Macerich Company (The)

Today, ladies and gentlemen, thank you for standing by. Welcome to the Mesa Ridge First Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Samantha Greening, Director of Investor Relations. Please go ahead.

Thank you for joining us on our first quarter 2023 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 the variety of risks and uncertainties set forth in today's press release and our SEC filings, including the adverse impact of the novel coronavirus in 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 investor 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. And with that, I turn the call over to Tom.

Thank you, Samantha. We're pleased to report another strong quarter with our operating results continuing to trend very positively. We again saw robust leasing demand with our first quarter volumes leased being better than the first quarter of last year. And just to remind you, leasing in 2022 was as good as it has been in a decade. Our portfolio average sales per foot for tenants under 10,000 square feet was $866 per foot, a 3% increase over a year ago. These strong results were achieved even in the very challenging macroeconomic climate we are facing today, including rising interest rates, the threat of a recession, and the volatile banking and political environments. Some of the other first quarter results included occupancy at 92.2%. That's a 90 basis point improvement from March of 22. And although a 40 basis point sequential quarter decline over year end, that is very normal. Over the past 15 years, with only one or two exceptions, occupancy has ticked down slightly from year end to the following March 31st. The range of decline is typically 40 to 100 basis points. We continue to see strong leasing volumes, which are in excess of last year's levels. For the quarter, we executed 256 leases for nearly a million square feet. Doug will provide more details in a few moments. Leasing spreads for the trailing 12 months ended March 31st were up 6.6%. Average rent per square foot at quarter end was nearly $64 at $63.98. That's a 2.1% increase over March of 22. We saw a very solid same-center NOI growth of 4.8% in the first quarter, and that compared to the first quarter of 22, which was a very strong quarter. Consistent with our strategy to redeploy capital into our top assets and to thin out our non-core assets, yesterday we sold the marketplace at Flagstaff for $23.5 million. This is a power center in a non-core market for us. Since year end, we've had a significant amount of financing activity, which Scott will comment on shortly. The debt market is still challenging, but our finance team is doing a great job, and we're getting our deals done. Progress continues at our mixed-use diversification and densification projects. Some examples include at Kierland Commons in the Phoenix market, we're moving forward with a 110-unit luxury apartment project. At Flatiron Crossing in Broomfield, Colorado, we're planning a 330-unit luxury multifamily project centered around 2.5 acres of public amenity space with 50,000 square feet of adjoining food, beverage, and entertainment. At Biltmore Fashion in Phoenix, we're advancing plans for a 250-unit luxury apartment complex which will be fully integrated into the heart of this open-air center. At our flagship town center, Tyson's Corner Center, we anticipate receiving approval of our zoning amendment later this year, which will pave the way for a future additional mixed-use development on the site of the former Lord & Taylor. There are also some recent announcements of great new additions to Santa Monica Place, including the Arte Museum, an immersive digital art destination which will occupy 48,000 square feet on the third level that had formerly been a theater box. We also signed a 10,000 square foot lease with Din Tai Fung Restaurant to take over the majority of that area that had been the food court, which is also on the third level of that center. As Doug will elaborate on shortly, we continue to be very pleased with the strength of the leasing environment. On the heels of a very strong leasing result in 2022, the first quarter of 23 was even better than a year ago. The leasing interest continues to come from a wide range of categories, including health and fitness, food and beverage, entertainment, sports, co-working, hotels, and multifamily projects at Kierlin, Flatiron, Tysons, and Billmore. Interest continues at levels we've never seen before. Bankruptcies continue to be at a record low. We continue to expect gains in occupancy throughout the year and net operating income as we progress through 2023. And now I'll turn it over to Scott to discuss in more detail the financial results for the quarter and significant financing activity. Thank you, Tom.