As filed with the Securities and Exchange Commission on February 5, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________________
THE MACERICH COMPANY
(Exact name of Registrant as specified in its charter)
________________________
Maryland 99-4448705
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
233 Wilshire Boulevard, No. 700
Santa Monica, California 90401
(310) 394-6911
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
________________________
Arthur M. Coppola
President
The Macerich Company
233 Wilshire Boulevard, No. 700
Santa Monica, California 90401
(310) 394-6911
________________________
Copy to:
Frederick B. McLane, Esq.
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071-2899
(213) 669-6000
________________________
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. x
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
CALCULATION OF REGISTRATION FEE
Title of each class of Proposes maximum Amount of
securities to be registered aggregate offering price registration fee
- -------------------------------------- ------------------------ ----------------
Common Stock ($.01 par value per share) (1)(2)(3) NA
Securities Warrants (1)(2)(4) NA
Rights (1)(2)(5) NA
Total $500,000,000 $147,148(6)
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(Footnotes on next page)
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
(Footnotes from preceding page)
(1) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement exceed $500,000,000 (or its
equivalent in foreign currency). Any securities registered hereunder may
be sold separately or as units with other securities registered hereunder.
(2) The proposed maximum offering price per unit will be determined, from time
to time, by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder.
(3) Subject to Footnote (1), there is being registered hereunder an
indeterminate number of shares of Common Stock as may be sold, from time to
time, by the Registrant.
(4) Subject to Footnote (1), there is being registered hereunder an
indeterminate number of Common Stock Warrants representing rights to
purchase Common Stock registered pursuant to this Registration Statement.
(5) Subject to Footnote (1), there is being registered hereunder an
indeterminate number of Rights representing rights to purchase Common Stock
registered pursuant to this Registration Statement.
(6) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933, as amended. Includes $14,412,500 aggregate amount
of Securities which were previously registered under the Registrant's
Registration Statement on Form S-3 (No. 33-93584). The registration
statement fee specified in the table has been computed on the basis of
$485,587,500 aggregate amount of Securities registered hereby, prior to
including the previously registered and unsold Securities referred to
above.
This Registration Statement includes $14,412,500 aggregate amount of
Securities which were previously registered under the Registrant's Registration
Statement on Form S-3 (No. 33-93584) and remain unsold as of the date hereof.
As permitted by Rule 429, the Prospectus with respect to this Registration
Statement also relates to the previously unsold Securities covered hereby.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1997
Prospectus $500,000,000
THE MACERICH COMPANY
Securities
The Macerich Company (the "Company") may offer from time to time, in one or
more series, shares of its Common Stock, $.01 par value per share (the "Common
Stock"), warrants to purchase Common Stock (the "Securities Warrants") and
rights to purchase shares of Common Stock (the "Rights"). The Common Stock,
the Securities Warrants and the Rights are collectively referred to herein as
the "Securities." Securities will have a maximum aggregate offering price of
$500,000,000 and will be offered on terms to be determined at the time of the
offering.
In the case of Common Stock, the specific number of shares and issuance
price per share will be set forth in the accompanying Prospectus Supplement.
In the case of Securities Warrants, the duration, offering price, exercise
price and detachability, if applicable, will be set forth in the accompanying
Prospectus Supplement. In the case of the Rights, the duration, exercise price
and transferability, if applicable, will be set forth in the accompanying
Prospectus Supplement. In addition, such specific terms of the Securities may
include limitations on direct or beneficial ownership and restrictions on
transfer of the Securities, in each case as may be appropriate to preserve the
status of the Company as a real estate investment trust ("REIT") for federal
income tax purposes. The Prospectus Supplement will also disclose whether the
Securities will be listed on a national securities exchange and if they are not
to be listed, the possible effects thereof on their marketability.
Securities may be sold directly, through agents from time to time or through
underwriters and/or dealers. If any agent of the Company or any underwriter is
involved in the sale of the Securities, the name of such agent or underwriter
and any applicable commission or discount will be set forth in the accompanying
Prospectus Supplement. No Securities may be sold without delivery of the
applicable Prospectus Supplement describing the method and terms of the
offering of such Securities. See "Plan of Distribution." The applicable
Prospectus Supplement will also contain information, when applicable, about
certain United State federal income tax considerations relating to the
Securities covered by such Prospectus Supplement.
See "Risk Factors" at page 3 of this Prospectus for certain factors relating
to an investment in the Securities.
_______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________________________
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
February 5, 1997
1
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information filed by the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and should be available for inspection and copying at the regional
offices of the Commission located at 7 World Trade Center, Suite 1300, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material, when filed, may also be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a World
Wide Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the site is http://www.sec.gov. The Company's securities are
listed on the New York Stock Exchange, 20 Broad Street, New York, New York
10005, at the offices of which reports, proxy and information statements and
other information concerning the Company may also be inspected.
This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto which the Company has filed with
the Commission under the Securities Act of 1933, as amended, and reference is
hereby made to such Registration Statement, including the exhibits thereto.
_______________________________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents of the
Company filed with the Commission: (1) Annual Report on Form 10-K for the
fiscal year ended December 31, 1995; (2) Quarterly Report on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996; (3)
Current Report on Form 8-K, event date January 25, 1996, October 21, 1996,
November 27, 1996 and December 18, 1996, and on Form 8-K/A, event date
January 25, 1996, April 5, 1996 and February 4, 1997; (4) the description of
the Company's Common Stock contained in the Company's registration statement
filed under the Exchange Act and any amendments or reports filed for the
purpose of updating such description; and (5) all documents filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Securities.
Any statement contained herein, in a Prospectus Supplement or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any subsequently
filed document which is incorporated by reference herein modifies or supersedes
such statements. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial holder, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any and all the foregoing
documents incorporated by reference herein, including exhibits specifically
incorporated by reference in such documents but excluding all other exhibits to
such documents. Requests should be made to the Corporate Secretary of the
Company at 233 Wilshire Boulevard, No. 700, Santa Monica, California 90401,
telephone number (310) 394-6911.
As used herein, the term "Company" includes The Macerich Partnership, L.P.,
a Delaware limited partnership, Macerich Property Management Company, a
California corporation, and Macerich Management Company, a California
corporation, unless the context otherwise requires.
2
THE COMPANY
The Macerich 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
23 regional shopping centers and three community shopping centers aggregating
approximately 19.1 million square feet of gross leaseable area. The 26
regional and community shopping centers described above and any newly acquired
shopping centers will be 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 two management
companies, Macerich Property Management Company, a California corporation, and
Macerich Management Company, a California corporation (collectively, the
"Management Companies").
The Company was organized as a Maryland corporation in September 1993 to
continue and expand the shopping center operations of Mace Siegel, Arthur M.
Coppola, Dana K. Anderson and Edward C. Coppola (the Principals) and certain of
their family members, relatives and business associates. The Company's
principal executive offices are located at 233 Wilshire Boulevard, No. 700,
Santa Monica, California 90401 and its telephone number is (310) 394-6911.
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
matters described below before purchasing any Securities offered hereby. Any
additional risk factors regarding an investment in the Securities will be set
forth in the applicable Prospectus Supplement. See also "Description of
Securities Warrants -- Certain Risk Considerations."
Risks of Real Estate Investments
- --------------------------------
General Factors Affecting Investments in Shopping Centers. Real property
investments are subject to varying degrees of risk that may affect the ability
of the Centers to generate sufficient revenues to meet operating and other
expenses, including debt service, lease payments, capital expenditures and
tenant improvements, and to make distributions to its stockholders. Revenues
and income from shopping center properties may be adversely affected by a
number of factors, including: the national economic climate; the regional and
local economy (which may be adversely impacted by plant closings, industry
slowdowns adverse weather conditions, natural disasters and other factors);
local real estate conditions (such as an oversupply of, or a reduction in
demand for, retail space); perceptions by retailers or shoppers of the safety,
convenience and attractiveness of the shopping center; and increased costs of
maintenance, insurance and operations (including real estate taxes). In
addition, investments in shopping centers and other real estate are relatively
illiquid. If the Centers were liquidated in the current real estate market,
the proceeds to the Company might be less than the Company's total investment
in the Centers. Income from shopping center properties and shopping center
values are also affected by such factors as applicable laws and regulations,
including tax and zoning laws, interest rate levels and the availability of
financing.
Dependence on Tenants. The Company's revenues and funds available for
distribution would be adversely affected if a significant number of the
Company's lessees were unable (due to poor operating results, bankruptcy or
other reasons) to meet their obligations, if the Company were unable to lease a
significant amount of space in the Centers on economically favorable terms, or
if for any other reason, the Company were unable to collect a significant
amount of rental payments. A decision by a department store or other large
retail store tenant (an "Anchor"), or other significant tenant, to cease
operations at a Center could also have an adverse effect on the Company. 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. In addition, mergers, acquisitions, consolidations,
dispositions or bankruptcies in the retail industry could result in the loss of
tenants at one or more Centers. The bankruptcy and subsequent closure of
retail stores could reduce occupancy levels and rental income, or otherwise
adversely affect the Company's performance. Furthermore, if the store sales of
retailers operating in the Centers were to decline sufficiently, tenants might
be unable to pay their minimum rents or expense recovery charges. In the event
of a default by a lessee, the Center may experience delays and costs in
enforcing its rights as lessor. See "Bankruptcy of Retail Stores."
3
Risks of Management and Leasing Business. Each of the Management Companies
is subject to the risks associated with the property management and leasing
business. These risks include the risks that management and leasing contracts
with third-party owners will be lost to competitors, that contracts will not be
renewed on terms consistent with current terms, and that leasing activity
generally may decline. Most of the third-party management contracts can be
terminated on 30 to 60 days notice by third parties. Additionally, the
compensation of the Management Companies is tied to various revenues under
virtually all of the property management agreements with third-party owners.
Acquisition and Redevelopment Strategy
- --------------------------------------
The Company's historical growth in revenues, net income and funds from
operations have been closely tied to the acquisition and redevelopment of
shopping centers. Many factors, including the availability and cost of
capital, overall debt to market capitalization ratio, interest rates and the
availability of attractive acquisition targets, among others, will affect the
Company's ability to acquire and redevelop additional properties.
Risks of Debt Financing
- -----------------------
The Company is subject to the risks associated with debt financing,
including the risk that the Company's cash flow will be insufficient to meet
required payments of principal and interest. A majority of the Centers are
mortgaged to secure payment of this indebtedness, and if the mortgage payments
cannot be made, a loss could be sustained as a result of foreclosure by the
mortgagee. The Company currently maintains some floating rate indebtedness,
and may utilize floating rate financing in future transactions. Increases in
these interest rates could adversely affect the Company's funds from operations
and its ability to service its debt.
Conflicts of Interest
- ---------------------
Management Companies
The management, leasing and redevelopment business of the Company is
carried on through the Management Companies because income from management,
leasing and redevelopment might jeopardize the Company's status as a REIT under
the Internal Revenue Code of 1986, as amended (the "Code"), if such operations
were carried on directly by the Operating Partnership. The Principals own 100%
of the outstanding shares of voting common stock of each of the Management
Companies, and the Operating Partnership owns 100% of the outstanding shares of
non-voting preferred stock of each of such entities. As the holder of 100% of
the preferred stock, the Operating Partnership has the right to receive 95% of
the net cash flow of each of the Management Companies. However, since each of
the Management Companies is an operating company and not a passive entity, the
Company's investment in the Management Companies, through non-voting preferred
stock, is subject to the risk that the Principals might have interests that are
inconsistent with the interests of the Company.
