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The Macerich Company Announces First Quarter Results

SANTA MONICA, Calif., May 12 /PRNewswire/ -- The Macerich Company (NYSE: MAC) today announced results of operations for the first quarter ended March 31, 2000 which included the following:

  • Funds from operations ("FFO") per share - diluted increased 7% to $.634 from $.592 for the first quarter of 1999 on a comparable basis.

  • Portfolio occupancy was at 92.3%, a 30 basis point improvement over the portfolio occupancy at March 31, 1999.

  • Total same center sales increased 3.6% and comparable tenant sales increased 3.8% compared to the first quarter of 1999.

  • During the quarter, Macerich signed new leases at average initial rents of $30 per square foot. First year rents on mall and freestanding store leases signed during the first quarter were 12% higher than expiring rents on a comparable space basis.

  • Same center net operating income, excluding redevelopment centers, increased approximately 5% compared to the first quarter of 1999 on a comparable basis.

Commenting on results for the quarter, Arthur Coppola, President and Chief Executive Officer of Macerich stated, "The strong results for the quarter reflect the on going trend of high occupancy levels and substantial same center net operating income increases. That combined with vibrant leasing activity, including very positive re-leasing spreads on new lease signings contributed to the robust internal growth, which fueled much of our FFO growth per share."

For the quarter ended March 31, 2000, FFO per share increased to $.634, up 7% from $.592 in the first quarter of 1999 on a comparable basis. The 1999 results were adjusted on a proforma basis to reflect the accounting change that became effective January 1, 2000. This accounting change was mandated by SEC 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 annual 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 fourth quarter of each year, rather than spread throughout the year.

Net income available to common stockholders for the quarter was $6.3 million compared to $8.9 million for the first quarter of 1999 and net income per share diluted was $.19 compared to $.26 in the first quarter of 1999.


  • During the quarter, there were approximately 292,000 square feet of leases signed for mall and freestanding space. The average rent on new leases was $30 per square foot. On a comparable space basis, new leases were signed at rents approximately 12% higher than expiring rents.

  • The $90 million redevelopment of Pacific View Mall in Ventura, California continued with the majority of the redevelopment completed in the first quarter. The renovation included the addition of a Robinson-May and Sears and a new 124,500 square foot J.C. Penney store. The leasing activity remains strong with the occupancy level expected to reach 90% in the third quarter. In addition, Macy's has started a $20 million renovation of their store.

  • The redevelopment of Lakewood Mall continues. The first new Macy's store ever built in Southern California is under construction with an expected completion in November 2000. The redevelopment will include the relocation of Mervyn's Department Store and the development of an additional 60,000 square feet of shop space which is expected to be completed in early 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.

  • The Company recently announced its participation in MerchantWired.com, a consortium of mall owners, to provide a full service retail infrastructure that connects the physical and virtual worlds in the retail industry.

  • Additional financing of $138 million was placed on the SDG/Macerich portfolio. The debt, with a combination of fixed and floating interest rates, has a current average interest rate of 7.364% and a maturity in 2006. The Company's share of the refinancing proceeds of $69 million was used to pay down its line of credit.

  • On May 11, 2000, the Company declared a dividend of $.51 per share on its common and preferred stock, payable on June 7, 2000 to shareholders of record on May 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.

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 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
                               THE MACERICH COMPANY
                               FINANCIAL HIGHLIGHTS


    Results of Operations:                       for the three months ended
                                                         2000        1999
    Minimum Rents                                       47,175       50,592
    Percentage Rents (a)                                 1,532        3,943
    Tenant Recoveries                                   24,569       23,097
    Other Income                                         2,027        1,217

