MACERICH CO - Quarter Report: 2011 June (Form 10-Q)

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, 2011

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 3, 2011 of the registrant's common stock, par value $0.01 per share: 131,916,463 shares

Table of Contents

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, 2011 and December 31, 2010	3
	Consolidated Statements of Operations of the Company for the three and six months ended June 30, 2011 and 2010	4
	Consolidated Statement of Equity and Redeemable Noncontrolling Interests of the Company for the six months ended June 30, 2011	5
	Consolidated Statements of Cash Flows of the Company for the six months ended June 30, 2011 and 2010	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
Part II	Other Information
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Removed and Reserved	49
Item 5.	Other Information	49
Item 6.	Exhibits	50
Signature		52

Table of Contents

THE MACERICH COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

(Unaudited)

				June 30, 2011			December 31, 2010

ASSETS:
Property, net				$	5,619,750		$	5,674,127
Cash and cash equivalents					73,229			445,645
Restricted cash					82,455			71,434
Marketable securities					25,394			25,935
Tenant and other receivables, net					86,559			95,083
Deferred charges and other assets, net					348,208			316,969
Loans to unconsolidated joint ventures					3,459			3,095
Due from affiliates					5,269			6,599
Investments in unconsolidated joint ventures					1,205,457			1,006,123

			Total assets	$	7,449,780		$	7,645,010

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY:
Mortgage notes payable:
	Related parties			$	276,709		$	302,344
	Others				2,820,109			2,957,131

			Total		3,096,818			3,259,475
Bank and other notes payable					782,420			632,595
Accounts payable and accrued expenses					69,808			70,585
Other accrued liabilities					247,243			257,678
Distributions in excess of investments in unconsolidated joint ventures					72,497			65,045
Co-venture obligation					128,869			160,270

			Total liabilities		4,397,655			4,445,648

Redeemable noncontrolling interests					11,366			11,366

Commitments and contingencies
Equity:
	Stockholders' equity:
		Common stock, $0.01 par value, 250,000,000 shares authorized, 132,074,432 and 130,452,032 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively			1,320			1,304
		Additional paid-in capital			3,480,284			3,456,569
		Accumulated deficit			(715,510	)		(564,357	)
		Accumulated other comprehensive income (loss)			2,951			(3,237	)

			Total stockholders' equity		2,769,045			2,890,279
	Noncontrolling interests				271,714			297,717

			Total equity		3,040,759			3,187,996

			Total liabilities, redeemable noncontrolling interests and equity	$	7,449,780		$	7,645,010

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)

(Unaudited)

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

			2011			2010			2011			2010
Revenues:
	Minimum rents		$	110,587		$	102,002		$	219,282		$	203,472
	Percentage rents			3,140			3,108			6,094			6,095
	Tenant recoveries			60,932			57,112			122,413			117,984
	Management Companies			8,119			12,117			18,702			22,339
	Other			8,162			6,887			14,501			12,793

		Total revenues		190,940			181,226			380,992			362,683

Expenses:
	Shopping center and operating expenses			64,080			56,296			126,416			116,784
	Management Companies' operating expenses			20,921			24,466			46,777			46,653
	REIT general and administrative expenses			3,742			3,642			11,386			11,160
	Depreciation and amortization			65,462			59,365			129,534			118,047

				154,205			143,769			314,113			292,644

	Interest expense:
		Related parties		4,086			3,103			8,575			6,205
		Other		44,946			49,135			92,454			101,444

				49,032			52,238			101,029			107,649
	Loss on early extinguishment of debt			32			489			9,133			489

		Total expenses		203,269			196,496			424,275			400,782
Equity in income of unconsolidated joint ventures				25,207			15,762			55,482			32,221
Co-venture expense				(1,202	)		(1,993	)		(2,498	)		(3,377	)
Income tax benefit				1,768			1,375			4,246			2,590
(Loss) gain on remeasurement, sale or write down of assets, net				(34,442	)		582			(32,641	)		582

(Loss) income from continuing operations				(20,998	)		456			(18,694	)		(6,083	)

Discontinued operations:
	Loss on sale or write down of assets, net			(24	)		(72	)		(2,262	)		(71	)
	Income (loss) from discontinued operations			111			(329	)		136			(652	)

