Macerich(US:MAC)2025-05-12 18:00Financial Data and Key Metrics Changes - FFO excluding certain expenses was approximately $87 million or $0.33 per share for Q1 2025, compared to approximately $75 million or $0.33 per share for Q1 2024, driven by higher leasing revenues [31][32] - Same center NOI, excluding lease termination income, increased by 0.9% year-over-year, while excluding Eddy assets, it increased by 2.4% [33] - Net debt to EBITDA at the end of Q1 was 7.9 times, nearly a full turn lower than at the outset of the path forward plan [35] Business Line Data and Key Metrics Changes - In Q1 2025, the company signed 2.6 million square feet of leases, including 2.3 million square feet of renewals, more than double the leases signed in Q1 2024 [11][21] - Trailing twelve-month leasing spreads were 10.9%, up from 8.8% last quarter, marking 14 consecutive quarters of positive leasing spreads [20] - The leasing speedometer indicated a completion percentage of 60% for new deals, up from 39% last quarter [13] Market Data and Key Metrics Changes - Portfolio sales at the end of Q1 were $837 per square foot, flat compared to Q4 2024, but $928 per square foot when excluding Eddy properties, which is up $13 from the last quarter [19] - Traffic for the year increased by 2% compared to the same period in 2024 [19] - Occupancy in Q1 was 92.6%, down from 94.1% in Q4 2024, primarily due to a decrease in temporary holiday stores [19] Company Strategy and Development Direction - The company is focused on executing its path forward plan, which aims to simplify the business, improve operational performance, and reduce leverage [5][7] - The leasing dashboard, referred to as the leasing speedometer, has been implemented to drive leasing and capital allocation decisions [8] - The company anticipates reaching a mid-2026 inflection point, indicating substantial completion of its plan [6][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the leasing progress and the overall execution of the path forward plan, stating that they are ahead of schedule [5][15] - Minimal impact from tariffs has been observed, with retailers continuing to honor their leases [14][42] - The company expects same store NOI growth in the 3% to 4% range for 2026, with significantly higher growth anticipated in 2027 and 2028 [61] Other Important Information - The company has made substantial progress on asset sales, with total dispositions reaching approximately $1.1 billion, and has identified additional assets totaling up to $400 million for sale or giveback [38][39] - The redevelopment and expansion of Green Acres is set to begin, addressing 370,000 square feet of vacant space [29] Q&A Session Summary Question: Potential upside on leasing due to recent news - Management noted minimal pullback from tenants regarding leasing, indicating strong retailer sentiment and confidence in the leasing metrics [41][42] Question: Clarification on the SNO pipeline - The $80 million SNO pipeline is incremental over revenue generated from 2024, with $25 million expected to be realized in 2025 [44] Question: Spending on leases and guidance reinstatement - Current spending on leases is slightly more than initially envisioned, with expectations for major uplifts in FFO and EBITDA in 2027 and 2028 [47][48] Question: Success of new deals and organizational structure - The consolidation of leasing teams has led to increased leasing activity, with a strong pipeline of new deals and a focus on high-quality spaces [52][53] Question: Same store NOI growth expectations - Management expects same store NOI growth of 3% to 4% in 2026, with higher growth anticipated in subsequent years [61] Question: Clarification on renewal leasing spread statistics - The renewal spread statistics include temporary spaces and are reflective of the exact same space, leading to differences in reported metrics [85][86] Question: Impact of tariffs on asset sales - Management indicated that tariffs have not significantly impacted asset sales, with positive demand and pricing for outparcels and other assets [110][111]