SANTA MONICA, Calif., May 13, 2003 /PRNewswire-FirstCall via COMTEX/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the quarter ended March 31, 2003 which included funds from operations ("FFO") per share - diluted increasing 21% to $.84 compared to $.70 for the quarter ended March 31, 2002. Total FFO - diluted increased by 54% to $63.3 million for the quarter compared to $41.1 million for the quarter ended March 31, 2002.
Net income available to common stockholders for the quarter ended March 31, 2003 was $19.4 million or $.37 per share - diluted compared to $17.4 million or $.50 per share - diluted for the quarter ended March 31, 2002. Net income in the quarter ended March 31, 2002 was positively impacted by net gain on sales of consolidated assets of $13.4 million or $.30 per share compared to a net loss of $.2 million on sales of consolidated assets in the quarter ended March 31, 2003. During the fourth quarter of 2002, the Company adopted SFAS No. 141- Business Combinations, which resulted in an increase in net income per share ("EPS") of $.016 during the quarter ended March 31, 2003. A reconciliation of net income to FFO is included in the financial highlights section of this press release.
Highlights included:
-- During the first quarter, Macerich signed 260,000 square feet of
specialty store leases at average initial rents of $36.76 per square
foot. First year rents on mall and freestanding store leases signed
during the first quarter were 23% higher than expiring rents on a
comparable space basis.
-- Portfolio quarter-end occupancy increased to 92.5% up from 92.0% at
March 31, 2002.
-- Total same center tenant sales, for the quarter ended March 31, 2003,
were even with the sales levels for the quarter ended March 31, 2002.
-- FFO per share -- diluted increased 21% to $.84 compared to $.70 per
share for the quarter ended March 31, 2002. In compliance with the
recently issued Securities and Exchange Commission's Regulation G
relating to non-GAAP financial measures, the Company has revised its
FFO definition as of January 1, 2003 and for all prior periods
presented, to include gain or loss on sales of peripheral land and
the effect of SFAS No. 141. The Company's revised definition is in
accordance with the definition provided by the National Association
of Real Estate Investment Trusts ("NAREIT"). The gain on sales of
land included in FFO for the quarter ended March 31, 2003 resulted in
an increase of $524,000 or $.007 per share and the inclusion of SFAS
No. 141 increased FFO by $1.1 million or $.015 per share. These
changes had no impact in the quarter ended March 31, 2002.
The Company uses FFO in addition to net income to report its operating and financial results and considers FFO a supplemental measure for the real estate industry and a supplement to GAAP measures. NAREIT defines FFO as net income (loss) (computed in accordance with Generally Accepted Accounting Principles (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 is 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 does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income as defined by GAAP and is not indicative of cash available to fund all cash flow needs. FFO as presented may not be comparable to similarly titled measures reported by other real estate investment trusts.
Commenting on results and recent events, Arthur Coppola, President and Chief Executive Officer of Macerich stated, "Despite the weak economy, we continue to achieve strong occupancy levels and positive releasing spreads. Our portfolio performed extremely well, as evidenced by the 17% growth in FFO per share, excluding the increases due to land sales and SFAS No. 141. In addition we continue to make excellent progress on our major redevelopment of Queens Center, which is already over 75% leased."
Redevelopment and Development Activity
At Queens Center, the redevelopment and expansion continued. The project will increase the size of the center from 620,000 square feet to approximately 1 million square feet. Completion is planned in phases starting in 2004 with stabilization expected in 2005. Leasing activity has been strong with 75% of the expansion space already leased.
At Lakewood Center, Target is building a two-level Target store in the location formerly occupied by Montgomery Wards. The opening is scheduled for fall 2003.
Bon Marche continues construction of a new department store at Redmond Town Center, slated to open in July 2003.
Construction continues at Scottsdale 101, a 600,000 square foot power center in North Phoenix and also at La Encantada, a 258,000 square foot specialty center in Tucson, Arizona.
Dispositions
The Company continues to dispose of non-core assets and recycle capital. In January, 2003 Paradise Village Gateway, a 296,000 square foot Phoenix area urban village anchored by Albertson's grocery store was sold for approximately $29.4 million.
Financing Activity
The Company has reached agreement with its bank group to issue $250 million in unsecured notes maturing in May 2007. The proceeds will be used to pay down, and create more availability under, the Company's line of credit. The financing is expected to close in May 2003.
