The Macerich Company (MAC) 2026 Q2 法說會逐字稿

Good afternoon and welcome to the Q2 2026 Macerich earnings conference call. (Operator Instructions) Please also note today's event is being recorded.

At this time, I'd like to turn the conference call over to Alexandra Johnstone, VP of Finance and Investor Relations. Please go ahead.

Thank you for joining us on the second-quarter 2026 earnings call.

During this call, we will make certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, including statements regarding projections, plans, or future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results and supplemental under SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in a supplemental filed on Form 8-K with the SEC, which is posted in the Investor section of the company's website at macerich.com.

Joining us today are Jack Shea, President and Chief Executive Officer; Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with us in the room is Brad Miller, Senior Vice President of Portfolio Management.

With that, I would like to turn the call over to Jack.

Thanks, AJ. Good afternoon, everyone. When we published our Path Forward 3.0 plan at NEWI in June, we highlighted that we were meaningfully ahead of schedule on the execution of the plan, which is delivering tangible results and positioning us for accretive growth above our original expectations.

We're demonstrating strong execution across three pillars: simplify the business, improve operational performance, and reduce leverage. We've made significant progress in leasing dispositions and balance sheet improvement, while also positioning us for sustainable NOI growth and new external growth opportunities.

Today, I'll briefly touch on our second quarter results, then turn to where we stand on our Path Forward plan, and how we're thinking about external growth.

I'm pleased with our second quarter results. FFO as adjusted was $0.35 per diluted share and go forward portfolio NOI grew 3.8%. We expect this growth to continue to ramp in 2027 and 2028 as our signed not open tenants open and begin paying rent.

Our snow pipeline reached $124 million. Portfolio sales reached a new company high of $919 per square foot and $954 million across the go-forward portfolio with leased occupancy of 94% and 95.5% in the go-forward portfolio. We remain ahead of schedule on our important strategic leasing initiatives. Our leasing speedometer, which tracks new deal completion in the five-year plan is at 88%, ahead of our 85% mid-year target. Only a small number of leases remain to complete the plan and our attention has shifted to conversion. That means getting tenants permitted, built out, open, and paying rent.

Occupancy is tracking with what we projected in our Path Forward plan and the strong demand for our space as our teams already leasing into 2029 and 2030 as little space remains available in our best centers. We recently introduced the store openings completion percentage, an operational metric intended to provide transparency on our progress to move tenants from LOI to store opening. As of May, we were at 50%, and today, we are at 57%. We expect to be ahead of our 60% year-end target at the end of this year.

We talked about how our playbook is working within the portfolio as the elevate and transformation strategy moves through the later stages and occupancy tightens, traffic increases, and NOI improves. If we look at our best performing centers year-to-date in terms of NOI growth, these centers have experienced the strongest traffic improvement. As compared to our portfolio average.

Our next good case study is the West Wing of Tysons Corner. That wing has historically been held back by weaker traffic, and we're changing that. We're adding, among other nationally recognized tenants, a two-level Eataly in the former American Girl space, Din Tai Fung, in the form of Pottery Barn and cider in the express space. These tenants are all proven traffic generators. With that wing now effectively full, that added traffic and dwell time should translate directly into pricing power, year to date through the first six months.

Traffic is up 10% at Tysons. As we have continued to upgrade the tenant base over the past three years. With these new tenants coming in that we've signed and others we expect to announce soon, that traffic has even more room to improve. The scarcity of space in our best centers is by design in our Path Forward plan. No one is building new regional malls and roughly 90% of our go-forward NOI comes from Class A assets and the best retailers in the world are concentrating their growth in high-quality centers like ours.

Retailer demand is as deep as we've seen it and is influencing how we are evaluating potential acquisition opportunities. Brands are pursuing quality over quantity and competing for limited space in our centers. The Gen Z consumer overindexes on visiting physical stores and spending on goods, food, and experiences, and is on track to become the largest spending demographic in the country. Those tailwinds are only getting stronger.

Let me turn to acquisitions, which is an increasingly important growth engine for us. Our opportunity set has grown and the pipeline is robust. We are evaluating a broad set of on and off-market opportunities, the most at any point, since we began the Path Forward plan. We remain highly disciplined and our criteria has not changed.

