SEC Filing | Macerich

THE MACERICH COMPANY (The Company) SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED JUNE 30, 2000 COMMISSION FILE NO. 1-12504 THE MACERICH COMPANY ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) MARYLAND 95-4448705 - --------------------------------- ------------------------------------------ (State or other jurisdiction (I.R.S. Employer Identification Number) of incorporation or organization) 401 Wilshire Boulevard, Suite 700, Santa Monica, CA 90401 - ------------------------------------------------------------------------------ (Address of principal executive office)(Zip code) Registrant's telephone number, including area code (310) 394-6000 N/A ----------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Number of shares outstanding of the registrant's common stock, as of August 9, 2000. Common stock, par value $.01 per share: 34,164,810 shares - ------------------------------------------------------------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or such shorter period that the Registrant was required to file such report) and (2) has been subject to such filing requirements for the past ninety (90) days. YES X NO ----------- ----------

THE MACERICH COMPANY (The Company) Form 10-Q INDEX Page Part I: Financial Information Item 1. Financial Statements Consolidated balance sheets of the Company as of June 30, 2000 and December 31, 1999 1 Consolidated statements of operations of the Company for the periods from January 1 through June 30, 2000 and 1999 2 Consolidated statements of operations of the Company for the periods from April 1, 2000 through June 30, 2000 and 1999 3 Consolidated statements of cash flows of the Company for the periods from January 1 through June 30, 2000 and 1999 4 Notes to condensed and consolidated financial statements 5 to 22 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 to 34 Item 3. Quantitative and Qualitative Disclosures About Market Risk 35 Part II: Other Information 36 to 38

THE MACERICH COMPANY (The Company) CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (Unaudited) June 30, December 31, 2000 1999 ------------------- ---------------- ASSETS: Property, net $1,921,806 $1,931,415 Cash and cash equivalents 34,954 40,455 Tenant receivables, including accrued overage rents of $461 in 2000 and $7,367 in 1999 27,342 34,423 Deferred charges and other assets, net 55,330 55,065 Investments in joint ventures and the Management Companies 270,724 342,935 ------------------- ---------------- Total assets $2,310,156 $2,404,293 =================== ================ LIABILITIES AND STOCKHOLDERS' EQUITY: Mortgage notes payable: Related parties $133,479 $133,876 Others 1,106,467 1,105,180 ------------------- ---------------- Total 1,239,946 1,239,056 Bank notes payable 112,014 160,671 Convertible debentures 161,400 161,400 Accounts payable and accrued expenses 17,728 27,815 Due to affiliates 1,499 6,969 Other accrued liabilities 22,467 25,849 Preferred stock dividend payable 4,648 4,648 ------------------- ---------------- Total liabilities 1,559,702 1,626,408 ------------------- ---------------- Minority interest in Operating Partnership 151,524 157,599 ------------------- ---------------- Commitments and contingencies (Note 9) Stockholders' equity: Series A cumulative convertible redeemable preferred stock, $.01 par value, 3,627,131 shares authorized, issued and outstanding at June 30, 2000 and December 31, 1999 36 36 Series B cumulative convertible redeemable preferred stock, $.01 par value, 5,487,471 shares authorized, issued and outstanding at June 30, 2000 and December 31, 1999 55 55 Common stock, $.01 par value, 100,000,000 shares authorized, 34,149,681 and 34,072,625 shares issued and outstanding at June 30, 2000 and December 31, 1999, respectively 341 338 Additional paid in capital 584,989 582,837 Accumulated earnings 22,243 43,514 Unamortized restricted stock (8,734) (6,494) ------------------- ---------------- ------------------- ---------------- Total stockholders' equity 598,930 620,286 ------------------- ---------------- Total liabilities and stockholders' equity $2,310,156 $2,404,293 =================== ================ The accompanying notes are an integral part of these financial statements. - 1 -

THE MACERICH COMPANY (The Company) CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share amounts) (Unaudited) Six Months Ended June 30, ----------------------------------------------- 2000 1999 --------------------- --------------------- REVENUES: Minimum rents $95,080 $101,905 Percentage rents 3,002 7,148 Tenant recoveries 49,438 47,276 Other 4,037 3,195 --------------------- --------------------- Total revenues 151,557 159,524 --------------------- --------------------- EXPENSES: Shopping center expenses 48,108 47,221 General and administrative expense 3,181 2,843 Interest expense: Related parties 5,042 5,053 Others 50,057 50,302 --------------------- --------------------- Total interest expense 55,099 55,355 --------------------- --------------------- --------------------- --------------------- Depreciation and amortization 29,568 30,539 Equity in income of unconsolidated joint ventures and the Management Companies 13,109 10,634 Loss on sale of assets (108) - --------------------- --------------------- Income before extraordinary item, minority interest and cumulative effect of change in accounting principle 28,602 34,200 Extraordinary loss on early extinguishment of debt - (988) Cumulative effect of change in accounting principle (963) - --------------------- --------------------- Income of the Operating Partnership 27,639 33,212 Less minority interest in net income of the Operating Partnership 4,421 6,488 --------------------- --------------------- Net income 23,218 26,724 Less preferred dividends 9,297 8,841 --------------------- --------------------- Net income - available to common stockholders $13,921 $17,883 ===================== ===================== Earnings per common share - basic: Income before extraordinary item and cumulative effect of change in accounting principle $0.44 $0.56 Extraordinary item - (0.03) Cumulative effect of change in accounting principle (0.03) - --------------------- --------------------- Net income per share - available to common stockholders $0.41 $0.53 ===================== ===================== Weighted average number of common shares outstanding - basic 34,120,000 33,971,000 ===================== ===================== Weighted average number of common shares outstanding - basic, assuming full conversion of Operating Partnership units outstanding 45,073,000 46,286,000 ===================== ===================== Earnings per common share - diluted: Income before extraordinary item and cumulative effect of change in accounting principle $0.43 $0.55 Extraordinary item - (0.02) Cumulative effect of change in accounting principle (0.02) - --------------------- --------------------- Net income per share - available to common stockholders $0.41 $0.53 ===================== ===================== Weighted average number of common shares outstanding - diluted for EPS 45,073,000 46,286,000 ===================== ===================== The accompanying notes are an integral part of these financial statements. - 2 -

THE MACERICH COMPANY (The Company) CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except share and per share amounts) (Unaudited) Three Months Ended June 30, --------------------------------------------- 2000 1999 -------------------- -------------------- REVENUES: Minimum rents $47,905 $51,313 Percentage rents 1,471 3,206 Tenant recoveries 24,869 24,178 Other 2,010 1,978 -------------------- -------------------- Total revenues 76,255 80,675 -------------------- -------------------- EXPENSES: Shopping center expenses 24,208 23,955 General and administrative expense 1,712 1,439 Interest expense: Related parties 2,523 2,540 Others 24,424 26,062 -------------------- -------------------- Total interest expense 26,947 28,602 -------------------- -------------------- -------------------- -------------------- Depreciation and amortization 15,040 15,285 Equity in income of unconsolidated joint ventures and the Management Companies 6,386 5,286 Loss on sale of assets (106) - -------------------- -------------------- Income before extraordinary item and minority interest 14,628 16,680 Extraordinary loss on early extinguishment of debt - (15) -------------------- -------------------- Income of the Operating Partnership 14,628 16,665 -------------------- -------------------- Less minority interest in net income of the Operating Partnership 2,383 3,258 -------------------- -------------------- Net income 12,245 13,407 Less preferred dividends 4,648 4,421 -------------------- -------------------- Net income - available to common stockholders $7,597 $8,986 ==================== ==================== Earnings per common share - basic: Income before extraordinary item $0.22 $0.26 -------------------- -------------------- Net income per share - available to common stockholders $0.22 $0.26 ==================== ==================== Weighted average number of common shares outstanding - basic 34,148,000 33,980,000 ==================== ==================== Weighted average number of common shares outstanding - basic, assuming full conversion of Operating Partnership units outstanding 45,093,000 46,291,000 ==================== ==================== Earnings per common share - diluted: Income before extraordinary item $0.22 $0.26 -------------------- -------------------- Net income per share - available to common stockholders $0.22 $0.26 ==================== ==================== Weighted average number of common shares outstanding - diluted for EPS 45,093,000 46,291,000 ==================== ==================== The accompanying notes are an integral part of these financial statements. - 3 -

