Exhibit 99.1
PRESS RELEASE
For: | THE MACERICH COMPANY |
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Press Contact: | Arthur Coppola, President and Chief Executive Officer |
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| or |
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| Thomas E. O’Hern, Executive Vice President and Chief Financial Officer |
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| (310) 394-6000 |
MACERICH ANNOUNCES FOURTH QUARTER RESULTS
Santa Monica, CA (2/13/07) — The Macerich Company (NYSE Symbol: MAC) today announced results of operations for the quarter and year ended December 31, 2006, which included net income available to common stockholders for the quarter ended December 31, 2006 increasing to $147.9 million or $1.98 per share-diluted compared to $23.6 million or $.39 per share-diluted for the quarter ended December 31, 2005. For the year ended December 31, 2006, net income available to common stockholders was $228 million or $3.19 per share-diluted compared to $52.6 million or $.88 per share-diluted for the year ended December 31, 2005. Funds from operations (“FFO”) — diluted increased to $124.7 million or $1.36 per share for the quarter compared to $105.9 million or $1.32 per share for the quarter ended December 31, 2005 and FFO-diluted for the year was $383.1 million or $4.35 per share compared to $336.8 million or $4.35 per share for the year ended December 31, 2005. The Company’s definition of FFO is in accordance with the definition provided by the National Association of Real Estate Investment Trusts (“NAREIT”). A reconciliation of net income to FFO and net income per common share-diluted (“EPS”) to FFO per share-diluted is included in the financial tables accompanying this press release.
Recent Highlights
· During the quarter, Macerich signed 286,000 square feet of specialty store leases at average initial rents of $39.90 per square foot. First year rents on mall and freestanding store leases signed during the quarter were 21% higher than average expiring rents.
· For the quarter, EPS increased to $1.98, up from $.39 during the quarter ended December 31, 2005. Gain on asset sales of $132.7 million helped fuel the increase.
· Mall tenant sales per square foot increased 8.4% to $452 compared to $417 for the year ended December 31, 2005.
· Portfolio occupancy at December 31, 2006 was 93.6% compared to 93.5% at December 31, 2005. On a same center basis occupancy decreased to 93.6% at December 31, 2006 compared to 93.8% at December 31, 2005.
· Same center earnings before interest, taxes, depreciation and amortization, excluding lease termination revenue, were up 3.0% compared to the quarter ended December 31, 2005.
· Macerich closed on the $241 million acquisition of Deptford Mall in Deptford, New Jersey.
Commenting on the quarter, Arthur Coppola president and chief executive officer of Macerich stated, “The fundamentals remained solid with good releasing spreads, strong occupancy levels and good tenant sales gains. The quarter was another example of strategically improving our overall portfolio with the sale of three non core assets and the acquisition of another strong East Coast mall. Through asset sales and financing activity our balance sheet continues to improve and we are well positioned to fund and execute our development pipeline.”
Redevelopment and Development Activity
The grand opening of the first phase of Twenty-Ninth Street, an 805,000 square foot shopping district in Boulder, Colorado, took place on October 13, 2006. The balance of the project is scheduled for completion in summer 2007. Phase I of the project is 93% leased. Recent store openings include Borders Books, Chipotle, Helly Hansen, Lady Footlocker, Lululemon, and Solstice. Wild Oats has also opened their corporate headquarters. Recent lease commitments include Anthropologie, Sephora, Cantina Laredo, Jamba Juice and North Face.
On November 1, Macerich received Phoenix City Council approval to add up to five mixed use towers of up to 165 feet at Biltmore Fashion Park. Biltmore Fashion Park is an established luxury destination for first-to-market, high-end and luxury tenants in the metropolitan Phoenix market. The mixed use towers are planned to be built over time based upon demand.
Groundbreaking took place on February 6, 2007 for the 230,000 square foot life style expansion at The Oaks in Thousand Oaks, California. Plans also call for a remodel of both the interior spaces and the exterior façade, and will include a new 138,000 square foot Nordstrom scheduled to open at the center in fall 2008. New tenants include Abercrombie Kids, Forever 21, Forth & Towne, Guess?, J Crew, Iridesse, Planet Funk and Solstice. The combined expansion and renovation of the center is projected to cost approximately $250 million and be completed in fall 2008.
Phase I of SanTan Village, a $205 million regional shopping center under construction in Gilbert, Arizona, is scheduled to open in fall 2007. The center, currently 85% leased, is an open-air streetscape that will contain in excess of 1.2 million square feet on 120 acres. More than 35 tenants have committed to date, including Dillard’s, Harkins Theatres, Aeropostale, American Eagle Outfitters, Ann Taylor, Ann Taylor Loft, Apple, Banana Republic, Best Buy, Blue Wasabi, The Body Shop, The Buckle, Charlotte Russe, Chico’s, The Children’s Place, Coach, Coldwater Creek, The Disney Store, Eddie Bauer, J. Jill, Lane Bryant/Cacique, lucy, PacSun, Soma by Chico’s, Swarovski, Victoria’s Secret, Weisfield’s Jewelers, White House/Black Market and Z Gallerie.
