MAC Macerich Co

Macerich Co. (MAC) reported second quarter 2011 FFO (fund from operations) of $66.7 million or 47 cents per share compared with $77.5 million or 57 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Adjusted FFO in the reported quarter stood at 72 cents per share, in line with the Zacks Consensus Estimate.

Total revenue during the quarter was $191 million versus $181 million in the year-ago period.

Overall portfolio occupancy at quarter-end was 92.3% versus 91.8% in the year-ago period. Mall tenant sales increased 9.1% during the reported quarter to $458 per square foot compared with $420 per square foot in the year-earlier period.

During the quarter, Macerich acquired the Fashion Outlets of Niagara Falls, spanning 526,000 square foot, with 96% occupancy and shop tenant sales of approximately $650 per square foot.

The company purchased a 33.3% ownership interest in Superstition Springs Mall and Arrowhead Towne Center in the Phoenix, which brings the ownership of both the assets up to 66.7%. The partnership interests were exchanged for six big-box anchor locations in Arizona, California, Illinois and Utah and $75 million in cash.

During the reported quarter, Macerich closed a loan worth $200 million on Los Cerritos Center. The loan carries an interest rate of 4.46% and a term of seven years. In addition, the company closed on a new $1.5 billion unsecured line of credit. The credit facility has a four-year term and can be extended by another year.

At quarter end, Macerich had cash and cash equivalents of $73.2 million. For full- year 2011, Macerich reiterated its earlier FFO guidance in the range of $2.84 to $2.94 per share.

 Macerich currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors Simon Property Group Inc. (SPG) also holds a Zacks #3 Rank.

 
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