FORM 10-K
(Mark one)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission File Number 1-12504
THE MACERICH COMPANY
(Exact Name of Registrant as Specified in Its Charter)
Maryland 95-4448705
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
233 Wilshire Boulevard, # 700
Santa Monica, California 90401
(Address of principal executive office) (Zip Code)
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Registrants telephone number, including area code: (310) 394-6911
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -----------------------
Common Stock, New York Stock Exchange
$0.01 Par Value
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Securities registered pursuant to Section 12(g) of the Act: None
As of March 4, 1997, the aggregate market value of the 16,463,275 shares of Common Stock held by non-affiliates of the registrant was $458.9 million based upon the closing price ($27.785) on the New York Stock Exchange composite tape on such date. (For this computation, the registrant has excluded the market value of all shares of its Common Stock reported as beneficially owned by executive officers and directors of the registrant and certain other shareholders; such exclusion shall not be deemed to constitute an admission that any such person is an "affiliate" of the registrant.) As of March 4, 1997, there were 25,743,497 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
THE MACERICH COMPANY
Annual Report on Form 10-K
For The Year Ended December 31, 1996
TABLE OF CONTENTS
Item No. Page No.
Part I
1. Business................................................ 1-10
2. Properties.............................................. 11-15
3. Legal Proceedings....................................... 15
4. Submission of Matters to a Vote of Security Holders..... 15
Part II
5. Market for the Registrant's Common Equity and
Related Shareholder Matters........................ 16
6. Selected Financial Data................................. 16-18
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............18-28
8. Financial Statements and Supplementary Data.............. 28
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............... 28
Part III
10. Directors and Executive Officers of the Registrant....... 28
11. Executive Compensation................................... 28
12. Security Ownership of Certain Beneficial Owners
and Management................................... 28
13. Certain Relationships and Related Transactions........... 28
PART IV
14. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K................................. 29
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SIGNATURES
The Company was organized as a Maryland corporation in September 1993 to continue and expand the shopping center operations of Mace Siegel, Arthur M. Coppola, Dana K. Anderson and Edward C. Coppola (the "Principals") and certain of their business associates.
All references to the Company in this 10-K include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise.
Valley View Mall is a super regional mall in Dallas, Texas which the Company acquired on October 21, 1996. Valley View Mall contains 1,523,815 square feet and the purchase price was $85.5 million in cash plus the assumption of $2.0 million in other liabilities.
Rimrock Mall, located in Billings, Montana, and Vintage Faire Mall, located in Modesto, California were both purchased on November 27, 1996. The combined purchase price was $118.2 million, including the assumption of $88.4 million of existing mortgage indebtedness, the assumption of $3.0 million of other liabilities and with the balance being paid in cash. Vintage Faire Mall is a super regional mall with 1,051,458 square feet and Rimrock Mall is a regional mall consisting of 581,912 square feet.
Buenaventura Mall, Fresno Fashion Fair and Huntington Center were purchased on December 18, 1996 for a combined price of $128.9 million, including $38 million of assumed mortgage indebtedness, assumption of $3.8 million of other liabilities and the balance was paid in cash. Buenaventura Mall, located in Ventura, California, is an 801,152 square foot super regional mall, Fresno Fashion Fair, located in Fresno, California, is a super regional mall containing 881,334 square feet and Huntington Center, located in Huntington Beach, California, consists of 834,578 square feet.
The addition of the 1996 Acquisition Centers brings the Company's portfolio to 23 Regional Shopping Centers and three Community Shopping Centers, comprising more than 19.1 million square feet.
The Company focuses on the acquisition and redevelopment of Regional Shopping Centers. Regional Shopping Centers have generally provided owners with relatively stable growth in income despite the cyclical nature of the retail business. This stability is due both to the diversity of tenants and to the typical dominance of Regional Shopping Centers in their trade areas. Regional Shopping Centers are difficult to develop because of the significant barriers to entry, including the limited availability of capital and suitable development sites, the presence of existing Regional Shopping Centers in most markets, a limited number of Anchors, and the associated development costs and risks. Consequently, the Company believes that few new Regional Shopping Centers will be built in the next five years. However, many of the market, financing and economic risks typically associated with the development of new Regional Shopping Centers can be mitigated by acquiring and redeveloping an existing Regional Shopping Center. Furthermore, the value of Regional Shopping Centers can be significantly enhanced through redevelopment, renovation and expansion.
Regional Shopping Centers have different strategies with regard to price, merchandise offered and tenant mix, and are generally tailored to meet the needs of their trade areas. Anchor tenants are located along common areas in a configuration designed to maximize consumer traffic for the benefit of the Mall Stores. Mall GLA, which generally refers to gross leasable area contiguous to the Anchors for tenants other than Anchors, is leased to a wide variety of smaller retailers. Mall stores typically account for the bulk of the revenues of a Regional Shopping Center.
Although a variety of retail formats compete for consumer purchases, the
Company believes that Regional Shopping Centers will continue to be a
preferred shopping destination. The combination of a climate controlled
shopping environment and a diverse tenant mix has resulted in Regional
Shopping Centers generating higher tenant sales than are generally achieved at
smaller retail formats. Further, the Company believes that department stores
located in Regional Shopping Centers will continue to provide a full range of
current fashion merchandise at a limited number of locations in any one
market, allowing them to command the largest geographical trade area of any
retail format.
Property Management and Leasing. The Company believes that on-site property managers can most effectively operate the Centers. Each Center's property manager is responsible for overseeing the operations, marketing, maintenance and security functions at the Center. Property managers focus special attention on controlling operating costs, a key element in the profitability of the Centers, and seek to develop strong relationships with and to be responsive to the needs of retailers.
The Company believes strongly in decentralized leasing and accordingly, most of its leasing managers are located on-site to better understand the market and the community in which a Center is located. Leasing managers are charged with more than the responsibility of leasing space; they continually assess and fine tune each Center's tenant mix, identify and replace underperforming tenants and seek to optimize existing tenant sizes and configurations.
Acquisitions. Since the IPO, the Company, has acquired interests in shopping centers nationwide. These acquisitions were identified and consummated by the Company's staff of acquisition professionals who are strategically located in Santa Monica, Dallas, Denver, and Atlanta. The Company believes that it is geographically well positioned to cultivate and maintain ongoing relationships with potential sellers and financial institutions and to act quickly when acquisition opportunities arise.
Concurrent with its IPO, the Company acquired Crossroads Mall in Oklahoma City, Oklahoma ("Crossroads-Oklahoma"). In addition, on July 21, 1994, the Company acquired Chesterfield Towne Center in Richmond, Virginia ("Chesterfield"). Together these properties are known as the "1994 Acquisition Centers". The Company made the following acquisitions during 1995: The Centre at Salisbury in Salisbury, Maryland ("Salisbury") on August 15, 1995, Capitola Mall in Capitola, California ("Capitola") on December 21, 1995, and Queens Center in New York, New York ("Queens Center") on December 28, 1995. Together these properties are known as the "1995 Acquisition Centers". The Company made the following acquisitions in 1996: Villa Marina Marketplace ("Villa Marina") on January 25, 1996; Valley View Mall on October 21, 1996; Vintage Faire Mall and Rimrock Mall on November 27, 1996; and Buenaventura Mall, Fresno Fashion Fair and Huntington Center on December 18, 1996. Together these properties are referred to as "1996 Acquisition Centers".
Redevelopment. One of the major components of the Company's growth strategy is its ability to redevelop acquired properties. For this reason, the Company has built a staff of redevelopment professionals who have primary responsibility for identifying redevelopment opportunities that will result in enhanced long-term financial returns and market position for the Centers. The redevelopment professionals oversee the design and construction of the projects in addition to obtaining required governmental and Anchor approvals.
Total revenues increased from $86.0 million in 1994 to $102.5 million in 1995 and $155.1 million in 1996 primarily due to acquisitions. See "Managements Discussion and Analysis of Financial Condition and Results of Operations." Lakewood Mall generated 16.0% of total shopping center revenues in 1996, 22.0% in 1995 and 25.6% in 1994. Shopping center revenues at Crossroads Mall-Colorado accounted for 10.6% of total shopping center revenues in 1995 and 12.16% in 1994. During 1995 Chesterfield accounted for 12.6% of total Shopping Center revenues. Queens Center accounted for 13.8% of 1996 shopping center revenue. No other Center generated more than 10% of shopping center revenues during 1996, 1995 or 1994.
For the Year Ended December 31,
--------------------------------------
1994 1995(2) 1996 (3)
-------- ------- --------
Mall store sales (in thousands) $761,181 $766,849 $992,614
-------- -------- --------
-------- -------- --------
Minimum rents 8.3% 8.3% 8.3%
Percentage rents 0.4% 0.4% 0.4%
Expense recoveries (1) 2.5% 2.6% 2.9%
-------- -------- --------
Mall tenant occupancy costs 11.2% 11.3% 11.6%
-------- -------- --------
-------- -------- --------
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(1) Represents real estate tax and common area maintenance charges.
(2) Excludes 1995 Acquisition Centers.
(3) Excludes 1996 Acquisition Centers.
The following retailers (including their subsidiaries) represent the 10 largest retailers in the Company's portfolio based upon minimum rents in place as of December 31, 1996:
Number of Stores % of Total Minimum Rents
Retailer in the Centers as of December 31, 1996
- -------- ---------------- -----------------------
The Limited 71 6.3%
Woolworth 96 4.8%
J.C. Penney 15 2.2%
Barnes & Noble 26 1.8%
The Musicland Group 29 1.7%
The Gap 14 1.5%
Melville 20 1.4%
Sears 13 1.1%
Payless Shoe Source 19 1.0%
Borders Group 16 0.9%
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The Company uses tenant spaces 10,000 square feet and under for comparing rental rate activity. Tenant space under 10,000 square feet comprises 76.0% of all Mall and Freestanding Store space. The Company believes that to include space over 10,000 square feet would provide a less meaningful comparison, especially on a quarterly basis.
When an existing lease expires, the Company is often able to enter into a new lease with a higher base rent component. The average base rent for new Mall and Freestanding Store leases, 10,000 square feet or under, commencing during 1996 was $27.02 per square foot, or 13.1% higher than the average base rent for all Mall and Freestanding Stores (10,000 square feet or under) at December 31, 1996 of $23.90 per square foot.
Average Base Average Base
Average Base Rent Per Sq. Ft. on Rent Per Sq. Ft. on
Rent Per Leases Commencing Leases Expiring
Square Foot (1) During the Year (2) During the Year (3)
December 31,
1994............................ $20.34 $24.12 $20.66
1995............................ $21.19 $23.13 $22.12
1996............................ $23.90 $27.02 $24.54
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(1) Average base rent per square foot is based on Mall and Freestanding Store GLA for spaces 10,000 square feet or under occupied as of December 31 for each of the Centers owned by the Company in 1994, 1995 (excluding the 1995 Acquisition Centers), and 1996 (excluding the 1996 Acquisition Centers). If the 1995 Acquisition Centers were included, the 1995 average would be $22.86, and if the 1996 Acquisition Centers were included, the 1996 average would be $23.58.
(2) The base rent on lease signings during the year represents the actual rent to be paid on a per square foot basis during the first twelve months. The 1995 average excludes the 1995 Acquisition Centers and the 1996 average excludes the 1996 Acquisition Centers.
(3) The average base rent on leases expiring during the year represents the final year minimum rent, on a cash basis, for tenant leases 10,000 square feet or under expiring during the year. The average base rent on leases expiring in 1995 excludes the 1995 Acquisition Centers and 1996 excludes the 1996 Acquisition Centers.
Retail stores at the Centers other than Anchors may also seek the protection of the bankruptcy laws, which could result in the termination of such tenants' leases and thus cause a reduction in the cash flow generated by the Centers. Although no single retailer accounts for greater than 6.5% of total rents, the bankruptcy and subsequent closure of stores could create a decrease in occupancy levels, reduced rental income or otherwise adversely affect the Centers.
Approximate % of Total Ending
Number of GLA of Leased GLA Base Rent per
Year Ending Leases Expiring Represented By Square Foot of
December 31, Expiring Leases Expiring Leases(1) Expiring Leases(1)
1997......... 336 647,760 14.1% $20.98
1998......... 260 479,774 10.4% $24.23
1999......... 255 474,550 10.3% $26.40
2000......... 241 486,030 10.6% $27.78
2001......... 211 436,606 9.5% $29.09
2002......... 152 345,859 7.5% $28.96
2003......... 166 411,288 8.9% $26.84
2004......... 127 290,789 6.3% $26.19
2005......... 124 306,673 6.7% $27.74
2006......... 121 346,330 7.5% $27.01
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(1) For leases 10,000 square feet or under
Anchors either own their stores, the land under them and in some cases adjacent parking areas, or enter into long-term leases with an owner at rates that are lower than the rents charged to tenants of Mall and Freestanding Stores.
Anchors accounted for approximately 11.2% of the Company's total rent for the year ended December 31, 1996. Each Anchor which owns its own store, and certain Anchors which lease their stores, enter into reciprocal easement agreements with the owner of the Center covering, among other things, operational matters, initial construction and future expansion.
The following table identifies each Anchor, each parent company that owns
multiple anchors and the number of square feet owned or leased by each such
Anchor or parent company in the Centers as of December 31, 1996, except as
otherwise indicated.
GLA GLA Total GLA
Number of Owned Leased Occupied
Name Anchor Stores By Anchor By Anchor By Anchor
------------- ------------ ---------- --------------
J.C. Penney (2) 16 531,611 1,439,622 1,971,233
Sears 12 602,943 793,734 1,396,677
Montgomery Ward 10 596,601 718,663 1,315,264
Federated Department
Stores (1)
Macy's 7 500,457 733,009 1,233,466
Macy's Men's
& Juniors 2 - 235,443 235,443
------------- ------------- ------------ ---------------
Total 9 500,457 968,452 1,468,909
Dayton Hudson Corp.
Mervyn's 7 232,537 336,724 569,261
Target 1 - 87,396 87,396
Dayton's 1 115,193 - 115,193
-------------- ------------- ------------- ----------------
Total 9 347,730 424,120 71,850
May Department Stores Co.
Foley's 3 602,485 - 602,485
Hechts 2 140,000 100,000 240,000
Robinsons-May 1 - 362,852 362,852
--------------- ------------- -------------- ----------------
Total 6 742,485 462,852 1,205,337
Gottschalks 5 178,120 438,290 616,410
Dillard's 3 642,802 - 642,802
Herberger's 2 - 122,635 122,635
Burlington Coat Factory 1 - 133,650 133,650
Boscov's 1 - 140,000 140,000
Fashion Bar 1 - 40,000 40,000
Hennessy's 1 - 96,800 96,800
Home Depot 1 - 130,232 130,232
Joslins 1 - 93,270 93,270
Leggetts 1 - 109,933 109,933
Mercantile Stores, Inc.
de Lendrecies 1 188,000 - 188,000
Nordstrom 1 - 185,241 185,241
Profitts 1 - 65,163 65,163
Vacant (1) 4 210,000 326,932 536,932
---------------- ------------- -------------- -----------------
86 4,540,749 6,689,589 11,230,338
---------------- ------------- -------------- -------------------
---------------- ------------- -------------- -------------------
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(2) On January 25, 1997, J.C. Penney ceased operating at County East Mall. The Company is currently negotiating with potential replacement tenants.
