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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009

Commission File No. 1-12504

THE MACERICH COMPANY
(Exact name of registrant as specified in its charter)

MARYLAND
(State or other jurisdiction
of incorporation or organization)
  95-4448705
(I.R.S. Employer
Identification Number)

401 Wilshire Boulevard, Suite 700, Santa Monica, California 90401
(Address of principal executive office, including zip code)

Registrant's telephone number, including area code (310) 394-6000

Securities registered pursuant to Section 12(b) of the Act

Title of each class   Name of each exchange on which registered
Common Stock, $0.01 Par Value   New York Stock Exchange

         Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act

YES ý    NO o

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act

YES o    NO ý

         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 12 months (or for such shorter period that the registrant was required to file such report) and (2) has been subject to such filing requirements for the past 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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES o    NO o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment on to this Form 10-K. ý

         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. (Check one):

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

         The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was approximately $1.4 billion as of the last business day of the registrant's most recent completed second fiscal quarter based upon the price at which the common shares were last sold on that day.

         Number of shares outstanding of the registrant's common stock, as of February 16, 2010: 96,652,642 shares

DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the proxy statement for the annual stockholders meeting to be held in 2010 are incorporated by reference into Part III of this Form 10-K



THE MACERICH COMPANY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2009
INDEX

 
   
  Page

Part I

       

Item 1.

 

Business

  1

Item 1A.

 

Risk Factors

  15

Item 1B.

 

Unresolved Staff Comments

  23

Item 2.

 

Properties

  24

Item 3.

 

Legal Proceedings

  32

Item 4.

 

Submission of Matters to a Vote of Security Holders

  32

Part II

       

Item 5.

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

  33

Item 6.

 

Selected Financial Data

  36

Item 7.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

  42

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

  60

Item 8.

 

Financial Statements and Supplementary Data

  61

Item 9.

 

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

  61

Item 9A.

 

Controls and Procedures

  61

Item 9B.

 

Other Information

  64

Part III

       

Item 10.

 

Directors and Executive Officers and Corporate Governance

  64

Item 11.

 

Executive Compensation

  64

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

  64

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

  64

Item 14.

 

Principal Accountant Fees and Services

  64

Part IV

       

Item 15.

 

Exhibits and Financial Statement Schedules

  65

Signatures

  141

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PART I

IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS

        This Annual Report on Form 10-K of The Macerich Company (the "Company") contains or incorporates by reference 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," and "estimates" 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-K 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" of this Annual Report on Form 10-K, as well as our other reports filed with the Securities and Exchange Commission ("SEC"). 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.

ITEM 1.    BUSINESS

General

        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 Macerich Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"). As of December 31, 2009, the Operating Partnership owned or had an ownership interest in 72 regional shopping centers and 14 community shopping centers totaling approximately 75 million square feet of gross leasable area ("GLA"). These 86 regional and community shopping centers are referred to herein as the "Centers," and consist of consolidated Centers ("Consolidated Centers") and unconsolidated joint venture Centers ("Unconsolidated Joint Venture Centers") as set forth in "Item 2—Properties," unless the context otherwise requires. The Company is a self-administered and self-managed real estate

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investment trust ("REIT") and conducts all of its operations through the Operating Partnership and 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."

        The Company was organized as a Maryland corporation in September 1993. All references to the Company in this Annual Report on Form 10-K include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise.

        Financial information regarding the Company for each of the last three fiscal years is contained in the Company's Consolidated Financial Statements included in Item 15. Exhibits and Financial Statement Schedules.

Recent Developments

        On July 30, 2009, the Company sold a 49% ownership interest in Queens Center to a third party for approximately $152.7 million, resulting in a gain on sale of assets of $154.2 million. The Company used the proceeds from the sale of the ownership interest in the property to pay down the Company's term loan and for general corporate purposes. As of the date of the sale, the Company has accounted for the operations of Queens Center under the equity method of accounting.

        On September 3, 2009, the Company formed a joint venture with a third party, whereby the Company sold a 75% interest in FlatIron Crossing and received approximately $123.8 million in cash proceeds for the overall transaction. The Company used the proceeds from the sale of the ownership interest in the property to pay down the Company's term loan and for general corporate purposes. As part of this transaction, the Company issued three warrants for an aggregate of 1,250,000 shares of common stock of the Company. (See Note 15—Stockholders' Equity in the Company's Notes to the Consolidated Financial Statements). As of the date of the sale, the Company has accounted for the operations of FlatIron Crossing under the equity method of accounting.

        On September 29, 2009, the Company sold a leasehold interest in a former Mervyn's store for $4.5 million, resulting in a gain on sale of assets of $4.1 million. The Company used the proceeds from the sale to pay down the Company's line of credit and for general corporate purposes.

        On September 30, 2009, the Company formed a joint venture with a third party, whereby the third party acquired a 49.9% interest in Freehold Raceway Mall and Chandler Fashion Center. The Company received approximately $174.6 million in cash proceeds for the overall transaction. The Company used the proceeds from this transaction to pay down the Company's line of credit and for general corporate purposes. As part of this transaction, the Company issued a warrant for an aggregate of 935,358 shares of common stock of the Company. (See Note 15—Stockholders' Equity in the Company's Notes to the Consolidated Financial Statements). 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 amount of $168.2 million representing the net cash proceeds received from the third party less the value allocated to the warrant.

        In addition, in 2009 the Company sold six non-core community centers for $83.2 million and sold five former Mervyn's stores for approximately $52.7 million. The Company used the proceeds from

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these sales to pay down the Company's line of credit and term loan and for general corporate purposes.

        On February 2, 2009, the Company refinanced the existing loan on Queens Center with a $130.0 million loan that bears interest at a rate of 7.78% and matures on March 1, 2013. The Company used the net loan proceeds to pay down the Company's line of credit and for general corporate purposes. On July 30, 2009, 49.0% of the loan balance on Queens Center was assumed by a third party in connection with the sale to that party of a 49.0% interest in the underlying property. See "Recent Developments—Acquisitions and Dispositions."

        On May 1, 2009, the Company paid off the existing loan on Paradise Valley Mall. On August 31, 2009, the Company placed a new $85.0 million loan on the property that bears interest at LIBOR plus 4.0% with a total interest rate floor of 5.50% and matures on August 31, 2012 with two one-year extension options.

        On May 11, 2009, Pacific Premier Retail Trust, one of the Company's joint ventures, replaced the existing loan on the Redmond Office with a new $62.0 million loan that bears interest at 7.52% and matures on May 15, 2014. The Company used its pro rata share of the net loan proceeds to pay down the Company's line of credit and for general corporate purposes.

        On June 10, 2009, the Company's joint venture in The Shops at North Bridge replaced its existing loan with a new $205.0 million loan that bears interest at 7.52% and matures on June 15, 2016.

        On August 21, 2009, Pacific Premier Retail Trust, one of the Company's joint ventures, replaced the existing loan on Redmond Town Center with a $74.0 million draw on a credit facility that is cross-collateralized by Redmond Town Center, Cross Court Plaza and Northpoint Plaza, bears interest at LIBOR plus 4.0% with a 2.0% LIBOR floor and matures on August 21, 2011, with a one-year extension option. On February 1, 2010, the joint venture borrowed an additional $81.0 million under the facility and paid off the existing loans on Cascade Mall, Kitsap Mall and Kitsap Place and added those properties as collateral.

        On September 3, 2009, 75.0% of the loan balance on FlatIron Crossing was assumed by a third party in connection with the sale to that party of a 75.0% interest in the underlying property. See "Recent Developments—Acquisitions and Dispositions."

        On September 10, 2009, the Company's joint venture refinanced the existing loan on Biltmore Fashion Park, a $60.0 million loan that bears interest at 8.25% and matures on October 1, 2014.

        On September 30, 2009, 49.9% of the loan balances on Freehold Raceway Mall and Chandler Fashion Center were assumed by a third party in connection with the Company entering into a co-venture arrangement with that party. See "Recent Developments—Acquisitions and Dispositions."

        On October 27, 2009, the Company completed an offering of 12,000,000 newly issued shares of its common stock, as well as an additional 1,800,000 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 13,800,000 shares of common stock at an initial price to the public of $29.00 per share, were approximately $383.4 million after deducting underwriting discounts, commissions and other transaction costs. The Company used the net proceeds of the offering to pay down its line of credit.

        On October 29, 2009, the Company's joint venture in Corte Madera replaced the existing loan on the property with a new $80.0 million loan that bears interest at 7.27% and matures on November 1, 2016. The Company used its pro rata share of the net loan proceeds to pay down the Company's line of credit and for general corporate purposes.

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        On December 29, 2009, the Company placed a construction loan on Northgate Mall that allows for borrowings of up to $60.0 million, bears interest at LIBOR plus 4.5% with a total interest rate floor of 6.0% and matures on January 1, 2013, with two one-year extension options. The loan also includes a provision that allows for additional borrowings of up to $20.0 million, depending on certain conditions. The net loan proceeds were used to pay down the Company's line of credit and for general corporate purposes.

        During the year ended December 31, 2009, the Company paid off its $446.3 million term loan that was scheduled to mature on April 26, 2010. As a result, the Company recognized a loss of $0.7 million on the early extinguishment of debt. The repayment was funded from the proceeds from the sale of the ownership interests in Queens Center and FlatIron Crossing, and through additional borrowings under the Company's line of credit.

        During the year ended December 31, 2009, the Company repurchased and retired $89.1 million of convertible senior notes ("Senior Notes") for $53.4 million. This early retirement of debt resulted in a gain of $29.8 million on early extinguishment of debt. The repurchases were funded through additional borrowings under the Company's line of credit.

        Northgate Mall, the Company's 712,771 square foot regional mall in Marin County, California, opened the first phase of its redevelopment on November 12, 2009. New anchor Kohl's was joined by retailers H&M, BJ's Restaurant, Children's Place, Chipotle, Gymboree, Hot Topic, PacSun, Panera Bread, See's Candies, Sunglass Hut, Tilly's and Vans. As of December 31, 2009, the Company incurred approximately $66.5 million of redevelopment costs for this Center and is estimating it will incur approximately $12.5 million of additional costs in 2010.

        Santa Monica Place in Santa Monica, California, is scheduled to open in August 2010 with anchors Bloomingdale's and Nordstrom. The Company recently announced deals with Tony Burch, Ben Bridge Jewelers and Charles David. As of December 31, 2009, the Company incurred approximately $163.2 million of redevelopment costs for this Center and is estimating it will incur approximately $101.8 million of additional costs in 2010.

The Shopping Center Industry

        There are several types of retail shopping centers, which are differentiated primarily based on size and marketing strategy. Regional shopping centers generally contain in excess of 400,000 square feet of GLA and are typically anchored by two or more department or large retail stores ("Anchors") and are referred to as "Regional Shopping Centers" or "Malls." Regional Shopping Centers also typically contain numerous diversified retail stores ("Mall Stores"), most of which are national or regional retailers typically located along corridors connecting the Anchors. Community Shopping Centers, also referred to as "strip centers", "urban villages" or "specialty centers," are retail shopping centers that are designed to attract local or neighborhood customers and are typically anchored by one or more supermarkets, discount department stores and/or drug stores. Community Shopping Centers typically contain 100,000 square feet to 400,000 square feet of GLA. In addition, freestanding retail stores are located along the perimeter of the shopping centers ("Freestanding Stores"). Mall Stores and Freestanding Stores over 10,000 square feet are also referred to as "Big Box." Anchors, Mall Stores and Freestanding Stores and other tenants typically contribute funds for the maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operation of the shopping center.

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        A Regional Shopping Center draws from its trade area by offering a variety of fashion merchandise, hard goods and services and entertainment, often in an enclosed, climate controlled environment with convenient parking. Regional Shopping Centers provide an array of retail shops and entertainment facilities and often serve as the town center and the preferred gathering place for community, charity, and promotional events.

        Regional Shopping Centers have generally provided owners with relatively stable income despite the cyclical nature of the retail business. This stability is due both to the diversity of tenants and to the typical dominance of Regional Shopping Centers in their trade areas.

        Regional Shopping Centers have different strategies with regard to price, merchandise offered and tenant mix, and are generally tailored to meet the needs of their trade areas. Anchor tenants are located along common areas in a configuration designed to maximize consumer traffic for the benefit of the Mall Stores. Mall GLA, which generally refers to GLA contiguous to the Anchors for tenants other than Anchors, is leased to a wide variety of smaller retailers. Mall Stores typically account for the majority of the revenues of a Regional Shopping Center.

Business of the Company

        The Company has a long-term four-pronged business strategy that focuses on the acquisition, leasing and management, redevelopment and development of Regional Shopping Centers.

        Acquisitions.    The Company focuses on well-located, quality Regional Shopping Centers that can be dominant in their trade area and have strong revenue enhancement potential. The Company subsequently seeks to improve operating performance and returns from these properties through leasing, management and redevelopment. Since its initial public offering, the Company has acquired interests in shopping centers nationwide. The Company believes that it is geographically well positioned to cultivate and maintain ongoing relationships with potential sellers and financial institutions and to act quickly when acquisition opportunities arise. (See "Recent Developments—Acquisitions and Dispositions").

        Leasing and Management.    The Company believes that the shopping center business requires specialized skills across a broad array of disciplines for effective and profitable operations. For this reason, the Company has developed a fully integrated real estate organization with in-house acquisition, accounting, development, finance, leasing, legal, marketing, property management and redevelopment expertise. In addition, the Company emphasizes a philosophy of decentralized property management, leasing and marketing performed by on-site professionals. The Company believes that this strategy results in the optimal operation, tenant mix and drawing power of each Center, as well as the ability to quickly respond to changing competitive conditions of the Center's trade area.

        The Company believes that on-site property managers can most effectively operate the Centers. Each Center's property manager is responsible for overseeing the operations, marketing, maintenance and security functions at the Center. Property managers focus special attention on controlling operating costs, a key element in the profitability of the Centers, and seek to develop strong relationships with and to be responsive to the needs of retailers.

        Similarly, the Company generally utilizes on-site and regionally located leasing managers to better understand the market and the community in which a Center is located. The Company continually assesses and fine tunes each Center's tenant mix, identifies and replaces underperforming tenants and seeks to optimize existing tenant sizes and configurations.

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        On a selective basis, the Company provides property management and leasing services for third parties. The Company currently manages five malls and three community centers for third party owners on a fee basis.

        Redevelopment.    One of the major components of the Company's growth strategy is its ability to redevelop acquired properties. For this reason, the Company has built a staff of redevelopment professionals who have primary responsibility for identifying redevelopment opportunities that they believe will result in enhanced long-term financial returns and market position for the Centers. The redevelopment professionals oversee the design and construction of the projects in addition to obtaining required governmental approvals. (See "Recent Developments—Redevelopment and Development Activity").

        Development.    The Company pursues ground-up development projects on a selective basis. The Company has supplemented its strong acquisition, operations and redevelopment skills with its ground-up development expertise to further increase growth opportunities. (See "Recent Developments—Redevelopment and Development Activity").

        As of December 31, 2009, the Centers consist of 72 Regional Shopping Centers and 14 Community Shopping Centers totaling approximately 75 million square feet of GLA. The 72 Regional Shopping Centers in the Company's portfolio average approximately 955,000 square feet of GLA and range in size from 2.2 million square feet of GLA at Tysons Corner Center to 314,305 square feet of GLA at Panorama Mall. The Company's 14 Community Shopping Centers have an average of approximately 276,000 square feet of GLA. As of December 31, 2009, the Centers included 300 Anchors totaling approximately 39.4 million square feet of GLA and approximately 8,500 Mall Stores and Freestanding Stores totaling approximately 35.2 million square feet of GLA.

        There are numerous owners and developers of real estate that compete with the Company in its trade areas. There are six other publicly traded mall companies in the United States and several large private mall companies, any of which under certain circumstances could compete against the Company for an acquisition, an Anchor or a tenant. In addition, private equity firms compete with the Company in terms of acquisitions. This results in competition for both acquisition of centers and for tenants or Anchors to occupy space. The existence of competing shopping centers could have a material adverse impact on the Company's ability to lease space and on the level of rent that can be achieved. There is also increasing competition from other retail formats and technologies, such as lifestyle centers, power centers, Internet shopping, home shopping networks, factory outlet centers, discount shopping clubs and mail-order services that could adversely affect the Company's revenues.

        In making leasing decisions, the Company believes that retailers consider the following material factors relating to a center: quality, design and location, including consumer demographics; rental rates; type and quality of Anchors and retailers at the center; and management and operational experience and strategy of the center. The Company believes it is able to compete effectively for retail tenants in its local markets based on these criteria in light of the overall size, quality and diversity of its portfolio of Centers.

        The Centers derived approximately 79% of their total rents for the year ended December 31, 2009 from Mall Stores and Freestanding Stores under 10,000 square feet. Big Box and Anchor tenants accounted for 21.0% of total rents for the year ended December 31, 2009. One tenant accounted for

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approximately 2.5% of total rents of the Company, and no other single tenant accounted for more than 2.4% of total rents as of December 31, 2009.

        The following retailers (including their subsidiaries) represent the 10 largest rent payers in the Company's portfolio (including joint ventures) based upon total rents in place as of December 31, 2009:

Tenant
  Primary DBA's   Number of
Locations
in the
Portfolio
  % of Total
Rents(1)
 

Gap Inc. 

  Gap, Banana Republic, Old Navy     94     2.5 %

Limited Brands, Inc. 

  Victoria Secret, Bath and Body     144     2.4 %

Forever 21, Inc. 

  Forever 21, XXI Forever     48     1.9 %

Foot Locker, Inc. 

  Footlocker, Champs Sports, Lady Footlocker     143     1.7 %

Abercrombie & Fitch Co. 

  Abercrombie & Fitch, Abercrombie, Hollister     81     1.6 %

AT&T Mobility LLC(2)

  AT&T Wireless, Cingular Wireless     29     1.3 %

Luxottica Group

  Lenscrafters, Sunglass Hut     156     1.3 %

American Eagle Outfitters, Inc. 

  American Eagle Outfitters     66     1.3 %

Macy's, Inc. 

  Macy's, Bloomingdale's     65     1.0 %

Signet Group PLC

  Kay Jewelers, Weisfield Jewelers     76     1.0 %

(1)
Total rents include minimum rents and percentage rents.

(2)
Includes AT&T Mobility office headquarters located at Redmond Town Center.