In addition, the Company has reached agreement on a refinancing of the existing $180 million floating rate loan on FlatIron Crossing. The existing loan will be paid off in late 2003 and refinanced with a $200 million, fixed rate 10-year loan bearing interest at 5.23%. The closing is expected in October 2003.
2003 Earnings Estimates
The Company is providing year 2003 EPS and FFO per share guidance in the following ranges:
Guidance for 2003 Range:
Fully Diluted EPS $1.70 ......... $1.78
Plus: Real Estate Depreciation and Amortization $1.78 ......... $1.78
Less: Gain on Sale of Assets $.00 ......... $.00
Fully Diluted FFO per share $3.48 ......... $3.56
Due to the uncertainty in the timing and economics of acquisitions and dispositions, the guidance ranges do not include any potential property acquisitions or dispositions other than those that have closed through March 31, 2003. The Company is not able to assess at this time the potential impact of such exclusions on future EPS and FFO. FFO does not include gains or losses on sales of depreciated operating assets.
The Macerich Company is a fully integrated self-managed and self- administered real estate investment trust, which focuses on the acquisition, leasing, management, redevelopment and development of regional malls and community centers throughout the United States. The Company is the sole general partner and owns an 82% ownership interest in The Macerich Partnership, L.P. Macerich now interests in 56 regional malls, 20 community centers and two development properties totaling approximately 58 million square feet. Additional information about The Macerich Company can be obtained from the Company's web site 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 , through Vcall at www.vcall.com , and CCBN at www.ccbn.com . The call begins today, May 13, 2003 at 9:30 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 will be available for 1 year after the call.
Note: This release contains statements that constitute forward-looking statements including 2003 EPS and FFO per share estimates. 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, tenant bankruptcies, lease rates and terms, availability 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; governmental actions and initiatives; 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, for a discussion of such risks and uncertainties.
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Results before Impact of Results after
SFAS 144 (f) SFAS 144 (f) SFAS 144 (f)
Results of
Operations: For the For the For the
Three Months Three Months Three Months
Ended March 31 Ended March 31 Ended March 31
Unaudited Unaudited
2003 2002 2003 2002 2003 2002
Minimum Rents (e) 72,137 48,970 (405) 72,137 48,565
Percentage Rents 1,710 1,297 1,710 1,297
Tenant Recoveries 37,018 24,698 (59) 37,018 24,639
Other Income 4,092 2,445 4 4,092 2,449
Total Revenues (e) 114,957 77,410 -- (460) 114,957 76,950
Shopping center
and operating
expenses (c) 39,362 25,755 (57) 39,362 25,698
Depreciation and
amortization 23,914 16,624 (115) 23,914 16,509
General,
administrative
and other expenses 2,336 1,533 2,336 1,533
Interest expense 34,008 25,124 34,008 25,124
Gain (loss) on
sale or writedown
of assets (38) 13,256 166 (13,408) 128 (152)
Pro rata income
(loss) of
unconsolidated
entities (c) 14,466 6,306 14,466 6,306
Extraordinary
loss on early
extinguishment
of debt -- -- -- -- -- --
Income (loss) of
the Operating
Partnership from
continuing
operations
before change
in accounting
principle (e) 29,765 27,936 166 (13,696) 29,931 14,240
Discontinued
Operations:
Gain (loss) on
sale of asset -- -- (166) 13,408 (166) 13,408
Income from
discontinuing
operations -- -- -- 288 -- 288
Income before
minority interest 29,765 27,936 -- -- 29,765 27,936
Income (loss)
allocated to
minority interests 5,145 5,573 5,145 5,573
Net income
before preferred
dividends 24,620 22,363 -- -- 24,620 22,363
Dividends earned
by preferred
stockholders 5,195 5,013 -- -- 5,195 5,013
Net income to
common
stockholders 19,425 17,350 -- -- 19,425 17,350
Average # of shares
outstanding
- basic 51,733 34,734 51,733 34,734
Average shares
outstanding
- diluted for
EPS (d) (e) 65,923 45,887 65,923 45,887
Average shares
outstanding
- diluted for
FFO (d) (e) 75,038 59,023 75,038 59,023
Per share
income - before
discontinued
operations and
extraordinary
items 0.37 0.50 0.37 0.50
Net income per
share - basic 0.38 0.50 0.38 0.50
Net income per
share - diluted 0.37 0.50 0.37 0.50
Dividend declared
per share 0.57 0.55 0.57 0.55
Funds from
operations
"FFO" (b)(d)
- basic 58,090 33,673 58,090 33,673
Funds from
operations
"FFO" (a)(b)(d)
- diluted 63,285 41,132 63,285 41,132
FFO per share
- basic (b)(d) 0.89 0.73 0.89 0.73
FFO per share
- diluted
(a)(b)(d) 0.84 0.70 0.84 0.70
% change in FFO
- diluted 21.02% 21.02%
(a) The Company issued $161,400 of convertible debentures in June and
July, 1997. The debentures were convertible into common shares at a
conversion price of $31.125 per share. The debentures were paid off
in December 2002. On February 25, 1998 the Company sold $100,000 of
convertible preferred stock and on June 16, 1998 another $150,000 of
convertible preferred stock was issued. The convertible preferred
shares can be converted on a 1 for 1 basis for common stock. These
preferred shares are not assumed converted for purposes of net income
per share for 2003 or 2002 as it would be antidilutive to that
calculation. The weighted average preferred shares outstanding are
assumed converted for purposes of FFO per diluted share as they are
dilutive to that calculation for all periods presented.