Income (loss) from discontinued operations				87			(401	)		(2,126	)		(723	)

Net (loss) income				(20,911	)		55			(20,820	)		(6,806	)
Less net (loss) income attributable to noncontrolling interests				(1,695	)		495			(1,638	)		(9	)

Net loss attributable to the Company			$	(19,216	)	$	(440	)	$	(19,182	)	$	(6,797	)

Earnings per common share attributable to Company—basic:
	Loss from continuing operations		$	(0.15	)	$	(0.01	)	$	(0.14	)	$	(0.07	)
	Discontinued operations			—			—			(0.01	)		(0.01	)

	Net loss available to common stockholders		$	(0.15	)	$	(0.01	)	$	(0.15	)	$	(0.08	)

Earnings per common share attributable to Company—diluted:
	Loss from continuing operations		$	(0.15	)	$	(0.01	)	$	(0.14	)	$	(0.07	)
	Discontinued operations			—			—			(0.01	)		(0.01	)

	Net loss available to common stockholders		$	(0.15	)	$	(0.01	)	$	(0.15	)	$	(0.08	)

Weighted average number of common shares outstanding:
	Basic			131,691,000			123,446,000			131,136,000			110,271,000

	Diluted			131,691,000			123,446,000			131,136,000			110,271,000

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 Income (Loss)
		Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance January 1, 2011			130,452,032	$	1,304	$	3,456,569		$	(564,357	)	$	(3,237	)	$	2,890,279		$	297,717		$	3,187,996		$	11,366

Comprehensive loss:
	Net loss		—		—		—			(19,182	)		—			(19,182	)		(1,780	)		(20,962	)		142
	Interest rate swap/cap agreements		—		—		—			—			6,188			6,188			—			6,188			—

	Total comprehensive loss		—		—		—			(19,182	)		6,188			(12,994	)		(1,780	)		(14,774	)		142
Amortization of share and unit-based plans			584,874		6		11,580			—			—			11,586			—			11,586			—
Employee stock purchases			7,405		—		320			—			—			320			—			320			—
Distributions paid ($1.00) per share			—		—		—			(131,971	)		—			(131,971	)		—			(131,971	)		—
Distributions to noncontrolling interests			—		—		—			—			—			—			(13,289	)		(13,289	)		(142	)
Contributions from noncontrolling interests			—		—		—			—			—			—			64			64			—
Other			—		—		827			—			—			827			—			827			—
Conversion of noncontrolling interests to common shares			1,030,121		10		20,221			—			—			20,231			(20,231	)		—			—
Adjustment of noncontrolling interest in Operating Partnership			—		—		(9,233	)		—			—			(9,233	)		9,233			—			—

Balance June 30, 2011			132,074,432	$	1,320	$	3,480,284		$	(715,510	)	$	2,951		$	2,769,045		$	271,714		$	3,040,759		$	11,366

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,

				2011			2010
Cash flows from operating activities:
	Net loss			$	(20,820	)	$	(6,806	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Loss on early extinguishment of debt			133			489
		Loss (gain) on remeasurement, sale or write down of assets, net			32,641			(582	)
		Loss on sale or write down of assets, net from discontinued operations			2,262			71
		Depreciation and amortization			137,352			125,268
		Amortization of net discount on mortgages, bank and other notes payable			4,573			792
		Amortization of share and unit-based plans			6,574			6,966
		Provision for doubtful accounts			1,517			2,429
		Income tax benefit			(4,246	)		(2,590	)
		Equity in income of unconsolidated joint ventures			(55,482	)		(32,221	)
		Co-venture expense			2,498			3,377
		Distributions of income from unconsolidated joint ventures			5,741			4,519
		Changes in assets and liabilities, net of acquisitions and dispositions:
			Tenant and other receivables		5,100			22,605
			Other assets		(5,869	)		(14,208	)
			Due from affiliates		1,330			426
			Accounts payable and accrued expenses		(3,553	)		(19,788	)
			Other accrued liabilities		(19,891	)		(17,961	)

