The following sets forth selected financial data for the Company on a historical basis. The following data should be read in conjunction with the consolidated 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 Exhibit 99.1. All amounts are in thousands except per share data.

			Years Ended December 31,

			2008			2007			2006			2005			2004
OPERATING DATA:
Revenues:
		Minimum rents(1)	$	544,421		$	475,749		$	438,261		$	392,046		$	294,846
		Percentage rents		19,092			26,104			23,876			23,744			15,655
		Tenant recoveries		266,885			245,510			227,575			195,896			145,055
		Management Companies		40,716			39,752			31,456			26,128			21,549
		Other		30,376			27,199			28,451			22,333			18,070

		Total revenues		901,490			814,314			749,619			660,147			495,175
Shopping center and operating expenses				287,077			256,730			233,669			203,829			146,465
Management Companies' operating expenses				77,072			73,761			56,673			52,840			44,080
REIT general and administrative expenses				16,520			16,600			13,532			12,106			11,077
Depreciation and amortization				277,827			212,509			196,760			171,987			128,413
Interest expense				295,160			261,498			260,705			228,061			134,549
(Gain) loss on early extinguishment of debt(2)				(84,143	)		877			1,835			1,666			1,642

		Total expenses		869,513			821,975			763,174			670,489			466,226
Equity in income of unconsolidated joint ventures				93,831			81,458			86,053			76,303			54,881
Income tax (provision) benefit(3)				(1,126	)		470			(33	)		2,031			5,466
(Loss) gain on sale or write-down of assets				(31,819	)		12,146			(84	)		1,253			473

		Income from continuing operations		92,863			86,413			72,381			69,245			89,769
Discontinued operations:(4)
	Gain (loss) on sale of assets			100,533			(2,376	)		241,816			277			7,568
	Income from discontinued operations			1,619			22,025			26,362			18,180			14,087

		Total income from discontinued operations		102,152			19,649			268,178			18,457			21,655

Net income				195,015			106,062			340,559			87,702			111,424
Less net income (loss) attributable to noncontrolling interests				28,966			29,827			96,010			(11,953	)		19,791

Net income attributable to the Company				166,049			76,235			244,549			99,655			91,633
Less preferred dividends				4,124			10,058			10,083			9,649			9,140
Less adjustment to redemption value of redeemable noncontrolling interests				—			2,046			17,062			183,620			—

Net income (loss) available to common stockholders			$	161,925		$	64,131		$	217,404		$	(93,614	)	$	82,493

Earnings (loss) per common share ("EPS") attributable to the Company—basic:
	Income from continuing operations		$	0.99		$	0.86		$	0.70		$	0.78		$	1.09
	Discontinued operations			1.18			0.02			2.35			(2.38	)		0.30

	Net income (loss) per share available to common stockholders		$	2.17		$	0.88		$	3.05		$	(1.60	)	$	1.39

EPS attributable to the Company—diluted:(5)(6)
	Income from continuing operations		$	0.99		$	0.86		$	0.78		$	0.78		$	1.08
	Discontinued operations			1.18			0.02			2.25			(2.37	)		0.30

	Net income (loss) per share available to common stockholders		$	2.17		$	0.88		$	3.03		$	(1.59	)	$	1.38

		As of December 31,

		2008			2007			2006			2005			2004
BALANCE SHEET DATA:
Investment in real estate (before accumulated depreciation)		$	7,355,703		$	7,078,802		$	6,356,156		$	6,017,546		$	4,149,776
Total assets		$	8,090,435		$	7,937,097		$	7,373,676		$	6,986,005		$	4,637,096
Total mortgages, bank and other notes payable		$	5,940,418		$	5,703,180		$	4,993,879		$	5,424,730		$	3,230,120
Redeemable noncontrolling interests(7)		$	23,327		$	322,619		$	322,710		$	306,700		$	—
Series A Preferred Stock(8)		$	—		$	83,495		$	98,934		$	98,934		$	98,934
Equity(9)		$	1,641,884		$	1,434,701		$	1,653,578		$	847,568		$	1,134,848
OTHER DATA:
Funds from operations ("FFO")—diluted(10)		$	461,515		$	396,556		$	383,122		$	336,831		$	299,172
Cash flows provided by (used in):
	Operating activities	$	251,947		$	326,070		$	211,850		$	235,296		$	213,197
	Investing activities	$	(558,956	)	$	(865,283	)	$	(126,736	)	$	(131,948	)	$	(489,822	)
	Financing activities	$	288,265		$	355,051		$	29,208		$	(20,349	)	$	308,383
Number of Centers at year end			92			94			91			97			84
Weighted average number of shares outstanding—EPS basic			74,319			71,768			70,826			59,279			58,537
Weighted average number of shares outstanding—EPS diluted(5)(6)			86,794			84,760			88,058			73,573			73,099
Cash distribution declared per common share		$	3.20		$	2.93		$	2.75		$	2.63		$	2.48

		Years Ended December 31,

(Dollars in millions)		2008		2007			2006		2005		2004
Revenues:
	Westbar	$	—	$	—		$	—	$	—	$	4.8
	Arizona LifeStyle Galleries		—		—			—		—		0.3
	Scottsdale 101		—		0.1			4.7		9.8		6.9
	Park Lane Mall		—		—			1.5		3.1		3.0
	Holiday Village Mall		0.3		0.2			2.9		5.2		4.8
	Greeley Mall		—		—			4.3		7.0		6.2
	Great Falls Marketplace		—		—			1.8		2.7		2.6
	Citadel Mall		—		—			15.7		15.3		15.4
	Northwest Arkansas Mall		—		—			12.9		12.6		12.7
	Crossroads Mall		—		—			11.5		10.9		11.2
	Mervyn's Stores		4.0		0.2			—		—		—
	Rochester Properties		—		83.1			80.0		51.7		—

	Total	$	4.3	$	83.6		$	135.3	$	118.3	$	67.9

Income from operations:
	Westbar	$	—	$	—		$	—	$	—	$	1.8
	Arizona LifeStyle Galleries		—		—			—		—		(1.0	)
	Scottsdale 101		—		—			0.8		0.2		(0.6	)
	Park Lane Mall		—		—			—		0.8		0.9
	Holiday Village Mall		0.3		0.2			1.2		2.8		1.9
	Greeley Mall		—		(0.1	)		0.6		0.9		0.5
	Great Falls Marketplace		—		—			1.1		1.7		1.6
	Citadel Mall		—		(0.1	)		2.5		1.8		2.0
	Northwest Arkansas Mall		—		—			3.4		2.9		3.1
	Crossroads Mall		—		—			2.3		3.2		3.9
	Mervyn's Stores		1.3		0.1			—		—		—
	Rochester Properties		—		21.9			14.5		3.9		—

	Total	$	1.6	$	22.0		$	26.4	$	18.2	$	14.1

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company is involved in the acquisition, ownership, development, 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 Operating Partnership. As of December 31, 2008, the Operating Partnership owned or had an ownership interest in 72 regional shopping centers and 20 community shopping centers totaling approximately 76 million square feet of GLA. These 92 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 REIT and conducts all of its operations through the Operating Partnership and the Company's Management Companies.

The following discussion is based primarily on the consolidated financial statements of the Company for the years ended December 31, 2008, 2007 and 2006. It compares the results of operations and cash flows for the year ended December 31, 2008 to the results of operations and cash flows for the year ended December 31, 2007. Also included is a comparison of the results of operations and cash flows for the year ended December 31, 2007 to the results of operations and cash flows for the year ended December 31, 2006. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

The financial statements reflect the following acquisitions, dispositions and changes in ownership subsequent to the occurrence of each transaction.

On February 1, 2006, the Company acquired Valley River Center, a 915,656 square foot super-regional mall in Eugene, Oregon. The total purchase price was $187.5 million and concurrent with the acquisition, the Company placed a $100.0 million ten-year loan on the property. The balance of the purchase price was funded by cash and borrowings under the Company's line of credit.

On June 9, 2006, the Company sold Scottsdale 101, a 564,000 square foot center in Phoenix, Arizona. The sale price was $117.6 million from which $56.0 million was used to payoff the mortgage on the property. The Company's share of the realized gain was $25.8 million.

On July 13, 2006, the Company sold Park Lane Mall, a 370,000 square foot center in Reno, Nevada, for $20 million resulting in a gain of $5.9 million.

On July 26, 2006, the Company purchased 11 department stores located in 10 of its Centers from Federated Department Stores, Inc. for approximately $100.0 million. The purchase price consisted of a $93.0 million cash payment at closing and a $7.0 million cash payment in 2007, in connection with development work by Federated at the Company's development properties. The Company's share of the purchase price was $81.0 million and was funded in part from the proceeds of sales of Park Lane Mall, Greeley Mall, Holiday Village Mall and Great Falls Marketplace, and from borrowings under the Company's line of credit. The balance of the purchase price was paid by the Company's joint venture partners.

On July 27, 2006, the Company sold Holiday Village Mall, a 498,000 square foot center in Great Falls, Montana, and Greeley Mall, a 564,000 square foot center in Greeley, Colorado, in a combined sale for $86.8 million, resulting in a gain of $28.7 million.

On August 11, 2006, the Company sold Great Falls Marketplace, a 215,000 square foot community center in Great Falls, Montana, for $27.5 million resulting in a gain of $11.8 million.

On December 1, 2006, the Company acquired Deptford Mall, a two-level 1.0 million square foot super-regional mall in Deptford, New Jersey. The total purchase price of $240.1 million was funded by cash and borrowings under the Company's line of credit. On December 7, 2006, the Company placed a $100.0 million six-year loan bearing interest at a fixed rate of 5.44% on the property.

On December 29, 2006, the Company sold Citadel Mall, a 1,095,000 square foot center in Colorado Springs, Colorado, Crossroads Mall, a 1,268,000 square foot center in Oklahoma City, Oklahoma, and Northwest Arkansas Mall, a 820,000 square foot center in Fayetteville, Arkansas, in a combined sale for $373.8 million, resulting in a gain of $132.7 million. The net proceeds were used to pay down the Company's line of credit and pay off the Company's $75.0 million loan on Paradise Valley Mall.

Valley River Center and Deptford Mall are referred to herein as the "2006 Acquisition Centers."

On September 5, 2007, the Company purchased the remaining 50% outside ownership interest in Hilton Village, a 96,985 square foot specialty center in Scottsdale, Arizona. The total purchase price of $13.5 million was funded by cash, borrowings under the Company's line of credit and the assumption of a mortgage note payable. The Center was previously accounted for under the equity method as an investment in unconsolidated joint ventures.

On December 17, 2007, the Company purchased a portfolio of ground leasehold interest and/or fee interests in 39 freestanding Mervyn's stores located in the Southwest United States. The purchase price of $400.2 million was funded by cash and borrowings under the Company's line of credit.

Hilton Village and the interest in the 39 freestanding Mervyn's freestanding stores are referred herein as the "2007 Acquisition Properties."

On January 1, 2008, a subsidiary of the Operating Partnership, at the election of the holders, redeemed its 3.4 million Class A participating convertible preferred units ("PCPUs"). As a result of the redemption, the Company received the 16.32% noncontrolling interest in the portion of the Wilmorite portfolio acquired on April 25, 2005 that included Danbury Fair Mall, Freehold Raceway Mall, Great Northern Mall, Rotterdam Square, Shoppingtown Mall, Towne Mall, Tysons Corner Center and Wilton Mall, collectively, referred to as the "Non-Rochester Properties," for total consideration of $224.4 million, in exchange for the Company's ownership interest in the portion of the Wilmorite portfolio that consisted of Eastview Mall, Eastview Commons, Greece Ridge Center, Marketplace Mall and Pittsford Plaza, collectively referred to as the "Rochester Properties." Included in the redemption consideration was the assumption of the remaining 16.32% noncontrolling interest in the indebtedness of the Non-Rochester Properties, which had an estimated fair value of $106.0 million. In addition, the Company also received additional consideration of $11.8 million, in the form of a note, for certain working capital adjustments, extraordinary capital expenditures, leasing commissions, tenant allowances, and decreases in indebtedness during the Company's period of ownership of the Rochester Properties. The Company recognized a gain of $99.1 million on the exchange. This exchange is referred to herein as the "Rochester Redemption."

On January 10, 2008, the Company, in a 50/50 joint venture, acquired The Shops at North Bridge, a 680,933 square foot urban shopping center in Chicago, Illinois, for a total purchase price of $515.0 million. The Company's share of the purchase price was funded by the assumption of a pro rata share of the $205.0 million fixed rate mortgage on the Center and by borrowings under the Company's line of credit.

On January 31, 2008, the Company purchased a ground leasehold interest in a freestanding Mervyn's store located in Hayward, California. The purchase price of $13.2 million was funded by cash and borrowings under the Company's line of credit.

On February 29, 2008, the Company purchased a fee simple interest in a freestanding Mervyn's store located in Monrovia, California. The purchase price of $19.3 million was funded by cash and borrowings under the Company's line of credit.

On May 20, 2008, the Company purchased a fee simple interest in a 161,350 square foot Boscov's department store at Deptford Mall in Deptford, New Jersey. The total purchase price of $23.5 million was funded by the assumption of the existing $15.2 million mortgage note on the property and by borrowings under the Company's line of credit.

The Boscov's store and the Mervyn's stores acquired in 2008 are referred to herein as the "2008 Acquisition Properties."

On June 11, 2008, the Company became a 50% owner in a joint venture that acquired One Scottsdale, which plans to develop a luxury retail and mixed-use property in Scottsdale, Arizona. The Company's share of the purchase price was $52.5 million, which was funded by borrowings under the Company's line of credit.

On December 19, 2008, the Company sold a fee and/or ground leasehold interest in three freestanding Mervyn's department stores to Pacific Premier Retail Trust, one of the Company's joint ventures, for $43.4 million, resulting in a gain on sale of assets of $1.5 million. The Company's pro rata share of the proceeds were used to pay down the Company's line of credit.

In July 2008, Mervyn's filed for bankruptcy protection and announced in October its plans to liquidate all merchandise, auction its store leases and wind down its business. The Company has 45 former Mervyn's stores in its portfolio. The Company owns the ground leasehold and/or fee simple interest in 44 of those stores and the remaining store is owned by a third party but is located at one of the Centers. In connection with the acquisition of the Mervyn's portfolio (See Note 12-Acquisitions of the Company's Consolidated Financial Statements) and applying Statement of Financial Accounting Standards ("SFAS") No. 141, the Company recorded intangible assets of $110.7 million and intangible liabilities of $59.0 million.

In September 2008, the Company recorded a write-down of $5.2 million due to the anticipated rejection of six of the Company's leases by Mervyn's. In addition, the Company terminated its former plan to sell the 29 Mervyn's stores located at shopping centers not owned or managed by the Company. (See Note 13—Discontinued Operations of the Company's Consolidated Financial Statements). The Company's decision was based on current conditions in the credit market and the assumption that a better return could be obtained by holding and operating the assets. As result of the change in plans to sell, the Company recorded a loss of $5.3 million in order to adjust the carrying value of these assets for depreciation expense that otherwise would have been recognized had these assets been continuously classified as held and used.

In December 2008, Kohl's and Forever 21 assumed a total of 23 of the Mervyn's leases and the remaining 22 leases were rejected by Mervyn's under the bankruptcy laws. As a result, the Company wrote-off the unamortized intangible assets and liabilities related to the rejected and unassumed leases in December 2008. The Company wrote-off $27.7 million of unamortized intangible assets related to lease in place values, leasing commissions and legal costs to depreciation and amortization. Unamortized intangible assets of $14.9 million relating to above market leases and unamortized intangible liabilities of $24.5 million relating to below market leases were written-off to minimum rents.

Construction continues on Santa Monica Place, a regional shopping center under development in Santa Monica, California. In September, the Company announced that Bloomingdale's will join

Nordstrom. Bloomingdale's will open the first of the store's SoHo concept outside of Manhattan. In addition, the Company has announced deals with 11 retailers and restaurants slated to join the new Santa Monica Place—Ed Hardy, Arthur, R.O.C. Republic of Couture, Ilori, Love Culture, Michael Brandon, Shuz, restaurants La Sandia, Zengo and Pizza Antica, and gallery Artevo. These 11 strong brands join previously announced restaurants XINO and Osumo Sushi and fashion retailers Kitson LA, BCBG Max Azria, Coach, Lacoste, Joe's Jeans and True Religion, all of which are slated to open in 2010 alongside Bloomingdale's SoHo concept and Nordstrom.

At Scottsdale Fashion Square, construction on an approximately 160,000 square foot expansion continues on schedule toward a Fall 2009 opening. The expansion will be anchored by a 60,000 square foot Barneys New York. In addition, recently signed fashion retailer Ed Hardy, French luxury homewear retailer Arthur and Forever 21 will join previously announced True Religion and restaurants Marcella's and Modern Steak, in the new wing. Recent additions to the Center's interior merchandise mix include Cartier and Bvlgari.

Also during the three months ended December 31, 2008, the Company wrote off $8.7 million of development costs on development projects the Company has determined it will not pursue. In addition, the Company recorded an $18.8 million impairment charge to reduce its pro rata share of the carrying value of land held for development at a consolidated joint venture.

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 using an annual multiple of increases in the Consumer Price Index ("CPI"). In addition, about 6%-13% of the leases expire each year, 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, historically the majority of the leases required the tenants to pay their pro rata share of operating expenses. In January 2005, the Company began entering into leases that require tenants to pay a stated amount for operating expenses, generally excluding property taxes, regardless of the expenses actually incurred at any Center. This change shifts the burden of cost control to the Company.

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 and the majority of percentage rent is recognized in the fourth quarter. As a result of the above, earnings are generally higher in the fourth quarter.

The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America 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.

Some of these estimates and assumptions include judgments on revenue recognition, estimates for common area maintenance and real estate tax accruals, provisions for uncollectible accounts, impairment of long-lived assets, the allocation of purchase price between tangible and intangible assets, and estimates for environmental matters. The Company's significant accounting policies are described

in more detail in Note 2—Summary of Significant Accounting Policies to the Consolidated Financial Statements. However, the following policies are deemed to be critical.

Minimum rental revenues are recognized on a straight-line basis over the term 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 line rent adjustment." Currently, 53% of the mall and freestanding leases contain provisions for CPI rent increases periodically throughout the term of the lease. The Company believes that using an annual multiple of CPI increases, rather than fixed contractual rent increases, results in revenue recognition that more closely matches the cash revenue from each lease and will provide more consistent rent growth throughout the term of the leases. Percentage rents are recognized when the tenants' specified sales targets have been met. Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred. Other tenants pay a fixed rate and these tenant recoveries' revenues are recognized on a straight-line basis over the term of the related leases.

The Company capitalizes costs incurred in redevelopment and development of properties in accordance with Statement of Financial Accounting Standards ("SFAS") No. 34 "Capitalization of Interest Cost" and SFAS No. 67 "Accounting for Costs and the Initial Rental Operations of Real Estate Properties." The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. Capitalized costs are allocated to the specific components of a project that are benefited. The Company considers a construction project as completed and held available for occupancy and ceases capitalization of costs when the areas under development have been substantially completed.

Maintenance and repair expenses are charged to operations as incurred. Costs for major replacements and betterments, which includes HVAC equipment, roofs, parking lots, etc., are capitalized and depreciated over their estimated useful lives. 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:

The Company accounts for all acquisitions in accordance with SFAS No. 141, "Business Combinations." The Company first determines the value of the land and buildings utilizing an "as if vacant" methodology. The Company then assigns a fair value to any debt assumed at acquisition. The balance of the purchase price is allocated to tenant improvements and identifiable intangible assets or liabilities. Tenant improvements represent the tangible assets associated with the existing leases valued on a fair market value basis at the acquisition date prorated over the remaining lease terms. The tenant improvements are classified as an asset under real estate investments and are depreciated over the remaining lease terms. Identifiable intangible assets and liabilities relate to the value of in-place

operating leases which come in three forms: (i) leasing commissions and legal costs, which represent the value associated with "cost avoidance" of acquiring in-place leases, such as lease commissions paid under terms generally experienced in the Company's markets; (ii) value of in-place leases, which represents the estimated loss of revenue and of costs incurred for the period required to lease the "assumed vacant" property to the occupancy level when purchased; and (iii) above or below market value of in-place leases, which represents the difference between the contractual rents and market rents at the time of the acquisition, discounted for tenant credit risks. Leasing commissions and legal costs are recorded in deferred charges and other assets and are amortized over the remaining lease terms. The value of in-place leases are recorded in deferred charges and other assets and amortized over the remaining lease terms plus an estimate of renewal of the acquired leases. Above or below market leases are classified in deferred charges and other assets or in other accrued liabilities, depending on whether the contractual terms are above or below market, and the asset or liability is amortized to minimum rents over the remaining terms of the leases.

When the Company acquires a real estate property, the Company allocates the purchase price to the components of these acquisitions using relative fair values computed using its estimates and assumptions. These estimates and assumptions impact the amount of costs allocated between various components as well as the amount of costs assigned to individual properties in multiple property acquisitions. These allocations also impact depreciation expense and gains or losses recorded on future sales of properties.