(b) The Company uses FFO in addition to net income to report its
operating and financial results and considers FFO a supplemental
measure for the real estate industry and a supplement to GAAP
measures. NAREIT defines FFO as net income (loss) (computed in
accordance with Generally Accepted Accounting Principles (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 is 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 does not represent cash flow
from operations as defined by GAAP, should not be considered as an
alternative to net income as defined by GAAP and is not indicative of
cash available to fund all cash flow needs. FFO as presented may not
be comparable to similarly titled measures reported by other real
estate investment trusts.
Effective January 1, 2003 gains or losses on sale of peripheral land
and the impact of SFAS 141 have been included in FFO. The inclusion
of gains on sales of peripheral land increased FFO for the quarter
ended March 31 , 2003 by $524,000, or $.01 per share and the impact
of SFAS No. 141 increased FFO by $1.1 million or $.015 per share.
During the quarter ended March 31, 2002 there were no outparcel sales
and no impact of SFAS No. 141 which is effective for all acquisitions
after June 30, 2002.
(c) This includes, using the equity method of accounting, the Company's
prorata share of the equity in income or loss of its unconsolidated
joint ventures and for Macerich Management Company for all periods
presented.
(d) The Company has operating partnership units ("OP units"). Each OP
unit can be converted into a share of Company stock. Conversion of
the OP units has been assumed for purposes of calculating the FFO per
share and the weighted average number of shares outstanding.
(e) Effective October 1, 2002 the Company adopted SFAS 141, Business
Combinations, which requires companies that have acquired assets
subsequent to June 2001 to reflect the discounted net present value
of market rents in excess of rents in place at the date of
acquisition as a deferred credit to be amortized into income over
the average remaining life of the acquired leases. The impact on EPS
for the period ended March 31, 2003 was approximately $.016 per
share. In accordance with the NAREIT definition of FFO the impact of
this accounting change is included in FFO.
(f) In October 2001, the FASB issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144
addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. The Company adopted SFAS 144 on
January 1, 2002. The Company sold Boulder Plaza on March 19, 2002
and in accordance with SFAS 144 the results of Boulder Plaza for the
periods from January 1, 2002 to March 19, 2002, have been
reclassified into "discontinued operations" on the consolidated
statements of operations. Additionally on January 2, 2003 the
Company sold its 67% interest in Paradise Village Gateway (acquired
in July 2002), and the loss on sale of $.2 million has been
reclassified to discontinued operations.
Mar 31 Dec 31
Summarized Balance Sheet Information 2003 2002
(UNAUDITED)
Cash and cash equivalents $105,754 $53,559
Investment in real estate, net (h) $3,127,902 $2,842,177
Investments in unconsolidated entities (i) $553,437 $617,205
Total Assets $3,933,848 $3,662,080
Mortgages and notes payable $2,555,094 $2,291,908
Mar 31 Mar 31
Additional financial data as of: 2003 2002
Occupancy of centers (f) 92.50% 92.00%
Comparable quarter change
in same center sales (f)(g) 0.00% -0.50%
Additional financial data for
the three months ended March 31 2003 2002
Acquisitions of property and equipment
- including joint ventures prorata $4,227 $2,474
Development, redevelopment and
expansions of centers
- including joint ventures prorata $35,291 $7,281
Renovations of centers - including
joint ventures at prorata $1,270 $536
Tenant allowances - including
joint ventures at prorata $1,470 $2,507
Deferred leasing costs - including
joint ventures at prorata $3,091 $2,687
(f) excludes redevelopment properties - Crossroads Mall - Boulder,
and Parklane Mall.
