The Macerich Company (MAC) Earnings Call Transcript & Summary

Morning, everyone. Welcome to the 2022 Macerich Investor Day. We'd like to thank our audience that is here live in person and virtually online. Our presenters have allowed Q&A at the end of their presentation. So we just ask that you use your microphone when they come around so that we can capture it for live -- for our virtual audience. And lastly, our presentations and all the materials will be available online following the event. And with that, I turn it over to Tom.

Okay, I did not pick -- I did not pick that walk-up song. That is not my walk-up song. Sorry. I think it might have been more like eye of the tiger or something like that after what we've all been through. Welcome, everybody. Thanks a lot for being here. It is so nice to be in person with everybody. Great time, yesterday, I think you saw a couple of our kind of middle-of-the-road assets yesterday, and they showed well and showed an example of what we're trying to do. As you can tell, A-quality malls are back. Consumers are back, shopping in person. We expect holiday season to be pretty good. The experts are saying 4% to 7%. That's what most of our retailers are saying. We don't generally predict that, but that would be fairly healthy on top of a really strong fourth quarter last year. So I think we're going to hear and see more good things to come over the next 4 or 5 weeks as we move forward. Black Friday, the first time in 2 years was good. It wasn't expected to be a door busting type day or weekend. It was expected to really just be the segue and start of a pretty good holiday season, and that's what we're seeing. I think one thing you'll take from the meeting today is we're in a pretty incredible leasing environment today. And a lot of times, we compare coming out of bad times with a great financial crisis. And I'd say we came pretty strong out of the financial crisis in 2010 and '11, but this is even stronger. We've got so many leasing alternatives that Doug Healey will get into a lot of details and leasing guys, but it's just an incredible environment that we frankly haven't seen before. So a lot of stats up here. I think an important one is we reduced our portfolio coming out of the financial crisis from 68 centers to 44. I mean our goal was really -- we said, okay, what performed well during tough times, what didn't perform well. And the top centers perform extremely well, such as Scottsdale, Kierland that you saw yesterday. We sold 24 centers that averaged about $325 a foot in sales. Our average today is $877. So that was our lower quartile. We raised about over $1 billion that we redeployed into our portfolio. Another interesting stat here. I'm sure all of you are very astute investors, but if you look at that 13.2%, what that is, is that's your return on equity today if you bought Macerich at $13. That's the AFFO divided by the share price. That's a pretty good starting point before even do anything good with the cash flow from operations. Another important stat here, the $877 a foot, that's higher than we were pre-COVID. That's tenant sales per foot. That's the highest we've ever had, and it's just trending up from here. So great things are happening with our portfolio. To the lower right-hand corner, our occupancy at 92.1%, pretty good, especially when you compare it to other sectors, but that's still below our pre-COVID level of 94%. So we've got a lot of running room left, a lot of growth in same-center NOI, which I'm sure Scott will get into and it bodes well for what's ahead of us. Investment thesis, the obvious. We're a great value stock today. We're trading at a 6.5 multiple. Historically, we've traded at a 15 to 20 multiple. So do the math. And for whatever it's worth, management is walking its talk, management has been buying a lot of stock. I don't know if you guys have noticed it, but there's a lot of form 4s out there. It's interesting. There's a lot of concern when Sears went bankrupt. We were frankly -- it was inevitable. We knew it was going to happen. We were looking for the opportunity to recapture a lot of those boxes and change a lot of the character and complexion of our properties and that's happened. So the opportunity to get back 10, 11, 12 Sears boxes has turned out to be an incredible opportunity for us. And you'll hear more about some of what we've done there later on in the presentation. And really, today, I'm glad you're going to meet a lot of our people. You guys have heard probably way too much from me and Ed over the years. So you're going to meet the rest of the team today. And they're the people that really get the job done and do the heavy lifting, and we've got a great team, and you're going to hear from a lot of them today. So post-pandemic, we continue to put up good numbers and not really a surprise to me. Sales are up, same center NOI is up. We're back to or ahead of pre-COVID levels in most categories. Occupancy continues to trend up. We've got another 200 basis points to go, which is nothing but positive. Leasing spreads are positive. The leasing environment is frankly incredible. We do something called Executive Leasing Committee every 2 weeks. So all the leasing professionals have to present their deals and convince us of why we should do the deals. And typically, this time of the year, things kind of taper off because the retailers are focused on the holiday season, not getting deals done. So typically, in November, December, we'd see 30 deals. We saw -- last Monday, we saw 110 deals. I mean, the leasing environment is very robust, and it's an exciting time to be in our business. We're also an industry leader in ESG. We'll hear from Olivia Leigh later on today about what we've done. We consistently win a lot of awards. We're on track to be carbon-neutral by 2030. And I think we're largely considered to be an industry leader when it comes to ESG. Looking at our portfolio, by design, we've really focused on the Northeast, California and Arizona. The 24 properties we sold off after the great financial crisis -- to a large degree, we're in the Midwest in tertiary markets, not strong markets compared to what we've got today. So we've got a great portfolio in great markets, and that's going to serve us well, great demographics. It's an outstanding portfolio. I mean somebody accused us yesterday of cherry picking a couple of good assets. There's another 4 or 5 assets in Phoenix we could have showed you yesterday, but we would have been on the bus for hours and hours. We didn't want to do that to you but they would have shown just as well. Moving on to where the portfolio is. We've got about 38% in the Northeast, New York down to D.C., 17% Phoenix and 28% in California. So a great high-quality portfolio, pure-play domestic A-quality town centers. And take a look at our top 10 and you may say, well, why do you just look at the top 10? Again, we could go through every asset, but these 10 represent 40% of our NOI. And really, what we're focused on is making our properties more diversified, densifying them, more traffic, more energy, more activity. And just to go down the list and give you some examples. So Village at Corte Madera in Marin County, small asset. We added a restoration hardware flagship store right in the middle of the parking lot. It's beautiful. It's 80,000 square feet. It's absolutely spectacular. It's really the talk of that town. And we also could do some residential there. Going down to the next asset, Broadway Plaza, that's in Walnut Creek, which is suburban San Francisco. We added a lifetime fitness, industrious co-working Pinstripes, great asset only getting better. There's another big announcement that will be coming shortly if Michael gets his act together and closes the deal. I don't want to jinx it by announcing it right now, but it will be a game changer out there. Scottsdale Fashion Square you saw it. We have office, we have hotel, we have co-working, we have fitness, we have luxury. It's a powerhouse. Queens Center in -- on Queens Boulevard, Long Island Expressway, it's a powerhouse. We've got some new names coming there, Zara, Primark, and the good just keeps getting better in that case, does $1,700 a foot in sales. By the way, an A-quality mall is around $600 a foot in sales. So you look at these top 10 and they exceed that significantly. Washington Square up in the Portland market. We've got a Sears box. We're in for entitlements. We're going to do a combination of hotel, entertainment, food and beverage as well as residential, great center that's just going to get better. Santa Monica Place, you're going to hear more about this later. Not too far from our office. We got back a Bloomingdale's box. Bloomingdale's was doing a mediocre $17 million or so in sales. As of this morning, I think -- Cory, where are you? Is the ink dry? Did the deal close? On the top level where we had a bankrupt theater, we're putting in the ARTE museum, which on the surface might not seem like much to you guys, but it is a -- basically, it's a digital art gallery, and they expect to generate 2,000 visitors a day up there. We've sent a team to Korea to visit their installation there, absolutely spectacular. It's a one of a kind that's going to be the first in the U.S. and it's going to be a game changer for Santa Monica Place. That's at the top level. Second level, we're doing co-working, bottom level, a high-end fitness studio. And on top of that, we're very close to a deal and not to jinx it, but I feel 100% confident that we're going to get signed with Din Tai Fung, which is a kind of a legendary Asian restaurant where people line up for 45 minutes to get in. I can't believe it. Ed Coppola, in particular, is very fond to this. Convinced me we should wait in line up in Seattle for 45 minutes, and it was worth the wait. So I know you love the noodles, yes. You're a noodle kind of guy. [ Carlin, ] you saw yesterday, we're adding 125 residential units and also potentially an office tower. Tysons Corner is the ultimate town center as it exists today. We have an office tower. We have a residential tower. We have a hotel, and we're adding an additional 600,000 square foot tower. It's either going to be retail and office or a combination of retail and mixed use. Los Cerritos Center, one of our last Sears boxes were going for entitlements, and that's expected to be 600 residential units, as well as probably a hotel. So sales and traffic, which is -- are the 2 stats, everybody loves to talk about, coming out of the pandemic where traffic level is about 95% of pre-COVID levels, which is effectively 100%. But if you look at sales, sales are 113% of what they were pre-COVID. That's the third quarter of 2019, we used as a comparison. And sales are going strong. The retail environment is good. The consumer is proving to be incredibly resilient. Now the next that history does repeat itself, by the way. So we're taking a look at 10 years of history. If you went back to the -- the low point coming out of the financial crisis for occupancy, was the first quarter of 2009, our occupancy was 89%. We called our way back to about 96% post-GFC. And I would tell you the leasing environment then was nowhere near as good as it is today. So you see our climb coming out of COVID, we got to a low of 89.5%, and it's moved up gradually, since then, we're at 92% today. We expect that trend to continue, and we expect to be back to pre-COVID level of 94% by the end of next year. I'm putting a lot of pressure on the leasing team here, but that's by design. They're good and they'll get it done. So looking at major trends, there's not a lot of A mall companies left anymore. You effectively really have Macerich to pure play and you have Simon. [ Todman ] has gone, Westfield/Unibail is really an international company and trying to get out of the U.S. So you look at the trends, it's a pretty small subset of companies that are pushing that trend and you see the categories. Luxury is going incredibly strong. And by the way, most of these names did not exist 5 years ago. So we've got a new, exciting, resilient, energized retail environment. 5, 10 years ago, the mall was all about apparel and footwear. It's so much more than that today. So you saw the power of luxury yesterday at Scottsdale Fashion Square. You go to the next category, which we've been focused on for a long time, digitally native brands. They're still relatively small. I think it's 3% of our portfolio today in terms of square footage, non-anchor square footage. But a lot of these names jump out to alo. We've got our retailer rep, Michael Guerin will talk about Vuori later on. And Yeti, Fabletics, a lot of great names that continue to come and take more brick-and-mortar space. New uses, SCHEELS, will hear about a little later on. That's an incredible sporting goods operation that's very experiential, industrious. A lot of food and beverage, Pinstripes, Round1, Dave & Buster's. So these are all names that are coming in growing size and demand. International continues to be big. Zara and Primark, two my favorites, and we continue to do a lot of deals with them. In fact, we are the #1 U.S. landlord for Primark, more deals to follow. Legacy brands continue to be good, think Apple, think SEPHORA, names like that, kind of household names. And food and beverage continues to be a bigger category for us than it's ever been. So again, the evolution continues in retail. What's an A-quality mall, it's more than just retail. It's office, it's co-working, it's hotels, food and beverage, a lot of exciting stuff. And we talked a little bit yesterday about the electric vehicle makers. 10 years ago coming out of the financial crisis, I think we had one Tesla store. Today, we have incredible demand from Polestar, Lucid, Rivian, ElectraMeccanica, VinFast, the names continue and they come and they take space in malls. And it's an exciting addition, frankly. It draws a lot of people and the demand is huge. Down here in the experiential category, Santa Monica is a good example. So we took a kind of underperforming theater space. We're putting the digital museum in the ARTE museum, which probably will get announced this week. Cayton Children's Museum is at the top level. They take about 30,000 square feet. And it just adds a lot of people. Cayton gets 250,000 visitors a year. The ARTE museum, thinks are going to get 1 million, adds a lot of bodies, a lot of energy. It's pretty exciting. So again, it's what's the trend, what's going on with the business. From our standpoint, it's about densifying, diversifying, making our properties more interesting, more exciting. It's going to include more office and these aren't going to be huge towers. There's going to be potentially want to build more, potentially one at Tysons, a lot of co-working. We found that coexist very well in the mall environment. A lot more health and wellness, he says with a raspy voice. Lifetime Fitness, we're doing a lot of deals with them. In Lifetime, they estimate they have 5,000 members on average and they go 2 or 3 times a week. I don't know, to me, that sounds optimistic, but I'll take even half of that number. It brings a lot of people to the properties. In residential, residential, we've got a Kierland, Scottsdale, Tysons and Los Cerritos. So with that, I'm going to turn it over to my colleague, Scott, who's going to get the tough questions on the financing market. Thank you.