THE MACERICH COMPANY (The Company) CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) January 1 to June 30, ---------------------------------------------- 2000 1999 ---------------------- --------------------- Cash flows from operating activities: Net income - available to common stockholders $13,921 $17,883 Preferred dividends 9,297 8,841 ---------------------- --------------------- ---------------------- --------------------- Net income 23,218 26,724 ---------------------- --------------------- Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary loss on early extinguishment of debt - 988 Cumulative effect of change in accounting principle 963 - Loss on sale of assets 108 - Depreciation and amortization 29,568 30,539 Amortization of net discount (premium) on trust deed note payable 17 174 Minority interest in net income of the Operating Partnership 4,421 6,488 Changes in assets and liabilities: Tenant receivables, net 6,118 4,038 Other assets 3,188 8,976 Accounts payable and accrued expenses (10,087) (10,222) Due to affiliates (5,470) - Other liabilities (3,382) (8,804) ---------------------- --------------------- Total adjustments 25,444 32,177 ---------------------- --------------------- Net cash provided by operating activities 48,662 58,901 ---------------------- --------------------- Cash flows from investing activities: Acquisitions of property and improvements (1,456) (4,226) Renovations and expansions of centers (11,387) (26,078) Tenant allowances (2,464) (2,762) Deferred charges (5,440) (7,932) Equity in income of unconsolidated joint ventures and the Management Companies (13,109) (10,634) Distributions from joint ventures 85,707 10,390 Contributions to joint ventures (387) (70,124) Loans to affiliates, net - (81,275) ---------------------- --------------------- Net cash provided by (used in) investing activities 51,464 (192,641) ---------------------- --------------------- Cash flows from financing activities: Proceeds from mortgages and notes payable 37,962 324,888 Payments on mortgages and notes payable (85,729) (138,934) Dividends and distributions to partners (48,563) (43,906) Dividends to preferred stockholders (9,297) (8,841) ---------------------- --------------------- Net cash (used in) provided by financing activities (105,627) 133,207 ---------------------- --------------------- Net decrease in cash (5,501) (533) Cash and cash equivalents, beginning of period 40,455 25,143 ---------------------- --------------------- Cash and cash equivalents, end of period $34,954 $24,610 ====================== ===================== Supplemental cash flow information: Cash payment for interest, net of amounts capitalized $55,263 $54,380 ====================== ===================== The accompanying notes are an integral part of these financial statements. - 4 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 1. Interim Financial Statements and Basis of Presentation: The accompanying consolidated financial statements of The Macerich Company (the "Company") have been prepared in accordance with generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements and have not been audited by independent public accountants. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results for interim periods are not necessarily indicative of the results to be expected for a full year. The accompanying consolidated balance sheet as of December 31, 1999 has been derived from the audited financial statements, but does not include all disclosure required by GAAP. Certain reclassifications have been made in the 1999 consolidated financial statements to conform to the 2000 financial statement presentation. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements," ("SAB 101") which became effective for periods beginning after December 15, 1999. This bulletin modified the timing of revenue recognition for percentage rent received from tenants. This change will defer recognition of a significant amount of percentage rent for the first three calendar quarters into the fourth quarter. The Company applied this accounting change as of January 1, 2000. The cumulative effect of this change in accounting principle, at the adoption date of January 1, 2000, including the pro rata share of joint ventures, was approximately $1,750,000. In June 1998, the FASB issued Statement of Financial Accounting Standard ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") which requires companies to record derivatives on the balance sheet, measured at fair value. Changes in the fair values of those derivatives will be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments and Hedging Activities," which delays the implementation of SFAS 133 from January 1, 2000 to January 1, 2001. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB Statement No. 133," ("SFAS138"), which amends the accounting and reporting standards of SFAS 133. The Company has not yet determined when it will implement SFAS 133 and SFAS 138 nor has it completed the analysis required to determine the impact on its consolidated financial statements. - 5 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) Earnings Per Share ("EPS") During 1998, the Company implemented SFAS No. 128, "Earnings per Share." The computation of basic earnings per share is based on net income and the weighted average number of common shares outstanding for six and three months ending June 30, 2000 and 1999. The convertible debentures and convertible preferred stock were not included in the calculation since the effect of their inclusion would be anti-dilutive. The Operating Partnership units ("OP units") not held by the Company have been included in the diluted EPS calculation since they are redeemable on a one-for-one basis for common stock. The following table reconciles the basic and diluted earnings per share calculation: For the Six Months Ended June 30, ------------------------------------------------------------------------- ------------------------------------ ---------------------------------- 2000 1999 ------------------------------------ ---------------------------------- Net Net Income Shares Per Share Income Shares Per Share ------------------------------------ ---------------------------------- (In thousands, except per share data) Net income $23,218 $26,724 Less: Preferred stock dividends 9,297 8,841 ------------ ------------ Basic EPS: Net income - available to common stockholders 13,921 34,120 $0.41 17,883 33,971 $0.53 Diluted EPS: Effect of dilutive securities: Conversion of OP units 4,421 10,953 6,488 12,315 Employee stock options and restricted stock n/a - antidilutive for EPS n/a - antidilutive for EPS Convertible preferred stock n/a - antidilutive for EPS n/a - antidilutive for EPS Convertible debentures n/a - antidilutive for EPS n/a - antidilutive for EPS ------------------------------------ ---------------------------------- Net income - available to common stockholders $18,342 45,073 $0.41 $24,371 46,286 $0.53 ==================================== ================================== For the Three Months Ended June 30, -------------------------------------------------------------------------- ------------------------------------- ----------------------------------- 2000 1999 ------------------------------------- ----------------------------------- Net Net Income Shares Per Share Income Shares Per Share ------------------------------------- ----------------------------------- (In thousands, except per share data) Net income $12,245 $13,407 Less: Preferred stock dividends 4,648 4,421 ------------ ------------ Basic EPS: Net income - available to common stockholders 7,597 34,148 $0.22 8,986 33,980 $0.26 Diluted EPS: Effect of dilutive securities: Conversion of OP units 2,383 10,945 3,258 12,311 Employee stock options and restricted stock n/a - antidilutive for EPS n/a - antidilutive for EPS Convertible preferred stock n/a - antidilutive for EPS n/a - antidilutive for EPS Convertible debentures n/a - antidilutive for EPS n/a - antidilutive for EPS ------------------------------------- ----------------------------------- Net income - available to common stockholders $9,980 45,093 $0.22 $12,244 46,291 $0.26 ===================================== =================================== - 6 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 2. Organization: The Company is involved in the acquisition, ownership, 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"). The Operating Partnership owns or has an ownership interest in 47 regional shopping centers and five community shopping centers aggregating approximately 42 million square feet of gross leasable area. These 52 regional and community shopping centers are referred to hereinafter as the "Centers", unless the context otherwise requires. The Company is a self-administered and self-managed real estate investment trust ("REIT") and conducts all of its operations through the Operating Partnership and the Company's three management companies, Macerich Property Management Company, a California corporation, Macerich Manhattan Management Company, a California corporation, and Macerich Management Company, a California corporation (collectively, the "Management Companies"). The Company was organized to qualify as a REIT under the Internal Revenue Code of 1986, as amended. The 20% limited partnership interest of the Operating Partnership not owned by the Company is reflected in these financial statements as minority interest. 3. Investments in Unconsolidated Joint Ventures and the Management Companies: The following are the Company's investments in various real estate joint ventures which own regional retail and community shopping centers. The Operating Partnership's interest in each joint venture as of June 30, 2000 is as follows: The Operating Partnership's Joint Venture Ownership % ------------- ------------------------ Macerich Northwestern Associates 50% Manhattan Village, LLC 10% Pacific Premier Retail Trust 51% Panorama City Associates 50% SDG Macerich Properties, L.P. 50% West Acres Development 19% The Operating Partnership also owns the non-voting preferred stock of Macerich Management Company and Macerich Property Management Company and is entitled to receive 95% of the distributable cash flow of these two entities. Macerich Manhattan Management Company is a 100% subsidiary of Macerich Management Company. - 7 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 3. Investments in Unconsolidated Joint Ventures and the Management Companies, Continued: The Company accounts for the Management Companies and joint ventures using the equity method of accounting. On February 18, 1999, the Company, through a 51/49 joint venture with Ontario Teachers' Pension Plan Board ("Ontario Teachers") closed on the first phase of a two phase acquisition of a portfolio of properties. The phase one closing included the acquisition of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers comprising approximately 3.6 million square feet for a total purchase price of approximately $427,000. The purchase price was funded with a $120,000 loan placed concurrently with the closing, $140,400 of debt from an affiliate of the seller, and $39,400 of assumed debt. The balance of the purchase price was paid in cash. The Company's share of the cash component was funded with the proceeds from two refinancings of centers and borrowings under the Company's line of credit. On July 12, 1999, the Company closed on the second phase of the acquisition. The second phase consisted of the acquisition of the office component of the mixed-use development for a purchase price of approximately $111,000. The purchase price was funded with a $76,700 loan placed concurrently with the closing and the balance was paid in cash. The Company's share of the cash component was funded from borrowings under the Company's line of credit. On June 2, 1999, Macerich Cerritos, LLC ("Cerritos"), a wholly-owned subsidiary of Macerich Management Company, acquired Los Cerritos Center in Cerritos, California. The total purchase price was $188,000, which was funded with $120,000 of debt placed concurrently with the closing and a $70,800 loan from the Company. The Company funded this loan from borrowings under a $60,000 bank loan agreement and the balance from the Company's line of credit. On October 26, 1999, 49% of the membership interests of Macerich Stonewood, LLC ("Stonewood"), Cerritos and Macerich Lakewood, LLC ("Lakewood"), were sold to Ontario Teachers' and concurrently Ontario Teachers' and the Company contributed their 99% collective membership interests in Stonewood and Cerritos and 100% of their collective membership interests in Lakewood to Pacific Premier Retail Trust ("PPRT"), a real estate investment trust, owned approximately 51% by the Company and 49% by Ontario Teachers. Lakewood, Stonewood, and Cerritos own Lakewood Mall, Stonewood Mall and Los Cerritos Center, respectively. The total value of the transaction was approximately $535,000. The properties were contributed to PPRT subject to existing debt of $322,000. The net cash proceeds to the Company were approximately $104,000 which were used for reduction of debt and for general corporate purposes. The results of these joint ventures are included for the period subsequent to their respective dates of acquisition. On October 27, 1999, Albany Plaza, a 145,462 square foot community center, which was owned 51% by the Macerich Management Company, was sold. - 8 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 3. Investments in Unconsolidated Joint Ventures and the Management Companies, Continued: On November 12, 1999, Eastland Plaza, a 65,313 square foot community center, which was 51% owned by the Macerich Management Company, was sold. Combined and condensed balance sheets and statements of operations are presented below for all unconsolidated joint ventures and the Management Companies, followed by information regarding the Operating Partnership's beneficial interest in the combined operations. Beneficial interest is calculated based on the Operating Partnership's ownership interests in the joint ventures and the Management Companies. COMBINED AND CONDENSED BALANCE SHEETS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES June 30, December 31, 2000 1999 ---------------- ------------------ . Assets: Properties, net $2,115,704 $2,117,711 Other assets 69,643 58,412 ---------------- ------------------ Total assets $2,185,347 $2,176,123 ---------------- ------------------ ---------------- ------------------ Liabilities and partners' capital: Mortgage notes payable $1,447,328 $1,287,732 Other liabilities 54,823 62,891 The Company's capital 270,724 342,935 Outside partners' capital 412,472 482,565 ---------------- ------------------ Total liabilities and partners' capital $2,185,347 $2,176,123 ---------------- ------------------ ---------------- ------------------ - 9 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 3. Investments in Unconsolidated Joint Ventures and the Management Companies - Continued: COMBINED STATEMENTS OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES Six Months Ended June 30, 2000 ------------------------------------------------------------------------------------- SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total ----------------- ---------------- ---------------- -------------- -------------- Revenues: Minimum rents $44,043 $46,076 $13,025 - $103,144 Percentage rents 2,230 1,248 731 - 4,209 Tenant recoveries 19,995 15,931 4,519 - 40,445 Management fee - - - $6,491 6,491 Other 1,051 591 704 191 2,537 ----------------- ---------------- ---------------- -------------- -------------- Total revenues 67,319 63,846 18,979 6,682 156,826 Expenses: Shopping center expenses 25,308 17,287 5,479 - 48,074 Interest expense 17,945 22,224 3,732 (161) 43,740 Management Company expense - - - 7,906 7,906 Depreciation and amortization 11,234 9,572 1,466 506 22,778 ----------------- ---------------- ---------------- -------------- -------------- Total operating expenses 54,487 49,083 10,677 8,251 122,498 ----------------- ---------------- ---------------- -------------- -------------- Gain (loss) on sale of assets - - 60 (447) (387) Cumulative effect of change in accounting principle (1,139) (397) (21) - (1,557) ----------------- ---------------- ---------------- -------------- -------------- Net income (loss) $11,693 $14,366 $8,341 ($2,016) $32,384 ================= ================ ================ ============== ============== COMBINED STATEMENTS OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES Six Months Ended June 30, 1999 ------------------------------------------------------------------------------------- SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total ----------------- ---------------- ---------------- -------------- -------------- Revenues: Minimum rents $42,548 $13,581 $12,563 $1,399 $70,091 Percentage rents 3,554 931 951 12 5,448 Tenant recoveries 19,612 4,279 5,665 341 29,897 Management fee - - - 4,098 4,098 Other 931 167 576 215 1,889 ---------------- ---------------- ---------------- -------------- -------------- Total revenues 66,645 18,958 19,755 6,065 111,423 Expenses: Shopping center expenses 24,288 5,507 6,390 373 36,558 Interest expense 15,189 6,399 3,794 1,019 26,401 Management Company expense - - - 5,718 5,718 Depreciation and amortization 10,566 3,525 2,141 698 16,930 ----------------- ---------------- ---------------- -------------- -------------- Total operating expenses 50,043 15,431 12,325 7,808 85,607 ----------------- ---------------- ---------------- -------------- -------------- Gain on sale of assets 5 - 983 300 1,288 ----------------- ---------------- ---------------- -------------- -------------- Net income (loss) $16,607 $3,527 $8,413 ($1,443) $27,104 ================= ================ ================ ============== ============== - 10 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 3. Investments in Unconsolidated Joint Ventures and the Management Companies - Continued: COMBINED STATEMENTS OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES Three Months Ended June 30, 2000 --------------------------------------------------------------------------------------------- SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total -------------------- --------------- ------------------ --------------- ------------ Revenues: Minimum rents $22,134 $23,088 $6,638 - $51,860 Percentage rents 628 456 367 - 1,451 Tenant recoveries 9,807 8,166 2,257 - 20,230 Management fee - - - $3,497 3,497 Other 566 279 402 76 1,323 -------------------- --------------- ------------------ --------------- ------------ Total revenues 33,135 31,989 9,664 3,573 78,361 Expenses: Shopping center expenses 12,389 8,680 2,725 - 23,794 Interest expense 9,908 10,964 1,864 (69) 22,667 Management Company expense - - - 4,449 4,449 Depreciation and amortization 5,723 4,943 417 274 11,357 -------------------- --------------- ------------------ --------------- ------------ Total operating expenses 28,020 24,587 5,006 4,654 62,267 -------------------- --------------- ------------------ --------------- ------------ Gain on sale of assets - - 60 - 60 -------------------- --------------- ------------------ --------------- ------------ Net income (loss) $5,115 $7,402 $4,718 ($1,081) $16,154 ==================== =============== ================== =============== ============ COMBINED STATEMENTS OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES Three Months Ended June 30, 1999 --------------------------------------------------------------------------------------------- SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total -------------------- --------------- ------------------ --------------- ------------ Revenues: Minimum rents $21,422 $9,317 $6,274 $1,399 $38,412 Percentage rents 1,684 616 391 12 2,703 Tenant recoveries 9,586 3,068 2,899 341 15,894 Management fee - - - 2,089 2,089 Other 362 91 282 61 796 -------------------- --------------- ------------------ --------------- ------------ Total revenues 33,054 13,092 9,846 3,902 59,894 Expenses: Shopping center expenses 12,155 3,963 3,269 373 19,760 Interest expense 7,562 4,324 1,888 1,124 14,898 Management Company expense - - - 2,974 2,974 Depreciation and amortization 5,388 2,533 1,075 614 9,610 -------------------- --------------- ------------------ --------------- ------------ Total operating expenses 25,105 10,820 6,232 5,085 47,242 -------------------- --------------- ------------------ --------------- ------------ Gain on sale of assets 2 - 983 288 1,273 -------------------- --------------- ------------------ --------------- ------------ Net income (loss) $7,951 $2,272 $4,597 ($895) $13,925 ==================== =============== ================== =============== ============ - 11 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 3. Investments in Unconsolidated Joint Ventures and the Management Companies - Continued: Significant accounting policies used by the unconsolidated joint ventures and the Management Companies are similar to those used by the Company. Included in mortgage notes payable are amounts due to affiliates of Northwestern Mutual Life ("NML") of $161,187 and $156,219 for the periods ended June 30, 2000 and December 31, 1999, respectively. NML is considered a related party because it is a joint venture partner with the Company in Macerich Northwestern Associates. Interest expense incurred on these borrowings amounted to $4,645 and $2,465 for the six months ended June 30, 2000 and 1999, respectively; and $2,150 and $1,234 for the three months ended June 30, 2000 and 1999, respectively. - 12 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 3. Investments in Unconsolidated Joint Ventures and the Management Companies - Continued: PRO RATA SHARE OF COMBINED AND CONDENSED STATEMENTS OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES The following tables set forth the Operating Partnership's beneficial interest in the joint ventures and the Management Companies: Six Months Ended June 30, 2000 ------------------------------------------------------------------------------------------ SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total ------------------ ------------------- ------------------ ------------ ------------ Revenues: Minimun rents $22,022 $23,499 $4,050 - $49,571 Percentage rents 1,115 636 219 - 1,970 Tenant recoveries 9,997 8,125 1,383 - 19,505 Management fee - - - $6,166 6,166 Other 525 301 150 181 1,157 ------------------ ------------------- ------------------ ------------ ------------ Total revenues 33,659 32,561 5,802 6,347 78,369 ------------------ ------------------- ------------------ ------------ ------------ Expenses: Shopping center expenses 12,654 8,816 1,828 - 23,298 Interest expense 8,973 11,334 1,461 (153) 21,615 Management Company expense - - - 7,511 7,511 Depreciation and amortization 5,617 4,882 656 481 11,636 ------------------ ------------------- ------------------ ------------ ------------ Total operating expenses 27,244 25,032 3,945 7,839 64,060 ------------------ ------------------- ------------------ ------------ ------------ Gain (loss) on sale of assets - - 11 (424) (413) Cumulative effect of change in accounting principle (570) (202) (15) - (787) ------------------ ------------------- ------------------ ------------ ------------ Net income (loss) $5,845 $7,327 $1,853 ($1,916) $13,109 ================== =================== ================== ============ ============ Six Months Ended June 30, 1999 ------------------------------------------------------------------------------------------ SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total ------------------ ------------------- ------------------ ------------ ------------ Revenues: Minimun rents $21,274 $6,926 $3,860 $1,329 $33,389 Percentage rents 1,777 475 300 11 2,563 Tenant recoveries 9,806 2,182 1,591 324 13,903 Management fee - - - 3,893 3,893 Other 466 85 117 204 872 ------------------ ------------------- ------------------ ------------ ------------ Total revenues 33,323 9,668 5,868 5,761 54,620 ------------------ ------------------- ------------------ ------------ ------------ Expenses: Shopping center expenses 12,144 2,808 1,948 354 17,254 Interest expense 7,594 3,263 1,485 968 13,310 Management Company expense - - - 5,431 5,431 Depreciation and amortization 5,283 1,798 722 662 8,465 ------------------ ------------------- ------------------ ------------ ------------ Total operating expenses 25,021 7,869 4,155 7,415 44,460 ------------------ ------------------- ------------------ ------------ ------------ Gain on sale of assets 2 - 188 284 474 ------------------ ------------------- ------------------ ------------ ------------ Net income (loss) $8,304 $1,799 $1,901 ($1,370) $10,634 ================== =================== ================== ============ ============ - 13 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 3. Investments in Unconsolidated Joint Ventures and the Management Companies - Continued PRO RATA SHARE OF COMBINED AND CONDENSED STATEMENTS OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES The following tables set forth the Operating Partnership's beneficial interest in the joint ventures and the Management Companies: Three Months Ended June 30, 2000 ------------------------------------------------------------------------------------------ SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total ------------------ -------------------- ----------------- ------------- ------------- Revenues: Minimum rents $11,068 $11,775 $2,084 - $24,927 Percentage rents 313 233 142 - 688 Tenant recoveries 4,903 4,165 710 - 9,778 Management fee - - - $3,323 3,323 Other 283 142 80 72 577 ------------------ -------------------- ----------------- ------------- ------------- Total revenues 16,567 16,315 3,016 3,395 39,293 ------------------ -------------------- ----------------- ------------- ------------- Expenses: Shopping center expenses 6,194 4,426 922 - 11,542 Interest expense 4,955 5,591 729 (66) 11,209 Management company expense - - - 4,226 4,226 Depreciation and amortization 2,861 2,521 298 261 5,941 ------------------ -------------------- ----------------- ------------- ------------- Total operating expenses 14,010 12,538 1,949 4,421 32,918 ------------------ -------------------- ----------------- ------------- ------------- Gain on sale of assets - - 11 - 11 ------------------ -------------------- ----------------- ------------- ------------- Net income (loss) $2,557 $3,777 $1,078 ($1,026) $6,386 ================== ==================== ================= ============= ============= Three Months Ended June 30, 1999 ------------------------------------------------------------------------------------------ SDG Pacific Macerich Premier Other Mgmt Properties, L.P. Retail Trust Joint Ventures Companies Total ------------------ -------------------- ----------------- ------------- ------------- Revenues: Minimum rents $10,712 $4,751 $1,915 $1,329 $18,707 Percentage rents 842 314 102 11 1,269 Tenant recoveries 4,793 1,564 829 324 7,510 Management fee - - - 1,985 1,985 Other 180 47 57 57 341 ------------------ -------------------- ----------------- ------------- ------------- Total revenues 16,527 6,676 2,903 3,706 29,812 ------------------ -------------------- ----------------- ------------- ------------- Expenses: Shopping center expenses 6,077 2,021 984 354 9,436 Interest expense 3,780 2,205 742 1,068 7,795 Management company expense - - - 2,825 2,825 Depreciation and amortization 2,694 1,292 364 583 4,933 ------------------ -------------------- ----------------- ------------- ------------- Total operating expenses 12,551 5,518 2,090 4,830 24,989 ------------------ -------------------- ----------------- ------------- ------------- Gain on sale of assets 1 - 188 274 463 ------------------ -------------------- ----------------- ------------- ------------- Net income (loss) $3,977 $1,158 $1,001 ($850) $5,286 ================== ==================== ================= ============= ============= - 14 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 4. Property: Property is summarized as follows: June 30, December 31, 2000 1999 -------------------- -------------------- Land $399,172 $399,172 Building improvements 1,683,112 1,603,348 Tenant improvements 52,660 49,654 Equipment & furnishings 11,623 11,272 Construction in progress 43,167 111,089 -------------------- -------------------- 2,189,734 2,174,535 Less, accumulated depreciation (267,928) (243,120) -------------------- -------------------- $1,921,806 $1,931,415 -------------------- -------------------- -------------------- -------------------- - 15 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 5. Mortgage Notes Payable: Mortgage notes payable at June 30, 2000 and December 31, 1999 consist of the following: Carrying Amount of Notes ---------------------------------------------------------- --------------------------- ----------------------------- 2000 1999 --------------------------- ----------------------------- Property Pledged Related Related Interest Payment Maturity As Collateral Other Party Other Party Rate Terms Date - -------------------------- ------------- ------------- --------------- ------------- ------------ -------------- ---------- Wholly Owned Centers: Capitola Mall ---- $36,790 ---- $36,983 9.25% 316 (a) 2001 Carmel Plaza $28,750 ---- $28,869 ---- 8.18% 202 (a) 2009 Chesterfield Towne Center 63,981 ---- 64,358 ---- 9.07% 548(b) 2024 Citadel 72,746 ---- 73,377 ---- 7.20% 554(a) 2008 Corte Madera, Village at 71,637 ---- 71,949 ---- 7.75% 516(a) 2009 Crossroads Mall-Boulder (c) ---- 34,689 ---- 34,893 7.08% 244(a) 2010 Fresno Fashion Fair 69,000 ---- 69,000 ---- 6.52% interest only 2008 Greeley Mall 15,787 ---- 16,228 ---- 8.50% 187(a) 2003 Green Tree Mall/Crossroads - OK/ Salisbury (d) 117,714 ---- 117,714 ---- 7.23% interest only 2004 Holiday Village ---- 17,000 ---- 17,000 6.75% interest only 2001 Northgate Mall ---- 25,000 ---- 25,000 6.75% interest only 2001 Northwest Arkansas Mall 61,555 ---- 62,080 ---- 7.33% 434(a) 2009 Parklane Mall ---- 20,000 ---- 20,000 6.75% interest only 2001 Queens Center 99,776 ---- 100,000 ---- 6.88% 633(a) 2009 Rimrock Mall 30,151 ---- 30,445 ---- 7.70% 244(a) 2003 Santa Monica Place (e) 85,000 ---- 80,000 ---- 8.39% interest only 2001 South Plains Mall 64,355 ---- 64,623 ---- 8.22% 454(a) 2009 South Towne Center 64,000 ---- 64,000 ---- 6.61% interest only 2008 Valley View Center 51,000 ---- 51,000 ---- 7.89% interest only 2006 Villa Marina Marketplace 58,000 ---- 58,000 ---- 7.23% interest only 2006 Vintage Faire Mall (f) 53,015 ---- 53,537 ---- 7.65% 427(a) 2003 Westside Pavilion 100,000 ---- 100,000 ---- 6.67% interest only 2008 ------------- ------------- --------------- ------------- ------------- ------------- --------------- ------------- Total - Wholly Owned Centers $1,106,467 $133,479 $1,105,180 $133,876 ------------- ------------- --------------- ------------- - 17 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 5. Mortgage Notes Payable, Continued: Mortgage notes payable at June 30, 2000 and December 31, 1999 consist of the following: Carrying Amount of Notes ---------------------------------------------------------- --------------------------- ----------------------------- 2000 1999 --------------------------- ----------------------------- Property Pledged Related Related Interest Payment Maturity As Collateral Other Party Other Party Rate Terms Date - ------------------------ ----------- ------------- --------------- ------------- ------------ -------------- ---------- Joint Venture Centers (at pro rata share): Broadway Plaza (50%) (g) - $36,367 - $36,690 6.68% 257 (a) 2008 Pacific Premier Retail Trust (51%) (g): Cascade Mall $13,554 - $13,837 - 6.50% 122 (a) 2014 Kitsap Mall/Kitsap Place (h) 31,110 - 20,452 - 8.06% 450 (a) 2010 Lakewood Mall (i) 64,770 64,770 - 7.20% interest only 2005 Los Cerritos Center 60,548 60,909 - 7.13% 421(a) 2006 North Point Plaza 1,855 - 1,889 - 6.50% 16 (a) 2015 Redmond Town Center - Retail 32,469 - 32,743 - 6.50% 224 (a) 2011 Redmond Town Center - Office (j) - 45,111 - 42,248 6.77% 298 (a) 2009 Stonewood Mall (k) 38,250 38,250 - 8.40% interest only 2001 Washington Square 59,964 - 60,471 - 6.70% 421 (a) 2009 Washington Square Too 6,427 - 6,533 - 6.50% 53 (a) 2016 SDG Macerich Properties L.P. (50%) (g) 187,231 - 159,282 - 6.52% (l) 1,120 (a) 2006 SDG Macerich Properties L.P. (50%) (g) 92,250 - 92,500 - 7.15% (l) interest only 2003 SDG Macerich Properties L.P. (50%) (g) 40,700 - - - 7.02% (l) interest only 2006 West Acres Center (19%) (g) (m) 7,600 - 7,600 - 6.52% interest only 2009 --------------- ------------- --------------- ------------- Total - Joint Venture Centers $636,728 $81,478 $559,236 $78,938 --------------- ------------- --------------- ------------- --------------- ------------- --------------- ------------- Total - All Centers $1,743,195 $214,957 $1,664,416 $212,814 =============== ============= =============== ============= Weighted average interest rate at June 30, 2000 - Wholly Owned Centers 7.57% ============ Weighted average interest rate at December 31, 1999 - Wholly Owned Centers 7.39% ============ (a) This represents the monthly payment of principal and interest. (b) This amount represents the monthly payment of principal and interest. In addition, contingent interest, as defined in the loan agreement, may be due to the extent that 35% of the amount by which the property's gross receipts (as defined in the loan agreement) exceeds a base amount specified therein. Contingent interest expense recognized by the Company was $236 and $106 for the six and three months ended June 30, 2000, respectively; and $138 and $26 for the six and three months ended June 30, 1999, respectively. (c) This note was issued at a discount. The discount is being amortized over the life of the loan using the effective interest method. At June 30, 2000 and December 31, 1999 the unamortized discount was $347 and $364, respectively. (d) This loan is cross collateralized by Green Tree Mall, Crossroads Mall-Oklahoma and the Centre at Salisbury. - 18 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 5. Mortgage Notes Payable, Continued: (e) The loan bears interest at LIBOR plus 1.75%. In addition, the Company can increase the loan amount up to $90,000. The Company has committed to refinance this loan with a 10 year fixed rate loan bearing interest at 7.70%. (f) This loan will be replaced with a new ten year loan for $70,000 at a fixed interest rate of 7.89%. (g) Reflects the Company's pro rata share of debt. (h) In connection with the acquisition of this Center, the joint venture assumed $39,425 of debt. At acquisition, this debt was recorded at fair market value of $41,475 which included an unamortized premium of $2,050. This premium was being amortized as interest expense over the life of the loan using the effective interest method. The joint venture's monthly debt service was $349 and was calculated based on an 8.60% interest rate. At December 31, 1999, the joint venture's unamortized premium was $1,365. On June 1, 2000, the joint venture paid off in full the old debt and a new note was issued for $61,000 bearing interest at a fixed rate of 8.06% and maturing June 2010. The new loan is interest only until December 31, 2001. Effective January 1, 2002, monthly principal and interest of $450 will be payable through maturity. The new debt is cross-collateralized by Kitsap Mall and Kitsap Place. (i) On August 15, 1995, the Company issued $127,000 of collateralized fixed rate notes (the "Notes"). The Notes bear interest at an average fixed rate of 7.20% and mature in July 2005. The Notes require the Company to deposit all cash flow from the property operations with a trustee to meet its obligations under the Notes. Cash in excess of the required amount, as defined, is released. Included in cash and cash equivalents is $750 of restricted cash deposited with the trustee at June 30, 2000 and at December 31, 1999. All of the Notes were assumed by the Pacific Premier Retail Trust joint venture on October 26, 1999. (j) Concurrent with the acquisition, the joint venture placed $76,700 of debt and obtained a construction loan for an additional $16,000. Principal is drawn on the construction loan as costs are incurred. As of June 30, 2000 and December 31, 1999, $11,753 and $6,745 of principal has been drawn under the construction loan, respectively. (k) The loan bears interest at LIBOR plus 1.75%. At June 30, 2000 and December 31, 1999, the total interest was 8.40% and 8.23%, respectively. - 19 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 5. Mortgage Notes Payable, Continued: (l) In connection with the acquisition of these Centers, the joint venture assumed $485,000 of mortgage notes payable which are secured by the properties. At acquisition, the $300,000 fixed rate portion of this debt reflected a fair market value of $322,700, which included an unamortized premium of $22,700. This premium is being amortized as interest expense over the life of the loan using the effective interest method. At June 30, 2000 and December 31, 1999, the unamortized balance of the debt premium was $17,361 and $18,565, respectively. This debt is due in May 2006 and requires monthly payments of $1,852. $184,500 of this debt is due in May 2003 and requires monthly interest payments at a variable weighted average rate (based on LIBOR) of 7.15% and 6.96% at June 30, 2000 and December 31, 1999, respectively. This variable rate debt is covered by an interest rate cap agreement which effectively prevents the interest rate from exceeding 11.53%. On April 12, 2000, the joint venture issued $138,500 of additional mortgage notes which are secured by the properties and are due in May 2006. $57,100 of this debt requires fixed monthly interest payments of $387 at a weighted average rate of 8.13% while the floating rate notes of $81,400 require monthly interest payments at a variable weighted average rate (based on LIBOR) of 7.02%. This variable rate debt is covered by an interest rate cap agreement which effectively prevents the interest rate from exceeding 11.83%. (m) On January 4, 1999, the joint venture replaced the old debt with a new loan of $40,000. The loan has an interest rate of 6.52% and matures January 2009. The debt is interest only until January 2001 at which time monthly payments of principal and interest will be due of $299. The Company periodically enters into treasury lock agreements in order to hedge its exposure to interest rate fluctuations on anticipated financings. Under these agreements, the Company pays or receives an amount equal to the difference between the treasury lock rate and the market rate on the date of settlement, based on the notional amount of the hedge. The realized gain or loss on the contracts is recorded on the balance sheet in other assets and amortized as interest expense over the period of the hedged loans. Certain mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt. Total interest capitalized for the wholly-owned centers during the six and three months ended June 30, 2000 was $2,690 and $1,591, respectively; and total interest capitalized during the six and three months ended June 30, 1999 was $2,739 and $1,488, respectively. The market value of mortgage notes payable for the wholly-owned Centers at June 30, 2000 and December 31, 1999 is estimated to be approximately $1,205,411 and $1,179,469, respectively, based on current interest rates for comparable loans. - 20 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 6. Bank and Other Notes Payable: The Company has a credit facility of $150,000 with a maturity of February 2001 currently bearing interest at LIBOR plus 1.15%. The interest rate on such credit facility fluctuates between 0.95% and 1.15% over LIBOR. As of June 30, 2000 and December 31, 1999, $29,400 and $57,400 of borrowings were outstanding under this line of credit at interest rates of 8.4% and 7.65%, respectively. As of August 14, 2000, $17,000 was outstanding under this line of credit. Additionally, the Company issued $5,776 in letters of credit guaranteeing performance by the Company of certain obligations. The Company does not believe that these letters of credit will result in a liability to the Company. During January 1999, the Company entered into a bank construction loan agreement to fund $89,200 of costs related to the redevelopment of Pacific View. The loan bears interest at LIBOR plus 2.25% and matures in February 2001. Principal is drawn as construction costs are incurred. As of June 30, 2000 and December 31, 1999, $82,614 and $72,671 of principal has been drawn under the loan, respectively. In addition, the Company had a note payable of $30,600 due in February 2000 payable to the seller of the acquired portfolio. The note bore interest at 6.5%. The entire $30,600 loan was paid off on February 18, 2000. 7. Convertible Debentures: During 1997, the Company issued and sold $161,400 of convertible subordinated debentures (the "Debentures") due 2002. The Debentures, which were sold at par, bear interest at 7.25% annually (payable semi-annually) and are convertible at any time, on or after 60 days, from the date of issue at a conversion price of $31.125 per share. The Debentures mature on December 15, 2002 and are callable by the Company after June 15, 2002 at par plus accrued interest. 8. Related-Party Transactions: The Company engaged the Management Companies to manage the operations of its properties and certain unconsolidated joint ventures. For the six and three months ending June 30, 2000, management fees of $1,437 and $724 respectively, and for the six and three months ended June 30, 1999, management fees of $1,620 and $812 respectively, were paid to the Management Companies by the Company. For the six and three months ending June 30, 2000, management fees of $3,449 and $1,752, respectively, and for the six and three months ended June 30, 1999, management fees of $2,033 and $1,142, respectively, were paid to the Management Companies by the joint ventures. Certain mortgage notes are held by one of the Company's joint venture partners (See Note 5). Interest expense in connection with these notes was $5,042 and $5,053 for the six months ended June 30, 2000 and 1999, respectively; and $2,523 and $2,540 for the three months ending June 30, 2000 and 1999, respectively. Included in accounts payable and accrued expenses is interest payable to these partners of $493 and $513 at June 30, 2000 and December 31, 1999, respectively. - 21 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 8. Related-Party Transactions - Continued: In 1997 and 1999 certain executive officers received loans from the Company totaling $6,500. These loans are full recourse to the executives. $6,000 of the loans were issued under the terms of the employee stock incentive plan, bear interest at 7%, are due in 2007 and 2009 and are secured by the Company common stock owned by the executives. On February 9, 2000, $300 of the $6,000 of the loans were forgiven. The $500 loan is non interest bearing and is forgiven ratably over a five year term. These loans receivable are included in other assets at June 30, 2000 and December 31, 1999. Certain Company officers and affiliates have guaranteed mortgages of $21,750 at one of the Company's joint venture properties and $2,000 at Greeley Mall. 9. Commitments and Contingencies: The Company has certain properties subject to noncancellable operating ground leases. The leases expire at various times through 2070, subject in some cases to options to extend the terms of the lease. Certain leases provide for contingent rent payments based on a percentage of base rental income, as defined. Ground rent expenses, net of amounts capitalized, were $170 and ($28) for the six and three months ended June 30, 2000, respectively. Ground rent expenses, net of amounts capitalized, were $456 and $257 for the six and three months ended June 30, 1999, respectively. There were no contingent rents in either period. Perchloroethylene ("PCE") has been detected in soil and groundwater in the vicinity of a dry cleaning establishment at North Valley Plaza, formerly owned by a joint venture of which the Company was a 50% member. The property was sold on December 18, 1997. The California Department of Toxic Substances Control ("DTSC") advised the Company in 1995 that very low levels of Dichloroethylene ("1,2 DCE"), a degradation byproduct of PCE, had been detected in a municipal water well located 1/4 mile west of the dry cleaners, and that the dry cleaning facility may have contributed to the introduction of 1,2 DCE into the water well. According to DTSC, the maximum contaminant level ("MCL") for 1,2 DCE which is permitted in drinking water is 6 parts per billion ("ppb"). The 1,2 DCE was detected in the water well at a concentration of 1.2 ppb, which is below the MCL. The Company has retained an environmental consultant and has initiated extensive testing of the site. The joint venture agreed (between itself and the buyer) that it would be responsible for continuing to pursue the investigation and remediation of impacted soil and groundwater resulting from releases of PCE from the former dry cleaner. Approximately $29 and $72 have already been incurred by the joint venture for remediation, and professional and legal fees for the periods ending June 30, 2000 and 1999, respectively. An additional $230 remains reserved by the joint venture as of June 30, 2000. The joint venture has been sharing costs on a 50/50 basis with a former owner of the property and intends to look to additional responsible parties for recovery. - 22 -