Each of the Centers has been subjected to a Phase I audit (which involves review of publicly available information and general property inspections, but does not involve soil sampling or ground water analysis) completed by an environmental consultant.
Based on these audits, and on other information, the Company is aware of the following environmental issues that are reasonably possible to result in costs associated with future investigation or remediation, or in environmental liability:
Asbestos. The Company has conducted ACM surveys at various locations within the Centers, which have indicated that ACMs are present or suspected in certain areas, primarily vinyl floor tiles, mastics, roofing materials, drywall tape, joint compounds and acoustical ceiling tiles. The identified ACMs are generally non-friable, in good condition, and possess low probabilities for disturbance. At certain Centers where ACMs are present or suspected, however,some ACMs have been or may be classified as "friable," and ultimately may require removal under certain conditions. The Company has developed and implemented an operations and maintenance (O&M) plan to manage ACM in place.
Underground Storage Tanks. Underground storage tanks ("USTs") are or were present at certain of the Centers, often in connection with tenant operations at gasoline stations or automotive tire, battery and accessory service centers located at such Centers. USTs also may be or have been present at properties neighboring certain Centers. Certain of these tanks have either leaked or are suspected to have leaked. Where leakage has occurred, investigation, remediation, and monitoring costs may be incurred by the Company, if the responsible current or former tenant, or other responsible parties are unavailable to pay such costs.
Chlorinated Hydrocarbons. The presence of chlorinated hydrocarbons such as perchloroethylene (PCE) and its degradation byproducts has been detected at certain of the Centers, often in connection with tenant dry cleaning operations. Where PCE has been detected, the Company may incur investigation, remediation and monitoring costs if responsible tenants, or other responsible parties, are unavailable to pay such costs.
Toluene, a petroleum constituent, has been detected in a groundwater
dewatering system at the Queens Center. The source of the toluene is
currently unknown, but it is possible that an adjacent service station has
caused or contributed to the problem. It is also possible that the toluene
remains from previous service station operations which occurred on site
prior to the development of the site into its current use in the early
1970s. Toluene was detected at levels of 410 and 160 parts per billion
(ppb) in samples taken from the tank in October, 1995 and February, 1996,
respectively. Additional samples were taken in May and December of 1996,
with results of .63 ppb and "non-detect" for the May sampling event and
16.2 ppb and 25.2 ppb for the December sampling event. The maximum
contaminant level (MCL) for toluene in drinking water is 150 ppb. Although
the Company believes that no remediation will be required, it has set up a
$150,000 reserve to cover professional fees and testing costs. The Company
intends to look to the responsible parties and insurers if remediation is
required.
Dry cleaning chemicals, including PCE have been detected in soil and groundwater in the vicinity of a dry cleaning establishment at Villa Marina Marketplace. The previous owner of the property has reported the release to the local government authorities and has agreed to fully assess and remediate the site to the extent required by those authorities subject to a limited indemnity agreement. The previous owner has removed the dominant source of impacted soil and is continuing its efforts to assess the site under the direction of the local regulatory oversight agency. Although the Company believes that it will not be required to participate in assessment or remediation activities, it has set up a $150,000 reserve ($20,000 of which has already been incurred) to cover professional and legal fees.
The Company acquired Fresno Fashion Fair in December, 1996. Asbestos has been detected in structural fireproofing throughout much of the Mall. Recent testing data conducted by a professional environmental consulting firms indicates that the fireproofing is largely inaccessible to building occupants and is well adhered to the structural members. Additionally, airborne concentrations of asbestos are well within OSHA's permissible exposure limit (PEL) of .1 fcc. The accounting for this acquisition included a reserve of $3.3 million to cover future removal of this asbestos, as necessary.
Dry cleaning chemicals including perchloroethylene (PCE) were detected in soil and groundwater in the vicinity of a former dry cleaning establishment at Huntington Center. The release has been reported to the local government authorities. The Company estimates, based on the data currently available, that costs for assessment, remediation and legal services will not exceed $500,000. Consequently, at the time of the acquisition, the Company established a $500,000 reserve to cover professional and legal fees. The company intends to look to responsible parties and insurers for cost recovery.
Item 2. Properties
Percentage
Year of Year of Mall and of Mall and
Original Most Recent Free Free Sales Per
Name of Center / Construction/ Expansion / Total Standing Standing Square
Location (1) Acquisition Renovation GLA (2) GLA GLA Leased Anchors Foot (8)
- ------------------- ------------ ------------ -------- -------- ----------- ----------------- ---------
Broadway Plaza (9) 1951/1985 1994 679,427 233,930 98.4% Macy's (2 locations), 401
Walnut Creek, California Nordstrom
Capitola Mall (9) 1997/1995 1988 585,618 205,901 95.7% Gottschalks, J.C. Penney, 278
Capitola, California Mervyn's, Sears
Chesterfield
Towne Center 1975/1994 1988 817,697 396,504 90.2% Hecht's, Leggett's, 289
Richmond, Virginia Proffitt's, Sears
County East Mall 1966/1986 1989 488,883 170,323 79.9% J.C. Penney (3), Sears 221
Antioch, California Gottschalks, Mervyn's,
Crossroads Mall (9) 1963/1979 1986 808,969 365,532 91.3% Foley's, J.C. Penney, 242
Boulder, Colorado Mervyn's, Sears
Montgomery Ward
Crossroads Mall 1974/1994 1991 1,112,374 372,686 83.4% Dillard's, Foley's, 213
Oklahoma City, Oklahoma Montgomery Ward
J. C. Penney
Greeley Mall 1973/1986 1987 585,044 241,682 89.0% J.C. Penney, 189
Greeley, Colorado Fashion Bar (4),
Joslins, Sears
Montgomery Ward
Green Tree Mall 1968/1975 1995 786,219 335,437 86.9% Dillard's, 281
Clarksville, Indiana J.C. Penney, Sears,
Target
Holiday
Village Center (9) 1959/1979 1992 597,361 269,842 96.7% Herberger's,
Great Falls, Montana J.C. Penney, 265
Montgomery Ward
Sears
Lakewood Mall 1953/1975 1992 1,758,939 815,290 98.9% Home Depot, Mervyns, 312
Lakewood, California J. C. Penney,
Montgomery Ward,
Robinson-May,
Northgate Mall 1964/1986 1987 744,050 273,719 90.9% Macy's, Mervyns, 245
San Rafael, California Sears
North Valley Plaza 1968/1987 1994 413,843 187,409 67.2% Montgomery Ward (6) 133
Chico, California Mervyn's
Panorama 1955/1979 1980 369,670 159,670 96.4% (7) 330
Panorama, California
Park Lane Mall (9) 1967/1978 1987 459,252 209,932 91.9% Gottschalks, (5) 252
Reno, Nevada
Queens 1973/1995 1991 625,126 156,983 97.5% J.C. Penney , Macy's 657
Queens, New York
Salisbury, Centre at 1990/1995 1990 883,672 278,691 87.8% Boscov's, J.C. Penney, 271
Salisbury, Maryland Montgomery Ward,
Hechts, Sears
West Acres 1972/1986 1992 907,595 355,040 95.8% Daytons, Sears, 320
Fargo, North Dakota O.J. De Lendrecies,
J.C. Penney
Bristol
Shopping Center (9) 1966/1986 1992 165,682 165,682 94.2% 367
Santa Ana, California
Marshalls'
Boulder Plaza 1969/1989 1991 158,939 158,939 100.0% 317
Boulder, Colorado
-------- ------- -------- ---------
Sub-total / Average at December 31, 1996 12,948,360 5,353,192 91.8% $294
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Item 2. Properties, Continued
THE MACERICH COMPANY: LIST OF PROPERTIES
Percentage
Year of Year of Mall and of Mall and
Original Most Recent Free Free Sales Per
Name of Center / Construction/ Expansion / Total Standing Standing Square
Location (1) Acquisition Renovation GLA (2) GLA GLA Leased Anchors Foot (8)
- ------------------------ ------------ ------------ -------- -------- ----------- ----------------------- ---------
1996 Acquisition Centers
Fresno Fashion Fair 1970/1996 1983 881,334 320,453 94.8% Gottschalks, J.C. Penney, 289
Fresno, California Macy's (2 locations)
Rimrock 1978/1996 - 581,912 266,472 94.5% Herbergers, Hennessy's 213
Billings, Montana J.C. Penney,
Montgomery Ward
Valley View 1973/1996 1996 1,523,815 465,918 84.7% Dillard's, Foleys, 212
Dallas, Texas J.C. Penney, Sears
Villa Marina
Marketplace 1972/1996 1995 447,684 447,684 96.3% 398
Marina Del Rey, California
Vintage Faire 1977/1996 - 1,051,458 351,539 86.7% Gottschalks, J.C. Penney, 279
Modesto, California Macy's, Sears
Macy's Men's & Home,
Sears
---------- --------- --------- ------
Total / Average 1996 Acquisitions 4,486,203 1,852,066 91.0% 279
(excluding major redevelopment properties)
---------- --------- --------- ------
Sub-Total / Average 17,434,563 7,205,258 91.6% 290
Major Redevelopment Properties
Buenaventura 1965/1996 1993 801,152 345,816 (11) J.C. Penney, Macy's, 267
Ventura, California Montgomery Wards
Huntington Center(9) 1965/1996 1997 832,578 286,881 (11) Edwards Cinema (10), 303
Huntington Beach, California Mervyn's
Burlington Coat Factory,
Montgomery Ward
---------- --------- ------
Total Major Redevelopment Centers 832,578 286,881 283
---------- --------- ------
Grand Total / Average 19,068,293 7,837,955 290
---------- --------- ------
---------- --------- ------
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All centers are wholly owned by the Company or its subsidiaries, except for Broadway Plaza (50%), North Valley Plaza (50%), Panorama Mall (50%), and West Acres (19%).
(2) Includes GLA attributable to Anchors (whether owned or leased) and Mall and Freestanding Stores as of December 31, 1996.
(3) J.C. Penney vacated its facility at County East Mall in 1997.
(4) The Company negotiated an early termination of the Fashion Bar lease. Fashion Bar closed on January 15, 1997. The Company is currently negotiating with a replacement tenant.
(5) Federated closed the Weinstock's store at Parklane Mall and the Company acquired Federated's leasehold interest. The Company is planning to demolish the Weinstocks building and redevelop this area as a location based entertainment complex.
(6) J.C. Penney vacated its facility at North Valley Plaza in 1993. The Company has relocated the existing 60,000 square foot Mervyn's at the Center into the larger J.C. Penney building. The Company is in negotiations for a replacement tenant for the Mervyn's building.
(7) Federated Department Stores, Inc. merged with Broadway Stores, Inc. in November, 1995. Federated owns the Broadway Store at Panorama. This Broadway Store ceased operations in January 1996. Federated is currently negotiating to sell this building to Wal-Mart.
(8) Sales are based on reports by retailers leasing Mall and Freestanding Stores for the year ending December 31, 1996 for tenants which have occupied such stores for a minimum of twelve months. Consistent with industry practices, sales per square foot are based on gross leased and occupied area, excluding theaters, and are not based on GLA.
(9) Portions of the land on which the Center is situated are subject to one or more ground leases.
(10) Edwards Cinema signed a lease in January 1997 to occupy the former Broadway location. Edwards is expected to open a 21 screen theater complex on that site in May 1998.
(11) Certain spaces have been intentionally held off the market and remain vacant due to major redevelopment strategy. As a result, the Company believes the percentage of mall and free-standing GLA leased at these major redevelopments is not meaningful data.
Annual Balance Earliest Date
Annual Principal Debt Due on on which all
Property Pledged Fixed or Interest Balance Service Maturity Maturity Notes Can
As Collateral Floating Rate (000's) (000's) Date (000's) Be Prepaid
----------------- ----------- ----------- ----------- ----------- -------- --------- -----------
Capitola Mall Fixed 9.25% 37,976 3,801 12/15/01 36,152 Any Time
Chesterfield
Towne Center (1) Fixed 8.75% 59,023 5,702 1/1/24 5,381 1/1/24 (2)
Chesterfield Towne Center Fixed 9.38% 5,304 540 1/1/24 515 1/1/24 (2)
Chesterfield Towne Center Fixed 8.88% 1,922 187 1/1/24 177 1/1/24 (2)
Chesterfield Fixed 8.54% 3,444 337 11/1/99 3,484 Any Time
Crossroads Mall (3) Fixed 7.08% 35,968 2,932 12/15/10 28,107 12/15/01
Fresno Fashion Fair Fixed 8.40% 38,000 3,165 10/1/05 38,000 Any Time
Greeley Mall Fixed 8.50% 18,514 2,245 9/15/03 12,519 Any Time
Green Tree Mall/
Crossroads- OK/
Salisbury Fixed 7.22% 117,714 3,597 3/16/04 50,000 Any Time
Holiday Village Mall Fixed 6.75% 17,000 1,147 4/1/01 17,000 1/10/99
Lakewood Mall Fixed 7.20% 127,000 9,144 8/10/05 127,000 Any Time
Northgate Mall Fixed 6.75% 25,000 1,688 4/1/01 25,000 1/10/99
Queens Mall Floating (4) 65,100 (4) 3/31/99 51,000 Any Time
Parklane Mall Fixed 6.75% 20,000 1,350 4/1/01 20,000 Any Time
Rimrock Mall Fixed 7.70% 31,994 2,924 1/1/03 28,496 Any Time
Valley View Mall Floating (5) 60,000 (5) (5) 60,000 Any Time
Vintage Faire Mall Fixed 7.65% 56,280 5,122 1/1/03 50,089 Any Time
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TOTAL - Wholly Owned Centers 720,239
Joint Venture Centers:
Broadway Plaza (50%) (6) Fixed 6.84% 21,750 1,487 5/5/98 21,750 Any Time
West Acres Center(19%)(6) Fixed 8.96% 7,301 648 7/15/99 6,613
-----------
TOTAL - All Centers $ 749,290
-----------
-----------
|
Notes:
(1) The annual debt service payment represents the payment of principal and interest. In addition, contingent interest, as defined in the loan agreement, may be due to the extent that 35% of the gross receipts (as defined in the loan agreement) exceeds a base amount specified therein. Contingent interest recognized was $75,910 for the period from July 21, 1994 (the date of acquisition of Chesterfield) to December 31, 1994, $184,321 for the year ended December 31, 1995 and $398,619 for the year ended December 31, 1996.
(2) No prepayment except under certain circumstances in the event of the sale of the Center.
(3) This debt was issued at a discount. The unamortized discount at December 31, 1996 was $463,000. The above balance is net of the discount.
(4) The interest rate is LIBOR plus .45%. LIBOR was 5.55% at December 31, 1996. There is an interest rate cap on $10 million of this debt at a LIBOR strike rate of 5.88% through maturity. The remaining principal has an interest rate cap with a LIBOR strike rate of 7.07% from December 31, 1996 to December 30, 1997, and 7.7% thereafter.
(5) The Valley View loan bears interest at LIBOR plus 1.50%. The Company can elect to convert the loan to a fixed rate, ten year loan at any time up to October 21, 1997.
(6) Reflects the Company's pro rata share of debt.
The Company, the Operating Partnership, the Management Companies and the affiliated partnerships are not currently involved in any material litigation nor, to the Company's knowledge, is any material litigation currently threatened against such entities or the Centers, other than routine litigation arising in the ordinary course of business, most of which is expected to be covered by liability insurance. For information about certain environmental matters, see "Business of the Company - Environmental Matters."