	Net cash provided by operating activities				89,860			72,786

Cash flows from investing activities:
	Acquisitions of property, development, redevelopment and property improvements				(91,268	)		(66,377	)
	Proceeds from note receivable				—			11,763
	Maturities of marketable securities				672			654
	Deferred leasing costs				(18,794	)		(18,205	)
	Distributions from unconsolidated joint ventures				60,746			60,549
	Contributions to unconsolidated joint ventures				(142,106	)		(8,123	)
	Loans to unconsolidated joint ventures, net				(364	)		(3,176	)
	Proceeds from sale of assets				4,875			—
	Restricted cash				(11,021	)		(854	)

	Net cash used in investing activities				(197,260	)		(23,769	)

Cash flows from financing activities:
	Proceeds from mortgages, bank and other notes payable				272,000			350,140
	Payments on mortgages, bank and other notes payable				(341,036	)		(985,993	)
	Repurchase of convertible senior notes				—			(18,191	)
	Deferred financing costs				(16,999	)		(6,260	)
	Proceeds from share and unit-based plans				320			376
	Net proceeds from stock offering				—			1,220,880
	Redemption of stock warrants				—			(17,639	)
	Dividends and distributions				(145,402	)		(81,881	)
	Distributions to co-venture partner				(33,899	)		(6,986	)

	Net cash (used in) provided by financing activities				(265,016	)		454,446

	Net (decrease) increase in cash and cash equivalents				(372,416	)		503,463
Cash and cash equivalents, beginning of period					445,645			93,255

Cash and cash equivalents, end of period				$	73,229		$	596,718

Supplemental cash flow information:
	Cash payments for interest, net of amounts capitalized			$	84,977		$	106,284

Non-cash transactions:
	Accrued development costs included in accounts payable and accrued expenses and other accrued liabilities			$	14,645		$	32,047

	Acquisition of properties by assumption of mortgage note payable and other accrued liabilities			$	56,900		$	—

	Disposition of property in exchange for investments in unconsolidated joint ventures			$	56,952		$	—

	Stock dividend			$	—		$	43,087

	Conversion of Operating Partnership units to common stock			$	20,231		$	4,331

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, 2011, 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, 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 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." The Company has identified Shoppingtown Mall, L.P. and Camelback Shopping Center Limited Partnership as variable interest entities that meet the criteria for consolidation. These variable interest entities included in the accompanying consolidated statements of operations had aggregate revenue of $2,604 and $2,673 for

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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)

the three months ended June 30, 2011 and 2010, respectively, and $4,768 and $6,331 for the six months ended June 30, 2011 and 2010, respectively. The aggregate expenses of these variable interest entities were $39,624 and $4,187 for the three months ended June 30, 2011 and 2010, respectively, and $43,143 and $7,699 for the six months ended June 30, 2011 and 2010, respectively. Included in the aggregate expenses for these variable interest entities is an impairment charge of $35,729 during the three and six months ended June 30, 2011 to write-down the long-lived assets of Shoppingtown Mall (See Note 6—Property). The significant assets and liabilities of these variable interest entities consisted of property of $43,043 and $81,155 at June 30, 2011 and December 31, 2010, respectively, and mortgage notes payable of $38,968 and $39,675 at June 30, 2011 and December 31, 2010, respectively.

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 Annual Report on Form 10-K for the year ended December 31, 2010. 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, 2010 has been derived from the audited financial statements, but does not include all disclosures required by GAAP.

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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"):

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, 2011, and 2010 (shares in thousands):

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

		2011			2010			2011			2010
Numerator
(Loss) income from continuing operations		$	(20,998	)	$	456		$	(18,694	)	$	(6,083	)
Income (loss) from discontinued operations			87			(401	)		(2,126	)		(723	)
Loss (income) attributable to noncontrolling interests			1,695			(495	)		1,638			9

Net loss attributable to the Company			(19,216	)		(440	)		(19,182	)		(6,797	)
Allocation of earnings to participating securities			(289	)		(534	)		(831	)		(1,523	)

Numerator for basic and diluted earnings per share—net loss available to common stockholders		$	(19,505	)	$	(974	)	$	(20,013	)	$	(8,320	)

Denominator
Denominator for basic and diluted earnings per share—weighted average number of common shares outstanding(1)			131,691			123,446			131,136			110,271

Earnings per common share—basic:
	Loss from continuing operations	$	(0.15	)	$	(0.01	)	$	(0.14	)	$	(0.07	)
	Discontinued operations		—			—			(0.01	)		(0.01	)

	Net loss available to common stockholders	$	(0.15	)	$	(0.01	)	$	(0.15	)	$	(0.08	)

Earnings per common share—diluted:
	Loss from continuing operations	$	(0.15	)	$	(0.01	)	$	(0.14	)	$	(0.07	)
	Discontinued operations		—			—			(0.01	)		(0.01	)

	Net loss available to common stockholders	$	(0.15	)	$	(0.01	)	$	(0.15	)	$	(0.08	)

(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, 2011 and 2010, as their effect was antidilutive.