Construction began in late 2006 on The Promenade at Casa Grande, a $135 million, 1 million-square-foot regional shopping center in Arizona’s fastest-growing county. Located in Casa Grande, Pinal County, the center will be located along the I-10 corridor between Phoenix and Tucson. The project is 85% committed, including anchors Target and JC Penney, and will deliver shopping, dining and entertainment options to a key growth corridor. The first phase of the project, which will include a combination of large-
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format retailers, specialty shops and restaurants, is scheduled for completion in fall 2007. Phase II is comprised of small shops and is scheduled to open in March 2008. The Promenade is a joint venture owned 51% by Macerich.
On January 22, Macerich received approval from the Fairfax County Board of Supervisors to move forward with plans for a transit-oriented development at Tysons Corner Center in McLean, Virginia. The expansion will add 3.5 million square feet of mixed use space to the existing 2.2 million square foot regional shopping center. The project is planned to be built in phases over the next 10 years based on market demand and the expansion of the area’s light rail system. Completion of the entitlement process for Phase I, totaling approximately 1.4 million square feet, is anticipated for the first quarter of 2008. The first phase of the project is anticipated to begin development in late 2009.
In late 2006, Macerich announced plans to bring Barneys New York Department Store to Scottsdale Fashion Square, replacing one of the anchor spaces acquired as a result of the Federated-May merger. Demolition of the vacant space and adjoining parking structure will begin in 2007, allowing for construction of an additional 100,000 square feet of new shop space and the 65,000 square foot Barneys New York location. This first to the Arizona market store is scheduled to open in fall 2009.
Acquisition Activity
In December Macerich acquired the entity owning Deptford Mall for $241 million. Deptford Mall is a two-level 1,040,000 square foot super-regional mall anchored by JC Penney, Sears, Macy’s and Boscov’s. The mall includes 343,000 square feet of mall shop space. Annual tenant sales per square foot are approximately $507. The mall has an occupancy level of 94%. Macerich placed a $172 million, five year, 5.44% fixed rate loan on the mall.
Asset Sales
Macerich continued to prune its portfolio with the sale of three non core malls: Crossroads Mall in Oklahoma City, Oklahoma, Northwest Arkansas Mall in Fayetteville, Arkansas and The Citadel Mall in Colorado Springs, Colorado. The combined sale price was $375 million reflecting a combined capitalization rate of 7.0 %. The average annual tenant sales per square foot for these assets was approximately $338. This brings the total number of malls sold in 2006 to six as the Company continues to redeploy its capital into developments, redevelopments and higher quality assets.
2007 Earnings Guidance
Management is issuing its guidance for EPS and FFO per share for 2007.
Guidance for 2007 and reconciliation of EPS to FFO per share:
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| Range per share: |
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Fully Diluted EPS |
| $ | 1.24 |
| - |
| $ | 1.34 |
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Plus: Real Estate Depreciation and Amortization |
| 3.44 |
| - |
| 3.44 |
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Less: other items including additional dilutive securities |
| (.10 | ) | - |
| (.10 | ) | ||
Fully Diluted FFO per share |
| $ | 4.58 |
| - |
| $ | 4.68 |
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The Company’s 2007 earnings guidance is based upon its internal forecasting and planning process and on many assumptions, including the following:
Management expects comparable property EBITDA (excluding the impact of lease termination revenue) to grow in the 2.5% to 3.5% range compared to 2006. EBITDA represents earnings before interest, income taxes, depreciation, amortization, minority interest, extraordinary items, gain (loss) on sale of assets and preferred dividends and includes joint ventures at their pro rata share.
This guidance is based on management’s current view of the current market conditions in the regional mall business. Due to the uncertainty in the timing and economics of acquisitions and dispositions, the guidance ranges do not include any potential property acquisitions or dispositions. The Company is not able to assess at this time the potential impact of such exclusions on future EPS and FFO. FFO does not include gains or losses on sales of depreciated operating assets.
The Macerich 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. The Company is the sole general partner and owns an 84% ownership interest in The Macerich Partnership, L.P. Macerich now owns approximately 77 million square feet of gross leaseable area consisting primarily of interests in 73 regional malls. Additional information about The Macerich Company can be obtained from the Company’s web site 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 and through CCBN at www.earnings.com. The call begins today, February 13, 2007 at 10:30 AM Pacific Time. To listen to the call, please go to either of these web sites 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 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. 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, 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 and terms, interest rate fluctuations, availability and cost of financing and
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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; governmental actions and initiatives (including legislative and regulatory changes); environmental and safety requirements; and terrorist activities 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, 2005, for a discussion of such risks and uncertainties, which discussion is incorporated herein by reference.
