# Macerich Co: Form 10-K for the period ended Dec 31, 2012

- Company: [Macerich Co](/companies/mac.md) (CIK 912242)
- Form: 10-K
- Filed: 2013-02-22
- Accepted by EDGAR: Feb 22, 2013, 16:01 ET
- Period: 2012-12-31
- Accession: 0001047469-13-001491
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/912242/000104746913001491/a2212822z10-k.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/912242/000104746913001491/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2012-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2012-10-01 to 2012-12-31 | $251.2m | us-gaap:Revenues |
| Revenue | 12 months, 2012-01-01 to 2012-12-31 | $881.3m | us-gaap:Revenues |
| Interest expense | 12 months, 2012-01-01 to 2012-12-31 | $176.8m | us-gaap:InterestExpense |
| Income tax | 12 months, 2012-01-01 to 2012-12-31 | −$4.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2012-10-01 to 2012-12-31 | $174.2m | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Net income | 12 months, 2012-01-01 to 2012-12-31 | $366.4m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2012-10-01 to 2012-12-31 | $1.27 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 12 months, 2012-01-01 to 2012-12-31 | $2.51 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2012-10-01 to 2012-12-31 | $1.27 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 12 months, 2012-01-01 to 2012-12-31 | $2.51 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months, 2012-01-01 to 2012-12-31 | 134,148,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2012-01-01 to 2012-12-31 | $351.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 12 months, 2012-01-01 to 2012-12-31 | $326.2m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2012-12-31 | $65.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2012-12-31 | $9.31bn | us-gaap:Assets |
| Total liabilities | at 2012-12-31 | $5.89bn | us-gaap:Liabilities |
| Shareholders' equity | at 2012-12-31 | $3.08bn | us-gaap:StockholdersEquity |

## Business

As filed, 47,089 characters.

### 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, 2012, the Operating Partnership owned or had an ownership interest in 61 regional shopping centers and nine community/power shopping centers totaling approximately 63 million square feet of gross leasable area ("GLA"). These 70 regional and community/power 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 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, Macerich Arizona Partners LLC, a single member Arizona limited liability company, Macerich Arizona Management LLC, a single member Delaware limited liability company, Macerich Partners of Colorado LLC, a Colorado limited liability company, MACW Mall Management, Inc., a New York corporation, and MACW Property Management, LLC, a single member New York limited liability company. All seven of the management companies are collectively referred to herein as the "Management Companies."

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

#### Acquisitions and Dispositions:

On February 29, 2012, the Company acquired a 327,000 square foot mixed-use retail/office building in Chicago, Illinois ("500 North Michigan Avenue") for $70.9 million. The purchase price was funded from borrowings under the Company's line of credit.

On March 30, 2012, the Company sold its 50% ownership interest in Chandler Village Center, a 273,000 square foot community center in Chandler, Arizona, for a total sales price of $14.8 million, resulting in a gain on the sale of assets of $8.2 million. The sales price was funded by a cash payment of $6.0 million and the assumption of the Company's share of the mortgage note payable on the property of $8.8 million. The Company used the cash proceeds from the sale to pay down its line of credit and for general corporate purposes.

On March 30, 2012, the Company sold its 50% ownership interest in Chandler Festival, a 500,000 square foot community center in Chandler, Arizona, for a total sales price of $31.0 million, resulting in a gain on the sale of assets of $12.3 million. The sales price was funded by a cash payment of $16.2 million and the assumption of the Company's share of the mortgage note payable on the property of $14.8 million. The Company used the cash proceeds from the sale to pay down its line of credit and for general corporate purposes.

On March 30, 2012, the Company's joint venture in SanTan Village Power Center, a 491,000 square foot community center in Gilbert, Arizona, sold the property for $54.8 million, resulting in a gain on the sale of assets of $23.3 million for the joint venture. The Company's pro rata share of the gain recognized was $7.9 million. The Company used its share of the proceeds to pay down its line of credit and for general corporate purposes.

On April 30, 2012, the Company sold The Borgata, a 94,000 square foot community center in Scottsdale, Arizona, for $9.2 million, resulting in a loss on the sale of assets of $1.3 million. The Company used the proceeds from the sale to pay down its line of credit and for general corporate purposes.

On May 11, 2012, the Company sold a former Mervyn's store in Montebello, California for $20.8 million, resulting in a loss on the sale of assets of $0.4 million. The proceeds from the sale were used for general corporate purposes.

On May 17, 2012, the Company sold Hilton Village, a 80,000 square foot community center in Scottsdale, Arizona, for $24.8 million, resulting in a gain on the sale of assets of $3.1 million. The Company used the proceeds from the sale to pay down its line of credit and for general corporate purposes.

On May 31, 2012, the Company sold its 50% ownership interest in Chandler Gateway, a 260,000 square foot community center in Chandler, Arizona, for a total sales price of $14.3 million, resulting in a gain on the sale of assets of $3.4 million. The sales price was funded by a cash payment of $4.9 million and the assumption of the Company's share of the mortgage note payable on the property of $9.4 million. The Company used the cash proceeds from the sale to pay down its line of credit and for general corporate purposes.

On June 28, 2012, the Company sold Carmel Plaza, a 112,000 square foot community center in Carmel, California, for $52.0 million, resulting in a gain on the sale of assets of $7.8 million. The Company used the proceeds from the sale to pay down its line of credit.

On August 10, 2012, the Company was bought out of its ownership interest in NorthPark Center, a 1,946,000 square foot regional shopping center in Dallas, Texas, for $118.8 million, resulting in a gain of $24.6 million. The Company used the cash proceeds to pay down its line of credit.

On October 3, 2012, the Company acquired the 75% ownership interest in FlatIron Crossing, a 1,443,000 square foot regional shopping center in Broomfield, Colorado, that it did not own for $310.4 million. The purchase price was funded by a cash payment of $195.9 million and the assumption of the third party's share of the mortgage note payable on the property of $114.5 million.

On October 26, 2012, the Company acquired the remaining 33.3% ownership interest in Arrowhead Towne Center, a 1,196,000 square foot regional shopping center in Glendale, Arizona, that it did not own for $144.4 million. The purchase price was funded by a cash payment of $69.0 million and the assumption of the third party's pro rata share of the mortgage note payable on the property of $75.4 million.

On November 28, 2012, the Company acquired Kings Plaza Shopping Center, a 1,198,000 square foot regional shopping center in Brooklyn, New York, for a purchase price of $756.0 million. The purchase price was funded from a cash payment of $726.0 million and the issuance of $30.0 million in restricted common stock of the Company. The cash payment was provided by the placement of a $500.0 million mortgage note on the property and from borrowings under the Company's line of credit.

On January 24, 2013, the Company acquired Green Acres Mall, a 1,800,000 square foot regional shopping center in Valley Stream, New York, for a purchase price of $500.0 million. The purchase price was funded from the placement of a $325.0 million mortgage note on the property and from borrowings under the Company's line of credit.

#### Financing Activity:

On February 1, 2012, the Company replaced the existing loan on Tucson La Encantada with a new $75.1 million loan that bears interest at an effective rate of 4.23% and matures on March 1, 2022.

On March 2, 2012, the Company's joint venture in Fashion Outlets of Chicago placed a new construction loan on the project that allows for borrowings up to $140.0 million, bears interest at LIBOR plus 2.50% and matures on March 5, 2017, including extension options.

On March 23, 2012, the Company borrowed an additional $25.9 million on the loan at Northgate Mall and modified the loan to bear interest at LIBOR plus 2.25% with a maturity of March 1, 2017.

On March 30, 2012, the Company placed a new $140.0 million loan on Pacific View that bears interest at an effective rate of 4.08% and matures on April 1, 2022.

On April 11, 2012, the Company's joint venture in Ridgmar Mall replaced the existing loan on the property with a new $52.0 million loan that bears interest at LIBOR plus 2.45% and matures on April 11, 2017, including extension options.

On May 17, 2012, the Company replaced the existing loan on The Oaks with a new $220.0 million loan that bears interest at an effective rate of 4.14% and matures on June 5, 2022.

On June 29, 2012, the Company replaced the existing loan on Chandler Fashion Center with a new $200.0 million loan that bears interest at an effective rate of 3.77% and matures on July 1, 2019.

On September 6, 2012, the Company replaced the existing loan on Westside Pavilion with a new $155.0 million loan that bears interest at an effective rate of 4.49% and matures on October 1, 2022.

On September 17, 2012, the Company placed a $110.0 million loan on Chesterfield Towne Center that bears interest at an effective rate of 4.80% and matures on October 1, 2022.

On October 3, 2012, the Company purchased the 75% interest in FlatIron Crossing that it did not own (See "Acquisitions and Dispositions" in Recent Developments). In connection with this acquisition, the Company assumed the loan on the property with a fair value of $175.7 million that bears interest at an effective rate of 1.96% and matures on December 1, 2013.

On October 5, 2012, the Company modified and extended the loan on Mall of Victor Valley to November 6, 2014. The new loan bears interest at LIBOR plus 1.60% until May 6, 2013, and increases to LIBOR plus 2.25% until maturity.

On October 25, 2012, the Company replaced the existing loan on Towne Mall with a new $23.4 million loan that bears interest at an effective rate of 4.48% and matures on November 1, 2022.

On October 26, 2012, the Company purchased the remaining 33.3% interest in Arrowhead Towne Center that it did not own (See "Acquisitions and Dispositions" in Recent Developments). In connection with this acquisition, the Company assumed the loan on the property with a fair value of $244.4 million that bears interest at an effective rate of 2.76% and matures on October 5, 2018.

On November 28, 2012, the Company acquired Kings Plaza Shopping Center (See "Acquisitions and Dispositions" in Recent Developments). In connection with the acquisition, the Company placed a new loan on the property that allowed for total borrowings up to $500.0 million, bears interest at an effective rate of 3.67% and matures on December 3, 2019. Concurrent with the acquisition, the Company borrowed $354.0 million on the loan. On January 3, 2013, the Company exercised its option to borrow the remaining $146.0 million of the loan.

On December 5, 2012, the Company replaced an existing loan on Deptford Mall with a new $205.0 million loan that bears interest at an effective rate of 3.76% and matures on April 3, 2023.

On December 24, 2012, the Company's joint venture in Queens Center replaced the existing loan on the property with a new $600.0 million loan that bears interest at an effective rate of 3.65% and matures on January 1, 2025.

On December 28, 2012, the Company placed a $240.0 million loan on Santa Monica Place that bears interest at an effective rate of 2.99% and matures on January 3, 2018.

On December 31, 2012, the Company's joint venture in Pacific Premier Retail LP paid off in full the existing $56.5 million loan on Redmond Office.

On January 2, 2013, the Company's joint venture in Kierland Commons replaced the existing loans on the property with a new $135.0 million loan that bears interest at LIBOR plus 1.90% and matures on January 2, 2018, including extension options.

On January 24, 2013, the Company acquired Green Acres Mall (See "Acquisitions and Dispositions" in Recent Developments). In connection with the acquisition, the Company placed a new loan on the property that allowed for total borrowings up to $325.0 million, bears interest at an estimated effective rate of 3.62% and matures on February 3, 2021. Concurrent with the acquisition, the Company borrowed $100.0 million on the loan. On January 31, 2013, the Company exercised its option to borrow the remaining $225.0 million of the loan.

#### Redevelopment and Development Activity:

In August 2011, the Company entered into a joint venture agreement with a subsidiary of AWE/Talisman for the development of Fashion Outlets of Chicago in the Village of Rosemont, Illinois. The Company owns 60% of the joint venture and AWE/Talisman owns 40%. The Center will be a fully enclosed two level, 526,000 square foot outlet center. The site is located within a mile of O'Hare International Airport. The project broke ground in November 2011 and is expected to be completed in August 2013. The total estimated project cost is approximately $200.0 million. As of December 31, 2012, the joint venture has incurred $91.8 million of development costs. On March 2, 2012, the joint venture obtained a construction loan on the property that allows for borrowings up to $140.0 million, bears interest at LIBOR plus 2.50% and matures on March 5, 2017. As of December 31, 2012, the joint venture has borrowed $9.2 million under the loan.

The Company's joint venture in Tysons Corner, a 2,154,000 square foot regional shopping center in McLean, Virginia, is currently expanding the property to include a 524,000 square foot office building, a 430 unit residential tower and a 300 room hotel. The joint venture started the expansion project in October 2011 and expects it to be completed in Fall 2014. The total cost of the project is estimated at $600.0 million, of which $300.0 million is estimated to be the Company's pro rata share. The Company has funded $64.8 million of the total of $129.6 million cost incurred by the joint venture as of December 31, 2012.

#### Other Transactions and Events:

On July 15, 2010, a court appointed receiver assumed operational control of Valley View Center and responsibility for managing all aspects of the property. In March 2012, the Company recorded an impairment charge of $54.3 million to write down the carrying value of the long-lived assets to their estimated fair value. On April 23, 2012, the property was sold by the receiver for $33.5 million, which resulted in a gain on the extinguishment of debt of $104.0 million.

On May 31, 2012, the Company conveyed Prescott Gateway, a 584,000 square foot regional shopping center in Prescott, Arizona, to the mortgage note lender by a deed-in-lieu of foreclosure. The mortgage loan was non-recourse. As a result of the conveyance, the Company recognized a gain on the extinguishment of debt of $16.3 million.

### The Shopping Center Industry

#### General:

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. "Strip centers," "urban villages" or "specialty centers" ("Community/Power Shopping 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/Power Shopping Centers typically contain 100,000 to 400,000 square feet of GLA. Outlet Centers generally contain a wide variety of designer and manufacturer stores located in an open-air center and typically range in size from 200,000 to 850,000 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, 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.

#### Regional Shopping Centers:

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 a 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. Anchors 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

#### Strategy:

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 principally focuses on well-located, quality Regional Shopping Centers that can be dominant in their trade area and have strong revenue enhancement potential. In addition, the Company pursues other opportunistic acquisitions of property that include retail and will complement the Company's portfolio such as Outlet Centers. 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 "Acquisitions and Dispositions" in Recent Developments).

*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, information technology, 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 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.

On a selective basis, the Company provides property management and leasing services for third parties. The Company currently manages four regional shopping centers 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 "Redevelopment and Development" in Recent Developments).

*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 "Redevelopment and Development" in Recent Developments).

#### The Centers

As of December 31, 2012, the Centers consist of 61 Regional Shopping Centers and nine Community/Power Shopping Centers totaling approximately 63 million square feet of GLA. The 61 Regional Shopping Centers in the Company's portfolio average approximately 930,000 square feet of GLA and range in size from 2.1 million square feet of GLA at Tysons Corner Center to 242,000 square feet of GLA at Tucson La Encantada. The Company's nine Community/Power Shopping Centers have an average of approximately 486,000 square feet of GLA. As of December 31, 2012, the Centers included 243 Anchors totaling approximately 33.1 million square feet of GLA and approximately 7,300 Mall Stores and Freestanding Stores totaling approximately 30.3 million square feet of GLA.

#### Competition

There are numerous owners and developers of real estate that compete with the Company in its trade areas. There are eight 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 of an Anchor or a tenant. In addition, other REITs, private real estate companies, and financial buyers compete with the Company 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 the Company's ability to make suitable property acquisitions on favorable terms. 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 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, outlet centers and discount shopping clubs 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 Centers.

#### Major Tenants

The Centers derived approximately 77% of their total rents for the year ended December 31, 2012 from Mall Stores and Freestanding Stores under 10,000 square feet. Big Box and Anchor tenants accounted for 23% of total rents for the year ended December 31, 2012.

