Beneficial Interest in Debt and Interest Expense

The Operating Partnership's beneficial interest in the debt, capitalized interest, and interest expense of its consolidated subsidiaries and its Unconsolidated Joint Ventures is summarized in the following table. The Operating Partnership's beneficial interest in the consolidated subsidiaries excludes debt and interest related to the noncontrolling interests in Cherry Creek Shopping Center (50%), The Mall at Wellington Green (10%), and MacArthur Center (5%). In October 2014, the Company disposed of The Mall at Wellington Green and MacArthur Center as part of the sale to Starwood (Note 2).



	At 100%						At Beneficial Interest
	Consolidated Subsidiaries				Unconsolidated Joint Ventures		Consolidated Subsidiaries				Unconsolidated Joint Ventures
Debt as of:
September 30, 2014	$	2,637,941	(1	)	$	1,785,602	$	2,448,342	(1	)	$	984,512
December 31, 2013	3,058,053				1,551,161		2,891,592				868,942

Capitalized interest:
Nine Months Ended September 30, 2014	$	18,844	(2	)	$	2,836	$	18,136			$	1,430
Nine Months Ended September 30, 2013	11,511		(2	)	73		11,169				46

Interest expense:
Nine Months Ended September 30, 2014	$	74,946			$	55,065	$	68,687			$	29,805
Nine Months Ended September 30, 2013	99,589				51,578		93,049				28,192


(1)	The debt balance presented includes the debt of centers classified as held for sale as of September 30, 2014 (Note 2). The debt of centers held for sale was $622 million at 100% and $596 million at the Operating Partnership's beneficial interest at September 30, 2014. In October 2014, the Company disposed of the centers that were previously held for sale (Note 2).

(2)

The Company capitalizes interest costs incurred in funding its equity contributions to development projects accounted for as Unconsolidated Joint Ventures. The capitalized interest cost is included in the Company's basis in its investment in Unconsolidated Joint Ventures. Such capitalized interest reduces interest expense in the Company's Consolidated Statement of Operations and Comprehensive Income and in the table above is included within Consolidated Subsidiaries.

2014 Financings

In April 2014, a $320 million construction facility was completed for The Mall of San Juan, a consolidated joint venture. The construction facility has an initial three-year term with two, one-year extension options. The loan is interest only for the entire term and bears interest at LIBOR plus 2.00%, which may decrease to LIBOR plus 1.75% upon achieving certain performance measures.

In March 2014, the maturity date on the Company's $65 million secondary revolving line of credit was extended through April 2016. All significant terms of the credit facility agreement remain unchanged as a result of the extension.

In January 2014, the Company used a portion of the proceeds from the sale of the total of 49.9% interests in the entity that owns International Plaza (Note 2) to pay off the $99.5 million mortgage note payable on Stony Point Fashion Park that was scheduled to mature in June 2014.

Debt Covenants

Certain loan agreements contain various restrictive covenants, including the following corporate covenants on the Company’s unsecured primary revolving line of credit, unsecured term loan, and the construction facilities on The Mall at University Town Center and The Mall of San Juan: a minimum net worth requirement, a maximum total leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum recourse secured debt ratio and a maximum payout ratio. In addition, the Company’s primary revolving line of credit and term loan have unencumbered pool covenants, which currently apply to Beverly Center, Dolphin Mall, and Twelve Oaks Mall on a combined basis. These covenants include a minimum number and minimum value of eligible unencumbered assets, a maximum unencumbered leverage ratio, a minimum unencumbered interest coverage ratio and a minimum unencumbered asset occupancy ratio. As of September 30, 2014, the corporate minimum fixed charge coverage ratio is the most restrictive covenant. The Company was in compliance with all of its covenants and loan obligations as of September 30, 2014. The maximum payout ratio covenant limits the payment of distributions generally to 95% of funds from operations, as defined in the loan agreements, except as required to maintain the Company’s tax status, pay preferred distributions, and for distributions related to the sale of certain assets.

Upon the disposition of Fairlane Town Center and The Shops at Willow Bend in October 2014 (Note 2), these centers were removed from the primary revolving line of credit and term loan unencumbered asset pool. The Company does not expect that this will significantly affect the ability to meet the required covenants or the current $1.1 billion availability under the line of credit.

Guarantees

In connection with the financing of the construction facility at The Mall at University Town Center, which is owned by an Unconsolidated Joint Venture, the Operating Partnership provided an unconditional guarantee of 25% of the principal balance and 50% of all accrued but unpaid interest. The maximum amount of the construction facility is $225 million. The outstanding balance of The Mall at University Town Center construction financing facility as of September 30, 2014 was $155.6 million. Accrued but unpaid interest as of September 30, 2014 was $0.2 million. The principal guarantee may be reduced to 12.5% of the outstanding principal balance upon achievement of certain performance measures. Upon stabilization, the unconditional guarantee may be released. The Company believes the likelihood of a payment under the guarantee to be remote.

In connection with the financing of the construction facility at The Mall of San Juan, the Operating Partnership has provided an unconditional guarantee of the construction loan principal balance and all accrued but unpaid interest during the term of the loan. In addition, the Operating Partnership has provided a guarantee as to the completion of the center. The outstanding balance of The Mall of San Juan construction financing facility as of September 30, 2014 was $116.0 million. Accrued but unpaid interest as of September 30, 2014 was $0.1 million. The center is expected to open in March 2015 and the Company believes the likelihood of a payment under the guarantees to be remote.

Other

The Company is required to escrow cash balances for specific uses stipulated by certain of its lenders. As of September 30, 2014 and December 31, 2013, the Company’s cash balances restricted for these uses were $43.3 million and $5.0 million, respectively. As of September 30, 2014, $39.6 million of the $43.3 million of restricted cash was required under certain debt agreements to be in escrow for certain major construction projects.