SANTA MONICA, Calif., Aug. 10 /PRNewswire/ -- The Macerich Company (NYSE: MAC - news) today announced results of operations for the quarter ended June 30, 2000 which included the following:
- Funds from operations (''FFO'') per share - diluted increased 7.5% to $.64 from $.59 for the second quarter of 1999 on a comparable basis.
- Tenant sales per square foot increased to $344 for the twelve months ended June 30, 2000 compared to $331 for the twelve months ended June 30, 1999.
- During the quarter, Macerich signed new leases at average initial rents of $33.53 per square foot. First year rents on mall and freestanding store leases signed during the quarter were 19% higher than expiring rents on a comparable space basis.
- Portfolio occupancy remained high at 92.3%. Portfolio occupancy at June 30, 1999 was 92.7%.
Effective January 1, 2000, the Company adopted Staff Accounting Bulletin Number 101 (''SAB 101'') which addresses certain revenue recognition practices, including accounting for percentage rent. SAB 101 requires deferral of the recognition of percentage rent until the tenant's sales threshold has been exceeded. While annual revenue from percentage rent will not be materially impacted by this change, the majority of percentage rent will now be recognized in the third and fourth quarters of each year, rather than spread throughout the year. For the quarter ended June 30, 2000, FFO per share - diluted increased to $.64 compared to $.59 in the second quarter of 1999, adjusted on a proforma basis to reflect SAB 101. Year-to-date FFO per share - diluted increased to $1.272 compared to $1.185 for the six months ended June 30, 1999 on a comparable basis.
Commenting on results for the quarter, Arthur Coppola, President and Chief Executive Officer of Macerich stated, ''The solid results for the quarter reflect the on going trend of vibrant leasing activity, including very positive re-leasing spreads on new lease signings and strong specialty tenant leasing. This activity contributed to much of our FFO growth per share. These gains were partially offset by higher interest rates on floating rate debt.''
For the quarter ended June 30, 2000, FFO - diluted was $38.2 million compared to $38.9 million during the second quarter of 1999. For the six months ended June 30, 2000, FFO-diluted was $76.0 million compared to $77.5 million for the first six months of 1999.
Net income available to common stockholders for the quarter was $7.6 million
compared to $9.0 million for the second quarter of 1999 and net income per share
- diluted was $.22 compared to $.26 in the second quarter of 1999.
Highlights
-- During the quarter, approximately 263,000 square feet of leases were
signed for mall and freestanding space. The average rent on new leases
was $33.53 per square foot, 26% greater than average portfolio minimum
rents of $26.62. On a comparable space basis, new leases were signed
at rents approximately 19% higher than expiring rents.
-- Total same center sales for the quarter increased 3.6% and comparable
tenant sales also increased by 3.6% over the second quarter of 1999.
-- The $90 million redevelopment of Pacific View Mall in Ventura,
California continued with the majority of this phased redevelopment,
(which included the demolition of a one level mall and the building of
a two level, four anchor mall) now complete. The renovation included
the addition of a Robinson-May and Sears and a new 124,500 square foot
J.C. Penney store. The mall store lineup includes; Abercrombie and
Fitch, Ann Taylor Loft, Gap/Body Gap, Baby Gap/Gap Kids, Bath and Body
Works and Chicos. The mall occupancy level is currently at 82%, and
based on current lease negotiations, 90+% occupancy is expected by the
first quarter of 2001. In addition, Macy's has committed to a
$20 million renovation of their store.
-- The first new Macy's store ever built in Southern California is under
construction at Lakewood mall with an expected completion in November
2000. The $30 million redevelopment will include the relocation of
Mervyn's to a new store that is scheduled to be completed in the fourth
quarter of 2000 and the development of an additional 60,000 square feet
of shop space which is expected to be completed in May, 2001.
-- At Chesterfield Towne Center a new 145,000 square foot J.C. Penney
store is under construction with a planned grand opening in November
2000. J.C. Penney will be the mall's fifth anchor.
-- In May, MerchantWired (www.merchantwired.com) was announced.
MerchantWired is a full service, retail infrastructure company that
connects the physical and virtual worlds in the retail industry.
MerchantWired is a consortium of major mall companies including
Macerich, The Rouse Company, Simon Property Group, Taubman Centers,
Inc., Urban Shopping Centers, Inc. and Westfield America, Inc.
-- A $61 million loan was placed on Kitsap Mall. The loan is a 10 year
fixed rate loan, bearing interest at 8.06%. Proceeds in excess of the
former $38 million loan are expected to be used for redevelopment.
-- The Company has committed to a refinancing of Santa Monica Place. The
current loan of $85 million, bearing interest at LIBOR plus 1.75%, will
be refinanced with a $85 million, 10 year, fixed rate loan bearing
interest at 7.70%.
-- On August 9, 2000, the Company declared a dividend of $.51 per share on
its common and preferred stock, payable on September 6, 2000 to
stockholders of record on August 18, 2000.