THE MACERICH COMPANY (The Company) NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands) (Unaudited) 9. Commitments and Contingencies, Continued: The Company acquired Fresno Fashion Fair in December 1996. Asbestos has been detected in structural fireproofing throughout much of the Center. Testing data conducted by professional environmental consulting firms indicates that the fireproofing is largely inaccessible to building occupants and is well adhered to the structural members. Additionally, airborne concentrations of asbestos were well within OSHA's permissible exposure limit ("PEL") of .1 fcc. The accounting for this acquisition includes a reserve of $3,300 to cover future removal of this asbestos, as necessary. The Company incurred $24 and $82 in remediation costs for the six months ending June 30, 2000 and 1999, respectively. An additional $2,759 remains reserved at June 30, 2000. 10. Redeemable Preferred Stock: On February 25, 1998, the Company issued 3,627,131 shares of Series A cumulative convertible redeemable preferred stock ("Series A Preferred Stock") for proceeds totaling $100,000 in a private placement. The preferred stock can be converted on a one for one basis into common stock and will pay a quarterly dividend equal to the greater of $0.46 per share, or the dividend then payable on a share of common stock. On June 17, 1998, the Company issued 5,487,471 shares of Series B cumulative convertible redeemable preferred stock ("Series B Preferred Stock") for proceeds totaling $150,000 in a private placement. The preferred stock can be converted on a one for one basis into common stock and will pay a quarterly dividend equal to the greater of $0.46 per share, or the dividend then payable on a share of common stock. No dividends will be declared or paid on any class of common or other junior stock to the extent that dividends on Series A Preferred Stock and Series B Preferred Stock have not been declared and/or paid. 11. Subsequent Events: On August 9, 2000, a dividend/distribution of $0.51 per share was declared for common stockholders and OP unit holders of record on August 18, 2000. In addition, the Company declared a dividend of $0.51 on the Company's Series A Preferred Stock and a dividend of $0.51 on the Company's Series B Preferred Stock. All dividends/distributions will be payable on September 6, 2000. - 23 -

