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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No.: 1-12504
THE MACERICH COMPANY
(Exact name of registrant as specified in its charter) | | | | | | | | | | | | | | | | | |
Maryland | | 95-4448705 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
401 Wilshire Boulevard, | Suite 700, | Santa Monica, | California | | 90401 |
(Address of principal executive office) | | (Zip Code) |
| | (310) | 394-6000 |
(Registrant's telephone number, including area code) |
N/A (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Securities Act: | | | | | | | | |
Title of each class | Trading symbol | Name of each exchange on which registered |
Common Stock, $0.01 Par Value | MAC | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety (90) days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding twelve (12) months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Large Accelerated Filer | x | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☐ | | Smaller Reporting Company | ☐ |
| | | | | | | | | Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares outstanding as of August 5, 2022 of the registrant's common stock, par value $0.01 per share: 214,775,995 shares
THE MACERICH COMPANY
FORM 10-Q
INDEX | | | | | | | | | | | | | | |
Part I | | Financial Information | | |
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Part II | | Other Information | | |
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THE MACERICH COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
(Unaudited) | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
ASSETS: | | | |
Property, net | $ | 6,175,685 | | | $ | 6,284,206 | |
| | | |
Cash and cash equivalents | 106,384 | | | 112,454 | |
Restricted cash | 52,060 | | | 54,517 | |
Tenant and other receivables, net | 162,310 | | | 211,361 | |
Right-of-use assets, net | 129,161 | | | 110,638 | |
Deferred charges and other assets, net | 238,847 | | | 254,908 | |
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Due from affiliates | 3,209 | | | — | |
Investments in unconsolidated joint ventures | 1,246,730 | | | 1,317,571 | |
Total assets | $ | 8,114,386 | | | $ | 8,345,655 | |
LIABILITIES AND EQUITY: | | | |
Mortgage notes payable | $ | 4,361,131 | | | $ | 4,423,554 | |
Bank and other notes payable | 74,964 | | | 104,811 | |
Accounts payable and accrued expenses | 53,889 | | | 59,228 | |
Due to affiliates | — | | | 327 | |
Lease liabilities | 98,426 | | | 80,711 | |
Other accrued liabilities | 214,451 | | | 254,279 | |
Distributions in excess of investments in unconsolidated joint ventures | 126,359 | | | 127,608 | |
Financing arrangement obligation | 128,773 | | | 118,988 | |
Total liabilities | 5,057,993 | | | 5,169,506 | |
Commitments and contingencies | | | |
Equity: | | | |
Stockholders' equity: | | | |
Common stock, $0.01 par value, 500,000,000 shares authorized at June 30, 2022 and December 31, 2021, and 215,113,342 and 214,797,057 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | 2,150 | | | 2,147 | |
Additional paid-in capital | 5,500,101 | | | 5,488,440 | |
Accumulated deficit | (2,560,793) | | | (2,443,696) | |
Accumulated other comprehensive income (loss) | 16 | | | (24) | |
Total stockholders' equity | 2,941,474 | | | 3,046,867 | |
Noncontrolling interests | 114,919 | | | 129,282 | |
Total equity | 3,056,393 | | | 3,176,149 | |
Total liabilities and equity | $ | 8,114,386 | | | $ | 8,345,655 | |
The accompanying notes are an integral part of these consolidated financial statements.
THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Revenues: | | | | | | | |
Leasing revenue | $ | 188,590 | | | $ | 196,987 | | | $ | 392,002 | | | $ | 376,522 | |
Other | 8,081 | | | 11,855 | | | 14,408 | | | 17,176 | |
Management Companies | 7,420 | | | 6,631 | | | 13,825 | | | 12,199 | |
Total revenues | 204,091 | | | 215,473 | | | 420,235 | | | 405,897 | |
Expenses: | | | | | | | |
Shopping center and operating expenses | 69,728 | | | 67,655 | | | 142,648 | | | 143,810 | |
Leasing expenses | 8,148 | | | 6,637 | | | 15,759 | | | 11,803 | |
Management Companies' operating expenses | 17,746 | | | 15,021 | | | 34,691 | | | 29,864 | |
REIT general and administrative expenses | 6,441 | | | 6,679 | | | 13,303 | | | 14,766 | |
| | | | | | | |
| | | | | | | |
Depreciation and amortization | 72,458 | | | 77,630 | | | 145,314 | | | 156,026 | |
| 174,521 | | | 173,622 | | | 351,715 | | | 356,269 | |
Interest expense: | | | | | | | |
Related parties | 8,892 | | | 2,954 | | | 16,895 | | | 4,273 | |
Other | 44,297 | | | 51,960 | | | 88,155 | | | 104,537 | |
| 53,189 | | | 54,914 | | | 105,050 | | | 108,810 | |
| | | | | | | |
Total expenses | 227,710 | | | 228,536 | | | 456,765 | | | 465,079 | |
Equity in income (loss) of unconsolidated joint ventures | 6,353 | | | 20,035 | | | (22,744) | | | 21,945 | |
Income tax benefit (expense) | 670 | | | (7,107) | | | (1,129) | | | (9,345) | |
(Loss) gain on sale or write down of assets, net | (1,091) | | | (3,927) | | | 5,362 | | | (25,210) | |
| | | | | | | |
Net loss | (17,687) | | | (4,062) | | | (55,041) | | | (71,792) | |
Less: net (loss) income attributable to noncontrolling interests | (2,303) | | | 7,703 | | | (2,475) | | | 3,577 | |
Net loss attributable to the Company | $ | (15,384) | | | $ | (11,765) | | | $ | (52,566) | | | $ | (75,369) | |
Loss per common share—attributable to common stockholders: | | | | | | | |
Basic | $ | (0.07) | | | $ | (0.06) | | | $ | (0.25) | | | $ | (0.42) | |
Diluted | $ | (0.07) | | | $ | (0.06) | | | $ | (0.25) | | | $ | (0.42) | |
Weighted average number of common shares outstanding: | | | | | | | |
Basic | 214,990,000 | | | 205,757,000 | | | 214,905,000 | | | 182,299,000 | |
Diluted | 214,990,000 | | | 205,757,000 | | | 214,905,000 | | | 182,299,000 | |
The accompanying notes are an integral part of these consolidated financial statements.
THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Dollars in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Net loss | $ | (17,687) | | | $ | (4,062) | | | $ | (55,041) | | | $ | (71,792) | |
Other comprehensive income: | | | | | | | |
Interest rate cap/swap agreements | 9 | | | 2,739 | | | 40 | | | 5,433 | |
Comprehensive loss | (17,678) | | | (1,323) | | | (55,001) | | | (66,359) | |
Less: net (loss) income attributable to noncontrolling interests | (2,303) | | | 7,703 | | | (2,475) | | | 3,577 | |
Comprehensive loss attributable to the Company | $ | (15,375) | | | $ | (9,026) | | | $ | (52,526) | | | $ | (69,936) | |
The accompanying notes are an integral part of these consolidated financial statements.
THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended June 30, 2022 and 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders' Equity | | | | |
| Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other Comprehensive (Loss) Income | | Total Stockholders' Equity | | | | |
| Shares | | Par Value | | | | | | Noncontrolling Interests | | Total Equity |
Balance at April 1, 2022 | 214,901,377 | | | $ | 2,148 | | | $ | 5,493,662 | | | $ | (2,513,179) | | | $ | 7 | | | $ | 2,982,638 | | | $ | 120,866 | | | $ | 3,103,504 | |
Net loss | — | | — | | — | | (15,384) | | | — | | (15,384) | | | (2,303) | | | (17,687) | |
