MARYLAND
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95-4448705
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification Number)
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401 Wilshire Boulevard, Suite 700, Santa Monica, California 90401
(Address of principal executive office, including zip code)
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(310) 394-6000
(Registrant's telephone number, including area code)
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N/A
(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller
reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Part I
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Financial Information
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Part II
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Other Information
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March 31,
2018 |
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December 31,
2017 |
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ASSETS:
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Property, net
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$
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6,908,416
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$
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7,109,230
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Assets held for sale
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142,611
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—
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Cash and cash equivalents
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118,175
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91,038
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Restricted cash
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49,677
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52,067
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Tenant and other receivables, net
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94,081
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112,653
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Deferred charges and other assets, net
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399,153
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449,190
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Due from affiliates
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84,674
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82,162
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Investments in unconsolidated joint ventures
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1,360,486
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1,709,522
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Total assets
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$
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9,157,273
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$
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9,605,862
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LIABILITIES AND EQUITY:
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Mortgage notes payable:
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Related parties
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$
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170,311
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$
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171,569
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Others
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4,075,936
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4,066,511
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Total
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4,246,247
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4,238,080
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Bank and other notes payable
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657,594
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932,184
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Accounts payable and accrued expenses
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67,430
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58,412
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Other accrued liabilities
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285,447
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325,701
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Distributions in excess of investments in unconsolidated joint ventures
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93,879
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83,486
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Financing arrangement obligation
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398,091
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—
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Total liabilities
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5,748,688
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5,637,863
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Commitments and contingencies
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Equity:
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Stockholders' equity:
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Common stock, $0.01 par value, 250,000,000 shares authorized, 141,104,587 and 140,993,985 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
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1,411
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1,410
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Additional paid-in capital
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4,549,748
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4,510,489
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Accumulated deficit
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(1,393,418
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)
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(830,279
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)
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Accumulated other comprehensive income (loss)
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19
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(42
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)
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Total stockholders' equity
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3,157,760
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3,681,578
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Noncontrolling interests
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250,825
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286,421
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Total equity
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3,408,585
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3,967,999
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Total liabilities and equity
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$
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9,157,273
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$
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9,605,862
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For the Three Months Ended March 31,
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2018
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2017
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Revenues:
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Minimum rents
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$
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142,407
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$
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145,555
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Percentage rents
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1,884
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1,918
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Tenant recoveries
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68,092
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72,412
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Other
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13,809
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15,264
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Management Companies
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10,542
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11,896
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Total revenues
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236,734
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247,045
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Expenses:
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Shopping center and operating expenses
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74,510
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75,897
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Management Companies' operating expenses
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38,323
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28,517
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REIT general and administrative expenses
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8,019
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8,463
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Depreciation and amortization
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79,937
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83,073
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200,789
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195,950
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Interest expense:
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Related parties
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10,169
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2,211
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Other
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42,466
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39,090
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52,635
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41,301
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Total expenses
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253,424
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237,251
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Equity in income of unconsolidated joint ventures
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16,872
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15,843
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Co-venture expense
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—
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(3,877
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)
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Income tax benefit
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2,949
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3,484
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(Loss) gain on sale or write down of assets, net
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(37,512
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)
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49,565
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Net (loss) income
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(34,381
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)
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74,809
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Less net (loss) income attributable to noncontrolling interests
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(808
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)
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5,566
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Net (loss) income attributable to the Company
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$
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(33,573
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)
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$
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69,243
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Earnings per common share—attributable to common stockholders:
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Basic
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$
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(0.24
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)
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$
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0.48
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Diluted
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$
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(0.24
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)
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$
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0.48
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Weighted average number of common shares outstanding:
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Basic
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141,024,000
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143,596,000
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Diluted
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141,050,000
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143,655,000
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For the Three Months Ended March 31,
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||||||
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2018
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2017
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Net (loss) income
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$
