Macerich Announces Strong Quarterly Results

Diluted EPS

$3.83 - $3.93

Plus: real estate depreciation and amortization

3.07 -   3.07

Less: gain on sale of dispositions

2.85 -   2.85

Diluted FFO per share

$4.05 - $4.15

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Results of Operations:

For the Three Months 

For the Six Months 

Ended June 30,

Ended June 30,

Unaudited

Unaudited

2016

2015

2016

2015

Revenues:

Minimum rents 

$152,448

$193,131

$303,496

$383,892

Percentage rents   

2,394

2,576

5,408

5,824

Tenant recoveries

75,948

105,592

156,121

211,290

Other income

17,789

15,321

30,937

28,324

Management Companies' revenues

11,325

6,174

19,942

11,799

     Total revenues

259,904

322,794

515,904

641,129

Expenses:

Shopping center and operating  expenses 

73,910

93,877

153,234

195,541

Management Companies' operating  expenses 

24,299

20,239

52,199

46,707

REIT general and administrative expenses 

7,681

7,550

16,310

15,972

Costs related to unsolicited takeover offer

-

11,423

-

24,995

Depreciation and amortization 

85,190

119,333

172,121

239,951

Interest expense  

41,195

54,896

80,971

108,182

Loss (gain) on extinguishment of debt, net

-

1,609

3,575

(636)

     Total expenses

232,275

308,927

478,410

630,712

Equity in income of unconsolidated joint ventures 

14,616

9,094

26,276

17,368

Co-venture expense (a)

(3,212)

(2,813)

(6,501)

(4,943)

Income tax (expense) benefit 

(514)

283

(1,831)

1,218

Gain (loss) on sale or write down of assets, net

10,915

(4,671)

445,371

(3,736)

(Loss) gain on remeasurement of assets

-

(14)

-

22,089

     Net income

49,434

15,746

500,809

42,413

Less net income attributable to noncontrolling interests

4,212

1,351

34,672

3,407

     Net income attributable to the Company

$45,222

$14,395

$466,137

$39,006

Average number of shares outstanding - basic

146,644

158,501

149,314

158,419

Average shares outstanding, assuming full conversion of OP Units  (b)

157,477

169,079

160,141

168,966

Average shares outstanding - Funds From Operations ("FFO") - diluted (b) 

157,602

169,211

160,286

169,134

Net income per share - basic 

$0.31

$0.09

$3.12

$0.24

Net income per share - diluted  

$0.31

$0.09

$3.12

$0.24

Dividend declared per share 

$0.68

$0.65

$1.36

$1.30

FFO - basic  (b) (c)

$160,348

$150,993

$301,377

$284,527

FFO - diluted (b) (c)

$160,348

$150,993

$301,377

$284,527

FFO  - diluted, excluding extinguishment of debt and costs

            related to unsolicited takeover offer  (b) (c)

$160,348

$164,025

$304,952

$308,886

FFO per share - basic   (b) (c)

$1.02

$0.89

$1.88

$1.68

FFO per share - diluted  (b) (c)

$1.02

$0.89

$1.88

$1.68

FFO per share - diluted, excluding extinguishment of debt and costs 

         related to unsolicited takeover offer (b) (c)

$1.02

$0.97

$1.90

$1.83

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(a)

This represents the outside partners' allocation of net income in the Chandler Fashion Center/Freehold Raceway Mall joint venture.

(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. 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 investment 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 income attributable to the Company to FFO (c):

 For the Three Months  

 For the Six Months  

 Ended June 30, 

 Ended June 30, 

 Unaudited 

 Unaudited 

2016

2015

2016

2015

Net income attributable to the Company

$45,222

$14,395

$466,137

$39,006

Adjustments to reconcile net income attributable to the Company to FFO - basic and diluted:

   Noncontrolling interests in OP

3,810

961

33,795

2,596

   (Gain) loss on sale or write down of consolidated assets, net

(10,915)

4,671

(445,371)

3,736

   Loss (gain) on remeasurement of consolidated assets

-

14

-

(22,089)

        plus gain on undepreciated asset sales - consolidated assets

225

-

2,637

944

        plus non-controlling interests share of gain on sale or 

           write down of consolidated joint ventures, net

-

-

-

112

   (Gain) loss on sale or write down of assets from unconsolidated joint ventures (pro rata), net

(2)

(139)

2

(139)

        plus gain (loss) on undepreciated asset sales - unconsolidated joint ventures (pro rata)

2

142

(2)

142

   Depreciation and amortization on consolidated assets 

85,190

119,333

172,121

239,951

   Less depreciation and amortization allocable to noncontrolling interests

        on consolidated joint ventures

(3,731)