| | | | | | | | | | | | | | | |
Interest rate cap agreement | — | | — | | — | | — | | 9 | | | 9 | | | — | | 9 | |
Amortization of share and unit-based plans | 80,472 | | | 1 | | | 5,383 | | | — | | — | | 5,384 | | | — | | 5,384 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employee stock purchases | 96,942 | | | 1 | | | 959 | | | — | | — | | 960 | | | — | | 960 | |
Stock offerings, net | — | | | — | | | (50) | | | — | | — | | (50) | | | — | | (50) | |
| | | | | | | | | | | | | | | |
Distributions paid ($0.15 per share) | — | | — | | — | | (32,230) | | | — | | (32,230) | | | — | | (32,230) | |
| | | | | | | | | | | | | | | |
Distributions to noncontrolling interests | — | | — | | — | | — | | — | | — | | | (3,169) | | | (3,169) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Conversion of noncontrolling interests to common shares | 34,551 | | | — | | | 2,078 | | | — | | — | | 2,078 | | | (2,078) | | | — | |
Redemption of noncontrolling interests | — | | — | | 177 | | | — | | — | | 177 | | | (505) | | | (328) | |
Adjustment of noncontrolling interests in Operating Partnership | — | | — | | (2,108) | | | — | | — | | (2,108) | | | 2,108 | | | — | |
Balance at June 30, 2022 | 215,113,342 | | | $ | 2,150 | | | $ | 5,500,101 | | | $ | (2,560,793) | | | $ | 16 | | | $ | 2,941,474 | | | $ | 114,919 | | | $ | 3,056,393 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders' Equity | | | | |
| Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Loss | | Total Stockholders' Equity | | | | |
| Shares | | Par Value | | | | | | Noncontrolling Interests | | Total Equity |
Balance at April 1, 2021 | 197,036,176 | | | $ | 1,971 | | | $ | 5,263,994 | | | $ | (2,426,555) | | | $ | (5,514) | | | $ | 2,833,896 | | | $ | 163,409 | | | $ | 2,997,305 | |
Net (loss) income | — | | | — | | | — | | | (11,765) | | | — | | | (11,765) | | | 7,703 | | | (4,062) | |
| | | | | | | | | | | | | | | |
Interest rate cap/swap agreements | — | | | — | | | — | | | — | | | 2,739 | | | 2,739 | | | — | | | 2,739 | |
Amortization of share and unit-based plans | 129,928 | | | 1 | | | 4,331 | | | — | | | — | | | 4,332 | | | — | | | 4,332 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employee stock purchases | 88,107 | | | 1 | | | 594 | | | — | | | — | | | 595 | | | — | | | 595 | |
Stock offerings, net | 13,915,443 | | | 139 | | | 167,771 | | | — | | | — | | | 167,910 | | | — | | | 167,910 | |
| | | | | | | | | | | | | | | |
Distributions paid ($0.15 per share) | — | | | — | | | — | | | (31,016) | | | — | | | (31,016) | | | — | | | (31,016) | |
| | | | | | | | | | | | | | | |
Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (10,856) | | | (10,856) | |
Contributions from noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (1) | | | (1) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Adjustment of noncontrolling interests in Operating Partnership | — | | | — | | | 1,803 | | | — | | | — | | | 1,803 | | | (1,803) | | | — | |
Balance at June 30, 2021 | 211,169,654 | | | $ | 2,112 | | | $ | 5,438,493 | | | $ | (2,469,336) | | | $ | (2,775) | | | $ | 2,968,494 | | | $ | 158,452 | | | $ | 3,126,946 | |
The accompanying notes are an integral part of these consolidated financial statements.
THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except per share data)
(Unaudited)
Six Months Ended June 30, 2022 and 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders' Equity | | | | |
| Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Loss | | Total Stockholders' Equity | | | | |
| Shares | | Par Value | | | | | | Noncontrolling Interests | | Total Equity |
Balance at January 1, 2022 | 214,797,057 | | | $ | 2,147 | | | $ | 5,488,440 | | | $ | (2,443,696) | | | $ | (24) | | | $ | 3,046,867 | | | $ | 129,282 | | | $ | 3,176,149 | |