The following retailers (including their subsidiaries) represent the 10 largest rent payers in the Centers based upon total rents in place as of December 31, 2012:

| Tenant | Primary DBAs | Number of Locations in the Portfolio | % of Total Rents(1) |
| --- | --- | ---: | ---: |
| Gap, Inc., The | Athleta, Banana Republic, The Gap, Gap Kids, Gap Body, Baby Gap, The Gap Outlet, Old Navy | 78 | 2.5% |
| Limited Brands, Inc. | Bath and Body Works, Victoria's Secret, Victoria's Secret Beauty, PINK | 116 | 2.5% |
| Forever 21, Inc. | Forever 21, XXI Forever | 41 | 2.2% |
| Foot Locker, Inc. | Champs Sports, CCS, Foot Locker, Foot Action USA, Kids Foot Locker, Lady Foot Locker | 116 | 1.7% |
| Luxottica Group S.P.A. | Ilori, LensCrafters, Oakley, Optical Shop of Aspen, Pearle Vision Center, Sunglass Hut / Watch Station | 124 | 1.3% |
| Abercrombie & Fitch Co. | Abercrombie & Fitch, abercrombie, Hollister | 58 | 1.2% |
| American Eagle Outfitters, Inc. | American Eagle, Aerie, 77Kids | 47 | 1.1% |
| Dick's Sporting Goods, Inc. | Dick's Sporting Goods | 12 | 1.1% |
| Nordstrom, Inc. | Nordstrom, Last Chance, Nordstrom Rack, Nordstrom Spa | 18 | 1.1% |
| Signet Jewelers Limited | Friedlander, J.B. Robinson, Jared The Galleria of Jewelry, Kay Jewelers, Rogers, Shaw Jewelers, Weisfield Jewelers | 61 | 1.1% |

(1)

Total rents include minimum rents and percentage rents.

#### Mall Stores and Freestanding Stores

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. The Company has generally entered into leases for Mall Stores and Freestanding Stores that require tenants to pay a stated amount for operating expenses, generally excluding property taxes, regardless of the expenses the Company actually incurs at any Center. Additionally, certain leases for Mall Stores and Freestanding Stores contain provisions that require tenants to pay their pro rata share of maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operations of the Center.

Tenant space of 10,000 square feet and under in the Company's portfolio at December 31, 2012 comprises 65.3% 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 because this space 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. 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.

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:

### Mall Stores and Freestanding Stores under 10,000 square feet:

| For the Years Ended December 31, Consolidated Centers: | Avg. Base Rent Per Sq. Ft.(1)(2) | Avg. Base Rent Per Sq. Ft. on Leases Executed During the Year(2)(3) | Avg. Base Rent Per Sq. Ft. on Leases Expiring During the Year(2)(4) |
| --- | ---: | ---: | ---: |
| 2012 | $40.98 | $44.01 | $38.00 |
| 2011 | $38.80 | $38.35 | $35.84 |
| 2010 | $37.93 | $34.99 | $37.02 |
| 2009 | $37.77 | $38.15 | $34.10 |
| 2008 | $41.39 | $42.70 | $35.14 |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): |  |  |  |
| 2012 | $55.64 | $55.72 | $48.74 |
| 2011 | $53.72 | $50.00 | $38.98 |
| 2010 | $46.16 | $48.90 | $38.39 |
| 2009 | $45.56 | $43.52 | $37.56 |
| 2008 | $42.14 | $49.74 | $37.61 |

11

### Big Box and Anchors:

| For the Years Ended December 31, Consolidated Centers: | Avg. Base Rent Per Sq. Ft.(1)(2) | Avg. Base Rent Per Sq. Ft. on Leases Executed During the Year(2)(3) | Number of Leases Executed During the Year | Avg. Base Rent Per Sq. Ft. on Leases Expiring During the Year(2)(4) | Number of Leases Expiring During the Year |
| --- | ---: | ---: | ---: | ---: | ---: |
| 2012 | $9.34 | $15.54 | 21 | $8.85 | 22 |
| 2011 | $8.42 | $10.87 | 21 | $6.71 | 14 |
| 2010 | $8.64 | $13.79 | 31 | $10.64 | 10 |
| 2009 | $9.66 | $10.13 | 19 | $20.84 | 5 |
| 2008 | $9.53 | $11.44 | 26 | $9.21 | 18 |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): |  |  |  |  |  |
| 2012 | $12.52 | $23.25 | 21 | $8.88 | 10 |
| 2011 | $12.50 | $21.43 | 15 | $14.19 | 7 |
| 2010 | $11.90 | $24.94 | 20 | $15.63 | 26 |
| 2009 | $11.60 | $31.73 | 16 | $19.98 | 16 |
| 2008 | $11.16 | $14.38 | 14 | $10.59 | 5 |

(1)

Average base rent per square foot is based on spaces occupied as of December 31 for each of the Centers and gives effect to the terms of each lease in effect, as of such date, including any concessions, abatements and other adjustments or allowances that have been granted to the tenants.

(2)

Centers under development and redevelopment are excluded from average base rents. The leases for The Shops at Atlas Park and Southridge Mall were excluded for the years ended 2012 and 2011. The leases for Santa Monica Place were excluded for the years ended December 31, 2010, 2009 and 2008. The leases for The Market at Estrella Falls were excluded for the years ended December 31, 2009 and 2008. The leases for Promenade at Casa Grande, SanTan Village Power Center and SanTan Village Regional Center were excluded for the year ended December 31, 2008.

(3)

The average base rent per square foot on leases executed during the year represents the actual rent paid on a per square foot basis during the first twelve months of the lease.

(4)

The average base rent per square foot on leases expiring during the year represents the actual rent to be paid on a per square foot basis during the final twelve months of the lease.

#### Cost of Occupancy

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:

| Consolidated Centers: | For Years ended December 31, 2012 | 2011 | 2010 | 2009 | 2008 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Minimum rents | 8.1% | 8.2% | 8.6% | 9.1% | 8.9% |
| Percentage rents | 0.4% | 0.5% | 0.4% | 0.4% | 0.4% |
| Expense recoveries(1) | 4.2% | 4.1% | 4.4% | 4.7% | 4.4% |
|  | 12.7% | 12.8% | 13.4% | 14.2% | 13.7% |
| **Unconsolidated Joint Venture Centers:** |  |  |  |  |  |
| Minimum rents | 8.9% | 9.1% | 9.1% | 9.4% | 8.2% |
| Percentage rents | 0.4% | 0.4% | 0.4% | 0.4% | 0.4% |
| Expense recoveries(1) | 3.9% | 3.9% | 4.0% | 4.3% | 3.9% |
|  | 13.2% | 13.4% | 13.5% | 14.1% | 12.5% |

(1)

Represents real estate tax and common area maintenance charges.

#### Lease Expirations

The following tables show scheduled lease expirations for Centers owned as of December 31, 2012 for the next ten years, assuming that none of the tenants exercise renewal options:

### Mall Stores and Freestanding Stores under 10,000 square feet:

| Year Ending December 31, Consolidated Centers: | 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) |
| --- | ---: | ---: | ---: | ---: | ---: |
| 2013 | 514 | 950,198 | 12.77% | $41.51 | 12.33% |
| 2014 | 416 | 924,273 | 12.42% | $38.16 | 11.02% |
| 2015 | 396 | 929,544 | 12.49% | $38.47 | 11.18% |
| 2016 | 365 | 872,551 | 11.72% | $40.69 | 11.10% |
| 2017 | 395 | 926,790 | 12.45% | $45.20 | 13.09% |
| 2018 | 289 | 709,087 | 9.53% | $45.84 | 10.16% |
| 2019 | 231 | 601,075 | 8.07% | $46.44 | 8.72% |
| 2020 | 184 | 419,450 | 5.63% | $52.93 | 6.94% |
| 2021 | 206 | 530,400 | 7.13% | $44.68 | 7.41% |
| 2022 | 168 | 397,705 | 5.34% | $45.28 | 5.63% |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): |  |  |  |  |  |
| 2013 | 259 | 258,991 | 11.92% | $52.68 | 10.81% |
| 2014 | 219 | 264,107 | 12.16% | $56.23 | 11.76% |
| 2015 | 237 | 285,904 | 13.16% | $60.03 | 13.59% |
| 2016 | 194 | 233,804 | 10.76% | $56.51 | 10.47% |
| 2017 | 176 | 239,321 | 11.02% | $52.37 | 9.93% |
| 2018 | 156 | 203,043 | 9.35% | $60.71 | 9.76% |
| 2019 | 122 | 136,176 | 6.27% | $69.03 | 7.45% |
| 2020 | 126 | 164,100 | 7.55% | $63.90 | 8.31% |
| 2021 | 131 | 175,098 | 8.06% | $57.64 | 7.99% |
| 2022 | 97 | 114,768 | 5.28% | $62.45 | 5.68% |

13

### Big Boxes and Anchors:

| Year Ending December 31, Consolidated Centers: | 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) |
| --- | ---: | ---: | ---: | ---: | ---: |
| 2013 | 21 | 543,335 | 4.14% | $11.34 | 4.71% |
| 2014 | 28 | 1,371,030 | 10.46% | $6.75 | 7.08% |
| 2015 | 21 | 1,033,065 | 7.88% | $5.76 | 4.55% |
| 2016 | 26 | 1,462,426 | 11.15% | $6.23 | 6.96% |
| 2017 | 36 | 1,598,217 | 12.19% | $7.42 | 9.07% |
| 2018 | 24 | 623,583 | 4.76% | $11.26 | 5.37% |
| 2019 | 18 | 326,126 | 2.49% | $20.97 | 5.23% |
| 2020 | 26 | 786,850 | 6.00% | $10.48 | 6.31% |
| 2021 | 26 | 1,061,376 | 8.09% | $13.37 | 10.86% |
| 2022 | 21 | 785,403 | 5.99% | $15.73 | 9.45% |
| Unconsolidated Joint Venture Centers (at the Company's pro rata share): |  |  |  |  |  |
| 2013 | 12 | 151,399 | 3.92% | $22.93 | 6.94% |
| 2014 | 18 | 305,099 | 7.90% | $15.44 | 9.42% |
| 2015 | 26 | 620,988 | 16.08% | $10.06 | 12.48% |
| 2016 | 16 | 279,061 | 7.23% | $10.99 | 6.13% |
| 2017 | 11 | 210,065 | 5.44% | $14.15 | 5.94% |
| 2018 | 15 | 366,333 | 9.49% | $7.34 | 5.38% |
| 2019 | 10 | 198,423 | 5.14% | $19.66 | 7.80% |
| 2020 | 17 | 726,084 | 18.80% | $12.32 | 17.88% |
| 2021 | 10 | 125,804 | 3.26% | $19.49 | 4.90% |
| 2022 | 6 | 63,137 | 1.63% | $26.30 | 3.32% |

(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, 63% of leases have provisions for future consumer price index increases that are not reflected in ending base rent. The leases for The Shops at Atlas Park and Southridge Mall were excluded as these properties are under redevelopment.

#### Anchors

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 8.5% of the Company's total rents for the year ended December 31, 2012.

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, 2012.

| Name Macy's Inc. | Number of Anchor Stores | GLA Owned by Anchor | GLA Leased by Anchor | Total GLA Occupied by Anchor |
| --- | ---: | ---: | ---: | ---: |
| Macy's(1) | 51 | 5,790,000 | 2,665,000 | 8,455,000 |
| Bloomingdale's | 2 | — | 358,000 | 358,000 |
| **Total** | **53** | **5,790,000** | **3,023,000** | **8,813,000** |
| Sears Holdings Corporation |  |  |  |  |
| Sears | 39 | 3,337,000 | 2,046,000 | 5,383,000 |
| K-Mart | 1 | — | 86,000 | 86,000 |
| **Total** | **40** | **3,337,000** | **2,132,000** | **5,469,000** |
| jcpenney | 36 | 1,948,000 | 3,040,000 | 4,988,000 |
| Dillard's | 21 | 3,246,000 | 258,000 | 3,504,000 |
| Nordstrom | 13 | 720,000 | 1,477,000 | 2,197,000 |
| Target | 9 | 728,000 | 453,000 | 1,181,000 |
| Forever 21 | 9 | 155,000 | 717,000 | 872,000 |
| The Bon-Ton Stores, Inc. |  |  |  |  |
| Younkers | 3 | — | 317,000 | 317,000 |
| Bon-Ton, The | 1 | — | 71,000 | 71,000 |
| Herberger's | 2 | 188,000 | 53,000 | 241,000 |
| **Total** | **6** | **188,000** | **441,000** | **629,000** |
| Kohl's | 5 | 165,000 | 240,000 | 405,000 |
| Home Depot | 3 | — | 395,000 | 395,000 |
| Costco | 2 | — | 321,000 | 321,000 |
| Lord & Taylor | 3 | 121,000 | 199,000 | 320,000 |
| Neiman Marcus | 3 | 120,000 | 188,000 | 308,000 |
| Boscov's | 2 | — | 301,000 | 301,000 |
| Burlington Coat Factory | 3 | 187,000 | 75,000 | 262,000 |
| Dick's Sporting Goods | 3 | — | 257,000 | 257,000 |
| Belk | 3 | — | 201,000 | 201,000 |
| Von Maur | 2 | 187,000 | — | 187,000 |
| Wal-Mart | 1 | 165,000 | — | 165,000 |
| La Curacao | 1 | — | 165,000 | 165,000 |
| Lowe's | 1 | — | 114,000 | 114,000 |
| Garden Ridge | 1 | — | 110,000 | 110,000 |
| Saks Fifth Avenue | 1 | — | 92,000 | 92,000 |
| Mercado de los Cielos | 1 | — | 78,000 | 78,000 |
| L.L. Bean | 1 | — | 76,000 | 76,000 |
| Best Buy | 1 | 66,000 | — | 66,000 |
| Barneys New York | 1 | — | 60,000 | 60,000 |
| Sports Authority | 1 | — | 52,000 | 52,000 |
| Bealls | 1 | — | 40,000 | 40,000 |
| Vacant Anchors(2) | 5 | — | 622,000 | 622,000 |
| **Total** | **232** | **17,123,000** | **15,127,000** | **32,250,000** |
| **Anchors at Centers not owned by the Company(3):** |  |  |  |  |
| Forever 21 | 4 | — | 316,000 | 316,000 |
| Burlington Coat Factory | 1 | — | 85,000 | 85,000 |
| Kohl's | 1 | — | 83,000 | 83,000 |
| Cabela's | 1 | — | 75,000 | 75,000 |
| Vacant Anchors at centers not owned by Macerich(3) | 4 | — | 301,000 | 301,000 |
| **Total** | **243** | **17,123,000** | **15,987,000** | **33,110,000** |

(1)

Macy's is scheduled to open a 103,000 square foot department store at Mall of Victor Valley in March 2013.

(2)

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

(3)

The Company owns a portfolio of 14 stores located at shopping centers not owned by the Company. Of these 14 stores, four have been leased to Forever 21, one has been leased to Kohl's, one has been leased to Burlington Coat Factory, one has been leased to Cabela's, three have been leased for non-Anchor usage and the remaining four locations are vacant. The Company is currently seeking replacement tenants for these vacant sites.

### 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, which may result in potential environmental liability and cause the Company to incur costs in responding to these liabilities or in other costs associated with future investigation or remediation:

*Asbestos.* The Company has conducted asbestos-containing materials ("ACM") surveys at various locations within the Centers. The surveys indicate that ACMs are present or suspected in certain areas, primarily vinyl floor tiles, mastics, roofing materials, drywall tape and joint compounds. The identified ACMs are generally non-friable, in good condition, and possess low probabilities for disturbance. At certain Centers where ACMs are present or suspected, however, some ACMs have been or may be classified as "friable," and ultimately may require removal under certain conditions. The Company has developed and implemented an operations and maintenance ("O&M") plan to manage ACMs in place.

*Underground Storage Tanks.* Underground storage tanks ("USTs") are or were present at certain Centers, often in connection with tenant operations at gasoline stations or automotive tire, battery and accessory service centers located at such Centers. USTs also may be or have been present at properties neighboring certain Centers. Some of these tanks have either leaked or are suspected to have leaked. Where leakage has occurred, investigation, remediation, and monitoring costs may be incurred by the Company if responsible current or former tenants, or other responsible parties, are unavailable to pay such costs.

*Chlorinated Hydrocarbons.* The presence of chlorinated hydrocarbons such as perchloroethylene ("PCE") and its degradation byproducts have been detected at certain Centers, often in connection with tenant dry cleaning operations. Where PCE has been detected, the Company may incur investigation, remediation and monitoring costs if responsible current or former tenants, or other responsible parties, are unavailable to pay such costs.

See "Item 1A. 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 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 and in the New Madrid seismic zone. 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 $200 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, 2012, the Company had approximately 1,368 employees, of which approximately 1,077 were full-time. 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—Financial Information—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.

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

Guidelines on Corporate Governance

Code of Business Conduct and Ethics

Code of Ethics for CEO and Senior Financial Officers

Audit Committee Charter

Compensation Committee Charter

Executive Committee Charter

Nominating and Corporate Governance Committee Charter

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

Attention: Corporate Secretary

401 Wilshire Blvd., Suite 700

Santa Monica, CA 90401

## Risk factors

As filed, 38,918 characters.

