Item 1. Business
ITEM 1. BUSINESS
General
The Company is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional and community/power shopping centers located throughout the United States. The Company is the sole general partner of, and owns a majority of the ownership interests in, The Macerich Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"). As of December 31, 2024, the Operating Partnership owned or had an ownership interest in 40
3
regional retail centers (including office, hotel and residential space adjacent to these shopping centers), two community/power shopping centers and one redevelopment property. These 43 regional retail centers, community/power shopping centers and one redevelopment property consist of approximately 43 million square feet of gross leasable area (“GLA”) and are referred to herein as the “Centers”. The Centers consist of consolidated Centers (“Consolidated Centers”) and unconsolidated joint venture Centers (“Unconsolidated Joint Venture Centers”), as set forth in “Item 2. Properties,” unless the context otherwise requires.
The Company is a self-administered and self-managed real estate investment trust ("REIT") and conducts all of its operations through the Operating Partnership and the Company's management companies, Macerich Property Management Company, LLC, a single member Delaware limited liability company, Macerich Management Company, a California corporation, Macerich Arizona Partners LLC, a single member Arizona limited liability company, Macerich Arizona Management LLC, a single member Delaware limited liability company, Macerich Partners of Colorado LLC, a single member Colorado limited liability company, MACW Mall Management, Inc., a New York corporation, and MACW Property Management, LLC, a single member New York limited liability company. All seven of the management companies are owned by the Company and are collectively referred to herein as the "Management Companies."
The Company was organized as a Maryland corporation in September 1993. All references to the Company in this Annual Report on Form 10-K include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise.
Financial information regarding the Company for each of the last three fiscal years is contained in the Company's Consolidated Financial Statements included in "Item 15. Exhibits and Financial Statement Schedules."
Recent Developments
Acquisitions:
On May 14, 2024, the Company acquired its joint venture partner's 40% interest in each of Arrowhead Towne Center and South Plains Mall for a purchase price of $36.4 million and the assumption of its joint venture partner's share of debt for each property. The Company now owns and has consolidated its 100% interests in Arrowhead Towne Center and South Plains Mall (See Note 15—Acquisitions in the Notes to the Consolidated Financial Statements).
On May 17, 2024, the Company acquired the former Sears parcel located at Inland Center for $5.4 million (See Note 15—Acquisitions in the Notes to the Consolidated Financial Statements).
On October 24, 2024, the Company acquired its joint venture partner's 40% interest in the Pacific Premier Retail Trust portfolio, which includes Los Cerritos Center, Washington Square and Lakewood Center, for a net purchase price of approximately $122.1 million, which includes the assumption of the partner's share of property level indebtedness. The Company now owns and has consolidated its 100% interests in these properties in its consolidated financial statements (See Note 15—Acquisitions in the Notes to the Consolidated Financial Statements).
Dispositions:
On June 13, 2024, the partnership agreement between the Company and its joint venture partner was amended and as a result, the Company no longer accounts for its investment in Chandler Fashion Center as a financing arrangement. Effective June 13, 2024, the Company accounts for its investment in Chandler Fashion Center under the equity method of accounting (See Note 12—Financing Arrangement and Note 16—Dispositions in the Notes to the Consolidated Financial Statements).
On June 28, 2024, the Company's joint venture sold Country Club Plaza, a 971,000 square foot regional retail center in Kansas City, Missouri, for $175.6 million. Concurrent with the sale, the remaining amount owed by the joint venture under the $295.5 million loan ($147.7 million at the Company's share) was forgiven by the lender (See Note 4—Investments In Unconsolidated Joint Ventures in the Notes to the Consolidated Financial Statements).
On June 28, 2024, the Company sold a former department store parcel at Valle Vista Mall in Harlingen, Texas for $7.1 million. The Company used the net proceeds to pay down debt. The Company recognized a gain on sale of assets of $0.8 million (See "Liquidity and Capital Resources" and Note 16—Dispositions in the Notes to the Consolidated Financial Statements).
On July 31, 2024, the Company sold its 50% interest in Biltmore Fashion Park, a 611,000 square foot regional retail center in Phoenix, Arizona, for $110.0 million. The Company used the net proceeds to pay down debt. As a result of this transaction, the Company recognized a gain of $42.8 million (See "Liquidity and Capital Resources" and Note 4—Investments In Unconsolidated Joint Ventures in the Notes to the Consolidated Financial Statements).
4
On November 25, 2024, the Company sold Southridge Mall, a 791,000 square foot power center in Des Moines, Iowa, for $4.0 million, which resulted in a loss on sale of assets of $0.9 million. The Company used the net proceeds to pay down debt (See Note 16—Dispositions in the Notes to the Consolidated Financial Statements).
On December 10, 2024, the Company sold The Oaks, a 1,206,000 square foot regional retail center in Thousand Oaks, California, for $157.0 million, which resulted in a loss on sale of assets of $6.9 million. The Company used the net proceeds to pay off the $147.8 million loan on the property (See "Financing Activities" and Note 16—Dispositions in the Notes to the Consolidated Financial Statements).
For the twelve months ended December 31, 2024, the Company and certain joint venture partners sold various land parcels in separate transactions, resulting in the Company's share of the gain on sale of land of $2.8 million. The Company used its share of the proceeds from these sales of $6.1 million to pay down debt and for other general corporate purposes.
