The Macerich Company (NYSE:MAC) Q4 2017 Earnings Conference Call Transcript

Feb 06, 2018 • 02:00 pm ET


The Macerich Company (NYSE:MAC) Q4 2017 Earnings Conference Call Transcript


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Good day, and welcome to the Macerich Company Fourth Quarter 2017 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Jean Wood, Vice President of Investor Relations. Please go ahead.

Jean Wood

Thank you, everyone for joining us today on our fourth quarter 2017 earnings call. During the course of this call, management may make certain statements that may be deemed forward-looking within the meaning of the Safe Harbor of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to a variety of risks, uncertainties and other factors.

We refer you to today's press release and our SEC filings for a detailed discussion of forward-looking statements. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the earnings release and supplemental filed on Form 8-K with SEC, which are posted in the Investors section of the Company's website at

Joining us today are Art Coppola, CEO and Chairman; Tom O'Hern, Senior Executive Vice President and Chief Financial Officer; and Robert Perlmutter, Senior Executive Vice President and Chief Operating Officer.

With that, I would like to turn the call over to Tom.

Thomas O Hern

Thank you, Jean. The fourth quarter reflected continued solid operating results as evidenced by the strength of most of our key operating metrics. FFO for the quarter was $1.03 that includes the adverse impact of about $0.10 a share due to revaluing our deferred tax assets as a result of the new lower corporate income tax rates that were passed by Congress at year end. Our guidance in the Street estimates did not factor in that tax rate impact. Excluding the impact of the revaluation of the deferred tax asset, FFO for the quarter was $1.13 and $3.93 for the year.

Same center NOI growth excluding straight-line rents and SFAS 141 income was up 2.4% for the quarter. Year-to-date, the same center growth rate was 2.7%. The major reasons for the actual being lower than our guidance range in the fourth quarter was largely due to temporary tenant income being less than forecast, other income including advertising being less than forecast, and the results from the Tysons mixed use buildings being less than forecast.

Lease termination fees for the quarter were $7.6 million compared to $4 million in the fourth quarter last year. However, for the full-year lease terminations were relatively flat at $22 million compared to $21 million in 2016. Bad debt expense was relatively modest $900,000 for the quarter down from $1.3 million in the fourth quarter of last year.

During the fourth quarter, the average interest rate was up about 20 basis points to 3.71% at year-end. The balance sheet continues to be in good shape. At quarter end, our balance sheet metrics were debt to market cap 44%, interest coverage ratio 3.3 times, very healthy and average debt maturity of 5.9 years, which we expect to improve as we closed on the financing of Broadway Plaza