SANTA MONICA, Calif.,
May 12, 2020 /PRNewswire/ -- The
Macerich Company (NYSE: MAC) today announced results of operations
for the quarter ended March 31, 2020,
which included net income attributable to the Company of
$7.5 million or $.05 per share-diluted for the quarter ended
March 31, 2020 compared to net income
of $7.8 million or $.05 per share-diluted attributable to the
Company for the quarter ended March 31,
2019. For the first quarter 2020, funds from operations
("FFO")-diluted, excluding financing expense in connection with
Chandler Freehold and loss on extinguishment of debt was
$122.7 million or $.81 per share-diluted compared to $122.3 million or $.81 per share-diluted for the quarter ended
March 31, 2019. A description and
reconciliation of earnings per share ("EPS")-diluted to FFO per
share-diluted, excluding financing expense in connection with
Chandler Freehold and loss on extinguishment of debt is included
within the financial tables accompanying this press release.
Results and Highlights:
- Mall tenant annual sales per square foot for the portfolio
increased by 7.4% to $801 for the
twelve months ended February 29,
2020, compared to $746 for the
twelve months ended March 31, 2019.
Given the widespread closures of a majority of the Company's
tenants during March 2020 as a result
of COVID-19, tenant sales reporting is reflected as of February 29, 2020.
- Mall portfolio occupancy was 93.1% at March 31, 2020, compared to 94.0% at December 31, 2019 and 94.7% at March 31, 2019.
- Re-leasing spreads for the twelve months ended March 31, 2020 were up 6.5%. This represented a
sequential improvement compared to re-leasing spreads for the
twelve months ended December 31,
2019, which were up 4.7%.
- Leasing volumes remained strong during the first quarter, with
nearly 200 leases signed for 739,000 square feet totaling
$38 million of rent.
- Average rent per square foot increased 2.8% to $62.44 at March 31,
2020, compared to $60.74 at
March 31, 2019.
"While we are certainly pleased by the first quarter operating
metrics and financial results, which exceeded our original first
quarter expectations, our world is facing an unprecedented health
crisis in the form of the novel coronavirus (COVID-19). It is a
crisis that is impacting our way of life and touching almost every
facet of the global economy. We are fortifying our Company and
re-shaping our strategic plans to help withstand this unprecedented
event. We are closely monitoring the situation and working with
local and national authorities and our number one priority is the
health and safety of our employees, our tenants, our service
providers, and our community shoppers," said the Company's Chief
Executive Officer, Thomas O'Hern. "I
am confident that we have built a resilient business model, a high
quality portfolio and a team of top professionals to weather this
crisis and to ensure we remain well-positioned going forward."
During the trough of the COVID-19 pandemic, all but a few of the
Company's malls had shuttered, except for the continued operation
of essential retail and services, and approximately 74% of the
gross leasable area, which was previously occupied prior to the
COVID-19 closures, had closed. Many of those stores that remained
open did so on a limited-hours basis. The Company is now actively
planning for the re-opening of its real estate in all facets.
Within the past two weeks, The Company has re-opened 13 assets
located in Texas, Colorado, Missouri, Iowa, Indiana
and Arizona. By the end of May,
the Company anticipates being able to open, as permitted,
approximately 35 properties. While still uncertain given the myriad
of state and local ordinances, at this time, it is reasonable to
assume that the vast majority of the Company's properties will be
open by mid-June. The Company is prepared and ready for re-opening,
when permitted to do so.
Community Outreach:
During this period, the Company engaged in numerous community
initiatives, including to name just a few:
- Donated food and supplies to support first responders and
hospitals
- Donated its real estate for essential functions, drive-through
testing facilities, first responder parking and food drives
- Donated to local non-profit charities
- Made Company billboards and other media available for
stay-at-home campaigns, healthy hygiene protocols and blood
drives
- Donated iPads to New York area
hospitals for use by terminal patients requiring connection to
family and friends
Liquidity Measures:
During this period of disrupted rent collections due to
COVID-19, the Company has taken numerous measures to preserve its
liquidity, including among others:
- As previously reported, the Company has drawn the majority of
the remaining capacity on its $1.5
billion revolving line of credit. As of March 31, 2020, the Company had $735 million of cash on its balance sheet,
including joint ventures at the Company's share.
