Jean Wood - Vice President of Investor Relations Thomas O’Hern - Senior Executive Vice President and Chief Financial Officer Robert Perlmutter - Executive Vice President, Leasing John Perry - Senior Vice President, Investor Relations Ed Coppola - President.

James Sullivan - Cowen & Co LLC Craig Schmidt - Bank of America Merrill Lynch Alexander Goldfarb - Sandler O’Neill Rich Moore - RBC Capital Markets Michael Mueller - JPMorgan Todd Thomas - KeyBanc Capital Markets Paul Morgan - Canaccord Genuity Christy McElroy - Citigroup Vincent Chao - Deutsche Bank Linda Tsai - Barclays Investment Bank Haendel St.

Juste - Morgan Stanley Caitlin Burrows - Goldman Sachs Ki Bin Kim - SunTrust Robinson Humphrey Paul Adornato - BMO Capital Markets Michael Bilerman - Citigroup.

Welcome to The Macerich Company Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time.

Today’s conference is being recorded and now I would like to turn the conference over to Jean Wood, Vice President of Investor Relations. Please go ahead..

Thank you everyone for joining us today on our third quarter 2015 earnings call. During the course of this call, management will be making forward-looking statements, which are subject to uncertainties and risk associated with our business and industry.

For a more detailed description of these risks, please refer to the company’s press release and SEC filings. During this call, we will discuss certain non-GAAP financial measures as defined by the SEC’s Regulation G.

The reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is included in the press release and the supplemental 8-K filings for the quarter, which are posted in the Investors section of the company’s website at www.macerich.com.

Joining us today are Tom O’Hern, Senior Executive Vice President and Chief Financial Officer; Bob Perlmutter, Executive Vice President, Leasing; John Perry, Senior Vice President, Investor Relations; also dialing in is Ed Coppola, President. With that, I would like to turn the call over to Tom..

Thank you, Jean. Art will not be joining us today. He is out with a flu. After running 86 straight earnings calls since our IPO, this is actually his first miss. Consistent with past practice, we will be limiting this call to one hour.

If we run out of time and you still have questions, please do not hesitate to reach out for me or John Perry or Jean Wood. It was another very strong quarter for us.

We continue to see the benefit in our operating results of the major portfolio transformation we’ve been through the past three years, including the sale of 15 lower productivity malls and the redeployment of that capital into more productive faster-growing assets. Leasing spreads were good again this quarter and we saw good deal volume.

Bob Perlmutter will be speaking in more detail on leasing environment in a moment. We signed about 265,000 square feet of leases on space under 10,000 square feet with average re-leasing spreads for the trailing 12 months of 16.3% that’s on a cash basis.

Mall occupancy was at 95.4%, down slightly from a year ago, but if you look at the permanent occupancy, permanent occupancy was actually up 30 basis points to 90.2%. Average malls base rents increased to 53.83%, up from 49.27% a year ago.

In terms of FFO, FFO for the quarter came in at $1.1 that compared to $0.88 for the quarter ended September 30, 2014. Same center NOIs for the quarter was up 7%, compared to the third quarter of last year and year-to-date same centre NOI is up 6.5%.

The increase has been driven by increased permanent occupancy, double-digit releasing spreads, annual rent increases and aggressive operating cost management. Likewise our gross operating margins also improved significantly, gross margin came in at 69.5% that’s up from 66.4% in the third quarter of last year.

Year-to-date the gross margin has improved by 250 basis points to 68.6% compared to 66.1% through the first nine months of 2014. Bad debt expense for the quarter was about $800,000 that’s compared to $1.7 million in the third quarter of last year.

Lease termination revenue was up modestly at $3.4 million in the quarter, up from $2.2 million in the third quarter of last year. And I should note, in the fourth quarter 2015 we forecasted about $1.2 million of lease term revenue, which will comp negatively compared to the $6.8 million that we had in the fourth quarter of 2014.

So that would have an adverse impact obviously on fourth quarter same centre NOI growth rate. We still expect to see fourth quarter NOI growth rate of 4.5% to 5%, however even factoring in the expected drop in lease term revenue.

Looking at the balance sheet, it continues to be in great shape, debt to market cap at quarter end is 36.5%, interest coverage 3.9 times, debt-to-EBITDA on a forward basis 7.2 times, average debt maturity 5.5 years although with the refinancings we have under way that will stretch to 6.5 year average maturity.

