Macerich Announces Quarterly Results

THE MACERICH COMPANY

FINANCIAL HIGHLIGHTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Results of Operations:

For the Three Months 

For the Nine Months 

Ended September 30,

Ended September 30,

Unaudited

Unaudited

2020

2019

2020

2019

Revenues:

Leasing revenue

$214,260

$554,981

$636,290

Other income

4,334

6,889

16,595

20,054

Management Companies' revenues

6,004

9,978

19,807

29,277

     Total revenues

185,844

231,127

591,383

685,621

Expenses:

Shopping center and operating  expenses 

64,680

69,328

192,538

203,024

Management Companies' operating  expenses 

13,031

15,514

45,697

50,220

Leasing expenses 

5,544

7,162

19,622

22,344

REIT general and administrative expenses 

7,589

5,285

22,652

16,835

Depreciation and amortization 

78,605

82,787

241,112

246,640

Interest expense (a)

37,184

14,799

65,292

90,265

Loss on extinguishment of debt

-

-

-

351

     Total expenses

206,633

194,875

586,913

629,679

Equity in (loss) income of unconsolidated joint ventures 

14,582

(16,988)

34,082

Income tax (expense) benefit

(1,106)

(678)

684

(1,703)

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

11,786

(131)

(28,784)

(15,506)

     Net (loss) income

50,025

72,815

Less net (loss) income attributable to noncontrolling interests

(431)

3,654

(833)

2,886

     Net (loss) income attributable to the Company

($22,191)

$46,371

($39,785)

$69,929

Weighted average number of shares outstanding - basic

149,626

141,368

145,071

141,325

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

160,509

151,784

155,694

151,740

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

160,509

151,784

155,694

151,740

Earnings per share ("EPS") - basic 

$0.33

$0.49

EPS - diluted  

($0.15)

$0.33

($0.28)

$0.49

Dividend paid per share 

$0.15

$0.75

$1.40

$2.25

FFO - basic and diluted  (b) (c)

$98,471

$170,579

$360,021

$453,723

FFO - basic and diluted, excluding financing expense in connection with

          Chandler Freehold (b) (c)

$83,367

$133,242

$266,584

$388,817

FFO - basic and diluted, excluding financing expense in connection with

          Chandler Freehold  and loss on extinguishment of debt (b) (c)

$83,367

$133,242

$266,584

$389,168

FFO per share - basic and diluted   (b) (c)

$0.61

$1.12

$2.31

$2.99

FFO per share - basic and diluted, excluding financing expense in connection with

     Chandler Freehold (b) (c)

$0.52

$0.88

$1.71

$2.56

FFO per share - basic and diluted, excluding financing expense in connection with

     Chandler Freehold and loss on extinguishment of debt (b) (c)

$0.52

$0.88

$1.71

$2.56

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 $15,502 and $96,793 to adjust for the change in the fair value

           of the financing arrangement obligation during the three and nine months ended September 30, 2020, respectively; and a credit of $39,455 and $70,977

           to adjust for the change in the fair value of the financing arrangement obligation during the three and nine months ended September 30, 2019, respectively;

           (ii) distributions of  ($398) and $885 to its partner representing the partner's share of net (loss) income for the three and nine months ending September 30,

           2020, respectively; and $1,278 and $5,157 to its partner representing the partner's share of net income for the three and nine months ended September 30, 

            2019, respectively; and (iii) distributions of $398 and $3,356 to its partner in excess of the partner's share of net income for the three and nine months 

           ended September 30, 2020, respectively; and $2,118 and $6,071 to its partner in excess of the partner's share of net income for the three and nine months 

           ended September 30, 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. 

           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 (loss) income attributable to the Company to FFO attributable to

 For the Three Months  

 For the Nine Months  

   common stockholders and unit holders - basic and diluted, excluding financing expense in

 Ended September 30, 

 Ended September 30, 

   connection with Chandler Freehold and loss on extinguishment of debt (c):

 Unaudited 

 Unaudited 

2019

2019

Net (loss) income attributable to the Company

($22,191)

$46,371

($39,785)

$69,929

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

(1,618)

3,427

(2,912)

5,151

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

(11,786)

131

28,784

15,506

   Add: gain on undepreciated asset sales from consolidated assets

12,362

81

12,402

615

   Loss on write down of consolidated non-real estate assets

(1,361)

-

(4,154)

-

   Noncontrolling interests share of gain (loss) on sale or write-down of consolidated joint ventures, net

