Good day and welcome to the The Macerich Company Third Quarter 2022 Earnings Call. This call is being recorded. And now at this time I'll turn the conference over to Samantha Greening. Please go ahead.

Thank you for joining us on our third quarter 2022 earnings call. During the course of this call, we will be making certain statements they 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 are future expectations. Actual results may differ materially due to a variety of risks and uncertainties set forth in today's press release and our SEC filings, including the adverse impact of the novel Coronavirus on the U.S. regional and global economies and the financial condition and results of operations of the company and its tenants. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8-K with SEC, which are posted in the investor section of company's website at macerich.com. Joining us today are Scott Kingsmore, Senior Executive Vice President and Chief Financial Officer and Doug Healy, Senior Executive Vice President of leasing. With that I'll turn the call over to Scott.

Thank you, Samantha. Good morning and good afternoon. Unfortunately, Tom was missing this call, as yesterday you had a death in his immediate family. At this time, we send Tom and his family our loved support, thoughts and prayers. We are pleased to report another strong quarter with the majority of our operating metrics trending very positively. After a very strong first half of 2022, we also had a solid third quarter, we saw robust retailer demand, tenant sales were flat in the third quarter however, our portfolio average sales for tenants under 10,000 feet were $877 per foot, our highest level ever. We continue to see traffic at about 95% of pre-COVID traffic, but comparable tenant sales or exceeding pre pandemic levels with year-to-date comparable sales up nearly 5% versus the same period in 2021 and up over 13% compared to the same period pre-COVID in 2019. The quarter continue to reflect retailer demand that is at a level we have not seen since 2015. Some of the other third quarter highlights include occupancy at quarter end was 92.1%, that was 180 basis point improvement from the third quarter of 2021, and a 30 basis point sequential quarterly improvement over the second quarter of 2022. We continue to see strong leasing volumes, which for the year are in excess of 2021 levels. For the quarter, we executed 219 leases for 1.1 million square feet. We saw same center NOI growth of 2.1% in the third quarter of compared to the third quarter of 2021, which was a very strong quarter. FFO came in at $0.46 per share. And on Thursday, last week, October 27, we declared a $0.17 per share quarterly dividend, which represents a 13.3% increase over the prior dividend. We continue to focus on redevelopment and repositioning…

Thanks Scott. Leasing momentum continued in the third quarter as evidenced by strong metrics and very high volumes. Third quarter sales were flat when compared to third quarter of 2021. And this was expected given the very strong sales in the third and fourth quarters of 2021. However year-to-date sales are up almost 5% when compared to the same period last year. Sales per square foot as of September 30, 2022, were $877. And once again, this represents an all time high for the company. Trailing 12-month leasing spreads were 6.6% as of September 2022, compared 2.6% last quarter and negative 2.5% a year ago. And this is the strongest spread result we've had since the third quarter of 2019 pre-pandemic. We just about to finished with our 2022 lease expirations with nearly 90% of our expiring square footage committed and the remainder in the Letter of Intent stage. And while addressing our 2022 expirations, we've concurrently been working on 2023. Today, we have almost 25% of our 2023 expiring square footage committed with another 50% in the Letter of Intent stage. In the third quarter we open almost 250,000 square feet of new stores. This brings our year-to-date store openings to just over 650,000 square feet, which exceeds where we were at this time last year. Notable openings in the third quarter include Sephora, Kings Plaza, SanTan Village, Doc Martens or Broadway Plaza, Garage at Scottsdale Fashion Square, North base at Washington Square, JD Sports at Fresno Fashion and Vintage Fair and two more stores with cottoned on that Kings Plaza and Queen Center. In the luxury category we opened Louie Vuitton men and [Indiscernible] and Scottsdale Fashion Square. We opened 15 new stores totaling almost 40,000 square feet of digitally native and emerging brands in the third quarter.…

[Operator Instructions] We will begin with Greg McGinniss with Scotiabank. .

Hey, good morning out there. Looking at the development pipeline hoping you could discuss the changes in the disclosure but the removal of some of the potential serious redevelopment and then your thoughts on mixed use redevelopment as we stare at higher borrowing costs, higher construction costs and looming economic risks.

