SANTA MONICA, Calif., May 9 /PRNewswire-FirstCall/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the quarter ended March 31, 2006 which included funds from operations ("FFO") per share -- diluted increasing 6% to $1.05 compared to $.99 for the quarter ended March 31, 2005. Total FFO -- diluted increased to $90.1 million for the quarter compared to $76.0 million for the quarter ended March 31, 2005. The Company's definition of FFO is in accordance with the definition provided by the National Association of Real Estate Investment Trusts ("NAREIT"). A reconciliation of net income per common share-diluted ("EPS") to FFO per share-diluted is included in the financial tables accompanying this press release.
Net income available to common stockholders for the quarter ended March 31, 2006 was $7.5 million or $.11 per share-diluted compared to $18.1 million or $.30 per share-diluted for the quarter ended March 31, 2005. A reconciliation of net income to FFO is included in the financial highlights section of this press release.
Recent highlights:
* During the quarter, Macerich signed 470,000 square feet of specialty
store leases at average initial rents of $37.59 per square foot.
Starting base rent and charges on new lease signings were 15.1% higher
than the expiring base rent and charges.
* Total same center tenant sales, for the quarter ended March 31, 2006,
were up 4.8% compared to sales for the quarter ended March 31, 2005.
* Portfolio occupancy at March 31, 2006 was 92.5% compared to 92.2% at
March 31, 2005. On a same center basis, occupancy increased to 92.6%
at March 31, 2006 compared to 92.2% at March 31, 2005.
* Same center earnings before interest, taxes, depreciation and
amortization were up 7.6% compared to the quarter ended March 31, 2005.
* In January, the Company issued 10.95 million shares of common stock.
The net proceeds of $747 million were used primarily to pay down
floating rate debt. As a result of paying off the floating rate debt,
a $1.8 million loss on early extinguishment of debt adversely impacted
FFO for the quarter.
Commenting on results, Arthur Coppola president and chief executive officer of Macerich stated, "The quarter was highlighted by strong fundamentals in our business with continued high occupancy levels and solid leasing activity. This was illustrated by good leasing volume and excellent releasing spreads. Our refinancing efforts and equity offering during the quarter have allowed us to significantly strengthen our balance sheet. We are very well positioned to take advantage of the pipeline of development and redevelopment opportunities in our existing portfolio. Those opportunities have been greatly enhanced by the recent agreement with Federated to acquire 11 of their stores located at some of our most productive properties."
Redevelopment and Development Activity
At Fresno Fashion Fair, an 87,000 square foot lifestyle center expansion to the existing mall continues on schedule. The first section, which included The Cheesecake Factory, opened in December. Completion of the balance of the project is expected in summer 2006. New tenants in the expansion include Anthropologie, Bebe, Bebe Sport, Cheesecake Factory, Chico's, Fleming's Steakhouse, Lucky Brand Jeans and Sephora. Currently, over 95% of this new space is committed.
Construction of the 877,000 square foot shopping district in Boulder, Colorado known as Twenty Ninth Street continues. Leasing has been strong and the project is currently 83% committed. Retail tenants include Ann Taylor Loft, Apple, Bath and Body Works, California Pizza Kitchen, Puma, JJill, Victoria's Secret, and White House/Black Market joining anchors Macy's department store, Wild Oats, Home Depot, and Century Theatres and an array of additional specialty stores and restaurants. Twenty Ninth Street is scheduled to open in phases starting in Fall 2006.
Construction began on the 430,000 square foot Village at Flagstaff, a 45 acre project adjacent to Flagstaff Mall. The site plan consists of large format retailers and a 12 screen theatre. The project is expected to be completed in phases starting in Fall 2007.
At Westside Pavilion in Los Angeles construction has started on the redevelopment of the western portion of the center that will include a 12 screen state of the art Landmark Theatre, a Barnes and Noble and restaurants. The estimated completion of the redevelopment is Fall 2007.
