Macerich Earnings: Same-Store NOI Growth Strong If Lease Termination Income Is Excluded

First-quarter results for no-moat Macerich were relatively in line with our expectations, leading us to reaffirm our $26.50 fair value estimate. Occupancy fell 40 basis points sequentially as there is typically a seasonality-related drop in occupancy from the fourth quarter into the first quarter. Still, occupancy is up 90 basis points year over year and was relatively in line with our 92.3% estimate. Re-leasing spreads were up 6.6% in the first quarter, better than our estimate of flat growth. Same-store net operating income was down 1.4% year over year. However, same-store NOI growth was negatively impacted by Macerich receiving less lease termination income, which we view as a positive for Macerich as that indicates that tenants are healthier than they were a year ago. Excluding lease termination income, same-store NOI was up 4.8%, well above our estimate of 1.6% growth. Funds from operations came in at $0.40 per share in the first quarter, which was a penny below our $0.41 estimate for the quarter.