MACERICH CO - Quarter Report: 2010 June (Form 10-Q)

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TABLE OF CONTENTS

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, 2010

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, including 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)

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 ý NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding twelve (12) months (or for such shorter period that the registrant was required to submit and post such files).

YES ý NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO ý

Number of shares outstanding as of August 6, 2010 of the registrant's common stock, par value $0.01 per share: 130,103,762 shares

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THE MACERICH COMPANY

FORM 10-Q

INDEX


Part I	Financial Information
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets of the Company as of June 30, 2010 and December 31, 2009	3
	Consolidated Statements of Operations of the Company for the three and six months ended June 30, 2010 and 2009	4
	Consolidated Statement of Equity and Redeemable Noncontrolling Interests of the Company for the six months ended June 30, 2010	5
	Consolidated Statements of Cash Flows of the Company for the six months ended June 30, 2010 and 2009	6
	Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	52
Part II	Other Information
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Removed and Reserved	53
Item 5.	Other Information	53
Item 6.	Exhibits	54
Signature		56

Table of Contents

THE MACERICH COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

(Unaudited)

				June 30, 2010			December 31, 2009

ASSETS:
Property, net				$	5,655,410		$	5,657,939
Cash and cash equivalents					596,718			93,255
Restricted cash					42,473			41,619
Marketable securities					26,459			26,970
Tenant and other receivables, net					84,344			101,220
Deferred charges and other assets, net					297,389			276,922
Loans to unconsolidated joint ventures					5,492			2,316
Due from affiliates					5,608			6,034
Investments in unconsolidated joint ventures					1,024,413			1,046,196

			Total assets	$	7,738,306		$	7,252,471

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY:
Mortgage notes payable:
	Related parties			$	194,782		$	196,827
	Others				3,076,321			3,039,209

			Total		3,271,103			3,236,036
Bank and other notes payable					627,667			1,295,598
Accounts payable and accrued expenses					58,956			70,275
Other accrued liabilities					254,353			266,197
Investments in unconsolidated joint ventures					69,065			67,052
Co-venture obligation					164,440			168,049
Preferred dividends payable					207			207

			Total liabilities		4,445,791			5,103,414

Redeemable noncontrolling interests					20,591			20,591

Commitments and contingencies
Equity:
	Stockholders' equity:
		Common stock, $0.01 par value, 250,000,000 shares authorized, 130,204,445 and 96,667,689 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively			1,302			967
		Additional paid-in capital			3,439,758			2,227,931
		Accumulated deficit			(465,143	)		(345,930	)
		Accumulated other comprehensive loss			(12,209	)		(25,397	)

			Total stockholders' equity		2,963,708			1,857,571
	Noncontrolling interests				308,216			270,895

			Total equity		3,271,924			2,128,466

			Total liabilities, redeemable noncontrolling interests and equity	$	7,738,306		$	7,252,471

The accompanying notes are an integral part of these consolidated financial statements.

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THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

			For the Three Months Ended June 30,						For the Six Months Ended June 30,

			2010			2009			2010			2009
Revenues:
	Minimum rents		$	102,510		$	120,569		$	204,490		$	243,778
	Percentage rents			3,108			2,669			6,095			5,470
	Tenant recoveries			57,259			61,765			118,268			125,911
	Management Companies			12,117			9,345			22,339			17,885
	Other			6,887			7,827			12,804			14,854

		Total revenues		181,881			202,175			363,996			407,898

Expenses:
	Shopping center and operating expenses			56,710			65,912			117,530			135,336
	Management Companies' operating expenses			24,466			18,872			46,653			42,302
	REIT general and administrative expenses			3,642			4,648			11,160			9,906
	Depreciation and amortization			59,913			62,302			119,128			125,777

				144,731			151,734			294,471			313,321

	Interest expense:
		Related parties		3,103			6,254			6,205			12,044
		Other		49,135			65,660			101,444			129,812

				52,238			71,914			107,649			141,856
	Loss (gain) on early extinguishment of debt			489			(7,127	)		489			(29,601	)

		Total expenses		197,458			216,521			402,609			425,576
Equity in income of unconsolidated joint ventures				15,762			14,556			32,221			30,482
Co-venture expense				(1,993	)		—			(3,377	)		—
Income tax benefit				1,375			380			2,590			1,181
Gain on sale or write down of assets				582			1,390			582			2,163

Income (loss) from continuing operations				149			1,980			(6,597	)		16,148

Discontinued operations:
	Loss on sale or write down of assets			(72	)		(26,995	)		(71	)		(27,012	)
	(Loss) income from discontinued operations			(22	)		649			(138	)		2,915

Total loss from discontinued operations				(94	)		(26,346	)		(209	)		(24,097	)

Net income (loss)				55			(24,366	)		(6,806	)		(7,949	)
Less net income (loss) attributable to noncontrolling interests				495			(2,630	)		(9	)		(229	)

Net loss attributable to the Company			$	(440	)	$	(21,736	)	$	(6,797	)	$	(7,720	)

Earnings per common share attributable to Company—basic:
	(Loss) income from continuing operations		$	(0.01	)	$	0.01		$	(0.08	)	$	0.15
	Discontinued operations			—			(0.30	)		—			(0.27	)

	Net loss available to common stockholders		$	(0.01	)	$	(0.29	)	$	(0.08	)	$	(0.12	)

Earnings per common share attributable to Company—diluted:
	(Loss) income from continuing operations		$	(0.01	)	$	0.01		$	(0.08	)	$	0.15
	Discontinued operations			—			(0.30	)		—			(0.27	)

	Net loss available to common stockholders		$	(0.01	)	$	(0.29	)	$	(0.08	)	$	(0.12	)

Weighted average number of common shares outstanding:
	Basic			123,446,000			77,270,000			110,271,000			77,082,000

	Diluted			123,446,000			77,270,000			110,271,000			77,082,000

The accompanying notes are an integral part of these consolidated financial statements.

