MAC - NYSE

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter 2025 Macerich Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Alexandra Johnstone, Vice President of Finance and Investor Relations. Please go ahead.

Thank you for joining us on our fourth quarter 2025 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, supplemental and our SEC filings. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8-K with the SEC, which is 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, Senior Vice President of Portfolio Management. With that, I would like to turn the call over to Jack.

Thank you, Alexandra, and good afternoon, and thank you for joining us. Before I begin, I want to thank the entire MAC team for their outstanding contributions throughout 2025. This was a year of significant execution and progress made possible by the dedication and hard work of our people across the organization. 2025 was a pivotal year for the company. We entered the year with clear objectives under our Path-Forward plan, simplifying the business, driving operational performance improvement and reducing leverage. I'm pleased to report that we've delivered against each of these pillars. Today, I'll spend time on our operational performance and leasing achievements and then turn it over to Doug and to Dan to discuss the portfolio and balance sheet in more detail. Let me start with leasing, which continues to be the engine driving our Path-Forward plan. For the full year, we signed 7.1 million square feet of new and renewal leases on a comparable center basis, an 85% increase over full year 2024, setting a new company record. Turning to our leasing speedometer, which tracks revenue completion percentage for all new leasing activity required to achieve our 5-year plan, we are at 76% today, exceeding our 2025 year-end target of 70%. This puts us well on track for our mid-2026 target of 85% and positions us to substantially complete our new leasing objectives by year-end 2026. Importantly, we are achieving our target market rent assumptions in the plan. Another way to look at how far along we are with leasing is in terms of the new deals left to sign in our 5-year plan. We are tracking a total of approximately 1,000 new deals in this plan. We now have 650 new deals open, executed or in lease documentation. All that is remaining is 350 uncommitted new deals totaling 1.6 million square feet, of which 150 are in the letter of intent stage. Our signed not open pipeline has grown to approximately $107 million, exceeding our 2025 year-end target of $100 million. This is relative to our total cumulative SNO opportunity of approximately $140 million in excess of the revenue generated in 2024. We have high confidence in achieving the full opportunity. Of the $140 million of total SNO, the estimated incremental annual contribution is $30 million in 2026, $40 million to $45 million in 2027 and $45 million to $50 million in 2028. I'm excited about the progress we've made on our anchor initiatives. We targeted 30 anchor and big box replacements in our Path-Forward plan, and I'm pleased to report that all 30 are now committed. We have 5 anchors open, 5 under construction, 11 executed and 9 with leases out. Consistent with the update we provided with our NAREIT presentation in December, these 30 anchors total 2.9 million square feet and are expected to generate approximately $750 million in annual tenant sales. More importantly, they're expected to drive traffic, extend dwell time and catalyze in-line leasing throughout our centers. On the disposition front, we've made substantial progress toward our $2 billion goal. We've completed $1.3 billion of total mall and outparcel sales transactions to date. The team is very focused on getting the remaining mall and outparcels sold. I want to spend a moment on Crabtree, which we acquired in June. We are on track with our renovation plans and the new DICK'S House of Sport store will open later this year. We were also pleased to see last month's announcement by Belk that they are consolidating their 2 locations at Crabtree into a full store remodel and long-term lease extension of their flagship location at the east end of the property. Belk is a leading brand in the Carolinas and their new store with a wine and coffee bar, personal shopper studio and other amenities will complement the remerchandising and leasing initiatives we have underway. We have already secured a commitment for backfilling the second Belk's anchor store with an entertainment-oriented retailer. Along with a very productive Macy's store, this solidifies the asset. Additionally, with the in-line space, we have commitments on 18 new and 31 renewal leases. While we've only owned the mall since June, I believe we've already demonstrated that the platform we've built can create value. We'll continue to look forward for additional opportunities to put our platform to work. The milestones we delivered in 2025, leasing volume well ahead of plan, all 30 anchors committed, $1.3 billion in dispositions completed, demonstrate that the Path-Forward plan is no longer just a plan. It's well along the way to completion across every pillar. As we enter 2026, I have tremendous confidence in our trajectory. The heavy lifting of derisking the Path-Forward plan is substantially complete. Our key focus areas for 2026 are; one, completing the leasing pipeline of 350 additional new leases, 150 are in the LOI stage; two, solidifying the remaining 2026 lease expirations and continuing to get ahead of the 2027 expirations; three, getting tenants in the physical spaces built out and paying rent on time; four, completing the remaining dispositions; and five, continuing to evaluate new acquisition opportunities that are accretive to our plan and portfolio. Lastly, I want to note that we expect to provide an updated Path-Forward plan 3.0 at REIT Week in June, and we intend to return to providing earnings guidance beginning in 2027. Doug, why don't you discuss the portfolio and leasing activity in more detail?

