Macerich (NYSE: MAC), a leading mall REIT, announced its Q3 earnings results in line with analyst expectations, while also reaffirming its full-year guidance. The company reported improving operating metrics during the quarter, including significant growth in leasing spreads.
In Q2 and Q3, Macerich saw double-digit increases in its trailing 12-month leasing spreads, with an average of 11%. This marks the second consecutive quarter of strong growth. Despite a modest decline in year-to-date tenant sales, demand for space has remained robust, with leasing volumes outpacing the same period in the previous year.
Macerich expects its 2023 FFO per share, excluding certain expenses, to range from $1.77 to $1.83, with a midpoint of $1.80. This guidance is in line with expectations, as the consensus estimate stands at $1.78.
The stock price of Macerich (MAC) rose 0.4% in premarket trading following the earnings announcement.
The company also highlighted accrued default interest expenses associated with specific properties. Notably, Macerich accrues these amounts according to GAAP requirements, although they are not expected to be paid and are likely to be reversed in the future once loan modifications or transfers are made.
In terms of financial performance, Macerich reported Q3 FFO per share of $0.44, matching the average analyst estimate. This figure represents an increase from $0.40 in Q2 but a decrease from $0.46 in Q3 2022. The company’s revenue for the quarter amounted to $218.2 million, surpassing the consensus estimate of $213.5 million. This revenue is up from $212.4 million in the previous quarter and $210.7 million in the same period last year.
Total expenses rose slightly to $231.7 million in Q3, compared to $229.7 million in the previous quarter. However, this figure declined from $232.1 million in the year-ago period.
Furthermore, Macerich reported a 4.8% year-over-year increase in same-center net operating income, excluding lease termination income, for Q3. Although this growth rate is slightly lower than the 5.6% increase seen in Q2, it demonstrates the company’s continued positive performance.
As of September 30, 2023, Macerich’s portfolio occupancy reached 93.4%, up from 92.6% at the end of June. Additionally, re-leasing spreads for the 12 months ended September 30 exceeded the expiring base rent by 10.6%, a slight decrease from the 11.3% recorded for the 12 months ended June 30. On a comparable-center basis, Macerich signed leases for 10% more square footage year-to-date, compared to the same period in 2022.
The market is eagerly awaiting the conference call scheduled for 1:00 PM ET, where Macerich’s executives will provide further insights into the company’s performance and strategies.