Earnings Call Transcript - MAC Q4 2020

Jean Wood, Vice President of Investor Relations

Thank you for joining us on our fourth quarter 2020 earnings call. During the course of this call, we will be making 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 press release and our SEC filings, including the adverse impact of the novel coronavirus COVID-19 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 the SEC, which are posted in the Investors section of the Company's website at macerich.com. Joining us today are Tom O'Hern, Chief Executive Officer; Scott Kingsmore, Senior Executive Vice President and Chief Financial Officer; and Doug Healey, Senior Executive Vice President of Leasing. And with that, I would like to turn the call over to Tom.

Tom O'Hern, CEO

Thank you, Jean. And thank all of you for joining us today as we continue to navigate through these challenging times. 2020 was an extraordinarily tough year in so many ways for all of us. Once COVID stormed the U.S. in mid-March, all of our centers closed and our tenants quit payment. We quickly adopted significant measures to conserve liquidity, much as we had done during the great financial crisis. We persevered through those dark days in the second quarter. We got most of our centers opened by mid-summer and all of our centers opened by early October with no further closures. It was a herculean effort by the Macerich team, and I'm very proud of their efforts. There were not a lot of good days, but we battled through it. Rent collections, for example, during April and May were 35%, that grew to 80% in the third quarter. As of today, the fourth quarter rent collections were at 92% and rising by the week. 2020 was a year of crisis, but we made it through the year, and things are improving by the week. The COVID daily infection cases are down significantly throughout our markets. The positivity rate is dropping, and hospitalizations are down significantly compared to a month ago. We now have two vaccines in distribution with a third on the way. Currently, 10% of the U.S. population has had at least one dose of the vaccine, and distribution is accelerating. Not that the Covid battle is over, but it is much, much better than it was even three months ago; some level of normality is returning, including restaurant dining and going to the mall. Our shoppers have returned. In fact, December sales were approaching 85% of pre-COVID levels even in the midst of a surge in COVID cases. Gradually, restrictions on capacity and indoor dining are being lifted, and that will help both our traffic and our sales. COVID, among other things, had the impact of accelerating bankruptcies of dozens of retailers that otherwise likely would have gone into bankruptcy over the next several years. But instead, they were accelerated into 2020. The result is our occupancy level is at 90%, which is the lowest since the Great Financial Crisis. However, within two years post-GFC, we were back to full occupancy. We expect a similar recovery post-COVID. We have worked through most of the bankruptcies from 2020. Fortunately, the vast majority of those have been reorganizations, not liquidations. The biggest bankruptcy of the year was JCPenney. Of our 27 JCPenney locations, only two locations closed, Green Acres and Kings Plaza, both in New York. I'm happy to report that we have leases out for signature on both of those locations and should be able to make announcements in the very near future. As we say goodbye to 2020 and gladly watch it in the rearview mirror, we are very optimistic about 2021 and the recovery of our business. Although 2021 is going to be a transitional year, it will be much better than 2020 in almost every respect. Most of the tenant COVID workout agreements will have some impact on us in 2021, both in terms of rent relief as well as higher than normal vacancy rates. That being said, we expect to see occupancy gains in the second half of the year in a gradually improving leasing environment. Rent collections have improved significantly, up from a September collection rate of 77% and are now above 90% in the fourth quarter. January is also trending above 90%. We have come to agreement on COVID workouts with over 93% of our top 200 tenants. Leasing activity picked up significantly in the fourth quarter. Volumes, in fact, were 90% of pre-COVID levels of the fourth quarter of 2019. We even have a variety of date attractions that are planning to open this year, including, model and the Museum of Ice Cream. Many of our replacement tenants in the former Sears locations will also open in 2021. Our 2021 lease expirations are 60% leased today, with the majority of the balance in the letter of intent stage. Looking at the balance sheet, most of our 2021 loan maturities have been successfully extended, and negotiations are well underway to renew our line of credit, which matures in the third quarter. Retailer traffic and sales continue to pick up with traffic at 80% of pre-COVID traffic and sales, on average, 85% of pre-COVID levels. We expect improvements in both traffic and sales as we progress through 2021. The cost reductions and cost containment measures we adopted when COVID hit will be continued into 2021. Lastly, we have been recognized as a leader in sustainability and have achieved the number one Global Real Estate Sustainability Benchmark ranking in the North American retail sector. That makes six straight years for that honor. With that, I'll turn it over to Scott.