Our criteria for acquisitions includes assets that are: one, accretive to our Path Forward plan; two, located in strong trade areas with clear catalyst to elevate and transform using our leasing, development and operational platform to add value; and three, finance in a way that keeps us within our leverage targets under the plan. We will remain patient and selective, but we intend to use this window because the conditions for acquiring and transforming high-quality malls are as favorable as we've seen.

At Annapolis, the onboarding has gone smoothly and the momentum is clear. Uniglow is now open, Dick's House of Sport opens on August 14.

And the elevate and transform effort is well underway. It is a market-leading asset in one of the most affluent trade areas on the East Coast and its proximity to Tyson's Corner extends our platform across the Washington D.C. region. At Crabtree, our leasing momentum has been strong. We recently announced Level99 and Fogo de Chão and Dick's House of Sport is opening in September.

In addition, Lululemon has recently signed a lease to extend and expand their location. Since the acquisition, we have commitments on 45 new and expansion leases, and 35 renewal leases. Both assets reinforce our conviction that our leasing capabilities and relationships with the best retailers in the world are what turned these acquisitions into value. And it's a big reason sellers and retailers want to work with us.

We are increasingly in a position of strength with the balance sheet. Following our most recent offering completed on a forward settlement basis, we have approximately $372 million from this offering available to fund future acquisitions, that financial flexibility, combined with our platform lets us act with speed and certainty that sellers and retailers value. That's a real competitive advantage in this market.

In summary, we are ahead of schedule. The plan is substantially de-risked and the structural tailwinds behind our business from the limited supply to retailer demand to the emergence of the Gen Z consumer are strengthening. As I've noted before, when we complete this plan. You should expect to see a company with higher permanent occupancy, embedded rent growth, a stronger balance sheet and a portfolio of irreplaceable assets in the country's most desirable markets.

With that, I'll turn the call over to Doug.

Thanks, Jack. Like the first quarter, the second quarter reflected continued leasing momentum across our portfolio. Portfolio sales at the end of the second quarter were $919 per square foot, once again representing a new high watermark for the company, and that's our full portfolio. By contrast, when you look at our go-forward portfolio, the center's where we're actively investing.

Sales were $954 per square foot, and this continues to underscore the success of our elevation and transformation strategy. Occupancy at the end of the second quarter was 94%, up 60 basis points from the first quarter. The go-forward portfolio occupancy at the end of the second quarter was 95.5%, and that's up 60 basis points sequentially and up 270 basis points year over year, continuing to reflect strong demand for space in our best centers.

As we get into actual leasing for the quarter, let's start with our lease expirations. We have commitments on approximately 93% of our 2026 expiring score footage. That is expected to renew and remain open with another 6% in the letter-of-intent stage.

As I mentioned last quarter, we're effectively done with 2026 and now actively focused on 2027 and 2028. In fact, as we look specifically at our 2027 expirations, we're just about 50% committed with another 40% in the letter-of-intent stage. And compared to this time last year, we're ahead of pace and very pleased with the progress we've made.

Turning to tenant openings, in the second quarter, we opened almost 350,000 square feet of new stores. Most notably, in the second quarter, we opened a new and expanded Zara store at Tysons Corner Center. At 45,000 square feet, this is the first true flagship Zara in our portfolio. And its opening was extremely strong. In fact, in its opening weekend, Zara at Tysons was ranked number one in sales in the United States and number five in the world. Since then, it remains number one in its region and in the top 10 in the country. And we look forward to opening our second Zara flagship at Los Cerritos in the fourth quarter of 2027.

In terms of leases signed in the second quarter, we signed 1.3 million square feet of new and renewal leases, of which 645,000 square feet were new deals, which is right on par with what we leased in the second quarter of 2025. And let's remember, last year was a record leasing year for us.

Examples of leases signed in the second quarter stand five categories: legacy brands like Aerie, Offline by Aerie, and Old Navy; food and beverage concepts like Eataly, Din Tai Fung, and Wood Ranch; international names like Zara and Sephora; experiential concepts like Level99 and Golf Galaxy; and emerging brands like Alo Yoga, On Running, Vuori, Rowan, Reformation, and Cider.

So my point in listing examples of brands we signed in the second quarter, which is really just a subset of all the leasing we’ve done in our five-year plan, is this. Of the 1,000 new deals in our five-year plan, we only have 170 left to achieve our goal, two-thirds of which are in the letter of intent stage. Given the continued healthy retail environment and unprecedented demand for space in our centers, we believe this is very achievable.