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THE MACERICH COMPANY

CONSOLIDATED STATEMENT OF EQUITY AND
REDEEMABLE NONCONTROLLING INTERESTS

(Dollars in thousands, except per share data)

(Unaudited)

		Stockholders' Equity

		Common Stock
		Common Stock										Accumulated Other Comprehensive Loss
		Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance January 1, 2010			96,667,689	$	967	$	2,227,931		$	(345,930	)	$	(25,397	)	$	1,857,571		$	270,895		$	2,128,466		$	20,591

Comprehensive income:
	Net loss		—		—		—			(6,797	)		—			(6,797	)		(266	)		(7,063	)		257
	Interest rate swap/cap agreements		—		—		—			—			13,188			13,188			—			13,188			—

	Total comprehensive income		—		—		—			(6,797	)		13,188			6,391			(266	)		6,125			257
Amortization of share and unit-based plans			616,076		6		14,271			—			—			14,277			—			14,277			—
Exercise of stock warrants			—		—		(17,639	)		—			—			(17,639	)		—			(17,639	)		—
Employee stock purchases			15,710		—		376			—			—			376			—			376			—
Distributions paid ($1.10) per share			—		—		—			(112,416	)		—			(112,416	)		—			(112,416	)		—
Distributions to noncontrolling interests			—		—		—			—			—			—			(13,893	)		(13,893	)		(257	)
Stock dividend			1,449,542		14		43,072			—			—			43,086			—			43,086			—
Stock offering			31,000,000		310		1,220,570			—			—			1,220,880			—			1,220,880			—
Contributions from noncontrolling interests			—		—		—			—			—			—			2,395			2,395			—
Other			—		—		567			—			—			567			—			567			—
Conversion of noncontrolling interests to common shares			455,428		5		4,326			—			—			4,331			(4,331	)		—			—
Redemption of noncontrolling interests			—		—		(126	)		—			—			(126	)		(174	)		(300	)		—
Adjustment of noncontrolling interest in Operating Partnership			—		—		(53,590	)		—			—			(53,590	)		53,590			—			—

Balance June 30, 2010			130,204,445	$	1,302	$	3,439,758		$	(465,143	)	$	(12,209	)	$	2,963,708		$	308,216		$	3,271,924		$	20,591

The accompanying notes are an integral part of these consolidated financial statements.

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THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

				For the Six Months Ended June 30,

				2010			2009
Cash flows from operating activities:
	Net loss			$	(6,806	)	$	(7,949	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Loss (gain) on early extinguishment of debt			489			(29,601	)
		Gain on sale or write down of assets			(582	)		(2,163	)
		Loss on sale or write down of assets of discontinued operations			71			27,012
		Depreciation and amortization			125,268			134,561
		Amortization of net discount on mortgages, bank and other notes payable			792			301
		Amortization of share and unit-based plans			6,966			5,036
		Equity in income of unconsolidated joint ventures			(32,221	)		(30,482	)
		Co-venture expense			3,377			—
		Distributions of income from unconsolidated joint ventures			4,519			5,698
		Changes in assets and liabilities, net of acquisitions and dispositions:
			Tenant and other receivables, net		25,034			17,163
			Other assets		(14,208	)		9,503
			Due from affiliates		426			1,309
			Accounts payable and accrued expenses		(19,788	)		(55,080	)
			Other accrued liabilities		(20,551	)		(9,521	)

	Net cash provided by operating activities				72,786			65,787

Cash flows from investing activities:
	Acquisitions of property, development, redevelopment and property improvements				(66,377	)		(97,336	)
	Proceeds from note receivable				11,763			—
	Maturities of marketable securities				654			638
	Deferred leasing costs				(18,205	)		(17,287	)
	Distributions from unconsolidated joint ventures				60,549			96,758
	Contributions to unconsolidated joint ventures				(8,123	)		(19,391	)
	Loans to unconsolidated joint ventures				(3,176	)		294
	Proceeds from sale of assets				—			8,394
	Restricted cash				(854	)		(8,263	)

	Net cash used in investing activities				(23,769	)		(36,193	)

Cash flows from financing activities:
	Proceeds from mortgages, bank and other notes payable				350,140			242,917
	Payments on mortgages, bank and other notes payable				(985,993	)		(146,661	)
	Repurchase of convertible senior notes				(18,191	)		(50,704	)
	Deferred financing costs				(6,260	)		(3,172	)
	Proceeds from share and unit-based plans				376			368
	Net proceeds from common stock offering				1,220,880			—
	Redemption of stock warrants				(17,639	)		—
	Dividends and distributions				(81,881	)		(80,982	)
	Distributions to co-venture partner				(6,986	)		—

	Net cash provided by (used in) financing activities				454,446			(38,234	)

	Net increase (decrease) in cash				503,463			(8,640	)
Cash and cash equivalents, beginning of period					93,255			66,529

Cash and cash equivalents, end of period				$	596,718		$	57,889

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THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Dollars in thousands)

(Unaudited)

		For the Six Months Ended June 30,

		2010		2009
Supplemental cash flow information:
	Cash payments for interest, net of amounts capitalized	$	106,284	$	137,150

Non-cash transactions:
	Accrued development costs included in accounts payable and accrued expenses and other accrued liabilities	$	32,047	$	47,750

	Accrued preferred dividend payable	$	207	$	207

	Stock dividend	$	43,087	$	38,564

The accompanying notes are an integral part of these consolidated financial statements.