- The Company's Board of Directors recently approved a reduction
in the quarterly dividend to $.50 per
share, payable 20% in cash and 80% in common stock for the upcoming
dividend. The dividend reduction preserves approximately
$150 million of cash annually. For
each quarter that the board chooses to pay the dividend in stock,
an additional $60 million in cash
will be preserved. The Company's next dividend payment is on
June 3, 2020 to shareholders of
record at market close on April 22,
2020.
- The Company's redevelopment pipeline has been significantly
reduced for the remainder of 2020. The Company anticipates spending
$60 million in the last three
quarters of 2020 on redevelopment, which represents a 60% reduction
in previously estimated 2020 redevelopment expenditures for that
period of time. This reduction excludes the joint venture owned
project at One Westside, Google's new Class A creative office
campus in West Los Angeles. Work
continues on that project during the pandemic, which is fully
funded by a non-recourse construction facility.
- The Company has reduced its controllable shopping center
expenses by approximately 45% during the period that its properties
are substantially closed, except for essential retail and
services.
Guidance:
On March 27, 2020, given the
complex and rapidly evolving circumstances surrounding the COVID-19
pandemic, the Company withdrew its previously published 2020
Guidance, and is not providing an updated outlook at this time.
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.
Macerich currently owns 51 million square feet of real
estate consisting primarily of interests in 47 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 West
Coast, Arizona, Chicago and the Metro New York
to Washington, DC corridor. A recognized leader in
sustainability, Macerich has achieved the #1 GRESB
ranking in the North American Retail Sector for five straight years
(2015 – 2019). 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 on May 12, 2020 at 10:00 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, and acquisitions and dispositions; the adverse
impact of the novel coronavirus (COVID-19) on the U.S., regional
and global economies and the financial condition and results of
operations of the Company and its tenants; 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,
2019 and our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2020 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
|
|
2020
|
2019
|
Revenues:
|
|
|
Leasing
revenue
|
$210,721
|
$211,008
|
Other
income
|
9,258
|
5,334
|
Management Companies'
revenues
|
6,973
|
10,180
|
|
|
|
Total revenues
|
226,952
|
226,522
|
|
|
|
Expenses:
|
|
|
Shopping center and
operating expenses
|
70,725
|
69,604
|
Management Companies'
operating expenses
|
16,224
|
19,014
|
Leasing
expenses
|
7,425
|
7,505
|
REIT general and
administrative expenses
|
6,821
|
6,961
|
Depreciation and
amortization
|
82,213
|
81,468
|
Interest expense
(a)
|
8,074
|
38,357
|
Loss on
extinguishment of debt
|
-
|
351
|
|
|
|
Total expenses
|
191,482
|
223,260
|
|
|
|
Equity in income of
unconsolidated joint ventures
|
9,698
|
12,243
|
Income tax benefit
(expense)
|
266
|
(346)
|
Loss on sale or write
down of assets, net
|
(36,703)
|
(6,316)
|
|
|
|
Net income
|
8,731
|
8,843
|
Less net income
attributable to noncontrolling interests
|
1,209
|
1,019
|
Net income attributable to
the Company
|
$7,522
|
$7,824
|
|
|
|
Weighted average
number of shares outstanding - basic
|
141,437
|
141,262
|
Weighted average
shares outstanding, assuming full conversion of OP Units
(b)
|
151,915
|
151,677
|
Weighted average
shares outstanding - Funds From Operations ("FFO") - diluted
(b)
|
151,915
|
151,677
|
|
|
|
Earnings per share
("EPS") - basic
|
$0.05
|
$0.05
|
EPS -
diluted
|
$0.05
|
$0.05
|
|
|
|
Dividend declared per
share
|
$0.50
|
$0.75
|
|
|
|
FFO - basic and
diluted (b) (c)
|
$168,389
|
$134,278
|
FFO - basic and
diluted, excluding financing expense in connection with
Chandler Freehold (b) (c)
|
$122,682
|
$121,934
|
FFO - basic and
diluted, excluding financing expense in connection with
Chandler Freehold and loss on
extinguishment of debt (b) (c)
|
$122,682
|
$122,285
|
|
|
|
FFO per share - basic
and diluted (b) (c)
|
$1.11
|
$0.89
|
FFO per share - basic
and diluted, excluding financing expense in connection with
Chandler Freehold (b) (c)
|
$0.81
|
$0.80
|
FFO per share - basic
and diluted, excluding financing expense in connection with
Chandler Freehold and loss on
extinguishment of debt (b) (c)
|
$0.81
|
$0.81
|
|
|
|
THE MACERICH
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
(a)
|
The Company accounts
for its investment in the Chandler Fashion Center and Freehold
Raceway Mall ("Chandler Freehold") joint venture as a
financing arrangement. As a
result, the Company has included in interest expense (i) a credit
of $48,385 and $14,265 to adjust for the change in the fair
value of the financing arrangement
obligation during the three months ended March 31, 2020 and 2019,
respectively; (ii) distributions of $1,464 and $1,897 to its partner representing the partner's
share of net income for the three months ended March 31, 2020 and
2019, respectively; and (iii)
distributions of $2,678 and $1,921 to its partner in excess of the
partner's share of net income for the three months ended March 31,
2020 and 2019,
respectively.