So how did we get here? We got here by record leasing activity in the last two and a half years, which we’ve discussed quarter after quarter. It’s very important to note, and I want to make this clear, we achieved this success not by just leasing space to fill space, but rather, we got here by leasing space in a very thoughtful and strategic manner, targeting many of the best and most sought-after retailers in the world.

Now when these 1,000 new tenants open between now and the end of 2028, the Macerich portfolio of shopping centers will have been completely reimagined and ultimately transformed and elevated like never before. When we look out to 2029 and beyond, the narrative of our leasing story will change. With the vast majority of our 1,000-deal program complete, we shift from record leasing volumes to curating and optimizing a portfolio that is already elevated.

We expect our go-forward centers to be operating at higher occupancy and higher sales productivity than any point in our history, giving us continued pricing power and the ability to drive sustainable same center NOI growth for years to come. With that, I’ll turn the call over to Dan to go through our second quarter financial results.

Thanks, Doug. Good afternoon. I’ll start with a review of the second quarter financial results. FFO, as adjusted, was approximately $100 million, or $0.35 per share during the second quarter of 2026. Go-forward portfolio centers NOI, excluding lease termination income, increased 3.8% in the second quarter of 2026 compared to the second quarter of 2025. With a strong second quarter of NOI growth, go-forward portfolio centers NOI has now increased 2.5% for the six-month period ended June 30, 2026, as compared to the same period in 2025.

We continue to expect go-forward portfolio centers NOI growth for the full year 2026 to increase at least 3% over 2025 and to accelerate meaningfully in 2027 and 2028 as the SNO pipeline tenants continue to open and begin paying rent. We have a high level of confidence in achieving the total SNO opportunity of approximately $140 million. The estimated annual contribution is $30 million in 2026, back-end weighted, $40 million to $45 million in 2027, and $45 million to $50 million in 2028. This represents a clear visible path to drive incremental growth.

Turning to the balance sheet, we are making strong progress on the balance sheet initiatives contained in our Path Forward plan. 2026 continues to be an incredibly productive year by the team in relation to our various financing activities. With respect to our equity capital markets activity, in May, we priced an upsized public offering of common stock at $21 per share, resulting in net proceeds of approximately $450 million. The use of proceeds were primarily to fund the acquisition of Annapolis Mall and related strategic leasing capital investments at Annapolis.

In June, we priced the public offering of common stock at $23.90 per share through forward sale agreements. The company did not initially receive any proceeds from the sale of shares of its common stock by the forward purchaser banks. We intend to use the future net proceeds to fund future acquisition opportunities.

Year to date in 2026, we have closed on a four-year loan extension through November 29 at our South Plains property, completed an amended and restated $900 million revolving credit facility, repaid the loan outstanding on Vintage Faire Mall, and closed on a new $115 million five-year mortgage loan at Deptford Mall.

With respect to our 29th Street property, the $76 million loan at the company’s pro rata share remains in default after its February maturity date. As we are currently in discussions with the lender on the terms of this loan, we do not have any additional commentary at this time.

We’re proactively addressing our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications, or if necessary, property give backs. We currently have approximately $1.2 billion in liquidity, including $900 million of capacity on our revolving line of credit. This excludes the net value of unsettled forward equity proceeds of approximately $372 million.

From a leverage perspective, net debt to adjusted EBITDA at the end of the second quarter was 7.3 times, which is almost a half turn lower than last quarter and over a one and a half turn lower than at the outset of the Path Forward plan. Inclusive of the unsettled forward equity proceeds, net debt to adjusted EBITDA is now below 7 times. Importantly, we’ve outlined our strategy to further reduce leverage to the 6 times plus or minus range.

We are executing on the dispositions we’ve outlined in our Path Forward plan. During the second quarter, we closed on the sale of our joint venture interest in West Acres for $1 million, plus the assumption of $13 million of debt at our share. To date, we have completed approximately $1.3 billion in total dispositions, representing about two-thirds of our initial disposition target. And the disclosures we’ve provided in our supplement include the summary of these asset dispositions. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine our portfolio.

