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Macerich (MAC) Enhances Debt Position With Financing Moves

The increase in consumers’ preference for in-person shopping experiences following the pandemic downtime has been driving the recovery in the retail real estate industry. Retailers continue to rent out more physical store spaces to meet this growing demand.

As a result, The Macerich Company’s MAC portfolio of premium assets in the United States, with a notable presence in California, the Pacific Northwest, Arizona and the Metro New York to Washington, DC corridor, has been experiencing solid leasing activity.

Amid this, Macerich noted that it has made continued progress in addressing its debt maturities and carried out three transactions totaling just under $1.4 billion. These financing moves have helped enhance the company’s liquidity position, poising it well for long-term growth.

On Jan 3, 2023, the company closed a five-year refinancing worth $370 million of the previous combined loans totaling $363 million. These loans formerly encumbered Green Acres Mall and Green Acres Commons in Valley Stream, NY, both of which were set to mature in first-quarter 2023.

The new loan, which is interest only during the entire loan term, bears a fixed interest rate of 5.90% and going to mature on Jan 6, 2028.

In early December 2022, MAC completed a three-year extension of its $300 million loan on Santa Monica Place in Santa Monica, CA. The extended loan is now set to mature on Dec 9, 2025, inclusive of the extension options and carries a floating rate of LIBOR plus 1.48%.

Further, this retail REIT’s joint venture that owns Scottsdale Fashion Square in Scottsdale, AZ, is in the process of refinancing the existing $405 million mortgage loan. The new five-year loan with a fixed rate is expected to be $700 million and is likely to generate around $150 million of additional liquidity for Macerich. This loan is anticipated to close in the first quarter of 2023.

It may be noted that in October 2022, Macerich announced plans for the next phase of the ongoing reinvestment in the company’s iconic Scottsdale Fashion Square, encompassing 1.9 million square feet. The move will provide the company an opportunity to capitalize on the expenditure trend of affluent customers and generate decent cash flows.

With added balance-sheet strength and a well-laddered debt maturity profile, the company is well-positioned to capitalize on long-term growth opportunities. As of Nov 3, it had more than $615 million of liquidity.

Also, Macerich’s aggressive capital-recycling program to enhance the overall quality of its portfolio highlights its prudent capital-management practices and releases the pressure off its balance sheet.

Shares of this Zacks Rank #3 (Hold) company have gained 32.9% in the past three months, outperforming the industry’s rise of 18.8%.

Zacks Investment Research
Zacks Investment Research

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Nonetheless, higher e-commerce adoption, stiff competition from industry peers and rising interest rates remain key concerns for the company.

Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties VICI, Stag Industrial STAG and National Retail Properties NNN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is pegged at $1.92.

The Zacks Consensus Estimate for Stag Industrial’s 2022 FFO per share is pegged at $2.21.

The Zacks Consensus Estimate for National Retail Properties’ ongoing year’s FFO per share stands at $3.20.

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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