SANTA MONICA, Calif., Feb 13, 2003 /PRNewswire-FirstCall via COMTEX/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the quarter and the year ended December 31, 2002 which included funds from operations ("FFO") per share-diluted increasing 12.8% to $1.07 for the quarter ended December 31, 2002 from $.95 for the comparable period in 2001 and FFO per share-diluted for the year ended December 31, 2002 increasing to $3.26 compared to $2.97 for 2001.
Net income available to common stockholders for the year ended December 31, 2002 was $61 million or $1.62 per share-diluted compared to $58.0 million or $1.72 per share-diluted for 2001. Net income to common stockholders for the three months ended December 31, 2002 was $33.2 million, or $.75 per share-diluted compared to net income of $35.5 million or $.94 per share- diluted for the three months ended December 31, 2001. Net income per share in 2001 was positively impacted by net gain on sales and writedown of assets of $.42 and $.55 per share respectively for the quarter and year ended December 31, 2001 compared to net gain on sales and writedown of assets in 2002 of $.18 per share for the quarter ended December 31, 2002 and $.44 per share for the year ended December 31, 2002. During the fourth quarter the Company adopted SFAS No. 141 - Business Combinations, which resulted in an increase in net income per share of $.03 relating to the acquisition of assets, all of which is reflected in the fourth quarter.
Highlights included:
- Total 2002 shareholder return, assuming reinvestment of dividends was 24.5%.
- Total diluted FFO in 2002 increased 18.3% over 2001 to $207.1 million. FFO per share-diluted for the quarter increased 12.8% to $1.07 and for the year FFO per share-diluted increased by 9.7% to $3.26. The impact of adopting SFAS #141 has been excluded from FFO.
- The Company acquired over $1.6 billion of real estate assets during 2002.
- During the fourth quarter, Macerich signed 276,000 square feet of specialty store leases at average initial rents of $40.54 per square foot. First year rents on mall and freestanding store leases signed during the quarter were 17% higher than expiring rents on a comparable space basis.
- Portfolio year-end occupancy increased to 93.9% up from 92.4% at December 31, 2001.
- Total same center tenant sales for the quarter ended December 31, 2002 were up .9% compared to the fourth quarter of 2001. The mall portfolio sales per square foot increased to $355 up from $350 in 2001.
- In November, the quarterly dividend was increased to $.57 per share. Macerich has increased its dividend each year since becoming a public company in 1994.
- The Company completed a $440 million equity issuance, sized up from $300 million due to strong investor demand. Funds from Operations ("FFO") is a widely used measure of the operating performance of real estate companies and is provided here as a supplemental measure to Generally Accepted Accounting Principles (GAAP) net income and earnings per share. A reconciliation of net income to FFO is provided in the financial statement section of this press release
Commenting on results and recent events, Arthur Coppola, President and Chief Executive Officer of Macerich stated, "The quarter was highlighted by continued strong fundamentals including occupancy levels and leasing spreads increasing over 2001 levels. Our portfolio performed extremely well, as is evidenced by the improved operating metrics and the double-digit increase in FFO per share, even in these challenging economic times.
We had a very successful equity offering in the fourth quarter, which was a ringing endorsement of our recent acquisition of Westcor and the direction of the Company. It was not only a successful year for us, but also for our shareholders who saw a total 2002 shareholder return on Macerich in excess of 24%."
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 69% of the expansion space already leased.
At Lakewood Center, Target commenced building a two-level Target store in the location formerly occupied by Montgomery Wards. Opening is scheduled for fall 2003.
Bon Marche continues construction of a new department store at Redmond Town Center, slated to open in August 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.
During October 2002 Macy's opened a new 236,000 square foot store becoming the fifth department store at the dominant super regional mall, Scottsdale Fashion Square.
Dispositions
The Company continues to dispose of non-core assets and recycle capital. In December 2002 the former Montgomery Wards site at Pacific View mall was sold and a gain on sale of approximately $12 million was recognized. 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
On December 13, 2002 the remaining $125 million of the Company's 7.25% convertible debentures were repaid in full.
In November 2002, the company filed to issue 10.2 million shares of common stock. Due to strong investor demand the offering was upsized to 13.2 million shares and with the exercise of the underwriters over-allotment the Company ultimately issued 15.2 million shares. The proceeds of the offering were used to pay off a $380 million acquisition loan incurred concurrent with the Westcor acquisition and other acquisition related debt.
