FinanceLooker

Excrept from filing document 2024-12-31

The aggregate market value of voting and non voting common equity held by non affiliates of the registrant was approximately 3 3 billion as of the last business day of the registrant s most recently completed second fiscal quarter based upon the price at which the common stock was last sold on that day
This Annual Report on Form 10 K of The Macerich Company the Company contains or incorporates statements that constitute forward looking statements within the meaning of the federal securities laws Any statements that do not relate to historical or current facts or matters are forward looking statements You can identify some of the forward looking statements by the use of forward looking words such as may will could should expects anticipates intends projects predicts plans believes seeks estimates scheduled and variations of these words and similar expressions Statements concerning current conditions may also be forward looking if they imply a continuation of current conditions Forward looking statements appear in a number of places in this Form 10 K and include statements regarding among other matters
Stockholders are cautioned that any such forward looking statements are not guarantees of future performance and involve risks uncertainties and other factors that may cause actual results performance or achievements of the Company or the industry to differ materially from the Company s future results performance or achievements or those of the industry expressed or implied in such forward looking statements Such factors include among others general industry as well as global national regional and local economic and business conditions which will among other things affect demand for retail space or retail goods availability and creditworthiness of current and prospective tenants anchor or tenant bankruptcies closures mergers or consolidations lease rates terms and payments elevated interest rates and inflation and its impact on the financial condition and results of operations of the Company including as a result of any defaults on mortgage loans and its tenants availability terms and cost of financing and operating expenses adverse changes in the real estate markets including among other things competition from other companies retail formats and technology risks of real estate development and redevelopment including elevated inflation supply chain disruptions and construction delays acquisitions and dispositions adverse impacts from any pandemic epidemic or outbreak of any highly infectious disease on the U S regional and global economies and the financial condition and results of operations of the Company and its tenants the liquidity of real estate investments governmental actions and initiatives including legislative and regulatory changes environmental and safety requirements and terrorist activities or other acts of violence which could adversely affect all of the above factors You are urged to carefully review the disclosures we make concerning these risks and other factors that may affect our business and operating results including those made in Item 1A Risk Factors of this Annual Report on Form 10 K as well as our other reports filed with the Securities and Exchange Commission the SEC which disclosures are incorporated herein by reference You are cautioned not to place undue reliance on these forward looking statements which speak only as of the date of this document The Company does not intend and undertakes no obligation to update any forward looking information to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events unless required by law to do so
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
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
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 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
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
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
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 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
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
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
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
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
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
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
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
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
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
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
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
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
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
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 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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
Set forth below are the risks that we believe are material to our investors and they should be carefully considered These risks are not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur This section contains forward looking statements You should refer to the explanation of the qualifications and limitations on forward looking statements in Important Factors Related To Forward Looking Statements For purposes of this Risk Factors section Centers wholly owned by us are referred to as Wholly Owned Centers and Centers that are partly but not wholly owned by us are referred to as Joint Venture Centers
Real property investments are subject to varying degrees of risk that may affect the ability of our Centers to generate sufficient revenues to meet operating and other expenses including debt service lease payments capital expenditures and tenant improvements and to make distributions to us and our stockholders A number of factors may decrease the income generated by the Centers including
the regional and local economy which may be negatively impacted by rising unemployment declining real estate values increased foreclosures higher taxes tariffs plant closings industry slowdowns union activity adverse weather conditions natural disasters and other factors
local real estate conditions such as an oversupply of or a reduction in demand for retail space or retail goods decreases in rental rates declining real estate values and the availability and creditworthiness of current and prospective tenants
changes in consumer behaviors preferences or demographics which may lead to decreased levels of consumer spending consumer confidence and seasonal spending especially during the holiday season when many retailers generate a disproportionate amount of their annual sales
A significant percentage of our Centers are located in California New York and Arizona To the extent that weak economic or real estate conditions or other factors affect California New York or Arizona or any region in which we have a
Our properties compete with other owners developers and managers of malls shopping centers and other retail oriented real estate including other publicly traded mall companies and large private mall companies for the acquisition of properties and in attracting tenants or Anchors to occupy space Competition for property acquisitions may result in increased purchase prices and may adversely affect our ability to make suitable property acquisitions on favorable terms or at all The existence of competing shopping centers could have a material adverse impact on our ability to lease space and on the rental rates that can be achieved
There is also increasing competition for tenants and shoppers from other retail formats and technologies such as lifestyle centers power centers outlet centers and online retail shopping that could adversely affect our revenues The increased popularity of digital and mobile technologies has accelerated the transition of a percentage of market share from shopping at physical stores to web based shopping If we are unsuccessful in adapting our business to evolving consumer purchasing habits it may have a material adverse impact on our financial condition and results of operations Further the increase in online retail shopping has resulted in and will continue to result in the closure of underperforming stores by retailers which if sustained could impact our occupancy levels and the rates that tenants are willing to pay to lease our space
We may be unable to renew leases lease vacant space or re let space as leases expire on favorable terms or at all or to the appropriate mix of tenants for the Centers which could adversely affect our financial condition and results of operations
There are no assurances that our leases will be renewed or that vacant space in our Centers will be re let at net effective rental rates equal to or above the current average net effective rental rates or that substantial rent abatements tenant improvements early termination rights or below market renewal options will not be offered to attract new tenants or retain existing tenants If the rental rates at our Centers decrease if our existing tenants do not renew their leases or if we do not re let a significant portion of our available space and space for which leases are expiring our financial condition and results of operations could be adversely affected
Additionally if we fail to identify and secure the right blend of tenants at our retail and mixed use properties including our properties under development or redevelopment our Centers may not appeal to the communities they are intended to serve which could reduce customer traffic and the operations of our tenants and adversely affect our financial condition and results of operations
Our financial condition and results of operations could be adversely affected if a downturn in the business of or the bankruptcy or insolvency of an Anchor or other significant tenant leads them to close retail stores or terminate their leases after seeking protection under the bankruptcy laws from their creditors including us as lessor In recent years including as a result of the general conditions caused by economic uncertainty in the U S a number of companies in the retail industry including some of our tenants have declared bankruptcy have gone out of business have significantly reduced their brick and mortar presence or have failed to comply with their contractual obligations to us and others If one of our tenants files for bankruptcy we may not be able to collect amounts owed by that party prior to filing for bankruptcy We may make lease modifications either pre or post bankruptcy for certain tenants undergoing significant financial distress in order for them to continue as a going concern In addition after filing for bankruptcy a tenant may terminate any or all of its leases with us in which event we would have a general unsecured claim against such tenant that would likely be worth less than the full amount owed to us for the remainder of the lease term Furthermore we may be required to incur significant expense in re letting the space vacated by a bankrupt tenant and may not be able to release the space on similar terms or at all The bankruptcy of a tenant particularly an Anchor may require a substantial redevelopment of their space the success of which cannot be assured and may make the re letting of their space difficult and costly and it may also be difficult to lease the remainder of the space at the affected property
Furthermore certain department stores and other national retailers have experienced and may continue to experience decreases in customer traffic in their retail stores increased competition from alternative retail options such as e commerce and other forms of pressure on their business models If the in store sales of retailers operating at our Centers decline significantly due to adverse economic conditions or for any other reason tenants might be unable to pay their minimum rents or expense recovery charges In the event of a default by a lessee the affected Center may experience delays and costs in enforcing its rights as lessor
Anchors and or tenants at one or more Centers might also terminate their leases as a result of mergers acquisitions consolidations or dispositions in the retail industry The sale of an Anchor or store to a less desirable retailer may reduce
occupancy levels customer traffic and rental income Depending on economic conditions there is also a risk that Anchors or other significant tenants may sell stores operating in our Centers or consolidate duplicate or geographically overlapping store locations Store closures by an Anchor and or a significant number of tenants may allow other Anchors and or certain other tenants to terminate their leases receive reduced rent and or cease operating their stores at the Center or otherwise adversely affect occupancy at the Center
Our historical growth in revenues net income and funds from operations has been in part tied to the acquisition development and redevelopment of shopping centers Many factors including the availability and cost of capital our total amount of debt outstanding our ability to obtain financing on attractive terms if at all interest rates and the availability of attractive acquisition targets among others will affect our ability to acquire develop and redevelop additional properties in the future including any acquisition development and redevelopment projects pursued in connection with the Path Forward Plan We may not be successful in pursuing acquisition opportunities and newly acquired properties may not perform as well as expected Expenses arising from our efforts to complete acquisitions develop and redevelop properties or increase our market penetration may have a material adverse effect on our business financial condition and results of operations We face competition for acquisitions primarily from other REITs as well as from private real estate companies or investors Some of our competitors have greater financial and other resources Increased competition for shopping center acquisitions may result in increased purchase prices and may adversely impact our ability to acquire additional properties on favorable terms or at all We cannot guarantee that we will be able to implement our growth strategy successfully or manage our expanded operations effectively and profitably
Our business strategy also includes the selective development and construction of retail properties On a selective basis our business strategy may include mixed use densification to maximize space at our Regional Retail Centers including by developing available land at our Regional Retail Centers or by demolishing underperforming department store boxes and redeveloping the land Any development redevelopment and construction activities that we may undertake will be subject to the risks of real estate development including lack of financing construction delays environmental requirements rising construction costs budget overruns sunk costs and lease up Furthermore occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable Real estate development activities are also subject to risks relating to the inability to obtain or delays in obtaining all necessary zoning land use building and occupancy and other required governmental permits and authorizations If any of the above events occur our ability to pay dividends to our stockholders and service our indebtedness could be adversely affected
Additionally if we elect to pursue a mixed use redevelopment we expose ourselves to risks associated with each non retail use e g office residential hotel and entertainment and the performance of our retail tenants in such properties may be negatively impacted by delays in opening and or the performance of such non retail uses We have less experience in developing and managing non retail real estate than we do with retail real estate and as a result we may seek to contract with a third party developer or third party manager with more experience in non retail uses In addition to the risks typically associated with the development of commercial real estate generally we would also be exposed to the risks associated with the ownership and management of non retail real estate including limited experience in managing certain types of non retail properties and the adverse impacts of competition and trends in the non retail industry For example in the case of office properties some businesses are rapidly evolving to make employee telecommuting flexible work schedules open workplaces and teleconferencing increasingly common which may enable businesses to reduce their space requirements and erode the overall demand for office space over time which in turn may place downward pressure on occupancy rental rates and property valuations each of which could have an adverse effect on our financial position results of operations cash flows and ability to make expected distributions to our stockholders to the extent we own office property
Certain of our properties have had or may continue to have excess space available for prospective tenants and those properties may continue to experience and other properties may commence experiencing such oversupply in the future While the pace of bankruptcies slowed in 2023 and 2022 compared to prior years it remained steady in 2024 and we continue to experience bankruptcies of Anchors and other national and local retailers including the bankruptcy of Express announced in April 2024 as well as store closures among our tenants In the past an increase in bargaining power of creditworthy retail tenants resulted in a downward pressure on our rental rates and occupancy levels and any increase in bargaining power in the future may also result in us having to increase our spend on tenant improvements and potentially make other lease modifications in order to attract or retain tenants any of which in the aggregate could materially and adversely affect us
As part of the Path Forward Plan we sold certain properties in 2024 and we may continue to pursue dispositions of our properties including non core assets in the future Investments in real estate are relatively illiquid which limits our ability to adjust our portfolio in response to changes in economic market or other conditions or realize our objectives through dispositions Moreover there are some limitations under federal income tax laws applicable to REITs that limit our ability to sell assets In addition because our properties are generally mortgaged to secure our debts we may not be able to obtain a release of a lien on a mortgaged property without the payment of the associated debt and or a substantial prepayment penalty which restricts our ability to dispose of a property even though the sale might otherwise be desirable Furthermore the number of prospective buyers interested in purchasing shopping centers is limited Therefore if we want to sell one or more of our Centers we may not be able to dispose of it in the desired time period and may receive less consideration than we originally invested in the Center
We periodically assess whether there are any indicators including property operating performance changes in anticipated holding period and general market conditions that the value of our real estate assets and other investments may be impaired A property s value is considered to be impaired only if the estimated aggregate future undiscounted and unleveraged property cash flows taking into account the anticipated probability weighted average holding period are less than the carrying value of the property In our estimate of cash flows we consider trends and prospects for a property and the effects of demand and competition on expected future operating income If we are evaluating the potential sale of an asset or redevelopment alternatives the undiscounted future cash flows consider the most likely course of action as of the balance sheet date based on current plans intended holding periods and available market information We are required to make subjective assessments as to whether there are impairments in the value of our real estate assets and other investments Impairment charges have an immediate direct impact on our earnings We have taken impairment charges on certain of our assets in the past and there can be no assurance that we will not take additional charges in the future Any future impairment could have a material adverse effect on our operating results in the period in which the charge is recognized
Each of the Centers has undergone Environmental Site Assessment Phase I studies conducted by an environmental consultant As a result of these assessments and other information we are aware of certain environmental issues present at certain Centers or at properties neighboring certain Centers such as asbestos containing materials ACMs some of which may ultimately require removal under certain conditions though the company has developed an operations and maintenance plan to manage ACMs underground storage tanks which are often present at or near Centers in connection with gasoline stations or automotive tire battery and accessory services centers and some of which may have leaked or are suspected to have leaked and chlorinated hydrocarbons such as perchloroethylene and its degradation byproducts which have been detected at certain Centers and are often present in connection with tenant dry cleaning operations These issues may result in potential environmental liability and cause us to incur costs in responding to these liabilities or in other costs associated with future investigation or remediation
Under various federal state and local environmental laws ordinances and regulations a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on under or in that real property These laws often impose liability whether or not the owner or operator knew of or was responsible for the presence of hazardous or toxic substances The costs of investigation removal or remediation of hazardous or toxic substances may be substantial In addition the presence of hazardous or toxic substances or the failure to remedy environmental hazards properly may adversely affect the owner s or operator s ability to sell or rent affected real property or to borrow money using affected real property as collateral
Persons or entities that arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of hazardous or toxic substances at the disposal or treatment facility whether or not that facility is owned or operated by the person or entity arranging for the disposal or treatment of hazardous or toxic substances For example laws exist that impose liability for release of ACMs into the air and third parties may seek recovery from owners or operators of real property for personal injury associated with exposure to ACMs In connection with our ownership operation management development and redevelopment of the Centers or any other centers or properties we acquire in the future we may be potentially liable under these laws and may incur costs in responding to these liabilities
Due to changes in weather patterns caused by climate change our properties in certain markets could experience increases in storm intensity and other weather related events and rising sea levels Over time climate change could result in volatile or decreased demand for retail space at some of our Centers or in extreme cases our inability to operate the properties at all Climate change may also have indirect effects on our business by increasing the cost of or making unavailable insurance on favorable terms or at all increasing the cost of energy at our properties or requiring us to spend funds to repair and protect our properties against such risks Additionally we seek to promote energy efficiency and other sustainability strategies at our properties Implementing such strategies and compliance with new laws or regulations related to climate change including compliance with green building codes may result in significant capital expenditures to improve our existing properties or properties we may acquire In addition laws and regulations at the federal state and local level aimed at increasing climate related disclosures including the rules proposed by the Securities and Exchange Commission and the legislation enacted in the state of California may increase compliance and data collection costs if and when such laws and regulations become effective If we are unable to comply with the laws and regulations on climate change or implement effective sustainability strategies our reputation among our tenants and investors may be damaged and we may incur fines and or penalties Moreover there can be no assurance that any of our sustainability strategies will result in reduced operating costs higher occupancy or higher rental rates or deter our existing tenants from relocating to properties owned by our competitors
Some of our Centers are located in areas that are subject to natural disasters including our Centers in California or in other areas with higher risk of earthquakes wildfires or other catastrophic weather events our Centers in flood plains or in areas that may be adversely affected by tornadoes as well as our Centers in coastal regions that may be adversely affected by increases in sea levels or in the frequency or severity of hurricanes tropical storms or other severe weather conditions The occurrence of natural disasters can delay redevelopment or development projects increase investment costs to repair or replace damaged properties increase future property insurance costs and negatively impact the tenant demand for lease space If insurance is unavailable to us or is unavailable on acceptable terms or our insurance is not adequate to cover losses from these events our financial condition and results of operations could be adversely affected
Each of our Centers has comprehensive liability fire extended coverage and rental loss insurance with insured limits customarily carried for similar properties We do not insure certain types of losses such as losses from wars because they are either uninsurable or not economically insurable and our insurance coverage may have certain exclusions such as pandemics that prevent us from collecting on certain claims under our policies In addition while we 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 We 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 we 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 we carry title insurance on substantially all of the Centers for generally less than their full value
If an uninsured loss or a loss in excess of insured limits occurs we could lose all or a portion of the capital we have invested in a property as well as the anticipated future revenue from the property but may remain obligated for any mortgage debt or other financial obligations related to the property
The real property taxes on our properties and any other properties that we develop or acquire in the future may increase as property tax rates change and as those properties are assessed or reassessed by tax authorities While most of our leases require the tenant to pay their pro rata share of property taxes some or all of such property taxes may not be collectible from our tenants An increase in our property tax rates or the assessed value of our properties could have an adverse effect on our financial position results of operations cash flows and ability to make expected distributions to our stockholders
