All right. Welcome to Citi's 2026 Global Property CEO Conference. I'm Craig Mailman with Citi Research, and we're pleased to have with Macerich and CEO Jackson Hsieh. This session is for Citi clients only, and disclosures will be made available at the corporate access desk. To ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit questions. Jack, we'll turn it over to you to introduce your company and team, provide any opening remarks, tell the audience the top reasons an investor should buy your stock today, and then we'll get into Q&A.
Great. Thank you. First, in quick introductions, Dan Swanstrom to my left is, Senior Executive Vice President, CFO of the company. To my right is Brad Miller.
Hit the red button.
Thanks. Good afternoon. Quick introductions. To my left is Dan Swanstrom. He's the Senior Executive Vice President, our CFO. To my right is Brad Miller. He's a Senior Vice President, Asset Management. To my far left is our Vice President of Finance, Alexandria Johnstone, and she also handles our Investor Relation. I'm gonna start off with some quick prepared remarks, then we'll open it up for Q&A. Thanks for having us. I'll give you a quick summary of where we are today and why I think investors should own the stock. We can open it up for questions. 2025 was a pivotal year Macerich. We entered the year with clear objectives under our Path Forward plan, which was simplify the business, drive operational performance, and reduce leverage. The message today is straightforward. We've delivered against each of these pillars.
As we enter 2026, I have tremendous confidence in our progress to date and direction and future. Leasing is the single best indicator of whether our plan is on track. We're ahead of plan on the leasing, and the numbers speak for themselves. In 2025, we signed 7.1 million sq ft of new and renewal leases on a comparable centre basis. This is an 85% increase over 2024 and a new company record. Our leasing speedometer, which tracks revenue completion percentage for all new leasing activity required to achieve our five-year plan, is at 76%, well ahead of our 70% year-end target. We're on track for 85% by mid-2026, at which point the new leasing component of our plan will be effectively complete. Importantly, we're achieving our target market rent assumptions in the plan.
Our signed not open pipeline hit $107 million, exceeding our $100 million year-end target against the total cumulative SNO opportunity of $140 million, in excess of the revenue generated in 2024. The way to think about the SNO phasing is approximately $30 million of incremental contribution in 2026, $40 million-$45 million in 2027, and $45 million-$50 million in 2028. That's a clear, visible path to drive incremental growth. We targeted 30 anchor and big box replacements in our plan, and all 30 are now committed. 2.9 million sq ft expected to generate over $750 million in annual tenant sales. These anchors are catalysts. They drive traffic, extend dwell time, and unlock in-line leasing across entire wings of our centres.
For instance, House of Sport at Freehold had one of the best openings in their 35 store House of Sport chain. Since opening, 18% of mall traffic now flows through that wing, a wing that was essentially dead before. We have nine House of Sport locations committed, Crabtree opening this fall, Tysons Corner and Washington Square following in 2027, and Valley River opening in early 2028. Portfolio sales hit $921 per sq ft in the go-forward portfolio, a new company high going back to our IPO in 1994. We posted 17 quarters of positive leasing spreads. The retailer environment and tenant demand remain strong. The retailers showing up in our pipeline are the strongest brands in the business, including Zara, Aritzia, lululemon, Alo Yoga, Abercrombie, and many others.
Demand is broad-based across traditional retail, international brands, food and beverage, entertainment, and digitally native concepts. As our head of leasing commented recently, never has the depth and breadth of retailer demand been what it is today. This speaks to the strength of our industry and is a clear testament to our high-quality portfolio of pure-play Class A retail centres. Why Macerich? I condense it down to three main things. First, execution credibility. Every major milestone we set out in our Path Forward plan, we've either met or exceeded. Leasing is ahead of schedule. All 30 anchors are committed. $1.3 billion in dispositions is completed with a clear path to $2 billion. Leverage is down a full turn. We also consolidated the PPRT JV, which enabled us to drive Washington Square and Los Cerritos forward and sell Lakewood Center. Second, visible NOI growth trajectory.
Our SNO pipeline provides a clear multi-year growth driver with approximately 80% flow through to NOI. We expect at least 3% NOI growth for the go-forward portfolio in 2026, back-end weighted to the second half as permanent tenants build out and begin paying rent. That ramp accelerates meaningfully in 2027 and 2028 as NOI growth from the new leasing activity, major development projects, and other redevelopment, including anchors, come online. Third, we own irreplaceable real estate. Approximately 92% of our go-forward NOI comes from A-minus or higher tier properties in affluent, supply-constrained markets. These are community destinations where the best retailers in the world wanna be. When you combine that with asset quality with the operational platform we've built, you get a company that's well-positioned as the logical buyer when an attractive asset comes to Crabtree is proof of that concept.
