SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark one) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999. OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from __________________ to __________________ Commission File Number 1-12504 THE MACERICH COMPANY (Exact Name of Registrant as Specified in Its Charter) <TABLE> <S> <C> Maryland 95-4448705 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 401 Wilshire Boulevard, # 700 Santa Monica, California 90401 (Address of principal executive office) (Zip Code) </TABLE> Registrant's telephone number, including area code: (310) 394-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: <TABLE> <CAPTION> Name of each exchange Title of each class on which registered ------------------- ------------------- <S> <C> Common Stock, $0.01 Par Value New York Stock Exchange Preferred Share New York Stock Exchange Purchase Rights </TABLE> SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIODS THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORT(S)) AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO . --- --- Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. / / As of February 29, 2000, the aggregate market value of the 25,479,497 shares of Common Stock held by non-affiliates of the registrant was $513 million based upon the closing price ($20.125) on the New York Stock Exchange composite tape on such date. (For this computation, the registrant has excluded the market value of all shares of its Common Stock reported as beneficially owned by executive officers and directors of the registrant and certain other shareholders; such exclusion shall not be deemed to constitute an admission that any such person is an "affiliate" of the registrant.) As of February 29, 2000, there were 34,107,497 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the proxy statement for the annual stockholders meeting to be held in 2000 are incorporated by reference into Part III.

THE MACERICH COMPANY ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 TABLE OF CONTENTS <TABLE> <CAPTION> ITEM NO. PAGE NO. -------- -------- <S> <C> PART I 1. Business..................................................................... 1-10 2. Properties................................................................... 11-17 3. Legal Proceedings............................................................ 18 4. Submission of Matters to a Vote of Security Holders.......................... 18 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters.... 19-20 6. Selected Financial Data...................................................... 20-22 7. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................... 23-34 7A. Quantitative and Qualitative Disclosures About Market Risk........................................................ 35 8. Financial Statements and Supplementary Data.................................. 35 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................................... 35 PART III 10. Directors and Executive Officers of the Company.............................. 36 11. Executive Compensation....................................................... 36 12. Security Ownership of Certain Beneficial Owners and Management............... 36 13. Certain Relationships and Related Transactions............................... 36 PART IV 14. Exhibits, Financial Statements, Financial Statement Schedules and Reports on Form 8-K.......................................................... 37-92 SIGNATURES </TABLE>

PART I ITEM I. BUSINESS GENERAL The Macerich Company (the "Company") is involved in the acquisition, ownership, redevelopment, management and leasing of regional and community shopping centers located throughout the United States. The Company is the sole general partner of, and owns a majority of the ownership interests in, The Macerich Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"). The Operating Partnership owns or has an ownership interest in 47 regional shopping centers and five community shopping centers aggregating approximately 42 million square feet of gross leasable area ("GLA"). These 52 regional and community shopping centers are referred to hereinafter as the "Centers", unless the context otherwise requires. The Company is a self-administered and self-managed real estate investment trust ("REIT") and conducts all of its operations through the Operating Partnership and the Company's three management companies, Macerich Property Management Company, a California corporation, Macerich Manhattan Management Company, a California corporation, and Macerich Management Company, a California corporation (collectively, the "Management Companies"). The Company was organized as a Maryland corporation in September 1993 to continue and expand the shopping center operations of Mace Siegel, Arthur M. Coppola, Dana K. Anderson and Edward C. Coppola and certain of their business associates. All references to the Company in this Form 10-K include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise. RECENT DEVELOPMENTS A. ACQUISITIONS AND JOINT VENTURE DEVELOPMENTS On February 18, 1999, the Company, through a 51/49 joint venture with Ontario Teachers' Pension Plan Board (" Ontario Teachers' ") closed on the first phase of a two phase acquisition of a portfolio of properties. The phase one closing included the acquisition of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers comprising approximately 3.6 million square feet for a total purchase price of approximately $427.0 million. The purchase price was funded with a $120.0 million loan placed concurrently with the closing, $140.4 million of debt from an affiliate of the seller, and $39.4 million of assumed debt. The balance of the purchase price was paid in cash. The Company's share of the cash component was funded with the proceeds from two refinancings of centers and borrowings under the Company's line of credit. On July 12, 1999, the Company closed on the second phase of the acquisition. The second phase consisted of the acquisition of the office component of the mixed-use development for a purchase price of approximately $111.0 million. The purchase price was funded with a $76.7 million loan placed concurrently with the closing and the balance was paid in cash. The Company's share of the cash component was funded from borrowings under the Company's line of credit. The two non-contiguous community shopping centers were subsequently sold in October and November of 1999. On June 2, 1999, Macerich Cerritos, LLC, ("Cerritos") a wholly-owned subsidiary of Macerich Management Company, acquired Los Cerritos Center, a 1,304,262 square foot super regional mall in Cerritos, California. The total purchase price was $188.0 million, which was funded with $120.0 million of debt placed concurrently with the closing and a $70.8 million loan from the Company. The Company funded this loan from borrowings under a $60.0 million bank loan agreement and the balance from the Company's line of credit. On October 26, 1999, 49% of the membership interests of Macerich Stonewood, LLC ("Stonewood"), Cerritos and Macerich Lakewood, LLC ("Lakewood") were sold to Ontario Teachers' and concurrently Ontario Teachers' and the Company contributed their 99% collective membership interests in Stonewood and Cerritos and 100% of their collective membership interests in Lakewood to Pacific Premier Retail Trust ("PPRT"), a real estate investment trust, owned approximately 51% by the Company and 49% by Ontario Teachers. Lakewood, Stonewood and Cerritos, own Lakewood Mall, Stonewood Mall and Los Cerritos Center, respectively. The total value of the transaction was approximately $535.0 million. The properties were contributed to PPRT subject to existing debt of $322.0 million. The net cash proceeds to the Company were approximately $104.0 million which were used for reduction of debt and for general corporate purposes. On October 29, 1999, Macerich Santa Monica, LLC, a wholly-owned indirect subsidiary of the Company, acquired Santa Monica Place, a 560,623 square foot regional mall located in Santa Monica, California. The total purchase price was $130.8 million, which was funded with $80.0 million of debt placed concurrently with the closing with the balance funded from proceeds from the PPRT transaction described above. 1

B. REFINANCINGS On February 4, 1999, the Company refinanced the debt on Queens Center. A $65.1 million floating rate loan was paid in full and a new note was issued for $100.0 million bearing interest at a fixed rate of 6.88% and maturing March 1, 2009. On February 17, 1999, the Company refinanced the debt on South Plains Mall. A $28.4 million loan, at an effective interest rate of 6.3%, was paid in full and a new note was issued for $65.0 million bearing interest at a fixed rate of 8.22% and maturing March 1, 2009. On April 30, 1999, the Company refinanced the debt on Carmel Plaza. A $25.0 million floating rate loan was paid in full and a new note was issued for $29.0 million bearing interest at a fixed rate of 8.18% and maturing May 1, 2009. On October 8, 1999, the Company refinanced the debt on Village at Corte Madera. A $60.0 million floating rate loan was paid in full and a new note was issued for $72.0 million bearing interest at a fixed rate of 7.75% and maturing November 1, 2009. C. OTHER EVENTS On November 15, 1999, the Company redeemed $25.1 million of Operating Partnership Units ("OP Units") of the Operating Partnership for cash from various unit holders. A total of 1,266,687 of OP Units were redeemed for cash at the Company's option in lieu of exchanging common stock for OP Units. On November 16, 1999, the Company sold Huntington Center. Huntington Center is a shopping center located in Huntington Beach, California, that was purchased by the Company in December 1996. The Center was purchased as part of a package with Fresno Fashion Fair in Fresno, California, and Pacific View (formerly know as Buenaventura Mall) in Ventura, California. The Center was sold for $48.0 million and the net cash proceeds from the sale were used for general corporate purposes. THE SHOPPING CENTER INDUSTRY GENERAL There are several types of retail shopping centers, which are differentiated primarily based on size and marketing strategy. Regional shopping centers generally contain in excess of 400,000 square feet of GLA, are typically anchored by two or more department or large retail stores ("Anchors") and are referred to as "Regional Shopping Centers" or "Malls". Regional Shopping Centers also typically contain numerous diversified retail stores ("Mall Stores"), most of which are national or regional retailers typically located along corridors connecting the Anchors. Community Shopping Centers, also referred to as "strip centers," are retail shopping centers that are designed to attract local or neighborhood customers and are typically anchored by one or more supermarkets, discount department stores and/or drug stores. Community Shopping Centers typically contain 100,000 square feet to 400,000 square feet of GLA. In addition, freestanding retail stores are located along the perimeter of the shopping centers ("Freestanding Stores"). Anchors, Mall and Freestanding Stores and other tenants typically contribute funds for the maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operation of the shopping center. REGIONAL SHOPPING CENTERS A Regional Shopping Center draws from its trade area by offering a variety of fashion merchandise, hard goods and services and entertainment, generally in an enclosed, climate controlled environment with convenient parking. Regional Shopping Centers provide an array of retail shops and entertainment facilities and often serve as the town center and the preferred gathering place for community, charity, and promotional events. The Company focuses on the acquisition and redevelopment of Regional Shopping Centers. Regional Shopping Centers have generally provided owners with relatively stable growth in income despite the cyclical nature of the retail business. This stability is due both to the diversity of tenants and to the typical dominance of Regional Shopping Centers in their trade areas. Regional Shopping Centers are difficult to develop because of the significant barriers to entry, including the limited availability of capital and suitable development sites, the presence of existing Regional Shopping Centers in most markets, a limited number of Anchors, and the associated development costs and risks. Consequently, the Company believes that few new Regional Shopping Centers will be built in the next five years. However, many of the market, financing and economic risks typically associated with the development of new Regional Shopping Centers can be mitigated by acquiring and redeveloping an existing Regional Shopping Center. Furthermore, the value of Regional Shopping Centers can be significantly enhanced through redevelopment, renovation and expansion. 2

REGIONAL SHOPPING CENTERS - CONTINUED: Regional Shopping Centers have different strategies with regard to price, merchandise offered and tenant mix, and are generally tailored to meet the needs of their trade areas. Anchor tenants are located along common areas in a configuration designed to maximize consumer traffic for the benefit of the Mall Stores. Mall GLA, which generally refers to gross leasable area contiguous to the Anchors for tenants other than Anchors, is leased to a wide variety of smaller retailers. Mall Stores typically account for the bulk of the revenues of a Regional Shopping Center. Although a variety of retail formats compete for consumer purchases, the Company believes that Regional Shopping Centers will continue to be a preferred shopping destination. The combination of a climate controlled shopping environment, a dominant location, and a diverse tenant mix has resulted in Regional Shopping Centers generating higher tenant sales than are generally achieved at smaller retail formats. Further, the Company believes that department stores located in Regional Shopping Centers will continue to provide a full range of current fashion merchandise at a limited number of locations in any one market, allowing them to command the largest geographical trade area of any retail format. COMMUNITY SHOPPING CENTERS Community Shopping Centers are designed to attract local and neighborhood customers and are typically open air shopping centers, with one or more supermarkets, drugstores or discount department stores. National retailers such as Kids-R-Us at Bristol Shopping Center, Toys-R-Us at Boulder Plaza, Saks Fifth Avenue at Carmel Plaza and The Gap, Victoria's Secret and Express/Bath and Body at Villa Marina, provide the Company's Community Shopping Centers with the opportunity to draw from a much larger trade area than a typical supermarket or drugstore anchored Community Shopping Center. BUSINESS OF THE COMPANY MANAGEMENT AND OPERATING PHILOSOPHY The Company believes that the shopping center business requires specialized skills across a broad array of disciplines for effective and profitable operations. For this reason, the Company has developed a fully integrated real estate organization with in-house acquisition, redevelopment, property management, leasing, finance, construction, marketing, legal and accounting expertise. In addition, the Company emphasizes a philosophy of decentralized property management, leasing and marketing performed by on-site professionals. The Company believes that this strategy results in the optimal operation, tenant mix and drawing power of each Center as well as the ability to quickly respond to changing competitive conditions of the Center's trade area. PROPERTY MANAGEMENT AND LEASING. The Company believes that on-site property managers can most effectively operate the Centers. Each Center's property manager is responsible for overseeing the operations, marketing, maintenance and security functions at the Center. Property managers focus special attention on controlling operating costs, a key element in the profitability of the Centers, and seek to develop strong relationships with and to be responsive to the needs of retailers. The Company believes strongly in decentralized leasing and accordingly, most of its leasing managers are located on-site to better understand the market and the community in which a Center is located. Leasing managers are charged with more than the responsibility of leasing space; they continually assess and fine tune each Center's tenant mix, identify and replace under performing tenants and seek to optimize existing tenant sizes and configurations. ACQUISITIONS. Since its initial public offering ("IPO"), the Company has acquired interests in shopping centers nationwide. These acquisitions were identified and consummated by the Company's staff of acquisition professionals who are strategically located in Santa Monica, Dallas, Denver, and Atlanta. The Company believes that it is geographically well positioned to cultivate and maintain ongoing relationships with potential sellers and financial institutions and to act quickly when acquisition opportunities arise. The Company focuses on assets that are or can be dominant in their trade area, have a franchise and where there is intrinsic value. The Company made the following acquisitions in 1998: The Company along with a 50/50 joint venture partner, acquired a portfolio of twelve regional malls totaling 10.7 million square feet on February 27, 1998; South Plains Mall in Lubbock, Texas on June 19,1998; Westside Pavilion in Los Angeles, California on July 1, 1998; Village at Corte Madera in Corte Madera, California in June and July 1998; Carmel Plaza in Carmel, California on August 10, 1998; and Northwest Arkansas Mall in Fayetteville, Arkansas on December 15, 1998. Together, these properties are known as the "1998 Acquisition Centers." 3

MANAGEMENT AND OPERATING PHILOSOPHY - CONTINUED: On February 18, 1999, the Company, along with a joint venture partner, acquired a portfolio of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers totaling approximately 3.6 million square feet. The Company is a 51% owner of this portfolio. The second phase of this transaction, which closed on July 12, 1999, consisted of the acquisition of the office component of the mixed-use development. The two non-contiguous community shopping centers were subsequently sold in October and November of 1999. Additionally, the Company acquired Los Cerritos Center in Cerritos, California, on June 2, 1999 and Santa Monica Place in Santa Monica, California, on October 29, 1999. Together, these properties are known as the "1999 Acquisition Centers." REDEVELOPMENT. One of the major components of the Company's growth strategy is its ability to redevelop acquired properties. For this reason, the Company has built a staff of redevelopment professionals who have primary responsibility for identifying redevelopment opportunities that will result in enhanced long-term financial returns and market position for the Centers. The redevelopment professionals oversee the design and construction of the projects in addition to obtaining required governmental and Anchor approvals. THE CENTERS. As of December 31, 1999, the Centers consist of 47 Regional Shopping Centers and five Community Shopping Centers aggregating approximately 42 million square feet of GLA. The 47 Regional Shopping Centers in the Company's portfolio average approximately 874,000 square feet of GLA and range in size from 1.8 million square feet of GLA at Lakewood Mall to 324,959 square feet of GLA at Panorama Mall. The Company's five Community Shopping Centers, Boulder Plaza, Bristol Shopping Center, Carmel Plaza, Great Falls Marketplace and Villa Marina Marketplace, have an average of 213,523 square feet of GLA. The 47 Regional Shopping Centers presently include 184 Anchors totaling approximately 23.1 million square feet of GLA and approximately 6,050 Mall and Freestanding Stores totaling approximately 19.1 million square feet of GLA. Total revenues increased from $283.9 million in 1998 to $327.4 million in 1999 primarily due to the 1999 and 1998 acquisitions. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Lakewood Mall generated 10.5% of total shopping center revenues in 1997. No Center generated more than 10% of shopping center revenues during 1998 and 1999. COST OF OCCUPANCY The Company's management believes that in order to maximize the Company's operating cash flow, the Centers' Mall Store tenants must be able to operate profitably. A major factor contributing to tenant profitability is cost of occupancy. The following table summarizes occupancy costs for Mall Store tenants in the Centers as a percentage of total Mall Store sales for the last three years: <TABLE> <CAPTION> For the Years Ended December 31, 1997 (2) 1998 (3) 1999 (4) ---------- ---------- ---------- <S> <C> <C> <C> Minimum rents 7.9% 7.7% 7.4% Percentage rents 0.4% 0.4% 0.5% Expense recoveries (1) 3.0% 3.0% 2.9% ---------- ---------- ---------- Mall tenant occupancy costs 11.3% 11.1% 10.8% ========== ========== ========== </TABLE> (1) Represents real estate tax and common area maintenance charges. (2) Excludes Centers acquired in 1997 (the "1997 Acquisition Centers"). See "Management's Discussion and Analysis of Financial Condition and Results of Operations." (3) Excludes 1998 Acquisition Centers. (4) Excludes 1999 Acquisition Centers. 4

COMPETITION The 47 Regional Shopping Centers are generally located in developed areas in middle to upper income markets where there are relatively few other Regional Shopping Centers. In addition, 46 of the 47 Regional Shopping Centers contain more than 400,000 square feet of GLA. The Company intends to consider additional expansion and renovation projects to maintain and enhance the quality of the Centers and their competitive position in their trade areas. There are numerous owners and developers of real estate that compete with the Company in its trade areas. There are nine other publicly traded mall companies, any of which under certain circumstances, could compete against the Company for an acquisition, an Anchor or a tenant. This results in competition for both acquisition of centers and for tenants to occupy space. The existence of competing shopping centers could have a material impact on the Company's ability to lease space and on the level of rent that can be achieved. There is also increasing competition from other forms of retail, such as factory outlet centers, power centers, discount shopping clubs, mail-order services, internet shopping and home shopping networks that could adversely affect the Company's revenues. MAJOR TENANTS The Centers derived approximately 90.2% of their total rents for the year ended December 31, 1999 from Mall and Freestanding Stores. One tenant accounted for approximately 5.2% of annual base rents of the Company, and no other single tenant accounted for more than 3.2%, as of December 31, 1999. The following tenants (including their subsidiaries) represent the 10 largest tenants in the Company's portfolio (including joint ventures) based upon minimum rents in place as of December 31, 1999: <TABLE> <CAPTION> NUMBER OF STORES % OF TOTAL MINIMUM RENTS TENANT IN THE CENTERS AS OF DECEMBER 31, 1999 -------- -------------- ----------------------- <S> <C> <C> The Limited, Inc. 144 5.2% Venator Group, Inc. 142 3.2% AT&T Wireless Services 3 2.8% The Gap, Inc. 48 2.4% J.C. Penney Co., Inc. 33 1.7% Barnes and Noble, Inc. 24 1.3% Claire Stores, Inc. 87 1.2% The Musicland Group, Inc. 47 1.1% Federated Department Stores 22 1.1% Sears, Roebuck & Company 30 1.1% </TABLE> MALL AND FREESTANDING STORES Mall and Freestanding Store leases generally provide for tenants to pay rent comprised of a fixed base (or "minimum") rent and a percentage rent based on sales. In some cases, tenants pay only a fixed minimum rent, and in some cases, tenants pay only percentage rents. Most leases for Mall and Freestanding Stores contain provisions that allow the Centers to recover their costs for maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operations of the Center. The Company uses tenant spaces 10,000 square feet and under for comparing rental rate activity. Tenant space 10,000 square feet and under in the portfolio at December 31, 1999, comprises 76.9% of all Mall and Freestanding Store space. The Company believes that to include space over 10,000 square feet would provide a less meaningful comparison. When an existing lease expires, the Company is often able to enter into a new lease with a higher base rent component. The average base rent for new Mall and Freestanding Store leases, 10,000 square feet or under, commencing during 1999 was $29.76 per square foot, or 16% higher than the average base rent for all Mall and Freestanding Stores (10,000 square feet or under) at December 31, 1999 of $25.60 per square foot. 5

MALL AND FREESTANDING STORES - CONTINUED: The following table sets forth for the Centers the average base rent per square foot of Mall and Freestanding GLA, for tenants 10,000 square feet and under, as of December 31 for each of the past three years: <TABLE> <CAPTION> Average Base Average Base Average Base Rent Per Sq. Ft. on Rent Per Sq. Ft. on Rent Per Leases Commencing Leases Expiring Square Foot (1) During the Year (2) During the Year (3) --------------- ------------------- ------------------- <S> <C> <C> <C> DECEMBER 31, 1997............................ $24.27 $27.58 $24.84 1998............................ $25.08 $28.58 $26.34 1999............................ $25.60 $29.76 $27.29 </TABLE> (1) Average base rent per square foot is based on Mall and Freestanding Store GLA for spaces 10,000 square feet or under occupied as of December 31 for each of the Centers owned by the Company in 1997 (excluding the 1997 Acquisition Centers), 1998 (excluding the 1998 Acquisition Centers), and 1999 (excluding the 1999 Acquisition Centers). (2) The base rent on lease signings during the year represents the actual rent to be paid on a per square foot basis during the first twelve months. The 1997 average excludes the 1997 Acquisition Centers, the 1998 average excludes the 1998 Acquisition Centers and the 1999 average excludes the 1999 Acquisition Centers. (3) The average base rent on leases expiring during the year represents the final year minimum rent, on a cash basis, for all tenant leases 10,000 square feet or under expiring during the year. On a comparable space basis, average initial rents, excluding the impact of straight lining of rent, on leases 10,000 square feet or under commencing in 1999 was $30.85 compared to expiring rents of $27.29. The average base rent on leases expiring in 1997 excludes the 1997 Acquisition Centers, the average for 1998 excludes 1998 Acquisition Centers and the average for 1999 excludes the 1999 Acquisition Centers. BANKRUPTCY AND/OR CLOSURE OF RETAIL STORES The bankruptcy and/or closure of an Anchor, or its sale to a less desirable retailer, could adversely affect customer traffic in a Center and thereby reduce the income generated by that Center. Furthermore, the closing of an Anchor could, under certain circumstances, allow certain other Anchors or other tenants to terminate their leases or cease operating their stores at the Center or otherwise adversely affect occupancy at the Center. Retail stores at the Centers other than Anchors may also seek the protection of the bankruptcy laws and/or close stores, which could result in the termination of such tenants' leases and thus cause a reduction in the cash flow generated by the Centers. Although no single retailer accounts for greater than 5.2% of total rents, the bankruptcy and/or closure of stores could result in decreased occupancy levels, reduced rental income or otherwise adversely impact the Centers. Although certain tenants have filed for bankruptcy, the Company does not believe such filings and any subsequent closures of their stores will have a material adverse impact on its operations. 6

LEASE EXPIRATIONS The following table shows scheduled lease expirations (for Centers owned as of December 31, 1999) of Mall and Freestanding Stores 10,000 square feet or under for the next ten years, assuming that none of the tenants exercise renewal options: <TABLE> <CAPTION> Approximate % of Total Ending Number of GLA of Leased GLA Base Rent per Year Ending Leases Expiring Represented by Square Foot of December 31, Expiring Leases Expiring Leases (1) Expiring Leases (1) ------------ -------- ------ ------------------- ------------------- <S> <C> <C> <C> <C> 2000 649 1,160,538 10.8% $ 25.60 2001 511 978,840 9.1% $ 26.96 2002 489 937,921 8.7% $ 26.80 2003 501 1,083,078 10.1% $ 25.38 2004 454 978,543 9.1% $ 26.31 2005 424 1,043,255 9.7% $ 27.40 2006 375 981,021 9.1% $ 28.66 2007 379 1,012,442 9.4% $ 28.20 2008 380 1,017,344 9.5% $ 29.39 2009 273 703,890 6.6% $ 29.32 </TABLE> (1) For leases 10,000 square feet or under ANCHORS Anchors have traditionally been a major factor in the public's identification with Regional Shopping Centers. Anchors are generally department stores whose merchandise appeals to a broad range of shoppers. Although the Centers receive a smaller percentage of their operating income from Anchors than from Mall and Freestanding Stores, strong Anchors play an important part in maintaining customer traffic and making the Centers desirable locations for Mall and Freestanding Store tenants. Anchors either own their stores, the land under them and in some cases adjacent parking areas, or enter into long-term leases with an owner at rates that are lower than the rents charged to tenants of Mall and Freestanding Stores. Each Anchor which owns its own store, and certain Anchors which lease their stores, enter into reciprocal easement agreements with the owner of the Center covering among other things, operational matters, initial construction and future expansion. Anchors accounted for approximately 9.8% of the Company's total rent for the year ended December 31, 1999. The following table identifies each Anchor, each parent company that owns multiple Anchors and the number of square feet owned or leased by each such Anchor or parent company in the Company's portfolio at December 31, 1999: 7

ANCHORS - CONTINUED: <TABLE> <CAPTION> GLA GLA TOTAL GLA NUMBER OF OWNED LEASED OCCUPIED NAME ANCHOR STORES BY ANCHOR BY ANCHOR BY ANCHOR ---- ------------- ----------- ----------- ----------- <S> <C> <C> <C> <C> J.C. Penney (1) 33 1,320,631 3,056,055 4,376,686 Sears 30 2,197,192 1,625,942 3,823,134 Target Corp. Mervyn's 12 571,016 432,307 1,003,323 Target 9 581,260 379,871 961,131 Dayton's 2 115,193 100,790 215,983 ------------- ----------- ----------- ----------- Total 23 1,267,469 912,968 2,180,437 Federated Department Stores Macy's (2) 10 1,366,344 411,599 1,777,943 Macy's Men's & Children 1 -- 76,650 76,650 Macy's Men's & Home 2 -- 155,614 155,614 Macy's Men's & Juniors 1 -- 70,256 70,256 The Bon Marche 2 -- 181,000 181,000 Lazarus 1 159,068 -- 159,068 ------------- ----------- ----------- ----------- Total 17 1,525,412 895,119 2,420,531 May Department Stores Co. Robinsons-May 6 676,928 494,102 1,171,030 Foley's 4 725,316 -- 725,316 Hechts 2 140,000 141,772 281,772 Famous Barr 1 180,000 -- 180,000 Meier & Frank 1 242,505 -- 242,505 Meier & Frank - ZCMI 1 -- 200,000 200,000 ------------- ----------- ----------- ----------- Total 15 1,964,749 835,874 2,800,623 Dillard's 14 1,257,162 662,735 1,919,897 Saks, Inc. Younker's 6 -- 609,177 609,177 Herberger's 5 188,000 283,891 471,891 ------------- ----------- ----------- ----------- 11 188,000 893,068 1,081,068 Montgomery Ward (3) 7 180,431 853,745 1,034,176 Gottschalks 5 332,638 283,772 616,410 Nordstrom 5 226,853 503,369 730,222 Von Maur 3 186,686 59,563 246,249 Belk 2 -- 127,950 127,950 Boscov's 2 -- 314,717 314,717 Wal-Mart 2 281,455 -- 281,455 Beall's 1 -- 40,000 40,000 DeJong 1 -- 43,811 43,811 Emporium 1 -- 50,625 50,625 Home Depot 1 -- 130,232 130,232 Kohl's 1 -- 92,466 92,466 Lamonts 1 -- 50,000 50,000 Peebles 1 -- 42,090 42,090 Service Merchandise 1 -- 60,000 60,000 Vacant (3) 7 224,222 387,673 611,895 ------------- ----------- ----------- ----------- 184 11,152,900 11,921,774 23,074,674 ============= =========== =========== =========== </TABLE> --------------------------- (1) This does not include the J.C. Penney currently under construction at Chesterfield Mall. (2) This does not include the Macy's currently under construction at Lakewood Mall. (3) Montgomery Ward filed for bankruptcy in 1997 and emerged from bankruptcy in late 1999. Montgomery Ward closed its stores at Holiday Village, Rimrock and Southridge in 1999. These three stores are included in Vacant Anchors as of December 31, 1999. The Montgomery Ward at Holiday Village is now owned by Herbergers. Dillards owns the former Montgomery Ward building at Rimrock. 8

ENVIRONMENTAL MATTERS Under various federal, state and local laws, ordinances and regulations, a current or prior owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on, under or in such property. Such laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The costs of investigation, removal or remediation of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner's or operator's ability to sell or rent such property or to borrow using such property as collateral. Persons or entities who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of a release of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person or entity. Certain environmental laws impose liability for release of asbestos-containing materials ("ACMs") into the air and third parties may seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs. In connection with the ownership (direct or indirect), operation, management and development of real properties, the Company may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and therefore potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property. Each of the Centers has been subjected to a Phase I audit (which involves review of publicly available information and general property inspections, but does not involve soil sampling or ground water analysis) completed by an environmental consultant. Based on these audits, and on other information, the Company is aware of the following environmental issues that are reasonably possible to result in costs associated with future investigation or remediation, or in environmental liability: - ASBESTOS. The Company has conducted ACM surveys at various locations within the Centers. The surveys indicate that ACMs are present or suspected in certain areas, primarily vinyl floor tiles, mastics, roofing materials, drywall tape and joint compounds. The identified ACMs are generally non-friable, in good condition, and possess low probabilities for disturbance. At certain Centers where ACMs are present or suspected, however, some ACMs have been or may be classified as "friable," and ultimately may require removal under certain conditions. The Company has developed and implemented an operations and maintenance (O&M) plan to manage ACMs in place. - UNDERGROUND STORAGE TANKS. Underground storage tanks ("USTs") are or were present at certain of the Centers, often in connection with tenant operations at gasoline stations or automotive tire, battery and accessory service centers located at such Centers. USTs also may be or have been present at properties neighboring certain Centers. Some of these tanks have either leaked or are suspected to have leaked. Where leakage has occurred, investigation, remediation, and monitoring costs may be incurred by the Company if responsible current or former tenants, or other responsible parties, are unavailable to pay such costs. - CHLORINATED HYDROCARBONS. The presence of chlorinated hydrocarbons such as perchloroethylene ("PCE") and its degradation byproducts have been detected at certain of the Centers, often in connection with tenant dry cleaning operations. Where PCE has been detected, the Company may incur investigation, remediation and monitoring costs if responsible current or former tenants, or other responsible parties, are unavailable to pay such costs. PCE has been detected in soil and groundwater in the vicinity of a dry cleaning establishment at North Valley Plaza, formerly owned by a joint venture of which the Company was a 50% member. The property was sold on December 18, 1997. The California Department of Toxic Substances Control ("DTSC") advised the Company in 1995 that very low levels of Dichloroethylene ("1,2 DCE"), a degradation byproduct of PCE, had been detected in a municipal water well located 1/4 mile west of the dry cleaners, and that the dry cleaning facility may have contributed to the introduction of 1,2 DCE into the water well. According to DTSC, the maximum contaminant level ("MCL") for 1,2 DCE which is permitted in drinking water is 6 parts per billion ("ppb"). The 1,2 DCE was detected in the water well at a concentration of 1.2 ppb, which is below the MCL. The Company has retained an environmental consultant and has initiated extensive testing of the site. Remediation began in October 1997. The joint venture agreed (between itself and the buyer) that it would be responsible for continuing to pursue the investigation and remediation of impacted soil and groundwater resulting from releases of PCE from the former dry cleaner. $149,466 and $153,100 have already been incurred by the joint venture for remediation, and professional and legal fees for the periods ending December 31, 1999 and 1998, respectively. An additional $258,566 remains reserved by the joint venture as of 9

ENVIRONMENTAL MATTERS, CONTINUED: December 31, 1999. The joint venture has been sharing costs on a 50/50 basis with a former owner of the property and intends to look to additional responsible parties for recovery. The Company acquired Fresno Fashion Fair in December 1996. Asbestos has been detected in structural fireproofing throughout much of the Center. Testing data conducted by professional environmental consulting firms indicates that the fireproofing is largely inaccessible to building occupants and is well adhered to the structural members. Additionally, airborne concentrations of asbestos were well within OSHA's permissible exposure limit ("PEL") of .1 fcc. The accounting for this acquisition includes a reserve of $3.3 million to cover future removal of this asbestos, as necessary. The Company incurred $90,876 and $255,500 in remediation costs for the twelve months ending December 31, 1999 and 1998, respectively. INSURANCE The Company has comprehensive liability, fire, flood, extended coverage and rental loss insurance with respect to the Centers. The Company or the joint venture, as applicable, also currently carries earthquake insurance covering the Centers located in California. Management believes that such insurance provides adequate coverage. QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its first taxable year ended December 31, 1994, and intends to conduct its operations so as to continue to qualify as a REIT under the Code. As a REIT, the Company generally will not be subject to federal and state income taxes on its net taxable income that it currently distributes to stockholders. Qualification and taxation as a REIT depends on the Company's ability to meet certain dividend distribution tests, share ownership requirements and various qualification tests prescribed in the Code. EMPLOYEES The Company and the Management Companies employ approximately 1,651 persons, including eight executive officers, personnel in the areas of acquisitions and business development (7), property management (270), leasing (75), redevelopment/construction (25), financial services (49) and legal affairs (31). In addition, in an effort to minimize operating costs, the Company generally maintains its own security staff (572) and maintenance staff (614). Approximately 6 of these employees are represented by a union. The Company believes that relations with its employees are good. 10

