Macerich Announces Quarterly Results

08 Feb, 2011, 06:00 ET from The Macerich Company

SANTA MONICA, Calif., Feb. 8, 2011 /PRNewswire/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the quarter ended December 31, 2010 which included total funds from operations ("FFO") diluted of $108.9 million or $.77 per share-diluted, compared to $92.7 million or $.90 per share-diluted for the quarter ended December 31, 2009.  For the year ended December 31, 2010, FFO-diluted was $351.3 million, or $2.66 per share-diluted compared to $344.1 million or $3.70 per share-diluted for the year ended December 31, 2009. Net income available to common stockholders for the quarter ended December 31, 2010 was $23.6 million or $.18 per share-diluted compared to net loss available to common stockholders of $14.4 million or $.18 per share-diluted for the quarter ended December 31, 2009.  For the year ended December 31, 2010, net income available to common stockholders was $25.2 million or $.19 per share-diluted compared to $120.7 million or $1.45 per share-diluted for the year ended December 31, 2009.   The Company's definition of FFO is in accordance with the definition provided by the National Association of Real Estate Investment Trusts ("NAREIT"). A reconciliation of net income to FFO and net income per common share-diluted ("EPS") to FFO per share-diluted is included in the financial tables accompanying this press release.

Recent Highlights  

  • Mall occupancy increased to 93.1%, up from 91.3% at December 31, 2009.
  • Mall total tenant sales increased 5.0% for the quarter compared to the quarter ended December 31, 2009.
  • During the quarter 294,000 square feet of leases were signed.  Releasing spreads were up 13.7% for the quarter.
  • During the quarter, same center net operating income increased by 1.8%.

Commenting on the quarter, Arthur Coppola chairman and chief executive officer of Macerich stated, "The fundamentals of our business continue to improve.  We saw strong retail sales gains again during the fourth quarter.  Mall occupancy continued to improve with a 180 basis point increase for the year.  We have now had four consecutive quarters of same center NOI growth, and we expect that trend to continue in 2011.  We successfully completed a number of very attractive refinancings and continue to benefit from a very strong capital market."

Redevelopment Update

At Pacific View Mall in Ventura, California, Macerich announced three new deals – BevMo!, Staples and Massage Envy which join previously announced Sephora, Trader Joe's and H&M.  BevMo!, Massage Envy and Trader Joe's are scheduled to open in the second quarter, followed by Staples in the third quarter. Macerich began this recycling of retail space on the property's north end in September 2010.

On February 5, 2011, a 79,000-square-foot Forever 21 opened as part of Macerich's phased anchor recycling at Danbury Fair, a 1,292,086 square-foot regional shopping center in Fairfield County, Connecticut. Forever 21 joins Dick's Sporting Goods, which opened in November 2010.

Financing Activity

On December 29, 2010, the Company closed on a $232 million loan on Freehold Raceway Mall.  The loan has a term of seven years with a fixed interest rate of 4.15%.  The loan paid off the previous loan of $157 million.

On February 1, 2011, the Company paid off the $50 million participating mortgage on Chesterfield Town Center.  The loan had an interest rate of 9.1% with a maturity in January 2024. The Company negotiated the early extinguishment of this debt at the principal amount plus $9 million, which included the buyout of the lender's 35% participating interest in any sale proceeds from the asset in excess of the loan amount.  

Earnings Guidance

The Company is issuing 2011 FFO per share guidance in a range from $2.78 to $2.94.  This guidance includes the prepayment of the Chesterfield loan.  The guidance also assumes same center net operating income growth of 1.5% to 2.5% and an occupancy gain of .50%.

 A reconciliation of FFO to EPS follows:

Estimated range for FFO per share:

$2.78  to  $2.94

Less:  real estate depreciation and amortization

$2.40   -   $2.40

Estimated EPS range:

$  .38  to  $  .54

Dividend

On February 2, 2011, the Board of Directors of the Company declared a quarterly cash dividend of $.50 per share of common stock.  The dividend is payable on March 8, 2011 to stockholders of record at the close of business on February 22, 2011.  

Macerich is a fully integrated self-managed and self-administered real estate investment trust, which focuses on the acquisition, leasing, management, development and redevelopment of regional malls throughout the United States. Macerich owns approximately 73 million square feet of gross leaseable area consisting primarily of interests in 71 regional malls. Additional information about Macerich can be obtained from the Company's website at www.macerich.com.