Thanks, Jack. Portfolio sales at the end of the fourth quarter were $881 per square foot. That's up $14 when compared to the last quarter, and this now represents a high watermark for the company dating back to when we went public in 1994. When you look at our go-forward portfolio, sales were actually $921 per square foot. Traffic for 2025 was flat when compared with the same period in 2024. Occupancy at the end of the fourth quarter was 94%, up 60 basis points from the last quarter, with the majority of this increase coming from permanent occupancy versus temporary occupancy. The go-forward portfolio occupancy at the end of the fourth quarter was 94.9%, also up 60 basis points from the last quarter. Trailing 12-month leasing spreads as of December 31, 2025, were 6.7%, up 80 basis points from the last quarter, and this now represents 17 consecutive quarters of positive leasing spreads. In the fourth quarter, we opened 416,000 square feet of new stores for a total of 1.3 million square feet for all of 2025. Most notably, we opened our first DICK'S House of Sports store at Freehold Raceway Mall in the former Lord & Taylor Box. Grand opening was one of the best in their 35-store chain, and the store continues to outperform all expectations. As a result, we've seen an increase in traffic, not only in their wing, but also in the mall overall. And this has already had a positive effect on leasing space outside the DICK'S location on both levels of the mall. We remain very bullish about this concept. Of the 9 commitments we have with DICK's House of Sport, as mentioned, Freehold is now opened, and we currently have 4 additional stores under planning and/or under construction at Crabtree Valley Mall, Tysons Corner Center, Washington Square and Valley River. Crabtree will open in the fall of this year. Tysons Corner and Washington Square will open in the fall of 2027 and Valley River will open in the spring of 2028. And we're working on adding to this list. So stay tuned for more announcements in the very near future. As Jack mentioned, leasing was very strong in 2025. For the year, we signed 7.1 million square feet of new and renewal leases. This is 85% more square footage than we leased in 2024, and 2024 was a record year for us. And it's important to note that of the 7.1 million square feet, 30% were new lease signings. Turning to our lease expirations. 2025 is behind us, and we're now focused on 2026. To date, we have commitments on 80% of our 2026 expiring square footage that is expected to renew and not close with another 16% in the letter of intent stage. This is unprecedented for us this early in the year. To put it in perspective, at this time last year, we were only 63% committed for our 2025 renewals. So we can now focus on our 2027 and in some instances, our 2028 lease expirations. Being able to work this far into the future significantly derisks the renewal portion of our 5-year plan. The retailer environment and tenant demand remains strong. In 2025, we reviewed and approved 40% more deals and 30% more square footage than we did in 2024. It's early days, but thus far, we're on par with where we were last year at this time. Further to this point, in December, we attended the annual ICSC Leasing Conference in New York City. Approximately 10,000 landlords and retailers attended to talk about current and future business. In just 2 days, we had almost 300 meetings with over 200 different retailers looking to do business in our portfolio. All categories remain active, including traditional retailers, international retailers, entertainment, experiential, food and beverage, wellness and emerging brands. And we continue to sign leases with some of the best brands in our industry, such as Apple,

