Balanced View on Macerich - Analyst Blog

On Mar 27, 2014, we issued an updated research report on retail real estate investment trust (REIT), The Macerich Company MAC.

On Feb 4, Macerich kept its winning streak alive by reporting impressive fourth-quarter results. The company's fourth-quarter 2013 adjusted funds from operations (AFFO) per share of 94 cents surpassed the Zacks Consensus Estimate by a penny and the year-ago figure by 4 cents. Escalation in revenues, overall portfolio occupancy and re-leasing spreads aided the quarterly results.

Going forward, we believe that the company's portfolio of high quality malls positioned across the thriving U.S. markets will boost its top line. Improving consumer confidence is expected to drive demand for retail goods and hence, Macerich that provides real estate support to the retail sector, is expected to benefit. Amid lower supply of new properties, steadily rising demand is shaping up as the sector's growth driver.

Apart from this, portfolio restructuring activities and its deal with the same-day delivery company, Deliv, bodes well. Yet, the company's geographic concentration of assets and anticipated rise in interest rates are the headwinds for this stock's growth going forward. Hence, we have a balanced view on this stock.

Over the last 30 days, the Zacks Consensus Estimate for FFO per share moved up a cent for both 2014 and 2015 and currently stands at $3.59 and $3.81, respectively. The stock now has a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Investors interested in the retail REIT industry may consider stocks like Federal Realty Investment Trust FRT, General Growth Properties, Inc GGP and Simon Property Group Inc. SPG. All these stocks have a Zacks Rank #2 (Buy).


Note:FFO, a widely used metric to gauge the performance of REITs, are obtained after adding depreciation, amortization and other non-cash expenses to net income.