Edgar Filing: MACERICH CO

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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)

Significant accounting policies used by the unconsolidated joint ventures are similar to those used by the Company.

Amounts paid (received) as a result of interest rate agreements are recorded as an addition (reduction) to (of) interest expense. The Company recorded other comprehensive income related to the marking-to-market of interest rate agreements of $4,830 and $7,979 for the three months ended March 31, 2011 and 2010, respectively.

The following table presents the Company's derivative instruments measured at fair value as of March 31, 2011:

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2011, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Depreciation expense was $54,442 and $49,589 for the three months ended March 31, 2011 and 2010, respectively.

During the three months ended March 31, 2011, the Company recognized a gain of $542 on the sale of land and a loss of $2,817 on the sale or write-down of assets. In addition, the Company recognized a gain of $1,838 on the purchase of a 50% interest in Desert Sky Mall. See Note 15—Acquisition.

The proceeds from maturities and interest receipts from the marketable securities are restricted to the service of the Greeley Note (See Note 11—Bank and Other Notes Payable).

Included in tenant and other receivables, net, is an allowance for doubtful accounts of $3,794 and $5,411 at March 31, 2011 and December 31, 2010, respectively. Also included in tenant and other receivables, net are accrued percentage rents of $1,604 and $5,827 at March 31, 2011 and December 31, 2010, 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 March 31, 2011 and December 31, 2010, the note had a balance of $8,929 and $8,992, respectively.

On August 18, 2009, the Company received a note receivable from J&R Holdings XV, LLC ("Pederson") that bears interest at 11.55% and matures on December 31, 2013. 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. The balance on the note at March 31, 2011 and December 31, 2010 was $3,445. Interest income on the note was $102 and $44 for the three months ended March 31, 2011 and 2010, respectively.

The allocated values of above-market leases included in deferred charges and other assets, net, and below-market leases included in other accrued liabilities, consist of the following:

The allocated values of above and below-market leases are amortized into minimum rents on a straight-line basis over the individual remaining lease terms. The remaining lease terms of below-market leases may include certain below-market fixed-rate renewal periods. In considering whether or not a lessee will execute a below-market fixed-rate lease renewal option, the Company evaluates economic factors and certain qualitative factors at the time of acquisition such as tenant mix in the center, the Company's relationship with the tenant and the availability of competing tenant space.

Mortgage notes payable at March 31, 2011 and December 31, 2010 consist of the following:

Most of the mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt.

The Company expects all 2011 loan maturities, except Valley View Center, will be refinanced, extended and/or paid-off from the Company's line of credit or with cash on hand.

Total interest expense capitalized during the three months ended March 31, 2011 and 2010 was $3,335 and $8,188, respectively.

Related party mortgage notes payable are amounts due to affiliates of NML. See Note 18—Related-Party Transactions for interest expense associated with loans from NML.

The fair value of mortgage notes payable at March 31, 2011 and December 31, 2010 was $3,336,688 and $3,438,674, respectively, based on current interest rates for comparable loans. The method for computing fair value was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt.

On March 16, 2007, the Company issued $950,000 in Senior Notes that are to mature on March 15, 2012. The Senior Notes bear interest at 3.25%, payable semiannually, are senior to unsecured debt of the Company and are guaranteed by the Operating Partnership. Prior to December 14, 2011, upon the occurrence of certain specified events, the Senior Notes will be convertible at the option of the holder into cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the election of the Company, at an initial conversion rate of 8.9702 shares per $1 principal amount. On and after December 15, 2011, the Senior Notes will be convertible at any time prior to the second business day preceding the maturity date at the option of the holder at the initial conversion rate. The initial conversion price of approximately $111.48 per share represented a 20% premium over the closing price of the Company's common stock on March 12, 2007. In addition, the Senior Notes are covered by two capped calls that effectively increased the conversion price of the Senior Notes to approximately $130.06, which represents a 40% premium to the March 12, 2007 closing price of $92.90 per common share of the Company. The initial conversion rate is subject to adjustment under certain circumstances. Holders of the Senior Notes do not have the right to require the Company to repurchase the Senior Notes prior to maturity except in connection with the occurrence of certain fundamental change transactions.

The carrying value of the Senior Notes at March 31, 2011 and December 31, 2010 was $609,560 and $606,971, respectively, which included unamortized discount of $10,072 and $12,661, respectively. The unamortized discount is amortized into interest expense over the term of the Senior Notes in a manner that approximates the effective interest method. As of March 31, 2011 and December 31, 2010, the effective interest rate was 5.41%. The fair value of the Senior Notes at March 31, 2011 and December 31, 2010 was $619,632 based on the quoted market price on each date.

The Company had a $1,500,000 revolving line of credit that bore interest at LIBOR plus a spread of 0.75% to 1.10% depending on the Company's overall leverage that matured on April 25, 2011. On May 2, 2011, the Company obtained a new $1,500,000 revolving line of credit that bears interest at LIBOR plus a spread of 1.75% to 3.0% depending on the Company's overall leverage and matures on May 2, 2015 with a one-year extension option. Based on the Company's current leverage levels, the borrowing rate on the new facility is LIBOR plus 2.0%. The line of credit can be expanded, depending on certain conditions, up to a total facility of $2,000,000. (See Note 21—Subsequent Events).

On July 27, 2006, concurrent with the sale of Greeley Mall, the Company provided marketable securities to replace Greeley Mall as collateral for the mortgage note payable on the property (See Note 7—Marketable Securities). As a result of this transaction, the mortgage note payable was reclassified to bank and other notes payable. This note bears interest at an effective rate of 6.34% and

matures in September 2013. At March 31, 2011 and December 31, 2010, the Greeley note had a balance outstanding of $25,430 and $25,624, respectively. The fair value of the note at March 31, 2011 and December 31, 2010 was $27,593 and $23,967, respectively, based on current interest rates for comparable loans. The method for computing fair value was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt.