        Mall Store and Freestanding Store leases generally provide for tenants to pay rent comprised of a base (or "minimum") rent and a percentage rent based on sales. In some cases, tenants pay only minimum rent, and in other cases, tenants pay only percentage rent. Historically, most leases for Mall Stores and Freestanding Stores contained provisions that allowed the Centers to recover their costs for maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operations of the Center. Since January 2005, the Company generally began entering into leases that require tenants to pay a stated amount for such operating expenses, generally excluding property taxes, regardless of the expenses the Company actually incurs at any Center.

        Tenant space of 10,000 square feet and under in the portfolio at December 31, 2009 comprises 69.1% of all Mall Store and Freestanding Store space. The Company uses tenant spaces of 10,000 square feet and under for comparing rental rate activity. Mall Store and Freestanding Store space greater than 10,000 square feet is inconsistent in size and configuration throughout the Company's portfolio and as a result does not lend itself to a meaningful comparison of rental rate activity with the Company's other space. Most of the non-anchor space over 10,000 square feet is not physically connected to the mall, does not share the same common area amenities and does not benefit from the foot traffic in the mall. As a result, space greater than 10,000 square feet has a unique rent structure that is inconsistent with mall space under 10,000 square feet. Mall Store and Freestanding Store space under 10,000 square feet is more consistent in terms of shape and configuration and, as such, the Company is able to provide a meaningful comparison of rental rate activity for this space.

        When an existing lease expires, the Company is often able to enter into a new lease with a higher base rent component. The average base rent for new Mall Store and Freestanding Store leases at the Consolidated Centers, 10,000 square feet and under, executed during 2009 was $38.15 per square foot, or 11.9% higher than the average base rent for all Mall Stores and Freestanding Stores at the Consolidated Centers, 10,000 square feet and under, expiring during 2009 of $34.10 per square foot.

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        The following tables set forth the average base rent per square foot for the Centers, as of December 31 for each of the past five years:

I.
Mall Stores and Freestanding Stores, GLA under 10,000 square feet:

For the Years Ended December 31,
  Average Base
Rent Per
Square Foot(1)
  Avg. Base Rent
Per Sq.Ft. on
Leases Executed
During the Year(2)
  Avg. Base Rent
Per Sq. Ft. on
Leases Expiring
During the Year(3)
 

Consolidated Centers:

                   

2009

  $ 37.77   $ 38.15   $ 34.10  

2008

  $ 41.39   $ 42.70   $ 35.14  

2007

  $ 38.49   $ 43.23   $ 34.21  

2006

  $ 37.55   $ 38.40   $ 31.92  

2005

  $ 34.23   $ 35.60   $ 30.71  

Unconsolidated Joint Venture Centers:

                   

2009

  $ 45.56   $ 43.52   $ 37.56  

2008

  $ 42.14   $ 49.74   $ 37.61  

2007

  $ 38.72   $ 47.12   $ 34.87  

2006

  $ 37.94   $ 41.43   $ 36.19  

2005

  $ 36.35   $ 39.08   $ 30.18  
II.
Big Box and Anchors:

For the Years Ended December 31,
  Average Base
Rent Per
Square Foot(1)
  Avg. Base Rent
Per Sq.Ft. on
Leases Executed
During the Year(2)
  Number of
Leases
Executed
during the
Year
  Avg. Base Rent
Per Sq. Ft. on
Leases Expiring
During the Year(3)
  Number of
Leases
Expiring
during the
Year
 

Consolidated Centers:

                               

2009

  $ 9.66   $ 10.13     19   $ 20.84     5  

2008

  $ 9.53   $ 11.44     26   $ 9.21     18  

2007

  $ 9.08   $ 18.51     17   $ 20.13     3  

2006

  $ 8.36   $ 13.06     15   $ 8.47     4  

2005

  $ 7.81   $ 10.70     18   $ 17.91     2  

Unconsolidated Joint Venture Centers:

                               

2009

  $ 11.60   $ 31.73     16   $ 19.98     16  

2008

  $ 11.16   $ 14.38     14   $ 10.59     5  

2007

  $ 10.89   $ 18.21     13   $ 11.03     5  

2006

  $ 9.69   $ 15.90     14   $ 7.53     2  

2005

  $ 9.32   $ 20.17     11   $ 2.27     1  

(1)
Average base rent per square foot is based on spaces occupied as of December 31 for each of the Centers. The leases for Tucson La Encantada and the expansion area of Queens Center were excluded for 2005 because they were under redevelopment. The leases for Promenade at Casa Grande, SanTan Village Power Center and SanTan Village Regional Center were excluded for 2007 and 2008 because they were under development. The leases for The Market at Estrella Falls and Santa Monica Place were excluded for 2008 and 2009 because they were under development and redevelopment, respectively.

(2)
The average base rent per square foot on leases executed during the year represents the actual rent to be paid on a per square foot basis during the first twelve months. The leases for Tucson La Encantada and the expansion area of Queens Center were excluded for 2005 because they were

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(3)
The average base rent per square foot on leases expiring during the year represents the final year of minimum rent, on a cash basis. The leases for Tucson La Encantada and the expansion area of Queens Center were excluded for 2005 because they were under redevelopment. The leases for Promenade at Casa Grande, SanTan Village Power Center and SanTan Village Regional Center were excluded for 2007 and 2008 because they were under development. The leases for The Market at Estrella Falls and Santa Monica Place were excluded for 2008 and 2009 because they were under development and redevelopment, respectively.

        A major factor contributing to tenant profitability is cost of occupancy, which consists of tenant occupancy costs charged by the Company. Tenant expenses included in this calculation are minimum rents, percentage rents and recoverable expenditures, which consist primarily of property operating expenses, real estate taxes and repair and maintenance expenditures. These tenant charges are collectively referred to as tenant occupancy costs. These tenant occupancy costs are compared to tenant sales. A low cost of occupancy percentage shows more capacity for the Company to increase rents at the time of lease renewal than a high cost of occupancy percentage. The following table summarizes occupancy costs for Mall Store and Freestanding Store tenants in the Centers as a percentage of total Mall Store sales for the last five years:

 
  For Years Ended December 31,  
 
  2009   2008   2007   2006   2005  

Consolidated Centers:

                               

Minimum rents

    9.1 %   8.9 %   8.0 %   8.1 %   8.3 %

Percentage rents

    0.4 %   0.4 %   0.4 %   0.4 %   0.5 %

Expense recoveries(1)

    4.7 %   4.4 %   3.8 %   3.7 %   3.6 %
                       

    14.2 %   13.7 %   12.2 %   12.2 %   12.4 %
                       

Unconsolidated Joint Venture Centers:

                               

Minimum rents

    9.4 %   8.2 %   7.3 %   7.2 %   7.4 %

Percentage rents

    0.4 %   0.4 %   0.5 %   0.6 %   0.5 %

Expense recoveries(1)

    4.3 %   3.9 %   3.2 %   3.1 %   3.0 %
                       

    14.1 %   12.5 %   11.0 %   10.9 %   10.9 %
                       

(1)
Represents real estate tax and common area maintenance charges.

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        The following tables show scheduled lease expirations (for Centers owned as of December 31, 2009) for the next ten years, assuming that none of the tenants exercise renewal options:

I.    Mall Stores and Freestanding Stores under 10,000 square feet:

Consolidated Centers:

Year Ending December 31,
  Number of
Leases
Expiring
  Approximate
GLA of Leases
Expiring(1)
  % of Total Leased
GLA Represented
by Expiring
Leases(1)
  Ending Base Rent
per Square Foot of
Expiring Leases(1)
  % of Base Rent
Represented by
Expiring Leases(1)
 

2010

    405     734,699     11.33 % $ 37.02     10.91 %

2011

    393     811,159     12.51 % $ 37.01     12.04 %

2012

    317     722,842     11.15 % $ 35.29     10.23 %

2013

    273     606,831     9.36 % $ 37.15     9.04 %

2014

    237     510,594     7.88 % $ 35.87     7.34 %

2015

    209     519,385     8.01 % $ 37.53     7.81 %

2016

    220     543,483     8.38 % $ 40.11     8.74 %

2017

    292     754,655     11.64 % $ 40.57     12.28 %

2018

    256     636,338     9.81 % $ 40.79     10.41 %

2019

    180     468,021     7.22 % $ 43.21     8.11 %

Unconsolidated Joint Venture Centers (at the Company's pro rata share):

Year Ending December 31,
  Number of
Leases
Expiring
  Approximate
GLA of Leases
Expiring(1)
  % of Total Leased
GLA Represented
by Expiring
Leases(1)
  Ending Base Rent
per Square Foot of
Expiring Leases(1)
  % of Base Rent
Represented by
Expiring Leases(1)
 

2010

    536     531,222     13.76 % $ 38.39     11.35 %

2011

    451     489,538     12.68 % $ 39.20     10.68 %

2012

    360     370,953     9.61 % $ 42.13     8.70 %

2013

    330     360,034     9.33 % $ 46.77     9.37 %

2014

    318     371,575     9.63 % $ 49.41     10.22 %

2015

    301     372,277     9.65 % $ 53.50     11.09 %

2016

    298     357,090     9.25 % $ 51.54     10.24 %

2017

    256     363,346     9.41 % $ 45.78     9.26 %

2018

    211     275,964     7.15 % $ 50.79     7.80 %

2019

    195     234,524     6.08 % $ 58.75     7.67 %

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II.    Big Box and Anchors:

Consolidated Centers:

Year Ending December 31,
  Number of
Leases
Expiring
  Approximate
GLA of Leases
Expiring(1)
  % of Total Leased
GLA Represented
by Expiring
Leases(1)
  Ending Base Rent
per Square Foot of
Expiring Leases(1)
  % of Base Rent
Represented by
Expiring Leases(1)
 

2010

    10     313,587     3.66 % $ 10.64     4.40 %

2011

    13     585,637     6.84 % $ 6.87     5.30 %

2012

    29     1,769,667     20.68 % $ 5.99     13.97 %

2013

    11     336,464     3.93 % $ 10.72     4.75 %

2014

    18     827,491     9.67 % $ 7.39     8.05 %

2015

    14     916,199     10.70 % $ 5.26     6.35 %

2016

    12     715,430     8.36 % $ 6.08     5.73 %

2017

    16     382,273     4.47 % $ 15.01     7.56 %

2018

    20     377,204     4.41 % $ 15.01     7.46 %

2019

    16     355,612     4.15 % $ 13.83     6.48 %

Unconsolidated Joint Venture Centers (at the Company's pro rata share):

Year Ending December 31,
  Number of
Leases
Expiring
  Approximate
GLA of Leases
Expiring(1)
  % of Total Leased
GLA Represented
by Expiring
Leases(1)
  Ending Base Rent
per Square Foot of
Expiring Leases(1)
  % of Base Rent
Represented by
Expiring Leases(1)
 

2010

    26     476,985     7.75 % $ 15.63     8.69 %

2011

    18     350,072     5.69 % $ 7.30     2.98 %

2012

    27     627,269     10.20 % $ 12.94     9.47 %

2013

    28     523,790     8.51 % $ 21.26     12.98 %

2014

    34     737,573     11.99 % $ 14.65     12.59 %

2015

    36     890,264     14.47 % $ 12.49     12.97 %

2016

    27     461,563     7.50 % $ 17.43     9.38 %

2017

    14     197,687     3.21 % $ 23.22     5.35 %

2018

    10     366,694     5.96 % $ 4.47     1.91 %

2019

    7     72,030     1.17 % $ 46.90     3.94 %

(1)
The ending base rent per square foot on leases expiring during the period represents the final year minimum rent, on a cash basis, for tenant leases expiring during the year. Currently, 57% of leases have provisions for future consumer price index increases that are not reflected in ending base rent. Leases for Santa Monica Place have been excluded from the Consolidated Centers because it is under development.

        Anchors have traditionally been a major factor in the public's identification with Regional Shopping Centers. Anchors are generally department stores whose merchandise appeals to a broad range of shoppers. Although the Centers receive a smaller percentage of their operating income from Anchors than from Mall Stores and Freestanding Stores, strong Anchors play an important part in maintaining customer traffic and making the Centers desirable locations for Mall Store and Freestanding Store tenants.

        Anchors either own their stores, the land under them and in some cases adjacent parking areas, or enter into long-term leases with an owner at rates that are lower than the rents charged to tenants of Mall Stores and Freestanding Stores. Each Anchor, that owns its own store, and certain Anchors that lease their stores, enter into reciprocal easement agreements with the owner of the Center covering, among other things, operational matters, initial construction and future expansion.

        Anchors accounted for approximately 6.9% of the Company's total minimum rent for the year ended December 31, 2009.

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        The following table identifies each Anchor, each parent company that owns multiple Anchors and the number of square feet owned or leased by each such Anchor or parent company in the Company's portfolio at December 31, 2009:

Name
  Number of
Anchor Stores
  GLA Owned
by Anchor
  GLA Leased
by Anchor
  Total GLA
Occupied
by Anchor
 

Macy's Inc.

                         
 

Macy's

    53     5,212,558     3,421,845     8,634,403  
 

Bloomingdale's(1)

    2     255,888     102,000     357,888  
                   
   

Total

    55     5,468,446     3,523,845     8,992,291  

Sears Holdings Corporation

                         
 

Sears

    48     3,303,956     3,238,020     6,541,976  
 

Great Indoors, The

    1     131,051         131,051  
 

K-Mart

    1     86,479         86,479  
                   
   

Total

    50     3,521,486     3,238,020     6,759,506  

J.C. Penney

    45     4,145,973     1,869,157     6,015,130  

Dillard's

    24     636,569     3,444,317     4,080,886  

Nordstrom(2)

    14     1,351,723     995,691     2,347,414  

Target

    11     664,110     811,905     1,476,015  

The Bon-Ton Stores, Inc.

                         
 

Younkers

    6     397,119     212,058     609,177  
 

Bon-Ton, The

    1     71,222         71,222  
 

Herberger's

    4     402,573         402,573  
                   
   

Total

    11     870,914     212,058     1,082,972  

Forever 21(3)

    9     542,551     324,601     867,152  

Kohl's

    6     279,400     239,902     519,302  

Boscov's

    3     301,350     174,717     476,067  

Neiman Marcus

    3     220,071     221,379     441,450  

Home Depot

    3     274,402     120,530     394,932  

Wal-Mart

    2         371,527     371,527  

Costco

    2     166,718     154,701     321,419  

Lord & Taylor

    3     320,007         320,007  

Burlington Coat Factory

    3     74,585     186,570     261,155  

Dick's Sporting Goods

    3     257,241         257,241  

Von Maur

    3     246,249         246,249  

Belk

    3     51,240     149,685     200,925  

La Curacao

    1         164,656     164,656  

Barneys New York

    2     62,046     81,398     143,444  

Lowe's

    1         135,197     135,197  

Saks Fifth Avenue

    1     92,000         92,000  

L.L. Bean

    1     75,778         75,778  

Cabela's(4)

    1         75,000     75,000  

Best Buy

    1         65,841     65,841  

Richman Gordman 1/2 Price

    1     60,000         60,000  

Sports Authority

    1     52,250         52,250  

Bealls

    1     40,000         40,000  

Vacant Anchors(5)

    12     1,173,543         1,173,543  
                   
 

Total

    276     20,948,652     16,560,697     37,509,349  

Anchors at centers not owned by the Company(6)

                         

Forever 21

    6         479,726     479,726  

Kohl's

    3         270,390     270,390  

Burlington Coat Factory(7)

    1         83,232     83,232  

Vacant Anchors(6)

    14         1,081,415     1,081,415  
                   

Total

    300     20,948,652     18,475,460     39,424,112  
                   

(1)
The above table includes a 102,000 square foot Bloomingdale's store scheduled to open at Santa Monica Place in August 2010.

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(2)
The above table includes a 122,000 square foot Nordstrom store scheduled to open at Santa Monica Place in August 2010.

(3)
The above table includes a 154,000 square foot Forever 21 store scheduled to open at Fresno Fashion Fair in Summer 2010.

(4)
Cabela's is scheduled to open a 75,000 square foot store at Mesa Mall in Spring 2010.

(5)
The Company is currently seeking various replacement tenants and/or contemplating redevelopment opportunities for these vacant sites.

(6)
The Company owns a portfolio of 24 former Mervyn's stores located at shopping centers not owned by the Company. Of these 24 stores, six have been leased to Forever 21, three have been leased to Kohl's, one has been leased to Burlington Coat Factory and the remaining 14 are vacant. The Company is currently seeking various replacement tenants for these vacant sites.

(7)
Burlington Coat Factory is scheduled to open an 83,232 square foot store at Chula Vista Center in March 2010.

Environmental Matters

        Each of the Centers has been subjected to an Environmental Site Assessment—Phase I (which involves review of publicly available information and general property inspections, but does not involve soil sampling or ground water analysis) completed by an environmental consultant.

        Based on these assessments, and on other information, the Company is aware of the following environmental issues that may reasonably result in costs associated with future investigation or remediation, or in environmental liability:

        See "Risk Factors—Possible environmental liabilities could adversely affect us."

Insurance

        Each of the Centers has comprehensive liability, fire, extended coverage and rental loss insurance with insured limits customarily carried for similar properties. The Company does not insure certain types of losses (such as losses from wars) because they are either uninsurable or not economically

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insurable. In addition, while the Company or the relevant joint venture, as applicable, further carries specific earthquake insurance on the Centers located in California, the policies are subject to a deductible equal to 5% of the total insured value of each Center, a $100,000 per occurrence minimum and a combined annual aggregate loss limit of $150 million on these Centers. The Company or the relevant joint venture, as applicable, carries specific earthquake insurance on the Centers located in the Pacific Northwest. However, the policies are subject to a deductible equal to 2% of the total insured value of each Center, a $50,000 per occurrence minimum and a combined annual aggregate loss limit of $800 million on these Centers. While the Company or the relevant joint venture also carries terrorism insurance on the Centers, the policies are subject to a $50,000 deductible and a combined annual aggregate loss of $800 million. Each Center has environmental insurance covering eligible third-party losses, remediation and non-owned disposal sites, subject to a $100,000 deductible and a $20 million five-year aggregate limit. Some environmental losses are not covered by this insurance because they are uninsurable or not economically insurable. Furthermore, the Company carries title insurance on substantially all of the Centers for less than their full value.