The Company assesses whether there has been 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 tenant's ability to perform their duties and pay rent under the terms of the leases. The Company may recognize impairment losses if the cash flows are not sufficient to cover its investment. Such a loss would be determined as the difference between the carrying value and the fair value of a center.

On January 1, 2008, the Company adopted SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions.

Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

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.

Costs relating to obtaining tenant leases are deferred and amortized over the initial term of the agreement using the straight-line method. Costs relating to financing of shopping center properties are deferred and amortized over the life of the related loan using the straight-line method, which approximates the effective interest method. In-place lease values are amortized over the remaining lease term plus an estimate of the renewal term. Leasing commissions and legal costs are amortized on a straight-line basis over the individual remaining lease years. The ranges of the terms of the agreements are as follows:

In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141(R), "Business Combinations." SFAS No. 141(R) requires an acquiring entity to recognize acquired assets and assumed liabilities in a transaction at fair value as of the acquisition date and changes the accounting treatment for certain items, including acquisition costs, which will be required to be expensed as incurred. The Company adopted SFAS No. 141(R) on January 1, 2009. The adoption of SFAS No. 141(R) did not have a material impact on the Company's consolidated financial statements.

In March 2008, FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133." SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives and quantitative disclosures about the fair value of and gains and losses on derivative instruments. The Company adopted SFAS No. 161 on January 1, 2009. The adoption of SFAS No. 161 did not have a material impact on the Company's consolidated financial statements.

Many of the variations in the results of operations, discussed below, occurred due to the transactions described above including the 2008 Acquisition Properties, the 2007 Acquisition Properties, the 2006 Acquisition Centers and the Redevelopment Centers. For the comparison of the year ended December 31, 2008 to the year ended December 31, 2007, the "Same Centers" include all consolidated Centers, excluding the 2008 Acquisition Properties, the 2007 Acquisition Properties and the Redevelopment Centers. For the comparison of the year ended December 31, 2007 to the year ended December 31, 2006, the Same Centers include all consolidated Centers, excluding the 2007 Acquisition Properties, the 2006 Acquisition Centers and the Redevelopment Centers.

For the comparison of the year ended December 31, 2008 to the year ended December 31, 2007, "Redevelopment Centers" include The Oaks, Northgate Mall, Santa Monica Place, Shoppingtown Mall, Westside Pavilion, The Marketplace at Flagstaff, SanTan Village Regional Center and Promenade at Casa Grande. For the comparison of the year ended December 31, 2007 to the year ended

December 31, 2006, "Redevelopment Centers" include The Oaks, Twenty Ninth Street, Santa Monica Place, Westside Pavilion, The Marketplace at Flagstaff Mall, SanTan Village Regional Center and Promenade at Casa Grande.

Unconsolidated joint ventures are reflected using the equity method of accounting. The Company's pro rata share of the results from these Centers is reflected in the Consolidated Statements of Operations as equity in income from unconsolidated joint ventures.

Minimum and percentage rents (collectively referred to as "rental revenue") increased by $61.7 million, or 12.3%, from 2007 to 2008. The increase in rental revenue is attributed to an increase of $42.1 million from the 2007 Acquisition Properties, $13.9 million from the Redevelopment Centers, $3.8 million from the 2008 Acquisition Properties and $1.9 million from the Same Centers. The increase in the revenues from the Same Centers is primarily due to rent escalations and lease renewals at higher rents, which was offset by decreases in lease termination income, amortization of straight-line rents and amortization of above and below market leases. The increase in the revenues from the Same Centers was also offset by a decrease of $6.3 million in percentage rents due to a decrease in retail sales.

Rental revenue includes the amortization of above and below market leases, the amortization of straight-line rents and lease termination income. The amortization of above and below market leases increased from $10.6 million in 2007 to $21.5 million in 2008. The amortization of straight-lined rents decreased from $6.9 million in 2007 to $5.7 million in 2008. Lease termination income increased from $9.7 million in 2007 to $9.9 million in 2008. The increase in above and below market leases is primarily due to the early termination of Mervyn's leases in 2008 (See "Management's Overview and Summary—Mervyn's.").

Tenant recoveries increased $21.4 million, or 8.7%, from 2007 to 2008. The increase in tenant recoveries is attributed to an increase of $9.4 million from the Same Centers, $6.3 million from the 2007 Acquisition Properties, $4.7 from the Redevelopment Centers and $1.0 million from the 2008 Acquisition Properties.

Management Companies' revenues increased by $1.0 million from 2007 to 2008, primarily due to increased management fees received from the Joint Venture Centers, additional third party management contracts and increased development fees from joint ventures.

Shopping center and operating expenses increased $30.3 million, or 11.8%, from 2007 to 2008. Approximately $13.6 million of the increase in shopping center and operating expenses is from the Same Centers, $11.3 million is from the 2007 Acquisition Properties, $5.0 million is from the Redevelopment Centers and $1.2 million is from the 2008 Acquisition Properties. The increase in Same Centers is primarily due to an increase in recoverable utility expenses and property taxes and a $2.0 million increase in bad debt expense.

Management Companies' operating expenses increased $3.3 million in 2007 to 2008, in part as a result of the additional costs of managing the Joint Venture Centers and third party managed properties.

REIT general and administrative expenses decreased by $0.1 million from 2007 to 2008. The decrease is primarily due to a decrease in share and unit-based compensation expense in 2008.

Depreciation and amortization increased $65.3 million from 2007 to 2008. The increase in depreciation and amortization is primarily attributed to an increase of $42.1 million from the 2007 Acquisition Properties, $12.0 million from the Redevelopment Centers, $7.3 million from the Same Centers and $3.7 million from the 2008 Acquisition Properties. Included in the increase of depreciation and amortization of 2007 Acquisition Properties is the write-off of $32.9 million of intangible assets as a result of the early termination of Mervyn's leases (See "Management's Overview and Summary—Mervyn's.")

Interest expense increased $33.7 million from 2007 to 2008. The increase in interest expense was primarily attributed to an increase of $17.9 million from borrowings under the Company's line of credit, $9.3 million from the Redevelopment Centers, $7.8 million from the Senior Notes issued on March 16, 2007 and $4.7 million from the Same Centers. The increase in interest expense was offset in part by a decrease of $3.8 million from term loans.

The increase in interest expense on the Company's line of credit was due to an increase in average outstanding borrowings during 2008, in part, because of the purchase of The Shops at North Bridge, the 2007 Acquisition Properties and the 2008 Acquisition Properties and the repurchase and retirement of Senior Notes in 2008, which is offset in part by lower LIBOR rates and spreads. The increase in interest expense on the Senior Notes is due to a full year of interest expense in 2008 compared to 2007. The decrease in interest expense on term loans was due to the repayment of the $250 million loan in 2007.

The above interest expense items are net of capitalized interest, which increased from $32.0 million in 2007 to $33.3 million in 2008 due to an increase in redevelopment activity in 2008.

The Company recorded a gain of $84.1 million on the early extinguishment of $222.8 million of the Senior Notes in 2008. In 2007, the Company recorded a $0.9 million loss from the early extinguishment of the $250 million term loan (See "Liquidity and Capital Resources".)

The equity in income of unconsolidated joint ventures increased $12.4 million from 2007 to 2008. The increase in equity in income of unconsolidated joint ventures is due in part to commission income of $6.5 million earned in 2008 from a joint venture, $3.6 million relating to the acquisition of The Shops at North Bridge in 2008, and $2.0 million relating to a loss on the sale of assets in the SDG Macerich Properties, L.P. joint venture in 2007.

The Company recorded a loss on sale or write down of assets of $31.8 million in 2008 relating to an $8.7 million write-off of development costs on projects the Company has determined not to pursue, a $19.2 million impairment charge to reduce the carrying value of land held for development and a $5.3 million adjustment to reduce the carrying value of Mervyn's stores that the Company had previously classified as held for sale (See "Management's Overview and Summary—Mervyn's.") The

gain on sale or write-down of assets in 2007 of $12.1 million is primarily related to gain on sales of land.

Income from discontinued operations increased $82.5 million from 2007 to 2008. The increase is primarily due to the $99.1 million gain from the Rochester Redemption in 2008. See "Management's Overview and Summary—Acquisitions and Dispositions." As a result of the Rochester Redemption, the Company classified the results of operations for these properties to discontinued operations for all periods presented.

Net income attributable to noncontrolling interests decreased from $29.8 million in 2007 to $29.0 million in 2008. The decrease in income from noncontrolling interests is attributable to $16.3 million from the Rochester Redemption and $0.6 million related to the consolidated joint ventures offset in part by an increase of $16.0 million from the Operating Partnership. The increase in net income attributable to noncontrolling interests in the Operating Partnership is due to an increase in net income from $106.1 million in 2007 to $195.0 million in 2008 offset in part by a decrease in the weighted average interest of the Operating Partnership not owned by the Company from 15.0% in 2007 compared to 14.4% in 2008. The decrease in the weighted average interest in the Operating Partnership not owned by the Company is primarily attributed to the conversion of 3,067,131 preferred shares into common shares in 2008 (See Note 22—Cumulative Convertible Redeemable Preferred Stock of the Company's Consolidated Financial Statements) and the repurchase of 807,000 shares in 2007 (See Note 21—Stock Repurchase Program of the Company's Consolidated Financial Statements).

Primarily as a result of the factors mentioned above, "FFO"—diluted increased 16.4% from $396.6 million in 2007 to $461.5 million in 2008. For disclosure of net income, the most directly comparable GAAP financial measure, for the periods and a reconciliation of FFO and FFO—diluted to net income available to common stockholders, see "Funds from Operations."

Cash flow from operations decreased from $326.1 million in 2007 to $251.9 million in 2008. The decrease was primarily due to changes in assets and liabilities in 2007 compared to 2008, an increase in distributions of income from unconsolidated joint ventures and due to the results at the Centers as discussed above.

Cash used in investing activities decreased from $865.3 million in 2007 to $559.0 million in 2008. The decrease in cash used in investing activities was primarily due to a decrease in capital expenditures of $507.7 million and acquisition deposits of $51.9 million offset by a decrease in distributions from unconsolidated joint ventures of $132.5 million and an increase in contributions to unconsolidated joint ventures. The decrease in capital expenditures is primarily due to the purchase of the Mervyn's portfolio for $400.2 million in 2007. The decrease in acquisition deposits and the increase in contributions to unconsolidated joint ventures is primarily due to the Company's purchase of a pro rata share of The Shops at North Bridge for $155.0 million in 2008 (See "Management's Overview and Summary—Acquisitions and Dispositions.") The decrease in distributions from unconsolidated joint ventures is due to the receipt of the Company's pro rata share of loan proceeds from the refinance transactions at various unconsolidated joint ventures in 2007.

Cash flow provided by financing activities decreased from $355.1 million in 2007 to $288.3 million in 2008. The decrease in cash provided by financing activities was primarily attributed to the issuance of $950 million of Senior Notes in 2007, the repurchase of $222.8 million of Senior Notes in 2008 (see "Liquidity and Capital Resources") and the purchase of the Capped Calls in connection with the issuance of the Senior Notes in 2007.

Rental revenue increased by $39.7 million, or 8.6%, from 2006 to 2007. The increase in rental revenue is attributed to an increase of $17.9 million from the 2006 Acquisition Centers, $13.8 million from the Redevelopment Centers, $6.7 million from the Same Centers and $1.2 million from the 2007 Acquisition Properties.

The amortization of above and below market leases, which is recorded in rental revenue, decreased to $10.6 million in 2007 from $12.2 million in 2006. The decrease in amortization is primarily due to leases which were terminated in 2006. The amortization of straight-lined rents, included in rental revenue, was $6.9 million in 2007 compared to $4.7 million in 2006. Lease termination income, which is included in rental revenue, decreased to $9.8 million in 2007 from $13.2 million in 2006.

Tenant recoveries increased $17.9 million, or 7.9%, from 2006 to 2007. The increase in tenant recoveries is attributed to an increase of $11.0 million from the 2006 Acquisition Centers, $4.3 million from the Redevelopment Centers, $2.4 million from the Same Centers and $0.2 million from the 2007 Acquisition Properties.

Management Companies' revenues increased by $8.3 million from 2006 to 2007, primarily due to increased management fees received from the Joint Venture Centers, additional third party management contracts and increased development fees from joint ventures.

Shopping center and operating expenses increased $23.1 million, or 9.9%, from 2006 to 2007. Approximately $9.6 million of the increase in shopping center and operating expenses is from the 2006 Acquisition Centers, $6.8 million is from the Redevelopment Centers, $6.1 million is from the Same Centers and $0.5 million is from the 2007 Acquisition Properties.

Management Companies' operating expenses increased to $73.8 million in 2007 from $56.7 million in 2006, in part as a result of the additional costs of managing the Joint Venture Centers and third party managed properties, higher compensation expense due to increased staffing and higher professional fees.

REIT general and administrative expenses increased by $3.1 million in 2007 from 2006, primarily due to increased share and unit-based compensation expense in 2007.

Depreciation and amortization increased $15.7 million in 2007 from 2006. The increase in depreciation and amortization is primarily attributed to an increase of $10.5 million at the Redevelopment Centers, $10.4 million from the 2006 Acquisition Centers and $0.1 million from the

2007 Acquisition Properties. This increase is offset in part by a decrease of $1.8 million from the Same Centers.

The increase in interest expense was primarily attributed to the increases of $38.7 million from the issuance of the Senior Notes in 2007 and $6.6 million from the 2006 Acquisition Centers. The increases in interest expense were partially offset by decreases of $17.2 million from term loans, $16.1 million from the line of credit, $8.1 million from the Same Centers and $2.7 million from the Redevelopment Centers.

The decrease in interest expense on term loans was due to the repayment of the $250 million loan in 2007 and the repayment of the $619 million term loan in 2006. The decrease in interest expense on the line of credit was due to: (i) a decrease in average outstanding borrowings during 2007, in part, because of the issuance of the Senior Notes, (ii) a decrease in interest rates because of the $400 million swap and (iii) lower LIBOR rates and spreads. The decrease in interest expense from the Same Centers is due to: (i) the repayment of the $75.0 million loan on Paradise Valley Mall in January 2007, (ii) an increase in capitalized interest and (iii) a decrease in LIBOR rates on floating rate mortgages payable.

The above interest expense items are net of capitalized interest, which increased to $32.0 million in 2007 from $14.9 million in 2006 due to an increase in redevelopment activity in 2007.

The Company recorded a $0.9 million loss from the early extinguishment of the $250 million term loan in 2007. In 2006, the Company recorded a loss from the early extinguishment of debt of $1.8 million related to the pay off of the $619 million term loan.

The equity in income of unconsolidated joint ventures decreased $4.6 million in 2007 from 2006. The decrease in equity in income of unconsolidated joint ventures is due in part to a $2.0 million loss on sale of assets in the SDG Macerich Properties, L.P. joint venture and additional interest expense and depreciation at other joint ventures due to the completion of development projects.

The Company recorded a gain on sale of assets of $12.1 million in 2007 relating to land sales of $8.8 million and $3.4 million relating to sale of equipment and furnishings.

The decrease of $248.5 million in income from discontinued operations is primarily related to the recognition of gain on the sales of Scottsdale 101, Park Lane Mall, Holiday Village Mall, Greeley Mall, Great Falls Marketplace, Citadel Mall, Crossroads Mall and Northwest Arkansas Mall in 2006 (See "Management's Overview and Summary—Acquisitions and Dispositions"). As result of these sales, the Company classified the results of operations for these properties to discontinued operations for all periods presented.

Net income attributable to noncontrolling interests decreased by $66.2 million from 2006 to 2007. The decrease is primarily attributed to $36.5 million from consolidated joint ventures and $29.6 million from the Operating Partnership. The decrease in net income attributable to noncontrolling interests in the Operating Partnership is due to a decrease in net income from $340.6 million in 2006 to $106.1 million in 2007, and a decrease in the weighted average interest of the Operating Partnership not owned by the Company from 15.8% in 2006 to 15.0% in 2007. The change in ownership interest is primarily due to the common stock offering by the Company in 2006, the conversion of partnership units and preferred shares into common shares in 2007 which is offset in part by the repurchase of 807,000 shares in 2007 (See Note 21—Stock Repurchase Program of the Company's Consolidated Financial Statements). The decrease in income attributable to noncontrolling interest in consolidated joint ventures is due to the gain on the sale of Scottsdale 101 in 2006.

Primarily as a result of the factors mentioned above, FFO—diluted increased 3.5% to $396.6 million in 2007 from $383.1 million in 2006. For disclosure of net income, the most directly comparable GAAP financial measure, for the periods and the reconciliation of FFO and FFO—diluted to net income available to common stockholders, see "Funds from Operations."

Cash flow from operations increased to $326.1 million in 2007 from $211.9 million in 2006. The increase was primarily due to changes in assets and liabilities in 2007 compared to 2006 and due to the results at the Centers as discussed above.

Cash used in investing activities increased to $865.3 million in 2007 from $126.7 million in 2006. The increase in cash used in investing activities was primarily due to a $580.3 million decrease in cash proceeds from the sales of assets and a $220.9 million increase in capital expenditures.

Cash flow provided by financing activities increased to $355.1 million in 2007 from $29.2 million in 2006. The increase in cash provided by financing activities was primarily attributed to the issuance of $950 million of Senior Notes in 2007, offset in part by a decrease of $746.8 million in proceeds from the common stock offering in 2006 and the purchase of the Capped Calls in connection with the issuance of the Senior Notes in 2007.

Although general market liquidity is constrained, the Company anticipates meeting its liquidity needs for its operating expenses and debt service and dividend requirements through cash generated from operations, working capital reserves and/or borrowings under its unsecured line of credit. Additional liquidity may also be provided if the Company decides to pay a portion of its dividends in stock during 2009.

The following tables summarize capital expenditures incurred at the Centers for the years ended December 31:

(Dollars in thousands)	2008		2007		2006

Consolidated Centers:
Acquisitions of property and equipment	$	87,516	$	387,899	$	580,542
Development, redevelopment and expansion of Centers		446,119		545,926		184,315
Renovations of Centers		8,541		31,065		51,406
Tenant allowances		14,651		27,959		26,976
Deferred leasing charges		22,263		21,611		21,610

	$	579,090	$	1,014,460	$	864,849

Joint Venture Centers (at Company's pro rata share):
Acquisitions of property and equipment	$	294,416	$	24,828	$	28,732
Development, redevelopment and expansion of Centers		60,811		33,492		48,785
Renovations of Centers		3,080		10,495		8,119
Tenant allowances		13,759		15,066		13,795
Deferred leasing charges		4,997		4,181		4,269

	$	377,063	$	88,062	$	103,700

Management expects levels to be incurred in future years for tenant allowances and deferred leasing charges to be comparable or less than 2008 and that capital for those expenditures will be available from working capital, cash flow from operations, borrowings on property specific debt or unsecured corporate borrowings. The Company expects to incur between $80 million to $120 million in 2009 for development, redevelopment, expansion and renovations. Capital for these major expenditures, developments and/or redevelopments has been, and is expected to continue to be, obtained from a combination of equity or debt financings, which include borrowings under the Company's line of credit and construction loans. In addition, the Company has also generated additional liquidity in the past through joint venture transactions and the sale of non-core assets, and may do so in the future. Furthermore, the Company has a shelf registration statement which registered an unspecified amount of common stock, preferred stock, debt securities, warrants, rights and units.

Current turmoil in the capital and credit markets, however, has significantly limited access to debt and equity financing for many companies. As demonstrated by recent activity, the Company was able to access capital throughout 2008, however there is no assurance the Company will be able to do so in future periods or on similar terms and conditions. Many factors impact the Company's ability to access capital, such as its overall debt level, interest rates, interest coverage ratios and prevailing market conditions. As a result of the current state of the capital and commercial lending markets, the Company may be required to finance more of its business activities with borrowings under its line of credit rather than with public and private unsecured debt and equity securities, fixed-rate mortgage financing and other traditional sources. In addition, in the event that the Company has significant tenant defaults as a result of the overall economy and general market conditions, the Company could have a decrease in cash flow from operations, which could create further borrowings under its line of credit. These events could result in an increase in the Company's proportion of variable-rate debt, which could cause it to be more subject to interest rate fluctuations in the future. See "Risk Factors—We depend on external financings for our growth and ongoing debt service requirements" included in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

The Company's total outstanding loan indebtedness at December 31, 2008 was $8.0 billion (including $2.3 billion of unsecured debt and $2.0 billion of its pro rata share of joint venture debt). The majority of the Company's debt consists of fixed-rate conventional mortgages payable collateralized by individual properties. Assuming the closing of the Company's current loan commitment, approximately $406 million of its indebtedness matures in 2009 (excluding loans with extensions). The Company expects that all 2009 debt maturities will be refinanced, extended and/or paid off from the Company's line of credit.

