MAC - Earnings call transcript Q4 2017

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Operator

Good day and welcome to the Macerich Company Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jean Wood, Vice President of Investor Relations. Please go ahead.

Jean Wood

Thank you, everyone for joining us today on our fourth quarter 2017 earnings call.

Securities this deemed may of forward-looking Harbor the of that certain the course of of be Act may within Private the call, make management statements Safe XXXX. During Reform Litigation the meaning Actual of uncertainties results and variety risks, may due factors. a materially differ to other SEC statements. refer We our to detailed a press today's for you discussion and release filings of forward-looking X-K included supplemental to website non-GAAP most directly of Form are financial filed measures and release measures section the SEC, posted in of at are earnings Reconciliations GAAP the Investors which in with on comparable www.macerich.com. the Company's the

Joining With and and Chairman; Chief that, to turn I us and over Senior Tom President and Coppola, Officer; President Vice Perlmutter, would Tom. Robert like Executive today are call Financial Executive the Art Officer. O’Hern, to Operating CEO Vice Senior Chief

Thomas O’Hern

impact Thank results income of The result lower adverse year share new of for our revaluing were operating includes $X.XX reflected as of the of as continued to key corporate that tax end. evidenced due the operating you, assets rates by deferred solid most fourth strength FFO Congress a metrics. was that our the passed at Jean. quarter about quarter by tax $X.XX a the

not in the Street in Our guidance rate estimates factor tax did impact. that

due being SFAS year. was and actual for for than the and and other center buildings growth to being Excluding fourth $X.XX advertising rents $X same the in less for for $X.XX major income forecast, NOI being X.X%. lower the tenant revaluation termination million forecast, for the of than excluding quarter. The less reasons of were Same straight-line the the the income fees temporary quarter million the the year. in use was the to fourth range than the impact Lease quarter income $X.X mixed deferred tax forecast. was than rate last our quarter quarter compared up the Year-to-date, growth FFO center from including being XXX was results asset, Tysons the largely guidance less X.X%

full-year for the to million million the for down year. $XXX,XXX XXXX. $XX was modest the relatively last at fourth $XX However, quarter flat $X.X Bad quarter terminations debt million relatively in from of compared lease expense in were

Philadelphia. million During to share average sheet to renovated on loan $X.XX. a XX-year rate years In quarter, last balance cap the quarter. was X.XX%. There That The on sheet average the close was the of as basis and has XX%, of recently Plaza The X.XX%. fourth the million partner, the to fixed loan of activity have million we of initial debt five-year And expect the In $XXX quarter rate loan, rate arranged Along rate District program we in our Monica improve interest X.XX%. At $X.XX expanded an five-year is a release, $XXX no Place. very talk metrics about ratio X.XX% be times, X.X to which debt to we good fourth to December, $XXX about XX were and will place maturity market million X.X $XXX floating year-end. earnings our guidance we the interest rate interest with on Fashion we the XXXX gave Broadway in loan and of healthy rate the balance loan repurchase shape. Broadway rate been at continues expected I interest end, loan in a refinancing also the points initial night's shortly. at up has former Plaza. our of floating locked Santa on in on the financing We put closed range closed during coverage new is for which we February in closed of

the is are at comparable include terminations rate basis reflecting major up X.X%, to of average actuals. lease billion of LIBOR assumptions rate same million Some or no NOI to to no $XX compared our center There XXXX share dispositions on we’ve are approximately X% estimated to assumed of XXXXacquisitions the and XXXX XX The debt be and assumed guidance. in floating $X.X buybacks. points XXXX

place That quarter will will the for there and quarter, the property-based XX our of expect environment. past the to properties which have portfolio million. non-core in XX% XXXX, reduced We XX% third, approximately overhead size. $XX cost in benefit which take in occur a in balance of like it to downsizing over significant the turn fourth reduced severance XXXX cuts. have the first to sold million. the the fourth year to in FFO, Those quarter, split staff quarterly impact Accordingly, will second, the and now dispositions significantly XXXX the our cuts is first some in yield have in discuss approximately quarter costs and from third the be quarter quarter the we income I'd Bob and cuts second $XX The years the and in assets, $XX first will the our will and the producing retail in annual million, XX% first of quarter. corporate And staff few to subsequent we making we of the lower savings be expense are quarter of and statement severance

