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Macerich Co (MAC) Reports Q1 2024 Earnings: A Detailed Analysis

GuruFocus Research
·3-min read

  • Net Loss: Reported a net loss of $126.7 million, or $0.59 per share-diluted, significantly below the estimated net loss of $15.35 million and EPS estimate of -$0.09.

  • Revenue: Details not provided, comparison with the estimated revenue of $205.11 million not possible.

  • Occupancy Rate: Increased to 93.4%, up from 92.2% year-over-year, showing improved portfolio occupancy.

  • Leasing Activity: Signed leases for 1.04 million square feet, marking a 14% increase in leased square footage compared to the first quarter of 2023.

  • Base Rent: Re-leasing spreads were 14.7% higher than expiring base rent for the trailing twelve months ended March 31, 2024, indicating strong rental income growth.

  • Same Center Net Operating Income (NOI): Decreased by 1.9% excluding lease termination income, reflecting a slight downturn in operational efficiency.

  • Dividend: Announced a quarterly cash dividend of $0.17 per share, payable on June 3, 2024, maintaining shareholder returns.

On April 30, 2024, Macerich Co (NYSE:MAC) released its 8-K filing, detailing the financial outcomes for the first quarter ended March 31, 2024. The report reveals a challenging quarter for the company, marked by a significant net loss, although there were notable achievements in leasing activities and portfolio management.

Company Overview

Macerich Co (NYSE:MAC) is an S&P 500 company specializing in high-quality retail real estate, including 47 million square feet across 43 regional retail centers primarily in major U.S. markets. As a leader in sustainability, Macerich has been recognized for its environmental efforts, achieving a #1 GRESB ranking for nine consecutive years. The company celebrated its 30th anniversary as a public entity this March and welcomed Jack Hsieh as its new CEO and President.

Financial Performance

The first quarter of 2024 was marked by a net loss of $126.7 million, or $0.59 per share-diluted, a significant increase from the net loss of $58.7 million, or $0.27 per share-diluted, reported in the same period in 2023. This downturn was primarily due to the impact of tenant bankruptcies, including a significant one from Express. Despite these challenges, Macerich reported a Funds From Operations (FFO) excluding certain expenses of $74.6 million, or $0.33 per share-diluted, although this too was down from $95.9 million, or $0.43 per share-diluted, year over year.

Operational Highlights

Operationally, Macerich showed resilience with a 1.2% increase in portfolio occupancy, reaching 93.4%. The company also experienced strong leasing activity, signing leases for 1.04 million square feet, a 14% increase from Q1 2023. This follows a record year of leasing in 2023, underlining the company's robust portfolio management strategy. However, same center net operating income (NOI) saw a decrease of 1.9%, excluding lease termination income.

Strategic Financial Management

Macerich has been proactive in managing its financial position, addressing near-term debt maturities through several refinancing activities. Notably, the company defaulted on a $300 million loan on Santa Monica Place but is currently negotiating terms with the lender. This strategic financial management is part of a broader plan to reduce net debt to EBITDA leverage to the low to mid-6x range over the next few years.

2024 Outlook and Guidance

Under the new leadership, Macerich has withdrawn its 2024 guidance for EPS-diluted and FFO per share diluted, citing the indeterminable impact of ongoing strategic transactions, including asset dispositions and acquisitions. The company remains committed to its long-term strategic goals, focusing on strengthening its financial structure and enhancing shareholder value.

Investor Considerations

While Macerich faces significant challenges, particularly with its net losses and the impact of tenant bankruptcies, its strong leasing activity and strategic management of debt maturities provide a foundation for potential recovery. Investors should closely monitor the company's ability to execute its strategic plans and navigate the retail real estate market's ongoing fluctuations.

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For detailed financial tables and further information, please refer to the full 8-K filing.

Explore the complete 8-K earnings release (here) from Macerich Co for further details.

This article first appeared on GuruFocus.