The Macerich Company (MAC) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Q2 2026 Macerich Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Alexandra Johnstone, VP of Finance and Investor Relations. Please go ahead.

Thank you for joining us on the second quarter 2026 earnings call. During this call, we will make certain statements that may be deemed forward-looking within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, including statements regarding projections, plans or future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's earnings results and supplemental and our SEC filings. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the supplemental filed on Form 8-K with the SEC, which is posted in the Investors section of the company's website at macerich.com. Joining us today are Jack Hsieh, President and Chief Executive Officer; Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with us in the room is Brad Miller, Senior Vice President of Portfolio Management. With that, I would like to turn the call over to Jack.

Thanks, A.J., and good afternoon, everyone. When we published our Path Forward 3.0 plan at NAREIT in June, we highlighted that we were meaningfully ahead of schedule on the execution of the plan, which is delivering tangible results and positioning us for accretive growth above our original expectations. We're demonstrating strong execution across 3 pillars: simplify the business, improve operational performance and reduce leverage. We've made significant progress in leasing dispositions and balance sheet improvement while also positioning us for sustainable NOI growth and new external growth opportunities. Today, I'll briefly touch on our second quarter results, then turn to where we stand on our Path Forward plan and how we're thinking about external growth. I'm pleased with our second quarter results. FFO as adjusted was $0.35 per diluted share and go-forward portfolio NOI grew 3.8%. We expect this growth to continue to ramp in 2027 and 2028 as our signed not open tenants open and begin paying rent. Our SNO pipeline reached $124 million. Portfolio sales reached a new company high of $919 per square foot and $954 across the go-forward portfolio with leased occupancy of 94% and 95.5% in the go-forward portfolio. We remain ahead of schedule on our important strategic leasing initiatives. Our leasing speedometer, which tracks new deal completion in the 5-year plan is at 88%, ahead of our 85% midyear target. Only a small number of leases remain to complete the plan and our attention has shifted to conversion. That means getting tenants permitted, built out, open and paying rent. Occupancy is tracking with what we projected in our Path Forward plan and the strong demand for our space has our teams already leasing into 2029 and 2030 as little space remains available in our best centers. We recently introduced the store openings completion percentage, an operational metric intended to provide transparency on our progress to move tenants from LOI to store opening. As of NAREIT, we were at 50%. And today, we are at 57%. We expect to be ahead of our 60% year-end target at the end of this year. We talked about how our playbook is working within the portfolio as the elevate and transformation strategy moves through the later stages and occupancy tightens, traffic increases and NOI improves. If we look at our best-performing centers year-to-date in terms of NOI growth, these centers have experienced the strongest traffic improvement as compared to our portfolio average. Our next good case study is the West wing of Tysons Corner. That wing has historically been held back by weaker traffic, and we're changing that. We're adding, among other nationally recognized tenants, a 2-level Eataly in the former American Girl space Din Tai Fung in the former Pottery Barn, and cider in the Express space. These tenants are all proven traffic generators. With that wing now effectively full, that added traffic and dwell time should translate directly into pricing power. Year-to-date through the first 6 months, traffic is up 10% at Tysons as we have continued to upgrade the tenant base over the past 3 years. With these new tenants coming in that we've signed and others we expect to announce soon, that traffic has even more room to improve. The scarcity of space in our best centers is by design in our path forward plan. No one is building new regional malls and roughly 90% of our go-forward NOI comes from Class A assets and the best retailers of the world -- in the world are concentrating their growth in high-quality centers like ours. Retailer demand is as deep as we've seen it and is influencing how we are evaluating potential acquisition opportunities. Brands are pursuing quality over quantity and competing for limited space in our centers. The Gen Z consumer over-indexes on visiting physical stores and spending on goods, food and experiences and is on track to become the largest spending demographic in the country. Those tailwinds are only getting stronger. Let me turn to acquisitions, which is an increasingly important growth engine for us. Our opportunity set has grown and the pipeline is robust. We are evaluating a broad set of on- and off-market opportunities, the most at any point since we began the Path Forward plan. We remain highly disciplined, and our criteria has not changed. Our criteria for acquisitions includes assets that are: one, accretive to our Path Forward plan; two, located in strong trade areas with clear catalysts to elevate and transform using our leasing, development and operational platform to add value; and three, finance in a way that keeps us within our leverage targets under the plan. We will remain patient and selective, but we intend to use this window because the conditions for acquiring and transforming high-quality malls are as favorable as we've seen. At Annapolis, the onboarding has gone smoothly and the momentum is clear. UNIQLO is now open. Dick's House of Sport opens on August 14, and the Elevate and Transform effort is well underway. It is a market-leading asset in one of the most affluent trade areas on the East Coast and its proximity to Tysons quarter extends our platform across the Washington, D.C. region. At Crabtree, our leasing momentum has been strong. We recently announced Level 99 and Fogo de Chao, and Dick's House of Sport is opening in September. In addition, Lululemon has recently signed a lease to extend and expand their location. Since the acquisition, we have commitments on 45 new and expansion leases and 35 renewal leases. Both assets reinforce our conviction that our leasing capabilities and relationships with the best retailers in the world are what turned these acquisitions into value, and it's a big reason sellers and retailers want to work with us. We are increasingly in a position of strength with the balance sheet. Following our most recent offering completed on a forward settlement basis, we have approximately $372 million from this offering available to fund future acquisitions. That financial flexibility, combined with our platform lets us act with speed and certainty that sellers and retailers value. That's a real competitive advantage in this market. In summary, we are ahead of schedule. The plan is substantially derisked and the structural tailwinds behind our business from the limited supply to retailer demand to the emergence of the Gen Z consumer are strengthening. As I've noted before, when we complete this plan, you should expect to see a company with higher permanent occupancy, embedded rent growth, a stronger balance sheet and a portfolio of irreplaceable assets in the country's most desirable markets. With that, I'll turn the call over to Doug.