Qualification as a Real Estate Investment Trust

        The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its first taxable year ended December 31, 1994, and intends to conduct its operations so as to continue to qualify as a REIT under the Code. As a REIT, the Company generally will not be subject to federal and state income taxes on its net taxable income that it currently distributes to stockholders. Qualification and taxation as a REIT depends on the Company's ability to meet certain dividend distribution tests, share ownership requirements and various qualification tests prescribed in the Code.

Employees

        As of December 31, 2009, the Company and the Management Companies had 2,749 regular and temporary employees, including executive officers (9), personnel in the areas of acquisitions and business development (39), property management/marketing (419), leasing (133), redevelopment/development (98), financial services (286) and legal affairs (61). In addition, in an effort to minimize operating costs, the Company generally maintains its own security and guest services staff (1,685) and in some cases maintenance staff (19). Unions represent twenty-two of these employees. The Company primarily engages a third party to handle maintenance at the Centers. The Company believes that relations with its employees are good.

Seasonality

        For a discussion of the extent to which the Company's business may be seasonal, see "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Management's Overview and Summary—Seasonality."

Available Information; Website Disclosure; Corporate Governance Documents

        The Company's corporate website address is www.macerich.com. The Company makes available free-of-charge through this website its reports on Forms 10-K, 10-Q and 8-K and all amendments thereto, as soon as reasonably practicable after the reports have been filed with, or furnished to, the SEC. These reports are available under the heading "Investing—SEC Filings", through a free hyperlink to a third-party service. Information provided on our website is not incorporated by reference into this Form 10-K.

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        The following documents relating to Corporate Governance are available on the Company's website at www.macerich.com under "Investing—Corporate Governance":

        You may also request copies of any of these documents by writing to:

ITEM 1A.    RISK FACTORS

        The following factors, among others, could cause our actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by our management from time to time. These factors, among others, may have a material adverse effect on our business, financial condition, operating results and cash flows, and you should carefully consider them. It is not possible to predict or identify all such factors. You should not consider this list to be a complete statement of all potential risks or uncertainties, and we may update them in our future periodic reports.

We invest primarily in shopping centers, which are subject to a number of significant risks that are beyond our control.

        Real property investments are subject to varying degrees of risk that may affect the ability of our Centers to generate sufficient revenues to meet operating and other expenses, including debt service, lease payments, capital expenditures and tenant improvements, and to make distributions to us and our stockholders. For purposes of this "Risk Factor" section, Centers wholly owned by us are referred to as "Wholly Owned Centers" and Centers that are partly but not wholly owned by us are referred to as "Joint Venture Centers." A number of factors may decrease the income generated by the Centers, including:

        Income from shopping center properties and shopping center values are also affected by applicable laws and regulations, including tax, environmental, safety and zoning laws.

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A continuation or worsening of recent adverse economic conditions and disruptions in the capital and credit markets could harm our business, results of operations and financial condition.

        The U.S. economy, the real estate industry as a whole, and the local markets in which our Centers are located have in recent years experienced adverse economic conditions, resulting in an economic recession as well as disruptions in the capital and credit markets. These adverse economic conditions have caused dramatic declines in the stock and housing markets, increases in foreclosures, unemployment and living costs as well as limited access to credit, which have adversely impacted consumer spending levels and the operating results of our tenants. If these conditions continue or worsen, or if similar conditions occur in the future, our tenants may also have difficulties obtaining capital at adequate or historical levels to finance their ongoing business and operations. These events could impact our tenants' ability to meet their lease obligations due to poor operating results, lack of liquidity, bankruptcy or other reasons. Our ability to lease space and negotiate rents at advantageous rates has been and, may continue to be, adversely affected in this type of economic environment, and more tenants may seek rent relief. Any of these events could harm our business, results of operations and financial condition.

Some of our Centers are geographically concentrated and, as a result, are sensitive to local economic and real estate conditions.

        A significant percentage of our Centers are located in California and Arizona, and eight Centers in the aggregate are located in New York, New Jersey and Connecticut. Many of these states have been more adversely affected by weak economic and real estate conditions than have other states. To the extent that weak economic or real estate conditions, including as a result of the factors described in the preceding risk factors, or other factors continue to affect or affect California, Arizona, New York, New Jersey or Connecticut (or their respective regions) more severely than other areas of the country, our financial performance could be negatively impacted.

We are in a competitive business.

        There are numerous owners and developers of real estate that compete with us in our trade areas. There are six other publicly traded mall companies in the United States and several large private mall companies, any of which under certain circumstances could compete against us for an acquisition of an Anchor or a tenant. In addition, other REITs, private real estate companies, and financial buyers compete with us in terms of acquisitions. This results in competition for both the acquisition of properties or centers and for tenants or Anchors to occupy space. Competition for property acquisitions may result in increased purchase prices and may adversely affect our ability to make suitable property acquisitions on favorable terms. The existence of competing shopping centers could have a material adverse impact on our ability to lease space and on the level of rents that can be achieved. There is also increasing competition from other retail formats and technologies, such as lifestyle centers, power centers, Internet shopping, home shopping networks, factory outlet centers, discount shopping clubs and mail-order services that could adversely affect our revenues.

Our Centers depend on tenants to generate rental revenues.

        Our revenues and funds available for distribution will be reduced if:

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        A decision by an Anchor or other significant tenant to cease operations at a Center could also have an adverse effect on our financial condition. The closing of an Anchor or other significant tenant may allow other Anchors and/or other tenants to terminate their leases, seek rent relief and/or cease operating their stores at the Center or otherwise adversely affect occupancy at the Center. In addition, Anchors and/or tenants at one or more Centers might terminate their leases as a result of mergers, acquisitions, consolidations, dispositions or bankruptcies in the retail industry. The bankruptcy and/or closure of retail stores, or sale of an Anchor or store to a less desirable retailer, may reduce occupancy levels, customer traffic and rental income, or otherwise adversely affect our financial performance. Furthermore, if the store sales of retailers operating in the Centers decline sufficiently due to adverse economic conditions or for any other reason, tenants might be unable to pay their minimum rents or expense recovery charges. In the event of a default by a lessee, the affected Center may experience delays and costs in enforcing its rights as lessor.

        Given current economic conditions, we believe there is an increased risk that store sales of Anchors and/or tenants operating in our Centers may decrease in future periods, which may negatively affect our Anchors' and/or tenants' ability to satisfy their lease obligations and may increase the possibility of consolidations, dispositions or bankruptcies of our tenants and/or closure of their stores.

Our acquisition and real estate development strategies may not be successful.

        Our historical growth in revenues, net income and funds from operations has been in part tied to the acquisition and redevelopment of shopping centers. Many factors, including the availability and cost of capital, our total amount of debt outstanding, our ability to obtain financing on attractive terms, if at all, interest rates and the availability of attractive acquisition targets, among others, will affect our ability to acquire and redevelop additional properties in the future. We may not be successful in pursuing acquisition opportunities, and newly acquired properties may not perform as well as expected. Expenses arising from our efforts to complete acquisitions, redevelop properties or increase our market penetration may have a material adverse effect on our business, financial condition and results of operations. We face competition for acquisitions primarily from other REITs, as well as from private real estate companies and financial buyers. Some of our competitors have greater financial and other resources. Increased competition for shopping center acquisitions may result in increased purchase prices and may impact adversely our ability to acquire additional properties on favorable terms. We cannot guarantee that we will be able to implement our growth strategy successfully or manage our expanded operations effectively and profitably.

        We may not be able to achieve the anticipated financial and operating results from newly acquired assets. Some of the factors that could affect anticipated results are:

        Our business strategy also includes the selective development and construction of retail properties. Any development, redevelopment and construction activities that we may undertake will be subject to the risks of real estate development, including lack of financing, construction delays, environmental requirements, budget overruns, sunk costs and lease-up. Furthermore, occupancy rates and rents at a newly completed property may not be sufficient to make the property profitable. Real estate development activities are also subject to risks relating to the inability to obtain, or delays in obtaining, all necessary zoning, land-use, building, and occupancy and other required governmental permits and authorizations. If any of the above events occur, our ability to pay dividends to our stockholders and service our indebtedness could be adversely affected.

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We may be unable to sell properties quickly because real estate investments are relatively illiquid.

        Investments in real estate are relatively illiquid, which limits our ability to adjust our portfolio in response to changes in economic or other conditions. Moreover, there are some limitations under federal income tax laws applicable to REITs that limit our ability to sell assets. In addition, because our properties are generally mortgaged to secure our debts, we may not be able to obtain a release of a lien on a mortgaged property without the payment of the associated debt and/or a substantial prepayment penalty, which restricts our ability to dispose of a property, even though the sale might otherwise be desirable. Furthermore, the number of prospective buyers interested in purchasing shopping centers is limited. Therefore, if we want to sell one or more of our Centers, we may not be able to dispose of it in the desired time period and may receive less consideration than we originally invested in the Center.

We have substantial debt that could affect our future operations.

        Our total outstanding loan indebtedness at December 31, 2009 was $6.8 billion (which includes $1.3 billion of unsecured debt and $2.3 billion of our pro rata share of joint venture debt). Approximately $247.2 million of such indebtedness matures in 2010 (excluding loans with extensions and refinancing transactions that have recently closed). As a result of this substantial indebtedness, we are required to use a material portion of our cash flow to service principal and interest on our debt, which limits the cash flow available for other business opportunities. We are also subject to the risks normally associated with debt financing, including the risk that our cash flow from operations will be insufficient to meet required debt service and that rising interest rates could adversely affect our debt service costs. In addition, our use of interest rate hedging arrangements may expose us to additional risks, including that the counterparty to the arrangement may fail to honor its obligations and that termination of these arrangements typically involves costs such as transaction fees or breakage costs. Furthermore, a majority of our Centers are mortgaged to secure payment of indebtedness, and if income from the Center is insufficient to pay that indebtedness, the Center could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value.

We are obligated to comply with financial and other covenants that could affect our operating activities.

        Our unsecured credit facilities contain financial covenants, including interest coverage requirements, as well as limitations on our ability to incur debt, make dividend payments and make certain acquisitions. These covenants may restrict our ability to pursue certain business initiatives or certain transactions that might otherwise be advantageous. In addition, failure to meet certain of these financial covenants could cause an event of default under and/or accelerate some or all of such indebtedness which could have a material adverse effect on us.

We depend on external financings for our growth and ongoing debt service requirements.

        We depend primarily on external financings, principally debt financings, to fund the growth of our business and to ensure that we can meet ongoing maturities of our outstanding debt. Our access to financing depends on the willingness of banks, lenders and other institutions to lend to us based on their underwriting criteria which can fluctuate with market conditions and on conditions in the capital markets in general. Recently, turmoil in the capital and credit markets has significantly limited access to debt and equity financing for many companies. We cannot assure you that we will be able to obtain the financing we need for future growth or to meet our debt service as obligations mature, or that the financing will be available to us on acceptable terms, or at all. Any such refinancing could also impose more restrictive terms.

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Inflation may adversely affect our financial condition and results of operations.

        If inflation increases in the future, we may experience any or all of the following:

Certain individuals have substantial influence over the management of both us and the Operating Partnership, which may create conflicts of interest.

        Under the limited partnership agreement of the Operating Partnership, we, as the sole general partner, are responsible for the management of the Operating Partnership's business and affairs. Three of the principals of the Operating Partnership serve as executive officers of us, and each principal is a member of our board of directors. Accordingly, these principals have substantial influence over our management and the management of the Operating Partnership. As a result, certain decisions concerning our operations or other matters affecting us may present conflicts of interest for these individuals.

The tax consequences of the sale of some of the Centers and certain holdings of the principals may create conflicts of interest.

        The principals will experience negative tax consequences if some of the Centers are sold. As a result, the principals may not favor a sale of these Centers even though such a sale may benefit our other stockholders. In addition, the principals may have different interests than our stockholders because they are significant holders of the Operating Partnership.

If we were to fail to qualify as a REIT, we will have reduced funds available for distributions to our stockholders.

        We believe that we currently qualify as a REIT. No assurance can be given that we will remain qualified as a REIT. Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or administrative interpretations. The complexity of these provisions and of the applicable income tax regulations is greater in the case of a REIT structure like ours that holds assets in partnership form. The determination of various factual matters and circumstances not entirely within our control, including determinations by our partners in the Joint Venture Centers, may affect our continued qualification as a REIT. In addition, legislation, new regulations, administrative interpretations or court decisions could significantly change the tax laws with respect to our qualification as a REIT or the U.S. federal income tax consequences of that qualification.

        If in any taxable year we were to fail to qualify as a REIT, we will suffer the following negative results:

        In addition, if we were to lose our REIT status, we will be prohibited from qualifying as a REIT for the four taxable years following the year during which the qualification was lost, absent relief under statutory provisions. As a result, net income and the funds available for distributions to our

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stockholders would be reduced for at least five years and the fair market value of our shares could be materially adversely affected. Furthermore, the Internal Revenue Service could challenge our REIT status for past periods, which if successful could result in us owing a material amount of tax for prior periods. It is possible that future economic, market, legal, tax or other considerations might cause our board of directors to revoke our REIT election.

        Even if we remain qualified as a REIT, we might face other tax liabilities that reduce our cash flow. Further, we might be subject to federal, state and local taxes on our income and property. Any of these taxes would decrease cash available for distributions to stockholders.

Complying with REIT requirements might cause us to forego otherwise attractive opportunities.

        In order to qualify as a REIT for U.S. federal income tax purposes, we must satisfy tests concerning, among other things, our sources of income, the nature of our assets, the amounts we distribute to our stockholders and the ownership of our stock. We may also be required to make distributions to our stockholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with REIT requirements may cause us to forego opportunities we would otherwise pursue.

        In addition, the REIT provisions of the Internal Revenue Code impose a 100% tax on income from "prohibited transactions." Prohibited transactions generally include sales of assets that constitute inventory or other property held for sale in the ordinary course of business, other than foreclosure property. This 100% tax could impact our desire to sell assets and other investments at otherwise opportune times if we believe such sales could be considered a prohibited transaction.

Complying with REIT requirements may force us to borrow or take other measures to make distributions to our stockholders.

        As a REIT, we generally must distribute 90% of our annual taxable income (subject to certain adjustments) to our stockholders. From time to time, we might generate taxable income greater than our net income for financial reporting purposes, or our taxable income might be greater than our cash flow available for distributions to our stockholders. If we do not have other funds available in these situations, we might be unable to distribute 90% of our taxable income as required by the REIT rules. In that case, we would need to borrow funds, liquidate or sell a portion of our properties or investments (potentially at disadvantageous or unfavorable prices), in certain limited cases distribute a combination of cash and stock (at our stockholders' election but subject to an aggregate cash limit established by the Company) or find another alternative source of funds. These alternatives could increase our costs or reduce our equity. In addition, to the extent we borrow funds to pay distributions, the amount of cash available to us in future periods will be decreased by the amount of cash flow we will need to service principal and interest on the amounts we borrow, which will limit cash flow available to us for other investments or business opportunities.

Outside partners in Joint Venture Centers result in additional risks to our stockholders.

        We own partial interests in property partnerships that own 47 Joint Venture Centers as well as fee title to a site that is ground-leased to a property partnership that owns a Joint Venture Center and several development sites. We may acquire partial interests in additional properties through joint venture arrangements. Investments in Joint Venture Centers involve risks different from those of investments in Wholly Owned Centers.

        We may have fiduciary responsibilities to our partners that could affect decisions concerning the Joint Venture Centers. Third parties may share control of major decisions relating to the Joint Venture Centers, including decisions with respect to sales, refinancings and the timing and amount of additional

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capital contributions, as well as decisions that could have an adverse impact on our status. For example, we may lose our management and other rights relating to the Joint Venture Centers if:

        In addition, some of our outside partners control the day-to-day operations of eight Joint Venture Centers (NorthPark Center, West Acres Center, Eastland Mall, Granite Run Mall, Lake Square Mall, NorthPark Mall, South Park Mall and Valley Mall). We, therefore, do not control cash distributions from these Centers, and the lack of cash distributions from these Centers could jeopardize our ability to maintain our qualification as a REIT. Furthermore, certain Joint Venture Centers have debt that could become recourse debt to us if the Joint Venture Center is unable to discharge such debt obligation.

Our holding company structure makes us dependent on distributions from the Operating Partnership.

        Because we conduct our operations through the Operating Partnership, our ability to service our debt obligations and pay dividends to our stockholders is strictly dependent upon the earnings and cash flows of the Operating Partnership and the ability of the Operating Partnership to make distributions to us. Under the Delaware Revised Uniform Limited Partnership Act, the Operating Partnership is prohibited from making any distribution to us to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the Operating Partnership (other than some non-recourse liabilities and some liabilities to the partners) exceed the fair value of the assets of the Operating Partnership. An inability to make cash distributions from the Operating Partnership could jeopardize our ability to maintain qualification as a REIT.

Possible environmental liabilities could adversely affect us.

        Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in that real property. These laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. The costs of investigation, removal or remediation of hazardous or toxic substances may be substantial. In addition, the presence of hazardous or toxic substances, or the failure to remedy environmental hazards properly, may adversely affect the owner's or operator's ability to sell or rent affected real property or to borrow money using affected real property as collateral.

        Persons or entities that arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of hazardous or toxic substances at the disposal or treatment facility, whether or not that facility is owned or operated by the person or entity arranging for the disposal or treatment of hazardous or toxic substances. Laws exist that impose liability for release of asbestos containing materials ("ACMs") into the air, and third parties may seek recovery from owners or operators of real property for personal injury associated with exposure to ACMs. In connection with our ownership, operation, management, development and redevelopment of the Centers, or any other centers or properties we acquire in the future, we may be potentially liable under these laws and may incur costs in responding to these liabilities.

Some of our properties are subject to potential natural or other disasters.

        Some of our Centers are located in areas that are subject to natural disasters, including our Centers in California or in other areas with higher risk of earthquakes, our Centers in flood plains or

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in areas that may be adversely affected by tornados, as well as our Centers in coastal regions that may be adversely affected by increases in sea levels or in the frequency or severity of hurricanes and tropical storms.

Uninsured losses could adversely affect our financial condition.