Diluted EPS excludes 208,640 convertible non-participating preferred units for the three and six months ended June 30, 2011 and 2010, as their impact was antidilutive.

Diluted EPS excludes 1,125,172 of unexercised stock appreciation rights ("SARs") for the three and six months ended June 30, 2011, and 1,150,172 of unexercised SARs for the three and six months ended June 30, 2010, as their effect was antidilutive.

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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 122,500 of unexercised stock options for the three and six months ended June 30, 2011, and 127,500 of unexercised stock options for the three and six months ended June 30, 2010, as their effect was antidilutive.

Diluted EPS excludes 935,358 of unexercised stock warrants for the three and six months ended June 30, 2011 and 2010, as their effect was antidilutive.

Diluted EPS excludes 11,448,084 and 12,049,003 partnership units for the three months ended June 30, 2011 and 2010, respectively, and 11,674,114 and 12,107,671 for the six months ended June 30, 2011 and 2010, respectively, as their effect was antidilutive.

4. Investments in Unconsolidated Joint Ventures:

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

On February 24, 2011, the Company's joint venture in Kierland Commons, a 434,690 square foot community center in Scottsdale, Arizona, acquired the ownership interest of another partner in the joint venture for $105,550. The Company's share of the purchase price consisted of a cash payment of $34,161 and the assumption of a pro rata share of debt of $18,613. As a result of the acquisition, the Company's ownership interest in Kierland Commons increased from 24.5% to 50.0%. The joint venture recognized a remeasurement gain of $25,019 on the acquisition based on the difference of the fair value received and its previously held investment in Kierland Commons. The Company's pro rata share of the gain recognized was $12,510.

On February 28, 2011, the Company in a 50/50 joint venture, acquired The Shops at Atlas Park, a 400,000 square foot community center in Queens, New York for a total purchase price of $53,750. The Company's share of the purchase price was $26,875. The results of The Shops at Atlas Park are included below for the period subsequent to the acquisition.

On February 28, 2011, the Company acquired the additional 50% ownership interest in Desert Sky Mall, an 893,561 square foot regional shopping center in Phoenix, Arizona, that it did not own for $27,625. The purchase price was funded by a cash payment of $1,875 and the assumption of the third party's pro rata share of the mortgage note payable on the property of $25,750. Concurrent with the purchase of the partnership interest, the Company paid off the $51,500 loan on the property. Prior to the acquisition, the Company had accounted for its investment in Desert Sky Mall under the equity method. Since the date of acquisition, the Company has included Desert Sky Mall in its consolidated financial statements (See Note 15—Acquisitions).

On April 1, 2011, the Company's joint venture in SDG Macerich Properties, L.P. conveyed Granite Run Mall to the mortgage note lender with a deed-in-lieu of foreclosure. The mortgage note was non-recourse. The Company's pro rata share of gain on the early extinguishment of debt was $7,753.

On June 3, 2011, the Company entered into a transaction with General Growth Properties, Inc. ("General Growth"), whereby the Company acquired an additional 33.3% ownership interest in Arrowhead Towne Center, a 1,196,941 square foot regional shopping center in Glendale, Arizona; an additional 33.3% ownership interest in Superstition Springs Center, a 1,204,803 square foot regional

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THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Investments in Unconsolidated Joint Ventures: (Continued)

shopping center in Mesa, Arizona; and an additional 50% ownership interest in the land under Superstition Springs Center ("Superstition Springs Land") that it did not own in exchange for six anchor locations, including five former Mervyn's stores (See Note 16—Discontinued Operations) and a cash payment of $75,000. As a result of this transaction, the Company now owns a 66.7% ownership interest in Arrowhead Towne Center, a 66.7% ownership interest in Superstition Springs Center and a 100% ownership interest in Superstition Springs Land. Although the Company had a 66.7% ownership interest in Arrowhead Towne Center and Superstition Springs Center upon completion of the transaction, the Company does not have a controlling financial interest in these joint ventures due to the substantive participation rights of the outside partner and, therefore, continues to account for its investments in these joint ventures under the equity method of accounting. Accordingly, no remeasurement gain was recorded on the increase in ownership. The Company has consolidated its investment in Superstition Springs Land since the date of acquisition (See Note 15—Acquisitions) and has recorded a remeasurement gain of $1,734 (See Note 6—Property) as a result of the increase in ownership. This transaction is referred herein as the "GGP Exchange".

