Macerich, SITE Centers Withdraw '20 Outlook on Coronavirus Woes
The coronavirus outbreak has been wreaking havoc on all financial markets and beyond, with the retail REIT sector being no exception. Hence, a few retail REITs have provided updates regarding the current situation and how the companies are dealing with it.
The Macerich Company MAC, a retail shopping centre REIT with notable presence in the West Coast, Arizona, Chicago, and the Metro New York to Washington, DC corridor, has withdrawn its 2020 guidance and is not looking to provide an outlook at present. Per management’s prior guidance, the Funds From Operations per share was projected at $3.40-3.50.
The company also mentioned about its liquidity position. It recently borrowed $550 million, on its revolving line of credit. This, along with the cash already present with the company, provides it with total cash balance of $735 million. This is expected to provide enhanced financial flexibility during such uncertain times. Moreover, the company is lowering its capital expenditures, including investment in redevelopments, on which it invested $1.6 billion in 12 major projects between 2010 and 2019, at a weighted average return on investment of 8.5%.
To reduce its cash outflows, on Mar 16, the company reduced its dividends for the first quarter to 50 cents per share, which will be payable 20% in cash and 80% in common stock. The company paid a quarterly cash dividend of 75 cents per share for its shareholders in the prior quarter. With this move, Macerich will be able to retain incremental cash of more than $98 million on a quarterly basis and approximately $400 million, in case it is implemented on an annual basis.
Another retail REIT company SITE Centers Corp.SITC has also followed suit and withdrawn the current-year guidance. The company previously projected OFFO per share at $1.10-$1.14 for this year.
As of Mar 26, 2020, the company had around $325 million available on its $970-million unsecured lines of credit. This figure was around $965 million at the end of fourth-quarter 2019. Also, the company had $516 million of unrestricted cash. Moreover, it has $4 million and $48 million of mortgage debt maturing in 2020 and 2021, respectively, while there are no unsecured debt maturities till 2023.
SITE Centers has also taken several steps to slash its capital expenditure and will have about $44 million remaining for financing the development projects as of Mar 31, 2020.
This pandemic has hit the Retail REIT sector hard, which has already been battling store closure and bankruptcy issues. Additionally, the recent spike in unemployment rate does not bode well either.
Currently, SITE Centers carries a Zacks Rank of 3 (Hold), while Macerich has a Zacks Rank of 4 (Sell). The price performances of both stocks for the past year compared with the industry are given below:
Year Over Year Performance
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