        Each of our Centers has comprehensive liability, fire, extended coverage and rental loss insurance with insured limits customarily carried for similar properties. We do not insure certain types of losses (such as losses from wars), because they are either uninsurable or not economically insurable. In addition, while we or the relevant joint venture, as applicable, carries specific earthquake insurance on the Centers located in California, the policies are subject to a deductible equal to 5% of the total insured value of each Center, a $100,000 per occurrence minimum and a combined annual aggregate loss limit of $150 million on these Centers. We or the relevant joint venture, as applicable, carries specific earthquake insurance on the Centers located in the Pacific Northwest. However, the policies are subject to a deductible equal to 2% of the total insured value of each Center, a $50,000 per occurrence minimum and a combined annual aggregate loss limit of $800 million on these Centers. While we or the relevant joint venture also carries terrorism insurance on the Centers, the policies are subject to a $50,000 deductible and a combined annual aggregate loss of $800 million. Each Center has environmental insurance covering eligible third-party losses, remediation and non-owned disposal sites, subject to a $100,000 deductible and a $20 million five-year aggregate limit. Some environmental losses are not covered by this insurance because they are uninsurable or not economically insurable. Furthermore, we carry title insurance on substantially all of the Centers for less than their full value.

        If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property, but may remain obligated for any mortgage debt or other financial obligations related to the property.

An ownership limit and certain anti-takeover defenses could inhibit a change of control or reduce the value of our common stock.

        The Ownership Limit.    In order for us to maintain our qualification as a REIT, not more than 50% in value of our outstanding stock (after taking into account options to acquire stock) may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include some entities that would not ordinarily be considered "individuals") during the last half of a taxable year. Our Charter restricts ownership of more than 5% (the "Ownership Limit") of the lesser of the number or value of our outstanding shares of stock by any single stockholder or a group of stockholders (with limited exceptions for some holders of limited partnership interests in the Operating Partnership, and their respective families and affiliated entities, including all three principals). In addition to enhancing preservation of our status as a REIT, the Ownership Limit may:

        Our board of directors, in its sole discretion, may waive or modify (subject to limitations) the Ownership Limit with respect to one or more of our stockholders, if it is satisfied that ownership in excess of this limit will not jeopardize our status as a REIT.

        Selected Provisions of our Charter and Bylaws.    Some of the provisions of our Charter and bylaws may have the effect of delaying, deferring or preventing a third party from making an acquisition proposal for us and may inhibit a change in control that some, or a majority, of our stockholders might

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believe to be in their best interest or that could give our stockholders the opportunity to realize a premium over the then-prevailing market prices for our shares. These provisions include the following:

        Selected Provisions of Maryland Law.    The Maryland General Corporation Law prohibits business combinations between a Maryland corporation and an interested stockholder (which includes any person who beneficially holds 10% or more of the voting power of the corporation's outstanding voting stock or any affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the corporation's outstanding stock at any time within the two year period prior to the date in question) or its affiliates for five years following the most recent date on which the interested stockholder became an interested stockholder and, after the five-year period, requires the recommendation of the board of directors and two super-majority stockholder votes to approve a business combination unless the stockholders receive a minimum price determined by the statute. As permitted by Maryland law, our Charter exempts from these provisions any business combination between us and the principals and their respective affiliates and related persons. Maryland law also allows the board of directors to exempt particular business combinations before the interested stockholder becomes an interested stockholder. Furthermore, a person is not an interested stockholder if the transaction by which he or she would otherwise have become an interested stockholder is approved in advance by the board of directors.

        The Maryland General Corporation Law also provides that the acquirer of certain levels of voting power in electing directors of a Maryland corporation (one-tenth or more but less than one-third, one-third or more but less than a majority and a majority or more) is not entitled to vote the shares in excess of the applicable threshold, unless voting rights for the shares are approved by holders of two-thirds of the disinterested shares or unless the acquisition of the shares has been specifically or generally approved or exempted from the statute by a provision in our Charter or bylaws adopted before the acquisition of the shares. Our Charter exempts from these provisions voting rights of shares owned or acquired by the principals and their respective affiliates and related persons. Our bylaws also contain a provision exempting from this statute any acquisition by any person of shares of our common stock. There can be no assurance that this bylaw will not be amended or eliminated in the future. The Maryland General Corporation Law and our Charter also contain supermajority voting requirements with respect to our ability to amend our Charter, dissolve, merge, or sell all or substantially all of our assets.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None.

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ITEM 2.    PROPERTIES

        The following table sets forth certain information regarding the Centers and other locations that are wholly owned or partly owned by the Company:

Company's
Ownership(1)
  Name of
Center/Location(2)
  Year of
Original
Construction/
Acquisition
  Year of Most
Recent
Expansion/
Renovation
  Total
GLA(3)
  Mall and
Freestanding
GLA
  Percentage
of Mall and
Freestanding
GLA Leased
  Anchors

CONSOLIDATED CENTERS:

100%

 

Capitola Mall(4)
Capitola, California

   
1977/1995
   
1988
   
487,970
   
196,373
   
87.8

%

Macy's, Kohl's, Sears

50.1%

 

Chandler Fashion Center
Chandler, Arizona

    2001/2002         1,325,543     640,383     97.1 %

Dillard's, Macy's, Nordstrom, Sears

100%

 

Chesterfield Towne Center(5)
Richmond, Virginia

    1975/1994     2000     1,032,283     423,548     86.9 %

J.C. Penney, Macy's, Sears

100%

 

Danbury Fair(5)
Danbury, Connecticut

    1986/2005     1991     1,292,176     495,968     97.3 %

J.C. Penney, Lord & Taylor, Macy's, Sears

100%

 

Deptford Mall
Deptford, New Jersey

    1975/2006     1990     1,039,120     342,678     99.6 %

Boscov's, J.C. Penney, Macy's, Sears

100%

 

Fiesta Mall
Mesa, Arizona

    1979/2004     2009     926,325     408,134     91.3 %

Dillard's, Macy's, Sears

100%

 

Flagstaff Mall
Flagstaff, Arizona

    1979/2002     2007     347,076     143,064     91.4 %

Dillard's, J.C. Penney, Sears

50.1%

 

Freehold Raceway Mall
Freehold, New Jersey

    1990/2005     2007     1,665,399     873,775     96.8 %

J.C. Penney, Lord & Taylor, Macy's, Nordstrom, Sears

100%

 

Fresno Fashion Fair
Fresno, California

    1970/1996     2006     956,296     395,415     95.9 %

Forever 21(6), J.C. Penney, Macy's (two)

100%

 

Great Northern Mall(5)
Clay, New York

    1988/2005         894,061     564,073     89.4 %

Macy's, Sears

100%

 

Green Tree Mall
Clarksville, Indiana

    1968/1975     2005     791,448     285,863     68.1 %

Burlington Coat Factory, Dillard's J.C. Penney, Sears

100%

 

La Cumbre Plaza(4)
Santa Barbara, California

    1967/2004     1989     491,716     174,716     86.1 %

Macy's, Sears

100%

 

Northridge Mall
Salinas, California

    1972/2003     1994     892,824     355,844     93.9 %

Forever 21, J.C. Penney, Macy's, Sears

100%

 

Oaks, The
Thousand Oaks, California

    1978/2002     2009     1,104,132     546,639     98.1 %

J.C. Penney, Macy's (two), Nordstorm

100%

 

Pacific View
Ventura, California

    1965/1996     2001     970,424     321,610     91.2 %

J.C. Penney, Macy's, Sears, Target

100%

 

Panorama Mall
Panorama, California

    1955/1979     2005     314,305     149,305     99.4 %

Wal-Mart

100%

 

Paradise Valley Mall
Phoenix, Arizona

    1979/2002     2009     1,152,333     372,204     88.0 %

Costco, Dillard's, J.C. Penney, Macy's, Sears

100%

 

Prescott Gateway
Prescott, Arizona

    2002/2002     2004     589,854     345,666     84.6 %

Dillard's, J.C. Penney, Sears

51.3%

 

Promenade at Casa Grande
Casa Grande, Arizona

    2007/—     2009     926,155     488,782     91.3 %

Dillard's, J.C.Penney, Kohl's, Target

100%

 

Rimrock Mall
Billings, Montana

    1978/1996     1999     600,839     289,169     90.1 %

Dillard's (two), Herberger's, J.C. Penney

100%

 

Rotterdam Square
Schenectady, New York

    1980/2005     1990     581,326     271,551     85.5 %

K-Mart, Macy's, Sears

100%

 

Salisbury, Centre at
Salisbury, Maryland

    1990/1995     2005     856,895     359,479     94.4 %

Boscov's, J.C. Penney, Macy's, Sears

84.9%

 

SanTan Village Regional Center
Gilbert, Arizona

    2007/—     2009     946,855     626,855     98.7 %

Dillard's, Macy's

100%

 

Somersville Towne Center
Antioch, California

    1966/1986     2004     349,274     176,089     92.7 %

Macy's, Sears

100%

 

South Plains Mall(5)
Lubbock, Texas

    1972/1998     1995     1,164,443     422,656     85.2 %

Bealls, Dillard's (two), J.C. Penney, Sears

100%

 

South Towne Center
Sandy, Utah

    1987/1997     1997     1,278,378     501,866     95.8 %

Dillard's, Forever 21, J.C. Penney, Macy's, Target

100%

 

Towne Mall
Elizabethtown, Kentucky

    1985/2005     1989     352,029     181,157     75.2 %

Belk, J.C. Penney, Sears

100%

 

Twenty Ninth Street(4)
Boulder, Colorado

    1963/1979     2007     830,159     538,505     84.6 %

Home Depot, Macy's

100%

 

Valley River Center(5)
Eugene, Oregon

    1969/2006     2007     916,134     340,070     91.6 %

J.C. Penney, Macy's, Sports Authority

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Table of Contents

Company's
Ownership(1)
  Name of
Center/Location(2)
  Year of
Original
Construction/
Acquisition
  Year of Most
Recent
Expansion/
Renovation
  Total
GLA(3)
  Mall and
Freestanding
GLA
  Percentage
of Mall and
Freestanding
GLA Leased
  Anchors

100%

 

Valley View Center
Dallas, Texas

    1973/1996     2004     1,032,480     577,047     73.8 %

J.C. Penney, Sears

100%

 

Victor Valley, Mall of(5)
Victorville, California

    1986/2004     2001     544,534     270,685     95.9 %

Forever 21, J.C. Penney, Sears

100%

 

Vintage Faire Mall
Modesto, California

    1977/1996     2008     1,124,710     424,361     91.9 %

Forever 21, J.C. Penney, Macy's (two), Sears

100%

 

Westside Pavilion
Los Angeles, California

    1985/1998     2007     739,822     381,694     97.5 %

Macy's, Nordstrom

100%

 

Wilton Mall(5)
Saratoga Springs, New York

    1990/2005     1998     740,824     455,220     92.6 %

The Bon-Ton, J.C. Penney, Sears

                                   

 

Total/Average Consolidated Centers

    29,258,142     13,340,444     91.2 %  
                                   

UNCONSOLIDATED JOINT VENTURE CENTERS (VARIOUS PARTNERS):

33.3%

 

Arrowhead Towne Center
Glendale, Arizona

   
1993/2002
   
2004
   
1,196,849
   
389,072
   
95.8

%

Dick's Sporting Goods, Dillard's, Forever 21, J.C. Penney, Macy's, Sears

50%

 

Biltmore Fashion Park
Phoenix, Arizona

    1963/2003     2006     578,992     273,992     84.2 %

Macy's, Saks Fifth Avenue

50%

 

Broadway Plaza(4)
Walnut Creek, California

    1951/1985     1994     662,439     216,942     97.6 %

Macy's (two), Nordstrom

50.1%

 

Corte Madera, Village at
Corte Madera, California

    1985/1998     2005     440,131     222,131     92.3 %

Macy's, Nordstrom

50%

 

Desert Sky Mall(5)
Phoenix, Arizona

    1981/2002     2007     892,642     282,147     79.3 %

Burlington Coat Factory, Dillard's, La Curacao, Sears

25%

 

FlatIron Crossing
Broomfield, Colorado

    2000/2002     2009     1,467,566     823,825     97.2 %

Dick's Sporting Goods, Dillard's, Macy's, Nordstrom

50%

 

Inland Center(4)
San Bernardino, California

    1966/2004     2004     932,759     204,888     94.7 %

Forever 21, Macy's, Sears

15%

 

Metrocenter Mall(4)
Phoenix, Arizona

    1973/2005     2006     1,121,718     594,469     77.7 %

Dillard's, Macy's, Sears

50%

 

North Bridge, The Shops at(4)
Chicago, Illinois

    1998/2008         679,639     419,639     91.6 %

Nordstrom

50%

 

NorthPark Center(4)
Dallas, Texas

    1965/2004     2005     1,947,956     895,636     95.0 %

Barneys New York, Dillard's, Macy's, Neiman Marcus, Nordstrom

51%

 

Queens Center(4)
Queens, New York

    1973/1995     2004     967,840     411,116     98.1 %

J.C. Penney, Macy's

50%

 

Ridgmar
Fort Worth, Texas

    1976/2005     2000     1,273,501     399,528     89.9 %

Dillard's, J.C. Penney, Macy's, Neiman Marcus, Sears

50%

 

Scottsdale Fashion Square
Scottsdale, Arizona

    1961/2002     2009     1,939,632     955,306     90.4 %

Barneys New York, Dillard's, Macy's, Neiman Marcus, Nordstrom

33.3%

 

Superstition Springs Center(4)
Mesa, Arizona

    1990/2002     2002     1,204,759     441,465     95.0 %

Best Buy, Burlington Coat Factory, Dillard's, J.C. Penney, Macy's, Sears

50%

 

Tysons Corner Center(4)
McLean, Virginia

    1968/2005     2005     2,207,342     1,319,100     97.3 %

Bloomingdale's, L.L. Bean, Lord & Taylor, Macy's, Nordstrom

19%

 

West Acres
Fargo, North Dakota

    1972/1986     2001     970,334     417,779     96.2 %

Herberger's, J.C. Penney, Macy's, Sears

                                   

 

Total/Average Unconsolidated Joint Venture Centers (Various Partners)

    18,484,099     8,267,035     92.7 %  
                                   

PACIFIC PREMIER RETAIL TRUST(7):

51%

 

Cascade Mall
Burlington, Washington

   
1989/1999
   
1998
   
586,585
   
262,349
   
87.8

%

J.C. Penney, Macy's (two), Sears, Target

51%

 

Kitsap Mall
Silverdale, Washington

    1985/1999     1997     849,053     389,070     91.0 %

J.C. Penney, Kohl's, Macy's, Sears

51%

 

Lakewood Center
Lakewood, California

    1953/1975     2001     2,033,670     968,323     92.4 %

Costco, Forever 21, Home Depot, J.C. Penney, Macy's, Target

51%

 

Los Cerritos Center
Cerritos, California

    1971/1999     ongoing     1,143,613     488,010     98.4 %

Forever 21, Macy's, Nordstrom, Sears

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Table of Contents

Company's
Ownership(1)
  Name of
Center/Location(2)
  Year of
Original
Construction/
Acquisition
  Year of Most
Recent
Expansion/
Renovation
  Total
GLA(3)
  Mall and
Freestanding
GLA
  Percentage
of Mall and
Freestanding
GLA Leased
  Anchors

51%

 

Redmond Town Center(4)
Redmond, Washington

    1997/1999     2004     1,276,583     1,166,583     94.6 %

Macy's

51%

 

Stonewood Mall(4)
Downey, California

    1953/1997     1991     930,093     356,333     94.6 %

J.C. Penney, Kohl's, Macy's, Sears

51%

 

Washington Square
Portland, Oregon

    1974/1999     2005     1,458,734     523,707     84.9 %

Dick's Sporting Goods, J.C. Penney, Macy's, Nordstrom, Sears

                                   

 

Total/Average Pacific Premier Retail Trust

    8,278,331     4,154,375     92.5 %  
                                   

SDG MACERICH PROPERTIES, L.P.(7):

50%

 

Eastland Mall(4)
Evansville, Indiana

   
1978/1998
   
1996
   
1,040,949
   
551,805
   
95.6

%

Dillard's, J.C. Penney, Macy's

50%

 

Empire Mall(4)
Sioux Falls, South Dakota

    1975/1998     2000     1,364,921     619,399     96.4 %

J.C. Penney, Kohl's, Macy's, Richman Gordman 1/2 Price, Sears, Target, Younkers

50%

 

Granite Run Mall
Media, Pennsylvania

    1974/1998     1993     1,032,675     531,866     86.7 %

Boscov's, J.C. Penney, Sears

50%

 

Lake Square Mall
Leesburg, Florida

    1980/1998     1995     559,088     263,051     80.2 %

Belk, J.C. Penney, Sears, Target

50%

 

Lindale Mall
Cedar Rapids, Iowa

    1963/1998     1997     688,616     383,053     92.1 %

Sears, Von Maur, Younkers

50%

 

Mesa Mall
Grand Junction, Colorado

    1980/1998     2003     848,369     407,161     92.2 %

Cabela's(8), Herberger's, J.C. Penney, Sears, Target

50%

 

NorthPark Mall
Davenport, Iowa

    1973/1998     2001     1,072,428     421,972     88.5 %

Dillard's, J.C. Penney, Sears, Von Maur, Younkers

50%

 

Rushmore Mall
Rapid City, South Dakota

    1978/1998     1992     725,403     422,302     86.5 %

Herberger's, J.C. Penney, Sears

50%

 

Southern Hills Mall
Sioux City, Iowa

    1980/1998     2003     792,737     479,160     86.5 %

J.C. Penney, Sears, Younkers

50%

 

SouthPark Mall
Moline, Illinois

    1974/1998     1990     1,017,106     439,050     83.1 %

Dillard's, J.C. Penney, Sears, Von Maur, Younkers

50%

 

SouthRidge Mall
Des Moines, Iowa

    1975/1998     1998     859,748     470,996     74.6 %

J.C. Penney, Sears, Target, Younkers

50%

 

Valley Mall(5)
Harrisonburg, Virginia

    1978/1998     1992     506,333     191,255     85.9 %

Belk, J.C. Penney, Target

                                   

 

Total/Average SDG Macerich Properties, L.P.

