Macerich Announces an 18% Increase in AFFO per Share and Increased Earnings Guidance PR Newswire SANTA MONICA, Calif., Aug. 5, 2013 SANTA MONICA, Calif., Aug. 5, 2013 /PRNewswire/ -- The Macerich Company (NYSE Symbol: MAC) today announced results of operations for the quarter ended June 30, 2013 which included adjusted funds from operations ("AFFO") diluted of $130.4 million or $.87 per share-diluted compared to $106.2 million or $.74 per share-diluted for the quarter ended June 30, 2012. Net income attributable to the Company was $219.0 million or $1.57 per share-diluted for the quarter ended June 30, 2013 compared to net income attributable to the Company for the quarter ended June 30, 2012 of $133.4 million or $1.00 per share-diluted. A description and reconciliation of FFO per share-diluted and AFFO per share-diluted to EPS-diluted is included in the financial tables accompanying this press release. Recent Highlights: oMall tenant annual sales per square foot increased 6.2% for the year ended June 30, 2013 to $545 compared to $513 for the year ended June 30, 2012. oThe releasing spreads for the year ended June 30, 2013 were up 14.2%. oMall portfolio occupancy was 93.8% at June 30, 2013 compared to 92.7% at June 30, 2012. oAFFO per share-diluted was $.87, up 18% compared to the quarter ended June 30, 2012. oFashion Outlets of Chicago opened on August 1^st. The 526,000 square foot center was 93% occupied on opening day. oDuring the quarter the Company sold five assets with its pro rata share of the gross sales proceeds totaling over $465 million. Commenting on the quarter, Arthur Coppola chairman and chief executive officer of Macerich stated, "It was a very strong quarter for us. Our operating fundamentals continued their upward trend with significant occupancy gains, continued tenant sales growth and a solid same center net operating income increase. In addition, we successfully continued executing our strategy of refining our portfolio with the sale of five non-core assets during the quarter." Developments: Fashion Outlets of Chicago, a 526,000 square foot fashion outlet center near O'Hare International Airport, opened on August 1, 2013. The $211 million project opened with 93% of the tenants in occupancy on opening day. The anchors are Last Call by Neiman Marcus, Bloomingdale's The Outlet Store, Saks Fifth Avenue Off 5^th and Forever 21.The anchors are joined by such stellar fashion retailers as Longchamp, Brunello Cucinelli, Prada, Gucci, Armani, Halston, Michael Kors, Coach, Coach Men's, Tory Burch and many others. At Tysons Corner Center, a 2.1 million square foot super regional mall, the Company is building a mixed-use densification which will add 1.4 million square feet to one of the country's premier retail centers. The Tysons expansion includes a 19-story office tower; a 500,000 square foot, 30-story, 430 unit luxury residential tower; and a 17-story, 300-room Hyatt Regency hotel. The office building is currently over 60% leased. The project is scheduled to open in 2014. Disposition Activity: During the quarter, the Company continued the refinement of its portfolio with the sale of five non-core assets. The assets sold were: the Redmond Town Center office building, Green Tree Mall in Clarksville, Indiana, Northridge Mall in Salinas, California, Rimrock Mall in Billings, Montana and Kitsap Mall in Silverdale, Washington. The average annual sales per-square-foot for these malls was $389. The Company's pro rata share of the total gross sales proceeds was $468 million. In addition, on August 1, the Company sold the retail component of Redmond Town Center and its pro rata share of the sales proceeds was approximately $63.6 million. Equity and Financing Activity: During the quarter, concurrent with the Company's inclusion into the S&P 500 Index, the Company sold 2,456,956 shares of common equity at an average sales price of $70.42 per share. The common stock was sold under its at-the-market ("ATM") program. The net proceeds were $171.2 million and were used to pay down debt. The Company has committed to an $850 million refinancing of the debt on the Tysons Corner super regional mall. The new fixed rate 10 year loan has an interest rate of 4.10%. The loan will close on August 30 and will pay off the existing $299.5 million loan that has a 4.78% interest rate. The Company owns 50% of the center and its $275 million share of excess loan proceeds will be used to pay down debt. The Company has arranged an extension and rate reduction on its $1.5 billion unsecured line of credit. The new facility has an August 6, 2018 maturity date and the interest rate, at the Company's current leverage level, was reduced to 1.50% over LIBOR, down from 2.00% over LIBOR. This facility can be expanded to $2.0 billion at the Company's election. 