Net loss | — | | | — | | | — | | | (52,566) | | | — | | | (52,566) | | | (2,475) | | | (55,041) | |
| | | | | | | | | | | | | | | |
Interest rate cap agreement | — | | | — | | | — | | | — | | | 40 | | | 40 | | | — | | | 40 | |
Amortization of share and unit-based plans | 184,792 | | | 2 | | | 11,444 | | | — | | | — | | | 11,446 | | | — | | | 11,446 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employee stock purchases | 96,942 | | | 1 | | | 959 | | | — | | | — | | | 960 | | | — | | | 960 | |
Stock offerings, net | — | | | — | | | (120) | | | — | | | | | (120) | | | — | | | (120) | |
| | | | | | | | | | | | | | | |
Distributions paid ($0.30 per share) | — | | | — | | | — | | | (64,531) | | | — | | | (64,531) | | | — | | | (64,531) | |
| | | | | | | | | | | | | | | |
Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (12,182) | | | (12,182) | |
Contributions from noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | |
Conversion of noncontrolling interests to common shares | 34,551 | | | — | | | 2,078 | | | — | | | — | | | 2,078 | | | (2,078) | | | — | |
Redemption of noncontrolling interests | — | | | — | | | 177 | | | — | | | — | | | 177 | | | (505) | | | (328) | |
Adjustment of noncontrolling interests in Operating Partnership | — | | | — | | | (2,877) | | | — | | | — | | | (2,877) | | | 2,877 | | | — | |
Balance at June 30, 2022 | 215,113,342 | | | $ | 2,150 | | | $ | 5,500,101 | | | $ | (2,560,793) | | | $ | 16 | | | $ | 2,941,474 | | | $ | 114,919 | | | $ | 3,056,393 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders' Equity | | | | |
| Common Stock | | Additional Paid-in Capital | | Accumulated Deficit | | Accumulated Other Comprehensive Loss | | Total Stockholders' Equity | | | | |
| Shares | | Par Value | | | | | | Noncontrolling Interests | | Total Equity |
Balance at January 1, 2021 | 149,770,575 | | | $ | 1,498 | | | $ | 4,603,378 | | | $ | (2,339,619) | | | $ | (8,208) | | | $ | 2,257,049 | | | $ | 188,211 | | | $ | 2,445,260 | |
Net (loss) income | — | | | — | | | — | | | (75,369) | | | — | | | (75,369) | | | 3,577 | | | (71,792) | |
| | | | | | | | | | | | | | | |
Interest rate cap/swap agreements | — | | | — | | | — | | | — | | | 5,433 | | | 5,433 | | | — | | | 5,433 | |
Amortization of share and unit-based plans | 224,681 | | | 2 | | | 9,361 | | | — | | | — | | | 9,363 | | | — | | | 9,363 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employee stock purchases | 88,107 | | | 1 | | | 594 | | | — | | | — | | | 595 | | | — | | | 595 | |
Stock offerings, net | 59,907,761 | | | 599 | | | 805,455 | | | — | | | — | | | 806,054 | | | — | | | 806,054 | |
| | | | | | | | | | | | | | | |
Distributions paid ($0.30 per share) | — | | | — | | | — | | | (54,348) | | | — | | | (54,348) | | | — | | | (54,348) | |
| | | | | | | | | | | | | | | |
Distributions to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (14,194) | | | (14,194) | |
Contributions from noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | 576 | | | 576 | |
| | | | | | | | | | | | | | | |
Conversion of noncontrolling interests to common shares | 1,178,530 | | | 12 | | | 22,206 | | | — | | | — | | | 22,218 | | | (22,218) | | | — | |
Redemption of noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | (1) | | | (1) | |
Adjustment of noncontrolling interests in Operating Partnership | — | | | — | | | (2,501) | | | — | | | — | | | (2,501) | | | 2,501 | | | — | |
Balance at June 30, 2021 | 211,169,654 | | | $ | 2,112 | | | $ | 5,438,493 | | | $ | (2,469,336) | | | $ | (2,775) | | | $ | 2,968,494 | | | $ | 158,452 | | | $ | 3,126,946 | |
The accompanying notes are an integral part of these consolidated financial statements.
THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited) | | | | | | | | | | | |
| For the Six Months Ended June 30, |
| 2022 | | 2021 |
Cash flows from operating activities: | | | |
Net loss | $ | (55,041) | | | $ | (71,792) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | |
| | | |
(Gain) loss on sale or write down of assets, net | (5,362) | | | 25,210 | |
Depreciation and amortization | 150,759 | | | 162,603 | |
| | | |
Amortization of share and unit-based plans | 9,152 | | | 7,460 | |
Straight-line rent and amortization of above and below market leases | 1,664 | | | (11,318) | |
Recovery of doubtful accounts | (876) | | | (5,907) | |
Income tax expense | 1,129 | | | 9,345 | |
Equity in loss (income) of unconsolidated joint ventures | 22,744 | | | (21,945) | |
Distributions of income from unconsolidated joint ventures | 385 | | | — | |
Change in fair value of financing arrangement obligation | 9,785 | | | (2,302) | |
Changes in assets and liabilities, net of dispositions: | | | |
Tenant and other receivables | 26,355 | | | 81,168 | |
Other assets | (9,577) | | | 9,480 | |
Due from affiliates | (3,536) | | | (3,200) | |
Accounts payable and accrued expenses | (5,202) | | | (15,426) | |
Other accrued liabilities | (26,957) | | | (50,349) | |
Net cash provided by operating activities | 115,422 | | | 113,027 | |
Cash flows from investing activities: | | | |
| | | |
Development, redevelopment, expansion and renovation of properties | (21,225) | | | (35,560) | |
Property improvements | (17,708) | | | (16,107) | |
| | | |
Proceeds from repayment of notes receivable | — | | | 1,300 | |
Deferred leasing costs | (915) | | | (1,176) | |
Distributions from unconsolidated joint ventures | 70,857 | | | 45,978 | |
Contributions to unconsolidated joint ventures | (31,886) | | | (39,487) | |
| | | |
Proceeds from collection of receivable in connection with sale of joint venture property | 21,000 | | | — | |
Proceeds from sale of assets | 30,994 | | | 149,993 | |
Net cash provided by investing activities | 51,117 | | | 104,941 | |
| | | |
| | | | | | | | | | | |
THE MACERICH COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Dollars in thousands) (Unaudited) |
| For the Six Months Ended June 30, |
| 2022 | | 2021 |
Cash flows from financing activities: | | | |
Proceeds from mortgages, bank and other notes payable | 25,000 | | | 495,000 | |
Payments on mortgages, bank and other notes payable | (120,796) | | | (1,632,572) | |
| | | |
Deferred financing costs | (1,922) | | | (22,228) | |
| | | |
Payments on finance leases | (1,147) | | | (1,102) | |
| | | |
Net (costs) proceeds from stock offerings | (120) | | | 791,425 | |
| | | |
Proceeds from share and unit-based plans | 960 | | | 595 | |
| | | |
| | | |
Redemption of noncontrolling interests | (328) | | | (1) | |
Contribution from noncontrolling interests | — | | | 124 | |
| | | |
| | | |
Dividends and distributions | (76,713) | | | (68,542) | |
Net cash used in financing activities | (175,066) | | | (437,301) | |
Net decrease in cash, cash equivalents and restricted cash | (8,527) | | | (219,333) | |
Cash, cash equivalents and restricted cash, beginning of period | 166,971 | | | 482,659 | |
Cash, cash equivalents and restricted cash, end of period | $ | 158,444 | | | $ | 263,326 | |
Supplemental cash flow information: | | | |
Cash payments for interest, net of amounts capitalized | $ | 90,733 | | | $ | 113,484 | |
Non-cash investing and financing transactions: | | | |
Accrued development costs included in accounts payable and accrued expenses and other accrued liabilities | $ | 23,340 | | | $ | 22,378 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Conversion of Operating Partnership Units to common stock | $ | 2,078 | | | $ | 22,218 | |
Accrued receivable of net proceeds from stock offering | $ | — | | | $ | 14,629 | |
| | | |
| | | |
The accompanying notes are an integral part of these consolidated financial statements.
THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
1. Organization:
The Macerich Company (the "Company") is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional town centers and community/power shopping centers (the "Centers") located throughout the United States.
The Company commenced operations effective with the completion of its initial public offering on March 16, 1994. As of June 30, 2022, the Company was the sole general partner of and held a 96% ownership interest in The Macerich Partnership, L.P. (the "Operating Partnership"). The Company was organized to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code").
The property management, leasing and redevelopment of the Company's portfolio is provided by the Company's management companies, Macerich Property Management Company, LLC, a single member Delaware limited liability company, Macerich Management Company, a California corporation, Macerich Arizona Partners LLC, a single member Arizona limited liability company, Macerich Arizona Management LLC, a single member Delaware limited liability company, Macerich Partners of Colorado LLC, a single member Colorado limited liability company, MACW Mall Management, Inc., a New York corporation, and MACW Property Management, LLC, a single member New York limited liability company. All seven of the management companies are collectively referred to herein as the "Management Companies."
All references to the Company in this Quarterly Report on Form 10-Q include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise.
2. Summary of Significant Accounting Policies:
Basis of Presentation:
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements and have not been audited by an independent registered public accounting firm.