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion is based primarily on the consolidated balance sheet of The Macerich Company as of June 30, 2000, and also compares the activities for the six and three months ended June 30, 2000 to the activities for the six and three months ended June 30, 1999. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto. These financial statements include all adjustments, which are, in the opinion of management, necessary to reflect the fair presentation of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. Forward-Looking Statements This quarterly report on Form 10-Q contains or incorporates statements that constitute forward-looking statements. Those statements appear in a number of places in this Form 10-Q and include statements regarding, among other matters, the Company's growth and acquisition opportunities, the Company's acquisition strategy, regulatory matters pertaining to compliance with governmental regulations and other factors affecting the Company's financial condition or results of operations. Words such as "expects," "anticipates," "intends," "projects," "predicts," "plans," "believes," "seeks," "estimates," and "should" and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company or industry to vary materially from the Company's future results, performance or achievements, or those of the industry, expressed or implied in such forward-looking statements. Such factors include, among others, general industry economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of current and prospective tenants, lease rents, availability and cost of financing and operating expenses; adverse changes in the real estate markets including, among other things, competition with other companies, retail formats and technology, risks of real estate development and acquisitions; governmental actions and initiatives and environmental and safety requirements. The Company will not update any forward-looking information to reflect actual results or changes in the factors affecting the forward-looking information. - 24 -