The financing market continues to be strong, concurrent with the joint ventures that I’ll be discussing in a moment. We’re doing $1.8 billion in new financing and that will yield over $1.1 million of excess proceeds to MAC that includes the financing of Washington Square of $550 million.

The existing debt is $225 million, so we are doubling the size of that debt. We have not only locked in rate at 3.65 for seven years we expect to close on that loan on Thursday, this Thursday, tomorrow. In South Plains, we closed last Friday on a $200 million dollar loan at 4.22% and that’s for 10 years. South Plains have been previously unencumbered.

Los Cerritos Center on Friday, we expect to close $525 million worth of new loan that’s at 4% fixed or 12 years that pays of the existing debt of $186 million. And then in January, we expect to close the loan on Arrowhead, which is $400 million, that rate is also locked at 4.05% for 12 years.

And both Los Cerritos and Washington Square are interest only loans for the first six years. As announced on September 30, we reached agreement to contribute minority interest in eight properties valued at a total value of $5.4 billion, which represent a good cross-section of assets from the Macerich portfolio.

They went into separate joint ventures with GIC who was 40% and five assets in Heitman that were 49% in three assets. Expected cash proceeds from the transactions, total about $2.3 billion, which includes $1.1 billion of excess refinance proceeds most of which I just spoke of.

Use of proceeds is expected to include share repurchases under the Company’s recently authorized $1.2 billion share repurchase program, we’re also planning to pay down line of credit, and we expect to make two special dividends total in the range of $3.5 to $4.5.

We’re very pleased to enter into these transactions with these very well regarded investment partners this is an expansion of a long-standing relationship with Heitman and the beginning of a new one with the GIC.

These transactions provide us with significant capital to create additional shareholder value they also highlight the significant differential between the private and public market valuation of our assets.

The joint venture that will include Lakewood Los Cerritos, South Plains and Washington Square to the total value of $3.1 billion is expected to close within a week possibly as early as this Friday, October 30. Arrowhead, FlatIron, Deptford, and Twenty Ninth Street are expected to close in early January.

Cash to MAC on the first closing is $1.44 billion, which includes about $850 million of excess loan proceeds. On October 23, our Board of Directors declared 4.4% increase in the quarterly cash dividend to $0.68 per share of common stock that dividend is payable December 4, to stockholders of record to close the business on November 12.

In addition we expect that as a result of the joint ventures that we’re in the process of closing two special dividends of approximately $2 each per share will be paid in December and January. Action on those will take place shortly after the two closings or at least the first closing, which we expect within a week.

In our press release this morning we referred our previously provided FFO per share guidance range $3.86 to $3.94 that also factors in about $0.03 of dilution that we expect to incur as a result of the joint ventures for the balance of this year that’s on the four assets are closing in the next week for roughly two months that remain in this year.

Tenant sales Bob, will get into more detail, but just on overall basis the portfolio tenant sales came at $6.30 for the trailing 12 months. And if you look at that, compared to last year the portfolio was $5.71 on a same-center basis were about 7.7% and $6.30, compared to $5.85 on a same center basis at September 30, 2014 a very strong increase.

At this point I’d like to turn it over to Bobby to discuss the leasing environment..

Thanks, Tom. Performance during the third quarter remain strong as the company’s portfolio continues to benefit from the aggressive capital recycling program achieved during the past three years.

The sale of non-core slower growing assets and the repatriation of these dollars into high-growth acquisitions, development, and redevelopment initiatives is resulting in strong performance consistent with the strategy we are seeing an accelerated differentiation by retailers between A quality centers and lower productivity assets.

During the third quarter leasing spreads were 16.3% on a trailing 12 month period lease space dropped slightly by 10 basis points to 95.4%. On a year-over-year basis the portfolio is down 20 basis points, which is – which decline is modest given the magnitude of the tenant bankruptcies earlier in 2015.

And we believe it illustrates the high quality portfolio that Macerich owns. We have discussed many times our goals in reducing temporary tenant occupancy. On a year-over-year basis our temporary tenant occupancy has decreased 50 basis points, while permanent occupancy rose 30 basis points.

During the third quarter leasing levels increased to the top 20 centers within our portfolio we are experiencing the strong leasing spreads at the East and West Coast centers. Demand from retailers is larger than 10,000 square feet continues to be active with over 200,000 square feet lease during the third quarter.