Part II
As of February 20, 1997 there were approximately 218 shareholders of record. The following table shows high and low closing prices per share of common stock for each quarter in 1995 and 1996 and dividends/distributions per share of common stock declared and paid by quarter.
Market Quotation Per Share Dividends/Distributions
High Low Declared and Paid
----- ---- -----------------
March 31, 1995 $21 1/2 $19 7/8 $0.40
June 30, 1995 20 3/4 19 3/8 0.42
September 30, 1995 21 7/8 19 1/2 0.42
December 31, 1995 21 1/4 19 1/4 0.42
March 31, 1996 $20 1/8 $19 1/4 $0.42
June 30, 1996 21 1/4 19 0.42
September 30, 1996 22 7/8 20 0.42
December 31, 1996 26 1/8 21 3/4 0.44
|
Item 6. Selected Financial Data.
The following sets forth selected financial data for the Company on a historical and pro forma consolidated basis, and for the Centers and the Management Companies (collectively, the "Predecessor"), on an historical combined basis. The following data should be read in conjunction with the financial statements (and the notes thereto) of the Company and the Predecessor and "Management's Discussion And Analysis of Financial Condition and Results of Operations" each included elsewhere in this Form 10-K.
The pro forma data for the Company for the year ended December 31, 1994 has been prepared as if the IPO and the transactions related to the reorganization of the Operating Partnership and formation of the Company (the "Formation") and the application of the net proceeds of the IPO had occurred as of January 1, 1994. The pro forma information is not necessarily indicative of what the Company's financial position or results of operations would have been assuming the completion of the Formation and IPO at the beginning of the period indicated, nor does it purport to project the Company's financial position or what results of operations would have been assuming the completion of the Formation and the IPO at the beginning of the period indicated, nor does it purport to project the Company's financial position or results of operations at any future date or for any future period.
The Selected Financial Data is presented on a combined basis. The limited partnership interests in the Operating Partnership (not owned by the REIT) are reflected in the pro forma data as minority interest. Centers in which the Company does not have a greater than 50% ownership interest (Panorama Mall, North Valley Plaza, Broadway Plaza and West Acres Shopping Center) are referred to as the "Joint Venture Centers", and along with the Management Companies, are reflected in the selected financial data under the equity method of accounting. Accordingly, the net income from the Joint Venture Centers and the Management Companies that is allocable to the Company and the Predecessor is included on the statement of operations as Income of uncombined joint ventures and management companies.
Item 6. Selected Financial Data, Continued
The Company Predecessor
-------------------------------------------- --------------------------------------
Pro Forma
as Reported March 16 to January 1 to
1996 1995 for 1994 Dec 31,1994 Mar 15,1994 1993 1992
------ ------ ------------ ------------ ------------ ------------ ------------
(All amounts in thousands except per share data and number of Centers)
Operating Data:
Revenues:
Minimum rents $99,061 $69,253 $59,640 $48,663 $9,993 $49,219 $46,393
Percentage rents 6,142 4,814 4,906 3,681 851 3,550 3,868
Tenant recoveries 47,648 26,961 22,690 18,515 3,108 16,320 15,991
Management fee
income (2) - - - - 528 2,658 3,130
Other 2,208 1,441 921 582 100 766 1,876
------------ -------- ------- --------- ------------ ---------- ------------
Total revenues $155,059 102,469 88,157 71,441 14,580 72,513 71,258
Shopping center
expenses 50,792 31,580 28,373 22,576 4,891 23,881 22,959
Management, leasing
and development
services (2) - - - - 557 2,084 2,598
REIT general
and administrative
expenses 2,378 2,011 1,954 1,545 - - -
Depreciation and
amortization 32,591 25,749 23,195 18,827 3,642 16,385 14,090
Interest expense 42,353 25,531 19,231 16,091 6,146 27,783 29,818
---------- -------- --------- --------- ---------- ---------- ------------
Income (loss) before
minority interest,
unconsolidated joint
ventures and
extraordinary item $26,945 $17,598 $15,404 $12,402 ($656) $2,380 $1,793
Minority interest (1) (10,975) (8,246) (8,008) (6,792) - - -
Income (loss) of
unconsolidated joint
ventures and management
companies (2) 3,256 3,250 3,054 3,016 (232) (178) 306
Extraordinary loss on
early extinguishment
of debt (315) (1,299) - - - - (1,000)
---------- -------- --------- --------- ------------ ---------- ------------
---------- -------- --------- --------- ------------ ---------- ------------
Net income (loss) $18,911 $11,303 $10,450 $8,626 ($888) $2,202 $1,099
----------- -------- --------- --------- ------------ ---------- ------------
----------- -------- --------- --------- ------------ ---------- ------------
Earnings per share: (3)
Income before
extraordinary
item $0.92 $0.78 $0.72 $0.60
Extraordinary item (0.01) (0.05) - -
------------ -------- --------- ---------
Net income
per share $0.91 $0.73 $0.72 $0.60
------------ -------- --------- ---------
------------ -------- --------- ---------
Other Data:
Funds from
operations(4) $62,424 $44,938 $39,343 $32,710 N/A N/A N/A
The Company's share
of FFO (5) $39,502 $25,982 $22,011 $18,300 N/A N/A N/A
EBITDA (6) $101,889 $68,878 $57,592 $47,320 N/A N/A N/A
Cash flows from
(used in):
Operating
activiti es $80,431 $48,186 $30,011 $6,449 N/A N/A N/A
Investing
activiti es ($296,675) ($88,413) ($137,637) ($1,659) N/A N/A N/A
Financing
activiti es $216,317 $51,973 $99,584 ($2,343) N/A N/A N/A
Number of centers
at year end 26 19 16 16 14 14 14
Weighted average
number of shares
outstanding (7) 32,934 26,930 25,645 25,714 N/A N/A N/A
Cash distributions
declared per
common share $1.70 $1.66 N/A $1.27 N/A N/A N/A
|
The Company Predecessor
----------------------------------- -----------------------------
December 31,
------------------------------------------------------------------
1996 1995 1994 1993 1992
(All amounts in thousands)
Balance Sheet Data:
Investment in real estate
(before accumulated
depreciation) $ 1,273,085 $ 833,998 $ 554,788 $ 375,972 $ 311,750
Total assets $ 1,187,753 $ 763,398 $ 485,903 $ 314,591 $ 281,668
Total debt $ 789,702 $ 509,313 $ 326,588 $ 402,885 $ 359,695
Minority interest (1) $ 112,242 $ 95,740 $ 72,376 $ - $ -
Partners' deficit $ - $ - $ - $ (88,294) $ (78,027)
Stockholders' equity $ 237,749 $ 158,345 $ 86,939 $ - $ -
|
(1) "Minority Interest" reflects the ownership interest in the Operating
Partnership not owned by the REIT.
(2) Unconsolidated joint ventures include all Centers that the Company does not
wholly own and the Management Companies. The Management Companies on a pro
forma basis and after March 15, 1994 have been reflected on the equity
method.
(3) Net income per share assumes full redemption of OP Units .
(4) Funds from operations ("FFO") represents net income (loss) (computed in
accordance with generally accepted accounting principles ("GAAP")),
excluding gains (or losses) from debt restructuring and sales of property,
plus depreciation and amortization (excluding depreciation on personal
property and amortization of loan and financial instrument costs), and
after adjustments for unconsolidated entities. Adjustments for
unconsolidated entities are calculated on the same basis. Funds from
operations does not represent cash flow from operations as defined by GAAP
and is not necessarily indicative of cash available to fund all cash flow
needs.
(5) The Company's share of FFO represents the Company's weighted average
ownership of the Operating Partnership multiplied by total FFO.
(6) EBITDA represents earnings before interest, income taxes, depreciation,
amortization, minority interest, income in unconsolidated entities and
extraordinary items. This data is relevant to an understanding of the
economics of the shopping center business as it indicates cash flow
available from operations to service debt and satisfy certain fixed
obligations. EBITDA should not be construed by the reader 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.
(7) Assumes that all OP units are converted to common stock.
The following discussion should be read in conjunction with the "Selected Financial Data" and the Company's Consolidated and Predecessor Combined Financial Statements and Notes thereto appearing elsewhere in this 10-K.
(1) Through its ownership of wholly-owned Centers.
(2) Through its ownership interests in Joint Venture Centers which
include Panorama Mall (50%), Broadway Plaza (50%), North Valley
Plaza (50%), and West Acres Shopping Center (19%).
EBITDA represents earnings before interest, income taxes, depreciation, amortization, minority interest, income in unconsolidated entities and extraordinary items. This data is relevant to an understanding of the economics of the shopping center business as it indicates cash flow available from operations to service debt and satisfy certain fixed obligations. 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. While the performance of individual Centers and the Management Companies determines EBITDA, the Company's capital structure also influences Funds from Operations. The most important component in determining EBITDA and Funds from Operations is Center revenues. Center revenues consist primarily of minimum rents, percentage rents and tenant expense recoveries. Minimum rents will increase to the extent that new leases are signed at market rents that are higher than prior rents. Minimum rent will also fluctuate up or down with changes in the occupancy level. Additionally, to the extent that new leases are signed with more favorable expense recovery terms, expense recoveries will increase.
Percentage rents generally increase or decrease with changes in tenant sales. As leases roll over, however, a significant portion of historical percentage rent is often converted to minimum rent. It is therefore common for percentage rents to decrease as minimum rents increase. Accordingly, in discussing financial performance, the Company combines minimum and percentage rents in order to better measure revenue growth.
The following discussion is based primarily on the consolidated financial statements of the Company for the years ended December 31, 1996 and 1995, and for the period from March 16, 1994 (commencement of operations) through December 31, 1994, and the combined financial statements of Macerich Predecessor Affiliates ("Predecessor") for the period from January 1, 1994 through March 15, 1994. The combined financial statements of the Predecessor combine the balance sheet data and results of operations of the partnerships that previously owned 14 of the properties and of the management and leasing operations of the Predecessor which were contributed to the Company. The Predecessor is considered the predecessor entity to the Company and the combined financial statements are presented for comparative purposes. The following discussion compares the activity for the year ended December 31, 1996 to results of operations for 1995. Also included is a comparison of the activities for the year ended December 31, 1995 to the results for the year ended December 31, 1994, which includes a summation of the Company's and the Predecessor's results of operations for 1994.
This information should be read in conjunction with the accompanying consolidated and combined financial statements and notes thereto.
On March 16, 1994 the Company acquired Crossroads Mall ("Crossroads-OK") located in Oklahoma City, Oklahoma and on July 21, 1994 the Company acquired Chesterfield Towne Center ("Chesterfield") in Richmond, Virginia. Crossroads- OK and Chesterfield are collectively referred to herein as the "1994 Acquisition Centers". In August, 1995, the Company acquired The Centre at Salisbury ("Salisbury") in Salisbury, Maryland, and in December, 1995 the Company acquired two malls, Capitola Mall ("Capitola"), in Capitola, California, and Queens Center ("Queens"), in Queens, New York. These properties are known as the "1995 Acquisition Centers." In January 1996, the Company acquired Villa Marina Marketplace ("Villa Marina"), Valley View Mall ("Valley View") in Dallas, Texas was acquired in October 1996 and Rimrock Mall ("Rimrock") in Billings, Montana and Vintage Faire Mall ("Vintage Faire") in Modesto, California were acquired in November 1996. In December 1996 the Company acquired Huntington Center ("Huntington") in Huntington Beach, California, Buenaventura Mall ("Buenaventura") in Ventura, California, and Fresno Fashion Fair ("Fresno") in Fresno, California. These properties are known as the "1996 Acquisition Centers." The financial statements include the results of the acquired properties from their acquisition dates. As a result, many of the variations in the results of operations, discussed below, occurred due to the addition of these properties to the Company's portfolio during 1996, 1995 and 1994. Many factors, such as availability and cost of capital, overall debt to market capitalization level, interest rates and availability of potential acquisition targets that meet the Company's criteria, impact the Company's ability to acquire additional properties. Accordingly, management is uncertain as to whether during 1997 and future years there will be similar acquisitions and corresponding increases in revenues, net income and Funds from Operations that occurred as a result of the 1996, 1995 and 1994 acquisitions.
In addition, the Company's success in the highly competitive real estate shopping center business depends upon many other factors, including general economic conditions, the ability of tenants to make rent payments, increases or decreases in operating expenses and interest rates, occupancy levels, changes in demographics, competition from other centers and forms of retailing and the ability to renew leases or relet space upon the expiration or termination of leases.
November 6, 1996 to repay the acquisition debt on Valley View Mall 60,000,000
November 29, 1996 acquisition of Rimrock Mall and Vintage Faire Mall 16,700,000
November 11, 1996 payoff of line of credit 45,500,000
----------------
Total 122,200,000
B. Acquisitions
----------------
On January 25, 1996, Villa Marina, a 447,684 square foot
entertainment/community center was acquired. The purchase price was $80
million and included the assumption of debt of $22.5 million.
On October 21, 1996 Valley View Mall, a 1.5 million square foot super
regional mall in Dallas, Texas was acquired. The purchase price was $87.5
million. Concurrent with the acquisition the Company placed $60 million of
debt on the property at an interest rate of LIBOR plus 1.50%. The Company has
the option of converting this debt to fixed rate debt at any time prior to
October 1, 1997.
On November 27, 1996, the Company purchased Rimrock and Vintage Faire.
The total purchase price was $118.2 million which included assumption of $88.4
million of debt which bears interest at an average fixed rate of 7.7%.
On December 18, 1996, the Company acquired Huntington, Buenaventura and
Fresno. The combined purchase price was $128.9 million and included
assumption of mortgage debt of $38.0 million and $3.8 million of other
liabilities.
C. Refinancings and Debt Reductions
------------------------------------
On April 1, 1996 the mortgage debt on Crossroads-OK, Greentree Mall, and
the Centre at Salisbury was refinanced. The total indebtedness was increased
to $117 million, from $88 million, and the average interest rate was fixed at
7.2%.
20
|
C. Refinancings and Debt Reductions, Continued:
------------------------------------------------
On September 30, 1996 the $65.1 million mortgage loan at Queens Center
was refinanced. The interest rate was reduced from LIBOR plus 1.10% to LIBOR
plus 0.45%.
On December 23, 1996 the Villa Marina Marketplace mortgage debt of $22
million was paid off.
There was a $60 million loan placed on Valley View Mall concurrent with
its acquisition. The interest rate is LIBOR plus 1.50% and the loan matures
in October 1997, but the Company can convert the loan into a fixed rate loan
that matures in October 2006.
Concurrent with the acquisition of Buenaventura Mall, Fresno Fashion
Fair and Huntington Center, a $57 million unsecured loan was obtained. The
loan bears interest at LIBOR plus 1.625%.
21
|
Results of Operations
- ---------------------
Comparison of Years Ended December 31, 1996 and 1995
----------------------------------------------------
Revenues
--------
Minimum and percentage rents increased by 42% to $105.2 million
from $74.1 million. Approximately $19.0 million of the increase
resulted from the 1995 Acquisition Centers and $13.2 million resulted
from the 1996 Acquisition Centers. These increases were partially
offset by declining rents of $1.1 million at Parklane Mall which was
adversely impacted by an anchor closure in 1996.
