管理層發言
Good afternoon, and welcome to the Q2 2026 Macerich Earnings Conference Call. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Alexandra Johnstone, VP of Finance and Investor Relations. Please go ahead.
Thank you for joining us on the second quarter 2026 earnings call. During this call, we will make certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, including statements regarding projections, plans or future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results and supplemental and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8-K with the SEC, which is posted in the Investors section of the company's website at macerich.com. Joining us today are Jack Hsieh, President and Chief Executive Officer; Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with us in the room is Brad Miller, Senior Vice President of Portfolio Management. With that, I would like to turn the call over to Jack.
Thanks, A.J., and good afternoon, everyone. When we published our Path Forward 3.0 plan at NAREIT in June, we highlighted that we were meaningfully ahead of schedule on the execution of the plan, which is delivering tangible results and positioning us for accretive growth above our original expectations. We're demonstrating strong execution across three pillars: simplify the business, improve operational performance and reduce leverage. We've made significant progress in leasing, dispositions and balance sheet improvement while also positioning us for sustainable NOI growth and new external growth opportunities. Today, I'll briefly touch on our second quarter results, then turn to where we stand on our Path Forward plan and how we're thinking about external growth. I'm pleased with our second quarter results. FFO as adjusted was $0.35 per diluted share and go-forward portfolio NOI grew 3.8%. We expect this growth to continue to ramp in 2027 and 2028 as our signed-not-open tenants open and begin paying rent. Our signed-not-open pipeline reached $124 million. Portfolio sales reached a new company high of $919 per square foot and $954 across the go-forward portfolio with leased occupancy of 94% and 95.5% in the go-forward portfolio. We remain ahead of schedule on our important strategic leasing initiatives. Our leasing speedometer, which tracks new deal completion in the 5-year plan, is at 88%, ahead of our 85% midyear target. Only a small number of leases remain to complete the plan and our attention has shifted to conversion. That means getting tenants permitted, built out, open and paying rent. Occupancy is tracking with what we projected in our Path Forward plan and the strong demand for our space has our teams already leasing into 2029 and 2030 as little space remains available in our best centers. We recently introduced the store openings completion percentage, an operational metric intended to provide transparency on our progress to move tenants from LOI to store opening. As of NAREIT, we were at 50%. And today, we are at 57%. We expect to be ahead of our 60% year-end target at the end of this year. We talked about how our playbook is working within the portfolio as the elevate and transformation strategy moves through the later stages and occupancy tightens, traffic increases and NOI improves. If we look at our best-performing centers year-to-date in terms of NOI growth, these centers have experienced the strongest traffic improvement as compared to our portfolio average. Our next good case study is the West wing of Tysons Corner. That wing has historically been held back by weaker traffic, and we're changing that. We're adding, among other nationally recognized tenants, a two-level Eataly in the former American Girl space, Din Tai Fung in the former Pottery Barn, and Cider in the Express space. These tenants are all proven traffic generators. With that wing now effectively full, that added traffic and dwell time should translate directly into pricing power. Year-to-date through the first six months, traffic is up 10% at Tysons as we have continued to upgrade the tenant base over the past three years. With these new tenants coming in that we've signed and others we expect to announce soon, that traffic has even more room to improve. The scarcity of space in our best centers is by design in our Path Forward plan. No one is building new regional malls and roughly 90% of our go-forward NOI comes from Class A assets and the best retailers in the world are concentrating their growth in high-quality centers like ours. Retailer demand is as deep as we've seen it and is influencing how we are evaluating potential acquisition opportunities. Brands are pursuing quality over quantity and competing for limited space in our centers. The Gen Z consumer over-indexes on visiting physical stores and spending on goods, food and experiences and is on track to become the largest spending demographic in the country. Those tailwinds are only getting stronger. Let me turn to acquisitions, which is an increasingly important growth engine for us. Our opportunity set has grown and the pipeline is robust. We are evaluating a broad set of on- and off-market opportunities, the most at any point since we began the Path Forward plan. We remain highly disciplined, and our criteria has not changed. Our criteria for acquisitions includes assets that are: one, accretive to our Path Forward plan; two, located in strong trade areas with clear catalysts to elevate and transform using our leasing, development and operational platform to add value; and three, finance in a way that keeps us within our leverage targets under the plan. We will remain patient and selective, but we intend to use this window because the conditions for acquiring and transforming high-quality malls are as favorable as we've seen. At Annapolis, the onboarding has gone smoothly and the momentum is clear. UNIQLO is now open. Dick's House of Sport opens on August 14, and the elevate and transform effort is well underway. It is a market-leading asset in one of the most