Macerich Earnings: Progress on Paying Down Debt and Acquiring Minority Shares of Assets

No-moat Macerich reported fourth-quarter results that were mixed compared with our expectations, though we didn’t see anything that would materially change our $24 fair value estimate. Occupancy increased 40 basis points sequentially and 60 basis points year over year to 94.1%, relatively in line with our 94.0% estimate. Trailing 12-month tenant sales per square foot were flat at $837 for 2024 compared with $836 for 2023, an improvement over the declines the company had reported over the prior several quarters. Re-leasing spreads were 8.8% in the fourth quarter, better than our 5.6% estimate. However, there was a significant difference between the consolidated portfolio, which saw re-leasing spreads decline 0.5%, and the joint-venture portfolio, which saw rents increase 33.9%. Macerich’s joint-venture assets tend to be higher-quality, so this is in line with our view that higher-quality retail will generally outperform lower-quality assets. Same-store net operating income fell 0.4% in the fourth quarter, though that is better than our estimate for a 2.9% decline. Macerich reported funds from operations of $0.47 per share, which was $0.02 below our $0.49 estimate.