Macerich recently released its 10-K report, providing a comprehensive overview of its business operations. As a leading real estate investment trust (REIT), Macerich owns, operates, and develops high-quality retail real estate in densely populated and attractive U.S. markets, with a portfolio concentrated in California, the Pacific Northwest, Phoenix/Scottsdale, and the Metro New York to Washington, D.C. corridor. The company currently owns 45 million square feet of real estate, primarily consisting of interests in 41 retail centers. Macerich is also dedicated to advancing environmental goals, social good, and sound corporate governance, having achieved a #1 Global Real Estate Sustainability Benchmark (GRESB) ranking for the North American retail sector for ten consecutive years (2015-2024).
In its 10-K report, Macerich discussed its liquidity and capital resources in "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." The company highlighted that most of its leases at the centers have rent adjustments periodically throughout the lease term, either in fixed increments or based on the annual increase in the Consumer Price Index. Additionally, the routine expiration of leases for spaces 10,000 square feet and under each year allows the company to replace existing leases with new leases at higher base rents if the existing rents are below the market rate. Macerich also noted that inflation had a negative impact on its costs in 2024 and is expected to continue to have a negative impact in 2025.
The 10-K report also delved into the company’s critical accounting policies and estimates, such as acquisitions, asset impairment, and fair value of financial instruments. Macerich explained that the preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported amounts of revenues and expenses during the reporting period.
Furthermore, the report provided an analysis of the results of operations, including the performance of Same Centers, Redevelopment Properties, JV Transition Centers, and Disposition Properties. Macerich considers tenant annual sales, occupancy rates, and releasing spreads to be key performance indicators of its internal growth. The company reported that during the trailing twelve months ended December 31, 2024, comparable tenant sales for spaces less than 10,000 square feet across the portfolio decreased by 0.4% relative to the twelve months ended December 31, 2023. Additionally, the leased occupancy rate increased to 94.1% at December 31, 2024, representing a 0.6% increase from December 31, 2023.
Macerich also highlighted its leasing spreads, noting that it executed leases at an average rent of $67.74 for new and renewal leases, resulting in a releasing spread increase of $5.47 per square foot, or 8.8%, for the trailing twelve months ended December 31, 2024. This marked the company's thirteenth consecutive quarter of positive base rent leasing spreads. However, Macerich also noted that due to various factors, it cannot be certain of its ability to sign, renew, or replace leases expiring in 2025 or beyond, representing approximately 1.4 million square feet of the centers, accounting for 23.25% of the GLA of mall stores. The market has reacted to these announcements by moving the company's shares -2.3% to a price of $17.9. Check out the company's full 10-K submission here.
