Macerich Stock

Welcome. This is The Macerich Roundtable. Very happy to have Jack Hsieh with us this afternoon, who's the CEO of the company. Jack, why don't you introduce your team, and then I'll turn it over to you for some opening remarks.

Great. All right. Good afternoon, everyone, and thanks, Samir, for hosting this conference. I just want to introduce my team. Dan Swanstrom, he's our CFO. Doug Healey is our EVP, Head of Leasing; Brad Miller is our Senior Vice President and Head of Portfolio Management; and Alexandra Johnstone is our Vice President of Investor Relations and Financial Strategy with Dan. So apologize, I'm going to read some prepared remarks, so I don't forget, and you all can ask a lot of questions, I'm sure, afterwards.

So I'll start with 2 years ago at this conference, we're basically launching the Path Forward plan, 1.0. And it was really just a plan at that point. I'm happy to say today, after 3.0, we've largely derisked the Path Forward plan, and I'm extremely excited about the opportunity that not only are we seeing within the portfolio, but the organic growth within the portfolio as well as some of the external growth opportunities that we're seeing today in the market.

So just as a reminder, the Path Forward plan rests on 3 critical pillars. The first is simplifying the business. The second is improving operating metrics and the third is reducing leverage. In June at NAREIT, as you all know, we produced the Path Forward 3.0 version. And we are meaningfully ahead of all 3 of the Path Forward presentations that we put out at this point. We've completed approximately $1.3 billion of the $2 billion dispositions that were part of our plan. We still have -- our expectation is another $300 million to $400 million of dispositions or loan givebacks by year-end, which will bring our total up to $1.6 billion to $1.7 billion out of the 2 as part of the plan.

From a leverage perspective, our current net debt-to-EBITDA is 7.3x, which is about 1.5 turns below where we were at the outset of Path Forward 1.0 about 2 years ago. And most importantly, with the capital that we raised recently as well as the SNO pipeline coming in, we expect to be plus or minus just around 6x net debt-to-EBITDA by 2028.

So operational performance begins and ends with leasing. I'm sure we'll talk a lot about leasing. We've gotten a lot of questions on leasing in our one-on-ones. But the momentum from our record leasing in 2025 has carried through into 2026. I'm sure most of you have heard about our leasing speedometer, but that speedometer currently sits at 89%, which I think is an awesome accomplishment by the team. If you think about tariffs, wars, all kinds of stuff happening. In spite of that, we've been able to do a tremendous amount of new leasing as part of this plan.

Of the roughly 1,000 new leases that were part of the base plan of the Path Forward, we have 950 committed at this point, either committed or under LOI. So that really leaves 50 left. Doug, I'm sure we'll talk a little bit later, but we really don't have much new leasing inventory left as part of the plan. Our '26 renewals are done. We're well into '27. And so our leasing teams now are really focused on '29, '30 and evaluating a lot of the new acquisition opportunities that we're looking at.

With this leasing component of our plan largely behind us, our attention for the team has flipped to conversion. So that means basically getting tenants open and paying rent on time. That's what we talk about our [ RCD, ] which you'll see our rent commencement schedule slide speedometer. So this is basically an algorithm that we focus on to make sure that we can deliver income SNO on time as scheduled that we talked about. Our rent commencement schedule stands at about 59% right now. So out of the 1,000 spaces that we've talked about, 485 are open and paying rent, 75 are under construction.

There's a big group that are in the basically lease permitting stage. We've got 120 or so leases out that we're negotiating and trying to bring to fruition, and we have 100 LOIs that we're moving towards getting to the point where we can go through and approve these leases. And then as I said, there's about 55 prospecting that are spread across the go-forward portfolio. One of the things about this operational metric is it's intended to bring more transparency in our progress as we move tenants from LOI to store opening.

As you all know, our signed but not open pipeline has reached $128 million out of the $140 million total opportunity that we talked about back in 2 years ago in Path Forward 1.0. Just as a reminder, this is committed organic growth that flows through NOI in 2028. In order to improve center vibrancy and increase foot traffic and sales, addressing vacant anchor stores was a critical component of our plan. And I reiterated this, all 30 of the targeted vacant anchors are now committed, which is comprising 2.9 million square feet, and we expect to generate something in the order of $750 million in sales. But more importantly, it's going to drive traffic and leasing into those former vacant wings, which were very difficult to handle.

As I noted on our Q2 earnings call, we expect go-forward NOI to grow at least 3% this year, back-end weighted, which implies at least 3.5% NOI growth expected in the second half of 2026 and then to accelerate meaningfully in '27 and '28, as the SNO pipeline tenants continue to open and begin paying rent. Some of our best centers today, such as Kierland Commons, Broadway Plaza, Scottsdale Fashion Square and Tysons Corner are the ones that are furthest along in this Elevate and Transform strategy, and they are meaningfully posting our strongest traffic, sales and NOI growth as compared to the go-forward portfolio average.

It's an exciting template that we're experiencing and seeing. And so we're confident that the mid-stage development, mid-stage transformation and early-stage transformation assets that are following are going to experience a similar growth profile. So finally, that brings me to the concept of acquisitions, which is our external growth engine. Let me be clear on how we're approaching growth. We're extremely disciplined, extremely careful on the things that we buy, the things that we believe we can add value to through leasing, development or intensive asset management.

We want assets that are accretive to our plan. We want assets that are accretive to 2028. And we are focused on strong trade areas, particularly where there might be a catalyst in the center to improve the direction of the property. And most importantly, we want to make sure that they can be financed within the leverage targets that we've outlined. I think what's different today as it relates to this opportunity set is our pipeline is basically the most robust it's been in the last 2 years. It's a combination of off-market and marketed transactions.

On the marketed transaction side, if you were to compare malls that we have interest in today that are being marketed, they are meaningfully higher in number and volume as compared to a year ago or a year before that when we were looking at Crabtree. So we're very confident in our ability to be very selective and very successful as it relates to external growth. With our recent equity offerings, we have the capacity to act on this pipeline in this current environment. No one is building new Class A regional malls. Capital is selective, and the best retailers are concentrating in the best centers.

Macerich has a unique advantage that differ from many other buyers. We have a fully integrated operating and leasing platform, deep national retailer relationships, attractive cost of capital and liquidity and the speed and certainty to close. And that's why sellers and retailers have been engaging with us most recently at this moment, just like in Crabtree and the Annapolis case study. So to summarize, we're ahead of schedule on the Path Forward plan. We believe the plan is significantly derisked, and we've got structural tailwinds behind us in the business that will only get stronger, particularly with Gen Z and how they're showing up in the malls and with brick-and-mortar retailers.

Our plan has us on track to achieve higher permanent physical occupancy, increased foot traffic, which will drive NOI, lease demand and rental rates within our portfolio, embedded rent growth, stronger balance sheet and a portfolio of truly irreplaceable assets in the country's most desirable markets. Our disciplined execution on the acquisition strategy and concrete steps we've taken to improve the balance sheet at the same time, position us as an attractive earnings growth story for several years to come. So thank you all for your interest. And Samir, we'll open up for questions or that we can talk about.

Yes. I'll start, and I want to keep this interactive. So if you have any questions, please dive in. But you talked about that $128 million of that SNO pipeline. Talk to us kind of how that -- what's the biggest risk right now to converting that pipeline into NOI on the time line you expect?

There's virtually very little risk. I mean these leases are basically, at this point, secured with national retailers. We have a process in place to go through delivery of premises, work through the existing tenant that might be in place. So it's really just more blocking and tackling Mall 101, which this company knows how to do. To me, I think if you were asking me like what's the risk, it's not in the plan anymore. We don't -- we only have 50 spaces that are unaccounted for right now. And of those 50 spaces, several are in Tysons Corner. There's a couple in Scottsdale Fashion Square.

They're generally really good space. We're just trying to get the right tenant at the right rate into those units. So virtually little risk on that. The new properties that we're evaluating, I take a lot of care and comfort, can we release these properties? Do they have the right dynamics in the marketplace, the right competitive position? We're going to, at some point, it might be later this year, talk to you about the change in Crabtree since we've acquired it, the leasing momentum. Let's talk broadly speaking about what's happened there.

The pro forma is better. The lease rates are better. We just secured a very, very important tenant that's a very -- that's going to elevate the entire next step of tenants coming into that mall. And I think when people see that, they're going to get comfort in our ability to execute. So when I think about acquisitions going forward, I do need leasing environments to continue to stay the way they are because these are generally assets that may have some SNO, but also have a value-add component to it, which we're very comfortable with. Yes.

But I guess going back to the $128 million of NOI, how does that flow? Is that majority in '28 that's going to...

Spread between '27 and '28.

Yes. And just to drill down on that a little bit more. Jack talked about the $128 million now being in place or committed, which gives us clear visibility into the total opportunity set of $140 million that we outlined at the beginning of the plan. Samir, to your point, in our updated presentation that we put out yesterday, you can kind of see the estimated annual contribution by year. And this is on a gross revenue basis of $40 million -- sorry, $30 million in 2026, $40 million to $45 million in 2027 and then sort of ramping up to $45 million to $50 million in 2028. So that is what's underlying this really strong NOI growth that Jack talked about in his prepared remarks, really accelerating and ramping into '27 and '28 based on the SNO pipeline that we've -- we're almost done executing against.

And all the 30 anchors at this point have been committed, right? I think...

You see in the footnote, yes.

Yes. So we've got 30 anchors committed, and we're really excited about these. These are exciting experiential concepts like DICK'S House of Sport, Dave & Buster's, Level99 that are really driving traffic to these centers. We estimate that they'll cumulatively contribute about $750 million of sales to these centers, which should drive in-line traffic. And we provided an update in terms of the status of those. We now have 7 open. Earlier this summer, we opened a DICK'S House of Sport in Freehold, which was an exciting opening, really increased traffic there.

It's one of the highest performing DICK'S openings. Most recently at our Annapolis acquisition, we just opened DICK'S House of Sport there. So we've got 7 open, 13 under construction, 5 executed and 5 lease out. So -- and at the bottom of the page, you can see kind of the cumulative openings by year. We've got 4 this year, 13 next year and 8 in 2028. So these will be really strong catalysts to the centers and really position the centers for strength going forward.

Can you just talk a little bit about the balance sheet? That's still a little elevated, it's down from where it was, a little elevated. What more do you think you could do, what the time line is?

Yes, sure. Happy to do that. So when Jack and I started, we were close to 9x debt-to-EBITDA. We outlined in Version 2.0, which was our June 2025 NAREIT, low to mid-6x debt-to-EBITDA and the various pillars or tools that we were going to use to get there. We've executed nicely against those. And in our most recent NAREIT presentation from June of 2026, version 3.0, we improved that target debt-to-EBITDA down to 6x, plus or minus. As Jack alluded to in his remarks, at the end of last quarter, we were 7.3x. If you include the forward equity, we're a little below 7x. And so we have clear visibility with that SNO pipeline that I just talked about with the organic NOI growth from there and a little bit of proceeds from our outparcels to achieve that 6x plus or minus debt-to-EBITDA.

That included any capital for the pipeline?

That's all reflected in there. Yes.

And 6 is still a little elevated to some of your peers. And is that -- do you think that will continue to...

Yes. I mean I think one of the unique opportunities that we have is we can buy assets all equity and still be accretive financially and delever. So the $370 million forward that we issued, if we buy an asset that's in the stabilized 9% to 11% range, all equity, it's about $0.02 to $0.04 accretive, all equity and then will reduce leverage by 25 basis points. We do that 3x, we're down in the 5s if we decide to do it that way. I think that one of the considerations for us internally is the convert gave us the opportunity to potentially pursue an unsecured investment-grade rating if we so choose.

If we were to do that, I'd like to be in the low 5s. If we decide to actually get on that kind of process. Secured mortgages gave us the put rights to be able to accomplish this plan. We wouldn't be able to do it if we were an unsecured borrower. So I think we'll make that evaluation. But I think in the current environment with the total addressable acquisition opportunity out there, there's a couple of different ways to delever the business that are earnings accretive, which I think are good.

Correct me if I'm wrong, your rates are weighted average by like 4.75%, 5% something on your debt.

In terms of existing debt?

Existing debt. Yes.

I mean there's a range. But we've assumed in our Path Forward plan all basically maturities through the end of the '28 plan, we assume a 6% refinancing rate. So some are marked up, some are marked down. It varies.

Yes. And our access to debt, obviously, like if we're in the term loan market, we're probably on a 5-year swapped inside of 6%. If we're doing a CMBS, we're probably 6%. The convert, obviously, is good for us because we're going to refinance 2.75% with some of the secured debt that we have north of 6%.

I seem to remember you don't have a lot of really low debt coming due the next year...

We've got a loan in...

In terms of the rate or -- like I said, there's a balance. There's a few that are coming due that are below that 6% assumption we use in the forward plan, but there are others that are north of that 6%.

And you're buying at cap rates, which are quite high for relative to where we were 10 years ago, 5 years ago.

Yes.

What does that suggest for the value of the assets that you own.

It's interesting like Green Street, we bought 2 properties. So we bought Crabtree, they started revising cap rates down. I called Green Street I was like that's one mall. There's almost 1,000 malls. You're really going to re-rate everything based on this one cap rate. So yes, that's market -- we used the most recent market data. Okay. Then I bought Annapolis in the 10s. They started re-rating again. All of a sudden, cap rates in Green Street underwriter are going back down again. And I said to them like what's really going to change cap rates is debt yields.

Right now, debt yields on Class A, class, whatever you're not getting inside a 10% debt yield on a loan. If you talk to any CMBS originator, they can't sell a mortgage on a regional mall under a 10% debt yield. It's probably more like 11%. And if it's got hair on it, it's 12% to 13%. Lifestyle Centers show up with the same tenancy, we're talking 8%, 8.5% debt yield. So there's a mortgage inflection issue happening right now. I don't think it's going to be forever. And I do think that it doesn't really make sense.

But I do also know that -- we've gone from 1,900 or so enclosed regional malls 15 years ago to about 900. That's a massive destruction of value as we've gone through that unwind. That 900 probably has to go to in the United States, in my opinion, they will get to 700 to maybe 600. There's still kind of dead man walking centers that will take a long time to go away, but they're eventually going to go away. The area that we're focused in is in the 300, which are kind of A. And if you sort of add in some of the B+s and Bs, you get to around 500 to 600 in that kind of range.

There's no reason why debt yields on an A++ asset should be like a 10.5%, makes no sense. So a lot of our maturities are coming up are like 8% debt yields. If I try to clear them right now, they're going for 10%. So lender, you want to extend or you want to take your chances out there. And so I think this log jam will start to unwind as we get through this kind of red line circle. Right now, a lot of lenders didn't want to finance malls. That was like a few years ago. Well, actually, now you can finance a mall, but it's going to be an 11% debt yield, maybe 12%, but it's really, really premium, maybe 10.5%.

Equity. I bought a partner out when I first got here, they told me this was the worst investment of all their United States investments, the biggest write-down. I said I'm sorry, but I didn't do it, and I'm going to take you out. And we've since then been able to really move those assets forward. So I think the pension funds that have invested in this will be very selective on when they come in. So if you look at who we're competing against, mostly private equity funds that are using leverage and trying to figure out how to get high teens levered returns in a business that takes a lot of money, takes a big equity check and always takes more time and more money.

So like Annapolis is a perfect example, like the fund -- if [ Sandeep ] were sitting here, he didn't want to sell it. It's like, God, you're selling too early. But the fund had made enough money and they looked at it and said, if I don't refi this thing right now because the rate -- the acquisition rate was brutal, I've got to wait 3 years because I got to pay for these tenants, I got to reopen them and then I got to try to get out. Macerich, they're going to pay me for that income in place, even though it's not here yet. And we have a capital structure that cannot necessarily have to finance in place. I mean so I think that gives us a little bit of an advantage over other people that are constrained with financing assets that are with in-place trailing NOI at 11% debt yield, no SNO credit, right? You don't get any credit for that. I think that gives us a little bit of advantage.

Spot market based on debt yields today.

10.5% to 12%.

For your portfolio -- no, with the cap rate for...

Cap rate for our portfolio, if you look at Green Street, that's -- I think they've got...

You're buying, right? You bought a couple of assets...

Yes. We bought everything to date has been stabilized north of 10%.

Right. I mean would you think 10% is the right number for the Mac portfolio today? Or do you think it's...

I think the value of our portfolio, yes, not significantly inside of that. Some of our best properties are Tysons Corner would be sub-6%, Scottsdale Fashion Square irreplaceable, sub-6% some...

Said there's not much trading.

Well, and the challenge with that is if we try to go sell one of those centers, 10% debt yield. So do the math, if it's $1.5 billion asset, 10% debt yield, someone's got to stroke a check for $600 million, a big number. There's not many people that can do that right now. Capital is not doing that. So that's why you're seeing the trades to date have been big institutions being monetized out by the operating partner. Operating partner has 50% in. If they got to promote, they're ahead and you've got the ability to move that out. But I think in time, these are really, really fortress in their characteristics of properties, very, very ring-fenced in terms of things that can hurt it and just a long list of tenant demand to get into those centers, the top centers in the country.

Maybe talk about, again, taking a step back, the opportunity set as you think -- as we think about acquisitions, right? It feels like you're looking at more stuff here like Crabtree, Annapolis -- what does that set look like? Talk about pricing?

I mean we're targeting for us, I'd say for like A- to B+. Our expectation is stabilized yields with SNO and all these other parts kind of in the 9% to 11% range. If we decide to go look at an A center that maybe goes -- that can go up to an A+. I think we're probably looking at stabilized yields in the mid- to lower kind of in that 8% range and then maybe going in is in the 7s. We're not going to -- we're not going to chase anything in the 6s that we don't -- the math for us right now doesn't make sense for that. And I think the opportunity set is big enough where we have plenty to be selective around at this point. These malls are big, and they're big commitments. So we want to make sure that the 2 we've done today, we're extremely, extremely grateful to have. And so we want to make sure we can continue that.

So very similar pricing to kind of what you've done in the past, right?

Probably similar, yes, I would say similar.

And even with rates where they are today, I mean, have you seen any shifts? I mean maybe it's a little bit too early.

I think it's a little early still. I mean rates going up are not going to affect debt yield, but certainly going to affect IRR and going in cash on cash and -- by definition, these assets, you can't just like buy them and set it and forget it. You really have to get in there and take a tenant out, NOI goes backwards before it goes forwards. If it's vacant anchors, you might have to buy it, and then you got to go cut a deal with DICK'S. That is not easy. Everybody wants to deal with them. So that deal looks like $15 a square foot in rent, $150 in [ TI. ] So that's another $18 million check to get it right, not including the box. If you want to chop the box up, costs a lot of money. So all these things really cost a lot.

But once you get them set, it's an awesome business right now. And from what we see right now, it's -- I talked about on the call, like some of our later-stage transformation assets, so that would be like Kierland Commons, Broadway Plaza, Tysons Corner, Scottsdale Fashion Square. If you looked at June year-to-date Placer traffic, that's like kind of traffic on those properties, June '26 versus year-to-date June '25, our go-forward portfolio is flat. The range on those 4 properties is 10% to 20% net increase. If you look at NOI, NOI for our go-forward portfolio during that period, 2.5%. In those 4 properties, 7% to 14% increase. It just -- that's how that SNO kind of comes in.

Sales. Our go-forward average for this period, June year-to-date was about 3.7%. For those 4 properties, the range was 6% to 18%. Why? Well, put a new Aritzia store in. You put a new DICK'S House of Sport in, you put these new restaurants, they can bring 1 million new customers of traffic incrementally into the center, give another -- give a customer another reason to want to come to the center, more frequency, more dwell time, more variety. And I feel like that is our job. Our job is to make sure we get the best retailers, the best merchandising mix, make sure they're doing the best job, make it really easy to get in and out of these centers.

If you got problems with parking, that's bad. We're competing against open-air centers and other malls. So it has to be very frictionless for people to come in. Gen Z is awesome. They come in all the time. All the time, they're coming in the malls, taking selfies. We open it and [ take the store ], place blows up. Trying to get my wife, who's a baby boomer into the mall is very, very difficult. If she wants to do luxury, I'll go to Fifth Avenue. They'll come to my house. Like I don't want to go to the malls, like all these people walking around. I'm going to walk out with a Gucci bag. She doesn't want to do that.

So the retailers have to address that. And baby boomers and millennials are starting to come back to malls, will reopen Eataly, they come -- we'll bring that in. Like if you go to Simon's Short Hills mall, it's awesome. They literally have -- everybody wants to get bigger. And if you look at the profile, it's the moms, it's the Gen Zers, it's the boomers that are in there. And they're spending a lot of money in there. So -- but you have to get the anchors fixed, you got to get the right elevated tenancy. And the fact that we went from whatever, 1,900 enclosed malls down to 900, it's going smaller. The retailer demand is equally going the other way, right? Aritzia has got open-to-buys. Zara wants bigger, better stores in their better markets.

What percent of NOI of those top 4 assets?

We are JVs. So like if you look at them, I'd say the range of NOI at share is probably $20 million to $60 million in terms of NOI. Scottsdale and Tysons are both 50-50 JVs, Broadway and Kierland the same. But Tysons is going to pro forma out at $120 million NOI, just the center. Scottsdale will be about $110 million. If you add the hotel and the resi and the office, Tysons will do $150 million to $160 million, so it's big, they're big assets -- big complex assets.

Jack, can I ask you on dispositions. You've guidance, I think you're guiding like $300 million to $400 million is that?

Between now and year-end.

Now and year-end, but you're still under contract and closed like $130 million or something, right?

Yes. So we provided an update on there, too. And just as a reminder, at the outside of the plan, we outlined $2 billion in terms of dispositions. About 75% of that was our malls, what we classified as [ Eddy ] Malls in the Path Forward presentation, about 25% of that was outparcels. As you see in our latest report here, the mall side of it has been substantially derisked. We've got about $1.2 billion of that closed. There's another about $150 million that has debt on it that's not part of our go-forward portfolio. So the mall is substantially derisking almost complete.

What we're -- the team is focused on now is getting the remaining outparcels done. It's about $500 million in total. To your point, Samir, we've got $130 million closed or under contract, and we expect to get to $300 million to $400 million total this year. The $130 million plus the, call it, $150 million rounded not part of the go-forward portfolio that gets you a lot closer to that $300 million number. And then in '27, it's largely the outparcels that will round out the disposition program. We've talked about this in the past. The outparcels require some work on our team to ready for sale, completing some entitlements to maximize value on some land components, doing some blend and extend on some net lease, doing some reparcelization.

So once that prep work is ready, the team will take that out to market. So yes, so we're progressing towards that $300 million to $400 million sold or under contract by the end of this year, and that will leave $300 million into...

You look like you still have activity. I mean it's already September.

Yes. And just like back-to-school, we have announced this. But if you look at the back-to-school traffic, it's the highest percentage traffic we've had in the last 5 years. And that's with half the stuff open. So I know it's going to get better. We've seen it at Freehold. Center-wide traffic is up 9% since the DICK'S House of Sport opened. DICK'S House of Sport opened in Annapolis. The first -- I think the first 2 weeks, had 110,000 people go through the door. It's had a massive boost to that center. We had a handshake on a retailer that's going to take the Sears vacant box. So that part of the wing, which is the weakest wing by the food court and the theater, that's going to be the next step of evolution.

Uniqlo opened, it was a smashing success. We still have the other 50-yard line space available that we're trying to figure out the highest and best user for that location. So we're in this period where the retailers that are the new ones. So I'd like -- not new ones, but like the big new important open-to-buys like Aritzia, you want to get them if you can. Gap. Gap is doing a great job, right? If you listen to Richard's call, the Gap was up 9%, right? Old Navy has still got some work. Athleta needs some work. Banana is still great, but they're solid, but the Gap is really, really doing particularly, especially with the Gap Kids.

We just opened a new Gap store, [ 8,750 ] square feet at Freehold, and we opened it in the last month. It's smashing success. So he wants to be back in the malls. He left, like Gap left these centers over the last 10 years, right? So they're trying to figure out a way to get back in. The challenge for Gap is they do -- they need like currently about 9,000 square feet, and they can do about $300 a foot in sales. Ain't going to get it done in our best centers in center court. It can't drive the volume. So I said to them like, look, you've got to rethink your footprint if you want to be in the best malls right now, figure out how to do less with more because Uniqlo is going to do better than you, Zara is going to do better than you.

Aritzia will blow out. Skims can do more than -- so there's -- they've got to figure out a way to reconstitute because they left a lot of these centers. They used to have probably some of the best space in these malls. And prior to Richard's leadership, they kind of lost their way a little bit, but they're back. Coach is back with Tapestry. American Eagle is doing great with Aerie and their brands. And so why are they doing great, the customer. That Gen Z customer that we all talk about, if you listen to any retailer call, listen very carefully, they will talk to you about that Gen Z customer, trying to figure out how to meet them.

They're already showing up. They want physical. They don't want to do everything online. But you got to show up the right way. And as a landlord, we have to show up the right way. My little Gen Z committee, it's a pretty cool committee. We meet with them, like what do we need to do in these centers? What's the long-term prospect to us that we need to bring in because we can't really rely on the boomers or millennials at this point because that -- that's our effective silver tsunami, if you were to compare it to like senior housing. It's big. It's only getting more spending power. And every day, it gets older and more frequency into the centers.

I know that we're out of time here, but we got a couple of rapid fire questions that I need to ask. So #1, if long-term rates stay higher for longer, which has the biggest impact on your sector? Is higher refinancing costs, lower transaction activity or less new supply?

We'll end up buying more centers if rates stay elevated like this.

Yes.

Highly confident about that.

Got it. Over the next 3 years, will third-party capital become a more important source of growth for public REITs than balance sheet capital? Yes or no?

For us, no.

And #3, for your sector, will same-store NOI growth next year be higher, the same or lower than '26?

It would be higher.

Great. Thank you.

Thank you all.

Good afternoon, and welcome to the Q2 2026 Macerich Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Alexandra Johnstone, VP of Finance and Investor Relations. Please go ahead.

Thank you for joining us on the second quarter 2026 earnings call. During this call, we will make certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, including statements regarding projections, plans or future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results and supplemental and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8-K with the SEC, which is posted in the Investors section of the company's website at macerich.com.

Joining us today are Jack Hsieh, President and Chief Executive Officer; Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with us in the room is Brad Miller, Senior Vice President of Portfolio Management. With that, I would like to turn the call over to Jack.

