MACERICH CO
For the period ended Dec 31, 2023. Filed Feb 26, 2024.
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FY2023 · Filed Feb 26, 2024
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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, 2023, the Operating Partnership owned or had an ownership interest in 43 regional town centers (including office, hotel and residential space adjacent to these shopping centers), three community/power shopping centers and one redevelopment property. These 47 regional town centers, community/power shopping centers and one redevelopment property consist of approximately 46 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
On May 18, 2023, the Company acquired Seritage Growth Properties' ("Seritage") remaining 50% ownership interest in the MS Portfolio LLC joint venture that owns five former Sears parcels, for a total purchase price of approximately $46.7 million. These parcels are located at Chandler Fashion Center, Danbury Fair Mall, Freehold Raceway Mall, Los Cerritos Center and Washington Square. Effective as of May 18, 2023, the Company now owns and has consolidated its 100% interest in these five former Sears parcels in its consolidated financial statements.
On November 16, 2023, the Company acquired its joint venture partner’s 49.9% ownership interest in Freehold Raceway Mall for $5.6 million and the assumption of its joint venture partner’s share of debt. The Company now owns 100% of Freehold Raceway Mall. Prior to November 16, 2023, the Company accounted for its investment in Freehold Raceway Mall as part of a financing arrangement (See Note 12 – Financing Arrangement and Note 15 – Acquisitions in the Notes to the Consolidated Financial Statements).
On December 9, 2023, the Company acquired its joint venture partner’s 50% interest in Fashion District Philadelphia for no consideration, and the Company now owns 100% of this property. Prior to December 9, 2023, due to the Company’s joint venture partner having no substantive participation rights, the Company accounted for this joint venture as a consolidated variable interest entity (“VIE”) in its consolidated financial statements (See Note 2 – Summary of Significant Accounting Policies and Note 15 – Acquisitions in the Notes to the Consolidated Financial Statements).
Dispositions:
On May 2, 2023, the Company sold The Marketplace at Flagstaff, a 268,000 square foot power center in Flagstaff, Arizona, for $23.5 million, which resulted in a gain on sale of assets of $10.3 million. The Company used the net proceeds to pay down debt.
On July 17, 2023, the Company sold Superstition Springs Power Center, a 204,000 square foot power center in Mesa, Arizona, for $5.6 million, which resulted in a gain on sale of assets of $1.9 million. The Company used the net proceeds to pay down debt.
The Company did not repay the loan on Towne Mall on its maturity date of November 1, 2022, and completed transition of the property to a receiver. On December 4, 2023, Towne Mall was sold by the receiver for $9.5 million, resulting in a gain on extinguishment of debt of $8.2 million.
On December 27, 2023, the Company’s joint venture in One Westside sold the property, a 680,000 square foot office property in Los Angeles, California, for $700 million. The existing $325 million loan on the property was repaid, and $77.6 million of net proceeds were generated at the Company’s 25% ownership share, which were used to reduce the Company’s revolving loan facility. As a result of this transaction, the Company recognized its share of gain on sale of assets of $8.1 million.
For the twelve months ended December 31, 2023, 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 $10.8 million. The Company used its share of the proceeds from these sales of $16.4 million to pay down debt and for other general corporate purposes.
Financing Activities:
On January 3, 2023, the Company replaced the existing $363.0 million of combined loans on Green Acres Mall and Green Acres Commons, both of which were scheduled to mature during the first quarter of 2023, with a $370.0 million loan that bears interest at a fixed rate of 5.90%, is interest only during the entire loan term and matures on January 6, 2028.
On January 20, 2023, the Company exercised its one-year extension option of the loan on Fashion District Philadelphia to January 22, 2024. The interest rate is SOFR plus 3.60% and the Company repaid $26.1 million of the outstanding loan balance at closing.
On March 3, 2023, the Company’s joint venture in Scottsdale Fashion Square replaced the existing $403.9 million mortgage loan on the property with a new $700.0 million loan that bears interest at a fixed rate of 6.21%, is interest only during the entire loan term and matures on March 6, 2028.
On March 22, 2023, the Company executed the one-year extension option on its credit facility to April 14, 2024. Effective March 13, 2023, the credit facility converted from LIBOR to 1-month Term SOFR.
On April 25, 2023, the Company's joint venture in Deptford Mall closed on a three-year maturity date extension for the existing loan of $159.9 million to April 3, 2026, including extension options. The Company's joint venture repaid $10.0 million ($5.1 million at the Company's pro rata share) of the outstanding loan balance at closing. The interest rate on the loan remains unchanged at 3.73%.