On March 16, 2007, the Company issued $950 million in Senior Notes that mature on March 15, 2012. The Senior Notes bear interest at 3.25%, payable semiannually, are senior to unsecured debt of the Company and are guaranteed by the Operating Partnership. Prior to December 14, 2011, upon the occurrence of certain specified events, the Senior Notes will be convertible at the option of holder into cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the election of the Company, at an initial conversion rate of 8.9702 shares per $1,000 principal amount. On and after December 15, 2011, the Senior Notes will be convertible at any time prior to the second business day preceding the maturity date at the option of the holder at the initial conversion rate. The initial conversion price of approximately $111.48 per share represented a 20% premium over the closing price of the Company's common stock on March 12, 2007. The initial conversion rate is subject to adjustment under certain circumstances. Holders of the Senior Notes do not have the right to require the Company to repurchase the Senior Notes prior to maturity except in connection with the occurrence of certain fundamental change transactions.

During the period of October 21, 2008 to December 29, 2008, the Company repurchased and retired $222.8 million of the Senior Notes and as a result recorded a gain of $84.1 on early extinguishment of debt for the year ended December 31, 2008. The purchase price of $122.7 million was funded by additional borrowings on the Company's line of credit. In February 2009, the Company repurchased and retired an additional $56.8 million of the Senior Notes for $30.7 million, resulting in a gain on early extinguishment of debt of approximately $22.5 million.

The Company has a $1.5 billion revolving line of credit that matures on April 25, 2010 with a one-year extension option. The interest rate fluctuates between LIBOR plus 0.75% to LIBOR plus 1.10% depending on the Company's overall leverage. In September 2006, the Company entered into an interest rate swap agreement that effectively fixed the interest rate on $400.0 million of the outstanding balance of the line of credit at 6.23% until April 25, 2011. On March 16, 2007, the Company repaid $541.5 million of borrowings outstanding from the proceeds of the Senior Notes (See Note 10—Bank and Other Notes Payable of the Company's Consolidated Financial Statements). As of December 31, 2008 and 2007, borrowings outstanding were $1.1 billion and $1.0 billion, respectively, at an average interest rate, net of the $400.0 million swapped portion, of 3.19% and 6.19%, respectively. The Company has access to the remaining balance of its $1.5 billion line of credit.

On May 13, 2003, the Company issued $250.0 million in unsecured notes maturing in May 2007 with a one-year extension option bearing interest at LIBOR plus 2.50%. On April 25, 2005, the Company modified these unsecured notes and reduced the interest rate to LIBOR plus 1.50%. On March 16, 2007, the Company repaid the notes from the proceeds of the Senior Notes (See Note 10—Bank and Other Notes Payable of the Company's Consolidated Financial Statements).

On April 25, 2005, the Company obtained a five year, $450.0 million term loan bearing interest at LIBOR plus 1.50%. In November 2005, the Company entered into an interest rate swap agreement

that effectively fixed the interest rate of the $450.0 million term loan at 6.30% from December 1, 2005 to April 15, 2010. At December 31, 2008 and 2007, the loan had a balance outstanding of $446.3 million and $450.0 million, respectively, with an effective interest rate of 6.30%.

At December 31, 2008, the Company was in compliance with all applicable loan covenants.

At December 31, 2008, the Company had cash and cash equivalents available of $66.5 million.

The Company has an ownership interest in a number of unconsolidated joint ventures as detailed in Note 4 to the Company's Consolidated Financial Statements included herein. The Company accounts for those investments that it does not have a controlling interest or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the Consolidated Balance Sheets of the Company as "Investments in Unconsolidated Joint Ventures." A pro rata share of the mortgage debt on these properties is shown in "Item 2. Properties—Mortgage Debt" of the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

In addition, certain joint ventures also have debt that could become recourse debt to the Company or its subsidiaries, in excess of the Company's pro rata share, should the joint ventures be unable to discharge the obligations of the related debt.

The following reflects the maximum amount of debt principal that could recourse to the Company at December 31, 2008 (in thousands):

Additionally, as of December 31, 2008, the Company is contingently liable for $19.7 million in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers. The Company does not believe that these letters of credit will result in a liability to the Company.

The following is a schedule of contractual obligations (as of December 31, 2008) for the consolidated Centers over the periods in which they are expected to be paid (in thousands):

The Company uses FFO in addition to net income to report its operating and financial results and considers FFO and FFO—diluted as supplemental measures for the real estate industry and a supplement to GAAP measures. The National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss) computed in accordance with GAAP, excluding gains (or losses) from extraordinary items and sales of depreciated operating properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. FFO and FFO on a fully diluted basis are useful to investors in comparing operating and financial results between periods. This is especially true since FFO excludes real estate depreciation and amortization as the Company believes real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. FFO on a fully diluted basis is one of the measures investors find most useful in measuring the dilutive impact of outstanding convertible securities. FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income as defined by GAAP and is not indicative of cash available to fund all cash flow needs. FFO, as presented, may not be comparable to

similarly titled measures reported by other real estate investment trusts. The reconciliation of FFO and FFO—diluted to net income available to common stockholders is provided below.

The following reconciles net income (loss) available to common stockholders to FFO and FFO—diluted (dollars in thousands):

			2008(3)			2007(3)			2006			2005			2004

Net income (loss) available to common stockholders			$	161,925		$	64,131		$	217,404		$	(93,614	)	$	82,493
Adjustments to reconcile net income (loss) to FFO—basic:
	Noncontrolling interests in the Operating Partnership			27,230			11,238			40,827			(22,001	)		19,870
	Gain on sale of consolidated assets			(68,714	)		(9,771	)		(241,732	)		(1,530	)		(8,041	)
	Adjustment for redemption value of redeemable noncontrolling interests			—			2,046			17,062			183,620			—
	Add: gain on undepreciated assets—consolidated assets			798			8,047			8,827			1,068			939
	Add: noncontrolling interests share of gain on sale of consolidated joint ventures			185			760			36,831			239			—
	Less: write-down of consolidated assets			(27,445	)		—			—			—			—
	Gain on sale of assets from unconsolidated entities (pro rata)			(3,432	)		(400	)		(725	)		(1,954	)		(3,353	)
	Add: gain on sale of undepreciated assets—from unconsolidated entities (pro rata)			3,039			2,793			725			2,092			3,464
		Add noncontrolling interests on sale of undepreciated consolidated entities		487			—			—			—			—
		Less write down of unconsolidated entities (pro rata)		(94	)		—			—			—			—
	Depreciation and amortization on consolidated Centers			279,339			231,860			232,219			205,971			146,383
	Less: depreciation and amortization allocable to noncontrolling interests on consolidated joint ventures			(3,395	)		(4,769	)		(5,422	)		(5,873	)		(1,555	)
	Depreciation and amortization on joint ventures (pro rata)			96,441			88,807			82,745			73,247			61,060
	Less: depreciation on personal property and amortization of loan costs and interest rate caps			(9,952	)		(8,244	)		(15,722	)		(14,724	)		(11,228	)

FFO—basic				456,412			386,498			373,039			326,541			290,032
Additional adjustments to arrive at FFO—diluted:
	Impact of convertible preferred stock			4,124			10,058			10,083			9,649			9,140
	Impact of non-participating convertible preferred units			979			—			—			641			—

FFO—diluted			$	461,515		$	396,556		$	383,122		$	336,831		$	299,172

Weighted average number of FFO shares outstanding for:
FFO—basic(1)				86,794			84,467			84,138			73,250			72,715
Adjustments for the impact of dilutive securities in computing FFO-diluted:
	Convertible preferred stock			1,447			3,512			3,627			3,627			3,627
	Non-participating convertible preferred units			205			—			—			197			—
	Stock options			—			293			293			323			385

FFO—diluted(2)				88,446			88,272			88,058			77,397			76,727

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 ratio of fixed rate, long-term debt to total debt such that floating rate exposure is kept at an acceptable level, (2) reducing interest rate exposure on certain long-term floating rate debt through the use of interest rate caps and/or swaps 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, 2008 concerning the Company's long term debt obligations, including principal cash flows by scheduled maturity, weighted average interest rates and estimated fair value ("FV") (dollars in thousands):

		For the years ending December 31,

		2009			2010			2011			2012			2013			Thereafter			Total			FV
CONSOLIDATED CENTERS:
Long term debt:
	Fixed rate(1)	$	360,628		$	1,016,646		$	718,015		$	950,971		$	430,419		$	839,278		$	4,315,957		$	3,868,229
	Average interest rate		6.30	%		6.51	%		5.59	%		5.48	%		6.13	%		6.02	%		6.00	%
	Floating rate		242,210			749,500			632,751			—			—			—			1,624,461			1,579,912
	Average interest rate		2.71	%		3.09	%		3.85	%											3.32	%

Total debt—Consolidated Centers		$	602,838		$	1,766,146		$	1,350,766		$	950,971		$	430,419		$	839,278		$	5,940,418		$	5,448,141

JOINT VENTURE CENTERS:
Long term debt (at Company's pro rata share):
	Fixed rate	$	294,161		$	124,839		$	36,326		$	172,443		$	315,717		$	892,724		$	1,836,210		$	1,711,229
	Average interest rate		5.38	%		6.78	%		6.11	%		6.97	%		5.64	%		5.66	%		5.83	%
	Floating rate		53,623			41,369			86,503			—			—			—			181,495			177,043
	Average interest rate		1.63	%		3.16	%		2.42	%											2.36	%

Total debt—Joint Venture Centers		$	347,784		$	166,208		$	122,829		$	172,443		$	315,717		$	892,724		$	2,017,705		$	1,888,272

The consolidated Centers' total fixed rate debt at December 31, 2008 and 2007 was $4.3 billion and $4.7 billion, respectively. The average interest rate on fixed rate debt at December 31, 2008 and 2007 was 6.00% and 5.57%, respectively. The consolidated Centers' total floating rate debt at December 31, 2008 and 2007 was $1.6 billion and $1.0 billion, respectively. The average interest rate on floating rate debt at December 31, 2008 and 2007 was 3.32% and 6.15%, respectively.

The Company's pro rata share of the Joint Venture Centers' fixed rate debt at December 31, 2008 and 2007 was $1.8 billion and $1.6 billion, respectively. The average interest rate on fixed rate debt at December 31, 2008 and 2007 was 5.83% and 5.89%, respectively. The Company's pro rata share of the Joint Venture Centers' floating rate debt at December 31, 2008 and 2007 was $181.5 million and $195.0 million, respectively. The average interest rate on the floating rate debt at December 31, 2008 and 2007 was 2.36% and 6.09%, respectively.

The Company uses derivative financial instruments in the normal course of business to manage or hedge interest rate risk and records all derivatives on the balance sheet at fair value in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (See Note 5—Derivative Instruments and Hedging Activities of the Company's Consolidated Financial Statements).

The following are outstanding derivatives at December 31, 2008 (amounts in thousands):

Property/Entity	Notional Amount								Fair Value(1)

Camelback Colonnade	$	41,500	Cap	8.54	%	11/15/2009	75	%	$	—
Desert Sky Mall		51,500	Cap	7.65	%	3/15/2010	50	%		—
La Cumbre Plaza		30,000	Cap	7.12	%	8/9/2009	100	%		—
Metrocenter Mall		112,000	Cap	7.25	%	2/15/2010	15	%		—
Metrocenter Mall		25,880	Cap	7.25	%	2/15/2010	15	%		—
Metrocenter Mall		133,596	Swap	4.57	%	2/15/2009	15	%		(103	)
Panorama Mall		50,000	Cap	6.65	%	3/1/2010	100	%		—
The Oaks		150,000	Cap	6.25	%	7/1/2010	100	%		1
The Operating Partnership		450,000	Swap	4.80	%	4/15/2010	100	%		(22,108	)
The Operating Partnership		400,000	Swap	5.08	%	4/25/2011	100	%		(34,224	)
Westside Pavilion		175,000	Cap	5.50	%	6/1/2010	100	%		1

Interest rate cap agreements ("Cap") offer protection against floating rates on the notional amount from exceeding the rates noted in the above schedule, and interest rate swap agreements ("Swap") effectively replace a floating rate on the notional amount with a fixed rate as noted above.

In addition, the Company has assessed the market risk for its floating rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash flows by approximately $18.1 million per year based on $1.8 billion outstanding of floating rate debt at December 31, 2008.

The fair value of the Company's long-term debt is estimated based on a present value model utilizing interest rates that reflect the risks associated with long-term debt of similar risk and duration. In addition, the method of computing fair value for mortgage notes payable included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt (See Note 9—Mortgage Notes Payable of the Company's Consolidated Financial Statements).

Refer to the Index to Financial Statements and Financial Statement Schedules for the required information appearing in Item 15.

			Page

(a) and (c)	1.	Financial Statements of the Company
		Report of Independent Registered Public Accounting Firm	27
		Consolidated balance sheets of the Company as of December 31, 2008 and 2007	28
		Consolidated statements of operations of the Company for the years ended December 31, 2008, 2007 and 2006	29
		Consolidated statements of equity of the Company for the years ended December 31, 2008, 2007 and 2006	30
		Consolidated statements of cash flows of the Company for the years ended December 31, 2008, 2007 and 2006	33
		Notes to consolidated financial statements	35
	2.	Financial Statements of Pacific Premier Retail Trust
		Report of Independent Registered Public Accounting Firm	81
		Consolidated balance sheets of Pacific Premier Retail Trust as of December 31, 2008 and 2007	82
		Consolidated statements of operations of Pacific Premier Retail Trust for the years ended December 31, 2008, 2007 and 2006	83
		Consolidated statements of stockholders' equity of Pacific Premier Retail Trust for the years ended December 31, 2008, 2007 and 2006	84
		Consolidated statements of cash flows of Pacific Premier Retail Trust for the years ended December 31, 2008, 2007 and 2006	85
		Notes to consolidated financial statements	86
	3.	Financial Statement Schedules
		Schedule III—Real estate and accumulated depreciation of the Company	95
		Schedule III—Real estate and accumulated depreciation of Pacific Premier Retail Trust	98

To the Board of Directors and Stockholders of
The Macerich Company
Santa Monica, California

We have audited the accompanying consolidated balance sheets of The Macerich Company and subsidiaries (the "Company") as of December 31, 2008 and 2007, and the related consolidated statements of operations, common stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedules listed in the Index at Item 15(a) (3). These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits. We did not audit the consolidated financial statements or the consolidated financial statement schedules of SDG Macerich Properties, L.P. (the "Partnership"), the Company's investment in which is reflected in the accompanying consolidated financial statements using the equity method of accounting. The Company's equity of $29,284,000 and $38,947,000 in the Partnership's net assets at December 31, 2008 and 2007, respectively, and $8,200,000, $7,324,000 and $11,197,000 in the Partnership's net income for the three years ended December 31, 2008 are included in the accompanying consolidated financial statements. These 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.

In our opinion, based on our audits and the report of the other auditor, such consolidated financial statements present fairly, in all material respects, the financial position of The Macerich Company and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, based on our audits and (as to the amounts included for the Partnership) the report of the other auditors, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2009 expressed an unqualified opinion on the Company's internal control over financial reporting based on our audit.

February 27, 2009 (May 27, 2009 as to changes in accounting policies described in Notes 2 and 25)

THE MACERICH COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value and share amounts)

					December 31,

					2008			2007
ASSETS:
Property, net					$	6,371,319		$	6,187,473
Cash and cash equivalents						66,529			85,273
Restricted cash						61,707			68,384
Marketable securities						27,943			29,043
Tenant and other receivables, net						118,374			137,498
Deferred charges and other assets, net						339,662			386,802
Loans to unconsolidated joint ventures						932			604
Due from affiliates						9,124			5,729
Investments in unconsolidated joint ventures						1,094,845			785,643
Assets held for sale						—			250,648

				Total assets	$	8,090,435		$	7,937,097

LIABILITIES, NONCONTROLLING INTERESTS, PREFERRED STOCK AND EQUITY:
Mortgage notes payable:
		Related parties			$	306,859		$	225,848
		Others				3,373,116			3,102,422

				Total		3,679,975			3,328,270
Bank and other notes payable						2,260,443			2,374,910
Accounts payable and accrued expenses						114,502			97,086
Other accrued liabilities						289,146			289,660
Investments in unconsolidated joint ventures						80,915			—
Preferred dividends payable						243			6,356

				Total liabilities		6,425,224			6,096,282

Redeemable noncontrolling interests						23,327			322,619

Commitments and contingencies
Series A cumulative convertible redeemable preferred stock, $.01 par value, 3,627,131 shares authorized, 0 and 3,067,131 shares issued and outstanding at December 31, 2008 and 2007, respectively						—			83,495

Equity:
	Stockholders' equity:
			Common stock, $.01 par value, 145,000,000 shares authorized, 76,883,634 and 72,311,763 shares issued and outstanding at December 31, 2008 and 2007, respectively			769			723
			Additional paid-in capital			1,721,256			1,428,124
			Accumulated deficit			(274,834	)		(203,505	)
			Accumulated other comprehensive loss			(53,425	)		(24,508	)

				Total stockholders' equity		1,393,766			1,200,834
	Noncontrolling interests					248,118			233,867

				Total equity		1,641,884			1,434,701

				Total liabilities, noncontrolling interests, preferred stock and equity	$	8,090,435		$	7,937,097

The accompanying notes are an integral part of these consolidated financial statements.

THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except share and per share amounts)

			For The Years Ended December 31,

			2008			2007			2006
Revenues:
	Minimum rents		$	544,421		$	475,749		$	438,261
	Percentage rents			19,092			26,104			23,876
	Tenant recoveries			266,885			245,510			227,575
	Management Companies			40,716			39,752			31,456
	Other			30,376			27,199			28,451

		Total revenues		901,490			814,314			749,619

Expenses:
	Shopping center and operating expenses			287,077			256,730			233,669
	Management Companies' operating expenses			77,072			73,761			56,673
	REIT general and administrative expenses			16,520			16,600			13,532
	Depreciation and amortization			277,827			212,509			196,760

				658,496			559,600			500,634

	Interest expense:
		Related parties		14,970			13,390			10,858
		Other		280,190			248,108			249,847

				295,160			261,498			260,705
	(Gain) loss on early extinguishment of debt			(84,143	)		877			1,835

		Total expenses		869,513			821,975			763,174
Equity in income of unconsolidated joint ventures				93,831			81,458			86,053
Income tax (provision) benefit				(1,126	)		470			(33	)
(Loss) gain on sale or write-down of assets				(31,819	)		12,146			(84	)

Income from continuing operations				92,863			86,413			72,381

Discontinued operations:
	Gain (loss) on sale of assets			100,533			(2,376	)		241,816
	Income from discontinued operations			1,619			22,025			26,362

Total income from discontinued operations				102,152			19,649			268,178

Net income				195,015			106,062			340,559
Less net income attributable to noncontrolling interests				28,966			29,827			96,010

Net income attributable to the Company				166,049			76,235			244,549
Less preferred dividends				4,124			10,058			10,083
Less adjustment to redemption value of redeemable noncontrolling interests				—			2,046			17,062

Net income available to common stockholders			$	161,925		$	64,131		$	217,404

Earnings per common share—basic:
	Income from continuing operations		$	0.99		$	0.86		$	0.70
	Discontinued operations			1.18			0.02			2.35

	Net income available to common stockholders		$	2.17		$	0.88		$	3.05

Earnings per common share—diluted:
	Income from continuing operations		$	0.99		$	0.86		$	0.78
	Discontinued operations			1.18			0.02			2.25

	Net income available to common stockholders		$	2.17		$	0.88		$	3.03

Weighted average number of common
	shares outstanding:
	Basic			74,319,000			71,768,000			70,826,000

	Diluted			86,794,000			84,760,000			88,058,000

The accompanying notes are an integral part of these consolidated financial statements.

THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF EQUITY

(Dollars in thousands, except per share data)

		Stockholders' Equity

		Common Stock
		Common Stock										Accumulated Other Comprehensive (Loss) income
		Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) income		Unamortized Restricted Stock			Total Stockholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance January 1, 2006			59,941,552	$	599	$	808,713		$	(114,257	)	$	87	$	(15,464	)	$	679,678		$	167,890		$	847,568		$	306,700

Comprehensive income:
	Net income		—		—		—			244,549			—		—			244,549			79,356			323,905			16,654
	Reclassification of deferred losses		—		—		—			—			1,510		—			1,510			—			1,510			—
	Interest rate swap/cap agreements		—		—		—			—			743		—			743			—			743			—

	Total comprehensive income		—		—		—			244,549			2,253		—			246,802			79,356			326,158			16,654
Amortization of share and unit-based plans			415,787		4		15,406			—			—		—			15,410			—			15,410			—
Exercise of stock options			14,101		—		260			—			—		—			260			—			260			—
Employee stock purchases			3,365		—		203			—			—		—			203			—			203			—
Common stock offering, gross			10,952,381		110		761,081			—			—		—			761,191			—			761,191			—
Underwriting and offering costs			—		—		(14,706	)		—			—		—			(14,706	)		—			(14,706	)		—
Adjustment for redemption value of redeemable noncontrolling interests			—		—		(17,062	)		—			—		—			(17,062	)		—			(17,062	)		17,062
Distributions paid ($2.75) per share			—		—		—			(197,266	)		—		—			(197,266	)		—			(197,266	)		—
Distributions to noncontrolling interests			—		—		—			—			—		—			—			(72,806	)		(72,806	)		(17,033	)
Preferred dividends			—		—		(10,083	)		—			—		—			(10,083	)		—			(10,083	)		—
Contributions from noncontrolling interests			—		—		—			—			—		—			—			9,816			9,816			—
Conversion of noncontrolling interests to common shares			240,722		3		9,916			—			—		—			9,919			(9,919	)		—			—
Redemption of noncontrolling interests			—		—		—			—			—		—			—			(1,755	)		(1,755	)		(673	)
Change in accounting principle due to adoption of SFAS No. 123(R)			—		—		(15,464	)		—			—		15,464			—			—			—			—
Reclassification upon adoption of SFAS No. 123(R)			—		—		6,000			—			—		—			6,000			—			6,000			—
Other			—		—		650			—			—		—			650			—			650			—
Adjustment of noncontrolling interests in Operating Partnership			—		—		(101,864	)		—			—		—			(101,864	)		101,864			—			—

Balance December 31, 2006			71,567,908		716		1,443,050			(66,974	)		2,340		—			1,379,132			274,446			1,653,578			322,710

The accompanying notes are an integral part of these consolidated financial statements.