Yeah, good afternoon, Greg. Changes to the development pipeline in terms of Sears you know we've really addressed the lion's share of the boxes with the exception of those that we intend to scrape and add mixed use and more densification. So for example, we've completed the returning of the boxes at Vintage Fair at Deptford Mall, we just mentioned the returning of Danbury with target to accompany Primark, smaller scale we retested the Sears Box at a property in upstate New York mall with what the hospital use. So we've really addressed most of those, we're still an entitlement and or preleasing for Washington Square in Los Cerritos. And once we have projects to report, we'll certainly report those likely they will land in our development pipeline. So at this point, it was appropriate to remove those. We have supplemented that now with two very exciting projects. One is effectively, again, a returning of three levels at Santa Monica place it's great real estate right across from the light rail station. And we intend to provide a variety of different and diverse uses to attract incremental traffic to that property. We're very excited about those uses, and we're at least with at least right now in lease documentation, with most of them very attractive returns as well. In Scottsdale, you know, it's really just an evolution of the luxury expansion that we did and we completed it two to three years ago. Recall we intensified our luxury and concentrate our luxury in the run to [Indiscernible], if you've seen it. The names are global, the names are domestic, the names are thick and broad. And as a result of the instrument, really it's been an incredible amount of demand as a result of that continued demand, we're going to…

Thanks, thank you. I appreciate all the color there. Just sticking with development pipeline, are there any updates, you can provide us whether on some of the fixers stadium, any numbers around that yet or working with the city on entitlements or ability to do what you guys want to do there. And then also on the parcel outlets?

Yeah. On Fashion District, I can't report much more at this point. Our development partner continues to work with the city on entitlements. We continue to secure control of any space that's necessary to accommodate the development of the arena, which again, would be several years down the line in the 2031 timeframe, which is when that would open. So nothing more to report, certainly in terms of economics there, I would anticipate we may be in a position to give you more over the next few quarters. As far as Carson, that remains an ongoing legal matter. And I'm just not at liberty to expand on that right now. Greg, thank you.

All right. Thank you.

We'll now hear from Derek Johnston with Deutsche Bank.

Good morning. Thank you. Can we hear your thoughts on the push and pull between increasing the dividend especially with the stock where it's trading now, versus potential other uses, like ramping redevelopment or even deleveraging?

Yeah, sure. Just as a reminder, we used the opportunity during COVID to reset our dividend along with the very robust recovering the business that's given us an opportunity to harvest a good amount of free cash flow. I mentioned, that cash flow on an annual basis after payment of recurring CapEx, but before dividend payments, is approximately $370 million. So fast forward two and a half years later, after we made those dividend decisions. The business is on firm footing, we're very confident about the outlook of the business. We still remain committed Derek to maintaining healthy payout ratios. We still remain committed to retaining cash flow to reinvest back in the portfolio and to reduce our debt. At the end of the day, the dividend change that we made was approximately $18 million. So, we do think it's important to get back into a cadence of increasing our dividend, given the outlook for the business. No guarantees for future increases, but we would certainly hope to be in a position to revisit that down the line as well. So, really it's a firm vote, in terms of our confidence for the business and the outlook for the business right now. We will still remain committed to reducing our leverage into reinvesting back in the portfolio through developments in Scottsdale and in Santa Monica are great examples of that. Post-dividend change, our payout ratios are still very acceptable very low. Leading into that our payout ratios by the way, were one of the lowest and right world. So I think there's a good balance between all three things and we're going to we're going to be mindful of the balance between our balance sheet reinvestment back in and also returning some capital to our shareholders.

Okay, great. Make sense? Secondly, you've had a pretty strong lease volumes here for a while at this point. Just hoping you can speak to the potential rent coming online over the next year and cadence of openings especially after opening 250,000 square foot in 3Q. I was wondering what you're anticipating for the 4Q and 2023. Thank you.

Yeah, sure, Derrick. So falling short of providing you guidance for 2023. I'll say that, you know, the leasing pipeline continues to be really strong. For last few quarters, now, it's exceeded 3 million square feet, both between signed deals and deals that are in process. And the deals are reviewed twice monthly, continue to be it's a very strong, very high volume agenda. So, in our view is we'll continue to see strong NOI growth, revenue growth coming from that. We do have a new disclosure in our investor deck, we'll continue to keep that updated as we move forward, which does provide the incremental rent impact that we would expect from any new stores that are coming online. So you can refer back to that, like I said, we'll keep that updated. The view is and Doug unless you tell me how that will happen. I don't think that's the case. Our pipelines strong and it doesn't show any signs right now abating.

