The Macerich Company (MAC) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Leasing Volume 1.5 million square feet of new and renewal leases signed in Q3 2025, an 87% increase from Q3 2024. Year-to-date signed leases in 2025 reached 5.4 million square feet, an 86% increase compared to the same period in 2024. The increase is attributed to strong leasing momentum and execution of the Path Forward plan.
SNO Pipeline Grew from $87 million in August to $99 million as of Q3 2025, with a target of $100 million by year-end. The inclusion of Crabtree Mall is expected to add $140 million of incremental SNO. Growth is driven by leasing initiatives and focus on high-rated spaces.
Portfolio Sales $867 per square foot at the end of Q3 2025, up almost 4% compared to Q3 2024. The go-forward portfolio sales were $905 per square foot. The increase is due to improved leasing and merchandising strategies.
Occupancy 93.4% at the end of Q3 2025, up 140 basis points from the previous quarter. The go-forward portfolio occupancy was 94.3%, up 150 basis points. The improvement is attributed to commitments on vacant spaces and better brands replacing previous tenants.
Leasing Spreads Trailing 12-month leasing spreads as of September 30, 2025, were positive at 5.9%, marking 16 consecutive quarters of positive leasing spreads. This reflects strong tenant demand and effective leasing strategies.
FFO (Funds From Operations) Approximately $93 million or $0.35 per share in Q3 2025. Includes $7.5 million of noncash interest expense related to debt mark-to-market amortization. The performance is supported by leasing and operational improvements.
Net Operating Income (NOI) Go-forward portfolio centers NOI, excluding lease termination income, increased 1.7% in Q3 2025 compared to Q3 2024. Year-to-date, NOI increased almost 2% compared to the same period in 2024. Growth is driven by improved leasing and operational performance.
Net Debt to EBITDA 7.76x at the end of Q3 2025, a full turn lower than at the outset of the Path Forward plan. The reduction is due to debt repayments and asset sales.
Dispositions Almost $1.2 billion in mall dispositions completed to date, including sales of Lakewood, Atlas Park, and Valley Mall. The disposition program aims to improve the balance sheet and refine the portfolio.
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Operating Highlights
New leases signed: 1.5 million square feet of new and renewal leases signed in Q3 2025, an 87% increase from Q3 2024. Year-to-date signed leases in 2025 total 5.4 million square feet, an 86% increase compared to 2024.
Anchor leasing initiatives: 30 anchors targeted to open between 2025 and 2028, with 25 committed to categories like sporting goods, fashion, entertainment, and grocery. Dick's House of Sport has 9 committed locations, with significant traffic increases reported.
New store openings: Opened 355,000 square feet of new stores in Q3 2025, totaling 852,000 square feet year-to-date. Notable openings include Hermès in Scottsdale Fashion Square and Level 99 at Tysons Corner.
Portfolio sales: Portfolio sales at the end of Q3 2025 were $867 per square foot, up 4% from 2024. The go-forward portfolio sales were $905 per square foot.
Occupancy: Portfolio occupancy at the end of Q3 2025 was 93.4%, up 140 basis points from last quarter. Go-forward portfolio occupancy was 94.3%, up 150 basis points.
Leasing spreads: Trailing 12-month leasing spreads as of September 30, 2025, were positive at 5.9%, marking 16 consecutive quarters of positive spreads.
Lease expirations: Commitments on 94% of 2025 expiring square footage and 55% of 2026 expiring square footage, with an additional 30% in the letter of intent stage for 2026.
Dispositions: Completed almost $1.2 billion in mall dispositions to date, with a clear path to achieving the $2 billion target by 2026. Recent sales include Atlas Park, Lakewood, and Valley Mall.
Debt reduction: Paid down almost $1 billion of debt with 2026 maturity dates, reducing net debt to EBITDA to 7.76x, a full turn lower than at the start of the Path Forward plan.
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Risk or Challenges
Debt Maturities: The company has one remaining maturing loan in 2025 for $200 million on the South Plains property, which is expected to be in technical default at maturity. Additionally, there are significant 2026 debt maturities that need to be addressed through asset sales, refinancings, loan modifications, or property givebacks.
Leverage: Net debt to EBITDA is currently at 7.76x, which is high, though it has improved from earlier levels. The company aims to reduce leverage to the low to mid-6x range over the next few years.
Dispositions: The company has a $2 billion disposition target as part of its Path Forward plan. While progress has been made, there are still significant assets to sell or give back, including additional mall dispositions and land/outparcel sales.
Occupancy and Leasing Risks: Occupancy at the end of Q3 2025 was 93.4%, with some progress in re-leasing vacant spaces. However, challenges remain in achieving permanent occupancy and improving merchandising mix to drive traffic and rents.
