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Macerich (MAC) Stock Down as Q3 FFO & Revenues Lag Estimates

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Shares of The Macerich Company (MAC - Free Report) depreciated 2.1% during Nov 5 regular trading session after the company reported lower-than-projected numbers both in terms of adjusted funds from operations (FFO) per share and revenues for third-quarter 2020.

Macerich delivered adjusted FFO per share of 52 cents, which missed the Zacks Consensus Estimate of 54 cents. The figure also plunged 50% year over year. Adjusted FFO per share for the quarter excludes financing expense in relation to Chandler Freehold and loss on extinguishment of debt.

During the quarter, Macerich endured downside in mall tenant annual sales and portfolio occupancyamid the pandemic-borne concerns. This affected same-center net operating income (NOI).

The company generated revenues of $185.8 million in the September-end quarter. The figure declined 19.6% year on year and missed the Zacks Consensus Estimate of $201.9 million.

The company noted that all of its properties were open as of Oct 7. Widespread reopening of malls has driven sequential improvement in rent collections and progress on negotiations with retail tenants.

In fact, the company is seeing an improvement in rental receipts, and has collected roughly 80% and 81% of billings in third-quarter and October, respectively. This compares favorably with second-quarter rent collections of 61%.

It has slashed the planned 2020 development expends by roughly $100 million though work continues on some select projects.

Behind the Headlines

As of Sep 30, 2020, average rent per square foot rose 1.8% to $62.29 from $61.16 as of Sep 30, 2019. Mall tenant annual sales for the 12-month period ended Sep 30, 2020 decreased to $718 per square feet from $800 for the 12-month period ended Sep 30, 2019. Notably, the sales metric excludes the period of coronavirus closure for each tenant.

Moreover, as of Sep 30, 2020, the mall portfolio occupancy (including closed centers) shrunk 50 basis points sequentially to 90.8%. Also, same-center NOI (excluding lease termination income) slump 29.3% to $152.4 million from the prior-year number.

It exited third-quarter 2020 with $630 million of cash and cash equivalents on its balance sheet, higher than $573 million at second-quarter end.

Dividend Update

On Oct 29, Macerich announced a quarterly cash dividend of 15 cents per share. The dividend will be paid on Dec 3, to shareholders of record as of Nov 9.

Macerich Company The Price, Consensus and EPS Surprise

Macerich Company The Price, Consensus and EPS Surprise

Macerich Company The price-consensus-eps-surprise-chart
| Macerich Company The Quote

Currently, Macerich carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other REITs

Iron Mountain Incorporated (IRM - Free Report) reported third-quarter 2020 normalized FFO per share of 61 cents, which beat the Zacks Consensus Estimate of 55 cents. However, the reported figure was 1.5% lower than the year-ago quarter’s 62 cents.

Public Storage's (PSA - Free Report) third-quarter 2020 core FFO per share of $2.63 surpassed the Zacks Consensus Estimate of $2.60. Quarterly revenues of $730.7 million exceeded the Zacks Consensus Estimate $723 million.

Healthpeak Properties, Inc. (PEAK - Free Report) reported third-quarter 2020 FFO as adjusted of 40 cents per share, surpassing the Zacks Consensus Estimate of 39 cents. However, the reported figure compared unfavorably with FFO as adjusted of 44 cents per share in the prior-year quarter.

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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