All of the properties in our portfolio are required to comply with the Americans with Disabilities Act the ADA Compliance with the ADA requirements could require removal of access barriers and non compliance could result in the imposition of fines by the United States government awards of damages to private litigants or both While the tenants to whom our portfolio is leased are obligated to comply with ADA provisions within their leased premises if required changes within their leased premises involve greater expenditures than anticipated or if the changes must be made on a more accelerated basis than anticipated the ability of tenants to cover costs could be adversely affected Furthermore we are required to comply with ADA requirements within the common areas of the properties in our portfolio and we may not be able to pass on to our tenants any costs necessary to remediate any common area ADA issues In addition we are required to operate the properties in compliance with fire and safety regulations building codes and other land use regulations as they may be adopted by governmental agencies and bodies and become applicable to our portfolio We may be required to make substantial capital expenditures to comply with and we may be restricted in our ability to renovate or redevelop the properties subject to those requirements and to comply with the provisions of the ADA The resulting expenditures and restrictions could have a material adverse effect on our financial condition and operating results
We face risks associated with and have been the target of security breaches through cyber attacks cyber intrusions or otherwise as well as other significant disruptions of our information technology IT networks and related systems
We face risks associated with cyber threats and have been the target of security breaches whether through cyber attacks or cyber intrusions over the Internet malware computer viruses attachments to e mails persons inside our organization or persons with access to systems inside our organization and other significant disruptions of our IT networks and related systems Cyber incidents have been increasing in sophistication and frequency and can include third parties gaining access to data using stolen or inferred credentials computer malware viruses spamming phishing attacks ransomware and other deliberate attacks and attempts to gain unauthorized access The techniques used to sabotage or to obtain systems in which data is stored or through which data is transmitted change frequently and we may be unable to implement adequate preventative measures or stop security breaches while they are occurring Because the techniques used by threat actors who may attempt to penetrate and sabotage our computer systems change frequently and may not be recognized until launched against a target we may be unable to anticipate these techniques These threats in turn may lead to increased costs to protect our information systems detect and respond to threats and recover from cyber incidents While we carry cyber liability insurance it may not be adequate to cover all losses relating to such events
Our IT networks and related systems are essential to the operation of our business and our ability to perform day to day operations and in some cases may be critical to the operations of certain of our tenants Although we make efforts to maintain the security and integrity of these types of IT networks and related systems and we have implemented various measures to manage the risk of a security incident there can be no guarantee that our security efforts and measures will be effective or that attempted cyber attacks would not be successful disruptive or damaging A security incident involving our information systems could disrupt the proper functioning of our networks and systems This could in turn result in misstated financial reports violations of loan covenants and or missed reporting deadlines the inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT the unauthorized access to and the destruction loss theft misappropriation or release of proprietary confidential sensitive or otherwise valuable information of ours or others which could be used to compete against us or for disruptive destructive or otherwise harmful purposes and outcomes require significant management attention and resources to remedy any damages that result subject us to claims for breach of contract damages credits penalties or termination of leases or other agreements or damage our reputation among our tenants and investors generally Moreover cyber attacks perpetrated against our Anchors and tenants including unauthorized access to customers credit card data and other confidential information could diminish consumer confidence and consumer spending and negatively impact our business Any breach loss or compromise of personal data may also subject us to civil fines and penalties or claims for damages under relevant state and federal privacy laws in the United States Data breaches and other data security compromises may lead to public disclosures which in turn may lead to widespread negative publicity
Because our properties are open to the public they are exposed to risks related to acts of violence and vandalism civil unrest criminal activity including organized retail crime and actual or threatened terrorist attacks that may be beyond our control or ability to prevent If any of these incidents were to occur the relevant property could face material damage physically and reputationally and the revenue generated by such property and its tenants could be negatively impacted Consumers may also perceive a heightened threat of these risks due to increased crime in markets where the Centers are located and negative media attention Concern around safety risk may impact the willingness of consumers tenants and tenants employees to shop and or work at our properties which could result in decreased consumer traffic and decreased sales at our properties or increase the need for additional expenditures on security resources Such a resulting decrease in retail demand could adversely impact our revenue and the value of our properties as well as make it difficult for us to renew or re lease our properties
Terrorist activities or violence and vandalism could also directly affect the value of our properties through damage destruction or loss Further the availability of insurance for such acts or of insurance generally might be reduced or cost more which could increase our operating expenses and adversely affect our financial condition and results of operations
Any future pandemic epidemic or outbreak of any highly infectious disease could cause disruptions in the U S regional and global economies and could materially and adversely impact our business financial condition and results of operations and the business financial condition and results of operations of our tenants
Any future pandemic epidemic or outbreak of any highly infectious disease could cause widespread disruptions to the United States and global economies and could contribute to significant volatility and negative pressure in financial markets The extent to which any future pandemic epidemic or outbreak of any highly infectious disease impacts our operations will depend on future developments which are highly uncertain and cannot be predicted with confidence including the scope severity and duration of such pandemic the emergence and characteristics of new variants the actions taken to contain the pandemic or mitigate its impact including the adoption administration and effectiveness of available vaccines and the direct and indirect economic effects of the pandemic and containment measures among others We previously experienced adverse impacts to our business from COVID 19 and any future pandemic epidemic or outbreak of any highly infectious disease may adversely affect our business financial condition and results of operations and it may also have the effect of heightening many of the risks described in this Risk Factors section including
a complete or partial closure of or other operational issues at one or more of our Centers resulting from government or tenant action which could adversely affect our operations and those of our tenants
reduced economic activity impacting the businesses financial condition and liquidity of our tenants which could cause one or more of our tenants including one or more of our Anchors to be unable to meet their obligations to us in full or at all to otherwise seek modifications of such obligations including deferrals or reductions of rental payments or to declare bankruptcy
decreased levels of consumer spending and consumer confidence as well as a decrease in traffic at our Centers which could affect the ability of the Centers to generate sufficient revenues to meet operating and other expenses in the short term and could also accelerate a shift to online retail shopping which if sustained could result in prolonged decreases in revenue at the Centers even after the immediate impact of such pandemic epidemic or outbreak of any other highly infectious disease is resolved
inability to renew leases lease vacant space including vacant space from tenant bankruptcies and defaults or re let space as leases expire on favorable terms or at all which could result in lower rental payments or reduced occupancy levels or could cause interruptions or delays in the receipt of rental payments
the closure of Anchors at one or more of our properties which could trigger co tenancy lease clauses within one or more of our leases at such properties and could potentially lead to a decline in revenue and occupancy
a potential negative impact on our financial results could adversely impact our compliance with the financial covenants within our credit facility and other debt agreements or cause a failure to meet certain of these financial covenants which could cause an event of default which if not cured or waived could accelerate some or all of such indebtedness and could have a material adverse effect on us
a potential decline in asset values at one or more of our properties encumbered by mortgage debt which could inhibit our ability to successfully refinance one or more such properties result in the default under the applicable mortgage debt agreement and potentially cause the acceleration of such indebtedness and
disruption and instability in the global financial markets or deteriorations in credit and financing conditions could make it difficult for us to access debt and equity capital on attractive terms or at all and could also impact our ability to fund business activities repay debt on a timely basis and renew extend or replace our credit facility prior to its maturity date at all or on terms that are favorable to us
Inflation in the United States has increased significantly in recent years and may increase again in the future While inflation levels began to decrease in 2024 they remain elevated relative to the years preceding 2021 As a result of these elevated inflation levels we have experienced and may continue to experience some or all of the following
Additionally even though most of our leases require tenants to pay their pro rata share of utilities and real estate taxes as well as a stated amount for operating expenses regardless of the expenses actually incurred at any Center substantial inflationary pressures and increased operating costs may increase our exposure to rising property expenses which would reduce our cash flows and profits and make it more difficult to maintain our historical cost controls at the Centers
Interest rates have increased in recent years and may continue to increase or remain elevated in the near term as the Federal Reserve continues to address inflation Such elevated interest rates may negatively impact consumer spending our tenants businesses and or future demand for space in our Centers
Additionally as a result of elevated interest rates borrowing costs on our outstanding floating rate debt as well as on new and refinanced fixed rate debt have increased and may continue to rise We are subject to the risks normally associated with debt financing and increased borrowing costs including the risk that our cash flow from operations will be insufficient to meet required debt service and that elevated interest rates could adversely affect our debt service costs
In certain cases we may limit our exposure to interest rate fluctuations related to a portion of our floating rate debt by the use of interest rate cap and swap agreements Such agreements subject to current market conditions allow us to replace floating rate debt with fixed rate debt in order to achieve our desired ratio of floating rate to fixed rate debt However in an elevated interest rate environment the fixed rates we can obtain with such replacement fixed rate cap and swap agreements or the fixed rate on new and refinanced debt will also remain elevated Our use of interest rate hedging arrangements may also expose us to additional risks including that the counterparty to the arrangement may fail to honor its obligations and that termination of these arrangements typically involves costs such as transaction fees or breakage costs There can be no assurance that our hedging activities will have the desired impact on our results of operations liquidity or financial condition
Although the extent of any prolonged periods of high interest rates remains unknown at this time negative impacts to our borrowing costs may also adversely affect our future business plans and growth at least in the near term
International trade disputes including threatened or implemented tariffs by the United States and threatened or implemented tariffs by foreign countries in retaliation could adversely impact our business Many of our tenants sell imported goods and tariffs or other trade restrictions could increase costs for these tenants To the extent our tenants are unable to pass these costs on to their customers our tenants could be adversely impacted In addition international trade disputes including those related to tariffs could result in inflationary pressures that directly impact our costs such as costs for steel lumber and other materials applicable to our redevelopment projects Trade disputes could also adversely impact global supply chains which could further increase costs for us and our tenants or delay delivery of key inventories and supplies
Our total outstanding loan indebtedness at December 31 2024 was 6 65 billion consisting of 4 99 billion of consolidated debt less 0 03 billion attributable to noncontrolling interests plus 1 69 billion of our pro rata share of mortgages and other notes payable on unconsolidated joint ventures Due to this substantial indebtedness we are required to use a material portion of our cash flow to service principal and interest on our debt which limits the amount of cash available for
other business opportunities As a part of the Path Forward Plan among other goals we aim to deleverage our capital structure over the next three to four years However the methods we may pursue and the timing extent and impact of any transactions in furtherance of this goal may vary and evolve and there can be no assurance that we will be successful in our efforts to deleverage
Furthermore most of our Centers are mortgaged to secure payment of indebtedness and if income from the Center is insufficient to pay that indebtedness the Center could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value During the year ended December 31 2024 we did not repay the outstanding mortgage loan on our Santa Monica Place property on its maturity and as a result the loan is in default We are in negotiations with the lender on the terms of this non recourse loan
Our unsecured credit facilities contain financial covenants including interest coverage requirements as well as limitations on our ability to incur debt make dividend payments and make certain acquisitions These covenants may restrict our ability to pursue certain business initiatives or certain transactions that might otherwise be advantageous In addition failure to meet certain of these financial covenants could cause an event of default which if not cured or waived could accelerate some or all of such indebtedness which could have a material adverse effect on us
We depend primarily on external financings principally debt financings and in more limited circumstances equity financings to fund the growth of our business and to ensure that we can meet ongoing maturities of our outstanding debt Our access to financing depends on the willingness of banks lenders and other institutions to lend to us based on their underwriting criteria which can fluctuate with market conditions and on conditions in the capital markets in general In addition levels of market disruption and volatility could materially adversely impact our ability to access the capital markets for equity financings
We are also subject to the risks normally associated with debt financings including the risk that our cash flow from operations will be insufficient to meet required debt service or that we will be unable to refinance such indebtedness on acceptable terms or at all If principal payments due at maturity cannot be refinanced extended or repaid with proceeds from other sources such as new equity capital our cash flow may not be sufficient to repay all maturing debt in years when significant balloon payments come due In addition there are no assurances that we will continue to be able to obtain the financing we need for future growth on acceptable terms or at all and any new or refinanced debt could also impose more restrictive terms
The success of our business depends in part on the leadership and performance of our executive management team and key employees and our ability to attract retain and motivate talented employees could significantly impact our future performance Competition for these individuals is intense and we cannot assure you that we will retain our executive management team and key employees or that we will be able to attract and retain other highly qualified individuals for these positions in the future Losing any one or more of these persons could have a material adverse effect on our results of operations financial condition and cash flows
The price of our common stock on the NYSE constantly changes and has been subject to significant price fluctuations Our stock price can fluctuate as a result of a variety of factors many of which are beyond our control These factors may include but are not limited to actual or anticipated variations in our operating results or dividends our ability to meet the goals established under the Path Forward Plan general market fluctuations including potentially extreme increases or decreases in the market prices of certain of our publicly traded tenants industry factors and general economic and geopolitical conditions and events such as economic slowdowns or recessions consumer confidence in the economy ongoing military conflicts and terrorist attacks technical factors in the public trading market for our stock that may produce price movements that may or may not comport with macro industry or company specific fundamentals including without limitation the sentiment of retail investors including as may be expressed on financial trading and other social media sites the amount and status of short interest in our securities and the potential for a short squeeze whereby short sellers are forced to cover their open positions access to margin debt trading in options and other derivatives on our common stock and other technical trading factors changes in our funds from operations or earnings estimates changes in the ability of our Centers to generate sufficient revenues to meet operating and other expenses Anchor or tenant bankruptcies closures mergers or consolidations local economic and real estate conditions in geographic locations where we have a high concentration of Centers competition by public or private
mall companies or others including competition for both acquisition of Centers and for tenants to occupy space the ability of our tenants to pay rent and meet their other obligations to us under current lease terms and our ability to lease space on favorable terms the success of our acquisition and real estate development strategy our ability to comply with the financial covenants in our debt agreements and the impact of restrictive covenants in our debt agreements our access to financing inflation and elevated interest rates the potential impact of tariffs the risk of our failure to qualify or maintain our status as a REIT our ability to comply with our joint venture agreements and other risks associated with our joint venture investments possible uninsured losses including losses from casualty events or natural disasters and possible environmental liabilities adverse impacts from any future pandemic epidemic or outbreak of any highly infectious disease on the U S regional and global economies and on our financial condition and results of operations and the financial condition and results of operations of our tenants a decision by any of our significant stockholders to sell substantial amounts of our common stock any future issuances of equity securities and the realization of any of the other risk factors included in this Annual Report on Form 10 K
Under the limited partnership agreement of the Operating Partnership we as the sole general partner are responsible for the management of the Operating Partnership s business and affairs Conflicts of interest may exist or could arise in the future as a result of the relationships between us and our affiliates on the one hand and our Operating Partnership or any of its partners on the other Our directors and officers have duties to our Company under Maryland law in connection with their management of our Company At the same time we have duties and obligations to our Operating Partnership and its limited partners under Delaware law as modified by the partnership agreement of our Operating Partnership in connection with the management of our Operating Partnership as the sole general partner Our duties and obligations as the general partner of our Operating Partnership may come into conflict with the duties of our directors and officers to our Company and our stockholders
We own partial interests in property partnerships that own 13 Joint Venture Centers and one development property as well as several development sites We may acquire partial interests in additional properties through joint venture arrangements Investments in Joint Venture Centers involve risks different from those of investments in Wholly Owned Centers
We have fiduciary responsibilities to our joint venture partners that could affect decisions concerning the Joint Venture Centers Our partners in certain Joint Venture Centers notwithstanding our majority legal ownership share control of major decisions relating to the Joint Venture Centers including decisions with respect to sales refinancings and the timing and amount of additional capital contributions as well as decisions that could have an adverse impact on us
Furthermore if one of our joint venture partners filed for bankruptcy it could materially and adversely affect the respective property or properties Pursuant to the bankruptcy code we could be precluded from taking some actions affecting the estate of our joint venture partner without prior court approval which would in most cases entail prior notice to other parties and a hearing At a minimum the requirement to obtain court approval may delay the actions we would or might want to take If the relevant joint venture through which we have invested in a Joint Venture Center has incurred recourse obligations the discharge in bankruptcy of one of the joint venture partners might result in our ultimate liability for a greater portion of those obligations than would otherwise be required
Our legal ownership interest in a joint venture vehicle may at times not equal our economic interest in the entity because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances allocations of profits and losses and payments of preferred returns As a result our actual economic interest as distinct from our legal ownership interest in certain of the Joint Venture Centers could fluctuate from time to time and may not wholly align with our legal ownership interests Substantially all of our joint venture agreements contain rights of first refusal buy sell provisions exit rights default dilution remedies and or other break up provisions or remedies which are customary in real estate joint venture agreements and which may positively or negatively affect the ultimate realization of cash flow and or capital or liquidation proceeds
Because we conduct our operations through the Operating Partnership our ability to service our debt obligations and pay dividends to our stockholders is strictly dependent upon the earnings and cash flows of the Operating Partnership and the ability of the Operating Partnership to make distributions to us Under the Delaware Revised Uniform Limited Partnership Act the Operating Partnership is prohibited from making any distribution to us to the extent that at the time of the distribution after giving effect to the distribution all liabilities of the Operating Partnership other than some non recourse liabilities and some liabilities to the partners exceed the fair value of the assets of the Operating Partnership An inability to make cash distributions from the Operating Partnership could jeopardize our ability to maintain qualification as a REIT
In order for us to maintain our qualification as a REIT not more than 50 in value of our outstanding stock after taking into account certain options to acquire stock may be owned directly or indirectly or through the application of certain attribution rules by five or fewer individuals as defined in the Internal Revenue Code of 1986 as amended the Code to include some entities that would not ordinarily be considered individuals at any time during the last half of a taxable year To assist us in maintaining our qualification as a REIT among other purposes our Charter restricts ownership of more than 5 the Ownership Limit of the lesser of the number or value of our outstanding shares of stock by any single stockholder or a group of stockholders with limited exceptions In addition to enhancing preservation of our status as a REIT the Ownership Limit may
have the effect of delaying deferring or preventing a change in control of us or other transaction without the approval of our board of directors even if the change in control or other transaction is in the best interests of our stockholders and
limit the opportunity for our stockholders to receive a premium for their common stock or preferred stock that they might otherwise receive if an investor were attempting to acquire a block of stock in excess of the Ownership Limit or otherwise effect a change in control of us
Our board of directors in its sole discretion may waive or modify subject to limitations and upon any conditions as it may direct the Ownership Limit with respect to one or more of our stockholders if it is satisfied that ownership in excess of this limit will not jeopardize our status as a REIT
Some of the provisions of our Charter and bylaws may have the effect of delaying deferring or preventing a third party from making an acquisition proposal for us and may inhibit a change in control that holders of some or a majority of our shares might believe to be in their best interests or that could give our stockholders the opportunity to realize a premium over the then prevailing market prices for our shares These provisions include the following
Certain provisions of the Maryland General Corporation Law the MGCL may have the effect of delaying deferring or preventing a third party from making an acquisition proposal for us and may inhibit a change in control that holders of some or a majority of our shares might believe to be in their best interests or that could give our stockholders the opportunity to realize a premium over the then prevailing market prices for our shares including
Business Combination provisions that subject to limitations prohibit certain business combinations between us and an interested stockholder defined generally as any person who beneficially owns 10 or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who at any time within the two year period immediately prior to the date in question was the beneficial owner of 10 or more of our then outstanding stock or an affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter may impose special appraisal rights and special stockholder voting requirements on these combinations and
