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Macerich (MAC) Inks Leases for 2.4MSF YTD on Solid Demand
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With robust retail demand and muted new supply continuing to drive the recovery in the retail real estate industry, The Macerich Company’s (MAC - Free Report) portfolio of premium assets in the vibrant markets of the United States is experiencing robust leasing activity, leading to occupancy gains.
Retailers are renting out more physical store spaces to meet this demand. This has also helped the company backfill its spaces, which is encouraging.
Notably, 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 square footage signed year over year.
This brings the company’s year-to-date leasing volume to 2.4 million square feet, a record. The same indicates a 34% increase in square footage signed from the prior-year period.
Moreover, solid demand has boosted occupancy levels at the company’s shopping centers. As of Jun 30, 2023, portfolio occupancy was 92.6%, up 40 basis points (bps) sequentially and 80 bps year over year. Consequently, MAC’s re-leasing spreads almost doubled quarter over quarter to 11.3%.
In addition, the company’s focus on the reuse and mixed-use of its properties through the recapture and repositioning of anchor tenants has paid off well.
The company opened 263,000 square feet of new stores in the second quarter of 2023, a rise of 20% in terms of square footage compared with the second quarter of 2022. These included Apple and Kendra Scott at Tysons Corner Center, Primark at Green Acres Mall, Target and Ashley HomeStore at Kings Plaza, and Louis Vuitton, Allbirds and Alo Yoga at Broadway Plaza, to name a few.
Per Doug Healey, senior executive vice president, Leasing, Macerich, “Macerich’s top-quality Regional Town Centers continue to mean more things to more people, thanks to the wide variety of categories and uses we successfully attract. In addition to apparel and accessories retailers, these categories now include health and fitness, food and beverage, entertainment, sports, hotels, multifamily residences and more – at interest levels we have never seen before.”
Macerich’s encouraging leasing pipeline of new store openings is expected to fuel its rental income growth in the upcoming years, poising it well to ride the growth curve. Specifically, it expects to realize around $66 million of incremental rent in the aggregate over 2023, 2024 and 2025 and be accretive to its net operating income and cash flow.
Further, the company expects to continue approving new deals and sign new leases in the upcoming period, especially with those in large formats, aiming to boost traffic and sales at its Regional Town Centers.
Shares of this Zacks Rank #3 (Hold) company have gained 16.4% in the past three months compared with the industry’s growth of 3.7%.
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 Centers’ 2023 funds from operations (FFO) per share has moved marginally upward in the past month to $4.14.
The consensus mark for Kite Realty Group’s current-year FFO per share has been raised marginally northward in the past month to $1.98.
The consensus estimate for Saul Centers’ ongoing year’s FFO per share has been revised marginally upward over the past month to $3.07.
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) Inks Leases for 2.4MSF YTD on Solid Demand
With robust retail demand and muted new supply continuing to drive the recovery in the retail real estate industry, The Macerich Company’s (MAC - Free Report) portfolio of premium assets in the vibrant markets of the United States is experiencing robust leasing activity, leading to occupancy gains.
Retailers are renting out more physical store spaces to meet this demand. This has also helped the company backfill its spaces, which is encouraging.
Notably, 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 square footage signed year over year.
This brings the company’s year-to-date leasing volume to 2.4 million square feet, a record. The same indicates a 34% increase in square footage signed from the prior-year period.
Moreover, solid demand has boosted occupancy levels at the company’s shopping centers. As of Jun 30, 2023, portfolio occupancy was 92.6%, up 40 basis points (bps) sequentially and 80 bps year over year. Consequently, MAC’s re-leasing spreads almost doubled quarter over quarter to 11.3%.
In addition, the company’s focus on the reuse and mixed-use of its properties through the recapture and repositioning of anchor tenants has paid off well.
The company opened 263,000 square feet of new stores in the second quarter of 2023, a rise of 20% in terms of square footage compared with the second quarter of 2022. These included Apple and Kendra Scott at Tysons Corner Center, Primark at Green Acres Mall, Target and Ashley HomeStore at Kings Plaza, and Louis Vuitton, Allbirds and Alo Yoga at Broadway Plaza, to name a few.
Per Doug Healey, senior executive vice president, Leasing, Macerich, “Macerich’s top-quality Regional Town Centers continue to mean more things to more people, thanks to the wide variety of categories and uses we successfully attract. In addition to apparel and accessories retailers, these categories now include health and fitness, food and beverage, entertainment, sports, hotels, multifamily residences and more – at interest levels we have never seen before.”
Macerich’s encouraging leasing pipeline of new store openings is expected to fuel its rental income growth in the upcoming years, poising it well to ride the growth curve. Specifically, it expects to realize around $66 million of incremental rent in the aggregate over 2023, 2024 and 2025 and be accretive to its net operating income and cash flow.
Further, the company expects to continue approving new deals and sign new leases in the upcoming period, especially with those in large formats, aiming to boost traffic and sales at its Regional Town Centers.
Shares of this Zacks Rank #3 (Hold) company have gained 16.4% in the past three months compared with the industry’s growth of 3.7%.
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.
Image Source: Zacks Investment Research
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 Saul Centers, Inc. (BFS - Free Report) . Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Regency Centers’ 2023 funds from operations (FFO) per share has moved marginally upward in the past month to $4.14.
The consensus mark for Kite Realty Group’s current-year FFO per share has been raised marginally northward in the past month to $1.98.
The consensus estimate for Saul Centers’ ongoing year’s FFO per share has been revised marginally upward over the past month to $3.07.
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.