The Management Companies have entered into management agreements
("Management Agreements") with the Operating Partnership and each of the
property partnerships (the "Property Partnerships") that own title to certain
of the Centers providing for the continued day-to-day property management of
the Centers. The Operating Partnership or the applicable Property Partnership
will have the right to terminate any Management Agreement at any time. The
terms of certain of the Management Agreements have not been negotiated on an
arm's-length basis. However, the Company believes the terms of the Management
Agreements are fair to the Company and are similar to the terms of Management
Agreements that the Management Companies have recently entered into with
unaffiliated owners of shopping centers. The Principals have a conflict of
interest with respect to their obligations as executive officers and directors
of the Company, which through the Operating Partnership will be required to
enforce the terms of the Management Agreements with the Management Companies.
The failure to enforce the material terms of those agreements could have an
adverse effect on the Company.
The Management Companies also provide management, leasing, construction and
redevelopment services for shopping centers owned by third parties who are
unaffiliated with the Company. In addition, the Management Companies may from
time to time agree to manage additional shopping centers that might compete
with the Centers.
4
Tax Consequences of Sale of Certain Centers
The sale of certain of the Centers will cause adverse tax consequences to
the Principals. As a result, the Principals might not favor a sale of these
Centers even though such a sale could be beneficial to other stockholders of
the Company. See "Federal Income Tax Considerations - Tax Aspects of the
Company's Investments in Partnerships."
Required Consent of Limited Partners of Operating Partnership for Certain
Transactions
The partnership agreement of the Operating Partnership (the "Partnership
Agreement") provides that a decision to merge the Operating Partnership, sell
all or substantially all of its assets or liquidate must be approved by the
holders of 75% of the limited partnership interests in the Operating
Partnership ("OP Units"). Since the Company currently owns only approximately
68% of the OP Units, the concurrence of at least some of the other holders of
OP Units (the "Participants") would be required to approve any such
transaction.
Principal Guarantees
The Principals have guaranteed mortgage loans encumbering the Centers. The
aggregate principal amount of such loans is $23.75 million, and the aggregate
principal amount guaranteed by the Principals is approximately $15.01 million.
The existence of such guarantees could result in the Principals having
interests that are inconsistent with the interests of the Company.
No Limitation on Debt
- ---------------------
The Company has adopted a policy of limiting the incurrence of debt to 50%
of Total Market Capitalization. "Total Market Capitalization" means the sum of
(i) the aggregate market value of the outstanding equity shares, assuming full
redemption of OP Units for shares of Common Stock, plus (ii) the total debt of
the Operating Partnership including a pro rata share of the debt of jointly
owned Centers. However, the Company will consider other factors such as its
interest service coverage ratio and acquisition opportunities and may exceed
50% debt to Total Market Capitalization under certain circumstances. The
organizational documents of the Company and its subsidiaries do not limit the
amount or percentage of indebtedness that they may incur. Accordingly, the
Board of Directors of the Company could alter or eliminate this current policy
with respect to borrowing. If this policy were changed, the Company could
become more highly leveraged, resulting in an increased risk of default on the
obligations of the Company and an increase in debt service requirements that
could adversely affect the financial condition and results of operations of the
Company.
Ability to Change Policies of the Company
- -----------------------------------------
The investment and financing policies of the Company and its policies with
respect to certain other activities, including its growth, debt capitalization,
distributions, REIT status and operating policies, are determined by the Board
of Directors. The Board of Directors has no present intention to amend or
revise these policies. However, the Board of Directors may do so at any time
without a vote of the Company's stockholders. A change in these policies could
adversely affect the Company's financial condition or results of operations.
See "Risk Factors - No Limitation on Debt."
Inability to Qualify as a REIT
- ------------------------------
The Company believes that it has operated so as to qualify as a REIT under
the Code and intends to operate to remain so qualified. No assurance, however,
can be given that the Company has qualified or will be able to remain qualified
as a REIT. Qualification as a REIT involves the application of highly
technical and complex Code provisions for which there are only limited judicial
or administrative interpretations. The complexity of these provisions and of
the applicable income tax regulations that have been promulgated under the Code
(the "Treasury Regulations") is greater in the case of a REIT that holds its
assets in partnership form. The determination of various factual matters and
circumstances not entirely within the Company's control may affect its ability
to qualify as a REIT. See also "Risk Factors - Outside Partners in Joint
Venture Centers." In addition, no assurance can be given that legislation, new
regulations, administrative interpretations or court decisions will not
significantly change the tax laws with respect to qualification as a REIT or
the federal income tax consequences of such qualification. See "Federal Income
Tax Considerations."
5
If in any taxable year the Company were to fail to qualify as a REIT, the
Company would not be allowed a deduction for distributions to stockholders in
computing its taxable income and would be subject to federal income tax on its
taxable income at regular corporate rates. Unless entitled to relief under
certain statutory provisions, the Company would be disqualified from treatment
as a REIT for the four taxable years following the year during which
qualification was lost. As a result, net income and the funds available for
distribution to the Company's stockholders would be reduced for each of the
years involved. Although the Company currently intends to operate in a manner
designed to qualify as a REIT, it is possible that future economic, market,
legal, tax or other considerations may cause the Company's Board of Directors
to revoke the REIT election. See "Federal Income Tax Considerations."
Failure of the Operating Partnership or a Property Partnership to Qualify as a
Partnership for Federal Income Tax Purposes
- ------------------------------------------------------------------------------
The Company believes that the Operating Partnership and each of the
Property Partnerships are properly treated as partnerships for federal income
tax purposes. If the Internal Revenue Service ("IRS") were to successfully
challenge the tax status of the Operating Partnership or any Property
Partnership as a partnership for federal income tax purposes, the Operating
Partnership or the affected Property Partnership would be taxable as a
corporation. In such event, the character of the Company's assets and income
would change, which would preclude the Company from qualifying as a REIT. The
imposition of a corporate tax on the Operating Partnership or any of the
Property Partnerships would reduce the amount of the funds available for
distribution to the Company and its stockholders. See "Federal Income Tax
Considerations - Tax Aspects of the Company's Investments in Partnerships."
The Company is obligated to make balloon payments of principal under
mortgages on certain of the Centers. Although the Company anticipates that it
will be able to refinance such indebtedness, or otherwise obtain funds by
selling assets or by raising equity, there can be no assurance that it will be
able to do so. In addition, interest rates on, and other terms of, any debt
issued to refinance such mortgage debt may be less favorable than the terms of
the current mortgage debt.
Outside Partners in Joint Venture Centers
- -----------------------------------------
The Company owns partial interests in Property Partnerships holding four of
the Centers (the "Joint Venture Centers"). The Company owns a 50% managing
general partnership interest in Property Partnerships that own three of the
Joint Venture Centers and a 19% non-managing general partnership interest in
the Property Partnership that holds the remaining Joint Venture Center. Such
investments involve risks not otherwise present with respect to wholly-owned
Centers.
The Company may have certain fiduciary responsibilities to its partners
which it will need to consider when making decisions that affect the Joint
Venture Centers. The Company does not have sole control of certain major
decisions relating to the Joint Venture Centers, including certain decisions
with respect to sales, refinancings and the timing and amount of additional
capital contributions thereto. Under certain circumstances, such as the
Operating Partnership's failure to contribute its share of additional capital
needed by the Property Partnerships, or defaults by the Operating Partnership
under a partnership agreement for a Property Partnership or other agreements
relating to the Property Partnerships or the Joint Venture Centers, the Company
may lose its management rights relating to the Joint Venture Centers. In
addition, with respect to one Joint Venture Center, the Company does not have
day-to-day operational control, nor is it able to control cash distributions
therefrom that may jeopardize its ability to maintain its qualification as a
REIT. These limitations may result in decisions by third parties with respect
to such Joint Venture Centers that do not fully reflect the interests of the
Company at such time, including decisions relating to the standards that the
Company is required to satisfy in order to maintain its status as a REIT under
the Code.
Bankruptcy of Retail Stores
- ---------------------------
The bankruptcy of an Anchor, if followed by its closing or by 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 to terminate their leases or cease operating their stores at the Center
or otherwise adversely affect occupancy at the Center. Retail stores at the
6
Centers other than Anchors may also seek the protection of the bankruptcy laws,
which could result in the termination of such tenants' leases and thus cause a
reduction in the cash flow generated by the Centers.
Competition
- -----------
There are numerous shopping facilities that compete with the Centers in
attracting tenants to lease space, and an increasing number of new retail
formats other than retail shopping centers that compete with the Centers for
retail sales. Increased competition could adversely affect the Company's
revenues.
Possible Environmental Liabilities
- ----------------------------------
In connection with its ownership and operation of the Centers, the Company
may be potentially liable and may incur costs under various federal, state, and
local environmental laws, ordinances and regulations. Such laws often impose
liability whether or not the owner or operator knew of, or was responsible for,
the presence of hazardous or toxic substances. In addition, the presence of
hazardous or toxic substances, or the failure to properly remediate such
property, may adversely affect the owner's or operator's ability to sell such
property or to borrow using such property as collateral. Persons who arrange
for the disposal or treatment of hazardous or toxic substances may also be
liable for the costs of removal or remediation of such substances at the
disposal or treatment facility, whether or not such facility is owned or
operated by such person. Certain laws impose liability for release of
asbestos-containing materials into the air and third parties may seek recovery
from owners or operators of real property for personal injury associated with
exposure to such materials.
Ownership and Governance of the Company and the Operating Partnership
- ---------------------------------------------------------------------
Under the Partnership Agreement, the Company, as the sole general partner
of the Operating Partnership, is responsible for the management of the
Operating Partnership's business and affairs. Through their ownership
interests in the Company and the Operating Partnership, the Principals
(together with certain family members) beneficially own approximately 21% of
the OP Units. Moreover, each of the Principals serves as an executive officer
of the Company and as a member of the Company's Board of Directors on a
staggered basis. Accordingly, the Principals have substantial influence over
the management of the Company and the Operating Partnership. See also "Risk
Factors - Conflicts of Interest."
Ownership Limit; Certain Anti-Takeover Provisions
- -------------------------------------------------
In order for the Company to maintain its qualification as a REIT, not more
than 50% in value of its outstanding shares of stock may (after taking into
account options to acquire shares) be owned, directly or indirectly, by five or
fewer individuals (as defined in the Code to include certain entities). The
charter of the Company (the "Charter") restricts ownership of more than 5% (the
"Ownership Limit") of the stock by any single stockholder (with limited
exceptions for certain Participants (and their respective families and
affiliated entities), including all four Principals). In addition to
preserving the Company's status as a REIT, the Ownership Limit may (i) have the
effect of precluding an acquisition of control of the Company without the
approval of the Board of Directors of the Company even if a change in control
were in the interest of stockholders and (ii) limit the opportunity for
stockholders to receive a premium for their Common Stock that might otherwise
exist if an investor were attempting to assemble a block of Common Stock in
excess of the Ownership Limit or otherwise effect a change in control of the
Company. The Board of Directors of the Company, in its sole discretion, may
waive the Ownership Limit with respect to other stockholders, but is under no
obligation to do so. See "Restrictions on Transfer" for additional information
regarding the Ownership Limit.