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THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

1. Organization:

The Macerich Company (the "Company") is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional and community 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, 2010, the Company was the sole general partner of and held a 92% 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 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, Westcor Partners, L.L.C., a single member Arizona limited liability company, Macerich Westcor Management LLC, a single member Delaware limited liability company, Westcor Partners of Colorado, LLC, a 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 ("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 independent public accountants.

The accompanying consolidated financial statements include the accounts of the Company and the Operating Partnership. Investments in entities in which the Company retains a controlling financial interest or entities that meet the definition of a variable interest entity in which the Company has, as a result of ownership, contractual or other financial interests, both the power to direct activities that most significantly impact the economic performance of the variable interest entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the variable interest entity are consolidated; otherwise they are accounted for under the equity method of accounting and are reflected as "Investments in unconsolidated joint ventures." All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

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

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THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

2. Summary of Significant Accounting Policies: (Continued)

Annual Report on Form 10-K for the year ended December 31, 2009. 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, 2009 has been derived from the audited financial statements, but does not include all disclosures required by GAAP.

All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Deferred Charges:

Costs relating to obtaining tenant leases are deferred and amortized over the initial term of the agreement using the straight-line method. As these deferred leasing costs represent productive assets incurred in connection with the Company's provision of leasing arrangements at the Centers, the related cash flows are classified as investing activities within the accompanying Consolidated Statements of Cash Flows. Costs relating to financing of shopping center properties are deferred and amortized over the life of the related loan using the straight-line method, which approximates the effective interest method. In-place lease values are amortized over the remaining lease term plus an estimate of renewal. Leasing commissions and legal costs are amortized on a straight-line basis over the individual lease years.

The range of the terms of the agreements is as follows:


Deferred lease costs		1-15 years
Deferred financing costs		1-15 years
In-place lease values		Remaining lease term plus an estimate for renewal
Leasing commissions and legal costs		5-10 years

Tenant and Other Receivables, net:

Included in tenant and other receivables, net, is an allowance for doubtful accounts of $5,717 and $5,943 at June 30, 2010 and December 31, 2009, respectively.

Included in tenant and other receivables, net, are the following notes receivable:

On March 31, 2006, the Company received a note receivable that is secured by a deed of trust, bears interest at 5.5% and matures on March 31, 2031. At June 30, 2010 and December 31, 2009, the note had a balance of $9,109 and $9,227, respectively.

On January 1, 2008, in connection with the redemption of the participating preferred units, the Company received an unsecured note receivable that bore interest at 9.0% and matured on June 30,

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THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

2. Summary of Significant Accounting Policies: (Continued)

2010. The note was paid off in full on June 30, 2010 and had a balance at December 31, 2009 of $11,763.

On August 16, 2009, the Company received a note receivable from J&R Holdings XV, LLC ("Pederson") that bears interest at 10% and matures August 14, 2014. Pederson is considered a related party because it has an ownership interest in Promenade at Casa Grande. The note is secured by Pederson's interest in Promenade at Casa Grande. Interest income on the note was $39 and $83 for the three and six months ended June 30, 2010, respectively. The balance on the note at June 30, 2010 and December 31, 2009 was $1,320 and $1,800, respectively.

Recent Accounting Pronouncements Adopted:

In June 2009, the Financial Accounting Standards Board ("FASB") issued new guidance which removes the concept of a qualifying special-purpose entity and requires a transferor to consider all arrangements or agreements made contemporaneously with, or in contemplation of, a transfer of a financial asset in order to determine whether a transferor and all of the entities included in the transferor's financial statements being presented have surrendered control of the transferred financial asset. The adoption of this pronouncement on January 1, 2010 did not have a material impact on the Company's consolidated financial statements.

In June 2009, the FASB issued new consolidation guidance for determining whether a reporting enterprise is the primary beneficiary in a variable interest entity and therefore should consolidate the variable interest entity in its financial statements. The new consolidation guidance also requires ongoing reassessments and additional disclosures about the reporting enterprise's involvement with the variable interest entity. The Company identified two variable interest entities which meet the criteria for consolidation under the new consolidation guidance. The Company determined that it is the primary beneficiary of these variable interest entities as it has both the power to direct activities that most significantly impact the economic performance of the variable interest entities and the obligation to absorb losses or right to receive benefits that could potentially be significant to the variable interest entities. The adoption of the new consolidation guidance did not have a material impact on the Company's consolidated financial statements as the Company had consolidated these variable interest entities in its consolidated financial statements based upon the risks and rewards-based quantitative approach under the prior consolidation guidance. The aggregate total revenues of these variable interest entities included in the accompanying consolidated statements of operations was $2,673 and $6,331 for the three and six months ended June 30, 2010, respectively. The total expenses relating to the operating activities of these variable interest entities included in the accompanying consolidated statements of operations were $4,187 and $7,699 for the three and six months ended June 30, 2010, respectively. At June 30, 2010, the significant assets and liabilities of these variable interest entities consisted of property of $82,572 and mortgage notes payable of $41,913.

