MAC

Business Context and Reporting Period

Company: The Macerich Company (MAC)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal Year Ended December 31, 2025
Business Overview: A self-administered REIT owning, developing, and managing regional and community shopping centers. As of December 31, 2025, the portfolio consisted of 38 centers (37 regional, 1 community/power) totaling approximately 39 million square feet of Gross Leasable Area (GLA). The company operates under a "Path Forward Plan" focused on deleveraging, portfolio optimization, and operational efficiency.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 11.8% to $1.014 billion, driven by the consolidation of joint venture properties (JV Transition Centers) and the acquisition of Crabtree Mall, offset by dispositions.
• Net Loss: GAAP net loss increased slightly to $197.1 million, primarily due to $147.4 million in impairment charges related to reduced holding periods for certain properties (including Santa Monica Place, Valley Mall, and South Park Mall).
• FFO Improvement: FFO attributable to common stockholders increased 8.7% to $397.0 million, reflecting operational improvements and the impact of asset sales.
• Portfolio Activity:
  • Acquisitions: Acquired Crabtree Mall (Raleigh, NC) for $290.0 million in June 2025.
  • Dispositions: Sold Lakewood Center (CA) for $332.1 million (gain of $21.1 million), Atlas Park (NY) JV interest (gain of $12.0 million), and various outparcels. Total proceeds from land parcel sales were $20.1 million.
• Debt Management: Refinanced Washington Square with a $340.0 million loan and extended the South Plains Mall loan maturity to 2029. The revolving credit facility was fully repaid during the year.

Guidance, Outlook, and Risks

• Path Forward Plan: Management aims to reduce the Net Debt to Adjusted EBITDA leverage ratio over the next two to three years through asset dispositions, organic EBITDA growth, and selective equity issuances. The company has identified a "Go-Forward Portfolio" of core assets.
• Outlook: The company expects to generate positive cash flow after recurring operating capital expenditures and dividends in 2026. Traffic levels were flat in 2025, but comparable tenant sales increased 1.2%.
• Dividends: Maintained a quarterly dividend of $0.17 per share. The Q1 2026 dividend was announced on February 12, 2026.
• Key Risks:
  • Debt Defaults: The $300 million loan on Santa Monica Place remains in default (receiver appointed). The $76.5 million loan (pro rata) on Twenty Ninth Street went into default in February 2026, with negotiations ongoing.
  • Interest Rates: Elevated interest rates continue to impact borrowing costs and refinancing terms.
  • Tenant Bankruptcies: Bankruptcies of major tenants (Forever 21, Claire's, Saks Global) impact occupancy and revenue, though the pace is lower than 2021 levels.
  • Impairments: Continued risk of impairment charges if holding periods for distressed assets are shortened further.

Investor Verification Checklist

• Debt Covenant Compliance: Verify the status of negotiations for the defaulted loans at Santa Monica Place and Twenty Ninth Street and their impact on liquidity.
• Impairment Assumptions: Review the discounted cash flow assumptions (cap rates, discount rates) used for the $147.4 million impairment charge to assess future valuation risks.
• Go-Forward Portfolio Performance: Analyze the specific NOI growth and occupancy trends of the identified "Go-Forward Portfolio" centers versus the disposed assets.
• Refinancing Pipeline: Confirm the company's ability to refinance remaining maturing debt in the current interest rate environment without significant cost increases.
• Equity Issuance: Monitor the utilization of the $374.1 million remaining under the 2024 ATM program and its dilutive impact on FFO per share.