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(34,381
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)
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$
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74,809
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Other comprehensive loss:
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Interest rate cap
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61
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—
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Comprehensive (loss) income
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(34,320
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)
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74,809
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Less net (loss) income attributable to noncontrolling interests
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(808
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)
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5,566
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Comprehensive (loss) income attributable to the Company
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$
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(33,512
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)
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$
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69,243
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Stockholders' Equity
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|||||||||||||||||||||||||
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Common Stock
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Additional Paid-in Capital
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Accumulated Deficit
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Accumulated Other Comprehensive (Loss) Income
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Total Stockholders' Equity
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Shares
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Par
Value
|
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Noncontrolling
Interests
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Total Equity
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|||||||||||||||||||
Balance at January 1, 2018
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140,993,985
|
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$
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1,410
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$
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4,510,489
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$
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(830,279
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)
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$
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(42
|
)
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$
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3,681,578
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$
|
286,421
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$
|
3,967,999
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Net loss
|
—
|
|
|
—
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|
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—
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(33,573
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)
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—
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(33,573
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)
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(808
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)
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|
(34,381
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)
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Cumulative effect of adoption of ASU 2014-09
|
—
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—
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—
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(424,859
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)
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—
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(424,859
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)
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—
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(424,859
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)
|
|||||||
Interest rate cap
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—
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—
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—
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—
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61
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61
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—
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61
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|||||||
Amortization of share and unit-based plans
|
109,602
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|
1
|
|
|
13,611
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|
|
—
|
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|
—
|
|
|
13,612
|
|
|
—
|
|
|
13,612
|
|
|||||||
Distributions declared ($0.74) per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(104,707
|
)
|
|
—
|
|
|
(104,707
|
)
|
|
—
|
|
|
(104,707
|
)
|
|||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
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|
|
—
|
|
|
(9,075
|
)
|
|
(9,075
|
)
|
|||||||
Conversion of noncontrolling interests to common shares
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Redemption of noncontrolling interests
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
(19
|
)
|
|
(65
|
)
|
|||||||
Adjustment of noncontrolling interests in Operating Partnership
|
—
|
|
|
—
|
|
|
25,694
|
|
|
—
|
|
|
—
|
|
|
25,694
|
|
|
(25,694
|
)
|
|
—
|
|
|||||||
Balance at March 31, 2018
|
141,104,587
|
|
|
$
|
1,411
|
|
|
$
|
4,549,748
|
|
|
$
|
(1,393,418
|
)
|
|
$
|
19
|
|
|
$
|
3,157,760
|
|
|
$
|
250,825
|
|
|
$
|
3,408,585
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(34,381
|
)
|
|
$
|
74,809
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Loss (gain) on sale or write down of assets, net
|
37,512
|
|
|
(49,565
|
)
|
||
Depreciation and amortization
|
81,524
|
|
|
84,551
|
|
||
Amortization of premium on mortgage notes payable
|
(235
|
)
|
|
(926
|
)
|
||
Amortization of share and unit-based plans
|
11,003
|
|
|
13,805
|
|
||
Straight-line rent adjustment
|
(2,683
|
)
|
|
(1,884
|
)
|
||
Amortization of above and below-market leases
|
152
|
|
|
193
|
|
||
Provision for doubtful accounts
|
1,354
|
|
|
1,318
|
|
||
Income tax benefit
|
(2,949
|
)
|
|
(3,484
|
)
|
||
Equity in income of unconsolidated joint ventures
|
(16,872
|
)
|
|
(15,843
|
)
|
||
Distributions of income from unconsolidated joint ventures
|
155
|
|
|
—
|
|
||
Change in fair value of financing arrangement obligation
|
4,382
|
|
|
—
|
|
||
Co-venture expense
|
—
|
|
|
3,877
|
|
||
Changes in assets and liabilities, net of acquisitions and dispositions:
|
|
|
|
||||
Tenant and other receivables
|
11,699
|
|
|
8,757
|
|
||
Other assets
|
11,473
|
|
|
12,618
|
|
||
Due from affiliates
|
(2,512
|
)
|
|
(12,015
|
)
|
||
Accounts payable and accrued expenses
|
13,239
|
|
|
4,285
|
|
||
Other accrued liabilities
|
(17,893
|
)
|
|
(17,792
|
)
|
||
Net cash provided by operating activities
|
94,968
|
|
|
102,704
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Development, redevelopment, expansion and renovation of properties
|
(49,242
|
)
|
|
(33,013
|
)
|
||
Property improvements
|
(4,968
|
)
|
|
(4,350
|
)
|
||
Proceeds from repayment of notes receivable
|
202
|
|
|
212
|
|
||
Deferred leasing costs
|
(13,384
|
)
|
|
(11,267
|
)
|
||
Distributions from unconsolidated joint ventures
|
418,333
|
|
|
114,528
|
|
||
Contributions to unconsolidated joint ventures
|
(40,990
|
)
|
|
(26,593
|
)
|
||
Proceeds from sale of assets
|
1,450
|
|
|
167,649
|
|
||
Net cash provided by investing activities
|
311,401
|
|
|
207,166
|
|
||
|
|
|
|
THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Dollars in thousands)
(Unaudited)
|
|||||||
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from mortgages, bank and other notes payable
|
120,000
|
|
|
200,000
|
|
||
Payments on mortgages, bank and other notes payable
|
(387,643
|
)
|
|
(263,927
|
)
|
||
Deferred financing costs
|
(132
|
)
|
|
(142
|
)
|
||
Stock repurchases
|
—
|
|
|
(132,550
|
)
|
||
Redemption of noncontrolling interests
|
(65
|
)
|
|
(15
|
)
|
||
Dividends and distributions
|
(113,782
|
)
|
|
(110,621
|
)
|
||
Distributions to co-venture partner
|
—
|
|
|
(4,302
|
)
|
||
Net cash used in financing activities
|
(381,622
|
)
|
|
(311,557
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
24,747
|
|
|
(1,687
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
143,105
|
|
|
143,997
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
167,852
|
|
|
$
|
142,310
|
|
Supplemental cash flow information:
|
|
|
|
||||
Cash payments for interest, net of amounts capitalized
|
$
|
46,418
|
|
|
$
|
40,462
|
|
Non-cash investing and financing transactions:
|
|
|
|
||||
Accrued development costs included in accounts payable and accrued expenses and other accrued liabilities
|
$
|
36,286
|
|
|
$
|
24,712
|
|
Accrued stock repurchase costs
|
$
|
—
|
|
|
$
|
8,552
|
|
Conversion of Operating Partnership Units to common stock
|
$
|
—
|
|
|
$
|
638
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Assets:
|
|
|
|
||||
Property, net
|
$
|
288,521
|
|
|
$
|
288,881
|
|
Other assets
|
59,321
|
|
|
60,586
|
|
||
Total assets
|
$
|
347,842
|
|
|
$
|
349,467
|
|
Liabilities:
|
|
|
|
||||
Mortgage notes payable
|
$
|
128,449
|
|
|
$
|
129,436
|
|
Other liabilities
|
74,841
|
|
|
72,705
|
|
||
Total liabilities
|
$
|
203,290
|
|
|
$
|
202,141
|
|
|
For the Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Beginning of period
|
|
|
|
||||
Cash and cash equivalents
|
$
|
91,038
|
|
|
$
|
94,046
|
|
Restricted cash
|
52,067
|
|
|
49,951
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
143,105
|
|
|
$
|
143,997
|
|
End of period
|
|
|
|
||||
Cash and cash equivalents
|
$
|
118,175
|
|
|
$
|
92,296
|
|
Restricted cash
|
49,677
|
|
|
50,014
|
|
||
Cash, cash equivalents and restricted cash
|
$
|
167,852
|
|
|
$
|
142,310
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Numerator
|
|
|
|
|
||||
Net (loss) income
|
|
$
|
(34,381
|
)
|
|
$
|
74,809
|
|
Less net (loss) income attributable to noncontrolling interests
|
|
(808
|
)
|
|
5,566
|
|
||
Net (loss) income attributable to the Company
|
|
(33,573
|
)
|
|
69,243
|
|
||
Allocation of earnings to participating securities
|
|
(244
|
)
|
|
(184
|
)
|
||
Numerator for basic and diluted EPS—net income attributable to common stockholders
|
|
$
|
(33,817
|
)
|
|
$
|
69,059
|
|
Denominator
|
|
|
|
|
||||
Denominator for basic EPS—weighted average number of common shares outstanding
|
|
141,024
|
|
|
143,596
|
|
||
Effect of dilutive securities(1):
|
|
|
|
|
||||
Share and unit-based compensation plans
|
|
26
|
|
|
59
|
|
||
Denominator for diluted EPS—weighted average number of common shares outstanding
|
|
141,050
|
|
|
143,655
|
|
||
EPS—net (loss) income attributable to common stockholders:
|
|
|
|
|
||||
Basic
|
|
$
|
(0.24
|
)
|
|
$
|
0.48
|
|
Diluted
|
|
$
|
(0.24
|
)
|
|
$
|
0.48
|
|
|
|
|
(1)
|
Diluted EPS excludes
90,619
convertible preferred partnership units for the
three months ended
March 31, 2018
and
2017
as their impact was antidilutive. Diluted EPS excludes
10,291,217
and
10,591,428
Operating Partnership units ("OP Units") for the
three months ended
March 31, 2018
and
2017
, respectively, as their impact was antidilutive.
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Assets(1):
|
|
|
|
||||
Property, net
|
$
|
8,994,424
|
|
|
$
|
9,052,105
|
|
Other assets
|
602,553
|
|
|
635,838
|
|
||
Total assets
|
$
|
9,596,977
|
|
|
$
|
9,687,943
|
|
Liabilities and partners' capital(1):
|
|
|
|
||||
Mortgage and other notes payable(2)
|
$
|
5,979,160
|
|
|
$
|
5,296,594
|
|
Other liabilities
|
388,245
|
|
|
405,052
|
|
||
Company's capital
|
1,822,298
|
|
|
2,188,057
|
|
||
Outside partners' capital
|
1,407,274
|
|
|
1,798,240
|
|
||
Total liabilities and partners' capital
|
$
|
9,596,977
|
|
|
$
|
9,687,943
|
|
Investments in unconsolidated joint ventures:
|
|
|
|
||||
Company's capital
|
$
|
1,822,298
|
|
|
$
|
2,188,057
|
|
Basis adjustment(3)
|
(555,691
|
)
|
|
(562,021
|
)
|
||
|
$
|
1,266,607
|
|
|
$
|
1,626,036
|
|
|
|
|
|
||||
Assets—Investments in unconsolidated joint ventures
|
$
|
1,360,486
|
|
|
$
|
1,709,522
|
|
Liabilities—Distributions in excess of investments in unconsolidated joint ventures
|
(93,879
|
)
|
|
(83,486
|
)
|
||
|
$
|
1,266,607
|
|
|
$
|
1,626,036
|
|
|
|
|
(1)
|
These amounts include the assets of
$3,068,722
and
$3,106,105
of
Pacific Premier Retail LLC
(the "
PPR Portfolio
") as of
March 31, 2018
and
December 31, 2017
, respectively, and liabilities of
$1,864,302
and
$1,872,227
of the
PPR Portfolio
as of
March 31, 2018
and
December 31, 2017
, respectively.
|
(2)
|
Included in mortgage and other notes payable are amounts due to an affiliate of Northwestern Mutual Life ("NML") of
$704,402
and
$482,332
as of
March 31, 2018
and
December 31, 2017
, respectively. NML is considered a related party because it is a joint venture partner with the Company in Macerich Northwestern Associates—Broadway Plaza. Interest expense on these borrowings was
$4,958
and
$3,160
for the
three months ended
March 31, 2018
and
2017
, respectively.
|
(3)
|
The Company amortizes the difference between the cost of its investments in unconsolidated joint ventures and the book value of the underlying equity into income on a straight-line basis consistent with the lives of the underlying assets. The amortization of this difference was
$4,103
and
$4,027
for the
three months ended
March 31, 2018
and
2017
, respectively.