929

-

929

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

71

(3)

77

381

   Depreciation and amortization on consolidated assets 

78,605

82,787

241,112

246,640

   Less depreciation and amortization allocable to noncontrolling interests

        in consolidated joint ventures

(3,855)

(3,746)

(11,472)

(11,067)

   Depreciation and amortization on unconsolidated joint ventures (pro rata) 

50,775

45,465

146,702

141,670

   Less: depreciation on personal property 

(3,460)

(3,934)

(11,662)

(11,733)

FFO attributable to common stockholders and unit holders - basic and diluted

98,471

170,579

360,021

453,723

   Financing expense in connection with Chandler Freehold

(15,104)

(37,337)

(93,437)

(64,906)

FFO attributable to common stockholders and unit holders, excluding financing expense in 

        connection with Chandler Freehold - basic and diluted

83,367

133,242

266,584

388,817

   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

$83,367

$133,242

$266,584

$389,168

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

 For the Three Months  

 For the Nine Months  

 Ended September 30, 

 Ended September 30, 

 Unaudited 

 Unaudited 

2020

2019

2020

2019

EPS - diluted

($0.15)

$0.33

($0.28)

$0.49

   Per share impact of depreciation and amortization of real estate

0.76

0.79

2.34

2.41

   Per share impact of  loss on sale or write down of assets, net

-

-

0.25

0.09

FFO per share - basic and diluted

$0.61

$1.12

$2.31

$2.99

   Per share impact of financing expense in connection with Chandler Freehold.

(0.09)

(0.24)

(0.60)

(0.43)

FFO per share - basic and diluted, excluding financing expense in connection with Chandler Freehold

$0.52

$0.88

$1.71

$2.56

   Per share impact of  loss on extinguishment of debt

-

-

-

-

FFO per share - basic and diluted, excluding financing expense in connection with Chandler Freehold

       and loss on extinguishment of debt

$0.88

$1.71

$2.56

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  

 For the Nine Months  

 Ended September 30, 

 Ended September 30, 

 Unaudited 

 Unaudited 

2019

2019

Net (loss) income attributable to the Company

($22,191)

$46,371

($39,785)

$69,929

   Interest expense - consolidated assets

14,799

65,292

90,265

   Interest expense - unconsolidated joint ventures (pro rata)

26,882

25,552

80,199

78,974

   Depreciation and amortization - consolidated assets

78,605

82,787

241,112

246,640

   Depreciation and amortization - unconsolidated joint ventures (pro rata)

50,775

45,465

146,702

141,670

   Noncontrolling interests in the OP

(1,618)

3,427

(2,912)

5,151

   Less: Interest expense and depreciation and amortization

             allocable to noncontrolling interests in consolidated joint ventures

(7,216)

(8,743)

(23,670)

(26,222)

   Loss on extinguishment of debt

-

-

-

351

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

(11,786)

131

28,784

15,506

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

71

(3)

77

381

   Add: Noncontrolling interests share of gain (loss) on sale or write-down of consolidated joint ventures, net

929

-

929

(3,369)

   Income tax expense (benefit)

1,106

678

(684)

1,703

   Distributions on preferred units

90

100

281

301

Adjusted EBITDA (d)

$152,831

$210,564

$496,325

$621,280

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

 For the Three Months  

 For the Nine Months  

 Ended September 30, 

 Ended September 30, 

 Unaudited 

 Unaudited 

2020

2019

2019

Adjusted EBITDA (d)

$152,831

$210,564

$496,325

$621,280

   REIT general and administrative expenses

7,589

5,285

22,652

16,835

   Management Companies' revenues

(6,004)

(9,978)

(19,807)

(29,277)

   Management Companies' operating  expenses 

13,031

15,514

45,697

50,220

   Leasing expenses, including joint ventures at pro rata

6,043

8,147

21,432

25,170

   Straight-line and above/below market adjustments 

(9,887)

(8,850)

(22,691)

(23,538)

NOI - All Centers

163,603

220,682

543,608

660,690

   NOI of non-Same Centers

(2,191)

(3,697)

(5,929)

(20,368)

NOI - Same Centers (e)

161,412

216,985

537,679

640,322

   Lease termination income of Same Centers

(9,050)

(1,404)

(12,777)

(5,309)

NOI - Same Centers, excluding lease termination income (e)

$           152,362

$           215,581

$                  524,902

$        635,013

NOI - Same Centers percentage change, excluding lease termination income (e)

-29.32%

-17.34%

(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.