MACERICH CO - Quarter Report: 2011 March (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 March 31, 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 May 3, 2011 of the registrant's common stock, par value $0.01 per share: 130,899,663 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 March 31, 2011 and December 31, 2010	3
	Consolidated Statements of Operations of the Company for the three months ended March 31, 2011 and 2010	4
	Consolidated Statement of Equity and Redeemable Noncontrolling Interests of the Company for the three months ended March 31, 2011	5
	Consolidated Statements of Cash Flows of the Company for the three months ended March 31, 2011 and 2010	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
Part II	Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Removed and Reserved	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
Signature		46

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THE MACERICH COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

(Unaudited)

				March 31, 2011			December 31, 2010

ASSETS:
Property, net				$	5,686,779		$	5,674,127
Cash and cash equivalents					188,025			445,645
Restricted cash					76,859			71,434
Marketable securities					26,000			25,935
Tenant and other receivables, net					92,200			95,083
Deferred charges and other assets, net					346,087			316,969
Loans to unconsolidated joint ventures					3,452			3,095
Due from affiliates					8,672			6,599
Investments in unconsolidated joint ventures					1,070,204			1,006,123

			Total assets	$	7,498,278		$	7,645,010

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY:
Mortgage notes payable:
	Related parties			$	277,817		$	302,344
	Others				2,911,860			2,957,131

			Total		3,189,677			3,259,475
Bank and other notes payable					634,990			632,595
Accounts payable and accrued expenses					74,287			70,585
Other accrued liabilities					258,613			257,678
Distributions in excess of investments in unconsolidated joint ventures					71,783			65,045
Co-venture obligation					131,274			160,270

			Total liabilities		4,360,624			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, 131,049,731 and 130,452,032 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively			1,310			1,304
		Additional paid-in capital			3,452,875			3,456,569
		Accumulated deficit			(630,017	)		(564,357	)
		Accumulated other comprehensive income (loss)			1,593			(3,237	)

			Total stockholders' equity		2,825,761			2,890,279
	Noncontrolling interests				300,527			297,717

			Total equity		3,126,288			3,187,996

			Total liabilities, redeemable noncontrolling interests and equity	$	7,498,278		$	7,645,010

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 March 31,

			2011			2010
Revenues:
	Minimum rents		$	109,521		$	101,980
	Percentage rents			2,954			2,987
	Tenant recoveries			61,672			61,009
	Management Companies			10,584			10,221
	Other			6,338			5,917

		Total revenues		191,069			182,114

Expenses:
	Shopping center and operating expenses			62,775			60,821
	Management Companies' operating expenses			25,855			22,187
	REIT general and administrative expenses			7,644			7,518
	Depreciation and amortization			64,626			59,215

				160,900			149,741

	Interest expense:
		Related parties		4,489			3,102
		Other		47,508			52,309

				51,997			55,411
	Loss on early extinguishment of debt			9,101			—

		Total expenses		221,998			205,152
Equity in income of unconsolidated joint ventures				30,275			16,459
Co-venture expense				(1,296	)		(1,384	)
Income tax benefit				2,478			1,215
Loss on sale or write down of assets, net				(437	)		—

Income (loss) from continuing operations				91			(6,748	)
Loss from discontinued operations				—			(113	)

Net income (loss)				91			(6,861	)
Less net income (loss) attributable to noncontrolling interests				57			(504	)

Net income (loss) attributable to the Company			$	34		$	(6,357	)

Earnings per common share attributable to Company—basic:
	Income (loss) from continuing operations		$	—		$	(0.08	)
	Discontinued operations			—			—

	Net income (loss) available to common stockholders		$	—		$	(0.08	)

Earnings per common share attributable to Company—diluted:
	Income (loss) from continuing operations		$	—		$	(0.08	)
	Discontinued operations			—			—

	Net income (loss) available to common stockholders		$	—		$	(0.08	)