2003 Earnings Estimates
The Company remains comfortable with its previously released year 2003 FFO per share guidance in the range of $3.42 to $3.50.
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 owns 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, February 13, 2003 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 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, 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 SFAS 144 SFAS 144
Results of For the Three For the Three For the Three
Operations: Months Ended Months Ended Months Ended
December 31 December 31 December 31
Unaudited Unaudited
2002 2001 2002 2001 2002 2001
Minimum Rents 73,233 53,271 (410) 73,233 52,861
Percentage Rents 6,943 7,014 6,943 7,014
Tenant Recoveries 36,109 29,297 (134) 36,109 29,163
Other Income 3,898 3,651 (6) 3,898 3,645
Total Revenues(e) 120,183 93,233 -- (550) 120,183 92,683
Shopping center
and operating
expenses(c) 39,651 30,221 (154) 39,651 30,067
Depreciation and
amortization 23,608 16,892 (120) 23,608 16,772
General,
administrative
and other
expenses 3,710 2,301 3,710 2,301
Interest expense 36,520 26,604 36,520 26,604
Gain (loss) on
sale or writedown
of assets 12,044 24,787 (12,150) (106) 24,787
Pro rata income
(loss) of
unconsolidated
entities (c) 22,094 12,040 22,094 12,040
Income before
minority interest
& extraordinary
items 50,832 54,042 (12,150) (276) 38,682 53,766
Extraordinary
loss on early
extinguishment
of debt 2,734 1,847 -- -- 2,734 1,847
Income (loss)
of the Operating
Partnership from
continuing
operations before
change in
accounting 48,098 52,195 (12,150) (276) 35,948 51,919
principle (e)
Rental accretion
from adopting
SFAS # 141(e) 1,139 -- 1,139 --
Discontinued
Operations:
Gain (loss) on
sale of asset -- -- 12,150 -- 12,150 --
Income from
discontinuing
operations -- -- -- 276 -- 276
Income before
minority
interest 49,237 52,195 -- -- 49,237 52,195
Income (loss)
allocated to
minority
interests 10,825 11,659 10,825 11,659
Net income before
preferred
dividends 38,412 40,536 -- -- 38,412 40,536
Dividends earned
by preferred
stockholders 5,195 5,013 -- -- 5,195 5,013
Net income
to common
stockholders 33,217 35,523 -- -- 33,217 35,523
Average # of shares
outstanding
- basic 42,077 33,935 42,077 33,935
Average shares
outstanding,
-basic, assuming
full conversion
of OP Units (d) 55,793 45,088 55,793 45,088
Average shares
outstanding
- diluted for
EPS (d)(e) 68,642 58,958 68,642 58,958
Average shares
outstanding
- diluted for
FFO (d)(e) 68,642 58,958 68,642 58,958
Per share income
- diluted before
extraordinary item 0.79 0.97 0.79 0.97
Net income per
share - basic 0.79 1.05 0.79 1.05
Net income per
share - diluted 0.75 0.94 0.75 0.94
Dividend declared
per share 0.57 0.55 0.57 0.55
Funds from
operations
"FFO" (b)(d)
- basic 66,048 47,839 66,048 47,839
Funds from
operations
"FFO" (a)(b)(d)
- diluted 73,303 55,796 73,303 55,796
FFO per share
- basic (b)(d) 1.18 1.06 1.18 1.06
FFO per share -
diluted (a)(b)(d) 1.07 0.95 1.07 0.95
% change in FFO
- diluted 12.84% 12.84%
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Results before Impact of Results after
SFAS 144 SFAS 144 SFAS 144
Results of For the Year For the Year For the Year
Operations: Ended Ended Ended
December 31 December 31 December 31
Unaudited Unaudited
2002 2001 2002 2001 2002 2001
Minimum Rents 233,478 201,481 (415) (1,616) 233,063 199,865
Percentage Rents 11,193 12,394 (39) 11,193 12,355
Tenant Recoveries 121,547 109,163 (59) (428) 121,488 108,735
Other Income 12,062 11,535 (21) (25) 12,041 11,510
Total Revenues(e) 378,280 334,573 (495) (2,108) 377,785 332,465
