Macerich's Q1 2025: Unpacking Contradictions in NOI Growth, Leasing Strategy, and Retailer Sentiment

Same Store NOI Growth and Strategy, Lease Renewal versus New Deal Spreads, Retailer Demand and Sales Growth, Tariffs and Retailer Sentiment, and Occupancy Growth Strategy are the key contradictions discussed in The Macerich Company's latest 2025Q1 earnings call.



Leasing and Financial Progress:
- Macerich is ahead of schedule on leasing efforts, with 2.6 million square feet of leases signed in Q1 2025, more than double the leases signed in the same quarter a year ago.
- The company is on track to achieve a 50% new deal completion rate by mid-2025 and a 70% rate by year-end, contributing to their goal of $130 million in cumulative SNO potential.
- The progress is due to streamlined leasing operations and a focus on attracting new tenants to drive higher spreads and incremental revenue.

Disposition and Leverage Reduction:
- Macerich has completed $837 per square foot in disposition sales for Q1, with total sales since the start of the plan exceeding $1.1 billion.
- The company aims to reduce leverage to the low to mid-six times range over the next couple of years by completing asset sales and givebacks.
- These activities are part of the Macerich Path Forward Plan, which focuses on simplifying the business, improving operational performance, and reducing leverage.

Same Center NOI and Leasing Spreads:
- Same center NOI increased by 0.9% year-over-year excluding lease termination income, with leasing spreads at 10.9% for Q1 2025.
- Trailing 12-month leasing spreads showed 22% for new deals and 7% for renewals, marking the 14th consecutive quarter of positive spreads.
- The increase in NOI and spreads is attributed to strong leasing performance, with higher spreads on new deals driving growth.

Tariff Impact and Retailer Sentiment:
- Macerich reported minimal impact from tariffs on its leasing activities, with nearly all retailers honoring their existing leases and open-to-buys.
- The company attributes this to strong retailer sentiment and continued leasing activity, as evident in the significant increase in lease approvals and new store openings in the ELC.