Macerich Announces Quarterly Results

News provided by

Macerich Company

Nov 04, 2010, 06:00 ET

SANTA MONICA, Calif., Nov. 4, 2010 /PRNewswire-FirstCall/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the quarter ended September 30, 2010 which included total funds from operations ("FFO") diluted of $93.3 million or $.66 per share-diluted, compared to $.97 per share-diluted for the quarter ended September 30, 2009.  Net income available to common stockholders for the quarter ended September 30, 2010 was $8.4 million or $.06 per share-diluted compared to net income available to common stockholders of $142.8 million or $1.75 per share-diluted for the quarter ended September 30, 2009.   The primary cause of the decrease in net income available to common stockholders resulted from the gain on asset sales recorded in the quarter ended September 30, 2009 of $161.6 million, or $1.76 per share.  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:  

  • During the quarter, same center net operating income increased by 2.6%.
  • Occupancy increased to 92.6% at September 30, 2010, up from 91.0% at September 30, 2009.
  • Mall total tenant sales increased 5.8% for the quarter compared to the quarter ended September 30, 2009.
  • During the quarter 305,000 square feet of leases were signed.  Releasing spreads were up 15.7% for the quarter ended September 30, 2010.

Commenting on the quarter, Arthur Coppola chairman and chief executive officer of Macerich stated, "We saw fundamentals make a very positive move during the quarter.  We had significant tenant sales gains and portfolio occupancy gains, positive same center NOI growth, and positive releasing spreads.  We successfully completed a number of very attractive refinancings and continue to benefit from a very strong capital market."

Redevelopment Update

The redeveloped Santa Monica Place opened in August. The project is 94% leased and is anchored by Nordstrom and Bloomingdale's and includes retailers Tiffany & Co, Louis Vuitton, Barneys Co-op, Nike, CB2, Ted Baker, Betsey Johnson, Disney, Hugo Boss, Burberry, AllSaints Spitalfields and Kitson LA.

Financing Activity

On September 10, 2010, the Company closed on 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 paid off the existing loan of $160 million with a 7.51% interest rate which was scheduled to mature in 2011.

On November 2, 2010, the Company closed on 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 paid off the old loan of $71 million with an interest rate of 7.44%.

In addition, the Company has reached agreement on a $232 million loan on Freehold Raceway Mall.  The loan will have a term of seven years with an expected fixed interest rate of 4.15%.  The loan is planned to close in December 2010 and will pay off the existing loan of $157 million.

The Company has only $55 million of remaining loan maturities for 2010.  Upon completion of the above transactions, and excluding loans with built-in extension options, the loan maturities in 2011 are $466 million.

Updated Guidance

The Company is tightening its 2010 full year FFO guidance range to $2.60 to $2.70.  The primary reason for the change is the reduction of its estimate of lease termination revenue from its initial estimate of $17 million down to $7.0 million.  Through September 30, 2010 lease termination revenue was $6.6 million.  A reconciliation of FFO to EPS follows:

New estimated range for FFO per share:

$2.60  to  $2.70

Less:  Real Estate Depreciation and Amortization

$2.55   -   $2.55

New estimated EPS range:

$  .05  to  $  .15



Dividend

On October 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 December 8, 2010 to stockholders of record at the close of business on November 12, 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, November 4, 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 September 30,

Ended September 30,

Ended September 30,


Unaudited

Unaudited


2010

2009

2010

2009

2010

2009

Minimum rents

$106,612

$119,903

-

($2,310)

$106,612

$117,593

Percentage rents  

3,862

3,909

-

(2)

3,862

3,907

Tenant recoveries

61,954

59,754

-

(526)

61,954

59,228

Management Companies' revenues

10,529

10,449

-

-

10,529

10,449

Other income

7,725

6,648

(3)

(33)

7,722

6,615

Total revenues

190,682

200,663

(3)

(2,871)

190,679

197,792








Shopping center and operating  expenses

64,379

65,160

(23)

(1,054)

64,356

64,106

Management Companies' operating  expenses

22,042

16,400

-

-

22,042

16,400

Income tax (benefit) expense

(2,662)

302

-

-

(2,662)

302

Depreciation and amortization

62,801

61,856

-

(954)

62,801

60,902

REIT general and administrative expenses

4,546

7,085

-

-

4,546

7,085

Interest expense  

51,662

65,779

-

-

51,662

65,779

Gain (loss) on early extinguishment of debt

2,096

(455)

-

-

2,096

(455)

Gain (loss) on sale or write down of assets

40

161,580

(48)

(3,968)

(8)

157,612

Co-venture interests (b)

(269)

-

-

-

(269)

-

Equity in income of unconsolidated joint ventures

19,687

19,165

-

-

19,687

19,165








Income from continuing operations

9,468

164,371

(28)

(4,831)

9,440

159,540

Discontinued operations:







  Gain on sale or write down of assets

-

-

48

3,968

48

3,968

  (Loss) income from discontinued operations

-

-

(20)