Weighted average number of common shares outstanding:
	Basic			130,574,000			96,951,000

	Diluted			130,574,000			96,951,000

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				Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity			Noncontrolling Interests						Redeemable Noncontrolling Interests
		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 income:
	Net income		—		—		—			34			—			34			(14	)		20			71
	Interest rate swap/cap agreements		—		—		—			—			4,830			4,830			—			4,830			—

	Total comprehensive income		—		—		—			34			4,830			4,864			(14	)		4,850			71
Amortization of share and unit-based plans			578,599		6		5,446			—			—			5,452			—			5,452			—
Distributions paid ($0.50) per share			—		—		—			(65,694	)		—			(65,694	)		—			(65,694	)		—
Distributions to noncontrolling interests			—		—		—			—			—			—			(7,358	)		(7,358	)		(71	)
Contributions from noncontrolling interests			—		—		—			—			—			—			42			42			—
Other			—		—		1,000			—			—			1,000			—			1,000			—
Conversion of noncontrolling interests to common shares			19,100		—		818			—			—			818			(818	)		—			—
Adjustment of noncontrolling interest in Operating Partnership			—		—		(10,958	)		—			—			(10,958	)		10,958			—			—

Balance March 31, 2011			131,049,731	$	1,310	$	3,452,875		$	(630,017	)	$	1,593		$	2,825,761		$	300,527		$	3,126,288		$	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 Three Months Ended March 31,

				2011			2010
Cash flows from operating activities:
	Net income (loss)			$	91		$	(6,861	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Loss on early extinguishment of debt			101			—
		Loss on sale or write-down of assets, net			437			—
		Depreciation and amortization			68,003			61,906
		Amortization of net discount on mortgages, bank and other notes payable			2,247			416
		Amortization of share and unit-based plans			2,371			2,804
		Provision for doubtful accounts			400			1,683
		Income tax benefit			(2,478	)		(1,215	)
		Equity in income of unconsolidated joint ventures			(30,275	)		(16,459	)
		Co-venture expense			1,296			1,384
		Distributions of income from unconsolidated joint ventures			2,679			3,582
		Changes in assets and liabilities, net of acquisitions and dispositions:
			Tenant and other receivables		2,685			3,648
			Other assets		(9,523	)		(16,656	)
			Due from affiliates		(2,073	)		188
			Accounts payable and accrued expenses		2,889			11,659
			Other accrued liabilities		2,698			18,838

	Net cash provided by operating activities				41,548			64,917

Cash flows from investing activities:
	Acquisitions of property, development, redevelopment and property improvements				(35,995	)		(67,191	)
	Deferred leasing costs				(10,406	)		(9,271	)
	Distributions from unconsolidated joint ventures				37,894			32,230
	Contributions to unconsolidated joint ventures				(63,839	)		(5,312	)
	Loans to unconsolidated joint ventures, net				(357	)		(389	)
	Proceeds from sale of assets				4,785			—
	Restricted cash				(5,425	)		(1,672	)

	Net cash used in investing activities				(73,343	)		(51,605	)

Cash flows from financing activities:
	Proceeds from mortgages, bank and other notes payable				127,000			198,948
	Payments on mortgages, bank and other notes payable				(248,215	)		(194,185	)
	Deferred financing costs				(1,195	)		(2,492	)
	Dividends and distributions				(73,123	)		(9,119	)
	Distributions to co-venture partner				(30,292	)		(3,493	)

	Net cash used in financing activities				(225,825	)		(10,341	)

	Net (decrease) increase in cash and cash equivalents				(257,620	)		2,971
Cash and cash equivalents, beginning of period					445,645			93,255

Cash and cash equivalents, end of period				$	188,025		$	96,226

Supplemental cash flow information:
	Cash payments for interest, net of amounts capitalized			$	48,343		$	58,023

Non-cash transactions:
	Accrued development costs included in accounts payable and accrued expenses and other accrued liabilities			$	1,848		$	28,926