In January 2010, the FASB issued new guidance that requires new disclosures and clarifications of existing disclosures related to transfers in and out of Level 1 and Level 2 fair value measurements, further disaggregation of fair value measurement disclosures for each class of assets and liabilities, and

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THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

2. Summary of Significant Accounting Policies: (Continued)

additional details of valuation techniques and inputs utilized. The adoption of this pronouncement on January 1, 2010 did not have a material impact on the Company's consolidated financial statements.

In January 2010, the FASB issued new guidance that requires that dividends declared and payable in a combination of stock and cash be included in earnings per share prospectively and not be considered a stock dividend for purposes of computing earnings per share. This guidance is consistent with the Company's previous accounting treatment and therefore the adoption of this pronouncement on January 1, 2010 did not have a material impact on the Company's consolidated financial statements.

3. Earnings per Share ("EPS"):

The following table reconciles the numerator and denominator used in the computation of earnings per share for the three and six months ended June 30, 2010 and 2009:

		For the Three Months Ended June 30,						For the Six Months Ended June 30,

		2010			2009			2010			2009
Numerator
Income (loss) from continuing operations		$	149		$	1,980		$	(6,597	)	$	16,148
Loss from discontinued operations			(94	)		(26,346	)		(209	)		(24,097	)
Income (loss) attributable to noncontrolling interests			(495	)		2,630			9			229

Net loss attributable to the Company			(440	)		(21,736	)		(6,797	)		(7,720	)
Allocation of earnings to participating securities			(534	)		(1,019	)		(1,523	)		(1,231	)

Numerator for basic and diluted earnings per share—net loss
	available to common stockholders	$	(974	)	$	(22,755	)	$	(8,320	)	$	(8,951	)

Denominator
Denominator for basic and diluted earnings per share—weighted average number of common shares outstanding(1)			123,446			77,270			110,271			77,082

Earnings per common share—basic:
	(Loss) income from continuing operations	$	(0.01	)	$	0.01		$	(0.08	)	$	0.15
	Discontinued operations		—			(0.30	)		—			(0.27	)

	Net loss available to common stockholders	$	(0.01	)	$	(0.29	)	$	(0.08	)	$	(0.12	)

Earnings per common share—diluted:
	(Loss) income from continuing operations	$	(0.01	)	$	0.01		$	(0.08	)	$	0.15
	Discontinued operations		—			(0.30	)		—			(0.27	)

	Net loss available to common stockholders	$	(0.01	)	$	(0.29	)	$	(0.08	)	$	(0.12	)

(1): The Senior Notes (See Note 11—Bank and Other Notes Payable) are excluded from diluted EPS for the three and six months ended June 30, 2010 and 2009 as their effect would be antidilutive to net loss available to common stockholders.

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THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

3. Earnings per Share ("EPS"): (Continued)

Diluted EPS excludes 208,640 and 193,164 of convertible non-participating preferred units for the three and six months ended June 30, 2010 and 2009, respectively, as their impact was antidilutive to net loss available to common stockholders.

Diluted EPS excludes 1,150,172 and 1,257,384 of unexercised stock appreciation rights ("SARs") for the three and six months ended June 30, 2010 and 2009, respectively, 127,500 of unexercised stock options for the three and six months ended June 30, 2010 and 132,500 of unexercised stock options for the three and six months ended June 30, 2009 as their effect was antidilutive to net loss available to common stockholders.

Diluted EPS excludes 935,358 of unexercised stock warrants for the three and six months ended June 30, 2010 as their effect was antidilutive to net loss available to common stockholders.

Diluted EPS excludes 12,049,003 and 11,700,000 partnership units for the three months ended June 30, 2010 and 2009 respectively, and 12,107,671 and 11,677,000 for the six months ended June 30, 2010 and 2009, respectively, as their effect was antidilutive to net loss available to common stockholders.

4. Investments in Unconsolidated Joint Ventures:

The Company accounts for its investments in joint ventures using the equity method of accounting unless the Company retains a controlling financial interest in the joint venture or the joint venture meets the definition of a variable interest entity in which the Company is the primary beneficiary through both its power to direct activities that most significantly impact the economic performance of the variable interest entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the variable interest entity. Although the Company has a greater than 50% interest in Pacific Premier Retail Trust, Camelback Colonnade SPE LLC, Corte Madera Village, LLC, Queens Mall Limited Partnership and Queens Mall Expansion Limited Partnership, the Company does not have a controlling financial interest in these joint ventures as it shares management control with the partners in these joint ventures and, therefore, accounts for its investments in these joint ventures using the equity method of accounting.

The Company has recently made the following investments in unconsolidated joint ventures:

On July 30, 2009, the Company sold a 49% ownership interest in Queens Center to a third party for $152,654, resulting in a gain on sale of assets of $154,156. The Company used the proceeds from the sale of the ownership interest in the property to pay down a term loan and for general corporate purposes. The results of Queens Center are included below for the period subsequent to the sale of the ownership interest.

