SEC Filing | Macerich

View:

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 1997

REGISTRATION NO. 333-38721

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-----------

AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-----------

THE MACERICH COMPANY
(Exact name of Registrant as specified in its charter)

MARYLAND 95-4448705
(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
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

-----------

COPIES OF COMMUNICATIONS TO:
THOMAS J. LEARY, ESQ. RICHARD A. BAYER, ESQ.,
O'MELVENY & MYERS LLP GENERAL COUNSEL AND SECRETARY
400 SOUTH HOPE STREET THE MACERICH COMPANY
LOS ANGELES, CALIFORNIA 90071-2899 233 WILSHIRE BOULEVARD, NO. 700
(213) 669-6000 SANTA MONICA, CALIFORNIA 90401
(310) 394-6911

-----------

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 the Selling Securityholders.

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 the 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 effective
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

- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Each Class of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered Security Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------------------

7-1/4% Convertible Subordinated
Debentures due 2002 $119,380,000 100% $119,380,000(1) $36,175(4)

- --------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value per
share 3,835,502(2)(3) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) Such number represents the number of shares of Common Stock initially
issuable upon conversion of the Debentures registered hereby and, pursuant
to Rule 416 under the Securities Act of 1933, as amended, such
indeterminate number of shares of Common Stock as may be issued from time
to time upon conversion of the Debentures by reason of adjustment of the
conversion price under certain circumstances outlined in the Prospectus.
(3) Pursuant to Rule 457(i), no registration fee is payable in connection with
the Common Stock issuable upon conversion of the Debentures.
(4) The registration fee has previously been paid by the Registrant.

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.

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 DECEMBER 22, 1997

PROSPECTUS

THE MACERICH COMPANY

$119,380,000 OF 7-1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002
AND
3,835,502 SHARES OF COMMON STOCK

-----------

This Prospectus relates to the offer and sale by the selling
securityholders named herein (the "Selling Securityholders") of $119,380,000
aggregate principal amount of 7-1/4% Convertible Subordinated Debentures due
2002 (the "Offered Debentures") of The Macerich Company, a Maryland corporation
("Macerich" or the "Issuer"), and the 3,835,502 shares (subject to adjustment in
certain circumstances) of the Issuer's Common Stock, $0.01 par value per share
(the "Common Stock"), issued or issuable upon the conversion of the Offered
Debentures. The Offered Debentures and the Common Stock issued or issuable upon
conversion of the Offered Debentures (the "Offered Shares") are sometimes
collectively referred to herein as the "Offered Securities." The Offered
Debentures were issued and sold to the Selling Securityholders in private
offerings in June 1997 and July 1997 without registration under the Securities
Act of 1933, as amended (the "Securities Act"), in reliance on the exemption
from registration provided by Rule 144A under the Securities Act. Concurrently
with the original issuance and sale of the Offered Debentures, the Issuer issued
and sold an additional $42,020,000 aggregate principal amount of its 7-1/4%
Convertible Subordinated Debentures due 2002 to non-United States persons in
off-shore transactions outside the United States without registration under the
Securities Act in reliance on the exemption from registration provided by
Regulation S under the Securities Act (the "Regulation S Debentures" and,
together with the Offered Debentures, the "Debentures"). This Prospectus does
not relate to the offer or sale by any holder of the Regulation S Debentures or
the shares of Common Stock issued or issuable upon the conversion of the
Regulation S Debentures (the "Regulation S Shares").

The Debentures mature on December 15, 2002. The Debentures are convertible
into shares of Common Stock prior to redemption, repurchase or maturity at a
conversion price of $31.125 per share, subject to adjustment under certain
conditions. A holder of Debentures (a "Holder") may not convert any Debenture
if as a result of such conversion any person (with certain limited exceptions)
would own or be deemed to own, directly or constructively, more than 5% of the
outstanding Common Stock. See "Description of Common Stock--Restrictions on
Transfer."

Interest on the Debentures is payable semi-annually in arrears on June 15
and December 15 in each year, commencing on December 15, 1997. Payments will be
made without deduction for United States withholding taxes to the extent
described herein. See "United States Federal Income Taxation
Considerations--United States Taxation of Domestic Holders of Debentures and
- --United States Taxation of Foreign Holders of Debentures."

The Debentures are redeemable in whole or in part, at the option of the
Issuer, at any time on or after June 15, 2002 at par plus accrued interest. The
Debentures are also redeemable for certain reasons intended to protect the
Issuer's status as a real estate investment trust ("REIT") or in the event the
Issuer becomes liable to pay Additional Amounts (as defined herein) as a result
of any change in the United States federal income tax laws or the regulations,
rulings or interpretations with respect thereto. The Debentures are subordinate
to all existing and future Senior Indebtedness and Subsidiary Indebtedness (each
as defined herein), which together include certain obligations of the Issuer and
the Company Subsidiaries (as defined herein). See "Description of the
Debentures--Subordination." The Indenture (as defined herein) does not limit
the amount of Senior Indebtedness or Subsidiary Indebtedness that the Issuer or
the Company Subsidiaries may incur, respectively.

The Offered Securities may be sold by the Selling Securityholders from time
to time to or through underwriters, directly to other purchasers or through
agents. This Prospectus is not the exclusive means for resales of Debentures or
Common Stock owned by the Selling Securityholders, who may, for example, sell
Debentures or Common Stock under Rule 144 under the Securities Act. The
distribution of the Offered Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Sales of Offered Securities
may be effected from time to time in one or more transactions on such national
securities exchanges on which the Debentures or the Common Stock may be listed,
or have unlisted trading privileges, or in negotiated transactions, or a
combination of such methods of sale, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at other negotiated
prices. The Issuer has agreed to bear substantially all expenses of
registration of the Offered Securities under federal and state securities laws,
other than commissions, fees and discounts of underwriters, brokers, dealers and
agents, and to indemnify the Selling Securityholders against certain
liabilities, including liabilities under the Securities Act. See "Plan of
Distribution."

The Selling Securityholders, and intermediaries through whom such
securities are sold, may be deemed "underwriters" within the meaning of the
Securities Act with respect to the Offered Securities, and any profits
realized or commissions received may be deemed underwriting compensation.
The Selling Securityholders and the Issuer have each agreed to indemnify the
other against certain liabilities, including liabilities under the Securities
Act. See "Plan of Distribution."

The Issuer will not receive any of the proceeds from the sale of the
Offered Securities by the Selling Securityholders. The Issuer received
approximately $156.0 million in net proceeds from the initial offering of the
Debentures after payment of underwriting discounts and commissions and expenses
with respect thereto.

The Debentures are listed on the Luxembourg Stock Exchange. The Common
Stock is not listed on the Luxembourg Stock Exchange. The Common Stock is
listed on the New York Stock Exchange and trades under the symbol "MAC". On
December 19, 1997, the reported last sale price of the Common Stock on the
New York Stock Exchange was $26.75 per share. The Offered Debentures, prior
to their resale pursuant to this Prospectus, were eligible for trading
through the Private Offerings, Resale and Trading through Automated Linkages
Market (the "PORTAL Market"). Any Offered Debentures sold pursuant to this
Prospectus will no longer be eligible for trading on the PORTAL Market.

SEE "RISK FACTORS" AT PAGE 4 OF THIS PROSPECTUS FOR CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE OFFERED SECURITIES.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE 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.

The date of this Prospectus is December __, 1997.

AVAILABLE INFORMATION

The Issuer has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a registration statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933 with respect to the
Offered Securities. This Prospectus, which is part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. For further information with respect to the
Issuer and the Offered Securities, reference is hereby made to the Registration
Statement and the exhibits thereto, which may be inspected without charge at the
public reference facilities maintained at the principal office of the Commission
at 450 Fifth Street, N.W., Room 1024, Washington D.C. 20549 and at the
Commission's regional offices at 7 World Trade Center, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such materials may be obtained upon written request from the public reference
section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a Website (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed (or
incorporated by reference) as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference.

The Issuer 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 statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Issuer may be inspected and copied at the public reference facilities maintained
by the Commission at the addresses shown above. Copies of such material can be
obtained from the Public Reference Section of the Commission at the address
shown above at prescribed rates or through the Commission's Website. In
addition, reports, proxy statements and other information concerning the Issuer
can be inspected and copied at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005, on which the Common Stock is listed.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

There are incorporated herein by reference the following documents of the
Issuer filed with the Commission: (1) the Issuer's Annual Report on Form
10-K for the fiscal year ended December 31, 1996; (2) the Issuer's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997; (3) the Proxy Statement for the Issuer's 1997 Annual
Meeting of Shareholders held on May 28, 1997; (4) the Issuer's Current Report
on Form 8-K, event date November 30, 1996, as amended by Form 8-K/A, filed
February 4, 1997; (5) the Issuer's Current Report on Form 8-K, event date
December 30, 1996, as amended by Form 8-K/A, filed February 27, 1997; (6) the
Issuer's Current Report on Form 8-K, event date June 20, 1997; (7) the
Issuer's Current Report on Form 8-K, event date August 6, 1997, as amended by
Form 8-K/A, filed October 16, 1997; (8) the description of the Issuer's
Common Stock contained in the Issuer's registration statement filed under the
Exchange Act and any amendments or reports filed for the purpose of updating
such description; and (9) all documents filed by the Issuer 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 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, 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 Issuer 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 or 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
Issuer at 233 Wilshire Boulevard, Santa Monica, California 90401, telephone
number (310) 394-6911. Copies of all documents filed by the Issuer with the
Commission can be reviewed on or obtained from the Commission's Website at
http://www.sec.gov.

UNLESS THE CONTEXT INDICATES OTHERWISE, ALL REFERENCES TO THE "COMPANY" IN
THIS PROSPECTUS INCLUDE THE ISSUER AND THOSE ENTITIES OWNED OR CONTROLLED BY THE
ISSUER, WHICH ENTITIES INCLUDE, WITHOUT LIMITATION, THE OPERATING PARTNERSHIP
AND THE PROPERTY PARTNERSHIPS, OTHER THAN THE PROPERTY PARTNERSHIPS WHICH OWN
THE JOINT VENTURE CENTERS. SEE "GLOSSARY" FOR THE DEFINITIONS OF CERTAIN TERMS
USED IN THIS PROSPECTUS.

THE COMPANY

The Issuer was formed in 1993 to continue and expand the business of The
Macerich Group, which since 1972 has focused on the acquisition, ownership,
redevelopment, management and leasing of regional shopping centers and
community shopping centers located throughout the United States. As of the
date of this Prospectus, the Company owns or has ownership interests in 26
regional shopping centers and three community shopping centers located in
twelve states, containing approximately 22.1 million square feet of gross
leasable area ("GLA") (the 29 regional and community shopping centers
described above and any shopping centers acquired after the date of this
Prospectus are referred to hereinafter as the "Centers").

The Issuer was organized as a Maryland corporation in September 1993 to
continue and expand the business of The Macerich Group, which has been engaged
in the shopping center business since 1965. The Macerich Group consists of Mace
Siegel, Arthur M. Coppola, Dana K. Anderson and Edward C. Coppola (the
"Principals") and certain business associates and members of management of the
Company. The Principals are directors and executive officers of the Issuer and
have a combined total of over 100 years of experience in the shopping center
business.

The Issuer operates through The Macerich Partnership L.P., a Delaware
limited partnership (the "Operating Partnership"). The Issuer has a majority
ownership interest in the Operating Partnership and, as the sole general
partner, has exclusive power to manage and conduct the business of the Operating
Partnership, subject to certain limited exceptions. The Issuer conducts all of
its operations through the Operating Partnership, two management companies,
Macerich Property Management Company and Macerich Management Company, both
California corporations (the "Management Companies"), and certain single purpose
entities (the "Property Partnerships") jointly owned by the Issuer and the
Operating Partnership and, in the case of the entities which own the Centers
which are not wholly-owned by the Company (the "Joint Venture Centers"),
third-party joint venture partners. The Operating Partnership owns all of the
non-voting preferred stock (generally entitled to dividends equal to 95% of cash
flow) of each of the Management Companies. All of the outstanding voting common
stock of each of the Management Companies is owned by the Principals.

The Company's primary objective is to enhance stockholder value by
increasing its Funds from Operations ("FFO") per share, primarily by focusing on
the acquisition of potentially dominant franchise regional malls that have
internal growth characteristics. The Company's strategy is to increase the net
operating income of each acquired property by rolling below-market rents up to
market levels as leases expire, expanding the Centers, adding department stores,
changing the tenant mix and increasing occupancy levels. In addition to its
acquisition strategy, the Company also seeks to improve the financial
performance of the Centers that it already owns by rolling below-market rents up
to market levels as leases expire, increasing occupancy levels, and
redeveloping, expanding and renovating the properties.

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 in evaluating an investment in the Offered Securities.

RISKS OF REAL ESTATE INVESTMENTS

GENERAL FACTORS AFFECTING INVESTMENTS IN SHOPPING CENTERS; COMPETITION

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 their owners
and the Issuer's stockholders. Income from shopping center properties may be
adversely affected by a number of factors, including: the national economic
climate; the regional economic climate (which may be adversely impacted by plant
closings, industry slowdowns 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.
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. 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
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") 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 to terminate their leases or cease operating their
stores at the Center. In addition, mergers, acquisitions, consolidations or
dispositions in the retail industry could result in the loss of tenants at one
or more Centers. Furthermore, if the sales of retailers operating in the
Centers were to decline sufficiently, tenants may 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."

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 in the
future.

CONFLICTS OF INTEREST

MANAGEMENT COMPANIES

The management, leasing and redevelopment business of the Company is
carried on through the Management Companies. The Principals own 100% of the
outstanding voting common stock of each of the Management Companies, and the
Operating Partnership owns 100% of the outstanding 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 (other than the Property Partnership which owns West Acres
Center) providing for the day-to-day property management of the Centers. The
Operating Partnership or the applicable Property Partnership has the right to
terminate the relevant 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 is required to enforce the terms of the
Management Agreements with the Management Companies. The failure by the Company
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. These arrangements may also create conflicts of interest for the
Principals.

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 "United States Federal Income Tax Considerations--Tax Aspects of
the Issuer's Investments in Partnerships."

PRINCIPAL GUARANTEES

The Principals have guaranteed certain of the mortgage loans encumbering
the Centers. As of the date of this Prospectus, the aggregate principal
amount of such loans is approximately $23.8 million, and the aggregate
principal amount guaranteed by the Principals is approximately $15.0 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

Since the Issuer's initial public offering of Common Stock in March 1994,
the Company has had a debt level of less than 50% of the Company's Total Market
Capitalization. The organizational documents of the Company, however, do not
limit the amount or percentage of indebtedness that it may incur. Accordingly,
the Board of Directors of the Issuer (the "Board of Directors") could alter or
eliminate this current practice with respect to borrowing. If this practice
were changed, the Company could become more highly leveraged, resulting in an
increased risk of default on its obligations and an increase in debt service
requirements, either of which could adversely affect the financial condition and
results of operations of the Company and the ability of the Issuer to make debt
service payments with respect to the Debentures.

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 growth, debt capitalization,
distributions, REIT status of the Issuer and operating policies, have been and
will continue to be 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 Issuer's
stockholders. A change in these policies could adversely affect the Company's
financial condition or results of operations and the ability of the Issuer to
make debt service payments with respect to the Debentures. See "--No Limitation
on Debt."

INABILITY TO QUALIFY AS A REIT

The Company believes that it has operated so as to qualify the Issuer as a
REIT under the United States Internal Revenue Code of 1986, as amended the
("Code") and intends to operate so that the Issuer may remain so qualified. No
assurance, however, can be given that the Issuer 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 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 Issuer's control may affect the
Issuer's ability to qualify as a REIT. See "--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 the Issuer's qualification as
a REIT or the federal income tax consequences of such qualification. See
"United States Federal Income Tax Considerations."

If in any taxable year the Issuer were to fail to qualify as a REIT, the
Issuer 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 Issuer 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 payments to
Holders and distributions to the Issuer's stockholders would be reduced for each
of the years involved. Although the Company currently intends to operate in a
manner designed to qualify the Issuer as a REIT, it is possible that future
economic, market, legal, tax or other considerations may cause

the Board of Directors to revoke the REIT election. See "United States Federal
Income Tax Considerations."

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. Other than the Debentures, the
Company's outstanding indebtedness represents obligations of the Operating
Partnership and certain Property Partnerships that hold the Centers and most of
which is nonrecourse to the applicable obligor. 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. Any outstanding indebtedness under the Company's working capital
credit facility is the obligation of the Operating Partnership and certain
Property Partnerships.

The Company's current indebtedness bears interest at both fixed rates and
floating rates. For future financings, the Company intends to seek the most
attractive financing arrangements available at the time, which may involve
either fixed or floating interest rates. With respect to floating rate
indebtedness, increases in interest rates could adversely affect the Company's
Funds from Operations, funds available for distribution and its ability to meet
its debt service obligations. In connection with $65.1 million of the Company's
floating rate indebtedness, as of the date of this Prospectus, the Company has
entered into interest rate protection agreements that limit the Company's
exposure to increases in interest rates. Consideration will be given to
acquiring interest rate caps or entering into other interest rate protection
agreements if appropriate with respect to future floating rate indebtedness
to reduce exposure to interest rate increases on such debt.

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 by the time the balloon payments
become due, 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.

To qualify as a REIT under the Code, the Issuer generally is required each
year to distribute to its stockholders at least 95% of its net taxable income
determined without regard to net capital gains and the dividends paid deduction.
See "United States Federal Income Tax Considerations--Taxation of the Company."
The Company could be required to borrow funds on a short-term basis or liquidate
investments to meet the distribution requirements that are necessary to qualify
the Issuer as a REIT, even if management believed that then prevailing market
conditions did not favor such actions.

OUTSIDE PARTNERS IN JOINT VENTURE CENTERS

The Company owns partial interests in the Property Partnerships which own
the Joint Venture Centers. 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 these Property Partnerships, or defaults by the Operating
Partnership under the 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, the Company does not have day-to-day
operational control with respect to West Acres Center (one of the Joint
Venture Centers), nor is it able to control cash distributions therefrom that
may jeopardize the Issuer's 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 the Issuer's status as a
REIT under the Code.

HOLDING COMPANY STRUCTURE; SUBORDINATION

The Debentures are general unsecured obligations of the Issuer and are not
guaranteed by the Operating Partnership, the Property Partnerships (including
the Property Partnerships which own the Joint Venture Centers), the Management
Companies or any other subsidiaries of the Issuer (such entities being
collectively referred to as the "Company Subsidiaries"). Because the Issuer
conducts its operations through the Operating Partnership, the Issuer's ability
to service its debt obligations, including its ability to pay the principal of,
premium, if any, and interest on the Debentures, and its ability to pay
dividends on the Common Stock (including the shares of Common Stock issued or
issuable upon conversion of the Debentures (the "Shares")), is strictly
dependent upon the earnings and cash flows of the Operating Partnership and the
ability of the Operating Partnership to make funds available to the Issuer for
such purpose in the form of intercompany distributions. Under the Delaware
Revised Uniform Limited Partnership Act, the Operating Partnership would be
prohibited from making any distribution to the Issuer to the extent that at the
time of the distribution, after giving effect to the distribution, all
liabilities of the Operating Partnership (other than certain nonrecourse
liabilities and certain liabilities to the partners) exceed the fair value of
the assets of the Operating Partnership.

The Debentures are subordinated in right of payment to all existing and
future Senior Indebtedness of the Issuer and to all existing and future
Subsidiary Indebtedness of the Company Subsidiaries. The Indenture does not
prohibit the Issuer or any of the Company Subsidiaries from incurring additional
Senior Indebtedness or Subsidiary Indebtedness, respectively.

Under the Indenture, the Issuer is not permitted to pay principal of,
premium, if any, or interest on (including payments of Additional Amounts (as
defined herein)), or otherwise repurchase or redeem the Debentures (including
any repurchase at the election of the Holders upon the occurrence of a
Designated Event (as defined herein)) at any time in which there has occurred
and is continuing a payment default or any other event of default with respect
to any Senior Indebtedness or any Subsidiary Indebtedness (other than any such
Senior Indebtedness or Subsidiary Indebtedness which is secured by real
property) which permits the holder thereof to accelerate the maturity thereof.
Moreover, in the event of the insolvency, bankruptcy, reorganization,
dissolution or other winding up of the Issuer or any Company Subsidiary, the
holders of Senior Indebtedness and Subsidiary Indebtedness will be entitled to
receive payment in full before the Holders of Debentures are entitled to receive
any payment. In addition, the Debentures are unsecured obligations and thus are
effectively subordinated to all secured indebtedness of the Issuer and the
Company Subsidiaries to the extent of the value of the assets securing

such indebtedness. Most of the outstanding indebtedness of the Issuer and the
Company Subsidiaries is secured indebtedness.