In February, construction began on the SanTan Village regional shopping center in Gilbert, Arizona. The center is an outdoor open air streetscape project planned to contain in excess of 1.2 million square feet on 120 acres. The center will be anchored by Dillard's, Harkins Theatres and will contain a lifestyle shopping district featuring retail, office, residential and restaurants. It is also anticipated that an additional department store will also anchor this center. The project is scheduled to open in phases starting in Fall 2007 with the retail phases expected to be completed by late 2008.
Financing Activity
The $79.9 million floating rate mortgage on Salisbury Center was refinanced with a $115 million 5.79% 10 year fixed rate loan.
The refinancing of the IBM portfolio, a group of 12 malls owned in joint venture by Macerich and Simon Property Group, is scheduled to close in mid-May. The total debt of $626 million (of which $268 million is floating) has an average interest rate of 6.5% today and is secured by all 12 of the properties. A series of seven new 10 year fixed rate loans totaling $796 million at an average rate of 5.81% is expected to close on May 10. The mortgaged properties will be Eastland Mall, Empire Mall, Granite Run Mall, Rushmore Mall, Mesa Mall, Southern Hills Mall and Valley Mall. After the financing, five of the malls in the portfolio will not be encumbered by a mortgage.
Earnings Guidance
Management is reaffirming its prior guidance for FFO-diluted per share for 2006 in the range of $4.50 to $4.60.
The Macerich Company is a fully integrated self-managed and self-administered real estate investment trust, which focuses on the acquisition, leasing, management, development and redevelopment of regional malls throughout the United States. The Company is the sole general partner and owns an 84% ownership interest in The Macerich Partnership, L.P. Macerich now owns approximately 80 million square feet of gross leaseable area consisting primarily of interests in 76 regional malls. 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 and through CCBN at www.earnings.com. The call begins today, May 9, 2006 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 at www.macerich.com will be available for one year 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, anchor or tenant bankruptcies, closures, mergers or consolidations, lease rates and terms, interest rate fluctuations, 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 (including legislative and regulatory changes); 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, including the Annual Report on Form 10-K for the year ended December 31, 2005, for a discussion of such risks and uncertainties.
(See attached tables)
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Results before Impact of Results after
SFAS 144(e) SFAS 144(e) SFAS 144(e)
Results of
Operations: For the Three For the Three For the Three
Months Ended Months Ended Months Ended
March 31 March 31 March 31
Unaudited Unaudited
2006 2005 2006 2005 2006 2005
Minimum
Rents $133,587 $94,796 ($3,824) ($3,523) $129,763 $91,273
Percentage
Rents 2,967 2,805 (38) (35) 2,929 2,770
Tenant
Recoveries 67,406 46,193 (1,494) (1,366) 65,912 44,827
Management
Companies
Revenues 7,257 5,277 -- -- 7,257 5,277
Other Income 6,947 5,146 (152) (120) 6,795 5,026
Total
Revenues 218,164 154,217 (5,508) (5,044) 212,656 149,173
Shopping
center and
operating
expenses 68,629 48,964 (2,168) (1,952) 66,461 47,012
Management
Companies'
operating
expenses(c) 14,714 11,047 -- -- 14,714 11,047
Depreciation
and
amortization 63,539 37,653 (1,590) (1,494) 61,949 36,159
General,
administrative
and other
expenses 3,698 2,652 -- -- 3,698 2,652
Income tax
expense
(benefit) (533) (509) -- -- (533) (509)
Interest
expense 71,966 42,564 (816) (607) 71,150 41,957
Loss on early
extinguishment
of debt 1,782 -- -- -- 1,782 --
Gain (loss)
on sale or
writedown of
