Shares of Macerich Company (NYSE:MAC) declined 2.4% in after-hours trading on Monday after the real estate investment trust revealed plans for an underwritten public offering of 14 million common shares.
Goldman Sachs & Co. LLC has been named as the lead bookrunner and the representative of the underwriters for the offering. Macerich also said it intends to give the underwriters a 30-day option to buy up to an additional 2.1 million shares.
The company indicated it expects to enter into a forward sale agreement with Goldman Sachs or its affiliates and with other financial institutions in relation to the 14 million shares. Under the terms described by Macerich, the forward purchasers or their affiliates are expected to borrow and sell an aggregate of 14 million shares to the underwriters, with those shares to be delivered in the offering.
Macerich noted that it will not initially receive proceeds from the sale of shares sold by the forward purchasers or their affiliates in the offering. The company said it intends to use net proceeds received upon the future settlement of the forward sale agreements to fund future acquisition opportunities and for general corporate purposes.
According to the company, these forward sale agreements permit Macerich to set the share price at the time the offering is priced, subject to certain adjustments, while deferring the actual issuance of shares and the receipt of net proceeds. Macerich expects settlement of the forward sale agreements to occur no later than June 16, 2027.
Macerich described its business as owning, operating, and developing retail properties in densely populated U.S. markets. The company said its portfolio is concentrated in California, the Pacific Northwest, the Phoenix/Scottsdale area, and the corridor from Metro New York to Washington, D.C. Macerich currently owns approximately 41 million square feet of real estate, consisting primarily of interests in 39 retail centers.
Summary
Macerich has launched an underwritten offering of 14 million common shares with Goldman Sachs & Co. LLC acting as lead bookrunner. The company plans to use forward sale agreements that will delay receipt of cash proceeds until future settlement, which is expected no later than June 16, 2027. In the immediate market response, Macerich shares fell 2.4% in after-hours trading.
Key points
- Macerich is offering 14 million common shares, with underwriters holding a 30-day option to purchase up to 2.1 million additional shares.
- Goldman Sachs & Co. LLC will serve as lead bookrunner and representative of the underwriters for the transaction.
- The company plans forward sale agreements that allow pricing at offering while postponing issuance and receipt of net proceeds until settlement, expected by June 16, 2027.
Sectors impacted
- Real estate - given Macerich's role as an owner and operator of retail properties.
- Retail property markets - due to the concentration of the REIT's portfolio in major U.S. population centers.
- Capital markets - as the offering and forward sale structure affect share supply and timing of proceeds.
Risks and uncertainties
- Near-term market reaction - shares declined 2.4% in after-hours trading following the announcement.
- Timing of proceeds - Macerich will not initially receive proceeds from shares sold by forward purchasers; net proceeds are contingent on future settlement.
- Settlement window - the forward sale agreements delay issuance and receipt of funds until a settlement date expected no later than June 16, 2027, introducing timing uncertainty.
The company did not disclose additional terms beyond those outlined, and readers should note that the information presented reflects the details Macerich provided about the offering and the forward sale agreements.