As of March 31, 2011 and December 31, 2010, the Company was in compliance with all applicable financial loan covenants.

On September 30, 2009, the Company formed a joint venture whereby a third party acquired a 49.9% interest in Freehold Raceway Mall and Chandler Fashion Center. As part of this transaction, the Company issued a warrant in favor of the third party to purchase 935,358 shares of common stock of the Company at an exercise price of $46.68 per share. See "Warrants" in Note 14—Stockholders' Equity. The Company received approximately $174,650 in cash proceeds for the overall transaction, of which $6,496 was attributed to the warrants.

As a result of the Company having certain rights under the agreement to repurchase the assets after the seventh year of the venture formation, the transaction did not qualify for sale treatment. The Company, however, is not obligated to repurchase the assets. The transaction has been accounted for as a profit-sharing arrangement, and accordingly the assets, liabilities and operations of the properties remain on the books of the Company and a co-venture obligation was established for the net cash proceeds received from the third party less costs allocated to the warrant. The co-venture obligation is increased for the allocation of income to the co-venture partner and decreased for distributions to the co-venture partner.

The Company allocates net income of the Operating Partnership based on the weighted average ownership interest during the period. The net income of the Operating Partnership that is not attributable to the Company is reflected in the consolidated statements of operations as noncontrolling interests. The Company adjusts the noncontrolling interests in the Operating Partnership at the end of each period to reflect its ownership interest in the Company. The Company had a 92% ownership interest in the Operating Partnership as of March 31, 2011 and December 31, 2010. The remaining 8% limited partnership interest as of March 31, 2011 and December 31, 2010, was owned by certain of the Company's executive officers and directors, certain of their affiliates, and other third party investors in the form of units of the Operating Partnership ("OP Units"). The OP Units may be redeemed for shares of stock or cash, at the Company's option. The redemption value for each OP Unit as of any balance sheet date is the amount equal to the average of the closing price per share of the Company's common stock, par value $0.01 per share, as reported on the New York Stock Exchange for the ten trading days ending on the respective balance sheet date. Accordingly, as of March 31, 2011 and

December 31, 2010, the aggregate redemption value of the then-outstanding OP Units not owned by the Company was $581,178 and $538,794, respectively.

The Company issued common and preferred units of MACWH, LP in April 2005 in connection with the acquisition of the Wilmorite portfolio. The common and preferred units of MACWH, LP are redeemable at the election of the holder, the Company may redeem them for cash or shares of the Company's stock at the Company's option, and they are classified as permanent equity.

Included in permanent equity are outside ownership interests in various consolidated joint ventures. The joint ventures do not have rights that require the Company to redeem the ownership interests in either cash or stock.

The outside ownership interests in the Company's joint venture in Shoppingtown Mall have a purchase option for $11,366. In addition, under certain conditions as defined by the partnership agreement, these partners have the right to "put" their partnership interests to the Company. Due to the redemption feature of the ownership interest in Shoppingtown Mall, these noncontrolling interests have been included in temporary equity.

On March 22, 2010, the Company issued 1,449,542 common shares to its common stockholders and OP Unit holders in connection with a declaration of a quarterly dividend of $0.60 per share of common stock to holders of record on February 16, 2010, consisting of a combination of cash and shares of the Company's common stock. The cash component of the dividend (not including cash paid in lieu of fractional shares) was 10% in the aggregate, or $0.06 per share, with the balance paid in shares of the Company's common stock.

In accordance with the provisions of Internal Revenue Service Revenue Procedure 2009-15, stockholders were asked to make an election to receive the dividends all in cash or all in shares. To the extent that more than 10% of cash was elected in the aggregate, the cash portion was prorated. Stockholders who elected to receive the dividends in cash received a cash payment of at least $0.06 per share. Stockholders who did not make an election received 10% in cash and 90% in shares of common stock. The number of shares issued on March 22, 2010 as a result of the dividend was calculated based on the volume weighted average trading prices of the Company's common stock on the New York Stock Exchange on March 10, 2010 through March 12, 2010 of $38.53 per share.

On September 3, 2009, the Company issued three warrants in connection with the sale of a 75% ownership interest in FlatIron Crossing. The warrants provided for a purchase in the aggregate of 1,250,000 shares of the Company's common stock. The warrants were valued at $8,068 and recorded as a credit to additional paid-in capital. In May 2010, the warrants were exercised pursuant to the holders' net issue exercise request and the Company elected to deliver a cash payment of $17,589 in exchange for the warrants.

On September 30, 2009, the Company issued a warrant in connection with its formation of a co-venture to own and operate Freehold Raceway Mall and Chandler Fashion Center. (See Note 12—Co-Venture Arrangement.) The warrant provides for the purchase of 935,358 shares of the Company's common stock. The warrant was valued at $6,496 and recorded as a credit to additional paid-in capital. The warrant was immediately exercisable upon its issuance and will expire 30 days after the refinancing or repayment of each loan encumbering the Centers has closed. The warrant has an exercise price of $46.68 per share, with such price subject to anti-dilutive adjustments. The warrant allows for either gross or net issue settlement at the option of the warrant holder. In the event that the warrant holder elects a net issue settlement, the Company may elect to settle the warrant in cash or shares; provided, however, that in the event the Company elects to deliver cash, the holder may elect to instead have the exercise of the warrant satisfied in shares. In addition, the Company entered into a registration rights agreement with the warrant holder whereby the Company provided certain registration rights regarding the resale of shares of common stock underlying the warrant.