assets (502) 1,605 -- (297) (502) 1,308
Pro rata
income (loss)
of
unconsolidated
entities(c) 21,016 11,246 -- -- 21,016 11,246
Income (loss)
of the
Operating
Partnership
from
continuing
operations 14,883 24,697 (934) (1,288) 13,949 23,409
Discontinued
Operations:
Gain (loss)
on sale of
asset -- -- -- 297 -- 297
Income from
discontinued
operations -- -- 934 991 934 991
Income before
minority
interests 14,883 24,697 -- -- 14,883 24,697
Income
allocated
to minority
interests 1,460 4,199 -- -- 1,460 4,199
Net income
before
preferred
dividends 13,423 20,498 -- -- 13,423 20,498
Preferred
dividends
and
distributions(a) 5,970 2,358 -- -- 5,970 2,358
Net income to
common
stockholders $7,453 $18,140 $0 $0 $7,453 $18,140
Average number
of shares
outstanding --
basic 68,738 58,865 68,738 58,865
Average shares
outstanding,
assuming
full conversion
of OP Units(d) 82,518 73,284 82,518 73,284
Average shares
outstanding --
diluted for
FFO(d) 86,145 76,912 86,145 76,912
Net income per
share --
diluted before
discontinued
operations -- -- $0.10 $0.28
Net income per
share -- basic $0.11 $0.31 $0.11 $0.31
Net income per
share --
diluted $0.11 $0.30 $0.11 $0.30
Dividend
declared per
share $0.68 $0.65 $0.68 $0.65
Funds from
operations
"FFO" (b)(d)
-- basic $87,647 $73,596 $87,647 $73,596
Funds from
operations
"FFO" (a)(b)
(d) --
diluted $90,113 $75,954 $90,113 $75,954
FFO per share
-- basic(b)(d) $1.07 $1.01 $1.07 $1.01
FFO per share
-- diluted
(a)(b)(d) $1.05 $0.99 $1.05 $0.99
percentage
change 5.93%
(a) On February 25, 1998, the Company sold $100,000 of convertible
preferred stock representing 3.627 million shares.
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 2006 and 2005 as they would
be antidilutive to those calculations.
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) The Company uses FFO in addition to net income to report its
operating and financial results and considers FFO and FFO-diluted as
supplemental measures for the real estate industry and a supplement
to Generally Accepted Accounting Principles (GAAP) measures. NAREIT
defines FFO as net income (loss) (computed in accordance with GAAP),
excluding gains (or losses) from extraordinary items and sales of
depreciated operating properties, plus real estate related
depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to
reflect FFO on the same basis. FFO and FFO on a fully diluted basis
are useful to investors in comparing operating and financial results
between periods. This is especially true since FFO excludes real
estate depreciation and amortization, as the Company believes real
estate values fluctuate based on market conditions rather than
depreciating in value ratably on a straight-line basis over time.
FFO on a fully diluted basis is one of the measures investors find
most useful in measuring the dilutive impact of outstanding
convertible securities. FFO does not represent cash flow from
operations as defined by GAAP, should not be considered as an
alternative to net income as defined by GAAP and is not indicative of
cash available to fund all cash flow needs. FFO as presented may not
be comparable to similarly titled measures reported by other real
estate investment trusts.
Effective January 1, 2003, gains or losses on sale of peripheral land
and the impact of SFAS 141 have been included in FFO. The inclusion
of gains on sales of peripheral land increased FFO for the three
months ended March 31, 2006 and 2005 by $0.1 million and
$1.6 million, respectively, or by $.00 per share and $.02 per
share, respectively. Additionally, SFAS 141 increased FFO for the
three months ended March 31, 2006 and 2005 by $4.6 million and
$2.4 million, respectively or by $.05 per share and $.03 per share,
respectively.
(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 for all periods presented. Certain reclassifications
have been made in the 2005 financial highlights to conform to
the 2006 financial highlights presentation.