Testing, testing. Can you hear me back there? Good. Okay. Great. Great. Well, white shirt, blue coat, Tom didn't even coordinate with me today, amazing. A few of us here in this room like that. Hey, everybody. Good morning. I really enjoyed spending time with you last night and during our property tours. While you likely digest a lot more content today than you did yesterday, there's really no replacement for visiting the real estate and hearing the story in person. And there's most definitely no replacement for the social interaction and engaging dialogue that we had last night driving to and from as well as at dinner. We do really appreciate you guys being here. I'll discuss now a little bit further in the company's positioning, both from a financial and an operating perspective. I'll touch on key drivers of NOI going forward. I'll dive into your favorite topic, the balance sheet and our capital plan and then finish off with a look at our current valuation. All this within roughly in half an hour or so. So let's get going. I think I got this, yes. So Tom touched on this briefly, but on the left-hand panel, it's certainly worth noting, especially given what we've just experienced during the pandemic. Coming out of the global financial crisis, we looked at what worked and what didn't, what pretty clearly didn't work were lesser quality assets and lesser quality markets. And over the course of 2013 to 2021, sorry to correct my boss, we actually sold a few more assets than what you mentioned. It was a very ambitious plan. We sold them in pairs, in singles, in triples, but without creating a separate spin-off, we sold over 40 assets over that 9-year time frame, primarily malls and power centers. We generated over $2 billion of capital that we recycled back into the portfolio and very accretive projects. Those assets did average in the mid-300s. So if we were still holding on to those assets today, I will assure you that our recovery coming out of the pandemic would have been dramatically different. So history does repeat itself. We learned our lessons from then, and I think that's a very important underpinning. Some of that activity actually occurred in 2021. As you guys are aware, we were opportunistic during '21 selling assets. We sold roughly $500 million of assets, 3 separate transactions. And we will continue to be opportunistic sellers. We're not going to post it in our guidance. We're not going to issue earnings releases until the transaction is done. As you guys know, you can never predict until the dollars are in the door and until escrow says you're close. But we will continue to be very opportunistic in terms of disposing of noncore properties. On the middle panel, you'll hear this throughout the day, and Tom mentioned it. It's going to get redundant, but for a reason. It's about leasing, leasing, leasing today. As we've told you before, 2021 was very close to the strongest leasing year we've ever had. And '22 is on pace to either equal or surpass 2021. I think at this point, it's pretty safe to say that when we look back over this 2-year period from last year through this year, we'll have the strongest 2-year leasing volume in the company history. So that's extremely noteworthy. And as the leasing team will soon to test to there's really no retrenchment at this point in retailer demand despite the clouds that may be on the horizon with what's going on with inflation. We have a very significant and growing leasing pipeline. We have leased during the course of 2021 and year-to-date in 2022, about 6.5 million square feet and growing. And I'll speak to the leasing pipeline in a little bit more detail in just a bit. As Tom mentioned, it's really about occupancy. It's about absorbing vacancy. And then ultimately, it's about creating some rental tension so we can push on rate and we're accomplishing all those objectives right now. We have increased occupancy in just 6 quarters alone, over 350 basis points. And really, as we enter into kind of an uncertain environment, despite that what the retailers are telling us, everything is great. You look at our watch list, and it is just massively smaller than what it was heading into the pandemic. We obviously took our pain, we took our lumps during the course of 5-year period running -- starting in late summer of 2016 through 2020 with year-over-year increasing amounts of bankruptcy and retailer failure. And so at this point, we really look at the landscape and we say, look, our retailers have rationalized their footprint. We know that because as we speak to them about renewing leases 2 years at a time as those leases expire. They're not talking about shedding stores, not talking about shedding markets. They're comfortable with where they're at. It's really a rental conversation. The retention rates are strong, and we just don't see that type of friction that we saw heading into the pandemic. So I think that's a very important backdrop to keep in mind as we head into, again, a little bit of uncertainty given the aggressive Fed rate hiking cycles that have really created some turmoil in the markets. On the right-hand panel, just real quick, certainly need to highlight our commitment to continue reducing leverage. In 2021, we were extremely aggressive. We reduced our debt load by 20%, $1.7 billion, and that's extremely noteworthy. And we'll remain committed to that on a very patient in a very prudent basis. We'll speak in a little bit in future slides about liquidity and cash flow positioning, but it is extremely strong. I'm not going to dwell on this too much. You guys heard from us at the quarterly call, we had some follow-up calls with several you in this room. But just to touch on a few facts, we continue to rebound quite well in terms of NOI growth year-to-date, up 10%. And we do expect, once we conclude the year based on our recent guidance, that over the course of 2022 as well as '21, we will have surpassed 7% NOI growth. And that is an extremely solid recovery coming after the pandemic. And we do believe that by the time we get towards the end of this year, we'll be back to pre-pandemic occupancy levels. Occupancy obviously is a leading indicator, cash flow follows shortly thereafter. We'll speak to that in a little bit when we talk about the pipeline but extremely noteworthy to see how well we've rebounded. And again, it's really about the health and the quality of our portfolio, as I touched on our disposition activity earlier. Sales remain strong. As Tom mentioned, most holiday forecast were for mid-single-digit growth. That should help us end up the year in kind of mid-single-digit growth over 2021 in terms of sales or tenant's top line. And I think it's extremely noteworthy that we were not alone during the third quarter, reporting that we're finally seeing some positive rental pressure. We've been pushing on the team now that we've been able to recapture so much occupancy to really start to drive rate, and they've been successful in doing so. As Tom mentioned, we review deals every other week. And it certainly seems on an anecdotal basis that we're getting pricing power. And look, a lot of that is not only because of the occupancy we've gained and the vacancy that we've absorbed but it's about a competition for space, and we've got very high-quality assets, very high-quality space that hasn't been on the market for quite some time. And as a result, you can create a competitive environment, you could really push rate. So we're not seeing the double-digit rental spread growth that we saw during period 5, 10 years ago, but we're seeing mid-single digits. And frankly, that's what we expected. And I think that's what we had indicated to you all in earnings calls earlier this year. So we're glad to see that start to unfold. And like I said, I don't think we're alone in that regard. So moving on, we're going to just talk briefly about key drivers over the near-term horizon in terms of NOI. Certainly, our leasing pipeline will be a key driver. We'll give you a slide here -- in the next slide to kind of help you quantify what that means rather than just express it in terms of occupancy growth or expressed it in terms of square footage. But as you can see, we're very much on pace of '22 to be in line or surpassing '21. And as I mentioned, we're looking at a 2-year historic run in terms of leasing. And then it's also important to note, and I'll touch on this in a bit. Our redevelopment activity will be extremely accretive. Recently, we updated our development pipeline to disclose two transactions, which will be very accretive and those will open in 2024. We'll cover that in just a bit. The guys will talk about this in a bit and not just still the thunder, but where is the demand coming from? It's kind of coming from all corners. But pretty noteworthy. When it comes to doing deals with new players, new brands in our space. Over the course of 2021 as well as year-to-date in 2022, we've leased 1.2 million square feet, which is no insignificant sum to brand-new retailers, the Macerich portfolio. So it's extremely noteworthy. And we're seeing demand just coming from a breadth and a depth of uses that we have never experienced. So this is the slide I was mentioning when we talked about the leasing pipeline, historically, we've talked about occupancy and growth. It's hard to quantify. We've talked about square footage in terms of leasing pipeline, somewhat hard to quantify. So we put this together about 3 months ago. We will continue to update this perpetually each quarter to help guide you guys. It's certainly a fundamental underpinning of where we see NOI going. And this measures incremental rent from future new stores over and above the existing rent from any permanent uses that are in place today. So again, this is incremental rent. So the blue bars are deals that are signed. The space is waiting to be built out, waiting to start paying rent. And the brown bars are deals that are in process, which means we have retailer commitments. Those deals are in documentation, within the next few months those deals will be signed. In 2023, we expect an incremental $29 million of rent from that new store pipeline. And then progressively into 2024, this is a cumulative chart. We expect an incremental $21 million and then in 2025, we really just started leasing into 2025, an incremental 6. So as we move forward into time, we'll certainly see 24 grow as we continue to lease into 2024. And like I said, it's very early days in terms of 2025. Now this is only one component of where we see NOI going. Obviously, we've got embedded rent growth. We've got the impact of inflation on operating expenses. We've got a lot of factors in there. We've got -- occasionally, we'll take down space opportunistically. There's a little bit of downtime that may not be reflected in this chart. We'll see a little bit of that here and there. I think we'll see a little bit of that in '23 but I don't want you guys to get over exuberant and say that this is guidance and just build these straight into your model, but it certainly does show you that we're on a very positive trajectory for future NOI and EBITDA growth. I mentioned our redevelopment pipeline. These 2 projects were disclosed about 6 weeks ago when we filed our 3Q earnings and Santa Monica Place and Scottsdale. Again, there's a lot of folks here that are going to be speaking about these projects in detail. I'll just cover the financial highlights. I get the easy part. They get the fun part. $80 million of spend in aggregate and on an average basis, high-teens yield. So extremely attractive projects. And in fact, if you look at that on an NAV basis, we're creating probably about $1 per share of NAV growth with just these 2 projects alone. And of course, there will be more to follow. Over the course of this year and next year, we expect roughly $125 million to $150 million of development spend. And as the development team will note shortly, they're actively working on numerous entitlement projects throughout our footprint. Your favorite topic, balance sheet. So I'm not going to spend a lot of time on this slide, but obviously, this depicts our maturity schedule. I do have a couple of slides following this, where we'll get into a lot more detail. I'll just say this, though, in terms of our near-term maturities, we are closing soon within the next week or so on a 3-year extension of Santa Monica Place. I'll give you some details in a bit. But with that, we will have addressed in full all of our 2022 maturities, and we are well underway on our 2023 financing plan. So a lot of numbers, a lot of details here. And again, this will be posted for everybody's consumption thereafter. And if you guys have any questions, Samantha is always available to field them. So completed to date, we've been extremely active, whether it's refinancings or extensions. And this is all a very strategic and coordinated plan. But year-to-date, we've closed on roughly $1.1 billion of transactions, about $800 million of the company's share. And that's a combination of refinancings from projects like FlatIron Crossing, Pacific View, extensions on projects like the Oaks in Danbury and Washington Square, but about $800 million of transactions and average duration of those deals was about 3.5 years. All that stuff is already disclosed in our public filings. In process today, we have 4 transactions, about $1.5 billion total, about $1.2 billion of the company's share. I just mentioned a bit ago, Santa Monica Place. We expect to close within the coming week or so. There will be no loan repayment on that $300 million loan. We expect to maintain the existing rate at LIBOR plus a little less than $150 million. Both of these are extremely attractive factors relative to the market today, and this will be a 3-year extension. So it's really a tremendous outcome. Green Acres, we have a loan on the mall, and we have a loan on the power center of the commons adjacent to it. I've got a team of investment bankers actually huddling up with our team on the East Coast right now as I speak. We're working on a $370-million refinance for 5 years on that project. It will be relatively leverage neutral with a slight over barrel. The fixed rate, if we locked it today, would be in the high 5s, be below 6%. And we expect in early 2023 closing from that, again, a 5-year deal. Scottsdale Fashion Square was kind of a beauty contest. You guys saw it yesterday, and you could see how any lender would love to have cover that and have that in their pool. We held that beauty contest over the last several weeks. And about 2 weeks ago, we selected 2 investment banks to partner up to team up on roughly a $700 million finance or refinance. This would be very liquidity accretive, generate about $300 million of excess proceeds, half of which is ours. It will be a very attractive loan that today would lock in at less than 5.5%, interest only, for 5 years. So extremely attractive financing, we would expect to close out some time middle to late first quarter. We're actively working on it. And then we've talked in the past about a pending deal on Danbury, which is still to be done through fits and starts in the market. We've decided that we've got an opportunity to just extend, and so we've extended our existing financing at what today is a below market rate at 5.5%. And we're going to get to a better climate here in the next couple of months, and I anticipate $150 million execution, have not locked rate yet, but that would be late first quarter, early second quarter type closing. And if I were to estimate the rate, it would be somewhere in the low to mid-6% range. So again, I think that's a transaction we could probably close in about 1.5 weeks or 2 weeks of time, most of the work has been done. So in mass, 4 transactions, $1.2 billion of share. We're getting things done. It's certainly not easy. It's keeping me up at night. My hairline was a lot longer, a lot thicker before all this started, but we're getting through it. And it's really a testament to the quality of the assets we have, frankly. The future transactions, certainly noteworthy at the end of 2023. We do expect a significant liquidity event with Tysons Corner, should generate anywhere between $60 million to $70 million of excess proceeds. And again, I think that will be somewhat of a beauty contest like we just experienced Scottsdale Fashion Square. So if you look at next year in total, since we're upon next year now, we expect roughly $200 million of liquidity coming out of the financing pipeline. Now admittedly, that's a little bit less than what I was planning on, say, 12 months ago. probably about half of what I was planning on 12 months ago. But there is liquidity to be garnered. If we look at the last 4 years, because I think that's really relevant because that's really when there's been disruption -- significant disruption within the debt capital markets. We've had times where these have loosened up. They've tightened up again. We expect that as the Fed starts getting a little bit more disciplined with their rate strategy and perhaps start to slow things down that there will be liquidity restored into the market. That's certainly the consensus view. As we look at 2020 and 2023, we've been very patient and very metered about how we have approached this. During 2020, we extended through 6 separate transactions over the course of 1 to 3 years, about $900 million of the company's debt. That was executed at weighted average closing rate of 4.5%. You guys know that's well below market. It was also executed with the usage of only about $30 million of liquidity. So we extended over $1 billion of debt. We used about $30 million of liquidity, less than 3% of what we extended. So a very attractive outcome. During 2022 and 2023 and all this correlates with this slide here. During '22 and '23, we expect to transact on about $2.5 billion of debt at the company's share. We expect over the course of that to generate about $130 million of liquidity. We expect the weighted average closing rate on those deals to be approximately 6%, again on average, which is about 140 basis points higher than what exists today. The weighted average term will be over 4 years, and we expect to get -- maintain a floating rate balance that will be well less than 10%. Over the course of this 4-year period, during a pandemic, when we've shuttered our real estate, we've locked our tenants out. We've had to reopen, reclose, reopen, all of that, during all this turmoil, we will have executed on over 50% of our debt portfolio, $3.5 billion. Weighted average closing rate somewhere in the mid-5s, raising net liquidity of $100 million. So from all this, I draw a few conclusions, reflect first on the strategy of our extensions, and we've entered into quite a few of those. The reason we do this again is, frankly, because of our secured nonrecourse position. It gives us a ton of leverage guys. This also enables us to finance the assets at a point in time when we've been able to reposition them and stabilize them following pandemic, obviously gets us to a better and more stable financing market. It's not a coincidental strategy though. It's very thoughtful, and it's proven to be very efficient, both from a liquidity and a rate standpoint. Again, during 2021, used only $30 million of liquidity. We executed at a closing rate of 4.5%, well below market. So we'll continue to utilize that as a tool when we need to and as necessary. At some point in time, we'll be back to just straightway refinancing. But right now, it's a very important tool. Secondly, I want to highlight that as some may have expected, we are not having to issue stock to address our maturities. It's really a flawed premise guys. We have secured nonrecourse debt. We're the best operator of those assets. And generally, those assets were leveraged at a point in time at origination 50%, 55% loan to value. So at the point in time they come up in a stable financing market, they're a source of liquidity, and they always have been through our company history. At a point in time, a friction like today within the debt capital markets, very little liquidity is used. So we don't need to issue stock to address our financing pipeline, very important. And lastly, I do want to point out that we're very aware that our maturity schedule has shrunk in terms of duration. That certainly keeps me up a little bit of night too. Not too long ago, our average duration of wire maturities were over 6 years and now we're less than 4 years. So our average duration will in fact increase a little bit with some of the activity I've just mentioned, the '22 and 2023 financings that are over 4 years in duration. So we'll be pushing that schedule out a bit. But we will start to be mindful, once that liquidity for 10-year paper starts to return, we will be mindful of that, and we will start to execute on a longer duration basis. Consensus view out there is that liquidity for 10-year paper will start to come back once the Fed stabilizes its monetary policy. And I think we would all agree that we're closer to that than we were 6 months ago. So those are my reflection points on our 2020 through 2023 financing plan. As we've discussed on many occasions, and it certainly bears repeating, we have significant free cash flow from operations, before dividends and development on the left-hand side. We anticipate roughly $360 million of such free cash flow in 2023. Now I don't want you guys interpreting that this is guidance. It will disappoint you to hear that we're not issuing guidance today. Guidance will be issued in our normal cadence when we issue our year-end earnings. So this is based on consensus view, but it certainly will not be far off, but we anticipate a significant amount of free cash flow next year just as we had this year. We have provided you in lieu of guidance certainly some important Qs in terms of where we're headed. We're providing you signed but not open lease pipeline, which certainly will be useful for you guys as you continue to model our outcomes over the intermediate term. And we provided you some more material near-term redevelopment activity highlights for Santa Monica and Scottsdale, both of which are extremely attractive projects. Other assumptions that are going into this chart, dividends are expected to be roughly $18 million higher, and that's based on the recently increased dividend. We increased our dividend, as you all know, 13% about 6 weeks ago and that's reflected in here. We have no dispositions assumed. We generally don't give forward-looking guidance on dispositions, as I commented on earlier. I'd say the one capital assumption that is embedded within here, is an assumption that we'll utilize the balance of our existing ATM facility, which is about $150 million. But I do want to emphasize, we firmly believe we have plenty of liquidity and free cash flow to manage our business. We're not in a rush by any means to issue stock at $13 a share nor is there a need for us to do so right now. So we are not entertaining a major recapitalization event. The PAT NOI and EBITDA growth is apparent from our standpoint. We've given you a lot of queues towards that. And we do think that we'll get back into a range of a more historical level of net debt-to-EBITDA, which for us is in the 7% to 7.5% range. By the time we get to the end of next year, as you guys can see, we'll be pretty close to that at roughly 8.2x. And by the end of next year, we anticipate roughly $875 million of liquidity available to the company to manage our business, and that's based on the assumptions I just outlined. More detail in terms of sources and uses and capital plan, I don't think there's anything too new here beyond what we talked about, but it's a reference point for you. And this is something that will continue to be available for you each quarter within our investor deck. So let's move on to valuation. As Tom mentioned today, we're trading well below historical multiple over the last 22 years, we've traded in the mid-13s, 13.3%, I believe, is what the chart says there. And today, we're roughly 6.5 multiple. So we're trading at a 50% discount to historical valuations. There's significant room to run. History does repeat itself in many cases, and I think it's important to look back and see what happened following the GFC. And we had a strong performance in our stock following the GFC. In early 2009, the low point in terms of our stock multiples were 1.5x. And within the short 7-quarter time frame, we were able to increase that 12-fold to roughly 18x. So great run-up following the GFC. If we juxtapose that then with what we've done post pandemic, our low point at the first quarter of 2020 was 2.5x. And today, again, we're about 6.5x, about a 2.5x expansion in our multiples. So from our vantage point, again, significant room to run guys, even despite the fact that we've had about a 60% run-up in our shares since the end of the third quarter. I think it's extremely critical always to look and ponder how much residual value is embedded within today's valuation at $13 a share, which is our approximate trading level today. As Tom mentioned, our implied cap rate is 8.3x. This despite the portfolio quality. If you look on the lower left-hand side of the chart, over 94% of our NOI is generated by assets performing over $500 a foot at an implied cap rate of 8.3%. It's absurd. So on the right-hand side, just to kind of outline some potential scenarios, pick an assumed cap rate, say, 6%, not suggesting 6%, I'm saying, just use that as a point of reference. At a 6% average cap rate, we're still trading at 125% discount in an implied $29 share price, which is what a 6 cap would equate to. And at a 15 multiple, which is what the implied multiple would be at a 6 cap, we'd be trading much more in line with history over the past 2 decades. And of course, let's keep in mind the quality of our assets is certainly not deteriorated over the last 22 years. So I'll leave you with this thought, which I thought was interesting. Recently -- before I open it up to Q&A recently, I was talking to a buy-side investor, and he asked me a question over conversation. he said, look, what happens if your best asset files for bankruptcy. Well, of course, that's not a risk, but it's a rhetorical question. And he said, well, your answer quite simply was, I don't really don't care because I didn't pay for it. It's not built into the stock price. So something to ponder, something to leave you with. Again, as Tom mentioned, we firmly believe we're a significant value play, and there's much room to run. And there's significant embedded value over and above our current market valuation. So with that, we'll open it up to Q&A. for myself as well as Tom. And we have mics in the back.

Great. Thank you. I guess maybe we could start with the bottom 40% of the portfolio, the 32% and the 6%, I think just, I guess, how do you see those assets like positioning for the next few years? It sounds like you're still looking to do some dispositions.

Yes. So if you look at that band over 500 to 750, it's 32% of our NOI some of those, we would consider keepers and some of those we would consider noncore. We are working, in fact, on entitlements for some of those projects that kind of fit into that band. There are still projects that are extremely relevant in their markets. There's opportunities to add mixed use. The extent of our investment in those is to be determined. But there are certainly some of those that will be noncore disposition candidates. So we're not going to put a portfolio out in the market in mass. We're always going to transact discretely. We're always having conversations right Ed, with various folks. And as one guy once told me, run silent, run deep. And you transact on these and you celebrate at escrow. And you'll see that from us. Haendel?

Thanks, Scott. So a lot of numbers on the refinancing and the excess proceeds didn't catch all. So maybe a ballpark amount of the excess proceeds that you expect to garner here and a sense of the priorities to allocating it. And then I think you also mentioned that there's $150 million on the ATM, and you're not interested in issuing stock at today's pricing, but it seems like that's embedded in the sources for next year. So I guess what level are you interested or what level potentially could that equity be issued at.

Haendel, thank you. First up, just to get you back to the slide here that shows our '22 and '23 financing plan. You can see in the second column from the right, the expectation for excess proceeds. You could see that in 2023, between the deals we have in process and the future transactions, we expect about $200 million of excess liquidity. In terms of use of that capital, there will be a balance between unencumbering assets, repaying debt as well as usage for development and just maintaining a prudent balance of liquidity. So there's -- we're always mindful of kind of all 3 prongs. But ultimately, our long-run goal is to continue to reduce debt. Back to the ATM concept or ATM topic. This time last year, we were trading in the low 20s and then Omicron became an issue. And at that point in time, we were actively trading. And then the market moved away from us because of the pandemic and because of the surge of that variant. So that was a level we were comfortable, transacting. We're certainly not going to queue up where we transact, but that was a level that we were comfortable where it started to make sense. We do believe that raising capital to enable growth is probably a prudent strategy, right, but not at $13 a share. It's just not a need. Right now, our free cash flow position is sufficient to cover what we need. Craig.

So on the operational side, you guys do a good job. And so that's something that's not really in question. But on the balance sheet side, in the past 2 downturns, you guys have done 2 major recaps. Your FFO per share used to be north of $5. Now it's going to be -- it's under $2 million. As far as the discount to multiple, if you think about from an investor standpoint that the company has now been through 2 recaps in the past 2 downturns, what's something that you can share with the market to say, hey, we're going to change balance sheet strategy, be it start unencumbering assets or doing something different because now we've gone through this twice. So what are some things that you can tell, the Street that you guys will do differently from a balance sheet strategy so that we won't have these recaps in the next downturn?

Sure. I'll start this, and then Tom, you can chime in as well. Look, we've already shown our commitment towards reducing leverage with what we did last year. We reduced our leverage by 20%, pretty committed approach there. As we look at things, certainly, we're seeing to see some earnings headwinds from interest. But from our standpoint, we do believe over the next few years, NOI is going to surpass interest growth, right? So I think recapping when we have a solid position from a free cash flow standpoint and liquidity, recapping right now since panic signals they don't need to be there. Our uses are not in excess of our sources. I don't think we need to do that. And given the quality of our asset base, I think I've demonstrated here that through a combination of extensions and refinancings, we're not draining our liquidity, and we're arriving at outcomes that are, frankly, in many cases, below market outcomes, favorable outcomes. And so we just don't see the need for that type of recapitalization event. Tom, do you want to expand?

Actually, coming out of the financial crisis, we didn't recap. We waited. We didn't issue survival equity in '08, '09. We waited. We've gotten as low as $5, $6 a share. We waited until we were trading at $29, $30 a share to issue some equity. As related to what we did in the mid 2015, 2016 era, the Board made a decision to sell some joint venture interests. We did so at a 4.25 cap rate, a very attractive cap rate, sold those to GIC as well as Heitman, a great transaction. But the decision at the time was made to buy back shares completely, and that's what really took the leverage up. So that was a Board decision. Reluctantly, I did not have a vote in that era. I do today have a vote, and we would not do that, okay? So looking back on what we have today, the management team we have today, the strategy we have today is actually very dramatically different. It's to have 30 to 35 A quality assets like Scottsdale Fashion Square, Kierland and maximize those, diversify those and drive cash flow and return. So it's a different era. Thank you, Laura.

I just want to go back to the valuation slide. You had noted that the A3 is, I think, you said absurd, I don't want to misquote you. And maybe suggest that if we just look at the midpoint of the 6% cap. But just as you're talking about where you're able to refinance on the secured basis in some of your best assets, fashion square and sort of the mid-5s. If you had to underwrite an asset today with those type of rates buffering in something on the return side of things and looking at maybe an economic cap rate versus a novel -- I mean, do you feel like a 6 is where you would look to price given that cost of capital today? Or is maybe the market closer to being right than the optimistic kind of assumptions there, just given the debt spreads?

It's a great question, Craig. I mean there's -- there really have not been transactions in the A mall space, right? Recent transaction from Westfield that Santa Anita one-off transaction that was published via sub-6 cap rate. But take Scottsdale Fashion Square, you walk the asset. You saw what it is. You saw that it's growing to be. You saw what the development potential is. If you believe that's a 6-cap asset, then we're probably on the wrong business. And we're in the wrong room. I'm using 6, really is a demonstrative example here. But look, there haven't been a lot of trades. The rate environment certainly has crept up, a lot of sectors are now having to rationalize cap rates based on where financing rates are. Negative leverage is certainly a topic that's out there. I'm not sure that we're at that point in terms of negative leverage. They really -- we're not sellers -- net sellers of that [ Elk of asset. ] But I would certainly argue that the vast majority of our assets given the quality spectrum that you see again on the lower left-hand side of this chart would be better than the 6% cap.

Scott, the last time there was an active market was when we sold those assets to...

To Heitman and GIC. And we had -- it was a cross-section of assets from our top 10 down to our bottom quartile and the average cap rate was 4.25. The transaction Scott referred to, [ Unibail ] is under pressure to sell our U.S. assets. They haven't had a lot of success. They sold one at a 6.25 to a local family that's a developer primarily. And I don't think that's indicative necessarily of value. So I would say it's pretty impossible to really peg where cap rates are today for A-quality malls. And since we're not sellers at the moment, it really doesn't matter. I mean what matters is can we drive cash flow from those assets, and we most certainly can. And would I rather have Scottsdale Fashion Square or some other property type in Phoenix or Scottsdale, I think I'd rather have Scottsdale Fashion Square. So we like where we are, and we like the cash flow that we think we're going to be able to drive from the great portfolio we've got today. Mike?

[indiscernible]?

Well, that's a great question. I mean historically, the sovereign funds have been big buyers of malls, and they exited and I think we're going to see a shift away from certain sectors. And at some point, people are going to say, well, I think I can get a pretty good yield by going into malls and they're attractive, they're stable. A malls are not going away. There's a huge difference between an A mall and a B mall. I mean, the Santa Anita transaction, for example, it's an okay center. It does like $550 a foot in sales. It would be in the bottom quartile of our portfolio. A big difference between that in the center that's doing $1,000 a foot. So I think it will happen. I don't know when, but it will. I mean we've been through this many, many times over the years. And 2009, there was not an institutional buyer of a mall anywhere to be found. And on and behold, 3, 4 years later, they were all over the place. So it will happen. I just can't tell you when, Mike.

