SANTA MONICA, Calif., May 8 /PRNewswire-FirstCall/ -- The Macerich
Company (NYSE:MAC) today announced results of operations for the
quarter ended March 31, 2008, which included total funds from
operations ("FFO") diluted of $96.0 million or $1.09 per
share-diluted compared to $85.1 million or $.96 per share-diluted
for the quarter ended March 31, 2007. Net income available to
common stockholders for the quarter ended March 31, 2008 was $95.6
million or $1.30 per share-diluted compared to $3.5 million or $.05
per share-diluted for the quarter ended March 31, 2007. 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 to FFO and net
income per common share-diluted ("EPS") to FFO per share-diluted is
included in the financial tables accompanying this press release.
Recent Highlights: -- During the quarter, Macerich signed 336,000
square feet of specialty store leases at average initial rents of
$44.71 per square foot. Starting base rent on new lease signings
was 24.3% higher than the expiring base rent. -- Mall tenant sales
per square foot for the trailing twelve month period increased 3.0%
to $468 in the first quarter of 2008 compared to $454 for the first
quarter of 2007. -- Portfolio occupancy at March 31, 2008 was 92.7%
compared to 92.8% at March 31, 2007. -- FFO per share-diluted
increased 13% to $1.09 for the quarter ended March 31, 2008
compared to $.96 for the quarter ended March 31, 2007. --
Construction began on the $265 million redevelopment of Santa
Monica Place. Commenting on the quarter, Arthur Coppola president
and chief executive officer of Macerich stated "It is encouraging
that in light of the global economic downturn, for us it was
another quarter of strong fundamentals including, high occupancy,
wide releasing spreads and solid same center net operating income
growth. The quarter was also highlighted by significant progress on
our three major redevelopments: The Oaks, Santa Monica Place and
Scottsdale Fashion Square." Redevelopment and Development Activity
The expansion of The Oaks, a 1.1 million square-foot super regional
mall in Thousand Oaks, California, continues on schedule toward a
multi-phased opening beginning with a 138,000-square-foot Nordstrom
Department Store slated to open in fall 2008. Construction on the
two-level, open-air retail, dining and entertainment venue, and a
complete interior renovation continues. New additions to the
center's interior retail lineup include the first-to-markets Bare
Escentuals, Fruits and Passions, kate spade, Marciano and Teavana.
On April 17, Macerich marked the construction start of an expansive
redevelopment of Santa Monica Place. Plans for the property are
expected to transform the center into an open-air shopping and
dining destination. The center closed for redevelopment on January
31 and is projected to re-open in fall 2009. Construction of the
underground parking structure for the first phase of a new luxury
wing at Scottsdale Fashion Square began in early 2008. Anchored by
a first-to-market 60,000-square-foot Barneys New York, the
expansion will introduce up to 110,000 square feet of luxury shops
and restaurants and is expected to begin opening in fall 2009. New
tenants that opened this quarter include Bottega Veneta, Jimmy Choo
and Marciano. Construction on the Market at Estrella Falls, the
power center phase of a 330-acre mixed-use development is underway.
