Tags: Macerich | REIT | retail | MAC

Macerich REIT Awaits Retail Rebound

By    |   Friday, 04 Nov 2011 12:05 PM

Real estate investment trust Macerich Company (MAC) has had a several-year run of declining income results offset by a rising share price. Closely tied to the retail market, this company needs retail shopping center sales to rebound from the current stagnant economy.

Macerich is a REIT which develops, buys, manages and leases shopping centers. The company revenues consist of rents from tenants, contracted percentage of retail sales of tenants, tenant recoveries — the tenant payments for common area maintenance — and management services. The company owns approximately 85 shopping centers located throughout the United States.

For a real estate investment trust, investors should keep an eye on quarterly funds from operations (FFO). This is the net income with depreciation and amortization added back in. The quarterly dividend from a REIT is paid out of the FFO.

In the second quarter of 2011, Macerich reported net loss of 15 cents per share with an adjusted FFO of 72 cents per share. The dividend payment for the quarter was 50 cents per share.

Starting to turn

In 2008, Macerich generated funds from operations of $5.50 per share. Since that peak, the year-over-year quarterly FFO numbers have been in a steady state of decline. Guidance for full year 2011 FFO is $2.84 to $2.92 per share.

In the second quarter, the company reported FFO of 47 cents per share, down from 57 cents a year earlier. However, excluding an impairment charge, the FFO for the quarter was 72 cents, an improvement over the second quarter of 2010.

On Nov. 1, MAC reported FFO of $104.2 million, or 73 cents per share for the third quarter, compared to 66 cents a year earlier. Adjusted FFO came to 75 cents per share. The dividend was increased by 10 percent to $2.20 per share.

It is interesting to note that while the profits of the company were steadily declining, Macerich’s share price has risen steadily from under $6, the level it dropped to at the bottom the of the 2009 bear market. Investors should be looking for a trend of increasing FFO and an increasing dividend to follow.

At the beginning of summer the analysts at Stifel Nicolaus reiterated their buy rating on MAC and increased the target price by $3 per share.

The company next reports on Jan. 31.

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Real estate investment trust Macerich Company (MAC) has had a several-year run of declining income results offset by a rising share price. Closely tied to the retail market, this company needs retail shopping center sales to rebound from the current stagnant...
Macerich,REIT,retail,MAC
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2011-05-04
Friday, 04 Nov 2011 12:05 PM
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