Effective May 9, 2023, the Company’s joint venture in Country Club Plaza defaulted on the $295.2 million ($147.6 million at the Company's pro rata share) non-recourse loan on the property. The Company’s joint venture is in negotiations with the lender on the terms of this non-recourse loan.
On June 27, 2023, the Company closed on a one-year extension on the $133.5 million loan on Danbury Fair Mall to July 1, 2024. The Company repaid $10.0 million of the outstanding loan balance at closing and the amended interest rate was 7.5% as of July 1, 2023 and incrementally increased to 8.0% as of October 1, 2023, 8.5% as of January 1, 2024 and 9.0% as of April 1, 2024.
On September 11, 2023, the Company and Operating Partnership entered into an amended and restated credit agreement, which amended and restated their prior credit agreement, and provides for an aggregate $650 million revolving loan facility that matures on February 1, 2027, with a one-year extension option. Concurrently with the entry into the amended and restated credit agreement, the Company drew $152 million of the amount available under the revolving loan facility and used the proceeds to repay in full amounts outstanding under the Company’s prior credit facility.
Effective October 6, 2023, the Company's $86.5 million loan on Fashion Outlets of Niagara Falls is in default. The Company is in negotiations with the lender on the terms of this non-recourse loan.
On December 4, 2023, the Company's joint venture in Tysons Corner Center replaced the existing $666.5 million mortgage loan on the property with a new $710.0 million loan that bears interest at a fixed rate of 6.60%, is interest only during the entire loan term and matures on December 6, 2028.
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 matures on April 21, 2024.
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.
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. The Company has funded $39.5 million of the total $78.9 million incurred by the joint venture as of December 31, 2023.
The Company is redeveloping an approximately 150,000 square foot, three-level space (formerly occupied by Bloomingdale’s and Arclight Theatre) at Santa Monica Place, a 534,000 square foot regional town center in Santa Monica,
California, with an entertainment destination use, high-end fitness, and other retail uses. The total cost of the project is estimated to be between $35.0 million and $40.0 million. The Company has incurred approximately $5.2 million as of December 31, 2023. The anticipated opening will happen in phases beginning in 2024 through 2025.
The Company’s joint venture in Scottsdale Fashion Square, an approximately 1,871,000 square foot regional town 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 $80.0 million and $86.0 million, with $40.0 million and $43.0 million estimated to be the Company’s pro rata share. The Company has incurred $21.0 million of the total $42.0 million incurred by the joint venture as of December 31, 2023. The anticipated opening is in 2024.
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, 2023. On February 2, 2024, the Company announced a first quarter cash dividend of $0.17 per share of its common stock, which will be paid on March 4, 2024 to stockholders of record on February 16, 2024. 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 "March 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 million. As of December 31, 2023, the Company had approximately $151.7 million of gross sales of its common stock available under the March 2021 ATM Program.
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.
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 Town Centers" or "Malls." Regional Town 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 Town Centers:
A Regional Town 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 Town 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 Town 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 Town Centers in their trade areas.
Regional Town 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 Town Center.
Business of the Company
Strategy:
The Company has a long-term four-pronged business strategy that focuses on the acquisition, leasing and management, redevelopment and development of Regional Town Centers.
Acquisitions. The Company principally focuses on well-located, quality Regional Town 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.
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. 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 one regional town center and two community centers for third party owners on a fee basis.
Redevelopment. One of the major components 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 Town Centers, including by developing available land at the Regional Town 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 Centers:
As of December 31, 2023, the Centers primarily included 43 Regional Town Centers (including office, hotel and residential space adjacent to these shopping centers), three Community/Power Shopping Centers and one redevelopment property totaling approximately 46 million square feet of GLA. These 47 Centers average approximately 980,000 square feet of GLA and range in size from 3.2 million square feet of GLA at Tysons Corner Center to 205,000 square feet of GLA at Boulevard Shops. As of December 31, 2023, the Centers primarily included 156 Anchors totaling approximately 21.2 million square feet of GLA and approximately 5,000 Mall Stores and Freestanding Stores totaling approximately 23.6 million square feet of GLA.
