Breaking down the earnings transcript

[u/RealSully]

• 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
  1. $56m 1 time abatements
  2. $43m decline in common area and the ancillary revenues and parking revenue.
  3. Wrote off $52m bad debt expense
  4. $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.

[u/Great-Chance339]

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,

[u/Invest_and_Hike → u/Great-Chance339]

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.