Shopping center
and operating
expenses (c) 129,504 110,827 (64) (572) 129,440 110,255
Depreciation and
amortization 78,837 65,983 (115) (381) 78,722 65,602
General,
administrative
and other
expenses 8,270 6,780 8,270 6,780
Interest expense 122,934 109,646 122,934 109,646
Gain < loss > on
sale or writedown
of assets 22,253 24,491 (26,073) (3,820) 24,491
Pro rata income
of unconsolidated
entities(c) 43,049 32,930 43,049 32,930
Income before
minority interest
& extraordinary
items and change
in accounting
principle (e) 104,037 98,758 (26,389) (1,155) 77,648 97,603
Rental revenue
accretion
resulting from
adopting
SFAS #141.(e) 1,139 -- 1,139 --
Extraordinary
loss on early
extinguishment
of debt 3,605 2,034 3,605 2,034
Income of the
Operating
Partnership from
continuing
operations 101,571 96,724 (26,389) (1,155) 75,182 95,569
Discontinued
Operations:
Gain on sale
of asset -- -- 26,073 -- 26,073 --
Income from
discontinuing
operations -- -- 316 1,155 316 1,155
Income before
minority
interest 101,571 96,724 -- -- 101,571 96,724
Income allocated
to minority
interests 20,189 19,001 -- -- 20,189 19,001
Net income before
preferred
dividends 81,382 77,723 -- -- 81,382 77,723
Dividends earned
by preferred
stockholders 20,417 19,688 -- -- 20,417 19,688
Net income
to common
stockholders 60,965 58,035 -- -- 60,965 58,035
Average # of shares
outstanding -
basic 37,348 33,809 37,348 33,809
Average shares
outstanding,
- basic, assuming
full conversion
of OP Units (d) 49,611 44,963 49,611 44,963
Average shares
outstanding
- diluted for
EPS(d)(e) 50,066 44,963 50,066 44,963
Average shares
outstanding
- diluted
for FFO(d)(e) 63,015 58,902 63,015 58,902
Per share income
- diluted before
extraordinary
item 1.69 1.76 1.69 1.76
Net income per
share - basic 1.63 1.72 1.63 1.72
Net income per
share - diluted 1.62 1.72 1.62 1.72
Dividend declared
per share 2.22 2.14 2.22 2.14
Funds from
operations
"FFO" (b)(d)
- basic 177,350 143,607 177,350 143,607
Funds from
operations
"FFO" (a)(b)(d)
- diluted 207,077 175,068 207,077 175,068
FFO per share
- basic(b)(d) 3.51 3.19 3.51 3.19
FFO per share
- diluted(a)(b)(d) 3.26 2.97 3.26 2.97
% change in FFO
- diluted 9.68% 9.68%
(a) 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. The debentures were paid off in
December 2002. 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 for 2002 or 2001 as it would be antidilutive to that
calculation. The preferred shares are assumed converted for the
quarters ended December 31, 2002 and 2001 as they are dilutive to net
income per share for those periods. 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) 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 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 29, 2001, Macerich Property Management
Company merged into a wholly-owned subsidiary of The Macerich
Partnership L.P. and as of that date the results 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. The FFO
per share reflected is the sum of the results for the four calendar
quarters. Due to an equity issuance in November, 2002 the calculation
of the annual FFO per share using the weighted average number of
shares outstanding during the year does not equal the sum of actual
FFO per share reported by quarter. The sum of the quarterly results
is reflected above.
(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 was
approximately $.03 per share. The Company has excluded the impact of
this accounting change from FFO. The impact of FAS 141 is reflected
above as a separate line item and is not included in revenues.