Certain other provisions of the Charter and bylaws may have the effect of
discouraging a third party from making an acquisition proposal for the Company
and may thereby inhibit a change in control of the Company that some, or a
majority, of the holders of Common Stock might believe to be in their best
interest or that could give the stockholders the opportunity to realize a
premium over the then-prevailing market prices. The provisions include a
staggered board of directors, advance notice requirements for stockholder
nominations of directors and stockholder proposals, the authority of the
directors to consider a variety of factors (other than maximizing stockholder
value) with respect to a proposed business combination or other transaction,
7
the authority of the directors to issue one or more series of preferred stock
and the authority to create and issue rights entitling the holders thereof to
purchase from the Company shares of stock or other securities or property.
Uninsured Loss
- --------------
While all of the Centers have comprehensive liability, fire, extended
coverage and rental loss insurance, there are certain types of losses (such as
from wars) that are not generally insured because they are either uninsurable
or not economically insurable. In addition, while the Company carries
earthquake insurance on the Centers located in California, such policies are
subject to deductibles, and have a per occurrence minimum and a combined annual
aggregate loss limit. Furthermore, the Company has elected to carry title
insurance for less than its full value on many of the Centers. Should an
uninsured loss or a loss in excess of insured limits occur, the owner of the
Center could lose its capital invested in the Center, as well as the
anticipated future revenue from the Center, while remaining obligated for any
mortgage indebtedness or other financial obligations related to the Center.
Any such loss would adversely affect the Company. Moreover, as the general
partner of the Operating Partnership, the Company will generally be liable for
any of their unsatisfied obligations other than non-recourse obligations. The
Company's management believes that the Centers are adequately insured in
accordance with industry standards.
USE OF PROCEEDS
The Company is required by the terms of the Partnership Agreement to
invest, contribute or otherwise transfer the net proceeds of any sale of
Securities to the Operating Partnership in exchange for securities of the
Operating Partnership equivalent to the Securities offered hereby. Except as
otherwise provided in the applicable Prospectus Supplement, the Operating
Partnership intends to use any such net proceeds for working capital and
general business purposes, which may include the reduction of outstanding
indebtedness, future acquisitions and the improvement of certain properties in
the Operating Partnership's portfolio. Pending the use thereof, the Operating
Partnership intends to invest any net proceeds in short-term, interest-bearing
securities.
8
DESCRIPTION OF COMMON STOCK
The following summary of the terms of the Common Stock does not purport to
be complete and is subject to and qualified in its entirety by reference to the
Charter and the Company's Bylaws, copies of which are exhibits to the
Registration Statement of which this Prospectus is a part. See "Additional
Information."
General
The total number of shares of all classes of stock that the Company has
authority to issue is 220,000,000, initially consisting of 10,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock"), 100,000,000
shares of Common Stock, par value $.01 per share, and 110,000,000 shares of
excess stock, par value $.01 per share (the "Excess Shares"). The Charter
provides that the Board of Directors of the Company (as used herein the term
"Board of Directors of the Company" includes any duly authorized committee
thereof) may classify or reclassify any unissued shares of stock by setting or
changing in any one or more respects the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such shares of stock.
The terms of any stock classified or reclassified by the Board of Directors
pursuant to the Articles shall be set forth in Articles Supplementary filed
with the State Department of Assessments and Taxation of Maryland prior to the
issuance of any such stock.
Common Stock
All shares of Common Stock offered hereby will be duly authorized, fully
paid and nonassessable. Subject to the preferential rights of any other shares
or series of stock and to the provisions of the Charter regarding the
restriction on transfer of stock, holders of shares of Common Stock are
entitled to receive dividends on such stock if, as and when authorized and
declared by the Board of Directors of the Company out of assets legally
available therefor and to share ratably in the assets of the Company legally
available for distribution to its stockholders in the event of its liquidation,
dissolution or winding up after payment of or adequate provision for all known
debts and liabilities of the Company.
Subject to the provisions of the Charter regarding the restriction on
transfer of stock, each outstanding share of Common Stock entitles the holder
to one vote on all matters submitted to a vote of stockholders, including the
election of directors and, except as provided with respect to any other class
or series of stock, the holders of such shares will possess the exclusive
voting power. There is no cumulative voting in the election of directors,
which means that the holders of a majority of the outstanding shares of Common
Stock can elect all of the directors then standing for election and the holders
of the remaining shares will not be able to elect any directors.
Holders of shares of Common Stock have no preference, conversion, exchange,
sinking fund, redemption or appraisal rights and have no preemptive rights to
subscribe for any securities of the Company. Subject to the provisions of the
Charter regarding restriction on transfer of stock, shares of Common Stock will
have equal dividend, liquidation and other rights.
Under the Maryland General Corporation Law (the "MGCL"), a Maryland
corporation generally cannot dissolve, amend its charter, merge, sell all or
substantially all of its assets, engage in a share exchange or engage in
similar transactions outside the ordinary course of business unless approved by
the affirmative vote of stockholders holding at least two thirds of the shares
entitled to vote on the matter unless a lesser percentage (but not less than a
majority of all of the votes entitled to be cast on the matter) is set forth in
the corporation's charter. The Charter does not provide for a lesser
percentage in such situations.
The Transfer Agent and Registrar for the Common Stock is First Chicago
Trust Company of New York.
Preferred Stock
As of the date hereof, no shares of Preferred Stock are outstanding and the
Company has no present plans to issue any Preferred Stock.
9
Power to Reclassify and Issue Additional Shares of Common Stock and Preferred
Stock
The Company believes that the power of the Board of Directors to issue
additional authorized but unissued shares of Common Stock or Preferred Stock
and to classify or reclassify unissued shares of Common or Preferred Stock and
thereafter to cause the Company to issue such classified or reclassified shares
of stock will provide the Company with increased flexibility in structuring
possible future financings and acquisitions and in meeting other needs which
might arise. The additional classes or series, as well as the Common Stock,
will be available for issuance without further action by the Company's
stockholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. Although the Board of Directors has no
intention at the present time of doing so, it could authorize the Company to
issue a class or series that could, depending upon the terms of such class or
series, delay, defer or prevent a transaction or a change in control of the
Company that might involve a premium price for holders of Common Stock or
otherwise be in their best interest.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Common Stock.
Securities Warrants may be issued independently or together with Common Stock
offered by any Prospectus Supplement and may be attached to or separate from
such Common Stock. Each series of Securities Warrants will be issued under a
separate warrant agreement (a "Securities Warrant Agreement") to be entered
into between the Company and a bank or trust company, as Securities Warrant
agent, all as set forth in the Prospectus Supplement relating to the particular
issue of offered Securities Warrants. The Securities Warrant agent will act
solely as an agent of the Company in connection with the Securities Warrant
certificates relating to the Securities Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders of
Securities Warrant certificates or beneficial owners of Securities Warrants.
The following summaries of certain provisions of the Securities Warrant
Agreements and Securities Warrants do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Securities Warrant Agreement and the Securities Warrant
certificates relating to each series of Security Warrants which will be filed
with the Commission and incorporated by reference as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of Security Warrants.
General
The applicable Prospectus Supplement will describe the terms of such
Securities Warrants, including as applicable: (i) the offering price; (ii) the
aggregate number of shares purchasable upon exercise of such Securities
Warrants and the exercise price; (iii) the number of such Securities Warrants
being offered; (iv) the date, if any, on and after which such Securities
Warrants and the Common Stock will be transferable separately; (v) the date on
which the right to exercise such Securities Warrants shall commence and the
date on which such right shall expire (the "Expiration Date"); (vi) any
material United States federal income tax consequences; (vii) the terms, if
any, on which the Company may accelerate the date by which the Securities
Warrants must be exercised; (viii) the number of Securities Warrants issued;
and (ix) any other terms of such Securities Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Securities Warrants. Securities Warrants for the purchase of Common Stock will
be offered and exercisable for United States dollars only and will be in
registered form only.
Securities Warrant certificates may be exchanged for new Securities Warrant
certificates of different denominations, may be presented for registration of
transfer, and may be exercised at the corporate trust office of the Securities
Warrant agent or any other office indicated in the applicable Prospectus
Supplement. Prior to the exercise of any Securities Warrants, holders of such
Securities Warrants will not have any rights of holders of such Common Stock,
including the right to receive payments of dividends, if any, on such Common
Stock, or to exercise any applicable right to vote.
Certain Risk Considerations
Any Securities Warrants issued by the Company will involve a certain degree
of risk, including risks arising from fluctuations in the price of the
underlying securities and general risks applicable to the securities market (or
markets) on which the underlying securities are traded.
10
Prospective purchasers of the Securities Warrants should recognize that the
Securities Warrants may expire worthless and, thus, purchasers should be
prepared to sustain a total loss of the purchase price of their Securities
Warrants. This risk reflects the nature of a Securities Warrant as an asset
which, other factors held constant, tends to decline in value over time and
which may, depending on the price of the underlying Securities, become
worthless when it expires. The trading price of a Securities Warrant at any
time is expected to increase if the price of or, if applicable, dividend rate
on the underlying Securities, increases. Conversely, the trading price of a
Securities Warrant is expected to decrease as the time remaining to expiration
of the Securities Warrant decreases and as the price of or, if applicable,
dividend rate on the underlying Securities, decreases. Assuming all other
factors are held constant, the more a Securities Warrant is "out-of-the-money"
(i.e., the more the exercise price exceeds the price of the underlying
Securities and the shorter its remaining term to expiration), the greater the
risk that a purchaser of the Securities Warrant will lose all or part of his or
her investment. If the price of the underlying Securities does not rise before
the Securities Warrant expires to an extent sufficient to cover a purchaser's
cost of the Securities Warrant, the purchaser will lose all or part of his or
her investment in such Securities Warrant upon expiration.
In addition, prospective purchasers of the Securities Warrants should be
experienced with respect to options and option transactions and understand the
risks associated with options and should reach an investment decision only
after careful consideration, with their financial advisers, of the suitability
of the Securities Warrants in light of their particular financial circumstances
and the information discussed herein and, if applicable, the Prospectus
Supplement. Before purchasing, exercising or selling any Securities Warrants,
prospective purchasers and holders of Securities Warrants should carefully
consider, among other things, (i) the trading price of the Securities Warrants,
(ii) the price of the underlying Securities at such time, (iii) the time
remaining to expiration and (iv) any related transaction costs. Some of the
factors referred to above are in turn influenced by various political, economic
and other factors that can affect the trading price of the underlying
Securities and should be carefully considered prior to making any investment
decisions.
Purchasers of the Securities Warrants should further consider that the
initial offering price of the Securities Warrants may be in excess of the price
that a purchaser of options might pay for a comparable option in a private,
less liquid transaction. In addition, it is not possible to predict the price
at which the Securities Warrants will trade in the secondary market or whether
any such market will be liquid. The Company may, but is not obligated to, file
an application to list any Securities Warrants issued on a United States
national securities exchange. To the extent that any Securities Warrants are
exercised, the number of Securities Warrants outstanding will decrease, which
may result in a lessening of the liquidity of the Securities Warrants.
Finally, the Securities Warrants will constitute direct, unconditional and
unsecured obligations of the Company and as such will be subject to any changes
in the perceived creditworthiness of the Company.
Exercise of Securities Warrants
Each Securities Warrant will entitle the holder thereof to purchase such
number of shares of Common Stock, as the case may be, at such exercise price as
shall in each case be set forth in, or calculable from, the Prospectus
Supplement relating to the offered Securities Warrants. After the close of
business on the Expiration Date (or such later date to which such Expiration
Date may be extended by the Company), unexercised Securities Warrants will
become void.