|
|
|
(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 sales of 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.
|
|
|
|
Beginning in the
first quarter of 2018, the Company revised its definition of FFO so
that FFO excluded the impact of the financing expense in
connection with Chandler Freehold.
Beginning in the third quarter of 2019, the Company presented a
separate non-GAAP measure - FFO excluding financing
expense in connection with Chandler
Freehold. The Company has revised the FFO presentation for the
three months ended March 31, 2019 to conform to the current presentation. The Company
accounts for its joint venture in Chandler Freehold as a financing
arrangement. In connection with this treatment, the Company recognizes financing
expense on (i) the changes in fair value of the financing
arrangement, (ii) any payments to such joint venture partner equal to their pro rata share of net
income and (iii) any payments to such joint venture partner less
than or in excess of their pro rata share of net income. The Company excludes the noted
expenses related to the changes in fair value and for the payments
to such joint venture partner less than or in excess of their pro rata share of net
income.
|
|
|
|
The Company also
presents FFO excluding financing expense in connection with
Chandler Freehold and loss on extinguishment of debt.
|
|
|
|
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"). In addition, the
Company believes that FFO
excluding financing expense in connection with Chandler Freehold
and non-routine costs associated with extinguishment of debt
provide useful supplemental
information regarding the Company's performance as they show a more
meaningful and consistent comparison of the Company's
operating performance and allows
investors to more easily compare the Company's results. 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
|
|
For the
Three Months
|
common stockholders and unit holders - basic and diluted, excluding
financing expense in
|
|
Ended March
31,
|
connection with Chandler Freehold and loss on extinguishment of
debt (c):
|
|
Unaudited
|
|
|
2020
|
2019
|
Net income
attributable to the Company
|
|
$7,522
|
$7,824
|
Adjustments to
reconcile net income attributable to the Company to FFO
attributable to common stockholders and unit holders - basic and
diluted:
|
|
|
|
Noncontrolling interests in the OP
|
|
557
|
577
|
Loss on
sale or write down of consolidated assets, net
|
|
36,703
|
6,316
|
Add:
gain on undepreciated asset sales from consolidated
assets
|
|
-
|
534
|
Loss on
sale or write down of assets from unconsolidated joint ventures
(pro rata), net
|
-
|
71
|
Depreciation and amortization on consolidated
assets
|
|
82,213
|
81,468
|
Less
depreciation and amortization allocable to noncontrolling interests
in consolidated joint ventures
|
|
(3,789)
|
(3,645)
|
Depreciation and amortization on unconsolidated joint ventures (pro
rata)
|
|
49,509
|
44,998
|
Less:
depreciation on personal property
|
|
(4,326)
|
(3,865)
|
|
|
|
|
FFO attributable to
common stockholders and unit holders - basic and diluted
|
|
168,389
|
134,278
|
|
|
|
|
Financing expense in connection with Chandler Freehold
|
|
(45,707)
|
(12,344)
|
|
|
|
|
FFO attributable to
common stockholders and unit holders, excluding financing expense
in connection with Chandler
Freehold - basic and diluted
|
|
122,682
|
121,934
|
|
|
|
|
Loss on
extinguishment of debt
|
|
-
|
351
|
|
|
|
|
FFO attributable to
common stockholders and unit holders, excluding financing expense
in connection with Chandler
Freehold and loss on extinguishment of debt - diluted
|
|
$122,682
|
$122,285
|
|
|
|
|
|
|
|
|
Reconciliation of
EPS to FFO per share - diluted (c):
|
|
|
|
|
|
For the
Three Months
|
|
|
Ended March
31,
|
|
|
Unaudited
|
|
|
2020
|
2019
|
EPS -
diluted
|
|
$0.05
|
$0.05
|
Per
share impact of depreciation and amortization of real
estate
|
|
0.82
|
0.79
|
Per
share impact of loss on sale or write down of assets,
net
|
|
0.24
|
0.05
|
FFO per share - basic
and diluted
|
|
$1.11
|
$0.89
|
Per
share impact of financing expense in connection with Chandler
Freehold.
