Q4 2021 Macerich Co Earnings Call

Please standby we're about to begin.

Good day and welcome to the Mace Rich company fourth quarter 2021 earnings call. Today's conference is being recorded please be advised that this call is scheduled for one hour. We ask that you limit your questions to one question and one follow up question.

Speaker 1: Good day and welcome to the Mace Rich Company fourth quarter 2021 earnings call. Today's conference is being recorded. Please be advised that this call is scheduled for one hour. We ask that you limit your questions to one question and one follow-up question.

Speaker 1: At this time, I would like to turn the conference over to Samantha Greening, Director of Investor Relations. Please go ahead.

At this time I would like to turn the conference over to Samantha Greening Director of Investor Relations. Please go ahead.

Speaker 2: Thank you for joining us on our fourth quarter 2021 earnings call. During the course of this call, we'll 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, or future expectations.

Thank you for joining us on our fourth quarter 2021 earnings call. During the course of this call we'll 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 or future expectations actual.

Speaker 2: Actual results may differ materially due to a variety of risks and uncertainties set forth in today's press release and our SEC filings, including the adverse impact of the novel coronavirus, COVID-19 on the U.S., regional and global economies, and the financial condition and results of operations of the company and its tenants.

<unk> results may differ materially due to a variety of risks and uncertainties set forth in today's press release, and our SEC filings, including the adverse impact of the novel Coronavirus Coronavirus COVID-19 on the U S regional and global economies and our financial condition and results of operations of the company and its tenants.

Speaker 2: 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 are posted on the investors section of the company's website at macerich.com.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on form 8-K, with the SEC, which are posted on the investors section of the Companys website at <unk> Dot com.

Speaker 2: Joining us today are Tom O'Hearn, Chief Executive Officer, Scott Kingsmore, Senior Executive Vice President and Chief Financial Officer, and Doug Healey, Senior Executive Vice President of Leasing. With that, I turn the call over to Tom. Thank you, Samantha. And thanks to all of you for joining us today.

Joining us today are Tom O'hern, Chief Executive Officer.

Scott King's more senior Executive Vice President and Chief Financial Officer, and Doug Healey Senior Executive Vice President of leasing.

With that I turn the call over to Tom.

Thank you Samantha.

Thanks to all of you for joining us today.

We're pleased to report an outstanding quarter with virtually all of our operating metrics trending very positively.

Speaker 3: We're pleased to report an outstanding quarter with virtually all of our operating metrics trending very positively. After battling through a very tough situation, Muppets have ambient braking.

After battling through a very tough 2020.

Speaker 3: To see the results we've achieved in 21 is a testament to our team and the quality of our portfolio.

To see the results we've achieved in 'twenty, one is a testament to our team and the quality of our portfolio.

Speaker 3: We continue to see very significant and accelerating retailer and mixed-use demands.

We continue to see very significant and accelerating retailer and mixed use demands.

Speaker 3: Our shoppers have come roaring back to our centers to shop with a purpose.

Our shoppers have come roaring back to our centers to shop with a purpose.

Speaker 3: We see a higher capture rate than pre-COVID with traffic at about 95% of fourth quarter 2019 traffic but with tenant sales exceeding the 2019 level.

We see a higher capture rate than pre COVID-19 , which traffic at about 95% of fourth quarter 2019 traffic.

So it was tenant sales exceeding the 2019 levels.

In the fourth quarter, we again saw double digit tenant sales gains and thats three quarters in a row compared to 2019.

Speaker 3: In the fourth quarter, we again saw double-digit tenant sales gains, and that's three-quarters in a row compared to 2019.

Retailer demand is at a level, we have not seen since 2015.

Speaker 3: Retailer demand is at a level we have not seen since 2015.

During 2021.

Speaker 3: sign more leases in terms of square footage than we did in 2019.

We signed more leases in terms of square footage than we did in 2019.

Speaker 3: And in fact, the volume equaled the previous high volume year, which was 2015.

And in fact, the volume equaled the previous high volume year, with which was 2015.

Speaker 3: In general, 2021 delivered a strong holiday season, more full price sales, less promotional, strong volumes, even when compared to the 2019 holiday season.

In General 2021 delivered a strong holiday season.

Full price sales less promotional strong volumes, even when compared to the 2019 holiday season.

Speaker 3: We certainly experienced that with our fourth quarter comp tenant sales up 12% versus the fourth quarter of 2019.

We certainly experienced that with our fourth quarter comp tenant sales up 12% versus the fourth quarter of 2019.

Some of the quarterly highlights included on a sequential quarter basis, we had occupancy gains of 120 basis points.

Speaker 3: That's on top of the 90 basis point gains we saw in both the second and third quarters.

On top of the 90 basis point gains we saw in both the secondhand third quarters.

Speaker 3: at year-end our occupancy level was at 91.5 percent.

At year end, our occupancy level was at 91, 5%.

Speaker 3: We continue to make great progress in pushing occupancy up to pre-COVID levels.

We continue to make great progress on pushing occupancy up to pre COVID-19 levels.

Speaker 3: Since our low occupancy point in the first quarter of 2021, we've seen 300 basis points have improved.

Since our low occupancy points in the first quarter of 2021, we've seen 300 basis points of improvement.

We saw robust leasing volumes for the quarter and the year both were in excess of 2019 levels.

Speaker 3: We saw robust leasing volumes for the quarter and the year. Both were in excess of twenty nineteen levels. Now back into automation, carried on changing us across Ma dr corporate scheme ofided the bullet that's whyFSY Lyme

We executed $3 5 million square feet of space.

Speaker 3: And that compares very favorably to the full year of 2019, which was about 3.4 million square feet of space.

That compares very favorably to the full year 2019, which was about $3 4 million square feet of space.

Speaker 3: Leasing spreads were positive at 4.9% for the trailing 12 months.

Leasing spreads were positive at four 9% for the trailing 12 months.

Speaker 3: We saw great same center NOI growth of 36% in the fourth quarter.

We saw great same center NOI growth of 36% in the fourth quarter.

That was the third.

Speaker 3: That was the third double-digit quarter we gained in a row.

Double digit quarter regained in a row.

Speaker 3: We're optimistic heading into the fourth quarter as we raise the FFO guidance range to the midpoint of 196. That was a 3% increase on top of the increase in guidance from the previous quarter. Actual FFO per share exceeded the top end of that range and came in at 203.

We're optimistic heading into the fourth quarter as we raise the <unk> guidance range to the midpoint of 196 that was a 3% increase on top of the increase in guidance from the previous quarter.

<unk> <unk> per share exceeded the top end of that range and came in at two or three.

Speaker 3: And that result was heavily driven by record-setting percentage rent.

And that result was heavily driven by record setting percentage rents.

Speaker 3: We continue to ramp up our redevelopment efforts as we move past COVID.

We continue to ramp up our redevelopment efforts as we move past COVID-19 .

Speaker 3: During the fourth quarter, our joint venture with HPP on 1 Westwood.

During the fourth quarter, our joint venture with HCP on one Westwood and.

Speaker 3: In Los Angeles, we delivered a 584,000-square-foot, three-level creative office space to Google.

In Los Angeles, we delivered a 584000 square foot three level creative office space to Google We.

Speaker 3: We expect Google to open in the summer of 2022.

We expect Google to open in the summer of 2022.

Speaker 3: The project remains ahead of schedule and on budget. The project is being fully funded with a construction loan.

The project remains ahead of schedule and on budget.

<unk> is being fully funded with a construction loan.

Speaker 3: In addition to Google, we have numerous near-term openings with many exciting and prominent large format users, including, among others, Shields All Sports at Chandler Fashion, Caesars Republic Hotel at Scottsdale Fashion, and many other great events.

In addition to Google we have numerous near term openings with many exciting and prominent large format users, including among others Shields, all sports and fast at Chandler fashion.

Caesars Republic hotel at Scottsdale fashion square.

Targeted Kings Plaza.

Speaker 3: Lifetime Fitness at both Broadway Plaza and Scottsdale Fashion Square, Pinstripes at Broadway Plaza, and Primark at both Greenacres and Tyson.

<unk> fitness at both Broadway Plaza, and Scottsdale fashion square.

Stripes at Broadway Plaza, and Prime market, both green acres in Tysons.

Speaker 3: These projects are expected to be funded with excess cash flow from operations.

These projects are expected to be funded with excess cash flow from operations.

Focusing now on the leasing environment.

The depth and breadth of leasing demand has us very optimistic about 2022 and beyond.

Speaker 3: The depth and breadth of leasing demand has us very optimistic about 2022 and beyond.

The leasing interest we are seeing comes from a wide range of categories, including health and fitness food and beverage Entertainment sports co working hotels and multifamily.

Speaker 3: The leasing interest we are seeing comes from a wide range of categories including health and fitness, food and beverage, entertainment and sports, co-working, hotels, and multi-family. All those categories are at interest levels.

All of those categories are in interest levels, we've never seen before.

Speaker 3: That is on top of demand for more traditional retailers like Target, Primark, Uniqlo, and Shield.

That is on top of demand for more traditional retailers like target Prime Mark Uniqlo and shields.

During the quarter, we saw many retailers experienced accelerating sales as they got further into the holiday season.

Speaker 3: During the quarter we saw many retailers experience accelerating sales as they got further into the holiday season. And that's something they had not seen in years.

That's something they had not seen in years.

Speaker 3: In addition, because of the waning COVID restrictions, the importance of physical stores has become more significant to retailers, as consumers want more social in-person experience of brick and mortar shopping. For more information visit www.FEMA.gov

In addition, because of the waning COVID-19 restrictions the importance of physical stores has become more significant to retailers as consumers want more social in person experience a brick and mortar shopping.

Speaker 3: In addition, many retailers have strengthened their balance sheets and are financially in position to expand their new store opening.

In addition, many retailers have strengthened their balance sheets and are financially positioned to expand our new store openings.

Speaker 3: The combination of all these very positive factors have us very optimistic about 2022 and 2023. We expect significant gains in occupancy, net operating income, and cash flow this year.

The combination of all these very positive factors have us very optimistic about 2022 and 2023, we expect.

Significant gains in occupancy net operating income and cash flow this year.

And now I'll turn it over to Scott to discuss in more detail the financial results and balance sheet activity.

Speaker 3: And now I'll turn it over to Scott to discuss in more detail the financial results and balance sheet activities.

Speaker 4: Thank you, Tom. Now onto the highlights of the financial results for the quarter. Once again, we posted extremely strong operating results in the fourth quarter, with SAMHSA and NNOI increasing 36% relative to the fourth quarter of 2020, both with and without these terminations.

Thank you Tom now onto the highlights of the financial results for the quarter.

Once again, we posted extremely strong operating results in the fourth quarter were same center NOI, increasing 36% relative to the fourth quarter of 2020, both with and without lease termination income for the year same center NOI growth was seven 3%, including lease term income and six 1% excluding <unk>.

Speaker 4: For the year, same center NOI growth was 7.3% including least term income and 6.1% excluding least term income.

Lease term income.

Speaker 4: early in 2021 and consistently thereafter, we signaled strong double-digit growth was likely to come during the second half of 2021. And that is, in fact, how the latter half of 2021 played out, with 29 percent same-center NOI growth within the second half of 2021 relative to the second half of 2020.

Early in 2021 and consistently thereafter, we signaled.

<unk> double digit growth was likely to come during the second half of 2021.

And that is in fact, how the latter half of 2021 played out with 29% same center NOI growth within the second half of 'twenty, one relative to the second half of 2020.

Speaker 4: Funds from operations for the quarter were $46 million or 63% higher than the fourth quarter of 2020.

<unk> from operations for the quarter were $46 million or 63% higher than the fourth quarter of 2020.

Speaker 4: FFO per share for the quarter was 53 cents. This was 8 cents or 17% higher than the fourth quarter of 2020 at 45 cents per share. And it also represents a 5 cent or 10% increase over consensus FFO estimates of 48 cents per share for the quarter.

<unk> per share for the quarter was 53.

This was <unk> <unk> or 17% higher than the fourth quarter of 2020 at 45 per share.

And it also represents a five or 10% increase over consensus estimates of <unk> 48 per share for the quarter.

This was a very strong earnings quarter primary factors contributing to these quarterly NOI in SFO gains are as follows on the positive front one quarter.

Speaker 4: This was a very strong earnings quarter. Primary factors contributing to these quarterly NOI and FFO gains are as follows. On the positive front, one, the quarter included a $30 million or $0.19 increase in percentage rents resulting from the continued dramatic increase in sales that we reported earlier today and that Doug will soon explain in more detail.

Our quarter included a $30 million or 19% increase in percentage rents, resulting from the continued dramatic increase in sales that we reported earlier today that Doug will soon explain in more detail.

Speaker 4: Two, minimum rent and tenant recovery income increased by 18 million or 11 cents per share.

Minimum rent and tenant recovery income increased by $18 million or <unk> 11 per share.

Speaker 4: And three, common area income, which has recovered quite nicely, contributed another seven cents of NOI and FFO, including from our urban parking garages. As we've noted during the past few quarters, our common area business has recovered beyond our expectations, and in 2022, it may surpass pre-pandemic levels.

And three commentary income, which has recovered quite nicely contributed another <unk> <unk> of NOI and SSO, including from our urban parking garages as we've noted during the past few quarters. Our commentary business has recovered beyond our expectations and in 2022 and may surpass pre pandemic levels.

Speaker 4: Offsetting these factors were one, a decrease in non-cash straight line of rental income of $29,000,000 or $0.18 per share resulting from the high level of rental assistance granted to our tenants in the fourth quarter of 2020 due to the pandemic.

Offsetting these factors were one a decrease in noncash straight line rental income of $29 million or <unk> 18 per share.

<unk> from the high level of rental assistance granted to our tenants in the fourth quarter of 2020 due to the pandemic and.

Speaker 4: And lastly, the fourth quarter also included a decrease of roughly 14 cents in FFO per share. That resulted from the increase in share count due to the common stock sold in 2021 through our ATM programs. It was offset also by the interest expense from the proceeds raised from those equity offerings.

And lastly, the fourth quarter also included a decrease of roughly <unk> 14, and <unk> <unk> per share that resulted from the increase in share count due to the common stock sold in 2021 through our ATM programs.

And it was offset also by the interest expense from the proceeds raised from those equity offerings.

This morning, we issued 2022 SFO guidance.

Speaker 4: This morning, we issued 2022 FFO guidance.

Speaker 4: 2022 FFO is estimated in the range of 185 to 205 per share. While certain guidance assumptions are provided within the sub-filing from earlier this morning, here are some further details.

2022, <unk> is estimated in the range of $1 85 to 205 per share.

While certain guidance assumptions are provided within the sub filing from earlier. This morning here. Some further details.

Speaker 4: This FFO range includes a very healthy same center NOI growth range of an estimated 4.0 to 5.5 percent.

This range includes a very healthy same center NOI growth range of an estimated four.

To five 5%.

Speaker 4: At the guidance midpoint, we anticipate a $14 million increase in FFO.

At the guidance midpoint, we anticipate a $14 million increase in SFO.

Speaker 4: The guidance also includes an estimated $10 million decline in non-cash straight line of rent in 22 versus 2021. So when you exclude that non-cash straight line of rent, FFO is estimated to increase by $24 million or 6%, which is an increase of $0.11 per share.

The guidance also includes an estimated $10 million decline in noncash straight line rent and 22 versus 2021.

So when you exclude that noncash straight line of rent <unk> is estimated to increase by $24 million or 6%, which is an increase of <unk> 11 per share.

Speaker 4: So our outlook for 2022 reflects a very healthy increase in operating cash flow, which is what we've been focusing on for some time now. And given the strong pace of both reported occupancy growth, as well as leasing activity, we anticipate that trend to continue beyond 2022.

So our outlook for 2022 reflects a very healthy increase in operating cash flow, which is what we've been focusing on for some time now and given the strong pace of both reported occupancy growth as well as leasing activity, we anticipate that trend to continue beyond 2022.

The guidance range assumes no further government mandated shutdowns of our retail properties does not include the issuance of common stock in 2022, and it does not assume any acquisitions or dispositions other than land sale transactions.

Speaker 4: The guidance range assumes no further government-mandated shutdowns of our retail properties.

Speaker 4: not include the issuance of common stock in 2022 and it does not assume any acquisitions or dispositions other than land sale transactions.

Speaker 4: In terms of the quarterly cadence for 2022 FFO per share guidance, we expect 25 percent in the first quarter, 22 percent in the second quarter, 24 percent in the third quarter, and the remaining 29 percent within the fourth quarter of 2022. More details of the guidance assumptions are included on page 17 of the company's Form AK-SUP, which, again, was filed earlier this morning. As for the balance sheet, as part of our

In terms of the quarterly cadence for 2022 <unk> per share guidance, we expect 25% in the first quarter, 22% in the second quarter, 24% in the third quarter.

And the remaining 29% within the fourth quarter of 2022.

More details of the guidance assumptions are included on page 17, the company's form 8-K.

Which again was filed earlier this morning.

As for the balance sheet.

As part of our continuing commitment to reducing our leverage.

Speaker 4: In 2021, we reduced our share of debt by an extremely noteworthy $1.7 billion, or 20%.

In 2021, we reduced our share of debt.

By an extremely noteworthy $1 7 billion or 20%.

Speaker 4: During 2021, we generated free cash flow after payment of dividends and recurring capital expenditures of roughly $240 million.

During 2021, we generated free cash flow after payment of dividends and recurring capital expenditures of roughly $240 million.

Speaker 4: We expect continued cash flow growth over the coming years as our business continues to positively rebound post COVID and grow.

We expect continued cash flow growth over the coming years as our business continues to positively rebound post COVID-19 and grow.

Net debt to forward EBITDA at the end of 2021 was nine times this relative to leverage in the mid elevens at the end of 2020 as a result of the severe disruption from the Covid pandemic.

Speaker 4: Net debt to forward EBITDA at the end of 2021 was nine times. This, relative to leverage in the mid-11s at the end of 2020, is a result of the severe disruption from the COVID pandemic. So that's a full two and a half turns of progress in reducing leverage during just the past 12 months.

So thats a full two five turns of progress in reducing leverage during just the past 12 months and.

Speaker 4: And with what we believe is a very clear view as to future operating cash flow and NOI growth, we are well on our way to continued healthy improvement and leverage reduction and getting to our target of a sub-eight times net debt to EBITDA.

And with what we believe is a very clear views with future operating cash flow and NOI growth. We are well on our way to continued healthy improvement in leverage reduction and getting to our target of a sub eight times net debt to EBITDA.

Including Undrawn capacity on our revolving line of credit of which only 90 $696 million of the $525 million aggregate capacity is currently outstanding we have approximately $622 million of liquidity today.

Speaker 4: including undrawn capacity on our revolving line of credit, of which only 96 million of the 525 million aggregate capacity is currently outstanding. We have approximately $622 million of liquidity today.

From a secured financing standpoint in October 21, we closed a five year $65 million refinance of the shops at Atlas Park, which is a lifestyle center near Queens, New York, and we recently closed a $175 million five year refinance of Flatiron crossing an enclosed regional town center in Broomfield.

Speaker 4: From a secured financing standpoint, in October of 21, we closed a five-year, $65 million refinance of the shops at Atlas Park, which is a lifestyle center near Queens, New York. And we recently closed a $175 million, five-year refinance of Flatiron Crossing, an enclosed regional town center in Broomfield, Colorado in the northern Denver market.

<unk> in the northern Denver market.

Speaker 4: As we have mentioned, we continue to see positive progress within the debt capital markets with the execution of a growing number of retail deals on generally improving terms.

As we have mentioned, we continue to see positive progress within the debt capital markets with the execution of a growing number of retail deals on generally improving terms.

Speaker 4: Now, I will turn it over to Doug to discuss the leasing and operating environment. Thanks, Scott. We closed out 2021 with very strong leasing metrics and leasing volumes. In fact, 2021 was our strongest leasing year since 2015 when viewed on the same center basis.

Now I will turn it over to Doug to discuss the leasing and operating environment. Thanks.

Thanks Scott.

We closed out 2021, with very strong leasing metrics and leasing volumes. In fact 2021 was our strongest leasing year since 2015 when viewed on a same center basis.

Speaker 4: I'm going to run through some various metrics and statistics, some of which Tom mentioned in his remarks. And in doing so, we'll hopefully provide a bit more detail and color.

I'm going to run through some various metrics and statistics, some of which Tom mentioned in his remarks and in doing so we will hopefully provide a bit more detail and color.

Speaker 5: Sales were robust in December , and this is on top of a very productive October and November .

<unk> were robust in December and this is on top of a very productive October and November .

Speaker 5: Fourth quarter sales were up 12% over fourth quarter 2019. All categories, including food and beverage, comp positively during the quarter.

Fourth quarter sales were up 12% over fourth quarter, 2019, all categories, including food and beverage comp positively during the quarter.

Speaker 5: And this is on top of both the second and third quarters, each being up 14% versus 2019.

And this is on top of both the second and third quarters, each being up 14% versus 2019.

Speaker 5: Occupancy at the end of the 4th quarter was 91.5%.

Occupancy at the end of the fourth quarter was 91, 5% that's up 120 basis points from 93% at the end of the third quarter.

Speaker 5: That's up 120 basis points from 90.3% at the end of the third quarter. Over the past nine months, portfolio occupancy has increased 300 basis points relative to the 88.5% occupancy rate on March 31, 2021.

Over the past nine months portfolio occupancy has increased 300 basis points relative to the 88, 5% occupancy rate on March 31 2021.

Speaker 5: And this pace of recovery certainly exceeds our expectations from early on last year.

And this pace of recovery certainly exceeds our expectations from early on last year.

As I stated last quarter and I still believe given the much healthier retail environment that exists today, coupled with our strong leasing pipeline, we anticipate that occupancy will continue to increase throughout 2022 and into 2023.

Speaker 5: As I stated last quarter, and I still believe, given the much healthier retail environment that exists today, coupled with our strong leasing pipeline, we anticipate that occupancy will continue to increase throughout 2022 and into 2023. There are no bankruptcies in our portfolio.

There were no bankruptcies in our portfolio in the fourth quarter.

Speaker 5: Trailing 12 leasing spreads were 4.9% as of December 31, 2021.

Trailing 12 leasing spreads were four 9% as of December 31, 2021.