The Company is under contract to sell Wilton Mall for $24.8 million, which is expected to close in the first half of 2025, subject to customary closing conditions. This asset is unencumbered.
Financing Activities:
On January 10, 2024, the Company's joint venture in Boulevard Shops replaced the existing $23.0 million mortgage loan on the property with a new $24.0 million loan that bears interest at a variable rate of SOFR plus 2.50%, is interest only during the entire loan term and matures on December 5, 2028. The new loan has a required interest rate cap throughout the term of the loan at a strike rate of 7.5%.
On January 22, 2024, the Company repaid the majority of the mortgage loan on Fashion District Philadelphia. The remaining $8.2 million was scheduled to mature on April 21, 2024 and was paid in full prior to maturity.
On January 25, 2024, the Company replaced the existing $116.9 million mortgage loan on Danbury Fair Mall with a new $155.0 million loan that bears interest at a fixed rate of 6.39%, is interest only during the majority of the loan term and matures on February 6, 2034.
On April 9, 2024, the Company defaulted on the $300.0 million loan on Santa Monica Place. The Company is in negotiations with the lender on the terms of this non-recourse loan.
On May 24, 2024, the Company closed a two-year extension of the $149.9 million loan on The Oaks, which was scheduled to mature on June 5, 2026. The interest rate during the first year of the extended term was 7.5% and would have increased to 8.5% during the second year of the extended term. On December 10, 2024, the Company repaid in full the $147.8 million loan with the net proceeds from the sale of the property (See "Dispositions").
On June 27, 2024, the Company's joint venture in Chandler Fashion Center replaced the existing $256.0 million loan on the property with a new $275.0 million loan that bears interest at 7.06%, is interest only during the entire loan term and matures on July 1, 2029. The Company received a distribution of $17.7 million in connection with the refinancing.
On August 22, 2024, the Company closed an $85.0 million, ten-year refinance of the loan on The Mall of Victor Valley. The new loan bears interest at a fixed rate of 6.72%, is interest only during the entire loan term and matures on September 6, 2034.
On October 28, 2024, the Company closed a $525.0 million, five-year refinance of the loan on Queens Center, which matures on November 6, 2029. The new loan replaced the existing $600.0 million loan, bears interest at a fixed rate of 5.37% and is interest only during the entire loan term.
On December 2, 2024, the Company repaid in full the $478.0 million loan on Washington Square with the net proceeds received from the Company’s public stock offering, which closed on November 27, 2024, together with cash on hand (See “Other Transactions and Events”). The mortgage loan on the property was scheduled to mature on November 1, 2026. The Company recognized a gain on extinguishment of debt of $14.4 million upon the repayment of the loan.
On February 7, 2025, the Company's joint venture in Flatiron Crossing repaid in full the $14.5 million mezzanine loan and $14.5 million of the first mortgage, and obtained a 90-day extension for the remaining $140.5 million of the first mortgage. The mezzanine loan had an interest rate of SOFR plus 12.25% and the first mortgage has an interest rate of SOFR plus 2.90% for a weighted average aggregate interest rate of SOFR plus 3.70%. The interest rate on the first mortgage is SOFR plus 2.90% during the extension period.
5
Redevelopment and Development Activities:
The Company has a 50/50 joint venture with Simon Property Group, which was initially formed to develop Los Angeles Premium Outlets, a premium outlet center in Carson, California. During the first quarter of 2024, the Company evaluated its investment and concluded that due to certain conditions, the Company should not continue to invest capital in this development project. As a result, the Company wrote-off its share of the investment in the three months ended March 31, 2024. At the time of the write-off, the Company had funded $39.5 million of the total $78.9 million incurred by the joint venture (See Note 4 – Investments in Unconsolidated Joint Ventures in the Notes to the Consolidated Financial Statements).
The Company’s joint venture in Scottsdale Fashion Square, a 1,875,000 square foot regional retail center in Scottsdale, Arizona, is redeveloping a two-level Nordstrom wing with luxury-focused retail and restaurant uses. The total cost of the project is estimated to be between $84.0 million and $90.0 million, with $42.0 million to $45.0 million estimated to be the Company’s pro rata share. The Company has incurred $25.9 million of the total $51.8 million incurred by the joint venture as of December 31, 2024. The opening will be in phases which began in 2024, with anticipated completion in 2025.
The Company is redeveloping the northeast quadrant of Green Acres Mall, a 2,058,000 square foot regional retail center in Valley Stream, New York. The project will include new exterior shops and facade totaling approximately 385,000 square feet of leasing, including new grocery use, redevelopment of a vacant anchor building and demolition of another vacant anchor building. The total cost of the project is estimated to be between $120.0 million and $140.0 million. The Company has incurred approximately $19.7 million as of December 31, 2024. The anticipated opening is in 2026.
The Company’s joint venture in FlatIron Crossing, a 1,390,000 square foot regional retail center in Broomfield, Colorado, is developing luxury, multi-family residential units, new/repurposed retail and food and beverage uses, and a community plaza, in addition to the redevelopment of the vacant former Nordstrom store located on the property. The Company's ownership percentage is expected to be 43.4% in the residential portion of the development and 51.0% in the remainder of the property. The total cost of the project is estimated to be between $240.0 million and $260.0 million, with $120.0 million to $130.0 million estimated to be the Company’s pro rata share. The Company has incurred $9.1 million of the total $17.9 million incurred by the joint venture as of December 31, 2024. The anticipated opening will be in phases beginning in 2027.