    10,508,373     5,181,070     88.0 %  
                                   

 

Total/Average Unconsolidated Joint Venture Centers

    37,270,803     17,602,480     91.3 %  
                                   

 

Total/Average before Community Centers

    66,528,945     30,942,924     91.3 %  
                                   

COMMUNITY / SPECIALTY CENTERS:

100%

 

Borgata, The(9)
Scottsdale, Arizona

   
1981/2002
   
2006
   
93,706
   
93,706
   
72.2

%

50%

 

Boulevard Shops(7)
Chandler, Arizona

    2001/2002     2004     184,822     184,822     98.4 %

75%

 

Camelback Colonnade(5)(7)
Phoenix, Arizona

    1961/2002     1994     619,101     539,101     97.0 %

100%

 

Carmel Plaza(9)
Carmel, California

    1974/1998     2006     110,954     110,954     67.7 %

50%

 

Chandler Festival(7)
Chandler, Arizona

    2001/2002         503,572     368,375     94.4 %

Lowe's

50%

 

Chandler Gateway(7)
Chandler, Arizona

    2001/2002         255,289     124,238     60.5 %

The Great Indoors

50%

 

Chandler Village Center(7)
Chandler, Arizona

    2004/2002     2006     273,418     130,285     95.7 %

Target

32.9%

 

Estrella Falls, The Market at(7)
Goodyear, Arizona

    2009/—     2009     233,692     233,692     91.9 %

100%

 

Flagstaff Mall, The Marketplace at(4)(9)
Flagstaff, Arizona

    2007/—         267,527     146,997     72.6 %

Home Depot

100%

 

Hilton Village(4)(9)
Scottsdale, Arizona

    1982/2002         96,956     96,956     86.4 %

24.5%

 

Kierland Commons(7)
Scottsdale, Arizona

    1999/2005     2003     436,783     436,783     95.9 %

26


Table of Contents

Company's
Ownership(1)
  Name of
Center/Location(2)
  Year of
Original
Construction/
Acquisition
  Year of Most
Recent
Expansion/
Renovation
  Total
GLA(3)
  Mall and
Freestanding
GLA
  Percentage
of Mall and
Freestanding
GLA Leased
  Anchors

100%

 

Paradise Village Office Park II(9)
Phoenix, Arizona

    1982/2002         46,834     46,834     100.0 %

34.9%

 

SanTan Village Power Center(7)
Gilbert, Arizona

    2004/—     2007     491,037     284,510     86.1 %

Wal-Mart

100%

 

Tucson La Encantada(9)
Tucson, Arizona

    2002/2002     2005     249,890     249,890     88.8 %

                                   

 

Total/Average Community / Specialty Centers

    3,863,581     3,047,143     89.7 %  
                                   

 

Total before major development and redevelopment properties and other assets

    70,392,526     33,990,067     91.1 %  
                                   

MAJOR DEVELOPMENT AND REDEVELOPMENT PROPERTIES(9):

100%

 

Northgate Mall
San Rafael, California

   
1964/1986
   
2009 ongoing
   
712,771
   
242,440
   
(10

)

Kohl's, Macy's, Sears

100%

 

Santa Monica Place
Santa Monica, California

    1980/1999     2009 ongoing     524,000     300,000     (10 )

Bloomingdale's(11), Nordstrom(11)

100%

 

Shoppingtown Mall
Dewitt, New York

    1954/2005     2000     967,186     554,627     (10 )

J.C. Penney, Macy's, Sears

                                   

 

Total Major Development and Redevelopment Properties

    2,203,957     1,097,067          
                                   

OTHER ASSETS:

100%

 

Former Mervyn's(9)(12)

   
Various/2007
   
   
1,081,415
   
   
 

100%

 

Forever 21(9)(12)

    Various/2007         479,726          

100%

 

Kohl's(9)(12)

    Various/2007         270,390          

100%

 

Burlington Coat Factory(9)(12)(13)

    Various/2007         83,232          

100%

 

Paradise Village ground leases
Phoenix, Arizona(9)

    Various/2002         89,359     89,359     46.4 %

30%

 

Wilshire Boulevard(7)
Santa Monica, CA

    1978/2007         40,000     40,000     100.0 %

                                   

 

Total Other Assets

    2,044,122     129,359          
                                   

 

Grand Total at December 31, 2009

    74,640,605     35,216,493          
                                   

(1)
The Company's ownership interest in this table reflects its legal ownership interest but may not reflect its economic interest since each joint venture has various agreements regarding cash flow, profits and losses, allocations, capital requirements and other matters.

(2)
With respect to 69 Centers, the underlying land controlled by the Company is owned in fee entirely by the Company, or, in the case of Joint Venture Centers, by the joint venture property partnership or limited liability company. With respect to the remaining 17 Centers, the underlying land controlled by the Company is owned by third parties and leased to the Company, the property partnership or the limited liability company pursuant to long-term ground leases. Under the terms of a typical ground lease, the Company, the property partnership or the limited liability company pays rent for the use of the land and is generally responsible for all costs and expenses associated with the building and improvements. In some cases, the Company, the property partnership or the limited liability company has an option or right of first refusal to purchase the land. The termination dates of the ground leases range from 2011 to 2132.

(3)
Includes GLA attributable to Anchors (whether owned or non-owned) and Mall and Freestanding Stores as of December 31, 2009.

(4)
Portions of the land on which the Center is situated are subject to one or more ground leases.

(5)
These properties have a vacant Anchor location. The Company is currently seeking various replacement tenants and/or contemplating redevelopment opportunities for these vacant sites.

(6)
Forever 21 is scheduled to open a 154,000 square foot store at Fresno Fashion Fair in Summer 2010.

(7)
Included in Unconsolidated Joint Venture Centers.

(8)
Cabela's is scheduled to open a 75,000 square foot store at Mesa Mall in Spring 2010.

(9)
Included in Consolidated Centers.

(10)
Tenant spaces have been intentionally held off the market and remain vacant because of major development or redevelopment plans. As a result, the Company believes the percentage of mall and freestanding GLA leased at these major development properties is not meaningful data.

(11)
Santa Monica Place closed for redevelopment in January 2008 and is scheduled to reopen in August 2010 with a Bloomingdale's and a Nordstrom.

(12)
The Company owns a portfolio of 24 former Mervyn's stores located at shopping centers not owned by the Company. Of these 24 stores, six have been leased to Forever 21, three have been leased to Kohl's, one has been leased to Burlington Coat Factory and the remaining 14 former Mervyn's locations are vacant. The Company is currently seeking replacement tenants for these vacant sites. With respect to 12 of the 24 stores, the underlying land is owned in fee entirely by the Company. With respect to the remaining 12 stores, the underlying land is owned by third parties and leased to the Company pursuant to long-term building or ground leases. Under the terms of a typical building or ground lease, the Company pays rent for the use of the building or land and is generally responsible for all costs and expenses associated with the building and improvements. In some cases, the Company has an option or right of first refusal to purchase the land. The termination dates of the ground leases range from 2015 to 2027.

(13)
Burlington Coat Factory is scheduled to open an 83,232 square foot store at Chula Vista Center in March 2010, in a space previously occupied by Mervyn's.

27


Table of Contents

Mortgage Debt

        The following table sets forth certain information regarding the mortgages encumbering the Centers, including those Centers in which the Company has less than a 100% interest. The information set forth below is as of December 31, 2009 (dollars in thousands):

Property Pledged as Collateral
  Fixed or
Floating
  Annual
Interest
Rate(1)
  Carrying
Amount(1)
  Annual
Debt
Service
  Maturity
Date
  Balance Due
on Maturity
  Earliest Date
Notes Can Be
Defeased or Be
Prepaid

Consolidated Centers:

                                     

Capitola Mall(2)

  Fixed     7.13 % $ 35,550   $ 4,560     5/15/11   $ 32,724   Any Time

Carmel Plaza(3)

  Fixed     8.15 %   24,309     2,424     5/1/10     24,109   Any Time

Chandler Fashion Center(4)

  Fixed     5.50 %   163,028     12,514     11/1/12     152,097   Any Time

Chesterfield Towne Center(5)

  Fixed     9.07 %   52,369     6,576     1/1/24     1,087   Any Time

Danbury Fair Mall

  Fixed     4.64 %   163,111     14,700     2/1/11     155,205   Any Time

Deptford Mall

  Fixed     5.41 %   172,500     9,336     1/15/13     172,500   Any Time

Deptford Mall

  Fixed     6.46 %   15,451     1,212     6/1/16     13,877   Any Time

Fiesta Mall

  Fixed     4.98 %   84,000     4,092     1/1/15     84,000   Any Time

Flagstaff Mall

  Fixed     5.03 %   37,000     1,836     11/1/15     37,000   Any Time

Freehold Raceway Mall(4)

  Fixed     4.68 %   165,546     14,208     7/7/11     155,522   Any Time

Fresno Fashion Fair(6)

  Fixed     6.76 %   167,561     13,248     8/1/15     154,596   Any Time

Great Northern Mall

  Fixed     5.11 %   38,854     2,808     12/1/13     35,566   Any Time

Hilton Village

  Fixed     5.27 %   8,564     444     2/1/12     8,600   Any Time

La Cumbre Plaza(7)

  Floating     2.11 %   30,000     336     12/9/10     30,000   Any Time

Northgate, The Mall at(8)

  Floating     6.90 %   8,844     528     1/1/13     8,844   Any Time

Northridge Mall(9)

  Fixed     8.20 %   71,486     5,436     1/1/11     70,481   Any Time

Oaks, The(10)

  Floating     2.28 %   165,000     3,276     7/10/11     165,000   Any Time

Oaks, The(11)

  Fixed     6.90 %   88,297     2,071     7/10/11     88,297   Any Time

Oaks, The(11)

  Floating     2.83 %   3,927     77     7/10/11     3,297   Any Time

Pacific View

  Fixed     7.20 %   85,797     7,224     8/31/11     83,046   Any Time

Panorama Mall(12)

  Floating     1.31 %   50,000     552     2/28/10     50,000   Any Time

Paradise Valley Mall(13)

  Floating     6.30 %   85,000     4,680     8/31/12     82,250   Any Time

Prescott Gateway

  Fixed     5.86 %   60,000     3,468     12/1/11     60,000   Any Time

Promenade at Casa Grande(14)

  Floating     1.70 %   86,617     1,428     8/16/10     86,617   Any Time

Rimrock Mall

  Fixed     7.57 %   41,430     3,840     10/1/11     40,025   Any Time

Salisbury, Center at

  Fixed     5.83 %   115,000     6,660     5/1/16     115,000   Any Time

Santa Monica Place

  Fixed     7.79 %   76,652     7,272     11/1/10     75,544   Any Time

SanTan Village Regional Center(15)

  Floating     2.93 %   136,142     3,408     6/13/11     136,142   Any Time

Shoppingtown Mall

  Fixed     5.01 %   41,381     3,828     5/11/11     38,968   Any Time

South Plains Mall(16)

  Fixed     9.49 %   53,936     5,448     3/1/29       Any Time

South Towne Center

  Fixed     6.39 %   88,854     6,648     11/5/15     81,161   Any Time

Towne Mall

  Fixed     4.99 %   13,869     1,200     11/1/12     12,316   Any Time

Tucson La Encantada(2)

  Fixed     5.84 %   77,497     4,344     6/1/12     74,931   Any Time

Twenty Ninth Street(17)

  Fixed     10.02 %   106,703     5,604     3/25/11     104,425   Any Time

Valley River Center

  Fixed     5.59 %   120,000     6,696     2/1/16     120,000   Any Time

Valley View Center

  Fixed     5.81 %   125,000     7,152     1/1/11     125,000   Any Time

Victor Valley, Mall of(18)

  Floating     2.09 %   100,000     1,836     5/6/11     100,000   Any Time

Vintage Faire Mall

  Fixed     7.92 %   62,186     6,096     9/1/10     61,372   Any Time

Westside Pavilion(19)

  Floating     3.24 %   175,000     3,912     6/5/11     175,000   Any Time

Wilton Mall(20)

  Fixed     11.08 %   39,575     4,188     11/1/29       Any Time
                                     

            $ 3,236,036                      
                                     

28


Table of Contents

Property Pledged as Collateral
  Fixed or
Floating
  Annual
Interest
Rate(1)
  Carrying
Amount(1)
  Annual
Debt
Service
  Maturity
Date
  Balance Due
on Maturity
  Earliest Date
Notes Can Be
Defeased or Be
Prepaid

Unconsolidated Joint Venture Centers (at Company's Pro Rata Share):

                                     

Arrowhead Towne Center (33.3%)

  Fixed     6.38 % $ 25,416   $ 2,217     10/1/11   $ 24,060   Any Time

Biltmore Fashion Park (50%)

  Fixed     8.25 %   29,967     2,641     10/1/14     28,725   4/1/12

Boulevard Shops (50%)(21)

  Floating     1.15 %   10,700     123     12/17/10     10,700   Any Time

Broadway Plaza (50%)(2)

  Fixed     6.12 %   73,785     5,460     8/15/15     67,443   Any Time

Camelback Colonnade (75%)(22)

  Floating     1.11 %   31,125     293     10/9/10     31,125   Any Time

Cascade (51%)(23)

  Fixed     5.28 %   19,435     1,362     7/1/10     19,342   Any Time

Chandler Festival (50%)

  Fixed     6.39 %   14,850     1,086     11/1/15     14,145   Any Time

Chandler Gateway (50%)

  Fixed     6.37 %   9,450     691     11/1/15     9,001   Any Time

Chandler Village Center (50%)(24)

  Floating     1.43 %   8,643     112     1/15/11     8,643   Any Time

Corte Madera, The Village at (50.1%)

  Fixed     7.27 %   40,048     3,265     11/1/16     36,696   11/1/12

Desert Sky Mall (50%)(25)

  Floating     1.33 %   25,750     343     3/4/10     25,750   Any Time

Eastland Mall (50%)

  Fixed     5.80 %   84,000     4,867     6/1/16     84,000   Any Time

Empire Mall (50%)

  Fixed     5.81 %   88,150     5,104     6/1/16     88,150   Any Time

Estrella Falls, The Market at (32.9%)(26)

  Floating     2.52 %   11,590     231     6/1/11     11,590   Any Time

FlatIron Crossing (25%)(27)

  Fixed     5.26 %   45,144     3,306     12/1/13     41,047   Any Time

Granite Run (50%)

  Fixed     5.84 %   58,291     4,311     6/1/16     51,604   Any Time

Inland Center (50%)

  Fixed     5.06 %   25,602     1,280     2/11/11     25,602   Any Time

Kierland Greenway (24.5%)

  Fixed     6.02 %   15,035     1,144     1/1/13     13,679   Any Time

Kierland Main Street (24.5%)

  Fixed     4.99 %   3,696     184     1/2/13     3,507   Any Time

Kierland Tower Lofts (15%)(28)

  Floating     3.25 %   1,049     56     11/18/10     1,049   Any Time

Kitsap Mall/Place (51%)(23)

  Fixed     8.14 %   28,342     2,755     6/1/10     28,143   Any Time

Lakewood Center (51%)

  Fixed     5.43 %   127,500     6,899     6/1/15     127,500   Any Time

Los Cerritos Center (51%)(29)

  Floating     1.12 %   102,000     951     7/1/11     102,000   Any Time

Mesa Mall (50%)

  Fixed     5.82 %   43,625     2,528     6/1/16     43,625   Any Time

Metrocenter Mall (15%)(30)

  Floating     1.71 %   16,800     197     2/9/10     16,800   Any Time

Metrocenter Mall (15%)(31)

  Floating     3.68 %   3,240     119     2/9/10     3,240   Any Time

North Bridge, The Shops at (50%)(2)

  Fixed     7.52 %   102,037     8,600     6/15/16     94,258   Any Time

NorthPark Center (50%)(32)

  Fixed     8.33 %   40,514     3,996     5/10/12     38,919   Any Time

Northpark Center (50%)(32)

  Fixed     5.97 %   90,660     6,409     5/10/12     86,928   Any Time

NorthPark Land (50%)

  Fixed     8.33 %   39,133     3,860     5/10/12     37,592   Any Time

Pacific Premier Retail Trust (51%)(23)

  Floating     7.28 %   37,740     2,264     8/21/11     37,740   Any Time

Queens Center (51%)(33)

  Fixed     7.78 %   65,602     5,879     3/1/13     62,186   Any Time

Queens Center (51%)(6)(33)

  Fixed     7.00 %   106,708     9,736     3/1/13     99,094   Any Time

Redmond Office (51%)

  Fixed     7.52 %   31,213     3,057     5/15/14     27,561   Any Time

Ridgmar (50%)

  Fixed     6.11 %   28,700     1,743     4/11/10     28,700   Any Time

Rushmore (50%)

  Fixed     5.82 %   47,000     2,723     6/1/16     47,000   Any Time

SanTan Village Power Center (34.9%)

  Fixed     5.33 %   15,705     837     2/1/12     15,705   Any Time

Scottsdale Fashion Square (50%)

  Fixed     5.66 %   275,000     15,565     7/8/13     275,000   Any Time

Southern Hills (50%)

  Fixed     5.82 %   50,750     2,940     6/1/16     50,750   Any Time

Stonewood Mall (51%)

  Fixed     7.44 %   36,749     3,298     12/11/10     36,244   Any Time

Superstition Springs Center (33.3%)(34)

  Floating     0.60 %   22,498     136     9/9/10     22,498   Any Time

Tyson's Corner Center (50%)

  Fixed     4.78 %   162,411     11,232     2/17/14     146,711   Any Time

Valley Mall (50%)

  Fixed     5.85 %   22,670     118     6/1/16     20,085   Any Time

Washington Square (51%)

  Fixed     6.04 %   115,983     8,439     1/1/16     105,324   Any Time

Washington Square (51%)

  Fixed     6.00 %   10,085     734     1/1/16     9,159   Any Time

West Acres (19%)

  Fixed     6.41 %   12,543     1,069     10/1/16     10,316   Any Time

Wilshire Building (30%)

  Fixed     6.35 %   1,804     154     1/1/33       Any Time
                                     

            $ 2,258,738                      
                                     

(1)
The mortgage notes payable balances include the unamortized debt premiums (discounts). Debt premiums (discounts) represent the excess (deficiency) of the fair value of debt over (under) the principal value of debt assumed in various acquisitions. The debt premiums (discounts) are being amortized into interest expense over the term of the related debt, in a manner which approximates the effective interest method. The annual interest rate in the above table represents the effective interest rate, including the debt premiums (discounts), loan finance costs and notional amounts covered by interest rate swap agreements.

