MAC - NYSE

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2025 Macerich Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Samantha Greening, Assistant Vice President, Director of Investor Relations.

Thank you for joining us on our first quarter 2025 earnings call. During this call, we will be making 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 and future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's press release and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8K with the SEC, which was posted in the Investors section of the company's website at macerich.com. Joining us today are Jack Hsieh, 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, SVP of Portfolio Management. And with that, I turn the call over to Jack.

Thank you, Samantha, and good afternoon. We're pleased to discuss today the significant progress we continue to make in executing on our path forward plan. I want to make sure everyone comes away with three main themes from this call. First, Macerich is a much better informed, aligned and operationally focused company than ever before. Second, we are ahead of schedule on our leasing progress targets. This gives us a greater line of sight and confidence into the key operational, financial and deleveraging metrics embedded in our path forward plan. And third, this leasing progress demonstrates how close we are to our major inflection point in mid-2026, the point that indicates we would be substantially complete with the plan. When I set out the path forward plan in July of 2024, the goal was to create a new Macerich. That required transforming the company by simplifying the business, improving operational performance and reducing leverage. We put a mission statement in place to own and operate thriving retail centers that bring our communities together and create long term value for our shareholders, partners and customers. We instilled new corporate values of excellence, empowerment, integrity, optimism, relationships and fun. Based on the results I've seen to date, I can attest to how well this mission and the corporate values have been embraced throughout the company. I also put in place a new structure that I talked about last quarter to streamline all our permanent, specialty and department store leasing teams under one leadership and reporting structure, make our asset management team a stand-alone group and place our property operations, marketing and development under a new leadership structure. To ensure that these teams could collaborate seamlessly with real time tenant data and leverage the five year ARGUS models that the asset and portfolio management teams created for each property. We implemented a leasing dashboard that we refer to internally as the leasing speedometer. This tool and other technology enhancements we've implemented drive every leasing and capital allocation decision at our properties. Everyone at Macerich is fully aligned on what we're doing. Over the past six to nine months, we have derisked the path forward plan by consolidating joint ventures, issuing equity, completing our refinancings and executing on dispositions. Today, I'll talk about the data we have now that gives me the confidence that we're on track to deliver our 2028 leverage and earnings metrics. This data shows that we're also on track with the major milestones and catalysts that can be expected to help us reach our mid-2026 inflection point. Let's speak to leasing first. Leasing is a piece of the plan that best tracks the progress on hitting our 2028 targets. It is what I am most focused on today at Macerich. I believe that it is the most accurate predictor of Macerich’s future success. I'm pleased to say that we are ahead of schedule on all our leasing efforts. I noted last quarter that we are targeting an average of 4 million square feet of leasing in 2025 and 2026. During the first quarter, we signed 2.6 million square feet of leases, including 2.3 million square feet of renewals. As Doug will describe in a moment, that's more than double the leases signed in the first quarter a year ago. Between commitments and LOIs, we are nearly done with our 2025 lease expirations. We are now well into 2026 lease expirations. We are also laser focused on a higher percentage of new lease deals versus renewals in our annual mix of business, as new deals will be the primary driver of higher spreads and incremental revenue to hit our NOI goal. We are tracking our progress on this front with two metrics- the new deal completion percentage that we track internally on our leasing speedometer and our SNO pipeline. As laid out in our last quarter earnings call, our initial goal on new deals was 50% progress by mid-2025 and seventy percent by year-end 2025. Hitting the 70% goal by year-end would put us on track for the mid-80% range by mid-2026. Reaching that goal also puts us on track for our ultimate opportunity to achieve the $130 million in cumulative SNO potential that I outlined last quarter. Mid-2026 leasing goal would effectively complete the new leasing goal outlined in our original plan. As I noted earlier, we are ahead of this plan. As of last quarter, our leasing speedometer was at 39%. I'm pleased to report that we are currently at 60% for new deal completion and have a large pipeline of LOIs, which gives us tremendous confidence in hitting the 70% mark by year end. Last quarter, our SNO pipeline was $66 million That has now grown on a cumulative basis to $80 million as of today, which puts us on track to achieve a total and cumulative SNO pipeline of $100 million by year end. Doug will provide additional details on our SNO pipeline shortly. While we're on the topic of leasing, I want to address the inevitable question on tariffs and any impact we're seeing. I'll echo what many CEOs have already said this quarter that we've seen minimal impact to date across the portfolio. We've had three strong executive leasing committees since early April and have touched base with all retailers with leases out, and virtually all are moving forward. In addition, we're in contact with existing tenants, and so far, there is no material effect on their business or inventories. We'll obviously continue to monitor these discussions and developments in real time. For our target of $2 billion of asset sales and loan givebacks, we continue to execute on targeted dispositions, which strengthen the balance sheet, and I'm pleased with the substantial progress made by the team. Dan will provide an update on these activities shortly. We're approaching the balance of 2025 with a significant amount of confidence in the outcome and timing of our plan as well as the clear conviction that we have derisked the elements of the path forward plan. This conviction is based on the fact that we have simplified the business by consolidating JVs, which also enabled us to execute the refinancing on Washington Square. Dispositions have reached a total of $11 billion. We completed the equity raise ahead of plan, raising $500 million. Refinancings are ahead of plan for $1 billion in total. We've locked in lease escalations that are a massive part of the expected lift. And lastly, efforts to secure new leases are well ahead of plan. All we have remaining to achieve the plan is $50 million of SNO and completion of the remaining mall dispositions and givebacks as well as the outparcel sales. I'm confident our leasing and asset management teams can deliver on these two remaining pieces. In conclusion, we have exceptional talent here at Macerich, and I'm pleased to see how well the team is collaborating using the tools and technology we've implemented. We are ahead of plan and have proven that we have the right process, strategies and team in place with great retail centers that can drive rental rates with strong permanent occupancy. With that, I'll turn the call over to Doug.