We continue to expect to sell or give back $300 million to $400 million of additional assets, outparcels, and land by the end of this year. This would increase total dispositions to approximately $1.7 billion. Year to date, we have closed on about $30 million in total dispositions. And we now have approximately $100 million under contract to sell. We’ll provide further updates on our disposition activities as we progress through the year. Overall, we are making great progress on our Path Forward plan objectives to reduce leverage, refine the portfolio, and strengthen the balance sheet. With that, we’ll turn the call over to the operator.

(Operator Instructions) Andrew Real, Bank of America.

Hi. Good afternoon. Thanks for taking my question. Now that all 30 anchor replacements are committed and starting to roll on, maybe could you just talk about in some more detail sort of the second order effects on leasing and rent spreads at the rest of the center once that anchor opens. How might that compound over both the next few years and then even beyond 2028 when the renewal opportunity really accelerates?

I’ll take that, Andrew. You’re asking sort of the, if I get the question right, of our 30 anchors, sort of a net follow-on effect.

Correct

Yeah. Okay, great. There’s probably like three stages that it goes through. The first is when we sign an anchor deal and can announce it. It’s obviously not open yet. That already enables us to begin the re-leasing effort with getting strategic tenants that we can build upon on the inline. There’s the second phase, which is when the store opens. That obviously brings more energy.

Into those wings. Then you’ve got what I’d call the after effect two years later, when now you’ve got that anchor open, operating, and multiple tenants now also open and operating in that wing. If I were to use an example of the SCHEELS store at Chandler. That store in itself right now is drawing 3.1 visitors to its store, according to Placer.ai, in the last 12 months. It’s the number one SCHEELS in the system.

That’s enabled us to bring Fiori, Alo Yoga. Din Tai Fung now is coming onto the outside. Seafood City just opened, for instance, at Chandler. That’s a pretty exciting brand that just opened last week. SCHEELS is very unique. They draw tremendous volumes.

But if you looked at another important anchor tenant that we’ve talked a lot about, Dick’s House of Sport. We have about nine months operating history at freehold with them. According to our math, they’re drawing over 800,000 customers into the center from their store. We expect them to achieve a 1 million incremental customer run rate. That’s already not only helped tenants within that wing, but enabling the teams to continue to follow on more leasing.

So it’s not a simple answer, but what I’d say is we get the first bite when we’re able to announce the anchor. We get the second bite when they open, and by then we’ve got other tenants on the inline opening. Then when you look at it two years later, you get the full effect.

Vince Tabone, Green Street Advisors.

Hi, good afternoon. I understand acquisitions are lumpy and hard to predict, but how should we best think about overall acquisitions volumes going forward? Based on your comments, it seems like there’s a lot of interesting opportunities you’re underwriting. So just trying to get a sense of if there’s any thresholds in terms of risk mitigation or human capital or number of assets you recently acquired that are in some state of transition that you’d want to kind of limit in terms of the overall portfolio. Ultimately, yeah, just trying to see how many of these we should reasonably expect over the next 12-18 months.

Yeah. Okay, Vince. I’ll try to take that. You kind of try to pin me down on size, shape, and volume. Man, if I was in my triple net, I would be spewing out quarter by quarter what we could do. I was listening to some of my peers in the shopping center business talk about volumes.

I guess the way I’ll answer it is, I believe that this is a really unique opportunity to buy enclosed regional shopping centers. I think that we have a tremendous advantage having an integrated operating platform. We’ve got great national tenant relationships, and we got the money, and we don’t need mortgage debt, and we’ve got speed and certainty.

And to me, that should give you confidence, like, that enabled us to win Crabtree in a fully marketed deal. That enabled us to secure Annapolis, which was off-market because the seller wanted certainty and he wanted speed.

What I can tell you today is since I’ve been at this company, we have a robust and broad on and off-market set of opportunities, with stabilized yields in the 9% to 11% area. I’m not going to give you a number. The way I would think about the net effect to us and what makes it so exciting for me sitting at where we are right now, we’re at $1.90 and 6 times debt to EBITDA on the core plan.

If we invest that $372 million of forward equity that we have, 100% equity on an acquisition in the 9%-11% stabilized yield area, that’s going to generate about $0.02 to $0.04 incremental FFO accretion and lower our leverage 25 to 30 bps debt to EBITDA. Our debt to EBITDA would be down in the high five range, if we’re able to just deploy that $372.