|
|
PPR Portfolio
|
|
|
Other
Joint
Ventures
|
|
Total
|
||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Minimum rents
|
$
|
32,739
|
|
|
|
$
|
127,708
|
|
|
$
|
160,447
|
|
Percentage rents
|
432
|
|
|
|
1,811
|
|
|
2,243
|
|
|||
Tenant recoveries
|
11,400
|
|
|
|
48,104
|
|
|
59,504
|
|
|||
Other
|
1,017
|
|
|
|
11,091
|
|
|
12,108
|
|
|||
Total revenues
|
45,588
|
|
|
|
188,714
|
|
|
234,302
|
|
|||
Expenses:
|
|
|
|
|
|
|
||||||
Shopping center and operating expenses
|
9,681
|
|
|
|
61,321
|
|
|
71,002
|
|
|||
Interest expense
|
16,726
|
|
|
|
33,032
|
|
|
49,758
|
|
|||
Depreciation and amortization
|
24,484
|
|
|
|
62,412
|
|
|
86,896
|
|
|||
Total operating expenses
|
50,891
|
|
|
|
156,765
|
|
|
207,656
|
|
|||
Gain on sale or write down of assets, net
|
—
|
|
|
|
970
|
|
|
970
|
|
|||
Net (loss) income
|
$
|
(5,303
|
)
|
|
|
$
|
32,919
|
|
|
$
|
27,616
|
|
Company's equity in net (loss) income
|
$
|
(616
|
)
|
|
|
$
|
17,488
|
|
|
$
|
16,872
|
|
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
||||||
Revenues:
|
|
|
|
|
|
|
||||||
Minimum rents
|
$
|
33,536
|
|
|
|
$
|
123,503
|
|
|
$
|
157,039
|
|
Percentage rents
|
730
|
|
|
|
1,738
|
|
|
2,468
|
|
|||
Tenant recoveries
|
11,439
|
|
|
|
47,915
|
|
|
59,354
|
|
|||
Other
|
1,026
|
|
|
|
11,511
|
|
|
12,537
|
|
|||
Total revenues
|
46,731
|
|
|
|
184,667
|
|
|
231,398
|
|
|||
Expenses:
|
|
|
|
|
|
|
||||||
Shopping center and operating expenses
|
9,760
|
|
|
|
62,195
|
|
|
71,955
|
|
|||
Interest expense
|
16,726
|
|
|
|
32,279
|
|
|
49,005
|
|
|||
Depreciation and amortization
|
26,275
|
|
|
|
62,879
|
|
|
89,154
|
|
|||
Total operating expenses
|
52,761
|
|
|
|
157,353
|
|
|
210,114
|
|
|||
(Loss) gain on sale or write down of assets, net
|
(35
|
)
|
|
|
4,581
|
|
|
4,546
|
|
|||
Net (loss) income
|
$
|
(6,065
|
)
|
|
|
$
|
31,895
|
|
|
$
|
25,830
|
|
Company's equity in net (loss) income
|
$
|
(962
|
)
|
|
|
$
|
16,805
|
|
|
$
|
15,843
|
|
Property
|
|
Notional Amount
|
|
Product
|
|
LIBOR Rate
|
|
Maturity
|
|
Fair Value
|
|||||
Santa Monica Place
|
|
$
|
300,000
|
|
|
Cap
|
|
4.00
|
%
|
|
12/9/2019
|
|
$
|
65
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Land
|
$
|
1,527,460
|
|
|
$
|
1,567,152
|
|
Buildings and improvements
|
6,164,004
|
|
|
6,385,035
|
|
||
Tenant improvements
|
616,955
|
|
|
620,352
|
|
||
Equipment and furnishings
|
183,434
|
|
|
187,998
|
|
||
Construction in progress
|
391,222
|
|
|
366,996
|
|
||
|
8,883,075
|
|
|
9,127,533
|
|
||
Less accumulated depreciation
|
(1,974,659
|
)
|
|
(2,018,303
|
)
|
||
|
$
|
6,908,416
|
|
|
$
|
7,109,230
|
|
|
|
Total Fair Value Measurement
|
|
Quoted Prices in Active Markets for Identical Assets
|
|
Significant Other Unobservable Inputs
|
|
Significant Unobservable Inputs
|
||||||||
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||
2018
|
|
$
|
49,000
|
|
|
$
|
—
|
|
|
$
|
49,000
|
|
|
$
|
—
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Leasing
|
$
|
213,550
|
|
|
$
|
232,819
|
|
Intangible assets:
|
|
|
|
||||
In-place lease values
|
99,339
|
|
|
108,432
|
|
||
Leasing commissions and legal costs
|
24,830
|
|
|
25,958
|
|
||
Above-market leases
|
152,270
|
|
|
164,040
|
|
||
Deferred tax assets
|
31,517
|
|
|
29,006
|
|
||
Deferred compensation plan assets
|
51,983
|
|
|
52,221
|
|
||
Distributions in excess of co-venture obligation(1)
|
—
|
|
|
31,150
|
|
||
Other assets
|
56,313
|
|
|
66,990
|
|
||
|
629,802
|
|
|
710,616
|
|
||
Less accumulated amortization(2)
|
(230,649
|
)
|
|
(261,426
|
)
|
||
|
$
|
399,153
|
|
|
$
|
449,190
|
|
|
|
|
(1)
|
See Note
11
—
Financing Arrangement
.
|
(2)
|
Accumulated amortization includes
$68,181
and
$74,507
relating to in-place lease values, leasing commissions and legal costs at
March 31, 2018
and
December 31, 2017
, respectively. Amortization expense of in-place lease values, leasing commissions and legal costs was
$3,835
and
$6,004
for the
three months ended
March 31, 2018
and
2017
, respectively.
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
Above-Market Leases
|
|
|
|
||||
Original allocated value
|
$
|
152,270
|
|
|
$
|
164,040
|
|
Less accumulated amortization
|
(52,021
|
)
|
|
(60,210
|
)
|
||
|
$
|
100,249
|
|
|
$
|
103,830
|
|
Below-Market Leases(1)
|
|
|
|
||||
Original allocated value
|
$
|
118,089
|
|
|
$
|
120,573
|
|
Less accumulated amortization
|
(56,029
|
)
|
|
(55,489
|
)
|
||
|
$
|
62,060
|
|
|
$
|
65,084
|
|
|
|
|
(1)
|
Below-market leases are included in other accrued liabilities.
|
|
|
Carrying Amount of Mortgage Notes(1)
|
|
|
|
|
|
|
|||||||||||||||||
|
|
March 31, 2018
|
|
December 31, 2017
|
|
|
|
|
|
|
|||||||||||||||
Property Pledged as Collateral
|
|
Related Party
|
|
Other
|
|
Related Party
|
|
Other
|
|
Effective Interest
Rate(2)
|
|
Monthly
Debt
Service(3)
|
|
Maturity
Date(4)
|
|||||||||||
Chandler Fashion Center(5)
|
|
$
|
—
|
|
|
$
|
199,920
|
|
|
$
|
—
|
|
|
$
|
199,904
|
|
|
3.77
|
%
|
|
$
|
625
|
|
|
2019
|
Danbury Fair Mall
|
|
103,737
|
|
|
103,736
|
|
|
104,599
|
|
|
104,598
|
|
|
5.53
|
%
|
|
1,538
|
|
|
2020
|
|||||
Fashion Outlets of Chicago(6)
|
|
—
|
|
|
199,379
|
|
|
—
|
|
|
199,298
|
|
|
3.32
|
%
|
|
527
|
|
|
2020
|
|||||
Fashion Outlets of Niagara Falls USA
|
|
—
|
|
|
111,981
|
|
|
—
|
|
|
112,770
|
|
|
4.89
|
%
|
|
727
|
|
|
2020
|
|||||
Freehold Raceway Mall(5)
|
|
—
|
|
|
398,088
|
|
|
—
|
|
|
398,050
|
|
|
3.94
|
%
|
|
1,300
|
|
|
2029
|
|||||
Fresno Fashion Fair
|
|
—
|
|
|
323,311
|
|
|
—
|
|
|
323,261
|
|
|
3.67
|
%
|
|
971
|
|
|
2026
|
|||||
Green Acres Commons(7)
|
|
—
|
|
|
127,105
|
|
|
—
|
|
|
107,219
|
|
|
4.38
|
%
|
|
413
|
|
|
2021
|
|||||
Green Acres Mall
|
|
—
|
|
|
289,684
|
|
|
—
|
|
|
291,366
|
|
|
3.61
|
%
|
|
1,447
|
|
|
2021
|
|||||
Kings Plaza Shopping Center
|
|
—
|
|
|
444,688
|
|
|
—
|
|
|
447,231
|
|
|
3.67
|
%
|
|
2,229
|
|
|
2019
|
|||||
Oaks, The
|
|
—
|
|
|
195,576
|
|
|
—
|
|
|
196,732
|
|
|
4.14
|
%
|
|
1,064
|
|
|
2022
|
|||||
Pacific View
|
|
—
|
|
|
123,650
|
|
|
—
|
|
|
124,397
|
|
|
4.08
|
%
|
|
668
|
|
|
2022
|
|||||
Queens Center
|
|
—
|
|
|
600,000
|
|
|
—
|
|
|
600,000
|
|
|
3.49
|
%
|
|
1,744
|
|
|
2025
|
|||||
Santa Monica Place(8)
|
|
—
|
|
|
296,550
|
|
|
—
|
|
|
296,366
|
|
|
3.38
|
%
|
|
771
|
|
|
2022
|
|||||
SanTan Village Regional Center
|
|
—
|
|
|
123,919
|
|
|
—
|
|
|
124,703
|
|
|
3.14
|
%
|
|
589
|
|
|
2019
|
|||||
Towne Mall
|
|
—
|
|
|
21,053
|
|
|
—
|
|
|
21,161
|
|
|
4.48
|
%
|
|
117
|
|
|
2022
|
|||||
Tucson La Encantada
|
|
66,574
|
|
|
—
|
|
|
66,970
|
|
|
—
|
|
|
4.23
|
%
|
|
368
|
|
|
2022
|
|||||
Victor Valley, Mall of
|
|
—
|
|
|
114,631
|
|
|
—
|
|
|
114,617
|
|
|
4.00
|
%
|
|
380
|
|
|
2024
|
|||||
Vintage Faire Mall
|
|
—
|
|
|
262,403
|
|
|
—
|
|
|
263,818
|
|
|
3.55
|
%
|
|
1,256
|
|
|
2026
|
|||||
Westside Pavilion(9)
|
|
—
|
|
|
140,262
|
|
|
—
|
|
|
141,020
|
|
|
4.49
|
%
|
|
783
|
|
|
2022
|
|||||
|
|
$
|
170,311
|
|
|
$
|
4,075,936
|
|
|
$
|
171,569
|
|
|
$
|
4,066,511
|
|
|
|
|
|
|
|
|
|
(1)
|
The mortgage notes payable balances include the unamortized debt premiums. Debt premiums represent the excess of the fair value of debt over the principal value of debt assumed in various acquisitions and are amortized into interest expense over the remaining term of the related debt in a manner that approximates the effective interest method. The loan on
Fashion Outlets of Niagara Falls USA
had a premium of
$2,398
and
$2,630
at
March 31, 2018
and
December 31, 2017
, respectively.
