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8-K
MACERICH CO filed this Form 8-K on 02/07/2019
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The Macerich Company

Supplemental Financial and Operating Information

Overview

The Macerich Company (the “Company”) is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional shopping centers located in the United States in many of the country’s most attractive, densely populated markets with significant presence on the West Coast, Arizona, Chicago and the Metro New York to Washington, DC corridor.

As of December 31, 2018, the Operating Partnership owned or had an ownership interest in 51 million square feet of gross leasable area (“GLA”) consisting primarily of interests in 47 regional shopping centers and five community/power shopping centers. These 52 centers (which include any related office space) are referred to hereinafter as the “Centers”, unless the context requires otherwise.

A recognized leader in sustainability, Macerich has earned Nareit’s prestigious “Leader in the Light” award every year from 2014-2018. For the fourth straight year in 2018 Macerich achieved the #1 GRESB ranking in the North American Retail Sector, among many other environmental accomplishments.

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”).

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 (collectively, the “Management Companies”).

All references to the Company in this Exhibit include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise.

Upon adoption of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), on January 1, 2018, the Company changed its accounting for its investment in the Chandler Fashion Center and Freehold Raceway Mall (“Chandler Freehold”) joint venture from a co-venture arrangement to a financing arrangement. Accordingly, the Company replaced its $31.1 million co-venture asset with a $393.7 million financing arrangement liability on its consolidated balance sheets and recorded a charge of $424.8 million to equity as a cumulative effect adjustment. Under ASC 606, any subsequent changes in fair value of the financing arrangement liability are recognized as financing expense in the Company’s consolidated statements of operations. During the three and twelve months ended December 31, 2018, the Company has included in interest expense ($1.9) million and $0.2 million, respectively in connection with the financing arrangement that consists of i) a credit of $5.9 million and $15.2 million to adjust for the reduction of fair value of the financing arrangement obligation during the three and twelve months ended December 31, 2018, respectively, ii) distributions of $2.5 million and $9.1 million to its partner representing the partner’s share of net income for the three and twelve months ended December 31, 2018, respectively, and iii) distributions of $1.6 million and $6.4 million to its partner in excess of the partner’s share of net income for the three and twelve months ended December 31, 2018, respectively.

The Company presents certain measures in this Exhibit on a pro rata basis which represents (i) the measure on a consolidated basis, minus the Company’s partners’ share of the measure from its consolidated joint ventures (calculated based upon the partners’ percentage ownership interest); plus (ii) the Company’s share of the measure from its unconsolidated joint ventures (calculated based upon the Company’s percentage ownership interest). Management believes that these measures provide useful information to investors regarding its financial condition and/or results of operations because they include the Company’s share of the applicable amount from unconsolidated joint ventures and exclude the Company’s partners’ share from consolidated joint ventures, in each case presented on the same basis. The Company has several significant joint ventures and the Company

 

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