Control Share provisions that provide that holders of control shares of our Company defined as shares which when aggregated with other shares controlled by the stockholder entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors acquired in a control share acquisition defined as the direct or indirect acquisition of ownership or control of control shares have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two thirds of all the votes entitled to be cast on the matter excluding all interested shares
As permitted by the MGCL our Charter contains certain exemptions from the business combination provisions The MGCL also allows the board of directors to exempt particular business combinations before the interested stockholder becomes an interested stockholder Furthermore a person is not an interested stockholder if the transaction by which he or she would otherwise have become an interested stockholder is approved in advance by the board of directors
Additionally pursuant to a provision in our bylaws we have opted out of the control share acquisition provisions of the MGCL However in the future we may without the approval of our stockholders by amendment to our bylaws opt in to the control share provisions of the MGCL The MGCL and our Charter also contain supermajority voting requirements with respect to our ability to amend certain provisions of our Charter merge or sell all or substantially all of our assets
Furthermore our board of directors has adopted a resolution prohibiting us from electing to be subject to the provisions of Title 3 Subtitle 8 of the MGCL that would among other things permit our board of directors to classify the board without stockholder approval Such provisions of Title 3 Subtitle 8 of the MGCL could have an anti takeover effect We may only elect to be subject to the classified board provisions of Title 3 Subtitle 8 after first obtaining the approval of our stockholders
We believe that we currently qualify as a REIT No assurance can be given that we will remain qualified as a REIT Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations The complexity of these provisions and of the applicable income tax regulations is greater in the case of a REIT structure like ours that holds assets through the Operating Partnership and joint ventures The determination of various factual matters and circumstances not entirely within our control including determinations by our partners in the Joint Venture Centers may affect our continued qualification as a REIT In addition legislation new regulations administrative interpretations or court decisions could significantly change the tax laws with respect to our qualification as a REIT or the U S federal income tax consequences of that qualification
In addition we currently hold certain of our properties through subsidiaries that have elected to be taxed as REITs and we may in the future determine that it is in our best interests to hold one or more of our other properties through one or more subsidiaries that elect to be taxed as REITs If any of these subsidiaries fails to qualify as a REIT for U S federal income tax purposes then we may also fail to qualify as a REIT for U S federal income tax purposes
In addition if we were to lose our REIT status we would be prohibited from qualifying as a REIT for the four taxable years following the year during which the qualification was lost absent relief under statutory provisions As a result net income and the funds available for distributions to our stockholders would be reduced for at least five years and the fair market value of our shares could be materially adversely affected Furthermore the Internal Revenue Service could challenge our REIT status for past periods Such a challenge if successful could result in us owing a material amount of tax interest and penalties for prior periods It is possible that future economic market legal tax or other considerations might cause our board of directors to revoke our REIT election
Even if we remain qualified as a REIT we might face other tax liabilities that reduce our cash flow Further we might be subject to federal state and local taxes on our income and property Any of these taxes would decrease cash available for distributions to stockholders
In order to qualify as a REIT for U S federal income tax purposes we must satisfy tests concerning among other things our sources of income the nature of our assets the amounts we distribute to our stockholders and the ownership of our stock We may also be required to make distributions to our stockholders at disadvantageous times or when we do not have funds readily available for distribution Thus compliance with REIT requirements may cause us to forego opportunities we would otherwise pursue
In addition the REIT provisions of the Code impose a 100 tax on income from prohibited transactions Prohibited transactions generally include sales of assets that do not qualify for a statutory safe harbor if such assets constitute inventory or other property held for sale in the ordinary course of business other than foreclosure property This 100 tax could impact our desire to sell assets and other investments at otherwise opportune times if we believe such sales could be considered prohibited transactions
As a REIT we generally must distribute 90 of our annual taxable income subject to certain adjustments to our stockholders From time to time we might generate taxable income greater than our net income for financial reporting purposes or our taxable income might be greater than our cash flow available for distributions to our stockholders If we do not have other funds available in these situations we might be unable to distribute 90 of our taxable income as required by the REIT rules In that case we would need to borrow funds liquidate or sell a portion of our properties or investments potentially at disadvantageous or unfavorable prices in certain limited cases distribute a combination of cash and stock at our stockholders election but subject to an aggregate cash limit established by the Company or find another alternative source of funds These alternatives could increase our costs or reduce our equity In addition to the extent we borrow funds to pay distributions the amount of cash available to us in future periods will be decreased by the amount of cash flow we will need to service principal and interest on the amounts we borrow which will limit cash flow available to us for other investments or business opportunities
If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable we may face adverse consequences and if the laws applicable to such transactions are amended or repealed we may not be able to dispose of properties on a tax deferred basis Section 1031 Exchanges now only apply to real property and do not apply to any related personal property transferred with the real property As a result any appreciated personal property that is transferred in connection with a Section 1031 Exchange of real property will cause gain to be recognized and such gain is generally treated as non qualifying income for the 95 and 75 gross income tests Any such non qualifying income could have an adverse effect on our REIT status
We intend to maintain the status of the Operating Partnership as a partnership for federal income tax purposes However if the Internal Revenue Service were to successfully challenge the status of the Operating Partnership as an entity taxable as a partnership the Operating Partnership would be taxable as a corporation This would reduce the amount of distributions that the Operating Partnership could make to us This could also result in our losing REIT status with the consequences described above This would substantially reduce the cash available to us to make distributions and the return on your investment In addition if any of the partnerships or limited liability companies through which the Operating Partnership owns its property in whole or in part loses its characterization as a partnership or disregarded entity for federal income tax purposes it would be subject to taxation as a corporation thereby reducing distributions to the Operating Partnership Such a recharacterization of an underlying entity could also threaten our ability to maintain REIT status
In recent years numerous legislative judicial and administrative changes have been made to the U S federal income tax laws applicable to investments similar to an investment in our stock Additional changes to tax laws are likely to continue in the future and we cannot assure you that any such changes will not adversely affect the taxation of us or our stockholders
The Company under the oversight of the Audit Committee of its Board of Directors has implemented and maintains a cybersecurity risk management program that includes processes for the systematic identification assessment and treatment through mitigation transfer avoidance and or acceptance of cybersecurity risks This program extends to third party vendors and the various properties under the Company s management including corporate and commercial properties through establishing vendor risk requirements and conducting vendor risk assessments
This risk management program addresses but is not limited to risks identified by external auditors and assessors internal auditors and assessors threat intelligence providers internal stakeholders vulnerability management programs and security management programs An internal audit team at the Company manages and maintains remediation strategies for identified risks and reports on them regularly to senior leadership As part of the Company s cyber risk management program the Company has engaged external independent assessors to conduct cyber risk assessments evaluate cyber risk management controls and report both findings and recommendations to management
The Company like other companies in its industry faces a number of cybersecurity risks in connection with its business Although such risks have not materially affected the Company including its business strategy results of operations or financial condition to date the Company has from time to time experienced threats to and security incidents related to its data and systems For more information about the cybersecurity risks the Company faces see Item 1A Risk Factors
The Company s cyber risk management program and related operations and processes are directed by the Senior Vice President of Information Technology the SVP IT Currently the SVP IT role is held by an individual who has over twenty five years of cybersecurity information technology and systems engineering experience The SVP IT meets with the Chief Financial Officer and Chief Legal Officer quarterly to monitor and review the outcomes of the Company s cybersecurity risk management processes and to discuss and decide matters related to cybersecurity risk treatment strategy including mitigations
The Company also formed the Business Continuity Plan BCP and Cyber Security Risk Committee the Security Committee which oversees the prioritization and escalation of risks from cybersecurity threats to senior leadership is chaired by the SVP IT and the Executive Vice President of Portfolio Operations and People The Security Committee reports to the Chief Financial Officer and Chief Legal Officer and the committee s members include senior company leadership responsible for asset management risk management property management marketing and business development Collectively the Security Committee members possess experience in information security risk management oversight and legal compliance
The Company s Board of Directors plays an important role in risk oversight and discharges its duties both as a full board and through its committees The Board has delegated oversight of risk management matters including cybersecurity and information technology matters to its Audit Committee As reflected in the Audit Committee charter the committee is responsible for reviewing information technology cybersecurity and other data protection strategies and plans as well as assessing incident response protocols The Security Committee provides quarterly reports to the Audit Committee and the SVP IT attends board meetings yearly or more frequently as appropriate to inform the Company s Board of Directors on cybersecurity risks
Additionally the Company is subject to the requirements of the Sarbanes Oxley Act of 2002 and information technology general controls are an important part of the Company s internal control over financial reporting and are subject to controls testing Control deficiencies that represent cybersecurity risks would be reported by management to the Audit Committee
The Company s ownership interest in this table reflects its direct or indirect legal ownership interest Legal ownership may at times not equal the Company s economic interest in the listed properties because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances allocations of profits and losses and payments of preferred returns As a result the Company s actual economic interest as distinct from its legal ownership interest in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests Substantially all of the Company s joint venture agreements contain rights of first refusal buy sell provisions exit rights default dilution remedies and or other break up provisions or remedies which are customary in real estate joint venture agreements and which may positively or negatively affect the ultimate realization of cash flow and or capital or liquidation proceeds See Item 1A Risks Related to Our Organizational Structure Outside partners in Joint Venture Centers result in additional risks to our stockholders
The Company owned or had an ownership interest in 40 Regional Retail Centers including office hotel and residential space adjacent to these shopping centers two community power shopping centers and one redevelopment property With the exception of the seven Centers indicated with footnote 5 in the table above the underlying land controlled by the Company is owned in fee entirely by the Company or in the case of Joint Venture Centers by the joint venture property partnership or limited liability company With respect to these seven Centers portions of the underlying land controlled by the Company are owned by third parties and leased to the Company or the joint venture property partnership or limited liability company pursuant to long term ground leases The termination dates of the ground leases range from 2038 to 2078
Total GLA includes GLA attributable to Anchors whether owned or non owned and Mall and Freestanding Stores as of December 31 2024 Non owned Anchors is space not owned by the Company or in the case of Joint Venture Centers by the joint venture property partnership or limited liability company which is occupied by Anchor tenants Company owned Anchors is space owned or leased by the Company or in the case of Joint Venture Centers by the joint venture property partnership or limited liability company and leased or subleased to Anchor
These Centers have vacant Anchor locations that are owned by the Company or its joint venture The Company is actively seeking replacement tenants or has entered into replacement leases for many of these vacant sites and or is currently executing 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
The Company owns an office building and two stores located at shopping centers not owned by the Company Of the two stores one has been leased to Kohl s and one has been leased for non Anchor use With respect to the office building the underlying land is owned in fee entirely by the Company With respect to the two stores the underlying land is owned by third parties and leased to the Company pursuant to long term building or ground leases Under the terms of a typical building or ground lease the Company pays rent for the use of the building or land and is generally responsible for all costs and expenses associated with the building and improvements In some cases the Company has an option or right of first refusal to purchase the land The two ground leases terminate in years 2027 and 2028
Construction started in summer 2021 on the first phase of a multi phase multi year project to convert the former regional retail center Paradise Valley Mall into a mixed used development with high end grocery restaurants multi family residences offices retail shops and other elements on the 92 acre site The first phase began opening in the fourth quarter of 2024 The existing Costco and JCPenney stores currently remain open and have been open during the entire construction period
The following table sets forth certain information regarding the mortgages encumbering the Centers including those Centers in which the Company has less than a 100 interest The information set forth below is as of December 31 2024 dollars in thousands
The mortgage notes payable balances include the unamortized debt discounts Debt discounts represent the deficiency of the fair value of debt under the principal value of debt assumed in various acquisitions The debt discounts are being amortized into interest expense over the term of the related debt in a manner which approximates the effective interest method
The mortgage notes payable balances also include unamortized deferred finance costs that are amortized into interest expense over the remaining term of the related debt in a manner that approximates the effective interest method Unamortized deferred finance costs at December 31 2024 were 22 0 million for Consolidated Centers and 7 1 million for Unconsolidated Joint Venture Centers at the Company s pro rata share
The maturity date assumes that all extension options are fully exercised and that the Company does not opt to refinance the debt prior to these dates These extension options are at the Company s discretion subject to certain conditions which the Company believes will be met
On May 14 2024 the Company acquired the remaining 40 ownership interest in Arrowhead Towne Center that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
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 January 3 2023 the Company closed on a five year 370 0 million combined refinance of Green Acres Mall and Green Acres Commons The new interest only loan bears interest at a fixed rate of 5 90 and matures on January 6 2028
On October 24 2024 the Company acquired the remaining 40 ownership interest in Lakewood Center that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
On October 24 2024 the Company acquired the remaining 40 ownership interest in Los Cerritos Center that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
On October 28 2024 the Company closed a 525 0 million five year refinance of the loan on Queens Center The new loan bears interest at a fixed rate of 5 37 is interest only during the entire loan term and matures November 6 2029
On December 9 2022 the Company closed on a three year extension of the loan to December 9 2025 including extension options The interest rate remained unchanged at LIBOR plus 1 48 and has converted to 1 month Term SOFR plus 1 52 effective July 9 2023 The loan was covered by an interest rate cap agreement that effectively prevented LIBOR from exceeding 4 0 during the period ending December 9 2023 The interest rate cap agreement was converted to 1 month Term SOFR effective July 9 2023 The interest rate cap agreement was extended with a 4 strike rate to December 9 2024 and was not renewed upon its maturity Effective April 9 2024 the loan is in default and accrues incremental default interest of 4 The Company is in negotiations with the lender on the terms of this non recourse loan
On May 14 2024 the Company acquired the remaining 40 ownership interest in South Plains Mall that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
On August 22 2024 the Company replaced the existing loan with an 85 0 million loan that bears interest at a fixed rate of 6 72 is interest only during the entire loan term and matures on September 6 2034
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 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 On June 27 2024 the Company s joint venture in Chandler Fashion Center refinanced the existing 256 0 million loan on the
The loan bore interest at SOFR plus 3 70 and was covered by an interest rate cap agreement that effectively prevented SOFR from exceeding 4 0 through February 15 2024 and 5 0 through February 9 2025 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
To maintain its qualification as a REIT the Company is required each year to distribute to stockholders at least 90 of its net taxable income after certain adjustments The Company paid all of its 2024 and 2023 quarterly dividends in cash The timing amount and composition of future dividends will be determined in the sole discretion of the Company s Board of Directors and will depend on actual and projected cash flow financial condition funds from operations earnings capital requirements annual REIT distribution requirements contractual prohibitions or other restrictions applicable law and such other factors as the Board of Directors deems relevant For example under the Company s existing financing arrangements the Company may pay cash dividends and make other distributions based on a formula derived from funds from operations See Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations Funds From Operations FFO and only if no default under the financing agreements has occurred unless under certain circumstances payment of the distribution is necessary to enable the Company to continue to qualify as a REIT under the Code
The following graph provides a comparison from December 31 2019 through December 31 2024 of the yearly percentage change in the cumulative total stockholder return assuming reinvestment of dividends of the Company the Standard Poors S P Midcap 400 Index and the FTSE Nareit Equity Retail Index The FTSE Nareit Equity Retail Index is an industry index of publicly traded REITs that include the Company
Upon written request directed to the Secretary of the Company the Company will provide any stockholder with a list of the REITs included in the FTSE Nareit Equity Retail Index The historical information set forth below is not necessarily indicative of future performance
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 Operating Partnership As of December 31 2024 the Operating Partnership owned or had an ownership interest in 40 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 REIT and conducts all of its operations through the Operating Partnership and the Management Companies
The following discussion is based primarily on the consolidated financial statements of the Company for the years ended December 31 2024 2023 and 2022 It compares the results of operations and cash flows for the year ended December 31 2024 to the results of operations and cash flows for the year ended December 31 2023 Also included is a comparison of the results of operations and cash flows for the year ended December 31 2023 to the results of operations and cash flows for the year ended December 31 2022 This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto
On August 2 2022 the Company acquired the remaining 50 ownership interest in two former Sears parcels Deptford Mall and Vintage Faire Mall in MS Portfolio LLC the Company s joint venture with Seritage Growth Properties Seritage for a total purchase price of 24 5 million Effective as of August 2 2022 the Company now owns and has consolidated its 100 interest in these two former Sears parcels in its consolidated financial statements See Note 15 Acquisitions in the Notes to the Consolidated Financial Statements
On May 18 2023 the Company acquired Seritage s remaining 50 ownership interest in the MS Portfolio LLC joint venture that owned 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 See Note 15 Acquisitions in the Notes to the 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 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
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 October 24 2024 the Company acquired its joint venture partner s 40 interest in the Pacific Premier Retail Trust portfolio which included Los Cerritos Center Washington Square and Lakewood Center for a net purchase price of approximately 122 1 million which included 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
For the twelve months ended December 31 2022 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 23 9 million The Company used its share of the proceeds from these sales of 60 3 million to pay down debt and for other general corporate purposes
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 0 million The existing 324 6 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
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
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 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
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
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
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
On February 2 2022 the Company s joint venture in FlatIron Crossing replaced the existing 197 0 million loan on the property with a new 175 0 million loan that bore interest at SOFR plus 3 70 and matured on February 9 2025 The loan was covered by an interest rate cap agreement that effectively prevented SOFR from exceeding 4 0 through February 15 2024 and 5 0 through February 9 2025
On July 1 2022 the Company further extended the loan maturity on Danbury Fair Mall to July 1 2023 The interest rate remained unchanged at 5 5 and the Company repaid 10 0 million of the outstanding loan balance at closing
On November 14 2022 the Company s joint venture in Washington Square extended the maturity date on the 503 0 million loan on the property to November 1 2026 including extension options The loan bore interest at a floating interest rate of SOFR plus 4 0 subject to an interest rate cap agreement that effectively prevented SOFR from exceeding 4 0 through November 1 2024 The joint venture repaid 15 0 million 9 0 million at the Company s pro rata share of the loan at closing
On December 9 2022 the Company extended the maturity date on the 300 0 million loan on Santa Monica Place to December 9 2025 including extension options The loan previously bore interest at a floating interest rate of LIBOR plus 1 48 and converted to 1 month Term SOFR plus 1 52 effective July 9 2023
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 was 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 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 subsequently sold the property on June 28 2024 and the remaining amount owed by the joint venture was forgiven by the lender
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 525 0 million credit agreement and provides for an aggregate 650 0 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 0 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 See Liquidity and Capital Resources
Effective October 6 2023 the Company s 86 5 million loan on Fashion Outlets of Niagara Falls was in default On March 19 2024 the Company closed a three year extension of the 84 7 million loan on Fashion Outlets of Niagara Falls The scheduled outstanding 1 8 million principal payments were applied at closing The extended loan bears the same fixed interest rate of 5 90 and matures on October 6 2026
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 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 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
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
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
