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Macerich: U.S. Malls Are Not Dying

Sep. 20, 2023 5:24 AM ETThe Macerich Company (MAC)58 Comments
Pacifica Yield profile picture
Pacifica Yield


  • Macerich has fallen by 70% over the last 5 years on a total return basis on the back of a bearish thesis that is increasingly not playing out.
  • The REIT is comparatively undervalued, trading 45% lower than its peers on a price to trailing 12-month funds from operations basis.
  • Record leasing volumes and rising occupancy rates indicate a strong post-pandemic rebound and a revival of US malls.

Retail Sales Slip In February After A Strong Start To The Year

Scott Olson/Getty Images News

The malls are dead drum has been beaten so much over the last decade for good reason as the rise of other e-commerce and players like Amazon set up a new perpetual zeitgeist where spending

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Pacifica Yield profile picture
The equity market is an incredibly powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, and green energy firms. By Leo Imasuen

Analyst’s Disclosure: I/we have a beneficial long position in the shares of SPG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (58)


Thats pretty positive for the sector !
MillennialBull profile picture
@theMEtraders tried replying to your comment earlier today. Was going to say, “another wasted year.”
@MillennialBull unfortunately thanks god my other investments are all up 50-60% lol
@MillennialBull maybe not a lost year after all, yesterday's run might be just the beginning?

The numbers don't lie: traffic is up, sales are up, retailers are on waitlists to join our centers.

According to a recent market analysis from Coresight Research, many malls reported "robust occupancy levels and bigger crowds than before the pandemic". In fact, Coresight found "foot traffic in top-tier malls was up by 12% in 2022 compared to 2019, while traffic in lower-tier malls was up 10%".
MillennialBull profile picture
@theMEtraders hey man. Long time no see. Come back to ST. We miss your relevant posting 🤙🏼
@MillennialBull ha, I wish, ST blocked me after I re-activated my account and doesn't want to undo it :) :)
MillennialBull profile picture
@theMEtraders whaaa, they blocked you? Damn that sucks. Nice to see you here though!
"Luxury retailers are spending big on their U.S. real estate, more evidence of the staying power of in-person shopping.

French jeweler Van Cleef & Arpels is opening a new Manhattan location on Madison Avenue. Chanel recently reopened its Beverly Hills flagship after more than doubling its footprint to 30,000 square feet. Gucci is expanding throughout the U.S., and now counts eight Texas locations and a boutique in downtown Detroit."

scheels more then doubled mall traffic at chandler
@Badgers360 interesting, thanks for sharing.

Do we know anything what will happen next?
Robbadob profile picture
It appears that this was entirely voluntary on the part of MAC and SPG because the mortgage wasn't due for 3 years and the interest rate was fixed at 3.88%. I pulled that info from MAC's annual report.

If that is the case, then one can figure that they have "put" it to the bank for the amount owed. I don't know what the negotiations would be about unless they are interested in buying it back from the bank at a lower price, or perhaps will manage it for the bank until the bank can sell it.
"In early December, Camp will unveil its 10th location, opening a 10,730 sq.-ft. store at Tysons Corner Center, Tysons, Va., which is just outside of Washington, D.C. The center is operated by real estate developer Macerich"

Toys R Us is planning a brick-and-mortar comeback in the U.S., with up to 24 new flagship stores

"Macerich: Target in old Sears space at Kings Plaza will increase sales by 8x"

@theMEtraders very nice to see this kind of news. These old department store boxes were deemed to be the doom of MAC malls by many not so long ago.

It seems it might be the opposite and the opportunity to get the space back and re-tenanting it to something better creates quite appealing results.
@p3tteri loads of rent coming online in 2023-2024-2025 just look at their pipeline. It was discussed in the ER call.
OverTheHorizon profile picture

“There are superior business models’: Why department stores are losing sales”
Morningstar has fair value at $25. Patience is required but you get paid to wait. GLL.
@DividendLiving which makes perfect sense considering Price to FFO.
careful investor 1 profile picture
What's the negative? 4B+ of debt that has to be refinanced at much higher rates. 88million in FFO per qtr won't be enough to cover debts & dividends. They will have to suspend the dividend and most likely issue new shares to raise capital. This is heading to mid single digits. REITS in general are bad investments right now.
ckarabin profile picture
@careful investor 1 I see that more than half that debt carries an interest rate in the 4's or lower. No way they'll get those rates again anytime soon. In their favor: not much of it comes due in the next 2 years. So they have time to hope for a better mortgage market
@careful investor 1 they got 66 million annual new rent coming online in 2024 and 2025 from already contracted new leases and leasing is still showing record volumes.

This is heading to $20.
careful investor 1 profile picture
@p3tteri $20 is a pipe deam. They couldn't do it with interest at close zero. The debt is going to bite big.
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