Macerich (MAC) Financials

Over the last two years, Macerich (NYSE: MAC) has exhibited mixed financial performance with noticeable swings in profitability, cash flow, and balance sheet metrics.

Positive trends:

• In Q2 2024, Macerich reported a strong net income attributable to common shareholders of $252 million, a significant rebound from losses in subsequent quarters.
• Total non-interest income increased to $314 million by Q4 2024, showing growth over prior quarters which helps to offset interest expenses.
• The company has maintained consistent dividend payments at $0.17 per share each quarter through 2023 and 2024, indicating stable shareholder returns.
• Operating cash flow remained positive in recent quarters, with $54.9 million in net cash from operating activities reported in Q4 2024, supporting operational sustainability despite net losses.
• Total assets have remained relatively stable around $7.5 to $7.9 billion, reflecting controlled asset base with strong premises and equipment value of over $6 billion.
• Long-term debt has been actively managed, with debt issuance and repayments to optimize capital structure—it issued $825 million in Q4 2024 but repaid $1.4 billion, showing proactive debt management.

Neutral observations:

• Depreciation expense remains steady around $70-85 million per quarter, reflecting ongoing capital investment and asset aging.
• Trading account securities constitute a large part of assets (~$775M to $1.2B), but fluctuations in these portfolios may impact liquidity and investment income unpredictably.
• Restricted cash balances have been consistent around $110 million, supporting compliance or operational needs with limited impact on liquidity.

Negative trends and risks:

• Since Q3 2023, Macerich has experienced sequential net income losses, culminating in a significant loss of $211 million to common shareholders in Q4 2024, driven largely by substantial “Other Gains / (Losses), net” negative impacts of -$225 million in that quarter alone.
• Total interest expense has risen sharply to $70.9 million in Q4 2024 from $25.4 million in Q4 2023, pressuring net income and reflecting higher borrowing costs or increased leverage.
• Negative net interest income reflecting high interest expense without offsetting interest income has persisted through all recent quarters, reducing profitability potential.
• Total non-interest expense climbed to nearly $198 million in Q4 2024 from around $167 million in Q4 2023, suggesting increased operating costs or impairments.
• Retained earnings remain heavily negative (approximately -$3.15 billion as of Q3 2024), signaling accumulated losses or distributions exceeding net income over time.
• The company’s net change in cash was negative in Q4 2024 (-$52.5 million), continuing a pattern of cash outflows that may strain liquidity if sustained.
• Despite significant asset base and equity (~$2.5 billion common equity), market pressures reflected in ongoing losses may impact investor confidence and stock performance.

Summary: Macerich is navigating a challenging period with rising interest costs and losses in recent quarters eroding net income. However, positive signs include healthy operating cash flows, strong income in mid-2024 (Q2), consistent dividend payments, and active debt management. Investors should monitor the company's ability to manage its high interest expenses, contain operational costs, and address the large negative retained earnings base as key indicators for potential recovery or further risk.