Macerich Company (The)

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the third 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 would need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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 third quarter 2023 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. Reconciliation 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 FEC, 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. With that, I turn the call over to Tom.

Thank you, Samantha. It was another strong quarter for us. Leasing volumes continue at a record level. We had a 130 basis point gain in occupancy compared to a year ago and an 80 basis point gain over the last quarter. That brings our occupancy at quarter end to 93.4%, and we are getting very close to our pre-pandemic level of 94%. We continue to see real strength in the leasing environment. On the heels of a very strong leasing result in 22, the 23 leasing environment has been robust. Store openings are accelerating. During the third quarter of 23, we opened nearly 500,000 square feet more than during the third quarter of 22. That included Shields Sporting Goods at Chandler Fashion Center, Lifetime at Broadway Plaza, Target at Kings Plaza, and Primark at Green Acres Mall. Across many categories, leasing demand is at levels we have never seen before. So the densification and diversification of our high-quality portfolio of town centers continues. As a result of the very strong leasing activity in 22 and 23, we have a very large and healthy leasing pipeline. We have over two million square feet in that pipeline of leases that are signed but not yet open. Once those tenants open, it will fuel our 24 and 25 same-center NOI growth. Most of our key operating metrics continue to trend very positively. Our average base rent was 65.40, up 2.8% compared to a year ago. Our portfolio average sales per foot for tenants under 10,000 square feet came in at $849 a foot, a very strong level, albeit slightly lower than a year ago, and that was mainly due to slower EV sales compared to 2022. We had double-digit positive releasing spreads for the quarter, up 10.6% on a trailing 12-month basis, and up 11% in the second quarter of 23. So those two consecutive quarters, very strong spreads. We had a 4.8% growth in same-center NOI, That's 5% year to date. And bankruptcies continued at a record low with only three small bankruptcies during the third quarter. We are very optimistic about our business for 24 and beyond. As we open more of our diversified uses, as evidenced by recent openings at Shield Sports at Chandler, Lifetime Fitness at Broadway Plaza, and further fueled by the 2024 opening of Arte Museum at Santa Monica Place, We expect consumer traffic and total center sales to grow meaningfully. And now I'm going to turn it over to Scott to discuss in more detail the financial results for the quarter and recent financing activity.