Thanks, Doug, and good afternoon. I'll start with a review of fourth quarter financial results. FFO, excluding financing expense in connection with Chandler Freehold, accrued default interest expense and gain on non-real estate investments was approximately $129 million or $0.48 per share during the fourth quarter of 2025. I would like to highlight the following item included in our FFO adjusted for the quarter. Legal claims settlement income of $16.1 million, partially offset by corporate expenses related to annual incentive bonus payouts above target levels, which resulted in an $8.4 million net impact or $0.03 per share. Go-Forward portfolio centers NOI, excluding lease termination income, increased 1.7% in the fourth quarter of 2025 compared to the fourth quarter of 2024. For 2025 full year, the Go-Forward portfolio centers NOI increased 1.8% compared to 2024. Turning to the balance sheet. We continue to make strong progress on the balance sheet initiatives contained in our Path-Forward plan. 2025 was an incredibly productive year by the team with transaction and financing activities. We have now closed on approximately $1.3 billion in dispositions, reduced leverage by a full turn lower and addressed each of our 2025 debt maturities as well as a substantial portion of our 2026 debt maturities. Earlier this month, we closed on a 4-year loan extension through November 2029 on our South Plains property. This $200 million loan extension was completed at the existing interest rate of approximately 4.2%. We're continuing to proactively address our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or, if necessary, property givebacks. With respect to our 29th Street property, this $76 million loan at the company's pro rata share is now in default after its recent 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 currently have approximately $990 million in 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 fourth quarter was 7.78x, which is 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-6x range over the next couple of years. We are making substantial progress in executing on dispositions as part of the Path-Forward plan. As previously announced, during the third quarter, we closed on the sale of 3 retail centers for approximately $425 million. During the fourth quarter, we closed on the sale of various outparcels and land for $42 million, which included the sale of the retail strip center at Washington Square for $26 million. Year-to-date, we have closed on the sale of an additional outparcels and land for $15 million. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine the portfolio. We have identified a clear path to achieving our $2 billion disposition target. To date, we have again completed approximately $1.3 billion in total dispositions and the disclosure we've provided in our supplement includes a summary of these asset dispositions. We have also identified several additional Eddy assets totaling $200 million to $300 million for sale or give back over the next year or so, which would increase total dispositions to the $1.5 billion to $1.6 billion range. One of these assets is La Cumbre Plaza, which is now under contract for approximately $11 million. This asset is unencumbered. The ongoing sales of certain outparcels and land represent the remaining $400 million to $450 million of dispositions to achieve our total $2 billion disposition target. We currently have approximately $15 million in additional outparcel and land sales under contract for sale and over $50 million in various stages of negotiation. We'll provide further updates on our disposition activities 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 over to the operator.

[Operator Instructions] The first question comes from Vince Tibone with Green Street.

You mentioned that you continue to evaluate acquisition opportunities. Could you just discuss kind of what types of properties would be most likely acquisition candidates for Macerich over the near term? Like are you looking for more value-add deals like Crabtree, where it can be immediately earnings accretive as well? Or would you consider stabilized, higher-quality centers that would have lower cap rates, probably 7 or lower just to add to the value of the portfolio. Curious how you're thinking about, just the acquisition landscape and most likely acquisition opportunities near term?

Vince, it's Jackson. Thanks for joining the call. I'd say our primary focus is obviously to make sure that if we do an acquisition, it's accretive to our 2028 FFO plans and targets. So that's first and foremost. Second is that we believe that it fits within the portfolio metrics of our current portfolio and ranks with -- or ranks well within it. I would say at least the short to medium term, it probably looks like more value-add kinds of opportunities that we're focused on. Crabtree is a great example because it's really a re-leasing or a lease-up value-add opportunity versus what I call redevelopment opportunity. I'd say with our current cost of capital to chase stabilized, call it, 7 and below kinds of yield assets. We're not likely to do it on our own. It might be different if we had a capital partner. But for now, we're principally going to focus on those value-add lease-up opportunities. And just to note, we brought on David Keane. He joined a couple of weeks ago from -- he was formerly at Washington Prime Group and spent many years over at General Growth properties in the acquisition area. And we're excited to have David. He's already participated in our property review quarterly process and was at our Board meeting recently and is actually touring assets as we speak.

No, that's all helpful color on the acquisition side. Just on -- if you were to find a deal, let's say, similar size to Crabtree, is it fair to assume you would issue equity? Or would you potentially ramp dispositions beyond the $2 billion to make it leverage neutral? Just how would you -- what will be the most likely funding source if you were to find a sizable deal that you wanted to move forward with?

I mean I'd say selling properties to buy properties, I think we've gotten more -- candidly more inbound interest from capital partners to do transactions with on the acquisition side. One thing we said is we want to simplify the business. So I think first choice would be issue equity if it made sense from a cost of capital standpoint. Obviously, we can't predict where our stock price will be, but probably that's our first preference. Second would be finding a capital partner that sees the asset and the strategy in the same way we do. And I'd say a very distant third would be recycling a property that we had to kind of bring that in.

And our next question will come from Samir Khanal with Bank of America Securities.

This is Andrew Reale on for Samir. It seems like there's a lot of tailwind from this leasing momentum. So just given the strength of your leasing pipeline now, how should we start to think about the magnitude and timing of the growth inflection in the second half and even into 2027 at this point?

Yes. Andrew, as we've talked about and Jack kind of outlined our SNO pipeline, which has $30 million of estimated contribution in '26. I would note that is back-end weighted in '26, consistent with how we've talked about the second half inflection point. But I think the real power of the SNO pipeline, you can see in '27 and '28 in terms of the dollar numbers that are coming through in those years, $40 million to $45 million in '27, $45 million to $50 million in '28. So that kind of lines up with the inflection point from a growth perspective.