Scott Kingsmore, CFO

Thank you, Tom. Highlights of the financial results for the quarter are as follows: funds from operations for the fourth quarter was $0.45, and it's down from the fourth quarter of 2019 at $0.98 per share. Same-center net operating income for the quarter was down 33% and year-to-date is down 22%. As you will see, these results are unchanged relative to what was filed last week on February 1. Changes between the fourth quarter of 2020 versus the fourth quarter of 2019 were driven primarily by the continuing impact of COVID-19 and are as follows: the figures I'm citing are at the Company's pro rata share. One, $38 million decline from COVID-related rent abatements across permanent and temporary leasing revenue line items. Fourth quarter abatements were elevated relative to the third quarter abatements of $28 million and this was largely due to the protracted summer closures of several large properties in New York and California, leading to delayed negotiations with tenants at those properties. Cumulatively for the year, in 2020, we granted $56 million of abatements. Number two, $19 million of COVID-related decline in common area and ancillary revenues including specialty leasing and temporary tenant revenue, percentage rent revenue, business development revenue, and parking revenue. These declines were generally a continuation of what we experienced in the second and third quarters, exacerbated in the fourth quarter due to the seasonal nature of these income types. However, looking forward into 2021, we do anticipate growth in each of these more transient income line items, assuming conditions at our properties improve, as we do expect. In total, for all of 2020, these line items were down $43 million. Number three, a general top line revenue decrease totaling approximately $12 million, driven primarily by COVID-related occupancy decreases. Number four, $6 million bad debt expense in the form of reversals of lease revenue for tenants on a cash basis per GAAP, that was about $5 million and then bad debt expenses of about $1 million. As a result of the COVID-related disruption to our business, the bad debt expense line item was significantly elevated in 2020 at $62 million. This was a $52 million increase versus $10 million of bad debt expense in 2019. Number five, there was an $8 million decrease from loss or gain on undepreciated asset sales or write-downs on consolidated assets, which included a $5 million impairment charge in the fourth quarter of 2020 for undeveloped land that is currently under contract for sale and is expected to close in 2021. Lastly, offsetting these items, straight-line rent increased $19 million in the fourth quarter, driven by applying straight-line rent averaging to all rental assistance lease amendments executed during the fourth quarter. To summarize some of the major impacts of COVID that impacted real estate NOI in 2020, all figures are at the Company's share. We highlight the following: First, $56 million of one-time retroactive abatements of rent; these concessions were granted to local business owners to secure near-term lease expirations and to achieve other landlord-favorable concessions. Second, $43 million of decline in common area and ancillary revenues, percentage rent, and parking revenues. Again, these are transient line items, and we expect those to bounce back. Third, we wrote off an extra $52 million of bad debt expense relative to 2019. Additionally, we had another $11 million of rent that was reversed for tenants accounted for on a cash basis. Collectively, that's roughly $162 million of pandemic-driven NOI decline just among those three categories. This morning, we provided 2021 earnings guidance, and I direct you to the Company's Form 8-K supplemental financial information for more details on guidance assumptions. 2021 FFO is estimated in the range of $2.05 per share to $2.25 per share. While certain guidance assumptions are provided within our supplemental filing, I would like to provide some further details. This guidance range assumes no further government-mandated shutdowns of our retail properties. We're not providing same-center NOI guidance at this time, given the continued expected impacts of COVID-19 in early 2021, but we do anticipate growth in same-center NOI starting in the third quarter of 2021. At this time, we expect strong double-digit growth in the second half of 2021. Anticipated progress on vaccination efforts, continued fiscal stimulus from the federal government, significant pent-up demand from our market consumers, and softer comparables in the last half of the year inform this thinking for ramped-up growth later in 2021. In terms of FFO by quarter, we estimate the following cadence: 21% in the first quarter, 24% in the second quarter, 25% in the third quarter, and the balance 30% in the last quarter. We view 2021 as a transitional year as we pivot away from the disruption caused by COVID during 2020. We expect that the first quarter of 2021 will include lingering effects of COVID, including retroactive rent adjustments relating to 2020. While we're not giving forward-looking guidance into 2022 and future years, we remain optimistic about the financial tailwinds that may ensue as our country heals from the pandemic. Trough occupancy appears to have been contained to roughly 88%, which we estimate will be at the end of the first quarter. We believe there's an opportunity to grow occupancy later in the year and certainly over the coming years, which should fuel future operating growth. More details of the guidance assumptions are included in the Company's Form 8-K supplemental financial information. Now, on to the balance sheet, as addressed in detail within our recent filings, over the last few months, we have successfully extended four secured mortgage loans totaling over $660 million for extension terms ranging up to three years. Those loans included mortgages on Danbury Fair, Fashion Outlets of Niagara, FlatIron Crossing, and Green Acres Mall. We anticipate securing similar extensions on remaining mortgages that mature in 2021, including from Green Acres Commons, for which we are currently working on a two-year extension. In November, the Company financed the previously unencumbered Tysons VITA. This is the residential tower at Tysons Corner. The loan is a $95 million mortgage loan, bearing fixed interest at 3.3% for 10 years. At closing, this generated $45 million of incremental liquidity to the Company, with some incremental funding capacity remaining under this line item. As mentioned in our recent filings, we continue to make progress on the renewal of our line of credit. Cash on hand at year-end was $555 million. As Tom previously noted, collection efforts are now over 90%. This improved collection environment is a direct byproduct of the extensive efforts by a vast many within the Company to negotiate thousands of agreements with our retailers. We are extremely proud of those efforts, as Tom has already noted. As a result, we anticipate further improvement in collections into 2021. Additionally, we estimate the collections of both contractually deferred and delayed rent collections in 2021 that relate to 2020 bill rents in the approximate range of $60 million to $75 million. During 2021, we expect to generate over $200 million of cash flow from operations, after recurring operating and leasing capital expenditures and after dividends. This assumption does not include any potential capital generated from dispositions, refinancings, or issuances of common equity. This operating cash flow surplus will be used to delever the balance sheet and to fund our development pipeline. For development, we expect to spend less than $100 million in 2021, excluding further development expenditures on One Westside, which recall, is independently funded by a construction loan facility. With that, I'll now turn it over to Doug to discuss the leasing environment.