Thanks, Jack. Portfolio sales at the end of the first quarter were $837 per square foot, which is flat when compared to the fourth quarter 2024. However, when you exclude our Eddy properties, sales were $928 per square foot, which is up $13 compared to the last quarter. Traffic for the year is up 2% when compared to the same period in 2024. Occupancy in the first quarter was 92.6%, down from 94.1% when compared to the fourth quarter of 2024. Most of this decline is due to the decrease in temporary holiday stores, which closed at the end of 2024 or during the first quarter 2025, as well as transitioning Fashion District Philadelphia from a development project back into same center occupancy. Portfolio occupancy, excluding our Eddy properties, was 95.2% for the quarter compared to 95.8% for the fourth quarter of 2024. Trailing 12 month leasing spreads as of March 31, 2025, were 10.9% versus 8.8% last quarter. This comprised of 22% spreads on new deals and 7% spreads on renewals. And this now represents 14 consecutive quarters of positive leasing spreads. Looking at the leasing spreads on a same space basis, spreads from new deals were 37.4% and spreads from renewals were 1.3%. In the first quarter, we opened 177,000 square feet of new stores, while signing 320 leases for 2.6 million square feet. In terms of these lease signings, this represents 50% more leases and 160% more square footage than we signed in the first quarter of 2024. And just looking at new deals, it's almost 70% more leases and 180% more square footage than first quarter 2024. The best brands remain very active and continue to take advantage of great space and centers. To that end, in the first quarter, we signed two flagship stores at Tysons Corner Center, a 45,000 square foot