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 and Other Related Information:

		June 30, 2011			December 31, 2010

Assets(1):
	Properties, net	$	5,041,605		$	5,047,022
	Other assets		470,073			470,922

	Total assets	$	5,511,678		$	5,517,944

Liabilities and partners' capital(1):
	Mortgage notes payable(2)	$	4,433,201		$	4,617,127
	Other liabilities		193,028			211,942
	Company's capital		430,941			349,175
	Outside partners' capital		454,508			339,700

	Total liabilities and partners' capital	$	5,511,678		$	5,517,944

Investments in unconsolidated joint ventures:
	Company's capital	$	430,941		$	349,175
	Basis adjustment(3)		702,019			591,903

	Investments in unconsolidated joint ventures	$	1,132,960		$	941,078

	Assets—Investments in unconsolidated joint ventures	$	1,205,457		$	1,006,123
	Liabilities—Distributions in excess of investments in unconsolidated joint ventures		(72,497	)		(65,045	)

		$	1,132,960		$	941,078

(1): These amounts include the assets and liabilities of the following significant subsidiaries as of June 30, 2011 and December 31, 2010:

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

As of June 30, 2011:
Total Assets	$	710,334	$	1,079,430	$	336,820
Total Liabilities	$	698,453	$	1,011,936	$	328,732
As of December 31, 2010:
Total Assets	$	817,995	$	1,101,186	$	330,117
Total Liabilities	$	815,884	$	1,019,513	$	324,527

(2): Certain mortgage notes payable 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, 2011 and

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)

December 31, 2010, a total of $372,309 and $348,658, respectively, could become recourse debt to the Company. As of June 30, 2011 and December 31, 2010, the Company has indemnity agreements from joint venture partners for $178,563 and $162,451, respectively, of the guaranteed amount.

Included in mortgage notes payable are amounts due to affiliates of Northwestern Mutual Life ("NML") of $568,729 and $573,239 as of June 30, 2011 and December 31, 2010, 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 $10,004 and $10,185 for the three months ended June 30, 2011 and 2010, respectively, and $20,097 and $20,429 for the six months ended June 30, 2011 and 2010, respectively.

(3): The Company amortizes the difference between the cost of its investments in unconsolidated joint ventures and the book value of the underlying equity into income on a straight-line basis consistent with the lives of the underlying assets. The amortization of this difference was $2,612 and $1,368 for the three months ended June 30, 2011 and 2010, respectively, and $4,119 and $3,281 for the six months ended June 30, 2011 and 2010, respectively.

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, 2011
Revenues:
	Minimum rents		$	20,081	$	32,545	$	14,786	$	86,329		$	153,741
	Percentage rents			569		936		445		2,344			4,294
	Tenant recoveries			11,024		13,621		10,215		41,240			76,100
	Other			658		1,037		703		9,137			11,535

		Total revenues		32,332		48,139		26,149		139,050			245,670

Expenses:
	Shopping center and operating expenses			12,434		14,612		8,081		53,365			88,492
	Interest expense			9,883		11,701		3,845		37,962			63,391
	Depreciation and amortization			6,730		10,325		5,043		31,083			53,181

	Total operating expenses			29,047		36,638		16,969		122,410			205,064

Loss on sale of assets				—		—		—		(329	)		(329	)
Gain on early extinguishment of debt				15,506		—		—		—			15,506

Net income			$	18,791	$	11,501	$	9,180	$	16,311		$	55,783

Company's equity in net income			$	9,394	$	5,850	$	3,490	$	6,473		$	25,207

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

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, 2011
Revenues:
	Minimum rents		$	42,175	$	65,344		$	30,329	$	172,890		$	310,738
	Percentage rents			1,501		2,102			868		4,478			8,949
	Tenant recoveries			22,684		27,267			20,478		82,288			152,717
	Other			1,465		2,056			1,430		17,391			22,342

