Macerich Reports Q4 Results Ahead of Expectations as Re-Leasing Spreads Turn Positive Again

Macerich reported fourth-quarter earnings that were ahead of our expectations, though we don’t anticipate any material changes to our $30 fair value estimate for the no-moat company. Occupancy continues to recover with a 120-basis-point sequential improvement in the fourth quarter to 91.5%, ahead of our 90.2% estimate for the quarter. After four straight quarters of negative re-leasing spreads, rents executed on new leases across the total portfolio in the fourth quarter were 4.9% higher than the prior rent levels, which was also better than our estimate of further rent deterioration. Same-store net operating income growth was up 36.1% year over year, slightly better than our 32.4% estimate, as property EBITDA was 12.7% higher but rent adjustments went from a $27.2 million charge in the fourth quarter of 2020 from writing off uncollectable rent to a $2.6 million positive adjustment in the fourth quarter of 2021. As a result, Macerich reported funds from operations of $0.53 per share in the fourth quarter that beat our $0.49 estimate by 4 cents and was 8 cents better than the $0.45 figure reported in the fourth quarter of 2020.