		Stockholders' Equity

		Common Stock
		Common Stock												Accumulated Other Comprehensive (Loss) income
		Shares			Par Value			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) income			Unamortized Restricted Stock		Total Stockholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance December 31, 2006			71,567,908			716			1,443,050			(66,974	)		2,340			—		1,379,132			274,446			1,653,578			322,710

Comprehensive income:
	Net income		—			—			—			76,235			—			—		76,235			12,990			89,225			16,837
	Reclassification of deferred losses		—			—			—			—			967			—		967			—			967			—
	Interest rate swap/cap agreements		—			—			—			—			(27,815	)		—		(27,815	)		—			(27,815	)		—

	Total comprehensive income (loss)		—			—			—			76,235			(26,848	)		—		49,387			12,990			62,377			16,837
Amortization of share and unit-based plans			215,132			2			21,407			—			—			—		21,409			—			21,409			—
Exercise of stock options			23,500			—			672			—			—			—		672			—			672			—
Employee stock purchases			13,184			—			881			—			—			—		881			—			881			—
Adjustment for redemption value of redeemable noncontrolling interests			—			—			(2,046	)		—			—			—		(2,046	)		—			(2,046	)		2,046
Distributions paid ($2.93) per share			—			—			—			(211,192	)		—			—		(211,192	)		—			(211,192	)		—
Distributions to noncontrolling interests			—			—			—			—			—			—		—			(42,216	)		(42,216	)		(18,974	)
Preferred dividends			—			—			(10,058	)		—			—			—		(10,058	)		—			(10,058	)		—
Contributions from noncontrolling interests			—			—			—			—			—			—		—			15,858			15,858			—
Conversion of noncontrolling interests to common shares			739,039			7			24,616			—			—			—		24,623			(24,623	)		—			—
Redemption of noncontrolling interests			—			—			(3,859	)		—			—			—		(3,859	)		(1,244	)		(5,103	)		—
Repurchase of common shares			(807,000	)		(8	)		(74,962	)		—			—			—		(74,970	)		—			(74,970	)		—
Conversion of preferred shares to common shares			560,000			6			15,433			—			—			—		15,439			—			15,439			—
Allocation of equity component of Senior Notes			—			—			71,149			—			—			—		71,149			—			71,149			—
Purchase of capped calls on Senior Notes			—			—			(59,850	)		—			—			—		(59,850	)		—			(59,850	)		—
Change in accounting principle due to adoption of FIN 48			—			—			—			(1,574	)		—			—		(1,574	)		—			(1,574	)		—
Other			—			—			347			—			—			—		347			—			347			—
Adjustment of noncontrolling interests in Operating Partnership			—			—			1,344			—			—			—		1,344			(1,344	)		—			—

Balance December 31, 2007			72,311,763			723			1,428,124			(203,505	)		(24,508	)		—		1,200,834			233,867			1,434,701			322,619

The accompanying notes are an integral part of these consolidated financial statements.

		Stockholders' Equity

		Common Stock
		Common Stock										Accumulated Other Comprehensive (Loss) income					Total Common Stockholders' Equity
		Shares		Par Value		Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) income			Unamortized Restricted Stock		Total Common Stockholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
Balance December 31, 2007			72,311,763		723		1,428,124			(203,505	)		(24,508	)		—		1,200,834			233,867			1,434,701			322,619

Comprehensive income:
	Net income		—		—		—			166,049			—			—		166,049			28,383			194,432			583
	Reclassification of deferred losses		—		—		—			—			285			—		285			—			285			—
	Interest rate swap/cap agreements		—		—		—			—			(29,202	)		—		(29,202	)		—			(29,202	)		—

	Total comprehensive income (loss)		—		—		—			166,049			(28,917	)		—		137,132			28,383			165,515			583
Amortization of share and unit-based plans			193,744		2		21,872			—			—			—		21,874			—			21,874			—
Exercise of stock options			362,888		4		8,568			—			—			—		8,572			—			8,572			—
Employee stock purchases			27,829		—		712			—			—			—		712			—			712			—
Distributions paid ($3.20) per share			—		—		—			(237,378	)		—			—		(237,378	)		—			(237,378	)		—
Distributions to noncontrolling interests			—		—		—			—			—			—		—			(48,595	)		(48,595	)		(583	)
Preferred dividends			—		—		(4,124	)		—			—			—		(4,124	)		—			(4,124	)		—
Contributions from noncontrolling interests			—		—		—			—			—			—		—			14,083			14,083			—
Conversion of noncontrolling interests to common shares			920,279		9		30,391			—			—			—		30,400			(30,400	)		—			—
Conversion of preferred shares to common shares			3,067,131		31		83,464			—			—			—		83,495			—			83,495			—
Redemption of redeemable noncontrolling interests			—		—		(864	)		—			—			—		(864	)		(457	)		(1,321	)		(96,564	)
Reversal of adjustments to redemption value of redeemable noncontrolling interests			—		—		202,728			—			—			—		202,728			—			202,728			(202,728	)
Other			—		—		1,622			—			—			—		1,622			—			1,622			—
Adjustment of noncontrolling interests in Operating Partnership			—		—		(51,237	)		—			—			—		(51,237	)		51,237			—			—

Balance December 31, 2008			76,883,634	$	769	$	1,721,256		$	(274,834	)	$	(53,425	)	$	—	$	1,393,766		$	248,118		$	1,641,884		$	23,327

The accompanying notes are an integral part of these consolidated financial statements.

THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

				For The Years Ended December 31,

				2008			2007			2006
Cash flows from operating activities:
	Net income			$	195,015		$	106,062		$	340,559
	Adjustments to reconcile net income to net cash provided by operating activities:
		(Gain) loss on early extinguishment of debt			(84,143	)		877			1,835
		Loss (gain) on sale or write-down of assets			31,819			(12,146	)		84
		(Gain) loss on sale of assets of discontinued operations			(100,533	)		2,376			(241,816	)
		Depreciation and amortization			287,917			238,645			232,220
		Amortization of net premium on mortgage and bank and other notes payable			4,931			1,489			(11,833	)
		Amortization of share and unit-based plans			11,650			12,344			9,607
		Equity in income of unconsolidated joint ventures			(93,831	)		(81,458	)		(86,053	)
		Distributions of income from unconsolidated joint ventures			24,096			4,118			4,106
		Changes in assets and liabilities, net of acquisitions and dispositions:
			Tenant and other receivables, net		28,786			(20,001	)		(22,319	)
			Other assets		(22,603	)		(33,375	)		8,303
			Accounts payable and accrued expenses		15,766			23,959			(14,000	)
			Due from affiliates		(3,395	)		(1,477	)		(24	)
			Other accrued liabilities		(43,528	)		84,657			(8,819	)

	Net cash provided by operating activities				251,947			326,070			211,850

Cash flows from investing activities:
	Acquisitions of property, development, redevelopment and property improvements				(535,263	)		(1,043,800	)		(822,903	)
	Redemption of Rochester Properties				(18,794	)		—			—
	Payment of acquisition deposits				—			(51,943	)		—
	Issuance of note receivable				—			—			(10,000	)
	Purchase of marketable securities				—			—			(30,307	)
	Maturities of marketable securities				1,436			1,322			444
	Deferred leasing costs				(38,095	)		(34,753	)		(29,688	)
	Distributions from unconsolidated joint ventures				141,773			274,303			187,269
	Contributions to unconsolidated joint ventures				(161,070	)		(38,769	)		(31,499	)
	Repayments of loans to unconsolidated joint ventures				(328	)		104			707
	Proceeds from sale of assets				47,163			30,261			610,578
	Restricted cash				4,222			(2,008	)		(1,337	)

	Net cash used in investing activities				(558,956	)		(865,283	)		(126,736	)

The accompanying notes are an integral part of these consolidated financial statements.

		For The Years Ended December 31,

		2008			2007			2006
Cash flows from financing activities:
	Proceeds from mortgages, bank and other notes payable		1,732,940			2,296,530			1,912,179
	Payments on mortgages, bank and other notes payable		(1,051,292	)		(1,535,017	)		(2,329,827	)
	Repurchase of convertible senior notes		(105,898	)		—			—
	Deferred financing costs		(11,898	)		(2,482	)		(6,886	)
	Purchase of Capped Calls		—			(59,850	)		—
	Repurchase of common stock		—			(74,970	)		—
	Proceeds from share and unit-based plans		9,284			1,553			463
	Net proceeds from stock offering		—			—			746,805
	Dividends and distributions		(274,634	)		(245,991	)		(269,419	)
	Dividends to preferred stockholders / preferred unit holders		(10,237	)		(24,722	)		(24,107	)

	Net cash provided by financing activities		288,265			355,051			29,208

	Net (decrease) increase in cash		(18,744	)		(184,162	)		114,322
Cash and cash equivalents, beginning of year			85,273			269,435			155,113

Cash and cash equivalents, end of year		$	66,529		$	85,273		$	269,435

Supplemental cash flow information:
	Cash payments for interest, net of amounts capitalized	$	263,199		$	280,820		$	282,987

Non-cash transactions:
	Acquisition of noncontrolling interests in Non-Rochester Properties in exchange for interest in Rochester Properties	$	205,520		$	—		$	—

	Deposits contributed to unconsolidated joint ventures and the purchase of properties	$	50,103		$	—		$	—

	Accrued development costs included in accounts payable and accrued expenses and other accrued liabilities	$	64,473		$	54,308		$	25,754

	Acquisition of property by assumption of mortgage notes payable	$	15,745		$	4,300		$	—

	Accrued preferred dividend payable	$	243		$	6,356		$	6,199

	Conversion of Series A cumulative convertible preferred stock to common stock	$	83,495		$	—		$	—

	Accrued distribution from unconsolidated joint ventures	$	8,684		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

THE MACERICH COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in thousands, except per share amounts)

The Macerich Company (the "Company") is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional and community shopping centers (the "Centers") located throughout the United States.

The Company commenced operations effective with the completion of its initial public offering on March 16, 1994. As of December 31, 2008, the Company was the sole general partner of and held an 87% 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, at the election of the holder, on a one-for-one basis for the Company's 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 13% limited partnership interest of the Operating Partnership not owned by the Company is reflected in these consolidated financial statements as noncontrolling interests in permanent equity.

The property management, leasing and redevelopment of the Company's portfolio is provided by the Company's management companies, Macerich Property Management Company, LLC ("MPMC, LLC"), a single member Delaware limited liability company, Macerich Management Company ("MMC"), a California corporation, Westcor Partners, L.L.C., a single member Arizona limited liability company, Macerich Westcor Management LLC, a single member Delaware limited liability company, Westcor Partners of Colorado, LLC, a Colorado limited liability company, MACW Mall Management, Inc., a New York corporation, and MACW Property Management, LLC, a single member New York limited liability company. These last two management companies are collectively referred to herein as the "Wilmorite Management Companies." The three Westcor management companies are collectively referred to herein as the "Westcor Management Companies." All seven of the management companies are collectively referred to herein as the "Management Companies."

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America. The accompanying consolidated financial statements include the accounts of the Company and the Operating Partnership. Investments in entities that are controlled by the Company or meet the definition of a variable interest entity in which an enterprise absorbs the majority of the entity's expected losses, receives a majority of the entity's expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity are consolidated; otherwise they are accounted for under the equity method and are reflected as "Investments in Unconsolidated Joint Ventures". All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The Company allocates net income to the Operating Partnership based on the weighted average ownership interest during the period. The net income of the Operating Partnership that is attributable to outside third parties is reflected in the consolidated statements of operations as noncontrolling interests. The Company adjusts the noncontrolling interests in the Operating Partnership at the end of each period to reflect its ownership interest in the Company. The Company had an 87% and 85% ownership interest in the Operating Partnership as of December 31, 2008 and 2007, respectively. The

remaining 13% and 15% limited partnership interest as of December 31, 2008 and 2007, respectively, was owned by certain of the Company's executive officers and directors, certain of their affiliates, and other third party investors in the form of OP Units. The OP Units may be redeemed on a one-for-one basis for shares of stock or cash, at the Company's option. The redemption value for each OP Unit as of any balance sheet date is the amount equal to the average of the closing price per share of the Company's common stock, par value $.01 per share, as reported on the New York Stock Exchange for the ten trading days ending on the respective balance sheet date. Accordingly, as of December 31, 2008 and 2007, the aggregate redemption value of the then-outstanding OP Units not owned by the Company was $227,091 and $904,150, respectively.

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents, for which cost approximates fair value. Restricted cash includes impounds of property taxes and other capital reserves required under the loan agreements.

Included in tenant and other receivables, net is an allowance for doubtful accounts of $3,754 and $2,417 at December 31, 2008 and 2007, respectively. Also included in tenant and other receivables, net are accrued percentage rents of $6,546 and $10,067 at December 31, 2008 and 2007, respectively.

Included in tenant and other receivables, net are the following notes receivable:

On March 31, 2006, the Company received a note receivable that is secured by a deed of trust, bears interest at 5.5% and matures on March 31, 2031. At December 31, 2008 and 2007, the note had a balance of $9,450 and $9,661, respectively.

On January 1, 2008, as part of the Rochester Redemption (See Note 13—Discontinued Operations), the Company received an unsecured note receivable that bears interest at 9.0% and matures on June 30, 2011. The balance on the note at December 31, 2008 was $11,763.

Minimum rental revenues are recognized on a straight-line basis over the term 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-line rent adjustment." Rental income was increased by $5,702, $6,894 and $4,653 due to the straight-line rent adjustment during the years ended December 31, 2008, 2007 and 2006, respectively. Percentage rents are recognized and accrued when tenants' specified sales targets have been met.

Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred. Other tenants pay a fixed rate and these tenant recoveries are recognized into revenue on a straight-line basis over the term of the related leases.

The Management Companies provide property management, leasing, corporate, development, redevelopment and acquisition services to affiliated and non-affiliated shopping centers. In consideration for these services, the Management Companies receives monthly management fees generally ranging from 1.5% to 6% of the gross monthly rental revenue of the properties managed.

Costs related to the development, redevelopment, construction and improvement of properties are capitalized. Interest incurred on development, redevelopment and construction projects is capitalized until construction is substantially complete.

Maintenance and repairs expenses are charged to operations as incurred. Costs for major replacements and betterments, which includes HVAC equipment, roofs, parking lots, etc., are capitalized and depreciated over their estimated useful lives. 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:

The Company accounts for all acquisitions in accordance with Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations." The Company first determines the value of the land and buildings utilizing an "as if vacant" methodology. The Company then assigns a fair value to any debt assumed at acquisition. The balance of the purchase price is allocated to tenant improvements and identifiable intangible assets or liabilities. Tenant improvements represent the tangible assets associated with the existing leases valued on a fair market value basis at the acquisition date prorated over the remaining lease terms. The tenant improvements are classified as an asset under real estate investments and are depreciated over the remaining lease terms. Identifiable intangible assets and liabilities relate to the value of in-place operating leases which come in three forms: (i) leasing commissions and legal costs, which represent the value associated with "cost avoidance" of acquiring in-place leases, such as lease commissions paid under terms generally experienced in the Company's markets; (ii) value of in-place leases, which represents the estimated loss of revenue and of costs incurred for the period required to lease the "assumed vacant" property to the occupancy level when purchased; and (iii) above or below market value of in-place leases, which represents the difference between the contractual rents and market rents at the time of the acquisition, discounted for tenant credit risks. Leasing commissions and legal costs are recorded in deferred charges and other assets and are amortized over the remaining lease terms. The value of in-place leases are recorded in deferred charges and other assets and amortized over the remaining lease terms plus an estimate of renewal of the acquired leases. Above or below market leases are classified in deferred charges and other assets or in other accrued liabilities, depending on whether the contractual terms are above or below market, and the asset or liability is amortized to rental revenue over the remaining terms of the leases.

When the Company acquires real estate properties, the Company allocates the purchase price to the components of these acquisitions using relative fair values computed using its estimates and assumptions. These estimates and assumptions impact the amount of costs allocated between various components as well as the amount of costs assigned to individual properties in multiple property acquisitions. These allocations also impact depreciation expense and gains or losses recorded on future sales of properties.

The Company accounts for its investments in marketable securities as held-to-maturity debt securities under the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," as the Company has the intent and the ability to hold these securities until maturity. Accordingly, investments in marketable securities are carried at their amortized cost. The discount on marketable securities is amortized into interest income on a straight-line basis over the term of the notes, which approximates the effective interest method.

Costs relating to obtaining tenant leases are deferred and amortized over the initial term of the agreement using the straight-line method. Costs relating to financing of shopping center properties are deferred and amortized over the life of the related loan using the straight-line method, which approximates the effective interest method. In-place lease values are amortized over the remaining lease term plus an estimate of renewal. Leasing commissions and legal costs are amortized on a straight-line basis over the individual lease years.

The Company assesses whether there has been impairment in the value of its long-lived assets by considering 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 determination of recoverability is made based upon the estimated undiscounted future net cash flows, excluding interest expense. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flows analysis, with the carrying value of the related assets. Long-lived assets classified as held for sale are measured at the lower of the carrying amount or fair value less cost to sell. In addition, the Company evaluates impairment for its joint venture investments using a discounted cash flow analysis in accordance with Accounting Principles Board Opinion No. 18, "The Equity Method of Accounting for Investments in Common Stock."

Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in

Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

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 $250. At various times during the year, the Company had deposits in excess of the FDIC insurance limit.

No Center or tenant generated more than 10% of total revenues during 2008, 2007 or 2006.

Gap, Inc. represented 2.4%, Mervyn's represented 3.3% and Limited Brands, Inc. represented 3.5% of the minimum rents for the years ended December 31, 2008, 2007 and 2006, respectively. No other retailer represented more than 2.3%, 2.7% and 2.9% of the minimum rents during the years ended December 31, 2008, 2007 and 2006, respectively.

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.

Financial Accounting Standards Board ("FASB") issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments—An Amendment of FASB Statements No. 133 and 140." This statement amended SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. 155 permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. This statement also established a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation. The adoption of SFAS No. 155 on January 1, 2007 did not have a material impact on the Company's consolidated results of operations or financial condition.

In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109" ("FIN 48"). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109, "Accounting for Income Taxes." This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition of previously recognized income tax benefits, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company adopted FIN 48 on January 1, 2007. See Note 19—Income Taxes for the impact of the adoption of FIN 48 on the Company's results of operations and financial condition.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In February 2008, the FASB issued Staff Position ("FSP") SFAS 157-1, "Application of SFAS No. 157 to SFAS No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13" FSP SFAS No. 157-1 and FSP SFAS 157-2, "Effective Date of SFAS No. 157". FSP No. 157-1 amends SFAS No. 157 to exclude from the scope of SFAS 157 certain leasing transactions accounted for under Statement of Financial Accounting Standards No. 13, "Accounting for Leases." The adoption of FSP SFAS 157-1, effective January 1, 2008, did not have a material impact on the Company's consolidated financial statements. FSP SFAS 157-2 amends SFAS No. 157 to defer the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities except those that are recognized or disclosed at fair value in the financial statements on a recurring basis to fiscal years beginning after November 15, 2008. The Company adopted FSP SFAS 157-2 effective January 1, 2008. In addition, in October 2008, the FASB issued FASB Staff Position SFAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active". FSP SFAS 157-3 clarifies the application of SFAS 157 to financial instruments in an inactive market. FSP SFAS 157-3 did not have a material impact on the Company's consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB No. 115." SFAS No. 159 permits, at the option of the reporting entity, measurement of certain assets and liabilities at fair value. The Company adopted SFAS No. 159 on January 1, 2008. The adoption of SFAS No. 159 did not have a material effect on the Company's results of operations or financial condition as the Company did not elect to apply the fair value option to eligible financial instruments on that date.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations." SFAS No. 141(R) requires an acquiring entity to recognize acquired assets and assumed liabilities in a transaction at fair value as of the acquisition date and changes the accounting treatment for certain items, including acquisition costs, which will be required to be expensed as incurred. The adoption of SFAS No. 141(R) on January 1, 2009 did not have a material impact on the Company's consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements—An Amendment of ARB No. 51." SFAS No. 160 requires that noncontrolling interests be presented as a component of consolidated equity and eliminates "minority interest accounting" such that the amount of net income attributable to the noncontrolling interests will be

presented as part of consolidated net income on the consolidated statements of operations. The Company adopted SFAS No. 160 on January 1, 2009.

