Macerich Co. said Wednesday that higher rents on new leases at its shopping malls helped it achieve a 58 percent increase in fourth quarter profits and 39 percent growth in funds from operations, the latter metric better than Wall Street expectations.
But shares fell as the Santa Monica real estate investment trust tempered its outlook for the coming year
The regional mall operator reported net income of $63.2 million (83 cents per share), compared with $39.9 million (55 cents) a year ago. Macerich said the starting rent on new leases was 23 percent higher than on expiring leases, but the occupancy rate at its facilities was 92.3 percent at the end of the year, down from 93.1 percent at the end of 2007.
The REIT said funds from operations was more than $184 million ($2.08 a share), compared with more than $132 million ($1.45) a year earlier. Analysts surveyed by Thomson Reuters expected funds from operations of $1.93 per share. The company's guidance for funds from operations of $4.50 to $4.75 per share in 2009 was below the analysts' consensus of $4.98 per share.
Funds from operations, which adds items such as amortization and depreciation back to net income, is a closely watched metric for REITS because it provides a more accurate picture of cash performance.
Full year 2008 net income was more than $183 million ($2.47), compared with $73.7 million ($1.02) in 2007.
"In light of the very difficult economy we are in, we are pleased with our results for the quarter and the year," Chief Executive Arthur Coppola said in a statement. "Occupancy levels, although down, remain at very healthy levels. We continue to access capital in this tough credit market and we continue to make good progress in bolstering our balance sheet."
Macerich shares were down 53 cents, or 3.4 percent, to $14.96 in morning trading on the New York Stock Exchange.
For reprint and licensing requests for this article, CLICK HERE.