Tenant recoveries increased to $47.7 million in 1996 from $27
million in 1995. The 1996 and 1995 Acquisition Centers caused $19.3
million of this increase. Approximately $1.1 million of the increase
was due to higher recoverable expenses in 1996 compared to 1995.
Other income increased to $2.2 million in 1996 from $1.4 million
in 1995. Approximately $1.2 million of the increase related to the 1996
and 1995 Acquisition Centers. This increase was partially offset by
lower interest income of $0.3 million in 1996 compared to 1995.
Expenses
--------
Shopping center expenses increased to $50.8 million in 1996
compared to $31.6 million in 1995. Approximately $18.7 million of the
increase resulted from the 1996 and 1995 Acquisition Centers. The other
centers had a net increase of $0.5 million in shopping center expenses
of which approximately $1.1 million was for increased property taxes,
$0.5 million of increased bad debt expense, offset by a reduction in
ground rent expense of $1.3 million which resulted from the October,
1995 acquisition of land at Crossroads Mall-Boulder which had previously
been leased.
General and administrative expenses increased to $2.4 million in
1996 from $2.0 million in 1995 primarily due to increased professional
fee expense.
Interest Expense
----------------
Interest expense increased to $42.4 million in 1996 from $25.5
million in 1995. Interest expense attributable to County East Mall
decreased $1.2 million in 1996 due to the payoff of that debt on
December 31, 1995, also, there was a decrease of $1.3 million at
Crossroads Mall-Boulder due to a December 1995 refinancing at a
substantially lower interest rate. These reductions partially offset
the increase of $19.1 million from the 1995 and 1996 Acquisition
Centers.
Depreciation and Amortization
-----------------------------
Depreciation increased to $32.6 million from $25.7 million in
1995. An increase of approximately $7.6 million related to the 1995 and
1996 Acquisition Centers. This increase was offset by a decrease of
approximately $1.4 million in amortization of financial instruments in
1996 which resulted from several financial instruments becoming fully
amortized in 1995.
Minority Interest
-----------------
The minority interest represents the 36.7% weighted average
interest of the Operating Partnership that is not owned by the Company
during 1996.
22
|
Gain (Loss) From Unconsolidated Joint Ventures and Management Companies
-----------------------------------------------------------------------
The gain from unconsolidated joint ventures and the management
companies was $3.3 million for 1996, essentially the same as 1995.
Extraordinary Loss on Early Retirement of Debt
----------------------------------------------
In connection with the sale of an interest rate cap, the Company
wrote off unamortized financing costs of $0.3 million in 1996. In 1995
the Company wrote off $1.3 million of loan costs concurrent with the
1995 refinancing of Lakewood Mall.
Net Income
----------
As a result of the foregoing, net income increased to $18.9
million in 1996 from $11.3 million in 1995.
Operating Activities
-------------------
Cash flow from operations increased to $80.4 million compared to
$48.2 million in 1995. The increase resulted from the factors discussed
above, primarily the impact of the 1995 and 1996 Acquisition Centers.
Investing Activities
--------------------
Cash flow used in investing activities was $296.6 million in
1996 compared to a reduction of $88.4 million in 1995. The change
resulted primarily from the seven acquisitions completed in 1996
compared to three acquisitions in 1995.
Financing Activities
--------------------
Cash flow from financing activities increased to $216.3 million
in 1996 compared to $52.0 million in 1995. The increase resulted from
more mortgage financing done in 1996, primarily to fund the 1996
acquisitions.
EBITDA and Funds From Operations
--------------------------------
Due primarily to the factors mentioned above, EBITDA increased
48%, to $101.9 million in 1996 from $68.9 million in 1995 and Funds From
Operations increased 39%, to $62.4 million, from $44.9 million in 1995.
23
|
Comparison of Years Ended December 31, 1995 and 1994
----------------------------------------------------
Revenues
--------
Minimum and percentage rents increased by 17.2% from $63,188,000
in 1994 to $74,067,000 in 1995. The 1995 Acquisition Centers accounted
for approximately $3,407,000 of this increase and 1994 Acquisition
Centers accounted for $6,128,000 of the increase. The primary reason
for the balance of the increase was contractual rent increases in
existing leases, and replacement of expiring leases with renewal leases
at higher minimum rents.
Tenant recoveries increased by $5,338,000 to $26,961,000 for the
year ended December 31, 1995, compared to the same period of 1994. The
1995 Acquisition Centers accounted for $1,293,000 of this increase in
recoveries and the 1994 Acquisition Centers accounted for $3,494,000.
The balance of the increase resulted primarily from increased
recoverable expenses at the other properties.
Management fee income was $528,000 for the period from January
1, 1994 through March 15, 1994. Prior to the IPO the Management
Companies were consolidated with the Predecessor. Subsequent to the
IPO, the Management Companies are accounted for on the equity method and
included in income from unconsolidated joint ventures and management
companies.
Other income increased from $682,000 in 1994 to $1,441,000 in
1995. This increase was due almost entirely to the temporary investment
of the proceeds of a common stock offering into interest bearing
investments until their ultimate use for debt repayment, acquisitions or
other corporate purposes.
Expenses
--------
Shopping center expenses increased by $4,113,000 to $31,580,000
for 1995. An increase of $2,989,000 was due to the 1994 Acquisition
Centers and $1,211,000 was due to the 1995 Acquisition Centers. The
increase due to the Acquisition Centers was partially offset by reduced
expense of $327,000 due to the purchase in October 1995 of a parcel of
land at Crossroads Mall-Boulder which had previously been ground leased.
In addition, real estate taxes, excluding the 1994 and 1995 Acquisition
Centers, increased by $277,000 due to reassessments. There were no
management and leasing expenses in 1995 compared to $557,000 for 1994.
This decrease is a result of the Management Companies being accounted
for on the equity method after March 16, 1994. General and
administrative expenses of the Company were $2,011,000 compared to
$1,545,000 during 1994. This difference was primarily due to the
Company being operational for only nine and one-half months in 1994.
Interest Expense
----------------
Interest expense increased by 14.8% from $22,237,000 for the
twelve months ended December 31, 1994 to $25,531,000 for 1995. This was
partially due to interest expense of $3,591,000 for the 1994 Acquisition
Centers and $710,000 for the 1995 Acquisition Centers. There was a
reduction in same center interest expense in 1995 primarily due to the
net reduction of approximately $117,100,000 of debt in March, 1994
subsequent to the IPO. During 1995, there was a full year of benefit
from those reductions.
Depreciation and Amortization
-----------------------------
Depreciation increased by $3,280,000 to $25,749,000 for the
twelve months ended December 31, 1996. The 1995 Acquisition Centers
accounted for $717,000 of the difference and the Acquisition Centers
that were purchased in 1994, but depreciated for a full year in 1995,
accounted for $1,745,000. Also contributing to this increase was
$515,000 related to additional depreciation of the 1994 acquisition cost
of partnership interests.
Minority Interest In Operating Partnership
------------------------------------------
The minority interest in the Operating Partnership represents
the 42% weighted average interest in the Operating Partnership that is
not owned by the Company at December 31, 1995.
24
|
Gain (Loss) From Unconsolidated Joint Ventures and Management Companies
-----------------------------------------------------------------------
The gain from unconsolidated joint ventures and the management
companies increased to $3,250,000 for 1995 compared to $2,784,000 for
1994. This increase was primarily due to net income at Broadway Plaza
increasing by $1,341,000 largely resulting from the addition of 15,000
square feet of space which was completed during 1994 and reduction of
the interest expense due to a debt reduction in March, 1994. The
Company owns a 50% joint venture interest in Broadway Plaza.
Extraordinary Loss on Early Retirement of Debt
----------------------------------------------
In connection with the 1995 refinancing of mortgage debt at
Lakewood Mall, the Company wrote off unamortized financing costs of
$1,299,000 associated with the retired debt of.
Net Income
----------
As a result of the foregoing, net income increased by $3,565,000
in 1995 compared to 1994.
Operating Activities
--------------------
Cash flow from operations was $44,936,000 in 1995, a 32.5%
increase over 1994, primarily due to the factors mentioned above.
Investing Activities
--------------------
Cash was utilized in investing activities totaling ($88,413,000)
in 1995 compared to ($137,637,000) in 1994. In 1994, cash flow was
reduced by investing activities, primarily the acquisition of property
and partnership interests concurrent with the IPO and the acquisition of
Chesterfield. Also contributing to the decrease was $27,799,000 of
contributions to joint ventures which was primarily used to pay down
debt at the joint ventures. During 1995, the decrease in cash flow due
to investing activities related primarily to cash expended for the 1995
Acquisition Centers.
Financing Activities
--------------------
Financing activities reflected net cash flow of $51,973,000 in
1995, compared to $99,584,000 in 1994. This was primarily the result of
the IPO in 1994 compared to the equity offering and refinancings in
1995.
EBITDA and Funds From Operations
--------------------------------
Due to factors described above, EBITDA increased 22% to
$68,878,000 from $56,452,000 in 1994. Funds from Operations increased
by 25.3% to $48,612,000 in 1995 from $38,790,000 in 1994.
Liquidity and Capital Resources
-------------------------------
The Company intends to meet its short term liquidity
requirements through cash generated from operations and working capital
reserves. The Company anticipates that revenues will continue to
provide necessary funds for its operating expenses and debt service
requirements, and to pay dividends to stockholders in accordance with
REIT requirements. The Company anticipates that cash generated from
operations, together with cash on hand, will be adequate to fund capital
expenditures which will not be reimbursed by tenants, other than non-
recurring capital expenditures. Capital for major expenditures or
redevelopments has been, and is expected to continue to be, obtained
from equity or debt financings.
The Company believes that it will have access to the capital
necessary to expand its business in accordance with its strategies for
growth and maximizing Funds from Operations. The Company presently
intends to obtain additional capital necessary to expand its business
through a combination of additional equity offerings and debt
financings.
25
|
Liquidity and Capital Resources, Continued
------------------------------------------
The Company's total outstanding loan indebtedness at December
31, 1996 was $818.0 million (including its pro rata share of joint
venture debt). This equated to a debt to Total Market Capitalization
(defined as total debt of the Operating Partnership, including its pro
rata share of joint venture debt, plus aggregate market value of
outstanding shares of common stock, assuming full conversion of OP Units
into stock) rate of approximately 45.0% at year end. Such debt consists
primarily of conventional mortgages payable secured by individual
properties. See "Properties-Mortgage Debt" for a description of the
Company's outstanding indebtedness. In connection with $65.1 million of
the Company's floating rate indebtedness, the Company has entered into
interest rate protection agreements that limit the Company's exposure to
increases in interest rates. See "Properties-Mortgage Debt."
The Company has filed a shelf registration statement, which is
not yet effective, to sell securities. The shelf registration is for a
total of $500 million of common stock or common stock warrants.
The Company has a line of credit up to $50 million. There was
$12 million outstanding at December 31, 1996 and $0 outstanding at
December 31, 1995.
At December 31, 1996 the Company had cash and cash equivalents
available of $15.6 million.
26
|
Funds From Operations
---------------------
The Company believes that the most significant measure of its
performance is Funds from Operations ("FFO"). FFO is defined by The
National Association of Real Estate Investment Trusts ("NAREIT") to be:
Net income, excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization and after
adjustments for unconsolidated joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to
reflect FFO on the same basis. This is herein referred to as "FFO -
Original Definition". In May 1995, NAREIT issued a revised
interpretation of FFO. This revised definition of FFO ("FFO - New
Definition") excludes the add back of non real estate depreciation and
amortization. Extraordinary items and significant non-recurring events
are also excluded from FFO-New Definition. FFO does not represent cash
flow from operations, as defined by generally accepted accounting
principles, and is not necessarily indicative of cash available to fund
all cash flow needs. The following reconciles net income to the FFO -
Original Definition to the FFO - New Definition.
|
1996 1995 1994
------ ----- -----
(Pro forma)
(amounts in thousands)
Net income $18,911 $11,303 $10,450
Adjustments to reconcile
net income to FFO -
Original Definition:
Minority interest 10,975 8,246 8,008
Depreciation and amortization
on wholly owned properties 32,591 25,749 23,195
Pro rata share of unconsolidated
entity depreciation
and amortization 2,096 2,255 1,797
Extraordinary loss on early
extinguishment of debt 315 1,299 -
Pro rata share of (gain) loss
on sale of joint venture assets (110) (240) (366)
--------- --------- -----------
Sub Total FFO - Original Definition 64,778 48,612 43,084
Adjustments to reconcile to
FFO - New Definition:
Amortization of loan costs,
including interest rate caps
and swaps (2,090) (3,250) (3,489)
Depreciation of
personal property (260) (424) (252)
--------- ---------- ----------
FFO - New Definition $62,428 $44,938 $39,343
---------- ---------- ----------
---------- ---------- ----------
Company's share of FFO -
new definition $39,502 $25,982 $22,011
---------- ---------- ----------
--------- ---------- ----------
Weighted average number of
shares outstanding,
assuming full conversion
of OP Units 32,934 26,930 25,645
--------- ---------- ---------
--------- ---------- ---------
|
Included in minimum rents were rents attributable to the accounting practice of "straight lining of rents." The amount of straight lining of rents that impacted minimum rents was $1,832 for 1996, $944 for 1995 and $1,306 for 1994 (pro forma).
In the last three years, inflation has not had a significant impact on the Company or the Predecessor because of a relatively low inflation rate. Substantially all the leases at the Centers have rent adjustments periodically through the lease term. These rent increases are either in fixed increments or based on increases in the Consumer Price Index. In addition, many of the leases are for terms of less than ten years, which enables the Company to replace existing leases with new leases at higher base rents if the rents of the existing leases are below the then existing market rate. Additionally, most of the leases require the tenants to pay their pro rata share of operating expenses. This reduces the Company's exposure to increases in costs and operating expenses resulting from inflation.
Part III
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
- -------------------------------------------------------------------------
Page
(a) 1. Financial Statements
Report of Independent Accountants 30
Consolidated balance sheets of the Company as of
December 31, 1996 and 1995 31
Consolidated statements of operations of the
Company for the years ended December 31, 1996 and
1995 and for the period from March 16, 1994 through
December 31, 1994 and combined statement of operations
of the Predecessor for the period from January 1, 1994
through March 15, 1994 32
Consolidated statements of stockholders' equity of the
Company for the years ended December 31, 1996 and 1995
and for the period from March 16, 1994 to December 31,
1994 and combined statement of partners' deficit for the
Predecessor for the period from January 1 through
March 15, 1994. 33
Consolidated statements of cash flows of the Company
for the years ended December 31, 1996 and 1995 and
for the period from March 16, 1994 through December 31,
1994 and combined statement of cash flows of the
Predecessor for the period from January 1, 1994 through
March 15, 1994. 34
Notes to consolidated and combined financial statements. 35
2. Financial Statement Schedules
Schedule III - Real estate and accumulated depreciation 51
(b) 1. Reports on Form 8-K filed during the last
quarter of 1996 are incorporated by reference
to this item.
A. Form 8-K dated October 30, 1996 for the
acquisition of Valley View Mall, including
the financial statements of the business to
be acquired and pro forma financial information.
B. Form 8-K dated December 11, 1996 for the
acquisition of Vintage Faire Mall and Rimrock Mall.
