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Macerich Hopes Openings Boost Stock

The Macerich Co. has had some good news in the market as of late.

Shares of the Santa Monica-based real estate investment trust closed at $16.75 on Jan. 29, a 52-week high. They have fallen slightly since then. 

In that same period, the stock gained about 25 percent in value between Jan. 31 of last year, when it closed at $12.92, and Jan. 30, when shares ended trading at $16.12.

On Jan. 3, the day it announced the sale of a former mall property it owned in a joint venture with Hudson Pacific Properties Inc. for $700 million to the University of California Los Angeles, Macerich shares closed at $14.89, a decrease of just more than 4%. Shares had closed at $15.55 on the previous day. 

The share price closed at $15.81 on Feb. 1.

The company reported on Oct. 31 a net loss of $263 million (-$1.22 a share) for the quarter ending Sept. 30, compared to a net loss of $15.2 million (-7 cents) in the same period of the previous year. Revenue increased by almost 4% from the third quarter of the prior year to $218 million. Macerich will report its fourth-quarter earnings on Feb. 7.

Macerich currently owns 47 million square feet of real estate consisting primarily of interests in 44 regional town centers. Its portfolio is concentrated in California, the Pacific Northwest, Phoenix/Scottsdale, and the Metro New York to Washington, D.C., corridor. 

Tom O’Hern, the company’s chief executive, said during a conference call with analysts on Oct. 31 that the occupancy rate of its properties was at 93.4%, or close to the 94 percent of the pre-Covid era. 

“We continue to see real strength in the leasing environment,” O’Hern said. “On the heels of a very strong leasing result in 2022, the 2023 leasing environment has been robust. Store openings are accelerating.”

The company opened 500,000 square feet more of space than it had in the third quarter of the previous year, he added.

Doug Healey, senior executive vice president of leasing at Macerich, said during the call that the company in the third quarter had signed 206 leases for 766,000 square feet.

“In the third quarter, we opened 740,000 square feet of new stores, which is three times the square footage we opened in the third quarter of 2022,” Healy said. “This brings our year-to-date total store openings to just over 1.2 million square feet, which is about 80% more square footage than we opened during the same period in 2022.”

Store openings included jewelry retailer Pandora at The Oaks, in Thousand Oaks; Scheels All Sports at Chandler Fashion Center, in Chandler, Arizona; Life Time Fitness at Broadway Plaza, in Walnut Creek; and Target at Kings Plaza, in Brooklyn, New York.

At the end of the third quarter, Macerich had 151 signed leases for about 2 million square feet of new stores that it expected to open in the remainder of last year, this year and into early next year, Healey said. 

Jeffrey Spector, an analyst with Banc of America Securities-Merrill Lynch Research in New York, asked during the call about the 2 million square feet in the pipeline and how it compares versus last quarter and to previous quarters. 

“Like how does that 2 million stack up?” Spector asked. 

O’Hern answered that the company had quite a few openings in the third quarter. 

 “So that was an unusually large quarter, I would say … in terms of that pipeline opening,” O’Hern added. “I would think that of the 2 million square feet we’ve got, probably 75% of that will open in (this year), with maybe 10% in the fourth quarter (of last year) here and another 15% carrying over into 2025.”

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