The Macerich Company's Q3 2025: Contradictions Emerge on Crabtree Acquisition, Earnings Guidance, Leasing Strategies, and SNO Growth

Guidance:

• Path Forward 2028 midpoint $1.81 (pre-Crabtree); Crabtree ~ $0.08 accretive to that plan.
• Reduce net debt/EBITDA to low- to mid-6x over the next couple of years.
• $2.0B disposition target, expected substantially complete by end of 2026.
• SNO pipeline targeted at $100M by year-end (expected to reach $140M including Crabtree); $20M of SNO in 2025, remainder in 2026+.
• Leasing completion: 70% revenue completion now, target 85% by mid-2026.
• Tenant retention expected ~85% for 2026.

Business Commentary:

• Strong Leasing Momentum and Target Achievements:
• The Macerich Company reported signing 1.5 million square feet of new and renewal leases in Q3 2025, an 87% increase from Q3 2024.
• Year-to-date, the company has achieved 5.4 million square feet in leasing, a 86% increase compared to the same period in 2024.

• This momentum was driven by strong demand for retail space from new and existing retailers, improving merchandising mix, and enhancing customer traffic and sales.

• Financial Performance and Balance Sheet Improvements:

• Macerich's FFO was $93 million or $0.35 per share in Q3 2025, excluding financing expenses.
• The go-forward portfolio's NOI increased by 1.7% in Q3 2025 compared to the same period in 2024.

• The company's balance sheet showed progress with a significant reduction in leverage, with net debt to EBITDA at 7.76x, reduced from higher levels at the outset of the Path Forward plan.

• Asset Sales and Disposition Progress:

• Macerich has completed almost $1.2 billion in mall dispositions, with plans to reach $2 billion by the end of 2026.

• The company achieved substantial progress on its sales and giveback component of the Path Forward plan, positioning it to hit its leverage targets by 2027.

• Lease Expirations and Renewals:

• By September 30, Macerich had commitments on 94% of its 2025 expiring square footage and 55% of its 2026 expiring square footage.
• The strong lease renewal rates are due to positive leasing spreads, with trailing 12-month leasing spreads remaining positive at 5.9%, and new anchor leasing initiatives contributing to increased occupancy and merchandising improvements.

Sentiment Analysis:

Overall Tone: Positive

• Management: "We had another great quarter... remained ahead of schedule on our Path Forward plan"; leasing: "signed 1.5 million square feet... an 87% increase from Q3 2024"; CFO: "FFO... approximately $93 million or $0.35 per share"; balance sheet: "net debt to EBITDA... 7.76x, a full turn lower... plan to reduce to low to mid-6x."

Q&A:

• Question from Vince Tibone (Green Street Advisors, LLC): What drove the decision to do $50M of ATM issuance now and should we expect further ATM issuances over time?
  Response: ATM used primarily to make the Crabtree acquisition leverage-neutral; future ATM use will be evaluated case-by-case for accretive growth and large projects; the equity issuance portion of the Path Forward plan is complete.

• Question from Vince Tibone (Green Street Advisors, LLC): On the SNO pipeline, you highlighted $6M related to Crabtree—was that all incremental leasing since August or in-place at acquisition?
  Response: Crabtree's SNO reflects both in-place SNO at acquisition and incremental leasing since ownership; management will follow up with a breakdown offline.

• Question from Samir Khanal (BofA Securities): For 2026 expirations you noted 55% commitments and ~30% LOIs—what are the economics/pricing/spreads on those deals vs. 2025 expirations?
  Response: About 88% of 2026 expirations are effectively covered (55% commitments, ~30% LOIs); new and renewal deals are at or mostly above the target market rents in the 5-year plan.

• Question from Samir Khanal (BofA Securities): Given momentum, are you tracking to exceed the $140M SNO target (with Crabtree)?
  Response: It is possible to exceed $140M as leasing momentum and selectively pricing renewals allow capturing additional SNO beyond plan reserves.

• Question from Michael Griffin (Evercore ISI): Timing/cadence for the 30 anchors to commence and what capital costs/tenant allowances should we expect?
  Response: Majority expected to open late-2027/early-2028; inline tenant allowances typically ~1–1.5x annual rent while anchor deals (e.g., Dick's House of Sport) are materially higher and vary by tenant/center; structures range from leasehold allowances to purchase arrangements.

• Question from Michael Griffin (Evercore ISI): What's lender appetite and potential refinancing rates for non-fortress assets if you were to refinance (e.g., South Plains)?
  Response: Debt markets have become constructive across quality spectrum; refinancing appetite exists but terms/pricing are asset-specific and evaluated case-by-case.