Other Transactions and Events:
The Company declared a cash dividend of $0.17 per share of its common stock for each quarter in the year ended December 31, 2024. On February 14, 2025, the Company announced a first quarter cash dividend of $0.17 per share of its common stock, which will be paid on March 18, 2025 to stockholders of record on March 4, 2025. The dividend amount will be reviewed by the Board on a quarterly basis.
In connection with the commencement of an “at the market” offering program on March 26, 2021, which is referred to as the “2021 ATM Program,” the Company entered into an equity distribution agreement with certain sales agents pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $500.0 million. During the twelve months ended December 31, 2024, the Company sold 9.4 million shares of common stock for approximately $148.6 million of net proceeds through the 2021 ATM Program at a weighted average share price of $15.81. The 2021 ATM Program was fully utilized as of September 30, 2024 and is no longer active.
In connection with the commencement of a separate “at the market” offering program on November 12, 2024, which is referred to as the “2024 ATM Program,” the Company entered into an equity distribution agreement with certain sales agents pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $500.0 million. During the twelve months ended December 31, 2024, the Company sold 3.7 million shares of common stock for approximately $69.1 million of net proceeds through the 2024 ATM Program at a weighted average price of $18.68. As of December 31, 2024, the Company had approximately $429.3 million of gross sales of its common stock available under the 2024 ATM Program.
On November 27, 2024, the Company completed a public offering of 23.0 million shares of its common stock at a price per share of $19.75, which includes the underwriters' full exercise of their option to purchase an additional 3.0 million shares, for gross proceeds of approximately $454.3 million. The net proceeds of the offering were approximately $439.5 million after deducting the underwriting discount and offering costs of approximately $14.8 million. The Company used the proceeds from the offering, together with cash on hand, to repay the mortgage loan secured by its Washington Square property.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a further discussion of the Company’s anticipated liquidity needs, and the measures taken by the Company to meet those needs.
6
The Shopping Center Industry
General:
There are several types of retail shopping centers, which are differentiated primarily based on size and marketing strategy. Regional shopping centers generally contain in excess of 400,000 square feet of GLA and are typically anchored by two or more department or large retail stores ("Anchors") and are referred to as "Regional Retail Centers" or "Malls." Regional Retail Centers also typically contain numerous diversified retail stores ("Mall Stores"), most of which are national or regional retailers typically located along corridors connecting the Anchors. "Strip centers", "urban villages" or "specialty centers" ("Community/Power Shopping Centers") are retail shopping centers that are designed to attract local or neighborhood customers and are typically anchored by one or more supermarkets, discount department stores and/or drug stores. Community/Power Shopping Centers typically contain 100,000 to 400,000 square feet of GLA. Outlet Centers generally contain a wide variety of designer and manufacturer stores, often located in an open-air center, and typically range in size from 200,000 to 850,000 square feet of GLA ("Outlet Centers"). In addition, freestanding retail stores are located along the perimeter of the shopping centers ("Freestanding Stores"). Mall Stores and Freestanding Stores over 10,000 square feet of GLA are also referred to as "Big Box." Anchors, Mall Stores, Freestanding Stores and other tenants typically contribute funds for the maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operation of the shopping center.
Regional Retail Centers:
A Regional Retail Center draws from its trade area by offering a variety of fashion merchandise, hard goods and services and entertainment, often in an enclosed, climate controlled environment with convenient parking. Regional Retail Centers provide an array of retail shops and entertainment facilities and often serve as the town center and a gathering place for community, charity and promotional events.
Regional Retail Centers have generally provided owners with relatively stable income despite the cyclical nature of the retail business. This stability is due both to the diversity of tenants and to the typical dominance of Regional Retail Centers in their trade areas.
Regional Retail Centers have different strategies with regard to price, merchandise offered and tenant mix, and are generally tailored to meet the needs of their trade areas. Anchors are located along common areas in a configuration designed to maximize consumer traffic for the benefit of the Mall Stores. Mall GLA, which generally refers to GLA contiguous to the Anchors for tenants other than Anchors, is leased to a wide variety of smaller retailers. Mall Stores typically account for the majority of the revenues of a Regional Retail Center.
Business of the Company
Strategy:
In the second quarter of 2024, the Company announced the Path Forward Plan, which is a multi-pronged strategy to improve the Company’s balance sheet, while also making inward-facing enhancements to both bolster company culture and improve key business processes to gain operating efficiencies. Essential goals of the Path Forward Plan include:
• Deleverage the capital structure, with a focus on reducing the Company’s Net Debt to Adjusted EBITDA leverage ratio over the next three to four years;
• Invest in and fortify the Company’s key assets in the portfolio;
• Proactively consolidate selected joint venture assets over time that are core to the Company’s overall strategy;
• Deliver a post-deleveraging Funds From Operations launch point goal over the next three to four years;
• Achieve outstanding operational results through rigorous internal process improvements; and
• Position the Company to take an offensive stance on acquisitions, reinvestment and selected development.
The Company may achieve these goals through a variety of methods and the timing, extent and impact of any transactions that the Company has or will undertake while implementing the Path Forward Plan may vary and evolve. In order to deleverage its capital structure, the Company may pursue asset dispositions and acquisitions, experience organic growth in EBITDA as tenants in its lease pipeline open for business, be selective about undertaking new development and redevelopment projects, and/or issue common stock. Asset sales will focus on whether a property is core to the Company’s strategy and may include defaulting on certain mortgage debts on the Company’s properties and giving possession of such secured properties to the lender.