We've already secured 18 new leases and 31 renewals since we acquired the property last June, including a flagship Belk consolidation and an entertainment anchor for the second men's Belk box. Looking ahead, our key focus areas for 2026 are, one, completing the leasing pipeline of 350 additional new leases, 150 are in the LOI stage. Two, solidifying the remaining 2026 committed lease expirations and continuing to get ahead of 2027 expirations. Three, getting tenants into physical spaces built out and paying rent on time. Four, completing the remaining dispositions. Five, continuing to evaluate new acquisition opportunities that accretive to our plan and portfolio. The heavy lifting of de-risking the Path Forward plan is substantially complete. We're now in the execution and conversion phase, and I'm very confident in where we're headed.
With that, Craig, I'll open it up for questions.
That was great. I think you summed it up for all of us. We can just go home now.
Okay.
Questions.
No, I appreciate the in-depth commentary. I think, you know, as we talked about on the call, as the Path Forward plan. You guys have made significant progress on it. One of the things that you talked a little bit about more was going on the offensive, Crabtree was kind of a first step towards it, and there's still work you guys are working on, right? It's not a done deal with the Path Forward, but you've de-risked it, as you said. Talk a little bit about the how aggressive you wanna be on the external front while making sure that you deliver on everything you've signed, that you're getting tenants in on time, you have the capital for it, right? Talk a little about the toggling back and forth of priorities.
Our strategic Path Forward plan, you know, achieving our results in 2028 are the highest priority for the company, because it's highest for the following reason. Our core portfolio with over $1.2 billion at our share going into the portfolio, and that's in tenant allowance, capital projects, and development, is gonna well position this company to drive releasing spreads as we move forward into 2029, 2030, 2031. The acquisitions are really, I would say, more opportunistic if they kind of fit within that 2028 Crabtree was perfect in a way because, the prior owner had secured a House of Sport lease. It's obviously under construction. It's gonna open later this year. We're gonna be able to really inflect the NOI growth within that 2028 calendar time period.
As we're looking at other opportunities, you're gonna see us look for similar types of characteristics, good trade area, more leasing value add type of opportunity, more importantly, be able to accomplish our 2028 objectives. You're not gonna see us do deep value add opportunities between now and 2028.
Could you do one a year, maybe put $200 million-$400 million to work? Is there enough of Crabtree-esque opportunity set out there that's going to hit the market that you could continue this while kind of delivering on the Path Forward?
Look, I hate to put numbers down and get locked in because, you know, we have a lot of priorities, most importantly, the 2028 plan. I did bring on David Keene recently, who is going to be a phenomenal addition to the team. He's already shown me a pipeline which wasn't even close to what we were looking at before. I think for a lot of it, for us, it's just going to be just making sure that we don't put our current Path Forward at risk 'cause it's really, you know, pretty much in the bag at this point.
Just selectively add property where we think it makes sense for us, you know, locationally, the amount of leasing that's required, the amount of capital that's required, and making sure that we get the right adequate return on our capital, especially given our current cost of capital.
I would just add a key criteria on that is relative to the 2028 Path Forward targets.
Yeah
You know, acquisition opportunities accretive to those.
Dan, I mean, as you look at the sources and uses over the next two years to get through the Path Forward, how much excess cash flow and capacity you have today? Because you guys are in a deleveraging stage as well. Like, realistically, how much excess capacity is there to pursue some of these versus having it earmarked for construction dollars to open, you know, the 30 anchors and the inline guys? Just walk us through that maybe.
Yeah. A lot of our development and anchor activity is front-end loaded over the next three years. Fortunately, we have sufficient liquidity. You know, we had at the time of our call two weeks ago, almost $1 billion. We had a $650 million credit facility, so that, you know, applies about, you know, $300 million plus of cash on hand. We did actually just last week also announce that we were able to amend and restate our credit facility, which gives us incremental capacity up to $900 million at a lower cost, extended the maturity on that. We feel like that was a really great execution by the team on that.
