SANTA MONICA, Calif., Aug. 12 /PRNewswire/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the quarter ended June 30, 1999 which included the following:
-- Funds from operations ("FFO") -- diluted increased 47% for the second
quarter of 1999 compared to the second quarter of 1998.
-- FFO per share -- diluted increased 8.1% to $.64 compared to $.59 for
the second quarter of 1998 on a comparable basis.
-- Portfolio occupancy was 92.2%, a 60 basis point improvement over
June 30, 1998.
-- Sales per square foot for mall and freestanding stores was $331 for the
twelve months ended June 30, 1999, a 3.8% increase over the 1998
portfolio sales per square foot of $319.
-- Initial year rents on mall and freestanding store leases signed during
the second quarter of 1999 were 10% higher than expiring rents.
-- Same center specialty leasing income increased 28% compared to the
second quarter of 1998.
-- Macerich acquired Los Cerritos Center in Cerritos California, a
1.3 million square foot super regional mall.
Commenting on results for the quarter, Arthur Coppola, President and Chief Executive Officer of Macerich stated, "The strong results for the second quarter reflect the continuing trend of occupancy gains compared to the same quarter in the prior year, same center net operating income increases and strong leasing activity. These positive trends have contributed to the significant increase in our internal growth, which has fueled much of our FFO growth per share. Same center net operating income growth was at 3.1% for the second quarter and we expect it to exceed 4% in the third and fourth quarter. Given the large number of recent acquisitions with strong internal growth potential, we anticipate that the positive same center net operating income growth will continue.
In addition, during the quarter we closed on the acquisition of Los Cerritos Center, a super regional mall in close proximity to two of the Company's malls -- Lakewood Mall and Stonewood Mall. The trade area served by these three malls has 1.8 million people. The malls combine for over 4 million square feet of gross leasable area and there are tremendous marketing, leasing and operating efficiencies to be derived from combining these properties."
Financial Results
For the quarter ended June 30, 1999, FFO -- diluted increased to $38.9 million from $26.4 million for the second quarter of 1998. On a per share basis, FFO-diluted increased 8.1% to $.64 for the quarter ended June 30, 1999 compared to $.59 on a proforma basis for the quarter ended June 30, 1998. The 1998 results were adjusted on a proforma basis to eliminate the accounting change for percentage rent that became effective during the second quarter of 1998 and was rescinded after the fourth quarter of 1998.
Net income for the quarter increased to $9.0 million, from $7.4 million for the second quarter of 1998 and net income per share increased to $.26 from $.24 in the second quarter of 1998.
During 1999, the Company's convertible debentures were dilutive to FFO per share. Accordingly, during 1999, the debentures were considered equity for purposes of calculating FFO per share -- diluted. The debentures were not dilutive for FFO purposes during the first and second quarters of 1998.
Second Quarter Highlights
-- During the second quarter, the Company signed leases for mall and
freestanding shop space for approximately 162,000 square feet. The
rent on new leases was $35.53. The new leases were signed at rents
approximately 10% higher than expiring rents.
-- The Company acquired Los Cerritos Center. Los Cerritos is a
1.3 million square foot super regional mall anchored by Robinson-May,
Sears, Mervyn's, Nordstrom and Macy's. The mall is located in
Cerritos, California and gives The Macerich Company an additional
dominant franchise regional mall in the Southern Los Angeles County
market. The Company concurrently placed a $120 million mortgage on the
property with a fixed interest rate of 7.13%.
-- The $90 million redevelopment of Pacific View Mall in Ventura,
California continued with the opening of a new 124,500 square foot
JC Penney store in March. In April, Robinson-May began the complete
transformation of the former JC Penney Store into a 165,000 square foot
fashion department store. Sears is approximately 60% complete with the
construction of their new 161,000 square foot store, scheduled to open
in October 1999. In addition, Macy's has announced a $20 million
renovation of their store and leasing activity remains strong with 75%
of the non-anchor space committed.
