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Macerich execs describe 'more balanced tone' in retailer tenant base

Macerich Co. executives on Feb. 6 described improved sentiment in the company's retailer base after tax reform, but said 2018 will still witness a meaningful level of tenant downsizing.

2017 ended on relatively solid footing, after an "above-average" holiday sales season and with a "more balanced tone" manifest in the mall real estate investment trust's tenant base, COO Robert Perlmutter said on a 2017 year-end earnings call. The coming year will see a meaningful level of bankruptcies, but management does not expect this year's class to be as large as the previous year's.

Many of the mall REIT's storefronts, in the meantime, deserve "more attention" with the cash windfall retailers will receive in the recent round of tax reform, Perlmuttter said.

"Where that tax savings goes, whether it goes into stores or whether it goes into online or it goes to the employees or it goes to the shareholders, I guess every company is going to make their own decision," Perlmutter said during the Q&A segment.

Later, Chairman and CEO Arthur Coppola resisted one analyst's effort to determine the "quarterly cadence" of the company's expected same-store NOI growth in 2018, in view of the store closures expected in the first half. The question was addressed to CFO Thomas O'Hern, but Coppola stepped in.

"I'm going to encourage you not to answer that question because there are too many things that happen every day and every week, and we don't control them," Coppola said.

The CEO went on to argue for assessing same-store NOI growth primarily, if not exclusively, on a full-year basis.

"I understand the need for everybody to want to look at things quarterly, but of every number that's out there, the one that I would highly encourage you to move away from focusing on, on a quarterly basis, as an entire sell-side and investor world — get away from quarterly same-center NOI," he said.

Executives declined to expand, beyond their public remarks, on the recent reports of a potential privatization deal led by the company's largest shareholder, Ontario Teachers' Pension Plan Board.