On May 11 before the market opened, Macerich Co. (MAC, Financial) released its first-quarter 2021 results, which surpassed Wall Street's projections.
Key metrics
The Santa Monica, California-based real estate company posted a first quarter net loss of $63.6 million, translating to loss of 40 cents per diluted share. Adjusted earnings per share stood at 43 cents vs. the expected loss of 15 cents. Revenue of $190.4 million was down from $226.95 million in the prior-year quarter but beat analysts' projections by 0.60%.
Funds from operations (FFO), a metric that strips out building depreciation costs and makes other industry adjustments, dropped from the $0.81 per share reported a year ago to $0.45 per share this quarter. Analysts had expected the metric to be 46 cents per share.
The mall operator stated that the occupancy rate at its malls came in at 88.5% at the end of March. That compares with a 93.1% occupancy rate reported in the same quarter last year. To help make up for this, average rent per square foot rose roughly 1.6% to $63.47 at the end of March. CEO Tom O'Hern commented:
"We continued to make progress re-opening our properties and partnering with our tenants to prioritize the health and safety of employees, tenants, service providers and shoppers. Communities are responding positively to the return of our centers, with pent-up demand for the in-store retail experience driving steady traffic and increased customer conversion rates that are exceeding expectations."
Store details
The company had entered into various lease agreements during the first quarter for new retail stores amounting to about 700,000 million square feet (barring Covid workout deals). The company opened 102,000 square feet of new stores during the quarter, translating to potential annual revenue of $7.6 million.
The real estate investment trust is encouraged by the pipeline of new store openings for the remainder of 2021 and into 2022 and firmly believes that retailers will continue to prioritize store operations in highly productive town centers. Macerich has entered into various lease agreements for new retail stores and concepts amounting to about 1.6 million square feet, which would be opened in the second half of this year and in 2022.
Outlook
Macerich has provided guidance for 2021. The company anticipates the diluted loss per share to fall within the $0.35 to $0.55 range, which translates to funds from operations of $1.77 to $1.97 per share, adjusted for real estate depreciation and amortization.
Disclosure: I do not hold any positions in the stocks mentioned.
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
