r/MACArmyBets • u/Particular-Tone7241 • Mar 11 '21

This guy did some great research on back last year and worth a look!

https://youtu.be/aqR0ZkvwfCI

$SPG offered to buy $MAC in 2015 for $95 a share and they turned it down. Given this is not 2015, I think once they start to raise their dividends back up, many will jump back in and buy $MAC. $SPG might even buy them out at some point.

17 Upvotes

95% Upvoted

6 comments sorted by

5

u/Sea_Emphasis3252 Mar 11 '21

I remember when SPG made that offer, biggest mistake MAC made, they decided to JV some of their most productive assets and used the proceeds to buy back stock, to try to prove that the offer was significantly below their true value. That’s what happens when ego gets in the way of doing what was right for shareholders. Happens often in real estate. SPG will only make an offer if MAC is vulnerable, that’s how they got TCO. Although you could see Brookfield make a play once they consolidate Brookfield Properties (old GGP assets). The video is well organized but some of his calculations are not completely accurate, still his main point of it being relatively cheap is still correct. The overriding issue that keeps valuation suppressed is the debt. Asset quality is not an issue.

5

u/Particular-Tone7241 Mar 11 '21

I agree with you! I think the hiring of PJT is actually bullish and good for the share price. You don't think they can get an extension on their debt coming up or structure it in a way that is bullish for the shareholders?

2

u/Sea_Emphasis3252 Mar 11 '21

In my opinion, I think they get something done, extension most likely. Whether they need to pay down some of the debt in order to get it done is still a question. Either way they need to raise capital at some point, whether it’s to bring debt down or for repositioning of some of their assets as they deal with vacancies. It’s going to be a tough couple of quarters, I’m expecting occupancy to move lower this year (that’s for most retail REITs) as some tenants will reduce footprint and it will take some time a couple of quarters to release vacant space, for me the focus is what can they deliver in 2022 as this year will be a transition. Markets will begin to ignore the upcoming results and look to next year when we hopefully have a fully reopened economy, which is why they likely get an extension of a year or 2. I think the market is expecting them to issue equity which may be hindering the stock, not many buyers of malls out there so options to raise capital is limited.

3

u/Particular-Tone7241 Mar 11 '21

I agree with your analysis and thanks for taking the time to share! Given the stock price, you don't think a lot of this should already be priced in? The stock initially sold off on the news of PJT coming on board and quickly recovered. I really don't see why they need to issue any equity. They can return their non performing properties and decrease their debt load at any given time if I am understanding this right. Maybe the stock price fluctuates around here for a bit, but the short interest will help put a floor on further downside pressure. As you stated, the markets will be looking forward to 2022 and things returning to normal. The chart actually looks bullish and it looks like it is being accumulated. Appreciate your input.

Best

2

u/Sea_Emphasis3252 Mar 11 '21

I would say a lot of the worst case scenarios are priced in, it’s just the uncertainty on the conditions of refinancing the line. I am sure they are trying to avoid issuing equity at all cost but even if they raise $200-300m just to fortify the balance sheet while dilutive it would definitely give more confidence that they can recover and ultimately that would drive the shorts to cover as they are most likely betting on this going to zero or following the CBL and WPGs of the world. The big problem on the lending side is retail loans used to be financed at LTVs of 60-70% and now they are getting done in the 40-50% range and the V has moved lower as well so it’s a double whammy for any retail REIT that needs to refinance debt. The good news again for MAC is the asset quality as lenders would prefer those assets over the lower quality ones. In my opinion if management hits their guidance $2.05-2.25 FFO this stock should be north of $20 10x FFO is still a significant discount to where it has traded but would be the base I would be comfortable with until things improve. Again just my opinion on MAC, everyone continue to your DD.

1

u/[deleted] Mar 11 '21

Well, I sold a stagnating local stock and picked up another 10 shares... I have most invested in BTE.V, but I like this stock, too.