Doug Healey, Senior Executive Vice President of Leasing

Thanks, Scott. In the fourth quarter, much of our focus was working with retailers to secure rental payments and improve our collection rates. Looking at our top 200 rent-paying national retailers, we now have commitments with 176, which is up considerably from last quarter. More importantly, we have received payments or we've worked out deals totaling 93% of the total rent these top 200 pay. As a result, our collections continue to improve. As of today, collection rates increased to 89% in the third quarter and 92% in the fourth quarter of 2020. Occupancy at the end of the third quarter was 89.7%, down 110 basis points from last quarter and down 4.3% from a year ago. This is primarily due to store closures from the unprecedented number of bankruptcies and early abandonments that occurred throughout 2020. Temporary occupancy was 5.9%, down 50 basis points from this time last year. Trailing 12-month leasing spreads were negative 3.6%, down from 4.9% last quarter and down from 4.7% in 2019. Average rent for the portfolio was $61.87 as of December 31, 2020, representing a 1.3% increase compared to $61.06 as of December 31, 2019, and a 0.7% decrease compared to $62.29 at September 30, 2020. 2021 lease expirations continue to be an important focal point. To date, we have commitments on 60% of our expiring square footage, with another 40% or the balance in the letter of intent stage, disregarding tenants who have closed or indicated they intend to close. In the fourth quarter, we signed 217 leases for 900,000 square feet. This represents 80% more leases and 1.5 times the square footage when compared to the third quarter of 2020. It also represents 90% of the square footage that we signed in the fourth quarter of 2019. Noteworthy leases signed in the fourth quarter include Catalana at Danbury Fair, Louis Vuitton at Scottsdale Fashion Square, Swarovski at La Encantada and Los Cerritos, Madison Reed at San Tan, as well as four renewals with Sephora at Eastland, FlatIron Crossing, Vintage Bar, and Pacific View, along with a five-store package with Charming Charlie's at Green Acres, FlatIron, Fresno, La Encantada, and Pacific View. Turning to openings in the fourth quarter, we opened 59 new tenants in 236,000 square feet, resulting in a total annual rent of over $10 million. Notable openings include Bulgari and Rolex at Scottsdale, Free People at La Encantada, Rush at Los Cerritos, TecoVas at Kierland Commons, and J.A. Henckels at Fashion Outlets of Chicago. In the international arena, we opened another three stores with Lovisa at Deptford Mall, Queens Center and Kings Plaza, along with Quay Australia at Los Cerritos. In the large-format category, we opened DICK's Sporting Goods at Vintage and Round One at Deptford Mall, both in former Sears locations. The digitally native and emerging brands continue to open brick-and-mortar stores. In the fourth quarter, we opened Amazon Forestar in Madison, 29th Street, Amazon Books at Los Cerritos, and Purple at Tysons Corner. Now looking into 2021 and our pipeline, it remains strong, vibrant, and exciting. We already have signed leases totaling approximately 494,000 square feet, all scheduled to open in 2021, and this list continues to grow. Later this year, we look forward to opening a two-level, 11,000 square-foot flagship Dior store at Scottsdale Fashion Square, the first and only Dior in Arizona. Joining Dior will be Louis Vuitton. Further marketing Scottsdale Fashion Square is the true luxury destination in the market and state. Our prime market is well under construction and will open its highly anticipated 50,000 square foot store at Fashion