-- 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 59,822SOURCE The Macerich Company
CONTACT:
Arthur Coppola, President and CEO
or
Thomas E. O'Hern, Executive VP and CFO
+1-310-394-6000