We feel good about the progress, we're making on our 2022 lease explorations.

Speaker 5: We feel good about the progress we're making on our 2022 lease expiration.

Speaker 5: To date, we have commitments on 39% of our 2022 expiring square footage, with another 55% in the letter of intent state.

We have commitments on 39% of our 2022 expiring square footage with another 55% in the letter of intent stage.

Speaker 5: In the fourth quarter, we opened 276,000 square feet of new storage.

In the fourth quarter, we opened 276000 square feet of new stores.

For the full year 2021, we opened 900000 square feet of new stores, which is about 2% more square footage than we opened during the same period in 2019.

Speaker 5: For the full year 2021, we open 900,000 square feet of new stores, which is about 2% more square footage than we opened during the same period in 2019. And I'm actually very pleased

And I'm actually very pleased about the statistics.

Speaker 5: Because if you think about it, the vast majority of 2021 store openings were a result of leasing done in 2019 and 2020, both of which were very difficult and challenging years to lease in, given the pandemic and the uncertainties it presented.

If you think about the vast majority of 2021 store openings were a result of leasing done in 2019, and 2020, both of which were very difficult challenging years to leasing given the pandemic and the uncertainties presented.

Notable openings in the fourth quarter include a ritchie at Tysons corner.

Speaker 5: Notable openings in the fourth quarter include Aritzia at Tyson's Corner, Alo Yoga at Scottsdale Fashion Square.

Hello, Yoga at Scottsdale fashion square.

Speaker 5: Urban Outfitters at Arrowhead and Chandler. Crunch Fitness at Deptford. Six stores with papaya at Arrowhead, Chandler, Desert Sky, Freehold, Scottsdale, and Superstition Springs.

Urban outfitters at Arrowhead in Chandler.

Fitness at Deptford.

Six stores with PAPAYA at Arrowhead, Chandler Desert Sky, Freehold, Scottsdale, and superstition Springs.

Speaker 5: and three stores with Windsor fashion at Flatiron, South Plains, and Victor Valley.

And three stores with Windsor fashion at Flatiron, South Plains and Victor Valley.

In the luxury category, we opened Marc Jacobs discussed out fashion Chanel face in beauty acumen common and.

Speaker 5: In the luxury category, we open Marc Jacobs at Costell Fashion, Chanel Face and Beauty at Kierland Common, and Versace at Fashion Outlook.

And versace of fashion outlets of Chicago.

The effort of sourcing new and exciting emerging brands continues to pay off as we opened <unk> Franke and lucid Motors, Tysons, Sim golf and worthy Parker at Washington Square.

Speaker 5: The effort of sourcing new and exciting emerging brands continues to pay off as we open Fabletics, Frankie's and Lucid Motors at Tysons, SimGolf and Warby Parker at Washington Square, Forward at Scottsdale Fashion.

Forward at Scottsdale fashion 10.

Speaker 5: 10 Shop and Tonel at Santa Monica Place and Guest Originals at Los Cerritos.

10 shop in <unk> at Santa Monica place and guests originals and low cerritos.

Yeah.

Now, let's take a look at the new and renewal leases, we signed in the fourth quarter.

Speaker 5: Now let's take a look at the new and renewal issues we signed in the fourth quarter.

Speaker 5: In the fourth quarter, we signed 146 leases for a half a million square feet.

In the fourth quarter, we signed 146 leases for a half a million square feet.

Speaker 5: For the full year 2021, we signed 833 leases for 3.5 million square feet.

For the full year 2021, we signed 833 leases for $3 5 million square feet.

Speaker 5: As Tom mentioned, this represents the highest square footage leasing volume for Mace Rich since 2015 when viewed on a same center basis.

As Tom mentioned this represents the highest square footage leasing volume for matrix since 2015, when viewed on a same center basis.

And speaking to the diversity of tenant demand we are seeing today. During 2021, we signed 99, new <unk> tenants.

Speaker 5: Speaking to the diversity of tenant demand we're seeing today, during 2021 we signed 99 new to Maestrich tenants, spanning 88 different brands for over 840,000 square feet.

Adding 88 different brands for over 840000 square feet.

Speaker 5: Notable leases signed in the fourth quarter include two key renewals with Apple at Fresno Fashion in Los Cerritos, as well as new leases with Free People Movement at Village of Corda Madera, Travis Matthew at Kierlin Commons, and Windsor Fashion at Fashion Outlets of Chicago and Fashion Outlets of Niagara Falls.

Notable leases signed in the fourth quarter include two key renewals with Apple at Fresno fashion, and luxury dose as well as new leases with free people movement at village of Corte Madera, Travis Matthew of Carolyn Commons, and Windsor fashion and fashion outlets of Chicago and fashion outlets of Niagara Falls.

We signed our first our release with Lidl.

Speaker 5: 30,000 square foot international grocer from Germany, with 11,000 stores across Europe and most recently the United States.

A 30000 square foot international grocery from Germany, with 11000 stores across Europe , and most recently the United States. They.

Speaker 5: They'll open a freehold raceway mall in summer 2023. And we look forward to further scaling our business.

They will open at Freehold Raceway mall in summer 2023, and we look forward to further scaling our business with them.

Speaker 5: In the home furnishings category, we signed leases with Lovesack at Freehold and Country Club Plaza, Ashley Furniture at King's Plaza, and Jembro Greenacres Commons.

The home furnishings category, we signed leases with love sack at Freehold and country Club Plaza Ashley furniture at Kings Plaza, and Gem broke green acres Commons.

Speaker 5: In the Emerging Brands category, we signed leases with Fabletics and Leap at Broadway Plaza and Scotch and Soda at Scotchdale Fashion.

And the emerging brands category, we signed leases with <unk> and leap at Broadway Plaza, and Scotch and soda at Scottsdale fashion.

Speaker 5: Lastly, as we continue to make our center something for everybody by adding ancillary service uses to traditional retail, we're pleased to announce the signing of the Department of Motor Vehicles at Valley River and the Veterinary Emergency Group at 29th Street in Boulder, Colorado.

Lastly, as we continue to make our centers something for everybody by adding ancillary service uses to traditional retail we're pleased to announce the signing of the department of Motor vehicles Valley River and the veterinary Emergency group at 29th Street in Boulder, Colorado.

Speaker 5: Turning to our leasing pipeline, at the end of the fourth quarter, we had 133 leases signed for 2 million square feet, which we expect to open in 2022 and 2023.

Turning to our leasing pipeline.

At the end of the fourth quarter, we had 133 leases signed for 2 million square feet, which we expect to open in 2022 and 2023.

Speaker 5: In addition to these signed leases, we're currently negotiating another 93 leases.

In addition to these signed leases were currently negotiating another 93 leases totaling.

Speaker 5: totaling 710,000 square feet, which will open in 2022 and early 2023.

Totaling 710000 square feet, which will open in 2022 in early 2023.

Speaker 5: So in total, that's over 225 signed and in-process leases, totaling 2.7 million square feet of new openings throughout the remainder of this year and into 2023.

So in total that's over 225 signed an in process leases totaling $2 7 million square feet of new openings throughout the remainder of this year and into 2023.

Speaker 5: And I want to emphasize, these are new openings. These numbers do not include renewals. So to conclude, sales continue to be much stronger.

And I want to emphasize these are new openings.

Does not include renewals.

So to conclude.

Sales continue to be much stronger than they were pre COVID-19 .

Speaker 5: Occupancy is up 300 basis points over the past three quarters and is expected to increase throughout 2022 and in 2023 There are no bankruptcies in our portfolio in the fourth quarter and bankruptcies overall are at their lowest levels since 2015 Which is consistent with our significantly reduced tenant watch

Occupancy is up 300 basis points over the past three quarters and is expected to increase throughout 2022 and 2023.

There are no bankruptcies in our portfolio in the fourth quarter and bankruptcies overall are at their lowest levels since 2015, which is consistent with our significantly reduced tenant watch list.

Speaker 5: Leasing velocity is at its highest level since 2015, as evidenced by the 3.5 million square feet we leased in 2021, the result of which is a very strong, vibrant and exciting pipeline of tenants slated to open yet this year and into 2023.

Leasing velocity is at its highest level since 2015 as evidenced by the $3 5 million square feet, we leased in 2021.

<unk> of which is a very strong vibrant and exciting pipeline of tenants slated to open yet this year and into 2023.

And given the new and emerging brands grant extensions and non retail uses we want to be in our centers I don't see these trends reversing anytime soon I believe 2022, and 2023 are going to be very exciting years on the leasing front years in which we will continue to transform traditional malls into experiential tower.

Speaker 5: And given the new and emerging brands, grand extensions, and non-retail uses that want to be in our centers, I don't see these trends reversing anytime soon. I believe 2022 and 2023 are going to be very exciting years on a leasing front, years in which we will continue to transform traditional malls into experiential town centers, where people will want to come to shop, to dine, to socialize, and to have fun.

In centers, where people want to come to shop to dine to.

To socialize and be entertained.

And now I will turn it over to the operator to open up the call for Q&A.

Speaker 5: And now I'll turn it over to the operator to open up the call for Q&A.

Speaker 1: Thank you. To ask a question, please press star one on your telephone keypad. Also, if you are using a speakerphone, please make sure your mute button is turned off to allow your signal to reach our equipment. As a reminder, please limit your questions to one question and one follow-up question. Once again, that is star one for questions. First, we'll go to

Thank you to ask a question. Please press star one on your telephone keypad also with you are using a speaker phone. Please make sure. Your mute button is turned off to allow your signal to reach our equipment.

As a reminder, please limit your questions to one question and one follow up question.

Once again that is star one for questions first we will go to Derek Johnston with Deutsche Bank.

Speaker 6: Hi, everyone. Thank you. I was hoping you could discuss private markets for a bit. You know, cap rates are so compressed for residential and industrial assets.

Hi, everyone. Thank you I was hoping you could discuss private markets for a bit.

Cap rates are so compressed for residential and industrial assets. Thus there really seems to be a surging interest in retail right now and notably local and grocer.

Speaker 6: Thus, there really seems to be a surging interest in retail right now, and notably, you know, local and grocer is certainly getting a lot of interest. But, you know, how is the interest in town center assets evolving? And could this perhaps impact?

It is certainly getting a lot of interest but.

How is the interest in town center assets evolving and could this perhaps impact your noncore.

Speaker 6: you know, your non-core assets and the dispo pace. And I say that especially, you know, as 90% of your NOI is derived from your top 30 centers.

Assets in the desktop pace and I say that especially as 90% of your NOI is derived from your top 30 centers.

Derek.

Speaker 3: Derek, it's a good question, although there certainly have not been any transactions for some time now, certainly in Class A regional malls, so it's really tough to speculate, you know, what a cap rate would be because there haven't been transactions. But given, as you mentioned, the very low cap rates in some other sectors, at some point the regional mall assets on the private side are going to...

It's a good question although.

There certainly have not been any transactions for some time now certainly in class a regional malls. So it's really tough to speculate what it what a cap rate would be because there haven't been transactions, but given as you mentioned in the very low cap rates and some other sectors that some point the regional mall assets in the private.

Side are going to.

Speaker 3: be found to be very attractive. Can't tell you what that is yet, because we haven't seen any transactions. But I will tell you if the market returns for

Be found to be very attractive.

Can't tell you what that is yet because we haven't seen any transactions, but I will tell you if the market returns for.

Some non core type assets for us, we certainly would be.

Speaker 3: Some non core type assets for us we certainly would be active on the disposition side you saw us do a couple dispositions in 2021 Paradise Valley, which is going to be converted from from an old mall into mixed use, as well as a lifestyle center in Tucson we sold last quarter and that was at about a five and a quarter cap rate or so.

Active on the disposition side you saw US do a couple of dispositions in 2021 Paradise Valley, which is going to be converted from <unk>.

From an old mall into the mixed use.

Well as a lifestyle center in Tucson, we sold last quarter and that was at about five and a quarter cap rate or so.

Speaker 3: But other than that, we don't have any transactions that we have seen that we could use as a good basis for speculating what the cap rate might be today on a quality regional model.

But other than that we don't have any transactions that we have seen.

That we could use as a good basis for speculating what the cap rate might be today at.

A quality regional malls.

Yeah.

Okay, Great and I guess switching gears.

Speaker 6: Okay, great. And I guess, you know, switching gears, you know, it is a trailing 12-month metric, but, you know, rent spreads were positive across the board for the first time since 3Q20. You know, that's on a consolidated JV and total basis.

As a trailing 12 month metric but.

Rent spreads were positive across the board for the first time since <unk> 2000, and that's on a consolidated JV and total basis. So have you reached an occupancy level, where youre, a little more comfortable and perhaps able to push rents a little more and then on the flip side is the tenant.

Speaker 6: So have you reached an occupancy level where you're a little more comfortable and perhaps able to push rent a little more? And then on the flip side, is the tenant demand and the breadth strong enough to actually get pricing at this point?

And then the brats strong enough to actually.

Get pricing at this point.

Speaker 3: Derek, I would say that it's always a fine balance between occupancy and rental rate.

Derek I would say that it's always a fine balance between occupancy and rental rate.

Speaker 3: And, you know, certainly we were under pressure in the beginning of 2021 when we hit a low point on occupancy of 88% to fill space.

And.

Certainly we were under pressure in the beginning of 2021, when we hit a low point in occupancy of 88%.

To fill space.

Speaker 3: And I would say that likely in the first and second quarter, we filled space, and it may have cost us a bit on rate. We felt that started to change and balance out in the third and fourth quarter.

And I would say that.

Likely in the first and second quarter.

We filled space in EMEA have cost us a bit on rate, we felt that started to change and balance out in the third and fourth quarter.

Speaker 3: as demand accelerated. So we had less space available and we had an accelerating leasing environment which really helped balance things between occupancy and rate and we expect that to continue.

As demand accelerated so we had less space available and we had an accelerating leasing environment, which really helped balance.

Things between occupancy and rate and we expect that to continue.

Speaker 5: Doug, you want to elaborate? Derek, to the point of the breadth of tenants, I mean, I think that is really going to be a factor in rate in the future. You know, we're leasing to all different sorts of uses, not just traditional legacy retailers, although they're still very important to our portfolio. But when you factor in digitally native emerging brands, tenants we're doing internationally.

Doug you want to elaborate.

The Derrick to the point of the breath of tenants I mean, I think that is really going to be a factor in it.

Right in the future.

We're leasing to all different sorts of uses not just traditional legacy retailers, although that is still very important to our portfolio, but when you factor in the digitally native emerging brands tenants, we're doing internationally food.

Speaker 5: food and beverage, fitness, entertainment, grocery, health and wellness.

Food and beverage fitness entertainment grocery health and wellness.

Service It just adds a whole new.

Speaker 5: it just adds a whole new dimension of retailers that we have to choose from, which is going to create competition and then ultimately affect rate.

Dimension of retailers that we have to choose from which is going to create competition and then ultimately affect rate.

Thank you guys.

Thank you thanks Derek.

Speaker 1: Moving on, we'll go to Craig Schmidt with Bank of America.

Moving on we'll go to Craig Schmidt with Bank of America.

Speaker 7: Yeah, I wanted, I mean, obviously great news, the continued elevated leasing and the opening of new stores. I'm just wondering, is there going to be a problem with staffing these new stores? I mean, obviously.

Yes, I wanted to I mean, obviously great news.

The elevated leasing and the opening of new stores I'm. Just wondering is there going to be a problem with staffing.

These new stores I mean, obviously.

Speaker 7: to get new workers is getting more and more competitive, higher minimum wages, bonus signings, and just a shortage of workers. Could this be a cap? Although they've leased these stores, can they get them all open in a regular space of time?

But to get new work is getting more and more competitive higher minimum wages.

Bonus plans and just the shortage of workers.

Could this be a cap.

Although they've leased these stores can get them all opened in.

Regular space of time.

Speaker 3: Now, Craig, that's a that's a good point. And, you know, it's going to continue to be a challenge for the retailers. And that's, you know, hiring enough good people. That's true of almost any industry today. But it doesn't seem to be slowing down the pace of new store signings and openings. Granted, some of some of those locations may be understaffed a bit and service may not be quite what we'd like to see, but they're getting their stores open.

Craig that's a good.

Point, and it's going to continue to be a challenge for the retailers and Thats no hiring enough. Good people, it's drove almost at any industry today.

But it doesn't seem to be slowing down the pace of new store signings and openings.

Now granted some of those locations may be understaffed a bit.

And service may not be quite what we'd like to see.

But theyre getting their stores opened.

Okay. Thank you and then just.

Speaker 7: Okay, thank you. And then just maybe a word on the Bloomingdale's and ArcLight redevelopment. It looks like you're going to be bringing in both entertainment and office. I just wondered, you know, which would be on the top floor and which might be on the lower levels that Bloomingdale occupies.

Maybe a word on <unk>.

The bloomingdale's and Arclight redevelopment.

Redevelopment.

It looks like Youre going to be bringing in both entertainment and office and I just wondered.

Would you be on the top floor, and which might be on the lower levels that that bloomingdales.

Occupied.

Yes, we're still in the process of that Craig as you know Thats a great location, it's right across the street from the end of the train line.

Speaker 3: Yeah, we're still in the process of that. Craig, as you know, that's a great location. It's right across the street from the end of the train line. Great visibility and it was a two level Bloomingdale's and then on top of that was an arc light theater.

Great visibility and it was a two level bloomingdales and then on top of that was an Arclight theater.

Speaker 3: So we now have possession of the theater space. It'd be very logical to put another theater up there and then put either one or two new tenants in on the first and second floor. We've had a fair amount of demand from creative office users, co-working, as well as more traditional retail. So a lot of different choices to make there, and you'll be hearing more about that in the quarters to come, but it's a great space. It's a quality situation for us.

So we now have possession of the theater space.

It would be very logical to put another theater up there and then.

But either one or two new tenants in on the first and second floor. We've had a fair amount of demand from creative office users co working as well as more traditional retail so.

A lot of different choices to make there.

Youll be hearing more about that in the quarters to come but it's a great space to quality situation for us.

Thank you.

Okay.

Speaker 1: And next we'll go to Sameer Kanal with Evercore ISI.

And next we will go to Samir Khanal with Evercore ISI.

Speaker 7: Hey, uh, good morning everybody. Um, so just on your level of termination income that you're assuming for the year, the 22Million. Just wondering, um, kind of what's driving that and I would have thought maybe that number would have been lower. Considering the, the, you know, the amount of closures that have been sort of at the lowest point here. So, maybe Doug, or anybody who wants to take that, maybe, you know, tell us what the tenants categories that are describing that number. Yeah, sure. Samir good morning.

Hey, good morning, everybody.

So just on your level of termination income that you are assuming for the year the $22 million.

Just wondering.

What's driving that and I would've thought.

Maybe that number would have been lower.

Considering the amount of closures that have been sort of at the lowest point here.

So maybe Doug or anybody who wants to take the maybe.

Tell us what many of the tenants categories.

Arrive at that number.

Yeah sure Samir good morning, Scott.

Speaker 4: Yeah, we've we've had a few termination settlements that have already triggered actually during the first part of this year, which is one of the reasons why you see the FFO a little bit higher than it would typically be in the first quarter.

Yes.

Had a few.

Termination settlements that have already triggered actually during the first part of this year, which is one of the reasons why you see the SFO a little bit higher than it would typically be in the first quarter.

Speaker 4: And so given that, given those few transactions, and these are really kind of proactive brand closures from, you know, ongoing interests, you know, they've just decided they want to consolidate brands. And so we've been able to negotiate settlements without naming names.

And so given that.

Given those few transactions and these are really kind of proactive brand closures from.

Ongoing inter.

Interests, they've just decided they want to consolidate brands and so we've been able to negotiate settlements without naming names.

Speaker 4: You know, given those already aimed and executed deals, we've got some termination income that's unspoken for, but that's really what's driving the high level of termination income in 22.

Given given those already inked and executed deals we've got some termination income that's unspoken for it but that's really what's driving the high level of termination income in 2002.

Speaker 7: Got it. And then I guess as a follow up, just maybe if we can, you know, unpack the guidance a little bit is, I mean, it's a big range.

Got it and then I guess as a follow up just maybe if we can.

Unpack the guidance a little bit I mean, it's a big range.

Speaker 7: And when you think about the sort of the low end and the top end of the range, I mean, is there anything that you can provide, whether it's. You know, what you're assuming for occupancy or any other kind of sort of line items here.

And then when you think about the sort of the low end and the top end of the range. I mean is there anything that you can provide whether it's.

What youre, assuming for occupancy or any other kind of separate line items here.

Yes.

Speaker 4: Yeah, the biggest factor that's really driving the range, and I think you probably heard this earlier this week, too, from one of our peers is the tenant sales environment.

Yeah, the biggest factor that's really driving the range.

I think you've probably heard this earlier this week two from one of our peers as a.

Tenant sales environment.

We've made some assumptions in our detailed budgeting that sales are going to be relatively flat versus 'twenty one.

Speaker 4: We've made some assumptions in our detailed budgeting that sales are going to be relatively flat versus 21. That could certainly change. That's not a predictor of what's to come. I think that's just a reasonable assumption, and if it proves to be conservative, we could certainly exceed our percentage rent estimates in our detailed guidance.

That could certainly change that's not a predictor of what's to come I think thats, just a reasonable assumption and if it proves to be conservative we could certainly exceed our percentage rent estimates in our in our detailed guidance.

Speaker 4: In addition, you know, at least termination income, again, is a little bit large. We've got some of that spoken for, some of it that's not. We just touched on that, Samir.

In addition at lease termination that come again is a little bit large we've got some of that spoken for some of it that's not we just touched on that Samir.

Speaker 4: And I'd say lastly, we also have some land sale transactions that are.

Lastly, we also have.

Some land sale transactions that are planned.

Speaker 4: Plan to be consistent with where we landed in 21 in terms of those gains and those FFO increases, but you know, those are you know take a lot of planning and entitlement and Due diligence to actually execute on so that that could you know, ultimately occur or not occur And so those are those are really some of the primary factors that are driving the wider range Samir you asked about occupancy and we picked up 300 basis points in 21, which is

Planned to be consistent with where we landed in 'twenty one in terms of those gains and those SSO increases but those are.

Take a lot of planning and entitlement and <unk>.

Due diligence to actually execute on so that could.