Economic and Market Uncertainty: The company acknowledges macroeconomic uncertainties, political noise, and pending tariffs as potential risks to tenant demand and overall performance.
Anchor Leasing Initiatives: While progress has been made in re-leasing vacant anchor spaces, the success of these initiatives is critical to improving traffic and dwell time in malls, which remains a challenge.
Retailer Environment: Despite strong tenant demand, the company is exposed to risks from legacy retailers reinventing themselves and emerging brands, which may not sustain long-term success.
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Guidance & Outlook
Leasing Momentum and Targets: The company has achieved 70% of its new lease deals target for the 5-year plan ahead of schedule and aims to reach 85% by mid-2026. The SNO pipeline is expected to meet or exceed $100 million by year-end 2025, with a total incremental SNO target of $140 million including Crabtree Mall.
Anchor Leasing Initiatives: 30 anchors are targeted to open between 2025 and 2028, with 25 already committed. These include categories such as sporting goods, fashion, entertainment, and grocery, which are expected to improve traffic and customer dwell time.
Crabtree Mall Acquisition: The acquisition is expected to be a compelling investment, with early progress in leasing and plans to deploy operating, leasing, and marketing platforms to drive occupancy and NOI growth.
Retailer Demand and Expansion: Strong retailer demand across categories is expected to continue, with legacy retailers reinventing themselves and emerging brands rapidly opening stores. Examples include Dick's House of Sport, Gap, American Eagle, and others.
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. Progress includes paying down $1 billion of debt over the past year and achieving a full turn lower in leverage since the Path Forward plan's inception.
Disposition Program: The company plans to complete its $2 billion disposition program by the end of 2026, with $1.2 billion already completed. Remaining dispositions include outparcels, freestanding retail, non-enclosed mall assets, and land.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What drove the decision to do a $50 million equity issuance, and should we expect further ATM issuances over time?
A:The main objective was to make Crabtree leverage neutral. Going forward, the company will evaluate ATM use in the context of accretive growth like Crabtree. The equity issuance portion of the Path Forward plan is complete, and equity outside of the plan will be considered for acquisitions or large capital projects that align with the 2028 Path Forward Plan targets.
Q:Was the $6 million SNO pipeline related to Crabtree all incremental leasing since August?
A:It was a combination of leases in place at the time of acquisition and incremental leasing since ownership. Management did not provide a specific breakdown but mentioned good progress on leasing and deals in process.
Q:Can you provide details on the '26 expirations and the economics of those deals?
A:55% of expiring square footage is committed, and 30% is in the letter of intent stage, totaling 88% of business in 2026. This is ahead of last year's pace. New and renewal deals are mostly at or above target market rents in the 5-year plan.
Q:Are you tracking to exceed the $140 million SNO pipeline target?
A:It is possible due to leasing momentum and price sensitivity on renewals. Reserves built into the plan and additional leasing progress could allow the company to exceed the $140 million target.
Q:What is the expected cadence for anchor leases to commence, and what are the associated capital costs?
A:Most anchor leases are expected to commence in the back half of '27 or early '28. Capital costs vary by tenant and center, with tenant allowances typically 1 to 1.5x annual rent for in-line deals and higher for anchor transactions like Dick's House of Sport.
Q:What is the lender appetite for non-Fortress assets, and what interest rates are expected for refinancing?
A:The debt financing market is constructive, even for lower-quality assets. Interest rates depend on the specific asset, but the market is open for refinancings.
Q:What is the timing for the $100 million SNO pipeline to come online?
A:$20 million will come online in 2025, with the rest in 2026 and beyond.
Q:How many anchors are still being leased up?
A:25 anchors are committed, 3 are in the letter of intent stage, and 2 are in prospecting. Additional anchors in the portfolio are in giveback assets.
Q:What are the opportunities for acquiring additional malls like Crabtree, and what are the financing conditions?
A:The company is evaluating opportunities but has no imminent acquisitions. Financing markets have improved, with recent loans secured at rates well below 10%, such as SOFR plus 2.50% for Crabtree.
Q:What was the drag on same-store NOI from Forever 21 and other factors, and what is the peak occupancy for the portfolio?
A:Forever 21 caused a near-term impact, but longer-term benefits are expected from higher-quality tenants and doubled rents. Adjusted same-store NOI growth would be closer to 3%+ for the quarter. Peak occupancy is not specified.
Q:How is the company addressing potential challenges with Saks and other tenants?
A:The company did not comment on specific tenants like Saks but mentioned limited exposure to such tenants in its portfolio.