Thanks, A.J., and good afternoon, everyone. When we published our Path Forward 3.0 plan at NAREIT in June, we highlighted that we were meaningfully ahead of schedule on the execution of the plan, which is delivering tangible results and positioning us for accretive growth above our original expectations. We're demonstrating strong execution across 3 pillars: simplify the business, improve operational performance and reduce leverage. We've made significant progress in leasing dispositions and balance sheet improvement while also positioning us for sustainable NOI growth and new external growth opportunities.

Today, I'll briefly touch on our second quarter results, then turn to where we stand on our Path Forward plan and how we're thinking about external growth. I'm pleased with our second quarter results. FFO as adjusted was $0.35 per diluted share and go-forward portfolio NOI grew 3.8%. We expect this growth to continue to ramp in 2027 and 2028 as our signed not open tenants open and begin paying rent. Our SNO pipeline reached $124 million. Portfolio sales reached a new company high of $919 per square foot and $954 across the go-forward portfolio with leased occupancy of 94% and 95.5% in the go-forward portfolio. We remain ahead of schedule on our important strategic leasing initiatives.

Our leasing speedometer, which tracks new deal completion in the 5-year plan is at 88%, ahead of our 85% midyear target. Only a small number of leases remain to complete the plan and our attention has shifted to conversion. That means getting tenants permitted, built out, open and paying rent. Occupancy is tracking with what we projected in our Path Forward plan and the strong demand for our space has our teams already leasing into 2029 and 2030 as little space remains available in our best centers. We recently introduced the store openings completion percentage, an operational metric intended to provide transparency on our progress to move tenants from LOI to store opening. As of NAREIT, we were at 50%. And today, we are at 57%. We expect to be ahead of our 60% year-end target at the end of this year.

We talked about how our playbook is working within the portfolio as the elevate and transformation strategy moves through the later stages and occupancy tightens, traffic increases and NOI improves. If we look at our best-performing centers year-to-date in terms of NOI growth, these centers have experienced the strongest traffic improvement as compared to our portfolio average. Our next good case study is the West wing of Tysons Corner. That wing has historically been held back by weaker traffic, and we're changing that. We're adding, among other nationally recognized tenants, a 2-level Eataly in the former American Girl space Din Tai Fung in the former Pottery Barn, and cider in the Express space. These tenants are all proven traffic generators. With that wing now effectively full, that added traffic and dwell time should translate directly into pricing power.

Year-to-date through the first 6 months, traffic is up 10% at Tysons as we have continued to upgrade the tenant base over the past 3 years. With these new tenants coming in that we've signed and others we expect to announce soon, that traffic has even more room to improve. The scarcity of space in our best centers is by design in our path forward plan. No one is building new regional malls and roughly 90% of our go-forward NOI comes from Class A assets and the best retailers of the world -- in the world are concentrating their growth in high-quality centers like ours. Retailer demand is as deep as we've seen it and is influencing how we are evaluating potential acquisition opportunities. Brands are pursuing quality over quantity and competing for limited space in our centers. The Gen Z consumer over-indexes on visiting physical stores and spending on goods, food and experiences and is on track to become the largest spending demographic in the country. Those tailwinds are only getting stronger.

Let me turn to acquisitions, which is an increasingly important growth engine for us. Our opportunity set has grown and the pipeline is robust. We are evaluating a broad set of on- and off-market opportunities, the most at any point since we began the Path Forward plan. We remain highly disciplined, and our criteria has not changed. Our criteria for acquisitions includes assets that are: one, accretive to our Path Forward plan; two, located in strong trade areas with clear catalysts to elevate and transform using our leasing, development and operational platform to add value; and three, finance in a way that keeps us within our leverage targets under the plan. We will remain patient and selective, but we intend to use this window because the conditions for acquiring and transforming high-quality malls are as favorable as we've seen.

At Annapolis, the onboarding has gone smoothly and the momentum is clear. UNIQLO is now open. Dick's House of Sport opens on August 14, and the Elevate and Transform effort is well underway. It is a market-leading asset in one of the most affluent trade areas on the East Coast and its proximity to Tysons quarter extends our platform across the Washington, D.C. region. At Crabtree, our leasing momentum has been strong. We recently announced Level 99 and Fogo de Chao, and Dick's House of Sport is opening in September. In addition, Lululemon has recently signed a lease to extend and expand their location. Since the acquisition, we have commitments on 45 new and expansion leases and 35 renewal leases. Both assets reinforce our conviction that our leasing capabilities and relationships with the best retailers in the world are what turned these acquisitions into value, and it's a big reason sellers and retailers want to work with us.

We are increasingly in a position of strength with the balance sheet. Following our most recent offering completed on a forward settlement basis, we have approximately $372 million from this offering available to fund future acquisitions. That financial flexibility, combined with our platform lets us act with speed and certainty that sellers and retailers value. That's a real competitive advantage in this market. In summary, we are ahead of schedule. The plan is substantially derisked and the structural tailwinds behind our business from the limited supply to retailer demand to the emergence of the Gen Z consumer are strengthening. As I've noted before, when we complete this plan, you should expect to see a company with higher permanent occupancy, embedded rent growth, a stronger balance sheet and a portfolio of irreplaceable assets in the country's most desirable markets.

With that, I'll turn the call over to Doug.

Thanks, Jack. Like the first quarter, the second quarter reflected continued leasing momentum across our portfolio. Portfolio sales at the end of the second quarter were $919 per square foot, once again representing a new high watermark for the company, and that's our full portfolio. By contrast, when you look at our go-forward portfolio, the centers where we're actively investing, sales were $954 per square foot, and this continues to underscore the success of our elevation and transformation strategy.

Occupancy at the end of the second quarter was 94%, up 60 basis points from the first quarter. The go-forward portfolio occupancy at the end of the second quarter was 95.5%, and that's up 60 basis points sequentially and up 270 basis points year-over-year, continuing to reflect strong demand for space in our best centers. As we get into actual leasing for the quarter, let's start with our lease expirations. We have commitments on approximately 93% of our 2026 expiring square footage that is expected to renew and remain open with another 6% in the letter of intent stage. As I mentioned last quarter, we're effectively done with 2026 and now actively focused on 2027 and 2028. In fact, as we look specifically at our 2027 expirations, we're just about 50% committed with another 40% in the letter of intent stage. And compared to this time last year, we're ahead of pace and very pleased with the progress we've made.

Turning to tenant openings. In the second quarter, we opened almost 350,000 square feet of new stores. Most notably, in the second quarter, we opened a new and expanded Zara store at Tysons Corner Center. At 45,000 square feet, this is the first true flagship Zara in our portfolio, and its opening was extremely strong. In fact, in its opening weekend, Zara Tysons was ranked #1 in sales in the United States and #5 in the world. Since then, it remains #1 in this region and in the top 10 in the country. And we look forward to opening our second Zara flagship at Los Cerritos in the fourth quarter of 2027.

In terms of leases signed in the second quarter, we signed 1.3 million square feet of new and renewal leases, of which 645,000 square feet were new deals, which is right on par with what we leased in the second quarter of 2025. And let's remember, last year was a record leasing year for us. Examples of leases signed in the second quarter span 5 categories: legacy brands like Aerie, OFFLINE by Aerie and Old Navy. Food and beverage concepts like Eataly, Din Tai Fung, and Wood Ranch. Iternational names like Zara and Sephora. Experiential concepts like Level 99 and Golf Galaxy and emerging brands like Alo Yoga, On Running, Viore, Rowan, Reformation, and Cider.

So my point listing examples of brands we signed in the second quarter, which is really just a subset of all the leasing we've done in our 5-year plan is this. Of the 1,000 new deals in our 5-year plan, we only have 170 left to achieve our goal, 2/3 of which are in the letter of intent stage. And given the continued healthy retail environment and unprecedented demand for space in our centers, we believe this is very achievable. So how did we get here? We got here by record leasing activity in the last 2.5 years, which we've discussed quarter after quarter. But it's very important to note, and I want to make this clear, we achieved the success not by just leasing space to fill space, but rather we got here by leasing space in a very thoughtful and strategic manner, targeting many of the best and most sought-after retailers in the world.

And when these 1,000 new tenants open between now and the end of 2028, the Macerich portfolio of shopping centers will have been completely reimagined and ultimately transformed and elevated like never before. And when we look out to 2029 and beyond, the narrative of our leasing story will change. With the vast majority of our 1,000-deal program complete, we shift from record leasing volumes to curating and optimizing a portfolio that is already elevated. We expect our go-forward centers to be operating at higher occupancy and higher sales productivity than any point in our history, giving us continued pricing power and the ability to drive sustainable same-center NOI growth for years to come.

And with that, I'll turn the call over to Dan to go through our second quarter financial results.

Thanks, Doug, and good afternoon. I'll start with a review of the second quarter financial results. FFO as adjusted was approximately $100 million or $0.35 per share during the second quarter of 2026. Go-forward portfolio centers NOI, excluding lease termination income, increased 3.8% in the second quarter of 2026 compared to the second quarter of 2025. With a strong second quarter of NOI growth, go-forward portfolio centers NOI has now increased 2.5% for the 6-month period ended June 30, 2026, as compared to the same period in 2025. We continue to expect go-forward portfolio centers NOI growth for the full year 2026 to increase at least 3% over 2025 and to accelerate meaningfully in 2027 and 2028 as the SNO pipeline tenants continue to open and begin paying rent.

We have a high level of confidence in achieving the total SNO opportunity of approximately $140 million. The estimated annual contribution is $30 million in 2026, back-end weighted, $40 million to $45 million in 2027 and $45 million to $50 million in 2028. This represents a clear visible path to drive incremental growth.

Turning to the balance sheet. We are making strong progress on the balance sheet initiatives contained in our Path Forward plan. 2026 continues to be an incredibly productive year by the team in relation to our various financing activities. With respect to our equity capital markets activity, in May, we priced an upsized public offering of common stock at $21 per share, resulting in net proceeds of approximately $450 million. The use of proceeds were primarily to fund the acquisition of Annapolis Mall and related strategic leasing capital investments at Annapolis. In June, we priced the public offering of common stock at $23.90 per share through forward sale agreements. The company did not initially receive any proceeds from the sale of shares of its common stock by the forward purchaser banks. We intend to use the future net proceeds to fund future acquisition opportunities.

Year-to-date in 2026, we have closed on a 4-year loan extension through November 29 at our South Plains property, completed an amended and restated $900 million revolving credit facility, repaid the loan outstanding on Vintage Fair Mall and closed on a new $115 million 5-year mortgage loan at Deptford Mall. With respect to our 29th Street property, the $76 million loan at the company's pro rata share remains in default after its February maturity date. As we are currently in discussions with the lender on the terms of this loan, we do not have any additional commentary at this time.

We're proactively addressing our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or if necessary, property givebacks. We currently have approximately $1.2 billion in liquidity, including $900 million of capacity on our revolving line of credit. This excludes the net value of unsettled forward equity proceeds of approximately $372 million. From a leverage perspective, net debt to adjusted EBITDA at the end of the second quarter was 7.3x, which is almost a half turn lower than last quarter and over a 1.5 turn lower than at the outset of the Path Forward plan. Inclusive of the unsettled forward equity proceeds, net debt to adjusted EBITDA is now below 7x. And importantly, we've outlined our strategy to further reduce leverage to the 6x, plus or minus range.

We are executing on the dispositions we've outlined in our Path Forward plan. During the second quarter, we closed on the sale of our joint venture interest in West Acres for $1 million plus the assumption of $13 million of debt at our share. To date, we have completed approximately $1.3 billion in total dispositions, representing about 2/3 of our initial disposition target and the disclosures we provided in our supplement includes a summary of these asset dispositions. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine our portfolio.

We continue to expect to sell or give back $300 million to $400 million of additional assets, outparcels and land by the end of this year. This would increase total dispositions to approximately $1.7 billion. Year-to-date, we have closed on about $30 million in total dispositions, and we now have approximately $100 million under contract to sell. We'll provide further updates on our disposition activities as we progress through the year. Overall, we are making great progress on our Path Forward plan objectives to reduce leverage, refine the portfolio and strengthen the balance sheet.

With that, we'll turn the call over to the operator.

[Operator Instructions] And our first question today comes from Andrew Reale from Bank of America.

Now that all 30 anchor replacements are committed and starting to roll on, maybe could you just talk about in more detail sort of the second order effects on leasing and rent spreads at the rest of the center once that anchor opens? How might that compound over both the next few years and then even beyond 2028 when the renewal opportunity really accelerates?

I'll take that, Andrew. So you're asking sort of the -- if I get the question right, of our 30 anchors, sort of a net follow-on effect. So there's probably like 3 stages that it goes through. The first is when we sign an anchor deal and can announce it. It's obviously not open yet. That already enables us to begin the re-leasing effort with getting strategic tenants that we can build upon on the inline. Then there's the second phase, which is when the store opens. That obviously brings more energy traffic into those wings. And then you've got what I'd call the after effect 2 years later when now you've got that anchor open, operating and multiple tenants now also open and operating in that wing.

If I were to use an example of the Scheels store at Chandler, that store in itself right now is drawing 3.1 visitors to its store according to Pacer in the last 12 months. It's the #1 Scheels in the system. That's enabled us to bring Vuori, Alo, Din Tai Fun now is coming on to the outside. Seafood City just opened, for instance, at Chandler. They were -- that's a pretty exciting brand that just opened last week. So you're seeing like -- and Scheels is very unique, right? They draw tremendous volumes. But if you look at another important anchor tenant that we've talked a lot about, Dick's House of Sport, we have about 9 months operating history at Freehold with them. And according to our math, they're drawing over 800,000 customers into the center from their store. So we expect them to achieve a $1 million incremental customer run rate.

That's already not only helped tenants within that wing, but enabling the teams to continue to follow on more leasing. So it's sort of a -- it's not a simple answer, but what I'd say is we get the first bite when we're able to announce the anchor. We get the second bite when they open. And by then, we've got other tenants on the in-line opening. And then when you look at it 2 years later, you get the full effect.

Our next question comes from Vince Tibone from Green Street Advisors.

I understand acquisitions are lumpy and hard to predict. But how should we best think about overall acquisition volumes going forward? Based on your comments, it seems like there's a lot of interesting opportunities you're underwriting. So just trying to get a sense of if there's any thresholds in terms of risk mitigation or human capital or number of assets you recently acquired that are in some state of transition that you want to kind of limit in terms of the overall portfolio. Ultimately, yes, just trying to see how many of these we should reasonably expect over the next 12, 18 months.

Yes. Okay. Vince, I'll try to take that. So you're kind of trying to pin me down on size, shape and volume. And man, if I was in my triple net, I would be skewing out quarter-by-quarter what we could do. And I was listening to some of my peers in the shopping center business talk about volumes. I guess the way I'll answer it is I believe that this is a really unique opportunity to buy enclosed regional shopping centers. I think that -- we have a tremendous advantage having an integrated operating platform. We've got great national tenant relationships, and we got the money. And we don't need mortgage debt, and we've got speed and certainty. And to me, that should give you confidence like that enables us to win Crabtree in a fully marketed deal. That enables us to secure Annapolis, which was off market because the seller wanted certainty and want speed.

What I can tell you today is since I've been at this company, we have a robust and broad on and off-market set of opportunities with stabilized yields in the 9% to 11% area. I'm not going to give you a number, but the way I would think about the net effect to us -- and what makes it so exciting for me sitting at where we are right now, we're at $1.90 and 6x debt-to-EBITDA on the core plan. If we invest that $372 million of forward equity that we have, 100% equity on an acquisition in the 9% to 11% stabilized yield area, that's going to generate about $0.02 to $0.04 incremental FFO accretion and lower our leverage 25 to low 30 bps debt to EBITDA. So our debt to EBITDA would be down in the high 5% range if we're able to just deploy that 372. So, we're going to be picky. We're going to do the right thing. And I probably got a lot of sellers listening to this call, too. So I don't want to make it harder on myself. But I think it's a tremendously unique opportunity for us as a company today.

Our next question comes from Craig Mailman from Citi.

Maybe not to pile on or try to pin down even more, but on acquisitions. I mean you guys came back pretty quickly to the equity market and raised a decent chunk of forward capacity here. I mean, I guess from our standpoint, what's the risk that, that capital doesn't get deployed by June of next year when you guys would have to settle it? I mean, is that even a possibility given what you have in the pipeline today?

It's not possible. I'm just going to tell you, Craig, it's just not possible. The reason why we decided to pursue the forward equity, we have so many good things happening in terms of leasing and I'll spend later in this call, talk about what we're seeing on sort of late-stage and mid-stage transformation and the impact it's having. But literally like doing a forward equity is a no-brainer. We've got a very, very large pipeline. We know that the net effect will take our debt to EBITDA down in the high 5s, like 5.75%, right in that range, and it's going to be accretive. So yes, we're going to use that money. I'm telling you, way before June of next year. So, I think it was just kind of prudent given the biggest thing I was concerned about just there's a lot of macro things happening in the world right now.

And right now, I'm very comfortable settling that forward equity somewhere between a 9% and 11% stabilized yield, and I kind of know the net effect of it, which will be positive for the business. So that was kind of the logic of why we did it. It wasn't like we had a deal ready to print. We just said this is too good. We need to protect this, our plan.

Our next question comes from Todd Thomas from KeyBanc Capital Markets.

I'll switch over to operations for this. Dan, you reiterated the full year go-forward NOI growth of at least 3% and then reiterated also that you expect a meaningful acceleration in '27 and '28. Just in terms of the cadence from here, following 3.8% this quarter, is there anything in the second half of the year that should create a headwind to go-forward NOI growth? Or do you see this period representing the inflection in growth with growth continuing to track higher from here on commencements?

Yes. Todd, this is Dan. Thanks for the question. Yes, we continue to expect at least 3% for the year, which based on -- obviously, second quarter was very strong at 3.8%. That brings us in at 2.5% year-to-date. So that does imply 3.5% NOI growth at least for the second half of the year. We think maybe the fourth quarter based on the SNO contribution might be a little stronger than the third quarter, but you kind of think about the second half of the year as 3.5% plus for '26.

And then as you noted, there's a meaningful ramp from there, we did put out our Path Forward version 3.0 at NAREIT. The 3-year NOI CAGR midpoint was 6.5% for years '26 through '28. So if you just for simple math, assume the 3% in '26, that implies north of 8% NOI growth in '27 and '28. And -- we've given you the SNO contribution by year in my prepared remarks. And again, '28 is slightly higher than '27. So you can kind of think of '28 as a little bit higher than '27. But over those 2 years, 8.25% sort of midpoint growth based on the 6.5% over the next 3 years.

And Todd, I'll pile on to Dan's comment on operations. So you've heard us in my comments, talk about later-stage transformation, mid-stage transformation, early-stage transformation. We're re-leasing, as you know, 1,000 new units, it's about 25% of our portfolio. So what does the late-stage transformation look like? So if I took Kierland Commons, Broadway Plaza, Scottsdale Fashion Square, Tysons Corner, those I would consider in the late-stage transformation of what's going on with those properties. If you look at the Placer traffic June year-to-date, those 4 centers are generating low teens traffic increases over last year, same period versus if you look at our go-forward portfolio, it's flat.

If you looked at year-to-date 26 NOI on those 4 properties versus '26, it would be close to 9%, high single digit versus 2.5% for our go-forward year-to-date '26 numbers. If you looked at sales June year-to-date for those 4 properties, it would be low double-digit increases versus last year compared to 3.7% for our go-forward average. So the point I'm trying to make is we're seeing like tremendous lift when we get this right. If you looked at 2 examples of what I call mid-stage transformation, that's Los Cerritos and Chandler. Those centers are seeing kind of mid-single-digit placement numbers, so it's in excess of our go-forward average. It's mid-single-digit NOI growth year-to-date compared to 2.5% for the go-forward average. And sales are also mid-single digit versus the 3.7%.

Each of those centers have very unique things about them, like Chandler, we just talked about, Sifu City just opened up. Zara is under construction. Din Tai Fung is under construction. Sephora, Alo, Wagyu House, all under construction. Los Cerritos, Dick's House of Sport under construction. Flagship Zara under construction, Coach Cider basically under construction and other tenants that we haven't announced yet. So, you're going to see like this follow-on effect. I think the question came in earlier from someone about the 30 anchors. And if you look at the other -- there's 15 other centers that are either in the early to mid-stage transformation that are undergoing -- that are going to start to contribute and follow on as we get into '28, and you'll see the effects rolling into '29, '30 that Doug talked about incremental curing in the portfolio.

So, there's a lot of power that comes from doing this. If you do it in the right centers with the right trade areas with the right mix of anchors and inline coming on. And the go-forward averages don't tell the whole story. That's the point. And so we'll begin to start to talk about this in the future quarters as we get more data. But very exciting from my seat from what I'm seeing because basically, it's working. And we keep talking about same-center NOI going up. We're seeing it real time in those later-stage assets and now the mid starting to see it. So, there'll be more to come, but gives us a lot of confidence that this is working.

Our next question comes from Floris Van Dijkum from Ladenburg.

I don't want to belabor the capital markets questions and the investments. Hopefully, people have gotten a pretty good sense of the growth ahead. My question is, I guess, what percentage of your total NOI today is in your go-forward portfolio? And then maybe also a little bit of update on the percentage of your SNO pipeline that's from redevelopment versus your core portfolio, please?

Yes. Floris, I can take the first part of your question on the NOI contribution and maybe Brad can chime in on the second part. In terms of the NOI, and I will refer you to our supplement, Page 7, just to draw it out. We had NOI for all centers for the quarter of $211 million and the go-forward centers represent $185 million of that $211 million. And then for the 6 months ended June 30, the NOI go-forward centers are about $360 million relative to $400 million for the total portfolio.

This is Brad. I'll take the SNO contribution. So of the $124 million of SNO we have out of the $140 million total opportunity, the $124 million roughly breaks down $20 million to our development pipeline of Scottsdale, Green Acres and Flatiron, $20 million to the -- what we call the redevelopments, which is all the anchors that we're opening up and then the remainder of the $84 million is the rest of the leasing of the portfolio.

Our next question comes from Haendel St. Juste from Mizuho.

I wanted to go back to the redevelopment capital spend, the curating, optimizing the portfolio. With your leasing goals now nearly complete, it seems like there's going to be a bit more of a shift towards some of that curating, optimizing the portfolio. You've done -- you have a number of anchor commitments. So I guess I'm curious if you could share some color on maybe the scope of the opportunity for redevelopment in front of you within the portfolio? How can we think about that on maybe an intermediate-term basis in terms of redevelopment spend and yield that you're targeting?

Yes. Thanks, Haendel. So in terms of your question on redevelopment priorities, yes, the team, we're actually going through that exercise right now as a team. because there's been so much focus on nailing down the 28 plan with the 1,000 units. There's things that we haven't touched that are going to really contribute. I'll give you one example. At Broadway Plaza, we have the former Neiman Marcus anchor box that was going to originally be a resto. That's not going to happen anymore. And thankfully, we actually have the opportunity to actually convert to more in-line opportunity. There is so much demand for tenant space at Broadway Plaza. We just -- we don't have the space. So that's going to actually end up being more accretive than have we followed through on the restoration hardware opportunity.

At Scottsdale Fashion Square, we have probably one of the most valuable pieces of commercial real estate on the North parcel adjacent to the Apple Store. We haven't -- we're undergoing plans to evaluate that. Tysons has tremendous opportunity up by the Silver Diner, across from the West Wing that we talked about. So -- and there's others like that within the portfolio that we are really beginning to put pen to paper on how to do it, how much does it pro forma out? Does it add value? Does it add traffic? Is it going to enhance our position and continue to put that moat around our assets?

Our next question comes from Greg McGinniss from Scotiabank.

For the acquisitions, you're looking at targeted yields in the 9% to 11% range. And I recognize that this math is not 1:1, but how should we think about the quality of those assets compared to the in-place portfolio considering the mid- to high 6% implied cap rate on the stock?

Yes. So Greg, you're kind of asking like quality of the 9% to 11% versus kind of our implied cap rate. I got that right. I would say the things that we are evaluating are really just going back, obviously, assets in very strong trade areas where we believe that if we can come up with a catalyst plan, whether it's the leasing, anchor redemise, can really take more share from that trade area. That's, first and foremost, starts with that. Obviously, it's got to be accretive. It's got to be the right financing within our leverage targets. At the end of the day, we have an A portfolio and the things that we're looking at, we believe can either -- they're either are already or if they're not, we believe that employing our strategy can get it there. So I'd say the quality of things that we are looking at are very solid, if that helps.

Our next question comes from Michael Griffin from Evercore ISI.

Jack, you mentioned the deals that you've closed over the past, call it, 1.5 years, Annapolis and Crabtree, one was marketed and one was off-market. I'm just curious if you're seeing any increased competition for prospective transactions. I got to imagine it's a relatively limited buyer pool. But just given the operational intensity and the nature of how to run these malls, have you seen more capital interested chasing these deals? And just curious, any thoughts on that?

I mean from my standpoint, you're talking about sort of the nature of the competition that we're competing with. I think like compared to like the Crabtree opportunity, that was pretty robust bidding. And I think the players that we were able to went over, they're still there. They're still looking at the same things that we're looking at. I think our cost of capital is tremendously different than when we were evaluating Crabtree. And I think I would agree with your point that it's -- these are not commodity assets. So anybody that wants to invest in this needs to be partnered with a really good operator. It's all leasing. It all takes time. It all takes money. But if you get it right, you get a Scottsdale Fashion Square that does -- had an 18% sales increase year-to-date versus last year. And it's phenomenal kind of stuff that happens if you can get this right.

I would say when we were successful with Crabtree and Annapolis, I mean, I was doing that part time with one of the asset managers. I have now -- I got an EVP of acquisitions. He's got a team, and he is -- we've got an unbelievable list of things that we're evaluating right now compared to last year and the year before. So yes, I mean, I feel like I'm sure it's going to be competitive. I'm not thinking we can't -- people are going to try to beat us and try to find things that make sense. But I also think that one advantage we have if you were going to try to bring a Dick's House of Sport on your campus, we have probably the most of any company right now that I can think of in terms of commitments with them.

We have a very unique relationship with them where we can get really good insight as to does this make sense? Will it make sense? If we do it, will you be there? If you were there, we can do some other things with it. And I think that it creates more predictability as we're underwriting these different opportunities versus, say, someone else that maybe always done one of them or maybe 2 or trying to get one done. I think it's very different.

