Leasing Activity: Signed 2.6 million square feet of leases in Q1 2025, including 2.3 million square feet of renewals. Portfolio Sales: $837 per square foot, flat compared to Q4 2024; $928 per square foot excluding Eddy properties, up $13 from last quarter. Occupancy Rate: 92.6% in Q1 2025, down from 94.1% in Q4 2024; 95.2% excluding Eddy properties. Leasing Spreads: Trailing 12-month leasing spreads at 10.9%, with 22% on new deals and 7% on renewals. FFO: Approximately $87 million or $0.33 per share in Q1 2025, up from $75 million or $0.33 per share in Q1 2024. Same-Center NOI: Increased 0.9% in Q1 2025 compared to Q1 2024; 2.4% increase excluding Eddy assets. Net Debt to EBITDA: 7.9 times at the end of Q1 2025, nearly a full turn lower than at the start of the Path Forward plan. Dispositions: Completed almost $800 million in sales; Lakewood sale under contract, expected to increase total to over $1.1 billion. Liquidity: Approximately $995 million, including $650 million capacity on revolving line of credit.

Warning! GuruFocus has detected 6 Warning Signs with MAC.

Release Date: May 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Macerich Co (NYSE:MAC) is ahead of schedule on its leasing progress targets, having signed 2.6 million square feet of leases in the first quarter, more than double the previous year's first quarter. The company has made significant progress in its Path Forward plan, including consolidating joint ventures, issuing equity, and completing refinancings and dispositions. Macerich Co (NYSE:MAC) has a strong pipeline of new leases, with a goal to achieve $130 million in cumulative signed not open (SNO) potential by mid-2026. The company has successfully executed asset sales and loan givebacks, with $1.1 billion in dispositions completed and a clear path to achieving its $2 billion target. Macerich Co (NYSE:MAC) has implemented a new corporate structure and technology enhancements, such as the leasing speedometer, to streamline operations and improve decision-making.

Negative Points

Occupancy in the first quarter was 92.6%, down from 94.1% in the previous quarter, primarily due to the closure of temporary holiday stores and transitioning projects. The company faces challenges with tenant bankruptcies, such as Forever21, which requires remerchandising efforts to fill vacated spaces. Despite progress, Macerich Co (NYSE:MAC) still has $50 million of SNO and remaining mall dispositions and givebacks to complete its Path Forward plan. Same-center NOI growth was modest at 0.9% year-over-year, indicating limited immediate revenue growth from existing properties. The company anticipates higher capital expenditures than initially planned, which could impact short-term financial performance.

Story Continues

Q & A Highlights

Q: With the recent news on trade tariffs, do you see any potential upside in leasing going forward? A: Douglas Healey, Senior Executive Vice President, Head - Leasing: We haven't seen much pullback due to tariffs. Retailer sentiment remains strong, as reflected in our leasing metrics and pipeline. We don't anticipate significant changes in upside due to tariffs.

Q: Can you provide details on the $80 million SNO pipeline and its net incremental impact? A: Brad Miller, Senior Vice President, Asset Management: The $80 million is incremental over 2024 revenue. We expect $25 million to be realized in 2025, with $6 million already realized in Q1.

Q: Given the progress on leasing and sales, how is your CapEx spending trending, and when might you provide guidance? A: Jackson Hsieh, President, CEO, Director: CapEx is slightly higher than initially planned, with faster spending. We expect major FFO and EBITDA uplift in 2027-2028. Guidance will be considered as we progress.

Q: What contributed to the success of new deals, which are up 70% from last year? A: Jackson Hsieh, President, CEO, Director: The success is due to our organizational structure and streamlined leasing process. Our leasing speedometer tool and clear directives have enabled rapid decision-making and execution.

Q: How do you view the impact of tariffs on asset sales, particularly for Lakewood? A: Jackson Hsieh, President, CEO, Director: Lakewood's proceeds over debt are minimal. Outparcel sales are performing well, with cap rates in the mid-5% range. We expect to exceed our outparcel sales target.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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