Thanks, Doug, and good afternoon. I'll start with a review of first quarter financial results. FFO excluding financing expense in connection with Chandler Freehold accrued default interest expense and loss on non-real estate investments was approximately $87 million or $0.33 per share during the first quarter of 2025 as compared to approximately $75 million or $0.33 per share for the first quarter of 2024. The primary driver of the $12 million increase in nominal FFO is higher leasing revenues, including from the net impact of JV interest acquisitions and dispositions activity, which more than offset increases in operating expenses and interest expense. I would like to highlight the following items included in our FFO adjusted for the quarter. Number one, $9 million of interest expense relates to the amortization of debt mark to market resulting from our various JV interest acquisitions. This non-cash expense is included in interest expense. Number two, $2 million of severance expense is included in management company's operating expenses. And number three, $6 million of legal claims net settlement income at one of our properties related to a construction design defect matter. We believe aggregate proceeds recovered are more than adequate to cover our proposed solution. This $6 million is nonrecurring in nature and is included in other income. Same center NOI, excluding lease termination income, increased 0.9% in the first quarter of 2025 compared to the first quarter of 2024. Excluding Eddy assets, same center NOI increased 2.4% year-over-year. Turning to the balance sheet. During the first quarter, we have made good progress on our path forward plan. We closed on a new $340 million 10 year mortgage loan on Washington Square at an attractive fixed interest rate of 5.58%. We used a portion of the net proceeds to repay the remaining first mortgage on Flatiron Crossing, which was approximately $72 million at our share and to repay the balance outstanding on our line of credit, which was $110 million. Flatiron was a 2025 maturity and inclusive of the $7.5 million mezz loan in Flatiron that we paid off earlier in the quarter carried an interest rate of just north of 9%. Flatiron is now unencumbered. For the balance of 2025, we have only one remaining maturing loan in November for approximately $200 million And we'll continue to proactively address our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or loan givebacks. We currently have approximately $995 million of liquidity, including $650 million of capacity on our revolving line of credit. From a leverage perspective, net debt to EBITDA at the end of the first quarter was 7.9 times, which is almost a full turn lower than at the outset of the path forward plan. And importantly, we've outlined our strategy to further reduce leverage to the low to mid six times range over the next couple of years. We continue to make substantial progress in executing on planned dispositions as part of the path forward plan. In March, we closed on the sale of Wilton Mall for $25 million. In April, we closed on the sale of South Park for $11 million. Both assets were unencumbered. We are currently under contract to sell Lakewood, which is expected to close in the second half of 2025, subject to customary closing conditions. We expect net proceeds to Macerich of approximately $5 million above the debt balance outstanding. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine our portfolio. With respect to our bucket of disposition outparcels, freestanding retail, non-enclosed malls and land, we have also made considerable progress toward our 2025 goal of $100 million to $150 million in total sales for the year. During the first quarter, we closed on $7 million at our share of land sales. In April, at SanTan Village, we closed on the sale of vacant lots for $25 million at our share and three outparcel assets for $7 million at our share. And I'm very pleased to report that we currently have approximately $17 million of additional land sales and approximately $21 million of additional outparcel sales under contract, which are expected to close in the second half of 2025 subject to customary closing conditions. This brings us to $77 million sold or under contract against our $100 million to $150 million target for 2025. To recap on the path forward plan's significant progress to date on the three key pillars to reduce leverage. One, Jack and Doug provided an update on the successful leasing progress to date that is critical component of delivering on the NOI growth component of the plan. Two, we achieved the equity issuance component of the plan in the fourth quarter of 2024. And three, we have made substantial progress on the sales and give back component of the plan and have identified a clear path to achieving our $2 billion disposition target. To date, we have completed almost $800 million and as you will see in the incremental disclosure we've provided in our supplement, This includes Country Club Plaza, Biltmore, The Oaks, Southridge, Wilton Mall and South Park, all of which are closed. Santa Monica Place, in which the loan encumbering this property is in default and then Atlas Park, is currently being marketed for sale. The sale of Lakewood, which is now under contract, would increase our sales completed total to just over $1.1 billion. And then we have identified internally several additional assets totaling up to $400 million for sale or give back over the next one to two years. The remaining dispositions in our plan represent the sale of outparcels, freestanding retail, non-enclosed mall assets and land. We continue to expect to be substantially complete on this last bucket of the disposition program by the end of 2026. We'll provide further updates on these sales as we progress through the year. In conclusion, 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 back over to the operator.

Thank you. And our first question will come from Ki Bin Kim with Truist.

Thank you. Good morning and congratulations on a great quarter. So first question, I know this answer might be a little bit different and you touched on the customer reactions and the trade tariffs. But with the news from this weekend, do you think there's any potential upside on leasing going forward?