The issuance of the warrants was exempt from registration under the Securities Act of 1933, as amended ("Securities Act"), pursuant to Section 4(2) of the Securities Act. Each investor represented that it was an accredited investor, as defined in Rule 501 of Regulation D, and that it was acquiring the securities for its own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act.

On April 20, 2010, the Company completed an offering of 30,000,000 newly issued shares of its common stock and on April 23, 2010 issued an additional 1,000,000 newly issued shares of common stock in connection with the underwriters' exercise of its over-allotment option. The net proceeds of the offering, after giving effect to the issuance and sale of all 31,000,000 shares of common stock at an initial price to the public of $41.00 per share, were approximately $1,220,829 after deducting underwriting discounts, commissions and other transaction costs. The Company used a portion of the net proceeds of the offering to pay down its line of credit in full and reduce certain property indebtedness. The Company used the remaining cash for debt repayments and/or general corporate purposes.

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 acquisition was completed in order to gain 100% ownership and control over this well located asset. 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 under the equity method (See Note 4—Investments in Unconsolidated Joint Ventures). As a result of this transaction, the Company obtained 100% ownership of Desert Sky Mall.

The following is a summary of the allocation of the fair value of Desert Sky Mall:

The Company determined that the purchase price represented the fair value of the additional ownership interest in Desert Sky Mall that was acquired. Accordingly, the Company also determined that the fair value of the acquired ownership interest in Desert Sky Mall equaled the fair value of the Company's existing ownership interest.

The Company has included the gain on remeasurement in the loss on sale or writedown of assets, net for the three months ended March 31, 2011. See Note 6—Property.

Since the date of acquisition, the Company has included Desert Sky Mall in its consolidated financial statements. Desert Sky Mall has generated incremental revenue of $888 and incremental shopping center expense of $518.

Revenues from discontinued operations consisted of $0 and $(4) for the three months ended March 31, 2011 and 2010, respectively. Loss from discontinued operations was $0 and $(113) for the three months ended March 31, 2011 and 2010, respectively.

The Company has certain properties subject to non-cancelable operating ground leases. The leases expire at various times through 2107, subject in some cases to options to extend the terms of the lease. Certain leases provide for contingent rent payments based on a percentage of base rental income, as defined in the lease. Ground rent expenses were $2,212 and $1,587 for the three months ended

March 31, 2011 and 2010, respectively. No contingent rent was incurred during the three months ended March 31, 2011 or 2010.

As of March 31, 2011 and December 31, 2010, the Company was contingently liable for $24,402 and $26,771, respectively, in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers. The Company does not believe that these letters of credit will result in a liability to the Company. In addition, the Company has a $11,366 letter of credit outstanding at March 31, 2011 that serves as collateral to a liability assumed in the acquisition of Shoppingtown Mall.

The Company has entered into a number of construction agreements related to its redevelopment and development activities. Obligations under these agreements are contingent upon the completion of the services within the guidelines specified in the agreement. At March 31, 2011, the Company had $14,838 in outstanding obligations under these agreements, which it believes will be settled in 2011.

A putative class action complaint was filed on September 1, 2010 involving a single plaintiff based on alleged wage and hour violations. The Company has denied all material allegations asserted in this complaint and is vigorously defending this action.

Certain unconsolidated joint ventures and third-parties have engaged the Management Companies to manage the operations of the Centers. Under these arrangements, the Management Companies are reimbursed for compensation paid to on-site employees, leasing agents and project managers at the Centers, as well as insurance costs and other administrative expenses. The following are fees charged to unconsolidated joint ventures and third-party managed properties:

Certain mortgage notes on the properties are held by NML (See Note 10—Mortgage Notes Payable). Interest expense in connection with these notes was $4,489 and $3,102 for the three months ended March 31, 2011 and 2010, respectively. Included in accounts payable and accrued expenses is interest payable on these notes of $1,373 and $1,439 at March 31, 2011 and December 31, 2010, respectively.

As of March 31, 2011 and December 31, 2010, the Company had loans to unconsolidated joint ventures of $3,452 and $3,095, respectively. Interest income associated with these notes was $94 and $31 for the three months ended March 31, 2011 and 2010, respectively. These loans represent initial funds advanced to development stage projects prior to construction loan funding. Correspondingly, loan payables in the same amount have been accrued as an obligation by the various joint ventures.

Due from affiliates of $8,672 and $6,599 at March 31, 2011 and December 31, 2010, respectively, represents unreimbursed costs and fees due from unconsolidated joint ventures under management agreements.

On February 28, 2011, the Company granted 190,000 limited partnership units of the Operating Partnership ("LTIP Units") under the Long-Term Incentive Plan ("LTIP") to four executive officers at a weighted average grant date fair value of $43.30 per LTIP Unit. The new grants vest over a service period ending January 31, 2012 based on the percentile ranking of the Company in terms of total return to stockholders (the "Total Return") per common stock share relative to the Total Return of a group of peer REITs, as measured at the end of the measurement period. Upon the occurrence of specified events and subject to the satisfaction of applicable vesting conditions, LTIP Units (after conversion into OP Units) are ultimately redeemable for common stock on a one-unit for one-share basis.

The fair value of the Company's LTIP Units granted in 2011 was estimated on the date of grant using a Monte Carlo Simulation model. The stock price of the Company, along with the stock prices of the group of peer REITs, was assumed to follow the Multivariate Geometric Brownian Motion Process. Multivariate Geometric Brownian Motion modeling is commonly used in financial markets, as it allows the modeled quantity (in this case, the stock price) to vary randomly from its current value based on the stock price's expected volatility and current market interest rates. The volatilities of the returns on the price of the Company and the peer group REITs were estimated based on a .92-year look-back period. The expected growth rate of the stock prices over the derived service period was determined with consideration of the risk free rate as of the grant date.