affluent trade areas on the East Coast and its proximity to Tysons extends our platform across the Washington, D.C. region. At Crabtree, our leasing momentum has been strong. We recently announced Level 99 and Fogo de Chao, and Dick's House of Sport is opening in September. In addition, Lululemon has recently signed a lease to extend and expand their location. Since the acquisition, we have commitments on 45 new and expansion leases and 35 renewal leases. Both assets reinforce our conviction that our leasing capabilities and relationships with the best retailers in the world are what turned these acquisitions into value, and it's a big reason sellers and retailers want to work with us. We are increasingly in a position of strength with the balance sheet. Following our most recent offering completed on a forward settlement basis, we have approximately $372 million from this offering available to fund future acquisitions. That financial flexibility, combined with our platform, lets us act with speed and certainty that sellers and retailers value. That's a real competitive advantage in this market. In summary, we are ahead of schedule. The plan is substantially de-risked and the structural tailwinds behind our business from the limited supply to retailer demand to the emergence of the Gen Z consumer are strengthening. As I've noted before, when we complete this plan, you should expect to see a company with higher permanent occupancy, embedded rent growth, a stronger balance sheet and a portfolio of irreplaceable assets in the country's most desirable markets. With that, I'll turn the call over to Doug.
Thanks, Jack. Like the first quarter, the second quarter reflected continued leasing momentum across our portfolio. Portfolio sales at the end of the second quarter were $919 per square foot, once again representing a new high watermark for the company, and that's our full portfolio. By contrast, when you look at our go-forward portfolio, the centers where we're actively investing, sales were $954 per square foot, and this continues to underscore the success of our elevate and transformation strategy. Occupancy at the end of the second quarter was 94%, up 60 basis points from the first quarter. The go-forward portfolio occupancy at the end of the second quarter was 95.5%, and that's up 60 basis points sequentially and up 270 basis points year-over-year, continuing to reflect strong demand for space in our best centers. As we get into actual leasing for the quarter, let's start with our lease expirations. We have commitments on approximately 93% of our 2026 expiring square footage that is expected to renew and remain open with another 6% in the letter of intent stage. As I mentioned last quarter, we're effectively done with 2026 and now actively focused on 2027 and 2028. In fact, as we look specifically at our 2027 expirations, we're just about 50% committed with another 40% in the letter of intent stage. And compared to this time last year, we're ahead of pace and very pleased with the progress we've made. Turning to tenant openings. In the second quarter, we opened almost 350,000 square feet of new stores. Most notably, in the second quarter, we opened a new and expanded Zara store at Tysons Corner Center. At 45,000 square feet, this is the first true flagship Zara in our portfolio, and its opening was extremely strong. In fact, in its opening weekend, Zara Tysons was ranked number one in sales in the United States and number five in the world. Since then, it remains number one in this region and in the top ten in the country. And we look forward to opening our second Zara flagship at Los Cerritos in the fourth quarter of 2027. In terms of leases signed in the second quarter, we signed 1.3 million square feet of new and renewal leases, of which 645,000 square feet were new deals, which is right on par with what we leased in the second quarter of 2025. And let's remember, last year was a record leasing year for us. Examples of leases signed in the second quarter span five categories: legacy brands like Aerie, OFFLINE by Aerie and Old Navy; food and beverage concepts like Eataly, Din Tai Fung, and Wood Ranch; international names like Zara and Sephora; experiential concepts like Level 99 and Golf Galaxy; and emerging brands like Alo Yoga, On Running, Viore, Rowan, Reformation, and Cider. So my point listing examples of brands we signed in the second quarter, which is really just a subset of all the leasing we've done in our five-year plan, is this: of the 1,000 new deals in our 5-year plan, we only have 170 left to achieve our goal, two-thirds of which are in the letter of intent stage. And given the continued healthy retail environment and unprecedented demand for space in our centers, we believe this is very achievable. So how did we get here? We got here by record leasing activity in the last 2.5 years, which we've discussed quarter after quarter. But it's very important to note, and I want to make this clear, we achieved the success not by just leasing space to fill space, but rather we got here by leasing space in a very thoughtful and strategic manner, targeting many of the best and most sought-after retailers in the world. And when these 1,000 new tenants open between now and the end of 2028, the Macerich portfolio of shopping centers will have been completely reimagined and ultimately transformed and elevated like never before. And when we look out to 2029 and beyond, the narrative of our leasing story will change. With the vast majority of our 1,000-deal program complete, we shift from record leasing volumes to curating and optimizing a portfolio that is already elevated. We expect our go-forward centers to be operating at higher occupancy and higher sales productivity than any point in our history, giving us continued pricing power and the ability to drive sustainable same-center NOI growth for years to come. And with that, I'll turn the call over to Dan to go through our second quarter financial results.
