Macerich Company (The)

Ladies and gentlemen, thank you for standing by. Welcome to the second quarter 2025 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 now like to turn the conference over to Samantha Greening, Assistant Vice President, Director of Investor Relations. Please go ahead.

Thank you for joining us on our second quarter 2025 earnings call. During 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, and future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results, supplemental, and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8K with the SEC, which is posted in the investor section on the company's website at nasearch.com. Joining us today are Jack Shea, President and Chief Executive Officer, Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer, and Doug Healy, Senior Executive Vice President of Leasing. And with us in the room is Brad Millio, Senior Vice President in Portfolio Management. And with that, I'd like to turn the call over to Jack.

Thank you, Samantha, and good afternoon. I want to begin with where everything starts for us at Maesrich. our people and their commitment to our mission and values. We are collectively a better informed, aligned and operationally focused company. Our second quarter results, the progress on our path forward plan and the acquisition of Crabtree Mall demonstrate how well we have put this mission and values to work together. Thank you all for your contributions that have brought us to this point. Now let us turn to our recent path forward plan. I want to let that update guide our discussion this afternoon. Recall that our path forward strategy is built on simplifying the business, operational performance improvement, and leverage reduction. We are solving for strengthening the balance sheet, fortifying our core portfolio, driving operational excellence, and positioning us for growth. We provided an update to our Path Forward plan in May, which included a comprehensive NOI bridge from year-end 2024 to 2028 for PORFORMA Go Forward portfolio NOI. It also provided a roadmap for 2028 target FFO ranges and a path to our 2028 target leverage ranges. We also provided an update on the composition of our go forward portfolio and identify which properties have been ranked as fortress, fortress potential, steady eddies, and eddies. As Dan will discuss later, you will now see some of our supplemental KPIs broken down under the go forward portfolio. A significant component of the plan is driving operational performance improvement. This all begins and ends with leasing. Leasing is the piece of the plan that best tracks the progress on hitting our 2028 targets. Recall that we are targeting an average of 4 million square feet of leasing in 2025 and 2026. Year to date, we've already signed 4.3 million square feet. I'm pleased to say that we are ahead of schedule on leasing volume and on target for our market rent assumptions used in our five-year plan. I want to focus on our leasing speedometer and snow pipeline. These metrics best track our progress on driving a higher percentage of new lease deals versus renewals, which in turn drive higher spreads and incremental revenue to achieve our NOI targets. We provided a helpful visual for you in the plan update for the leasing dashboard that we refer to internally as the Mace Ridge Leasing Speedometer, which tracks revenue completion percentage for all new leasing activity in the five-year plan. This tool and other technology enhancements we've implemented drive every leasing and capital allocation decision at our properties. Our initial goal on new deals was 50% progress by mid 2025 and 70% by year end 2025. Hitting the 70% goal by year end would put us on track for the 85% completion target by mid 2026. Reaching that goal also puts us on track for our ultimate opportunity to achieve the 130 million in cumulative snow potential. Reaching that mid-2026 leasing goal would effectively complete the new leasing goal outlined in our plan. We remain ahead of this plan on both the new deal completion and the snow pipeline. For new deal completion, we were at 54% at the end of last quarter and 60% in May. Today, we're at 65%. and have a large pipeline of LOIs, which puts us on pace to exceed our 70% year-end target. The snow pipeline has grown from 75 million on a cumulative basis at the end of last quarter and 80 million in May to 87 million as of today. That also has us on track to exceed our snow pipeline target of 100 million by year-end. None of these figures include the addition of Crabtree. I noted on our last call that we were confident we de-risked the key elements of the path forward plan with our leasing, disposition, capital markets, and leverage reduction progress. That progress on the plan positioned us to opportunistically pursue external growth via an attractive transaction. At the end of June, Mace Rich acquired Crabtree Mall, a market-dominant Class A retail center totaling approximately 1.3 million square feet in the Raleigh-Durham, North Carolina MSA for approximately $290 million. The strategic rationale for this transaction is compelling. It's accretive to the path forward planned 2028 target FFO range. powerful entry point to one of the top southeastern u.s markets it holds a market dominant position in a high growth market with the week with top retailers in the country identifying it as the number one or number two must have location in the region we have a perfect opportunity to deploy our operating leasing and marketing platform to reinvigorate leasing momentum and drive permanent occupancy from 74% as of June 30th to closer to 90% by 2028 and capture the embedded NOI growth upside potential. And it's expected to keep us within our stated deleveraging targets under the path forward plan. We're excited to close this acquisition as Crabtree enhances our go forward portfolio and creates a compelling opportunity to drive shareholder value. Doug will comment on the strong leasing momentum we've already seen at Crabtree and the tremendous response and feedback we have received from many retailers who are elated that we now own and manage Crabtree. In closing, I feel very good about where we are on the path forward plan and with the addition of Crabtree to our go forward portfolio. As I noted earlier, We're ahead of plan on leasing. We're also ahead of plan on asset sales and dispositions. We have a clear roadmap for hitting our deleveraging targets. Our team is working well together, executing nicely on the key components of the path forward plan, and properly incentivized and aligned on shareholder value creation. With that, I will turn the call over to Doug.