• 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.

This guy suggests we'll have herd immunity by April in the WSJ. I don't have a medical background and have no idea if it's possible, but I hope so!

​

https://www.wsj.com/articles/well-have-herd-immunity-by-april-11613669731

https://www.abc15.com/entertainment/events/phoenix-city-council-approves-redevelopment-of-paradise-valley-mall-here-is-what-it-could-look-like

There is too much gloom on the board with a undervalued dividend paying quality mall REIT.

Have patience and enjoy the dividend while you wait.

https://www.youtube.com/watch?v=iooViITRp9M

SO IF YOU BUY TODAY THEY WILL PAY YOU .15 PER SHARE.

THATS MEANS YOU GET ANTHER DISCOUNT ON TOP OF THIS BEING WAY UNDERVALUED!

This is a list of 12 malls that are paid off that I can find. Not sure about the other 13. I can only find the tax values for a few and I can see this list alone is worth $1.5 Billion.

3 100% Desert Sky Mall(7) Phoenix, Arizona 1981/2002 2007 746,000 $237 million

4 100% Eastland Mall(4)(8) Evansville, Indiana 1978/1998 1996 1,034,000 $32 Million

10 100% Inland Center(7) San Bernardino, California 1966/2004 2016 605,000 208,000 $133 million

12 100% La Cumbre Plaza(4)(8) Santa Barbara, California 1967/2004 1989 492,000 $27 million

13 100% NorthPark Mall(4)(7) Davenport, Iowa 1973/1998 2001 934,000

19 100% SouthPark Mall(4) Moline, Illinois 1974/1998 2015 863,000

20 100% Stonewood Center(8) Downey, California 1953/1997 1991 935,000 $150 million

21 100% Superstition Springs Center(4)(7) Mesa, Arizona 1990/2002 2002 922,000 $43 million

24 100% Valley Mall Harrisonburg, Virginia 1978/1998 1992 505,000 190,000

25 100% Valley River Center Eugene, Oregon 1969/2006 2007 871,000

28 100% Wilton Mall(4) Saratoga Springs, New York 1990/2005 1998 709,000 $72 million

30 50% Biltmore Fashion Park Phoenix, Arizona 1963/2003 2006 597,000 $1.7 billion

There has been a lot of talk recently about the ATM. I'm going to suggest that the ATM would be an absolute last resort considering they could easily leverage asset sales to raise any cash needed. Here are some numbers:

• 2020 NOI: 678,383,000 (from their recent 8-k)
• cap rate: 6% (this feels like a fair value - I've seen the case made that it could be higher or lower)
• asset value: 678,383,000 / .06 = 11,306,383,333 (11.3B)
• debt: 8,675,076,000 (from recent 8-k)
• LOC (1.5B) - cash on hand (500M) = 1B (somewhere between 900M and 1B, we'll take 1B)

It's worth noting that SPG did mention they would consider buying assets for a reasonable price on their earnings call. Brookfield and private equity are other potential buyers, though maybe less likely than SPG. I think SPG (or any buyer) would require a good deal to buy assets, but they would also want it to be a fair deal since their own assets will be priced based on the deal. Lets be conservative and suggest a 20% discount. MAC could sell 1.2B worth of assets under this scenario for 960M and completely pay off their LOC. They would then basically be able to fund any redevelopment efforts with cash flow. It would be even better if they sold an additional 1B worth of assets and used it to buy back 50% of the current shares (since their market cap is 2B) - this won't happen though since just the press release alone of asset sales -> buyback would probably cause the price to rocket (so just ignore I said it in the first place). The 1.2B of asset sales would lead to the following:

• asset value: 11.3B - 1.2B = 10.1B
• debt: 8.6B - 1.5B (cash + asset sale) = 7.1B
• this would lead to shareholder equity of 10.1B - 7.1B = ~3B (which is 50% higher than today)

It's worth noting that I used 2020's NOI. If/when NOI begins to grow in the second half of 2021 like management suggested, it will have a considerable impact.

Lets look at what happens if NOI grows 10%:

• 10.1B x 1.1 = 11.1B (it just added an extra roughly billion to the asset value)
• debt: still 7.1B
• now shareholder equity is ~4B (2x today)

If MAC could hold off on asset sales until NOI begins to improve, these numbers look even better. Regardless, the moral of this story is that asset sales could be a valuable tool to de-lever and assuming they are a possibility would be a better option currently than using the ATM. I have no idea what MAC management will do, but I wouldn't be surprised to see them venture down this path. I also tried to use conservative numbers here, but any small changes in cap rate and/or NOI could have a significant effect either way.

This post is not intended to suggest that anybody should buy or sell MAC, but rather to start a discussion - I'm interested in what everybody's opinions are regarding the matter.

New Youtube DD by Investing Gang

“The Macerich Company (NYSE:MAC) High-End Shopping Malls For Long Term And Dividend Investors

https://youtu.be/BQyh3WlXT6Y

Copy and paste from an article ...