No. Sure, it does. Scott. And the question I get asked all the time, given what's going on in the macroeconomic environment out there, and the looming recession is the retailer's pulling back? And the short answer is, they're just not. We have a very, very healthy retailer environment right now. Those that were going to fail, pre-COVID ended up failing during COVID. So we're left with a watch list that is as low as it's ever been. And a lot of retailers out there with very healthy balance sheets. So we don't see this ending anytime soon.

Sounds good. Thanks everyone. That's it for me. .

Well, now move to Craig Schmidt with Bank of America.

Thank you. I just wanted to maybe dig into what really drove the higher leasing spread. As you pointed out, it's the strongest it's been three years. Are you getting more pricing power or was fortunate quarter that just played out well. Are you looking for more explanation on the 6.6 or leasing spread?

Yeah, good question, Craig. We've been talking about it for a few quarters now that with the pickup and occupancy, we'd start things to think we could start to push on rate. And that seems to be the case. We got to 92% occupancy, which creates that tension between supply and demand. And as we review deals again, every other week, it seems like we're getting more and more pricing power. In a given quarter, it's kind of hard to tell. I think as we started the year, we were hoping that we'd get to kind of a healthy mid-single digit leasing spread. In fact, I think maybe we even spoke spoken to that call or two ago. And we're pleased to be sitting here now. And as we look forward, based on all the deals are reviewing, I think that's a level we can continue to sustain. Doug, any commentary on that?

No, I think you're spot on, Scott. We talked about our main goal coming out of the pandemic was all about occupancy, occupancy, occupancy. And you know, we've gotten to ourselves position now, at a 92% occupancy level to refocusing on rate, which is exactly what we're doing.

And I guess just it sounds like, obviously, you have a lot of confidence, that continuation and leasing spread. Are your expectations for a holiday '22 to be reasonably positive?

Yeah, I think so. Craig. If you look at the National forecasts that are out there, they call for mid-single digit type of holiday growth. We certainly won't see the 15% or so growth, mid-teens growth that we did in the fourth quarter last year. But, I think it's reasonable to assume based on our conversations with the retailers, they feel optimistic about some growth this year, just not as robust as last year.

And Greg, it's Doug. I've read a couple of surveys and really feels and exciting excites me, it really feels like the vast majority of shoppers this holiday, are going to be shopping bricks and mortar. And in addition to online, but bricks and mortars and favor, it's the delays in shipping, which were abundant last year, I think frustrated a lot of people. The shipping costs are getting expensive. So I think bricks and mortar is going to be very, very favorable this holiday.

Thanks for the color.

Thanks, Craig.

Our next question will come from Samir Khanal with Evercore.

Hey, Scott, good morning. I know you guys are not providing guidance for next year, but just generally, how are you thinking about potential tenant fallout, sort of the post-holidays, normally when we see them right and coming off a year where it's basically been in nil or basically zero. So clearly positive momentum on the leasing side, but just trying to figure out if there's any sort of headwinds we sort of need to think about into next year.

Yeah. It's hard to say that we're going to have the same type of nil year in 2023, that we've experienced in 2022. But ordinarily right now, we'd start to hear from retailers that were setting themselves up for a major renegotiation, a major restructure. We'd start to hear from them, we'd start to hear from their consultants. And that's really just not the case. So I think it will be 2023 will likely be an unusually low year. I don't think it's going to be a nil year, but I do think it's going to be a low year in terms of tenant fallout as well. I would say our renewal conversations with our retailers are still very strong. They are coming in requesting to shed stores, I think generally, they've right sized their fleets in the United States. And they're in expansion mode, for the most part. But we don't see them shutting stores, especially in our high quality Town Center. So I think the backdrop is set for continued occupancy growth, there may be one or two here or there that that that file, but nothing that's on our radar screen at this point in time Samir.

And I guess, Doug, just shifting over to you in terms of the negotiation that you've talked about, retailers not pulling back, they're still continuing to open up stores. But if you kind of take a step back, what are they pushing back on here? Is it primarily sort of higher TIs or CapEx? I mean, what's sort of the pushback you're getting, as you kind of talked about that sort of 25% of the leases that are committed and then that sort of balance you're negotiating?

