Macerich Launches Path-Forward Plan
Macerich has announced its Path-Forward plan aimed at simplifying the business, enhancing operational performance, and reducing leverage under the leadership of new President and CEO Jack Hsieh. The plan focuses on three main strategies: deleveraging the capital structure to a low-to-mid 6x range over three to four years, investing in key portfolio assets, and consolidating selected joint venture assets. The company aims to deliver a clean FFO/share launch point of approximately $1.80/share. Improvements in internal processes and an offensive stance on acquisitions, reinvestment, and selected development are also part of the plan. Macerich will present its strategy at Nareit’s REITweek: 2024 Investor Conference in New York City on June 4, 2024.
- Simplification of the business structure under new leadership.
- Plan to reduce leverage to a low-to-mid 6x range over the next 3-4 years.
- Investment in and fortification of key portfolio assets.
- Proactive consolidation of selected joint venture assets.
- Aim to deliver clean FFO/share launch point of ~$1.80/share.
- Improvements in internal processes for better operational results.
- Offensive strategy on acquisitions, reinvestment, and selective development.
- Presentation at Nareit’s REITweek: 2024 Investor Conference could attract new investors.
- No specific financial metrics or timelines are provided for some initiatives.
- Potential risks associated with the consolidation of joint venture assets.
- The 3-4 year timeline to reduce leverage may be seen as lengthy by some investors.
- No immediate benefits or results; improvements are long-term.
- The offensive strategy may involve higher risk investments.
Insights
Macerich’s recently announced three-part strategy is an ambitious plan aimed at simplifying the business, improving operational performance and reducing leverage. The commitment to deleveraging the capital structure to a low-to-mid 6x range over the next three to four years represents a significant shift towards financial stability. This is important for attracting investors who prioritize lower-risk profiles. Furthermore, the target of a clean FFO/share launch point of approximately
The strategic focus on fortifying key assets and consolidating selected joint venture assets aligns with Macerich’s need to concentrate resources on their highest-performing properties. This can lead to more robust performance metrics and increased property values. The retail real estate sector has been under pressure with rising e-commerce trends, so focusing on 'fortress-like' assets that boast high market positions and customer visits could safeguard revenue streams. However, the success of this plan is contingent on the effective execution of process improvements and realignment efforts. Additionally, the intention to take an offensive stance on acquisitions and selective development suggests a proactive growth strategy, but it also entails risks related to market conditions and competition. Investors should consider how these operational shifts impact tenancy rates and overall sales production in Macerich's portfolio.
Three-Part Strategy Designed to Simplify the Business, Improve Operational Performance, and Reduce Leverage
SANTA MONICA, Calif., May 23, 2024 (GLOBE NEWSWIRE) -- Macerich (NYSE: MAC), one of the nation’s leading owners, operators, and developers of major retail properties in top markets, today published its detailed Path-Forward plan to simplify the business, improve operational performance and reduce leverage under the leadership of new President and Chief Executive Officer Jack Hsieh.
“I am excited to chart a new direction for Macerich and lead the company to elevated performance as we launch a simple, executable plan that forwards our mission to add long-term value for shareholders, partners, and customers,” said Hsieh. “I am very optimistic and confident about our company’s future as we undertake this well-crafted path forward.”
Macerich’s plan is designed to:
- Deleverage the capital structure to a low-to-mid 6x range over the next three to four years.
- Invest in and fortify key assets in the portfolio.
- Proactively consolidate selected joint venture assets that are core to the overall strategy.
- Deliver clean FFO/share launch point of ~
$1.80 /share over the next three to four years. - Improve various internal processes that are being evaluated and realigned to achieve outstanding operational results.
- Position the company to take an offensive stance on acquisitions, reinvestment, and selected development.
To view and download the full Macerich Path Forward plan, visit investing.macerich.com.
“As I shared on our Q1 2024 earnings call, Macerich is an outstanding company with many fortress-like assets in terms of their market position, annual customer visits, tenancy, and overall sales production. And, while we have proven operational processes, there is even more room for improvement,” Hsieh added. “By executing on this plan, we will concentrate our portfolio on our best properties, which are thriving centers, and we will have a substantially stronger balance sheet. All of this will position Macerich to be offensive on acquisitions, reinvestment, and selective development.”
Upcoming Investor Outreach
- Nareit’s REITweek: 2024 Investor Conference at the New York Hilton Midtown in New York City, June 4-5, 2024, including a company presentation on June 4, 2024, at 11:45 a.m. Eastern Time. Additional details about the presentation, including a live audio webcast, will be available to the public on the Investor Relations website, investing.macerich.com.
About Macerich
Macerich is a fully integrated, self-managed, self-administered real estate investment trust (REIT). As a leading owner, operator, and developer of high-quality retail real estate in densely populated and attractive U.S. markets, Macerich’s portfolio is concentrated in California, the Pacific Northwest, Phoenix/Scottsdale, and the Metro New York to Washington, D.C. corridor. Developing and managing properties that serve as community cornerstones, Macerich currently owns 47 million square feet of real estate consisting primarily of interests in 43 retail centers. Macerich is firmly dedicated to advancing environmental goals, social good and sound corporate governance. A recognized leader in sustainability, Macerich has achieved a #1 Global Real Estate Sustainability Benchmark (GRESB) ranking for the North American retail sector for nine consecutive years (2015-2023). For more information, please visit www.Macerich.com.
Macerich uses, and intends to continue to use, its Investor Relations website, which can be found at investing.macerich.com, as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Additional information about Macerich can be found through social media platforms such as LinkedIn. Reconciliations of non-GAAP financial measures, including NOI and FFO, to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8-K with the SEC, which are posted on the Investor Relations website at investing.macerich.com.
MAC-I
SOURCE: Macerich
INVESTOR RELATIONS CONTACT:
Samantha Greening Samantha.greening@macerich.com
FAQ
What is Macerich's Path-Forward plan?
What is the goal of Macerich's deleveraging strategy?
How much FFO/share does Macerich aim to deliver?
When will Macerich present its Path-Forward plan to investors?
What is Macerich's strategy for its key portfolio assets?