Some notable deals include H&M at Broadway Plaza, Nordstrom Rack at Fashion Outlets of Chicago and Uniqlo at Tysons Center. Finally during the quarter we converted 52,000 square feet from temporary to permanent tenants resulting in 109% rent increase sales ended the third $630 per square foot, which is another high watermark for the company.

Year-over-year sales per square foot showed a 7.7% increase on the same centre basis.

Positive drivers for sales per square foot include one, increased from high-impact tenants such as Apple and Tesla; two strong categories such as home furnishings, jewelry, athletic footwear and cosmetics; three, store closures and remerchandising of under productive tenants such as RadioShack, Coldwater Creek, Love Culture gap and Wet Seal; and four, strong comparable sales at a number of centers including Fashion Outlets at Chicago.

On the negative side, apparel sales are only showing modest sales per square foot gains, if they struggle with a lack of a distinct fashion trend increasing competition from large format retailers and sluggish consumer settlement. All regions are showing increase in sales with the West Coast Post in the highest growth levels.

Turning to the development projects, we’re pleased with the progress of Broadway Plaza where we are nearly complete with the leasing for the first phase of the identification of this unique asset. A portion in the first phase will open in November with the majority of the expansion opening in May 2016.

Earlier in the week, we issued a press release, which is available on our website announcing 45 stores that have signed leases in this development. We are particularly pleased that Arhaus, Gap, H&M, and Zara are all signed to build two level of flagship stores at Broadway Plaza.

Overall, the first phase is 84% of this space under signed leases and we expect to add more retailers to this list prior to the May 2016 opening. We are also pleased with the leasing progress at green acres comments, a 335,000 square foot power centre located adjacent to Green Acres Mall.

The centre has executed leases on 75% of the space and will be anchored by Dick’s Sporting Goods, Ashley Furniture in Burlington, as well as a number of freestanding restaurants. We are planning a fourth quarter 2016 opening. Century 21 held a very successful store opening yesterday at Green Acres Mall.

We believe the addition of this unique 70,000 square foot department store will significantly add to the market penetration of this centre. We are also seeing the impact of adding theatres to some of our premier assets, including Santa Monica Place, Scottsdale Fashion Square and Los Cerritos.

These theatres which will open in the coming months have increased demands from high-quality restaurants, fast casual food concepts, and specialty stores. Restaurants opening during the fourth quarter include Cheesecake Factory at Santa Monica Place in Los Cerritos, as well as Shake Shack at Scottsdale Fashion Square.

Looking forward, we continue to make progress on the redevelopment of the existing Sears store Kings Plaza, as well as the pre-leasing for the outlet centers in Philadelphia and San Francisco. We expect to discuss these developments in the coming months. Art and Tom have both spoken in the past about our renewed emphasis on our common areas.

We’re focused on enhancing the revenue generation and elevating the customer experience, with a particular emphasis on fortress assets for both permanent kiosks and business development opportunities.

We are forecasting by the end of the year 2015, the in place annualized permanent kiosk revenue will have increased over 20%, as compared to the previous year.

Illustrative of their commitment to quality at Santa Monica Place we have been able to attract such users as Starbucks, Aesop, which is a high-end UK skincare company and Pressed Juice into the common area. All of these will impact revenue and enhance our customer experience.

Looking towards the end of the year, we are anticipating that bankruptcies are likely to be comparable or higher than in previous years. Many of these retailers are public companies and based on their current stock prices the markets are pricing in a significant risk of bankruptcy.

Contrary to the previous year, we are expecting less store closing as part of the bankruptcies as many of the retailers are prime candidates for restructuring with a smaller store base. Again, we believe the lower quality centers will be disproportionately impacted.

In conclusion, the performance during the first three quarters reflects a continuing demand from retailers for locations in high quality centers that serve dense and affluent trade areas.

The company is focused on better quality centers with a significant presence on both Coast, is consistent with many retailers breaking Brick & Mortar expansion plans.

The impact of the capital recycling that has occurred during the past three years is very evident in the year-to-date results and we believe positions Macerich well into the coming years.

Tom?.

Thanks Bob. Now as we go into Q&A, I ask everyone to, in order to give everyone a chance to ask their question, please limit yourself to one question. Thanks. Now we’ll go to Q&A..

[Operator Instructions] Our first question today comes from Jim Sullivan from the Cowen Group..