Hey, Samir. The pushback like always whether it's now or whether it's pre-pandemic, it's always a function of rate. And rate is in negotiation, I would say that tenant allowances are consistent. They haven't changed very much over the last several years. So I would say, the battle is always round rate. Thankfully, given the quality of our portfolio, we're able to get what we need to get.

Okay, got it. And then one more Scott, if I can on the guidance range, I know you've talked about landfill gains maybe coming in, I think, later this year, but shifting over '23. In terms of modeling, is this sort of a recurring kind of an item we got to start putting into our models now? And if so, what sort of the magnitude we got to think about sort of annually going forward?

Yeah, Samir most of the land sales are concentrated in our Arizona portfolio. These were land holdings that we've had on the balance sheet for 15 to 20 years, as we, at one point in time envisioned expanding that market with further regional town centers, that's no longer the case. So we've continued to sell through that inventory, we will continue to sell that inventory into next year. We'll provide you a little more clarity on the 2023 inaugural '23 call when we give guidance. But I think those will start to really subside in 2014 and going forward. There always be a little element of that with past sales here and there. But I think by the time we get to the end of next year, a good majority of that will be exhausted. So we'll give you a little more clarity in three months.

Got it. Thank you.

We'll now move to Floris Van Dijkum with Compass Point?

Thanks, guys for taking my question. It sounds like the underlying business seems to be doing pretty well. You've got 9% same store NOI growth year-to-date, record tenant sales, positive leasing spreads, your S&L pipeline it's fairly robust, it was $33 million expected of incremental or revenue for next year approximately? When do you guys think that you can get back to '19 levels of NOI. You obviously not providing guidance for next year, but just how comfortable are you that you're going to get there? And see if you can get some color on that. That'd be great.

Yeah, share Floris. I mean, we're very comfortable, we're going to get there. The question is when. Again, the pipeline is very strong. We do think that by the time we get to the end of next year, we'll be there on a least occupancy basis. Obviously, there's some delay in start times for those new stores. And so yeah, without giving you guidance in terms of '23, I think on a run rate basis, we'll be there in terms of occupancy by the end of next year.

And then the other thing, the other question I had for you is in terms of your OCR, which is relatively low it at 10.8% I believe. You're we're starting to see your ability to push a rate through. Can you maybe talk us through some of the dynamics of that and how tenants are looking at rents relative to and their occupancy costs and relative to their ability to pay more rent going forward?

Yeah, you're no, you're spot on. I mean, our ability to push rate as indicated by spreads is negatively correlated with cost of occupancy, at 10.8%, less than 11%. That's about 100 basis points, I think below where we were at the end of 2019. And as probably if I went back in time, four or five year low for us. So that's a kind of a leading indicator of our ability to likely push rents given the profitability of our portfolio. Doug, do you want to?

Yeah, I would say, less cost of occupancy is becoming less and less relevant. These stores in our in our town centers are more than just for the retailer more than just selling merchandize. They buy online, pick up in store, they buy online ship from store. So while cost of occupancy is still important and something we look at. We really look to the value of our real estate and our properties and that's how we price our real estate, not necessarily strictly off the cost of occupancy.

Bear in mind, Floris competition, which there certainly is competition for our better real estate also allows you to push rate. And so we're certainly seeing those situations where there's a competitive situation as we leave space.

Thanks. So maybe last question for me, in terms of specialty leasing, it's really hard for investors to figure out, it doesn't show up in leasing spreads, it doesn't typically show up and other things, and how is that progressing? What are you seeing for key off and billboards and, and parking and other ancillary revenue? And as the economy gets better, how much more ability do you have to increase that amount?

Great question for us. I think we've spoken to this before. And I'll just confirm that, that's one segment of our business that will, in fact, the back to pre-COVID levels this year, the local merchants, the advertising contracts, that all that ancillary revenue, parking, revenues, et cetera, have bounced back extremely well. If you look at our occupancy, we're still north of 7% in terms of our temporary tenancies. And so there's always a push and pull between Doug and his counterpart that's in that temporary tenant kind of specialty leasing world. And anytime we're able to convert those deals to permanent uses, you're talking about a pickup in rent, that's probably 2 to 2.5 times what the temporary tenant was paying. So that certainly should be a big component of our growth going forward is converting temporary occupancy to permanent occupancy. The good news is the local merchants with which we worked with extensively throughout the pandemic. I have recovered quite well, and we've shed some, but certainly the demand has maintained very strong. We're looking forward to converting that to permanent though.

