MAC — The Macerich Company

Macerich Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• FFO (Funds From Operations) as adjusted: $92 million, or $0.34 per share.
• Sales per square foot: Increased to $941 for the go-forward portfolio, with total comparable in-line sales up 3.9% year-over-year.
• NOI (Net Operating Income) growth: 1.2% for go-forward portfolio centers.
• Occupancy rates: Overall occupancy at 93.4%, down 60 basis points sequentially; go-forward portfolio occupancy at 94.5%.
• Cumulative signed not open (SNO) pipeline: $116 million against a target of $140 million, with 80% flow-through to NOI.

2. Strategic Updates and Business Highlights:

• Path Forward Plan: Continued progress with a focus on leasing 1,000 new units to enhance retail centers, aiming for an occupancy increase to 88-89%.
• Recent Acquisition: Acquired Annapolis Mall for $260 million, expected to be accretive to FFO by $0.04 per share by 2028. The mall has strong leasing momentum with 18 new tenant deals.
• Leasing Activity: Signed 1.6 million square feet of leases, with 700,000 square feet being new deals, indicating strong demand from retailers.
• Elevate and Transform Strategy: Focus on upgrading tenant mix, including luxury and experiential brands, to drive customer traffic.

3. Forward Guidance and Outlook:

• 2026 NOI Growth: Expected to be at least 3%, with growth anticipated to accelerate in 2027 and 2028 as SNO tenants open.
• Long-term targets: Confidence in achieving 88-89% physical permanent occupancy and lower leverage by 2028, with a focus on maintaining strong free cash flow.

4. Bad News, Challenges, or Points of Concern:

• Occupancy Decline: Seasonal decline in occupancy rates, typical for Q1, raises concerns about maintaining momentum.
• Weather Impact: Winter weather negatively affected NOI growth by about 50 basis points at East Coast properties.
• Debt Maturities: Ongoing discussions regarding a defaulted loan on the 29th Street property, highlighting potential refinancing risks.
• Market Competition: The retail environment remains competitive, requiring continuous adaptation to consumer trends and preferences.

5. Notable Q&A Insights:

• Annapolis Mall Financing: No mortgage assumed; initial funding through cash and line of credit. Long-term financing strategies to be evaluated.
• Leasing Spreads: Current re-leasing spreads not emphasized; focus on completing the Path Forward plan before reassessing metrics.
• K-shaped Economy Impact: Mixed sales trends observed, with luxury tenants performing well while lower-income segments face challenges.
• Temporary Tenants: Temporary tenants are utilized strategically to drive traffic, but a high number of vacancies could limit pricing power.

Overall, Macerich's Q1 2026 results reflect a company in transition, making significant strides in leasing and acquisitions while navigating challenges in occupancy and market dynamics. The focus remains on executing the Path Forward plan to enhance portfolio performance and financial health.