-- In July, Macerich closed on phase two of the Safeco portfolio which
included 6 office buildings at Redmond Town Center which are all leased
to AT&T Wireless. Redmond Town Center is a mixed-use project that also
includes 570,000 square feet of retail. The purchase price for phase
two was $111 million. A concurrent 10 year, fixed rate loan of
$76 million, bearing interest at 6.77%, was placed on the property at
closing. The acquisition of the Safeco portfolio was done in a joint
venture with an affiliate of Ontario Teachers' Pension Plan Board
owning 49% and an affiliate of Macerich owning 51%.
Macerich has acquired 23 regional centers totaling 19.2 million square feet in the past 18 months. The Company's total portfolio consists of over 41.5 million square feet comprised of 47 regional shopping centers and seven community centers.
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 78% ownership interest in The Macerich Partnership, L.P. Additional information about The Macerich Company can be obtained from the Company's web site at www.macerich.com .
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, availability and cost of financing and operating expenses; adverse changes in the real estate markets including, among other things, competition with other companies, retail formats and technology, risks of real estate development and acquisition; governmental actions and initiatives; and environmental and safety requirements. 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 ended for the six months ended
June 30 June 30
unaudited
1999 1998 1999 1998
Minimum Rents 51,313 40,213 101,905 79,629
Percentage Rents (b) 3,206 1,080 7,148 4,250
Tenant Recoveries 24,178 19,181 47,276 36,822
Other Income 1,978 933 3,195 1,881
Total Revenues 80,675 61,407 159,524 122,582
Shopping Center
Expenses 23,955 19,279 47,221 38,001
Depreciation and
amortization 15,285 11,894 30,539 23,607
General,
administrative
and other
expenses (c) 1,439 1,153 2,843 2,177
Interest expense 28,602 20,636 55,355 41,212
Gain on sale of
assets 0 9 0 9
Pro rata income of
unconsolidated
entities (d) 5,286 4,152 10,634 5,582
Income before minority
interest &
extraordinary items 16,680 12,606 34,200 23,176
Income allocated to
minority interests 3,258 3,182 6,488 6,190
Extraordinary loss
on early extinguishment
of debt 15 0 988 90
Dividends earned by
preferred stockholders 4,421 2,057 8,841 2,706
Net income -- available
to common stockholders 8,986 7,367 17,883 14,190
Average # of shares
outstanding -- basic 33,980 30,765 33,971 28,975
Average shares outstanding,
-- basic, assuming full
conversion of
OP Units (e) 46,291 42,853 46,286 41,063
Average shares outstanding
-- diluted for
FFO (f) (e) 61,143 47,896 61,022 44,631
Net income per share
-- basic $0.26 $0.24 $0.53 $0.49
Net income per share
-- diluted $0.26 $0.24 $0.53 $0.49
Dividend declared
per share $0.485 $0.460 $0.970 $0.920
Funds from operations
"FFO" (a) (e)
-- basic $30,963 $24,378 $61,782 $46,791
Funds from operations
"FFO" (a) (f) (e)
-- diluted $38,913 $26,435 $77,510 $49,753
FFO per share --
basic (a) (e) $0.669 $0.569 $1.335 $1.139
FFO per share -
diluted (a) (f) (e) $0.636 $0.552 $1.270 $1.115
Proforma FFO per share
-- diluted assuming
the accounting change,
EITF 97-11, was effective
1-1-98, and that EITF 98-9,
was reversed effective 1-1-98.
proforma impact of EITF
97-11 (c) n/a ($0.020)
proforma impact
of EITF
98-9 (b) $0.037 $0.037
Proforma FFO per
share -- diluted (g) $0.636 $0.589 $1.270 $1.132
% change in proforma
FFO -- diluted (g) 8.07% 12.23%
The Macerich Company
Financial Highlights
(In Thousands, Except Per Share Amounts)
(a) 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." Percentage
change in FFO per share is based on a comparison to the same period in
1998.
(b) Effective April 1, 1998, there was an accounting change (EITF 98-9)
mandated by the Financial Accounting Standards Board which modifies
the timing on recognition of revenue for percentage rent received
from tenants. Although the accounting change had no material impact
on the annual percentage rent recognized, the accounting change had
the effect of deferring $1,792 of percentage rent (or $.037 per
diluted share) from the second quarter of 1998 to the quarter ended
December 31, 1998. During 1999, the FASB reversed EITF 98-9 and the
accounting treatment, starting effective January 1, 1999 reverted to
the former method of accounting for percentage rents.