…from the asset sales.

What, if anything, have you provided for in terms of use of proceeds?.

I’m sorry, Jim, the first part of your question cut out a little bit..

Sure. To repeat, your guidance provided for $0.03 dilutive impact in Q4 from the asset sales.

What, if any provision have you made for use of proceeds in that revision?.

Well, Jim, the – one of the biggest use of proceeds will be the approved share buyback program. And that’s not something that we could start until after the window opened, which will be in November sometime. So there has been some of that assumed in the $0.03.

There has been some use of the cash to pay down the line of credit during that period of time. But a lot of that cash will not be deployed in the fourth quarter, and that’s been factored into the $0.03..

And moving on we have a question from Craig Schmidt from Bank of America..

Hi, great. Thanks. You’re looking at your sales per square foot by asset, I was wondering how village at Corte Madera went from 955 to 1,435 sales per square foot.

I’m wondering if it was related Tesla Motors maybe starting to report sales?.

Craig, this is Bob Perlmutter. You’re correct. I mean, two comments. Corte Madera has a small middle between the two department stores. So obviously, individual tenants can make a much greater impact. But secondly, I believe that last quarter Tesla annualized, and so now they’re included in the comp sales. So they obviously had a significant impact..

Great. Thanks..

[Operator Instructions] We’ll go next to Alexander Goldfarb from Sandler O’Neill..

Good morning out there. Tom, on the stock buyback, obviously, when you guys announced it a few weeks ago with the transaction, stock was materially lower and had a very good run.

So how much price sensitivity is there in the stock buyback program? And would you – are you guys 100% committed to it, or depending on where the stock is you may use that capital elsewhere where it may be more accretive?.

Alex, it’s always a function of market conditions. And today – the price we’re at today, we think it’s still a very significant discount to NAV, which would make a buyback attractive. So at the moment, it’s attractive, and we’ll just have to monitor market conditions as we move forward..

Okay. Thank you..

Next, we’ll go to Rich Moore from RBC Capital Markets..

Yes. Hi, guys. Good morning..

Hi, Rich..

What changes, Tom, occur through the same-store NOI numbers and the comp sales numbers when you guys complete the transaction – the joint venture transactions? I mean, is that prorated in some sense? Do you make changes based on your percentage ownership in each of those centers?.

Obviously, it’s a function of our pro rata ownership. I would say that the growth rate in those centers approximates the growth rate over the next five years we expect from the rest of the portfolio. So it really shouldn’t change things too much. But we’ll just keep picking up our pro rata share of NOI from those eight assets once the JVs have closed..

Okay. Thanks, guys..

And next we’ll go to Michael Mueller from JPMorgan..

Hi. Just a quick one.

What drove the higher cap interest expectation in guidance?.

Yes, Mike, we’ve been running about $5 million a quarter, that was just a change to our initial guidance assumption. We’ve been running it a little bit higher than that assumption, which was roughly at $4 million a quarter we’ve been running closer to $5 million. There really was no change in the projects per se.

There is always some timing that is factored in when you are estimating capitalized interest and that assumption was just low. If you see like the last three quarters we’ve been running pretty much right at 5 million to 5.5 million a quarter..

Okay.

So, nothing changed in terms of capitalization policies at the pipeline?.

No..

Okay.

And I forget is that a one question limit or can we have a follow-up?.

Go ahead Michael..

That doesn’t count though.

But your Green Acres Commons, is that a long-term hold in the portfolio?.

Mike this is Bob Perlmutter.

We really considered part of the mall and if you look at Green Acres Mall, there’s a significant amount of sales generation that comes from anchored tenants outside the mall, so it seems like it makes a ton of sense for us to own the asset in conjunction with the mall because a big part of the draw is not only the shopping center itself, but all the peripheral development..

Okay..

Bobby, this is Ed, can I make one comment?.

Sure..

It’s also the front door of the mall Michael. When we selectively went after that property during the acquisition process of Green Acres, we saw the opportunity there to integrate it into the property and make it part of as Bobby says the outside portion where Wal-Mart is and all the rest.

So, it’s an integral part of the property and that will be very productive and we’re getting very, very good rents compared to other big box deals in our portfolio. So, I assume it’s a long hold..

Got it. Okay. Thank you..

Our next question comes from Todd Thomas from KeyBanc Capital Markets..

