MAC Q3 2025: Leasing Volume Surges 87%, Accelerating Path Forward Execution
Mace Rich’s Q3 illuminated a decisive inflection in leasing momentum, with signed deals up sharply and operational execution tracking ahead of its five-year plan. The company’s rapid progress on its Path Forward Plan, including anchor backfills and disciplined asset sales, is compressing the deleveraging timeline and positioning the portfolio for higher future rents. Management’s tone signaled confidence in exceeding initial targets as leasing velocity and tenant demand remain robust, even amid macro uncertainty.
Summary
- Leasing Velocity Outpaces Plan: Signed lease volume and pipeline metrics are running well ahead of schedule, supporting above-plan rent realization.
- Anchor Redevelopment Drives Traffic: Strategic anchor backfills, including Dick’s House of Sport, are revitalizing centers and boosting tenant mix.
- Balance Sheet Deleveraging Accelerates: Asset sales and disciplined ATM use are compressing leverage toward mid-6x targets, de-risking the capital structure.
Performance Analysis
Mace Rich’s Q3 results showcased a material step-change in operational execution, driven by a surge in leasing activity and disciplined balance sheet management. The company signed 1.5 million square feet of new and renewal leases in the quarter, an 87% increase year over year, bringing the year-to-date total to 5.4 million square feet, up 86%. This leasing surge is translating directly into improved occupancy, with the go-forward portfolio now at 94.3%, up 150 basis points sequentially.
Same-store NOI (Net Operating Income, core property cash flow) for the go-forward portfolio grew 1.7% year over year, but management emphasized that excluding the Forever 21 drag, growth would have exceeded 3%. Leasing spreads, the difference between new and expiring rents, remained positive for the 16th consecutive quarter at 5.9%, underscoring sustained pricing power. The company’s asset disposition program continues to unlock capital, with nearly $1.2 billion in mall sales completed and $1 billion in liquidity available. Net debt to EBITDA has fallen a full turn since the Path Forward Plan’s inception, now at 7.76x, with further deleveraging targeted.
- Leasing Pipeline Expansion: The S&O (signed and outstanding leases, a forward rent indicator) pipeline rose to $99 million, on pace to exceed the $100 million year-end target, and could reach $140 million including Crabtree.
- Anchor Backfill Progress: 25 of 30 targeted anchor spaces are now committed, supporting traffic and merchandising improvements.
- Asset Sale Execution: Major mall and outparcel sales have advanced the $2 billion disposition goal, with $1.2 billion completed and additional sales under contract.
Operational friction from retenanting is expected to fade, positioning the portfolio for stronger NOI growth as new tenants ramp up and higher rents flow through in 2026 and beyond.
Executive Commentary
"During the third quarter, we signed 1.5 million square feet of new and renewal leases, which is an 87% increase from Q3 2024. This brings year-to-date signed leases in 2025 to 5.4 million square feet in the total portfolio, an 86% increase compared to the same period in 2024. That is well ahead of schedule on leasing volume, and we're executing on target for a market net effective rent assumptions used in our five-year plan."
Jack Shea, President and Chief Executive Officer
"We have made substantial progress on the sales and give back component of the plan and have identified a clear path to achieving our $2 billion disposition target. To date, we have completed almost $1.2 billion in mall dispositions... Net debt to EBITDA at the end of the third quarter was 7.76 times, which is a full turn lower than at the outset of the path forward plan."
Dan Swanstrom, Senior Executive Vice President and Chief Financial Officer
Strategic Positioning
1. Leasing Momentum as a Core Value Driver
The surge in signed leases and the robust S&O pipeline are compressing the timeline for occupancy and rent growth, allowing Mace Rich to pull forward value relative to its original five-year plan. The “leasing speedometer,” a proprietary metric tracking revenue completion, hit the 70% 2025 target a year early, with management now projecting 85% by mid-2026. This acceleration is foundational for future NOI growth and supports a more optimistic outlook for 2028 targets.
2. Anchor Redevelopment and Merchandising Upgrade
Releasing and redeveloping anchor spaces is a strategic lever for traffic and rent maximization. With 25 of 30 anchor backfills committed—spanning sporting goods, entertainment, grocery, and fashion—Mace Rich is re-energizing wings that had been drag points. The rollout of Dick’s House of Sport, with nine locations committed, is cited as a “critical component” of both Mace Rich and Dick’s own growth strategies, with early data showing mid-teens percentage traffic lifts post-opening.
