We updated our research report on The Macerich Company MAC on Jun 9.

This Santa Monica, CA-based retail real estate investment trust (REIT) is engaged in owning, acquiring, leasing, managing, developing and redeveloping regional and community shopping centers in high barrier-to-entry U.S. markets. In first-quarter 2017, the company reported funds from operations (FFO) of $0.87, surpassing the Zacks Consensus Estimate of $0.84. The prior-year quarter’s FFO per share figure was also $0.87. Amid challenging retail landscape, the quarter witnessed modest improvement in same-center net operating income (NOI).

In the last 30 days, the company’s second-quarter 2017 FFO per share estimates moved up 1.1%. In fact, the company has a high concentration of premium malls in certain vibrant U.S. markets. Also, the company boasts well-capitalized retailers that have fared relatively well in the post-recession environment where the U.S. consumers have become more budget conscious. Additionally, its omni-channel model, steadily rising demand along with tempered supply and aggressive capital-recycling program are emerging as growth drivers.

However, increasing consumer purchases through the Internet has emerged as a pressing concern for retail REITs. While Macerich is making attempts to counter the pressure through various initiatives, the implementation of such measures requires a decent upfront cost, and therefore would limit any robust growth in its profit margins in the near term.

Shares of Macerich underperformed the Zacks categorized REIT and Equity Trust – Retail industry in the last three months. While the stock declined 7.9%, the industry lost 1.9%.

Currently, Macerich carries a Zacks Rank #3 (Hold).

Investors interested in the REIT space, may consider better-ranked stocks like DCT Industrial Trust Inc. DCT, Gaming and Leisure Properties, Inc. GLPI and PS Business Parks, Inc. PSB, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last 30 days, DCT Industrial Trust’s funds from operations (FFO) per share for second-quarter 2017 remained unchanged at 59 cents.

In the last 30 days, Gaming and Leisure Properties’ FFO per share for second-quarter 2017 remained unchanged at 77 cents.

In the last 30 days, PS Business Parkss FFO per share for second-quarter 2017 moved up 2% to $1.53.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. All EPS numbers presented in this write up represent FFO per share.

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