Let me talk about what we were seeing during the tariff. We did not see a lot of pullback. In fact, a couple of weeks ago, we had our Board meeting. Prior to that, we contacted every one of our 40 national rent paying tenants. And really, none of them was pulling back on open to buys. They were all honoring their leases out or their fully executed leases. Then we actually looked at every lease we had out for signature, contacted every retailer and there was only a handful that were pulling back. So we haven't seen a lot. Therefore, I don't think there's really any change in the upside. I mean the retailer sentiment is strong. You can see it in our leasing metrics, what we signed, what we approved in ELC and then most importantly, what's currently in our pipeline.

And on the SNO pipeline of $80 million that's a cumulative number, but can you provide what is net incremental that we can expect when we model?

So the $80 million is incremental over the revenue being generated in the spaces from 2024. So that is our cumulative total that we expect to see in our model through 2028 and $25 million of that will be realized in 2025 and $6 million of it was realized in Q1.

And the next question will come from Craig Mailman with Citi. Your line is open.

You mentioned a couple of times that you're ahead of plan here on the leasing side of things and you're doing well on the sales and givebacks. Just kind of curious as you look at what you're spending on the leases to get them up and running on the CapEx side. Is that trending ahead? And then also just given the execution here, when do you guys think you'd reinstate giving guidance?

On the spend, I think we talked about on spaces under 10,000 square feet, it's basically north of one times annual rent, 1.2 to 1.4 times in that range. Obviously, for anchor deals, anchor deals are more expensive. We have 26 anchor deals that we believe will come online in 2028, 17 of the 26 deals are already committed. There's either leases signed or leases out. We've another six LOIs and three are prospecting. I would say, generally, as we think about capital, the plan is probably slightly more capital than initially envisioned when we came up with a path forward last year. The dollars are being spent faster in the model. And as we discussed last time correspondingly, you're going to see the major uplift in FFO and EBITDA in 2027 and 2028 just as it relates to the time it takes to deliver.

And our next question will come from Linda Tsai with Jefferies.

Just wondering about the success of the new deals in the quarter, up 70% from a year ago. I assume that the new structure that you talked about to streamline permanent specialty and department store leasing under one leadership helps. But just any more color and details you could provide about the success of the pace in new leasing?

Look, the pace works because of the way we've laid out the plan and our organizational structure. Obviously, the leasing is consolidated into one team. But the asset management team, which rides as an equal partner to leasing, there's a very direct line of communication between asset management, leasing, how it affects portfolio management in our model and in our speedometer. That speedometer, once again, just to reiterate, that represents expected revenue from these new leases. So it's very important to be at 60% at this point. So I would say that while the pace has been honestly incredible versus historical experience here, there's no reason why it can't stop or continue with this pace. We've got the right properties, tenants want to be in there, we kind of know the right prescription, we know how it affects the model, we make decisions very rapidly and the teams have a very clear directive. One of the reasons why I think we've really broken the back of this plan, the $50 million of remaining SNO that we talked about, $20 million of that $50 million is within our Fortress properties, our best properties in the portfolio. And of the $50 million 90% percent of that revenue is going to come from A, B and C rated space. So we're talking about the best space and our best centers or our top centers that are remaining to go. And so yes, we're going to continue to lease at very aggressive levels, but we've got a lot of great space to lease, though, in great centers.

Just wondering if you're considering a wider cohort of tenants that you would lease to?

No. I think we've talked about this on several calls. Coming out of COVID, the breadth and depth of- we don't even call them retailers anymore, it's really usage has expanded tremendously. So when we talk about leasing, yes, there are the key legacy retailers. They'll always be a part of our shopping centers, but you're also looking at digitally native and emerging brands, international brands, food and beverage, restaurant, medical, entertainment, electric vehicles, fitness, home furnishings, grocery. So the uses that we have to choose from are really unprecedented today.

And the next question will come from Ronald Kamdem with Morgan Stanley. Your line is open.

I think the last call you'd mentioned thoughts on same store NOI maybe being flattish for this year and next maybe until you sort of get the lease commencements and so forth. Just curious if we can get an update on that given things are running ahead of plan and any sort of high level ‘27, ‘28 occupancy targets in your mind would also be helpful.