ITEM 2. PROPERTIES The following table sets forth certain information about each of the Centers: <TABLE> <CAPTION> Year of Year of Percentage Company's Original Most Recent Mall and of Mall and Ownership Name of Center / Construction/ Expansion / Total Free-standing Free-standing % Location (1) Acquisition Renovation GLA (2) GLA GLA Leased --------- ----------------------------------- ------------- ----------- ----------- ------------- ------------- <S> <C> <C> <C> <C> <C> <C> 100% Boulder Plaza 1969 / 1989 1991 158,997 158,997 100.0% Boulder, Colorado 100% Bristol Shopping Center (4) 1966 / 1986 1992 165,279 165,279 90.6% Santa Ana, California 50% Broadway Plaza (4) 1951 / 1985 1994 685,368 239,871 99.4% Walnut Creek, California 100% Capitola Mall (4) 1977 / 1995 1988 584,872 205,155 90.2% Capitola, California 100% Carmel Plaza 1974 / 1998 1993 115,215 115,215 91.2% Carmel, California 100% Chesterfield Towne Center 1975 / 1994 1997 884,100 421,135 95.3% Richmond, Virginia 100% Citadel, The 1972 / 1997 1995 1,045,469 450,129 84.7% Colorado Springs, Colorado 100% Corte Madera, Village at 1985 / 1998 1994 428,398 210,398 92.0% Corte Madera, California 100% County East Mall 1966 / 1986 1989 494,342 175,782 93.5% Antioch, California 100% Crossroads Mall 1974 / 1994 1991 1,175,047 435,359 85.6% Oklahoma City, Oklahoma 100% Fresno Fashion Fair 1970 / 1996 1983 874,306 313,425 96.1% Fresno, California 100% Great Falls Marketplace 1997 / 1997 - 179,821 179,821 100.0% Great Falls, Montana 100% Greeley Mall 1973 / 1986 1987 573,238 229,876 80.0% Greeley, Colorado 100% Green Tree Mall (4) 1968 / 1975 1995 785,037 341,041 83.1% Clarksville, Indiana 100% Holiday Village Mall (4) 1959 / 1979 1992 594,735 267,216 79.9% Great Falls, Montana 10% Manhattan Village Shopping Ctr (4) 1981 / 1997 1992 551,847 375,793 97.0% Manhattan Beach, California 100% Northgate Mall 1964 / 1986 1987 743,795 273,464 90.2% San Rafael, California 100% Northwest Arkansas Mall 1972 / 1998 1997 822,703 309,033 94.4% Fayetteville, Arkansas 50% Panorama Mall 1955 / 1979 1980 324,959 159,959 94.4% Panorama, California 100% Queens Center 1973 / 1995 1991 624,260 156,117 100.0% Queens, New York <CAPTION> Company's Sales Per Ownership Name of Center / Square % Location (1) Anchors Foot (3) --------- ----------------------------------- ------------------------------------------ --------- <S> <C> <C> <C> 100% Boulder Plaza ----- $328 Boulder, Colorado 100% Bristol Shopping Center (4) ----- 345 Santa Ana, California 50% Broadway Plaza (4) Macy's, Nordstrom, 517 Walnut Creek, California Macy's Men's and Juniors 100% Capitola Mall (4) Gottschalks, J.C. Penney, 320 Capitola, California Mervyn's, Sears 100% Carmel Plaza ----- 346 Carmel, California 100% Chesterfield Towne Center Dillard's (two), Hechts, Sears 324 Richmond, Virginia J.C. Penney (9) 100% Citadel, The Dillard's, Foley's, J.C. Penney, Mervyn's 277 Colorado Springs, Colorado 100% Corte Madera, Village at Macy's, Nordstrom 545 Corte Madera, California 100% County East Mall Sears, Gottschalks, Mervyn's (6) 286 Antioch, California 100% Crossroads Mall Dillards, Foley's, J.C. Penney, 263 Oklahoma City, Oklahoma Montgomery Ward 100% Fresno Fashion Fair Gottschalks, J.C. Penney, Macy's, 342 Fresno, California Macy's Men's and Children 100% Great Falls Marketplace ----- 212 Great Falls, Montana 100% Greeley Mall Dillard's (two), J.C. Penney, Sears, 256 Greeley, Colorado Montgomery Ward 100% Green Tree Mall (4) Dillard's, J.C. Penney, 333 Clarksville, Indiana Sears, Target 100% Holiday Village Mall (4) Herberger's, J.C. Penney, Sears (5)(6) 251 Great Falls, Montana 10% Manhattan Village Shopping Ctr (4) Macy's, Macy's Men's & Home 659 Manhattan Beach, California 100% Northgate Mall Macy's, Mervyns, Sears 294 San Rafael, California 100% Northwest Arkansas Mall Dillard's (two), J.C. Penney, Sears 300 Fayetteville, Arkansas 50% Panorama Mall Wal-Mart 431 Panorama, California 100% Queens Center J.C. Penney, Macy's 746 Queens, New York </TABLE> 11

ITEM 2. PROPERTIES, CONTINUED <TABLE> <CAPTION> Year of Year of Percentage Company's Original Most Recent Mall and of Mall and Ownership Name of Center / Construction/ Expansion / Total Free-standing Free-standing % Location (1) Acquisition Renovation GLA (2) GLA GLA Leased --------- ----------------------------------- ------------- ----------- ----------- ------------- ------------- <S> <C> <C> <C> <C> <C> <C> 100% Rimrock Mall 1978 / 1996 1980 610,184 294,744 97.0% Billings, Montana 100% Salisbury, Centre at 1990 / 1995 1990 883,634 278,653 90.6% Salisbury, Maryland 100% Santa Monica Place 1980/1999 1990 560,623 277,373 99.4% Santa Monica, California 100% South Plains Mall 1972 / 1998 1995 1,142,737 400,950 92.6% Lubbock, Texas 100% South Towne Center 1987/1997 1997 1,235,499 458,987 95.6% Sandy, Utah 100% Valley View Center 1973 / 1996 1996 1,567,574 509,677 90.9% Dallas, Texas 100% Villa Marina Marketplace 1972 /1996 1995 448,301 448,301 99.8% Marina Del Rey, California 100% Vintage Faire Mall 1977 / 1996 - 1,031,678 331,759 90.9% Modesto, California 19% West Acres 1972 / 1986 1992 929,822 377,267 95.6% Fargo, North Dakota 100% Westside Pavilion 1985 / 1998 1991 756,017 397,889 93.8% Los Angeles, California ----------- --------- ------- TOTAL / AVERAGE AT DECEMBER 31, 1999 (a) 20,977,857 8,958,665 92.6% ----------- --------- ------- PACIFIC PREMIER RETAIL TRUST PROPERTIES (b): 51% Cascade Mall 1989 / 1999 1998 584,614 265,733 89.1% Burlington, Washington 51% Kitsap Mall (4) 1985 / 1999 1997 850,129 340,146 83.5% Silverdale, Washington 51% Lakewood Mall (10) 1953 / 1975 2000 1,838,826 895,177 98.5% Lakewood, California 51% Los Cerritos Center (4) 1971 / 1999 1998 1,304,262 502,981 97.9% Cerritos, California <CAPTION> Company's Sales Per Ownership Name of Center / Square % Location (1) Anchors Foot (3) --------- ----------------------------------- ------------------------------------------ --------- <S> <C> <C> <C> 100% Rimrock Mall Dillard's, Herbergers, J.C. Penney (5)(6) 286 Billings, Montana 100% Salisbury, Centre at Boscov's, J.C. Penney, Hechts, 314 Salisbury, Maryland Montgomery Ward, Sears 100% Santa Monica Place Macy's, Robinsons-May 379 Santa Monica, California 100% South Plains Mall Beall's, Dillards (two), J.C. Penney, 322 Lubbock, Texas Meryvn's, Sears 100% South Towne Center Dillard's, J.C. Penney, Mervyn's, 240 Sandy, Utah Target, Meier & Frank - ZCMI 100% Valley View Center Dillard's, Foleys, J.C. Penney, 303 Dallas, Texas Sears 100% Villa Marina Marketplace ----- 459 Marina Del Rey, California 100% Vintage Faire Mall Gottschalks, J.C. Penney, Macy's, 335 Modesto, California Macy's Men's & Home, Sears 19% West Acres Daytons, Herberger's, J.C. Penney, Sears 363 Fargo, North Dakota 100% Westside Pavilion Nordstrom, Robinsons-May 388 Los Angeles, California ------ TOTAL / AVERAGE AT DECEMBER 31, 1999 (a) $358 ------ PACIFIC PREMIER RETAIL TRUST PROPERTIES (b): 51% Cascade Mall The Bon Marche, Emporium, $269 Burlington, Washington J.C. Penney, Sears, Target 51% Kitsap Mall (4) The Bon Marche, J.C. Penney, Lamonts, 314 Silverdale, Washington Mervyn's, Sears 51% Lakewood Mall (10) Home Depot, J.C. Penney, Mervyn's, 351 Lakewood, California Montgomery Ward, Robinsons-May 51% Los Cerritos Center (4) Macy's, Mervyn's, Nordstrom, 369 Cerritos, California Robinsons-May, Sears </TABLE> 12

ITEM 2. PROPERTIES, CONTINUED <TABLE> <CAPTION> Year of Year of Percentage Company's Original Most Recent Mall and of Mall and Ownership Name of Center / Construction/ Expansion / Total Free-standing Free-standing % Location (1) Acquisition Renovation GLA (2) GLA GLA Leased --------- ----------------------------------- ------------- ----------- ----------- ------------- ------------- PACIFIC PREMIER RETAIL TRUST PROPERTIES, CONTINUED: <S> <C> <C> <C> <C> <C> <C> 51% Redmond Town Center (4) (8) 1997 / 1999 2000 1,149,373 1,149,373 97.0% Redmond, Washington 51% Stonewood Mall (4) 1953 / 1997 1991 927,508 356,761 86.8% Downey, California 51% Washington Square 1974 / 1999 1995 1,391,434 423,107 100.0% Tigard, Oregon --------- --------- ------ TOTAL / AVERAGE PACIFIC PREMIER RETAIL TRUST PROPERTIES 8,046,146 3,933,278 95.2% --------- --------- ------ SDG MACERICH PROPERTIES, L.P. PROPERTIES: 50% Eastland Mall (4) 1978 / 1998 1995 1,075,745 482,790 89.9% Evansville, Indiana 50% Empire Mall (4) 1975 / 1998 1988 1,315,673 625,566 91.4% Sioux Falls, South Dakota 50% Granite Run Mall 1974 / 1998 1993 1,022,984 522,175 97.5% Media, Pennsylvania 50% Lake Square Mall 1980 / 1998 1992 561,077 265,040 86.4% Leesburg, Florida 50% Lindale Mall 1963 / 1998 1997 690,964 385,401 88.7% Cedar Rapids, Iowa 50% Mesa Mall 1980 / 1998 1991 856,258 430,441 93.8% Grand Junction, Colorado 50% NorthPark Mall 1973 / 1998 1994 1,040,868 389,335 88.1% Davenport, Iowa 50% Rushmore Mall 1978 / 1998 1992 834,491 429,831 89.3% Rapid City, South Dakota 50% Southern Hills Mall 1980 / 1998 -- 752,712 439,135 96.6% Sioux City, Iowa 50% SouthPark Mall 1974 / 1998 1990 1,034,852 456,796 89.9% Moline, Illinois 50% SouthRidge Mall (4) 1975 / 1998 1998 1,008,607 510,801 90.4% Des Moines, Iowa 50% Valley Mall 1978 / 1998 1992 482,370 196,307 92.9% Harrisonburg, Virginia --------- ------- ------- TOTAL / AVERAGE SDG MACERICH PROPERTIES, L.P. PROPERTIES 10,676,601 5,133,618 91.5% ---------- ---------- ------- GRAND TOTAL / AVERAGE AT DECEMBER 31, 1999 (c) 39,700,604 18,025,561 92.8% ========== ========== ======= <CAPTION> Company's Sales Per Ownership Name of Center / Square % Location (1) Anchors Foot (3) --------- ----------------------------------- ------------------------------------------ --------- PACIFIC PREMIER RETAIL TRUST PROPERTIES, CONTINUED: <S> <C> <C> <C> 51% Redmond Town Center (4) (8) ----- $285 Redmond, Washington 51% Stonewood Mall (4) J.C. Penney, Mervyn's, Robinsons-May, 325 Downey, California Sears 51% Washington Square J.C. Penney, Meier & Frank, Mervyn's, 488 Tigard, Oregon Nordstrom, Sears ----- TOTAL / AVERAGE PACIFIC PREMIER RETAIL TRUST PROPERTIES $353 ----- SDG MACERICH PROPERTIES, L.P. PROPERTIES: 50% Eastland Mall (4) DeJong, Famous Barr, J.C. Penney, $355 Evansville, Indiana Lazarus, Service Merchandise 50% Empire Mall (4) Daytons, J.C. Penney, Kohl's 372 Sioux Falls, South Dakota Sears, Target, Younkers (6) 50% Granite Run Mall Boscov's, J.C. Penney, Sears 286 Media, Pennsylvania 50% Lake Square Mall Belk, J.C. Penney, Sears, Target 224 Leesburg, Florida 50% Lindale Mall Sears, Von Maur, Younkers 284 Cedar Rapids, Iowa 50% Mesa Mall Herberger's, J.C. Penney, Mervyn's, 227 Grand Junction, Colorado Sears, Target 50% NorthPark Mall J.C. Penney, Montgomery Ward, Sears, 231 Davenport, Iowa Von Maur, Younkers 50% Rushmore Mall Herberger's, J.C. Penney, Sears, 271 Rapid City, South Dakota Target 50% Southern Hills Mall Sears, Target, Younkers 329 Sioux City, Iowa 50% SouthPark Mall J.C. Penney, Sears, Younkers, 221 Moline, Illinois Von Maur, Montgomery Ward 50% SouthRidge Mall (4) Sears, Younkers, J.C. Penney, 243 Des Moines, Iowa Target, (5)(6) 50% Valley Mall Belk, J.C. Penney, Wal-Mart, 304 Harrisonburg, Virginia Peeble's ---- TOTAL / AVERAGE SDG MACERICH PROPERTIES, L.P. PROPERTIES 284 ---- GRAND TOTAL / AVERAGE AT DECEMBER 31, 1999 (c) $336 ==== </TABLE> 13

ITEM 2. PROPERTIES, CONTINUED <TABLE> <CAPTION> Year of Year of Percentage Company's Original Most Recent Mall and of Mall and Ownership Name of Center / Construction/ Expansion / Total Free-standing Free-standing % Location (1) Acquisition Renovation GLA (2) GLA GLA Leased --------- ---------------------------------------- ------------- ----------- ----------- ------------- ------------- MAJOR REDEVELOPMENT PROPERTIES: <S> <C> <C> <C> <C> <C> <C> 100% Crossroads Mall (4) 1963 / 1979 1998 811,450 368,013 (7) Boulder, Colorado 100% Pacific View (formerly Buenaventura 1965 / 1996 1999 1,248,579 422,105 (7) Mall) Ventura, California 100% Parklane Mall (4) 1967 / 1978 1998 386,911 257,191 (7) Reno, Nevada ----------- --------- TOTAL MAJOR REDEVELOPMENT PROPERTIES 2,446,940 1,047,309 ----------- --------- GRAND TOTAL 42,147,544 19,072,870 =========== ========= <CAPTION> Company's Sales Per Ownership Name of Center / Square % Location (1) Anchors Foot (3) --------- ----------------------------------- ---------------------------------------------------- --------- MAJOR REDEVELOPMENT PROPERTIES: <S> <C> <C> <C> 100% Crossroads Mall (4) Foley's, J.C. Penney, Sears (6) (7) Boulder, Colorado 100% Pacific View (formerly Buenaventura J.C. Penney, Macy's, Montgomery Ward, Robinsons-May, (7) Mall) Sears Ventura, California 100% Parklane Mall (4) Gottschalks (7) Reno, Nevada </TABLE> a) Excluding Pacific Premier Retail Trust Properties, SDG Macerich Properties, L.P. Properties and Major Redevelopment Properties b) Includes five contiguous freestanding properties c) Excluding Major Redevelopment Properties 14

ITEM 2. PROPERTIES, CONTINUED (1) The land underlying thirty-seven of the Centers is owned in fee entirely by the Company or, in the case of jointly-owned Centers, by the joint venture property partnership or limited liability company. All or part of the land underlying the remaining Centers is owned by third parties and leased to the Company or property partnership pursuant to long-term ground leases. Under the terms of a typical ground lease, the Company or property partnership pays rent for the use of the land and is generally responsible for all costs and expenses associated with the building and improvements. In some cases, the Company or property partnership has an option or right of first refusal to purchase the land. The termination dates of the ground leases range from 2000 to 2070. (2) Includes GLA attributable to Anchors (whether owned or non-owned) and Mall and Freestanding Stores as of December 31, 1999. (3) Sales are based on reports by retailers leasing Mall and Freestanding Stores for the year ending December 31, 1999 for tenants which have occupied such stores for a minimum of twelve months. Consistent with industry practices, sales per square foot are based on gross leased and occupied area, excluding theaters, and are not based on GLA. (4) Portions of the land on which the Center is situated are subject to one or more ground leases. (5) During 1997, Montgomery Ward filed for bankruptcy and emerged from bankruptcy in late 1999. Montgomery Ward closed its stores at Holiday Village Mall, Rimrock Mall and Southridge Mall in 1999. The Montgomery Ward at Holiday Village is owned by Herbergers. Dillards owns the former Montgomery Ward Building at Rimrock. (6) These properties have a vacant Anchor location. The Company is contemplating various replacement tenant/redevelopment opportunities for these vacant sites. (7) Certain spaces have been intentionally held off the market and remain vacant because of major redevelopment plans. As a result, the Company believes the percentage of Mall and Freestanding GLA leased and the sales per square foot at these major redevelopment properties is not meaningful data. (8) The office portion of this mixed-use development does not have retail sales. (9) J.C. Penney is currently building a store at Chesterfield Mall. (10) Macy's is currently building a store at Lakewood Mall. 15

MORTGAGE DEBT The following table sets forth certain information regarding the mortgages encumbering the Centers, including those Centers in which the Company has less than a 100% interest. All mortgage debt is nonrecourse to the Company. The information set forth below is as of December 31, 1999. <TABLE> <CAPTION> Earliest Date Annual Balance on which all Annual Principal Debt Due on Notes Can Property Pledged Fixed or Interest Balance Service Maturity Maturity Be Defeased As Collateral Floating Rate (000'S) (000'S) Date (000'S) or Be Prepaid ------------- -------- ---- ------- ------- ---- ------- ------------- <S> <C> <C> <C> <C> <C> <C> <C> Wholly-Owned Centers: Capitola Mall Fixed 9.25% $ 36,983 $ 3,801 12/15/2001 $ 36,193 Any Time Carmel Plaza Fixed 8.18% 28,869 2,421 5/1/2009 25,642 5/26/2001 Chesterfield Towne Center (1) Fixed 9.07% 64,358 6,580 1/1/2024 1,087 1/1/2006 Citadel Fixed 7.20% 73,377 6,648 1/1/2008 59,962 1/1/2003 Corte Madera, Village at Fixed 7.75% 71,949 6,190 11/1/2009 62,941 10/4/2003 Crossroads Mall - Boulder Fixed 7.08% 34,893 3,948 12/15/2010 28,107 1/15/2000 Fresno Fashion Fair Fixed 6.52% 69,000 4,561 8/10/2008 62,890 11/16/2000 Greeley Mall Fixed 8.50% 16,228 2,245 9/15/2003 12,519 Any Time Green Tree Mall/Crossroads - OK/ Salisbury Fixed 7.23% 117,714 8,499 3/5/2004 117,714 Any Time Holiday Village Fixed 6.75% 17,000 1,147 4/1/2001 17,000 Any Time Northgate Mall Fixed 6.75% 25,000 1,688 4/1/2001 25,000 Any Time Northwest Arkansas Mall Fixed 7.33% 62,080 5,209 1/10/2009 49,304 1/1/2004 Parklane Mall Fixed 6.75% 20,000 1,350 4/1/2001 20,000 Any Time Queens Center Fixed 6.88% 100,000 7,595 3/1/2009 88,651 2/4/2002 Rimrock Mall Fixed 7.70% 30,445 2,924 1/1/2003 28,496 1/1/2000 Santa Monica Place Floating 7.16%(2) 80,000 5,728 2/1/2001 80,000 Any Time South Plains Mall Fixed 8.22% 64,623 5,448 3/1/2009 57,557 2/17/2002 South Towne Center Fixed 6.61% 64,000 4,289 10/10/2008 64,000 7/24/2001 Valley View Mall Fixed 7.89% 51,000 4,080 10/10/2006 51,000 4/16/2000 Villa Marina Marketplace Fixed 7.23% 58,000 4,249 10/10/2006 58,000 8/29/2000 Vintage Faire Mall Fixed 7.65% 53,537 5,122 1/1/2003 50,089 1/1/2000 Westside Pavilion Fixed 6.67% 100,000 6,529 7/1/2008 91,133 10/7/2000 ---------- Total - Wholly Owned Centers $1,239,056 ---------- Joint Venture Centers (at pro rata share): Broadway Plaza (50%) (3) Fixed 6.68% 36,690 3,089 8/1/2008 29,315 Any Time Pacific Premier Retail Trust (51%) (3): Cascade Mall Fixed 6.50% 13,837 1,461 8/1/2014 141 Any Time Kitsap Mall (4) Fixed 6.50% 20,452 2,137 6/1/2000 19,571 Any Time Lakewood Mall Fixed 7.20% 64,770 4,661 8/10/2005 64,770 Any Time Los Cerritos Center Fixed 7.13% 60,909 5,054 7/1/2006 54,955 6/1/2002 North Point Fixed 6.50% 1,889 190 12/1/2015 47 2/7/2004 Redmond Town Center - Retail Fixed 6.50% 32,743 2,686 2/1/2011 23,850 Any Time Redmond Town Center - Office Fixed 6.77% 42,248 3,575 7/10/2009 26,223 6/1/2002 Stonewood Mall Floating 8.23%(5) 38,250 3,251 2/1/2001 38,250 Any Time Washington Square Fixed 6.70% 60,471 5,051 1/1/2009 48,289 3/1/2004 Washington Square Too Fixed 6.50% 6,533 634 12/1/2016 116 2/17/2004 SDG Macerich Properties L.P. (50%) (3) Fixed 6.23%(6) 159,282 11,114 5/15/2006 150,000 Any Time SDG Macerich Properties L.P. (50%) (3) Floating 6.96%(6) 92,500 5,689 5/15/2003 92,500 Any Time West Acres Center (19%) (3) Fixed 6.52% 7,600 495 1/1/2009 7,538 1/4/2002 ---------- Total - Joint Venture Centers (3) $638,174 ---------- Total - All Centers $1,877,230 ========== </TABLE> 16

MORTGAGE DEBT, CONTINUED: Notes: (1) The annual debt service payment represents the payment of principal and interest. In addition, contingent interest, as defined in the loan agreement, may be due to the extent that 35% of the gross receipts (as defined in the loan agreement) exceeds a base amount specified therein. Contingent interest recognized was $385,556 for the year ended December 31, 1999 and $387,101 for the year ended December 31, 1998. (2) The loan bears interest at LIBOR plus 1.75%. At December 31, 1999, the total interest rate was 7.16%. In addition, the Company can, subject to certain conditions, increase the borrowing amount up to $90.0 million. As of January 6, 2000, an additional $5.0 million was advanced for total borrowings outstanding of $85.0 million. (3) Reflects the Company's pro rata share of debt. (4) In connection with the acquisition of this Center, the joint venture assumed $39.4 million of debt. At acquisition, this debt was recorded at the fair value of $41.5 million which included an unamortized premium of $2.1 million. This premium is being amortized as interest expense over the life of the loan using the effective interest method. The joint venture's monthly debt service is $349,000 and is calculated using an 8.60% interest rate. At December 31, 1999, the joint venture's unamortized premium was $1.4 million. (5) The loan bears interest at LIBOR plus 1.75%. At December 31, 1999, the total interest rate was 8.23%. (6) In connection with the acquisition of these Centers, the joint venture assumed $485 million of mortgage notes payable which are secured by the properties. At acquisition, this debt reflected a fair value of $322.7 million, which included an unamortized premium of $22.7 million. This premium is being amortized as interest expense over the life of the loan using the effective interest method. At December 31, 1999, the unamortized balance of the debt premium was $18.6 million. This debt is due in May 2006 and requires a monthly payment of $1.9 million. $185 million of this debt is due in May 2003 and requires monthly interest payments at a variable weighted average rate (based on LIBOR) of 6.96% at December 31, 1999. This variable rate debt is covered by an interest rate cap agreement which effectively prevents the interest rate from exceeding 11.53%. The Company has a credit facility of $150 million with a maturity of February 2001, currently bearing interest at LIBOR plus 1.15%. The interest rate on such credit facility fluctuates between 0.95% and 1.15% over LIBOR. As of December 31, 1999 and December 31, 1998, $57.4 million and $137.0 million of borrowings were outstanding under this line of credit at interest rates of 7.65% and 6.79%, respectively. Additionally, the Company issued $776,000 in letters of credit guaranteeing performance by the Company of certain obligations. The Company does not believe that these letters of credit will result in a liability to the Company. During January 1999, the Company entered into a bank construction loan agreement to fund $89.2 million of costs related to the redevelopment of Pacific View. See "Item 2. Properties." The loan bears interest at LIBOR plus 2.25% and matures in February 2001. Principal is drawn as construction costs are incurred. As of December 31, 1999, $72.7 million of principal has been drawn under the loan. In addition, the Company had a note payable of $30.6 million due in February 2000 payable to the seller of the acquired portfolio. The note bore interest at 6.5%. The loan was paid in full on February 18, 2000. During 1997, the Company issued and sold $161.4 million of convertible subordinated debentures (the "Debentures") due 2002. The Debentures, which were sold at par, bear interest at 7.25% annually (payable semi-annually) and are convertible at any time, on or after 60 days, from the date of issue at a conversion price of $31.125 per share. The Debentures mature on December 15, 2002 and are callable by the Company after June 15, 2002 at par plus accrued interest. 17

ITEM 3. LEGAL PROCEEDINGS. The Company, the Operating Partnership, the Management Companies and their respective affiliates are not currently involved in any material litigation nor, to the Company's knowledge, is any material litigation currently threatened against such entities or the Centers, other than routine litigation arising in the ordinary course of business, most of which is expected to be covered by liability insurance. For information about certain environmental matters, see "Business of the Company - Environmental Matters." ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS. None. 18

PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The common stock of the Company is listed and traded on the New York Stock Exchange ("NYSE") under the symbol "MAC". The common stock began trading on March 10, 1994 at a price of $19 per share. In 1999, the Company's shares traded at a high of $27.0625 and a low of $17.8125. As of February 29, 2000, there were approximately 457 stockholders of record. The following table shows high and low closing prices per share of common stock during each quarter in 1998 and 1999 and dividends/distributions per share of common stock declared and paid by quarter: <TABLE> <CAPTION> Quarters Ended Market Quotation Per Share Dividends/Distributions -------------- -------------------------- ----------------------- -------------- High Low Declared and Paid ---- --- ----------------- <S> <C> <C> <C> March 31, 1998 $30 3/8 $27 $ 0.46 June 30, 1998 29 3/4 26 1/16 0.46 September 30, 1998 29 3/8 22 1/4 0.46 December 31, 1998 28 7/16 24 0.485 March 31, 1999 26 11/16 22 7/16 0.485 June 30, 1999 27 1/16 22 1/8 0.485 September 30, 1999 26 10/16 21 8/16 0.485 December 31, 1999 22 10/16 17 13/16 0.51 </TABLE> The Company has issued 3,627,131 shares of its Series A cumulative convertible redeemable preferred stock ("Series A Preferred Stock"), and 5,487,471 shares of its Series B cumulative convertible redeemable preferred stock ("Series B Preferred Stock"). The Series A Preferred Stock and Series B Preferred Stock can be converted into shares of common stock on a one-to-one basis. There is no established public trading market for either the Series A Preferred Stock or the Series B Preferred Stock. All of the outstanding shares of the Series A Preferred Stock are held by Security Capital Preferred Growth Incorporated. All of the outstanding shares of the Series B Preferred Stock are held by Ontario Teachers' Pension Plan Board. The Series A Preferred Stock and Series B Preferred Stock were issued on February 25, 1998 and June 16, 1998, respectively. The following table shows the dividends per share of preferred stock declared and paid for each quarter in 1998 and 1999. Preferred stock dividends are accrued quarterly and paid in arrears. No dividends will be declared or paid on any class of common or other junior stock to the extent that dividends on Series A Preferred Stock and Series B Preferred Stock have not been declared and/or paid. <TABLE> <CAPTION> Series A Series B Preferred Stock Preferred Stock Dividends Dividends --------------- --------------- QUARTERS ENDED Declared Paid Declared Paid -------- ---- -------- ---- <S> <C> <C> <C> <C> March 31, 1998 ............ N/A N/A N/A N/A June 30, 1998 ............. $0.179 N/A N/A N/A September 30, 1998 ........ 0.460 $0.179 $0.071 N/A December 31, 1998.......... 0.485 0.460 0.485 $0.071 QUARTERS ENDED March 31, 1999 ............ 0.485 0.485 0.485 0.485 June 30, 1999 ............. 0.485 0.485 0.485 0.485 September 30, 1999 ........ 0.510 0.485 0.510 0.485 December 31, 1999.......... 0.510 0.510 0.510 0.510 </TABLE> 19

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - CONTINUED On February 26, 1999, the Company issued 20,700 shares of common stock upon the redemption of 20,700 OP Units in a private placement to a limited partner of the Operating Partnership, an accredited investor, pursuant to Section 4(2) of the Securities Act of 1933. On August 27, 1999, the Company issued 10,000 shares of common stock upon the redemption of 10,000 OP Units in a private placement to a limited partner of the Operating Partnership, an accredited investor, pursuant to Section 4(2) of the Securities Act of 1933. ITEM 6. SELECTED FINANCIAL DATA. The following sets forth selected financial data for the Company on a historical basis. The following data should be read in conjunction with the financial statements (and the notes thereto) of the Company and "Management's Discussion And Analysis of Financial Condition and Results of Operations" each included elsewhere in this Form 10-K. The Selected Financial Data is presented on a consolidated basis. The limited partnership interests in the Operating Partnership (not owned by the REIT) are reflected as minority interest. Centers in which the Company does not have a controlling ownership interest (Panorama Mall, North Valley Plaza, Broadway Plaza, Manhattan Village, Pacific Premier Retail Trust, SDG Macerich Properties, L.P. and West Acres Shopping Center) are referred to as the "Joint Venture Centers", and along with the Management Companies, are reflected in the selected financial data under the equity method of accounting. Accordingly, the net income from the Joint Venture Centers and the Management Companies that is allocable to the Company is included in the statement of operations as "Equity in income (loss) of unconsolidated joint ventures and Management Companies." 20

ITEM 6. SELECTED FINANCIAL DATA, CONTINUED <TABLE> <CAPTION> The Company ----------------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- (All amounts in thousands, except per share data) <S> <C> <C> <C> <C> <C> OPERATING DATA: Revenues: Minimum rents $ 204,568 $ 179,710 $ 142,251 $ 99,061 $ 69,253 Percentage rents 15,106 12,856 9,259 6,142 4,814 Tenant recoveries 99,126 86,740 66,499 47,648 26,961 Other 8,644 4,555 3,205 2,208 1,441 --------- --------- --------- --------- --------- Total revenues 327,444 283,861 221,214 155,059 102,469 Shopping center expenses 100,327 89,991 70,901 50,792 31,580 REIT general and administrative expenses 5,488 4,373 2,759 2,378 2,011 Depreciation and amortization 61,383 53,141 41,535 32,591 25,749 Interest expense 113,348 91,433 66,407 42,353 25,531 --------- --------- --------- --------- --------- Income before minority interest, unconsolidated entities and extraordinary item 46,898 44,923 39,612 26,945 17,598 Minority interest (1) (38,335) (12,902) (10,567) (10,975) (8,246) Equity in income (loss) of unconsolidated joint ventures and management companies (2) 25,945 14,480 (8,063) 3,256 3,250 Gain on sale of assets 95,981 9 1,619 -- -- Extraordinary loss on early extinguishment of debt (1,478) (2,435) (555) (315) (1,299) --------- --------- --------- --------- --------- Net income 129,011 44,075 22,046 18,911 11,303 Less preferred dividends 18,138 11,547 -- -- -- --------- --------- --------- --------- --------- Net income available to common stockholders $ 110,873 $ 32,528 $ 22,046 $ 18,911 $ 11,303 ========= ========= ========= ========= ========= Earnings per share - basic: (3) Income before extraordinary item $ 3.30 $ 1.14 $ 0.86 $ 0.92 $ 0.78 Extraordinary item (0.04) (0.08) (0.01) (0.01) (0.05) --------- --------- --------- --------- --------- Net income per share - basic $ 3.26 $ 1.06 $ 0.85 $ 0.91 $ 0.73 ========= ========= ========= ========= ========= Earnings per share - diluted: (3)(4)(7) Income before extraordinary item $ 3.01 $ 1.11 $ 0.86 $ 0.90 $ 0.78 Extraordinary item (0.02) (0.05) (0.01) (0.01) (0.05) --------- --------- --------- --------- --------- Net income per share - diluted $ 2.99 $ 1.06 $ 0.85 $ 0.89 $ 0.73 ========= ========= ========= ========= ========= OTHER DATA: Funds from operations-diluted (4) $ 164,302 $ 120,518 $ 83,427 $ 62,428 $ 44,938 EBITDA (5) $ 221,629 $ 189,497 $ 147,554 $ 101,889 $ 68,878 Cash flows from (used in): Operating activities $ 139,576 $ 85,176 $ 78,476 $ 80,431 $ 48,186 Investing activities ($247,685) ($761,147) ($215,006) ($296,675) ($ 88,413) Financing activities $ 123,421 $ 675,960 $ 146,041 $ 216,317 $ 51,973 Number of centers at year end 52 47 30 26 19 Weighted average number of shares outstanding - basic (6) 46,130 43,016 37,982 32,934 26,930 Weighted average number of shares outstanding - diluted (4)(6)(7) 60,893 43,628 38,403 33,320 26,984 Cash distributions declared per common share $ 1.965 $ 1.865 $ 1.78 $ 1.70 $ 1.66 FFO per share - diluted (4) $ 2.698 $ 2.426 $ 2.172 $ 1.874 $ 1.669 </TABLE> 21