Thanks, Jack. Like the first quarter, the second quarter reflected continued leasing momentum across our portfolio. Portfolio sales at the end of the second quarter were $919 per square foot, once again representing a new high watermark for the company, and that's our full portfolio. By contrast, when you look at our go-forward portfolio, the centers where we're actively investing, sales were $954 per square foot, and this continues to underscore the success of our elevation and transformation strategy. Occupancy at the end of the second quarter was 94%, up 60 basis points from the first quarter. The go-forward portfolio occupancy at the end of the second quarter was 95.5%, and that's up 60 basis points sequentially and up 270 basis points year-over-year, continuing to reflect strong demand for space in our best centers. As we get into actual leasing for the quarter, let's start with our lease expirations. We have commitments on approximately 93% of our 2026 expiring square footage that is expected to renew and remain open with another 6% in the letter of intent stage. As I mentioned last quarter, we're effectively done with 2026 and now actively focused on 2027 and 2028. In fact, as we look specifically at our 2027 expirations, we're just about 50% committed with another 40% in the letter of intent stage. And compared to this time last year, we're ahead of pace and very pleased with the progress we've made. Turning to tenant openings. In the second quarter, we opened almost 350,000 square feet of new stores. Most notably, in the second quarter, we opened a new and expanded Zara store at Tysons Corner Center. At 45,000 square feet, this is the first true flagship Zara in our portfolio, and its opening was extremely strong. In fact, in its opening weekend, Zara Tysons was ranked #1 in sales in the United States and #5 in the world. Since then, it remains #1 in this region and in the top 10 in the country. And we look forward to opening our second Zara flagship at Los Cerritos in the fourth quarter of 2027. In terms of leases signed in the second quarter, we signed 1.3 million square feet of new and renewal leases, of which 645,000 square feet were new deals, which is right on par with what we leased in the second quarter of 2025. And let's remember, last year was a record leasing year for us. Examples of leases signed in the second quarter span 5 categories: legacy brands like Aerie, OFFLINE by Aerie and Old Navy. Food and beverage concepts like Eataly, Din Tai Fung, and Wood Ranch. Iternational names like Zara and Sephora. Experiential concepts like Level 99 and Golf Galaxy and emerging brands like Alo Yoga, On Running, Viore, Rowan, Reformation, and Cider. So my point listing examples of brands we signed in the second quarter, which is really just a subset of all the leasing we've done in our 5-year plan is this. Of the 1,000 new deals in our 5-year plan, we only have 170 left to achieve our goal, 2/3 of which are in the letter of intent stage. And given the continued healthy retail environment and unprecedented demand for space in our centers, we believe this is very achievable. So how did we get here? We got here by record leasing activity in the last 2.5 years, which we've discussed quarter after quarter. But it's very important to note, and I want to make this clear, we achieved the success not by just leasing space to fill space, but rather we got here by leasing space in a very thoughtful and strategic manner, targeting many of the best and most sought-after retailers in the world. And when these 1,000 new tenants open between now and the end of 2028, the Macerich portfolio of shopping centers will have been completely reimagined and ultimately transformed and elevated like never before. And when we look out to 2029 and beyond, the narrative of our leasing story will change. With the vast majority of our 1,000-deal program complete, we shift from record leasing volumes to curating and optimizing a portfolio that is already elevated. We expect our go-forward centers to be operating at higher occupancy and higher sales productivity than any point in our history, giving us continued pricing power and the ability to drive sustainable same-center NOI growth for years to come. And with that, I'll turn the call over to Dan to go through our second quarter financial results.