Robert Perlmutter

sales store the performance department Fourth with closures. began bankruptcies, of quarter average spreads. centers retailer leasing trends number Tom. with a owned balanced levels XXXX Thanks, with and and regarding a store specialty above more degree holiday more of leasing solid a store high retail improved community. generated an uncertainty, from floating bankruptcies of on resolution the and solid year season The ended specialty

were foot. was with the period for statistics. X.X% a previous start slightly the year. leases increase is than previous the $XX.XX leasing trailing Average This portfolio Let quarter. XX-month higher X.X% Trailing Average This the spreads the base is up during from me leasing per represents the within XX.X%. XX-month over rent This foot. prior square per rent $XX.XX year. square signed is

of leases a total $X.X square to million activity bringing were total quarter, the During the million during year of feet $X.X signed, the feet. square fourth

quarter, During the years. Cumbre, point XXX,XXX This XX,XXX square the feet the to a years. Life year X.X Athletic Zimmer feet were Children's Leasing average XX%. with with than QX leases year-over-year XX Rack the a Farms as Portfolio ended on basis. totaling point greater third for signed represented feet. year-over-year ShareWell the By square compared Nordstrom average decrease and new X.X% at This Lakewood signed increase sales Place, in at included XX,XXX Santa the This from The over new at Plaza La Time term increase fourth square the quarter levels tenants lease H&M. at Monica fourth and is fourth stores Bristol quarter on a a and quarter. at as foot, Burlington Museum of SanTan, Kings basis at locations well basis the square a three of under five the end two is $XXX to basis XX was per increased Biltmore,

the lower level stores. center often volume to productive fourth square these increase more year were feet, including in in XX-month present an same with square totaled quarter. basis, square the sales Bankruptcies of from the XXX,XXX We've bankruptcies feet XXX,XXX replace feet. retailers previous up XXX,XXX opportunity X.X%. was discussed On stronger trailing This XXXX, an before,

of November However, these Bureau, in the items. for XX% impact The December space retailers U.S. XXXX physical increase spent in over during According will over the X.X% stores. the increase XX% holiday period was and is an bankruptcies of sales sales amount on strongest previous released. of related number were the holiday $XXX income Census this $XXX and that a research previous is years. an as gifts This year. the indicated year. the ICSC billion, totaled Of average conducted season the shoppers a to

the improving, and burden, for vision will Pennsylvania, seems to an to XXXX XX% provided Retailer passage a iconic the relief position stand positive tax appears this through opening growth additional of an The of shoppers made tax the of to University advances and retailers in-store by contrast share I'll and retailers. individuals been of to stands while early strong Macerich outcome this bankruptcies and Plaza premier According to reform that and at reduced. the purchase to in retailers. system. asset have corporate Club’s region. retailer’s to as tax over addition it the turn of highlighting way reform continue the Country it when numerous combination border In XXXX Art. terminations and the Finally, season, years positive expand significantly rate City headwinds reform conclusion, and The planned law on the that center is announced Nordstrom written Club the the over in online for $XXX its the Country support beginning be as Taubman With stark recent benefit impact beginning tax in of store tax the much has XXXX. Last businesses. a year-end of tax XXXX. sentiment to holiday working temper Nordstrom of in solid Friday, weighed on is a that, XX provide to the billion of tax their articles There next to the relationship relocation estimated fear in for Kansas corporate from click-and-collect their

Arthur Coppola

to want Thanks annual some review for outlook metrics Bob. to of also. I the results the a bit, just basic little look Thanks and Tom. XXXX the

by of closures XXXX, amount schedule that our us to we our continue portfolio the to spite right to raised fact same year. volatility had spreads store is in has are year extending debt. but was schedule extend We by converting balance Obviously the $XXX X.X% over by XXXX, the For our just fixed calendar got up thing any memory. of from the great and an NOI our taking just solid we year unprecedented maturity impact for base up very Tenant our though hit On year mix our floating we sheet, long-term rate over maturity in to for a unexpected average over FFO and debt just of rate sales even a rate this recent We releasing in do X.X% rent $XXX. interest XX%. foot on at another had for environment. that measure center short-term of out the by an

During assets over we talk two $XXX of million $XXX just dispositions. sold XXXX, that our over $XX the We of another for million, and and properties money million office walk well. other total $XXX on assets We non-core million. sub-performing sold a we reinvested continue to for retail of

or Plaza during we would centers Nordstrom store our recycling announcement at As of made pointed take coming tenants going integrity anchor Sears to the are Country in the for to out, which the we Club new that whether improving good occupy progress the of that the year Bobby are it be store May terms be in of excited able place. this year to showcase as of to you very anchor Kings Plaza, April, is the that

and about Biltmore future. Life one near announce premier Athletic We through Life are the our in we Athletics very expect of adding very to with excited Time deal another centers Time

of they'll Athletic of Life is traffic center. point demographic. this another these health to for with This and visitors portfolio, that household at levels holistic average which the exactly day Time right that that a the Marcus. us conflict the not right will that athletics, facility, wellness another item not needs On times and amounts club another is other We in day anticipate and incomes of the like of year performing the at hours of would and the don't be retailers draw fitness properties comparable it's least gym a of our I this tremendous well members our that each point facility at household or out Nordstrom would the to Typical not draws the at the is strong are be per that parking retailers. at major average Neiman of income of XXX,XXX