Most of the leases at the Centers have rent adjustments periodically throughout the lease term These rent increases are either in fixed increments or based on using an annual multiple of increases in the Consumer Price Index In addition the routine expiration of leases for spaces 10 000 square feet and under each year See Item 1 Business of the Company Lease Expirations enables the Company to replace existing leases with new leases at higher base rents if the rents of the existing leases are below the then existing market rate The Company has generally entered into leases that require tenants to pay a stated amount for operating expenses generally excluding property taxes regardless of the expenses actually incurred at any Center which places the burden of cost control on the Company Additionally most leases require the tenants to pay their pro rata share of property taxes and utilities Inflation had a negative impact on the Company s costs in 2024 and is expected to continue to have a negative impact on the Company s costs in 2025
The preparation of financial statements prepared in accordance with generally accepted accounting principles in the United States of America GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period Actual results could differ from those estimates
Some of these estimates and assumptions include judgments on revenue recognition estimates for common area maintenance and real estate tax accruals provisions for uncollectible accounts impairment of long lived assets the allocation of purchase price between tangible and intangible assets capitalization of costs and fair value measurements The Company s significant accounting policies and estimates are described in more detail in Note 2 Summary of Significant Accounting Policies in the Company s Notes to the Consolidated Financial Statements However the following policies are deemed to be critical
Upon the acquisition of real estate properties the Company evaluates whether the acquisition is a business combination or asset acquisition For both business combinations and asset acquisitions the Company allocates the purchase price of properties to acquired tangible assets and intangible assets and liabilities For asset acquisitions the Company capitalizes transaction costs and allocates the purchase price using a relative fair value method allocating all accumulated costs For business combinations the Company expenses transaction costs incurred and allocates purchase price based on the estimated fair value of each separately identified asset and liability The Company allocates the estimated fair value of acquisitions to land building tenant improvements and identified intangible assets and liabilities based on their estimated fair values In addition any assumed mortgage notes payable are recorded at their estimated fair values The estimated fair value of the land and buildings is determined utilizing an as if vacant methodology Tenant improvements represent the tangible assets associated with the existing leases valued on a fair value basis at the acquisition date prorated over the remaining lease terms The tenant improvements are classified as an asset under property and are depreciated over the remaining lease terms Identifiable intangible assets and liabilities relate to the value of in place operating leases which come in three forms i leasing commissions and legal costs which represent the value associated with cost avoidance of acquiring in place leases such as lease commissions paid under terms generally experienced in the Company s markets ii value of in place leases which represents the estimated loss of revenue and of costs incurred for the period required to lease the assumed vacant property to the occupancy level when purchased and iii above or below market value of in place leases which represents the difference between the contractual rents and market rents at the time of the acquisition discounted for tenant credit risks Leasing commissions and legal costs are recorded in deferred charges and other assets and are amortized over the remaining lease terms The value of in place leases are recorded in deferred charges and other assets and amortized over the remaining lease terms plus any below market fixed rate renewal options Above or below market leases are classified in deferred charges and other assets or in other accrued liabilities depending on whether the contractual terms are above or below market and the asset or liability is amortized to minimum rents over the remaining terms of the leases The remaining lease terms of below market leases may include certain below market fixed rate renewal periods In considering whether or not a lessee will execute a below market fixed rate lease renewal option the Company evaluates economic factors and certain qualitative factors at the time of acquisition such as tenant mix in the Center the Company s relationship with the tenant and the availability of competing tenant space
Remeasurement gains are recognized when the Company becomes the primary beneficiary of an existing equity method investment that is a variable interest entity to the extent that the fair value of the existing equity investment exceeds the carrying value of the investment and remeasurement losses are recognized to the extent the carrying value of the investment exceeds the fair value The fair value is determined based on a discounted cash flow model with the significant unobservable inputs including discount rate terminal capitalization rate and market rents
The Company assesses whether an indicator of impairment in the value of its properties exists by considering expected future operating income trends and prospects as well as the effects of demand competition and other economic factors Such factors include projected rental revenue operating costs and capital expenditures as well as capitalization rates and estimated holding periods The Company generally holds and operates its properties long term which decreases the likelihood of their carrying values not being recoverable Changes in events or changes in circumstances may alter the expected hold period of an asset or asset group which may result in an impairment loss and such loss could be material to the Company s financial condition or operating performance If the carrying value of the property exceeds the estimated undiscounted cash flows an impairment loss is recognized equal to the excess of carrying value over its estimated fair value Properties classified as held for sale are measured at the lower of the carrying amount or fair value less cost to sell
The estimated fair value of a property is typically determined through a discounted cash flow analysis or based upon a contracted sales price The discounted cash flow method includes significant unobservable inputs including the discount rate terminal capitalization rate and market rents Cash flow projections and rates are subject to management s judgment and changes in those assumptions could impact the estimation of fair value
The Company s investments in unconsolidated joint ventures apply the same accounting model for property level impairment as described above Further the Company reviews its investments in unconsolidated joint ventures for a series of operating losses and other factors that may indicate that a decrease in the value of its investments has occurred which is other than temporary The investment in each unconsolidated joint venture is evaluated periodically and as deemed necessary for recoverability and valuation declines that are other than temporary The Company records any such impairment up to the extent of its investment
The fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity s own assumptions about market participant assumptions
Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly Level 2 inputs may include quoted prices for similar assets and liabilities in active markets as well as inputs that are observable for the asset or liability other than quoted prices such as interest rates foreign exchange rates and yield curves that are observable at commonly quoted intervals Level 3 inputs are unobservable inputs for the asset or liability which is typically based on an entity s own assumptions as there is little if any related market activity In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety The Company s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability
The Company calculates the fair value of financial instruments and includes this additional information in the Notes to the Consolidated Financial Statements when the fair value is different than the carrying value of those financial instruments When the fair value reasonably approximates the carrying value no additional disclosure is made
The Company recorded its financing arrangement See Note 12 Financing Arrangement in the Company s Notes to the Consolidated Financial Statements obligation at fair value on a recurring basis with changes in fair value being recorded as interest income or expense in the Company s consolidated statements of operations The fair value was determined based on a discounted cash flow model with the significant unobservable inputs including discount rate terminal capitalization rate and market rents The fair value of the financing arrangement obligation was sensitive to these significant unobservable inputs and a change in these inputs may result in a significantly higher or lower fair value measurement
Many of the variations in the results of operations discussed below occurred because of the transactions affecting the Company s properties described above including those related to the Redevelopment Properties the JV Transition Centers and the Disposition Properties each as defined below
For purposes of the discussion below the Company defines Same Centers as those Centers that are substantially complete and in operation for the entirety of both periods of the comparison Non Same Centers for comparison purposes include those Centers or properties that are going through a substantial redevelopment often resulting in the closing of a portion of the Center Redevelopment Properties those properties that have recently transitioned to or from equity method joint ventures to or from consolidated assets JV Transition Centers and properties that have been disposed of Disposition Properties The Company moves a Center in and out of Same Centers based on whether the Center is substantially complete and in operation for the entirety of both periods of the comparison Accordingly the Same Centers consist of all Consolidated Centers excluding the Redevelopment Properties the JV Transition Centers Santa Monica Place and the Disposition Properties for the periods of comparison Santa Monica Place is excluded from Same Centers due to the Company s default on the non recourse loan on April 9 2024
For the comparison of the year ended December 31 2024 to the year ended December 31 2023 the Redevelopment Properties are Green Acres Mall and Fashion District Philadelphia For the comparison of the year ended December 31 2023 to the year ended December 31 2022 there are no Redevelopment Properties
For the comparison of the year ended December 31 2024 to the year ended December 31 2023 the JV Transition Centers are Arrowhead Towne Center Chandler Fashion Center Lakewood Center Los Cerritos Center Washington Square
South Plains Mall and the five former Sears parcels located at Chandler Fashion Center Danbury Fair Mall Freehold Raceway Mall Los Cerritos Center and Washington Square See Acquisitions in Management s Overview and Summary and for the comparison of the year ended December 31 2023 to the year ended December 31 2022 the JV Transition Centers are the two former Sears parcels at Deptford Mall and Vintage Faire Mall the five former Sears parcels at Chandler Fashion Center Danbury Fair Mall Freehold Raceway Mall Los Cerritos Center and Washington Square
For the comparison of the year ended December 31 2024 to the year ended December 31 2023 the Disposition Properties are The Oaks The Marketplace at Flagstaff Southridge Mall Superstition Springs Power Center Towne Mall and a former department store parcel at Valle Vista Mall See Dispositions in Management s Overview and Summary and for the comparison of the year ended December 31 2023 to the year ended December 31 2022 the Disposition Properties are The Marketplace at Flagstaff Superstition Springs Power Center and Towne Mall
Unconsolidated joint ventures are reflected using the equity method of accounting The Company s pro rata share of the results from these Centers is reflected in the Consolidated Statements of Operations as equity in loss of unconsolidated joint ventures
The Company considers tenant annual sales occupancy rates excluding large retail stores or Anchors and releasing spreads i e a comparison of initial average base rent per square foot on leases executed during the trailing twelve months to average base rent per square foot at expiration for the leases expiring during the trailing twelve months based on the spaces 10 000 square feet and under to be key performance indicators of the Company s internal growth
During the trailing twelve months ended December 31 2024 comparable tenant sales for spaces less than 10 000 square feet across the portfolio decreased by 0 4 relative to the twelve months ended December 31 2023 The leased occupancy rate of 94 1 at December 31 2024 represented a 0 6 increase from 93 5 at December 31 2023 and a 0 4 sequential increase compared to the 93 7 occupancy rate at September 30 2024 Releasing spreads increased as the Company executed leases at an average rent of 67 74 for new and renewal leases executed compared to 62 27 on leases expiring resulting in a releasing spread increase of 5 47 per square foot or 8 8 for the trailing twelve months ended December 31 2024 This was the Company s thirteenth consecutive quarter of positive base rent leasing spreads
The Company continues to renew or replace leases that are scheduled to expire in 2025 however due to a variety of factors the Company cannot be certain of its ability to sign renew or replace leases expiring in 2025 or beyond These leases that are scheduled to expire represent approximately 1 4 million square feet of the Centers accounting for 23 25 of the GLA of mall stores and freestanding stores for spaces 10 000 square feet and under as of December 31 2024 These calculations exclude Centers under development or redevelopment and property dispositions See Acquisitions Dispositions and Redevelopment and Development Activities in Management s Overview and Summary and include square footage of Centers owned by joint ventures at the Company s share
As of December 31 2024 the Company has executed renewal leases or commitments on 47 of its square footage expiring in 2025 which leases are expected to commence throughout 2025 and 2026 and another 32 of such expiring space is in the letter of intent stage Excluding those leases the remaining leases expiring in 2025 which represent approximately 600 000 square feet of the Centers are in the prospecting stage
The Company has entered into 91 leases for new stores totaling approximately 0 9 million square feet that have opened or are planned for opening in 2025 and another 13 leases for new stores totaling approximately 300 000 square feet opening after 2025 In total through 2028 new store leases are expected to produce total rent of approximately 66 million at the Company s pro rata share in excess of the rent generated from prior uses in those same spaces While there may be additional new space openings in 2025 any such leases are not yet executed
During the trailing twelve months ended December 31 2024 the Company signed 229 new leases and 651 renewal leases comprising approximately 3 7 million square feet of GLA of which 2 2 million square feet is related to the consolidated Centers The average tenant allowance was 17 02 per square foot
During the second quarter of 2024 the Company unveiled 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
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
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 Although the majority of the key performance indicators at the Centers continued to improve during 2024 operating results have been and are expected to continue to be negatively impacted by certain external factors including sustained inflation and elevated interest rates as well as the impact from the 2024 bankruptcy of Express and any future tenant bankruptcies
Traffic levels at the Company s Centers for 2024 increased 1 6 over 2023 levels Comparable tenant sales from spaces less than 10 000 square feet across the portfolio for the trailing twelve months ended December 31 2024 decreased by 0 4 compared to the same period in 2023 Portfolio tenant sales per square foot for spaces less than 10 000 square feet for the trailing twelve months ended December 31 2024 were 837 compared to 836 for the twelve months ended December 31 2023
During 2024 the Company signed 880 new and renewal leases for approximately 3 7 million square feet compared to 763 leases and 3 8 million square feet signed during 2023 This leasing volume represented a 15 3 increase in the number of leases and a 3 9 decrease in the amount of square footage leased compared to the same period in 2023 on a comparable basis
The Company believes that diversity of use within its tenant base has been and will continue to be a prominent internal growth catalyst at its Centers going forward as new uses enhance the productivity and diversity of the tenant mix and have the potential to significantly increase customer traffic at the applicable Centers During the year ended December 31 2024 the Company signed leases for new stores with new to Macerich portfolio uses for over 225 000 square feet with another 200 000 square feet of such new to Macerich portfolio leases currently in negotiation as of the date of this Annual Report on Form 10 K
As of December 31 2024 the leased occupancy rate increased to 94 1 a 0 6 increase compared to the leased occupancy rate of 93 5 at December 31 2023 and a 0 4 sequential increase compared to the leased occupancy rate of 93 7 at September 30 2024
Many of the Company s leases contain co tenancy clauses Certain Anchor or small tenant closures have become permanent whether caused by the pandemic or otherwise and co tenancy clauses within certain leases may be triggered as a result The Company does not anticipate that the negative impact of such clauses on lease revenue will be significant
The pace of bankruptcy filings involving the Company s tenants has remained steady in recent years but is substantially lower than 2021 levels For the year ended December 31 2024 there were 13 bankruptcy filings involving the Company s tenants including the bankruptcy of Express announced on April 22 2024 totaling 54 leases and representing approximately 369 000 square feet of leased space and 21 7 million of annual leasing revenue at the Company s share Based on current information and market data the Company expects that the pace of bankruptcy filings in 2025 will continue to be lower than the average bankruptcy rate over the last decade
During 2025 the Company expects to generate positive cash flow after recurring operating capital expenditures leasing capital expenditures and payment of dividends This assumption does not include any potential capital generated from dispositions refinancings or issuances of common stock To the extent available any excess cash flow may be used to fund the Company s development and redevelopment pipeline and or to de lever the Company s balance sheet
The Company continues to actively address its near term non recourse loan maturities with eight completed transactions since the beginning of 2024 Since January 1 2024 the Company has refinanced or extended eight loans totaling approximately 1 4 billion or approximately 1 2 billion at the Company s pro rata share For additional information on the Company s financing transactions in 2024 through the date of this Annual Report on Form 10 K see Financing Activities and Liquidity and Capital Resources
Elevated interest rates have increased and may continue to increase the cost of the Company s borrowings due to its outstanding floating rate debt and have led and may continue to lead to higher interest rates on new fixed rate debt While interest rates have begun to decrease they remain elevated and the Company expects to incur increased interest expense from the refinancing or extension of loans that may currently carry below market interest rates In certain cases the Company has limited and may continue to limit its exposure to interest rate fluctuations related to a portion of its floating rate debt by using interest rate cap and swap agreements Such agreements subject to current market conditions allow the Company to replace floating rate debt with fixed rate debt in order to achieve its desired ratio of floating rate to fixed rate debt However any interest rate cap or swap agreements that the Company enters into may not be effective in reducing its exposure to interest rate changes
Leasing revenue increased by 41 4 million or 5 1 from 2023 to 2024 The increase in leasing revenue is attributed to increases of 61 3 million from the JV Transition Centers offset in part by decreases of 7 1 million from the Disposition Properties and 12 3 million from the Redevelopment Properties Leasing revenue includes the amortization of above and below market leases the amortization of straight line rents lease termination income percentage rent and the recovery of bad debts The amortization of above and below market leases increased from 3 1 million in 2023 to 5 3 million in 2024 The amortization of straight line rents increased from 4 6 million in 2023 to 0 8 million in 2024 Lease termination income decreased from 10 5 million in 2023 to 2 9 million in 2024 Percentage rent decreased from 38 2 million in 2023 to 34 3 million in 2024 primarily from conversions from variable rent to fixed rent structures on lease renewals of expiring space Provisions for recovery of bad debts increased from 2 7 million in 2023 to 6 2 million in 2024
Other income decreased from 44 9 million in 2023 to 37 9 million in 2024 This decrease is primarily due to a decrease in parking income related to the Same Centers and other non recurring income in 2023 compared to 2024
Shopping center and operating expenses increased 18 5 million or 6 4 from 2023 to 2024 The increase in shopping center and operating expenses is attributed to increases of 12 1 million from the JV Transition Centers and 8 3 million from the Same Centers which is primarily due to increased insurance maintenance utilities and snow removal costs offset in part by decreases of 2 0 million from the Disposition Properties and 1 6 million from the Redevelopment Properties Additionally 1 7 million of the increase is attributable to Santa Monica Place
Depreciation and amortization increased 12 4 million from 2023 to 2024 The increase in depreciation and amortization is attributed to increases of 21 8 million from the JV Transition Centers and 1 0 million from the Redevelopment Centers offset in part by decreases of 7 6 million from the Same Centers and 6 1 million from the Disposition Properties Additionally 3 3 million of the increase is attributable to Santa Monica Place
Interest expense increased 47 1 million from 2023 to 2024 The increase in interest expense is attributed to increases of 31 3 million from the JV Transition Centers 12 9 million from the financing arrangement See Note 12 Financing Arrangement in the Company s Notes to the Consolidated Financial Statements 2 5 million from the Same Centers and 0 4 million from higher interest rates and outstanding balances on the Company s revolving line of credit offset in part by a decrease of 7 8 million from the Redevelopment Centers Additionally 7 8 million of the increase is attributable to Santa Monica Place which includes default interest expense of 8 9 million The decrease in interest income from the financing arrangement is primarily due to the change in fair value of the underlying properties and the mortgage notes payable on the underlying properties and Chandler Freehold no longer being accounted for as a financing arrangement See Note 12 Financing Arrangement in the Company s Notes to the Consolidated Financial Statements
Equity in loss of unconsolidated joint ventures increased 40 4 million from 2023 to 2024 The increase in equity in loss of unconsolidated joint ventures is primarily due to the write down of the Company s investment in Los Angeles Premium Outlets of 57 7 million in 2024 and impairment losses of 121 1 million recognized in 2024 as a result of the shortening of holding periods on certain joint venture assets as compared to impairment losses in 2023 of 51 4 million at MS Portfolio LLC and 107 7 million at Country Club Plaza as a result of the reduction in the estimated holding periods See Note 4 Investments in Unconsolidated Joint Ventures in the Company s Notes to the Consolidated Financial Statements
Gain loss on sale or write down of assets net increased 173 5 million from 2023 to 2024 The increase is primarily due to the gains recognized in 2024 of 334 3 million relating to the Company no longer accounting for its investment in Chandler Fashion Center as a financing arrangement See Note 12 Financing Arrangement and Note 16 Dispositions in the Company s Notes to the Consolidated Financial Statements and 42 8 million from the sale of the Company s ownership interest in Biltmore Fashion Park offset in part by impairment losses in 2024 of 334 3 million recognized as a result of the reduction in the estimated holding periods of certain properties including Fashion District Philadelphia The Oaks Santa Monica Place and Wilton Mall as compared to an impairment loss of 144 7 million recognized in 2023 as a result of the reduction in the estimated holding period of Fashion Outlets of Niagara Falls
Net loss decreased 80 4 million from 2023 to 2024 The decrease in net loss is primarily due to the gain on sale of assets discussed above offset in part by impairment losses recognized as a result of the reduction in the estimated holding periods of certain consolidated properties and properties held by unconsolidated joint ventures including Fashion District Philadelphia Santa Monica Place Los Angeles Premium Outlets The Oaks and Wilton Mall in 2024 and by the 2023 write down of assets as a result of the reduction in the estimated holding period at MS Portfolio LLC and Country Club Plaza along with the other variances noted above
Primarily as a result of the factors mentioned above FFO attributable to common stockholders and unit holders diluted excluding financing expense in connection with Chandler Freehold gain or loss on extinguishment of debt net accrued default interest expense and loss on non real estate investments
decreased 11 6 from 413 2 million in 2023 to 365 3 million in 2024 For a reconciliation of net loss income attributable to the Company the most directly comparable GAAP financial measure to FFO attributable to common stockholders and unit holders basic and diluted and FFO attributable to common stockholders and unit holders excluding financing expense in connection with Chandler Freehold gain loss on extinguishment of debt net accrued default interest expense and loss gain on non real estate investments diluted see Funds From Operations FFO below
Cash provided by investing activities decreased 32 8 million from 2023 to 2024 The decrease in cash provided by investing activities is primarily attributed to a decrease in distributions from unconsolidated joint ventures of 206 9 million increases in the acquisitions of property of 124 1 million and development redevelopment and renovation of 31 4 million offset in part by increases in proceeds from the sale of assets of 246 6 million and 49 0 million in cash acquired from acquisitions of unconsolidated joint ventures and decreases in contributions to unconsolidated joint ventures of 32 2 million and property improvements of 16 2 million The decrease in distributions from unconsolidated joint ventures is primarily due to the distribution of net loan proceeds from the Scottsdale Fashion Square refinance in 2023 See Financing Activities in Management s Overview and Summary
