SANTA MONICA, Calif.,
May 2, 2018 /PRNewswire/ -- The
Macerich Company (NYSE Symbol: MAC) today announced results of
operations for the quarter ended March 31,
2018, which included net loss attributable to the Company of
$33.6 million or $.24 per share-diluted for the quarter ended
March 31, 2018 compared to net income
attributable to the Company for the quarter ended March 31, 2017 of $69.2
million or $.48 per
share-diluted. For the first quarter, 2018, funds from operations
("FFO") diluted was $123.5 million or
$.82 per share-diluted compared to
$133.6 million or $.87 per share-diluted for the quarter ended
March 31, 2017. A
description and reconciliation of EPS per share-diluted to FFO per
share-diluted is included in 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 $686 for the
year ended March 31, 2018 compared to
$639 for the year ended March 31, 2017.
- The re-leasing spreads for the year ended March 31, 2018 were up 14.7%.
- Mall portfolio occupancy was 94.0% at March 31, 2018 compared to 94.3% at March 31, 2017.
- Average rent per square foot increased to $58.44, up 3.8% from $56.31 at March 31,
2017.
"During the quarter our portfolio continued to perform
well. We achieved solid re-leasing spreads with good
leasing volume and strong tenant sales growth" said the Company's
chairman and chief executive officer, Arthur Coppola. "We remain excited about
the leasing opportunities we see as the synergies between digitally
native retailers on line sales and their appetite for great real
estate become more clear as is evidenced by their appetite for off
line stores."
Financing Activity:
The Company closed on a
$450 million, 12-year fixed rate loan
on the recently expanded and renovated Broadway Plaza. The
interest rate is 4.18%. The Company has less than
$10 million of loan maturities for
the balance of 2018.
Joint Ventures:
On March 1,
2018 the Company formed a joint venture with Hudson Pacific
Properties (HPP) to work together to transform Westside Pavilion
into creative office space. The mall will be contributed to
the partnership at a value of $190
million. Macerich will own 25% and HPP will own
75%. Total project costs, including the contributed mall at
$190 million, are expected to be in
the range of $425 million to
$475 million.
Non-Core Asset Sales:
The Company is continuing its
strategy of selling non-core assets and recycling the capital into
its higher quality assets. During the quarter the Company and
its joint venture partner sold a portion of an office building that
is adjacent to Fashion District of Philadelphia for $42
million. In addition two non-core retail assets
are currently under contract. Since 2013, the Company
has sold 21 non-core retail centers for a total of $1.8 billion in proceeds.
2018 Earnings Guidance:
Management is re-affirming its
previously issued FFO per share guidance for 2018. A
reconciliation of estimated EPS to FFO per share-diluted
follows:
|
2018
range
|
Diluted EPS
|
$ .49 - $
.59
|
Plus: real estate
depreciation and
amortization
|
3.15 -
3.15
|
Plus: financing
expense due to accounting rule change ASC606
|
.04
- .04
|
Plus: loss on sale or
write-down of depreciable assets
|
.24
- .24
|
Diluted FFO per
share
|
$3.92 -
$4.02
|
As anticipated same center net operating income growth in the
first quarter was modest, however, the Company continues to be
comfortable with the original full year assumption on same center
net operating income growth of 2.0% to 2.5%. 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 53 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. A recognized leader in sustainability, Macerich
has earned NAREIT's prestigious "Leader in the Light" award every
year from 2014-2017. For the third straight year in 2017 Macerich
achieved the #1 GRESB ranking in the North American Retail Sector,
among many other environmental accomplishments. 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 May 3, 2018 at 11:00 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, 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,