THE MACERICH COMPANY (The Company) Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued: The following table reflects the Company's acquisitions in 1999: - ---------------------------------------------------------------------------------------------------------------------------------- Date Acquired Location "1999 Joint Venture Acquisition Centers" Pacific Premier Retail February 18, 1999 Three regional malls, retail component of a mixed-use Trust Portfolio (*) development and five contiguous properties in Washington and Oregon. The office component of the mixed-used development was acquired July 12, 1999. Albany Plaza (*) February 18, 1999 Two non-contiguous community shopping Eastland Plaza (*) Centers located in Oregon and Ohio, respectively. Los Cerritos Center (*) June 2, 1999 Cerritos, California "1999 Acquisition Center" Santa Monica Place October 29, 1999 Santa Monica, California - ----------------------------------------------------------------------------------------------------------------------------------- (*) denotes the Company owns its interests in these Centers through an unconsolidated joint venture or through one of the Management Companies. The financial statements include the results of these Centers for periods subsequent to their acquisition. On February 18, 1999, the Company, through a 51%/49% joint venture, known as Pacific Premier Retail Trust ("PPRT"), with Ontario Teachers' Pension Plan Board ("Ontario Teachers") acquired Washington Square, Redmond Town Center, Cascade Mall, Kitsap Mall and five contiguous properties. On October 26, 1999, 49% of the membership interests of Macerich Stonewood, LLC ("Stonewood"), Macerich Cerritos, LLC ("Cerritos") and Macerich Lakewood, LLC ("Lakewood"), were sold to Ontario Teachers' and concurrently Ontario Teachers' and the Company contributed their 99% collective membership interests in Stonewood and Cerritos and 100% of their collective membership interests in Lakewood to PPRT, a real estate investment trust, owned approximately 51% by the Company and 49% by Ontario Teachers. Lakewood, Stonewood, and Cerritos own Lakewood Mall, Stonewood Mall and Los Cerritos Center, respectively. The total value of the transaction was approximately $535,000. The properties were contributed to PPRT subject to existing debt of $322,000. The net cash proceeds to the Company were approximately $104,000 which were used for reduction of debt and for general corporate purposes. Lakewood and Stonewood are referred to herein as the "Contributed JV Assets." On October 27, 1999, Albany Plaza, a 145,462 square foot community center, which was owned 51% by the Macerich Management Company, was sold. On November 12, 1999, Eastland Plaza, a 65,313 square foot community center, which was 51% owned by the Macerich Management Company, was sold. - 25 -