very So excited we that. are about

is you you guidance positive as as tell you is into I that much The Our more hit I when say in bankruptcies XXXX point of own I optimistic cautiously cautiously can XXXX, optimistic. am entitlements reason am the get outlook from at cities, do rents look you major replacing with for XXXX I existing we you are and the and high XXXX. unexpected for to in are talking would our are commitments. which this XXXX, barrier-to-entry get in tenants like and business high, hard extremely for that where many so are even did assets tenants

switch thoughtful the balance mix replace XX that will curating You months; a turn just tenants is with of the takes complement six that and go about ahead vacancy and on center. don't replacement tenant when It to especially overnight. the someone the

said, the time. this in mood is Bobby at As point definitely better retailer

and read point out the the better. is that the – but retailers brighter generally public attend conference all January fact that's You from hear retailers or that's public outcome the are just retailers legacy mood not ICR, and the their reviews I than entire public universe, retail mood that company. of would the you from that the in retail is moving the that public conference companies that that much and retailers universe, generally the The from retailers company the away company

the balance From or the exists. of fastest company. brands understand any XX% putting much I XXXX terms any a other commerce of water, the particularly of XXXX of of than that their and digital totally will all talking faster most And first into a As native, native, private the about They're want and the for at vertically XX%. it's integrated retailer. them, That's in channel is these offline that day brands. top it's that digital of estimated the vertically to of retailers commerce toe digitally news digital end they in the makes is but that from about about you great good all other they stores. inning, at individual that This digitally growing grow share integrated market growth category look am to the companies

we forward coming I from legacy the concepts, going which the And them. from legacy three source. the more They the make are for that As better Several number hopefully are is is two or into a the where demand digital the fund to centers will and going that big exciting. expansions be years, to see look next come new question The of Tax the these working by are retailers are answer integrated retailers on demand fueled vibrant? Cuts mood. in to of offline is

at uses grow like As a source previous portfolio, you over a that year. draws few Santa draw Angeles at within There to by be center. native, brands year, any over see visitors by Museum note, most of to and of In a I’ve as growth year each would Children's not they Children's to integrating year look Museum vertically it, Children's the but it's talked isn't about the the The year the integrated year big are our we Children's I Place the it's this XXX,XXX to is digitally Santa year major and Santa going Museum minutes that of per currently Monica anticipate in going ago, grow And they'll going complementary market evidently Museum drive Los significantly more the city. another Monica. than under-served one-hour Monica.

our co-working a signed place lot at to experiential concepts feet as even the Square with find centers XX,XXX concepts their an entertainment of are way a is deal So just our think that a going operator centers, we a and into we the centers Scottsdale take to complementary with going to VR as to great exciting Fashion going well in be We think our center. fact, and a retail. and AR in make more it's them of today draw co-working to find retail,

I'm more questions. XXXX cautiously XXXX. optimistic I'm significantly XXXX, open up XXXX. about With that, I I'm to look it like of proud and as and to I’d So optimistic for

Operator

Jeff take We’ll first with Donnelly your Fargo. from [Operator Wells Instructions] question

Jeffrey Donnelly

afternoon, guys. Good

Arthur Coppola

Jeff. Hello,

Jeffrey Donnelly

Are just of we able for are ends maybe in cuts? versus overhead should a I this and of talk asset enhancing margin Hello. talked going of curious I'm the some margins about after forward How Actually it call just company? NOI be are the I’ll post adjusting about Tom, those those you the cuts it, those cuts and you prior looking to of sort basis sales if post think that for and sales, to – was where company up guys making. implemented you cuts guess the question about sales? the to

Thomas O’Hern

the property years Well you've margins over past level. fairly significantly Jeff, it has, few the at improved the seen

headcount property about a basis result through it gradually made overhead improved of to the improvement points will these points about the EBITDA XXX points. And as by show and dispositions in margin So This there basis and EBITDA actually primarily XXXX XXXX. that level, to be will reductions. XXX XXXX. We of should XXX our see we've improvement margins as up at entirety and an in by its basis our reduced our an we've and margin will we've from be

Jeffrey Donnelly

Thanks. Okay.

Thomas O’Hern

Thanks Jeff.

Operator

We'll Boenning. from from Dijkum hear next Floris van

Arthur Coppola

Good morning, Floris.