On September 3, 2009, the Company formed a joint venture with a third party whereby the Company sold a 75% interest in FlatIron Crossing. As part of this transaction, the Company issued three warrants for an aggregate of 1,250,000 shares of common stock of the Company (See Note 14—Stockholders' Equity). The Company received $123,750 in cash proceeds for the overall transaction, of which $8,068 was attributed to the warrants. The proceeds attributable to the interest sold exceeded the Company's carrying value in the interest sold by $28,720. However, due to certain contractual rights

Table of Contents

THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Investments in Unconsolidated Joint Ventures: (Continued)

afforded to the buyer of the interest in FlatIron Crossing, the Company recognized a gain on sale of $2,506. The remaining net cash proceeds in excess of the Company's carrying value in the interest sold has been included in other accrued liabilities and will not be recognized until dissolution of the joint venture or disposition of the Company's or buyer's interest in the joint venture. The Company used the proceeds from the sale of the ownership interest to pay down a term loan and for general corporate purposes. The results of FlatIron Crossing are included below for the period subsequent to the sale of the ownership interest.

Combined and condensed balance sheets and statements of operations are presented below for all unconsolidated joint ventures.

Table of Contents

THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Investments in Unconsolidated Joint Ventures: (Continued)

Combined and Condensed Balance Sheets of Unconsolidated Joint Ventures:

		June 30, 2010			December 31, 2009

Assets(1):
	Properties, net	$	5,066,987		$	5,294,495
	Other assets		470,584			518,946

	Total assets	$	5,537,571		$	5,813,441

Liabilities and partners' capital(1):
	Mortgage notes payable(2)	$	4,633,194		$	4,807,262
	Other liabilities		196,708			208,863
	Company's capital		358,284			377,711
	Outside partners' capital		349,385			419,605

	Total liabilities and partners' capital	$	5,537,571		$	5,813,441

Investment in unconsolidated joint ventures:
	Company's capital	$	358,284		$	377,711
	Basis adjustment(3)		597,064			601,433

	Investments in unconsolidated joint ventures	$	955,348		$	979,144

	Assets—Investments in unconsolidated joint ventures	$	1,024,413		$	1,046,196
	Liabilities—Investments in unconsolidated joint ventures(4)		(69,065	)		(67,052	)

		$	955,348		$	979,144

(1): These amounts include the assets and liabilities of the following significant subsidiaries as of June 30, 2010 and December 31, 2009:

	SDG Macerich Properties, L.P.		Pacific Premier Retail Trust		Tysons Corner LLC

As of June 30, 2010:
Total Assets	$	828,628	$	1,100,345	$	326,119
Total Liabilities	$	816,832	$	1,018,275	$	333,757
As of December 31, 2009:
Total Assets	$	850,593	$	1,122,156	$	323,535
Total Liabilities	$	818,912	$	1,030,429	$	328,780

(2): Certain joint ventures have debt that could become recourse debt to the Company should the joint venture be unable to discharge the obligations of the related debt. As of June 30, 2010 and December 31, 2009, a total of $17,143 and $17,450, respectively, could become recourse debt to the Company.

Table of Contents

THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Investments in Unconsolidated Joint Ventures: (Continued)

Included in mortgage notes payable are amounts due to affiliates of Northwestern Mutual Life ("NML") of $577,572 and $581,774 as of June 30, 2010 and December 31, 2009, respectively. NML is considered a related party because it is a joint venture partner with the Company in Macerich Northwestern Associates—Broadway Plaza. Interest expense incurred on these borrowings amounted to $10,185 and $4,213 for the three months ended June 30, 2010 and 2009, respectively, and $20,429 and $7,511 for the six months ended June 30, 2010 and 2009, respectively.

(3): This represents the difference between the cost of an investment and the book value of the underlying equity of the joint venture. The Company amortizes this difference into income on a straight-line basis, consistent with the lives of the underlying assets. The amortization of this difference was $1,368 and $1,247 for the three months ended June 30, 2010 and 2009, respectively, and $3,281 and $5,111 for the six months ended June 30, 2010 and 2009, respectively.
(4): This represents investments in unconsolidated joint ventures with distributions in excess of the Company's investments.

Table of Contents

THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Investments in Unconsolidated Joint Ventures: (Continued)

Combined and Condensed Statements of Operations of Unconsolidated Joint Ventures:

			SDG Macerich Properties, L.P.		Pacific Premier Retail Trust		Tysons Corner LLC		Other Joint Ventures			Total

Three Months Ended June 30, 2010
Revenues:
	Minimum rents		$	21,898	$	31,905	$	14,477	$	86,510		$	154,790
	Percentage rents			472		1,066		264		1,876			3,678
	Tenant recoveries			9,982		11,965		9,468		41,901			73,316
	Other			851		1,361		587		6,944			9,743

		Total revenues		33,203		46,297		24,796		137,231			241,527

Expenses:
	Shopping center and operating expenses			10,968		13,392		7,785		54,093			86,238
	Interest expense			11,588		12,973		4,131		38,595			67,287
	Depreciation and amortization			7,777		9,746		4,659		30,635			52,817

	Total operating expenses			30,333		36,111		16,575		123,323			206,342

Gain on sale of assets				3		—		—		608			611

Net income			$	2,873	$	10,186	$	8,221	$	14,516		$	35,796

Company's equity in net income			$	1,437	$	5,170	$	3,728	$	5,427		$	15,762

Three Months Ended June 30, 2009
Revenues:
	Minimum rents		$	22,493	$	32,034	$	14,504	$	67,915		$	136,946
	Percentage rents			410		861		239		1,786			3,296
	Tenant recoveries			11,849		12,199		9,539		33,514			67,101
	Other			850		973		492		4,558			6,873