Investor Conference Call

The Company will provide an online Web simulcast and rebroadcast of its quarterly earnings conference call.  The call will be available on The Macerich Company's website at www.macerich.com (Investing Section) and through CCBN at www.earnings.com.  The call begins today, February 8, 2011 at 10:30 AM Pacific Time. To listen to the call, please go to any of these websites at least 15 minutes prior to the call in order to register and download audio software if needed. An online replay at www.macerich.com (Investing Section) will be available for one year after the call.  

The Company will publish a supplemental financial information package which will be available at www.macerich.com in the Investing Section.  It will also be furnished to the SEC as part of a Current Report on Form 8-K.

Note:  This release contains statements that constitute forward-looking statements which can be identified by the use of words, such as  "expects," "anticipates," "assumes," "projects," "estimated" and "scheduled" and similar expressions that do not relate to historical matters. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to vary materially from those anticipated, expected or projected.  Such factors include, among others, general industry, as well as national, regional and local economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of current and prospective tenants, anchor or tenant bankruptcies, closures, mergers or consolidations, lease rates, terms and payments, interest rate fluctuations, availability, terms and cost of financing and operating expenses; adverse changes in the real estate markets including, among other things, competition from other companies, retail formats and technology, risks of real estate development and redevelopment, acquisitions and dispositions; the liquidity of real estate investments, governmental actions and initiatives (including legislative and regulatory changes); environmental and safety requirements; and terrorist activities which could adversely affect all of the above factors.  The reader is directed to the Company's various filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2009, for a discussion of such risks and uncertainties, which discussion is incorporated herein by reference. The Company does not intend, and undertakes no obligation, to update any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events unless required by law to do so.

(See attached tables)

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Results of Operations:

Results before

Impact of

Results after

Discontinued Operations (a)

Discontinued Operations (a)

Discontinued Operations (a)

For the Three Months

For the Three Months

For the Three Months

Ended December 31,

Ended December 31,

Ended December 31,

Unaudited

Unaudited

2010

2009

2010

2009

2010

2009

Minimum rents

$112,052

$113,829

10

($932)

$112,062

$112,897

Percentage rents  

8,454

7,247

-

-

8,454

7,247

Tenant recoveries

63,081

59,338

(4)

(373)

63,077

58,965

Management Companies' revenues

10,028

12,422

-

-

10,028

12,422

Other income

10,270

8,439

(6)

(2)

10,264

8,437

Total revenues

203,885

201,275

0

(1,307)

203,885

199,968

Shopping center and operating  expenses

64,021

59,022

(22)

(282)

63,999

58,740

Management Companies' operating  expenses

21,718

20,602

-

-

21,718

20,602

Income tax benefit

(3,950)

(3,883)

-

-

(3,950)

(3,883)

Depreciation and amortization

64,882

75,656

-

(272)

64,882

75,384

REIT general and administrative expenses

4,999

8,944

-

-

4,999

8,944

Interest expense  

53,507

59,408

-

1

53,507

59,409

Gain on early extinguishment of debt

2,053

15

-

-

2,053

15

(Loss) gain on sale or write down of assets

(77)

(14,965)

-

17,126

(77)

2,161

Co-venture interests (b)

(2,547)

(2,262)

-

-

(2,547)

(2,262)

Equity in income of unconsolidated joint ventures

27,621

18,513

-

-

27,621

18,513

Income (loss) from continuing operations

25,758

(17,173)

22

16,372

25,780

(801)

Discontinued operations:

  Loss on sale or write down of assets

-

-

-

(17,126)

-

(17,126)

  (Loss) income from discontinued operations

-

-

(22)

754

(22)

754

Total loss from discontinued operations

-

-

(22)

(16,372)

(22)

(16,372)

Net income (loss)

25,758

(17,173)

-

-

25,758

(17,173)

Less net income (loss) attributable to noncontrolling interests

2,200

(2,797)

-

-

2,200

(2,797)

Net income (loss) attributable to the Company

23,558

(14,376)

-

-

23,558

(14,376)

Less preferred dividends

-

-

-

-

-

-

Net income (loss) available to common stockholders

$23,558

($14,376)

-

-

$23,558

($14,376)

Average number of shares outstanding - basic

130,301

91,102

130,301

91,102

Average shares outstanding, assuming full conversion of OP Units  (c)

142,031

103,026

142,031

103,026

Average shares outstanding - Funds From Operations ("FFO") - diluted (c)

142,031

103,026

142,031

103,026

Per share income (loss) - diluted before discontinued operations

-

-

$0.18

($0.02)

Net income (loss) per share-basic

$0.18

($0.17)

$0.18

($0.17)

