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Macerich's Resurgence: Q1 2025 Earnings Signal a Turnaround in Retail REITs

Charles HayesMonday, May 12, 2025 2:48 pm ET
138min read

The retail sector has long been a battleground for real estate investors, but macerich (MAC) is proving that adaptive strategies and prime assets can turn the tide. In its Q1 2025 earnings report, the company demonstrated resilience through strategic leasing, experiential retail pivots, and a fortress balance sheet—signaling a critical inflection point for the retail REIT sector. Here’s why investors should act now to capitalize on this undervalued opportunity.

Occupancy Declines Are Temporary; Leasing Momentum Is Strong

Macerich’s Q1 occupancy rate dipped to 92.6%, down slightly from prior periods, but this drop is misleading. The decline stems from seasonal temporary tenants—holiday pop-ups and specialty retailers—rather than core tenant churn. Crucially, the company signed 2.6 million square feet of leases in Q1, a 156% surge year-over-year, driven by renewals and new experiential concepts.

The 10.9% rent premium on re-leasing—a record 14th consecutive quarter of positive spreads—confirms tenant demand remains robust. This outperforms peers like Simon Property Group (SPG), which reported only a 6.2% re-leasing spread in Q1. Macerich’s focus on high-margin experiential spaces (e.g., dining, entertainment, and wellness) is attracting tenants willing to pay more for prime foot traffic.

Ask Aime: "Should I invest in Macerich (MAC) based on its strong leasing momentum and resilient balance sheet?"

MAC, REG, SPG
Date
Occupancy Cost(USD)
2025 Q4--
2025 Q4--
2025 Q4--
Name
The MacerichMAC
Regency CentersREG
Simon Property GroupSPG

Same-Store NOI Growth and Portfolio Optimization Signal Stability

While occupancy dipped, Macerich’s Same Center NOI rose 0.9% year-over-year (excluding lease termination income), a testament to its ability to navigate challenges. The company is aggressively shedding underperforming assets: the sale of Wilton Mall and SouthPark Mall in Q1 reduced exposure to weaker markets, freeing capital for high-potential locations.

Ask Aime: Invest in MAC stock for retail REIT sector's turnaround

Macerich’s portfolio of 30 premium regional malls—including properties like Century City (Los Angeles) and Cherry Creek (Denver)—are anchors in thriving urban cores. These assets are proving more resilient than secondary malls, as consumers prioritize convenience and experiential retail.

Balance Sheet Strength Supports Dividend Sustainability

Despite macroeconomic pressures, Macerich’s liquidity remains solid. Its $340 million refinancing of Washington Square Mall at a 4.5% interest rate extended debt maturities, reducing near-term refinancing risk. With a debt-to-EBITDA ratio of 6.5x—well below the 8.0x threshold for investment-grade stability—the company can weather volatility while peers face liquidity strains.

Investors can also rest assured that the $0.33 per share FFO and $0.12 quarterly dividend (a 1.6% yield) are secure. Unlike mall REITs with high leverage, Macerich’s conservative capital structure ensures dividend sustainability even in a downturn.

MAC Dividend Yield (TTM)

Why MAC Is Poised to Outperform

Macerich’s strategy is laser-focused on three growth levers:
1. Experiential Retail: Renovating malls to include dining, entertainment, and outdoor spaces to boost foot traffic and tenant retention.
2. Prime Locations: 85% of its malls are in top-tier markets with strong demographics, shielding them from e-commerce displacement.
3. Tenant Mix Diversification: Reducing reliance on traditional retailers by attracting service-based and lifestyle brands (e.g., fitness studios, restaurants).

These moves are already paying off. While the sector’s occupancy dropped 1.2% year-over-year in Q1, Macerich’s 10.9% rent growth outpaces peers, and its lease term of 8.2 years ensures long-term stability.

Investor Call to Action: Buy MAC Before the Turnaround Goes Mainstream

Macerich trades at a 24% discount to its 5-year average P/FFO multiple, despite improving fundamentals. With occupancy set to rebound as seasonal leases end, Same Center NOI poised to accelerate, and a dividend that’s rock-solid, this is a rare value play in a recovering sector.

The retail REIT sector is on the cusp of a rebound, and MAC’s combination of prime assets, disciplined capital allocation, and tenant-friendly innovation positions it to lead the charge. Investors who act now can secure a 15–20% upside within 12–18 months as the market recognizes this turnaround.

MAC, SPXC Closing Price

In a retail landscape still healing from pandemic scars, Macerich has turned challenges into opportunities. Its Q1 results are a clear signal: this is a company—and an investment—built to thrive in the next phase of recovery.

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greenpride32
05/12
Occupancy might be down, but that 10.9% rent premium is a game-changer. Tenants are willing to pay more for prime spots. Solid strategy by MAC.
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Avtomati1k
05/12
@greenpride32 Solid move by MAC, but watch how long that premium holds.
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Historyissuper
05/12
Same Center NOI up 0.9% YoY? That's resilience, folks. Portfolio optimization is key. MAC's got the game plan.
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Witty-Performance-23
05/12
Retail sector's occupancy drop 1.2% YoY? Temporary blip. MAC's lease term at 8.2 years signals long-term stability. 📈
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charon-the-boatman
05/12
Prime locations, strong fundamentals, undervalued AF. 🚀
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Very_Guilty_Lawyer
05/12
Prime locations, focused strategy. 85% in top-tier markets. MAC's got the demographics working for them.
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LoinsSinOfPride
05/12
Occupancy dip? Temporary pop-up issue. Leasing momentum strong. 10.9% rent premium is beast mode activated.
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Lurking_In_A_Cape
05/12
Yield's low, but dividend's solid. Hold or fold?
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Corpulos
05/12
Diversifying tenant mix is smart AF. Less dependence on traditional retailers means more stability.
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bnabin51
05/12
I'm holding MAC long-term. Diversified portfolio, strong balance sheet, and that dividend keeps me invested. Not just a stock, it's a plan.
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GazBB
05/12
MAC's dividend yield at 1.6%? Secure and sustainable. Not like those high-leverage mall REITs struggling to pay out.
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bottomline77
05/12
$MAC's got the retail therapy right. Experiential, tenant mix shift is the future. I'm holding long-term, no sweat.
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Luka77GOATic
05/12
@bottomline77 How long you planning to hold $MAC? Curious if you're thinking years or just riding the uptrend.
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Traditional-Jump6145
05/12
MAC's experiential push is a game-changer, peeps.
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ReindeerApart5536
05/12
@Traditional-Jump6145 Eh, just another retail gimmick.
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Mehmetemizel
05/12
@Traditional-Jump6145 MAC's experiential push is lit.
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Holiday_Context5033
05/12
MAC's experiential push is 🔥. Diversifying with service brands is smart. Watch them ride the retail wave.
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mattko
05/12
Refinancing at 4.5%? Smart move to extend maturities. Liquidity looks good. Investors, take note.
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pais_tropical
05/12
MAC vs. SPG: 10.9% vs. 6.2% re-leasing spread? Easy choice for tenant preference. MAC's winning the race.
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Critical-Peace-8319
05/12
@pais_tropical SPG's spread is weak; MAC's strength shines.
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