29


Table of Contents

Property Pledged as Collateral
   
 

Danbury Fair Mall

  $ 4,938  

Deptford Mall

    (36 )

Freehold Raceway Mall

    5,507  

Great Northern Mall

    (110 )

Hilton Village

    (36 )

Shoppingtown Mall

    1,565  

Towne Mall

    277  
       

  $ 12,105  
       

Property Pledged as Collateral
   
 

Arrowhead Towne Center

  $ 191  

Kierland Greenway

    444  

Tysons Corner

    2,366  

Wilshire Building

    (121 )
       

  $ 2,880  
       
(2)
Northwestern Mutual Life ("NML") is the lender of this loan. NML is considered a related party as it is a joint venture partner with the Company in Broadway Plaza.

(3)
The loan was extended to May 1, 2010 and has extension options to extend the maturity date to May 1, 2011.

(4)
On September 30, 2009, 49.9% of the loan was assumed by a third party in connection with entering into a co-venture arrangement with that unrelated party. See "Recent Developments—Acquisitions and Dispositions".

(5)
In addition to monthly principal and interest payments, contingent interest, as defined in the loan agreement, may be due to the extent that 35% of the amount by which the property's gross receipts exceeds a base amount. Contingent interest expense recognized by the Company was ($331) for the year ended December 31, 2009.

(6)
NML is the lender for 50% of the loan.

(7)
The loan bears interest at LIBOR plus 0.88%. On December 30, 2009, the loan was extended to December 9, 2010 with extension options through June 9, 2012, subject to certain conditions. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 3.0% over the loan term. The total interest rate was 2.11% at December 31, 2009.

(8)
On December 29, 2009, the Company placed a construction loan on the property that allows for total borrowings of up to $60,000, bears interest at LIBOR plus 4.50% with a total interest rate floor of 6.0% and matures on January 1, 2013, with two one-year extension options. The loan includes an option for additional borrowings of up to $20,000, depending on certain conditions. At December 31, 2009, the total interest rate was 6.90%.

(9)
On June 1, 2009, the Company extended the loan until January 1, 2011 at an interest rate of 8.20%. On February 12, 2010, the entire loan was paid off.

(10)
The loan bears interest at LIBOR plus 1.75% and matures on July 10, 2011, with two one-year extension options. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 6.25% over the loan term. At December 31, 2009, the total interest rate was 2.28%.

(11)
The construction loan allows for total borrowings of up to $135,000, bears interest at LIBOR plus a spread of 1.75% to 2.10%, depending on certain conditions and matures on July 10, 2011, with two one-year extension options. The Company placed an interest rate swap agreement on the loan that effectively converts $88,297 of the loan amount from floating rate debt to fixed rate debt of 6.90% until April 15, 2010. At December 31, 2009, the total interest rate, excluding the swapped portion, was 2.83%.

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(12)
The loan bears interest at LIBOR plus 0.85% and matures on February 28, 2010, with a one-year extension option. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 6.65% over the loan term. At December 31, 2009, the total interest rate was 1.31%. The Company is in the process of extending this loan.

(13)
On May 1, 2009, the existing loan was paid off in full. On August 31, 2009, the Company placed a new $85,000 loan on the property that bears interest at LIBOR plus 4.0% with a total interest rate floor of 5.50% and matures on August 31, 2012, with two one-year extension options. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 5.0% over the loan term. At December 31, 2009, the total interest rate was 6.30%.

(14)
The loan bears interest at LIBOR plus a spread of 1.20% to 1.40%, depending on certain conditions. The loan matures on August 16, 2010, with a one-year extension option, subject to certain conditions. At December 31, 2009, the total interest rate was 1.70%.

(15)
The construction loan on the property allows for total borrowings of up to $150,000 and bears interest at LIBOR plus a spread of 2.10% to 2.25%, depending on certain conditions. The loan matures on June 13, 2011, with two one-year extension options. At December 31, 2009, the total interest rate was 2.93%.

(16)
On March 1, 2009, the interest rate on the loan was increased from 7.49% to 9.49% and the loan was extended to March 1, 2029.

(17)
On March 25, 2009, the loan was modified to bear interest at LIBOR plus 3.40% and matures on March 25, 2011, with a one-year extension option. The Company placed an interest rate swap agreement on the loan that effectively converts the loan from floating rate debt to fixed rate debt of 10.02% until April 15, 2010.

(18)
The loan bears interest at LIBOR plus 1.60% and matures on May 6, 2011, with two one-year extension options. At December 31, 2009, the total interest rate on the new loan was 2.09%.

(19)
The loan bears interest at LIBOR plus 2.00% and matures on June 5, 2011, with two one-year extension options. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 5.50% until June 1, 2010. At December 31, 2009, the total interest rate on the loan was 3.24%.

(20)
On November 1, 2009, the interest rate on the loan was increased from 8.58% to 11.08% and the loan was extended to November 1, 2029.

(21)
The loan bears interest at LIBOR plus 0.90% and matures on December 17, 2010. At December 31, 2009, the total interest rate was 1.15%.

(22)
The loan bears interest at LIBOR plus 0.69% and matures on October 9, 2010. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 8.54% over the loan term. At December 31, 2009, the total interest rate was 1.11%.

(23)
On August 21, 2009, the joint venture replaced the existing loans on Redmond Town Center with a $74,000 loan draw on its credit facility that is cross-collateralized by Redmond Town Center, Cross Court Plaza and Northpoint Plaza, bears interest at LIBOR plus 4.0% with a 2.0% LIBOR floor and matures on August 21, 2011, with a one-year extension option. On February 1, 2010, the joint venture borrowed an additional $81,000 under the facility and paid off the existing loans on Cascade Mall, Kitsap Mall and Kitsap Place and added those properties as collateral. At December 31, 2009, the total interest rate was 7.28%.

(24)
The loan bears interest at LIBOR plus 1.00% and matures on January 15, 2011. At December 31, 2009, the total interest rate was 1.43%.

(25)
The loan bears interest at LIBOR plus 1.10% and matures on March 4, 2010, with a one-year extension option. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 7.65% over the term. At December 31, 2009, the total interest rate was 1.33%.

(26)
The construction loan allows for total borrowings of up to $80,000, bears interest at LIBOR plus a spread of 1.50% to 1.60%, depending on certain conditions, and matures on June 1, 2011, with two one-year extension options. At December 31, 2009, the total interest rate was 2.52%.

(27)
On September 3, 2009, 75.0% of the loan was assumed by third party in connection with a sale to that party of 75.0% of the underlying property. See "Recent Developments—Acquisitions and Dispositions".

(28)
The loan bears interest at LIBOR plus 3.0% and matures in November 2010. At December 31, 2009, the total interest rate was 3.25%.

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(29)
The original loan bears interest at LIBOR plus 0.55% and matures in July 2011. On August 18, 2009, the joint ventured borrowed an additional $70,000 at a rate of LIBOR plus 0.90%. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 8.55% until July 1, 2010. At December 31, 2009, the total interest rate was 1.12%.

(30)
The loan bears interest at LIBOR plus 0.94% with a maturity date of February 9, 2010. The majority owner of the joint venture is currently negotiating with the lender. At December 31, 2009, the total interest rate was 1.71%.

(31)
The construction loan bears interest at LIBOR plus 3.45% with a maturity date of February 9, 2010. The majority owner of the joint venture is currently negotiating with the lender. At December 31, 2009, the total interest rate was 3.68%.

(32)
Contingent interest, as defined in the loan agreement, is due upon the occurrence of certain capital events and is equal to 15% of proceeds less a base amount.

(33)
On July 30, 2009, 49.0% of the loan was assumed by a third party in connection with a sale to that party of 49.0% of the underlying property. See "Recent Developments—Acquisitions and Dispositions".

(34)
The loan bears interest at LIBOR plus 0.37% and matures on September 9, 2010, with a one-year extension option. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 8.63% over the loan term. At December 31, 2009, the total interest rate was 0.60%.

ITEM 3.    LEGAL PROCEEDINGS

        None of the Company, the Operating Partnership, the Management Companies or their respective affiliates are currently involved in any material legal proceedings nor, to the Company's knowledge, are any material legal proceedings currently threatened against such entities or the Centers, other than routine litigation arising in the ordinary course of business, most of which is expected to be covered by liability insurance.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        The common stock of the Company is listed and traded on the New York Stock Exchange under the symbol "MAC". The common stock began trading on March 10, 1994 at a price of $19 per share. In 2009, the Company's shares traded at a high of $38.22 and a low of $5.45.

        As of February 16, 2010, there were approximately 754 stockholders of record. The following table shows high and low closing prices per share of common stock during each quarter in 2009 and 2008 and dividends/distributions per share of common stock declared and paid by quarter:

 
  Market Quotation
Per Share
   
 
 
  Dividends/
Distributions
Declared/Paid
 
Quarter Ended
  High   Low  

March 31, 2009

  $ 20.45   $ 5.45   $ 0.80  

June 30, 2009

    21.81     5.95     0.60 (1)

September 30, 2009

    35.60     14.46     0.60 (1)

December 31, 2009

    38.22     26.67     0.60 (1)

March 31, 2008

   
72.38
   
57.50
   
0.80
 

June 30, 2008

    76.50     60.52     0.80  

September 30, 2008

    70.98     51.52     0.80  

December 31, 2008

    62.70     8.31     0.80  

(1)
The dividend was paid 10% in cash and 90% in shares of common stock in accordance with stockholder elections (subject to proration).

        At December 31, 2008, the stockholders had converted all of the Company's outstanding shares of its Series A cumulative convertible redeemable preferred stock ("Series A Preferred Stock"). There was no established public trading market for the Series A Preferred Stock. The Series A Preferred Stock was issued on February 25, 1998. Preferred stock dividends were accrued quarterly and paid in arrears. The Series A Preferred Stock was convertible on a one for one basis into common stock and paid a quarterly dividend equal to the greater of $0.46 per share, or the dividend then payable on a share of common stock. No dividends could be declared or paid on any class of common or other junior stock to the extent that dividends on Series A Preferred Stock had not been declared and/or paid. The following table shows the dividends per share of Series A Preferred Stock declared and paid by quarter in 2008:

 
  Series A Preferred
Stock Dividend
 
Quarter Ended
  Declared   Paid  

March 31, 2008

  $ 0.80   $ 0.80  

June 30, 2008

    0.80     0.80  

September 30, 2008

    0.80     0.80  

December 31, 2008

    N/A     0.80  

        To maintain its qualification as a REIT, the Company is required each year to distribute to stockholders at least 90% of its net taxable income after certain adjustments. Beginning during the second quarter of 2009, the Company paid its quarterly dividends in a combination of cash and shares of common stock, with the cash limited to 10% of the total dividend. Paying all or a portion of the dividend in a combination of cash and common stock would allow the Company to satisfy its REIT taxable income distribution requirement under existing requirements of the Code, while enhancing the Company's financial flexibility and balance sheet strength. The decision to declare and pay dividends on

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common stock in the future, as well as the timing, amount and composition of future dividends, will be determined in the sole discretion of the Company's board of directors and will depend on actual and projected cash flow, financial condition, funds from operations, earnings, capital requirements, the annual REIT distribution requirements, contractual prohibitions or other restrictions, applicable law and such other factors as the board of directors deems relevant. For example, under the Company's existing financing arrangements, the Company may pay cash dividends and make other distributions based on a formula derived from funds from operations (See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Funds From Operations") and only if no default under the financing agreements has occurred, unless, under certain circumstances, payment of the distribution is necessary to enable the Company to continue to qualify as a REIT under the Code.

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Stock Performance Graph

        The following graph provides a comparison, from December 31, 2004 through December 31, 2009, of the yearly percentage change in the cumulative total stockholder return (assuming reinvestment of dividends) of the Company, the Standard & Poor's ("S&P") 500 Index, the S&P Midcap 400 Index and the FTSE NAREIT Equity Index, an industry index of publicly-traded REITs (including the Company). The Company is providing the S&P Midcap 400 Index since it is a company within such index.

        The graph assumes that the value of the investment in each of the Company's common stock and the indices was $100 at the beginning of the period. The graph further assumes the reinvestment of dividends.

        Upon written request directed to the Secretary of the Company, the Company will provide any stockholder with a list of the REITs included in the FTSE NAREIT Equity Index. The historical information set forth below is not necessarily indicative of future performance. Data for the FTSE NAREIT Equity Index, the S&P 500 Index and the S&P Midcap 400 Index were provided to the Company by Research Data Group, Inc.

GRAPHIC

        Copyright© 2010 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

 
  12/31/04   12/31/05   12/31/06   12/31/07   12/31/08   12/31/09  

The Macerich Company

  $ 100.00   $ 111.47   $ 149.27   $ 126.74   $ 34.88   $ 79.81  

S&P 500 Index

    100.00     104.91     121.48     128.16     80.74     102.11  

S&P Midcap 400 Index

    100.00     112.55     124.17     134.08     85.50     117.46  

FTSE NAREIT Equity Index

    100.00     112.16     151.49     127.72     79.53     101.79  

Recent Sales of Unregistered Securities

        On December 4, 2009, the Company, as general partner of the Operating Partnership, issued 6,963 shares of common stock of the Company upon the redemption of 6,963 common partnership units of the Operating Partnership. These shares of common stock were issued in a private placement to two limited partners of the Operating Partnership, each an accredited investor, pursuant to Section 4(2) of the Securities Act of 1933, as amended.

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ITEM 6.    SELECTED FINANCIAL DATA

        The following sets forth selected financial data for the Company on a historical basis. The following data should be read in conjunction with the consolidated financial statements (and the notes thereto) of the Company and "Management's Discussion and Analysis of Financial Condition and Results of Operations," each included elsewhere in this Form 10-K. All amounts are in thousands except per share data.

 
  Years Ended December 31,  
 
  2009   2008   2007   2006   2005  

OPERATING DATA:

                               

Revenues:

                               
   

Minimum rents(1)

  $ 474,261   $ 528,571   $ 466,071   $ 429,343   $ 383,856  
   

Percentage rents

    16,631     19,048     25,917     23,817     23,596  
   

Tenant recoveries

    244,101     262,238     242,012     224,340     192,769  
   

Management Companies

    40,757     40,716     39,752     31,456     26,128  
   

Other

    29,904     30,298     27,090     28,355     22,287  
                       
   

Total revenues

    805,654     880,871     800,842     737,311     648,636  

Shopping center and operating expenses

    258,174     281,613     253,258     230,463     200,305  

Management Companies' operating expenses

    79,305     77,072     73,761     56,673     52,840  

REIT general and administrative expenses

    25,933     16,520     16,600     13,532     12,106  

Depreciation and amortization

    262,063     269,938     209,101     193,589     168,917  

Interest expense

    267,045     295,072     260,862     259,958     226,432  

(Gain) loss on early extinguishment of debt(2)

    (29,161 )   (84,143 )   877     1,835     1,666  
                       
   

Total expenses

    863,359     856,072     814,459     756,050     662,266  

Equity in income of unconsolidated joint ventures(3)

    68,160     93,831     81,458     86,053     76,303  

Co-venture expense(4)

    (2,262 )                

Income tax benefit (provision)(5)

    4,761     (1,126 )   470     (33 )   2,031  

Gain (loss) on sale or write down of assets

    161,937     (30,911 )   12,146     (84 )   1,253  
                       
   

Income from continuing operations

    174,891     86,593     80,457     67,197     65,957  

Discontinued operations:(6)

                               
 

(Loss) gain on sale or write down of assets

    (40,171 )   99,625     (2,376 )   241,816     277  
 

Income from discontinued operations

    4,530     8,797     27,981     31,546     21,468  
                       
   

Total (loss) income from discontinued operations

    (35,641 )   108,422     25,605     273,362     21,745  
                       

Net income

    139,250     195,015     106,062     340,559     87,702  

Less net income (loss) attributable to noncontrolling interests

    18,508     28,966     29,827     96,010     (11,953 )
                       

Net income attributable to the Company

    120,742     166,049     76,235     244,549     99,655  

Less preferred dividends

        4,124     10,058     10,083     9,649  

Less adjustment to redemption value of redeemable noncontrolling interests

            2,046     17,062     183,620  
                       

Net income (loss) available to common stockholders

  $ 120,742   $ 161,925   $ 64,131   $ 217,404   $ (93,614 )
                       

Earnings per common share ("EPS") attributable to the Company—basic:

                               
 

Income from continuing operations

  $ 1.83   $ 0.92   $ 0.79   $ 0.64   $ 0.73  
 

Discontinued operations

    (0.38 )   1.25     0.09     2.41     (2.33 )
                       
 

Net income (loss) available to common stockholders

  $ 1.45   $ 2.17   $ 0.88   $ 3.05   $ (1.60 )
                       

EPS attributable to the Company—diluted:(7)(8)

                               
 

Income from continuing operations

  $ 1.83   $ 0.92   $ 0.79   $ 0.72   $ 0.73  
 

Discontinued operations

    (0.38 )   1.25     0.09     2.31     (2.33 )
                       
 

Net income (loss) available to common stockholders

  $ 1.45   $ 2.17   $ 0.88   $ 3.03   $ (1.60 )
                       

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  As of December 31,  
 
  2009   2008   2007   2006   2005  

BALANCE SHEET DATA:

                               

Investment in real estate (before accumulated depreciation)

  $ 6,697,259   $ 7,355,703   $ 7,078,802   $ 6,356,156   $ 6,017,546  

Total assets

  $ 7,252,471   $ 8,090,435   $ 7,937,097   $ 7,373,676   $ 6,986,005  

Total mortgage and notes payable

  $ 4,531,634   $ 5,940,418   $ 5,703,180   $ 4,993,879   $ 5,424,730  

Redeemable noncontrolling interests(9)

  $ 20,591   $ 23,327   $ 322,619   $ 322,710   $ 306,700  

Series A preferred stock(10)

  $   $   $ 83,495   $ 98,934   $ 98,934  

Equity(11)

  $ 2,128,466   $ 1,641,884   $ 1,434,701   $ 1,653,578   $ 847,568  

OTHER DATA:

                               

Funds from operations ("FFO")—diluted(12)

  $ 344,108   $ 461,515   $ 396,556   $ 383,122   $ 336,831  

Cash flows provided by (used in):

                               
 

Operating activities

  $ 120,890   $ 251,947   $ 326,070   $ 211,850   $ 235,296  
 

Investing activities

  $ 302,356   $ (558,956 ) $ (865,283 ) $ (126,736 ) $ (131,948 )
 

Financing activities

  $ (396,520 ) $ 288,265   $ 355,051   $ 29,208   $ (20,349 )

Number of Centers at year end

    86     92     94     91     97  

Regional Mall portfolio occupancy

    91.3 %   92.3 %   93.1 %   93.4 %   93.3 %

Regional Mall portfolio sales per square foot(13)

  $ 407   $ 441   $ 467   $ 452   $ 417  

Weighted average number of shares outstanding—EPS basic

   
81,226
   
74,319
   
71,768
   
70,826
   
59,279
 

Weighted average number of shares outstanding—EPS diluted(8)(9)

    81,226     86,794     84,760     88,058     73,573  

Distributions declared per common share

  $ 2.60   $ 3.20   $ 2.93   $ 2.75   $ 2.63  

(1)
Included in minimum rents is amortization of above and below-market leases of $9.6 million, $22.5 million, $10.3 million, $11.8 million and $10.7 million for the years ended December 31, 2009, 2008, 2007, 2006 and 2005, respectively.

