Macerich shares rise on improved forecast

SANTA MONICA, Calif. - Shares of shopping mall owner Macerich Co. surged Tuesday as the company boosted its outlook for the rest of the year, despite lower-than-expected third-quarter results.

Its stock gained $2.07, or 7.5 percent, to $30.19 in late morning trading.

Earlier in the day, the company said funds from operations in the quarter that ended Sept. 30 fell 8 percent to $102.1 million, or $1.16 a share. That compares with $111 million, or $1.15 per share, in the period a year ago.

On average, analysts polled by Thomson Reuters expected FFO of $1.19 per share.

Funds from operations, or FFO, which adds such items as amortization and depreciation back to profit, is considered a key indication of strength for real estate investment trusts like Macerich.

The company calculated its per-share results for FFO using 88.3 million average shares outstanding in the third quarter, compared with 96.7 million a year ago.

Net income avaialable to common shareholders totaled $5.7 million, or 8 cents per share, compared with $19.7 million, or 27 cents per share in the same period last year.

Total revenue, after stock option expenses, rose to $225.8 million from $202.1 million in the year-ago period. Occupancy as of Sept. 30 fell to 92.8 percent, compared with 93.5 percent a year earlier. Revenue rose to $225.8 million from $202.1 million in the year-ago period.

Mall tenant sales per square foot for the 12-month period ended Sept. 30 was $463, up from $460 in the year-ago period.

Macerich also increased its expectations for the year. It now expects FFO to range from $5.35 to $5.50 per share, up from its prior guidance for $5 to $5.15 per share. Wall Street analysts are targeting FFO of $4.99 per share.

"There's little question that high-quality malls continue to perform well in the current environment as they often do in a soft economy," wrote RBC Capital Markets analyst Rich Moore in a research note.

Citigroup analysts Michael Bilerman and Quentin Velleley wrote in a research note that Macerich's malls, concentrated on the West Coast, are performing well with stable occupancy levels.

However, the Citigroup analysts noted that the housing market decline in California and Arizona, "could put pressure on the portfolio" as the economy remains weak in those states.

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