SANTA MONICA, Calif., May 4 /PRNewswire-FirstCall/ -- The Macerich
Company (NYSE:MAC) today announced results of operations for the
quarter ended March 31, 2007 which included funds from operations
("FFO") per share-diluted of $.96 compared to $1.05 for the quarter
ended March 31, 2006. Total FFO-diluted was $85.1 million for the
quarter compared to $90.1 million for the quarter ended March 31,
2006. 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,
2007 was $2.6 million or $.04 per share-diluted compared to $7.4
million or $.11 per share-diluted for the quarter ended March 31,
2006. 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 359,000 square
feet of specialty store leases at average initial rents of $42.61
per square foot. Starting base rent on new lease signings was 23.8%
higher than the expiring base rent. * Total same center tenant
sales, for the quarter ended March 31, 2007, were up 5.5% compared
to sales for the quarter ended March 31, 2006. Tenant sales-per
square-foot for the portfolio were $454 up 7.1% from March 31,
2006. * Portfolio occupancy at March 31, 2007 was 92.8% compared to
92.5% at March 31, 2006. On a same center basis, occupancy was
92.8% at March 31, 2007 compared to 92.8% at March 31, 2006. * In
March 2007, the Company issued $950 million of 3.25% convertible
notes. The net proceeds were used primarily to pay off short-term,
higher coupon floating rate debt. The Company's floating rate debt
as a percentage of total debt has been decreased to 8%. As a result
of paying off the floating rate debt, a $.9 million loss on early
extinguishment of debt was reflected in the quarter. Commenting on
results, Arthur Coppola president and chief executive officer of
Macerich stated, "The quarter was highlighted by solid fundamentals
in our business with continued high occupancy levels, strong tenant
sales and excellent releasing spreads. Our refinancing efforts
during the quarter have allowed us to significantly strengthen our
balance sheet. We are well positioned to take advantage of the
pipeline of development and redevelopment opportunities in our
existing portfolio such as the new regional mall under construction
at SanTan Village and the major redevelopment of The Oaks mall."
During the quarter lease termination revenues, including joint
ventures at pro rata share, dropped to $3.4 million from $9.0
million in the quarter ended March 31, 2006. Redevelopment and
Development Activity Scheduled to open in October 2007, Phase I of
SanTan Village, a 120-acre open-air regional shopping center under
construction in Gilbert, Arizona, will consist of approximately 130
retailers occupying in excess of 1.2 million square feet. Fourteen
new leases were recently announced including Anchor Blue, Avante
Salon and Spa, Brio Tuscan Grille, Dick's Sporting Goods, Finish
Line, Forever 21, Journey's, Johnny Rockets, Sunglass Icon, Torrid,
Wet Seal and Zumiez. The center is currently 87% leased. The other
retail phases are expected to be completed by late 2008.
Construction continues on The Promenade at Casa Grande, a
1-million-square-foot regional shopping center currently under
development in Arizona's Pinal County on the I-10 corridor between
Phoenix and Tucson. Phase I is scheduled to open in fall 2007. The
project is 90% committed. New deals announced for the project
include Best Buy, Dillards, Famous Footwear, Harkin's Theaters, JC
Penney, Kohl's, Lane Bryant, Michaels, Petsmart, Staples, Shoe
Pavilion and Target. Phase II is scheduled to open in spring 2008.
