THE MACERICH COMPANY SANTA MONICA, Calif., April 27, 2017 /PRNewswire/ -- The Macerich Company (NYSE Symbol: MAC) today announced results of operations for the quarter ended March 31, 2017, which included net income attributable to the Company of $69.2 million or $.48 per share-diluted for the quarter ended March 31, 2017 compared to net income attributable to the Company for the quarter ended March 31, 2016 of $420.9 million or $2.76 per share-diluted. Included in net income in the first quarter of 2016 results is a $434 million or $2.67 per share of gain, primarily from the sale of joint venture interests in four malls during that quarter. For the first quarter, 2017, funds from operations ("FFO") diluted was $133.6 million or $.87 per share-diluted compared to $141.0 million or $.87 per share-diluted for the quarter ended March 31, 2016. A description and reconciliation of EPS per share-diluted to FFO-diluted is included in the financial tables accompanying this press release.
Results and Capital Highlights
-- Mall tenant annual sales per square foot for the portfolio were $639 for
the year ended March 31, 2017 compared to $625 for the year ended March
31, 2016.
-- The releasing spreads for the year ended March 31, 2017 were up 17.5%.
-- Mall portfolio occupancy was 94.3% at March 31, 2017 compared to 95.1%
at March 31, 2016.
-- On January 18, 2017 the Company sold two non-core assets, Northgate Mall
and Cascade Mall, for a combined purchase price of $170 million. In
addition on March 17, 2017 an office building at Country Club Plaza was
sold. The Company's share of the sale proceeds on the office building
was $39 million.
"While portions of the retail industry undoubtedly face challenges amidst a shifting landscape, we continue to believe it is all part of an ongoing evolution of the shopper experience that the Macerich portfolio is uniquely well-positioned for," said the Company's chairman and chief executive officer, Arthur Coppola. "Furthermore, we recently took advantage of the price dislocation created by these challenges to acquire our shares at what we believe to be a significant discount to net asset value, using the proceeds from recently-completed dispositions of non-core assets."
Financing Activity
On March 16, 2017, the Company refinanced Kierland Commons and closed on a $225 million loan with a 3.97% fixed interest rate for 10 years. The prior loan was a floating rate loan of $130 million with a 2.63% interest rate at payoff.
Share Repurchase Activity:
During March, the Company repurchased and retired 2.2 million shares of its common stock. The source of funds for the $141 million in repurchase activity was primarily the sales proceeds from the sale of Northgate Mall, Cascade Mall and the office building at Country Club Plaza. The average repurchase price was $64.17.
2017 Earnings Guidance:
Management is reaffirming its previously provided diluted EPS and FFO per share guidance for 2017. A reconciliation of estimated EPS to FFO per share-diluted follows:
2017 range
----------
Diluted EPS $1.26 - $1.36
Plus: real estate depreciation
and amortization 3.05 - 3.05
Less: gain on sale of
dispositions .41 - .41
-------------
Diluted FFO per share $3.90 - $4.00
-------------
More details of the guidance assumptions are included in the Company's Form 8-K supplemental financial information.
Macerich, an S&P 500 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.
Macerich currently owns 54 million square feet of real estate consisting primarily of interests in 48 regional shopping centers. Macerich specializes in successful retail properties in many of the country's most attractive, densely populated markets with significant presence in the Pacific Rim, Arizona, Chicago, and the New York Metro area to Washington DC corridor. Additional information about Macerich can be obtained from the Company's website 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 (Investors Section). The call begins April 28, 2017 at 10:30 AM Pacific Time. To listen to the call, please go to the website 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 (Investors Section) will be available for one year after the call.
The Company will publish a supplemental financial information package which will be available at www.macerich.com in the Investors Section. It will also be furnished to the SEC as part of a Current Report on Form 8-K.
Note: This release contains statements that constitute forward-looking statements which can be identified by the use of words, such as "expects," "anticipates," "assumes," "projects," "estimated" and "scheduled" and similar expressions that do not relate to historical matters. 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, as well as national, regional and local 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, terms and payments, interest rate fluctuations, availability, terms 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; the liquidity of real estate investments, governmental actions and initiatives (including legislative and regulatory changes); environmental and safety requirements; and terrorist activities or other acts of violence 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, 2016, for a discussion of such risks and uncertainties, which discussion is incorporated herein by reference. The Company does not intend, and undertakes no obligation, to update any forward-looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events unless required by law to do so.