The 500,000-square-foot power center will begin opening in phases
in fall 2008. Old Navy joins previously announced large-format
retailers Bashas', Staples, Shoe Pavilion, Razmataz and Petco. The
project's future phases include a department-store anchored super
regional shopping center and additional parcels for commercial and
potential mixed-use opportunities. Acquisitions and Dispositions
Effective January 1, 2008, the former owner of the Wilmorite
portfolio exercised its right to exchange 3.4 million preferred
units (redeemable into 2.9 million common units) in exchange for
the Company's interest in Eastview Mall, Greece Ridge Center,
Pittsford Plaza and Marketplace Mall (together known as the
"Rochester Assets"). The Rochester Assets were transferred with pro
rata mortgage debt of approximately $218 million. The total square
footage of the Rochester Assets is 4.7 million square feet of GLA
and the average sales per square foot were $360. A non cash gain on
redemption of $99 million was recorded in the first quarter as a
result of the disposition of these non-core assets. On January 10,
2008, Macerich and its partner, the Alaska Permanent Fund
Corporation (APFC), announced the acquisition of The Shops at North
Bridge. The Shops at North Bridge is a 680,933-square-foot
mixed-use retail development anchoring the south end of Chicago's
primary retail district known as "The Magnificent Mile." The Shops
at North Bridge is home to one of the top five performing Nordstrom
Department Stores in the country. Located on Chicago's famed
Michigan Avenue, the center has a 94.9% occupancy level and annual
shop tenant sales of $839 per square foot. Macerich and APFC
acquired the property for $515 million. Macerich and APFC assumed
the $205 million existing loan at an interest rate of 4.67%
maturing in July 2009. This is the second joint venture for the two
entities: Macerich and APFC co-own another of the country's
top-performing regional shopping centers, Tysons Corner Center.
Financing Activity In March, the Company placed a $101 million
construction loan on Cactus Power Center. The three year
construction loan has an initial interest rate of 3.95%. On May 6,
2008, a new $100 million floating rate loan was placed on The Mall
at Victor Valley. The initial interest rate is 4.33%. On May 14,
2008, an $82 million construction loan is expected to close on the
Market at Estrella Falls. The loan is a three year loan, extendable
to five years and has an initial interest rate of approximately
4.30%. The Company has received a $150 million loan commitment for
the currently unencumbered SanTan Village regional mall. The five
year loan is expected to fund in June. The Company has also reached
agreement on a $170 million seven year, 6.76% fixed rate loan on
Fresno Fashion Fair. The new loan will pay off a $63 million
maturing loan. The loan is expected to close in July. 2008 Earnings
Guidance Management is reaffirming its guidance for 2008 full year
FFO per share in the range of $5.00 to $5.15. This guidance is
based on management's current view of the current market conditions
in the regional mall business. Due to the uncertainty in the timing
and economics of acquisitions and dispositions, the guidance range
does not include any potential property acquisitions or
dispositions. The Company is not able to assess at this time the
potential impact of such exclusions on future FFO. FFO does not
include gains or losses on sales of depreciated operating assets.
Macerich 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
72 regional malls. Additional information about Macerich 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/ (Investing section) and through CCBN at
http://www.earnings.com/. The call begins today, May 8, 2008 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/ (Investing section) 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, 2007, 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. (See attached
tables) THE MACERICH COMPANY FINANCIAL HIGHLIGHTS (IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS) Results of Operations: Results before
Impact of Results after SFAS 144 (e) SFAS 144 (e) SFAS 144 (e) For
the For the For the Three Months Three Months Three Months Ended
March 31, Ended March 31, Ended March 31, Unaudited Unaudited 2008
2007 2008 2007 2008 2007 Minimum rents $132,087 $123,995 ($6,256)
($11,035) $125,831 $112,960 Percentage rents 2,704 3,784 - (120)