On January 27, 2011, as part of a separation agreement with a former executive, the Company modified the terms of 20,949 stock units and 460 stock awards then outstanding. As a result of this modification, the Company recognized an additional $955 of compensation cost during the three months ended March 31, 2011.

The following summarizes the compensation cost under the share and unit-based plans:

The Company capitalized share and unit-based compensation costs of $3,081 and $2,400 for the three months ended March 31, 2011 and 2010, respectively.

The following table summarizes the activity of the non-vested share and unit based plans:

Unrecognized compensation cost of share and unit-based plans at March 31, 2011 consisted of $7,809 from LTIP Units, $820 from stock awards, $960 from phantom stock units and $5,060 from stock units.

The Company has made Taxable REIT Subsidiary elections for all of its corporate subsidiaries other than its Qualified REIT Subsidiaries. The elections, effective for the year beginning January 1, 2001 and future years were made pursuant to section 856(l) of the Internal Revenue Code. The Company's Taxable REIT Subsidiaries ("TRSs") are subject to corporate level income taxes which are provided for in the Company's consolidated financial statements. The Company's primary TRSs include Macerich Management Company and Westcor Partners, L.L.C.

The net operating loss carryforwards are currently scheduled to expire through 2030, beginning in 2021. Net deferred tax assets of $22,997 and $19,525 were included in deferred charges and other assets, net at March 31, 2011 and December 31, 2010, respectively.

The tax years 2007-2010 remain open to examination by the taxing jurisdictions to which the Company is subject. The Company does not expect that the total amount of unrecognized tax benefits will materially change within the next 12 months.

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 foreclosure. The mortgage note is non-recourse. The Company estimates its pro rata share of gain on the transaction to be $7,667.

On April 29, 2011, the Company announced a dividend/distribution of $0.50 per share for common stockholders and OP Unit holders of record on May 10, 2011. All dividends/distributions will be paid 100% in cash on June 8, 2011.

On April 29, 2011, the Company purchased a fee interest in a freestanding Kohl's store at Capitola Mall for $28,500. The purchase price was paid from cash on hand.

On May 2, 2011, the Company obtained a new $1,500,000 revolving line of credit that bears interest at LIBOR plus a spread of 1.75% to 3.0% depending on the Company's overall leverage and matures on May 2, 2015 with a one-year extension option. Based on the Company's current leverage levels, the borrowing rate on the new facility is LIBOR plus 2.0%. The line of credit can be expanded, depending on certain conditions, up to a total facility of $2,000,000.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q of The Macerich Company (the "Company") contains or incorporates statements that constitute forward-looking statements within the meaning of the federal securities laws. Any statements that do not relate to historical or current facts or matters are forward-looking statements. You can identify some of the forward-looking statements by the use of forward-looking words, such as "may," "will," "could," "should," "expects," "anticipates," "intends," "projects," "predicts," "plans," "believes," "seeks," "estimates," "scheduled" and variations of these words and similar expressions. Statements concerning current conditions may also be forward-looking if they imply a continuation of current conditions. Forward-looking statements appear in a number of places in this Form 10-Q and include statements regarding, among other matters:

Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company or the industry to differ materially from the Company's future results, performance or achievements, or those of the industry, expressed or implied in such forward-looking statements. You are urged to carefully review the disclosures we make concerning risks and other factors that may affect our business and operating results, including those made in "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2010, as well as our other reports filed with the Securities and Exchange Commission, which disclosures are incorporated herein by reference. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. The Company does not intend, and undertakes no obligation, to update any forward-looking information to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, unless required by law to do so.

The Company is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional and community shopping centers located throughout the United States. The Company is the sole general partner of, and owns a majority of the ownership interests in, the Operating Partnership. As of March 31, 2011, the Operating Partnership owned or had an ownership interest in 71 regional shopping centers and 14 community shopping centers totaling approximately 73 million square feet of gross leasable area. These 85 regional and community shopping centers are referred to hereinafter as the "Centers," unless the context otherwise requires. The Company is a self-administered and self-managed REIT and conducts all of its operations through the Operating Partnership and the Management Companies.

The following discussion is based primarily on the consolidated financial statements of the Company for the three months ended March 31, 2011 and 2010. It compares the results of operations and cash flows for the three months ended March 31, 2011 to the results of operations and cash flows

for the three months ended March 31, 2010. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

On February 24, 2011, the Company increased its ownership interest in Kierland Commons, a 434,690 square foot community center in Scottsdale, Arizona, from 24.5% to 50%. The Company's share of the purchase price for this transaction was $34.2 million in cash and the assumption of $18.6 million of existing debt.

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 $53.8 million. The Company's share of the purchase price was $26.9 million and was funded from the Company's cash on hand.

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. The total purchase price was $27.6 million which included the assumption of the third party's pro rata share of the mortgage note payable on the property of $25.7 million. Concurrent with the purchase of the partnership interest, the Company paid off the $51.5 million loan on the property. Desert Sky Mall is referred to herein as the "Acquisition Property."

In December 2007, the Company purchased a portfolio of ground leasehold interest and/or fee interests in 39 freestanding Mervyn's stores located in the Southwest United States. In January 2008, the Company purchased a ground leasehold interest in a freestanding Mervyn's store located in Hayward, California and in February 2008, the Company purchased a fee simple interest in a freestanding Mervyn's store located in Monrovia, California. These former Mervyn's stores are referred to herein as the "Mervyn's Properties." Mervyn's filed for bankruptcy protection in July 2008 and rejected all of its leases during the remainder of the year.