As a consequence of the Issuer's status as a holding company, the
Debentures effectively rank junior in right of payment to the prior payment in
full of all obligations and liabilities of the Company Subsidiaries. Therefore,
the claims of creditors of the Company Subsidiaries, in respect of the assets of
each of the Company Subsidiaries, have priority over claims of the Issuer's
creditors (including the Holders). The Indenture does not restrict or limit the
ability of the Company Subsidiaries to incur, assume or guarantee any
indebtedness. Moreover, the Indenture does not restrict or limit the ability of
the Issuer or any of the Company Subsidiaries from creating liens and security
interests or otherwise encumbering their respective properties and assets, or
from making payments and distributions on account of their respective equity
interests or securities.

BANKRUPTCY OF RETAIL STORES

Over the past seven years, three department store companies operating a
total of twenty of the current Anchors at the Centers have filed for bankruptcy
under the United States Bankruptcy Code of 1978, as amended. As of the date of
this Prospectus, seventeen of these stores are still operating and are meeting
their current economic obligations to the Centers, one store has been acquired
by another department store, one store has been acquired by the Company which is
negotiating with potential replacement tenants and one store is being demolished
to make space available for a theater complex and adjacent restaurants and
shops. 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
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.

POSSIBLE ENVIRONMENTAL LIABILITIES

Under various federal, state, and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws often impose liability whether or not
the owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. In addition, the presence of hazardous or toxic
substances, or the failure to properly remedy environmental hazards, 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. In connection with its ownership
and operation of the Centers, the Company may be potentially liable under such
laws and may incur costs in responding to such liabilities. See "Item 1.
Business--Environmental Matters" and Note 10 to the Financial Statements
contained in the Issuer's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 for a description of known environmental liabilities.

OWNERSHIP AND GOVERNANCE OF THE COMPANY AND THE OPERATING PARTNERSHIP

Under the partnership agreement of the Operating Partnership (the
"Partnership Agreement"), the Issuer, as the sole general partner of the
Operating Partnership, is responsible for the management of the Operating
Partnership's business and affairs. Moreover, each of the Principals serves as
an executive officer of the Issuer and as a member of the Issuer's Board of
Directors on a staggered basis. Accordingly, the Principals have substantial
influence over the management of the Issuer and the Operating Partnership. See
also "--Conflicts of Interest."

The Partnership Agreement provides that a decision to merge the Operating
Partnership, sell all or substantially all of its assets or liquidate the
Operating Partnership must be approved by the holders of at least 75% of the
limited partnership interests in the Operating Partnership (the "OP Units").
The Issuer owns less than 75% of the OP Units. Accordingly, the concurrence of
at least some of the other holders of OP Units would be required to approve any
such transaction.

OWNERSHIP LIMIT; CERTAIN ANTI-TAKEOVER PROVISIONS

In order for the Issuer to maintain its qualification as a REIT, not more
than 50% in value of its outstanding capital stock may (after taking into
account options to acquire capital stock) 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. The Issuer's Articles restrict
ownership of more than 5% (the "Ownership Limit") of the capital stock by any
single stockholder (with limited exceptions for certain holders of OP Units (and
their respective families and affiliated entities), including all four
Principals). In addition to preserving the Issuer's status as a REIT, the
Ownership Limit may (i) have the effect of precluding an acquisition of control
of the Issuer without the approval of the Board of Directors of the Issuer 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 Issuer. The Board of Directors, in its sole discretion, may
waive or (subject to certain limitations) modify the Ownership Limit with
respect to other stockholders if it is satisfied that ownership in excess of
this limit will not jeopardize the Issuer's status as a REIT. See "Description
of Common Stock--Restrictions on Transfer" for additional information regarding
the Ownership Limit.

Certain other provisions of the Issuer's Articles and bylaws may have the
effect of discouraging a third party from making an acquisition proposal for the
Issuer and may thereby inhibit a change in control of the Issuer 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, 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 Issuer shares of capital stock or other securities or
property.

UNINSURED LOSS

The Company carries comprehensive liability, fire, extended coverage and
rental loss insurance covering all of the Centers (except West Acres Center and
Manhattan Village Shopping Center), with policy specifications and insured
limits customarily carried for similar properties. There are, however,

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 a deductible equal to 5% of the total
insured value of each Center, a $500,000 per occurrence minimum and a combined
annual aggregate loss limit of $100 million on these Centers. Furthermore, the
Company has elected to carry title insurance on many of the Centers for less
than their full value. Should an uninsured loss or a loss in excess of insured
limits occur, the Operating Partnership or the Property Partnership, as the case
may be, which owns 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 and each of the Property
Partnerships, the Issuer 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.

UNITED STATES INCOME TAX TREATMENT OF FOREIGN HOLDERS

Certain special United States tax considerations apply by reason of the
fact that the Debentures are convertible into Common Stock. Under certain
limited circumstances, gain on the sale or exchange of Debentures by a foreign
Holder (including by reason of the payment of the principal of, premium, if any,
or interest on, the Debentures) may be subject to United States income taxation.
In such circumstances, the buyer (or the Issuer, as applicable) would be
required to collect a 10% withholding tax from the proceeds of such sale or
exchange. The Issuer generally would have no "gross-up" obligation with respect
to the foregoing tax liabilities. See "United States Federal Income Tax
Considerations--United States Taxation of Foreign Holders of Debentures."
Distributions of ordinary income paid out of earnings and profits with respect
to Common Stock to a Non-U.S. Stockholder (as defined herein) will generally be
subject to a 30% withholding tax unless either (i) a lower treaty rate applies,
or (ii) the Non-U.S. Stockholder submits an Internal Revenue Service ("IRS")
Form 4224 with the Issuer claiming that the distribution is effectively
connected income. Distributions attributable to the sale or exchange of an
interest in United States real property will generally be subject to United
States income taxation (resulting in such Non-U.S. Stockholder being required to
file a United States income tax return) and the Issuer will be required to
collect a 35% withholding tax from subsequent distributions that it could
designate as a capital gain dividend. Additionally, it is possible that gain on
the sale or exchange of Common Stock (and distributions in excess of earnings
and profits, to the extent they exceed the adjusted basis of the Common Stock)
by a Non-U.S. Stockholder may be subject to United States taxation (resulting in
such stockholder being required to file a United States income tax return) and
the buyer (or the Issuer, as applicable) would be required to collect a 10%
withholding tax. See "United States Federal Income Tax Considerations--Taxation
of Foreign Stockholders."

MARKET FOR AND LISTING OF DEBENTURES AND COMMON STOCK

The Debentures are listed on the Luxembourg Stock Exchange. The Issuer does
not intend to apply for listing of the Debentures on any securities exchange
other than the Luxembourg Stock Exchange. No assurance can be given that a
market for the Debentures will develop or, if developed, will be maintained.
To the extent that they trade, the Debentures may trade at a discount from
their stated principal.

Prior to the date of this Prospectus, the Offered Debentures were
designated as eligible for trading through the PORTAL Market. Any Offered
Debentures sold pursuant to this Prospectus will no longer be eligible for
trading through the PORTAL Market.

The Common Stock is listed on the New York Stock Exchange. The Common
Stock is not listed on the Luxembourg Stock Exchange.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the Company's ratio of earnings to fixed
charges for the periods shown.

Year Ended December 31, Nine Months Ended September 30,
-------------------------------- -------------------------------
1996 1995 1994 1993 1992 1997 1996
---- ---- ---- ---- ---- ---- ----
1.66 1.69 1.58 1.08 1.06 1.41 1.66

The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income (loss) before
minority interest, extraordinary items and fixed charges (excluding capitalized
interest). Fixed charges consist of interest expense (including interest costs
capitalized) and amortization of debt issuance costs. To date, the Issuer
has not issued any preferred stock; therefore, the ratios of earnings to
combined fixed charges and preferred stock dividends are unchanged from the
ratios presented in the table above.

USE OF PROCEEDS

The Issuer will not receive any proceeds from the sale of the Offered
Securities by the Selling Securityholders.

SELLING SECURITYHOLDERS

The Selling Securityholders (which term includes their transferees,
pledgees, donees and their successors) may from time to time offer and sell
pursuant to this Prospectus any or all of the Offered Securities. The Issuer
will not receive any of the proceeds from the sale of the Offered Securities.
To the Issuer's knowledge, none of the Selling Securityholders has, or within
the past three years has had, any position, office or other material
relationship with the Issuer or any of its predecessors or affiliates, except as
otherwise indicated below.

The following table sets forth certain information with respect to the
ownership and sale of the Debentures by each of the Selling Securityholders for
whom the Issuer is registering the Offered Securities for resale to the public.

DEBENTURES
BENEFICIALLY OWNED
PRINCIPAL AMOUNT MAXIMUM PRINCIPAL AFTER COMPLETION OF
OF DEBENTURES AMOUNT OF THIS OFFERING
SELLING SECURITYHOLDER(1) BENEFICIALLY OWNED DEBENTURES TO BE SOLD (PRINCIPAL AMOUNT AND
PRIOR TO THIS OFFERING IN THIS OFFERING % OF CLASS)(2)
- -----------------------------------------------------------------------------------------------------------------------------------

AON Pension Plan $ 500,000 $ 500,000 0
AON Savings Plan - Fund B 300,000 300,000 0
Brown Brothers Harriman & Co.(3) 2,478,000 2,478,000 0
Champion International Corporation Master
Retirement Trust 650,000 650,000 0
Corestates Bank, N.A.(3) 1,000,000 1,000,000 0
Delta Airlines Master Trust 1,600,000 1,600,000 0
Dow Chemical Company Employees
Retirement Plan 1,300,000 1,300,000 0
Franklin Income Fund 55,000,000 55,000,000 0
Franklin Income Securities Fund 5,500,000 5,500,000 0
Franklin Investors Securities Trust -
Convertible Securities Fund 4,000,000 4,000,000 0
Franklin Multi-Income Trust 500,000 500,000 0
Franklin Strategic Series -
Franklin Strategic Income Fund 750,000 750,000 0
Franklin Universal Trust 2,750,000 2,750,000 0
Key/SBSF Convertible Securities Fund 500,000 500,000 0
Lazard Freres & Co.(3) 2,140,000 2,140,000 0
Lehman Brothers, Inc.(3) 3,582,000 3,582,000 0
New York Life Insurance Company 10,000,000 10,000,000 0
Northwestern Mutual Life Insurance Company(4) 20,250,000 20,250,000 0
Port Authority of Allegheny County
Retirement and Disability Allowance Plan
for the Employees Represented by Local 85
of the Amalgamated Transit Union 850,000 850,000 0
RJR Nabisco Defined Benefit Master Trust 600,000 600,000 0
Societe Generale Securities Corp. 890,000 890,000 0
Soundshore Partners, L.P. 2,000,000 2,000,000 0
State Street Bank - Custodian(3) 440,000 440,000 0
UBS Securities, LLC 1,800,000 1,800,000 0
-----------

TOTAL: $119,380,000

___________________

(1) Unless otherwise indicated, the information contained in this table with
respect to each Selling Securityholder has been furnished to the Issuer
by such Selling Securityholder or its agent or representative.

(2) Calculations assume that all of the Offered Debentures will be sold.

(3) The information pertaining to the Selling Securityholder has been
furnished to the Issuer by The Depository Trust Company, New York, New
York ("DTC"). The Selling Securityholder may hold the Offered Securities
as nominee for one or more beneficial owners.

(4) Figures for The Northwestern Mutual Life Insurance Company include
$250,000 in principal amount of Debentures held in The Northwestern
Mutual Life Insurance Company Group Annuity Separate Account. In the
ordinary course of business, Northwestern Mutual Investment Services,
Inc., Robert W. Baird & Co. Incorporated, Baird/Mark Capital Group, and
MGIC Mortgage Securities Corporation, each of which is a broker-dealer
and affiliated with The Northwestern Mutual Life Insurance Company, may,
from time to time, have acquired or disposed of, or may in the future
acquire or dispose of, securities of The Macerich Company or its
affiliates, for such broker-dealers' own accounts or for the accounts of
others. Other affiliates of The Northwestern Mutual Life Insurance
Company may, in the ordinary course of business, effect transactions in
the securities of The Macerich Company or its affiliates. Only security
holdings of The Northwestern Mutual Life Insurance Company are reflected
in the above table.

The following table sets forth certain information with respect to the
ownership and sale of Common Stock by each of the Selling Securityholders for
whom the Issuer is registering the Offered Securities for resale to the public.

MAXIMUM NUMBER OF SHARES OF SHARES OF COMMON STOCK
BENEFICIAL OWNERSHIP COMMON STOCK BENEFICIALLY OWNED AFTER
OF SHARES OF COMMON STOCK TO BE SOLD IN COMPLETION OF THIS OFFERING
SELLING SECURITYHOLDERS(1) PRIOR TO THIS OFFERING(2) THIS OFFERING(2) (AMOUNT AND % OF CLASS)(3)
- -----------------------------------------------------------------------------------------------------------------------------------

AON Pension Plan $ 34,964 $ 16,064 18,900/*
AON Savings Plan - Fund B 14,638 9,638 5,000/*
Brown Brothers Harriman & Co.(4) 79,614 79,614 0
Champion International Corporation
Master Retirement Trust 20,883 20,883 0
Corestates Bank, N.A.(4) 32,128 32,128 0
Delta Airlines Master Trust 51,405 51,405 0
Dow Chemical Company Employees
Retirement Plan 41,767 41,767 0
Franklin Income Fund 1,767,068 1,767,068 0
Franklin Income Securities Fund 176,706 176,706 0
Franklin Investors Securities Trust -
Convertible Securities Fund 128,514 128,514 0
Franklin Multi-Income Trust 16,064 16,064 0
Franklin Strategic Series -
Franklin Strategic Income Fund 24,096 24,096 0
Franklin Universal Trust 88,353 88,353 0
Key/SBSF Convertible Securities Fund 16,064 16,064 0
Lazard Freres & Co.(4) 68,755 68,755 0
Lehman Brothers, Inc.(4) 115,084 115,084 0
New York Life Insurance Company 321,285 321,285 0
Northwestern Mutual Life Insurance Company(5) 1,635,802 650,602 985,200/3.57%
Port Authority of Allegheny County
Retirement and Disability Allowance Plan
for the Employees Represented by Local 85
of the Amalgamated Transit Union 27,309 27,309 0
RJR Nabisco Defined Benefit Master Trust 19,277 19,277 0
Societe Generale Securities Corp. 28,594 28,594 0
Soundshore Partners, L.P. 64,257 64,257 0
State Street Bank - Custodian(4) 14,136 14,136 0
UBS Securities, LLC 57,831 57,831 0

___________________
* Percentage does not exceed one percent of the Issuer's outstanding
Common Stock.

(2) Assumes conversion of the full amount of the Offered Debentures held by
such holder at the initial rate of $31.125 in principal amount of
Debentures per share of Common Stock. For purposes of the table, the
number of shares of Common Stock issuable upon conversion of the Offered
Debentures at such initial rate has been rounded down to the nearest whole
share, as fractional shares of Common Stock are not to be issued upon
conversion of the Debentures. The per share conversion price, and therefore
the number of shares of Common Stock issuable upon conversion of the
Debentures, are subject to adjustment under certain circumstances.
Accordingly, the number of shares of Common Stock offered hereby may
increase or decrease. See "Description of the Debentures--Conversion
Rights."

(3) Calculations assume that all of the Offered Shares will be sold by each
Selling Securityholder. Percentage of the Common Stock owned by each
Selling Securityholder is calculated assuming that all OP Units and
all Debentures held by the subject Selling Securityholder are redeemed or
converted, as the case may be, for shares of Common Stock and that none of
the OP Units or Debentures held by other persons are so redeemed or
converted, notwithstanding the percentage limitations under the Issuer's
Articles which limit the number of shares that may be acquired by such
Selling Securityholder. See "Description of Common Stock."

(4) The information pertaining to the Selling Securityholder has been
furnished to the Issuer by DTC. The Selling Securityholder may hold the
Offered Shares as nominee for one or more beneficial owners.

(5) Figures for The Northwestern Mutual Life Insurance Company include
shares of Common Stock issuable upon conversion of $250,000 in principal
amount of Debentures held in The Northwestern Mutual Life Insurance
Company Group Annuity Separate Account. The Northwestern Mutual Life
Insurance Company holds 985,200 OP Units which are convertible into
shares of Common Stock of the Issuer on a one-for-one basis. In the
ordinary course of business, Northwestern Mutual Investment Services,
Inc., Robert W. Baird & Co. Incorporated, Baird/Mark Capital Group, and
MGIC Mortgage Securities Corporation, each of which is a broker-dealer
and affiliated with The Northwestern Mutual Life Insurance Company, may,
from time to time, have acquired or disposed of, or may in the future
acquire or dispose of, securities of The Macerich Company or its
affiliates, for such broker-dealers' own accounts or for the accounts of
others. Other affiliates of The Northwestern Mutual Life Insurance
Company may, in the ordinary course of business, effect transactions in
the securities of The Macerich Company or its affiliates. Only security
holdings of The Northwestern Mutual Life Insurance Company are reflected
in the above table.

Lazard Freres & Co. is an affiliate of Lazard Capital Markets, which
acted as one of the managers with respect to the initial offering of the
Debentures.

Within the last three years, Lehman Brothers, Inc. or one of its
affiliates was an underwriter with respect to the Issuer's initial public
offering and secondary public offerings of Common Stock, was one of the
managers with respect to the initial offering of the Debentures and has
performed (and may continue to perform) other financial advisory and/or
investment banking services for the Company.

UBS Securities Inc. was one of the managers with respect to the initial
offering of the Debentures.

Within the past three years, The Northwestern Mutual Life Insurance
Company has been a co-owner (general partner or LLC member) with the
Operating Partnership of two regional shopping centers. The Northwestern
Mutual Life Insurance Company has also made mortgage loans to the Operating
Partnership and has contracted with an affiliate of the Operating Partnership
which is a management company to manage certain real estate properties. In
disclosing the foregoing information, The Northwestern Mutual Life Insurance
Company does not concede that such information necessarily constitutes
material relationships under Regulation S-K that must be disclosed in this
Prospectus.

PLAN OF DISTRIBUTION

The distribution of the Offered Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.

Sales of Offered Securities may be effected from time to time in one or
more transactions on such national securities exchanges on which the Debentures
or the Common Stock may be listed, or have unlisted trading privileges, or in
negotiated transactions, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at other negotiated prices.

In connection with the sale of Offered Securities, underwriters or agents
may receive compensation from the Selling Securityholders or from purchasers of
Offered Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell Offered 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 agents. The Selling
Securityholders and any underwriters, dealers or agents that participate in the
distribution of Offered Securities may be deemed to be "underwriters," and any
discounts or commissions received by them from the Selling Securityholders and
any profit on the resale of Offered Securities by them may be deemed to be
underwriting discounts and commissions, under the Securities Act. To the extent
the Selling Securityholders may be deemed to be underwriters, the Selling
Securityholders may be subject to certain statutory liabilities, including,
but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule
10b-5 under the Exchange Act.

To the extent not described herein and as otherwise required by law, the
specific amount of the Offered Debentures and Offered Shares being offered or
sold, the names of the Selling Securityholders, the respective purchase prices
and public offering prices, the names of any agent, dealer or underwriter, and
any applicable commissions or discounts with respect to a particular offer or
sale will be set forth in an accompanying Prospectus Supplement or, if
appropriate, a post-effective amendment to the Registration Statement of which
this Prospectus is a part.

Under agreements that may be entered into by the Selling Securityholders,
underwriters and agents who participate in the distribution of Offered
Securities may be entitled to indemnification by the Selling Securityholders
against certain liabilities, including liabilities under the Securities Act.
Pursuant to the Registration Rights Agreement entered into in connection with
the original offer and sale of the Debentures by the Issuer, each of the Issuer
and the Selling Securityholders will be indemnified by the other against certain
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.

In order to comply with the securities laws of certain states, if
applicable, the Offered Securities will be sold in such jurisdictions, if
required, only through registered or licensed brokers or dealers.

Certain of the underwriters or agents and their associates may engage in
transactions with and perform services for the Company or the Selling
Securityholders in the ordinary course of business.

The Issuer has agreed to bear substantially all expenses of registration of
the Offered Securities under federal and state securities laws, other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.

The Common Stock issuable upon conversion of the Offered Debentures has
been authorized for listing on the New York Stock Exchange upon official notice
of issuance. The Debentures are listed on the Luxembourg Stock Exchange.

DESCRIPTION OF THE DEBENTURES

The Debentures were issued under, and are entitled to the benefits of, an
Indenture (the "Indenture") dated as of June 27, 1997 between the Issuer and
Chase Manhattan Trustees Limited, as the trustee (in such capacity, the
"Trustee"). Effective December 19, 1997, Chase Manhattan Trustees Limited
resigned as Trustee, and The Chase Manhattan Bank was appointed by the Issuer
to serve as successor Trustee.

