It has been about a month since the last earnings report for Macerich (MAC). Shares have added about 13.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Macerich due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Macerich's Q3 FFO Lags Estimates, Revenues Increase Y/Y
Macerich reported FFO per share, excluding financing expenses in connection with Chandler Freehold, accrued default interest expense and loss on non-real estate investments of 38 cents, which missed the Zacks Consensus Estimate of 40 cents. The figure decreased 15.6% from the year-ago quarter’s 45 cents.
Results reflected higher interest expenses on a year-over-year basis. However, this retail REIT experienced an increase in same-center NOI, including lease termination income, from the prior-year period, backed by a higher base rent re-leasing spread.
Quarterly revenues of $220.2 million were higher than the year-ago quarter’s $218.2 million. The figure surpassed the Zacks Consensus Estimate of $219.7 million.
Behind the Headlines
Same-center NOI, including lease termination income, increased 1.9% year over year to $180.8 million.
The portfolio tenant sales per square foot for spaces less than 10,000 square feet for the trailing 12 months ended Sept. 30, 2024, came in at $834, down from $847 reported in the quarter ended Sept. 30, 2023.
During the reported quarter, Macerich signed leases encompassing 0.83 million square feet. On a comparable center basis, it reflected a 16% year-over-year increase in leased square footage.
As of Sept. 30, 2024, portfolio occupancy was 93.7%, up 40 basis points from 93.3% reported in the prior quarter. Our expectation for the portfolio occupancy was 93.8%.
For the 12 months ended Sept. 30, 2024, base rent re-leasing spreads were 11.9% more than the expiring base rent.
During the reported quarter, interest expenses increased by 7% to $57.1 million.
Balance Sheet
As of Nov. 6, 2024, Macerich had around $667 million of liquidity. This included $505 million of available capacity on its $650 million revolving line of credit.
As of Sept. 30, 2024, the company had a total net debt of $6.19 billion and net debt to adjusted EBITDAre of 8.23X.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, Macerich has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Macerich has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Macerich is part of the Zacks REIT and Equity Trust - Retail industry. Over the past month, Regency Centers (REG), a stock from the same industry, has gained 0.6%. The company reported its results for the quarter ended September 2024 more than a month ago.
Regency Centers reported revenues of $360.27 million in the last reported quarter, representing a year-over-year change of +9%. EPS of $0.54 for the same period compares with $1.02 a year ago.
For the current quarter, Regency Centers is expected to post earnings of $1.06 per share, indicating a change of +3.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Regency Centers. Also, the stock has a VGM Score of D.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