Securities Warrants may be exercised by delivering to the Securities
Warrant agent payment as provided in the applicable Prospectus Supplement of
the amount required to purchase the Common Stock purchasable upon such exercise
together with certain information set forth on the reverse side of the
Securities Warrant certificate. Securities Warrants will be deemed to have
been exercised upon receipt of payment of the exercise price, subject to the
receipt within five business days, of the Securities Warrant certificate
evidencing such Securities Warrants. Upon receipt of such payment and the
Securities Warrant certificate properly completed and duly executed at the
corporate trust office of the Securities Warrant agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon as
practicable, issue and deliver the Common Stock, as the case may be,
purchasable upon such exercise. If fewer than all of the Securities Warrants
represented by such Securities Warrant certificate are exercised, a new
Securities Warrant certificate will be issued for the remaining amount of
Securities Warrants.
11
Amendments and Supplements to Securities Warrant Agreements
The Securities Warrant Agreements may be amended or supplemented without
the consent of the holders of the Securities Warrants issued thereunder to
effect changes that are not inconsistent with the provisions of the Securities
Warrants and that do not adversely affect the interests of the holders of the
Securities Warrants.
Common Stock Warrant Adjustments
Unless otherwise specified in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant are subject to adjustment in certain events, including
(i) payment of a dividend on the Common Stock payable in stock and stock
splits, combinations or reclassifications of the Common Stock, (ii) issuance to
all holders of Common Stock of rights or warrants to subscribe for or purchase
shares of Common Stock at less than their current market price (as defined in
the Securities Warrant Agreement for such series of Common Stock Warrants), and
(iii) certain distributions of evidences of indebtedness or assets (including
securities but excluding cash dividends or distributions paid out of
consolidated earnings or retained earnings or dividends payable in Common
Stock) or of subscription rights and warrants (excluding those referred to
above).
No adjustment will be required unless such adjustment would require a
change of at least 1% in the exercise price then in effect. Except as stated
above, the exercise price of, and the number of shares of Common Stock covered
by, a Common Stock Warrant will not be adjusted for the issuance of Common
Stock or any securities convertible into or exchangeable for Common Stock, or
carrying the right or option to purchase or otherwise acquire the foregoing, in
exchange for cash, other property or services.
Unless otherwise specified in the applicable Prospectus Supplement, in the
event of any (i) consolidation or merger of the Company with or into any entity
(other than a consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock), (ii) sale, transfer, lease or conveyance of the assets of the
Company substantially as an entirety or (iii) reclassification, capital
reorganization or change of the Common Stock, then any holder of a Securities
Warrant will be entitled, on or after the occurrence of any such event, to
receive on exercise of such Securities Warrant the kind and amount of shares of
stock or other securities, cash or other property (or any combination thereof)
that the holder would have received had such holder exercised such holder's
Securities Warrant immediately prior to the occurrence of such event. If the
consideration to be received upon exercise of the Securities Warrant following
any such event consists of common stock of the surviving entity, then from and
after the occurrence of such event, the exercise price of such Securities
Warrant will be subject to the same anti-dilution and other adjustments
described in the second preceding paragraph, applied as if such common stock
were Common Stock.
DESCRIPTION OF RIGHTS
The Company may issue Rights to its stockholders for the purchase of Common
Stock. Each series of Rights will be issued under a separate rights agreement
(a "Rights Agreement") to be entered into between the Company and a bank or
trust company, as Rights agent, all as set forth in the Prospectus Supplement
relating to the particular issue of Rights. The Rights agent will act solely
as an agent of the Company in connection with the certificates relating to the
Rights and will not assume any obligation or relationship of agency or trust
for or with any holders of Rights certificates or beneficial owners of Rights.
The Rights Agreement and the Rights certificates relating to each series of
Rights will be filed with the Commission and incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such series of Rights.
The applicable Prospectus Supplement will describe the terms of the Rights
to be issued, including as applicable: (i) the date for determining the
stockholders entitled to the Rights distribution; (ii) the aggregate number of
shares of Common Stock purchasable upon exercise of such Rights and the
exercise price; (iii) the aggregate number of Rights being issued; (iv) the
date, if any, on and after which such Rights may be transferable separately;
(v) the date on which the right to exercise such Rights shall commence and the
date on which such right shall expire; (vi) any material United States federal
income tax consequences; (vii) the number of Rights issued; and (viii) any
other terms of such Rights, including terms, procedures and limitations
relating to the distribution, exchange and exercise of such Rights. Rights
will be exercisable for United States dollars only and will be in registered
form only.
12
RESTRICTIONS ON TRANSFER
For the Company to qualify as a REIT under the Code, (i) not more than 50%
in value of its outstanding stock (after taking into account options to acquire
stock) may be owned, directly or indirectly, by five or fewer individuals (as
defined in the Code to include certain entities) during the last half of a
taxable year, (ii) stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months or during a
proportionate part of a shorter taxable year and (iii) certain percentages of
the Company's gross income must be from particular activities (see "Federal
Income Tax Considerations C Taxation of the Company" and "C Requirements for
Qualification"). Because the Board of Directors believes it is essential for
the Company to continue to qualify as a REIT, the Charter restricts the
ownership and transfer of shares of the Company's capital stock.
Subject to certain exceptions specified in the Charter, no stockholder may
own, or be deemed to own by virtue of the attribution provisions of the Code,
more than 5% of the number or value of the issued and outstanding stock of the
Company. The attribution of ownership provisions are complex and may cause
stock owned directly or indirectly by a group of related individuals or
entities to be deemed to be owned by one individual or entity. As a result,
the acquisition of less than 5% in value or in number of stock (or the
acquisition of an interest in an entity which owns stock) by an individual or
entity could cause that individual or entity (or another individual or entity)
to be deemed to own in excess of 5% in value or in number of the outstanding
stock of the Company, and thus subject such stock to the Ownership Limit. The
Board of Directors may waive the Ownership Limit but is under no obligation to
do so. The Company's Charter excludes from the Ownership Limit certain persons
and their respective families and affiliates ("Excluded Participants") but
provides that no Excluded Participant may own (directly or indirectly) more
than a specified percentage of Common Stock as determined in accordance with
the Charter (such Excluded Participant's "Percentage Limitation").
The Charter provides that any purported transfer or issuance of shares, or
other event, that would (i) result in a person owning stock in excess of the
Ownership Limit or the Percentage Limitation, as appropriate, (ii) result in
the shares of Common Stock and preferred stock being owned by fewer than 100
persons (determined without reference to any rules of attribution), (iii) cause
the Company to become "closely held" under Section 856(h) of the Code
(determined without regard to Code Section 856(h)(2) and by deleting the words
"the last half of" in the first sentence of Code Section 542(a)(2) in applying
Code Section 856(h)) or (iv) result in the disqualification of the Company as a
REIT, (collectively, the "Prohibited Events"), that is not otherwise permitted
as provided above, will be null and void ab initio as to the intended
transferee or purported owner and the intended transferee or purported owner
will acquire or retain no rights to, or economic interest in, those shares of
capital stock.
Issuance of Excess Shares
The Charter provides that in the event of a purported transfer of stock or
other event that would, if effective, result in a Prohibited Event, such stock
will automatically be exchanged for Excess Shares, to the extent necessary to
ensure that the purported transfer or other event does not result in the
Prohibited Event. Such Excess Shares shall automatically be transferred into a
trust, in which all outstanding Excess Shares will be held (the "Trust"). The
trustee of the Trust (the "Trustee") shall be appointed by the Company but
shall be independent of the Company, any purported record or beneficial
transferee and any beneficiary of such trust (the "Beneficiary"). The
Beneficiary shall be one or more charitable organizations selected by the
Trustee.
The Charter further provides that Excess Shares shall be entitled to the
same dividends as the shares of stock exchanged for Excess Shares (the
"Original Shares"). The Trustee, as record holder of the Excess Shares, shall
be entitled to receive all dividends and distributions in respect of such
Excess Shares as may be authorized and declared by the Board of Directors and
shall hold such dividends or distributions in trust for the benefit of the
Beneficiary. The Trustee shall also be entitled to cast all votes which
holders of the Excess Shares are entitled to cast acting for the benefit of the
Beneficiary. Excess Shares in the hands of the Trustee shall have the same
voting rights as Original Shares. Upon the liquidation, dissolution or winding
up of the Company, each Excess Share shall be entitled to receive ratably with
each other share of stock of the same class or series as the Original Shares,
the assets of the Company distributed to the holders of such class or series of
stock. The Trustee shall distribute to the purported transferee the amounts
received upon such liquidation, dissolution, or winding up of the Company, but
13
only up to the amount paid by such purported transferee, or the market price on
the date of the purported transfer, if no consideration was paid by such
transferee, for the Original Shares and subject to additional limitations and
offsets set forth in the Charter.
If, after the purported transfer or other event resulting in an exchange of
stock for Excess Shares, dividends or distributions are paid with respect to
the Original Shares, then such dividends or distributions are to be repaid to
the Trustee for the benefit of the Beneficiary. While Excess Shares are held
in trust, Excess Shares may be transferred by the Trustee only to a person
whose ownership of the Original Shares will not result in a Prohibited Event.
At the time of any such permitted transfer, the Excess Shares will be
automatically exchanged for the same number of shares of the same type and
class as the Original Shares. The Charter contains provisions that prohibit
the purported transferee of the Excess Shares from receiving in return for the
permitted transfer an amount that reflects any appreciation in the Original
Shares during the period that such Excess Shares were outstanding. The Charter
requires any amount in excess of the amount permitted to be received to be paid
immediately to the Beneficiary.
The Charter further provides that the Company may purchase, for a period of
90 days during the time the Excess Shares are held in trust, all or any portion
of the Excess Shares at the lesser of the price paid for the stock by the
purported transferee per share in the transaction that resulted in the
Prohibited Event (or if no consideration was paid, fair market value at the
time of such transaction) or the market price of such shares as determined in
accordance with the Charter. The 90-day period begins on the date of the
prohibited transfer if the purported transferee gives notice to the Board of
Directors of the transfer or, if no such notice is given, the date the Board of
Directors determines that a prohibited transfer has been made.
The aforementioned provisions of the Charter will not be automatically
removed even if the REIT provisions of the Code are changed so as to no longer
contain any ownership concentration limitation or if the ownership
concentration limitation is increased. Except as otherwise described above,
any change in the Ownership Limit would require an amendment to the Charter.
Amendments to the Charter require the affirmative vote of at least 66-2/3% of
the shares entitled to vote.
All certificates representing shares of Common Stock issued after the date
hereof will bear a legend referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions of
the Code, more than 5% of the outstanding stock must file an affidavit with the
Company containing the information specified in the Charter within 30 days
after January 1 of each year. In addition, certain significant stockholders
shall upon demand be required to disclose to the Company in writing such
information with respect to the direct, indirect and constructive ownership of
shares as the Board of Directors deems necessary to comply with the provisions
of the Code applicable to a REIT or to comply with the requirements of any
taxing authority or governmental agency or to determine any such compliance.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale
of Securities will be named in the applicable Prospectus Supplement. The
Company has reserved the right to sell Securities directly to investors on its
own behalf in those jurisdictions where and in such manner as it is authorized
to do so.