The following statements under this heading are summaries of the detailed
provisions of the Debentures and the Indenture, do not purport to be complete
and are qualified in their entirety by reference to the Debentures and the
Indenture, copies of which are filed as exhibits to the Issuer's Current Report
on Form 8-K, event date June 20, 1997, and incorporated herein by reference.

The Debentures and the Indenture do not limit the securities which may be
issued by the Issuer or any of the Company Subsidiaries, and do not contain
financial covenants or similar restrictions respecting the Issuer or the Company
Subsidiaries and, therefore, Holders do not have any protection (other than
their rights upon a Default or an Event of Default as described in "--Events of
Default" below) from adverse changes in the Company's financial condition.

As used herein, "United States" means the United States of America
(including the states and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction. The term "United
States Alien" means any person who, for United States federal income tax
purposes, is a foreign corporation, a nonresident alien individual, an estate or
trust the income of which is not subject to United States Federal income
taxation regardless of its source, a "foreign trust," as defined in Section
7701(a)(31) of the Code, or a foreign partnership one or more of the members of
which is, for United States Federal income tax purposes, any of the foregoing.

PRINCIPAL, MATURITY AND INTEREST

The Debentures were issued in the aggregate principal amount of $161.4
million and mature on December 15, 2002. $119,380,000 in aggregate principal
amount of Debentures were sold without registration under the Securities Act
in reliance on the exemption from registration provided by Rule 144A and
$42,020,000 in aggregate principal amount of Debentures were sold without
registration under the Securities Act in reliance on the exemption from
registration provided by Regulation S. The date on which the Debentures were
originally issued was June 27, 1997 (the "Issue Date"). The Debentures bear
interest from June 27, 1997, at a rate of 7-1/4% per annum, payable
semi-annually in arrears on June 15 and December 15 in each year (each an
"Interest Payment Date"), commencing on December 15, 1997. Interest on the
Debentures accrues from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of original issuance.
Interest is computed on the basis of a 360-day year comprised of twelve
30-day months. The interest payable on December 15, 1997, will amount to
$33.83 per $1,000 aggregate principal amount of the Debentures, and on each
June 15 and December 15 thereafter will amount to $36.25 per $1,000 aggregate
principal amount of the Debentures.

SUBORDINATION

The Debentures are subordinated in right of payment to the prior payment in
full of all existing and future Senior Indebtedness of the Issuer and all
existing and future Subsidiary Indebtedness of the Company Subsidiaries. The
Debentures do not limit the ability of the Issuer or the Company Subsidiaries to
incur additional Senior Indebtedness or Subsidiary Indebtedness, respectively.

"Senior Indebtedness" means the principal of, premium, if any, and unpaid
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Issuer whether or not a claim
for post-filing interest is allowed in such proceeding) on, and fees, charges,
expenses, reimbursement and indemnification obligations and all other amounts
payable under or with

respect to, (i) any indebtedness of the Issuer for money borrowed, including
indebtedness of the Operating Partnership for which the Issuer is liable as the
general partner of the Operating Partnership, whether or not evidenced by
debentures, notes or similar instruments, issued, incurred, or assumed by the
Issuer, including any guaranty of any indebtedness for money borrowed of any
other person, and whether outstanding on the date of this Prospectus or
hereafter created or incurred; (ii) indebtedness incurred, assumed or guaranteed
by the Issuer in connection with the acquisition by it or any of the Company
Subsidiaries of any other business, properties or assets; (iii) all indebtedness
and other obligations guaranteed by the Issuer, including indebtedness of the
Operating Partnership for which the Issuer is liable as the general partner of
the Operating Partnership, or the payment and performance of which is secured by
a lien on property or assets of the Issuer; (iv) any refunding, renewal,
extension or refinancing of any such indebtedness, obligation or liability
described in clauses (i) through (iii) above; PROVIDED HOWEVER, that "Senior
Indebtedness" does not include (x) any indebtedness, obligation or liability
referred to in clauses (i) through (iv) above as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such indebtedness, obligation or liability is subordinate to or
pari passu with the Debentures and (y) the Debentures.

"Subsidiary Indebtedness" means the principal of, premium, if any, and
unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the applicable Company
Subsidiary whether or not a claim for post-filing interest is allowed in such
proceeding) on, and fees, charges, expenses, reimbursement and indemnification
obligations and all other amounts payable under or with respect to, (i) any
indebtedness of any Company Subsidiary for money borrowed, whether or not
evidenced by debentures, notes or similar instruments, issued, incurred, or
assumed by any such Company Subsidiary, including any guaranty of any
indebtedness for money borrowed of any other person, and whether outstanding on
the date of this Prospectus or hereafter created or incurred; (ii) indebtedness
incurred, assumed or guaranteed by any Company Subsidiary in connection with the
acquisition by the Issuer or any Company Subsidiary of any other business,
properties or assets; (iii) all indebtedness and other obligations guaranteed by
any Company Subsidiary, or the payment and performance of which is secured by a
lien on property or assets of such Company Subsidiary; (iv) any refunding,
renewal, extension or refinancing of any such indebtedness, obligation or
liability described in clauses (i) through (iii) above; PROVIDED HOWEVER, that
"Subsidiary Indebtedness" does not include any indebtedness, obligation or
liability referred to in clauses (i) through (iv) above as to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness, obligation or liability is
subordinate to or pari passu with the Debentures.

Upon any distribution of assets of the Issuer or any Company Subsidiary in
any dissolution, winding-up, liquidation or reorganization of the Issuer or such
Company Subsidiary, as the case may be, payment of the principal of, premium, if
any, and interest on (including payments of Additional Amounts) the Debentures
will be subordinated, to the extent and in the manner set forth in the
Indenture, to the prior payment in full of all existing and future Senior
Indebtedness or Subsidiary Indebtedness, as the case may be. Such subordination
will not prevent the occurrence of an Event of Default (as defined below). See
"--Events of Default." In addition, by reason of the subordination of the
Debentures, in the event of

insolvency of the Issuer, Holders may recover less ratably than other general
creditors of the Issuer or the Company Subsidiaries.

The Debentures are obligations exclusively of the Issuer and not of the
Company Subsidiaries. Because the only material assets of the Issuer are its
interests in the Company Subsidiaries, the Issuer's cash flow and its consequent
ability to service debt, including the Debentures, are dependent upon the Funds
from Operations of the Company Subsidiaries and the distribution to the Issuer
of its share of those Funds from Operations.

The Debentures are effectively subordinated to all existing and future
indebtedness and other liabilities, including current liabilities and
commitments under leases, if any, of the Company Subsidiaries. Any right of the
Issuer to receive assets of any of the Company Subsidiaries upon liquidation or
reorganization of such Company Subsidiary (and the consequent right of the
Holders to participate in those assets) is effectively subordinated to the
claims of such Company Subsidiary's creditors, except to the extent that the
Issuer is itself recognized as a creditor of such Company Subsidiary, in which
case the claims of the Issuer would still be subject to any security interests
in the assets of such Company Subsidiary and subordinated to any indebtedness of
such Company Subsidiary senior to that held by the Issuer.

The Debentures are unsecured obligations and thus are effectively
subordinated to all existing and future secured indebtedness of the Issuer and
the Company Subsidiaries to the extent of the value of the assets securing such
indebtedness. Most of the outstanding indebtedness of the Issuer and the
Company Subsidiaries is secured indebtedness.

DELIVERY AND FORM OF DEBENTURES

DEBENTURES SOLD OUTSIDE THE UNITED STATES

Debentures sold to subscribers outside the United States (the "Regulation
S Debentures," which expression includes the Reg S Global Debentures) were
sold in offshore transactions pursuant to Regulation S promulgated under the
Securities Act and were represented initially by two temporary Global
Debentures, without interest coupons or conversion rights, which were
deposited with a common depositary in London for Cedel and Euroclear on the
Issue Date. One temporary Global Debenture was issued in bearer form (the
"Bearer Global Debenture") and one temporary Global Debenture was issued in
fully registered form (the "Registered Global Debenture" and together with
the Bearer Global Debenture, the "Reg S Global Debentures"). Upon the
issuance of the Reg S Global Debentures, each of Cedel and Euroclear
credited, on its respective book-entry registration and transfer system, the
respective principal amounts of the Debentures represented by the Reg S
Global Debentures to the accounts of institutions that have accounts with it
(as the case may be, "Euroclear Participants" or "Cedel Participants").
Ownership of beneficial interests in the Reg S Global Debentures is limited
to Euroclear and Cedel Participants or persons that may hold interests
through Euroclear or Cedel Participants. Ownership of beneficial interests
in the Reg S Global Debentures is shown on, and the transfer of those
beneficial interests is effected only through, records maintained by
Euroclear and Cedel (with respect to Euroclear and Cedel Participants'
beneficial interest) and such Euroclear and Cedel Participants (with respect
to the beneficial interests in the Reg S Global Debentures held through
Euroclear or Cedel Participants). Each person who owns a beneficial interest
in a Reg S Global Debenture relies on the procedures of Euroclear or Cedel
and, if such person was not a Euroclear or Cedel Participant, on the
procedures of the Euroclear or Cedel Participant through which such person
owns its interest, to exercise any rights of a holder of Debentures under the
Indenture or a Reg S Global Debenture.

Interests in the Bearer Global Debenture became exchangeable for
definitive Debentures in bearer form (the "Bearer Debentures") with coupons
attached, in denominations of $1,000, $10,000, $100,000 and $1,000,000, and
interests in the Registered Global Debenture became exchangeable for
definitive Debentures in registered form (the "Registered Debentures")
without coupons, in denominations of $1,000, $10,000 or integral multiples of
$10,000, in each case commencing on the date 40 days after the Issue Date
(the "Exchange Date"). Any such exchange for definitive Debentures will, in
the case of the Registered Global Debenture, be made only upon certification
in the form required by the Indenture that each beneficial owner of the
Debentures (x) upon such exchange will not beneficially own, directly or
constructively, more than 5% of the Issuer's outstanding Common Stock and (y)
is not a U.S. person (as defined in Regulation S under the Securities Act).
For purposes of calculations as to any particular investor with respect to
this limitation on beneficial ownership, the Issuer includes shares of Common
Stock issuable upon conversion of Registered Debentures beneficially owned by
that investor and excludes shares of Common Stock issuable upon conversion of
Debentures beneficially owned by other investors. See "Description of Common
Stock." Any exchange for definitive Debentures will, in the case of the
Bearer Global Debenture, be made only upon certification that each beneficial
owner of such Debenture is (i) a United States Alien (as defined above), (ii)
a person described in Section 1.163-5(c)(2)(i)(D)(6) of the United States
Treasury Regulations (the "Treasury Regulations") or (iii) a financial
institution that has purchased such Bearer Debentures for purposes of resale
during the restricted period (as defined in Section 1.163-5(c)(2)(i)(D)(7) of
the Treasury Regulations), and such financial institution certifies in
addition that it has not acquired such Bearer Debentures for purposes of
resale directly or indirectly to a United States Person (as defined in
"United States Federal Income Taxation Considerations--United States Taxation
of Foreign Holders of Debentures") or within the United States as described
in Section 1.163-5 of the Treasury Regulations. A financial institution,
whether or not described in (i) or (ii) above, that acquires such Bearer
Debentures for purposes of resale during the restricted period (which does
not end until the Exchange Date) must give the certification described in
(iii) above. A beneficial owner must exchange its beneficial interests in
the Reg S Global Debentures for definitive Debentures before interest
payments or other payments will be made or conversion rights may be exercised.

The Bearer Global Debenture and each Bearer Debenture and coupon carries
the following legend: "Any United States Person who holds this obligation will
be subject to limitations under the United States income tax laws, including the
limitations provided in Sections 165(j) and 1287(a) of the United States
Internal Revenue Code." The sections referred to in that legend provide that a
United States taxpayer who holds interests in the Bearer Global Debenture or a
Bearer Debenture or coupon, with certain exceptions, will not be entitled to
deduct any loss on such Bearer Global Debenture or Bearer Debenture or coupon
and will not be entitled to any capital gains treatment that might otherwise be
applicable to any gain on any sale, exchange, redemption, repurchase or other
disposition of such Bearer Global Debenture or a Bearer Debenture or coupon but
will be taxed thereon at ordinary income rates instead.

DEBENTURES SOLD IN THE UNITED STATES

Debentures sold to subscribers in the United States (the "Restricted
Debentures," which expression shall include the Restricted Registered Debentures
and the Restricted Global Debentures) were sold only to "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act) ("QIBs") in
transactions exempt from registration under the Securities Act and were
represented initially by the Restricted Global Debentures registered in the name
of Cede & Co. as nominee of DTC.

Upon the issuance of the Restricted Global Debentures, DTC credited, on its
book-entry registration and transfer system, the respective principal amounts of
the Debentures represented by the

Restricted Global Debentures to the accounts of institutions that have accounts
with it or its nominee ("DTC Participants"). Ownership of beneficial interests
in the Restricted Global Debentures is limited to DTC Participants or persons
that may hold interests through DTC Participants. Ownership of beneficial
interests in the Restricted Global Debentures is shown on, and the transfer of
those beneficial interests is effected only through, records maintained by DTC
(with respect to DTC Participants' beneficial interests) and such DTC
Participants (with respect to beneficial interests in the Restricted Global
Debentures held through DTC Participants). Each person owning a beneficial
interest in a Restricted Global Debenture must rely on the procedures of DTC
and, if such person is not a DTC Participant, on the procedures of the DTC
Participant through which such person owns its beneficial interest, to exercise
any rights of a Holder of Debentures under the Indenture or a Restricted Global
Debenture.

If (i) the Issuer notifies the Trustee in writing that DTC is no longer
willing or able to act as a depository or DTC ceases to be registered as a
clearing agency under the Exchange Act and the Issuer is unable to locate a
qualified successor within 90 days, (ii) the Issuer, at its option, notifies the
Trustee in writing that it elects to cause the issuance of definitive Registered
Debentures which bear the legend referred to under "--Private Placement of
Debentures in the United States" (the "Restricted Registered Debentures") or
(iii) upon the occurrence of certain other events, then, upon surrender by DTC
of the Restricted Global Debenture, Restricted Registered Debentures will be
issued to each person that DTC identifies as the beneficial owner of the
Debentures represented by the Restricted Global Debenture. Upon any such
issuance, the Trustee is required to register such Restricted Registered
Debentures in the name of such person or persons (or the nominee of any
thereof), and cause the same to be delivered thereto.

Neither the Issuer nor the Trustee shall be liable for any delay by DTC or
any DTC Participant or in identifying the beneficial owners of the related
Debentures and each such person may conclusively rely on, and shall be protected
in relying on, instructions from DTC for all purposes (including with respect to
the registration and delivery, and the respective principal amounts, of the
Restricted Registered Debentures to be issued).

Any reference herein to Euroclear, Cedel or DTC shall, whenever the context
so permits, be deemed to include a reference to any additional or alternative
clearance system approved by the Trustee and (in the case of Euroclear and
Cedel) the Luxembourg Stock Exchange.

EXCHANGE AND TRANSFER

At the option of the Holder, and subject to the terms of the Debentures and
of the Indenture, Bearer Debentures (provided that all unmatured related coupons
are attached) are only exchangeable for an equal aggregate principal amount of
Registered Debentures which are Regulation S Debentures in authorized
denominations and integral multiples thereof without coupons or Bearer
Debentures of authorized denominations without service charge (other than the
cost of delivery) but upon payment of any taxes and other governmental charges
as provided in the Indenture. None of the Registered Debentures, the beneficial
interests in a Registered Global Debenture or the beneficial interests in a
Restricted Global Debenture are exchangeable for Bearer Debentures. Registered
Debentures are registered as provided in the Indenture. Title to Bearer
Debentures passes by delivery. The registered Holder of a Registered Debenture,
a Registered Global Debenture and a Restricted Global Debenture are treated by
the Issuer, the Trustee and their respective agents for all purposes as the
owner of such Registered Debenture.

Resales or other transfers of beneficial interests in a Restricted Global
Debenture held through DTC to purchasers of beneficial interests in a Restricted
Global Debenture through DTC are conducted in accordance with DTC rules and
procedures applicable to United States corporate debt obligations and settle in
next-day funds. Subject to compliance with the provisions of the Indenture,
QIBs holding a beneficial interest in a Restricted Global Debenture through DTC
may transfer such beneficial interest to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or in
an offshore transaction in accordance with Regulation S under the Securities
Act. Upon such transfer the Registrar or Transfer Agent shall reflect on its
books a decrease in the principal amount of the Restricted Global Debenture in
an amount equal to the beneficial interest so transferred and the Issuer shall
(x) in the case of a transfer to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act), deliver
Restricted Registered Debentures and (y) in the case of an offshore transaction
in accordance with Regulation S under the Securities Act after the Exchange
Date, deliver Registered Debentures which are Regulation S Debentures. In the
case of a transfer after the Exchange Date of a beneficial interest in a
Restricted Global Debenture to a purchaser in an offshore transaction in
accordance with Regulation S under the Securities Act, such transfer shall be
conducted in accordance with the procedures described below. Subject to
compliance with the provisions of the Indenture, Registered Debentures
transferred to QIBs pursuant to Rule 144A are eligible to be held by such QIBs
through DTC as a beneficial interest in the Restricted Global Debenture. Upon
such transfer, the Registrar or Transfer Agent shall reflect on its books an
increase in the principal amount of the Restricted Global Debenture in an amount
equal to the Registered Debentures so transferred and the Trustee shall cancel
such Registered Debentures.

Resales or other transfers of beneficial interests in a Bearer Global
Debenture or a Registered Global Debenture held through Euroclear or Cedel to
purchasers of beneficial interests in such Bearer Global Debenture or such
Registered Global Debenture, respectively, are conducted in accordance with the
rules and procedures of Euroclear and Cedel and are settled using the procedures
applicable to conventional eurobonds.

Subject to compliance with the provisions of the Indenture, a beneficial
interest in the Bearer Global Debenture held through Euroclear or Cedel may be
transferred to a purchaser which wants to hold such beneficial interest as a
beneficial interest in the Registered Global Debenture through an account of a
Cedel or Euroclear Participant. Upon such transfer the Registrar or Transfer
Agent shall reflect on its books (x) a decrease in the principal amount of the
Bearer Global Debenture in an amount equal to the beneficial interest so
transferred and (y) an increase in the principal amount of the Registered Global
Debenture in a corresponding amount. A beneficial interest in the Registered
Global Debenture held through Euroclear and Cedel may not be transferred to a
purchaser which wants to hold such beneficial interest as a beneficial interest
in the Bearer Global Debenture through an account of a Cedel or Euroclear
Participant.

Subject to compliance with the provisions of the Indenture, a beneficial
interest in the Restricted Global Debenture held through DTC may be transferred
to a purchaser which wants to hold such beneficial interest as a beneficial
interest in the Registered Global Debenture through an account of a Cedel or
Euroclear Participant. Upon such transfer the Registrar or Transfer Agent shall
reflect on its books (x) a decrease in the principal amount of the Restricted
Global Debenture in an amount equal to the beneficial interest so transferred
and (y) an increase in the principal amount of the Registered Global Debenture
in a corresponding amount. A beneficial interest in the Restricted Global
Debenture held through DTC may not be transferred to a purchaser which wants to
hold such beneficial interest as a beneficial interest in the Bearer Global
Debenture through an account of a Cedel or Euroclear Participant.

Subject to compliance with the provisions of the Indenture, a beneficial
interest in the Registered Global Debenture held through Euroclear or Cedel may
be transferred to a purchaser which wants to hold such beneficial interest as a
beneficial interest in the Restricted Global Debenture through an account of a
DTC Participant. Upon such transfer the Registrar or Transfer Agent shall
reflect on its books (x) a decrease in the principal amount of the Registered
Global Debenture in an amount equal to the beneficial interest so transferred
and (y) an increase in the principal amount of the Restricted Global Debenture
in a corresponding amount. A beneficial interest in the Bearer Global Debenture
may not be transferred to a purchaser which wants to hold such beneficial
interest as a beneficial interest in the Restricted Global Debenture through an
account of a DTC Participant. Neither a beneficial interest in a Registered
Global Debenture nor a beneficial interest in a Bearer Global Debenture may be
transferred to a purchaser which wants to hold such interest in the form of a
Restricted Registered Debenture.

Subject to compliance with the provisions of the Indenture, prior to the
Exchange Date a holder of Restricted Registered Debentures may transfer such
Debentures to a purchaser which wants to hold such Debentures as a beneficial
interest in the Registered Global Debenture through an account of a Cedel or
Euroclear Participant. Upon such transfer the Registrar or Transfer Agent shall
reflect on its books an increase in the principal amount of the Registered
Global Debenture in an amount equal to the Restricted Registered Debentures so
transferred and the Trustee shall cancel such Restricted Registered Debentures.
A holder of Restricted Registered Debentures may not transfer such Debentures to
a purchaser which wants to hold such Debentures as a beneficial interest in the
Bearer Global Debenture through an account of a Cedel or Euroclear Participant.