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 a number of 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, 2023, 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, 2023:
| Tenant | Primary DBAs | Number ofLocationsin thePortfolio | % of TotalRents |
|---|---|---|---|
| Victoria's Secret & Co. | Pink, Victoria's Secret | 42 | 2.0% |
| Dick's Sporting Goods, Inc. | Dick's Sporting Goods, Moosejaw | 18 | 2.0% |
| The Gap, Inc. | Athleta, Banana Republic, Gap, Gap Kids, Old Navy, and others | 40 | 1.9% |
| Foot Locker, Inc. | Champs Sports, Foot Locker, House of Hoops by Foot Locker, Kids Foot Locker, and others | 59 | 1.9% |
| Signet Jewelers Limited | Banter by Piercing Pagoda, Blue Nile, Jared, Kay Jewelers, Zales | 94 | 1.8% |
| LVMH, Inc. | Louis Vuitton, Sephora, and others | 34 | 1.6% |
| H & M Hennes & Mauritz L.P. | H&M | 25 | 1.5% |
| SPARC Group LLC | Aeropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand, and others | 64 | 1.4% |
| American Eagle Outfitters, Inc. | Aerie, American Eagle Outfitters | 36 | 1.3% |
| Abercrombie & Fitch Co. | Abercrombie & Fitch, Abercrombie Kids, Hollister Co. | 43 | 1.2% |
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.
Tenant space of 10,000 square feet and under in the Company's portfolio at December 31, 2023 comprises approximately 61% 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 Mall Store sales for the twelve months ended December 31, 2023 and December 31, 2022:
| For the Twelve Months Ended December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Consolidated Centers: | ||
| Minimum rents | 7.9% | 7.4% |
| Percentage rents | 0.8% | 1.1% |
| Expense recoveries(1) | 3.4% | 3.1% |
| 12.1% | 11.6% | |
| Unconsolidated Joint Venture Centers: | ||
| Minimum rents | 7.1% | 6.5% |
| Percentage rents | 1.1% | 1.0% |
| Expense recoveries(1) | 2.9% | 2.8% |
| 11.1% | 10.3% | |
(1)Represents real estate tax and common area maintenance charges.
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. BaseRent PerSq. Ft.(1)(2) | Avg. Base RentPer Sq. Ft. onLeases ExecutedDuring the Year(2)(3) | Avg. Base RentPer Sq. Ft.on Leases ExpiringDuring the Year(2)(4) |
|---|---|---|---|
| Consolidated Centers (at the Company's pro rata share): | |||
| 2023 | $61.66 | $58.97 | $50.14 |
| 2022 | $60.72 | $56.63 | $56.44 |
| 2021 | $59.86 | $56.39 | $55.91 |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): | |||
| 2023 | $70.42 | $64.42 | $55.74 |
| 2022 | $67.37 | $69.88 | $62.72 |
| 2021 | $66.12 | $66.98 | $60.48 |
Big Box and Anchors:
| For the Years Ended December 31, | Avg. BaseRent PerSq. Ft.(1)(2) | Avg. Base RentPer Sq. Ft. onLeases ExecutedDuring the Year(2)(3) | Number ofLeasesExecutedDuringthe Year | Avg. Base RentPer Sq. Ft.on Leases ExpiringDuring the Year(2)(4) | Number ofLeasesExpiringDuringthe Year |
|---|---|---|---|---|---|
| Consolidated Centers (at the Company's pro rata share): | |||||
| 2023 | $16.65 | $21.85 | 34 | $29.67 | 15 |
| 2022 | $15.95 | $22.68 | 18 | $32.15 | 14 |
| 2021 | $17.26 | $12.64 | 15 | $8.57 | 15 |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): | |||||
| 2023 | $16.40 | $30.90 | 25 | $13.60 | 21 |
| 2022 | $16.23 | $27.77 | 11 | $15.81 | 12 |
| 2021 | $16.72 | $36.90 | 11 | $37.45 | 15 |
(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.