2013 Earnings Guidance: Management is increasing its previously issued estimated 2013 FFO per share-diluted guidance range by $.03 per share to $3.38 to $3.48. A reconciliation of estimated EPS to FFO per share -diluted follows: Estimated EPS range: $2.11 to $2.21 Less: estimated Gain on asset sales -1.56 to -1.56 Plus: Real estate depreciation and amortization 2.83 to 2.83 Estimated range for FFO per share-diluted $3.38 to $3.48 Included in the above FFO per share guidance is an increase in the assumption of same center net operating income to 3.75% to 4.25%. Also included is a reduction in lease termination revenue to $3 million from the previous estimate of $7 million. No further asset sales, above the $532 million mentioned above, are assumed in this guidance. 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 approximately 61 million square feet of real estate consisting primarily of interests in 58 regional shopping centers. Macerich specializes in successful retail properties in many of the country's most attractive, densely populated markets with significant presence in California, Arizona, Chicago, Greater New York Metro and Washington, DC. 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 (Investing Section) and through CCBN at www.earnings.com. The call begins Tuesday, August 6, 2013 at 11:00 AM Central Time. To listen to the call, please go to any of these websites 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 (Investing 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 Investing 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 beidentified 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, 2012, 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: Results before Impact of Results after Discontinued Discontinued Discontinued Operations (a) Operations (a) Operations (a) For the Three For the Three Months For the Three Months Months Ended June 30, Ended June 30, Ended June 30, Unaudited Unaudited 2013 2012 2013 2012 2013 2012 Minimum rents $150,761 $ 120,186 ($3,769) ($7,574) $146,992 $112,612 Percentage rents 2,798 2,872 24 (247) 2,822 2,625 Tenant recoveries 87,307 66,013 (1,943) (4,388) 85,364 61,625 Management 10,301 9,657 - - 10,301 9,657 Companies' revenues Other income 11,733 9,736 (235) (598) 11,498 9,138 Total revenues 262,900 208,464 (5,923) (12,807) 256,977 195,657 Shopping center and operating 84,743 66,791 (2,237) (4,759) 82,506 62,032 expenses Management Companies' 22,816 23,734 - - 22,816 23,734 operating expenses REIT general and administrative 6,693 5,655 - - 6,693 5,655 expenses Depreciation and 93,984 73,003 (1,651) (3,834) 92,333 69,169 amortization Interest expense 54,439 45,068 - (1,771) 54,439 43,297 Gain on extinguishment of (1,943) (120,356) - 120,356 (1,943) - debt, net Total expenses 260,732 93,895 (3,888) 109,992 256,844 203,887 Equity in income of unconsolidated 92,201 18,691 - - 92,201 18,691 joint ventures Co-venture expense (2,138) (1,304) - - (2,138) (1,304) (b) Income tax benefit 1,477 3,075 - - 1,477 3,075 Gain (loss) on remeasurement, sale 141,108 9,512 (141,906) (11,040) (798) (1,528) or write down of assets, net Income from continuing 234,816 144,543 (143,941) (133,839) 90,875 10,704 operations Discontinued operations: Gain on sale, disposition or - - 141,906 131,396 141,906 131,396 write down of assets, net Income from discontinued - - 2,035 2,443 2,035 2,443 operations Total income from discontinued - - 143,941 133,839 143,941 133,839 operations Net income 234,816 144,543 - - 234,816 144,543 Less net income attributable to 15,819 11,189 - - 15,819 11,189 noncontrolling interests Net