Subject to compliance with the provision of the Indenture, after the
Exchange Date upon a transfer of Restricted Registered Debentures in an offshore
transaction in accordance with Regulation S under the Securities Act, the
Trustee shall cancel such Restricted Registered Debentures so transferred and
the Issuer shall deliver Registered Debentures which are Regulation S Debentures
in a corresponding amount. A purchaser in such transfer may not receive a
Bearer Debenture.

The transfers described above will be conducted in accordance with the
rules of DTC, Euroclear or Cedel, as applicable.

Debentures may be presented for exchange, and Registered Debentures may be
presented for transfer (with the form of transfer endorsed thereon duly
executed), at the offices of any Transfer Agent or at the office of the
Registrar, without service charge but upon payment of any taxes and other
governmental charges as provided in the Indenture. Any registration of transfer
or exchange will be effected upon the Transfer Agent or the Registrar, as the
case may be, being satisfied with the documents of title and identity of the
person making the request and, with respect to Registered Debentures, upon
registration of such transfer in the Debenture Register, and subject to such
reasonable regulations as the Issuer may from time to time agree upon with the
Transfer Agents and the Registrar, all as described in the Indenture.
Registered Debentures which are Regulation S Debentures may be transferred in
whole or in part in the amount of $1,000, $10,000 or an integral multiple of
$10,000, and the Restricted Registered Debentures may be transferred in whole or
in part in the amount of $250,000 or integral multiples of $1,000 in excess
thereof. In the case of a partial transfer of Debentures, new Debentures may be
obtained from the Transfer Agents as described in the Indenture.

The Issuer will not be required (i) to exchange Bearer Debentures for
Registered Debentures which are Regulation S Debentures during the period
between the close of business on each June 1 or December 1 (each, an "Interest
Record Date") and the opening of business on the next succeeding Interest
Payment Date; (ii) to exchange Bearer Debentures for Registered Debentures which
are Regulation S

Debentures if, as a result, the Issuer would incur adverse consequences under
United States federal income tax law at the time of exchange; or (iii) in the
event of a redemption in part, (a) to register the transfer of Registered
Debentures or to exchange Bearer Debentures for Registered Debentures which are
Regulation S Debentures for a period of 15 days immediately preceding the date
notice is given identifying the serial numbers of the Debentures called for such
redemption; (b) to register the transfer of or exchange of any such Registered
Debenture, or portion thereof, called for redemption; or (c) to exchange any
Bearer Debenture called for redemption; PROVIDED, HOWEVER, that a Bearer
Debenture called for redemption may be exchanged for a Registered Debenture
which is a Regulation S Debenture that is simultaneously surrendered, with
written instruction for payment on the date fixed for redemption, unless the
redemption date is after an Interest Record Date and on or before the next
Interest Payment Date, in which case such exchange may only be made prior to the
Interest Record Date immediately preceding the redemption date.

The Indenture provides that, for purposes of application of the 5%
ownership limit on Common Stock (see "Description of Common Stock"), ownership
of the Registered Debentures will be treated as ownership of the Common Stock
into which such Debentures are convertible. As a result, the Indenture provides
that the Issuer and the Registrar and any Transfer Agent may refuse to exchange
or register the transfer of any Registered Debenture if such transfer (a) would,
or in the determination of the Board of Directors might, result in a single
person beneficially owning (or upon conversion of any Debentures thereupon
owning), directly or constructively, more than 5% of the Issuer's outstanding
Common Stock (including Common Stock issuable upon conversion of Debentures held
by that person, but not Common Stock issuable upon conversion of Debentures held
by others) or (b) would cause the Issuer to fail to meet any requirement
necessary for the continued qualification of the Issuer as a REIT under the
Code. Moreover, if the exchange or transfer of any Debenture would cause either
of the consequences described in the preceding sentence, then such exchange or
transfer will be null and void AB INITIO as to both the transferor and the
intended transferee, and the intended transferee will acquire no rights or
economic interests in the Debentures. Each Debenture will bear a legend setting
forth the foregoing restrictions.

The Issuer initially appointed The Chase Manhattan Bank, New York, New York
as Registrar and The Chase Manhattan Bank, New York, New York, London, England
and Luxembourg as Transfer Agents. The Issuer reserves the right to vary or
terminate the appointment of the Registrar or of any Transfer Agent or to
appoint additional or other Registrars or Transfer Agents or to approve any
change in the office through which any Registrar or any Transfer Agent acts,
PROVIDED that, until the Debentures have been delivered to the Trustee for
cancellation or monies sufficient to pay the principal of, premium, if any, and
interest on the Debentures have been made available for such payment and either
paid or returned to the Issuer as provided in the Indenture, there will at all
times be a Registrar and Transfer Agent in New York City and a Transfer Agent in
a Western European city, and PROVIDED, FURTHER, that so long as the Debentures
are listed by the Issuer on the Luxembourg Stock Exchange and the rules of such
Exchange shall so require, the Issuer will maintain a Transfer Agent in
Luxembourg. Notice of any such termination or appointment and of any change in
the office through which the Registrar or any Transfer Agent will act will be
given in accordance with "--Notices" below.

Notwithstanding any statement herein, the Issuer reserves the right to
impose or remove transfer, certification, substitution or other requirements,
and to require such restrictive legends on Debentures and the Shares, as it may
determine are necessary to ensure compliance with the securities laws of the
United States and the states therein and any other applicable laws or as may be
required by any stock exchange on which the Debentures or the Shares are listed.

CONVERSION RIGHTS

The Debentures are, subject to the terms of the Debentures and of the
Indenture, convertible into Shares, initially at the conversion price of $31.125
per Share (the "Conversion Price") (equivalent to approximately 32.13 Shares for
each $1,000 principal amount of Debentures), at any time prior to redemption or
repurchase upon the happening of a Designated Event or maturity. The right to
convert Debentures called for redemption will terminate at the close of business
on the date prior to the date fixed for redemption, and will be lost if not
exercised prior to that time, even if such redemption occurs at a time when
conversion of the Debentures is in the best interests of the Holders. The right
to convert Debentures submitted pursuant to the exercise by a Holder of its
Repurchase Right will terminate at the close of business on the date prior to
the date fixed for repurchase.

The Indenture provides that a Holder may not convert any Debenture, and
such Debenture shall not be convertible by any Holder, if as a result of such
conversion any person would then be deemed to beneficially own, directly or
constructively, more than 5% of the Issuer's outstanding Common Stock. Any
attempted conversion in violation of the limitation set forth in the preceding
sentence will be null and void AB INITIO as to the Holder, and the Holder will
acquire no rights or economic interests in the Common Stock. Instead, Shares
that such Holder would have received will automatically be exchanged for Excess
Shares (see "Description of Common Stock--Issuance of Excess Shares"). For
purposes of calculations as to any particular investor with respect to this
limitation on beneficial ownership, the Issuer will include shares of Common
Stock issuable upon conversion of Debentures held by that Holder and exclude
shares of Common Stock issuable upon conversion of Debentures held by other
Holders. Each Debenture bears a legend setting forth the above limitation.
Subject to the above limitation, the right of conversion attaching to any
Debenture may be exercised by the Holder by delivering the Debenture at the
office of any of the Conversion Agents in New York, New York, London, England or
Luxembourg, accompanied by a duly signed and completed notice of conversion in
which the Holder is required to state that, upon such conversion, such Holder
will not beneficially own, directly or constructively, more than 5% of the
outstanding Common Stock. A notice of conversion may be obtained from the
offices of any of the Conversion Agents. The conversion date shall be the date
on which the Debenture and the duly signed and completed notice of conversion
shall have been so delivered. Each Bearer Debenture delivered for conversion
must be delivered with all unmatured related coupons. A Holder delivering a
Debenture for conversion will not be required to pay any taxes or duties payable
in respect of the issue or delivery of Common Stock on conversion, but will be
required to pay any tax or duty which may be payable in respect of any transfer
involved in the issue or delivery of the Common Stock in a name other than that
of the Holder. Certificates representing shares of Common Stock will not be
issued or delivered unless all taxes and duties, if any, payable by the Holder
have been paid. Such certificates will be delivered to the address specified by
the Holder in his completed notice of conversion as soon as practicable after
all conditions to conversion have been satisfied.

The Conversion Price is subject to adjustment in certain events, including
(a) dividends (and other distributions) payable in Common Stock or any class of
capital stock of the Issuer or subdivisions, reclassifications or combinations
of Common Stock, (b) the issuance to all holders of Common Stock of rights,
warrants or options entitling them to subscribe for or purchase Common Stock or
securities convertible into Common Stock at less than the then-current market
price (as determined in accordance with the Debentures and the provisions of the
Indenture), unless Holders of Debentures are entitled to receive the same upon
conversion, (c) the issuance of Common Stock, or securities convertible into
Common Stock, to any person at less than the then-current market price (as
determined in accordance with the Debentures and the provisions of the
Indenture), except with respect to below-market issuances in connection with
employee or director benefit or incentive plans, (d) the issuance by the
Operating

Partnership of OP Units or other equity interests in the Operating Partnership
(collectively "OP Interests"), or securities convertible into OP Interests or
Common Stock, to any person at less than the then-current market price (as
determined in accordance with the Debentures and the provisions of the
Indenture), except with respect to below-market issuances to the Issuer, or
below-market issuances in connection with employee or director benefit or
incentive plans and (e) distributions to all holders of Common Stock of
evidences of indebtedness of the Issuer or assets (including securities, but
excluding those rights, warrants, dividends and distributions referred to above,
and excluding dividends and distributions paid in cash). With respect to
clauses (c) and (d) above, the Indenture provides that issuances of Common Stock
or OP Interests (or securities convertible into Common Stock or OP Interests) at
a price not less than 90% of the then-current market price (as determined in
accordance with the Debentures and the provisions of the Indenture) in
connection with the acquisition of real property by the Company will be deemed
to be an issuance of such Common Stock or OP Interests at the then-current
market price. In addition, the Indenture provides that if Common Stock or OP
Interests (or securities convertible into Common Stock or OP Interests) are to
be issued on a deferred basis in connection with the acquisition of real
property by the Company, the then-current market price of such Common Stock or
OP Interests shall be determined in good faith by the Board of Directors.

In addition to the foregoing adjustments, the Issuer is permitted to make
such downward adjustments in the Conversion Price as it considers to be
advisable in order that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
holders of the Common Stock. Adjustments in the Conversion Price of less than
$0.25 will not be required, but any adjustment that would otherwise be required
to be made will be taken into account in the computation of any subsequent
adjustment. Fractional shares of Common Stock are not to be issued or delivered
upon conversion, but, in lieu thereof, a cash adjustment will be paid based upon
the then-current market price of Common Stock. Registered Debentures
surrendered for conversion after the close of business on an Interest Record
Date for payment of interest and before the close of business on the next
succeeding Interest Payment Date must be accompanied by payment of an amount
equal to the interest thereon that is to be paid on such Interest Payment Date.
Subject to the foregoing, no payments or adjustments will be made upon
conversion on account of accrued interest on the Debentures or for any dividends
or distributions on any shares of Common Stock delivered upon such conversion.
Notice of any adjustment of the Conversion Price will be given in the manner set
forth herein under "--Notices."

If at any time the Issuer makes a distribution of property to its
stockholders that would be taxable to such stockholders as a dividend for United
States federal income tax purposes (e.g, distribution of evidences of
indebtedness or assets of the Issuer, but generally not stock dividends or
rights to subscribe for Common Stock) and, pursuant to the antidilution
provisions of the Debentures, the Conversion Price of the Debentures is reduced,
such reduction may be deemed to be the payment of a taxable dividend to the
Holders. Such a deemed dividend might be subject to a 30% or then-applicable
United States withholding tax unless the Holder is entitled to a reduction of
the tax under a tax treaty.

In the event that the Issuer should merge with another entity, become a
party to a consolidation, transfer all or substantially all its assets to
another entity or reclassify or change its outstanding Common Stock, each
Debenture then outstanding would, without the consent of any Holder, become
convertible only into the kind and amount of securities, cash and other property
receivable upon the merger, consolidation or transfer by a holder of the number
of shares of Common Stock into which such Debenture might have been converted
immediately prior to such transaction.

REDEMPTION

Unless previously redeemed, converted or purchased and canceled by the
Issuer, the Debentures will mature on December 15, 2002, and shall be redeemed
at 100% of their principal amount. All Debentures redeemed by the Issuer prior
to the maturity thereof will be canceled.

OPTIONAL REDEMPTION

The Debentures may be redeemed in whole or in part (in any integral
multiple of $10,000), at the option of the Issuer, at any time on or after
June 15, 2002, upon notice given in accordance with "--Notices" below. In case
of any such redemption, the redemption price will be 100% of the principal
amount of the Debentures, plus accrued and unpaid interest to the date fixed for
redemption (subject to the right of Holders of record on the relevant Interest
Record Date to receive interest due on an Interest Payment Date). In the case
of a redemption of the Debentures in part, selection of the Debentures for
redemption will be made by the Trustee, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.

TAX REDEMPTION

The Debentures may be redeemed at any time if the Issuer shall determine
that: (i) as a result of any change in, or amendment to, the laws or any
regulations or rulings of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or any amendment to, or
change in, an official application or interpretation of such laws, regulations
or rulings, which amendment or change is announced or becomes effective on or
after the date of this Prospectus, the Issuer has or will become obligated to
pay Additional Amounts on the Debentures, as described below under "--Payment of
Additional Amounts," and such obligation cannot be avoided by the Issuer taking
reasonable measures available to it; PROVIDED that no such notice of redemption
shall be given earlier than 90 nor less than 30 days prior to the earliest date
on which the Issuer would be obligated to pay such Additional Amounts were a
payment in respect of the Debentures then due; PROVIDED FURTHER, that at the
time such notice is given, (i) such obligation to pay such Additional Amounts
remains in effect or (ii) such redemption is necessary to preserve the Issuer's
status as a REIT under the Code. If either such determination is made, the
Debentures may (x) in the case of (i) above, be redeemed in whole but not in
part and (y) in the case of (ii) above, be redeemed in whole or from time to
time in part (in any integral multiple of $10,000). In case of any such
redemption, the redemption price will be 100% of the principal amount of the
Debentures, plus accrued and unpaid interest to the date fixed for redemption.
In the case of a redemption of the Debentures in part, selection of the
Debentures for redemption will be made by the Trustee, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate. The
Issuer is required to deliver to the Trustee a certificate stating that the
Company is entitled to effect such redemption and that the conditions precedent
to the right of the Issuer to redeem the Debentures have occurred and an opinion
of counsel stating that the legal conditions precedent to the right of the
Issuer to effect such redemption have occurred.

MANDATORY REDEMPTION

Except as set forth in the next succeeding paragraph, the Issuer shall
redeem the Bearer Debentures as a whole but not in part at 100% of the principal
amount thereof, together with accrued and unpaid interest to the date fixed for
redemption, less applicable withholding taxes, if any, plus any applicable
Additional Amounts payable, in the event the Issuer determines that payment of
principal, premium, if any, or interest on Bearer Debentures or related coupons
outside the United States by the

Issuer or any Paying Agent would, under any present or future laws or
regulations of the United States, be subject to any certification,
identification or information reporting requirement with regard to the
nationality, residence or identity of the beneficial owner of such Bearer
Debenture or coupon who is a United States Alien (other than such a requirement
(a) that would not be applicable to a payment made by the Issuer or any one of
its Paying Agents (i) directly to the beneficial owner or (ii) to any custodian,
nominee or other agent of the beneficial owner, or (b) that can be satisfied by
the custodian, nominee or other agent of the beneficial owner certifying that
the beneficial owner is a United States Alien, PROVIDED that in each case
referred to in clauses (a) (ii) and (b), payment to such custodian, nominee or
other agent of such beneficial owner is not otherwise subject to any such
requirement). The Issuer shall make such determination on the basis of a
written opinion of counsel and will notify the Trustee thereof as soon as
practicable, stating in the notice the effective date of such requirement and
the dates within which the redemption shall occur, and the Trustee shall give
prompt notice thereof to the Holders in accordance with "--Notices" below. Such
redemption of the Debentures must take place on a date determined by the Issuer
upon at least 75 days' notice to the Trustee, not later than one year after the
publication of the initial notice of the Issuer's determination of such
requirement. Notwithstanding the foregoing, the Issuer shall not so redeem the
Bearer Debentures if the Issuer, based on a written opinion of counsel,
determines, not less than 30 days prior to the date fixed for redemption, that
no such payment would be subject to any such requirement, in which case the
Issuer shall notify the Trustee, which shall give prompt notice of that
determination in accordance with "--Notices" below, and any earlier redemption
notice shall thereupon be revoked and of no further effect.

Notwithstanding the preceding paragraph, if and so long as the
certification, identification or information reporting requirement referred to
in the preceding paragraph would be fully satisfied by payment of United States
withholding, backup withholding or similar taxes, the Issuer may elect, prior to
publication of the notice of redemption and in lieu of redemption of the Bearer
Debentures, to pay as Additional Amounts (regardless of item (d) under
"--Payment of Additional Amounts") such amounts as are necessary in order that
every net payment made outside the United States by the Issuer or a Paying Agent
of the principal of, premium, if any, and interest on a Bearer Debenture or
related coupon to a Holder who is a United States Alien (without regard to such
certification, identification or information reporting requirement), after
deduction for United States withholding, backup withholding or similar taxes
(other than a tax (a) that would not be applicable in the circumstances referred
to in the parenthetical clause of the first sentence of the preceding paragraph
or (b) imposed as a result of the presentation of such Bearer Debenture or
coupon for payment more than 10 days after the date on which such payment
becomes due and payable or on which payment thereof is duly provided for,
whichever occurs later), will not be less than the amount provided in the
Debenture or the related coupon to be then due and payable. If the Issuer
elects to pay such Additional Amounts, and as long as it is obligated to pay
such Additional Amounts, the Issuer may subsequently redeem the Bearer
Debentures, at any time, in whole but not in part, at 100% of their principal
amount, plus accrued and unpaid interest to the date fixed for redemption.

Except as set forth in the two preceding paragraphs, the Issuer is not
required to make mandatory redemption or sinking fund payments with respect to
the Debentures.

NOTICES OF REDEMPTION

Notice of intention to redeem Debentures will be given as described under
"--Notices" below. In the case of redemption of all Debentures, notice will be
given not more than 60 nor less than 30 days prior to the date fixed for
redemption.

Notices of redemption will specify the date fixed for redemption, the
applicable redemption price, the date the conversion privilege expires and, in
the case of a partial redemption, the aggregate principal amount of Debentures
to be redeemed, the aggregate principal amount of the Debentures which will be
outstanding after such partial redemption, the last date on which exchanges or
transfers of Debentures may be made pursuant to the provisions of "--Exchange
and Transfer" above and the serial numbers of the Debentures and the portions
thereof called for redemption.

In addition, the Issuer may at any time and from time to time repurchase
the Debentures in the open market or in private transactions at prices it
considers attractive. Debentures repurchased by the Issuer will be canceled.

REPURCHASE RIGHTS

Upon any Designated Event (as defined below) with respect to the Issuer,
each Holder will have the right (the "Repurchase Right"), at such Holder's
option, to require the Issuer to repurchase all of such Holder's Debentures on
the date (the "Repurchase Date") that is 45 days after the date of the Company
Notice at a price equal to 100% of the principal amount of the Debentures, plus
accrued and unpaid interest, if any, to the Repurchase Date; PROVIDED, HOWEVER,
that installments of interest due on an Interest Payment Date occurring on or
prior to the Repurchase Date shall be payable to the registered Holders of the
applicable Debentures on the relevant Interest Record Date.

Within 30 days after the occurrence of a Designated Event, the Issuer is
obligated to give notice (the "Company Notice") as provided in the Indenture of
the occurrence of such Designated Event and the Repurchase Right arising as a
result thereof. To exercise the Repurchase Right, a Holder must deliver, on or
before the 30th day after the date of the Company Notice, irrevocable written
notice to the Issuer (or an agent designated by the Issuer for such purpose),
the Trustee and any Paying Agent, including such agent in Luxembourg, of such
Holder's exercise of such right, together with the Debentures with respect to
which the right is being exercised, duly endorsed for transfer. The submission
of a Debenture pursuant to the exercise of a Repurchase Right will be
irrevocable on the part of the Holder (unless the Issuer fails to repurchase the
Debenture on the Repurchase Date) and the right to convert such Debenture will
expire upon such submission.

The Issuer will comply with the requirements of Rules 13e-4 and 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Debentures in connection with a Designated Event.