2,704 3,664 Tenant recoveries 67,831 67,783 (1,442) (6,918) 66,389
60,865 Management Companies' revenues 9,691 8,754 - - 9,691 8,754
Other income 6,613 7,592 (284) (1,037) 6,329 6,555 Total revenues
$218,926 $211,908 ($7,982) ($19,110) $210,944 $192,798 Shopping
center and operating expenses 70,953 68,680 (2,036) (6,664) 68,917
62,016 Management Companies' operating expenses 18,343 17,755 - -
18,343 17,755 Income tax expense (benefit) 301 (120) - - 301 (120)
Depreciation and amortization 61,128 55,974 (421) (4,595) 60,707
51,379 REIT general and administrative expenses 4,403 5,373 - -
4,403 5,373 Interest expense 70,827 67,555 - (3,535) 70,827 64,020
Loss on early extinguishment of debt - 878 - - - 878 Gain on sale
or disposition of assets 99,937 1,463 (99,263) 289 674 1,752 Equity
in income of unconsolidated joint ventures (c) 22,298 14,483 - -
22,298 14,483 Minority interests in consolidated joint ventures
(526) (5,038) - 3,820 (526) (1,218) Income (loss) from continuing
operations 114,680 6,721 (104,788) (207) 9,892 6,514 Discontinued
Operations: Gain (loss) on sale or disposition of assets - - 99,263
(289) 99,263 (289) Income from discontinued operations - - 5,525
496 5,525 496 Income before minority interests of OP 114,680 6,721
- - 114,680 6,721 Income allocated to minority interests of OP
16,598 638 - - 16,598 638 Net income before preferred dividends
98,082 6,083 - - 98,082 6,083 Preferred dividends (a) 2,454 2,575 -
- 2,454 2,575 Net income to common stockholders $95,628 $3,508 $0
$0 $95,628 $3,508 Average number of shares outstanding - basic
72,342 71,669 72,342 71,669 Average shares outstanding, assuming
full conversion of OP Units (d) (e) 88,290 85,034 88,290 85,034
Average shares outstanding - diluted for FFO (a) (d) (e) 88,290
88,661 88,290 88,661 Per share income - diluted before discontinued
operations - - $0.11 $0.05 Net income per share - basic $1.32 $0.05
$1.32 $0.05 Net income per share - diluted (a) (e) $1.30 $0.05
$1.30 $0.05 Dividend declared per share $0.80 $0.71 $0.80 $0.71
Funds from operations "FFO" (b) (d) - basic $93,554 $82,493 $93,554
$82,493 Funds from operations "FFO" (a) (b) (d) (e) - diluted
$96,008 $85,068 $96,008 $85,068 FFO per share - basic (b) (d) $1.10
$0.97 $1.10 $0.97 FFO per share - diluted (a) (b) (d) (e) $1.09
$0.96 $1.09 $0.96 THE MACERICH COMPANY FINANCIAL HIGHLIGHTS (IN
THOUSANDS, EXCEPT PER SHARE AMOUNTS) (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 assumed converted for purposes of net income per share -
diluted for 2008 and they are not assumed converted for 2007 as
they would be antidilutive to the calculation. 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 October 18, 2007, 560,000 shares of
convertible preferred stock were converted to common shares. On
March 16, 2007, the Company issued $950 million of convertible
senior notes. These notes are not dilutive for purposes of net
income per share - diluted or FFO - diluted for 2008 and 2007. (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 sales 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, 2008 and 2007 by $1.6 million and $0.9
million, respectively, or by $.02 per share and $.01 per share,
respectively. Additionally, SFAS 141 increased FFO for the three
months ended March 31, 2008 and 2007 by $4.6 million and $4.0
million, respectively, or by $.05 per share and $0.045 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 share and
unit-based compensation plans 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. For the three months ended March 31, 2008 and 2007,
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 December 17, 2007, the Company, as part of a
sale/leaseback transaction involving Mervyn's sites, identified
certain locations available for sale. The Company has classified
the results of operations from these sites to discontinued
operations. 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. The participating units
are not assumed converted for purposes of net income per share and
FFO - diluted per share for all periods presented as they would be
antidilutive to the calculation. On January 1, 2008, a subsidiary
of the Company, at the election of the holders, redeemed
approximately 3.4 million participating convertible preferred units
in exchange for the distribution of the interests in the entity
which held that portion of the Wilmorite portfolio that consisted
of Eastview Mall, Greece Ridge Center, Marketplace Mall and