(See attached tables)
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5
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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| Results before SFAS 144 (e) |
| Impact of SFAS 144 (e) |
| Results after SFAS 144 (e) |
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Results of Operations: |
| For the Three Months |
| For the Three Months |
| For the Three Months |
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| Ended December 31, |
| Ended December 31, |
| Ended December 31, |
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| Unaudited |
| Unaudited |
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| 2006 |
| 2005 |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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Minimum rents |
| $ | 141,347 |
| $ | 132,972 |
| ($6,819 | ) | ($11,651 | ) | $ | 134,528 |
| $ | 121,321 |
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Percentage rents |
| 15,572 |
| 15,093 |
| (523 | ) | (939 | ) | 15,049 |
| 14,154 |
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Tenant recoveries |
| 69,334 |
| 63,219 |
| (2,026 | ) | (3,962 | ) | 67,308 |
| 59,257 |
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Management Companies’ revenues |
| 8,806 |
| 7,766 |
| — |
| — |
| 8,806 |
| 7,766 |
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Other income |
| 8,650 |
| 7,898 |
| (535 | ) | (531 | ) | 8,115 |
| 7,367 |
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Total revenues |
| 243,709 |
| 226,948 |
| (9,903 | ) | (17,083 | ) | 233,806 |
| 209,865 |
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Shopping center and operating expenses |
| 71,439 |
| 68,851 |
| (2,635 | ) | (6,052 | ) | 68,804 |
| 62,799 |
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Management Companies’ operating expenses |
| 15,379 |
| 15,547 |
| — |
| — |
| 15,379 |
| 15,547 |
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Income tax expense (benefit) |
| (187 | ) | 174 |
| — |
| — |
| (187 | ) | 174 |
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Depreciation and amortization |
| 57,598 |
| 59,171 |
| (2,288 | ) | (3,758 | ) | 55,310 |
| 55,413 |
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General, administrative and other expenses |
| 3,991 |
| 2,170 |
| — |
| — |
| 3,991 |
| 2,170 |
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Interest expense |
| 73,209 |
| 74,281 |
| (2,825 | ) | (3,089 | ) | 70,384 |
| 71,192 |
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Loss on early extinguishment of debt |
| 24 |
| 1,666 |
| — |
| — |
| 24 |
| 1,666 |
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Gain (loss) on sale or writedown of assets |
| 132,710 |
| 56 |
| (132,710 | ) | — |
| — |
| 56 |
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Equity in income of unconsolidated entities (c) |
| 28,686 |
| 29,887 |
| — |
| — |
| 28,686 |
| 29,887 |
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Minority interests in consolidated joint ventures |
| (1,832 | ) | (129 | ) | 37 |
| 72 |
| (1,795 | ) | (57 | ) | ||||||
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Income (loss) from continuing operations |
| 181,820 |
| 34,902 |
| (134,828 | ) | (4,112 | ) | 46,992 |
| 30,790 |
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Discontinued Operations: |
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Gain (loss) on sale of asset |
| — |
| — |
| 132,695 |
| — |
| 132,695 |
| — |
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Income from discontinued operations |
| — |
| — |
| 2,133 |
| 4,112 |
| 2,133 |
| 4,112 |
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Income before minority interests of OP |
| 181,820 |
| 34,902 |
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| 181,820 |
| 34,902 |
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Income allocated to minority interests of OP |
| 27,690 |
| 5,365 |
| — |
| — |
| 27,690 |
| 5,365 |
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Net income before preferred dividends |
| 154,130 |
| 29,537 |
| — |
| — |
| 154,130 |
| 29,537 |
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Preferred dividends and distributions (a) |
| 6,198 |
| 5,900 |
| — |
| — |
| 6,198 |
| 5,900 |
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Net income to common stockholders |
| $ | 147,932 |
| $ | 23,637 |
| $ | 0 |
| $ | 0 |
| $ | 147,932 |
| $ | 23,637 |
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Average number of shares outstanding - basic |
| 71,521 |
| 59,916 |
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| 71,521 |
| 59,916 |
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Average shares outstanding, assuming full conversion of OP Units (d) |
| 91,820 |
| 73,728 |
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| 91,820 |
| 73,728 |
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Average shares outstanding - diluted for FFO(d) |
| 91,820 |
| 80,496 |