THE MACERICH COMPANY (The Company) Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued: The 1999 Joint Venture Acquisitions are reflected using the equity method of accounting. The results of these acquisitions are reflected in the consolidated results of operations of the Company in equity in income of unconsolidated joint ventures and the Management Companies. Many of the variations in the results of operations, discussed below, occurred due to the 1999 Joint Venture Acquisition Centers, the 1999 Acquisition Center and the partial sale and contribution of the Contributed JV Assets to PPRT during 1999. Many factors impact the Company's ability to acquire additional properties; including the availability and cost of capital, the overall debt to market capitalization level, interest rates and availability of potential acquisition targets that meet the Company's criteria. Accordingly, management is uncertain whether during 2000, and in future years, there will be similar acquisitions and corresponding increases in equity in income of unconsolidated joint ventures and the Management Companies and funds from operations that occurred as a result of the 1999 Joint Venture Acquisition Centers. Management anticipates the pace of acquisitions to slow considerably in 2000 compared to 1999. Pacific View (formerly known as Buenaventura Mall), Crossroads Mall-Boulder and Parklane Mall are currently under redevelopment and are referred to herein as the "Redevelopment Centers." All other Centers, excluding the 1999 Acquisition Center, the 1999 Joint Venture Acquisition Centers, the Contributed JV Assets and Redevelopment Centers, are referred to herein as the "Same Centers," unless the context otherwise requires. The bankruptcy and/or closure of an Anchor, or its sale to a less desirable retailer, could adversely affect customer traffic in a Center and thereby reduce the income generated by that Center. Furthermore, the closing of an Anchor could, under certain circumstances, allow certain other Anchors or other tenants to terminate their leases or cease operating their stores at the Center or otherwise adversely affect occupancy at the Center. Other retail stores at the Centers may also seek the protection of bankruptcy laws and/or close stores, which could result in the termination of such tenants and thus cause a reduction in cash flow generated by the Centers. In addition, the Company's success in the highly competitive real estate shopping center business depends upon many other factors, including general economic conditions, the ability of tenants to make rent payments, increases or decreases in operating expenses, occupancy levels, changes in demographics, competition from other centers and forms of retailing and the ability to renew leases or relet space upon the expiration or termination of leases. Results of Operations Comparison of Six Months Ended June 30, 2000 and 1999 Revenues Minimum and percentage rents decreased by 10.1% to $98.1 million in 2000 from $109.1 million in 1999. Approximately $15.0 million of the decrease related to the contribution of 100% and 99% of the membership interests of Lakewood Mall and Stonewood Mall, respectively, to the PPRT joint venture on October 26, 1999. The Company's prorata share of results from those assets subsequent to the contribution to PPRT is reflected in Income from - 26 -

THE MACERICH COMPANY (The Company) Results of Operations - Continued: Comparison of Six Months Ended June 30, 2000 and 1999 Revenues- Continued: Unconsolidated Joint Ventures. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin 101, "RevenueRecognition in Financial Statements," ("SAB 101") which became effective for periods after December 15, 1999. This bulletin modified the timing of revenue recognition for percentage rent received from tenants. SAB 101 requires deferral of the recognition of percentage rent until the tenant's annual sales breakpoint has been exceeded. While annual revenue from percentage rent will not be materially impacted by this change, the majority of percentage rent will now be recognized in the fourth quarter of each year, rather than spread throughout the year. The impact of SAB 101 represented approximately a $4.1 million decrease in revenues for the six months ended June 30, 2000.. These decreases are offset by revenue increases of $5.0 million relating to the 1999 acquisition of Santa Monica Place, $0.4 million increase at the Redevelopment Centers and $2.7 million of the increase was attributable to the Same Centers. Tenant recoveries increased to $49.4 million in 2000 from $47.3 million in 1999. The 1999 acquisition of Santa Monica Place generated $3.4 million of the increase, $2.3 million of the increase was from the Same Centers and $0.4 million from the Redevelopment Centers. These increases were partially offset by revenue decreases of $4.3 million resulting from the contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture. Other income increased to $4.0 million in 2000 from $3.2 million in 1999. Approximately $0.8 million of the increase related to the 1999 acquisition of Santa Monica Place. Expenses Shopping center expenses increased to $48.1 million in 2000 compared to $47.2 million in 1999. Approximately $3.8 million of the increase resulted from the 1999 acquisition of Santa Monica Place, $1.7 million of the increase resulted from increased property taxes and recoverable expenses at the Same Centers. Additionally, the Redevelopment Centers had an increase of $0.2 million in shopping center expenses resulting primarily from increased property taxes and recoverable expenses. These increases were offset by a decrease of $4.8 million resulting from the contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture. General and administrative expenses increased to $3.2 million in 2000 from $2.8 million in 1999 primarily as a result of higher compensation expense. Interest Expense Interest expense decreased to $55.1 million in 2000 from $55.4 million in 1999. Approximately $4.6 million of the decrease is from the contribution of Lakewood Mall to the PPRT joint venture. This decrease is offset by the acquisition activity in 1999, which was partially funded with secured debt and borrowings under the Company's line of credit. - 27 -