863

(20)

863

Total gain from discontinued operations

-

-

28

4,831

28

4,831

Net income

9,468

164,371

-

-

9,468

164,371

Less net income attributable to noncontrolling interests

1,039

21,533

-

-

1,039

21,533

Net income attributable to the Company

8,429

142,838

-

-

8,429

142,838

Less preferred dividends

-

-

-

-

-

-

Net income available to common stockholders

$8,429

$142,838

-

-

$8,429

$142,838








Average number of shares outstanding - basic

130,213

79,496



130,213

79,496

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

142,020

91,347



142,020

91,347

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

142,020

91,347



142,020

91,347








Per share income- diluted before discontinued operations

-

-



$0.06

$1.70

Net income per share-basic

$0.06

$1.75



$0.06

$1.75

Net income per share - diluted  (c)

$0.06

$1.75



$0.06

$1.75

Dividend declared per share

$0.50

$0.60



$0.50

$0.60

FFO - basic  (c) (d)

$93,321

$88,650



$93,321

$88,650

FFO - diluted (c) (d)

$93,321

$88,650



$93,321

$88,650

FFO per share- basic   (c) (d)

$0.66

$0.97



$0.66

$0.97

FFO per share- diluted  (c) (d)

$0.66

$0.97



$0.66

$0.97



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 Nine Months

For the Nine Months

For the Nine Months


Ended September 30,

Ended September 30,

Ended September 30,


Unaudited

Unaudited


2010

2009

2010

2009

2010

2009

Minimum rents

$311,098

$370,879

4

($9,514)

$311,102

$361,365

Percentage rents  

9,957

9,396

-

(13)

9,957

9,383

Tenant recoveries

180,222

187,194

-

(2,057)

180,222

185,137

Management Companies' revenues

32,867

28,335

-

-

32,867

28,335

Other income

20,529

21,552

(3)

(81)

20,526

21,471

Total revenues

554,673

617,356

1

(11,665)

554,674

605,691








Shopping center and operating  expenses

182,043

203,504

(164)

(4,067)

181,879

199,437

Management Companies' operating  expenses

68,696

58,702

-

-

68,696

58,702

Income tax benefit

(5,252)

(878)

-

-

(5,252)

(878)

Depreciation and amortization

181,930

190,507

-

(3,829)

181,930

186,678

REIT general and administrative expenses

15,704

16,989

-

-

15,704

16,989

Interest expense  

159,311

207,631

-

5

159,311

207,636

Gain on early extinguishment of debt

1,608

29,145

-

-

1,608

29,145

Gain on sale or write down of assets

551

136,731

23

23,045

574

159,776

Co-venture interests (b)

(3,646)

-

-

-

(3,646)

-

Equity in income of unconsolidated joint ventures

51,908

49,647

-

-

51,908

49,647








Income from continuing operations

2,662

156,424

188

19,271

2,850

175,695

Discontinued operations:







  Loss on sale or write down of assets

-

-

(23)

(23,045)

(23)

(23,045)

  (Loss) income from discontinued operations

-

-

(165)

3,774

(165)

3,774

Total loss from discontinued operations

-

-

(188)

(19,271)

(188)

(19,271)

Net income

2,662

156,424

-

-

2,662

156,424

Less net income attributable to noncontrolling interests

1,030

21,306

-

-

1,030

21,306

Net income attributable to the Company

1,632

135,118

-

-

1,632

135,118

Less preferred dividends

-

-

-

-

-

-

Net income available to common stockholders

$1,632

$135,118

-

-

$1,632

$135,118








Average number of shares outstanding - basic

116,992

77,898



116,992

77,898

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

128,998

89,635



128,998

89,635

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

128,998

89,635



128,998

89,635








Per share income- diluted before discontinued operations

-

-



$0.00

$1.92

Net income per share-basic

$0.00

$1.71



$0.00

$1.71

Net income per share - diluted  (c)

$0.00

$1.71



$0.00

$1.71

Dividend declared per share

$1.60

$2.00



$1.60

$2.00

FFO - basic  (c) (d)

$242,387

$251,410



$242,387

$251,410

FFO - diluted (c) (d)

$242,387

$251,410



$242,387

$251,410

FFO per share- basic   (c) (d)

$1.88

$2.80



$1.88

$2.80

FFO per share- diluted  (c) (d)

$1.88

$2.80



$1.88

$2.80



THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


(a)  The following dispositions impacted the results for the three and nine months ended September 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 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 nine months ended September 30, 2010 and 2009 by $0.1 million, $0.5 million, $0.8 million and $3.3 million, respectively, or by $0.00 per share, $0.00 per share, $0.01 per share and $0.04 per share, respectively. Additionally, amortization of above/below market leases increased FFO for the three and nine months ended September 30, 2010 and 2009 by $2.5 million, $8.3 million, $3.2 million and $10.4 million, respectively, or by $0.02 per share, $0.06 per share, $0.04 per share and $0.12 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 Nine Months  


