Macerich(US:MAC)2023-02-07 23:00Financial Data and Key Metrics Changes - FFO per share for Q4 2022 was $0.53, consistent with Q4 2021, while the full year FFO was $1.96, exceeding Street consensus by approximately $0.03 [88][110] - Same-center NOI growth for Q4 2022 was 2% compared to Q4 2021, with a full year increase of 7.5% [113] - Occupancy at the end of 2022 was 92.6%, a 110 basis point improvement from Q4 2021 [84] Business Line Data and Key Metrics Changes - The company executed 261 leases for 900,000 square feet in Q4 2022, totaling 974 leases for 3.8 million square feet for the full year [121] - Average sales per square foot for tenants under 10,000 square feet was $869, a 7% increase over 2021 [83] - Trailing 12-month leasing spreads remained positive at 4% as of December 31, 2022, down from 6.6% last quarter [94] Market Data and Key Metrics Changes - Retail sales for 2022 were up nearly 3% compared to 2021, with Q4 sales flat versus Q4 2021 [93][108] - The company expects to see a significant increase in occupancy, targeting between 93.5% and 94% by the end of 2023 [134] Company Strategy and Development Direction - The company is focusing on redevelopment and repositioning of its centers, including mixed-use projects and luxury brand additions [65][111] - The Arte Museum at Santa Monica Place is expected to attract 1 million visitors annually, enhancing the property’s appeal [86] Management's Comments on Operating Environment and Future Outlook - Management noted strong retailer demand and minimal pullback from retailers despite macroeconomic uncertainties [98] - The company anticipates a healthy operating cash flow of approximately $315 million before dividends for 2023 [66] Other Important Information - The company expects bad debts to remain normal, with low incidents of bankruptcies and a significant drop in lease termination income from $25 million in 2022 to an estimated $10 million in 2023 [68] - The company is experiencing a competitive leasing environment, which is expected to drive rates up [30] Q&A Session All Questions and Answers Question: What bad debt assumptions did you forecast in guidance given the macro backdrop? - Management indicated a very healthy retailer community, with many retailers being long-term and opportunistic in securing prime real estate [126] Question: Are you seeing any shifts given the macro uncertainty in leasing and rent negotiations? - Management noted that retailers are still pushing through with expansion projects and that leasing negotiations are progressing positively [153] Question: What is the land sales expectation built into 2023? - Management did not provide specific figures but indicated that leasing activity remains robust [154]