Thanks. That's it for me.

Our next question comes from Linda Tsai with Jefferies.

Hi, recovery of bad debt has been a tailwind in '22. And netting that with a view that tenant fallout is likely low in '23. Is the bad debt line item, a headwind or still a potential tailwind to earnings in '23.

Hey, Linda, I would say it's probably relatively neutral. We -- gapper forces you once retailers file once retailers are showing significant signs of weakness and not being able to meet their contract rent for the remainder of the lease term, GAAP compels you to reserve those receivables in their entirety. We've certainly get received some benefits of collections of those this year. We'll see that to a lesser extent in 2023. I think it's going to be relatively neutral. It's not a big needle mover. But we don't see a huge bad debt line item at this point in time next year.

Got it. And then on Irma's opening in Scottsdale, how are luxury retailers thinking about their U.S. store growth plans over the next two to three years?

Hey, Linda it's Doug. Luxury is a very, very strong category right now in the United States. And the luxury tenants are very active., they're looking hard at Scottsdale. And as Scott mentioned earlier, you know, we finished our remix of the Neiman Marcus Wing, and we're going to move now to the Nordstrom wing. And we probably have more demand right now in the luxury sector than we have space. So we see it as very aggressive. But keep in mind we don't have a lot of luxury or luxury really is focused around Scottsdale Fashion Square, Fashion Outlets of Chicago and to a lesser extent, Santa Monica place.

Thank you.

We'll now move to Connor Mitchell with Piper Sandler.

Hi, thanks for taking my question. I just have a couple. So first, in Alexander's earnings release, they reported that IKEA that was recently opened and Rego Park is now leaving. Do you guys see any tenants potentially closing up early at urban locations? And do you think this might be a one off or if similar situation could be possible elsewhere?

No, I don't think so. I mean, there's always going to be situations where a store underperforms and they're going to leave. I don't think that's an indictment necessarily on large format urban locations though, Doug.

No, I mean, I would consider Kings Plaza Brooklyn and urban location I would consider Queens Plaza in Queens in urban location and we've seen little to no fallout in either one of those centers. And I think that's sort of indicative of what's going on in the urban world within our portfolio.

The good news is, in some of those locations, the opportunity to backfill is pretty significant. Doug, you alluded to Queen center, that's roughly 100,000 square feet with two very prominent apparel retailers that we're not at liberty to disclose right now. So that base does come up at the opportunity to backfill and with, frankly, incrementally, a creative resources from the sales and traffic generation is pretty high.

Okay, appreciate that. And then regarding one website, now that it's open, and Google's moved in. Do you see yourself in harvesting these type of assets, the non-core assets and selling your position? Or how do you view the market, through your stake in the ability to transact to these type of assets?

Well, one Westside certainly unique. It's a single tenant, Google credit. So you can look and see what the cap rates are for that it's very attractive. There's mechanisms in that joint venture agreement, I can't get into that do allow for a transaction to occur. In the meantime, we're going to enjoy the diversity of NOI from Google, which is obviously a fantastic credit. And we're certainly celebrating the conversion of a regional mall project that is no longer a retail project. It's now Google Campus, some 600,000 square feet. It's very noteworthy. So we'll hold on to that NOI, and at the appropriate time, we'll go ahead and consider something.

Okay, and then if I could just one last quick one. Regarding Washington Square in Santa Monica place. Are you expecting any expensive or heavy principal pay downs for the extension? If you could speak on that?

Yeah, I can't get into the details. Those are transactions that are pending. So it'd be inappropriate for me to do. So I'll just tell you that, we've exercised our ability to secure extensions and refinancings for the last couple years, with very little capital to pay down and I'm not sure that's going to be any dissimilar to what we're doing with Washington Square in Santa Monica, but we can't get into specifics there. We will report once those transactions are closed, which should be in the next few weeks.

Yeah, understood. Okay. That's all for me. Thank you.

Thank you.

We'll now hear from Mike Mueller with JPMorgan.