Floris van Dijkum

Hi, good is and partner you happening the that I are companies I malls there is had that mall guess preventing guess quarter. is sharing of right shared one I two what the one part for space value is investors with guess would – from or with – your concerned you question, in and are investors and with about I is, what the things number one, things prevent Broadway you a every What's share any updates of as what is board guess can range key believe give of to there Art. A mall And obviously investors? you the particular. Plaza your you on with your number these your morning, stake more one, that related that the I I the NAV and

Arthur Coppola

first Sure, answer part I'm I'm part. answer and to the going to not happy the second

number of as hired market six the so anticipate probably before size here, if of circle partner teasers likely the and because banker that interest they've set of institutional something investment It's strong but to just months we and one. you'll property investors. great out be they And a that Its print will probably is has part an first guess or their my would a a have it asset. – position. you The on the will is to our

major of as inappropriate, look it's and can there folks Unify have own Westfield to far A going share you value that As print happen XX mean mall and to then are not because proxy would it be opinion, an for portfolio, between people but I'm have the do your that and you an map. for of out all but and I looking didn't I at. now a there's transaction

I do answering it I and that's your you. of for hope can in question answers the terms So best that

Floris van Dijkum

thanks. Okay,

Operator

We’ll next move of from Schmidt America. to Craig Bank

Thomas O’Hern

Hi, Craig.

Craig Schmidt

Thanks. I opportunities more I they new into a you to digitally What looking of native, to touch towards of the wanted tenants are bit on for impact finding integrated trial retailers. open those of work to results guess looking the the terms might for the doing little bands. basis? some What they more lease? Are how yourself as vertically those in that you new and are

Thomas O’Hern

I think that’s Adam questions Craig.

Craig Schmidt

sorry an just of… overview I'm maybe

Arthur Coppola

you Look, answer one with they’re native. any that answer business brands answer then them. digitally one of there getting characteristics would common sorry. the I’ve with is, doing get no kind and my of way was if the These in them that there a was are makes

new and important of brand a digital resonates be beauty. of within all customer At has much the long-term the own their Okay, rate. stores acquired the these their brand to worlds, or cost much That's a have a apparel their is strategy. conversion is brand they to it stores that and all and They're that that selling or integrated appendage, are through were end they world. core their the lower people's much per vertically stuff. and whether a meaning that point their totally is higher channels. customers they're the to related day, they for They've offline value sector an offline created digital own a goods. thing – place with are they've of selling not understand online not And it They're not stores. born and shoes and in the supply reselling that's the other home have Having a chain huge entire customers But that their want say, brand. acquisition that brands the other higher

as exist So as we these brands to want to have are offline offline. But expertise and open where go they they they born landlords. digitally and doesn't their is stores, now help this where this go is and them

through ways. are different in things we the or helping the of helping finding in of getting much getting stores with entitled. build, of flexible so them them more lease helping terms actually sometimes number a a And them them contractors process We're walking

in creative year lease in the portfolio, of with us, for There's of at more it but for each the lease. a are the a part them. much definitely out for creative so doing exist place We short-term ultimately a our the that day of the might it end becomes leases while conventional once proves or

way there's them, bridge if we rule real gap. them this we're is, word rule do how business. of us no to and new it's would new helping get it So is to the the rule the only in to The and

Operator

the in from caller next go the to ahead. move Capital BMO Please Markets. queue Jeremy We’ll Metz

Jeremy Metz

guys. Hey

this increased some get You Bob, sense their were that better Question outlook for mean part then mood you moods stores where retailer talk to a improving for call? you and physical reform. talked of an what of this just focus can to [indiscernible] closing do And your bankruptcies post maybe reinvesting in for is last you relative about here? about on is the

Robert Perlmutter

So of comments. a couple

the As I previous in year. compares mentioned before with our that XXX,XXX XXXX XXX,XXX bankruptcies was in

definitely saw heavier XXX,XXX. actually anticipated we The a uptick. we fourth quarter had was than So an little at

the restructuring the to on many majority bankruptcies at signs, year, positive you saw and the liquidation, of want as of in resulting work of liquidating. as we opposed the the through think them beginning the I XXXX

the sign working as be doesn't there. it look We believe We looking when going ones they're XXXX. and We of there. in mean high think they're at as we the not still strength. are we a list, out at were major be some bankruptcies to are through just – some going XXXX, don't that's really of they So see the to

it terms to it into employees every their goes savings whether that guess their going whether or stores goes tax I to of or to into decision. these shareholders, own make of In a means digital it is online the their goes where from company We goes or physical store brick-and-mortar with and stores. the evidenced very it retailers. brands, growth do believe attention part their trajectory to needs of is profitable have that goes It's as more many these

So starting see see or effectively an complementary. see to them retailers better we don't venues. it either the is the we relationships understand being more for We and multiple use them

Jeremy Metz

Thanks guys.

