Macerich(MAC) - 2025 Q4 - Annual Report

Financial Strategy - The Company unveiled the Path Forward Plan in Q2 2024, aiming to improve its balance sheet and enhance operational efficiencies[45] - The Company targets to reduce its Net Debt to Adjusted EBITDA leverage ratio over the next two to three years[47] - The Company plans to focus on asset dispositions, including non-core properties, to refine its portfolio[45] Property Management and Operations - The Company emphasizes decentralized property management to optimize operations and tenant mix at each Center[51] - The Company is pursuing ground-up development projects selectively to increase growth opportunities[56] - Tenant occupancy costs are a critical factor for profitability, with a focus on maintaining low costs relative to tenant sales[65] Rental Income and Lease Expirations - Consolidated Centers reported minimum rents of 8.1% for 2025, up from 7.9% in 2023, while percentage rents decreased to 0.6% from 0.8%[66] - Average base rent per square foot for consolidated centers increased to $66.92 in 2025 from $61.66 in 2023, reflecting a growth of 8.5%[67] - Unconsolidated joint venture centers showed an increase in average base rent per square foot to $79.47 in 2025, up from $70.42 in 2023, marking a 12.9% increase[67] - Scheduled lease expirations for consolidated centers indicate that 15.60% of total leased GLA will expire in 2026, with an ending base rent of $70.67 per square foot[70] - For big boxes and anchors, 4.61% of total leased GLA will expire in 2026, with an ending base rent of $27.31 per square foot[71] - The average base rent per square foot on leases executed during 2025 for consolidated centers was $66.92, compared to $65.62 in 2024[68] Tenant Composition and Performance - Approximately 73% of total rents for the year ended December 31, 2025, were derived from Mall Stores and Freestanding Stores under 10,000 square feet[60] - Major tenants accounted for 27% of total rents from Big Box and Anchor tenants, with Dick's Sporting Goods contributing 4%[62] - Anchors accounted for approximately 6.9% of the company's total rents for the year ended December 31, 2025[74] - The Company is focusing on maintaining strong anchor tenants to drive customer traffic and enhance the desirability of its centers[72] Employee Relations and Diversity - As of December 31, 2025, the Company employed approximately 598 individuals, with a turnover rate of 14.3%[87][88] - The Company achieved a Net Promoter Score (NPS) of 55, indicating excellent employee relations according to Bain & Company's scoring framework[87] - The Company recognizes the importance of diversity, with approximately 58% of its employees identifying as female and 30% belonging to underrepresented groups[91] - The Company has implemented various employee benefits, including a 401(k) plan, stock purchase program, and comprehensive health insurance[93] Sustainability and Corporate Responsibility - The Company has maintained a strong commitment to sustainability, achieving the 1 GRESB ranking in the North American Retail Sector for ten consecutive years[95] - The Company has established operational protocols to ensure the health and safety of employees and customers at its centers[92] Debt Management and Interest Rate Risk - The Company is exposed to interest rate risk and manages this by maintaining a ratio of fixed-rate long-term debt to total debt[376] - As of December 31, 2025, the total long-term debt for the Consolidated Centers is $5.1 billion, with a fair value of $4.98 billion[377] - The average interest rate for fixed rate debt at the Consolidated Centers is 4.56%, while the average interest rate for floating rate debt is 5.62%[378] - The Company's pro rata share of the Unconsolidated Joint Venture Centers' total fixed rate debt is $1.55 billion, with an average interest rate of 5.29%[379] - A 1% increase in interest rates is estimated to decrease future earnings and cash flows by approximately $4.7 million per year based on $471.1 million of floating rate debt outstanding[382] - The Company utilizes derivative financial instruments to manage interest rate risk, including interest rate cap and swap agreements[380] - The total fixed rate debt for the Consolidated Centers was $4.7 billion as of December 31, 2024, indicating a slight increase in average interest rates from 4.40% to 4.56%[378] - The total floating rate debt for the Consolidated Centers increased from $0.4 billion in 2024 to $0.5 billion in 2025, with a decrease in average interest rates from 6.21% to 5.62%[378] - The Company's pro rata share of floating rate debt in Unconsolidated Joint Venture Centers decreased from $132.9 million in 2024 to $12.0 million in 2025[379] - The fair value of the Company's long-term debt is estimated using a present value model that reflects risks associated with similar long-term debt[383] - The Company extended a $200 million loan at South Plains Mall to November 6, 2029, at an existing rate of 4.22%[377]