|
(2)
|
The interest rate disclosed represents the effective interest rate, including the debt premiums and deferred finance costs.
|
(3)
|
The monthly debt service represents the payment of principal and interest.
|
(4)
|
The maturity date assumes that all extension options are fully exercised and that the Company does not opt to refinance the debt prior to these dates. These extension options are at the Company's discretion, subject to certain conditions, which the Company believes will be met.
|
(5)
|
A
49.9%
interest in the loan has been assumed by a third party in connection with the Company's joint venture in
Chandler Freehold
(See Note
11
—
Financing Arrangement
).
|
(6)
|
The loan bears interest at LIBOR plus
1.50%
. At
March 31, 2018
and
December 31, 2017
, the total interest rate was
3.32%
and
3.02%
, respectively.
|
(7)
|
On
March 1, 2018
, the Company borrowed the remaining
$20,000
available under the loan agreement on the property. The loan bears interest at LIBOR plus
2.15%
. At
March 31, 2018
and
December 31, 2017
, the total interest rate was
4.38%
and
4.07%
, respectively.
|
(8)
|
The loan bears interest at
LIBOR
plus
1.35%
. At
March 31, 2018
and
December 31, 2017
, the total interest rate was
3.38%
and
3.13%
, respectively.
|
(9)
|
On
March 1, 2018
, the Company entered into an agreement to contribute the underlying property into an unconsolidated joint venture (See Note
14
—
Collaborative Arrangement
).
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Management fees
|
|
$
|
4,679
|
|
|
$
|
4,480
|
|
Development and leasing fees
|
|
3,604
|
|
|
5,270
|
|
||
|
|
$
|
8,283
|
|
|
$
|
9,750
|
|
Grant Date
|
|
Units
|
|
Type
|
|
Fair Value per LTIP Unit
|
|
Vest Date
|
|||
1/1/2018
|
|
65,466
|
|
|
Service-based
|
|
$
|
65.68
|
|
|
12/31/2020
|
1/1/2018
|
|
291,326
|
|
|
Market-indexed
|
|
$
|
44.28
|
|
|
12/31/2020
|
1/29/2018
|
|
13,632
|
|
|
Service-based
|
|
$
|
66.02
|
|
|
2/1/2022
|
1/29/2018
|
|
1,893
|
|
|
Service-based
|
|
$
|
66.02
|
|
|
12/31/2020
|
1/29/2018
|
|
7,775
|
|
|
Market-indexed
|
|
$
|
48.23
|
|
|
12/31/2020
|
3/2/2018
|
|
99,407
|
|
|
Service-based
|
|
$
|
59.04
|
|
|
3/2/2018
|
|
|
479,499
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
LTIP Units
|
|
$
|
10,108
|
|
|
$
|
14,381
|
|
Stock units
|
|
3,230
|
|
|
2,612
|
|
||
Stock options
|
|
31
|
|
|
4
|
|
||
Phantom stock units
|
|
243
|
|
|
177
|
|
||
|
|
$
|
13,612
|
|
|
$
|
17,174
|
|
|
LTIP Units
|
|
Phantom Stock Units
|
|
Stock Units
|
|||||||||||||||
|
Units
|
|
Value(1)
|
|
Units
|
|
Value(1)
|
|
Units
|
|
Value(1)
|
|||||||||
Balance at January 1, 2018
|
636,632
|
|
|
$
|
52.36
|
|
|
4,054
|
|
|
$
|
79.82
|
|
|
151,355
|
|
|
$
|
73.32
|
|
Granted
|
479,499
|
|
|
51.03
|
|
|
4,366
|
|
|
63.03
|
|
|
82,782
|
|
|
59.00
|
|
|||
Vested
|
(99,407
|
)
|
|
59.04
|
|
|
(3,639
|
)
|
|
70.71
|
|
|
(102,596
|
)
|
|
73.42
|
|
|||
Forfeited
|
—
|
|
|
—
|
|
|
(790
|
)
|
|
80.20
|
|
|
—
|
|
|
—
|
|
|||
Balance at March 31, 2018
|
1,016,724
|
|
|
$
|
51.08
|
|
|
3,991
|
|
|
$
|
69.67
|
|
|
131,541
|
|
|
$
|
64.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(1) Value represents the weighted average grant date fair value.
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Current
|
|
$
|
439
|
|
|
$
|
—
|
|
Deferred
|
|
2,510
|
|
|
3,484
|
|
||
Total income tax benefit
|
|
$
|
2,949
|
|
|
$
|
3,484
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
expectations regarding the Company's growth;
|
•
|
the Company's beliefs regarding its acquisition, redevelopment, development, leasing and operational activities and opportunities, including the performance of its retailers;
|
•
|
the Company's acquisition, disposition and other strategies;
|
•
|
regulatory matters pertaining to compliance with governmental regulations;
|
•
|
the Company's capital expenditure plans and expectations for obtaining capital for expenditures;
|
•
|
the Company's expectations regarding income tax benefits;
|
•
|
the Company's expectations regarding its financial condition or results of operations; and
|
•
|
the Company's expectations for refinancing its indebtedness, entering into and servicing debt obligations and entering into joint venture arrangements.