		Total revenues		35,602		46,067		24,774		107,773			214,216

Expenses:
	Shopping center and operating expenses			13,711		13,286		8,040		42,010			77,047
	Interest expense			11,641		12,451		3,964		27,769			55,825
	Depreciation and amortization			7,776		8,959		4,504		26,008			47,247

	Total operating expenses			33,128		34,696		16,508		95,787			180,119

Gain (loss) on sale of assets				46		—		—		(59	)		(13	)

Net income			$	2,520	$	11,371	$	8,266	$	11,927		$	34,084

Company's equity in net income			$	1,260	$	5,784	$	4,133	$	3,379		$	14,556

Table of Contents

THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Investments in Unconsolidated Joint Ventures: (Continued)

			SDG Macerich Properties, L.P.		Pacific Premier Retail Trust			Tysons Corner LLC		Other Joint Ventures			Total

Six Months Ended June 30, 2010
Revenues:
	Minimum rents		$	44,155	$	63,596		$	29,074	$	175,626		$	312,451
	Percentage rents			1,196		1,963			384		4,393			7,936
	Tenant recoveries			21,622		24,412			18,974		88,487			153,495
	Other			1,650		2,531			1,265		13,177			18,623

		Total revenues		68,623		92,502			49,697		281,683			492,505

Expenses:
	Shopping center and operating expenses			25,033		27,077			15,891		108,807			176,808
	Interest expense			23,085		26,074			8,149		77,513			134,821
	Depreciation and amortization			15,402		18,935			9,251		62,016			105,604

	Total operating expenses			63,520		72,086			33,291		248,336			417,233

Gain (loss) on sale of assets				3		—			—		(628	)		(625	)
Loss on early extinguishment of debt				—		(1,352	)		—		—			(1,352	)

Net income			$	5,106	$	19,064		$	16,406	$	32,719		$	73,295

Company's equity in net income			$	2,553	$	9,737		$	7,820	$	12,111		$	32,221

Six Months Ended June 30, 2009
Revenues:
	Minimum rents		$	45,479	$	64,801		$	29,146	$	137,716		$	277,142
	Percentage rents			1,244		1,417			382		3,268			6,311
	Tenant recoveries			24,133		24,452			18,618		67,564			134,767
	Other			1,686		1,970			885		9,799			14,340

		Total revenues		72,542		92,640			49,031		218,347			432,560

Expenses:
	Shopping center and operating expenses			27,967		26,969			15,704		83,290			153,930
	Interest expense			23,157		24,679			7,962		55,737			111,535
	Depreciation and amortization			15,024		17,842			8,954		52,299			94,119

	Total operating expenses			66,148		69,490			32,620		191,326			359,584

Gain on sale of assets				44		—			—		117			161

Net income			$	6,438	$	23,150		$	16,411	$	27,138		$	73,137

Company's equity in net income			$	3,219	$	11,774		$	8,206	$	7,283		$	30,482

Property/Entity(1)		Product				Fair Value

La Cumbre Plaza	30,000	Cap	3.00	%	6/9/2011	$	1
Panorama Mall	50,000	Swap	5.08	%	4/25/2011		(1,871	)
Paradise Valley Mall	85,000	Cap	5.00	%	9/12/2011		1
The Oaks	150,000	Cap	6.25	%	7/1/2011		—
The Oaks	75,000	Swap	5.08	%	4/25/2011		(2,806	)
Victor Valley Mall	100,000	Swap	5.08	%	4/25/2011		(3,742	)
Westside Pavilion	175,000	Cap	5.50	%	6/5/2011		—
Westside Pavilion	175,000	Swap	5.08	%	4/25/2011		(6,548	)

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)			Significant Unobservable Inputs (Level 3)		Total

Assets
Derivative instruments	$	—	2	$	—	$	2
Liabilities
Derivative instruments		—	14,967		—		14,967

	June 30, 2010			December 31, 2009

Land	$	1,145,396		$	1,052,761
Building improvements		4,635,736			4,614,706
Tenant improvements		347,710			338,259
Equipment and furnishings		112,716			108,199
Construction in progress		547,927			583,334

		6,789,485			6,697,259
Less accumulated depreciation		(1,134,075	)		(1,039,320	)

	$	5,655,410		$	5,657,939

	June 30, 2010			December 31, 2009

Government debt securities, at par value	$	27,171		$	27,825
Less discount		(712	)		(855	)

		26,459			26,970
Unrealized gain		2,993			2,637

Fair value	$	29,452		$	29,607

		June 30, 2010			December 31, 2009

Leasing		$	166,866		$	149,155
Financing			54,610			48,287
Intangible assets:
	In-place lease values		102,372			109,705
	Leasing commissions and legal costs		29,724			30,925

			353,572			338,072
Less accumulated amortization(1)			(152,978	)		(144,002	)

			200,594			194,070
Other assets			96,795			82,852

		$	297,389		$	276,922

	June 30, 2010			December 31, 2009

Above-Market Leases
Original allocated value	$	51,867		$	50,573
Less accumulated amortization		(36,666	)		(33,632	)

	$	15,201		$	16,941

Below-Market Leases
Original allocated value	$	123,498		$	120,227
Less accumulated amortization		(80,477	)		(71,416	)

	$	43,021		$	48,811

	Carrying Amount of Mortgage Notes(1)