Thanks, Doug, and good afternoon. I'll start with a review of the second quarter financial results. FFO as adjusted was approximately $100 million or $0.35 per share during the second quarter of 2026. Go-forward portfolio centers NOI, excluding lease termination income, increased 3.8% in the second quarter of 2026 compared to the second quarter of 2025. With a strong second quarter of NOI growth, go-forward portfolio centers NOI has now increased 2.5% for the 6-month period ended June 30, 2026, as compared to the same period in 2025. We continue to expect go-forward portfolio centers NOI growth for the full year 2026 to increase at least 3% over 2025 and to accelerate meaningfully in 2027 and 2028 as the SNO pipeline tenants continue to open and begin paying rent. We have a high level of confidence in achieving the total SNO opportunity of approximately $140 million. The estimated annual contribution is $30 million in 2026, back-end weighted, $40 million to $45 million in 2027 and $45 million to $50 million in 2028. This represents a clear visible path to drive incremental growth. Turning to the balance sheet. We are making strong progress on the balance sheet initiatives contained in our Path Forward plan. 2026 continues to be an incredibly productive year by the team in relation to our various financing activities. With respect to our equity capital markets activity, in May, we priced an upsized public offering of common stock at $21 per share, resulting in net proceeds of approximately $450 million. The use of proceeds were primarily to fund the acquisition of Annapolis Mall and related strategic leasing capital investments at Annapolis. In June, we priced the public offering of common stock at $23.90 per share through forward sale agreements. The company did not initially receive any proceeds from the sale of shares of its common stock by the forward purchaser banks. We intend to use the future net proceeds to fund future acquisition opportunities. Year-to-date in 2026, we have closed on a 4-year loan extension through November 29 at our South Plains property, completed an amended and restated $900 million revolving credit facility, repaid the loan outstanding on Vintage Fair Mall and closed on a new $115 million 5-year mortgage loan at Deptford Mall. With respect to our 29th Street property, the $76 million loan at the company's pro rata share remains in default after its February maturity date. As we are currently in discussions with the lender on the terms of this loan, we do not have any additional commentary at this time. We're proactively addressing our remaining 2026 debt maturities through a combination of potential asset sales, refinancings, loan modifications or if necessary, property givebacks. We currently have approximately $1.2 billion in liquidity, including $900 million of capacity on our revolving line of credit. This excludes the net value of unsettled forward equity proceeds of approximately $372 million. From a leverage perspective, net debt to adjusted EBITDA at the end of the second quarter was 7.3x, which is almost a half turn lower than last quarter and over a 1.5 turn lower than at the outset of the Path Forward plan. Inclusive of the unsettled forward equity proceeds, net debt to adjusted EBITDA is now below 7x. And importantly, we've outlined our strategy to further reduce leverage to the 6x, plus or minus range. We are executing on the dispositions we've outlined in our Path Forward plan. During the second quarter, we closed on the sale of our joint venture interest in West Acres for $1 million plus the assumption of $13 million of debt at our share. To date, we have completed approximately $1.3 billion in total dispositions, representing about 2/3 of our initial disposition target and the disclosures we provided in our supplement includes a summary of these asset dispositions. These sales transactions are consistent with our stated disposition plan to improve the balance sheet and refine our portfolio. We continue to expect to sell or give back $300 million to $400 million of additional assets, outparcels and land by the end of this year. This would increase total dispositions to approximately $1.7 billion. Year-to-date, we have closed on about $30 million in total dispositions, and we now have approximately $100 million under contract to sell. We'll provide further updates on our disposition activities as we progress through the year. Overall, we are making great progress on our Path Forward plan objectives to reduce leverage, refine the portfolio and strengthen the balance sheet. With that, we'll turn the call over to the operator.

