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Macerich's (MAC) Q1 FFO Beats Estimates, Revenues Miss

The Macerich Company MAC reported first-quarter 2016 adjusted funds from operations (“FFO”) per share of 89 cents, which came in higher than both the Zacks Consensus Estimate and the prior-year quarter tally of 86 cents. Improvement in mall tenant annual sales aided the result.

Total revenue for the quarter came in at $256 million, lagging the Zacks Consensus Estimate of $270.3 million and falling short of the year-ago tally of $318.3 million.

Quarter in Detail

As of Mar 31, 2016, mall portfolio occupancy decreased 30 basis points (bps) year over year to 95.1%. Mall tenant annual sales increased 3% year over year to $625 per square foot. In addition, re-leasing spreads rose 15.4% on a year-over-year basis. Also, same centers NOI grew 7.5% year over year to $207.1 million.

During the quarter, in a joint venture deal, the company purchased Kansas City, MO-based Country Club Plaza for $660 million.

Subsequent to the quarter-end, Macerich sold Capitola Mall for $93 million.

As of Mar 31, 2016, on a pro rata basis, Macerich’s share of cash and cash equivalents were $192.7 million, compared with $163.2 million as of Dec 31, 2015. Moreover, the company had a total debt of nearly $7.1 billion (on pro rata basis), up from $7 billion at the end of the prior quarter.

2016 Guidance

Macerich has reaffirmed the guidance range for 2016. The REIT expects FFO per share in a range of $4.05–$4.15. The Zacks Consensus Estimate of $4.09 falls in the range. Also, the company anticipates 2016 cash same store NOI to grow 4.50–5.00%.

Our Viewpoint

We believe Macerich’s premium operating portfolio shows promise, going forward. Improving mall tenant annual sales per square foot and re-leasing spreads would pave the way for a robust top line.

Currently, Macerich has a Zacks Rank #2 (Buy). Investors interested in the retail REIT space may consider stocks like Equinix, Inc. EQIX, Saul Centers Inc. BFS and STORE Capital Corporation STOR. All these stocks hold the same Zacks Rank as Macerich.

Note: Funds 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.

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EQUINIX INC (EQIX): Free Stock Analysis Report
 
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