	June 30, 2010				December 31, 2009
Property Pledged as Collateral	Other		Related Party		Other		Related Party		Interest Rate(2)			Monthly Payment Term(3)		Maturity Date
Capitola Mall	$	—	$	34,519	$	—	$	35,550		7.13	%	$	380		2011
Carmel Plaza(4)		—		—		24,309		—		—			—		—
Chandler Fashion Center(5)		161,220		—		163,028		—		5.50	%		435		2012
Chesterfield Towne Center(6)		51,438		—		52,369		—		9.07	%		548		2024
Danbury Fair Mall		159,650		—		163,111		—		4.64	%		1,225		2011
Deptford Mall		172,500		—		172,500		—		5.41	%		778		2013
Deptford Mall		15,350		—		15,451		—		6.46	%		101		2016
Fiesta Mall		84,000		—		84,000		—		4.98	%		348		2015
Flagstaff Mall		37,000		—		37,000		—		5.03	%		155		2015
Freehold Raceway Mall(5)		162,366		—		165,546		—		4.68	%		1,184		2011
Fresno Fashion Fair		83,295		83,294		83,781		83,780		6.76	%		1,104		2015
Great Northern Mall		38,468		—		38,854		—		5.19	%		234		2013
Hilton Village		8,573		—		8,564		—		5.27	%		37		2012
La Cumbre Plaza(7)		28,447		—		30,000		—		2.53	%		28		2010
Northgate, The Mall at(8)		33,141		—		8,844		—		7.00	%		44		2013
Northridge Mall(9)		—		—		71,486		—		—			—		—
Oaks, The(10)		165,000		—		165,000		—		2.40	%		330		2011
Oaks, The(11)		92,224		—		92,224		—		6.37	%		179		2011
Pacific View		84,962		—		85,797		—		7.20	%		602		2011
Panorama Mall(12)		50,000		—		50,000		—		6.14	%		256		2011
Paradise Valley Mall(13)		85,000		—		85,000		—		6.30	%		446		2012
Prescott Gateway		60,000		—		60,000		—		5.86	%		293		2011
Promenade at Casa Grande(14)		86,617		—		86,617		—		1.80	%		119		2010
Rimrock Mall		41,047		—		41,430		—		7.57	%		320		2011
Salisbury, Center at		115,000		—		115,000		—		5.83	%		559		2016
Santa Monica Place		75,990		—		76,652		—		7.79	%		606		2010
SanTan Village Regional Center(15)		137,863		—		136,142		—		3.08	%		354		2011
Shoppingtown Mall		40,535		—		41,381		—		5.01	%		319		2011
South Plains Mall(16)		104,767		—		53,936		—		6.52	%		569		2015
South Towne Center		88,299		—		88,854		—		6.39	%		554		2015
Towne Mall		13,611		—		13,869		—		4.99	%		100		2012
Tucson La Encantada		—		76,969		—		77,497		5.84	%		362		2012
Twenty Ninth Street(17)		107,024		—		106,703		—		5.45	%		467		2011
Valley River Center		120,000		—		120,000		—		5.59	%		559		2016
Valley View Center(18)		125,000		—		125,000		—		5.81	%		605		2011
Victor Valley, Mall of(19)		100,000		—		100,000		—		6.94	%		578		2011
Vintage Faire Mall(20)		135,000		—		62,186		—		3.64	%		410		2015
Westside Pavilion(21)		175,000		—		175,000		—		8.08	%		1,178		2011
Wilton Mall (22)		37,934		—		39,575		—		11.08	%		349		2029

	$	3,076,321	$	194,782	$	3,039,209	$	196,827

Property Pledged as Collateral	June 30, 2010			December 31, 2009

Danbury Fair Mall	$	2,841		$	4,938
Deptford Mall		(33	)		(36	)
Freehold Raceway Mall		3,790			5,507
Great Northern Mall		(96	)		(110	)
Hilton Village		(27	)		(36	)
Shoppingtown Mall		1,028			1,565
Towne Mall		230			277

	$	7,733		$	12,105

		LTIP Units					Stock Awards					Phantom Stock					SARs					Stock Units

		Units			Value(1)		Shares			Value(1)		Units			Value(1)		Units			Value(1)		Shares			Value(1)
Balance at January 1, 2010			252,940		$	55.50		126,137		$	69.53		—		$	—		1,135,397		$	7.51		1,567,597		$	7.17
	Granted		232,632			48.89		11,664			38.58		47,671			34.24		—			—		—			—
	Vested		(213,346	)		54.45		(74,143	)		78.48		(12,885	)		35.52		—			—		(529,048	)		7.17
	Forfeited		—			—		(307	)		61.17		—			—		(76,275	)		7.68		—			—

Balance at June 30, 2010			272,226		$	50.68		63,351		$	53.69		34,786		$	33.76		1,059,122		$	7.50		1,038,549		$	7.17


Buildings and improvements		5 - 40 years
Tenant improvements		5 - 7 years
Equipment and furnishings		5 - 7 years


Deferred lease costs		1 - 15 years
Deferred financing costs		1 - 15 years
In-place lease values		Remaining lease term plus an estimate for renewal
Leasing commissions and legal costs		5 - 10 years

Property	Recourse Debt

Boulevard Shops	$	4,280	12/17/2010
Chandler Village Center		4,375	1/15/2011
The Market at Estrella Falls		8,488	6/1/2011

	$	17,143

	Payment Due by Period

Contractual Obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than five years
Long-term debt obligations (includes expected interest payments)	$	4,115,900	$	1,057,710	$	1,996,202	$	280,629	$	781,359
Operating lease obligations(1)		827,570		11,036		22,855		24,048		769,631
Purchase obligations(1)		26,949		26,949		—		—		—
Other long-term liabilities(2)		285,462		200,277		3,852		4,160		77,173

