The Macerich Company Q2 FY2025 earnings call

• Path Forward plan: Focuses on simplifying business, operational performance improvement, and leverage reduction. Included an NOI bridge from year-end 2024 to 2028 for pro forma go-forward portfolio NOI, road map for 2028 target FFO and leverage ranges, and portfolio composition breakdown.
• Leasing: Year-to-date signed 4.3 million square feet, ahead of schedule. New deal completion at 65% as of current time, SNO pipeline at $87 million (on track to exceed $100 million by year-end).
• Acquisition: Acquired Crabtree Mall for $290 million, strategic rationale includes being accretive to the Path Forward plan, market-dominant position in Raleigh-Durham MSA, and opportunity to reinvigorate leasing and drive occupancy.
• Operational updates: Portfolio sales, traffic, occupancy, leasing spreads, new store openings, lease signings, Executive Leasing Committee activity, lease expirations, and SNO pipeline for the go-forward portfolio.

In the second quarter, portfolio sales were $849 per square foot, up $12 from the first quarter, while go-forward portfolio sales were $906 per square foot. Portfolio traffic increased 1.6% compared to the same period in 2024, and go-forward portfolio traffic was up 2.1%. Occupancy at the end of the second quarter was 92%, down 60 basis points from the prior quarter (largely due to Forever 21 store closings), with go-forward portfolio occupancy at 92.8%. Trailing 12-month leasing spreads as of June 30, 2025, were 10.5% (15 consecutive quarters of positive spreads). Year-to-date through June 30, 509,000 square feet of new stores were opened, and 650 new and renewal leases were signed for 4.3 million square feet.

• Path Forward plan: Outlines NOI bridge from 2024 to 2028, 2028 target FFO ranges, and plans to reduce leverage to the low to mid-6x range over the next couple of years.
• Disposition: Aims to achieve $2 billion in dispositions, with over $800 million completed to date and plans to sell additional assets. Goal for 2025 dispositions is $100 million to $150 million, with approximately $100 million sold or under contract.
• Go-forward portfolio: Midpoint CAGR of 5.2% NOI growth over the next 4 years, ramping up in mid-2026.

• Macroeconomic uncertainty and pending tariffs affecting the retail environment.
• Potential challenges with asset sales timing and execution.
• Impact of lease expirations and re-leasing of vacant spaces.

Q: Talk about Crabtree, sales per square foot, Apple Store impact.

A: Jackson Hsieh discusses trade area, value-add component, and leasing potential of Crabtree, mentioning the trade area's GLA per capita and the unique value-add opportunities at Crabtree.

Q: Bad debt, watch list trending.

A: Dan Swanstrom states bad debt is down year-over-year, with the watch list at an all-time low, and notes Claire's impact on the portfolio is minimal.

Q: TIs, concessionary environment.

A: Jackson Hsieh talks about anchor stores, noting that tenant allowance (TA) expense is generally in line, with varying deals by asset type (e.g., Tysons vs Washington Square).

Q: External growth, acquisition engine.

A: Jackson Hsieh discusses leasing momentum, highlighting signed/LOI leases and market rents, indicating strong external growth potential.

Q: Crabtree CapEx vs debt paydown.

A: Jackson Hsieh and Dan Swanstrom explain the accretive nature of the Crabtree acquisition and its alignment with the Path Forward plan's leverage reduction goals.

Q: SNO pipeline, composition, temp tenancy.

A: Brad Miller and Jackson Hsieh talk about the SNO pipeline as a percentage of NOI, its composition, and the focus on reducing temp tenancy by driving high-quality tenants.

Q: South Plains Mall rationale.

A: Jackson Hsieh discusses negotiations with the lender at South Plains Mall, aiming for NOI lift through potential loan extensions.

Q: Go-forward portfolio NOI growth, Crabtree CapEx.

A: Dan Swanstrom and Jackson Hsieh provide details on the go-forward portfolio's NOI growth projections and the specific CapEx plans for Crabtree, including common area reimagining and parking deck improvements.

Q: California portfolio performance.

A: Jackson Hsieh discusses the performance of California locations, highlighting strong centers like Los Cerritos and Victor Valley, and ongoing efforts in other areas.

Q: Forever 21 backfills, DICK'S/ Foot Locker merger.

A: Douglas Healey talks about Forever 21 backfills and the positive potential of the DICK'S/ Foot Locker merger on the portfolio.