So last quarter, when I made reference to the flat NOI same store profile, my initial comment was really related to the entire portfolio. As I said, the best indicator of success is our leasing progress. And based on this faster leasing pace on our go-forward portfolio, we actually expect same store NOI in our go-forward portfolio in 2026 to be in the 3% to 4% range and significantly higher in '27 and '28. As it relates to physical permanent occupancy, I talked last quarter about roughly being around 84% physical permanent occupancy in our go-forward portfolio. At the time, the SNO that we talked about last quarter represented about 250 basis points of potential permanent occupancy. So if we kind of keep up this pace, you sort of should expect us to get very close to that 89% area of physical permanent occupancy plus 26 anchor locations being fulfilled, which those anchors we think will generate over $600 million in sales. So we do our work. We think that we're going to really be able to accelerate the sales productivity and traffic in our centers. And that's going to really set ourselves up for some better releasing spreads as we get more permanently occupied on the next cycle of lease renewals after 2028.

The next question comes from Samir Khanal with Bank of America. Your line is open.

Good morning, everybody. I guess, Jack, I mean, you're certainly making a lot of good progress here, especially on the leasing side. But just one metric that sort of is lagging or has sort of held constant is sales. Guess how should we think about your ability to sort of push rents here, especially if sales don't grow? Again, it's good progress made so far, but just want to get your thoughts on sales here.

So I think you've got to sort of trust in the process that we're executing on. When I look at like Scottsdale's Fashion Square, that center is doing over $1 billion in sales. Tysons is going to do over $1 billion after we get a couple of more. We've got an anchor deal that's approved, but we're in the documentation phase. We've got 26 anchors that are coming online between now and 2028 and an incredible amount of in line permanent occupancy increasing with what I call best in class brands that drive traffic and rent and sales. So yes, we're spending a lot of money in centers. We're not densifying. We're in good retail use. And I think that's what's going really that gives us the confidence to be able to drive sales productivity. So I wouldn't get so worried about this intermediate period on sales. Maybe at some point, we'll break down sales in some of our better centers where we've done this type of work, like Tysons and Scottsdale that give us the confidence to know if you do the right things in the center, so a retail standpoint, you get the right result in terms of traffic increase and sales productivity. And we're applying that sort of basic strategy across our go forward portfolio at this point.

And the next question comes from Floris Van Dijkum with Compass Point. Your line is open.

My question to you was more, you've identified, your Eddy and some of these potential additional sales candidates, can you quantify to us what percentage of your NOI today is core versus non-core? And maybe talk a little bit about I think you've indicated that you think your core NOI is going to grow by 3% to 4%. Is that this year or is that next year?

So that's next year on the 3% to 4% on the core go forward portfolio. But I think we're going to come out with this NOI bridge in the next two weeks, like it's between ICSC and NAREIT. I think will make this a little bit more clearer and also outline what properties are designated within the go forward. And I think that after we do that, will be more helpful for you and we can take you through it.

And our next question comes from Greg McGinnis with Scotiabank. Your line is open.

Hey, I have two questions on the new leasing. Just trying to better understand that kind of speedometer metric. But what percent of total leasing deals do you expect to be new deals in 2025 and 2026? How does that compare to the historical average? And then does this new deals under consideration by the executive leasing committee, is that more retailers looking to locate in Macerich assets? Or is that more of a willingness on your end not to renew tenants, take on the short term vacancy for some longer term gain?

I'll take the second question first and then Brad maybe you can take the first question. But the deals we review in our executive leasing committee are really a combination of new deals and renewal deals. Many are new deals that are just strictly taking vacant space that we've identified. Jack mentioned A, B and C quality space. We have every single space in our portfolio identified and our rent attributed to it. So we know exactly what we're doing methodically. Are we taking off some space, taking some space offline? Yes. And we do that. That's just normal course of business. We do that to enhance the merchandising of the shopping centers, and Jack just alluded to that. So really, ELC is a combination of both renewal deals and new deals, but I really view it as a forward-looking metric that unlike signed leases, which is the stuff we've done in the past, what we look at on a biweekly basis is all new and really more indicative of what's going on in the present and more importantly in the future.