|
Buildings and improvements
|
5 - 40 years
|
Tenant improvements
|
5 - 7 years
|
Equipment and furnishings
|
5 - 7 years
|
Deferred lease costs
|
1 - 15 years
|
Deferred financing costs
|
1 - 15 years
|
|
For the Three Months Ended March 31,
|
||||||
(Dollars in thousands)
|
2018
|
|
2017
|
||||
Consolidated Centers:
|
|
|
|
||||
Acquisitions of property and equipment
|
$
|
4,826
|
|
|
$
|
4,350
|
|
Development, redevelopment, expansion and renovation of Centers
|
37,659
|
|
|
18,471
|
|
||
Tenant allowances
|
2,089
|
|
|
1,515
|
|
||
Deferred leasing charges
|
5,041
|
|
|
5,030
|
|
||
|
$
|
49,615
|
|
|
$
|
29,366
|
|
Joint Venture Centers:
|
|
|
|
||||
Acquisitions of property and equipment
|
$
|
1,910
|
|
|
$
|
562
|
|
Development, redevelopment, expansion and renovation of Centers
|
25,877
|
|
|
29,880
|
|
||
Tenant allowances
|
904
|
|
|
912
|
|
||
Deferred leasing charges
|
2,827
|
|
|
2,126
|
|
||
|
$
|
31,518
|
|
|
$
|
33,480
|
|
|
Payment Due by Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than
1 year
|
|
1 - 3
years
|
|
3 - 5
years
|
|
More than
five years
|
||||||||||
Long-term debt obligations (includes expected interest payments)(1)
|
$
|
5,675,826
|
|
|
$
|
213,286
|
|
|
$
|
1,983,128
|
|
|
$
|
1,664,281
|
|
|
$
|
1,815,131
|
|
Operating lease obligations(2)
|
254,157
|
|
|
10,265
|
|
|
18,774
|
|
|
18,067
|
|
|
207,051
|
|
|||||
Purchase obligations(2)
|
31,916
|
|
|
31,916
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term liabilities
|
290,817
|
|
|
203,394
|
|
|
17,603
|
|
|
19,688
|
|
|
50,132
|
|
|||||
|
$
|
6,252,716
|
|
|
$
|
458,861
|
|
|
$
|
2,019,505
|
|
|
$
|
1,702,036
|
|
|
$
|
2,072,314
|
|
(1)
|
Interest payments on floating rate debt were based on rates in effect at
March 31, 2018
.
|
(2)
|
See Note
16
—
Commitments and Contingencies
in the Company's Notes to Consolidated Financial Statements.
|
|
|
|
For the Three Months Ended March 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
Net (loss) income attributable to the Company
|
|
|
$
|
(33,573
|
)
|
|
$
|
69,243
|
|
Adjustments to reconcile net income attributable to the Company to FFO attributable to common stockholders and unit holders—basic and diluted:
|
|
|
|
|
|
||||
Noncontrolling interests in the Operating Partnership
|
|
|
(2,450
|
)
|
|
5,108
|
|
||
Loss (gain) on sale or write down of assets, net—consolidated assets
|
|
|
37,512
|
|
|
(49,565
|
)
|
||
Add: noncontrolling interests share of gain on sale or write down of assets—consolidated assets
|
|
|
590
|
|
|
—
|
|
||
Add: gain on sale of undepreciated assets—consolidated assets
|
|
|
807
|
|
|
—
|
|
||
Less: loss on write-down of non-real estate assets—consolidated assets
|
|
|
—
|
|
|
(10,138
|
)
|
||
Loss (gain) on sale or write down of assets— unconsolidated joint ventures, net(1)
|
|
|
157
|
|
|
(2,269
|
)
|
||
Add: (loss) gain on sale of undepreciated assets—unconsolidated joint ventures(1)
|
|
|
(2,085
|
)
|
|
660
|
|
||
Depreciation and amortization—consolidated assets
|
|
|
79,937
|
|
|
83,073
|
|
||
Less: noncontrolling interests in depreciation and amortization—consolidated assets
|
|
|
(3,641
|
)
|
|
(3,893
|
)
|
||
Depreciation and amortization—unconsolidated joint ventures(1)
|
|
|
43,584
|
|
|
44,765
|
|
||
Less: depreciation on personal property
|
|
|
(3,345
|
)
|
|
(3,381
|
)
|
||
Financing expense in connection with the adoption of ASC 606 (Chandler Freehold)
|
|
|
6,020
|
|
|
—
|
|
||
FFO attributable to common stockholders and unit holders—basic and diluted
|
|
|
$
|
123,513
|
|
|
$
|
133,603
|
|
Weighted average number of FFO shares outstanding for:
|
|
|
|
|
|
||||
FFO attributable to common stockholders and unit holders—basic (2)
|
|
|
151,316
|
|
|
154,187
|
|
||
Adjustments for impact of dilutive securities in computing FFO-diluted:
|
|
|
|
|
|
||||
Share and unit based compensation plans
|
|
|
26
|
|
|
59
|
|
||
FFO attributable to common stockholders and unit holders—diluted (3)
|
|
|
151,342
|
|
|
154,246
|
|
|
|
|
(1)
|
Unconsolidated joint ventures are presented at the Company's pro rata share.
|
(2)
|
Calculated based upon basic net income as adjusted to reach basic FFO. Includes
10.3 million
and
10.6 million
OP Units for the
three months ended
March 31, 2018
and
2017
, respectively.
|
(3)
|
The computation of FFO—diluted shares outstanding includes the effect of share and unit-based compensation plans using the treasury stock method. It also assumes the conversion of MACWH, LP common and preferred units to the extent that they are dilutive to the FFO—diluted computation.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Period
|
|
Total Number of Shares Purchased
|
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
|
|
||||||
January 1, 2018 to January 31, 2018
|
|
—
|
|
|
|
$
|
—
|
|
|
—
|
|
|
|
$
|
278,707,048
|
|
|
February 1, 2018 to February 28, 2018
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
$
|
278,707,048
|
|
|
|
March 1, 2018 to March 31, 2018
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
$
|
278,707,048
|
|
|
|
|
|
—
|
|
|
|
$
|
—
|
|
|
—
|
|
|
|
|
|
(1)
|
On February 12, 2017, the Company's Board of Directors authorized the repurchase of up to $500.0 million of the Company's outstanding common shares from time to time as market conditions warrant.
|
Exhibit
Number
|
|
Description
|
|
||
3.1
|
|
Articles of Amendment and Restatement of the Company (incorporated by reference as an exhibit to the Company's Registration Statement on Form S-11, as amended (No. 33-68964)) (Filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
3.1.1
|
|
Articles Supplementary of the Company (incorporated by reference as an exhibit to the Company's Current Report on Form 8-K, event date May 30, 1995) (Filed in paper - hyperlink is not required pursuant to Rule 105 of Regulation S-T).
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
THE MACERICH COMPANY
|
|
|
|
|
By:
|
/s/ THOMAS E. O'HERN
|
|
|
|
|
Thomas E. O'Hern
|
|
|
|
|
Senior Executive Vice President and Chief Financial Officer
|
Date:
|
May 7, 2018
|
|
(Principal Financial Officer)
|
(c)
|
“
Board
” means the Board of Directors of the Company.
|
(f)
|
“
Change in Control
” means any of the following:
|
(h)
|
“
Code
” means Internal Revenue Code of 1986, as amended.
|
(ii)
|
the Executive’s Pro-Rata Bonus;
|
(a)
|
He or she is hereby advised by the Company to discuss all aspects of this Release Agreement with an attorney before signing this Release Agreement;
|
(b)
|
He or she has relied solely on her/his own judgment and/or that of her/his attorney regarding the consideration for and the terms of this Release Agreement and is signing this Release Agreement knowingly and voluntarily of her/his own free will;
|
(c)
|
He or she is not entitled to the Severance Payment unless she/he agrees to and fully complies with the terms of this Release Agreement;
|
(d)
|
He or she has been given at least [twenty-one (21)] [forty-five (45)] calendar days to consider this Release Agreement (the “
Consideration
Period
”). If she/he signs this Release Agreement before the end of the Consideration Period, she/he acknowledges by signing this Release Agreement that such decision was entirely voluntary and that she/he had the opportunity to consider this Release Agreement for the entire Consideration Period.
|
(e)
|
He or she may revoke this Release Agreement within seven (7) calendar days after signing it by submitting a written notice of revocation to the Employer. She/he further understands that this Release Agreement is not fully effective until the next business day after the seven (7) day period of revocation has expired without revocation, and that if she/he revokes this Release Agreement within the seven (7) day revocation period, she/he will not receive the Severance Payment;
|
(f)
|
He or she has read and understands this Release Agreement and further understands that it includes a general release of any and all known and unknown, foreseen or unforeseen claims presently asserted or otherwise arising through the date of her/his signing of this Release Agreement that she/he may have against the Employer; and
|
(g)
|
No statements made or conduct by the Employer has in any way coerced or unduly influenced her/him to execute this Release Agreement.