Ultimately occur or not occur and so those are really some of the primary factors that are driving the wider range. Sameer you asked about occupancy and we picked up 300 basis points in 'twenty, one which is.

Speaker 3: Fairly incredible we're not expecting to be quite that high and in 22 and 23, but if you said pre coven our occupancy level was 94% today.

Fairly incredible we're not expecting to be quite that high in 'twenty two 'twenty three but if you said pre COVID-19 our occupancy level was 94%.

Today, we're at 91 and a half.

Speaker 3: 250 basis points to get back to where we were pre-COVID and on occupancy. And I would expect roughly half of that to be picked up in 22 and half in 23. So we don't typically give guidance on occupancy, but I'll give you a ballpark there that roughly half of that 250 basis points will be picked up in 22 over the course of 22.

250 basis points to get back to where we were pre COVID-19 on occupancy.

And I would expect roughly half of that to be picked up in 'twenty, two and half in 'twenty three.

So we don't typically give guidance on occupancy, but I'll give you a ballpark there that roughly half of that 250 basis points will be picked up in 22 over the course of 'twenty two.

Okay.

Great great. Thanks, so much Scott I appreciate it.

Speaker 1: We will now hear from Alexander Goldfarb with Piper Sandler.

We will now hear from Alexander Goldfarb with Piper Sandler.

Hey, good morning out there.

So two questions for me.

Speaker 8: So two questions for me. First, Scott, on the refinancings, certainly the mall performance, the fact that you guys are exceeding 2019.

First Scott on the Refinancings certainly the mall performance. The fact that you guys are exceeding 2020.

2019 sales healthily in the leasing volume et cetera, I would think that would be making the lenders much much calmer in a better mood to do to do refinancing. So is there is there something else that's going on as far as like the refinancings of the 2020 and the 2021 I would have.

Speaker 8: sales healthily and the leasing volume, etc., I would think that would be making the lenders much calmer and in better moods to do refinancing. So is there something else that's going on as far as like

Speaker 8: the refinancings of the 2020 and the 2021. So I would think that the letter should be pretty excited with how you guys have shown the rebound of the malls and certainly the strength of lease.

I would think that the lenders should be pretty excited with how how how you. How you guys have shown the rebound in the malls and certainly the strength of leasing.

Speaker 4: Yeah, Alex, I think you're reading it correctly. The markets continue to get better quarter after quarter. And in fact, we're pretty active right now. We just closed last week, as I mentioned, a loan on Flatiron Crossing. We're active on

Yes, Alex I think youre reading it correctly the markets continue to get better.

Quarter after quarter and in fact, we're pretty active right now we just closed last week as I mentioned alone on Flatiron crossing we're active on.

Speaker 4: A few other transactions as well, you know, the CMBS market is very productive right now, both on a single asset as well as a conduit basis. We're seeing, you know, some fairly strong interest, and that ranges from assets that start at 500 bucks a foot headed north.

A few other transactions as well.

The <unk> market is as very productive right now both on a single asset as well as a conduit basis, we're seeing.

On some fairly strong interest in that ranges from assets that started at 500 Bucks a foot headed north.

Speaker 4: You know, if you look at our pipeline, we feel pretty good about it. We've got some very high quality assets coming.

If you look at our pipeline, we feel pretty good about it we've got some very high quality assets coming with maturities like Scottsdale fashion like Tysons corner like Green acres, where we've done a lot of leasing and I think those are going to be very well received in the 'twenty three time frame.

Speaker 4: with maturities like Scottsdale Fashion, like Tyson's Corner, like Green Acres, where we've done a lot of.

Speaker 4: Leasing and you know, I think those are going to be very well received in the 23 time frame and

Speaker 4: You know, like I said, we're extremely active. Banks are out there doing business. Debt funds are out.

Like I said, we're extremely active.

Are out there doing business that funds are out there.

Speaker 4: And even some of the life companies are bidding on on high quality a mall transaction. So, you know, given the quality of our portfolio, I feel I feel good about our ability to execute here. And like I said, we're very active and we'll continue to report those deals as and when they they occur.

And even some of the life companies are bidding on on high quality a mall transaction. So given the quality of our portfolio I feel I feel good about our ability to execute here.

We're very active and we will continue to report those deals.

When they occur.

Speaker 8: Okay, so just reading between the lines sounds like the 2020 and the 2021s that are on short-term extensions.

Okay. So just reading between the lines it sounds like the 2020 and the 2020 ones that are on short term extensions sounds like those are still being worked through so.

Speaker 8: Sounds like those are still being worked through. So I guess I'll wait. That's what it sounds like. My next question is on, unfortunately, all the theft, the crime that's been in the headlines. Obviously, you guys are not immune. Has there been any impact to leasing as far as tenants reacting one way or the other? I mean, your peer already commented on security expense going up, but just curious if there's been any fallout on the leasing front, either positive or negative, as tenants assess their location.

So I guess, that's what it sounds like my next question is on Unfortunately, all the.

The SaaS the crime that's been the headlines obviously you guys were not immune.

Has there been any impact to leasing as far as tenants react in one way or the other I mean your peer already commented on security.

<unk> going up but just curious if theres been any fallout on the leasing front, either positive or negative as tenants assess their locations.

Hey, Alex it's Doug.

Speaker 5: Hey Alex, it's Doug. I'm talking to the retailers all the time. My team is talking to the retailers all the time. I would say the answer to that question is a solid no. And I say that because as we look at the deals we approve and we bring deals to committee every other week, we're substantially outpacing where we were actually in 2021. So we have not seen it. Okay.

Talking to the retailers all the time my team is talking to the retailers all the time I would say the answer to that question is a solid no.

And I say that because as we look at the deals we approve and we bring deals to committee every other week.

We're substantially outpacing where we were actually in 2021, so we have not seen it.

Okay. Thank you.

Thanks, Alex.

Speaker 1: Moving on, we'll go to Flores Van Dykem with Compass Point.

Moving on we'll go to Floris van <unk> with Compass point.

Thanks for taking my question guys.

Speaker 9: You know, just delving into the same store NOI number a little bit more, obviously, you still have, you know, your 3% fixed bumps. So, you know, all things being equal, everything else would, you know, go up by 3% if the world stayed the same. But you're going to see some occupancy gains, as you alluded to, Tom, maybe 125. It looks like you're buying that open. Pipeline is about.

Just delving into the same store NOI number a little bit more obviously you still have.

Your 3% fixed bumps.

So all things being equal everything else would go up by 3%.

If the world stayed the same but youre going to see some occupancy gains as you alluded to Tom maybe 125.

It looks like you are signed not open pipeline is about.

Speaker 9: you know, about 5% of your, your total space ballpark figure there. So again, some, some significant.

About 5% of your your total space at ballpark figure there. So again some some significant.

Speaker 9: significantly higher upside potential in terms of NOI as I look at it. But what's your, what's your temporary tenant percentage today? And, um, you know, I know your peers, you know, indicated what the rents were for, for the temp tenants. Uh, it looks like it's a threefold increase to, to, uh, to permanent, uh, uh, rents. What, what kind of, kind of Delta is there? Is it similar in your portfolio?

Currently higher upside potential in terms of NOI, but as I look at it but what's your what's your temporary tenant percentage today and.

I know your peer indicated what the rents were for the temp tenants.

It looks like at the threefold increase too to permanent.

Rents what whats kind of Delta is there is it similar to your portfolio.

I mean, I would say that you get between two and three times the rent from a permanent tenant than you get from a temporary.

Speaker 3: I mean, I would say that you get between two and three times the rent from a permanent tenant than you get from a temporary.

Speaker 3: And what happened is we did see some good temporary tenant leasing in 2020 and 2021, because as we got a lot of that space back very quickly by virtue of the 2020 bankruptcies, takes a while to generate a permanent lease. So we put a lot of that space in the hands of our specialty leasing group, and they had more inventory than usual, and they did a great job of filling a lot of that space on a temporary basis. You know, I'd say temporary occupancy.

What happened is we did see some good temporary tenant leasing in 2020 in 2021, because as we got a lot of that space back very quickly by virtue of the 2020 bankruptcies. It takes a while to generate a permanent lease. So we put a lot of that space in the hands of our especially.

Especially leasing group and they had more inventory than usual and they did a great job of filling a lot of that space on a temporary basis.

I'd say temporary occupancy.

Speaker 3: When we were at 88% permanent occupancy, we probably had, you know, close to 7% of our space was being leased on a temporary basis. And that's going to shrink and continue to shrink as we convert these leases to permanent leases. You know, another thing on the same center number, you've got to keep in mind that

When we were at 88% permanent occupancy, we probably had close to 7% of our space was being leased on a temporary basis and thats going to shrink and continued to shrink as we convert these leases too to permanent leases. Another thing on the same center number you got to keep in mind that.

We're going to get a full year impact of that 300 basis point gain in occupancy that happened in 2021, but we wont see that economic impact until 2022.

Speaker 3: We're going to get a full year impact of that 300 basis point gain in occupancy that happened in 2021, but we won't see that economic impact until 2022 and in some cases 23 if there's a delayed opening as a result of an extensive build out so that's part of what's driving same center not just in 22 but should drive it also in 23.

In some cases 23, if theres a delayed opening as a result of an extensive build out. So that's part of what's driving same center not just in 'twenty, two but should drive it also in 'twenty three.

And then maybe.

Speaker 9: And then maybe I noticed that while your leasing spreads were positive, which was very encouraging, the average rent signs.

Notice that your while your leasing spreads were positive which was very encouraging the average rent signs is still below the average in your portfolio.

Speaker 9: is still below the average in your portfolio. Do you expect your average ABR on leases, new leases executed, to continue to steadily increase? And what has been the, you know, how much ability do you have to push to those rents? And maybe talk about your occupancy costs as well, and what has happened to your occupancy costs relative to the last couple of years.

Do you expect your average ABR on on leases new leases executed to continue to steadily increase in what has been the how.

How much ability do you have to push.

Those rents and maybe talk about your occupancy costs as well what has happened to your occupancy cost relative to last.

Last couple of years.

Yes, Floris good afternoon.

Speaker 4: Yeah, Floris, good afternoon. Yeah, we would expect average base rent to continue to tick up, you know, when you think of it, especially

Yes, we would expect average base rent to continue to tick up when you think of it especially.

Speaker 4: excuse me, in the context of some of the COVID negotiations from 2020, where we did some heavy variable rent deals, we will continue to see variable rent convert to fixed rent with fixed annual escalators. So that's exactly where we want to be. So I would expect over the course of the next couple years.

Excuse me in the context of some of the current negotiations from 2020, where we did some heavy variable rent deals. We will continue to see variable rent convert to fixed rent with fixed annual escalators. So that's exactly where we want to be so I would expect over the course of the next couple of years as that variable rent converts to <unk>.

Speaker 4: As that variable rent converts to fixed, we'll see average base rents continue to tick up.

Average base rents continue to tick up.

Speaker 4: On the cost of occupancy side, we've certainly seen that metric drop with the increase in sales. We haven't reported that, but I'd say we're probably at what would be considered a historic low, just given the sales environment today. There's definitely some room to push.

On the cost of occupancy side, we've certainly seen that metric drop with the increase in sales we haven't reported that.

Say, we are probably at what would be considered a historic low just given the sales environment today.

There's definitely some some room to push.

Thanks Scott.

Okay.

Speaker 10: And next, we'll go to Linda Tsai with Jefferies. Hi. Hi, Linda. Hi. Sort of tacking on to Alex's question, can you discuss how you'll approach the mortgages coming due in 2022? You noted a very healthy refinancing market, but, you know, what are the main steps to reach eight times net debt to EBITDA, and it sounds like raising equity isn't factored into your guidance.

And next we'll go to Linda Tsai with Jefferies.

Hi.

So we're working on that.

Hi.

You're talking on to Alex's question can you discuss how you will approach the mortgages coming due in 2022, you noted the very healthy refinancing market, but what are the main steps to reach <unk> eight times net debt to EBITDA and it sounds like raising equity isn't factored into your guidance.

Speaker 4: Well, you know, we continue to chip away at the maturity schedule. Linda, as I look at the.

Well, we continue to chip away at the at the maturity schedule Linda as I look at the.

Speaker 4: The debt that is rolling in 22 and in 2023, those assets are pretty well positioned. They're generally very high-quality assets. I called out a few earlier, and as I look at several of those, they're extremely underleveraged.

The debt that is rolling in 'twenty, two and in 2023.

Those assets are pretty well positioned there are generally very high quality assets I called out a few earlier.

And as I look at several of those theyre extremely under leveraged.

Speaker 4: You know, which leads me to believe that we'll probably have a net liquidity event over the course of the next 18 months as we refinance 22 and 23, you know, we're picking those off in order of time date in order of maturity. So, again, we're very active in the market, spending a lot of time on it and receiving, you know, quite a quite a good reception. So I feel good about where we stand right now.

Which leads me to believe that we will probably have a net liquidity.

Events over the course of the next 18 months as we refinanced 22 and 23, we're picking those off in order of time date in order of maturity. So again, we're very active in the market spending a lot of time on it and receiving quite a quite a good reception. So I feel good about where we stand right now.

How about the timeframe for getting to eight times.

Speaker 4: Well, I think part of that is going to be driven by increase in NOI. You know, we painted, I think, a pretty optimistic picture for 22 with...

Well I think part of that is going to begin driven by increase in NOI.

I think a pretty optimistic picture for 'twenty two with.

Speaker 4: you know, with our same center in a wide range of roughly 4.75% with the occupancy growth that we're seeing. And again, occupancy being a leading indicator, and you'll see a lot of that cash flow come online later in 22 and into 23. And also with the pickup and leasing environment, you know, we really don't see that abating at all. And so as we continue to grow EBITDA and NOI, we'll continue to see that sub-8 target become much more of a reality.

With our same center NOI range at roughly 475% with the occupancy growth that we're seeing and again occupancy being a leading indicator and youll see a lot of that cash flow come online later in 'twenty, two and into 'twenty three and also with the pickup in leasing environment, We really don't see that abating at all.

And so as we continue to grow EBITDA and NOI will continue to see that sub eight target.

Much more of a reality.

I would expect it to happen.

Speaker 3: By the end of 2023, you know, some of it depends on the not just the pace of NOI pickup, but also our ability to sell non-core assets. We kind of quietly went out, sold $150 million worth of assets this year and used those proceeds to delever. And I'd expect we'll see some of that in 22 and 23 as well. Are you getting inbounds?

By the end of 2023 some of it depends on the pace not just the pace of <unk>.

NOI pickup, but also our ability to sell non core assets, we kind of quietly went out sold a $150 million worth of.

Assets this year.

Use that those proceeds to Delever and I would expect we'll see some of that in 'twenty two 'twenty three as well.

Are you getting inbounds in terms of interest for your noncore assets.

Okay.

Speaker 3: Uh, occasionally we do generally, you know, we're out trying to create the opportunity and you know, we do these on a one off basis. Um, we, we sold, uh, lawn cantata Lifestyle Center in Tucson last year to a local, a local buyer and we sold, uh,

Occasionally we do generally we're out trying to create the opportunity.

And we do these on a one off basis.

Which we sold.

Ron can Todd a lifestyle center in Tucson last year to a local a local buyer.

Sold.

Paradise Valley to a local developer.

Speaker 3: Paradise Valley to a local developer. And there weren't necessarily marketed deals, but we knew somebody that had a mandate, had capital, and had an interest in those particular assets.

And their work necessarily marketed deals, but we knew somebody that had.

Our mandate head capital and had an interest in those particular assets. So.

Speaker 3: I think we're going to continue to operate that way in 22 and 23. And just to remind you, you know, coming out of the financial crisis, we sold 29 malls. We decided to sell our lower quartile assets.

I think we're going to continue to operate that way in 'twenty two 'twenty three and just to remind you coming out of the financial crisis. We sold 29 malls, we decided to sell our lower quartile assets and we were successful in selling those 29 centers.

Speaker 3: and we were successful in selling those 29 centers. And that was roughly 2010 through 2015.

And that was roughly 2010 through 2015.

Thanks, just one last one on percentage rents. It seems like those were elevated in the quarter would you expect that to kind of remain the case over the next few quarters.

Speaker 10: Just one last one. On percentage rents, it seems like those were elevated in the quarter. Would you expect that to kind of remain the case over the next few quarters?

Yes, I think so again, we've guided.

Speaker 4: Yeah, I think so. Again, we've guided, you know, with flat sales assumptions. So over the course of time, as I mentioned to Flores earlier, we'll continue to see percentage rents convert to fixed, those will naturally tick down. But you know, we don't see the sales environment slowing down at this point. I think our assumptions are, like I said, relatively conservative.

With the flat sales assumptions so.

Over the course of time as I mentioned to Floris earlier, we will continue to see percentage rents convert to fixed those will naturally ticked down.

But we don't see the sales environment slowing down at this point.

I think our assumptions or like I said relatively conservative.

Speaker 4: But I think over the course of time, we'll see variable rent continue to tick down to more historic levels, probably over the next two to three years. Great. Thank you.

But I think over the course of time, we'll see variable rent continue does it ticked down to more historic levels, probably over the next two to three years.

Great. Thank you.

Sure.

And next we'll go to Hong Zhang with Jpmorgan.

Yeah, Hi, I guess, just adding on to Linda's question on the percentage rent side of things.

Speaker 7: Yeah, hi. I guess just adding on to Linda's question on the percentage rent side of things, if you're assuming flat tenant sales next year, does that mean you're essentially assuming a similar level of percentage rent in 22?

Assuming flat tenant sales next year does that mean, you're essentially assuming similar levels of percentage rent in 'twenty two.

Speaker 4: We're showing some decline in percentage rent. Again, just as a result of the negotiation and converting, you know, large store fleets that are renewing to fixed rate deals. So we do see some increase or some decrease of percentage rent in our 22 guidance. Again, percentage rents, you know, the sales assumptions may be flat.

We're showing some decline in percentage rent again, just as a result of the negotiation and converting large store fleets that are renewing two fixed rate deals. So we do see some.

Some decrease of percentage rent in our 'twenty two guidance.

Again percentage rents the sales assumptions may be flat.

Speaker 4: But it's very individuated on a deal-by-deal basis. You may have some tenants that pay more percentage rent than others. So it's really kind of a broad assumption. Some tenants may have fantastic performance, like they did in 21, and generate some outsized percentage rent. It's very, very hard to predict and budget with a lot of specificity. But we are seeing some decline in percentage rent in our 22 guidance, just as a result of the negotiation to fixed rent.

But it's very individually at it on a deal by deal basis, you may have some tenants that pay more percentage rent than others. So it's really kind of a broad assumption.

Some tenants may have.

Fantastic performance like they did in 'twenty, one and generate some outsized percentage rent, it's very very hard to predict and budget with a lot of specificity, but we are seeing some decline in percentage rent in our 'twenty two guidance just as a result of the negotiation to fixed rents.

Yes, I guess I guess on that topic as you convert tenants from I guess, a higher percentage rent component to them more to a higher fixed rent component is is there I guess any slippage in revenue.

Speaker 7: Got it. And I guess on that topic, as you convert tenants from, I guess, a higher percentage rent component to a more, to a higher fixed rent component, is there, I guess, any slippage in revenue? Or would it kind of be whatever they would be paying percentage rent would kind of essentially be converted more to a fixed rent?

Sure.

Way to kind of be whatever they are they would be paying percentage rent will essentially be converted more to a fixed rate.

Speaker 3: basis, if that makes any sense. Yeah, yeah. Essentially, the percentage rent would get converted to fixed. If anything, there might be a bit of a pickup. So, you know, typically we're going to get the benefit of whatever that percentage rent was. It's just going to come in the form of guaranteed rent, which we'd rather have, which our lenders would rather see. It's easier for them to underwrite.

Basis that makes any sense, yes, yes, essentially the percentage rent would get converted to fixed if anything there might be a bit of a pickup.

So typically.

We're going to get the benefit of whatever that percentage rent was it's just going to come in the form of guaranteed rate, which we'd rather have which our lenders would rather see it's easier for them to underwrite.

Speaker 4: And that would typically come with the net charges as well. So you convert it to base rent, you convert it to fixed GAM, you convert it to tax. So it's much more of a return to a traditional lease structure.

Yes.

Tom with with the net charges as well right. So you convert converted to base rent to convert it to fixed Cam you converted to tax. So it's it's much more of a return to a traditional lease structure.

Yes, if I could sneak one last question in there.

Speaker 7: Guy, if I could sneak one last question in there. Your not cash rent guidance represents a step down from where you used to try historically. Is there anything one-time in nature going on with that, with those lines?

Youre not cash rent guidance represents step down from where you used to try historically is there anything onetime in nature going on with those lines.

Speaker 4: No, not really. It's a function of, you know, if we've historically provided rental assistance as a result of COVID to tenants, you know, there was elevated straight line of rent.

No not really it's a function of if we have.

Historically provided rental assistance as a result of Covid to tenants there was elevated straight line of rent and Conversely, as you move forward and you flip the calendar year and you compare back if theres less rent relief in prior years, then youre going to get less straight line in the subsequent years. So.

Speaker 4: And conversely, as you move forward and you flip the calendar year and you compare back, you know, if there's less rent relief in prior years, then you're going to get less straight line in the subsequent years. So it's just that kind of natural seesaw relationship.

It's just that kind of naturals CSR relationship.

Speaker 4: You know, if you look at our 22 guidance, there's basically not a lot of non-cash accounting noise in the FFO, which kind of makes it a cleaner underwrite from our perspective. So that's really what's going on there.

If you look at our 'twenty two guidance Theres basically not a lot of noncash accounting noise in the <unk>, which kind of makes it a cleaner cleaner underwrite from our perspective, so that's really what's going on there.

Okay. Thank you.

Speaker 1: And moving on, we'll go to Greg McGinnis with Scotiabank.

And moving on we'll go to Greg Mcginniss with Scotiabank.

Hey, good morning.

Speaker 7: Hey, good morning. Just in thinking about that trailing 12-month rent spread number at plus 5%, how would that spread be impacted if you included the overage or percent rent that those leases have been achieving as well?

Just in thinking about that trailing 12 month rent spread number at plus 5%.

How would that spread be impacted if you included the <unk> percent Brian .

Business and have been achieving as well.