In May 2008, the FASB issued FSP APB No. 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)" ("FSP APB No. 14-1"). This new standard requires the initial proceeds from convertible debt that may be settled in cash to be bifurcated between a liability component and an equity component. The objective of the guidance is to require the liability and equity components of convertible debt to be separately accounted for in a manner such that the interest expense recorded on the convertible debt would not equal the contractual rate of interest on the convertible debt, but instead would be recorded at a rate that would reflect the issuer's conventional non-convertible debt borrowing rate at the date of issuance. This is accomplished through the creation of a discount on the debt that would be accreted using the effective interest method as additional non-cash interest expense over the period the debt is expected to remain outstanding. The Company adopted FSP APB No. 14-1 on January 1, 2009.

In June 2008, the FASB issued FSP EITF No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." The adoption of FSP EITF No. 03-6-1 on January 1, 2009 did not have a material impact on the Company's consolidated financial statements.

In June 2008, the FASB ratified EITF No. 07-5, "Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock." Paragraph 11(a) of SFAS No. 133, Accounting for Derivatives and Hedging Activities, specifies that a contract that would otherwise meet the definition of a derivative but is both (a) indexed to the Company's own stock and (b) classified in stockholders' equity in the statement of financial position would not be considered a derivative financial instrument. EITF No. 07-5 provided a new two-step model to be applied in determining whether a financial instrument or an embedded feature is indexed to an issuer's own stock and thus able to qualify for the SFAS No. 133 paragraph 11(a) scope exception. The adoption of EITF No. 07-5 on January 1, 2009 did not have an impact on the Company's consolidated financial statements.

See Note 25—Cumulative Effect of Adoption of Accounting Principles for a summary of the impact of the retrospective adoptions of FSP APB No. 14-1, SFAS No. 160 and FSP EITF No. 03-6-1 on the Company's consolidated financial statements.

The Company computes basic earnings per common share by (i) dividing net income available to common stockholders less an allocation to participating securities pursuant to the two-class method by (ii) the weighted average number of common vested shares outstanding. The computation of diluted earnings per share includes the dilutive effect of share and unit-based compensation plans and convertible senior notes calculated using the treasury stock method and the dilutive effect of all other dilutive securities calculated using the "if converted" method. The OP Units and the common units of

MACWH, LP, a Delaware limited partnership and subsidiary of the Company ("MACWH, LP"), not held by the Company have been included in the diluted EPS calculation since they may be redeemed on a one-for-one basis for stock or cash, at the Company's option.

The following table reconciles the basic and diluted earnings per share calculation for the years ended December 31:

		2008			2007			2006

Numerator
Income from continuing operations		$	92,863		$	86,413		$	72,381
Income from discontinued operations			102,152			19,649			268,178
Income attributable to noncontrolling interests			(28,966	)		(29,827	)		(96,010	)

Net income attributable to the Company			166,049			76,235			244,549
Preferred dividends			(4,124	)		(10,058	)		(10,083	)
Adjustment to redemption value of redeemable noncontrolling interests			—			(2,046	)		(17,062	)
Allocation of earnings to participating securities			(906	)		(987	)		(1,306	)

Numerator for basic earnings per share—net income available common stockholders			161,019			63,144			216,098
Effect of assumed conversions:
	Partnership units		27,230			11,238			40,827
	Convertible preferred stock		—			—			10,083

Numerator for diluted earnings per share—net income available common stockholders		$	188,249		$	74,382		$	267,008

Denominator
Denominator for basic earnings per share—weighted average
	number of common vested shares outstanding		74,319			71,768			70,826
Effect of dilutive securities:(1)
	Partnership units		12,475			12,699			13,312
	Share and unit-based plans		—			293			293
	Convertible preferred stock(2)		—			—			3,627

Denominator for diluted earnings per share—weighted average number of common vested shares outstanding			86,794			84,760			88,058

Earnings per common share—basic:
	Income from continuing operations	$	0.99		$	0.86		$	0.70
	Discontinued operations		1.18			0.02			2.35

	Net income available to common stockholders	$	2.17		$	0.88		$	3.05

Earnings per common share—diluted:
	Income from continuing operations	$	0.99		$	0.86		$	0.78
	Discontinued operations		1.18			0.02			2.25

	Net income available to common stockholders	$	2.17		$	0.88		$	3.03

The noncontrolling interests of the Operating Partnership as reflected in the Company's consolidated statements of operations has been allocated for EPS calculations as follows for the years ended December 31:

The following are the Company's investments in various joint ventures or properties jointly owned with third parties. The Operating Partnership's interest in each joint venture as of December 31, 2008 is as follows:

Joint Venture

Biltmore Shopping Center Partners LLC	50.0	%
Camelback Colonnade SPE LLC	75.0	%
Chandler Festival SPE LLC	50.0	%
Chandler Gateway SPE LLC	50.0	%
Chandler Village Center, LLC	50.0	%
Coolidge Holding LLC	37.5	%
Corte Madera Village, LLC	50.1	%
Desert Sky Mall—Tenants in Common	50.0	%
East Mesa Land, L.L.C.	50.0	%
East Mesa Mall, L.L.C.—Superstition Springs Center	33.3	%
Jaren Associates #4	12.5	%
Kierland Tower Lofts, LLC	15.0	%
Macerich Northwestern Associates	50.0	%
Macerich SanTan Phase 2 SPE LLC—SanTan Village Power Center	34.9	%
MetroRising AMS Holding LLC	15.0	%
New River Associates—Arrowhead Towne Center	33.3	%
North Bridge Chicago LLC	50.0	%
NorthPark Land Partners, LP	50.0	%
NorthPark Partners, LP	50.0	%
One Scottsdale Investors LLC	50.0	%
Pacific Premier Retail Trust	51.0	%
PHXAZ/Kierland Commons, L.L.C.	24.5	%
Propcor Associates	25.0	%
Propcor II Associates, LLC—Boulevard Shops	50.0	%
Scottsdale Fashion Square Partnership	50.0	%
SDG Macerich Properties, L.P.	50.0	%
The Market at Estrella Falls LLC	35.1	%
Tysons Corner Holdings LLC	50.0	%
Tysons Corner LLC	50.0	%
Tysons Corner Property Holdings II LLC	50.0	%
Tysons Corner Property Holdings LLC	50.0	%
Tysons Corner Property LLC	50.0	%
WM Inland, L.L.C.	50.0	%
West Acres Development, LLP	19.0	%
Westcor/Gilbert, L.L.C.	50.0	%
Westcor/Goodyear, L.L.C.	50.0	%
Westcor/Queen Creek Commercial LLC	37.8	%
Westcor/Queen Creek LLC	37.7	%
Westcor/Queen Creek Medical LLC	37.7	%
Westcor/Queen Creek Residential LLC	37.6	%
Westcor/Surprise Auto Park LLC	33.3	%
Westpen Associates	50.0	%
WM Ridgmar, L.P.	50.0	%
Wilshire Building—Tenants in Common	30.0	%

The Company generally accounts for its investments in joint ventures using the equity method unless the Company has a controlling interest in the joint venture or is the primary beneficiary in a variable interest entity. Although the Company has a greater than 50% interest in Pacific Premier Retail Trust, Camelback Colonnade SPE LLC and Corte Madera Village, LLC, the Company shares management control with the partners in these joint ventures and therefore, accounts for these joint ventures using the equity method of accounting.

The Company has acquired the following investments in unconsolidated joint ventures during the years ended December 31, 2008, 2007 and 2006:

On September 5, 2007, the Company purchased the remaining 50% outside ownership interest in Hilton Village, a 96,985 square foot specialty center in Scottsdale, Arizona. The total purchase price of $13,500 was funded by cash, borrowings under the Company's line of credit and the assumption of a mortgage note payable. The Center was previously accounted for under the equity method as an investment in unconsolidated joint ventures.

On October 25, 2007, the Company purchased a 30% tenants-in-common interest in the Wilshire Building, a 40,000 square foot strip center in Santa Monica, California. The total purchase price of $27,000 was funded by cash, borrowings under the Company's line of credit and the assumption of an $6,650 mortgage note payable. The results of the Wilshire Building are included below for the period subsequent to its date of acquisition.

On January 10, 2008, the Company, in a 50/50 joint venture, acquired The Shops at North Bridge, a 680,933 square foot urban shopping center in Chicago, Illinois, for a total purchase price of $515,000. The Company's share of the purchase price was funded by the assumption of a pro rata share of the $205,000 fixed rate mortgage on the Center and by borrowings under the Company's line of credit. The results of The Shops at North Bridge are included below for the period subsequent to its date of acquisition.

On June 11, 2008, the Company became a 50% owner in a joint venture that acquired One Scottsdale, which plans to develop a luxury retail and mixed-use property in Scottsdale, Arizona. The Company's share of the purchase price was $52,500, which was funded by borrowings under the Company's line of credit. The results of One Scottsdale are included below for the period subsequent to its date of acquisition.

On December 19, 2008, the Company sold a fee and/or ground leasehold interest in three freestanding Mervyn's department stores to Pacific Premier Retail Trust, one of the Company's joint ventures, for $43,405, resulting in a gain on sale of assets of $1,511. The Company's pro rata share of the proceeds were used to pay down the Company's line of credit. See Mervyn's in Note 13—Discontinued Operations.

Combined and condensed balance sheets and statements of operations are presented below for all unconsolidated joint ventures.

Combined and Condensed Balance Sheets of Unconsolidated Joint Ventures as of December 31:

Combined and Condensed Statements of Operations of Unconsolidated Joint Ventures:

			SDG Macerich Properties, L.P.			Pacific Premier Retail Trust		Tysons Corner LLC		Other Joint Ventures		Total

Year Ended December 31, 2008
Revenues:
	Minimum rents		$	96,413		$	130,780	$	60,318	$	281,577	$	569,088
	Percentage rents			4,877			5,177		2,246		18,606		30,906
	Tenant recoveries			52,736			50,690		36,818		135,142		275,386
	Other			3,656			4,706		2,168		42,564		53,094

		Total revenues		157,682			191,353		101,550		477,889		928,474

Expenses:
	Shopping center and operating expenses			63,982			54,092		30,714		167,918		316,706
	Interest expense			46,778			45,995		16,385		118,680		227,838
	Depreciation and amortization			31,129			32,627		17,875		101,817		183,448

	Total operating expenses			141,889			132,714		64,974		388,415		727,992

Gain on sale or write-down of assets				606			—		—		17,380		17,986

Net income			$	16,399		$	58,639	$	36,576	$	106,854	$	218,468

Company's equity in net income			$	8,200		$	29,471	$	18,288	$	37,872	$	93,831

Year Ended December 31, 2007
Revenues:
	Minimum rents		$	97,626		$	125,558	$	64,182	$	238,350	$	525,716
	Percentage rents			5,614			7,409		2,170		19,907		35,100
	Tenant recoveries			52,786			50,435		31,237		116,692		251,150
	Other			2,955			4,237		2,115		22,871		32,178

		Total revenues		158,981			187,639		99,704		397,820		844,144

Expenses:
	Shopping center and operating expenses			63,985			52,766		25,883		135,123		277,757
	Interest expense			46,598			49,524		16,682		108,006		220,810
	Depreciation and amortization			29,730			30,970		20,547		88,374		169,621

	Total operating expenses			140,313			133,260		63,112		331,503		668,188

(Loss) gain on sale of assets				(4,020	)		—		—		6,959		2,939

Net income			$	14,648		$	54,379	$	36,592	$	73,276	$	178,895

Company's equity in net income			$	7,324		$	27,868	$	18,296	$	27,970	$	81,458

Year Ended December 31, 2006
Revenues:
	Minimum rents		$	97,843		$	124,103	$	59,580	$	225,000	$	506,526
	Percentage rents			4,855			7,611		2,107		21,850		36,423
	Tenant recoveries			51,480			48,739		28,513		107,288		236,020
	Other			3,437			4,166		2,051		22,876		32,530

		Total revenues		157,615			184,619		92,251		377,014		811,499

Expenses:
	Shopping center and operating expenses			62,770			51,441		25,557		128,498		268,266
	Interest expense			44,393			50,981		16,995		90,064		202,433
	Depreciation and amortization			28,058			29,554		20,478		78,071		156,161

	Total operating expenses			135,221			131,976		63,030		296,633		626,860

Gain on sale of assets				—			—		—		1,742		1,742

Net income			$	22,394		$	52,643	$	29,221	$	82,123	$	186,381

Company's equity in net income			$	11,197		$	26,802	$	14,610	$	33,444	$	86,053

Significant accounting policies used by the unconsolidated joint ventures are similar to those used by the Company. Included in mortgage notes payable are amounts due to affiliates of Northwestern Mutual Life ("NML") of $211,098 and $125,984 as of December 31, 2008 and 2007, 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 $10,432, $8,678 and $9,082 for the years ended December 31, 2008, 2007 and 2006, respectively.

The Company recognizes all derivatives in the consolidated financial statements and measures the derivatives at fair value. The Company uses derivative financial instruments in the normal course of business to manage or reduce its exposure to adverse fluctuations in interest rates. The Company designs its hedges to be effective in reducing the risk exposure that they are designated to hedge. Any instrument that meets the cash flow hedging criteria in SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," is formally designated as a cash flow hedge at the inception of the derivative contract. On an ongoing quarterly basis, the Company adjusts its balance sheet to reflect the current fair value of its derivatives. To the extent they are effective, changes in fair value of derivatives are recorded in comprehensive income. Ineffective portions, if any, are included in net income. No ineffectiveness was recorded in net income during the years ended December 31, 2008, 2007 or 2006. If any derivative instrument used for risk management does not meet the hedging criteria, it is marked-to-market each period in the consolidated statements of operations. As of December 31, 2008, four of the Company's derivative instruments were not designated as cash flow hedges. Changes in the market value of these derivative instruments are recorded in the consolidated statements of operations.

As of December 31, 2008 and 2007, the Company had $0 and $286, respectively, reflected in other comprehensive income related to treasury rate locks settled in prior years. The Company reclassified $285, $967 and $1,510 for the years ended December 31, 2008, 2007 and 2006, respectively, related to treasury rate lock transactions settled in prior years from accumulated other comprehensive income to earnings.

Interest rate swap and cap agreements are purchased by the Company from third parties to manage the risk of interest rate changes on some of the Company's floating rate debt. Payments received as a result of these agreements are recorded as a reduction of interest expense. The fair value of the instrument is included in deferred charges and other assets if the fair value is an asset or in other accrued liabilities if the fair value is a deficit. The Company recorded other comprehensive (loss) income of ($29,202), ($27,815) and $743 related to the marking-to-market of interest rate swap and cap agreements for the years ended December 31, 2008, 2007 and 2006, respectively. The amount expected to be reclassified to interest expense in the next 12 months is immaterial.

The fair values of interest rate swap and cap agreements are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates fell below or rose above the strike rate of the interest rate swap and cap agreements. The variable interest rates used in the calculation of projected receipts on the interest rate swap and cap agreements are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. To comply with the provisions of SFAS No. 157, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and

the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2008, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The following table presents the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2008:

The above schedule also includes the properties purchased in connection with the acquisition of Valley River Center, Federated stores, Deptford Mall, Hilton Village and Mervyn's and Boscov's freestanding stores (See Note 12—Acquisitions).

Depreciation expense for the years ended December 31, 2008, 2007 and 2006 was $192,511, $162,798 and $141,841, respectively.

The Company recognized a (loss) gain on the sale or write-down of property of ($33,206), $3,365 and ($600) during the years ended December 31, 2008, 2007 and 2006, respectively. In addition, the Company recognized a gain on the sale of land of $1,387, $8,781 and $516 during the years ended December 31, 2008, 2007 and 2006, respectively.

The loss on the sale or write-down of property of $33,206 for the year ended December 31, 2008 consists of the following:

In September 2008, the Company changed its plans to sell the 29 Mervyn's stores located at shopping centers not owned or managed by the Company and therefore the results of these stores have been reclassified in the Company's consolidated statements of operations to continuing operations for all periods presented (See Note 13—Discontinued Operations). The Company's decision was based on current conditions in the credit market and an expectation that a better return could be obtained by holding and operating the assets. As a result of this change, the Company was required to revalue the assets related to the stores at the lower of their i) carrying amount before the assets were classified as held for sale, adjusted for depreciation that would have otherwise been recognized had the assets been continuously classified as held and used, or ii) the fair value of the assets at the date subsequent to the decision not to sell. Accordingly, the Company recorded a loss of $5,347 in (loss) gain on sale or write-down of assets.

In December 2008, the Company wrote off $8,613 of development costs on development projects the Company has determined it will not pursue. In addition, the Company recorded a $19,237 impairment charge to reduce the carrying value of land held for development.

Future contractual maturities of marketable securities at December 31, 2008 are as follows:

The proceeds from maturities and interest receipts from the marketable securities are restricted to the service of the $27,038 note on which the Company remains obligated following the sale of Greeley Mall in July 2006 (See Note 10—Bank and Other Notes Payable).

Deferred charges and other assets, net at December 31, 2008 and 2007 consist of the following:

The allocated values of above market leases included in deferred charges and other assets, net and below market leases included in other accrued liabilities, related to SFAS No. 141, at December 31, 2008 and 2007 consist of the following:

The allocated values of above and below market leases will be amortized into minimum rents on a straight-line basis over the individual remaining lease terms. The estimated amortization of these values for the next five years and subsequent years is as follows:

	Carrying Amount of Mortgage Notes(a)

	2008				2007
	2008				2007				Interest Rate			Monthly Payment (b)		Maturity Date
Property Pledged as Collateral	Other		Related Party		Other		Related Party		Interest Rate			Monthly Payment (b)		Maturity Date
Capitola Mall	$	—	$	37,497	$	—	$	39,310		7.13	%	$	380		2011
Cactus Power Center(c)		654		—		—		—		3.23	%		2		2011
Carmel Plaza		25,805		—		26,253		—		8.18	%		202		2009
Chandler Fashion Center		166,500				169,789		—		5.50	%		435		2012
Chesterfield Towne Center(d)		54,111		—		55,702		—		9.07	%		548		2024
Danbury Fair Mall		169,889		—		176,457		—		4.64	%		1,225		2011
Deptford Mall		172,500		—		172,500		—		5.41	%		778		2013
Deptford Mall(e)		15,642		—		—		—		6.46	%		101		2016
Eastview Commons(f)		—		—		8,814		—		—			—		—
Eastview Mall(f)		—		—		101,007		—		—			—		—
Fiesta Mall		84,000		—		84,000		—		4.98	%		341		2015
Flagstaff Mall		37,000		—		37,000		—		5.03	%		153		2015
FlatIron Crossing		184,248		—		187,736		—		5.26	%		1,102		2013
Freehold Raceway Mall		171,726		—		177,686		—		4.68	%		1,184		2011
Fresno Fashion Fair(g)		84,706		84,705		63,590		—		6.76	%		1,104		2015
Great Northern Mall		39,591		—		40,285		—		5.11	%		234		2013
Greece Ridge Center(f)		—		—		72,000		—		—			—		—
Hilton Village		8,547		—		8,530		—		5.27	%		37		2012
La Cumbre Plaza(h)		30,000		—		30,000		—		2.58	%		52		2009
Marketplace Mall(f)		—		—		39,345		—		—			—		—
Northridge Mall		79,657		—		81,121		—		4.94	%		453		2009
Oaks, The(i)		165,000		—		—		—		3.48	%		438		2011
Oaks, The(j)		65,525		—		—		—		4.24	%		193		2011
Pacific View		87,382		—		88,857				7.20	%		602		2011
Panorama Mall(k)		50,000		—		50,000		—		1.62	%		59		2010
Paradise Valley Mall		20,259		—		21,231		—		5.89	%		183		2009
Pittsford Plaza(f)		—		—		24,596		—		—			—		—
Pittsford Plaza(f)		—		—		9,148		—		—			—		—
Prescott Gateway		60,000		—		60,000		—		5.86	%		289		2011
Promenade at Casa Grande(l)		97,209		—		79,964		—		3.35	%		267		2009
Queens Center(m)		88,913		—		90,519		—		7.11	%		633		2009
Queens Center		106,657		106,657		108,539		108,538		7.00	%		1,591		2013
Rimrock Mall		42,155		—		42,828		—		7.56	%		320		2011
Salisbury, Center at		115,000		—		115,000		—		5.83	%		555		2016
Santa Monica Place		77,888		—		79,014		—		7.79	%		606		2010
SanTan Village Regional Center(n)		126,573		—		—		—		3.91	%		363		2011
Shoppingtown Mall		43,040		—		44,645		—		5.01	%		319		2011
South Plains Mall		57,721		—		58,732		—		8.29	%		454		2029
South Towne Center(o)		89,915		—		64,000		—		6.75	%		554		2015
Towne Mall		14,366		—		14,838		—		4.99	%		100		2012
Tucson La Encantada		—		78,000		—		78,000		5.84	%		364		2012
Twenty Ninth Street(p)		115,000		—		110,558		—		2.20	%		192		2009
Valley River Center		120,000		—		120,000		—		5.60	%		558		2016
Valley View Center		125,000		—		125,000		—		5.81	%		596		2011
Victor Valley, Mall of(q)		100,000		—		51,211		—		3.74	%		290		2011

Debt premiums (discounts) as of December 31, 2008 and 2007 consist of the following:

Property Pledged as Collateral	2008			2007

Danbury Fair Mall	$	9,166		$	13,405
Deptford Mall		(41	)		—
Eastview Commons		—			573
Eastview Mall		—			1,736
Freehold Raceway Mall		8,940			12,373
Great Northern Mall		(137	)		(164	)
Hilton Village		(53	)		(70	)
Marketplace Mall		—			1,650
Paradise Valley Mall		99			392
Pittsford Plaza		—			857
Shoppingtown Mall		2,648			3,731
Towne Mall		371			464
Victor Valley, Mall of		—			54
Village Fair North		—			49
Wilton Mall		1,263			2,729

	$	22,256		$	37,779

Most of the mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt.