Thanks, Doug, and good afternoon. I'll start with a review of the second quarter financial results. FFO as adjusted was approximately $100 million or $0.35 per share during the second quarter of 2026. Go-forward portfolio centers NOI, excluding lease termination income, increased 3.8% in the second quarter of 2026 compared to the second quarter of 2025. With a strong second quarter of NOI growth, go-forward portfolio centers NOI has now increased 2.5% for the six-month period ended June 30, 2026, as compared to the same period in 2025. We continue to expect go-forward portfolio centers NOI growth for the full year 2026 to increase at least 3% over 2025 and to accelerate meaningfully in 2027 and 2028 as the signed-not-open pipeline tenants continue to open and begin paying rent. We have a high level of confidence in achieving the total signed-not-open opportunity of approximately $140 million. The estimated annual contribution is $30 million in 2026, back-end weighted, $40 million to $45 million in 2027 and $45 million to $50 million in 2028. This represents a clear visible path to drive incremental growth. Turning to the balance sheet. We are making strong progress on the balance sheet initiatives contained in our Path Forward plan. 2026 continues to be an incredibly productive year by the team in relation to our various financing activities. With respect to our equity capital markets activity, in May, we priced an upsized public offering of common stock at $21 per share, resulting in net proceeds of approximately $450 million. The use of proceeds were primarily to fund the acquisition of Annapolis Mall and related strategic leasing capital investments at Annapolis. In June, we priced the public offering of common stock at $23.90 per share through forward sale agreements. The company did not initially receive any proceeds from the sale of shares of its common stock by the forward purchaser banks. We intend to use the future net proceeds to fund future acquisition opportunities. Year-to-date in 2026, we have closed on a four-year loan extension through November 29 at our South Plains property, completed an amended and restated $900 million revolving credit facility, repaid the loan outstanding on Vintage Fair Mall and closed on a new $115 million five-year mortgage loan at Deptford Mall. With respect to our 29th Street property, the $76 million loan at the company's pro rata share remains in default after its February maturity date. As we are currently in discussions with the lender on the terms of this loan, we do not have any additional commentary at this time. We're proactively addressing our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or if necessary, property givebacks. We currently have approximately $1.2 billion in liquidity, including $900 million of capacity on our revolving line of credit. This excludes the net value of unsettled forward equity proceeds of approximately $372 million. From a leverage perspective, net debt to adjusted EBITDA at the end of the second quarter was 7.3x, which is almost a half turn lower than last quarter and over a 1.5 turn lower than at the outset of the Path Forward plan. Inclusive of the unsettled forward equity proceeds, net debt to adjusted EBITDA is now below 7x. And importantly, we've outlined our strategy to further reduce leverage to the 6x, plus or minus range. We are executing on the dispositions we've outlined in our Path Forward plan. During the second quarter, we closed on the sale of our joint venture interest in West Acres for $1 million plus the assumption of $13 million of debt at our share. To date, we have completed approximately $1.3 billion in total dispositions, representing about two-thirds of our initial disposition target and the disclosures we provided in our supplement includes a summary of these asset dispositions. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine our portfolio. We continue to expect to sell or give back $300 million to $400 million of additional assets, outparcels and land by the end of this year. This would increase total dispositions to approximately $1.7 billion. Year-to-date, we have closed on about $30 million in total dispositions, and we now have approximately $100 million under contract to sell. We'll provide further updates on our disposition activities as we progress through the year. Overall, we are making great progress on our Path Forward plan objectives to reduce leverage, refine the portfolio and strengthen the balance sheet. With that, we'll turn the call over to the operator.