Underwriters may offer and sell Securities at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Company also may offer and sell Securities in exchange for one or more of its
outstanding issues of the Securities or other securities. The Company also
may, from time to time, authorize dealers, acting as the Company's agents, to
offer and sell Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Securities,
underwriters may receive compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
14
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, will be set
forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, or otherwise, by one or
more firms ("remarketing firms"), acting as principals for their own accounts
or as agents for the Company. Any remarketing firm will be identified and the
terms of its agreement, if any, with the Company and its compensation will be
described in the applicable Prospectus Supplement. Remarketing firms may be
deemed to be underwriters in connection with the Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company to indemnification by the Company against and contribution
toward certain civil liabilities, including liabilities under the Securities
Act of 1933, as amended, and may be customers of, engage in transactions with
or perform services for the Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers acting as the Company's agents to solicit offers by certain
institutions to purchase the Securities from the Company at the public offering
price set forth in the applicable Prospectus Supplement pursuant to delayed
delivery contracts ("Contracts") providing for payment and delivery on the date
or dates stated in such Prospectus Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount of the Securities sold
pursuant to Contracts shall be not less nor more than, the respective amounts
stated in the applicable Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions but will in all cases be
subject to the approval of the Company. Contracts will not be subject to any
conditions except (i) the purchase by an institution of the Securities covered
by its Contract shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which such institution is subject,
and (ii) if the Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of such Securities
less the principal amount thereof covered by Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for, the Company in the
ordinary course of business.
FEDERAL INCOME TAX CONSIDERATIONS
The following summary of material federal income tax considerations to the
Company is based on current law and does not purport to deal with all aspects
of taxation that may be relevant to particular holders of Securities in light
of their personal investment or tax circumstances, or to certain types of
securities holders (including insurance companies, tax-exempt organizations,
financial institutions or broker-dealers, foreign corporations and persons who
are not citizens or residents of the United States) subject to special
treatment under the federal income tax laws. Certain federal income tax
considerations relevant to holders of the Securities will be provided in the
applicable Prospectus Supplement relating thereto.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS
SUPPLEMENT, AS WELL AS HIS OR HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO HIM OR HER OF THE PURCHASE, OWNERSHIP AND SALE OF SECURITIES IN
AN ENTITY ELECTING TO BE TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP AND SALE AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
15
General
The Company has made an election to be taxed as a REIT under Sections 856
through 860 of the Code, commencing with its taxable year ending December 31,
1994. The Company believes that it is organized and has operated in such a
manner as to qualify for taxation as a REIT under the Code and intends to
continue to operate in such a manner. No assurances, however, can be given
that it has operated in a manner so as to qualify as a REIT or that it will
continue to operate in such a manner in the future. Qualification and taxation
as a REIT depends on the Company's ability to meet on a continuing basis,
through actual annual operating results, distribution levels and diversity of
stock ownership, the various qualification tests imposed under the Code on
REITs, some of which are summarized below. While the Company intends to
operate so that it qualifies as a REIT, given the highly complex nature of the
rules governing REITs, the ongoing importance of factual determinations, and
the possibility of future changes in circumstances of the Company, no assurance
can be given that the Company satisfies the REIT tests or will continue to do
so. See "Failure to Qualify" below.
The sections of the Code relating to qualification and operation as a REIT,
and the federal income tax treatment of a REIT and its securityholders, are
highly technical and complex. The following discussion sets forth only the
material aspects of those sections. This summary is qualified in its entirety
by the applicable Code provisions, rules and regulations promulgated
thereunder, and administrative and judicial interpretations thereof.
Taxation of the Company
In any year in which the Company qualifies as a REIT, in general, it will
not be subject to federal income tax on that portion of its taxable income or
capital gain which is distributed to stockholders. The Company will, however,
be subject to tax at normal corporate rates upon any taxable income or capital
gain not distributed.
Notwithstanding its qualification as a REIT, the Company may also be
subject to taxation in certain other circumstances. If the Company should fail
to satisfy the 75% or the 95% gross income test (as discussed below), and
nonetheless maintains its qualification as a REIT because certain other
requirements are met, it will be subject to a 100% tax on the greater of the
amount by which the Company fails either the 75% or the 95% test, multiplied by
a fraction intended to reflect the Company's profitability. The Company will
also be subject to a tax of 100% on net income from "prohibited transactions"
(which are, in general, certain sales or other dispositions of property held
primarily for sale to customers in the ordinary course of business, other than
foreclosure property) and, if the Company has (i) net income from the sale or
other disposition of "foreclosure property" (generally, property acquired by
reason of a default on indebtedness or a lease) which is held primarily for
sale to customers in the ordinary course of business or (ii) other
non-qualifying income from foreclosure property, it will be subject to tax on
such income from foreclosure property at the highest corporate rate. In
addition, if the Company should fail to distribute during each calendar year at
least the sum of (i) 85% of its REIT ordinary income for such year, (ii) 95% of
its REIT capital gain net income for such year, and (iii) any undistributed
taxable income from prior years, the Company would be subject to a 4% excise
tax on the excess of such required distribution over the amounts actually
distributed. The Company may also be subject to the corporate "alternative
minimum tax," on its items of tax preference, as well as tax in certain
situations not presently contemplated. Each of the Management Companies is
taxed on its income at regular corporate rates. The Company uses the calendar
year for federal income tax purposes and for financial reporting purposes.
Requirements for Qualification
To qualify as a REIT, the Company must elect to be so treated and must meet
the requirements, discussed below, relating to the Company's organization,
sources of income, nature of assets, and distributions of income to
stockholders.
Organizational Requirements. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors;
(2) the beneficial ownership of which is evidenced by transferable shares, or
by transferable certificates of beneficial interest; (3) which would be taxable
as a domestic corporation, but for Sections 856 through 860 of the Code; (4)
which is neither a financial institution nor an insurance company subject to
certain provisions of the Code; (5) the beneficial ownership of which is held
by 100 or more persons; (6) during the last half of each taxable year not more
than 50% in value of the outstanding stock of which is owned, directly or
16
indirectly, by five or fewer individuals (as defined in the Code); and (7)
which meets certain other tests, described below, regarding the nature of its
income and assets. The Code provides that conditions (1) to (4), inclusive,
must be met during the entire taxable year and that condition (5) must be met
during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months. The Charter
provide for restrictions regarding transfer of its capital stock, in order to
assist the Company in continuing to satisfy the share ownership requirements
described in (5) and (6) above. Such transfer restrictions are described in
"Restrictions on Transfer."
Gross Income Tests. In order for the Company to maintain its qualification
as a REIT, there are three requirements relating to the Company's gross income
that must be satisfied annually. First, at least 75% of the Company's gross
income (excluding gross income from prohibited transactions) for each taxable
year must consist of defined types of income derived directly or indirectly
from investments relating to real property or mortgages on real property
(including "rents from real property" and, in certain circumstances, interest)
or temporary investment income. Second, at least 95% of the Company's gross
income (excluding gross income from prohibited transactions) for each taxable
year must be derived from such real property and from dividends, other types of
interest and gain from the sale or disposition of stock or securities or from
any combination of the foregoing. Third, short-term gain from the sale or other
disposition of stock or securities, gain from prohibited transactions and gain
on the sale or other disposition of real property held for less than four years
(apart from involuntary conversions and sales of foreclosure property) must
represent less than 30% of the Company's gross income (including gross income
from prohibited transactions) for each taxable year.
In the case of a REIT which is a partner in a partnership, Treasury
Regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the
income of the partnership attributable to such share. In addition, the
character of the assets and gross income of the partnership will retain the
same character in the hands of the REIT for federal income tax purposes. Thus,
the Company's proportionate share of the assets, liabilities and items of
income of the Operating Partnership and the Property Partnerships will be
treated as assets, liabilities and items of income of the Company for purposes
of applying the REIT requirements described herein.
Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in
whole or in part on the income or profits of any person. An amount received or
accrued generally will not be excluded from the term "rents from real property"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales. Second, the Code provides that rents received from a tenant
will not qualify as "rents from real property" in satisfying the gross income
tests if the REIT, or an owner of 10% or more of the REIT, directly or
constructively, owns 10% or more of such tenant. Third, if rent attributable
to personal property, leased in connection with a lease of real property, is
greater than 15% of the total rent received under the lease, then the portion
of rent attributable to such personal property will not qualify as "rents from
real property." Finally, for rents received to qualify as "rents from real
property," the REIT generally must not operate or manage the property or
furnish or render services to the tenants of such property, other than through
an independent contractor from whom the REIT derives no revenue, except that
the Company may directly perform certain services other than services which are
not "usually or customarily rendered" in connection with the rental space for
occupancy only and are considered "rendered to the occupant" of the property.
The Management Companies (which will not satisfy the independent contractor
standard) as manager for the Operating Partnership and Property Partnerships,
will provide certain services with respect to the Centers (other than West
Acres Mall) and any newly-acquired property of the Operating Partnership or a
Property Partnership. The Company believes that all services provided by the
Management Companies to the Operating Partnership or Property Partnerships will
be of the type usually or customarily rendered in connection with the rental of
space for occupancy only, and therefore, that the provision of such services
will not cause the rents received with respect to the Centers or newly-acquired
centers to fail to qualify as rents from real property for purposes of the 75%
and 95% gross income tests. If the Operating Partnership or a Property
Partnership contemplates providing services in the future that reasonably might
be expected not to meet the "usual or customary" standard, it will arrange to
have such services provided by an independent contractor from which neither the
Operating Partnership nor the Property Partnership receives any income.
Any gross income derived from a prohibited transaction is taken into
account in applying the 30% income test necessary to qualify as a REIT (and the
net income from that transaction is subject to a 100% tax). The term
17
"prohibited transaction" generally includes a sale or other disposition of
property (other than foreclosure property) that is held primarily for sale to
customers in the ordinary course of a trade or business. The Operating
Partnership and the Company believe that no asset owned by the Operating
Partnership, the Property Partnerships or the Company is held for sale to
customers and that sale of any Center and associated property will not be in
the ordinary course of business of the Operating Partnership, the relevant
Property Partnership or the Company. Whether property is held "primarily for
sale to customers in the ordinary course of a trade or business" depends,
however, on the facts and circumstances in effect from time to time, including
those related to a particular property. Nevertheless, the Company and the
Operating Partnership will attempt to comply with the terms of safe-harbor
provisions in the Code prescribing when asset sales will not be characterized
as prohibited transactions. Complete assurance cannot be given, however, that
the Company can comply with the safe-harbor provisions of the Code or avoid
owning property that may be characterized as property held "primarily for sale
to customers in the ordinary course of business."
It is anticipated that, for purposes of the gross income tests, the
Company's investment in the Centers through the Operating Partnership and
Property Partnerships will in major part give rise to qualifying income in the
form of rents and gains on the sales of Centers. Moreover, substantially all
income derived from the Company from the Management Companies will be in the
form of dividends on the stock of such entities owned by the Operating
Partnership. Although such dividends will satisfy the 95%, but not the 75%
gross income test (as discussed above), the Company anticipates that
non-qualifying income on its investments (including such dividend income) will
not result in the Company failing any of the three gross income tests.
Even if the Company fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions will be generally available if the Company's failure to
meet such tests is due to reasonable cause and not due to willful neglect, the
Company attaches a schedule of the sources of its income to its return, and any
incorrect information on the schedule was not due to fraud with intent to evade
tax. It is not possible, however, to state whether in all circumstances the
Company would be entitled to the benefit of these relief provisions. As
discussed above in "Federal Income Tax Consideration C Taxation of the
Company," even if these relief provisions apply, a tax would be imposed with
respect to the excess of 75% or 95% of the Company's gross income over the
Company's qualifying income in the relevant category, whichever is greater,
reduced by approximated expenses. There is no comparable relief provision
which could mitigate the consequences of a failure to satisfy the 30% gross
income limitation.
