On July 31, 2024, Macerich Co (MAC, Financial) released its 8-K filing for the second quarter of 2024. The Macerich Company is an S&P 500 company that invests in premium mall assets. The company owns 27 regional malls in its consolidated portfolio and 16 regional malls in its unconsolidated portfolio along with three power centers and seven other real estate assets. The company's total portfolio has 46.3 million square feet of gross leasable area and averaged $836 sales per square foot over the 12 months ended in December 2023.
Performance Overview
Macerich Co (MAC, Financial) reported a net income attributable to the company of $252.0 million or $1.16 per share-diluted for Q2 2024, a significant improvement from the net loss of $15.0 million or $0.07 per share-diluted in Q2 2023. This performance exceeded analyst estimates, which had projected an earnings per share (EPS) of $0.06.
Funds from Operations (FFO) excluding certain expenses was $88.1 million or $0.39 per share-diluted, slightly down from $89.1 million or $0.40 per share-diluted in the same quarter last year. Same center net operating income (NOI), excluding lease termination income, increased by 1.4% year-over-year.
Operational Highlights
Portfolio tenant sales per square foot for spaces less than 10,000 square feet were $835 for the trailing twelve months ended June 30, 2024, compared to $837 in the previous quarter and $853 in the same quarter last year. Portfolio occupancy stood at 93.3%, up from 92.6% in Q2 2023 but slightly down from 93.4% in Q1 2024. Base rent re-leasing spreads were 10.1% greater than expiring base rent, marking the eleventh consecutive quarter of positive base rent leasing spreads.
Financial Achievements
During the quarter, Macerich Co (MAC, Financial) closed on the acquisitions of its partner’s interests in Arrowhead Towne Center and South Plains Mall, with Arrowhead priced at a 7.2% cap rate. The company also completed the short-sale of Country Club Plaza and expects to close on the sale of an open-air retail asset for $110 million at a 6.5% cap rate.
The company has been active in managing its debt maturities, closing five transactions year-to-date for nearly $700 million of loans or $539 million at its share. Macerich Co (MAC, Financial) expects to refinance its sole remaining loan maturity in 2024 on The Mall of Victor Valley within the coming weeks.
Income Statement and Balance Sheet
Key financial metrics from the income statement and balance sheet include:
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Income | $252.0 million | -$15.0 million |
| EPS (Diluted) | $1.16 | -$0.07 |
| FFO (Diluted) | $0.39 | $0.40 |
| Same Center NOI | +1.4% | N/A |
Path Forward Plan
During Q2 2024, Macerich Co (MAC, Financial) unveiled its Path Forward Plan, aimed at improving its balance sheet and operational efficiencies. The plan includes goals such as reducing the Net Debt to Adjusted EBITDA leverage ratio to a low-to-mid 6x range over the next three to four years and achieving a clean, post-deleveraging FFO launch point of approximately $1.80 per share.
Conclusion
Macerich Co (MAC, Financial) has shown a strong recovery in Q2 2024, surpassing analyst estimates and demonstrating significant improvements in net income and operational metrics. The company's strategic acquisitions, debt management, and Path Forward Plan position it well for future growth and stability in the competitive retail real estate market.
Explore the complete 8-K earnings release (here) from Macerich Co for further details.