On March 4, 2011, the Company sold a fee interest in a former Mervyn's store for $3.4 million, resulting in a loss on sale of $2.2 million. The Company used the proceeds from the sale for general corporate purposes.

As of March 31, 2011, eight former Mervyn's stores in the Company's portfolio remain vacant. The Company is currently seeking replacement tenants for these spaces.

On July 15, 2010, a court appointed receiver ("Receiver") assumed operational control of Valley View Center and responsibility for managing all aspects of the property. The Company anticipates the disposition of the asset, which is under the control of the Receiver, will be executed through foreclosure, deed in lieu of foreclosure, or by some other means, and will be completed within the next twelve months. Although the Company is no longer funding any cash shortfall, it continues to record the operations of the Valley View Center until the title for the Center is transferred and its obligation for the loan is discharged. Once title to the Center is transferred, the Company will remove the net assets and liabilities from the Company's consolidated balance sheets. The mortgage note payable on Valley View Center is non-recourse to the Company.

In the last three years, inflation has not had a significant impact on the Company because of a relatively low inflation rate. Most of the leases at the Centers have rent adjustments periodically through the lease term. These rent increases are either in fixed increments or based on an annual

multiple of increases in the Consumer Price Index ("CPI"). In addition, about 6% to 13% of the leases expire each year, which enables the Company to replace existing leases with new leases at higher base rents if the rents of the existing leases are below the then existing market rate. Historically the majority of the leases also required the tenants to pay their pro rata share of operating expenses. In January 2005, the Company began entering into leases that require tenants to pay a stated amount for operating expenses, generally excluding property taxes, regardless of the expenses actually incurred at any Center. This change shifts the burden of cost control to the Company.

The shopping center industry is seasonal in nature, particularly in the fourth quarter during the holiday season when retailer occupancy and retail sales are typically at their highest levels. In addition, shopping malls achieve a substantial portion of their specialty (temporary retailer) rents during the holiday season and the majority of percentage rent is recognized in the fourth quarter. As a result of the above, earnings are generally higher in the fourth quarter.

The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Some of these estimates and assumptions include judgments on revenue recognition, estimates for common area maintenance and real estate tax accruals, provisions for uncollectible accounts, impairment of long-lived assets, the allocation of purchase price between tangible and intangible assets, and estimates for environmental matters. The Company's significant accounting policies are described in more detail in Note 2—Summary of Significant Accounting Policies in the Company's Notes to the Consolidated Financial Statements. However, the following policies are deemed to be critical.

Minimum rental revenues are recognized on a straight-line basis over the term of the related lease. The difference between the amount of rent due in a year and the amount recorded as rental income is referred to as the "straight line rent adjustment." Currently, 59% of the Mall Store and Freestanding Store leases contain provisions for CPI rent increases periodically throughout the term of the lease. The Company believes that using an annual multiple of CPI increases, rather than fixed contractual rent increases, results in revenue recognition that more closely matches the cash revenue from each lease and will provide more consistent rent growth throughout the term of the leases. Percentage rents are recognized when the tenants' specified sales targets have been met. Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred. Other tenants pay a fixed rate and these tenant recoveries' revenues are recognized on a straight-line basis over the term of the related leases.

The Company capitalizes costs incurred in redevelopment and development of properties. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. Capitalized costs are allocated to the specific components of a project that are benefited. The Company considers a construction project as completed and held

available for occupancy and ceases capitalization of costs when the areas under development have been substantially completed.

Maintenance and repair expenses are charged to operations as incurred. Costs for major replacements and betterments, which includes HVAC equipment, roofs, parking lots, etc., are capitalized and depreciated over their estimated useful lives. Gains and losses are recognized upon disposal or retirement of the related assets and are reflected in earnings.

Property is recorded at cost and is depreciated using a straight-line method over the estimated useful lives of the assets as follows:

The Company first determines the value of land and buildings utilizing an "as if vacant" methodology. The Company then assigns a fair value to any debt assumed at acquisition. The purchase price is allocated to tenant improvements and identifiable intangible assets or liabilities. Tenant improvements represent the tangible assets associated with the existing leases valued on a fair value basis at the acquisition date prorated over the remaining lease terms. The tenant improvements are classified as an asset under property and are depreciated over the remaining lease terms. Identifiable intangible assets and liabilities relate to the value of in-place operating leases which come in three forms: (i) leasing commissions and legal costs, which represent the value associated with "cost avoidance" of acquiring in-place leases, such as lease commissions paid under terms generally experienced in the Company's markets; (ii) value of in-place leases, which represents the estimated loss of revenue and of costs incurred for the period required to lease the "assumed vacant" property to the occupancy level when purchased; and (iii) above or below market value of in-place leases, which represents the difference between the contractual rents and market rents at the time of the acquisition, discounted for tenant credit risks. Leasing commissions and legal costs are recorded in deferred charges and other assets and are amortized over the remaining lease terms. The value of in-place leases are recorded in deferred charges and other assets and amortized over the remaining lease terms plus an estimate of renewal of the acquired leases. Above or below market leases are classified in deferred charges and other assets or in other accrued liabilities, depending on whether the contractual terms are above or below market. The allocated values of above and below-market leases are amortized into minimum rents on a straight-line basis over the individual remaining lease terms. The remaining lease terms of below-market leases may include certain below-market fixed-rate renewal periods. In considering whether or not a lessee will execute a below-market fixed-rate lease renewal option, the Company evaluates economic factors and certain qualitative factors at the time of acquisition such as tenant mix in the center, the Company's relationship with the tenant and the availability of competing tenant space.