7
Further, the Company has a long-term four-pronged business strategy that focuses on the acquisition, leasing and management, redevelopment and development of Regional Retail Centers.
Acquisitions. The Company principally focuses on well-located, quality Regional Retail Centers that can be dominant in their trade area and have strong revenue enhancement potential. In addition, the Company pursues other opportunistic acquisitions of property that include retail and will complement the Company's portfolio. The Company subsequently seeks to improve operating performance and returns from these properties through leasing, management and redevelopment. Since its initial public offering, the Company has acquired interests in shopping centers nationwide. The Company believes that it is geographically well positioned to cultivate and maintain ongoing relationships with potential sellers and financial institutions and to act quickly when acquisition opportunities arise.
Since implementation of the Path Forward Plan, the Company acquired its joint venture partner's interest in Arrowhead Towne Center, South Plains Mall, Lakewood Center, Los Cerritos Center and Washington Square (See "Acquisitions" in Recent Developments).
Leasing and Management. The Company believes that the shopping center business requires specialized skills across a broad array of disciplines for effective and profitable operations. For this reason, the Company has developed a fully integrated real estate organization with in-house acquisition, accounting, development, finance, information technology, leasing, legal, marketing, property management and redevelopment expertise. In addition, the Company emphasizes a philosophy of decentralized property management, leasing and marketing performed by on-site professionals. The Company believes that this strategy results in the optimal operation, tenant mix and drawing power of each Center, as well as the ability to quickly respond to changing competitive conditions of the Center's trade area.
The Company believes that on-site property managers can most effectively operate the Centers. Each Center's property manager is responsible for overseeing the operations, marketing, maintenance and security functions at the Center. Property managers focus special attention on controlling operating costs, a key element in the profitability of the Centers, and seek to develop strong relationships with, and be responsive to, the needs of retailers.
The Company generally utilizes regionally located leasing managers to better understand the market and the community in which a Center is located. In addition, the Company may utilize third party leasing brokers on a selective basis. The Company continually assesses and fine tunes each Center's tenant mix, identifies and replaces underperforming tenants and seeks to optimize existing tenant sizes and configurations.
On a selective basis, the Company provides property management and leasing services for third parties. The Company currently manages two community centers for third-party owners on a fee basis.
Redevelopment. One component of the Company's growth strategy is its ability to redevelop acquired properties. On a selective basis, the Company's business strategy may include mixed-use densification to maximize space at the Company’s Regional Retail Centers, including by developing available land at the Regional Retail Centers or by demolishing underperforming department store boxes and redeveloping the land. For this reason, the Company has built a staff of redevelopment professionals who have primary responsibility for identifying redevelopment opportunities that they believe will result in enhanced long-term financial returns and market position for the Centers. The redevelopment professionals oversee the design and construction of the projects in addition to obtaining required governmental approvals (See "Redevelopment and Development Activities" in Recent Developments).
Development. The Company pursues ground-up development projects on a selective basis. The Company has supplemented its strong acquisition, operations and redevelopment skills with its ground-up development expertise to further increase growth opportunities.
The Company will be very selective in undertaking any future redevelopment or development projects and may choose to pause existing projects if the Company believes they are no longer economically viable.
The Centers:
As of December 31, 2024, the Centers primarily included 40 Regional Retail Centers (including office, hotel and residential space adjacent to these shopping centers), two Community/Power Shopping Centers and one redevelopment property totaling approximately 43 million square feet of GLA. These 43 Centers average approximately 990,000 square feet of GLA and range in size from 3.3 million square feet of GLA at Tysons Corner Center to 205,000 square feet of GLA at Boulevard Shops. As of December 31, 2024, the Centers primarily included 146 Anchors totaling approximately 20.0 million square feet of GLA and approximately 5,000 Mall Stores and Freestanding Stores totaling approximately 21.1 million square feet of GLA.
8
Competition:
Numerous owners, developers and managers of malls, shopping centers and other retail-oriented real estate compete with the Company for the acquisition of properties and in attracting tenants or Anchors to occupy space. There are other publicly traded mall companies and several large private mall companies in the United States, any of which under certain circumstances could compete against the Company for an Anchor or a tenant. In addition, these companies, as well as other REITs, private real estate companies or investors compete with the Company in terms of property acquisitions. This results in competition both for the acquisition of properties or centers and for tenants or Anchors to occupy space. Competition for property acquisitions may result in increased purchase prices and may adversely affect the Company's ability to make suitable property acquisitions on favorable terms. The existence of competing shopping centers could have a material adverse impact on the Company's ability to lease space and on the level of rents that can be achieved. There is also increasing competition from other retail formats and technologies, such as lifestyle centers, power centers, outlet centers and online retail shopping that could adversely affect the Company's revenues.
In making leasing decisions, the Company believes that retailers consider the following material factors relating to a center: quality, design and location, including consumer demographics; rental rates; type and quality of Anchors and retailers at the center; and management and operational experience and strategy of the center. The Company believes it is able to compete effectively for retail tenants in its local markets based on these criteria in light of the overall size, quality and diversity of its Centers.
Major Tenants:
For the year ended December 31, 2024, the Centers derived approximately 73% of their total rents from Mall Stores and Freestanding Stores under 10,000 square feet and 27% of their total rents from Big Box and Anchor tenants. Total rents as set forth in "Item 1. Business" include minimum rents and percentage rents.