Yeah. Hi, just a quick one here. What are some of the dynamics driving the Santa Monica box redevelopment returned to the call it close to two times higher than the box redeveloping at Scottsdale Fashion?

Well, extremely attractive real estate for starters. It's positioned across from a light rail that you know prior to COVID delivered 7,000 commuters per day, to the doorstep of the doorstep of that three level configuration. So there's a great opportunity to do something there. Santa Monica is obviously a heavy tourist community. International tourism has subsided during COVID, we see that starting to tick up a domestic tourism seems to have almost fully replaced that. And it does feel like my commutes a little bit longer now. So I think the office population, the daytime population is improving here in Santa Monica incrementally. If you look at our project in Santa Monica, relative to the balance, which is Third Street, just do north of it we're able to privately secure privately maintain our project and a little bit of a different fashion than, say, Third Street Promenade. So I think that is deemed to be a significant advantage as well. We're pretty excited about the uses ranging from, kind of three to four times a week uses with fitness to co-working. And those two, by the way, of course, interplay with each other perfectly, very synergistic. And then lastly, we're very excited about the destination entertainment use. And we will provide you more details on those as soon as we can once those leases are fully negotiated. But it's really highly coveted real estate is the fundamental underpinning there.

Well, I think Scott, you alluded to this earlier, competition for space. And this is a perfect example of where we had more interest than we had available space. And while our goal was to come up with the perfect mix, for the property, to generate footsteps to Santa Monica place, we had the luxury of more interest than we had space. And that by definition would drive rate and I think that's why you're seeing some of the higher returns there.

Yeah, great point. I mean, went through multiple iterations. Asians have laying that out with a variety of different uses. So again, competition creates rent.

Got it? Okay. Thank you.

And we will now move to a question from [indiscernible] with Truist.

Thank you. Good morning. Just a couple quick questions on the balance sheet. I noticed in your debt disclosure, you talked about the Washington Square Mall and Santa Monica being potentially refinance this month. Looking at the SOFR and the spread, Washington Square Mall at a 4% of spread Santa Monica 1.5%. Just curious, I know you don't want to go into too much detail. But just those are two high quality malls, like a different spread. And if I remember correctly, Washington Square was plus $1,500 square foot sales mall. Curious if that's somewhat indicative of what we can expect on a pricing perspective for some of your other future refinancings. Thank you.

Yeah, good afternoon. Yeah, I really can't comment much further at all on Washington Square and Santa Monica. And the unique differences between each. The debt markets some of the lenders do view these transactions as effectively new money going out. So they price it contemporaneously with where they view things are at. I just can't get into the dynamics of each though. On balance, so we do feel good about the execution, which is again, 280 over SOFR. But you can't look at one deal and broadcast that over the entire population. What we're certainly aware of is every deal is unique, and every deal is going to arrive at different terms.

Okay. Just one question on the Santa Monica loan, is that price at all benefiting from like an option type of agreement that you had previously?

So the maturity on the Santa Monica loan is December of 2022.

Okay, and just last question, Scott. Was there any benefit from the conversion of cash base tendency to grow this quarter?

Very little, you kind of see it a little bit in our in our bad debts, which were marginally positive, less than a million bucks. So you'll see a little bit of it there, but it's not significant.

Okay, thank you, guys.

Thank you.

And we'll now hear from Craig Mailman with Citi.

All right, I'm just kind of curious looking at the 2023 debt maturity schedule. Any update on where we are at Green Acre and Scottsdale? In the process there?

Yeah, we are in the market. Those are two very unique assets. Green Acres, is one of our very few billion dollar campuses, which generates a $1 billion of annual sales revenue across the board. So it's everything from major big box national retailers household names to grocery to traditional mall uses. So it's a bit unique in terms of its makeup and its flavor and Scottsdale Fashion Square is a top 10 asset in the United States. We have a huge redevelopment under its belt, luxury, momentum and more to come. So those are two unique assets that we are in the market on right now. So we'll continue to report over the next few months our progress on those two.

Do you think those will be extension similar to recent deals? Or would lenders be kind of open to refinance kind of rolled that?

Yeah, again, we're in the market right now, which means I think they'll be attractive refinance candidates, because of the unique nature of them. And I think we'll have other refinance candidates as 2023 rolls on.

