MACERICH CO (MAC) stock intrinsic value fair value estimate & owner earnings analysis

Macerich owns and operates a portfolio of roughly 40 regional shopping centers, concentrated in higher-income coastal and Sun Belt markets, after years of shedding lower-productivity malls and recycling that capital into its best assets. The company has continued this playbook recently: in 2024 it bought out joint-venture partners' stakes in Lakewood Center, Los Cerritos Center, Washington Square, Arrowhead Towne Center and South Plains Mall, then sold Lakewood again in 2025, and in 2025 it bought Crabtree Mall for about $290 million. It is also spending heavily on redevelopment, with $250-300 million budgeted for 2026 at Scottsdale Fashion Square, Green Acres Mall and FlatIron Crossing. We measure what the company actually generates for owners: operating cash flow, less the swings caused by working-capital timing, less stock compensation, less the capital needed just to keep the existing centers competitive (separating that from the discretionary, growth-oriented spending on acquisitions and redevelopment). On that basis, owner earnings have run between roughly $0.80 and $2.45 per share over the last decade, with 2020 essentially breakeven as the pandemic disrupted rent collection. We anchor the valuation on the median of the last five years (2021 through 2025), which we treat as representative of the company as it exists today, after the earlier round of portfolio pruning and past the pandemic disruption: about $0.89 per share. We then project owner earnings forward for ten years and place a value today on everything the malls are likely to earn after that. Because Macerich's redevelopment and property-improvement spending is already charged against owner earnings every year, and regional malls do not have a fixed expiration date the way a patent does, we treat the business as continuing to earn a roughly stable amount, adjusted only modestly for growth, rather than assuming it eventually stops. This 'tail' beyond year ten is more than half of the total value in every case, which is typical for a real-estate business with long-lived assets, but it means the valuation leans heavily on the malls remaining relevant for decades, not just the next ten years - the main thing that would make us wrong. Our base case assumes leasing spreads stay positive, occupancy holds in the low-to-mid 90s, and the current redevelopment program delivers roughly on plan, producing modest single-digit growth in owner earnings for the next few years that tapers toward flat in real terms further out. That produces a value of about $17.81 per share. Our bear case (roughly a one-in-ten outcome) assumes a more difficult stretch: one or more department-store or big-box anchor closures hit several centers at once without a quick backfill, the redevelopment pipeline gets scaled back as construction and financing costs bite, and upcoming mortgage refinancings get done at meaningfully higher rates given the company's leverage - all of which push owner earnings down for several years before the portfolio stabilizes at a lower level, with the weakest assets in a mild structural decline thereafter. That comes out to about $10.54 per share, which is roughly 59% of the base case - a moderate but real downside, appropriate for a leveraged real-estate business with genuine anchor-tenant risk. Our bull case (roughly a one-in-ten outcome) assumes the redevelopment projects lease up faster and more profitably than planned, the company continues making accretive acquisitions like Crabtree Mall, and financing costs ease as rates come down, supporting mid-single-digit growth in owner earnings through the projection period. That comes out to about $22.22 per share. Given the spread between the bear and base cases, the margin-of-safety price sits at a meaningful discount to the roughly $17.81 base value, at about $13.06 per share. We did not need to invoke net debt as a separate deduction: the operating cash flow we start from is already after cash interest paid, so leverage risk is captured directly in how much worse the bear case is, not as a balance-sheet subtraction. A few accounting notes worth flagging. Macerich has reported a GAAP net loss in most recent years, mainly reflecting large non-cash depreciation on its real estate and non-cash losses on its share of joint-venture properties; none of that affects the cash-flow-based measure we used. We also could not fully match the filing's disclosed capital-spending table (which includes tenant allowances and deferred leasing costs of roughly $25-36 million a year) to the standardized cash-flow-statement tags available to us; we used the cash-flow-statement figures, which may understate total maintenance-type spending modestly and would make our estimate of owner earnings very slightly generous as a result.