ITEM 6. SELECTED FINANCIAL DATA, CONTINUED <TABLE> <CAPTION> The Company ------------------------------------------------------------------ December 31, ------------------------------------------------------------------ 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- ( All amounts in thousands) <S> <C> <C> <C> <C> <C> BALANCE SHEET DATA: Investment in real estate (before accumulated depreciation) $2,174,535 $2,213,125 $1,607,429 $1,273,085 $ 833,998 Total assets $2,404,293 $2,322,056 $1,505,002 $1,187,753 $ 763,398 Total mortgage, notes and debentures payable $1,561,127 $1,507,118 $1,122,959 $ 789,239 $ 485,193 Minority interest (1) $ 157,599 $ 165,524 $ 100,463 $ 112,242 $ 95,740 Stockholders' equity $ 620,286 $ 577,413 $ 216,295 $ 237,749 $ 158,345 </TABLE> (1) "Minority Interest" reflects the ownership interest in the Operating Partnership not owned by the REIT. (2) Unconsolidated joint ventures include all Centers in which the Company does not have a controlling ownership interest and the Management Companies. The Management Companies have been reflected using the equity method. (3) Earnings per share is based on SFAS No. 128 for all years presented. (4) Funds from Operations ("FFO") represents net income (loss) (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from debt restructuring and sales or write-down of assets, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs), and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. FFO does not represent cash flow from operations as defined by GAAP and is not necessarily indicative of cash available to fund all cash flow needs. The computation of FFO - diluted and diluted average number of shares outstanding includes the effect of outstanding common stock options and restricted stock using the treasury method. Convertible debentures for the twelve month period ending December 31, 1998 are anti-dilutive and are not included in the FFO calculation. The convertible debentures are dilutive for the twelve month period ending December 31, 1999 and are included in the FFO calculation. On February 25, 1998, the Company sold $100 million of its Series A Preferred Stock. On June 17, 1998, the Company sold $150 million of its Series B Preferred Stock. The preferred stock can be converted on a one-for-one basis for common stock. The preferred stock was dilutive to FFO in 1998 and 1999 and the preferred stock and the convertible debentures were dilutive to net income in 1999. (5) EBITDA represents earnings before interest, income taxes, depreciation, amortization, minority interest, equity in income (loss) of unconsolidated entities, extraordinary items, gain (loss) on sale of assets and preferred dividends. This data is relevant to an understanding of the economics of the shopping center business as it indicates cash flow available from operations to service debt and satisfy certain fixed obligations. EBITDA should not be construed by the reader as an alternative to operating income as an indicator of the Company's operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) or as a measure of liquidity. (6) Assumes that all OP Units are converted to common stock. (7) Assumes issuance of common stock for in-the-money options and restricted stock calculated using the Treasury method in accordance with SFAS No. 128 for all years presented. 22

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL BACKGROUND AND PERFORMANCE MEASUREMENT The Company believes that the most significant measures of its operating performance are Funds from Operations and EBITDA. Funds from Operations is defined as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales or write-down of assets, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs), and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. Funds from Operations does not represent cash flow from operations as defined by GAAP and is not necessarily indicative of cash available to fund all cash flow needs. EBITDA represents earnings before interest, income taxes, depreciation, amortization, minority interest, equity in income (loss) of unconsolidated entities, extraordinary items, gain (loss) on sale of assets and preferred dividends. This data is relevant to an understanding of the economics of the shopping center business as it indicates cash flow available from operations to service debt and satisfy certain fixed obligations. EBITDA should not be construed as an alternative to operating income as an indicator of the Company's operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) or as a measure of liquidity. While the performance of individual Centers and the Management Companies determines EBITDA, the Company's capital structure also influences Funds from Operations. The most important component in determining EBITDA and Funds from Operations is Center revenues. Center revenues consist primarily of minimum rents, percentage rents and tenant expense recoveries. Minimum rents will increase to the extent that new leases are signed at market rents that are higher than prior rents. Minimum rents will also fluctuate up or down with changes in the occupancy level. Additionally, to the extent that new leases are signed with more favorable expense recovery terms, expense recoveries will increase. Percentage rents generally increase or decrease with changes in tenant sales. As leases roll over, however, a portion of historical percentage rent is often converted to minimum rent. It is therefore common for percentage rents to decrease as minimum rents increase. Accordingly, in discussing financial performance, the Company combines minimum and percentage rents in order to better measure revenue growth. The following discussion is based primarily on the consolidated financial statements of the Company for the years ended December 31, 1999, 1998 and 1997. The following discussion compares the activity for the year ended December 31, 1999 to results of operations for 1998. Also included is a comparison of the activities for the year ended December 31, 1998 to the results for the year ended December 31, 1997. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto. FORWARD-LOOKING STATEMENTS This annual report on Form 10-K contains or incorporates statements that constitute forward-looking statements. Those statements appear in a number of places in this Form 10-K and include statements regarding, among other matters, the Company's growth and acquisition opportunities, the Company's acquisition strategy, regulatory matters pertaining to compliance with governmental regulations and other factors affecting the Company's financial condition or results of operations. Words such as "expects," "anticipates," "intends," "projects," "predicts," "plans," "believes," "seeks," "estimates," and "should" and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company or industry to vary materially from the Company's future results, performance or achievements, or those of the industry, expressed or implied in such forward-looking statements. Such factors include, among others, general industry economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of current and prospective tenants, lease rents, availability and cost of financing and operating expenses; adverse changes in the real estate markets including, among other things, competition with other companies, retail formats and technology, risks of real estate development and acquisitions; governmental actions and initiatives; and environmental and safety requirements. The Company will not update any forward-looking information to reflect actual results or changes in the factors affecting the forward-looking information. 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table reflects the Company's acquisitions in 1997, 1998 and 1999: <TABLE> <CAPTION> Date Acquired Location -------- -------- <S> <C> <C> "1997 ACQUISITION CENTERS": South Towne Center March 27, 1997 Sandy, Utah Stonewood Mall August 6, 1997 Downey, California Manhattan Village (*) August 19, 1997 Manhattan Beach, California The Citadel Mall December 19, 1997 Colorado Springs, Colorado Great Falls Marketplace December 31, 1997 Great Falls, Montana "1998 ACQUISITION CENTERS": ERE/Yarmouth Portfolio (*) February 27, 1998 Twelve properties in eight states South Plains Mall June 19, 1998 Lubbock, Texas Westside Pavilion July 1, 1998 Los Angeles, California Village at Corte Madera June-July 1998 Corte Madera, California Carmel Plaza August 10, 1998 Carmel, California Northwest Arkansas Mall December 15, 1998 Fayetteville, Arkansas "1999 ACQUISITION CENTERS": Pacific Premier Retail Trust (*) February 18, 1999 Three regional malls, retail component of a mixed-use development and five contiguous properties in Washington and Oregon. The office component of the mixed-used development was acquired July 12, 1999. PPR Albany Plaza LLC (**) February 18, 1999 Two non-contiguous community shopping PPR Eastland Plaza LLC (**) Centers located in Oregon and Ohio, respectively. Los Cerritos Center (***) June 2, 1999 Cerritos, California Santa Monica Place October 29, 1999 Santa Monica, California </TABLE> -------------------------------------------------------------------------------- (*) denotes the Company owns these Centers through a joint venture partnership. (**) denotes the Company owns its interests in these Centers through one of the Management Companies. On October 27, 1999 and November 12, 1999, Albany Plaza and Eastland Plaza were sold, respectively. (***) denotes the Company owned an interest in this Center through one of the Management Companies from the date of acquisition through October 25, 1999. On October 26, 1999, 99% of the membership interests of the entity owning this Center were contributed to Pacific Premier Retail Trust. The financial statements include the results of these Centers for periods subsequent to their acquisition. The properties acquired by SDG Macerich Properties, L.P., Pacific Premier Retail Trust and the Management Companies ("Joint Venture Acquisitions") are reflected using the equity method of accounting. The results of these acquisitions are reflected in the consolidated results of operations of the Company in equity in income of unconsolidated joint ventures and the Management Companies. 24

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED: Many of the variations in the results of operations, discussed below, occurred due to the addition of these properties to the portfolio during 1999 and 1998. Many factors impact the Company's ability to acquire additional properties; including the availability and cost of capital, the overall debt to market capitalization level, interest rates and availability of potential acquisition targets that meet the Company's criteria. Accordingly, management is uncertain whether during the balance of 2000, and in future years, there will be similar acquisitions and corresponding increases in revenues, net income and FFO that occurred as a result of the 1999 and 1998 Acquisition Centers. Management anticipates the pace of acquisitions to slow considerably in 2000 compared to 1999 and 1998. Pacific View (formerly known as Buenaventura Mall), Crossroads Mall-Boulder, Huntington Center and Parklane Mall are currently under redevelopment and are referred to herein as the "Redevelopment Centers." Huntington Center was sold on November 16, 1999. All other Centers, excluding the 1999 and 1998 Acquisition Centers and Redevelopment Centers, are referred to herein as the "Same Centers", unless the context otherwise requires. The bankruptcy and/or closure of an Anchor, or its sale to a less desirable retailer, could adversely affect customer traffic in a Center and thereby reduce the income generated by that Center. Furthermore, the closing of an Anchor could, under certain circumstances, allow certain other Anchors or other tenants to terminate their leases or cease operating their stores at the Center or otherwise adversely affect occupancy at the Center. Other retail stores at the Centers may also seek the protection of bankruptcy laws and/or close stores, which could result in the termination of such tenants leases and thus cause a reduction in cash flow generated by the Centers. In addition, the Company's success in the highly competitive real estate shopping center business depends upon many other factors, including general economic conditions, the ability of tenants to make rent payments, increases or decreases in operating expenses, occupancy levels, changes in demographics, competition from other centers and forms of retailing and the ability to renew leases or relet space upon the expiration or termination of leases. ASSETS AND LIABILITIES Total assets increased to $2,404 million at December 31, 1999 compared to $2,322 million at December 31, 1998 and $1,505 million at December 31, 1997. During that same period, total liabilities increased from $1,188 million in 1997 to $1,579 million in 1998 and $1,626 million in 1999. These changes were primarily a result of the 1998 common stock offerings of 7,920,181 shares, the 1998 preferred stock offerings of 9,114,602 shares, the 1997 offering of $161.4 million of debentures, the purchase of the 1999, 1998 and 1997 Acquisition Centers and related debt transactions. A. ACQUISITIONS AND JOINT VENTURE DEVELOPMENTS On February 18, 1999, the Company, through a 51/49 joint venture with Ontario Teachers closed on the first phase of a two phase acquisition of a portfolio of properties. The phase one closing included the acquisition of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers comprising approximately 3.6 million square feet for a total purchase price of approximately $427.0 million. The purchase price was funded with a $120.0 million loan placed concurrently with the closing, $140.4 million of debt from an affiliate of the seller, and $39.4 million of assumed debt. The balance of the purchase price was paid in cash. The Company's share of the cash component was funded with the proceeds from two refinancings of Centers and borrowings under the Company's line of credit. On July 12, 1999, the Company closed on the second phase of the acquisition. The second phase consisted of the acquisition of the office component of the mixed-use development for a purchase price of approximately $111.0 million. The purchase price was funded with a $76.7 million loan placed concurrently with the closing and the balance was paid in cash. The Company's share of the cash component was funded from borrowings under the Company's line of credit. The two non-contiguous community shopping centers were subsequently sold in October and November of 1999. On June 2, 1999, Cerritos, a wholly-owned subsidiary of Macerich Management Company, acquired Los Cerritos Center, a 1,304,262 square foot super regional mall in Cerritos, California. The total purchase price was $188.0 million, which was funded with $120.0 million of debt placed concurrently with the closing and a $70.8 million loan from the Company. The Company funded this loan from borrowings under a $60.0 million bank loan agreement and the balance from the Company's line of credit. 25

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED: ASSETS AND LIABILITIES - CONTINUED: On October 26, 1999, 49% of the membership interests of Stonewood, Cerritos and Lakewood were sold to Ontario Teachers' and concurrently Ontario Teachers' and the Company contributed their 99% collective membership interests in Stonewood and Cerritos and 100% of their collective membership interests in Lakewood to PPRT, a real estate investment trust, owned approximately 51% by the Company and 49% by Ontario Teachers. Lakewood, Stonewood, and Cerritos own Lakewood Mall, Stonewood Mall and Los Cerritos Center, respectively. The total value of the transaction was approximately $535.0 million. The properties were contributed to PPRT subject to existing debt of $322.0 million. The net cash proceeds to the Company were approximately $104.0 million which were used for reduction of debt and for general corporate purposes. On October 29, 1999, Macerich Santa Monica, LLC, a wholly-owned indirect subsidiary of the Company, acquired Santa Monica Place, a 560,623 square foot regional mall located in Santa Monica, California. The total purchase price was $130.8 million, which was funded with $80.0 million of debt placed concurrently with the closing with the balance funded from proceeds from the PPRT transaction described above. B. REFINANCINGS On February 4, 1999, the Company refinanced the debt on Queens Center. A $65.1 million floating rate loan was paid in full and a new note was issued for $100.0 million bearing interest at a fixed rate of 6.88% and maturing March 1, 2009. On February 17, 1999, the Company refinanced the debt on South Plains Mall. A $28.4 million loan, at an effective interest rate of 6.3%, was paid in full and a new note was issued for $65.0 million bearing interest at a fixed rate of 8.22% and maturing March 1, 2009. On April 30, 1999, the Company refinanced the debt on Carmel Plaza. A $25.0 million floating rate loan was paid in full and a new note was issued for $29.0 million bearing interest at a fixed rate of 8.18% and maturing May 1, 2009. On October 8, 1999, the Company refinanced the debt on Village at Corte Madera. A $60.0 million floating rate loan was paid in full and a new note was issued for $72.0 million bearing interest at a fixed rate of 7.75% and maturing November 1, 2009. C. OTHER EVENTS On November 15, 1999, the Company redeemed $25.1 million of OP Units of the Operating Partnership for cash from various unit holders. A total of 1,266,687 of OP Units were redeemed for cash at the Company's option in lieu of exchanging common stock for OP Units. On November 16, 1999, the Company sold Huntington Center. Huntington Center is a shopping center located in Huntington Beach, California, that was purchased by the Company in December 1996. The Center was purchased as part of a package with Fresno Fashion Fair in Fresno, California, and Pacific View (formerly know as Buenaventura Mall) in Ventura, California. The Center was sold for $48.0 million and the net cash proceeds from the sale were used for general corporate purposes. 26

RESULTS OF OPERATIONS COMPARISON OF YEARS ENDED DECEMBER 31, 1999 AND 1998 REVENUES Minimum and percentage rents increased by 14.1% to $219.7 million in 1999 from $192.6 million in 1998. Approximately $26.3 million of the increase resulted from the 1998 Acquisition Centers, $1.9 million from the 1999 acquisition of Santa Monica Place and $5.2 million of the increase was attributable to the Same Centers. These increases were partially offset by revenue decreases at the Redevelopment Centers of $2.1 million in 1999 and $4.2 million of the decrease related to the contribution of 100% and 99% of the membership interests of Lakewood Mall and Stonewood Mall, respectively, to the PPRT joint venture on October 26,1999. Tenant recoveries increased to $99.1 million in 1999 from $86.7 million in 1998. The 1998 Acquisition Centers generated $12.9 million of this increase, $1.3 million was from the acquisition of Santa Monica Place, and $1.9 million of the increase was from the Same Centers. These increases were partially offset by revenue decreases at the Redevelopment Centers of $2.1 million in 1999 and $1.6 million of the decrease resulted from the contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture. Other income increased to $8.6 million in 1999 from $4.5 million in 1998. Approximately $0.7 million of the increase related to the 1998 Acquisition Centers and the 1999 acquisition of Santa Monica Place, and $3.7 million of the increase was attributable to the Same Centers. EXPENSES Shopping center expenses increased to $100.3 million in 1999 compared to $90.0 million in 1998. Approximately $13.2 million of the increase resulted from the 1998 Acquisition Centers and the 1999 acquisition of Santa Monica Place and $1.1 million of the increase resulted from increased property taxes and recoverable expenses at the Same Centers. The Redevelopment Centers had a net decrease of $2.0 million in shopping center expenses resulting primarily from decreased property taxes and recoverable expenses. The contribution of Lakewood Mall and Stonewood Mall to the PPRT joint venture resulted in $2.0 million of this decrease. General and administrative expenses increased to $5.5 million in 1999 from $4.4 million in 1998 primarily as a result of the accounting change required by EITF 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions," which requires the expensing of internal acquisition costs. Previously in accordance with GAAP, certain internal acquisition costs were capitalized. The increase is also attributable to higher executive and director compensation expense. INTEREST EXPENSE Interest expense increased to $113.3 million in 1999 from $91.4 million in 1998. This increase of $22.1 million is primarily attributable to the acquisition activity in 1998 and 1999, which was partially funded with secured debt and borrowings under the Company's line of credit. DEPRECIATION AND AMORTIZATION Depreciation increased to $61.4 million from $53.1 million in 1998. This increase relates primarily to the 1998 and 1999 Acquisition Centers. MINORITY INTEREST The minority interest represents the 26.3% weighted average interest of the Operating Partnership that was not owned by the Company during 1999. This compares to 28.4% not owned by the Company during 1998. INCOME FROM UNCONSOLIDATED JOINT VENTURES AND MANAGEMENT COMPANIES The income from unconsolidated joint ventures and the Management Companies was $25.9 million for 1999, compared to income of $14.5 million in 1998. A total of $3.2 million of the change is attributable to the 1998 acquisitions of SDG Macerich Properties, L.P. and $7.9 million of the change is attributable to the 1999 acquisitions by Pacific Premier Retail Trust. 27

RESULTS OF OPERATIONS - CONTINUED: COMPARISON OF YEARS ENDED DECEMBER 31, 1999 AND 1998 GAIN ON SALE OF ASSETS A gain on sale of assets of $96.0 million is a result of the Company selling approximately 49% of the membership interests of Stonewood and Lakewood to Ontario Teachers' in October 1999 and the Company's sale of Huntington Center on November 16, 1999. EXTRAORDINARY LOSS FROM EARLY EXTINGUISHMENT OF DEBT In 1999, the Company wrote off $1.5 million of unamortized financing costs, compared to $2.4 million written off in 1998. NET INCOME AVAILABLE TO COMMON STOCKHOLDERS As a result of the foregoing, including the gain on sale of assets, net income available to common stockholders increased to $110.9 million in 1999 from $32.5 million in 1998. OPERATING ACTIVITIES Cash flow from operations was $139.6 million in 1999 compared to $85.2 million in 1998. The increase is primarily because of increased net operating income from the 1998 and 1999 Acquisition Centers. INVESTING ACTIVITIES Cash flow used in investing activities was $247.7 million in 1999 compared to $761.1 million in 1998. The change resulted primarily from the cash contributions required by the Company for the joint venture acquisitions of $240.2 million in 1998 compared to $116.9 million in 1999, and the proceeds from the sale of assets in 1999 of $106.9 million. FINANCING ACTIVITIES Cash flow from financing activities was $123.4 million in 1999 compared to $676.0 million in 1998. The decrease resulted from no equity offerings in 1999 compared to 7,920,181 shares of common stock sold in 1998. Additionally, 9,114,602 shares of preferred stock were sold in the first and second quarters of 1998. EBITDA AND FUNDS FROM OPERATIONS Primarily because of the factors mentioned above, EBITDA increased 16.9% to $221.6 million in 1999 from $189.5 million in 1998 and Funds from Operations - Diluted increased 36.3% to $164.3 million from $120.5 million in 1998. 28

RESULTS OF OPERATIONS - CONTINUED: COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997 REVENUES Minimum and percentage rents increased by 27% to $192.6 million in 1998 from $151.5 million in 1997. Approximately $18.9 million of the increase resulted from the 1997 Acquisition Centers, $18.8 million resulted from the 1998 Acquisition Centers and $5.0 million of the increase was attributable to the Same Centers. These increases were partially offset by revenue decreases at the Redevelopment Centers of $1.6 million in 1998. Tenant recoveries increased to $86.7 million in 1998 from $66.5 million in 1997. The 1998 and 1997 Acquisition Centers generated $17.7 million of this increase and $2.2 million of the increase was from the Same Centers. Other income increased to $4.5 million in 1998 from $3.2 million in 1997. Approximately $0.6 million of the increase related to the 1998 and 1997 Acquisition Centers, $0.7 million of the increase was attributable to the Same Centers and the Redevelopment Centers. EXPENSES Shopping center expenses increased to $90.0 million in 1998 compared to $70.9 million in 1997. Approximately $17.3 million of the increase resulted from the 1998 and 1997 Acquisition Centers. The other Centers had a net increase of $1.8 million in shopping center expenses resulting primarily from increased property taxes and recoverable expenses. General and administrative expenses increased to $4.4 million in 1998 from $2.8 million in 1997 primarily due to the accounting change required by EITF 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions," which requires the expensing of internal acquisition costs. Previously in accordance with GAAP, certain internal acquisition costs were capitalized. The increase is also attributable to higher executive and director compensation expense. INTEREST EXPENSE Interest expense increased to $91.4 million in 1998 from $66.4 million in 1997. This increase of $25.0 million is primarily attributable to the acquisition activity in 1997 and 1998, which was partially funded with secured debt and borrowings under the Company's line of credit. In addition, in June and July of 1997, the Company issued $161.4 million of convertible debentures, which contributed to $5.7 million of this increase. DEPRECIATION AND AMORTIZATION Depreciation and amortization increased to $53.1 million from $41.5 million in 1997. This increase relates primarily to the 1997 and 1998 Acquisition Centers. MINORITY INTEREST The minority interest represents the 28.4% weighted average interest of the Operating Partnership that was not owned by the Company during 1998. This compares to 31.8% not owned by the Company during 1997. 29

RESULTS OF OPERATIONS - CONTINUED: COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997 - CONTINUED: INCOME (LOSS) FROM UNCONSOLIDATED JOINT VENTURES AND MANAGEMENT COMPANIES The income from unconsolidated joint ventures and the Management Companies was $14.5 million for 1998, compared to a loss of $8.1 million in 1997. A total of $14.5 million of the change is attributable to the 1998 acquisition of the ERE/Yarmouth portfolio. Also, in 1997, there was a write-down and loss of $10.5 million on the sale of North Valley Plaza. GAIN ON SALE OF ASSETS During 1997, the Company sold a parcel of land for a net gain of $1.6 million compared to a minimal amount of gain on sale recognized in 1998. EXTRAORDINARY LOSS FROM EARLY EXTINGUISHMENT OF DEBT In 1998, the Company wrote off $2.4 million of unamortized financing costs, compared to $0.6 million written off in 1997. NET INCOME AVAILABLE TO COMMON STOCKHOLDERS As a result of the foregoing, net income available to common stockholders increased to $32.5 million in 1998 from $22.0 million in 1997. OPERATING ACTIVITIES Cash flow from operations was $85.2 million in 1998 compared to $78.4 million in 1997. The increase resulted from the factors discussed above, primarily the impact of the 1997 and 1998 Acquisition Centers. INVESTING ACTIVITIES Cash flow used in investing activities was $761.1 million in 1998 compared to $215.0 million in 1997. The change resulted primarily from the higher volume of acquisition activity completed in 1998 compared to 1997. FINANCING ACTIVITIES Cash flow from financing activities was $676.0 million in 1998 compared to $146.0 million in 1997. The increase resulted from the offerings of 7,920,181 shares of common stock, 3,627,131 shares of Series A Preferred Stock and 5,487,471 shares of Series B Preferred Stock completed in 1998. No equity was raised in 1997. EBITDA AND FUNDS FROM OPERATIONS Primarily because of the factors mentioned above, EBITDA increased 28% to $189.5 million in 1998 from $147.6 million in 1997 and Funds from Operations - Diluted increased 44% to $120.5 million from $83.4 million in 1997. 30

LIQUIDITY AND CAPITAL RESOURCES The Company intends to meet its short term liquidity requirements through cash generated from operations and working capital reserves. The Company anticipates that revenues will continue to provide necessary funds for its operating expenses and debt service requirements, and to pay dividends to stockholders in accordance with REIT requirements. The Company anticipates that cash generated from operations, together with cash on hand, will be adequate to fund capital expenditures which will not be reimbursed by tenants, other than non-recurring capital expenditures. Capital for major expenditures or major redevelopments has been, and is expected to continue to be, obtained from equity or debt financings which include borrowings under the Company's line of credit and construction loans. However, many factors impact the Company's ability to access capital, such as its overall debt to market capitalization level, interest rates, interest coverage ratios and prevailing market conditions. The Company currently is undertaking a $90 million redevelopment of Pacific View. See "Item 2. Properties." The Company has a bank construction loan agreement to fund $89.2 million of these construction costs. The Company believes that it will have access to the capital necessary to expand its business in accordance with its strategies for growth and maximizing Funds from Operations. The Company presently intends to obtain additional capital necessary to expand its business through a combination of additional public and private equity offerings, debt financings and/or joint ventures. During 1998 and 1999, the Company acquired two portfolios through joint ventures. The Company believes such joint venture arrangements provide an attractive alternative to other forms of financing. See "Acquisitions and Joint Venture Developments." The Company's total outstanding loan indebtedness at December 31, 1999 was $2.2 billion (including its pro rata share of joint venture debt). This equated to a debt to Total Market Capitalization (defined as total debt of the Company, including its pro rata share of joint venture debt, plus aggregate market value of outstanding shares of common stock, assuming full conversion of OP Units and preferred stock into common stock) ratio of approximately 66% at December 31, 1999. The Company's debt consists primarily of fixed-rate conventional mortgages payable secured by individual properties. See "Properties-Mortgage Debt" for a description of the Company's outstanding mortgage indebtedness. The Company has filed a shelf registration statement, effective December 8, 1997, to sell securities. The shelf registration is for a total of $500 million of common stock, common stock warrants or common stock rights. During 1998, the Company sold a total of 7,920,181 shares of common stock under this shelf registration. The aggregate offering price of these transactions was approximately $212.9 million, leaving approximately $287.1 million available under the shelf registration statement. The Company has an unsecured line of credit for up to $150.0 million. There was $57.4 million of borrowings outstanding at December 31, 1999. At December 31, 1999, the Company had cash and cash equivalents available of $40.5 million. 31

YEAR 2000 READINESS DISCLOSURE THE INFORMATION PROVIDED BELOW CONTAINS YEAR 2000 STATEMENTS AND IS A YEAR 2000 READINESS DISCLOSURE PURSUANT TO PUB. L. NO. 105-271. YEAR 2000 COMPLIANCE PROGRAM Approximately two years ago, the Company initiated a Year 2000 compliance program which consisted of the following phases: (1) identification of Year 2000 issues; (2) assessment of Year 2000 compliance of systems; (3) remediation or replacement of non-compliant systems; (4) testing of critical systems to verify compliance; and (5) contingency planning, as appropriate. This program included a review of both information technology ("IT") and non-IT systems of the Company's offices and the Centers in which the Company has an ownership interest and manages. In addition, material tenants, anchors and vendors of the Centers were surveyed for Year 2000 compliance and contingency plans were prepared for each Center. YEAR 2000 COMPLIANCE PROGRAM RESULTS Two of the key dates of the Company's Year 2000 program were January 1, 2000 and February 29, 2000. The Company encountered no Year 2000 compliance issues with any operating system, material tenant, anchor and/or vendor on either date because the Company was able to successfully identify and address the potential Year 2000 issues in advance. COSTS The Company was able to minimize costs by using its own personnel to administer the Year 2000 program. No outside consultants or third parties were hired except for testing purposes. The preliminary final costs for the Company's Year 2000 program were approximately $120,000 and consisted of the following: (a) IT SYSTEMS: One IT hardware system needed a Year 2000 upgrade at a cost of $13,100. (b) NON-IT SYSTEMS: Certain critical systems, 14 energy management systems, five telephone systems, two fire alarm systems, one security alarm system, one CCTV system, one HVAC system and one elevator intercom system required Year 2000 upgrades. Replacement and/or remediation of all non-IT systems at the Centers and offices cost the Company approximately $47,194. (c) ELECTRICAL INSPECTION: The electrical infrastructure of each Center was inspected to ensure Year 2000 compliance at an estimated cost of approximately $13,230. (d) TESTING OF CRITICAL SYSTEM: All date-sensitive critical operating systems at each Center and office were tested to ensure Year 2000 compliance. In most cases outside vendors tested the system and charged a fee. The Company's total testing costs were approximately $9,125. (e) SECURITY CONTINGENCY PLANS: Each Center implemented security contingency plans. The aggregate costs of approximately $37,500 included the costs associated with hiring additional personnel and obtaining necessary equipment and back-up supplies ranging from emergency generators to flashlights. (f) PERSONNEL: The Company did not separately record the internal costs incurred for its Year 2000 compliance program. Such costs are primarily the related payroll costs for its personnel who were part of the Year 2000 program. 32

FUNDS FROM OPERATIONS The Company believes that the most significant measure of its performance is FFO. FFO is defined by The National Association of Real Estate Investment Trusts ("NAREIT") to be: Net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales or write-down of assets, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs) and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. FFO does not represent cash flow from operations, as defined by GAAP, and is not necessarily indicative of cash available to fund all cash flow needs. The following reconciles net income available to common stockholders to FFO: <TABLE> <CAPTION> 1999 1998 ----------------------- ---------------------- Shares Amount Shares Amount --------- --------- --------- --------- (amounts in thousands) <S> <C> <C> <C> <C> Net income - available to common stockholders $ 110,873 $ 32,528 Adjustments to reconcile net income to FFO-basic: Minority interest 38,335 12,902 Loss on early extinguishment of debt 1,478 2,435 Gain on sale of wholly-owned assets (95,981) (9) Loss on sale or write-down of assets from unconsolidated entities (pro rata) 193 143 Depreciation and amortization on wholly owned centers 61,383 53,141 Depreciation and amortization on joint ventures and from the management companies (pro rata) 19,715 10,879 Less: depreciation on personal property and amortization of loan costs and interest rate caps (4,271) (3,716) --------- --------- FFO - basic (1) 46,130 $ 131,725 43,016 $ 108,303 Additional adjustment to arrive at FFO-diluted Impact of convertible preferred stock 9,115 18,138 6,058 11,547 Impact of stock options and restricted stock using the treasury method 462 1,823 612 668 Impact of convertible debentures 5,186 12,616 (n/a anti-dilutive) --------- --------- --------- --------- FFO - diluted (2) 60,893 $ 164,302 49,686 $ 120,518 ========= ========= ========= ========= </TABLE> 33