So we’re going to be picky. We’re going to do the right thing. I probably got a lot of sellers listening to this call too, I don’t want to make it harder on myself, I think it’s a tremendously unique opportunity for us as a company today.

Craig Mailman, Citi.

Maybe not to pile on or try to pin you down even more, on acquisitions. You guys came back pretty quickly to the equity market and raised a decent chunk of forward capacity here. I guess from our standpoint, what’s the risk that that capital doesn’t get deployed by June of next year when you guys would have to settle it? Is that even a possibility given what you have in the pipeline today?

It’s not possible. I’m just going to tell you, Craig. It’s just not possible. The reason why we decided to pursue the forward equity. We have so many good things happening in terms of leasing. I’ll spend a little later in this call, talk about what we’re seeing on sort of late stage and mid-stage transformation and the impact it’s having. Literally, doing a forward equity is a no-brainer. We’ve got very large pipeline. We know that the net effect will take our debt EBITDA down into high fives, like 575, around that range. It’s going to be accretive. Yeah, we’re going to use that money, I’m telling you, way before June of next year. The biggest thing I was concerned about, just there’s a lot of macro things happening in the world right now.

Right now I’m very comfortable settling that forward equity somewhere between a nine and 11 stabilized yield. I kind of know the net effect of it, which will be positive for the business. That was kind of the logic of why we did it. It wasn’t like we had a deal ready to print. We just said, This is too good. We need to protect this, our plan.

Todd Thomas, KeyBanc Capital Markets.

Hi, thanks. I’ll switch over to operations for this. Dan, you reiterated the full year go forward NOI growth of at least 3% and reiterated also that you expect a meaningful acceleration in 2027 and 2028. Just in terms of the cadence from here following 3.8% this quarter, is there anything in the second half of the year that should create a headwind to go forward NOI growth? Do you see this period representing the inflection in growth with growth continuing to track higher from here on commencements?

Hey, Todd, this is Dan. Thanks for the question. Yes, we continue to expect at least 3% for the year, which based on second quarter was very strong at 3.8%. That brings us in at 2.5% year to date. That does imply 3.5% NOI growth at least for the second half of the year. We think maybe the fourth quarter based on the SNO contribution might be a little stronger than the third quarter, but you kind of think about the second half of the year as 3.5% plus for 2026.

As you noted, there’s a meaningful ramp from there. We did put out our Path Forward 3.0 at Nareit. The three-year NOI CAGR midpoint was 6.5% for years 2026 through 2028. If you just for simple math assume a 3% in 2026, that implies north of 8% NOI growth in 2027 and 2028. We’ve given you the SNO contribution by year in my prepared remarks. Again, 2028 is slightly higher than 2027. You can kind of think of 2028 as a little bit higher than 2027.

Over those two years, 8.25% sort of midpoint growth based on the 6.5% over the next three years.If you looked at sales June year-to-date for those four properties, it would be low double-digit increases versus last year compared to 3.7% for our go-forward average.

So the point I’m trying to make is we’re seeing tremendous lift when we get this right. If you looked at two examples of what I call mid-stage transformation, that’s Los Cerritos and Chandler. Those centers are seeing kind of mid-single-digit Placer numbers, so it’s in excess of our go-forward average. It’s mid-single-digit NOI growth year-to-date, compared to 2.5% for the go-forward average.

Sales are also mid-single-digit versus the 3.7%. Each of those centers have very unique things about them. Like Chandler, we just talked about. Seafood City just opened up. Zara is under construction. Din Tai Fung is under construction. Sephora, Alo, Wagyu House, all under construction.

At Los Cerritos, Dick’s House of Sport under construction. Flagship Zara under construction. Coach, Cider basically under construction, and other tenants that we haven’t announced yet. You’re going to see this follow-on effect. I think a question came in earlier from someone about the 30 anchors. If you look at the others, there’s 15 other centers that are either in the early to mid-stage transformation that are undergoing, that are going to start to contribute and follow on as we get into 2028.

You’ll see the effects roll into 2029, 2030. Doug talked about incrementally curating the portfolio. There’s a lot of power that comes from doing this. If you do it in the right centers with the right traders, with the right mix of anchors and inline coming on. The go-forward averages don’t tell the full story. That’s the point.