分析師問答
And our first question today comes from Andrew Reale from Bank of America.
Now that all 30 anchor replacements are committed and starting to roll on, maybe could you just talk about in more detail sort of the second order effects on leasing and rent spreads at the rest of the center once that anchor opens? How might that compound over both the next few years and then even beyond 2028 when the renewal opportunity really accelerates?
I'll take that, Andrew. So you're asking sort of the net follow-on effect of our 30 anchors. There are probably three stages it goes through. The first is when we sign an anchor deal and can announce it. It's obviously not open yet. That already enables us to begin the re-leasing effort with getting strategic tenants that we can build upon in the inline. Then there's the second phase, which is when the store opens. That obviously brings more energy and traffic into those wings. And then you've got what I'd call the after-effect two years later when the anchor is open and operating and multiple tenants are also open and operating in that wing. If I were to use an example of the Scheels store at Chandler, that store in itself right now is drawing 3.1 visitors to its store according to Placer in the last 12 months. It's the number one Scheels in the system. That's enabled us to bring Vuori, Alo, Din Tai Fung now is coming on to the outside. Seafood City just opened, for instance, at Chandler. That's a pretty exciting brand that just opened last week. So you're seeing that effect. Scheels is very unique; they draw tremendous volumes. But if you look at another important anchor tenant that we've talked a lot about, Dick's House of Sport, we have about nine months operating history at Freehold with them. And according to our math, they're drawing over 800,000 customers into the center from their store. We expect them to achieve about a $1 million incremental customer run rate. That's already not only helped tenants within that wing, but enabled the teams to continue to follow on more leasing. So it's not a simple answer, but what I'd say is we get the first bite when we're able to announce the anchor. We get the second bite when they open. And by then, we've got other tenants in-line opening. And then when you look at it two years later, you get the full effect.
Our next question comes from Vince Tibone from Green Street Advisors.
I understand acquisitions are lumpy and hard to predict. But how should we best think about overall acquisition volumes going forward? Based on your comments, it seems like there's a lot of interesting opportunities you're underwriting. So just trying to get a sense of if there's any thresholds in terms of risk mitigation or human capital or number of assets you recently acquired that are in some state of transition that you want to kind of limit in terms of the overall portfolio. Ultimately, yes, just trying to see how many of these we should reasonably expect over the next 12 to 18 months.
Yes. Okay, Vince, I'll try to take that. So you're kind of trying to pin me down on size, shape and volume. The way I'll answer it is I believe that this is a really unique opportunity to buy enclosed regional shopping centers. We have a tremendous advantage having an integrated operating platform, great national tenant relationships, and the capital. We don't need mortgage debt for acquisitions and we have speed and certainty. That should give you confidence and enabled us to win Crabtree in a fully marketed deal and secure Annapolis, which was off market because the seller wanted certainty and speed. What I can tell you today is since I've been at this company, we have a robust and broad on- and off-market set of opportunities with stabilized yields in the 9% to 11% area. I'm not going to give you a specific number of deals, but the way I would think about the net effect to us—and what makes it exciting for me—is we're at $1.90 and 6x debt-to-EBITDA on the core plan. If we invest that $372 million of forward equity that we have, 100% equity on an acquisition in the 9% to 11% stabilized yield area, that's going to generate about $0.02 to $0.04 incremental FFO accretion and lower our leverage 25 to low-30 basis points debt-to-EBITDA. So our debt-to-EBITDA would be down into the high 5s if we're able to just deploy that $372 million. We're going to be picky and do the right thing. I probably have a lot of sellers listening to this call too, so I don't want to make it harder on myself. But I think it's a tremendously unique opportunity for us as a company today.
Our next question comes from Craig Mailman from Citi.
