Quarterly earnings of Macerich fell short, yet revenue surpassed expectations, accompanied by a decrease in occupancy rate.
Macerich's Q2 Earnings Show Mixed Results Amidst Challenges
Macerich Company (NYSE:MAC), a prominent real estate investment trust, reported its Q2 2025 earnings, revealing a drop in adjusted Funds From Operations (FFO) per share despite an increase in revenue.
The company's Q2 adjusted FFO per share came in at $0.33, a decrease from the previous quarter's $0.39. This figure also fell short of the average analyst estimate of $0.34. The revenue for Q2, however, surpassed expectations, climbing to $249.8 million from $230.1 million in the same period last year.
The increase in revenue was primarily due to strong leasing revenue growth, with leasing revenues reaching $232.7 million, up from $198.0 million in Q2 2024.
However, several factors contributed to the decline in the adjusted FFO per share. Impairments and write-downs amounting to $10.5 million, linked to reduced holding periods for certain assets, negatively impacted earnings. Additionally, the Santa Monica Place loan is in default, with a court-appointed receiver managing the asset, expected to be disposed of under receiver control. This situation likely increased risk and valuation pressures.
Higher secured debt and leverage also played a role. Mortgage notes payable rose to $5.23 billion from $4.89 billion due to acquisitions and refinancing, increasing interest expenses and financial leverage.
Portfolio transactions and acquisitions, such as the acquisition of Crabtree Mall and the consolidation of joint venture interests, added to leasing revenues but also contributed to expenses due to associated transaction and financing costs.
Despite strong leasing revenue growth and improved liquidity, these one-time and structural costs offset operational income gains, resulting in a decline in adjusted FFO per share and an overall net loss that underperformed market expectations.
Furthermore, Macerich's occupancy slipped in Q2, adding to the challenges faced by the company.
In conclusion, Macerich's Q2 2025 earnings report shows a mixed picture, with revenue growth offset by various challenges, leading to a drop in adjusted FFO per share. The company continues to navigate these challenges, aiming to maintain growth and stability in the future.
Investing in Macerich Company's stocks might be questionable for some business-focused investors, given the drop in the adjusted Funds From Operations (FFO) per share despite an increase in revenue, as shown in the Q2 2025 earnings report.
The company's business strategy, which includes acquiring assets and securing debt, seems to have positively impacted leasing revenues but negatively affected the adjusted FFO per share, as seen in the Q2 earnings report.