|
|
(0.30)
|
(0.09)
|
FFO per share - basic
and diluted, excluding financing expense in connection with
Chandler Freehold
|
$0.81
|
$0.80
|
Per
share impact of loss on extinguishment of debt
|
|
-
|
0.01
|
FFO per share - basic
and diluted, excluding financing expense in connection with
Chandler Freehold and loss on
extinguishment of debt
|
|
$0.81
|
$0.81
|
|
|
|
|
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
|
|
|
2020
|
2019
|
|
|
|
|
Net income
attributable to the Company
|
|
$7,522
|
$7,824
|
Interest
expense - consolidated assets
|
|
8,074
|
38,357
|
Interest
expense - unconsolidated joint ventures (pro rata)
|
|
26,988
|
27,054
|
Depreciation and amortization - consolidated assets
|
|
82,213
|
81,468
|
Depreciation and amortization - unconsolidated joint ventures (pro
rata)
|
|
49,509
|
44,998
|
Noncontrolling interests in the OP
|
|
557
|
577
|
Less:
Interest expense and depreciation and amortization allocable to
noncontrolling interests in consolidated joint ventures
|
|
(8,963)
|
(8,637)
|
Loss on
extinguishment of debt
|
|
-
|
351
|
Loss on
sale or write down of assets, net - consolidated assets
|
|
36,703
|
6,316
|
Loss on
sale or write down of assets, net - unconsolidated joint ventures
(pro rata)
|
|
-
|
71
|
Income
tax (benefit) expense
|
|
(266)
|
346
|
Distributions on preferred units
|
|
100
|
100
|
Adjusted EBITDA
(d)
|
|
$202,437
|
$198,825
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA to Net Operating Income ("NOI") and to NOI - Same
Centers:
|
|
|
|
|
|
For the
Three Months
|
|
|
Ended March
31,
|
|
|
Unaudited
|
|
|
2020
|
2019
|
Adjusted EBITDA
(d)
|
|
$202,437
|
$198,825
|
REIT
general and administrative expenses
|
|
6,821
|
6,961
|
Management Companies' revenues
|
|
(6,973)
|
(10,180)
|
Management Companies' operating expenses
|
|
16,224
|
19,014
|
Leasing
expenses, including joint ventures at pro rata
|
|
8,215
|
8,471
|
Straight-line and above/below market adjustments
|
|
(13,039)
|
(6,011)
|
NOI - All
Centers
|
|
213,685
|
217,080
|
NOI of
non-Same Centers
|
|
(2,891)
|
(9,001)
|
NOI - Same Centers
(e)
|
|
210,794
|
208,079
|
Lease
termination income of Same Centers
|
|
(1,241)
|
(658)
|
NOI - Same Centers,
excluding lease termination income (e)
|
|
$ 209,553
|
$ 207,421
|
|
|
|
|
NOI - Same Centers
percentage change, excluding lease termination income
(e)
|
|
1.03%
|
|
|
|
|
|
|
|
(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, leasing expenses
(including joint ventures at pro rata), the Company's REIT 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