Macerich Company (The)

Stand by, we're about to begin. Good day and welcome to the Mace Rich Company fourth quarter 2021 earnings call. Today's conference is being recorded. Please be advised that this call is scheduled for one hour. We ask that you limit your questions to one question and one follow-up question. At this time, I would like to turn the conference over to Samantha Greening, Director of Investor Relations. Please go ahead.

Thank you for joining us on our fourth quarter 2021 earnings call. During the course of this call, we'll 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 release and supplemental filed on Form 8K with the SEC, which are posted on the Investors section of the company's website at macerich.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 turn the call over to Tom.

Thank you, Samantha, and thanks to all of you for joining us today. We're pleased to report an outstanding quarter with virtually all of our operating metrics trending very positively. After battling through a very tough 2020, To see the results we've achieved in 21 is a testament to our team and the quality of our portfolio. We continue to see very significant and accelerating retailer and mixed use demand. Our shoppers have come roaring back to our centers to shop with a purpose. We see a higher capture rate than pre-COVID with traffic at about 95% of fourth quarter 2019 traffic, but with tenant sales exceeding the 2019 levels. In the fourth quarter, we again saw double digit tenant sales gains, and that's three quarters in a row compared to 2019. Retailer demand is at a level we have not seen since 2015. During 2021, we signed more leases in terms of square footage than we did in 2019. And in fact, the volume equaled the previous high volume year, which was 2015. In general, 2021 delivered a strong holiday season. More full price sales, less promotional, strong volumes, even when compared to the 2019 holiday season. We certainly experienced that with our fourth quarter comp tenant sales up 12% versus the fourth quarter of 2019. Some of the quarterly highlights included on a sequential quarter basis, we had occupancy gains of 120 basis points. That's on top of the 90 basis point gains we saw in both the second and third quarters. The year end our occupancy level was at 91.5%. We continue to make great progress on pushing occupancy up to pre-COVID levels. Since our low occupancy point in the first quarter of 2021, we've seen 300 basis points of improvement. We saw robust leasing volumes for the quarter and the year. Both were in excess of 2019 levels. We executed 3.5 million square feet of space. and that compares very favorably to the full year of 2019, which was about 3.4 million square feet of space. Leasing spreads were positive at 4.9% for the trailing 12 months. We saw great same-center NOI growth at 36% in the fourth quarter. That was the third double-digit quarterly gain in a row. We're optimistic heading into the fourth quarter as we raise the FFO guidance range to the midpoint of 196, That was a 3% increase on top of the increase in guidance from the previous quarter. Actual FFO per share exceeded the top end of that range and came in at 203. And that result was heavily driven by record-setting percentage rents. We continue to ramp up our redevelopment efforts as we move past COVID. During the fourth quarter, our joint venture with HPP on 1 Westwood in Los Angeles, we delivered a 584,000 square foot three-level creative office space to Google. We expect Google to open in the summer of 2022. The project remains ahead of schedule and on budget. The project is being fully funded with a construction loan. In addition to Google, we have numerous near-term openings with many exciting and prominent large format users, including, among others, Shields All Sports at Chandler Fashion, Caesars Republic Hotel at Scottsdale Fashion Square, Target at Kings Plaza, Lifetime Fitness at both Broadway Plaza and Scottsdale Fashion Square, Pinstripes at Broadway Plaza, and Primark at both Green Acres and Tyson's. These projects are expected to be funded with excess cash flow from operations. Focusing now on the leasing environment, the depth and breadth of the leasing demand has us very optimistic about 2022 and beyond. The leasing interest we are seeing comes from a wide range of categories, including health and fitness, food and beverage, entertainment and sports, co-working, hotels, and multifamily. All those categories are at interest levels we've never seen before. That is on top of demand for more traditional retailers like Target, Primark, Uniqlo, and Shields. During the quarter, we saw many retailers experience accelerating sales as they got further into the holiday season. And that's something they had not seen in years. In addition, because of the waning COVID restrictions, the importance of physical stores has become more significant to retailers as consumers want more social in-person experience of brick and mortar shopping. In addition, many retailers have strengthened their balance sheets and are financially in position to expand their new store openings. The combination of all these very positive factors have us very optimistic about 2022 and 2023. We expect significant gains in occupancy, net operating income, and cash flow this year. And now I'll turn it over to Scott to discuss in more detail the financial results and balance sheet activity. Thank you, Tom.