And Greg, on the first part of the question, in 2023, just as a point in time, we did 4.2 million square feet of leasing. 1.4 million of that square footage was new leases. Now that was for the entire portfolio. I would say as they go forward, you should expect our percentage of new to be higher. I can give you exact target, but it's going to be higher than that percentage. And we've talked about that where that's the big opportunity.

Okay. And if I could just follow-up on the redevelopments. Just saw that the yields fell a bit this quarter. It looks like a mix of increased project costs and lower rent assumptions. Just hoping you could give us some more clarity on that.

Greg, it's really just the team has just completed their property quarterly reviews. And in going through that process, there were some marginal cost increases at both Flatiron and Green Acres, which are really driving the differences that you'll see in the supplement page on the development.

Okay. No risk for further growth beyond that?

Not as we sit here today based on the latest review of the projects that we just completed over the last couple of weeks.

And the next question comes from Vince Tibone with Green Street. Your line is open. Hi.

Could you clarify the differences in the two renewal leasing spread statistics you cited earlier? I believe you said one was 7% and the other was like closer to 1% on a same space basis. But thought for renewals, things should generally be same space. So just if you could clarify kind of what's driving the delta there, that'd be helpful.

On the same space spreads, we look at it, it includes temp spaces and who's in the space today and so it's apples to apples, the exact same space. When we look at the new and renewal, the 22 and the metric for new deals, that includes both against the same expiring rent. So it's just splitting it between the two.

Okay. So I've done this here then. I thought it was like one renewal was 7%, the other one was 1%. I guess so renewals, it sounds like the 1% figure is the more appropriate like renewal spread on to think about?

Yes, I would say so. I mean, renewal spreads are definitely less than our new deal spread and that's why we're-

But also like in the first quarter, we had an anchor renewal, so it's also waiting in that package.

Yes. Got it. So that is the prior tenant, so it includes anchors, it includes temps. I just want to make sure I understand what's in that metric. I believe that's the first time this has been provided. Correct me if I'm wrong.

Think we provided the color last quarter as well on the same space.

And the next question will come from Omotayo Okusanya with Deutsche Bank. Your line is open.

For the same store NOI growth this quarter, could you give us a little bit more detail about kind of same store revenues and same store expenses? What happened in these two items to kind of get to the same store NOI?

Are you referencing for the first quarter of 2025?

Yes, for the first quarter of 2025. And then just trying to understand how you ultimately expect that to change to kind of get to this 3%, 4% growth we're talking about in 2026?

In the first quarter we did see some operating expense increases. But as I mentioned earlier, the revenue generation was more than offsetting those shopping center increases for the first quarter. And you went out on the second part of your question.

You're talking about the go forward. So it's a different portfolio.

That's the problem. The first quarter 2025 is for the current portfolio and the commentary Jack referenced earlier, the 3% to 4% in 2026, that's for the go forward portfolio, which to the earlier comment, we'll be providing more color on the position of that portfolio with our NOI bridge over the next couple of weeks.

The next question comes from Alexander Goldfarb with Piper Sandler.

On the numbers side, there were some items in the first quarter. Maybe you mentioned the legal expense in the opening, I didn't hear it, but there was a lease term fee and then there was legal expense. And then also it sounds like there's $21 million of land sales potentially in the balance this year in FFO. So just trying to get a better understanding on the legal and lease term in the first quarter, expectations for more lease terms this year and then land sales that we should expect in FFO for the balance of the year?

Yes, sure. So I'll start with the legal claims. As I mentioned, it was $6 million of net settlement income at one of our properties during the first quarter related to a construction design defect matter. That's one time in nature. We expect those proceeds received recovered will more than be adequate to cover the cost of the proposed solution. So we highlighted that as more of a nonrecurring onetime item. As it relates to lease termination fees, we had about $5 million of lease termination fees come through in the first quarter. And that was primarily driven by one large tenant at Fashion Outlets of Chicago, which was a $3 million amount. And we're pleased that we already have another tenant that has taken that space. So that's good news of that particular asset. And then as it relates to land sales, yes, we just kind of gave an update that for the first quarter, closed on $7 million of land sales. And then in April, we closed on the sale of another $25 million of land sales. So in totality, that's part of our $100 million to $150 million bucket, which in combination with the outparcels, we're now $77 million sold against that $100 million to $150 million target.