Net income (loss) per share - diluted  (c)

$0.18

($0.18)

$0.18

($0.18)

Dividend declared per share

$0.50

$0.60

$0.50

$0.60

FFO - basic  (c) (d)

$108,921

$92,701

$108,921

$92,701

FFO - diluted (c) (d)

$108,921

$92,701

$108,921

$92,701

FFO per share- basic   (c) (d)

$0.77

$0.90

$0.77

$0.90

FFO per share- diluted  (c) (d)

$0.77

$0.90

$0.77

$0.90

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Results of Operations:

Results before

Impact of

Results after

Discontinued Operations (a)

Discontinued Operations (a)

Discontinued Operations (a)

For the Twelve Months

For the Twelve Months

For the Twelve Months

Ended December 31,

Ended December 31,

Ended December 31,

Unaudited

Unaudited

2010

2009

2010

2009

2010

2009

Minimum rents

$423,151

$484,709

13

($10,448)

$423,164

$474,261

Percentage rents  

18,411

16,643

-

(12)

18,411

16,631

Tenant recoveries

243,303

246,533

(4)

(2,432)

243,299

244,101

Management Companies' revenues

42,895

40,757

-

-

42,895

40,757

Other income

30,800

29,988

(10)

(84)

30,790

29,904

Total revenues

758,560

818,630

(1)

(12,976)

758,559

805,654

Shopping center and operating  expenses

246,066

262,526

(188)

(4,352)

245,878

258,174

Management Companies' operating  expenses

90,414

79,305

-

-

90,414

79,305

Income tax benefit

(9,202)

(4,761)

-

-

(9,202)

(4,761)

Depreciation and amortization

246,812

266,163

-

(4,100)

246,812

262,063

REIT general and administrative expenses

20,703

25,933

-

-

20,703

25,933

Interest expense  

212,818

267,039

-

6

212,818

267,045

Gain on early extinguishment of debt

3,661

29,161

-

-

3,661

29,161

Gain on sale or write down of assets

474

121,766

23

40,171

497

161,937

Co-venture interests (b)

(6,193)

(2,262)

-

-

(6,193)

(2,262)

Equity in income of unconsolidated joint ventures

79,529

68,160

-

-

79,529

68,160

Income from continuing operations

28,420

139,250

210

35,641

28,630

174,891

Discontinued operations:

  Loss on sale or write down of assets

-

-

(23)

(40,171)

(23)

(40,171)

  (Loss) income from discontinued operations

-

-

(187)

4,530

(187)

4,530

Total loss from discontinued operations

-

-

(210)

(35,641)

(210)

(35,641)

Net income

28,420

139,250

-

-

28,420

139,250

Less net income attributable to noncontrolling interests

3,230

18,508

-

-

3,230

18,508

Net income attributable to the Company

25,190

120,742

-

-

25,190

120,742

Less preferred dividends

-

-

-

-

-

-

Net income available to common stockholders

$25,190

$120,742

-

-

$25,190

$120,742

Average number of shares outstanding - basic

120,346

81,226

120,346

81,226

Average shares outstanding, assuming full conversion of OP Units  (c)

132,283

93,010

132,283

93,010

Average shares outstanding - Funds From Operations ("FFO") - diluted (c)

132,283

93,010

132,283

93,010

Per share income- diluted before discontinued operations

-

-

$0.19

$1.83

Net income per share-basic

$0.19

$1.45

$0.19

$1.45

Net income per share - diluted  (c)

$0.19

$1.45

$0.19

$1.45

Dividend declared per share

$2.10

$2.60

$2.10

$2.60

FFO - basic  (c) (d)

$351,308

$344,108

$351,308

$344,108

FFO - diluted (c) (d)

$351,308

$344,108

$351,308

$344,108

FFO per share- basic   (c) (d)

$2.66

$3.70

$2.66

$3.70

FFO per share- diluted  (c) (d)

$2.66

$3.70

$2.66

$3.70

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

    (a)  The following dispositions impacted the results for the three and twelve months ended December 31, 2010 and 2009:

          During the twelve months ended December 31, 2009, the Company sold six non-core community centers for $83.2 million

          and sold five Kohl's stores for approximately $52.7 million. As a result of these sales, the Company has classified the results

          of operations to discontinued operations for all periods presented.

   (b)  This represents the outside partners' allocation of net income in the Chandler Fashion Center/Freehold Raceway Mall joint venture.