• Question from Linda Yu Tsai (Jefferies LLC): Timing of the $100M SNO coming online?
  Response: $20M of the SNO will come online in 2025; the remainder will come in 2026 and thereafter.

• Question from Linda Yu Tsai (Jefferies LLC): Of the 30 anchors targeted to open 2025–2028, how many are still to be leased?
  Response: Of the 30 anchors, 25 are committed, 3 have papers/LOIs trading and 2 are in prospecting stage for the go-forward portfolio.

• Question from Floris Gerbrand Van Dijkum (Ladenburg Thalmann & Co. Inc.): What are you seeing for additional mall opportunities like Crabtree and financing costs—can you borrow under 10% for A- assets?
  Response: Company is evaluating opportunities but none imminent; financing market improved—Crabtree term loan priced at SOFR+250 (~mid-6%), well inside 10%; mezz and securitization options exist for well-positioned operators.

• Question from Ronald Kamdem (Morgan Stanley): How much did Forever 21 or proactive vacancy conversion drag on same-store NOI this quarter and what is your view of peak occupancy (94.3% go-forward now)?
  Response: 2025 is transitional with frictional downtime; adjusting for Forever 21, go-forward NOI growth would be closer to +3%+ (reported +1.7%); go-forward occupancy at quarter end was 94.3%—no explicit 'peak' occupancy target given.

• Question from Omotayo Okusanya (Deutsche Bank AG): Given media speculation about tenants like Saks, how are you thinking through tenant risk/exposure?
  Response: Management declined to comment on specific tenants and provided no tenant-level commentary.

• Question from Haendel St. Juste (Mizuho Securities USA LLC): Color on categories/regions driving sales, foot traffic/back-to-school and holiday expectations?
  Response: Traffic was flat; go-forward comp sales +3.5% in Q3 (fortress +4.8%); strongest categories: apparel/accessories, fast food, home furnishings, jewelry, athleisure; retailers generally optimistic entering Q4/holiday season.

• Question from Haendel St. Juste (Mizuho Securities USA LLC): Read-through from recent A-mall transactions and cap rates for your go-forward portfolio?
  Response: Transactions differ by deal type (auctions vs JV buyouts); Crabtree is an early comp for auctioned, marketed centers, but read-through depends on transaction context—management cautions direct comparisons.

• Question from Greg McGinniss (Scotiabank): How much of the $99M SNO pipeline is coming from anchors you're filling?
  Response: Anchors are a component of the $99M SNO, but the company did not provide the split on the call and will follow up.

• Question from Greg McGinniss (Scotiabank): Plans for Fashion District (redevelopment/tenant excitement)?
  Response: Leasing efforts refocused after arena uncertainty; early momentum is cautiously encouraging, no debt on the asset, and management is evaluating redevelopment/leasing with potential municipal support—still early stages.

• Question from Todd Thomas (KeyBanc Capital Markets): Re-leasing spreads fell to 5.9% T12—what should we expect going forward and what tenant retention do you anticipate for 2026?
  Response: Re-leasing spreads fluctuate by lease mix; focus is on achieving net effective rents per the 5-year plan and hitting market rent targets; tenant retention for 2026 is expected to be about 85%.

• Question from Alexander Goldfarb (Piper Sandler & Co.): Impact of fewer Canadian/Mexican tourists on Arizona/Scottsdale sales?
  Response: Fewer Canadian visitors noted in some markets but management hasn't seen a material portfolio sales impact; Scottsdale Fashion Square delivered the strongest comp performance in Q3.

• Question from Alexander Goldfarb (Piper Sandler & Co.): How do you reconcile consumer stress headlines with strong leasing demand?
  Response: Macerich's 'must-have' Class A portfolio attracts retailer expansion and emerging brands; retailers are opportunistically opening stores to support e-commerce—leasing metrics remain strong despite headlines.

• Question from Craig Mailman (Citigroup Inc.): Pace of asset sales going forward and appetite for non-fortress dispositions?
  Response: Dispositions are progressing; several $200M+ mall sales remain tied to 2026 debt maturities and will be evaluated for sale or giveback; outparcels/land ($100–150M target for 2025) are being readied and the company remains on track to substantially complete the $2B program by end-2026.

• Question from Craig Mailman (Citigroup Inc.): On Forever 21 backfills, how are TIs/concessions trending and are you splitting boxes (higher CapEx)?
  Response: Backfills are a mix of full-box replacements and divided boxes; TI/capex varies by project—some require more CapEx—but new tenants will pay materially higher rent; 74% of the vacated Forever 21 space already has commitments.