On the Repurchase Date, the Issuer will, to the extent lawful, (i) accept
for payment Debentures or portions thereof, or coupons tendered, (ii) deposit
with the Paying Agents an amount equal to the purchase price in respect of all
Debentures or portions thereof so tendered plus accrued and unpaid interest
thereon payable on such Repurchase Date and (iii) deliver or cause to be
delivered to the Trustee the Debentures so accepted, together with an officers'
certificate stating the Debentures or portions thereof tendered to the Issuer.
The Paying Agents shall, in accordance with the procedures set forth in
"--Payments, Paying Agents and Conversion Agents," promptly pay to each Holder
so accepted, payment in an amount equal to the purchase price for such
Debentures plus accrued and unpaid interest thereon payable on such Repurchase
Date. The Issuer will publicly announce the results of the offer to repurchase
on or as soon as practicable after the Repurchase Date. There can be no
assurance that the Issuer will have the financial resources necessary to
repurchase the Debentures in such circumstances.

"Designated Event" means a Change of Control or a Termination of Trading.

A "Change of Control" will be deemed to have occurred when: (i) any
"person" or "group" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"Beneficial Owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
including all shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock (on a
fully diluted basis, including for such purpose the impact of the redemption of
OP Units held by such Person for shares of Common Stock but excluding the impact
of the redemption of OP Units held by any other Person for shares of Common
Stock) of the Issuer; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Issuer was
approved by a vote of a majority of the directors of the Issuer then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors then in office;
(iii) the merger or consolidation of the Issuer or the Operating Partnership, as
the case may be, with or into another person or the merger of another Person
with or into the Issuer or the Operating Partnership, as the case may be, or the
sale of all or substantially all the assets of the Issuer and the Company
Subsidiaries taken as a whole to another Person (in each case, other than a
person that is wholly-owned by the Issuer or the Permitted Holders), and, in the
case of any such merger, consolidation or sale, the securities of the Issuer
that are outstanding immediately prior to such transaction and which represent
100% of the aggregate voting power of the Voting Stock of the Issuer are changed
into or exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in addition to
any other consideration, securities of the surviving corporation that represent,
immediately after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving Person or (iv) the Issuer shall for
any reason cease to be the sole general partner of the Operating Partnership.

"Permitted Holders" means the Principals or any of their affiliates or
family members.

A "Termination of Trading" shall have occurred if the Common Stock (or
other common stock into which the Debentures are then convertible) is neither
listed for trading on a United States national securities exchange nor approved
for trading on an established automated over-the-counter trading market in the
United States for a period of 30 consecutive days.

"Voting Stock" of a Person means all classes of capital stock or other
interests (including partnership interests) of such person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.

Except as described above with respect to a Designated Event, the Indenture
does not contain any other provisions that permit the Holders to require that
the Issuer repurchase or redeem the Debentures in the event of a takeover,
recapitalization or similar restructuring.

The Designated Event purchase feature of the Debentures, insofar as it
pertains to a Change of Control, may in certain circumstances make more
difficult or discourage a takeover of the Issuer, and, thus, the removal of
incumbent management. Such purchase feature, however, is not the result of
management's knowledge of any specific effort to accumulate the Issuer's stock
or to obtain control of the Issuer by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by management to adopt a series of
anti-takeover provisions. Instead, such purchase feature is a result of
negotiations between the Issuer and the Managers. Management has no present
intention to engage in a transaction involving a Change of Control, although it
is possible that the Issuer could decide to do so in the future.

Subject to the limitations on mergers, consolidations and sale of assets
described herein, the Issuer could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations,
that would not constitute a Change of Control under the Indenture, but that
could increase the amount of indebtedness (including Senior Indebtedness and
Subsidiary Indebtedness) outstanding at such time or otherwise affect the
Issuer's capital structure or credit ratings. The payment of the purchase price
of the Debentures is subordinated to the prior payment of Senior Indebtedness
and Subsidiary Indebtedness as described under "--Subordination" above.

Any future credit agreements or other agreements relating to indebtedness
of the Issuer and the Company Subsidiaries may contain prohibitions or
restrictions on the Issuer's ability to effect the repurchase of the Debentures.
In the event a Designated Event occurs at a time when such prohibitions or
restrictions are in effect, the Issuer could seek the consent of its lenders to
purchase the Debentures or could attempt to refinance the borrowings that
contain such prohibition. If the Issuer does not obtain such a consent or repay
such borrowings, the Company will be effectively prohibited from purchasing the
Debentures. The Company's agreement for its existing line of credit allows the
lender to accelerate any indebtedness outstanding thereunder upon the occurrence
of a Designated Event and prohibits the Issuer from repurchasing Debentures
unless and until (a) such indebtedness under the line of credit is repaid, or
(b) the lender thereunder consents to such repurchase.

REGISTRATION RIGHTS

Pursuant to a registration rights agreement dated the Issue Date, between
the Issuer and the Managers (the "Registration Rights Agreement"), the Issuer
agreed for the benefit of the Holders of the Restricted Debentures that (i) it
would, at its cost, within 120 days after the Issue Date, file a shelf
registration statement (the "Shelf Registration Statement") with the Securities
and Exchange Commission (the "Commission") with respect to resales of the
Restricted Debentures and the Restricted Shares, (ii) it would use its best
efforts to have such Shelf Registration Statement be declared effective by the
Commission within 180 days after the Issue Date, and (iii) the Issuer would
maintain such Shelf Registration Statement continuously effective under the
Securities Act until the second anniversary of the Issue Date (or, in the event
that Rule 144(k) under the Securities Act is amended to provide for a shorter
holding period, until the end of such shorter period) or such earlier date as of
which all the Restricted Debentures and the Restricted Shares have been sold
pursuant to such Shelf Registration Statement. If the Issuer fails to comply
with clause (i) above then, at such time, the per annum interest rate on the
Debentures will increase by 25 basis points. Such increase will remain in
effect until the date on which such Shelf Registration Statement is filed, on
which date the interest rate on the Debentures will revert to the interest rate
originally borne by the Debentures plus any increase in such interest rate
pursuant to the following sentence. If the Shelf Registration Statement is not
declared effective as provided in clause (ii) above, then, at such time, and on
each successive 30th day following such time, the per annum interest rate on the
Debentures (which interest rate will be the original interest rate on the
Debentures plus any increase or increases in such interest rate pursuant to the
preceding sentence and this sentence) will increase by an additional 25 basis
points; PROVIDED, that the interest rate will not increase by more than 50 basis
points pursuant to this sentence and will not increase by more than 75 basis
points pursuant to this sentence and the preceding sentence. Such increase or
increases will remain in effect until the date on which such Shelf Registration
Statement is declared effective, on which date the interest rate on the
Debentures will revert to the interest rate originally borne by the Debentures.
Pursuant to clause (iii) above, however, if the Issuer fails to keep the Shelf
Registration Statement continuously effective for the period specified above,
then at such time as the Shelf Registration Statement is no longer effective and
on each date thereafter that is the successive 30th day subsequent to such time,
and until the earliest of (i) the date that the Shelf Registration Statement is
again deemed effective, (ii) the date that is the

second anniversary of the date of the Issue Date (or, in the event that
Rule 144(k) under the Securities Act is amended to provide for a shorter holding
period, until the end of such shorter period) or (iii) the date as of which all
the Restricted Debentures and the Restricted Shares are sold pursuant to the
Shelf Registration Statement, the per annum interest rate on the Debentures will
increase by an additional 25 basis points; PROVIDED, HOWEVER, that the interest
rate will not increase by more than 50 basis points pursuant to this sentence.
The Issuer is permitted to suspend the use of this Prospectus for a period not
to exceed 45 days in any ninety day period under certain circumstances relating
to pending corporate developments, public filings with the Commission and
similar events.

The Issuer will provide or cause to be provided to each Holder of
Restricted Debentures and Restricted Shares copies of this Prospectus, notify or
cause to be notified each such Holder when such Shelf Registration Statement has
become effective and take certain other actions as are required to permit
unrestricted resales of the Restricted Debentures and Restricted Shares. A
Holder of Restricted Debentures or Restricted Shares that sells such securities
pursuant to the Shelf Registration Statement will be required to be named as a
selling security holder in this Prospectus and to deliver this Prospectus to
purchasers, is subject to certain of the civil liability provisions under the
Securities Act in connection with such sales and is bound by the provisions of
the Registration Rights Agreement that are applicable to such Holder (including
certain indemnification and contribution rights and obligations). The Issuer
has agreed to pay all expenses of the Shelf Registration Statement (other than
underwriting and brokerage fees and discounts of such Holders and transfer fees
and taxes applicable to such Holders).

The Company has entered into registration rights agreements with the
Principals and certain other holders of OP Units (the "OP Unit Holders"). Under
these agreements, the Principals and certain of the OP Unit Holders received
advance notice of the filing of the Shelf Registration Statement and, following
conversion of their OP Units into shares of Common Stock and subject to certain
conditions and limitations, were entitled to include in the Shelf Registration
Statement shares of Common Stock received upon such conversion of the OP Units.
None of the Principals or such OP Unit Holders elected to include in the Shelf
Registration Statement such shares of Common Stock.

PAYMENTS, PAYING AGENTS AND CONVERSION AGENTS

Principal of, premium, if any, and interest on Bearer Debentures is payable
in United States dollars, subject to any applicable laws and regulations, at
such paying agencies outside the United States, its territories and possessions
as the Issuer may appoint from time to time and at which, at the option of the
Holder, such payment will be made by United States dollar check drawn on a bank
located in New York City, or (if arrangements satisfactory to the Trustee are
made) by wire transfer to a United States dollar account maintained by the
Holder at a bank outside the United States, its territories and possessions.
Payment of principal of, and premium, if any, on Bearer Debentures will be made
upon surrender of the Bearer Debentures, together with any coupons appertaining
thereto, at the office of a Paying Agent outside the United States, its
territories and possessions. Payment of interest on Bearer Debentures will be
made upon surrender of the interest coupon pertaining to the relevant Interest
Payment Date at a Paying Agent outside the United States, its territories and
possessions.

No payment on any Bearer Debenture or coupon will be made at any paying
agency maintained by the Issuer in the United States, its territories and
possessions, nor will any payment be made by transfer to an account in, or by
mail to an address in, the United States, its territories or possessions.

The principal of, premium, if any, and interest on Registered Debentures is
payable in United States dollars. Payments of such principal and premium, if
any, will be made against surrender of

Registered Debentures at the offices of the Paying Agents in New York City, a
designated Western European city or Luxembourg (or such other Paying Agencies as
may be specified in notices to the Holders in accordance with "--Notices" below)
by United States dollar check drawn on, or, wire transfer (in the case of
Holders of an aggregate principal amount of Debentures in excess of $250,000) to
a United States dollar account maintained by such Holder with, a bank located in
New York City. Payments of any installment of interest on Registered Debentures
will be made by a United States dollar check drawn on a bank in New York City
mailed to the Holder at such Holder's registered address or (if arrangements
satisfactory to the Issuer and the Trustee are made) by wire transfer to a
United States dollar account maintained by the Holder with a bank in New York
City. Payment of such interest on any Interest Payment Date will be made to the
person in whose name such Debenture is registered at the close of business on
the Interest Record Date prior to the relevant Interest Payment Date. Accrued
and unpaid interest payable on any Registered Debenture that is redeemed or
repurchased upon a Designated Event will be payable against surrender of such
Registered Debenture in the manner described above with respect to payments of
principal on Registered Debentures, except Registered Debentures that are
redeemed or repurchased on a date after the close of business on the Interest
Record Date immediately preceding such Interest Payment Date and on or before
the Interest Payment Date, on which interest will be paid to the Holder of
record on the related Interest Payment Date.

The Issuer may at any time, so long as there is no Default or Event of
Default under the Indenture, terminate the appointment of the Trustee or any
Paying or Conversion Agent and appoint a successor Trustee and additional or
other Paying and Conversion Agents, or approve any change in the office through
which the Trustee or any Paying or Conversion Agent acts, PROVIDED, that until
the Debentures have been delivered to the Trustee for cancellation, or moneys
sufficient to pay the principal of, premium, if any, and interest on, the
Debentures have been made available for such payment and either paid or returned
to the Issuer as provided in the Indenture, a Paying and Conversion Agent will
be maintained in New York City and in a Western European city for payments with
respect to Registered Debentures and for the surrender of such Debentures for
conversion, PROVIDED FURTHER that, so long as the Debentures are listed by the
Issuer on the Luxembourg Stock Exchange and the rules of such Exchange shall so
require, the Issuer will maintain a Transfer, Paying and Conversion Agent in
Luxembourg, for payments with respect to Bearer and Registered Debentures and
for the surrender of Debentures for conversion. Notice of any such termination
or appointment and of any change in the office through which any Paying Agent or
Conversion Agent will act will be given in accordance with "--Notices" below.

Any payment on the Debentures due on any day which is not a Business Day
will not be made on such day, but will be made on the next succeeding Business
Day with the same force and effect as if made on such due date, and no interest
shall accrue for the period from and after such date. "Business Day," as
defined in the Indenture, when used with respect to any place of payment, place
of conversion or any other place, as the case may be, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York City or that place of payment, place of conversion or
other place, as the case may be, are authorized or obligated by law or executive
order to close.

Debentures may be surrendered for conversion, subject to any applicable
laws and regulations, at the office of any Conversion Agent outside the United
States. In addition, Registered Debentures may be surrendered for conversion at
the office of the Conversion Agent in New York City. Debentures surrendered for
conversion must be accompanied by appropriate notices (including a duly signed
and completed notice of conversion), any unmatured coupons and any payment in
respect of interest or taxes as applicable, as described above under
"--Conversion Rights." As promptly as practicable on or after

the conversion date in respect of any Debenture, the Issuer shall issue and
deliver at the office of the applicable Conversion Agent a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion of such Debenture, together with payment in lieu of any fraction of a
share.

Bearer Debentures should be presented for payment together with all
unmatured related coupons, failing which the amount of any missing unmatured
related coupon will be deducted from the sum due for payment. Each amount so
deducted will be paid in the manner mentioned above against surrender of the
relevant missing coupon.

If the Issuer reasonably and in good faith determines that it is not a
"domestically controlled REIT," payments of principal upon redemption or
repurchase, delivery of Shares upon conversion, or payments of cash, if any, in
lieu of fractional shares upon conversion of a Debenture will be subject to
applicable withholding (see "United States Federal Income Tax
Considerations--United States Taxation of Foreign Holders of Debentures"),
unless (i) the Holder provides the Issuer with written certification (the
"Section 897 Certification"), in the form required by the Indenture stating
either (x) that the aggregate value of all Debentures owned by such Holder on
the last date any Debenture was purchased by such Holder did not exceed 5% of
the value of the outstanding Common Stock on such date or (y) that such Holder
is not a United States Alien, or (ii) the Issuer reasonably and in good faith
determines that withholding is not otherwise required.

All monies paid by the Issuer to a Paying Agent for the payment of
principal of, premium, if any, or interest on any Debenture that remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Issuer, and the Holder
of such Debenture or any related coupon will thereafter look only to the Issuer
for payment thereof; PROVIDED, HOWEVER, that payment of interest on a Bearer
Debenture will be made only upon presentation of a coupon or upon making of any
other proper demand for payment to the Issuer or to any agent appointed by the
Issuer outside the United States or its territories and possessions.

PAYMENT OF ADDITIONAL AMOUNTS

The Issuer will pay to the Holder of any Debenture or any related coupon
who is a United States Alien such additional amounts (the "Additional Amounts")
as may be necessary in order that every net payment of the principal of,
premium, if any, and interest on, such Debenture, and any cash payments made in
lieu of issuing Shares upon conversion of a Debenture, after withholding for or
on account of any future tax, assessment or governmental charge imposed upon or
as a result of such payment by the United States or any political subdivision or
taxing authority thereof or therein, will not be less than the amount provided
for in such Debenture or in such coupon to be then due and payable; PROVIDED,
HOWEVER, that the foregoing obligations to pay Additional Amounts shall not
apply to any one or more of the following:

(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between the Holder or the beneficial owner (or between a
fiduciary, settlor, beneficiary, member or stockholder of, or a person
holding a power over, such Holder, if such Holder is an estate, trust,
partnership or corporation) and the United States or any political
subdivision or taxing authority thereof or therein including, without
limitation, such Holder or beneficial owner (or such fiduciary, settlor,
beneficiary, member, stockholder or person holding a power over such
Holder) being or having been a citizen or resident or treated as a resident
thereof or being or having been engaged in a trade or business therein or
being or having been present therein or having or having had an

office, fixed place of business or permanent establishment therein,
(ii) such Holder's or beneficial owner's present or former status as a
personal holding company, foreign personal holding company, passive foreign
investment company, foreign private foundation or other foreign tax-exempt
entity, or controlled foreign corporation for United States tax purposes or
a corporation which accumulates earnings to avoid United States federal
income tax, (iii) such Holder or beneficial owner (or such fiduciary,
settlor, beneficiary member, stockholder or person holding a power over
such Holder) making an election under United States federal income tax law
the effect of which is to make payments of principal of, premium, if any,
and interest on such Debenture subject to United States federal income tax;
PROVIDED, HOWEVER, if failure to make such election would result in a
higher tax liability related to the Debentures then such Holder shall not
be deemed not to have made such election, or (iv) such Holder's status as a
bank extending credit pursuant to a loan agreement entered into in the
ordinary course of business;

(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the Holder of such
Debenture or any related coupon for payment on a date more than 10 days
after the date on which such payment became due and payable or on the date
on which payment thereof is duly provided, whichever occurs later;

(c) any estate, inheritance, gift, sales, transfer or personal or
intangible property tax or any similar tax, assessment or other
governmental charge;

(d) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with any certification,
information, documentation or other reporting requirements concerning the
nationality, residence, identity or present or former connection with the
United States of the Holder or beneficial owner of such Debenture or any
related coupon if such compliance is required by statute, regulation or
ruling or other administrative action of the United States or any political
subdivision or taxing authority thereof or therein as a precondition to
relief or exemption from such tax, assessment or other governmental charge;

(e) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of,
premium, if any, or interest on such Debenture or is payable as a result of
any such payment being treated as a disposition of a United States real
property interest;

(f) any tax, assessment or other governmental charge imposed on
interest received by a person holding, actually or constructively, 10
percent or more of the total combined voting power of all classes of stock
of the Issuer entitled to vote;

(g) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of principal of, premium, if
any, or interest on any Debenture or interest on any coupon appertaining
thereto if such payment can be made without such withholding by any other
Paying Agent;

(h) any tax, assessment or other governmental charge imposed on a
Holder that is not the beneficial owner of such Debenture or that is a
partnership or a fiduciary, but only to the extent that any beneficial
owner, beneficiary or settlor with respect to such fiduciary or member of
the partnership would not have been entitled to the payment of Additional
Amounts had the

beneficial owner, beneficiary, settlor or member directly received its
beneficial or distributive share of payment on such Debenture;

(i) any tax, assessment or other governmental charge which is imposed
solely as a result of a Holder owning Debentures which, if converted, would
result in any person owning, directly or constructively, more than 5% of
the outstanding Common Stock; or

(j) any combination of items (a), (b), (c), (d), (e), (f), (g),
(h) and (i).

EVENTS OF DEFAULT

An Event of Default with respect to the Debentures is any one of the
following events: (i) default in any payment when due of the principal of and
premium, if any, with respect to any such Debenture, (ii) default for 30 days in
the payment of any installment of interest or any required payment of any
Additional Amounts on any such Debenture, (iii) default for 60 days after
appropriate notice in the performance of any other covenant of the Issuer in the
Debentures or the Indenture with respect to such Debentures, (iv) certain events
of bankruptcy, insolvency or reorganization, (v) failure by the Issuer to comply
with the provisions described under "--Repurchase Rights," (vi) acceleration of,
or failure to pay when due upon maturity, any indebtedness for money borrowed by
the Company (excluding such indebtedness or obligations for which recourse is
limited to the Operating Partnership, the limited partners of the Operating
Partnership (other than the Issuer), or real property owned by the Company) in
an aggregate principal amount in excess of $20 million, which acceleration is
not rescinded or annulled or which failure is not cured within 30 days after
notice of acceleration or after such failure, as the case may be, or (vii) any
judgment or judgments for the payment of money in an uninsured aggregate amount
in excess of $20 million (excluding any judgment related to mortgages or notes
payable which is secured by real property owned by the Company) shall be
rendered against the Company and the same shall remain undischarged for a period
of 60 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by any judgment creditor to levy upon
assets or properties of the Company to enforce such judgment. Most of the
indebtedness of the Company is secured by real property owned by the Company.
See "Properties--Mortgage and Other Debt."

If any Event of Default occurs and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Debentures
then outstanding may (subject to certain restrictions) declare all the
Debentures to be due and payable immediately. Notwithstanding the foregoing, in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Debentures will become due and payable without
further action or notice. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Debentures may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders
notice of any continuing Event of Default or event that is or with the passage
of time or the giving of notice or both would be an Event of Default (a
"Default") (except a Default or Event of Default relating to the payment of
principal, premium, if any, or interest) if it determines that withholding
notice is in their interest.