THE MACERICH COMPANY (The Company) Results of Operations - Continued: Comparison of Six Months Ended June 30, 2000 and 1999 Depreciation and Amortization Depreciation and amortization decreased to $29.6 million in 2000 from $30.5 million in 1999. Approximately $2.3 million of the decrease relates primarily to the contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture, which is offset by an increase of $1.5 million relating to the acquisition of Santa Monica Place. Income from Unconsolidated Joint Ventures and Management Companies The income from unconsolidated joint ventures and the Management Companies was $13.1 million for 2000, compared to income of $10.6 million in 1999. A total of $5.5 million of the increase is attributable to the 1999 Joint Venture Acquisitions and the Contributed JV Assets. These increases are partially offset by the change in accounting principle for percentage rent required by SAB 101 of $1.9 million. Extraordinary Loss from Early Extinguishment of Debt In 1999, the Company wrote off $1.0 million of unamortized financing costs, compared to no financing costs written off in 2000. Net Income Available to Common Stockholders As a result of the foregoing, net income available to common stockholders decreased to $13.9 million in 2000 from $17.9 million in 1999. Operating Activities Cash flow from operations was $48.7 million in 2000 compared to $58.9 million in 1999. The decrease is primarily because of decreased net operating income from the factors mentioned above. Investing Activities Cash generated from investing activities was $51.5 million in 2000 compared to cash utilized by investing activities of $192.6 million in 1999. The change resulted primarily from the cash contributions required by the Company for the joint venture acquisitions of $70.1 million in 1999 compared to $0.4 million in 2000. Additionally, a loan from the Company for $81.3 million was made to a joint venture for acquisitions in 1999. There were no loans made to affiliates in 2000. This is offset by increases in joint venture distributions of $85.7 million in 2000 compared to $10.4 in 1999. Financing Activities Cash flow from financing activities was ($105.6) million in 2000 compared to $133.2 million in 1999. The change resulted primarily from the refinancing of Centers in 1999. - 28 -

THE MACERICH COMPANY (The Company) Results of Operations - Continued: Comparison of Six Months Ended June 30, 2000 and 1999 Funds From Operations Primarily because of the factors mentioned above, including the impact of the change in accounting for percentage rent required by SAB 101, Funds from Operations - Diluted decreased 1.8% to $76.1 million in 2000 from $77.5 million in 1999. Comparison of Three Months Ended June 30, 2000 and 1999 Revenues Minimum and percentage rents decreased by 9.4% to $49.4 million in 2000 from $54.5 million in 1999. Approximately $7.6 million of the decrease related to the contribution of 100% and 99% of the membership interests of Lakewood Mall and Stonewood Mall, respectively, to the PPRT joint venture on October 26, 1999. The Company's prorata share of results from those assets subsequent to the contribution to PPRT is reflected in Income from Unconsolidated Joint Ventures. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements," ("SAB 101") which was adopted by the Company effective January 1, 2000. This bulletin modified the timing of revenue recognition for percentage rent received from tenants. SAB 101 requires deferral of the recognition of percentage rent until the tenant's annual sales breakpoint has been exceeded. While annual revenue from percentage rent will not be materially impacted by this change, the majority of percentage rent will now be recognized in the fourth quarter of each year, rather than spread throughout the year. The impact of SAB 101 for the three months ended June 30, 2000 represented approximately a $1.8 million decrease. These decreases are offset by revenue increases of $2.5 million relating to the 1999 acquisition of Santa Monica Place, $0.5 million increase at the Redevelopment Centers and $1.4 million of the increase was attributable to the Same Centers. Tenant recoveries increased to $24.9 million in 2000 from $24.2 million in 1999. The 1999 acquisition of Santa Monica Place generated $1.8 million of the increase, $0.7 million of the increase was from the Same Centers and $0.1 million from the Redevelopment Centers. These increases were partially offset by revenue decreases of $2.1 million resulting from the contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture. Expenses Shopping center expenses increased to $24.2 million in 2000 compared to $24.0 million in 1999. Approximately $1.9 million of the increase resulted from the 1999 acquisition of Santa Monica Place, $0.8 million of the increase resulted from increased property taxes and recoverable expenses at the Same Centers. These increases were offset by a decrease of $2.4 million resulting from the contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture. General and administrative expenses increased to $1.7 million in 2000 from $1.4 million in 1999 primarily as a result of higher compensation expense. - 29 -

THE MACERICH COMPANY (The Company) Results of Operations - Continued: Comparison of Three Months Ended June 30, 2000 and 1999 Interest Expense Interest expense decreased to $26.9 million in 2000 from $28.6 million in 1999. This decrease of $1.7 million related primarily of $2.3 million from the contribution of Lakewood Mall to the PPRT joint venture offset by the acquisition activity in 1999, which was partially funded with secured debt and borrowings under the Company's line of credit. Depreciation and Amortization Depreciation and amortization decreased to $15.0 million in 2000 from $15.3 million in 1999. This decrease relates primarily to the contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture offset by an increase relating to the 1999 acquisition of Santa Monica Place. Income from Unconsolidated Joint Ventures and Management Companies The income from unconsolidated joint ventures and the Management Companies was $6.4 million for 2000, compared to income of $5.3 million in 1999. A total of $2.6 million of the change is attributable to the 1999 Joint Venture Acquisitions and the Contributed JV Assets. These increases are partially offset by the change in accounting principle for percentage rent required by SAB 101 of $0.8 million. Net Income Available to Common Stockholders As a result of the foregoing, net income available to common stockholders decreased to $7.6 million in 2000 from $9.0 million in 1999. Funds From Operations Primarily because of the factors mentioned above, including the impact of the change in accounting for percentage rent required by SAB 101, Funds from Operations - Diluted decreased 1.8% to $38.2 million in 2000 from $38.9 million in 1999. - 30 -

THE MACERICH COMPANY (The Company) Results of Operations - Continued: Liquidity and Capital Resources The Company intends to meet its short term liquidity requirements through cash generated from operations and working capital reserves. The Company anticipates that revenues will continue to provide necessary funds for its operating expenses and debt service requirements, and to pay dividends to stockholders in accordance with REIT requirements. The Company anticipates that cash generated from operations, together with cash on hand, will be adequate to fund capital expenditures which will not be reimbursed by tenants, other than non-recurring capital expenditures. Capital for major expenditures or major redevelopments has been, and is expected to continue to be, obtained from equity or debt financings which include borrowings under the Company's line of credit and construction loans. However, 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. The Company currently is undertaking a $90 million redevelopment of Pacific View. The Company has a bank construction loan agreement to fund $89.2 million of these construction costs. The Company believes that it will have access to the capital necessary to expand its business in accordance with its strategies for growth and maximizing Funds from Operations. The Company presently intends to obtain additional capital necessary to expand its business through a combination of additional public and private equity offerings, debt financings and/or joint ventures. During 1998 and 1999, the Company acquired two portfolios through joint ventures and raised additional capital in 1999 from the sale of interests in two properties to one joint venture partner. The Company believes such joint venture arrangements provide an attractive alternative to other forms of financing. The Company's total outstanding loan indebtedness at June 30, 2000 was $2.2 billion (including its pro rata share of joint venture debt). This equated to a debt to Total Market Capitalization (defined as total debt of the Company, including its pro rata share of joint venture debt, plus aggregate market value of outstanding shares of common stock, assuming full conversion of OP Units and preferred stock into common stock) ratio of approximately 65% at June 30, 2000. The Company's debt consists primarily of fixed-rate conventional mortgages payable secured by individual properties. The Company has filed a shelf registration statement, effective December 8, 1997, to sell securities. The shelf registration is for a total of $500 million of common stock, common stock warrants or common stock rights. During 1998, the Company sold a total of 7,920,181 shares of common stock under this shelf registration. The aggregate offering price of these transactions was approximately $212.9 million, leaving approximately $287.1 million available under the shelf registration statement. The Company has an unsecured line of credit for up to $150.0 million. There were $29.4 million of borrowings outstanding at June 30, 2000. As of August 14, 2000, $17.0 million was outstanding under this line of credit. At June 30, 2000, the Company had cash and cash equivalents available of $35.0 million. - 31 -

THE MACERICH COMPANY (The Company) Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued: Funds From Operations The Company believes that the most significant measure of its performance is Funds from Operations ("FFO"). FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") to be: Net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales or write-down of assets, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs) and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. FFO does not represent cash flow from operations, as defined by GAAP, and is not necessarily indicative of cash available to fund all cash flow needs. The following reconciles net income available to common stockholders to FFO: Six months ended June 30, 2000 1999 ------------------------ --------------------------- Shares Amount Shares Amount ---------- ------------ ----------- -------------- (amounts in thousands) Net income - available to common stockholders $13,921 $17,883 Adjustments to reconcile net income to FFO - basic: Minority interest 4,421 6,488 Depreciation and amortization on wholly owned centers 29,568 30,539 Pro rata share of unconsolidated entities' depreciation and amortization 11,636 8,465 Loss on sale of wholly-owned assets 108 - Loss on early extinguishment of debt - 988 Pro rata share of (gain) loss on sale of assets from unconsolidated entities 413 (474) Cumulative effect of the change in accounting principle - wholly-owned assets 963 - Cumulative effect of the change in accounting principle - pro rata joint ventures 787 - Less: Depreciation on personal property and amortization of loan costs and interest rate caps (2,359) (2,107) ------------ -------------- FFO - basic (1) 45,073 59,458 46,286 61,782 Additional adjustments to arrive at FFO - diluted: Impact of convertible preferred stock 9,115 9,297 9,115 8,841 Impact of stock options and restricted stock using the treasury method 401 1,003 435 611 Impact of convertible debentures 5,186 6,292 5,186 6,276 ---------- ------------ ----------- -------------- FFO - diluted (2) 59,775 $76,050 61,022 $77,510 ========== ============ =========== ============== - 32 -