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| 91,820 |
| 80,496 |
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Per share income- diluted before discontinued operations |
| — |
| — |
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| $ | 0.51 |
| $ | 0.33 |
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Net income per share-basic |
| $ | 2.07 |
| $ | 0.39 |
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| $ | 2.07 |
| $ | 0.39 |
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Net income per share- diluted (a) |
| $ | 1.98 |
| $ | 0.39 |
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| $ | 1.98 |
| $ | 0.39 |
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Dividend declared per share |
| $ | 0.71 |
| $ | 0.68 |
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| $ | 0.71 |
| $ | 0.68 |
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Funds from operations “FFO” (b) (d)- basic |
| $ | 118,521 |
| $ | 99,976 |
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| $ | 118,521 |
| $ | 99,976 |
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Funds from operations “FFO” (a) (b) (d) - diluted |
| $ | 124,719 |
| $ | 105,876 |
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| $ | 124,719 |
| $ | 105,876 |
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FFO per share- basic (b) (d) |
| $ | 1.40 |
| $ | 1.36 |
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| $ | 1.40 |
| $ | 1.36 |
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FFO per share- diluted (a) (b) (d) |
| $ | 1.36 |
| $ | 1.32 |
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| $ | 1.36 |
| $ | 1.32 |
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THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
| Results before SFAS 144 (e) |
| Impact of SFAS 144 (e) |
| Results after SFAS 144 (e) |
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Results of Operations: |
| For the Year |
| For the Year |
| For the Year |
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|
| Ended December 31 |
| Ended December 31 |
| Ended December 31 |
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|
| Unaudited |
| Unaudited |
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| 2006 |
| 2005 |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
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Minimum rents |
| $ | 525,728 |
| $ | 468,363 |
| ($36,650 | ) | ($44,604 | ) | $ | 489,078 |
| $ | 423,759 |
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Percentage rents |
| 26,173 |
| 26,258 |
| (1,506 | ) | (2,106 | ) | 24,667 |
| 24,152 |
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Tenant recoveries |
| 270,214 |
| 233,029 |
| (15,688 | ) | (18,197 | ) | 254,526 |
| 214,832 |
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Management Companies’ revenues |
| 31,456 |
| 26,128 |
| — |
| — |
| 31,456 |
| 26,128 |
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Other income |
| 31,406 |
| 24,581 |
| (1,477 | ) | (1,628 | ) | 29,929 |
| 22,953 |
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Total revenues |
| 884,977 |
| 778,359 |
| (55,321 | ) | (66,535 | ) | 829,656 |
| 711,824 |
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Shopping center and operating expenses |
| 281,273 |
| 248,020 |
| (19,146 | ) | (24,115 | ) | 262,127 |
| 223,905 |
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Management Companies’ operating expenses |
| 56,673 |
| 52,840 |
| — |
| — |
| 56,673 |
| 52,840 |
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Income tax expense (benefit) |
| 33 |
| (2,031 | ) | — |
| — |
| 33 |
| (2,031 | ) | ||||||
Depreciation and amortization |
| 236,669 |
| 208,938 |
| (12,396 | ) | (15,793 | ) | 224,273 |
| 193,145 |
| ||||||
General, administrative and other expenses |
| 13,532 |
| 12,106 |
| — |
| — |
| 13,532 |
| 12,106 |
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Interest expense |
| 286,635 |
| 249,917 |
| (11,968 | ) | (12,820 | ) | 274,667 |
| 237,097 |
| ||||||
Loss on early extinguishment of debt |
| 1,835 |
| 1,666 |
| — |
| — |
| 1,835 |
| 1,666 |
| ||||||
Gain (loss) on sale or writedown of assets |
| 241,732 |
| 1,530 |
| (241,694 | ) | (277 | ) | 38 |
| 1,253 |
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Equity in income of unconsolidated entities (c) |
| 86,053 |
| 76,303 |
| — |
| — |
| 86,053 |
| 76,303 |
| ||||||
Minority interests in consolidated joint ventures |
| (40,933 | ) | (600 | ) | 37,266 |
| (100 | ) | (3,667 | ) | (700 | ) | ||||||
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|
|
|
|
|
|
|
|
| ||||||
Income (loss) from continuing operations |
| 295,179 |
| 84,136 |
| (216,239 | ) | (14,184 | ) | 78,940 |
| 69,952 |
| ||||||
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|
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|
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| ||||||
Discontinued Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Gain (loss) on sale of asset |
| — |
| — |
| 204,863 |