The punchline over the sources and uses is between cash on hand and some of the dispositions, outparcels that we have identified remaining, we have sufficient capital to fund plus free cash flow from the business after dividend. We have sufficient capital to fund the development and redevelopment and anchor activities. Once we get past that, there's excess capital from the disposition program to go towards some of the remaining deleveraging. The big part of the remaining deleveraging comes from the NOI from the SNOW pipeline coming online over the next 2.5 years. That enables us to get from where we are now down to the low- to mid-six times debt-to-EBITDA.
Taking a step back with acquisitions similar Crabtree, given where the going-in yields were when we looked at it, you know, it really only pushed leverage up a small amount, so we remained within that debt-to-EBITDA range. We subsequently used the ATM to make that leverage neutral. It's a long way of saying we've got sources and uses to fund our needs in the Path Forward plan. On acquisitions, we'll look at it opportunistically if accretive to 2028 and look at the funding sources to keep it within our leverage parameters.
You bring up the point, right? If you can find something at an +11% yield, you can finance it with a decent amount of equity, right?
Yeah
accretive relative to that. I mean, how much appetite would you guys have from the equity issuance perspective versus wanting to kind of build up the debt-to-EBITDA capacity, maybe partially fund with cheaper debt as spreads kind of tighten for the real estate folks?
You wanna take that?
Yeah. I mean, look, I think it just goes back to that criteria of it's gotta accretive to 2028 from an FFO perspective, but we don't wanna blow past the high end of our leverage range. Within there, you know, we'll look at what makes the most sense opportunistically and economically from that perspective.
Jack, you kind of hinted by NAREIT, summer NAREIT, right? You guys are gonna have the next iteration of the Path Forward. One of the things that you did talk about that could be part of that is talking a little bit more about commencement, and I'm assuming that means commencement timing. Could you go into a little more detail about, without giving away the surprise for June, but some of what that could uncover, at least from an investor standpoint, that increased clarity, how you feel that would be the next iteration?
I mean, one of the key components, obviously, in this plan is leasing, right? We talked about that ad nauseam. We've talked about this opportunity to lease 1,000 new tenants in our portfolio. That includes anchor and inline. You know, to give you some sense, that's roughly almost 25% that represents of the entire space available unit space in our portfolio. Think about it as almost 25% of our portfolio is literally delivering over the next two and a half years. The timing of that's very critical. We monitor it. We're all over that right now in terms of our tenant, you know, real estate services effort. I think we're gonna. You know, we talked about a speedometer that relates to leasing.
I think we're gonna try to share some of that speedometer that we have on rent commencement, because that's something that we focus on actually quite a bit internally. I think it'd be helpful for people to understand that.
As you look at sort of the success on maybe what was in the lease from a deadline, from a commencement timing perspective versus where the team has actually been able to deliver it, is there sort of an average delta between that? Like, are you guys outperforming by a week, a day? Have you ever kind of missed that commencement date? Just give us a sense of how the team is operating at this point, given the workload that they have with all this leasing that you're working on.
I mean, I would say we started preparing for this, frankly last year, you know, middle of last year, realigning how these teams communicate and the systems that we had. If you were to drop into one of our biweekly calls, you know, rent commencement discussions are critical, and they talk about it. We actually have weekly meetings on the east and west for the largest rent deals that are going through the system to make sure that, you know, our tenant coordinators, our asset managers, our leasing team, our mall management staff are fully aligned with what is exactly happening. You know, in general, I would say it's hard to outperform timing. You know, we wanna make sure we make timing.
You know, that's really staying on top of the tenant to make sure they're permitting, getting their permits done, and then once they get physical control of the space, you know, my mall manager's walking by every day. "Hey, there's no construction crew there for the last week." Guess what? Immediately a call goes into X, Y, and Z tenant from our business side to figure out what's happening or not happening, because it's a big effort. I'd say we have the systems in place to ensure that we're gonna get the best possible outcome.
You know, I think you had mentioned to some of us that when you came in, right, the budgeting internally was, like, a year out, right? Things were being done in Excel. What have you done from a technology process standpoint, maybe from a software or however, to really track this other than the biweekly meetings, right? What is there so that on a daily basis, a project manager could go in there and say, "We should be here. We're only here. Let's catch up and make some phone calls"?
Yeah. I would give a lot of credit to our, you know, process improvement committee, you know, in terms of different initiatives that they've put forward and our technology team internally. You know, we rely on Yardi as the backbone of our sort of accounting system and tracking system, and Yardi's done a great job, you know, continue to do a great job building applications that sort of support all the things that we're doing. You know, the ARGUS models are done independent of that, but, you know, Yardi's done a great job working in partnership with us, trying to get, you know, just more communication, more ability to track and monitor, and that we're getting the most out of it right now.