Maybe not to pile on or try to pin down even more, but on acquisitions. I mean you guys came back pretty quickly to the equity market and raised a decent chunk of forward capacity here. I mean, I guess from our standpoint, what's the risk that that capital doesn't get deployed by June of next year when you guys would have to settle it? I mean, is that even a possibility given what you have in the pipeline today?
It's not possible. I'm just going to tell you, Craig, it's just not possible. The reason we pursued the forward equity is we have so many good things happening in terms of leasing and our pipeline. Doing a forward equity was a no-brainer. We have a very, very large pipeline. We know that the net effect will take our debt-to-EBITDA down into the high 5s, around 5.75%, and it's going to be accretive. So yes, we're going to use that money well before June of next year. It was prudent given the macro uncertainties. Right now, I'm very comfortable settling that forward equity on acquisitions in the 9% to 11% stabilized yield range, and I know the net effect, which will be positive for the business. So that was the logic of why we did it. It wasn't that we had a single deal ready to print; we just said this is too good and we need to protect our plan.
Our next question comes from Todd Thomas from KeyBanc Capital Markets.
I'll switch over to operations for this. Dan, you reiterated the full year go-forward NOI growth of at least 3% and then reiterated also that you expect a meaningful acceleration in 2027 and 2028. Just in terms of the cadence from here, following 3.8% this quarter, is there anything in the second half of the year that should create a headwind to go-forward NOI growth? Or do you see this period representing the inflection in growth with growth continuing to track higher from here on commencements?
Yes. Todd, thanks for the question. We continue to expect at least 3% for the year, which given the second quarter at 3.8% brings us to 2.5% year-to-date. That implies we need about 3.5% NOI growth for the second half of the year. We think the fourth quarter based on the signed-not-open contribution might be a little stronger than the third quarter, but think about the second half as at least 3.5% for 2026. As noted, there's a meaningful ramp from there—our Path Forward 3.0 sets a three-year NOI CAGR midpoint of 6.5% for 2026 through 2028. If you assume 3% in 2026, that implies north of 8% NOI growth in 2027 and 2028. We've also given the SNO contribution by year in our prepared remarks, and 2028 is slightly higher than 2027, so you can think of 2028 as a little bit stronger than 2027. Over those two years, the midpoint equates to roughly 8.25% growth based on the three-year midpoint.
And Todd, I'll add to Dan's comment on operations. You've heard us talk about later-stage, mid-stage and early-stage transformation. We're re-leasing about 1,000 new units—it's roughly 25% of our portfolio. The late-stage transformation assets like Kierland Commons, Broadway Plaza, Scottsdale Fashion Square and Tysons Corner are generating low-teens traffic increases year-to-date versus a flat go-forward portfolio average. If you look at NOI year-to-date for those four properties, it's close to 9%—high single-digit—versus 2.5% for the go-forward average. Sales year-to-date for those properties are low double-digit increases versus 3.7% for the go-forward average. Mid-stage examples like Los Cerritos and Chandler are seeing mid-single-digit NOI growth year-to-date compared to 2.5% for the go-forward average, and sales are also mid-single digit versus the 3.7% go-forward average. Each of those centers has unique tenant activity—Chandler has Seafood City open, Zara under construction, Din Tai Fung under construction, Sephora, Alo and Wagyu House under construction. Los Cerritos has Dick's House of Sport under construction, flagship Zara under construction, Coach and Cider under construction and other tenants to be announced. You're going to see follow-on effects. The question about the 30 anchors earlier: there are 15 other centers either in early- to mid-stage transformation that will start to contribute and follow on as we progress into 2028, and you'll see effects rolling into 2029 and 2030. The go-forward averages don't tell the whole story. We're seeing real-time lift in later-stage assets and mid-stage is beginning to show it as well. It's working and gives us a lot of confidence.
Our next question comes from Floris Van Dijkum from Ladenburg.
I don't want to belabor the capital markets questions and the investments. Hopefully, people have gotten a pretty good sense of the growth ahead. My question is, what percentage of your total NOI today is in your go-forward portfolio? And then maybe also a little bit of an update on the percentage of your signed-not-open pipeline that's from redevelopment versus your core portfolio, please?