		Total revenues		67,825		96,769			53,105		277,047			494,746

Expenses:
	Shopping center and operating expenses			26,223		29,206			16,682		105,748			177,859
	Interest expense			21,343		23,424			7,818		76,435			129,020
	Depreciation and amortization			14,199		20,481			9,906		61,494			106,080

	Total operating expenses			61,765		73,111			34,406		243,677			412,959

Gain on sale of assets				—		—			—		24,545			24,545
Gain on early extinguishment of debt				15,506		—			—		—			15,506

Net income			$	21,566	$	23,658		$	18,699	$	57,915		$	121,838

Company's equity in net income			$	10,782	$	12,033		$	7,198	$	25,469		$	55,482

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

Property/Entity(1)	Notional Amount		Product				Fair Value

La Cumbre Plaza	$	30,000	Cap	3.00	%	12/9/2011	$	—
Paradise Valley Mall		85,000	Cap	5.00	%	9/12/2011		—
The Oaks		150,000	Cap	6.25	%	7/1/2011		—
Westside Pavilion		175,000	Cap	5.50	%	6/5/2012		—

	June 30, 2011			December 31, 2010

Land	$	1,164,643		$	1,158,139
Building improvements		4,951,592			4,934,391
Tenant improvements		412,904			398,556
Equipment and furnishings		120,318			124,530
Construction in progress		292,225			292,891

		6,941,682			6,908,507
Less accumulated depreciation		(1,321,932	)		(1,234,380	)

	$	5,619,750		$	5,674,127

	June 30, 2011			December 31, 2010

Government debt securities, at par value	$	25,837		$	26,509
Less discount		(443	)		(574	)

		25,394			25,935
Unrealized gain		2,267			2,612

Fair value	$	27,661		$	28,547


1 year or less	$	1,379
2 to 5 years		24,458

	$	25,837

		June 30, 2011			December 31, 2010

Leasing		$	211,251		$	189,853
Financing			50,062			57,564
Intangible assets:
	In-place lease values		93,722			99,328
	Leasing commissions and legal costs		28,793			29,088
Other assets			156,647			152,167

			540,475			528,000
Less accumulated amortization(1)			(192,267	)		(211,031	)

		$	348,208		$	316,969

	June 30, 2011			December 31, 2010

Above-Market Leases
Original allocated value	$	59,927		$	50,615
Less accumulated amortization		(37,417	)		(36,935	)

	$	22,510		$	13,680

Below-Market Leases
Original allocated value	$	117,158		$	121,813
Less accumulated amortization		(85,827	)		(83,780	)

	$	31,331		$	38,033

	Carrying Amount of Mortgage Notes(1)

