Macerich Company (The)

Ladies and gentlemen, thank you for standing by. Welcome to the third quarter 2024 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 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 like now to turn the conference over to Samantha Greening, Director of Investor Relations. Please go ahead.

Thank you for joining us on our third quarter 2024 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 filings. 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 SEC, which are posted on the investor section of the company's website at nacerich.com. Joining us today are Jack Shea, President and 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'd like to turn the call over to Jack.

Thanks, Samantha, and good day, everyone. Before commenting on the third quarter, I would like to briefly discuss the change in Scott Kingsmore's role at Mace Rich. Scott has been with Mace Rich for 29 years and has provided valued service across a variety of roles within the company. I'd like to thank Scott for those many contributions to Mace Rich over the years and for helping in my transition. Scott was invaluable to me in designing our path forward plan. He will be missed by all of us. Dan Swanstrom, who I have worked with for many years when we were both former investment bankers in Morgan Stanley's real estate group, will be joining Mace Rich as our new EVP and CFO. Dan's banking experience and two CFO roles will bring valued perspective to Mace Rich as we continue to execute on our path forward strategy. We will be incurring severance charges in the fourth quarter related to Scott and two other senior executives that will result in a two cent reduction to our fourth quarter earnings. Our third quarter saw continued improvement in operational results, a testament to our outstanding team and quality shopping centers. Our occupancy, leasing activity, and same-store NOI improved over the previous quarter. Excluding the eddy assets, our sales per square foot was $910, our occupancy rate was 95.4%, same-store NOI was 2.8%, and traffic was up 1.6%. I'm excited about the progress we are making on our Path Forward initiative. On the debt initiative, we are targeting a $2 billion reduction in long-term debt as part of that aspect of our plan. Based on closed dispositions, progress with lenders on potential loan givebacks, a binding $157 million purchase and sale agreement for the Oaks, and other signed asset agreements we have approximately 60% of the $2 billion target, or $1.17 billion, either completed and currently in play. The balance of effort to reduce the remaining debt will be sales or givebacks on a few remaining EDI properties and a focused disposition effort on freestanding retail assets, vacant land sales, and smaller open-air centers around our regional shopping centers. We will be embarking on that sales process in early 2025. We're making solid progress on achieving the NOI gap that we are solving for in our path forward plan. Based upon expected lease renewals, signed but not open leases, and releasing opportunities, we are very encouraged with the ability to meet our internal target of incremental NOI that is necessary for our plan. The next 24 months will be critical for us as we target leasing of select current vacant temporary lease spaces and former Forever 21 and Express space in our Fortress and SteadyEddie portfolio. We will share more information on an NOI bridge early next year. A core aspect of our path forward is simplifying the business. The announced acquisition of our partner's interest in Pacific Premier Retail Trust, the entity that owns Los Cerritos, Washington Square, and Lakewood Center, goes a long way towards helping us meet that objective. The overall deal is long-term accretive to FFO per share, We will be able to refinance high-cost debt at Washington Square and aggressively pursue redevelopment plans for Los Cerritos. Both of these centers are outstanding properties and fit in our fortress and fortress potential categories. We will immediately begin exploring sale options for Lakewood Center and Eddy property. With that, I'll turn the call over to Doug for more leasing color.