Okay. And then just as a follow-up, it seems like holiday season was pretty strong. Could you just speak to the overall health of the consumer, if performance has been consistent across the portfolio, if there's some bifurcation between the top and bottom of the quality spectrum?

Yes. I would say like if you think about our customer, we're definitely experiencing this Pay-Shapes consumer. And I'd say if you think about some of the retail green shoots that some of our tenants are talking about, obviously, this calendar year, we're going to have a higher tax refund going through to people in this country. We've got the World Cup coming, which obviously will draw a lot more customer, more visitation in the U.S., some Olympics in '28. And actually, the kind of issue that Saks is going through, I think is kind of an interesting opportunity as it relates to Macy's, Nordstrom dealers being able to really relook at how they're thinking about luxury items as well as just luxury demand in general. As it relates to that upper portion of the [ K ] that we're primarily focused on, I think, in a lot of our tenancy on the in-line, if you look at our traffic for our go-Forward portfolio in 2025, it was up in the mid 1.5% range. But if you really -- or actually -- I'm sorry, the traffic was up like just flat, basically up 20 basis points, but in-line sales were up 1.5%. But if you actually go down and look at luxury, the luxury sales were up almost 5.5%. So to me, I think that's a kind of early compelling sign of maybe what might be more coming in the future. And look, I think we -- I've spent a lot of time with retailers, which is kind of new for me. But they're very focused. They know consumers are spending, but super selectively. They acknowledge this bifurcated pay economy with their different income tiers. But the one thing that's really consistent, branding, fit, merchandising, innovation, that's a consistent theme that we hear from our retailer customers. Promotional items are really being more targeted. And I'd say, overall, their outlook is cautious but constructive, and we're seeing that in our leasing. I mean there's real demand for space right now that we have remaining thing that strikes me, which is so interesting is the retail store -- physical store is still the most profitable lane for these retailers right now. They have omnichannel, but their physical stores are the most profitable areas and lines of business. And the fact that we have no real new supply in the kinds of real estate assets that we compete in, I think is good for what we're trying to do right now.

And our next question will come from Michael Griffin with Evercore.

Just on the leasing pipeline, with 2026 derisked as much as it is, have you started maybe being able to actively, maybe not renew a certain amount of space in hopes of capturing higher rents. It just seems like with what feels like a lot more leverage that you might have on the leasing front. Just curious how you break down kind of the cost benefit between renewing a tenant, keeping them in place versus actively taking that space back and trying to re-lease it at a higher rate.

That's a great question. I would say, overall, when we set up this plan, we have 1,000 new leases. We had pro forma market rents in there that are very specific to each space of these 1,000 that we talk about. And on the renewals, we pro forma positive spreads on those as well, right? So you have 2 levers trying to happen at the same time. For us, and I'd say like the unfortunate thing is we've set a target out there in 2028. Time is kind of not our friend. And while we might be able to get more, if we start to lose time, we might get more, but it will come in through 2028. So we're trying to balance what we can get done today based on the pro formas that we've run to back up this Path-Forward plan versus trying to extract the very last dollar that's possible. I think the question is a really good one because I think we haven't really talked about what happens after 2028. But if you think of the amount of investment that we're putting into these centers, the 30 anchors, when we start to really look at renewals from '28, '29, '30, I think there's tremendous opportunity that we'll see that we've never really been able to see, say, over the last several years, just given how fully leased up these in-line levels will be relative to historical standards.

That's certainly some helpful context. And then maybe just one on external growth. You talked about acquisition, you're potential opportunities earlier. But I'm curious if you've evaluated maybe other revenue streams, whether it's bridge lending, Mezz financing, third-party management. Just are there other levers you think you can pull sort of on the revenue growth side, maybe outside of those potential external growth opportunities as it relates to acquisitions?

It's a great question because one thing that I love about this business is there are very few people that can do it in terms of being able to do it and scale on a national basis. And while it'd be tempting to look at that and clearly, I've thought about it, I feel like the real -- the really -- we're staying focused on what we're trying to do right now, which is a lot actually, and trying to incrementally add quality acquisitions into the company, I think is at least for the near term, going to be where we're really focused. We do have opportunity to do Mezz and other structured because financing is very unique for this kind of asset base. But I think like I said, in the short term, we'll stay focused on the pillars of the plan, which is right there in front of us for this year.

And our next question will come from Floris Van Dijkum with Ladenburg.

I wanted to ask about the Go-Forward portfolio. Obviously, higher sales, better occupancy. Presumably, these are the assets you're going to be spending your capital on. Could you maybe just give us a little bit more information, what percentage of total NOI does that portfolio represent today?