	June 30, 2011				December 31, 2010
Property Pledged as Collateral	Related Party		Other		Related Party		Other		Interest Rate(2)			Monthly Payment Term(3)		Maturity Date
Capitola Mall(4)	$	—	$	—	$	33,459	$	—		—		$	—		—
Chandler Fashion Center(5)		—		157,451		—		159,360		5.50	%		1,043		2012
Chesterfield Towne Center(6)		—		—		—		50,462		—			—		—
Danbury Fair Mall		118,559		118,559		109,657		109,657		5.53	%		1,351		2020
Deptford Mall		—		172,500		—		172,500		5.41	%		778		2013
Deptford Mall		—		15,139		—		15,248		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)		—		232,900		—		232,900		4.20	%		805		2018
Fresno Fashion Fair		82,272		82,272		82,791		82,792		6.76	%		1,104		2015
Great Northern Mall		—		37,668		—		38,077		5.19	%		234		2013
Hilton Village		—		8,590		—		8,581		5.27	%		37		2012
La Cumbre Plaza(7)		—		20,536		—		23,113		2.37	%		18		2011
Northgate, The Mall at(8)		—		38,115		—		38,115		7.00	%		191		2013
Oaks, The(9)		—		165,000		—		165,000		2.24	%		308		2011
Oaks, The(10)		—		92,264		—		92,264		2.83	%		182		2011
Pacific View(11)		—		—		—		84,096		—			—		—
Paradise Valley Mall(12)		—		85,000		—		85,000		6.30	%		446		2012
Prescott Gateway		—		60,000		—		60,000		5.86	%		293		2011
Promenade at Casa Grande(13)		—		78,166		—		79,104		5.21	%		296		2013
Rimrock Mall(14)		—		40,237		—		40,650		7.57	%		320		2011
Salisbury, Center at		—		115,000		—		115,000		5.83	%		559		2016
SanTan Village Regional Center(15)		—		138,087		—		138,087		2.90	%		334		2012
Shoppingtown Mall(16)		—		38,968		—		39,675		8.00	%		319		2011
South Plains Mall		—		103,445		—		104,132		6.54	%		383		2015
South Towne Center		—		87,135		—		87,726		6.39	%		554		2015
Towne Mall		—		13,077		—		13,348		4.99	%		100		2012
Tucson La Encantada		75,878		—		76,437		—		5.84	%		448		2012
Twenty Ninth Street(17)		—		107,000		—		106,244		3.08	%		275		2016
Valley River Center		—		120,000		—		120,000		5.59	%		559		2016
Valley View Center(18)		—		125,000		—		125,000		5.72	%		596		2011
Victor Valley, Mall of(19)		—		97,000		—		100,000		2.11	%		171		2012
Vintage Faire Mall(20)		—		135,000		—		135,000		3.48	%		392		2015
Westside Pavilion(21)		—		175,000		—		175,000		2.93	%		427		2012
Wilton Mall(22)		—		40,000		—		40,000		1.19	%		40		2013

	$	276,709	$	2,820,109	$	302,344	$	2,957,131


Property		$	46,603
Deferred charges, net			5,474
Cash and cash equivalents			6,057
Tenant receivables			202
Other assets, net			4,481

	Total assets acquired		62,817

Mortgage note payable			51,500
Accounts payable			33
Other accrued liabilities			3,017

	Total liabilities assumed		54,550

	Fair value of acquired net assets (at 100% ownership)	$	8,267


Fair value of existing ownership interest (at 50% ownership)		$	4,134
Carrying value of investment in Desert Sky Mall			(2,296	)

	Gain on remeasurement	$	1,838

		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, 2011			272,226		$	50.68		63,351		$	53.69		29,783		$	34.18		1,059,122		$	7.51		1,038,549		$	7.17
	Granted		422,631			46.38		11,350			48.47		5,870			48.99		—			—		64,463			48.36
	Vested		(504,857	)		49.85		(53,571	)		57.36		(12,028	)		40.09		(1,034,122	)		7.51		(519,272	)		7.17
	Forfeited		—			—		—			—		—			—		(25,000	)		7.51		(7,400	)		12.35

Balance at June 30, 2011			190,000		$	43.30		21,130		$	40.68		23,625		$	34.84		—		$	—		576,340		$	11.71


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

	For the Six Months Ended June 30,

(Dollars in thousands)	2011		2010
*Consolidated Centers:*
Acquisitions of property and equipment	$	70,114	$	6,514
Development, redevelopment, expansion and renovations		52,461		96,994
Tenant allowances		8,792		7,034
Deferred leasing charges		16,868		14,806

	$	148,235	$	125,348

*Joint Venture Centers (at Company's pro rata share):*
Acquisitions of property and equipment	$	137,291	$	1,752
Development, redevelopment, expansion and renovations		16,410		17,771
Tenant allowances		2,697		1,503
Deferred leasing charges		2,878		2,326

	$	159,276	$	23,352

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)	$	4,065,575	$	1,897,950	$	690,464	$	1,012,458	$	464,703
Operating lease obligations(1)		813,715		13,396		27,156		23,917		749,246
Purchase obligations(1)		10,016		10,016		—		—		—
Other long-term liabilities		242,706		196,821		4,177		4,136		37,572

	$	5,132,012	$	2,118,183	$	721,797	$	1,040,511	$	1,251,521

		For the years ended June 30,

		2012			2013			2014			2015			2016			Thereafter			Total			FV
CONSOLIDATED CENTERS:
Long term debt:
	Fixed rate	$	984,307		$	343,184		$	70,577		$	193,120		$	528,602		$	443,281		$	2,563,071		$	2,681,042
	Average interest rate		5.70	%		5.45	%		5.69	%		5.86	%		6.09	%		4.83	%		5.61	%
	Floating rate		835,387			120,821			120,643			132,316			107,000			—			1,316,167			1,313,552
	Average interest rate		2.65	%		6.52	%		3.84	%		3.48	%		3.08	%					3.23	%

