Malls rebound as balance sheet pressure starts to ease
- Macerich owns interests in 38 shopping centers with about 39 million square feet of space.
- Portfolio occupancy rose to 94% in Q2 2026, reversing a recent sequential decline.
- Net operating income for the go-forward portfolio grew 3.8% in the second quarter.
- Leverage improved as net debt to adjusted EBITDA dropped to 7.3x.
- The company raised $372 million in forward equity to fund new property acquisitions.
Occupancy rebounds as strategy pivots
The bull case gained momentum in the second quarter of 2026. After a slight dip earlier in the year, portfolio occupancy rebounded by 60 basis points to hit 94%. Even better, the core 'go-forward' portfolio saw net operating income grow by 3.8%. This proves that top-tier tenants still want premium mall space and are willing to pay for it.
Management is also making visible progress on the balance sheet. A central piece of the Path Forward Plan is cutting leverage, and net debt to adjusted EBITDA dropped to 7.3x in Q2. Including forward equity proceeds, leverage sits below 7x. This eases the primary concern that has weighed on the stock for years.
With the balance sheet stabilizing, Macerich is pivoting to growth. The company raised $372 million in forward equity to buy new assets at targeted yields of 9% to 11%. If management can find good deals in a tight market, this cash will drive the next phase of earnings growth.
The bear case now focuses on execution and asset-level stress. High leverage remains a structural reality. Furthermore, the company is still dealing with a defaulted $76 million loan at its Twenty Ninth Street joint venture property. Deploying hundreds of millions of dollars into new acquisitions also introduces fresh risk if those new properties fail to hit their return targets.
Rent from retail space
Macerich is a real estate investment trust, or REIT. A REIT owns income-producing real estate and must pay out much of its taxable income as dividends. Macerich makes most of its money by leasing space in regional malls and shopping centers.
Tenants pay base rent. Some also pay percentage rent tied to sales. Tenants also reimburse Macerich for items such as operating costs, property taxes, and utilities. This model works when stores sell enough goods to keep paying rent and when open space can be leased at fair prices.
The weak point is capital. Malls need money for tenant improvements, redevelopment, and refinancing. Macerich must balance heavy debt loads against the capital needed to keep its properties attractive to top-tier retailers.
The moat is location. Strong malls in California, New York, Arizona, and other dense markets act like town centers. But if consumers pull back or lenders demand harsher terms, that moat can narrow fast.
What Macerich owns
Regional retail centers
This is the core business. Macerich owns or has interests in 37 regional retail centers focused in dense, high-barrier markets.
Community and power center
The portfolio includes one community or power shopping center. This remains a small part of the total property base.
Go-Forward Portfolio Centers
Management has named a focused group of centers it wants to keep and build around. These assets have a 95.5% occupancy rate and drive the company's future growth.
Redevelopment projects
Projects at properties like Scottsdale Fashion Square aim to turn old space into better mixed-use space. These create value but require significant upfront cash.
Joint venture centers
Some centers are partly owned with partners. These give Macerich exposure to important assets, though they can make debt and cash flow harder to read.
Mostly leasing revenue
This mix uses standard MD&A revenue lines. Macerich reports leasing revenue as the main line, with Management Companies revenue much smaller, reflecting an operating revenue view rather than a formal multi-segment split.
What could go wrong
Acquisition execution risk
High impact · Medium oddsMacerich raised $372 million in forward equity to fund new acquisitions at targeted yields of 9% to 11%. Buying new properties in a competitive market carries execution risk. If the purchased assets underperform, the new equity could dilute shareholders without providing the expected returns.
Debt is improving but remains high
High impact · High oddsNet debt to adjusted EBITDA fell to 7.3x in Q2 2026, showing clear progress. However, total debt remains a heavy burden that consumes cash. The Path Forward Plan needs sustained deleveraging to ensure long-term stability.
Defaulted assets create surprise costs
Medium impact · Medium oddsA joint venture defaulted on the $76 million Twenty Ninth Street loan in early 2026, and discussions with lenders continue. Handing back keys can protect corporate cash when debt is non-recourse, but it still signals asset-level stress. The final legal and financial result matters.
Tenant bankruptcies hit rent
Medium impact · Medium oddsTenant bankruptcies can leave empty boxes and lower rent. Macerich has dealt with failures from brands like Express, Forever 21, and Claire's over the last year. More failures could reverse the recent occupancy gains.
In one breath
What does Macerich do?
Macerich owns, manages, and leases shopping centers in the United States. Most of its income comes from rent and tenant reimbursements at regional retail centers.
Why is Macerich risky?
The biggest risk is debt. The company holds significant leverage, though it recently improved its net debt to adjusted EBITDA ratio to 7.3x. It also faces risks in deploying new equity into acquisitions.
Is Macerich's mall portfolio improving?
Yes. Portfolio occupancy rebounded to 94% in Q2 2026, and the go-forward portfolio saw net operating income grow by 3.8%.
What should investors watch next?
Watch how management deploys its new $372 million in forward equity. Also, monitor the final outcome of the defaulted Twenty Ninth Street asset.