The following retailers (including their subsidiaries) represent the 10 largest tenants in the Centers based upon total rents in place as of December 31, 2024:
Tenant Primary DBAs Number of
Locations
in the
Portfolio % of Total
Rents
Victoria's Secret & Co. Pink, Victoria's Secret 40 2.1 %
Foot Locker, Inc. Champs Sports, Foot Locker, House of Hoops by Foot Locker, Kids Foot Locker, and others 56 2.0 %
Dick's Sporting Goods, Inc. Dick's Sporting Goods, Moosejaw 16 2.0 %
Signet Jewelers Limited Banter by Piercing Pagoda, Blue Nile, Jared, Kay Jewelers, Zales 89 1.9 %
The Gap, Inc. Athleta, Banana Republic, Gap, Gap Kids, Old Navy, and others 36 1.7 %
LVMH, Inc. Louis Vuitton, Sephora, and others 31 1.7 %
H & M Hennes & Mauritz L.P. H&M 23 1.5 %
American Eagle Outfitters, Inc. Aerie, American Eagle Outfitters 35 1.5 %
JD Sports Fashion Plc Finish Line, JD Sports, Shoe Palace 38 1.5 %
SPARC Group LLC Aeropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand, and others 56 1.4 %
Mall Stores and Freestanding Stores:
Mall Store and Freestanding Store leases generally provide for tenants to pay rent comprised of a base (or "minimum") rent and a percentage rent based on sales. In some cases, tenants pay only minimum rent, and in other cases, tenants pay only percentage rent. The Company generally enters into leases for Mall Stores and Freestanding Stores that also require tenants to pay their pro rata share of property taxes and to pay a stated amount for operating expenses, excluding property taxes, regardless of the expenses the Company actually incurs at any Center. However, certain leases for Mall Stores and Freestanding Stores contain provisions that require tenants to pay their pro rata share of maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operations of the Center.
9
Tenant space of 10,000 square feet and under in the Company's portfolio at December 31, 2024 comprises approximately 60% of all Mall Store and Freestanding Store space. The Company uses tenant spaces of 10,000 square feet and under for comparing rental rate activity because this space is more consistent in terms of shape and configuration and, as such, the Company is able to provide a meaningful comparison of rental rate activity for this space. Mall Store and Freestanding Store space greater than 10,000 square feet is inconsistent in size and configuration throughout the Company's portfolio and as a result does not lend itself to a meaningful comparison of rental rate activity with the Company's other space. Much of the non-Anchor space over 10,000 square feet is not physically connected to the mall, does not share the same common area amenities and does not benefit from the foot traffic in the mall. As a result, space greater than 10,000 square feet has a unique rent structure that is inconsistent with mall space under 10,000 square feet.
Cost of Occupancy:
A major factor contributing to tenant profitability is cost of occupancy, which consists of tenant occupancy costs charged by the Company. Tenant occupancy costs include tenant expenses such as minimum rents, percentage rents and recoverable expenditures, which consist primarily of property operating expenses and real estate taxes. These costs are then compared to tenant sales to present tenant occupancy costs as a percentage of tenant sales. A low cost of occupancy percentage shows more potential capacity for the Company to increase rents at the time of lease renewal than a high cost of occupancy percentage. The following table summarizes occupancy costs for Mall Store and Freestanding Store tenants in the Centers as a percentage of total sales for the years ended December 31, 2024, 2023 and 2022:
For the Years Ended December 31,
2024 2023 2022
Consolidated Centers:
Minimum rents 8.1 % 7.9 % 7.4 %
Percentage rents 0.6 % 0.8 % 1.1 %
Expense recoveries(1) 3.1 % 3.4 % 3.1 %
11.8 % 12.1 % 11.6 %
Unconsolidated Joint Venture Centers:
Minimum rents 7.6 % 7.1 % 6.5 %
Percentage rents 1.0 % 1.1 % 1.0 %
Expense recoveries(1) 3.2 % 2.9 % 2.8 %
11.8 % 11.1 % 10.3 %
(1) Represents real estate tax and common area maintenance charges.
10
The following tables set forth the average base rent per square foot for the Centers, as of December 31 for each of the past three years:
Mall Stores and Freestanding Stores under 10,000 square feet:
For the Years Ended December 31, Avg. Base
Rent Per
Sq. Ft.(1)(2) Avg. Base Rent
Per Sq. Ft. on
Leases Executed
During the Year(2)(3) Avg. Base Rent
Per Sq. Ft.
on Leases Expiring
During the Year(2)(4)
Consolidated Centers (at the Company's pro rata share):
2024 $ 65.62 $ 61.16 $ 61.45
2023 $ 61.66 $ 58.97 $ 50.14
2022 $ 60.72 $ 56.63 $ 56.44
Unconsolidated Joint Venture Centers (at the Company's pro rata share):
2024 $ 76.11 $ 86.78 $ 64.79
2023 $ 70.42 $ 64.42 $ 55.74
2022 $ 67.37 $ 69.88 $ 62.72
Big Box and Anchors:
For the Years Ended December 31, Avg. Base
Rent Per
Sq. Ft.(1)(2) Avg. Base Rent
Per Sq. Ft. on
Leases Executed
During the Year(2)(3) Number of
Leases
Executed
During
the Year Avg. Base Rent
Per Sq. Ft.