I'd also say one advantage we have is kind of like working with municipalities. The project we're doing out of Flatiron in Broomfield in partnership with the city of Broomfield, that project is going to be something that our company is going to be super proud of when we get done with that. And I would say that there are assets that are like that, that can be transformed, and we'll need to work with the local government in partnership to get those things over the goal line potentially. So that's -- so deals like Flatiron would not have worked were not in partnership with the city of Broomfield. And that's going to be a project that's not only financially super successful for us and super additive from a quality standpoint, but it's something that their community and their tax authorities are going to be very proud of.

And our next question comes from Tayo Okusanya from Deutsche Bank.

Just curious, with the recent increase in the 10-year and kind of all the concern about rates being higher for longer, does that kind of change any of the calculus for you guys at this point in regards to capital allocation? Or is that just kind of less of an issue now kind of given everything you've done with all the asset sales and the deleveraging?

Dan, do you want to take Tayo's question about capital allocation and how we're thinking about it?

Yes. I would say, Tayo, it's not having any immediate effect. And also in terms of as we think about the refinancings within the plan, we did assume kind of a 6% all-in cost of financing on refinancing. So even with the rise in the 5-year and the 10-year, spreads still are very constructive and really at all-time lows. So I think that's not currently impacting where we expect to be able to refinance the rest of the portfolio. In terms of broader capital allocation, not yet. It hasn't had any impact on us. I don't know, Jack, do you want to add anything to that?

No. I mean I think you said it great. And then obviously, with having that forward in place, it just completely protects our ability to get the balance sheet under 6x debt to EBITDA. I mean just straight out, I'll tell you that, in 2028.

Our next question comes from Ron Kamdem from Morgan Stanley.

Just I guess going back to some of the conversations in terms of the pipeline for sort of acquisitions. Obviously, you guys have done 2 successfully. Is there a way to sort of categorize what that potential pipeline could look like over the next 3 to 5 years? Other opportunities like this coming along, whether it's reverse inquiry? I just like to sort of categorize how often these deals can come about.

All right, Ron. I mean you trying to pin me down. But if I tell you, it's robust. It's the most stuff we have in our pipeline right now since I started. I'll give you one piece. It's about -- half of our pipeline is on market, half is off market right now. So you can call around and ask the brokers what they're selling or what they think is selling and half of our portfolio is directly with the seller. That I will tell you.

And our next question comes from Mike Mueller from JPMorgan.

I know you're seeing more competition for acquisitions, but you're still talking about cap rates that are fairly high in the 9% to 11% range. Are you seeing any signs of cap rate compression? Are you seeing it come anytime soon? Or do you think this window is going to be open for a while?

Okay, Mike. Well, first, I'll just say, personally, I hope it doesn't compress. I want to buy more. But I think to me, I'd have to focus on debt yields. At the end of the day, debt yields are certainly compressing on the best A++ properties. You've seen that. But I think it's going to still be a while before debt yields really start to have an impact, in my opinion, on cap rates, broadly speaking, in the mall business. And any mall that requires any kind of elevate and transform effort to it, there's going to be a limitation on the leverage advancement on the acquisition. So whoever wants to buy it is going to put up 40% equity maybe, 35%, 40%. You have to write more checks for the next 3 years and you hope your partner does the right thing and gets the math to work for you.

So I think as long as that dynamic stays in place, I think we'll be able to sort of experience these kinds of yields we're talking about. If there are more buyers like us or other shopping center companies that want to get into this, that might have an impact on cap rates. But right now, I'd say I haven't seen it yet.

Our next question comes from Alexander Goldfarb from Piper Sandler.

Jack, can you talk a little bit about -- I haven't heard you talk about like ancillary income sponsorship and all that sort of overlay that the malls can have. I'm just sort of curious, as you look at the plan forward, if your focus right now is more on assembling the portfolio you want. And then once you're done with the plan forward, then going back and doing sort of the ancillary income overlay or if it's a dual track strategy?

Alex, yes, in terms of ancillary income, we haven't missed a beat on it. One of the things that was a really exciting transaction was the PenFed Plaza transaction that we were able to enter a partnership with down at Tysons in that Open Plaza, where Dick's House Sport is going to go and where the hotel -- the main entrance of the property on that upper level. It's branded PenFed Plaza. We're looking at a branding opportunity in Scottsdale Fashion Square, similar to that right now. We're kind of in the market with it. And I do think that there are other areas like that. That's an example of ancillary income.

And so we're constantly -- our team in business development are looking at those opportunities because we've got these centers that have real cache. They're driving 14 million, 15 million annual customers through the doors and they're staying on the campus, in closed campus, which is a pretty unique opportunity. And so I think in our best centers, that that's going to be more and more of an opportunity for us. And there are a lot of other things beyond just putting kiosks and the carts out there in the common area where we're driving incremental revenue. So yes, definitely, we're not going to wait until this gets there. As these centers are upgrading, there's real opportunity to cross-sell into those non-real estate opportunities that generate NOI.

And our next question comes from Caitlin Burrows from Goldman Sachs.

Maybe just 2 modeling points. Wondering if you could confirm versus the goal of 88% to 89% physical permanent occupancy, what it was as of 2Q? And then just on the management company side, it looks like revenues are down year-over-year, but the management company expenses are up. So just wondering if you could go through kind of what's driving that, what we should assume going forward, if it's impacted by acquisitions or something else?

Brad, do you want to take the first and then Dan take the second.

Yes, sure. Thanks, Jack. So we reported 95.5% leased occupancy for the go-forward portfolio. Physical occupancy at the end of Q2 was 91%. And yes, we still think we are definitely going to get to that 88%, 89% physical permanent occupancy when we get these 1,000 tenants open.

Yes. On the management company revenues, they were down slightly in the second quarter relative to 2Q '25, but the first quarter was up. So year-to-date, we're at -- we're actually up almost $1.5 million versus '25 million, and that's really from development fees are outsized versus last year, and we would expect that to kind of continue in the second half of '26 as we complete Green Acres and Flatiron in sort of the last stages of Scottsdale in terms of the 3 major redevelopments.

On the expense side, we did see some increases year-over-year, and those are primarily attributable to some headcount and compensation. We built out our asset management team and obviously have built out the acquisitions team. And there's a little bit of investments in technology and AI spend as well.

And there appear to be no -- go ahead, sir.

I apologize. I want to thank everyone for coming on tonight, and just to let you know that we are extremely excited about what we're seeing on the operational lift in terms of our transformation strategy and we -- and also our pipeline of acquisition opportunities. So thank you for joining our call.

And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.

Good day, and welcome to the First Quarter 2026 Macerich Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Alexandra Johnstone, Vice President of Finance and Investor Relations. Please go ahead, ma'am.

Thank you for joining us on our first quarter 2026 earnings call. During this call, we will make certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, including statements regarding projections, plans or future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results and supplemental and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8-K with the SEC, which is posted in the Investors section of the company's website at macerich.com.

Joining us today are Jack Hsieh, President and Chief Executive Officer; Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with us in the room is Brad Miller, Senior Vice President of Portfolio Management.

With that, I would like to turn the call over to Jack.

Thanks, Alexandra, and good afternoon, everyone. I'll give some brief comments on the quarter, followed by an update on our leasing progress against our Path Forward plan, some context on what we're seeing in Class A regional malls and discuss our recent acquisition of Annapolis Mall. Our first quarter results reflect the continued progress we're making on our Path Forward plan. Our FFO as adjusted per diluted share was $0.34. For our go-forward portfolio, sales per square foot increased to $941. Total comparable in-line sales increased 3.9% from Q1 2026 versus 2025, and foot traffic was slightly up. Go-forward portfolio centers NOI growth was 1.2%.

One of our primary goals with the Path Forward plan is to elevate and transform the merchandising plan and mix of our centers through the leasing of 1,000 new units, which will create thriving retail centers with increased customer traffic, dwell time and result in improved productivity for our tenants. This leasing strategy enables us to mark-to-market the rents in our retail portfolio, enabling us to create $140 million of cumulative SNO, the signed not open tenant pipeline that will drive our property NOI through 2028. And coupled with our $2 billion disposition plan, we believe will result in higher FFO per share and lower corporate leverage. Our cumulative SNO pipeline at the end of Q1 was $116 million against our $140 million target. That is contracted revenue with approximately 80% flow-through to NOI that is multiyear growth engine that will provide the NOI ramp through 2028.

Leasing our temporary vacant and below-market in-line and vacant anchor spaces remains one of the critical elements of our path forward plan as the new 1,000 leases represents almost 25% of the entire space units within our go-forward portfolio. Our leasing speedometer, which tracks revenue completion was at 81% at the end of Q1 and currently stands at 83%. We only have 250 remaining leases to complete the plan, of which 125 leases are currently in the LOI phase and 125 units are in the prospecting phase. These remaining space units are primarily situated within our fortress, fortress potential assets in A, B and C rated spaces. Our ELC approval quarterly run rate has averaged 100 deals per quarter. In Q1, we approved 103 new lease transactions. Based upon our new lease approval run rate and the remaining 250 deals that need to execute, I'm confident we will substantially complete our leasing target by year-end.

As I now have passed my 2-year tenure here at Macerich, I've gained more confidence and belief in the resurgence of Class A regional malls and their ability to consolidate trade areas and to become even more relevant to customers and tenants. The mall industry has had to battle decades of overbuilding, the Amazon effect, anchor store closures and major in-line tenant consolidation and bankruptcies, the global financial crisis and COVID. It's havoc on the U.S. mall industry where only 895 enclosed malls currently remain. The silver lining today is that tenants have seen a demonstrated improvement in their omnichannel strategy with good physical stores. There has been a lack of new store expansion until most recently. Retailers' preference has been a growth strategy of quality versus quantity, large flagship and high-quality built-out physical stores versus historical market saturation strategies in the past.

But the 236 Class A regional malls today, we have multiple strategies and targets for anchor tenants, numerous in-line international, domestic and experiential tenants that can drive customer traffic to our centers. We have a high-quality, irreplaceable portfolio with 90% of our NOI from Class A malls. Gen Z shoppers today are another long-term tailwind for us as that cohort over-indexes in visiting physical stores, spending money on items, food and experiences. By 2040, Gen Z will be the largest spending demographic surpassing millennials and Gen X. I recently created a Gen Z committee within our company. Their focus is on helping us gain insight on how to transform and elevate our centers through winning loyalty of the Gen Z customer without losing the current dominant millennial and Gen Xers that visit our centers.

Executing our Path Forward leasing strategy will result in physical permanent occupancy increasing from 84% to 88% to 89%, which will enable us to have more pricing power and ability to further elevate and transform our centers. To give you a specific example of this later-stage transformation, at Scottsdale Fashion Square, we replaced a 35,000 square foot home furnishing tenant with luxury and dining options, including Hermès, Elephante and Laurel Piana. Cost of occupancy on the new spaces increased more than 10x. Sales are also projected to increase more than 10x to over $100 million. Backfilling our 30 vacant anchors is also critical to our elevate and transform strategy. We have all 30 of these locations committed, over 2.9 million square feet that is expected to generate over $750 million in sales. More importantly, these are catalysts to unlock productivity in entire mall wings and drive in-line leasing.

The Scheels Sporting Goods store at Chandler is a perfect example of the success of this strategy. Since Scheels' opening in late 2023, the Chandler Mall trade area has increased over 40% and overall traffic at the center is over 20%. Prior to Scheels' opening in a vacant Nordstrom store, that mall wing had in-line vacancy and less relevant tenancy. Today, not only has the Shield wing dramatically elevated, the entire center is experiencing elevated tenancy and transformation. Lululemon expanded and relocated their store. Other new store openings include Warby Parker, Travis Mathew's, JD Sports, Viori, James Avery, Gorjana , Swarovski, Levi's, Garage, Din Tai Fung and many other exciting brands to be announced soon. Green Street upgraded our Chandler asset from A- to A and their cap rate valuation compressed 100 basis points. That's the playbook that we're executing across 30 similar projects.

Dick's House of Sport recently opened at Freehold Raceway Mall. And that center has experienced increased traffic and vibrancy in the former vacant Lord and Taylor wing and is enabling us to leverage more leasing throughout the center. Most recently, we executed a deal with Bon Mauer to locate in the former Nordstrom building. We currently have 10 committed Dick's House of Sports stores in our anchor store inventory.

Before I comment on our recent Annapolis Mall acquisition, I want to share a quick update on Crabtree Mall. We have already made improvements in the common area and are currently addressing our preplanned CapEx. We have completed 36 new and relocation lease deals and 27 renewals. The Raleigh-Durham MSA is on many tenants target list, given the growth and health of the trade area, and Crabtree is continuing to gain market share as we have implemented the Elevate and Transform strategy.

Annapolis Mall has similar positive green shoots like Crabtree Mall. The difference is that the prior owners successfully started the Elevate and Transform process 2 years ago. Last week, we closed on the mall acquisition for $260 million, plus $12 million for the 13.1acre vacant Sears parcel. This is a Class A regional mall with 1.5 million total square feet in one of the most affluent markets on the East Coast, average household income over $161,000 in the primary trade area and a total trade area population of over 1 million. Over the past 2 years, the prior owners were able to secure a Dick's House of Sport that is opening later in August and signed 18 new tenant deals, totaling 353,000 square feet opening in 2026 and 2027, including Dave & Buster's, Tesla, Uniqlo, Aeropostale, Abercrombie, Jack & Jones, Pop Mart, a Lululemon relocation expansion plus recent long-term renewals with Apple, Zara and AMC.

Annapolis Mall's proximity to the dominant Tysons Corner Mall extends our platform, creating a more influential portfolio that will benefit from our ability to lease up the remaining 107,000 square feet of near-term available space, including 52,000 square feet of prime in-line space in the new Dick's House of Sport wing. We are currently exploring backfill opportunities for the vacant Sears parcel. It sits on the most heavily trafficked corner of the property and provides optionality for future retail, mixed-use or alternative development. The acquisition is accretive to our 2028 target FFO range under our Path Forward plan by approximately $0.04 per share on a leverage-neutral basis. We expect year 1 NOI, including SNO of approximately $29 million, projected to stabilize in the $33 million area. That's an initial yield of 10.5%, increasing to 11% plus at stabilization. The asset is in good physical condition and does not require significant capital to address deferred maintenance.

We funded the acquisition with cash on hand, which includes $85 million of ATM equity at an average price above $19 and $150 million of borrowings on our line of credit. As I look forward, we are well on the way to completing our Path Forward plan. The finish line is in plain sight. I have a high degree of confidence in achieving our 2028 operational and financial targets. No one is building new Class A regional malls, and the leasing demand is evident. We operate in affluent supply-constrained markets and approximately 90% of our go-forward NOI comes from Class A properties. We believe the structural tailwind of expanding retailers, coupled with the burgeoning Gen Z demographic will be a continued positive factor for our business over the next decade.

When we come out on the other side of this plan, we believe you're going to be looking at a company with 88% to 89% physical permanent occupancy, embedded annual rent escalators across our portfolio, a balance sheet with lower leverage, strong free cash flow generation and a portfolio of irreplaceable assets in affluent markets with the most relevant retailers in place. We look forward to providing an update on Path Forward 3.0 at NAREIT in June. With that, I'll turn it over to Doug.

Thanks, Jack. First quarter reflects continued leasing momentum across our portfolio. Portfolio sales at the end of the first quarter were $899 per square foot, up $18 when compared to the last quarter, representing a new high watermark for the company. When you look at our go-forward portfolio, sales were $941 per square foot, underscoring the strength of our elevation strategy and long-term rent growth opportunity. Occupancy at the end of the first quarter was 93.4%, down 60 basis points sequentially. This seasonal decline is consistent with prior years as temporary tenants typically vacate during the first quarter. The go-forward portfolio occupancy at the end of the first quarter was 94.5%, reflecting strong underlying demand for space in our best centers.

In the first quarter, we opened 225,000 square feet of new stores. Most notably, we opened 2 new restaurants in the Nordstrom luxury wing at Scottsdale Fashion Square, Din Tai Fung and Teleferic Barcelona. This is our second store with Din Tai Fung and first with Teleferic Barcelona. Teleferic is the first Arizona family-owned contemporary Taas restaurant actually originating in Barcelona. Din Tai Fung and Teleferic going well-established concepts such as Elephante, Catch, Society Swan and our restaurant leasing in this wing is now complete. These restaurants have opened to tremendous fanfare, and all are exceeding our goals and expectations, reinforcing the role of high-quality food and beverage as a key traffic driver in luxury assets. We also opened a 10,000 square foot Aritzia store in Los Cerritos. Aritzia is one of the most sought-after retailers in North America and a great catalyst as we elevate the merchandising mix in the center. This is our eighth store with Aritzia, and we expect to grow this relationship as the brand expands its store fleet and increases its open to buys.

Leasing activity remained strong throughout the first quarter. In total, we signed 1.6 million square feet of new and renewal leases, of which 700,000 square feet were new deals, more than double the amount of new leasing we completed in the first quarter of 2025. As Jack highlighted, backfilling vacant anchor space is critical to our transformation strategy. During the quarter, we signed 3 more anchor tenants, Dick's House of Sport at Los Cerritos, Round 1 at Washington Square and Von Mauer at Freehold Raceway Mall. For those less familiar with Von Mauer, it's a family-owned upscale department store founded in the late 1800s in Davenport, Iowa. It's still headquartered there and run by the Von Mauer family. Von Mauer is known for its exceptional service, premium brands and high-quality build-outs. Von Mauer's 145,000 square foot store, is currently under construction and will open in the third quarter of 2027. Von Mauer, along with the recently opened Dick's House of Sport will play a key role in transforming and elevating the merchandise mix at Freehold.

We're also excited to announce our first deal with Fogo de Chao, which will open in the redevelopment area of Green Acres Mall. This 7,500 square foot Brazilian steakhouse is globally recognized brand with more than 70 locations nationwide. Fogo de Chao has successfully evolved into a first-class contemporary dining concept that will strongly resonate with our young customers. Fogo de Chao is scheduled to open in 2027, and we look forward to announcing additional locations with this brand across our portfolio in the very near future.

Turning to our lease expirations. We have commitments on approximately 90% of 2026 expiring square footage that is expected to renew and remain open with another 10% in the letter of intent stage. As a result, we're effectively done with 2026 and now actively focused on 2027 and 2028. In fact, as we look specifically at our 2027 expirations, we're 30% committed with another 55% in the letter of intent stage. These are critical milestones that significantly derisk the renewal component of our 5-year plan. Retail environment is healthy and tenant demand continues to be strong. In the first quarter of 2026, we reviewed and approved roughly the same number of new deals as we did in first quarter 2025. And keep in mind, 2025 was a record leasing year for us. Supported by our enhanced internal leasing processes, we now have clear insight into what's next across our portfolio. Letters of intent remain a key leading indicator of future leasing activity and based on both volume and velocity, we expect this strong momentum to continue throughout the remainder of the year.

Lastly, we're looking forward to the Las Vegas ICSC convention in mid-May, where we expect strong retailer attendance in a highly productive environment. Over the course of 3 days, we have more than 300 scheduled meetings with 250 different retailers, spanning legacy retailers, international retailers, entertainment and experiential concepts, food and beverage, health and wellness and emerging brands. We are confident that the activity coming out of this convention will translate into incremental leasing growth, which will continue to strengthen our already robust leasing pipeline.

And with that, I'll turn the call over to Dan to go through our first quarter financial results.

Thanks, Doug, and good afternoon. I'll start with a review of first quarter financial results. FFO as adjusted was approximately $92 million or $0.34 per share during the first quarter of 2026. I would like to highlight the following item included in our FFO as adjusted for the quarter. Total gain on undepreciated asset sales of approximately $10 million, resulting primarily from the sale of a land parcel at Washington Square. Go-forward portfolio centers NOI, excluding lease termination income, increased 1.2% in the first quarter of 2026 compared to the first quarter of 2025. Winter weather, which resulted in higher SNO removal and related expenses at our East Coast properties negatively impacted our NOI growth by about 50 basis points.

As a reminder, we expect go-forward portfolio centers NOI growth for the full year 2026 to be up at least 3% over 2025 and back-end weighted in terms of NOI growth contribution for the year. We then continue to expect go-forward NOI growth to accelerate meaningfully from there in 2027 and 2028 as the SNO pipeline tenants open and begin paying rent.

As Jack mentioned, we have a high level of confidence in achieving the total SNO opportunity of approximately $140 million. The estimated annual contribution is $30 million in 2026, back-end weighted, $40 million to $45 million in 2027 and $45 million to $50 million in 2028. This represents a clear visible path to drive incremental growth.

Turning to the balance sheet. We continue to make strong progress on the balance sheet initiatives contained in our Path Forward plan. 2026 has already been an incredibly productive year by the team in relation to our various financing activities. In February, we closed on a 4-year loan extension through November 2029 on our South Plains property. This $200 million loan extension was completed at the existing interest rate of approximately 4.2%. With respect to our 29th Street property, this $76 million loan at the company's pro rata share remains in default after its February maturity date. As we are currently in discussions with the lender on the terms of this loan, we do not have any additional commentary at this time.

Also in February, we closed an amended and restated $900 million revolving credit facility. We increased the size of the facility from $650 million to $900 million, extended the maturity date from January 2027 to March 2030 and lowered the current pricing grid from a spread range of 200 to 250 basis points over SOFR to 180 to 220 basis points over SOFR. The current spread is 190 basis points over SOFR. Upon achievement of certain performance thresholds, those spreads will be further reduced to a range of 135 to 165 basis points over SOFR. We are very pleased with the execution on this new facility, and we appreciate our bank group's support of Macerich and its path forward plan.

In March, we repaid the outstanding balance of approximately $212 million on Vintage Fair Mall with cash on hand and $100 million of borrowings on the line of credit. At Deptford Mall, subsequent to quarter end, our joint venture closed on a new $115 million 5-year mortgage loan. This new loan bears interest at a fixed rate of 6.95% and is interest only during the entire loan term. This execution and interest rate are consistent with what we had assumed for Deptford in our Path Forward plan refinancing assumptions. We're continuing to proactively address our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or if necessary, property givebacks.

We currently have approximately $780 million in liquidity, including $650 million of capacity on our revolving line of credit. From a leverage perspective, net debt to adjusted EBITDA at the end of the first quarter was 7.76x, which is a full turn lower than at the outset of the Path Forward plan. And importantly, we've outlined our strategy to further reduce leverage to the low to mid-6x range over the next couple of years.

We are making substantial progress in executing on dispositions as part of our Path Forward plan. During the first quarter, we closed on the sale of various outparcels and land for approximately $15 million, which included the land parcel at Washington Square. To date, we have completed approximately $1.3 billion in total dispositions, representing about 2/3 of our initial disposition target and the disclosure we've provided in our supplement includes a summary of these asset dispositions. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine our portfolio. Based on our current level of discussions, marketing activities and contract negotiations, we currently expect to sell or give back $300 million to $400 million of additional Eddie assets, outparcels and land by the end of this year. This would increase total dispositions up to approximately $1.7 billion.

The ongoing and remaining sales primarily related to certain outparcels and land are likely to carry over into 2027 as we continue to work through various entitlements, re-parcelizations and lender-related activities. These items simply just take some additional time to complete, and we will remain disciplined in our execution to maximize sales proceeds and shareholder value. We'll provide further updates on our disposition activities as we progress through the year. Overall, we are making great progress on our Path Forward plan objectives to reduce leverage, refine the portfolio and strengthen the balance sheet.

With that, we'll turn the call over to the operator.

[Operator Instructions] And our first question for today will come from Nishal Shah with Green Street.

This is Nishal on for Vince. Maybe just a couple on Annapolis. Could you confirm that there is no mortgage assumed for the mall? And how do you plan to capitalize this asset long-term?

This is Jackson. Yes, there's no mortgage on it. We took -- refinanced it on our line of credit. I'll hand it over to Dan. He can talk about sort of the long-term financing plans there.

Yes. Thanks, Jack. So, as we -- and for everyone's benefit, we also posted a presentation as it relates to the Annapolis acquisition on our website. So, the initial funding was funded with cash on hand. As part of that, there was $85 million of proceeds that we used on the ATM. And additionally, we put $150 million of borrowings on our revolving line of credit. So that's the initial financing for the asset. As we thought about it, this resulted in a leverage neutral outcome in relation to our 2028 debt-to-EBITDA targets. And obviously, as Jack mentioned, it's $0.04 accretive to 2028 FFO targets. As we think about permanent funding for this asset, I think we'll evaluate that over time. Right now, we just increased the size of our line of credit. So, we have additional capacity and plenty of capacity on there as it relates to the $150 million.

For Crabtree, we put in place a term loan and used some ATM. I think as we move forward here, we'll evaluate our options and in the context of those 2028 targets, decide on the permanent funding. But we have time and capacity on our line of credit to kind of figure that out.

The next question will come from Andrew Reale with Bank of America.

Maybe just another on Annapolis. It's a nice yield year 1, over 9%, which is before the SNO. So maybe if you could just help us think through in some more detail how we get to that 11% plus longer-term target you've laid out. Maybe if you could just discuss sort of what the leasing opportunity, leasing timeline there looks like? And then just any other value-add opportunities that would help drive the yield towards that 11% figure?

Sure. Thanks. So, one of the things that was really attractive about this opportunity, the former owners killed their Partners, Atlas Hill, which is Sandeep, and Centennial have been working on this project for 2 years, and they've generated tremendous leasing momentum and merchandising. So, a lot of those 18 leases that we talked about are effectively rolling in this year and next year as part of that SNO component. But what's really exciting for our team is that 52,000 square feet of prime space that if you look on that leasing map diagram in our deck, that's Center Court, that's opposite Uniqlo, which is soon to open and where Dick's is opening in August. So, we think that, that's going to give us a lot of opportunity to get some really good retailers in that corridor.

And then there's also really great opportunity, as you can see in that darker blue section on that diagram where we believe there's an opportunity to increase rent and permanent tenancy from flipping some underperforming tenants into other opportunities as that center starts to stabilize. And then finally, that Sears parcel, we believe, is very valuable. There's already a number of anchor discussions that have been taking place, and there's definitely residential options as well. So, we're going to evaluate that pretty carefully as to the best course of action. Ultimately, we want to have a great thriving shopping center. So, we'll decide very quickly what the best course of action is.

The next question will come from Greg McGinniss with Scotiabank.

This is Viktor Fediv on with Greg. So just a question on your same-store NOI for go-forward portfolio for this year. So last quarter, you mentioned at least 3% to be achieved. But based on leasing activity year-to-date and your focus on rent commencement dates and the progress on that, is it still the kind of base case to be at least 3%? Or are you kind of trending better than that?

Dan, why don't you take that one?