| 277 |
| 204,863 |
| 277 |
| ||||||
Income from discontinued operations |
| — |
| — |
| 11,376 |
| 13,907 |
| 11,376 |
| 13,907 |
| ||||||
Income before minority interests of OP |
| 295,179 |
| 84,136 |
| — |
| — |
| 295,179 |
| 84,136 |
| ||||||
Income allocated to minority interests of OP |
| 42,821 |
| 12,450 |
| — |
| — |
| 42,821 |
| 12,450 |
| ||||||
Net income before preferred dividends |
| 252,358 |
| 71,686 |
| — |
| — |
| 252,358 |
| 71,686 |
| ||||||
Preferred dividends and distributions (a) |
| 24,336 |
| 19,098 |
| — |
| — |
| 24,336 |
| 19,098 |
| ||||||
Net income to common stockholders |
| $ | 228,022 |
| $ | 52,588 |
| $ | 0 |
| $ | 0 |
| $ | 228,022 |
| $ | 52,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Average number of shares outstanding - basic |
| 70,826 |
| 59,279 |
|
|
|
|
| 70,826 |
| 59,279 |
| ||||||
Average shares outstanding, assuming full conversion of OP Units (d) |
| 88,058 |
| 73,573 |
|
|
|
|
| 88,058 |
| 73,573 |
| ||||||
Average shares outstanding - diluted for FFO (d) |
| 88,058 |
| 77,397 |
|
|
|
|
| 88,058 |
| 77,397 |
| ||||||
|
|
|
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|
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|
|
|
|
|
|
|
| ||||||
Per share income- diluted before discontinued operations |
| — |
| — |
|
|
|
|
| $ | 0.73 |
| $ | 0.69 |
| ||||
Net income per share-basic |
| $ | 3.22 |
| $ | 0.89 |
|
|
|
|
| $ | 3.22 |
| $ | 0.89 |
| ||
Net income per share- diluted (a) |
| $ | 3.19 |
| $ | 0.88 |
|
|
|
|
| $ | 3.19 |
| $ | 0.88 |
| ||
Dividend declared per share |
| $ | 2.75 |
| $ | 2.63 |
|
|
|
|
| $ | 2.75 |
| $ | 2.63 |
| ||
Funds from operations “FFO” (b) (d)- basic |
| $ | 373,039 |
| $ | 326,541 |
|
|
|
|
| $ | 373,039 |
| $ | 326,541 |
| ||
Funds from operations “FFO” (a) (b) (d) - diluted |
| $ | 383,122 |
| $ | 336,831 |
|
|
|
|
| $ | 383,122 |
| $ | 336,831 |
| ||
FFO per share- basic (b) (d) |
| $ | 4.43 |
| $ | 4.46 |
|
|
|
|
| $ | 4.43 |
| $ | 4.46 |
| ||
FFO per share- diluted (a) (b) (d) |
| $ | 4.35 |
| $ | 4.35 |
|
|
|
|
| $ | 4.35 |
| $ | 4.35 |
| ||
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(a) On February 25, 1998, the Company sold $100,000 of convertible preferred stock representing 3.627 million shares. The convertible preferred shares can be converted on a 1 for 1 basis for common stock. These preferred shares are assumed converted for purposes of net income per share - diluted for 2006 and are not assumed converted for 2005 as they would be antidilutive.
The weighted average preferred shares outstanding are assumed converted for purposes of FFO per diluted share as they are dilutive to that calculation for all periods presented.
(b) 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. 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 and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. FFO and FFO on a fully 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. FFO on a fully diluted basis is one of the measures investors find most useful in measuring the dilutive impact of outstanding convertible securities. FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income as defined by GAAP and is not indicative of cash available to fund all cash flow needs. FFO as presented may not be comparable to similarly titled measures reported by other real estate investment trusts.
Effective January 1, 2003, gains or losses on sale of undepreciated assets and the impact of SFAS 141 have been included in FFO. The inclusion of gains on sales of undepreciated assets increased FFO for the three and twelve months ended December 31, 2006 and 2005 by $3.6 million, $9.5 million, $0.2 million and $3.4 million, respectively, or by $.04 per share, $.11 per share, $.00 per share and $.04 per share, respectively. Additionally, SFAS 141 increased FFO for the three and twelve months ended December 31, 2006 and 2005 by $4.0 million, $16.9 million, $4.4 million and $15.3 million, respectively or by $.04 per share, $.19 per share, $.05 per share and $.20 per share, respectively.
(c) This includes, using the equity method of accounting, the Company’s prorata share of the equity in income or loss of its unconsolidated joint ventures for all periods presented.
(d) The Macerich Partnership, LP (the “Operating Partnership” or the “OP”) has operating partnership units (“OP units”). Each OP unit can be converted into a share of Company stock. Conversion of the OP units not owned by the Company has been assumed for purposes of calculating the FFO per share and the weighted average number of shares outstanding. The computation of average shares for FFO - - diluted includes the effect of outstanding stock options and restricted stock using the treasury method. Also assumes conversion of MACWH, LP units to the extent they are dilutive to the calculation. For the three months ended December 31, 2006 and 2005, the MACWH, LP units were dilutive to FFO. For the twelve months ended December 31, 2006 and 2005, the MACWH, LP units were antidilutive to FFO.