Hi, thanks, good morning out there..

Hey Todd..

Hi.

First, quick follow-up question on the stock buyback, is there a limit as to how much stock can be repurchased within a certain timeframe and then my other question though is regarding the special dividend, the portion of that special that’s earmarked for 2016, I think you said that portion would be paid in January, is there are any thought or is it possible to delay that distribution until later in the year see how your taxable income position stands at year-end and then make a final determination, are there reasons why you can’t defer that payment at all into the year?.

In terms of that, we have a pretty good visibility on what the taxable income is going to be absent any other asset dispositions, so for tax purposes we’re deferring the closing on a few of these JVs until January and we’re pretty confident that we’re going to just go ahead and make that payment in January not deferred until later in the year.

So, I’d expect that once these JVs close that there will be a dividend they will each be approximately $2 a share likely one paid in December, one paid in January.

And I’m sorry Tom what was the first part of your question?.

I was just curious if there is a limit as to how much stock can be repurchased within a certain timeframe?.

Well, typically they say within a given trading date, 10% to 20% of your daily volume..

Moving on, we have a question from Paul Morgan from Canaccord..

Hi, good morning, just following up on your comments about the bankruptcy watch list and some of the apparel retailers I mean you said some of their stocks are pricing at a bankruptcy, but you didn’t necessarily see the post-holiday bankruptcy season this year as being as bad as it was in 2015 and I just wanted to get a little more clarity on the comment that some of these downsides could take place and the chance could be profitable I mean a lot of the downsizing is typically are part of the Chapter 11 filing and I mean we do contemplate change negotiating access outside of bankruptcy to downsize and become more profitable and how are you thinking about that?.

Paul, this is Bob Perlmutter. I think the distinction I was trying to draw is that when a tenant goes bankrupt in the last couple of years we’ve seen most of them result in the entire chain being closed. A number of the candidates that we believe are potentially priced in the way that bankruptcy is the significant risk.

We’re not as certain that they’re going to close this number of stores that the previous bankruptcies incurred. So we basically feel the bankruptcy levels maybe the similar as last year, but the amount of store closings maybe less, because the number of these chains will use bankruptcy potentially to reduce their store count.

Outside of bankruptcy it’s more difficult, because the landlords will typically require some buyout or compensation and many of the companies have not – there’s been very few examples where companies have been successful doing that..

Okay, and then that’s where it gets to your point that you think that the impact would be disproportionately felt on lower tier malls, because in part of the bankruptcy process though the stores that they would want to keep open would be in the high-end malls, is what?.

Correct. The higher productivity malls..

Yes, okay. Thanks..

Christy McElroy from Citi has our next question..

Hi, Christy..

Hi, good morning. Hey, guys, thanks. I’m wondering if you expect any onetime debt charges in Q4 and Q1 resulting from the refinancings that you are doing on the JVs, and sort of related to that the $3.86 to $3.94 range is your adjusted FFO guidance.

Can you provide your 2015 guidance range in accordance with NAREIT?.

As part of the transaction, we would expect to prepay early both Los Cerritos debt and the Arrowhead debt. Collectively that’s about $20 million a prepayment penalty and that would be split pro rata between our partner and ourselves. And that’s something that would happen as part of the closing of the transaction.

The things that would factor the NAREIT definition would include the cost we incurred as a result of the unsolicited takeover attempt and we spoke about those earlier in the year I don’t those in front of me. But that would be something that would be factored into yet to your NAREIT definition..

What’s the split of the $20 million between Q4 and Q1?.

It’s roughly half and half..

Okay. Thank you..

And we’ll go next to Vincent Chao from Deutsche Bank..

Hey, good morning everyone. Just a question, going back to the share buybacks, the 10% to 20% of daily volume.

Just curious, when you factor in blackout days, what number of days are really available to be buying back shares in any given quarter?.

Well, there’s a variety of ways to do these buybacks Vin, and one way is an accelerated share repurchase program where you effectively do a program through your investment bank and they don’t have the windows that we have.

So once that program is started if we go that route they could buy all the way through a quarter but no blackout windows or if it’s for us typically once the quarter ends we’re in a blackout period until three days after earnings call something like that.

So about a third of the quarter would be under normal circumstances would be a blackout period for us just depends on what method we used to pursue with the buyback..