3. Portfolio Rationalization and Capital Discipline
The Path Forward Plan’s aggressive asset sale and deleveraging strategy is materially de-risking the balance sheet, with nearly $1.2 billion in mall dispositions closed and additional sales under contract. The company is also using its ATM equity program in a targeted, accretive manner, notably to neutralize leverage from the Crabtree acquisition. Management signaled continued discipline, with future acquisitions only considered if they are demonstrably accretive to 2028 FFO (Funds From Operations, a REIT cash flow metric) targets.
4. Tenant Mix and Demand Resilience
Retailer demand remains robust across categories, with legacy brands reinventing themselves and emerging brands using physical locations to support online growth. The company cited strong activity from brands like Gap, American Eagle (Aerie, Offline), J.Crew, Levi’s (Beyond Yoga), and a cohort of digital-native brands. 16 straight quarters of positive leasing spreads and high renewal commitments (94% for 2025 expirations) underscore the portfolio’s appeal and sector health.
5. Operational Flexibility and Market Readiness
Management is maintaining flexibility to pursue value-creating opportunities, including selective acquisitions like Crabtree, while prioritizing core operational improvements and deleveraging. The improved debt market environment, with recent financings well below 10% interest, provides optionality for both refinancing and growth investment.
Key Considerations
This quarter’s results reflect a business in the midst of a strategic inflection, with operational and financial levers pulling in the same direction to accelerate value realization.
Key Considerations:
- Leasing Execution Surpassing Plan: The pace and quality of new and renewal leases materially exceed internal targets, supporting higher future rent growth.
- Anchor Backfill as a Traffic Catalyst: Strategic anchor redevelopments are revitalizing underperforming wings and enhancing overall center productivity.
- Deleveraging and Asset Sales: Aggressive disposition of non-core assets is compressing leverage and improving capital structure resilience.
- Tenant Mix Upgrades: Increased commitments from both legacy and emerging brands are driving merchandising improvements and supporting higher sales per square foot.
- Operational Friction Fading: Short-term NOI drag from retenanting is expected to reverse as new tenants open and ramp, supporting stronger future earnings growth.
Risks
Execution risk remains around the timing and economics of anchor backfills, as capital costs for tenant allowances, particularly for demand generators like Dick’s House of Sport, can be substantial. Asset sale timing and pricing, especially for non-fortress properties, may be sensitive to broader capital market conditions. Macroeconomic volatility, consumer spending shifts, and potential tariff impacts could affect retailer health and leasing demand, though current tenant activity remains robust.
Forward Outlook
For Q4 2025, Mace Rich expects:
- Continued acceleration in leasing velocity, with the S&O pipeline likely to exceed the $100 million year-end target.
- Further progress on anchor openings and portfolio occupancy improvement as new tenants ramp up.
For full-year 2025, management maintained guidance:
- Completion of $100–150 million in outparcel and land sales, with $130 million already sold or under contract.
- Path Forward Plan FFO midpoint remains at $1.81, with Crabtree expected to add $0.08 accretion.
Management highlighted several factors that will drive results:
- Leasing momentum and rent realization above five-year plan assumptions.
- Disciplined capital allocation and further deleveraging through asset sales and refinancing.
Takeaways
Mace Rich’s Q3 marked a decisive acceleration in strategic execution, with leasing and occupancy gains compressing the timeline for future rent and NOI growth.
- Leasing Surge as a Leading Indicator: The 87% year-over-year increase in signed leases and robust S&O pipeline point to sustained rent growth and occupancy gains heading into 2026.
- Balance Sheet De-risking on Track: $1.2 billion in asset sales and targeted ATM issuance have reduced leverage and increased financial flexibility, supporting future investment and stability.
- Anchor Redevelopment Unlocks Value: Strategic backfills are driving traffic, improving tenant mix, and positioning the portfolio for higher productivity and rent capture as new tenants come online.
Conclusion
Mace Rich’s Q3 results demonstrate a business executing ahead of schedule on its operational and financial objectives, with leasing, occupancy, and balance sheet improvements setting the stage for outsized rent and NOI growth through 2028. The company’s disciplined approach to capital allocation and portfolio management is de-risking the business and positioning it for long-term outperformance.
Industry Read-Through
Mace Rich’s leasing momentum and anchor backfill success signal a broader recovery in Class A mall demand, with both legacy and digital-native brands seeking high-productivity locations. The positive leasing spreads and robust retailer demand challenge the narrative of secular mall decline, at least for top-tier centers. Improved debt market conditions and successful asset sales suggest that capital is returning to high-quality retail real estate, which could support further consolidation and redevelopment across the sector. Investors in retail REITs should watch for similar leasing and occupancy inflections as leading indicators of future NOI growth and capital market receptivity.