(d) The Macerich Partnership, LP has operating partnership units
("OP units"). Each OP unit can be converted into a share of Company
stock. Conversion of the OP units not owned by the Company has been
assumed for purposes of calculating the FFO per share and the
weighted average number of shares outstanding. The computation of
average shares for FFO - diluted includes the effect of outstanding
common stock options and restricted stock using the treasury method.
Also assumes conversion of MACWH, LP units to the extent they are
dilutive to the calculation. For the three months ended March 31,
2006, the MACWH, LP units were antidilutive to FFO.
(e) In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144
addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. The Company adopted SFAS 144 on
January 1, 2002.
On January 5, 2005, the Company sold Arizona Lifestyle Galleries.
The sale of this property resulted in a gain on sale of $0.3 million.
Additionally, the results of Crossroads Mall in Oklahoma and
Scottsdale 101 in Arizona for the three months ended March 31, 2006
and 2005 have been reclassified to discontinued operations as the
Company has identified these assets for disposition.
March 31, December 31,
Summarized Balance Sheet Information 2006 2005
(UNAUDITED)
Cash and cash equivalents $66,808 $155,113
Investment in real estate, net (h) $5,671,809 $5,438,496
Investments in unconsolidated entities (i) $1,074,590 $1,075,621
Total Assets $7,304,366 $7,178,944
Mortgage and notes payable $4,862,398 $5,424,730
Pro rata share of debt on unconsolidated
entities $1,461,244 $1,438,960
Total common shares outstanding at
quarter end: 71,358 59,942
Total preferred shares outstanding at
quarter end: 3,627 3,627
Total partnership/preferred units outstanding
at quarter end: 16,463 16,647
March 31, March 31,
Additional financial data as of: 2006 2005
Occupancy of centers (f) 92.50% 92.20%
Comparable quarter change in same center
sales (f) (g) 5.90% 5.80%
Additional financial data for the three
months ended:
Acquisitions of property and equipment
-- including joint ventures at prorata $244,520 $55,606
Redevelopment and expansions of centers
-- including joint ventures at prorata $38,004 $31,523
Renovations of centers -- including joint
ventures at prorata $11,622 $7,509
Tenant allowances- including joint ventures
at prorata $3,814 $7,294
Deferred leasing costs -- including joint
ventures at prorata $7,707 $4,404
(f) excludes redevelopment properties -- 29th Street Center, Parklane
Mall and Santa Monica Place.
(g) includes mall and freestanding stores.
(h) includes construction in process on wholly owned assets of $186,214
at March 31, 2006 and $162,157 at December 31, 2005.
(i) includes the Company's prorata share of construction in process on
unconsolidated entities of $103,286 at March 31, 2006 and $98,180 at
December 31, 2005.
For the Three Months
PRORATA SHARE OF JOINT VENTURES Ended March 31
(UNAUDITED)
(All amounts in thousands)
2006 2005
Revenues:
Minimum rents $58,370 $44,566
Percentage rents 2,628 1,907
Tenant recoveries 27,603 19,160
Other 3,537 2,819
Total revenues 92,138 68,452
Expenses:
Shopping center expenses 31,158 23,322
Interest expense 19,461 16,821
Depreciation and amortization 20,579 17,495
Total operating expenses 71,198 57,638
Gain on sale or writedown of assets -- 288
Equity in income of joint venture 76 144
Loss on early extinguishment of debt -- --
Net income $21,016 $11,246
For the Three Months
RECONCILIATION OF NET INCOME TO FFO (b)(e) Ended March 31
(UNAUDITED)
(All amounts in thousands)
2006 2005
Net income -- available to common stockholders $7,453 $18,140
Adjustments to reconcile net income to
FFO -- basic
Minority interest in the operating partnership 1,460 4,199
(Gain ) loss on sale of consolidated assets 502 (1,605)
(Gain) loss on sale of assets from
unconsolidated entities (pro rata share) -- (288)
