MAC — The Macerich Company

Macerich Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Funds from Operations (FFO): Approximately $93 million, or $0.35 per share.
• Net Operating Income (NOI): Go-forward portfolio NOI increased 1.7% year-over-year; year-to-date NOI up nearly 2%.
• Portfolio Sales: Ended the quarter at $867 per square foot, up nearly 4% from Q3 2024; go-forward portfolio sales at $905 per square foot.
• Occupancy Rate: 93.4% overall, up 140 basis points from the previous quarter; go-forward portfolio occupancy at 94.3%, up 150 basis points.
• Leasing Activity: Signed 1.5 million square feet of new and renewal leases in Q3, an 87% increase from Q3 2024; year-to-date total of 5.4 million square feet, an 86% increase.

2. Strategic Updates and Business Highlights

• Path Forward Plan: Progressing well, with leasing momentum driving confidence in achieving 2028 targets.
• Acquisition of Crabtree Mall: Acquired in June, expected to enhance leasing momentum and NOI growth. Incremental SNO pipeline increased from $87 million to $99 million, with expectations of reaching $140 million including Crabtree.
• Anchor Leasing Initiatives: Targeting 30 new anchor openings by 2028, with 25 already committed in various retail sectors.
• Retailer Demand: Strong demand from both legacy and emerging brands, with positive leasing spreads continuing for 16 consecutive quarters.

3. Forward Guidance and Outlook

• 2028 Targets: Confident in meeting or exceeding targets due to strong leasing activity and retailer demand.
• SNO Pipeline: Potential to exceed the $140 million target based on current leasing momentum.
• Deleveraging Goals: Aiming to reduce net debt to EBITDA to the low to mid-6x range over the next couple of years.

4. Challenges and Points of Concern

• Traffic: Flat traffic compared to Q3 2024, indicating potential headwinds in customer engagement.
• Forever 21 Liquidation: While 74% of the vacated space has commitments, the liquidation has impacted occupancy and may affect short-term NOI.
• Debt Maturities: One remaining loan maturing in 2025 is expected to be in technical default, with ongoing discussions for an extension.
• Economic Uncertainty: Concerns regarding macroeconomic factors, including political noise and potential tariffs, could impact future performance.

5. Notable Q&A Insights

• Equity Issuance: The recent $50 million equity raise was primarily to make the Crabtree acquisition leverage neutral, with future ATM issuances being evaluated on a case-by-case basis.
• Leasing Dynamics: Strong demand persists despite conflicting consumer signals; retailers are adapting and expanding, which bodes well for leasing activity.
• Anchor Lease Cadence: Most anchor openings are expected to be back-weighted towards 2027 and 2028, with varying capital costs based on tenant type.
• Retailer Adaptation: Many legacy retailers are successfully reinventing themselves, contributing to a robust leasing environment.

Overall, Macerich demonstrated strong operational performance and strategic execution in Q3 2025, with positive leasing momentum and a focus on deleveraging, despite facing challenges related to traffic and economic uncertainties.