The Company's sole significant asset is its investment in the Operating Partnership and as a result, substantially all of the Company's assets and liabilities represent the assets and liabilities of the Operating Partnership. In addition, the Operating Partnership has investments in a number of consolidated variable interest entities ("VIEs"), including Fashion District Philadelphia and SanTan Village Regional Center.
The Operating Partnership's consolidated VIEs included the following assets and liabilities: | | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Assets: | | | |
Property, net | $ | 449,717 | | | $ | 458,964 | |
Other assets | 83,546 | | | 83,685 | |
Total assets | $ | 533,263 | | | $ | 542,649 | |
Liabilities: | | | |
Mortgage notes payable | $ | 413,971 | | | $ | 413,925 | |
Other liabilities | 56,081 | | | 56,947 | |
Total liabilities | $ | 470,052 | | | $ | 470,872 | |
All intercompany accounts and transactions have been eliminated in the consolidated financial statements.
THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
2. Summary of Significant Accounting Policies: (Continued)
The unaudited interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements for the interim periods have been made. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements but does not include all disclosures required by GAAP. The following table presents a reconciliation of the beginning of period and end of period cash, cash equivalents and restricted cash reported on the Company's consolidated balance sheets to the totals shown on its consolidated statements of cash flows:
| | | | | | | | | | | |
| For the Six Months Ended June 30, |
| 2022 | | 2021 |
Beginning of period | | | |
Cash and cash equivalents | $ | 112,454 | | | $ | 465,297 | |
Restricted cash | 54,517 | | | 17,362 | |
Cash, cash equivalents and restricted cash | $ | 166,971 | | | $ | 482,659 | |
End of period | | | |
Cash and cash equivalents | $ | 106,384 | | | $ | 194,028 | |
Restricted cash | 52,060 | | | 69,298 | |
Cash, cash equivalents and restricted cash | $ | 158,444 | | | $ | 263,326 | |
COVID-19 Pandemic:
In March 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. As a result, all of the markets that the Company operates in were subject to stay-at-home orders, and the majority of its properties were temporarily closed in part or completely. Following staggered re-openings during 2020, all Centers have been open and operating since October 7, 2020 and government-imposed capacity restrictions resulting from COVID-19 have been essentially eliminated across the Company’s markets.
COVID-19 Lease Accounting:
In April 2020, the Financial Accounting Standards Board issued a Staff Question-and-Answer (“Q&A”) to clarify whether lease concessions related to the effects of COVID-19 require the application of the lease modification guidance under Accounting Standards Codification ("ASC") 842, "Leases" ("the lease modification accounting framework"). Under ASC 842, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant or an enforceable right and obligation within the existing lease. The Q&A allows for the bypass of a lease-by-lease analysis, and allows the Company to elect to either apply the lease modification accounting framework or not to all of its lease concessions with similar characteristics and circumstances. The Company has elected to apply the lease modification accounting framework to lease concessions that include the abatement of rent in its consolidated financial statements for the three and six months ended June 30, 2022 and 2021.
THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
3. Earnings Per Share ("EPS"):
The following table reconciles the numerator and denominator used in the computation of EPS for the three and six months ended June 30, 2022 and 2021 (shares in thousands): | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Numerator | | | | | | | |
Net loss | $ | (17,687) | | | $ | (4,062) | | | $ | (55,041) | | | $ | (71,792) | |
Less: net (loss) income attributable to noncontrolling interests | (2,303) | | | 7,703 | | | (2,475) | | | 3,577 | |
Net loss attributable to the Company | (15,384) | | | (11,765) | | | (52,566) | | | (75,369) | |
Allocation of earnings to participating securities | (209) | | | (214) | | | (431) | | | (429) | |
Numerator for basic and diluted EPS—net loss attributable to common stockholders | $ | (15,593) | | | $ | (11,979) | | | $ | (52,997) | | | $ | (75,798) | |
Denominator | | | | | | | |
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Denominator for basic and diluted EPS—weighted average number of common shares outstanding(1) | 214,990 | | | 205,757 | | | 214,905 | | | 182,299 | |
EPS—net loss attributable to common stockholders | | | | | | | |
Basic and diluted | $ | (0.07) | | | $ | (0.06) | | | $ | (0.25) | | | $ | (0.42) | |
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(1) Diluted EPS excludes 99,565 and