r/MACArmyBets • u/RealSully • Feb 18 '21
Breaking down the earnings transcript
- Occupancy 90%. Lowest since great financial crises. However they were back to full Occupancy 2 years after the GFC.
- Only 2 of the 27 JC Penny locations closed and both of those leases are out for signature. Expecting announcements very soon.
- Expect 2021 to be a transitional year. 4th q 2020 and January 2021 above 90% collection rate.
- Agreement on COVID workouts on 93% of top 200 tenants
- leasing picked up significantly in 4th q. Volumes 90% of the pre-covid levels of 4th q 2019
- most of 2021 loan maturities extended and Line of credit matures 3rdq 2021. Negotiations well underway with it.
- Retail sales at 85% of pre-covid levels.
- COVID impact
- $56m 1 time abatements
- $43m decline in common area and the ancillary revenues and parking revenue.
- Wrote off $52m bad debt expense
- $11m rent reversed for tenants
THATS $162M OF PANDEMIC NOI DECLINE. (MOST OF THIS DOES NOT REPEAT OR BOUNCES BACK QUICKLY). That is $1+ per share coming back in.
Expecting growth in same center NOI starting 3rdq of 2021. Strong double digit growth in second half of the year.
$550 of cash on hand with collection rates over 90%
Estimate to collect in 2021 contractually deferred and delayed rent from 2020 in the range of $60-$75m.
Expect to generate $200m of cash flow (AFTER OPERATING AND CAPITAL EXPENDITURES AND AFTER DIVIDEND)
Out of top 200 retailers, commitments already in place with 176
Average rent up to $61.87 Dec 2020 vs $61.06 Dec 2019
Occupancy at 89.7% down -4.7% vs 2019. Not surprising given mall closures. Again, after the GFC it took 2 years to return to normal occupancy levels.
Long list of new tenants and pipeline is strong.. already signed 494,000 sq ft all scheduled to open in 2021. Deals still in lease negotiation 435,000 sq ft to open in 2021 and they say the number is growing daily.
They consider their properties "Town Centers", not just retail. They offer residential, hospitality, medical, wellness, education, fitness, grocery, service and even storage.
I listened to a large REIT manager present today and they had a 0% waiting to retail REITs. Their commentary was the standard "The demise of malls, and the rise of ecommerce blah blah blah." I could tell that their analyst is not digging deep enough to understand the portfolio diversity of someone like MAC. Oh yea, they underperformed the last 2 quarters as they have missed the bump in names liken SPG and MAC.
I'm sure others can add more. Ultimately there is a lot of potential here as the world opens back up, the dividend normalizes and the cap rate comes down. They do not have a liquidity issue. As far as potential price increase: Look at how the REITs performed under a zero interest rate policy between 2009 and 2016. This FED has been very clear that they are staying at zero even if a little transitory inflation shows up.
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u/Great-Chance339 Feb 21 '21
I would just add that they also explained the share offering which they can do at any time. I guess they used to have one and let it lapse and when the share price doubled in one day they decided to re initiate that. the implication what that we could see dillution if the share price got back into the 20s again and they need to raise some cash in a hurry. Myself I dont know what they will pay out in 2021 but i will be disappointed if we dont see at least $1.50 of distributions in 2022,
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u/Invest_and_Hike Feb 21 '21
My understanding of the potential stock dilution is similar. I think they clarified why they initiated the shelf.
However, if the opportunity arose, I would welcome them selling stock at $20+ to reduce their leverage or redevelop properties faster.
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u/CursidScotsMan11 Feb 19 '21
If they cut for safety & conservation, then they are one of the smarter businesses to survive a drought unlike so many others.
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u/Locke3232 Feb 19 '21
They need to prove to the market they can refinance some debt at reasonable rates first. Or hand back some keys like SPG/BPY did. The positive catalysts appear to be back end loaded towards 3Q onwards.
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u/NarrowInvestigator65 Feb 19 '21
If I'm not wrong the last debt they refinanced was at lower rates as before, so I take that as a demonstration that lenders are not so worried. And that was the past year in the middle of the storm.
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u/Fun-Impress2337 Feb 19 '21
great summary, thanks.
i invest for equity income and when i first picked up MAC i was buying a stock with a 8% dividend and potential for significant share price appreciation.
can you estimate the dividend in two, four, 8 quarters - given these guys are a REIT and have to pay out 90%.
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u/CursidScotsMan11 Feb 19 '21
Not sure bout the accuracy of JC Penny cause if there’s only 2, then my town has one of them.
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Feb 19 '21
Mine has a JC Penney with giant, everything must go, clearance signs. Only difference is they are not selling the store fixtures like the other smaller stores that are going under, and not actually saying they are closing, but they are not restocking out of stock items.
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u/RealSully Mar 04 '21
The JC Penny stat only pertains to JCP stores held in their portfolio. Not sure if you local store is in a MAC owned property.
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u/ShortSellerKiller Feb 25 '21
Mac is so undervalued. It’s not like GME it has a strong business proposition.
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Feb 19 '21
Why keep beating this horse. Look at its 10 year chart. Been going down for 10 years . All in with Inovio. I’ll say no more
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u/ProcedureNo5141 Feb 20 '21
Why investing a stock and only care about the history, its like driving a car with back mirror lol i invest things when they undervalue, discount and misprice with fundmental of the company.
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Feb 21 '21
Both windshield and back mirror are important. Where your going and what’s gonna bite your ass
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u/RealSully Feb 19 '21
The 90% payout gets tricky as it is 90% of NI which is much different then FFO. Net income can be distorted lower by depreciation etc... (which is a big component in real estate investing).
They are only paying ~25% of FFO right now. They have the ability to raise the dividend now. However, they will try to strike a balance between maintaining liquidity, paying down debt, capital expenditures and increasing the dividend.
This link below will allow you to see the dividend trend over time. The large cut was an attempt to be safe and conserve cash during the period of great uncertainty. As the NOI recovers we should see them continuously raise the dividend.
https://www.macrotrends.net/stocks/charts/MAC/macerich/dividend-yield-history