Cash used in financing activities decreased 22 8 million from 2023 to 2024 The decrease in cash used in financing activities is primarily due to increases in proceeds from stock offerings of 657 0 million and proceeds from mortgages bank and other notes payable of 506 0 million and a decrease in deferred financing costs of 20 1 million offset in part by an increase in payments on mortgages bank and other notes payable of 1 2 billion
Discussion of the year ended December 31 2023 compared to the year ended December 31 2022 was included in the Company s Annual Report on Form 10 K for the year ended December 31 2023 on page 48 under Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations which was filed with the SEC on February 26 2024
The Company anticipates meeting its liquidity needs for its operating expenses debt service and dividend requirements for the next twelve months and beyond through cash generated from operations distributions from unconsolidated joint ventures working capital reserves and or borrowings under its revolving loan facility
Additionally the Company is focused on implementing the Path Forward Plan including its goal to reduce its Net Debt to Adjusted EBITDA leverage ratio to a lower level over the next three to four years The Company may achieve this goal and other goals set in connection with the Path Forward Plan 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
1 For the twelve months ended December 31 2024 this includes cash paid of 129 0 million excluding the assumption of the partner s share of certain cash balances on October 24 2024 for the Company s acquisition of its joint venture partner s 40 interest in Lakewood Center Los Cerritos Center and Washington Square The total purchase price also included the assumption of the partner s share of debt The Company now owns 100 of these regional retail centers In addition for the twelve months ended December 31 2024 this includes cash paid of 36 4 million on May 14 2024 for the Company s acquisition of its joint venture partner s 40 interest in Arrowhead Towne Center and South Plains Mall The total purchase price also included the assumption of the partner s share of debt The Company now owns 100 of these regional retail centers
For the twelve months ended December 31 2023 this includes the Company s acquisition of its joint venture partner s Seritage 50 interest in five former Sears parcels on May 18 2023 for 46 7 million The Company now owns 100 of these five parcels located at Chandler Fashion Center Danbury Faire Mall Freehold Raceway Mall Los Cerritos Center and Washington Square
The Company expects amounts to be incurred during the next twelve months for tenant allowances and deferred leasing charges to be approximately 50 0 million to 75 0 million The Company expects to incur approximately 250 0 million to 300 0 million during 2025 for development redevelopment expansion and renovations which includes Scottsdale Fashion Square Green Acres Mall and FlatIron Crossing See Redevelopment and Development Activities in Management s Overview and Summary Capital for these expenditures developments and or redevelopments has been and is expected to continue to be obtained from a combination of cash on hand cash generated from operations asset sales debt or equity financings which may include borrowings under the Company s revolving loan facility and sales of common stock from property financings and construction loans each to the extent available The Company will be very selective in undertaking any future development or redevelopment projects and may choose to pause existing projects if the Company believes they are no longer economically viable
The Company has also generated liquidity in the past and may continue to do so in the future through equity offerings and issuances property refinancings joint venture transactions and the sale of non core assets 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 For example since implementing the Path Forward Plan in the second quarter of 2024 the Company s joint venture sold Country Club Plaza in Kansas City Missouri on June 28 2024 and the Company sold its 50 interest in Biltmore Fashion Park in Phoenix Arizona on July 31 2024 Additionally on November 25 2024 the Company sold Southridge Mall in Des Moines Iowa and on December 10 2024 the Company sold The Oaks in Thousand Oaks California The Company used its share of proceeds from these transactions to pay down its revolving loan facility and other debt obligations In addition the Company is under contract to sell Wilton Mall which is expected to close in the first half of 2025 subject to customary closing conditions During the year ended December 31 2024 the Company and certain joint venture partners sold various land parcels in separate transactions for aggregate proceeds of 6 1 million at the Company s share which the Company used to pay down debt and for other general corporate purposes
Furthermore the Company has filed a shelf registration statement which registered an unspecified amount of common stock preferred stock depositary shares debt securities warrants rights stock purchase contracts and units that may be sold from time to time by the Company
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
On each of March 26 2021 and November 12 2024 the Company registered separate at the market offering programs 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 under each of the 2021 ATM Program and the 2024 ATM Program in each case in amounts and at times to be determined by the Company The 2021 ATM Program was fully utilized as of September 30 2024 and is no longer active During the twelve months ended December 31 2023 no shares were issued under the ATM Programs During the twelve months ended December 31 2024 13 1 million shares of common stock were issued under the ATM Programs 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 The following table sets forth certain information with respect to issuances made under each of the ATM Programs as of December 31 2024
The capital and credit markets can fluctuate and at times limit access to debt and equity financing for companies The Company has been able to access capital however there is no assurance the Company will be able to do so in future periods or on similar terms and conditions Many factors impact the Company s ability to access capital such as its overall debt level interest rates interest coverage ratios and prevailing market conditions including periods of economic slowdown or recession
For example the credit markets have experienced and may continue to experience a slowdown stemming from broader market issues pertaining to various factors including among others the health of regional banks prevailing market sentiment regarding various commercial real estate sectors and interest rate increases imposed by the Federal Reserve While interest rates have begun to decrease they remain elevated and the Company expects to incur increased interest expense from the refinancing or extension of loans that may carry below market interest rates In addition increases in the Company s proportion of floating rate debt will cause it to be subject to interest rate fluctuations in the future
The Company s total outstanding loan indebtedness which includes mortgages and other notes payable at December 31 2024 was 6 65 billion consisting of 4 99 billion of consolidated debt less 0 03 billion of noncontrolling interests plus 1 69 billion of its pro rata share of unconsolidated joint venture debt The majority of the Company s debt consists of fixed rate conventional mortgage notes collateralized by individual properties The Company expects that all of the maturities during the next twelve months will be refinanced restructured extended and or paid off from the Company s revolving loan facility or cash on hand with the exception of Santa Monica Place See Financing Activities in Management s Overview and Summary
The Company believes that the pro rata debt provides useful information to investors regarding its financial condition because it includes the Company s share of debt from unconsolidated joint ventures and for consolidated debt excludes the Company s partners share from consolidated joint ventures in each case presented on the same basis The Company has several significant joint ventures and presenting its pro rata share of debt in this manner can help investors better understand the Company s financial condition after taking into account the Company s economic interest in these joint ventures The Company s pro rata share of debt should not be considered as a substitute for the Company s total consolidated debt determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company s financial information prepared in accordance with GAAP
The Company accounts for its investments in joint ventures that it does not have a controlling interest or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the consolidated balance sheets of the Company as investments in unconsolidated joint ventures
Additionally as of December 31 2024 the Company was contingently liable for 6 1 million in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers As of December 31 2024 5 9 million of these letters of credit were secured by restricted cash The Company does not believe that these letters of credit will result in a liability to the Company
The Company continues to actively address its near term non recourse loan maturities with eight completed transactions since the beginning of 2024 Since January 1 2024 the Company has refinanced or extended eight loans totaling approximately 1 4 billion or approximately 1 2 billion at the Company s pro rata share For additional information on the Company s financing transactions in 2024 through the date of this Annual Report on Form 10 K see Financing Activities in Management s Overview and Summary
On September 11 2023 the Company and the Operating Partnership entered into an amended and restated credit agreement which amended and restated their prior credit agreement and provides for an aggregate 650 0 million revolving loan facility that matures on February 1 2027 with a one year extension option The revolving loan facility can be expanded up to 950 0 million subject to receipt of lender commitments and other conditions Concurrently with the entry into the amended and restated credit agreement the Company drew 152 0 million of the amount available under the revolving loan facility and used the proceeds to repay in full amounts outstanding under its prior credit facility All obligations under the credit facility are guaranteed unconditionally by the Company and are secured in the form of mortgages on certain wholly owned assets and pledges of equity interests held by certain of the Company s subsidiaries The new credit facility bears interest at the Operating Partnership s option at either the base rate as defined in the credit agreement or adjusted term SOFR as defined in the credit agreement plus in both cases an applicable margin The applicable margin depends on the Company s overall leverage ratio and ranges from 1 00 to 2 50 over the selected index rate As of December 31 2024 the borrowing rate was SOFR plus a spread of 2 35 As of December 31 2024 borrowings under the credit facility were 110 0 million less unamortized deferred finance costs of 11 7 million for the revolving loan facility at a total effective interest rate of 7 59 As of December 31 2024 the Company s availability under the revolving loan facility for additional borrowings was 539 8 million
diluted as supplemental measures for the real estate industry and a supplement to GAAP measures The National Association of Real Estate Investment Trusts defines FFO as net loss income computed in accordance with GAAP excluding gains or losses from sales of properties plus real estate related depreciation and amortization impairment write downs of real estate and write downs of investments in an affiliate where the write downs have been driven by a decrease in the value of real estate held by the affiliate and after adjustments for unconsolidated joint ventures Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis
Prior to June 13 2024 the Company accounted for its joint venture in Chandler Freehold as a financing arrangement In connection with this treatment the Company recognized financing expense on i the changes in fair value of the financing arrangement obligation ii any payments to the joint venture partner equal to their pro rata share of net income and iii any payments to the joint venture partner less than or in excess of their pro rata share of net income The Company excludes from its definition of FFO the noted expenses related to the changes in fair value and for the payments to the joint venture partner less than or in excess of their pro rata share of net income On November 16 2023 the Company acquired its joint venture partner s 49 9 ownership interest in Freehold Raceway Mall and as a result this property is no longer part of the financing arrangement and is 100 owned by the Company On June 13 2024 the partnership agreement between the Company and its partner was amended 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 References to Chandler Freehold for the period November 16 2023 through June 13 2024 shall be deemed to only refer to Chandler Fashion Center
The Company also presents FFO excluding financing expense in connection with Chandler Freehold gain or loss on extinguishment of debt accrued default interest expense and gain or loss on non real estate investments
FFO and FFO on a diluted basis are useful to investors in comparing operating and financial results between periods This is especially true since FFO excludes real estate depreciation and amortization as the Company believes real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight line basis over time The Company believes that such a presentation also provides investors with a more meaningful measure of its operating results in comparison to the operating results of other REITs In addition the Company believes that FFO excluding financing expense in connection with Chandler Freehold impact associated with extinguishment of debt accrued default interest expense and impact of non cash changes in the market value of non real estate investments provides useful supplemental information regarding the Company s performance as it shows a more meaningful and consistent comparison of the Company s operating performance and allows investors to more easily compare the Company s results On March 19 2024 the Company closed on a three year extension of the Fashion Outlets of Niagara Falls non recourse loan and all default interest expense was reversed Effective April 9 2024 default interest expense has been accrued on the non recourse loan on Santa Monica Place GAAP requires that the Company accrue default interest expense which is not expected to be paid and is expected to be reversed once a loan is modified or once title to the mortgaged loan collateral is transferred The Company believes that the accrual of default interest on non recourse loans and the related reversal thereof should be excluded The Company holds certain non real estate investments that are subject to mark to market changes every quarter These investments are not core to the Company s business and the changes to market value and the related gain or loss are entirely non cash in nature As a result the Company believes that the gain or loss on non real estate investments should be excluded In the first quarter of 2024 the Company updated its presentation to exclude gain or loss on non real estate investments for the reasons noted above The Company recast the presentation for prior periods to reflect this change
The Company believes that FFO does not represent cash flow from operations as defined by GAAP should not be considered as an alternative to net loss income as defined by GAAP and is not indicative of cash available to fund all cash flow needs The Company also cautions that FFO as presented may not be comparable to similarly titled measures reported by other real estate investment trusts
Management compensates for the limitations of FFO by providing investors with financial statements prepared according to GAAP along with this detailed discussion of FFO and a reconciliation of net loss income to FFO and FFO diluted Management believes that to further understand the Company s performance FFO should be compared with the Company s reported net loss income and considered in addition to cash flows in accordance with GAAP as presented in the Company s consolidated financial statements The following reconciles net loss income attributable to the Company to FFO attributable to common stockholders and unit holders basic and diluted and FFO attributable to common stockholders and unit holders basic and diluted excluding financing expense in connection with Chandler Freehold gain loss on extinguishment of debt net accrued default interest expense and loss gain on non real estate investments for the years ended December 31 2024 2023 2022 2021 and 2020 dollars and shares in thousands
FFO attributable to common stockholders and unit holders excluding financing expense in connection with Chandler Freehold gain loss on extinguishment of debt net accrued default interest expense and loss gain on non real estate investments diluted
Calculated based upon basic net income as adjusted to reach basic FFO During the years ended December 31 2024 2023 2022 2021 and 2020 there were 10 0 million 9 0 million 8 6 million 9 9 million and 10 7 million OP Units outstanding respectively
The computation of FFO diluted shares outstanding includes the effect of share and unit based compensation plans and the convertible senior notes using the treasury stock method It also assumes the conversion of MACWH LP common and preferred units to the extent that they are dilutive to the FFO diluted computation
The Company s primary market risk exposure is interest rate risk The Company has managed and will continue to manage interest rate risk by 1 maintaining a ratio of fixed rate long term debt to total debt such that floating rate exposure is kept at an acceptable level 2 reducing interest rate exposure on certain long term floating rate debt through the use of interest rate caps and or swaps with matching maturities where appropriate 3 using treasury rate locks where appropriate to fix rates on anticipated debt transactions and 4 taking advantage of favorable market conditions for long term debt and or equity
The following table sets forth information as of December 31 2024 concerning the Company s long term debt obligations including principal cash flows by scheduled maturity weighted average interest rates and estimated fair value dollars in thousands
On February 7 2025 the Company s joint venture in FlatIron Crossing repaid 29 1 million 14 8 million at the Company s pro rata share on the mortgage loan and obtained a 90 day extension on the remaining 140 5 million 71 6 million at the Company s pro rata share loan See Financing Activity in Management s Overview and Summary
The Consolidated Centers total fixed rate debt at December 31 2024 and 2023 was 4 7 billion and 3 8 billion respectively The average interest rate on such fixed rate debt at December 31 2024 and 2023 was 4 40 and 4 29 respectively The Consolidated Centers total floating rate debt at December 31 2024 and 2023 was 0 4 billion and 0 5 billion respectively The average interest rate on such floating rate debt at December 31 2024 and 2023 was 6 21 and 7 43 respectively
The Company s pro rata share of the Unconsolidated Joint Venture Centers fixed rate debt at December 31 2024 and 2023 was 1 6 billion and 2 8 billion respectively The average interest rate on such fixed rate debt at December 31 2024 and 2023 was 5 28 and 5 06 respectively The Company s pro rata share of the Unconsolidated Joint Venture Centers floating rate debt at December 31 2024 and 2023 was 132 9 million and 45 2 million respectively The average interest rate on such floating rate debt at December 31 2024 and 2023 was 8 29 and 9 00 respectively
The Company uses derivative financial instruments in the normal course of business to manage or hedge interest rate risk and records all derivatives on the balance sheet at fair value Interest rate cap agreements offer protection against floating rates on the notional amount from exceeding the rates noted in the above schedule and interest rate swap agreements effectively
replace a floating rate on the notional amount with a fixed rate as noted above As of December 31 2024 the Company has interest rate cap agreements in place See Note 4 Investments in Unconsolidated Joint Ventures and Note 5 Derivative Instruments and Hedging Activities in the Company s Notes to the Consolidated Financial Statements The respective loans each require an interest rate cap agreement to be in place at all times which limits how high the prevailing floating loan rate index i e SOFR for the loans can rise As of the date of this Annual Report on Form 10 K SOFR for each of these loans exceeded the strike interest rate the Strike Rate within the required interest rate cap agreement If SOFR does exceed the Strike Rate each of these loans would then be considered fixed rate debt If SOFR for these respective loans thereafter no longer exceeds the Strike Rate then these loans would once again be considered floating rate debt
In addition the Company has assessed the market risk for its floating rate debt and believes that a 1 increase in interest rates would decrease future earnings and cash flows by approximately 5 4 million per year based on 542 9 million of floating rate debt outstanding at December 31 2024
The fair value of the Company s long term debt is estimated based on a present value model utilizing interest rates that reflect the risks associated with long term debt of similar risk and duration In addition the method of computing fair value for mortgage notes payable included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt See Note 10 Mortgage Notes Payable and Note 11 Bank and Other Notes Payable in the Company s Notes to the Consolidated Financial Statements
As required by Rule 13a 15 b under the Securities and Exchange Act of 1934 as amended the Exchange Act management carried out an evaluation under the supervision and with the participation of the Company s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company s disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10 K Based on their evaluation as of December 31 2024 the Company s Chief Executive Officer and Chief Financial Officer have concluded that the Company s disclosure controls and procedures as defined in Rule 13a 15 e and 15d 15 e under the Exchange Act were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is a recorded processed summarized and reported within the time periods specified in the SEC s rules and forms and b accumulated and communicated to the Company s management including its Chief Executive Officer and Chief Financial Officer or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure
The Company s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a 15 f under the Exchange Act The Company s management assessed the effectiveness of the Company s internal control over financial reporting as of December 31 2024 In making this assessment the Company s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework 2013 The Company s management concluded that as of December 31 2024 its internal control over financial reporting was effective based on this assessment
KPMG LLP the independent registered public accounting firm that audited the Company s 2024 consolidated financial statements included in this Annual Report on Form 10 K has issued a report on the Company s internal control over financial reporting which follows below
There were no changes in the Company s internal control over financial reporting during the quarter ended December 31 2024 that have materially affected or are reasonably likely to materially affect the Company s internal control over financial reporting
We have audited The Macerich Company and subsidiaries the Company internal control over financial reporting as of December 31 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission In our opinion the Company maintained in all material respects effective internal control over financial reporting as of December 31 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the consolidated balance sheets of the Company as of December 31 2024 and 2023 the related consolidated statements of operations comprehensive loss equity and cash flows for each of the years in the three year period ended December 31 2024 and the related notes and financial statement Schedule III Real Estate and Accumulated Depreciation collectively the consolidated financial statements and our report dated February 28 2025 expressed an unqualified opinion on those consolidated financial statements
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control Over Financial Reporting Our responsibility is to express an opinion on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audit also included performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinion
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that 1 pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company 2 provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and 3 provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
During the three months ended December 31 2024 none of the Company s directors or officers as defined in Rule 16a 1 f of the Exchange Act adopted terminated or modified a Rule 10b5 1 trading arrangement or non Rule 10b5 1 trading arrangement as such terms are defined in Item 408 of Regulation S K
The Company has an insider trading policy governing the purchase sale and other dispositions of the Company s securities that applies to all of the Company s directors officers employees and other covered persons The Company believes that its insider trading policy is reasonably designed to promote compliance with insider trading laws rules and regulations and listing standards applicable to the Company In addition with regard to the Company s trading in its own securities it is the Company s policy to comply with insider trading laws rules and regulations and applicable exchange listing standards A copy of the Company s insider trading policy is filed as Exhibit 19 to this Annual Report on Form 10 K
The Company has adopted a Code of Business Conduct and Ethics that provides principles of conduct and ethics for its directors officers and employees This Code complies with the requirements of the Sarbanes Oxley Act of 2002 and applicable rules of the Securities and Exchange Commission and the New York Stock Exchange In addition the Company has adopted a Code of Ethics for CEO and Senior Financial Officers which supplements the Code of Business Conduct and Ethics applicable to all employees and complies with the additional requirements of the Sarbanes Oxley Act of 2002 and applicable rules of the Securities and Exchange Commission for those officers To the extent required by applicable rules of the Securities and Exchange Commission and the New York Stock Exchange the Company intends to promptly disclose future amendments to certain provisions of these Codes or waivers of such provisions granted to directors and executive officers including the Company s principal executive officer principal financial officer principal accounting officer or persons performing similar functions on the Company s website at
During 2024 there were no material changes to the procedures described in the Company s proxy statement relating to the 2025 Annual Meeting of Stockholders by which stockholders may recommend director nominees to the Company
