Macerich Sees Higher Retail Sales Than Pre-Covid Levels

After navigating almost two full years battling the impact of COVID, The Macerich Co.’s Q3 numbers were “outstanding” thanks to retailer demand. That is according to CEO Tom O’Hern, on the REIT’s Q3 earnings call. O’Hern noted that shoppers have come roaring back as US consumers are continuing to shop with a purpose. 

“We see a higher capture rate than pre-COVID,” he said, adding that sales are exceeding pre-COVID levels with double-digit gains in the past two quarters compared to 2019. And that momentum, he said, is carrying into the fourth quarter. “Retailer demand is at a level we have not seen since 2015.”

He also expects traffic to continue to increase. “The current level is over 95% of the 2019 traffic levels,” he said. Some of the second quarter highlights include: on a sequential quarter basis, the REIT had occupancy gains of 90 basis points, and that’s on top of the 90 basis point gain it had in the second quarter. At quarter end, occupancy was at 90.3%.

“We have a ways to go there, but we’re making great progress,” O’Hern explained. “We saw robust leasing volumes for the quarter and year to date, both were in excess of 2019 levels.”

Year to date, the REIT has executed leases for over 3 million square feet of space, and that compares very favorable to full year 2019 level of 3.3 million square feet, and the full year 2015 level of 3.4 million square feet, he said. Once the REIT includes the fourth quarter, its full year 2021 leasing volumes will exceed not only 2019 but the prior high of 2015.

He also explained that the company saw same-center NOI growth of 21% in the quarter and expects the fourth quarter to continue with the double-digit growth they have seen in the past two quarters. “We’re obviously optimistic about the fourth quarter as we raised the FFO guided midpoint range to $1.96, a 3% increase on top of the increase in guidance last quarter. The depth and breadth of the leasing demand has us very optimistic about the future.”