(3,745)

(7,425)

(7,536)

   Depreciation and amortization on unconsolidated joint ventures (pro rata) 

43,640

18,658

85,516

34,269

   Less: depreciation on personal property 

(3,093)

(3,297)

(6,033)

(6,465)

Total FFO - basic and diluted

160,348

150,993

301,377

284,527

   Loss (gain) on extinguishment of debt, net - consolidated assets

-

1,609

3,575

(636)

Total FFO  - diluted, excluding extinguishment of debt 

160,348

152,602

304,952

283,891

Add: Costs related to unsolicited takeover offer

-

11,423

-

24,995

Total FFO - diluted, excluding extinguishment of debt and costs related to unsolicited

       takeover offer 

$160,348

$164,025

$304,952

$308,886

Reconciliation of EPS to FFO per diluted share (c):

 For the Three Months  

 For the Six Months  

 Ended June 30, 

 Ended June 30, 

 Unaudited 

 Unaudited 

2016

2015

2016

2015

Earnings per share - diluted

$0.31

$0.09

$3.12

$0.24

   Per share impact of depreciation and amortization of real estate

0.78

0.77

1.52

1.53

   Per share impact of  (gain) loss on remeasurement, sale or write down of assets, net

(0.07)

0.03

(2.76)

(0.09)

FFO per share - diluted

$1.02

$0.89

$1.88

$1.68

Per share impact of  loss on extinguishment of debt, net

-

0.01

0.02

-

Per share impact of costs related to unsolicited takeover offer

-

0.07

-

0.15

FFO per share - diluted, excluding extinguishment of debt and costs related to unsolicited

$1.02

$0.97

$1.90

$1.83

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 EBITDA:

 Ended June 30, 

 Ended June 30, 

 Unaudited 

 Unaudited 

2016

2015

2016

2015

Net income attributable to the Company

$45,222

$14,395

$466,137

$39,006

   Interest expense - consolidated assets

41,195

54,896

80,971

108,182

   Interest expense - unconsolidated joint ventures (pro rata)

24,170

8,771

46,664

17,350

   Depreciation and amortization - consolidated assets

85,190

119,333

172,121

239,951

   Depreciation and amortization - unconsolidated joint ventures (pro rata)

43,640

18,658

85,516

34,269

   Noncontrolling interests in OP

3,810

961

33,795

2,596

   Less: Interest expense and depreciation and amortization

            allocable to noncontrolling interests on consolidated joint ventures

(6,057)

(6,099)

(12,100)

(12,278)

   Loss (gain) on extinguishment of debt, net - consolidated assets

-

1,609

3,575

(636)

   (Gain) loss on sale or write down of assets - consolidated assets, net

(10,915)

4,671

(445,371)

3,736

   Loss (gain) on remeasurement of assets - consolidated assets

-

14

-

(22,089)

   (Gain) loss on sale or write down of assets - unconsolidated joint ventures (pro rata), net

(2)

(139)

2

(139)

   Add: Non-controlling interests share of  gain on sale of consolidated assets, net

-

-

-

112

   Income tax expense (benefit)

514

(283)

1,831

(1,218)

   Distributions on preferred units

143

138

286

276

EBITDA (d)

$226,910

$216,925

$433,427

$409,118

Reconciliation of EBITDA to Net Operating Income ("NOI") and to NOI - Same Centers:

 For the Three Months  

 For the Six Months  

 Ended June 30, 

 Ended June 30, 

 Unaudited 

 Unaudited 

2016

2015

2016

2015

EBITDA (d)

$226,910

$216,925

$433,427

$409,118

Add: REIT general and administrative expenses

7,681

7,550

16,310

15,972

         Costs related to unsolicited takeover offer

-

11,423

-

24,995

         Management Companies' revenues

(11,325)

(6,174)

(19,942)

(11,799)

         Management Companies' operating  expenses 

24,299

20,239

52,199

46,707

         Straight-line and above/below market adjustments 

(8,702)

(7,270)

(15,114)

(13,243)

NOI - All Centers

238,863

242,693

466,880

471,750

         NOI of non-comparable centers

(26,040)

(42,900)

(46,936)

(79,337)

NOI - Same Centers (e)

$212,823

$199,793

$419,944

$392,413

(d)

EBITDA represents earnings before interest, income taxes, depreciation, amortization, noncontrolling interests, 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 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 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 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 EBITDA and subtracting out EBITDA from non-comparable centers and eliminating the management companies and the Company's general and administrative expenses and costs related to unsolicited takeover offer. Same center NOI excludes the impact of straight-line and above/below market adjustments to minimum rents.