FUNDS FROM OPERATIONS, CONTINUED: (1) Calculated based upon basic net income as adjusted to reach basic FFO. Weighted average number of shares includes the weighted average shares of common stock outstanding for 1999 assuming the conversion of all outstanding OP Units. (2) The computation of FFO - diluted and diluted average number of shares outstanding includes the effect of outstanding common stock options and restricted stock using the treasury method. Convertible debentures for the twelve month period ending December 31, 1998 were anti-dilutive and were not included in the FFO calculation. The debentures are dilutive at December 31, 1999 and are included in the FFO calculation. On February 25, 1998, the Company sold $100 million of its Series A Preferred Stock. On June 17, 1998, the Company sold $150 million of its Series B Preferred Stock. The preferred stock can be converted on a one-for-one basis for common stock. The preferred shares are assumed converted for purposes of 1999 net income as they are dilutive to that calculation. The preferred shares are anti-dilutive to net income for 1998. The preferred shares are assumed converted for purposes of FFO-diluted per share as they are dilutive to that calculation. Included in minimum rents were rents attributable to the accounting practice of straight lining of rents. The amount of straight lining of rents that impacted minimum rents was $2,628,000 for 1999, $3,814,000 for 1998 and $3,599,000 for 1997. INFLATION In the last three years, inflation has not had a significant impact on the Company because of a relatively low inflation rate. Most of the leases at the Centers have rent adjustments periodically through the lease term. These rent increases are either in fixed increments or based on increases in the Consumer Price Index. In addition, many of the leases are for terms of less than ten years, which enables the Company to replace existing leases with new leases at higher base rents if the rents of the existing leases are below the then existing market rate. Additionally, most of the leases require the tenants to pay their pro rata share of operating expenses. This reduces the Company's exposure to increases in costs and operating expenses resulting from inflation. SEASONALITY The shopping center industry is seasonal in nature, particularly in the fourth quarter during the holiday season when retailer occupancy and retail sales are typically at their highest levels. In addition, shopping malls achieve a substantial portion of their specialty (temporary retailer) rents during the holiday season. As a result of the above, plus the accounting change discussed below for percentage rent, earnings are generally higher in the fourth quarter of each year. NEW PRONOUNCEMENTS ISSUED In May 1998, the Financial Accounting Standards Board ("FASB"), through the Emerging Issues Task Force ("EITF"), modified the timing of recognition of revenue for percentage rent received from tenants in EITF 98-9, "Accounting for Contingent Rent in Interim Financial Periods" ("EITF 98-9"). The Company applied this accounting change as of April 1, 1998. The accounting change had the effect of deferring $3,241,000, including the pro rata share of joint ventures, of percentage rent from the second and third quarters of 1998 to the quarter ended December 31, 1998. During the fourth quarter of 1998, the FASB reversed EITF 98-9. Accordingly, the Company resumed accounting for percentage rent on the accrual basis for 1999. In December 1999, the Securities and Exchange Committee issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements," ("SAB 101") which will be effective for periods beginning after December 15, 1999. This bulletin again modified the timing of revenue recognition for percentage rent received from tenants and adopted the method mandated by EITF 98-9. The Company expects this change to defer recognition of a significant amount of percentage rent for the first three calendar quarters into the fourth quarter. The Company applied this accounting change as of January 1, 2000. Estimates of the effects of this change have not yet been determined. In June 1998, the FASB issued Statement of Financial Accounting Standard ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") which requires companies to record derivatives on the balance sheet, measured at fair value. Changes in the fair values of those derivatives will be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments and Hedging Activities," which delays the implementation of SFAS 133 from January 1, 2000 to January 1, 2001. The Company has not yet determined when it will implement SFAS 133 nor has it completed the analysis required to determine the impact on its financial statements. 34

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary market risk exposure is interest rate risk. The Company has managed and will continue to manage interest rate risk by (1) maintaining a conservative ratio of fixed rate, long-term debt to total debt such that variable rate exposure is kept at an acceptable level, (2) reducing interest rate exposure on certain long-term variable rate debt through the use of interest rate caps with appropriately matching maturities, (3) using treasury rate locks where appropriate to fix rates on anticipated debt transactions, and (4) taking advantage of favorable market conditions for long-term debt and/or equity. The following table sets forth information as of December 31, 1999 concerning the Company's long term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates and estimated fair value ("FV"): <TABLE> <CAPTION> For the Years Ended December 31, (dollars in thousands) 2000 2001 2002 2003 2004 Thereafter Total FV --------- --------- --------- --------- --------- ---------- ---------- ---------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Long term debt: Fixed rate $ 39,264 $ 108,479 $ 11,717 $ 101,229 $ 127,705 $ 801,263 $1,189,657 $1,130,015 Average interest rate 7.40% 7.37% 7.37% 7.33% 7.34% 7.34% 7.38% -- Fixed rate - Debentures -- -- 161,400 -- -- -- 161,400 157,175 Average interest rate -- -- 7.25% -- -- -- 7.25% -- Variable rate -- 210,069 -- -- -- -- 210,069 210,069 Average interest rate -- 7.37% -- -- -- -- 7.37% -- --------- --------- --------- --------- --------- ---------- ---------- ---------- Total debt - Wholly owned Centers $ 39,264 $ 318,548 $ 173,117 $ 101,229 $ 127,705 $ 801,263 $1,561,126 $1,497,259 --------- --------- --------- --------- --------- ---------- ---------- ---------- Joint Venture Centers: (at Company's pro rata share) Fixed rate $ 26,515 $ 6,498 $ 6,939 $ 7,413 $ 7,913 $ 452,146 $ 507,424 $ 461,553 Average interest rate 6.65% 6.65% 6.65% 6.65% 6.65% 6.55% 6.64% -- Variable rate -- 38,250 -- 92,500 -- -- 130,750 130,750 Average interest rate -- 8.23% -- 6.15% -- -- 6.76% -- --------- --------- --------- --------- --------- ---------- ---------- ---------- Total debt - Joint Ventures $ 26,515 $ 44,748 $ 6,939 $ 99,913 $ 7,913 $ 452,146 $ 638,174 $ 592,303 --------- --------- --------- --------- --------- ---------- ---------- ---------- Total debt - All Centers $ 65,779 $ 363,296 $ 180,056 $ 201,142 $ 135,618 $1,253,409 $2,199,300 $2,089,562 ========= ========= ========= ========= ========= ========== ========== ========== </TABLE> $57.4 million of variable debt maturing in 2001 represents the outstanding borrowings under the Company's credit facility. The credit facility matures in February 2001. In addition, the Company has assessed the market risk for its variable rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash flows by approximately $3.4 million per year based on $340.8 million outstanding at December 31, 1999. The fair value of the Company's long term debt is estimated based on discounted cash flows at interest rates that management believes reflects the risks associated with long term debt of similar risk and duration. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Refer to the Index to Financial Statements and Financial Statement Schedules for the required information. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 35

PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY. There is hereby incorporated by reference the information which appears under the captions "Election of Directors," "Executive Officers" and "Section 16 Reporting" in the Company's definitive proxy statement for its 2000 Annual Meeting of Stockholders. ITEM 11. EXECUTIVE COMPENSATION. There is hereby incorporated by reference the information which appears under the caption "Executive Compensation" in the Company's definitive proxy statement for its 2000 Annual Meeting of Stockholders; provided, however, that neither the Report of the Compensation Committee on executive compensation nor the Stock Performance Graph set forth therein shall be incorporated by reference herein, in any of the Company's prior or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such report or stock performance graph by reference therein and shall not be otherwise deemed filed under either of such Acts. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT There is hereby incorporated by reference the information which appears under the captions "Principal Stockholders," "Information Regarding Nominees and Directors" and "Executive Officers" in the Company's definitive proxy statement for its 2000 Annual Meeting of Stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There is hereby incorporated by reference the information which appears under the captions "Certain Transactions" in the Company's definitive proxy statement for its 2000 Annual Meeting of Stockholders. 36

PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K <TABLE> <CAPTION> PAGE ---- <S> <C> (a) 1. Financial Statements of the Company Report of Independent Accountants........................................................... 39 Consolidated balance sheets of the Company as of December 31, 1999 and 1998................. 40 Consolidated statements of operations of the Company for the years ended December 31, 1999, 1998 and 1997......................................................................... 41 Consolidated statements of stockholders' equity of the Company for the years ended December 31, 1999, 1998 and 1997............................................................ 42 Consolidated statements of cash flows of the Company for the years ended December 31, 1999, 1998 and 1997......................................................................... 43 Notes to consolidated financial statements.................................................. 44-64 2. Financial Statements of Pacific Premier Retail Trust Report of Independent Accountants........................................................... 65 Consolidated balance sheet of Pacific Premier Retail Trust as of December 31, 1999.......... 66 Consolidated statement of operations of Pacific Premier Retail Trust for the period from February 18, 1999 (Inception) through December 31, 1999..................................... 67 Consolidated statement of stockholders' equity of Pacific Premier Retail Trust for the period from February 18, 1999 (Inception) through December 31,1999.......................... 68 Consolidated statement of cash flows of Pacific Premier Retail Trust for the period from February 18, 1999 (Inception) through December 31, 1999......................... 69 Notes to consolidated financial statements.................................................. 70-75 3. Financial Statements of SDG Macerich Properties, L.P. Independent Auditors' Report................................................................ 76 Balance sheets of SDG Macerich Properties, L.P. as of December 31, 1999 and 1998 ........... 77 Statements of operations of SDG Macerich Properties, L.P. for the years ended December 31, 1999 and 1998..................................... ......................................... 78 Statements of cash flows of SDG Macerich Properties, L.P. for the years ended December 31, 1999 and 1998..................................... ......................................... 79 Statements of partners' equity of SDG Macerich Properties, L.P. for the years ended December 31, 1999 and 1998.................................................................. 80 Notes to financial statements............................................................... 81-83 </TABLE> 37

<TABLE> <CAPTION> ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON PAGE FORM 8-K, CONTINUED: ---- <S> <C> 4. Financial Statement Schedules Schedule III - Real estate and accumulated depreciation of the Company...................... 84-85 Schedule III - Real estate and accumulated depreciation of Pacific Premier Retail Trust..... 86 Schedule III - Real estate and accumulated depreciation of SDG Macerich Properties, L.P..... 87 (b) 1. Reports on Form 8-K A report on Form 8-K dated March 4, 1999, event date February 18, 1999, was filed with the Securities and Exchange Commission for the purpose of disclosing the acquisition of three regional malls, the retail component of one mixed-use development and five contiguous properties by Pacific Premier Retail Trust............................................................. A report on Form 8-K/A, Amendment No. 1, dated April 21, 1999, event date February 18, 1999, was filed with the Securities and Exchange Commission for the purpose of disclosing certain financial statements and pro forma financial information regarding the acquisition of three regional Malls, the retail component of one mixed-use development and five contiguous properties by Pacific Premier Retail Trust........................................................................ A report on Form 8-K dated June 14, 1999, event date June 2, 1999, was filed with the Securities and Exchange Commission for the purpose of disclosing the acquisition of Los Cerritos Center......................................................................... A report on Form 8-K/A, Amendment No. 2, dated July 30, 1999, event date July 12, 1999, was filed with the Securities and Exchange Commission for the purpose of disclosing the acquisition of the office component of Redmond Town Center, a mixed-use development, by Pacific Premier Retail Trust........................................................................ A report of Form 8-K dated November 10, 1999, event date October 26, 1999, was filed with the Securities and Exchange Commission ("SEC") for the purpose of disclosing (i) the acquisition of Santa Monica Place by an indirect subsidiary of the Company and (ii) the contribution of membership interests in Macerich Stonewood, LLC, Macerich Cerritos, LLC and Lakewood Mall, LLC to Pacific Premier Retail Trust................................................................................ A report on Form 8-K dated November 30, 1999, event date November 16, 1999, was filed with the SEC for the purpose of disclosing the sale of Huntington Center located in Huntington Beach, California................................................................ (c) 1. Exhibits The Exhibit Index attached hereto is incorporated by reference under this item................................................................... </TABLE> 38

REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of The Macerich Company: We have audited the consolidated financial statements and financial statement schedule of The Macerich Company ("the Company") as listed in Items 14(a)(1) and (4) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these statements and financial statement schedule based on our audits. We did not audit the financial statements of SDG Macerich Properties, L.P. (the "Partnership") the investment in which is reflected in the accompanying consolidated financial statements using the equity method of accounting. The investment in the Partnership represents approximately 10% of 1999 and 1998 consolidated total assets of the Company, and the equity in its net income represents approximately 6% and 33% of the Company's 1999 and 1998 consolidated net income, respectively. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for the Partnership, is based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Macerich Company as of December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for the years ended December 31, 1999, 1998 and 1997, in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. PricewaterhouseCoopers LLP Los Angeles, California February 14, 2000 39

THE MACERICH COMPANY CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) <TABLE> <CAPTION> December 31, ------------------------------------------ 1999 1998 ---- ---- <S> <C> <C> ASSETS: Property, net $1,931,415 $1,966,845 Cash and cash equivalents 40,455 25,143 Tenant receivables, including accrued overage rents of $7,367 in 1999 and $5,917 in 1998 34,423 37,373 Deferred charges and other assets, net 55,065 62,673 Investments in joint ventures and the Management Companies 342,935 230,022 -------------------- -------------------- Total assets $2,404,293 $2,322,056 ==================== ==================== LIABILITIES AND STOCKHOLDERS' EQUITY: Mortgage notes payable: Related parties $133,876 $134,625 Others 1,105,180 1,074,093 -------------------- -------------------- Total 1,239,056 1,208,718 Bank notes payable 160,671 137,000 Convertible debentures 161,400 161,400 Accounts payable and accrued expenses 27,815 27,701 Due to affiliates 6,969 2,953 Other accrued liabilities 25,849 36,927 Preferred stock dividend payable 4,648 4,420 -------------------- -------------------- Total liabilities 1,626,408 1,579,119 Minority interest in Operating Partnership 157,599 165,524 -------------------- -------------------- Commitments and contingencies (Note 11) Stockholders' equity: Series A cumulative convertible redeemable preferred stock, $.01 par value, 3,627,131 shares authorized, issued and outstanding at December 31, 1999 and 1998 36 36 Series B cumulative convertible redeemable preferred stock, $.01 par value, 5,487,471 shares authorized, issued and outstanding at December 31, 1999 and 1998 55 55 Common stock, $.01 par value, 100,000,000 shares authorized, 34,072,625 and 33,901,963 shares issued and outstanding at December 31, 1999 and 1998, respectively 338 338 Additional paid in capital 582,837 581,508 Accumulated earnings 43,514 - Unamortized restricted stock (6,494) (4,524) -------------------- -------------------- Total stockholders' equity 620,286 577,413 -------------------- -------------------- Total liabilities and stockholders' equity $2,404,293 $2,322,056 ==================== ==================== </TABLE> The accompanying notes are an integral part of these financial statements. 40

THE MACERICH COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) <TABLE> <CAPTION> For the years ended December 31, ----------------------------------------------------------- 1999 1998 1997 ---- ---- ---- <S> <C> <C> <C> REVENUES: Minimum rents $204,568 $179,710 $142,251 Percentage rents 15,106 12,856 9,259 Tenant recoveries 99,126 86,740 66,499 Other 8,644 4,555 3,205 ------------------ ------------------ ------------------- Total revenues 327,444 283,861 221,214 ------------------ ------------------ ------------------- EXPENSES: Shopping center expenses 100,327 89,991 70,901 General and administrative expense 5,488 4,373 2,759 ------------------ ------------------ ------------------- 105,815 94,364 73,660 ------------------ ------------------ ------------------- Interest expense: Related parties 10,170 10,224 10,287 Others 103,178 81,209 56,120 ------------------ ------------------ ------------------- Total interest expense 113,348 91,433 66,407 ------------------ ------------------ ------------------- Depreciation and amortization 61,383 53,141 41,535 Equity in income (loss) of unconsolidated joint ventures and the management companies 25,945 14,480 (8,063) Gain on sale of assets 95,981 9 1,619 ------------------ ------------------ ------------------- Income before minority interest and extraordinary item 168,824 59,412 33,168 Extraordinary loss on early extinguishment of debt (1,478) (2,435) (555) ------------------ ------------------ ------------------- Income of the Operating Partnership 167,346 56,977 32,613 Less minority interest in net income of the Operating Partnership 38,335 12,902 10,567 ------------------ ------------------ ------------------- Net income 129,011 44,075 22,046 Less preferred dividends 18,138 11,547 - ------------------ ------------------ ------------------- Net income available to common stockholders $110,873 $32,528 $22,046 ================== ================== =================== Earnings per common share - basic: Income before extraordinary item $3.30 $1.14 $0.86 Extraordinary item (0.04) (0.08) (0.01) ------------------ ------------------ ------------------- Net income - available to common stockholders $3.26 $1.06 $0.85 ================== ================== =================== Weighted average number of common shares outstanding - basic 34,007,000 30,805,000 25,891,000 ================== ================== =================== Weighted average number of common shares outstanding - basic, assuming full conversion of operating units outstanding 46,130,000 43,016,000 37,982,000 ================== ================== =================== Earnings per common share - diluted: Income before extraordinary item $3.01 $1.11 $0.86 Extraordinary item (0.02) (0.05) (0.01) ------------------ ------------------ ------------------- Net income - available to common stockholders $2.99 $1.06 $0.85 ================== ================== =================== Weighted average number of common shares outstanding - diluted for EPS 60,893,000 43,628,000 38,403,000 ================== ================== =================== </TABLE> The accompanying notes are an integral part of these financial statements. 41

THE MACERICH COMPANY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) <TABLE> <CAPTION> Common Preferred Common Preferred Stock Stock Stock Stock Par Par (# Shares) (# of Shares) Value Value ---------- ------------- ----- ------ <S> <C> <C> <C> <C> Balance December 31, 1996 25,743,000 - $257 - Issuance costs Issuance of restricted stock 89,958 Unvested restricted stock (89,958) Restricted stock vested in 1997 8,248 Exercise of stock options 253,552 3 Distributions paid ($1.78 per share) Net income Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership ---------- ----------- ------ ------ Balance December 31, 1997 26,004,800 - 260 - Common stock issued to public 7,828,124 78 Preferred stock issued 9,114,602 $91 Issuance costs Issuance of restricted stock 83,018 Unvested restricted stock (83,018) Restricted stock vested in 1998 26,039 Exercise of stock options 43,000 Distributions paid ($1.865) per share Net income Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership ---------- ----------- ------ ------ Balance December 31, 1998 33,901,963 9,114,602 338 91 Issuance costs Issuance of restricted stock 176,600 Unvested restricted stock (176,600) Restricted stock vested in 1999 51,675 Exercise of stock options 88,250 Distributions paid ($1.965) per share Net income Conversion of OP units to common stock 30,737 Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership ---------- ----------- ------ ------ Balance December 31, 1999 34,072,625 9,114,602 $338 $91 ========== =========== ====== ====== </TABLE> <TABLE> <CAPTION> Additional Unamortized Total Paid In Accumulated Restricted Stockholders' Capital Earnings Stock Equity -------- --------- ------ ------ <S> <C> <C> <C> <C> Balance December 31, 1996 $238,346 - ($854) $237,749 Issuance costs (352) (352) Issuance of restricted stock 2,471 2,471 Unvested restricted stock (2,471) (2,471) Restricted stock vested in 1997 239 239 Exercise of stock options 2,410 2,413 Distributions paid ($1.78 per share) (24,061) ($22,046) (46,107) Net income 22,046 22,046 Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership 307 307 ---------- ----------- ------- -------- Balance December 31, 1997 219,121 - (3,086) 216,295 Common stock issued to public 214,562 214,640 Preferred stock issued 249,909 250,000 Issuance costs (13,813) (13,813) Issuance of restricted stock 2,383 2,383 Unvested restricted stock (2,383) (2,383) Restricted stock vested in 1998 945 945 Exercise of stock options 839 839 Distributions paid ($1.865) per share (24,464) (32,528) (56,992) Net income 32,528 32,528 Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership (67,029) (67,029) ---------- ----------- ------- -------- Balance December 31, 1998 581,508 - (4,524) 577,413 Issuance costs (198) (198) Issuance of restricted stock 4,007 4,007 Unvested restricted stock (4,007) (4,007) Restricted stock vested in 1999 2,037 2,037 Exercise of stock options 1,705 1,705 Distributions paid ($1.965) per share (67,359) (67,359) Net income 110,873 110,873 Conversion of OP units to common stock 441 441 Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership (4,626) (4,626) ---------- ----------- ------- -------- Balance December 31, 1999 $582,837 $43,514 ($6,494) $620,286 ========== =========== ======= ======== </TABLE> The accompanying notes are an integral part of these financial statements. 42

THE MACERICH COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) <TABLE> <CAPTION> FOR THE YEARS ENDED DECEMBER 31, ---------------------------------------- 1999 1998 1997 ----------- -------------------------- <S> <C> <C> <C> Cash flows from operating activities: Net income - available to common stockholders $110,873 $32,528 $22,046 Preferred dividends 18,138 11,547 - ----------- ----------- ----------- Net income 129,011 44,075 22,046 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary loss on early extinguishment of debt 1,478 2,435 555 Gain on sale of assets (95,981) (9) (1,619) Depreciation and amortization 61,383 53,141 41,535 Amortization of net discount (premium) on trust deed note payable 191 (635) 33 Minority interest in the net income of the Operating Partnership 38,335 12,902 10,567 Changes in assets and liabilities: Tenant receivables, net (3,174) (13,677) (504) Other assets 9,817 (19,772) (10,899) Accounts payable and accrued expenses 2,407 10,366 1,938 Due to affiliates 4,059 (12,156) 14,679 Other liabilities (8,178) 4,086 145 Accrued preferred stock dividend 228 4,420 - ----------- ----------- ----------- Total adjustments 10,565 41,101 56,430 ----------- ----------- ----------- Net cash provided by operating activities 139,576 85,176 78,476 ----------- ----------- ----------- Cash flows from investing activities: Acquisitions of property and improvements (142,564) (481,735) (199,729) Renovations and expansions of centers (74,560) (40,545) (12,929) Tenant allowances (7,213) (5,383) (2,599) Deferred charges (17,352) (14,536) (12,542) Equity in (income) loss of unconsolidated joint ventures and the management companies (25,945) (14,480) 8,063 Distributions from joint ventures 29,989 32,623 8,181 Contributions to joint ventures (116,944) (240,196) (7,783) Loans to affiliates - 3,105 - Proceeds from sale of assets 106,904 - 4,332 ----------- ----------- ----------- Net cash used in investing activities (247,685) (761,147) (215,006) ----------- ----------- ----------- Cash flows from financing activities: Proceeds from mortgages, notes and debentures payable 584,270 480,348 331,400 Payments on mortgages and notes payable (328,452) (165,671) (119,515) Net proceeds from equity offerings - 450,828 - Dividends and distributions (114,259) (77,998) (65,844) Dividends to preferred shareholders (18,138) (11,547) - ----------- ----------- ----------- Net cash provided by financing activities 123,421 675,960 146,041 ----------- ----------- ----------- Net increase (decrease) in cash 15,312 (11) 9,511 Cash and cash equivalents, beginning of period 25,143 25,154 15,643 ----------- ----------- ----------- Cash and cash equivalents, end of period $40,455 $25,143 $25,154 =========== =========== =========== Supplemental cash flow information: Cash payment for interest, net of amounts capitalized $112,399 $89,543 $65,475 =========== =========== =========== Non-cash transactions: Acquisition of property by assumption of debt - $70,116 $121,800 =========== =========== =========== Acquisition of property by issuance of OP Units - $7,917 - =========== =========== =========== Contributions of liabilities in excess of assets to joint venture $8,820 - - =========== =========== =========== </TABLE> The accompanying notes are an integral part of these financial statements. 43

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1. ORGANIZATION AND BASIS OF PRESENTATION: The Macerich Company (the "Company") commenced operations effective with the completion of its initial public offering (the "IPO") on March 16, 1994. The Company is the sole general partner of and holds an 80% ownership interest in The Macerich Partnership, L. P. (the "Operating Partnership"). The interests in the Operating Partnership are known as OP Units. OP Units not held by the Company are redeemable, subject to certain restrictions, on a one-for-one basis, for the Company's common stock or cash at the Company's option. The Company was organized to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended. The 20% limited partnership interest of the Operating Partnership not owned by the Company is reflected in these financial statements as minority interest. The property management, leasing and redevelopment of the Company's portfolio is provided by the Macerich Management Company, Macerich Property Management Company and Macerich Manhattan Management Company, all California corporations (together referred to hereafter as the "Management Companies"). The non-voting preferred stock of the Macerich Management Company and Macerich Property Management Company is owned by the Operating Partnership, which provides the Operating Partnership the right to receive 95% of the distributable cash flow from the Management Companies. Macerich Manhattan Management Company is a 100% subsidiary of Macerich Management Company. BASIS OF PRESENTATION: The consolidated financial statements of the Company include the accounts of the Company and the Operating Partnership. The properties in which the Operating Partnership does not have a controlling interest in, and the Management Companies, have been accounted for under the equity method of accounting. These entities are reflected on the Company's consolidated financial statements as "Investments in joint ventures and the Management Companies." All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: CASH AND CASH EQUIVALENTS: The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents, for which cost approximates market. Included in cash is restricted cash of $1,418 at December 31, 1999 and $5,954 at December 31, 1998. TENANT RECEIVABLES: Included in tenant receivables are allowances for doubtful accounts of $1,752 and $1,707 at December 31, 1999 and 1998, respectively. REVENUES: Minimum rental revenues are recognized on a straight-line basis over the terms of the related lease. The difference between the amount of rent due in a year and the amount recorded as rental income is referred to as the "straight lining of rent adjustment." Rental income was increased by $2,628 in 1999, $3,814 in 1998 and $3,599 in 1997 due to the straight lining of rent adjustment. Percentage rents are recognized on an accrual basis. Recoveries from tenants for real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable costs are incurred. The Management Companies provide property management, leasing, corporate, redevelopment and acquisition services to affiliated and non-affiliated shopping centers. In consideration for these services, the Management Companies receive monthly management fees generally ranging from 1.5% to 5% of the gross monthly rental revenue of the properties managed. 44

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: PROPERTY: Costs related to the redevelopment, construction and improvement of properties are capitalized. Interest costs are capitalized until construction is substantially complete. Expenditures for maintenance and repairs are charged to operations as incurred. Realized gains and losses are recognized upon disposal or retirement of the related assets and are reflected in earnings. Property is recorded at cost and is depreciated using a straight-line method over the estimated useful lives of the assets as follows: Buildings and improvements 5-40 years Tenant improvements initial term of related lease Equipment and furnishings 5- 7 years The Company assesses whether there has been an impairment in the value of its long-lived assets by considering factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. Such factors include the tenants' ability to perform their duties and pay rent under the terms of the leases. The Company may recognize an impairment loss if the income stream is not sufficient to cover its investment. Such a loss would be determined between the carrying value and the fair value of a center. Management believes no such impairment has occurred in its net property carrying values at December 31, 1999 and 1998. DEFERRED CHARGES: Costs relating to financing of shopping center properties and obtaining tenant leases are deferred and amortized over the initial term of the agreement. The straight-line method is used to amortize all costs except financing, for which the effective interest method is used. The range of the terms of the agreements are as follows: Deferred lease costs 1 - 15 years Deferred financing costs 1 - 15 years In March 1998, the Financial Accounting Standards Board ("FASB"), through its Emerging Issues Task Force ("EITF"), concluded based on EITF 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions," that all internal costs to source, analyze and close acquisitions should be expensed as incurred. The Company has historically capitalized these costs, in accordance with generally accepted accounting principles ("GAAP"). The Company has adopted the FASB's interpretation effective March 19, 1998. DEFERRED ACQUISITION LIABILITY: As part of the Company's total consideration to the seller of Capitola Mall, the Company will issue $5,000 of OP Units five years after the acquisition date, which was December 21, 1995. The number of OP Units will be determined based on the Company's common stock price at that time. INCOME TAXES: The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. A REIT is generally not subject to income taxation on that portion of its income that qualifies as REIT taxable income as long as it distributes at least 95 percent of its taxable income to its stockholders and complies with other requirements. Accordingly, no provision has been made for income taxes in the consolidated financial statements. 45

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: INCOME TAXES - CONTINUED: On a tax basis, the distributions of $1.965 paid during 1999 represented $1.30 of ordinary income and $0.665 of capital gain. The distributions of $1.865 per share during 1998 represented $1.12 of ordinary income and $0.745 of return of capital. During 1997, the distributions were $1.78 per share of which $0.96 was ordinary income and $0.82 was return of capital. Each partner is taxed individually on its share of partnership income or loss, and accordingly, no provision for federal and state income tax is provided for the Operating Partnership in the consolidated financial statements. RECLASSIFICATIONS: Certain reclassifications have been made to the 1997 and 1998 consolidated financial statements to conform to the 1999 financial statement presentation. ACCOUNTING PRONOUNCEMENTS: In May 1998, the FASB, through the EITF, modified the timing of recognition of revenue for percentage rent received from tenants in EITF 98-9, "Accounting for Contingent Rent in Interim Financial Periods" ("EITF 98-9"). The Company applied this accounting change as of April 1, 1998. The accounting change had the effect of deferring $3,241,000, including the prorata share of joint ventures, of percentage rent from the second and third quarters of 1998 to the quarter ended December 31, 1998. During the fourth quarter of 1998, the FASB reversed EITF 98-9. Accordingly, the Company resumed accounting for percentage rent on the accrual basis for 1999. In December 1999, the Securities and Exchange Committee issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements," ("SAB 101") which will be effective for periods beginning after December 15, 1999. This bulletin again modified the timing of revenue recognition for percentage rent received from tenants and adopted the method mandated by EITF 98-9. The Company expects this change to defer recognition of a significant amount of percentage rent for the first three calendar quarters into the fourth quarter. The Company applied this accounting change as of January 1, 2000. Estimates of the effects of this change have not yet been determined. In June 1998, the FASB issued Statement of Financial Accounting Standard ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") which requires companies to record derivatives on the balance sheet, measured at fair value. Changes in the fair values of those derivatives will be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments and Hedging Activities," which delays the implementation of SFAS 133 from January 1, 2000 to January 1, 2001. The Company has not yet determined when it will implement SFAS 133 nor has it completed the analysis required to determine the impact on its consolidated financial statements. FAIR VALUE OF FINANCIAL INSTRUMENTS: To meet the reporting requirement of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," the Company calculates the fair value of financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of those financial instruments. When the fair value reasonably approximates the carrying value, no additional disclosure is made. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. 46

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED: Interest rate cap agreements are purchased by the Company from third parties to hedge the risk of interest rate increases on some of the Company's variable rate debt. The cost of these cap agreements is amortized over the life of the cap agreement on a straight line basis. Payments received as a result of the cap agreements are recorded as a reduction of interest expense. The unamortized costs of the cap agreements are included in deferred charges. The fair value of these caps will vary with fluctuations in interest rates. The Company is exposed to credit loss in the event of nonperformance by these counter parties to the financial instruments; however, management does not anticipate nonperformance by the counter parties. The Company periodically enters into treasury lock agreements in order to hedge its exposure to interest rate fluctuations on anticipated financings. Under these agreements, the Company pays or receives an amount equal to the difference between the treasury lock rate and the market rate on the date of settlement, based on the notional amount of the hedge. The realized gain or loss on the contracts is recorded on the balance sheet, in other assets, and amortized as interest expense over the period of the hedged loans. EARNINGS PER SHARE ("EPS"): During 1998, the Company implemented SFAS No. 128, "Earnings per share." The computation of basic earnings per share is based on net income and the weighted average number of common shares outstanding for the years ended December 31, 1999, 1998 and 1997. The computation of diluted earnings per share includes the effect of outstanding restricted stock and common stock options calculated using the Treasury stock method. The OP Units not held by the Company have been included in the diluted EPS calculation since they are redeemable on a one-for-one basis. The following table reconciles the basic and diluted earnings per share calculation: <TABLE> <CAPTION> For the years ended (in thousands, except per share data) 1999 1998 1997 --------------------------------- -------------------------------- --------------------------- Net Per Net Per Net Per Income Shares Share Income Shares Share Income Shares Share ------ ------ ----- ------ ------ ----- ------ ------ ------ <S> <C> <C> <C> <C> <C> <C> <C> <C> <C> Net income $129,011 34,007 $44,075 30,805 $22,046 25,891 Less: Preferred stock dividends 18,138 11,547 - Basic EPS Net income - available to --------------------------------- -------------------------------- --------------------------- common stockholders $110,873 34,007 $3.26 $32,528 30,805 $1.06 $22,046 25,891 $0.85 DILUTED EPS: Conversion of OP units 38,335 12,123 12,902 12,211 10,567 12,091 Employee stock options and restricted stock 1,824 462 668 612 239 421 Convertible preferred stock 18,138 9,115 n/a - antidilutive N/A Convertible debentures 12,616 5,186 n/a - antidilutive N/A Net income - available to --------------------------------- -------------------------------- --------------------------- common stockholders $181,786 60,893 $2.99 $46,098 43,628 $1.06 $32,852 38,403 $0.85 ========================= ======= ============ ========== ======== ========== ================ </TABLE> 47

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: CONCENTRATION OF RISK: The Company maintains its cash accounts in a number of commercial banks. Accounts at these banks are guaranteed by the Federal Deposit Insurance Corporation ("FDIC") up to $100. At various times during the year, the Company had deposits in excess of the FDIC insurance limit. Lakewood Mall generated 10.5% of total shopping center revenues in 1997. No Center generated more than 10% of shopping center revenues during 1999 and 1998. The Centers derived approximately 90.2%, 89.9% and 89.5% of their total rents for the years ended December 31, 1999, 1998, and 1997, respectively, from Mall and Freestanding Stores. The Limited represented 5.2% and 6.1% of total minimum rents in place as of December 31, 1999 and 1998, respectively, and no other retailer represented more than 3.2% and 4.5% of total minimum rents as of December 31, 1999 and 1998, respectively. MANAGEMENT ESTIMATES: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. YEAR 2000 COMPLIANCE: Approximately two years ago, the Company initiated a Year 2000 compliance program which consisted of the following phases: (1) identification of Year 2000 issues; (2) assessment of Year 2000 compliance of systems; (3) remediation or replacement of non-compliant systems; (4) testing of critical systems to verify compliance; and (5) contingency planning, as appropriate. This program included a review of both information technology ("IT") and non-IT systems of the Company's offices and the Centers in which the Company has an ownership interest and manages. In addition, material tenants, anchors and vendors of the Centers were surveyed for Year 2000 compliance and contingency plans were prepared for each Center. Two of the key dates of the Company's Year 2000 program were January 1, 2000 and February 29, 2000. The Company encountered no Year 2000 compliance issues, with any operating system, material tenant, anchor and/or vendor on either date. As of December 31, 1999, the Company did not expend significant amounts for the Year 2000 program. 3. INVESTMENTS IN JOINT VENTURES AND THE MANAGEMENT COMPANIES: The following are the Company's investments in various real estate joint ventures which own regional retail and community shopping centers. The Operating Partnership's interest in each joint venture as of December 31, 1999 is as follows: <TABLE> <CAPTION> The Operating Partnership's Joint Venture Ownership % ------------- ----------- <S> <C> Macerich Northwestern Associates 50% Manhattan Village, LLC 10% Pacific Premier Retail Trust 51% Panorama City Associates 50% SDG Macerich Properties, L.P. 50% West Acres Development 19% </TABLE> 48