*The following factors 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. This list should not be considered to be a complete statement of all potential risks or uncertainties as it does not describe additional risks of which we are not presently aware or that we do not currently consider material. We may update our risk factors from time to time in our future periodic reports. Any of these factors may have a material adverse effect on our business, financial condition, operating results and cash flows.*

### RISKS RELATED TO OUR BUSINESS AND PROPERTIES

***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:

the national economic climate (including the impact of continued weakness in the U.S. economy);

the regional and local economy (which may be negatively impacted by rising unemployment, declining real estate values, increased foreclosures, higher taxes, plant closings, industry slowdowns, union activity, adverse weather conditions, natural disasters, terrorist activities, other acts of violence and other factors);

local real estate conditions (such as an oversupply of, or a reduction in demand for, retail space or retail goods, decreases in rental rates, declining real estate values and the availability and creditworthiness of current and prospective tenants);

decreased levels of consumer spending, consumer confidence, and seasonal spending (especially during the holiday season when many retailers generate a disproportionate amount of their annual sales);

negative perceptions by retailers or shoppers of the safety, convenience and attractiveness of a Center; and

increased costs of maintenance, insurance and operations (including real estate taxes).

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

***Weakness in the U.S. economy may materially and adversely affect our results of operations and financial condition.***

The U.S. economy has continued to experience weakness from the severe recession that began in 2007. Although the U.S. economy has improved, the rate of U.S. economic growth remains uncertain, high levels of unemployment persist and valuations for retail space have not fully recovered to pre-recession levels. If U.S. economic conditions remain weak or worsen, we may, as we did following the severe recession in 2007, experience downward pressure on the rental rates we are able to charge as leases signed prior to the recession expire, tenants may declare bankruptcy, announce store closings or fail to meet their lease obligations and occupancy rates may decline, any of which could adversely affect the value of our properties and our financial condition and results of operations.

***A significant percentage 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 ten 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 eight 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 both for 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, outlet centers and discount shopping clubs that could adversely affect our revenues.

***We may be unable to renew leases, lease vacant space or re-let space as leases expire, which could adversely affect our financial condition and results of operations.***

There are no assurances that our leases will be renewed or that vacant space in our Centers will be re-let at net effective rental rates equal to or above the current average net effective rental rates or that substantial rent abatements, tenant improvements, early termination rights or below-market renewal options will not be offered to attract new tenants or retain existing tenants. If the rental rates at our Centers decrease, if our existing tenants do not renew their leases or if we do not re-let a significant portion of our available space and space for which leases will expire, our financial condition and results of operations could be adversely affected.

***If Anchors or other significant tenants experience a downturn in their business, close or sell stores or declare bankruptcy, our financial condition and results of operations could be adversely affected.***

Our financial condition and results of operations could be adversely affected if a downturn in the business of, or the bankruptcy or insolvency of, an Anchor or other significant tenant leads them to close retail stores or terminate their leases after seeking protection under the bankruptcy laws from their creditors, including us as lessor. In recent years a number of companies in the retail industry, including some of our tenants, have declared bankruptcy or have gone out of business. We may be unable to re-let stores vacated as a result of voluntary closures or the bankruptcy of a tenant. Furthermore, if the store sales of retailers operating at our Centers decline significantly 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.

In addition, Anchors and/or tenants at one or more Centers might terminate their leases as a result of mergers, acquisitions, consolidations or dispositions in the retail industry. The sale of an Anchor or store to a less desirable retailer may reduce occupancy levels, customer traffic and rental income. If U.S. economic conditions remain weak or worsen, there is also an increased risk that Anchors or other significant tenants will sell stores operating in our Centers or consolidate duplicate or geographically overlapping store locations. Store closures by an Anchor and/or a significant number of tenants may allow other Anchors and/or certain other tenants to terminate their leases, receive reduced rent and/or cease operating their stores at the Center or otherwise adversely affect occupancy at the Center.

### 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 ability to integrate and manage new properties, including increasing occupancy rates and rents at such properties;

the disposal of non-core assets within an expected time frame; and

our ability to raise long-term financing to implement a capital structure at a cost of capital consistent with our business strategy.

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 occurs, our ability to pay dividends to our stockholders and service our indebtedness could be adversely affected.

***We may be unable to sell properties at the time we desire and on favorable terms.***

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.

### 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 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, tropical storms or other severe weather conditions. The occurrence of natural disasters can delay redevelopment or development projects, increase investment costs to repair or replace damaged properties, increase future property insurance costs and negatively impact the tenant demand for lease space. If insurance is unavailable to us or is unavailable on acceptable terms, or our insurance is not adequate to cover losses from these events, our financial condition and results of operations could be adversely affected.

### 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, carry 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, carry specific earthquake insurance on the Centers located in the Pacific Northwest and in the New Madrid Seismic Zone. 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 $200 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 all of the Centers for generally 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.

***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:

Difficulty in replacing or renewing expiring leases with new leases at higher rents;

Decreasing tenant sales as a result of decreased consumer spending which could adversely affect the ability of our tenants to meet their rent obligations and/or result in lower percentage rents; and

An inability to receive reimbursement from our tenants for their share of certain operating expenses, including common area maintenance, real estate taxes and insurance.

### We have substantial debt that could affect our future operations.

Our total outstanding loan indebtedness at December 31, 2012 was $6.9 billion (which includes $800.0 million of unsecured debt and $1.6 billion of our pro rata share of unconsolidated joint venture debt). Approximately $498.0 million of such indebtedness (at our pro rata share) matures in 2013, after giving effect to refinancing transactions and loan commitments that occurred after December 31, 2012. 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 amount of cash 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, most 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. Certain Centers also have debt that could become recourse debt to us if the Center is unable to discharge such debt obligation and, in certain circumstances, we may incur liability with respect to such debt greater than our legal ownership.

***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 and, in more limited circumstances, equity 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. The credit markets experienced a severe dislocation during 2008 and 2009, which, for certain periods of time, resulted in the near unavailability of debt financing for even the most creditworthy borrowers. Although the credit markets have recovered from this severe dislocation, there are a number of continuing effects, including a weakening of many traditional sources of debt financing and changes in underwriting standards and terms. Following the severe recession that began in 2007, the capital markets also experienced significant volatility and disruption. While the capital markets have improved, additional levels of market disruption and volatility could materially adversely impact our ability to access the capital markets for equity financings. There are no assurances that we will continue to 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 debt refinancing could also impose more restrictive terms.

In addition, the federal government's failure to increase the amount of debt that it is statutorily permitted to incur as needed to meet its future financial commitments or a downgrade in the debt rating on U.S. government securities could lead to a weakened U.S. dollar, rising interest rates and constrained access to capital, which could materially adversely affect the U.S. and global economies, increase our costs of borrowing and materially adversely affect our results of operations and financial condition.

### RISKS RELATED TO OUR ORGANIZATIONAL STRUCTURE

***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 our executive officers and as members 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.

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

We own partial interests in property partnerships that own 27 Joint Venture Centers as well as 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 have fiduciary responsibilities to our partners that could affect decisions concerning the Joint Venture Centers. Third parties in certain Joint Venture Centers (notwithstanding our majority legal ownership) 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 capital contributions, as well as decisions that could have an adverse impact on us.

In addition, we may lose our management and other rights relating to the Joint Venture Centers if:

we fail to contribute our share of additional capital needed by the property partnerships;

we default under a partnership agreement for a property partnership or other agreements relating to the property partnerships or the Joint Venture Centers; or

with respect to certain of the Joint Venture Centers, if certain designated key employees no longer are employed in the designated positions.

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 and, in certain circumstances, we may incur liability with respect to such debt greater than our legal ownership.

Our legal ownership interest in a joint venture vehicle may, at times, not equal our economic interest in the entity because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, our actual economic interest (as distinct from our legal ownership interest) in certain of the Joint Venture Centers could fluctuate from time to time and may not wholly align with our legal ownership interests. Substantially all of our joint venture agreements contain rights of first refusal, buy-sell provisions, exit rights, default dilution remedies and/or other break up provisions or remedies which are customary in real estate joint venture agreements and which may, positively or negatively, affect the ultimate realization of cash flow and/or capital or liquidation proceeds.

***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.

***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 who serve as one of our executive officers and directors). In addition to enhancing preservation of our status as a REIT, the Ownership Limit may:

have the effect of delaying, deferring or preventing a change in control of us or other transaction without the approval of our board of directors, even if the change in control or other transaction is in the best interest of our stockholders; and

limit the opportunity for our stockholders to receive a premium for their common stock or preferred stock that they might otherwise receive if an investor were attempting to acquire a block of stock in excess of the Ownership Limit or otherwise effect a change in control of us.

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 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:

advance notice requirements for stockholder nominations of directors and stockholder proposals to be considered at stockholder meetings;

the obligation of the directors to consider a variety of factors (in addition to maximizing stockholder value) with respect to a proposed business combination or other change of control transaction;

the authority of the directors to classify or reclassify unissued shares and issue one or more series of common stock or preferred stock;

the authority to create and issue rights entitling the holders thereof to purchase shares of stock or other securities or property from us; and

limitations on the amendment of our Charter and bylaws, the dissolution or change in control of us, and the liability of our directors and officers.

*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.

### FEDERAL INCOME TAX RISKS

***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.

In addition, we currently hold certain of our properties through subsidiaries that have elected to be taxed as REITs and we may in the future determine that it is in our best interests to hold one or more of our other properties through one or more subsidiaries that elect to be taxed as REITs. If any of these subsidiaries fails to qualify as a REIT for U.S. federal income tax purposes, then we may also fail to qualify as a REIT for U.S. federal income tax purposes.

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

we will not be allowed a deduction for distributions to stockholders in computing our taxable income; and

we will be subject to U.S. federal income tax on our taxable income at regular corporate rates.

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 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.

### Tax legislative or regulatory action could adversely affect us or our investors.

In recent years, numerous legislative, judicial, and administrative changes have been made to the U.S. federal income tax laws applicable to investments similar to an investment in our stock. Additional changes to tax laws are likely to continue in the future, and we cannot assure you that any such changes will not adversely affect the taxation of us or our stockholders. Any such changes could have an adverse effect on an investment in our stock or on the market value or the resale potential of our properties.

## Properties

As filed, 32,571 characters.

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) CONSOLIDATED CENTERS: | 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 | Non-Owned Anchors(3) | Company Owned Anchors(3) | Sales PSF(4) |
| ---: | --- | --- | --- | ---: | ---: | ---: | --- | --- | ---: |
| 100% | Arrowhead Towne Center(5) Glendale, Arizona | 1993/2002 | 2004 | 1,196,000 | 388,000 | 98.1% | Dillard's jcpenney Macy's Sears | Dick's Sporting Goods Forever 21 | $635 |
| 100% | Capitola Mall(6) Capitola, California | 1977/1995 | 1988 | 586,000 | 196,000 | 84.8% | Macy's Sears Target | Kohl's | 327 |
| 50.1% | Chandler Fashion Center Chandler, Arizona | 2001/2002 | — | 1,323,000 | 638,000 | 96.7% | Dillard's Macy's Nordstrom Sears | — | 564 |
| 100% | Chesterfield Towne Center Richmond, Virginia | 1975/1994 | 2000 | 1,016,000 | 473,000 | 91.9% | — | Garden Ridge jcpenney Macy's Sears | 361 |
| 100% | Danbury Fair Mall Danbury, Connecticut | 1986/2005 | 2010 | 1,289,000 | 583,000 | 96.9% | jcpenney Macy's Sears | Forever 21 Lord & Taylor | 623 |
| 100% | Deptford Mall Deptford, New Jersey | 1975/2006 | 1990 | 1,040,000 | 344,000 | 99.3% | jcpenney Macy's Sears | Boscov's | 497 |
| 100% | Desert Sky Mall Phoenix, Arizona | 1981/2002 | 2007 | 890,000 | 280,000 | 96.2% | Burlington Coat Factory Dillard's Sears | La Curacao Mercado de los Cielos | 263 |
| 100% | Eastland Mall(6) Evansville, Indiana | 1978/1998 | 1996 | 1,042,000 | 552,000 | 99.5% | Dillard's Macy's | jcpenney | 401 |
| 100% | Fashion Outlets of Niagara Falls USA Niagara Falls, New York | 1982/2011 | 2009 | 530,000 | 530,000 | 94.5% | — | — | 571 |
| 100% | Fiesta Mall Mesa, Arizona | 1979/2004 | 2009 | 933,000 | 414,000 | 86.1% | Dillard's Macy's Sears | — | 235 |
| 100% | Flagstaff Mall Flagstaff, Arizona | 1979/2002 | 2007 | 347,000 | 143,000 | 89.7% | Dillard's Sears | jcpenney | 296 |
| 100% | FlatIron Crossing(7) Broomfield, Colorado | 2000/2002 | 2009 | 1,443,000 | 799,000 | 89.4% | Dillard's Macy's Nordstrom | Dick's Sporting Goods | 548 |
| 50.1% | Freehold Raceway Mall Freehold, New Jersey | 1990/2005 | 2007 | 1,675,000 | 877,000 | 95.1% | jcpenney Lord & Taylor Macy's Nordstrom Sears | — | 623 |
| 100% | Fresno Fashion Fair Fresno, California | 1970/1996 | 2006 | 962,000 | 401,000 | 97.0% | Macy's Women's & Home | Forever 21 jcpenney Macy's Men's & Children's | 630 |
| 100% | Great Northern Mall(8) Clay, New York | 1988/2005 | — | 894,000 | 564,000 | 93.3% | Macy's Sears | — | 263 |
| 100% | Green Tree Mall Clarksville, Indiana | 1968/1975 | 2005 | 793,000 | 288,000 | 91.2% | Dillard's | Burlington Coat Factory jcpenney Sears | 400 |
| 100% | Kings Plaza Shopping Center(6)(9) Brooklyn, New York | 1971/2012 | 2002 | 1,198,000 | 469,000 | 95.5% | Macy's | Lowe's Sears | 680 |
| 100% | La Cumbre Plaza(6) Santa Barbara, California | 1967/2004 | 1989 | 494,000 | 177,000 | 79.7% | Macy's | Sears | 391 |
| 100% | Lake Square Mall Leesburg, Florida | 1980/1998 | 1995 | 559,000 | 263,000 | 86.4% | Target | Belk jcpenney Sears | 232 |
| 100% | Northgate Mall San Rafael, California | 1964/1986 | 2010 | 721,000 | 251,000 | 95.9% | — | Kohl's Macy's Sears | 387 |