District Philadelphia in September of this year. Other impactful openings to look forward to this year include Dave & Buster's at Vintage Faire, Kids Empire and Madison Reed at San Tan, Tyra Banks' Modelland at Santa Monica Place, XLanes or Fresno Fashion Fair, San Bernardino County offices at Inland Center, Bourbon and Bones at San Tan Village, Coopers Hawk Winery at Boulevard Shops, Shake Shack at 29th Street, Uncle Julio's at South Plains and Verity Village of Corte Madera, Lucid Motors at Tysons Corner and Scottsdale Fashion Square, and Marine Layer at Broadway Plaza. And that's just to name a few. When looking at deals still in lease negotiations, we have yet another 435,000 square feet to open in 2021, and this number grows daily. I'm often asked during this unprecedented time of bankruptcies and store closures who is left to fill this space. It's essential to remember that this pandemic only accelerated the demise of those retailers who were already struggling pre-pandemic. However, what's not talked about are those retailers who were strong going into the pandemic and actually came out stronger on the other end. They had great products and offered great value or had robust omni-channel businesses that used their online strategies to increase customer awareness and acquisition. Think Lululemon, Dick's Sporting Goods, Target, Peloton, Blue Nile, and many others, or strong traditional retailers with significant open-to-buys looking to capitalize on great new available space in some of the best centers in the country. I'm talking about retailers such as Aerie, Madewell, Free People, Levi's, Sephora, Arhaus, Aritzia, Old Navy, and Athleta, to name a few. We've also engaged in brand extensions such as offline by American Eagle, Gilly Hicks by Abercrombie and Fitch, or DICK's Sporting Goods' experiential concept, and new and emerging brands like L Yoga, Faherty, Psycho Bunny, and Tonal; we are deep in discussions with all these retailers and many more. However, we know our shoppers want more than just traditional retail, which is why we continue to focus on bringing alternative uses to our campuses and not just retail. Uses like office, residential, hospitality, medical, wellness, education, fitness, grocery, service, and even storage; this is why we continue to refer to our properties as town centers, because that's what they are becoming. They're transformational and will be something for everyone. And they have to be because that's what our modern-day shopper wants. Now I'll turn it over to the operator to open up the call for Q&A.

Operator, Operator

Thank you. We will now take the first question from Samir Khanal from Evercore. Please go ahead.

Samir Khanal, Analyst

So Scott, thank you for the color on when occupancy will trough. I think you mentioned 88%. But I guess, how should we think about the pickup or the ramp-up in occupancy maybe into 2022 from a modeling perspective with all the leasing you're doing?

Scott Kingsmore, CFO

Samir, well, again, we're not giving guidance into 2022. But just I think Doug provided a pretty good sense for the return of leasing demand. We have almost 500,000 square feet that is already executed to open in 2021. We have well over 400,000 square feet that is in our shadow pipeline, deals in documentation, deals in negotiation. That's going to spill into 2021 as well as 2022. We've been pretty clear in the past that we've got some high-quality space that has not been on the market for quite some time, given the decline in occupancy. These brands, both legacy and new and emerging, are very interested in taking high quality space in high-quality markets, so I think we'll see some decent pickup.