(g) includes mall and freestanding stores.
(h) includes construction in process on wholly owned assets of $166,017
at March 31, 2003 and $111,517 at December 31, 2002.
(i) includes the Company's prorata share of construction in process on
unconsolidated entities of $16,341 at March 31, 2003 and $16,147 at
December 31, 2002.
PRORATA SHARE OF JOINT VENTURES For the Three Months
Ended March 31
Unaudited
(Unaudited) (All amounts in thousands)
2003 2002
Revenues:
Minimum rents (e) $39,773 $26,417
Percentage rents 1,387 1,143
Tenant recoveries 16,143 10,662
Management fee (c) 2,584 2,134
Other 1,081 759
Total revenues 60,968 41,115
Expenses:
Shopping center and operating expenses 19,117 13,360
Interest expense 14,163 10,772
Management company expense 2,012 1,884
Depreciation and amortization 11,657 7,375
Total operating expenses 46,949 33,391
Gain (loss) on sale or writedown of assets 447 (1,418)
Net income 14,466 6,306
For the Three Months
RECONCILIATION OF NET INCOME TO FFO (b) Ended March 31
(All amounts in thousands)
(UNAUDITED)
2003 2002
Net income - available to common stockholders $19,425 $17,350
Adjustments to reconcile net income
to FFO - basic
Minority interest 5,145 5,573
Loss on early extinguishment of debt -- --
(Gain) loss on sale of wholly owned assets,
excluding peripheral land sales 166 (13,256)
(Gain) loss on sale or write-down of
depreciated assets from unconsolidated
entities (pro rata), excluding peripheral
land sales (51) 1,418
Depreciation and amortization on
wholly owned centers 23,914 16,624
Depreciation and amortization
on joint ventures and from the
management companies (pro rata) 11,657 7,375
Less: depreciation on personal property
and amortization of loan costs and
interest rate caps (2,166) (1,411)
Total FFO - basic 58,090 33,673
Weighted average shares outstanding
- basic (d) 65,486 45,887
Additional adjustment to arrive at FFO
- diluted
Interest expense and amortization of
loan costs on the debentures (e) 2,446
Preferred stock dividends earned 5,195 5,013
Effect of employee/director stock
incentive plans antidilutive antidilutive
FFO - diluted 63,285 41,132
Weighted average shares outstanding
- diluted (d) (e) 75,038 59,023
THE MACERICH COMPANY
RECONCILIATION OF NET INCOME TO EBITDA
(DOLLARS IN THOUSANDS) For the Three Months Ended
Mar 31, Mar 31,
2003 2002
Net income available to common stockholders $19,425 $17,350
Interest expense 34,008 25,124
Interest expense - unconsolidated
entities (pro rata) 14,163 10,772
Depreciation and amortization
- wholly-owned centers 23,914 16,624
Depreciation and amortization
- unconsolidated entities (pro rata) 11,657 7,375
Minority interest 5,145 5,573
Loss (gain) on sale of assets
- wholly-owned centers 38 (13,256)
Loss (gain) on sale of assets
- unconsolidated entities (pro rata) (447) 1,418
Preferred dividends 5,195 5,013
EBITDA 113,098 75,993
RECONCILIATION OF EBITDA TO SAME CENTERS - NET OPERATING INCOME ("NOI")
(DOLLARS IN THOUSANDS) For the Three Months Ended
Mar 31, Mar 31,
2003 2002
EBITDA (j) $113,098 $75,993
Add: REIT general and administrative expenses 2,336 1,533
Management Company expenses
- wholly-owned 1,736 1,226
Management Co. - unconsolidated entity (931) (179)
EBITDA of non-comparable centers (40,715) (5,223)
SAME CENTERS - Net operating income
(NOI) (k) 75,524 73,350
(j) EBITDA represents earnings before interest, income taxes,
depreciation, amortization, minority interest, 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 to 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.
(k) 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.
SOURCE The Macerich Company
CONTACT:
Arthur Coppola,
President and Chief Executive Officer
or Thomas E. O'Hern,
Executive Vice President and Chief Financial Officer
of
The Macerich Company,
+1-310-394-6000