Do you think this leasing success would have been possible under the old systems that you guys had in place?
It just wouldn't have been... No, it wouldn't have. You wouldn't have been able to understand what you were leasing and how it impacted the model and being able to make decisions real time as to is this the right lease versus that. Then once, you know, trying to get tenant rent commencements moving forward, the old system was really pretty inefficient. You know, we're really able to kind of move through. Proof of the pudding will be something Crabtree, which we literally were able to drop into our infrastructure.
You know, when we eventually start to share what we've done there, people will be really impressed with, not only just the progress, but just how efficiently we were able to absorb that asset and quickly kind of bring it into our system.
If we dive deeper, right, the speedometer, you guys are ahead of pace. With what you have left, were you guys just successful at getting some of the better space leased quicker, and then you have tougher space left? How does the remaining inventory kind of break out between your A, B, C spaces to kind of inform, right? Does it get the speedometer speed up, or is it slow as we get closer to 100?
That's a great question, Craig. If you look at it in the context of our SNOW, right, our total opportunity is 140. The latest update is we've got 107 of that committed. The new leasing activity and the team's really focused on that remaining $33 million of SNOW. One way to look at it is, you know, when we did our ARGUS models, we went through and ranked all the spaces A, B, C, D, E, F. 90% of the remaining SNOW is located in A, B, or C spaces, so that gives us, as leadership and the team a lot of confidence that we'll be able to deliver on that space. Another way to look at it is, about two-thirds of that $33 million is at our fortress or fortress potential properties.
Again, it's some of the better quality properties. We think that is another, you know, stat that should give everyone confidence as it gives us confidence that we'll be able to kind of complete the remaining new leases and the SNOW.
That opportunity set is about 1.6 million sq ft, as we talked about. You know, we're two months into the year in terms of us going through lease approvals, you know, through our ELC process, you know, meetings, and we're basically at the same, you know, pace as of last year. You know, like, there's really good momentum. The teams know what they need to do, and we're just getting after it.
Just given the success on the leasing front, for the remaining space, do you go about it differently from a curation standpoint of, you know, well, we may have taken this tenant two years ago, but today we can hold out for X, Y, or Z tenant who we feel fits better? Do you just have more flexibility in or more optionality in being able to pick the tenant versus maybe just having a little bit more urgency to get the space filled?
Yeah. I mean, there's always a balance. You know, at any given time, if you can imagine 300 spaces, our marketing teams are constantly touring and taking different tenants through. You know, they could be an existing tenant at that mall relocating, or they could be, you know, wanting more space, or it could be a different concept altogether. We're always going to try to put the best tenant and get the most rent. Sometimes, you know, the best tenant is not ready to move on our timing. We're going to default to number two, the second best option. The best way to describe what we've done internally is, you know, I've basically frozen the floor plans. You've got 300 spaces, get after it right now. Let's finish. Let's get ahead of our renewals, try to de-risk that.
The reason for that is, you know, we want to execute our 2028 plan. When we start to talk about where we'll be next year, late next year, we're probably not going to push escalation, you know, renewals as quickly. You know, we're gonna be delivering a very, very strong, vibrant portfolio of tenants, you know, and all these wings will be full. I think that'll give us a better chance to really work on incremental merchandising moves when we get into 2028, 2029 going forward.
I mean, have you seen the realization among tenants, especially ones that are throughout the portfolio versus maybe a guy with two or three leases with you, where they understand what you guys are doing to the portfolio, they understand where you are as a company, that they're trying to come to you today to pull forward those renewals to get a potentially better deal than as you get closer to next year, mid to late next year, where they know they're going to have a weaker bargaining stand?
To be honest with you, I don't think there's been really change in that sort of decision-making. you know, one of the things that we're not doing is subsidizing weaker properties. Obviously, I talked about that early in the you know, the launch of this plan. you know, we've got really good real estate. You know, we're trying to make really good decisions quickly. I would say that one thing that I've seen and directly, you know, meeting with a lot of different tenants, I mean, they really appreciate our clarity. They really appreciate the amount of capital that's going into these projects and the speed of our decision-making. I think that's a big difference than maybe in the past.