Right, got it. Okay. Thanks. And then just another question on the leasing spreads – still very strong, but they have kind of tailed off a little bit over the last couple of quarters.

Is there anything to read into that? Or do you expect that could pick up again here over the next couple of quarters, just given the strength of your sales performance and things like that?.

I don’t think we see any trend that is affecting on I think it’s just a function of what basket of leases got signed in the projected quarter and what expired..

All right, okay. Thanks..

Our next question comes from Linda Tsai from Barclays..

Yes, hi following up on an earlier question, back to Bob’s comments about the challenging retail environment, and cognizant that the store closures would impact the class B malls more, do you have a forecast for the store closings you might see in your portfolio in 2016? Presumably it’s less than in 2015, but is there any sense yet?.

We keep a watch list that is based not only on companies, but particular stores. So where we have generally had a pretty good handle I know going into 2015 we had a very good handle on who was going to close and we budgeted accordingly.

So we’re in the same process now when we prepare our budget in terms of looking at not only chains that we think have additional risk, but particular stores that are vulnerable based on the occupancy costs..

But is it more or less than 2015?.

I would it’s pretty consistent honestly..

Okay. Thanks..

And now we’ll take a question from Haendel St. Juste from Morgan Stanley..

Hey, thanks there. So, Tom, I guess for you.

Going back to same-store NOI for the quarter, can you talk a bit more on the drivers for the 7% growth year-over-year, especially in light of the 20 basis point occupancy decline? And then with your year-to-date same-store NOI coming in around 6.5%, maybe some comments on what you’re seeing and expecting in 4Q that prevents you from raising the upper end of the current range?.

Okay, Haendel, I’ll be happy to repeat some of that. Actually, the permanent occupancy went up 30 basis points and that’s far more critical than occupancy with a temporary tenant. So the economic occupancy actually went up.

If you take a look at the impact of the expense cuts 7% for the quarter, the expense savings and cuts combined were about 2.4% of that. So that still puts us at 4.6% growth rate in the quarter, excluding the expenses that help drive the number up to 7%.

As I mentioned earlier in the call, fourth quarter we don’t expect to be that high, because we include lease termination revenues, that’s cash revenue to us, it’s an active part of the mall business where you make the decision to recapture space, take some cash now, and create a vacancy or not. So we included in our definition of same-store NOI.

And in the fourth quarter of last year, we had about $6.8 million of lease termination revenue. Our projection for the fourth quarter of this year is about $1 to $2 million. So that’s about $4.8 million, that’s going to have an adverse effect on that Same-center NOI number in the fourth quarter.

So we think the fourth quarter will be more like 4.5% or so, and if you combine that with the first three quarters that have averaged 6.5%, we end up at about 6%, which is the upper end of our guidance range, still very strong, I might add..

Gotcha. I appreciate the color and sorry if there was repetitive..

No problem..

Andrew Rosivach from Goldman Sachs have our next question..

Hi, this is Caitlin Burrows. The debt portion of your supplement mentions that you’re negotiating with the loan servicer for the loan associated with Flagstaff Mall, which is a $350 square foot mall.

I was just wondering if you could talk through what’s going on here and how you decided to go that route?.

Well, the debt is basically at or above the value of the center, and it’s non-recourse loan and we’re transitioning that loan back to the loan servicer..

Okay. Are there any….

The only point I would add on Flagstaff is the loan only secures the mall. The power center that is actually very well leased, adjacent is not part of the loan security..

Got it. Okay. And I was just wondering on the $350 a square foot that that mall is doing, it seems like a relatively okay amount.

So is there anything else just special about that center?.

In terms of the sales productivity, it’s certainly in the bottom part of our portfolio. And as Tom mentioned, when we look at the value of the asset and the levels of the debt, we don’t think there is equity involved that is warranted..

Okay. Thanks..

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

Thanks. Just a couple of quick ones.

Why not institute a 10b5-1 program for your share buyback where you can buy it during a blackout period? And the second question, when you talk about the – your watch list, does that include companies like Gap or Abercrombie, where the stock price isn’t exactly the low single-digits, but obviously they’re still closing a bunch of stores.

Is that in your radar screen as a potential more closures?.

I will try to take the second question, let Tom take the first. Companies like Gap and Abercrombie, our emphasis is more on specific stores than the company themselves.