|
(h)
|
Except for the Severance Payment, she/he has been paid all wages, bonuses, compensation, benefits and other amounts that the Employer ever owed to him or her. Further she/he acknowledges and agrees that she/he is not entitled to any other severance pay, benefits or equity rights including without limitation, pursuant to any other severance plan or program or arrangement.
|
Title
:
|
Chief Executive Officer, effective January 1, 2019.
|
Board of Directors
:
|
You will be nominated for election as an executive member of the Board of Directors on or before July 1, 2018. For clarity, if at any time the Company fails to propose you, without your consent, to be a member of the Board of Directors, such failure shall constitute a material diminution in your position, authority, duties or responsibilities for purposes of qualifying as “Good Reason” under Annex A hereto, the CIC Plan (as such term is defined below), and under all of your equity award agreements, including the Annual Equity Grants provided below. In the event you become an executive member of the Board of Directors, if you subsequently cease to be a member of the Board of Directors, without your consent, such change in status shall also constitute a material diminution in your position, authority, duties or responsibilities for purposes of qualifying as “Good Reason” under Annex A hereto, the CIC Plan, and under all of your equity award agreements, including the Annual Equity Grants provided below.
|
Base Salary
:
|
Your annual base salary (“
Salary
”) will be $800,000 per annum, starting on April 26, 2018, prorated for the remainder of the 2018 calendar year.
|
Term
:
|
April 26, 2018 to April 25, 2021.
|
Annual Bonus Potential
:
|
You are eligible for a target annual incentive bonus opportunity of 200% of your Salary, effective immediately upon the start of the Term, prorated for the remainder of the 2018 calendar year. For the avoidance of doubt, you will also remain eligible for a target annual incentive bonus opportunity equal to $900,000 (i.e., 150% of your base salary as in effect prior to April 26, 2018), prorated for the period during 2018 that you served as Chief Financial Officer of the Company. For each calendar year, the Compensation Committee of the Company will determine if your annual incentive bonus (your “An
nual Bonus
”), which is discretionary, will be paid and in what amount, and if awarded in cash or in fully vested units or fully vested shares. Notwithstanding the foregoing, with respect to your Annual Bonuses payable in relation to services performed by you in 2018, 2019 and 2020, the proportion of your Annual Bonus paid in cash or fully vested units or fully vested shares will be determined by the Compensation Committee and subject to your consent.
|
Annual Equity Grant:
|
For each calendar year of the Term, you shall receive an “
Annual Equity Grant
” in the form of Company Long Term Incentive Plan (LTIP) units, having a target grant date value equal to $6,000,000 per year. Each annual grant shall be made at the same time (which is expected to occur in the first calendar quarter of the given year), shall be allocated in the same proportion, and shall vest on the same terms, as annual equity grants made to all other executive officers of the Company, as determined by the Compensation Committee of the Board of Directors. As of the date of this agreement, such allocation and vesting are as follows: (1) 25% as a Service-Based LTIP grant (vesting over a three-year period), and (2) 75% as a Performance-Based LTIP grant (vesting for each Performance-Based LTIP grant, based upon a three year relative total shareholder return (“
TSR
”) in accordance with the LTIP). Notwithstanding the foregoing, the remaining terms of this agreement, or anything to the contrary in any applicable equity award agreement provided to you (both Performance-Based and Service-Based LTIP award agreements), including but not limited to the provisions of Section 5 of such equity award agreements, all LTIP grants to you under such agreements shall vest, upon your termination by the Company for no reason or for any reason other than Cause (as defined in Annex A hereto), termination of your employment by you for Good Reason (as defined in Annex A hereto), your death, or Disability (as defined in Annex A hereto), on terms no less favorable than those contained in your 2018 LTIP Unit Award Agreements.
|
One Time Equity Grant:
|
You shall be granted $5,000,000 in fully vested LTIP units on April 26, 2018, based on the Company’s closing share price on April 26, 2018 (the “One-Time Equity Grant”). If your employment is terminated for Cause or you resign for any reason other than Good Reason prior to April 26, 2019, you agree to repay one-half of the amount of the One-Time Equity Grant to the Company, as follows: (1) if any LTIP units remain outstanding at such time, you will forfeit one-half of all outstanding LTIP units, (2) if the LTIP units have been converted into shares of common stock of the Company, you will deliver one-half of such shares to the Company, and (3) if the LTIP units have been sold or otherwise converted into value, the recoverable amount shall be one-half of the value of such sale proceeds or such value delivered to you at the time of sale or conversion.
|
Severance
:
|
You are eligible for the severance benefits set forth in Annex A. This employment agreement, including Annex A hereto, and the CIC Plan identified in the next paragraph, shall each be deemed to be a “
Service Agreement
” for purposes of Section 5 of all your equity award agreements, including the Annual Equity Grants and One-Time Equity Grant described above. Except as otherwise provided for herein, the vesting and payment of your equity awards upon your termination of employment shall be governed by Section 5 of the applicable equity award agreement (or any similar provisions in a subsequent grant of equity awards), including but not limited to your 2018 LTIP Unit Award Agreements. If there is a Change of Control of the Company (as such term is defined in the CIC Plan), you will receive the benefits as provided under the CIC Plan (in lieu of the benefits provided under Annex A) and pursuant to the provisions of your equity award agreements, with the period of time during which the covenant set forth in Section 5(c) to be in effect through the end of the applicable Performance Period (but in no event less than 12 months).
|
Change in Control
Severance Plan:
|
You are an “Eligible Employee” under the Company Change in Control Severance Plan for Senior Executives, dated November 2, 2017 (the “
CIC Plan
”). In brief, under such plan, your severance benefits as provided therein are a payment equal to (a) three (3) times annual salary plus (b) an average bonus amount, and three (3) years of sponsored COBRA.
|
Reporting Relationship:
|
Chairman of the Board, The Macerich Company.
|
Effective Date
:
|
April 26, 2018.
|
Termination
:
|
You may terminate your employment for Good Reason, subject to the Severance provisions above and in Annex A, or for any other reason upon thirty (30) days written notice to the Company.
|
Office Location
:
|
Santa Monica Corporate offices.
|
Health/Dental Insurance:
|
As a full-time employee, you will continue to be eligible for medical and dental benefits. The Company offers several plans and shares the cost of the monthly premium with you. You may choose which plans satisfy your personal and family circumstances. In addition, you have the option to purchase vision coverage and may set up a flexible spending account. The Company reserves the right to modify its benefit program at any time.
|
401(k) Plan:
|
You will continue to be eligible for, and enrolled in, the Company 401(k) plan. The Company match is 100% of your deferrals for the first 3% and 50% for the next 2% of deferrals for a maximum Company match of 4%.
|
Deferred Compensation:
|
You continue to be eligible for the Company’s Deferred Compensation Plan. Details will be provided to you.
|
Other Benefits
:
|
You will continue to be eligible for the basic life and long-term disability plans the Company currently provides at no cost to you. You have the option to purchase supplemental and dependent life and short-term disability insurance. During the Term, you shall be entitled to fringe benefits on the same basis as those provided generally at any time thereafter to the other members of the Company’s management.
|
Vacation
:
|
You will earn paid vacation at the rate of thirty (30) days per year.
|
Personal Days
:
|
You will receive three (3) personal days on April 26, 2018. On January 1, 2019, and every year thereafter, unless otherwise notified, you will receive three (3) personal days per year.
|
IRC 409A
:
|
Amounts paid under this agreement are intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury regulations and other authoritative guidance issued thereunder (“
Section 409A
”), to the extent such requirements are applicable. This agreement shall be interpreted and administered in accordance with that intent. Consistent with that intent, for benefits that are to be paid in connection with a termination of employment, “termination of employment” shall be limited to such a termination that constitutes a “separation from service” under Section 409A. In the event that you are subject to the payout restrictions that apply to a “specified employee” as defined in Section 409A, the payout of any amount in connection with your separation from service during for the first six months following such separation that would violate Section 409A shall be paid on the first day of the seventh month after your separation from service. Notwithstanding the foregoing, to the extent an exemption from the requirements of Section 409A is available such exemption shall apply and the additional limitations imposed by Section 409A shall not apply. For purposes of application of Section 409A, to the extent applicable, each payment made under this agreement shall be treated as a separate payment.
|
1.