Yes. Floris, this is Dan. I'll refer you guys over to our supplement. If you kind of look at Page 7, we've got NOI go-forward portfolio for the full year 2025 was $738 million relative to NOI for all the centers of $841 million. So obviously, it represents a substantial majority. And trending towards just the Go-Forward amounts.

The other question is regarding your SNO pipeline. Maybe if you can give us a little bit more details what percentage of -- actual percentage of your square footage does that represent? And maybe also maybe a little bit more information and what percentage of that $107 million, which is, again, ahead of estimates represents luxury. Jack, you mentioned luxury being -- having 5.5% sales growth. How much expansion do you foresee in your portfolio from that particular segment?

I can start with the first part on the $107 million. It's not a large part. So luxury is brands, by the way. I mean luxury is relatively a small part of our business at a little bit -- mostly at Scottsdale and a little bit at FOC.

Yes. Brad, I agree, it's Doug, Floris. Our luxury really is in Scottsdale, started in the Neiman Marcus Wing, as you know. And given the demand we had once we finished the Neiman Marcus Wing, we transitioned over to Nordstrom and turned that into a luxury wing. And at this point, we're basically done. I think we're 90% -- 91% committed. And most of those luxury retailers have already gone through the pipeline. If you think about Tiffany, who's opened and Hermes that's opened and Salem that's opened, there's very few left to open. They'll open the rest of this year and then a few into 2027. So the luxury component is going to be probably a small percentage of the pipeline.

And I think, Floris, you were asking about SNO. And so if you think about the SNO, that includes anchor stores and in-line. And I don't know if I'm answering your question the right way, but at least how I was thinking about it was we refer to 1,000 in line. We have about -- that's about 20%, 25% of the entire in-line population of our Go-Forward portfolio. So if you think about just sheer numbers, we're effectively influencing about 20% to 25% of our in-line floor plan. Then you think about the 30 anchors we're going to be able to do better leasing on the inline as well as those 30 will drive traffic and also rent. And to me, like -- and then if you look at the remaining 1.6 million square feet of -- that we talked about of new leases, the 350 uncommitted spaces, 90% of that space or 90% of that CLO is in A, B and C rated spaces. And another way to look at it, about 2/3 of it are in our fortress and fortress potential properties. So these are not bad spaces that are left or rump spaces. These are high-quality spaces in our best centers. So I'm confident that we're going to get the rate. We're just trying to make sure we get the right tenant in there that's going to do the right thing for the center. And just stepping back, why are we doing all this stuff? We are seeing, like I said, anecdotal evidence when we opened SCHEELS down at Chandler Center in Arizona. SCHEELS generated about a 21% increase in search in the mall traffic and has continued to really be robust in that market, does over $150 million in sales. And if you walk through our leasing team in that wing, the before and after is quite tremendous in terms of how we're reimagining and re-leasing that wing. At Tysons, as strong as Tysons is, in the fourth quarter, traffic was up 16% year-over-year because Level 99 opened, Skims opened, the

And the next question will come from Haendel St. Juste with Mizuho.

Two quick ones from me here. First, I guess I appreciate the color on the asset sales to date and the discussions you have underway. It looks like you have, I think, $60 million of the remaining $400 million to $500 million remaining disposals under some level of discussion. But it also seems like we've been plus or minus at the same levels for a little while now, a couple of quarters. So I'm curious what's taking so long? And what's your expectations for some movement in the dispose left to be done over the next year?

Yes. Haendel, this is Dan. I'll start and then Jack can chime in. I appreciate the question. On the malls, we've got $200 million to $300 million of remaining asset sales. And the time line of that is, in some part, a function of the maturities. So we have some coming up this year, and there's some others coming up later in the year. On the outparcel and land side, recall that we have said in the past, from the beginning, we said that the sales in this bucket was going to be weighted towards '26 versus 2025. And that's primarily because many of these assets have some encumbrances, whether they're part of a loan collateral, so we have to work with the lender to kind of unencumber them from that. On the land, in some instances, there's some zoning and entitlements that are in the final stages that from a maximizing value to the company and shareholders, we'd rather wait a quarter or 2 to get to maximize that value with entitlement in hand. So there's kind of a story to a lot of these outparcels. They're not just sitting there ready to sell. It's just us working the process and continuing to execute on getting as many of those sold or under contract by the end of this year. There is no impact that we're seeing whatsoever as it relates to pricing or appetite in the market for these assets. It's just time to work through the sales.