Asset Tests. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets.
First, at least 75% of the value of the Company's total assets must be
represented by real estate assets (including (i) its allocable share of real
estate assets held by partnerships in which the Company owns an interest and
(ii) stock or debt instruments held for not more than one year purchased with
the proceeds of a stock offering or long-term (at least five years) debt
offering of the Company), cash, cash items and government securities. Second,
not more than 25% of the Company's total assets may be represented by
securities other than those in the 75% asset class. Third, of the investments
included in the 25% asset class, the value of any one issuer's securities owned
by the Company may not exceed 5% of the value of the Company's total assets and
the Company may not own more than 10% of any one issuer's outstanding voting
securities. The Company's investment in the Centers through its interests in
the Operating Partnership and Property Partnerships will constitute qualified
assets for purposes of the 75% asset test.
The Operating Partnership owns 100% of the non-voting preferred stock of
each of the Management Companies. By virtue of its partnership interest in the
Operating Partnership, the Company will be deemed to own its pro rata share of
the assets of the Operating Partnership, including the securities of such
entities.
Because the Operating Partnership will not own any of the voting securities
of the entities that constitute the Management Companies, the 10% limitation on
holdings of the voting securities of any one issuer will not be violated. In
addition, based upon a comparison of the total estimated value of the
securities of such entities to be owned by the Operating Partnership to the
estimated value of the total assets to be owned by the Operating Partnership
and the Company, the Company has represented that the Company's pro rata share
of the value of the securities of each such entity has not exceeded, and is not
expected to exceed in the future, 5% by value of the total assets owned by the
Company. This 5% limitation must be satisfied not only on the date that the
Company (directly or through the Operating Partnership) acquires securities of
such entities, but also at the end of any quarter in which the Company so
18
increases its interest in such entities or so acquires other property. In this
respect, if any limited partner of the Operating Partnership exercises its
rights to redeem OP Units and the Company satisfies the Operating Partnership's
obligation upon such exercise with shares of Common Stock, the Company will
thereby increase its proportionate (indirect) ownership interest in such
entities, thus requiring the Company to meet the 5% test in any quarter in
which such rights are exercised. Although the Company plans to take steps to
ensure that it satisfies the 5% value test for any quarter with respect to
which retesting is to occur, there can be no assurance that such steps will
always be successful or will not require a reduction in the Operating
Partnership's overall interest in the Management Companies.
Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends)
to its stockholders in an amount at least equal to (A) the sum of (i) 95% of
the Company's REIT taxable income (computed without regard to the dividends
paid deduction and the Company's net capital gain) and (ii) 95% of the net
income (after tax), if any, from foreclosure property, minus (B) the sum of
certain items of noncash income. Such distributions must be paid in the
taxable year to which they relate, or in the following taxable year if declared
before the Company timely files its tax return for such year and if paid on or
before the first regular dividend payment after such declaration. To the
extent that the Company does not distribute all of its net capital gain or
distributes at least 95%, but less than 100%, of its REIT taxable income, as
adjusted, it will be subject to tax on the undistributed amount at regular
ordinary and capital gains corporate tax rates. Furthermore, if the Company
should fail to distribute during each calendar year at least the sum of (i) 85%
of its REIT ordinary income for such year, (ii) 95% of its REIT capital gain
net income for such year, and (iii) any undistributed taxable income from prior
periods, the Company would be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. The Company has
made and intends to make timely distributions sufficient to satisfy all annual
distribution requirements.
It is possible that, from time to time, the Company may experience timing
differences between (i) the actual receipt of income and actual payment of
deductible expenses and (ii) the inclusion of that income and deduction of such
expenses in arriving at the Company's taxable income. Further, it is possible
that, from time to time, the Company may be allocated a share of net capital
gain attributable to the sale of depreciated property which exceeds its
allocable share of cash attributable to that sale. As such, the Company may
have less cash available for distribution than is necessary to meet its annual
95% distribution requirement or to avoid tax with respect to capital gain or
the excise tax imposed on certain undistributed income. To meet the 95%
distribution requirement necessary to qualify as a REIT or to avoid tax with
respect to capital gain or the excise tax imposed on certain undistributed
income, the Company may find it appropriate to arrange for short-term (or
possibly long-term) borrowings or to pay distributions in the form of taxable
stock dividends. Any such borrowings for the purpose of making distributions
to stockholders are required to be arranged through the Operating Partnership.
Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement for a year by paying "deficiency
dividends" to stockholders in a later year, which may be included in the
Company's deduction for dividends paid for the earlier year. Thus, the Company
may be able to avoid being taxed on amounts distributed as deficiency
dividends; however, the Company will be required to pay interest based upon the
amount of any deduction taken for deficiency dividends.
Pursuant to applicable Treasury Regulations, in order to be able to elect
to be taxed as a REIT, the Company must maintain certain records and request
certain information from its stockholders designed to disclose the actual
ownership of its stock. The Company has complied and intends to continue to
comply with such requirements.
Failure to Qualify
If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which
the Company fails to qualify will not be deductible by the Company nor will
they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to stockholders will be
taxable as ordinary income, and, subject to certain limitations of the Code,
corporate distributees may be eligible for the dividends received deduction.
Unless entitled to relief under specific statutory provisions, the Company will
also be disqualified from taxation as a REIT for the four taxable years
following the year during which the Company ceased to qualify as a REIT. It is
not possible to state whether in all circumstances the Company would be
entitled to such statutory relief.
19
Taxation of Stockholders
Taxation of Taxable Domestic Stockholders. As long as the Company
qualifies as a REIT, distributions made to the Company's taxable U.S.
stockholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by such U.S.
stockholders as ordinary income and will not be eligible for the dividends
received deduction for corporations. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
they do not exceed the Company's actual net capital gain for the taxable year)
without regard to the period for which the stockholder has held its stock.
However, corporate stockholders may be required to treat up to 20% of certain
capital gain dividends as ordinary income. Distributions in excess of current
and accumulated earnings and profits will not be taxable to a stockholder to
the extent that they do not exceed the adjusted basis of the stockholder's
shares, but rather will reduce the adjusted basis of such shares. To the
extent that distributions in excess of current and accumulated earnings and
profits exceed the adjusted basis of a stockholder's shares, such distributions
will be included in income as long-term capital gain (or short-term capital
gain if the shares have been held for one year or less) assuming the shares are
a capital asset in the hands of the stockholder. In addition, any distribution
declared by the Company in October, November or December of any year payable to
a stockholder of record on a specified date in any such month shall be treated
as both paid by the Company and received by the stockholder on December 31 of
such year, provided that the distribution is actually paid by the Company
during January of the following calendar year. Stockholders may not include in
their individual income tax returns any net operating losses or capital losses
of the Company.
In general, any loss upon a sale or exchange of shares by a stockholder who
has held such shares for six months or less (after applying certain holding
period rules), will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such stockholder as
long-term capital gain.
Backup Withholding. The Company will report to its U.S. stockholders and
the IRS the amount of
distributions paid during each calendar year, and the amount of tax withheld,
if any. Under the backup withholding rules, a stockholder may be subject to
backup withholding at the rate of 31% with respect to distributions paid unless
such holder (a) is a corporation or comes within certain other exempt
categories and when required, demonstrates this fact, or (b) provides a
taxpayer identification number, certifies as to no loss of exemption from
backup withholding, and otherwise complies with applicable requirements of the
backup withholding rules. A stockholder that does not provide the Company with
his correct taxpayer identification number may also be subject to penalties
imposed by the IRS. Any amount paid as backup withholding will be creditable
against the stockholder's income tax liability. In addition, the Company may
be required to withhold a portion of capital gain distributions to any
stockholders who fail to certify their nonforeign status to the Company. See
"Federal Income Tax Consideration C Taxation of Stockholder Taxation of Foreign
Stockholders."
Treatment of Tax-Exempt Stockholders. Distributions from the Company to a
tax-exempt employee pension trust or other domestic tax-exempt stockholder
generally will not constitute "unrelated business taxable income" ("UBTI")
unless the stockholder has borrowed to acquire or carry the Common Stock. For
taxable years beginning after December 31, 1993, however, qualified trusts that
hold more than 10% (by value) of certain REITs may be required to treat a
certain percentage of such a REIT's distributions as UBTI. This requirement
will apply only if (i) the REIT would not qualify for federal income tax
purposes but for the application of a "look-through" exception to the "five or
fewer" requirement applicable to shares held by qualified trusts and (ii) the
REIT is "predominantly held" by qualified trusts. A REIT is predominantly held
if either (i) a single qualified trust holds more than 25% by value of the REIT
interests or (ii) one or more qualified trusts, each owning more than 10% by
value of the REIT interests, hold in the aggregate more than 50% of the REIT
interests. The percentage of any REIT dividend treated as UBTI is equal to the
ratio of (a) the UBTI earned by the REIT (treating the REIT as if it were a
qualified trust and therefore subject to tax on UBTI) to (b) the total gross
income (less certain associated expenses) of the REIT. A de minimis exception
applies where the ratio set forth in the preceding sentence is less than 5% for
any year. For those purposes, a qualified trust is any trust described in
section 401(a) of the Code and exempt from tax under section 501(a) of the
Code. The provisions requiring qualified trusts to treat a portion of REIT
distributions as UBTI will not apply if the REIT is able to satisfy the "five
or fewer" requirement without relying upon the "look-through" exception. The
restrictions on ownership of the Common Stock in the Charter will prevent
application of the provisions treating a portion of REIT distributions as UBTI
to tax-exempt entities purchasing the Common Stock, absent approval by the
Board of Directors.
20
Taxation of Foreign Stockholders. The rules governing United States
federal income taxation of nonresident alien individuals, foreign corporations,
foreign partnerships and other foreign stockholders (collectively, "Non-U.S.
Stockholders") are complex and no attempt will be made herein to provide more
than a summary of such rules. Prospective Non-U.S. Stockholders should consult
with their own tax advisors to determine the impact of federal, state and local
income tax laws with regard to an investment in shares, including any reporting
requirements.
Distributions that are not attributable to gain from sales or exchanges by
the Company of United States real property interests and not designated by the
Company as capital gains dividends will be treated as dividends of ordinary
income to the extent that they are made out of current or accumulated earnings
and profits of the Company. Such distributions will ordinarily be subject to a
withholding tax equal to 30% of the gross amount of the distribution unless a
applicable tax treaty reduces or eliminates that tax. However, if income from
the investment in the shares is treated as effectively connected with the
Non-U.S. Stockholder's conduct of a United States trade or business, the
Non-U.S. Stockholder generally will be subject to a tax at graduated rates, in
the same manner as U.S. stockholders are taxed with respect to such
distributions (and may also be subject to the 30% branch profits tax in the
case of a stockholder that is a foreign corporation). The Company expects to
withhold United States income tax at the rate of 30% on the gross amount of any
such distributions made to a Non-U.S. Stockholder unless (i) a lower treaty
rate applies or (ii) the Non-U.S. Stockholder files an IRS Form 4224 with the
Company claiming that the distribution is effectively connected income.
