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Macerich (MAC) Sells Non-Core Retail Assets for $170 Million
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Retail REIT – The Macerich Company (MAC - Free Report) – declared the sale of two centers to Merlone Geier Partners for $170 million. The move came as part of the company’s effort to re-deploy capital from non-core assets to its development activities.
Specifically, the company sold Cascade Mall in Burlington, WA and Northgate Mall in San Rafael, CA and reaped around $100 million, subsequent to the repayment of a floating-rate note on Northgate.
However, the company would have to experience the dilutive impact from the asset sale and as such its funds from operations (FFO) per share for 2017 would be reduced by around 6 cents per share.
Notably, the sales per square foot generated by the two properties and their occupancy levels were below than that of Macerich portfolio averages, making the asset dispositions a strategic fit for the company.
As of Sep 30, 2016, Cascade and Northgate generated sales per square foot of $319 and $421, respectively, against the company’s portfolio average of $626 per square foot in sales. Occupancy rates for Cascade and Northgate were 86.5% and 94.9%, respectively while Macerich’s portfolio average was 95.3% as of Sep 30, 2016.
However, over the past one year, shares of Macerich underperformed the Zacks categorized REIT and Equity Trust – Retail industry. Macerich’s shares experienced a loss of 8.7% against the 6.9% gain recorded by the industry, over the same time frame. Also, the company’s 2016 estimates edged down 0.5% to $4.08 per share, over the past 60 days.
This comes amidst an increase in consumer purchases through the Internet, which has emerged as a pressing concern for retail REITs. While Macerich has been striving to counter such pressure through various initiatives, we believe that this factor still poses a challenge to the company’s growth and is likely to restrict any expansion in margins in the near term. Further, hike in interest rate have added to its woes.
As such, Macerich currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the REIT industry include The GEO Group, Inc. (GEO - Free Report) , Mack-Cali Realty Corp. and Urban Edge Properties (UE - Free Report) . While The GEO Group sports a Zacks Rank #1 (Strong Buy), Mack-Cali and Urban Edge carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The GEO Group’ 2016 estimates inched up 1% to $2.94 per share, over the past 60 days.
Mack-Cali’s 2016 FFO per share estimates ascended 1.9%, over the past 60 days, to $2.20.
For Urban Edge Properties, the projected growth rate for FFO per share is 37.6% for 2016 and 6.3% for 2017.
Note: Funds from operations (“FFO”) a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Macerich (MAC) Sells Non-Core Retail Assets for $170 Million
Retail REIT – The Macerich Company (MAC - Free Report) – declared the sale of two centers to Merlone Geier Partners for $170 million. The move came as part of the company’s effort to re-deploy capital from non-core assets to its development activities.
Specifically, the company sold Cascade Mall in Burlington, WA and Northgate Mall in San Rafael, CA and reaped around $100 million, subsequent to the repayment of a floating-rate note on Northgate.
However, the company would have to experience the dilutive impact from the asset sale and as such its funds from operations (FFO) per share for 2017 would be reduced by around 6 cents per share.
Notably, the sales per square foot generated by the two properties and their occupancy levels were below than that of Macerich portfolio averages, making the asset dispositions a strategic fit for the company.
As of Sep 30, 2016, Cascade and Northgate generated sales per square foot of $319 and $421, respectively, against the company’s portfolio average of $626 per square foot in sales. Occupancy rates for Cascade and Northgate were 86.5% and 94.9%, respectively while Macerich’s portfolio average was 95.3% as of Sep 30, 2016.
However, over the past one year, shares of Macerich underperformed the Zacks categorized REIT and Equity Trust – Retail industry. Macerich’s shares experienced a loss of 8.7% against the 6.9% gain recorded by the industry, over the same time frame. Also, the company’s 2016 estimates edged down 0.5% to $4.08 per share, over the past 60 days.
This comes amidst an increase in consumer purchases through the Internet, which has emerged as a pressing concern for retail REITs. While Macerich has been striving to counter such pressure through various initiatives, we believe that this factor still poses a challenge to the company’s growth and is likely to restrict any expansion in margins in the near term. Further, hike in interest rate have added to its woes.
As such, Macerich currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the REIT industry include The GEO Group, Inc. (GEO - Free Report) , Mack-Cali Realty Corp. and Urban Edge Properties (UE - Free Report) . While The GEO Group sports a Zacks Rank #1 (Strong Buy), Mack-Cali and Urban Edge carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The GEO Group’ 2016 estimates inched up 1% to $2.94 per share, over the past 60 days.
Mack-Cali’s 2016 FFO per share estimates ascended 1.9%, over the past 60 days, to $2.20.
For Urban Edge Properties, the projected growth rate for FFO per share is 37.6% for 2016 and 6.3% for 2017.
Note: Funds from operations (“FFO”) a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>