Okay. No, I appreciate that. One more for me. Thinking about the -- it certainly seems like you're shifting a bit, focus more on external. You talked about -- I was curious about the infrastructure, the resources of the platform you have in hand. So as part of this growth, one part that you've made enough progress with your leasing and dispose and now looking to be opportunistic because the platform can operate and be more efficient with more assets. And so curious kind of about the size, the efficiency of the platform. And then curious how you're thinking about AI as you look about -- at your business and what potential efficiencies you can leverage that to garner.

Yes. Thanks, Haendel. So on the new opportunity side, I think some of it is just a function of the market is reopening. I think the addressable market for mall opportunities is getting a little bit bigger than, say, it was last time this year. So that's kind of compelling, and we like sort of where these yields are, at least what we're seeing right now. As it relates to our platform, we've -- if you remember my comments a year ago this time, I talked a lot about process improvement committees and introduction of dashboards and efficiencies in terms of being able to create more operating efficiency just with the way our teams are communicating CRM -- new CRM that's in place. So I would say like we are able to easily scale given our current infrastructure with more GLA. The question I'm trying to balance right now is finding opportunities that enhance that 2028 FFO range that we've talked about, but also fit well with what I think our strengths are internally. So I don't think you'll see us do heavy redevelopment as our next opportunity. We're very, very good at leasing. We're very, very good at credibility with retailers like what we're experiencing down at Crabtree. And so to me, those are more easy puts, short puts. I think assets that have a more deeper value add, I think we'll look at those very diligently and carefully to see if that fits with our strategy. But I would say like when I think about 1 year ago versus today organizationally, the organization has really advanced quite amazingly, if you were sitting in here from a technological standpoint, operational standpoint, process standpoint, communication standpoint, decision-making standpoint. And that's not without -- that's not really relying on AI. That's just human beings and Microsoft BI and different things [indiscernible] like that. As it relates to AI for us, I've asked that question for our retailers. How are you all thinking about AI? And if you listen to Walmart, look, they're selling large volumes, penny matter for them. And so AI will definitely, I think, influence what they do. But if you think about what we do, apparel companies, customers that are constantly looking for innovation and fashion and things like that. I think there's -- I think AI is still -- I think if you were to ask retailers that are primarily focused on our centers, they're still trying to understand like how it can really leverage their system. I think when you look at mass retailers like Walmart, I think it's a different circumstance given what they do in terms of their scale. And it's falling back to what we do, I think it's still early days for us, to be honest with you. I'm trying myself to get more up to speed and think about how it can influence us. But we have so much low-hanging fruit just doing the basics here and executing to add value. But I think in the coming next couple of years, we'll really look at and see how it can help us.

And the next question will come from Todd Thomas with KeyBanc Capital.

First question on the South Plains refi. I appreciate the detail there. And apologies if I missed it, but was there any consideration related to the decrease, the extension there and the decrease in the coupon from 7.97% to 4.22%? Or is that decrease pretty straightforward as far as the impact on the P&L and it will result in nearly 400 basis points of savings.

Yes. Todd, this is Dan. I would just clarify the higher rate that you're referring to represented the effective interest rate, right? So when we bought out our JV interest in South Plains, there was a debt mark-to-market. And so that kind of flowed through the effective interest rate, which was higher. The coupon remains the same at 4.2%. So going forward, what we wouldn't have is that debt mark-to-market amortization as an additional cost. It will just be kind of the coupon.

Okay. Got it. That's helpful. And then I just wanted to follow up on the outparcel and land sale opportunity. You previously talked about a 7% to 8% cap rate on those deals ex land. And I realize you mentioned some of those assets are collateral for loans and/or there are some other things that may need to happen for those outparcel and freestanding transactions to move forward and take place. But has the market changed at all in recent quarters around pricing? Is there any change to that 7% to 8% cap rate target?

No, we're still tracking towards that. We've had a number of these outparcels, some smaller deals that have been sub-7 cap. This most recent transaction with the retail strip center at Washington Square was done right in that 7% range. So if anything, we're probably tracking maybe slightly ahead, but generally expect to still be in that 7% to 8% range for the outparcel components of the program.

And our next question will come from Ronald Kamdem with Morgan Stanley.

Great. Just 2 quick ones. So looking at the Go-Forward portfolio NOI without lease termination income, that's sort of 1.7% year-over-year number. I was just wondering if we could just dig into in terms of whether it's some of the closures that we have this year, whether it's some of the proactively taking back space and converting to better tenants. Just how much do you think of that -- what's the magnitude of the impact on that year-over-year number just so we get a sense of what the growth rate could be as those things sort of go away?

