Alert: Macerich Dropped 5% And We Can’t Figure Out Why – Still Bullish
Macerich (MAC) dropped 5% this week – more than twice the decline of any other Regional Mall REIT and yet there was no new news that would have sparked the selloff.
We didn’t sell out of all of our shares – we still have a 1.1% exposure to the stock. But with a 4% target allocation and a current price of $55.82, we don’t see any reason why we wouldn’t reestablish our position. The Price/AFFO is slightly below its long-term average and the decline in AFFO for 2018 is already embedded in the stock price.
With a 5% boost to AFFO in 2019 and another 6% in 2020, combined with a 5.3% dividend yield, investors are looking at a potential 10%+ return in each of the next two years without any multiple expansion. If the multiple rises to a very reasonable 18.7 from 16.4, the end of 2019 price would be $63.58, a 14% increase from current levels PLUS the dividend. The upside still outweighs the downside in my opinion.
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Disclosure: I am/we are long MAC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.