So we’ll begin to start to talk about this in the future quarters as we get more data. But very exciting from my seat, from what I’m seeing, because basically it’s working. We keep talking about same-center NOI going up. We’re seeing it real-time in those later stage assets. And now the mids starting to see it. There’ll be more to come, but it gives us a lot of confidence that this is working.

Floris Van Dijkum, Ladenburg Thalmann.

Hey, thanks, guys. I don’t want to belabor the capital markets questions and the investments. Hopefully, people have gotten a pretty good sense of the growth ahead. My question is, I guess, what percentage of your total NOI today is in your go-forward portfolio? Then maybe also a little bit of update on the % of your SNO pipeline that’s from redevelopment versus your core portfolio, please.

Yeah. Hey, Floris. I can take the first part of your question on the NOI contribution, and maybe Brad can chime in on the second part.

In terms of the NOI, I will refer you to our supplement, page seven, just to draw it out. We had NOI for all centers for the quarter of $211 million, and the go-forward centers represent $185 of that $211. For the six months ended June 30th, the NOI go-forward centers are about $360 relative to $400 for the total portfolio.

This is Brad. I’ll take the SNO contribution. Of the $124 million of SNO we have out of the $140 million total opportunity, the $124 roughly breaks down $20 million to our development pipeline of Scottsdale, Green Acres, and Flatiron. $20 million to what we call the redevelopments, which is all the anchors that we’re opening up. The remainder, the $84 million, is the rest of the leasing of the portfolio.

Haendel St. Juice, Mizuho.

Hey there, guys. I wanted to go back to the redevelopment capital spend, the curating, optimizing the portfolio. With your leasing goals now nearly complete, it seems there’s going to be a bit more of a shift towards some of that curating, optimizing portfolio. You have a number of anchor commitments.

So I guess I’m curious if you could share some color on maybe the scope of the opportunity for a redevelopment in front of you within the portfolio. How can we think about that on maybe an intermediate-term basis in terms of redevelopment spend and yields that you’re targeting? Thanks.

Yeah, thanks, Haendel. In terms of your question on redevelopment priorities, yeah, we’re actually going through that exercise right now as a team because there’s been so much focus on nailing down the 2028 plan with 1,000 units. There’s things that we haven’t touched that are going to really contribute. I’ll give you one example. At Broadway Plaza, we have the former Neiman Marcus anchor box that was going to originally be a Resto. That’s not going to happen anymore.

Thankfully, we actually have the opportunity to actually convert it to more inline opportunity. There is so much demand for tenant space at Broadway Plaza. We don’t have the space. That’s going to actually end up being more accretive than had we followed through on the Restoration Hardware opportunity.

At Scottsdale Fashion Square, we have probably one of the most valuable pieces of commercial real estate on the north parcel adjacent to the Apple store. We’re undergoing plans to evaluate that. Tysons has tremendous opportunity up by the Silver Diner, across from the west wing that we talked about. There’s others like that within the portfolio that we are really beginning to put pen to paper on how to do it, how much does it perform out? Does it add value? Does it add traffic? Is it going to enhance our position and continue to put that moat around our assets?

Greg McInnis, Scotiabank.

Great, thanks. Jack, you mentioned the deals that you’ve closed over the past, call it year and a half, Annapolis and Crabtree. One was marketed and one was off market. I’m just curious if you’re seeing any increased competition for prospective transactions. I got to imagine it’s a relatively limited buyer pool, but just given the operational intensity and the nature of how to run these malls, have you seen more capital interested chasing these deals? Just curious, any thoughts on that?

Yeah. Greg, you’re kind of asking quality of the 9.11 versus kind of our implied cap rate, if I got that right. I would say the things that we are evaluating are really, just going back, obviously assets in very strong trade areas, where we believe that if we can come up with a catalyst plan, whether it’s a leasing, anchor re-demise, can really take more share from that trade area. That’s first and foremost, starts with that.

Obviously, there’s got to be accretive, it’s got to be the right financing within our leverage targets. At the end of the day, we have a portfolio and the things that we’re looking at, we believe they’re either RA already, or if they’re not, we believe that employing our strategy can get it there. I’d say the quality of things that we are looking at are very solid. If that helps.

Michael Griffin, Evercore ISI.