Pittsford Plaza ("Rochester Properties"). This exchange is referred
to as the "Rochester Redemption." As a result of the Rochester
Redemption , the Company has classified the results of operations
from the Rochester Properties to discontinued operations and
recorded a gain of $99.3 million for the period ended March 31,
2008. THE MACERICH COMPANY FINANCIAL HIGHLIGHTS (IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS) Pro rata share of joint ventures: For the
Three Months Ended March 31, Unaudited 2008 2007 Revenues: Minimum
rents $66,310 $61,890 Percentage rents 2,262 2,287 Tenant
recoveries 32,596 29,189 Other 4,158 2,663 Total revenues $105,326
$96,029 Expenses: Shopping center expenses 35,925 30,588 Interest
expense 26,259 24,317 Depreciation and amortization 22,279 24,388
Total operating expenses 84,463 79,293 Gain (loss) on sale of
assets 1,319 (2,382) Equity in income of joint ventures 116 129 Net
income $22,298 $14,483 Reconciliation of Net Income to FFO (b): For
the Three Months Ended March 31, Unaudited 2008 2007 Net income -
available to common stockholders $95,628 $3,508 Adjustments to
reconcile net income to FFO - basic Minority interest in OP 16,598
638 Gain on sale or disposition of consolidated assets (99,937)
(1,463) plus gain on undepreciated asset sales- consolidated assets
333 881 plus minority interest share of gain on sale of
consolidated joint ventures 341 837 (Gain) loss on sale of assets
from unconsolidated entities (pro rata share) (1,319) 2,382 plus
gain on undepreciated asset sales- unconsolidated entities (pro
rata share) 1,319 - Depreciation and amortization on consolidated
assets (f) 61,128 55,974 Less depreciation and amortization
allocable to minority interests on consolidated joint ventures
(573) (994) Depreciation and amortization on joint ventures (pro
rata) (f) 22,279 24,388 Less: depreciation on personal property and
amortization of loan costs (f) (2,243) (3,658) Total FFO - basic
93,554 82,493 Additional adjustment to arrive at FFO - diluted
Preferred stock dividends earned 2,454 2,575 Total FFO - diluted
$96,008 $85,068 (f) In 2008, amortization of loan costs is included
in interest expense. Reconciliation of EPS to FFO per diluted
share: For the Three Months Ended March 31, Unaudited 2008 2007
Earnings per share - diluted $1.30 $0.05 Per share impact of
depreciation and amortization of real estate 0.95 0.90 Per share
impact of (gain) loss on sale or disposition of depreciated assets
(1.17) 0.03 Per share impact of preferred stock not dilutive to EPS
0.01 (0.02) Fully diluted FFO per share $1.09 $0.96 THE MACERICH
COMPANY FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS) For the Three Months Reconciliation of Net Income to
EBITDA: Ended March 31, Unaudited 2008 2007 Net income - available
to common stockholders $95,628 $3,508 Interest expense 70,827
67,555 Interest expense - unconsolidated entities (pro rata) 26,259
24,317 Depreciation and amortization - consolidated assets 61,128
55,974 Depreciation and amortization - unconsolidated entities (pro
rata) 22,279 24,388 Minority interest 16,598 638 Less: Interest
expense and depreciation and amortization allocable to minority
interests on consolidated joint ventures (759) (1,435) Loss on
early extinguishment of debt - 878 Gain on sale or disposition of
assets - consolidated assets (99,937) (1,463) (Gain) loss on sale
of assets - unconsolidated entities (pro rata) (1,319) 2,382 Add:
Minority interest share of gain on sale of consolidated joint
ventures 341 837 Income tax expense (benefit) 301 (120)
Distributions on preferred units 276 3,547 Preferred dividends
2,454 2,575 EBITDA (g) $194,076 $183,581 Reconciliation of EBITDA
to Same Centers - Net Operating Income ("NOI"): For the Three
Months Ended March 31, Unaudited 2008 2007 EBITDA (g) $194,076
$183,581 Add: REIT general and administrative expenses 4,403 5,373
Management Companies' revenues (9,691) (8,754) Management
Companies' operating expenses 18,343 17,755 Lease termination
income of comparable centers (2,523) (3,354) EBITDA of
non-comparable centers (28,151) (23,211) Same Centers - net
operating income ("NOI") (h) $176,457 $171,390 (g) 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. (h)
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 ,
+1-310-394-6000, both of The Macerich Company Web site:
http://www.macerich.com/
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