As I mentioned in the prepared remarks, we continue to expect that go-forward NOI for 2026 will be at least 3%. And as we've mentioned before, and I'll reiterate, it's kind of back-end weighted towards the end of 2026. So, we're still on track with that for 2026. And then as we've talked about a lot, obviously, given the overall plan and the ramp in SNO that we outlined at the back half of '26 into '27 and '28, obviously, that NOI growth ramps very materially into '27 and '28.

The next question will come from Floris Van Dijkum with Ladenburg.

Obviously, the financing of this mall, I'm a little surprised it doesn't entail a little bit more equity because obviously, equity is a lot cheaper than the yields that you're getting here. Maybe talk a little bit about -- because I don't think this is the only mall that's currently being shopped, the only sort of A- mall that could be attractive. Maybe, Jack, could you give a little bit more of an update on what you're seeing in the market in terms of transactions? And how much of it appeals to you and where you think you can actually add value to acquisitions or assets?

Thanks, Floris. I mean just to remind everybody again, acquisition criteria that really is critical for us. And first and foremost, the acquisition has to be accretive to our 2028 FFO per share as part of our plan. Obviously, strong trade area, competitive position and have to enhance our go-forward portfolio. That being said, and also the ability to elevate and transform the property. So, I would say like we have a nice pipeline of things that we've been evaluating. This opportunity was obviously off market. If you saw my -- our press release, which was a real win-win for the seller and for us as the buyer, there's still a lot more to do with the asset.

I think you're balancing basically going in yields versus what I call stabilized yields. And if I were to contrast Annapolis to Crabtree, when we acquired Crabtree, the prior owner had secured that Dick Tousseasport, but they didn't really have as much progress on the in-line leasing in terms of elevating and transforming. And so, Annapolis was 2 years forward in our progress. So, as we're looking at these different opportunities right now, we're really trying to evaluate timing, the ability to execute. And look, at the end of the day, we think an asset like Annapolis is going to continue to consolidate the trade area and really begin to draw a lot wider than what it currently does. And we love assets like that, things that can be turned around because the trade area, the competition works in the real estate's favor. So, I would say they got a senior guy focusing on acquisitions, David, we've talked about him before, and he's got a nice pipeline of things that we're looking at. And if we're successful, obviously, we'll be prudent on how we think about financing it.

The next question will come from Michael Griffin with Evercore ISI.

Maybe a question on leasing. Just on the 1.6 million square feet in the quarter, can you give us the breakdown of mix of new versus renewal leasing? And any commentary you can have on re-leasing spreads, not only on the quarter, but maybe for expectations of deals that you've got in the pipeline that are going to be executed later this year?

Yes. So, the 1.6 million square feet we leased 700,000 square feet of it was to new retailers, some of which were anchor stores, some of which were in line. I think I mentioned in my prepared remarks, we did a Von Mauer deal at Freehold. We did a round 1 deal at Washington Square and Zara at Los Cerritos. So those are the new deals. The remainder were the mall shop stores. But it really speaks to the retailer demand that's out there, that 700,000 square feet of new deals. I mean the retail environment is extremely healthy. Retailers are continuing to reinvent themselves. Our watch list is at an all-time low. It's interesting. The legacy retailers are coming out with all these brand extensions. For example, A&F has Hollister, Abercrombie Kids. American Eagle has Aerie Offline, Gap has Old Navy. We're hearing that Old Navy might come out with an athleisure concept.

The emerging brands are strong. You think about Aloe, Beyond Yoga, Ferity. A lot of the retailers are all over this Gen Z consumer. You think about Cider, Addicted, Princess Polly, Randy Melville, and the list goes on. I'm just -- it's the tip of the iceberg. But suffice it to say, given everything that's going on in the macroeconomic environment, what's going on in Iran, we are not seeing any letup at all in retailer demand.

And on the re-leasing spreads, I think I talked on the last call and we certainly communicated at Citi. We're not going to use that metric at this point. When we get through our Path Forward plan, which is -- we're almost done at this point, we'll try to come up with a more thoughtful metric because that was one that, candidly, we inherited here. So, there'll be more to talk about on that in the future.

The next question will come from Haendel St. Juste with Mizuho.

This is Ravi Vaidya on the line for Haendel. I wanted to ask a bit about the K-shaped economy. And how are you seeing sales trend for some of your luxury tenants for maybe some of your non-luxury maybe aim for more of a lower income? And how are you seeing that across your portfolio?

Yes. It's a good question. I'll start with -- I'm sure you've seen this. The National Retail Federation is projecting a 4.4% annual sales increase over '25. And that's primarily related to their projections on income growth, household balance sheets, labor market stability. Getting down, the tax refunds have certainly helped. I mean, I think the average tax refund this year is up about 11% versus last year. And clearly, the middle upper income groups are spending still. If you look at our sales in the first quarter, it was 3.8% comp sales. But that's not really telling the full story. We only had one category group out of 7, which is the shoes that were negative. All of the other categories, fast food, general, home furnishings, jewelry, they all were trending positive to kind of make that composite. So, the sales are -- the consumer is definitely coming to the mall and spending in the mall.

And one of the other things that's, I think, sort of an interesting stat for us as we look at and probably more particular to our portfolio as it relates to this K-shaped economy and what we're doing. We talked about 1,000 new leases or tenants being secured in our portfolio, which is about 25% of the entire portfolio that's available to lease. That's a lot of space, obviously, in a lot of units, and that doesn't include remodels and refreshes by tenants where we extend them in place. But -- so what -- the point I'm trying to make is a good example of like what I call later-stage assets that we have that are more mature in their elevation and transformation process would be an asset like Broadway Plaza or Kierland Commons or Scottsdale Fashion Square. The traffic in the first quarter from those 3 properties, which I would consider more mature were all in the double-digit plus traffic first quarter 2026 versus '25.

So, what we're seeing is as we continue to complete this plan, get these stores built out, get these environments and anchor stores secured, we believe that we're going to experience what we're experiencing in those centers like those 3 I just mentioned. And like I said, overall sales trend is pretty much unchanged from what we saw last year going into last year. Middle high income is continuing to do what they do and retailers are super focused on having value relevance, newness, innovation and product and marketing. They're kind of taking on AI like with a veracity right now. And that's what you're seeing in terms of their level of commitment to expand, improve their physical stores. I mean they're seeing it in their top line and bottom line.

The next question will come from Ronald Kamdem with Morgan Stanley.

Just a quick one on just the physical occupancy. I think the last presentation talked about bottoming at sort of 89% this year and then start to ramp really forward. Just would love an update on just how you guys are thinking about just those commencement schedules, if you're feeling sort of better or worse, how that's sort of shaking out?

Yes. Thanks, Ron, for asking that. This Path Forward 3.0, it's not going to be a big reveal. The one thing we are going to add, which I think will help is that we're going to put -- we have a speedometer that looks at rent commencement schedules. There's like tenant criteria or gates that tenants have to move through a process for us. And we're right on track right now with that cost of occupancy completion rate and something we're really focused on now as we're transitioning with the completion of the leasing effort as we move forward to kind of getting all these stores open. So, I'd say we're right on track. It's a high level of focus right now with our real estate services team. asset management teams, leasing, on-site mall operation managers, mall managers. It's a really collective effort on trying to bring what is really an unprecedented amount of new stores into our portfolio. And obviously, that's going to impact the physical permanent occupancy increasing it to that 88% to 89% level.

And the next question will come from Alexander Goldfarb with Piper Sandler.

Annapolis Mall, congrats on the deal. But I have to ask, you keep talking about the 2028. So, it seems pretty clear there are a lot of moving pieces. this year into next as we get towards '28. Where do we stand as far as the target FFO? I think Crabtree elevated it, this elevates it. But I'm not sure if you're planning any more dispositions as you think about debt paydowns. And then obviously, the yield curve has changed versus when you initially laid out as far as where rates may be. So I think we were sort of at that 180 or 185, but can you just refresh us like where you guys see 28 FFO now sort of as the midpoint, if you will, what we should be thinking about?

You're stealing Dan's thunder for our 3.0, but I'll let him take that question.

Yes, look, I mean, we put out version 2.0, I guess, last summer. As you know, the midpoint was $1.81. And then since then, we've done the Crabtree deal, as you said, and we provided those economics. And now we've done the Annapolis deal, which we said is $0.04 accretive to that. So, we plan to sort of tighten and narrow the ranges in part of version 3.0. But overall, as we've said, we're on track to -- as Jack said in his comments, we're on track to achieve the targets that we put out there for financial and operation metrics.

Okay. But is there -- I mean, it sounds like you should be closer to $190, right?

We'll be addressing that so we can -- yes, I mean we'll be addressing that when we put out that 3.0 deck by in 3 weeks.

The next question will come from Mike Mueller with JPMorgan.

Going back to the 88% to 89% permanent occupancy that you talked about being at on the other side. I guess looking at the temp tenants on top of those, can you talk about what those tenants generally are or expected to be? For example, what portion are tenants that are typically there testing out space and really thinking about permanent occupancy versus what, I guess, people usually think of when they think of temp tenants?

Yes. I think tenants -- well, like in my comments, if you have vacant anchors, I can guarantee you have a lot of temp tenants in those wings, and it's anybody and everybody that can go in there and add value. Generally, a temp tenant is someone in our experience that pays gross rent that doesn't necessarily pay CAM and tax. It's just a gross rent number. And more than likely, as a landlord, you're going to be underperforming from a rent capability standpoint. We'll always have some degree of temporary tenants. It's a good thing to have in a center like this because at any given time, a new opportunity for a new tenant will emerge and you want to create that opportunity because you believe or we believe it will drive traffic and overall sales volume in the space. So, I mean, a good example would be like Primark. Primark is now being spun off from associated British Foods next year, they've got growth -- we've got 7 of them already in our portfolio.

There's 38 in the United States. Those are great stores. People really love shopping in them. They take up a lot of space, but they've candidly not been expanding rapidly as they've kind of gone through strategic alternatives. When they're spun off, my guess is they'll be starting to roll out that concept from the East Coast to the West. Like you want to be able to have those type of opportunities to bring them into your center. As a result of doing that, typically, you're displacing tenants. So having that buffer, which is typically 7% to 8% on a temp basis when you've got full anchor deployment is really a good thing for us to manage price tension and the right merchandising mix. It's a problem when you have like 30 vacant anchors and you got a lot of temp tenants you really have no pricing power as it relates to the things that we want to do or ability to kind of drive merchandising.

So, we're just going to be in a whole lot better place when we get done with this. Like I said, we only have 250 left to complete out of our 1,000, and we're going to be able to be doing some pretty exciting things because there are other tenants. Zara is rolling out its Bershka concept. We just approved a lease in one of our Southern California properties. So, there's some really nice opportunities that are kind of coming up from just domestic brands, international brands, experiential brands and having that temp space and fully occupied anchors is really a good thing for a landlord in our business.

Your next question will come from Caitlin Burrows with Goldman Sachs.

Another question quickly and not another one. But anyways, could you let us know the current physical permanent occupancy rate versus that target of 88% to 89%. But then I was wondering on the pricing side, if you could comment on the occupancy cost. It's at 11.7%. It doesn't seem to move much year-to-year, but wondering how in-place occupancy cost compares to where you're signing leases and how it could move over the next, call it, like 1 to 3 years?

Yes. I mean I think our physical permanent sits at around 84% now. And when all these stores open, it's projected again in that range that we talked about, 88% to 89%. We're actually signing leases. You can see just when we have our disclosure, you can see the lease rates are going up. As we're converting more tenants from gross leases, which has been the case in many cases, to have fixed rent plus fixed CAM and fixed real estate taxes, that's going to drive more occupancy cost and will have obviously an impact on cost of occupancy. So, I think that you'll start to see that increase. And then hopefully, sales will increase as well because more traffic, more productivity, and that sort of sets up the virtuous cycle for us to continue to drive rent and have productivity in these centers.

I mean maybe the best way to describe it, just stepping back, 25% new tenants. And that 25% that's being replaced, a lot of that's temp tenants that we've kicked the can on tenants with older stores, tenants that are not mark-to-market, tenants that are on gross leases versus fixed rent with fixed CAM and fixed taxes. So overall, it's going to create a better ecosystem from a merchandising standpoint as well as a more productive financial result for us as a landlord.

And this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Hsieh for any closing remarks. Please go ahead.

Great. I want to thank everyone for joining us this afternoon and thank the number of different colleagues across our platform that are really driving to the finish line, our Path Forward plan. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

All right. Welcome to Citi's 2026 Global Property CEO Conference. I'm Craig Mailman with Citi Research, and we're pleased to have with us Macerich and CEO, Jack Hsieh. [Operator Instructions] Jack, we'll turn it over to you to introduce your company and team, provide any opening remarks, tell the audience the top reasons that investors should buy your stock today, and then we'll get into Q&A.

Yes, thank you. First quick introductions. Dan Swanstrom to my left, he's the senior Executive Vice President and CFO of the company. To my right is Brad Miller...

Hit the right button.

Thanks. Good afternoon. Quick introductions. To my left is Dan Swanstrom, he's the Senior Executive Vice President, our CFO. To my right is Brad Miller. He's a Senior Vice President, Asset Management. And my far left is our Vice President of Finance, Alexandra Johnstone, and she also handles our IR. I'm going to start off with some quick prepared remarks, and then we'll open it up for Q&A.

Thanks for having us. I'll give you a quick summary of where we are today and why I think investors should own the stock, and we can open it up for questions. 2025 is a pivotal year for Macerich. We entered the year with clear objectives under our Path Forward Plan, which was simplify the business, drive operational performance and reduce leverage.

The message today is straightforward. We've delivered against each of these pillars. As we enter 2026, I have tremendous confidence in our progress to date and direction and future. Leasing is the single best indicator of whether our plan is on track. We're ahead of plan on the leasing and the numbers speak for themselves. In 2025, we signed 7.1 million square feet of new and renewal leases on a comparable center basis. This is an 85% increase over 2024 and a new company record.

Our leasing speedometer, which tracks revenue completion percentage for all new leasing activity required to achieve our 5-year plan is at 76%, well ahead of our 70% year-end target. We're on track for 85% by mid-2026, at which point the new leasing component of our plan will be effectively complete. Importantly, we're achieving our target market rent assumptions in the plan.

Our signed not open pipeline hit $107 million, exceeding our $100 million year-end target against the total cumulative SNO opportunity of $140 million in excess of the revenue generated in 2024. The way to think about the SNO phasing is approximately $30 million of incremental contribution in 2026, $40 million to $45 million in 2027 and $45 million to $50 million in 2028. That's a clear visible path to drive incremental growth.

We targeted 30 anchor and big box replacements in our plan, and all 30 are now committed, 2.9 million square feet expected to generate over $750 million in annual tenant sales. These anchors are catalysts. They drive traffic, extend dwell time and unlock in-line leasing across entire wings of our centers. For instance, DICK'S House of Sport at Freehold had one of the best openings in their 35-store House of Sport chain. Since opening, 18% of mall traffic now flows through that wing, a wing that was essentially dead before.

We have 9 House of Sport locations committed with Crabtree opening this fall, Tysons Corner and Washington Square following in 2027 and Valley River opening in early 2028.

Portfolio sales hit $921 per square foot in the Go-Forward Portfolio, a new company high going back to our IPO in 1994. And we posted 17 quarters of positive leasing spreads. The retail environment and tenant demand remains strong. The retailers showing up in our pipeline are the strongest brands in the business, including Zara, Aritzia, Lululemon, Alo Yoga, Abercrombie and many others. Demand is broad-based across traditional retail, international brands, food and beverage, entertainment and digitally native concepts.

As our Head of Leasing commented recently, never has the depth and breadth of retailer demand been what it is today. This speaks to the strength of our industry, and is a clear testament to our high-quality portfolio of pure-play Class A retail centers.

So why own Macerich? I condense it down to three main things. First, execution credibility. Every major milestone we set out in our Path Forward Plan, we've either met or exceeded. Leasing is ahead of schedule. All 30 anchors are committed. $1.3 billion in dispositions is completed with a clear path to $2 billion. Leverage is down a full turn. We also consolidated the PPRT JV, which enabled us to drive Washington Square and Los Cerritos forward and sell Lakewood Center.

Second, visible NOI growth trajectory. Our SNO pipeline provides a clear multiyear growth driver with approximately 80% flow-through to NOI. We expect at least 3% NOI growth for the Go-forward Portfolio in 2026, back-end weighted to the second half as permanent tenants build out and begin paying rent. That ramp accelerates meaningfully in 2027 and 2028 as NOI growth from the new leasing activity, major development projects and other redevelopment, including anchors come online.

Third, we own irreplaceable real estate. Approximately 92% of our go-forward NOI comes from A- or higher tier properties in affluent supply-constrained markets. These are community destinations where the best retailers in the world want to be. When you combine that with asset quality with the operational platform we've built, you get a company that's well positioned as the logical buyer when an attractive asset comes to market.

Crabtree is proof of that concept. We've already secured 18 new leases and 31 renewals since we acquired the property last June, including a flagship Belk consolidation and an entertainment anchor for the second men's Belk's box. Looking ahead, our key focus areas for 2026 are: one, completing the leasing pipeline of 350 additional new leases, 150 are in the LOI stage; two, solidifying the remaining 2026 committed lease expirations and continuing to get ahead of 2027 expirations.

Three, getting tenants into physical spaces built out and paying rent on time; four, completing the remaining dispositions; and five, continuing to evaluate new acquisition opportunities that are accretive to our plan and portfolio. The heavy lifting of derisking the Path Forward Plan is substantially complete. We're now in the execution and conversion phase, and I'm very confident in where we're headed. And with that, Greg, I'll open it up for questions.

That was great. I think you summed it up for all of us, we can just go home now. No, I appreciate the in-depth commentary. I think as we talked about on the call, as the Path Forward Plan is -- you guys have made significant progress on it. One of the things that you talked a little bit about more was going on the offensive, right? And Crabtree was kind of a first step towards it. And there's still work you guys are working on, right? It's not a done deal with the Path Forward, but you've derisked it, as you said. So talk a little bit about the -- how aggressive you want to be on the external front while making sure that you deliver on everything you've signed, that you're getting tenants in on time, you have the capital for it, right? Talk a little bit about the toggling back and forth of priorities.

Our strategic Path Forward Plan, achieving our results in 2028 are the highest priority for the company because it's highest for the following reason. Our core portfolio with over $1.2 billion at our share going into the portfolio, and that's in tenant allowance, capital projects and development. is going to well position this company to drive re-leasing spreads as we move forward into '29, '30, '31.

The acquisitions are really, I would say, more opportunistic if they kind of fit within that 2028 lens. Crabtree was perfect in a way because the prior owner had secured a DICK'S House of Sport lease. It's obviously under construction. It's going to open later this year.

And we're going to be able to really inflect the NOI growth within that 2028 calendar time period. So as we're looking at other opportunities, you're going to see us look for similar types of characteristics, good trade area, more leasing value-add type of opportunity, but more importantly, be able to accomplish our 2028 objectives. So you're not going to see us do deep value-add opportunities between now and 2028.

Let's say you can do -- could you do 1 a year, maybe put $200 million to $400 million to work? Is there enough of a Crabtree as opportunity set out there that's going to hit the market that you could continue this while kind of delivering on the Path Forward?

Yes. I hate to put numbers down and get locked in because we have a lot of priorities, most importantly, the 2028 plan. I did bring on David Keane recently, who is going to be a phenomenal addition to the team. He's already shown me a pipeline which wasn't even close to what we were looking at before. So I think for a lot of it, for us, it's just going to be just making sure that we don't put our current Path Forward at risk because it's really pretty much in the bag at this point. And then just selectively add property where we think it makes sense for us locationally, the amount of leasing that's required, the amount of capital that's required and making sure that we get the right adequate return on our capital, especially given our current cost of capital.

I would just add a key criteria on that is relative to the 2028 Path Forward targets of acquisition opportunities being accretive to those.

And Dan, I mean, as you look at the sources and uses over the next 2 years to get to the Path Forward, how much excess cash flow and capacity you have today because you guys are in the deleveraging stage as well. Like realistically, how much excess capacity is there to pursue some of these versus having it earmarked for construction dollars to open the 30 anchors and the in-line guys. Just walk us through that maybe.

Yes. And a lot of our development and anchor activity is front-end loaded over the next 3 years. So fortunately, we have sufficient liquidity. We had at the time of our call 2 weeks ago, almost $1 billion, we had a $650 million credit facility. So that implies about $300 million plus of cash on hand. We did actually just last week also announced that we were able to amend and restate our credit facility, which gives us incremental capacity up to $900 million at a lower cost, extended the maturity on that. So we feel like that was a really great execution by the team on that.

But the punchline over the sources and uses is between cash on hand and some of the dispositions outparcels that we have identified remaining, we have sufficient capital to fund plus free cash flow from the business after dividends. We have sufficient capital to fund the development and redevelopment and anchor activities. And then once we get past that, there's excess capital from the disposition program to go towards some of the remaining deleveraging.

The big part of the remaining deleveraging comes from the NOI from the SNO pipeline coming online over the next 2.5 years. So that enabled us to get from where we are now down to the low to mid-6x debt to EBITDA. So taking a step back with acquisitions similar to Crabtree, given where the go-in yields were when we looked at it, it really only pushed leverage up a small amount. So we remained within that debt-to-EBITDA range. And then we subsequently used the ATM to make that leverage neutral. So it's a long way of saying we've got sources and uses to fund our needs in the Path Forward plan. And then on acquisitions, we'll look at it opportunistically if it's accretive to 2028 and look at the funding sources to keep it within our leverage parameters.

Can you bring up the point, right, if you can find something at an 11-plus percent yield, you can finance it with a decent amount of equity, right, because it's still accretive relative to that. I mean, how much appetite would you guys have from the equity issuance perspective versus wanting to kind of build up the debt-to-EBITDA capacity, maybe partially fund with cheaper debt as spreads kind of tighten for the real estate folks.

Do you want to take that?

Yes. I mean, look, I think it just goes back to that criteria of it's got to be accretive to '28 from an FFO perspective, but we don't want to flow past the high end of our leverage range. So within there, we'll look at what makes the most sense opportunistically and economically from that perspective.

And then, Jack, you kind of hinted by Nareit -- summer Nareit, right? You guys are going to have the next iteration of the Path Forward. And one of the things that you did talk about that could be part of that is talking a little bit more about commencement. And I'm assuming that means commencement timing. What -- could you go into a little more detail about without giving away the surprise for June, but some of what that could uncover at least from an investor standpoint, that increased clarity, how you feel that would be the next iteration?

Yes. I mean one of the key components in this plan is leasing, right? We talked about that ad nauseam. And we've talked about this opportunity to lease 1,000 new tenants in our portfolio. So that includes anchor and in-line. To give you some sense, that's roughly almost 25% that represents of the entire space available, unit space in our portfolio. So think about it as almost 25% of our portfolio is literally delivering over the next 2.5 years.

The timing of that is very critical. And so we monitor it. We're all over that right now in terms of our tenant real estate services effort. And I think we're going to -- we talked about a speedometer that relates to leasing. I think we're going to try to share some of that speedometer that we have on rent commencement because that's something that we focus on actually quite a bit internally. I think it would be helpful for people to understand that.

And as you look at sort of the success on maybe what was in the lease from a deadline from a commencement timing perspective versus where the team has actually been able to deliver it. Is there sort of an average delta between that? Like are you guys outperforming by a week, a day? Are you -- have you ever kind of missed that commencement date? Just give us a sense of how the team is operating at this point given the workload that they have with all this leasing that you're working on?

Yes. I mean I would say we started preparing for this, frankly, last year, middle of last year, realigning how these teams communicate and the systems that we had. So if you were to drop into one of our biweekly calls, rent commencement discussions are critical, and they talk about it. And then we actually have weekly meetings on the East and West for the largest rent deals that are going through the system to make sure that our tenant coordinators, our asset managers, our leasing team, our mall management staff are fully aligned with what is exactly happening.

In general, I would say it's hard to outperform timing. We want to make sure we make timing. And so that's really staying on top of the tenant to make sure they're permitting, getting their permits done. And then once they get physical control of the space, my mall manager is walking by every day, hey, there's no construction crew there for the last week. Guess what? Immediately, a call goes into X, Y and Z tenant from our business side to figure out what's happening or not happening because it's a big effort. So -- but I'd say we have the systems in place to ensure that we're going to get the best possible outcome.

And I think you had mentioned to some of us that when you came in, right, the budgeting internally was like a year out, right? Things are being done on Excel. What have you done from a technology process standpoint, maybe from a software or however, to really track this other than the biweekly meetings, right? What is there so that on a daily basis, the project manager could go in there and say, we should be here, we're only here. Let's catch up and make some phone calls.

Yes. I give a lot of credit to our process improvement committee in terms of different initiatives that they've put forward and our technology team internally. We rely on Yardi as the backbone of our sort of accounting system and tracking system, and Yardi has done a great job -- continue to do a great job building apertures that sort of support all the things that we're doing. The ARGUS models are done independent of that, but Yardi has done a great job working in partnership with us, trying to get just more communication, more ability to track and monitor and that we're getting the most out of it right now.

Do you think this leasing success would have been possible under the old systems that you guys had in place?

It just wouldn't have been -- no, it wouldn't have -- it's -- you wouldn't have been able to understand what you were leasing and how it impacted the model and being able to make decisions real time as to is this the right lease versus that. And then once trying to get tenant rent commencements moving forward, the old system was really pretty inefficient. So we're really able to kind of move through. And proof of the pudding will be something like Crabtree, which we literally were able to drop into our infrastructure. And when we eventually start to share what we've done there, people will be really impressed with not only just the progress, but just how efficiently we were able to absorb that asset and quickly kind of bring it into our system.

And if we dive deeper, right, this speedometer, you guys are ahead of pace, with what you have left, were you guys just successful at getting some of the better space leased quicker and then you have tougher space left? Or how does the remaining inventory kind of break out between your A, B, C spaces to kind of inform, right, does it get the speedometer speed up? Or is it slow as we get closer to 100?

Yes, that's a great question, Craig. If you look at it in the context of our SNO, right, so our total opportunity is $140 million. The latest update is we've got $107 million of that committed. So the new leasing activity and the team is really focused on that remaining $33 million of SNO. One way to look at it is when we did our ARGUS models, we went through and ranked all the spaces, A, B, C, D, E, F, 90% of the remaining SNO is located in A, B or C spaces. So that gives us as leadership and the team a lot of confidence that we'll be able to deliver on that space.

Another way to look at it is about 2/3 of that $33 million is at our Fortress or Fortress potential properties. So again, it's some of the better quality properties. So we think that is another stat that should give everyone confidence as it gives us confidence that we'll be able to kind of complete the remaining new leases in the snow.