(2)
The Company repurchased $89.1 million and $222.8 million of its Senior Notes during the years ended December 31, 2009 and 2008, respectively, that resulted in gain of $29.8 million and $84.1 million on the early extinguishment of debt for the years ended December 31, 2009 and 2008, respectively. The gain on early extinguishment of debt for the year ended December 31, 2009, was offset in part by a loss of $0.6 million on the early extinguishment of the term loan.

(3)
On July 30, 2009, the Company sold a 49% ownership interest in Queens Center to a third party for approximately $152.7 million, resulting in a gain on sale of assets of $154.2 million. The Company used the proceeds from the sale of the ownership interest in the property to pay down the term loan and for general corporate purposes. As of the date of the sale, the Company has accounted for the operations of Queens Center under the equity method of accounting.


On September 3, 2009, the Company formed a joint venture with a third party, whereby the Company sold a 75% interest in FlatIron Crossing and received approximately $123.8 million in cash proceeds for the overall transaction. The Company used the proceeds from the sale of the ownership interest in the property to pay down the term loan and for general corporate purposes. As part of this transaction, the Company issued three warrants for an aggregate of approximately 1.3 million shares of common stock of the Company. (See Note 15—Stockholders' Equity in the Company's Notes to the Consolidated Financial Statements). As of the date of the sale, the Company has accounted for the operations of FlatIron Crossing under the equity method of accounting.

(4)
On September 30, 2009, the Company formed a joint venture with a third party, whereby the third party acquired a 49.9% interest in Freehold Raceway Mall and Chandler Fashion Center. The Company received approximately $174.6 million in cash proceeds for the overall transaction. The Company used the proceeds from this transaction to pay down the Company's line of credit and

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(5)
The Company's Taxable REIT Subsidiaries are subject to corporate level income taxes (See Note 24—Income Taxes in the Company's Notes to the Consolidated Financial Statements).

(6)
Discontinued operations include the following:


On January 5, 2005, the Company sold Arizona Lifestyle Galleries. The sale of this property resulted in a gain on sale of asset of $0.3 million. The results of operations for the period January 1, 2005 to January 5, 2005 have been reclassified to discontinued operations.


On June 9, 2006, the Company sold Scottsdale 101 and the results for the period January 1, 2006 to June 9, 2006 and for the year ended December 31, 2005 have been classified as discontinued operations. The sale of Scottsdale 101 resulted in a gain on sale of asset of $62.7 million.


The Company sold Park Lane Mall on July 13, 2006 and the results for the period January 1, 2006 to July 13, 2006 and for the year ended December 31, 2005 have been classified as discontinued operations. The sale of Park Lane Mall resulted in a gain on sale of asset of $5.9 million.


The Company sold Greeley Mall and Holiday Village Mall in a combined sale on July 27, 2006, and the results for the period January 1, 2006 to July 27, 2006 and the year ended December 31, 2005 have been classified as discontinued operations. The sale of these properties resulted in a gain on sale of assets of $28.7 million.


The Company sold Great Falls Marketplace on August 11, 2006, and the results for the period January 1, 2006 to August 11, 2006 and for the year ended December 31, 2005 have been classified as discontinued operations. The sale of Great Falls Marketplace resulted in a gain on sale of asset of $11.8 million.


The Company sold Citadel Mall, Crossroads Mall and Northwest Arkansas Mall in a combined sale on December 29, 2006, and the results for the period January 1, 2006 to December 29, 2006 and the year ended December 31, 2005 have been classified as discontinued operations. The sale of these properties resulted in a gain on sale of assets of $132.7 million.


In addition, the Company recorded an additional loss of $2.4 million in 2007 related to the sale of properties in 2006.


On January 1, 2008, MACWH, LP, a subsidiary of the Operating Partnership, at the election of the holders, redeemed the 3.4 million participating convertible preferred units ("PCPUs") in exchange for the 16.32% noncontrolling interest in the Non-Rochester Properties, in exchange for the Company's ownership interest in the Rochester Properties. As a result of the Rochester Redemption, the Company recognized a gain of $99.1 million on the exchange (See Note 17—Discontinued Operations—Rochester Redemption in the Company's Notes to the Consolidated Financial Statements).


The Company sold the fee simple and/or ground leasehold interests in three former Mervyn's stores to Pacific Premier Retail Trust, one of its joint ventures, on December 19, 2008, and the results for the period of January 1, 2008 to December 19, 2008 and for the year ended December 31, 2007 have been classified as discontinued operations. The sale of these interests resulted in a gain on sale of assets of $1.5 million.


In June 2009, the Company recorded an impairment charge of $26.0 million, as it relates to the fee and/or ground leasehold interests in five former Mervyn's stores due to the anticipated loss on the sale of these properties in July 2009. The Company subsequently sold the properties in July 2009 for $52.7 million in total proceeds, resulting in an additional $0.5 million loss related to transaction

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In June 2009, the Company recorded an impairment charge of $1.0 million, as it related to the anticipated loss on the sale of Village Center, a 170,801 square foot urban village property, in July 2009. The Company subsequently sold the property on July 14, 2009 for $11.9 million in total proceeds, resulting in a gain of $0.1 million related to a change in estimate in transaction costs. The Company used the proceeds from the sale to pay down the term loan and for general corporate purposes.


On September 29, 2009, the Company sold a leasehold interest in a former Mervyn's store for $4.5 million, resulting in a gain on sale of $4.1 million. The Company used the proceeds from the sale to pay down the Company's line of credit and for general corporate purposes.


During the fourth quarter of 2009, the Company sold five non-core community centers for $71.3 million, resulting in an aggregate loss on sales of $16.9 million. The Company used the proceeds from these sales to pay down the Company's line of credit and for general corporate purposes.


The Company has classified the results of operations and gain or loss on sale for all of the above dispositions during the year ended December 31, 2009 as discontinued operations for the years ended December 31, 2009, 2008, 2007, 2006 and 2005.

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Total revenues and income from discontinued operations were:

   
  Years Ended December 31,  
  (Dollars in millions)
  2009   2008   2007   2006   2005  
 

Revenues:

                               
   

Scottsdale/101

  $   $   $ 0.1   $ 4.7   $ 9.8  
   

Park Lane Mall

                1.5     3.1  
   

Holiday Village

        0.3     0.2     2.9     5.2  
   

Greeley Mall

                4.3     7.0  
   

Great Falls Marketplace

                1.8     2.7  
   

Citadel Mall

                15.7     15.3  
   

Northwest Arkansas Mall

                12.9     12.6  
   

Crossroads Mall

                11.5     10.9  
   

Mervyn's

    3.0     11.8     0.5          
   

Rochester Properties

            83.1     80.0     51.7  
   

Village Center

    0.9     2.0     2.1     1.9     1.9  
   

Village Plaza

    1.8     2.1     2.1     2.1     1.9  
   

Village Crossroads

    2.1     2.6     2.7     2.2     1.8  
   

Village Square I

    0.6     0.7     0.7     0.7     0.7  
   

Village Square II

    1.3     1.9     1.9     1.8     1.8  
   

Village Fair North

    3.3     3.6     3.7     3.5     3.4  
                         
   

Total

  $ 13.0   $ 25.0   $ 97.1   $ 147.5   $ 129.8  
                         
 

Income from operations:

                               
   

Scottsdale/101

  $   $   $   $ 0.8   $ 0.2  
   

Park Lane Mall

                    0.8  
   

Holiday Village

        0.3     0.2     1.2     2.8  
   

Greeley Mall

            (0.1 )   0.6     0.9  
   

Great Falls Marketplace

                1.1     1.7  
   

Citadel Mall

            (0.1 )   2.5     1.8  
   

Northwest Arkansas Mall

                3.4     2.9  
   

Crossroads Mall

                2.3     3.2  
   

Mervyn's

        2.5     0.2          
   

Rochester Properties

            21.9     14.5     3.9  
   

Village Center

    0.4     0.6     0.6     0.6     0.2  
   

Village Plaza

    0.8     1.3     1.1     1.1     0.7  
   

Village Crossroads

    1.1     1.4     1.5     1.1     0.6  
   

Village Square I

    0.2     0.3     0.4     0.4     0.2  
   

Village Square II

    0.4     0.8     0.9     0.9     0.5  
   

Village Fair North

    1.6     1.6     1.4     1.0     1.1  
                         
   

Total

  $ 4.5   $ 8.8   $ 28.0   $ 31.5   $ 21.5  
                         
(7)
Assumes the conversion of Operating Partnership units to the extent they are dilutive to the EPS computation. It also assumes the conversion of MACWH, LP common and preferred units to the extent that they are dilutive to the EPS computation.

(8)
Includes the dilutive effect, if any, of share and unit-based compensation plans and Senior Notes calculated using the treasury stock method and the dilutive effect, if any, of all other dilutive securities calculated using the "if converted" method.

(9)
Redeemable noncontrolling interests include the PCPUs and other redeemable equity interests not included within equity.

(10)
The holder of the Series A Preferred Stock converted approximately 0.6 million, 0.7 million, 1.3 million and 1.0 million shares to common shares on October 18, 2007, May 6, 2008, May 8, 2008 and September 17, 2008, respectively. As of December 31, 2008, there was no Series A Preferred Stock outstanding.

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(11)
Equity includes the noncontrolling interests in the Operating Partnership, nonredeemable interests in consolidated joint ventures and common and non-participating preferred units of MACWH, L.P.

(12)
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 Generally Accepted Accounting Principles ("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. The Company also adjusts FFO for the noncontrolling interest due to redemption value on the Rochester Properties (See Note 17—Discontinued Operations in the Company's Notes to the Consolidated Financial Statements.)


FFO and FFO on a fully 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. In addition, consistent with the key objective of FFO as a measure of operating performance, the adjustment of FFO for the noncontrolling interest in redemption value provides a more meaningful measure of the Company's operating performance between periods without reference to the non-cash charge related to the adjustment in noncontrolling interest due to redemption value. 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 fully 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.


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 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 and considered in addition to cash flows in accordance with GAAP, as presented in the Company's Consolidated Financial Statements. For disclosure of net income, the most directly comparable GAAP financial measure, for the periods presented and a reconciliation of FFO and FFO—diluted to net income, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Funds from Operations."


The computation of FFO—diluted includes the effect of share and unit-based compensation plans and convertible senior notes calculated using the treasury stock method. It also assumes the conversion of MACWH, LP common and preferred units and all other securities to the extent that they are dilutive to the FFO computation (See Note 16—Acquisitions in the Company's Notes to the Consolidated Financial Statements). On February 25, 1998, the Company sold $100 million of its Series A Preferred Stock. The Preferred Stock was convertible on a one-for-one basis for common stock. The Series A Preferred Stock then outstanding was dilutive to FFO for all periods presented and was dilutive to net income in 2006.

(13)
Sales are based on reports by retailers leasing Mall Stores and Freestanding Stores for the trailing 12 months for tenants which have occupied such stores for a minimum of 12 months. Sales per square foot are based on tenants 10,000 square feet and under for Regional Malls. Year ended 2007 sales per square foot were $467 after giving effect to the Rochester Redemption and including The Shops at North Bridge.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Overview and Summary

        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 December 31, 2009, the Operating Partnership owned or had an ownership interest in 72 regional shopping centers and 14 community shopping centers totaling approximately 75 million square feet of GLA. These 86 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 Company's Management Companies.

        The following discussion is based primarily on the consolidated financial statements of the Company for the years ended December 31, 2009, 2008 and 2007. It compares the results of operations and cash flows for the year ended December 31, 2009 to the results of operations and cash flows for the year ended December 31, 2008. Also included is a comparison of the results of operations and cash flows for the year ended December 31, 2008 to the results of operations and cash flows for the year ended December 31, 2007. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

        The financial statements reflect the following acquisitions, dispositions and changes in ownership subsequent to the occurrence of each transaction.

        On September 5, 2007, the Company purchased the remaining 50% outside ownership interest in Hilton Village, a 96,985 square foot specialty center in Scottsdale, Arizona. The total purchase price of $13.5 million was funded by cash, borrowings under the Company's line of credit and the assumption of a mortgage note payable. The Center was previously accounted for under the equity method as an investment in unconsolidated joint ventures.

        On December 17, 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. The purchase price of $400.2 million was funded by cash and borrowings under the Company's line of credit.

        On January 1, 2008, a subsidiary of the Operating Partnership, at the election of the holders, redeemed its 3.4 million Class A participating convertible preferred units ("PCPUs"). As a result of the redemption, the Company received the 16.32% noncontrolling interest in the portion of the Wilmorite portfolio acquired on April 25, 2005 that included Danbury Fair Mall, Freehold Raceway Mall, Great Northern Mall, Rotterdam Square, Shoppingtown Mall, Towne Mall, Tysons Corner Center and Wilton Mall, collectively, referred to as the "Non-Rochester Properties," for total consideration of $224.4 million, in exchange for the Company's ownership interest in the portion of the Wilmorite portfolio that consisted of Eastview Mall, Eastview Commons, Greece Ridge Center, Marketplace Mall and Pittsford Plaza, collectively referred to as the "Rochester Properties." Included in the redemption consideration was the assumption of the remaining 16.32% noncontrolling interest in the indebtedness of the Non-Rochester Properties, which had an estimated fair value of $106.0 million. In addition, the Company also received additional consideration of $11.8 million, in the form of a note, for certain working capital adjustments, extraordinary capital expenditures, leasing commissions, tenant allowances, and decreases in indebtedness during the Company's period of ownership of the Rochester Properties. The Company recognized a gain of $99.1 million on the exchange. This exchange is referred to herein as the "Rochester Redemption."

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        On January 10, 2008, the Company, in a 50/50 joint venture, acquired The Shops at North Bridge, a 680,933 square foot urban shopping center in Chicago, Illinois, for a total purchase price of $515.0 million. The Company's share of the purchase price was funded by the assumption of a pro rata share of the $205.0 million fixed rate mortgage on the Center and by borrowings under the Company's line of credit.

        On January 31, 2008, the Company purchased a ground leasehold interest in a freestanding Mervyn's store located in Hayward, California. The purchase price of $13.2 million was funded by cash and borrowings under the Company's line of credit.

        On February 29, 2008, the Company purchased a fee simple interest in a freestanding Mervyn's store located in Monrovia, California. The purchase price of $19.3 million was funded by cash and borrowings under the Company's line of credit.

        On May 20, 2008, the Company purchased a fee simple interest in a 161,350 square foot Boscov's department store at Deptford Mall in Deptford, New Jersey. The total purchase price of $23.5 million was funded by the assumption of the existing $15.2 million mortgage note on the property and by borrowings under the Company's line of credit. This transaction is referred to herein as the "2008 Acquisition Property."

        On June 11, 2008, the Company became a 50% owner in a joint venture that acquired One Scottsdale, which plans to develop a mixed-use property in Scottsdale, Arizona. The Company's share of the purchase price was $52.5 million, which was funded by borrowings under the Company's line of credit.

        On December 19, 2008, the Company sold a fee and/or ground leasehold interest in three freestanding Mervyn's department stores to Pacific Premier Retail Trust, one of the Company's joint ventures, for $43.4 million, resulting in a gain on sale of assets of $1.5 million. The proceeds were used to pay down the Company's line of credit.

        In June 2009, the Company recorded an impairment charge of $1.0 million, related to the anticipated loss on the sale of Village Center, a 170,801 square foot urban village property, in July 2009. The Company subsequently sold the property on July 14, 2009 for $11.9 million in total proceeds, resulting in a gain of $0.1 million related to a change in estimate in transaction costs. The Company used the proceeds from the sale to pay down the term loan and for general corporate purposes.

        On July 30, 2009, the Company sold a 49% ownership interest in Queens Center to a third party for approximately $152.7 million, resulting in a gain on sale of assets of $154.2 million. The Company used the proceeds from the sale of the ownership interest in the property to pay down the Company's term loan and for general corporate purposes. As of the date of the sale, the Company has accounted for the operations of Queens Center under the equity method of accounting.

        On September 3, 2009, the Company formed a joint venture with a third party whereby the Company sold a 75% interest in FlatIron Crossing. As part of this transaction, the Company issued three warrants for an aggregate of 1,250,000 shares of common stock of the Company (See Note 15—Stockholders' Equity in the Notes to Company's Consolidated Financial Statements.) The Company received $123.8 million in cash proceeds for the overall transaction, of which $8.1 million was attributed to the warrants. The proceeds attributable to the interest sold exceeded the Company's carrying value in the interest sold by $28.7 million. However, due to certain contractual rights afforded to the buyer of the interest in FlatIron Crossing, the Company has only recognized a gain on sale of $2.5 million. The Company used the proceeds from the sale of the ownership interest to pay down the term loan and for general corporate purposes. As of the date of the sale, the Company has accounted for the operations of FlatIron Crossing under the equity method of accounting.

        Queens Center and FlatIron Crossing are referred to herein as the "Joint Venture Centers."

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        On September 30, 2009, the Company formed a joint venture with a third party, whereby the third party acquired a 49.9% interest in Freehold Raceway Mall and Chandler Fashion Center. The Company received approximately $174.6 million in cash proceeds for the overall transaction. The Company used the proceeds from this transaction to pay down the Company's line of credit and for general corporate purposes. As part of this transaction, the Company issued a warrant for an aggregate of 935,358 shares of common stock of the Company. (See Note 15—Stockholders' Equity in the Company's Notes to Consolidated Financial Statements). 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 has been established for the amount of $168.2 million representing the net cash proceeds received from the third party less costs allocated to the warrant.