(e) In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Company adopted SFAS 144 on January 1, 2002.
On January 5, 2005, the Company sold Arizona Lifestyle Galleries. The sale of this property resulted in a gain on sale of $0.3 million.
On June 9, 2006, Scottsdale 101 in Arizona was sold. The sale of this property resulted in a gain on sale, at the Company’s prorata share, of $25.8 million. Additionally, the Company reclassified the results of operations for the three and twelve months ended December 31, 2006 and 2005 to discontinued operations.
On July 13, 2006, Park Lane Mall in Nevada was sold. The sale of this property resulted in a gain on sale of $5.9 million. The Company reclassified the results of operations for the three and twelve months ended December 31, 2006 and 2005 to discontinued operations.
On July 27, 2006, Greeley Mall in Colorado and Holiday Village in Montana were sold. The sale of these properties resulted in gains on sale of $21.3 million and $7.4 million, respectively. The Company reclassified the results of operations for the three and twelve months ended December 31, 2006 and 2005 to discontinued operations.
On August 11, 2006, Great Falls Marketplace in Montana was sold. The sale of this property resulted in a gain on sale of $11.8 million. The Company reclassified the results of operations for the three and twelve months ended December 31, 2006 and 2005 to discontinued operations.
On December 29, 2006, Citadel Mall in Colorado Springs, Colorado, Crossroads Malls in Oklahoma City, Oklahoma and Northwest Arkansas Mall in Fayetteville, Arkansas were sold. The sale of these properties resulted in a total gain on sale of $132.7 million. The Company reclassified the results of operations for the three and twelve months ended December 31, 2006 and 2005 to discontinued operations.
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
| Dec 31, |
| Dec 31, |
| ||
Summarized Balance Sheet Information |
| 2006 |
| 2005 |
| ||
|
| (UNAUDITED) |
| ||||
Cash and cash equivalents |
| $ | 269,435 |
| $ | 155,113 |
|
Investment in real estate, net (h) |
| $ | 5,755,283 |
| $ | 5,438,496 |
|
Investments in unconsolidated entities (i) |
| $ | 1,010,380 |
| $ | 1,075,621 |
|
Total Assets |
| $ | 7,562,163 |
| $ | 7,178,944 |
|
Mortgage and notes payable |
| $ | 4,993,879 |
| $ | 5,424,730 |
|
Pro rata share of debt on unconsolidated entities |
| $ | 1,664,447 |
| $ | 1,505,612 |
|
|
|
|
|
|
| ||
Total common shares outstanding at quarter end: |
| 71,568 |
| 59,942 |
| ||
Total preferred shares outstanding at quarter end: |
| 3,627 |
| 3,627 |
| ||
Total partnership/preferred units outstanding at quarter end: |
| 16,342 |
| 16,647 |
| ||
|
| Dec 31, |
| Dec 31, |
| ||
Additional financial data as of: |
| 2006 |
| 2005 |
| ||
|
|
|
|
|
| ||
Occupancy of centers (f) |
| 93.60 | % | 93.50 | % | ||
Comparable quarter change in same center sales (f) (g) |
| 2.53 | % | 5.50 | % | ||
|
|
|
|
|
| ||
Additional financial data for the twelve months ended: |
|
|
|
|
| ||
Acquisitions of property and equipment - including joint ventures at prorata |
| $ | 609,275 |
| $ | 2,503,688 |
|
Redevelopment and expansions of centers- including joint ventures at prorata |
| $ | 223,307 |
| $ | 156,655 |
|
Renovations of centers- including joint ventures at prorata |
| $ | 59,525 |
| $ | 83,336 |
|
Tenant allowances- including joint ventures at prorata |
| $ | 49,398 |
| $ | 30,686 |
|
Deferred leasing costs- including joint ventures at prorata |
| $ | 27,045 |
| $ | 26,950 |
|
(f) excludes redevelopment properties.
(g) includes mall and freestanding stores.
(h) includes construction in process on wholly owned assets of $294,115 at December 31, 2006 and $162,157 at December 31, 2005.
