Macerich Announces Quarterly Results

News provided by

Macerich Company

Aug 09, 2010, 06:00 ET

SANTA MONICA, Calif., Aug. 9 /PRNewswire-FirstCall/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the quarter ended June 30, 2010 which included total funds from operations ("FFO") diluted of $77.5 million or $.57 per share-diluted, compared to $.67 per share-diluted for the quarter ended June 30, 2009. Net loss available to common stockholders for the quarter ended June 30, 2010 was $.4 million or $.01 per share-diluted compared to net loss available to common stockholders of $21.7 million or $.29 per share-diluted for the quarter ended June 30, 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 loss to FFO and net loss per common share-diluted ("EPS") to FFO per share-diluted is included in the financial tables accompanying this press release.

Recent Highlights:  

  • During the quarter, same center net operating income increased by 2.0%.
  • Occupancy increased to 91.8% at June 30, 2010, up from 90.5% at June 30, 2009.
  • Mall total tenant sales increased 3.3% for the quarter compared to the quarter ended June 30, 2009.
  • In April, the Company issued 31 million shares of common stock raising net proceeds in excess of $1.2 billion.
  • On August 6th, the Company celebrated the grand opening of the new Santa Monica Place, a 524,000 square-foot, three-level, open-air retail project anchored by Bloomingdale's and Nordstrom.

Commenting on the quarter and recent events, Arthur Coppola chairman and chief executive officer of Macerich stated, "We saw very solid and improving results for the quarter.  We had strong occupancy gains, positive same center NOI growth and positive releasing spreads.  In addition we continue to see improvement in the capital markets and we have been able to capitalize on that with some very attractive financings.

We are also very pleased with last Friday's grand opening of the new Santa Monica Place.  Many of the world's best retail brands are there, drawn by the outstanding quality of this project and the rare opportunity to locate in the highly desirable community of Santa Monica.  The strong leasing demand for this project demonstrates that retailers will respond to a project with vision, location and top-quality execution even during challenging economic times."

Redevelopment Update

On August 6, 2010, Macerich celebrated the grand opening of the new Santa Monica Place, a 524,000 square-foot, three-level, open-air retail and dining destination just two blocks from the beach.  Bloomingdale's, a majority of retailers and the third-level Dining Deck opened as Macerich debuted the new Santa Monica Place. The project is 92% leased and 97% committed, with Nordstrom and Tory Burch opening August 27th, Tiffany & Co. slated to open September 2010 and The Market at Santa Monica Place planned for the first half of 2011. Retailers that opened alongside Bloomingdale's include Louis Vuitton, Barneys Co-op, Nike, CB2, Ted Baker, Betsey Johnson, Disney, Hugo Boss, Michael Kors, Juicy Couture and Kitson LA.   Photos and more information on the grand opening can be found at: http://www.macerich.com/FileManager/Corporate/News/Macerich/smp_grand_opening_8-6-10.pdf

On May 7, a relocated and expanded 138,000-square-foot Nordstrom and 35,000 square feet of new small shop space opened at Los Cerritos Center, Macerich's high-performing, super-regional shopping center in Southern California. The project is 100% leased and new retailers include True Religion, Love Culture, MAC Cosmetics, Foreign Exchange, Carlton Hair and Vision Shoes.

Financing Activity

Transactions completed or committed to in 2010 total over $640 million.  Recent activity includes:

The Company has arranged a $114 million refinancing of Stonewood Center.  The new loan is a seven year fixed rate loan with an interest rate of 4.6%.   This transaction will pay off the old loan of $71 million with an interest rate of 7.41%.

The Company has also agreed to a $250 million loan on Danbury Fair Mall.  The new loan has a fixed interest rate of 5.50% and has a ten year maturity.  It will pay off the existing loan of $160 million with a 7.51% interest rate which was scheduled to mature in 2011.

Upon completion of the above transactions, the Company will have only $118 million of remaining loan maturities for 2010.

Dividend

On July 29, 2010, the Board of Directors of the Company declared a quarterly cash dividend of $.50 per share of common stock.  The dividend is payable on September 8, 2010 to stockholders of record at the close of business on August 20, 2010.  

