MAC - Mall REITs Keep Crushing Expectations
Early this week, U.S. mall giant Simon Property Group reported a strong earnings recovery for the second quarter of 2021. On Wednesday, its smaller rival Macerich (NYSE: MAC) joined in. Macerich's impressive second-quarter results should remove the last shreds of doubt about the mall industry's ability to bounce back from the COVID-19 pandemic.
In the first quarter, Macerich was still facing a fairly difficult year-over-year comparison. Additionally, the company booked $29 million of retroactive rent abatements for tenants that were unable to pay rent during the pandemic. As a result, adjusted FFO per share plunged 44% year over year on a 29% drop in same-center net operating income (excluding lease termination income).
By contrast, retroactive rent abatements decreased to $15 million in Q2 -- and just $5 million, net of bad debt reversals recorded last quarter. Meanwhile, Macerich boosted its occupancy rate by nearly 1 percentage point during the quarter, from 88.5% to 89.4%. It also booked gains on non-core land sales and some of its venture-capital investments in emerging retailers.
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Mall REITs Keep Crushing Expectations