|
Upon a termination without Cause or resignation with Good Reason (other than in a circumstance where you are eligible for severance benefits under the CIC Plan), in each case, that occurs during the Protected Period, subject to Section 2 of this Annex A, you will be entitled to receive the following payments and benefits:
|
(a)
|
Accrued Obligations
– (1) Your base salary through your termination date to the extent earned and not theretofore paid, (2) your accrued vacation pay and/or personal days to the extent earned and payable in connection with the termination of employment pursuant to the Company’s policy, (3) your accrued annual incentive bonus for the fiscal year immediately preceding the year in which your termination date occurs (if any), to the extent such bonus is determined to otherwise have been earned based on the Company’s achievement of applicable performance targets but not theretofore paid, and (4) vested rights under any equity, compensation or benefit plan, policy, practice or program of or any other contract or agreement with the Company including, without limitation, any acceleration of vesting of equity awards as provided in this Agreement or that shall occur upon a “Qualifying Termination” as set forth in the applicable equity award agreement and/or equity incentive plan pursuant to which such awards have been granted. Accrued Obligations described in clauses (1) and (2) shall be paid in a lump sum in cash within the time required by law but in no event more than 30 days after the date of termination and the Accrued Obligation in clause (3) shall be paid at the same time annual cash bonuses are paid to actively employed senior executives of the Company in respect of the applicable performance period, but in no event later than 75 days after the end of the fiscal year. Accrued Obligations described in clause (iv) shall be paid at such time(s) as required under the applicable plan or agreement. In addition and for clarity, and as set forth in this Agreement, all LTIPs granted during the Term of this contract shall, to the extent not previously vested, immediately vest upon termination and shall be deemed Accrued Obligations.
|
(b)
|
Prorated Bonus
– Your Annual Bonus (as such term is defined in the agreement to which this Annex A is attached) for the year in which your termination occurs, based on actual performance through the end of the applicable performance period and prorated based on the number of days you were employed by the Company or its affiliate during the applicable performance period. The Prorated Bonus will be paid at the time annual cash bonuses are paid to actively employed senior executives of the Company in respect of the year in which your termination occurs, but in no event later than March 15 of the following year.
|
(c)
|
Severance Payment
– An amount equal to (1) the sum of (x) your Base Salary (as such term is defined in the CIC Plan) in effect of the date of your termination and (y) your Bonus (as such term is defined in the CIC Plan), multiplied by (2) the quotient of (I) the number of days remaining in the Term as of the date of termination of your employment, divided by (II) 365,
i.e.
, (x+y)x(I/II). In the event that your termination of employment occurs prior to the date on which an annual incentive bonus is otherwise payable under the Company annual incentive bonus program in respect of calendar year 2018, your Bonus shall equal your target Bonus in effect as of the date of your termination, including both the prorated target Bonus attributable to your service as Chief Financial Officer of the Company and the prorated target Bonus attributable to your service as Chief Executive Officer of the Company. In the event that your termination of employment occurs prior to the date on which three annual incentive bonuses have been awarded to you by the Company in your capacity as Chief Executive Officer of the Company, your Bonus shall equal the bonus awarded to you if only one annual incentive bonus has been awarded or the average of the annual incentive bonuses awarded to you in your capacity as Chief Executive Officer of the Company. The Severance Payment shall be
|
(d)
|
COBRA Subsidy
– A payment equal to (1) the total amount of the COBRA continuation monthly premium rate that would otherwise be payable by you for such COBRA continuation for you and your eligible dependents as of your termination date, multiplied by (2) 36. The COBRA Subsidy shall be paid in a lump sum within 60 days after your termination of employment;
provided
that if the 60-day period begins in one calendar year and ends in a second calendar year, such amounts shall be paid in the second calendar year by the last day of such 60-day period.
|
(e)
|
Outplacement Services
. Outplacement services pursuant to the Company’s outplacement plan for senior executives at the level and for the periods described in Schedule A to the CIC Plan.
|
2.
|
The payments and benefits described in Section 1(b), 1(c) and 1(d) are subject to your execution and non-revocation of a release of claims substantially in the form set forth in
Schedule B
of the CIC Plan.
|
3.
|
Death and Disability
. If your employment is terminated by reason of your death or Disability during the Term, the Company shall provide your estate or beneficiaries or you, as applicable, with the Accrued Obligations described in Section 1(a).
|
4.
|
The capitalized terms used in Annex A have the meanings set forth below:
|
(a)
|
“
Cause
” has the meaning set forth in Section 2(e) of the CIC Plan.
|
(b)
|
“
CIC Plan
” means The Macerich Company Change in Control Severance Plan for Senior Executives, dated November 2, 2017.
|
(c)
|
The “
Company
” means the Macerich Company and its subsidiaries.
|
(d)
|
"
Disability
" means (1) a “permanent and total disability” within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (“Code”), or (2) your absence from your duties with the Company on a full-time basis for a period of twelve months as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to you or your legal representative (such agreements as to acceptability not to be unreasonably withheld). “Incapacity” as used herein shall be limited only to a condition that substantially prevents you from performing your duties.
|
(e)
|
“
Good Reason
” means an action taken by the Company, without your written consent thereto, resulting in a material negative change in the employment relationship. For these purposes, a “material negative change in the employment relationship” shall include, without limitation, any one or more of the following reasons, to the extent not remedied by the Company within 30 days after receipt by the Company of written notice from you provided to the Company within 90 days (the “
Cure Period
”) of your knowledge of the occurrence of an event or circumstance set forth in clauses (i) through (v) below specifying in reasonable detail such occurrence:
|
(i)
|
the assignment to you of any duties materially inconsistent in any respect with your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other material diminution in such position, authority, duties or responsibilities (whether or not occurring solely as a result of the Company’s ceasing to be a publicly traded entity);
|
(ii)
|
a change in your principal office location to a location further away from your home which is more than 30 miles from your current principal office;
|
(iii)
|
any one or more reductions in your annual rate of base salary and/or annual target bonus opportunity that, individually or in the aggregate, exceed 10% of your annual rate of base salary and target bonus opportunity, in the aggregate; or
|
(iv)
|
any material breach by the Company of this letter.
|
(f)
|
“
Protected Period
” means period commencing on April 26, 2018 and ending on April 25, 2021.
|
5.
|
For the avoidance of doubt, your right to receive severance payments and benefits under this Annex A shall terminate on April 25, 2021 and this Annex A shall have no further force and effect thereafter.
|
6.
|
The following provisions of the CIC Plan shall also apply to this Annex A as if set forth herein: Section 6 (Withholding), Section 7 (No Duty to Mitigate), Section 10 (Governing Law and Dispute Resolution), Section 11 (Severability), Section 12 (Disclaimer of Rights), Section 13 (Captions), Section 14 (Number and Gender), and Section 15 (Section 409A).
|
Salary
:
|
$500,000 per annum.
|
Annual Bonus Potential
:
|
You are eligible for an Annual Bonus of 150% of your base compensation (“Salary”). The Compensation Committee of the Company will determine if the Annual Bonus, which is discretionary, will be paid and in what amount and if awarded in cash or in fully vested units or fully vested shares. Notwithstanding the foregoing, with respect to your Annual Bonuses payable in respect of 2018, 2019 and 2020, the proportion of your Annual Bonus paid in cash or fully vested units or fully vested shares will be determined by the Compensation Committee and subject to your consent.
|
Annual Equity Grant:
|
You are eligible for an Annual Equity Grant to the extent offered to other Officers at the Executive Vice President level in the form of LTIPs at a value equal to one times annual salary. Such grant is currently allocated 25% to time vested (vested over 3 years – 1/3 one year after grant, 1/3 two years after grant and 1/3 three years after grant) and 75% to performance based upon a three year relative total shareholder return (“TSR”). Should the Compensation Committee change the standard for the Annual Equity Grants for Executive Vice Presidents, you would be treated similarly.
|
One Time Equity Grant
:
|
Prior to the date hereof, you received a one-time grant of LTIPs equal to $900,000. The number of LTIPs was calculated based on PWC’s valuation of a Macerich Company LTIP at starting date of employment (($900,000/ LTIP per unit value)= number of LTIP’s granted). Vesting to be 25% and the end of year 1, 2, 3 and 4.