Floris, I can take the first part of your question on the NOI contribution and refer you to our supplement, Page 7. We had NOI for all centers for the quarter of $211 million and the go-forward centers represent $185 million of that $211 million. For the six months ended June 30, the NOI for go-forward centers is about $360 million relative to $400 million for the total portfolio.
I'll take the signed-not-open contribution. Of the $124 million of SNO we have out of the $140 million total opportunity, the $124 million roughly breaks down to $20 million from our development pipeline—Scottsdale, Green Acres and Flatiron—$20 million to the redevelopments, which is all the anchors that we're opening up, and the remainder of about $84 million is the rest of the leasing across the portfolio.
Our next question comes from Haendel St. Juste from Mizuho.
I wanted to go back to the redevelopment capital spend, curating and optimizing the portfolio. With your leasing goals nearly complete, it seems like there's going to be a shift towards some of that curating and optimizing the portfolio. You have a number of anchor commitments. So I'm curious if you could share some color on the scope of the opportunity for redevelopment in front of you within the portfolio. How can we think about that on an intermediate-term basis in terms of redevelopment spend and the yield you're targeting?
Thanks, Haendel. On redevelopment priorities, the team is working through that exercise now. There's been so much focus on the 1,000-unit plan that there are additional opportunities we haven't fully addressed that will contribute. For example, at Broadway Plaza we have the former Neiman Marcus anchor box that was originally planned for a Restoration Hardware; that's not going to happen anymore and, thankfully, we have the opportunity to convert it to more inline space because there's so much demand for tenant space at Broadway Plaza. That will be more accretive than the prior plan. At Scottsdale Fashion Square, we have a very valuable piece of commercial real estate on the north parcel adjacent to the Apple Store and we're evaluating options there. Tysons has tremendous opportunity up by the Silver Diner, across from the West Wing that we discussed. There are others like that across the portfolio that we're beginning to put pen to paper on—how to structure it, how it pro formas out, whether it adds value and traffic, and whether it enhances our competitive moat. We'll provide more detail as we progress.
Our next question comes from Greg McGinniss from Scotiabank.
For the acquisitions, you're looking at targeted yields in the 9% to 11% range. And I recognize that this math is not one-to-one, but how should we think about the quality of those assets compared to the in-place portfolio considering the mid- to high-6% implied cap rate on the stock?
Greg, you're asking about the quality differential between assets in the 9% to 11% stabilized yield range and our in-place portfolio implied cap rate. We are evaluating assets in very strong trade areas where we believe, with a catalyst plan—leasing, anchor re-demise, repositioning—we can gain more market share. First and foremost, the asset must be in a strong trade area. It must be accretive and finance within our leverage targets. Our portfolio is an A portfolio and the assets we're looking at are solid; many are already high quality or can be made so by employing our strategy. So the quality of the opportunities we're underwriting is very solid.
Our next question comes from Michael Griffin from Evercore ISI.
Jack, you mentioned the deals that you've closed over the past 1.5 years, Annapolis and Crabtree—one was marketed and one was off-market. I'm curious if you're seeing any increased competition for prospective transactions. I imagine it's a relatively limited buyer pool. But given the operational intensity and the nature of how to run these malls, have you seen more capital chasing these deals? Any thoughts on that?
I think Crabtree was pretty robustly bid and there are still players evaluating similar opportunities. Our cost of capital advantage is different now compared to when we evaluated Crabtree, and these are not commodity assets. Anyone investing in this space needs to partner with a strong operator; it takes time and capital to execute. When we were successful with Crabtree and Annapolis, we were more limited in team bandwidth; now we have an EVP of acquisitions and a dedicated team and an expanded pipeline. We do see competition, but we have advantages—tenant relationships, speed, certainty, municipal relationships and operational capabilities. For example, if you're trying to bring Dick's House of Sport to a campus, we have a deep relationship and commitments that provide predictability as we underwrite opportunities. Some opportunities require partnerships with municipalities—like Flatiron in Broomfield, which involves the city. That project wouldn't work without that partnership and it's going to be a source of pride for our company and the community. So yes, competitive, but we have distinct advantages.
And our next question comes from Tayo Okusanya from Deutsche Bank.