	Acquisition of property by assumption of mortgage note payable			$	51,500			—

	Stock dividend			$	—		$	43,086

	Conversion of Operating Partnership units to common stock			$	818		$	1,068

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 March 31, 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, 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." The Company identified two variable interest entities which meet the criteria for consolidation. These variable interest entities included in the accompanying consolidated statements of operations had aggregate revenue of $2,402 and $3,658 for the three months ended March 31, 2011 and 2010, respectively, and aggregate expenses of $3,519

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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)

and $3,512 for the three months ended March 31, 2011 and 2010, respectively. The significant assets and liabilities of these variable interest entities consisted of property of $79,599 and $81,155 at March 31, 2011 and December 31, 2010, respectively, and mortgage notes payable of $39,234 and $39,675 at March 31, 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 months ended March 31, 2011, and 2010 (shares in thousands):

		For the Three Months Ended March 31,

		2011			2010
Numerator
Income (loss) from continuing operations		$	91		$	(6,748	)
Loss from discontinued operations			—			(113	)
(Income) loss attributable to noncontrolling interests			(57	)		504

Net income (loss) attributable to the Company			34			(6,357	)
Allocation of earnings to participating securities			(542	)		(989	)

Numerator for basic and diluted earnings per share—net loss available to common stockholders		$	(508	)	$	(7,346	)

Denominator
Denominator for basic and diluted earnings per share—weighted average number of common shares outstanding(1)			130,574			96,951

Earnings per common share—basic:
	Income (loss) from continuing operations	$	—		$	(0.08	)
	Discontinued operations		—			—

	Net income (loss) available to common stockholders	$	—		$	(0.08	)

Earnings per common share—diluted:
	Income (loss) from continuing operations	$	—		$	(0.08	)
	Discontinued operations		—			—

	Net income (loss) available to common stockholders	$	—		$	(0.08	)

(1)

The Senior Notes (See Note 11—Bank and Other Notes Payable) are excluded from diluted EPS for the three months ended March 31, 2011 and 2010 as their effect would be antidilutive to net income (loss) available to common stockholders.

Diluted EPS excludes 208,640 convertible non-participating preferred units for the three months ended March 31, 2011 and 2010, as their impact was antidilutive to net income (loss) available to common stockholders.

Diluted EPS excludes 1,125,172 and 1,150,172 of unexercised stock appreciation rights for the three months ended March 31, 2011 and 2010, respectively, as their effect was antidilutive to net income (loss) available to common stockholders.

Diluted EPS excludes 122,500 and 127,500 of unexercised stock options for the three months ended March 31, 2011 and 2010, respectively, as their effect was antidilutive to net income (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 935,358 and 2,185,358 of unexercised stock warrants for the three months ended March 31, 2011 and 2010, respectively, as their effect was antidilutive to net income (loss) available to common stockholders.
Diluted EPS excludes 12,082,710 and 12,232,655 partnership units for the three months ended March 31, 2011 and 2010, respectively, as their effect was antidilutive to net income (loss) available to common stockholders.

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—Acquisition).

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

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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)

Combined and Condensed Balance Sheets of Unconsolidated Joint Ventures:

		March 31, 2011			December 31, 2010

Assets(1):
	Properties, net	$	5,174,884		$	5,047,022
	Other assets		470,789			470,922

	Total assets	$	5,645,673		$	5,517,944

Liabilities and partners' capital(1):
	Mortgage notes payable(2)	$	4,558,807		$	4,617,127
	Other liabilities		212,697			211,942
	Company's capital		416,828			349,175
	Outside partners' capital		457,341			339,700

	Total liabilities and partners' capital	$	5,645,673		$	5,517,944

Investments in unconsolidated joint ventures:
	Company's capital	$	416,828		$	349,175
	Basis adjustment(3)		581,593			591,903

		$	998,421		$	941,078

	Assets—Investments in unconsolidated joint ventures	$	1,070,204		$	1,006,123
	Liabilities—Distributions in excess of investments in unconsolidated joint ventures		(71,783	)		(65,045	)

