MACERICH CO Q3 FY2024 earnings call

• Jack Hsieh discussed Scott Kingsmore's departure and Dan Swanstrom's upcoming role as EVP and CFO, with severance charges related to Scott resulting in a $0.02 reduction to fourth quarter earnings.
• Third quarter operational results showed improvement in occupancy, leasing activity, and same-store NOI. Progress on the Path Forward initiative included targeting $2 billion reduction in long-term debt, with ~60% of the target achieved so far.
• Acquisition of partners' interest in Pacific Premier Retail Trust is long-term accretive to FFO per share, with plans to refinance high-cost debt at Washington Square and pursue redevelopment at Los Cerritos.
• Doug Healey provided leasing color, noting sales per square foot, traffic trends, and new lease signings, including a 50,000 square foot Restoration Hardware design gallery and Chanel's flagship at Scottsdale Fashion Square.

Excluding the Eddie assets, Macerich's third quarter saw sales per square foot of $9.10, an occupancy rate of 95.4%, same-store NOI of 2.8%, and traffic up 1.6%. In terms of leasing, 220 leases for 830,000 square feet were signed in the third quarter, with year-to-date leases totaling 2.6 million square feet. Key new leases included a 50,000 square foot Restoration Hardware design gallery and a 11,000 square feet Chanel flagship at Scottsdale Fashion Square.

• Targeting a $2 billion reduction in long-term debt, with ~60% of the target ($1.17 billion) either completed or in play. Efforts to reduce remaining debt include sales or givebacks on remaining Eddie properties and focused disposition of freestanding retail assets, etc.
• Making progress on achieving NOI gap, encouraged by expected lease renewals, signed but not open leases, and re-leasing opportunities. Next 24 months critical for leasing select vacant spaces.
• Acquisition of partners' interest in Pacific Premier Retail Trust is long-term accretive to FFO per share, with plans to refinance high-cost debt and pursue redevelopment at key properties.

• Market conditions and interest rate fluctuations could impact disposition plans and debt reduction efforts. For example, current interest rates and market transparency could affect the sale of certain assets.
• Dependence on successful leasing and redevelopment of properties, with any delays or challenges in these areas potentially impacting NOI and growth targets.

Q: With market today pricing in higher rates, do you think it impacts disposition plans?

A: Scott Kingsmore stated current rates are not a concern, with $1.17 billion in deals well in progress and confidence in dealing with the $2 billion debt reduction target.

Q: Elaborate on consumer strength?

A: Doug Healey said consumer strength is seen across the board, with essentials key but discretionary starting to move to retailers providing newness and innovation, and holiday sales expected to be 3%-3.5% higher.

Q: Impact of PPRT acquisition on growth rate?

A: Jack Hsieh said the acquisition will help accelerate business plans at Washington Square and Los Cerritos, enabling refinancing and redevelopment, thus boosting growth rate.

Q: Cap rate on Oaks?

A: Jack Hsieh mentioned the Oaks has a 13% cap rate.