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01/11 03:33
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary reveals strong financial performance with record leasing progress and a growing SNO pipeline, despite some uncertainties. The Q&A section highlights confidence in re-leasing and strategic acquisitions, with no major risks identified. The company's strategic plan to reduce leverage and increase asset sales is on track, and the focus on permanent tenants and high-quality assets is promising. The market cap indicates moderate sensitivity to these developments, suggesting a positive stock price movement within 2% to 8% over the next two weeks.
Portfolio sales per square foot $849 per square foot, up $12 compared to Q1 2025. For the go-forward portfolio, sales were $906 per square foot.
Traffic Up 1.6% for the total portfolio and 2.1% for the go-forward portfolio compared to the same period in 2024.
Occupancy 92% at the end of Q2 2025, down 60 basis points from the last quarter due to the liquidation and closing of Forever 21 stores. However, go-forward portfolio occupancy was 92.8%.
Trailing 12-month leasing spreads Positive at 10.5%, consistent with the previous quarter, marking 15 consecutive quarters of positive leasing spreads.
New and renewal leases signed 650 leases for 4.3 million square feet year-to-date through Q2 2025, representing 40% more leases and 75% more square footage than the same period in 2024. For new deals, it was double the number of leases and triple the square footage compared to 2024.
SNO (Signed Not Open) pipeline Increased from $75 million last quarter to $87 million in Q2 2025, with a target to exceed $100 million by year-end.
FFO (Funds From Operations) Approximately $87 million or $0.33 per share in Q2 2025, excluding certain expenses. This includes $9 million of interest expense related to debt mark-to-market amortization, compared to $3 million in Q2 2024.
Go-Forward Portfolio Centers NOI Increased 2.4% in Q2 2025 compared to Q2 2024. Year-to-date, it increased 2% compared to the same period in 2024.
Net debt to EBITDA 7.9x at the end of Q2 2025, almost a full turn lower than at the outset of the Path Forward plan.
Leasing Activity: Achieved 4.3 million square feet of leasing year-to-date, surpassing the 2025 target. New deals completion reached 65%, ahead of the 70% year-end target.
New Retail Concepts: Signed leases for DICK'S House of Sport, an experiential retail concept, at multiple locations including Washington Square and Crabtree Mall.
Acquisition of Crabtree Mall: Acquired Crabtree Mall in Raleigh-Durham, North Carolina for $290 million. The mall is a market-dominant Class A retail center with plans to increase occupancy from 74% to 90% by 2028.
Market Expansion: Entry into the high-growth southeastern U.S. market with Crabtree Mall acquisition, enhancing the portfolio's strategic positioning.
Operational Efficiency: Implemented technology enhancements like the Macerich leasing speedometer to optimize leasing and capital allocation decisions.
Portfolio Refinement: Sold multiple assets, including Atlas Park and SouthPark, contributing to $800 million in mall sales to date. On track to achieve $2 billion disposition target.
Path Forward Plan: Focused on simplifying the business, improving operational performance, and reducing leverage. Progress includes achieving a net debt to EBITDA ratio of 7.9x, with a target of low to mid-6x in the next few years.
Deleveraging Strategy: Proactively addressing debt maturities and leveraging asset sales to strengthen the balance sheet.
Leverage and Debt Maturities: The company has a high net debt to EBITDA ratio of 7.9x, which, while reduced, remains a significant leverage risk. Additionally, there are upcoming debt maturities in 2025 and 2026, which require proactive management through asset sales, refinancings, or other measures.
Occupancy Challenges: Occupancy rates have declined to 92% due to the liquidation and closing of Forever 21 stores. While efforts are underway to remerchandise the space, this poses a short-term risk to revenue and operational performance.
Economic Uncertainty and Tariffs: The macroeconomic environment and pending tariffs create uncertainty, which could impact retailer sentiment and leasing activity.
Execution of Disposition Plan: The company has a $2 billion disposition target as part of its Path Forward plan. While progress has been made, achieving this target is critical to balance sheet improvement and remains a challenge.
Crabtree Mall Acquisition Risks: The acquisition of Crabtree Mall, while strategic, involves risks related to achieving the targeted occupancy increase from 74% to 90% by 2028 and realizing the embedded NOI growth potential.
Retailer Sentiment and Leasing Risks: Although leasing activity is strong, the company remains dependent on retailer sentiment and the ability to attract and retain tenants, especially in a competitive retail environment.
Leasing Targets: The company is targeting an average of 4 million square feet of leasing in 2025 and 2026. They are ahead of schedule, having already signed 4.3 million square feet year-to-date. The goal is to achieve 70% new deal completion by year-end 2025 and 85% by mid-2026, which would contribute to a $130 million cumulative SNO potential.
SNO Pipeline: The signed-not-open (SNO) pipeline has grown to $87 million as of today, with a target to exceed $100 million by year-end 2025. This includes 179 leases for 1.5 million square feet of new stores expected to open by early 2028.
Crabtree Mall Acquisition: The company acquired Crabtree Mall for $290 million, aiming to increase permanent occupancy from 74% to 90% by 2028. This acquisition is expected to enhance the Path Forward plan's 2028 target FFO range and align with deleveraging targets.
Debt and Leverage Reduction: The company aims to reduce net debt to EBITDA to the low to mid-6x range over the next few years. They are addressing 2025 and 2026 debt maturities through asset sales, refinancings, and other measures.
Dispositions: The company has a $2 billion disposition target, with $1.2 billion already completed or under contract. They plan to complete the remaining dispositions, including land and outparcel sales, by the end of 2026.
New Retail Concepts: DICK'S House of Sport is expected to open at multiple locations, including Crabtree Mall in spring 2027 and Washington Square in fall 2027, aiming to transform these spaces into destination-oriented retail hubs.
The selected topic was not discussed during the call.
The company's strategic initiatives, such as the successful leasing targets, Crabtree Mall acquisition, and debt reduction plans, indicate positive momentum. The Q&A section showed a constructive debt market and positive leasing demand, despite some management opacity. The company's strong leasing performance, optimistic holiday sales outlook, and positive impact from the Crabtree acquisition support a positive sentiment. The market cap suggests moderate sensitivity to these factors, leading to a prediction of a 2% to 8% stock price increase over the next two weeks.
The earnings call summary reveals strong financial performance with record leasing progress and a growing SNO pipeline, despite some uncertainties. The Q&A section highlights confidence in re-leasing and strategic acquisitions, with no major risks identified. The company's strategic plan to reduce leverage and increase asset sales is on track, and the focus on permanent tenants and high-quality assets is promising. The market cap indicates moderate sensitivity to these developments, suggesting a positive stock price movement within 2% to 8% over the next two weeks.
The earnings call presents a mixed picture: EPS missed expectations, but FFO showed improvement. The leasing strategy appears strong, with increased leasing spreads and a growing SNO pipeline. However, occupancy rates declined, and net debt to EBITDA remains high. The Q&A session revealed some management evasiveness and uncertainties, particularly around core versus non-core NOI and asset pricing. The market cap suggests moderate volatility, but without strong positive catalysts or partnerships, the stock is likely to remain neutral in the short term.
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