We have audited the accompanying consolidated balance sheets of The Macerich Company and subsidiaries Company as of December 31 2024 and 2023 the related consolidated statements of operations comprehensive loss equity and cash flows for each of the years in the three year period ended December 31 2024 and the related notes and financial statement Schedule III Real Estate and Accumulated Depreciation collectively the consolidated financial statements In our opinion the consolidated financial statements present fairly in all material respects the financial position of the Company as of December 31 2024 and 2023 and the results of its operations and its cash flows for each of the years in the three year period ended December 31 2024 in conformity with U S generally accepted accounting principles
We also have audited in accordance with the standards of the Public Company Accounting Oversight Board United States PCAOB the Company s internal control over financial reporting as of December 31 2024 based on criteria established in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28 2025 expressed an unqualified opinion on the effectiveness of the Company s internal control over financial reporting
These consolidated financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on these consolidated financial statements based on our audits We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements We believe that our audits provide a reasonable basis for our opinion
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that 1 relate to accounts or disclosures that are material to the consolidated financial statements and 2 involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matters below providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate
As discussed in Notes 4 10 12 and 16 to the consolidated financial statements the Company amended the partnership agreement between the Company and its joint venture partner resulting in the derecognition of the related financing arrangement obligation and the recording of a gain on sale of assets The fair value of the derecognized financing arrangement obligation and corresponding gain recognized upon deconsolidation was determined primarily based upon the fair value of the underlying shopping center owned by the Chandler Freehold joint venture Chandler Fashion Center which was previously consolidated through the date of the amended partnership agreement The fair value of the shopping center was estimated using a discounted cash flow approach Subsequent changes in the fair value of the financing arrangement obligation were recorded as interest expense through the date the partnership agreement was amended at which time the financing arrangement was derecognized and recorded in gain on sale of assets During 2024 the Company recognized a gain on sale of assets of 334 285 thousand related to the deconsolidation of the Chandler Freehold joint venture net of interest expense of 13 795 thousand related to the current year change in the fair value of the financing arrangement The gain on sale included 88 721 thousand
We identified the evaluation of the fair value of the Chandler Freehold financing arrangement obligation and the related gain on sale recorded upon deconsolidation as a critical audit matter A high degree of auditor judgment was required to evaluate the key assumptions used in the discounted cash flow approach including the market rental rates discount rate and terminal capitalization rate The analysis was sensitive to reasonably possible changes to these key assumptions which could have had a significant effect on the determination of fair value of the financing arrangement obligation specifically the underlying shopping center and related gain on sale recognized upon deconsolidation The evaluation of these key assumptions required significant audit effort including the involvement of valuation professionals with specialized skills and knowledge
The following are the primary procedures we performed to address this critical audit matter We evaluated the design and tested the operating effectiveness of certain internal controls over the Company s fair value determination process for the financing arrangement obligation and related gain on sale upon deconsolidation including controls over the development of the key assumptions used in the discounted cash flow analysis
With the assistance of our valuation professionals with specialized skills and knowledge we evaluated the key assumptions used in the discounted cash flow analysis by comparing the market rental rates discount rate and terminal capitalization rate used by the Company to publicly available market data for comparable properties in a similar geographic region
As discussed in Notes 2 4 and 6 to the consolidated financial statements the Company evaluates its consolidated property and investments in unconsolidated joint ventures which own and operate properties for impairment whenever there are indicators that the carrying value of the property may not be recoverable or where there may be an other than temporary impairment of investments in unconsolidated joint ventures The Company considers property operating performance expected holding periods capitalization rates and other market factors in making this evaluation If the carrying value of a property exceeds the estimate of its undiscounted cash flows an impairment loss is recognized equal to the excess of the carrying value over its fair value The fair value of property is determined through either a sales approach or a discounted cash flow approach Impairment of properties held in an unconsolidated joint venture follows a similar method Due to a reduction in the expected holding period of certain consolidated properties the Company determined the properties carrying values were impaired and recorded impairment charges of 334 375 thousand during 2024 of which a portion was recorded based on the discounted cash flow approach and included in gain loss on sale or write down of assets net on the consolidated statement of operations In addition due to a reduction in the expected holding period on certain joint venture properties the Company recorded impairment losses of 179 960 thousand during 2024 of which a portion was recorded based on the discounted cash flow approach and included in equity in loss of unconsolidated joint ventures on the consolidated statement of operations As of December 31 2024 property net was 7 097 113 thousand and investments in unconsolidated joint ventures was 654 667 thousand
We identified the assessment of impairment of property net and investments in unconsolidated joint ventures as a critical audit matter Subjective auditor judgment was required to assess the relevant events or changes in circumstances that Company officials considered when evaluating expected holding periods A shortening of a property s expected holding period could indicate a potential impairment In addition the evaluation of the fair value as determined through a discounted cash flow approach in particular the key assumptions over the property s market rental rates discount rate and terminal capitalization rate required a high degree of auditor judgment The evaluation of these key assumptions required significant audit effort including the involvement of valuation professionals with specialized skills and knowledge
The following are the primary procedures we performed to address this critical audit matter We evaluated the design and tested the operating effectiveness of certain internal controls over the Company s property impairment process including controls over the Company s evaluation of the expected holding period and the development of the key assumptions used in the discounted cash flow analysis We evaluated the relevant events or changes in circumstances that the Company considered when evaluating expected holding periods by
reading minutes of the meetings of the Company s Board of Directors and obtaining written representations regarding potential plans if any to dispose of certain real estate properties or investments in unconsolidated joint ventures
With the assistance of our valuation professionals with specialized skills and knowledge we evaluated the significant assumptions used in the discounted cash flow analysis by comparing the market rental rates discount rate and terminal capitalization rate used by the Company to publicly available market data for comparable properties in a similar geographic region
The Macerich Company the Company is involved in the acquisition ownership development redevelopment management and leasing of regional and community power shopping centers the Centers located throughout the United States
The Company commenced operations effective with the completion of its initial public offering on March 16 1994 As of December 31 2024 the Company was the sole general partner of and held a 96 ownership interest in The Macerich Partnership L P the Operating Partnership The Company was organized to qualify as a real estate investment trust REIT under the Internal Revenue Code of 1986 as amended the Code
The property management leasing and redevelopment of the Company s portfolio is provided by 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 accompanying consolidated financial statements include the accounts of the Company Investments in entities in which the Company has a controlling financial interest or entities that meet the definition of a variable interest entity VIE in accordance with Accounting Standards Codification Topic 810 Consolidation in which the Company has as a result of ownership contractual or other financial interests both the power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE are consolidated otherwise they are accounted for under the equity method of accounting and are reflected as investments in unconsolidated joint ventures
The Company s sole significant asset is its investment in the Operating Partnership and as a result substantially all of the Company s assets and liabilities represent the assets and liabilities of the Operating Partnership In addition the Operating Partnership has investments in a number of VIEs including SanTan Village Regional Center
The following table presents a reconciliation of the beginning of year and end of year cash and cash equivalents and restricted cash reported on the Company s consolidated balance sheets to the totals shown on its consolidated statements of cash flows
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents for which cost approximates fair value Restricted cash includes impounds of property taxes and other capital reserves required under loan and other agreements
Leasing revenue includes minimum rents percentage rents tenant recoveries and other leasing income Minimum rental revenues are recognized on a straight line basis over the terms of the related leases The difference between the amount of rent due in a year and the amount recorded as rental income is referred to as the straight line rent adjustment Minimum rents were decreased by 759 4 624 and 777 due to the straight line rent adjustment during the years ended December 31 2024 2023 and 2022 respectively Percentage rents are recognized and accrued when tenants specified sales targets have been met Estimated recoveries from certain tenants for their pro rata share of real estate taxes insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred Other tenants pay a fixed rate and these tenant recoveries are recognized as revenues on a straight line basis over the term of the related leases
The Management Companies provide property management leasing corporate development redevelopment and acquisition services to affiliated and non affiliated shopping centers In consideration for these services the Management Companies receive monthly management fees generally ranging from 1 5 to 4 0 of the gross monthly rental revenue of the properties managed
Maintenance and repair expenses are charged to operations as incurred Costs for major replacements and betterments which includes HVAC equipment roofs parking lots etc are capitalized and depreciated over their estimated useful lives Gains and losses are recognized upon disposal or retirement of the related assets and are reflected in earnings Gains on the disposition of real estate are recognized when the Company transfers control as well as the risks and rewards of ownership to the buyer
The Company capitalizes costs incurred in redevelopment development renovation and improvement of properties The capitalized costs include pre construction costs essential to the development of the property development costs construction costs interest costs real estate taxes salaries and related costs and other costs incurred during the period of development These capitalized costs include direct and certain indirect costs clearly associated with the project Indirect costs include real estate taxes insurance and certain shared administrative costs In assessing the amounts of direct and indirect costs to be capitalized allocations are made to projects based on estimates of the actual amount of time spent on each activity Indirect costs not clearly associated with specific projects are expensed as period costs Capitalized indirect costs are allocated to development and redevelopment activities based on the square footage of the portion of the building not held available for immediate occupancy If costs and activities incurred to ready the vacant space cease then cost capitalization is also discontinued until such activities are resumed Once work has been completed on a vacant space project costs are no longer capitalized For projects with extended lease up periods the Company ends the capitalization when significant activities have ceased which does not exceed the shorter of a one year period after the completion of the building shell or when the construction is substantially complete
The Company accounts for its investments in joint ventures using the equity method of accounting unless the Company has a controlling financial interest in the joint venture or the joint venture meets the definition of a VIE in which the Company is the primary beneficiary through both its power to direct activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE Although the Company has a greater than 50 interest in Corte Madera Village LLC Macerich HHF Centers LLC and Freehold Chandler Holdings LP the Company does not have controlling financial interests in these joint ventures due to the substantive participation rights of the outside partners in these joint ventures and therefore accounts for its investments in these joint ventures using the equity method of accounting
Equity method investments are typically recorded on the balance sheet at cost and are subsequently adjusted to reflect the Company s proportionate share of net earnings and losses distributions received additional contributions and certain other adjustments as appropriate The Company ceases recognizing its proportionate share of net losses when such losses reduce the investment to zero and the Company has no obligation to guarantee the joint venture s obligations and is not otherwise committed to provide further financial support to the joint venture The Company separately reports investments in joint ventures when accumulated distributions have exceeded the Company s investment as distributions in excess of investments in unconsolidated joint ventures The net investment of certain joint ventures is less than zero because of financing or operating distributions that are usually greater than net income as net income includes charges for depreciation and amortization
Upon the acquisition of real estate properties the Company evaluates whether the acquisition is a business combination or asset acquisition For both business combinations and asset acquisitions the Company allocates the purchase price of properties to acquired tangible assets and intangible assets and liabilities For asset acquisitions the Company capitalizes transaction costs and allocates the purchase price using a relative fair value method allocating all accumulated costs For business combinations the Company expenses transaction costs incurred and allocates purchase price based on the estimated fair value of each separately identified asset and liability The Company allocates the estimated fair value of acquisitions to land building tenant improvements and identified intangible assets and liabilities based on their estimated fair values In addition any assumed mortgage notes payable are recorded at their estimated fair values The estimated fair value of the land and buildings is determined utilizing an as if vacant methodology Tenant improvements represent the tangible assets associated with the existing leases valued on a fair value basis at the acquisition date prorated over the remaining lease terms
The tenant improvements are classified as an asset under property and are depreciated over the remaining lease terms Identifiable intangible assets and liabilities relate to the value of in place operating leases which come in three forms i leasing commissions and legal costs which represent the value associated with cost avoidance of acquiring in place leases such as lease commissions paid under terms generally experienced in the Company s markets ii value of in place leases which represents the estimated loss of revenue and of costs incurred for the period required to lease the assumed vacant property to the occupancy level when purchased and iii above or below market value of in place leases which represents the difference between the contractual rents and market rents at the time of the acquisition discounted for tenant credit risks Leasing commissions and legal costs are recorded in deferred charges and other assets and are amortized over the remaining lease terms The value of in place leases is recorded in deferred charges and other assets and amortized over the remaining lease terms plus any below market fixed rate renewal options Above or below market leases are classified in deferred charges and other assets or in other accrued liabilities depending on whether the contractual terms are above or below market and the asset or liability is amortized to minimum rents over the remaining terms of the leases The remaining lease terms of below market leases may include certain below market fixed rate renewal periods In considering whether or not a lessee will execute a below market fixed rate lease renewal option the Company evaluates economic factors and certain qualitative factors at the time of acquisition such as tenant mix in the Center the Company s relationship with the tenant and the availability of competing tenant space
Remeasurement gains are recognized when the Company becomes the primary beneficiary of an existing equity method investment that is a VIE to the extent that the fair value of the existing equity investment exceeds the carrying value of the investment and remeasurement losses are recognized to the extent the carrying value of the investment exceeds the fair value The fair value is determined based on a discounted cash flow model with the significant unobservable inputs including discount rate terminal capitalization rate and market rents
Direct costs relating to obtaining tenant leases are deferred and amortized over the initial term of the lease agreement using the straight line method As these deferred leasing costs represent productive assets incurred in connection with the Company s leasing arrangements at the Centers the related cash flows are classified as investing activities within the accompanying Consolidated Statements of Cash Flows Costs relating to financing of shopping center properties are deferred and amortized over the life of the related loan using the straight line method which approximates the effective interest method
The Company assesses whether an indicator of impairment in the value of its properties exists by considering expected future operating income trends and prospects as well as the effects of demand competition and other economic factors Such factors include projected rental revenue operating costs and capital expenditures as well as capitalization rates and estimated holding periods The Company generally holds and operates its properties long term which decreases the likelihood of their carrying values not being recoverable Changes in events or changes in circumstances may alter the expected hold period of an asset or asset group which may result in an impairment loss and such loss could be material to the Company s financial condition or operating performance If the carrying value of the property exceeds the estimated undiscounted cash flows an impairment loss is recognized equal to the excess of carrying value over its estimated fair value Properties classified as held for sale are measured at the lower of the carrying amount or fair value less cost to sell
The estimated fair value of a property is typically determined through a discounted cash flow analysis or based upon a contracted sales price The discounted cash flow method includes significant unobservable inputs including the discount rate terminal capitalization rate and market rents Cash flow projections and rates are subject to management s judgment and changes in those assumptions could impact the estimation of fair value
The Company s investments in unconsolidated joint ventures apply the same accounting model for property level impairment as described above Further the Company reviews its investments in unconsolidated joint ventures for a series of operating losses and other factors that may indicate that a decrease in the value of its investments has occurred which is other than temporary The investment in each unconsolidated joint venture is evaluated periodically and as deemed necessary for recoverability and valuation declines that are other than temporary The Company records any such impairment up to the extent of its investment
The cost of share and unit based compensation awards is measured at the grant date based on the calculated fair value of the awards and is recognized on a straight line basis over the requisite service period which is generally the vesting period of the awards
The Company recognizes all derivatives in the consolidated financial statements and measures the derivatives at fair value The Company uses interest rate swap and cap agreements collectively interest rate agreements in the normal course of business to manage or reduce its exposure to adverse fluctuations in interest rates The Company designs its hedges to be effective in reducing the risk exposure that they are designated to hedge Any instrument that meets the cash flow hedging criteria is formally designated as a cash flow hedge at the inception of the derivative contract On an ongoing quarterly basis the Company adjusts its balance sheet to reflect the current fair value of its derivatives To the extent they are effective changes in fair value are recorded in comprehensive income
If any derivative instrument used for risk management does not meet the hedging criteria it is marked to market each period with the change in value included in the consolidated statements of operations
The Company elected to be taxed as a REIT under the Code commencing with its taxable year ended December 31 1994 To qualify as a REIT the Company must meet a number of organizational and operational requirements including a requirement that it distribute at least 90 of its taxable income to its stockholders It is management s current intention to adhere to these requirements and maintain the Company s REIT status As a REIT the Company generally will not be subject to corporate level federal income tax on taxable income it distributes currently to its stockholders If the Company fails to qualify as a REIT in any taxable year then it will be subject to federal income taxes at regular corporate rates and may not be able to qualify as a REIT for four subsequent taxable years Even if the Company qualifies for taxation as a REIT the Company may be subject to certain state and local taxes on its income and property and to federal income and excise taxes on its undistributed taxable income if any
Each partner is taxed individually on its share of partnership income or loss and accordingly no provision for federal and state income tax is provided for the Operating Partnership in the consolidated financial statements The Company s taxable REIT subsidiaries TRSs are subject to corporate level income taxes which are provided for in the Company s consolidated financial statements
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns Under this method deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse The deferred tax assets and liabilities of the TRSs relate primarily to differences in the book and tax bases of property and to operating loss carryforwards for federal and state income tax purposes A valuation allowance for deferred tax assets is provided if the Company believes it is more likely than not that all or some portion of the deferred tax assets will not be realized Realization of deferred tax assets is dependent on the Company generating sufficient taxable income in future periods
The fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity s own assumptions about market participant assumptions
Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly Level 2 inputs may include quoted prices for similar assets and liabilities in active markets as well as inputs that are observable for the asset or liability other than quoted prices such as interest rates foreign exchange rates and yield curves that are observable at commonly quoted intervals Level 3 inputs are unobservable inputs for the asset or liability which are typically based on an entity s own assumptions as there is little if any related market activity In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety The Company s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability
The Company calculates the fair value of financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of those financial instruments When the fair value reasonably approximates the carrying value no additional disclosure is made
The fair values of interest rate agreements are determined using the market standard methodology of discounting the future expected cash payments or receipts that would occur if variable interest rates fell below or rose above the strike rate of the interest rate agreements The variable interest rates used in the calculation of projected receipts on the interest rate agreements are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty s nonperformance risk in the fair value measurements In adjusting the fair value of its derivative contracts for the effect of nonperformance risk the Company has considered the impact of netting and any applicable credit enhancements such as collateral postings thresholds mutual puts and guarantees
The Company recorded its financing arrangement obligation at fair value on a recurring basis with changes in fair value being recorded as interest expense in the Company s consolidated statements of operations The fair value was determined based on a discounted cash flow model with the significant unobservable inputs including the discount rate terminal capitalization rate and market rents The fair value of the financing arrangement obligation was sensitive to these significant unobservable inputs and a change in these inputs would have resulted in a significantly higher or lower fair value measurement
The Company maintains its cash accounts in a number of commercial banks Accounts at these banks are guaranteed by the Federal Deposit Insurance Corporation FDIC up to 250 At various times during the year the Company had deposits in excess of the FDIC insurance limit
No Center or tenant generated more than 10 of total revenues during the years ended December 31 2024 2023 or 2022 with the exception of one Center in New York which represented approximately 11 11 and 12 of the Company s consolidated revenues for the years ended December 31 2024 2023 and 2022 respectively