The major redevelopment and expansion of The Oaks continues. The
Oaks is a 1.1-million-square-foot super-regional shopping center in
California's affluent Thousand Oaks. The Company is adding a
235,000-square-foot mall expansion and the market's first Nordstrom
department store. The project is expected to be completed in fall
2008. At Freehold Raceway Mall in New Jersey, construction is
underway on the 100,000-square-foot, $40 million lifestyle
expansion. The project is 90% committed. In addition, an interior
renovation of the existing 1.4-million-square-foot regional
shopping center commenced in the first quarter. Both projects are
expected to be substantially complete in the fourth quarter of
2007. Financing Activity On March 16, 2007, the Company issued $950
million of convertible notes. The notes will pay interest
semiannually at a rate of 3.25% per annum and mature on March 15,
2012. The initial conversion price of approximately $111.48
represents a 20% premium to the closing price of the Company's
common stock on March 12, 2007. In addition, the Company entered
into capped call transactions with the initial purchasers of the
notes. These agreements effectively increase the conversion price
of the notes to approximately $130.06, which represents a 40%
premium to the March 12, 2007 closing price of $92.90 per common
share of the Company. Concurrent with the debt offering, the
Company repurchased $75 million (807,000 shares) of the Company's
common stock. Earnings Guidance Management is reaffirming its prior
guidance for FFO-diluted per share for 2007 in the range of $4.58
to $4.68. 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 85% ownership
interest in The Macerich Partnership, L.P. Macerich now owns
approximately 77 million square feet of gross leaseable area
consisting primarily of interests in 73 regional malls. Additional
information about The Macerich Company can be obtained from the
Company's web site at http://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
http://www.macerich.com/ and through CCBN at
http://www.earnings.com/. The call begins today, May 4, 2007 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
http://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, 2006, for a discussion of such risks and
uncertainties, which discussion is incorporated herein by
reference. 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 For the Three For
the Three For the Three of Operations: Months Ended Months Ended
Months Ended March 31, March 31, March 31, Unaudited Unaudited 2007
2006 2007 2006 2007 2006 Minimum rents $123,995 $133,587 ($10)
($11,498) $123,985 $122,089 Percentage rents 3,784 2,967 (17) (595)
3,767 2,372 Tenant recoveries 67,783 67,406 (129) (5,065) 67,654
62,341 Management Companies' revenues 8,754 7,257 -- -- 8,754 7,257
Other income 7,592 6,947 (81) (314) 7,511 6,633 Total revenues
211,908 218,164 (237) (17,472) 211,671 200,692 Shopping center and
operating expenses 68,680 68,126 (58) (6,281) 68,622 61,845
Management Companies' operating expenses 17,755 14,714 -- -- 17,755
14,714 Income tax expense (120) (533) -- -- (120) (533)
Depreciation and amortization 57,087 63,539 -- (4,130) 57,087
59,409 General, administrative and other expenses 5,373 3,698 -- --
5,373 3,698 Interest expense 67,555 71,966 -- (3,185) 67,555 68,781
Loss on early extinguishment of debt 878 1,782 -- -- 878 1,782 Gain
(loss) on sale or writedown of assets 1,463 (502) 289 -- 1,752
(502) Equity in income of unconsolidated entities (c) 14,483 21,016
-- -- 14,483 21,016 Minority interests in consolidated joint
ventures (1,491) (503) -- 40 (1,491) (463) Income (loss) from
continuing operations 9,155 14,883 110 (3,836) 9,265 11,047
Discontinued Operations: Gain (loss) on sale of asset -- -- (289)
-- (289) -- Income from discontinued operations -- -- 179 3,836 179
3,836 Income before minority interests of OP 9,155 14,883 -- --
9,155 14,883 Income allocated to minority interests of OP 467 1,460
-- -- 467 1,460 Net income before preferred dividends 8,688 13,423
-- -- 8,688 13,423 Preferred dividends and distributions (a) 6,122
5,970 -- -- 6,122 5,970 Net income to common stockholders $2,566
$7,453 $0 $0 $2,566 $7,453 Average number of shares outstanding -
basic 71,669 68,738 71,669 68,738 Average shares outstanding,
assuming full conversion of OP Units (d) 85,034 82,518 85,034
82,518 Average shares outstanding - diluted for FFO (a) (d) 88,661
86,145 88,661 86,145 Per share income - diluted before discontinued
operations -- -- $0.04 $0.06 Net income per share-basic $0.04 $0.11
$0.04 $0.11 Net income per share - diluted (a) $0.04 $0.11 $0.04