28

| 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 | Non-Owned Anchors(3) | Company Owned Anchors(3) | Sales PSF(4) |
| ---: | --- | ---: | ---: | ---: | --- | --- | ---: |
| 100% | NorthPark Mall Davenport, Iowa 1973/1998 2001 | 1,071,000 | 421,000 | 89.0% | Dillard's jcpenney Sears Von Maur | Younkers | $310 |
| 100% | Northridge Mall Salinas, California 1972/2003 1994 | 890,000 | 353,000 | 97.2% | Macy's Sears | Forever 21 jcpenney | 342 |
| 100% | Oaks, The Thousand Oaks, California 1978/2002 2009 | 1,136,000 | 578,000 | 94.4% | jcpenney Macy's Macy's Men's & Home | Nordstrom | 505 |
| 100% | Pacific View Ventura, California 1965/1996 2001 | 1,017,000 | 368,000 | 96.9% | jcpenney Sears Target | Macy's | 419 |
| 100% | Paradise Valley Mall Phoenix, Arizona 1979/2002 2009 | 1,146,000 | 366,000 | 88.2% | Dillard's jcpenney Macy's | Costco Sears | 287 |
| 100% | Rimrock Mall Billings, Montana 1978/1996 1999 | 603,000 | 295,000 | 92.0% | Dillard's Dillard's Men's | Herberger's jcpenney | 424 |
| 100% | Rotterdam Square Schenectady, New York 1980/2005 1990 | 585,000 | 275,000 | 86.1% | Macy's | K-Mart Sears | 232 |
| 100% | Salisbury, Centre at Salisbury, Maryland 1990/1995 2005 | 862,000 | 364,000 | 96.3% | Macy's | Boscov's jcpenney Sears | 311 |
| 100% | Santa Monica Place Santa Monica, California 1980/1999 2010 | 471,000 | 248,000 | 94.3% | — | Bloomingdale's Nordstrom | 723 |
| 84.9% | SanTan Village Regional Center Gilbert, Arizona 2007/— 2009 | 991,000 | 653,000 | 96.4% | Dillard's Macy's | — | 477 |
| 100% | Somersville Towne Center Antioch, California 1966/1986 2004 | 349,000 | 176,000 | 84.7% | Sears | Macy's | 287 |
| 100% | SouthPark Mall Moline, Illinois 1974/1998 1990 | 1,010,000 | 435,000 | 86.9% | Dillard's Von Maur | jcpenney Sears Younkers | 248 |
| 100% | South Plains Mall Lubbock, Texas 1972/1998 1995 | 1,131,000 | 471,000 | 90.2% | Sears | Bealls Dillard's (two) jcpenney | 469 |
| 100% | South Towne Center Sandy, Utah 1987/1997 1997 | 1,276,000 | 499,000 | 88.7% | Dillard's | Forever 21 jcpenney Macy's Target | 374 |
| 100% | Towne Mall Elizabethtown, Kentucky 1985/2005 1989 | 352,000 | 181,000 | 88.4% | — | Belk jcpenney Sears | 320 |
| 100% | Tucson La Encantada Tucson, Arizona 2002/2002 2005 | 242,000 | 242,000 | 90.3% | — | — | 673 |
| 100% | Twenty Ninth Street(6) Boulder, Colorado 1963/1979 2007 | 841,000 | 550,000 | 95.8% | Macy's | Home Depot | 588 |
| 100% | Valley Mall Harrisonburg, Virginia 1978/1998 1992 | 504,000 | 231,000 | 94.0% | Target | Belk jcpenney | 266 |
| 100% | Valley River Center(8) Eugene, Oregon 1969/2006 2007 | 899,000 | 323,000 | 95.6% | Macy's | jcpenney Sports Authority | 496 |
| 100% | Victor Valley, Mall of Victorville, California 1986/2004 2012 | 494,000 | 253,000 | 93.7% | Macy's(10) | jcpenney Sears | 460 |
| 100% | Vintage Faire Mall Modesto, California 1977/1996 2008 | 1,127,000 | 427,000 | 99.1% | Forever 21 Macy's Women's & Children's Sears | jcpenney Macy's Men's & Home | 578 |
| 100% | Westside Pavilion Los Angeles, California 1985/1998 2007 | 754,000 | 396,000 | 95.8% | Macy's | Nordstrom | 362 |
| 100% | Wilton Mall Saratoga Springs, New York 1990/2005 1998 | 736,000 | 501,000 | 95.7% | jcpenney | Bon-Ton, The Sears | 313 |
|  | **Total Consolidated Centers** | 37,418,000 | 17,236,000 | 93.4% |  |  | $463 |
| **UNCONSOLIDATED JOINT VENTURE CENTERS (VARIOUS PARTNERS):** |  |  |  |  |  |  |  |
| 50% | Biltmore Fashion Park Phoenix, Arizona 1963/2003 2006 | 529,000 | 224,000 | 87.6% | — | Macy's Saks Fifth Avenue | $903 |
| 50% | Broadway Plaza(6) Walnut Creek, California 1951/1985 1994 | 775,000 | 213,000 | 97.6% | Macy's Women's, Children's & Home | Macy's Men's & Juniors Neiman Marcus Nordstrom | $657 |

29

| 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 | Non-Owned Anchors(3) | Company Owned Anchors(3) | Sales PSF(4) |
| ---: | --- | ---: | ---: | ---: | --- | --- | ---: |
| 51% | Cascade Mall(11) Burlington, Washington 1989/1999 1998 | 595,000 | 270,000 | 92.8% | Target | jcpenney Macy's Macy's Men's, Children's & Home Sears | 299 |
| 50.1% | Corte Madera, Village at Corte Madera, California 1985/1998 2005 | 440,000 | 222,000 | 98.3% | Macy's Nordstrom | — | 882 |
| 50% | Inland Center(6)(8) San Bernardino, California 1966/2004 2004 | 933,000 | 205,000 | 94.3% | Macy's Sears | Forever 21 | 399 |
| 50% | Kierland Commons Scottsdale, Arizona 1999/2005 2003 | 433,000 | 433,000 | 95.1% | — | — | 641 |
| 51% | Kitsap Mall(11) Silverdale, Washington 1985/1999 1997 | 846,000 | 386,000 | 92.4% | Kohl's Sears | jcpenney Macy's | 383 |
| 51% | Lakewood Center(11) Lakewood, California 1953/1975 2008 | 2,079,000 | 1,014,000 | 93.7% | — | Costco Forever 21 Home Depot jcpenney Macy's Target | 412 |
| 51% | Los Cerritos Center(8)(11) Cerritos, California 1971/1999 2010 | 1,305,000 | 511,000 | 97.2% | Macy's Nordstrom Sears | Forever 21 | 682 |
| 50% | North Bridge, The Shops at(6) Chicago, Illinois 1998/2008 — | 682,000 | 422,000 | 90.1% | — | Nordstrom | 805 |
| 51% | Queens Center(6) Queens, New York 1973/1995 2004 | 967,000 | 411,000 | 97.3% | jcpenney Macy's | — | 1,004 |
| 50% | Ridgmar Mall Fort Worth, Texas 1976/2005 2000 | 1,273,000 | 399,000 | 84.6% | Dillard's jcpenney Macy's Neiman Marcus Sears | — | 332 |
| 50% | Scottsdale Fashion Square Scottsdale, Arizona 1961/2002 2009 | 1,807,000 | 837,000 | 95.1% | Dillard's | Barneys New York Macy's Neiman Marcus Nordstrom | 603 |
| 51% | Stonewood Center(6)(11) Downey, California 1953/1997 1991 | 928,000 | 355,000 | 99.4% | — | jcpenney Kohl's Macy's Sears | 500 |
| 66.7% | Superstition Springs Center(6) Mesa, Arizona 1990/2002 2002 | 1,207,000 | 444,000 | 92.3% | Best Buy Burlington Coat Factory Dillard's jcpenney Macy's Sears | — | 334 |
| 50% | Tysons Corner Center(6) McLean, Virginia 1968/2005 2005 | 1,991,000 | 1,103,000 | 97.5% | — | Bloomingdale's L.L. Bean Lord & Taylor Macy's Nordstrom | 820 |
| 51% | Washington Square(11) Portland, Oregon 1974/1999 2005 | 1,454,000 | 519,000 | 93.3% | Macy's Sears | Dick's Sporting Goods jcpenney Nordstrom | 909 |
| 19% | West Acres Fargo, North Dakota 1972/1986 2001 | 977,000 | 424,000 | 97.1% | Herberger's Macy's | jcpenney Sears | 535 |
|  | **Total Unconsolidated Joint Ventures** | 19,221,000 | 8,392,000 | 94.5% |  |  | $629 |
|  | **Total Regional Shopping Centers** | 56,639,000 | 25,628,000 | 93.8% |  |  | $517 |
| **COMMUNITY / POWER CENTERS** |  |  |  |  |  |  |  |
| 50% | Boulevard Shops(12) Chandler, Arizona 2001/2002 2004 | 185,000 | 185,000 | 99.2% | — | — | $429 |
| 73.2% | Camelback Colonnade(8)(12) Phoenix, Arizona 1961/2002 1994 | 621,000 | 541,000 | 97.7% | — | — | 351 |
| 39.7% | Estrella Falls, The Market at(12) Goodyear, Arizona 2009/— 2009 | 238,000 | 238,000 | 95.5% | — | — | (14) |
| 100% | Flagstaff Mall, The Marketplace at(6)(13) Flagstaff, Arizona 2007/— — | 268,000 | 147,000 | 100.0% | — | Home Depot | (14) |

30

| 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 | Non-Owned Anchors(3) | Company Owned Anchors(3) | Sales PSF(4) |
| ---: | --- | ---: | ---: | ---: | ---: | ---: | ---: |
| 100% | Panorama Mall(13) Panorama, California 1955/1979 2005 | 313,000 | 148,000 | 92.8% | Wal-Mart | — | $349 |
| 51.3% | Promenade at Casa Grande(13) Casa Grande, Arizona 2007/— 2009 | 934,000 | 496,000 | 95.9% | Dillard's jcpenney Kohl's Target | — | 193 |
| 51% | Redmond Town Center(6)(11)(12) Redmond, Washington 1997/1999 2004 | 695,000 | 585,000 | 89.2% | — | Macy's | 361 |
|  | **Total Community / Power Centers** | 3,254,000 | 2,340,000 | 94.9% |  |  | $335 |
|  | **Total before Centers under redevelopment and other assets** | 59,893,000 | 27,968,000 | 93.9% |  |  |  |
| **COMMUNITY / POWER CENTERS UNDER REDEVELOPMENT:** |  |  |  |  |  |  |  |
| 50% | Atlas Park, The Shops at(12) Queens, New York 2006/2011 — | 377,000 | 377,000 | (16) | — | — | (16) |
| 100% | Southridge Mall(13) Des Moines, Iowa 1975/1998 1998 | 741,000 | 416,000 | (16) | — | Sears Target Younkers | (16) |
|  | **Total Community / Power Centers under redevelopment** | 1,118,000 | 793,000 |  |  |  |  |
| **OTHER ASSETS:** |  |  |  |  |  |  |  |
| 100% | Various(13)(15) | 1,078,000 | 218,000 | 100.0% | — | Burlington Coat Factory Cabela's Forever 21 Kohl's |  |
| 100% | 500 North Michigan Avenue(13) Chicago, Illinois 1997/1999 2004 | 327,000 | 327,000 | 73.2% | — | — |  |
| 100% | Paradise Village Ground Leases(13) Phoenix, Arizona | 58,000 | 58,000 | 65.6% | — | — |  |
| 100% | Paradise Village Office Park II(13) Phoenix, Arizona | 46,000 | 46,000 | 88.7% | — | — |  |
| 51% | Redmond Town Center-Office(11)(12) Redmond, Washington | 582,000 | 582,000 | 99.1% | — | — |  |
| 50% | Scottsdale Fashion Square-Office(12) Scottsdale, Arizona | 123,000 | 123,000 | 83.1% | — | — |  |
| 50% | Tysons Corner Center-Office(12) McLean, Virginia | 163,000 | 163,000 | 76.6% | — | — |  |
| 30% | Wilshire Boulevard(12) Santa Monica, California | 40,000 | 40,000 | 100.0% |  |  |  |
|  | **Total Other Assets** | 2,417,000 | 1,557,000 |  |  |  |  |
|  | **Grand Total at December 31, 2012** | 63,428,000 | 30,318,000 |  |  |  |  |
| **2013 ACQUISITION CENTER:** |  |  |  |  |  |  |  |
| 100% | Green Acres Mall(6)(17) Valley Stream, New York 1956/2013 2007 | 1,800,000 | 1,050,000 | — | — | BJ's Wholesale Club jcpenney Kohl's Macy's Macy's Men's/ Furniture Gallery Sears Wal-Mart | $535 |
|  | **Grand Total** | 65,228,000 | 31,368,000 |  |  |  |  |

(1)

The Company's ownership interest in this table reflects its legal ownership interest. Legal ownership may, at times, not equal the Company's economic interest in the listed properties because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company's actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests. Substantially all of the Company's joint venture agreements contain rights of first refusal, buy-sell provisions, exit rights, default dilution remedies and/or other break up provisions or remedies which are customary in real estate joint venture agreements and which may, positively or negatively, affect the ultimate realization of cash flow and/or capital or liquidation proceeds. See "Item 1A.—Risks Related to Our Organizational Structure—Outside partners in Joint Venture Centers result in additional risks to our stockholders."

(2)

With respect to 56 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 14 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 has an option or right of first refusal to purchase the land. The termination dates of the ground leases range from 2013 to 2132.

(3)

Total GLA includes GLA attributable to Anchors (whether owned or non-owned) and Mall and Freestanding Stores as of December 31, 2012. "Non-owned Anchors" is space not owned by the Company (or, in the case of Joint Venture Centers, by the joint venture property partnership or limited liability company) which is occupied by Anchor tenants. "Company owned Anchors" is space owned (or leased) by the Company (or, in the case of Joint Venture Centers, by the joint venture property partnership or limited liability company) and leased (or subleased) to Anchor tenants.

(4)

Sales per square foot 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 also based on tenants 10,000 square feet and under for Regional Shopping Centers.

(5)

On October 26, 2012, the Company acquired the remaining 33.3% ownership interest in Arrowhead Towne Center resulting in 100% ownership.

(6)

Portions of the land on which the Center is situated are subject to one or more long-term ground leases.

(7)

On October 3, 2012, the Company acquired the 75% ownership interest in FlatIron Crossing resulting in 100% ownership.

(8)

These Centers have a vacant Anchor location. The Company is seeking various replacement tenants and/or contemplating redevelopment opportunities for these vacant sites.

(9)

The Company acquired Kings Plaza Shopping Center on November 28, 2012.

(10)

Macy's is scheduled to open a 103,000 square foot store at Mall of Victor Valley in March 2013. The Forever 21 at Mall of Victor Valley closed in January 2012.

(11)

These properties are part of Pacific Premier Retail LP, an unconsolidated joint venture.

(12)

Included in Unconsolidated Joint Venture Centers.

(13)

Included in Consolidated Centers.

(14)

These Centers have no tenants under 10,000 square feet and therefore sales per square foot is not applicable.

(15)

The Company owns a portfolio of 14 stores located at shopping centers not owned by the Company. Of these 14 stores, four have been leased to Forever 21, one has been leased to Kohl's, one has been leased to Burlington Coat Factory, one has been leased to Cabela's, three have been leased for non-Anchor usage and the remaining four locations are vacant. The Company is currently seeking replacement tenants for these vacant sites. With respect to nine of the 14 stores, the underlying land is owned in fee entirely by the Company. With respect to the remaining five 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 2018 to 2027.

(16)

Tenant spaces have been intentionally held off the market and remain vacant because of redevelopment plans. As a result, the Company believes the percentage of mall and freestanding GLA leased and the sales per square foot at these redevelopment properties is not meaningful data.

(17)

On January 24, 2013, the Company acquired Green Acres Mall, a 1.8 million square foot super regional mall. Including Green Acres Mall, the Company owned or had an ownership interest in 62 regional shopping centers and nine community/power centers aggregating approximately 65 million square feet of GLA.

