Macerich Company (The)

Good day ladies and gentlemen. Thank you for standing by. Welcome to the second quarter 2023 Mace Rich earnings conference call. At this time all participants are in 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 automated message advising your hand is raised. To withdraw your question please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Samantha Greening, Director of Investor Relations. Please go ahead.

Thank you for joining us on our second quarter 2023 earnings call. During the course of this call, we'll be making certain statements that may be deemed forward-looking, which is 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 coronavirus on the U.S., regional and global economies, and the financial conditions 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 maysearch.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. It was, yet again, another strong quarter for us. Leasing volumes continued at a record level. We had an 80 basis point gain in occupancy compared to a year ago, and 40 basis point gain compared to last quarter. We had a 5.6% growth in same center net operating income, and we had double digit positive releasing spreads. The US consumer continues to be incredibly resilient in the face of the challenging macroeconomic climate we're facing today with higher interest rates and the threat of recession. And we are seeing that at our centers. Consumers are shopping, eating out, and traveling at pre-pandemic levels. Those trends bode well for A-quality malls. Our key operating metrics continue to improve. We once again saw robust leasing demand with year-to-date leasing volumes being better than this time last year. And keep in mind, leasing in 2022 is as good as it's been in the last decade. Our portfolio average sales per square foot for tenants under 10,000 square feet was $853, which is a very strong level, albeit slightly lower than a year ago, mainly due to slower EV sales compared to 22. We returned to double-digit releasing spreads up 11% on a trailing 12-month basis, Occupancy is now at 92.6 at quarter end, and we expect to be above 93% by year end. As a result of the very strong leasing activity in 22 and so far in 23, we have an incredibly large leasing pipeline with 2.3 million square feet of new store leases signed but not yet open. And there's another 500,000 square feet of new stores in lease documentation. Once those tenants open, it will fuel our 24 and 25 same-center NOI growth. As Doug will elaborate on shortly, we continue to see unabated strength in the leasing environment. On the heels of a very strong leasing result in 22, the first half of 23 was even better. The leasing interest continues to come from a wide range of categories, including health and fitness, food and beverage uses, entertainment retailers, sports, hotels, and multifamily projects at Kierland, Flatiron Crossings, and Tysons. Across many categories, interest is at levels we have never seen before. And so the densification and diversification of our high-quality portfolio continues. Bankruptcies continue to be at a record low. We continue to expect gains in occupancy and net operating income as we progress through 23 and into 24. Now I'll turn it over to Scott to discuss in more detail the financial results for the quarter and financing activity.