Tom. I do have a comment on that. And it's not a speculation. We have made or facilitated 3 transactions in the last couple of years and been in worse markets [indiscernible] , okay ? We don't really speak about it, but we sold a lot to at a subset, okay? Lifestyle center in Tucson raised $160 million and nobody is transacting [indiscernible] Macerich did that. It wasn't marketed, one shot one kill, go back down, right? And we sold Paradise Valley, 90% of it for $100 million, and I think it had a $2 million cash flow. It's land value. It's going to be a huge densification there with what we're planning to do with our new partners there. Why did we do it? We did it because it was noncore. It had to be densified, and we made one hell of a deal, okay? We recently did a transaction where we facilitated a new financial partner coming into an existing asset that we own here in Arizona, okay? And it wasn't Scottsdale Fashion. And it has densification opportunity. It's built more fashion, and we have different partners there. And I will tell you that it was a sub-6. And that's all I got to say about that. The reason that I can say that is because we did it, not that we say we can do it. We did it. Ki Bin, I think you had a question?

Yes. Just a quick question on Washington Square Mall. You guys had refinancing it, plus 400, obviously that's one of your top 10 assets. I was just curious that asset trade [indiscernible] versus some of the other deals that you're expecting at sub-6 or in the 5s?

Yes, that was a situation, a unique situation. The asset had been impacted by the pandemic. NOI was impacted by the pandemic. So that yield was not at a level that was commensurate with a good market execution, was a balance sheet consortium, and they viewed that as new money going out, new money that need to be priced. And at the point in time that deal was struck, new money was at roughly 400 over for that type of leverage point. I kind of look at these in total in mass. We're doing 2 of those right now, both the roughly $300 million of debt at our share, Santa Monica Place, Washington Square. If you look at that on a blended basis, it's 300 -- less than 300 over LIBOR or SOFR, pick your floating rate. It's really a tremendous execution for both given where the assets are at. So you've got some that are better, some that are worse. At the end of the day, I think the extension strategy gets you to a much better ride and has really been an efficient means. Yes, Derek had one.

What's it going to take to get the residential JV program kind of off the ground? Clearly, rates are a headwind and development yields have been crimped. But with your entitlements, I would have expected some more announcements with minimal cash outlays from you guys and a pretty good JV share. What has to change in '23? And do you think that we'll see some more action on that front?

Derek, you saw an example yesterday, we were underway, and that's at Kierland, we're going to do 125 units there. We picked Street Lights as our partner, and we're moving forward. And in this environment, our cost of capital is fairly high. We have some choices to make as to what percentage we stay in for, whether we just contribute our land. So it's happened there. You're going to hear later on today about a project we've got where we're converting a department store box into multifamily. It may be the first of its kind that's going to be done, and I don't want to steal the thunder from the development team. Doug don't get too far away. I'm going to hand the mic to you in a minute to hear the exciting stuff about leasing. So we're underway. Some jurisdictions, the entitlements take longer, like Los Cerritos, Washington Square. We're in for entitlements on those. So it's underway. We have a huge amount of interest from partners, multifamily builders who want to come in, the big names, the REIT names as well as small kind of merchant builders. So there's a lot of opportunity there. We don't need to be in a hurry, but it's underway and it's moving, and you're going to hear a lot more about that going forward. So we're well on our way. A lot of it is kind of slow silent activity where you're working with municipalities to get the entitlements. And we've done a lot of that. So we're in a pretty good spot right now. Actually, a great spot. Yes.

When you look at portfolio NOI by sales per square foot level across the 3 buckets, where do you see same-store trending next year by bucket? And then how does it lend out?

Well, I'd be giving you guidance, wouldn't I? I would say, again, demonstrative of the leasing pipeline that we showed you. We'll see positive NOI growth. I'll just kind of leave it at that. I don't want to give you too much information and mislead you. We're not giving guidance right now. But we've got a strong leasing pipeline. It's really not isolated or focused just on the top quartile there. It's across the board. So I would expect decent NOI growth in all 3 of those sectors.

I mean that being said, sales growth is best at the top and rents tend to follow sales. And so I would expect our top 10 to outperform our bottom 10 for sure. The middle 2 just depends on some big deals that we're working on in some places like Danbury and Deptford and other places where we've converted a big box stores into smaller stores. So the growth will be good. But generally speaking, the top 10 are going to do better than the next 20 or 30. Scott?

Can I ask about CapEx? You've got a lot of conversion because a lot of different things. So maybe just guide us through in terms of CapEx over the next several years as a percentage of NOI revenues, how should you think about that?

Well, if you look at the last 2 years, our CapEx levels have not been unusual or extraordinary. I think on average, we're about $50 million of operating CapEx. In terms of [ TAs, ] again, nothing unusual. We give a lot of very clear disclosure on that. You can see that there's really nothing unusual. I'd say we're really capitalizing a lot of these anchor box backfill opportunities. And so a lot of that's been flooding through the development pipeline. We'll still see some more of that into next year. That's part of that $150 million expected spend next year. But I wouldn't say there's anything extraordinary in this environment. the biggest usage is right now, just backfilling some of those boxes. But as the team will tell you, not every instance are we spending capital. In many cases, we're delivering the box free and clear and the retailer is spending all their own capital to refit that box for their operations. So there's no cookie-cutter approach. You can't see each one is $10 million or $15 million. In some cases, there's no capital, and we're still getting a pretty handsome rent relative to the prior occupant, so.

And Scott, that's a great segue into leasing. So we're going to flip the script here a little bit, put the leasing guys up there. You're going to hear the great news about what's going on there. And if you're in a room with a bunch of real estate people, everybody's got a white shirt on, a dark coat. But the way you can tell the leasing guys, they're the guys that aren't wearing socks. Michael?

Thanks, Tom. Good morning. By way of introductions, I'm Doug Healey, Senior Executive Vice President of Leasing. I've been in this business for about 35 years. I cut my teeth down in Manhattan at a company called Corporate Property Investors back in 1986. Corporate Property Investors was known for owning and developing some of the best assets in the country, including Roosevelt Field on Long Island, Lenox Square in Atlanta, Boca Town Center down in Boca Raton, among others. They were later sold. One of the first big sales to Simon Property Group, and I think it was 1998 for something like $4.8 billion, which was a huge transaction mix. And but prior to that, I left CPI and went up to work for Wilmorite which is a small family-owned development business in Rochester, New York, primarily with assets in the Northeast. Some of which you probably know, we built Danbury Fair Mall. We built Freehold Raceway Mall. We bought and redeveloped Tysons Corner Center. And then in 2005, I came to Macerich by way of the Macerich Wilmorite merger. And I've been here since. To my immediate left is F.K. Grunert, Executive Vice President overseeing all of our assets in the East. F.K. has been in the business about 25 years, started at [ Bernard & Company ] in Boston, then I hired him in 1998 at Wilmorite and like me, came to Macerich vis-a-vis the merger. He oversees properties such as -- acquisition, sorry. F.K. oversees some of our best properties in the East, including Tysons Corner Center in McLean, Virginia, Queen Center, Queens Center in Queens, Kings Plaza in Brooklyn, Green Acres on Long Island, among many others. To my far left is Michael Guerin. Michael Guerin has been in the business about 20 years, came to Macerich in -- was Michael -- 2001, property management and operations quickly transitioned into leasing in 2004, been here ever since, and you guys could probably tell from yesterday he is definitely our luxury Guru. Michael see some of our best property -- oversee some of our best properties in the West, including Santa Monica Place, Los Cerritos in L.A., broadway Plaza up in Walnut Creek, The Village at Corte Madera in Marin and then, of course, the Arizona Assets, Scottsdale Fashion Square, Kierland and the others that you saw yesterday. So that's the team. And I'll tell you, these guys are among the best in the business. And I would put these guys and their teams up against anybody in our industry. And I think the quality and the merchandising of our properties show that. Most of you in this room have heard me speak about leasing, just me. So I'm going to give you all the break today, and let F.K. and Michael take you through what they do every day. You're going to be proving to some very powerful information. You're going to hear that it's a very exciting time to be leasing space in our sector. You're going to hear about unprecedented retailer demand and record-setting leasing volumes. You're going to hear about our best-in-class real estate in some of the most powerful markets in the United States. You're going to hear about uses as opposed to traditional stores. You're going to hear words like newness, transformational, experiential, repurposing and reimagining. And while metrics are always important, my hope is that you walk away from today with an understanding that leasing is as much art as it is a science. It's what we do to create some of the best town centers in our industry. And so with that, I'll turn it over to the 2 guys that make this all happen.

Thank you, Doug. Good morning, everyone. Great to see everyone yesterday. We just are going to show you some examples in categories and different retailers. What we're excited about what we're seeing out there. You guys all had an opportunity yesterday to see a living asset, how we're densifying, diversifying, curating, really creating a customer journey that matters. The customers speaking and that's -- and coming back to us in the form of sales. Here we go. Yes. Like Doug said, we're missed a tremendous transformational opportunity. That's what's exciting to us. Not the first 2 presentations, you guys can focus on the debt with Tom and Scott, it's what is happening at these assets. Best-in-class assets, we're in gateway markets. It makes our job easier to an extent. We'll walk you through some of the examples of the newness of the transformation it's in many different forms. It's in line. It's in the boxes. It's how we're curating at the assets, listening to our partners, the retailers, listening to the customers and driving an experience that's texturizing our merchandise plan and again, the customer is responding by enjoying it, invoking all their senses, living there, working there, working out there, eating there and really being a live and vibrant. Let me just work through. How are we doing that? Again, we're taking -- we're knocking out obsolescence. We gave some examples yesterday. There's some examples on this sheet. We're adapting and changing how we're leasing based on the changing customer demands and how their preferences are changing. There are some great examples you guys saw [indiscernible] yesterday that replaced [indiscernible] Carolyn. Lifetime Fitness, we have them opening in Q1 '23 at Scottsdale and opening in 2023 at Broadway, built more if you haven't been over there, 80,000 square feet. It's at capacity membership of over 5,000 members, unbelievable amenity to the asset. RH, Tom mentioned restoration hardware, 50,000 square feet, 20% of the volume they're doing, which is significant as is F&B, which is a great driver to the asset to create further lifestyle for that customer. Tysons Corner, office, residential and hotel tower, replacing in Plaza, replacing Circuit City, unbelievable experience in live, working and playing at the asset. And then Prada, you saw that we walked as we're walking away from Neiman Marcus towards center court, unbelievable transformation. And this is a great example of what excites us. You had a Stuart Weitzman, [indiscernible] in Ben Bridge, and we repurposed it with PRADA products. It's a flagship type presentation, a great investment from the retailer in the asset. Tom commented you'll see this. We're maybe a little bit redundant here, but it's exciting. We won't read every one of these names. What's exciting about this is five years ago, half of these names we didn't even know about. And the -- there's newness coming on to our desk every day. That's what excites us. We signed over 3 million square feet. You've heard that comment in 2022, 40% of that was new to Macerich. Again, that's what excites us. Ultimately, it's going to serve the customer, they're responding in the form of using their wallets.

And Tom already showed this slide also. We're talking about momentum here. And you can see the 860 deals, 3.2 million square feet that we've signed year-to-date this year. What's exciting is the different categories that we're going to talk about on this slide and the next one, I mean, as Doug said, I've been doing this for 25 years. I think I had a full head of hair when I started working for you. After 25 years, finally have the newness that we're seeing now that we haven't seen and certainly didn't see coming out of the great financial crisis is really fun for us to see. Also talking about the momentum, and Tom mentioned this a little bit. We have a real estate committee that we have every other week and to be moving into the tail end of the year and have 100 deals, which is double what we typically look at, really shows the momentum continuing despite the clouds on the horizon. Thinking beyond the box, and this is really Michael and I started this thought process about 18 months ago as we were coming -- saw the -- hopefully, what we thought was the end of COVID and really started thinking, again, outside beyond the box, the box would be 1,000 feet at center core. The box can be 200,000 square feet in an anchor. And we really started focusing on all these different categories, and we continue to do so. And we're going to go through some of the specifics on this as we move forward. We talk about the East, let's jump to the next one. The East for me and what we oversee goes from Iowa to Connecticut and New York down to Virginia. You see it here. It's about 18 assets, about 44% of the NOI generated out of this geography. And I'm going to jump right into it. Tom mentioned at Danbury National Resources, a group out of Greenwich, Connecticut that has been around for a while and typically looks at transforming existing boxes. We signed a deal with them to transform a box at Danbury into living you know which will be micro units in a box. We think it's the first one that will be done in the country. We're excited to see where this goes and what opportunities it might present for us elsewhere. Green Acres, Valley Stream out of Long Island. So Green Acres opened as an open-air center way back when it was converted to an enclosed mall and added on to. And because of the open air dynamic, they use a truck tunnel underneath to service all of the retailers. That truck tunnel has remained unused, unmonetized for the last 20 years. We just recently signed a short-term deal with Emberly Logistics specializes in office furniture. They see the value there. We're now talking about expansion and has also elevated the interest for other users for the space. Medical -- hospital and medical. Michael is going to talk about this as well in the West. We've had 3 wins. And what we're finding with the medical is that it's sort of a unique fit for every market in every location. Saratoga, our Wilton Mall up in Saratoga, Saratoga Hospital came in, tested half of the Sears box was so successful, expanded and just completed their renovation, the entire Sears box there. At Atlas Park in Queens, we're adding 2 deals with Northwell Health and pediatrics, all different sizes, different levels, different spaces, but it all seems to work.

Yes. I'll just jump in there, F. K. This is an very important category we created and developed an internal team that's focused on this. between product and services, the wellness and medical markets a $1.4 trillion market. We have over 150 uses in our portfolio today. We have 229,000 square feet, over 100,000 more working in our pipeline. So we think there's a lot of runway here in this category. It makes sense in aging population, expanding dollars being spent on health care for our assets and health care leaving hospitals and aftercare being out of hospitals, that's a great marriage for our assets. It's accessible. We provide amenities. And that customer wants to be closer to their home, which is our asset. So we think there's a lot of runway here.

This is a fun slide to talk about, too. We talk about great real estate and all of these brands that you can see here always target the best real estate in each market. I'll start with the left with Target. We announced Kings Plaza and Danbury Fair target coming in. And then Five Below, Barnes and Ulta, all 3 of them, this is specific to Danbury. We're in the market, now through COVID with the opportunity that we've been talking about, all 3 of them have relocated into our center, just creating more of that retail densification that we're looking for.

Hang on, just go back to that for one second. I have one comment. I think I alluded to this on the last earnings call. I have a different take on this slide because there's a lot of noise out in the industry about how the retailers wanted to be in lifestyle centers, open-air centers, especially during COVID. Well, guess what, all those stores you're looking at their target, Five Below, Barnes & Noble, Ulta, the traditional -- they're traditionally power center tenants, lifestyle tenants. But guess what, they're choosing the best real estate in the market. And that best real estate isn't a lifestyle center. It's not a power center. It's Danbury Fair Mall, a traditional and closed center.

It's a good point. And when we sit with Ulta next week at New York ICSC, I'm sure they're going to tell us like they always do. We don't go into malls and then we'll talk about the mall deals we've done and the next ones we're going to do. It leads to beauty. Ulta and Sephora, we continue to expand our footprint with both of them. Sephora, we just recently opened at Kings, which was a big win for us. Fitness. Michael is going to talk about fitness some more, specifically on the East. We just recently signed deals with Crunch Fitness at Eastland Mall out in Evansville, Indiana and in Deptford and an old Sears TBA. Education, Goldfish Swim school, I'm not sure if this is education or entertainment, I guess, it depends on if you're 6 or if 30. But again, we've backfilled the space at Atlas Park that we won't really sure what we were going to do with it. But again, great use going to add to those footsteps and traffic on a daily, weekly basis to Atlas Park. Grocer, as we continue to diversify and try to be the destination of every day, we just recently opened early market in Philadelphia. We're under construction with [indiscernible] freehold, and we hope to have some more announcements on grocer soon. F&B dining and fast casual, Michael is going to talk pretty lengthy about this. But in the East, recently, we have a great partnership with Shake Shack. We just opened them on a pad at Danbury in their -- with their new app through. I think it might have been the first one in the country. We have a new Shake Shack opening at Kings Plaza this fall pretty excited about that. And then we obviously have the Queens, Tysons and a number of locations out west, holding back a couple more there. The other thing that we focused on is we're coming out of is the local and the local F&B, which really seems to elevate the experience at our locations. We did Danbury Diner in a pretty tough space at Danbury, but they're very excited about. They'll open this fall. And I want to just touch base on Bone saw brewery. We have 2 locations in New Jersey, not with Bone saw, 2 malls in New Jersey. And the blue laws in New Jersey make it very difficult for us to add F&B just because of the cost of the liquor license. The team went out, found out that if you add a brewery and the brew in space, you don't have to go through the liquor license. So we get to add the food and beverage creatively without the expense. So kudos to them for doing that. And we continue to expand our footprint with Cheesecake Factory. Entertainment, I'm not going to go through all of these. It's a great add for all of our assets. We continue to push to add and diversify our entertainment uses. Michael will speak about this some more in a little bit, as we can. Technology, I put Apple. I mean we continue excitingly to expand our footprint with Apple across the portfolio and also within each of the locations where we have Apple, showing their long-term commitment to our strength, our strong centers in each of the markets. And then last, Tom mentioned 2 of the international Fast Fashion, Primark and Zara. I did confirm with Primark yesterday morning, we are still the #1 U.S. landlord, and we're proud of that. We have landed prime market, Danbury, Freehold, Philadelphia, Kings Plaza, which we will talk about in a second. Green Acres, they're under construction, will open in spring of '23 and about 50,000 square feet and 2 levels there. Tysons Corner Center they were going to open in fall of '24 and 2 levels there. That rework of space also allowed us to expand our Lululemon similar to the one that you all saw yesterday. And then they just announced their new deal with us in 50,000 square feet at Queens Center, which we're pretty excited about. We've talked about Queens. The team that works on Queens in New York, Calls Queens, the Beast of the East. It is for us, $1,700 a square foot. With that reputation, it's been fairly difficult for us to come up with the space. The opportunity that we've been talking about coming out of COVID allowed us to put together 90,000 square feet of contiguous space at Queens which, other than the expansion that we did, I don't know has ever been available at that center. So between Primark, which is going to take about 50,000 square feet of that and another tenant that will take the additional space, we anticipate that the sales for that same space will be 5x what it was from the previous 3 tenants. So we're pretty excited to see that. Unfortunately, as Scott said, we're going to have to take space offline at Queens for most of '23 while we get those stores built out, but it will be a really exciting addition for us. And then Zara, a great partner with us East to West. Zara, Mike and I was just looking at sales this morning, double-digit -- high double-digit increases across our portfolio out of Zara right now. The nice thing about these 2 groups is they really work with us as we try to transform our assets, I want to flip to the next slide. We talked about what happened at Kings. And you can see here on the left and the technology here will work for us. But as we looked and thought about what we were going to do at Kings with the Sears box that basically has looked like that through -- since the '60s. And we had interest from Primark. We had interest from Zara. We had interest from Burlington. And now we're going to add Target. And if you take a step here. So what we went for, for [ curbpeal ] or threshold experience from before to after, extremely transformational. More exciting than this even is that the same box that house those between Zara, Primark, Burlington Target, we think we're going to have 6x the sales that we did out of the previous user. So pretty exciting for us.