income attributable to the $218,997 $133,354 $0 $0 $218,997 $133,354 Company Average number of shares outstanding 139,372 132,768 139,372 132,768 - basic Average shares outstanding, assuming full 149,311 144,030 149,311 144,030 conversion of OP Units (c) Average shares outstanding - Funds From Operations 149,465 144,139 149,465 144,139 ("FFO") - diluted (c) Per share income - diluted before - - $0.61 $0.07 discontinued operations Net income per $1.57 $1.00 $1.57 $1.00 share-basic Net income per $1.57 $1.00 $1.57 $1.00 share - diluted Dividend declared $0.58 $0.55 $0.58 $0.55 per share FFO - basic (c) $130,405 $226,212 $130,405 $226,212 (d) FFO - diluted (c) $130,405 $226,212 $130,405 $226,212 (d) FFO per share- $0.87 $1.57 $0.87 $1.57 basic (c) (d) FFO per share- $0.87 $1.57 $0.87 $1.57 diluted (c) (d) Adjusted FFO ("AFFO") per share- $0.87 $0.74 $0.87 $0.74 diluted (c)(d) THE MACERICH COMPANY FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Results of Operations: Results before Impact of Results after Discontinued Discontinued Discontinued Operations (a) Operations (a) Operations (a) For the Six Months For the Six Months For the Six Months Ended June 30, Ended June 30, Ended June 30, Unaudited Unaudited 2013 2012 2013 2012 2013 2012 Minimum rents $299,917 $ 243,823 ($9,210) ($17,444) $290,707 $226,379 Percentage rents 7,175 6,864 16 (613) 7,191 6,251 Tenant recoveries 172,631 132,785 (4,804) (9,180) 167,827 123,605 Management 20,451 20,872 - - 20,451 20,872 Companies' revenues Other income 25,510 20,738 (509) (3,888) 25,001 16,850 Total revenues 525,684 425,082 (14,507) (31,125) 511,177 393,957 Shopping center and 170,120 135,607 (5,014) (11,045) 165,106 124,562 operating expenses Management Companies' 45,965 46,259 - - 45,965 46,259 operating expenses REIT general and administrative 12,717 10,174 - - 12,717 10,174 expenses Depreciation and 187,143 149,968 (4,007) (9,269) 183,136 140,699 amortization Interest expense 108,137 92,191 2 (6,370) 108,139 85,821 Gain on extinguishment of (1,943) (120,012) - 120,012 (1,943) - debt, net Total expenses 522,139 314,187 (9,019) 93,328 513,120 407,515 Equity in income of unconsolidated joint 110,316 49,309 - - 110,316 49,309 ventures Co-venture expense (4,179) (2,395) - - (4,179) (2,395) (b) Income tax benefit 1,721 1,225 - - 1,721 1,225 Gain (loss) on remeasurement, sale 145,942 (26,215) (141,912) 44,184 4,030 17,969 or write down of assets, net Income from continuing 257,345 132,819 (147,400) (80,269) 109,945 52,550 operations Discontinued operations: Gain on sale, disposition or write - - 141,912 75,828 141,912 75,828 down of assets, net Income from discontinued - - 5,488 4,441 5,488 4,441 operations Total income from discontinued - - 147,400 80,269 147,400 80,269 operations Net income 257,345 132,819 - - 257,345 132,819 Less net income attributable to 20,256 13,533 - - 20,256 13,533 noncontrolling interests Net income attributable to the $237,089 $119,286 $0 $0 $237,089 $119,286 Company Average number of shares outstanding - 138,460 132,520 138,460 132,520 basic Average shares outstanding, assuming full 148,532 143,741 148,532 143,741 conversion of OP Units (c) Average shares outstanding - Funds From Operations 148,653 143,832 148,653 143,832 ("FFO") - diluted (c) Per share income - diluted before - - $0.72 $0.34 discontinued operations Net income per $1.71 $0.90 $1.71 $0.90 share-basic Net income per share $1.71 $0.90 $1.71 $0.90 - diluted Dividend declared $1.16 $1.10 $1.16 $1.10 per share FFO - basic (c) (d) $257,379 $332,385 $257,379 $332,385 FFO - diluted (c) $257,379 $332,385 $257,379 $332,385 (d) FFO per share- $1.73 $2.31 $1.73 $2.31 basic (c) (d) FFO per share- $1.73 $2.31 $1.73 $2.31 diluted (c) (d) Adjusted FFO ("AFFO") per share- $1.73 $1.50 $1.73 $1.50 diluted (c)(d) THE MACERICH COMPANY FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The Company has classified the results of operations on dispositions as (a) discontinued operations for the three and six months ended June 30, 2013 and 2012. (b) This represents the outside partners' allocation of net income in the Chandler Fashion Center/Freehold Raceway Mall joint venture. The Macerich Partnership, L.P. (the "Operating Partnership" or