(c) Effective March 19, 1998 the Financial Accounting Standards Board
adopted EITF #97-11 entitled "Accounting for Internal Costs Relating
to Real Estate Property Acquisitions." This accounting
interpretation requires internal acquisition costs to be expensed,
previously these costs had been capitalized. If this new accounting
interpretation had been implemented effective January 1, 1998, income
before extraordinary items and minority interests would have been
reduced by $834 or $.02 per share during the first quarter of 1998.
(d) This includes the Company's prorata share of the equity in income or
loss of its unconsolidated joint ventures and the Management
companies, all of which are accounted for using the equity method of
accounting.
(e) 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.
(f) The Company issued $161.4 million of convertible debentures in June
and July, 1997. The debentures are convertible into common shares at
a conversion price of $31.125 per share. Conversion is not reflected
for calculation of 1998 FFO per share or net income per share as the
conversion would be antidilutive. On February 25, 1998 the Company
sold $100 million of convertible preferred stock and on June 17, 1998
another $150 million 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 is the effect of stock options and restricted
stock, calculated using the treasury method.
(g) This reflects the impact of the accounting changes discussed in
footnotes (b) and (c) above on a proforma basis assuming that the
accounting change noted in footnote (c) was effective as of
January 1, 1998 and that the accounting change discussed in footnote
(b), EITF 98-9 was reversed effective January 1, 1998.
June 30 Dec 31
Summarized Balance Sheet Information 1999 1998
(UNAUDITED)
Cash and cash equivalents 24,610 25,143
Investment in real estate, net 1,973,543 1,966,845
Total Assets 2,466,670 2,322,056
Mortgage and notes payable 1,531,846 1,345,718
Convertible debentures 161,400 161,400
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Additional financial data as of June 30, 1999
Occupancy of centers (h) 92.20%
Year to date increase in same center sales (h) (i) 3.1%
Debt as a percentage of total market capitalization (j) 60.6%
(h) excludes redevelopment properties -- Pacific View Mall, Crossroads
Mall -- Boulder, Huntington Center and Parklane Mall
(i) includes mall and freestanding stores
(j) includes joint ventures at pro rata and is based on the closing stock
price on June 30, 1999 of $26.25
RECONCILIATION OF NET INCOME TO FFO
for the three months ended for the six months ended
June 30, June 30,
(UNAUDITED) (UNAUDITED)
1999 1998 1999 1998
Net income -- available
to common stockholders 8,986 7,367 17,883 14,190
Adjustments to
reconcile net income
to FFO -- basic
Minority interest 3,258 3,182 6,488 6,190
Loss on early
extinguishment of
debt 15 0 988 90
(Gain) loss on sale of
wholly owned assets 0 (9) 0 (9)
(Gain) loss on sale or
write-down of assets
from unconsolidated
entities (pro rata) (462) (205) (474) 164
Depreciation and
amortization on
wholly owned centers 15,285 11,894 30,539 23,607
Depreciation and
amortization on joint
ventures and from
the management companies
(pro rata) 4,932 3,057 8,465 4,427
Less: depreciation on
personal property and
amortization of loan
costs and interest
rate caps (1,051) (908) (2,107) (1,868)
Total FFO -- basic 30,963 24,378 61,782 46,791
Weighted average
shares outstanding
-- basic (e) 46,291 42,853 46,286 41,063
Additional adjustment to
arrive at FFO -- diluted
Interest expense and
amortization of loan
costs on the
debentures (f) 3,161 0 6,276 0
Preferred stock
dividends earned 4,421 2,057 8,841 2,706
Effect of restricted
stock grants 368 0 611 256
FFO -- diluted 38,913 26,435 77,510 49,753
Weighted average
shares outstanding --
diluted (f) 61,143 47,896 61,022 44,631
SOURCE The Macerich Company