### 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, 2012 (dollars in thousands in table and footnotes):

| Property Pledged as Collateral Consolidated Centers: | Fixed or Floating | Carrying Amount(1) | Effective Interest Rate(2) | Annual Debt Service(3) | Maturity Date(4) | Balance Due on Maturity | Earliest Date Notes Can Be Defeased or Be Prepaid |
| --- | --- | ---: | ---: | ---: | --- | ---: | --- |
| Arrowhead Towne Center(5) | Fixed | $243,176 | 2.76% | $13,572 | 10/5/18 | $199,487 | Any Time |
| Chandler Fashion Center(6)(7) | Fixed | 200,000 | 3.77% | 7,500 | 7/1/19 | 200,000 | 7/1/15 |
| Chesterfield Towne Center(8) | Fixed | 110,000 | 4.80% | 6,876 | 10/1/22 | 92,380 | 10/13/14 |
| Danbury Fair Mall(9) | Fixed | 239,646 | 5.53% | 18,456 | 10/1/20 | 188,854 | Any Time |
| Deptford Mall(10) | Fixed | 205,000 | 3.76% | 11,376 | 4/3/23 | 160,294 | 12/5/15 |
| Deptford Mall | Fixed | 14,800 | 6.46% | 1,212 | 6/1/16 | 13,877 | Any Time |
| Eastland Mall | Fixed | 168,000 | 5.79% | 9,732 | 6/1/16 | 168,000 | Any Time |
| Fashion Outlets of Chicago(11) | Floating | 9,165 | 3.00% | 264 | 3/5/17 | 9,165 | Any Time |
| Fashion Outlets of Niagara Falls USA | Fixed | 126,584 | 4.89% | 8,724 | 10/6/20 | 103,810 | Any Time |
| Fiesta Mall | Fixed | 84,000 | 4.98% | 4,092 | 1/1/15 | 84,000 | Any Time |
| Flagstaff Mall | Fixed | 37,000 | 5.03% | 1,812 | 11/1/15 | 37,000 | Any Time |
| FlatIron Crossing(12) | Fixed | 173,561 | 1.96% | 13,224 | 12/1/13 | 164,187 | Any Time |
| Freehold Raceway Mall(6) | Fixed | 232,900 | 4.20% | 9,660 | 1/1/18 | 216,258 | 1/1/2014 |
| Fresno Fashion Fair(9) | Fixed | 161,203 | 6.76% | 13,248 | 8/1/15 | 154,596 | Any Time |
| Great Northern Mall | Fixed | 36,395 | 5.19% | 2,808 | 12/1/13 | 35,566 | Any Time |
| Kings Plaza Shopping Center(13) | Fixed | 354,000 | 3.67% | 26,748 | 12/3/19 | 427,423 | 2/25/15 |
| Northgate Mall(14) | Floating | 64,000 | 3.09% | 1,584 | 3/1/17 | 64,000 | Any Time |
| Oaks, The(15) | Fixed | 218,119 | 4.14% | 12,768 | 6/5/22 | 174,311 | Any Time |
| Pacific View(16) | Fixed | 138,367 | 4.08% | 8,016 | 4/1/22 | 110,597 | 4/12/17 |
| Paradise Valley Mall(17) | Floating | 81,000 | 6.30% | 7,500 | 8/31/14 | 76,000 | Any Time |
| Promenade at Casa Grande(18) | Floating | 73,700 | 5.21% | 3,360 | 12/30/13 | 73,700 | Any Time |
| Salisbury, Centre at | Fixed | 115,000 | 5.83% | 6,660 | 5/1/16 | 115,000 | Any Time |
| Santa Monica Place(19) | Fixed | 240,000 | 2.99% | 12,048 | 1/3/18 | 214,118 | 12/28/15 |
| SanTan Village Regional Center(20) | Floating | 138,087 | 2.61% | 3,192 | 6/13/13 | 138,087 | Any Time |
| South Plains Mall | Fixed | 101,340 | 6.57% | 7,776 | 4/11/15 | 97,824 | Any Time |
| South Towne Center | Fixed | 85,247 | 6.39% | 6,648 | 11/5/15 | 81,162 | Any Time |
| Towne Mall(21) | Fixed | 23,369 | 4.48% | 1,404 | 11/1/22 | 18,886 | 12/19/14 |
| Tucson La Encantada(22)(23) | Fixed | 74,185 | 4.23% | 4,416 | 3/1/22 | 59,788 | Any Time |
| Twenty Ninth Street(24) | Floating | 107,000 | 3.04% | 3,024 | 1/18/16 | 102,776 | Any Time |
| Valley Mall | Fixed | 42,891 | 5.85% | 3,360 | 6/1/16 | 40,169 | Any Time |
| Valley River Center | Fixed | 120,000 | 5.59% | 6,696 | 2/1/16 | 120,000 | Any Time |
| Victor Valley, Mall of(25) | Floating | 90,000 | 2.12% | 1,644 | 11/6/14 | 90,000 | Any Time |
| Vintage Faire Mall(26) | Floating | 135,000 | 3.51% | 4,224 | 4/27/15 | 130,252 | Any Time |
| Westside Pavilion(27) | Fixed | 154,608 | 4.49% | 9,396 | 10/1/22 | 125,489 | 9/28/14 |
| Wilton Mall(28) | Floating | 40,000 | 1.22% | 384 | 8/1/13 | 40,000 | Any Time |
|  |  | $4,437,343 |  |  |  |  |  |

33

| Property Pledged as Collateral Unconsolidated Joint Venture Centers (at the Company's Pro Rata Share): | Fixed or Floating | Carrying Amount(1) | Effective Interest Rate(2) | Annual Debt Service(3) | Maturity Date(4) | Balance Due on Maturity | Earliest Date Notes Can Be Defeased or Be Prepaid |
| --- | --- | ---: | ---: | ---: | --- | ---: | --- |
| Biltmore Fashion Park(50.0%) | Fixed | $29,259 | 8.25% | $2,642 | 10/1/14 | $28,758 | Any Time |
| Boulevard Shops(50.0%)(29) | Floating | 10,327 | 3.26% | 487 | 12/16/13 | 10,122 | Any Time |
| Broadway Plaza(50.0%)(23) | Fixed | 70,661 | 6.12% | 5,460 | 8/15/15 | 67,443 | Any Time |
| Camelback Colonnade(73.2%) | Fixed | 35,250 | 4.82% | 1,606 | 10/12/15 | 35,250 | 10/12/2013 |
| Corte Madera, The Village at(50.1%) | Fixed | 38,776 | 7.27% | 3,265 | 11/1/16 | 36,696 | Any Time |
| Estrella Falls, The Market at(39.7%)(30) | Floating | 13,305 | 3.17% | 394 | 6/1/15 | 13,305 | Any Time |
| Inland Center(50.0%)(31) | Floating | 25,000 | 3.46% | 804 | 4/1/16 | 25,000 | Any Time |
| Kierland Commons(50.0%)(32) | Fixed | 35,072 | 5.74% | 2,838 | 1/2/13 | 35,072 | Any Time |
| Lakewood Center(51.0%) | Fixed | 127,500 | 5.43% | 6,899 | 6/1/15 | 127,500 | Any Time |
| Los Cerritos Center(51.0%)(9) | Fixed | 99,774 | 4.50% | 6,173 | 7/1/18 | 89,057 | Any Time |
| North Bridge, The Shops at(50.0%)(23) | Fixed | 98,860 | 7.52% | 8,601 | 6/15/16 | 94,258 | Any Time |
| Pacific Premier Retail LP(51.0%)(33) | Floating | 58,650 | 4.98% | 2,175 | 11/3/13 | 58,650 | Any Time |
| Queens Center(51.0%)(34) | Fixed | 306,000 | 3.65% | 10,670 | 1/1/25 | 306,000 | 1/29/15 |
| Ridgmar Mall(50.0%)(35) | Floating | 26,000 | 2.96% | 692 | 4/11/17 | 24,800 | Any Time |
| Scottsdale Fashion Square(50.0%)(36) | Fixed | 275,000 | 5.66% | 15,565 | 7/8/13 | 275,000 | Any Time |
| Stonewood Center(51.0%) | Fixed | 55,541 | 4.67% | 3,918 | 11/1/17 | 48,180 | 11/02/2013 |
| Superstition Springs Center(66.7%)(37) | Floating | 45,000 | 2.82% | 1,131 | 10/28/16 | 45,000 | Any Time |
| Tyson's Corner Center(50.0%) | Fixed | 151,453 | 4.78% | 11,232 | 2/17/14 | 147,007 | Any Time |
| Washington Square(51.0%) | Fixed | 120,794 | 6.04% | 9,173 | 1/1/16 | 114,482 | Any Time |
| West Acres(19.0%) | Fixed | 11,671 | 6.41% | 1,069 | 10/1/16 | 10,315 | Any Time |
| Wilshire Boulevard(30.0%) | Fixed | 1,691 | 6.35% | 153 | 1/1/33 | — | Any Time |
|  |  | $1,635,584 |  |  |  |  |  |

(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 debt premiums (discounts) as of December 31, 2012 consisted of the following:

#### Consolidated Centers

| Property Pledged as Collateral |  |
| --- | ---: |
| Arrowhead Towne Center | $17,716 |
| Deptford Mall | (19) |
| Fashion Outlets of Niagara Falls USA | 7,270 |
| FlatIron Crossing | 5,232 |
| Great Northern Mall | (28) |
| Valley Mall | (307) |
|  | $29,864 |

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

| Property Pledged as Collateral |  |
| --- | ---: |
| Tysons Corner Center | $712 |
| Wilshire Boulevard | (105) |
|  | $607 |

(2)

The interest rate disclosed represents the effective interest rate, including the debt premiums (discounts) and deferred finance costs.

(3)

The annual debt service represents the annual 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)

On October 26, 2012, the Company purchased the remaining 33.3% interest in Arrowhead Towne Center that it did not own (See "Item 1. Business—Recent Developments—Acquisitions and Dispositions"). In connection with this acquisition, the Company assumed the loan on the property with a fair value of $244,403 that bears interest at an effective rate of 2.76% and matures on October 5, 2018.

(6)

A 49.9% interest in the loan has been assumed by a third party in connection with a co-venture arrangement.

(7)

On June 29, 2012, the Company replaced the existing loan on the property with a new $200,000 loan that bears interest at an effective rate of 3.77% and matures on July 1, 2019.

(8)

On September 17, 2012, the Company placed a $110,000 loan on the property that bears interest at an effective rate of 4.80% and matures on October 1, 2022.

(9)

Northwestern Mutual Life ("NML") is the lender of 50% of the loan. NML is considered a related party as it is a joint venture partner with the Company in Broadway Plaza.

(10)

On December 5, 2012, the Company replaced the existing loan on the property with a new $205,000 loan that bears interest at an effective interest rate of 3.76% and matures on April 3, 2023.

(11)

On March 2, 2012, the joint venture placed a new construction loan on the property that allows for borrowings up to $140,000, bears interest at LIBOR plus 2.50% and matures on March 5, 2017.

(12)

On October 3, 2012, the Company purchased the 75% interest in FlatIron Crossing that it did not own (See "Item 1. Business—Recent Developments—Acquisitions and Dispositions"). In connection with this acquisition, the Company assumed the loan on the property with a fair value of $175,720 that bears interest at an effective rate of 1.96% and matures on December 1, 2013.

(13)

On November 28, 2012, in connection with the Company's acquisition of Kings Plaza Shopping Center (See "Item 1. Business—Recent Developments—Acquisitions and Dispositions"), the Company placed a new loan on the property that allows for borrowing up to $500,000 at an effective interest rate of 3.67% and matures on December 3, 2019. Concurrent with the acquisition, the Company borrowed $354,000 on the loan. On January 3, 2013, the Company exercised its option to borrow the remaining $146,000 on the loan.

(14)

On March 23, 2012, the Company borrowed an additional $25,885 and modified the loan to bear interest at LIBOR plus 2.25% with a maturity of March 1, 2017.

(15)

On May 17, 2012, the Company replaced the existing loan on the property with a new $220,000 loan that bears interest at an effective rate of 4.14% and matures on June 5, 2022.

(16)

On March 30, 2012, the Company placed a new $140,000 loan on the property that bears interest at an effective rate of 4.08% and matures on April 1, 2022.

(17)

The loan bears interest at LIBOR plus 4.0% with a total interest rate floor of 5.50% and matures on August 31, 2014.

(18)

The loan bears interest at LIBOR plus 4.0% with a LIBOR rate floor of 0.50% and matures on December 30, 2013.

(19)

On December 28, 2012, the Company placed a new $240,000 loan on the property that bears interest at an effective interest rate of 2.99% and matures on January 3, 2018.

(20)

The loan bears interest at LIBOR plus 2.10% and matures on June 13, 2013.

(21)

On October 25, 2012, the Company replaced the existing loan on the property with a new $23,400 loan that bears interest at an effective interest rate of 4.48% and matures on November 1, 2022.

(22)

On February 1, 2012, the Company replaced the existing loan on the property with a new $75,135 loan that bears interest at an effective rate of 4.23% and matures on March 1, 2022.

(23)

NML is the lender on this loan.

(24)

The loan bears interest at LIBOR plus 2.63% and matures on January 18, 2016.

(25)

On October 5, 2012, the Company modified and extended the loan to November 6, 2014. The loan bears interest at LIBOR plus 1.60% until May 6, 2013 and increases to LIBOR plus 2.25% until maturity.

(26)

The loan bears interest at LIBOR plus 3.0% and matures on April 27, 2015.

(27)

On September 6, 2012, the Company replaced the existing loan on the property with a new $155,000 loan that bears interest at an effective rate of 4.49% and matures on October 1, 2022.

(28)

The loan bears interest at LIBOR plus 0.675% and matures on August 1, 2013. As additional collateral for the loan, the Company is required to maintain a deposit of $40,000 with the lender, which has been included in restricted cash. The interest on the deposit is not restricted.

(29)

The loan bears interest at LIBOR plus 2.75% and matures on December 16, 2013.

(30)

The loan bears interest at LIBOR plus 2.75% and matures on June 1, 2015.

(31)

The loan bears interest at LIBOR plus 3.0% and matures on April 1, 2016.

(32)

On January 2, 2013, the joint venture replaced the existing loans on the property with a new $135,000 loan that bears interest at LIBOR plus 1.90% and matures on January 2, 2018, including extension options.

(33)

The credit facility bears interest at LIBOR plus 3.50%, matures on November 3, 2013 and is cross-collateralized by Cascade Mall, Kitsap Mall and Redmond Town Center.

(34)

On December 24, 2012, the joint venture replaced the existing loan on the property with a new $600,000 loan that bears interest at an effective rate of 3.65% and matures on January 1, 2025.

(35)

On April 11, 2012, the joint venture replaced the existing loan on the property with a new $52,000 loan that bears interest at LIBOR plus 2.45% and matures on April 11, 2017, including extension options.

(36)

The joint venture has entered into a commitment to replace the existing loan with a new $525,000 loan. This transaction is expected to close in March 2013.

(37)

The loan bears interest at LIBOR plus 2.30% and matures on October 28, 2016.

## Legal proceedings

As filed, 160 characters.

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

## Management's discussion and analysis

As filed, 66,820 characters.

### 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, 2012, the Operating Partnership owned or had an ownership interest in 61 regional shopping centers and nine community/power shopping centers totaling approximately 63 million square feet of GLA. These 70 regional and community/power shopping centers are referred to hereinafter as the "Centers," unless the context otherwise requires. The Company is a self-administered and self-managed REIT and conducts all of its operations through the Operating Partnership and the Management Companies.

The following discussion is based primarily on the consolidated financial statements of the Company for the years ended December 31, 2012, 2011 and 2010. It compares the results of operations and cash flows for the year ended December 31, 2012 to the results of operations and cash flows for the year ended December 31, 2011. Also included is a comparison of the results of operations and cash flows for the year ended December 31, 2011 to the results of operations and cash flows for the year ended December 31, 2010. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

#### Acquisitions and Dispositions:

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

On February 24, 2011, the Company's joint venture in Kierland Commons Investment LLC ("KCI") acquired an additional ownership interest in PHXAZ/Kierland Commons, L.L.C. ("Kierland Commons"), a 433,000 square foot regional shopping center in Scottsdale, Arizona. As a result of this transaction, the Company's ownership interest in KCI increased from 24.5% to 50.0%. The Company's share of the purchase price consisted of a cash payment of $34.2 million and the assumption of a pro rata share of debt of $18.6 million.

On February 28, 2011, the Company, in a 50/50 joint venture, acquired The Shops at Atlas Park, a 377,000 square foot community center in Queens, New York, for a total purchase price of $53.8 million. The Company's share of the purchase price was $26.9 million and was funded from the Company's cash on hand.

On February 28, 2011, the Company acquired the remaining 50% ownership interest in Desert Sky Mall, an 890,000 square foot regional shopping center in Phoenix, Arizona, that it did not own. The total purchase price was $27.6 million, which included the assumption of the third party's pro rata share of the mortgage note payable on the property of $25.8 million. Concurrent with the purchase of the partnership interest, the Company paid off the $51.5 million loan on the property.

On March 4, 2011, the Company sold a fee interest in a former Mervyn's store in Santa Fe, New Mexico, for $3.7 million, resulting in a loss on the sale of $1.9 million. The Company used the proceeds from the sale for general corporate purposes.

On April 29, 2011, the Company purchased a fee interest in a freestanding Kohl's store at Capitola Mall in Capitola, California for $28.5 million. The purchase price was paid from cash on hand.

On June 3, 2011, the Company acquired an additional 33.3% ownership interest in Arrowhead Towne Center, a 1,196,000 square foot regional shopping center in Glendale, Arizona, an additional 33.3% ownership interest in Superstition Springs Center, a 1,207,000 square foot regional shopping center in Mesa, Arizona, and an additional 50% ownership interest in the land under Superstition Springs Center ("Superstition Springs Land") in exchange for the Company's ownership interest in six anchor stores, including five former Mervyn's stores and a cash payment of $75.0 million. The cash purchase price was funded from borrowings under the Company's line of credit. This transaction is referred to herein as the "GGP Exchange".

On July 22, 2011, the Company acquired Fashion Outlets of Niagara Falls USA, a 530,000 square foot outlet center in Niagara Falls, New York. The initial purchase price of $200.0 million was funded by a cash payment of $78.6 million and the assumption of the mortgage note payable of $121.4 million. The cash purchase price was funded from borrowings under the Company's line of credit. The purchase and sale agreement includes contingent consideration based on the performance of Fashion Outlets of Niagara Falls USA from the acquisition date through July 21, 2014 that could increase the purchase price from the initial $200.0 million up to a maximum of $218.3 million. As of December 31, 2012, the Company estimated the fair value of the contingent consideration as $16.1 million, which has been included in other accrued liabilities.

