The Macerich Company (MAC), a fully integrated real estate investment trust (REIT), reported first quarter 2011 FFO (fund from operations) of $73.7 million or 52 cents per share, compared with $71.6 million or 66 cents in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. The reported FFO for the quarter missed the Zacks Consensus Estimate by 6 cents.
Total revenues during the quarter were $191.1 million, compared with $182.1 million in the year-ago period. Total revenues for the reported quarter well exceeded the Zacks Consensus Estimate of $180 million.
Overall portfolio occupancy at quarter-end was 92.5% versus 91.1% in the year-ago period. Mall tenant sales increased 7.9% during the reported quarter to $449 per square foot compared to the twelve-month period ended March 31, 2010, primarily due to the gradual revival of the overall economy.
Macerich acquired 3 properties during first quarter 2011. These included Kierland Commons – a 38-acre mixed-use retail anchored development in Phoenix, Arizona, that produces annual shop tenant sales of $625 per square foot. Occupancy for the project's 316,000 square feet of retail space is currently 98%.
The company also purchased ‘The Shops at Atlas Park’ – an approximately 400,000 square-foot mixed-used neighborhood center in New York. In addition, Macerich acquired Desert Sky Mall – a 900,000 square-foot indoor shopping center in West Phoenix that features a unique merchandise mix focusing primarily on the Hispanic consumers.
During the reported quarter, Macerich completed the early extinguishment of a $50.3 million loan collateralized by the Chesterfield Towne Center property. Macerich also obtained a $200 million loan secured by its Los Cerritos Center property. In addition, the company closed on a new $1.5 billion unsecured line of credit facility that has an interest rate of LIBOR + 2.00%. The credit facility has a four-year term and can be extended by a year. At quarter-end, Macerich had cash and cash equivalents of $188.0 million and total debt of $5.8 billion.
For full year 2011, Macerich reiterated its earlier FFO guidance in the range of $2.78 to $2.94 per share. We maintain our ‘Neutral’ rating on the stock, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for Simon Property Group Inc. (SPG), one of the competitors of Macerich.
MACERICH CO (MAC): Free Stock Analysis Report
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