2017, 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
|
|
|
2018
|
2017
|
|
Revenues:
|
|
|
|
Minimum
rents
|
$142,407
|
$145,555
|
|
Percentage
rents
|
1,884
|
1,918
|
|
Tenant
recoveries
|
68,092
|
72,412
|
|
Other
income
|
13,809
|
15,264
|
|
Management Companies'
revenues
|
10,542
|
11,896
|
|
|
|
|
|
Total revenues
|
236,734
|
247,045
|
|
|
|
|
|
Expenses:
|
|
|
|
Shopping center and
operating expenses
|
74,510
|
75,897
|
|
Management Companies'
operating expenses
|
38,323
|
28,517
|
|
REIT general and
administrative expenses
|
8,019
|
8,463
|
|
Depreciation and
amortization
|
79,937
|
83,073
|
|
Interest expense
(a)
|
52,635
|
41,301
|
|
|
|
|
|
Total expenses
|
253,424
|
237,251
|
|
|
|
|
|
Equity in income of
unconsolidated joint ventures
|
16,872
|
15,843
|
|
Co-venture expense
(a)
|
-
|
(3,877)
|
|
Income tax
benefit
|
2,949
|
3,484
|
|
(Loss) gain on sale
or write down of assets, net
|
(37,512)
|
49,565
|
|
|
|
|
|
Net (loss) income
|
(34,381)
|
74,809
|
|
Less net (loss)
income attributable to noncontrolling interests
|
(808)
|
5,566
|
|
Net (loss) income
attributable to the Company
|
($33,573)
|
$69,243
|
|
|
|
|
|
Weighted average
number of shares outstanding - basic
|
141,024
|
143,596
|
|
Weighted average
shares outstanding, assuming full conversion of OP Units
(b)
|
151,316
|
154,187
|
|
Weighted average
shares outstanding - Funds From Operations ("FFO") - diluted
(b)
|
151,342
|
154,246
|
|
|
|
|
|
Earnings per share
("EPS") - basic
|
($0.24)
|
$0.48
|
|
EPS -
diluted
|
($0.24)
|
$0.48
|
|
|
|
|
|
Dividend declared per
share
|
$0.74
|
$0.71
|
|
|
|
|
|
FFO - basic (b)
(c)
|
$123,513
|
$133,603
|
|
FFO - diluted (b)
(c)
|
$123,513
|
$133,603
|
|
|
|
|
|
FFO per share -
basic (b) (c)
|
$0.82
|
$0.87
|
|
FFO per share -
diluted (b) (c)
|
$0.82
|
$0.87
|
|
|
|
|
|
|
|
|
|
THE MACERICH
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
(a)
|
On January 1, 2018,
in accordance with the adoption of ASC Topic 606, Revenue from
Contracts with Customers ("ASC 606"), the Company changed
its accounting for its investment in the Chandler Fashion
Center and Freehold Raceway Mall ("Chandler Freehold") joint
venture from a co-venture arrangement to a financing
arrangement. As a result, the Company has included in interest
expense for the three months ended March 31, 2018 (i) a charge of
$4,382 to adjust the fair value of the financing arrangement
obligation during the period, (ii) distributions of $2,002 to its
partner representing the partner's share of net income and
(iii) distributions of $1,638 to its partner in excess of the
partner's share of net income.
|
|
|
(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. As a result of changes in accounting
standards effective January 1, 2018 (ASC 606), the Company began
treating its joint venture in Chandler Freehold as a financing
arrangement for accounting purposes. 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 from its definition of FFO 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. Although the NAREIT definition
of FFO predates this guidance for accounting for financing
arrangements, the Company believes that excluding the noted
expenses resulting from the financing arrangement is consistent
with the key objective of FFO as a performance measure and it
allows the Company's currrent FFO to be comparable with the
Company's FFO from prior quarters. 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
investement 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 (loss) 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
|
|
|
|
2018
|
2017
|
|
|
Net (loss) income
attributable to the Company
|
|
($33,573)
|
$69,243
|
|
|
Adjustments to
reconcile net (loss) income attributable to the Company to FFO
attributable to common stockholders and unit holders - basic and
diluted:
|
|
|
|
|
Noncontrolling interests in the OP
|
|
(2,450)
|
5,108
|