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 now 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, August 9, 2010 at 10:30 AM Pacific Time. To listen to the call, please go to any of these web sites 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. 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, 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 and terms, 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 and the Quarterly Reports on Form 10-Q, 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 June 30,

Ended June 30,

Ended June 30,


Unaudited

Unaudited


2010

2009

2010

2009

2010

2009

Minimum rents

$102,509

$123,504

1

($2,935)

$102,510

$120,569

Percentage rents  

3,108

2,686

-

(17)

3,108

2,669

Tenant recoveries

57,259

62,530

-

(765)

57,259

61,765

Management Companies' revenues

12,117

9,345

-

-

12,117

9,345

Other income

6,887

7,850

-

(23)

6,887

7,827

Total revenues

181,880

205,915

1

(3,740)

181,881

202,175








Shopping center and operating  expenses

56,731

67,565

(21)

(1,653)

56,710

65,912

Management Companies' operating  expenses

24,466

18,872

-

-

24,466

18,872

Income tax benefit

(1,375)

(380)

-

-

(1,375)

(380)

Depreciation and amortization

59,913

63,740

-

(1,438)

59,913

62,302

REIT general and administrative expenses

3,642

4,648

-

-

3,642

4,648

Interest expense  

52,238

71,914

-

-

52,238

71,914

(Loss) gain on early extinguishment of debt

(489)

7,127

-

-

(489)

7,127

Gain (loss) on sale or write down of assets

510

(25,605)

72

26,995

582

1,390

Co-venture interests (b)

(1,993)

-

-

-

(1,993)

-

Equity in income of unconsolidated joint ventures

15,762

14,556

-

-

15,762

14,556








Income (loss) income from continuing operations

55

(24,366)

94

26,346

149

1,980

Discontinued operations:







  Loss on sale or write down of assets

-

-

(72)

(26,995)

(72)

(26,995)

  (Loss) income from discontinued operations

-

-

(22)

649

(22)

649

Total loss from discontinued operations

-

-

(94)

(26,346)

(94)

(26,346)

Net income (loss)

55

(24,366)

-

-

55

(24,366)

Less net (loss) income attributable to noncontrolling interests

495

(2,630)

-

-

495

(2,630)

Net loss attributable to the Company

(440)

(21,736)

-

-

(440)

(21,736)

Less preferred dividends

-

-

-

-

-

-

Net loss available to common stockholders

($440)

($21,736)

-

-

($440)

($21,736)








Average number of shares outstanding - basic

123,446

77,270



123,446

77,270

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

135,495

88,970



135,495

88,970

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

135,495

88,970



135,495

88,970








Per share (loss) income- diluted before discontinued operations

-

-



($0.01)

$0.01

Net loss per share-basic

($0.01)

($0.29)



($0.01)

($0.29)

Net loss per share - diluted  (c)

($0.01)

($0.29)



($0.01)

($0.29)

Dividend declared per share

$0.50

$0.60



$0.50

$0.60

FFO - basic  (c) (d)

$77,466

$59,920



$77,466

$59,920

FFO - diluted (c) (d)

$77,466

$59,920



$77,466

$59,920

FFO per share- basic   (c) (d)

$0.57

$0.67



$0.57

$0.67

FFO per share- diluted  (c) (d)

$0.57

$0.67



$0.57

$0.67



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 Six Months

For the Six Months

For the Six Months


Ended June 30,

Ended June 30,

Ended June 30,


Unaudited

Unaudited


2010

2009

2010

2009

2010

2009

Minimum rents

$204,485

$250,976

5

($7,198)

$204,490

$243,778

Percentage rents  

6,095

5,487

-

(17)

6,095

5,470

Tenant recoveries

118,268

127,441

-

(1,530)

118,268

125,911

Management Companies' revenues

22,339

17,885

-

-

22,339

17,885

Other income

12,804

14,904

-

(50)

12,804

14,854

Total revenues

363,991

416,693

5

(8,795)

363,996

407,898








Shopping center and operating  expenses

117,663

138,346

(133)

(3,010)

117,530

135,336

Management Companies' operating  expenses

46,653

42,302

-

-

46,653

42,302

Income tax benefit

(2,590)