(See attached tables)
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Results of Operations:
For the Three Months
Ended March 31,
---------------
Unaudited
---------
2017 2016
---- ----
Revenues:
Minimum rents $145,555 $151,048
Percentage rents 1,918 3,014
Tenant recoveries 72,412 80,173
Other income 15,264 13,148
Management Companies' revenues 11,896 8,617
Total revenues 247,045 256,000
------- -------
Expenses:
Shopping center and operating
expenses 75,897 79,324
Management Companies' operating
expenses 28,517 27,900
REIT general and administrative
expenses 8,463 8,629
Depreciation and amortization 83,073 86,931
Interest expense 41,301 39,776
Loss on extinguishment of debt, net - 3,575
Total expenses 237,251 246,135
------- -------
Equity in income of unconsolidated
joint ventures 15,843 11,660
Co-venture expense (a) (3,877) (3,289)
Income tax benefit (expense) 3,484 (1,317)
Gain on sale or write down of assets,
net 49,565 434,456
Net income 74,809 451,375
Less net income attributable to
noncontrolling interests 5,566 30,460
Net income attributable to the
Company $69,243 $420,915
======= ========
Weighted average number of shares
outstanding -basic 143,596 151,984
------- -------
Weighted average shares outstanding,
assuming full conversion of OP Units
(b) 154,187 162,805
------- -------
Weighted average shares outstanding -
Funds From Operations ("FFO") -
diluted (b) 154,246 162,924
------- -------
Net income per share - basic $0.48 $2.77
----- -----
Net income per share - diluted $0.48 $2.76
----- -----
Dividend declared per share $0.71 $0.68
----- -----
FFO - basic (b) (c) $133,603 $141,029
-------- --------
FFO - diluted (b) (c) $133,603 $141,029
-------- --------
FFO -diluted, excluding
extinguishment of debt, net $133,603 $144,604
-------- --------
FFO per share - basic (b) (c) $0.87 $0.87
----- -----
FFO per share - diluted (b) (c) $0.87 $0.87
----- -----
FFO per share -diluted, excluding
extinguishment of debt, net $0.87 $0.89
----- -----
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
(a) This represents the
outside partners'
allocation of net
income in the
Chandler Fashion
Center/Freehold
Raceway Mall joint
venture.
(b) The Macerich
Partnership, L.P.
(the "Operating
Partnership" or the
"OP") has operating
partnership units
("OP units"). OP
units can be
converted into
shares of Company
common stock.
Conversion of the OP
units not owned by
the Company has been
assumed for purposes
of calculating FFO
per share and the
weighted average
number of shares
outstanding. The
computation of
average shares for
FFO - diluted
includes the effect
of share and unit-
based compensation
plans, stock
warrants and
convertible senior
notes using the
treasury stock
method. It also
assumes conversion
of MACWH, LP
preferred and common
units to the extent
they are dilutive to
the calculation.
(c) 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. The
National Association
of Real Estate
Investment Trusts
("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,
impairment write-
downs of real estate
and write-downs of
investments in an
affiliate where the
write-downs have
been driven by a
decrease in the
value of real estate
held by the
affiliate and after
adjustments for
unconsolidated joint
ventures.
Adjustments for
unconsolidated joint
ventures are
calculated to
reflect FFO on the
same basis.
FFO and FFO on a
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. The
Company believes
that such a
presentation also
provides investors
with a more
meaningful measure
of its operating
results in
comparison to the
operating results of
other real estate
investment trusts
("REITs"). The
Company believes
that FFO on a
diluted basis is a
measure investors
find most useful in
measuring the
dilutive impact of
outstanding
convertible
securities. The
Company further
believes that FFO
does not represent
cash flow from
operations as
defined by GAAP,
should not be
considered as an
alternative to net
income (loss) as
defined by GAAP,
and is not
indicative of cash
available to fund
all cash flow needs.
The Company also
cautions that FFO as
presented, may not
be comparable to
similarly titled
measures reported by
other REITs.
