-- Funds from operations ("FFO") per share - diluted increased to $.72
from $.65 for the quarter ended September 30, 2000.
-- Same center net operating income, excluding lease termination revenue,
was up 5.7% compared to the quarter ended September 30, 2000.
-- During the quarter, Macerich signed new leases at average initial rents
of $37.21 per square foot, substantially in excess of average portfolio
minimum rents of $27.87. First year rents on mall and freestanding
store leases signed during the quarter were 25% higher than expiring
rents.
-- Portfolio occupancy remains high at 92.4% at September 30, 2001
compared to 92.4% at June 30, 2001 and 92.6% at September 30, 2000.
-- The quarterly dividend, payable December 7, 2001, was increased to
$.55 per share.
-- Total tenant sales decreased 1.8% for the quarter ended September 30,
2001 compared to the quarter ended September 30, 2000.
Commenting on results for the quarter, Arthur Coppola, President and Chief
Executive Officer of Macerich stated, "The quarterly results reflect a double
digit growth in FFO per share, a strong increase in same center net operating
income and good leasing activity, all of which illustrate the resiliency of our
portfolio. The majority of our leases are long term, to national tenants. The
strong occupancy level is a byproduct of our quality tenants and portfolio. In
this softening economic climate, we are pleased with our results for the quarter
and our long-term view of our prospects for growth in our portfolio remains
positive."
Operating Results for the Quarter Ended September 30, 2001
Total revenues were $82.9 million for the quarter, compared to $76.9 million for the quarter ended September 30, 2000 and $241.3 million for the nine months ended September 30, 2001 compared to $228.5 million for the same period in 2000. The pro rata income of unconsolidated entities increased to $8.2 million for the quarter compared to $7.4 for the quarter ended September 30, 2000 and $20.9 million for the nine months ended September 30, 2001 compared to $20.5 million for the nine months ended September 30, 2000. Included in revenues are rents attributable to the accounting practice of straight lining of rents. The amount of straight lined rents, including joint ventures at pro rata, decreased to $321,000 in the quarter compared to $517,000 during the quarter ended September 30, 2000. This decrease resulted primarily from the Company structuring the majority of its new leases using annual CPI increases, which generally do not require straight lining treatment. CPI increases included in minimum rents were approximately $445,000 greater than in the quarter ended September 30, 2000. Lease termination revenue, including joint ventures at pro rata, was $1.7 million for the quarter compared to $744,000 during the quarter ended September 30, 2000 and $3.9 million for the nine months ended September 30, 2001 compared to $3.3 million during the comparable period in 2000.
Excluding lease termination revenue, same center earnings, before interest, taxes, depreciation and amortization, including joint ventures at pro rata, ("EBITDA") grew at a 5.7% pace in the quarter ended September 30, 2001 compared to the same period in 2000.
For the quarter ended September 30, 2001, FFO-diluted was $42.5 million compared to $38.8 million for the third quarter of 2000. For the nine months ended September 30, 2001, FFO-diluted was $119.3 million compared to $114.9 million for the first nine months of 2000. Net income available to common stockholders for the quarter was $9.3 million compared to $7.2 million for the third quarter of 2000 and net income per share diluted was $.27 compared to $.21 in the third quarter of 2000. Net income available to common stockholders for the nine months ended September 30, 2001 was $22.5 million or $.67 per share compared to $21.1 million or $.62 per share for the nine months ended September 30, 2000.
Quarterly Results
-- During the quarter, leases were signed for approximately 235,000 square
feet of mall and freestanding space. The average rent on new leases
was $37.21 per square foot, 25% greater than expiring rents.
-- Total same center tenant sales for the quarter decreased 1.8% compared
to the third quarter of 2000 and increased .3% for the nine months
ended September 30, 2001, compared to the same period in 2000. The
quarterly decrease was driven by a total same center tenant sales
decline for the month of September of 7.1%.
-- On November 9, 2001, the Company declared an increased quarterly
dividend of $.55 per share on its common and preferred stock, payable
on December 7, 2001 to stockholders of record on November 19, 2001.
This represents a 4% increase over the prior quarterly dividend. The
Company has increased its dividend each year since becoming a public
company in 1994.
-- Robinson-May executed a lease for a 30,000 square foot expansion of
their store at Stonewood Mall and completed a comprehensive renovation
of their store at Lakewood Center.
-- Nordstrom completed a major renovation of their store at Los Cerritos
Center.
-- Swedish apparel retailer Hennes & Mauritz (H&M) leased 19,427 square
feet at Queens Center with a planned opening in late 2001.
-- At Vintage Faire Mall in Modesto, California a $10 million renovation
was completed. Year to date sales are up 9% at this property with
sales per square foot now over $370.
-- At Redmond Town Center, in Redmond, Washington, city approval was
obtained for the addition of an 110,000 square foot Bon Marche
department store.