Lease Expirations:
The following tables show scheduled lease expirations for Centers owned as of December 31, 2023 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 ofLeasesExpiring | ApproximateGLA of LeasesExpiring(1) | % of Total LeasedGLA Representedby ExpiringLeases(1) | Ending Base Rentper Square Foot ofExpiring Leases(1) | % of Base RentRepresentedby ExpiringLeases(1) |
|---|---|---|---|---|---|
| Consolidated Centers (at the Company's pro rata share): | |||||
| 2024 | 417 | 893,335 | 22.90% | $60.83 | 20.88% |
| 2025 | 323 | 700,699 | 17.96% | $65.35 | 17.60% |
| 2026 | 241 | 610,959 | 15.66% | $68.98 | 16.20% |
| 2027 | 212 | 433,085 | 11.10% | $77.99 | 12.98% |
| 2028 | 135 | 309,302 | 7.93% | $64.40 | 7.65% |
| 2029 | 136 | 373,421 | 9.57% | $70.73 | 10.15% |
| 2030 | 76 | 211,845 | 5.43% | $62.83 | 5.11% |
| 2031 | 40 | 110,746 | 2.84% | $79.29 | 3.37% |
| 2032 | 29 | 74,904 | 1.92% | $60.89 | 1.75% |
| 2033 | 35 | 129,216 | 3.31% | $54.29 | 2.70% |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): | |||||
| 2024 | 294 | 372,635 | 18.30% | $67.49 | 16.06% |
| 2025 | 232 | 320,924 | 15.76% | $69.35 | 14.21% |
| 2026 | 213 | 290,581 | 14.27% | $74.76 | 13.87% |
| 2027 | 164 | 241,022 | 11.84% | $79.09 | 12.17% |
| 2028 | 158 | 257,132 | 12.63% | $83.57 | 13.72% |
| 2029 | 94 | 134,346 | 6.60% | $82.01 | 7.04% |
| 2030 | 79 | 107,526 | 5.28% | $92.04 | 6.32% |
| 2031 | 50 | 73,060 | 3.59% | $74.16 | 3.46% |
| 2032 | 58 | 85,234 | 4.19% | $90.70 | 4.94% |
| 2033 | 56 | 90,720 | 4.46% | $81.08 | 4.70% |
Big Boxes and Anchors:
| Year Ending December 31, | Number ofLeasesExpiring | ApproximateGLA of LeasesExpiring(1) | % of Total LeasedGLA Representedby ExpiringLeases(1) | Ending Base Rentper Square Foot ofExpiring Leases(1) | % of Base RentRepresentedby ExpiringLeases(1) |
|---|---|---|---|---|---|
| Consolidated Centers (at the Company's pro rata share): | |||||
| 2024 | 15 | 319,225 | 3.90% | $38.24 | 8.11% |
| 2025 | 32 | 1,324,385 | 16.17% | $12.57 | 11.05% |
| 2026 | 28 | 1,416,432 | 17.30% | $10.74 | 10.10% |
| 2027 | 39 | 1,155,852 | 14.12% | $24.26 | 18.62% |
| 2028 | 22 | 944,679 | 11.54% | $16.87 | 10.58% |
| 2029 | 12 | 311,671 | 3.81% | $21.33 | 4.41% |
| 2030 | 10 | 291,804 | 3.56% | $17.13 | 3.32% |
| 2031 | 8 | 335,560 | 4.10% | $19.86 | 4.42% |
| 2032 | 6 | 245,071 | 2.99% | $14.49 | 2.36% |
| 2033 | 12 | 359,849 | 4.39% | $30.23 | 7.22% |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): | |||||
| 2024 | 23 | 440,317 | 11.12% | $17.67 | 11.67% |
| 2025 | 29 | 623,800 | 15.76% | $13.57 | 12.70% |
| 2026 | 22 | 350,725 | 8.86% | $30.64 | 16.13% |
| 2027 | 19 | 347,431 | 8.78% | $20.94 | 10.92% |
| 2028 | 15 | 496,132 | 12.53% | $13.70 | 10.20% |
| 2029 | 17 | 413,283 | 10.44% | $18.28 | 11.33% |
| 2030 | 7 | 467,875 | 11.82% | $4.95 | 3.48% |
| 2031 | 8 | 346,541 | 8.75% | $10.48 | 5.45% |
| 2032 | 3 | 55,037 | 1.39% | $29.38 | 2.43% |
| 2033 | 8 | 116,195 | 2.94% | $36.04 | 6.28% |
(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 Town 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 6.5% of the Company's total rents for the year ended December 31, 2023.