the "OP") has operating partnership units ("OP units"). OP units can be convertedinto shares of Company common stock. Conversion of the OP units not owned by the Company has been assumed for purposes of calculating (c) FFOper share and the weighted average number of shares outstanding. The computation of average shares for FFO - diluted includes the effect of shareand 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. The Company uses FFO in addition to net income to report its operating and financial results and considers FFO and FFO-diluted assupplemental 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 (d) losses) from extraordinary items andsales of depreciated operating properties, plus real estate related depreciation and amortization, impairment write-downs of real estate and write-downs of investments in an affiliate where the write-downs have been driven by a decrease in the value of real estate held by the affiliate and after adjustments for unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis. Adjusted FFO ("AFFO") excludes the FFO impact of Shoppingtown Mall and Valley View Center for the three and six months ended June 30, 2012. In December 2011, the Company conveyed Shoppingtown Mall to the lender by a deed-in-lieu of foreclosure. In July 2010, a court-appointed receiver assumed operational control of Valley View Center and responsibility for managing all aspects of the property. Valley View Center was sold bythe receiver on April 23, 2012, and the related non-recourse mortgage loan obligation was fully extinguished on that date. On May 31, 2012, the Company conveyed Prescott Gateway to the lender by a deed-in-lieu of foreclosure and the debt was forgiven resulting in a gain on extinguishment of debt of $16.4 million. AFFO excludes the gain on extinguishment of debt on Prescott Gateway for the three and six months ended June 30, 2012. 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 AFFO and AFFO on a diluted basis 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 allow investors to more easily compare the Company's results without taking into account non-cash credits and charges on properties controlled by either a receiver or loan servicer. FFO and AFFO on a diluted basis are measures investors find most useful in measuring the dilutive impact of outstanding convertible securities. FFO and AFFO do 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 are not indicative of cash available to fund all cash flow needs. The Company also cautions that FFO and AFFO as presented, may not be comparable to similarly titled measures reported by other real estate investment trusts. THE MACERICH COMPANY FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Reconciliation of Net income attributable to the Company to FFO and AFFO (d): For the Three Months For the Six Months Ended June 30, Ended June 30, Unaudited Unaudited 2013 2012 2013 2012 Net income attributable to the $218,997 $133,354 $237,089 $119,286 Company Adjustments to reconcile net income attributable to the Company to FFO - basic and diluted: Noncontrolling interests in 15,902 11,294 17,244 10,106 OP (Gain) loss on remeasurement, sale or write (141,108) (9,512) (145,942) 26,215 down of consolidated assets, net plus (loss) gain on undepreciated asset sales - (10) - 2,238 - consolidated assets plus non-controlling interests share of (loss) gain on remeasurement, sale orwrite (9) (17) 3,163 3,538 down of consolidated joint ventures, net (Gain) loss on remeasurement, sale or write down of assets (73,035) 354 (73,016) (11,157) fromunconsolidated entities (pro rata), net plus gain on undepreciated asset sales - 486 - 484 - unconsolidated entities (pro rata) Depreciation and amortization on consolidated 93,984 73,003 187,143 149,968 assets Less depreciation and amortization allocable to (4,603) (4,578) (9,137) (9,428) noncontrolling interests on consolidated joint ventures Depreciation and amortization on joint ventures 22,815 25,553 44,147 50,310 (pro rata) Less: depreciation on (3,014) (3,239) (6,034) (6,453) personal property Total FFO - basic and diluted $130,405 $226,212 $257,379 $332,385 Additional adjustments to arrive at AFFO - diluted (d): Shoppingtown