• Question from Michael Mueller (JPMorgan Chase & Co): Why have rent spreads been higher for the overall portfolio vs the go-forward portfolio?
  Response: Difference is driven by lease-mix in the pools being compared rather than a substantive trend—mix effects explain the variance.

• Question from Michael Mueller (JPMorgan Chase & Co): When might you tighten the 2028 FFO range?
  Response: Management will evaluate tightening the 2028 FFO range as year-end approaches and as progress on dispositions and other initiatives becomes clearer; no specific timing commitment given.

• Question from Caitlin Burrows (Goldman Sachs Group, Inc.): Path Forward midpoint was $1.81 and Crabtree is $0.08 accretive—should we think the new midpoint is $1.89?
  Response: Yes: the published $1.81 midpoint was pre-Crabtree and Crabtree is expected to be roughly $0.08 accretive (implying ~ $1.89), subject to subsequent adjustments such as ATM proceeds or other items.

Contradiction Point 1

Crabtree Acquisition Strategy

It involves a contradiction in the explanation of the strategic rationale behind the Crabtree acquisition, impacting understanding of the company's growth strategy.

Could you clarify the decision to issue $50 million in equity and if additional equity issuances are expected? - Vince Tibone (Green Street Advisors, LLC)

2025Q3: The equity issuance of $50 million was for the Crabtree acquisition to make it leverage neutral. Post-Crabtree, future equity issuances will be evaluated in the context of accretive growth opportunities. - Daniel Swanstrom(CFO, Treasurer & Senior EVP)

Can you discuss the Crabtree acquisition's market positioning and risks associated with tenants like Belk and Macy's? - Ki Bin Kim (Truist)

2025Q2: Acquiring Crabtree was opportunistic given its growth potential and alignment with our Path Forward plan. Although we had significant cash on hand, the implied growth rate of Crabtree's NOI and our confidence in achieving lease targets were key factors in choosing external growth. - Jack Hsieh(President, CEO & Director)

Contradiction Point 2

Earnings Guidance and Recovery Timeline

It involves a contradiction in the company's timeline for earnings recovery and the impact of external growth on guidance, which is crucial for investor expectations.

Is the $6 million in the SNO pipeline from new leasing at Crabtree since August rather than existing leases? - Vince Tibone (Green Street Advisors, LLC)

2025Q3: We are not reinstating guidance. Ultimately, the guide will be determined by the successful execution of the Path Forward plan. - Jackson Hsieh(President, CEO & Director)

What milestones remain before you reinstate guidance? - Linda Tsai (Jefferies)

2025Q2: The asset sales are an important component in balancing leasing and asset sales without constraining the company with guidance. We are carefully managing these two aspects to ensure a smooth process, focusing on executing asset sales and leasing ahead of schedule. - Jack Hsieh(President, CEO & Director)

Contradiction Point 3

Leasing and Renewal Rents

It involves a contradiction in the company's reported leasing spreads and overall leasing strategy, impacting understanding of the company's financial performance and growth prospects.

What are the economic terms and spreads for 2026 expirations compared to 2025? - Samir Khanal (BofA Securities, Research Division)

2025Q3: We are committed to 55% of 2026 expiring square footage with 88% committed or in LOI, much ahead of last year. Our renewal and new deals are at or above target market rents for the 5-year plan. - Doug Healey(Senior EVP & Head of Leasing)

Can you compare acquiring Crabtree versus using cash to pay down debt? - Jeff Spector (Bank of America)

2025Q2: Our 5-year plan calls for growth in market rents that we believe are achievable as we increase demand for our space from a broad range of high-quality tenants that are expanding and looking for space. - Doug Healey(Senior EVP & Head of Leasing)

Contradiction Point 4

SNO Growth and Leasing Strategy

It involves the company's expectations for same-store NOI growth and leasing strategies, which are crucial for assessing the company's financial performance and operational goals.

Can you explain the decision to issue $50 million in equity and whether further issuances are expected? - Vince Tibone (Green Street Advisors, LLC)

2025Q3: The $6 million SNO pipeline is a combination of in-place leases and new leasing since the acquisition of Crabtree. The team has made good progress, with more details to follow as deals are completed. - Jackson Hsieh(CEO)

Considering the $27 million SNO pipeline, what are your expectations for same-store NOI growth in 2025? - Floris Gerbrand van Dijkum (Compass Point)

2024Q4: SNO growth is expected to be more flat for 2025 and 2026, with a stair-step increase in 2027 and 2028. The mix of new versus renewal leases is expected to increase to 45%, which will impact SNO significantly. - Jackson Hsieh(CEO)