Speaker 4: Yeah, good morning, Greg, or afternoon, we, we haven't quantified that, but it would certainly increase, you know, when you add the percentage rent element, we have historically provided our spreads based on average, just base rent, but we'd probably see a tick up. I don't I don't have a figure for you though. We'd certainly see a tick up though.

Yes, good morning, Greg our afternoon.

We haven't quantified that but it would certainly increase.

When you add the percentage rent element, we have historically provided.

Our spreads based on ever just base rent.

But we'd probably see a tick up I don't I don't have a figure for you that we certainly see a tick up there.

Speaker 6: Okay, yeah, what I mean, obviously, one of your peers talked about it on their call, and it was pretty significant. So I just

Okay.

Obviously, one of your peers talked about it on their call and it was pretty significant.

Wanted to see if you guys had that.

Speaker 7: wanted to see if you guys had that, but we can discuss later. And then regarding your comment on several assets being under leveraged, the expectation that you'll increase the LTV on those assets, and then what would be the use of those funds, and how do you kind of balance that against the pursuit of lower leverage?

Can discuss later.

And then regarding regarding your comment on some of the assets being under leveraged the expectation that you will increase the LTV on those assets and then what would be the use of those funds and how do you kind of balance that against the pursuit of lower leverage.

Yes, I think to the extent, we borrow in excess of the maturing principal amount that would go to pay down debt.

Speaker 3: Yeah, I think to the extent we borrow in excess of the maturing principal amount, that would go to pay down debt.

Speaker 3: line of credit or other other variable debt that we're able to pay down without penalty. Okay, great. Thank you.

Line of credit or other other variable debt that were able to pay down.

Without penalty.

Okay, great. Thank you.

And next we'll go to Rich Hill with Morgan Stanley .

Speaker 4: Hey, how are you? I have a clarification question about sales being flat. This has actually come up a fair amount with your peer. When you talk about sales, are you talking about like gross revenue or are you talking about transactions? And the reason I mention it is if we're talking about revenue and given the price of a good is up.

Hey, good morning, guys.

Hey, how are you.

Clarify.

<unk> about sales being flat this has actually come up a fair amount with with you here. When you talk about sales are you talking about.

Gross revenue or are you talking about transactions and the reason I mentioned that is if we're talking about revenue and given the price of a good is up.

Speaker 4: does that mean transactions are down and your views that sales will be flat is actually fairly conservative. If you can just maybe talk us through a little bit more what, what sales being flat actually means. I think that would be helpful.

Does that mean transactions are down and your views that sales will be flat is actually fairly conservative. If you could just maybe talk us through a little bit more what sales being flat actually means I think that would be helpful.

Speaker 3: Yeah, and I think when Scott said sales being flat, he was relating that to the percentage rent question. So the full universe of tenants don't pay percentage rent. Maybe eight percent of your tenants

Yes.

Think when Scott said sales being flat he was relating that to the percentage rent question. So the full universe of tenants don't pay percentage rent.

Maybe 8% of your tenants are in percentage rent.

Speaker 3: And so for him to calculate and make a guidance assumption in 2022, he was assuming that those tenants that paid percentage rent.

So for him to calculate and make our guidance assumption in 2022. He was assuming that those tenants that paid percentage rent their sales would be flat for 2022.

Speaker 3: their sales would be flat for 2022. I don't believe sales are going to be flat for 2022. We see the momentum we've got. Can it remain at double digits? That's unlikely. But I could easily see sales moving forward, you know.

I don't believe sales are going to be flat for 2022, we see the momentum we've got can it remain at double digits that's unlikely.

I could easily see sales moving forward.

Debt levels.

Speaker 3: between 5% and 10% increase this year.

<unk>, 5% to 10%.

Increase this year.

Speaker 3: I don't think we're going to lose that momentum, so I think that was just a comment that was specific to the percentage rent calculation for guidance purposes.

I don't think I don't think were going to lose that momentum. So I think that was just.

A comment that was specific to the percentage rent Cal.

Calculation for guidance purposes got.

Speaker 3: Got it. Thank you for taking up, taking up a lot of oxygen in the room over the past couple of days. At least, at least we might have a headache. So, so in other words, rich, we probably have a conservative percentage red assumption in the guidance.

Got it. Thank you correct taken up and taken up a lot of oxygen in the room over the past couple of days.

Sure sure.

So in other words rich, we probably have a conservative percentage rent assumption in the guidance that was going to be my next question guys.

Speaker 4: Well, that was going to be my next question, guys. I think everyone, including ourselves, and hopefully I'm not unique in this, we have trouble modeling percentage rents. You just had a blowout year and quarter with percentage rents. Could you maybe just provide a little bit more transparency on what you think you should assume or we should assume for percentage rents in 2022 as a percentage of 2021? Hopefully I didn't use percentages too many times in that question.

I think everyone including ourselves.

Im not unique in this we have trouble modeling percentage rents.

Just had a blowout year and quarter with percentage rents.

Maybe just provide a little bit more transparency on what you think you should assume that we should assume for percentage rents in 2022 as a percentage of 2021, hopefully I didn't use percentages to many times on that question.

Speaker 4: Yeah, there's a lot of percentages in there. So I'll try and steer away from the statement. I would say it's probably like 0.8 to 0.85 times what it was in 2021. I think we're going to see a little bit of tick down, but I think they'll still remain elevated.

Yes, there was a lot of percentages in there.

I'll try and steer away from the statement.

I would say, it's probably like eight.

8% to <unk> 85 times, what it was in 2021, I think we're going to see a little bit of tick down.

But I think they'll still remain elevated.

Yeah, Rich I'll give you just some anecdotal.

Speaker 3: Yeah, I'm rich to give you just some anecdotal information at Scottsdale Fashion Square, where we've got a luxury wing that we added a few years ago. The luxury did not do well in 2020, but 2021.

Information at Scottsdale fashion square, where we've got a luxury wing that we added a few years ago.

The luxury did not do well in 2020.

But 2021.

Speaker 3: For many of them, they had sales that were two times what they had in 2019, and in some cases, three times.

For many of them. They had sales that were two times, what they had in 2019 and in some cases three types.

Speaker 3: So those tenants got into, and I'm not gonna mention names, but those luxury tenants got into percentage rent to a much greater degree than we expected and probably greater than they expected. And certainly we don't expect that's gonna continue.

So those tenants got into and I'm not going to mention names, but those luxury tenants got into percentage rent to a much greater degree than that.

We expected and probably greater than they expected and certainly we don't expect that's going to continue.

In perpetuity, so we took a fairly conservative stance as we.

Speaker 3: in perpetuity. So, you know, we took a fairly conservative stance as we, you know, did our forecast and made our guidance as it related to percentage rent. And that's why we've got a wide

Did our forecast and made our guidance as it related to percentage rent and that's why we've got a wide range.

Speaker 4: Okay, got it. Hey, Scott, maybe we can just follow up offline when we catch up in a couple days. I'd like to just unpack that a little bit more. One more question, if I may. I actually think the Class B, C mall sale market is, I wouldn't call it vibrant, but by our count, there was almost 40 mall sales in 2021. Twenty-five of those were operating Class B and C malls.

Okay got it. Thanks, Scott maybe you can just maybe we can just follow up offline when we catch up in a couple of days I'd like to just unpack that a little bit more one more question if I may.

I actually think the class B C mall sale market is I wouldn't call it vibrant but by our count there was almost 40 mall sales in 2021 25 of those were operating class B and C malls.

Speaker 4: Cap rates came in fairly significantly in 2021 versus 2020 as you would expect them to.

<unk> came in fairly significantly in 2021 versus 2020 as you would expect them too. So I guess I would love to just go back to the question Derek was asking about mall sales is this a function of you thinking that cap rates are going to tighten even further and therefore, there will be a better time to sell the non core in the future.

Speaker 4: So I guess I would love to just go back to the question Derek was asking about mall sales. Is this is this a function of you thinking that cap rates are going to tighten even further and therefore there'll be a better time to sell the non-core in the future?

Speaker 5: You know, why, sorry for asking such a direct question, but why can't you sell? Why aren't you selling the asset?

Why.

Sorry for asking such a direct question.

Can't you sell why aren't you are selling your non.

The assets.

Speaker 3: Well, we we were fairly active last year. We've only got.

While we were fairly active last year.

Already got.

Speaker 3: I would say 10 non-core assets, and we sold two out of the 10.

I would say 10 noncore assets, we sold to out of the 10.

No.

Part of it too rich you have to keep in mind that market hasnt been there for that type of asset.

Speaker 3: Part of it, too, Rich, you have to keep in mind the debt market hasn't been there for that type of asset.

Speaker 3: And it's slowly coming back, and I think that could change things fairly quickly. But, you know, we were very successful with our disposition program in the 2011 to 2015 range. And we've shown a willingness and ability to sell non-core assets and redeploy that capital into our better assets. And that's what we're going to continue to do.

And it's slowly coming back and I think that could change things fairly quickly but.

Yes.

We were very successful with our disposition program and the.

2011 to 2015 range and we've shown a willingness and ability to sell non core assets and redeploy that capital into our our better assets and that's what we're going to continue to do so.

Speaker 3: If you think there's an opportunity somewhere or you see a fund that's actively buying, give me a heads up. All right. Well, I will call you about that then. Thanks for humoring my obnoxious self, that question. Thanks. Nice call, guys. Thanks, Rich. Thanks, Rich.

If you think there's actually not dissimilar if you think theres an opportunity somewhere or you see a fund that's actively buying give me a heads up.

Alright.

I will call you about that then thanks for hearing might have knocked yourself that question.

Nice quarter guys.

Thanks, Robert Thanks Rich.

Speaker 1: And next we'll go to Todd Thomas with TD Bank Capital Markets.

And next we'll go to Todd Thomas with TD Bank capital markets.

Yeah.

Speaker 11: Okay, thanks 1st question, Doug appreciate the, the color around the executed leases in the pipeline, but I just wanted to go back to that. The 225 new leases 2.7Million square feet. I think you said, can you just share what may switches share of.

Okay. Thanks.

First question, Doug I appreciate the color around the executed leases in the pipeline, but I just wanted to go back to that.

225, new leases $2 7 million square feet. I think you said can you just share what may searches share of.

Speaker 11: Um, the is that's associated with that backlog of leasing. So all tenants, including anchor spaces over 10,000 square feet, you know, cam tax recoveries. What's the look like for that backlog? And what's the timeframe for that to come online?

The NOI is associated with that backlog of leasing so all tenants, including anchor spaces over 10000 square feet Cam tax recoveries, what's the NOI look like for that backlog and whats the timeframe for that to come online.

Yes, I'll go ahead and take that one Todd.

Speaker 4: Yeah, I'll go ahead and take that one. Todd, the you know, our average share is about 70%. So you can kind of use that as a barometer, including consolidated as well as our share of unconsolidated centers. And, and I'm sorry, what was this?

Our average share is about 70% seem kind of use that as a barometer, including consolidated as well as our share of unconsolidated <unk>.

Centers.

In.

And I'm sorry, what was the second part of your question.

The NOI associated with that.

Speaker 11: The NOI associated with that for all spaces, so over 10,000 square feet, anchors, everything fully loaded.

For all spaces over 10000 square feet anchors everything fully loaded.

Speaker 4: Yeah, yeah, so I'm sorry, we, you know, we haven't quantified that we aren't providing guidance for that. But I think your other question was, look, how, how, what's the timeframe for that to come online? Small shops are typically, you know, six to nine months to get permitted for the landlord and the tenant to do their build out work.

Yes, yes, so I'm sorry.

We haven't quantified that we arent providing guidance for that but I think your other question was look how whats the timeframe for that to come online.

Small shops are typically six to nine months to get permitted for the landlord and the tenant to do their buildout work, you've got some large format space in their bear in mind.

Speaker 4: You've got some large format space in there, bear in mind. You know, we've got things like Caesar's Republic in there. We've got things like Google in there. So obviously those take a lot longer to gestate.

We've got things like <unk>.

Caesars Republic in there, we've got things like Google and there. So obviously those take a lot longer to gestate.

Speaker 4: You've got, you know, box backfills like Primark and Penstripes and the like, those typically take about 18 months between lease execution and the cash flow to come online. So, you know, that's why we feel not only good about 22.

<unk> got box backfill as like Primark, and Penn stripes and alike those.

Typically take about 18 months between lease execution in the cash flow to come online. So that's why we feel not only good about 'twenty two.

Speaker 4: We feel very good about 23 as well, in terms of the occupancy. Actually, the cash flows from that occupancy really hitting the ground and running.

We feel very good about 'twenty three as well in terms of the occupancy actually the cash flows from that occupancy really.

Hitting hitting the ground and running.

Okay.

Speaker 11: And then just following up on the occupancy discussion a little bit and, you know, given some of the, the terminations, I guess, that you discussed, that'll take place in the 1st quarter. And normally there's some seasonality, you know, at the beginning of the year where you, where you do see occupancy decrease with a little bit of higher higher tenant turnover. But it does sound like, you know, leasing is really strong and the pipelines fairly robust. You expect.

And then just following up on the occupancy discussion a little bit and.

Given some of the terminations I guess that you discussed that.

That will take place in the first quarter and normally there is some seasonality at.

At the beginning of the year, where you do see occupancy decrease with a little bit of higher higher tenant turnover, but it does sound like leasing is really strong and the pipeline's fairly robust do you expect.

Speaker 11: You know, within the roughly 125 base point, maybe occupancy uptick that you expect throughout the year. Do you expect occupancy to decrease sequentially to start the year, or do you think that, you know, it could continue to just climb higher, which I think you experienced for, you know, a couple of years, you know, in the recovery after the GFC.

Within the roughly 125 basis point, maybe occupancy uptick that you expect throughout the year do you expect occupancy to decrease sequentially to start the year or do you think that could continue to climb higher which I think you experienced for a couple of years.

The recovery after the GSA.

Speaker 3: Yeah, Todd, you're right. First quarter is typically a low occupancy quarter. You know, that being said, as Doug mentioned, you know, it's almost a record low in terms of bankruptcies in.

Yes, Todd you're right first quarter is typically low occupancy quarter.

Being said as Doug mentioned it was almost a record low in terms of bankruptcies in.

Speaker 3: in 21, and there's fewer people on our watch list, and typically we would see closures in the first quarter from weaker tenants.

In 'twenty, one and there is fewer people on our watch list and typically we would see closures in the first quarter from weaker tenants.

Speaker 3: And we very well may have a year this year where we don't see that happen. You know, that being said, I would expect occupancy to kind of accelerate through the course of the year. In that one hundred and twenty five basis point pickup would would happen. Probably mostly.

We very well may have a year this year, where we don't see that happen.

That being said I would expect.

Occupancy to kind of accelerate through the course of the year and that 125 basis point pickup what would happen.

Probably mostly in the second and third quarter.

Okay. So it sounds like I mean those are those.

Speaker 3: Those are typically our most active quarters in terms of lease signings.

Sounded like Iron most active those are typically our most active quarters in terms of lease signings.

Got it so it sounds like occupancy might sort of hold steady <unk> before before picking back up throughout the balance of the year a little bit.

Speaker 11: Got it. So it sounds like occupancy might sort of hold steady 4Q to 1Q before picking back up throughout the balance of the year a little bit.

That's a reasonable assumption yes.

Speaker 11: Okay. And then just lastly, with regard to the lease term fees that you mentioned, Scott, I think, you know, within for the full year, you know, how much of that do you expect then to be collected in the first quarter, roughly?

Okay, and then just lastly, with regard to the lease term fees that you mentioned, Scott I think within for the full year, how much of that do you expect them to be collected in the first quarter roughly.

Speaker 4: A pretty decent chunk, I would say, in the order of magnitude of 40 to 50 percent of it.

Pretty decent chunk I would say in the order of magnitude of 40% to 50% of it.

Okay, Alright, great. Thank you.

Speaker 11: Okay. All right. Great. Thank you. Sure. Thanks.

Sure. Thanks.

Speaker 2: And we'll move on to Katie McConnell with Citi. Great. Thank you. Just going back to a prior comment you had on land sales, can you specify what you're assuming for a range of potential land sale gains within your FFO guidance for this year?

And we will move on to Katy Mcconnell with Citi.

Great. Thank you just going back to your prior comment one on land.

Can you specify what youre, assuming for a range of potential windfall gain.

Our guidance for this year.

Speaker 4: Yeah, Katie, it's going to be very similar in 22 relative to 2021. Again, you know, there's multiple deals, I think we executed on probably, you know, 15 to 18 deals or so in 2021.

Yeah, Katy it's going to be very similar in 'twenty two relative to 2021 again.

There's multiple deals I think we executed on probably.

15% to 18 deals or so in 2021.

Speaker 4: Roughly, and I think it's about the same type of volume in 22. There's a lot of transactional activity. Some could slip into 23. Some could actually go away. But right now in our guidance, we've got similar amounts in 22 relative to 2021, which were in that $20 million range.

Roughly and I think it's about the same type of volume in 'twenty. Two there's a lot of a lot of transactional activity some could slip into 'twenty three some could actually go away, but right now in our guidance. We've got similar amounts in 'twenty two relative to 2021, which were in the $20 million range.

Speaker 12: Okay, great. Thanks. Um, and then just on the conversation.

Okay great.

And then just on the operator.

Right.

I am sorry go ahead.

Speaker 12: Oh, can you hear me? Sorry. I'm just going to ask you a plan for leasing CapEx spend this year and then separately what you're planning for redevelopment spend, including the anchor repositioning.

Can you hear me sorry.

I was just going to ask you plans for leasing Capex done this year, and then separately, what you're planning for Redevelopments and <unk>.

The anchor repositioning projects.

Yes, I don't think Youll see the leasing Capex change a lot our development Capex will continue to increase.

Speaker 4: Yeah, I don't think you'll see the leasing CapEx change a lot. Our development CapEx will continue to increase. We had about $100 million of expenditure in 2021 last year. I expect that to increase roughly 50% or so in 2022. And then going forward into 23, I expect it to increase even further. We've outlined a few projects that we're getting entitled right now. So it's just natural for the development pipeline to start to ramp up.

We have about $100 million of expenditure in 2021 last year I expect that to increase roughly 50% or so in 2022, and then going forward into 'twenty three are expected to increase even further we've outlined a few projects that were.

Getting entitled Right now so it is just natural for the development pipeline to start to ramp up.

Speaker 4: Hey, Tom, it's Michael Billerman. I had a quick question just on the overall transaction market. And you're responding to Rich a little bit on deals. Unibody Westfields came out a little bit more strongly this morning to say that the US is definitely on the chopping block to be sold.

Hey, Tom It's Michael Bilerman.

I had a quick question just on the overall transaction market.

Bonnie.

Rich a little bit on on deals.

What you hope came out a little bit more strongly this morning to say that the U S is definitely.

On the chopping block to be sold.

Speaker 7: Obviously, a lot of those assets are in some of your core markets. How do you think about potential ways to enhance the platform and the portfolio? And are there capital sources that you can tap to effectuate a type of transaction to enlarge the pie?

Obviously, a lot of those assets are and some of your core markets. How do you think about.

<unk> ways to enhance the platform and the portfolio.

Are there capital sources that you can tap to effectuate a type of transaction.

The March the pie.

Speaker 3: I mean, we'd have to see, Michael. They came once before with assets, and their pricing did not seem appealing. They didn't get a lot of activity. And we'll obviously look at what they've got there. We've done a lot of joint ventures over time, and there's always ways to structure. If it's a deal that makes sense for the portfolio.

I mean, we just we'd have to see Michael they came once once before with assets in their pricing.

Did not seem appealing that didn't get a lot of.

A lot of activity in the.

Well, obviously look at what <unk> got there.

We've done a lot of joint ventures overtime, and there is always ways to structure. If it's a deal that makes sense for the portfolio.

Alright, I just wonder what the appetite is of your joint venture partners right now and what would they be looking for in terms of asset relative to what they are adjusted now right. If they wanted to put incremental capital to work.

Speaker 7: Right. I just wonder what the appetite is of your joint venture partners right now, and what would they be looking for in terms of assets relative to what they're invested now, right? If they want to put incremental capital to work, what are they really looking for today?

Are they really looking for today.

Speaker 3: Well, there hasn't been a lot of institutional capital lined up for the mall sector in 2021. We obviously got hit pretty hard and immediately by COVID. That being said, I think their appetites are starting to warm up, particularly as they look at the type of yields they're getting on other property types. So, I think it's only a matter of time. It's improving. I don't think it's there yet, though.

Well, there hasn't been a lot of institutional capital lined up.

For the mall sector in 2020 , one obviously got hit pretty hard and immediately by Covid that being said I think their appetites are starting to warm up particularly as they look at the type of.

Yields they're getting on other property types. So I think it's only a matter of time, it's improving I don't think its there yet.

We'll be focused on I'm, just trying to get a sense of and I recognize the market's been very dry there hasnt been much product and obviously the sector has gone through some challenges.

Speaker 7: really focused on. I'm just trying to get a sense of and I recognize the market's been very dry. There hasn't been much product and obviously the sector's gone through some challenges.

Speaker 7: You obviously have very deep relationships with some very deep-pocketed investors that have put out incremental capital elsewhere. So you're talking about that relative spread. But when they're going to consider investing in a mall, what are the characteristics today relative to where they've been before for what would pass their threshold? Assuming that the price is right, what are they really looking for?

You, obviously have very deep relationships with some very deep pocketed investors that have put out incremental capital elsewhere. So you are talking about that relative to spread but when theyre going to consider.

Being in a mall.

What are the what are the characteristics today relative to where they've been before for what would pass their thresholds assuming that the price is right what are they really looking for.

Speaker 3: Well, again, that's probably more a question for them, but obviously they're looking for post COVID stability. I mean, we've never been through this before. I think everybody's looking to see, you know, how long the

Well again, thats, probably more a question for them, but obviously they are looking for post COVID-19 stability.

<unk> never been through this before.

I think everybody is looking to see.

How long the recovery takes.

Speaker 3: how quick the pace is, how quick the cadence is, whether the current leasing environment can stay as strong as it is.

How quick the paces have quick the cadence is whether the current leasing environment can stay as strong as it is.

Speaker 3: And if all those things remain, I think, I think they're going to start to see, you know, more interest and hopefully some transactions.

And if all those things remain I think I think they're going to start to see more interest and hopefully some transactions.