And then expectations for lease terms for the balance of the year?

We expect maybe a couple more million dollars of lease termination income in the balance of the year based on the visibility we have today.

The next question comes from Haendel St. Juste with Mizuho. Your line is open.

Hey, guys. Good morning out there. Appreciate the comments on the tariffs not impacting leasing, but I guess I'm curious on how tariffs might be impacting the conversations around some of the asset sale that you're doing here. I understand liquid is the last sizable asset you have left to sell, but what can you tell us about the pricing, the demand for Lakewood? Any color on that and potentially a sense of when you expect that to close?

Yeah. Well, liquid, as we referenced, the proceeds over the debt amount are not very significant. So the borrower is going through a process right now with the existing lender, the buyer. I would say, as it relates to debt financings, I mean, I think Washington Square is a great example of refinancing stabilized malls, but Dan can give you more color. On the outparcels, some of the cap rates on the restaurants were like in the 5%, mid-5% percent range. These are high net worth buyers, 1031 buyers. Did a lot of this at our old company, expert [ph]. And so if you ask me on our outparcel objective, I think we laid out $500 million of outparcels, roughly 8%. I think we're going to do better than that. I think it's going probably be closer to 7%. And I think we're going to end up maybe even do it more if we want because we have identified more vacant land opportunity that quite candidly on a price per acre is a lot more valuable than what we did at SanTam. And so, yes, I think feel really good about that piece of the execution that's left.

Okay. Any ballpark on NOI yield or any stat on the pricing for the liquid from a value perspective given the space where we also get-?

I would just look at the debt yield that we put in our supplemental in our disclosure that it's pretty good approximation for a cap rate there.

And then maybe one more if I could. Just appreciate the color and all the numbers you guys provided, lots of numbers. But I'm curious if we should be reading into your comments that the mid-‘26 inflection, if that's when we should be thinking about cash flow or earnings to be troughing and then to inflect positively from that point?

I think that's a fair characterization of it. Just as Jack mentioned, as we have a lot of leasing activity coming online over the next couple of years, development NOI really starts to ramp second half of '26 six into '27 and '28. And then on the flip side, we're working through these outparcel sales and asset sales and give back. So it's possible that the lost NOI from those could be more than what's coming online from the sources coming in over that next twelve to eighteen month period. So that's a long way of saying it. I think your statement is fair.

The next question comes from Caitlin Burrows with Goldman Sachs.

I guess just thinking about the long term plan and the targets in terms of reaching the physical permanent occupancy targets by 2028, which I think was up about 500 basis points from year end 2024. I'm wondering if you could go through what kind of leakage or tenant fallout, non-renewals, that sort of thing you're assuming on the other side. I guess one concern is that a new Forever 21 or someone like that comes along and creates a new hole to fill. So just wondering kind of how that's factored into your occupancy targets and outlooks?

We take that all into consideration in our 500 basis points of increase. Any fallout from planned closures and that we're replacing is all weighed into that 500 basis points.

And our next question will come from Michael Mueller with JPMorgan.

Just for the Forever 21 releasing, what portion of that activity is going to single users as opposed to breaking up the spaces for smaller tenants?

It's really a mixed bag. I would say that the majority of the space is being leased as it is. Some of the larger anchor store spaces that Forever 21 may get broken up. But as I mentioned, we're about 50% committed. And we're going to basically double the rent that Forever 21 was paying. And while we're not at liberty to disclose or talk about the replacement deals yet, you should be thinking about some of the real, real hot tenants that are out there right now. I mean this is really an opportunity for us to be able to get these underperforming stores back and then think about like Dick's House of Sport or

Thanks. I am showing this is all the time that we have now for questions. I would now like to turn the call back to Jack Hsieh for closing remarks.

Thank you. And we're pleased to report our continued progress on the many strategic initiatives within our path forward plan. And we thank you all for your time today.