Tom O'Hern, CEO

Samir, to give you a frame of reference, the last time we had an occupancy level this low was the end of 2009 going into 2010 after the Great Financial Crisis. It took about two years before we bounced back to 94%-95% occupancy level. It seems very similar this time around, and it will take a couple of years to fully recover and for that space to be absorbed. We have good demand. There are many new retail categories, less apparel, and more experiential offers, but it's going to take a few quarters for sure.

Samir Khanal, Analyst

Got it. And I guess as a follow-up. And Scott, when I look at your receivables, it's about $240 million on the balance sheet. I understand that's been built up over the last few quarters. There's always a normal strength to receivables you carry on the balance sheet even before COVID. But that bad debt expense you're guiding, there was only about $10 million. I'm wondering, what are you seeing in terms of retail health to give you confidence that, that number is the appropriate amount for the year? Just trying to make sure I'm not missing anything here.

Scott Kingsmore, CFO

Sure. Well, we do have a view into the economies recovering and our centers opening. If anything, over the last two months, we have not seen further restrictions. We've seen a loosening of the mandated closures and mandated occupancy restrictions, including by use, like with restaurants. We see a healthier environment, which will certainly pick up traffic and ultimately pick up sales. We’ve built in reserves for uncertainty, and I’ll just say that we are carrying more than we typically would have carried, considering the environment today.

Operator, Operator

We'll now take the next question from Floris Van Dijkum at Compass Point. Please go ahead.

Floris Van Dijkum, Analyst

Thank you for taking my question. I noticed that Samir was a bit more detailed about the growth of NOI in 2021. Scott or Tom, can you share your expectations for NOI? What kind of recovery should we anticipate in 2021 considering the challenges you mentioned?

Tom O'Hern, CEO

Floris, yes, it's really going to be two halves of the year that look significantly different. First quarter of 2021 is still going to have the impact of some COVID concessions and abatements that will compare against a pretty healthy first quarter of 2020. We expect the first half of the year to be down in terms of same-center. But as Scott said, the second half of the year, we think will be very strong, and we'll probably be putting up close to double-digit same-center growth.

Floris Van Dijkum, Analyst

Are we discussing an overall NOI growth of 3% to 4% for the year? What range are you considering?

Scott Kingsmore, CFO

Yes, Floris, we're not getting specificity for the entire year. I certainly hope to be in a position to do that as the year progresses, but we do not think at this point it’s the right thing to do. The first quarter is going to have a lot of volatility in it. We will be comping against COVID over the coming weeks, leading to the first quarter being a difficult comp to the first quarter of 2019. Once we get clear of that, we should hopefully be in position to provide more concrete same-center guidance or NOI guidance for the balance of the year.

Floris Van Dijkum, Analyst

Great. Could you walk us through the refinancing of the line? We've had some offline discussions about it. Can you share what people should expect regarding this process? Will it require you to pledge additional unencumbered assets, and how much flexibility do you have in those discussions? What potential cost impact should we anticipate, and is this already reflected in your guidance, particularly if you expect to pay a higher interest cost in the second half?

Tom O'Hern, CEO

Floris, we're in deep negotiations with our lending group. These are lenders we've done business with for the last 25 years. We're making great progress with them. We may end up securing a line that, currently, it's unsecured, but we have quite a few unencumbered assets, so that's a possibility going forward. Other than that, we're not giving any more color than that due to the negotiations.

Operator, Operator

We will now take the next question from Mike Mueller from JP Morgan. Please go ahead.

Mike Mueller, Analyst

Two quick ones here. First, can you give us a sense of what the rent spreads are on your '21 leasing activity and how they compare to last year's down 4%? And second question is on straight-line rental income. What's some more normalized go-forward run rate?

Tom O'Hern, CEO

Doug, do you want to take the first part of that?