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 3. INVESTMENTS IN JOINT VENTURES AND THE MANAGEMENT COMPANIES, CONTINUED: The Operating Partnership also owns the non-voting preferred stock of the Macerich Management Company and Macerich Property Management Company and is entitled to receive 95% of the distributable cash flow of these two entities. Macerich Manhattan Management Company is a 100% subsidiary of Macerich Management Company. The Company accounts for the Management Companies and joint ventures using the equity method of accounting. On February 27, 1998, the Company, through SDG Macerich Properties, L.P., a 50/50 joint venture with an affiliate of Simon Property Group, Inc., acquired a portfolio of twelve regional malls. The properties in the portfolio comprise 10.7 million square feet and are located in eight states. The total purchase price was $974,500, which included $485,000 of assumed debt, at market value. The Company's share of the cash component of the purchase price was funded by issuing $100,000 of Series A cumulative convertible redeemable preferred stock ("Series A Preferred Stock"), $80,000 of common stock and borrowing the balance from the Company's line of credit. Each of the joint venture partners have assumed leasing and management responsibilities for six of the regional malls. On February 18, 1999, the Company, through a 51/49 joint venture with Ontario Teachers' Pension Plan Board ("Ontario Teachers") closed on the first phase of a two phase acquisition of a portfolio of properties. The phase one closing included the acquisition of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers comprising approximately 3.6 million square feet for a total purchase price of approximately $427,000. The purchase price was funded with a $120,000 loan placed concurrently with the closing, $140,400 of debt from an affiliate of the seller, and $39,400 of assumed debt. The balance of the purchase price was paid in cash. The Company's share of the cash component was funded with the proceeds from two refinancings of centers and borrowings under the Company's line of credit. On July 12, 1999, the Company closed on the second phase of the acquisition. The second phase consisted of the acquisition of the office component of the mixed-use development for a purchase price of approximately $111,000. The purchase price was funded with a $76,700 loan placed concurrently with the closing and the balance was paid in cash. The Company's share of the cash component was funded from borrowings under the Company's line of credit. On June 2, 1999, Macerich Cerritos, LLC ("Cerritos"), a wholly-owned subsidiary of Macerich Management Company, acquired Los Cerritos Center in Cerritos, California. The total purchase price was $188,000, which was funded with $120,000 of debt placed concurrently with the closing and a $70,800 loan from the Company. The Company funded this loan from borrowings under a $60,000 bank loan agreement and the balance from the Company's line of credit. On October 26, 1999, 49% of the membership interests of Macerich Stonewood, LLC ("Stonewood"), Cerritos and Macerich Lakewood, LLC ("Lakewood"), were sold to Ontario Teachers' and concurrently Ontario Teachers' and the Company contributed their 99% collective membership interests in Stonewood and Cerritos and 100% of their collective membership interests in Lakewood to Pacific Premier Retail Trust ("PPRT"), a real estate investment trust, owned approximately 51% by the Company and 49% by Ontario Teachers. Lakewood, Stonewood, and Cerritos own Lakewood Mall, Stonewood Mall and Los Cerritos Center, respectively. The total value of the transaction was approximately $535,000. The properties were contributed to PPRT subject to existing debt of $322,000. The net cash proceeds to the Company were approximately $104,000 which were used for reduction of debt and for general corporate purposes. The results of these joint ventures are included for the period subsequent to their respective dates of acquisition. On October 27, 1999, Albany Plaza, a 145,462 square foot community center, which was owned 51% by the Macerich Management Company, was sold. On November 12, 1999, Eastland Plaza, a 65,313 square foot community center, which was 51% owned by the Macerich Management Company, was sold. 49

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 3. INVESTMENTS IN JOINT VENTURES AND THE MANAGEMENT COMPANIES, CONTINUED: Combined and condensed balance sheets and statements of operations are presented below for all unconsolidated joint ventures and the Management Companies, followed by information regarding the Operating Partnership's beneficial interest in the combined operations. Beneficial interest is calculated based on the Operating Partnership's ownership interests in the joint ventures and the Management Companies. <TABLE> <CAPTION> COMBINED AND CONDENSED BALANCE SHEETS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES December 31, December 31, 1999 1998 ---- ---- <S> <C> <C> Assets: Properties, net $2,117,711 $1,141,984 Other assets 58,412 38,103 -------------------- ------------------ Total assets $2,176,123 $1,180,087 ==================== ================== Liabilities and partners' capital: Mortgage notes payable $1,287,732 $618,384 Other liabilities 62,891 42,048 The Company's capital 342,935 230,022 Outside partners' capital 482,565 289,633 -------------------- ------------------ Total liabilities and partners' capital $2,176,123 $1,180,087 ==================== ================== </TABLE> 50

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) COMBINED AND CONDENSED STATEMENTS OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES ---------------------------- For the years ended December 31, <TABLE> <CAPTION> 1999 -------------------------------------------------------------------------------------- SDG Pacific Macerich Premier Retail Other Joint Management Properties, L.P. Trust Ventures Companies Total -------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Revenues: Minimum rents $88,014 $46,170 $25,497 $5,940 $165,621 Percentage rents 7,422 3,497 2,268 191 13,378 Tenant recoveries 40,647 15,866 11,305 2,917 70,735 Management fee - - - 10,033 10,033 Other 2,291 336 1,243 897 4,767 -------------------------------------------------------------------------------------- Total revenues 138,374 65,869 40,313 19,978 264,534 -------------------------------------------------------------------------------------- Expenses: Management Company expense - - - 12,737 12,737 Shopping center expenses 50,972 18,373 13,205 2,724 85,274 Interest expense 30,565 21,642 7,579 5,291 65,077 Depreciation and amortization 21,451 10,463 3,362 2,405 37,681 -------------------------------------- --------------- ----------------- ------------- Total operating expenses 102,988 50,478 24,146 23,157 200,769 -------------------------------------- --------------- ----------------- ------------- Gain (loss) on sale or write down of assets 5 - 961 (392) 574 -------------------------------------- --------------- ----------------- ------------- Net income (loss) $35,391 $15,391 $17,128 ($3,571) $64,339 ====================================== =============== ================= ============= </TABLE> <TABLE> <CAPTION> 1998 1997 ---------------------------------------------------------- --------------------------------- SDG Other Macerich Joint Management Joint Management Properties, L.P. Ventures Companies Total Ventures Companies Total --------------------------------------------------------- ---------------------------------- <S> <C> <C> <C> <C> <C> <C> <C> Revenues: Minimum rents $71,892 $25,213 - $97,105 $20,644 - $20,644 Percentage rents 6,138 1,208 - 7,346 2,084 - 2,084 Tenant recoveries 31,752 10,905 - 42,657 8,787 - 8,787 Management fee - - 6,605 6,605 - $3,987 3,987 Other 1,723 940 486 3,149 967 176 1,143 ---------------- ------------ ------------- ------------ ----------- ----------- ----------- Total revenues 111,505 38,266 7,091 156,862 32,482 4,163 36,645 ---------------- ------------ ------------- ------------ ----------- ----------- ----------- Expenses: Management Company expense - - 10,122 10,122 - 4,738 4,738 Shopping center expenses 38,673 12,877 - 51,550 11,952 - 11,952 Interest expense 26,432 7,129 (398) 33,163 6,361 (204) 6,157 Depreciation and amortization 17,383 4,288 787 22,458 4,600 392 4,992 ---------------- ------------ ------------- ------------ ----------- ----------- ----------- Total operating expenses 82,488 24,294 10,511 117,293 22,913 4,926 27,839 ---------------- ------------ ------------- ------------ ----------- ----------- ----------- Gain (loss) on sale or write down of assets 29 140 (198) (29) (20,491) 184 (20,307) ---------------- ------------ ------------- ------------ ----------- ----------- ----------- Net income (loss) $29,046 $14,112 ($3,618) $39,540 ($10,922) ($579) ($11,501) ================ ============ ============= ============ =========== =========== =========== </TABLE> Significant accounting policies used by the unconsolidated joint ventures and the Management Companies are similar to those used by the Company. Included in mortgage notes payable are amounts due to affiliates of Northwestern Mutual Life ("NML") of $156,219, $74,612 and $43,500 for the years ended December 31, 1999, 1998 and 1997, respectively. NML is considered a related party because they are a joint venture partner with the Company in Macerich Northwestern Associates. Interest expense incurred on these borrowings amounted to $7,138, $3,786 and $2,974 for the years ended December 31, 1999, 1998 and 1997, respectively. Included in the gain (loss) on sale or write-down of assets is $20,990 of loss on the sale and write-down of North Valley Plaza in 1997. 51

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The following table sets forth the Operating Partnership's beneficial interest in the joint ventures and the Management Companies: <TABLE> <CAPTION> PRO RATA SHARE OF COMBINED AND CONDENSED STATEMENT OF OPERATIONS OF JOINT VENTURES AND THE MANAGEMENT COMPANIES ---------------------------- For the years ended December 31, 1999 -------------------------------------------------------------------------------------- SDG Pacific Macerich Premier Retail Other Joint Management Properties, L.P. Trust Ventures Companies Total ----------------------- ----------------- --------------- ---------------- ----------- <S> <C> <C> <C> <C> <C> Revenues: Minimum rents $44,007 $23,547 $7,822 $5,643 $81,019 Percentage rents 3,711 1,783 730 181 6,405 Tenant recoveries 20,323 8,092 3,214 2,771 34,400 Management fee - - - 9,531 9,531 Other 1,146 171 262 852 2,431 ----------------------- ----------------- --------------- ---------------- ----------- Total revenues 69,187 33,593 12,028 18,978 133,786 ----------------------- ----------------- --------------- ---------------- ----------- Expenses: Management Company expense - - - 12,100 12,100 Shopping center expenses 25,486 9,370 4,077 2,579 41,512 Interest 15,283 11,037 2,973 5,028 34,321 Depreciation and amortization 10,726 5,336 1,371 2,282 19,715 ----------------------- ----------------- --------------- ---------------- ----------- Total operating costs 51,495 25,743 8,421 21,989 107,648 ----------------------- ----------------- --------------- ---------------- ----------- Gain (loss) on sale or write down of assets 3 - 176 (372) (193) ----------------------- ----------------- --------------- ---------------- ----------- Net income (loss) $17,695 $7,850 $3,783 ($3,383) $25,945 ======================= ================= =============== ================ =========== </TABLE> <TABLE> <CAPTION> For the years ended December 31, 1998 1997 --------------------------------------------------------------------------------------------- SDG Other Other Macerich Joint Management Joint Management Properties, L.P. Ventures Companies Total Ventures Companies Total ---------------- ----------- ------------- ----------- ----------- ------------ ----------- <S> <C> <C> <C> <C> <C> <C> <C> Revenues: Minimum rents $35,946 7,763 - $43,709 $7,420 - $7,420 Percentage rents 3,069 416 - 3,485 737 - 737 Tenant recoveries 15,876 2,963 - 18,839 2,804 - 2,804 Management fee - - 6,275 6,275 - $3,788 3,788 Other 862 212 461 1,535 236 167 403 ---------------- ----------- ------------- ----------- ----------- ------------ ----------- Total revenues 55,753 11,354 6,736 73,843 11,197 3,955 15,152 ---------------- ----------- ------------- ----------- ----------- ------------ ----------- Expenses: Management Company expense - - 9,616 9,616 - 4,328 4,328 Shopping center expenses 19,337 4,025 - 23,362 4,238 - 4,238 Interest 13,216 2,525 (378) 15,363 2,129 (192) 1,937 Depreciation and amortization 8,692 1,439 748 10,879 1,940 372 2,312 ---------------- ----------- ------------- ----------- ----------- ------------ ----------- Total operating costs 41,245 7,989 9,986 59,220 8,307 4,508 12,815 ---------------- ----------- ------------- ----------- ----------- ------------ ----------- Gain (loss) on sale or write down of assets 15 30 (188) (143) (10,400) - (10,400) ---------------- ----------- ------------- ----------- ----------- ------------ ----------- Net income (loss) $14,523 $3,395 ($3,438) $14,480 ($7,510) ($553) ($8,063) ---------------- ----------- ------------- ----------- ----------- ------------ ----------- </TABLE> 52

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) 4. PROPERTY: Property is summarized as follows: <TABLE> <CAPTION> December 31, --------------------------------------- 1999 1998 ---- ---- <S> <C> <C> Land $399,172 $422,592 Building improvements 1,603,348 1,684,188 Tenant improvements 49,654 47,808 Equipment & furnishings 11,272 9,097 Construction in progress 111,089 49,440 ------------ ------------ 2,174,535 2,213,125 Less, accumulated depreciation (243,120) (246,280) ------------ ------------ $1,931,415 $1,966,845 ============ ============ </TABLE> Depreciation expense for the years ended December 31, 1999, 1998 and 1997 was $52,592, $46,030 and $35,833, respectively. A gain on sale of assets of $95,981 is a result of the Company selling approximately 49% of the membership interests of Stonewood and Lakewood to Ontario Teachers' on October 26, 1999 and the Company's sale of Huntington Center on November 16, 1999. 5. DEFERRED CHARGES AND OTHER ASSETS: Deferred charges and other assets are summarized as follows: <TABLE> <CAPTION> December 31, --------------------------------- 1999 1998 ---- ---- <S> <C> <C> Leasing $32,934 $30,338 Financing 20,773 19,137 --------- --------- 53,707 49,475 Less, accumulated amortization (22,131) (20,108) --------- --------- 31,576 29,367 Other assets 23,489 33,306 --------- --------- $55,065 $62,673 ========= ========= </TABLE> 53

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) 6. MORTGAGE NOTES PAYABLE: Mortgage notes payable at December 31, 1999 and December 31, 1998 consist of the following: <TABLE> <CAPTION> Carrying Amount of Notes ------------------------------------------------------ 1999 1998 ------------------------------------------------------ Property Pledged Related Related Interest Payment Maturity As Collateral Other Party Other Party Rate Terms Date --------------------- ---------- --------- ------- --------- -------- ------------- -------- <S> <C> <C> <C> <C> <C> <C> <C> Wholly-Owned Centers: Capitola Mall ---- $36,983 ---- $37,345 9.25% 316(a) 2001 Carmel Plaza (b) $28,869 ---- $25,000 ---- 8.18% 202(a) 2009 Chesterfield Towne Center 64,358 ---- 65,064 ---- 9.07% 548(c) 2024 Chesterfield Towne Center ---- ---- 3,266 ---- 8.54% 31(a) 1999 Citadel 73,377 ---- 74,575 ---- 7.20% 554(a) 2008 Corte Madera, Village at (d) 71,949 ---- 60,000 ---- 7.75% 516(a) 2009 Crossroads Mall-Boulder (e) ---- 34,893 ---- 35,280 7.08% 244(a) 2010 Fresno Fashion Fair 69,000 ---- 69,000 ---- 6.52% interest only 2008 Greeley Mall 16,228 ---- 17,055 ---- 8.50% 187(a) 2003 Green Tree Mall/Crossroads - OK/ Salisbury (f) 117,714 ---- 117,714 ---- 7.23% interest only 2004 Holiday Village ---- 17,000 ---- 17,000 6.75% interest only 2001 Lakewood Mall (g) ---- ---- 127,000 ---- 7.20% interest only 2005 Northgate Mall ---- 25,000 ---- 25,000 6.75% interest only 2001 Northwest Arkansas Mall 62,080 ---- 63,000 ---- 7.33% 434(a) 2009 Parklane Mall ---- 20,000 ---- 20,000 6.75% interest only 2001 Queens Center (h) 100,000 ---- 65,100 ---- 6.88% 633(a) 2009 Rimrock Mall 30,445 ---- 31,002 ---- 7.70% 244(a) 2003 Santa Monica Place (i) 80,000 ---- ---- ---- 7.16% interest only 2001 South Plains Mall (j) 64,623 ---- 28,795 ---- 8.22% 454(a) 2009 South Towne Center 64,000 ---- 64,000 ---- 6.61% interest only 2008 Valley View Center 51,000 ---- 51,000 ---- 7.89% interest only 2006 Villa Marina Marketplace 58,000 ---- 58,000 ---- 7.23% interest only 2006 Vintage Faire Mall (k) 53,537 ---- 54,522 ---- 7.65% 427(a) 2003 Westside Pavilion 100,000 ---- 100,000 ---- 6.67% interest only 2008 ============ ========== ============ ========== Total - Wholly Owned Centers $1,105,180 $133,876 $1,074,093 $134,625 ============ ========== ============ ========== </TABLE> 54

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) 6. MORTGAGE NOTES PAYABLE, CONTINUED: <TABLE> <CAPTION> Carrying Amount of Notes ------------------------------------------------- 1999 1998 ------------------------------------------------- Property Pledged Related Related Interest Payment Maturity As Collateral Other Party Other Party Rate Terms Date ----------------- ----- ----- ----- ----- -------- ------------ -------- <S> <C> <C> <C> <C> <C> <C> <C> Joint Venture Centers (at pro rata share): Broadway Plaza (50%) (l) ---- $36,690 ---- $37,306 6.68% 257(a) 2008 Pacific Premier Retail Trust (51%) (l): Cascade Mall $13,837 ---- ---- ---- 6.50% 122(a) 2014 Kitsap Mall 20,452 ---- ---- ---- 6.50% (m) 178(a) 2000 Lakewood Mall (g) 64,770 ---- ---- ---- 7.20% interest only 2005 Los Cerritos Center 60,909 ---- ---- ---- 7.13% 421(a) 2006 North Point Plaza 1,889 ---- ---- ---- 6.50% 16(a) 2015 Redmond Town Center - Retail 32,743 ---- ---- ---- 6.50% 224(a) 2011 Redmond Town Center - Office (n) ---- 42,248 ---- ---- 6.77% 298(a) 2009 Stonewood Mall (o) 38,250 ---- ---- ---- 8.23% interest only 2001 Washington Square 60,471 ---- ---- ---- 6.70% 421(a) 2009 Washington Square Too 6,533 ---- ---- ---- 6.50% 53(a) 2016 SDG Macerich Properties L.P. (50%) (l) 159,282 ---- $160,434 ---- 6.23% (p) 926(a) 2006 SDG Macerich Properties L.P. (50%) (l) 92,500 ---- 92,500 ---- 6.96% (p) interest only 2003 West Acres Center (19%) (l) 7,600 ---- 7,202 ---- 6.52% (q) interest only 2009 ------------ ---------- ------------ ---------- Total - Joint Venture Centers $559,236 $78,938 $260,136 $37,306 ------------ ---------- ------------ ---------- ============ ========== ============ ========== Total - All Centers $1,664,416 $212,814 $1,334,229 $171,931 ============ ========== ============ ========== Weighted average interest rate at December 31, 1999 7.39% ===== Weighted average interest rate at December 31, 1998 7.24% ===== </TABLE> (a) This represents the monthly payment of principal and interest. (b) On April 30, 1999, the old loan of $25,000 was paid in full and was refinanced with a new loan of $29,000, with a fixed interest rate of 8.18%, maturing May 1, 2009. (c) This amount represents the monthly payment of principal and interest. In addition, contingent interest, as defined in the loan agreement, may be due to the extent that 35% of the amount by which the property's gross receipts (as defined in the loan agreement) exceeds a base amount specified therein. Contingent interest expense recognized by the Company was $385 for the year ended December 31, 1999 and $387 for the year ended December 31, 1998. (d) The old loan bore interest at LIBOR plus 2.0%. On October 8, 1999, the loan was paid in full and was refinanced with a new loan of $72,000 at a fixed rate of 7.75%, maturing November 1, 2009. (e) This note was issued at a discount. The discount is being amortized over the life of the loan using the effective interest method. At December 31, 1999 and December 31, 1998 the unamortized discount was $364 and $397, respectively. 55

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) 6. MORTGAGE NOTES PAYABLE, CONTINUED: (f) This loan is cross collateralized by Green Tree Mall, Crossroads Mall-Oklahoma and the Centre at Salisbury. (g) On August 15, 1995, the Company issued $127,000 of collateralized fixed rate notes (the "Notes"). The Notes bear interest at an average fixed rate of 7.20% and mature in July 2005. The Notes require the Company to deposit all cash flow from the property operations with a trustee to meet its obligations under the Notes. Cash in excess of the required amount, as defined, is released. Included in cash and cash equivalents is $750 of restricted cash deposited with the trustee at December 31, 1999 and at 1998. All of the Notes were assumed by the Pacific Premier Retail Trust joint venture on October 26, 1999. (h) At December 31, 1998, a $65,100 loan was outstanding which bore interest at LIBOR plus 0.45%. There was an interest rate protection agreement in place on the first $10,200 of this debt with a LIBOR ceiling of 5.88% through maturity with the remaining principal having an interest rate cap with a LIBOR ceiling of 7.07% through 1997 and 7.7% thereafter. The $65,100 loan was paid in full on February 4, 1999 and refinanced with a new loan of $100,000, with interest at 6.88%, maturing in 2009. The Company incurred a loss on early extinguishment of the old debt in 1999 of $163. (i) The loan bears interest at LIBOR plus 1.75%. In addition, the Company can increase the loan amount up to $90,000. As of January 6, 2000, an additional $5,000 was advanced for total borrowings outstanding of $85,000. (j) The old note of $28,795 was assumed at acquisition. At the time of acquisition in June 1998, this debt was recorded at fair value and the premium was amortized as interest expense over the life of the loan using the effective interest method. The monthly debt service payment was $348 per month and was calculated based on a 12.5% interest rate. At December 31, 1998, the unamortized premium was $6,165. On February 17, 1999, the loan was paid in full and was refinanced with a new loan of $65,000, with interest at 8.22%, maturing in 2009. The Company incurred a loss on early extinguishment of the old debt in 1999 of $810. (k) Included in cash and cash equivalents is $0 and $3,030 at December 31, 1999 and 1998 respectively, of cash restricted under the terms of this loan agreement. (l) Reflects the Company's pro rata share of debt. (m) In connection with the acquisition of this Center, the joint venture assumed $39,425 of debt. At acquisition, this debt was recorded at fair value of $41,475 which included an unamortized premium of $2,050. This premium is being amortized as interest expense over the life of the loan using the effective interest method. The joint venture's monthly debt service is $349 and is calculated based on an 8.60% interest rate. At December 31, 1999, the joint venture's unamortized premium was $1,365. (n) Concurrent with the acquisition, the joint venture placed $76,700 of debt and obtained a construction loan for an additional $16,000. Principal is drawn on the construction loan as costs are incurred. As of December 31, 1999, $6,745 of principal had been drawn under the construction loan by the joint venture. (o) The loan bears interest at LIBOR plus 1.75%. At December 31, 1999 the total interest rate was 8.23%. 56

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) 6. MORTGAGE NOTES PAYABLE, CONTINUED: (p) In connection with the acquisition of these Centers, the joint venture assumed $485,000 of mortgage notes payable which are secured by the properties. At acquisition, this debt reflected a fair value of $322,700, which included an unamortized premium of $22,700. This premium is being amortized as interest expense over the life of the loan using the effective interest method. At December 31, 1999 and December 31, 1998, the unamortized balance of the debt premium was $18,565 and 20,868, respectively. This debt is due in May 2006 and requires monthly payments of $1,852. $185,000 of this debt is due in May 2003 and requires monthly interest payments at a variable weighted average rate (based on LIBOR) of 6.96% and 5.86% at December 31, 1999 and December 31, 1998, respectively. This variable rate debt is covered by an interest rate cap agreement which effectively prevents the interest rate from exceeding 11.53%. (q) On January 4, 1999, the joint venture replaced the old debt with a new loan of $40,000. The loan is at an interest rate of 6.52% and matures January 2009. The debt is interest only until January 2001 at which time monthly payments of principal and interest will be due of $299. Certain mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt. Total interest expense capitalized during 1999, 1998 and 1997 was $6,670, $3,199 and $2,224, respectively. The fair value of mortgage notes payable for wholly-owned Centers at December 31, 1999 and December 31, 1998 is estimated to be approximately $1,179,469 and $1,271,853, respectively, based on current interest rates for comparable loans. The above debt matures as follows: <TABLE> <CAPTION> Joint Venture Years Ending Wholly-Owned Centers December 31, Centers (at pro rata share) Total ------------ ------------------ ------------------ ------------------ <S> <C> <C> <C> 2000 $8,664 $26,515 $35,179 2001 188,479 44,748 233,227 2002 11,717 6,939 18,656 2003 101,229 99,913 201,142 2004 127,705 7,913 135,618 2005 and beyond 801,262 452,146 1,253,408 ------------- ------------- ------------- $1,239,056 $638,174 $1,877,230 ============= ============= ============= </TABLE> The Company is currently in negotiations to refinance $20.5 million of the debt maturing in 2000. The remaining debt maturing in 2000 reflects the amortization of principal on existing debt. 57 f

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 7. BANK AND OTHER NOTES PAYABLE: The Company has a credit facility of $150,000 with a maturity of February 2001, currently bearing interest at LIBOR plus 1.15%. The interest rate on such credit facility fluctuates between 0.95% and 1.15% over LIBOR. As of December 31, 1999 and December 31, 1998, $57,400 and $137,000 of borrowings were outstanding under this line of credit at interest rates of 7.65% and 6.79%, respectively. Additionally, the Company issued $776 in letters of credit guaranteeing performance by the Company of certain obligations. The Company does not believe that these letters of credit will result in a liability to the Company. During January 1999, the Company entered into a bank construction loan agreement to fund $89,200 of costs related to the redevelopment of Pacific View. The loan bears interest at LIBOR plus 2.25% and matures in February 2001. Principal is drawn as construction costs are incurred. As of December 31, 1999, $72,671 of principal has been drawn under the loan. In addition, the Company had a note payable of $30,600 due in February 2000 payable to the seller of the acquired portfolio. The note bore interest at 6.5%. The entire $30,600 loan was paid off on February 18, 2000. 8. CONVERTIBLE DEBENTURES: During 1997, the Company issued and sold $161,400 of convertible subordinated debentures (the "Debentures") due 2002. The Debentures, which were sold at par, bear interest at 7.25% annually (payable semi-annually) and are convertible at any time, on or after 60 days, from the date of issue at a conversion price of $31.125 per share. The Debentures mature on December 15, 2002 and are callable by the Company after June 15, 2002 at par plus accrued interest. 9. RELATED-PARTY TRANSACTIONS: The Company engaged the Management Companies to manage the operations of its properties and certain unconsolidated joint ventures. During 1999, 1998 and 1997, management fees of $3,247, $2,817 and $2,219, respectively, were paid to the Management Companies by the Company. During 1999, 1998 and 1997, management fees of $4,982, $2,375, and $633, respectively, were paid to the Management Companies by the joint ventures. Certain mortgage notes are held by one of the Company's joint venture partners. Interest expense in connection with these notes was $10,171, $10,224 and $10,287 for the years ended December 31, 1999, 1998 and 1997, respectively. Included in accounts payables and accrued expense is interest payable to these partners of $513 and $512 at December 31, 1999 and 1998, respectively. In 1997 and 1999, certain executive officers, received loans from the Company totaling $6,500. These loans are full recourse to the executives. $6,000 of the loans were issued under the terms of the employee stock incentive plan, bear interest at 7%, are due in 2007 and 2009 and are secured by Company common stock owned by the executives. The remaining loan is non interest bearing and is forgiven ratably over a five year term. These loans receivable are included in other assets at December 31, 1999 and 1998. Certain Company officers and affiliates have guaranteed mortgages of $21,750 at one of the Company's joint venture properties and $2,000 at Greeley Mall. 58

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 10. FUTURE RENTAL REVENUES: Under existing noncancellable operating lease agreements, tenants are committed to pay the following minimum rental payments to the Company: <TABLE> <CAPTION> Years Ending December 31, ------------ <S> <C> 2000 $166,586 2001 154,489 2002 143,616 2003 130,190 2004 116,321 2005 and beyond 432,357 ------- $1,143,559 ========== </TABLE> 11. COMMITMENTS AND CONTINGENCIES: The Company has certain properties subject to noncancellable operating ground leases. The leases expire at various times through 2070, subject in some cases to options to extend the terms of the lease. Certain leases provide for contingent rent payments based on a percentage of base rental income, as defined. Ground rent expenses were $890 (including contingent rent of $0) in 1999, $1,125 (including contingent rent of $0) in 1998 and $817 (including contingent rents of $0) in 1997. Minimum future rental payments required under the leases are as follows: <TABLE> <CAPTION> Years Ending December 31, ------------ <S> <C> 2000 $446 2001 440 2002 440 2003 440 2004 444 2005 and beyond 20,225 ------ $22,435 ======= </TABLE> Perchloroethylene ("PCE") has been detected in soil and groundwater in the vicinity of a dry cleaning establishment at North Valley Plaza, formerly owned by a joint venture of which the Company was a 50% member. The property was sold on December 18, 1997. The California Department of Toxic Substances Control ("DTSC") advised the Company in 1995 that very low levels of Dichloroethylene ("1,2 DCE"), a degradation byproduct of PCE, had been detected in a municipal water well located 1/4 mile west of the dry cleaners, and that the dry cleaning facility may have contributed to the introduction of 1,2 DCE into the water well. According to DTSC, the maximum contaminant level ("MCL") for 1,2 DCE which is permitted in drinking water is 6 parts per billion ("ppb"). The 1,2 DCE was detected in the water well at a concentration of 1.2 ppb, which is below the MCL. The Company has retained an environmental consultant and has initiated extensive testing of the site. Remediation began in October 1997. The joint venture agreed (between itself and the buyer) that it would be responsible for continuing to pursue the investigation and remediation of impacted soil and groundwater resulting from releases of PCE from the former dry cleaner. $149 and $153 have already been incurred by the joint venture for remediation and professional and legal fees for the years ending December 31, 1999 and 1998, respectively. An additional $259 remains reserved by the joint venture as of December 31, 1999. The joint venture has been sharing costs on a 50/50 basis with a former owner of the property and intends to look to additional responsible parties for recovery. 59

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 11. COMMITMENTS AND CONTINGENCIES - CONTINUED: The Company acquired Fresno Fashion Fair in December 1996. Asbestos has been detected in structural fireproofing throughout much of the Center. Testing data conducted by professional environmental consulting firms indicates that the fireproofing is largely inaccessible to building occupants and is well adhered to the structural members. Additionally, airborne concentrations of asbestos were well within OSHA's permissible exposure limit (PEL) of .1 fcc. The accounting for this acquisition includes a reserve of $3,300 to cover future removal of this asbestos, as necessary. The Company incurred $91 and $255 in remediation costs for the years ending December 31, 1999 and 1998, respectively. 12. PROFIT SHARING PLAN: The Management Companies and the Company have a retirement profit sharing plan that was established in 1984 covering substantially all of their eligible employees. The plan is qualified in accordance with section 401(a) of the Internal Revenue Code. Effective January 1, 1995, this plan was modified to include a 401(k) plan whereby employees can elect to defer compensation subject to Internal Revenue Service withholding rules. This plan was further amended effective February 1, 1999, to add the Macerich Company Common Stock Fund as a new investment alternative under the plan. 150,000 shares of common stock were reserved for issuance under the plan. Contributions by the Management Companies are made at the discretion of the Board of Directors and are based upon a specified percentage of employee compensation. The Management Companies and the Company contributed $615, $509 and $400 to the plan during the years ended December 31, 1999, 1998 and 1997, respectively. 13. STOCK OPTION PLAN: The Company has established an employee stock incentive plan under which stock options or restricted stock may be awarded for the purpose of attracting and retaining executive officers, directors and key employees. The Company has issued options to employees and directors to purchase shares of the Company under the stock incentive plan. The term of these options is ten years from the grant date. These options generally vest 33 1/3% per year over three years and were issued and are exercisable at the market value of the common stock at the grant date. In addition, the Company has established a plan for non employee directors. The non employee director options have a term of ten years from the grant date, vest six months after grant and are issued at the market value of the common stock on the grant date. The plan reserved 50,000 shares of which 42,500 shares were granted as of December 31, 1999. 390,815 shares of restricted stock also have been issued under the employees stock incentive plan to executives. These awards are granted based on certain performance criteria for the Company. The restricted stock generally vests over 5 years and the compensation expense related to these grants is determined by the market value at the vesting date and is amortized over the vesting period on a straight line basis. As of December 31, 1999 and 1998, 85,962 and 34,287 shares, respectively, of restricted stock had vested. A total of 176,600 shares at a weighted average price of $22.69 were issued in 1999, 83,018 shares at a weighted average price of $28.71 were issued in 1998 and 89,958 shares at a weighted average price of $27.46 were issued during 1997. Restricted stock is subject to restrictions determined by the Company's compensation committee. Restricted stock has the same dividend and voting rights as common stock and is considered issued when vested. Compensation expense for restricted stock was $2,037, $944 and $239 in 1999, 1998 and 1997, respectively. Approximately 319,000 and 803,000 additional shares were reserved and were available for issuance under the stock incentive plan at December 31, 1999 and 1998, respectively. The plan allows for, among other things, granting options or restricted stock at market value. 60