Dec 31 Dec 31
Summarized Balance Sheet Information 2002 2001
(UNAUDITED)
Cash and cash equivalents $53,559 $26,470
Investment in real estate, net (h) $2,842,177 $1,887,329
Investments in unconsolidated entities (i) $617,205 $278,526
Total Assets $3,660,762 $2,294,502
Mortgage and notes payable $2,291,906 $1,398,512
Convertible debentures $0 $125,148
Dec 31 Dec 31
Additional financial data as of: 2002 2001
Occupancy of centers (f) 93.90% 92.40%
Comparable quarter change
in same center sales(f)(g) 0.90% -1.80%
Additional financial data for the year
ended December 31
Acquisitions of property and equipment
- including joint ventures prorata $1,661,227 $20,748
Development, redevelopment and
expansions of centers - including
joint ventures prorata $65,184 $43,057
Renovations of centers - including
joint ventures at prorata $6,860 $14,588
Tenant allowances - including
joint ventures at prorata $16,010 $16,369
Deferred leasing costs - including
joint ventures at prorata $16,512 $13,904
(f) excludes redevelopment properties - Crossroads Mall - Boulder, and
Parklane Mall. The 2002 acquisitions, Westcor and the Oaks, are
excluded at 12-31-01.
(g) includes mall and freestanding stores.
(h) includes construction in process on wholly owned assets of $111,517
at December 31, 2002 and $71,161 at December 31, 2001.
(i) the Company's prorata share of construction in process on
unconsolidated entities of $16,147 at December 31, 2002 and $3,110 at
December 31, 2001.
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRORATA SHARE OF
JOINT VENTURES For the Three Months For the Year
Ended December 31 Ended December 31
Unaudited Unaudited
(All amounts in thousands) (All amounts in thousands)
2002 2001 2002 2001
Revenues:
Minimum rents $44,798 $28,599 $136,292 $106,610
Percentage rents 4,351 3,828 7,138 6,823
Tenant recoveries 17,627 11,141 55,130 43,622
Management fee(c) 2,758 2,410 9,646 9,738
Other 1,598 1,598 3,735 4,334
Total revenues 71,132 47,576 211,941 171,127
Expenses:
Shopping center
and operating
expenses 20,113 15,265 64,581 55,211
Interest expense 14,330 10,458 50,116 45,888
Management company
expense(c) 3,247 1,836 9,411 9,084
Depreciation
and amortization 11,988 7,833 37,530 28,077
Total operating
expenses 49,678 35,392 161,638 138,260
Rental accretion
from adopting
SFAS #141(e) 767 -- 767 --
Gain (loss) on sale
or writedown of
assets (127) (16) (8,021) 191
Cumulative effect of
change in accounting
principle -- (128) -- (128)
Net income 22,094 12,040 43,049 32,930
RECONCILIATION OF
NET INCOME TO FFO For the Three Months For the Year
Ended December 31 Ended December 31
(All amounts in thousands)(All amounts in thousands)
(UNAUDITED) (UNAUDITED)
2002 2001 2002 2001
Net income -
available to common
stockholders $33,217 $35,523 $60,965 $58,035
Adjustments to
reconcile net income
to FFO - basic
Minority interest 10,825 11,659 20,189 19,001
Loss on early
extinguishments of
debt 2,734 1,847 3,605 2,034
(Gain) loss on sale
of wholly owned
assets (12,044) (24,787) (22,253) (24,491)
(Gain) loss on sale
or write-down of
assets from
unconsolidated
entities (prorata) 127 16 8,021 (191)
Cumulative effect
of change in
accounting principle
- unconsolidated
entities, prorata -- 128 -- 128
Exclude impact of
SFAS #141(e) (1,906) (1,906)
Depreciation and
amortization on
wholly owned
centers 23,608 16,892 78,837 65,983
Depreciation and
amortization on
joint ventures
and from the
management companies
(prorata) 11,815 7,833 37,355 28,077
Less: depreciation
on personal property
and amortization of
loan costs and
interest rate caps (2,328) (1,272) (7,463) (4,969)
Total FFO - basic 66,048 47,839 177,350 143,607
Weighted average
shares outstanding
- basic(d) 55,793 45,088 49,611 44,963
Additional adjustment
to arrive at FFO
- diluted
Interest expense and
amortization of
loan costs on the
debentures(e) 2,060 2,944 9,310 11,773
Preferred stock
dividends earned 5,195 5,013 20,417 19,688
Effect of
employee/direct
or stock incentive
plans FFO - diluted 73,303 55,796 207,077 175,068
Weighted average
shares outstanding
- diluted(d)(e) 68,642 58,958 63,015 58,902
SOURCE:The Macerich Company
CONTACT:
Arthur Coppola, President and Chief Executive Officer, or
Thomas E. O'Hern, Executive Vice President and Chief Financial Officer, both
of The Macerich Company, +1-310-394-6000