Thank you and that does conclude our conference.

That will conclude today's call we'd like to thank everyone for their participation.

Speaker 1: That will conclude today's call. We'd like to thank everyone for their participation.

You may now disconnect.

[music].

Speaker 13: I.

[music].

Speaker 13: .

Good day and welcome to the Macy's Rich company fourth quarter 2021 earnings call. Today's conference is being recorded please be advised that this call is scheduled for one hour. We ask that you limit your questions to one question and one follow up question.

Speaker 1: Good day and welcome to the Mace Rich Company fourth quarter 2021 earnings call. Today's conference is being recorded. Please be advised that this call is scheduled for one hour. We ask that you limit your questions to one question and one follow up question.

At this time I would like to turn the conference over to Samantha Greening Director of Investor Relations. Please go ahead.

Speaker 1: At this time, I would like to turn the conference over to Samantha Greening, Director of Investor Relations. Please go ahead.

Speaker 2: Thank you for joining us on our fourth quarter 2021 earnings call during the course of this call 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 or future expectations.

Thank you for joining us on our fourth quarter 2021 earnings call. During the course of this call we'll 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 or future expectations actually.

Speaker 2: Actual results may differ materially due to a variety of risks and uncertainties set forth in today's press release and our SEC filings, including the adverse impact of the novel coronavirus COVID-19 on the U.S., regional and global economies, and the financial condition and results of operations of the company and its tenants.

<unk> results may differ materially due to a variety of risks and uncertainties set forth in today's press release, and our SEC filings, including the adverse impact of the novel Coronavirus Coronavirus COVID-19 on the U S regional and global economies and our financial condition and results of operations of the company and its tenants.

Speaker 2: Reconciliations of non-GATT financial measures to the most directly comparable GATT measures are included in the earnings release and supplemental filed on Form 8K with the SEC, which are posted on the investor section of the company's website at macerich.com.

Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on form 8-K, with the SEC, which are posted on the investors section of the company's website at May stretch dotcom.

Speaker 2: Joining us today are Tom O'Hearn, Chief Executive Officer, Scott Kingsmore, Senior Executive Vice President and Chief Financial Officer, and Doug Healey, Senior Executive Vice President of Leasing. With that, I turn the call over to Tom. Thank you, Samantha, and thanks to all of you for joining us today.

Joining us today are Tom O'hern, Chief Executive Officer, Scott King's Moore, Senior Executive Vice President and Chief Financial Officer, and Doug Healey Senior Executive Vice President of leasing.

With that I turn the call over to Tom.

Thank you Samantha.

Thanks to all of you for joining us today.

Speaker 3: We're pleased to report an outstanding quarter with virtually all of our operating metrics trending very positively after battling through a very

We're pleased to report an outstanding quarter with virtually all of our operating metrics trending very positively.

After battling through a very tough 2020 to see the results. We've achieved in 'twenty. One is a testament to our team and the quality of our portfolio.

Speaker 3: To see the results we've achieved in 21 is a testament to our team and the quality of our portfolio.

Speaker 3: We continue to see very significant and accelerating retailer and mixed use demand.

We continue to see very significant and accelerating retailer and mixed use demands.

Speaker 3: Our shoppers have come roaring back to our centers to shop with a purpose.

Our shoppers have come roaring back to our centers to shop with a purpose.

Speaker 3: We see a higher capture rate than pre-COVID with traffic at about 95% of fourth quarter 2019 traffic, but with tenant sales exceeding the 2019 level.

We see a higher capture rate than pre COVID-19 with traffic at about 95% of fourth quarter 2019 traffic.

But with tenant sales exceeding the 2019 levels.

Speaker 3: In the fourth quarter, we again saw double-digit tenant sales gains, and that's three quarters in a row compared to 2019.

In the fourth quarter, we again saw double digit tenant sales gains and thats three quarters in a row compared to 2019.

Speaker 3: Retailer demand is at a level we have not seen since 2015.

Retailer demand is at a level, we have not seen since 2015.

During 2021.

Speaker 3: We signed more leases in terms of square footage than we did in 2019.

We signed more leases in terms of square footage than we did in 2019.

Speaker 3: And in fact, the volume equaled the previous high volume year, which was 2015.

And in fact, the volume equaled the previous high volume year, with which was 2015.

Speaker 3: In general, 2021 delivered a strong holiday season, more full price sales, less promotional, strong volumes, even when compared to the 2019 holiday season.

In General 2021 delivered a strong holiday season.

Full price sales less promotional strong volumes, even when compared to the 2019 holiday season.

Speaker 3: We certainly experienced that with our fourth quarter comp tenant sales up 12% versus the fourth quarter of 2019.

We certainly experienced that with our fourth quarter comp tenant sales up 12% versus the fourth quarter of 2019.

Some of the quarterly highlights included on a sequential quarter basis, we had occupancy gains of 120 basis points. That's on top of the 90 basis point gains we saw in both the second and third quarters.

Speaker 3: Some of the quarterly highlights included, on a sequential quarter basis, we had occupancy gains of 120 basis points.

Speaker 3: That's on top of the 90 basis point gains we saw in both the second and third quarters.

Speaker 3: The year-end our occupancy level was at 91.5%.

At year end, our occupancy level was at 91, 5%.

Speaker 3: We continue to make great progress on pushing occupancy up to pre-COVID levels.

We continue to make great progress on pushing occupancy up to pre COVID-19 levels.

Speaker 3: Since our low occupancy point in the first quarter of 2021, we've seen 300 basis points of improvement.

Since our low occupancy point in the first quarter of 2021, we've seen 300 basis points of improvement.

Speaker 3: We saw robust leasing volumes for the quarter and the year. Both were in excess of 2019 levels.

We saw robust leasing volumes for the quarter and the year both were in excess of 2019 levels.

We executed $3 5 million square feet of space.

And that compares very favorably to the full year 2019, which was about $3 4 million square feet of space.

Speaker 3: And that compares very favorably to the full year 2019, which was about 3.4 million square feet of space.

Speaker 3: Leasing spreads were positive at 4.9% for the trailing 12 months.

Leasing spreads were positive at four 9% for the trailing 12 months.

Speaker 3: We saw great same center NOI growth of 36% in the fourth quarter.

We saw great same center NOI growth of 36% in the fourth quarter.

That was the third.

Speaker 3: That was the third double digit quarter we gained in a row.

Double digit quarter, we gain in a row.

Speaker 3: We're optimistic heading into the fourth quarter as we raise the FFO guidance range to the midpoint of 196. That was a 3% increase on top of the increase in guidance from the previous quarter. Actual FFO per share exceeded the top end of that range and came in at 203.

We're optimistic heading into the fourth quarter as we raise the <unk> guidance range to the mid point of 196 that was a 3% increase on top of the increase in guidance from the previous quarter.

Actual <unk> per share exceeded the top end of that range and came in at 203 in.

Speaker 3: And that result was heavily driven by record-setting percentage rent.

And that result was heavily driven by record setting percentage rents.

We.

Speaker 3: We continue to ramp up our redevelopment efforts as we move past COVID.

To ramp up our redevelopment efforts as we move past COVID-19 .

Speaker 3: During the fourth quarter, our joint venture with HPP on one Westwood.

During the fourth quarter, our joint venture with HCP on one Westwood.

Speaker 3: in Los Angeles, we delivered a 584,000-square-foot, three-level creative office space to Google.

In Los Angeles, we delivered a 584000 square foot three level creative office space to Google.

Speaker 3: We expect Google to open in the summer of 2022.

We expect Google to open in the summer of 2022.

Speaker 3: The project remains ahead of schedule and on budget. The project is being fully funded with a construction loan.

<unk> remains ahead of schedule and on budget. The project is being fully funded with a construction loan.

In addition to Google we have numerous near term openings with many exciting and prominent large format users, including among others <unk>.

Speaker 3: In addition to Google, we have numerous near-term openings with many exciting and prominent large-format users, including, among others, Shields All Sports at Chandler Fashion, Caesars Republic Hotel at Scottsdale Fashion.

<unk>, all sports and fast at Chandler fashion.

Caesars Republic hotel at Scottsdale fashion square.

Targeted Kings Plaza.

Speaker 3: Lifetime Fitness at both Broadway Plaza and Scottsdale Fashion Square, Pinstripes at Broadway Plaza, and Primark at both Greenacres and Tyson.

Lifetime fitness at both Broadway Plaza, and Scottsdale fashion square.

Pinstripes at Broadway Plaza, and Prime market, both green acres and Tysons These projects.

Speaker 3: These projects are expected to be funded with excess cash flow from operations.

<unk> are expected to be funded with excess cash flow from operations.

Focusing now on the leasing environment.

Speaker 3: The depth and breadth of leasing demand has us very optimistic about 2022 and beyond.

The depth and breadth of leasing demand has us very optimistic about 2022 and beyond.

Speaker 3: The leasing interest we are seeing comes from a wide range of categories, including health and fitness, food and beverage, entertainment, sports, co-working, hotels and multifamily. All those categories are an interest.

The leasing interest we are seeing comes from a wide range of categories, including health and fitness food and beverage Entertainment and sports co working hotels and multifamily.

All of those categories are in interest levels, we've never seen before.

Speaker 3: That is on top of demand from more traditional retailers like Target, Primark, Uniqlo and Shield.

That is on top of demand for more traditional retailers like target primer Uniqlo and shields.

Speaker 3: During the quarter, we saw many retailers experience accelerating sales as they got further into the holiday season. And that's something they had not seen in years.

During the quarter, we saw many retailers experienced accelerating sales as they get further into the holiday season, and Thats something they had not seen in years.

Speaker 3: In addition, because of the waning COVID restrictions, the importance of physical stores has become more significant to retailers as consumers want more social, in-person experience of brick and mortar shopping.

In addition, because of the winning COVID-19 restrictions the importance of physical stores has become more significant to retailers as consumers want more social in person experience of brick and mortar shopping.

Speaker 3: In addition, many retailers have strengthened their balance sheets and are financially in position to expand their new store opening.

In addition, many retailers have strengthened their balance sheets and are financially and positioned to expand our new store openings.

The combination of all these very positive factors have us very optimistic about 2022 and 2023.

Speaker 3: The combination of all these very positive factors have us very optimistic about 2022 and 2023. We expect significant gains in occupancy, net operating income, and cash flow this year.

We expect significant gains in occupancy net operating income and cash flow this year.

And now I'll turn it over to Scott to discuss in more detail the financial results and balance sheet activity.

Speaker 3: And now I'll turn it over to Scott to discuss in more detail the financial results and balance sheet activity.

Speaker 4: Thank you, Tom. Now on to the highlights of the financial results for the quarter. Once again, we posted extremely strong operating results in the fourth quarter, with same-center NOI increasing 36 percent relative to the fourth quarter of 2020, both with and without lease termination.

Thank you Tom now onto the highlights of the financial results for the quarter.

Once again, we posted extremely strong operating results in the fourth quarter were same center NOI, increasing three 6% relative to the fourth quarter of 2020, both with and without lease termination income for the year same center NOI growth was seven 3%, including lease term income.

Speaker 4: For the year, same center NOI growth was 7.3% including least term income and 6.1% excluding least term income.

Six 1% excluding lease term income.

Speaker 4: early in 2021 and consistently thereafter, we signaled strong double-digit growth was likely to come during the second half of 2021.

Early in 2021 and consistently thereafter, we signaled.

Strong double digit growth was likely to come during the second half of 2021.

Speaker 4: And that is, in fact, how the latter half of 2021 played out with 29% same center NOI growth within the second half of 21, relative to the second half of 2020.

And that is in fact, how the latter half of 2021 played out with 29% same center NOI growth within the second half of 'twenty, one relative to the second half of 2020.

Speaker 4: Funds from operations for the quarter were $46 million or 63% higher than the fourth quarter of 2020.

Funds from operations for the quarter were $46 million or 63% higher than the fourth quarter of 2020.

Speaker 4: FFO per share for the quarter was $0.53, this was $0.08 or 17% higher than the fourth quarter of 2020 at $0.45 per share, and it also represents a $0.05 or 10% increase over consensus FFO estimates of $0.48 per share for the quarter.

<unk> per share for the quarter was 53.

This was <unk> <unk> or 17% higher than the fourth quarter of 2020 at 45 per share.

And it also represents a five or 10% increase over consensus estimates of <unk> 48 per share for the quarter.

Speaker 4: This was a very strong earnings quarter. Primary factors contributing to these quarterly NOI and FFO gains are as follows. On the positive front, one, the quarter included a $30 million or $0.19 increase in percentage rents resulting from the continued dramatic increase in sales that we reported earlier today that Doug will soon explain in more detail.

This was a very strong earnings quarter primary factors contributing to these quarterly NOI in SFO gains are as follows on the positive front one quarter.

The quarter included a $30 million or 19% increase in percentage rents, resulting from the continued dramatic increase in sales that we reported earlier today that Doug will soon explain in more detail.

Speaker 4: Two, minimum rent and tenant recovery income increased by $18 million, or $0.11 per share.

To minimum rent and tenant recovery income increased by $18 million or <unk> 11 per share.

Speaker 4: And three, common area income, which has recovered quite nicely, contributed another seven cents of NOI and FFO, including from our urban parking garages. As we've noted during the past few quarters, our common area business has recovered beyond our expectations, and in 2022, it may surpass pre-pandemic levels.

And three commentary income, which has recovered quite nicely contributed another <unk> <unk> of NOI and SSO, including from our urban parking garages as we've noted during the past few quarters. Our commentary business has recovered beyond our expectations and in 2022 and may surpass pre pandemic levels.

Speaker 4: Offsetting these factors were one, a decrease in non-cash straight line of rental income of $29 million or $0.18 per share, resulting from the high level of rental assistance granted to our tenants in the fourth quarter of 2020 due to the pandemic.

Offsetting these factors were one a decrease in noncash straight line rental income of $29 million or <unk> 18 per share.

Resulting from the high level of rental assistance granted to our tenants in the fourth quarter of 2020 due to the pandemic.

Speaker 4: And lastly, the fourth quarter also included a decrease of roughly 14 cents in FFO per share. That resulted from the increase in share count due to the common stock sold in 2021 through our ATM programs. It was offset also by the interest expense from the proceeds raised from those equity offerings.

And lastly, the fourth quarter also included a decrease of roughly <unk> 14, and <unk> <unk> per share that resulted from the increase in share count due to the common stock sold in 2021 through our ATM programs.

And it was offset also by the interest expense from the proceeds raised from those equity offerings.

Speaker 4: This morning, we issued 2022 FFO guidance.

This morning, we issued 2022 <unk> guidance.

Speaker 4: 2022 FFO is estimated in the range of $185 to $205 per share. While certain guidance assumptions are provided within the sub-filing from earlier this morning, here are some further details.

2022, <unk> is estimated in the range of $1 85 to 205 per share.

While certain guidance assumptions are provided within the sub filing from earlier. This morning here. Some further details.

Speaker 4: This FFO range includes a very healthy same center NOI growth range of an estimated 4.0 to 5.5 percent.

This range includes a very healthy same center NOI growth range of an estimated four point.

To five 5%.

Speaker 4: At the guidance midpoint, we anticipate a $14 million increase in FFO.

The guidance midpoint, we anticipate a $14 million increase in SFO.

The guidance also includes an estimated $10 million decline in noncash straight line rent and <unk> 22 versus 2021.

Speaker 4: The guidance also includes an estimated $10 million decline in non-cash straight line of rent in 22 versus 2021. So when you exclude that non-cash straight line of rent, FFO is estimated to increase by 24 million or 6%, which is an increase of 11 cents per share.

So when you exclude that noncash straight line of rent at <unk> is estimated to increase by $24 million or 6%, which is an increase of <unk> 11 per share.

Speaker 4: So our outlook for 2022 reflects a very healthy increase in operating cashflow, which is what we've been focusing on for some time now. And given the strong pace of both reported occupancy growth as well as leasing activity, we anticipate that trend to continue beyond 2022.

So our outlook for 2022 reflects a very healthy increase in operating cash flow, which is what we've been focusing on for some time now and.

And given the strong pace of both reported occupancy growth as well as leasing activity, we anticipate that trend to continue beyond 2022.

Speaker 4: The guidance range assumes no further government mandated shutdowns of our retail properties.

The guidance range assumes no further government mandated shutdowns of our retail properties does not include the issuance of common stock in 2022, and it does not assume any acquisitions or dispositions other than land sale transactions.

Speaker 4: not include the issuance of common stock in 2022, and it does not assume any acquisitions or dispositions other than land sale transactions.

Speaker 4: In terms of the quarterly cadence for 2022 FFO per share guidance, we expect 25 percent in the first quarter, 22 percent in the second quarter, 24 percent in the third quarter, and the remaining 29 percent within the fourth quarter of 2022. More details of the guidance assumptions are included on page 17 of the company's Form AK-SUP, which, again, was filed earlier this morning. As for the balance sheet, as part of our

In terms of the quarterly cadence for 2022 <unk> per share guidance, we expect 25% in the first quarter, 22% in the second quarter, 24% in the third quarter.

And the remaining 29% within the fourth quarter of 2022.

Details of the guidance assumptions are included on page 17, the company's form 8-K.

Which again was filed earlier this morning.

As for the balance sheet.

As part of our continuing commitment to reducing our leverage.

Speaker 4: In 2021, we reduced our share of debt by an extremely noteworthy $1.7 billion, or 20%.

In 2021, we reduced our share of debt.

By an extremely noteworthy $1 7 billion or 20%.

Speaker 4: During 2021, we generated free cash flow after payment of dividends and recurring capital expenditures of roughly $240 million.

During 2021, we generated free cash flow after payment of dividends and recurring capital expenditures of roughly $240 million.

Speaker 4: We expect continued cash flow growth over the coming years as our business continues to positively rebound post COVID and grow.

We expect continued cash flow growth over the coming years as our business continues to positively rebound post COVID-19 and grow.

Net debt to forward EBITDA at the end of 2021 was <unk> nine times this relative to leverage in the mid elevens at the end of 2020 as a result of the severe disruption from the Covid pandemic.

Speaker 4: Net debt to forward EBITDA at the end of 2021 was nine times. This relative to leverage in the mid 11s at the end of 2020 as a result of the severe disruption from the COVID pandemic. So that's a full two and a half turns of progress in reducing leverage during just the past 12 months.

So thats a full two five turns of progress in reducing leverage during just the past 12 months.

Speaker 4: And with what we believe is a very clear view to future operating cash flow and NOI growth, we are well on our way to continued healthy improvement and leverage reduction in getting to our target of a sub-eight times net debt to EBITDA.

And with what we believe is a very clear views and future operating cash flow and NOI growth. We are well on our way to continued healthy improvement in leverage reduction and getting to our target of a sub eight times net debt to EBITDA.

Including Undrawn capacity on our revolving line of credit of which only 90 $696 million of the 525 million aggregate capacity is currently outstanding we have approximately $622 million of liquidity today.

Speaker 4: including undrawn capacity on our revolving line of credit, of which only 96 million of the 525 million aggregate capacity is currently outstanding. We have approximately $622 million of liquidity today.

From a secured financing standpoint, and October 21, we closed a five year $65 million refinance of the shops at Atlas Park, which is a lifestyle center near Queens, New York, and we recently closed a $175 million five year refinance of Flatiron crossing and enclosed regional town center in Broomfield.

Speaker 4: From a secured financing standpoint, in October of 21, we closed a five-year, $65 million refinance of the shops at Atlas Park, which is a lifestyle center near Queens, New York. And we recently closed a $175 million, five-year refinance of Flatiron Crossing, an enclosed regional town center in Broomfield, Colorado, in the northern Denver market.

<unk> in the northern Denver market.

Speaker 4: As we have mentioned, we continue to see positive progress within the debt capital markets with the execution of a growing number of retail deals on generally improving terms.

As we have mentioned, we continue to see positive progress within the debt capital markets with the execution of a growing number of retail deals on generally improving terms.

Speaker 5: Now I will turn it over to Doug to discuss the leasing and operating environment. Thanks, Scott. We closed out 2021 with very strong leasing metrics and leasing volumes. In fact, 2021 was our strongest leasing year since 2015 when viewed on the same center basis.

Now I will turn it over to Doug to discuss the leasing and operating environment. Thanks.

Thanks Scott.

We closed out 2021, with very strong leasing metrics and leasing volumes. In fact 2021 was our strongest recent years since 2015 when viewed on a same center basis.

Speaker 5: I'm going to run through some various metrics and statistics, some of which Tom mentioned in his remarks. And in doing so, we'll hopefully provide a bit more detail and color.

I'm going to run through some various metrics and statistics, some of which Tom mentioned in his remarks and in doing so will hopefully provide a bit more detail and color.

Speaker 5: Sales were robust in December and this is on top of a very productive October and November .

Sales were robust in December and this is on top of a very productive October and November <unk>.

Speaker 5: Fourth quarter sales were up 12% over fourth quarter 2019. All categories, including food and beverage, comp positively during the quarter.

Fourth quarter sales were up 12% over fourth quarter, 2019, all categories, including food and beverage comp positively during the quarter.

Speaker 5: And this is on top of both the second and third quarters, each being up 14% versus 2019.

And this is on top of both the second and third quarters, each being up 14% versus 2019.

Speaker 5: Occupancy at the end of the fourth quarter was 91.5%.

Occupancy at the end of the fourth quarter was 91, 5%.

Speaker 5: That's up 120 basis points from 90.3% at the end of the third quarter. Over the past nine months, portfolio occupancy has increased 300 basis points relative to the 88.5% occupancy rate on March 31, 2021.

Up 120 basis points from 93% at the end of the third quarter over.

Over the past nine months portfolio occupancy has increased 300 basis points relative to the 88, 5% occupancy rate on March 31 2021.

Speaker 5: And this pace of recovery certainly exceeds our expectations from early on last year.

And this pace of recovery certainly exceeds our expectations from early on last year.

As I stated last quarter and I still believe given the much healthier retail environment that exists today, coupled with our strong leasing pipeline, we anticipate that occupancy will continue to increase throughout 2022 and into 2023.

Speaker 5: As I stated last quarter, and I still believe, given the much healthier retail environment that exists today, coupled with our strong leasing pipeline, we anticipate that occupancy will continue to increase throughout 2022 and into 2023. There are no bankruptcies in our portfolio.