Mall - 36 - 396 Valley View Center - (103,745) - (101,116) Prescott Gateway - (16,350) - (16,350) Total AFFO- diluted $130,405 $106,153 $257,379 $215,315 Reconciliation of EPS to FFO and AFFO per diluted share (d): For the Three Months For the Six Months Ended June 30, Ended June 30, Unaudited Unaudited 2013 2012 2013 2012 Earnings per share - diluted $1.57 $1.00 $1.71 $0.90 Per share impact of depreciation and amortization 0.73 0.63 1.45 1.28 of real estate Per share impact of gain on remeasurement, sale or write (1.43) (0.06) (1.43) 0.13 down of assets FFO per share - diluted $0.87 $1.57 $1.73 $2.31 Per share impact - Shoppingtown Mall, Valley View 0.00 (0.83) 0.00 (0.81) Center and Prescott Gateway AFFO per share - diluted $0.87 $0.74 $1.73 $1.50 THE MACERICH COMPANY FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) For the Three Months For the Six Months Reconciliation of Net income attributable to the Company to Ended June 30, Ended June 30, EBITDA: Unaudited Unaudited 2013 2012 2013 2012 Net income attributable to the $218,997 $133,354 $237,089 $119,286 Company Interest expense - 54,439 45,068 108,137 92,191 consolidated assets Interest expense - unconsolidated entities (pro 16,977 26,056 35,849 52,778 rata) Depreciation and amortization - consolidated 93,984 73,003 187,143 149,968 assets Depreciation and amortization - unconsolidated 22,815 25,553 44,147 50,310 entities (pro rata) Noncontrolling interests in 15,902 11,294 17,244 10,106 OP Less: Interest expense and depreciation and amortization allocable to noncontrolling (7,447) (7,503) (14,741) (15,279) interests on consolidated joint ventures Gain on extinguishment of (1,943) (120,356) (1,943) (120,012) debt - consolidated entities (Gain) loss on remeasurement, sale or write (141,108) (9,512) (145,942) 26,215 down of assets - consolidated assets, net (Gain) loss on remeasurement, sale or write (73,035) 354 (73,016) (11,157) down of assets - unconsolidated entities (pro rata), net Add: Non-controlling interests share of (loss) gain (9) (17) 3,163 3,538 on sale of consolidated assets, net Income tax benefit (1,477) (3,075) (1,721) (1,225) Distributions on preferred 183 208 367 416 units EBITDA (e) $198,278 $174,427 $395,776 $357,135 Reconciliation of EBITDA to Same Centers - Net Operating Income ("NOI"): For the Three Months For the Six Months Ended June 30, Ended June 30, Unaudited Unaudited 2013 2012 2013 2012 EBITDA (e) $198,278 $174,427 $395,776 $357,135 Add: REIT general and 6,693 5,655 12,717 10,174 administrative expenses Management Companies' (10,301) (9,657) (20,451) (20,872) revenues Management Companies' 22,816 23,734 45,965 46,259 operating expenses Lease termination income, straight-line and above/below market (2,602) (4,105) (4,879) (9,401) adjustmentsto minimum rents of comparable centers EBITDA of (35,052) (18,209) (68,904) (36,955) non-comparable centers Same Centers - NOI (f) $179,832 $171,845 $360,224 $346,340 EBITDA represents earnings before interest, income taxes, depreciation, amortization, noncontrolling interests, extraordinary items, gain (loss) on remeasurement, sale or write down of assets and preferred dividends and includes joint ventures at their pro rata share. Management considers EBITDAto be an appropriate supplemental measure to net income because it (e) helps investors understand the ability of the Company to incur and service debtand make capital expenditures. EBITDA should not be construed as an alternative to operating income as an indicator of the Company's operatingperformance, 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. 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 (f) out EBITDA from non-comparable centers and eliminating the management companies and the Company's general and administrative expenses. Same center NOI excludes the impact of leasetermination income, straight-line and above/below market adjustments to minimum rents. SOURCE Macerich Company Website: http://www.macerich.com Contact: Thomas O'Hern, Senior Executive Vice President and Chief Financial Officer, (310) 394-6000
Macerich Announces an 18% Increase in AFFO per Share and Increased Earnings Guidance
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