Yes, fantastic, very exciting, power of the real estate, absolutely. I'll walk you through some examples in the West. Scott had this slide up, just again, the power of the real estate, all the assets that are in states that touch the Pacific Ocean as well as Arizona is composed about 55% of the NOI. It's a great focus for us on the leasing side, and we're able to grab a lot of synergies and leverage these assets with one another to create leasing momentum. One other quick data point here. Tom put up our top 10, 3 of those are in Arizona. As you know, Scottsdale, Kierland and Arrowhead. So 3 powerhouses reside in Arizona alone. Medical, you heard the data point that I gave. This wasn't on our radar 12 months ago. We just made 2 deals with BioLife plasma. It's one of the -- it's from Japan, Takeda owns this company, one of the largest pharmaceutical companies now in the U.S. We did 2 deals with them at Lakewood Center in Washington Square, 12,000 square feet plus newness took out vacant spaces or occupied vacant spaces, great opportunity, like I was pointing out before, museums, Cayton Museum, 21,000 square feet at Santa Monica Place, attracts 250,000 to 300,000 people a year. You heard Tom mention, I think, yesterday on the tour, we'll be adding Din Tai Fung to this floor, third level, Santa Monica Place, you'll hear Cory talk about Korea's largest immersive digital exhibition and ARTE museum that will be coming on this floor as well. So these are unique. They're creative. They are fabric drivers -- traffic drivers of the of the communities. This one particular concept brings families, children. And obviously, there's a lot of synergy in what they'll shop in addition to visiting the museum. DICK's legacy brand, dominant in their category. We only have 16 in our 44, 45 assets. So a lot of runway here. This is a great example in Modesto, Central California, we replaced obsolete obsolescence Sears with 50,000 square foot DICK's. It's doing phenomenally well and 35,000 square foot Dave & Busters again, newness, repurposed, a different reason for the customer to visit the asset. SCHEELS, you'll hear more detail about this. This is incredibly exciting. This is just an example of a replacement of an entire box 220,000 square feet. It's an experiential type department store. Dave will walk you through that. This should do 4 to 5x the volume that the previous tenant did in this location. Home Furnishings, we saw this really flourish during COVID over 2019. Sales were up over 30 -- around 30%. So it's a very vibrant, robust category. What's exciting about this slide, you see the beauty and the investment that RH made in Marin. I already commented on that, phenomenal. Again, it was in the parking lot. So a great additive element to the asset. Our house, we have 6 of these. You saw Kierland yesterday, that's our #1 performer in the portfolio where this rendering or picture here is 29th Street in Boulder, we're relocating them, expanding them. It will be a flagship type presentation investment by our house. And then also, you have. You saw Lovesac here, and we have 14 of those in our portfolio. will expand more locations with them. And they have new entrants, Parachute, Interior Define, Purple, Avocado. So again, all this newness brands that we didn't know about, not so long ago are coming on to the scene. Industrious, you saw this 2 levels at Scottsdale Fashion Square, 33,000 square feet. Part of the recomposition of that Barney's box with Apple, beautiful presentation by both of them. We also met have them at Philadelphia, Broadway Plaza, Country Club Plaza, and you saw Scottsdale. F&B, I think this is -- this obviously was a hurting category through COVID, and now we're seeing great comps, working our way out of COVID. People are thirsty, no pun intended, but want to get out and eat. They want to experience. They want to be with other people, their friends, their families. And there's no better opportunity for us to texturize our plans by bringing in newness in the format of F&B, a correlating fact with all our total signed deals. We've signed about 100,000 square feet of restaurants in 22 currently and 40% of those -- that 100,000 square feet is new to Macerich. So again, bringing new brands, taking out obsolescence, tiredness and bringing in a new reason for the customer to come. You could see a couple of names on here. You guys saw Francine, Toca and Nobu yesterday, all doing incredible business. Riddle Joe's and Broadway -- coming to Walnut Creek and Bawa Plaza, real heritage, localized brand from San Francisco and then Lulu on Tom mentioned, third level of Santa Monica Place, just opened, and that's doing great, and that will be a great complement to the ARTE, the Cayton and Din Tai Fung, so a real redo of the third level of San marketplace. Entertainment, not only we have a robust pipeline. You see Pinstripes that are opening in 2023, 27,000 square feet at Broadway Plaza and we're working on a couple of other specific deals with them. But you have Round 1 has 4 spoches. They're more of their flagship presentation. There's about 48 round ones in the U.S. There are 4 spoches. This will be the fifth one at Arrowhead Town Center will be about 83,000 square feet, again, bringing -- giving the customer a reason and what we like about entertainment in a lot of these uses, it's driving a different daypart. It's feeding the nighttime traffic, weekend traffic. So it really rounds out, again, the reasons why someone will visit the asset. It gives them another time a day. Dave & Busters, as I mentioned, at Vintage and Modesto being a partner to Dick. Lifetime Fitness, this is best-in-class. If you haven't bend one, you need to go to one. It's really an opportunity for someone to enjoy wellness, bring their families, lounge, there's F&B, the real flagship amenity to our assets, this has built more 80,000 square feet like I mentioned prior Broadway and Scottsdale opening next year. So we're really excited about having -- and you'll hear Cory talk about fitness and well-being being added to Santa Monica Place. So great category, a lot of opportunity for us in our portfolio. and they want to be in the best real estate. Nike, we put this on here. We have -- this is Nike Live. We have one Nike Live. We have other Nike representation, but one of the best brands in the world, as we know. They've had a much criticized D2C plan. They announced publicly they're going to do open over 200 stores. Miami just opened -- in Miami, they just opened their rise concept, which is their flagship sports oriented. So they'll open these rises in big sports towns and urban hubs. And then they also have live, which is a more localized neighborhood type approach where they really cater based on their digital platform to what the customers' preferences are in any particular market. So we see a lot of runway here with Nike as well, great brand, great signature. We're excited about it. Pure athleisure, everybody's wearing athleisure. What a booming category. We always thought about this category with Lululemon and Athleta, and that's exciting. We're expanding our footprint with Athleta, Lululemon, in the downturn, speaking back to the quality of the real estate, they are very smart, strategic. When they saw opportunity, they're expanding. They relocated and expanded that Scottsdale, they expanded at Broadway. So they were adept at grabbing the best real estate when it became available in a real powerhouse both in their signature and then their performance. But what's exciting about this sheet, you also have new entrants. You saw alo, yoga. They're at Scottsdale. We walked by it in the Nordstrom wing, the redo of the Z gallery space at Kierland, partnering with Vuori, unbelievable redo. The volume that we're seeing initially is pretty exciting, fantastic to say the least. Fabletics, we have 7 of those in our portfolio. We'll continue to expand them. And then yes, so you got a combination of legacy and you've got a combination of additive new entrants to the category that are driving a lot of volume and putting a lot of investment in our assets. Electric vehicle, Tom mentioned this. Our first Tesla opened in Scottsville in 2012. It was a one car show for a while. But with the preferences of the consumer, again, and more people driving electric vehicles for the environment, you have Lucid come onto the scene. VinFast, we opened 2 VinFast, it's Vietnamese owned electric vehicle, Polestar has about 43 locations in the U.S. They're #1 performing assets in Marin, stores in Marin and The Village at Corte Madera. So you've seen, again, new entrants, somebody that's been around a while, Tesla, but then you have a lot of competitors and new entrants, and they all offer their own value proposition. VinFast and Polestar are probably more moderately priced and then you got Lucid in the luxury and Tesla at their upper end is definitely a luxury price point. Aritzia, really excited about this. You guys all know, Aritzia, they have just over 40 locations in the U.S. So there's a lot of runway for them. They're international they're best in class. We have a few in our portfolio. They're doing over $1,000 a square foot. So when you look at apparel, we looked at one tenant yesterday [indiscernible] mentioned. You look at that performance and you see these guys coming to the U.S. They individually design each one of their stores. They create a real environment. They have both vertically integrated merchandise. They have third-party label merchandise and they're best in class. So they're building a great store. They're driving a great environment. I was just in one -- last week with my daughter, the service is phenomenal. Those are -- that's what matters when we're looking at these new stores. How is -- how are they operating on the asset? How are they treating the customer, those are the brands that are going to win and have long-term viability. Chanel, I don't have to talk about the name. It's unbelievable. This replaced Papyrus. It's a small -- it's a fragrance and beauty concept. I think there's about 13 or 14 in the U.S. We have 2. So we're -- I think we got a good run on them, and we'll add more stores. Broadway, we'll be opening. Carolyn's open. You saw that yesterday, but unbelievable branding, unbelievable name and again, signature on our lease. You saw this. I'll talk a little bit more on the development about the luxury. But again, when we're talking about transformation and repurpose and newness and evoking the customer senses and this couldn't be a better example. As you walk in to Scottsdale, you guys all enjoyed it yesterday, a complete transformation, a 2-level flagship. Luxury, we love the luxury category. We're not overexposed as a company, but it's a category that's more resilient. In downturns, you've seen tremendous growth, 22% over 2021, which comped 20% over the previous year. And you expect between the Gen Y and Gen Z, you'll see this grow 60% by 2030. It's a $350 billion personal goods market right now. You can see this at $550 million to $600 billion in 2030. So we're excited about the category. That's it.

You've used all your words.

I left management because they made me wear socks.

Sorry -- Yes. I've got a question maybe on -- one of the interesting things that I don't think you guys get enough credit for, perhaps, is you've got -- you've added a number of the targets to your portfolio. What percentage of your properties have a grocer or grocery element if you add up all of the targets and all the other types of grocery sales? And then maybe also talk about what your percentage of space in your mall is for restaurants or F&B? And is there a difference between your best malls and your B malls that you have left in terms of the percentage of restaurant space that you would want to have?

Yes. You want to -- yes, I was going to say -- so the first question, yes, we see opportunity. What's exciting about that question is the grocery element. And again, when we're talking about live, work, playing giving the customer reasons to come to the asset, we absolutely have opportunity to add more grocery so to probably be on a smaller basis that from a percentage standpoint. So again, a lot of opportunity for us to add that type of category to our assets. The second question, when you're looking at the higher performer versus lesser performance, some of the examples on our presentation weren't all Scottsdale Fashion Square. So even in -- not as exposed markets or not as sexy markets, yet we're seeing localized newness, new restaurants. So you've seen it across the portfolio. And any given mix. We're probably 10% to 15% of our merchandise mix is in the form of -- seen it at the high end, you're seeing that the mid-market as well, brands that recognize these assets. They're not Tysons and Scottsdale. They're in Modesto. They were in Fresno. They're in 1,000 Oaks. There's great assets, but they're not as recognized. They're not on our top 10 and they're doing phenomenally well in the merchandise.

But It is a great question, and it is early days, and I don't have the percentages of grocery or F&B, but it's not a huge percentage, but it's going to be. And as we continue to add F&B grocer, Michael and FK talked about discounters and luxury and restaurants, entertainment, experiential. That's why we refer to our properties now as town centers. We're really transforming what was a traditional stale regional mall into what really is a town center.

So just a question on general tenant credit. It seems like this amazing environment where tenant credit is awesome, right? It's still well below average. Retailers follow sort of a cyclical pattern and at some point, they'll start choking and we'll have workouts and all that fun stuff. So how long do you think -- how long are you underwriting as you're doing your leasing and doing deals? Are you underwriting this wonderful credit environment? And two, is there something fundamentally different about the retailers now like how their balance sheet positioned versus pre-pandemic where we saw there was always a constant list of tenants that we were worried about. Right now, it doesn't seem like we're really worried about many tenants.

I think Scott can take the underwriting part of it, but he alluded to it. If you think about it, pre-pandemic, there are a lot of retailers out there that were struggling and probably would have failed over time, 3 to 5 years, but the pandemic really accelerated their failure. So we're left with a retailer environment that is very strong. The retailers have very strong balance sheets. We review them constantly when we're doing deals, and we're not doing deals just to make sure that our watch list is proper. And I think, Scott, you have the statistic on this, but our watch list is, I think, 85% less than what it was pre-pandemic and number of tenants on it. So we're in a really good spot right now when it comes to retail health.

And Doug, you didn't even embellish that statistic. That's the number.

I'm sorry?

I said you did not embellish the stat there, that's the number. It's maybe the first time today.

I'm leasing.

Alex, interesting and ironic comment is, as we are heading towards the pandemic, we had a number of tenants on our watch list, one of which was GameStop. And lo and behold, we had the Reddit run-up and GameStop went out and they raised a lot of equity. So we still keep a close eye on them, but they're no longer on a watch list and they've got a great balance sheet. And there's a couple of other tenants that fell in that category, but I'm not going to name them because you guys might put it in print. But it's the healthiest retail environment we've seen in probably the last 30 years. I think we had 3 spaces, this entire year that have gone bankrupt. That's it. That's a record, for sure.

Thank you. I was just going to ask, what's the company's leasing philosophy today on the portfolio, sitting with retailers, your A malls versus B malls. Is it each -- does each asset stand on its own or are you trying to help the Bs with the As? Like what's the overall philosophy today?

Yes, absolutely. Yes, there's definitely a certain amount of -- first off, we're listening to the retailers. We know our customer in the markets that we have assets in. We listening to the retailers, proposition of who they think their customers. We're making that synergy with our assets. But absolutely, with the quality of our portfolio. Yes, we'll -- like we were talking about this market. If somebody asked yesterday about competition. If somebody is looking at Scottsdale quarter or once we go to a quarter, but they want to get into discuss with [indiscernible], of course, we're going to leverage that conversation and say, you should be a care, if we want them. To Kim's point, we don't have a lot of opportunity there because it's so well leased. But we'll absolutely have that leverage scaled conversation. And again, it's not always -- I don't like the word leverage. It's more satisfying the retailers open to buy and helping them satisfy their rollout like when you come to Arizona. If you're not represented, we can solve that in the West, in the North, the Southeast, and we could do a 3- to 4-, 5-store market rollout for them and satisfy the whole plan, so...

I'd also say that projects like Scottsdale and Tysons are more of a calling card, right? Everybody wants to be there. I'm going to roll something out. I'm going to start with that, and it really gives us an opportunity to educate them about the rest of the portfolio and what's going on. So it's not so much a leverage as a, hey, did you hear what's going on at Danbury, did you hear what's going on in freehold or the Oaks because they probably have it because they're so focused on those. So it's really more of an education process.

So then my follow-up is, I guess, are you then happy with the size of the portfolio from RC, we still think about larger might be better in retail, the more quality centers you own, maybe the more leverage you have with the retailers. Do you want to add any other product type to the portfolio? I know you've done outlets like I guess, could you talk about that?

I would let Tom and Scott answer the acquisition or disposition of the size of the portfolio, they commented on that. But with respect to dealmaking and leasing, no, I think we've got a great representation of different types of assets. locations, different markets, again, fortress assets and gateway markets. It gives us a lot of leverage, and I said earlier, to an extent, it makes our job easier. And to F. K's point, when these retailers and we're educating them about assets they may have not known about. They see the newness that we're bringing in, the different categories that we're bringing in and that also helps us make the progress. But I think we're well represented in luxury core operating assets, lifestyle assets, outlets. So we've got a great sampling to work with the retailers.

I would say when it comes to leasing, really, it's more about the quality of our portfolio as it is about the size and bodes very well for us, given our quality.

Theater tenant exposure, thoughts on that type of tenant credit. How do you think about backfilling a theater these days? What kind of costs are there? And then just in general, how are you thinking about maybe pushing out weaker tenants? Or are you letting them stay in the portfolio until failure or actively pursuing to push them out and backfill in the stronger leasing environment?

I'll take one part of that. I think we were talking about this last night. We're always -- I mean, it's part of our job every day to monitor the movement in any particular shopping center, whether it's frictional vacancy that we're creating as we move brands around to create a better merchandise plan. But we're absolutely monitoring and studying performance when we have opportunity naturally expirations, sometimes we have outs that we put into leases that we can control the real estate. So it's part of our job to pay attention to that movement and try to optimize the plan with a better performing or better rent paying tenant, which is 2 elements, obviously, we're looking at closely now in theaters. I won't provide the detail, but the #1 theater representation in our portfolio has got a tremendous balance sheet. They're really strongly performing for some of the theaters that have been in the markets with a lesser balance sheet or lesser position balance sheet, we're very slightly exposed. So in the theater category, where we feel very good in AMC, Tom was talking about the mean run up and what they were able to do with their equity in the stock market was valuable for them as well. And then repurposing, you'll hear Cory, we have, I think, I'll give you 2 great examples. We just made a deal at a center in Arizona where theater went out with the team flew to a different market, met an operator, and they're bringing a theater into that asset. And then you'll hear about Santa Monica Place with ArcLight Studio going out, and we've got a great backfill of that location as well in its entirety the whole box. So we don't have a lot of exposure [indiscernible] theaters.

So not a lot of exposure and generally speaking, if we don't replace a theater with another theater the stronger balance sheet. We've got better uses. And we'll hear about that shortly from Corey Scott when he talks about what's going on in Santa Monica Place.

All right. Thank you, everyone.

Thank you very much everybody. Okay, everybody.

We're going to go ahead and jump right into this. Good morning. It's great to see everybody. Great to see everybody last night. By way of introduction, I think we met most of you last night. But I'm Dave Short, I'm the Executive Vice President of Asset Management for the West. And joining me on stage today is Corey Scott. He's my counterpart in the East Executive Vice President of Asset Management also. Today, we're going to be talking about an important subject, and that is repurposing and transforming our anchor spaces. Very important topic, a topic that has been discussed a lot among this community. It's certainly an important one to us, discussed a lot internally, and it's very, very important. They don't call them anchors for nothing. Traditionally, these boxes have been occupied by department stores. Many of those department stores have lost their way over the years. There's a couple of poster children out there that I'll try not to beat up on too much. But for a number of reasons, many of them have come back to us. And sometimes, when we think about anchor stores coming back to us, we think about the challenges that come along with that in the form of costs or downtime or that sort of thing. But as mall owners, we look at that as a big opportunity for a number of reasons, and we'll go into that as we get through the slides here. As we think about anchor boxes, there's generally 3 big tranches or 3 big areas that we look at when we're talking about repurposing them. One is with a single user. That's not as popular, a replacement as it maybe once was but it still is an opportunity, and we'll talk about one of those today. Another one is multiple users where we take the existing box and we redevelop it, we break it into pieces, we add more diversity, different uses, that sort of thing. And then the last one, which is a very interesting one, is really more of the redevelopment angle, and that's where you take the box, you scrape it, you take that FAR and you redeploy that into a mixed-use type of redevelopment. Corey and I are going to talk about the first 2 today. You'll hear a little bit about the third from our development team as we move on through the presentation today. So what are we trying to accomplish with these boxes? On the right side there, I think, first and foremost, we're trying to drive center value through diversification of uses. A lot of these original department stores have lost their way. They were no longer exciting. They weren't investing in the business. Their sales have declined, that sort of thing. So by diversifying uses, we were able to bring different types of operators and make the center much more exciting. So what does that do? It expand sales and traffic. We'll give you a few examples today about how some of these replacements are increasing traffic and sales dramatically, and that helps in a number of ways across the center as we lease it up. Creating customer experiences. Once again, some of these older department stores aren't the greatest of experience and the replacements are. So we feel really good about that. And as we know, in the bricks-and-mortar world, in the mall world, being able to create good customer experience is a significant point of differentiation for us versus, say, online retailing, improve center co-tenancy to better drive rents and occupancy, very important. Our leasing team in the room will tell you that by bringing in these exciting new uses by improving these boxes that it has dramatic effects on our ability to lease up and improve the interior mall space, which is where so much of our revenue comes from. And then lastly, expanding the trade area and broadening the appeal of the center. Several of the uses we can bring in, just make the center better, make it more interesting to customers and expand the trade area. And we'll give you an example of that as we walk through these slides. So moving on, we're going to walk through a couple of in-process projects across the portfolio. The first 2, I'm going to talk about our former Sears buildings, and we'll just jump right into that. So Danbury Fair, Danbury Fair, a great mall for Macerich, a large center, 1.3 million square foot super regional property located in Danbury, Connecticut. I talked to a few of you last night and some of you actually shopped this mall. It might be your mall, great community, a fluent center, high growth, high quality of life, close to the New York metro area has benefited tremendously from work from home. And so great center. So this is what it looked -- used to look like. It was originally a Sears building, 178,000 square feet, very underperforming. Sears have put no money into it, not exciting, wasn't the best of anchors for the balance of the center. And in 2016, this was converted into a Sears Primark combination. It was one of Sears last ditch efforts to improve their brand. They reduced the size of the store, at least a portion of it to Primark. And that ultimately, we all know how that ultimately ended. We ended up getting that business back in June of 2021. Going to the next slide, you heard us allude to this earlier. We were able to -- based on strong demand at the center, we were able to make a target deal here. We executed a lease with them in May of this year and importantly, got that done just 11 months after we recovered possession from Sears. And it's a 126,000 square foot unit. We expect to deliver possession in spring of next year, and we expect them to open 1 year later. And importantly on this, we were able to complete this deal at a very strong rent with very little cost. So they're actually spending the lion's share of the money to build out and refit this space. So just a testament to not only a capital-friendly deal, but also a testament to the strength of our real estate that we're able to execute on these sorts of things. Jumping ahead to the next slide. So what do we like about this deal? We love the traffic increase. I won't get into numbers, but suffice to say, we expect the traffic generated by this to be enormous, not just 10% or 50% even increase over what was there before, but a multiple of that. In terms of higher sales, you'll see the note there, 10x higher sales. We know what Sears did by itself before. And we know what Primark is doing now, and we have a pretty good idea of what we think Target will do. And so we're pretty confident when we say that we think ultimately, this will do 10x the volume of what Sears was doing before. So once again, this just demonstrates the power that this brings to the center. I'm jumping down, we're also -- and FK alluded to this before, you'll see some other brands there on the top where we were able to part and parcel with this bring in other large users that we like to the center, like a 60,000 square foot round 1, bringing an entertainment use to the center, which we really like Five Below and Barnes & Noble, which we like along the way. We've expanded Dick's here. So once again, lots of momentum here in the box department, which only serves to help what we're doing in the middle of the mall. This next slide just shows a site plan representation of what this looks like in the -- at the far left end of the center, where you see the red and the blue, that's where Target and Primark are. Immediately to the right of that, that sort of gray block. You can see we took a big block of ball space, and we're able to do Barnes & Noble and Five Below there, thus making the mall shop space a little bit smaller and creating more of those strip center type uses there. And then over to the right, we were able to do a 60,000 square foot round 1. And that's all in addition to doing some peripheral leasing here and obviously, making some real good strides on the inside of the mall. The next one, I'm going to talk about similar, as I mentioned earlier, also a former Sears box. This is Deptford Mall in Deptford, New Jersey. This is a nicely sized 1 million square foot regional mall very strong orientation to family, dining and beverage and entertainment, sort of a fun fact of this mall that sort of demonstrates its family orientation. This is always the #1 Santo mall in our portfolio. So go figure. But obviously, very, very big orientation toward families here. Jumping to the next slide. This is what we had here. So this was a 192,000 square foot Sears store. This came back to us as a rejection during the Sears bankruptcy in May of '19, and once again, presented a big opportunity for us. This particular location on the site is right at the front door, right, at Main and Main, very good real estate, front of the center. And as a result, no surprise there was significant demand for this box. So after thinking about what we wanted to do here, we figured the right thing to do here was to split up this box. There was a DICK'S sporting goods across the street that was in an older store. We were able to relocate them into the lower level of this building in 64,000 square feet. We love taking retailers from the competition. We were also able to secure around 1 and 49,000 square feet on the upper level. Both of those uses front the enclosed mall, providing that cross traffic that is so beneficial to us and beneficial to our leasing team. And then for Round 1, we also have -- you can kind of see over in the right there, a launchpad so you can not only access them from the enclosed mall, but you can access them from the exterior. We were able to identify these uses early. Once again, the building came back to us in '19. We were able to identify these uses early and we were able to get this project going, do this construction largely during COVID, so we didn't miss any time, and this building continued to chug along. And then along the way, we added Crunch Fitness in 28,000 square feet in TBA, we added a Republic Bank on a pad that did not exist before to a very favorable ground rent. And then as you can kind of see along the bottom there on the left, we also added some wall shops exterior facing to add little exterior expression. Now one thing that's not shown on this slide that I wanted to comment on is as a part of this project, we also worked with our anchors to get another permissible building area on the site, which will allow us to add another pad and further add revenue. So great overall outcome here. So what do we like? Lots of momentum. Once again, strong traffic increase, which benefits the enclosed mall, the Republic Bank pad. We love bringing in DICK'S from a competitor. DICK's, by the way, is doing 40% more volume attached to the mall than they were doing across the street Pre-COVID, diversifying the use with entertainment, fitness, food and beverage and once again, the addition of the pad. And just lastly, the site plan depiction of this. As you can see on the left side of the center there, that sort of pinkish purple that's the box, the former Sears box, where we were able to make these uses. And then to the left of that, the bubble pink pad to the lower left is where we did the Crunch Fitness. And with that, I'll turn it over to Corey.

