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Macerich (MAC) Jumps 33.7% in 3 Months: Will the Trend Last?
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Shares of The Macerich Company (MAC - Free Report) , currently carrying a Zacks Rank #3 (Hold), have soared 33.7% in the past three months compared with the industry’s growth of 5.6%.
With robust retail demand and muted new supply continuing to drive the recovery in the retail real estate industry, Macerich’s portfolio of premium assets in the vibrant markets of the United States is expected to have benefited from robust leasing activity, leading to occupancy gains.
Also, this retail real estate investment trust’s (REIT) focus on mixed-use developments, omni-channel retailing and capital-recycling moves have enabled it to ride the growth curve.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price.
With retail demand remaining robust, retailers are renting out more physical store spaces, benefiting retail REITs like Macerich. This healthy retailer demand has aided leasing activity in recent quarters and helped the company backfill its spaces, which is encouraging.
During the second quarter of 2023, Macerich signed 191 leases encompassing 1.4 million square feet. On a comparable center basis, this reflected a 21% increase in the amount of square footage signed year over year.
Also, solid demand has boosted occupancy levels at the company’s shopping centers. As of Jun 30, 2023, portfolio occupancy was 92.6%, up 91.8% year over year.
With an encouraging leasing pipeline, the company’s rental income growth is expected to remain robust in the coming years, poising it well to ride the growth curve.
In recent years, omni-channel retailing has gained popularity and has become the focal point for many retailers. In line with this, MAC’s efforts to enhance its asset quality and grow its successful tie-ups with premium retailers by increasing its adoption of the omni-channel model are likely to have paid off well.
Moreover, the company has been focusing on the re-use and mixed-use of its properties through the recapture and repositioning of anchor tenants. In July 2023, it unveiled that its Santa Monica Place will be housing high-end fitness concept, Club Studio. The same will encompass 48,000 square feet and replace the first level of the former Bloomingdale’s site at the property.
In June 2023, MAC welcomed the Ireland-based retail brand — Primark — to its Green Acres Mall in Long Island, NY, replacing a former JCPenney site.
Further, in the same month, MAC acquired the remaining 50% interest in five former Sears boxes, encompassing a total gross leasable area of 819,000 square feet, from its joint venture partner — Seritage Growth Properties — and now wholly owns and controls each parcel. The move provides scope to undertake redevelopment opportunities at these properties and enrich them with renowned in-demand retailers.
Macerich follows an aggressive capital-recycling program to enhance its overall portfolio quality. Through this, it divests its non-core and slow-growing assets and uses the proceeds for acquisitions, developments and redevelopment activities. These measures highlight its prudent capital-management practices and bode well for growth.
The company maintains a healthy balance sheet position and has a well-laddered debt maturity profile. It had around $565 million of liquidity as of Aug 8, 2023. With a strong financial footing, MAC seems well-positioned to capitalize on long-term growth opportunities.
Nonetheless, higher e-commerce adoption and limited consumers’ willingness to spend amid macroeconomic uncertainty and a high interest rate environment remain key concerns for the company.
The Zacks Consensus Estimate for Regency’s 2023 FFO per share is pegged at $4.12, implying a year-over-year growth of 7.6%.
The Zacks Consensus Estimate for Kite Realty Group’s ongoing year’s FFO per share is pegged at $1.98, suggesting a year-over-year growth of 2.6%.
The Zacks Consensus Estimate for Essential Properties Realty Trust’s 2023 FFO per share stands at $1.65, indicating 7.8% growth from the prior-year quarter’s tally.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Macerich (MAC) Jumps 33.7% in 3 Months: Will the Trend Last?
Shares of The Macerich Company (MAC - Free Report) , currently carrying a Zacks Rank #3 (Hold), have soared 33.7% in the past three months compared with the industry’s growth of 5.6%.
With robust retail demand and muted new supply continuing to drive the recovery in the retail real estate industry, Macerich’s portfolio of premium assets in the vibrant markets of the United States is expected to have benefited from robust leasing activity, leading to occupancy gains.
Also, this retail real estate investment trust’s (REIT) focus on mixed-use developments, omni-channel retailing and capital-recycling moves have enabled it to ride the growth curve.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price.
With retail demand remaining robust, retailers are renting out more physical store spaces, benefiting retail REITs like Macerich. This healthy retailer demand has aided leasing activity in recent quarters and helped the company backfill its spaces, which is encouraging.
During the second quarter of 2023, Macerich signed 191 leases encompassing 1.4 million square feet. On a comparable center basis, this reflected a 21% increase in the amount of square footage signed year over year.
Also, solid demand has boosted occupancy levels at the company’s shopping centers. As of Jun 30, 2023, portfolio occupancy was 92.6%, up 91.8% year over year.
With an encouraging leasing pipeline, the company’s rental income growth is expected to remain robust in the coming years, poising it well to ride the growth curve.
In recent years, omni-channel retailing has gained popularity and has become the focal point for many retailers. In line with this, MAC’s efforts to enhance its asset quality and grow its successful tie-ups with premium retailers by increasing its adoption of the omni-channel model are likely to have paid off well.
Moreover, the company has been focusing on the re-use and mixed-use of its properties through the recapture and repositioning of anchor tenants. In July 2023, it unveiled that its Santa Monica Place will be housing high-end fitness concept, Club Studio. The same will encompass 48,000 square feet and replace the first level of the former Bloomingdale’s site at the property.
In June 2023, MAC welcomed the Ireland-based retail brand — Primark — to its Green Acres Mall in Long Island, NY, replacing a former JCPenney site.
Further, in the same month, MAC acquired the remaining 50% interest in five former Sears boxes, encompassing a total gross leasable area of 819,000 square feet, from its joint venture partner — Seritage Growth Properties — and now wholly owns and controls each parcel. The move provides scope to undertake redevelopment opportunities at these properties and enrich them with renowned in-demand retailers.
Macerich follows an aggressive capital-recycling program to enhance its overall portfolio quality. Through this, it divests its non-core and slow-growing assets and uses the proceeds for acquisitions, developments and redevelopment activities. These measures highlight its prudent capital-management practices and bode well for growth.
The company maintains a healthy balance sheet position and has a well-laddered debt maturity profile. It had around $565 million of liquidity as of Aug 8, 2023. With a strong financial footing, MAC seems well-positioned to capitalize on long-term growth opportunities.
Nonetheless, higher e-commerce adoption and limited consumers’ willingness to spend amid macroeconomic uncertainty and a high interest rate environment remain key concerns for the company.
Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Regency Centers (REG - Free Report) , Kite Realty Group Trust (KRG - Free Report) and Tanger Factory Outlet Centers (SKT - Free Report) , 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 Regency’s 2023 FFO per share is pegged at $4.12, implying a year-over-year growth of 7.6%.
The Zacks Consensus Estimate for Kite Realty Group’s ongoing year’s FFO per share is pegged at $1.98, suggesting a year-over-year growth of 2.6%.
The Zacks Consensus Estimate for Essential Properties Realty Trust’s 2023 FFO per share stands at $1.65, indicating 7.8% growth from the prior-year quarter’s tally.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.