        During the fourth quarter of 2009, the Company sold five non-core community centers for $71.3 million, resulting in aggregate loss on sales of $16.9 million. The Company used the proceeds from these sales to pay down the Company's line of credit and for general corporate purposes.

        In July 2008, Mervyn's filed for bankruptcy protection and announced in October its plans to liquidate all merchandise, auction its store leases and wind down its business. The Company had 45 former Mervyn's stores in its portfolio. The Company owned the ground leasehold and/or fee simple interest in 44 of those stores and the remaining store was owned by a third party but is located at one of the Centers.

        In September 2008, the Company recorded a write-down of $5.2 million due to the anticipated rejection of six of the Company's leases by Mervyn's. In addition, the Company terminated its former plan to sell the 29 Mervyn's stores located at shopping centers not owned or managed by the Company. (See Note 17—Discontinued Operations in the Company's Notes to the Consolidated Financial Statements). The Company's decision was based on current conditions in the credit market and the assumption that a better return could be obtained by holding and operating the assets. As a result of the change in plans to sell, the Company recorded a loss of $5.3 million in order to adjust the carrying value of these assets for depreciation expense that otherwise would have been recognized had these assets been continuously classified as held and used.

        In December 2008, Kohl's and Forever 21 assumed a total of 23 of the Mervyn's leases and the remaining 22 leases were rejected by Mervyn's under the bankruptcy laws. As a result, the Company wrote off the unamortized intangible assets and liabilities related to the rejected and unassumed leases in December 2008. The Company wrote off $27.7 million of unamortized intangible assets related to lease in place values, leasing commissions and legal costs to depreciation and amortization. Unamortized intangible assets of $14.9 million relating to above market leases and unamortized intangible liabilities of $24.5 million relating to below market leases were written off to minimum rents.

        On December 19, 2008, the Company sold a fee and/or ground leasehold interest in three former Mervyn's stores to Pacific Premier Retail Trust, one of its joint ventures, for $43.4 million, resulting in a gain on sale of assets of $1.5 million. The Company's pro rata share of the proceeds was used to pay down the Company's line of credit.

        In June 2009, the Company recorded an impairment charge of $26.0 million, as it relates to the fee and/or ground leasehold interests in five former Mervyn's stores due to the anticipated loss on the sale of these properties in July 2009. The Company subsequently sold the properties in July 2009 for $52.7 million in total proceeds, resulting in an additional $0.5 million loss related to transaction costs. The Company used the proceeds from the sales to pay down the Company's term loan and for general corporate purposes.

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        On September 29, 2009, the Company sold a leasehold interest in a former Mervyn's store for $4.5 million, resulting in a gain on sale of $4.1 million. The Company used the proceeds from the sale to pay down the Company's line of credit and for general corporate purposes.

        The Mervyn's stores acquired in 2007 and 2008 are referred to herein as the "Mervyn's Properties."

        Northgate Mall, the Company's 712,771 square foot regional mall in Marin County, California, opened the first phase of its redevelopment on November 12, 2009. New anchor Kohl's was joined by retailers H&M, BJ's Restaurant, Children's Place, Chipotle, Gymboree, Hot Topic, PacSun, Panera Bread, See's Candies, Sunglass Hut, Tilly's and Vans. As of December 31, 2009, the Company incurred approximately $66.5 million of redevelopment costs for this Center and is estimating it will incur approximately $12.5 million of additional costs in 2010.

        Santa Monica Place in Santa Monica, California, is scheduled to open in August 2010 with anchors Bloomingdale's and Nordstrom. The Company recently announced deals with Tony Burch, Ben Bridge Jewelers and Charles David. As of December 31, 2009, the Company incurred approximately $163.2 million of redevelopment costs for this Center and is estimating it will incur approximately $101.8 million of additional costs in 2010.

        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 using an annual multiple of increases in the Consumer Price Index ("CPI"). In addition, about 6%-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. Additionally, historically the majority of the leases 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.

Critical Accounting Policies

        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

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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, 57% of the mall and freestanding 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:

Buildings and improvements

  5-40 years

Tenant improvements

  5-7 years

Equipment and furnishings

  5-7 years

        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 balance of 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 market 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

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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, and the asset or liability is amortized to minimum rents over the remaining terms of the leases.

        The Company assesses whether there has been impairment in the value of its long-lived assets 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. Costs relating to financing of shopping center properties are

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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:

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

Results of Operations

        Many of the variations in the results of operations, discussed below, occurred due to the transactions described above including the 2008 Acquisition Property, the Joint Venture Centers, the Mervyn's Properties and the Redevelopment Centers. For the comparison of the year ended December 31, 2009 to the year ended December 31, 2008, the "Same Centers" include all Consolidated Centers, excluding the 2008 Acquisition Property, the Mervyn's Properties, the Joint Venture Centers and the Redevelopment Centers as defined below. For the comparison of the year ended December 31, 2008 to the year ended December 31, 2007, the "Same Centers" include all consolidated Centers, excluding the 2008 Acquisition Property, the Mervyn's Properties and the Redevelopment Centers.

        For the comparison of the year ended December 31, 2009 to the year ended December 31, 2008, the "Redevelopment Centers" include The Oaks, Northgate Mall, Santa Monica Place and Shoppingtown Mall. For the comparison of the year ended December 31, 2008 to the year ended December 31, 2007, the "Redevelopment Centers" include The Oaks, Northgate Mall, Santa Monica Place, Shoppingtown Mall, Westside Pavilion, The Marketplace at Flagstaff, SanTan Village Regional Center and Promenade at Casa Grande.

        The U.S. economy, the real estate industry as a whole, and the local markets in which the Centers are located have in recent years experienced adverse economic conditions, resulting in an economic recession as well as disruptions in the capital and credit markets. These difficult economic conditions have adversely impacted consumer spending levels and the operating results of the Company's tenants. Regional Mall sales per square foot for 2009 declined by approximately 8% from 2008 to a level of $407 per square foot, continuing the downward trend that began in 2007. Regional Mall portfolio occupancy also has declined since 2007, with occupancy at December 31, 2009 at 91.3% compared to 92.3% at December 31, 2008. The Company's ability to lease space and negotiate rents at advantageous rates has been, and may continue to be, adversely affected in this type of economic environment, and more tenants may seek rent relief. The spread between rents on executed leases and expiring leases remains positive but decreased in 2009 compared to 2008. While the Company cannot predict how long these adverse conditions will continue, a further continuation could harm the Company's business, results of operations and financial condition.

Comparison of Years Ended December 31, 2009 and 2008

        Minimum and percentage rents (collectively referred to as "rental revenue") decreased by $56.7 million, or 10.4%, from 2008 to 2009. The decrease in rental revenue is attributed to a decrease of $32.1 million from the Joint Venture Centers, $26.9 million from the Mervyn's Properties and $7.4 million from the Same Centers which is offset in part by an increase of $8.9 million from the Redevelopment Centers and $0.8 million from the 2008 Acquisition Property. The decrease in rental

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revenue from the Mervyn's Properties is due to the rejection of 22 leases by Mervyn's under the bankruptcy laws in 2008, offset in part by the assumption of 23 of the Mervyn's leases by Kohls and Forever 21 as well as the sale of six of the Mervyn's stores in 2009. The Company is currently seeking replacement tenants for the remainder of the vacant Mervyn's spaces. If these spaces are not leased, this trend will continue throughout 2010. The decrease in Same Centers rental revenue is primarily attributed to a decrease in occupancy, a decrease in amortization of above and below market leases and a decrease in percentage rents due to a decrease in retail sales.

        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 decreased from $22.5 million in 2008 to $9.6 million in 2009. The amortization of straight-lined rents increased from $4.5 million in 2008 to $6.5 million in 2009. Lease termination income increased from $9.6 million in 2008 to $16.2 million in 2009. The decrease in the amortization of above and below market leases is primarily due to the early termination of Mervyn's leases in 2008 (See "Management's Overview and Summary—Mervyn's.").

        Tenant recoveries decreased $18.1 million, or 6.9%, from 2008 to 2009. The decrease in tenant recoveries is attributed to a decrease of $12.7 million from the Joint Venture Centers, $4.3 million from the Same Centers and $4.0 million from the Mervyn's Properties offset in part by an increase of $2.7 million from the Redevelopment Centers and $0.2 million from the 2008 Acquisition Property. The decrease in Same Centers is due to a decrease in recoverable operating expenses, utilities and property taxes.

        Shopping center and operating expenses decreased $23.4 million, or 8.3%, from 2008 to 2009. The decrease in shopping center and operating expenses is attributed to a decrease of $15.1 million from the Joint Venture Centers and $10.1 million from the Same Centers offset in part by an increase of $1.5 million from the Redevelopment Centers and $0.3 million from the 2008 Acquisition Property. The decrease in Same Centers is due to a decrease in recoverable operating expenses, utilities and property taxes.

        Management Companies' operating expenses increased $2.2 million from 2008 to 2009 due to severance costs paid in connection with the implementation of the Company's workforce reduction plan in 2009.

        REIT general and administrative expenses increased by $9.4 million from 2008 to 2009. The increase is primarily due to $7.3 million in transaction and other related costs relating to the Chandler Fashion Center and Freehold Raceway Mall transaction (See "Management Overview and Summary—Acquisitions and Dispositions") and $1.5 million in other compensation costs incurred in 2009.

        Depreciation and amortization decreased $7.9 million from 2008 to 2009. The decrease in depreciation and amortization is primarily attributed to a decrease of $11.4 million from the Mervyn's Properties and $8.5 million from the Joint Venture Centers offset in part by an increase of $4.6 million from the Same Centers, $2.9 million from the Redevelopment Centers and $0.3 million from the 2008 Acquisition Property. Included in the decrease of depreciation and amortization of Mervyn's Properties is the write-off of intangible assets as a result of the early termination of Mervyn's leases in 2008 (See "Management's Overview and Summary—Mervyn's.")

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        Interest expense decreased $28.0 million from 2008 to 2009. The decrease in interest expense was primarily attributed to a decrease of $12.1 million from the Senior Notes, $10.9 million from the Joint Venture Centers, $10.8 million from borrowings under the Company's line of credit and $9.0 million from the term loan offset in part by an increase of $8.5 million from the Redevelopment Centers, $5.7 million from the Same Centers and $0.6 million from the 2008 Acquisition Property.

        The decrease in interest expense on the Senior Notes is due to a reduction of weighted average outstanding principal balance from 2008 to 2009. The decrease in interest expense on the Company's line of credit was due to a decrease in average outstanding borrowings during 2009, due in part, to the proceeds from sale of the 2009 joint venture transactions (See "Management's Overview and Summary—Acquisitions and Dispositions") and the equity offering in 2009. (See "Liquidity and Capital Resources".)

        The above interest expense items are net of capitalized interest, which decreased from $33.3 million in 2008 to $21.3 million in 2009 due to a decrease in redevelopment activity in 2009 and a reduction in the cost of borrowing.

        Gain on early extinguishment of debt decreased from $84.1 million in 2008 to $29.2 million in 2009. The reduction in gain reflects a decrease in the amount of Senior Notes repurchased in 2009 compared to 2008. (See "Liquidity and Capital Resources").

        Equity in income of unconsolidated joint ventures decreased $25.7 million from 2008 to 2009. The decrease in equity in income from joint ventures is primarily attributed to $9.1 million of termination fee income received in 2008 and $7.6 million related to a write-down of assets at certain joint venture Centers in 2009.

        The gain (loss) on sale or write-down of assets increased from a loss of $30.9 million in 2008 to a gain of $161.9 million in 2009. The gain is primarily attributed to the gain of $156.7 million related to the sale of ownership interests in the Joint Venture Centers (See "Management's Overview and Summary—Acquisitions and Dispositions"), the impairment charge of $19.2 million in 2008 to reduce the carrying value of land held for development and a $5.3 million adjustment in 2008 to reduce the carrying value of Mervyn's stores that the Company had previously classified as held for sale (See "Management's Overview and Summary—Mervyn's").

        The Company recorded a loss from discontinued operations of $35.6 million in 2009 compared to income of $108.4 million in 2008. The reduction in income is primarily attributed to the $99.1 million gain from the Rochester Redemption in 2008 (See "Management's Overview and Summary—Acquisitions and Dispositions") and the loss on sale or write-down of assets of $40.2 million in 2009.

        Net income attributable to noncontrolling interests decreased from $29.0 million in 2008 to $18.5 million in 2009. The decrease in net income from noncontrolling interests is attributable to $16.3 million from the Rochester Redemption in 2008 and an increase in income from continuing operations.

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        Primarily as a result of the factors mentioned above, FFO—diluted decreased 25.4% from $461.5 million in 2008 to $344.1 million in 2009. For disclosure of net income, the most directly comparable GAAP financial measure, for the periods and a reconciliation of FFO and FFO—diluted to net income available to common stockholders, see "Funds from Operations."

        Cash provided by operations decreased from $251.9 million in 2008 to $120.9 million in 2009. The decrease was primarily due to changes in assets and liabilities in 2008 compared to 2009, an increase in accounts payable and other accrued liabilities and the results at the Centers as discussed above.

        Cash from investing activities increased from a deficit of $559.0 million in 2008 to a surplus of $302.4 million in 2009. The increase in cash provided by investing activities was primarily due to an increase in proceeds from the sale of assets of $370.3 million, a decrease in capital expenditures of $337.8 million, a decrease in contributions to unconsolidated joint ventures of $110.7 million and an increase in distributions from unconsolidated joint ventures of $27.4 million.

        The increase in proceeds from the sale of assets is due to the sale of the ownership interests in the Joint Venture Centers. The decrease in capital expenditures is primarily due to the purchase of a ground leasehold and fee simple interest in two Mervyn's stores in 2008 and the decrease in development activity in 2009. The decrease in contributions to unconsolidated joint ventures is primarily due to the Company's purchase of a pro rata share of The Shops at North Bridge for $155.0 million in 2008. See "Management's Overview and Summary—Acquisitions and Dispositions" for a discussion of the acquisition of The Shops at North Bridge, the Joint Venture Centers and Mervyn's.

        Cash flows from financing activities decreased from a surplus of $288.3 million in 2008 to a deficit of $396.5 million in 2009. The decrease in cash from financing activities was primarily attributed to decreases in cash provided by mortgages, bank and other notes payable of $1.3 billion and cash payments on mortgages, bank and other notes payable of $177.8 million offset in part by the net proceeds from the common stock offering in 2009 of $343.5 million, the decrease in dividends and distributions (See "Liquidity and Capital Resources") of $179.0 million and the contribution from a co-venture partner of $168.2 million. (See "Management's Overview and Summary—Acquisitions and Dispositions.")

Comparison of Years Ended December 31, 2008 and 2007

        Rental revenue increased by $55.6 million, or 11.3%, from 2007 to 2008. The increase in rental revenue is attributed to an increase of $37.4 million from the Mervyn's Properties, $13.9 million from the Redevelopment Centers, $3.0 million from the Same Centers and $1.3 million from the 2008 Acquisition Property. The increase in the revenues from the Same Centers is primarily due to rent escalations and lease renewals at higher rents, which was offset by decreases in lease termination income, amortization of straight-line rents and amortization of above and below market leases. The increase in the revenues from the Same Centers was also offset by a decrease of $6.3 million in percentage rents due to a decrease in retail sales.

        The amortization of above and below market leases increased from $10.3 million in 2007 to $22.5 million in 2008. The amortization of straight-lined rents decreased from $6.7 million in 2007 to

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$4.5 million in 2008. Lease termination income decreased from $9.7 million in 2007 to $9.6 million in 2008. The increase in above and below market leases is primarily due to the early termination of Mervyn's leases in 2008 (See "Management's Overview and Summary—Mervyn's").

        Tenant recoveries increased $20.2 million, or 8.4%, from 2007 to 2008. The increase in tenant recoveries is attributed to an increase of $9.7 million from the Same Centers, $5.5 million from the Mervyn's Properties, $4.7 from the Redevelopment Centers and $0.3 million from the 2008 Acquisition Property.

        Management Companies' revenues increased by $1.0 million from 2007 to 2008, primarily due to increased management fees received from the joint ventures, additional third party management contracts and increased development fees from joint ventures.

        Shopping center and operating expenses increased $28.4 million, or 11.2%, from 2007 to 2008. The increase in shopping center and operating expenses is attributed to an increase of $13.1 million from the Same Centers, $10.0 million from the Mervyn's Properties, $5.0 million from the Redevelopment Centers and $0.3 million from the 2008 Acquisition Property. The increase in Same Centers is primarily due to an increase in recoverable utility expenses and property taxes and a $2.0 million increase in bad debt expense.

        Management Companies' operating expenses increased $3.3 million from 2007 to 2008, in part as a result of the additional costs of managing the joint ventures and third party managed properties.

        REIT general and administrative expenses decreased by $0.1 million from 2007 to 2008. The decrease is primarily due to a decrease in share and unit-based compensation expense in 2008.

        Depreciation and amortization increased $60.8 million from 2007 to 2008. The increase in depreciation and amortization is primarily attributed to an increase of $37.7 million from the Mervyn's Properties, $12.0 million from the Redevelopment Centers, $6.8 million from the Same Centers and $0.6 million from the 2008 Acquisition Property. Included in the increase of depreciation and amortization of Mervyn's Properties is the write-off of $32.9 million of intangible assets as a result of the early termination of Mervyn's leases. (See "Management's Overview and Summary—Mervyn's".)

        Interest expense increased $34.2 million from 2007 to 2008. The increase in interest expense was primarily attributed to an increase of $17.9 million from borrowings under the Company's line of credit, $7.8 million from the Senior Notes, $6.3 million from the Redevelopment Centers, and $5.5 million from the Same Centers. The increase in interest expense was offset in part by a decrease of $3.8 million from term loans.

        The increase in interest expense on the Company's line of credit was due to an increase in average outstanding borrowings during 2008, in part, because of the purchase of The Shops at North Bridge, the Mervyn's Properties and the 2008 Acquisition Property and the repurchase and retirement of Senior Notes in 2008, which is offset in part by lower LIBOR rates and spreads. The increase in interest expense on the Senior Notes is due to a full year of interest expense in 2008 compared to

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2007. The decrease in interest expense on term loans was due to the repayment of the $250 million loan in 2007.