Macerich's Strategic Turnaround and Improved Credit Profile: Deleveraging Unlocks Retail REIT Value

The retail real estate investment trust (REIT) sector has long grappled with the dual challenges of e-commerce disruption and shifting consumer behavior. Yet, Macerich (NYSE: MAC) stands out as a case study in strategic reinvention. Through aggressive deleveraging, operational restructuring, and a focus on high-potential assets, the company has begun to stabilize its balance sheet while laying the groundwork for renewed growth. For investors, the question is whether these efforts will translate into a sustainable recovery—or if the shadows of its $6.8 billion debt burdenMacerich Dividend: 90% Cash Flow Payout Amidst Debt and Default Concerns^[1] will continue to loom large.

A Path Forward: Deleveraging and Liquidity Gains

Macerich's “Path Forward Plan,” initiated in 2024, has prioritized reducing leverage and simplifying its portfolio. By Q1 2025, the company had boosted operating cash flow to $88 million, a 44% increase from $61 million in Q1 2024Macerich Dividend: 90% Cash Flow Payout Amidst Debt and Default Concerns^[1], while cash and equivalents surged to $253 million from $90 million at year-end 2024Macerich Dividend: 90% Cash Flow Payout Amidst Debt and Default Concerns^[1]. These gains, however, contrast sharply with its cash-to-debt ratio of 0.04:1Macerich Dividend: 90% Cash Flow Payout Amidst Debt and Default Concerns^[1], underscoring the urgency of its refinancing and asset-sale strategies.

The company has already executed $1.6 billion in debt repayments since early 20249 Analysts Have This To Say About Macerich^[3], including a $440 million equity offering to fund obligations. Notably, the acquisition of Crabtree Mall in Raleigh-Durham for $290 millionMacerich Reports Second Quarter 2025 Results^[2]—a property expected to drive future funds from operations (FFO) and net operating income (NOI) growth—demonstrates Macerich's focus on accretive, high-traffic assets. Such moves align with its target of a 5.2% compound annual growth rate in NOI for its core portfolioMacerich Reports Second Quarter 2025 Results^[2], a metric critical for attracting both tenants and capital.

Analyst Optimism vs. Credit Risks

While Macerich's financial engineering has drawn cautious optimism, its credit profile remains a double-edged sword. As of July 2025, analysts were split: Ladenburg Thalmann and Mizuho upgraded to “Buy” and “Outperform,” citing improved liquidity9 Analysts Have This To Say About Macerich^[3], while Goldman Sachs and others maintained “Sell” or “Sector Perform” ratings due to concerns over profitability and leverage9 Analysts Have This To Say About Macerich^[3]. The average 12-month price target of $17.609 Analysts Have This To Say About Macerich^[3] reflects this duality, down 10% from prior estimates as bearish sentiment intensified.

The company's deleveraging efforts have not yet translated into credit rating upgrades from S&P, Moody's, or Fitch9 Analysts Have This To Say About Macerich^[3], though its debt-to-equity ratio of 1.99—below industry averages9 Analysts Have This To Say About Macerich^[3]—suggests progress. However, profitability metrics remain troubling: a net margin of -20.19%9 Analysts Have This To Say About Macerich^[3] and lagging returns on equity (ROE) and assets (ROA) highlight operational inefficiencies. These challenges are compounded by near-term debt maturities of $763 million, including the defaulted $300 million Santa Monica Place loanMacerich Dividend: 90% Cash Flow Payout Amidst Debt and Default Concerns^[1].

The stock's historical performance around earnings releases offers additional context. Since 2022, a simple buy-and-hold strategy following earnings announcements has shown a median price drift turning positive from day 1, peaking at ~+4.9% around day 13, with a win rate above 80%. While the effect fades after ~20 trading days and lacks statistical significance, the pattern suggests short-term momentum that could align with Macerich's strategic milestones. This dynamic underscores the importance of timing and market sentiment in capitalizing on the company's turnaround efforts.

The Dividend Dilemma

Macerich's commitment to maintaining a $0.17-per-share quarterly dividend—financed by a 90% payout of operating free cash flow in Q1 2025Macerich Dividend: 90% Cash Flow Payout Amidst Debt and Default Concerns^[1]—has been both a strength and a vulnerability. While it preserves shareholder value, it also limits flexibility in addressing debt obligations. This tension is evident in its recent Q2 results: despite FFO of $87 million ($0.33 per share)Macerich Reports Second Quarter 2025 Results^[2] and 75% more leasing activity year-to-date compared to 2024Macerich Reports Second Quarter 2025 Results^[2], occupancy rates dipped to 92% due to tenant closures9 Analysts Have This To Say About Macerich^[3].

Credit Market Context and Future Outlook

The broader credit environment adds complexity. While speculative-grade upgrades have outpaced downgrades in 20259 Analysts Have This To Say About Macerich^[3], Macerich's exposure to retail—a sector still redefining itself post-pandemic—remains a risk. Fitch's July 2025 Global Corporates Rating Trends Monitor noted a general trend of downgrades outpacing upgrades, though Macerich was not specifically highlighted. Moody's and S&P have similarly focused on macroeconomic headwinds, such as rising tariffs and geopolitical tensions9 Analysts Have This To Say About Macerich^[3], which could dampen consumer spending and, by extension, retail REIT performance.

For Macerich, the path to a stronger credit profile hinges on executing its deleveraging plan while navigating these external pressures. Its recent Relative Strength Rating upgrade to 819 Analysts Have This To Say About Macerich^[3]—a sign of improved market leadership—suggests investor confidence in its strategy. Yet, without a material reduction in debt or a credit rating upgrade, the company's valuation may remain constrained.

Conclusion: A Calculated Bet on Retail's Resilience

Macerich's turnaround is far from complete, but its deleveraging efforts and strategic acquisitions signal a commitment to long-term value creation. For investors, the key will be monitoring its ability to balance dividend obligations with debt reduction while capitalizing on high-potential markets like Crabtree Mall. If the company can sustain its current pace of NOI growth and secure even a modest credit rating upgrade, it may yet prove that retail REITs can adapt—and thrive—in a post-digital era.