The Company assesses whether an indicator of impairment in the value of its long-lived assets exists by considering factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. Such factors include the tenant's ability to perform their duties and pay rent under the terms of the leases. The Company may recognize impairment losses if the cash flows are not sufficient to cover its investment. Such a loss would be determined as the difference between the carrying value and the fair value of a center.

The Company reviews its investments in unconsolidated joint ventures for a series of operating losses and other factors that may indicate that a decrease in the value of its investments has occurred

which is other-than-temporary. The investment in each unconsolidated joint venture is evaluated periodically, and as deemed necessary, for recoverability and valuation declines that are other than temporary.

The fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions.

Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The Company calculates the fair value of financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of those financial instruments. When the fair value reasonably approximates the carrying value, no additional disclosure is made.

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 Company's 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 the renewal term. Leasing commissions and legal costs are amortized on a straight-line basis over the individual remaining lease years. The ranges of the terms of the agreements are as follows:

Many of the variations in the results of operations, discussed below, occurred due to the transactions described above, including the Acquisition Property, the Mervyn's Properties and the Redevelopment Centers. The "Same Centers" include all consolidated Centers, excluding the Mervyn's Properties, the Acquisition Property and the Redevelopment Centers.

The "Redevelopment Centers" include Santa Monica Place and Shoppingtown Mall. The increase in revenue and expenses of the Redevelopment Centers during the three months ended March 31, 2011 in comparison to the three months ended March 31, 2010 is primarily due to the opening of Santa Monica Place in August 2010.

Unconsolidated joint ventures are reflected using the equity method of accounting. The Company's pro rata share of the results from these Centers is reflected in the Consolidated Statements of Operations as equity in income from unconsolidated joint ventures.

The U.S. economy, the retail industry as well as certain of the Company's operating results continued to improve during the first quarter of 2011. The Company's total regional mall occupancy as of March 31, 2011 increased compared to March 31, 2010. In addition, the recent trend of retail sales growth continued in this quarter with mall tenant sales per square foot increasing compared to the twelve months ended March 31, 2010 and December 31, 2010. While recent economic data has shown signs of a positive trend, the U.S. economy is still experiencing weakness, high levels of unemployment have persisted, and rental rates and valuations for retail space have not fully recovered to pre-recession levels. If this positive trend does not continue, any further continuation of these adverse conditions could harm the Company's business, results of operations and financial condition.

Minimum and percentage rents (collectively referred to as "rental revenue") increased by $7.5 million, or 7.2%, from 2010 to 2011. The increase in rental revenue is attributed to an increase of $3.6 million from the Redevelopment Centers, $2.2 million from the Same Centers, $1.0 million from the Mervyn's Properties and $0.7 million from the Acquisition Property. The increase in rental revenue from the Same Centers is primarily due to an increase in occupancy and an increase in lease termination income as described below.

Rental revenue includes the amortization of above and below-market leases, the amortization of straight-line rents and lease termination income. The amortization of above and below-market leases increased from $2.0 million in 2010 to $2.2 million in 2011. The amortization of straight-lined rents decreased from $0.4 million in 2010 to $0.2 million in 2011. Lease termination income increased from $0.7 million in 2010 to $1.3 million in 2011.

Tenant recoveries increased $0.7 million, or 1.1%, from 2010 to 2011. The increase in tenant recoveries is attributed to an increase of $2.5 million from the Redevelopment Centers, $0.3 million from the Mervyn's Properties and $0.3 million from the Acquisition Property offset in part by a decrease of $2.4 million from the Same Centers. The decrease in tenant recoveries from the Same Centers is primarily due to a decrease in recoverable expenses.

Shopping center and operating expenses increased $2.0 million, or 3.2%, from 2010 to 2011. The increase in shopping center and operating expenses is attributed to an increase of $2.9 million from the Redevelopment Centers, $0.6 million from the Acquisition Property and $0.3 million from the Mervyn's Properties offset in part by a decrease of $1.8 million from the Same Centers. The decrease in shopping center and operating expenses at the Same Centers is primarily due to a decrease in property taxes and bad debt expense.

Management Companies' operating expenses increased $3.7 million from 2010 to 2011 due to an increase in compensation costs in 2011.

REIT general and administrative expenses increased by $0.1 million from 2010 to 2011.

Depreciation and amortization increased $5.4 million from 2010 to 2011. The increase in depreciation and amortization is primarily attributed to an increase of $3.5 million from the Redevelopment Centers, $1.3 million from the Same Centers and $0.3 million from the Acquisition Property.

Interest expense decreased $3.4 million from 2010 to 2011. The decrease in interest expense was primarily attributed to a decrease of $5.1 million from the Same Centers, $1.2 million from borrowings under the Company's line of credit and $0.2 million from the Senior Notes offset in part by an increase of $3.1 million from the Redevelopment Centers. The decrease in interest expense at the Same Centers is primarily attributed to the maturity of a $450.0 million interest rate swap agreement in April 2010.

The above interest expense items are net of capitalized interest, which decreased from $8.2 million in 2010 to $3.3 million in 2011, primarily due to a decrease in redevelopment activity.

The loss on early extinguishment of debt in 2011 is attributed to the prepayment of the mortgage note payable on Chesterfield Towne Center.

Equity in income of unconsolidated joint ventures increased $13.8 million from 2010 to 2011. The increase in equity in income of unconsolidated joint ventures is primarily attributed to the Company's $12.5 million pro rata share of the remeasurement gain on the acquisition of an underlying ownership interest in Kierland Commons in 2011, see "Acquisitions."