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period Actual results could differ from those estimates
requires incremental disclosures related to a public entity s reportable segments Required disclosures include on an annual and interim basis significant segment expenses that are regularly provided to the chief operating decision maker CODM and included within each reported measure of segment profit or loss an amount for other segment items which is the difference between segment revenue less segment expenses and less segment profit or loss and a description of its composition the title and position of the CODM and an explanation of how the CODM uses the reported measure s of segment profit or loss in assessing segment performance and deciding how to allocate resources The standard also permits disclosure of more than one measure of segment profit ASU 2023 07 is effective for fiscal years beginning after December 15 2023 and interim periods within fiscal years beginning after December 15 2024 The Company adopted ASU 2023 07 beginning with its fiscal year ended December 31 2024 The adoption of ASU 2023 07 did not have any material impact on the Company s consolidated financial statements as the primary change was the inclusion of additional disclosures related to the Company s single reportable segment See Note 22
In November 2024 the FASB issued ASU 2024 03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures Subtopic 220 40 Disaggregation of Income Statement Expenses ASU 2024 03 The amendments in ASU 2024 03 apply to all public business entities and require disclosure of specified information about certain costs and expenses ASU 2024 03 is effective for annual reporting periods beginning after December 15 2026 and interim periods within fiscal years beginning after December 15 2027 with early adoption permitted The Company is currently evaluating the potential impact of adopting ASU 2024 03
In November 2024 the FASB issued ASU 2024 04 Debt Debt with Conversion and Other Options Subtopic 470 20 Induced Conversions of Convertible Debt Instruments ASU 2024 04 The amendments in ASU 2024 04 clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion The new guidance is effective for annual reporting periods beginning after December 15 2025 and interim periods within those annual periods The Company is currently evaluating the potential impact of adopting ASU 2024 04
The Company owns operating properties through various unconsolidated joint ventures with third parties The Company s direct or indirect ownership interest in each joint venture as of December 31 2024 was as follows
The Company s ownership interest in this table reflects its direct or indirect legal ownership interest Legal ownership may at times not equal the Company s economic interest in the listed entities because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances allocations of profits and losses and payments of preferred returns As a result the Company s actual economic interest as distinct from its legal ownership interest in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests Substantially all of the Company s joint venture agreements contain rights of first refusal buy sell provisions exit rights default dilution remedies and or other break up provisions or remedies which are customary in real estate joint venture agreements and which may positively or negatively affect the ultimate realization of cash flow and or capital or liquidation proceeds
The Company has made the following investments dispositions and financings in unconsolidated joint ventures during the years ended December 31 2024 2023 and 2022 and events subsequent to December 31 2024
On February 2 2022 the Company s joint venture in FlatIron Crossing replaced the existing 197 011 loan on the property with a new 175 000 loan that bore interest at SOFR plus 3 70 and matured on February 9 2025 The loan was covered by an interest rate cap agreement that effectively prevented SOFR from exceeding 4 0 through February 15 2024 and 5 0 through February 9 2025
On August 2 2022 the Company acquired the remaining 50 ownership interest in two former Sears parcels Deptford Mall and Vintage Faire Mall in MS Portfolio LLC the Company s joint venture with Seritage Growth Properties Seritage for a total purchase price of approximately 24 544 As a result of this transaction and the shortening of holding periods on certain other assets in the joint venture an impairment loss was recorded for the year ended December 31 2022 The Company s share of the impairment loss was 27 054 Effective as of August 2 2022 the Company now owns and has consolidated its 100 interest in these two former Sears parcels in its consolidated financial statements See Note 15
On November 14 2022 the Company s joint venture in Washington Square closed on a four year maturity date extension for the existing loan to November 1 2026 including extension options The Company s joint venture repaid 15 000 9 000 at
the Company s pro rata share of the outstanding loan balance at closing The loan bore interest at SOFR plus 4 0 and was covered by an interest rate cap agreement that effectively prevented SOFR from exceeding 4 0 through November 1 2024 On November 1 2023 the Company s joint venture repaid an additional 15 000 9 000 at the Company s pro rata share of the outstanding loan balance
On March 3 2023 the Company s joint venture in Scottsdale Fashion Square replaced the existing 403 931 mortgage loan on the property with a 700 000 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 April 25 2023 the Company s joint venture in Deptford Mall closed on a three year maturity date extension for the existing loan to April 3 2026 including extension options The Company s joint venture repaid 10 000 5 100 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 295 210 147 605 at the Company s pro rata share non recourse loan on the property The Company s joint venture was in negotiations with the lender on the terms of this non recourse loan Accordingly the joint venture shortened the holding period of the property due to the uncertainty as to the outcome of these discussions As a result of shortening the holding period the joint venture determined the fair value of the property was less than the carrying value and recorded an impairment loss during 2023 The Company recognized 100 997 as its share of the impairment which was limited to the extent of its investment which was reduced to zero
On May 18 2023 the Company acquired Seritage s remaining 50 ownership interest in the MS Portfolio LLC joint venture that owns five former Sears parcels for a total purchase price of 46 687 These parcels are located at Chandler Fashion Center Danbury Fair Mall Freehold Raceway Mall Los Cerritos Center and Washington Square As a result of this transaction and the shortening of holding periods an impairment loss was recorded by the joint venture The Company s share of the impairment loss was 51 363 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 See Note 15 Acquisitions
On December 4 2023 the Company s joint venture in Tysons Corner Center replaced the existing 666 465 mortgage loan on the property with a new 710 000 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 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 700 000 The existing 324 632 loan on the property was repaid and 77 643 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 8 118
On January 10 2024 the Company s joint venture in Boulevard Shops replaced the existing 23 000 mortgage loan on the property with a new 24 000 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
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 three months ended March 31 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 determined the investment was impaired on an other than temporary basis and wrote off its entire investment of 57 686 in the first quarter of 2024 through equity in loss of unconsolidated joint ventures
On May 14 2024 the Company acquired the remaining 40 ownership interest in Arrowhead Towne Center in the New River Associates LLC joint venture that it did not previously own for a total purchase price of 36 447 and the assumption of its joint venture partner s share of debt on the property Effective as of May 14 2024 the Company now owns and has consolidated its 100 interest in Arrowhead Towne Center See Note 15 Acquisitions
On May 14 2024 the Company acquired the remaining 40 ownership interest in South Plains Mall in the Pacific Premier Retail LLC joint venture that it did not previously own for no cash consideration and the assumption of its joint venture partner s share of debt on the property Effective as of May 14 2024 the Company now owns and has consolidated its 100 interest in South Plains Mall See Note 15 Acquisitions
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
On June 27 2024 the Company s joint venture in Chandler Fashion Center refinanced the existing 256 000 loan on the property with a 275 000 loan that bears interest at a fixed rate of 7 06 is interest only during the entire loan term and matures on July 1 2029 The Company received a distribution of 17 700 in connection with this transaction
On June 28 2024 the Company s joint venture in Country Club Plaza sold the property for 175 600 Concurrent with the transaction the remaining amount owed by the joint venture under the 295 470 loan 147 735 at the Company s pro rata share was forgiven by the lender
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 110 000 The Company used the net proceeds to pay down debt The Company recognized a gain of approximately 42 815 in connection with this transaction See Note 6 Property net
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 122 132 which includes the assumption of the partner s share of property level indebtedness As a result of this transaction and the shortening of holding periods an impairment loss was recorded by the joint venture The Company s share of the impairment loss was 117 031 The Company now owns and consolidates its 100 interests in these properties See Note 15 Acquisitions
On February 7 2025 the Company s joint venture in Flatiron Crossing repaid in full the 14 532 mezzanine loan and 14 532 of the first mortgage and obtained a 90 day extension for the remaining 140 480 of the first mortgage The mezzanine loan had an interest rate of SOFR plus 12 25 and the first mortgage had 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
These amounts include 2 613 690 of assets and 1 578 328 of liabilities of Pacific Premier Retail LLC the PPR Portfolio as of December 31 2023 On October 24 2024 the Company acquired its joint venture partner s 40 interest in the PPR Portfolio as described above
The Company amortizes the difference between the cost of its investments in unconsolidated joint ventures and the book value of the underlying equity into loss income on a straight line basis consistent with the lives of the underlying assets or on an accelerated basis upon disposition by the joint venture The amortization of this difference was 343 722 14 316 and 9 371 for the years ended December 31 2024 2023 and 2022 respectively
The Company uses interest rate cap agreements to manage the interest rate risk on certain floating rate debt The Company recorded other comprehensive income loss related to the marking to market of derivative instruments of 918 1 584 and 656 during the years ended December 31 2024 2023 and 2022 respectively The 918 in other comprehensive income for the year ended December 31 2024 1 584 in other comprehensive loss for the year ended December 31 2023 and 632 of the 656 in other comprehensive income for the year ended December 31 2022 is the Company s pro rata share of hedged derivative instruments from certain unconsolidated joint ventures
The above derivatives were valued with an aggregate fair value Level 2 measurement and were included in other assets other accrued liabilities The fair value of the Company s interest rate derivatives were determined using discounted cash flow analysis on the expected cash flows of the derivatives This analysis reflects the contractual terms of the derivatives including the period to maturity and uses observable market based inputs including interest rate curves and implied volatilities The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty s nonperformance risk in the fair value measurements
Although the Company has determined that the majority of the inputs used to value its derivatives falls within Level 2 of the fair value hierarchy the credit valuation adjustments associated with its derivatives utilize Level 3 inputs such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate caps As a result the Company determined that its interest rate cap valuations in its entirety is classified in Level 2 of the fair value hierarchy
For the year ended December 31 2024 includes a gain of 334 285 as a result of the Company no longer recognizing its investment in Chandler Fashion Center as a financing arrangement Effective June 13 2024 the Company accounts for its investment under the equity method of accounting See Note 12 Financing Arrangement and Note 16 Dispositions Also includes a gain of 42 815 from the sale of the Company s interest in Biltmore Fashion Park See Note 4 Investments in Unconsolidated Joint Ventures For the year ended December 31 2023 includes gains related to the sale of The Marketplace at Flagstaff and Superstition Springs Power Center See Note 16 Dispositions
For the year ended December 31 2024 includes impairment losses of 334 265 due to the reduction of the estimated holding periods of certain properties including Fashion District Philadelphia The Oaks Santa Monica Place and Wilton Mall For the year ended December 31 2023 includes impairment losses of 144 656 on Fashion Outlets of Niagara Falls and 7 880 on Towne Mall For the year ended December 31 2022 includes impairment loss of 5 471 relating to the Company s investment in MS Portfolio LLC See Note 4 Investments in Unconsolidated Joint Ventures and impairment loss of 5 140 on Towne Mall The impairment losses were
The following table summarizes certain of the Company s assets that were measured on a nonrecurring basis as a result of impairment charges recorded for the years ended December 31 2024 2023 and 2022 as described above
The fair value Level 2 measurement relating to a portion of the 2024 impairments were based on sales contracts and are classified within Level 2 of the fair value hierarchy The fair value Level 3 measurement related to the 2024 2023 and 2022 impairments were based upon an income approach using an estimated terminal capitalization rate in the range of 7 3 to 13 0 a discount rate in the range of 9 0 and 14 5 and market rents per square foot of 8 to 500 The fair value is sensitive to these significant unobservable inputs
Included in tenant and other receivables net is an allowance for doubtful accounts of 7 146 and 4 824 at December 31 2024 and 2023 respectively Also included in tenant and other receivables net are accrued percentage rents of 17 214 and 15 076 at December 31 2024 and 2023 respectively and a deferred rent receivable due to straight line rent adjustments of 94 445 and 105 260 at December 31 2024 and 2023 respectively
The Company leases its Centers under agreements that are classified as operating leases These leases generally include minimum rents percentage rents and recoveries of real estate taxes insurance and other shopping center operating expenses Minimum rental revenues are recognized on a straight line basis over the terms of the related leases Percentage rents are recognized and accrued when tenants specified sales targets have been met Estimated recoveries from certain tenants for their pro rata share of real estate taxes insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred Other tenants pay a fixed rate and these tenant recoveries are recognized as revenues on a straight line basis over the term of the related leases For leasing revenues in which collectability of substantially all of the rents is not considered probable lease income is recognized on a cash basis and all previously recognized tenant accounts receivables including straight line rent are fully reserved in the period in which the lease income is determined not to be probable of collection
The Company has certain properties that are subject to non cancelable operating leases The leases expire at various times through 2078 subject in some cases to options to extend the terms of the lease Certain leases provide for contingent rent payments based on a percentage of base rental income as defined in the lease In addition the Company has three finance leases that expire at various times through 2030
The Company s weighted average remaining lease term of its operating and finance leases at December 31 2024 was 24 3 years and 2 6 years respectively The Company s weighted average incremental borrowing rate of its operating and finance leases at December 31 2024 was 7 2 and 2 8 respectively
Accumulated amortization includes 33 883 and 39 540 relating to in place lease values leasing commissions and legal costs at December 31 2024 and 2023 respectively Amortization expense for in place lease values leasing commissions and legal costs was 18 423 7 417 and 6 734 for the years ended December 31 2024 2023 and 2022 respectively
The allocated values of above and below market leases will be amortized into minimum rents on a straight line basis over the individual remaining lease terms The amortization of these values for the next five years and thereafter is as follows
The mortgage notes payable balances include the unamortized debt discounts Debt discounts represent the deficiency of the fair value of debt under the principal value of debt assumed in various acquisitions The debt discounts are being amortized into interest expense over the term of the related debt in a manner which approximates the effective interest method
The mortgage notes payable balances also include unamortized deferred finance costs that are amortized into interest expense over the remaining term of the related debt in a manner that approximates the effective interest method Unamortized deferred finance costs were 22 042 and 21 148 at December 31 2024 and 2023 respectively
The maturity date assumes that all extension options are fully exercised and that the Company does not opt to refinance the debt prior to these dates These extension options are at the Company s discretion subject to certain conditions which the Company believes will be met
On May 14 2024 the Company acquired the remaining 40 ownership interest in Arrowhead Towne Center that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
On November 16 2023 the Company acquired its joint venture partner s 49 9 interest in Freehold Raceway Mall for 5 6 million and assumed the partner s share of debt The Company now owns 100 of Freehold Raceway Mall See Note 15 Acquisitions On June 13 2024 the partnership agreement between the Company and its 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 and the related debt has been deconsolidated See Note 12 Financing Arrangement and Note 16 Dispositions
On January 25 2024 the Company replaced the existing loan with a 155 000 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 January 20 2023 the Company repaid 26 107 of the outstanding loan balance and exercised its one year extension option of the loan to January 22 2024 The interest rate was SOFR plus 3 60 On January 22 2024 the Company repaid the majority of the loan balance and the remaining 8 171 was scheduled to mature on April 21 2024 and was paid in full on April 19 2024
Effective October 6 2023 the loan was in default and the Company was in negotiations with the lender on the terms of this non recourse loan On March 19 2024 the Company closed on a three year extension of the loan to October 6 2026 The interest rate remained unchanged at 5 90
On January 3 2023 the Company closed on a five year 370 000 combined refinance of Green Acres Mall and Green Acres Commons The new interest only loan bears interest at a fixed rate of 5 90 and matures on January 6 2028
On October 24 2024 the Company acquired the remaining 40 ownership interest in Lakewood Center that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
On October 24 2024 the Company acquired the remaining 40 ownership interest in Los Cerritos Center that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
On May 6 2022 the Company closed on a two year extension of the loan to June 5 2024 at a new fixed interest rate of 5 25 The Company repaid 5 000 of the outstanding loan balance at closing On June 5 2023 the Company repaid 10 000 of the outstanding loan balance On December 10 2024 the Company sold The Oaks and concurrently paid off the loan balance with the net proceeds See Note 16 Dispositions
On October 28 2024 the Company closed a 525 000 five year refinance of the loan on Queens Center The new loan bears interest at a fixed rate of 5 37 is interest only during the entire loan term and matures on November 6 2029
On December 9 2022 the Company closed on a three year extension of the loan to December 9 2025 including extension options The interest rate remained unchanged at LIBOR plus 1 48 and converted to 1 month Term SOFR plus 1 52 effective July 9 2023 The loan was covered by an interest rate cap agreement that effectively prevented LIBOR from exceeding 4 0 during the period ending December 9 2023 The interest rate cap agreement was converted to 1 month Term SOFR effective July 9 2023 The interest rate cap agreement was extended with a 4 strike rate to December 9 2024 and was not renewed upon its maturity Effective April 9 2024 the loan is in default and accrues incremental default interest of 4 The Company is in negotiations with the lender on the terms of this non recourse loan
On May 14 2024 the Company acquired the remaining 40 ownership interest in South Plains Mall that it did not previously own and has consolidated its 100 interest See Note 15 Acquisitions In connection with the acquisition the Company assumed the partner s share of the loan on the property
The Company expects all loan maturities during the next twelve months will be refinanced restructured extended and or paid off from the Company s line of credit or with cash on hand with the exception of Santa Monica Place as noted above
The estimated fair value Level 2 measurement of mortgage notes payable at December 31 2024 and 2023 was 4 726 227 and 3 863 997 respectively based on current interest rates for comparable loans Fair value was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt
Previously the Company had a 525 000 revolving loan facility which was scheduled to mature on April 14 2024 On September 11 2023 the Company and the Operating Partnership entered into an amended and restated credit agreement which amended and restated their prior credit agreement and provides for an aggregate 650 000 revolving loan facility that matures on February 1 2027 with a one year extension option The revolving loan facility can be expanded up to 950 000 subject to receipt of lender commitments and other conditions Concurrently with the entry into the amended and restated credit agreement the Company drew 152 000 of the amount available under the revolving loan facility and used the proceeds to repay in full amounts outstanding under its prior credit facility All obligations under the credit facility are guaranteed unconditionally by the Company and are secured in the form of mortgages on certain wholly owned assets and pledges of equity interests held by certain of the Company s subsidiaries The new credit facility bears interest at the Operating Partnership s option at either the base rate as defined in the credit agreement or adjusted term SOFR as defined in the credit agreement plus in both cases an applicable margin The applicable margin depends on the Company s overall leverage ratio and ranges from 1 00 to 2 50 over the selected index rate Adjusted term SOFR is Term SOFR as defined in the credit agreement plus 0 10 per annum As of December 31 2024 and 2023 the borrowing rate was SOFR plus a spread of 2 35 As of December 31 2024 and 2023 borrowings under the revolving loan facility were 110 000 and 105 000 respectively less unamortized deferred finance costs of 11 677 and 15 452 respectively at a total interest rate of 7 59 and 8 57 respectively As of December 31 2024 the Company s availability under the revolving loan facility for additional borrowings was 539 777 The estimated fair value Level 2 measurement of borrowings under the credit facility at December 31 2024 was 110 963 for the revolving loan facility based on a present value model using a credit interest rate spread offered to the Company for comparable debt
On September 30 2009 the Company formed a joint venture whereby a third party acquired a 49 9 interest in Chandler Fashion Center a 1 401 000 square foot regional shopping center in Chandler Arizona and Freehold Raceway Mall a 1 537 000 square foot regional shopping center in Freehold New Jersey collectively referred to herein as Chandler Freehold As a result of the Company having certain rights under the agreement to repurchase the assets of Chandler
Freehold the transaction did not qualify for sale treatment The Company however was not obligated to repurchase the assets The Company accounted for its investment in Chandler Freehold as a financing arrangement
On November 16 2023 the Company acquired the 49 9 ownership interest in Freehold Raceway Mall See Note 15 Acquisitions As a result Freehold Raceway Mall is no longer part of the financing arrangement and is 100 owned by the Company In connection with the acquisition of the 49 9 ownership interest the Company recorded the 5 587 purchase amount as a reduction to the financing arrangement obligation
On June 13 2024 the partnership agreement between the Company and its partner was amended removing the specific rights that prohibited the transaction s qualification for sale treatment As a result the transaction qualified for sale treatment and the Company no longer accounts for its investment in Chandler Fashion Center as a financing arrangement The financing arrangement obligation was 88 721 on June 13 2024 and was reversed and included in gain on sale of assets See Note 16 Dispositions References to Chandler Freehold for the period after November 16 2023 through June 13 2024 shall be deemed to only refer to Chandler Fashion Center
The Company recognized interest expense on i the changes in fair value of the financing arrangement obligation ii any payments to the joint venture partner equal to their pro rata share of net income loss and iii any payments to the joint venture partner less than or in excess of their pro rata share of net income
The fair value Level 3 measurement of the financing arrangement obligation at June 13 2024 and December 31 2023 was based upon a terminal capitalization rate of approximately 7 0 and 6 5 respectively a discount rate at June 13 2024 and December 31 2023 of 8 25 and 8 0 respectively and market rents per square foot of 45 to 240 The fair value of the financing arrangement obligation was sensitive to these significant unobservable inputs and a change in these inputs could have resulted in a significantly higher or lower fair value measurement Distributions to the partner excluding distributions of excess loan proceeds and changes in fair value of the financing arrangement obligation were recognized as related party interest expense income in the Company s consolidated statements of operations