(c) 1. Exhibits
The Exhibit Index attached hereto is incorporated by
|
reference to this item.
To the Board of Directors and Stockholders of The Macerich Company
We have audited the consolidated and combined financial statements and financial statement schedule of The Macerich Company and Macerich Predecessor Affiliates as listed in Item 14(a) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Macerich Company as of December 31, 1996 and 1995, and the consolidated and combined results of the Macerich Company's and Macerich Predecessor Affiliates' operations and their cash flows for the years ended December 31, 1996 and 1995 and for the period March 16, 1994 through December 31, 1994 and the period January 1, 1994 through March 15, 1994, respectively, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 14, 1997
THE MACERICH COMPANY (THE "COMPANY")
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
December 31,
1996 1995
---- ----
ASSETS:
-------
Property, net $1,108,668 $694,900
Cash and cash equivalents 15,643 15,570
Tenant receivables, including accrued
overage rents of $3,805 in 1996
and $2,455 in 1995 23,192 15,214
Due from affiliates 3,105 -
Deferred charges and other assets, net 20,716 20,434
Investment in joint ventures and
the Management Companies 16,429 17,280
---------- -------
Total assets $1,187,753 $763,398
----------- --------
------------ --------
LIABILITIES AND STOCKHOLDERS' EQUITY:
-------------------------------------
Mortgage notes payable:
Related parties $135,944 $136,186
Others 584,295 349,007
---------- --------
Total 720,239 485,193
Bank notes payable 69,000 -
Accounts payable 4,197 2,265
Accrued interest expense 3,584 2,015
Accrued real estate taxes and ground rent expense 7,616 4,522
Due to affiliates 430 811
Deferred acquisition liability 5,000 5,000
Other accrued liabilities 27,696 9,507
---------- --------
Total liabilities 837,762 509,313
---------- --------
Minority interest in Operating Partnership 112,242 95,740
---------- --------
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000
shares authorized - none issued - -
Common stock, $.01 par value, 100,000,000 shares
authorized, 25,743,000 and 19,977,000 shares
issued and outstanding at December 31, 1996
and 1995, respectively 257 200
Additional paid in capital 238,346 158,145
Accumulated earnings - -
Unamortized restricted stock (854) -
----------- -------
Total stockholders' equity 237,749 158,345
----------- -------
Total liabilities and
stockholders' equity 1,187,753 763,398
----------- --------
----------- --------
|
The accompanying notes are an integral part of these financial statements.
<PAGE >
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES ("PREDECESSOR")
CONSOLIDATED STATEMENTS OF OPERATIONS OF THE COMPANY AND
COMBINED STATEMENT OF OPERATIONS OF THE PREDECESSOR
(Dollars in thousands, except per share amounts)
The Company Predecessor
---------------------------------------- -------------
For the year ended March 16 January 1
December 31, December 31, to December 31, to March 15,
1996 1995 1994 1994
------------ ------------ -------------- -----------
REVENUES:
Minimum rents $99,061 $69,253 $48,663 $9,993
Percentage rents 6,142 4,814 3,681 851
Tenant recoveries 47,648 26,961 18,515 3,108
--------- ------------ ---------- -----------
152,851 101,028 70,859 13,952
--------- ------------ ---------- -----------
Management fees:
Affiliates - - - 401
Other - - - 127
--------- ------------ ---------- -----------
- - - 528
--------- ------------ ---------- -----------
Other 2,208 1,441 582 100
--------- ------------ ---------- -----------
Total revenues 155,059 102,469 71,441 14,580
--------- ------------ ---------- -----------
EXPENSES:
Shopping center expenses 50,792 31,580 22,576 4,891
Management and leasing
services - - - 557
General and administrative
expense 2,378 2,011 1,545 -
--------- ------------ ---------- -----------
53,170 33,591 24,121 5,448
--------- ------------ ---------- -----------
Interest expense:
Related parties 10,172 8,226 6,417 2,235
Others 32,181 17,305 9,674 3,911
Depreciation and amortization 32,591 25,749 18,827 3,642
--------- ------------ ---------- -----------
74,944 51,280 34,918 9,788
--------- ------------ ---------- -----------
Equity in income (loss) of
unconsolidated joint
ventures and the
management companies 3,256 3,250 3,016 (232)
--------- ------------ ---------- -----------
Income before minority interest
and extraordinary item 30,201 20,848 15,418 (888)
Extraordinary loss from early
extinguishment of debt (315) (1,299) - -
--------- ------------ ---------- -----------
Income (loss) of the Operating
Partnership 29,886 19,549 15,418 (888)
Less minority interest in net
income of
Operating Partnership 10,975 8,246 6,792 -
--------- ------------ ---------- -----------
Net income (loss) $18,911 $11,303 $8,626 ($888)
--------- ------------ ---------- -----------
--------- ------------ ---------- -----------
Earnings per common share:
Income before
extraordinary item $0.92 $0.78 $0.60
Extraordinary item (0.01) (0.05) -
--------- ------------ ----------
Net income $0.91 $0.73 $0.60
--------- ------------ ----------
--------- ------------ ----------
Weighted average number of
shares of common stock
outstanding 20,781,000 15,482,000 14,375,000
---------- ------------ -----------
---------- ------------ -----------
|
The accompanying notes are an integral part of these financial statements.
<PAGE >
THE MACERICH COMPANY (THE COMPANY) and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
COMBINED STATEMENT OF PARTNERS' DEFICIT OF THE PREDECESSOR
(In thousands, except share data)
The Company Predecessor
Common
Common Stock Additional Unamortized Total
Stock Par Paid In Accumulated Restricted Stockholders' Partners'
(# shares) Value Capital Earnings Stock Equity Deficit
--------- ------- ------------- ------------- ---------- ----------- --------
Balance December 31, 1993 (88,294)
Contributions 1,675
Distributions (6,847)
Net income (888)
----------
Balance March 16, 1994 (inception) ($94,354)
----------
----------
Common stock issued
to the public 14,375,000 $144 $272,981 $273,125
Issuance costs (23,656) (23,656)
Distributions paid
($.87 per share) (3,880) ($8,626) (12,506)
Net income from inception
to 12/31/94 - - - 8,626 8,626
Accounting adjustment
necessary to reflect
assets at
Predecessor cost (158,650) (158,650)
------------- ------ ---------- ---------- ----------- ----------
Balance
December 31, 1994 14,375,000 144 86,795 - 245,589
Common stock issued to
public 5,600,000 56 107,408 107,464
Issuance costs (582) (582)
Distributions paid
($1.66 per share) (14,913) (11,303) (26,216)
Net income 11,303 11,303
Adjustment to reflect
minority interest on a
pro rata basis according
to year end ownership
percentage of
Operating Partnership (20,615) (20,615)
Other, net 2,000 52 52
------------- ------ ---------- ---------- ------------ -------------
Balance
December 31, 1995 19,977,000 200 158,145 - 316,995
Common stock issued to
public 5,750,000 57 122,129 - 122,186
Issuance costs - - (152) - (152)
Issuance of restricted
stock 41,238 - 854 - $0 854
Unvested
restricted stock (41,238) - - - (854) (854)
Exercise of
stock options 16,000 - 291 - 291
Distributions paid
($1.70 per share (17,565) (18,911) (36,476)
Net income - - - 18,911 18,911
Adjustment to reflect
minority interest on a
pro rata basis according
to year end ownership
percentage of
Operating Partnership - - (25,356) - (25,356)
------------- ------ ---------- ---------- ------------- -------------
Balance
December 31, 1996 25,743,000 $257 $238,346 $0 ($854) $237,749
------------- ------ --------- ----------- ------------ -------------
------------- ------ --------- ----------- ------------ -------------
|
The accompanying notes are an integral part of these financial statements.
<PAGE >
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
CONSOLIDATED STATEMENTS OF CASH FLOWS OF THE COMPANY AND
COMBINED STATEMENT OF CASH FLOWS OF THE PREDECESSOR
(Dollars in thousands)
The Company Predecessor
January 1 to January 1 to March 16 to January 1,
December 31, December 31, December 31, to March 15,
1996 1995 1994 1994
--------- ------------ ------------ ---------
Cash flows from operating activities:
Net income (loss) $18,911 $11,303 $8,626 ($888)
--------- ------------ ------------ ---------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Extraordinary loss on early
extinguishment of debt 315 1,299 - -
Depreciation and amortization 32,591 25,749 18,827 3,642
Interest payments deferred,
(deferred interest paid) - - 2,369 (2,591)
Amortization of discount on
trust deed note payable 33 547 394 104
Minority interest in the income
of the Operating Partnership 10,975 8,246 6,792 -
Changes in assets and liabilities:
Tenant receivables, net (7,977) (2,973) (4,262) (758)
Other assets 1,181 (2,149) (911) 217
Accounts payable and
accrued expenses 6,596 1,378 (422) 1,163
Due to affiliates (382) 345 (1,309) 2,324
Other liabilities 18,188 4,441 (93) 3,236
--------- ------------ ------------ ---------
Total adjustments 61,520 36,883 21,385 7,337
--------- ------------ ------------ ---------
Net cash provided by
operating activities 80,431 48,186 30,011 6,449
--------- ------------ ------------ ---------
Cash flows from investing activities:
Acquisitions of property and
improvements (277,319) (75,738) (106,780) (170)
Renovations and expansions
of centers (8,019) (4,571) (3,904) (253)
Additions to tenant improvements (920) (1,554) (1,704) (215)
Equity in (income) loss of
unconsolidated joint ventures
and the management companies (3,256) (3,250) (2,778) 232
Deferred charges (9,111) (6,698) 3,092 (1,113)
(Contributions to) and
distributions from joint ventures 4,107 3,398 (27,799) 225
(Loans to) repayment from affiliates (3,105) - 2,236 (365)
Proceeds from sale of assets 948 - - -
--------- ------------ ------------ ---------
Net cash used in
investing activities (296,675) (88,413) (137,637) (1,659)
--------- ------------ ------------ ---------
Cash flows from financing activities:
Proceeds from notes and
mortgages payable 235,673 148,000 111,773 227
Interest rate agreements - - (6,225) -
Payments on mortgage and
notes payable (84,775) (157,800) (235,501) 2,552
Net proceeds from equity offerings 122,034 106,879 249,325 -
Actual and deemed net
distributions to partners (56,615) (45,106) (20,171) (5,172)
Investment of cash restricted
for use - - 383 50
--------- ------------ ------------ ---------
Net cash provided by
(used in) financing
activities 216,317 51,973 99,584 (2,343)
--------- ------------ ------------ ---------
Net increase (decrease)
in cash 73 11,746 (8,042) 2,447
Cash and cash equivalents,
beginning of period 15,570 3,824 11,866 9,419
--------- ------------ ------------ ---------
Cash and cash equivalents,
end of period $15,643 $15,570 $3,824 $11,866
--------- ------------ ----------- ---------
--------- ------------ ------------ ---------
Supplemental cash flow information:
Cash payment for interest,
net of amounts capitalized $40,572 $24,429 $15,975 $ 8,403
--------- ------------ ------------ ---------
--------- ------------ ------------ ---------
Non cash transactions:
Acquisition of property by
assumption of debt $152,228 $178,900 $67,547 -
--------- ------------ ------------ ---------
--------- ------------ ------------ ---------
Acquisition of property by
issuance of OP units $600 $18,448 $3,915 -
--------- ------------ ------------ ---------
--------- ------------ ------------ ---------
|
The accompanying notes are an integral part of these financial statements.
<PAGE >
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
The Company, which was organized to qualify as a real estate investment trust ("REIT") under the Internal Revenue Service Code of 1986, as amended, as of December 31, 1996, owns approximately 68% of The Operating Partnership and is the sole general partner. The 32% limited partnership interest of the Operating Partnership, not owned by the Company, is reflected in these financial statements as minority interest. The average total number of OP Units outstanding in The Operating Partnership (including the units owned by the Company) was 32,934,000 for the year ended December 31, 1996, 26,930,000 for the year ended December 31, 1995, and 25,645,000 for the period from March 16, 1994 to December 31, 1994.
The property management, leasing and redevelopment of the Company's portfolio is provided by the Macerich Management Company and Macerich Property Management Company, California corporations (together referred to hereafter as "the Management Companies"). The non-voting preferred stock of the Management Companies is owned by The Operating Partnership, which provides The Operating Partnership the right to receive 95% of the distributable cash flow from the Management Companies.
The formation of the Company has been reflected as a reorganization of the predecessor business with the assets and liabilities reflected at the historical cost basis of the Predecessor, except for those properties for which monetary consideration was given to acquire interests previously held by outside joint venture partners, in which case the portion of the property so acquired has been adjusted to reflect the value of the consideration given.
All significant intercompany accounts and transactions have been eliminated in the consolidated and combined financial statements.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
The Management Companies provide property management, leasing, corporate, development and acquisitions services to affiliated and non- affiliated shopping centers. In consideration for these services, the Management Companies receive monthly management fees generally ranging from 1.5% to 5% of the gross monthly rental revenue of the properties managed.
Management fees are recognized as revenue as they are earned in the combined financial statements of the Predecessor.
Expenditures for maintenance and repairs are charged to operations as incurred. Realized gains and losses are recognized upon disposal or retirement of the related assets and are reflected in earnings.
Property is recorded at cost and is depreciated using a straight- line method over the estimated useful lives of the assets as follows:
Tenant improvements initial term of related lease
Buildings and improvements 5-40 years
Equipment and furnishings 5- 7 years
Deferred Charges:
----------------
|
Costs relating to financing of shopping center properties and obtaining tenant leases are deferred and amortized over the initial term of the agreement. The straight-line method is used to amortize all costs except financing, for which the effective interest method is used. The range of the terms of the agreements are as follows:
Deferred lease costs 2 - 15 years Deferred financing costs 1 - 15 years
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
On a tax basis, the distributions of $1.70 paid during 1996 represented $1.14 of ordinary income and $0.56 of return of capital and the distributions of $1.66 per share during 1995 represented $1.00 of ordinary income and $0.66 return of capital. During 1994 the distributions were $0.87 per share of which $0.70 was ordinary income and $0.17 was return of capital.
Each partner is taxed individually on their share of partnership income or loss, and accordingly, no provision for federal and state income tax is provided for the Operating Partnership or Predecessor in the combined financial statements.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Interest rate cap agreements are purchased by the Company from third parties to hedge the risk of interest rate increases on some of the Company's variable rate debt. The cost of these cap agreements is amortized over the life of the cap agreement on a straight line basis. Payments received as a result of the cap agreements are recorded as a reduction of interest expense. The unamortized costs of the cap agreements are included in deferred charges. The fair market value of these caps will vary with fluctuations in interest rates. The Company is exposed to credit loss in the event of nonperformance by these counter parties to the financial instruments, however, management does not anticipate nonperformance by the counter party.
The Centers derived approximately 88.8% of their total rents for the year ended December 31, 1996 from Mall and Freestanding Stores. No single retailer accounted for more than 6.5% of annual base rents of the Company as of December 31, 1996. The Limited represented 6.3% of total minimum rents in place as of December 31, 1996 and Woolworth represented 4.8% as of that date. No other retailer represented more than 2.5% of total minimum rents as of December 31, 1996.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
The Operating
Partnership's
Joint Venture Ownership %
----------------------- -------------
Macerich Northwestern Associates 50%
North Valley Plaza Associates 50%
Panorama City Associates 50%
West Acres Development 19%
|
The Operating Partnership also owns the non-voting preferred stock of the Management Companies and is entitled to receive 95% of the distributable cash flow.