CONSOLIDATION, MERGER AND SALE OF ASSETS

The Indenture provides that (x) neither the Issuer nor the Operating
Partnership shall consolidate or merge with or into any person (whether or not
the Issuer or the Operating Partnership, as the case may be, is the surviving
corporation), and (y) the Issuer and the Company Subsidiaries may not sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of their properties or assets, taken as a whole unless (i)(a) the Issuer or the
Operating Partnership, as the case may be, is the surviving or

continuing corporation or (b) the person formed by or surviving any such
consolidation or merger (if other than the Issuer or the Operating Partnership,
as the case may be), or the person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition such properties and assets is an entity
organized or existing under the laws of the United States, any state hereof or
the District of Columbia; (ii) the entity or person formed by or surviving any
such consolidation or merger (if other than the Issuer or the Operating
Partnership, as the case may be) assumes all the obligations of the Issuer under
the Debentures and the Indenture pursuant to a supplemental agreement in a form
reasonably satisfactory to the Trustee; (iii) such sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
properties or assets of the Issuer and the Company Subsidiaries taken as a whole
shall be as an entirety or virtually as an entirety to one person and such
persons shall have assumed all the obligations of the Issuer under the
Debentures and the Indenture pursuant to a supplemental agreement in a form
reasonably satisfactory to the Trustee; (iv) immediately after such transaction
no Default or Event of Default exists; and (v) the Issuer or such person shall
have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that such transaction and the supplemental agreement
comply with the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied. Under certain circumstances
described above involving a Change of Control, each Holder may have the right to
require the Issuer to repurchase such Debentures. See "--Repurchase Rights."

MEETINGS, MODIFICATION AND WAIVER

The Indenture contains provisions for convening meetings of the Holders to
consider matters affecting their interest.

The Indenture (including the terms and conditions of the Debentures and
coupons) may be modified or amended by the Company and the Trustee without the
consent of the Holders to (a) evidence the succession of another person to the
Company and the assumption by any such successor of the covenants and
obligations of the Company in the Indenture or the Debentures; (b) add to the
covenants of the Company for the benefit of the Holders of Debentures or
coupons, or to surrender any right or power herein conferred upon the Company,
(c) permit Registered Debentures to be exchanged for Bearer Debentures or
payment of principal, premium, if any, and interest on Bearer Securities in the
United States to the extent then permitted by United States tax laws and
regulations, PROVIDED that no adverse consequences would result to any Holder;
(d) provide for the conversion rights of holders of Debentures in the event of a
consolidation, merger or sale of substantially all of the assets of the Company;
(e) comply with the requirements of the Commission in connection with qualifying
the Indenture under the Trust Indenture Act of 1939, as amended; (f) make any
change to the subordination provisions that would limit or terminate the
benefits available to holders of Senior Indebtedness or Subsidiary Indebtedness;
(g) add guarantees with respect to the Debentures or secure the Debentures; and
(h) cure any ambiguity or to correct or supplement any provision therein which
may be inconsistent with any other provision therein or which is otherwise
defective or make any other provisions with respect to matters or questions
arising under the Debentures or the Indenture, PROVIDED such action pursuant to
this clause (h) shall not adversely affect the interests of the Holders of
Debentures or coupons.

Modifications and amendments to the Indenture or to the terms and
conditions of the Debentures may be made and future compliance with or any
Default or Event of Default by the Issuer under any of the provisions thereof
may be waived, or any acceleration thereunder annulled, with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Debentures at the time outstanding (excluding for purposes of such calculation
the aggregate principal amount of Debentures held by the Issuer or the Company
Subsidiaries) or by the adoption of a resolution, at a meeting of Holders

at which a Quorum is present and acting throughout, by not less than a majority
in aggregate principal amount of the Debentures present or represented at such
meeting (excluding for purposes of such calculation the aggregate principal
amount of Debentures held by the Issuer or the Company Subsidiaries); PROVIDED,
HOWEVER, that no such modification or amendment to the terms and conditions of
the Debentures may, without the consent or the affirmative vote of the Holder of
each Debenture affected thereby, (i) waive a Default or Event of Default in the
payment of principal of, premium, if any, interest or Additional Amounts on any
Debenture or the failure of the Issuer to repurchase Debentures in connection
with any Designated Event; (ii) change the stated maturity of the principal of,
premium, if any, or the time of payment for any installment of interest on any
Debenture; (iii) reduce the principal amount of or the rate of interest on any
such Debenture; (iv) change the obligation of the Issuer to pay Additional
Amounts as described above (except as otherwise permitted by the Debentures or
the Indenture); (v) change the coin or currency in which any Debenture or
interest thereon is payable; (vi) adversely affect the right to convert any such
Debenture or modify the rights of any Holder upon redemption; (vii) modify the
subordination provisions of the Debenture in a manner adverse to the Holders;
(viii) reduce the requirements under the Indenture for quorum or voting, or
reduce the percentage in principal amount of the outstanding Debentures the
consent of whose Holders is required for any amendment or modification of the
Indenture or the terms and conditions of the Debentures or the consent of whose
Holders is required for any waiver (of compliance with certain provisions of the
Indenture or the Debentures or certain defaults thereunder and their
consequences) provided for in the Debentures; or (ix) change the obligation of
the Issuer to maintain an office or agency in New York and a Western European
city, and, so long as the Debentures are listed on the Luxembourg Stock Exchange
and the rules of such Exchange shall so require, Luxembourg.

The "Quorum" at any meeting called to adopt a resolution will be the
persons holding or representing a majority in aggregate principal amount of the
Debentures at the time outstanding (excluding for purposes of such calculation
the aggregate principal amount of Debentures held by the Issuer or the Company
Subsidiaries) and the quorum at any adjourned meeting will be persons holding or
representing 25% in aggregate principal amount of the Debentures at the time
outstanding (excluding for purposes of such calculation the aggregate principal
amount of Debentures held by the Issuer or the Company Subsidiaries). Any
instrument given by or on behalf of any Holder in connection with any consent to
any such modification, amendment or waiver will be irrevocable once given and
will be conclusive and binding on all subsequent Holders of such Debenture and
related coupons. Any modifications, amendments or waivers to the Indenture or
to the terms and conditions of the Debentures will be conclusive and binding on
all Holders of Debentures and related coupons, whether or not they have given
such consent or were present at any meeting, and on Holders of Debentures and
related coupons, whether or not notation of such modifications, amendments or
waivers is made upon the Debentures or related coupons.

NOTICES

Notices to Holders will be given by publication in a leading daily
newspaper in the English language of general circulation in New York City and in
London and, so long as the Debentures are listed on the Luxembourg Stock
Exchange, in a daily newspaper of general circulation in Luxembourg or, if
publication in either London or Luxembourg is not practical, in any country in
Western Europe. Such publications shall be made twice, the first publication to
be not earlier than the earliest date and the second publication to be made not
later than the latest date prescribed in the Indenture for giving such notice.
Such publication is expected to be made in The Wall Street Journal (Eastern
Edition), The Financial Times and The Luxembourg Wort. In addition, notices to
Holders of Registered Debentures will be given by mail to the addresses of such
Holders as they appear in the register maintained by the

Registrar on the day 15 days prior to such mailing. Such notices will be deemed
to have been given on the date of such publication or mailing.

REPLACEMENT OF DEBENTURES AND RELATED COUPONS

Debentures (including related coupons, if any) that become mutilated,
destroyed, stolen or lost will be replaced by the Issuer at the expense of the
Holder upon delivery to the Trustee of the Debentures and related coupons or
evidence of the loss, theft or destruction thereof satisfactory to the Issuer
and the Trustee. In the case of a lost, stolen or destroyed Debenture or
related coupons, an indemnity satisfactory to the Issuer and the Trustee may be
required at the expense of the Holder of such Debenture or related coupons
before a replacement Debenture or related coupons, as the case may be, will be
issued.

GOVERNING LAW

The Debentures, the related coupons and the Indenture are governed by and
construed in accordance with the laws of the State of New York, without giving
effect to its conflicts of law rules.

CONCERNING THE TRUSTEE

Chase Manhattan Trustees Limited is the Trustee under the Indenture. The
Issuer may in the future maintain deposit accounts and conduct other banking
transactions with the Trustee in the ordinary course of business.

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 Articles and the Issuer'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 Issuer 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 of the
Issuer"), 100,000,000 shares of Common Stock, and 110,000,000 shares of
excess stock, par value $.01 per share (the "Excess Shares"). The Issuer's
Articles provide that the Board of Directors (as used herein the term "Board
of Directors" includes any duly authorized committee thereof) may classify
and reclassify any unissued shares of capital 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 capital
stock classified or reclassified by the Board of Directors pursuant to the
Articles shall be set forth in Articles Supplementary filed with the Maryland
State Department of Assessments and Taxation prior to the issuance of any
such capital stock.

RIGHTS OF HOLDERS OF COMMON STOCK

Subject to the provisions of the Articles regarding Excess Shares, the
holders of the outstanding shares of Common Stock have full voting rights, one
vote for each share held of record. Subject to the provisions of the Articles
regarding Excess Shares and the rights of holders of preferred stock of the
Issuer, holders of Common Stock are entitled to receive such dividends as may be
declared by the Board

of Directors out of funds legally available therefor. Upon liquidation,
dissolution, or winding up of the Issuer (but subject to the provisions of the
Articles and the rights of holders of preferred stock of the Issuer), the assets
legally available for distribution to holders of Common Stock shall be
distributed ratably among such holders. Holders of Common Stock have no
preemptive or other subscription or conversion rights, and no liability for
further calls upon shares. The Common Stock is not subject to assessment.

The Transfer Agent and Registrar for the Common Stock is First Chicago
Trust Company of New York.

Pursuant to the Articles and the Issuer's Bylaws, shareholders of the
Issuer are entitled to receive advance notice of annual and special meetings of
shareholders of the Issuer. Notice is given to a shareholder when it is
personally delivered to him, left at his residence or usual place of business,
or mailed to him at his address as it appears on the Issuer's records.

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 Articles do not provide for
a lesser percentage in such situations.

RESTRICTIONS ON TRANSFER

For the Issuer to qualify as a REIT under the Code, (i) not more than 50%
in value of its outstanding capital stock (after taking into account options to
acquire capital 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) capital 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 Issuer's gross income must be from particular activities (see "United States
Federal Income Tax Considerations--Taxation of the Company" and "--Requirements
for Qualification"). Because the Board of Directors believes it is essential
for the Issuer to continue to qualify as a REIT, the Articles restrict the
ownership and transfer of shares of the Issuer's capital stock.

Subject to certain exceptions specified in the Articles, 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 capital stock
of the Issuer. The attribution of ownership provisions are complex and may
cause capital 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 capital
stock (or the acquisition of an interest in an entity which owns capital 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 capital stock of the Issuer, and thus subject such capital
stock to the Ownership Limit. The Board of Directors, in its sole discretion,
may waive the Ownership Limit with respect to stockholders, but is under no
obligation to do so. As a condition of such waiver, the Board of Directors may
require opinions of counsel satisfactory to it or an undertaking from the
applicant with respect to preserving the REIT status of the Issuer. The
Articles exclude from the Ownership Limit certain persons and their respective
families and affiliates ("Excluded Participants") but provide that no Excluded
Participant may own (directly or indirectly) more than a specified percentage of
Common Stock as determined in accordance with the Articles (such Excluded
Participant's "Percentage Limitation").

The Articles provide that any purported transfer or issuance of shares, or
other event, that would (i) result in a person owning capital 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 Issuer 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 Issuer 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 Articles provide that in the event of a purported transfer of capital
stock or other event that would, if effective, result in a Prohibited Event,
such capital 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. Outstanding Excess Shares will be held in
trust. The trustee of such trust shall be appointed by the Issuer and shall be
independent of the Issuer, 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 Articles further provide that Excess Shares shall be entitled to the
same dividends as the shares of capital 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 that holders
of the Excess Shares are entitled to cast. 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 Issuer, each Excess Share shall be
entitled to receive ratably with each other share of capital stock of the same
class or series as the Original Shares, the assets of the Issuer distributed to
the holders of such class or series of capital stock. The trustee shall
distribute to the purported transferee the amounts received upon such
liquidation, dissolution, or winding up of the Issuer, but only up to the amount
paid by such purported transferee, or the market price for the Original Shares
on the date of the purported transfer, if no consideration was paid by such
transferee, and subject to additional limitations and offsets set forth in the
Articles.

If, after the purported transfer or other event resulting in an exchange of
capital 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 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 Articles contain provisions that prohibit the
purported transferee of the Excess Shares from receiving in return for such
transfer an amount that reflects any appreciation in the Original Shares during
the period that such Excess Shares were outstanding. The Articles require any
amount received by a purported transferee in excess of the amount permitted to
be received to be paid to the Beneficiary.

The Articles further provide that the Issuer 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 capital stock by
the purported transferee (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 Articles. 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 Articles 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. Amendments to the Articles require the affirmative
vote of at least 66-2/3% of the shares entitled to vote. In addition to
preserving the Issuer's status as a REIT, the Ownership Limit may have the
effect of precluding an acquisition of control of the Issuer without the
approval of the Board of Directors.

All certificates representing shares of Common Stock 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 capital stock must file an affidavit
with the Issuer containing the information specified in the Articles within 30
days after January 1 of each year. In addition, certain significant
stockholders shall upon demand be required to disclose to the Issuer 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.

LIMITATION OF LIABILITY OF DIRECTORS

The Articles include provisions which limit the liability of directors and
officers to the fullest extent permitted under the Maryland General Corporation
Law. In addition, the Issuer has entered into indemnification agreements with
each of the Issuer's officers and directors.

UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

THE FOLLOWING SUMMARY OF MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS IS BASED ON CURRENT LAW AND DOES NOT PURPORT TO DEAL WITH ALL
ASPECTS OF TAXATION THAT MAY BE RELEVANT TO HOLDERS OF THE DEBENTURES OR THE
COMMON STOCK IN LIGHT OF THEIR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES.

EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT ITS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO IT 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.

GENERAL

The Issuer 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. In the opinion of O'Melveny & Myers LLP, tax counsel to the Issuer,
the Issuer is organized and has operated in such a manner as to qualify the
Issuer for taxation as a REIT under the Code and its proposed future method
of operation will enable the Issuer to continue to so qualify. It must be
emphasized that this opinion is based on various assumptions and is
conditioned upon certain representations made by the Issuer as to factual
matters. In addition, this opinion is based upon the factual representations
of the Issuer concerning the Company's business and properties as set forth
in the documents incorporated by reference in this Prospectus and assumes
that the actions described in the documents incorporated by reference in this
Prospectus are completed in a timely fashion. Moreover, such qualification
and taxation as a REIT depends on the Issuer'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, the
results of which will not be reviewed by O'Melveny & Myers LLP. Accordingly,
no assurance can be given that the Issuer actually 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 United States 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. O'Melveny & Myers LLP has acted as tax counsel to the
Company in connection with the offering of the Debentures.

TAXATION OF THE COMPANY

In any year in which the Issuer 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 Issuer 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 Issuer may also be subject
to taxation in certain other circumstances. If the Issuer 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 Issuer fails either the 75% or the 95% test, multiplied by a fraction
intended to reflect the Issuer's profitability. The Issuer 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 Issuer 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 Issuer
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 Issuer would be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. The Issuer 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 Issuer uses the calendar year for federal income tax purposes and
for financial reporting purposes.

REQUIREMENTS FOR QUALIFICATION

To qualify as a REIT, the Issuer must elect to be so treated and must meet
the requirements, discussed below, relating to the Issuer'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 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. For taxable years of the Issuer beginning on or after
January 1, 1998, the Issuer will be treated as having satisfied condition (6) if
it complies with the regulatory requirements to request information from its
shareholders regarding their actual ownership of the Issuer's stock, and does
not know, or exercising reasonable diligence would not have known, that it
failed to satisfy such condition. If the Issuer fails to comply with these
regulatory requirements for any such taxable year it will be subject to a
penalty of $25,000, or $50,000 if such failure was intentional. However, if the
Issuer's failure to comply was due to reasonable cause and not willful neglect,
no penalties will be imposed. The Articles provide for restrictions regarding
transfer of its capital stock, in order to assist the Issuer in continuing to
satisfy the share ownership requirements described in (5) and (6) above. Such
transfer restrictions are described in "Description of Common
Stock--Restrictions on Transfer."

GROSS INCOME TESTS. In order for the Issuer to maintain its qualification
as a REIT, there are three requirements relating to the Issuer's gross income
that must be satisfied annually. First, at least 75% of the Issuer'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 Issuer'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 Issuer's gross income (including gross income from prohibited
transactions) for each taxable year. For taxable years of the Issuer beginning
on or after January 1, 1998, this 30% of gross income limitation need not be
satisfied.

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 Issuer'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 Issuer for purposes of applying the REIT
requirements described herein.

Rents received by the Issuer 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 considered "rendered to the occupant"
of the property and are not "usually or customarily rendered" in connection
with the rental space for occupancy only. For taxable years of the Issuer
beginning on or after January 1, 1998, a de minimis amount of up to 1% of the
gross income received by the Company from each property is permitted to be
from the provision of non-customary services without disqualifying all other
amounts received form such property as "rents from real property." However,
such de minimis amount itself will not qualify as "rents from real property"
for purposes of the 75% and 95% gross income tests.

The Management Companies (which will not satisfy the independent contractor
standard) as manager for the Operating Partnership and Property Partnerships
(other than West Acres Center), will provide certain services with respect to
the Centers (other than West Acres Center) and any newly-acquired property of
the Operating Partnership or a Property Partnership. The Issuer 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
"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 Issuer believe that no asset owned by the Operating
Partnership, the Property Partnerships or the Issuer 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 Issuer. 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 Issuer 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 Issuer 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
Issuer'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 by the Issuer 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 Issuer anticipates that non-qualifying income on its
investments (including such dividend income) will not result in the Issuer
failing any of the three gross income tests.

Even if the Issuer 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 Issuer's failure to
meet such tests is due to reasonable cause and not due to willful neglect, the
Issuer 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
Issuer would be entitled to the benefit of these relief provisions. As
discussed above in "United States Federal Income Tax Considerations--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 Issuer's gross income over the
Issuer'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 Issuer, 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 Issuer'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 Issuer 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 Issuer),
cash, cash items and government securities. Second, not more than 25% of the
Issuer'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 Issuer may not exceed 5% of the value of the Issuer's
total assets and the Issuer may not own more than 10% of any one issuer's
outstanding voting securities. The Issuer'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 Issuer 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 Issuer, the
Issuer has represented that the Issuer'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 Issuer. This 5%
limitation must be satisfied not only on the date that the Issuer (directly or
through the Operating Partnership) acquires securities of such entities, but
also at the end of any quarter in which the Issuer so 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 Issuer satisfies the Operating Partnership's obligation upon such exercise
with shares of Common Stock, the Issuer will thereby increase its proportionate
(indirect) ownership interest in such entities, thus requiring the Issuer to
meet the 5% test in any quarter in which such rights are exercised. Although
the Issuer 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 Issuer, 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 Issuer's REIT taxable income (computed without regard to the dividends
paid deduction and excluding the Issuer'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 Issuer 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 Issuer 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, as applicable. For taxable
years of the Issuer beginning on or after January 1, 1998, the Issuer may
designate all or a portion of its undistributed capital gains as being
includable in the income of its stockholders as gain from the sale or
exchange of a capital asset, which stockholders would receive an increase in
the basis of their stock in the Issuer in the amount of such income
recognized. Such stockholders would also be treated as having paid their
proportionate share of the capital gains tax imposed on the Issuer on such
undistributed amounts and would receive a corresponding decrease in the basis
of their stock in the Issuer. Furthermore, if the Issuer 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 Issuer would be subject to a 4% excise tax on the

excess of such required distribution over the amounts actually distributed. The
Issuer has made and intends to make timely distributions sufficient to satisfy
all annual distribution requirements.

It is possible that, from time to time, the Issuer 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 Issuer's taxable income. Further, it is
possible that, from time to time, the Issuer 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. Additionally, the
Issuer may incur cash expenditures that are not currently deductible for tax
purposes. As such, the Issuer 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 the excise tax imposed on
certain undistributed income, the Issuer 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 relating to any IRS audit adjustments that
increase income, the Issuer 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 Issuer's deduction
for dividends paid for the earlier year. Thus, the Issuer may be able to avoid
being taxed on amounts distributed as deficiency dividends; however, the Issuer
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 Issuer must maintain certain records and request
certain information from its stockholders designed to disclose the actual
ownership of its stock. The Issuer has complied and intends to continue to
comply with such requirements.