Great. Thank you, Dave. So when you get this far down the agenda, some of my surprises may have already been taken here this morning, but I'll do my best to keep at least some level of surprise, hopefully, before I'm done this morning for you guys. Santa Monica plays one of our absolute jewels on the West Coast, a shopping center that Macerich purchased back in 1999. Shortly after we purchased it, we recognized there was a tremendous opportunity to redevelop this shopping center into something really special. In 2008, we began a massive redevelopment project for about $250 million, where we ripped the roof off the project, turn it into an open-air shopping center. Two levels of retail, a beautiful third level with a food court, lots of great restaurants and an ArcLight movie theater as well. Santa Monica Place located in an absolutely amazing location. It's just a couple of blocks from the ocean, a couple of blocks from the iconic Santa Monica Pier. The tourism traffic there is just off the charts. There's 3,000 hotel rooms in 30 different hotels within a 1-mile radius to the shopping center. It sits at the southern end of the beautiful Third Street Promenade, which is just a premier destination down there and enjoys great parking, which makes it a really good shopping destination. Since redeveloped in 2010, the leasing team has done a really good job of making sure that we merchandise the shopping center to really focus on our core shopper. And again, Santa Monica is kind of a unique area. We've got 1/3 of our shoppers come from kind of the local market in our daytime population. 1/3 of the shopper traffic comes from domestic tourists and 1/3 of it comes from international tourists. So a little bit unique with the offerings that we get there. The pandemic or 2010 hit our urban shopping centers, the hardest, and Santa Monica Place was certainly no exception to that. We suffered government-mandated shutdowns for several months during 2020. We had civil unrest within the community that led to some property damage with almost 20 different storefronts being impacted at the shopping center. And in the midst of all of that chaos, we were notified that 2 of our long-term anchor tenants at the shopping center, we're going to be closing their doors. Bloomingdale's announced they were going to close their 100,000 square foot store on the southwest corner of the development. And ArcLight movie theater announced they'd be closing the theater in 50,000 square feet directly on top of the Bloomingdale's box. Despite the staging of those 2 key losses, we recognized that this was going to be an unprecedented opportunity for us to reimagine and transform the shopping center. We now had a perfect 3-level 150,000 square foot box, sitting beautifully on a corner location of Colorado Avenue and Fort Street directly across the street from the light rail station that was now bringing millions of people to our front door every year. We wanted to stay true to merchandising that was going to focus on our core shopper that I mentioned earlier. But at the same time, we wanted to make sure we brought in a new level of uniqueness and really focused on boosting traffic, especially during the daytime population to the shopping center. We left no stone unturned as we looked literally around the world in this case, to find the best uses for the shopping center. As Tom mentioned earlier, we focused on 3 uses. We're going to have a ground level fitness use, a second-level co working. And on the third level, new entertainment concept as mentioned a couple of times this morning, ARTE Museum, which will be on the third level. We are in the process right now of finalizing the leases for the fitness and co-working. We should be able to announce those users soon. And as also mentioned earlier, we literally signed the ARTE lease last night. On the ground floor, 50,000 square foot fitness space, we discovered a high-end full-service health club and wellness concept. As those of you who know Santa Monica, you know that the wellness-focused lifestyle is a really big part of the fabric of the community. And we wanted to make sure that we focused on a high-end concept as today, we feel the Santa Monica market is underserved in that category. We've identified a user that's anticipating 5,000 members and almost 1 million total visits every year. As you heard from Michael and FK just a minute ago, we've had great success with fitness across our portfolio to date with great names like 24-hour Fitness, Lifetime and Crunch, and we look forward to building on the fitness concept here in Santa Monica as well. In the middle position, we will have a 50,000 square foot full-service co-working space. As you've heard several times today, we absolutely love the synergy and energy that's created when you bring retail and office together, whether it's the 500,000 square foot office tower at Tysons or it's the 30,000 square-foot co-working space in Scottsdale, there's just great energy that's brought together when you put the 2 in the developments together. The office users love our ample parking, unprecedented amenities in the vibrant atmospheres. Our restaurants and our retailers love the daytime traffic, they fill up their coffee shops, bring in the lunch crowd and fill them during the happy hours. And now, as you've heard a couple of times this morning, it's my pleasure to introduce ARTE Museum. Very excited about this new concept for the third level at Santa Monica Place. ARTE Museum is designed by a Korean-based company called d'stric. D'stric is a world-class digital design company, a long track record and a very distinguished client base that includes great brands like Samsung, Tiffany and [ Duro. ] They kind of stepped out of their box a little bit here, where they've now created this new interactive museum concept, which will combine their art work and their new digital technology into a ticketed immersive art experience that is truly like nothing else that you'll find in the market. As Tom mentioned, several of us got to go to Korea, meet with d'stric and visit ARTE Museum. And I can tell you the amazing visuals that you get here from this video really do no justice to the unbelievable experience that people are going to see when they get to experience this in Santa Monica Place. This will be the very first flagship location in the United States and will be exclusive for the Los Angeles market when it opens late next year. Also, as mentioned earlier this morning, we expect really strong traffic. Our ARTE Museum is estimating an average of 3,000 people every day for almost 1 million visitors a year to the museum. Again, as we touched on earlier, the full box with all 3 tenants should be opened in 2024. We're looking at a total capital spend of $35 million to $40 million and 22% to 24% return on capital. And now I'll turn it back to Dave, and maybe get a drink of water.

Thanks, Cory. So jumping ahead. Right here in this market, Chandler, just a few miles south of us. I want to talk about Chandler Fashion Center. One of our top properties in the Valley, a big center, 1.3 million square feet situated in Chandler, which is one of the top fastest-growing markets in the country. Very family-oriented, very educated, really a great market, home to what we call the Silicon desert around here, which is -- includes employers like Intel and Orbital Sciences and Microchip Technologies and many other high-tech companies. But moving along the Chandler and talking about the opportunity here. So this was a 144,000 square foot Nordstrom building that came back to us during the middle of the pandemic, as you may recall, Nordstrom was rationalizing their fleet of full-line stores. It was a good performing store, but as you know, they decided to adjust their fleet. Now typically, mall owners don't like it when they hear that Nordstrom is planning to close. But once again, at Chandler Fashion Center, we view this as an enormous opportunity for us. As mentioned earlier, the horse we've chosen to ride here is SCHEELS all sports. And we as -- when looking at this, we looked at a number of different options before we chose SCHEELS including office, residential and retail, all of which were viable. We did pro formas on all of them. The idea of splitting up this box was very attractive to a lot of retailers. But at the end of the day, we settled on SCHEELS because of the many benefits that we think it brings the center, which I'll go into in just a moment. This shows an aerial photograph of the site. And you'll notice on the left there, the positioning of the former Nordstrom box in the 144,000 square feet, and you can see it depicted as an expansion in the kind of red color. If you keep going to kind of the upper left, you'll see Chandler Boulevard, which is the main drag in Chandler. And then to the right, you'll see the 101. So this center really sits at the corner of Main and Main. The plan is to take it from 144,000 square feet to 220,000 square feet in a capital friendly way. This was a building that was owned by Nordstrom we were able to recapture that building in a very favorable way from an economic perspective. And SCHEELS will be doing the very, very lion share of the build-out here. So once again, really excited about getting this kind of a user here. And importantly, and similar to Target, we were able to make this deal with SCHEELS in 10 months from the date that we were able to get Nordstrom back, which is saying something because SCHEELS is not a large retailer by store count. They only opened about 1 store per year approximately and getting them as a major clue to the center. It's under construction right now. I don't know if any of you had a chance to tour the market. It's a site to be hold. It's a very big building, very tall building and we're looking forward to a September 2023 opening. So who is SCHEELS? I don't know how many of you know them. So I wanted to take a moment just to talk about them. They're a very different retailer, truly a one-of-a-kind experience. The term game changer is used a lot in a lot of different areas. I really think this is a game changer. It's so much more than a sporting goods store. And by comparison, when we think of sporting goods stores, we generally think of the market leader, which is DICK'S. DICK'S typically occupies about 55,000 square feet. This will be 4x that, just to give you an idea. But in terms of the overall store, it's an employee-owned business. They have 32 locations. They have about 10,000 employees. They have grown their sales by 250% since 2017. Remember, they don't open very many stores. So really excited about this. And then on the right, as you look at some of those brands there, you'll see just a couple to name a few, Vuori,, YETI, alo, Travis Mathew. Those are just a few of the brands that they'll be featuring in their store, and we love that because when department stores or in this case, SCHEELS, has those brands in the stores and they do well, that bodes directly to us being able to make deals on an attractive level in the mall space. The other brand I circled on here just kind of for fun is that track in the lower right-hand corner. Even with 32 stores, they're the #1 Trek dealer in the United States. So they sell a lot of stuff. We talk a lot about experience in our world and how that's a differentiator for us. SCHEELS is probably the poster child for that. as personified by the Ferris wheel that sits in every one of their large format stores, but it's not just that. It's the 16,000 gallon saltwater aquarium, the Wildlife Mountain, which is a taxidermy style wildlife area in the store, which is really amazing to look at. You could probably spend a lot of time just looking at that. But sports simulators, food and beverage, archery lanes, tons of interactive experiences, bowling, you name it. If you haven't been in one, I highly recommend that you go see one and bring your credit card because it's hard to get out of there without spending a lot of money. This is just a little quick sizzle reel that SCHEELS users. So we thought that we'd show this for a second. [Presentation]

I want to add a couple of things on this. Yes. Dave, I want to add couple of things on this. These guys are e-stock owned by the employees and [indiscernible] every person in every department is pretty much an expert in that particular area. Store managers will retire after their tenure with SCHEELS with several million dollars in their bank account. They recently opened a store actually their store opening was right during COVID in Dallas a couple of years ago, and they'll do in excess of $200 million in that store in Dallas. I expect them to do well over $100 million in this location. They're very excited about the market. They're Fargo, North Dakota based and really one heck of a store. If you get a chance to visit one, I would highly recommend it. Problem is, you'll spend 2, 3, 4 hours there because you want a relief.

Thanks, Ed. And just to expand on a few things that Ed said, I think of this slide is the power of SCHEELS. As Ed alluded to, we know what Nordstrom traffic was. We know what Nordstrom sales were. We have a really good idea of what SCHEELS traffic and sales will be because they have other stores. So we're thinking that this is going to be in the 4 to 5 times range in terms of increased traffic and increased sales. Comparable stores within the SCHEELS portfolio generate $4 million traffic per year. Pretty amazing. And as a part of us doing this deal, we commissioned a study, and one of the nuggets that came out of that study was the data scientists felt that this would increase our primary trade area by 36%, just to the drawing power of SCHEELS over the next 10-year period. And the last thing I want to point out, which is down there at the bottom there, and that is strong retailer brown recognition. Not everybody knows who SCHEELS is, not everybody has been to their stores, but the retailers and the brokers and all of the retailers and brokers that we want to do business with and bring those retailers to the center, they know and it gives us incredible credibility in terms of expanding the trade area for Chandler Fashion. But in addition to that, we love the to bring sporting goods to the center. And as Kim, I think she's back there. You heard from her yesterday will attest the retailers love SCHEELS. And we've already done a bunch of deals based on SCHEELS, and we expect to do a lot more. This last slide just shows their national footprint. You saw a version of that on the sizzle reel. Arizona is a big hole in their U.S. market, and so we're really excited to get them here. And more than anything, they're not only going to draw significantly across the valley, but also to the state and maybe even beyond. It's over 500 miles to the next closest SCHEELS and they're definitely a destination. So super excited about that. Super excited to what it brings Chandler, and I'll let Corey bring us home.

All right. Thanks, again, Dave. All right. Fashion District Philadelphia. So Macerich first stepped into downtown Philadelphia with the redevelopment of the former market at Gallery East and developed fashion district -- Fashion District opened in -- reopened in late 2019. This shopping center is a 840,000 square foot shopping center in downtown Philadelphia and Center City. It currently covers 3 city blocks and is really at the epicenter of the second largest city on the East Coast. We redeveloped it with great brands, great balance of retail shopping and entertainment. We've got City Winery, we've got Primark. Industrious is there, Wonder spaces, Nike and H&M, just to name a few. The shopping center also sits right on a transportation epicenter for the entire city. 22 million riders annually go through Fashion District Philadelphia as all the train stations converge right there on the lower concourse level. We were very excited when the center opened in 2019, felt like we had hit a big finish line, and we're proud of what we've done with the shopping center. And then every once in a while, exciting opportunities knock when you least expect them. So we're very excited about the opportunity that has come forth here involving the Philadelphia 76ers. So I'm going to let the video kind of roll while I talk a little bit, but in July of this year, Josh Harris and David Blitzer, who are the managing partners of Harris Blitzer Sports Entertainment, the owners of the iconic Philadelphia 76ers publicly announced that they were out in the market looking for a new arena home for the 76ers organization. HBSC has teamed up with Philadelphia business leader, David Adelman, to pursue a privately funded sports and entertainment arena that will be located on a portion of what is now Fashion District Philadelphia. This privately funded arena is estimated to cost $1.3 billion. And during the construction period, provided $1.9 billion of economic benefit for the community. This -- as you've heard many times today, we're constantly enhancing our properties to try to extract the greatest value that we can from them. And this exciting addition to Fashion District is an exciting once-in-a-lifetime opportunity to reimagine what these 3 blocks could be. This will further solidify our investment into Fashion District and will be the catalyst for a huge transformation in downtown Philadelphia. We think the arena is going to be a very exciting anchor. They will have over 150 days of activation with not only the 76ers, but also concerts and other performance events. They expect 3 million people annually to attend events and sporting events at the arena. 76ers games alone have almost 19,000 people in attendance for each game, and they anticipate that the arena will produce a $400 million annual benefit to the city once it's complete. As you can see from this time line, we've got a long way to go. We started down the journey and we're focused on a grand opening with the kickoff of the NBA season in 2031. The city is already buzzing and Fashion District couldn't be more excited. The tenants are very excited to learn more about this as we kind of move forward. And the calls are already coming in from retailers and restauranteurs who are excited to find out how they can get position within this new development. The future for Fashion District, the 76ers in Philadelphia is certainly exciting, and we are looking forward to going down this path with our new partners. I don't know anyone who can quite articulate excitement and represent the iconic 76ers brand, quite like my friend Franklin. So right now, I would like to invite our friend Franklin of the Philadelphia 76ers to come join us and share some excitement and brotherly love with the room. [Presentation]

Thank you, Frank, for being here with us today. We appreciate it, and -- thank you. I think we'll let frankly lead us after the break and maybe he'll be around to say hi to a few of you as you enjoy your break. Thank you, everybody. [Break]

So good morning, again. We're going to go ahead and get started. I just want to thank Cory and Dave for that difficult act to follow, but we're going to do our best. So by way of introduction, my name is Will Voegele, I am EVP and Chief Development Officer. I have been in the mall and mixed-use development business since I was 25. So from the look of my hair, I'm sure you can imagine that's been a long time. I'm joined up here today by Garrett Newland and Scott Nelson, they are Senior Vice Presidents, located in our Phoenix office. They are true industry veterans. They manage essentially everything that happens on this side of the country. Of course, Michael is up here with us, and there's possibly nothing else I could say further to introduce Michael. He's going to help us talk about Scottsdale Fashion Square. But I don't want to forget Jacob Knudsen and Andy Greenwood, who are in the back, they are Vice Presidents in our development group. They are more than anyone, the people on the ground at each project. You saw Andy touring Scottsdale yesterday and Jacob touring Kierland. They're the people pushing these projects forward. If you couldn't see the pride beaming from their faces, it's probably because you were distracted by that beautiful Dior storefront at Scottsdale or that beautiful empty parking lot at Kierland. So beauty is in the eye of the beholder for us developers. And believe me, what we see at Kierland is really an exciting vision. So with that said, I want to -- first of all, I want to say that I'm very privileged to be working with this group. They really are the best of the best along with the rest of our development team around the country. But today, we want to share with you not just a deeper dive into some of the projects that you've seen and what we have on the horizon, but I want to take a few minutes to speak a little bit to development in general, the culture and the approach that we take. There we go. So the Macerich Vision, it all starts with a fundamental vision, to continue to transform our portfolio into vibrant town centers that are the heart of their community. This vision drives a critical part of our growth and value creation story, which is to leverage our exceptional real estate by bringing the full complement of mixed-use development to our properties. That means residential, office, hotel, fitness, entertainment, medical, the whole range is what our focus is and what we've been doing already. And that is diversification and densification. That's fundamentally that concept. When you bring those complementary uses to a project, you not only drive diverse income streams from each individual use, you drive the proven benefits of mixed-use development. If you're not familiar with those, it's very well known that when you put the right uses together, in the right environment, in the right real estate, you raise the bar on each of those uses. They each bring the tide up for each of the other uses. So a perfect example is Tysons. We have 400-unit residential building called Vita, top of the market rents, top of the market occupancy. We have a 0.5 million square foot office building in Tysons Tower, top of the market rents, top of the market occupancy. And we have a portfolio-leading Hyatt Hotel, just broke some records on F&B for that brand. And those uses around that plaza next to the incredible Tysons Corner Gateway project on the real estate we have is the reason why we see that kind of performance. So that's a model for us. And you'll see essentially examples of those same things and even how we want to continue to transform and grow what we're doing at Tysons as we share more with you today. But 3 points I want to make before I hand it over to this great team. The first is opportunity. When you have gateway properties, like we have, you have coveted land and the coveted land attracts the best of the best developers who want to plant a flag on your property because of the great real estate you have. And in turn, creating value for Macerich. That built-in demand translates to an abundance of opportunities. And almost all projects that we do, we work with multiple developers in competition, until we find the right opportunity, the right developer, the right business deal, the right land value, and only then do we execute and go forward. So the attractiveness of our properties also drives business deals, especially in things like vertical residential development that allows us to shed much of the development risk, but drive significant income and value to Macerich. So that's opportunity. The second is optionality. Traditionally, developers buy land, hold land, suffer the time pressure of cost of carry and other factors that weigh into their decision-making. When you own the land, you own the opportunity. And we have the ability to time what we do to make it make sense with the market, to make sure that the preleasing is in place, to make sure that it's in alignment with our capital allocation strategy and that's when we pulled the trigger on these developments. And as you heard, much of the development that we're doing involves contributing the land and that land contribution always buys us a meaningful portion of the equity stack. But we have the additional optionality of buying up further if it makes sense with where we are and with our capital allocation strategy and the investment itself. So again, optionality. And lastly, execution, and this is a really important one. We take a very disciplined approach to what we do. We have some very creative and just highly aspirational players in our group. And that means that we're focused very much on the quality of the design, the quality of the open spaces that we create, the way we program those spaces, the way we design and execute construction. But it all lives under an umbrella of discipline that makes sure that every decision we make and every development that we move forward with is built upon a foundation of strong returns and what makes responsible sense as a development. So those are all the things that you saw yesterday and you're going to see more of it today. But those are foundational for Macerich and how we look at development. So it's this vision, it's this optionality, it's this significant level of opportunity that we have that's driving the value creation for our properties, our communities and our shareholders. So with that, I'm going to turn it over to Garrett and Scott, and we want to talk first -- you guys want to have this, do you want me to flip it for you and do it? First about Scottsdale Fashion Square. Again, one of the most transformational, completely reimagined redevelopments that you're going to find anywhere.