Refinancing Activity
In October 2001 a $46 million, 10 year, fixed rate loan bearing interest at 7.45% was placed on Rimrock Mall in Billings, Montana. This loan replaced a $28 million, 7.7% interest rate loan.
During the quarter, the Company's line of credit facility was increased to $200 million and two additional banks were added. There is currently $134 million outstanding on the credit facility.
Financial Outlook
The following statements are based on our current expectations and are subject to the forward -looking statement caveat that appears below.
Management is not modifying previous earnings guidance for year 2001. Management realizes that given the current volatile economic climate that the fourth quarter of 2001 earnings could be impacted by declining retail sales and occupancy levels. Although management is not predicting it, if retail sales drop 10% for each of its tenants in the fourth quarter of 2001 the Company's percentage rent would drop approximately $1.6 million. If a significant drop in retail sales or occupancy should occur, FFO per share for the year could reach the lower end of the range of previous FFO guidance of $2.96 to 3.02.
Management estimates that FFO-diluted per share will range from $3.11 to $3.18 during 2002. This range is based on many assumptions, including the assumption that 2002 same center EBITDA will grow at a 3.0% to 3.5% rate compared to 2001 results. Inherent in the same center growth rate assumption is that straight line rent revenue will continue to decline based on the Company's shift to structuring new leases using CPI rent increases rather than fixed rent increases.
The Macerich Company is a fully integrated self-managed and self-administered real estate investment trust, which focuses on the acquisition and redevelopment of regional malls and community centers throughout the United States. The Company is the sole general partner and owns a 79% ownership interest in The Macerich Partnership, L.P. Macerich owns interests in 46 regional malls and five community centers totaling over 41.5 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 third quarter 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 through Street Events at www.streetevents.com . The call begins today, November 13, at 10:30 Pacific Daylight 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 will be available for 90 days after the call.
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, 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, 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 of Operations: For the Three Months For the Nine Months
Ended September 30 Ended September 30
(UNAUDITED)
2001 2000 2001 2000
Minimum Rents 49,991 47,839 148,209 142,920
Percentage Rents(a) 2,392 2,154 5,380 5,156
Tenant Recoveries 27,701 24,891 79,867 74,329
Other Income 2,803 2,053 7,885 6,091
Total Revenues 82,887 76,937 241,341 228,496
Shopping center and
operating expenses(c) 28,629 25,122 80,606 73,231
Depreciation and
amortization 16,601 15,064 49,092 44,632
General, administrative
and other expenses 963 851 4,478 4,032
Interest expense 27,550 26,962 83,042 82,061
Gain (loss) on sale
of assets (107) (1,189) (295) (1,297)
Pro rata income of
unconsolidated
entities(c) 8,209 7,353 20,891 20,461
Income before minority
interest & extraordinary
items 17,246 15,102 44,719 43,704
Extraordinary loss on
early extinguishments
of debt -- 984 187 984
Cumulative effect of change
in accounting principle(a) -- -- -- (963)
Income of the Operating
Partnership 17,246 14,118 44,532 41,757
Income allocated to
minority interests 2,965 2,301 7,342 6,722
Dividends earned by
preferred stockholders 5,013 4,648 14,675 13,945
Net income - available to
common stockholders 9,268 7,169 22,515 21,090
Average # of shares
outstanding - basic 33,879 34,162 33,761 34,134
Average shares
outstanding,- basic,
assuming full conversion
of OP Units(d) 45,032 45,107 44,915 45,084
Average shares outstanding
- diluted for FFO(d)(e) 58,994 59,915 58,877 59,822
Per share income before
cumulative effect of change
in accounting principle and
extraordinary item-diluted 0.27 0.23 0.67 0.66
Net income per
share - basic 0.27 0.21 0.67 0.62
Net income per share -
diluted 0.27 0.21 0.67 0.62
Dividend declared per share 0.53 0.51 1.59 1.53
Funds from operations
"FFO"(b)(d) - basic 34,478 30,630 95,769 90,088
Funds from operations
"FFO" (b)(d)(e) - diluted 42,462 38,830 119,273 114,879
FFO per share - basic(b)(d) 0.77 0.68 2.13 2.00
FFO per share -
diluted(b)(d)(e) 0.72 0.65 2.03 1.92
% change in FFO - diluted 11.06% 5.49%
(a) Effective January 1, 2000, in accordance with Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements," the
Company changed its method of accounting for percentage rents. The
new accounting method has the impact of deferring percentage rent
from the first, second and third quarters into the fourth quarter.
The cumulative effect of this change in accounting treatment at the
adoption date of January 1, 2000 was $963 for the wholly owned assets
and $787 for joint ventures on a prorata basis, which in accordance
with GAAP, was written off as a cumulative change in accounting
principle.