    Total Revenues                                      75,303       78,849

    Shopping Center Expenses                            23,900       23,265
    Depreciation and amortization                       14,528       15,253
    General, administrative and other expenses           1,469        1,403
    Interest expense                                    28,151       26,753
    Gain (loss) on sale of assets                           (2)           0
    Pro rata income of unconsolidated entities (c)       6,723        5,346
    Income before minority interest, extraordinary
     items and cumulative effect of accounting change   13,976       17,521
    Extraordinary loss on early extinguishment of debt       0          973
    Cumulative effect of change
     in accounting principle (a)                          (963)           0
    Income of the Operating Partnership                 13,013       16,548
    Income allocated to minority interests               2,039        3,230
    Dividends earned by preferred stockholders           4,648        4,421
    Net income - available to common stockholders        6,326        8,897
    Average shares outstanding - basic                  34,091       33,927
    Average shares outstanding - basic, assuming
    full conversion of OP Units (d)                     45,052       46,246
    Average shares outstanding
    - diluted for FFO (d) (e)                           59,651       60,866
    Income before extraordinary items and cumulative
     effect of change in accounting principle-diluted    $0.21        $0.28
    Net income per share - basic                         $0.19        $0.26
    Net income per share - diluted                       $0.19        $0.26
    Dividend declared per share                         $0.510       $0.485
    Funds from operations "FFO" (b) (d) - basic        $29,570      $30,819
    Funds from operations "FFO" (b) (d) (e) - diluted  $37,822      $38,597
    FFO per share - basic (b) (d)                       $0.656       $0.666
    FFO per share - diluted (b) (d) (e)                 $0.634       $0.634
    Proforma FFO per share - diluted assuming the
     accounting change for % rent was effective
     January 1, 1999 Proforma impact of SAB 101 (a)        n/a      ($0.042)
    Proforma FFO per share - diluted (a)(d)(e)          $0.634       $0.592

    Percentage change in FFO per Share - diluted (b)     7.08%

(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 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 quarter ended March 31,
        1999 were restated on a proforma basis to reflect this accounting
        change.  The proforma impact on the first quarter 1999 results was a
        reduction of percentage rent, including a prorata share of joint
        ventures of $2,564 or $.042 per diluted share.

(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.
        Percentage change in FFO/ share is based on the comparison to the same
        period in 1999.

(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

(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.  In the first quarter of 2000
        and 1999, the debentures are not dilutive to net income per share, but
        the debentures were dilutive to FFO per share and are reflected as
        converted for the calculation of FFO per share - diluted.
        The Company has 9,115 shares of convertible preferred stock
        outstanding.  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.

                               THE MACERICH COMPANY
                               FINANCIAL HIGHLIGHTS


                                                     March 31,     Dec 31
    Summarized Balance Sheet Information               2000         1999

    Cash and cash equivalents                           30,756       40,455
    Investment in real estate, net                   1,926,340    1,931,415
    Total Assets                                     2,382,249    2,404,293
    Mortgage and notes payable                       1,401,617    1,399,727
    Convertible debentures                             161,400      161,400

    Additional financial data as of:                  March 31,    March 31,
                                                         2000        1999
    Occupancy of centers (f)                            92.30%       92.00%
    Year to date increase in same center sales (f) (g)   3.60%        4.40%

(f) excludes redevelopment properties-Crossroads - Boulder, Parklane Mall,

and Pacific View Mall.

(g) includes mall and freestanding stores

                                                  for the three months ended
    RECONCILIATION OF NET INCOME TO FFO                       MARCH 31,
                                                          2000         1999

    Net income - available to common stockholders        6,326        8,897

    Adjustments to reconcile net income to FFO - basic
      Minority interest                                  2,039        3,230
      Loss on early extinguishment of debt                   0          973
      (Gain) loss on sale of wholly owned assets             2
      (Gain) loss on sale of assets from
       unconsolidated entities (pro rata)                  424          (13)
      Depreciation and amortization on
       wholly owned centers                             14,528       15,253
      Depreciation and amortization on joint ventures
       and from the management companies (pro rata)      5,695        3,533
    Cumulative effect of the change in accounting
     principle - wholly owned assets                       963
    Cumulative effect of the change in accounting
     principle-prorata joint ventures                      787
      Less: depreciation on personal property and
       amortization of loan costs and
       interest rate caps                               (1,194)      (1,054)

        Total FFO - basic                               29,570       30,819

        Weighted average shares outstanding
         - basic (d)                                    45,052       46,246

    Additional adjustment to arrive at FFO - diluted
      Interest expense and amortization of loan
       costs on the debentures (e)                       3,146        3,114
      Preferred stock dividends earned                   4,648        4,421
      Effect of restricted stock grants                    458          243

       FFO - diluted                                    37,822       38,597

      Weighted average shares outstanding - diluted (e) 59,651       60,866

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, 310-394-6000/

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