SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 2, 1998
(June 19, 1998)
THE MACERICH COMPANY
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(Exact Name of Registrant as Specified in Charter)
Maryland 1-12504 95-4448705
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
401 Wilshire Boulevard, Suite 700, Santa Monica, CA 90401
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code (310) 394-6911
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets
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On June 19, 1998, a majority owned subsidiary of The Macerich
Company (the "Registrant") acquired South Plains Mall in Lubbock,Texas, a
super regional mall containing approximately 1,107,000 square feet. The
seller of the asset was South Plains Mall Associates Ltd, a Texas Limited
Partnership ("Seller"). The assets acquired include, among other things, real
property, the buildings and improvements located thereon, certain lease
interests, tangible and intangible personal property and rights related
thereto.
The purchase price was approximately $115.7 million, and was
determined in good faith, arms length negotiations between Registrant and the
Seller. In negotiating the purchase price the Registrant considered, among
other factors, the mall's historical and projected cash flow, the nature and
term of existing tenancies and leases, the current operating costs, the
expansion availability, the physical condition of the property, and the terms
and conditions of available financing. No independent appraisals were
obtained by the Registrant. The purchase price was funded by assuming a
$29.4 million loan at fair market value, and $86.3 million in cash. The
Registrant intends to continue operating the mall as currently operated and
leasing the space therein to national and local retailers.
The description contained herein of the transaction described above
does not purport to be complete and is qualified in its entirety by reference
to the Purchase Agreement which is filed as Exhibit 2.1 hereto.
2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Pro Forma Financial Information
Condensed Combined Statements of Operations
of the Macerich Company for the year ended
December 31, 1997 F-1
Condensed Combined Statements of Operations
of the Macerich Company for the three months ended
March 31, 1998 F-2
Condensed Combined Balance Sheet as of
March 31, 1998 F-3
3
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
The Macerich Company has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized, in the City of Santa Monica, State of
California, on July 2, 1998.
THE MACERICH COMPANY
By: /s/Thomas E. O'Hern
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Thomas E. O'Hern
Senior Vice President and
Chief Financial Officer
4
The following unaudited pro forma statement of operations has been prepared
for the year ended December 31, 1997. This statement gives effect to the
acquisition of the twelve malls from the Equitable Life Assurance Society of
the United States (the "ERE/Yarmouth portfolio") and South Plains Mall as if
the acquisitions were completed on January 1, 1997. This statement does not
purport to be indicative of the results of operations that actually would
have resulted if the Registrant had owned those malls throughout the period
presented.
THE MACERICH COMPANY
UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS)
Pro forma
Company results Adjustment- Pro forma Pro forma Results
for the year ERE/Yarmouth Adjustment- for the year
ended portfolio South Plains Mall ended
DEC 31, 1997 Acquisition Acquisition DEC 31, 1997
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(A)
Revenues:
Minimum Rents 142,251 8,133 150,384
Percentage Rents 9,259 1,215 10,474
Tenant Recoveries 66,499 5,667 72,166
Other 3,205 163 3,368
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Total revenues 221,214 0 15,178 236,392
Shopping center expenses 70,901 5,582 76,483
REIT general and administrative expenses 2,759 2,759
Depreciation and amortization 41,535 2,168 (B) 43,703
Interest expense 66,407 4,900 (C) 7,945 (D) 79,252
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Net income (loss) before minority interest,
unconsolidated joint ventures and
extraordinary loss 39,612 (4,900) (517) 34,195
Gain on sale of asset 1,619 1,619
Minority interest (E) (10,567) 442 151 (9,974)
Income (loss) from unconsolidated joint 0
ventures and management companies (8,063) 12,776 (B) 4,713
Extraordinary loss on early retirement of debt (555) (555)
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Net income 22,046 8,318 (366) 29,998
less preferred dividends 0 6,383 (F) 0 6,383
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Net income - available to common shareholders 22,046 1,935 (366) 23,615
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BASIC EARNINGS PER SHARE:
Net income per share before extraordinary items $0.86 $ 0.83
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Net income per share $0.85 $ 0.82
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Weighted average number of shares outstanding 25,891 2,878 0 28,769
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DILUTED EARNINGS PER SHARE:
Net income per share before extraordinary items $0.85 $ 0.82
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Net income per share $0.84 $ 0.81
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Weighted average number of shares outstanding 38,400 2,878 (F) 0 41,278
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(A) This information should be read in conjunction with The Macerich Company's
("the Company") report on Form 10-K for the year ended December 31, 1997.