THE MACERICH COMPANY (The Company) Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued: Three months ended June 30, 2000 1999 -------------------------- -------------------------- Shares Amount Shares Amount ------------ ------------ ----------- ------------- (amounts in thousands) Net income - available to common stockholders $7,597 $8,986 Adjustments to reconcile net income to FFO - basic: Minority interest 2,383 3,258 Depreciation and amortization on wholly owned centers 15,040 15,285 Pro rata share of unconsolidated entities' depreciation and amortization 5,941 4,933 Loss on sale of wholly-owned assets 106 - Loss on early extinguishment of debt - 15 Pro rata share of (gain) loss on sale of assets from unconsolidated entities (11) (463) Cumulative effect of the change in accounting principle - wholly-owned assets - - Cumulative effect of the change in accounting principle - pro rata joint ventures - - Less: Depreciation on personal property and amortization of loan costs and interest rate caps (1,166) (1,051) ------------ ------------- FFO - basic (1) 45,093 29,890 46,291 30,963 Additional adjustments to arrive at FFO - diluted: Impact of convertible preferred stock 9,115 4,648 9,115 4,421 Impact of stock options and restricted stock using the treasury method 506 545 551 368 Impact of convertible debentures 5,186 3,145 5,186 3,161 ------------ ------------ ----------- ------------- FFO - diluted (2) 59,900 $38,228 61,143 $38,913 ============ ============ =========== ============= 1) Calculated based upon basic net income as adjusted to reach basic FFO. Weighted average number of shares includes the weighted average number of shares of common stock outstanding for 2000 and 1999 assuming the conversion of all outstanding OP units. 2) The computation of FFO - diluted and diluted average number of shares outstanding includes the effect of outstanding common stock options and restricted stock using the treasury method. Convertible debentures are dilutive for the six and three months ending June 30, 2000 and 1999, and therefore assumed converted to equity to calculate FFO - diluted. On February 25, 1998, the Company sold $100 million of its Series A Preferred Stock. On June 17, 1998, the Company sold $150 million of its Series B Preferred Stock Each series of preferred stock can be converted on a one for one basis for common stock. These preferred shares are not assumed converted for purposes of net income per share as they would be anti-dilutive to that calculation. The preferred shares are assumed converted for purposes of FFO diluted per share as they are dilutive to that calculation. - 33 -

THE MACERICH COMPANY (The Company) Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued: Included in minimum rents were rents attributable to the accounting practice of straight-lining of rents. The amount of straight-lining of rents that impacted minimum rents was $0.6 million and $1.3 million for the six months ended June 30, 2000 and 1999, respectively; and $0.4 million and $0.7 million for the three months ended June 30, 2000 and 1999, respectively. Inflation In the last three years, inflation has not had a significant impact on the Company because of a relatively low inflation rate. Most of the leases at the Centers have rent adjustments periodically through the lease term. These rent increases are either in fixed increments or based on increases in the Consumer Price Index. In addition, many of the leases are for terms of less than ten years, which enables the Company to replace existing leases with new leases at higher base rents if the rents of the existing leases are below the then existing market rate. Additionally, most of the leases require the tenants to pay their pro rata share of operating expenses. This reduces the Company's exposure to increases in costs and operating expenses resulting from inflation. 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. As a result of the above, plus the accounting change discussed below for percentage rent, earnings are generally highest in the fourth quarter of each year. New Accounting Pronouncements Issued In December 1999, the Securities and Exchange Committee issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"), which became effective for periods beginning after December 15, 1999. This bulletin modified the timing of revenue recognition for percentage rent received from tenants. This change will defer recognition of a significant amount of percentage rent for the first three calendar quarters into the fourth quarter. The Company applied this accounting change as of January 1, 2000. The cumulative effect of this change in accounting principle at the adoption date of January 1, 2000, including the pro rata share of joint ventures, was approximately $1,750,000. - 34 -

THE MACERICH COMPANY (The Company) Management's Discussion and Analysis of Financial Condition and Results of Operations, Continued: New Accounting Pronouncements Issued- Continued: In June 1998, the FASB issued Statement of Financial Accounting Standard ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") which requires companies to record derivatives on the balance sheet, measured at fair value. Changes in the fair values of those derivatives will be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments and Hedging Activities," which delays the implementation of SFAS 133 from January 1, 2000 to January 1, 2001. In June 2000, the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB Statement No. 133," ("SFAS 138") which amends the accounting and reporting standards of SFAS 133. The Company has not yet determined when it will implement SFAS 133 and SFAS 138 nor has it completed the analysis required to determine the impact on its financial statements. - 35 -

THE MACERICH COMPANY (The Company) Item 3 Quantitative and Qualitative Disclosures About Market Risk 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 conservative ratio of fixed rate, long-term debt to total debt such that variable rate exposure is kept at an acceptable level, (2) reducing interest rate exposure on certain long-term variable rate debt through the use of interest rate caps 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 June 30, 2000 concerning the Company's long term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates and estimated fair value ("FV"). For the Years Ended December 31, (dollars in thousands) 2000 2001 2002 2003 2004 Thereafter Total FV -------- --------- ---------- --------- ---------- ---------- ---------- --------- Wholly Owned Centers: Long term debt: Fixed rate $8,664 $108,286 $11,717 $99,972 $127,705 $798,602 $1,154,946 $1,120,411 Average interest rate 7.40% 7.37% 7.37% 7.33% 7.34% 7.34% 7.40% - Fixed rate - Debentures - - 161,400 - - - 161,400 158,494 Average interest rate - - 7.25% - - - 7.25% - Variable rate - 197,014 - - - - 197,014 197,014 Average interest rate - 8.56% - - - - 8.56% - -------- --------- ----------- --------- ---------- ---------- ------------ ----------- Total debt - Wholly owned Centers $8,664 $305,300 $173,117 $99,972 $127,705 $798,602 $1,513,360 $1,475,919 -------- --------- ----------- ---------- ---------- ----------- ------------ ----------- Joint Venture Centers: (at Company's pro rata share) Fixed rate $6,063 $ 6,498 $7,173 $7,689 $8,212 $511,371 $547,006 $508,582 Average interest rate 6.70% 6.71% 6.71% 6.71% 6.71% 6.71% 6.70% - Variable rate - 38,250 - 92,250 - 40,700 171,200 171,200 Average interest rate - 8.40% - 7.15% - 7.02% 7.40% - -------- --------- --------- ----------- ----------- ----------- ----------- ---------- Total debt - Joint Ventures $6,063 $44,748 $7,173 $99,939 $8,212 $552,071 $718,206 $679,782 -------- --------- --------- ----------- ------------ ----------- ------------ ----------- Total debt - All Centers $14,727 $350,048 $180,290 $199,911 $135,917 $1,350,673 $2,231,566 $2,155,701 ======== ========== ========== =========== =========== ============ =========== ============= Of the $235.3 million of variable rate debt maturing in 2001, $29.4 million represents the outstanding borrowings under the Company's credit facility and $82.6 million represents outstanding borrowings under the Pacific View construction loan. Additionally, the Company has committed to refinancing $85.0 million of floating rate debt scheduled to mature in 2001 with a 10 year fixed rate loan bearing interest at 7.70%. In addition, the Company has assessed the market risk for its variable rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash flows by approximately $3.7 million per year based on $368.2 million outstanding at June 30, 2000. The fair value of the Company's long term debt is estimated based on discounted cash flows at interest rates that management believes reflect the risks associated with long term debt of similar risk and duration. - 36 -

THE MACERICH COMPANY (The Company) PART II Other Information Item 1 Legal Proceedings During the ordinary course of business, the Company, from time to time, is threatened with, or becomes a party to, legal actions and other proceedings. Management is of the opinion that the outcome of currently known actions and proceedings to which it is a party will not, singly or in the aggregate, have a material adverse effect on the Company. Item 2 Changes in Securities and Use of Proceeds None Item 3 Defaults Upon Senior Securities None Item 4 Submission of Matters to a Vote of Security Holders The following matters were voted upon at the Annual Meeting held on May 16, 2000: A. The following three persons were elected as directors of the Company to serve until the annual meeting of stockholders in 2003 and until their respective successors are duly elected and qualify: For Authority Withheld Arthur M. Coppola 14,739,760 114,326 James S. Cownie 14,739,758 114,328 Mace Siegel 14,738,016 116,070 B. The ratification of the selection of PricewaterhouseCoopers LLP as independent public accountants for the fiscal year ending December 31, 2000. Votes: For: 14,812,818 Against: 13,867 Abstain: 27,401 Item 5 Other Information None Item 6 Exhibits and Reports on Form 8-K None - 37 -

THE MACERICH COMPANY (The Company) Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The Macerich Company By: /s/ Thomas E. O'Hern Thomas E. O'Hern Executive Vice President and Chief Financial Officer Date: August 14, 2000 - 38 -

THE MACERICH COMPANY (The Company) Exhibit Index Exhibit No. Page (a) Exhibits None - 39 -

5 THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 1,2 AND 3 OF THE COMPANY'S FORM 10Q FOR THE YEAR. 0000912242 THE MACERICH COMPANY 1,000 US 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 1 34,954 0 27,342 0 0 0 2,189,734 (267,928) 2,310,156 46,342 1,513,360 0 91 341 598,498 2,310,156 0 151,557 0 51,289 30,285 0 55,099 0 0 0 0 963 0 13,921 0.41 0.41