Ended September 30,

Ended September 30,


Unaudited

Unaudited


2010

2009

2010

2009

Revenues:





   Minimum rents

$75,093

$72,756

$222,494

$204,733

   Percentage rents

3,155

2,857

6,808

5,712

   Tenant recoveries

39,424

35,310

112,489

99,187

   Other

5,914

4,361

14,733

11,009

   Total revenues

123,586

115,284

356,524

320,641






Expenses:





    Shopping center and operating expenses

44,191

39,982

126,238

111,156

    Interest expense

32,131

27,448

94,516

78,747

    Depreciation and amortization

27,977

28,552

84,185

80,961

    Total operating expenses

104,299

95,982

304,939

270,864

Gain (loss) on sale or write down of assets

333

(309)

699

(298)

Loss on early extinguishment of debt

-

-

(689)

-

Equity in income of joint ventures

67

172

313

168

    Net income

$19,687

$19,165

$51,908

$49,647



Reconciliation of Net income to FFO (d):






For the Three Months  

For the Nine Months  


Ended September 30,

Ended September 30,


Unaudited

Unaudited


2010

2009

2010

2009

Net income - available to common stockholders

$8,429

$142,838

$1,632

$135,118






Adjustments to reconcile net income to FFO - basic





  Noncontrolling interests in OP

913

21,520

167

20,351

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

(40)

(161,580)

(551)

(136,731)

       plus gain on undepreciated asset sales - consolidated assets

-

792

-

3,289

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

33

-

2

310

       less write down of consolidated assets

-

(589)

-

(28,228)

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

(333)

309

(699)

298

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

92

(26)

489

(24)

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

-

(282)

(32)

(282)

  Depreciation and amortization on consolidated assets

62,801

61,856

181,930

190,507

  Less depreciation and amortization allocable to noncontrolling interests on consolidated joint ventures

(1,995)

(1,117)

(13,585)

(3,247)

  Depreciation and amortization on joint ventures (pro rata)

27,977

28,552

84,185

80,961

  Less: depreciation on personal property

(4,556)

(3,623)

(11,151)

(10,912)






Total FFO - basic

93,321

88,650

242,387

251,410






Additional adjustment to arrive at FFO - diluted:





   Preferred units - dividends

-

-

-

-

Total FFO - diluted

$93,321

$88,650

$242,387

$251,410



Reconciliation of EPS to FFO per diluted share:






For the Three Months  

For the Nine Months  


Ended September 30,

Ended September 30,


Unaudited

Unaudited


2010

2009

2010

2009

Earnings per share - diluted

$0.06

$1.75

$0.00

$1.71

  Per share impact of depreciation and amortization of real estate

0.60

0.94

1.87

2.89

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

0.00

(1.72)

0.01

(1.80)

FFO per share - diluted

$0.66

$0.97

$1.88

$2.80



THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)







For the Three Months  

For the Nine Months  

Reconciliation of Net income to EBITDA:

Ended September 30,

Ended September 30,


Unaudited

Unaudited


2010

2009

2010

2009






Net income - available to common stockholders

$8,429

$142,838

$1,632

$135,118






  Interest expense - consolidated assets

51,662

65,779

159,311

207,631

  Interest expense - unconsolidated entities (pro rata)

32,131

27,448

94,516

78,747

  Depreciation and amortization - consolidated assets

62,801

61,856

181,930

190,507

  Depreciation and amortization - unconsolidated entities (pro rata)

27,977

28,552

84,185

80,961

  Noncontrolling interests in OP

913

21,520

167

20,351

  Less: Interest expense and depreciation and amortization





           allocable to noncontrolling interests on consolidated joint ventures

(3,101)

(1,552)

(21,491)

(4,511)

  (Gain) loss on early extinguishment of debt

(2,096)

455

(1,608)

(29,145)

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

-

-

689

-

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

(40)

(161,580)

(551)

(136,731)

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

(333)

309

(699)

298

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

33

-

2

310

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

-

-

93

-

  Income tax (benefit) expense

(2,662)

302

(5,252)

(878)

  Distributions on preferred units

208

208

624

623






EBITDA   (e)

$175,922

$186,135

$493,548

$543,281



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











For the Three Months  

For the Nine Months  


Ended September 30,

Ended September 30,


Unaudited

Unaudited


2010

2009

2010

2009

EBITDA (e)

$175,922

$186,135

$493,548

$543,281






Add: REIT general and administrative expenses

4,546

7,085

15,704

16,989

       Management Companies' revenues

(10,529)

(10,449)

(32,867)

(28,335)

       Management Companies' operating  expenses

22,042

16,400

68,696

58,702

       Lease termination income of comparable centers

(3,072)

(6,804)

(5,640)

(9,500)

       EBITDA of non-comparable centers

(40,384)

(47,553)

(96,471)

(147,398)






Same Centers - NOI (f)

$148,525

$144,814

$442,970

$433,739











(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