There were no bankruptcies in our portfolio in the fourth quarter.

Speaker 5: Trailing 12 leasing spreads were 4.9% as of December 31, 2021.

Trailing 12 leasing spreads were four 9% as of December 31, 2021.

Speaker 5: We feel good about the progress we're making on our 2022 lease expiration.

We feel good about the progress, we're making on our 2022 lease expirations to.

Speaker 5: To date, we have commitments on 39% of our 2022 expiring square footage, with another 55% in the letter of intent state.

To date, we have commitments on 39% of our 2022 expiring square footage with another 55% in the letter of intent stage.

Speaker 5: In the fourth quarter, we opened 276,000 square feet of new storage.

In the fourth quarter, we opened 276000 square feet of new stores.

Speaker 5: For the full year 2021, we opened 900,000 square feet of new stores, which is about 2% more square footage than we opened during the same period in 2019. And I'm actually very pleased.

For the full year 2021, we opened 900000 square feet of new stores, which is about 2% more square footage than we opened during the same period in 2019.

And I'm actually very pleased about the statistics, because if you think about the vast majority of 2021 store openings were a result of leasing done in 2019, and 2020, both of which were very difficult challenging years to Liza and given the pandemic and the uncertainties are presented.

Speaker 5: Because if you think about it, the vast majority of 2021 store openings were a result of leasing done in 2019 and 2020, both of which were very difficult and challenging years to lease in, given the pandemic and the uncertainties it presented.

Speaker 5: Notable openings in the fourth quarter include Aritzia at Tyson's Corner, Alo Yoga at Scottsdale Fashion Square.

Notable openings in the fourth quarter include a ritchie at Tysons corner.

Hello, Yoga at Scottsdale fashion square.

Speaker 5: Urban Outfitters at Arrowhead and Chandler. Crunch Fitness at Deptford. Six stores with papaya at Arrowhead, Chandler, Desert Sky, Freehold, Scottsdale, and Superstition Springs.

Urban outfitters at Arrowhead in Chandler.

Fitness at Deptford.

Six stores with PAPAYA at Arrowhead, Chandler Desert Sky, Freehold, Scottsdale, and superstition Springs.

Speaker 5: and three stores with Windsor fashion at Flatiron, South Plains, and Victor Valley.

And three storage with Windsor fashion at Flatiron, South Plains and Victor Valley.

In the luxury category, we opened Marc Jacobs discussed fashion Chanel face in beauty acumen common and.

Speaker 5: In the luxury category, we open Marc Jacobs at Costell Fashion, Chanel Face and Beauty at Kierland Common, and Versace at Fashion Outlet.

And versace at fashion outlets of Chicago.

The effort of sourcing new and exciting emerging brands continues to pay off as we opened <unk> frankly is in lucid motors, Tysons Sim golf and worthy Parker at Washington Square.

Speaker 5: The effort of sourcing new and exciting emerging brands continues to pay off as we open Fabletics, Frankie's and Lucid Motors at Tysons, SimGolf and Warby Parker at Washington Square, Forward at Scottsdale Fashion.

Forward at Scottsdale fashion.

Speaker 5: 10 Shop and Tonel at Santa Monica Place and Guess Originals at Los Cerritos.

10 shop in <unk> at Santa Monica place and guests originals and low cerritos.

Now, let's take a look at the new and renewal leases, we signed in the fourth quarter.

Speaker 5: Now let's take a look at the new and renewal issues we signed in the fourth quarter.

Speaker 5: In the fourth quarter, we signed 146 leases for a half a million square feet.

In the fourth quarter, we signed 146 leases for a half a million square feet.

Speaker 5: For the full year 2021, we signed 833 leases for 3.5 million square feet.

For the full year 2021, we signed 833 leases for $3 5 million square feet.

As Tom mentioned this represents the highest square footage leasing volume for matrix since 2015, when viewed on a same center basis.

Speaker 5: As Tom mentioned, this represents the highest square footage leasing volume for Mace Rich since 2015 when viewed on a same center basis.

Speaker 5: Speaking to the diversity of tenant demand we're seeing today, during 2021, we signed 99 new to Maestrich tenants, spanning 88 different brands for over 840,000 square feet.

And speaking to the diversity of tenant demand we're seeing today. During 2021, we signed 99, new to me streets tenants spanning 88 different brands for over 840000 square feet.

Speaker 5: Notable leases signed in the fourth quarter include two key renewals with Apple at Fresno Fashion in Los Cerritos, as well as new leases with Free People Movement at Village of Cordo Madera, Travis Matthew at Kierlin Commons, and Windsor Fashion at Fashion Outlets of Chicago and Fashion Outlets of Niagara Falls. We signed our first

Notable leases signed in the fourth quarter include two key renewals with Apple at Fresno fashion, and luxury dose as well as new leases with free people movement at village of Corte Madera, Travis Matthew Acumen, Commons, and Windsor fashion and fashion outlets of Chicago and fashion outlets of Niagara Falls.

We signed our first are released with Lido.

Speaker 5: 30,000 square foot international grocer from Germany, with 11,000 stores across Europe , and most recently the United States.

A 30000 square foot international grocer from Germany, with 11000 stores across Europe , and most recently the United States will.

Speaker 5: They'll open a freehold raceway mall in summer 2023, and we look forward to further scaling our business.

They will open at Freehold Raceway mall in summer 2023, and we look forward to further scaling our business with them.

Speaker 5: In the home furnishings category, we signed leases with Lovesack at Freehold and Country Club Plaza, Ashley Furniture at King's Plaza, and Jembro at Greenacres Commons.

The home furnishings category, we signed leases with love sack at Freehold and country Club Plaza Ashley furniture at Kings Plaza, and Gem broke green acres Commons.

Speaker 5: In the emerging brands category, we sign leases with Fabletics and Leap at Broadway Plaza and Scotch and Soda at Scotchdale Fashion.

And the emerging brands category, we signed leases with <unk> and leap at Broadway Plaza, and Scotch <unk> soda at Scottsdale fashion.

Lastly, as we continue to make our centers something for everybody by adding ancillary service uses to traditional retail we're pleased to announce the signing of the department of motor vehicles at Valley River and the veterinary Emergency group at 29th Street in Boulder, Colorado.

Speaker 5: Lastly, as we continue to make our center something for everybody by adding ancillary service uses to traditional retail We're pleased to announce the signing of the Department of Motor Vehicles at Valley River and the veterinary emergency group at 29th Street in Boulder, Colorado

Turning to our leasing pipeline at the end of the fourth quarter. We had 133 leases signed for 2 million square feet, which we expect to open in 2022 and 2023.

Speaker 5: Turning to our leasing pipeline, at the end of the fourth quarter, we had 133 leases signed for 2 million square feet, which we expect to open in 2022 and 2023.

Speaker 5: In addition to these signed leases, we're currently negotiating another 93 leases.

In addition to these signed leases were currently negotiating another 93 leases.

Speaker 5: totaling 710,000 square feet, which will open in 2022 and early 2023.

Italy, 710000 square feet, which will open in 2022 in early 2023.

So in total that's over 225 signed an in process leases totaling $2 7 million square feet of new openings throughout the remainder of this year and into 2023.

Speaker 5: So in total, that's over 225 signed and in-process leases, totaling 2.7 million square feet of new openings throughout the remainder of this year and into 2023.

Speaker 5: And I want to emphasize, these are new openings. These numbers do not include renewals. So to conclude, sales continue to be much stronger.

And I want to emphasize these are new openings. These numbers do not include renewals.

So to conclude.

Sales continued to be much stronger than they were pre COVID-19 .

Speaker 5: Occupancy is up 300 basis points over the past three quarters and is expected to increase throughout 2022 and in 2023 There are no bankruptcies in our portfolio in the fourth quarter and bankruptcies overall are at their lowest levels since 2015 Which is consistent with our significantly reduced tenant watch

Occupancy is up 300 basis points over the past three quarters and is expected to increase throughout 2022 and 2023.

There are no bankruptcies in our portfolio in the fourth quarter and bankruptcies overall are at their lowest levels since 2015, which is consistent with our significantly reduced tenant watch list.

Speaker 5: Leasing velocity is at its highest level since 2015, as evidenced by the 3.5 million square feet we leased in 2021, the result of which is a very strong, vibrant and exciting pipeline of tenants slated to open yet this year and into 2023.

Leasing velocity is at its highest level since 2015 as evidenced by the $3 5 million square feet. We leased in 2021. The result of which is a very strong vibrant and exciting pipeline of tenants slated to open yet this year and into 2023.

And given the new and emerging brands brand extensions and non retail uses that want to be in our centers I don't see these trends reversing anytime soon.

Speaker 5: And given the new and emerging brands, brand extensions, and non-retail uses that want to be in our centers, I don't see these trends reversing any time soon. I believe 2022 and 2023 are going to be very exciting years on a leasing front, years in which we will continue to transform traditional malls into experiential town centers, where people want to come to shop, to dine, to socialize, and to have fun.

I believe 2022, and 2023 are going to be very exciting years on the leasing front.

Years in which we will continue to transform traditional malls into experiential town centers, where people want to come to shop to dine.

To socialize and to be entertained.

Speaker 5: And now I'll turn it over to the operator to open up the call for Q&A.

And now I will turn it over to the operator to open up the call for Q&A.

Speaker 1: Thank you. To ask a question, please press star one on your telephone keypad. Also, if you are using a speakerphone, please make sure your mute button is turned off to allow your signal to reach our equipment. As a reminder, please limit your questions to one question and one follow-up question. Once again, that is star one for questions. First, we'll go to

Thank you to ask a question. Please press star one on your telephone keypad also if you are using a speaker phone. Please make sure. Your mute button is turned off to allow your signal to reach our equipment. As a reminder, please limit your questions to one question and one follow up question.

Once again that is star one for questions first we will go to Derek Johnston with Deutsche Bank.

Hi, everyone. Thank you I was hoping you could discuss private markets for a bit.

Speaker 6: Hi everyone. Thank you. I was hoping you could discuss private markets for a bit. You know cap rates are so compressed for residential and industrial assets.

Cap rates are so compressed for residential and industrial assets. Thus there really seems to be a surging interest in retail right now and notably local and grocer.

Speaker 6: Thus, there really seems to be a surging interest in retail right now, and notably, you know, local and grocer is certainly getting a lot of interest. But, you know, how is the interest in town center assets evolving? And could this perhaps impact.

<unk> is certainly getting a lot of interest but.

How is the interest in town center assets are evolving and could this perhaps impact your noncore.

Speaker 6: you know, your non-core assets and the dispo pace. And I say that especially, you know, as 90% of your NOI is derived from your top 30 centers.

Assets in the desktop pace and I say that especially as 90% of your NOI is derived from your top 30 centers.

Speaker 3: Derek, it's a good question, although there certainly have not been any transactions for some time now, certainly in Class A regional malls, so it's really tough to speculate, you know, what a cap rate would be because there haven't been transactions. But given, as you mentioned, the very low cap rates in some other sectors, at some point the regional mall assets on the private side are going to...

Derek.

It's a good question although.

Theres certainly have not been any transactions for some time now certainly in class a regional malls. So it's really tough to speculate what it what a cap rate would be because there haven't been transactions, but given as you mentioned the very low cap rates and some other sectors at some point the regional mall assets on the private.

Side are going to.

Speaker 3: be found to be very attractive. Can't tell you what that is yet because we haven't seen any transactions, but I will tell you if the market returns for

Be found to be very attractive.

Can't tell you what that is yet because we haven't seen any transactions, but I will tell you if the market returns for.

Speaker 3: Some non-core type assets for us, we certainly would be active on the disposition side. You saw us do a couple dispositions in 2021. Paradise Valley, which is going to be converted from an old mall into mixed use, as well as a lifestyle center in Tucson we sold last quarter. And that was at about a five and a quarter cap rate or so.

Some non core type assets for us, we certainly would be.

Active on the disposition side you saw us do a couple of dispositions in 2021 Paradise Valley.

Which is going to be converted from <unk>.

From an old mall into the.

Mixed use as well as a lifestyle center in Tucson, we sold last quarter and that was at about a five and a quarter cap rate or so.

Speaker 3: But other than that, we don't have any transactions that we have seen that we could use as a good basis for speculating what the cap rate might be today on a quality regional model.

But other than that we don't have any transactions that we have seen.

We could use as a good basis for speculated what the cap rate might be today at.

A quality regional malls.

Okay, Great and I guess switching gears.

Speaker 6: Okay, great. And I guess, you know, switching gears, you know, it is a trailing 12-month metric, but, you know, rent spreads were positive across the board for the first time since 3Q20. You know, that's on a consolidated JV and total basis.

As a trailing 12 month metric but.

Rent spreads were positive across the board for the first time since <unk> 2000, and that's on a consolidated JV and total basis. So have you reached an occupancy level, where you are a little more comfortable and perhaps able to push rents a little more and then on the flip side is the tenant.

Speaker 6: So have you reached an occupancy level where you're a little more comfortable and perhaps able to push rents a little more? And then on the flip side, is the tenant demand and the breadth strong enough to actually get pricing at this point?

<unk> then the breaths.

Strong enough to actually.

Get pricing at this point.

Speaker 3: Derek, I would say that it's always a fine balance between occupancy and rental rates.

Derek I would say that it's always a fine balance between occupancy and rental rate.

Speaker 3: And, you know, certainly we were under pressure in the beginning of 2021 when we hit a low point on occupancy of 88% to fill space.

And.

Certainly we were under pressure in the beginning of 2021.

When we hit a low point on occupancy of 88%.

To fill space.

Speaker 3: And I would say that likely in the first and second quarter, we filled space, and it may have cost us a bit on rate. We felt that started to change and balance out in the third and fourth quarter.

And I would say that.

Likely in the first and second quarter.

<unk>.

We filled space in EMEA have cost us a bit on rate, we felt that started to change and balance out in the third and fourth quarter.

Speaker 3: as demand accelerated. So we had less space available and we had an accelerating leasing environment which really helped balance things between occupancy and rate and we expect that to continue.

As demand accelerated so we had less space available and we had an accelerating leasing environment, which.

<unk> helped balance.

Things between occupancy and rate and we expect that to continue Doug you want to elaborate to the Derrick to the point of the breath of tenants I mean, I think that is really going to be a factor in it.

Speaker 5: Doug, you want to elaborate? Derek, to the point of the breadth of tenants, I mean, I think that is really going to be a factor in rate in the future. You know, we're leasing to all different sorts of uses, not just traditional legacy retailers, although they're still very important to our portfolio. But when you factor in digitally native emerging brands, tenants we're doing internationally.

In the future.

No.

We're leasing to all different sorts of uses not just traditional legacy retailers. Although there is still very important to our portfolio, but when you factor in digitally native emerging brands tenants, we're doing internationally.

Speaker 5: food and beverage, fitness, entertainment, grocery, health and wellness.

Food and beverage fitness entertainment grocery health and wellness.

Service It just adds a whole new demur.

Speaker 5: it just adds a whole new dimension of retailers that we have to choose from, which is going to create competition and then ultimately affect rate.

Dimension of retailers that we have to choose from which is going to create competition and then ultimately affect rate.

Thank you guys.

Thank you thanks Derek.

Speaker 1: Moving on, we'll go to Craig Schmidt with Bank of America.

Moving on we'll go to Craig Schmidt with Bank of America.

Speaker 7: Yeah, I wanted, I mean, obviously, great news, the continued elevated leasing and the opening of new stores. I'm just wondering, is there going to be a problem with staffing these new stores? I mean, obviously,

Yes, I wanted to I mean, obviously, great news the continued elevated leasing and the opening of new stores.

Im just wondering is there.

Theyre going to be a problem with staffing.

These new stores I mean, obviously.

But to get new work is getting more and more competitive higher minimum wages bonus plans and just the shortage of workers.

Speaker 7: to get new workers is getting more and more competitive, higher minimum wages, bonus signings, and just a shortage of workers. Could this be a cap? Although they've leased these stores, can they get them all open in a regular space of time?

Could this be a cap.

Although they've leased these stores can that youll get them all opened.

Regular space of time.

Speaker 3: Now, Craig, that's a that's a good point. And, you know, it's going to continue to be a challenge for the retailers. And that's, you know, hiring enough good people. That's true of almost any industry today. But it doesn't seem to be slowing down the pace of new store signings and openings. Granted, some of some of those locations may be understaffed a bit and service may not be quite what we'd like to see, but they're getting their stores open.

Craig that's a good.

Point, and it's going to continue to be a challenge for the retailers and Thats no hiring enough. Good people thats drove almost at any industry today.

But it doesn't seem to be slowing down the pace of.

New store signings and openings.

Now granted some of those locations, maybe understaffed a bit.

And service may not be quite what we'd like to see.

But theyre getting their stores opened.

Speaker 7: Okay, thank you. And then just maybe a word on the Bloomingdale's and Arclight redevelopment, it looks like you're going to be bringing in both entertainment and office. I just wondered, you know, which would be on the top floor and which might be on the lower levels that that Bloomingdale occupies.

Okay. Thank you and then just.

Maybe a word on <unk>.

The bloomingdale's and Arclight.

Redevelopment.

Looks like you are going to be bringing in both entertainment and office and I just wondered.

Which would be on the top floor, and which might be on the lower levels that that bloomingdales occupied.

Speaker 3: Yeah, we're still in the process of that. Craig, as you know, that's a great location. It's right across the street from the end of the train line. Great visibility and it was a two level Bloomingdale's and then on top of that was an arc light theater.

Yes, we're still in the process of that Craig as you know Thats a great location, it's right across the street from the end of the train line.

Visibility and it was a two level bloomingdales and then on top of that was an Arclight theater.

Speaker 3: So we now have possession of the theater space. It'd be very logical to put another theater up there and then put either one or two new tenants in on the first and second floor. We've had a fair amount of demand from creative office users, co-working, as well as more traditional retail. So a lot of different choices to make there, and you'll be hearing more about that in the quarters to come, but it's a great space. It's a quality situation for us.

So we now have possession of the theater space.

It would be very logical to put another theater up there.

And then.

But either one or two new tenants in on the first and second floor. We've had a fair amount of demand from creative office users co working as well as more traditional retail.

A lot of different choices to make there and you'll be hearing more about that in the quarters to come but it's a great space to quality situation for us.

Thank you.

Okay.

And next we'll go to Samir Khanal with Evercore ISI.

Speaker 1: And next we'll go to Sameer Kanal with Evercore ISI.

Hey, good morning, everybody.

Speaker 7: Hey, good morning, everybody. So, just on your level of termination income that you're assuming for the year, the 22Million. Just wondering kind of what's driving that and I would have thought maybe that number would have been lower. Considering the, the, you know, the amount of closures that have been sort of at the lowest point here. So, maybe Doug, or anybody who wants to take that, maybe. You know, tell us what the tenants categories that are describing that number. Yeah, sure. Samir good morning.

So just wanted your level of termination income that you were assuming for the year the $22 million.

Just wondering.

What's driving that and I would've thought maybe that number would have been lower.

Certainly the amount of closures that have been sort of at the lowest point here. So.

So maybe Doug or anybody who wants to take the maybe.

Tell us what made the tenants categories.

And that number.

Yeah sure Samir good morning, Scott.

Yes.

Speaker 4: Yeah, we've we've had a few termination settlements that have already triggered actually during the first part of this year, which is one of the reasons why you see the FFO a little bit higher than it would typically be in the first quarter.

Had a few.

Termination settlements that have already triggered actually during the first part of this year, which is one of the reasons why you see the SFO a little bit higher than it would typically be in the first quarter.

Speaker 4: And so given that, given those few transactions, and these are really kind of proactive brand closures from, you know, ongoing interests, you know, they've just decided they want to consolidate brands. And so we've been able to negotiate settlements without naming names.

And so given that.

Given those few transactions and these are really kind of proactive brand closures from.

Ongoing.

Interests, they've just decided they want to consolidate brands and so we've been able to negotiate settlements without naming names.

Speaker 4: You know, given those already inked and executed deals, we've got some termination income that's unspoken for, but that's really what's driving the high level of termination income in 22.

Given given those already inked and executed deals we've got some termination income that's unspoken for it but that's really what's driving the high level of termination income in 2002.

Got it and then I guess as a follow up just maybe if we can.

Unpack the guidance a little bit I mean, it's a big range.

And then when you think about the sort of the low end and the top end of the range. I mean is there anything that you can provide whether it's.

What youre, assuming for occupancy or any other tenants, but line item here.

Yes.

Speaker 4: Yeah, the biggest factor that's really driving the range, and I think you probably heard this earlier this week, too, from one of our peers is the tenant sales environment.

Yes, the biggest factor that's really driving the range.

I think you've probably heard this earlier this week two from one of our peers as a.

Tenant sales environment.

Speaker 4: We've made some assumptions in our detailed budgeting that sales are going to be relatively flat versus 21. That could certainly change. That's not a predictor of what's to come. I think that's just a reasonable assumption. And if it proves to be conservative, we could certainly exceed our percentage rent estimates in our in our detailed guidance.

We've made some assumptions in our detailed budgeting that sales are going to be relatively flat versus 'twenty one.

That could certainly change that's not a predictor of what's to come I think thats, just a reasonable assumption and if it proves to be conservative we could certainly exceed our percentage rent estimates in our in our detailed guidance.

Speaker 4: In addition, you know, at least termination income, again, is a little bit large. We've got some of that spoken for, some of it that's not. We just touched on that, Samir.

In addition at lease termination at come again is a little bit large we've got some of that spoken for some of it thats not we just touched on that Samir.

Speaker 4: And I'd say lastly, we also have some land sale transactions that are.

Lastly, we also have <unk>.

Some land sale transactions that are.

Speaker 4: Plan to be consistent with where we landed in 21 in terms of those gains and those FFO increases, but you know, those are you know take a lot of planning and entitlement and Due diligence to actually execute on so that that could you know, ultimately occur or not occur And so those are those are really some of the primary factors that are driving the wider range Samir you asked about occupancy and we picked up 300 basis points in 21, which is

Planned to be consistent with where we landed in 'twenty one in terms of those gains and those SSO increases but those are.

Take a lot of planning and entitlement and <unk>.

Due diligence to actually execute on so that could.

Ultimately occur or not occur and so those are those are really some of the primary factors that are driving the wider range. Sameer you asked about occupancy and we picked up 300 basis points 21, which is.