Combined and condensed balance sheets and statement of operations are presented below for all unconsolidated joint ventures and the Management Companies, followed by information regarding The Operating Partnership's/ Predecessor's beneficial interest in operations. Beneficial interest is calculated based on the terms of the joint venture agreements and reflects 95% of the Management Companies.
COMBINED AND CONDENSED BALANCE SHEETS OF JOINT VENTURES
AND THE MANAGEMENT COMPANIES
December 31, December 31,
1996 1995
Assets:
Properties, net $106,751 $104,879
Other assets 13,257 10,923
------------ ----------
Total assets $120,008 $115,802
------------ ----------
------------ ----------
Liabilities and partners' capital:
Mortgage notes payable $ 81,925 $ 82,515
Other liabilities 11,116 5,306
The Company's capital 16,429 17,280
Outside partners' capital 10,538 10,701
------------ ----------
Total liabilities and
partners' capital $120,008 $115,802
------------ ----------
------------ ----------
|
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
3. Investments In Joint Ventures and the Management Companies, Continued:
- ----------------------------------------------------------------------
COMBINED AND CONDENSED STATEMENTS OF OPERATIONS OF JOINT VENTURES
AND THE MANAGEMENT COMPANIES
From March 16 From January 1
to to
1996 1995 Dec 31, 1994 March 15, 1994
----------- ----------- ------------------ ------------------
Revenues $31,533 $32,270 $24,944 $5,099
----------- ----------- ------------------ ------------------
Expenses:
Management Company expense 4,293 3,987 3,958 -
Shopping center expenses 9,598 9,293 6,724 2,063
Interest 6,409 6,414 4,740 2,317
Depreciation and amortization 4,406 4,485 3,283 796
----------- ----------- ------------------ ------------------
Total operating costs 24,706 24,179 18,705 5,176
----------- ----------- ------------------ ------------------
Gain on sale of land 581 1,265 1,875 28
----------- ----------- ------------------ ------------------
Net income (loss) $7,408 $9,356 $8,114 ($49)
----------- ----------- ------------------ ------------------
----------- ----------- ------------------ ------------------
|
Significant accounting policies used by the unconsolidated joint ventures and the Management Companies are similar to those used by the Company.
The Management Companies are reflected above for the years ended December 31, 1996 and 1995 and for the period from March 16, 1994 to December 31, 1994. Prior to March 16, 1994 (the date of the IPO) the Management Companies were combined and included in the results of the Predecessor.
Included in mortgage notes payable are amounts due to related parties of $43,500 for the years ended December 31, 1996, 1995 and 1994. Interest expense incurred on these borrowings amounted to $2,976 for the years ended December 31, 1996 and 1995, $1,631 for the period from January 1 to March 15, 1994 and $2,081 for the period March 16 through December 31, 1994.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
The following table sets forth the Operating Partnership's and the Predecessor's beneficial interest in the joint ventures and the Management Companies:
PRO RATA SHARE OF COMBINED AND CONDENSED STATEMENT OF OPERATIONS
OF JOINT VENTURES AND THE MANAGEMENT COMPANIES
For the For the From March 16 From January 1
year ended year ended to to
1996 1995 Dec 31, 1994 March 15, 1994
--------- ---------- --------------- ------------------
Revenues $14,980 $15,393 $12,315 $1,974
--------- ---------- ------------------ ------------------
Expenses:
Management
Company
expense 3,747 3,988 3,769 -
Shopping center
expenses 3,856 4,042 2,917 901
Interest 2,135 2,098 1,541 946
Depreciation
and
amortization 2,096 2,255 1,433 364
--------- ---------- ------------------ ------------------
Total operating
costs 11,834 12,383 9,660 2,211
--------- ---------- ------------------ ------------------
Gain on sale
of land 110 240 361 5
--------- ---------- ------------------ ------------------
Net income
(loss) $3,256 $3,250 $3,016 ($232)
--------- ---------- ------------------ ------------------
--------- ---------- ------------------ ------------------
|
4. Property:
Property, at December 31, is summarized as follows:
1996 1995
----------- ------------
Land $239,847 $155,490
Building Improvements 990,125 636,183
Tenant Improvements 34,149 34,730
Equipment & Furnishings 4,769 3,668
Construction in Progress 4,195 3,927
----------- ------------
1,273,085 833,998
Less, accumulated
depreciation (164,417) (139,098)
----------- ------------
$1,108,668 $694,900
----------- ------------
----------- ------------
|
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
December 31, December 31,
1996 1995
--------- ----------
Leasing $25,629 $24,926
Financing 7,891 8,173
----------- ---------
33,520 33,099
Less, accumulated amortization (15,434) (16,476)
----------- ---------
18,086 16,623
Other assets 2,630 3,811
----------- ---------
$20,716 $20,434
----------- ---------
----------- ---------
|
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
6. Mortgage Notes Payable:
Mortgage notes payable at December 31, 1996 and December 31, 1995 consists
of the following:
Carrying Amount of Notes
-----------------------
1996 1995
---- ----
Property Pledged Related Related Interest Payment Maturity
As Collateral Other Party Other Party Rate Terms Date
Capitola Mall ---- $37,976 ---- $38,250 9.25% 316 (f) 2001
Chesterfield
Towne Center $59,023 ---- $59,536 ---- 8.75% 475(i) 2024
Chesterfield
Towne Center 5,304 ---- 5,346 ---- 9.38% 43(i) 2024
Chesterfield
Towne Center 1,922 ---- 1,938 ---- 8.88% 16(i) 2024
Chesterfield
Towne Center 3,444 ---- ---- ---- 8.54% 28(f) 1999
Crossroads Mall (b) (c) ---- $35,968 ---- 35,936 7.08% 244(f) 2010
Fresno Fashion Fair 38,000 ---- ---- ---- 8.40% interest only 2005
Greeley Mall 18,514 ---- 19,000 ---- 8.50% interest only 2003
Green Tree Mall/
Crossroads - OK/
Salisbury (g) 117,714 ---- 50,000 ---- 7.23% interest only 2004
Holiday Village Mall ---- ---- 73 ---- 5.50% 7(f) 1996
Holiday Village Mall ---- 17,000 ---- 17,000 6.75% interest only 2001
Lakewood Mall (a) 127,000 ---- 127,000 ---- 7.20% interest only 2005
Northgate Mall ---- 25,000 ---- 25,000 6.75% interest only 2001
Parklane Mall ---- 20,000 ---- 20,000 6.75% interest only 2001
Queens Center 65,100 ---- ---- ---- (d) interest only 1999
Queens Center ---- ---- 55,800 ---- (e) (e) 1999
Queens Center ---- ---- 10,200 ---- (e) (e) 1999
Rimrock Mall 31,994 ---- ---- ---- 7.70% 244(f) 2003
The Centre at
Salisbury (k) ---- ---- 21,000 ---- 7.13% interest only 2004
Valley View Mall 60,000 ---- ---- ---- (l) interest only (l)
Vintage Faire Mall 56,280 ---- ---- ---- 7.65% 427(f) 2003
-------- ------ ------- -------
Sub-Total 584,295 135,944 349,893 136,186
Less interest rate
arrangements (h) ---- ---- 886 ----
-------- ------- -------- -------
Total $584,295 $135,944 $349,007 $136,186
-------- ------- -------- -------
-------- ------- -------- -------
Weighted average interest rate at December 31, 1995 7.52%
---------
---------
Weighted average interest rate at December 31, 1996 7.45%
---------
---------
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THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
The Note requires the Company to deposit all cash flow from the property operations with a trustee to meet its obligations under the Notes. Cash in excess of the required amount, as defined, is released. Included in cash and cash equivalents is $750 of restricted cash deposited with the trustee at December 31, 1995 and $750 at December 31, 1996.
(b) This loan was refinanced on December 21, 1995. The loan amount remained the same. The interest rate was reduced to 7.08%.
(c) This note was issued at a discount. The discount is being amortized over the life of the loan using the effective interest method. At December 31, 1996 and 1995 the unamortized discount was $463 and $496, respectively.
(d) This loan bears interest at LIBOR plus 0.45%. There is an interest rate protection agreement in place on the first $10.2 million of this debt with a LIBOR ceiling of 5.88% through maturity with the remaining principal having an interest rate cap with a LIBOR ceiling at 7.07% through 1997 and 7.7% thereafter.
(e) The $55,800 loan bears interest at LIBOR plus .90%. This loan was paid off on September 30, 1996.
The $10,200 loan bears interest at LIBOR plus 2.22%. This loan was paid off on September 30, 1996.
(f) This represents the monthly payment of principal and interest.
(g) This loan is cross collateralized by Green Tree Mall and Crossroads Mall Oklahoma and as of April 14, 1996 also included Salisbury.
(h) Represents the unamortized cost of interest rate arrangements at County East Mall and Crossroads Mall. The estimated market value of these arrangements is $886 at December 31, 1995 and $0 at December 31, 1996.
(i) This amount represents the monthly payment of principal and interest. In addition, contingent interest, as defined in the loan agreement, may be due to the extent that 35% of the amount by which the property's gross receipts (as defined in the loan agreement) exceeds a base amount specified therein. Contingent interest expense recognized by the Company was $76 for the period from July 21, 1994 (the date of acquisition of Chesterfield Towne Center) to December 31, 1994, $184 for the year ended December 31, 1995 and $399 for 1996. As of January 1, 1997 all these loans were consolidated into a new loan of $66.2 million at an interest rate of 9.1%.
This amount bears interest at LIBOR plus 1.50% and matures on October 21, 1997, however, at any time prior to maturity, the Company can convert this into a fixed rate loan maturing in October 2006.
(j) Interest only is payable through March 1996. Thereafter monthly payments total $187 until maturity, at which time the balance is due in full.
(k) This loan was combined with the Greentree/Crossroads-OK loan on April 14, 1996.
(l) This loan bears interest at LIBOR plus 1.50% (7.00% at December 31, 1996). At any time prior to October 21, 1997 this loan can be converted to a fixed rate loan at a rate of 1.25% over the rate on a Treasury Note of a duration equal to the maturity of the loan.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Total interest expense capitalized during 1996 was $461 and during 1995 was $546 and during 1994 was $116 .
The above debt matures as follows:
Years Ending
December 31,
1997 $3,317
1998 3,651
1999 72,227
2000 4,188
2001 102,697
2002 and beyond 534,159
---------
$720,239
|
The market value of notes payable at December 31, 1996 and 1995 is estimated to be approximately $733,000 and $466,000, respectively, based on current interest rates for comparable loans.
Certain mortgage notes are held by outside partners of the individual Macerich Group partnerships. Interest expense, in connection with these notes was $10,168, $8,226 and $8,652 for the years ended December 31, 1996, 1995 and 1994, respectively. Included in accounts payables and accrued expense is interest payable to these partners of $516, $537 and $398 at December 31, 1996, 1995, and 1994 respectively.
Certain Company officers and affiliates have guaranteed mortgages of $21,750 at one of the Company's joint venture properties and $2,000 at Greeley Mall.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Years Ending
December 31,
------------
1997 $118,239
1998 109,506
1999 99,036
2000 86,477
2001 73,135
2002 and beyond 319,166
$805,559
------------
------------
|
The Company has certain properties subject to noncancellable operating ground leases. The leases expire at various times through 2060, subject in some cases to options to extend the terms of the lease. Certain leases provide for contingent rent payments based on a percent of base rent income, as defined. Ground rent expenses were $704, (including contingent rent of $0) in 1996, $1,944 (including contingent rents of $1,168) in 1995 and $2,267 (including contingent rents of $733) in 1994.
Certain leases also require the lessee to pay real estate taxes, insurance and certain other operating costs applicable to the leased property.
Minimum future rental payments required under the leases are as follows:
Years Ending
December 31,
-------------
1997 $ 553
1998 553
1999 557
2000 557
2001 549
2002 and beyond 25,948
-------
$28,717
-------
-------
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Perchloroethylene (PCE) has been detected in soil and groundwater in the vicinity of a dry cleaning establishment at North Valley Plaza. The California Department of Toxic Substance Control (DTSC) has advised the Company that very low levels of Dichlorethylene (1,2,DCE) a degradation byproduct of PCE, have been detected in a water well located 1/4 mile west from the dry cleaners, and that the dry cleaning facility may have contributed to the introduction of 1,2 DCE into the water well. According to DTSC, the maximum contaminant level (MCL) for 1,2DCE which is permitted in drinking water is 6 parts per billion (ppb); and the 1,2DCE was detected in the water well at 1.2 ppb, which is below the MCL. The Company has retained an environmental consultant and has initiated extensive testing of the site, although the extent of the impacted soil and groundwater has not been fully defined. Remediation is scheduled to begin in the first half of 1997. The joint venture that owns that property had a $685 reserve at December 31, 1996. In addition, $155 has already been incurred, to cover professional fees and testing costs. The Company intends to look to the responsible parties and insurers for cost recovery.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Dry cleaning chemicals, including PCE were detected in soil and groundwater in the vicinity of a dry cleaning establishment at Villa Marina Marketplace. The previous owner of the property has reported the release to the local government authorities and has agreed to fully assess and remediate the site to the extent required by those authorities. Although the Company believes that it will not be required to participate in assessment or remediation activities, it has set up a $150 reserve ($20 of which has already been incurred) to cover professional and legal fees.
Dry cleaning chemicals including PCE were detected in soil and groundwater in the vicinity of a former dry cleaning establishment at Huntington Center. The release has been reported to the local government authorities. The Company estimates, based on the data currently available, that costs for assessment, remediation and legal services will not exceed $500. Consequently, a $500 reserve was established at the time of the acquisition to cover professional and legal fees. The Company intends to look to responsible parties and insurers for cost recovery.
The Company acquired Fresno Fashion Fair in December, 1996. Asbestos has been detected in structural fireproofing throughout much of the Mall. Recent testing data conducted by a professional environmental consulting firms indicates that the fireproofing is largely inaccessible to building occupants and is well adhered to the structural members. Additionally, airborne concentrations of asbestos are well within OSHA's permissible exposure limit (PEL) of .1 fcc. The Company intends to abate asbestos fireproofing as tenant spaces become vacant. The accounting for this acquisition includes a reserve of $3.3 million to cover future removal of this asbestos, as necessary.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
12. Stock Option Plan, Continued
In addition, the Company has established a plan for non employee directors. A total of 27,500 options were outstanding at December 31, 1996, 22,500 were exercisable. The non employee directors options have a term of ten years from the grant date and vest six months after grant.
Also, under the employees stock incentive plan 41,238 shares of restricted stock have been issued to executives. These awards are granted based on certain performance criteria for the Company. The restricted stock vests over 5 years and the compensation expense related to these grants is reflected over the vesting period on a straight line basis. As of December 31, 1996 none of the restricted stock grants had vested. A total of 41,238 shares were issued during 1996 at a weighted average price of $20.70 per share and 0 shares were issued during 1995.
An additional 412,762 shares have been reserved for issuance under the stock incentive plan. The plan allow for granting options or restricted stock at market value.