[Operator Instructions] And our first question today comes from Andrew Reale from Bank of America.

Now that all 30 anchor replacements are committed and starting to roll on, maybe could you just talk about in more detail sort of the second order effects on leasing and rent spreads at the rest of the center once that anchor opens? How might that compound over both the next few years and then even beyond 2028 when the renewal opportunity really accelerates?

I'll take that, Andrew. So you're asking sort of the -- if I get the question right, of our 30 anchors, sort of a net follow-on effect. So there's probably like 3 stages that it goes through. The first is when we sign an anchor deal and can announce it. It's obviously not open yet. That already enables us to begin the re-leasing effort with getting strategic tenants that we can build upon on the inline. Then there's the second phase, which is when the store opens. That obviously brings more energy traffic into those wings. And then you've got what I'd call the after effect 2 years later when now you've got that anchor open, operating and multiple tenants now also open and operating in that wing. If I were to use an example of the Scheels store at Chandler, that store in itself right now is drawing 3.1 visitors to its store according to Pacer in the last 12 months. It's the #1 Scheels in the system. That's enabled us to bring Vuori, Alo, Din Tai Fun now is coming on to the outside. Seafood City just opened, for instance, at Chandler. They were -- that's a pretty exciting brand that just opened last week. So you're seeing like -- and Scheels is very unique, right? They draw tremendous volumes. But if you look at another important anchor tenant that we've talked a lot about, Dick's House of Sport, we have about 9 months operating history at Freehold with them. And according to our math, they're drawing over 800,000 customers into the center from their store. So we expect them to achieve a $1 million incremental customer run rate. That's already not only helped tenants within that wing, but enabling the teams to continue to follow on more leasing. So it's sort of a -- it's not a simple answer, but what I'd say is we get the first bite when we're able to announce the anchor. We get the second bite when they open. And by then, we've got other tenants on the in-line opening. And then when you look at it 2 years later, you get the full effect.

Our next question comes from Vince Tibone from Green Street Advisors.

I understand acquisitions are lumpy and hard to predict. But how should we best think about overall acquisition volumes going forward? Based on your comments, it seems like there's a lot of interesting opportunities you're underwriting. So just trying to get a sense of if there's any thresholds in terms of risk mitigation or human capital or number of assets you recently acquired that are in some state of transition that you want to kind of limit in terms of the overall portfolio. Ultimately, yes, just trying to see how many of these we should reasonably expect over the next 12, 18 months.

Yes. Okay. Vince, I'll try to take that. So you're kind of trying to pin me down on size, shape and volume. And man, if I was in my triple net, I would be skewing out quarter-by-quarter what we could do. And I was listening to some of my peers in the shopping center business talk about volumes. I guess the way I'll answer it is I believe that this is a really unique opportunity to buy enclosed regional shopping centers. I think that -- we have a tremendous advantage having an integrated operating platform. We've got great national tenant relationships, and we got the money. And we don't need mortgage debt, and we've got speed and certainty. And to me, that should give you confidence like that enables us to win Crabtree in a fully marketed deal. That enables us to secure Annapolis, which was off market because the seller wanted certainty and want speed. What I can tell you today is since I've been at this company, we have a robust and broad on and off-market set of opportunities with stabilized yields in the 9% to 11% area. I'm not going to give you a number, but the way I would think about the net effect to us -- and what makes it so exciting for me sitting at where we are right now, we're at $1.90 and 6x debt-to-EBITDA on the core plan. If we invest that $372 million of forward equity that we have, 100% equity on an acquisition in the 9% to 11% stabilized yield area, that's going to generate about $0.02 to $0.04 incremental FFO accretion and lower our leverage 25 to low 30 bps debt to EBITDA. So our debt to EBITDA would be down in the high 5% range if we're able to just deploy that 372. So, we're going to be picky. We're going to do the right thing. And I probably got a lot of sellers listening to this call, too. So I don't want to make it harder on myself. But I think it's a tremendously unique opportunity for us as a company today.