(1,181)

-

-

(2,590)

(1,181)

Depreciation and amortization

119,128

128,651

-

(2,874)

119,128

125,777

REIT general and administrative expenses

11,160

9,906

-

-

11,160

9,906

Interest expense  

107,649

141,852

-

4

107,649

141,856

(Loss) gain on early extinguishment of debt

(489)

29,601

-

-

(489)

29,601

Gain (loss) on sale or write down of assets

511

(24,849)

71

27,012

582

2,163

Co-venture interests (b)

(3,377)

-

-

-

(3,377)

-

Equity in income of unconsolidated joint ventures

32,221

30,482

-

-

32,221

30,482








(Loss) income from continuing operations

(6,806)

(7,949)

209

24,097

(6,597)

16,148

Discontinued operations:







  Loss on sale or write down of assets

-

-

(71)

(27,012)

(71)

(27,012)

  (Loss) income from discontinued operations

-

-

(138)

2,915

(138)

2,915

Total loss from discontinued operations

-

-

(209)

(24,097)

(209)

(24,097)

Net loss

(6,806)

(7,949)

-

-

(6,806)

(7,949)

Less net loss attributable to noncontrolling interests

(9)

(229)

-

-

(9)

(229)

Net loss attributable to the Company

(6,797)

(7,720)

-

-

(6,797)

(7,720)

Less preferred dividends

-

-

-

-

-

-

Net loss available to common stockholders

($6,797)

($7,720)

-

-

($6,797)

($7,720)








Average number of shares outstanding - basic

110,271

77,082



110,271

77,082

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

122,379

88,759



122,379

88,759

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

122,379

88,759



122,379

88,759








Per share (loss) income- diluted before discontinued operations

-

-



($0.08)

$0.15

Net loss per share-basic

($0.08)

($0.12)



($0.08)

($0.12)

Net loss per share - diluted  (c)

($0.08)

($0.12)



($0.08)

($0.12)

Dividend declared per share

$1.10

$1.40



$1.10

$1.40

FFO - basic  (c) (d)

$149,063

$162,760



$149,063

$162,760

FFO - diluted (c) (d)

$149,063

$162,760



$149,063

$162,760

FFO per share- basic   (c) (d)

$1.22

$1.83



$1.22

$1.83

FFO per share- diluted  (c) (d)

$1.22

$1.83



$1.22

$1.83



THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


    (a)  The following dispositions impacted the results for the three and six months ended June 30, 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 (loss) 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 fully 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 fully

          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 six months ended June 30, 2010 and 2009 by $0.4 million,

          $0.4 million, $1.1 million and $2.5 million, respectively, or by $0.00 per share, $0.00 per share, $0.01 per share and $0.03 per share, respectively.

          Additionally, amortization of above/below market leases increased FFO for the three and six months ended June 30, 2010 and 2009 by $2.9 million,

          $5.8 million, $3.0 million and $7.2 million, respectively, or by $0.02 per share, $0.05 per share, $0.03 per share and $0.08 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 Six Months  


Ended June 30,

Ended June 30,


Unaudited

Unaudited


2010

2009

2010

2009

Revenues:





   Minimum rents

$73,350

$64,941

$147,401

$131,977

   Percentage rents

1,757

1,458

3,653

2,855

   Tenant recoveries

35,751

31,822

73,065

63,877

   Other

4,636

3,213

8,819

6,648

   Total revenues

115,494

101,434

232,938

205,357






Expenses:





    Shopping center and operating expenses

40,231

35,195

82,047

71,174

    Interest expense

31,293

25,797

62,385

51,299

    Depreciation and amortization

28,753

25,908

56,208

52,409

    Total operating expenses

100,277

86,900

200,640

174,882

Gain on sale or write down of assets

428

3

366

11

Loss on early extinguishment of debt

-

-

(689)

-

Equity in income (loss) of joint ventures

117

19

246

(4)

    Net income

$15,762

$14,556

$32,221

$30,482



Reconciliation of Net loss to FFO (d):