And that opportunity set is about 1.6 million square feet as we talked about. And we're 2 months into the year in terms of us going through lease approvals through our ELC process and meetings. And we're basically at the same pace as of the last -- last year. So there's really good momentum. The teams know what they need to do, and we're just getting after it.

And just given the success on the leasing front for the remaining space, how are you -- do you go about it differently from a curation standpoint of, well, we may have taken this tenant 2 years ago, but today, we can hold out for X, Y or Z tenant who we feel fits better. Do you just have more flexibility or more optionality in being able to pick the tenant versus maybe just having a little bit more urgency to get the space built?

I mean there's always a balance. At any given time, you can imagine 300 spaces, our marketing teams are constantly touring and taking different tenants through. They could be an existing tenant at that mall relocating or they could be wanting more space or it could be a different concept altogether. And we're always going to try to put the best tenant and get the most rent. But sometimes, the best tenant is not ready to move on our timing. So we're going to default to #2, the second best option.

The best way to describe what we've done internally is I've basically frozen the floor plans. So you've got 300 spaces, get after it right now. Let's finish. Let's get ahead of our renewals, trying to derisk that. And the reason for that is we want to execute our 2028 plan. When we start to talk about where we'll be next year -- late next year, we're probably not going to push escalation renewals as quickly. We're going to be delivering a very, very strong, vibrant portfolio of tenants. All these wings will be full. So I think that will give us a better chance to really work on incremental merchandising moves when we get into 2028, '29 going forward.

I mean, have you seen the realization among tenants, especially ones that are throughout the portfolio versus maybe a guy with 2 or 3 leases with you, where they understand what you guys are doing to the portfolio. They understand where you are as a company that they're trying to come to you today to pull forward those renewals to get a potentially better deal than as you get closer to next year, mid- to late next year where they know they're going to have a weaker bargaining stand?

To be honest with you, I don't think there's been really a change in that sort of decision-making. One of the things that we're not doing is subsidizing weaker properties. Obviously, I talked about that early in the launch of this plan. So we've got really good real estate. We're trying to make really good decisions quickly. I would say that one thing that I've seen directly meeting with a lot of different tenants, I mean, they really appreciate our clarity. They really appreciate the amount of capital that's going into these projects. and the speed of our decision-making. I think that's a big difference than maybe in the past.

We have very clear visibility on what happens if we do X, Y and Z at this rent per square foot with this TA package. And I don't think that we necessarily had that ability before because how can you make a 3-year commitment on a major space and you don't really have the analytics to really support what that does to you. So I think there's probably less -- our decision-making is very quick. So I think tenants appreciate that. And they also see the investment going into the centers. So they have the confidence that they can invest.

One of the things we've been trying to get a read on more through the conferences is AI, which is not a surprise as the topic of everything going on. But I know you kind of touched on it on the call that it may not be your primary focus. But just as you -- to the extent that you guys are using it internally, you guys obviously have Yardi, ARGUS, right? Are you utilizing any of the AI add-ons that those vendors are offering or working with them to build something in? Kind of where are you on the AI evolution?

I would say we're working in partnership. We're doing some beta testing with Yardi right now on some application. We've done third-party application like when we acquired Crabtree, all those leases were scraped with an AI capability. We separated with 2 different vendors.

So we're now looking at just for our own lease intelligence information, trying to figure out how to try to move that into that kind of aperture. Energy efficiency, that's already linked to AI now. So we're already -- we've already got that application. It's -- on the margin, the teams are executing, to make more efficiency and more -- and better reporting, more insight. I don't think that there's -- I haven't seen anything sort of earth shattering yet in terms of really moving the needle.

I do think that there is an opportunity. If you if you look at what we've been doing, we've been dropping anchors and all the space and great tenancy that drive traffic. And we've had third-party consultants sort of doing market analysis and sales traffic analysis and sales analysis. I do believe that there'll be an AI function at some point that can really dictate if we put in Eataly, [indiscernible] a, a DICK'S House Sport in this center, how can it shape competition? How can it pull from different trade area consolidation like what we've seen with the SCHEELS opening up in Chandler. That to me would be kind of an interesting opportunity.

I know the -- there's just a lot of data and particularly, I'm really focused on with these dollars going in, how can it shape trade area consolidation at our property and effect -- and that could be a great marketing tool for us when we go pitch a retailer. Here's our analytics on, if you come in based on X, Y and Z also coming into the center, this is what's going to happen.

For new tenants, real estate is obviously critical. Co-tenancy is huge, right? They want to understand co-tenancy within a mall itself. And so -- and it feeds on itself. And I think that right now, there hasn't been a real AI application for that. But I think to me, that would be a really interesting one. And so that's one that's high on my list right now to see if there's that opportunity.

And I guess having your background also be in the triple net space, which is much less operationally intensive versus coming to Macerich, which is more operationally intensive. Do you feel like AI has more opportunities in a company like this with the operational aspect of it? Or do you feel like if you're just an underwriter and credit, right, you're underwriting that, is there more efficiencies to be had in that environment? Or is it just as easy to get it in the operating environment?

For sure, operations for us, at the end of the day, we're doing all this effort on the top line to create SNO and all this 1,000 new leases. Us controlling expense creep is critical, right? So I think that certainly AI will help us in that regard, just trying to be more efficient. So...

Like from a mechanical standpoint, HVAC and electricity, like how much of that is smart meter today or at least more controllable versus tenants have access to temperatures in their side of their stores versus you guys doing that.

We definitely -- I can't be expert, but I can tell you, we already have good functionality to try to create more efficiency because that -- those -- some of that expense creep is on us, especially if there's vacancy in there. So we want to maximize utility expense. It's a big expense, right? So we've already have that capability, and it's going to only get better as we get fully occupied too. So we have all the CAM and all the tax reimbursements coming through the P&L.

Does anyone have any questions before I hit rapid fires? All right. We'll go to rapid fire because I feel like I may run out of time if I ask you another question. So same-store NOI growth for the retail sector in 2027?

Yes, I think it's going to continue to be positive in the same direction, and that's a function of great productivity, great omnichannel, and no supply.

If you had to put a number on it?

Probably I don't want to guess on a number, but I would say it'd be very comparable to the last 12 months of the recent batch.

And then from an M&A standpoint, will your property sector have more or fewer or the same amount of companies this time next year?

Same.

Perfect.

I will give you one last thing. So just you all know, I took my LTIP, 100% performance shares, again, like I did last year. So those are all relative TSR based and absolute. So I'm trying to drive long-term shareholder value here. So...

Do those best on change of control? I'm joking. Just a joke.

Thanks.

Well, thank you guys very much. I hope everyone enjoys the rest of the conference.

Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter 2025 Macerich Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Alexandra Johnstone, Vice President of Finance and Investor Relations. Please go ahead.

Thank you for joining us on our fourth quarter 2025 earnings call. During this call, we will make certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, including statements regarding projections, plans or future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results, supplemental and our SEC filings.

Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8-K with the SEC, which is posted in the Investors section of the company's website at macerich.com.

Joining us today are Jack Hsieh, President and Chief Executive Officer; Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with us in the room is Brad Miller, Senior Vice President of Portfolio Management.

With that, I would like to turn the call over to Jack.

Thank you, Alexandra, and good afternoon, and thank you for joining us. Before I begin, I want to thank the entire MAC team for their outstanding contributions throughout 2025. This was a year of significant execution and progress made possible by the dedication and hard work of our people across the organization. 2025 was a pivotal year for the company. We entered the year with clear objectives under our Path-Forward plan, simplifying the business, driving operational performance improvement and reducing leverage. I'm pleased to report that we've delivered against each of these pillars.

Today, I'll spend time on our operational performance and leasing achievements and then turn it over to Doug and to Dan to discuss the portfolio and balance sheet in more detail.

Let me start with leasing, which continues to be the engine driving our Path-Forward plan. For the full year, we signed 7.1 million square feet of new and renewal leases on a comparable center basis, an 85% increase over full year 2024, setting a new company record. Turning to our leasing speedometer, which tracks revenue completion percentage for all new leasing activity required to achieve our 5-year plan, we are at 76% today, exceeding our 2025 year-end target of 70%. This puts us well on track for our mid-2026 target of 85% and positions us to substantially complete our new leasing objectives by year-end 2026.

Importantly, we are achieving our target market rent assumptions in the plan. Another way to look at how far along we are with leasing is in terms of the new deals left to sign in our 5-year plan. We are tracking a total of approximately 1,000 new deals in this plan. We now have 650 new deals open, executed or in lease documentation. All that is remaining is 350 uncommitted new deals totaling 1.6 million square feet, of which 150 are in the letter of intent stage. Our signed not open pipeline has grown to approximately $107 million, exceeding our 2025 year-end target of $100 million. This is relative to our total cumulative SNO opportunity of approximately $140 million in excess of the revenue generated in 2024.

We have high confidence in achieving the full opportunity. Of the $140 million of total SNO, the estimated incremental annual contribution is $30 million in 2026, $40 million to $45 million in 2027 and $45 million to $50 million in 2028. I'm excited about the progress we've made on our anchor initiatives. We targeted 30 anchor and big box replacements in our Path-Forward plan, and I'm pleased to report that all 30 are now committed. We have 5 anchors open, 5 under construction, 11 executed and 9 with leases out. Consistent with the update we provided with our NAREIT presentation in December, these 30 anchors total 2.9 million square feet and are expected to generate approximately $750 million in annual tenant sales.

More importantly, they're expected to drive traffic, extend dwell time and catalyze in-line leasing throughout our centers. On the disposition front, we've made substantial progress toward our $2 billion goal. We've completed $1.3 billion of total mall and outparcel sales transactions to date. The team is very focused on getting the remaining mall and outparcels sold. I want to spend a moment on Crabtree, which we acquired in June. We are on track with our renovation plans and the new DICK'S House of Sport store will open later this year.

We were also pleased to see last month's announcement by Belk that they are consolidating their 2 locations at Crabtree into a full store remodel and long-term lease extension of their flagship location at the east end of the property. Belk is a leading brand in the Carolinas and their new store with a wine and coffee bar, personal shopper studio and other amenities will complement the remerchandising and leasing initiatives we have underway. We have already secured a commitment for backfilling the second Belk's anchor store with an entertainment-oriented retailer. Along with a very productive Macy's store, this solidifies the asset.

Additionally, with the in-line space, we have commitments on 18 new and 31 renewal leases. While we've only owned the mall since June, I believe we've already demonstrated that the platform we've built can create value. We'll continue to look forward for additional opportunities to put our platform to work. The milestones we delivered in 2025, leasing volume well ahead of plan, all 30 anchors committed, $1.3 billion in dispositions completed, demonstrate that the Path-Forward plan is no longer just a plan. It's well along the way to completion across every pillar.

As we enter 2026, I have tremendous confidence in our trajectory. The heavy lifting of derisking the Path-Forward plan is substantially complete. Our key focus areas for 2026 are; one, completing the leasing pipeline of 350 additional new leases, 150 are in the LOI stage; two, solidifying the remaining 2026 lease expirations and continuing to get ahead of the 2027 expirations; three, getting tenants in the physical spaces built out and paying rent on time; four, completing the remaining dispositions; and five, continuing to evaluate new acquisition opportunities that are accretive to our plan and portfolio.

Lastly, I want to note that we expect to provide an updated Path-Forward plan 3.0 at REIT Week in June, and we intend to return to providing earnings guidance beginning in 2027. Doug, why don't you discuss the portfolio and leasing activity in more detail?

Thanks, Jack. Portfolio sales at the end of the fourth quarter were $881 per square foot. That's up $14 when compared to the last quarter, and this now represents a high watermark for the company dating back to when we went public in 1994. When you look at our go-forward portfolio, sales were actually $921 per square foot. Traffic for 2025 was flat when compared with the same period in 2024. Occupancy at the end of the fourth quarter was 94%, up 60 basis points from the last quarter, with the majority of this increase coming from permanent occupancy versus temporary occupancy.

The go-forward portfolio occupancy at the end of the fourth quarter was 94.9%, also up 60 basis points from the last quarter. Trailing 12-month leasing spreads as of December 31, 2025, were 6.7%, up 80 basis points from the last quarter, and this now represents 17 consecutive quarters of positive leasing spreads. In the fourth quarter, we opened 416,000 square feet of new stores for a total of 1.3 million square feet for all of 2025. Most notably, we opened our first DICK'S House of Sports store at Freehold Raceway Mall in the former Lord & Taylor Box. Grand opening was one of the best in their 35-store chain, and the store continues to outperform all expectations.

As a result, we've seen an increase in traffic, not only in their wing, but also in the mall overall. And this has already had a positive effect on leasing space outside the DICK'S location on both levels of the mall. We remain very bullish about this concept. Of the 9 commitments we have with DICK's House of Sport, as mentioned, Freehold is now opened, and we currently have 4 additional stores under planning and/or under construction at Crabtree Valley Mall, Tysons Corner Center, Washington Square and Valley River. Crabtree will open in the fall of this year. Tysons Corner and Washington Square will open in the fall of 2027 and Valley River will open in the spring of 2028. And we're working on adding to this list. So stay tuned for more announcements in the very near future.

As Jack mentioned, leasing was very strong in 2025. For the year, we signed 7.1 million square feet of new and renewal leases. This is 85% more square footage than we leased in 2024, and 2024 was a record year for us. And it's important to note that of the 7.1 million square feet, 30% were new lease signings.

Turning to our lease expirations. 2025 is behind us, and we're now focused on 2026. To date, we have commitments on 80% of our 2026 expiring square footage that is expected to renew and not close with another 16% in the letter of intent stage. This is unprecedented for us this early in the year. To put it in perspective, at this time last year, we were only 63% committed for our 2025 renewals. So we can now focus on our 2027 and in some instances, our 2028 lease expirations. Being able to work this far into the future significantly derisks the renewal portion of our 5-year plan.

The retailer environment and tenant demand remains strong. In 2025, we reviewed and approved 40% more deals and 30% more square footage than we did in 2024. It's early days, but thus far, we're on par with where we were last year at this time. Further to this point, in December, we attended the annual ICSC Leasing Conference in New York City. Approximately 10,000 landlords and retailers attended to talk about current and future business. In just 2 days, we had almost 300 meetings with over 200 different retailers looking to do business in our portfolio. All categories remain active, including traditional retailers, international retailers, entertainment, experiential, food and beverage, wellness and emerging brands. And we continue to sign leases with some of the best brands in our industry, such as Apple, Zara, Aritzia, Lululemon, Alo Yoga, American Eagle, Abercrombie & Fitch, Gorjana, Addicted and Warby Parker, just to name a few.

As I've said in the past, never has the depth and breadth of retailer demand been what it is today. And again, I think this speaks to not only the health of our industry, but also to our portfolio of pure-play Class A retail centers.

And with that, I'll turn the call over to Dan to go through our fourth quarter financial results.

Thanks, Doug, and good afternoon. I'll start with a review of fourth quarter financial results. FFO, excluding financing expense in connection with Chandler Freehold, accrued default interest expense and gain on non-real estate investments was approximately $129 million or $0.48 per share during the fourth quarter of 2025. I would like to highlight the following item included in our FFO adjusted for the quarter.

Legal claims settlement income of $16.1 million, partially offset by corporate expenses related to annual incentive bonus payouts above target levels, which resulted in an $8.4 million net impact or $0.03 per share. Go-Forward portfolio centers NOI, excluding lease termination income, increased 1.7% in the fourth quarter of 2025 compared to the fourth quarter of 2024. For 2025 full year, the Go-Forward portfolio centers NOI increased 1.8% compared to 2024.

Turning to the balance sheet. We continue to make strong progress on the balance sheet initiatives contained in our Path-Forward plan. 2025 was an incredibly productive year by the team with transaction and financing activities. We have now closed on approximately $1.3 billion in dispositions, reduced leverage by a full turn lower and addressed each of our 2025 debt maturities as well as a substantial portion of our 2026 debt maturities. Earlier this month, we closed on a 4-year loan extension through November 2029 on our South Plains property. This $200 million loan extension was completed at the existing interest rate of approximately 4.2%. We're continuing to proactively address our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or, if necessary, property givebacks.

With respect to our 29th Street property, this $76 million loan at the company's pro rata share is now in default after its recent maturity date. As we are currently in discussions with the lender on the terms of this loan, we do not have any additional commentary at this time. We currently have approximately $990 million in liquidity, including $650 million of capacity on our revolving line of credit. From a leverage perspective, net debt to EBITDA at the end of the fourth quarter was 7.78x, which is a full turn lower than at the outset of the Path-Forward plan. And importantly, we've outlined our strategy to further reduce leverage to the low to mid-6x range over the next couple of years. We are making substantial progress in executing on dispositions as part of the Path-Forward plan.

As previously announced, during the third quarter, we closed on the sale of 3 retail centers for approximately $425 million. During the fourth quarter, we closed on the sale of various outparcels and land for $42 million, which included the sale of the retail strip center at Washington Square for $26 million. Year-to-date, we have closed on the sale of an additional outparcels and land for $15 million. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine the portfolio. We have identified a clear path to achieving our $2 billion disposition target. To date, we have again completed approximately $1.3 billion in total dispositions and the disclosure we've provided in our supplement includes a summary of these asset dispositions.

We have also identified several additional Eddy assets totaling $200 million to $300 million for sale or give back over the next year or so, which would increase total dispositions to the $1.5 billion to $1.6 billion range. One of these assets is La Cumbre Plaza, which is now under contract for approximately $11 million. This asset is unencumbered. The ongoing sales of certain outparcels and land represent the remaining $400 million to $450 million of dispositions to achieve our total $2 billion disposition target. We currently have approximately $15 million in additional outparcel and land sales under contract for sale and over $50 million in various stages of negotiation. We'll provide further updates on our disposition activities as we progress through the year.

In conclusion, we are making great progress on our Path-Forward plan objectives to reduce leverage, refine the portfolio and strengthen the balance sheet.

With that, we'll turn the call over to the operator.

[Operator Instructions] The first question comes from Vince Tibone with Green Street.

You mentioned that you continue to evaluate acquisition opportunities. Could you just discuss kind of what types of properties would be most likely acquisition candidates for Macerich over the near term? Like are you looking for more value-add deals like Crabtree, where it can be immediately earnings accretive as well? Or would you consider stabilized, higher-quality centers that would have lower cap rates, probably 7 or lower just to add to the value of the portfolio. Curious how you're thinking about, just the acquisition landscape and most likely acquisition opportunities near term?

Vince, it's Jackson. Thanks for joining the call. I'd say our primary focus is obviously to make sure that if we do an acquisition, it's accretive to our 2028 FFO plans and targets. So that's first and foremost. Second is that we believe that it fits within the portfolio metrics of our current portfolio and ranks with -- or ranks well within it. I would say at least the short to medium term, it probably looks like more value-add kinds of opportunities that we're focused on. Crabtree is a great example because it's really a re-leasing or a lease-up value-add opportunity versus what I call redevelopment opportunity.

I'd say with our current cost of capital to chase stabilized, call it, 7 and below kinds of yield assets. We're not likely to do it on our own. It might be different if we had a capital partner. But for now, we're principally going to focus on those value-add lease-up opportunities. And just to note, we brought on David Keane. He joined a couple of weeks ago from -- he was formerly at Washington Prime Group and spent many years over at General Growth properties in the acquisition area. And we're excited to have David. He's already participated in our property review quarterly process and was at our Board meeting recently and is actually touring assets as we speak.

No, that's all helpful color on the acquisition side. Just on -- if you were to find a deal, let's say, similar size to Crabtree, is it fair to assume you would issue equity? Or would you potentially ramp dispositions beyond the $2 billion to make it leverage neutral? Just how would you -- what will be the most likely funding source if you were to find a sizable deal that you wanted to move forward with?

I mean I'd say selling properties to buy properties, I think we've gotten more -- candidly more inbound interest from capital partners to do transactions with on the acquisition side. One thing we said is we want to simplify the business. So I think first choice would be issue equity if it made sense from a cost of capital standpoint. Obviously, we can't predict where our stock price will be, but probably that's our first preference. Second would be finding a capital partner that sees the asset and the strategy in the same way we do. And I'd say a very distant third would be recycling a property that we had to kind of bring that in.

And our next question will come from Samir Khanal with Bank of America Securities.

This is Andrew Reale on for Samir. It seems like there's a lot of tailwind from this leasing momentum. So just given the strength of your leasing pipeline now, how should we start to think about the magnitude and timing of the growth inflection in the second half and even into 2027 at this point?

Yes. Andrew, as we've talked about and Jack kind of outlined our SNO pipeline, which has $30 million of estimated contribution in '26. I would note that is back-end weighted in '26, consistent with how we've talked about the second half inflection point. But I think the real power of the SNO pipeline, you can see in '27 and '28 in terms of the dollar numbers that are coming through in those years, $40 million to $45 million in '27, $45 million to $50 million in '28. So that kind of lines up with the inflection point from a growth perspective.

Okay. And then just as a follow-up, it seems like holiday season was pretty strong. Could you just speak to the overall health of the consumer, if performance has been consistent across the portfolio, if there's some bifurcation between the top and bottom of the quality spectrum?

Yes. I would say like if you think about our customer, we're definitely experiencing this Pay-Shapes consumer. And I'd say if you think about some of the retail green shoots that some of our tenants are talking about, obviously, this calendar year, we're going to have a higher tax refund going through to people in this country. We've got the World Cup coming, which obviously will draw a lot more customer, more visitation in the U.S., some Olympics in '28. And actually, the kind of issue that Saks is going through, I think is kind of an interesting opportunity as it relates to Macy's, Nordstrom dealers being able to really relook at how they're thinking about luxury items as well as just luxury demand in general.

As it relates to that upper portion of the [ K ] that we're primarily focused on, I think, in a lot of our tenancy on the in-line, if you look at our traffic for our go-Forward portfolio in 2025, it was up in the mid 1.5% range. But if you really -- or actually -- I'm sorry, the traffic was up like just flat, basically up 20 basis points, but in-line sales were up 1.5%. But if you actually go down and look at luxury, the luxury sales were up almost 5.5%. So to me, I think that's a kind of early compelling sign of maybe what might be more coming in the future.

And look, I think we -- I've spent a lot of time with retailers, which is kind of new for me. But they're very focused. They know consumers are spending, but super selectively. They acknowledge this bifurcated pay economy with their different income tiers. But the one thing that's really consistent, branding, fit, merchandising, innovation, that's a consistent theme that we hear from our retailer customers. Promotional items are really being more targeted. And I'd say, overall, their outlook is cautious but constructive, and we're seeing that in our leasing. I mean there's real demand for space right now that we have remaining thing that strikes me, which is so interesting is the retail store -- physical store is still the most profitable lane for these retailers right now. They have omnichannel, but their physical stores are the most profitable areas and lines of business. And the fact that we have no real new supply in the kinds of real estate assets that we compete in, I think is good for what we're trying to do right now.

And our next question will come from Michael Griffin with Evercore.

Just on the leasing pipeline, with 2026 derisked as much as it is, have you started maybe being able to actively, maybe not renew a certain amount of space in hopes of capturing higher rents. It just seems like with what feels like a lot more leverage that you might have on the leasing front. Just curious how you break down kind of the cost benefit between renewing a tenant, keeping them in place versus actively taking that space back and trying to re-lease it at a higher rate.

That's a great question. I would say, overall, when we set up this plan, we have 1,000 new leases. We had pro forma market rents in there that are very specific to each space of these 1,000 that we talk about. And on the renewals, we pro forma positive spreads on those as well, right? So you have 2 levers trying to happen at the same time. For us, and I'd say like the unfortunate thing is we've set a target out there in 2028. Time is kind of not our friend. And while we might be able to get more, if we start to lose time, we might get more, but it will come in through 2028.

So we're trying to balance what we can get done today based on the pro formas that we've run to back up this Path-Forward plan versus trying to extract the very last dollar that's possible. I think the question is a really good one because I think we haven't really talked about what happens after 2028. But if you think of the amount of investment that we're putting into these centers, the 30 anchors, when we start to really look at renewals from '28, '29, '30, I think there's tremendous opportunity that we'll see that we've never really been able to see, say, over the last several years, just given how fully leased up these in-line levels will be relative to historical standards.

That's certainly some helpful context. And then maybe just one on external growth. You talked about acquisition, you're potential opportunities earlier. But I'm curious if you've evaluated maybe other revenue streams, whether it's bridge lending, Mezz financing, third-party management. Just are there other levers you think you can pull sort of on the revenue growth side, maybe outside of those potential external growth opportunities as it relates to acquisitions?

It's a great question because one thing that I love about this business is there are very few people that can do it in terms of being able to do it and scale on a national basis. And while it'd be tempting to look at that and clearly, I've thought about it, I feel like the real -- the really -- we're staying focused on what we're trying to do right now, which is a lot actually, and trying to incrementally add quality acquisitions into the company, I think is at least for the near term, going to be where we're really focused. We do have opportunity to do Mezz and other structured because financing is very unique for this kind of asset base. But I think like I said, in the short term, we'll stay focused on the pillars of the plan, which is right there in front of us for this year.

And our next question will come from Floris Van Dijkum with Ladenburg.

I wanted to ask about the Go-Forward portfolio. Obviously, higher sales, better occupancy. Presumably, these are the assets you're going to be spending your capital on. Could you maybe just give us a little bit more information, what percentage of total NOI does that portfolio represent today?

Yes. Floris, this is Dan. I'll refer you guys over to our supplement. If you kind of look at Page 7, we've got NOI go-forward portfolio for the full year 2025 was $738 million relative to NOI for all the centers of $841 million. So obviously, it represents a substantial majority. And trending towards just the Go-Forward amounts.

The other question is regarding your SNO pipeline. Maybe if you can give us a little bit more details what percentage of -- actual percentage of your square footage does that represent? And maybe also maybe a little bit more information and what percentage of that $107 million, which is, again, ahead of estimates represents luxury. Jack, you mentioned luxury being -- having 5.5% sales growth. How much expansion do you foresee in your portfolio from that particular segment?

I can start with the first part on the $107 million. It's not a large part. So luxury is brands, by the way. I mean luxury is relatively a small part of our business at a little bit -- mostly at Scottsdale and a little bit at FOC.

Yes. Brad, I agree, it's Doug, Floris. Our luxury really is in Scottsdale, started in the Neiman Marcus Wing, as you know. And given the demand we had once we finished the Neiman Marcus Wing, we transitioned over to Nordstrom and turned that into a luxury wing. And at this point, we're basically done. I think we're 90% -- 91% committed. And most of those luxury retailers have already gone through the pipeline. If you think about Tiffany, who's opened and Hermes that's opened and Salem that's opened, there's very few left to open. They'll open the rest of this year and then a few into 2027. So the luxury component is going to be probably a small percentage of the pipeline.