Operator

We Nick from will UBS. hear from Yulico next

Nicholas Yulico

guess feel going better high have little kind you for you this bankruptcies assume this you're into year. similar year could lease but term of just that – how about I year. that this space should cautiously we fees to benefit guidance, we like the talked I should get Thanks. not and that with finally last gets being you back that year as guidance the a know being of optimistic occupancy And Art, through year? don't versus bit and implying occupancy specific And you of are some this releasing square

Arthur Coppola

business we this some is occupancy feel about have Look today leasing the on very one. benefit and but Company that occupancy me. I in XXXX. Everybody starts this more with we're in basis hard, gains believe a much in it's job that I positive relative could working year,

screen. a non-recurring radar another, they're are there, long-term way consistent manner. while they history are, a seem as One those in non-recurring what far or fees, under lease don't and they are – term As to there's my they recur they come in frankly

view. my that's So

Nicholas Yulico

Thanks.

Arthur Coppola

Thank you.

Operator

to next Goldfarb Sandler O'Neill. move We’ll Alexander from

Alexander Goldfarb

good Hi, morning.

Arthur Coppola

Good morning.

Alexander Goldfarb

Art. morning, Good

for question you. a Just

At members decided not for You're going a election, or bring your reelection. a coming of step member board to down one have to to have chance run the on. board

look the about I the retailers guys industry business, digital is and lot a talked at mean changing. you As you how

that As Company running in is as you member you Company a going perspective of look at a in for the particular anything the forward quality board new forward? you're looking there see

Arthur Coppola

what governance have of is going looking committee the be and looking for Yes. profile board We definitely to what nominating for. is the a

And and board a that regularly board. And have evaluating in the will committee great our of number the We governance near-term. the candidates – be over queue. have a will nominating this are we

and candidates. additions believe be have recent very board. we quality John most two that to to that Alschuler reason it's been on a every attract to to terrific join Our for And people attractive Hash Steve we're able the have board high going

Alexander Goldfarb

you. Thank

Arthur Coppola

you. Thank

Operator

Vincent Deutsche Bank Chao your has question. next from

Vincent Chao

want ins Tom, everyone. and just of your the the to comments go same-store fourth the some back to Hey, about outs in quarter. NOI

that and what a mentioned expected maybe it, Bobby really think same-store just maybe bit lease maybe and maybe numbers? mentioned higher I terminations terminations either than than number in being quantify heightened had impacted you of that Can higher quarter something fourth expected. fee in around to how of just or drove things color was on bankruptcies quarter? the mean full-year. just amount for which to the occupancy do with that You I thought little a then the XXX,XXX good that what the the the Can NOI you maybe some I give And

Thomas O’Hern

course, lease the we did I’ll more Well quarter. expected, have fees, which his bit but but comment let for causes affected of negotiating of adversely we in a second, than that the Bob term terms the vacancy

it So in one one and it is those. my case helped, in hurt close estimate on case offsetting to

expected. and The see as were tenant off, other was mentioned which advertising less fourth and temporary slower was quarter also was And not strong forecast timing the to last did use roughly compared relatively than had forecast on our year in income and that meet the revenue included last based building things that mostly actual we differences had Tysons we this off the that on year. and things was which I rent mixed assets lease from year's also primarily apartments office up the typically

Robert Perlmutter

of the basically In terminations a there were owned probably in significant lot but these with parents larger that publicity, One by settlements fourth brands two in which terms resources quarter. has of were were the larger terminations. resulted received two

issue the in probably the quarter it than a impact way, huge when quarter it's happened. fourth of fourth bankruptcies, XXXX a it probably more of the timing they of didn't because numbers in XXXX terms In is of

Vincent Chao

Thank Okay. you.

Operator

from Todd Thomas Markets. from KeyBanc We’ll hear next Capital

Arthur Coppola

Todd. Good morning,

Todd Thomas

that later thanks. that shareholder was you happened a research contemplating commented activity Hi, XX Good X-K your morning. not indicate the January he filed the and up context privatization provide will intention reported that board the published, some Can was seat a Ontario ask week no there the hoping then two events, the days and wanted of and about note sequence I stand that recently I by the less opening, meeting. a that could shareholder than day Ontario following Ontario series was same, Teachers representation? to on of some just later Art, an maintain is board light you annual indicating events on board an for on. to Teachers largest on upcoming there representing Teachers Bloomberg and Macerich saying following shed re-election you sole member

Arthur Coppola

that speak last we Look to not the comments the first papers so inherent view they all made as your in Well, question, the themselves. any as of to rumors don't on for board our press, hit relevant. our comments have rumors. far Those the a that's as seat, right about

company. way run run for valuable a put in had that. John between not As all public result we in Sullivan’s I of is disagreement decision Thank board what news and was and his any the by decision that far really that's the the out a the very was not to re-election The filed John and stand to you as what is for about we reelection, member you, next. as know to of us John X-K and news for not say positions we

