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Macerich's (MAC) Q1 FFO Meets Estimates, Leasing Revenues Dip

Zacks Equity Research

Retail REIT The Macerich Company MAC delivered first-quarter 2019 funds from operations (FFO) per share, excluding loss on extinguishment of debt, of 81 cents, in line with the Zacks Consensus Estimate. The figure compares unfavorably with the prior-year quarter’s reported tally of 82 cents.

The company witnessed an uptick in occupancy and mall tenant annual sales in the first quarter. Nonetheless, results suggested a decline in leasing revenues.

In fact, the company posted leasing revenues of $211 million in the quarter, missing the Zacks Consensus Estimate of $205.5 million. The figure, however, comes in 3.3% lower than the prior-year quarter’s reported number.

Quarter in Detail

As of Mar 31, 2019, mall portfolio occupancy expanded 70 basis points (bps) year over year to 94.7%. Mall tenant annual sales for the 12-month period ended Mar 31, 2019 increased 8.7% year over year to $746 per square feet. Re-leasing spreads for the 12-month period ended Mar 31, 2019, increased 11%. Average rent per square foot ascended 3.9% to $60.74 from $58.44 as of Mar 31, 2018.

Also, same-center net operating income (excluding lease termination revenue) inched up 1.7% to approximately $209 from the prior-year quarter.


Moreover, Macerich reiterated its guidance for 2019. The REIT expects FFO per share of $3.50-3.58, and $3.65-$3.73 (excluding impact of ASC 842). The Zacks Consensus Estimate for full-year 2019 FFO per share is $3.56.   

Our Viewpoint

With high concentration of premium malls in certain vibrant U.S. markets, Macerich is witnessing decent demand for its real estate space. Further, the company remains focused on redevelopment opportunities which will likely provide value accretion and enable diversified usage of its high-quality properties.

Macerich Company (The) Price and EPS Surprise

Macerich Company (The) Price and EPS Surprise | Macerich Company (The) Quote

However, significant retailer bankruptcies during the first quarter impacted results. With no respite from the choppy retail environment, tenant bankruptcies are expected to keep affecting the company’s leasing and occupancy level.    

Macerich currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Cousins Properties Incorporated CUZ reported FFO per share of 20 cents during the January-March quarter, in line with the Zacks Consensus Estimate. The figure came in higher than the prior-year quarter’s reported tally of 15 cents. 

Duke Realty Corporation’s DRE first-quarter 2019 core FFO per share of 33 cents surpassed the Zacks Consensus Estimate of 32 cents. Moreover, the figure came higher than the year-ago quarter’s reported tally of 30 cents.

Ventas, Inc. VTR delivered first-quarter normalized FFO of 99 cents, beating the Zacks Consensus Estimate of 96 cents. The reported figure, however, came in lower than the prior year’s $1.05.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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