Well, yes, really quick, Michael. I mean, I know we focus a lot on Scottsdale and obviously, we're here in Phoenix, and Scottsdale is a really easy one to get to and it's fun to show off. I think when we talk about Scottsdale, we talk about primarily in the vein of this is an opportunity that our portfolio offers us many times over, not just at Scottsdale. And we've just spent a lot of time talking about kind of the leasing and the merchandising and the luxury wing, and we'll talk more about it. But I think the Scottsdale Fashion Square more than anything has been a huge partnership and consensus building and collaboration between leasing, property management, development, asset management. And I think it's probably one of those great stories about how this process kind of takes a lot of factors in, and it requires a lot of collaboration and cooperation amongst the different disciplines. So...

Yes, absolutely, Scott. I look at -- we all got to see Scottsdale Fashion Square on the tour, but it's so much more. It's not just about Scottsdale Fashion Square, it's about the dynamic market drivers, visionary landlord, motivated retailers all collaborating together, internal partners, to deliver a premium product that ultimately is evolving, like I said yesterday, over a decade. It's just enjoyed its 60th year. And you think of some of the evolutionary changes at the center. It used to have Rob May and Bullock's and A.J. Bayless and Diamonds and Sears, and now you have Nordstrom and Harkins and Dick's and Neiman's and Dillard's and Macy's and all great top-performing stores. So you can just see the evolution, the power of the real estate and the execution and collaboration internally. This map here, just go back to the map real quick. Just from abroad -- I talked about this, it shows the geographical orientation of our assets. These are 8 powerful assets. Again, we can solve many retailers open to buy or their expansion plans in this market. This is all with the nucleus of Scottsdale and Kierland at the center to the West SanTan and Chandler. I mean, I'm sorry, Arrowhead and then to the Southeast SanTan and Chandler. Let's go to the next slide. I commented on this yesterday, just again, the evolution and the power of this real estate, maybe you could just point to Camelback and Scottsdale Road, which is over by the waterfront condominiums in the top left portion of the screen. What's important about that is we we're redeveloping and looking at this canvas that development helped provide. We're the painters, the leasing, we took advantage of the cut through that Goldwater provides. The cut through I talked about from Scottsdale to Camelback. It was unserviced retail prior. That road used to be 70th Street, it was renamed Goldwater. And you could see the lux entrance. We were standing there where the Lifetime Fitness logo is. And that was all envisioned, created, developed, again. We couldn't do it without the collaboration or communication with the retailers, the proprietors, the founders of what they wanted and what they would best service them in being productive. Working with development, we were able to create a wonderful entrance, a new sense of arrival to the asset, the best it's had in its history. Let's go to the next. I talked about the objectives. We had 5 objectives when we embarked on the first part of the redevelopment. One was to reposition and remerchandise the Barney's box, certainly wasn't broken real estate. It was broken retail outside of New York City. Barney's didn't work outside of New York City. And we repurposed it with a flagship Apple. And as you saw, a 30,000 square foot -- plus square foot industrial. So that was one of the goals that's complete. Created a true sense of arrival. I commented on, we have about $60 million of F&B that's new and added to that entrance. We have Lifetime Fitness opening and added valet unbelievably successful. That's complete. The third component was to elevate the aesthetics and the materials on the center in the first phase of the luxury redevelopment in the Neiman Marcus wing. I don't know if anyone went into the restrooms, they're remarkable. They matter to the luxury retailers. The materials on the floor matter to the luxury retailers. The brand opportunities matter to the luxury retailers. So we're -- we've completed that first phase. And then two more components. On the success of completing the first redevelopment and executing in the way that we did, it gave us credibility with retailers and further buoyed our opportunity to redevelop the Nordstrom wing. So that's ongoing. As you know, that we're redeveloping in the Nordstrom wing, we walked into that yesterday. And then densification on the North Parcel part of our ethos, the live, work, play, diversified, dense, develop and densify. This is alive and well here. You can get a better example in the U.S. right now of what that brick-and-mortar is alive and well, north of $1 billion of sales, and we continue to evolve and elevate it. We were standing outside. This is pretty -- this is a pretty powerful slide. You can see on the left, we talked about, we walked outside of the store looked at the parking lot and said, "Oh, my goodness, like, can we do this?" And this is what we developed. Again, we painted the canvas. The developers provide the infrastructure. We took advantage of the market drivers in the demo and psychographics that were alive and we executed, I think, in the highest manner. Walked in -- this is a huge component, the sightlines. So especially when you're dealing with the luxury brands and global retailers, the sightlines and their brand identity is significantly important to them. When we walked in, it was clouded with columns, vertical transportation, escalators, elevators. And we had a real deep dive about how we could execute and create this. So it wouldn't be the same offering, wouldn't evoke the same sense and emotion when you walked in if it was crowded with vertical blockage on sightlines. These are just some examples. You guys -- we stood outside of Dior, that flagship presentation has been a catalyst for other brands coming here. The CEOs of these global retailers that are coming aren't saying just where is my space. They're saying, "How can I get the best brand impression? How do I get a flagship representation?" That store helped us create that. And then just quickly the -- yes, we could just stay here. As you walk down the -- we walked down from Neiman Marcus towards center court, you enjoyed a seamless transition walking down that corridor that wasn't blocked by, again, vertical carts, kiosks. But the amenity and the aesthetic is at a premium level, again, shows our credibility and it enabled us to have further discussions to keep growing our position. As you -- just real quickly on that slide, you saw in the papers, it was announced [indiscernible]. We signed 11,000 square foot of [ mezz ] deal. It's going to be a spectacular addition to our lineup. Balenciaga, you saw that. They just opened across from Vuitton. And Prada, I think -- we're very proud of this Prada story, the location, the investment that they made, but also the repurposing and the transformation. Again, that was Stuart Weitzman and Ben Bridge, they were tired stores. There hadn't been an investment in the stores in quite some time. Motivated retailer created something wonderful. So to us, on the leasing side, I told this story yesterday, we were -- people want to be near the Neiman space, they want to choose where they want to be, and we try to lease this to multiple retailers and they're like, "Oh, we want to go there. We want to go there." Now they come back and they say, "How come we didn't get that location?" So the location is unbelievable, repurposed. It really shows off its true value. Yes. And just -- and I'll kick this over to Scott. I talked about the sightlines, the brand opportunities, the execution and those conversations have flowed over into brands that aren't here. We walked them through the center, and it's a clear juxtaposition as you saw between what it felt like in the materials and the sightlines on the Nordstrom wing and what we actually executed on. So we did what we said we were going to do when we were out selling the project and it built tremendous credibility, and we look forward and are very optimistic about our redevelopment in the Nordstrom wing.

Yes. This is, I think, due to the success, right, of the Neiman wing, there's been more luxury and global luxury demand. And so as we looked at ways to accommodate that demand, it was a pretty kind of easy path to think about the Nordstrom wing and how do we advance that. The Nordstrom wing initially opened up in '98. So it hasn't really been touched and kind of seen a facelift in quite some time. So a picture kind of tells a thousand words. You walk the Neiman's wing and very much what you see there is what we're going to impart on the Nordstrom wing and bring it up to an elevated standard. Again, that can be receptive to the global luxury and the luxury players that are knocking on our door and now wanting to be here because of the productivity of the Neiman's wing. So here's just a couple images. Another thing we're doing, and again, hasn't really been touched in quite some time is the Porte Cochere that we spoke of kind of in and around the rotunda by Tiffany's yesterday on the walk. And this is the #1 entrance to the center. It's the #1 valet kind of Porte Cochere in the state. So we didn't think it was really representative of what we were trying to display on the inside. And this is kind of a little bit of a piece of it. And then once you get inside, which we don't have an image of, it's quite a transformation. This is the rotunda area we stood by yesterday as we walked. Again, Tiffany's is kind of off to your upper left there, as you said, removing vertical transportation, improving sightlines and really improving the overall experience of Fashion Square for the tenants.

Yes. And I would just jump in here, Scott, speaking of the Porte Cochere in this rendering, it's a real connector to what we're doing on the Nordstrom level. The cuisine that we'll add at the Porte Cochere entrance, it will be a real be-seen type of approach. It will be best-in-class F&B. And when we're leasing and we just went over what we did on the Goldwater side, we're paying attention to all day parts, the cuisine. So we're thoughtful and conscientious about giving the customer again another choice, another experience that's not already represented at the asset.

Yes. And so as Scott kind of mentioned in his early remarks, this is kind of an overview of where kind of the economics stand $40 million to $45 million at share, 13% to 15% return on capital. So a very compelling project undertaking and continues to make Scottsdale Fashion Square the choice for luxury and the superregional mall that it is with an extended reach. So many of you saw yesterday Caesars Republic going up, excited about that. We refer to that as the North Parcel, and it's about 6 acres of land that arguably is, I would say, some of the most valuable land in the state. There isn't a week that goes by where we don't get calls from mixed-use developers saying, how can I be a part of that, whether it's office, residential, even further hospitality. So off to the right here is this is kind of a rendering of what could be. Off to the right, you see Caesars. Caesars is going to be 265 rooms. One of the unique -- not unique, but favorable financial kind of positions and optionality that Will spoke about is Caesars is on a long-term ground lease, a very compelling value of one. So that's just one instance where we're taking our land and monetizing it in favorable ways for the company. In this, we're kind of figuring out what we want to do with the other 4 acres now that Caesars is underway. In this rendering here, we're showing 2 office buildings. As Cory mentioned, we love the symbiotic nature of office and retail. We love the fact that it drives bodies and valets during a time that's usually less active at the centers, being weekdays and during the week. And so we love this idea, obviously. There's a lot of work to do. And we'll find that right choice for programming the real estate. About 5 years ago, we ended up embarking on an entitlement here that was very robust, and we were able to perfect, which is really going to allow the North Parcel to be what it wants to be. So we got over 1,600 units of residential, another 2 million square feet of commercial can be added to the overall campus, and we got up to 150 feet in height. Prior to that, it was 65 feet. So we can have the tallest building, or at least match the tallest building in all of Downtown Scottsdale. Another compelling thing about the North Parcel, and it's kind of built into the opportunity is, this sits right next to the largest parking facility on the campus at 2,100 stalls. So we have the ability to leverage through shared parking, that parking structure to help park the rest of the development and the densification that we have planned for the site. As we talked about 265 keys, Giada De Laurentis with a couple of different F&B offerings. So we think it's just going to be a great addition to the overall campus and really matches the brands that we're trying to attract inside the mall and so forth.

All right. We'll jump over to Kierland Commons, keeping on the theme of great real estate. You saw this yesterday, and Kierland's really a premier -- the premier outdoor lifestyle center, opened in 2000, over 400,000 square feet plus office, plus residential already. As we have been working on projects since then, every community you talk to says, "Hey, I want a Kierland." Well, it's tough to duplicate this trade area, this market, the Scottsdale Airpark with 60,000 jobs right next door, all the resort business that you have and what that brings. So it's difficult to duplicate. And again, fantastic, fantastic real estate. So we have an opportunity to further densify as we showed you yesterday, the corner of the site kind of behind Tommy Bahama, opportunity to do multifamily for rent, 100 to 120 units. We're working with a boutique, high-end multifamily developer. We think we can differentiate the product here. We're going to go for some larger units. The typical average units is about 900 to 1,000 square feet. We're going to go for 2,000 square feet here, which is actually going to drive higher rents because there's not that much of that kind of product available. It's also going to have luxury hotel amenities. It's really going to be top of the market. Additional densification. We showed you over by the current P.F. Chang's building, opportunity for office. There's been no new office product built in this trade area in the last 5 to 7 years. We do think that there's potential both for here and for Fashion Square to drive some very high top-of-the-market office rents, probably $50 a foot, which is also exciting and obviously helps make the pro forma make a lot of sense. And again, we believe in the right places, an office project is a great synergistic use. The ability to use shared parking during off times for the retail and another great example of mixed-use densification here for Kierland. That's just a couple of shots of the potential office. I'll turn it back over to Scott.

Yes. Speaking of great real estate and office opportunities, Biltmore Fashion Park has been around since 1963. It was actually kind of the original spot for luxury, right, anchored by Saks. I mean, Gucci was there at one point in time. Cartier was there at one point in time. And then you kind of have the sucking sound of Scottsdale Fashion Square and the momentum that it's had. But you can -- I love this aerial because it demonstrates the intersection of 24th Street and Camelback. Look at every other quadrant of the intersection and look how dense it is and how much square footage. And then you look at the Biltmore. And all I see as a eke developer, right, is opportunity. And so again, probably a decade, now 1.5 decades ago, we embarked on entitlements. Here, we have the ability to do over 2,600 residential units and another close to 900,000 square feet of commercial on top of what's already there. So we're envisioning kind of two initial phases over the coming years. One being a residential tower of somewhere between 250 to 300 units, there in the purple. And then an office building that could be anywhere from 250,000 to 300,000 square feet. Again, as Garrett was mentioning, in recent years, probably in the last year to 18 months, Phoenix have finally pushed over $50 a foot, which is huge for Phoenix. And it definitely requires a highly amenitized piece of real estate. It's not everywhere. And so we feel like we have a great opportunity to deliver on some great density opportunities. This is just a potential office rendering there next to Lifetime. All right. FlatIron Crossing, about 1.3 million square feet in Broomfield, Colorado, basically right in the middle between Denver and Boulder on the 36 Highway corridor, great community. We've had a long-standing relationship with the City of Broomfield back to when this was developed in 2000. They have been probably, I believe, one of the most impeccable partners we have. And over the last couple of 3 years during the pandemic, we embarked on a public/private partnership and a rezoning of the asset -- of the real estate to allow for all the uses you would want to do, extreme density, height and ultimately, a co-investment from the city via sales tax reimbursement. What we envisioned here is the big piece of this is where it says Village redevelopment there, roughly 25 to 30 acres that we're going to reimagine into a mixed-use opportunity that will look like this. In this case, to the left kind of middle of the screen, you have 2 phases of residential, both each -- or each about 300 units. Off to the right of kind of the common green you see is a 180,000 square foot office building, all revolving around a greater common area, a community gathering spot, something that we believe will be a true amenity not only to the city of Broomfield, but obviously, to each of the uses that surround it. On top of that, we're rethinking kind of the food and beverage and entertainment opportunities here along with this. So again, it really is going to become kind of a little city within Broomfield. So truly kind of playing on that town center approach. I spoke to this a little bit. It certainly will be done in phases. We are currently engaged with a residential partner that will be able to announce in the coming months on the first phase. That will really be the key driver to getting this thing kicked off. Goal is to start construction on both kind of the infrastructure and the horizontal improvements as well as the residential by late '23. Derek, you reminded me when you're asking Tom about when are some of these things going to start taking over. And reminding me of an interview I had when I joined Macerich and a person interviewing me said, "If you need instant gratification, development and redevelopment of malls is not for you." So we're finally getting to a point where we're going to start to see these things happen. But it certainly doesn't happen as fast as we would like. But we're getting to a point where it's getting very exciting. Dave mentioned it, so we won't touch on this. This is the former Nordstrom box. We were able to recapture it at the similar time they closed the store. It was kind of a mid-market store. We were able to capture that in a good deal. And so we're reimagining this as a conversion to office. Interestingly enough, Boulder is getting kind of outpriced or overpriced, I should say, as it relates to office and there certainly isn't large chunks of space to accommodate larger users. So we see a great strategic advantage here and being able to offer that in conjunction with what we're doing in the village redevelopment, which will be a huge amenity or further amenity to an office user or users.

All right. Just a couple more slides for us to get through. We talked a lot about repurposing anchor spaces. You had great examples from Dave, from Cory, Michael and F.K. And we just wanted to point out a few more where we've already got entitlements in place and are now perfecting the opportunity as the market demands. Again, fully entitled projects. One quick comment. The Scottsville Fashion Square, Biltmore Fashion Park and Kierland Commons, probably 3 of the best commercial sites, not only in Arizona, but in the entire Southwest. So again, that theme of great real estate. Scott talked through Fashion Square and Biltmore, who we're highlighting here. What we haven't talked about much yet is Washington Square. We do have full entitlements here. This was a former Sears store and Parcel. Opportunity for up to 2,000 residential units, 2-plus million square feet of office and significant height that you probably won't ever even achieve getting up to 200 feet. So...

Yes, it's about a 15-acre site, so it's a huge opportunity up against a juggernaut of a regional mall, right?

Right. And then other projects, again, a sample here of entitlements that we're pursuing. One of them is Lakewood Center in the L.A. market. It's been a workhorse center for the company for a lot of years. It's almost 2 million square feet. It's already got grocery, it's got a Costco, Home Depot, Best Buy, and 1 million square foot mall that is probably too big. The mall, we need to rightsize the fashion and food and beverage goods at the mall. While we're doing that, it's time to evolve, add some amenities, some green space, more food and beverage and mixed-use. Big opportunity here to add additional multifamily units potentially as many as 1,000 to the campus, again, to help support what we're doing on the project. We talked some about Tysons in Tysons, Virginia, Tysons Corner, big powerhouse mall. Opportunity today is taking better advantage of the transit-oriented development opportunity there with the metro line. We're moving, working to shift some of the approved entitlement over to the L&T site, adjacent to the metro line, an additional 500,000 square feet of office or a combined office and residential scenarios. Final project to point out is Los Cerritos, again, back in the L.A. market. It's another Sears opportunity. We are working on scraping the building and an underperforming retailer, big retailer, 280,000 square feet and delivering 70,000 square feet of retail, food and beverage, entertainment-type plaza, some green space, hotel likely, and again, multifamily, big demand for multifamily. We can see 600-plus units here as we move forward and work this out with the city. So these are just a few examples. Again, the idea of best-in-class, best real estate and then bringing these mixed-use and redevelopment opportunities to rise the tide, which will continue to further the great mall properties that we have. So Will?

Thanks, Garrett. Just to underscore that point, what you've seen is the full embodiment of the town center vision, the North Star that we have. That is great mixed-use development, great place making, all in the context of exceptional real estate that is retail and food and beverage and entertainment and all the things that we bring to our properties. What you've also seen is an active and evolving development pipeline, opportunities that we're leveraging today to drive value, entitlements that we have that we've put in place that are laying the groundwork for value that we'll create tomorrow and then also properties where we're securing entitlements to set the stage for development and value creation going forward. That is the Macerich development story. Thank you. Are we opening for comments and questions?