So we focus our attention really within the portfolio and in terms of figuring out, which stores we have opportunities to remerchandise and get higher rents and more productivity tenants. And you see that in some of these numbers, for example, at a center like the Oaks, you see a pretty significant increase in sales.

And that increase was primarily, because we took a low productivity Gap store, low productivity Abercrombie store, and combined them and leased the space to Zara. So part of the discussion with those tenants is to work through some of these lower productivity stores as opposed to a more traditional watch list that says the company is a concern..

The first question or the first part of that one question in terms of the 10b5 plan, it’s a possibility. I mean, we ‘re considering all alternatives. We’re not going to scratch anything off the list in terms of how we go about a buyback..

Okay. Thank you..

Thanks..

Our next question today is from Paul Adornato from BMO Capital Markets..

Hi, Paul..

Hi, thanks.

Tom, you mentioned the improvement in gross margin, I was wondering if you could help us think through that metric how it should be trending over the next two years, and if that metric is an important one for management?.

Well, I think it’s important to improve that metric. It’s harder to measure between portfolios, because we’re not making widgets here. And obviously, it’s more expensive to operate a center in an urban area like New York in a suburban market.

But I think we stepped forward about nine months ago and said that, we were committing to push from margin improvement of about 400 basis points over the next two years. We picked up 250 basis points already for the – through the first three quarters of that two-year period, and we’ll continue to push forward.

Bob mentioned some of those drives that we’ve made on common area leasing, that’s going to be a big part of it. We’ve made some expense cuts this year that’ll carryforward, but you can’t do that every year to the same level. But they have contributed significantly this year.

But I think we’re going to continue to see the revenue growth that we’re going to continue to see that improvement as we go through the course of the next four or five quarters..

Thank you..

Jim Sullivan from the Cowen Group have our next question..

Thanks. Yes, I’ve got a question for Bobby on Primark. Primark, of course, has performed very well in Europe in terms of productivity, that’s obviously a different market than the U.S.. and they’ve opened their first store in Boston here last month.

I’m just curious, as you think about the addition of Primark to two of your centers, taking some of that Sears space, what do you anticipate will be the impact on traffic and perhaps sales levels from retailers who might be deemed to be competitive with their merchandise mix and price point?.

Well, we believe Primark will make a significant impact, in particular, on the East Coast, which is where they’re starting their store strategy.

We – we’ve been talking them for two, three years, not only because we feel that they will make an impact, but we feel our centers in particular on the East Coast are very well aligned with what their store expansion plans are. So right now there’s two transactions that are part of the Sears portfolio.

But we’re also having a number of other discussions with them. And, again, we believe our centers line up very much with what their store expansion will be. We are very impressed with the amount of traffic they generate.

And we’re obviously very impressed with their pricing, but we’re also very impressed with the physical box that they build, and the way that they handle the traffic through their store.

We believe their stores will take volume from multiple people both inside and outside the mall, both some fast fashion specialty format retailers, but also some big box and apparel retailers outside the mall. So we really, Jim, see their impact as more than just taking market share from mall tenants we see it as impacting many different venues.

I think, what you’ll see is, you will see the retailers adjust and become potentially been more competitive in terms of their pricing policy, and it will force the retailers to become better at providing the merchandise to the customers at a more affordable price..

Good. Thank you..

Our final question today is from Christy McElroy from Citi..

Hey, it’s Michael Bilerman. Tom, I’m just curious, as you think about – you’ve been working on this joint venture for the better part of 4 to 5 months. You announced it a few weeks ago. And the stock dividend is – or the cash dividend is pretty easy to model in, because you sort of had to return the capital.

But I’m curious, on the stock buyback, why you haven’t crystallized a more firmer plan, and why you’re just not just doing a Dutch tender to take back and do it all at once, rather than leaving some of this uncertainty.

I guess I’m curious why a decision hasn’t been made, as you knew this was coming?.

Well, Michael, for starters until the window opened early was nothing we could do and there are business reasons not to disclose and chip our hand as to how and when we’re going to do it obviously we’re going to be in the market buying back shares.

So in many respects the more detail you give up there the more works against you as you try to accomplish that goal. So we’re going to keep all those possibilities out there and consider all of them and I would expect us to be active as we go through the rest of the year..

Well, that I think that was the last question. I’d like to thank everybody for joining us on the call today. And looking forward to see most of you in NAREIT next month. Thank you..

And that does conclude our conference today. Thank you all for your participation..