Great, thanks. Jack, you mentioned the deals that you’ve closed over the past, call it year and a half, Annapolis and Crabtree. One was marketed and one was off market. I’m just curious if you’re seeing any increased competition for prospective transactions. I got to imagine it’s a relatively limited buyer pool, but just given the operational intensity and the nature of how to run these malls, have you seen more capital interested chasing these deals? Just curious, any thoughts on that?

From my standpoint, you’re talking about sort of the nature of the competition that we’re competing with. I think compared to the Crabtree opportunity, that was pretty robust bidding, and I think the players that we were able to win over, they’re still there. They’re still looking at the same things that we’re looking at. I think our cost of capital is tremendously different than when we were evaluating Crabtree. I think I would agree with your point that these are not commodity assets.

Anybody that wants to invest in this needs to be partnered with a really good operator. It’s all leasing. It all takes time. It all takes money. If you get it right, you get a Scottsdale Fashion Square that had an 18% sales increase year to date versus last year.

It’s phenomenal kind of stuff that happens if you can get this right. I would say when we were successful with Crabtree and Annapolis, I was doing that part-time with one of the asset managers. I got an EVP of acquisitions. He’s got a team, and we’ve got an unbelievable list of things that we’re evaluating right now compared to last year and the year before. Yeah, I feel like I’m sure it’s going to be competitive. I’m not thinking people are going to try to beat us and try to find things that make sense. But I also think that one advantage we have, if you were going to try to bring a Dick’s House of Sport onto your campus, we have probably the most of any company right now that I can think of in terms of commitments with them.

We have a very unique relationship with them where we can get really good insight as to, does this make sense? Will it make sense? If we do it, will you be there? If you are there, we can do some other things with it. I think that it creates more predictability as we’re underwriting these different opportunities versus, say, someone else that maybe only has done one of them or maybe two, or trying to get one done.

I think it’s very different. I’d also say one advantage we have is kind of like working with municipalities. The project we’re doing out of Flatiron in Broomfield in partnership with the City of Broomfield, that project is going to be something that our company’s going to be super proud of when we get done with that.

I would say that there are assets that are like that that can be transformed, and we’ll need to work with the local government in partnership to get those things over the goal line, potentially. Deals like Flatiron would not have worked were it not in partnership with the City of Broomfield. That’s going to be a project that’s not only financially super successful for us and super additive from a quality standpoint, but it’s something that their community and their tax authorities are going to be very proud of.

Omotayo Okusanya, Deutsche Bank.

Yes. Good afternoon, everyone. Just curious, with the recent increase in the 10-year and kind of all the concern about rates being higher for longer

Does that kind of change any of the calculus for you guys at this point in regards to capital allocation? Or is that just kind of less of an issue now, kind of given everything you’ve done with all the asset sales and the leveraging?

Dan, you want to trade Tayo's question about capital allocation and how we're thinking about it?

Yeah. I would say, Tayo, it’s not having any immediate effect. In terms of as we think about the refinancings within the plan, we did assume kind of a 6% all-in cost of financing on refinancing. Even with the rise in the five-year and the 10-year, spreads still are very constructive and really at all-time lows. I think that’s not currently impacting where we expect to be able to refinance the rest of the portfolio. In terms of broader capital allocation, not yet. It hasn’t had any impact on us.

I don’t know, Jack, you want to add anything to that?

No, I mean, I think you said it great. Obviously, with having that forward in place just completely protects our ability to get the balance sheet under six times debt to EBITDA. I mean, just straight out, I’ll tell you that. In 2028.

Ron Camden, Morgan Stanley.

Hey, great. Just, I guess, going back to some of the conversations in terms of the pipeline for sort of acquisitions. Obviously, you guys have done two successfully. Is there a way to sort of categorize what that potential pipeline could look like over the next three to five years? Other opportunities like this coming along, whether it’s reverse inquiry, just like to sort of categorize how often these deals can come about. Thanks.

All right, Ron. I mean, yeah, he’s trying to pin me down, if I tell you it’s robust, it’s the most stuff we have in our pipeline right now since I started. I’ll give you one piece. Half of our pipeline is on market, half is off market right now. You can call around and ask the brokers what they’re selling or what they think is selling, and half of our portfolio is directly with the seller. That I will tell you.

Mike Mueller, JPMorgan.