$0.11 Dividend declared per share $0.71 $0.68 $0.71 $0.68 Funds
from operations "FFO" (b)(d)- basic $82,493 $87,647 $82,493 $87,647
Funds from operations "FFO" (a)(b)(d) - diluted $85,068 $90,113
$85,068 $90,113 FFO per share - basic (b)(d) $0.97 $1.07 $0.97
$1.07 FFO per share - diluted (a)(b)(d) $0.96 $1.05 $0.96 $1.05 (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 - diluted for 2007 and 2006 as
they would be antidilutive to those calculations. The weighted
average preferred shares outstanding are assumed converted for
purposes of FFO per share - diluted as they are dilutive to those
calculations for all periods presented. On April 25, 2005, in
connection with the acquisition of Wilmorite Holdings, L.P. and its
affiliates, the Company issued as part of the consideration
participating and non-participating convertible preferred units in
MACWH, LP. These preferred units are not assumed converted for
purposes of net income per share - diluted and FFO per share -
diluted for 2007 and 2006 as they would be antidilutive to those
calculations. On March 16, 2007, the Company issued $950 million of
convertible senior notes. These notes are not assumed converted for
purposes of net income per share - diluted and FFO per share -
diluted for 2007 as they would be antidilutive to those
calculations. (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 undepreciated assets
and the impact of SFAS 141 have been included in FFO. The inclusion
of gains on sales of undepreciated assets increased FFO for the
three months ended March 31, 2007 and 2006 by $0.9 million and $0.1
million, respectively, or by $.01 per share and $.00 per share,
respectively. Additionally, SFAS 141 increased FFO for the three
months ended March 31, 2007 and 2006 by $4.0 million and $4.6
million, respectively, or by $.045 per share and $.05 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. (d) The Macerich Partnership, LP (the "Operating
Partnership" or the "OP") 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
stock options and restricted stock using the treasury method and
assumes conversion of MACWH, LP preferred and common units to the
extent they are dilutive to the calculation. For the three months
ended March 31, 2007 and 2006, the MACWH, LP preferred 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 June 9, 2006,
Scottsdale 101 in Arizona was sold. The sale of this property
resulted in a gain on sale in 2006, at the Company's prorata share,
of $25.8 million. Additionally, the Company reclassified the
results of operations for the three months ended March 31, 2007 and
2006 to discontinued operations. On July 13, 2006, Park Lane Mall
in Nevada was sold. The sale of this property resulted in a gain on
sale of $5.9 million in 2006. The Company reclassified the results
of operations for the three months ended March 31, 2007 and 2006 to
discontinued operations. On July 27, 2006, Greeley Mall in Colorado
and Holiday Village in Montana were sold. The sale of these
properties resulted in gains on sale of $21.3 million and $7.4
million, respectively, in 2006. The Company reclassified the
results of operations for the three months ended March 31, 2007 and
2006 to discontinued operations. On August 11, 2006, Great Falls
Marketplace in Montana was sold. The sale of this property resulted
in a gain on sale of $11.8 million in 2006. The Company
reclassified the results of operations for the three months ended
March 31, 2007 and 2006 to discontinued operations. On December 29,
2006, Citadel Mall in Colorado Springs, Colorado, Crossroads Malls
in Oklahoma City, Oklahoma and Northwest Arkansas Mall in
Fayetteville, Arkansas were sold. The sale of these properties
resulted in a total gain on sale of $132.7 million in 2006. The
Company reclassified the results of operations for the three months
ended March 31, 2007 and 2006 to discontinued operations. March 31,
Dec. 31, Summarized Balance Sheet Information 2007 2006 (UNAUDITED)
Cash and cash equivalents $47,945 $269,435 Investment in real
estate, net (h) $5,806,357 $5,755,283 Investments in unconsolidated
entities (i) $987,435 $1,010,380 Total assets $7,391,217 $7,562,163
Mortgage and notes payable $4,998,179 $4,993,879 Pro rata share of
debt on unconsolidated entities $1,669,232 $1,664,447 Total common
shares outstanding at quarter end: 71,450 71,568 Total preferred
shares outstanding at quarter end: 3,627 3,627 Total
partnership/preferred units outstanding at quarter end: 15,878
16,342 March 31, March 31, Additional financial data as of: 2007
2006 (UNAUDITED) Occupancy of centers (f) 92.80% 92.50% Comparable