	$	5,255,881	$	1,295,972	$	2,022,909	$	308,837	$	1,628,163

		For the years ended June 30,

		2011			2012			2013			2014			2015			Thereafter			Total			FV
CONSOLIDATED CENTERS:
Long term debt:
	Fixed rate(1)	$	777,155		$	508,121		$	950,858		$	69,169		$	191,075		$	607,075		$	3,103,453		$	2,958,512
	Average interest rate		6.48	%		6.03	%		5.44	%		5.92	%		5.95	%		6.51	%		6.05	%
	Floating rate		222,088			322,587			115,847			2,477			2,271			130,047			795,317			787,965
	Average interest rate		3.65	%		2.74	%		6.50	%		3.63	%		3.65	%		3.64	%		3.70	%

Total debt—Consolidated Centers		$	999,243		$	830,708		$	1,066,705		$	71,646		$	193,346		$	737,122		$	3,898,770		$	3,746,477

UNCONSOLIDATED JOINT VENTURE CENTERS:
Long term debt (at Company's pro rata share):
	Fixed rate	$	108,285		$	206,722		$	209,934		$	501,790		$	163,698		$	738,982		$	1,929,411		$	1,890,532
	Average interest rate		6.87	%		6.90	%		6.93	%		5.48	%		5.97	%		6.20	%		6.19	%
	Floating rate		112,574			181,050			—			—			—			—			293,624			292,736
	Average interest rate		1.35	%		3.80	%														2.86	%

Total debt—Unconsolidated Joint Venture Centers		$	220,859		$	387,772		$	209,934		$	501,790		$	163,698		$	738,982		$	2,223,035		$	2,183,268


1 year or less	$	1,334
2 to 5 years		25,837

	$	27,171

	For the Three Months Ended June 30,				For the Six Months Ended June 30,

	2010		2009		2010		2009
LTIP Units	$	3,941	$	909	$	5,441	$	1,967
Stock awards		524		1,568		2,086		3,674
Stock units		3,588		944		5,046		1,214
Stock options		148		148		295		295
SARs		656		742		951		1,368
Phantom stock units		216		151		458		321

	$	9,073	$	4,462	$	14,277	$	8,839


3.1*		Articles of Amendment and Restatement of the Company
3.1.1**		Articles Supplementary of the Company
3.1.2***		Articles Supplementary of the Company (with respect to the first paragraph)
3.1.3****		Articles Supplementary of the Company (Series D Preferred Stock)
3.1.4#		Articles Supplementary of the Company
3.1.5#**		Articles of Amendment of the Company (declassification of the Board)
3.1.6#****		Articles Supplementary of the Company
3.1.7#***		Articles of Amendment of the Company (increased authorized shares)
3.2##		Amended and Restated Bylaws of the Company (June 30, 2010)
4.1###		Form of Common Stock Certificate
4.2####		Form of Preferred Stock Certificate (Series D Preferred Stock)
4.3#*		Indenture, dated as of March 16, 2007, among the Company, the Operating Partnership and Deutsche Bank Trust Company Americas (includes form of the Notes and Guarantee)
4.4##*		Warrant to Purchase Common Stock, dated as of September 30, 2009, between the Company and Heitman M-rich Investors LLC
10.1##**		Separation Agreement and Release of Claims between the Company and Tony Grossi dated March 26, 2010 (includes Consulting Agreement between the Company and Mr. Grossi which became effective on or about May 15, 2010)(1)
10.2##**		Notice of Extension to the $1,500,000,000 Second Amended and Restated Revolving Loan Facility Credit Agreement, effective April 25, 2010
31.1		Section 302 Certification of Arthur Coppola, Chief Executive Officer
31.2		Section 302 Certification of Thomas O'Hern, Chief Financial Officer
32.1		Section 906 Certification of Arthur Coppola, Chief Executive Officer, and Thomas O'Hern, Chief Financial Officer
101		The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Operations, (3) the Consolidated Statement of Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements, tagged as blocks of text.


		THE MACERICH COMPANY
		By:		/s/ THOMAS E. O'HERN Thomas E. O'Hern Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Property/Entity(1)	Notional Amount		Product						Fair Value(1)

Camelback Colonnade	$	41,500	Cap	8.54	%	11/15/2010	75	%	$	—
Desert Sky Mall		51,500	Cap	7.65	%	3/15/2011	50	%		—
La Cumbre Plaza		30,000	Cap	3.00	%	6/9/2011	100	%		1
Los Cerritos		200,000	Cap	8.55	%	7/1/2010	51	%		—
Panorama Mall		50,000	Swap	5.08	%	4/25/2011	100	%		(1,871	)
Paradise Valley Mall		85,000	Cap	5.00	%	9/12/2011	100	%		1
Superstition Springs Center		67,500	Cap	8.63	%	9/9/2010	33	%		—
The Oaks		150,000	Cap	6.25	%	7/1/2011	100	%		—
The Oaks		75,000	Swap	5.08	%	4/25/2011	100	%		(2,806	)
Victor Valley Mall		100,000	Swap	5.08	%	4/25/2011	100	%		(3,742	)
Westside Pavilion		175,000	Cap	5.50	%	6/5/2011	100	%		—
Westside Pavilion		175,000	Swap	5.08	%	4/25/2011	100	%		(6,548	)