• Sales per Square Foot: $837 at the end of Q4 2024, up $3 from the previous quarter.
• Occupancy Rate: 94.1% in Q4 2024, up 40 basis points from Q3 and 60 basis points year-over-year.
• New Store Openings: 1.5 million square feet in 2024.
• Leasing Volume: 3.7 million square feet of leases signed in 2024.
• FFO: Approximately $117 million or $0.07 per share in Q4 2024, down from $128 million or $0.57 per share in Q4 2023.
• Same-Center NOI: Decreased 0.4% in Q4 2024 compared to Q4 2023; increased 0.2% for the full year 2024 compared to 2023.
• Debt to EBITDA: Slightly below 8 times at year-end 2024, almost a full turn lower than the previous year.
• Liquidity: Approximately $683 million, including $540 million of capacity on the line of credit.
• Incremental Rent Pipeline: $66 million, with $27 million expected to be realized in 2025.

• Warning! GuruFocus has detected 11 Warning Signs with MAC.

Release Date: February 27, 2025

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

Positive Points

• Macerich Co (NYSE:MAC) has made significant progress in simplifying its business by consolidating joint venture interests and refinancing at favorable rates.
• The company has implemented a new leasing dashboard tool, improving visibility and efficiency in leasing and tenant coordination.
• Macerich Co (NYSE:MAC) achieved an 8.8% base rent re-leasing spread for permanent tenants under 10,000 square feet, with new leases signed at 17.6% higher base rent.
• The company's Path Forward Plan aims to increase physical permanent occupancy from 84% to 89% by 2028, with 50% of this increase already accounted for by the current SNO pipeline.
• Macerich Co (NYSE:MAC) has a strong pipeline of new store openings, totaling over 2 million square feet, expected to contribute $66 million in incremental rent by early 2028.

Negative Points

• The company experienced a decrease in FFO due to higher interest expenses and severance costs.
• Same-center NOI, excluding lease termination income, decreased by 0.4% in the fourth quarter of 2024 compared to the previous year.
• Macerich Co (NYSE:MAC) faces higher anticipated landlord work and tenant allowance costs due to a focus on new tenants.
• There is potential for delays in the development pipeline, particularly at FlatIron Crossing.
• The company is operating with a high debt-to-EBITDA ratio, although it has been reduced to slightly below 8 times.

Q & A Highlights

Q: Can you provide insights on the expected same-store NOI growth for 2025, considering the SNO pipeline? A: Jackson Hsieh, President and CEO, explained that while the SNO pipeline is expected to contribute significantly, the overall same-store NOI growth will be more flat in the next couple of years, with a more substantial increase anticipated in 2027 and 2028. The focus is on achieving leasing goals and improving tenant quality, which will eventually reflect in NOI growth.

Q: How is the current leasing environment affecting your strategy, and what are the expected impacts on occupancy and rental revenue? A: Douglas Healey, Senior EVP of Leasing, noted that the healthy retailer environment is a significant tailwind. The company is focused on increasing permanent leasing and improving tenant mix, which is expected to enhance occupancy and rental revenue over time. The integration of leasing processes under one leadership structure is also contributing to this strategy.

Q: What are the financial implications of the Path Forward Plan, particularly regarding leverage and asset sales? A: Dan Swanstrom, CFO, highlighted that the company is on track to reduce leverage to the low to mid-6 times range over the next several years. The plan includes asset sales and loan givebacks, with a target of $2 billion in dispositions. The company has already completed significant sales and is progressing with additional transactions.

Q: How is the new leasing dashboard impacting operational efficiency and leasing outcomes? A: Jackson Hsieh explained that the new leasing dashboard has significantly improved efficiency by providing real-time visibility into leasing activities. This tool allows for better coordination among teams and has reduced time spent on non-revenue-generating activities, thereby enhancing leasing outcomes.

Q: What are the expectations for capital expenditures in 2025, and how do they compare to previous years? A: Jackson Hsieh mentioned that capital expenditures are expected to be higher in 2025 and 2026 due to increased leasing activity and a higher percentage of new tenants. This is part of the strategic plan to improve tenant quality and drive long-term revenue growth.

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