quarter change in same center sales(f)(g) 5.50% 4.80% Additional
financial data for the three months ended: Acquisitions of property
and equipment - including joint ventures at prorata $2,707 $244,520
Redevelopment and expansions of centers - including joint ventures
at prorata $88,662 $38,004 Renovations of centers - including joint
ventures at prorata $16,723 $11,622 Tenant allowances - including
joint ventures at prorata $7,802 $3,814 Deferred leasing costs -
including joint ventures at prorata $6,514 $7,707 (f) excludes
redevelopment properties (Santan Village Phase 2, Santa Monica
Place, The Oaks, Twenty Ninth Street and Westside Pavilion
Adjacent) (g) includes mall and freestanding stores. (h) includes
construction in process on wholly owned assets of $359,924 at March
31, 2007 and $294,115 at December 31, 2006. (i) the Company's
prorata share of construction in process on unconsolidated entities
of $42,757 at March 31, 2007 and $45,268 at December 31, 2006. For
the Three Months PRORATA SHARE OF JOINT VENTURES Ended March 31,
(UNAUDITED) (All amounts in thousands) 2007 2006 Revenues: Minimum
rents $61,890 $58,370 Percentage rents 2,287 2,628 Tenant
recoveries 29,189 27,603 Other 2,663 3,537 Total revenues 96,029
92,138 Expenses: Shopping center expenses 30,588 31,158 Interest
expense 24,317 19,461 Depreciation and amortization 24,388 20,579
Total operating expenses 79,293 71,198 Loss on sale of assets
(2,382) -- Equity in income of joint ventures 129 76 Net income
$14,483 $21,016 For the Three Months RECONCILIATION OF NET INCOME
TO FFO (b)(e) Ended March 31, (UNAUDITED) (All amounts in
thousands) 2007 2006 Net income - available to common stockholders
$2,566 $7,453 Adjustments to reconcile net income to FFO - basic
Minority interest in OP 467 1,460 (Gain ) loss on sale of
consolidated assets (1,463) 502 plus gain on undepreciated asset
sales - consolidated assets 881 121 plus minority interest share of
gain on sale of consolidated joint ventures 837 -- (Gain) loss on
sale of assets from unconsolidated entities (pro rata share) 2,382
-- Depreciation and amortization on consolidated assets 57,087
63,539 Less depreciation and amortization allocable to minority
interests on consolidated joint ventures (994) (1,975) Depreciation
and amortization on joint ventures (pro rata) 24,388 20,579 Less:
depreciation on personal property and amortization of loan costs
and interest rate caps (3,658) (4,032) Total FFO - basic 82,493
87,647 Additional adjustment to arrive at FFO - diluted Preferred
stock dividends earned 2,575 2,466 FFO - diluted $85,068 $90,113
For the Three Months Ended March 31, (UNAUDITED) Reconciliation of
EPS to FFO per diluted share: 2007 2006 Earnings per share $0.04
$0.11 Per share impact of depreciation and amortization of real
estate $0.91 $0.95 Per share impact of gain on sale of depreciated
assets $0.03 $0.01 Per share impact of preferred stock not dilutive
to EPS ($0.02) ($0.02) Fully Diluted FFO per share $0.96 $1.05 THE
MACERICH COMPANY For the Three Months RECONCILIATION OF NET INCOME
TO EBITDA Ended March 31, (UNAUDITED) (All amounts in thousands)
2007 2006 Net income - available to common stockholders $2,566
$7,453 Interest expense 67,555 71,966 Interest expense -
unconsolidated entities (pro rata) 24,317 19,461 Depreciation and
amortization - consolidated assets 57,087 63,539 Depreciation and
amortization - unconsolidated entities (pro rata) 24,388 20,579
Minority interest 467 1,460 Less: Interest expense and depreciation
and amortization allocable to minority interests on consolidated
joint ventures (1,435) (2,867) Loss on early extinguishment of debt
878 1,782 Loss (gain) on sale of assets - consolidated assets
(1,463) 502 Loss (gain) on sale of assets - unconsolidated entities
(pro rata) 2,382 -- Add: Minority interest share of gain on sale of
consolidated joint ventures 837 -- Income tax expense (benefit)
(120) (533) Preferred dividends 6,122 5,970 EBITDA (j) $183,581
$189,312 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) 2007 2006 EBITDA
(j) $183,581 $189,312 Add: REIT general and administrative expenses
5,373 3,698 Management Companies' revenues (c) (8,754) (7,257)
Management Companies' operating expenses (c) 17,755 14,714 Lease
termination income of comparable centers (3,397) (8,569) EBITDA of
non-comparable centers (20,198) (20,507) SAME CENTERS - Net
operating income ("NOI") (k) $174,360 $171,391 (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. DATASOURCE: 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, +1-310-394-6000 Web site:
http://www.macerich.com/
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