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Macerich (MAC) Q4 FFO Misses Estimates, Revenues Fall Y/Y

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Retail REIT The Macerich Company (MAC - Free Report) delivered fourth-quarter 2017 adjusted funds from operations (FFO) per share of $1.13, missing the Zacks Consensus Estimate by a cent. Results reflect decline in occupancy in the quarter. Moreover, revenues slipped from the prior-year period as well.

Including the $14.5-million re-valuation reduction of a deferred tax asset because of the lower federal corporate income tax rates, FFO per share for the quarter came in at $1.03 compared with $1.17 in the prior-year period.

The company posted revenues of $256.7 million for the fourth quarter, surpassing the Zacks Consensus Estimate of $234.4 million. However, the figure came in 5.6% lower than the prior-year quarter figure.

For full-year 2017, FFO per share came in at $3.83, down 6.1% from the year-ago tally of $4.08. The company also experienced a 4.6% year-over-year decline in revenues to nearly $993.7 million.

Quarter in Detail

As of Dec 31, 2017, mall portfolio occupancy contracted 40 basis points (bps) year over year to 95.0%. Mall tenant annual sales increased 4.8% year over year to $660 per square feet. Re-leasing spreads for the year ended Dec 31, 2017, increased 15.2%. Average rent per square foot increased 3.8% to $56.97 from $54.87 as of Dec 31, 2016.

Also, same-center net operating income for the reported quarter grew around 2.4% from the prior-year period.

As of Dec 31, 2017, Macerich’s cash and cash equivalents were $91.0 million, up from $71.1 million as of Sep 30, 2017.

Guidance

Macerich offered its guidance for 2018. The retail REIT expects FFO per share in the range of $3.92-$4.02. This is backed by same-center NOI growth rate projection of 2.0-2.5% and no asset sales or acquisitions assumptions. Currently, the Zacks Consensus Estimate for FFO per share is pegged at $4.07.

Our Viewpoint

Dwindling footfall amid shift of consumers toward online channels, store closures and bankruptcy of retailers are anticipated to adversely affect the company’s performance in the near term. While Macerich has been striving to counter the pressure through efforts to support omni-channel retailing and portfolio revamp, implementation of such measures requires a decent upfront cost and therefore, might limit any robust growth in profit margins in the near term. Furthermore, interest rate hikes and portfolio concentration remain concerns for the company.

Currently, Macerich has a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has lost 1.4% in the past six months compared with 4.5% growth recorded by its industry.

Macerich Company (The) Price, Consensus and EPS Surprise
 

Macerich Company (The) Price, Consensus and EPS Surprise | Macerich Company (The) Quote

We now look forward to the earnings releases of other retail REITs like Taubman Centers, Inc. (TCO - Free Report) , Regency Centers Corporation (REG - Free Report) and Federal Realty Investment Trust (FRT - Free Report) . Taubman Centers and Regency Centers are scheduled to release results on Feb 8, while Federal Realty is slated to report its numbers on Feb 13.

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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