Is it Wise to Retain Macerich Stock in Your Portfolio Now?

Macerich (MAC) is focusing on premium malls and omnichannel strategies to drive growth, supported by divesting non-core assets, with expected 2025 capital expenditures of $250-$300 million for development and redevelopment. However, increasing e-commerce adoption and recent tenant bankruptcies, including Forever 21 and Express, pose challenges, while a leveraged balance sheet with $6.80 billion in debt and a net debt to adjusted EBITDA ratio of 7.95x, raises concerns about financial flexibility.

Analysis

Macerich (MAC) is navigating a challenging retail environment by focusing its portfolio on premium shopping centers in vibrant U.S. markets and enhancing asset quality through omnichannel strategies and mixed-use redevelopments, with planned capital expenditures of $250-$300 million for 2025. The company is actively engaged in a capital recycling program, evidenced by recent sales such as SouthPark for $11 million and Wilton Mall for $25 million, aiming to fund higher-growth projects and reduce leverage. Despite these strategic efforts, MAC faces significant headwinds from the persistent growth of e-commerce and a notable increase in tenant bankruptcies, including Forever 21 in Q1 2025 and 13 filings in 2024 impacting 54 leases. A primary concern is Macerich's substantial leverage, with total pro-rata debt at approximately $6.80 billion and a net debt to adjusted EBITDA ratio of 7.95x as of March 31, 2025, which limits financial flexibility. This challenging operational and financial backdrop is reflected in the stock's 4.2% decline over the past three months, underperforming the industry's 2.4% growth, and aligns with its Zacks Rank #3 (Hold) classification and overall mixed-to-cautious market sentiment.

Key Decisions for Investors

• Investors should maintain a cautious stance on MAC, reflecting the current Zacks Rank #3 (Hold), its substantial leverage of $6.80 billion, and ongoing risks from tenant bankruptcies and e-commerce competition.
• Closely monitor Macerich's progress on its deleveraging efforts, the execution and impact of its $250-$300 million development and redevelopment plan for 2025, and stabilization of tenant occupancy rates before considering new or increased positions.
• Given MAC's recent share price decline of 4.2% against industry growth and the highlighted operational and financial challenges, investors may wish to evaluate comparably better-ranked REITs in the sector, such as EPR Properties and W.P. Carey, which have seen positive FFO per share estimate revisions.