Doug Healey, Senior Executive Vice President of Leasing

Yes, sure. With regard to the lease executions, I talked about in my prepared remarks. I don't believe that the spreads have improved. I expect that in the short term, pressure on spreads will continue as we focus on occupancy. We’ve talked about that. Last quarter and this quarter, occupancy is paramount. Once we take supply off the table and demand returns, I think we'll start to see the spreads increase. But for the short term, there will be some compression.

Scott Kingsmore, CFO

Mike, on the straight-line rent question, it's going to be elevated in the first part of the year, consistent with rental concession agreements we continue to execute with our tenants. We cannot recognize those rental concessions until we book the arrangement, and when we sign that deal it inversely impacts straight-line rent. So we're going to see straight-line rent elevated for the first part of the year. We're not providing straight-line guidance just due to uncertainties about the flow of those deals, but we expect it to return to normal in 2022.

Operator, Operator

We'll now take the next question from Todd Thomas at KeyBanc Capital Markets. Please go ahead.

Ravi Vaidya, Analyst

This is Ravi Vaidya on the line for Todd Thomas. The stock has been a bit volatile over the last couple of weeks. Regarding the ATM program being recently filed, how should we think about your desire to issue equity at current stock levels?

Tom O'Hern, CEO

Yes, we did file for an ATM. If we use the ATM, we'll report on that quarterly in our 10-Qs. It's just a periodic decision that the Company and the Board will make. Should we see a stock price we like, we would consider it. It's just a tool we have available.

Ravi Vaidya, Analyst

Okay. And just one more here. How do you think about dispositions as a source of capital? Is there interest in selling one of your larger assets to raise capital to delever? And what’s the market for that like? We haven't seen a lot of trades for individual assets yet?

Tom O'Hern, CEO

You're right, there haven't been a lot of trades. There's always a fair amount of capital out there, and there's interest. I wouldn't be surprised to see us transact a little bit this year. We don't have any of that in our guidance, and we can't count on it too heavily, but it's certainly a possibility this year.

Operator, Operator

We'll now take the next question from Caitlin Burrows from Goldman Sachs. Please go ahead.

Caitlin Burrows, Analyst

Just following up on some of the previous questions. You disclosed earlier in the month that negotiations are ongoing for recasting the credit facility. It could include a lower lending commitment and required securities. If you need to reduce your borrowings to recast it, how do you plan to fund that pay down, given where the line of credit is today?

Scott Kingsmore, CFO

Well, Caitlin, we've got about $550 million of cash on the balance sheet. I don't think reducing that line a bit is going to be an issue at all. We have plenty of liquidity for that.

Caitlin Burrows, Analyst

Okay. Considering the current leverage and the EBITDA growth outlook for 2021, what is your interest or urgency in reducing leverage this year? How do you plan to achieve that?

Tom O'Hern, CEO

Well, you can’t really look at debt to EBITDA today due to what has happened with EBITDA. You need to look forward to see where it's going to go. We plan to generate a significant amount of cash after debt service and dividends. I expect we will probably use most of that excess cash to reduce our leverage.

Operator, Operator

We'll now take the next question from Alexander Goldfarb at Piper Sandler. Please go ahead.

Alexander Goldfarb, Analyst

So just bringing around some Caitlin's questions. Two things for me. First, on the mortgages that you are extending and renegotiating. Are there any cash restrictions, whereby the lenders are saying that any excess cash above the CapEx needs to go to debt pay down before it can do anything else? Are there any cash flow restrictions by maybe those mortgage extensions or refinancings?

Tom O'Hern, CEO

It would be atypical for us. In some cases, there are minor restrictions, but we've generally been able to execute these extensions from one to three years with very little or no re-margin at closing; it is not typical to have those situations.

Alexander Goldfarb, Analyst

Given your comments on the ATM, it seems you haven't utilized it and are cautious about issuing equity. If that's true, and considering the dividend taxable requirements from the last two quarters, wouldn't reducing the dividend to the minimum provide you with an additional source of capital, possibly around $80 million or $90 million? If you aren't planning to issue equity soon, wouldn't that be a good option to assist with refinancing the upcoming maturities?

Tom O'Hern, CEO

Yes, Alex, I'm not sure you got a clear view on the tax side. It's a good point, and we cut to the minimum to meet the tax requirement this year. It's a Board decision, we're not giving guidance on the dividend per se. But from a tax standpoint, we don't expect a big change. We cut this year to the minimum in the second half of the year, and that's probably something we'll consider in 2021 as well.