		$	998,421		$	941,078

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

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

As of March 31, 2011:
Total Assets	$	814,980	$	1,083,401	$	333,366
Total Liabilities	$	814,538	$	1,017,460	$	326,556
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 March 31, 2011 and December 31, 2010, a total of $346,954 and $348,658, respectively, could become recourse debt to

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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)

the Company. As of March 31, 2011 and December 31, 2010, the Company has an indemnity from one of its joint venture partners for $161,616 and $162,451, respectively, of the guaranteed amount.

Included in mortgage notes payable are amounts due to affiliates of Northwestern Mutual Life ("NML") of $570,984 and $573,239 as of March 31, 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 $10,093 and $10,244 for the three months ended March 31, 2011 and 2010, respectively.

(3): This represents the difference between the cost of the investments and the book value of the underlying equity of the joint ventures. 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 $1,435 and $3,702 for the three months ended March 31, 2011 and 2010, respectively.

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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)

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 March 31, 2011
Revenues:
	Minimum rents		$	22,094	$	32,799		$	15,543	$	86,561		$	156,997
	Percentage rents			932		1,166			423		2,134			4,655
	Tenant recoveries			11,660		13,646			10,263		41,048			76,617
	Other			807		1,019			727		8,254			10,807

		Total revenues		35,493		48,630			26,956		137,997			249,076

Expenses:
	Shopping center and operating expenses			13,789		14,594			8,601		52,383			89,367
	Interest expense			11,460		11,723			3,973		38,473			65,629
	Depreciation and amortization			7,469		10,156			4,863		30,411			52,899

	Total operating expenses			32,718		36,473			17,437		121,267			207,895

Gain on sale/remeasurement of assets				—		—			—		24,874			24,874

Net income			$	2,775	$	12,157		$	9,519	$	41,604		$	66,055

Company's equity in net income			$	1,388	$	6,183		$	3,708	$	18,996		$	30,275

Three Months Ended March 31, 2010
Revenues:
	Minimum rents		$	22,257	$	31,691		$	14,597	$	89,116		$	157,661
	Percentage rents			724		897			120		2,517			4,258
	Tenant recoveries			11,640		12,447			9,506		46,586			80,179
	Other			799		1,170			678		6,233			8,880

		Total revenues		35,420		46,205			24,901		144,452			250,978

Expenses:
	Shopping center and operating expenses			14,065		13,685			8,106		54,714			90,570
	Interest expense			11,497		13,101			4,018		38,918			67,534
	Depreciation and amortization			7,625		9,189			4,592		31,381			52,787

	Total operating expenses			33,187		35,975			16,716		125,013			210,891

Loss on sale of assets				—		—			—		(1,236	)		(1,236	)
Loss on early extinguishment of debt				—		(1,352	)		—		—			(1,352	)

Net income			$	2,233	$	8,878		$	8,185	$	18,203		$	37,499

Company's equity in net income			$	1,116	$	4,567		$	4,092	$	6,684		$	16,459

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)

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		—
Victor Valley Mall		100,000	Swap	5.08	%	4/25/2011		(307	)
Vintage Faire Mall		135,000	Swap	5.08	%	4/25/2011		(414	)
Westside Pavilion		175,000	Cap	5.50	%	6/5/2011		—
Westside Pavilion		165,000	Swap	5.08	%	4/25/2011		(507	)

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

Assets
Derivative instruments	$	—	$	—	$	—	$	—
Liabilities
Derivative instruments		—		1,228		—		1,228

	March 31, 2011			December 31, 2010

Land	$	1,169,314		$	1,158,139
Building improvements		4,984,435			4,934,391
Tenant improvements		399,884			398,556
Equipment and furnishings		117,125			124,530
Construction in progress		293,516			292,891

		6,964,274			6,908,507
Less accumulated depreciation		(1,277,495	)		(1,234,380	)