Our next question comes from Craig Mailman from Citi.

Maybe not to pile on or try to pin down even more, but on acquisitions. I mean you guys came back pretty quickly to the equity market and raised a decent chunk of forward capacity here. I mean, I guess from our standpoint, what's the risk that, that capital doesn't get deployed by June of next year when you guys would have to settle it? I mean, is that even a possibility given what you have in the pipeline today?

It's not possible. I'm just going to tell you, Craig, it's just not possible. The reason why we decided to pursue the forward equity, we have so many good things happening in terms of leasing and I'll spend later in this call, talk about what we're seeing on sort of late-stage and mid-stage transformation and the impact it's having. But literally like doing a forward equity is a no-brainer. We've got a very, very large pipeline. We know that the net effect will take our debt to EBITDA down in the high 5s, like 5.75%, right in that range, and it's going to be accretive. So yes, we're going to use that money. I'm telling you, way before June of next year. So, I think it was just kind of prudent given the biggest thing I was concerned about just there's a lot of macro things happening in the world right now. And right now, I'm very comfortable settling that forward equity somewhere between a 9% and 11% stabilized yield, and I kind of know the net effect of it, which will be positive for the business. So that was kind of the logic of why we did it. It wasn't like we had a deal ready to print. We just said this is too good. We need to protect this, our plan.

Our next question comes from Todd Thomas from KeyBanc Capital Markets.

I'll switch over to operations for this. Dan, you reiterated the full year go-forward NOI growth of at least 3% and then reiterated also that you expect a meaningful acceleration in '27 and '28. Just in terms of the cadence from here, following 3.8% this quarter, is there anything in the second half of the year that should create a headwind to go-forward NOI growth? Or do you see this period representing the inflection in growth with growth continuing to track higher from here on commencements?

Yes. Todd, this is Dan. Thanks for the question. Yes, we continue to expect at least 3% for the year, which based on -- obviously, second quarter was very strong at 3.8%. That brings us in at 2.5% year-to-date. So that does imply 3.5% NOI growth at least for the second half of the year. We think maybe the fourth quarter based on the SNO contribution might be a little stronger than the third quarter, but you kind of think about the second half of the year as 3.5% plus for '26. And then as you noted, there's a meaningful ramp from there, we did put out our Path Forward version 3.0 at NAREIT. The 3-year NOI CAGR midpoint was 6.5% for years '26 through '28. So if you just for simple math, assume the 3% in '26, that implies north of 8% NOI growth in '27 and '28. And -- we've given you the SNO contribution by year in my prepared remarks. And again, '28 is slightly higher than '27. So you can kind of think of '28 as a little bit higher than '27. But over those 2 years, 8.25% sort of midpoint growth based on the 6.5% over the next 3 years.

And Todd, I'll pile on to Dan's comment on operations. So you've heard us in my comments, talk about later-stage transformation, mid-stage transformation, early-stage transformation. We're re-leasing, as you know, 1,000 new units, it's about 25% of our portfolio. So what does the late-stage transformation look like? So if I took Kierland Commons, Broadway Plaza, Scottsdale Fashion Square, Tysons Corner, those I would consider in the late-stage transformation of what's going on with those properties. If you look at the Placer traffic June year-to-date, those 4 centers are generating low teens traffic increases over last year, same period versus if you look at our go-forward portfolio, it's flat. If you looked at year-to-date 26 NOI on those 4 properties versus '26, it would be close to 9%, high single digit versus 2.5% for our go-forward year-to-date '26 numbers. If you looked at sales June year-to-date for those 4 properties, it would be low double-digit increases versus last year compared to 3.7% for our go-forward average. So the point I'm trying to make is we're seeing like tremendous lift when we get this right. If you looked at 2 examples of what I call mid-stage transformation, that's Los Cerritos and Chandler. Those centers are seeing kind of mid-single-digit placement numbers, so it's in excess of our go-forward average. It's mid-single-digit NOI growth year-to-date compared to 2.5% for the go-forward average. And sales are also mid-single digit versus the 3.7%. Each of those centers have very unique things about them, like Chandler, we just talked about, Sifu City just opened up. Zara is under construction. Din Tai Fung is under construction. Sephora, Alo, Wagyu House, all under construction. Los Cerritos, Dick's House of Sport under construction. Flagship Zara under construction, Coach Cider basically under construction and other tenants that we haven't announced yet. So, you're going to see like this follow-on effect. I think the question came in earlier from someone about the 30 anchors. And if you look at the other -- there's 15 other centers that are either in the early to mid-stage transformation that are undergoing -- that are going to start to contribute and follow on as we get into '28, and you'll see the effects rolling into '29, '30 that Doug talked about incremental curing in the portfolio. So, there's a lot of power that comes from doing this. If you do it in the right centers with the right trade areas with the right mix of anchors and inline coming on. And the go-forward averages don't tell the whole story. That's the point. And so we'll begin to start to talk about this in the future quarters as we get more data. But very exciting from my seat from what I'm seeing because basically, it's working. And we keep talking about same-center NOI going up. We're seeing it real time in those later-stage assets and now the mid starting to see it. So, there'll be more to come, but gives us a lot of confidence that this is working.