Total debt—Consolidated Centers		$	1,819,694		$	464,005		$	191,220		$	325,436		$	635,602		$	443,281		$	3,879,238		$	3,994,594

UNCONSOLIDATED JOINT VENTURE CENTERS:
Long term debt (at Company's pro rata share):
	Fixed rate	$	275,989		$	212,664		$	502,131		$	164,390		$	673,919		$	99,567		$	1,928,660		$	2,077,135
	Average interest rate		6.89	%		6.94	%		5.48	%		5.96	%		6.09	%		5.83	%		6.12	%
	Floating rate		147,117			58,849			18,976			13,306			25,000			—			263,248			263,406
	Average interest rate		0.99	%		5.04	%		3.11	%		3.15	%		3.50	%					2.39	%

Total debt—Unconsolidated Joint Venture Centers		$	423,106		$	271,513		$	521,107		$	177,696		$	698,919		$	99,567		$	2,191,908		$	2,340,541

		Description

3.1		Articles of Amendment and Restatement of the Company (incorporated by reference as an exhibit to the Company's Registration Statement on Form S-11, as amended (No. 33-68964)).
3.1.1		Articles Supplementary of the Company (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date May 30, 1995).
3.1.2		Articles Supplementary of the Company (with respect to the first paragraph) (incorporated by reference as an exhibit to the Company's 1998 Form 10-K).
3.1.3		Articles Supplementary of the Company (Series D Preferred Stock) (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date July 26, 2002).
3.1.4		Articles Supplementary of the Company (incorporated by reference as an exhibit to the Company's Registration Statement on Form S-3, as amended (No. 333-88718)).
3.1.5		Articles of Amendment (declassification of Board) (incorporated by reference as an exhibit to the Company's 2008 Form 10-K).
3.1.6		Articles Supplementary (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date February 5, 2009).
3.1.7		Articles of Amendment (increased authorized shares) (incorporated by reference as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009).
3.2		Amended and Restated Bylaws of the Company (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date June 30, 2010).
4.1		Form of Common Stock Certificate (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, as amended, event date November 10, 1998).
4.2		Form of Preferred Stock Certificate (Series D Preferred Stock) (incorporated by reference as an exhibit to the Company's Registration Statement on Form S-3 (No. 333-107063)).
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) (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date March 16, 2007).
4.4		Warrant to Purchase Common Stock, dated as of September 30, 2009, between the Company and Heitman M-rich Investors LLC (incorporated by reference as an exhibit to the Company's 2009 Form 10-K).
10.1	*	Amendment No. 2 to Amended and Restated Deferred Compensation Plan for Executives (May 1, 2011).
10.2	*	Amendment No. 2 to 2005 Deferred Compensation Plan for Executives (May 1, 2011).
10.3	*	Amendment No. 2 to Amended and Restated Deferred Compensation Plan for Senior Executives (May 1, 2011).
10.4	*	Amendment No. 2 to 2005 Deferred Compensation Plan for Senior Executives (May 1, 2011).

Exhibit Number			Description

	10.5		$1,500,000,000 Revolving Loan Facility Credit Agreement, dated as of May 2, 2011, by and among the Operating Partnership, the Company and the other guarantors party thereto, Deutsche Bank Trust Company Americas, as administrative agent and as collateral agent, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC, as joint lead arrangers and joint bookrunning managers; JPMorgan Chase Bank, N.A., as syndication agent, and various lenders party thereto (includes the form of pledge and security agreement) (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date May 2, 2011).
	10.6		Unconditional Guaranty, dated as of May 2, 2011, by and between the Company and Deutsche Bank Trust Company Americas, as administrative agent (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date May 2, 2011).
	10.7		Unconditional Guaranty, dated as of May 2, 2011, by and among the Guarantors and Deutsche Bank Trust Company Americas, as administrative agent (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date May 2, 2011).
	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 Certifications of Arthur Coppola and Thomas O'Hern
	101.INS		XBRL Instance Document
	101.SCH		XBRL Taxonomy Extension Schema Document
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document


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