The Company expects all 2009 loan maturities will be refinanced, extended and/or paid-off from the Company's line of credit.

Total interest expense capitalized during 2008, 2007 and 2006 was $33,281, $32,004 and $14,927, respectively.

Related party mortgage notes payable are amounts due to affiliates of NML. See Note 11—Related Party Transactions, for interest expense associated with loans from NML.

The fair value of mortgage notes payable at December 31, 2008 and 2007 was $3,529,762 and $3,437,032 based on current interest rates for comparable loans. The method for computing fair value at December 31, 2008 was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt.

On March 16, 2007, the Company issued $950,000 in Senior Notes that are to mature on March 15, 2012. The Senior Notes bear interest at 3.25%, payable semiannually, are senior unsecured debt of the Company and are guaranteed by the Operating Partnership. Prior to December 14, 2011, upon the occurrence of certain specified events, the Senior Notes will be convertible at the option of holder into cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the election of the Company, at an initial conversion rate of 8.9702 shares per $1 principal amount. On and after December 15, 2011, the Senior Notes will be convertible

at any time prior to the second business day preceding the maturity date at the option of the holder at the initial conversion rate. The initial conversion price of approximately $111.48 per share represented a 20% premium over the closing price of the Company's common stock on March 12, 2007. The initial conversion rate is subject to adjustment under certain circumstances. Holders of the Senior Notes do not have the right to require the Company to repurchase the Senior Notes prior to maturity except in connection with the occurrence of certain fundamental change transactions.

During the period of October 21, 2008 to December 29, 2008, the Company repurchased and retired $222,835 of the Senior Notes for $122,688 and recorded a gain on extinguishment of $84,143. The repurchase was funded by borrowings under the Company's line of credit.

The carrying value of the Senior Notes at December 31, 2008 and December 31, 2007 was $687,654 and $882,234, respectively, which included unamortized discount of $39,510 and $67,766, respectively. The unamortized discount is amortized into interest expense over the term of the Senior Notes in a manner that approximates the effective interest method. As of December 31, 2008 and December 31, 2007, the effective interest rate was 5.41%. The fair value of the Senior Notes at December 31, 2008 and 2007 was $379,435 and $809,305, respectively based on the quoted market price on each date.

In connection with the issuance of the Senior Notes, the Company purchased two capped calls ("Capped Calls") from affiliates of the initial purchasers of the Senior Notes. The Capped Calls effectively increased the conversion price of the Senior Notes to approximately $130.06, which represents a 40% premium to the March 12, 2007 closing price of $92.90 per common share of the Company. The Capped Calls are expected to generally reduce the potential dilution upon exchange of the Senior Notes in the event the market value per share of the Company's common stock, as measured under the terms of the relevant settlement date, is greater than the strike price of the Capped Calls. If, however, the market value per share of the Company's common stock exceeds $130.06 per common share, then the dilution mitigation under the Capped Calls will be capped, which means there would be dilution from exchange of the Senior Notes to the extent that the market value per share of the Company's common stock exceeds $130.06. The cost of the Capped Calls was approximately $59,850 and was recorded as a charge to additional paid-in capital in 2007.

The Company has a $1,500,000 revolving line of credit that matures on April 25, 2010 with a one-year extension option. The interest rate fluctuates from LIBOR plus 0.75% to LIBOR plus 1.10% depending on the Company's overall leverage. The Company has an interest rate swap agreement that effectively fixed the interest rate on $400,000 of the outstanding balance of the line of credit at 6.23% until April 25, 2011. As of December 31, 2008 and 2007, borrowings outstanding were $1,099,500 and $1,015,000 at an average interest rate, excluding the $400,000 swapped portion, of 3.19% and 6.19%, respectively. The fair value of the Company's line of credit at December 31, 2008 and 2007 was $1,067,631 and $1,015,000 based on a present value model using current interest rate spreads offered to the Company for comparable debt.

On May 13, 2003, the Company issued $250,000 in unsecured notes that were to mature in May 2007 with a one-year extension option and bore interest at LIBOR plus 2.50%. These notes were repaid in full on March 16, 2007, from the proceeds of the Senior Notes offering.

On April 25, 2005, the Company obtained a five-year, $450,000 term loan that bears interest at LIBOR plus 1.50% and matures on April 26, 2010. In November 2005, the Company entered into an interest rate swap agreement that effectively fixed the interest rate of the term loan at 6.30% from December 1, 2005 to April 15, 2010. As of December 31, 2008 and 2007, the note had a balance outstanding of $446,250 and $450,000, respectively, with an effective interest rate of 6.50%. The fair value of the term loan at December 31, 2008 and 2007 was $452,240 and $450,000 based on a present value model using current interest rate spreads offered to the Company for comparable debt.

On July 27, 2006, concurrent with the sale of Greeley Mall (See Note 13—Discontinued Operations), the Company provided marketable securities to replace Greeley Mall as collateral for the mortgage note payable on the property (See Note 7—Marketable Securities). As a result of this transaction, the debt was reclassified to bank and other notes payable. This note bears interest at an effective rate of 6.34% and matures in September 2013. The fair value of the note at December 31, 2008 and 2007 was $19,074 and $29,730 based on current interest rates for comparable loans. The method for computing fair value at December 31, 2008 was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt.

As of December 31, 2008 and 2007, the Company was in compliance with all applicable loan covenants.

Certain unconsolidated joint ventures have engaged the Management Companies to manage the operations of the Centers. Under these arrangements, the Management Companies are reimbursed for compensation paid to on-site employees, leasing agents and project managers at the Centers, as well as

insurance costs and other administrative expenses. The following are fees charged to unconsolidated joint ventures for the years ended December 31:

Certain mortgage notes on the properties are held by NML (See Note 9—Mortgage Notes Payable). Interest expense in connection with these notes was $17,501, $13,390 and $10,860 for the years ended December 31, 2008, 2007 and 2006, respectively. Included in accounts payable and accrued expenses is interest payable to these partners of $1,609 and $1,150 at December 31, 2008 and 2007, respectively.

As of December 31, 2008 and 2007, the Company had loans to unconsolidated joint ventures of $932 and $604, respectively. Interest income associated with these notes was $45, $46 and $734 for the years ended December 31, 2008, 2007 and 2006, respectively. These loans represent initial funds advanced to development stage projects prior to construction loan funding. Correspondingly, loan payables in the same amount have been accrued as an obligation by the various joint ventures.

Due from affiliates of $9,124 and $5,729 at December 31, 2008 and 2007, respectively, represents unreimbursed costs and fees due from unconsolidated joint ventures under management agreements.

The Company has completed the following acquisitions during the years ended December 31, 2008, 2007 and 2006:

On February 1, 2006, the Company acquired Valley River Center, a 915,656 square foot super-regional mall in Eugene, Oregon. The total purchase price was $187,500 and concurrent with the acquisition, the Company placed a $100,000 loan on the property. The balance of the purchase price was funded by cash and borrowings under the Company's line of credit. The results of Valley River Center's operations have been included in the Company's consolidated financial statements since the acquisition date.

On July 26, 2006, the Company purchased 11 department stores located in 10 of its Centers from Federated Department Stores, Inc. for approximately $100,000. The Company's share of the purchase price of $81,043 was funded in part from the proceeds of sales of properties and from borrowings under the line of credit. The balance of the purchase price was paid by the Company's joint venture partners where four of the eleven stores were located.

On December 1, 2006, the Company acquired the Deptford Mall, a 1,039,911 square foot super-regional mall in Deptford, New Jersey. The total purchase price was $240,055. The purchase price was funded by cash and borrowings under the Company's line of credit. Subsequently, the Company placed a $100,000 loan on the property. The proceeds from the loan were used to pay down the Company's line of credit. The results of Deptford Mall's operations have been included in the Company's consolidated financial statements since the acquisition date.

On September 5, 2007, the Company purchased the remaining 50% outside ownership interest in Hilton Village, a 96,985 square foot specialty center in Scottsdale, Arizona. The total purchase price of $13,500 was funded by cash, borrowings under the Company's line of credit and the assumption of a mortgage note payable. The Center was previously accounted for under the equity method as an investment in unconsolidated joint ventures. The results of Hilton Village's operations have been included in the Company's consolidated financial statements since the acquisition date.

On December 17, 2007, the Company purchased a portfolio of ground leasehold and/or fee simple interests in 39 Mervyn's department stores for $400,160. The Company purchased an additional ground leasehold interest on January 31, 2008 for $13,182 and a fee simple interest on February 29, 2008 for $19,338. All of the purchased properties are located in the Southwest United States. The purchase price was funded by cash and borrowings under the Company's line of credit. Concurrent with each acquisition, the Company entered into individual agreements to lease back the properties to Mervyn's for terms of 14 to 20 years. The results of operations include these properties since the acquisition date. (See Note 13—Discontinued Operations).

On May 20, 2008, the Company purchased fee simple interests in a 161,350 square foot Boscov's department store at Deptford Mall in Deptford, New Jersey. The total purchase price of $23,500 was funded by the assumption of the existing mortgage note on the property and by borrowings under the Company's line of credit. The results of operations have included this property since the date of acquisition.

The following dispositions occurred during the years ended December 31, 2008, 2007 and 2006:

On June 9, 2006, the Company sold Scottsdale 101, a consolidated joint venture, for $117,600 resulting in a gain on sale of asset of $62,633. The Company's share of the gain was $25,802. The Company's pro rata share of the proceeds were used to pay down the Company's line of credit.

On July 13, 2006, the Company sold Park Lane Mall for $20,000 resulting in a gain on sale of asset of $5,853.

On July 27, 2006, the Company sold Holiday Village Mall and Greeley Mall in a combined sale for $86,800, resulting in a gain on sale of asset of $28,711. Concurrent with the sale, the Company defeased the mortgage note payable on Greeley Mall. As a result of the defeasance, the lender's secured interest in the property was replaced with a secured interest in marketable securities (See Note 7—Marketable Securities). This transaction did not meet the criteria for extinguishment of debt under SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities."

On August 11, 2006, the Company sold Great Falls Marketplace for $27,500 resulting in a gain on sale of asset of $11,826.

The proceeds from the sale of Park Lane, Holiday Village Mall, Greeley Mall and Great Falls Marketplace were used in part to fund the Company's pro rata share of the purchase price of the Federated stores acquisition (See Note 12—Acquisitions) and pay down the line of credit.

On December 29, 2006, the Company sold Citadel Mall, Northwest Arkansas Mall and Crossroads Mall in a combined sale for $373,800, resulting in a gain of $132,671. The proceeds were used to pay down the Company's line of credit and pay off the mortgage note payable on Paradise Valley Mall (See Note 9—Mortgage Notes Payable).

The carrying value of the properties sold in 2006 at December 31, 2005 was $168,475.

On December 17, 2007, the Company purchased a portfolio of ground leasehold and/or fee simple interests in 39 Mervyn's department stores for $400,160. The Company purchased an additional ground leasehold interest on January 31, 2008 for $13,182 and a fee simple interest on February 29, 2008 for $19,338. (See Note 12—Acquisitions). Upon closing of these acquisitions, management designated the 29 stores located at shopping centers not owned or managed by the Company in the portfolio as available for sale. The results of operations from these properties had been included in income from discontinued operations from the respective acquisition dates until September 2008. The carrying value of these properties was recorded as assets held for sale at December 31, 2007 in the amount of $250,648.

applying SFAS 141, the Company recorded intangible assets of $110.7 million and intangible liabilities of $59.0 million.

During the three months ended September 30, 2008, the Company recorded a write-down of $5,214 due to the anticipated rejection of six of the Company's leases by Mervyn's. In addition, the Company terminated its former plan to sell the 29 Mervyn's stores located at shopping centers not owned or managed by the Company. The Company's decision was based on current conditions in the credit market and the assumption that a better return could be obtained by holding and operating the assets. As a result of the change in plans to sell, the Company recorded a loss of $5,347 in (loss) gain on sale or write-down of assets in order to adjust the carrying value of these assets for depreciation expense that otherwise would have been recognized had these assets been continuously classified as held and used.

In December 2008, Kohl's and Forever 21 assumed a total of 23 of the Mervyn's leases and the remaining 22 leases were rejected by Mervyn's under the bankruptcy laws. As a result, the Company wrote-off the unamortized intangible assets and liabilities related to the rejected and unassumed leases in December 2008. The Company wrote-off $27,655 of unamortized intangible assets related to lease in place values, leasing commissions and legal costs to depreciation and amortization. Unamortized intangible assets of $14,881 relating to above market leases and unamortized intangible liabilities of $24,523 relating to below market leases were written-off to minimum rents.

On December 19, 2008, the Company sold a fee and/or ground leasehold interest in three freestanding Mervyn's department stores to Pacific Premier Retail Trust, one of the Company's joint ventures, for $43,405, resulting in a gain on sale of assets of $1,511. The Company's pro rata share of the proceeds were used to pay down the Company's line of credit.

On January 1, 2008, a subsidiary of the Operating Partnership, at the election of the holders, redeemed the 3,426,609 participating convertible preferred units ("PCPUs"). As a result of the redemption, the Company received the 16.32% noncontrolling interests in the portion of the Wilmorite portfolio that included Danbury Fair Mall, Freehold Raceway Mall, Great Northern Mall, Rotterdam Square, Shoppingtown Mall, Towne Mall, Tysons Corner Center and Wilton Mall, collectively referred to as the "Non-Rochester Properties," for total consideration of $224,393, in exchange for the Company's ownership interest in the portion of the Wilmorite portfolio that consisted of Eastview Commons, Eastview Mall, Greece Ridge Center, Marketplace Mall and Pittsford Plaza, collectively referred to as the "Rochester Properties," including approximately $18,000 in cash held at those properties. Included in the redemption consideration was the assumption of the remaining 16.32% interest in the indebtedness of the Non-Rochester Properties, which had an estimated fair value of $105,962. In addition, the Company also received additional consideration of $11,763, in the form of a note, for certain working capital adjustments, extraordinary capital expenditures, leasing commissions, tenant allowances, and decreases in indebtedness during the Company's period of ownership of the Rochester Properties. The Company recognized a gain of $99,082 on the exchange based on the difference between the fair value of the additional interest acquired in the Non-Rochester Properties and the carrying value of the Rochester Properties, net of minority interest. This exchange is referred to herein as the "Rochester Redemption."

The Company determined the fair value of the debt using a present value model based upon the terms of equivalent debt and upon credit spreads made available to the Company. The following table represents the debt measured at fair value on January 1, 2008:

The source of the Level 2 inputs involved the use of the nominal weekly average of the U.S. treasury rates. The source of Level 3 inputs was based on comparable credits spreads on the estimated value of the property that serves as the underlying collateral of the debt.

As a result of the Rochester Redemption, the Company recorded a credit to additional paid-in capital of $202,728 due to the reversal of adjustments to noncontrolling interests for the redemption value on the Rochester Properties over the Company's historical cost. In addition, the Company recorded a step-up in the basis of approximately $218,812 in the remaining portion of the Non-Rochester Properties.

The Company has classified the results of operations for the years ended December 31, 2008, 2007 and 2006 for all of the above dispositions as discontinued operations.

Loss on sale of assets from discontinued operations of $2,409 in 2007 consisted of additional costs related to properties sold in 2006.

The following table summarizes the revenues and income for the years ended December 31:

		2008			2007			2006

Revenues:
	Scottsdale 101	$	10		$	56		$	4,668
	Park Lane Mall		—			13			1,510
	Holiday Village Mall		338			175			2,900
	Greeley Mall		—			(8	)		4,344
	Great Falls Marketplace		(21	)		—			1,773
	Citadel Mall		—			45			15,729
	Northwest Arkansas Mall		—			29			12,918
	Crossroads Mall		—			(28	)		11,479
	Mervyn's		4,014			181			—
	Rochester Properties		—			83,096			80,037

		$	4,341		$	83,559		$	135,358

Income from discontinued operations:
	Scottsdale 101	$	(3	)	$	14		$	779
	Park Lane Mall		—			(31	)		44
	Holiday Village Mall		338			157			1,179
	Greeley Mall		—			(84	)		574
	Great Falls Marketplace		(33	)		(2	)		1,136
	Citadel Mall		—			(81	)		2,546
	Northwest Arkansas Mall		—			16			3,429
	Crossroads Mall		—			18			2,124
	Mervyn's		1,317			50			—
	Rochester Properties		—			21,968			14,551

		$	1,619		$	22,025		$	26,362

Under existing non-cancelable operating lease agreements, tenants are committed to pay the following minimum rental payments to the Company:

The Company has certain properties subject to non-cancelable operating ground leases. The leases expire at various times through 2107, 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 in the lease. Ground rent expenses were $8,999, $4,047 and $4,235 for the years ended December 31, 2008, 2007 and 2006, respectively. No contingent rent was incurred for the years ended December 31, 2008, 2007 and 2006.

As of December 31, 2008 and 2007, the Company was contingently liable for $19,699 and $6,361, respectively, in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers. The Company does not believe that these letters of credit will result in a liability to the Company. In addition, the Company has a $24,000 letter of credit that serves as collateral to a liability assumed in the acquisition of a property.

The Company has entered into a number of construction agreements related to its redevelopment and development activities. Obligations under these agreements are contingent upon the completion of the services within the guidelines specified in the agreement. At December 31, 2008, the Company had $96,711 in outstanding obligations, which it believes will be settled in 2009.

The Company has established share-based compensation plans for the purpose of attracting and retaining executive officers, directors and key employees. In addition, the Company has established an Employee Stock Purchase Plan ("ESPP") to allow employees to purchase the Company's common stock at a discount.

On January 1, 2006, the Company adopted SFAS No. 123(R), "Share-Based Payment," to account for its share-based compensation plans using the modified-prospective method. Accordingly, prior period amounts have not been restated. Under SFAS No. 123(R), an equity instrument is not recorded to common stockholders' equity until the related compensation expense is recorded over the requisite service period of the award. The Company records compensation expense on a straight-line basis for awards, with the exception of the market-indexed awards granted under the Long-Term Incentive Plan ("LTIP").

Prior to the adoption of SFAS No. 123(R), and in accordance with the previous accounting guidance, the Company recognized compensation expense and an increase to additional paid in capital

for the fair value of vested stock awards and stock options. In addition, the Company recognized compensation expense and a corresponding liability for the fair value of vested stock units issued under the Eligible Directors' Deferred Compensation/Phantom Stock Plan ("Directors' Phantom Stock Plan").

In connection with the adoption of SFAS No. 123(R), the Company determined that $6,000 included in other accrued liabilities at December 31, 2005, in connection with the Directors' Phantom Stock Plan, should be included in additional paid-in capital. Additionally, the Company reclassified $15,464 from the Unamortized Restricted Stock line item within equity to additional paid-in capital. The Company made these reclassifications during the year ended December 31, 2006.

The following summarizes the compensation cost under the share and unit-based plans:

The Company capitalized share and unit-based compensation costs of $10,224, $9,065 and $5,802 for the years ended December 31, 2008, 2007 and 2006, respectively.

The 2003 Equity Incentive Plan ("2003 Plan") authorizes the grant of stock awards, stock options, stock appreciation rights, stock units, stock bonuses, performance based awards, dividend equivalent rights and operating partnership units or other convertible or exchangeable units. As of December 31, 2008, only stock awards, LTIP Units (as defined below), stock appreciation rights ("SARs"), operating partnership units and stock options have been granted under the 2003 Plan. All stock options or other rights to acquire common stock granted under the 2003 Plan have a term of 10 years or less. These awards were generally granted based on certain performance criteria for the Company and the employees. The aggregate number of shares of common stock that may be issued under the 2003 Plan is 6,000,000 shares. As of December 31, 2008, there were 3,352,901 shares available for issuance under the 2003 Plan.