As a former [ transplant ] from L.A., I know housing is fairly difficult to come by. Are you guys seeing much in the way of the municipalities working with you to give incentives to build some of these multifamily? Because it seems like a good mix between your spaces and kind of what they're looking for.

Why don't you take that, Scott?

I was going to say, speak to the RHNA process, yes.

Yes. The state has definitely -- they're pushing down requirements to all the cities to add units in every case and the -- forget what the RHNA stands for. But the cities had to come up with a number of units that they could deliver in an 8- to 10-year time frame, and then they've got to now go out and zone properties to achieve that. And so some of our projects, Lakewood and Cerritos, specifically that I've mentioned and even a couple of others, yes, they're absolutely working with us. And there are, depending on if you're adjacent to a transit line, there are some benefits. And yes, the cities are definitely working with us on that.

Well, I'll just add to that, the regional housing needs assessment, which is the RHNA acronym. And I normally wouldn't be the one to remember that. It's I think in its sixth round in California. And this time, they're not messing around. If you don't accomplish the zoning necessary to get the units that are designated for your community, they do it for you. There was also legislation just recently passed in Sacramento that even facilitates residential development on commercially zoned land without it having to be rezoned. So there's a huge aggressive play happening right now to accommodate.

Residential developments for us, yes, definitely.

Yes.

I have a question. As you guys have gone through the opportunity, clearly, residential makes sense. I think on the office side, though, there's a fair bit of that contemplated here. And then I understand the dynamic of the attractiveness of the new flashy office of the market because you suck demand from the older obsolete buildings. But as you guys kind of think longer term, right, second gen leasing gets tougher on these assets, and you're putting an asset class together with kind of malls, the two of them together at least right now, financeability is very difficult, right? And so you're taking one asset class that's just more recently been harder to finance with another asset class that's increasingly worse than malls to finance, right? And cap rates are moving higher quickly on office. So just the thought process there on your view of the long-term value creation versus the market and lenders view of long-term value creations and kind of how you balance that longer term?

Yes, I want to answer that one. Don't overstate what we're telling you. And what we're telling you is we're getting the right to make money at the right time when it's ready. We're not telling you we're going to go out and build all this stuff today. And for example, when we built Tysons Tower in Tysons, we had to make a decision to either start it or not. And what we did was we built the underground parking and we capped the deck until we were 65% leased. And then we went vertical. And we're getting the highest rents in Tysons. It's the only way we're going to do this stuff, or we're going to have partners that finance it for us. So from the risk category, okay, and I think we all know that financing at some point will come back, office is just entering the period that malls hopefully are coming out of, right? But we're only going to build this stuff when the demand is absolutely ready to go and we can make money with it. We're not going to take huge risks here. We're not going naked.

Well, in some markets, and I couldn't have said it better, some markets like where we are right now, there is such a limited amount of quality office space that the last couple of projects that came out of the ground that actually provide quality Class A with amenities, we're 100% pre-leased. So it's certainly market dependent. But again, optionality, which was 1 of my key 3 points, I'll give you a good example at Tysons, we're getting approval for both an office building, another trophy class office building or a mixed-use residential over office. So those are the fundamentals the way we look at this stuff. And we don't go forward until all the pieces make sense.

And it could be either a ground lease. It could be a lease. It could be an own and build, or it could be a joint venture. We're going to fill it. We're going to be very minded as to how we stretch these things moving forward. We're not going to take huge risks. And when you own the asset, you control it and you have the right to make money. You can be patient. We're under no gun here. We don't have to build it.

How much of the current development pipeline is driven by prior anchor closures now that department stores have finally figured out that they actually need stores open in order to generate sales? What are your thoughts on additional store -- department store rationalization and how you're thinking about future redevelopment opportunities beyond what you've outlined today without some of these low rent anchor stores to redevelop and backfill?

Yes, I don't have a percentage as it relates to what portion is anchor backfill. You saw the incredible story at Chandler with Scheels. You saw the incredible story at Santa Monica Place. I can tell you when those opportunities present themselves, we're capitalizing on them and making great things happen. So I don't really know the percentage. But the quality of the real estate is then driving a lot of this vertical development everywhere else. Who else would?

I would just...

Go ahead.

I was just going to say, and we're absolutely looking at all of the anchor positions across the whole portfolio consistently, constantly and looking for those opportunities. And if it looks like one is getting weaker, then yes, we're going to start planning and game planning what we can do with the box to take it forward.

And on the leasing side, you hear in this theme, just the texture. So when it happens to be in boxes, it's a perfect opportunity. But look at the uses, you saw a lot of examples. And if you think of we keep calling it mall, we call it town centers. So the fabric of what makes up these town centers are much different than what they used to be in the mall -- the traditional mall asset class experiential. All these different categories that we're pointing out weren't represented before in a great degree and now we're adding those and that's serving the customer and they're responding. So we just see again, taking out the obsolescence, bringing in newness, bringing in new experiences, new categories, and that's going to drive value over time.

And the other point is, let's talk about financing and the difficulty of financing. A lot of this stuff gives us the ability to separately finance whatever we're working on because it's not part of the mortgage or it's separately -- a separate parcel. So it's not going to be a jambalaya of mixture of trying to get the same thing financed. They're going to be separately financed for it.

One -- I think, to me, one size really doesn't fit all. So Dave mentioned kind of the iterations we went through on the Nordstrom box at Chandler, right, where we looked at cutting it up and doing retail that was certainly in demand and wanted to be there. We looked at an office conversion and we looked at Scheels and we weigh all the positive, the pros, the cons and what's right for that mall or that property, that town center and what's right for the real estate. And then you have things like Washington Square and Cerritos, who wouldn't want to own 15 acres at the front door of Washington Square, who wouldn't want to own 20 acres at Cerritos, which are $1,500 a foot centers only getting better, and you just found yourself with an opportunity to densify, diversify all the things that we've been talking about today. So it's a huge opportunity.

So a question, sort of a two-part. On the assets where you contribute the land and you bring in a third party to develop, assuming that you don't put any more capital into the deal, is -- should we think about sort of a standard 20% stake, like if we think of land value and that you would get 20% or some metric of the NOI? And then the second part is once you have -- bring other people onto your properties, how do you ensure that they maintain the assets at a level that's commensurate with you? Do you guys have like rights of getting the asset back or enforcement? Like what's the mechanism to make sure that someone maintains their part of the deal to be commensurate with the rest of the Macerich asset?

No, and that's a great question, Alex. I mean I guess the first part is it's case by case, right? Not all real estate is created equal, not all land values are created equal when you think about these things. But I mean you could probably argue that anywhere between 20% -- and the land is going to carry anywhere from 20% to almost 50% in some cases, depending on the location. On kind of the control and decision-making standpoint, we certainly are going to put either equity into the deal such that we have control rates or we're going to document the bejeezus out of it to make sure that what gets built and what gets maintained. And if it gets passed on to different ownership groups or if we don't control -- have controlling rights in it, that it's going to be up to the standard of the surrounding development of the regional shopping center...

Right, the commensurate quality.

I think we've got time for one more question.

Okay, one more question.

I wanted to ask a similar question, but maybe I'll follow-up Alex's question with. I guess, what level of interest would you like to retain in some of these contemplated multifamily JVs as you -- obviously, you're sourcing -- you're providing your land, bringing in someone to do the building. And then would you have an ability later on to then buy back up to...

That's a great question. A lot of it has to do with the return on cost and we weigh that. We take a look -- so Kierland is the best example. That was a situation where I think we put our land in and we have equated to about 35...

Mid-30s, yes.

But we decided based on the return and the economics and the dynamics of that project that we want to be at 50%. So we agreed putting a little bit of capital [ above 30% ]. And the way control [indiscernible] agreement, that was part of the earlier question, so that contractually whoever has the -- is managing it or running the asset, they've got flying certain standards, quality standards. So we had to control [indiscernible] documentation as well. So we will evaluate each one separately. In some cases, maybe just donate the land and end up with 25% or 30% interest. In other cases, we'll buy up. And we may even at times when -- our cost of capital gets cheaper. We're excited to do the whole thing and bring it [indiscernible], which is similar to what we did at Tysons [indiscernible].

That's helpful. And then one more, if I could, on -- I didn't notice any comment on Carson, the L.A. development. Anything you can provide us with in terms of expectations or what you're waiting for or looking for there?

Nothing to do on that one. [indiscernible] real managing partner on that one.

Thank you. Thanks.

I'm going to stand. If you don't mind, I'm going to stand. I've been sitting way too long. Well, thank you. My name is Ken Volk, I'm the Executive Vice President for Business Development. Put it more clearly, I'm the guy that leases the common area, temporary carts, permanent kiosks. We do all the in-line temporary leasing as well as media sponsorship, gated attractions and experiences in our properties. Put it more clearly, development looks at 3 to 5 years, 10 years on how they're going to create value for the company. Leasing looks at it. They're 12 months, 18 months putting out a small store or a big box. I'd like -- I try to make money for you today, right? So that is our goal. And what I want to do is just maybe talk about some things that -- from my group that you may find interesting. So I think the pandemic has created opportunities for us. It sounds a little crazy, but we had great ideas before the pandemic that got accelerated because of the pandemic. And the 3 things I'm going to talk -- or 4 things I'm going to talk to you about is how we recovered, what happened to short-term leasing during the pandemic and how that recovered, and what we're doing in median and, let's say, let's say, experiences in our properties, followed by, last but not least, which I think is very compelling, is how we digitalize the leasing process. And we're going to become the next Airbnb of leasing space for 1 year or less and make it very easy for the retailers. So with that, looking at our recovery, if you look at 2019 as basically the, let's say, stabilized year before the pandemic, our department dropped in income by 29%. But we had a robust recovery, and we grew 23% year-over-year. And this year, we're going to grow another 23% over '21. So we're projecting to be 8% over 2019. And I can tell you that, that demonstrates how resilient the tenants are, the local short-term tenants are. It also shows our ability to work with them, to keep them their business, to maintain our occupancy and the diverse merchandise mix in our centers with the number of retailers we have. If you go a little deeper, you could see how our income dropped on the last slide from '19 to '20. But our occupancy for those temporary tenants really didn't move that much. We worked with them to figure out a way to keep the business. Because we knew if they left, getting them back was going to be very difficult. So we came up with great plans, kept new business. And as soon as recovery started to happen, we had our base tenants and we grew the occupancy and temporary leasing to over 2.2 million. And you're going to see in 2022, occupancy is starting to come down on a temporary basis, but that's going to happen. As Doug and his team, Michael and F.K. leased more permanent space, we have a choice, try to move them to another location, get them into the common area that keeps some of the revenue or we have to let them go. So on a stabilized year, back in '19, we had about 750 temporary tenants. We're still at 860 plus. Generally speaking, I see that going down. I see our income going to the common area again to maintain some of the revenue. But you can see how we are now stabilizing the group. And to be honest with you, you're not going to see 23% increase in my department year-over-year going forward. It's going to be more stabilized, you're going to see some growth in other areas that we try to drive our revenue with. So just talk briefly about temporary in line because there are a lot of tenants. We do work closely with perm leasing, and we work with great brands. If it's not Purple, Lululemon, Bad Birdies, Goodlife. We occasionally work with these brands with leasing because they can't find a perfect location in the center where they want to be. So they want to be in quickly. So we give them a temp location. When a space becomes available, they move into another permanent location. We also have -- with 850 tenants, we do our best to convert the top-performing temporary tenants to permanent. Prior to the pandemic, let's say, 2 years prior to the pandemic, we converted about 160 temporary tenants to perm. The good thing is you'll double the rent or triple the rent with a high-performing local tenant. And now that we're past the craziness of the pandemic, we have 850 tenants, we have an opportunity probably to convert another 30 or 40 over the next 6 to 18 months, at least. Just we're very opportunistic, you can imagine. We do over 5,000 agreements a year. So during the pandemic, we had -- when you say the same-day testing, a slide up there, we had 36 different operations in our portfolio doing testing and vaccinations. The good news is we offer the service. The bad news we had to do it. The good news is they're all going to be out of here before Christmas. So it's one tenant that we're glad to see leave for sure. So we also work opportunistically with distribution companies, so you probably have heard of Fillogic, they're one of our centers looking to go to Phoenix as well as L.A., and they do logistics for tenants in our properties. And then scooters were a big thing during the pandemic. So we opened up scooter stores as well. Moving on, one of the big drivers of our income as well as our occupancy was this abundance of gated attractions. So even today, we have one opening up in Philadelphia next week called Banksy. We have another art exhibit opening up in Santa Monica next week as well. But we've hosted The Office, we've hosted The Friends, Princess Di, Sistine Chapel, all of these locations stay for anywhere from 6 to 12 months. They pay solid rent and we get a percentage of ticket sales as well, and they drive a tremendous amount of traffic to our properties. The other opportunity that we found during COVID was most of the car shows around the country were canceled. So we've worked with their industry and all their agencies. We did pop-ups with Tesla, with Lexus, with Toyota, Porsche, Mercedes, and we still have them going today. And the good thing is, it seems to be continuing the trend. We just extended Lexus at Tysons just last week. The other opportunity that was created through COVID was outdoor events. So when people want to -- they wanted to get out, but they didn't want to go inside. So we ended up renting out our parking lots to gated attractions for dinosaurs, to great brands in public structures in the parking lot as well as large car shows, not to mention probably a dozen circuses and carnivals. I just gave you an idea about how we drove the revenue outside of the traditional Spirit Halloween, the Christmas store. I think someone laughed about Santa Claus being a deferred. That's big money for us, just so you know. It's big money. Yes, it's millions. So we love it. That's right. So when we're talking about media. You probably don't even recognize the advertising in malls most of the times. It started back as the advertiser would pay for the production of the directories. That has become very sophisticated. So we are now in the business of selling, programming, scheduling and billing and managing an entire media business within our properties. And to give you an idea what it looks like, it is all done centralized out of Tysons. We are probably 1 of maybe 2 mall companies that have the capability of doing this. So we built the infrastructure where we have a net operating center at Tysons, it's cloud-based. We have servers at every one of our properties. We work with programmatic companies that basically it's like buying Facebook, but you're buying our screens. Agencies can go online, pick the malls they want to be in, the time of day they want to be on that screen, and they buy it directly. The only thing we do is we approve the creative. But we also have a big staff, big staff, maybe 5 people selling advertising throughout our entire portfolio. So we now deliver all the content to every screen in the property, large format, all the exterior screens we have, hundreds of small format screens throughout the center. What's great about this is we continue to build our town centers. We have built the infrastructure to deliver content anywhere in the United States. So we want to build stages for community events, you don't have to do it. You have not to worry about it. We already built it. So this gives you an idea of the size of the program. These are large 17-foot screens. We build them into our national agreements with Coke, with Rivian, with Klarna, with American Tower, all multiyear agreements, not only for different opportunities with the company, but they're also looking at our network to reach consumers. Small format, we have over 400 screens. The great thing about this is we've cleaned up the property, right? We no longer have directories, we no longer have to manage it. It's fully integrated into our infrastructure. And when store opens, there's no one else changing anything. It's built into our CRM platform, it automatically changes for the day. So we've basically built a digital network with one person managing every screen, every directory in the entire portfolio. And last but not least, it's probably the most opportunistic is outdoor media. We've done a great job in Philadelphia, Santa Monica, up in Chicago. Very, very difficult to get it approved, but if you can get it approved, it's a home run. We are looking at doing additional outdoor. We just got approval at Tysons to put up a sign and we're working in Santa Monica with the city to come up with a pretty dynamic plan for exterior media as well. You'll find these brands. You go through Scottsdale yesterday. You saw Tiffany, you saw Gucci, you see great brands buying digital advertising in our centers. But that's the ones you expect, right? All the brands in the malls you expect. But do you really believe that we'd be selling advertising to like Google for Chrome or to Dyson or FanDuel or Netflix. There are big advertisers for our company at this point. So just looks familiar, just different brands. I honestly believe if you take the screen that leasing put up and what Tom put up and then you look at the brands that our business development group is working with, there's a few brands that are not coming to our centers. Why? They want our shopper. That's what it's about. So even if you don't have a store, they want to be in our properties. So QuikSpace. And I was told I had to get it done in 20 minutes, so I'm trying to go fast, right? So QuikSpace, back to during the pandemic. We worked with CoStar up here, and we used to list spaces for rent, right? And there's too much friction. So -- and we knew that. And because I'm in a temporary leasing business of 1 year or less, we used to sit there in a meeting and say, if you can rent the hotel room and see the room, see the resort, get a price and rent it online or you can go to an apartment and lease it for a year and get the price and do it online or storage space, why can't you do it for malls? So we are trying to take the friction out of short-term leasing, reduce the burden of administrative work that needs to be done to get a lease done and we've launched QuikSpace. And at the end of QuikSpace, after you lease space, we created the first tenant portal. So now we manage the relationship with all of our temporary tenants in a portal where they pay the rent, they can change how they pay rent, they can give us insurance, we could talk about renewals, and we could talk about new spaces with a tenant. So what I'm going to do is I'm going to walk you through the process. And take a look. You can get this through macerich.com or a mall site. You pick a mall where you want to rent space. You can watch videos, no different than a hotel or residential place, gives you an idea of what the center looks like. From there, you go through an interactive map, we highlight the spaces that are available for temp leasing. You go through a virtual tour in the space itself. I don't show it here, but you can actually walk out into the common area and walk the mall and see your cotenancies at the same time. And here, we have some tools on spaces. If we know what merchandise we're looking for, for a space, we can actually show it. And then we have downloadable. If it's an aerial shot or if it's a market profile, basic information that a tenant would want. Then you fill up the application. You'll see a little button at the bottom where you can get messages and you want to talk to somebody, you can actually schedule a call to talk to our leasing agent for that property without even talking to the rep. From there, we're launching -- and we have launched storage rental. So we believe we can figure out how to lease space for storage and online, we can go to temporary leasing. So right now, you can go into our portal, find a location, put the dates you want, prices come up, you put in your information, your store name, it automatically links to our CRM financial platform and we send you a lease. So I want to say by the end of the first quarter, all storage, new agreements, all renewals will be done through QuikSpace or our portal, and we're going to launch short-term leasing on QuikSpace. The first quarter of next year, probably by June or July, the entire portfolio, you'll have spaces, pricing and an instant access to a lease. So trying to take as much friction out of the process to make it easier and faster to get tenants into our property. So leasing can then lease the space that we can throw them out. With that, I'm open to questions.

Just for the storage space, like what's the typical term that you're leasing space for? And like what does that represent of your total ABR? I mean, how big or small is it, give us a sense of what the opportunity is.

Well, one, you can lease temporary space with us for storage for a week, for a day. Most of the tenants signed up for at least 3 months for the holidays. We have tenants now that need more storage space because they buy online, pick up and store. They're taking storage space to fulfill some of their orders, and they need the inventory on site. So you're finding leases that go to a year. And there is also permanent tenants that take space for the entire term of their lease. I wouldn't say it's -- we don't make any money on storage. I could say it's well into the 7 figures. I don't know, Scott, if you want to elaborate on how much we make. But it's a side business. It could be much bigger, and we're going to build it through QuikSpace.

Yes, I think that's the important to you given [indiscernible] orientation it's that extreme size.

Right.

And these aren't prime retail space?

No, not at all. This is built from back of house, back service corridor in every corner of the property, making it convenient for the retailer to have storage. But some of the rents are substantial, especially if you look in New York or you look at Tysons and Scottsdale, it's sizable rents.

[indiscernible]

No, that's correct. We debated that. We debated it. Once we get our infrastructure set up, we prove out that it's working, retailers are using it, once we maximize our retailers, there could be an opportunity for us to start leasing space to outside companies.

Have you incentivized retailers paying less money in terms of your leases to go to longer term leases, paying for more money?

We're very nice to our tenants. But I can tell you that -- if we see tenants doing $0.5 million, $0.75 million, $1 million and it's the right use for our property and they're in the right location where we want them. They want to stay in our property, they're going to go do a permanent lease.

We have some question...

Yes. I'm sorry, I got mic. Go ahead, I'm sorry.

How much are you making on the LED advertising in that space right now? And what's your kind of expected growth there?

I could say it's grown pretty dramatically since 2019. That our growth last year or the last 2 years was driven by advertising sales and temporary in-line leasing. I scope it for my group. My group represents how much, Scott for the company? My department represents what?