Net income increased from a net loss of $6.9 million in 2010 to $0.1 million of net income in 2011. The increase in net income is primarily attributed to an increase in equity in income from unconsolidated joint ventures of $13.8 million offset in part by the loss on early extinguishment of debt of $9.1 million in 2011.

Primarily as a result of the factors mentioned above, FFO—diluted increased 2.9% from $71.6 million in 2010 to $73.7 million in 2011. For a reconciliation of FFO and FFO—diluted to net income (loss) available to common stockholders, the most directly comparable GAAP financial measure, see "Funds from Operations."

Cash provided by operating activities decreased from $64.9 million in 2010 to $41.5 million in 2011. The decrease was primarily due to changes in assets and liabilities and the results at the Centers as discussed above, including a $9.1 million loss on early extinguishment of debt.

Cash used in investing activities increased from $51.6 million in 2010 to $73.3 million in 2011. The increase was primarily due to an increase in contributions to unconsolidated joint ventures of $58.5 million offset in part by a decrease in acquisitions of property, development, redevelopment and property improvements of $31.2 million. The increase in contributions to unconsolidated joint ventures is primarily attributed to the Kierland Commons and The Shops at Atlas Park transactions (See "Acquisitions").

Cash used in financing activities increased from $10.3 million in 2010 to $225.8 million in 2011. The increase was primarily attributed to a decrease in proceeds from mortgages, bank and other notes payable of $71.9 million, an increase in cash dividends and distributions of $64.0 million, an increase in payments on mortgages, bank and other notes payable of $54.0 million and an increase in distributions to the co-venture partner of $26.8 million.

The Company anticipates meeting its liquidity needs for its operating expenses and debt service and dividend requirements through cash generated from operations, working capital reserves and/or borrowings under its unsecured line of credit. The completion of the Company's stock offering in April 2010, which raised net proceeds of approximately $1.2 billion, provided the Company with additional liquidity.

The Company expects amounts to be incurred in future years for tenant allowances and deferred leasing charges to be comparable or less than 2010 and that capital for those expenditures will be available from working capital, cash flow from operations, borrowings on property specific debt or unsecured corporate borrowings. The Company expects to incur between $100 million and $200 million during the next twelve months for development, redevelopment, expansion and renovations. Capital for these major expenditures, developments and/or redevelopments has been, and is expected to continue to be, obtained from a combination of equity or debt financings, which include borrowings under the Company's line of credit and construction loans. In addition to the Company's April 2010 equity offering and property refinancings, the Company has also generated additional liquidity in the past through joint venture transactions and the sale of non-core assets, and may continue to do so in the future.

The capital and credit markets can fluctuate, and at times, limit access to debt and equity financing for companies. As demonstrated by the Company's recent activity, including its new $1.5 billion line of credit and April 2010 equity offering, the Company was able to access capital; however, there is no assurance the Company will be able to do so in future periods or on similar terms and conditions. Many factors impact the Company's ability to access capital, such as its overall debt level, interest rates, interest coverage ratios and prevailing market conditions. In the event that the Company has significant tenant defaults as a result of the overall economy and general market conditions, the Company could have a decrease in cash flow from operations, which could create borrowings under its line of credit. These events could result in an increase in the Company's proportion of floating rate debt, which would cause it to be subject to interest rate fluctuations in the future.

The Company's total outstanding loan indebtedness at March 31, 2011 was $6.0 billion (including $609.6 million of unsecured debt and $2.2 billion of its pro rata share of joint venture debt). The majority of the Company's debt consists of fixed-rate conventional mortgages payable collateralized by individual properties. Approximately $270.5 million of the outstanding total indebtedness matures in 2011 (at the Company's pro rata share and excluding loans with extensions and refinancing transactions that have recently closed). The Company expects that all of these maturities during the next twelve months, except the mortgage note payable on Valley View Center, will be refinanced, restructured, extended and/or paid off from the Company's line of credit or cash on hand.

The Company's Senior Notes bear interest at 3.25%, payable semiannually, mature on March 15, 2012 and are senior to unsecured debt of the Company and are guaranteed by the Operating Partnership. The carrying value of the Senior Notes at March 31, 2011 was $609.6 million. See Note 11—Bank and Other Notes Payable in the Company's Notes to the Consolidated Financial Statements.

The Company had, through the Operating Partnership, a $1.5 billion revolving line of credit that bore interest at LIBOR plus a spread of 0.75% to 1.10% depending on the Company's overall leverage that matured on April 25, 2011. On May 2, 2011, the Company, through the Operating Partnership, obtained a new $1.5 billion revolving line of credit that bears interest at LIBOR plus a spread of 1.75% to 3.0% depending on the Company's overall leverage and matures on May 2, 2015 with a one-year extension option. Based on the Company's current leverage levels, the borrowing rate on the new facility is LIBOR plus 2.0%. The line of credit can be expanded, depending on certain conditions, up to a total facility of $2.0 billion. All obligations under the line of credit are unconditionally guaranteed by the Company and certain of its direct and indirect subsidiaries and are secured, subject to certain exceptions, by pledges of direct and indirect ownership interests in certain of the subsidiary guarantors.

Cash dividends and distributions for the three months ended March 31, 2011 were $73.1 million. A total of $41.5 million was funded by cash flows provided by operations. The remaining $31.6 million was funded through distributions received from unconsolidated joint ventures which are included in the cash flows from investing activities section of the Company's Consolidated Statement of Cash Flows.

At March 31, 2011, the Company was in compliance with all applicable loan covenants under its agreements.

At March 31, 2011, the Company had cash and cash equivalents available of $188.0 million.