Speaker 3: Fairly incredible, we're not expecting to be quite that high and in 22 and 23, but if you said pre coven or occupancy level was 94%. Today.

Fairly incredible we're not expecting to be quite that high in 'twenty two 'twenty three but if you said pre COVID-19 our occupancy level was 94%.

Today, we're at 91 and a half.

Speaker 3: 250 basis points to get back to where we were pre-COVID and on occupancy. And I would expect roughly half of that to be picked up in 22 and half in 23. So we don't typically give guidance on occupancy, but I'll give you a ballpark there that roughly half of that 250 basis points will be picked up in 22 over the course of 22.

It's 250 basis points to get back to where we were pre COVID-19 on occupancy.

And I would expect roughly half of that to be picked up in 'twenty, two and half in 'twenty three.

So we don't typically give guidance on occupancy, but I'll give you a ballpark there that roughly half of that 250 basis points will be picked up in 'twenty two over the course of 'twenty two.

Okay.

Great great. Thanks, so much Scott I appreciate it.

Speaker 1: We will now hear from Alexander Goldfarb with Piper Sandler.

We will now hear from Alexander Goldfarb with Piper Sandler.

Hey, good morning out there.

So two questions for me.

Speaker 8: So two questions for me. First, Scott, on the refinancings, certainly the mall performance, the fact that you guys are exceeding 2019.

First Scott on the Refinancings certainly the mall performance. The fact that you guys are exceeding 2020.

2019 sales healthily in the leasing volume et cetera, I would think that would be making the lenders much much calmer in a better mood to do to do refinancing. So is there is there something else thats going on as far as like the refinancings of the 2020 and the 2021, so I would have.

Speaker 8: sales healthily and the leasing volume, etc. I would think that would be making the lenders much, much calmer and in better moods to do to do refinancing. So is there is there something else that's that's going on as far as like

Speaker 8: the refinancings of the 2020 and the 2021s, I would think that the letters should be pretty excited with how you guys have shown the rebound of the malls and certainly the strength of lease.

I would think that the lenders should be pretty excited with how how you guys have shown the rebound in the malls and certainly the strength of leasing.

Speaker 4: Yeah, Alex, I think you're reading it correctly. The markets continue to get better quarter after quarter. And in fact, we're pretty active right now. We just closed last week, as I mentioned, alone on Flatiron Crossing. We're active on

Yes, Alex I think youre reading it correctly the markets continue to get better.

Quarter after quarter and in fact, we're pretty active right now we just closed last week as I mentioned alone on Flatiron crossing we're active on.

Speaker 4: A few other transactions as well, you know, the CMBS market is very productive right now, both on a single asset as well as a conduit basis. We're seeing, you know, some fairly strong interest, and that ranges from assets that start at 500 bucks a foot headed north.

A few other transactions as well.

The <unk> market is as very productive right now both on a single asset as well as a conduit basis, we're seeing.

Some some fairly strong interest in that ranges from assets that start at 500 Bucks a foot headed north.

Speaker 4: If you look at our pipeline, we feel pretty good about it. We've got some very high quality assets coming.

If you look at our pipeline, we feel pretty good about it we've got some very high quality assets coming with maturities like Scottsdale fashion like Tysons corner like Green acres, where we've done a lot of leasing and <unk>.

Speaker 4: With maturities like Scottsdale Fashion, like Tyson's Corner, like Green Acres, where we've done a lot of.

Speaker 4: Leasing and you know, I think those are going to be very well received in the 23 time frame and

Those are going to be very well received in the 'twenty three time frame.

Speaker 4: You know, like I said, we're extremely active. Banks are out there doing business. Debt funds are out.

Like I said, we're extremely active.

Thanks are out there doing business that funds are out there and even some of the life companies are betting on high quality a mall transaction. So given the quality of our portfolio I feel I feel good about our ability to execute here and like I said, we're very active and we will continue to report those deals.

Speaker 4: And even some of the life companies are bidding on on high quality a mall transaction. So, you know, given the quality of our portfolio, I feel I feel good about our ability to execute here. And like I said, we're very active and we'll continue to report those deals as and when they they occur.

And when they occur.

Speaker 8: Okay, so just reading between the lines sounds like the 2020 and the 2021s that are on short-term extensions.

So just reading between the lines it sounds like the 2020 and the 2020 ones that are on short term extensions sounds like those are still being worked through so.

Speaker 8: Sounds like those are still being worked through. So I guess I'll wait. That's what it sounds like. My next question is on, unfortunately, all the theft, the crime that's been in the headlines. Obviously, you guys are not immune. Has there been any impact to leasing as far as tenants reacting one way or the other? I mean, your peer already commented on security expense going up, but just curious if there's been any fallout on the leasing front, either positive or negative, as tenants assess the other location.

So I guess I'll wait that's what it sounds like my next question is on Unfortunately, all the.

The SaaS the crime that's been in the headlines obviously you guys were not immune.

There have been any impact to leasing as far as tenants react in one way or the other I mean <unk> already commented on security expense going up but just curious if theres been any fallout on the leasing front, either positive or negative as tenants assess their locations.

Speaker 5: Hey, Alex, it's Doug. I'm talking to the retailers all the time. My team is talking to the retailers all the time. I would say the answer to that question is a solid no. And I say that because as we look at the deals we approve, and we bring deals to committee every other week, we're substantially outpacing where we were actually in 2021. so we have not seen it. Okay, thank you. Thanks, Alex. Moving on, we'll go

Hey, Alex it's Doug.

Talking to the retailers all the time my team is talking to the retailers all the time I would say the answer to that question is a solid no.

And I say that because as we look at the deals we approve and we bring deals to committee every other week.

We're substantially outpacing where we were actually in 2021, so we have not seen it.

Okay. Thank you.

Yes.

Thanks, Alex.

Moving on we'll go to Floris van <unk> with Compass point.

Thanks for taking my question guys.

Speaker 9: You know, just delving into the same store NOI number a little bit more, obviously, you still have, you know, your 3% fixed bumps, so, you know, all things being equal, everything else would, you know, go up by 3% if the world stayed the same. But you're going to see some occupancy gains, as you alluded to, Tom, maybe 125. It looks like you're signing that open. Pipeline is about.

Just.

Delving into the same store NOI number a little bit more obviously you still have.

Your 3% fixed bumps.

So all things being equal everything else would go up by 3%.

If the world stayed the same but youre going to see some occupancy gains as you alluded to Tom maybe 125.

It looks like you are signed not open pipeline is about.

Speaker 9: you know, about 5% of your, your total space ballpark figure there. So again, some, some significant.

About 5% of your total space a ballpark figure there so again some some significant.

Speaker 9: significantly higher upside potential in terms of NOI as I look at it, but what's your temporary tenant percentage today? And I know your peers indicated what the rents were for the 10 tenants. It looks like it's a threefold increase to permanent rents. What kind of delta is there? Is it similar in your portfolio?

Differently higher upside potential in terms of NOI, but as I look at it but what's your what's your temporary tenant percentage today and.

I know your peers indicated what the rents were for the temp tenants.

It looks like its a three fold increase to to permanent.

Rents, what what kind of Delta is there is it similar to your portfolio.

I mean, I would say that you get between two and three times the rent from a permanent tenant than you get from a temporary.

Speaker 3: I mean, I would say that you get between two and three times the rent from a permanent tenant than you get from a temporary.

Speaker 3: And what happened is we did see some good temporary tenant leasing in 2020 and 2021, because as we got a lot of that space back very quickly by virtue of the 2020 bankruptcies, takes a while to generate a permanent lease. So we put a lot of that space in the hands of our specialty leasing group, and they had more inventory than usual, and they did a great job of filling a lot of that space on a temporary basis. You know, I'd say temporary occupancy.

What happened is we did see some good temporary tenant leasing in 2020 in 2021, because as we got a lot of that space back very quickly by virtue of the 2020 bankruptcies. It takes a while to generate a permanent lease. So we put a lot of that space in the hands of our.

Specialty leasing group and they had more inventory than usual and they did a great job of filling a lot of that space on a temporary basis.

I'd say temporary occupancy.

Speaker 3: When we were at 88% permanent occupancy, we probably had close to 7% of our space was being leased on a temporary basis. And that's going to shrink and continue to shrink as we convert these leases to permanent leases. Another thing on the same center number, you've got to keep in mind that

When we were at 88% permanent occupancy, we probably had close to 7% of our space was being leased on a temporary basis and thats going to shrink and continue to shrink as we convert these leases too to permanent leases. Another thing on the same center number you've got to keep in mind that.

Speaker 3: We're going to get a full year impact of that 300 basis point gain in occupancy that happened in 2021, but we won't see that economic impact until 2022 and in some cases 23 if there's a delayed opening as a result of an extensive build out. So that's part of what's driving the same center, not just in 22, but should drive it also in 23.

We're going to get a full year impact of that 300 basis point gain in occupancy that happened in 2021, but we wont see that economic impact until 2022 and in some cases 23, if theres a delayed opening as a result of an extensive build out. So that's part of what's driving same center not just in 'twenty, two but should drive it also in 'twenty three.

Speaker 9: And then maybe I noticed that while your leasing spreads were positive, which was very encouraging, the average rent signs

And then maybe I noticed that your while your leasing spreads were positive which was very encouraging the average rent signs.

Speaker 9: is still below the average in your portfolio. Do you expect your average ABR on leases, new leases executed, to continue to steadily increase? And what has been the, you know, how much ability do you have to push to those rents? And maybe talk about your occupancy costs as well, and what has happened to your occupancy costs relative to the last couple of months.

It's still below the average in your portfolio.

Do you expect your average ABR on on leases new leases executed to continue to steadily increase in what has been the.

How much ability do you have to push to.

Those rents and maybe talk about your occupancy costs as well what has happened to your occupancy cost relative to last.

Last couple of years.

Speaker 4: Yeah, Floris, good afternoon. Yeah, we would expect average base rent to continue to tick up, you know, when you think of it, especially

Yes, Floris good afternoon.

Yes, we would expect average base rent to continue to tick up when you think of it especially.

Speaker 4: excuse me, in the context of some of the COVID negotiations from 2020 where we did some heavy variable rent deals, we will continue to see variable rent convert to fixed rent with fixed annual escalators. So that's exactly where we want to be. So I would expect over the course of the next couple years

Excuse me in the context of some of the covered negotiations from 2020, where we did some heavy variable rent deals. We will continue to see variable rent convert to fixed rent with fixed annual escalators. So that's exactly where we want to be so I would expect over the course of the next couple of years as that variable rent converts to <unk>.

Speaker 4: As that variable rent converts to fixed, we'll see average base rents continue to tick up.

Average base rents continue to tick up.

Speaker 4: On the cost of occupancy side, we've certainly seen that metric drop with the increase in sales. We haven't reported that, but I'd say we're probably at what would be considered a historic low, just given the sales environment today. There's definitely some room to push.

On the cost of occupancy side, we've certainly seen that metric drop with the increase in sales we haven't reported that.

Say, we're probably at what would be considered a historic low just given the sales environment today.

There is definitely some some room to push.

Thanks, Doug.

Okay.

Speaker 10: And next, we'll go to Linda Tsai with Jefferies. Hi. Hi, Linda. Hi. Sort of tacking on to Alex's question, can you discuss how you'll approach the mortgages coming due in 2022? You noted a very healthy refinancing market, but, you know, what are the main steps to reach eight times net debt to EBITDA, and it sounds like raising equity isn't factored into your guidance.

And next we'll go to Linda Tsai with Jefferies.

Hi.

So we're looking at that high sort of tacking on to Alex's question can you discuss how you will approach the mortgages coming due in 2022.

Did the very healthy refinancing market, but what are the main steps to reach <unk> eight times net debt to EBITDA and it sounds like raising equity isn't factored into your guidance.

Well, we continue to chip away at the maturity schedule, Linda as I look at the.

Speaker 4: Well, you know, we continue to chip away at the maturity schedule, Linda, as I look at the

Speaker 4: The debt that is rolling in 22 and in 2023, those assets are pretty well positioned. They're generally very high-quality assets. I called out a few earlier, and as I look at several of those, they're extremely underleveraged.

The debt that is rolling in 'twenty, two and in 2023.

Those assets are pretty well positioned they are generally very high quality assets I called out a few earlier.

And as I look at several of those theyre extremely under leveraged.

Speaker 4: you know, which leads me to believe that we'll probably have a net liquidity event over the course of the next 18 months as we refinance 22 and 23. You know, we're picking those off in order of time date, in order of maturity. So again, we're very active in the market, spending a lot of time on it, and receiving, you know, quite a good reception. So I feel good about where we stand right now.

Which leads me to believe that we will probably have a net liquidity.

Events over the course of the next 18 months as we refinanced 22 and 'twenty three.

Picking those off in order of time date in order of maturity. So again, we're very active in the market spending a lot of time on it and receiving quite a quite a good reception. So I feel good about where we stand right now.

How about the timeframe for getting to eight times.

Well I think part of that is going to begin driven by increase in NOI.

Speaker 4: Well, I think part of that is going to be driven by increase in NOI. You know, we painted, I think, a pretty optimistic picture for 22 with.

Painted I think a pretty optimistic picture for 'twenty two with.

With our same center NOI range at roughly 475%.

Speaker 4: you know, with our same center NOI range at roughly 4.75% with the occupancy growth that we're seeing. And again, occupancy being a leading indicator and you'll see a lot of that cashflow come online later in 22 and into 23. And also with the pickup and leasing environment, you know, we really don't see that abating at all. And so as we continue to grow EBITDA and NOI, we'll continue to see that sub eight target become much more of a reality. Thank you.

The occupancy growth that we're seeing and again occupancy being a leading indicator and youll see a lot of that cash flow come online later in 'twenty, two and ended 23 and also with the pickup in leasing environment, We really don't see that abating at all and so as we continue to grow EBITDA and NOI will continue to see that.

Hub eight target.

Much more of a reality.

Sure.

I would expect it to happen.

Speaker 3: by the end of 2023. You know, some of it depends on the pace, not just the pace of NOI pickup, but also our ability to sell non-core assets. We kind of quietly went out, sold $150 million worth of assets this year and used those proceeds to de-lever. And I would expect we'll see some of that in 22 and 23 as well, Linda. Are you getting inbounds?

By the end of 2023 some of it depends on the not just the pace of <unk>.

I pick up but also our ability to sell non core assets, we kind of quietly went out sold a $150 million worth of.

Assets this year.

Use that those proceeds to Delever and I would expect we'll see some of that in 'twenty two 'twenty three as well.

Are you getting inbounds in terms of interest for your noncore assets.

Okay.

Speaker 3: Uh, occasionally we do generally, you know, we're out trying to create the opportunity and you know, we do these on a one off basis. Um, we, we sold, uh, lawn cantata lifestyle center in Tucson last year to a local, a local buyer and we sold, uh,

Occasionally we do generally we're out trying to create the opportunity.

And we do these on a one off basis.

We sold <unk>.

<unk> cantata lifestyle center in Tucson last year to a local <unk>.

Local buyer and we sold.

Speaker 3: Paradise Valley to a local developer. And they weren't necessarily marketed deals, but we knew somebody that had a mandate, had capital, and had an interest in those particular assets.

Paradise Valley to a local developer.

And their work necessarily marketed deals, but we knew somebody that had.

Our mandate head capital that had an interest in those particular assets.

Speaker 3: I think we're going to continue to operate that way in 22 and 23. And just to remind you, coming out of the financial crisis, we sold 29 malls. We decided to sell our lower quartile assets.

I think we're going to continue to operate that way in 'twenty two 'twenty three and just to remind you coming out of the financial crisis. We sold 29 malls, we decided to sell our lower quartile assets and we were successful in selling those 29 centers.

Speaker 3: And we were successful in selling those 29 centers. And that was roughly 2010 through 2015.

And that was roughly 2010 through 2015.

Thanks, just one last one on percentage rents. It seems like those were elevated in the quarter would you expect that to kind of remain the case over the next few quarters.

Speaker 10: Just one last one. On percentage rents, it seems like those were elevated in the quarter. Would you expect that to kind of remain the case over the next few quarters?

Yes, I think so again, we've guided.

Speaker 4: Yeah, I think so. Again, we've guided, you know, with flat sales assumptions. So over the course of time, as I mentioned to Flores earlier, we'll continue to see percentage rents convert to fixed, those will naturally tick down. But you know, we don't see the sales environment slowing down at this point. I think our assumptions are, like I said, relatively conservative.

With flat sales assumptions so.

Over the course of time as I mentioned to Floris earlier, we will continue to see percentage rents convert to fixed those will naturally ticked down.

But we don't see the sales environment slowing down at this point.

I think our assumptions or like I said relatively conservative.

Speaker 4: But I think over the course of time, we'll see variable rent continue to tick down to more historic levels, probably over the next two to three years. Great, thank you.

But I think over the course of time, we'll see variable rent continued to tick down to more historic levels, probably over the next two to three years.

Great. Thank you.

Sure.

And next we'll go to Hong Zhang with Jpmorgan.

Speaker 7: Yeah, hi. I guess just adding on to Linda's question on the percentage rent side of things, if you're assuming flat tenant sales next year, does that mean you're essentially assuming a similar level of percentage rent in 22?

Yeah, Hi, I guess, just adding on to Linda's question on the percentage rent side of things.

Assuming flat tenant sales next year does that mean, you're essentially assuming similar levels of percentage rent in 'twenty two.

Speaker 4: We're showing some decline in percentage rent again, just as a result of the negotiation and converting, you know, large store fleets that are renewing to fixed rate deals. So we do see some increase or some decrease of percentage rent in our 22 guidance. Again, percentage rents, you know, the sales assumptions may be flat.

We're showing some decline in percentage rent again, just as a result of the negotiation and converting large store fleets that are renewing two fixed rate deals. So we do see some increase or some decrease of percentage rent in our 'twenty two guidance.

Again percentage rents the sales assumptions may be flat.

Speaker 4: But it's very individuated on a deal-by-deal basis. You may have some tenants that pay more percentage rent than others. So it's really kind of a broad assumption. Some tenants may have fantastic performance, like they did in 21, and generate some outsized percentage rent. It's very, very hard to predict and budget with a lot of specificity. But we are seeing some decline in percentage rent in our 22 guidance, just as a result of the negotiation to fixed rent.

But it's very individually added on a deal by deal basis, you may have some tenants that pay more percentage rent than others. So it's really kind of a broad assumption.

Some tenants may have.

Fantastic performance like they did in 'twenty, one and generate some outsized percentage rent, it's very very hard to predict and budget with a lot of specificity, but we are seeing some decline in percentage rent in our 'twenty two guidance just as a result of the negotiation to fixed rents.

Got it I guess I guess on that topic as you convert tenants from I guess, a higher percentage rent component to them more to a higher fixed rent component is is there I guess any slippage in revenue.

Speaker 7: Got it. And I guess on that topic, as you convert tenants from, I guess, a higher percentage rent component to a more, to a higher fixed rent component, is there, I guess, any slippage in revenue? Or would it kind of be whatever they would be paying percentage rent would kind of essentially be converted more to a fixed rent?

Sure.

Way to kind of be wherever they are they would be paying percentage rent will essentially be converted more to a fixed rate.

Speaker 3: basis, if that makes any sense. Yeah, yeah, essentially the percentage rent would get converted to fixed. If anything, there might be a bit of a pickup. So, you know, typically we're going to get the benefit of whatever that percentage rent was. It's just going to come in the form of guaranteed rent, which we'd rather have, which our lenders would rather see. It's easier for them to underwrite.

Basis that makes any sense, yes, yes, essentially the percentage rent would get converted to fixed if anything there might be a bit of a pickup.

So typically.

We're going to get the benefit of whatever that percentage rent was it's just going to come in the form of guaranteed rate, which we'd rather have which our lenders would rather see it's easier for them to underwrite.

Speaker 4: And that would typically come with the net charges as well. So you convert it to base rent, you convert it to fixed GAM, you convert it to tax. So it's much more of a return to a traditional lease structure.

Got it.

Typically come with with the net charges as well right. So you convert converted to base rent to convert it to fixed Cam you converted to tax. So it's it's much more of a return to a traditional lease structure.

Speaker 7: Guy, if I could sneak one last question in there, your non-cash rent guidance represents a step down from where you used to try historically. Is there anything one-time in nature going on with that, with those lines?

Yes, if I could sneak one last question in there.

Youre not cash rent guidance represents step down from where it used to historically is there anything onetime in nature going on with those lines.

Speaker 4: No, not really. It's a function of, you know, if we've historically provided rental assistance as a result of COVID to tenants, you know, there was elevated straight line of rent.

No not really it's a function of if we have.

Historically provided rental assistance as a result of Covid to tenants there was elevated straight line of rent.

Speaker 4: And conversely, as you move forward and you flip the calendar year and you compare back, you know, if there's less rent relief in prior years, then you're going to get less straight line in the subsequent years. So it's just that kind of natural seesaw relationship. You know, if you look at our 22 guidance, there's basically not a lot of non-cash accounting noise in the FFO, which kind of makes it a cleaner underwrite from our perspective. So that's really what's going on there.

And Conversely, as you move forward and you flip the calendar year and you compare back if theres less rent relief in prior years, then youre going to get less straight line in the subsequent years. So.

It's just that kind of naturals seesaw relationship.

If you look at our 'twenty two guidance, there's basically not a lot of noncash accounting noise in the SSO, which kind of makes it a cleaner cleaner underwrite from our perspective, so that's really what's going on there.

Okay. Thank you.

Speaker 1: And moving on, we'll go to Greg McGinnis with Scotiabank.

And moving on we'll go to Greg Mcginniss with Scotiabank.

Speaker 7: Hey, good morning. Just in thinking about that trailing 12-month rent spread number at plus 5%, how would that spread be impacted if you included the overage or percent rent that those leases have been achieving as well?

Hey, good morning.

Just in thinking about that trailing 12 month rent spread number at plus 5%.

How would that spread be impacted if you included the old bridge a percent rent.

Businesses have been achieving as well.

Speaker 4: Yeah, good morning, Greg, or afternoon. We, we haven't quantified that, but it would certainly increase, you know, when you add the percentage rent element, we have historically provided our spreads based on average, just base rent, but we'd probably see a tick up. I don't, I don't have a figure for you though. We'd certainly see a tick up there.