Distributions in excess of current and accumulated earnings and profits of the
Company will not be taxable to a stockholder to the extent that such
distributions do not exceed the adjusted basis of a stockholder's shares, but
rather will reduce the adjusted basis of such shares. To the extent that
distributions in excess of current accumulated earnings and profits exceed the
adjusted basis of a Non-U.S. Stockholder's shares, such distributions will give
rise to tax liability if the Non-U.S. Stockholder would otherwise be subject to
tax on any gain from the sale or disposition of his shares in the Company, as
described below. If it cannot be determined at the time a distribution is made
whether or not such distribution will be in excess of current and accumulated
earnings and profits, the distributions will be subject to withholding at the
same rate as dividends. However, amounts thus withheld are refundable if it is
subsequently determined that such distribution was, in fact, in excess of
current and accumulated earnings and profits of the Company.
For any year in which the Company qualifies as a REIT, distributions that
are attributable to gain from sales or exchanges by the Company of United
States real property interests will be taxed to a Non-U.S. Stockholder under
the provisions of the Foreign Investment in Real Property Tax Act of 1980
("FIRPTA"). Under FIRPTA, distributions attributable to gain from sales of
United States real property interests are taxed to a Non-U.S. Stockholder as if
such gain were effectively connected with a United States business. Non-U.S.
Stockholders would thus be taxed at the normal capital gain rates applicable to
U.S. stockholders (subject to applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals). Also,
distributions subject to FIRPTA may be subject to a 30% branch profits tax in
the hands of a foreign corporate stockholder not entitled to treaty exemption.
The Company is required by applicable Treasury Regulations to withhold 35% of
any distribution that could be designated by the Company as a capital gains
dividend. This amount is creditable against the Non-U.S. Stockholder FIRPTA
tax liability.
Gain recognized by a Non-U.S. Stockholder upon a sale of shares generally
will not be taxed under FIRPTA if the Company is a "domestically controlled
Company" defined generally as a REIT in which at all times during a specified
testing period less than 50% in value of the stock was held directly or
indirectly by foreign persons. It is currently anticipated that the Company
will be a "domestically controlled Company," and therefore the sale of shares
will not be subject to taxation under FIRPTA. However, gain not subject to
FIRPTA will be taxable to a Non-U.S. Stockholder if (i) investment in the
shares is effectively connected with the Non-U.S. Stockholder's United States
trade or business, in which case the Non-U.S. Stockholder will be subject to
the same treatment as U.S. stockholders with respect to such gain, or (in) the
Non-U.S. Stockholder is a nonresident alien individual who was present in the
United States for more than 182 days during the taxable year and has a "tax
home" in the United States, in which case the nonresident alien individual will
be subject to a 30% tax on the individual's capital gains. If the gain on the
sale of shares were to be subject to taxation under FIRPTA the Non-U.S.
Stockholder will be subject to the same treatment a U.S stockholders with
respect to such gain (subject to applicable alternative minimum tax and a
special alternative minimum tax in the case of nonresident alien individuals).
If the proceeds of a sale of shares are paid by or through a U.S. office of
a broker, the payment is subject to information reporting and to backup
withholding unless the disposing Non-U.S. Stockholder certifies as to his name,
21
address and non-U.S. status or otherwise establishes an exemption. Generally,
U.S. information reporting and backup withholding will not apply to a payment
of disposition proceeds if the payment is made outside the U.S. through a
non-U.S. office of a non-US. broker. U.S. information reporting requirements
(but not backup withholding) will apply, however, to a payment of disposition
proceeds outside the U.S. if: (i) the payment is made through an office outside
the U.S. of a broker that is: (a) a U.S. person; (b)a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the U.S.; or (c) a "controlled foreign corporation" for
U.S. federal income tax purposes; and (ii) the broker fails to initiate
documentary evidence that the shareholder is a Non-U.S. Stockholder and that
certain conditions are met or that the Non-U.S. Stockholder otherwise is
entitled to a exemption.
Tax Aspects of the Company's Investments In Partnerships
General. The Company holds direct or indirect interests in the Operating
Partnership and the Property Partnerships (each individually a "Partnership"
and, collectively, the "Partnerships"). In general, partnerships are
"pass-through" entities which are not subject to federal income tax. Rather,
partners are allocated their proportionate shares of the items of income, gain,
loss, deduction and credit of a partnership, and are potentially subject to tax
thereon, without regard to whether the partners receive a distribution from the
partnership. The Company will include its proportionate share of the foregoing
items of the Partnerships for purposes of the various REIT income tests and in
the computation of its REIT taxable income. See "Federal Income Tax
Consideration C Requirements for Qualification C Gross Income Tests." Any
resultant increase in the Company's REIT taxable income will increase its
distribution requirements (see "Federal Income Tax Consideration C Requirements
or Qualification C Annual Distribution Requirements"), but will not be subject
to federal income tax in the hands of the Company provided that such income is
distributed by the Company to its stockholders. Moreover, for purposes of the
REIT asset tests (see "Federal Income Tax Consideration C Requirements for
Qualification C Asset Tests"), the Company will include its proportionate share
of assets held by the Partnerships.
Entity Classification. The Company's interests in the Partnerships involve
special tax considerations, including the possibility of a challenge by the IRS
of the status of the Partnerships as partnerships (as opposed to associations
taxable as corporations) for federal income tax purposes. If any of the
Partnerships were to be treated as an association, it would be taxable as a
corporation and therefore subject to an entity-level tax on its income. In
such a situation, the character of the Company's assets and items of gross
income would change, which would preclude the Company from satisfying the asset
tests and possibly the income tests (see "Federal Income Tax Consideration C
Requirements for Qualification C Asset Tests" and "Gross Income Tests"), and in
turn would prevent the Company from qualifying as a REIT. See "Federal Income
Tax Consideration C Failure to Qualify" above for a discussion of the effect of
the Company's failure to meet such tests for a taxable year. The Company
believes each of the Partnerships will be treated for federal income tax
purposes as a partnership (and not an association taxable as a corporation).
No assurance can be given that the IRS will not challenge the tax status of the
Partnerships or that administrative or judicial changes would not modify the
partnership status of each of the Partnerships.
Tax Allocations with Respect to Contributed Properties. Pursuant to
Section 704(c) of the Code, income, gain, loss and deduction attributable to
appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership, must be allocated in a manner such
that the contributing partner is charged with, or benefits from, respectively,
the unrealized gain or unrealized loss associated with the property at the time
of the contribution. The amount of such unrealized gain or unrealized loss is
generally equal to the difference between the fair market value of contributed
property at the time of contribution, and the adjusted tax basis of such
property at the time of contribution (a "Book-Tax Difference"). Such
allocations are solely for federal income tax purposes and do not affect the
book capital accounts or other economic or legal arrangements among the
partners. The Operating Partnership was formed principally by way of
contributions of appreciated property. Consequently, the Partnership Agreement
requires such allocation to be made in a manner consistent with Section 704(c)
of the Code.
In general, the limited partners of the Operating Partnership will be
allocated lower amounts of depreciation deductions for tax purposes and
increased taxable income and gain on sale by the Partnerships of the
contributed assets. This will tend to eliminate the Book-Tax Difference over
the life of the Partnerships. However, the special allocation rules of Section
704(c) do not always rectify the Book-Tax Difference on an annual basis or with
respect to a specific taxable transaction such as a sale. Under the applicable
22
Treasury Regulations, such special allocations of income and gain and
depreciation deductions must be made on a property-by-property basis.
Depreciation deductions resulting from the carryover basis of a contributed
property are used to eliminate the Book-Tax Difference by allocating such
deductions to the non-contributing partners (i.e., the REIT and the other non-
contributing partners) up to the amount of their share of book depreciation.
Any remaining tax depreciation for the contributed property would be allocated
to the partners that contributed the property. The Operating Partnership
intends to elect the traditional method of rectifying the Book-Tax Difference
under the applicable Treasury Regulations, pursuant to which, if depreciation
deductions are less than the non-contributing partners' share of book
depreciation, then the non-contributing partners lose the benefit of these
deductions ("ceiling rule"). When the property is sold, the resulting tax gain
is used to the extent possible to eliminate the Book-Tax Difference (reduced by
any previous book depreciation). Because of the application of the ceiling
rule it is anticipated that tax depreciation will be allocated substantially in
accordance with the percentages of OP Units held by the Company and the limited
partners of the Operating Partnership, notwithstanding Section 704(c) of the
Code. Thus, the carryover basis of the contributed assets in the hands of the
Partnerships will cause the Company to be allocated lower depreciation and
other deductions, and possibly greater amounts of taxable income in the event
of a sale of such contributed assets in excess of the economic or book
depreciation allocated to it, and possibly the economic and book income or gain
allocated to it as a result of such sale. This may cause the Company to
recognize taxable income in excess of cash proceeds, which might adversely
affect the Company's ability to comply with the REIT distribution requirements.
See "Federal Income Tax Consideration C Requirements for Qualification C Annual
Distribution Requirements."
Other Tax Considerations
The Management Companies. A portion of the cash to be used by the
Operating Partnership to fund distributions to partners, including the Company,
is expected to come from the Management Companies through dividends on the
stock that will be held by the Operating Partnership. The Management Companies
will receive income from the Operating Partnership, the Property Partnerships
and unrelated third parties. Because the Company, the Operating Partnership and
the Management Companies are related through stock ownership, income of the
Management Companies from services performed for the Company and the Operating
Partnership may be subject to certain rules under which additional income may
be allocated to the Management Companies. The Management Companies will pay
federal and state income tax at the full applicable corporate rates on its
income prior to payment of any dividends. The Management Companies will
attempt to minimize the amount of such taxes, but there can be no assurance
whether or the extent to which measures taken to minimize taxes will be
successful. To the extent that the Management Companies are required to pay
federal, state, or local taxes, the cash available for distribution by the
Company to stockholders will be reduced accordingly.
Possible Legislative or Other Actions Affecting Tax Consequences.
Prospective holders of Securities should recognize that the present federal
income tax treatment of investment in the Company may be modified by
legislative, judicial or administrative action at any time and that any such
action may affect investments and commitments previously made. The rules
dealing with federal income taxation are constantly under review by persons
involved in the legislative process and by the IRS and the Treasury Department,
resulting in revisions of regulations and revised interpretations of
established concepts as well as statutory changes. Revisions in federal tax
laws and interpretations thereof could adversely affect the tax consequences of
investment in the Company.
State and Local Taxes. The Company and its holders of Securities may be
subject to state or local taxation in various jurisdictions, including those in
which it or they transact business or reside. The state and local tax
treatment of the Company and its holders of Securities may not conform to the
federal income tax consequences discussed above. Consequently, prospective
holders of Securities should consult their own tax advisors regarding the
effect of state and local tax laws on an investment in any Securities.
LEGAL MATTERS
The validity of the Offered Securities and certain tax matters will be
passed upon for the Company by O'Melveny & Myers LLP. O'Melveny & Myers LLP
will rely as to certain matters of Maryland law on the opinion of Ballard Spahr
Andrews & Ingersoll.
23
EXPERTS
The financial statements and financial statement schedule of the Company
incorporated in this Prospectus by reference to its 1995 Annual Report on Form
10-K/A and the combined statement of Certain Revenues and Certain Expenses of
Vintage Faire Associates and Billings Associates for the year ended December
31, 1995, incorporated in this Prospectus by reference to Current Report on
Form 8-K/A, have been audited by Coopers & Lybrand L.L.P., and the Statement of
Revenues and Certain Expenses for Valley View Mall for the year ended
December 31, 1995, incorporated in this Prospectus by reference to Current
Reports on Form 8-K, have been audited by Price Waterhouse LLP, respectively,
independent accountants, as indicated in each of their reports with respect
thereto, and are incorporated herein by reference in reliance upon the
authority of said firms as experts in accounting and auditing in giving said
reports.