For the Three Months  

For the Six Months  


Ended June 30,

Ended June 30,


Unaudited

Unaudited


2010

2009

2010

2009

Net loss - available to common stockholders

($440)

($21,736)

($6,797)

($7,720)






Adjustments to reconcile net loss to FFO - basic





  Noncontrolling interests in OP

52

(3,293)

(746)

(1,169)

  (Gain) loss on sale or write down of consolidated assets

(510)

25,605

(511)

24,849

       plus gain on undepreciated asset sales - consolidated assets

-

1,143

-

2,497

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





          joint ventures

(32)

310

(32)

310

       less write down of consolidated assets

-

(27,058)

-

(27,639)

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





   unconsolidated entities (pro rata)

(428)

(3)

(366)

(11)

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

427

3

396

2

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

-

-

(32)

-

  Depreciation and amortization on consolidated assets

59,913

63,740

119,128

128,651

  Less depreciation and amortization allocable to noncontrolling interests





       on consolidated joint ventures

(6,497)

(1,064)

(11,590)

(2,130)

  Depreciation and amortization on joint ventures (pro rata)

28,753

25,908

56,208

52,409

  Less: depreciation on personal property

(3,772)

(3,635)

(6,595)

(7,289)






Total FFO - basic

77,466

59,920

149,063

162,760






Additional adjustment to arrive at FFO - diluted:





   Preferred units - dividends

-

-

-

-

Total FFO - diluted

$77,466

$59,920

$149,063

$162,760



Reconciliation of EPS to FFO per diluted share:






For the Three Months  

For the Six Months  


Ended June 30,

Ended June 30,


Unaudited

Unaudited


2010

2009

2010

2009

Earnings per share - diluted

($0.01)

($0.29)

($0.08)

($0.12)

  Per share impact of depreciation and amortization of real estate

0.58

0.96

1.30

1.95

FFO per share - diluted

$0.57

$0.67

$1.22

$1.83



THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)







For the Three Months  

For the Six Months  

Reconciliation of Net loss to EBITDA:

Ended June 30,

Ended June 30,


Unaudited

Unaudited


2010

2009

2010

2009






Net loss - available to common stockholders

($440)

($21,736)

($6,797)

($7,720)






  Interest expense - consolidated assets

52,238

71,914

107,649

141,852

  Interest expense - unconsolidated entities (pro rata)

31,293

25,797

62,385

51,299

  Depreciation and amortization - consolidated assets

59,913

63,740

119,128

128,651

  Depreciation and amortization - unconsolidated entities (pro rata)

28,753

25,908

56,208

52,409

  Noncontrolling interests in OP

52

(3,293)

(746)

(1,169)

  Less: Interest expense and depreciation and amortization





           allocable to noncontrolling interests on consolidated joint ventures

(10,391)

(1,471)

(18,390)

(2,959)

  Loss (gain) on early extinguishment of debt

489

(7,127)

489

(29,601)

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

-

-

689

-

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

(510)

25,605

(511)

24,849

  Loss (gain) on sale or write down of assets - unconsolidated entities (pro rata)

(428)

(3)

(366)

(11)

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

(32)

310

(32)

310

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

93

-

93

-

  Income tax (benefit) expense

(1,375)

(380)

(2,590)

(1,181)

  Distributions on preferred units

208

171

416

415






EBITDA   (e)

$159,863

$179,435

$317,625

$357,144



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











For the Three Months  

For the Six Months  


Ended June 30,

Ended June 30,


Unaudited

Unaudited


2010

2009

2010

2009

EBITDA (e)

$159,863

$179,435

$317,625

$357,144






Add: REIT general and administrative expenses

3,642

4,648

11,160

9,906

       Management Companies' revenues

(12,117)

(9,345)

(22,339)

(17,885)

       Management Companies' operating  expenses

24,466

18,872

46,653

42,302

       Lease termination income of comparable centers

(1,295)

(1,154)

(2,569)

(2,696)

       EBITDA of non-comparable centers

(27,852)

(48,650)

(56,085)

(99,846)






Same Centers - NOI (f)

$146,707

$143,806

$294,445

$288,925











(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 straight-

     line and above/below market adjustments to minimum rents.



SOURCE Macerich Company