|
Severance
:
|
You are eligible for the severance benefits set forth in Annex A. This offer of employment letter, including Annex A hereto, and the Change in Control Agreement identified in the next paragraph, shall each be deemed to be a “Service Agreement” for purposes of Section 5 of all your equity award agreements, including the Annual Equity Grants and One-Time Equity Grant described above. The vesting and payment of your equity awards upon your termination of employment shall be governed by Section 5 of the applicable equity award agreement (or any similar provisions in a subsequent grant of equity awards), including but not limited to all of your 2018 LTIP Unit Award Agreements.
|
Agreement:
|
You are party to a Change in Control Agreement dated February 24, 2018. In brief, three (3) times annual salary plus bonus, and three (3) years of sponsored COBRA.
|
Reporting Relationship
:
|
Chief Executive Officer
|
Office Location
:
|
Santa Monica Corporate
|
Health/Dental Insurance
:
|
As a full-time employee, you are eligible for medical and dental benefits. The Company offers several plans and shares the cost of the monthly premium with you. You may choose which plans satisfy your personal and family circumstances. In addition, you have the option to purchase vision coverage and may set up a flexible spending account. Regardless of the plans you elect,
|
401(k) Plan
:
|
You were automatically enrolled in the 401(k) plan on your first day of hire. The Company match is 100% of your deferrals for the first 3% and 50% for the next 2% of deferrals for a maximum Company match of 4%.
|
Deferred Compensation:
|
You are eligible for the Company’s Deferred Compensation Plan.
|
Program:
|
When eligible you may participate in the Company Employee Stock Purchase Program. The Program allows you to make payroll deductions to purchase Macerich Common Stock at a discount. The program provides the ability to authorize payroll deductions of 1% to 15% of your gross compensation each full payroll period, not to exceed $26,000 per year.
|
Other Benefits
:
|
You are eligible for the basic life and long-term disability plans the Company currently provides at no cost to you. You have the option to purchase supplemental and dependent life and short-term disability insurance.
|
Vacation
:
|
You will earn paid vacation at the rate of twenty (20) days per year.
|
Personal Days
:
|
You received three (3) personal days upon your start date. On January 1, 2019, and every year thereafter, unless otherwise notified, you will receive three (3) personal days per year.
|
Sick Days
:
|
You received ten (10) sick days upon your start date. On January 1, 2019, and every year thereafter, unless otherwise notified, you will receive ten (10) sick days.
|
Employment Status
:
|
You are an employee at will. Either you or the Company may terminate your employment at any time, for any reason (or for no reason), and with or without advance notice. If your employment with the Company terminates, regardless of the reason, you will not be entitled to and you will not be considered to have earned any bonus or other incentive referenced above (to the extent not actually paid to you by the Company prior to the date your employment terminates), except as provided above under “Severance”, as provided in your Change in Control Agreement described above and pursuant to the provisions of your equity award agreements. The Company reserves the right to modify its compensation and benefit programs at any time, with or without advance notice.
|
Entire Agreement
:
|
This letter constitutes the entire agreement between you and the Company with respect to the subject matter hereof and shall supersede your prior offer letter.
|
1.
|
Upon a termination without Cause or resignation with Good Reason, in each case, that occurs during the Protected Period, subject to Section 2 of this Annex A, you will be entitled to receive the following payments and benefits:
|
(a)
|
Accrued Obligations
– (1) Your base salary through your termination date to the extent earned and not theretofore paid, (2) your accrued vacation pay and/or personal days to the extent earned and payable in connection with the termination of employment pursuant to the Company’s policy, (3) your accrued annual incentive bonus for the fiscal year immediately preceding the year in which your termination date occurs (if any), to the extent such bonus is determined to otherwise have been earned based on the Company’s achievement of applicable performance targets but not theretofore paid, and (4) vested rights under any equity, compensation or benefit plan, policy, practice or program of or any other contract or agreement with the Company including, without limitation, any acceleration of vesting of equity awards that shall occur upon a “Qualifying Termination” as set forth in the applicable equity award agreement and/or equity incentive plan pursuant to which such awards have been granted. Accrued Obligations described in clauses (1) and (2) shall be paid in a lump sum in cash within the time required by law but in no event more than 30 days after the date of termination and the Accrued Obligation in clause (3) shall be paid at the same time annual cash bonuses are paid to actively employed senior executives of the Company in respect of the applicable performance period, but in no event later than 75 days after the end of the fiscal year. Accrued Obligations described in clause (iv) shall be paid at such time(s) as required under the applicable plan or agreement.
|
(b)
|
Prorated Bonus
– Your Bonus (as such term is defined in the CIC Agreement) for the year in which your termination occurs, based on actual performance through the end of the applicable performance period and prorated based on the number of days you were employed by the Company or its affiliate during the applicable performance period. The Prorated Bonus will be paid at the time annual cash bonuses are paid to actively employed senior executives of the Company in respect of the year in which your termination occurs, but in no event later than March 15 of the following year.
|
(c)
|
COBRA Subsidy
– A payment equal to the total amount of the COBRA continuation monthly premium rate that would otherwise be payable by you for such COBRA continuation for you and your eligible dependents as of your termination date, multiplied by 36. The COBRA Subsidy shall be paid in a lump sum within 60 days after your termination of employment;
provided
that if the 60-day period begins in one calendar year and ends in a second calendar
|
(d)
|
Outplacement Services
. Outplacement services pursuant to the Company’s outplacement plan for senior executives at the level and for the periods described in Schedule A to your CIC Agreement.
|
2.
|
The payments and benefits described in Section 1(b), 1(c) and 1(d) are subject to your execution and non-revocation of a release of claims substantially in the form set forth in
Schedule B
of the CIC Agreement.
|
3.
|
The capitalized terms used in Annex A have the meanings set forth below:
|
(a)
|
“
Cause
” has the meaning set forth in Section 2(e) of your CIC Agreement.
|
(b)
|
“
CIC Agreement
” means your Change in Control Agreement, dated as of February 24, 2018, as in effect as of the date hereof.
|
(c)
|
The “
Company
” means the Macerich Company and its subsidiaries.
|
(d)
|
“
Good Reason
” means an action taken by the Company, without your written consent thereto, resulting in a material negative change in the employment relationship. For these purposes, a “material negative change in the employment relationship” shall include, without limitation, any one or more of the following reasons, to the extent not remedied by the Company within 30 days after receipt by the Company of written notice from you provided to the Company within 90 days (the “
Cure Period
”) of your knowledge of the occurrence of an event or circumstance set forth in clauses (i) through (v) below specifying in reasonable detail such occurrence:
|
(i)
|
the assignment to you of any duties materially inconsistent in any respect with your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other material diminution in such position, authority, duties or responsibilities (whether or not occurring solely as a result of the Company’s ceasing to be a publicly traded entity);
|
(ii)
|
a change in your principal office location to a location further away from your home which is more than 30 miles from your current principal office;
|
(iii)
|
any one or more reductions in your annual rate of base salary and/or annual target bonus opportunity that, individually or in the aggregate, exceed 10% of your annual rate of base salary and target bonus opportunity, in the aggregate; or
|
(iv)
|
any material breach by the Company of this letter.
|
(e)
|
“
Protected Period
” means period commencing on April 20, 2018 and ending on December 31, 2020.
|
4.
|
For the avoidance of doubt, your right to receive severance payments and benefits under this Annex A shall terminate on December 31, 2020 and this Annex A shall have no further force and effect thereafter.
|
5.
|
The following provisions of your CIC Agreement shall also apply to this Annex A as if set forth herein: Section 6 (Withholding), Section 7 (No Duty to Mitigate), Section 9 (Governing Law and Dispute Resolution), Section 10 (Severability), Section 11 (Disclaimer of Rights), Section 12 (Captions), Section 13 (Number and Gender), and Section 14 (Section 409A).
|
1.
|
I have reviewed this report on Form 10-Q for the quarter ended
March 31, 2018
of The Macerich Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
/s/ ARTHUR M. COPPOLA
|
Date:
|
May 7, 2018
|
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q for the quarter ended
March 31, 2018
of The Macerich Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
|
|
|
/s/ THOMAS E. O'HERN
|
Date:
|
May 7, 2018
|
|
Senior Executive Vice President and Chief Financial Officer
|
(i)
|
the Quarterly Report on Form 10-Q for the quarter ended
March 31, 2018
of the Company (the "Report") fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
/s/ ARTHUR M. COPPOLA
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
/s/ THOMAS E. O'HERN
|
|
|
Senior Executive Vice President and Chief Financial Officer
|