  (c)  The Macerich Partnership, L.P. (the "Operating Partnership" or the "OP") has operating partnership units ("OP units"). OP units can be converted

          into shares of Company common stock. Conversion of the OP units not owned by the Company has been assumed for purposes of calculating the FFO

          per share and the weighted average number of shares outstanding. The computation of average shares for FFO - diluted includes the effect of share

          and unit-based compensation plans and convertible senior notes using the treasury stock method. It also assumes conversion of MACWH, LP preferred

          and common units to the extent they are dilutive to the calculation.

   (d)  The Company uses FFO in addition to net income to report its operating and financial results and considers FFO and FFO-diluted as

          supplemental measures for the real estate industry and a supplement to Generally Accepted Accounting Principles ("GAAP") measures.

          NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from extraordinary items and

          sales of depreciated operating properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated

          partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the

          same basis. FFO and FFO on a diluted basis are useful to investors in comparing operating and financial results between periods.

          This is especially true since FFO excludes real estate depreciation and amortization, as the Company believes real estate values

          fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. FFO on a

          diluted basis is one of the measures investors find most useful in measuring the dilutive impact of outstanding convertible securities.

          FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income (loss)

          as defined by GAAP and is not indicative of cash available to fund all cash flow needs. The Company also cautions that FFO as presented,

          may not be comparable to similarly titled measures reported by other real estate investment trusts.

         Gains or losses on sales of undepreciated assets and the impact of amortization of above/below market leases have been included in FFO.

          The inclusion of gains on sales of undepreciated assets increased FFO for the three and twelve months ended December 31, 2010 and 2009 by $0.1 million,

          $0.6 million, $1.3 million and $4.6 million, respectively, or by $0.00 per share, $0.00 per share, $0.01 per share and $0.05 per share, respectively.

          Additionally, amortization of above/below market leases increased FFO for the three and twelve months ended December 31, 2010 and 2009 by $2.4 million,

          $10.8 million, $3.3 million and $13.7 million, respectively, or by $0.02 per share, $0.08 per share, $0.03 per share and $0.15 per share, respectively.

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Pro rata share of unconsolidated joint ventures:

For the Three Months  

For the Twelve Months  

Ended December 31,

Ended December 31,

Unaudited

Unaudited

2010

2009

2010

2009

Revenues:

   Minimum rents

$78,143

$78,564

$300,637

$283,297

   Percentage rents

6,650

6,647

13,458

12,359

   Tenant recoveries

36,868

37,247

149,357

136,434

   Other

6,685

5,413

21,418

16,422

   Total revenues

128,346

127,871

484,870

448,512

Expenses:

    Shopping center and operating expenses

43,983

44,259

170,221

155,415

    Interest expense

31,342

32,529

125,858

111,276

    Depreciation and amortization

25,721

25,474

109,906

106,435

    Total operating expenses

101,046

102,262

405,985

373,126

Gain (loss) on sale or write down of assets

124

(7,344)

823

(7,642)

Loss on early extinguishment of debt

-

-

(689)

-

Equity in income of joint ventures

197

248

510

416

    Net income

$27,621

$18,513

$79,529

$68,160

Reconciliation of Net income (loss) to FFO (d):

For the Three Months  

For the Twelve Months  

Ended December 31,

Ended December 31,

Unaudited

Unaudited

2010

2009

2010

2009

Net income (loss) - available to common stockholders

$23,558

($14,376)

$25,190

$120,742

Adjustments to reconcile net income (loss) to FFO - basic

  Noncontrolling interests in OP

2,330

(2,834)

2,497

17,517

  Loss (gain) on sale or write down of consolidated assets

77

14,965

(474)

(121,766)

       plus gain on undepreciated asset sales - consolidated assets

-

1,475

-

4,763

       plus non-controlling interests share of gain (loss) on sale or write down of consolidated

          joint ventures

-

-

2

310

       less write down of consolidated assets

-

(210)

-

(28,439)

  (Gain) loss on sale or write-down of assets from

                  unconsolidated entities (pro rata)

(124)

7,344

(823)

7,642

       plus gain (loss) on undepreciated asset sales - unconsolidated entities (pro rata share)

124

(128)

613

(152)

       less write down of assets - unconsolidated entities (pro rata share)

-

(7,219)

(32)

(7,501)

  Depreciation and amortization on consolidated assets

64,882

75,656

246,812

266,163

  Less depreciation and amortization allocable to noncontrolling interests

       on consolidated joint ventures

(4,394)

(4,624)

(17,979)

(7,871)

  Depreciation and amortization on joint ventures (pro rata)

25,721

25,474

109,906

106,435

  Less: depreciation on personal property

(3,253)

