Macerich Company (The)

Good day, everyone. Welcome to the Maystritch Company second quarter 2021 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jean Wood, Vice President of Investor Relations. Please go ahead.

Thank you for joining us on our second 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 SEC, which are posted in the investor section of the company's website at nacerich.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 Leasing. With that, I will turn the call over to Tom.

Thank you, Jean. And thanks to all of you for joining us today. As you read in our 8K this morning, we had a very good quarter. As we pass the midpoint of the year, we find ourselves at an inflection point. As we said at our last call, we expected occupancy to hit a low point at March 31st of 2021, and that appears to be the case. As we look today, almost all of our operating metrics have started to trend positive, including occupancy. And many of these metrics are even trending positive compared to the pre-pandemic second quarter of 2019. Improving operating results, including leasing volumes, occupancy gains, and most importantly, tenant sales, which have trended very positively. In fact, to give you some month-by-month numbers, March tenant sales were up 8.6%. April sales were up 9.9%. May and June were both up a strong 15%. Those increases are versus the same periods in 2019. We're not comparing sales to 2020. Those are compared to 2019. Traffic is still lagging a bit at around 90% of pre-COVID levels on average. So what we're seeing is an improved capture rate for the retailers compared to pre-COVID. We do expect traffic to continue to increase in the second half of the year. I would say brick and mortar mall based retail is back with a vengeance, albeit helped to some degree by stimulus checks and revenge buying. Because of the robust leasing environment, it feels much better to us than when we emerged from the great financial crisis in 2009 and 2010. Some of the second quarter highlights include on a sequential basis occupancy gains of 90 basis points. Leasing volumes for the quarter and year to date were in excess of 2019 levels. We saw same center NOI growth of 11.5%. We expect the second half of 2021 to be even better. We raised the bottom end of our FFO guidance range and moved the midpoint up, even factoring in the impact of issuing equity during the second quarter. In terms of balance sheet activity, we used the ATM to a small degree in June. Since our last earnings call, we issued 6.4 million shares at an average price of $18.20. We raised $114 million of capital, and that was used to reduce debt. Trading was good for us in the quarter and in June, and we ended the second quarter as a second best-performing REIT of 58%. Another balance sheet activity, in addition to our sale of Paradise Valley Mall in March, we're still expecting to close on the sale of another non-core asset or two in the second half of 2021. And that's in our guidance. Net proceeds expected to be in the $100 million range. The balance sheet moves we made in the first half have significantly improved our leverage metrics. Year to date, we've paid down over $1.3 billion of debt. Focusing for a moment now on leasing, we're seeing incredible demand for space, including big box space and perimeter locations. And that includes multifamily, healthcare, fitness, wellness uses, food and beverage, and other traditional, non-traditional retail uses. A great example of the latter is that during this past quarter, we announced a 222,000 square foot Shields Sporting Goods lease in the former Nordstrom's box at Chandler Fashion Center. This store will be their first in Arizona and will feature a 16,000 gallon saltwater aquarium, a wildlife mountain, a restaurant and more. Non-traditional mall retail demand in smaller format also continues to accelerate with the digitally native brands getting active again on brick and mortar locations after a hiatus during COVID. Other interesting additions include a host of new electric car companies taking space in many of our malls, including Polestar and Lucid, who've done multiple deals with us this year. Many of our traditional retailers are back with even greater demand for space than pre-pandemic, and Doug will elaborate on that in a few moments. We are very optimistic about our business as we move forward to the balance of the year and into 2022. For the most part in the US, with 58% of the population vaccinated, the worst of the pandemic is behind us. The leasing environment is strong and getting better by the month, and we expect significant gains in occupancy, net income, and FFO growth as we move through the year and into next year. And now I'll turn it over to Scott to discuss in more detail the financial results for the quarter.