The statement of revenues and certain expenses of Villa Marina Marketplace
(the Mall) for the year ended December 31, 1995 is incorporated by reference
herein to a current report on Form 8 K/A dated April 5, 1996, and upon
authority of said firm as experts in accounting and auditing. Such report
contains a paragraph that states that the statement of revenues and certain
expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission and for inclusion in the
Form 8-K of the Macerich Company as described in note 2. It is not intended to
be a complete presentation of the Mall's revenues and expenses.
24
No dealer, salesperson or other
individual has been authorized to give
any information or to make any
representations other than those
contained or incorporated by reference $500,000,000
in this Prospectus in connection with
the offer made by this Prospectus and,
if given or made, such information or
representations must not be relied upon
as having been authorized by the
Company or any agent, dealer or
underwriter. Neither the delivery of
this Prospectus nor any sale made THE MACERICH COMPANY
hereunder shall under any circumstances
create an implication that there has
been no change in the affairs of the
Company since the date hereof. This
Prospectus does not constitute an offer
or solicitation by anyone in any state
in which such offer or solicitation is
not authorized or in which the person
making such offer or solicitation is
not qualified to do so or to anyone to
whom it is unlawful to make such offer
or solicitation.
_______________________
TABLE OF CONTENTS SECURITIES
Page
Prospectus
AVAILABLE INFORMATION 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE 2
THE COMPANY 3
RISK FACTORS 3 ---------------------------
USE OF PROCEEDS 8 PROSPECTUS
DESCRIPTION OF COMMON STOCK 9 ---------------------------
DESCRIPTION OF SECURITIES
WARRANTS 10
RESTRICTIONS ON TRANSFER 13
PLAN OF DISTRIBUTION 15
FEDERAL INCOME TAX
CONSIDERATIONS 16
LEGAL MATTERS 24
EXPERTS 24
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution*
Registration fee $147,148
Listing fees *
Printing and engraving expenses *
Accounting fees and expenses *
Legal fees and expenses *
Blue sky fees and expenses *
Fees and expenses of Transfer Agent *
Miscellaneous *
--------
Total $*
--------
--------
_____________________
* To be filed by amendment.
Item 15. Indemnification of Directors and Officers
The MGCL permits a corporation formed in Maryland to include in its
charter a provision eliminating or limiting the liability of its directors and
officers to the corporation and its stockholders for money damages except for
(i) active and deliberate dishonesty established by a final judgment as being
material to that cause of action or (ii) actual receipt of an improper benefit
or profit in money, property or services. The Company's Charter has
incorporated such a provision which limits such liability to the fullest
extent permitted by the MGCL.
The Charter authorizes the Company to indemnify its present and former
officers and directors and to pay or reimburse reasonable expenses in advance
of the final disposition of the proceeding to the maximum extent permitted
from time to time by the laws of Maryland. The Bylaws of the Company obligate
it to indemnify and advance reasonable expenses to present and former
directors and officers to the maximum extent permitted by Maryland law. The
MGCL permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any
proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (i) the act or
omission of the director or officer was material to the matter giving rise to
the proceeding and (a) was committed in bad faith or (b) was the result of
active and deliberate dishonesty, (ii) the director or officer actually
received an improper personal benefit, or (iii) in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the
act or omission was unlawful. In addition, the MGCL requires the Company, as
conditions to advancing expenses, to obtain (a) a written affirmation by the
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification by the Company as authorized by the
applicable Bylaws or partnership agreement and (b) a written statement by him
or on his behalf to repay the amount paid or reimbursed by the Company if it
shall ultimately be determined that the standard of conduct was not met. The
MGCL requires a corporation (unless its charter provides otherwise, which the
Company's Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he is made a party by reason of his service in that capacity. However,
under the MGCL, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation. The bylaws also (i)
permit the Company to provide indemnification and advance expenses to a
present or former director or officer who served a predecessor of the Company
in such capacity, and to any employee or agent of the Company or a predecessor
of the Company, (ii) provide that any indemnification or payment or
II-1
reimbursement of the expenses permitted by the applicable bylaws shall be
furnished in accordance with the procedures provided for indemnification and
payment or reimbursement of expenses under Section 2-418 of the MGCL for
directors of Maryland corporations and (iii) permit the Company to provide
such other and further indemnification or payment or reimbursement of expenses
as may be permitted by Section 2-418 of the MGCL for directors of Maryland
corporations.
The Partnership Agreement of the Operating Partnership also
provides for indemnification of the Company and its officers and directors to
the same extent that indemnification is provided to officers and directors of
the Company in the Charter, and limits the liability of the Company and its
officers and directors to the Operating Partnership and its partners to the
same extent that liability of officers and directors of the Company is limited
under the Charter.
The Company and the Operating Partnership have entered into
indemnification agreements with each of the Company's officers and directors.
The indemnification agreements require, among other things, that the Company
and the Operating Partnership indemnify the Company's officers and directors
to the fullest extent permitted by law, and advance to the officers and
directors all related reasonable expenses, subject to reimbursement if it is
subsequently determined that indemnification is not permitted. The Company
and the Operating Partnership must also indemnify and advance all expenses
incurred by officers and directors seeking to enforce their rights under the
indemnification agreements, and cover officers and directors under the
Company's directors' and officers' liability insurance. Although this form of
indemnification agreement offers substantially the same scope of coverage
afforded by provisions in the Charter and the Bylaws of the Company and the
Partnership Agreement of the Operating Partnership, it provides greater
assurance to directors and officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the future by
the Board of Directors, by the stockholders or by the partners of the
Operating Partnership to eliminate the rights it provides.
Item 16. Exhibits.
Exhibit
Number Description of Exhibit
4.1 Articles of Amendment and Restatement of the Company
(included as an exhibit to the Company's Registration Statement on
Form S-11, as amended (No. 33-68964), and incorporated herein by
reference).
4.2 Articles Supplementary (included as an exhibit to the Company's
Current Report on Form 8-K, event date May 30, 1995, and
incorporated herein by reference).
4.3 Bylaws of the Company (included as an exhibit to the Company's
Registration Statement on Form S-11, as amended (No. 33-68964),
and incorporated herein by reference).
4.4 Form of Common Stock Certificate (included as an exhibit to the
Company's Current Report on Form 8-K, event date May 30, 1995, and
incorporated herein by reference).
5.1* Opinion of O'Melveny & Myers LLP as to the validity of the
Securities.
8.1* Opinion of O'Melveny & Myers LLP as to certain tax matters.
II-2
23.1 Consent of Coopers & Lybrand L.L.P.
23.2* Consent of KPMG Peat Marwick LLP.
23.3* Consent of Price Waterhouse LLP.
23.2* Consent of O'Melveny & Myers LLP (to be included in Exhibits
5.1 and 8.1).
24.1 Power of Attorney (included on page II-5).
___________________
*To be filed by amendment.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, unless the information required to
be included in such post-effective amendment is contained in a
periodic report filed by Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 and
incorporated herein by reference;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement, unless
the information required to be included in such post-effective
amendment is contained in a periodic report filed by Registrant
pursuant to Section 13 or Section 15(d) of the Securities Act of
1934 and incorporated herein by reference;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described in Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
II-3
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby further undertakes that:
(1) For the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as a part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Santa Monica, State of California,
on the 3rd day of February, 1997.
THE MACERICH COMPANY
By: /s/ Arthur M. Coppola
--------------------------
Arthur M. Coppola
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned directors and officers of The Macerich Company, and
each of us, do hereby constitute and appoint Mace Siegel, Dana K. Anderson,
Arthur M. Coppola, Thomas E. O'Hern and Richard A. Bayer, or any one of them,
our true and lawful attorneys and agents, each with power of substitution, to
do any and all acts and things in our name and on our behalf in our capacities
as directors and officers and to execute any and all instruments for us and in
our names in the capacities indicated above, which said attorneys and agents,
or any one of them, may deem necessary or advisable to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules,
regulations, and requirements of the Securities and Exchange Commission, in
connection with this Registration Statement, including specifically but
without limitation, power and authority to sign for us or any of us in our
names in the capacities indicated below, any and all amendments (including
post-effective amendments) hereto; and we do hereby ratify and confirm all
that the said attorneys and agents, or his substitute or substitutes, or any
one of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ---------------------
/s/ Mace Siegel Chairman of the Board of February 3, 1997
Mace Siegel Directors
- ----------------------
/s/ Dana K. Anderson Vice Chairman of the Board February 3, 1997
Dana K. Anderson of Directors and Chief
Operating Officer
II-5
Signature /Title Date
- ----------------------
/s/ Arthur M. Coppola Director, President and Chief February 3, 1997
Arthur M. Coppola Executive Officer (Principal
Executive Officer)
- -----------------------
/s/ Edward C. Coppola Director, Executive Vice January 30, 1997
Edward C. Coppola President and Director of
Acquisitions
- ---------------------
/s/ James S. Cownie Director January 29, 1997
James S. Cownie
Theodore S. Hochstim Director January , 1997
- ---------------------
/s/ Fred S. Hubbell Director January 29, 1997
Fred S. Hubbell
- ----------------------
/s/ Stanley A. Moore Director January 28, 1997
Stanley A. Moore
- --------------------------
/s/ Dr. William P. Sexton Director January 28, 1997
Dr. William P. Sexton
- ----------------------
/s/ Thomas E. O'Hern Senior Vice President, February 4, 1997
Thomas E. O'Hern Chief Financial Officer
and Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
II-6
February 3, 1997
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
The Macerich Company on Form S-3 dated February 5, 1997 of our report dated
March 14, 1996, on our audits of the consolidated and combined financial
statements and financial statement schedule of The Macerich Company and Macerich
Predecessor Affiliates as of December 31, 1995 and 1994, and for the year
ended December 31, 1995 and the periods March 16, 1994 through December 31,
1994 and January 1, 1994 through March 15, 1994, and the year ended December
31, 1993 which report is included in the Annual Report on Form 10-K/A of the
Macerich Company. We consent to the incorporation by reference of our report
dated October 1, 1996, on our audit of the combined statement of Certain
Revenues and Certain Expenses of Vintage Faire Associates and Billings
Associates for the year ended December 31, 1995, which report is included in
the Current Report on Form 8-K/A of the Macerich Company. We also consent to
the reference to our Firm under the caption "Experts."
COOPERS & LYBRAND
Los Angeles, California
February 5, 1997
Exhibit 23.2
The Board of Directors
The Macerich Company:
We consent to the incorporation by reference in this registration statement on
Form S-3 of the Macerich Company of our report dated March 15, 1996, with
respect to the combined statement of revenues and certain expenses of Villa
Marina Marketplace for the year ended December 31, 1995, which report appears
in the Form 8-K/A of the Macerich Company dated, April 5, 1996.
KPMG Peat Marwick LLP
Los Angeles, California
February 3, 1997
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this registration
statement of The Macerich Company on Form S-3 of our report dated September
30, 1996 relating to the Statement of Revenues and Direct Operating Expenses
of Valley View Center.
Price Waterhouse LLP
Chicago, Illinois
February 3, 1997
