10-K: Macerich 2025 Annual Report: Portfolio Refinement & Debt Focus

Macerich reports a net loss in 2025 but shows FFO growth and positive leasing trends amid strategic portfolio adjustments and ongoing debt management efforts.

Summary

• The Macerich Company, a self-administered and self-managed REIT, is focused on the acquisition, ownership, development, redevelopment, management, and leasing of 37 regional retail centers and one community/power shopping center across the U.S., totaling approximately 39 million square feet of gross leasable area as of December 31, 2025.
• The company is executing its 'Path Forward Plan' to deleverage its capital structure, reduce its Net Debt to Adjusted EBITDA leverage ratio over the next two to three years, invest in key assets, consolidate joint venture assets, and achieve operational efficiencies.
• In 2025, the company acquired Crabtree Mall for $290.0 million and completed numerous dispositions totaling approximately $440.0 million in sales, including Wilton Mall ($24.8M), SouthPark Mall ($10.5M), Lakewood Center ($332.1M), and Valley Mall ($22.1M), using proceeds primarily for debt reduction and general corporate purposes.
• Financing activities included closing a $340.0 million, ten-year loan on Washington Square at a fixed rate of 5.58% and securing a $159.1 million term loan on Crabtree Mall at SOFR plus 2.50%.
• Redevelopment projects are underway at Scottsdale Fashion Square (estimated total cost $84.0M-$90.0M, company share $42.0M-$45.0M, anticipated completion 2027), Green Acres Mall (estimated total cost $130.0M-$150.0M, majority tenants opening 2026-2027), and FlatIron Crossing (estimated total cost $245.0M-$265.0M, company share $125.0M-$135.0M, anticipated opening 2027).
• For the year ended December 31, 2025, the company reported a net loss attributable to the company of $(197.1) million, an increase from $(194.1) million in 2024.
• Funds From Operations (FFO) attributable to common stockholders and unit holders (diluted, excluding certain adjustments) increased by 8.7% to $397.0 million in 2025 from $365.3 million in 2024.
• Net Operating Income (NOI) from Go-Forward Portfolio Centers (excluding lease termination income) increased by 1.8% to $729.8 million in 2025 from $716.7 million in 2024.
• Comparable tenant sales for spaces less than 10,000 square feet across the portfolio increased by 1.2% for the trailing twelve months ended December 31, 2025, compared to the prior year.
• The leased occupancy rate was 94.0% as of December 31, 2025, a slight decrease from 94.1% at December 31, 2024, but a sequential increase from 93.4% at September 30, 2025.
• Releasing spreads increased by $4.38 per square foot, or 6.7%, for the trailing twelve months ended December 31, 2025, marking the seventeenth consecutive quarter of positive base rent leasing spreads.
• The company sold 3.1 million shares of common stock for $53.9 million in net proceeds through its 2024 ATM Program during 2025, with $374.1 million remaining available under the program as of December 31, 2025.
• A cash dividend of $0.17 per share of common stock was declared for each quarter in 2025, totaling $0.68 per share for the year, and a first quarter 2026 dividend of $0.17 per share was announced.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with a slightly negative sentiment due to the reported net loss and ongoing debt defaults, despite positive FFO growth and strong leasing metrics, indicating continued challenges in the company's portfolio transformation.

Positives

• Funds From Operations (FFO) attributable to common stockholders and unit holders (diluted, excluding certain adjustments) increased by 8.7% to $397.0 million in 2025 from $365.3 million in 2024.
• Net Operating Income (NOI) from the Go-Forward Portfolio Centers (excluding lease termination income) increased by 1.8% to $729.8 million in 2025 from $716.7 million in 2024.
• Comparable tenant sales for spaces less than 10,000 square feet across the portfolio increased by 1.2% for the trailing twelve months ended December 31, 2025, compared to the prior year.
• The company achieved its seventeenth consecutive quarter of positive base rent leasing spreads, with an increase of $4.38 per square foot, or 6.7%, for the trailing twelve months ended December 31, 2025.
• Leased occupancy rate showed a sequential increase to 94.0% at December 31, 2025, from 93.4% at September 30, 2025.
• Leasing volume significantly increased in 2025, with 1,199 new and renewal leases signed for approximately 7.1 million square feet, a 46% increase in leases and an 85% increase in square footage compared to 2024.
• New store leases through 2028 are expected to produce approximately $107 million in total rent (at the company's pro-rata share) in excess of prior uses.
• The company's employee Net Promoter Score (NPS) of 55 is measured as 'excellent' by Bain & Company's framework, indicating strong employee relations and culture.
• Macerich has achieved the #1 GRESB ranking in the North American Retail Sector for ten consecutive years, highlighting its leadership in sustainability.
• Successfully refinanced, restructured, or extended approximately $1.9 billion (company's pro rata share) of near-term, non-recourse loan maturities since the beginning of 2024.
• The One Big Beautiful Bill Act (OBBB) relaxed the REIT asset test for taxable REIT subsidiaries from 20% to 25% and permanently extended the pass-through qualified business income deduction for REIT dividends, which are positive legislative changes for REITs.