And I think, Floris, you were asking about SNO. And so if you think about the SNO, that includes anchor stores and in-line. And I don't know if I'm answering your question the right way, but at least how I was thinking about it was we refer to 1,000 in line. We have about -- that's about 20%, 25% of the entire in-line population of our Go-Forward portfolio. So if you think about just sheer numbers, we're effectively influencing about 20% to 25% of our in-line floor plan. Then you think about the 30 anchors we're going to be able to do better leasing on the inline as well as those 30 will drive traffic and also rent.

And to me, like -- and then if you look at the remaining 1.6 million square feet of -- that we talked about of new leases, the 350 uncommitted spaces, 90% of that space or 90% of that CLO is in A, B and C rated spaces. And another way to look at it, about 2/3 of it are in our fortress and fortress potential properties. So these are not bad spaces that are left or rump spaces. These are high-quality spaces in our best centers. So I'm confident that we're going to get the rate. We're just trying to make sure we get the right tenant in there that's going to do the right thing for the center.

And just stepping back, why are we doing all this stuff? We are seeing, like I said, anecdotal evidence when we opened SCHEELS down at Chandler Center in Arizona. SCHEELS generated about a 21% increase in search in the mall traffic and has continued to really be robust in that market, does over $150 million in sales. And if you walk through our leasing team in that wing, the before and after is quite tremendous in terms of how we're reimagining and re-leasing that wing.

At Tysons, as strong as Tysons is, in the fourth quarter, traffic was up 16% year-over-year because Level 99 opened, Skims opened, the Zara relocation happened, Addicted opened, [indiscernible] Maggiano's all open. So it had an impact to the center but we also have the entire west side of the property that -- to have 2 major -- one major restaurant and one very proven restaurant food retailer that will drive tremendous traffic. I can't disclose the name yet. But -- and so as we continue to add these stores and units in DICK's House of Sport on the north side, it's just going to have unprecedented ability to move traffic up.

And then finally, Doug talked about Freehold. Freehold right, that House of Sport represents about 18% of mall traffic since it's opened. And so we're super excited. January is off to a great start over the comp set. So more to come as we experience like these new anchors opening, new concepts, new remerchandising happening in these centers. And so that's what's getting a lot of our customers excited on the retail front. It's helping us on the leasing.

And the next question will come from Haendel St. Juste with Mizuho.

Two quick ones from me here. First, I guess I appreciate the color on the asset sales to date and the discussions you have underway. It looks like you have, I think, $60 million of the remaining $400 million to $500 million remaining disposals under some level of discussion. But it also seems like we've been plus or minus at the same levels for a little while now, a couple of quarters. So I'm curious what's taking so long? And what's your expectations for some movement in the dispose left to be done over the next year?

Yes. Haendel, this is Dan. I'll start and then Jack can chime in. I appreciate the question. On the malls, we've got $200 million to $300 million of remaining asset sales. And the time line of that is, in some part, a function of the maturities. So we have some coming up this year, and there's some others coming up later in the year. On the outparcel and land side, recall that we have said in the past, from the beginning, we said that the sales in this bucket was going to be weighted towards '26 versus 2025. And that's primarily because many of these assets have some encumbrances, whether they're part of a loan collateral, so we have to work with the lender to kind of unencumber them from that. On the land, in some instances, there's some zoning and entitlements that are in the final stages that from a maximizing value to the company and shareholders, we'd rather wait a quarter or 2 to get to maximize that value with entitlement in hand.

So there's kind of a story to a lot of these outparcels. They're not just sitting there ready to sell. It's just us working the process and continuing to execute on getting as many of those sold or under contract by the end of this year. There is no impact that we're seeing whatsoever as it relates to pricing or appetite in the market for these assets. It's just time to work through the sales.

Okay. No, I appreciate that. One more for me. Thinking about the -- it certainly seems like you're shifting a bit, focus more on external. You talked about -- I was curious about the infrastructure, the resources of the platform you have in hand. So as part of this growth, one part that you've made enough progress with your leasing and dispose and now looking to be opportunistic because the platform can operate and be more efficient with more assets. And so curious kind of about the size, the efficiency of the platform. And then curious how you're thinking about AI as you look about -- at your business and what potential efficiencies you can leverage that to garner.

Yes. Thanks, Haendel. So on the new opportunity side, I think some of it is just a function of the market is reopening. I think the addressable market for mall opportunities is getting a little bit bigger than, say, it was last time this year. So that's kind of compelling, and we like sort of where these yields are, at least what we're seeing right now. As it relates to our platform, we've -- if you remember my comments a year ago this time, I talked a lot about process improvement committees and introduction of dashboards and efficiencies in terms of being able to create more operating efficiency just with the way our teams are communicating CRM -- new CRM that's in place. So I would say like we are able to easily scale given our current infrastructure with more GLA.

The question I'm trying to balance right now is finding opportunities that enhance that 2028 FFO range that we've talked about, but also fit well with what I think our strengths are internally. So I don't think you'll see us do heavy redevelopment as our next opportunity. We're very, very good at leasing. We're very, very good at credibility with retailers like what we're experiencing down at Crabtree. And so to me, those are more easy puts, short puts. I think assets that have a more deeper value add, I think we'll look at those very diligently and carefully to see if that fits with our strategy.

But I would say like when I think about 1 year ago versus today organizationally, the organization has really advanced quite amazingly, if you were sitting in here from a technological standpoint, operational standpoint, process standpoint, communication standpoint, decision-making standpoint. And that's not without -- that's not really relying on AI. That's just human beings and Microsoft BI and different things [indiscernible] like that. As it relates to AI for us, I've asked that question for our retailers. How are you all thinking about AI? And if you listen to Walmart, look, they're selling large volumes, penny matter for them. And so AI will definitely, I think, influence what they do.

But if you think about what we do, apparel companies, customers that are constantly looking for innovation and fashion and things like that. I think there's -- I think AI is still -- I think if you were to ask retailers that are primarily focused on our centers, they're still trying to understand like how it can really leverage their system. I think when you look at mass retailers like Walmart, I think it's a different circumstance given what they do in terms of their scale. And it's falling back to what we do, I think it's still early days for us, to be honest with you. I'm trying myself to get more up to speed and think about how it can influence us. But we have so much low-hanging fruit just doing the basics here and executing to add value. But I think in the coming next couple of years, we'll really look at and see how it can help us.

And the next question will come from Todd Thomas with KeyBanc Capital.

First question on the South Plains refi. I appreciate the detail there. And apologies if I missed it, but was there any consideration related to the decrease, the extension there and the decrease in the coupon from 7.97% to 4.22%? Or is that decrease pretty straightforward as far as the impact on the P&L and it will result in nearly 400 basis points of savings.

Yes. Todd, this is Dan. I would just clarify the higher rate that you're referring to represented the effective interest rate, right? So when we bought out our JV interest in South Plains, there was a debt mark-to-market. And so that kind of flowed through the effective interest rate, which was higher. The coupon remains the same at 4.2%. So going forward, what we wouldn't have is that debt mark-to-market amortization as an additional cost. It will just be kind of the coupon.

Okay. Got it. That's helpful. And then I just wanted to follow up on the outparcel and land sale opportunity. You previously talked about a 7% to 8% cap rate on those deals ex land. And I realize you mentioned some of those assets are collateral for loans and/or there are some other things that may need to happen for those outparcel and freestanding transactions to move forward and take place. But has the market changed at all in recent quarters around pricing? Is there any change to that 7% to 8% cap rate target?

No, we're still tracking towards that. We've had a number of these outparcels, some smaller deals that have been sub-7 cap. This most recent transaction with the retail strip center at Washington Square was done right in that 7% range. So if anything, we're probably tracking maybe slightly ahead, but generally expect to still be in that 7% to 8% range for the outparcel components of the program.

And our next question will come from Ronald Kamdem with Morgan Stanley.

Great. Just 2 quick ones. So looking at the Go-Forward portfolio NOI without lease termination income, that's sort of 1.7% year-over-year number. I was just wondering if we could just dig into in terms of whether it's some of the closures that we have this year, whether it's some of the proactively taking back space and converting to better tenants. Just how much do you think of that -- what's the magnitude of the impact on that year-over-year number just so we get a sense of what the growth rate could be as those things sort of go away?

Yes. Ronald, and again, '25 was a transitional year. As we've discussed, we had frictional downtime as we're executing on all of our tenant and strategy initiatives. Just to give you a flavor of how we were impacted by Forever 21 year-over-year, which had a high percentage rent contribution in the fourth quarter of 2024. Excluding Forever 21, that would have been 2.7% for the fourth quarter and closer to 2.5% for the year. So that just gives you a sense for 2025.

And going forward, I know we've talked about this in the past, but I'll refer you back to our Path-Forward plan update that we put out last summer. In there, we had an NOI bridge that assumed a midpoint CAGR of 5.2% for the Go-Forward portfolio for the 4-year period of 2025 through 2028. Obviously, in 2025, you can see we landed at 1.8%. Obviously, that implies significant growth in the future. For '26, we think we'll be at least 3% back-end weighted. But when you look at that in the context of '27 and '28, you can see that, obviously, that implies a significant increase above that kind of 5.2% CAGR levels in those years.

Really helpful color. Just the second one, and I appreciate that we'll get an update midyear and guidance in 2027. Just can you talk about just -- I think you said there was an inflection point happening midyear around this time. A lot of that is related to the leasing and so forth. But just organizationally, is there sort of any other sort of pieces of the plan that you're waiting on for that inflection point? Or is it solely tied to the leasing?

No, I think we're just business as usual. I mean we've brought in some of the focus on the lead our acquisition effort. So it's kind of a new -- that's going to create a new -- I'm sure that a lot of people will be busy as we're sort of evaluating different opportunities. But I would say we're operating -- trying to execute this leasing initiative.

And our next question will come from Craig Mailman with Citi.

Just the first question I have on the equity and income, you guys had a pretty big pickup sequentially and a lot of that looks to be from other. Is that -- could you just tell us what that is and if that's sustainable or more just seasonal?

Yes. Craig, a big piece of that -- sorry, just so I know, are you referring -- what periods are you exactly referring to?

4Q over 3Q. So you guys -- just looking through the supplemental, 4Q, you guys had $27.5 million versus $9.7 million last quarter and other income was $25 million, up big sequentially.

Okay. Yes, that's helpful. And to clarify, I just want to make sure I was addressing your question. It's really driven in the fourth quarter of this year, as I alluded to in my prepared remarks, we had a legal settlement income, which was about $16 million in the fourth quarter of 2025. So that's really driving the lion's share of that $20 million increase from the fourth quarter of 2024.

Great. That -- sorry, I missed that in your prepared remarks. And then just the second question. I know it's a little bit early here, but Jack, any early insights into maybe what the evolution of the Path-Forward plan could be in Version 3.0? Like what are the big items we should be expecting?

Yes. I mean look, when I look at -- as I said in my remarks, in terms of things that we're focused on, obviously, dispositions, we'll give you an update. I think by our leasing phenomena, I think we'll give a very good update in the middle of the year. One thing we haven't talked about in detail, which I think we'll start to talk about is rent commencement dates. It's a huge issue in our company in terms of tenant coordination, legal, asset management, also with leasing, trying to get these spaces on time, tenant in place, rent commencing.

And so it's a big work stream that you all don't see, and we haven't put any disclosure out there, but I believe that we'll be less talking about new leasing and more about RCD, what we call RCD rent commencement dates. So I think that's going to be something that you'll see in the middle of the year. My guess is we'll be tightening down our 2028 ranges of what we put out there. And I keep looking at the end, we'll probably be talking about '29 at that point, possibly because we see -- we can forecast out from there what's happening here. And I guess just continued updates on our development -- 3 development projects. So -- but I think RCD will be rent commencement dates, providing more insight into that will be something we'll talk about in the middle of the year.

And our next question will come from Greg McGinniss with Scotiabank.

I just wanted to touch on the couple of remaining -- or a couple of the remaining non-go-forward assets. With 29th Street not in that portfolio and in negotiations with lenders, is the expectation to hand that asset back? Or do you believe that there's kind of equity value to extract thereafter negotiations? And then what's the plan on Fashion Outlets in Niagara? Is that an expected hand back?

Yes, I appreciate the question. I think at this point, I just gave you the sort of latest data play on 29th Street. Probably no additional commentary at this point. We'll obviously give you guys updates as we have relevant news to share.

Okay. And then on the development side, are Green Acres and Scottsdale projects fully leased? What percent of those tenants are expected to open in '26? And are those leases included in the SNO pipeline?

Yes. It's Brad. Yes, they are in the SNO pipeline. So roughly of the $107 million, roughly about $20 million comes from our development pipeline. And then, Doug, if you want to talk to the leasing aspects?

Yes. So Greg, at Scottsdale, I think I mentioned earlier, we're just about done. We're 91% committed with very few spaces left. And at Green Acres, we are about 75% committed. The majority of the exterior redevelopment is complete and the work to do right now is on the interior. But the good news is we've added some really powerful tenants. We're adding some powerful tenants to Green Acres. We think about ShopRite, Grocery, Sephora, Cheesecake Factory, Shake Shack, Foot Locker, JD Sports. It's really going to redefine the exterior. It's going to create a new grand entrance. And the hope is -- the plan is that it all funnels into the inside, and that's what we're starting to see today.

And the next question will come from Omotayo Okusanya with Deutsche Bank.

While you guys don't have any real facts or [indiscernible] exposure, could you just talk a little bit about kind of what you're seeing out there in terms of just tenant credit in general and whether -- as you kind of think about 2026, whether that's kind of more or less of a risk for you guys?

Yes. Thanks for the question. Certainly, those issues are in the news. For us, I think the summary is we don't expect a meaningful impact from this group as it relates to 2026. And I don't think they're reflective of the overall strong retailer environment that we're seeing across the board that Doug alluded to at our centers. Our watch list remains at an all-time low. And none of those centers would impact kind of how we're thinking about our 2026 bad debt expectations for the portfolio.

And our next question will come from Alexander Goldfarb with Piper Sandler.

So 2 questions. First, Jackson, you've -- obviously, you hired a CIO and you've been doing a lot of work on the portfolio. Just curious, with how the debt markets have improved and how you're looking at dispositions, do you think part of Macerich may now be in a position where the unencumbering of wholly owned assets could start to be part of the mix? Do you think the company is there yet? Or with everything that you're doing right now, you just don't see the asset sales and capital markets quite there enough to start down that process?

Alex, you're talking about like unencumbering for like an investment-grade rating or something like that?

Not investment grade, but just start to create like a pool of unencumbered assets.

I mean I'd say like if you think about like Crabtree, I mean, we've kind of pursued -- it's a term loan, but it's not a...

Yes. Alex, I would just say we paid off the debt on FlatIron. Crabtree, it's got a term loan that's highly flexible. It gives us some maturity, but it gives us an ability to prepay it. So I don't think it's an immediate near-term priority, but maybe more medium term to aspirational to start to increase our wholly owned assets more unencumbered.

Okay. And then as far as the legal settlement goes, can you give a little bit more color on what drove it? And is this like a one-off? Or is there a potential that there are other of these onetime benefits that you guys may be able to harvest?

Sure. I appreciate the question. Yes, it relates to a former development project that we're no longer pursuing that resulted in a favorable settlement outcome. It's nonrecurring item in other income, as I mentioned, and it's not part of the go-forward portfolio.

And our next question will come from Michael Mueller with JPMorgan.

Can you comment on what rent spreads have been on the 2026 leases that you've addressed so far? And for the second question, are you seeing any uplift in shop leasing escalators compared to a couple of years ago?

Okay. On the rent spreads, first, the way we've historically talked about rent spreads, and obviously, you saw it over 6% for this group, it's really not correlated to the success of our Path-Forward plan. Our Path-Forward plan, if you think about it, we have a set number of new spaces that we're focused on leasing that have market rents tied to them, PA assumptions tied to them. So achieving in excess of that, more rent, less PA is good for us because all this will sort of result in increased permanent occupancy, more productivity. I don't like the measure. It doesn't.

And then we're also renewing a really large volume of renewals. And I don't think it really correlates to what we're really trying to do and it probably gives you the wrong impression or not the right impression. So we're evaluating that metric. I don't know exactly -- I don't believe it really works right now for us in terms of the success of our plan. So we're going to try to see if there's a better way to do it.

And Michael, it's Doug. I think you asked about escalators. There really has been no change. We've been consistent over the years, and we remain consistent. The escalators when you blend the escalators for fixed minimum rent and CAM, you're somewhere in that 3% to 4% range.

And our last question will come from Caitlin Burrows with Goldman Sachs.

Maybe 2 more on the occupancy front. As a follow-up to Floris' SNO question from earlier, I guess maybe phrasing it a different way, you guys reported the 94.9% lease rate. Could you tell us what your economic occupancy is for the Go-Forward portfolio?

Caitlin, it's Brad Miller here. Yes, so we're at 94.9% on the leased occupancy. Our physical occupancy is closer to 91%.

I would now like to turn the call back over to Jack Hsieh for closing remarks.

Thank you, operator. Thanks again for your participation today. We look forward to seeing many of you at the conferences and property tours in the coming weeks. Thank you.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

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" Green Street Advisors, LLC, Research Division

" BofA Securities, Research Division

" Evercore ISI Institutional Equities, Research Division

" Jefferies LLC, Research Division

" Ladenburg Thalmann & Co. Inc., Research Division

" Morgan Stanley, Research Division

" Deutsche Bank AG, Research Division

" Mizuho Securities USA LLC, Research Division

" Scotiabank Global Banking and Markets, Research Division

" KeyBanc Capital Markets Inc., Research Division

" Piper Sandler & Co., Research Division

" Citigroup Inc., Research Division

" JPMorgan Chase & Co, Research Division

" Goldman Sachs Group, Inc., Research Division

Ladies and gentlemen, thank you for standing by. Welcome to the Third Quarter 2025 Macerich Earnings Conference Call. [Operator Instructions].

Please be advised that today's conference is being recorded. I would now like to turn the conference over to Alexandra Johnstone, Vice President of Finance and Investor Relations. Please go ahead.

Thank you for joining us on our third quarter 2025 earnings call. During this call, we will make certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, including statements regarding projections, plans or future expectations.

Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results, supplemental and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8-K with the SEC, which is posted in the Investor section of the website at macerich.com.

Joining us today are Jack Hsieh, President and Chief Executive Officer; Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with us in the room is Brad Miller, Senior Vice President of Portfolio Management.

With that, I would like to turn the call over to Jack.

Thank you, Alexandra. We had another great quarter at Macerich as we've remained ahead of schedule on our Path Forward plan and well positioned to deliver on our 2028 targets. I want to thank everyone at Macerich for their continued contributions to our success.

Today, I'll spend some time on the operational performance improvement pillar of our Path Forward plan. Then I'll have Doug and Dan speak to the state of our portfolio and leasing outlook as well as the progress on the balance sheet.

For the last few quarters, I've been talking about the momentum we've built up in our leasing efforts. This momentum has driven our confidence in hitting our 2028 targets and pursuing an incremental opportunity such as the acquisition of Crabtree in June. I'll update you on that leasing while also providing some additional specifics that further demonstrate how well we're executing against the plan.

During the third quarter, we signed 1.5 million square feet of new and renewal leases, which is an 87% increase from Q3 2024. This brings year-to-date signed leases in 2025 to 5.4 million square feet in the total portfolio, an 86% increase compared to the same period in 2024. That is well ahead of schedule on leasing volume, and we're executing on target for our market net effective rent assumptions used in our 5-year plan.

As we've stated on prior calls related to our leasing speedometer, which tracks revenue completion percentage for all new leasing activity in the 5-year plan, our initial goal for new lease deals was 70% by year-end 2025. We're currently at 70% today. Our large pipeline of LOIs puts us on track for the 85% completion target by mid-2026.

Turning to the SNO pipeline. It has grown from $87 million in August to $99 million as of today, which again has put us on pace to meet or exceed our target of $100 million by year-end. With the inclusion of Crabtree, we expect a total of $140 million of incremental SNO. Of the remaining $40 million in SNO left to achieve, roughly 90% is in our A, B and C rated spaces. Another way to look at it is that 68% is in our fortress or fortress potential properties.

In our Path Forward plan, the strategy around new deals is to improve permanent occupancy, which will enhance our thriving retail centers. We believe these new leases will improve merchandising mix, which improves traffic, generates higher sales and better productivity. This positions our portfolio to drive increased rents in 2028 and beyond once we have all the work done. In a moment, Doug will highlight several of the examples of our recent deals with retailers who are already having a tremendous positive impact on our centers.

New deals approved by our Executive Leasing Committee, which reviews and approves deals on a biweekly basis, is up 61% from the same time last year, and is more than all of the new deals approved in 2024, affirming the health of the overall retailer landlord environment for best-in-class centers.

We are also making tremendous progress on our anchor leasing initiatives. We have 30 anchors targeted to open between 2025 and 2028, of which 25 are committed to sporting goods, fashion, entertainment, grocery and other retail uses. Re-leasing these vacant anchors is an important part of our Path Forward plan as they help with the permanent leasing in their respective wings, improving the merchandising mix and most importantly, driving customer traffic and dwell time.

As I've said in the past, I'm really excited about what we're doing with House of Sport in particular. We have 9 committed locations with them. Dick's House of Sport had their grand opening at Freehold in the former Lord & Taylor Box this past Friday. This, along with the recent opening of the Freehold Athletic Club and Dave & Buster's in the prior Sears Wane joining Primark has revitalized this center.

Dick's has made the rollout of House of Sport a critical component of their growth plans and have publicly stated they are creating the future of retail with this concept. They are quoting incremental traffic to a mall, in the mid-teens percentage 1 year after a House of Sport opens. And that's consistent with what we've analyzed.

As I said last quarter, leasing momentum I've described today gave us the confidence to opportunistically pursue Crabtree Mall, which we believe will be a very compelling investment based on the early progress on leasing. One of the more important considerations in that acquisition was the opportunity to deploy our operating, leasing and marketing platforms to invigorate leasing momentum and drive permanent occupancy to capture the embedded NOI growth potential.

I believe our team has more than delivered on that front so far at Crabtree, and we'll have more to share in the coming months. As we look ahead, we'll continue to evaluate potential new investment opportunities. That said, we'll remain patient and disciplined in terms of additional external growth. We are very focused on leasing, driving operational improvement throughout the portfolio and hitting our deleveraging targets.

Doug, why don't you take it from here?

Thanks, Jack. Like last quarter, in my remarks this afternoon, I'll refer to total portfolio statistics and where applicable, I'll provide the go-forward portfolio statistics as well.

Portfolio sales at the end of the third quarter were $867 per square foot. That's up almost 4% when compared to the same period in 2024. However, when you look at our go-forward portfolio, sales were actually $905 per square foot.

Traffic through the third quarter was flat when compared to the same period in 2024. Occupancy at the end of the third quarter was 93.4%, up 140 basis points from last quarter. The go-forward portfolio occupancy at the end of the third quarter was 94.3%, which is up 150 basis points from last quarter. And a quick update on the Forever 21 liquidation, which has been a drag on our occupancy for the past few quarters. To date, of the 0.5 million square feet that became vacant, we have commitments on 74% of that square footage.

And again, with much better brands paying significantly more rent than Forever 21 was paying. Trailing 12-month leasing spreads as of September 30, 2025, remain positive at 5.9%, and this now represents 16 consecutive quarters of positive leasing spreads. In the third quarter, we opened 355,000 square feet of new stores for a total of 852,000 square feet year-to-date through September 30. And after years in the making, we finally opened our 11,000 square foot Hermès store at Scottsdale Fashion Square.

Hermès, an iconic brand that is arguably the most sought-after luxury retailer in our industry, will join the likes of Dior, Louis Vuitton, Cartier, Saint Laurent, Versace, Prada and Brunello Cucinelli, just to name a few. This is Hermès’ first store in Arizona with its closest being in Las Vegas. The addition of Hermès now unquestionably makes Scottsdale Fashion Square the primary luxury destination, not only in the Scottsdale market, but also in the entire state of Arizona and at the same time, making Scottsdale one of the most important luxury addresses in the United States.

We also opened a 42,000 square foot Level 99 at Tysons Corner. For those not familiar, Level 99 is the first-of-its-kind entertainment destination for adults, featuring real-world interactive social gaming with over 50 physical and mental challenge rooms. Already being considered best-in-class in the entertainment category, this will be Level 99's third location in the United States behind Natick, Massachusetts and Providence Rhode Island, with many more slated to open in the next several years, including Walt Disney World in Orlando, Florida. Level 99 joins Heidi Lau, Cheesecake Factory, Maggiano's, Coastal Flats and Seasons 52 as we continue to reimagine and remerchandise Tyson's East End Entertainment wing.

Turning to our lease expirations. As of September 30, we had commitments on 94% of our 2025 expiring square footage that is expected to renew and not close with another 5% in the letter of intent stage. In terms of our 2026 expiring square footage, we have commitments on almost 55% of our expiring square footage with another 30% in the letter of intent stage.

So, as I mentioned last quarter, we're basically done with 2025 and in very good shape with our 2026 business. In fact, when looking at our 2026 expirations, we're significantly ahead of where we were at this time last year when we were dealing with our 2025 expirations.

As Jack alluded to in his earlier remarks, the retailer environment, tenant demand remains strong, even despite the noise of politics, uncertainty in the macroeconomic environment and the pending tariffs. And this is not just me telling you this, but rather it's evidenced by retailer activity in our portfolio.

Legacy retailers are reinventing themselves and coming up with brand extensions to meet the demands of consumers. One of the best examples is Gap and how they've adapted their brands and merchandise to once again become one of the most relevant retailers in our industry. And as a result, their open-to-buys have significantly increased. Other examples include American Eagle, which is expanding and opening new stores and their brand extensions, Aerie and OFFLINE are doing the same. J.Crew is rolling out their factory concept as well as Madewell. And Levi's is doing the same thing with Beyond Yoga. JD Sports has caught fire in the U.S. and is on a major rollout as are Coach, PacSun and Abercrombie & Fitch, just to name a few.

And then you have the emerging brands, many of which are rapidly opening stores to support their online business. Examples include Pop Mart, Rowan, On Running, Cider, Addicted, Princess Polly, Brandy Melville, Skims, and many, many more. And as Jack also mentioned, there's Dick's House of Sport, one of the greatest big box concepts in recent history. Dick's has reimagined the sporting goods business and will ultimately redefine the entire category.