Q:What categories and regions are driving portfolio sales, and what are the expectations for the holiday season?
A:Categories like apparel, accessories, fast food, home furnishings, and jewelry performed well. Higher-end customers are driving sales, with fortress properties outperforming. Retailers are optimistic about the holiday season.
Q:What is the read-through from recent A mall trades for the company's portfolio?
A:Recent trades like Crabtree and NorthPark provide some benchmarks, but each transaction is unique. The company remains disciplined in evaluating opportunities.
Q:How much of the incremental $99 million rent is from anchor spaces?
A:Anchor spaces contribute to the $99 million, but specific figures were not provided.
Q:What are the plans for Fashion District, and how is the company addressing challenges there?
A:Leasing efforts have been redirected, and early momentum is positive. The company is working with the city to improve the area and create leasing momentum.
Q:What is the outlook for re-leasing spreads and tenant retention in '26?
A:Re-leasing spreads vary by quarter and mix but are generally ahead of net effective rent projections. Tenant retention for '26 is expected to be about 85%.
Q:What has been the impact of reduced Canadian and Mexican tourists on sales?
A:Reduced international tourists have had some impact, but Scottsdale Fashion Square showed strong sales performance, indicating limited overall impact.
Q:How is the company interpreting conflicting signals about consumer behavior and retailer health?
A:Despite headlines about consumer stress, leasing demand remains strong due to the portfolio's quality and retailers' long-term planning. Emerging brands are also contributing to demand.
Q:What is the pace of asset sales, and what is the appetite for non-Fortress dispositions?
A:The company is on track to complete its $2 billion disposition program by 2026, with progress on Eddy mall sales and outparcel sales.
Q:How are TIs and concessions trending for Forever 21 backfills, and are boxes being split?
A:It is a mix of single-tenant replacements and splitting boxes. Tenants like Dick's House of Sport and Zara are replacing Forever 21, with higher rents and better traffic generation.
Q:Why have rent spreads been higher for the overall portfolio compared to the go-forward portfolio?
A:This is due to the mix of leases signed in each pool, and no significant conclusions should be drawn from this variation.
Q:When will the company tighten the 2028 FFO range?
A:The company will evaluate this as it progresses through the Path Forward plan and completes initiatives.
Q:Has the Path Forward plan target been adjusted for the Crabtree acquisition?
A:The midpoint of the Path Forward plan was $1.81 before Crabtree, which is expected to add $0.08, bringing the adjusted midpoint to $1.89.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct breakdown of incremental leasing at Crabtree since August, stating they would follow up later. They also did not comment on specific tenants like Saks or provide a peak occupancy figure for the portfolio. Additionally, the exact contribution of anchor spaces to the $99 million incremental rent was not disclosed.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Arizona
Banking Markets
Capital Markets
Chase Co
Co Research
Division Deutsche
Division Evercore
Division Goldman
Division JPMorgan
Division KeyBanc
Division Ladenburg
Division Mizuho
Division Piper
Division Scotiabank
Forward plan
Global Banking
Group Inc
Hermès store
Inc Research
JPMorgan Chase
KeyBanc Capital
LLC Research
Ladenburg Thalmann
Level
Markets Inc
Path Forward
Research Division
Scottsdale
Senior EVP
category
concept
luxury
momentum
MAC Transcript
The Macerich Company (MAC) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call presented strong financial performance with record high revenue per square foot, increased occupancy, and successful leasing activities. Despite high net debt to EBITDA, liquidity is robust. The Q&A section reinforced positive sentiment, with management confirming achievable growth targets and strategic asset management. While some uncertainty remains regarding specific financial metrics, the overall outlook is optimistic, supported by strategic leasing and sales strategies. Given the company's market cap and the positive indicators, a 'Positive' rating is justified, anticipating a stock price increase of 2% to 8% over the next two weeks.
The Macerich Company (MAC) Presents at Citi's Miami Global Property CEO Conference 2026 Transcript
Neutral3-2
The Macerich Company (MAC) Q4 2025 Earnings Call Transcript
Positive2-18
The earnings call shows strong leasing momentum, a significant reduction in net debt, and a robust liquidity position, indicating good financial health. The Q&A section reveals strategic focus on value-add acquisitions and a cautious yet positive outlook on consumer demand. Despite some unclear management responses, the overall sentiment is positive, supported by strong operational performance and strategic initiatives. With a market cap of approximately $3.3 billion, the stock is likely to experience a moderate positive reaction, falling into the 2% to 8% range.
The Macerich Company (MAC) Q3 2025 Earnings Call Transcript
Positive11-5
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.
MAC Report
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