The Company allocates net income of the Operating Partnership based on the weighted average ownership interest during the period The net income of the Operating Partnership that is not attributable to the Company is reflected in the consolidated statements of operations as noncontrolling interests The Company adjusts the noncontrolling interests in the Operating Partnership periodically to reflect its ownership interest in the Company The Company had a 96 ownership interest in the Operating Partnership as of December 31 2024 and 2023 The remaining 4 limited partnership interest as of December 31 2024 and 2023 was owned by certain of the Company s executive officers and directors certain of their affiliates and other third party investors in the form of OP Units The OP Units may be redeemed for shares of registered or unregistered stock or cash at the Company s option The redemption value for each OP Unit as of any balance sheet date is the amount equal to the average of the closing price per share of the Company s common stock par value 0 01 per share as reported on the New York Stock Exchange for the ten trading days ending on the respective balance sheet date Accordingly as of December 31 2024 and 2023 the aggregate redemption value of the then outstanding OP Units not owned by the Company was 218 988 and 158 157 respectively
The Company issued common and cumulative preferred units of MACWH LP in April 2005 in connection with the acquisition of the Wilmorite portfolio The common and preferred units of MACWH LP are redeemable at the election of the holder the Company may redeem them for cash or shares of the Company s stock at the Company s option and they are classified as permanent equity
Included in permanent equity are outside ownership interests in various consolidated joint ventures The joint ventures do not have rights that require the Company to redeem the ownership interests in either cash or stock
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 500 000 under the 2021 ATM Program
During the year ended December 31 2024 the Company issued 9 401 596 shares of common stock under the 2021 ATM Program for aggregate gross proceeds of 151 699 and net proceeds of 148 624 after commissions and other transaction costs The proceeds from the sales under the 2021 ATM Program were used to pay down the Company s revolving loan facility See Note 11 Bank and Other Notes Payable As of December 31 2024 the 2021 ATM Program was fully utilized and is no longer active
In connection with the commencement of an 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 500 000 under the 2024 ATM Program During the year ended December 31 2024 the Company issued 3 709 322 shares of common stock under the 2024 ATM Program for aggregate gross proceeds of 70 706 and net proceeds of 69 057 after commissions and other transaction costs
On November 27 2024 the Company completed a public offering of 23 000 000 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 3 000 000 shares for gross proceeds of approximately 454 250 The net proceeds of the offering were approximately 439 410 after deducting the underwriting discount and offering costs of approximately 14 840 The Company used the proceeds from the offering together with cash on hand to repay the mortgage loan secured by its Washington Square property
On February 12 2017 the Company s Board of Directors authorized the repurchase of up to 500 000 of its outstanding common shares as market conditions and the Company s liquidity warrant Repurchases may be made through open market purchases privately negotiated transactions structured or derivative transactions including accelerated share repurchase transactions or other methods of acquiring shares from time to time as permitted by securities laws and other legal requirements The program is referred to herein as the Stock Buyback Program
On August 2 2022 the Company acquired the remaining 50 ownership interest in two former Sears parcels Deptford Mall and Vintage Faire Mall in the MS Portfolio LLC joint venture that it did not previously own for a total purchase price of 24 544 Effective as of August 2 2022 the Company now owns and has consolidated its 100 interest in these two former Sears parcels in its consolidated financial statements
On May 18 2023 the Company acquired Seritage s remaining 50 ownership interest in the MS Portfolio LLC joint venture that owns five former Sears parcels for a total purchase price of 46 687 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 5 587 and the assumption of its joint venture partner s share of debt The Company now owns 100 interest of this property 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
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 VIE in its consolidated financial statements See Note 2 Summary of Significant Accounting Policies
On May 14 2024 the Company acquired the remaining 40 ownership interest in Arrowhead Towne Center that it did not previously own for a total purchase price of 36 447 and the assumption of its joint venture partner s share of the debt on the property Effective as of May 14 2024 the Company now owns and has consolidated its 100 interest in Arrowhead Towne Center
The net assets acquired upon consolidation of Arrowhead Towne Center were initially recorded at their relative fair values as shown in the table above The carrying value of the property was then reduced by the remaining negative basis of 58 683 from the equity method investment previously held by the Company
On May 14 2024 the Company acquired the remaining 40 ownership interest in South Plains Mall that it did not previously own for no cash consideration and the assumption of its joint venture partner s share of the debt on the property Effective as of May 14 2024 the Company now owns and has consolidated its 100 interest in South Plains Mall
The net assets acquired upon consolidation of South Plains Mall were initially recorded at their relative fair values as shown in the table above The carrying value of the property was then reduced by the remaining negative basis of 80 750 from the equity method investment previously held by the Company
On October 24 2024 the Company acquired the remaining 40 ownership interest in the Pacific Premier Retail LLC joint venture that owns Lakewood Center Los Cerritos Center and Washington Square that it did not previously own for a total purchase price of 129 000 less the assumption of the partner s share of certain cash balances of 6 868 for a net purchase price of 122 132 and the assumption of its joint venture partner s share of debt on the properties Effective as of October 24 2024 the Company now owns and has consolidated its 100 interest in Lakewood Center Los Cerritos Center and Washington Square
The net assets acquired upon consolidation of Lakewood Center Los Cerritos Center and Washington Square were initially recorded at their relative fair values as shown in the table above The carrying value of the property was then reduced by the remaining negative basis of 98 800 from the equity method investment previously held by the Company
On December 2 2024 the Company paid off the remaining loan balance assumed on Washington Square with the proceeds from the Company s public offering on November 27 2024 See Note 14 Stockholders Equity and recognized a gain on extinguishment of debt of 14 403 for the year ended December 31 2024
On May 2 2023 the Company sold The Marketplace at Flagstaff a 268 000 square foot power center in Flagstaff Arizona for 23 500 which resulted in a gain on sale of assets of 10 349 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 5 634 which resulted in a gain on sale of assets of 1 903 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 9 500 resulting in a gain on extinguishment of debt of 8 208
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 See Note 12 Financing Arrangement Effective June 13 2024 the Company accounts for its investment in Chandler Fashion Center under the equity method of accounting
On June 28 2024 the Company sold a former department store parcel at Valle Vista Mall in Harlingen Texas for 7 100 which resulted in a gain on sale of assets of 756 The Company used the net proceeds to pay down debt
On November 25 2024 the Company sold Southridge Mall a 791 000 square foot power center in Des Moines Iowa for 4 000 which resulted in a loss on sale or write down of assets of 911 The Company used the net proceeds to pay down debt
On December 10 2024 the Company sold The Oaks a 1 206 000 square foot regional retail center in Thousand Oaks California for 157 000 which resulted in a loss on sale or write down of assets of 6 932 The Company used the net proceeds to pay off the 147 751 loan on the property
For the year ended December 31 2024 2023 and 2022 the Company sold various land parcels in separate transactions resulting in gains on sale of land of 1 185 5 592 and 22 357 respectively The Company used its share of the proceeds from these sales to pay down debt and for other general corporate purposes
As of December 31 2024 the Company was contingently liable for 6 113 in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers The Company does not believe that these letters of credit will result in a liability to the Company
The Company has entered into a number of construction agreements related to its redevelopment and development activities Obligations under these agreements are contingent upon the completion of the services within the guidelines specified in the relevant agreement At December 31 2024 the Company had 10 722 in outstanding obligations which it believes will be settled in the next twelve months
Certain unconsolidated joint ventures have engaged the Management Companies to manage the operations of the Centers Under these arrangements the Management Companies are reimbursed for compensation paid to on site employees leasing agents and project managers at the Centers as well as insurance costs and other administrative expenses The following are fees charged to unconsolidated joint ventures for the years ended December 31
Interest income expense from related party transactions also includes 11 264 24 206 and 34 735 for the years ended December 31 2024 2023 and 2022 respectively in connection with the Financing Arrangement See Note 12 Financing Arrangement
The 2003 Equity Incentive Plan 2003 Plan authorizes the grant of stock awards stock options stock appreciation rights stock units stock bonuses performance based awards dividend equivalent rights and OP Units or other convertible or exchangeable units As of December 31 2024 stock awards stock units LTIP Units as defined below stock appreciation rights SARs and stock options have been granted under the 2003 Plan All stock options or other rights to acquire common stock granted under the 2003 Plan have a term of 10 years or less These awards were generally granted based on the performance of the Company and the employees None of the awards have performance requirements other than a service condition of continued employment unless otherwise provided All awards are subject to restrictions determined by the Company s compensation committee The aggregate number of shares of common stock that may be issued under the 2003 Plan is 26 112 331 shares As of December 31 2024 there were 6 967 041 shares available for issuance under the 2003 Plan
The stock units represent the right to receive upon vesting one share of the Company s common stock for one stock unit The value of the stock units was determined by the market price of the Company s common stock on the date of the grant The following table summarizes the activity of non vested stock units during the years ended December 31 2024 2023 and 2022
Under the Long Term Incentive Plan LTIP each award recipient is issued a form of operating partnership units LTIP Units in the Operating Partnership or form of restricted stock units together with the LTIP Units the LTI Units Upon the occurrence of specified events and subject to the satisfaction of applicable vesting conditions LTIP Units after conversion into OP Units are ultimately redeemable for common stock of the Company or cash at the Company s option on a one unit for one share basis LTI Units receive cash dividends based on the dividend amount paid on the common stock of the Company The LTIP may include market indexed awards performance based awards and service based awards
The market indexed LTI Units vest over the service period of the award based on the percentile ranking of the Company in terms of total return to stockholders the Total Return per share of common stock relative to the Total Return of a group of peer REITs as measured at the end of the measurement period The performance based LTI Units vest over a specified period based on the Company s operational performance over that period
The fair value of the service based LTI Units was determined by the market price of the Company s common stock on the date of the grant The fair value of the market indexed LTI Units and performance based LTI Units are estimated on the date of
grant using a Monte Carlo Simulation model The stock price of the Company along with the stock prices of the group of peer REITs for market indexed awards is assumed to follow the Multivariate Geometric Brownian Motion Process Multivariate Geometric Brownian Motion is a common assumption when modeling in financial markets as it allows the modeled quantity in this case the stock price to vary randomly from its current value and take any value greater than zero The volatilities of the returns on the share price of the Company and the peer group REITs were estimated based on a look back period The expected growth rate of the stock prices over the derived service period is determined with consideration of the risk free rate as of the grant date
The Directors Phantom Stock Plan offers non employee members of the board of directors Directors the opportunity to defer their cash compensation and to receive that compensation in common stock rather than in cash after termination of service or a predetermined period Compensation generally includes the annual retainers payable by the Company to the Directors Deferred amounts are generally credited as units of phantom stock at the beginning of each three year deferral period by dividing the present value of the deferred compensation by the average fair market value of the Company s common stock at the date of award Compensation expense related to the phantom stock awards was determined by the amortization of the value of the stock units on a straight line basis over the applicable service period The stock units including dividend equivalents vest as the Directors services to which the fees relate are rendered Vested phantom stock units are ultimately paid out in common stock on a one unit for one share basis To the extent elected by a Director stock units receive dividend equivalents in the form of additional stock units based on the dividend amount paid on the common stock The aggregate number of phantom stock units that may be granted under the Directors Phantom Stock Plan is 650 000 As of December 31 2024 there were 169 758 stock units available for grant under the Directors Phantom Stock Plan
The ESPP authorizes eligible employees to purchase the Company s common stock through voluntary payroll deductions made during periodic offering periods Under the ESPP common stock is purchased at a 15 discount from the lesser of the fair value of common stock at the beginning and end of the offering period A maximum of 1 791 117 shares of common stock is available for purchase under the ESPP The number of shares available for future purchase under the plan at December 31 2024 was 406 633
The fair value of the stock units that vested during the years ended December 31 2024 2023 and 2022 was 3 317 2 736 and 2 349 respectively Unrecognized compensation costs of share and unit based plans at December 31 2024 consisted of 12 781 from LTI Units and 1 597 from stock units
The Company has a defined contribution retirement plan that covers its eligible employees the Plan The Plan is a defined contribution retirement plan covering eligible employees of the Macerich Property Management Company LLC and participating affiliates In accordance with the Plan the Company makes matching contributions equal to 100 percent of the first three percent of compensation deferred by a participant and 50 percent of the next two percent of compensation deferred by a participant During the years ended December 31 2024 2023 and 2022 these matching contributions made by the Company were 3 644 3 593 and 3 206 respectively Contributions and matching contributions to the Plan by the plan sponsor and or participating affiliates are recognized as an expense of the Company in the period that they are made
The Company has established deferred compensation plans under which executives and key employees of the Company may elect to defer receiving a portion of their cash compensation otherwise payable in one calendar year until a later year The Company may as determined by the Board of Directors in its sole discretion prior to the beginning of the plan year credit a participant s account with a matching amount equal to a percentage of the participant s deferral The Company contributed 492 463 and 429 to the plans during the years ended December 31 2024 2023 and 2022 respectively Contributions are recognized as compensation in the periods they are made
For income tax purposes distributions paid to common stockholders consist of ordinary income capital gains unrecaptured Section 1250 gain and return of capital or a combination thereof The following table details the components of the distributions on a per share basis for the years ended December 31 2024 2023 and 2022
54 5 of the 2022 ordinary income is treated as qualified REIT dividends for purposes of Section 199A of the Code and 45 5 of the 2022 ordinary income is treated as qualified dividend income for purposes of Section 1 h 11 of the Code
The Company has made Taxable REIT Subsidiary elections for all of its corporate subsidiaries other than its Qualified REIT Subsidiaries The elections effective for the year beginning January 1 2001 and future years were made pursuant to Section 856 l of the Code
The net operating loss NOL carryforwards for NOLs generated through the 2017 tax year are scheduled to expire through 2037 beginning in 2031 Pursuant to the Tax Cuts and Jobs Act of 2017 NOLs generated in 2018 and subsequent tax years are carried forward indefinitely The Coronavirus Aid Relief and Economic Security Act removed the 80 of taxable income limitation imposed by the Tax Cuts and Jobs Act for NOLs generated in 2018 2019 and 2020
The Company is required to establish a valuation allowance for any portion of the deferred tax asset that the Company concludes is more likely than not to be unrealizable The Company s assessment considers all evidence both positive and negative including the nature frequency and severity of any current and cumulative losses taxable income in carry back years the scheduled reversal of deferred tax liabilities tax planning strategies and projected future taxable income in making this assessment As of December 31 2024 the Company had no valuation allowance recorded
The tax years 2021 through 2023 remain open to examination by the taxing jurisdictions to which the Company is subject The Company does not expect that the total amount of unrecognized tax benefit will materially change within the next 12 months
The Company operates as one operating segment and 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 s CODM is the chief executive officer who reviews financial information presented on a consolidated basis The CODM assesses performance for the Company s single reportable segment and decides how to allocate resources based on consolidated net income see the Consolidated Statements of Operations The Company s objective in making resource allocation decisions is to optimize the consolidated financial results
The accounting policies of the Company s single reportable segment are the same as those described in the summary of significant accounting policies As the Company s operations comprise of a single reporting segment the measure of segment assets is reported in the accompanying consolidated balance sheets as Total assets Consolidated net income which is reported in the accompanying Consolidated Statements of Operations as Net loss attributable to the Company is the measure of segment profit or loss that is most consistent with GAAP that is regularly reviewed by the CODM Consolidated net income is used by the CODM in assessing the performance of the segment and the significant segment expenses are listed on the accompanying Consolidated Statements of Operations
On February 14 2025 the Company announced a dividend distribution of 0 17 per share for common stockholders and OP Unit holders of record on March 4 2025 All dividends distributions will be paid 100 in cash on March 18 2025
Master Agreement dated November 14 2014 by and among Pacific Premier Retail LLC MACPT LLC Macerich PPR GP LLC Queens JV LP Macerich Queens JV LP Queens JV GP LLC 1700480 Ontario Inc and the Company incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date November 14 2014
Articles of Amendment and Restatement of the Company incorporated by reference as an exhibit to the Company s Registration Statement on Form S 11 as amended No 33 68964 Filed in paper hyperlink is not required pursuant to Rule 105 of Regulation S T
Articles Supplementary of the Company incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date May 30 1995 Filed in paper hyperlink is not required pursuant to Rule 105 of Regulation S T
Articles of Amendment of the Company to eliminate the supermajority vote requirement to amend the charter and to clarify a reference in Article NINTH incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date May 30 2014
Articles Supplementary election to be subject to Section 3 803 of the Maryland General Corporation Law incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date March 17 2015
Articles Supplementary repeal of election to be subject to Section 3 803 of the Maryland General Corporation Law incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date May 28 2015
Articles Supplementary opting out of provisions of Subtitle 8 of Title 3 of the Maryland General Corporate Law MUTA Provisions incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date April 24 2019
Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated June 27 1997 incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date June 20 1997
Ninth Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated July 26 2002 incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date July 26 2002
Eleventh Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated as of March 16 2007 incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date March 16 2007
Twelfth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership dated as of April 30 2009 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended June 30 2009
Thirteenth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership dated as of October 29 2009 incorporated by reference as an exhibit to the Company s 2009 Form 10 K
Fourteenth Amendment to Amended and Restated Limited Partnership Agreement of the Operating Partnership dated as of April 14 2021 incorporated by reference as an exhibit to the Company s 2021 Form 10 K
Form of Fifteenth Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date April 25 2005
Amendment Number 2 to Amended and Restated Deferred Compensation Plan for Executives May 1 2011 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended June 30 2011
Amendment Number 3 to Amended and Restated Deferred Compensation Plan for Executives September 27 2012 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended September 30 2012
Amendment Number 2 to Amended and Restated Deferred Compensation Plan for Senior Executives May 1 2011 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended June 30 2011
Amendment Number 3 to Amended and Restated Deferred Compensation Plan for Senior Executives September 27 2012 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended September 30 2012
Deferred Compensation Plan Amended and Restated Trust Agreement between the Company and Wells Fargo Bank National Association effective as of June 17 2019 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended June 30 2019
Registration Rights Agreement dated as of March 16 1994 among the Company and Mace Siegel Dana K Anderson Arthur M Coppola and Edward C Coppola incorporated by reference as an exhibit to the Company s 1994 Form 10 K Filed in paper hyperlink is not required pursuant to Rule 105 of Regulation S T
Registration Rights Agreement dated as of December 18 2003 by the Operating Partnership the Company and Taubman Realty Group Limited Partnership Registration rights assigned by Taubman to three assignees incorporated by reference as an exhibit to the Company s 2003 Form 10 K
Incidental Registration Rights Agreement dated March 16 1994 incorporated by reference as an exhibit to the Company s 1994 Form 10 K Filed in paper hyperlink is not required pursuant to Rule 105 of Regulation S T
Redemption Registration Rights and Lock Up Agreement dated as of July 24 1998 between the Company and Harry S Newman Jr and LeRoy H Brettin incorporated by reference as an exhibit to the Company s 1998 Form 10 K
Amended and Restated Credit Agreement dated as of September 11 2023 by and among the Company as a guarantor the Partnership as borrower certain subsidiary guarantors Deutsche Bank AG New York Branch as administrative agent and collateral agent Deutsche Bank Securities Inc JPMorgan Chase Bank N A Goldman Sachs Bank USA and BMO Bank N A as joint lead arrangers and joint bookrunning managers Deutsche Bank Securities Inc and JPMorgan Chase Bank N A as co syndication agents Goldman Sachs Bank USA and TD Securities Inc as co documentation agents and various lenders party thereto incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date September 11 2023
Amended and Restated Unconditional Guaranty dated as of September 11 2023 by the Company in favor of Deutsche Bank AG New York Branch as administrative agent incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date September 11 2023
First Amendment to the Macerich Company Employee Stock Purchase Plan incorporated by reference as an exhibit to the Company s Registration Statement on Form S 8 filed with the Securities and Exchange Commission on May 30 2024
The Macerich Company Amended and Restated Severance Pay Plan effective as of March 1 2024 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended September 30 2024
2005 Amended and Restated Agreement of Limited Partnership of MACWH LP dated as of April 25 2005 incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date April 25 2005
Registration Rights Agreement dated as of April 25 2005 among the Company and the persons names on Exhibit A thereto incorporated by reference as an exhibit to the Company s Current Report on Form 8 K event date April 25 2005
Employment Agreement between the Company and Jackson Hsieh effective as of March 1 2024 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended March 31 2024
The Macerich Company Sign On LTIP Inducement Unit Award Agreement Service Based between the Company and Jackson Hsieh dated March 1 2024 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended March 31 2024
The Macerich Company 2024 LTIP Inducement Unit Award Agreement Service Based between the Company and Jackson Hsieh dated March 1 2024 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended March 31 2024
The Macerich Company 2024 LTIP Inducement Unit Award Agreement Performance Based between the Company and Jackson Hsieh dated March 1 2024 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended March 31 2024
Letter Agreement between the Company and Edward C Coppola dated February 2 2024 incorporated by reference as an exhibit to the Company s Quarterly Report on Form 10 Q for the quarter ended March 31 2024
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on February 28 2025
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated

Company Name	MACERICH CO Vist SEC web-site
Category	REAL ESTATE INVESTMENT TRUSTS
Trading Symbol	MAC