Just curious, with the recent increase in the 10-year and concerns about rates being higher for longer, does that change any of the calculus for you guys at this point in regards to capital allocation? Or is that less of an issue now given everything you've done with asset sales and deleveraging?
Tayo, it hasn't had an immediate effect. As we think about refinancings within the plan, we assumed roughly a 6% all-in cost of financing on refinancings. Even with the rise in the five-year and ten-year, spreads are still constructive and really at all-time lows. So we don't currently expect it to affect our ability to refinance the rest of the portfolio. In terms of broader capital allocation, it hasn't impacted our strategy yet. Jack, do you want to add anything?
I agree with Dan's points. With the forward equity in place, it protects our ability to get the balance sheet under 6x debt-to-EBITDA. That gives us significant flexibility even with some rate uncertainty.
Our next question comes from Ron Kamdem from Morgan Stanley.
Going back to the pipeline for acquisitions, you've done two successfully. Is there a way to categorize what that potential pipeline could look like over the next three to five years? How often can deals like this come about—marketed or reverse inquiry?
Ron, you're trying to pin me down, but the pipeline is robust—the most we've had since I started. One helpful data point: about half of our pipeline is on-market and half is off-market. So we're seeing a broad set of opportunities and we're actively engaged across both channels.
Our next question comes from Mike Mueller from JPMorgan.
You're talking about cap rates in the 9% to 11% range. Are you seeing any signs of cap rate compression? Do you think this window is open for a while or might cap rates compress soon?
Mike, personally I'd prefer cap rates not compress because I'd like to buy more. I think the focus should be on debt yields. Debt yields are compressing on the best A++ properties, but it's going to be a while before that meaningfully impacts cap rates broadly in the mall business. Any mall that requires elevate and transform effort tends to limit leverage on acquisition—buyers may need to put up 35% to 40% equity and write checks over the next three years. As long as that dynamic remains, we should be able to see the kinds of yields we're discussing. If more buyers like us enter the market, that could impact cap rates, but I haven't seen that yet.
Our next question comes from Alexander Goldfarb from Piper Sandler.
Jack, can you talk about ancillary income, sponsorship and overlay opportunities that malls can have? As you look at the Path Forward, are you focused first on assembling the portfolio you want and then adding ancillary overlays, or is this a dual-track strategy?
Alex, we haven't missed a beat on ancillary income. A good example is the PenFed Plaza transaction at Tysons where we entered a partnership and branding opportunity in that open plaza near the Dick's House of Sport and hotel entrance. We're exploring similar branding opportunities at Scottsdale Fashion Square. These are examples of ancillary income and business development is actively pursuing them. Our best centers drive 14 to 15 million annual customers through the doors, offering unique cross-sell opportunities for non-real-estate revenue. We won't wait until the plan is fully delivered—we'll pursue these opportunities as centers upgrade because they generate meaningful incremental NOI.
Our next question comes from Caitlin Burrows from Goldman Sachs.
Maybe two modeling points. Can you confirm versus the goal of 88% to 89% physical permanent occupancy, what it was as of Q2? And on the management company side, revenues look down year-over-year but management company expenses are up. What's driving that and what should we assume going forward? Is it impacted by acquisitions or something else?
We reported 95.5% leased occupancy for the go-forward portfolio. Physical occupancy at the end of Q2 was 91%. We still expect to get to that 88% to 89% physical permanent occupancy as we get the 1,000 tenants open.
On the management company revenues, they were down slightly in Q2 relative to Q2 2025, but Q1 was up, so year-to-date we're up about $1.5 million versus '25. That's primarily from development fees being outsized versus last year, and we expect that to continue in the second half of 2026 as we complete Green Acres and Flatiron and finish the last stages of Scottsdale. On the expense side, increases year-over-year are primarily from headcount and compensation—we built out our asset management and acquisitions teams—and there's some investments in technology and AI spend as well.
And there appear to be no further questions at this time. Please go ahead, sir.
I apologize for interrupting. I want to thank everyone for joining tonight, and let you know we are extremely excited about what we're seeing on the operational lift from our transformation strategy and our pipeline of acquisition opportunities. Thank you for joining our call.
And ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.