	$	5,686,779		$	5,674,127

	March 31, 2011			December 31, 2010

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

		26,000			25,935
Unrealized gain		2,276			2,612

Fair value	$	28,276		$	28,547


1 year or less	$	1,461
2 to 5 years		25,048

	$	26,509

		March 31, 2011			December 31, 2010

Leasing		$	209,924		$	189,853
Financing			57,024			57,564
Intangible assets:
	In-place lease values		97,114			99,328
	Leasing commissions and legal costs		29,616			29,088
Other assets			162,982			152,167

			556,660			528,000
Less accumulated amortization(1)			(210,573	)		(211,031	)

		$	346,087		$	316,969

	March 31, 2011			December 31, 2010

Above-Market Leases
Original allocated value	$	62,934		$	50,615
Less accumulated amortization		(36,955	)		(36,935	)

	$	25,979		$	13,680

Below-Market Leases
Original allocated value	$	120,948		$	121,813
Less accumulated amortization		(83,811	)		(83,780	)

	$	37,137		$	38,033

	Carrying Amount of Mortgage Notes(1)

	March 31, 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)				158,412		—		159,360		5.50	%		1,043		2012
Chesterfield Towne Center(6)		—		—		—		50,462		—			—		—
Danbury Fair Mall		119,135		119,136		109,657		109,657		5.53	%		1,351		2020
Deptford Mall		—		172,500		—		172,500		5.41	%		778		2013
Deptford Mall		—		15,191		—		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		82,534		82,534		82,791		82,792		6.76	%		1,104		2015
Great Northern Mall		—		37,868		—		38,077		5.19	%		234		2013
Hilton Village		—		8,586		—		8,581		5.27	%		37		2012
La Cumbre Plaza(7)		—		21,561		—		23,113		2.43	%		27		2011
Northgate, The Mall at(8)				38,115		—		38,115		7.00	%		191		2013
Oaks, The(9)		—		165,000		—		165,000		2.31	%		318		2011
Oaks, The(10)		—		92,264		—		92,264		2.83	%		182		2011
Pacific View		—		83,651		—		84,096		7.23	%		649		2011
Paradise Valley Mall(11)		—		85,000		—		85,000		6.30	%		446		2012
Prescott Gateway		—		60,000		—		60,000		5.86	%		293		2011
Promenade at Casa Grande(12)		—		78,959		—		79,104		5.21	%		296		2013
Rimrock Mall		—		40,445		—		40,650		7.57	%		320		2011
Salisbury, Center at		—		115,000		—		115,000		5.83	%		559		2016
SanTan Village Regional Center(13)		—		138,087		—		138,087		2.99	%		344		2011
Shoppingtown Mall		—		39,234		—		39,675		5.01	%		319		2011
South Plains Mall		—		103,773		—		104,132		6.53	%		383		2015
South Towne Center		—		87,433		—		87,726		6.39	%		554		2015
Towne Mall		—		13,211		—		13,348		4.99	%		100		2012
Tucson La Encantada		76,148		—		76,437		—		5.84	%		358		2012
Twenty Ninth Street(14)		—		107,000		—		106,244		3.15	%		467		2016
Valley River Center		—		120,000		—		120,000		5.59	%		559		2016
Valley View Center(15)		—		125,000		—		125,000		5.81	%		605		2011
Victor Valley, Mall of(16)		—		100,000		—		100,000		6.94	%		578		2011
Vintage Faire Mall(17)		—		135,000		—		135,000		8.37	%		942		2015
Westside Pavilion(18)		—		175,000		—		175,000		7.81	%		1,139		2011
Wilton Mall(19)		—		40,000		—		40,000		1.25	%		42		2013

	$	277,817	$	2,911,860	$	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

	For the Three Months Ended March 31,

	2011		2010
Management Fees	$	6,263	$	6,910
Development and Leasing Fees		2,384		2,167