Negatives

• The company reported a net loss attributable to the company of $(197.1) million for the year ended December 31, 2025, an increase from $(194.1) million in 2024.
• The leased occupancy rate decreased slightly year-over-year from 94.1% at December 31, 2024, to 94.0% at December 31, 2025.
• Operating results in 2025 were negatively impacted by sustained inflation, tariffs, and elevated interest rates, and these factors are expected to continue to have a negative impact in 2026.
• Several tenant bankruptcies occurred in 2025 (Forever 21, Claire's) and early 2026 (Saks Global LLC), impacting 67 leases and 873,000 square feet in 2025, and 14 leases and 250,000 square feet in early 2026, leading to a loss of annual leasing revenue.
• The $300.0 million non-recourse loan on Santa Monica Place defaulted on April 9, 2024, and the property transitioned to a receiver in Q1 2025, with disposition expected through foreclosure or deed-in-lieu.
• The $200.0 million loan at South Plains Mall was in default as of November 6, 2025, though it was subsequently extended.
• The $76.5 million loan (company's pro rata share) at Twenty Ninth Street is in default as of February 6, 2026, with negotiations ongoing.
• Interest expense increased by $63.6 million from 2024 to 2025, primarily due to JV Transition Centers, a financing arrangement, Same Centers, and the Crabtree Mall acquisition, including $3.3 million in default interest expense for Santa Monica Place.
• The company recognized a net loss on sale or write down of assets of $(123.4) million in 2025, primarily due to impairment losses of $147.4 million on properties like Santa Monica Place, Valley Mall, and South Park Mall.
• Cash used in investing activities increased significantly to $(325.3) million in 2025 from $19.8 million provided in 2024, driven by property acquisitions and contributions to unconsolidated joint ventures.