on Leases Expiring
During the Year(2)(4) Number of
Leases
Expiring
During
the Year
Consolidated Centers (at the Company's pro rata share):
2024 $ 14.85 $ 13.59 18 $ 21.14 23
2023 $ 16.65 $ 21.85 34 $ 29.67 15
2022 $ 15.95 $ 22.68 18 $ 32.15 14
Unconsolidated Joint Venture Centers (at the Company's pro rata share):
2024 $ 24.83 $ 87.30 12 $ 41.53 13
2023 $ 16.40 $ 30.90 25 $ 13.60 21
2022 $ 16.23 $ 27.77 11 $ 15.81 12
_____________________
(1) Average base rent per square foot is based on spaces occupied as of December 31 for each of the Centers and gives effect to the terms of each lease in effect, as of such date, including any concessions, abatements and other adjustments or allowances that have been granted to the tenants.
(2) Centers under development and redevelopment are excluded from average base rents.
(3) The average base rent per square foot on leases executed during the year represents the actual rent paid on a per square foot basis during the first twelve months of the lease.
(4) The average base rent per square foot on leases expiring during the year represents the actual rent to be paid on a per square foot basis during the final twelve months of the lease.
11
Lease Expirations:
The following tables show scheduled lease expirations for Centers owned as of December 31, 2024 for the next ten years, assuming that none of the tenants exercise renewal options:
Mall Stores and Freestanding Stores under 10,000 square feet:
Year Ending December 31, Number of
Leases
Expiring Approximate
GLA of Leases
Expiring(1) % of Total Leased
GLA Represented
by Expiring
Leases(1) Ending Base Rent
per Square Foot of
Expiring Leases(1) % of Base Rent
Represented
by Expiring
Leases(1)
Consolidated Centers (at the Company's pro rata share):
2025 522 1,201,265 24.99 % $ 66.31 23.13 %
2026 353 867,595 18.05 % $ 69.75 17.57 %
2027 313 690,977 14.37 % $ 72.28 14.50 %
2028 204 504,465 10.49 % $ 71.09 10.41 %
2029 210 500,783 10.42 % $ 73.36 10.67 %
2030 105 299,679 6.23 % $ 69.32 6.03 %
2031 64 184,046 3.83 % $ 76.25 4.07 %
2032 38 104,832 2.18 % $ 68.44 2.08 %
2033 57 200,336 4.17 % $ 65.05 3.78 %
2034 56 125,521 2.61 % $ 121.32 4.42 %
Unconsolidated Joint Venture Centers (at the Company's pro rata share):
2025 159 195,281 16.29 % $ 71.54 13.58 %
2026 145 189,609 15.82 % $ 74.10 13.66 %
2027 129 173,144 14.45 % $ 89.57 15.07 %
2028 104 154,682 12.91 % $ 87.05 13.09 %
2029 88 104,692 8.74 % $ 87.78 8.93 %
2030 64 85,671 7.15 % $ 97.76 8.14 %
2031 30 41,797 3.49 % $ 75.00 3.05 %
2032 51 78,099 6.52 % $ 104.76 7.95 %
2033 35 55,634 4.64 % $ 86.90 4.70 %
2034 39 66,118 5.52 % $ 95.92 6.16 %
12
Big Boxes and Anchors:
Year Ending December 31, Number of
Leases
Expiring Approximate
GLA of Leases
Expiring(1) % of Total Leased
GLA Represented
by Expiring
Leases(1) Ending Base Rent
per Square Foot of
Expiring Leases(1) % of Base Rent
Represented
by Expiring
Leases(1)
Consolidated Centers (at the Company's pro rata share):
2025 27 1,585,933 15.42 % $ 11.35 10.76 %
2026 33 1,453,864 14.13 % $ 13.74 11.95 %
2027 42 1,310,568 12.74 % $ 22.45 17.59 %
2028 22 941,158 9.15 % $ 17.05 9.59 %
2029 20 749,327 7.28 % $ 18.89 8.46 %
2030 18 937,880 9.12 % $ 8.80 4.94 %
2031 11 600,117 5.83 % $ 15.16 5.44 %
2032 6 242,800 2.36 % $ 18.02 2.61 %
2033 11 385,674 3.75 % $ 24.17 5.57 %
2034 13 569,519 5.54 % $ 15.81 5.38 %
Unconsolidated Joint Venture Centers (at the Company's pro rata share):
2025 12 148,754 8.05 % $ 37.12 10.45 %
2026 16 256,400 13.88 % $ 40.96 19.88 %
2027 10 140,723 7.62 % $ 27.15 7.23 %
2028 10 229,425 12.42 % $ 24.78 10.76 %
2029 11 219,420 11.88 % $ 21.57 8.96 %
2030 9 204,131 11.05 % $ 16.38 6.33 %
2031 5 178,636 9.67 % $ 18.32 6.19 %
2032 2 17,959 0.97 % $ 52.56 1.79 %
2033 8 68,758 3.72 % $ 53.24 6.93 %
2034 4 60,043 3.25 % $ 31.15 3.54 %
_______________________________________________________________________________
(1) The ending base rent per square foot on leases expiring during the period represents the final year minimum rent, on a cash basis, for tenant leases expiring during the year.
Anchors:
Anchors have traditionally been a major factor in the public's identification with Regional Retail Centers. Anchors are generally department stores whose merchandise appeals to a broad range of shoppers. Although the Centers receive a smaller percentage of their operating income from Anchors than from Mall Stores and Freestanding Stores, strong Anchors play an important part in maintaining customer traffic and making the Centers desirable locations for Mall Store and Freestanding Store tenants.