Operator

to from Linda Barclays. Tsai next move We’ll

Linda Tsai

of of the about the in trend? SSNOI thinking in the So can the you in we that or some assume first be half strong are down be maybe cadence color weighed thinking the occupancies should how you how more closures SSNOI XXXX? Hi, in half? quarterly second about just Should

Arthur Coppola

everybody control quarter, it that's don't up from way and that's looking The in and week you basis going question there. quarter the that's NOI, and at center I because to sell give or every from going an are there try try one you things to I'll many our out can Tom, going I and and you answer the year We I'm at are things think that way, entire versus basis, think ahead wrong that not but annual the I preempt give about answer, I there read and every be an jump answer them. from to want it's on need too focusing just that view know basis, would do too quarterly things because other, one numbers it. your we about side look it can to look for best on a question one that's many way I'm that the encourage think the with for investor Tom. – the our and on answer the think to The it world, to to into happen quarterly highly right to a you I I every to we go you're XXX I but you the question. you But answer Tom. quarterly, away day same and about that understand for question. other get free and my and to encourage to it way you're by move guidance then at at and tell really as quarterly at away you things

Thomas O’Hern

be I of terribly me don't to think it would answer. prudent

It's the though on the FFO I split going the give preamble, middle first some low to of balance XX% and severance have is on revenues our FFO that of quarter, in the XX% seasonality that's because do will then be our is quarter then Given the the business quarter because we in the quarterly Thank for to third fourth at in the in year. you year and Linda. XX% the second you. the

Linda Tsai

Thanks.

Operator

SunTrust. next to Bin Ki move We’ll from Kim

Ki Bin Kim

have early compare Thanks. does Could gotten pace comment on you the of that renegotiations, lease I or to it how XXXX? better

Thomas O’Hern

this. take Ki I’ll try to Bin,

their like, more our that the fleets the bit the It's economics bringing comfortable that's we that legacy sense reflecting feeling a in the consistency. mentioned retailers renewals. reflecting in but not more would is are is it business larger retailers, I As with always and with little

to talk moving open seem to to be and with predictability So bit seem like The we're stores the dealing towards how a it more close there's mandates about does stores new to to keep tenants. try together plans. little working

does on wouldn't renewals. robust it say improving means, be So I but the it's any by seem to

Ki Bin Kim

that the Okay, and that income? caused rental the is blips renewals of or SFAS activity occupancy decrease and XXX

Arthur Coppola

it asset due I was the out you and down in so that the that building books a a and eliminated XXX Macy's the reverse and went The primarily item. we on main reason non-recurring decrease XXX to therefore was purchased

Ki Bin Kim

Thank Okay. you.

Operator

from Evercore from We'll hear ISI. Steve next Sakwa

Steve Sakwa

couple is new talked Scottsdale. Monica morning. Pavillion about for comments if talk of of and of Place, how around provide I looking are just returns, on some kind about wondering process the and of the Thanks. And returns sort other could just those those the questions some the co-working talked there Good and you on you sale that's about of could there? deals at of compare at. any you the are Santa to then kind Westside this which on I'm museum deal guess a going uses, you the

Arthur Coppola

Sure. question. we the was level museum to property. might about what the $XX for given The space. rents you particular And actually a that people generate the within we the in third we actually co-working expected net because Monica have to you And that the were our of able space asked This a be something it's some is is that ADR co-working happened, cold legitimate it well of approached would level, put was operation XX,XXX pretty we third did museum, of Santa into that Place glad on that and good portfolio, I'm going our space from feet. say that actually which it have we some decided just – profitable nice wouldn't look on and us. the up got XXX,XXX experience. They've kids brought programs and cultural exchange, dizziness We music interesting, word and decided, public co-working been brought And got movement, traffic completely interactive interactive offered there is the actually the experiential them. operation. to childhood museum talked we in have the have would moms to cross it This and been actually and rent it arts, education. classes. a comparable It's a they a would This early would us, have third level, with does is They've visitors an experiential interactive. totally disservice. – average but

opportunities the the these So co-working the you would where in co-working to doing, of zip and the space urban again profile I'm retail ADRs really And are XX-yard those. in line the We're mall. idea. above and The that. the bullish have not on of that use likes that a of the our pure worker first locations a analysis rent I'm bullish on type of very work level of on that we're it's from we our average within type seeing ADRs in of code portfolio that early average get this a

and great property of I these a use drives thing – are then brings more of just have good rigor in in this it’s the going complementary return a financial So traffic a get and new more our and stand financial is you there to that to if more portfolio. be world and look customer to And this think there a do. can each a that return, of to a have but