On October 14, 2011, the Company sold a former Mervyn's store in Salt Lake City, Utah, for $8.1 million, resulting in a gain on the sale of assets of $3.8 million. The proceeds from the sale were used for general corporate purposes.

On November 30, 2011, the Company sold a former Mervyn's store in West Valley City, Utah, for $2.3 million, resulting in a loss on the sale of $0.2 million. The proceeds from the sale were used for general corporate purposes.

On December 31, 2011, the Company and its joint venture partner reached agreement for the distribution and conveyance of interests in SDG Macerich that owned 11 regional malls in a 50/50 partnership. Six of the eleven assets were distributed to the Company on December 31, 2011. The Company received 100% ownership of Eastland Mall in Evansville, Indiana, Lake Square Mall in Leesburg, Florida, SouthPark Mall in Moline, Illinois, Southridge Mall in Des Moines, Iowa, NorthPark Mall in Davenport, Iowa and Valley Mall in Harrisonburg, Virginia (collectively referred to herein as the "SDG Acquisition Properties"). These wholly-owned assets were recorded at fair value at the date of transfer, which resulted in a gain to the Company of $188.3 million. The gain reflected the fair value of the net assets received in excess of the book value of the Company's interest in SDG Macerich. The distribution and conveyance of the properties from SDG Macerich to the Company is referred to herein as the "SDG Transaction".

On February 29, 2012, the Company acquired a 327,000 square foot mixed-use retail/office building ("500 North Michigan Avenue") in Chicago, Illinois for $70.9 million. The building is adjacent to The Shops at North Bridge. The purchase price was paid from borrowings under the Company's line of credit.

On March 30, 2012, the Company sold its 50% ownership interest in Chandler Village Center, a 273,000 square foot community center in Chandler, Arizona, for a total sales price of $14.8 million, resulting in a gain on the sale of assets of $8.2 million. The sales price was funded by a cash payment of $6.0 million and the assumption of the Company's share of the mortgage note payable on the property of $8.8 million. The Company used the cash proceeds from the sale to pay down its line of credit and for general corporate purposes.

On March 30, 2012, the Company sold its 50% ownership interest in Chandler Festival, a 500,000 square foot community center in Chandler, Arizona, for a total sales price of $31.0 million, resulting in a gain on the sale of assets of $12.3 million. The sales price was funded by a cash payment of $16.2 million and the assumption of the Company's share of the mortgage note payable on the property of $14.8 million. The Company used the cash proceeds from the sale to pay down its line of credit and for general corporate purposes.

On March 30, 2012, the Company's joint venture in SanTan Village Power Center, a 491,000 square foot community center in Gilbert, Arizona, sold the property for $54.8 million, resulting in a gain on the sale of assets of $23.3 million for the joint venture. The Company's pro rata share of the gain recognized was $7.9 million. The Company used its share of the proceeds to pay down its line of credit and for general corporate purposes.

On April 30, 2012, the Company sold The Borgata, a 94,000 square foot community center in Scottsdale, Arizona, for $9.2 million, resulting in a loss on the sale of $1.3 million. The Company used the proceeds from the sale to pay down its line of credit and for general corporate purposes.

On May 11, 2012, the Company sold a former Mervyn's store in Montebello, California for $20.8 million, resulting in a loss on the sale of $0.4 million. The proceeds from the sale were used for general corporate purposes.

On May 17, 2012, the Company sold Hilton Village, a 80,000 square foot community center in Scottsdale, Arizona, for $24.8 million, resulting in a gain on the sale of assets of $3.1 million. The Company used the proceeds from the sale to pay down its line of credit and for general corporate purposes.

On May 31, 2012, the Company sold its 50% ownership interest in Chandler Gateway, a 260,000 square foot community center in Chandler, Arizona, for a total sales price of $14.3 million, resulting in a gain on the sale of assets of $3.4 million. The sales price was funded by a cash payment of $4.9 million and the assumption of the Company's share of the mortgage note payable on the property of $9.4 million. The Company used the cash proceeds from the sale to pay down its line of credit and for general corporate purposes.

On June 28, 2012, the Company sold Carmel Plaza, a 112,000 square foot community center in Carmel, California, for $52.0 million, resulting in a gain on the sale of assets of $7.8 million. The Company used the proceeds from the sale to pay down its line of credit.

On August 10, 2012, the Company was bought out of its ownership interest in NorthPark Center, a 1,946,000 square foot regional shopping center in Dallas, Texas, for $118.8 million, resulting in a gain of $24.6 million. The Company used the cash proceeds to pay down its line of credit.

On October 3, 2012, the Company acquired the 75% ownership interest in FlatIron Crossing, a 1,443,000 square foot regional shopping center in Broomfield, Colorado, that it did not own for a cash payment of $195.9 million and the assumption of the third party's share of the mortgage note payable of $114.5 million.

On October 26, 2012, the Company acquired the remaining 33.3% ownership interest in Arrowhead Towne Center, a 1,196,000 square foot regional shopping center in Glendale, Arizona, that it did not own for $144.4 million. The Company funded the purchase price by a cash payment of $69.0 million and the assumption of the third party's pro rata share of the mortgage note payable on the property of $75.4 million.

On November 28, 2012, the Company acquired Kings Plaza Shopping Center, a 1,198,000 square foot regional shopping center in Brooklyn, New York, for a purchase price of $756.0 million. The purchase price was funded from a cash payment of $726.0 million and the issuance of $30.0 million in restricted common stock of the Company. The cash payment was provided by the placement of a mortgage note on the property that allowed for borrowings up to $500.0 million and from borrowings under the Company's line of credit. Concurrent with the acquisition, the Company borrowed $354.0 million on the loan. On January 3, 2013, the Company exercised its option to borrow the remaining $146.0 million of the loan.

On January 24, 2013, the Company acquired Green Acres Mall, a 1,800,000 square foot regional shopping center in Valley Stream, New York, for a purchase price of $500.0 million. The purchase price was funded from the placement of a $325.0 million mortgage note on the property and $175.0 million from borrowings under the Company's line of credit.

#### Other Transactions and Events:

On July 15, 2010, a court appointed receiver assumed operational control of Valley View Center and responsibility for managing all aspects of the property. In March 2012, the Company recorded an impairment charge of $54.3 million to write down the carrying value of the long-lived assets to their estimated fair value. On April 23, 2012, the property was sold by the receiver for $33.5 million, which resulted in a gain on the extinguishment of debt of $104.0 million.

On April 1, 2011, the Company's joint venture in SDG Macerich conveyed Granite Run Mall to the mortgage note lender by a deed-in-lieu of foreclosure. The mortgage note was non-recourse. The Company's pro rata share of gain on the extinguishment of debt was $7.8 million.

On May 11, 2011, the non-recourse mortgage note payable on Shoppingtown Mall went into maturity default. As a result of the maturity default and the corresponding reduction of the estimated holding period, the Company recognized an impairment charge of $35.7 million to write-down the carrying value of the long-lived assets to their estimated fair value. On September 14, 2011, the Company exercised its right and redeemed the outside ownership interests in the Center for a cash payment of $11.4 million. On December 30, 2011, the Company conveyed the property to the mortgage note lender by a deed-in-lieu of foreclosure. As a result of the conveyance, the Company recognized an additional $3.9 million loss on the disposal of the property.

On May 31, 2012, the Company conveyed Prescott Gateway, a 584,000 square foot regional shopping center in Prescott, Arizona, to the mortgage note lender by a deed-in-lieu of foreclosure. The mortgage loan was non-recourse. As a result of the conveyance, the Company recognized a gain on the extinguishment of debt of $16.3 million.

#### Redevelopment and Development Activity:

In August 2011, the Company entered into a joint venture agreement with a subsidiary of AWE/Talisman for the development of Fashion Outlets of Chicago in the Village of Rosemont, Illinois. The Company owns 60% of the joint venture and AWE/Talisman owns 40%. The Center will be a fully enclosed two level, 526,000 square foot outlet center. The site is located within a mile of O'Hare International Airport. The project broke ground in November 2011 and is expected to be completed in August 2013. The total estimated project cost is approximately $200.0 million. As of December 31, 2012, the joint venture has incurred $91.8 million of development costs. On March 2, 2012, the joint venture obtained a construction loan on the property that allows for borrowings up to $140.0 million, bears interest at LIBOR plus 2.50% and matures March 5, 2017. As of December 31, 2012, the joint venture has borrowed $9.2 million under the loan.

The Company's joint venture in Tysons Corner, a 2,154,000 square foot regional shopping center in McLean, Virginia, is currently expanding the property to include a 524,000 square foot office building, a 430 unit residential tower and a 300 room hotel. The joint venture started the expansion project in October 2011 and expects it to be completed in Fall 2014. The total cost of the project is estimated at $600.0 million, of which $300.0 million is estimated to be the Company's pro rata share. The Company has funded $64.8 million of the total of $129.6 million cost incurred by the joint venture as of December 31, 2012.

#### Inflation:

In the last five 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 throughout 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, approximately 5% to 13% of the leases expire each year, which enables the Company to replace existing leases with new leases at higher base rents if the rents of the existing leases are below the then existing market rate. The Company has generally entered 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, which places the burden of cost control on the Company. Additionally, certain leases require the tenants to pay their pro rata share of operating expenses.

#### Seasonality:

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 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.

#### Revenue Recognition:

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, 63% of the Mall Store and Freestanding Store leases contain provisions for CPI rent increases periodically throughout the term of the lease. The Company believes that using an annual multiple of CPI increases, rather than fixed contractual rent increases, results in revenue recognition that more closely matches the cash revenue from each lease and will provide more consistent rent growth throughout the term of the leases. Percentage rents are recognized when the tenants' specified sales targets have been met. Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred. Other tenants pay a fixed rate and these tenant recoveries' revenues are recognized on a straight-line basis over the term of the related leases.

#### Property:

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 |

#### Capitalization of Costs:

The Company capitalizes costs incurred in redevelopment, development, renovation and improvement of properties. 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. These capitalized costs include direct and certain indirect costs clearly associated with the project. Indirect costs include real estate taxes, insurance and certain shared administrative costs. In assessing the amounts of direct and indirect costs to be capitalized, allocations are made to projects based on estimates of the actual amount of time spent on each activity. Indirect costs not clearly associated with specific projects are expensed as period costs. Capitalized indirect costs are allocated to development and redevelopment activities based on the square footage of the portion of the building not held available for immediate occupancy. If costs and activities incurred to ready the vacant space cease, then cost capitalization is also discontinued until such activities are resumed. Once work has been completed on a vacant space, project costs are no longer capitalized. For projects with extended lease-up periods, the Company ends the capitalization when significant activities have ceased, which does not exceed the shorter of a one-year period after the completion of the building shell or when the construction is substantially complete.

#### Acquisitions:

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

The Company immediately expenses costs associated with business combinations as period costs.

#### Asset Impairment:

The Company assesses whether an indicator of impairment in the value of its properties exists by considering expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. Such factors include projected rental revenue, operating costs and capital expenditures as well as estimated holding periods and capitalization rates. If an impairment indicator exists, the determination of recoverability is made based upon the estimated undiscounted future net cash flows, excluding interest expense. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flows analysis, with the carrying value of the related assets. The Company generally holds and operates its properties long-term, which decreases the likelihood of their carrying values not being recoverable. Properties classified as held for sale are measured at the lower of the carrying amount or fair value less cost to sell.

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.

#### Fair Value of Financial Instruments:

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 is 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.

#### Deferred Charges:

Costs relating to obtaining tenant leases are deferred and amortized over the initial term of the agreement using the straight-line method. As these deferred leasing costs represent productive assets incurred in connection with the Company's provision of leasing arrangements at the Centers, the related cash flows are classified as investing activities within the Company's consolidated statements of cash flows. Costs relating to financing of shopping center properties are deferred and amortized over the life of the related loan using the straight-line method, which approximates the effective interest method. The ranges of the terms of the agreements are as follows:

|  |  |
| --- | --- |
| Deferred lease costs | 1 - 15 years |
| Deferred financing costs | 1 - 15 years |

### Results of Operations

Many of the variations in the results of operations, discussed below, occurred because of the transactions affecting the Company's properties described above, including those related to the Acquisition Properties and the Development Property as defined below.

For purposes of the discussion below, the Company defines "Same Centers" as those Centers that are substantially complete and in operation for the entirety of both periods of the comparison. Non-Same Centers for comparison purposes include recently acquired properties ("Acquisition Properties") and those Centers or properties that are going through a substantial redevelopment often resulting in the closing of a portion of the Center ("Development Properties"). The Company moves a Center in and out of Same Centers based on whether the Center is substantially complete and in operation for the entirety of both periods of the comparison. Accordingly, the Same Centers consist of all consolidated centers, excluding the Acquisition Properties and the Development Properties, for the periods of comparison.

For comparison of the year ended December 31, 2012 to the year ended December 31, 2011, the Acquisition Properties include Desert Sky Mall, the Kohl's store at Capitola Mall, Superstition Springs Land, Fashion Outlets of Niagara Falls USA, the SDG Acquisition Properties, 500 North Michigan Avenue, FlatIron Crossing, Arrowhead Towne Center and Kings Plaza Shopping Center. For comparison of the year ended December 31, 2011 to the year ended December 31, 2010, the Acquisition Properties include Desert Sky Mall, the Kohl's store at Capitola Mall, Superstition Springs Land, Fashion Outlets of Niagara Falls USA and the SDG Acquisition Properties. The increase in revenues and expenses of the Acquisition Properties from the year ended December 31, 2011 to the year ended December 31, 2012 is primarily due to the acquisition of the SDG Acquisition Properties (See "Acquisitions and Dispositions" in Management's Overview and Summary). The increase in revenues and expenses of the Acquisition Properties from the year ended December 31, 2010 to the year ended December 31, 2011 is primarily due to the acquisition of Desert Sky Mall in 2011 (See "Acquisitions and Dispositions" in Management's Overview and Summary).

For the comparison of the year ended December 31, 2012 to the year ended December 31, 2011, the "Development Property" is the Fashion Outlets of Chicago. For the comparison of the year ended December 31, 2011 to the year ended December 31, 2010, the "Development Property" is Santa Monica Place. The increase in revenue and expenses of the Development Property from the year ended December 31, 2010 to the year ended December 31, 2011 is primarily due to the opening of Santa Monica Place in August 2010.

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

The Company considers tenant annual sales per square foot (for tenants in place for a minimum of 12 months or longer and 10,000 square feet and under) for regional shopping centers, occupancy rates (excluding large retail stores or "Anchors") for the Centers and releasing spreads (i.e. a comparison of average base rent per square foot on leases executed during the trailing twelve months to average base rent per square foot on leases expiring during the year based on the spaces 10,000 square feet and under) to be key performance indicators of the Company's internal growth.

Tenant sales per square foot increased from $489 for the twelve months ended December 31, 2011 to $517 for the twelve months ended December 31, 2012. Occupancy rate increased from 92.7% at December 31, 2011 to 93.8% at December 31, 2012. Releasing spreads increased 15.4% for the twelve months ended December 31, 2012. These calculations exclude Centers under development or redevelopment.

The Company's recent trend of retail sales growth continued during the twelve months ended December 31, 2012 with tenant sales per square foot and releasing spreads increasing compared to the twelve months ended December 31, 2011. The Company expects that releasing spreads will continue to be positive in 2013 as it renews or relets leases that are scheduled to expire during the year. The Company's occupancy rate as of December 31, 2012 also increased compared to December 31, 2011. Although certain aspects of the U.S. economy, the retail industry as well as the Company's operating results have continued to improve, economic and political uncertainty remains in various parts of the world and the U.S. economy is still experiencing weakness. Any further continuation or worsening of these adverse conditions could harm the Company's business, results of operations and financial condition.

### Comparison of Years Ended December 31, 2012 and 2011

#### Revenues:

Minimum and percentage rents (collectively referred to as "rental revenue") increased by $72.9 million, or 16.3%, from 2011 to 2012. The increase in rental revenue is attributed to an increase of $74.0 million from the Acquisition Properties offset in part by a decrease of $1.1 million from the Same Centers. The decrease at the Same Centers is primarily attributed to the decrease in above and below-market leases and lease termination income as noted below.