plus gain on land sales - consolidated assets 121 1,308
plus gain on land sales- unconsolidated assets -- 288
Depreciation and amortization on consolidated
assets 63,539 37,653
Less depreciation and amortization allocable to
minority interests on consolidated
joint ventures (1,975) (421)
Depreciation and amortization on joint
ventures (pro rata) 20,579 17,495
Less: depreciation on personal property and
amortization of loan costs and interest
rate caps (4,032) (3,173)
Total FFO -- basic 87,647 73,596
Additional adjustment to arrive at FFO -- diluted
Preferred stock dividends earned 2,466 2,358
Non-Participating Preferred units -- dividends n/a n/a
Participating Preferred units -- dividends n/a n/a
FFO -- diluted $90,113 $75,954
For the Three Months
Ended March 31
(UNAUDITED)
(All amounts in thousands)
Reconciliation of EPS to FFO
per diluted share: 2006 2005
Earnings per share $0.11 $0.30
Per share impact of depreciation and
amortization real estate $0.95 $0.71
Per share impact of gain on sale of depreciated
assets $0.01 $0.00
Per share impact of preferred stock not dilutive
to EPS ($0.02) ($0.02)
Fully Diluted FFO per share $1.05 $0.99
THE MACERICH COMPANY For the Three Months
RECONCILIATION OF NET INCOME TO EBITDA Ended March 31
(UNAUDITED)
(All amounts in thousands)
2006 2005
Net income -- available to common stockholders $7,453 $18,140
Interest expense 71,966 42,564
Interest expense - unconsolidated entities
(pro rata) 19,461 16,821
Depreciation and amortization -- consolidated
centers 63,539 37,653
Depreciation and amortization --
unconsolidated entities (pro rata) 20,579 17,495
Minority interest 1,460 4,199
Less: Interest expense and depreciation and
amortization allocable to minority interests
on consolidated joint ventures (2,427) (538)
Loss on early extinguishment of debt 1,782 --
Loss on early extinguishment of debt --
unconsolidated entities (pro rata) -- --
Loss (gain) on sale of assets --
consolidated assets 502 (1,605)
Loss (gain) on sale of assets --
unconsolidated entities (pro rata) -- (288)
Income tax (benefit) expense (533) (509)
Preferred dividends 5,970 2,358
EBITDA(j) $189,752 $136,290
THE MACERICH COMPANY
RECONCILIATION OF EBITDA TO SAME CENTERS
-- NET OPERATING INCOME ("NOI")
For the Three Months
Ended March 31
(UNAUDITED)
(All amounts in thousands)
2006 2005
EBITDA (j) $189,752 $136,290
Add: REIT general and administrative expenses 3,698 2,652
Management Companies' revenues (7,257) (5,277)
Management Companies' operating expenses(c) 14,714 11,047
EBITDA of non-comparable centers (55,044) (9,121)
SAME CENTERS - Net operating income ("NOI")(k) $145,863 $135,591
(j) EBITDA represents earnings before interest, income taxes,
depreciation, amortization, minority interest, extraordinary items,
gain (loss) on sale of assets and preferred dividends and includes
joint ventures at their pro rata share. Management considers EBITDA
to be an appropriate supplemental measure to net income because it
helps investors understand the ability of the Company to incur and
service debt and make capital expenditures. EBITDA should not be
construed as an alternative to operating income as an indicator of
the Company's operating performance, or to cash flows from operating
activities (as determined in accordance with GAAP) or as a measure of
liquidity. EBITDA, as presented, may not be comparable to similarly
titled measurements reported by other companies.
(k) The Company presents same-center NOI because the Company believes it
is useful for investors to evaluate the operating performance of
comparable centers. Same-center NOI is calculated using total EBITDA
and subtracting out EBITDA from non-comparable centers and
eliminating the management companies and the Company's general and
administrative expenses.
SOURCE The Macerich Company
05/09/2006
/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/
/Web site: http://www.earnings.com /
/Web site: http://www.macerich.com /
(MAC)