The following stock awards, SARS, LTIP Units, operating partnership units and stock options have been granted under the 2003 Plan:

The outstanding stock awards vest over three years and the compensation cost related to the grants are determined by the market value at the grant date and are amortized over the vesting period on a straight-line basis. Stock awards are subject to restrictions determined by the Company's compensation committee. As of December 31, 2008, there was $12,034 of total unrecognized

compensation cost related to non-vested stock awards. This cost is expected to be recognized over a weighted average period of three years.

On October 31, 2006, as part of a separation agreement with a former executive, the Company accelerated the vesting of 34,829 shares of stock awards. As a result of this accelerated vesting, the Company recognized an additional $610 in compensation cost.

The following table summarizes the activity of non-vested stock awards during the years ended December 31, 2008, 2007 and 2006:

				Weighted Average Grant Date Fair Value

Balance at January 1, 2006		523,654		$	47.07
	Granted	185,976		$	73.93
	Vested	(314,733	)	$	44.95
	Forfeited	(2,603	)	$	64.24

Balance at December 31, 2006		392,294		$	61.06
	Granted	150,057		$	92.36
	Vested	(201,311	)	$	56.89
	Forfeited	(4,968	)	$	76.25

Balance at December 31, 2007		336,072		$	77.21
	Granted	127,272		$	61.17
	Vested	(182,510	)	$	70.06
	Forfeited	(5,653	)	$	70.04

Balance at December 31, 2008		275,181		$	74.68

The fair value of stock awards vested during the years ended December 31, 2008, 2007 and 2006 was $12,787, $11,453 and $23,302, respectively.

On March 7, 2008, the Company granted 1,257,134 SARs to certain executives of the Company as an additional component of compensation. The SARs vest on March 15, 2011. Once the SARs have vested, the executive will have up to 10 years from the grant date to exercise the SARs. There is no performance requirement, only a service condition of continued employment. Upon exercise, the executives will receive unrestricted common shares for the appreciation in value of the SARs from the grant date to the exercise date. The Company has measured the grant date value of each SAR to be $7.68 as determined using the Black-Scholes Option Pricing Model based upon the following assumptions: volatility of 22.52%, dividend yield of 5.23%, risk free rate of 3.15%, current value of $61.17 and an expected term of 8 years. The assumptions for volatility and dividend yield were based on the Company's historical experience as a publicly traded company, the current value was based on

the closing price on the date of grant and the risk free rate was based upon the interest rate of the 10-year treasury bond on the date of grant.

The total unrecognized compensation cost of SARs at December 31, 2008 was $6,870.

The following table summarizes the activity of non-vested stock awards during the year ended December 31, 2008:

On October 26, 2006, The Macerich Company 2006 Long-Term Incentive Plan ("2006 LTIP"), a long-term incentive compensation program, was approved pursuant to the 2003 Plan. Under the 2006 LTIP, each award recipient is issued a new form of operating partnership units ("LTIP Units") in the Operating Partnership. Upon the occurrence of specified events and subject to the satisfaction of applicable vesting conditions, LTIP Units are ultimately redeemable for common stock, or cash at the Company's option, on a one-unit for one-share basis. LTIP Units receive cash dividends based on the dividend amount paid on the common stock. The 2006 LTIP provides for both market-indexed awards and service-based awards.

The market-indexed LTIP Units vest over the service period based on the percentile ranking of the Company in terms of total return to stockholders (the "Total Return") per common stock share relative to the Total Return of a group of peer REITs, as measured at the end of each year of the three year measurement period and at the end of the three year measurement period, subject to certain exceptions. The service-based LTIP Units vest straight-line over the service period. The compensation cost is recognized under the graded attribution method for market-indexed LTIP awards and the straight-line method for the serviced based LTIP awards.

The fair value of the market-based LTIP Units is estimated on the date of grant using a Monte Carlo Simulation model. The stock price of the Company, along with the stock prices of the group of peer REITs (for market-indexed awards), is assumed to follow the Multivariate Geometric Brownian Motion Process. Multivariate Geometric Brownian Motion is a common assumption when modeling in financial markets, as it allows the modeled quantity (in this case, the stock price) to vary randomly from its current value and take any value greater than zero. The volatilities of the returns on the price of the Company and the peer group REITs were estimated based on a three year look-back period. The expected growth rate of the stock prices over the "derived service period" is determined with consideration of the risk free rate as of the grant date.

The following table summarizes the activity of non-vested LTIP Units during the years ended December 31, 2008, 2007 and 2006:

The total unrecognized compensation cost of LTIP Units at December 31, 2008 was $6,689.

On October 8, 2003, the Company granted 2,500 stock options to a director at a weighted average exercise price of $39.43. These outstanding stock options vested six months after the grant date and were issued with a strike price equal to the fair value of the common stock at the grant date. The term of these stock options is ten years from the grant date.

On September 4, 2007, the Company granted 100,000 stock options to an officer with a weighted average exercise price of $82.14 per share and a ten-year term. Options vest 33¹/3% on each of the three subsequent anniversaries of the date of the grant and are generally contingent upon the officer's continued employment with the Company. The Company has estimated the fair value of the stock option award at $17.87 per share using the Black-Scholes Option Pricing Model based upon the following assumptions: volatility of 22.83%, dividend yield of 3.46%, risk free rate of 4.56%, a current value $82.14 and an expected term of eight years. The assumptions for volatility and dividend yield were based on the Company's historical experience as a publicly traded company, the current value was based on the closing price on the date of grant, and the risk free rate was based upon the interest rate of the 10-year treasury bond on the date of grant.

The Company recognizes compensation cost using the straight-line method over the three-year vesting period.

The following table summarizes the activity of stock options for the years ended December 31, 2008, 2007 and 2006:

The total unrecognized compensation cost of stock options at December 31, 2008 was $997.

The Directors' Phantom Stock Plan offers non-employee members of the board of directors ("Directors") the opportunity to defer their cash compensation and to receive that compensation in common stock rather than in cash after termination of service or a predetermined period. Compensation generally includes the annual retainer and regular meeting fees payable by the Company to the Directors. Every Director has elected to receive their compensation in common stock. Deferred amounts are credited as units of phantom stock at the beginning of each three-year deferral period by dividing the present value of the deferred compensation by the average fair market value of the Company's common stock at the date of award. Compensation expense related to the phantom stock award was determined by the amortization of the value of the stock units on a straight-line basis over the applicable three-year service period. The stock units (including dividend equivalents) vest as the Directors' services (to which the fees relate) are rendered. Vested phantom stock units are ultimately paid out in common stock on a one-unit for one-share basis. Stock units receive dividend equivalents in the form of additional stock units, based on the dividend amount paid on the common stock. The aggregate number of phantom stock units that may be granted under the Directors' Phantom Stock

Plan is 250,000. As of December 31, 2008, there were 106,028 units available for grant under the Directors' Phantom Stock Plan. As of December 31, 2008, there was $269 of unrecognized cost related to non-vested phantom stock units, which will vest over the next year.

The following table summarizes the activity of the non-vested phantom stock units for the years ended December 31, 2008, 2007 and 2006:

				Weighted Average Grant Date Fair Value

Balance at January 1, 2006		5,858		$	43.70
	Granted	3,707		$	74.90
	Vested	(9,565	)	$	55.79
	Forfeited	—		$	—

Balance at December 31, 2006		—		$	—
	Granted	13,491		$	84.03
	Vested	(7,072	)	$	84.19
	Forfeited	—		$	—

Balance at December 31, 2007		6,419		$	83.86
	Granted	11,234		$	34.17
	Vested	(14,444	)	$	45.21
	Forfeited	—		$	—

Balance at December 31, 2008		3,209		$	83.88

The ESPP authorizes eligible employees to purchase the Company's common stock through voluntary payroll deduction made during periodic offering periods. Under the plan, common stock is purchased at a 10% discount from the lesser of the fair value of common stock at the beginning and ending of the offering period. A maximum of 750,000 shares of common stock is available for purchase under the ESPP. The number of shares available for future purchase under the plan at December 31, 2008 was 691,808.

Prior to the adoption of the 2003 Plan, the Company had several other share-based plans. Under these plans, 36,434 stock options were outstanding as of December 31, 2008. No additional shares may be issued under these plans. All stock options outstanding under these plans were fully vested as of December 31, 2005 and were, therefore, not impacted by the adoption of SFAS No. 123(R). As of December 31, 2008, all of the outstanding shares are exercisable at a weighted average price of $25.44.

The weighted average remaining contractual life for options outstanding and exercisable was three years.

The Company has a retirement profit sharing plan that covers substantially all of its 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. A total of 150,000 shares of common stock were reserved for issuance under the plan. Contributions by the Company to the plan were made at the discretion of the Board of Directors and were based upon a specified percentage of employee compensation. The Company contributed $1,694 during the year ended December 31, 2004. On January 1, 2004, the plan adopted the "Safe Harbor" provision under Sections 401(k)(12) and 401(m)(11) of the Internal Revenue Code. In accordance with these newly adopted provisions, the Company began matching contributions equal to 100 percent of the first three percent of compensation deferred by a participant and 50 percent of the next two percent of compensation deferred by a participant. During the years ended December 31, 2008, 2007 and 2006, these matching contributions made by the Company were $2,785, $2,680 and $1,747, respectively. Contributions are recognized as compensation in the period they are made.

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 at its sole discretion prior to the beginning of the plan year, credit a participant's account with a matching amount equal to a percentage of the participant's deferral. The Company contributed $898, $815 and $712 to the plans during the years ended December 31, 2008, 2007 and 2006, respectively. Contributions are recognized as compensation in the periods they are made.

The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 1994. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its taxable income to its stockholders. It is management's current intention to adhere to these requirements and maintain the Company's REIT status. As a REIT, the Company generally will not be subject to corporate level federal income tax on net income it distributes currently to its stockholders. If the Company fails to qualify as a REIT in any taxable year, then it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes

on its income and property and to federal income and excise taxes on its undistributed taxable income, if any.

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.

For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains, unrecaptured Section 1250 gain and return of capital or a combination thereof. The following table details the components of the distributions, on a per share basis, for the years ended December 31:

The Company has made Taxable REIT Subsidiary elections for all of its corporate subsidiaries other than its Qualified REIT Subsidiaries. The elections, effective for the year beginning January 1, 2001 and future years were made pursuant to section 856(l) of the Internal Revenue Code. The Company's Taxable REIT Subsidiaries ("TRSs") are subject to corporate level income taxes which are provided for in the Company's consolidated financial statements. The Company's primary TRSs include Macerich Management Company and Westcor Partners, LLC.

The income tax (provision) benefit of the TRSs for the years ended December 31, 2008, 2007 and 2006 is as follows:

Income tax (provision) benefit of the TRSs for the years ended December 31, 2008, 2007 and 2006 are reconciled to the amount computed by applying the Federal Corporate tax rate as follows:

SFAS No. 109, "Accounting for Income Taxes," requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The deferred tax assets and liabilities of the TRSs relate primarily to differences in the book and tax bases of property and to operating loss carryforwards for federal and state income tax purposes. A valuation allowance for deferred tax assets is provided if the Company believes it is more likely than not that all or some portion of the deferred tax assets will not be realized. Realization of deferred tax assets is dependent on the TRSs generating sufficient taxable income in future periods. The net operating loss carryforwards are currently scheduled to expire through 2028, beginning in 2012. Net deferred tax assets of $13,830 and $12,080 were included in deferred charges and other assets, net at December 31, 2008 and 2007, respectively.

The tax effects of temporary differences and carryforwards of the TRSs included in the net deferred tax assets at December 31, 2008 and 2007 are summarized as follows:

The Company adopted the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109," on January 1, 2007. The adoption of this standard did not have a material impact on the Company's results of operations or financial condition. At the adoption date of January 1, 2007, the Company had $1,574 of unrecognized tax benefit included in other accrued liabilities, all of which would affect the Company's effective tax rate if recognized, and which was recorded as a charge to accumulated deficit. At December 31, 2008, the Company had $2,201 of unrecognized tax benefit. As a result of tax positions taken during the current year, an increase in the unrecognized tax benefit of $647 and a decrease in the unrecognized tax

benefit of $352 (relating to the expiration of the statue of limitations for the 2004 tax year) were included in the Company's consolidated statements of operations.

The following is a reconciliation of the unrecognized tax benefits for the year ended December 31, 2008:

The tax years 2005-2007 remain open to examination by the taxing jurisdictions to which the Company is subject. The Company does not expect that the total amount of unrecognized tax benefit will materially change within the next 12 months.

On January 19, 2006, the Company issued 10,952,381 common shares for net proceeds of $746,485. The proceeds from issuance of the shares were used to pay off the $619,000 acquisition loan and to pay down a portion of the Company's line of credit pending use to pay part of the purchase price for Valley River Center (See Note 12—Acquisitions).

On March 16, 2007, the Company repurchased 807,000 shares for $74,970 concurrent with the Senior Notes offering (See Note 10—Bank and Other Notes Payable). These shares were repurchased pursuant to the Company's stock repurchase program authorized by the Company's Board of Directors on March 9, 2007. This repurchase program ended on March 16, 2007 because the maximum shares allowed to be repurchased under the program was reached.

On February 25, 1998, the Company issued 3,627,131 shares of Series A cumulative convertible redeemable preferred stock ("Series A Preferred Stock") for proceeds totaling $100,000 in a private placement. The preferred stock was convertible on a one for one basis into common stock and paid a quarterly dividend equal to the greater of $0.46 per share, or the dividend then payable on a share of common stock.

The holder of the Series A Preferred Stock had redemption rights if a change in control of the Company occurred, as defined under the Articles Supplementary. Under such circumstances, the holder of the Series A Preferred Stock was entitled to require the Company to redeem its shares, to the extent the Company had funds legally available therefor, at a price equal to 105% of its liquidation preference plus accrued and unpaid dividends. The Series A Preferred Stock holder also had the right to require the Company to repurchase its shares if the Company failed to be taxed as a REIT for federal tax purposes at a price equal to 115% of its liquidation preference plus accrued and unpaid dividends to the extent funds were legally available therefor.

No dividends could be declared or paid on any class of common or other junior stock to the extent that dividends on Series A Preferred Stock had not been declared and/or paid.

On October 18, 2007, the holder of the Series A Preferred Stock converted 560,000 shares to common shares. On May 6, 2008, the holder of the Series A Preferred Stock converted 684,000 shares to common shares. On May 8, 2008, the holder of the Series A Preferred Stock converted 1,338,860 shares to common shares. On September 17, 2008, the holder of the Series A Preferred Stock converted the remaining 1,044,271 shares to common shares.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," 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, development, redevelopment, management and leasing of regional and community shopping centers. Additionally, the Company operates in one geographic area, the United States.

The following is a summary of quarterly results of operations for the years ended December 31, 2008 and 2007:

On January 1, 2009, the Company adopted FSP APB No. 14-1. The adoption of FSP APB No. 14-1 requires the Company to retrospectively allocate the initial proceeds from Senior Notes between a liability component and an equity component based on the fair value calculated based on the present value of contractual cash flows discounted at an appropriate comparable non-convertible debt borrowing rate at the date of issuance of the Senior Notes. As a result, the Company allocated

$869,351 of the initial $940,500 proceeds to the liability component and the remaining $71,149 of proceeds to the equity component at the date of issuance of the Senior Notes.

Effective January 1, 2009, the Company adopted the provisions of SFAS No. 160, which requires a noncontrolling interest in a subsidiary to be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest to be included within consolidated net income. SFAS No. 160 also requires consistency in the manner of reporting changes in the parent's ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. In connection with the retrospective adoption of SFAS No. 160, the Company also performed a concurrent review and retrospectively adopted the measurement provisions of EITF D-98.

The Company's reassessment of EITF D-98 resulted in the continued classification of its redeemable equity interest in one of its consolidated joint ventures and the outside interests in the Rochesters Properties as temporary equity due to the possibility that the Company could be required to redeem this interest for cash upon the occurrence of certain events outside the control of the Company. The carrying amount of the redeemable equity interest is equal to its liquidation value, which is the amount payable upon the occurrence of such event. See Rochester Redemption in Note 13—Discontinued Operations.

The Company's reassessment of EITF D-98 resulted in the reclassification of the OP Units and the common and preferred units of MACWH, LP to permanent equity. The OP Units and the common and preferred units of MACWH, LP are redeemable at the election of the holder and the Company may redeem them for cash or shares of stock at the Company's election. In addition, the Company reclassified outside ownership interests in various consolidated joint ventures to permanent equity.

Further, as a result of the adoption of SFAS No. 160, net income attributable to noncontrolling interests is now included in consolidated net income. Corresponding changes have also been made to the accompanying consolidated statements of cash flows.

Effective January 1, 2009, the Company adopted the provisions of FSP EITF No. 03-6-1. FSP EITF No. 03-6-1 requires that nonvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents be treated as participating securities in the computation of net income available to common stockholders per share pursuant to the two-class method.

In accordance with the guidance, the provisions of FSP EITF No. 03-6-1 were applied retrospectively to the Company's calculation of net income available to common stockholders per share for all periods presented. As a result of the adoption of FSP EITF No. 03-6-1, the effect of the Company's outstanding nonvested stock awards are included in both the Company's basic and diluted per share computations for net income available to common stockholders using the two-class method. Prior to adopting FSP EITF No. 03-6-1, the impact of nonvested shares and stock awards were included only in the Company's diluted per share computations for net income available to common

stockholders by reflecting them in the Company's calculation of weighted average shares outstanding by application of the treasury stock method.

The following is a summary of the impact of adoption of these standards on the financial statements of prior periods presented:

				Adoption of

	As Previously Reported			FSP APB No. 14-1			SFAS No. 160			As Adjusted
Consolidated Balance Sheet as of December 31, 2008:
Bank and other notes payable	$	2,295,294		$	(34,851	)	$	—		$	2,260,443
Total liabilities		6,460,075			(34,851	)		—			6,425,224
Redeemable noncontrolling interests		266,061			—			(242,734	)		23,327
Additional paid-in capital		1,660,825			60,431			—			1,721,256
Accumulated deficit		(243,870	)		(30,964	)		—			(274,834	)
Total stockholders' equity		1,364,299			29,467			—			1,393,766
Noncontrolling interests		—			5,384			242,734			248,118
Total equity		1,364,299			34,851			242,734			1,641,884
Consolidated Balance Sheet as of December 31, 2007:
Bank and other notes payable		2,434,688			(59,778	)		—			2,374,910
Total liabilities		6,156,060			(59,778	)		—			6,096,282
Redeemable noncontrolling interests		547,693			—			(225,074	)		322,619
Additional paid-in capital		1,367,566			60,558			—			1,428,124
Accumulated deficit		(193,932	)		(9,573	)		—			(203,505	)
Total stockholders' equity		1,149,849			50,985			—			1,200,834
Noncontrolling interests		—			8,793			225,074			233,867
Total equity		1,149,849			59,778			225,074			1,434,701

Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006

						Adoption of

			As Previously Reported			FSP APB No. 14-1			SFAS No. 160 and EITF No. 03-06-1			As Adjusted
For the year ended December 31, 2008:
Interest expense:
		Other	$	266,386		$	13,804		$	—		$	280,190
		Total		281,356			13,804			—			295,160
(Gain) loss on early extinguishment of debt				(95,265	)		11,122			—			(84,143	)
		Total expenses		844,587			24,926			—			869,513
Income from continuing operations				117,789			(24,926	)		—			92,863
Net income				219,941			(24,926	)		—			195,015
Less net income attributable to noncontrolling interests				32,501			(3,535	)		—			28,966
Net income attributable to the Company				187,440			(21,391	)		—			166,049
Net income available to common stockholders				183,316			(21,391	)		—			161,925
Earnings per common share attributable to the Company—basic:
	Income from continuing operations			1.29			(0.29	)		(0.01	)		0.99
	Net income available to common stockholders			2.47			(0.29	)		(0.01	)		2.17
Earnings per common share attributable to the Company —diluted:
	Income from continuing operations			1.29			(0.25	)		(0.05	)		0.99
	Net income available to common stockholders			2.47			(0.25	)		(0.05	)		2.17

						Adoption of

			As Previously Reported			FSP APB No. 14-1			SFAS No. 160 and EITF No. 03-06-1			As Adjusted
For the year ended December 31, 2007:
Interest expense:
		Other	$	236,737		$	11,371		$	—		$	248,108
		Total		250,127			11,371			—			261,498
		Total expenses		810,604			11,371			—			821,975
Income from continuing operations				97,784			(11,371	)		—			86,413
Discontinued operations:
	Gain (loss) on sale of assets			(2,409	)		—			33			(2,376	)
	Income from discontinued operations			5,770			—			16,255			22,025
Total income from discontinued operations				3,361			—			16,288			19,649
Net income				101,145			(11,371	)		16,288			106,062
Less net income attributable to noncontrolling interests				15,337			(1,798	)		16,288			29,827
Net income attributable to the Company				85,808			(9,573	)		—			76,235
Net income available to common stockholders				73,704			(9,573	)		—			64,131
Earnings per common share—basic:
	Income from continuing operations			1.01			(0.13	)		(0.02	)		0.86
	Net income available to common stockholders			1.03			(0.13	)		(0.02	)		0.88
Earnings per common share—diluted:
	Income from continuing operations			1.01			(0.11	)		(0.04	)		0.86
	Discontinued operations			0.01			—			0.01			0.02
	Net income available to common stockholders			1.02			(0.11	)		(0.03	)		0.88

				Adoption of

		As Previously Reported		FSP APB No. 14-1		SFAS No. 160 and EITF No. 03-06-1			As Adjusted
For the year ended December 31, 2006:
Discontinued operations:
	Gain on sale of assets	$	204,985	$	—	$	36,831		$	241,816
	Income from discontinued operations		9,870		—		16,492			26,362
Total income from discontinued operations			214,855		—		53,323			268,178
Net income			287,236		—		53,323			340,559
Less net income attributable to noncontrolling interests			42,687		—		53,323			96,010
Earnings per common share—basic:
	Income from continuing operations		0.72		—		(0.02	)		0.70
	Net income available to common stockholders		3.07		—		(0.02	)		3.05
Earnings per common share—diluted:
	Income from continuing operations		0.80		—		(0.02	)		0.78
	Net income available to common stockholders		3.05		—		(0.02	)		3.03

On February 2, 2009, the Company replaced an existing loan on Queens Center with a new $130,000 loan that bears interest at 7.50% and matures on March 1, 2013. NML funded 50% of the loan.