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 an 80% ownership interest in The Macerich Partnership, L.P. Macerich owns interests in 47 regional malls and five community centers totaling over 42 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 second 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 StreetFusion at www.streetfusion.com. The call begins today, August 10, at 1:30 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, 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 acquisitions, 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 For the Six
Months Ended Months Ended
June 30 June 30
(UNAUDITED)
2000 1999 2000 1999
Minimum Rents 47,905 51,313 95,080 101,905
Percentage Rents(a) 1,471 3,206 3,002 7,148
Tenant Recoveries 24,869 24,178 49,438 47,276
Other Income 2,010 1,978 4,037 3,195
Total Revenues 76,255 80,675 151,557 159,524
Shopping Center Expenses 24,208 23,955 48,108 47,221
Depreciation and amortization 15,040 15,285 29,568 30,539
General, administrative and
other expenses 1,712 1,439 3,181 2,843
Interest expense 26,947 28,602 55,099 55,355
Gain < loss > on sale of assets (106) 0 (108) 0
Pro rata income of
unconsolidated entities(c) 6,386 5,286 13,109 10,634
Income before minority interest
& extraordinary items 14,628 16,680 28,602 34,200
Extraordinary loss on early
extinguishment of debt 0 15 0 988
Cumulative effect of change
in accounting principle(a) 0 0 (963) 0
Income of the Operating
Partnership 14,628 16,665 27,639 33,212
Income allocated to minority
interests 2,383 3,258 4,421 6,488
Dividends earned by preferred
stockholders 4,648 4,421 9,297 8,841
Net income - available to
common stockholders 7,597 8,986 13,921 17,883
Average # of shares
outstanding - basic 34,148 33,980 34,120 33,971
Average shares outstanding
- basic, assuming full
conversion of OP Units(d) 45,093 46,291 45,073 46,286
Average shares outstanding
- diluted for FFO(d)(e) 59,900 61,143 59,775 61,022
Per share Income before
cumulative effect of change
in accounting principle and
extraordinary item - diluted $0.22 $0.26 $0.43 $0.55
Net income per share - basic $0.22 $0.26 $0.41 $0.53
Net income per share - diluted $0.22 $0.26 $0.41 $0.53
Dividend declared per share $0.510 $0.485 $1.020 $0.970
Funds from operations "FFO"
(b)(d) - basic $29,890 $30,963 $59,458 $61,782
Funds from operations "FFO"
(b)(d)(e) - diluted $38,228 $38,913 $76,050 $77,510
FFO per share - basic(b)(d) $0.663 $0.669 $1.319 $1.335
FFO per share - diluted(b)(d)(e) $0.638 $0.636 $1.272 $1.270
Proforma FFO per share -
diluted assuming the
accounting change, for %
rent was effective January 1,
1999: proforma impact
of SAB 101(a) n/a ($0.043) n/a ($0.085)
Proforma FFO per
share - diluted $0.638 $0.593 $1.272 $1.185
% change in proforma
FFO - diluted 7.54% 7.35%
(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 $786 for joint ventures on a prorata basis, which in accordance
with GAAP, was written off as a cumulative change in accounting
principle. For comparative purposes, the results for the three and
six months ended June 30, 1999 were restated on a proforma basis to
reflect this accounting change. The proforma impact on the second
quarter of 1999 was -$.043 per diluted share and -$.085 per diluted
share for the six months ended June 30, 1999.
(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 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.
(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 $161.4 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. 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.
June 30 Dec 31
Summarized Balance Sheet Information 2000 1999
(UNAUDITED)
Cash and cash equivalents 34,954 40,455
Investment in real estate, net 1,921,806 1,931,415
Total Assets 2,310,156 2,404,293
Mortgage and notes payable 1,351,960 1,399,727
Convertible debentures 161,400 161,400
June 30 June 30
Additional financial data as of: 2000 1999
Occupancy of centers(f) 92.30% 92.70%
Comparable quarter increase in same center
sales(f)(g) 3.60% 2.20%
(f) excludes redevelopment properties - Pacific ViewMall, Crossroads
Mall - Boulder, and Parklane Mall
(g) includes mall and freestanding stores
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Three Months For the Six Months
Ended Ended
RECONCILIATION OF NET INCOME TO FFO June 30 June 30,
(UNAUDITED) (UNAUDITED)
2000 1999 2000 1999
Net income - available to
common stockholders 7,597 8,986 13,921 17,883
Adjustments to reconcile net
income to FFO - basic
Minority interest 2,383 3,258 4,421 6,488
Loss on early extinguishments
of debt 0 15 0 988
(Gain) loss on sale of wholly
owned assets 106 0 108 0
(Gain) loss on sale or write-down
of assets from unconsolidated
entities (pro rata) (11) (462) 413 (474)
Depreciation and amortization on
wholly owned centers 15,040 15,285 29,568 30,539
Depreciation and amortization on
joint ventures and from the
management companies (pro rata) 5,941 4,932 11,636 8,465
Cumulative effect of change in
accounting -wholly owned assets 0 0 963 0
Cumulative effect of change in
accounting -prorata joint ventures 0 0 787 0
Less: depreciation on personal
property and amortization of loan
costs and interest rate caps (1,166) (1,051) (2,359) (2,107)
Total FFO - basic 29,890 30,963 59,458 61,782
Weighted average shares
outstanding - basic(d) 45,093 46,291 45,073 46,286
Additional adjustment to
arrive at FFO - diluted
Interest expense and
amortization of loan
costs on the debentures(e) 3,145 3,161 6,292 6,276
Preferred stock dividends earned 4,648 4,421 9,297 8,841
Effect of employee/director
stock incentive plan 545 368 1,003 611
FFO - diluted 38,228 38,913 76,050 77,510
Weighted average shares
outstanding - diluted(d)(e) 59,900 61,143 59,775 61,022