Rental revenue includes the amortization of above and below-market leases, the amortization of straight-line rents and lease termination income. The amortization of above and below-market leases decreased from $9.4 million in 2011 to $5.3 million in 2012. The amortization of straight-line rents increased from $4.8 million in 2011 to $6.1 million in 2012. Lease termination income decreased from $5.7 million in 2011 to $4.7 million in 2012.

Tenant recoveries increased $31.7 million, or 13.1%, from 2011 to 2012. The increase in tenant recoveries is attributed to increases of $32.3 million from the Acquisition Properties offset in part by a decrease of $0.6 million from the Same Centers.

Management Companies' revenue increased from $40.4 million in 2011 to $41.2 million in 2012 primarily due to an increase in development fees.

#### Shopping Center and Operating Expenses:

Shopping center and operating expenses increased $38.2 million, or 15.8%, from 2011 to 2012. The increase in shopping center and operating expenses is attributed to an increase of $41.2 million from the Acquisition Properties offset in part by a decrease of $3.0 million from the Same Centers.

#### Management Companies' Operating Expenses:

Management Companies' operating expenses decreased $1.0 million from 2011 to 2012 due to a decrease in compensation costs.

#### REIT General and Administrative Expenses:

REIT general and administrative expenses decreased by $0.7 million from 2011 to 2012.

#### Depreciation and Amortization:

Depreciation and amortization increased $50.5 million from 2011 to 2012. The increase in depreciation and amortization is primarily attributed to an increase of $45.8 million from the Acquisition Properties and $4.7 million from the Same Centers.

#### Interest Expense:

Interest expense decreased $2.9 million from 2011 to 2012. The decrease in interest expense was primarily attributed to decreases of $25.3 million from the Senior Notes, which were paid off in full in March 2012 (See Liquidity and Capital Resources), $7.7 million from the Same Centers and $1.3 million from the Development Property. These decreases were offset in part by increases of $19.5 million from the Acquisition Properties, $8.9 million from the borrowings under the line of credit and $3.0 million from the term loan. The decrease from the Same Centers was primarily due to the maturity of a $400.0 million interest rate swap agreement in April 2011.

The above interest expense items are net of capitalized interest, which decreased from $11.9 million in 2011 to $10.7 million in 2012, primarily due to a decrease in interest rates in 2012.

#### Loss (gain) on Early Extinguishment of Debt:

Loss (gain) on early extinguishment of debt decreased $10.6 million from 2011 to 2012. The decrease in loss on early extinguishment of debt is primarily attributed to a $9.1 million loss from the prepayment of the mortgage note payable on Chesterfield Towne Center in 2011 and a $1.4 million loss from the repurchase of the Senior Notes in 2011.

#### Equity in Income of Unconsolidated Joint Ventures:

Equity in income of unconsolidated joint ventures decreased $215.4 million from 2011 to 2012. The decrease in equity in income of unconsolidated joint ventures is primarily attributed to the Company's pro rata share of the gain of $188.3 million in connection with the SDG Transaction (See "Acquisitions and Dispositions" in Management's Overview and Summary) in 2011. The remaining decrease in equity in income from unconsolidated joint ventures is attributed to the Company's $12.5 million pro rata share of the remeasurement gain on the acquisition of an underlying ownership interest in Kierland Commons in 2011 (See "Acquisitions and Dispositions" in Management's Overview and Summary), and the Company's $7.8 million pro rata share of the gain on early extinguishment of debt of its joint venture in Granite Run Mall in 2011 (See "Other Transactions and Events" in Management's Overview and Summary).

#### Gain (loss) on Remeasurement, Sale or Write down of Assets, net:

Gain (loss) on remeasurement, sale or write down of assets, net increased $226.7 million from 2011 to 2012. The increase is primarily attributed to the $115.7 million remeasurement gain on the purchase of Arrowhead Towne Center in 2012, the $84.2 million remeasurement gain on the purchase of FlatIron Crossing in 2012 and the $24.6 million gain on the buyout of the Company's ownership interest in NorthPark Center in 2012 (See "Acquisitions and Dispositions" in Management's Overview and Summary).

#### Income (loss) from Discontinued Operations:

Income (loss) from discontinued operations increased $144.2 million from 2011 to 2012. The increase is primarily due to the $49.7 million gain on disposal of Valley View Center in 2012, the $16.3 million gain on disposal of Prescott Gateway in 2012, the $7.8 million gain on the sale of Carmel Plaza in 2012, the loss on disposal of $39.7 million on Shoppingtown Mall in 2011 and the impairment charge of $19.7 million on The Borgata in 2011 (See "Acquisitions and Dispositions" in Management's Overview and Summary).

#### Net Income:

Net income increased $197.3 million from 2011 to 2012. The increase in net income is primarily attributed to increases of $226.7 million from gains on remeasurement, sale or write down of assets, net, $144.2 million from discontinued operations and $44.4 million from the operating results of the consolidated properties offset in part by a decrease of $215.4 million from equity in income of unconsolidated joint ventures as discussed above.

#### Funds From Operations ("FFO"):

Primarily as a result of the factors mentioned above, FFO—diluted increased 44.6% from $399.6 million in 2011 to $577.9 million in 2012. For a reconciliation of FFO and FFO—diluted to net income available to common stockholders, the most directly comparable GAAP financial measure, see "Funds From Operations ("FFO") and Adjusted Funds From Operations ("AFFO")".

#### Operating Activities:

Cash provided by operating activities increased from $237.3 million in 2011 to $351.3 million in 2012. The increase was primarily due to changes in assets and liabilities and the results at the Centers as discussed above.

#### Investing Activities:

Cash used in investing activities increased from $212.1 million in 2011 to $963.4 million in 2012. The increase in cash used in investing activities was primarily due to increases of $936.7 million from acquisitions of properties and $83.3 million from the development, redevelopment and renovations of properties offset in part by an increase of $119.7 million in proceeds from the sale of assets, an increase of $106.6 million in distributions from unconsolidated joint ventures and a decrease of $60.0 million in contributions to unconsolidated joint ventures. The increase in the acquisitions of properties is primarily due to the purchases of Kings Plaza Shopping Center, FlatIron Crossing and Arrowhead Towne Center in 2012 (See "Acquisitions and Dispositions" in Management's Overview and Summary). The increase in proceeds from the sale of assets is primarily due to the buyout of the Company's ownership interest in NorthPark Center and the sales of The Borgata, Carmel Plaza, Hilton Village and ownership interests in Chandler Festival, Chandler Village Center and Chandler Gateway in 2012. The increase in distributions from the unconsolidated joint ventures is primarily due to the distribution of the Company's pro rata share of the excess refinancing proceeds of Queens Center in 2012.

#### Financing Activities:

Cash provided by financing activities increased from a deficit of $403.6 million in 2011 to a surplus of $610.6 million in 2012. The increase in cash provided by financing activities was primarily due to an increase in proceeds from mortgages, bank and other notes payable of $2.4 billion, the repurchase of Senior Notes of $180.3 million in 2011 and the net proceeds from the at-the-market program of $175.6 million (See Liquidity and Capital Resources) offset in part by an increase in payments on mortgages, bank and other notes payable of $1.7 billion.

### Comparison of Years Ended December 31, 2011 and 2010

#### Revenues:

Rental revenue increased by $37.1 million, or 9.0%, from 2010 to 2011. The increase in rental revenue is attributed to an increase of $17.8 million from the Acquisition Properties, $11.6 million from the Development Property and $7.7 million from the Same Centers. The increase in Same Centers' rental revenue is primarily attributed to an increase in releasing spreads.

The amortization of above and below market leases increased from $7.1 million in 2010 to $9.4 million in 2011. The amortization of straight-line rents increased from $4.1 million in 2010 to $4.8 million in 2011. Lease termination income increased from $4.2 million in 2010 to $5.7 million in 2011.

Tenant recoveries increased by $13.3 million from 2010 to 2011. The increase in tenant recoveries is primarily attributed to an increase of $7.4 million from the Development Property and $6.1 million from the Acquisition Properties offset in part by a decrease of $0.2 million from the Same Centers.

Management Companies' revenue decreased from $42.9 million in 2010 to $40.4 million in 2011 primarily due to a decrease in development fees.

#### Shopping Center and Operating Expenses:

Shopping center and operating expenses increased $18.5 million, or 8.3%, from 2010 to 2011. The increase in shopping center and operating expenses is attributed to an increase of $10.1 million from the Acquisition Properties, $8.1 million from the Development Property and $0.3 million from the Same Centers.

#### Management Companies' Operating Expenses:

Management Companies' operating expenses decreased $3.8 million from 2010 to 2011 due to a decrease in compensation costs.

#### REIT General and Administrative Expenses:

REIT general and administrative expenses increased by $0.4 million from 2010 to 2011.

#### Depreciation and Amortization:

Depreciation and amortization increased $25.5 million from 2010 to 2011. The increase in depreciation and amortization is primarily attributed to an increase of $10.1 million from the Development Property, $9.4 million from the Acquisition Properties and $6.0 million from the Same Centers.

#### Interest Expense:

Interest expense decreased $18.3 million from 2010 to 2011. The decrease in interest expense was primarily attributed to a decrease of $19.4 million from interest rate swap agreements, $9.6 million from the Same Centers and $2.3 million from the Senior Notes offset in part by an increase of $6.7 million from the Development Property, $3.5 million from the Acquisition Properties, $2.6 million from the borrowings under the line of credit and $0.2 million from the term loans. The decrease resulting from the interest rate swap agreements is due to the maturity of a $450.0 million interest rate swap agreement in April 2010 and the maturity of a $400.0 million interest rate swap agreement in April 2011.

The above interest expense items are net of capitalized interest, which decreased from $25.7 million in 2010 to $11.9 million in 2011 due to a decrease in redevelopment activity in 2011.

#### Loss on Early Extinguishment of Debt, net:

The loss on early extinguishment of debt, net increased $14.2 million from 2010 to 2011. The increase in loss on early extinguishment of debt is primarily attributed to a $9.1 million loss from the prepayment of the mortgage note payable on Chesterfield Towne Center in 2011, the $1.4 million loss from the repurchase of the Senior Notes in 2011 and the $4.2 million gain on the refinancing of two mortgage notes payable in 2010.

#### Equity in Income of Unconsolidated Joint Ventures:

Equity in income of unconsolidated joint ventures increased $215.1 million from 2010 to 2011. The increase in equity in income of unconsolidated joint ventures is primarily attributed to the Company's pro rata share of the gain of $188.3 million in connection with the SDG Transaction (See "Acquisitions and Dispositions" in Management's Overview and Summary) in 2011. The remaining increase in equity in income from unconsolidated joint ventures is attributed to the Company's $12.5 million pro rata share of the remeasurement gain on the acquisition of an underlying ownership interest in Kierland Commons in 2011 (See "Acquisitions and Dispositions" in Management's Overview and Summary), and the Company's $7.8 million pro rata share of the gain on early extinguishment of debt of its joint venture in Granite Run Mall in 2011 (See "Other Transactions and Events" in Management's Overview and Summary).

#### Loss on Remeasurement, Sale or Write down of Assets, net:

Loss on remeasurement, sale or write down of assets, net increased $22.5 million from 2010 to 2011. The increase in loss is primarily attributed to the $25.2 million impairment charge in 2011 (See Note 6—Property to the Company's Consolidated Financial Statements).

#### Loss from Discontinued Operations:

Loss from discontinued operations increased from $10.4 million in 2010 to $74.9 million in 2011. The increase in loss from discontinued operations is primarily attributed to the $39.6 million loss on the disposal of Shoppingtown Mall in 2011 (See "Other Transactions and Events" in Management's Overview and Summary) and the $19.7 million impairment charge on The Borgata in 2011 (See "Acquisitions and Dispositions" in Management's Overview and Summary).

#### Net Income:

Net income increased $140.7 million from 2010 to 2011. The increase in net income is primarily attributed to the Company's pro rata share of the $188.3 million gain on the SDG Transaction (See "Acquisitions and Dispositions" in Management's Overview and Summary) offset in part by the loss on the disposal of Shoppingtown Mall of $39.6 million (See "Other Transactions and Events" in Management's Overview and Summary).

#### Funds From Operations:

Primarily as a result of the factors mentioned above, FFO—diluted increased 13.7% from $351.3 million in 2010 to $399.6 million in 2011. For a reconciliation of FFO and FFO—diluted to net income available to common stockholders, the most directly comparable GAAP financial measure, see "Funds From Operations ("FFO") and Adjusted Funds From Operations ("AFFO")".

#### Operating Activities:

Cash provided by operating activities increased from $200.4 million in 2010 to $237.3 million in 2011. The increase was primarily due to changes in assets and liabilities and the results at the Centers as discussed above.

#### Investing Activities:

Cash used in investing activities increased from $142.2 million in 2010 to $212.1 million in 2011. The increase was primarily due to an increase of $138.7 million in contributions to unconsolidated joint ventures offset in part by an increase of $98.3 million in distributions from unconsolidated joint ventures. The increase in contributions to unconsolidated joint ventures is primarily attributed to the Kierland Commons, The Shops at Atlas Park, Arrowhead Towne Center and Superstition Springs transactions (See "Acquisitions and Dispositions" in Management's Overview and Summary). The increase in distributions from the unconsolidated joint ventures is primarily due to the distribution of the Company's pro rata share of the excess refinancing proceeds of the loan on Arrowhead Towne Center in 2011.

#### Financing Activities:

Cash from financing activities decreased from a surplus of $294.1 million in 2010 to a deficit of $403.6 million in 2011. The increase in cash used was primarily due to the $1.2 billion stock offering in 2010, a decrease in proceeds from mortgages, bank and other notes payable of $170.5 million, an increase in the repurchase of the Senior Notes of $162.1 million and an increase in dividends and distributions of $71.0 million offset in part by a decrease in payments on mortgages, bank and other notes payable of $940.8 million.

### Liquidity and Capital Resources

The Company anticipates meeting its liquidity needs for its operating expenses and debt service and dividend requirements for the next twelve months through cash generated from operations, working capital reserves and/or borrowings under its unsecured line of credit.

The following tables summarize capital expenditures and lease acquisition costs incurred at the Centers for the years ended December 31:

*(Dollars in thousands)*

| Consolidated Centers: | 2012 | 2011 | 2010 |
| --- | ---: | ---: | ---: |
| Acquisitions of property and equipment | $1,313,091 | $314,575 | $12,888 |
| Development, redevelopment, expansion and renovation of Centers | 158,474 | 88,842 | 214,796 |
| Tenant allowances | 18,116 | 19,418 | 21,993 |
| Deferred leasing charges | 23,551 | 29,280 | 24,528 |
|  | $1,513,232 | $452,115 | $274,205 |
| **Joint Venture Centers (at Company's pro rata share):** |  |  |  |
| Acquisitions of property and equipment | $5,080 | $143,390 | $6,095 |
| Development, redevelopment, expansion and renovation of Centers | 79,642 | 37,712 | 42,289 |
| Tenant allowances | 6,422 | 8,406 | 8,130 |
| Deferred leasing charges | 4,215 | 4,910 | 4,664 |
|  | $95,359 | $194,418 | $61,178 |

The Company expects amounts to be incurred during the next twelve months for tenant allowances and deferred leasing charges to be comparable or less than 2012 and that capital for those expenditures will be available from working capital, cash flow from operations, borrowings on property specific debt or unsecured corporate borrowings. The Company expects to incur between $200 million and $300 million during the next twelve months for development, redevelopment, expansion and renovations. Capital for these major expenditures, developments and/or redevelopments has been, and is expected to continue to be obtained from a combination of debt or equity financings, which are expected to include borrowings under the Company's line of credit and construction loans. The

Company has also generated liquidity in the past through equity offerings, property refinancings, joint venture transactions and the sale of non-core assets. The Company has announced plans to sell certain non-core assets in 2013 depending upon market conditions which will generate additional liquidity. Furthermore, the Company has filed a shelf registration statement which registered an unspecified amount of common stock, preferred stock, depositary shares, debt securities, warrants, rights and units.