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 13. STOCK OPTION PLAN, CONTINUED: <TABLE> <CAPTION> Weighted Average Exercise Price Employee Plan Director Plan # of On Exercisable ------------- ------------- Options Option Price Option Price Exercisable Options Shares Per Share Shares Per Share At Year End At Year End ------ --------- ------ --------- ----------- ----------- <S> <C> <C> <C> <C> <C> <C> Shares outstanding at December 31, 1996 1,512,334 $19.00-$21.62 27,500 $19.00-$26.12 793,697 $19.09 --------- ------------- ------ ------------- --------- ---------- Granted 369,109 $26.50-$26.88 5,000 $28.50 Exercised (253,552) $19.00 - - Forfeited (8,000) - - - --------- ------------- ------ ------------- --------- ---------- Shares outstanding at December 31, 1997 1,619,891 $19.00-$26.88 32,500 $19.00-$28.50 1,230,227 $20.58 --------- ------------- ------ ------------- --------- ---------- Granted 412,500 $27.38 5,000 $25.625 Exercised (66,080) $19.00 (7,000) $19.00-$21.375 Forfeited - - --------- ------------- ------ ------------- --------- ---------- Shares outstanding at December 31, 1998 1,966,311 $19.00-$27.38 30,500 $19.00-$28.50 1,330,654 $19.38 --------- ------------- ------ ------------- --------- ---------- Granted 520,000 $23.375 5,000 $20.6875 Exercised (88,250) $19.00 - Forfeited (18,500) - - --------- ------------- ------ ------------- --------- ---------- Shares outstanding at December 31, 1999 2,379,561 $19.00-$27.38 35,500 $19.00-$28.50 1,536,473 $21.72 ========= ============= ====== ============= ========= ========== </TABLE> The weighted average exercise price for options granted in 1997 was $27.06, in 1998 was $27.38 and in 1999 was $23.35. The weighted average remaining contractual life for options outstanding at December 31, 1999 was 5 years and the weighted average remaining contractual life for options exercisable at December 31, 1999 was 5 years. The Company records options granted using Accounting Principles Board (APB) opinion Number 25, "Accounting for Stock Issued to Employees and Related Interpretations." Accordingly, no compensation expense is recognized on the date the options are granted. If the Company had recorded compensation expense using the methodology prescribed in SFAS 123, "Accounting for Stock-Based Compensation", the Company's net income would have been reduced by approximately $488 or $0.01 per share for the year ended December 31, 1999 and $228 or $0.00 per share for the year ended December 31, 1998. 61

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 13. STOCK OPTION PLAN, CONTINUED: The weighted average fair value of options granted during 1999 and 1998 were $0.98 and $2.01, respectively. The fair value of each option grant issued in 1999 and 1998 is estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: (a) dividend yield of 10% in 1999 and 7.8% in 1998 , (b) expected volatility of the Company's stock of 17.29% in 1999 and 17.26% in 1998, (c) a risk free interest rate based on U.S. Zero Coupon Bonds with time of maturity approximately equal to the options' expected time to exercise and (d) expected option lives of five years for options granted in 1999 and 1998. 14. DEFERRED COMPENSATION PLANS: The Company has established deferred compensation plans under which key executives of the Company may elect to defer receiving a portion of their cash compensation otherwise payable in one calendar year until a later year. The Company may, as determined by the Board of Directors in its sole discretion, credit a participant's account with an amount equal to a percentage of the participant's deferral. The Company contributed $296 during 1999 and $295 during 1998 to two of these plans. In addition, certain executives have split dollar life insurance agreements with the Company whereby the Company generally pays annual premiums on a life insurance policy in an amount equal to the executives deferral under one of the Company's deferred compensation plans. 15. ACQUISITIONS AND OTHER DEVELOPMENTS: On February 18, 1999, the Company, through a 51/49 joint venture with Ontario Teachers' closed on the first phase of a two phase acquisition of a portfolio of properties. The phase one closing included the acquisition of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers comprising approximately 3.6 million square feet for a total purchase price of approximately $427,000. The purchase price was funded with a $120,000 loan placed concurrently with the closing, $140,400 of debt from an affiliate of the seller, and $39,400 of assumed debt. The balance of the purchase price was paid in cash. The Company's share of the cash component was funded with the proceeds from two refinancings of centers and borrowings under the Company's line of credit. On July 12, 1999, the Company closed on the second phase of the acquisition. The second phase consisted of the acquisition of the office component of the mixed-use development for a purchase price of approximately $111,000. The purchase price was funded with a $76,700 loan placed concurrently with the closing and the balance was paid in cash. The Company's share of the cash component was funded from borrowings under the Company's line of credit. On June 2, 1999, Cerritos, a wholly-owned subsidiary of Macerich Management Company, acquired Los Cerritos Center, a 1,304,262 square foot super regional mall in Cerritos, California. The total purchase price was $188,000, which was funded with $120,000 of debt placed concurrently with the closing and a $70,800 loan from the Company. The Company funded this loan from borrowings under a $60,000 bank loan agreement and the balance from the Company's line of credit. On October 29, 1999, Macerich Santa Monica, LLC, a wholly-owned indirect subsidiary of the Company, acquired Santa Monica Place, a 560,623 square foot regional mall located in Santa Monica, California. The total purchase price was $130,800, which was funded with $80,000 of debt placed concurrently with the closing with the balance funded from proceeds from a joint venture transaction with Ontario Teachers'. On November 15, 1999, the Company redeemed $25,133 of OP Units of the Operating Partnership for cash from various unit holders. A total of 1,266,687 of OP Units were redeemed for cash at the Company's option in lieu of exchanging common stock for OP Units. 62

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 16. PRO FORMA FINANCIAL INFORMATION (UNAUDITED): The following unaudited pro forma financial information combines the consolidated results of operations of the Company for 1999 and 1998 as if the 1999 Acquisitions had occurred on January 1, 1998, after giving effect to certain adjustments, including depreciation, interest expense relating to debt incurred to finance the acquisitions and general and administrative expense to manage the properties. The pro forma information is based on assumptions management believes to be appropriate. The pro forma information is not necessarily indicative of what the actual results would have been had the acquisitions occurred at the beginning of the period indicated, nor does it purport to project the Company's financial position or results of operations at any future date or for any future period. <TABLE> <CAPTION> Years ended December 31, --------------------------------------- 1999 1998 ---- ---- <S> <C> <C> Revenues $341,445 $302,377 Income before minority interest and extraordinary items $169,378 $59,096 Income before extraordinary items $111,853 $34,737 Net income - available to common stockholders $110,375 $32,302 Per share income before extraordinary items - basic $3.29 $1.13 Net income per share - available to common stockholders - basic $3.25 $1.05 Weighted average number of common shares outstanding - basic 34,007 30,805 Per share income before extraordinary items - diluted $3.02 $1.10 Net income per share - available to common stockholders - diluted $2.99 $1.05 Weighted average number of common shares outstanding - diluted 60,893 43,628 </TABLE> 17. REDEEMABLE PREFERRED STOCK: On February 25, 1998, the Company issued 3,627,131 shares of Series A Preferred Stock for proceeds totaling $100,000 in a private placement. The preferred stock can be converted on a one for one basis into common stock and will pay a quarterly dividend equal to the greater of $0.46 per share, or the dividend then payable on a share of common stock. On June 17, 1998, the Company issued 5,487,471 shares of Series B cumulative convertible redeemable preferred stock ("Series B Preferred Stock") for proceeds totaling $150,000 in a private placement. The preferred stock can be converted on a one for one basis into common stock and will pay a quarterly dividend equal to the greater of $0.46 per share, or the dividend then payable on a share of common stock. No dividends will be declared or paid on any class of common or other junior stock to the extent that dividends on Series A Preferred Stock and Series B Preferred Stock have not been declared and/or paid. 63

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 18. QUARTERLY FINANCIAL DATA (UNAUDITED): The following is a summary of periodic results of operations for 1999 and 1998: <TABLE> <CAPTION> 1999 Quarter Ended 1998 Quarter Ended ----------------------------------------- ------------------------------------------- Dec 31 Sept 30 June 30 Mar 31 Dec 31 Sept 30 June 30 Mar 31 ------- ------- ------- ------- ------- ------- ------- ------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Revenues $84,676 $83,244 $80,675 $78,849 $86,200 $75,079 $61,407 $61,175 Income before minority interest and extraordinary items 117,438 17,200 16,665 17,521 23,583 12,653 12,607 10,569 Income before extraordinary items 84,327 9,153 9,001 9,870 13,780 6,903 7,368 6,912 Net income - available to common stockholders 83,865 9,125 8,986 8,897 13,759 4,579 7,368 6,822 Income before extraordinary items per share $2.48 $0.27 $0.26 $0.29 $0.42 $0.23 $0.24 $0.25 Net income - available to common stockholders per share - basic $2.47 $0.27 $0.26 $0.26 $0.42 $0.15 $0.24 $0.25 </TABLE> 19.SEGMENT INFORMATION: During 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." SFAS No. 131 established standards for disclosure about operating segments and related disclosures about products and services, geographic areas and major customers. The Company currently operates in one business segment, the acquisition, ownership, redevelopment, management and leasing of regional and community shopping centers. Additionally, the Company operates in one geographic area, the United States. 20.SUBSEQUENT EVENTS (UNAUDITED): On February 14, 2000 a dividend/distribution of $0.51 per share was declared for common stockholders and OP Unit holders of record on February 18, 2000. In addition, the Company declared a dividend of $0.51 on the Company's Series A Preferred Stock and a dividend of $0.51 on the Company's Series B Preferred Stock. All dividends/distributions will be payable on March 7, 2000. 64

REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Trustees and Stockholders of Pacific Premier Retail Trust: We have audited the consolidated financial statements and financial statement schedule of Pacific Premier Retail Trust (the "Trust") as listed in Items 14(a) (2) and (4) of this Form 10-K. These financial statements and financial statement schedule are the responsibility of the Trust's management. Our responsibility is to express an opinion on these statements and financial statement schedule based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respect, the consolidated financial position of Pacific Premier Retail Trust as of December 31, 1999, and the consolidated results of its operations and its cash flows for the period from February 18, 1999 (Inception) to December 31, 1999, in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. PricewaterhouseCoopers LLP Los Angeles, California February 14, 2000 65

PACIFIC PREMIER RETAIL TRUST (A MARYLAND REAL ESTATE INVESTMENT TRUST) CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) <TABLE> <CAPTION> <S> <C> ASSETS: Property, net 984,743 Cash 4,295 Tenant receivables, net 6,793 Deferred rent receivables 2,501 Deferred charges, less accumulated amortization of $161 1,116 Other assets 778 ---------- Total assets $1,000,226 ========== LIABILITIES AND STOCKHOLDERS' EQUITY: Notes payable $670,787 Accounts payable 3,086 Accrued interest payable 3,556 Accrued real estate taxes 912 Tenant security deposits 1,018 Other accrued liabilities 9,192 Due to related parties 1,479 ---------- Total liabilities 690,030 Commitments (Note 8) Stockholders' equity: Series A redeemable preferred stock, $.01 par value, 625 shares authorized, issued and outstanding at December 31, 1999 - Common stock, $.01 par value, 219,611 shares authorized issued and outstanding at December 31, 1999 2 Additional paid in capital 307,613 Accumulated earnings 2,581 ---------- Total stockholders' equity 310,196 ---------- Total liabilities and stockholders' equity $1,000,226 ========== </TABLE> The accompanying notes are an integral part of these financial statements. 66

PACIFIC PREMIER RETAIL TRUST (A MARYLAND REAL ESTATE INVESTMENT TRUST) CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD FROM FEBRUARY 18, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) <TABLE> <S> <C> Revenues: Minimum rents $46,170 Percentage rents 3,497 Tenant recoveries 15,866 Other income 336 ------- Total revenues 65,869 ------- Expenses: Interest 21,642 Maintenance and repairs 4,627 Real estate taxes 4,743 Management fees 2,253 General and administrative 1,132 Ground rent 905 Insurance 301 Marketing 662 Utilities 2,012 Security 1,724 ------- Total expenses 40,001 ------- Income before depreciation and amortization and minority interest 25,868 Depreciation and amortization 10,463 Minority interest 14 ------- Net income $15,391 ======= </TABLE> The accompanying notes are an integral part of these financial statements. 67

PACIFIC PREMIER RETAIL TRUST (A MARYLAND REAL ESTATE INVESTMENT TRUST) CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROM FEBRUARY 18, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999 (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) <TABLE> <CAPTION> COMMON PREFERRED ADDITIONAL TOTAL STOCK STOCK COMMON STOCK PAID IN ACCUMULATED STOCKHOLDERS' (# OF SHARES) (# OF SHARES) PAR VALUE CAPITAL EARNINGS EQUITY ------------- ------------- ------------ ---------- ----------- ------------- <S> <C> <C> <C> <C> <C> <C> Common stock issued to Macerich PPR Corp. 111,691 $1 $115,527 $115,528 Common stock issued to Ontario Teachers' Pension Plan Board 107,920 1 189,677 189,678 Preferred stock issued 625 2,500 2,500 Issuance costs (91) (91) Common stock distributions paid to Macerich PPR Corp. ($6,524) (6,524) Common stock distributions paid to Ontario Teachers' Pension Plan Board (6,268) (6,268) Preferred stock distributions paid (18) (18) Net income 15,391 15,391 ---------- ------------- ------------ ---------- ----------- ------------- Balance December 31, 1999 219,611 625 $2 $307,613 $2,581 $310,196 ---------- ------------- ------------ ---------- ----------- ------------- </TABLE> The accompanying notes are an integral part of these financial statements. 68

PACIFIC PREMIER RETAIL TRUST (A MARYLAND REAL ESTATE INVESTMENT TRUST) CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM FEBRUARY 18, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) <TABLE> <S> <C> Cash flows from operating activities: Net income $15,391 -------- Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,463 Changes in assets and liabilities: Tenant receivables, net (3,438) Deferred rent receivables (2,501) Other assets 27 Accounts payable 2,870 Accrued interest payable 2,285 Accrued real estate taxes (1,228) Tenant security deposits 315 Other accrued liabilities 5,449 Due to related parties 4,108 -------- Total adjustments 18,350 -------- Net cash flows provided by operating activities 33,741 -------- Cash flows from investing activities: Acquisition of property and improvements (389,536) Deferred charges (704) -------- Net cash flows used in investing activities (390,240) Cash flows from financing activities: Proceeds from notes payable 203,444 Payments on notes payable (4,942) Net proceeds from preferred stock offering 409 Contributions 175,266 Distributions (12,792) Preferred dividends paid (18) Deferred finance costs (573) -------- Net cash flows provided by financing activities 360,794 Net increase in cash 4,295 Cash, beginning of period - -------- Cash, end of year $4,295 ======== Supplemental cash flow information: Cash payments for interest, net of amounts capitalized $18,087 ======== Non-cash transactions: Non-cash contribution of assets, net of assumed debt $131,100 ======== Non-cash assumption of debt $150,625 ======== </TABLE> The accompanying notes are an integral part of these financial statements. 69

PACIFIC PREMIER RETAIL TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1. ORGANIZATION AND BASIS OF PRESENTATION: On February 18, 1999, Macerich PPR Corp. (the "Corp"), an indirect wholly owned subsidiary of the Macerich Company (the "Company"), and Ontario Teachers' Pension Plan Board ("Ontario Teachers'") acquired a portfolio of properties in the first of a two-phase acquisition and formed the Pacific Premier Retail Trust (the "Trust"). The first phase of the acquisition consisted of three regional malls, the retail component of a mixed-use development and five contiguous properties comprising approximately 3.4 million square feet for a total purchase price of approximately $415,000. The purchase price was funded with a $120,000 loan placed concurrently with the closing, $109,800 of debt from an affiliate of the seller and $39,400 of assumed debt. The balance of the purchase price was paid in cash. The second phase consisted of the acquisition of the office component of the mixed-use development for a purchase price of approximately $111,000. The purchase price was funded with a $76,700 loan placed concurrently with the closing and the balance was paid in cash. On October 26, 1999, 99% of the membership interests of Los Cerritos Center and Stonewood Mall and 100% of the membership interests of Lakewood Mall were contributed to the Trust. The total value of the transaction was approximately $535,000. The properties were contributed to the Trust subject to existing debt of $322,000. The properties were recorded at approximately $453,100 to reflect the cost basis of the assets contributed to the Trust. The Trust was organized to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended. The Corp maintains a 51% ownership interest in the Trust, while Ontario Teachers' maintains a 49% ownership interest in the Trust. The properties as of December 31, 1999 and their locations are as follows: <TABLE> <S> <C> Cascade Mall Burlington, Washington Creekside Crossing Mall Redmond, Washington Cross Court Plaza Burlington, Washington Kitsap Mall Silverdale, Washington Kitsap Place Mall Silverdale, Washington Lakewood Mall Lakewood, California Los Cerritos Center Cerritos, California Northpoint Plaza Silverdale, Washington Redmond Towne Center Redmond, Washington Redmond Office Redmond, Washington Stonewood Mall Downey, California Washington Square Mall Tigard, Oregon Washington Square Too Tigard, Oregon </TABLE> 70

PACIFIC PREMIER RETAIL TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: CASH AND CASH EQUIVALENTS: The Trust considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents, for which cost approximates market. Included in cash is restricted cash of $1,299 at December 31, 1999. TENANT RECEIVABLES: Included in tenant receivables are accrued overage rents of $2,835 and an allowance for doubtful accounts of $171 at December 31, 1999. REVENUES: Minimum rental revenues are recognized on a straight-line basis over the terms of the related lease. The difference between the amount of rent due in a year and the amount recorded as rental income is referred to as the "straight lining of rent adjustment." Rental income was increased by $2,501 in 1999 due to the straight lining of rents. Percentage rents are recognized on an accrual basis. Recoveries from tenants for real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable costs are incurred. The Trust engages the Macerich Management Company (the "Management Company"), an affiliate of the Company, to manage the operations of the Trust. The Management Company provides property management, leasing, corporate, redevelopment and acquisitions services to the properties of the Trust. In consideration of these services, the Management Company receives monthly management fees ranging from 1.0% to 4.0% of the gross monthly rental revenue of the properties managed. PROPERTY: Costs related to the redevelopment, construction and improvement of properties are capitalized. Interest costs are capitalized until construction is substantially complete. Expenditures for maintenance and repairs are charged to operations as incurred. Realized gains and losses are recognized upon disposal or retirement of the related assets and are reflected in earnings. Property is recorded at cost and is depreciated using a straight-line method over the estimated lives of the assets as follows: Building and improvements 5-39 years Tenant improvements initial term of related lease Equipment and furnishings 5 years The Trust assesses whether there has been an impairment in the value of its long-lived assets by considering factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. Such factors include the tenants' ability to perform their duties and pay rent under the terms of the leases. The Trust may recognize an impairment loss if the income stream is not sufficient to cover its investments. Such a loss would be determined between the carrying value and the fair value of a property. Management believes no such impairment has occurred in its net property carrying values at December 31, 1999. DEFERRED CHARGES: Costs relating to financing of properties and obtaining tenant leases are deferred and amortized over the initial term of the agreement. The straight-line method is used to amortize all costs except financing, for which the effective interest method is used. The range of the terms of the agreements are as follows: Deferred lease costs 1 - 9 years Deferred financing costs 1 - 12 years 71

PACIFIC PREMIER RETAIL TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) INCOME TAXES: The Trust has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. A REIT is generally not subject to income taxation on that portion of its income that qualifies as REIT taxable income as long as it distributes at least 95% of its taxable income to its stockholders and complies with other requirements. Accordingly, no provision has been made for income taxes in the financial statements. FAIR VALUE OF FINANCIAL INSTRUMENTS: To meet the reporting requirements of SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," the Trust calculates the fair value of financial instruments and includes this additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of those financial instruments. When the fair value reasonably approximates the carrying value, no additional disclosure is made. The estimated fair value amounts have been determined by the Trust using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Trust could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. CONCENTRATION OF RISK: The Trust maintains its cash accounts in a number of commercial banks. Accounts at these banks are guaranteed by the Federal Deposit Insurance Corporation ("FDIC") up to $100. At various times during the year, the Trust had deposits in excess of the FDIC insurance limit. AT&T Wireless Services represented 9.5% of total minimum rents in place as of December 31, 1999, and no other tenant represented more than 2.7% of total minimum rents as of December 31, 1999. MANAGEMENT ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. PROPERTY: Property is summarized as follows: <TABLE> <CAPTION> December 31, 1999 ---- <S> <C> Land $239,194 Building and improvements 735,258 Tenant improvements 89 Equipment and furnishings 148 Construction in progress 20,356 -------- 995,045 -------- Less, accumulated depreciation (10,302) -------- $984,743 ======== </TABLE> 72

PACIFIC PREMIER RETAIL TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 4. MORTGAGE NOTES PAYABLE: Mortgage notes payable at December 31, 1999 consist of the following: <TABLE> <CAPTION> Carrying Amount of Notes -------------------------------------------------------------- 1999 -------------------------------------------------------------- Property Pledged Related Interest Payment Maturity As Collateral Other Party Rate Terms Date ---------------- ----- ----- ---- ----- ---- <S> <C> <C> <C> <C> <C> Cascade Mall $27,130 ---- 6.50% 239(e) 2014 Kitsap Mall 40,101 ---- 6.50% (c) 349(e) 2000 Lakewood Mall (a) 127,000 ---- 7.20% interest only 2005 Los Cerritos Center 119,430 ---- 7.13% 826(e) 2006 North Point Plaza 3,705 ---- 6.50% 31(e) 2015 Redmond Town Center - Retail 64,202 ---- 6.50% 439(e) 2011 Redmond Town Center - Office (b) ---- $82,839 6.77% 584(e) 2009 Stonewood Mall 75,000 ---- 8.23% (d) interest only 2001 Washington Square 118,571 ---- 6.70% 825(e) 2009 Washington Square Too 12,809 ---- 6.50% 104(e) 2016 -------- ------- Total $587,948 $82,839 ======== ======= Weighted average interest rate at December 31, 1999 6.85% ===== </TABLE> (a) In connection with the acquisition of this property, the Trust assumed $127,000 of collateralized fixed rate notes (the ("Notes"). The Notes bear interest at an average fixed rate of 7.20% and mature in July 2005. The Notes require the Trust to deposit all cash flow from the property operations with a trustee to meet its obligations under the Notes. Cash in excess of the required amount, as defined, is released. Included in cash and cash equivalents is $750 of restricted cash deposited with the trustee at December 31, 1999. (b) Concurrent with the acquisition of the property, the Trust placed $76,700 of debt and obtained a construction loan for an additional $16,000. Principal is drawn on the construction loan as costs are incurred. As of December 31, 1999, $6,745 of principal has been drawn under the construction loan. (c) In connection with the acquisition of this property, the Trust assumed $39,425 of debt. At acquisition, this debt was recorded at the fair value of $41,475 which included an unamortized premium of $2,050. This premium is being amortized as interest expense over the life of the loan using the effective interest method. The Trust's monthly debt service is $349 and is calculated based on an 8.60% interest rate. At December 31, 1999, the Trust's unamortized premium was $1,365. (d) This loan pays interest at LIBOR plus 1.75%. At December 31, 1999 the total interest rate was 8.23%. (e) This represents the monthly payment of principal and interest. 73

PACIFIC PREMIER RETAIL TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 4. MORTGAGE NOTES PAYABLE - CONTINUED: Certain mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt. Total interest costs capitalized during the period from February 18, 1999 (Inception) through December 31, 1999 were $290. The fair value of mortgage notes payable at December 31, 1999 is estimated to be approximately $621,393 based on interest rates for comparable loans. The above debt matures as follows: <TABLE> <CAPTION> Years Ending December 31, ------------------------- <S> <C> 2000 $48,298 2001 83,773 2002 9,381 2003 10,031 2004 10,720 2005 and beyond 508,584 -------- $670,787 ======== </TABLE> The Trust is currently in negotiations to refinance $40,101 of the debt maturing in 2000. The remaining debt maturing in 2000 reflects the amortization of principal on existing debt. 5. RELATED PARTY TRANSACTIONS: The Trust engaged the Management Company to manage the operations of its properties. During 1999, the Trust incurred management fees of $2,253 to the Management Company. A mortgage note collateralized by the office component of Redmond Town Center is held by one of the Company's joint venture partners. In connection with this note, interest expense was $2,192 during the year ended December 31, 1999. Additionally, $248 of interest costs were capitalized during the year ended December 31, 1999 in relation to this note. 6. FUTURE RENTAL REVENUES: The property leases generally provide for fixed annual minimum rent, overage rent based on sales, and reimbursement for certain operating expenses, including real estate taxes. For leases in effect at December 31, 1999, fixed minimum rents to be received in each of the next five years and thereafter are summarized as follows: <TABLE> <CAPTION> <S> <C> 2000 $82,468 2001 79,055 2002 75,601 2003 69,648 2004 64,234 Thereafter 331,153 -------- $702,159 ======== </TABLE> 74

PACIFIC PREMIER RETAIL TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 7. REDEEMABLE PREFERRED STOCK: On October 6, 1999, the Trust issued 125 shares of Series A Redeemable Preferred Shares of Beneficial Interest ("Preferred Stock") for proceeds totaling $500 in a private placement. On October 26, 1999 the Trust issued 254 and 246 shares of Preferred Stock to the Corp and Ontario Teachers', respectively. The Preferred Stock can be redeemed by the Trust at any time with 15 days notice for $4,000 per share plus accumulated and unpaid dividends and the applicable redemption premium. The Preferred Stock will pay a semiannual dividend equal to $300 per share. The Preferred Stock has limited voting rights. 8. COMMITMENTS: The Trust has certain properties subject to non-cancelable operating ground leases. The leases expire at various times through 2069, subject in some cases to options to extend the terms of the lease. Ground rent expense was $905 for the period from February 18, 1999 (Inception) through December 31, 1999. Minimum future rental payments required under the leases are as follows: <TABLE> <CAPTION> Years Ending December 31, ------------------------- <S> <C> 2000 $1,215 2001 1,215 2002 1,215 2003 1,215 2004 1,230 Thereafter 105,492 -------- $111,582 ======== </TABLE> 75

INDEPENDENT AUDITORS' REPORT The Partners SDG Macerich Properties, L.P.: We have audited the accompanying balance sheets of SDG Macerich Properties, L.P. as of December 31, 1999 and 1998, and the related statements of operations, cash flows, and partners' equity for the years then ended. In connection with our audits of the financial statements, we have also audited the related financial statement schedule (Schedule III). These financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SDG Macerich Properties, L.P. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule (Schedule III), when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG LLP Indianapolis, Indiana February 11, 2000 76

SDG MACERICH PROPERTIES, L.P. BALANCE SHEETS AS OF DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) <TABLE> <CAPTION> ASSETS: 1999 1998 ------------ ------------- <S> <C> <C> Properties: Land $200,123 199,377 Building and improvements 815,559 804,724 Equipment and furnishings 1,125 472 ------------ ------------- 1,016,807 1,004,573 Less accumulated depreciation 38,818 17,383 ------------ ------------- 977,989 987,190 Cash and cash equivalents 8,332 9,156 Tenant receivables, including accrued revenue less allowance for doubtful accounts of $979 and $804 20,700 20,579 Prepaid real estate taxes and other assets 2,178 1,096 ------------ ------------- $1,009,199 1,018,021 ============ ============= LIABILITIES AND PARTNERS' EQUITY Mortgage notes payable $503,565 505,868 Accounts payable 7,755 10,935 Due to affiliates 633 443 Accrued real estate taxes 14,859 12,423 Accrued interest expense 1,562 1,562 Accrued management and leasing fees 322 249 Other liabilities 674 1,503 ------------ ------------ Total liabilities 529,370 532,983 Partners' equity 479,829 485,038 ------------ ------------ $1,009,199 1,018,021 ============ ============ </TABLE> See accompanying notes to financial statements. 77

SDG MACERICH PROPERTIES, L.P. STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) <TABLE> <CAPTION> 1999 1998 --------- ---------- <S> <C> <C> Revenues: Minimum rents $88,051 72,016 Overage rents 6,905 5,782 Tenant recoveries 47,161 35,806 Other 2,382 1,822 --------- ---------- 144,499 115,426 --------- ---------- Expenses: Property operations 18,750 13,561 Depreciation of properties 21,451 17,383 Real estate taxes 18,603 13,577 Repairs and maintenance 6,979 6,312 Advertising and promotion 7,481 5,013 Management fees 3,763 3,062 Provision for credit losses 748 809 Interest on mortgage notes 30,565 26,432 Other 768 231 --------- --------- 109,108 86,380 --------- --------- Net income $35,391 29,046 ========= ========= </TABLE> See accompanying notes to financial statements. 78

SDG MACERICH PROPERTIES, L.P. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) <TABLE> <CAPTION> 1999 1998 ---------- --------- <S> <C> <C> Cash flows from operating activities: Net income $ 35,391 29,046 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of properties 21,451 17,383 Amortization of debt premium (2,303) (1,843) Change in tenant receivables (121) (14,452) Change in accrued real estate taxes 2,436 (527) Other items (4,684) 8,871 ---------- --------- Net cash provided by operating activities 52,170 38,478 ---------- --------- Cash flows from investing activities: Acquisition of properties, net of mortgage notes assumed - (480,392) Additions to properties (12,394) (4,922) ---------- --------- Net cash used by investing activities (12,394) (485,314) ---------- --------- Cash flows from financing activities: Contributions by partners - 480,392 Distributions to partners (40,600) (24,400) ---------- --------- Net cash provided by financing activities (40,600) 455,992 ---------- --------- Net increase (decrease) in cash and cash equivalents (824) 9,156 Cash and cash equivalents at beginning of year 9,156 - ---------- --------- Cash and cash equivalents at end of year $ 8,332 9,156 ========== ========= Supplemental cash flow information: Cash payments for interest $ 32,868 26,713 ========== ========= Non-cash transaction: Fair value of mortgage notes assumed with properties acquired - 507,711 Fair value of other liabilities, net, assumed with properties acquired - 11,548 ========== ========= </TABLE> See accompanying notes to financial statements. 79

SDG MACERICH PROPERTIES, L.P. STATEMENTS OF PARTNERS' EQUITY YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) <TABLE> <CAPTION> Simon Property The Macerich Total Group, Inc. Company affiliates affiliates -------------- ------------ ----------- <S> <C> <C> <C> Percentage ownership interest 50% 50% 100% ============== ============ =========== Balance at January 1, 1998 $ - - - Contributions 240,196 240,196 480,392 Distributions (12,200) (12,200) (24,400) Net income for the year 14,523 14,523 29,046 -------------- ------------ ----------- Balance at December 31, 1998 242,519 242,519 485,038 Distributions (20,300) (20,300) (40,600) Net income for the year 17,695 17,696 35,391 -------------- ------------ ----------- Balance at December 31, 1999 $ 239,914 239,915 479,829 ============== ============ =========== </TABLE> See accompanying notes to financial statements. 80

SDG MACERICH PROPERTIES, L.P. Notes to Financial Statements December 31, 1999 and 1998 (Dollars in thousands) (1) GENERAL (a) PARTNERSHIP ORGANIZATION On December 29, 1997, affiliates of Simon Property Group, Inc. (Simon) and The Macerich Company (Macerich) formed a limited partnership to acquire and operate a portfolio of 12 regional shopping centers. SDG Macerich Properties, L.P. (the Partnership) acquired the properties on February 27, 1998, and the accompanying financial statements include the results of operations of the properties since the date of acquisition. As a result, the statement of operations presented for 1998 only represents ten months of activity. (b) PROPERTIES Simon and Macerich have divided the property management services, and affiliates of each company manage six of the shopping centers. The shopping centers and their locations are as follows: Simon managed properties: South Park Mall Moline, Illinois Valley Mall Harrisonburg, Virginia Granite Run Mall Media, Pennsylvania Eastland Mall and Convenience Center Evansville, Indiana Lake Square Mall Leesburg, Florida North Park Mall Davenport, Iowa Macerich managed properties: Lindale Mall Cedar Rapids, Iowa Mesa Mall Grand Junction, Colorado South Ridge Mall Des Moines, Iowa Empire Mall and Empire East Sioux Falls, South Dakota Rushmore Mall Rapid City, South Dakota Southern Hills Mall Sioux City, Iowa The shopping center leases generally provide for fixed annual minimum rent, overage rent based on sales, and reimbursement for certain operating expenses, including real estate taxes. For leases in effect at December 31, 1999, fixed minimum rents to be received in each of the next five years and thereafter are summarized as follows: <TABLE> <S> <C> 2000 $ 72,730 2001 66,183 2002 60,239 2003 53,401 2004 45,992 Thereafter 149,455 --------- $ 448,000 ========= </TABLE> 81