(i) the Company’s prorata share of construction in process on unconsolidated entities of $45,268 at December 31, 2006 and $98,180 at December 31, 2005.
|
| For the Three Months |
| For the Year |
| ||||||||
PRORATA SHARE OF JOINT VENTURES |
| Ended December 31, |
| Ended December 31, |
| ||||||||
|
| (UNAUDITED) |
| (UNAUDITED) |
| ||||||||
(Unaudited) |
| (All amounts in thousands) |
| (All amounts in thousands) |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
| ||||
Minimum rents |
| $ | 64,400 |
| $ | 59,803 |
| $ | 241,630 |
| $ | 209,933 |
|
Percentage rents |
| 8,657 |
| 7,873 |
| 15,963 |
| 13,815 |
| ||||
Tenant recoveries |
| 29,108 |
| 25,636 |
| 111,788 |
| 91,482 |
| ||||
Other |
| 4,518 |
| 3,737 |
| 15,125 |
| 12,402 |
| ||||
Total revenues |
| 106,683 |
| 97,049 |
| 384,506 |
| 327,632 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses: |
|
|
|
|
|
|
|
|
| ||||
Shopping center expenses |
| 33,076 |
| 29,549 |
| 125,945 |
| 106,616 |
| ||||
Interest expense |
| 25,244 |
| 20,255 |
| 91,504 |
| 74,383 |
| ||||
Depreciation and amortization |
| 20,536 |
| 18,004 |
| 82,745 |
| 73,247 |
| ||||
Total operating expenses |
| 78,856 |
| 67,808 |
| 300,194 |
| 254,246 |
| ||||
Gain on sale of assets |
| 480 |
| 93 |
| 725 |
| 1,954 |
| ||||
Equity in income of joint ventures |
| 379 |
| 553 |
| 1,016 |
| 970 |
| ||||
Loss on early extinguishment of debt |
| — |
| — |
| — |
| (7 | ) | ||||
Net income |
| $ | 28,686 |
| $ | 29,887 |
| $ | 86,053 |
| $ | 76,303 |
|
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
| For the Three Months |
| For the Year |
| ||||||||
RECONCILIATION OF NET INCOME TO FFO (b)(e) |
| Ended December 31, |
| Ended December 31, |
| ||||||||
|
| (UNAUDITED) |
| (UNAUDITED) |
| ||||||||
|
| (All amounts in thousands) |
| (All amounts in thousands) |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Net income - available to common stockholders |
| $ | 147,932 |
| $ | 23,637 |
| $ | 228,022 |
| $ | 52,588 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjustments to reconcile net income to FFO- basic |
|
|
|
|
|
|
|
|
| ||||
Minority interest in OP |
| 27,690 |
| 5,365 |
| 42,821 |
| 12,450 |
| ||||
(Gain) loss on sale of consolidated assets |
| (132,710 | ) | (56 | ) | (241,732 | ) | (1,530 | ) | ||||
plus gain on undepreciated asset sales- consolidated assets |
| 3,112 |
| — |
| 8,827 |
| 1,068 |
| ||||
plus minority interest share of gain on sale of consolidated joint ventures |
| 15 |
| — |
| 36,831 |
| 239 |
| ||||
(Gain) loss on sale of assets from unconsolidated entities (pro rata share) |
| (480 | ) | (93 | ) | (725 | ) | (1,954 | ) | ||||
plus gain on undepreciated asset sales- unconsolidated assets |
| 481 |
| 225 |
| 725 |
| 2,092 |
| ||||
Depreciation and amortization on consolidated assets |
| 57,598 |
| 59,171 |
| 236,669 |
| 208,938 |
| ||||
Less depreciation and amortization allocable to minority interests on consolidated joint ventures |
| (1,071 | ) | (2,261 | ) | (5,422 | ) | (5,873 | ) | ||||
Depreciation and amortization on joint ventures (pro rata) |
| 20,536 |
| 18,004 |
| 82,745 |
| 73,247 |
| ||||
Less: depreciation on personal property and amortization of loan costs and interest rate caps |
| (4,582 | ) | (4,016 | ) | (15,722 | ) | (14,724 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Total FFO - basic |
| 118,521 |
| 99,976 |
| 373,039 |
| 326,541 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Additional adjustment to arrive at FFO -diluted |
|
|
|
|
|
|
|
|
| ||||
Preferred stock dividends earned |
| 2,575 |
| 2,430 |
| 10,083 |
| 9,648 |
| ||||
Non-participating preferred units - dividends |
| 284 |
| 320 |
|
|
| 642 |
| ||||
Participating preferred units - dividends |
| 3,339 |
| 3,150 |
| n/a - antidilutive |
| ||||||
FFO - diluted |
| $ | 124,719 |
| $ | 105,876 |
| $ | 383,122 |
| $ | 336,831 |
|
|
| For the Three Months |
| For the Year |
| ||||||||
|
| Ended December 31, |
| Ended December 31, |
| ||||||||
|
| (UNAUDITED) |
| (UNAUDITED) |
| ||||||||
|
| (All amounts in thousands) |
| (All amounts in thousands) |
| ||||||||