Anchors either own their stores, the land under them and in some cases adjacent parking areas, or enter into long-term leases with an owner at rates that are lower than the rents charged to tenants of Mall Stores and Freestanding Stores. Each Anchor that owns its own store and certain Anchors that lease their stores enter into reciprocal easement agreements with the owner of the Center covering, among other things, operational matters, initial construction and future expansion.
Anchors accounted for approximately 7.2% of the Company's total rents for the year ended December 31, 2024.
13
The following table identifies each Anchor, each parent company that owns multiple Anchors and the number of square feet owned or leased by each such Anchor or parent company in the Company's portfolio at December 31, 2024.
Name Number of
Anchor
Stores GLA Owned
by Anchor GLA Leased
by Anchor Total Anchor GLA
Macy's Inc.
Macy's 31 4,132,000 1,718,000 5,850,000
Bloomingdale's 1 — 253,000 253,000
32 4,132,000 1,971,000 6,103,000
JCPenney 23 1,345,000 2,191,000 3,536,000
Dillard's 11 2,133,000 — 2,133,000
Nordstrom 7 266,000 941,000 1,207,000
Dick's Sporting Goods 15 — 1,003,000 1,003,000
Target 5 304,000 377,000 681,000
Forever 21 5 — 464,000 464,000
Home Depot 3 102,000 274,000 376,000
Primark 6 — 351,000 351,000
Costco 2 155,000 167,000 322,000
Scheels All Sports 1 253,000 — 253,000
Burlington 3 100,000 140,000 240,000
BJ's Wholesale Club 2 116,000 123,000 239,000
Von Maur 2 187,000 — 187,000
Walmart 1 — 173,000 173,000
La Curacao 1 — 165,000 165,000
Kohl's 1 — 81,000 81,000
Manor House 1 163,000 163,000
Boscov's 1 — 161,000 161,000
Lowe's 1 — 114,000 114,000
Neiman Marcus 1 — 100,000 100,000
Belk 1 — 87,000 87,000
Mercado de los Cielos 1 — 78,000 78,000
Vacant Anchors(1) 19 — 1,729,000 1,729,000
Total 145 9,093,000 10,853,000 19,946,000
Anchors at Centers not owned by the Company(2):
Kohl's 1 — 82,000 82,000
Total 146 9,093,000 10,935,000 20,028,000
_______________________________
(1) The Company is actively seeking replacement tenants or has entered into replacement leases for many of these vacant sites and/or is currently executing on or considering redevelopment opportunities for these locations. The Company continues to collect rent under the terms of an agreement regarding two of these vacant Anchors.
(2) The Company owns an office building and two stores located at shopping centers not owned by the Company. Of these two stores, one is leased to Kohl's, and one has been leased for non-Anchor usage.
Governmental Regulations
Compliance with various governmental regulations has an impact on the Company’s business, including its capital expenditures, earnings and competitive position, which can be material. The Company incurs costs to monitor, and takes actions to comply with, governmental regulations that are applicable to its business, which include, among others, federal securities laws and regulations, applicable stock exchange requirements, REIT and other tax laws and regulations, environmental and health and safety laws and regulations, local zoning, usage and other regulations relating to real property, the Americans with Disabilities Act of 1990 (the "ADA") and related laws and regulations.
See “Item 1A. Risk Factors” for a discussion of material risks to the Company, including, to the extent material, to its competitive position, relating to governmental regulations, and see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” together with the Company’s Consolidated Financial Statements, including the
14
related notes included therein, for a discussion of material information relevant to an assessment of the Company’s financial condition and results of operations, including, to the extent material, the effects that compliance with governmental regulations may have upon its capital expenditures and earnings.
Insurance
Each of the Centers has comprehensive liability, fire, extended coverage and rental loss insurance with insured limits customarily carried for similar properties. The Company does not insure certain types of losses (such as losses from wars), because they are either uninsurable or not economically insurable. In addition, while the Company or the relevant joint venture, as applicable, carry specific earthquake insurance on the Centers located in California, the policies are subject to a deductible equal to 5% of the total insured value of each Center, a $150,000 per occurrence minimum and a combined annual aggregate loss limit of $100 million on these Centers. The Company or the relevant joint venture, as applicable, carry specific earthquake insurance on the Centers located in the Pacific Northwest and in the New Madrid Seismic Zone. However, the policies are subject to a deductible equal to 2% of the total insured value of each Center, a $150,000 per occurrence minimum and a combined annual aggregate loss limit of $100 million on these Centers. While the Company or the relevant joint venture also carry standalone terrorism insurance on the Centers, the policies are subject to a $25,000 deductible and a combined annual aggregate loss limit of $1.325 billion. Each Center has environmental insurance covering eligible third-party losses, remediation and non-owned disposal sites, subject to a $100,000 retention and a $50 million three-year aggregate loss limit, with the exception of one Center, which has a $5 million ten-year aggregate loss limit. Some environmental losses are not covered by this insurance because they are uninsurable or not economically insurable. Furthermore, the Company carries title insurance on substantially all of the Centers for generally less than their full value.
