Macerich upgraded to Buy at BofA on higher growth, path to lower leverage

Bank of America Securities upgraded Macerich from Neutral to Buy, citing significant improvements in its portfolio, financial structure, and leasing developments.

Analyst Samir Khanal forecasts considerable growth in net operating income (NOI) from 2026 to 2028, attributing it to new lease agreements and capital projects.

The firm anticipates a turning point for both NOI and funds from operations (FFO) by mid-2026, with expected FFO of $1.99 for 2028, bolstered by the acquisition of Crabtree Mall.

Macerich has successfully reduced its net debt-to-EBITDA ratio and is projected to achieve further improvements, potentially enhancing its adjusted funds from operations (AFFO) multiple.

Recommendation Rating: Buy

Bank of America Securities has upgraded Macerich (NYSE: MAC) from Neutral to Buy, highlighting significant improvements in the shopping mall Real Estate Investment Trust (REIT). This decision stems from the enhancement of Macerich's portfolio, its solid financial structure, and positive leasing developments.

Analyst Samir Khanal anticipates notable growth in net operating income (NOI) from 2026 through 2028, driven by lease agreements, upcoming properties, extensive capital projects, and strategic redevelopments.

In a note to clients, Khanal stated, "We predict that both NOI and funds from operations (FFO) will experience a turning point by mid-2026, with continued acceleration expected in 2027 and 2028." BofA projects an FFO of $1.99 for 2028, placing it at the higher end of Macerich’s forecast range of $1.73 to $2.05, which incorporates an additional $0.08 contribution from the acquisition of Crabtree Mall.

Furthermore, Khanal pointed out that Macerich has successfully decreased its net debt-to-EBITDA ratio by approximately 0.8x to 7.9x since implementing its Path Forward strategy. He anticipates that this ratio could be reduced to the mid-6x range by the conclusion of 2028, which could lead to an expansion in the adjusted funds from operations (AFFO) multiple.

BofA's Buy rating for Macerich is consistent with the average recommendation from Wall Street analysts, contrasting with the Sell rating from Seeking Alpha's Quantitative analysis.