Our next question comes from Floris Van Dijkum from Ladenburg.

I don't want to belabor the capital markets questions and the investments. Hopefully, people have gotten a pretty good sense of the growth ahead. My question is, I guess, what percentage of your total NOI today is in your go-forward portfolio? And then maybe also a little bit of update on the percentage of your SNO pipeline that's from redevelopment versus your core portfolio, please?

Yes. Floris, I can take the first part of your question on the NOI contribution and maybe Brad can chime in on the second part. In terms of the NOI, and I will refer you to our supplement, Page 7, just to draw it out. We had NOI for all centers for the quarter of $211 million and the go-forward centers represent $185 million of that $211 million. And then for the 6 months ended June 30, the NOI go-forward centers are about $360 million relative to $400 million for the total portfolio.

This is Brad. I'll take the SNO contribution. So of the $124 million of SNO we have out of the $140 million total opportunity, the $124 million roughly breaks down $20 million to our development pipeline of Scottsdale, Green Acres and Flatiron, $20 million to the -- what we call the redevelopments, which is all the anchors that we're opening up and then the remainder of the $84 million is the rest of the leasing of the portfolio.

Our next question comes from Haendel St. Juste from Mizuho.

I wanted to go back to the redevelopment capital spend, the curating, optimizing the portfolio. With your leasing goals now nearly complete, it seems like there's going to be a bit more of a shift towards some of that curating, optimizing the portfolio. You've done -- you have a number of anchor commitments. So I guess I'm curious if you could share some color on maybe the scope of the opportunity for redevelopment in front of you within the portfolio? How can we think about that on maybe an intermediate-term basis in terms of redevelopment spend and yield that you're targeting?

Yes. Thanks, Haendel. So in terms of your question on redevelopment priorities, yes, the team, we're actually going through that exercise right now as a team. because there's been so much focus on nailing down the 28 plan with the 1,000 units. There's things that we haven't touched that are going to really contribute. I'll give you one example. At Broadway Plaza, we have the former Neiman Marcus anchor box that was going to originally be a resto. That's not going to happen anymore. And thankfully, we actually have the opportunity to actually convert to more in-line opportunity. There is so much demand for tenant space at Broadway Plaza. We just -- we don't have the space. So that's going to actually end up being more accretive than have we followed through on the restoration hardware opportunity. At Scottsdale Fashion Square, we have probably one of the most valuable pieces of commercial real estate on the North parcel adjacent to the Apple Store. We haven't -- we're undergoing plans to evaluate that. Tysons has tremendous opportunity up by the Silver Diner, across from the West Wing that we talked about. So -- and there's others like that within the portfolio that we are really beginning to put pen to paper on how to do it, how much does it pro forma out? Does it add value? Does it add traffic? Is it going to enhance our position and continue to put that moat around our assets?

Our next question comes from Greg McGinniss from Scotiabank.

For the acquisitions, you're looking at targeted yields in the 9% to 11% range. And I recognize that this math is not 1:1, but how should we think about the quality of those assets compared to the in-place portfolio considering the mid- to high 6% implied cap rate on the stock?