SDG MACERICH PROPERTIES, L.P. Notes to Financial Statements December 31, 1999 and 1998 (Dollars in thousands) (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) REVENUES All leases are classified as operating leases, and minimum rents are recognized monthly on a straight-line basis over the terms of the leases. Most retail tenants are also required to pay overage rents based on sales over a stated base amount during the lease year, generally ending on January 31. Overage rents are recognized as revenues based on reported and estimated sales for each tenant through December 31, less a proration of the base amount. Differences between estimated and actual amounts are recognized in the subsequent year. During January 2000, the Emerging Issues Task Force finalized Issue No. 98-9 on ACCOUNTING FOR CONTINGENT RENT. The EITF clarified the recognition of overage rent by stating that revenue for such contingent rent should not be recognized until the sales of the tenant have exceeded its base amount. The Partnership will be required to adopt this new method as of January 1, 2000. The effect of this pronouncement will be to delay the recognition of revenue until later in the year and into the subsequent year. Estimates of the effects of this change have not yet been determined. Tenant recoveries for real estate taxes and common area maintenance are adjusted annually based on the actual expenses, and the related revenues are recognized in the year in which the expenses are incurred. Charges for other operating expenses are billed monthly with periodic adjustments based on the estimated utility usage and/or a current price index, and the related revenues are recognized as the amounts are billed and as adjustments become determinable. (b) CASH EQUIVALENTS All highly liquid debt instruments purchased with a maturity of three months or less are considered to be cash equivalents. (c) PROPERTIES Properties are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the assets as follows: Buildings and improvements 39 years Equipment and furnishings 5-7 years Tenant improvements Initial term of related lease Improvements and replacements are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. All other repairs and maintenance items are expensed as incurred. The Partnership assesses whether there has been an impairment in the value of a property by considering factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. Such factors include the tenants' ability to perform their duties and pay rent under the terms of the leases. The Partnership would recognize an impairment loss if the estimated future income stream of a property is not sufficient to recover its investment. Such a loss would be the difference between the carrying value and the fair value of a property. Management believes no impairment in its net property carrying values has occurred at December 31, 1999 or 1998. 82

SDG MACERICH PROPERTIES, L.P. Notes to Financial Statements December 31, 1999 and 1998 (Dollars in thousands) (d) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (e) INCOME TAXES As a partnership, the allocated share of income or loss for the year is includable in the income tax returns of the partners; accordingly, income taxes are not reflected in the accompanying financial statements. (3) MORTGAGE NOTES PAYABLE AND FAIR VALUE OF FINANCIAL INSTRUMENTS In connection with the acquisition of the properties, the Partnership assumed $485,000 of mortgage notes payable which are secured by liens on the properties. The notes consist of $300,000 of debt which is due in May 2006 and requires monthly interest payments at a fixed weighted average rate of 7.41% and $185,000 of debt which is due in May 2003 and requires monthly interest payments at a variable weighted average rate (based on LIBOR) of 6.96% at December 31, 1999 (5.86% at December 31, 1998). The variable rate debt is covered by an interest cap agreement which effectively prevents the variable rate from exceeding 11.53%. The fair value assigned to the $300,000 fixed-rate debt at the acquisition date based on an estimated market interest rate of 6.23% was $322,711, and the resultant debt premium is being amortized to interest expense over the remaining term of the debt using a level yield method. At December 31, 1999 and 1998, the unamortized balance of the debt premium was $18,565 and $20,868, respectively. The fair value of the $300,000 fixed-rate debt at December 31, 1999 and 1998 based on an interest rate of 8.34% and 6.70%, respectively, is estimated to be $266,530 and $312,000, respectively. The $185,000 carrying value of the variable-rate debt and the Partnership's other financial instruments are estimated to equal their financial statement values. The Partnership intends to obtain additional mortgage financing secured by the properties of up to $140,000 in 2000. The new financing is expected to have the same maturity as the existing fixed rate mortgage notes, which mature on May 15, 2006. (4) MANAGEMENT SERVICES Management fees incurred in 1999 and 1998 totaled $1,960 and $1,592, respectively, for the Simon-managed properties and $1,803 and $1,470, respectively, for the Macerich-managed properties, both based on a fee of 4% of gross receipts, as defined. (5) CONTINGENT LIABILITY The Partnership currently is not involved with any litigation other than routine and administrative proceedings arising in the ordinary course of business. On the basis of consultation with counsel, management believes that these items will not have a material adverse impact on the Partnership's financial statements taken as a whole. 83

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1999 (Dollars in thousands) Schedule III. Real Estate and Accumulated Depreciation <TABLE> <CAPTION> Initial Cost to Company ------------------------------------ Cost Equipment Capitalized Building and and Subsequent to Land Improvements Furnishings Acquisition ---- ------------ ----------- ----------- <S> <C> <C> <C> <C> Shopping Centers/Entities: Bristol Shopping Center $132 $11,587 $0 $1,449 Boulder Plaza 2,919 9,053 0 787 Capitola Mall 11,312 46,689 0 1,585 Carmel Plaza 9,080 36,354 0 437 Chesterfield Towne Center 18,517 72,936 2 9,522 Citadel, The 21,600 86,711 0 3,101 Corte Madera, Village at 24,433 97,821 0 1,174 County East Mall 4,096 20,317 1,425 7,060 Crossroads Mall - Boulder 50 37,793 64 36,655 Crossroads Mall - Oklahoma 10,279 43,486 291 13,039 Fresno Fashion Fair 17,966 72,194 0 (1,321) Great Falls Marketplace 2,960 11,840 0 660 Greeley Mall 5,601 12,648 13 7,874 Green Tree Mall 4,947 14,925 332 23,488 Holiday Village Mall 3,491 18,229 138 19,014 Northgate Mall 8,400 34,865 841 19,236 Northwest Arkansas Mall 18,800 75,358 0 1,118 Pacific View (formerly known as Buenaventura Mall) 8,697 8,696 0 85,660 Parklane Mall 2,311 15,612 173 14,849 Queens Center 21,460 86,631 8 4,136 Rimrock Mall 8,737 35,652 0 3,307 Salisbury, The Centre at 15,290 63,474 31 1,892 Santa Monica Place 26,400 105,600 0 273 South Plains Mall 23,100 92,728 0 1,426 South Towne Center 19,600 78,954 0 5,236 Valley View Center 17,100 68,687 0 10,525 Villa Marina Marketplace 15,852 65,441 0 279 Vintage Faire Mall 14,902 60,532 0 100 Westside Pavilion 34,100 136,819 0 2,597 The Macerich Partnership, L.P. 451 1,844 0 0 -------- ---------- ------ -------- $372,583 $1,523,476 $3,318 $275,158 ======== ========== ====== ======== </TABLE> <TABLE> <CAPTION> Gross Amount at Which Carried at Close of Period ------------------------------------------------------------------ Total Cost Furniture, Net of Building and Fixtures and Constuction Accumulated Accumulated Land Improvements Equipment in Progress Total Depreciation Depreciation ---- ------------ --------- ----------- ----- ------------ ------------ <S> <C> <C> <C> <C> <C> <C> <C> Shopping Centers/Entities: Bristol Shopping Center $132 $13,033 $0 $3 $13,168 $6,186 $6,982 Boulder Plaza 2,919 9,840 0 0 12,759 3,232 9,527 Capitola Mall 11,309 48,199 78 0 59,586 5,153 54,433 Carmel Plaza 9,080 36,757 23 11 45,871 1,336 44,535 Chesterfield Towne Center 18,517 80,281 2,179 0 100,977 15,237 85,740 Citadel, The 21,600 89,410 273 129 111,412 4,904 106,508 Corte Madera, Village at 24,433 98,957 34 4 123,428 3,752 119,676 County East Mall 4,099 27,894 811 94 32,898 11,694 21,204 Crossroads Mall - Boulder 21,616 42,312 158 10,476 74,562 24,520 50,042 Crossroads Mall - Oklahoma 13,357 53,270 367 101 67,095 9,164 57,931 Fresno Fashion Fair 17,966 70,523 140 210 88,839 5,602 83,237 Great Falls Marketplace 3,090 12,370 0 0 15,460 619 14,841 Greeley Mall 5,601 20,377 142 16 26,136 10,806 15,330 Green Tree Mall 4,947 38,198 547 0 43,692 22,570 21,122 Holiday Village Mall 5,807 34,810 249 6 40,872 22,036 18,836 Northgate Mall 8,400 53,832 949 161 63,342 21,173 42,169 Northwest Arkansas Mall 18,800 76,413 41 22 95,276 2,096 93,180 Pacific View (formerly known as Buenaventura Mall) 8,697 8,797 277 85,282 103,053 712 102,341 Parklane Mall 2,426 25,246 411 4,862 32,945 17,323 15,622 Queens Center 21,454 87,498 647 2,636 112,235 9,195 103,040 Rimrock Mall 8,737 38,847 112 0 47,696 3,223 44,473 Salisbury, The Centre at 15,284 64,821 582 0 80,687 7,653 73,034 Santa Monica Place 26,400 105,864 9 0 132,273 476 131,797 South Plains Mall 23,100 94,004 130 20 117,254 3,791 113,463 South Towne Center 19,600 84,018 161 11 103,790 6,417 97,373 Valley View Center 17,100 73,116 639 5,457 96,312 6,617 89,695 Villa Marina Marketplace 15,852 65,666 38 16 81,572 6,826 74,746 Vintage Faire Mall 14,298 59,656 718 862 75,534 4,987 70,547 Westside Pavilion 34,100 137,149 1,557 710 173,516 5,372 168,144 The Macerich Partnership, L.P. 451 1,844 0 0 2,295 448 1,847 -------- ---------- ------- -------- ---------- -------- ---------- $399,172 $1,653,002 $11,272 $111,089 $2,174,535 $243,120 $1,931,415 ======== ========== ======= ======== ========== ======== ========== </TABLE> 84

THE MACERICH COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED: Depreciation and amortization of the Company's investment in buildings and improvements reflected in the statements of income are calculated over the estimated useful lives of the asset as follows: <TABLE> <S> <C> Buildings and improvements 5 - 40 years Tenant improvements life of related lease Equipment and furnishings 5 - 7 years </TABLE> The changes in total real estate assets for the three years ended December 31, 1999 are as follows: <TABLE> <CAPTION> 1997 1998 1999 ---------- ---------- ---------- <S> <C> <C> <C> Balance, beginning of year $1,273,085 $1,607,429 $2,213,125 Additions 334,344 605,696 224,322 Disposals and retirements - - (262,912) ---------- ---------- ---------- Balance, end of year $1,607,429 $2,213,125 $2,174,535 ---------- ---------- ---------- ---------- ---------- ---------- </TABLE> The changes in accumulated depreciation and amortization for the three years ended December 31, 1999 are as follows: <TABLE> <CAPTION> 1997 1998 1999 -------- -------- -------- <S> <C> <C> <C> Balance, beginning of year $164,417 $200,250 $246,280 Additions 35,833 46,030 52,592 Disposals and retirements - - (55,752) -------- -------- -------- Balance, end of year $200,250 $246,280 $243,120 -------- -------- -------- </TABLE> 85

PACIFIC PREMIER RETAIL TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999 (DOLLARS IN THOUSANDS) SCHEDULE III. REAL ESTATE AND ACCUMULATED DEPRECIATION <TABLE> <CAPTION> Initial Cost to Trust Gross Amount Which Carried at Close of Period ----------------------- Cost -------------------------------------------------------- Capitalized Furniture, Building and Subsequent Building and Fixtures and Construction Properties: Land Improvements to Acquisition Land Improvements Equipment in Progress Total ---------- ------- ------------ -------------- ------- ------------ ------------ ------------ -------- <S> <C> <C> <C> <C> <C> <C> <C> <C> Cascade Mall $ 8,200 $ 32,843 $ 23 $ 8,200 $ 32,842 $ 19 $ 5 $ 41,066 Creekside Crossing Mall 620 2,495 11 620 2,495 - 11 3,126 Cross Court Plaza 1,400 5,629 - 1,400 5,629 - - 7,029 Kitsap Mall 13,590 56,672 239 13,590 56,893 18 - 70,501 Kitsap Place Mall 1,400 5,627 - 1,400 5,627 - - 7,027 Lakewood Mall 48,025 112,059 2,825 48,025 112,128 1 2,755 162,909 Los Cerritos Center 57,000 133,000 69 57,000 133,052 17 - 190,069 Northpoint Plaza 1,400 5,627 - 1,400 5,627 - - 7,027 Redmond Towne Center 18,381 73,868 1,593 18,381 74,217 39 1,205 93,842 Redmond Office 20,676 90,929 8,347 20,676 82,904 - 16,372 119,952 Stonewood Mall 30,902 72,104 - 30,902 72,104 - - 103,006 Washington Square Mall 33,600 135,084 719 33,600 135,742 53 8 169,403 Washington Square Too 4,000 16,087 1 4,000 16,087 1 - 20,088 ----------------------------------------------------------------------------------------------------- $239,194 $742,024 $13,827 $239,194 $735,347 $148 $20,356 $995,045 ===================================================================================================== <CAPTION> Total Cost Net of Accumulated Accumulated Properties: Depreciation Depreciation ---------- ------------ ------------ <S> <C> <C> Cascade Mall $ 735 $ 40,331 Creekside Crossing Mall 56 3,070 Cross Court Plaza 125 6,904 Kitsap Mall 1,283 69,218 Kitsap Place Mall 125 6,902 Lakewood Mall 752 162,157 Los Cerritos Center 627 189,442 Northpoint Plaza 125 6,902 Redmond Towne Center 1,672 92,170 Redmond Office 1,010 118,942 Stonewood Mall 386 102,620 Washington Square Mall 3,048 166,355 Washington Square Too 358 19,730 ------------------------------ $10,302 $984,743 ============================== </TABLE> <TABLE> <S> <C> Depreciation and amortization of the Trust's The changes in total real estate assets for investment in buildings and improvements reflected the year ended December 31, 1999 are as follows: in the statement of income are calculated over the estimated useful lives of the assets as follows: Balance, beginning of period $ - Building and improvements 5 - 39 years Acquisitions 981,218 Tenant improvements life of related lease Additions 13,827 Equipment and furnishings 5 years Disposals and retirements - -------- Balance, end of period $ 995,045 ========= <CAPTION> <C> The changes in accumulated depreciation for the year ended December 31, 1999 are as follows: Balance, beginning of period $ - Additions 10,302 Disposals and retirements - -------- Balance, end of period $ 10,302 ======== </TABLE> 86

SDG MACERICH PROPERTIES, L.P. Schedule III - Real Estate and Accumulated Depreciation As of December 31, 1999 (Dollars in thousands) <TABLE> <CAPTION> Initial Cost to Partnership Costs ------------------------------------- Capitalized Building and Equipment Subsequent Shopping Center (1) Location Land Improvements and Furnishings to Acquisition ------------------- -------- ---- ------------ --------------- -------------- <S> <C> <C> <C> <C> <C> Mesa Mall Grand Junction, Colorado $ 11,155 44,635 -- 576 Lake Square Mall Leesburg, Florida 7,348 29,392 -- 716 South Park Mall Moline, Illinois 21,341 85,540 -- 1,518 Eastland Mall Evansville, Indiana 28,160 112,642 -- 2,727 Lindale Mall Cedar Rapids, Iowa 12,534 50,151 -- 521 North Park Mall Davenport, Iowa 17,210 69,042 -- 1,443 South Ridge Mall Des Moines, Iowa 11,524 46,097 -- 3,708 Granite Run Mall Media, Pennsylvania 26,147 104,671 -- 1,446 Rushmore Mall Rapid City, South Dakota 12,089 50,588 -- 1,089 Empire Mall Sioux Falls, South Dakota 23,706 94,860 -- 1,574 Empire East Sioux Falls, South Dakota 2,073 8,291 -- -- Southern Hills Mall Sioux City, South Dakota 15,697 62,793 -- 925 Valley Mall Harrisonburg, Virginia 10,393 41,572 -- 913 --------------------------------------------------------- $199,377 800,274 -- 17,156 ========================================================= <CAPTION> Gross Book Value at December 31, 1999 Total Cost --------------------------------------- Net of Building and Equipment Accumulated Accumulated Shopping Center (1) Location Land Improvements and Furnishings Depreciation Depreciation ------------------- -------- ---- ------------ --------------- ------------ ------------ <S> <C> <C> <C> <C> <C> <C> Mesa Mall Grand Junction, Colorado 11,155 45,186 25 2,155 54,211 Lake Square Mall Leesburg, Florida 7,348 30,044 64 1,438 36,018 South Park Mall Moline, Illinois 21,341 86,965 92 4,177 104,221 Eastland Mall Evansville, Indiana 28,160 115,160 209 5,433 138,096 Lindale Mall Cedar Rapids, Iowa 12,535 50,646 25 2,438 60,768 North Park Mall Davenport, Iowa 17,210 70,463 22 3,323 84,372 South Ridge Mall Des Moines, Iowa 12,278 48,897 154 2,279 59,050 Granite Run Mall Media, Pennsylvania 26,147 105,819 298 5,013 127,251 Rushmore Mall Rapid City, South Dakota 12,089 51,641 36 2,550 61,216 Empire Mall Sioux Falls, South Dakota 23,697 96,343 101 4,607 115,534 Empire East Sioux Falls, South Dakota 2,073 8,291 - 390 9,974 Southern Hills Mall Sioux City, South Dakota 15,697 63,632 86 3,045 76,370 Valley Mall Harrisonburg, Virginia 10,393 42,472 13 1,970 50,908 ------------------------------------------------------------------------- 200,123 815,559 1,125 38,818 977,989 ========================================================================= </TABLE> <TABLE> <S> <C> Depreciation and amortization of the Partnership's The changes in total shopping center properties for investment in shopping center properties reflected the years ended December 31, 1999 and 1998 are as follows: in the statement of operations are calculated over the estimated useful lives of the assets as follows: Balance at January 1, 1998 $ -- Building and improvements 39 years Acquisitions in 1998 999,651 Additions in 1998 4,922 Equipment and furnishings 5-7 years Disposals and retirements in 1998 -- -------------------- Balance at December 31, 1998 1,004,573 Acquisitions in 1999 -- Additions in 1999 12,394 Disposals and retirements in 1999 (160) -------------------- Balance at December 31, 1999 $ 1,016,807 ==================== <CAPTION> <C> The changes in accumulated depreciation for the years ended December 31, 1999 and 1998 are as follows: Balance at January 1, 1998 $ -- Additions in 1998 17,383 Disposals and retirements in 1998 -- ------------------- Balance at December 31, 1998 17,383 Additions in 1999 21,451 Disposals and retirements in 1999 (16) ------------------- Balance at December 31, 1999 $ 38,818 =================== </TABLE> (1) All of the shopping centers are encumbered by mortgage notes payable with a carrying value of $503,565 and $505,868 at December 31, 1999 and 1998, respectively. 87

SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE MACERICH COMPANY By /s/ ARTHUR M. COPPOLA ---------------------------------------- Arthur M. Coppola President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. <TABLE> <CAPTION> SIGNATURE CAPACITY DATE <S> <C> <C> /s/ ARTHUR M. COPPOLA President and Chief Executive Officer --------------------------------- And Director March 21, 2000 Arthur M. Coppola /s/ MACE SIEGEL Chairman of the Board March 21, 2000 --------------------------------- Mace Siegel /s/ DANA K. ANDERSON Vice Chairman of the Board March 21, 2000 --------------------------------- Dana K. Anderson /s/ EDWARD C. COPPOLA Executive Vice President March 21, 2000 --------------------------------- Edward C. Coppola /s/ JAMES COWNIE Director March 21, 2000 --------------------------------- James Cownie /s/ THEODORE HOCHSTIM Director March 21, 2000 --------------------------------- Theodore Hochstim /s/ FREDERICK HUBBELL Director March 21, 2000 --------------------------------- Frederick Hubbell /s/ STANLEY MOORE Director March 21, 2000 --------------------------------- Stanley Moore /s/ WILLIAM SEXTON Director March 21, 2000 --------------------------------- William Sexton /s/ THOMAS E. O'HERN Executive Vice President, Treasurer and --------------------------------- Chief Financial and Accounting Officer March 21, 2000 Thomas E. O'Hern </TABLE> 88

EXHIBIT INDEX <TABLE> <CAPTION> EXHIBIT NUMBER DESCRIPTION SEQUENTIALLY NUMBERED PAGE <S> <C> <C> 3.1* Articles of Amendment and Restatement of the Company 3.1.1** Articles Supplementary of the Company 3.1.2*** Articles Supplementary of the Company (Series A Preferred Stock) 3.1.3**** Articles Supplementary of the Company (Series B Preferred Stock) 3.1.4### Articles Supplementary of the Company (Series C Junior Participating Preferred Stock) 3.2***** Amended and Restated Bylaws of the Company 4.1***** Form of Common Stock Certificate 4.2****** Form of Preferred Stock Certificate (Series A Preferred Stock) 4.2.1### Form of Preferred Stock Certificate (Series B Preferred Stock) 4.2.2***** Form of Preferred Stock Certificate (Series C Junior Participating Preferred Stock) 4.3******* Indenture for Convertible Subordinated Debentures dated June 27, 1997 4.4***** Agreement dated as of November 10, 1998 between the Company and First Chicago Trust Company of New York, as Rights Agent 10.1******** Amended and Restated Limited Partnership Agreement for the Operating Partnership dated as of March 16, 1994 10.1.1****** Amendment to Amended and Restated Limited Partnerships Agreement for the Operating Partnership dated June 27, 1997 10.1.2****** Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated November 16, 1997 10.1.3****** Fourth Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated February 25, 1998 10.1.4****** Fifth Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated February 26, 1998 10.1.5### Sixth Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated June 17, 1998 10.1.6### Seventh Amendment to Amended and Restated Limited Partnership Agreement for the Operating Partnership dated December 31, 1999 </TABLE> 89

<TABLE> <CAPTION> EXHIBIT NUMBER DESCRIPTION SEQUENTIALLY NUMBERED PAGE <S> <C> <C> 10.2******** Employment Agreement between the Company and Mace Siegel dated as of March 16, 1994 10.2.1******** List of Omitted Employment Agreements 10.2.2****** Employment Agreement between Macerich Management Company and Larry Sidwell dated as of February 11, 1997 10.3****** The Macerich Company Amended and Restated 1994 Incentive Plan 10.4# The Macerich Company 1994 Eligible Directors' Stock Option Plan 10.5# The Macerich Company Deferred Compensation Plan 10.6# The Macerich Company Deferred Compensation Plan for Mall Executives 10.7******** The Macerich Company Eligible Directors' Deferred Compensation Plan/Phantom Stock Plan 10.8******** The Macerich Company Executive Officer Salary Deferral Plan 10.9#### 1999 Cash Bonus/Restricted Stock Program and Stock Unit Program under the Amended and Restated 1994 Incentive Plan (including the forms) Award Agreements 10.10******** Registration Rights Agreement, dated as of March 16, 1994, between the Company and The Northwestern Mutual Life Insurance Company 10.11******** Registration Rights Agreement, dated as of March 16, 1994, among the Company and Mace Siegel, Dana K. Anderson, Arthur M. Coppola and Edward C. Coppola 10.12******* Registration Rights Agreement, dated as of March 16, 1994, among the Company, Richard M. Cohen and MRII Associates 10.13******* Registration Rights Agreement dated as of June 27, 1997 10.14******* Registration Rights Agreement dated as of February 25, 1998 between the Company and Security Capital Preferred Growth Incorporated 10.15******** Incidental Registration Rights Agreement dated March 16, 1994 10.16****** Incidental Registration Rights Agreement dated as of July 21, 1994 10.17****** Incidental Registration Rights Agreement dated as of August 15, 1995 10.18****** Incidental Registration Rights Agreement dated as of December 21, 1995 10.18.1****** List of Incidental/Demand Registration Rights Agreements, Election Forms, Accredited/Non-Accredited Investors Certificates and Investor Certificates </TABLE> 90

<TABLE> <CAPTION> EXHIBIT NUMBER DESCRIPTION SEQUENTIALLY NUMBERED PAGE <S> <C> <C> 10.19### Registration Rights Agreement dated as of June 17, 1998 between the Company and the Ontario Teachers' Pension Plan Board 10.20### Redemption, Registration Rights and Lock-Up Agreement dated as of July 24, 1998 between the Company and Harry S. Newman, Jr. and LeRoy H. Brettin 10.21******** Indemnification Agreement, dated as of March 16, 1994, between the Company and Mace Siegel 10.21.1******** List of Omitted Indemnification Agreements 10.22* Partnership Agreement for Macerich Northwestern Associates, dated as of January 17, 1985, between Macerich Walnut Creek Associates and the Northwestern Mutual Life Insurance Company 10.23******** First Amendment to Macerich Northwestern Associates Partnership Agreement between Operating Partnership and the Northwestern Mutual Life Insurance Company 10.24* Agreement of Lease (Crossroads-Boulder), dated December 31, 1960, between H.R. Hindry, as lessor, and Gerri Von Frellick, as lessee, with amendments and supplements thereto 10.25****** Secured Full Recourse Promissory Note dated November 17, 1997 Due November 16, 2007 made by Edward C. Coppola to the order of the Company 10.25.1****** List of Omitted Secured Full Recourse Notes 10.26****** Stock Pledge Agreement dated as of November 17, 1997 made by Edward C. Coppola for the benefit of the Company 10.26.1****** List of omitted Stock Pledge Agreement 10.27****** Promissory Note dated as of May 2, 1997 made by David J. Contis to the order of Macerich Management Company 10.28## Purchase and Sale Agreement between the Equitable Life Assurance Society of the United States and S.M. Portfolio Partners 10.29****** Partnership Agreement of S.M. Portfolio Ltd. Partnership 10.30### First Amended and Restated Credit Agreement, dated as of June 25, 1998, between the Operating Partnership, the Company and Wells Fargo Bank, National Association 10.31 Secured full recourse promissory note dated November 30, 1999 due November 29, 2009 made by Arthur M. Coppola to the order of the Company. 10.32 Stock Pledge Agreement dated as of November 30, 1999 made by Arthur M. Coppola for the benefit of the Company. </TABLE> 91

<TABLE> <CAPTION> EXHIBIT NUMBER DESCRIPTION SEQUENTIALLY NUMBERED PAGE <S> <C> <C> 21.1 List of Subsidiaries 23.1 Consent of Independent Accountants (PricewaterhouseCoopers LLP) 23.2 Consent of Independent Auditors (KPMG LLP) * Previously filed as an exhibit to the Company's Registration Statement on Form S-11, as amended (No. 33-68964), and incorporated herein by reference. ** Previously filed as an exhibit to the Company's Current Report on Form 8-K, event date May 30, 1995, and incorporated herein by reference. *** Previously filed as an exhibit to the Company's Current Report on Form 8-K, event date February 25, 1998, and incorporated herein by reference. **** Previously filed as an exhibit to the Company's Current Report on Form 8-K, event date June 17, 1998, and incorporated herein by reference. ***** Previously filed as an exhibit to the Company's Current Report on Form 8-K, event date November 10, 1998, as amended, and incorporated herein by reference. ****** Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1997, and incorporated herein by reference. ******* Previously filed as an exhibit to the Company's Current Report on Form 8-K, event date June 20, 1997, and incorporated herein by reference. ******** Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1996, and incorporated herein by reference. # Previously filed as an exhibit to the Company's Quarterly Statement on Form 10-Q for the quarter ended June 30, 1994, and incorporated herein by reference. ## Previously filed as an exhibit to the Company's Current Report on Form 8-K, event date February 27, 1998, and incorporated herein by reference. ### Previously filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, and incorporated herein by reference. #### Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999. </TABLE> 92

EXHIBIT 10.31 SECURED FULL RECOURSE PROMISSORY NOTE DUE NOVEMBER __, 2009 $1,000,000.00 Los Angeles, CA -------------- November __, 1999 FOR VALUE RECEIVED, Arthur M. Coppola, an individual ("MAKER"), unconditionally promises to pay to The Macerich Company, a Maryland corporation (together with any successor or assignee by operation of law or otherwise, the "PAYEE"), on the earlier of December __, 2009 or such other date as provided herein, in the manner and at the place hereinafter provided, the lesser of (i) one million dollars ($1,000,000.00) and (ii) the unpaid principal amount of all advances made by Payee to Maker for the purposes of Maker's purchase of common stock of the Payee pursuant to the terms of The Macerich Company Amended and Restated 1994 Incentive Plan (the "Plan"). All advances made under this Note shall be noted hereon; PROVIDED, HOWEVER, that the failure to make a notation shall not limit or otherwise affect the obligations of Maker hereunder with respect to payments of principal or interest on this Note. Maker also promises to pay interest on the unpaid principal balance of this Note from the date such principal is advanced until such principal is paid in full at a rate per annum equal to the lesser of: (i) the maximum amount allowable pursuant to applicable law; or (ii) 7.00%. Interest that is due and payable but not yet paid shall be added to principal and accrue interest from the date due. Interest on this Note shall be computed on the basis of a 365-day year, based on the actual number of days elapsed and shall be payable in arrears quarterly on the fifteenth (15th) day of each March, June, September and December, commencing on March 15, 2000, upon any prepayment of this Note (to the extent accrued on the amount being prepaid) and at maturity. 1. PAYMENTS; VOLUNTARY REPAYMENT. All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America. Each payment made hereunder shall be credited first to interest then due and the remainder of such payment shall be credited to principal, and interest shall thereupon cease to accrue upon the principal so credited. Maker shall have the right at any time and from time to time to prepay the principal of this Note in whole or in part, without premium or penalty, such prepayment hereunder being accompanied by interest on the principal amount of the Note being prepaid to the date of prepayment. Notwithstanding any payment or prepayment of principal hereunder by Maker, Maker acknowledges and agrees that the aggregate advances made by Payee hereunder shall in no event exceed the sum of $1,000,000. 1

2. MANDATORY REPAYMENT. (a) If the Board of Directors of Payee (the "Board") makes any dividend or other distribution to its stockholders which it determines for these purposes to be unusual or extraordinary (an "Extraordinary Distribution"), then the Board, or the Compensation Committee of the Board, may, in its sole discretion, require that Maker use the Net Cash Proceeds (as defined below) of the Extraordinary Distribution to repay this Note. The Net Cash Proceeds shall be applied first to accrued and unpaid interest on this Note and second to the unpaid principal balance of this Note. As used herein, Net Cash Proceeds means all cash or cash proceeds from an Extraordinary Distribution in respect of the Pledged Collateral (as defined in that certain Pledge Agreement (the "Pledge Agreement") dated as of November __, 1999 between Maker and Payee) MINUS the amount of applicable federal, state and local taxes which the Board, or the Compensation Committee of the Board, reasonably determines will be payable by Maker in connection with the Extraordinary Distribution. The Board, or the Compensation Committee of the Board, shall cause Payee to notify Maker in writing at least 10 days prior to the payment date of any Extraordinary Distribution with respect to which it intends to require Maker to use the Net Cash Proceeds to repay this Note. If Maker is required to use the Net Cash Proceeds to repay this Note, then within three (3) business days of receipt of the Net Cash Proceeds, Maker shall pay to Payee an amount equal to the Net Cash Proceeds to be so applied. (b) In the event that Maker sells, transfers, assigns or otherwise disposes of any of the Pledged Collateral as permitted by and in accordance with Section 6 of the Pledge Agreement, Maker shall concurrently repay the unpaid principal balance of this Note in an amount equal to the greater of: (i)(A) the percentage of the total Pledged Collateral (prior to such disposition) that the shares so disposed of represents MULTIPLIED BY (B) the unpaid principal amount of this Note or (ii) the amount by which the unpaid principal amount of this Note exceeds the Fair Market Value (as defined in the Pledge Agreement) of the Pledged Collateral (after giving effect to the release of collateral set forth in Section 6 of the Pledge Agreement). (c) If there shall occur a Termination of Employment (as such term is defined in the Plan) of Maker, the unpaid principal amount of this Note together with accrued interest thereon shall become due and payable on the 10th business day after the Termination of Employment of Maker except as otherwise provided in Section 1.8(d) of the Plan. 3. FULL RECOURSE NOTE. This Note is the Note referred to in the Pledge Agreement. This Note is a full recourse Note and Maker shall be liable for the full payment of 2

principal of and interest on this Note. This Note is also secured by, and is entitled to the benefit of, the Pledge Agreement, the terms and provisions of which are hereby incorporated herein as if set forth herein in full. 4. EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default: (a) The sale, transfer, assignment or other disposition of any Pledged Collateral, other than in accordance with the terms and conditions of Section 2(b) of this Note and Section 6(c) of the Pledge Agreement; (b) The failure by Maker to pay any principal under this Note when due, whether at stated maturity, by acceleration, or otherwise, or failure to pay any interest or other amount due under this Note within five (5) days after the date due; (c) any challenge, or institution of any proceedings to challenge by Maker of the validity, binding effect or enforceability of this Note or any endorsement of this Note; (d) any default by Maker of any other obligation under this Note or the Pledge Agreement; or (e) The initiation of any proceeding relating to Maker under any bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of debt or receivership law or statute, whether filed by or against Maker, or the assignment for the benefit of creditors by Maker. Upon an Event of Default set forth in clauses (a), (b) and (e) above, the principal amount of this Note together with accrued interest thereon shall become immediately due and payable, without presentment, demand, notice, protest or other requirements of any kind (all of which are hereby expressly waived by Maker). Upon any other Event of Default, Payee may, by written notice to Maker, declare the principal amount of this Note together with accrued interest thereon to be due and payable, and the principal amount of this Note together with such interest shall thereupon immediately become due and payable without presentment, further notice, protest or other requirements of any kind (all of which are hereby expressly waived by Maker). 5. SET-OFF. Payee shall be entitled to set-off against this Note any and all amounts owed by Payee to Maker as and when such amounts become due and payable, whether presently existing or hereafter incurred, to the maximum extent allowable under applicable laws. To the extent that Maker's consent to the set-off is required, this Note constitutes Maker's consent. 3