Yeah, hi. Thanks. I know you’re seeing more competition for acquisitions, you’re still talking about cap rates that are fairly high in the 9% to 11% range. Are you seeing any signs of cap rate compression? Are you seeing it come anytime soon? Do you think this window’s going to be open for a while?

Okay, Mike. Well, first, I’ll just tell you, personally, I hope it doesn’t compress, because I want to buy more. I think to me, I’d have you focus on debt yields. At the end of the day, debt yields are certainly compressing on the best A++ properties. You’ve seen that. I think it’s going to still be a while before debt yields really start to have an impact, in my opinion, on cap rates, broadly speaking, in the mall business. Any mall that requires any kind of elevate and transform effort to it, there’s going to be a limitation on the leverage advancement on the acquisition. Whoever wants to buy it is going to put up 40% equity maybe, 35%, 40%.

You’re going to have to write more checks for the next three years, and you hope your partner does the right thing and gets the math to work for you. I think as long as that dynamic stays in place, I think we’ll be able to sort of experience these kinds of yields we’re talking about. If there are more buyers like us or other shopping center companies that want to get into this, that might have an impact on cap rates. Right now, I’d say I haven’t seen it yet.

Alexander Goldfarb, Piper Sandler.

Hey, good evening down there. Jack, can you talk a little bit about, I haven’t heard you talk about ancillary income, sponsorship, and all that sort of overlay that the malls can have. Just sort of curious as you look at the Path Forward, if your focus right now is more on assembling the portfolio you want, and then once you’re done with the Path Forward, then going back and doing sort of the ancillary income overlay, or if it’s a dual track strategy.

Hey, Alex. Yeah. In terms of ancillary income, we haven’t missed a beat on it. One of the things that was a really exciting transaction was the PenFed Plaza transaction that we were able to enter in a partnership with down at Tysons. In that open plaza where Dick’s House of Sport is going to go and where the hotel, the main entrance of the property on that upper level. It’s branded PenFed Plaza. We’re looking at a branding opportunity in Scottsdale Fashion Square similar to that right now.

We’re kind of quote, in the market with it. I do think that there are other areas like that. That’s an example of ancillary income. We’re constantly, our team in business development are looking at those opportunities because we’ve got these centers that have real cachet.

They’re driving $14 million, $15 million annual customers through the doors, and they’re staying on the campus, enclosed campus, which is a pretty unique opportunity. I think in our best centers, that’s going to be more and more of an opportunity for us. There are a lot of other things, beyond just putting kiosks and the carts out there in the common area where we’re driving incremental revenue. Yeah, that’s definitely, we’re not going to wait till this gets there. As these centers are upgrading, there’s real opportunity to cross-sell into those non-real estate opportunities that generate NOI.

Caitlin Burrows, Goldman Sachs.

Hi, everyone. Maybe just two modeling points. Wondering if you could confirm, versus the goal of 88%-89% physical permanent occupancy, what it was as of Q2. Just on the management company side, it looks like revenues are down year over year, but the management company expenses are up. Just wondering if you could go through kind of what’s driving that, what we should assume going forward, if it’s impacted by acquisitions or something else.

Brad, do you want to take the first, and then Dan, take the second?

Yeah, sure. Thanks, Jack. We reported 95.5% lease occupancy for the go-forward portfolio.

Yeah,

Physical occupancy at the end of Q2 was 91%. Yeah, we still think we are definitely going to get to that 88%, 89%, physical permanent occupancy when we get these 1,000 tenants open.

Dan, do you want to take on the management company?

Yeah. On the management company revenues, they were down slightly in the second quarter relative to Q2 2025. The first quarter was up. Year to date, we are actually up almost $1.5 million versus 2025, and that is really from development fees are outside versus last year, and we would expect that to kind of continue in the back second half of 2026 as we complete Green Acres and Flatiron and sort of the last stages of Scottsdale in terms of the three major redevelopments.

On the expense side, we did see some increases year-over-year, and those are primarily attributable to some headcount and compensation. We built out our asset management team and obviously have built out the acquisitions team. There is a little bit of investments in technology and AI spend as well.

And there appear to be no -- go ahead, sir.

I want to thank everyone for coming on tonight and just to let you know that we are extremely excited about what we're seeing on the operational lift in terms of our transformation strategy, and also our pipeline of acquisition opportunities. So thank you for joining our call.

And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.