Macerich Company (The)

Good day and welcome to the Mace Ridge Company first quarter 2021 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Jean Wood, Vice President of Investor Relations. Please go ahead.

Thank you for joining us on our first quarter 2021 earnings call. During the course of 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 filing, 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 release and supplemental filed on Form 8K with the FDC, which are posted in the investor section of the company's website at maistrich.com. Joining us today are Tom O'Hearn, Chief Executive Officer, Scott Kingsmore, Senior Executive Vice President and Chief Financial Officer, and Doug Healy, Senior Executive Vice President of LACI. 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 are finally finding ourselves on the backside of the pandemic and we see our business starting to return to normal. The COVID daily infection rates are down and dropping sharply through most of our markets. We now have three vaccines in distribution and currently 46% of the US population has had at least one dose. We've seen dramatic improvement in the past 90 days in terms of the country reopening and consumers getting back to normal. Find a lot of reasons to be optimistic. We continue to do our part as we have nine vaccination clinics at our properties, and we're administering a total of approximately 10,000 vaccinations per day. In terms of our core business, we're at an inflection point. As we indicated last quarter, we expected occupancy to hit its lowest level in the first quarter, and in fact, it did at 88%, which is slightly lower than the low point coming out of the financial crisis in 2009. Post-GFC, by mid-2011, we were back to 92% occupancy. The absorption of space happened fairly quickly. We expect to see a similar recovery post-COVID, perhaps better, as today we have a much higher quality portfolio than we did 10 years ago. Although some of our first quarter operating metrics reflected the ill effects of final retroactive COVID-related rent abatements, The prospects going forward are extremely positive, and we expect to see a very strong recovery over the balance of the year and going into 2022. The leasing environment has significantly improved. Leasing volumes were very good in the first quarter, on par with the first quarter of 2020 when leasing was largely unimpacted by COVID. The demand we are seeing is not only from traditional retailers, but also non-traditional uses such as fitness, health, and wellness, co-working, medical, hotel, big box, food, beverage, and entertainment. To give you just some examples of how strong the leasing environment is today, yesterday we announced two new Primark deals for our portfolio, one in Tyson's Corner, one in Green Acres. We are now one of the largest US landlords for Primark. Within the next few weeks, we'll be announcing a new department store commitment for Kings Plaza. In addition, we will soon be announcing an exciting new use for a former department store Chandler. The deal flow is back to pre-COVID levels. Every two weeks, we have an executive leasing meeting where we review and approve pending lease deals. Last week, we had 95 deals to approve. That's just in a two-week period. That's 256,000 square feet. If we annualized that pace, we would be doing deals for this year for roughly one-third of our non-anchor space. Now, I'm not predicting we're going to see that volume every two weeks, but it is an indication of the strength of the leasing environment. And Doug will get into that in more detail in a few moments. Sales are also picking up significantly. I'm comparing now the first quarter of 21 here to 2019, not 2020. Portfolio-wide, during the first quarter of 2021, sales were 2% higher than the first quarter of 2019, excluding the still restricted food and beverage category. We look at our Arizona assets as a precursor for the rest of the portfolio, as Arizona has had fewer COVID-related restrictions. During the first quarter of 21, Excluding food and beverage, sales in Arizona were 11.5% higher than the first quarter of 2019. Looking at the month of March, just the month of March 2021, sales in Arizona were 18% higher than March of 2019. To say there is pent-up consumer demand is an understatement. We've also been very active on the balance sheet so far this year. We raised $732 million of equity via common stock sales. We sold a non-core asset for $100 million, Paradise Valley, and we used the proceeds of both plus cash on hand to pay down a billion dollars of debt. We've reduced our leverage significantly this year. We put in place a new line of credit and a credit facility, and we also extended terms on several near-term loan maturities. Scott will be elaborating on those transactions shortly. We have $450 million of liquidity in the form of cash on our balance sheet and line of credit capacity. And this year, we expect to generate significant cash from operations after the dividend of about $200 million. We are very optimistic about our business as we look forward toward the balance of the year and into 2022. For the most part, in the U.S., the pandemic is behind us. The leasing environment is strong and getting better by the month. And we expect significant gains in occupancy and net operating income as we move through 21 and into 2022. And now I'll turn it over to Scott to discuss the operating results for the quarter and financing updates.