	$	8,647	$	9,077

	For the Three Months Ended March 31,

	2011		2010
LTIP Units	$	1,901	$	1,500
Stock awards		493		1,562
Stock units		2,813		1,458
Stock options		—		147
Stock appreciation rights ("SARs")		321		295
Phantom stock units		240		242

	$	5,768	$	5,204

		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		10,850			48.36		3,863			47.31		—			—		64,463			48.36
	Vested		(504,857	)		49.85		(53,239	)		57.49		(6,088	)		39.49		(1,034,122	)		7.51		(519,272	)		7.17
	Forfeited		—			—		—			—		—			—		(25,000	)		7.51		(6,470	)		7.17

Balance at March 31, 2011			190,000		$	43.30		20,962		$	40.35		27,558		$	34.84		—		$	—		577,270		$	11.77

	For the Three Months Ended March 31,

	2011		2010
Current	$	—	$	—
Deferred		2,478		1,215

Total income tax benefit	$	2,478	$	1,215


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

	For the Three Months Ended March 31,

(Dollars in thousands)	2011		2010
*Consolidated Centers:*
Acquisitions of property and equipment	$	38,017	$	2,183
Development, redevelopment and expansion of Centers		19,345		35,686
Renovations of Centers		1,855		2,193
Tenant allowances		3,078		2,024
Deferred leasing charges		9,482		8,153

	$	71,777	$	50,239

*Joint Venture Centers (at Company's pro rata share):*
Acquisitions of property and equipment	$	61,391	$	144
Development, redevelopment and expansion of Centers		7,604		7,059
Renovations of Centers		1,089		1,400
Tenant allowances		1,333		567
Deferred leasing charges		1,464		1,185

	$	72,881	$	10,355

	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)	$	4,032,595	$	1,774,090	$	766,055	$	880,620	$	611,830
Operating lease obligations(1)		822,635		13,920		28,434		25,325		754,956
Purchase obligations(1)		14,838		14,838		—		—		—
Other long-term liabilities		252,893		206,898		4,177		4,136		37,682

	$	5,122,961	$	2,009,746	$	798,666	$	910,081	$	1,404,468

		For the years ended March 31,

		2012			2013			2014			2015			2016			Thereafter			Total			FV
CONSOLIDATED CENTERS:
Long term debt:
	Fixed rate(1)	$	1,266,926		$	414,963		$	71,217		$	96,210		$	627,116		$	582,249		$	3,058,681		$	3,214,202
	Average interest rate		6.10	%		5.52	%		5.77	%		5.16	%		6.69	%		5.08	%		5.91	%
	Floating rate		418,662			121,365			118,959			—			107,000			—			765,986			769,711
	Average interest rate		2.67	%		6.52	%		3.88	%					3.15	%					3.54	%

Total debt—Consolidated Centers		$	1,685,588		$	536,328		$	190,176		$	96,210		$	734,116		$	582,249		$	3,824,667		$	3,983,913

UNCONSOLIDATED JOINT VENTURE CENTERS:
Long term debt (at Company's pro rata share):
	Fixed rate	$	60,938		$	406,750		$	476,976		$	65,594		$	375,801		$	580,250		$	1,966,309		$	2,118,310
	Average interest rate		6.00	%		7.05	%		5.36	%		7.65	%		5.76	%		6.10	%		6.10	%
	Floating rate		146,806			58,846			10,277			—			—			25,000			240,929			240,725
	Average interest rate		1.20	%		5.07	%		3.38	%								3.56	%		2.48	%

Total debt—Unconsolidated Joint Venture Centers		$	207,744		$	465,596		$	487,253		$	65,594		$	375,801		$	605,250		$	2,207,238		$	2,359,035

		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	*	Form of 2011 LTIP Unit Award Agreement under 2003 Equity Incentive Plan (Performance-Based)
10.2		$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).


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

Exhibit Number			Description

	10.3		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).
	10.4		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		The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, 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)