(B) Depreciation on the Acquisition malls is computed on the straight-line
method over the estimated useful life of 40 years.
(C) Interest expense is calculated on the additional $70,000 borrowed on the
Company's line of credit for the closing of this acquisition. Interest is
calculated at LIBOR plus 1.365%, totaling 7.0%.
(D) The principal and the interest rate are adjusted to fair market value of
the note at the date of acquisition. The principal was adjusted to
$29.4 million and the interest rate 6.5%. In addition the balance of the
purchase price of $86.2 million is assumed to borrowed under the company's
line of credit at 7%.
(E) Minority interest represents the ownership interest in the Operating
Partnership not owned by the Company
(F) Reflects the issuance of equity, the proceeds of which were used for the
ERE/Yarmouth portfolio acquisition.
F-1
The following unaudited pro forma statement of operations has been prepared
for the quarter ended March 31, 1998. This statement gives effect to the
acquisition of the twelve malls from the Equitable Life Assurance Society of
the United States (the "ERE/Yarmouth portfolio") and South Plains Mall as
if the acquisitions were completed on January 1, 1998. This statement does
not purport to be indicative of the results of operations that actually
would have resulted if the Registrant had owned those malls throughout the
period presented.
THE MACERICH COMPANY
UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS)
Pro forma
Company results Adjustment- Pro forma Pro forma Results
for the year ERE/Yarmouth Adjustment- for the year
ended portfolio South Plains Mall ended
March 31, 1998 Acquisition Acquisition March 31, 1998
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(A)
Revenues:
Minimum Rents 39,416 1,959 41,375
Percentage Rents 3,170 889 4,059
Tenant Recoveries 17,641 1,207 18,848
Other 948 112 1,060
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Total revenues 61,175 0 4,167 65,342
Shopping center expenses 18,722 1,243 19,965
REIT general and administrative expenses 1,024 1,024
Depreciation and amortization 11,712 542 12,254
Interest expense 20,576 817(C) 1,986(D) 23,379
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Net income (loss) before minority interest,
unconsolidated joint ventures and
extraordinary loss 9,141 (817) 396 8,720
Gain on sale of asset
Minority interest (E) (3,008) (241) (117) (3,366)
Income (loss) from unconsolidated joint
ventures and management companies 1,428 2,129 (B) 3,557
Extraordinary loss on early retirement of debt (90) (90)
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Net income 7,471 1,071 279 8,821
less preferred dividends 649 1,019 (F) 0 1,668
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Net income - available to common shareholders 6,822 52 279 7,153
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BASIC EARNINGS PER SHARE:
Net income per share before extraordinary items $0.25 $ 0.25
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Net income per share $0.25 $ 0.25
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Weighted average number of shares outstanding 27,153 1,636 (F) 28,789
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DILUTED EARNINGS PER SHARE:
Net income per share before extraordinary items $0.25 $ 0.25
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Net income per share $0.25 $ 0.25
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Weighted average number of shares outstanding 39,907 1,636 41,543
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(A) This information should be read in conjunction with The Macerich
Company's (the "Company") report on Form 10-Q for the quarter ended
March 31, 1998.
(B) Depreciation on the Acquisition malls is computed on the straight-line
method over the estimated useful life of 40 years.
(C) Interest expense is calculated on the additional $70,000 borrowed on
the Company's line of credit for the closing of this acquisition.
Interest is calculated at LIBOR plus 1.365%, totaling 7.0%.
(D) The principal and the interest rate are adjusted to fair market value of
the note at the date of acquisition. The principal was adjusted to
$29.4 million and the interest rate 6.5%.
(E) Minority interest represents the ownership interest in the Operating
Partnership not owned by the Company
(F) Reflects the issuance of equity, the proceeds of which were used for the
ERE/Yarmouth portfolio acquisition.
F-2
THE MACERICH COMPANY
UNAUDITED PRO FORMA
CONDENSED COMBINED BALANCE SHEET
(ALL AMOUNTS IN THOUSANDS)
Pro forma Condensed
Pro forma Balance Sheet
The Macerich Adjustment- (including South
Company South Plains Plains Mall)
as reported Mall as of
March 31, 1998 Acquisition March 31, 1998
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Gross property 1,617,878 115,700 1,733,578
Total assets 1,738,029 115,700 1,853,729
Mortgages and loans 1,199,882 115,700 1,315,582
Minority interest 131,542 131,542
Preferred stock 100,000 100,000
Common stock 288 288
Additional paid in capital 257,769 257,769
Total liabilities and shareholder equity 1,738,029 115,700 1,853,729
F-3