The capital and credit markets can fluctuate, and at times, limit access to debt and equity financing for companies. As demonstrated by the Company's recent activity, including its new $500 million ATM Program discussed below and its $1.5 billion line of credit, the Company has recently been able to access capital; however, there is no assurance the Company will be able to do so in future periods or on similar terms and conditions. Many factors impact the Company's ability to access capital, such as its overall debt level, interest rates, interest coverage ratios and prevailing market conditions. In the event that the Company has significant tenant defaults as a result of the overall economy and general market conditions, the Company could have a decrease in cash flow from operations, which could result in borrowings under its line of credit. These events could result in an increase in the Company's proportion of floating rate debt, which would cause it to be subject to interest rate fluctuations in the future.

On August 17, 2012, the Company entered into an equity distribution agreement ("Distribution Agreement") with a number of sales agents to issue and sell, from time to time, shares of common stock, having an aggregate offering price of up to $500 million (the "Shares"). Sales of the Shares, if any, may be made in privately negotiated transactions and/or any other method permitted by law, including sales deemed to be an "at the market" offering, which includes sales made directly on the New York Stock Exchange or sales made to or through a market maker other than on an exchange. This offering is referred to herein as the "ATM Program". During the three months ended December 31, 2012, the Company did not sell any shares of common stock under the ATM Program. During the year ended December 31, 2012, the Company sold 2,961,903 shares of common stock under the ATM Program in exchange for aggregate gross proceeds of $177.9 million and net proceeds of $175.6 million, after commissions and other transaction costs. The proceeds from the sales were used to pay down the Company's line of credit. As of December 31, 2012, $322.1 million remained available to be sold under the ATM Program. Actual future sales will depend upon a variety of factors including but not limited to market conditions, the trading price of the Company's common stock and our capital needs. The Company has no obligation to sell the remaining shares available for sale under the ATM Program.

The Company's total outstanding loan indebtedness at December 31, 2012 was $6.9 billion (including $800.0 million of unsecured debt and $1.6 billion of its pro rata share of unconsolidated joint venture debt). The majority of the Company's debt consists of fixed-rate conventional mortgage notes collateralized by individual properties. The Company expects that all of the maturities during the next twelve months will be refinanced, restructured, extended and/or paid off from the Company's line of credit or cash on hand. The Company's loan obligations regarding Valley View Center and Prescott Gateway were discharged on April 23, 2012 and May 31, 2012, respectively (See "Other Transactions and Events" in Management's Overview and Summary).

On March 15, 2012, the Company paid off in full the $439.3 million of Senior Notes that had matured. The repayment was funded by borrowings under the Company's line of credit.

The Company has a $1.5 billion revolving line of credit that bears interest at LIBOR plus a spread of 1.75% to 3.0% depending on the Company's overall leverage and matures on May 2, 2015 with a one-year extension option. Based on the Company's current leverage levels, the borrowing rate on the facility is LIBOR plus 2.0%. The line of credit can be expanded, depending on certain conditions, up to a total facility of $2.0 billion less the outstanding balance of the $125.0 million unsecured term loan, as discussed below. All obligations under the line of credit are unconditionally guaranteed by the

Company and certain of its direct and indirect subsidiaries and are secured, subject to certain exceptions, by pledges of direct and indirect ownership interests in certain of the subsidiary guarantors. At December 31, 2012, total borrowings under the line of credit were $675.0 million with an average effective interest rate of 2.76%.

The Company has a $125.0 million unsecured term loan under the Company's line of credit that bears interest at LIBOR plus a spread of 1.95% to 3.20% depending on the Company's overall leverage and matures on December 8, 2018. Based on the Company's current leverage levels, the borrowing rate is LIBOR plus 2.20%. As of December 31, 2012, the total interest rate was 2.57%.

At December 31, 2012, the Company was in compliance with all applicable loan covenants under its agreements.

At December 31, 2012, the Company had cash and cash equivalents available of $65.8 million.

#### Off-Balance Sheet Arrangements:

The Company accounts for its investments in joint ventures that it does not have a controlling interest or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the consolidated balance sheets of the Company as investments in unconsolidated joint ventures.

In addition, certain joint ventures have secured debt that could become recourse debt to the Company or its subsidiaries, in excess of the Company's pro rata share, should the joint ventures be unable to discharge the obligations of the related debt. At December 31, 2012, the balance of the debt that could be recourse to the Company was $51.2 million offset in part by indemnity agreements from joint venture partners for $21.3 million. The maturities of the recourse debt, net of indemnification, are $4.1 million in 2013, $16.8 million in 2015 and $9.0 million in 2016.

Additionally, as of December 31, 2012, the Company is contingently liable for $3.8 million in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers. The Company does not believe that these letters of credit will result in a liability to the Company.

#### Contractual Obligations:

The following is a schedule of contractual obligations as of December 31, 2012 for the consolidated Centers over the periods in which they are expected to be paid (in thousands):

| Contractual Obligations | Payment Due by Period Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than five years |
| --- | ---: | ---: | ---: | ---: | ---: |
| Long-term debt obligations (includes expected interest payments) | $5,472,292 | $561,517 | $930,446 | $1,483,945 | $2,496,384 |
| Operating lease obligations(1) | 340,547 | 14,496 | 25,488 | 24,387 | 276,176 |
| Purchase obligations(1) | 41,107 | 41,107 | — | — | — |
| Other long-term liabilities | 301,067 | 259,271 | 2,982 | 3,299 | 35,515 |
|  | $6,155,013 | $876,391 | $958,916 | $1,511,631 | $2,808,075 |

(1)

See Note 18—Commitments and Contingencies in the Company's Notes to the Consolidated Financial Statements.

### Funds From Operations ("FFO") and Adjusted Funds From Operations ("AFFO")

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, impairment write-downs of real estate and write-downs of investments in an affiliate where the write-downs have been driven by a decrease in the value of real estate held by the affiliate and after adjustments for unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis.

Adjusted FFO ("AFFO") excludes the FFO impact of Shoppingtown Mall and Valley View Center for the years ended December 31, 2012 and 2011. In December 2011, the Company conveyed Shoppingtown Mall to the lender by a deed-in-lieu of foreclosure. In July 2010, a court-appointed receiver assumed operational control of Valley View Center and responsibility for managing all aspects of the property. Valley View Center was sold by the receiver on April 23, 2012, and the related non-recourse mortgage loan obligation was fully extinguished on that date, resulting in a gain on extinguishment of debt of $104.0 million. On May 31, 2012, the Company conveyed Prescott Gateway to the lender by a deed-in-lieu of foreclosure and the debt was forgiven resulting in a gain on extinguishment of debt of $16.3 million. AFFO excludes the gain on extinguishment of debt on Prescott Gateway for the twelve months ended December 31, 2012.

FFO and FFO on a diluted basis are useful to investors in comparing operating and financial results between periods. This is especially true since FFO excludes real estate depreciation and amortization, as the Company believes real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. The Company believes that such a presentation also provides investors with a more meaningful measure of its operating results in comparison to the operating results of other REITs. The Company believes that AFFO and AFFO on a diluted basis provide useful supplemental information regarding the Company's performance as they show a more meaningful and consistent comparison of the Company's operating performance and allow investors to more easily compare the Company's results without taking into account non-cash credits and charges on properties controlled by either a receiver or loan servicer. FFO and AFFO on a diluted basis are measures investors find most useful in measuring the dilutive impact of outstanding convertible securities.

FFO and AFFO do 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 are not indicative of cash available to fund all cash flow needs. The Company also cautions that FFO and AFFO, as presented, may not be comparable to similarly titled measures reported by other real estate investment trusts.

Management compensates for the limitations of FFO and AFFO by providing investors with financial statements prepared according to GAAP, along with this detailed discussion of FFO and AFFO and a reconciliation of FFO and AFFO and FFO and AFFO-diluted to net income available to common stockholders. Management believes that to further understand the Company's performance, FFO and AFFO 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.

The following reconciles net income attributable to the Company to FFO and FFO-diluted for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 and FFO and FFO—diluted to AFFO and AFFO—diluted for the same periods (dollars and shares in thousands):

|  | 2012 | 2011 | 2010 | 2009 | 2008 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Net income attributable to the Company | $337,426 | $156,866 | $25,190 | $120,742 | $161,925 |
| Adjustments to reconcile net income attributable to the Company to FFO—basic: |  |  |  |  |  |
| Noncontrolling interests in the Operating Partnership | 27,359 | 13,529 | 2,497 | 17,517 | 27,230 |
| (Gain) loss on remeasurement, sale or write down of consolidated assets, net | (159,575) | 76,338 | (474) | (121,766) | (68,714) |
| Add: (loss) gain on undepreciated assets—consolidated assets | (390) | 2,277 | — | 4,762 | 798 |
| Add: noncontrolling interests share of gain (loss) on sale of assets—consolidated joint ventures | 1,899 | (1,441) | 2 | 310 | 185 |
| (Gain) loss on remeasurement, sale or write down of assets—unconsolidated joint ventures(1) | (2,019) | (200,828) | (823) | 7,642 | (3,432) |
| Add: gain (loss) on sale of undepreciated assets—unconsolidated joint ventures(1) | 1,163 | 51 | 613 | (152) | 3,039 |
| Add: noncontrolling interests on sale of undepreciated assets—consolidated joint ventures | — | — | — | — | 487 |
| Depreciation and amortization on consolidated assets | 307,193 | 269,286 | 246,812 | 266,164 | 279,339 |
| Less: noncontrolling interests in depreciation and amortization—consolidated joint ventures | (18,561) | (18,022) | (17,979) | (7,871) | (3,395) |
| Depreciation and amortization—unconsolidated joint ventures(1) | 96,228 | 115,431 | 109,906 | 106,435 | 96,441 |
| Less: depreciation on personal property | (12,861) | (13,928) | (14,436) | (13,740) | (9,952) |
| FFO—basic | 577,862 | 399,559 | 351,308 | 380,043 | 483,951 |
| Additional adjustments to arrive at FFO—diluted: |  |  |  |  |  |
| Impact of convertible preferred stock | — | — | — | — | 4,124 |
| Impact of non-participating convertible preferred units | — | — | — | — | 979 |
| FFO—diluted | 577,862 | 399,559 | 351,308 | 380,043 | 489,054 |
| Shoppingtown Mall | 422 | 3,491 | — | — | — |
| Valley View Center | (101,105) | 8,786 | — | — | — |
| Prescott Gateway | (16,296) | — | — | — | — |
| AFFO and AFFO—diluted | $460,883 | $411,836 | $351,308 | $380,043 | $489,054 |
| Weighted average number of FFO shares outstanding for: |  |  |  |  |  |
| FFO—basic(2) | 144,937 | 142,986 | 132,283 | 93,010 | 86,794 |
| Adjustments for the impact of dilutive securities in computing FFO—diluted: |  |  |  |  |  |
| Convertible preferred stock | — | — | — | — | 1,447 |
| Non-participating convertible preferred units | — | — | — | — | 205 |
| FFO—diluted(3) | 144,937 | 142,986 | 132,283 | 93,010 | 88,446 |

(1)

Unconsolidated assets are presented at the Company's pro rata share.

(2)

Calculated based upon basic net income as adjusted to reach basic FFO. During the years ended December 31, 2012, 2011, 2010, 2009 and 2008, there were 10.9 million, 11.4 million, 11.6 million, 11.8 million and 12.5 million OP Units outstanding, respectively.

(3)

The computation of FFO and AFFO—diluted shares outstanding includes the effect of share and unit-based compensation plans and the Senior Notes 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 and AFFO-diluted computation. During the year ended December 31, 2008, 3.0 million shares of the Company's Series A preferred stock then outstanding were converted on a one-for-one basis for common stock.

## Market risk

As filed, 4,835 characters.

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

The following table sets forth information as of December 31, 2012 concerning the Company's long term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates and estimated fair value ("FV") (dollars in thousands):

| CONSOLIDATED CENTERS: Long term debt: | For the years ended December 31, 2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | Total | FV |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Fixed rate | $288,256 | $62,660 | $517,487 | $518,262 | $59,711 | $2,277,042 | $3,723,418 | $3,839,329 |
| Average interest rate | 3.07% | 4.00% | 5.91% | 5.53% | 3.71% | 4.00% | 4.40% |  |
| Floating rate | 256,232 | 172,413 | 133,190 | 777,952 | 73,165 | 125,000 | 1,537,952 | 1,549,942 |
| Average interest rate | 3.19% | 4.04% | 3.50% | 2.79% | 3.08% | 2.56% | 3.05% |  |
| Total debt—Consolidated Centers | $544,488 | $235,073 | $650,677 | $1,296,214 | $132,876 | $2,402,042 | $5,261,370 | $5,389,271 |
| **UNCONSOLIDATED JOINT VENTURE CENTERS:** |  |  |  |  |  |  |  |  |
| Long term debt (at Company's pro rata share): |  |  |  |  |  |  |  |  |
| Fixed rate | $322,833 | $185,239 | $239,079 | $260,838 | $51,726 | $397,587 | $1,457,302 | $1,522,680 |
| Average interest rate | 5.66% | 5.37% | 5.55% | 6.75% | 4.67% | 3.85% | 5.27% |  |
| Floating rate | 69,198 | 294 | 13,599 | 70,294 | 24,897 | — | 178,282 | 180,258 |
| Average interest rate | 4.72% | 3.06% | 3.17% | 3.05% | 2.96% | — | 3.69% |  |
| Total debt—Unconsolidated Joint Venture Centers | $392,031 | $185,533 | $252,678 | $331,132 | $76,623 | $397,587 | $1,635,584 | $1,702,938 |

The Consolidated Centers' total fixed rate debt at December 31, 2012 and 2011 was $3.7 billion and $2.6 billion, respectively. The average interest rate on such fixed rate debt at December 31, 2012 and 2011 was 4.40% and 5.53%, respectively. The Consolidated Centers' total floating rate debt at December 31, 2012 and 2011 was $1.5 billion and $1.6 billion, respectively. The average interest rate on floating rate debt at December 31, 2012 and 2011 was 3.05% and 3.09%, respectively.

The Company's pro rata share of the Unconsolidated Joint Venture Centers' fixed rate debt at December 31, 2012 and 2011 was $1.5 billion and $1.8 billion, respectively. The average interest rate on such fixed rate debt at December 31, 2012 and 2011 was 5.27% and 5.92%, respectively. The Company's pro rata share of the Unconsolidated Joint Venture Centers' floating rate debt at December 31, 2012 and 2011 was $178.3 million and $161.2 million, respectively. The average interest rate on such floating rate debt at December 31, 2012 and 2011 was 3.69% and 3.88%, respectively.

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

Interest rate cap agreements offer protection against floating rates on the notional amount from exceeding the rates noted in the above schedule, and interest rate swap agreements effectively replace a floating rate on the notional amount with a fixed rate as noted above. As of December 31, 2012, the Company did not have any interest rate cap or swap agreements in place.

In addition, the Company has assessed the market risk for its floating rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash flows by approximately $17.2 million per year based on $1.7 billion of floating rate debt outstanding at December 31, 2012.

The fair value of the Company's long-term debt is estimated based on a present value model utilizing interest rates that reflect the risks associated with long-term debt of similar risk and duration. In addition, the method of computing fair value for mortgage notes payable included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt (See Note 10—Mortgage Notes Payable and Note 11—Bank and Other Notes Payable in the Company's Notes to the Consolidated Financial Statements).

## Controls and procedures

As filed, 6,659 characters.

#### Conclusion Regarding Effectiveness of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), management carried out an evaluation, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on their evaluation as of December 31, 2012, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) were effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (a) recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and (b) accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

#### Management's Report on Internal Control Over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2012. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. The Company's management concluded that, as of December 31, 2012, its internal control over financial reporting was effective based on this assessment.

KPMG LLP, the independent registered public accounting firm that audited the Company's 2012, 2011 and 2010 consolidated financial statements included in this Annual Report on Form 10-K, has issued a report on the Company's internal control over financial reporting which follows below.

#### Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

### Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

The Macerich Company:

We have audited The Macerich Company's (the "Company") internal control over financial reporting as of December 31, 2012, based on criteria established in *Internal Control—Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, The Macerich Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in *Internal Control—Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, equity and redeemable noncontrolling interests and cash flows for each of the years in the three-year period ended December 31, 2012, and the related financial statement schedule III—Real Estate and Accumulated Depreciation, and our report dated February 22, 2013 expressed an unqualified opinion on those consolidated financial statements and the related financial statement schedule.

/s/ KPMG LLP

Los Angeles, California

February 22, 2013

Filed Feb 22, 2013.
Source: SEC EDGAR, the filing index for accession 0001047469-13-001491. Last ingested by Listed: Nov 5, 2026, 12:24 ET. No prices; not investment advice.