|
|
Loss
(gain) on sale or write down of consolidated assets, net
|
|
37,512
|
(49,565)
|
|
|
Add:
gain on undepreciated asset sales from consolidated
assets
|
|
807
|
-
|
|
|
Loss on
write-down of consolidated non-real estate assets
|
|
-
|
(10,138)
|
|
|
Noncontrolling interests share of gain on sale or write-down of
consolidated joint ventures
|
|
590
|
-
|
|
|
Loss
(gain) on sale or write down of assets from unconsolidated joint
ventures (pro rata), net
|
157
|
(2,269)
|
|
|
Add:
(loss) gain on sales or write down of undepreciated assets from
unconsolidated joint ventures (pro rata), net
|
(2,085)
|
660
|
|
|
Depreciation and amortization on consolidated
assets
|
|
79,937
|
83,073
|
|
|
Less
depreciation and amortization allocable to noncontrolling interests
in consolidated joint ventures
|
|
(3,641)
|
(3,893)
|
|
|
Depreciation and amortization on unconsolidated joint ventures (pro
rata)
|
|
43,584
|
44,765
|
|
|
Less:
depreciation on personal property
|
|
(3,345)
|
(3,381)
|
|
|
Financing expense in connection with the adoption of ASC 606
(Chandler Freehold)
|
6,020
|
-
|
|
|
|
|
|
|
|
|
FFO attributable to
common stockholders and unit holders - basic and diluted
|
|
$ 123,513
|
$ 133,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
EPS to FFO per diluted share (c):
|
|
|
|
|
|
|
|
For the
Three Months
|
|
|
|
Ended March
31,
|
|
|
|
Unaudited
|
|
|
|
2018
|
2017
|
|
|
EPS -
diluted
|
|
($0.24)
|
$0.48
|
|
|
Per
share impact of depreciation and amortization of real
estate
|
|
0.77
|
0.78
|
|
|
Per
share impact of loss (gain) on sale or write down of assets,
net
|
|
0.25
|
(0.39)
|
|
|
Per
share impact of financing expense in connection with the adoption
of ASC 606 (Chandler Freehold)
|
|
0.04
|
-
|
|
|
FFO per share -
diluted
|
|
$0.82
|
$0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE MACERICH
COMPANY
|
|
FINANCIAL
HIGHLIGHTS
|
|
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Net (loss) income attributable to the Company to Adjusted
EBITDA:
|
|
|
|
|
|
|
For the
Three Months
|
|
|
|
Ended March
31,
|
|
|
|
Unaudited
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to the Company
|
|
($33,573)
|
$69,243
|
|
|
Interest
expense - consolidated assets
|
|
52,635
|
41,301
|
|
|
Interest
expense - unconsolidated joint ventures (pro rata)
|
|
25,433
|
25,306
|
|
|
Depreciation and amortization - consolidated assets
|
|
79,937
|
83,073
|
|
|
Depreciation and amortization - unconsolidated joint ventures (pro
rata)
|
|
43,584
|
44,765
|
|
|
Noncontrolling interests in the OP
|
|
(2,450)
|
5,108
|
|
|
Less:
Interest expense and depreciation and amortization allocable to
noncontrolling interests in consolidated joint ventures
|
|
(8,781)
|
(6,212)
|
|
|
(Gain)
loss on sale or write down of assets, net - consolidated
assets
|
|
37,512
|
(49,565)
|
|
|
Loss
(gain) on sale or write down of assets, net - unconsolidated joint
ventures (pro rata)
|
157
|
(2,269)
|
|
|
Add:
Noncontrolling interests share of gain on sale or write down of
consolidated joint ventures, net
|
|
590
|
-
|
|
|
Income
tax benefit
|
|
(2,949)
|
(3,484)
|
|
|
Distributions on preferred units
|
|
99
|
96
|
|
|
Adjusted EBITDA
(d)
|
|
$192,194
|
$207,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA to Net Operating Income ("NOI") and to NOI - Same
Centers:
|
|
|
|
|
|
|
For the
Three Months
|
|
|
|
Ended March
31,
|
|
|
|
Unaudited
|
|
|
|
2018
|
2017
|
|
|
Adjusted EBITDA
(d)
|
|
$192,194
|
$207,362
|
|
|
REIT
general and administrative expenses
|
|
8,019
|
8,463
|
|
|
Management Companies' revenues
|
|
(10,542)
|
(11,896)
|
|
|
Management Companies' operating expenses
|
|
38,323
|
28,517
|
|
|
Straight-line and above/below market adjustments
|
|
(8,172)
|
(7,414)
|
|
|
NOI - All
Centers
|
|
219,822
|
225,032
|
|
|
NOI of
non-Same Centers
|
|
(7,283)
|
(12,646)
|
|
|
NOI - Same Centers
(e)
|
|
$212,539
|
$212,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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