So, my point here is this. never has the depth and breadth of retailer demand across all categories been what it is today. And to me, that speaks not only to the strength of our portfolio, but importantly, to the health of the Class A Mall Sector across the country.

And with that, I'll turn the call over to Dan to go through our third quarter financial results.

Thanks, Doug, and good afternoon.

I'll start with a review of third quarter financial results. FFO, excluding financing expense in connection with Chandler Freehold, accrued default interest expense and loss on non-real estate investments was approximately $93 million or $0.35 per share during the third quarter of 2025.

Similar to the last few quarters, I would like to highlight the following item included in our FFO adjusted for the quarter. $7.5 million of interest expense relates to the amortization of debt mark-to-market resulting from our various JV interest acquisitions. As a reminder, this noncash expense is included in interest expense. Go-forward Portfolio centers NOI, excluding lease termination income, increased 1.7% in the third quarter of 2025 compared to the third quarter of 2024. Year-to-date, the go-forward portfolio centers NOI has increased almost 2% compared to the same period in 2024.

Turning to the balance sheet. We continue to make strong progress on the balance sheet initiatives contained in our Path Forward plan. We have only one remaining maturing loan in 2025 for approximately $200 million on our South Plains property. We expect this loan will be in technical default at maturity as we continue discussions with the lender to obtain a potential loan extension. We do not have any additional commentary at this time.

We're continuing to proactively address our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or property givebacks. In fact, over the course of the last year, we've paid down almost $1 billion of debt that had a 2026 maturity date, including most recently approximately $350 million of repayments through the combined sales of Lakewood and Atlas Park.

We currently have approximately $1 billion of liquidity, including $650 million of capacity on our revolving line of credit. From a leverage perspective, net debt to EBITDA at the end of the third quarter was 7.76x, which is a full turn lower than at the outset of the Path Forward plan. And importantly, we've outlined our strategy to further reduce leverage to the low to mid-6x range over the next couple of years.

During the third quarter of 2025, we sold 2.8 million shares of common stock for approximately $50 million of net proceeds through the company's ATM program at a weighted average price of $18.03 per share. While our recent acquisition of Crabtree Mall is expected to keep the company within its previously stated deleveraging targets under the Path Forward plan, these ATM proceeds bring the Crabtree acquisition closer to being leverage neutral as it relates to our goal of low to mid-6x target leverage.

We are making substantial progress in executing on planned dispositions as part of the Path Forward plan. In July, we closed on the sale of Atlas Park for $72 million. We used our 50% portion of the net proceeds from this sale to repay our 50% portion of the $65 million loan on the property that had an effective interest rate of over 9% and a 2026 maturity date. In August, we closed on the sale of Lakewood for $332 million, including the assumption by the buyer of the $317 million loan on the property that also had a 2026 maturity date.

In August, we also closed on the sale of Valley Mall for $22 million. This asset was unencumbered. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine the portfolio. We have made substantial progress on the sales and giveback component of the plan and have identified a clear path to achieving our $2 billion disposition target.

To date, we have completed almost $1.2 billion in mall dispositions. And as you will see in the disclosure we've provided in our supplement, this includes Country Club Plaza, Biltmore, Southridge, The Oaks, Wilton Mall, South Park, Atlas Park, Lakewood Center and Valley Mall, all of which are now closed. This total also includes Santa Monica Place in which the loan encumbering this property is in default and the property is in receivership.

In addition, we have identified internally several additional Eddy assets for sale or giveback over the next year or so, which would increase total mall dispositions to the $1.4 billion to $1.5 billion range. The remaining dispositions in our plan represent the sale of outparcels, freestanding retail, non-enclosed mall assets and land. As you will recall, our 2025 goal for this bucket of dispositions is $100 million to $150 million in total sales for the year.

I'm pleased to report that we currently have approximately $130 million sold or under contract against this target. Year-to-date, we have now closed on land sales for $55 million at our share and various outparcels assets for $11 million at our share. And we currently have approximately $15 million of additional land sales and approximately $50 million of additional outparcel sales under contract for sale.

We continue to expect to be substantially complete on our $2 billion disposition program by the end of 2026. We'll provide further updates on these sales as we progress through the year.

In conclusion, we are making great progress on our Path Forward Plan objectives to reduce leverage, to refine the portfolio and to strengthen the balance sheet. With that, I'll turn the call back over to the operator.

[Operator Instructions] And our first question will come from Vince Tibone with Green Street.

I just wanted to follow up on the equity issuance here. I totally understand the deleveraging goals, but the prior equity raise is closer to $20. I know you're very bullish on the stock over the intermediate term. So, I guess kind of what drove the decision to do $50 million here? And then also, should we expect further ATM issuances over time? Or was this kind of more of a 1 quarter event to get let Crabtree more leverage neutral?

Vince, this is Dan. I'll start and then Jack can chime in. I think the main objective in the third quarter was to make Crabtree leverage neutral, as I mentioned. Going forward, we'll continue to evaluate the ATM use in the context of accretive growth like Crabtree. We'll continue to be thoughtful and disciplined in our approach and evaluation. We've completed the equity issuance portion of the Path Forward plan. And I know Jack's previously said we would consider equity outside of the plan in the context of these type of acquisition or large capital projects that are accretive to our 2028 Path Forward Plan targets.

No, that's really helpful. And then maybe my next one, just switching gears. I just wanted to clarify on the SNO pipeline, you highlighted $6 million of that was related to Crabtree. Was that all incremental leasing at Crabtree since August? Just wanted to confirm that wasn't leases that were in place when the mall was acquired back in the second quarter.

Yes, Vince, if you recall, when we acquired it, it was 11% going-in yield, but with in-place SNO, it brought it up to about 12.5%. So it's really a combination of what was in place at the time of acquisition plus incremental leasing by the team since we've taken ownership.

Are you able to parse those 2 just because I think it would be helpful to kind of isolate what, how much leasing took place kind of over the last 3 months if you have it handy.

Vince, we can follow up with you afterwards. But I would tell you that there's a lot of good progress on the leasing front in terms of deals that have been approved and run through our committee. We've made, we've signed some deals actually already. So we've got others in process. So we'll give more update as we make more progress.

And the next question will come from Samir Khanal, Bank of America.

I guess, Doug, maybe talk about the '26 expirations. You talked about the commitments on the 55%. I think it was another 30% on the LOIs. Talk about the economics on those deals, the pricing, kind of the spreads you're seeing on those versus maybe the '25 expirations.

Samir, yes, you're right. We. I think in my opening remarks, we said 55% of our expiring square footage and 30% in the letter of intent stage. So we're basically trading paper on 88% of our business in 2026. And to put it in perspective, and I mentioned this earlier, at this time last year, we were only 23% committed when looking at our 2025 expiration. So we're way ahead of where we were last year. And as with our new deals, our renewal deals, both in '25, '26, and we're going out to '27 is all at or mostly all at or above our target market rents that are in the 5-year plan.

Got it. And then I guess, Jack, just turning over to you on this $100 million of SNO pipeline, which is you're tracking ahead of kind of your budget here. You talked about the $130 million opportunity without Crabtree, $140 million with Crabtree. Given the momentum that you have in leasing here, as you saw through the last several quarters, is it fair to assume you're tracking to exceed the 140 at this point?

It's possible. It really is because I think we can probably be more thoughtful or be more price sensitive on renewals as well. I mean we're seeing momentum across the board, as Doug said, on new and renewals that we're approving and signing from a net effective rent standpoint. We also had, if you recall, reserves built in the plan. So we're trying to, as we continue to gain more momentum to lease additional space that we didn't really believe we could lease, that's, I think that gives us an ability to kind of exceed that 140 target as we continue to make progress.

And our next question will come from Michael Griffin with Evercore.

Just wanted to get some color around these anchor leases that you've got expected to commence over the next couple of years. Should we think about the cadence of that being more back half weighted to '27 or '28? Do you think some will commence next year? And then can you give us a sense of how the capital costs are going to be associated with commencing those leases?

Yes. I think like a safe assumption is back half of '27, early part of '28 when these actually open, the large majority of them. Now we're able to obviously lease in line once we've got commitments as we go through our leasing efforts within the malls itself. As it relates to economics, I think we've given commentary around in-line deals, tenant allowance being something typically into 1 to 1.5x annual rent in the form of tenant allowance.

For anchor transactions, it's more. It really depends on the nature and the type of tenant. Dick's House of Sport, they're great. They're not cheap. They're definitely more than 1x. I'll tell you that. But each deal is different, and they're different depending on the center, where they are in the market. In some of the deals, we've structured them as opportunities for them to purchase some of the vacant anchors. Others are leasehold lease deals where we're providing a fairly meaningful tenant allowance as part of their commitment to open.

So I wouldn't say there's like a rule of thumb. And if you look at other large tenants that we deem as demand generators, I would say the Dick's deals are probably on the higher end of what they, in terms of landlord costs. But obviously, we believe that they drive tremendous incremental mall traffic. We certainly analyzed it, and we believe that they'll be very successful like what we've seen early days at Freehold.

Jack, I appreciate the color there. And then, Dan, I know you're not going to comment on specifics around South Plains in general, but can you give us a sense of sort of what the lender appetite is like for these non-Fortress or non-Fortress potential assets if you were to choose to refi them? And then any sense on interest rate you could get if you decide to go down the path of refinancing some of these assets?

Yes. I mean, look, it's really case by case based on the assets. Obviously, we don't want to comment on South Plains in particular. But I think we've all seen a very constructive debt financing markets across not just Class A assets, but more recently going down in the quality spectrum. So I think the market is open for refinancings, but it's case by case really based on the specific asset.

The next question will come from Linda Tsai with Jefferies.

In terms of getting to $100 million in SNO by year-end potentially, could you also provide the timing of when that comes online?

Sure. This is Brad Miller. I'll take it. So of the $100 million, $20 million will come online in 2025, and the rest will come on in 2026 and thereafter.

Got it. And then with 30 anchors targeted to open, how many other anchors are you still trying to lease up?

Yes. So, I think we have 25 committed, 3, we have papers trading LOIs out and then 2 are in prospecting stage. There are some other anchors that are in the portfolio, but those are kind of in like giveback assets. And so, the totality of what we're referencing are anchors in our go-forward portfolio.

And our next question comes from Floris Van Dijkum with Ladenburg.

Question on the opportunities out there for additional malls like Crabtree. What are you guys seeing? And what is the financing appetite for those kinds of properties, the A minus assets in your view, it's, can you borrow at under 10% on a secured basis now? Or where are borrowing costs trending for those kinds?

Floris, I'll take the front end, and I'll let Dan talk about the financing. But we're quite happy and excited about Crabtree. We think it's a unique asset in a unique market. We've got quite a significant amount of leasing demand and interest and tours that have been happening since we bought the asset. The asset needed capital. We've already repainted the interior. We've got mockups on rails and lighting already put in place, plans to do wayfinding and work on bathrooms and do some maintenance and improvement on the parking areas.

I mean that's a unique asset. Just it's like you put a little bit of capital in there. I think a lot of tenants got very excited with us stepping in long-term owner operator in the mall space. And so I think it's a great rally opportunity for us to generate a lot of really good return.

Look, we're looking for other, we're evaluating other opportunities. I can just tell you, we don't have anything that sort of satisfies us, I would say, imminently or in this quarter at this point. But I think in time, more of these opportunities have come up as loans go either into receivership or special servicing. I mean you've got to have a capital commitment and a plan to really get these centers to go in the right direction like a Crabtree. And so I suspect we'll see more opportunity as we roll into 2026 and 2027.

I mean I think you know us from a, when we think about acquisitions, you can look at our overall capital allocation progress year-to-date since I've been here, we've sold $1.2 billion of centers at about an 8 cap. Why do we sell them? A, they were either noncore, took too much capital to achieve driving centers that would satisfy IRRs and return on investment for us. You saw us buy out our partner on the PPRT JV, which included Lakewood, Los Cerritos and Washington Square. That was done at a low 7 cap, but really critical properties that we couldn't refinance anything. We had the Dick’s; we had the Sears. We own the Sears locations in both Los Cerritos and Washington Square.

So, there were a lot of strategic reasons for us to gain control of that asset to effectuate the business plans, which we will be able to drive leasing and anchor decisions in a couple of our best centers. And then we showed the example of Crabtree. So, look, bottom line is we're going to look at opportunities that are accretive to our 2028 FFO per share, where we believe we have the ability to drive incremental leasing and NOI growth that can generate strong IRRs and return on investment. And I'd say we're very disciplined about what we're looking at. So, and then Dan, I think you can comment. The financing market has really improved for these assets.

Yes, that's right, Floris. We're seeing a very improved financing market for these types of assets. In fact, look, for us, in August, we were able to close on about $160 million term loan on Crabtree, which was well inside the 10% that you quoted. Our loan is at an interest rate of SOFR plus 250. And this particular term loan gives us tremendous flexibility. It's got 2-year term plus 2 1-year extension options. So, we have flexibility to prosecute the asset management plan with this structure. And we also were able to negotiate an early prepayment without penalty if we chose to do that. So, a lot of flexibility on our loan, but certainly well inside the 10% you quoted, SOFR plus 2.50% in kind of the mid-6% range.

And I'd say like, Floris, if a private buyer wanted to get leverage, they can get investment-grade debt securitization and there's more Mezz opportunity out there. I think you saw the recap on NorthPark Mall. They got pretty good levels on that refinancing to take out their partners. So, I think the financing markets and the Mezz markets are improving quite a bit as we speak; malls that have the right operator, have the right capital commitment and the expertise to kind of get it done.

Our next question will come from Ronald Kamdem with Morgan Stanley.

Just on the go-forward portfolio, just quickly on the same-store NOI in the quarter, any way to sort of quantify sort of the drag from either Forever 21 or proactively taking on space? Just what that sort of did to that same-store number? And if I could ask quickly as well, just that occupancy of 94.3% in your mind, what do you think is sort of peak occupancy for that portfolio?

Ronald, this is Dan. I'll start on the first point on NOI. Again, just recall, 2025 is a transitional year as we're executing on our re-tenanting initiatives across the portfolio, and we have some frictional downtime. The second half of '25, to your question on Forever 21 is also impacted on a year-over-year comp basis. So near term, there's an impact. But as Doug indicated, longer term, a significant positive with higher quality tenants and our ability to double the rent in those spaces when the backfills come in. But our 1.7% growth, if you were to adjust for Forever 21 would be closer to 3% plus for the quarter.

And our next question will come from Omotayo Okusanya with Deutsche Bank.

I know you don't have a lot of exposure to Saks as a whole, maybe like Neiman, Macy’s, Brooks or maybe an Oak somewhere. But just curious how you're kind of thinking through the situation there, just given some of the media speculation about some difficulties that you're dealing with.

Yes. Obviously, we're not going to comment specifically on the tenant. I think you referenced Saks Fifth Avenue, right? So, we have, I think we have one at Fashion Outlets of Chicago. Yes, we can't talk about a specific tenant basis.

And our next question will come from Haendel St. Juste with Mizuho.

I wanted to go back to the portfolio sales, saw the productivity continues to get better here. Maybe some more color on the categories, the regions driving this and give us some color on foot traffic and sales throughout the quarter and the back-to-school season and expectations for the holiday season.

Sure. I mean, look, the strong momentum we're seeing on leasing, which is obviously really critical for our plan, it's not showing up in traffic. Traffic, as Doug talked about, was kind of generally flat. But if you look at comp sales comparing 2025 to 2024, in the third quarter for our go-forward portfolio, those numbers were 3.5% and our fortress properties, 4.8%.

So obviously, the strong properties saw better performance from a '24 versus '25 third quarter basis. That's obviously a lot better than Q1, Q2. Q1, we had election, liberation day was flowing through there, tariffs, a lot of noise. So, it's really encouraging to see in the third quarter this kind of turn. Part of that is back-to-school, other factors. And in terms of categories in the third quarter, apparel and accessories, fast food, general and home furnishings and jewelry did quite well, obviously, athleisure as well.

So, it feels like the higher-end customer, obviously, there's, we've got a duality lower income. I think there's obviously more challenges in the higher income customer bracket. We're seeing those categories. Obviously, the fortress is performing better than the overall go-forward that I gave you those numbers. So, I think that is sort of the tail right now. And as Doug maybe alluded to, I think the retailers are generally optimistic in the fourth quarter. They've got tariffs and they've got other things that they've got to manage with suppliers and potential price increases and other pressures on vendors. But it feels pretty good for the fourth quarter, which as the holiday season is upon us.

Got it. And if I could follow up one more, maybe more on the transaction market. We've seen a few more A mall trades. And I guess I'm curious what your, what you make us some of the cap rates we've seen for Brickell, Taubman, NorthPark and what you think the read-through for your go-forward portfolio is?

I feel like those are a little bit different. I mean, like Crabtree was an auction process. They had an institutional owner that had no debt on the property that was looking to maximize value. NorthPark was sort of like an internal JV buyout. Obviously, it was a pretty, they got great financing. It was a very exciting cap rate relative to how that might translate in our best properties.

I think Brickell, I don't know the details of it, but same situation where there's a JV buyout. Obviously, the partner, Simon, they know that partner, they know the asset quite well. So, I feel like those were auction arm's length transactions, so a little bit different. But I do think that Crabtree is a good beginning comp. I think there'll be others that, others that we're not, there's other processes that we're not participating in. So that will give more insight as to where the proper levels are for what I would call fully auctioned and marketed centers.

And our next question will come from Greg McGinniss with Scotiabank.

I was curious on that incremental rent to $99 million, how much of that is coming from the anchor spaces that you're now filling up?

It's definitely. this is Brad Miller. It is, I don't have the number off the top of my head, but it is definitely a part of the $99 million, and we can follow up with you.

Okay. And then for an asset like Fashion District, which sits into the go-forward portfolio, but there's been different plans for that asset over the years, obviously, an expensive redevelopment, bought it from your partner, hopeful for getting the arena there that fell through. Is there additional plans for redevelopment there or anything to kind of excite tenants for that asset?

We finally redirected leasing energy and effort on that center. We really had our hands tied because of the arena. We really couldn't do anything because it was taking up such critical space and you're trying to, you can imagine, you're trying to hold tenants together that would be potentially part of where the arena would sit and we had to move them.

The teams are actually I'd say I'm cautiously optimistic about some of the early momentum that we're starting to see there. I think the mayor is very focused in this area as well, and there's efforts to try to just improve the overall area that Fashion District of Philadelphia sits in. We don't have any debt on the property. So, I think we're going to do our best to try to figure out how to create the right kind of leasing momentum and merchandising mix and really make sure that we can, with the IRRs and Return on Investment makes sense.

So, we're going through that right now. I'd say it's still early days. But so far, from what I've seen from the early parts of the feedback from the teams on our quarterly asset reviews, we're finally getting after it. And I think that we can get some help from the city in terms of what their plans are for that area to try to improve it that might improve our prospects there.

And the next question will come from Todd Thomas with KeyBanc Capital Markets.

Doug, I wanted to follow up on leasing. Two questions actually. First, it looks like spreads, re-leasing spreads this quarter were down with the T12 re-leasing metric decreasing to 5.9%. You said that you're tracking ahead of the market rent projections in the Path Forward plan, but what does that mean for re-leasing spreads going forward? If you could provide some color. And then the second question, I think you characterized your commentary around the '25 and '26 expirations that have been addressed as a percent of the tenants that are expected to renew. What kind of tenant retention are you anticipating in '26? Is there anything worth calling out or noting in terms of nonrenewal activity?

Maybe, Doug, can take on the first part, on the re-leasing spread, we're leasing ahead of schedule, as you can see from a velocity standpoint. And as we said, we're ahead of net effective rents on new and renewal deals that we've signed up and approved.

Depending on the mix of the pool every quarter, you're going to see variation on releasing spreads. I would not read honestly too much into it. We're having what I call significant increases in leasing. And the thing you want to focus on, are we on track with our speedometer ,because that's a revenue concept as it relates to completion.

Are we above our net effective rent projections for each space? These are space-by-space numbers that we have throughout the entire go-forward portfolio. And I would tell you that this number is going to move around. And I wouldn't, if it's up, if it's like 15%, I wouldn't look and conclude too much into it. Depending on the nature of the renewals and what we have going into the mix at that time, it's going to influence that. So to me, the number that I focus on, are we ahead on a net effective rent basis because that's the real dollars that are going to materialize relative to the snow we're projecting and our renewals. And then Doug, you follow up on that second part of the question.

Yes. No, I think you kind of hit on it, Jack. So we talked about where we were in 2025 and 2026. We're way ahead in 2026 compared to this time last year. And as part of our 5-year plan, we're really focused on 2027 and 2028 as well. We've had success getting the retailers to come to the table in order to address these future years, which I think is extremely important because it really mitigates the risk of our 5-year plan. And as Jack sort of alluded to, in terms of spreads, Todd, it's really more about hitting our market rents that are part of the 5-year plan. And I can tell you that with both our new deals and renewing our expirations, we are hitting our targets as part of the 5-year plan.

To the second part of your question on tenant retention, too. I think for '26, we're expecting about 85%.

And our next question will come from Alexander Goldfarb with Piper Sandler.

So 2 questions. First, just thinking about the Canadian and Mexican tourists and snow birders. Arizona, obviously, a big market. What has ultimately happened? There was concern at the beginning, towards the beginning of the year that there would be a lot fewer like Canadians coming down and maybe that would impact sales. Are there retailers seeing that play out? Or this winter is looking more like a normal one in which case your percent rents from the Scottsdale assets, et cetera, should not really be any impact? Just trying to understand if there's going to be an impact or not.

Look, I mean I think for sure, between ATC, the Canadians coming over, it's definitely a reduced number. We've seen it at fashion outlets in Chicago, which is typically an international kind of customer that goes in there.

That being said, if you look at the third quarter, our best, the center that had the highest '25 versus '24 third quarter sales performance is Scottsdale Fashion Square, top of the list. So it's sort of, I think, I don't know if I draw too much conclusion. Our assets are pretty, they're not, I wouldn't call them necessarily tourist destinations with the exception of maybe Chicago that gets a little bit more influenced there. But definitely, there's been less Canadians coming into the country and that's, but I haven't seen a material impact in the sales performance within our portfolio.

Okay. And then the second question is, Doug, you guys mentioned a lot of strength on the leasing front, and that's been a theme that we've been hearing. At the same time, there are news articles like a number of talking about like Chipotle and other brands that have been struggling because consumers have been shying away from them. So how do you guys interpret some of these conflicting signals where it would seem like the consumer is under stress, they're pulling back. And at the same time, it seems like they're still shopping the malls and the retailers remain healthy and the retailers are growing. I'm just trying to understand how to drive sort of conflicting signals between what the retailers seem to actually be doing versus some of these headlines that we read about.

Yes. Alex, it's Doug. Thanks. It's a great question because I talk about all this retailer demand, Jack was talking about the leases we signed, we've talked about our executive leasing committee. And the numbers we're putting up, the metrics we're putting up are counterintuitive to everything that you read about in the paper or on the news. And I think there's a few reasons for that.

One is our, Macerich has a must-have portfolio. There's not a lot of new supply, and the retailers have to expand. I mean they're taking down leases for 5, 7, 10 years, and they're sophisticated enough, they're able to see past what's going on and maybe what you're reading about in the paper. They're being very opportunistic and are using this opportunity to take down great space in great malls, all of which we have.

So, and then you have the emerging brands, which I referred to. And more and more, they're coming to the plate because we know that when they open bricks-and-mortar stores, it helps their online business. It supports their online business. So there's a lot of going on right now in my world that are just counterintuitive to everything that we're reading about or hearing about.

And the next question will come from Craig Mailman with Citi.

This is Sidney McInteer on for Craig. So I know we already touched on acquisitions a bit. So maybe on the flip side for the dispositions. You've been making good progress on the asset sales with Lakewood, Valley Mall, Atlas Park. How are you thinking about the pace of asset sales moving forward? And what's the appetite like for some of the non-Fortress dispositions that you've identified in the portfolio?

Yes. Thanks for the question. In terms of the remaining Eddy mall sales, we've got a handful that I indicated that are in that kind of $200 million plus range. A couple of those will be determined based on the timing of the debt maturities as they mature through 2026, and we'll evaluate in the context of a sale or in some instances, a potential giveback.

Now as it relates to the outparcels, we've identified this pool, $100 million to $150 million in 2025. That pool is $500 million plus. So the majority of those remaining assets, the team is working through now in terms of readying them for sale for 2026. So as I said in my prepared remarks, I think the progress on the dispositions has been phenomenal by the team. They've done a great job across the organization with the dollars of assets sold to date, and we're on track to substantially complete the $2 billion disposition program by the end of '26.

That's helpful. And then maybe a quick follow-up on Forever 21. Of that 74% committed, how are TIs and concessions trending? And have you had to split any boxes leading to higher CapEx commitments? Or is it mostly single tenants you're able to find to backfill?

I would say it's Doug. I would say it's a mix. In some instances, we're just simply replacing a large Forever 21 box, and that may require a little bit less capital. But in some cases, we are dividing up a box. And the reason we're doing it is because we have demand. for a long time, we've been trying to get these large-format tenants in our properties and just haven't had the space. So if there's ever a silver lining that comes with a liquidation like this, it really freed up our ability to go after some of these retailers that we've been wanting to, but just didn't have the space. Without getting into specifics, I mean, think about Dick’s House of Sport, think about Zara, think about Uniqlo, think about Round 1. I mean those are all tenants that we're replacing Forever 21.

And I think going to be significantly more rent with much better retailers that -- and Jack was talking about this, that are going to drive traffic to these wings and increase dwell time within the center. So I think we're in pretty good shape. And to be 74% at this point, given the timing of their liquidation is a good thing. And if you think about it, when we did all these Forever 21 deals, they were sort of the darling of the industry. They looked at the best malls and they always got the best space. So to get back some of the space is sort of a bonus.

And our next question will come from Michael Mueller with JPMorgan.

Just a quick one on lease spreads. This year and last year, the rent spreads on the overall portfolio have been higher than what you reported for the stronger go-forward portfolio. Just curious what's driving that.

This is Brad Miller. I wouldn't read too much into it. It's just the pool of leases that are being signed on each of the spaces.

Okay. So basically mix. And then actually, if I can sneak a follow-up in there. Dan, when do you think you'll be at a position where you can start to think about tightening the 2028 FFO range? Do you think it could be next year? Or do you want to get past the asset sales next year and get into '27?