(b) Funds from Operations ("FFO") is defined as: "net income (computed
in accordance with GAAP) excluding gains or losses from debt
restructuring and sales of property, plus depreciation and
amortization (excluding depreciation on personal property and
amortization of loan and financial instrument cost) and after
adjustments for unconsolidated entities. Adjustments for
unconsolidated entities are calculated on the same basis." In
accordance with the National Association of Real Estate Investment
Trusts' (NAREIT) white paper on Funds from Operations, dated October,
1999, excluded from FFO are the earnings impact of cumulative effects
of accounting changes and results of discontinued operations, both as
defined by GAAP.
(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 and for The Macerich Property Management Company through
March 28, 2001. Effective March 28, 2001, the Macerich Property
Management Company was converted from an unconsolidated preferred
stock subsidiary into a taxable reit subsidiary ("TRS") and as of
that date the results of the Macerich Property Management Company are
now included in the consolidated results of The Macerich Company.
(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) The Company issued $161,400 of convertible debentures in June and
July, 1997. The debentures are convertible into common shares at a
conversion price of $31.125 per share. On February 25, 1998 the
Company sold $100,000 of convertible preferred stock and on June 17,
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 as it would be antidilutive to
that calculation. The weighted average preferred shares outstanding
are assumed converted for purposes of FFO per share as they are
dilutive to that calculation. Also included in diluted net income
per share and FFO per share for 2000 is the effect of stock options
and restricted stock, calculated using the treasury method.
Sept. 30 Dec 31
Summarized Balance Sheet Information 2001 2000
(UNAUDITED)
Cash and cash equivalents 27,882 36,273
Investment in real estate, net(h) 1,934,233 1,933,584
Investments in unconsolidated entities(I) 276,087 273,140
Total Assets 2,332,021 2,337,242
Mortgage and notes payable 1,438,087 1,400,087
Convertible debentures 150,848 150,848
September 30 September 30
Additional financial data as of: 2001 2000
Occupancy of centers(f) 92.40% 92.60%
Comparable quarter change in same
center sales(f)(g) -1.80% 3.50%
(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 $60,300 at
September 30, 2001 and $44,700 at December 31, 2000.
(I) includes the Company's prorata share of construction in process on
unconsolidated entities of $19,900 at September 30, 2001 and $4,860
at December 31, 2000.
PRORATA SHARE OF For the Three Months For the Nine Months
JOINT VENTURES Ended September 30 Ended September 30
(All amounts in thousands)
2001 2000 2001 2000
Revenues:
Minimum rents 26,630 25,103 78,011 74,674
Percentage rents 1,016 881 2,995 2,851
Tenant recoveries 11,274 10,409 32,481 29,914
Management fee 2,104 2,528 7,328 8,693
Other 915 1,098 2,736 2,255
Total revenues 41,939 40,019 123,551 118,387
Expenses:
Shopping center expenses 13,782 12,423 39,946 35,740
Interest expense 11,529 12,260 35,430 33,875
Management company expense 1,584 2,609 7,248 10,101
Depreciation and
amortization 6,920 6,550 20,244 18,186
Total operating expenses 33,815 33,842 102,868 97,902
Gain (loss) on sale of assets 85 1,176 208 763
Cumulative effect of change in
accounting principle (787)
Net income 8,209 7,353 20,891 20,461
RECONCILIATION OF NET For the Three Months For the Nine Months
INCOME TO FFO Ended September 30 Ended September 30
(All amounts in thousands)
(UNAUDITED) (UNAUDITED)
2001 2000 2001 2000
Net income - available to
common stockholders 9,268 7,169 22,515 21,090
Adjustments to reconcile net
income to FFO - basic
Minority interest 2,965 2,301 7,342 6,722
Loss on early extinguishments
of debt -- 984 187 984
(Gain) loss on sale of
wholly owned assets 107 1,189 295 1,297
(Gain) loss on sale or
write-down of assets from
unconsolidated entities
(pro rata) (85) (1,176) (208) (763)
Depreciation and
amortization on wholly
owned centers 16,601 15,064 49,092 44,632
Depreciation and
amortization on joint
ventures and from the
management companies
(pro rata) 6,920 6,550 20,244 18,186
Cumulative effect of change
in accounting - wholly owned
assets 963
Cumulative effect of change
in accounting - prorata joint
ventures 787
Less: depreciation on
personal property and
amortization of loan costs
and interest rate caps (1,298) (1,451) (3,698) (3,810)
Total FFO - basic 34,478 30,630 95,769 90,088
Weighted average shares
outstanding - basic(d) 45,032 45,107 44,915 45,084
Additional adjustment to
arrive at FFO - diluted
Interest expense and
amortization of loan
costs on the debentures(e) 2,971 3,162 8,829 9,454
Preferred stock dividends
earned 5,013 4,648 14,675 13,945
Effect of employee/director
stock incentive plan 390 1,392
FFO - diluted 42,462 38,830 119,273 114,879
Weighted average shares
outstanding -
diluted(d)(e) 58,994 59,915 58,877 59,822
SOURCE The Macerich Company
CONTACT:
Arthur Coppola, President and CEO
or
Thomas E. O'Hern, Executive VP and CFO
+1-310-394-6000