[indiscernible]

Right, I would say 20% to 25% probably comes from advertising and sponsorship and event income, right? I can tell you it's growing. And it's an area that we have a small group dedicated and working on nothing but media sales, gated attractions, experiential activities in the malls and all they do is deal with agencies for events, advertising for advertising sales and programmatic companies that drive additional income. But it is now at a point where it's making more money for us than the traditional temporary income in the common area and its sizable as our, let's say, permanent kiosk spaces.

Two questions. Can you remind us what temporary leasing trended like pre-COVID to now?

What was that?

Like the percentage of temporary leasing in your portfolio?

Well, it's -- all in my slides, I had that, right? We had about 750 temporary tenants, about 1.8 million square feet of temporary inline. And today, we're about 2.1 million, 2.2 million and that should be coming down to more stabilized, I would think, to 1.8 million in time.

And then how do the rents change when you go from temporary to permanent? And how do you decide to structure those leases? And are you solving for certain occupancy cost ratio.

We don't want to lock in some of these local tenants for 5, 7, 10 years. Most of the temp to perms, except if they're great brands that are just testing a market or trying to find a home for them, you're looking at a 3-year lease of a temporary tenant. Some of them will end up doing more after they've proven that they can survive as a permanent tenant. But the rents, like I said, double, triple depending on the years.

Just a question on merchandising using sort of like the Auto Mile example where car dealers like to be around other car dealers to generate more and more sales [indiscernible], do you find the same thing with the retailers? Or is it at some point where there's cannibalization? I'm thinking like you have a lot of like boutique, let's say, eyeglass stores, then you throw in a Warby Parker or outdoors like whatever, clothing, like athleisure, so maybe others don't like that they feel like there's a lower price entrance or something that's going to cannibalize. Do the retailers not like that? Or do they like it because it creates a critical mass?

Well, there's a push and pull, right? It goes back and forth depending on the center. Like at Kierland, there's no space, right? So we had one space last year at Kierland. And when you have such a little space and assume that's got great demand, we put -- it was at Lexus in there, and they paid permanent rent for the 6 or 7 months that they are in there and it's a good fit. But at Tysons, sometimes, in some wings, maybe a merchandise isn't perfect. But you know you have the right to terminate in 30 days if they don't perform well or they don't look right. But we take great pride in the way we execute temporary tenants.

But as far as longer term, is there a more concern about cannibalization when you have like-type tenants next to each other or creates more of a destination? [indiscernible].

I think, they're synergies, so that and it creates a destination. I look at how many sneaker stores could be in a mall and cluster them together and create a place where people go or restaurants in the same location. Like you see the entrance of Scottsdale Fashion Square, I think there's value in bringing things together.

I think clustering was much more prevalent maybe 10 years ago than it is today. I think there are still some uses that do like to be around one another. Restaurants do, luxury wants to be with other luxury. Digitally native brands want to be with digitally native brands. But for the most part, as Ken said, they want to just take the best real estate they can in the property. .

Any other question?

Last one.

Yes?

Can you talk about [ my idea that ] you're thinking about for VIP service to your best customers. [indiscernible]

It's funny you say that since I worked for Simon for 13 years, ran their marketing for years. And I worked in The Mills for years until Simon bought them, and then I came here. And there seems to be a great, great interest in trying to create a relationship with someone else's customer, right? Our customer is the retailer. And my energy and my focus for my group is how do we make it easier to lease space in our great properties. So all of our digital efforts in my mind, the mass majority of them have been in building a platform that helps us drive revenue for our shareholders. I do believe there's a place for a loyalty program. We have a lot of digital marketing that we do with e-mail addresses and communication to them. But we're not going down a path of building a loyalty program. And I've seen many of them crash. I don't know if that answers your question.

One quick follow-on to that. Simon just did an Amex co-branded card. That's kind of what you're getting at. If you guys went that route, wouldn't you get a lot more data beyond what you already have?

Probably. I guess, maybe I've been around the industry too long. I've been around when we've launched a credit card. I wished some luck with it. I'm happy to be a fast follower on a program like that. And American Express was our partner for years. If you remember, PNC had a card called the VIP Card years ago in our industry. And to be honest with you, I worked on it for years. The acceptance rate of people getting the card was so small that you spend more money trying to get people to sign up than you made on the back end. So maybe it's changed. Maybe it's changed. I'm a fast follower when it comes to that type of program. Thank you.

Hi, everyone. I'm Olivia Leigh. All my colleagues stood up here and told you all about their long and storied careers. I am fresh off of a birthday 2 days ago. So I'm still real raw in talking about age. I'm going to go ahead and just skip that part. Just suffice it to say that I have been with Macerich for about 20 years. I came to Macerich after a career in leasing, which I ended when I realized I like socks. So not for me. Here at Macerich, I lead the groups, which my father lovingly question mark referred to as invisible disciplines at Thanksgiving dinner this year. That means that all of the things that the consumers don't see on mall, but that are critical to our infrastructure, real estate tax and housekeeping and maintenance and risk management. And one of the programs that is in -- has been for a long time in those invisible disciplines is sustainability, But I'm really proud to have worked over the last several years with my colleagues and our team members in our energy management and sustainability departments to really bring our efforts to the forefront. I too have been tasked to get us back on time. So I'm going to be really zipping through this presentation. I'm going to focus on the E and not so much on the S and G. And I will turn it over to Scott. If you have any questions, I will be guarding the mole enchiladas outside, so you can find me there. Sustainability is a space in which Macerich has had a presence for almost 2 decades. Our program is really guided by 4 principles. We have set up the ambitious goal of being carbon neutral by 2030, admittedly somewhat complicated by the second goal, which is double materiality. So Scott accused me of making up that term this morning. But if only for his benefit, I will tell you that my definition of material -- double materiality is the intersection of economic responsibility and good stewardship of our natural resources. Again, the S and the G, we have robust programs around those, but I'm really going to focus on the E portion today. Recognizing that the real estate industry has about a 40% share in all greenhouse gas emissions. We did set this really ambitious goal. It's 20 years ahead of the Paris accord. Again, made more difficult by a real emphasis on this double materiality concept. We are achieving carbon neutrality through all of these measures, all of which come with strict economic discipline around them. We created this about 2 months ago before the Inflation Reduction Act was really stuffed out. One of the things that is really positive around that act is that we think that it is going to spur significant growth in the public utility and private development sector around massive developments that we can use to procure energy, green energy, clean energy with no capital outlay from Macerich's part. This is evident even here in Arizona, which has historically been a really tough nut to crack. Lots of sun here, not a lot of incentives. So it's really hard to do projects like solar or fuel cell or battery storage. But given the Inflation Reduction Act and some of the private development, we've been able to partner with the Salt River Project. We now offtake about 8% of a massive solar development outside of Gilbert and it powers 20% of all of our energy here in Arizona with absolutely no capital outlay from Macerich. So we're really proud of that. Some quick highlights of things that we've done. We focus really on energy, on electricity, on natural gas, water and waste to make sure that we are -- we have a responsible circular economy. I don't love this slide. I am uncomfortable being in the spotlight. That's why I don't like birthdays, but we don't do this for the awards, but it is nice to be recognized when our industry and others see the progress that we have made in this area. Probably our largest initiative has been our solar initiative. We began this about 15 years ago as an energy management initiative. It helped that it was good for the planet, but it was really a focus on how do we make more efficient our energy costs on mall. We have projects that have already reached maturity. We are well into our 16th project. We are the 23rd largest on-site solar generator in the U.S. across all industries, so that includes Walmart and Apple and all those guys. And we expect to continue doing more projects if the Inflation Reduction Act works the way the government says, I have been promised that I'm going to get my real ID for the last 6 weeks, I have not yet received it. So forgive me for being a little bit skeptical about government promises. Another raw subject. Really quickly, water. It's a big deal here in the West. We are very focused on making sure that we are responsible users of water. We are very focused on making sure that the energy that we produce, we use fully on mall and that we have behavioral implementations that reduce the excess amount of energy that we need to offtake from the grid. The total energy that we save on an annual basis can power my entire hometown, which admittedly had more [ cows ] than people, but still impressive. Future investment. We expect to continue investing in all of these categories, LED, fuel cell, solar, controls for things like [ VFDs ], again, with the overlay of economic discipline. I can tell you that any project that I get really excited about and I get to the bottom line, and it doesn't have double digits, it goes back to the drawing board. Come back when you can show me a project that, that meets that intersection of economic responsibility and doing good for the planet as well. Again, this is our S slide. Our social programs have always been part of the communities that we serve. That is our role as town centers. We are blood drives, we are farmers market, we are programs that are individuated based on the needs of the communities of that particular town center. One of the case studies that I like the most is actually really timely. You'll see Mr. Thanksgiving there. He has been hosting Thanksgiving for mostly seniors who don't have family around to celebrate Thanksgiving with. There were -- he did continue to do this during the pandemic. He had a drive-thru Thanksgiving. Almost 50 years he's been doing this and has chosen our mall as his venue because it is so large. That's responding to the community's needs. And then finally, we are an industry that kids coming out of college, kids in their second, third job don't recognize. My daughter has no idea what I do. I have told her so many times, and she's like, "Yes, mom, I don't know. Can you get me a deal at Abercrombie?" No, so she's not interested. We are an invisible industry. So we have implemented several programs where we introduce landlord retail to future leaders to ensure that we are being responsible about our succession planning, and we're broadening the appeal of our industry to those kids who are coming out of college or who are relatively newly tenured in their career. We actually, in this picture, we've actually hired one of these young men. So we've had a couple of success stories out of our internship program, and we're really pleased about that. Governance, everybody wake up, it's the exciting part now. You probably heard before, we've opted out of MUTA. We have board diversity. We have Board refreshment. Our diversity extends to experience and gender and ethnicity. We have executive compensation that are -- that is tied to our ESG goals, and we'll continue to focus on whatever is acute over the time period. We have Board oversight of our ESG goals. Yes, still awake. If you have any questions, Ann is very excited. She has not had a part today, but she really wants to talk about this. So do stop by. She's the only one of us who did not get the memo to wear a dark blazer and white shirt. So I did my best, Tom, I'm sorry. That was the fastest ESG presentation that I've ever done. I have not even had caffeinated coffee today. So it would have been about 3x, if I had, had any caffeinated coffee. 4 minutes for questions. This is a group of people that loves their mole enchiladas, I can tell. All right. If you do have questions, and again, I apologize, I don't want to give the subject a short trip, but I was...

Actually, I do have a question.

You don't like mole enchiladas?

I love mole enchiladas. Actually a question on fire suppression. EVs, like traditional gas car fire takes about 500 gallons to put out. EVs take about 12,000 gallons. So what are you guys doing across your portfolio to ensure that your garages are capable of handling EV fires, which we do see in the news that are quite destructive?

Did you know that I started my career as a risk manager?

I did not.

Do you want to -- we can talk insurance. I mean...

Risk management. That means that you went to Bermuda and wore [ tall socks ].

So, funny, my husband used to work in Bermuda and wore [ tall socks ]. So yes, you are correct. EV fires, they burn longer and they burn hotter. One of the things that we are doing is partnering with Paragon, our consultants, as well as with our primary insurance carriers, our stock of leading carriers to look at renovating our fire suppression systems in our malls that have parking garages in particular. It is -- we have not implemented any of those systems yet, but there are a variety of methods that we're looking at. Some of them are cost intensive. And so that's going to need to be a consideration as we move forward and make a decision about which of the systems that we want to implement. All right. Again, I apologize for giving the subject a short trip. I don't want to, but I do really want to make sure that we stick to the time, so if you have any questions, happy to answer questions outside. With that, Scott Kingsmore.

Thank you, Ken. Thank you, Olivia, for getting us back on target. That's great. That's great. Look, I'd like to thank the efforts of so many in our organization that have contributed to making this day work, work seamlessly, be enjoyable. Obviously, thank you to the members of the team that presented here today as well as many that accompany us on the tours yesterday, including my friend, Kim. Also thank you to those many behind the scenes that worked so diligently to make the last 24 hours work without a hitch. To that point, thank you, Samantha Greening whom you guys all know. Others may have met some of these folks, [ Kurt Id ], John Kessner, Brooke Newland, Jameson Valone, Karen Bauer, Maggie Emmons, Laura Crossman, who's done a wonderful job, and [ Carey Kurt ], thank you all very much. And of course, guys are really a special thank you to Franklin, 76 years Mascot for making the trip out. That was pretty cool. And in all candor, the shoot from the hip plan was to use the T-shirt candidate. I'm pretty glad we didn't do that in this room. It would have been fun. For those of you that are here in person, we really do appreciate your efforts to make this post-holiday visit after NAREIT, after Thanksgiving, personal travel, it's a big endeavor, and we thank you for that. A critical element of this Investor Day was to visit 2 of our finest assets. Obviously, Scottsdale and Kierland. It's also for you to spend some quality time with the members of the team, the leadership team and the property teams to hear about the Macerich story in person, rather than just hear it from Tom and Doug and I. For those of you that attended virtually, while you're not able to enjoy the social and in-person aspects for the last day, we invite you to enjoy a taste of what those attending in person saw yesterday. To that point, on our Investor page, we have posters. We'll soon be posting 2 video brief video tours, virtual tours of Scottsdale and Kierland. These videos will provide you with shortened albeit still resemblance of the content that we got yesterday on the tour. So those will be up if they aren't up already. And those of you that are here, you can look at it again. To sum up the past day, you had the opportunity to visit just a portion of the extremely high-quality portfolio we have here in the Phoenix Valley. Since we acquired it in 2002, the Phoenix market has presented a tremendous growth platform for the company. Collectively, the 6 asset collection that includes Scottsdale and Kierland, Chandler Fashion Center, Biltmore Fashion Park, SanTan Village and Arrowhead Towne Center, accounts for a whopping over $1,200 per square foot in 3 of our top 10 assets. Given that Arizona experienced this thing called COVID Light, which those of you that live here in Phoenix, you know what I'm talking about, this portfolio did not experience nearly the level of economic shot that the balance of our portfolio did. As a result, the Phoenix region has enjoyed an atypically strong emergence from the pandemic. While we certainly exposed you to 2 of the finest assets here in the Valley, you also learned from the likes of Dave about the exciting game-changing Scheels use coming to Chandler Fashion Center. You heard from Will and his team about some of the mixed-use opportunities that we're entitled for, and we'll take advantage of it at the right time, Biltmore Fashion Park. The Phoenix Valley has just been a very attractive market for us. It's a consistently strong population growth given the affordability of the market compared to other major MSAs, including Southern California. As retailers look Westward, while California maybe in the forefront of their mind, Arizona is a very close second. So we are the place that they come when they want to get a beachhead here in the Phoenix Valley. The Macerich team continues to discover vast many ways to transform our town centers quite simply to provide multiple somethings to everyone within our highly attractive markets. Today and yesterday, you heard of the many examples in which we are finding ways to meaningfully diversify the offerings and to transform our town centers, whether it is reshaping large-format space with game-changing and our unique traffic-generating uses like Santa Monica Place, Cory introduced today or whether it is curating the best brands on the campus similar to what you observed yesterday on the tours, whereas Michael and F.K. described, we continue to see a tremendous flight to quality and a depth and breadth of diversified uses that really punctuates the dominance of our town center portfolio. At this point, again, it seems safe to say that we'll be lapping a 2-year history here that will rival any period within our company's history. And that doesn't seem to be slowing whatsoever. Demand for our product, our real estate is and remains abundant and extremely healthy. You learned about the progress our development team is making on entitlements to densify our town centers with alternative uses such as resi, hotel, in certain instances office, along with a thoughtful placemaking for social gathering. As the development team clearly conveyed our land, which is typically positioned at Main and Main within our markets is highly coveted. Think of it this way, you saw Kierland Commons yesterday, we bought that center 20 years ago. Imagine what the land basis was 20 years ago. Imagine what the accretive land value is today. And that will give you some idea that you can digest the attractive returns on incremental new equity, which is very minimal. And so we're creating those opportunities across the platform. And that's really a prudent disciplined way to handle this development effort. It's not about balance sheet constraints. It's about the prudent use of our capital. Exciting mixed-use densification projects are on the horizon. We will be mindful of when and how we bring those opportunities to life. We will listen to what the market tells us. As Ed said, we'll be mindful of potential down economic cycles, such as the one we may be soon facing. You learned from Cory about the tremendous opportunity we have in Philadelphia, and we look forward to reporting on that more as 2023 progresses. You heard about the efforts of our business development team from Ken. They brought their revenue center well beyond the prepandemic level. Ken, you're my favorite dude in the room. They have done this by sourcing creative and lucrative opportunities for traffic to draw to gated attractions, advertising opportunities, such as how we -- and they've also really set the table in terms of creating creative forward-thinking platforms such as how we operate our portfolio-wide digital network and also the cutting-edge digitization of thousands of transactions every year, as Ken demonstrated with our new Yardi QuikSpace tool. Maybe you guys need a little bit of coffee right there, but we've demonstrated this amongst our peer group and across sectors and it's really quite a buzz, really is. So a lot of forward thinking in that regard. You learned briefly. Thank you, Olivia, more about our ESG efforts at a depth that you likely have not heard before. We look forward to engaging others, including Linda, about our ESG efforts and look forward to helping you guys write about how we are making a difference to this planet. You learned a new phrase. I did too, double materiality. That's cool. But it does make a lot of sense for doing the right things by the planet, as citizens of the planet, but we're also being fiscally responsible in everything we're approaching. One thing I'm extremely proud of with this company is we are just massively philanthropic. This week, we started a fundraiser for St. Jude. I haven't gotten any figures from that, but I look forward to hearing about it. That is the cause that we're supporting here at the holidays. The company is match funding contributions. And we do this each and every year. We've got a wonderful platform in which donor-advised platform that encourages payroll deductions. The company kicks in, just another way in which we are just a wonderful community citizen, and that really is something we embrace end-to-end. So I'm extremely proud of that. And as Olivia mentioned, we don't do this for the accolades. We don't do this for the honors, but look, it's good to get them. And I think fundamentally, it's important to comment on them because it is an independent validation. So by GRESB, who has recognized us 8 years running as the most sustainable retail real estate company in North America. We're proud of that. And we're certainly proud of our recent ISS ratings with their best possible ESG scoring. These are all important facets of being a public company. We must acknowledge that. So we've made great meaningful progress over the last 24 months. We -- I would say one thing. Obviously, the business has emerged from the pandemic quite well, but so not have the debt capital markets. All that said, over the past 24 months, we've made very meaningful progress. As I mentioned, since the start of the pandemic through the end of next year, we will have touched over half or $3.5 billion of maturities. Yes, it wasn't straightforward. Yes, it was a very tortured process to get there, but we feel confident in our ability to execute. We're doing so in a very efficient way from both the liquidity and a rate standpoint. As I highlighted to you earlier, the underpinnings of that success are relatively light leverage that we put on in place when we originate debt, as well as our nonrecourse secured positioning. All those are important facets of our balance sheet strategy and structure. Throughout the past day, we reminded you of the resilience and the strength and the solid foundation underlying our business. And it certainly does seem that even despite the recent run-up in our share price, there remains a substantial remaining discount and significant embedded residual value that is not captured within our current valuation. As you sit here today, I feel pretty good about saying this, I think. What was once labeled the retail Armageddon, I'm now hearing a lot more about it becoming a retail Renaissance. Our spaces are changing. Their morphing. The mall sector is capitalizing on a unique opportunity to transform itself. And in Macerich terms, our strategic vision is to not just own malls. But as you've heard many times today as well as yesterday is to transform and curate town centers, whether there is to find the best first-class shopping with the most exciting and relevant brands, or to promote personal fitness, wellness or beauty, to shop for staples and groceries to meet your daily and weekly needs, or prove options for your future electric vehicle purchase or to socially gather to play, to dine, to be entertained, stay at a hotel while you're passing through town, to work or to live, et cetera, et cetera. The town center model is pretty clear. It's to cultivate as many reasons as possible for our community citizens to visit our A-class portfolio. Our end goal is to have our market patrons pause and reflect just how important our properties are within their daily and weekly lives. For [indiscernible] that at that point that we have made progress in fulfilling our mission, which is to be the social heart and economic engine of the communities we serve. We do hope you're leaving today with a greater appreciation for the quality of our A Class portfolio for the vast and many transformative opportunities that are facing us today as well as the demonstrated expertise of the entire Macerich team to execute upon these opportunities. We sincerely thank you again for your commitment and time following NAREIT and following Thanksgiving. We wish you a very safe travels home, and we wish you a wonderful and joy-filled holiday season with your family and friends. Thank you very much.