Risks

• Real property investments are subject to risks from global, national, regional, and local economic and business conditions, including geopolitical tensions, tariffs, elevated interest rates, and inflation, affecting demand for retail space, tenant creditworthiness, lease rates, and operating expenses.
• A significant percentage of centers are geographically concentrated in California, New York, and Arizona, making the company sensitive to local economic and real estate conditions in these areas.
• Intense competition from other mall owners, developers, managers, retail formats (lifestyle, power, outlet centers), and online retail shopping could adversely affect leasing ability, rental rates, and revenues.
• Inability to renew leases, lease vacant space, or re-let space on favorable terms or to the appropriate tenant mix could adversely affect financial condition and results of operations.
• Downturns, bankruptcies (e.g., Express, Forever 21, Claire's, Saks Global LLC), store closures, mergers, or consolidations of anchors or other significant tenants could adversely affect financial condition, trigger co-tenancy clauses, and lead to substantial redevelopment expenses.
• Acquisition, development, and redevelopment strategies, including the 'Path Forward Plan,' may not be successful due to factors like capital availability and cost, debt levels, interest rates, and competition for attractive targets.
• Real estate investments are relatively illiquid, limiting the ability to adjust the portfolio or sell properties at desired times and on favorable terms, especially with mortgage encumbrances and REIT tax law limitations.
• Real estate assets may be subject to impairment charges if estimated future undiscounted cash flows are less than carrying value, which could materially and adversely affect operating results.
• Possible environmental liabilities (e.g., asbestos, underground storage tanks, chlorinated hydrocarbons) could result in substantial investigation, removal, or remediation costs and affect property marketability.
• Risks associated with climate change, including increased storm intensity, rising sea levels, higher insurance costs, increased energy costs, and significant capital expenditures for compliance with green building codes, could adversely affect the business.
• Some properties are subject to natural disasters (earthquakes, wildfires, floods, hurricanes), and uninsured or underinsured losses from these events could adversely affect financial condition.
• Property taxes may increase without notice, and not all increases may be collectible from tenants, adversely affecting financial position and cash flows.
• Compliance with the Americans with Disabilities Act (ADA) and other fire, safety, and building regulations may require substantial capital expenditures and restrict renovation ability, adversely affecting cash flows and operating results.
• Cybersecurity risks, including cyber attacks, data breaches, malware, and social engineering, as well as risks related to artificial generative intelligence technologies, could disrupt IT systems, lead to financial misstatements, data loss, reputational damage, and legal liabilities.
• Acts of violence, vandalism, civil unrest, criminal activity, and terrorist attacks could cause material damage, negatively impact revenue, reduce customer traffic, and increase security expenditures.
• Future pandemics, epidemics, or highly infectious disease outbreaks could cause widespread economic disruptions, leading to property closures, tenant defaults, decreased consumer spending, and difficulties in accessing capital.
• Inflation may adversely affect financial condition and results of operations by increasing interest rates on floating-rate debt, making it difficult to increase rents, and decreasing tenant sales, while increasing operating costs.
• Elevated interest rates increase borrowing costs on floating-rate debt and new/refinanced fixed-rate debt, impacting cash flow, debt service, and future business plans, with hedging arrangements not guaranteed to be effective.
• International trade disputes, including U.S. trade tariffs and retaliatory tariffs, could increase costs for tenants and the company, impacting supply chains and potentially leading to inflationary pressures.
• Substantial debt ($6.59 billion at December 31, 2025) requires a material portion of cash flow for debt service, limiting funds for other opportunities, and most centers are mortgaged, risking foreclosure.
• Obligation to comply with financial and other covenants in unsecured credit facilities, including interest coverage requirements and limitations on debt, dividends, and acquisitions, could restrict business initiatives or lead to default.
• Dependence on external financings (debt and equity) for growth and debt service, with access subject to market conditions, underwriting criteria, and capital market volatility, poses refinancing risk.
• Success depends on attracting and retaining talented employees, and the loss of key personnel could adversely impact the business.
• The price of common stock can fluctuate significantly due to operating results, market conditions, economic events, tenant performance, debt compliance, and other factors.
• Certain individuals have substantial influence over management, potentially creating conflicts of interest between the company and its operating partnership or joint venture partners.
• Outside partners in joint venture centers introduce additional risks, including shared control over major decisions, potential loss of management rights, and increased liability in case of partner bankruptcy.
• The holding company structure makes the company dependent on distributions from the Operating Partnership, and an inability to make distributions could jeopardize REIT qualification.
• An ownership limit (5%) and certain charter/bylaw provisions could inhibit a change of control or reduce common stock value.
• Certain provisions of Maryland law could also inhibit a change in control or reduce common stock value.
• Failure to qualify as a REIT would result in federal and state income taxes, reduced funds for distributions, and a prohibition from re-qualifying for four years.
• Complying with REIT requirements might force the company to forego otherwise attractive opportunities or borrow funds to make distributions.
• Risks associated with Section 1031 Exchanges, where transactions intended to be tax-deferred could become taxable.
• If the Operating Partnership fails to maintain its partnership status for tax purposes, it would face adverse tax consequences, reducing distributions and potentially threatening REIT status.
• Legislative or regulatory action, including changes to U.S. federal income tax laws, could adversely affect the company or its stockholders.

Future Outlook

The company anticipates meeting its liquidity needs through cash from operations, joint venture distributions, working capital, and credit facility borrowings. The 'Path Forward Plan' aims to deleverage the capital structure over the next two to three years through asset dispositions, acquisitions, organic EBITDA growth, selective development, and potential common stock issuance. While key performance indicators improved in 2025, external factors like inflation, tariffs, and elevated interest rates, along with tenant bankruptcies, are expected to continue negatively impacting operating results in 2026. The company expects positive cash flow after recurring operating and leasing capital expenditures and dividends in 2026, with any excess used for development or debt reduction. The company will be selective in future development projects and may pause existing ones if not economically viable.

Management Comments

• Management states that the 'Path Forward Plan' is a multi-pronged strategy to improve the balance sheet and enhance company culture and business processes for operating efficiencies.
• Management believes that diversity of use within its tenant base has been, and will continue to be, a prominent internal growth catalyst at its Centers, enhancing productivity and customer traffic.
• Management expects that the pace of bankruptcy filings in 2026 will continue to be lower than the average bankruptcy rate over the last decade, but will continue to monitor the impact of tariffs and other economic conditions on tenants.
• Management believes that relations with its employees are good, noting an employee Net Promoter Score ('NPS') of 55, a score measured 'excellent' by Bain & Company's NPS scoring framework.

Industry Context

StockSavvy.ai notes that Macerich's strategic shift towards portfolio refinement, deleveraging, and mixed-use densification aligns with broader trends in the retail real estate industry, where traditional enclosed malls are adapting to evolving consumer preferences and the rise of e-commerce. The focus on 'Go-Forward Portfolio Centers' and selective redevelopment reflects a common strategy among REITs to concentrate resources on high-performing, experiential assets. The continued challenge from tenant bankruptcies and elevated interest rates is a sector-wide headwind, impacting many retail REITs. Macerich's consistent top GRESB ranking indicates a strong commitment to sustainability, a growing expectation among investors and tenants in the industry.