Weighted
Average
Exercise Price
Employee Plan Director Plan # of Options On Exercisable
Option Price Option Price Exercisable Options
Shares Per Share Shares Per Share At Year End At Year End
Shares outstanding
at January 1, 1994 - - - -
Granted 1,148,000 $19.00-$19.63 17,500 $19.00-$21.38
Exercised - - - -
Forfeited - - - - 0 0
---------- ------------- ------ -------------- ---------- ----------
---------- ----------
Shares outstanding
at December 31, 1994 1,148,000 $19.00-$19.63 17,500 $19.00
Granted 115,000 $20.25 5,000 $20.00
Exercised (2,000) $19.00 - -
Forfeited (6,500) - - - 399,784 19.02
---------- ------------- ------ -------------- ---------- ----------
---------- ----------
Shares outstanding
at December 31, 1995 1,254,500 $19.00-$20.25 22,500 $19.00-$21.38
Granted 281,000 $21.62 5,000 $26.12
Exercised (16,000) $19.00 - -
Forfeited (7,166) - - -
---------- ------------- ------ --------------
Shares outstanding
at December 31, 1996 1,512,334 $19.00 - $21.62 27,500 $19.00 - $26.12 793,697 $19.09
---------- --------------- ------ --------------- ----------- ---------
---------- --------------- ------ --------------- ----------- ---------
|
The weighted average exercise price for options granted in 1994 is $19.02, for 1995 is $20.25 and for 1996 is $21.65.
The weighted average remaining contractual life for options outstanding at December 31, 1996 is 7.9 years and the weighed average remaining contractual life for options exercisable at December 31, 1996 is 7.6 years.
The Company records options granted using Accounting Principles Board (APB) opinion Number 25, Accounting for Stock Issued to Employees and Related Interpretations. Accordingly, no compensation expense is recognized on the date the options are granted. If the Company had recorded compensation expense using the methodology prescribed in Financial Accounting Standards Number 123, the Company's net income would have been reduced by approximately $56 or $0.00 per share for the year ended December 31, 1996 and $160 or $0.01 per share for the year ended December 31, 1995.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
In addition, certain executives have split dollar life insurance agreements with the Company whereby the Company generally pays annual premiums on a life insurance policy in an amount equal to the executives deferral under one of the Company's deferred compensation plans.
On July 21, 1994, the Company acquired Chesterfield Towne Center ("Chesterfield") in Richmond, Virginia. Chesterfield is a 608,500 square foot regional mall. The purchase price of $84,500 was paid with approximately $13,100 in cash, $3,900 in OP Units of the Operating Partnership and assumption of the existing mortgage of approximate $67,500.
On August 15, 1995 the Company acquired The Centre at Salisbury ("Salisbury"), an 884,000 square foot super regional mall. The total purchase price was $78 million, and was comprised of $55.6 million of cash, $21 million of debt and approximately $1.4 million in OP Units.
Capitola Mall ("Capitola") was acquired on December 21, 1995. Capitola is a 577,000 square foot regional mall. The purchase price was $57.5 million and was comprised of the issuance of OP Units valued at $12.1 million, the assumption of $38.3 million of mortgage indebtedness, and cash of $2.1 million. The remaining $5 million of consideration will be paid in OP Units in five years.
Queens Center ("Queens") was acquired on December 28, 1995. The total purchase price was $108 million which consisted of assumption of debt of $66 million and $42 million of cash.
Villa Marina was acquired on January 25, 1996. Villa Marina is a 447,684 square foot community center/entertainment complex located in Marina del Rey, California. The purchase price was $80 million, consisting of $57.6 million of cash and $22.4 million of assumption of mortgage indebtedness.
Valley View Mall is a super regional mall in Dallas, Texas which the Company acquired on October 21, 1996. Valley View Mall contains 1,523,000 square feet and the purchase price was $87.5 million.
Rimrock Mall, located in Billings, Montana, and Vintage Faire Mall, located in Modesto, California were purchased simultaneous on November 27, 1996. The combined purchase price was $118.2 million. Vintage Faire Mall is a super regional mall with 1,051,458 square feet and Rimrock Mall is a regional mall consisting of 581,912 square feet.
Buenaventura Mall, Fresno Fashion Fair and Huntington Center were purchased on December 18, 1996 for a combined price of $128.9 million. Buenaventura Mall, located in Ventura, California, is an 801,152 square foot regional mall, Fresno Fashion Fair, located in Fresno, California, is a super regional mall containing 881,334 square feet and Huntington Center, located in Huntington Beach, California, consists of 832,578 square feet.
THE MACERICH COMPANY (THE "COMPANY") and
MACERICH PREDECESSOR AFFILIATES (PREDECESSOR)
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Year ended December 31,
1996 1995
Revenues $203,512 $168,785
Income of the Operating
Partnership before
extraordinary items 37,851 31,416
Income before extraordinary items 23,875 18,166
Net income 23,675 17,413
Per share income before
extraordinary items $1.15 $1.17
Net income per share $1.14 $1.12
Weighted average number of common
shares outstanding 20,781,000 15,482,000
|
Company
1996 Quarter Ended 1995 Quarter Ended
Dec 31 Sept 30 June 30 Mar 31 Dec 31 Sept 30 June 30 Mar 31
Revenues $43,924 $37,749 $37,777 $35,293 $29,016 $26,291 $24,067 $23,095
Income before minority
interest and
extraordinary items 8,417 7,479 6,925 7,065 6,586 5,066 5,064 4,132
Income before
extraordinary items 5,539 4,659 4,502 4,401 4,077 2,821 2,824 2,304
Net income 5,539 4,659 4,312 4,401 4,077 2,821 2,101 2,304
Income before
extraordinary
items per share $0.24 $0.23 $0.22 $0.22 $0.22 $0.20 $0.20 $0.16
Net income per share $0.24 $0.23 $0.21 $0.22 $0.22 $0.20 $0.15 $0.16
|
17. Subsequent Events
On February 7, 1997 a $0.44 per share dividend was declared, payable to stockholders of record as of February 20, 1997 and paid on March 6, 1997.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
(in thousands)
Initial Cost to Company
Equipment Cost Capitalized
Building and and Subsequent to
Land Improvements Furnishings Acquisition
Shopping Centers
Bristol Shopping Center $ 0 $11,051 $0 $1,111
Buenaventura Mall 3,414 13,979 0 0
Capitola Mall 11,312 46,689 0 592
Chesterfield Towne Center 16,992 68,660 2 4,667
County East Mall 2,633 15,131 716 5,767
Crossroads Mall - Boulder 0 37,528 64 27,167
Crossroads Mall - Oklahoma 10,279 43,458 291 2,103
Fresno Fashion Fair 17,966 72,194 0 0
Greeley Mall 5,600 12,617 13 6,761
Green Tree Mall 4,947 14,893 332 22,067
Holiday Village
Shopping Center 2,311 13,488 138 15,936
Huntington Center 4,679 19,056 0 0
Lakewood Mall 12,502 31,158 117 30,264
Marshalls' Boulder Plaza 2,650 7,950 0 782
Northgate Mall 7,144 29,805 841 17,595
Parklane Mall 1,377 11,775 173 12,432
Queens Center 21,460 86,631 8 758
Rimrock Mall 8,737 35,652 0 31
The Centre at Salisbury 15,290 63,474 31 368
Towne Center Plaza 1,525 4,276 0 31
Valley View Center 17,100 68,687 0 23
Villa Marina Marketplace 15,852 65,441 0 352
Vintage Faire Mall 14,902 60,532 0 0
The Macerich
Partnership, L.P. 11,962 47,848 0 28,945
-------- -------- -------- --------
Total $210,634 $881,973 $2,726 $177,752
-------- -------- -------- --------
-------- -------- -------- --------
|
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
(in thousands)
Gross Amount at Which Carried at Close of Period
Furniture, Net of
Building and Fixtures & Construction Accumulated Accumulated
Land Improvements Equipment in Progress Total Depreciation Depreciation
Shopping Centers
Bristol Shopping Center $ 0 $12,162 $ 0 $ 0 $12,162 $4,552 $7,610
Buenaventura Mall 3,414 13,979 0 0 17,393 14 17,379
Capitola Mall 11,309 47,239 45 0 58,593 1,265 57,328
Chesterfield Towne
Center 16,992 72,486 811 32 90,321 5,650 84,671
County East Mall 2,633 20,823 791 0 24,247 7,565 16,682
Crossroads Mall
- Boulder 23,302 41,249 101 107 64,759 21,036 43,723
Crossroads Mall
- Oklahoma 10,279 45,517 316 19 56,131 4,133 51,998
Fresno Fashion Fair 17,966 72,194 0 0 90,160 74 90,086
Greeley Mall 5,600 19,325 66 0 24,991 8,119 16,872
Green Tree Mall 4,947 36,860 432 0 42,239 17,730 24,509
Holiday Village
Shopping Center 2,311 29,387 175 0 31,873 17,122 14,751
Huntington Center 4,679 19,056 0 0 23,735 20 23,715
Lakewood Mall 12,503 59,353 612 1,573 74,041 27,671 46,370
Marshalls'
Boulder Plaza 2,650 8,732 0 0 11,382 2,091 9,291
Northgate Mall 7,144 47,318 923 0 55,385 15,639 39,746
Parklane Mall 1,565 21,369 384 2,439 25,757 13,809 11,948
Queens Center 21,454 87,349 37 17 108,857 2,273 106,584
Rimrock Mall 8,737 35,676 7 0 44,420 88 44,332
The Centre
at Salisbury 15,284 63,845 34 0 79,163 2,282 76,881
Towne Center Plaza 1,525 4,307 0 0 5,832 59 5,773
Valley View Center 17,100 68,687 15 8 85,810 347 85,463
Villa Marina
Marketplace 15,852 65,773 20 0 81,645 1,572 80,073
Vintage Faire Mall 14,901 60,533 0 0 75,434 148 75,286
The Macerich
Partnership, L.P. 17,700 71,055 0 0 88,755 11,158 77,597
-------- -------- -------- -------- -------- -------- --------
Total $239,847 $1,024,274 $4,769 $4,195 $1,273,085 $164,417 $1,108,668
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
The changes in total real estate assets for the three years ended December 31, 1996 are as follows:
1994 1995 1996
Balance, beginning
of year 375,972 554,788 833,998
Additions 178,816 279,210 439,087
Disposals and
retirements 0 0 0
Balance,
end of year 554,788 833,998 1,273,085
The changes in accumulated depreciation and amortization for the three years ended December 31, 1996 are as
follows:
1994 1995 1996
Balance, beginning
of year 102,963 119,466 139,098
Additions 16,503 19,632 25,319
Disposals and
retirement 0 0 0
Balance,
end of year 119,466 139,098 164,417
Depreciation and amortization of the Macerich Company's investment in buildings and improvements reflected
in the statements of income are calculated over the estimated useful lives of the assets as follows:
Buildings and Improvements 5 - 40 years
Tenant Improvements life of related lease
Equipment and Furnishings 5 - 7 years
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE MACERICH COMPANY
By /s/ Arthur M. Coppola
----------------------
Arthur M. Coppola
President and Chief
Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Capacity Date
/s/ Arthur M. Coppola President and Chief March 25, 1997
Arthur M. Coppola Executive Officer
and Director
/s/ Mace Siegel Chairman of the Board March 25, 1997
Mace Siegel
/s/ Dana K. Anderson Vice Chairman of the March 25, 1997
Dana K. Anderson Board and
Chief Operating Officer
/s/ Edward C. Coppola Executive Vice President March 25, 1997
Edward C. Coppola Director of Acquisitions
and Director
/s/ James Cownie Director March 25, 1997
James Cownie
/s/ Theodore Hochstim Director March 25, 1997
Theodore Hochstim
/s/ Frederick Hubbell Director March 25, 1997
Frederick Hubbell
/s/ Stanley Moore Director March 25, 1997
Stanley Moore
/s/ William Sexton Director March 25, 1997
William Sexton
/s/ Thomas E. O'Hern Senior Vice President and March 25, 1997
Thomas E. O'Hern Chief Financial and
Accounting Officer
|
EXHIBIT INDEX
Exhibit
Number Description Sequentially
Numbered Page
3.1* Articles of Amendment and Restatement of the Company
3.2** Articles Supplementary of the Company
3.3* Bylaws of the Company
4.1** Form of Common Stock Certificate
10.1*** Amended and Restated Limited Partnership Agreement
for the Operating Partnership, dated as of March 16, 1994
10.2*** Employment Agreement between the Company and Mace Siegel,
dated as of March 16, 1994
10.2.1*** List of omitted Employment Agreements
10.3**** The Macerich Company 1994 Stock Incentive Plan
10.4**** The Macerich Company 1994 Eligible Directors' Stock Option Plan
10.5**** The Macerich Company Deferred Compensation Plan
10.6**** The Macerich Company Annual Incentive Compensation Plan
10.7**** The Macerich Company Deferred Compensation Plan for Mall
Executives
10.8*** The Macerich Company Eligible Directors' Deferred Compensation
Plan/Phantom Stock Plan
10.9*** The Macerich Company Executive Officer Salary Deferral Plan
10.10* NML Master Agreement, dated as of October 22, 1993, among the
Operating Partnership, The Northwestern Mutual Life Insurance
Company (as general partner), The Northwestern Mutual Life
Insurance Company (as lender), each of the property partnerships
and each of the Macerich Partnerships
10.11* Partnership Interest Agreement of Purchase and Sale, dated as of
October 18, 1993, between Hexalon Real Estate, Inc. and the
Operating Partnership
10.12* Third Amendment to Partnership Interest Agreement of Purchase
and Sale, dated as of February 9, 1994, between Hexalon Real
Estate, Inc. and the Operating Partnership
10.13* Purchase and Sale Agreement, dated as of June 30, 1993, between
the Operating Partnership and Provident Life and Accident
Insurance Company
10.14* Indenture of Lease, dated as of January 26, 1983, between PCA
Crossroads, Ltd., as landlord, and Crossroads Shopping Center
Company and Macerich Crossroads Associates, collectively, as
tenant, as amended
|
10.15*** Macerich Master Agreement, dated as of March 16, 1994, regarding
the transfer of property partnership interests of The Macerich
Group to the Operating Partnership
10.16*** Registration Rights Agreement, dated as of March 16, 1994,
between the Company and The Northwestern Mutual Life Insurance
Company
10.17*** Registration Rights Agreement, dated as of March 16, 1994, among
the Company and Mace Siegel, Dana K. Anderson, Arthur M. Coppola
and Edward C. Coppola
10.18*** Registration Rights Agreement, dated as of March 16, 1994, among
the Company, Richard M. Cohen and MRII Associates
10.19*** Incidental Registration Rights Agreement, dated as of March 16,
1994
10.20*** Indemnification Agreement, dated as of March 16, 1994, between
the Company and Mace Siegel
10.20.1*** List of omitted Indemnification Agreements
10.21*** Property Management Agreement, dated as of March 16, 1994, with
respect to Macerich Bristol Associates
10.21.1*** List of omitted Property Management Agreements
10.22* Management and Operating Agreement, dated July 1, 1991, between
Macerich Management Company and North Valley Plaza Associates
10.23* Management and Operating Agreement, dated January 17, 1985,
between Macerich Management Company and Macerich Northwestern
Associates, as amended
10.24* Management Agreement, dated September 1, 1985, between Macerich
Management Company and Panorama City Associates
10.25*** Amended and Restated Partnership Agreement for Macerich Bristol
Associates
10.25.1*** List of omitted Amended and Restated Partnership Agreements for
certain Property Partnerships
10.26* Partnership Agreement for Macerich Northwestern Associates, dated
as of January 17, 1985, between Macerich Walnut Creek Associates
and The Northwestern Mutual Life Insurance Company
10.27*** First Amendment to Macerich Northwestern Associates Partnership
Agreement between Operating Partnership and The Northwestern
Mutual Life Insurance Company
10.28* North Valley Plaza Associates Joint Venture Agreement, dated as
of April 14, 1988, between Chico Associates and The Northwestern
Mutual Life Insurance Company
10.29*** First Amendment to North Valley Plaza Associates Joint Venture
Agreement between Operating Partnership and The Northwestern
Mutual Life Insurance Company
|
10.30* Panorama City Associates Partnership Agreement, dated as of
February 2, 1979, between Macerich Panorama Associates and
Connecticut General Mortgage and Realty Investments, as amended
10.31*** Second Amendment to Panorama City Associates Partnership
Agreement between Operating Partnership and 745 Property
Investments (formerly Connecticut General Mortgage and Realty
Investments)
10.32* Amended and Restated Partnership Agreement, dated as of
February 28, 1986, among William A. Schlossman, Donald L. Johnson,
Charles R. Nolan, John L. McCormick, M.O. Foss, Jr., Mark B. Foss,
and Macerich Fargo Associates
10.33* Parcel #1 Ground Lease (Bristol), dated as of November 1, 1971,
between First Western Bank and Trust Company, as landlord, and
Rinker Development Corp., as tenant
10.33.1*** List of omitted Ground Leases
10.34* Amendment to Lease Parcel #2 Ground Lease (Bristol), dated
November 1, 1973, between First Western Bank and Trust Company, as
landlord, and Century Properties Equity Partnership 72, as tenant
10.35* Amendment No. 1 to Ground Leases (Bristol), dated as of June 6,
1973, between First Western Bank and Trust Company, as landlord,
and Montgomery Ross Fisher and Joanne M. Fisher, collectively, as
lessee
10.36* Ground Lease (Broadway), dated June 30, 1993, between City of
Walnut Creek, as lessor, and Macerich Northwestern Associates, as
lessee
10.37* Agreement of Lease (Crossroads-Boulder), dated December 31, 1960,
between H.R. Hindry, as lessor, and Gerri Von Frellick, as lessee,
with amendments and supplements thereto
10.38* Lease (Menke #1) (Parklane), dated December 22, 1959, between
Bessie L. Menke, as lessor, and A.J. Flagg, as lessee, as
supplemented
10.39* Agreement Supplementing Lease (Menke #1), dated November 1, 1960,
between Bessie L. Menke, as lessor, and A.J. Flagg, as lessee
10.40* Second Agreement Supplementing Lease (Menke #1), dated
September 1, 1964, between Mark W. Menke, as executor of the
estate of Bessie L. Menke, and Edith Menke Gamos and Mark W.
