UPDATE 2-Macerich first-quarter FFO rises, shares sink

* FFO rises on one-time gain

* Pares 2009 FFO forecast

* Shares fall 15 pct
(Adds possible equity offering, CEO comment, updates share
price)

By Ilaina Jonas

NEW YORK, May 5 (Reuters) - Macerich Co (MAC.N) reported
first-quarter funds from operations that beat Wall Street's
forecast, chiefly on a gain from the buy-back of its debt, but
sales and occupancy at its malls declined, and its shares sank
nearly 14 percent.

"We're still in a very tough retail environment. The last
six months in particular have been very difficult for our
tenants in terms of sales trend," Arthur Coppola, Macerich
chairman and chief executive, told analysts on a conference
call.

Macerich, which owns malls chiefly in U.S. Western regions,
on Tuesday posted FFO, a performance measure of a real estate
investment trust, that rose to $102.8 million, or $1.16 per
share. The results include a $22.5 million gain from the early
extinguishment of debt. A year earlier the company posted FFO of
$92.5 million, or $1.05 per share.

Analysts on average expected the company to post FFO of
$1.08 per share.

The U.S. recession has hindered consumer spending and hurt
retailers. For Macerich, that translated into a 6 percent fall
in sales per square foot to $440 at centers the company has
operated for at least a year. Bankruptcy at big-box stores
helped cut occupancy during the quarter to 90.2 percent from
92.3 a year earlier.

But 21 percent higher rent for new leases than for the
older ones that expired helped net operating income stay
essentially flat. Net operating income reflects how well the
properties did during the quarter, and does not include debt or
corporate-level expenses.

Investors, concerned about the Santa Monica,
California-based company's looming debt, have flogged Macerich's
stock price, driving it down more than 78 percent over the past
year.

The company will have $143 million of remaining loan
maturities for 2009 and more than a billion dollars due each
year in 2011 through 2013.

"The balance sheet is stretched, and we believe the company
should issue equity," said RBC Capital Markets analyst Rich
Moore, one of several calling for the company to issue shares
to raise cash.

Macerich plans on tackling its debt load through a
combination of selling non-core assets and entering into joint
ventures. Coppola said that in addition to selling whole or
part of its non-core and core assets, the company likely will
issue more shares to raise equity.

"I think it is going to require a fine balancing act
between the two," Coppola said. "You know we're fully prepared
to accept some tough decisions."

Earlier this month, Macerich cut its quarterly dividend from
80 cents per share all cash to 60 cents per share comprised of
10 percent cash and the rest stock. The company said the mixture
would allow it to retain $65 million a share per quarter.

To reflect the additional shares the dividend will
generate, Macerich pared its 2009 forecast to FFO of $4.25 to
$4.55 per share from $4.50 to $4.75 per share. Analysts have
targeted $4.41 per share.

Shares of Macerich were down $2.87 or 15 percent at $16.30
on the New York Stock Exchange on Tuesday afternoon.
(Reporting by Ilaina Jonas, editing by Dave Zimmerman, editing
by Matthew Lewis)