Alexander Goldfarb, Analyst

I was just going off of the tax declaration that you guys had where $0.01 was taxable, and the other $0.14 was not. That's what I was basing it on.

Tom O'Hern, CEO

Yes, but you've got to look at the full year; you can’t just look at one quarter.

Operator, Operator

We'll now take the next question from Michael Bilerman at Citi. Please go ahead.

Michael Bilerman, Analyst

Tom or Scott, can you provide the current unencumbered asset pool, either in terms of depreciated book value or perhaps an annualized NOI? I’m looking to understand what the potential unencumbered borrowing base might be.

Tom O'Hern, CEO

We have about 25 assets of various sizes that are unencumbered. I don't have the NOI on that specifically, and we probably wouldn't disclose it anyway, but there are a significant number of unencumbered assets. You can match that up against the property schedule.

Michael Bilerman, Analyst

Yes, I’m just trying to get a sense of assets of all sizes and types. Just to try to determine a rough goalpost, just to better understand a borrowing basis, whether it's $1 billion, $2 billion, $1.5 billion under, just some guidance in terms of mortgage value for those assets?

Tom O'Hern, CEO

That unencumbered pool is significant enough to support our existing line of credit at $1.5 billion.

Michael Bilerman, Analyst

And then just related to the ATM. Can you walk through a little bit? It's not a tool that you had put in place previously. What held you back before from having an ATM in your toolkit? Because I assume that Wednesday, when your stock doubled, probably would have been a decision you may have pulled, I’m not sure. Can you just talk about the decision of not having that previously and now putting it in place?

Tom O'Hern, CEO

We've had it before. When the ATM expired last time, we didn't like where our share price was, so we chose not to renew it. You can get one put in place quickly. We didn’t anticipate the spike related to GameStop, and it got us thinking about the ATM again. It’s a good tool, we might as well have it back on the shelf.

Operator, Operator

We'll now take the next question from Greg McGinniss from Scotiabank. Please go ahead.

Greg McGinniss, Analyst

Scott, I appreciate clarity on the Q4 rent abatements and why they were higher than Q3. Could you tell us how much actually applied to Q4 as we try to create a go-forward billable run rate to model off?

Scott Kingsmore, CFO

I would say probably less than 3% to 5%. This relates to retroactive periods, primarily from the second quarter. For those properties in California and New York, the abatement extended for a longer period since our retailers weren't able to operate for six months. Very little of that pertains to the fourth quarter.

Greg McGinniss, Analyst

Okay, and then for the second question. On the leasing volumes, I appreciate the potential for the 800,000 square feet plus at this point. Just hoping you could provide more context to help us understand the financial benefit from those leases. Could you provide the total Macerich-owned GLA, and how much of that demand has been reconsolidated versus unconsolidated centers?

Scott Kingsmore, CFO

We don't have a breakdown of that between consolidated and unconsolidated. Our GLA is roughly 21 million, 22 million or so. So that 800,000, if all of it were to come to fruition, represents 350 to 400 basis points of occupancy. Doug quoted a couple of numbers. He cited just under 500,000 square feet that we expect to come online as new deals in 2021, and the rest of it, over 400,000 square feet, will be things that pop online later this year and into 2022.

Operator, Operator

We'll now take the next question from Floris Van Dijkum at Compass Point. Please proceed.

Floris Van Dijkum, Analyst

A follow-up question, but I think one of the fears of some investors, I know that Samir was explicit in terms of talking about its NOI in 2021 growing. Is there any color you can give us, Scott or Tom, on what your expectations are for NOI? How much of a bounce back should people expect in 2021, given some of the headwinds you're talking about?

Tom O'Hern, CEO

We are optimistic about the financial tailwinds due to structural improvements in our business. We expect NOI to recover significantly in the second half of 2021. That's our perspective at this point.

Operator, Operator

That concludes today's questions-and-answer session. Mr. Tom O'Hern, I'd like to turn the conference back to you, sir.

Tom O'Hern, CEO

Katherine, thank you. Thank you all for joining us today. Be well, stay positive, test negative. Hope to see you soon.

Operator, Operator

That concludes today's call. Thank you for your participation. You may now disconnect.