Yes. Ronald, and again, '25 was a transitional year. As we've discussed, we had frictional downtime as we're executing on all of our tenant and strategy initiatives. Just to give you a flavor of how we were impacted by Forever 21 year-over-year, which had a high percentage rent contribution in the fourth quarter of 2024. Excluding Forever 21, that would have been 2.7% for the fourth quarter and closer to 2.5% for the year. So that just gives you a sense for 2025. And going forward, I know we've talked about this in the past, but I'll refer you back to our Path-Forward plan update that we put out last summer. In there, we had an NOI bridge that assumed a midpoint CAGR of 5.2% for the Go-Forward portfolio for the 4-year period of 2025 through 2028. Obviously, in 2025, you can see we landed at 1.8%. Obviously, that implies significant growth in the future. For '26, we think we'll be at least 3% back-end weighted. But when you look at that in the context of '27 and '28, you can see that, obviously, that implies a significant increase above that kind of 5.2% CAGR levels in those years.

Really helpful color. Just the second one, and I appreciate that we'll get an update midyear and guidance in 2027. Just can you talk about just -- I think you said there was an inflection point happening midyear around this time. A lot of that is related to the leasing and so forth. But just organizationally, is there sort of any other sort of pieces of the plan that you're waiting on for that inflection point? Or is it solely tied to the leasing?

No, I think we're just business as usual. I mean we've brought in some of the focus on the lead our acquisition effort. So it's kind of a new -- that's going to create a new -- I'm sure that a lot of people will be busy as we're sort of evaluating different opportunities. But I would say we're operating -- trying to execute this leasing initiative.

And our next question will come from Craig Mailman with Citi.

Just the first question I have on the equity and income, you guys had a pretty big pickup sequentially and a lot of that looks to be from other. Is that -- could you just tell us what that is and if that's sustainable or more just seasonal?

Yes. Craig, a big piece of that -- sorry, just so I know, are you referring -- what periods are you exactly referring to?

4Q over 3Q. So you guys -- just looking through the supplemental, 4Q, you guys had $27.5 million versus $9.7 million last quarter and other income was $25 million, up big sequentially.

Okay. Yes, that's helpful. And to clarify, I just want to make sure I was addressing your question. It's really driven in the fourth quarter of this year, as I alluded to in my prepared remarks, we had a legal settlement income, which was about $16 million in the fourth quarter of 2025. So that's really driving the lion's share of that $20 million increase from the fourth quarter of 2024.

Great. That -- sorry, I missed that in your prepared remarks. And then just the second question. I know it's a little bit early here, but Jack, any early insights into maybe what the evolution of the Path-Forward plan could be in Version 3.0? Like what are the big items we should be expecting?

Yes. I mean look, when I look at -- as I said in my remarks, in terms of things that we're focused on, obviously, dispositions, we'll give you an update. I think by our leasing phenomena, I think we'll give a very good update in the middle of the year. One thing we haven't talked about in detail, which I think we'll start to talk about is rent commencement dates. It's a huge issue in our company in terms of tenant coordination, legal, asset management, also with leasing, trying to get these spaces on time, tenant in place, rent commencing. And so it's a big work stream that you all don't see, and we haven't put any disclosure out there, but I believe that we'll be less talking about new leasing and more about RCD, what we call RCD rent commencement dates. So I think that's going to be something that you'll see in the middle of the year. My guess is we'll be tightening down our 2028 ranges of what we put out there. And I keep looking at the end, we'll probably be talking about '29 at that point, possibly because we see -- we can forecast out from there what's happening here. And I guess just continued updates on our development -- 3 development projects. So -- but I think RCD will be rent commencement dates, providing more insight into that will be something we'll talk about in the middle of the year.

And our next question will come from Greg McGinniss with Scotiabank.

I just wanted to touch on the couple of remaining -- or a couple of the remaining non-go-forward assets. With 29th Street not in that portfolio and in negotiations with lenders, is the expectation to hand that asset back? Or do you believe that there's kind of equity value to extract thereafter negotiations? And then what's the plan on Fashion Outlets in Niagara? Is that an expected hand back?

Yes, I appreciate the question. I think at this point, I just gave you the sort of latest data play on 29th Street. Probably no additional commentary at this point. We'll obviously give you guys updates as we have relevant news to share.

Okay. And then on the development side, are Green Acres and Scottsdale projects fully leased? What percent of those tenants are expected to open in '26? And are those leases included in the SNO pipeline?

Yes. It's Brad. Yes, they are in the SNO pipeline. So roughly of the $107 million, roughly about $20 million comes from our development pipeline. And then, Doug, if you want to talk to the leasing aspects?