We have very clear visibility on what happens if we do X, Y, and Z at this rent per sq ft with this TA package. I don't think that we necessarily had that ability before because, you know, how can you make a three-year commitment on a major space and, you know, you don't really have the analytics to really support what that does to you. I think there was probably less, you know, our decision-making is very quick. I think tenants appreciate that, and they also see the investment going into the centres, so they have the confidence that they can invest.
One of the things we've been trying to get a read on more through the conferences is AI, which is not a surprise as the topic with everything going on. I know you kind of touched on it on the call that it may not be your primary focus, but just to the extent that you guys are using it internally, you guys obviously have a Yardi, you know, ARGUS, right? Are you utilizing any of the AI add-ons that those vendors are offering or working with them to build something in? Kind of where are you on the AI evolution internally?
I would say we're working a partnership. You know, we're doing some beta testing with Yardi right now on some application. We've done third-party application, like when we Crabtree, all those leases were scraped with an AI, you know, capability. We separated with two different vendors. We're now looking at, you know, just for our own lease intelligence information, trying to figure out how to try to move that into that kind of aperture. You know, energy efficiency, that's already linked to AI now, we've already got that application. It's on the margin, the teams are executing, you know, to make more efficiency and better reporting, more insight.
I haven't seen anything sort of earth-shattering yet, in terms of really moving the needle. I do think that there is an opportunity. If you look at what we've been doing, you know, we've been dropping anchors in all this space and great tenancy that drive traffic, and we've had third-party consultants sort of doing market analysis and sales traffic analysis and sales analysis. I do believe that there'll be an AI function at some point that can really dictate if we put an Eataly, a Din Tai Fung, a House of Sport in this centre, how can it shape competition? How can it pull from different, trade area consolidation like what we've seen, you know, with the SCHEELS opening up in Chandler? That to me would be kind of an interesting opportunity.
There's just a lot of data, and particularly I'm really focused on with these dollars going in, how can it shape trade area consolidation at our property. That could be a great marketing tool for us when we go pitch a retailer. Here's our analytics on if you come in based on X, Y, and Z also coming into the centre, this is what's gonna happen. You know, for new tenants, real estate's obviously critical. Co-tenancy is huge, right? They wanna understand co-tenancy within a mall itself. It feeds on itself. I think that right now. From, you know, there hasn't been a real AI application for that, but I think to me that would be a really interesting one.
That's one that's high on my list right now to see if there's that opportunity.
I guess, you know, having your background also be in the triple net space, which is much less operationally intensive versus coming Macerich, which is more operationally intensive, do you feel like AI has more opportunities in a, in a company like this with the operational aspect of it? Or do you feel like if you're just an underwriter in credit, right, you're underwriting that, is there more efficiencies to be had in that environment? Or is it just as easy to get it in the operating environment?
I, like, for sure operations for us, you know, at the end of the day, we're doing all this effort on the top line to create SNO and all this 1,000 new leases. You know, us controlling expense creep is critical, right? I think that certainly AI will help us in that regard, just trying to be more efficient, you know.
Like, from a mechanical standpoint, HVAC and electricity, like, how much of that is smart metered today or at least more controllable versus tenants have access to temperatures inside their stores versus you guys doing that?
I mean, we definitely, I can't be expert, but I can tell you we already have good functionality to try to create more efficiency because, you know, that, you know, those, some of that expense creep is on us, especially if there's vacancy in there. We wanna maximize utility expense. You know, it's a big expense, right? We've already had that capability, and it's gonna only get better as we get fully occupied too. We have all the CAM and all the tax reimbursements coming through the P&L.
Does anyone have any questions before I hit rapid fires? All right. Well, we'll go to rapid fire 'cause I feel like I may run out of time if I ask you another question. Same store and online growth for the retail sector in 2027.
Yeah, I think it's gonna continue to be positive in the same direction, and that's a function of great productivity, great Omnichannel, and no supply.
If you had to put a number on it.
Probably I don't wanna guess on a number, but I would say it'd be very comparable to the last 12 months.
Okay
...in the recent batch.
From a M&A standpoint, will your property sector have more, fewer, or the same amount of companies this time next year?
Same.
Perfect.
I will give you one last thing. Just so you all know, I took my LTIP 100% performance shares again like I did last year. Those are all relative TSR-based and absolute. I'm trying to drive long-term shareholder value here. If any of you guys-
Do those vest on change of control?
No, I'm joking. Just a joke.
Thanks.
Well, thank you guys very much. I hope everyone enjoys the rest of the conference.
Thank you.