6. MISCELLANEOUS. (a) All notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, telefacsimile or cable communication) and hand-delivered, mailed, or telecopied as follows: if to Maker, at its address specified opposite its signature below; and if to Payee, at 401 Wilshire Boulevard, Santa Monica, CA 90401; or in each case at such other address as shall be designated by Payee or Maker. All such notices and communications shall, when hand-delivered, mailed, or telecopied (with answer-back confirmation) be effective when deposited in the mails, delivered or sent by telecopier. (b) No failure or delay on the part of Payee or any other holder of this Note to exercise any right, power or privilege under this Note and no course of dealing between Maker and Payee shall impair such right, power or privilege or operate as a waiver of any default or an acquiescence therein, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies expressly provided in this Note are cumulative to, and not exclusive of, any rights or remedies that Payee would otherwise have. No notice to or demand on Maker in any case shall entitle Maker to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of Payee to any other or further action in any circumstances without notice or demand. (c) Maker and any endorser of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder. To the fullest extent permitted by law, the obligations of Maker hereunder shall not be subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment, deferment, suspension, reduction or defense (other than the full and strict compliance by Maker with those obligations) based on any claim that Maker may have against Payee or any other person. (d) No provision of this Note may be waived, modified or discharged orally, but only by an agreement signed by the party against whom enforcement is sought. (e) If any provision in or obligation under this Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 4

(f) This note and the rights and obligations of maker and payee hereunder shall be governed by, and shall be construed and enforced in accordance with the laws of the State of California except for such matters as are subject to the General Corporation Law of the State of Maryland. IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the day and year and at the place first above written. ---------------------------------- Arthur M. Coppola Notice Address: Arthur M. Coppola c/o The Macerich Company 401 Wilshire Blvd., Suite 700 Santa Monica, CA 90401 5

TRANSACTIONS ON PROMISSORY NOTE AMOUNT OF OUTSTANDING AMOUNT OF PRINCIPAL PRINCIPAL LOAN MADE REPAID ON BALANCE ON DATE ON THIS DATE THIS DATE THIS DATE 6

EXHIBIT 10.32 STOCK PLEDGE AGREEMENT This STOCK PLEDGE AGREEMENT (this "AGREEMENT") is dated as of November __, 1999 and entered into by and between ARTHUR M. COPPOLA, AN INDIVIDUAL("PLEDGOR"), and THE MACERICH COMPANY, a Maryland corporation ("SECURED PARTY"). WITNESSETH WHEREAS, pursuant to the terms of a promissory note dated of even date herewith executed by Pledgor in favor of Secured Party (said promissory note, as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "NOTE," the terms defined therein and not otherwise defined herein being used herein as therein defined), Secured Party has agreed to loan (the "LOAN") up to one million dollars ($1,000,000) to Pledgor; WHEREAS, the proceeds of the Loan will be used to pay for the purchase by Pledgor of shares of common stock of the Secured Party; and WHEREAS, as a condition to the making of such Loans by Secured Party the repayment of which is evidenced by the Note, Pledgor has agreed to grant the security interests and undertake the obligations contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce Secured Party to make the Loan the repayment of which is evidenced by the Note and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows: SECTION 1. CERTAIN DEFINITIONS. The following terms used in this Agreement shall have the following meanings: "AGREEMENT" means this Pledge Agreement dated as of November __, 1999 by and between Pledgor and Secured Party. "BOARD" means the Board of Directors of Secured Party, or the Compensation Committee thereof. "CONTRACTUAL OBLIGATION," as applied to any Person, means any provision of any security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person 1

is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "EVENT OF DEFAULT" has the meaning assigned to such term in the Note. "FAIR MARKET VALUE," with respect to shares of the Company's common stock or any other securities, means the average closing sale price as reported on the New York Stock Exchange (or such other national exchange or market system on which the Company's common stock or such other securities may then be listed or quoted) for the ten (10) trading days immediately preceding the date of valuation or such other method as may be required by applicable Legal Limits, or, if the Company's common stock or such other securities are not listed or quoted on a national exchange or market system, then a value determined in good faith by the Board. "Fair Market Value," with respect to any other property shall be determined in good faith by the Board of Directors. "LEGAL LIMITS" means any legal restrictions applicable to the release of the Pledged Collateral and the extension or maintenance of credit or its repayment, including without limitation those included in Regulation G of the Federal Reserve Board. "LIEN" means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing. "LOAN" has the meaning assigned to such term in the recitals to this Agreement. "MANDATORY REPAYMENT OBLIGATIONS" means the obligations of Pledgor to repay the Note pursuant to Section 2 of the Note. "NOTE" has the meaning assigned to such term in the recitals to this Agreement. "PERSON" means and includes natural persons, corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "PLEDGED COLLATERAL" has the meaning assigned to such term in Section 2. 2

"PLEDGED SHARES" means all shares of common stock of the Company purchased by Pledgor using the proceeds of the Loan, and any other securities into which such shares are converted or reclassified (by stock split, merger, extraordinary distribution or otherwise) or for which such shares are exchanged by operation of law or consent of Secured Party. "PLEDGOR" means Arthur M. Coppola, Jr. "PROCEEDS" has the meaning assigned to such term in Section 2(c). "SEC" means the Securities and Exchange Commission. "SECURED OBLIGATIONS" has the meaning assigned to such term in Section 3. "SECURED PARTY" means The Macerich Company, a Maryland corporation, and its successors and assigns by operation of law or otherwise. "SECURITIES ACT" means the Securities Act of 1933, as amended. "UNDERLYING DEBT" has the meaning assigned to such term in Section 3. SECTION 2. PLEDGE OF SECURITY. Subject to Section 8(a), Pledgor hereby pledges and assigns to Secured Party, and hereby grants to Secured Party a security interest in, all of Pledgor's right, title and interest in and to the following and all interests therein (the "PLEDGED COLLATERAL"): (a) the Pledged Shares and the certificates representing the Pledged Shares and any interest of Pledgor in the entries on the books of any financial intermediary pertaining to the Pledged Shares, and all dividends, warrants, rights, securities, instruments and other property or proceeds distrib uted in respect of or in exchange for any or all of the Pledged Shares; and (b) all proceeds of any or all of the foregoing Pledged Collateral. For purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable or received when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to Pledgor or Secured Party from time to time with respect to any of the Pledged Collateral. 3

SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the Pledged Collateral is collateral security for, the prompt payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and liabilities of every nature of Pledgor now or hereafter existing under or arising out of or in connection with the Note and all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to Pledgor, would accrue on such obligations), fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Secured Party as a preference, fraudulent transfer or otherwise (all such obligations and liabilities being the "UNDERLYING DEBT"), and all obligations of every nature of Pledgor now or hereafter existing under this Agreement (all such obligations of Pledgor, together with the Underlying Debt, being the "SECURED OBLIGATIONS"). SECTION 4. DELIVERY OF PLEDGED COLLATERAL. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of Secured Party pursuant hereto and shall be in suitable form for transfer by delivery or, as applicable, shall be accompanied by Pledgor's endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Secured Party. Secured Party shall have the right, at any time in its discretion and without notice to Pledgor, to transfer to or to register in the name of Secured Party or any of its nominees any or all of the Pledged Collateral. In addition, Secured Party shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. SECTION 5. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants that, as of the date that the Loan is made and at all times that the Loan remains outstanding: (a) GOOD TITLE. Pledgor is the record and beneficial owner of, and has good and marketable title to, the Pledged Shares and such shares are and will remain free and clear of all adverse claims, pledges, liens, security interests and other encumbrances, restrictions and rights whatsoever, except the lien and security interest created by this Pledge Agreement. 4

(b) BINDING OBLIGATION. Each of the Note and this Agreement has been duly executed and delivered by Pledgor and is the legally valid and binding obligation of Pledgor, enforceable against him in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally. (c) PERFECTION. The pledge of the Pledged Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in the Pledged Collateral, securing the payment of the Secured Obligations. (d) OTHER INFORMATION. All information heretofore, herein or hereafter supplied to Secured Party by or on behalf of Pledgor with respect to the Pledged Collateral is and will be accurate and complete in all respects. (e) NO CONSENTS. No consent, approval or authorization of or designation or filing with any authority or third party on the part of Pledgor is required in connection with the execution, delivery or performance of the Note, this Agreement or the pledge and security interest granted pursuant to this Agreement. SECTION 6. TRANSFERS AND OTHER LIENS; ADDITIONAL PLEDGED COLLATERAL; RELEASE OF COLLATERAL. (a) Pledgor shall not, without the prior written consent of Secured Party (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral or (ii) create or suffer to exist any Lien upon or with respect to any of the Pledged Collateral, except for the security interest under this Agreement. (b) Pledgor shall pay promptly when due all taxes, assessments and governmental charges or levies imposed upon, and all claims against, the Pledged Collateral, except to the extent the validity thereof is being contested in good faith; PROVIDED that Pledgor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgement, writ or warrant of attachment entered or filed against Pledgor or any of the Pledged Collateral as a result of the failure to make such payment. (c) Secured Party currently anticipates that it will consent to a sale, assignment, transfer or other disposition (each, a "TRANSFER") of all or any portion of the Pledged Collateral so long as: (i) Pledgor repays the Note to the extent required by Section 2(b) thereof; (ii) no Event of Default is is continuing under the Note and Pledgor is not in default of his obligations hereunder; and (iii) the sale, assignment, transfer 5

or disposition, including the effect thereof on Secured Party, complies with Section 1.8 of The Macerich Company Amended and Restated 1994 Incentive Plan and any applicable Legal Limits (as determined by the Board in its sole discretion). In the event of any such Transfer of Pledged Collateral to which Secured Party has given its consent, Secured Party shall release its security interest and lien with respect to the Pledged Collateral so transferred in accordance with Section 6(d) below. Such release shall take place promptly upon receipt of the proceeds of any required prepayment under the Note or, to the extent permitted by applicable law, in advance of Secured Party's receipt of the proceeds if Secured Party has received assurances satisfactory to Secured Party that such release would be in conformity with any applicable Legal Limits and that all such proceeds will be delivered to Secured Party. With respect to any disposition of the Pledged Collateral under this Section 6(c), Pledgor shall pay all costs and expenses, including broker's commissions, of such disposition. (d) Upon any repayment of the principal of the Loan, whether a voluntary or mandatory repayment, Secured Party shall, subject to any applicable Legal Limits, release that percentage of the Pledged Collateral obtained by dividing (i) the amount of such repayment, by (ii) the unpaid principal balance of the Loan (prior to the repayment); PROVIDED, HOWEVER, that Pledged Collateral shall be released only to the extent that the Fair Market Value of Pledged Collateral remaining after such release is at least equal to the remaining unpaid principal amount of the Loan. (e) Notwithstanding anything in this Section 6 to the contrary, Pledgor may not sell, transfer, assign or otherwise dispose of any part of the Pledged Collateral at any time that such sale, transfer, assignment or disposition: (i) would violate any applicable Legal Limits or other applicable law, including without limitation restrictions on insider trading; (ii) would impair the Payee's ability to have any then-pending or completed transaction be accounted for as a pooling of interests; or (iii) is prohibited by Secured Party's policies relating to insider trading of its stock. SECTION 7. FURTHER ASSURANCES; PLEDGE AMENDMENTS. Pledgor agrees that from time to time Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that Secured Party may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. Without limiting the generality of the foregoing, Pledgor will: (i) execute and file such financing or continuation statements, or amendments thereto, and such other 6

instruments or notices, as may be necessary or desirable, or as Secured Party may request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (ii) deliver any certificates representing any security issued in connection with any share dividend, share distribution, or any other rights, whether as an addition to, in substitution for, or in exchange for any of the Pledged Collateral together with stock transfer powers duly endorsed in blank; and (iii) at Secured Party's request, appear in and defend any action or proceeding that may affect Pledgor's title to or Secured Party's security interest in all or any part of the Pledged Collateral. SECTION 8. VOTING RIGHTS; DIVIDENDS; ETC. (a) So long as no Event of Default shall have occurred and be continuing: (i) Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agree ment or the Note. (ii) Subject to the Mandatory Repayment Obligations, Pledgor may retain, and may utilize free and clear of the lien of this Agreement, all dividends, distributions and other payments paid (or payable) in cash with respect to the Pledged Collateral. (iii) All dividends, distributions and other payments paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral shall be, and shall forthwith be delivered to, Secured Party to hold as Pledged Collateral and shall, if received by Pledgor, be received in trust for the benefit of Secured Party, be segregated from the other property or funds of Pledgor and be forthwith delivered to Secured Party as Pledged Collateral in the same form as so received (with all necessary endorsements); PROVIDED THAT Pledgor may retain, to the extent divisible, the portion of such non-cash dividends, distributions and other payments that the Board reasonably determines must be used by Pledgor for the sole purpose of paying taxes applicable to such dividends, distributions or other payments. (iv) Secured Party shall promptly execute and deliver (or cause to be executed and delivered) to Pledgor all such proxies, dividend payment orders and other instruments as Pledgor may from time to time reasonably request for the purpose of enabling Pledgor 7

to exercise the voting and other consensual rights which it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends, principal or interest payments which it is authorized to receive and retain pursuant to paragraph (ii) above. (b) Upon the occurrence and during the continuation of an Event of Default: (i) Upon written notice from Secured Party to Pledgor, all rights of Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 8(a)(i) shall cease, and all such rights shall thereupon become vested in Secured Party who shall thereupon have the sole right to exercise such voting and other consensual rights. (ii) Without limiting the Mandatory Repayment Obligations, all rights of Pledgor to receive the dividends, distributions and other payments which it would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) shall cease, and all such rights shall thereupon become vested in Secured Party who shall thereupon have the sole right to receive and hold as Pledged Collateral such dividends and interest payments. (iii) All dividends, distributions and other payments which are received by Pledgor contrary to the provisions of paragraph (ii) of this Section 8(b) shall be received in trust for the benefit of Secured Party, shall be segregated from other funds of Pledgor and shall forthwith be paid over to Secured Party as Pledged Collateral in the same form as so received (with any necessary endorsements). (c) In order to permit Secured Party to exercise the voting and other consensual rights which it may be entitled to exercise pursuant to Section 8(b)(i) and to receive all dividends and other distributions which it may be entitled to receive under Section 8(a)(ii) or Section 8(b)(ii), (i) Pledgor shall promptly execute and deliver (or cause to be executed and delivered) to Secured Party all such proxies, dividend payment orders and other instruments as Secured Party may from time to time reasonably request and (ii) without limiting the effect of the immediately preceding clause (i), Pledgor hereby grants to Secured Party an irrevocable proxy to vote (to the extent permitted by law) the Pledged Shares and to exercise all other rights, powers, privileges and remedies to which a holder of the Pledged Shares would be entitled (including, without limitation, giving or withholding written consents of shareholders, calling special meetings of shareholders and voting at such meetings), which proxy shall be effective, automatically and without the necessity 8

of any action (including any transfer of any Pledged Shares on the record books of the issuer thereof) by any other Person (including the issuer of the Pledged Shares or any officer or agent thereof), upon the occurrence of an Event of Default and which proxy shall only terminate upon the payment in full of the Secured Obligations or the curing (as determined by Secured Party) of such Event of Default. SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time in Secured Party's discretion to take any action and to execute any instrument that Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including without limitation: (a) to file one or more financing or continuation statements, or amendments thereto, relative to all or any part of the Pledged Collateral without the signature of Pledgor; (b) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Pledged Collateral; (c) to receive, endorse and collect any instruments made payable to Pledgor representing any dividend, principal or interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same; and (d) to file any claims or take any action or institute any proceedings that Secured Party may deem necessary or desirable for the collection of any of the Pledged Collateral or otherwise to enforce the rights of Secured Party with respect to any of the Pledged Collateral. SECTION 10. SECURED PARTY MAY PERFORM. If Pledgor fails to perform any agreement contained herein, Secured Party may itself perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Pledgor under Section 13(b). SECTION 11. STANDARD OF CARE. The powers conferred on Secured Party hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, Secured Party shall have no duty as to any Pledged Collateral, it being understood that Secured Party shall have no responsibility for (a) ascertaining or taking action with respect to calls, 9

conversions, exchanges, maturities, tenders or other matters relating to any Pledged Collateral, whether or not Secured Party has or is deemed to have knowledge of such matters, (b) taking any necessary steps (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Pledged Collateral) to preserve rights against any parties with respect to any Pledged Collateral, (c) taking any necessary steps to collect or realize upon the Secured Obligations or any guarantee therefor, or any part thereof, or any of the Pledged Collateral, or (d) initiating any action to protect the Pledged Collateral against the possibility of a decline in market value. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equal to that which Secured Party accords its own property consisting of negotiable securities. SECTION 12. REMEDIES. (a) If any Event of Default shall have occurred and be continuing, all of the Secured Obligations shall immediately become due and payable and Secured Party may exercise in respect of the Pledged Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code as in effect in any relevant jurisdiction (whether or not the Uniform Commercial Code applies to the affected Pledged Collateral). Secured Party shall have full recourse to Pledgor (directly and as to a deficiency in respect of the Pledged Collateral) and the Pledged Collateral in respect of the Secured Obligations arising under the Note. In exercising its remedies against the Pledged Collateral, Secured Party may, upon ten (10) days' written notice to Pledgor, but without any other demand or notice whatsoever, transfer ownership of the Pledged Collateral to Secured Party in discharge of the Secured Obligations to the extent of the Fair Market Value of the Pledged Collateral so transferred, to the extent required to pay all of the Secured Obligations, such transfer to be free and clear of any right or equity of redemption, which right or equity is hereby expressly waived and released. (b) In the event that Pledged Collateral is transferred to Secured Party in discharge of any or all of the Secured Obligations as set forth in the last sentence of the foregoing paragraph, such transfer shall be applied first to all costs and expenses of such transfer and second to the Secured Obligations arising in respect of the Note (first to interest and then to principal). All proceeds received by Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied first to all costs and expenses of such sale, collection or other realization and second to the Secured Obligations arising in respect of the Note (first to interest and then to principal). 10

In the event that the amount received from the sale of, collection from, or other realization upon the Pledged Collateral, or in the case of a transfer of the Pledged Collateral to Secured Party, the Fair Market Value of the Pledged Collateral, exceeds the aggregate amount of the Secured Obligations (plus the costs and expenses described above) Secured Party shall pay such excess to or upon the order of Pledgor, or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. All rights and remedies hereunder are in addition to whatever other rights the parties hereto may otherwise have against one another, and no exercise of any such rights or remedies shall be deemed to preclude the exercise of any other rights or remedies. (c) Pledgor recognizes that Secured Party may be unable to effect a public sale or disposition of any or all the Pledged Collateral by reason of certain prohibitions contained in the Securities Act, the rules promulgated by the SEC thereunder, and applicable state securities laws but may be compelled to resort to one or more private sales or dispositions thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Pledgor acknowledges and agrees that any such private sale or disposition may result in prices and other terms (including the terms of any securities or other property received in connection therewith) less favorable to the seller than if such sale or disposition were a public sale or disposition and, notwithstanding such circumstances, agrees that any such private sale or disposition shall be deemed to have been made in a commercially reasonable manner. Secured Party shall be under no obligation to delay a sale or disposition of any of the Pledged Collateral to permit the registration of such securities (or trust certificates representing such securities) for public sale under the Act, or under applicable state securities laws, even if the Company would agree to do so. (d) Pledgor further agrees to do or cause to be done all such other acts and things as may be necessary to make such sale or sales or dispositions of any portion or all of the Pledged Collateral valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales or dispositions, all at Pledgor's expense. Pledgor further agrees that a breach of any of the covenants contained in this Section 12 will cause irreparable injury to Secured Party, that Secured Party has no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this section shall be specifically enforceable against Pledgor, and Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants 11

except for a defense that no Event of Default has occurred hereunder. (e) If Secured Party determines to exercise its right to sell any or all of the Pledged Collateral, upon written request, Pledgor shall and shall cause each issuer of any Pledged Shares to be sold hereunder from time to time to furnish to Secured Party all such information as Secured Party may request in order to determine the number of shares and other instruments included in the Pledged Collateral which may be sold by Secured Party in exempt transactions under the Securities Act and the rules and regulations of the SEC thereunder, as the same are from time to time in effect. SECTION 13. INDEMNITY. Pledgor agrees to indemnify Secured Party from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including, without limitation, enforcement of this Agreement), except to the extent such claims, losses or liabilities result solely from Secured Party's gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF NOTE. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (a) remain in full force and effect until the payment in full of all Secured Obligations, (b) be binding upon Pledgor, its successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of Secured Party and its successors and assigns by operation of law or otherwise. Upon the payment in full of all Secured Obligations, the security interest granted hereby shall terminate and all rights to the Pledged Collateral shall revert to Pledgor. Upon any such termination Secured Party will, at Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination and Pledgor shall be entitled to the return, upon its request and at its expense, against receipt and without recourse to Secured Party, of such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. SECTION 15. AMENDMENTS; ETC. No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by Pledgor therefrom, shall in any event be effective unless the same shall be in writing and signed by Secured Party and, in the case of any such amendment or modification, by Pledgor. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. 12

SECTION 16. NOTICES. Any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile (with answer-back confirmation) or telex, or three business days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof or, as to either party, such other address as shall be designated by such party in a written notice delivered to the other party hereto. SECTION 17. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of Secured Party in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 18. SEVERABILITY. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 19. HEADINGS. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. SECTION 20. GOVERNING LAW; TERMS. This Agreement and the rights and obligations of the parties hereunder shall be governed by, and shall be construed and enforced in accordance with the laws of the State of California except: (i) for such matters as are subject to the jurisdiction of the General Corporation Law of the State of Maryland; and (ii) to the extent that the Uniform Commercial Code in effect in any jurisdiction provides that the validity or perfection of the security interest hereunder, or remedies hereunder, in respect of any particular pledged collateral are governed by the laws of a jurisdiction other than the State of California. Unless otherwise defined herein or in the Note, terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of California are used herein as therein defined. 13

SECTION 21. COUNTERPARTS. This Agreement and any amendment hereto may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. 14

IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to be duly executed and delivered as of the date first written above. ---------------------------------- Arthur M. Coppola Notice Address: Arthur M. Coppola c/o The Macerich Company 401 Wilshire Blvd., Suite 700 Santa Monica, CA 90401 THE MACERICH COMPANY ---------------------------------- Richard A. Bayer Executive Vice President & General Counsel Notice Address: The Macerich Company 401 Wilshire Boulevard, Suite 700 Santa Monica, California 90401 Attn: General Counsel S-1

Exhibit 21.1 LIST OF SUBSIDIARIES THE MACERICH PARTNERSHIP, L.P., a Delaware limited partnership LAKEWOOD MALL BUSINESS COMPANY, a Delaware business trust LAKEWOOD MALL FINANCE COMPANY, a Delaware corporation MACERICH BRISTOL ASSOCIATES, a California general partnership MACERICH BUENAVENTURA LIMITED PARTNERSHIP, a California limited partnership MACERICH BUENAVENTURA GP CORP., a Delaware corporation MACERICH CARMEL GP CORP, a Delaware corporation MACERICH CARMEL LIMITED PARTNERSHIP, a California limited partnership MACERICH CERRITOS, LLC, a California limited liability company MACERICH CERRITOS MALL CORP., a Delaware corporation MACERICH CITADEL LIMITED PARTNERSHIP, a California limited partnership MACERICH CITADEL GP CORP., a Delaware corporation MACERICH CM VILLAGE GP CORP, a Delaware corporation MACERICH CM VILLAGE LIMITED PARTNERSHIP, a California limited partnership MACERICH EQ LIMITED PARTNERSHIP, a California limited partnership MACERICH EQ GP CORP., a Delaware corporation MACERICH FARGO ASSOCIATES, a California general partnership MACERICH FAYETTEVILLE GP CORP, a Delaware corporation MACERICH FAYETTEVILLE LIMITED PARTNERSHIP, a California limited partnership MACERICH FRESNO LIMITED PARTNERSHIP, a California limited partnership MACERICH FRESNO GP CORP., a Delaware corporation MACERICH GREAT FALLS LIMITED PARTNERSHIP, a California limited partnership MACERICH GREAT FALLS GP CORP., a Delaware corporation MACERICH GREELEY ASSOCIATES, a California general partnership MACERICH HUNTINGTON LIMITED PARTNERSHIP, a California limited partnership MACERICH HUNTINGTON GP CORP., a Delaware corporation

MACERICH LAKEWOOD, LLC, a Delaware limited liability company MACERICH LUBBOCK GP CORP, a Delaware corporation MACERICH LUBBOCK LIMITED PARTNERSHIP, a California limited partnership MACERICH MANAGEMENT COMPANY, a California corporation MACERICH MANHATTAN LIMITED PARTNERSHIP, a California limited partnership MACERICH MANHATTAN GP CORP., a Delaware corporation MACERICH MANHATTAN MANAGEMENT COMPANY, a California corporation MACERICH MARINA LIMITED PARTNERSHIP, a California limited partnership MACERICH MARINA GP CORP., a Delaware corporation MACERICH NORTHWESTERN ASSOCIATES, a California general partnership MACERICH OKLAHOMA LIMITED PARTNERSHIP, a California limited partnership MACERICH OKLAHOMA GP CORP., a Delaware corporation MACERICH PPR CORP, a Maryland corporation MACERICH PROPERTY EQ GP CORP., a Delaware corporation MACERICH PROPERTY MANAGEMENT COMPANY, a California corporation MACERICH QUEENS ADJACENT GP CORP., a Delaware corporation MACERICH QUEENS ADJACENT GUARANTOR CORP., a Delaware corporation MACERICH QUEENS ADJACENT LIMITED PARTNERSHIP, a California limited partnership MACERICH QUEENS LIMITED PARTNERSHIP, a California limited partnership MACERICH QUEENS FUNDING CORP., a Delaware corporation MACERICH QUEENS GP CORP., a Delaware corporation MACERICH RIMROCK GP CORP., a Delaware corporation MACERICH RIMROCK LIMITED PARTNERSHIP, a California limited partnership MACERICH SCG FUNDING GP CORP., a Delaware corporation MACERICH SCG FUNDING LIMITED PARTNERSHIP, a California limited partnership MACERICH SCG GP CORP., a Delaware corporation MACERICH SCG HOLDINGS LIMITED PARTNERSHIP, a California limited partnership MACERICH SCG LIMITED PARTNERSHIP, a California limited partnership MACERICH SANTA MONICA LLC, a Delaware limited liability company MACERICH SANTA MONICA PLACE CORP., a Delaware corporation MACERICH SASSAFRAS GP CORP., a Delaware corporation

MACERICH SASSAFRAS LIMITED PARTNERSHIP, a California limited partnership MACERICH SOUTH TOWNE GP CORP., a Delaware corporation MACERICH SOUTH TOWNE LIMITED PARTNERSHIP, a California limited partnership MACERICH ST MARKETPLACE GP CORP., a Delaware corporation MACERICH ST MARKETPLACE LIMITED PARTNERSHIP, a California limited partnership MACERICH STONEWOOD CORP., a Delaware corporation MACERICH STONEWOOD GP CORP., a Delaware corporation MACERICH STONEWOOD LIMITED PARTNERSHIP, a California limited partnership MACERICH STONEWOOD LLC, a Delaware limited liability company MACERICH VALLEY VIEW ADJACENT GP CORP., a Delaware corporation MACERICH VALLEY VIEW ADJACENT LIMITED PARTNERSHIP, a California limited partnership MACERICH VALLEY VIEW GP CORP., a Delaware corporation MACERICH VALLEY VIEW LIMITED PARTNERSHIP, a California limited partnership MACERICH VINTAGE FAIRE GP CORP., a Delaware corporation MACERICH VINTAGE FAIRE LIMITED PARTNERSHIP, a California limited partnership MACERICH WESTSIDE ADJACENT GP CORP., a Delaware corporation MACERICH WESTSIDE ADJACENT LIMITED PARTNERSHIP, a California limited partnership MACERICH WESTSIDE GP CORP, a Delaware corporation MACERICH WESTSIDE LIMITED PARTNERSHIP, a California limited partnership MANHATTAN VILLAGE, LLC, a California limited liability company NORTHGATE MALL ASSOCIATES, a California general partnership NORTH VALLEY PLAZA ASSOCIATES, a California general partnership PACIFIC PREMIER RETAIL TRUST, a Maryland real estate investment trust PANORAMA CITY ASSOCIATES, a California general partnership PPR ALBANY PLAZA LLC, a Delaware limited liability company PPR CASCADE LLC, a Delaware limited liability company PPR CREEKSIDE CROSSING LLC, a Delaware limited liability company PPR CROSS COURT LLC, a Delaware limited liability company PPR EASTLAND PLAZA LLC, a Delaware limited liability company PPR KITSAP MALL LLC, a Delaware limited liability company

PPR KITSAP PLACE LLC, a Delaware limited liability company PPR NORTH POINT LLC, a Delaware limited liability company PPR REDMOND DEVELOPMENT LLC, a Delaware limited liability company PPR REDMOND OFFICE LLC, a Delaware limited liability company PPR REDMOND RETAIL LLC, a Delaware limited liability company PPR SQUARE TOO LLC, a Delaware limited liability company PPR WASHINGTON SQUARE LLC, a Delaware limited liability company PPRT LAKEWOOD MALL CORP., a Delaware corporation SOUTHRIDGE ADJACENT LLC, a California limited liability company SDG MACERICH PROPERTIES, L.P., a Delaware limited partnership SM PORTFOLIO LIMITED PARTNERSHIP, a Delaware limited partnership WEST ACRES DEVELOPMENT, a North Dakota general partnership

Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of The Macerich Company on Form S-3 (File No. 333-21157), Form S-3 (File No. 333-38721) and Form S-8 of our report dated February 14, 2000, on our audits of the consolidated financial statements and financial statement schedule of The Macerich Company as of December 31, 1999 and 1998 and for the years ended December 31, 1999, 1998 and 1997, which report is included in the Annual Report on Form 10-K. PricewaterhouseCoopers LLP Los Angeles, California March 21, 2000

Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS The Partners SDG Macerich Properties, L.P. and The Board of Directors The Macerich Company We consent to the incorporation by reference in the registration statements of The Macerich Company on Form S-3 (File No. 333-21157), Form S-3 (File No. 333-38721) and Form S-8 of our report dated February 11, 2000, relating to the balance sheets of SDG Macerich Properties, L.P. as of December 31, 1999 and 1998, and the related consolidated statements of operations, cash flows, and partners' equity for the years then ended, and the related schedule, which report appears in the December 31, 1999 Annual Report on Form 10-K of The Macerich Company. KPMG LLP Indianapolis, Indiana March 21, 2000

<TABLE> <S> <C>

<ARTICLE> 5 <LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON PAGES 40 AND 41 OF THE COMPANY'S FORM 10-K FOR THE YEAR AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. </LEGEND> <MULTIPLIER> 1,000 <S> <C> <PERIOD-TYPE> YEAR <FISCAL-YEAR-END> DEC-31-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> DEC-31-1999 <CASH> 40,455 <SECURITIES> 0 <RECEIVABLES> 34,423 <ALLOWANCES> 0 <INVENTORY> 0 <CURRENT-ASSETS> 0 <PP&E> 2,174,535 <DEPRECIATION> (243,120) <TOTAL-ASSETS> 2,404,293 <CURRENT-LIABILITIES> 34,784 <BONDS> 1,561,127 <PREFERRED-MANDATORY> 91 <PREFERRED> 0 <COMMON> 338 <OTHER-SE> 619,857 <TOTAL-LIABILITY-AND-EQUITY> 2,404,293 <SALES> 0 <TOTAL-REVENUES> 327,444 <CGS> 0 <TOTAL-COSTS> 105,815 <OTHER-EXPENSES> (4,070) <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 113,348 <INCOME-PRETAX> 0 <INCOME-TAX> 0 <INCOME-CONTINUING> 0 <DISCONTINUED> 0 <EXTRAORDINARY> (1,478) <CHANGES> 0 <NET-INCOME> 110,873 <EPS-BASIC> 3.26 <EPS-DILUTED> 2.99 </TABLE>