The Company accounts for its investments in joint ventures that it does not have a controlling interest or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the Consolidated Balance Sheets of the Company as "Investments in Unconsolidated Joint Ventures."

In addition, certain joint ventures also have secured debt that could become recourse debt to the Company or its subsidiaries, in excess of the Company's pro rata share, should the joint ventures be unable to discharge the obligations of the related debt. At March 31, 2011, the balance of the debt that could be recourse to the Company was $347.0 million offset in part by an indemnity from one of its joint venture partners for $161.6 million. The maturities of the recourse debt, net of indemnification, are $8.5 million in 2011, $172.5 million in 2013 and $4.4 million in 2014.

Additionally, as of March 31, 2011, the Company is contingently liable for $24.4 million in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers. The Company does not believe that these letters of credit will result in a liability to the Company.

The following is a schedule of long-term contractual obligations as of March 31, 2011 for the consolidated Centers over the periods in which they are expected to be paid (in thousands):

The Company uses FFO in addition to net income to report its operating and financial results and considers FFO and FFO—diluted as supplemental measures for the real estate industry and a supplement to GAAP measures. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss) computed in accordance with GAAP, excluding gains (or losses) from extraordinary items and sales of depreciated operating properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis.

FFO and FFO on a diluted basis are useful to investors in comparing operating and financial results between periods. This is especially true since FFO excludes real estate depreciation and

amortization as the Company believes real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. The Company believes that such a presentation also provides investors with a more meaningful measure of its operating results in comparison to the operating results of other REITs. Further, FFO on a diluted basis is one of the measures investors find most useful in measuring the dilutive impact of outstanding convertible securities.

FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income as defined by GAAP and is not indicative of cash available to fund all cash flow needs. The Company also cautions that FFO, as presented, may not be comparable to similarly titled measures reported by other real estate investment trusts. The reconciliation of FFO and FFO—diluted to net income (loss) available to common stockholders is provided below.

Management compensates for the limitations of FFO by providing investors with financial statements prepared according to GAAP, along with this detailed discussion of FFO and a reconciliation of FFO and FFO-diluted to net income (loss) available to common stockholders. Management believes that to further understand the Company's performance, FFO should be compared with the Company's reported net income (loss) and considered in addition to cash flows in accordance with GAAP, as presented in the Company's Consolidated Financial Statements.

The following reconciles net income (loss) available to common stockholders to FFO and FFO-diluted (dollars and shares in thousands):

The Company's primary market risk exposure is interest rate risk. The Company has managed and will continue to manage interest rate risk by (1) maintaining a ratio of fixed rate, long-term debt to total debt such that floating rate exposure is kept at an acceptable level, (2) reducing interest rate exposure on certain long-term floating rate debt through the use of interest rate caps and/or swaps with appropriately matching maturities, (3) using treasury rate locks where appropriate to fix rates on anticipated debt transactions, and (4) taking advantage of favorable market conditions for long-term debt and/or equity.

The following table sets forth information as of March 31, 2011 concerning the Company's long term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates and estimated fair value ("FV") (dollars in thousands):

The consolidated Centers' total fixed rate debt at March 31, 2011 and December 31, 2010 was $3.1 billion. The average interest rate on fixed rate debt at March 31, 2011 and December 31, 2010 was 5.91% and 5.98%, respectively. The consolidated Centers' total floating rate debt at March 31, 2011 and December 31, 2010 was $766.0 million and $766.9 million, respectively. The average interest rate on floating rate debt at March 31, 2011 and December 31, 2010 was 3.54% and 3.85%, respectively.

The Company's pro rata share of the Joint Venture Centers' fixed rate debt at March 31, 2011 and December 31, 2010 was $2.0 billion. The average interest rate on fixed rate debt at March 31, 2011 and December 31, 2010 was 6.10% and 6.11%, respectively. The Company's pro rata share of the Joint

Venture Centers' floating rate debt at March 31, 2011 and December 31, 2010 was $240.9 million and $241.7 million, respectively. The average interest rate on the floating rate debt at March 31, 2011 and December 31, 2010 was 2.48% and 2.24%, respectively.

The Company uses derivative financial instruments in the normal course of business to manage or hedge interest rate risk and records all derivatives on the balance sheet at fair value (See Note 5—Derivative Instruments and Hedging Activities in the Company's Notes to the Consolidated Financial Statements).

The following are outstanding derivatives at March 31, 2011 (amounts in thousands):

Interest rate cap agreements ("Cap") offer protection against floating rates on the notional amount from exceeding the rates noted in the above schedule, and interest rate swap agreements ("Swap") effectively replace a floating rate on the notional amount with a fixed rate as noted above.

In addition, the Company has assessed the market risk for its floating rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash flows by approximately $10.1 million per year based on $1.0 billion outstanding of floating rate debt at March 31, 2011.

The fair value of the Company's long-term debt is estimated based on discounted cash flows at interest rates that management believes reflect the risks associated with long-term debt of similar risk and duration.

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, management carried out an evaluation, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on their evaluation as of March 31, 2011, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is (a) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and (b) is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In addition, there has been no change in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

None of the Company, the Operating Partnership, the Management Companies or their respective affiliates are currently involved in any material legal proceedings.

There have been no material changes to the risk factors relating to the Company set forth under the caption "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

The Company, as general partner of the Operating Partnership, issued 1,200,858 shares of common stock of the Company upon the redemption of a total of 1,200,858 common partnership units of the Operating Partnership by four limited partners of the Operating Partnership on various dates through May 6, 2011. These shares of common stock were issued in private placements to the four limited partners pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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

	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


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


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 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

		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).

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.