country I Museums the Children’s to get and the I is the center The portfolio did Director centers in Children's of other for and brilliant these the met Our town town essentially wants shopping don’t contact into that reasons. shopping put said to a whatever me a is be there. she around Museum, day or think to all center city It's Museums say being of be a because it's dozen how squares. her with what's and half you Children’s we to going have

news retail, of to they're are the quite all good use, use, a developing side Dave it's test other us. of steroids and shortage but on to experiential look companies no Time a Cheese stand today generators. experience the think don't is, with Disneyland, doesn't coming. interesting put Chuck but on just space, the Life the talking they're a traffic That about look yesterday, very darn of and bringing Athletics. financial different and pretty and the ideas, right about were perfect exciting, any And brings I on complimentary are And that the customer of and they So approach Busters & and it's lot and E. have a there's and entertainment just as traffic test, was discipline good them them traffic the it's they

properties. this they’re great. and thing era type the coming more And these of in them be to new town of the going think of you're square going it's that to see more I So to

I gave gave Thank answers. and you question you So you. one four

Next.

Operator

Citi. We’ll McElroy move next Christy to from

Michael Bilerman

Hey. back Art, It’s decades Cadillac Michael Bilerman now. two your Christy. here Ontario relationship for goes with and over Teachers

it's between board back stock position? largest Can us swapping the share onto to what almost is two close goes and asset two a been stepping I see reason you assets it's So to very invited to for for our few which board them a a opportunity long with the level And And your XX least some years the move sit a you enterprise at to that XX% the on and deal but recognize because disagreement, John can XX% have very and manage multi-billion a ago dollar what the the there's now relationship was that in built relinquish close it as you with and organizations the the between did the really is time no and remember in relationship level. do you shareholder. an rationale he effectively at us rationale off you provided rare an shareholder I very a up the stake November firms. you arguably of when him said share least from opportunity behind you to at at time

Arthur Coppola

of the operator I John CEO a yes, first Ontario share very Teachers Fairview Cadillac in and to XX important with for Fairview have largest years. the operator very all quality highest me Cadillac Canada. relationship. let is and enjoyed say, Well It's relationship now Macerich Cadillac the of Fairview. And and continue a best good –

every week that's literally forth in back and practices best share ongoing. to continue We

two relationship and Ontario which the Macerich So good. by Cadillac is extremely the between is companies,

re-election, cannot did he As give decided reason. not a for reason not speak I for to and him that the to he specific me stand

Michael Bilerman

or…? with intention And replace any independent the is to him

Arthur Coppola

Yes, absolutely. Yes, definitely.

that south their at and teams, Macerich’s number tenants of we close that north, but Director, we're their a marketing pulse best again, him they and really focused being have John stopped Director in having We with everyday a sent good leasing forth we tenants And as practices candidates operations will hasn't very share a that the doesn't doing, teams, from we'll continue. are not back preclude look, and a miss how on sent on.

Michael Bilerman

vote board's agreement agreement the does I voting the since was what shares And for above – he in can't recommendation to remember his line have that XX.X% stake? the everything with with the

Arthur Coppola

public top you a record. matter of that of Tom my if – don't all head. the of off I That's recall

Thomas O’Hern

I just excess in XX%. think of it's

Michael Bilerman

Okay. you. Thank

Arthur Coppola

It's a matter of public record.

It's I a matter So will of get and we public that. you on get the record checked record. public to back

way. that Let's answer the question

Michael Bilerman

you. Thank Okay.

Arthur Coppola

Mike. Thanks

Operator

We'll hear next Jefferies. from from Tayo Okusanya

Omotayo Okusanya

mainly around question My afternoon. focused good structure. yes, capital Hi, is

worldwide your discount Just to by recently when generally XQ paper big isn’t given any plan trying released NAV, to understand XXXX the and leases new and this why a your much buybacks that that? why fund longer were no as of in to in there no

Arthur Coppola

and down in But our more I than our the our absolutely say it's value it's for do retaining we a would our answered little redeployment creating can of to a of we even our in It the – live our them or that we in properties dispositions properties other probably I it's if us that look that that that with question that view, we've perception into buy. buybacks because reserving the redevelopment dropping is uncertain value is do. great on else densification think a had really list opportunities from the for anything nothing the times great a activities I portfolio, other and capital last more. call in given anything share activity dropped priority of in bit saw has

XXXX and in I last see call. that buybacks timeframe don't the the I share strongly So in signal

Omotayo Okusanya

leases? duration use Gotcha, funded a longer and the paper five to then year

Thomas O’Hern

and Monica but a the of Well, of that in financing long pieces that that like effects on finance has ourselves under example, couple we didn't moving being leverage long-term still Plaza Broadway unique kind there's today was a of XX been there find years, Place, asset. in want of case years and lot a to our situation. particular very Most Santa for

than third Just where that a on In project and going those. situation on long-term. we pre-funded as example go typically of are construction talked loan, is a which short-term there's financing do about we with that's the rare the in other decided few relatively essentially case level changes to is Philadelphia a go the construction Children's that Museum a and short-term on so was

Arthur Coppola

has much the a On Broadway longer other hand term.

