Macerich’s Earnings Call Highlights Leasing Success and Strategic Progress

Macerich Company ((MAC)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Macerich Company painted a generally positive picture, highlighting significant progress in leasing and asset sales. The company is ahead of schedule on key operational targets, with financial results showing improvement. However, challenges such as a decline in occupancy and the impact of Forever 21’s bankruptcy were also noted.

Ahead of Schedule on Leasing Progress

Macerich has made impressive strides in its leasing efforts, signing 2.6 million square feet of leases in Q1 2025, which includes 2.3 million square feet of renewals. This figure is more than double the leases signed in Q1 2024, showcasing the company’s aggressive push to enhance its leasing portfolio.

Strong Leasing Metrics and New Deals

The company’s leasing speedometer reached 60% for new deal completion, with a robust pipeline of Letters of Intent (LOIs) aiming to hit 70% by the end of the year. The Signed Not Open (SNO) pipeline grew from $66 million to $80 million in just 90 days, indicating strong future leasing activity.

Financial Results and Progress on Path Forward Plan

Macerich reported Funds From Operations (FFO), excluding certain expenses, of $87 million in Q1 2025, up from $75 million in Q1 2024. Same center Net Operating Income (NOI), excluding lease termination income, increased by 0.9% year-over-year, reflecting steady financial growth.

Progress on Dispositions and Asset Sales

The company successfully closed the sale of Wilton Mall for $25 million and South Park for $11 million. Additionally, Macerich is under contract to sell Lakewood, with the transaction expected to close in the second half of 2025, further strengthening its financial position.

Redevelopment and Expansion of Green Acres

Macerich is breaking ground on a 370,000 square feet redevelopment project at Green Acres, with 50% of the project square footage already committed and another 17% in the LOI stage, demonstrating strong demand for this development.

Occupancy Decline

Occupancy rates in Q1 2025 fell to 92.6% from 94.1% in Q4 2024, primarily due to the decrease in temporary holiday stores and the transition of Fashion District Philadelphia, posing a challenge for the company’s occupancy metrics.

Forever 21 Bankruptcy Impact

The bankruptcy filing of Forever 21, the only filing year-to-date, affected a significant amount of square footage. However, the impact on rent was minimal, indicating resilience in Macerich’s leasing strategy.

Flat Same-Center Sales

Portfolio sales at the end of Q1 2025 were $837 per square foot, flat compared to Q4 2024. Excluding Eddy properties, sales were $928 per square foot, showing a minimal increase, which suggests stability in sales performance.

Increased Operating Expenses

Operating expenses rose in Q1 2025, but these were offset by higher leasing revenues, indicating effective cost management amidst rising expenses.

Forward-Looking Guidance

Macerich’s forward-looking guidance reflects significant progress in their path forward plan, particularly in leasing and financial metrics. The company surpassed its leasing target, achieving 2.6 million square feet, and aims to reach a $100 million SNO pipeline by year-end. Macerich is also focusing on deleveraging, with a goal to reduce net debt to EBITDA to the low to mid-six times range in the coming years. Strategic initiatives are on track to meet 2028 leverage and earnings goals, with key milestones anticipated by mid-2026.

In summary, Macerich’s earnings call underscored a positive sentiment, with substantial progress in leasing and asset sales. While challenges such as occupancy decline and the impact of Forever 21’s bankruptcy were acknowledged, the company’s strategic initiatives and financial improvements paint an optimistic picture for the future.