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, 2023.
| Name | Number ofAnchorStores | GLA Ownedby Anchor | GLA Leasedby Anchor | Total Anchor GLA |
|---|---|---|---|---|
| Macy's Inc. | ||||
| Macy's | 34 | 4,404,000 | 1,931,000 | 6,335,000 |
| Bloomingdale's | 1 | — | 253,000 | 253,000 |
| 35 | 4,404,000 | 2,184,000 | 6,588,000 | |
| JCPenney | 24 | 1,641,000 | 2,043,000 | 3,684,000 |
| Dillard's(1) | 12 | 1,912,000 | 257,000 | 2,169,000 |
| Nordstrom | 8 | 266,000 | 1,079,000 | 1,345,000 |
| Dick's Sporting Goods | 16 | — | 1,048,000 | 1,048,000 |
| Target(2) | 6 | 304,000 | 489,000 | 793,000 |
| Forever 21 | 5 | — | 464,000 | 464,000 |
| Home Depot | 3 | 102,000 | 274,000 | 376,000 |
| Primark(3) | 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 |
| Boscov's | 1 | — | 161,000 | 161,000 |
| Shoppers World | 2 | — | 134,000 | 134,000 |
| Lowe's | 1 | — | 114,000 | 114,000 |
| Neiman Marcus | 1 | — | 100,000 | 100,000 |
| Saks Fifth Avenue | 1 | — | 92,000 | 92,000 |
| Belk | 1 | — | 87,000 | 87,000 |
| Kohl's | 1 | — | 80,000 | 80,000 |
| Mercado de los Cielos | 1 | — | 78,000 | 78,000 |
| Des Moines Area Community College | 1 | 64,000 | — | 64,000 |
| Vacant Anchors(4) | 18 | 148,000 | 1,614,000 | 1,762,000 |
| 155 | 9,652,000 | 11,417,000 | 21,069,000 | |
| Anchors at Centers not owned by the Company(5): | ||||
| Kohl's | 1 | — | 82,000 | 82,000 |
| Total | 156 | 9,652,000 | 11,499,000 | 21,151,000 |
(1)Dillard's owns and is currently redeveloping the former Sears parcel at South Plains Mall. They plan to open this store in fall 2024 and vacate their two existing stores at the property.
(2)Target has announced plans to open a two-level 126,000 square foot store at Danbury Fair Mall.
(3)Primark has announced plans to open a two-level store at Tysons Corner Center.
(4)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 three of these vacant Anchors.
(5)The Company owns an office building and three stores located at shopping centers not owned by the Company. Of these three stores, one is leased to Kohl's, and two have 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 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 $1.2 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 and another Center, which has a $20 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, 2023, the Company had approximately 655 employees, of which 654 were full-time and one was part-time. The Company believes that relations with its employees are good.
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, innovation and diversity, 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:
Diversity and Inclusion: 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 diversity, 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, 2023, approximately 58% of the Company’s employees identified as female. Of the total employee population, approximately 30% identified as belonging to an underrepresented group and approximately <1% did not specify race or ethnicity. In addition to diversity across its employee base, the Company is also committed to increasing diversity in leadership positions. In 2023, 40% of individuals receiving promotions at the Vice President level identified as female. Additionally, in alignment with the Company’s long-term goal of building a pipeline of diverse future leaders, individuals identifying as female accounted for 89% of all promotions at the Assistant Vice President level and those identifying as female from underrepresented groups accounted for 22% of all promotions at the Assistant Vice President level in 2023.
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;
basic life and long-term disability insurance, as well as medical, dental and vision insurance;
critical illness coverage and supplemental accident insurance;
paid vacation, sick time and company observed holidays;
healthcare and dependent care flexible spending accounts;
referral bonus awards;
financial, legal, family or personal assistance through the employee assistance program;
an employee stock purchase program;
a tax-advantaged 529 educational savings program;
scholarship program to help fund post high-school education for dependents of employees;
Company-sponsored donor advised fund to support philanthropic efforts of employees, which provides a Company matching program and paid time off program for philanthropic volunteerism;
paid time off for volunteer efforts; and
paid time off for employees to bond with a new child.
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, diversity, skill development, privacy and cybersecurity. In furtherance of the value it places on talent development, in 2023 the Company implemented a unified platform available to all employees that supports training and education related to compliance, inclusion and professional development. As of December 31, 2023, the average tenure of the Company’s employees was approximately 10.8 years and that of the Company’s senior management was 20.6 years. In 2023, the Company’s workforce turnover rate was 14%, which includes all employees.
Employee Health and Safety: The Company is also committed to ensuring that the operations at all of 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 a long list of 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 nine straight years 2015 – 2023. A copy of the Company's Corporate Responsibility Report, as well as additional information about the Company’s Environmental, Social and Governance programs can be obtained from the Company's website atwww.macerich.com under "Investors—Corporate Responsibility". Copies of the Company's sustainability policies and ESG commitments are also available on the Company's website atwww.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 iswww.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 atwww.macerich.com under "Investors—Corporate Governance":
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
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.