Menke, individually (collectively as lessor), and Parklane Mall,
as lessee
10.41* Lease (Menke #2), dated July 30, 1960, between Edith Menke Gamos
and Mark W. Menke, collectively, as lessor, and Flaghill, Inc., as
lessee
10.42* Amendment to Ground Lease (Menke #2), dated May 1, 1979, between
Parklane Shopping Center Company, as ground lessee, and Mark W.
Menke, Diana J. Jones, Edith Menke Gamos and Gary Gamos,
collectively, as ground lessor
10.43* Lease (Menke #3), dated October 5, 1960, between Bessie L. Menke,
as lessor, and Flaghill, Inc., as lessee
10.44* First Agreement Supplementing Lease (Menke #3), dated
September 1, 1964, between Mark W. Menke, executor of the estate
of Bessie L. Menke, deceased, Edith Menke Gamos and Mark W. Menke,
as lessor, and Parklane Mall, as lessee
10.45* Lease (Menke #4), dated October 5, 1960, between Bessie L. Menke,
as lessor, and Flaghill, Inc., as lessee, as supplemented
10.46* Amendment of Leases (Menke #1 through Menke #4) dated June 9,
1981, among Diana J. Jones, Curtis D. Jones, Gary Gamos, Steward
R. Wilson (as Trustee for Menke Trust), Edith Gamos and Mark W.
S. Menke, collectively, as lessor, and Parklane Shopping Center
Company, as lessee
10.47* Agreement (amending Menke #1 through Menke #4), dated May 31,
1967, among Parklane Mall (as ground lessee), Mark W. Menke, Edith
Menke Gamos and Mark W. Menke (as the Administrator of the Estate
of Bessie L. Menke, deceased) (collectively, the ground lessors)
and The Equitable Life Assurance Society of the United States
10.48* Agreement (amending Menke #1 through Menke #4), dated May 1,
1979, among Parklane Mall (as ground lessee), Mark W. Menke, Edith
Menke Gamos and Gary Gamos, Diana J. Jones, Stewart R. Wilson, and
Diana J. Jones as trustee under a Trust Agreement dated September
3, 1971 (collectively, the ground lessors), and The Equitable Life
Assurance Society of the United States
10.49*** Amended and Restated Partnership Agreement of Macerich Fargo
Associates, dated as of March 16, 1994
10.50* Purchase and Sale Agreement, dated as of January 24, 1994, by and
between Crossroads Associates Limited Partnership, as seller, and
the Operating Partnership, as purchaser
10.51***** Contribution Agreement, dated May 13, 1994, between Chesterfield
Mall Associates, a Virginia general partnership, and the Operating
Partnership, as amended and supplemented
10.52****** Contribution Agreement, dated May 13, 1995, between Salisbury-
Springhill Limited Partnership, a Maryland limited partnership,
and the Operating Partnership
10.53******* Contribution Agreement, dated as of July 28, 1995, between
Capitola Mall Associates, a California limited partnership, and
the Operating Partnership, as amended
10.54******** Purchase and Sale Agreement, dated as of November 28, 1995,
between Queens Center Associates, L.P., a Delaware limited
partnership, and Macerich Queens Limited Partnership, a California
limited partnership, as amended
10.55********* Purchase and Sale Agreement, dated as of November 11, 1995,
between Copley Investors Limited Partnership, a Delaware limited
partnership, and Macerich Marina Limited Partnership, a California
limited partnership
|
10.56# Purchase and Sale Agreement, dated as of September 26, 1996,
between LaSalle Street Fund Incorporated of Delaware, a Delaware
corporation, and Macerich Valley View Limited Partnership, a
California limited partnership
10.57## Purchase and Sale Agreement, dated as of September 30, 1996,
between Vintage Faire Associates, a California general
partnership, and Macerich Vintage Faire Limited Partnership, a
California limited partnership.
10.58### Purchase and Sale Agreement, dated as of September 30, 1996,
between Billings Associates, a Montana limited partnership, and
Macerich Rimrock Mall Limited Partnership, a California limited
partnership.
10.59#### Purchase and Sale Agreement, dated as of November 22, 1996,
between MCA Buenaventura Associates, L.P., a Delaware limited
partnership, and MR Buenaventura Limited Partnership, a California
limited partnership
10.60##### Purchase and Sale Agreement, dated as of November 22, 1996,
between MCA Fresno Associates, L.P., a Delaware limited
partnership, and MR Fresno Limited Partnership, a California
limited partnership
10.61###### Purchase and Sale Agreement, dated as of November 22, 1996,
between MCA Huntington Associates, L.P., a Delaware limited
partnership, and MR Huntington Limited Partnership, a California
limited partnership
11.1 Computation of per Share Earnings
21.1 List of Subsidiaries
23.1 Consent of Independent Accountants (Coopers & Lybrand L.L.P.)
|
* Previously filed as an exhibit to the Company's Registration Statement on
Form S-11, as amended (No. 33-68964), and incorporated herein by reference.
** Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date May 30, 1995, and incorporated herein by reference.
*** Previously filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, and incorporated herein
by reference.
**** Previously filed as an exhibit to the Company's Quarterly Statement on
Form 10-Q for the quarter ended June 30, 1994, and incorporated herein by
reference.
***** Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date July 21, 1994, and incorporated herein by reference.
****** Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date May 13, 1995, and incorporated herein by reference.
******* Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date July 28, 1995, and incorporated herein by
reference.
******** Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date December 28, 1995, and incorporated herein by
reference.
********* Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date January 29, 1996, and incorporated herein by
reference.
# Previously filed as an exhibit to the Company's Current Report on Form 8-K,
event date October 21, 1996, and incorporated herein by reference.
## Previously filed as an exhibit to the Company's Current Report on Form 8-K,
event date February 3, 1997, and incorporated herein by reference.
### Previously filed as an exhibit to the Company's Current Report on Form 8-K,
event date February 3, 1997, and incorporated herein by reference.
#### Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date February 27, 1997, and incorporated herein by
reference.
##### Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date February 27, 1997, and incorporated herein by
reference.
###### Previously filed as an exhibit to the Company's Current Report on
Form 8-K, event date February 27, 1997, and incorporated herein by
reference.
|
Exhibit 11.1
THE MACERICH COMPANY
Computation of Earnings Per Share
(Dollars in thousands, except per share data)
For the year ended
December 31, 1996 December 31, 1995
--------------------- ----------------------
Primary
Net income as reported $18,911 $11,303
---------------------- ----------------------
---------------------- ----------------------
Weighted average number
of shares outstanding 20,781,000 15,481,000
Incremental shares
resulting from stock
options and
restricted stock 150,000 20,000
---------------------- ----------------------
Weighted average number
of shares of common
stock and
equivalents 20,931,000 15,501,000
---------------------- ----------------------
Primary earnings
per share $0.90 $0.73
---------------------- ----------------------
---------------------- ----------------------
Fully Diluted
Net income as reported $18,911 $11,303
---------------------- ----------------------
---------------------- ----------------------
Weighted average number
of shares outstanding 20,781,000 15,481,000
Incremental shares
resulting from
stock options and
restricted stock 244,000 58,000
---------------------- ----------------------
Weighted average
number of shares
of common stock
and equivalents 21,025,000 15,539,000
---------------------- ----------------------
---------------------- ----------------------
Fully diluted
earnings per share $0.90 $0.73
---------------------- ----------------------
---------------------- ----------------------
|
Exhibit 21.1
LIST OF SUBSIDIARIES
THE MACERICH PARTNERSHIP, L.P., a Delaware limited partnership
MACERICH FARGO ASSOCIATES, a California general partnership
MACERICH BRISTOL ASSOCIATES, a California general partnership
MACERICH BUENAVENTURA LIMITED PARTNERSHIP, a California limited partnership
MACERICH BUENAVENTURA GP CORP., a Delaware corporation
MACERICH NORTHWESTERN ASSOCIATES, a California general partnership
MACERICH FRESNO LIMITED PARTNERSHIP, a California limited partnership
MACERICH FRESNO GP CORP., a Delaware corporation
MACERICH GREELEY ASSOCIATES, a California general partnership
MACERICH HUNTINGTON LIMITED PARTNERSHIP, a California limited partnership
MACERICH HUNTINGTON GP CORP., a Delaware corporation
NORTHGATE MALL ASSOCIATES, a California general partnership
NORTH VALLEY PLAZA ASSOCIATES, a California general partnership
PANORAMA CITY ASSOCIATES, a California general partnership
LAKEWOOD MALL BUSINESS COMPANY, a Delaware business trust
LAKEWOOD MALL FINANCE COMPANY, a Delaware corporation
MACERICH PROPERTY MANAGEMENT COMPANY, a California corporation
MACERICH MANAGEMENT COMPANY, a California corporation
MACERICH MARINA LIMITED PARTNERSHIP, a California limited partnership
MACERICH MARINA GP CORP., a Delaware corporation
MACERICH OKLAHOMA LIMITED PARTNERSHIP, a California limited partnership
MACERICH OKLAHOMA GP CORP., a Delaware corporation
MACERICH QUEENS LIMITED PARTNERSHIP, a California limited partnership
MACERICH QUEENS GP CORP., a Delaware corporation
MACERICH QUEENS FUNDING CORP., a Delaware corporation
MACERICH RIMROCK LIMITED PARTNERSHIP, a California limited partnership
MACERICH RIMROCK GP CORP., a Delaware corporation
MACERICH SCG LIMITED PARTNERSHIP, a California limited partnership
MACERICH SCG GP CORP., a Delaware corporation
MACERICH SCG FUNDING LIMITED PARTNERSHIP, a California limited partnership
MACERICH SCG HOLDING LIMITED PARTNERSHIP, a California limited partnership
MACERICH SCG FUNDING GP CORP., a Delaware corporation
MACERICH SASSAFRAS GP CORP., a Delaware corporation
MACERICH SASSAFRAS LIMITED PARTNERSHIP, a California limited partnership
MACERICH SOUTH TOWNE LIMITED PARTNERSHIP, a California limited partnership
MACERICH SOUTH TOWNE GP CORP., a Delaware corporation
MACERICH ST MARKETPLACE LIMITED PARTNERSHIP, a California limited
partnership
MACERICH ST MARKETPLACE GP CORP., a Delaware corporation
MACERICH VALLEY VIEW LIMITED PARTNERSHIP, a California limited partnership
MACERICH VALLEY VIEW GP CORP., a Delaware corporation
MACERICH VINTAGE FAIRE LIMITED PARTNERSHIP, a California limited partnership
MACERICH VINTAGE FAIRE GP CORP., a Delaware corporation
WEST ACRES DEVELOPMENT, a North Dakota general partnership
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of The Macerich Company in Form S-3 and Form S-8, of our report dated March 14, 1997, on our audits of the consolidated financial statements and financial statement schedule of The Macerich Company as of December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and the period March 16,1994 through December 31, 1994 and the combined financial statements of Macerich Predecessor Affiliates for the period January 1, 1994 through March 15, 1994, and the year ended December 31, 1993, which report is included in the Annual Report on Form 10-K. We also consent to the reference to our Firm under the caption "Experts" in the registration statement on Form S-3.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 25, 1997
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEETS AND CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 31 AND 32 OF THE COMPANY'S FORM 10-K FOR THE YEAR, AND IS QUALIFIED IN ITS ENTIRETY BY REFERNCE TO SUCH FINANCIAL STATEMENTS. |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | DEC 31 1996 |
| PERIOD END | DEC 31 1996 |
| CASH | 15,643 |
| SECURITIES | 0 |
| RECEIVABLES | 26,297 |
| ALLOWANCES | 0 |
| INVENTORY | 0 |
| CURRENT ASSETS | 37,145 |
| PP&E | 1,273,085 |
| DEPRECIATION | 164,417 |
| TOTAL ASSETS | 1,187,753 |
| CURRENT LIABILITIES | 117,523 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 257 |
| COMMON | 0 |
| OTHER SE | 237,492 |
| TOTAL LIABILITY AND EQUITY | 1,187,753 |
| SALES | 0 |
| TOTAL REVENUES | 155,059 |
| CGS | 0 |
| TOTAL COSTS | 0 |
| OTHER EXPENSES | 85,761 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 42,353 |
| INCOME PRETAX | 19,226 |
| INCOME TAX | 0 |
| INCOME CONTINUING | 19,226 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | (315) |
| CHANGES | 0 |
| NET INCOME | 18,911 |
| EPS PRIMARY | .91 |
| EPS DILUTED | .91 |