I think that's something we'll evaluate as we get closer to year-end and further along with the program to provide any updates. We just put out the version 2.0 at the June NAREIT, and it is a multiyear plan. So, I think we'll evaluate as we get kind of through this year and see where we're at in totality on all the initiatives across the Path Forward Plan.

And the next question will come from Caitlin Burrows with Goldman Sachs.

Just one and it goes as a decent follow-up to that last one. So, on the Path Forward plan, right now, you guys have a midpoint of $1.81 and you've mentioned Crabtree is $0.08 accretive. So maybe this was more of a 2Q question, but I don't think it got asked then. Would you say the new target is $0.08 higher, so midpoint $1.89 or not exactly?

Yes, that's right, Caitlin. The Path Forward plan was put out before the Crabtree acquisition. So, the midpoint of that range was $1.81. The Crabtree was expected to be $0.08 accretive. Obviously, there's adjustments along the way, for example, the ATM $50 million that we just used. But I think that's the right way to think about it in terms of the plan that was put out pre-Crabtree and then the accretive $0.08 to that plan subsequent to that.

And now this does conclude our question-and-answer session. I would now like to turn it back to Jack for closing remarks.

All right. Thank you, operator. Thank you, Michelle. I'd like to thank all of you for participating in our Q3 2025 earnings call. We're excited about our progress on our Path Forward plan and about the future prospects for our company. So with that, good evening.

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Let's get started here. Welcome to the Macerich Roundtable. Jack, I'll turn it over to you. Maybe you can make some introductions, the team up here. And I think you've got some opening remarks.

I have some prepared remarks. So good afternoon. It's a pleasure to be here. My name is Jack Hsieh, I'm the CEO of Macerich. I brought to my right, Doug Healey, our Senior EVP, Head of Leasing. On my left is Dan Swanstrom, our Senior EVP and CFO. I've got Brad Miller at the end, SVP, Head of our Portfolio Management Effort.

Ironically, when we were here a year ago, I had just started last year at the company, we were focusing on beginning to outline what we could accomplish on our Path Forward plan. Today, I'm proud to report that we're either ahead of schedule or on track on all components of the plan and have significantly derisked the plan.

This pace and confidence in achieving our remaining goals for a projected mid-2026 inflection point have enabled us to pursue new growth opportunities such as the acquisition of Crabtree Mall in June. Recall that our Path Forward strategy is built on simplifying the business, operational performance improvement and leverage reduction. We're solving for strengthening the balance sheet, fortifying our core portfolio, driving operational excellence and positioning us for growth.

In May, we provided an update to our Path Forward plan, which included a comprehensive NOI bridge. This update also provided a road map for 2028 target FFO ranges and a path to our target 2028 leverage ranges. We also provided an update on the composition of our go-forward portfolio. Driving operational performance improvement begins and ends with leasing. Recall that we are targeting an average of 4 million square feet of leasing in 2025 and 2026.

Through the end of the second quarter, we've already signed 4.3 million square feet, which is ahead of schedule on leasing volume and on target for our market rent assumptions used in the 5-year plan. I think by now, we're all familiar with our leasing speedometer and our signed not open or snow pipeline. These metrics best track our progress on driving a higher percentage of new lease deals versus renewals, which in turn drive higher spreads and incremental revenue to achieve our NOI targets.

The Macerich leasing speedometer tracks revenue completion percentage for all new leasing activity in the 5-year plan and drives every leasing and capital allocation decision at our properties. Our initial goal on new deals was 50% progress by mid-2025 and 70% by year-end 2025. By hitting that goal, it will put us on track for 85% completion target by mid-2026, which would effectively complete the new leasing goal outlined in our plan.

That also puts us on track for our ultimate opportunity to achieve the $130 million in cumulative snow potential. For new deal lease completion, we are at 66% today, and we have a large pipeline of LOIs, which puts us on pace to exceed our 70% year-end target. The snow pipeline has grown to $87 million when we reported Q2 earnings in August. That also puts us on track to exceed our snow pipeline target of $100 million by year-end.

We're also making substantial progress in executing on planned dispositions as part of our Path Forward plan to improve the balance sheet and refine the composition of our portfolio. To date, we have completed approximately $1.2 billion of mall sales, which include the recent sale of Lakewood and Valley Mall 3 weeks ago.

What we have remaining for mall sales are several additional Eddy assets for sale or loan givebacks we've identified over the next 1 to 2 years, increasing the total dispositions to $1.4 billion to $1.5 billion. The remaining $500 million to $600 million of dispositions in our plan represent the sale of outparcels, freestanding retail, non-enclosed mall assets and land.

I'm pleased to report that we currently have approximately $120 million sold or under contract against our 2025 target of $100 million to $150 million. I mentioned Crabtree earlier. I'd like to close on that acquisition as it speaks to how much we have derisked execution of the plan and how positive we are on Class A malls in general. We acquired Crabtree Mall, a market-dominant Class A retail center totaling 1.3 million square feet in the Raleigh-Durham MSA for approximately $290 million.

It's accretive to the Path Forward Plans 2028 target FFO range. It's a powerful entry point to one of the top Southeastern U.S. markets and it holds a dominant market position in a high-growth market with the top retailers in the country identifying it as either the #1 or #2 must-have location within the Raleigh-Durham MSA.

We're excited about this mall as we have the perfect opportunity to deploy our operating leasing and marketing platform to reinvigorate leasing momentum, drive permanent occupancy closer to 90% by 2028 and capture the embedded NOI growth upside potential. Retailers are now elated that we own and manage the mall, and we've seen that reflected in the inbound indications of interest and negotiations already underway.

We believe there are more opportunities out there to use the platform we've created with our Path Forward plan and our rigorous process to work with leading retailers eager to find the best malls to reach their consumers. In closing, I feel very good about where we are on the Path Forward plan and with the addition of Crabtree to our go-forward portfolio.

I'm pleased that we're ahead of plan on leasing, on track with asset sales and dispositions and have a clear road map for hitting our deleveraging targets. Our team is working well together, executing nicely on the key components of the path forward plan and properly incentivized and aligned on shareholder value creation.

I'll turn it over to you.

Great. Thanks, Jack, for that. I mean you're certainly well ahead of leasing when you compare it to your plan, you're certainly well ahead of leasing when you compare it to last year in both the sort of the number of deals and the square footage. Talk to kind of the changes that you've implemented, right, getting to that sort of progress.

And I know you've talked really about technology enhancements in the portfolio driving the leasing capital allocation. Does it -- so what changes have you made as you've come to Macer that is sort of driving this leasing machine here?

I think what we're doing is very unique as it relates to being a mall landlord. It started with COVID, right? Macerich, before I joined the company last year was not positioned well going into COVID, obviously, from a balance sheet standpoint. It had to do a very large equity offering to kind of rightsize the balance sheet, so it didn't have to pursue other more toxic options, I would say.

So what happened between that time and before I started was the company was basically kind of on an annual basis, trying to just kind of stay ahead of kind of quarterly earnings and guidance. The mall portfolio was generally pretty well leased, but we had over 30 vacant anchor locations within our centers.

So I see like the first change that I think which is why we're seeing the success coming in was come up with a game plan on what are the assets that we need to own, first and foremost. What is the culture that we want our company to be. One of the principal ones is empowerment. I think this was a very top talent controlled kind of organization over the last decade -- number of decades.

If you were to look at why we're doing what we're doing today, we have a leasing team, an asset management team, a property management team, legal team. The team is just going above and beyond historically what this company has performed in terms of these leasing targets.

And so I think on the one hand, we're leasing really good space in really good centers where tenants want to be in. We're making capital decisions to kind of support that leasing, which is driving those spreads. We have a host of technology tools that we put in place and process tools that enable this company to communicate really efficiently, especially as it relates to tenants and leasing.

The other thing that a big change was the empowerment of our asset management team. If you were to ask me, who is the owner of these assets? Who is the owner representative at Macerich before I got here, it wasn't really clear to me. So I said, look, asset management team, you guys are the owner.

You guys are coming up with these 5-year budgets. You're going to hold the organization accountable to them. You're going to hold the organization to capital allocation, look at point-to-point IRRs, decide on whether we should sell or buy. And that [ candidly ] frees up leasing to basically green light and do what they need to do versus having indifference within the company.

So I'd say it's a combination of very specific strategy, empowering our asset management team to kind of be the owners of these assets that are going to be accountable for these 5-year plans. We had a great leasing team. So they always knew how to lease. We just didn't give them the direction or the latitude to do it. And so I think that's why you're seeing us succeed in this way right now.

I guess, Doug, turning over to you. I mean, what are you seeing on the ground as it relates to the consumer? Clearly, they've been impacted with inflation. Retailers have been impacted from tariffs. I'm sure you're in deal review meetings, like what are things that come up and what are concerns from your retailers?

Well, there's definitely a lot of things going on between politically, the tariffs and other things in the macroeconomic environment. But so far, and I think I've said this on several calls, so far, we've seen no correlation with retailer demand. In fact, I think you alluded to it earlier, we have already signed as many deals in 2024 year-to-date than we signed in all of 2025 -- I'm sorry, '25 compared to '24.

That's kind of what we've done in the past. What's more forward-looking is we have an executive leasing committee every other week that approves deals and those deals go to lease, they go -- they get fully executed, they go into our snow pipeline. We've already reviewed more deals in that committee this year, year-to-date this year than we did in all of 2024.

And that's much more forward-looking in my opinion. So we're not seeing any slowdown at all at this point.

And just to put it into perspective here, when you think about '26 expirations, how much of that have been addressed versus where you were, let's say, last year?

Brad, do you have that exact number? I know we're ahead of where we -- we're ahead of where we're basically done with 2025, and we're ahead of where we were at this point for 2026.

'26.

And then talk to us about the Forever 21 space, right? I mean, clearly, square footage, but they didn't pay a lot of rent. So where are you kind of on those sort of, let's call it, under commitment? Where is it under LOI? Talk to us about those discussions that you're having.

So you're right. We had about 570,000 square feet with Forever 21 that we got back. That's a lot of square footage, but you're 100% right. They did not pay a lot of rent. And we kind of -- we foresaw this. We knew this was going to happen. So we've been actively leasing the space way before they filed bankruptcy, way before they closed stores.

We're about 67% committed right now in terms of fully executed leases and leases out with another 18% in LOI. So we're trading paper on about 85% of the vacant square footage. And if there is a silver lining, in this filing and this liquidation, it's allowing us to take out what was a nonrelevant retailer, not paying a lot of rent and putting in tenants that are really relevant and will pay rent.

If you think about replacing a Forever 21 with a flagship Zara or a Dick's House of Sport or a Uniqlo or a flagship Foot Locker, not only are you replacing with a better brand, but now you replace an anchor in what was probably a dead wing because Forever 21 wasn't doing the business with tenants that are going to drive traffic into that area, and that traffic is going to parlay into better leasing and more rent.

And then what's sort of the rent growth you'll see in these types of -- I mean, obviously, there's a capital commitment part you have to think about, right? So maybe on a net effective basis, what would be sort of the rent growth in that?

Yes. I mean on the Forever 21 spaces, we expect to double the rent, right, that we were getting from Forever 21 across...

2 to 2.5x the rent Forever 21 is paying.

And Doug, just to add on the 26 expiries, we had -- as of when we reported about a month ago, we had commitments on almost 30% of our expiring square footage and another 45% in the LOI stage. So pretty far along. And to Doug's point, certainly ahead of pace compared to last year.

And in terms of categories, as we think about retailer categories that are active as we're looking for -- as they're looking for space, maybe talk about that for the audience here.

It's interesting. We're seeing -- we're still seeing unprecedented demand almost across all categories. Luxury -- I'm sorry, legacy for sure, digitally native and emerging brands, international brands, think about Zara, think about Aritzia, think about Uniqlo.

Food and beverage, for sure, grocery, medical, entertainment, health and wellness, I mean, there's demand from all of these categories, which is really exciting to me, and I think very intriguing is we always talk about some of these sexy emerging brands, whether it's Alo Yoga or Ferity or Brandy Melville, and they're great. We need to have them in our shopping centers. But we're starting to see some of these legacy brands really reinvent themselves.

For example, The Gap, Old Navy, they've been irrelevant for a long time. They are extremely relevant right now. We've seen it with Abercrombie & Fitch and Hollister, Coach, Pacific Sunwear. So while we continue to reach out and accommodate these emerging brands, really good to see the legacy brands who are staple in our properties, reinventing themselves and performing very, very well.

I want to keep the conversation interactive. So if there's any questions, please. Okay. On the balance sheet front, I know you got one sort of remaining maturing loan in November right now. Maybe talk around that. And also, how are you addressing some of the '26 maturities at this point?

Yes. So on '25, we've got one at South Plains. We're currently in discussions there. so stay tuned. We're looking at a potential extension there, but more to come in the coming weeks. We've already attacked a lot of our '26 maturities through asset sales. Examples most recently, Lakewood, 3 weeks ago, we announced we closed on the sale of Lakewood for $332 million. That was probably our second largest maturity.

Flatiron, we had paid down the debt on that. So we're proactively attacking the '26 maturities as well through a combination of refinancings, asset sale paydowns and then there's 1 or 2 where we'll have discussions with the lender and kind of see where those play out if it makes sense to get an extension or a potential give back.

In terms of asset sales, maybe update us on that. I know you did South Clark in April, Alice Park sold in July. So remind me.

Yes, Valley Mall, Lakewood.

Yes. So we just closed, as I said, on Lakewood for $332 million. Valley was similarly about 3 weeks ago, that was $22 million. That was an unencumbered asset. So in totality, if you just take a step back when Jack came on the outlined about $2 billion of asset sales as our target. We've incredible progress over the last year.

With Valley and Lakewood, we're now at $1.2 billion of mall sales completed. And we've got another $200 million to $300 million where malls that we'll look at over the next 12 months in terms of incremental remaining Eddy dispositions or givebacks. And then really, the last chunk to get to the overall $2 billion target is $500 million to $600 million of outparcels, freestanding retail, non- enclosed malls.

And on those, we had at the beginning of the year, provided guidance of $100 million to $150 million of what we thought we could sell in 2025. And as Jack alluded to earlier, we're pleased to report that we're currently at $120 million against that target. So ahead of pace on the disposition targets. And the team is aggressively attacking the '26 outparcel dispositions and lining them up as we speak now.

Maybe on that, just talk about the appetite from buyers for these mall assets, right? It feels like you're making good progress on that side, too. So maybe just kind of what does the transaction market look like? What does pricing look like?

Yes. I mean the financing market is thankfully opened up on sort of what I call what we would call B malls, malls that are performing in the 400 to 600 square foot in sales. They're probably looking at like 14%, 15% debt yields in terms of underwriting. So that's going to kind of put a kind of floor on cap rates for a while as it relates to just financeability of those assets.

But I would say the -- there is -- we've seen a good buyer base of malls that we're selling. I know when we were competing for Crabtree, there were a number of private entities that we were competing against. So I would say that the market is starting to begin to function more holistically. And I think what that means is you'll see more malls, some that are special servicing, some that are lender controlled start to come to market.

And there's a lot of equity to buy homes for that right now, I'd say, private equity. We've had a lot of success in selling malls within our portfolio into that group. And so it's just -- the buyer has to have his own vision as to what they want to do, like in each -- like Lakewood, we sold that to Pacific Retail. They have an institutional partner that's going to come alongside with them.

There is an opportunity to generate return on that asset. It probably looks like a 6-year kind of, in our opinion, kind of back-ended horizon to accomplish that. And in our judgment, I'd rather put that money and put it immediately into a Crabtree that is generating 11% yield and is going to quickly increase based on kind of the things that we do really well.

So I would say that the market is getting more functional as opposed to dysfunctional because of financing, equity sources there and now it's just a question of the product, the total addressable market. And I think you will probably start to see more come on in the market in the coming months.

I mean Crabtree feels like it was a very unique opportunity, right? It's like sort of a too good to be true where I mean it generates very high sales productivity. I mean 11% yield. And talk to us how that came about that opportunity for you.

Well, it was owned by a sovereign wealth fund for many, many years. And I think they had -- over that course of time, tried to sell the center. And obviously, they probably may have should have sold it earlier in a different kind of cap rate environment for that type of center. The financeability, I think, the way if someone wanted to get secured financing on that could only go so far and create so much flexibility.

And the equity check required for a private buyer, like if we were selling that property, it was unencumbered, you would probably need $100 million to $120 million equity check into that. That's not for everyone, right? So I think size certainly kind of impacted some of the marketability of that asset. And for us, we -- once we saw it, we were kind of all ran to it. And we're happy to own it right now, happy for our shareholders.

And in terms of what you can do there, the opportunity set, what feedback are you getting from retailers from Crabtree. Talk about what is occupancy today? Where can you take it? Talk about that accretion.

The occupancy today is, Brad?

Mid-70s.

Yes. And we expect to take it to 90% by the end of 2028. What I can tell you about the retailers and they were waiting for the right buyer, and we were the right buyer. The previous owner wasn't investing a lot of capital into the property. They weren't investing a lot of capital into the retailers. The retailers wanted to be in that center.

They wanted to invest in their stores, but if the landlord wasn't going to do it, then they weren't going to do it. So as Jack said in his prepared comments, they were elated when we bought it. And I'm not going to start naming names, but we have some key retailers that are expiring in the near future who have approached us proactively not only wanting to extend for another 10 years, but also expand, remodel, et cetera.

And then those retailers that are not in the market where they might have gone to the competition, they're now looking at us. So it's been very, very well received by the retailer community.

The one topic I want to talk a little bit about was CapEx, right? I mean it feels like you get these boxes back going to require capital requirement. Maybe generally, as we think about the boxes you've gone back, Forever 21, et cetera. And how should we think about CapEx over the next several years in the mall business as a percentage of NOI?

I mean boxes are clearly more challenging. So we have 23 what I call anchors that have either been -- we've already signed deals, we've opened them or underway right now. 6 are under LOI right now. We've got one that we're prospecting. So we're going to target having 30 complete within a pretty short period of time.

I mean the different options are sell the box with a little bit of TA or sell the box for a good number, have the tenant build. The other option is we -- if they sign a lease and we provide the capital for the tenant improvement, there's also landlord work associated with it, especially if it's an old Sears box. So there's not a one size fits all. I would tell you that the way I look at it is obviously, I look at the return on capital of just what like a Dick's House of Sport is going to go into a serious location.

Kind of depending on the type of deal you structure with them, you're going to get a good rent, you're going to provide a decent amount of TA, and there's probably going to be some landlord work. But that's not the end of the story. And you'll get a decent return, hopefully, mid- to higher single -- mid- to single-digit return on that capital invested.

But the real story is what does it do to the wing of that shopping center? Who else can you bring in? Does it drive traffic? Our business is really simple. Go to Tysons Corner, go to Queen Center, go to Scottsdale Fashion. We drive traffic. We drive sales, we drive rent big time, right?

If I have a wing that's got a vacant anchor, I don't have that ability to create that tension. I don't have to draw. Someday, we'll start to show you statistics at Chandler. The prior -- the leadership had negotiated a deal with Sheils, pretty much gave the box to Shield Shiels some tenant allowance to get them to open that store. Sheils is going to do north of $120 million in sales. The trade area for Chandler has increased 20% because of Sheils. If you look at the tenancy in that wing, we just approved Alo in that wing to go into that swing in the center, it was virtually unleasable with too much GLA.

Now that center is really thriving. So as you all think about the opportunity for Macerich, we are both the band-aid off leasing the way we should be leasing building anchors, that gets us the starting point in 2028. So yes, we'll hit our leverage target. We'll exceed or meet our FFO per share, but that's not the real story. The real story is going to be in 2029, 2030, 2031 renewals when we're starting to really drive traffic and sales.

That's where the real power, I think, is in terms of opportunity. Because for a long time, I would say if I were a student of what happened in our portfolio, not a lot of offensive capital went in. So we got picked off by power centers, lifestyle centers. But there will be a time of reckoning when I'm going to be able to go back when I'm fully leased and be much more offensive as it relates to pulling tenants out of lifestyle centers around us.

And let's see what happens then, right? So we haven't had that chance because if you think about the mall business, it has been very challenging like you got COVID, you got anchors, you got people not going to centers anymore. Well, reality is traffic in our portfolio year-to-date is up already. So versus the first 6 months of last year.

And it's only going to increase with these 30 anchor stores and all of these flagship locations that are being built, which are demand generators when Haidilao opens, when Din Tai Fung opens, when Eataly opens, when Dick's House Sport opens, when Von Maur opens down the line, these will drive Level 99 Tysons, these are going to drive traffic.

And if you've studied which you should know Gen Z is a big proponent of customer, the highest, fastest-growing customer foot traffic in our centers. Big spending. That's a big pot of money. They go to malls. What do they want? Well, I can tell you, we're trying to figure it out, right? They want certain tenancy, but as a landlord, what do we need to do today? What do we need to do 5 years from now, 10 years from now because that is going to be the largest segment spending population that will facilitate in our centers.

So that's kind of like the newest committee that I've just formed, my Gen Z committee, which I don't qualify, but I'm getting the right people on it.

[indiscernible]

Delevering is the most important thing that we can do right now because for some right now at our current leverage level, we're not investable for some. And I think that that's a core objective of the company. When we looked at Crabtree, I looked at 6 other opportunities for Crabtree. And I would just tell you, I offered on one other one, one of those other 6.

And Crabtree was one that was the one that we needed to buy for -- as I've sort of mentioned. Will there be other ones? I don't know. We'll continue to look, but they've got a really high bar of what it takes to sold more than bought, so kind of a good feeling as to what we really need. But deleveraging is really critical.

We're not going to buy a bunch of stuff and delay our deleveraging plan by any. We're just not going to do that.

[indiscernible]

And the other thing about buying a Crabtree is it gives them the ability to maybe look at some of the Steady Eddy. Some of those are unencumbered, I can monetize them. The cap rates now are inflecting pretty close to where I might be able to maybe trade out a slower growing kind of go forward versus a Crabtree, which is a very high same-store NOI kind of property right now in our portfolio.

Jack, when I -- I mean this conversation we're having, it feels like, again, you're well ahead of all your targets. Leasing, S&O. I mean, you've done a good job on the leverage side. I mean this 180 that you put out is out there, but it certainly feels like moving even above that direction.

Like help us understand kind of what are the biggest swing factors, right? Like it feels like -- is it asset sales? Like what's driving you not to push that 180 million above?

Yes. Look, and just for everyone's background, I think everybody has seen the Path Forward plan. But in May, we put out our Path Forward plan, which included a detailed look at a comprehensive NOI bridge, targets to key components of 2028 FFO targets and the deleveraging path. As you look at some of the variables on the NOI bridge, obviously, we talked about the asset sales and the timing of those.

But from incremental NOI perspective, we've got the pace of NOI growth from the new leasing activity and the SNO pipeline that we've talked about, where we're driving good progress, completion of the major development and other redevelopments, the timing of which and when that comes online, obviously, affects when the NOI is realized.

And then on the FFO, we provided key components on the expense side, the largest one being interest expense. We've put our assumptions in there. So obviously, interest rates and the variability of that could be a factor in that plan. But yes, I mean, look, as we've talked here today, we believe we've derisked that plan significantly.

We're ahead of plan on leasing, which shows up on the leasing speedometer and the SNO. We had $87 million as of last quarter, driving towards that $100 million goal this year and $130 million ultimate opportunity, and we're on track on the asset sales. So I mean, I think we just put out the version 2.0 a couple of months ago, and this is kind of a multiyear plan.

Okay. We've got a couple of rapid-fire questions. But before that, any final questions?

[indiscernible]

I mean the trouble with these cap rates, I think it's really hard to triangulate like we sold Lakewood for a mid-9 cap rate. Now that had a development component to it. I don't think there's like a uniform kind of cap rate price right now. I think some of it is affected by financeability.

Some of it is a function of IRRs that people kind of model in. Some of that's based on where you can take NOI, how much capital is involved to get it there. I wouldn't kind of try to suggest that 11% cap rate is the cap rate because like we might show up with 1 at 13 or I might show up with 1 at an 8 and be able to show you defensively why that makes sense.

So it's -- they're really -- I know Green Street kind of moderated all their NAVs, but the buyer base right now is basically private equity with operators, now us. Simon bought Brickell in a very unique circumstance, right? So it's -- I think it's a little -- I don't think you could sort of generalize kind of an overall cap rate.

I think that, that was very attractive for us as a buyer. I'm very happy with that. Especially if you look at comps on open-air centers that have similar tenancy that are, I don't know, 400 basis points, 500 basis points inside of that. And that is a really defensible investment.

That center is going to gain -- regain trade area again and customer traffic.

[indiscernible]

I don't know too much about it except that obviously, it's a very strategic asset, high end. They were already a partner in it. So we weren't a partner in Crabtree. I haven't necessarily seen them buy out in the open market. That's not say it wouldn't -- I'm not in their shoes. But for us, we've sold enough assets at this point.

We kind of understand the elements that really for us make a really good compelling investment. And so if they -- if it lines up and doesn't derail us from -- or delay us in any way in our leverage kind of goals, we'll certainly try to lean into it.

In terms of FFO, as we think about this year and next year, you sort of troughed in FFO, right? I mean it feels like you're going to inflect. What's the time frame? Do you think...

I mean we've talked about this sort of a lot of these components come around sort of a mid-'26 inflection point. I mean a lot of it is dependent on the timing of asset sales, right, and when those are realized in terms of the bridge. We've talked about all the leasing activity, which kind of gets you to like 85% plus by the mid-2026 time frame.

Again, the NOI bridge kind of outlines a lot of this, but you can see the ramp-up in NOI from development coming online that really starts to ramp '26 into '27 and '28. So you can tell in the NOI bridge, we've provided sort of the CAGR over 4 years. It's 5.2%.

And we -- based on what we said before, it really ramps in '26 -- the end of '26 into '27 and '28.

Okay. A couple of rapid-fire questions. So number one, when the Fed starts to cut rates, do you expect long-term debt -- long-term yields to decline, stay flat or potentially rise?

Sorry, can you just repeat the first part of that?

Yes. So Fed at this point, will probably likely cut rates, right? So what happens to the 10-year yield? Do you think the decline stays flat or potentially rise?

Flat to down.

Okay. Number two, last year, the majority of companies stated they are ramping up spending on AI initiatives. How would you characterize your plans over the next year? Higher, flat or lower?

It's flat.

Flat. Okay. Number three, this is for the industry. A mall sector, do you believe same-store NOI growth for the A mall sector will be higher, lower or same next year?

It's higher.

Okay. Thank you very much.

Thank you.