Okay, and then just one quick one on the landfill gains that got delayed, is that under contract and just the timing got pushed out? Or is that sort of a prospective placeholder in '22 guidance that you guys are now just pushing out in the transaction market?

It's a specific deal center contract. Those deals sometimes take a little time to come to fruition, including getting entitlements in place to provide the uses that are the buyer is developing for. So it's just a matter of timing.

Okay, great. Thank you. Sure.

Our next question comes from Haendel St. Just with Mizuho.

Hi, this is [indiscernible] and in line Haendel. Hope you guys are doing well. I had a follow up on leasing spreads. Does denominator include a large portion of COVID adjusted leases were lower base rents for exchange for lower break points for on percentage rents. And for your leases sign now, and going forward, have you guys reverted back to a traditional lease structure?

Yeah, the population is everything that's expired in the last 12 months. That's the comparison point, versus everything that we've signed in the last 12 months. So yeah, it's very, very possible that some of those pre-COVID deals are reflected in that number. And that will continue to be the case. We've been saying for a bit of time that as we continue to convert those deals, which, way back when we had a lower fixed rent element and a heavier variable element, as we convert those. We'll get a stronger rent structure with fixed rents, in annual increases net will be the case. So there's a bit of that in the spreads. We can't quantify that for you. But there's a bit of that. We're very much leasing on a normal basis right now, which is fixed minimum rent with annual increases, fixed common area maintenance with annual increases that are slightly higher than the base rent, and tax recovery. So their triple net deals?

Got it. Thanks. Thanks for the caller. Just one more here. You had strong sales in the quarter sales per foot? How much of this would you attribute to higher foot traffic? How is the foot traffic trended year-over-year? And would you say that is foot traffic driving the strong sales or is it inflation?

Yes. foot traffic has been really consistent this year, range bound, and I'd say between 95% and 100%. Foot traffic has been very consistent relative to pre-COVID levels. We have a combination of tenants that are performing very well, luxury has certainly been a category that's performed well, for us. You've got just generally a better healthy sales environment, as we look at all of our categories. I'd say footwear is the only category that's mildly negative, and everything else is trending positive. So it's really kind of an across the board thing, but our traffic is held up well, and, there certainly is some impact of inflation in there as well.

Got it. Thanks for the color, guys.

Thank you.

And we have a question from Ronald Kamden with Morgan Stanley.

Hey, just a quick one and apologies if you addressed this already. But previously, you commented on sort of the leasing activity coming in slightly ahead of sort of 2021 levels and potentially getting back to pre-COVID occupancy by the end of '23. Just sort of curious as you're sort of seeing the activity today. Is that still make sense? And maybe it's not better or worse than you expected at this point?

Yeah, it still makes sense, based on the deal flow that we're seeing today. Doug did provide some commentary that we are not hearing from retailers that they intend to slow or stop their new store expansions. And so if we still think that the view is supportable, that will get continue to gain occupancy and, and we'll see continued NOI growth into next year in the year beyond. So I think that holds does anything different?

No, I have nothing to add to that. As I said before, we have a very healthy retailer environment out there. And I talked to the retailers all the time. And, we're not seeing the fallout that you might think, given what's going on in the economy.

Yeah, just to underscore that, I mean, bricks and mortars are in a great spot. And I think that's a theme that you've heard from our sector over the last few days.

Great. And then the last one, if I may, just on the financing side. I guess you guys are working through some multi-year extension. Any sort of idea where rates are indicated, or things are looking to shake out in terms of debt cost at this point on those deals, Thanks.

Yeah, I would say Ron, on balance, you're talking about secured financings, you're going to be in the low to mid sixes, you're going to have some that are better, you're going to have some that are worse, it's hard to figure out where that stands on a weighted average basis. Could be more towards the low end of the sixes. But that's, that's probably a reasonable outcome on average.

Great, thanks so much.

Thank you.

And ladies and gentlemen, that's all the time we have for questions today. I'll turn the call back over to Scott for closing remarks.

Well, thank you, everybody for joining us. We continue to enjoy strong operating results during the year and strong demand from our tenant community. We look forward to seeing many of you in person or virtually during our upcoming investor day which is in Scottsdale, That's on November 29 through November 30. Thank you for joining us today.

And with that, ladies and gentlemen, this does conclude your conference for today. Thank you for your participation. And you may now disconnect.