The Macerich Company 2026 Q2 Earnings Call

Please go ahead. Thank you for joining us on the second quarter of 2026 earnings call.

During this call, we will make 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, or future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results and supplemental and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in a supplemental filed on Form 8-K with the SEC, which is posted in the investors section of the company's website at macerich.com. Joining us today are Jack Hsieh, President and Chief Executive Officer, Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer, and Doug Healey, Senior Executive Vice President of Leasing.

With us in the room is Brad Miller, Senior Vice President of Portfolio Management. With that, I would like to turn the call over to Jack.

Thanks, AJ. Good afternoon, everyone. When we published our Path Forward 3.0 plan at Nareit in June, we highlighted that we were meaningfully ahead of schedule on the execution of the plan, which is delivering tangible results and positioning us for accretive growth above our original expectations. We're demonstrating strong execution across three pillars: simplify the business, improve operational performance, and reduce leverage. We've made significant progress in leasing, dispositions, and balance sheet improvement, while also positioning us for sustainable NOI growth and new external growth opportunities. Today, I'll briefly touch on our second quarter results, then turn to where we stand on our Path Forward plan and how we're thinking about external growth. I'm pleased with our second quarter results. FFO, as adjusted, was $0.35 per diluted share, and go-forward portfolio NOI grew 3.8%.

We expect this growth to continue to ramp in 2027 and 2028 as our signed-not-open tenants open and begin paying rent. Our SNO pipeline reached $124 million. Portfolio sales reached a new company high of $919 per square foot and $954 across the go-forward portfolio, with leased occupancy of 94% and 95.5% in the go-forward portfolio. We remain ahead of schedule on our important strategic leasing initiatives. Our leasing speedometer, which tracks new deal completion in the five-year plan, is at 88%, ahead of our 85% midyear target. Only a small number of leases remain to complete the plan. Our attention has shifted to conversion. That means getting tenants permitted, built out, open, and paying rent.

Occupancy is tracking with what we projected in our Path Forward plan. The strong demand for our space has our teams already leasing into 2029 and 2030 as little space remains available in our best centers. We recently introduced the store openings completion percentage, an operational metric intended to provide transparency on our progress to move tenants from LOI through store opening. As of Nareit, we were at 50%, and today, we are at 57%. We expect to be ahead of our 60% year-end target at the end of this year. We've talked about how our playbook is working within the portfolio as the elevate and transformation strategy moves through the later stages. Occupancy tightens, traffic increases, and NOI improves.

If we look at our best performing centers year-to-date in terms of NOI growth, these centers have experienced the strongest traffic improvement as compared to our portfolio average. Our next good case study is the west wing of Tysons Corner. That wing has historically been held back by weaker traffic. We're changing that. We're adding, among other nationally recognized tenants, a 2-level Eataly in the former American Girl space, Din Tai Fung in the former Pottery Barn, and Cider in the Express space. These tenants are all proven traffic generators. With that wing now effectively full, that added traffic and dwell time should translate directly into pricing power. Year-to-date through the first six months, traffic is up 10% at Tysons, as we have continued to upgrade the tenant base over the past three years.

With these new tenants coming in that we've signed, and others we expect to announce soon, that traffic has even more room to improve. The scarcity of space in our best centers is by design in our Path Forward plan. No one is building new regional malls. Roughly 90% of our go-forward NOI comes from Class A assets. The best retailers in the world are concentrating their growth in high-quality centers like ours. Retailer demand is as deep as we've seen it. It's influencing how we are evaluating potential acquisition opportunities. Brands are pursuing quality over quantity and competing for limited space in our centers. The Gen Z consumer overindexes on visiting physical stores and spending on goods, food, and experiences, and is on track to become the largest spending demographic in the country. Those tailwinds are only getting stronger.

Let me turn to acquisitions, which is an increasingly important growth engine for us. Our opportunity set has grown, and the pipeline is robust. We are evaluating a broad set of on and off-market opportunities, the most at any point since we began the Path Forward plan. We remain highly disciplined, and our criteria has not changed. Our criteria for acquisitions includes assets that are, one, accretive to our Path Forward plan, two, located in strong trade areas with clear catalysts to elevate and transform using our leasing development and operational platform to add value, and three, financed in a way that keeps us within our leverage targets under the plan. We will remain patient and selective, but we intend to use this window because the conditions for acquiring and transforming high-quality malls are as favorable as we've seen.

At Annapolis, the onboarding has gone smoothly, and the momentum is clear. Uniqlo is now open, Dick's House of Sport opens on August 14th, and the elevate and transform effort is well underway. It is a market-leading asset in one of the most affluent trade areas on the East Coast, and its proximity to Tysons Corner extends our platform across the Washington, D.C. region. At Crabtree, our leasing momentum has been strong. We recently announced Level 99 and Fogo de Chão, and Dick's House of Sport is opening in September. Lululemon has recently signed a lease to extend and expand their location. Since the acquisition, we have commitments on 45 new and expansion leases and 35 renewal leases.

Both assets reinforce our conviction that our leasing capabilities and relationships with the best retailers in the world are what turn these acquisitions into value. It's a big reason sellers and retailers want to work with us. We are increasingly in a position of strength with the balance sheet. Following our most recent offering, completed on a forward settlement basis, we have approximately $372 million from this offering available to fund future acquisitions. Financial flexibility, combined with our platform, lets us act with speed and certainty that sellers and retailers value. That's a real competitive advantage in this market. In summary, we are ahead of schedule. The plan is substantially de-risked, and the structural tailwinds behind our business, from the limited supply to retailer demand to the emergence of the Gen Z consumer, are strengthening.

As I've noted before, when we complete this plan, you should expect to see a company with higher permanent occupancy, embedded rent growth, a stronger balance sheet, and a portfolio of irreplaceable assets in the country's most desirable markets. With that, I'll turn the call over to Doug.

Thanks, Jack. Like the first quarter, the second quarter reflected continued leasing momentum across our portfolio. Portfolio sales at the end of the second quarter were $919 per square foot, once again representing a new high water mark for The Macerich Company. That's our full portfolio. By contrast, when you look at our go-forward portfolio, the centers where we're actively investing, sales were $954 per square foot. This continues to underscore the success of our elevation and transformation strategy. Occupancy at the end of the second quarter was 94%, up 60 basis points from the first quarter. The go-forward portfolio occupancy at the end of the second quarter was 95.5%, that's up 60 basis points sequentially and up 270 basis points year-over-year, continuing to reflect strong demand for space in our best centers.