mac-20220630

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

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

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021

Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2022 and 2021

Consolidated Statements of Equity for the three and six months ended June 30, 2022 and 2021

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

Notes to Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Part II

Other Information

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

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

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.

Table of Contents

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.

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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.

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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.

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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.

Table of Contents

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

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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.

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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.

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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



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)

(1) Diluted EPS excludes 99,565 and