Yes, good morning, Greg or afternoon.

We haven't quantified that but it would certainly increase.

You add the percentage rent element.

Have historically provided.

Our spreads based on ever just base rent, but.

But we'd probably see a tick up I don't I don't have a figure for you that we certainly see a tick up there.

Okay, Yes.

Speaker 6: Okay, yeah, what I mean, obviously, one of your peers talked about it on their call and it was pretty significant. So just

Obviously, one of your peers talked about it on their call and it was pretty significant.

Wanted to see if you guys had that.

Speaker 7: Wanted to see if you guys had that, but we can discuss later. And then regarding your comment on some of the assets being under leveraged, the expectation that you'll increase the LTV on those assets, and then what would be the use of those funds and how do you kind of balance that against the pursuit of lower leverage?

Discuss later.

And then regarding regarding your comment on some of the assets being under leveraged the expectation that you will increase the LTV on those assets and then what would be the use of those funds and how do you kind of balance that against the pursuit of lower leverage.

Speaker 3: Yeah, I think to the extent we borrow in excess of the maturing principal amount, that would go to pay down debt.

Yes, I think to the extent, we borrow in excess of the maturing principal amount that would go to pay down debt.

Speaker 3: line of credit or other variable debt that we're able to pay down without penalty. Okay. Great.

Line of credit or other other variable that we're able to pay down.

Without penalty.

Okay, great. Thank you.

And next we'll go to Rich Hill with Morgan Stanley .

Speaker 4: Hey, how are you? I have a clarification question about sales being flat. This has actually come up a fair amount with your peer. When you talk about sales, are you talking about like gross revenue or are you talking about transactions? And the reason I mention it is if we're talking about revenue and given the price of a good is up.

Hey, good morning, guys.

Hey.

How are you.

Clarify some question about sales being flat. This has actually come up a fair amount with with you here. When you talk about sales are you talking about gross revenue or are you talking about transactions and the reason I mentioned that is if we're talking about revenue and given the price of a good is up does that mean transactions were down and your.

Speaker 4: Does that mean transactions are down and your views that sales will be flat is actually fairly conservative? If you can just maybe talk us through a little bit more what, what sales being flat actually means, I think that would be helpful.

Net sales will be flat is actually fairly concerned enough. If you could just maybe talk us through a little bit more what sales being flat actually means I think that would be helpful.

Speaker 3: Yeah, and I think when Scott said sales being flat, he was relating that to the percentage rent question. So the full universe of tenants don't pay percentage rent. Maybe 8% of your tenants

And I think when Scott said sales being flat he was relating that to the percentage rent question. So the full universe of tenants don't pay percentage rent.

Maybe 8% of your tenants are in percentage rent.

Speaker 3: And so for him to calculate and make a guidance assumption in 2022, he was assuming that those tenants that paid percentage rent.

So for him to calculate and make our guidance assumption in 2022. He was assuming that those tenants that paid percentage rent their sales would be flat for 2022.

Speaker 3: their sales would be flat for 2022. I don't believe sales are going to be flat for 2022. We see the momentum we've got. Can it remain at double digits? That's unlikely. But I could easily see sales moving forward, you know.

I don't believe sales are going to be flat for 2022, we see the momentum we've got can it remain at double digits that's unlikely.

I could easily see sales moving forward.

Debt levels.

Speaker 3: between 5% and 10% increase this year.

<unk>, 5% to 10%.

Increase this year.

Speaker 3: I don't think we're going to lose that momentum, so I think that was just a comment that was specific to the percentage rent calculation for guidance purposes.

I don't think were going to I don't think were going to lose that momentum. So I think that was just.

A comment that was specific to the percentage rent Cal.

Calculation for guidance purposes got.

Speaker 3: Got it. Thank you for taking up taking up a lot of oxygen in the room over the past couple of days, at least, at least, I have a headache. So, so in other words, rich, we probably have a conservative percentage red assumption in the guide.

Got it. Thank you correct taken up and taken up a lot of oxygen in the room over the past couple of days at least.

I have a headache.

So in other words rich, we probably have a conservative percentage rent assumption in the guidance that was going to be my next question guys.

Speaker 4: Well, that was going to be my next question, guys. I think everyone, including ourselves, and hopefully I'm not unique in this, we have trouble modeling percentage rents. You just had a blowout year and quarter with percentage rents. Could you maybe just provide a little bit more transparency on what you think you should assume or we should assume for percentage rents in 2022 as a percentage of 2021? Hopefully I didn't use percentages too many times in that question.

I think everyone including ourselves.

Im not unique in this we have trouble modeling percentage rents you just had a blowout year and quarter with percentage rents.

Can you maybe just provide a little more transparency on what you think you should assume that we should assume for percentage rents in 2022 as a percentage of 2021, hopefully I didn't use percentages to many times in that question.

Speaker 4: Yeah, there was a lot of percentages in there. So I'll try and steer away from the statement. I would say it's probably like 0.8 to 0.85 times what it was in 2021. I think we're going to see a little bit of tick down, but I think they'll still remain elevated.

Yes, there was a lot of percentages in there so I'll try and steer away from the statement.

I would say, it's probably like eight to eight five times what it was in 2021, I think we're going to see a little bit of tick down.

But I think they'll still remain elevated.

Speaker 3: Yeah, I'm rich to give you just some anecdotal, um. Information it's got still fashion square where we've got a luxury wing that we added a few years ago. The luxury did not do well in 2020, but 2021.

Yeah, Rich I'll give you just some anecdotal.

Information.

<unk> fashion square, where we've got a luxury wing that we added a few years ago.

The luxury did not do well in 2020.

2021.

Speaker 3: For many of them, they had sales that were two times what they had in 2019, and in some cases, three times.

For many of them. They had sales that were two times, what they had in 2019 and in some cases three times.

Speaker 3: So those tenants got into, and I'm not gonna mention names, but those luxury tenants got into percentage rent to a much greater degree than we expected and probably greater than they expected. And certainly we don't expect that's gonna continue.

So those tenants got into and I'm not going to mention names, but those luxury tenants got into percentage rent to a much greater degree than we expected and probably greater than they expected.

Certainly we don't expect that's going to continue.

In perpetuity.

Speaker 3: in perpetuity so you know we took a fairly conservative stance as we you know did our forecast and made our guidance as it related to percentage rent and that's why we've got a wide

<unk>, So we took a fairly conservative stances.

Did our forecast and made our guidance as it related to percentage rent and that's why we've got a wide range.

Speaker 4: Okay, got it. Hey, Scott, maybe we can just follow up offline when we catch up in a couple days. I'd like to just unpack that a little bit more. One more question, if I may. I actually think the Class B, C mall sale market is, I wouldn't call it vibrant, but by our count, there was almost 40 mall sales in 2021. Twenty-five of those were operating Class B and C malls.

Got it. Thanks, Scott maybe you can just maybe we can just follow up offline when we catch up in a couple of days I'd like to just unpack that a little bit more one more question if I may.

I actually think the class B C mall sale market is I wouldn't call it vibrant but by our count there was almost 40 mall sales in 2021 25 of those were operating class B and C malls cap.

Speaker 4: Cap rates came in fairly significantly in 2021 versus 2020, as you would expect them to. So, I guess I would love to just go back to the question Derek was asking about mall sales. Is this a function of you thinking that cap rates are going to tighten even further, and therefore there will be a better time to sell the non-core in the future?

Cap rates came in fairly significantly in 2021 versus 2020 as you would expect them too. So I guess I would love to just go back to the question Derek was asking about mall sales is this a function of you.

You're thinking that cap rates are going to tighten even further and therefore, there will be a better time to sell the non core in the future.

Speaker 4: Sorry for asking such a direct question, but why can't you sell? Why aren't you selling the asset?

Sorry for asking such a direct question.

Why can't you sell why aren't you selling or not.

On.

Yes.

Well, we were fairly active last year.

Speaker 3: Well, we we were fairly active last year. We've only got.

We've already got.

I would say 10 noncore assets and we sold two out of 10.

Speaker 3: I would say 10 non-core assets, and we sold two out of the 10.

So.

Part of it too rich you have to keep in mind that market hasn't been there for that type of asset.

Speaker 3: Part of it too, Rich, you have to keep in mind that the debt market hasn't been there for that type of asset.

Speaker 3: And it's slowly coming back, and I think that could change things fairly quickly. But, you know, we were very successful with our disposition program in the 2011 to 2015 range. And we've shown a willingness and ability to sell non-core assets and redeploy that capital into our better assets. And that's what we're going to continue to do.

And it's slowly coming back and I think that could change things fairly quickly but.

We were very successful with our disposition program and the <unk>.

2011 to 2015 range.

We've shown a willingness and ability to sell non core assets and redeploy that capital into our our better assets.

We're going to continue to do so.

Speaker 3: If you think there's an opportunity somewhere or you see a fund that's actively buying, give me a heads up. I will call you about that then. Thanks for humoring my obnoxious sell-side question. Nice quarter, guys. Thanks, Rich. Thanks, Rich. Thanks, Rich.

If you think there's actually not dissimilar if you think theres an opportunity somewhere or you see a fund that's actively buying give me a heads up.

Alright.

I will tell you about that then thanks for hearing my obnoxious sell side question.

Nice quarter guys.

Thanks for thanks Rich.

Speaker 1: And next we'll go to Todd Thomas with TD Bank Capital Markets.

And next we'll go to Todd Thomas with TD Bank capital markets.

Speaker 11: Okay, thanks. 1st question, Doug appreciate the, the color around the executed leases in the pipeline, but I just wanted to go back to that. The 225 new leases 2.7Million square feet. I think you said, can you just share what may switches share of.

Okay. Thanks.

First question, Doug I appreciate the color around the executed leases in the pipeline, but I just wanted to go back to that.

225, new leases $2 7 million square feet. I think you said can you just share what may searches share of.

Speaker 11: Um, the is that's associated with that backlog of leasing. So all tenants, including anchor spaces over 10,000 square feet, you know, cam tax recoveries. What's the look like for that backlog? And what's the timeframe for that to come online?

The NOI is that associated with that backlog of leasing so all tenants, including anchor spaces over 10000 square feet Cam tax recoveries, what's the NOI look like for that backlog and whats the timeframe for that to come online.

Yes, I'll go ahead and take that one Todd.

Speaker 4: Yeah, I'll go ahead and take that one. Todd, the you know, our average share is about 70%. So you can kind of use that as a barometer, including consolidated as well as our share of unconsolidated centers. And, and I'm sorry, what was the

Our average share is about 70%. So you can kind of use that as a barometer, including consolidated as well as our share of unconsolidated <unk>.

Centers.

In.

And I'm sorry, what was the second part of your question.

Speaker 11: The NOI associated with that for all spaces, so over 10,000 square feet, anchors, everything fully loaded.

Yeah.

NOI associated with that.

For all spaces over 10000 square feet anchors everything fully loaded.

Speaker 4: Yeah, yeah, so I'm sorry, we, you know, we haven't quantified that we aren't providing guidance for that. But I think your other question was, look, how, how, what's the timeframe for that to come online? Small shops are typically, you know, 6 to 9 months to get permitted for the landlord and the tenant to do their build out work.

Yes, yes, so I'm sorry.

We haven't quantified that we arent providing guidance for that but I think your other question was like how what's the timeframe for that to come online.

Small shops are typically six to nine months to get permitted for the landlord and the tenant to do their buildout work, you've got some large format space in their bear in mind, we've got things like <unk>.

Speaker 4: You've got some large format space in there, bear in mind. You know, we've got things like Caesar's Republic in there. We've got things like Google in there. So, obviously, those take a lot longer to gestate. You've got, you know, box backfills like Primark and Penstripes and the like.

Caesars Republic in there, we've got things like Google and there. So obviously those take a lot longer to gestate.

<unk> got box backfill as like Primark, and Penn stripes and alike. Those typically take about 18 months between lease execution in the cash flow to come online. So that's why we feel not only good about 'twenty two.

Speaker 4: Those typically take about 18 months between lease execution and the cash flow to come online. So, you know, that's why we feel not only good about 22.

Speaker 4: uh... we feel very good about twenty three as well in terms of the occupancy uh... actually the cash flows you know from that occupancy you know really uh... hidden hit the ground and run it

We feel very good about 'twenty three as well in terms of the occupancy actually the cash flows from that occupancy really.

Hidden hitting the ground and running.

Okay.

Speaker 11: And then just following up on the occupancy discussion a little bit and, you know, given some of the, the terminations, I guess, that you discussed, that'll take place in the 1st quarter. And normally there's some seasonality, you know, at the beginning of the year where you, where you do see occupancy decrease with a little bit of higher, higher tenant turnover. But it does sound like, you know, leasing is really strong and the pipelines fairly robust. You expect.

And then just following up on the occupancy discussion a little bit and.

Given some of the terminations I guess that you discussed that.

That will take place in the first quarter and normally there is some seasonality.

At the beginning of the year, where you do see occupancy decrease with a little bit of higher higher tenant turnover, but it does sound like leasing is really strong and the pipelines are fairly robust do you expect.

Speaker 11: You know, within the roughly 125 base point, maybe occupancy uptick that you expect throughout the year. Do you expect occupancy to decrease sequentially to start the year, or do you think that, you know, it could continue to just climb higher, which I think you experienced for, you know, a couple of years, you know, in the recovery after the GFC.

Within the roughly 125 basis point, maybe occupancy uptick that you expect throughout the year do you expect occupancy to decrease sequentially to start the year or do you think that could continue to climb higher which I think you experienced for a couple of years.

And the recovery after the GSA.

Speaker 3: Yeah, Todd, you're right. First quarter is typically the low occupancy quarter, you know, that being said, as Doug mentioned, you know, it's almost a record low in terms of bankruptcies in.

Yes, Todd you're right first quarter is typically low occupancy quarter.

That being said as Doug mentioned it was almost a record low in terms of bankruptcies in the.

Speaker 3: in 21, and there's fewer people on our watch list, and typically we would see closures in the first quarter from weaker tenants.

In 'twenty, one and there is fewer people on our watch list and typically we would see closures in the first quarter from weaker tenants.

Speaker 3: And we very well may have a year this year where we don't see that happen. You know, that being said, I would expect occupancy to kind of accelerate through the course of the year. In that one hundred and twenty five basis point pickup would would happen. Probably mostly.

We very well may have a year this year, where we don't see that happen.

That being said I would expect.

Occupancy to kind of accelerate through the course of the year and that 125 basis point pickup what would happen.

Probably mostly in the second and third quarter.

Speaker 3: Those are typically our most active quarters in terms of lease signings.

Okay. So it sounds like I mean those are there.

Sounded like all our most active those are typically our most active quarters in terms of lease signings.

Speaker 11: Got it, so it sounds like occupancy might sort of hold steady for Q to one Q before before picking back up throughout the balance of the year a little bit.

Got it so it sounds like occupancy might sort of hold steady for Q1, Q before before picking back up throughout the balance of the year a little bit.

That's a reasonable assumption yes.

Speaker 11: Okay. And then just lastly, with regard to the lease term fees that you mentioned, Scott, I think, you know, within for the full year, you know, how much of that do you expect then to be collected in the first quarter, roughly?

Okay, and then just lastly, with regard to the lease term fees that you mentioned, Scott I think within for the full year, how much of that do you expect them to be collected in the first quarter roughly.

Speaker 4: A pretty decent chunk, I would say, in the order of magnitude of 40 to 50 percent of it.

Pretty decent chunk I would say in the order of magnitude of 40% to 50% of it.

Okay.

Speaker 11: Okay. All right. Great. Thank you. Sure. Thanks.

Alright, great. Thank you.

Sure. Thanks.

And we'll move on to Katy Mcconnell with Citi.

Speaker 12: And we'll move on to Katie McConnell with Citi. Great. Thank you. Just going back to a prior comment you had on land sales, can you specify what you're assuming for a range of potential land sale gains within your FFO guidance for this year?

Great. Thank you just going back to your prior comment one on land.

Can you specify what youre, assuming for a range of potential windfall gain.

For guidance for this year.

Speaker 4: Yeah, Katie, it's going to be very similar in 22 relative to 2021. Again, you know, there's multiple deals. I think we executed on probably, you know, 15 to 18 deals or so in 2021.

Yes, Katy it's going to be very similar in 'twenty two relative to 2021 again.

There's multiple deals I think we executed on probably <unk>.

<unk> 15 to 18 deals or so in 2021.

Speaker 4: Roughly, and I think it's about the same type of volume in 22. There's a lot of transactional activity. Some could slip into 23. Some could actually go away. But right now in our guidance, we've got similar amounts in 22 relative to 2021, which were in the $20 million range.

Roughly and I think it's about the same type of volume in 'twenty. Two there's a lot of a lot of transactional activity some could slip into 'twenty three some could actually go away, but right now in our guidance. We've got similar amounts in 'twenty two relative to 2021, which were in the $20 million range.

Sure.

Speaker 12: Okay, great. Thanks. And then just on the.

Okay great.

And then just on the operator, thank you Brian .

I am sorry go ahead.

Speaker 12: Oh, can you hear me? Sorry. I'm just going to ask you a plan for leasing CapEx spend this year and then separately what you're planning for redevelopment spend, including the anchor repositioning.

Can you hear me sorry.

Just going to ask you plans for leasing Capex down next year, and then separately, what youre planning for redevelopments, including the anchor repositioning projects.

Speaker 4: Yeah, I don't think you'll see the leasing CapEx change a lot. Our development CapEx will continue to increase. We had about $100 million of expenditure in 2021 last year. I expect that to increase roughly 50% or so in 2022. And then going forward into 23, I expect it to increase even further. We've outlined a few projects that we're getting entitled right now. So it's just natural for the development pipeline to start to ramp up.

Yes, I don't think Youll see the leasing Capex change a lot our development Capex will continue to increase.

We had about $100 million of expenditure in 2021 last year I expect that to increase roughly 50% or so in 2022, and then going forward into 'twenty three are expected to increase even further we've outlined a few projects that were.

Getting entitled Right now so it is just natural for the development pipeline to start to ramp up.

Hey, Tom It's Michael Bilerman.

Speaker 4: Hey, Tom, it's Michael Billerman. I had a quick question just on the overall transaction market. And you're responding to Rich a little bit on deals. Unibody Westfields came out a little bit more strongly this morning to say that the U.S. is definitely on the chopping block to be sold.

I had a quick question just on the overall transaction market.

Funding.

Rich a little bit on when deals.

<unk> came out a little bit more strongly this morning to say that the U S is definitely.

On the chopping block to be sold.

Speaker 7: Obviously, a lot of those assets are in some of your core markets. How do you think about potential ways to enhance the platform and the portfolio? And are there capital sources that you can tap to effectuate a type of transaction to enlarge the pie?

Obviously, a lot of those assets are and some of your core markets. How do you think about potential ways to enhance the platform and the portfolio.

Their capital sources that you can tap to effectuate a type of transaction.

The launch of the pie.

I mean, we just we'd have to see Michael.

Speaker 3: I mean, we'd have to see, Michael. They came once before with assets, and their pricing did not seem appealing. They didn't get a lot of activity. And we'll obviously look at what they've got there. We've done a lot of joint ventures over time, and there's always ways to structure. If it's a deal that makes sense for the portfolio.

They came once once before with assets in their pricing.

<unk> did not seem appealing that didn't get a lot of.

A lot of activity in the.

Well, obviously look at what <unk> got there.

Done a lot of joint ventures overtime, and there is always ways to structure. If it's a deal that makes sense for the portfolio.

Speaker 7: Right. I just wonder what the appetite is of your joint venture partners right now, and what would they be looking for in terms of assets relative to what they're invested now, right? If they want to put incremental capital to work, what are they really looking for today?

Alright, I just wonder what the appetite is of your joint venture partners right now and what would they be looking for in terms of.

Relative to what they are adjusted now right if they wanted to put incremental capital to work.

Are they really looking for today.

Well, there hasn't been a lot of institutional capital lined up.

Speaker 3: Well, there hasn't been a lot of institutional capital lined up for the mall sector in 2021. We obviously got hit pretty hard and immediately by COVID. That being said, I think their appetites are starting to warm up, particularly as they look at the type of yields they're getting on other property types. So I think it's only a matter of time. It's improving. I don't think it's there yet, though.

For the mall sector in 2020 , one, we obviously got hit pretty hard and immediately by Covid.

That being said I think their appetites are starting to warm up, particularly as they look at the type of <unk>.

Yields they're getting on other property types. So I think it's only a matter of time, it's improving I don't think its there yet.

So we focused on I'm, just trying to get a sense of and I recognize the market's been very dry there hasnt been much product and obviously the sector has gone through some challenges.

Speaker 7: really focused on, I'm just trying to get a sense of, and I recognize the market's been very dry, there hasn't been much product, and obviously the sector's gone through some challenges.

Speaker 7: you obviously have very deep relationships with some very deep-pocketed investors that have put out incremental capital elsewhere, so you're talking about that relative spread, but when they're going to consider investing in a mall, what are the characteristics today relative to where they've been before for what would pass their threshold? Assuming that the price is right, what are they really looking for?

You, obviously have very deep relationships with some very deep pocketed investors that have put out incremental capital elsewhere. So you are talking about that relevant spread but when theyre going to consider investing in a mall.

What are the what are the characteristics today relative to where they've been before for what would pass their thresholds assuming that the price is right what are they really looking for.

Well again, thats, probably more a question for them, but obviously they are looking for post COVID-19 stability.

Speaker 3: Well, again, that's probably more a question for them, but obviously they're looking for post COVID stability. I mean, we've never been through this before. I think everybody's looking to see, you know, how long the

Never been through this before.

I think everybody is looking to see.

How long the recovery takes.

Speaker 3: how quick the pace is, how quick the cadence is, whether the current leasing environment can stay as strong as it is.

How quick the paces have quick the cadence is whether the current leasing environment can stay as strong as it is.

Speaker 3: And if all those things remain, I think they're going to start to see, you know, more interest and hopefully some transactions.

And if all those things remain I think I think they're going to start to see more interest and hopefully some transactions.

Thank you and that does conclude our conference.

Speaker 1: That will conclude today's call. We'd like to thank everyone for their participation.

That will conclude today's call we'd like to thank everyone for their participation.

You may now disconnect.