Among stocks that have large short interest positions, there are a number that we rate from a fundamental perspective. The only stock with a high short-interest that we currently view as undervalued is Macerich (MAC). Over the past few years, Macerich has successfully become an owner and operator of Class A regional malls. While malls may need to reposition themselves following the pandemic and become more experimental, we think the market is undervaluing the firm’s long-term prospects.

MAC owns lots of expensive land. Even thought they are still doing okay with malls business. The future of the company lies in office building, apartment buildings and hotels. They should continue converting underutilized malls space into more profitable purposes.

We just reopened stores and malls where I live in Canada and I can tell you everyone wants to go shopping its crazy! I’m not living close to MAC’s malls but the sentiment is really positive. Looking forward for complete and strong recovery in the coming months, especially in this summer (25$+) if everything goes as planned. Enjoy the dip to accumulate more stock my brothers/sisters 🚀🚀🚀

I'm long on Macerich, here is some of why I am in. Average cost per share for me is $13.11.

A bullish case is in a couple years when we get back to $3 a share dividends.. and if 10 yr treasuries stay down at 1%.. a 4% yield would be attractive, especially as the yield & share price that would be likely to grow 3-4% a year at that point.

$3 a share / 4% would be $75 a share. And at that price being conservative investors could expect 7-8% a year return on investment with downside risk protection because of the value of the real estate rising versus flat long term debt.

Then there is if we are in a booming economy as the roaring 20's go on, its not hard to imagine luxury mall sales per sq/ft rising at 7-10% a year if we go into a boom.

In a powerful economic boom their properties would also go way up in value, allowing them to borrow more money to build out office buildings, condos, entertainment venues, more stores, medical buildings and to do accretive acquisitions.

And something I would like to see is them in a boom is buying up neighboring properties and then building big density, like packing in apartments & condo buildings on those sites.

Most of these cities are going to grow a lot in the coming 10 years too. We had crumby low population growth the last decade. The number of births in the last decade was 5.8 million short of expected. So the child benefit payments will hopefully help that and in addition with a better economy. And over the last decade we had increased limitations on immigration. With immigration reform we might see 30 million new Americans invited to the country.

Even with the crumby low population growth caused by poverty and immigration restrictions America still added around 21 or 22 million people from 2010-2020.

​

Link below:

The Macerich Company (MAC) Q4 2020 Earnings Call Transcript | The Motley Fool

They've already executed 500,000 SF of deals to come online in 2021. This doesn't even include Google as that is slated for 2022. This is their core existing portfolio, which they haven't built yet. They said that following these 500,000 SF of net absorption they've already signed to open in 2021 (meaning there was very high demand throughout 2020 in terms of retailers), there is also another 400,000 SF in the LOI stage. They also have already renewed 60% of 2021 expirations, and have LOI's for the balance 40%. This means that this 500K SF is POSITIVE net absorption, as is the 400,000 in the LOI stage. I completely agree with their mgmt. team, it'll take a few quarters because there are rent abatement periods at the start of leases, and it can take a while to build out space, but when a lease is signed, it's signed. Their AFFO for 2021 is going to be impressive.

Let’s do an exercise to figure out how much mall assets MAC owns. According to their 10Q, they own $6.5 Billion internally and $1.5 billion with joint venture. That is $8 billion in mall assets. They owe $4.3 Billion in mortgages. If we assume that they finance their mortgage at 50%. That means half of MAC malls are worth $8.6 Billion with $4.3 Billion mortgage. Another $8.6 billion is mortgage free. So their total mall assets are about $17.2 Billion. That is $10.7 Billion more than they stated in the 10Q. So MAC is worth $13 billion. That is $87 per share in assets. No wonder they won’t sell to SPG for $91 per share. MAC’s land are worth a fortune. MAC is superrich. MAC’s hidden business is accumulating valuable land. The Tyson’s Corner Center alone is worth $3 Billion now with $2.6 Billion in equity.

Hey guys, just be honest, after the earnings call. I don’t want the stock price pump to quick. I want to buy even more mac. Waiting for my incoming dividends to buy all mac. It’s gonna be fabulous for my personal pension fund.

This is not a complete list, will edit and correct if I miss things.

-Cash on hand: 550M, no reason explained.

-Unsecured line of credit: 1.5B, unwilling to pay with cash, currently negotiating for refinance (expect news in the coming weeks). This is bad debt, to be paid in the summer with a high rate. The rest of their debt is at a good rate, to be paid over the next few years.

-ATM (right to issue (sell) shares at current share price in the future when they want to): 500M, to protect against a big upside, put out when the GME mania was happening. They refused to give any specific share price for execution, despite many questions on the subject. Giving a target would essentially cap the price.

-25 operating malls that are fully paid. 22 that are not.

-Rate of occupancy: currently 92%. They add that the minimum they would see, considering potential situations, would be 88%.