FAILURE TO QUALIFY

If the Issuer fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Issuer 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
Issuer fails to qualify will not be deductible by the Issuer 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 Issuer will also be
disqualified from taxation as a REIT for the four taxable years following the
year during which the Issuer ceased to qualify as a REIT. It is not possible to
state whether in all circumstances the Issuer would be entitled to such
statutory relief.

UNITED STATES TAXATION OF DOMESTIC HOLDERS OF DEBENTURES

EXCHANGES OF DEBENTURES. Neither the exchange of interests in the
temporary Global Debentures for Bearer Debentures or Registered Debentures, nor
the exchange of (i) Bearer Debentures for Registered Debentures, (ii) Bearer
Debentures for other Bearer Debentures, or (iii) Registered Debentures for other
Registered Debentures should be a taxable event to Holders, and Holders should
not recognize

any taxable gain or loss as result of such an exchange. Additionally, the
conversion of a Debenture into Common Stock pursuant to a Holder's conversion
rights should not be a taxable event to such Holder.

MARKET DISCOUNT. If a Debenture is acquired by a subsequent purchaser at a
"market discount," some or all of any gain realized upon a disposition
(including a sale or a taxable exchange) or payment at maturity of such
Debenture may be treated as ordinary income. "Market discount" with respect to
a security is, subject to a de minimis exception, the excess of (1) the stated
redemption price of the security over (2) such Holder's tax basis in the
security. The amount of market discount treated as having accrued will be
determined either on a ratable basis, or, if the Holder so elects, on a constant
interest method. Upon any subsequent disposition (including a gift or payment
at maturity) of such Debenture (other than in connection with certain
nonrecognition transactions), the lesser of any gain on such disposition (or
appreciation, in the case of a gift) or the portion of the market discount that
accrued while the Debenture was held by such Holder will be treated as ordinary
interest income at the time of the disposition. In lieu of including accrued
market discount in income at the time of disposition, a Holder may elect to
include market discount in income currently. Unless a Holder so elects, such
Holder may be required to defer a portion of any interest expense that may
otherwise be deductible on any indebtedness incurred or maintained to purchase
or carry such Debenture until the Holder disposes of the Debenture.

ACQUISITION PREMIUM. If a Holder is treated as acquiring Debentures at a
premium (generally, the Holder's tax basis over the remaining principal amount
of the Debentures, but excluding any premium attributable to the conversion
feature of the Debentures), and holds such Debentures as a capital asset under
Section 1221 of the Code, such Holder may elect under Section 171 of the Code to
amortize such premium using a constant yield method. Amortizable premium is
treated as an offset to interest income on the Debentures, rather than a
separate interest deduction. Premium allocable to the Debentures for which an
amortization election is not made should be allocated among the payments on the
Debentures representing stated redemption price and be allowed as an ordinary
deduction as such payments are made (or for a Holder using the accrual method of
accounting, when such payments become due).

DISPOSITION OF DEBENTURES. A Holder will recognize gain or loss upon the
sale, redemption, retirement or other disposition of such Debentures: such gain
or loss will generally be equal to the difference between (i) the amount of cash
and the fair market value of property received and (ii) the Holder's adjusted
tax basis (including any accrued market discount previously included in income
by the Holder and reduced by any previous payments with respect to the
Debentures) in such Debentures. Subject to the market discount rules discussed
above, gain or loss recognized will be capital gain or loss, provided such
Debentures are held as capital assets by the Holder.

BACKUP WITHHOLDING. Under the backup withholding rules, a Holder may be
subject to backup withholding at a rate of 31% 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 withholdings, and otherwise
complies with applicable requirements of the backup withholding rules. A Holder
that does not provide the Issuer 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 a Holder's income tax liability.

THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF HIS PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER

SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO
SUCH HOLDER OF THE OWNERSHIP AND DISPOSITION OF THE DEBENTURES, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, OR
SUBSEQUENT VERSIONS THEREOF.

UNITED STATES TAXATION OF FOREIGN HOLDERS OF DEBENTURES

Under present United States federal income and estate tax law, and subject
to the discussion below concerning information reporting and backup withholding:

(a) payments of principal of, premium, if any, and interest on the
Debentures by the Issuer or any of its paying agents to any Holder who is
not a United States Person (as defined below) will not be subject to United
States withholding tax; PROVIDED, HOWEVER, that in the case of interest and
original issue discount (i) the Holder does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of the Issuer entitled to vote, (ii) the Holder is not a controlled foreign
corporation for United States tax purposes that is related to the Issuer
through stock ownership, (iii) the Holder is not a bank extending credit
pursuant to a loan agreement entered into in the ordinary course of its
trade or business and (iv) in the case of Registered Debentures that the
Issuer, or the person who would otherwise be required to withhold tax from
such distributions, is provided with a statement, signed under penalties of
perjury, identifying the Holder and stating, among other things, that the
Holder is not a United States Person. If such statement, or any other
required statement, is not provided in the case of Registered Debentures,
30% withholding will apply, unless reduced or eliminated pursuant to an
applicable tax treaty or unless the interest on the Debentures is income
that is effectively connected with a trade or business within the United
States by such non-United States Person. In the latter case, and with
respect to either Registered or Bearer Debentures, such non-United States
Person will be subject to United States federal income tax at regular rates
and will be required to file a United States income tax return;

(b) assuming the Issuer is at all times "a domestically controlled
REIT," a Holder who is not a United States Person will not be subject to
United States federal income tax on any gain realized on the sale,
exchange, conversion or redemption of a Debenture unless (i) the gain is
effectively connected with the conduct by the Holder of a trade or business
in the United States, or (ii) in the case of gain realized by an individual
Holder, the Holder is present in the United States for 183 days or more in
the year of the sale, and certain other conditions are met;

(c) if the Issuer no longer qualifies as a "domestically controlled
REIT," then the proceeds of any disposition of a Debenture for federal
income tax purposes (including any payments of principal of, premium, if
any, and interest on, a Debenture) by a Holder who is not a United States
Person would be subject to a 10% withholding tax, and the Holder would be
subject to United States income tax thereon (which would require the filing
of a United States income tax return). Such withholding tax would be
refundable to the extent that it exceeded such Holder's substantive United
States liability, if any. However, such Holder will not be subject to such
withholding tax or subject to United States income tax, as long as the
aggregate value of all Debentures owned by such Holder on the last date any
Debentures were purchased by such Holder did not exceed 5% of the value of
the outstanding Common Stock on such date;

(d) a Debenture held by an individual who at the time of death is
not a citizen or resident of the United States will not be subject to
United States federal estate tax as a result of

such individual's death, if at the time of death the individual did not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Issuer entitled to vote, unless such
individual held the Debenture in connection with a United States trade or
business; and

(e) if at any time the Issuer makes a distribution of property to its
stockholders that would be taxable to such stockholders as a dividend for
United States federal income tax purposes (e.g., distributions of evidences
of indebtedness or assets of the Issuer, but generally not stock dividends
or rights to subscribe for Common Stock) and, pursuant to the antidilution
provisions of the Debentures, the Conversion Price of the Debentures is
reduced, such reduction may be deemed to be the payment of a taxable
dividend to Holders. Such a deemed dividend might be subject to a 30% or
then applicable United States withholding tax unless the Holder is entitled
to a reduction of the tax under a tax treaty.

A "domestically controlled REIT" is 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 Issuer will be a "domestically controlled REIT"; however, there can be
no assurance that it will retain its status as such.

Certain payments to noncorporate persons of interest on and principal of
obligations, and of the proceeds from the sale of obligations, are subject to
information reporting and may be subject to a backup withholding tax at a rate
of 31%. Under current United States federal income tax law and regulations,
neither information reporting nor backup withholding will apply to payments of
interest on and principal of a Debenture made by the Issuer or any of its paying
agents or to payments of the proceeds of the sale of a Debenture if the Issuer
or its paying agents do not have actual knowledge that the beneficial owner of
the Debenture is a United States Person and if (i) with respect to a Bearer
Debenture or coupon, such payments are made outside the United States, and (ii)
with respect to a Registered Debenture, the beneficial owner of the Debenture
certifies under penalty of perjury that it is not a United States Person.
However, if payments of interest on or principal of, or the proceeds of a sale
of, a Debenture are collected outside the United States by a foreign office of a
custodian, nominee or other agent acting on behalf of the beneficial owner of a
Bearer Debenture, and, if such custodian, nominee or agent is a (i) United
States Person, (ii) a controlled foreign corporation for United States tax
purposes, or (iii) a foreign person 50% or more of whose gross income is from a
United States trade or business, payments of interest and principal in respect
of the Debenture, or the proceeds of a sale of the Debenture, made by such
custodian, nominee or agent to the beneficial owner may be subject to
information reporting unless such custodian, nominee or agent has sufficient
documentary evidence in its records that the beneficial owner is not a United
States Person or the beneficial owner otherwise establishes an exemption.
Currently, such payments are not subject to backup withholding. If payments of
interest, principal, premium, if any, or the proceeds of the sale of a Debenture
are collected by the United States office of a custodian, agent or nominee
acting on behalf of the beneficial owner, information reporting and backup
withholding will apply to payments made by such custodian, agent or nominee to
the beneficial owner unless such owner certifies under penalty of perjury that
it is not a United States Person or otherwise established an exemption.

The discussion set forth above is dependent, among other things, on the
accuracy of representations made to the Issuer by the Managers that they have in
effect procedures reasonably designed to ensure that their employees or agents
who are directly engaged in selling the Debentures are aware that the Debentures
cannot be offered or sold during the restricted period to a person who is within

the United States who is a United States Person, except as permitted by United
States Treasury Regulations.

As used in this section, "United States" means the United States of America
(including the States and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction, "United States Person"
means any citizen or resident of the United States, a corporation, partnership
or other entity organized in or under the laws of the United States or any
political subdivision thereof and any estate or trust the income of which is
subject to United States federal income taxation regardless of its source, and
"restricted period" has the meaning given such term in the regulations
promulgated under Section 163(f) of the Code.

TAXATION OF TAXABLE DOMESTIC STOCKHOLDERS

As long as the Issuer qualifies as a REIT, distributions made to the
Issuer'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 Issuer'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
stockholders's shares, such distributions will be included in income as
capital gain assuming the shares are a capital asset in the hands of the
stockholder. In addition, any distribution declared by the Issuer 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
Issuer and received by the stockholder on December 31 of such year, PROVIDED
that the distribution is actually paid by the Issuer 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 Issuer.

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 Issuer required to be treated by such stockholder as
long-term capital gain.

BACKUP WITHHOLDING. The Issuer 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 withholdings, and otherwise complies with applicable
requirements of the backup withholding rules. A stockholder that does not
provide the Issuer 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 Issuer may be required to withhold a portion of capital gain distributions
to any stockholders who fail

to certify their nonforeign status to the Issuer. See "United States Federal
Income Tax Considerations--Taxation of Foreign Stockholders."

TREATMENT OF TAX-EXEMPT STOCKHOLDERS. Distributions from the Issuer to a
tax-exempt employee pension or 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 REIT's may be required to treat a
certain percentage of such a REIT's distributions as UBTI. This requirement
will apply only if (1) the REIT would not qualify for federal income tax
purposes but for 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 Articles 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.

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 Issuer 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 Issuer. 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. Stockholders'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 Issuer 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 Issuer claiming that the
distribution is effectively connected income. For this purpose,
distributions made after December 31, 1998 to a foreign account will be
presumed to be made to a Non-U.S. Stockholder. Distributions in excess of
current and accumulated earnings and profits of the Issuer 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 Issuer, 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 Issuer.

For any year in which the Issuer 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 and will
result in such Non-U.S. Stockholder being required to file a United States
income tax return. 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). Moreover, tax on such gains would be imposed on
a Non-U.S. Stockholder regardless of whether the appreciation of the United
States real property interests sold or exchanged by the Company resulting in
such gains occurred during or prior to such stockholder's ownership of his
shares. 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 Issuer is required by applicable Treasury Regulations to
withhold 35% of any distribution that could be designated by the Issuer 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 Issuer is a "domestically controlled
REIT." As described above, it is currently anticipated that the Issuer will be a
"domestically controlled REIT," although there can be no assurance that it will
retain its status as such. If the Issuer is not "domestically controlled," gain
recognized by a Non-U.S. Stockholder will continue to be exempt under FIRPTA if
such person at no time owned more than five percent of the Common Stock of the
Issuer. 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 (ii) 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 as 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,
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 United States 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 ISSUER'S INVESTMENTS IN PARTNERSHIPS

GENERAL. The Issuer 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 Issuer 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 "United States Federal Income
Tax Considerations--Requirements for Qualification--Gross Income Tests." Any
resultant increase in the Issuer's REIT taxable income will increase its
distribution requirements (see "United States Federal Income Tax
Considerations--Requirements for Qualification--Annual Distribution
Requirements"), but will not be subject to federal income tax in the hands of
the Issuer provided that such income is distributed by the Issuer to its
stockholders. Moreover, for purposes of the REIT asset tests (see "United
States Federal Income Tax Considerations--Requirements for Qualification--Asset
Tests"), the Issuer will include its proportionate share of assets held by 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 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 Issuer 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 Issuer to recognize taxable income in
excess of cash proceeds, which might adversely affect the Issuer's ability to
comply with the REIT distribution requirements. See "United States Federal
Income Tax Considerations--Requirements for Qualification--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 Issuer,
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 (other
than West Acres Center) and unrelated third parties. Because the Issuer, the
Operating Partnership and the Management Companies are related through stock
ownership, income of the Management Companies from services performed for the
Issuer 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 their 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
Issuer 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 Issuer 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 Issuer.

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 issuance of the Offered Securities and certain tax
matters will be passed upon for the Company by O'Melveny & Myers LLP.

EXPERTS

The financial statements and financial statement schedule of the
Issuer incorporated in this Prospectus by reference to the Issuer's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, 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 the Issuer's Current Report
on Form 8-K/A (event date November 30, 1996), have been audited by Coopers &
Lybrand L.L.P., independent accountants, as indicated in each of its reports
thereon included therein and incorporated herein by reference.

The combined statement of certain revenues and certain expenses of
Buenaventura Mall, Fresno Fashion Fair and Huntington Beach Mall for the
fiscal year ended December 31, 1995, incorporated in this Prospectus by
reference to the Issuer's Current Report on Form 8-K/A (event date December
30, 1996), has been audited by KPMG Peat Marwick LLP, independent
accountants, as indicated in its report thereon included therein and
incorporated herein by reference.

The combined statement of certain revenues and certain expenses of South
Towne Center and South Towne Marketplace for the fiscal year ended December
31, 1996, incorporated in this Prospectus by reference to the Issuer's
Current Report on Form 8-K/A (event date August 6, 1997), has been audited by
Ernst & Young LLP, independent accountants, as indicated in its report
thereon included therein and incorporated herein by reference.

Each of the above-referenced financial statements, schedules and reports
is incorporated herein by reference in reliance upon the authority of the
respective firms as experts in accounting and auditing.

GLOSSARY

Unless the context otherwise requires, the following terms shall have the
meanings set forth below for the purposes of this Prospectus.

"Anchor" means a department store or other large retail store tenant.

"Articles" means the Issuer's Articles of Amendment and Restatement, as
amended by the articles supplementary filed with the Maryland State Department
of Assessments and Taxation on May 30, 1995.

"Bearer Debentures" means definitive Debentures in bearer form with coupons
attached.

"Bearer Global Debenture" means the temporary global Debenture in bearer
form deposited with a common depository in London for Cedel and Euroclear on the
Issue Date which initially represented the Regulation S Debentures issued in
bearer form.

"Centers" means, collectively, the 26 Regional Shopping Centers and three
Community Shopping Centers in which the Company presently has ownership
interests, each being a "Center."

"Common Stock" means common stock, $.01 par value per share, of the
Company.

"Company" means the Issuer and those entities owned or controlled by the
Issuer, which entities include the Operating Partnership and the Property
Partnerships, other than the Property Partnerships which own the Joint Venture
Centers.

"Company Subsidiaries" means the Operating Partnership, the Property
Partnerships (including the Property Partnerships which own the Joint Venture
Centers), the Management Companies and all other subsidiaries of the Issuer,
whether now or hereafter existing, formed or acquired.

"Debentures" means the 7-1/4% Convertible Subordinated Debentures due 2002
of the Issuer.

"Funds from Operations" or "FFO" means net income (loss), assuming full
conversion of all OP Units, excluding gains (losses) from debt restructuring and
sales of property, plus depreciation and amortization (excluding depreciation on
personal property and amortization of loan and financial instrument costs), and
after adjustments for unconsolidated entities.

"Global Debentures" means the Reg S Global Debentures and the Restricted
Global Debentures.

"Issue Date" means June 27, 1997, the date on which the Debentures were
originally issued.

"Issuer" means The Macerich Company.

"Joint Venture Centers" means the Centers which are not wholly-owned by the
Company.

"Macerich" means The Macerich Company, a Maryland corporation.

"Management Companies" means Macerich Property Management Company and
Macerich Management Company, both California corporations.

"Managers" means Lazard Capital Markets, Lehman Brothers International
(Europe) and UBS Limited, the managers of the initial offering of the
Debentures.

"Offered Debentures" means the Restricted Debentures which are being
offered and sold by the Selling Securityholders pursuant to this Prospectus.

"Offered Securities" means the Offered Debentures and the Offered Shares.

"Offered Shares" means the Common Stock issued or issuable upon conversion
of the Offered Debentures.

"OP Units" means limited partnership interests in the Operating
Partnership.

"Operating Partnership" means The Macerich Partnership L.P., a Delaware
limited partnership.

"Participants" means holders of the OP Units.

"Partnership Agreement" means the Amended and Restated Limited Partnership
Agreement, dated as of March 16, 1994, as amended to date, the partnership
agreement of the Operating Partnership.

"Principals" means Mace Siegel, Arthur M. Coppola, Dana K. Anderson and
Edward C. Coppola.

"Property Partnerships" means the single purpose entities that hold title
to the Centers, which entities are jointly owned by the Issuer and the Operating
Partnership and, in the case of entities which own the Joint Venture Centers,
third-party joint venture partners.

"QIBs" or "Qualified Institutional Buyers" means qualified institutional
buyers as defined in Rule 144A under the Securities Act.

"REIT" means a real estate investment trust under the Code.

"Registered Debentures" means definitive Debentures in registered form
without coupons, and includes the Restricted Debentures unless the context
requires otherwise.

"Registered Global Debenture" means the temporary global Debenture
deposited with a common depository in London for Cedel and Euroclear on the
Issue Date which initially represented the Regulation S Debentures issued in
registered form.

"Reg S Global Debentures" means the Bearer Global Debenture and the
Registered Global Debenture.

"Regulation S" means Regulation S under the Securities Act, as in effect on
the date hereof.

"Regulation S Debentures" means the Debentures issued in registered form
without coupons and in bearer form with coupons outside the United States in
accordance with Regulation S, and includes the Reg S Global Debentures.

"Restricted Debentures" means the Debentures issued in registered form
without coupons offered to QIBs in the United States and includes the Restricted
Global Debentures.

"Restricted Global Debentures" means the global Debenture or global
Debentures deposited with DTC which represent the Restricted Debentures.

"Restricted Shares" means the shares of Common Stock issuable upon
conversion of the Restricted Debentures.

"Rule 144A" means Rule 144A under the Securities Act.

"Securities" means the Debentures and the Shares.

"Shares" means the Common Stock issuable upon conversion of the Debentures.

"Total Market Capitalization" means the sum of (i) the aggregate market
value of the outstanding shares of Common Stock, assuming full redemption of OP
Units for shares of Common Stock, and (ii) the total mortgages and notes payable
of the Company including a pro rata share of the total mortgages and notes
payable of the Joint Venture Centers.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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 IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER OR THE SELLING
SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUER SINCE THE
DATE HEREOF.
-----------

TABLE OF CONTENTS
Page
----
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Ratio of Earnings to Fixed Charges. . . . . . . . . . . . . . . . . . . . 12
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Selling Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . 12
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Description of Debentures . . . . . . . . . . . . . . . . . . . . . . . . 17
Description of Common Stock . . . . . . . . . . . . . . . . . . . . . . . 39
United States Federal Income Tax Considerations . . . . . . . . . . . . . 43
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

THE MACERICH
COMPANY

$119,380,000
7-1/4% CONVERTIBLE
SUBORDINATED DEBENTURES
DUE 2002

AND

3,835,502 SHARES OF
COMMON STOCK

-------------------

PROSPECTUS

-------------------

DECEMBER __, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses in connection with the registration and sale of the Securities
are as follows:

SEC registration fee. . . . . . . . . . . . . . . . . . . . $ 36,175
Printing and engraving expenses . . . . . . . . . . . . . . 15,000
Accounting fees and expenses. . . . . . . . . . . . . . . . 30,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . 75,000
Fees and expenses of Trustee. . . . . . . . . . . . . . . . 7,500
Fees and expenses of Transfer Agent . . . . . . . . . . . . 7,500
Miscellaneous expenses. . . . . . . . . . . . . . . . . . . 13,825
--------

Total. . . . . . . . . . . . . . . . . . . . . . . . . . . $185,000
--------
--------
- -------------------

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 Issuer's Articles include such a
provision which limits such liability to the fullest extent permitted by the
MGCL.

