Macerich Company (The)

Good day and welcome to the Mace Rich Company fourth quarter 2020 earnings conference call. Today's conference is being recorded and at this time I'd like to turn the conference over to Jean Wood, Vice President of Investor Relations. Please go ahead.

Thank you for joining us on our fourth quarter 2020 earnings call. During the course this call we will be making 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 press release and our sec filings including the adverse impact of the novel coronavirus, COVID-19, on the U.S. regional and global economies and the financial condition and results of operations of the company and its tenants. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the earnings relates and supplemental filed on Form 8K with the SEC, which are posted in the investor section of the company's website at newsrich.com. Joining us today are Tom O'Hearn, Chief Executive Officer, Scott Kingsmore, Senior Executive Vice President and Chief Financial Officer, and Ted Healy, Senior Executive Vice President of Lacey. And with that, I would like to turn the call over to Tom.

Thank you, Jean, and thank all of you for joining us today as we continue to navigate through these challenging times. 2020 was an extraordinarily tough year in so many ways for all of us. Once COVID stormed the US in mid-March, all of our centers closed and our tenants quit payment. We quickly adopted significant measures to conserve liquidity, much as we had done during the great financial crisis. We persevered through those dark days of the second quarter and got most of our centers open by mid-summer and all of our centers open by early October with no further closures. It was a Herculean effort. by the Mace Ridge team, and I'm very proud of their efforts. There were not a lot of good days, but we battled through it. Rent collections, for example, during April and May were 35%. That grew to 80% in the third quarter, and as of today, the fourth quarter rent collections are at 92% and rising by the week. 2020 was a year of crisis, but we made it through the year, and things are improving by the week. COVID daily infection cases are down significantly throughout our markets. The positivity rate is dropping and hospitalizations are down significantly compared to a month ago. We now have two vaccines in distribution with a third on the way. Currently 10% of the US population has had at least one dose of the vaccine and distribution is accelerating. Not that the COVID battle is over, but it is much, much better than it was even three months ago. Some level of normalcy is returning, including restaurant, dining, and going to the mall. Our shoppers have returned. In fact, December sales were approaching 85% of pre-COVID levels, even in the midst of a surge in COVID cases. Gradually, restrictions on capacity and indoor dining are being lifted, and that will help both our traffic and our sales. Among many other things, had the impact of accelerating bankruptcies of dozens of retailers that otherwise likely would have gone into bankruptcy over the next several years, but instead were accelerated into 2020. The result is our occupancy level is at 90%, which is the lowest since the great financial crisis. However, within two years post-GFC, we were back to full occupancy. We expect a similar recovery post-COVID. We have worked through most of the bankruptcies from 2020. Unfortunately, the vast majority of those have been reorganizations, not liquidations. The biggest bankruptcy of the year was JCPenney. Of our 27 JCPenney locations, only two locations closed, Green Acres and King's Plaza, both in New York. I'm happy to report that we have leases out for signature on both of those locations and should be able to make announcements in the very near future. As you say goodbye to 2020 and gladly watch it in the rearview mirror, we are very optimistic about 2021 and the recovery of our business. Although 21 is going to be a transitional year, it will be much better than 2020 in almost every respect. Most of the tenant COVID workout agreements will have some impact on us in 21, both in terms of rent relief as well as higher than normal vacancy rates. That being said, we expect to see occupancy gains in the second half of the year in a gradually improving leasing environment. Rent collections have improved significantly up from a September collection rate of 77% and are now above 90% in the fourth quarter. January is also trending above 90%. We have come to agreement on COVID workouts with over 93% of our top 200 tenants. Leasing activity picked up significantly in the fourth quarter. YNs, in fact, were 90% of pre-COVID levels of the fourth quarter of 2019. We even have a variety of gated attractions that are planning to open this year, including Candytopia, Model Land, and the Museum of Ice Cream. Many of our replacement tenants in the former Sears locations will also open in 2021. Our 2021 lease expirations are 60% leased today, with the majority of the balance in the letter of intent stage. Looking at the balance sheet, most of our 2021 loan maturities have been successfully extended and negotiations are well underway to renew our line of credit, which matures in the third quarter. Retailer traffic and sales continue to pick up with traffic at 80% of pre-COVID traffic and sales on average 85% of pre-COVID levels. We expect improvements in both traffic and sales as we progress through 2021. The cost reductions and cost containment measures we adopted when COVID hit will be continued into 2021. And the final point for me, once again, we have been recognized as a leader in sustainability and have achieved the number one global real estate sustainability benchmark ranking in the North American retail sector. That makes six straight years for that honor. With that, I'll turn it over to Scott.