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Reconciliation of net income attributable to the Company to FFO attributable to common stockholders and unit holders - basic and diluted (c):
For the Three Months
Ended March 31,
---------------
Unaudited
---------
2017 2016
---- ----
Net income attributable to the Company $69,243 $420,915
Adjustments to reconcile net income attributable to the Company to FFO attributable to common
stockholders and unit holders - basic and diluted:
Noncontrolling interests in OP 5,108 29,985
Gain on sale or write down of consolidated assets, net (49,565) (434,456)
Add: Gain on undepreciated asset sales - consolidated assets - 2,412
Loss on write-down of consolidated non-real estate assets (10,138) -
(Gain) loss on sale or write down of assets from unconsolidated joint ventures (pro rata), net (2,269) 4
Add: Gain (loss) on undepreciated asset sales - unconsolidated joint ventures (pro rata) 660 (4)
Depreciation and amortization on consolidated assets 83,073 86,931
Less depreciation and amortization allocable to noncontrolling interests
on consolidated joint ventures (3,893) (3,694)
Depreciation and amortization on unconsolidated joint ventures (pro rata) 44,765 41,876
Less: depreciation on personal property (3,381) (2,940)
FFO attributable to common stockholders and unit holders - basic and diluted 133,603 141,029
Loss on extinguishment of debt, net - consolidated assets - 3,575
FFO attributable to common stockholders and unit holders excluding extinguishment of debt, net - diluted $133,603 $144,604
======== ========
Reconciliation of Earnings per Share
("EPS") to FFO per diluted share (c):
For the Three
Months
Ended March 31,
---------------
Unaudited
---------
2017 2016
---- ----
EPS - diluted $0.48 $2.76
Per share impact of depreciation and
amortization of real estate 0.78 0.76
Per share impact of gain on sale or
write down of assets, net (0.39) (2.65)
FFO per share - diluted $0.87 $0.87
Per share impact of loss on
extinguishment of debt, net - 0.02
FFO per share -diluted, excluding
extinguishment of debt, net $0.87 $0.89
===== =====
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Reconciliation of Net
income attributable
to the Company to
Adjusted EBITDA:
For the Three Months
Ended March 31,
---------------
Unaudited
---------
2017 2016
---- ----
Net income
attributable to the
Company $69,243 $420,915
Interest expense -
consolidated assets 41,301 39,776
Interest expense -
unconsolidated joint
ventures (pro rata) 25,306 22,494
Depreciation and
amortization -
consolidated assets 83,073 86,931
Depreciation and
amortization -
unconsolidated joint
ventures (pro rata) 44,765 41,876
Noncontrolling
interests in OP 5,108 29,985
Less: Interest
expense and
depreciation and
amortization
allocable to
noncontrolling
interests on
consolidated joint
ventures (6,212) (6,043)
Loss on
extinguishment of
debt, net -
consolidated assets - 3,575
Gain on sale or write
down of assets, net
-consolidated
assets (49,565) (434,456)
(Gain) loss on sale
or write down of
assets, net -
unconsolidated joint
ventures (pro rata) (2,269) 4
Income tax (benefit)
expense (3,484) 1,317
Distributions on
preferred units 96 143
Adjusted EBITDA (d) $207,362 $206,517
======== ========
Reconciliation of Adjusted EBITDA to Net Operating Income ("NOI") and
to NOI -Same Centers:
For the Three Months
Ended March 31,
---------------
Unaudited
---------
2017 2016
---- ----
Adjusted EBITDA (d) $207,362 $206,517
REIT general and administrative
expenses 8,463 8,629
Management Companies' revenues (11,896) (8,617)
Management Companies' operating
expenses 28,517 27,900
Straight-line and above/below
market adjustments (7,419) (6,412)
NOI - All Centers 225,027 228,017
NOI of non-Same Centers (19,894) (27,266)
NOI - Same Centers (e) $205,133 $200,751
======== ========
(d) Adjusted EBITDA
represents earnings
before interest,
income taxes,
depreciation,
amortization,
noncontrolling
interests in the OP,
extraordinary items,
loss (gain) on
remeasurement, sale
or write down of
assets, loss (gain)
on extinguishment of
debt and preferred
dividends and
includes joint
ventures at their pro
rata share.
Management considers
Adjusted 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.
The Company believes
that Adjusted 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. The
Company also cautions
that Adjusted EBITDA,
as presented, may not
be comparable to
similarly titled
measurements reported
by other companies.
(e) 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 Adjusted
EBITDA and
eliminating the
impact of the
management companies'
revenues and
operating expenses,
the Company's general
and administrative
expenses and the
straight-line and
above/below market
adjustments to
minimum rents and
subtracting out NOI
from non-Same
Centers.
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SOURCE The Macerich Company