Comparison to Industry Standards

• The filing does not provide specific comparable company data for direct assessment against global benchmarks. However, StockSavvy.ai notes that Macerich's reported 1.2% increase in comparable tenant sales for spaces under 10,000 square feet for the trailing twelve months ended December 31, 2025, provides an indication of its operational performance relative to its own prior periods.
• The 6.7% increase in releasing spreads for the trailing twelve months ended December 31, 2025, and the seventeenth consecutive quarter of positive spreads, suggests effective leasing strategies in a competitive market, which can be benchmarked against other regional mall REITs like Simon Property Group (SPG) or Federal Realty Investment Trust (FRT) when their respective leasing metrics are available.
• The leased occupancy rate of 94.0% at December 31, 2025, can be compared to the average occupancy rates of peer regional mall REITs to gauge market positioning, although direct comparisons require detailed breakdowns of asset quality and geographic focus.
• The company's #1 GRESB ranking in the North American Retail Sector for ten consecutive years is a strong indicator of industry-leading sustainability performance, surpassing many global and national peers in environmental, social, and governance (ESG) practices.

Legal Proceedings

• None of the company, the Operating Partnership, the Management Companies, or their respective affiliates are currently involved in any material legal proceedings.

Related Party Transactions

• The Management Companies charged $14.6 million in management fees and $7.5 million in development and leasing fees to unconsolidated joint ventures for the year ended December 31, 2025.
• Due from affiliates includes $2.4 million of unreimbursed costs and fees from unconsolidated joint ventures under management agreements as of December 31, 2025.

Stakeholder Impact

• Shareholders: Impacted by the net loss, FFO growth, dividend payments ($0.68 per share in 2025), and potential dilution from the ATM program, as well as stock price fluctuations.
• Employees: Benefit from competitive compensation, comprehensive benefits, professional development opportunities, and a positive company culture (NPS of 55), with a 2025 turnover rate of 14.3%.
• Customers/Shoppers: Affected by redevelopment projects aimed at enhancing shopping experiences and tenant mix, as well as potential impacts from tenant bankruptcies and safety concerns.
• Tenants: Directly impacted by leasing terms, occupancy costs, and the company's ability to maintain desirable centers, with some facing business downturns and bankruptcies.
• Lenders/Creditors: Affected by the company's substantial debt ($6.59 billion), refinancing efforts, and instances of loan defaults (Santa Monica Place, South Plains Mall, Twenty Ninth Street), which pose credit risk.
• Suppliers/Contractors: Engaged in redevelopment and construction activities, with outstanding obligations of $84.2 million as of December 31, 2025.

Next Steps

• Continue to execute the 'Path Forward Plan' to deleverage the capital structure and improve operational efficiencies over the next two to three years.
• Invest in and fortify key assets in the portfolio.
• Proactively consolidate selected joint venture assets that are core to the company's overall strategy.
• Achieve outstanding operational results through rigorous internal process improvements.
• Position the company for strategic acquisitions, reinvestment, and targeted development.
• Complete the sale of La Cumbre Plaza, expected to close in the second quarter of 2026.
• Continue redevelopment at Scottsdale Fashion Square, with anticipated completion in 2027 and majority of tenants opening in 2026.
• Continue redevelopment at Green Acres Mall, with majority of tenants expected to open in 2026 or 2027.
• Continue development at FlatIron Crossing, with anticipated opening in phases beginning in 2027.
• Address the defaulted loan at Twenty Ninth Street through negotiations with the lender.
• Review the dividend amount on a quarterly basis.
• Incur approximately $75.0 million to $100.0 million for tenant allowances and deferred leasing charges in the next twelve months.
• Incur approximately $250.0 million to $300.0 million for development, redevelopment, expansion, and renovations during 2026.
• Monitor the impact of tariffs and other economic conditions on tenants and the pace of bankruptcy filings.

Key Dates

Recommendation

A seasoned investor or institution would likely recommend a 'Hold' for Macerich. While the company reported a net loss, the positive FFO growth, strong leasing spreads, and strategic portfolio adjustments under the 'Path Forward Plan' indicate operational resilience and a clear path forward. However, the ongoing challenges with debt defaults, significant impairment charges, and the impact of external economic factors like inflation and elevated interest rates warrant caution. The stock's performance will largely depend on the successful execution of its deleveraging strategy and redevelopment projects, making it a 'wait and see' situation for further significant investment, but not a 'sell' given the underlying operational improvements.

Keywords

REIT, Retail Real Estate, Shopping Centers, Mall Management, Property Development, Asset Dispositions, Debt Management, Leasing, Financial Performance, Corporate Strategy, SEC Filing, 10-K, Macerich