Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you be more specific on some key objectives for the next year when you presented it to the Board?
A: Jackson Hsieh, President, CEO & Director of Macerich Co, outlined that the key objectives include reducing leverage to the low 6x debt-to-EBITDA range, focusing on asset disposals or givebacks, and increasing NOI which accounts for about 60 basis points of reduction in the debt-to-EBITDA ratio. These objectives are part of a strategic plan expected to take 3 to 4 years, with specific sequencing for asset disposals and givebacks.
Q: How much of the current strategic plan was in place when you joined versus your view on what needed to be done here?
A: Jackson Hsieh, President, CEO & Director of Macerich Co, mentioned that the strategic plan started from his first day, focusing on a mission statement and corporate values. He emphasized transforming the business approach to focus on hospitality, enhancing merchandise mix, and improving customer experience at their properties.
Q: Thinking about the assets you're looking to sell and not give back, are those generally in the Eddie category?
A: Jackson Hsieh explained that the assets targeted for sale include a mix of properties, some of which may not be strategic long-term but have potential for capital redeployment. This includes assets with manageable debt and those that are not central to the company's long-term strategy.
Q: Given where rates are today, how realistic is the goal on dispositions today?
A: Jackson Hsieh discussed the company's assumption of a base rate of 6.5% over the next 3 years for planning purposes. He highlighted that the assets considered for disposition include those with attractive below-market financing and unencumbered properties, as well as monetizable outparcels.
Q: How do you think about the backfilling of Express stores' spaces?
A: Douglas J. Healey, Senior EVP & Head of Leasing at Macerich Co, noted that the spaces being vacated by Express are located in some of their best properties, offering an opportunity to refresh and diversify these centers. The focus is on replacing underperforming tenants with new, exciting options that can enhance the overall property.
Q: What was Express paying, and what is the mark-to-market opportunity when these spaces get released?
A: Scott W. Kingsmore, Senior EVP, CFO & Treasurer of Macerich Co, chose not to specify the rents paid by Express but indicated that the spaces are high-quality and located in a strong leasing environment, suggesting a positive outlook for re-leasing these spaces.
Q: What indicators should investors look at to assess the success of the strategies mentioned to rightsize the portfolio?
A: Jackson Hsieh pointed to achieving an FFO of around $1.80 per share and a leverage level in the low 6x range in 3 to 4 years as indicators of success. He also highlighted the importance of improving NOI, particularly in properties on the Eastern Seaboard that are currently underperforming.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
