Business context and reporting period
The Macerich Company is a self-managed REIT that owns, operates, leases, redevelops and develops U.S. shopping centers. This Form 10-K covers the fiscal year ended December 31, 2023—not a standalone fourth quarter. At year-end, the portfolio comprised interests in 43 regional town centers, three community/power centers and one redevelopment property, totaling approximately 46 million square feet of gross leasable area. Results include consolidated properties and the Company’s share of unconsolidated joint ventures where indicated.
Financial and operating performance
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $884.1 million | $859.2 million |
| Net loss attributable to the Company | $274.1 million | $66.1 million |
| Diluted loss per share | $1.28 | $0.31 |
| Net cash from operating activities | $295.5 million | $337.5 million |
| Cash and cash equivalents at year-end | $94.9 million | $100.3 million |
| Adjusted FFO attributable to common stockholders and unit holders, diluted | $403.0 million | $437.5 million |
Revenue increased 2.9%. Leasing revenue rose 1.1% to $809.0 million; other income increased to $44.9 million from $30.1 million. Shopping center and operating expenses edged down 0.5% to $288.4 million. Reported interest expense, net of interest income, was $172.9 million versus $216.9 million; the comparison was materially affected by fair-value changes in the financing arrangement. Cash interest paid, net of capitalized interest, was $191.5 million, compared with $180.3 million.
The Company reported a $156.9 million equity loss from unconsolidated joint ventures. Property write-downs and impairment losses drove a $134.5 million net loss on sale or write-down of assets. The filing does not present a single operating-margin measure as a headline metric.
Operating cash flow was $295.5 million. Investing activities provided $52.5 million, including $300.9 million in distributions from joint ventures, while financing activities used $338.9 million. Company-share capital expenditures and leasing costs were $309.2 million in total ($210.3 million for consolidated centers and $98.9 million for joint ventures).
Year-end GAAP liabilities included $4.14 billion of mortgage notes and $89.5 million of bank and other notes payable. The Company reports total loan indebtedness of $6.92 billion on a pro rata basis, including $2.85 billion of its share of unconsolidated joint-venture debt. It had $544.8 million of additional revolver availability under its $650 million facility, which matures February 1, 2027, with a one-year extension option. Restricted cash was $95.4 million and should not be treated as unrestricted liquidity.
Material changes versus the prior comparable period
- Net loss attributable to the Company widened by $208.0 million, primarily because of property and joint-venture impairments. The filing cites a $144.7 million impairment at Fashion Outlets of Niagara Falls, a $101.0 million Company-share impairment at Country Club Plaza, and $51.4 million of Company-share impairments at joint-venture transition properties.
- Adjusted FFO fell 7.9% to $403.0 million. Cash from operations declined by $42.0 million.
- Leased occupancy rose to 93.5% from 92.6%. For spaces under 10,000 square feet, comparable tenant sales declined 1.8%; sales per square foot were $836 versus $869.
- New and renewal leasing totaled 4.2 million square feet, up from 3.8 million in 2022. Average new and renewal rent of $61.00 per square foot exceeded $52.04 on expiring leases, a reported 17% releasing spread.
- Portfolio and financing changed through acquisitions of former Sears parcels and ownership interests at Freehold Raceway Mall and Fashion District Philadelphia, sales of two power centers and Towne Mall, and the joint-venture sale of One Westside. One Westside proceeds attributable to Macerich were $77.6 million and were used to reduce the revolver.
Outlook, commentary, risks and unusual items
- Management expects 2024 cash flow to be positive after recurring operating and leasing capital expenditures and dividends, excluding proceeds from asset sales, refinancings or equity issuance. It expects to use any surplus for development and redevelopment and, if available, debt reduction.
- Management estimates 2024 development, redevelopment, expansion and renovation spending of approximately $160 million to $180 million. Projects include Santa Monica Place, with estimated total cost of $35 million to $40 million and phased openings beginning in 2024, and Scottsdale Fashion Square, with estimated total cost of $80 million to $86 million and an anticipated 2024 opening.
- Management says inflation and elevated interest rates, or an economic slowdown or recession, could weigh on 2024 results and increase borrowing costs. It also identifies tenant failures and bankruptcies, leasing and occupancy, refinancing access, competition from online retail, property-value impairment, development execution, climate and natural-disaster exposure, insurance limits, cybersecurity and REIT qualification among material risks.
- Two significant non-recourse loans were in default at year-end: Fashion Outlets of Niagara Falls ($86.5 million) and the Country Club Plaza joint-venture loan ($295.2 million total; $147.6 million at Macerich’s share). The Company or joint venture was negotiating with the respective lender. The loan on Towne Mall was not repaid at maturity; a receiver sold the property in December 2023.
- Subsequent financing included a January 2024 $155 million Danbury Fair Mall refinancing at 6.39%, and repayment of most of Fashion District Philadelphia’s mortgage, leaving $8.2 million due April 21, 2024. The filing states that 2024 maturities were expected to be refinanced, restructured, extended or repaid, but outcomes are not assured.
- The Company declared dividends of $0.17 per share per quarter in 2023, or $0.68 for the year. The Board reviews dividends quarterly. Jackson Hsieh was announced as incoming CEO and President effective March 1, 2024, following the planned retirements of Thomas O’Hern and Edward Coppola.
- KPMG issued unqualified opinions on the financial statements and internal control over financial reporting. The audit identified impairment valuation and the fair value of the financing-arrangement obligation as critical audit matters. No material legal proceedings were reported.
Important facts for investors to verify
- Progress and final terms of negotiations on the Fashion Outlets of Niagara Falls and Country Club Plaza defaults, including potential lender remedies and any further impairment or cash impact.
- Execution of the refinancing and repayment plan for near-term maturities, and the availability and cost of additional financing in the higher-rate environment.
- Whether occupancy, tenant sales and leasing spreads remain resilient, particularly as 2024 leases expire and vacant anchor space is re-tenanted or redeveloped.
- Whether management’s forecast positive 2024 cash flow and capital-spending plans can be achieved while maintaining the dividend and reducing debt.
- Sensitivity of reported asset values and impairment charges to management’s holding-period, rent, discount-rate and capitalization-rate assumptions.