Reconciliation of EPS to FFO per diluted share: |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Earnings per share |
| $ | 1.98 |
| $ | 0.39 |
| $ | 3.19 |
| $ | 0.88 |
|
Per share impact of depreciation and amortization real estate |
| $ | 0.86 |
| $ | 0.97 |
| $ | 3.54 |
| $ | 3.57 |
|
Per share impact of gain on sale of depreciated assets |
| ($1.48 | ) | $ | 0.00 |
| ($2.33 | ) | $ | 0.00 |
| ||
Per share impact of preferred stock not dilutive to EPS |
| $ | 0.00 |
| ($0.04 | ) | ($0.05 | ) | ($0.10 | ) | |||
Fully Diluted FFO per share |
| $ | 1.36 |
| $ | 1.32 |
| $ | 4.35 |
| $ | 4.35 |
|
THE MACERICH COMPANY |
| For the Three Months |
| For the Year |
| ||||||||
RECONCILIATION OF NET INCOME TO EBITDA |
| Ended December 31, |
| Ended December 31, |
| ||||||||
|
| (UNAUDITED) |
| (UNAUDITED) |
| ||||||||
|
| (All amounts in thousands) |
| (All amounts in thousands) |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income - available to common stockholders |
| $ | 147,932 |
| $ | 23,637 |
| $ | 228,022 |
| $ | 52,588 |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
| 73,209 |
| 74,281 |
| 286,635 |
| 249,917 |
| ||||
Interest expense - unconsolidated entities (pro rata) |
| 25,244 |
| 20,255 |
| 91,504 |
| 74,383 |
| ||||
Depreciation and amortization - consolidated assets |
| 57,598 |
| 59,171 |
| 236,669 |
| 208,938 |
| ||||
Depreciation and amortization - unconsolidated entities (pro rata) |
| 20,536 |
| 18,004 |
| 82,745 |
| 73,247 |
| ||||
Minority interest |
| 27,690 |
| 5,365 |
| 42,821 |
| 12,450 |
| ||||
Less: Interest expense and depreciation and amortization allocable to minority interests on consolidated joint ventures |
| (1,836 | ) | (3,117 | ) | (8,027 | ) | (8,280 | ) | ||||
Loss on early extinguishment of debt |
| 24 |
| 1,666 |
| 1,835 |
| 1,666 |
| ||||
Loss on early extinguishment of debt- unconsolidated entities (pro rata) |
| — |
| 7 |
| — |
| 7 |
| ||||
Loss (gain) on sale of assets - consolidated assets |
| (132,710 | ) | (56 | ) | (241,732 | ) | (1,530 | ) | ||||
Loss (gain) on sale of assets - unconsolidated entities (pro rata) |
| (480 | ) | (93 | ) | (725 | ) | (1,954 | ) | ||||
Add: Minority interest share of gain on sale of consolidated joint ventures |
| 15 |
| — |
| 36,831 |
| — |
| ||||
Income tax expense (benefit) |
| (187 | ) | 174 |
| 33 |
| (2,031 | ) | ||||
Preferred dividends |
| 6,198 |
| 5,900 |
| 24,336 |
| 19,098 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
EBITDA (j) |
| $ | 223,233 |
| $ | 205,194 |
| $ | 780,947 |
| $ | 678,499 |
|
THE MACERICH COMPANY
FINANCIAL HIGHLIGHTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THE MACERICH COMPANY
RECONCILIATION OF EBITDA TO SAME CENTERS - NET OPERATING INCOME (“NOI”)
|
| For the Three Months |
| For the Year |
| ||||||||
|
| Ended December 31, |
| Ended December 31, |
| ||||||||
|
| (UNAUDITED) |
| (UNAUDITED) |
| ||||||||
|
| (All amounts in thousands) |
| (All amounts in thousands) |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
EBITDA (j) |
| $ | 223,233 |
| $ | 205,194 |
| $ | 780,947 |
| $ | 678,499 |
|
|
|
|
|
|
|
|
|
|
| ||||
Add: REIT general and administrative expenses |
| 3,991 |
| 2,170 |
| 13,532 |
| 12,106 |
| ||||
Management Companies’ revenues (c) |
| (8,806 | ) | (7,766 | ) | (31,456 | ) | (26,128 | ) | ||||
Management Companies’ operating expenses (c) |
| 15,379 |
| 15,547 |
| 56,673 |
| 52,840 |
| ||||
EBITDA of non-comparable centers |
| (25,511 | ) | (19,843 | ) | (147,493 | ) | (77,092 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
SAME CENTERS - Net operating income (“NOI”) (k) |
| $ | 208,286 |
| $ | 195,302 |
| $ | 672,203 |
| $ | 640,225 |
|
(j) EBITDA represents earnings before interest, income taxes, depreciation, amortization, minority interest, extraordinary items, gain (loss) on sale of assets 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. 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. EBITDA, as presented, may not be comparable to similarly titled measurements reported by other companies.
(k) 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.