Qualification as a Real Estate Investment Trust
The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its first taxable year ended December 31, 1994, and intends to conduct its operations so as to continue to qualify as a REIT under the Code. As a REIT, the Company generally will not be subject to federal and state income taxes on its net taxable income that it currently distributes to stockholders. Qualification and taxation as a REIT depends on the Company's ability to meet certain dividend distribution tests, share ownership requirements and various qualification tests prescribed in the Code.
Employees and Human Capital
As of December 31, 2024, the Company had approximately 616 employees, of which 615 were full-time and one was part-time. Based on its semi-annual survey of employees, the Company believes that relations with its employees are good, noting an employee Net Promoter Score ("NPS") of 77, a score measured "excellent" by Bain & Company's NPS scoring framework.
As of December 31, 2024, the average tenure of the Company's employees was approximately 10.6 years and that of the Company's senior management was 16.6 years. In 2024, the Company's workforce turnover rate was 13.7%, which includes all employees.
The Company, with oversight from senior management and its Board of Directors, puts great effort into cultivating an inclusive company culture that attracts top talent and creates an environment that fosters collaboration and innovation, while providing professional development opportunities and training. The Company’s human capital objectives include, as applicable, identifying, recruiting, retaining, developing, incentivizing and integrating the Company’s existing and prospective employees. To further these objectives, the Company has established a number of policies and programs and undertaken various initiatives, including:
Employee Compensation and Benefits: The Company maintains cash- and equity-based compensation programs designed to attract, retain and motivate its employees. The Company offers full-time employees a strong benefits package, including:
• Company-matched retirement savings through tax-advantaged 401(k) plans;
• an employee stock purchase program;
• a tax-advantaged 529 educational savings program;
• Company-matched donor advised fund to support philanthropic efforts of employees;
• paid vacation, sick time and company observed holidays;
• paid time off for employees to bond with a new child;
15
• paid time off for volunteer efforts;
• comprehensive benefits, including medical, dental and vision insurance; basic life and long-term disability insurance; and critical illness coverage and supplemental accident insurance;
• healthcare and dependent care flexible spending accounts;
• new employee referral bonus awards; and
• financial, legal, family or personal assistance through the employee assistance program.
Employee Training and Professional Development: The Company values the professional development of its employees and seeks to foster their talent and growth by providing training and education at all levels. In addition to training programs geared towards specific job functions, the Company offers training related to company policies, skill development, privacy and cybersecurity. In alignment with its commitment to invest in talent development, in 2024, the Company launched a performance management platform that supports objective and key result tracking, performance reviews, 1-on-1 meetings between employees and managers, and peer-to-peer recognition.
Workforce: The Company recognizes the value in strengthening its workforce with diverse thought, ideas and people and maintains employment policies that comply with federal, state and local labor laws. As an equal opportunity employer, it is committed to recognition and inclusion and rewards its employees based on merit and their contributions in accordance with the principles and requirements of the Equal Employment Opportunities Commission and the principles and requirements of the ADA. The Company’s policies set forth its commitment to provide equal employment opportunity and to recruit, hire and promote at all levels without regard to race, national origin, religion, age, color, sex, sexual orientation, gender identity, disability, protected veteran status or any other characteristic protected by local, state or federal laws. As of December 31, 2024, approximately 58% of the Company’s employees identified as female. Of the total employee population, approximately 30% identified as belonging to an underrepresented group.
Employee Health and Safety: The Company is also committed to ensuring that the operations at all its Centers and corporate offices are conducted in a manner that safeguards the health and safety of employees, tenants, contractors, customers and members of the public who are either present at, or affected by, its operations. The Company has implemented operational protocols at each of its Centers and its offices that are designed to ensure the safety of its employees, tenants, service providers and shoppers.
Seasonality
The shopping center industry is seasonal in nature, particularly in the fourth quarter during the holiday season when retailer occupancy and retail sales are typically at their highest levels. In addition, shopping malls achieve a substantial portion of their specialty (temporary retailer) rents during the holiday season and the majority of percentage rent is recognized in the fourth quarter. As a result of the above, earnings are generally higher in the fourth quarter.
Sustainability
A recognized leader in sustainability, the Company has achieved the #1 GRESB ranking in the North American Retail Sector for ten consecutive years. A copy of the Company's Corporate Responsibility Report can be obtained from the Company's website at www.macerich.com under "Investors—Corporate Responsibility". Copies of the Company's sustainability policies are also available on the Company's website at www.macerich.com under "Investors—Corporate Governance". Information provided on the Company's website is not incorporated by reference into this Form 10-K.
Available Information; Website Disclosure; Corporate Governance Documents
The Company's corporate website address is www.macerich.com . The Company makes available free-of-charge through this website its reports on Forms 10-K, 10-Q and 8-K and all amendments thereto, as soon as reasonably practicable after the reports have been filed with, or furnished to, the SEC. These reports are available under the heading "Investors—Financial Information—SEC Filings", through a free hyperlink to a third-party service. Information provided on the Company's website is not incorporated by reference into this Form 10-K. The following documents relating to Corporate Governance are available on the Company's website at www.macerich.com under "Investors—Corporate Governance":
16
Guidelines on Corporate Governance
Code of Business Conduct and Ethics
Code of Ethics for CEO and Senior Financial Officers
Audit Committee Charter
Compensation Committee Charter
Executive Committee Charter
Nominating and Corporate Governance Committee Charter
You may also request copies of any of these documents by writing to:
Attention: Corporate Secretary
The Macerich Company
401 Wilshire Blvd., Suite 700
Santa Monica, CA 90401