Thomas O’Hern

Broadway is loan. a XX-year

Arthur Coppola

much long, Santa where the I to are years Monica need will in and silly just cycle at felt upside but would was up to it have that, that really it so be was to – done gone tie that in look the have you over normally three XX Monica measure you have more. saw and years the for next we loved we the landlords would near-term NOI Santa

Omotayo Okusanya

Okay, great.

Arthur Coppola

two. the to of And schedules maturity that's trying ladder we’re part our also

Omotayo Okusanya

one of same-store just where versus really again XXXX, other about XXXX resulting back end going to my trying just second slowdown understand occupancy in in that could many slight just XXXX? then slowdown guys to NOI in Gotcha. in versus And comfortable kind are question factors that, you XXXX feeling did the if XXXX up of the

Arthur Coppola

was XXXX, It cautiously was choppy I in incident I’m re-merchandise takes we store of six optimistic closures. spaces a intelligently centers tremendous to these I'm and see. which so amount like and And re-curate months know. great we'll to cautiously from XX about we're would say in all happened said, XXXX Look this optimistic an waters you late if about that the today. that reasons for we've Like talked

Omotayo Okusanya

Okay, all right. Thank you.

Arthur Coppola

Thank you.

Operator

Your next Hill Rich Morgan will from Stanley. come question from

Richard Hill

and Hey, question. good Thanks morning. call my for taking

that hoping us robust XXXX? with year-over-year helping that sales quickly declined over I commentary XQ into in could the XX% a Just we've a second. – I of bit little numbers like there in rents just the of for that get looks heard some XQ, time want maybe say was you It spend around the to back reconcile that were

Thomas O’Hern

Yes, answer rents must part of big get I’ll tenants that. percentage well. not as of base we to Bob relevant Rich. total few rents. of rent We and in I’ll percentage The take that or let rent just have very terribly prefer wise. – percentage part our percentage is a from significant

$XX is for If for you rents only $XXX million. at the percentage the year rents look at million total year

those the being leases we rent rent higher a significant, So paying of a tenants it's and move position relatively base out leases into percentage we're as expire significant and is what percentage rent. few and tenant are to at renew paying actually will in of in able position very in hope rents,

Robert Perlmutter

Tom Yes, lot said productive either Rich, in base try stores thing. the up are times, wanting try to early would rent case they percentage add their presentation the within we the renewal of their expand is as and or to only to center which specialty and wind the a I shopping we more these thing same into upgrade roll the new at right that

tenants reflects generating some rent. probably of percentage productive or part expansions the down of early renewal either So going at that are it expiration the

Richard Hill

Got it. I'll stop the there. Thanks for color.

Arthur Coppola

Okay.

more. time I one think get for we'll

Operator

come Michael will JPMorgan. from question last Mueller Your from

Michael Mueller

Hi.

Thomas O’Hern

Hey, Mike.

Michael Mueller

bogie just of down your some business a of on materialize year? Tom, temp about the function being a put having just comments being was high normal didn't where fourth color get Was or quarter, that? just this case you can a on revenues of ad ad it you and it leasing course the or that more didn't pretty tenant down

Arthur Coppola

on handheld revenue and that there are example moving on billboards I'm people to Bob sure the and this, more of signage. case devices prior for advertising but shift, than little history the and opinion a and an year, maybe on base that in maybe Well we is rather was have based Art

Robert Perlmutter

Yes.

that media I get at happens of of think things and had the a year fell can end the the a fairly quickly. impact. deals make sort of out some business business in we that couple And hoped is a of unfortunately to reasonable those

and that's a but receiving quickly, terms decisions are of not it's XX-year lease long fairly something as it's made also very It's as quickly revenue. lead in not item. So predictable presented a

Michael Mueller

Got it. about tenants? what the temp And

Robert Perlmutter

were something the year Temp to vacancies tenants, know is add not going to that to that again, don't we maximize that have the I I that budget budget try can side. to our I in know that. we I color. can Clearly did that pushed any offer any during and hit it color knowing And

Michael Mueller

it. Got

Okay. Thank End you. Q&A of

Arthur Coppola

we to you, to today Thank right. and appreciate with communicating All you Thank in us forward the all. joining and look We come. very you you weeks months much.

Operator

participation. teleconference. today's for all conclude We does you That thank your

The Macerich Company (MAC) 6 Feb 182017 Q4 Earnings call transcript