(2,822)

(14,404)

(13,735)

Total FFO - basic

108,921

92,701

351,308

344,108

Additional adjustment to arrive at FFO - diluted:

   Preferred units - dividends

-

-

-

-

Total FFO - diluted

$108,921

$92,701

$351,308

$344,108

Reconciliation of EPS to FFO per diluted share:

For the Three Months  

For the Twelve Months  

Ended December 31,

Ended December 31,

Unaudited

Unaudited

2010

2009

2010

2009

Earnings per share - diluted

$0.18

($0.18)

$0.19

$1.45

  Per share impact of depreciation and amortization of real estate

0.59

0.91

2.46

3.77

  Per share impact of loss (gain) on sale or write-down of depreciated assets

0.00

0.17

0.01

(1.52)

FFO per share - diluted

$0.77

$0.90

$2.66

$3.70

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

For the Three Months  

For the Twelve Months  

Reconciliation of Net income (loss) to EBITDA:

Ended December 31,

Ended December 31,

Unaudited

Unaudited

2010

2009

2010

2009

Net income (loss) - available to common stockholders

$23,558

($14,376)

$25,190

$120,742

  Interest expense - consolidated assets

53,507

59,408

212,818

267,039

  Interest expense - unconsolidated entities (pro rata)

31,342

32,529

125,858

111,276

  Depreciation and amortization - consolidated assets

64,882

75,656

246,812

266,163

  Depreciation and amortization - unconsolidated entities (pro rata)

25,721

25,474

109,906

106,435

  Noncontrolling interests in OP

2,330

(2,834)

2,497

17,517

  Less: Interest expense and depreciation and amortization

           allocable to noncontrolling interests on consolidated joint ventures

(7,224)

(7,328)

(28,715)

(11,839)

  Gain on early extinguishment of debt

(2,053)

(15)

(3,661)

(29,161)

  Loss on early extinguishment of debt - unconsolidated entities (pro rata)

-

-

689

-

  Loss (gain) on sale or write down of assets - consolidated assets

77

14,965

(474)

(121,766)

  (Gain) loss on sale or write down of assets - unconsolidated entities (pro rata)

(124)

7,344

(823)

7,642

  Add: Non-controlling interests share of  gain on sale of consolidated joint ventures

-

275

2

585

  Add: Non-controlling interests share of gain on sale of unconsolidated entities

-

-

93

-

  Income tax benefit

(3,950)

(3,883)

(9,202)

(4,761)

  Distributions on preferred units

207

208

831

831

EBITDA   (e)

$188,273

$187,423

$681,821

$730,703

Reconciliation of EBITDA to Same Centers - Net Operating Income ("NOI"):

For the Three Months  

For the Twelve Months  

Ended December 31,

Ended December 31,

Unaudited

Unaudited

2010

2009

2010

2009

EBITDA (e)

$188,273

$187,423

$681,821

$730,703

Add: REIT general and administrative expenses

4,999

8,944

20,703

25,933

       Management Companies' revenues

(10,028)

(12,422)

(42,895)

(40,757)

       Management Companies' operating  expenses

21,718

20,602

90,414

79,305

       Lease termination income, straight-line and above/below market adjustments

         to minimum rents of comparable centers

(4,924)

(11,189)

(19,638)

(28,955)

       EBITDA of non-comparable centers

(19,380)

(15,927)

(106,778)

(155,059)

Same Centers - NOI (f)

$180,658

$177,431

$623,627

$611,170

(e) EBITDA represents earnings before interest, income taxes, depreciation, amortization, noncontrolling interests, extraordinary items, gain (loss) on sale

     of assets and preferred dividends and includes joint ventures at their pro rata share. Management considers EBITDA to be an appropriate

     supplemental measure to net income because it helps investors understand the ability of the Company to incur and service debt and make

     capital expenditures. EBITDA should not be construed as an alternative to operating income as an indicator of the Company's operating

     performance, or to cash flows from operating activities (as determined in accordance with GAAP) or as a measure of liquidity.

    EBITDA, as presented, may not be comparable to similarly titled measurements reported by other companies.

(f) The Company presents same-center NOI because the Company believes it is useful for investors to evaluate the operating performance of

    comparable centers. Same-center NOI is calculated using total EBITDA and subtracting out EBITDA from non-comparable centers and

    eliminating the management companies and the Company's general and administrative expenses. Same center NOI excludes the impact of lease

     termination income, straight-line and above/below market adjustments to minimum rents.

SOURCE The Macerich Company



RELATED LINKS

http://www.macerich.com/