The Articles authorize the Issuer 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 Issuer 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 Issuer, 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 Issuer 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
Issuer 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 Issuer's Articles do 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

II-1

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 Issuer to
provide indemnification and advance expenses to a present or former director or
officer who served a predecessor of the Issuer in such capacity, and to any
employee or agent of the Issuer or a predecessor of the Issuer, (ii) provide
that any indemnification or payment or 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 Issuer 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 Issuer and its officers and directors to the same extent
that indemnification is provided to officers and directors of the Issuer in the
Articles, and limits the liability of the Issuer and its officers and directors
to the Operating Partnership and its partners to the same extent that liability
of officers and directors of the Issuer is limited under the Articles.

The Issuer and the Operating Partnership have entered into indemnification
agreements with each of the Issuer's officers and directors. The
indemnification agreements require, among other things, that the Issuer and the
Operating Partnership indemnify the Issuer'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 Issuer 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 Issuer's directors' and
officers' liability insurance. Although this form of indemnification agreement
offers substantially the same scope of coverage afforded by provisions in the
Articles and the Bylaws of the Issuer 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
- ------- -----------

4.1 Indenture, dated as of June 27, 1997, by and between the Registrant
and Chase Manhattan Trustees Limited, as trustee, with respect to the
Debentures (including forms of certificates for the Debentures) (filed
as Exhibit 4.1 to the Issuer's Current Report on Form 8-K, event date
June 20, 1997, and incorporated herein by reference).

4.2 Registration Rights Agreement, dated as of June 27, 1997, by and among
the Registrant, Lazard Capital Markets, Lazard Freres & Co. LLC,
Lehman Brothers International (Europe), and UBS Limited (filed as
Exhibit 4.2 to the Issuer's Current Report on Form 8-K, event date
June 20, 1997, and incorporated herein by reference).

4.3 Articles of Amendment and Restatement of the Issuer
(included as an exhibit to the Issuer's Registration Statement on
Form S-11, as amended (No. 33-68964), and incorporated herein by
reference).

4.4 Articles Supplementary (included as an exhibit to the Issuer's
Current Report on Form 8-K, event date May 30, 1995, and
incorporated herein by reference).

4.5 Bylaws of the Issuer (included as an exhibit to the Issuer's
Registration Statement on Form S-11, as amended (No. 33-68964),
and incorporated herein by reference).

5.1 Opinion of O'Melveny & Myers LLP regarding the legality of the Offered
Securities.*

8.1 Opinion of O'Melveny & Myers LLP regarding certain tax matters.

12.1 Computation of Ratio of Earnings to Fixed Charges.

23.1 Consent of Coopers & Lybrand L.L.P. (relating to report on financial
statements and financial statement schedule of the Issuer included
in the Issuer's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and to report on combined statement of certain
revenues and certain expenses of Vintage Faire Associates and Billings
Associates for the fiscal year ended December 31, 1995).

23.2 Consent of Ernst & Young LLP (relating to report on combined
statement of certain revenues and certain expenses of South Towne
Center and South Towne Marketplace for the fiscal year ended
December 31, 1996).*

23.3 Consent of O'Melveny & Myers LLP (contained in Exhibits 5.1 and 8.1).

23.4 Consent of KPMG Peat Marwick LLP (relating to report on combined
statement of certain revenues and certain expenses of Buenaventura
Mall, Fresno Fashion Fair and Huntington Beach Mall for the fiscal
year ended December 31, 1995).

24.1 Power of Attorney.*

25.1 Form T-1 Statement of Eligibility and Qualifications under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank.

_____________________
* Previously filed.

II-2

ITEM 17. UNDERTAKINGS

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 otherwise required
to be included in a 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 otherwise
required to be included in a 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(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 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by

II-3

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 foregoing provisions, 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 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:

(1) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as 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 shall be deemed to
be part of this registration statement as of the time it was declared
effective.

(2) That, 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 the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Santa Monica,
State of California, on December 22, 1997.

THE MACERICH COMPANY

By: /s/ Richard A. Bayer
-----------------------------------------
Richard A. Bayer
GENERAL COUNSEL AND SECRETARY

Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

* Chairman of the Board of December 22, 1997
- ---------------------------- Directors
Mace Siegel

* Vice Chairman of the December 22, 1997
- ---------------------------- Board of Directors and
Dana K. Anderson Chief Operating Officer

II-5

* Director, President and December 22, 1997
- ---------------------------- Chief Executive Officer
Arthur M. Coppola (Principal Executive
Officer)

* Director, Executive Vice December 22, 1997
- ---------------------------- President and Director of
Edward C. Coppola Acquisitions

* Director December 22, 1997
- ----------------------------
James S. Cownie

* Director December 22, 1997
- ----------------------------
Theodore S. Hochstim

* Director December 22, 1997
- ----------------------------
Fred S. Hubbell

* Director December 22, 1997
- ----------------------------
Stanley A. Moore

* Director December 22, 1997
- ----------------------------
Dr. William P. Sexton

/s/ Thomas E. O'Hern Senior Vice President, December 22, 1997
- ---------------------------- Chief Financial Officer
Thomas E. O'Hern and Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)

- -------------------

* By: /s/ RICHARD A. BAYER
--------------------
Richard A. Bayer
ATTORNEY-IN-FACT

II-6



   
                                                                    EXHIBIT 8.1
                    [LETTERHEAD OF O'MELVENY & MYERS LLP]

                                  December
                                    22nd
                                  1 9 9 7


                                                                    528,715-064
                                                                     LA1-771869
    


The Macerich Company
233 Wilshire Boulevard
Suite 700
Santa Monica, California 90401

         Re:  STATUS AS A REAL ESTATE INVESTMENT TRUST ("REIT")

Ladies and Gentlemen:

   
         You have requested our opinion concerning certain federal income tax 
considerations in connection with the registration by The Macerich Company 
(the "Company") of $119,380,000 aggregate principal amount of the Company's 7 
1/4% Convertible Subordinated Debentures due 2002 to be sold by the holders 
thereof and the 3,835,502 shares (subject to adjustment in certain 
circumstances as described in the Indenture dated as of June 27, 1997) of 
Common Stock of the Company issuable upon conversion of the Offered 
Debentures, as more fully described in the Registration Statement on Form S-3 
filed with the Securities and Exchange Commission on October 24, 1997 
(Registration No. 333-38721), as amended by Amendment No. 1 filed on December 
22, 1997, (as so amended, the "Registration Statement," which includes the 
Prospectus).  Capitalized terms used in this letter and not otherwise defined 
herein have the meanings assigned to such terms in the Prospectus.
    

         The opinion set forth in this letter is based on relevant provisions 
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury 
Regulations thereunder (including proposed and temporary Treasury 
Regulations), and interpretations of the foregoing as expressed in court 
decisions, administrative determinations, and the legislative history as of 
the date hereof.  These provisions and interpretations are subject to change, 
which may or may not be retroactive in effect, that might result in 
modifications of our opinion.

         In rendering our opinion we examined such records, certificates, 
documents and other materials as we considered necessary or appropriate as a 
basis for such opinion,


   
Page 2 - The Macerich Company - December 22, 1997
    
including the following:  (1) the Registration Statement (including the 
exhibits thereto and all amendments made through the date hereof), (2) the 
Amended and Restated Limited Partnership Agreement of The Macerich 
Partnership, L.P. (the "Operating Partnership"), (3) the corporate charter of 
the Company, as supplemented by Articles Supplementary filed with the 
appropriate State of Maryland authorities on May 30, 1995, (4) the corporate 
organizational documents of the two Management Companies, (5) the Company's 
Annual Report on Form 10-K for the year ended December 31, 1996, (6) the 
Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 
1997, (7) the agreements for the partnerships in which the Operating 
Partnership is a partner (the "Property Partnerships") and (8) such other 
documents and information provided by you as we deemed relevant to our 
opinion.

         In addition, you have provided us with a certificate (the "Officer's 
Certificate"), executed by a duly appointed officer of the Company, as the 
corporation which is directly or indirectly serving as (i) the sole corporate 
general partner of the Operating Partnership, and (ii) a general partner of 
each of the Property Partnerships, setting forth certain representations 
relating to the formation and operation of the Company and its subsidiaries 
(including the Operating Partnership and the Property Partnerships).

         For purposes of our opinion, we have not made an independent 
investigation of the facts set forth in such documents, the Officer's 
Certificate, the partnership agreement for the Operating Partnership, the 
partnership agreements for the Property Partnerships, or the Prospectus.  We 
have, consequently, relied on your respective representations that the 
information presented in such documents, or otherwise furnished to us, 
accurately and completely describe all material facts relevant to our 
opinion. We have also assumed, with your permission, that the opinion of 
Richards, Layton & Finger, dated March 16, 1994, as to certain matters of 
Delaware law relating to the Lakewood Mall Business Company, a Delaware 
business trust continues to be correct.  No facts have come to our attention, 
however, that would cause us to question the accuracy and completeness of 
such facts, documents, or assumption in a material way.

         We have also assumed for the purposes of this opinion that the 
Company is validly organized and duly incorporated under the laws of the 
State of Maryland, that the Management Companies are validly organized and 
incorporated under the laws of the State of Delaware, that the Operating 
Partnership is a duly organized and validly existing partnerships under the 
laws of the State of Delaware and that each of the Property Partnerships is 
duly organized and a validly existing partnership under the law of its state 
of organization.

         Based on the foregoing, we are of the opinion that:

         1.  The Company has qualified for treatment as a real estate 
investment trust ("REIT") under the Code for its taxable years ended December 
31, 1994, December 31, 1995 and December 31, 1996, and the Company's 
organization and method of operation will enable it to meet the requirements 
for qualification and taxation as a REIT for its taxable 



   
Page 3 - The Macerich Company - December 22, 1997
    
year ending December 31, 1997, and to continue to meet such requirements in 
each taxable year thereafter.

         2.  The discussion in the Prospectus under the heading "FEDERAL INCOME
TAX CONSIDERATIONS," fairly summarizes the federal income tax considerations
that are likely to be material to a holder of Common Stock.

         The Company's qualification and taxation as a REIT depends upon the 
Company's ability to meet on a continuing basis, through actual annual 
operating and other results, the various requirements under the Code and 
described in the Prospectus with regard to, among other things, the sources 
of its gross income, the composition of its assets, the level of its 
distributions to stockholders, and the diversity of its stock ownership.  
O'Melveny & Myers LLP will not review the Company's compliance with these 
requirements on a continuing basis. Accordingly, no assurance can be given 
that the actual results of the operations of the Company, the Operating 
Partnership, and their subsidiaries, the sources of their income, the nature 
of their assets, the level of the Company's distributions to stockholders and 
the diversity of its stock ownership for any given taxable year will satisfy 
the requirements under the Code for qualification and taxation as a REIT.

         For a discussion relating the law to the facts and the legal 
analysis underlying the opinion set forth in this letter, we incorporate by 
reference the discussion of federal income tax issues, which we assisted in 
preparing, in the sections of the Prospectus under the heading "FEDERAL 
INCOME TAX CONSIDERATIONS."

         Other than as expressly stated above, we express no opinion on any 
issue relating to the Company, the Operating Partnership, one or more of the 
Property Partnerships or to any investment therein.

         We hereby consent to the filing of this opinion as an exhibit to the 
Registration Statement and the use to the name of our firm therein.

   
                             Respectfully submitted,
                             /s/ O'MELVENY & MYERS LLP


                                                                    EXHIBIT 12.1
 
                              THE MACERICH COMPANY

   CALCULATION OF CONSOLIDATED AND COMBINED EARNINGS TO FIXED CHARGES RATIO
                        INCLUDING THE MACERICH PREDECESSOR
                            (dollars in thousands)

   


                                         Years Ended December 31,                  Nine Months Ended September 30,
                         -----------------------------------------------------     -------------------------------
                           1996       1995        1994       1993       1992             1997          1996
                         --------   --------    --------   --------   --------       -----------    -----------
                                                                                
Income (loss) before
 minority interest and
 extraordinary items      $30,201    $20,848     $14,530    $ 2,202    $ 2,099         $22,551        $21,784

Fixed Charges:

 Interest Expense          42,353     25,531      22,237     27,783     29,818          47,402         30,490
 Interest Capitalized         461        546         116          0        246           1,916            235
 Amortization of Loan 
  Costs                     2,090      3,250       2,397        860        864           1,377          1,717
                         --------   --------    --------   --------   --------         -------        -------
Total Fixed Charges:      $44,904    $29,327     $24,750    $28,643    $30,928         $50,695        $32,442
                         --------   --------    --------   --------   --------         -------        -------
Total Earnings            $74,644    $49,629     $39,164    $30,845    $32,781         $71,330        $53,991
                         --------   --------    --------   --------   --------         -------        -------

Ratio of Earnings to 
Fixed Charges               1.66x      1.69x       1.58x      1.08x      1.06x           1.41x          1.66x
                         --------   --------    --------   --------   --------         -------        -------
                         --------   --------    --------   --------   --------         -------        -------



   
                                                                  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, as amended, dated December 22, 1997 of our 
report dated March 14, 1997, on our audits of the consolidated financial 
statements and financial statements schedule of The Macerich Company as of 
December 31, 1996 and 1995, and for the years then ended and the period March 
16, 1994 through December 31, 1994 and the combined financial statements of 
Macerich Predecessor Affiliates for the period January 1, 1994 through March 
15, 1994, which report is included in the Annual Report on Form 10K. 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 (event dated November 30, 1996) of The Macerich Company. We also 
consent to the reference to our Firm under the caption "Experts."


/s/COOPERS & LYBRAND L.L.P.

Coopers & Lybrand L.L.P.

Los Angeles, California
December 22, 1997



   
                                                                   EXHIBIT 23.4

                   [LETTERHEAD OF KPMG PEAT MARWICK LLP]



The Board of Directors
The Macerich Company:



We consent to the incorporation by reference in the registration statement 
(No. 33338721) on Form S-3 of the Macerich Company of our report dated 
December 19, 1996, with respect to the combined statement of revenues and 
certain expenses of Buenaventura Mall, Fresno Fashion Fair and Huntington 
Beach Mall for the year ended December 31, 1995, which report appears in the 
Form 8-K/A of the Macerich Company dated, February 27, 1997.



                                              /s/  KPMG Peat Marwick LLP

Los Angeles, California
December 19, 1997



                      Securities Act of 1933 File Number 333-38721

- --------------------------------------------------------------------------------


                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

                                  ------------------
                                       FORM T-1
            STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
                    OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE



            CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
                          PURSUANT TO SECTION 305(b)(2) / /

                                  ------------------
                               THE CHASE MANHATTAN BANK
                 (Exact name of trustee as specified in its charter)

                                      13-4994650
                       (I.R.S. Employer Identification Number)
                         270 PARK AVENUE, NEW YORK, NEW YORK
                      (Address of principal executive offices)

                                        10017
                                      (Zip Code)

                                   ---------------
                                 THE MACERICH COMPANY
                 (Exact name of obligor as specified in its charter)


              MARYLAND                                    954448705

    (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                    Identification No.)


                                233 WILSHIRE BOULEVARD
                           SANTA MONICA, CALIFORNIA  90401
                                    (310) 394-6911

                  (Address, including zip code, and telephone number,
             including area code of Issuer's principal executive offices)

                    -------------------------------------------------
                  7.25% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002
                              (Title of the securities)





                 ------------------------------------------------------





                                       GENERAL

Item 1.  General Information.

         Furnish the following information as to the trustee:

         (a)  Name and address of each examining or supervising authority to
              which it is subject.

              New York State Banking Department, State House, Albany, New
              York 12110.

              Board of Governors of the Federal Reserve System, Washington, 
              D.C. 20551.

              Federal Reserve Bank of New York, District No. 2, 33 Liberty 
              Street, New York, N.Y.

              Federal Deposit Insurance Corporation, Washington, D.C. 20429.


         (b)  Whether it is authorized to exercise corporate trust powers.

              Yes.


Item 2.  Affiliations with the Obligor.

         If the obligor is an affiliate of the trustee, describe each such
         affiliation.

         None.


                                          2



Item 16. List of Exhibits


    List below all exhibits filed as a part of this Statement of Eligibility.

    1.  A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated herein by reference).
   
    2.  A copy of the Certificate of Authority of the Trustee to commence
business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated herein by reference).  On July 14,
1996, in connection with the merger of Chemical Bank and The Chase Manhattan
Bank (National Association), Chemical Bank, the surviving corporation, was
renamed The Chase Manhattan Bank.
    
    3.  None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.

    4.  A copy of the existing by-laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated herein by reference).

    5.  Not applicable.
   
    6.  The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference). On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank.
    
    7.  A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
On July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving corporation,
was renamed The Chase Manhattan Bank.

    8.  Not applicable.

    9.  Not applicable.


                                          3

   
                                      SIGNATURE

    Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 19th day of December, 1997.
    


                             THE CHASE MANHATTAN BANK




                             By: /s/ Douglas Lavelle
                                ----------------------------------------------
                                Douglas Lavelle
                                Second Vice President

                                          4



                                Exhibit 7 to Form T-1


                                   Bank Call Notice

                                RESERVE DISTRICT NO. 2
                         CONSOLIDATED REPORT OF CONDITION OF

                               The Chase Manhattan Bank
                     of 270 Park Avenue, New York, New York 10017
                        and Foreign and Domestic Subsidiaries,
                       a member of the Federal Reserve System,

                   at the close of business September 30, 1997, in
           accordance with a call made by the Federal Reserve Bank of this
           District pursuant to the provisions of the Federal Reserve Act.


                                                               DOLLAR AMOUNTS
            ASSETS                                              IN MILLIONS


Cash and balances due from depository institutions:
    Noninterest-bearing balances and
    currency and coin .....................................       $ 11,760
    Interest-bearing balances .............................          4,343
Securities:  ...............................................
Held to maturity securities.................................         2,704
Available for sale securities...............................        37,885
Federal funds sold and securities purchased under
    agreements to resell ..................................         27,358
Loans and lease financing receivables:
    Loans and leases, net of unearned income   $ 127,370
    Less: Allowance for loan and lease losses      2,760
    Less: Allocated transfer risk reserve .....       13
                                                 -------
    Loans and leases, net of unearned income,
    allowance, and reserve ................................        124,597
Trading Assets .............................................        64,630
Premises and fixed assets (including capitalized
    leases)................................................          2,925
Other real estate owned ....................................           286
Investments in unconsolidated subsidiaries and
    associated companies...................................            232
Customers' liability to this bank on acceptances
    outstanding............................................          2,212
Intangible assets .........................................          1,480
Other assets ...............................................        11,117
                                                                    ------
TOTAL ASSETS ...............................................      $291,529
                                                                  --------
                                                                  --------
                                          5


                                     LIABILITIES

Deposits
    In domestic offices ...................................        $86,574
    Noninterest-bearing .........................   $31,818
    Interest-bearing ............................    54,756
                                                     ------
    In foreign offices, Edge and Agreement subsidiaries,
    and IBF's .............................................         69,887
    Noninterest-bearing .........................   $ 3,777
    Interest-bearing ............................    66,110

Federal funds purchased and securities sold under agree-
ments to repurchase ........................................        45,307
Demand notes issued to the U.S. Treasury ...................           161
Trading liabilities.........................................        47,406

Other borrowed money (includes mortgage indebtedness
    and obligations under capitalized leases):
    With a remaining maturity of one year or less .........          4,578
    With a remaining maturity of more than one year 
           through three years.............................            261
      With a remaining maturity of more than three years....           131
Bank's liability on acceptances executed and outstanding             2,212
Subordinated notes and debentures ..........................         5,715
Other liabilities ..........................................        12,355

TOTAL LIABILITIES ..........................................       274,587
                                                                   -------
                                EQUITY CAPITAL

Perpetual preferred stock and related surplus                            0
Common stock................................................         1,211
Surplus  (exclude all surplus related to preferred stock)...        10,294
Undivided profits and capital reserves .....................         5,414
Net unrealized holding gains (losses)
on available-for-sale securities ...........................             7
Cumulative foreign currency translation adjustments ........            16

TOTAL EQUITY CAPITAL .......................................        16,942
                                                                    ------
TOTAL LIABILITIES AND EQUITY CAPITAL .......................      $291,529
                                                                ----------
                                                                ----------
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named
bank, do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued
by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.

                                JOSEPH L. SCLAFANI

We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.

                                WALTER V. SHIPLEY             )
                                THOMAS G. LABRECQUE           )DIRECTORS
                                WILLIAM B. HARRISON, JR.      )


                                          6