Yes. So Greg, at Scottsdale, I think I mentioned earlier, we're just about done. We're 91% committed with very few spaces left. And at Green Acres, we are about 75% committed. The majority of the exterior redevelopment is complete and the work to do right now is on the interior. But the good news is we've added some really powerful tenants. We're adding some powerful tenants to Green Acres. We think about ShopRite, Grocery, Sephora, Cheesecake Factory, Shake Shack, Foot Locker, JD Sports. It's really going to redefine the exterior. It's going to create a new grand entrance. And the hope is -- the plan is that it all funnels into the inside, and that's what we're starting to see today.

And the next question will come from Omotayo Okusanya with Deutsche Bank.

While you guys don't have any real facts or [indiscernible] exposure, could you just talk a little bit about kind of what you're seeing out there in terms of just tenant credit in general and whether -- as you kind of think about 2026, whether that's kind of more or less of a risk for you guys?

Yes. Thanks for the question. Certainly, those issues are in the news. For us, I think the summary is we don't expect a meaningful impact from this group as it relates to 2026. And I don't think they're reflective of the overall strong retailer environment that we're seeing across the board that Doug alluded to at our centers. Our watch list remains at an all-time low. And none of those centers would impact kind of how we're thinking about our 2026 bad debt expectations for the portfolio.

And our next question will come from Alexander Goldfarb with Piper Sandler.

So 2 questions. First, Jackson, you've -- obviously, you hired a CIO and you've been doing a lot of work on the portfolio. Just curious, with how the debt markets have improved and how you're looking at dispositions, do you think part of Macerich may now be in a position where the unencumbering of wholly owned assets could start to be part of the mix? Do you think the company is there yet? Or with everything that you're doing right now, you just don't see the asset sales and capital markets quite there enough to start down that process?

Alex, you're talking about like unencumbering for like an investment-grade rating or something like that?

Not investment grade, but just start to create like a pool of unencumbered assets.

I mean I'd say like if you think about like Crabtree, I mean, we've kind of pursued -- it's a term loan, but it's not a...

Yes. Alex, I would just say we paid off the debt on FlatIron. Crabtree, it's got a term loan that's highly flexible. It gives us some maturity, but it gives us an ability to prepay it. So I don't think it's an immediate near-term priority, but maybe more medium term to aspirational to start to increase our wholly owned assets more unencumbered.

Okay. And then as far as the legal settlement goes, can you give a little bit more color on what drove it? And is this like a one-off? Or is there a potential that there are other of these onetime benefits that you guys may be able to harvest?

Sure. I appreciate the question. Yes, it relates to a former development project that we're no longer pursuing that resulted in a favorable settlement outcome. It's nonrecurring item in other income, as I mentioned, and it's not part of the go-forward portfolio.

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

Can you comment on what rent spreads have been on the 2026 leases that you've addressed so far? And for the second question, are you seeing any uplift in shop leasing escalators compared to a couple of years ago?

Okay. On the rent spreads, first, the way we've historically talked about rent spreads, and obviously, you saw it over 6% for this group, it's really not correlated to the success of our Path-Forward plan. Our Path-Forward plan, if you think about it, we have a set number of new spaces that we're focused on leasing that have market rents tied to them, PA assumptions tied to them. So achieving in excess of that, more rent, less PA is good for us because all this will sort of result in increased permanent occupancy, more productivity. I don't like the measure. It doesn't. And then we're also renewing a really large volume of renewals. And I don't think it really correlates to what we're really trying to do and it probably gives you the wrong impression or not the right impression. So we're evaluating that metric. I don't know exactly -- I don't believe it really works right now for us in terms of the success of our plan. So we're going to try to see if there's a better way to do it.

And Michael, it's Doug. I think you asked about escalators. There really has been no change. We've been consistent over the years, and we remain consistent. The escalators when you blend the escalators for fixed minimum rent and CAM, you're somewhere in that 3% to 4% range.

And our last question will come from Caitlin Burrows with Goldman Sachs.

Maybe 2 more on the occupancy front. As a follow-up to Floris' SNO question from earlier, I guess maybe phrasing it a different way, you guys reported the 94.9% lease rate. Could you tell us what your economic occupancy is for the Go-Forward portfolio?

Caitlin, it's Brad Miller here. Yes, so we're at 94.9% on the leased occupancy. Our physical occupancy is closer to 91%.

I would now like to turn the call back over to Jack Hsieh for closing remarks.

Thank you, operator. Thanks again for your participation today. We look forward to seeing many of you at the conferences and property tours in the coming weeks. Thank you.