On February 6, 2009, the Company declared a dividend/distribution of $0.80 per share for common stockholders and OP Unit holders of record on February 20, 2009. In addition, MACWH, LP declared a distribution of $1.05 per unit for its non-participating convertible preferred unit holders and $0.80 per unit for its common unit holders of record on February 20, 2009. All dividends/distributions will be payable on March 6, 2009.

On February 13 and February 17, 2009, the Company repurchased and retired $56,815 of the Senior Notes for $30,963, resulting in a gain on early extinguishment of debt of approximately $22,474. The purchase price was funded by borrowings under the Company's line of credit.

We have audited the accompanying consolidated balance sheets of Pacific Premier Retail Trust, a Maryland Real Estate Investment Trust (the "Trust") as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedules listed in the Index at Item 15(a) (3). These financial statements and financial statement schedules are the responsibility of the Trust's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, such consolidated financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

PACIFIC PREMIER RETAIL TRUST

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share amounts)

			December 31,

			2008			2007
ASSETS:
Property, net			$	1,013,232		$	978,979
Cash and cash equivalents				94,467			17,078
Restricted cash				1,608			1,485
Tenant receivables, net				4,890			8,119
Deferred rent receivable				10,030			9,792
Deferred charges, net				16,759			10,021
Other assets				7,845			1,499

		Total assets	$	1,148,831		$	1,026,973

LIABILITIES AND STOCKHOLDERS' EQUITY:
Mortgage notes payable:
	Related parties		$	61,687		$	66,059
	Others			869,164			753,180

		Total		930,851			819,239
Accounts payable				2,985			1,943
Accrued interest payable				3,638			3,942
Tenant security deposits				2,584			2,245
Other accrued liabilities				35,271			14,247
Due to related parties				1,177			1,200

		Total liabilities		976,506			842,816

Commitments and contingencies
Stockholders' equity:
	Series A and Series B redeemable preferred stock, $.01 par value, 625 shares authorized, issued and outstanding at December 31, 2008 and 2007			—			—
	Series A and Series B common stock, $.01 par value, 219,611 shares authorized issued and outstanding at December 31, 2008 and 2007			2			2
	Additional paid-in capital			320,555			320,555
	Accumulated deficit			(148,232	)		(136,400	)

		Total common stockholders' equity		172,325			184,157

		Total liabilities and stockholders' equity	$	1,148,831		$	1,026,973

PACIFIC PREMIER RETAIL TRUST

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

		For the years ended December 31,

		2008			2007			2006
Revenues:
	Minimum rents	$	130,780		$	125,558		$	124,103
	Percentage rents		5,177			7,409			7,611
	Tenant recoveries		50,690			50,435			48,739
	Other		4,706			4,237			4,166

			191,353			187,639			184,619

Expenses:
	Maintenance and repairs		10,985			11,210			10,484
	Real estate taxes		13,784			14,099			13,588
	Management fees		6,700			6,474			6,382
	General and administrative		5,783			4,568			4,993
	Ground rent		1,559			1,456			1,425
	Insurance		2,118			2,207			1,649
	Marketing		751			611			648
	Utilities		6,790			6,708			6,903
	Security		5,390			5,238			5,184
	Interest		45,995			49,524			50,981
	Depreciation and amortization		32,627			30,970			29,554

			132,482			133,065			131,791

Income before minority interest			58,871			54,574			52,828
Minority interest			(232	)		(195	)		(185	)

Net income		$	58,639		$	54,379		$	52,643

PACIFIC PREMIER RETAIL TRUST

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Dollars in thousands, except share data)

			Common Stock Par Value		Additional Paid-in Capital		Accumulated Earnings (Deficit)			Total Stockholders' Equity

Balance January 1, 2006	219,611	625	$	2	$	307,613	$	(134,475	)	$	173,140
Distributions paid to Macerich PPR Corp.	—	—		—		—		(23,647	)		(23,647	)
Distributions paid to Ontario Teachers' Pension Plan Board	—	—		—		—		(22,999	)		(22,999	)
Other distributions paid	—	—		—		—		(75	)		(75	)
Net income	—	—		—		—		52,643			52,643

Balance December 31, 2006	219,611	625		2		307,613		(128,553	)		179,062
Contributions from Macerich PPR Corp.	—	—		—		6,582		—			6,582
Contributions from Ontario Teachers' Pension Plan Board	—	—		—		6,360		—			6,360
Distributions paid to Macerich PPR Corp.	—	—		—		—		(31,609	)		(31,609	)
Distributions paid to Ontario Teachers' Pension Plan Board	—	—		—		—		(30,542	)		(30,542	)
Other distributions paid	—	—		—		—		(75	)		(75	)
Net income	—	—		—		—		54,379			54,379

Balance December 31, 2007	219,611	625		2		320,555		(136,400	)		184,157
Distributions paid to Macerich PPR Corp.	—	—		—		—		(35,802	)		(35,802	)
Distributions paid to Ontario Teachers' Pension Plan Board	—	—		—		—		(34,594	)		(34,594	)
Other distributions paid	—	—		—		—		(75	)		(75	)
Net income	—	—		—		—		58,639			58,639

Balance December 31, 2008	219,611	625	$	2	$	320,555	$	(148,232	)	$	172,325

PACIFIC PREMIER RETAIL TRUST

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

				For the years ended December 31,

				2008			2007			2006
Cash flows from operating activities:
	Net income			$	58,639		$	54,379		$	52,643
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			33,132			31,458			29,554
		Minority interest			232			195			185
		Changes in assets and liabilities:
			Tenant receivables, net		3,229			(1,435	)		(3,957	)
			Deferred rent receivable		(238	)		207			(103	)
			Other assets		(6,346	)		629			(449	)
			Accounts payable		(265	)		681			(15,926	)
			Accrued interest payable		(304	)		(72	)		(8	)
			Tenant security deposits		339			198			195
			Other accrued liabilities		3,513			4,959			1,188
			Due to related parties		(23	)		428			(192	)

	Net cash provided by operating activities				91,908			91,627			63,130

Cash flows from investing activities:
	Acquistions of property and improvements				(62,386	)		(19,070	)		(22,669	)
	Deferred leasing charges				(9,868	)		(3,325	)		(3,657	)
	Restricted cash				(123	)		(166	)		452

	Net cash used in investing activities				(72,377	)		(22,561	)		(25,874	)

Cash flows from financing activities:
	Proceeds from notes payable				250,000			—			130,000
	Payments on notes payable				(138,388	)		(11,643	)		(119,946	)
	Contributions				—			12,942			—
	Distributions				(52,946	)		(61,851	)		(46,346	)
	Dividends to preferred stockholders				(375	)		(375	)		(375	)
	Deferred financing costs				(433	)		—			(142	)

	Net cash provided by (used in) financing activities				57,858			(60,927	)		(36,809	)

	Net increase in cash				77,389			8,139			447
Cash and cash equivalents, beginning of year					17,078			8,939			8,492

Cash and cash equivalents, end of year				$	94,467		$	17,078		$	8,939

Supplemental cash flow information:
	Cash payment for interest, net of amounts capitalized			$	45,794		$	49,596		$	50,981

Non-cash transactions:
	Accrued distributions included in other accrued liabilities			$	17,150		$	—		$	—

PACIFIC PREMIER RETAIL TRUST

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

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") formed the Pacific Premier Retail Trust (the "Trust") to acquire and operate a portfolio of regional shopping centers ("Centers").

Included in the Centers is a 99% interest in Los Cerritos Center and Stonewood Mall, all other Centers are held at 100%.

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 Trust considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents, for which cost approximates fair value.

Included in tenant receivables are accrued percentage rents of $1,826 and $2,773 and an allowance for doubtful accounts of $326 and $59 at December 31, 2008 and 2007, respectively.

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-line rent adjustment." Rental income was increased (decreased) by $59, ($28) and $104 in 2008, 2007 and 2006, respectively, due to the straight-line rent adjustment.

Percentage rents are recognized on an accrual basis and are accrued when tenants' specified sales targets have been met.

Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred or as specified in the leases. Other tenants pay a fixed rate and these tenant recoveries are recognized into revenue on a straight-line basis over the term of the related leases.

Costs related to the redevelopment, construction and improvement of properties are capitalized. Interest incurred on redevelopment and construction projects is capitalized until construction is substantially complete.

Maintenance and repairs expenses are charged to operations as incurred. Costs for major replacements and betterments, which includes HVAC equipment, roofs, parking lots, etc. are capitalized and depreciated over their estimated useful lives. 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:

The Trust assesses whether there has been impairment in the value of its long-lived assets by considering 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 determination of recoverability is made based upon the estimated undiscounted future net cash flows, excluding interest expense. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flows analysis, with the carrying value of the related assets. Long-lived assets classified as held for sale are measured at the lower of the carrying amount or fair value less cost to sell. Management does not believe impairment has occurred in its net property carrying values at December 31, 2008 or 2007.

Costs relating to obtaining tenant leases are deferred and amortized over the initial term of the agreement using the straight-line method. Costs relating to financing of properties are deferred and amortized over the life of the related loan using the straight-line method, which approximates the effective interest method. The range of terms of the agreements is as follows:

Included in deferred charges are accumulated amortization of $11,982 and $12,167 at December 31, 2008 and 2007, respectively.

On January 1, 2008, the Trust adopted Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity's own assumptions about market participant assumptions.

Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Trust assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The Trust 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 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 $250. At various times during the year, the Trust had deposits in excess of the FDIC insurance limit.

One tenant represented 10.6%, 10.1% and 10.6% of total minimum rents in place as of December 31, 2008, 2007 and 2006, respectively.

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.

In March 2005, the Financial Accounting Standards Board ("FASB") issued FIN No. 47, "Accounting for Conditional Asset Retirement Obligations-an interpretation of SFAS No. 143." FIN No. 47 requires that a liability be recognized for the fair value of a conditional asset retirement obligation if the fair value can be reasonably estimated. The adoption of FIN No. 47 did not have a material effect on the Trust's results of operations or financial condition.

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments—An Amendment of FASB Statements No. 133 and 140." This statement amended SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. 155 permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. This statement also established a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation. The adoption of SFAS No. 155 on January 1, 2007 did not have a material impact on the Trust's consolidated results of operations or financial condition.

In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109" ("FIN 48"). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109, "Accounting for Income Taxes." This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition of previously recognized income tax benefits, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Trust adopted FIN 48 on January 1, 2007. The adoption of FIN No. 48 did not have a material effect on the Trust's results of operations or financial condition.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position SFAS 157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13" ("FSP SFAS 157-1") and FSP SFAS 157-2, "Effective Date of SFAS No. 157 "("FSP SFAS 157-2"). FSP SFAS 157-1 amends SFAS 157 to exclude from the scope of SFAS 157 certain leasing transactions accounted for under Statement of Financial Accounting Standards No. 13, "Accounting for Leases." The adoption of FSP SFAS 157-1, effective January 1, 2008, did not have a material impact on the Trust's consolidated financial statements. FSP SFAS 157-2 amends SFAS No. 157 to defer the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities except those that are recognized or disclosed at fair value in the financial statements on a recurring basis to fiscal years beginning after November 15, 2008. The Trust adopted FSP SFAS 157-2 effective January 1, 2008. In addition, in October 2008, the FASB issued FASB Staff Position SFAS 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active" ("FSP SFAS 157-3"). FSP SFAS 157-3 clarifies the application of SFAS 157 to financial

instruments in an inactive market. FSP SFAS 157-3 did not have a material impact on the Trust's consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115." SFAS No. 159 permits, at the option of the reporting entity, to measure certain assets and liabilities at fair value. The Trust adopted SFAS No. 159 on January 1, 2008. The adoption of SFAS No. 159 did not have a material effect on the Trust's results of operations or financial condition as the Trust did not elect to apply the fair value option to eligible financial instruments on that date.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—An Amendment of ARB No. 51. SFAS No. 141(R) requires an acquiring entity to recognize acquired assets and assumed liabilities in a transaction at fair value as of the acquisition date and changes the accounting treatment for certain items, including acquisition costs, which will be required to be expensed as incurred. SFAS No. 160 requires that noncontrolling interests be presented as a component of consolidated stockholders' equity and eliminates "minority interest accounting" such that the amount of net income attributable to the noncontrolling interests will be presented as part of consolidated net income on the consolidated statement of operations. SFAS No. 141(R) and SFAS No. 160 require concurrent adoption and are to be applied prospectively for the first annual reporting period beginning on or after December 15, 2008. Early adoption of either standard is prohibited. The Trust believes that these statements will not have a material impact on the Trust's results of operations and financial condition.

In June 2008, the FASB issued Staff Position EITF No. 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities." FSP EITF No. 03-6-1 will be applied retrospectively to all the periods presented for the fiscal years beginning after December 15, 2008. The Trust believes that the adoption of FSP EITF No. 03-6-1will not have a material impact on its results of operations and financial condition.

In June 2008, the FASB issued The Trust currently believes that FASB Staff Position EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities will not have a material impact on the Trust's consolidated financial statements and results of operations based upon the share-based payment programs currently in place. FSP EITF No. 03-6-1 will be applied retrospectively to all the periods presented for the fiscal years beginning after December 15, 2008.

On December 19, 2008, the Trust purchased a fee and/or ground leasehold interest in freestanding Mervyn's department stores located at Lakewood Mall, Los Cerritos Center and Stonewood Mall for an aggregate purchase price of $43,405, from the Macerich Management Company ("Management Company"), a subsidiary of the Company. The purchase was funded by the proceeds of the Washington Square loan, which closed on December 10, 2008 (See Note 4—Mortgage Note Payble).

Depreciation expense for the years ended December 31, 2008, 2007 and 2006 was $29,586, $27,911 and $26,603, respectively.

	Carrying Amount of Mortage Notes

	2008				2007
	2008				2007				Interest Rate			Monthly Payment Term(a)		Maturity Date
Property Pledged as Collateral	Other		Related Party		Other		Related Party		Interest Rate			Monthly Payment Term(a)		Maturity Date
Cascade Mall	$	38,790	$	—	$	39,432	$	—		5.28	%		223		2010
Kitsap Mall/Kitsap Place(b)		56,457		—		57,272		—		8.14	%		450		2010
Lakewood Mall		250,000		—		250,000		—		5.43	%		1,127		2015
Los Cerritos Center(c)		130,000		—		130,000		—		2.14	%		772		2011
Redmond Town Center—Retail		70,850		—		72,136		—		4.81	%		301		2009
Redmond Town Center—Office(d)		—		61,687		—		66,059		6.77	%		726		2009
Stonewood Mall		73,067		—		73,990		—		7.44	%		539		2010
Washington Square(e)		250,000		—		97,905		—		6.04	%		1,497		2016
Washington Square(f)		—		—		32,445		—		—			—		—

	$	869,164	$	61,687	$	753,180	$	66,059

Most of the mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt. The related party mortgage note is payable to one of the Company's joint venture partners. See Note 5—Related Party Transactions.

Total interest costs capitalized for the years ended December 31, 2008, 2007 and 2006 was $1,199, $1,844 and $668, respectively.

The fair value of mortgage notes payable at December 31, 2008 and 2007 was $885,725 and $834,565 based on current interest rates for comparable loans. The method for computing fair value at December 31, 2008 was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt.

The Trust engages the Management 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. Under these arrangements, the Management Company is reimbursed for compensation paid to on-site employees, leasing agents and project managers at the properties, as well as insurance costs and other administrative expenses. In consideration of these services, the Management Company receives monthly management fees of 4.0% of the gross monthly rental revenue of the properties. During the years ended 2008, 2007 and 2006, the Trust incurred management fees of $6,700, $6,474 and $6,382, respectively, 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 $4,369, $4,654 and $4,875 during the years ended December 31, 2008, 2007 and 2006, respectively. Additionally, no interest costs were capitalized during the years ended December 31, 2008, 2007 and 2006, respectively, in relation to this note.

On December 19, 2008, the Trust purchased a fee and/or ground leasehold interest in freestanding Mervyn's department stores located at Lakewood Mall, Los Cerritos Center and Stonewood Mall for an aggregate purchase price of $43,405, from the Management Company. The purchase was funded by the proceeds of Washington Square loan, which closed on December 10, 2008 (See Note 3—Fixed Assets).

The Trust elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 1999. To qualify as a REIT, the Trust must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its taxable income to its stockholders. It is the Trust's current intention to adhere to these requirements and maintain the Trust's REIT status. As a REIT, the Trust generally will not be subject to corporate level federal income tax on net income it distributes currently to its stockholders. As such, no provision for federal income taxes has been included in the accompanying consolidated financial statements. If the Trust fails to qualify as a REIT in any taxable year, then it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Trust qualifies for taxation as a REIT, the Trust may be subject to certain state and local taxes on its income and property and to federal income and excise taxes on its undistributed taxable income, if any.

For income tax purposes, distributions consist of ordinary income, capital gains, return of capital or a combination thereof. The following table details the components of the distributions for the years ended December 31:

Under existing non-cancelable operating lease agreements, tenants are committed to pay the following minimum rental payments to the Trust:

On October 6, 1999, the Trust issued 125 shares of 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.

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, net of amounts capitalized, was $1,559, $1,456 and $1,425 for the years ended December 31, 2008, 2007 and 2006, respectively.

	Initial Cost to Company									Gross Amount at Which Carried at Close of Period

	Initial Cost to Company						Cost Capitalized Subsequent to Acquisition			Gross Amount at Which Carried at Close of Period													Total Cost Net of Accumulated Depreciation
Shopping Centers Entities	Land		Building and Improvements		Equipment and Furnishings		Cost Capitalized Subsequent to Acquisition			Land		Building and Improvements		Furniture, Fixtures and Equipment		Construction in Progress			Total		Accumulated Depreciation		Total Cost Net of Accumulated Depreciation
Black Canyon Auto Park	$	20,600	$	—	$	—	$	307		$	—	$	—	$	—	$	20,907		$	20,907	$	—	$	20,907
Black Canyon Retail		—		—		—		446			—		—		—		446			446		—		446
Borgata		3,667		28,080		—		7,536			3,667		35,430		186		—			39,283		6,548		32,735
Cactus Power Center		15,374		—				13,391			—		—		—		28,765			28,765		—		28,765
Capitola Mall		11,312		46,689		—		7,384			11,309		53,534		542		—			65,385		18,280		47,105
Carmel Plaza		9,080		36,354		—		15,333			9,080		51,490		197		—			60,767		13,376		47,391
Chandler Fashion Center		24,188		223,143		—		6,732			24,188		228,834		1,041		—			254,063		42,572		211,491
Chesterfield Towne Center		18,517		72,936		2		32,955			18,517		103,152		2,192		549			124,410		42,817		81,593
Coolidge Holding		—		—		—		61			—		—		—		61			61		—		61
Danbury Fair Mall		130,367		316,951		—		60,854			132,895		354,681		2,594		18,002			508,172		33,049		475,123
Deptford Mall		48,370		194,250		—		22,233			61,029		203,406		397		21			264,853		11,959		252,894
Estrella Falls		10,550		—		—		14,297			—		—		—		24,847			24,847		—		24,847
Fiesta Mall		19,445		99,116		—		52,003			20,483		112,620		78		37,383			170,564		13,463		157,101
Flagstaff Mall		5,480		31,773		—		9,909			5,480		41,550		132		—			47,162		6,709		40,453
FlatIron Crossing		21,823		286,809		—		18,110			20,388		278,310		100		27,944			326,742		48,870		277,872
FlatIron Peripheral		6,205		—		—		(50	)		6,155		—		—		—			6,155		—		6,155
Former Mervyn's locations		82,998		240,872		—		475			82,998		238,244		—		3,103			324,345		9,899		314,446
Freehold Raceway Mall		164,986		362,841		—		90,951			178,875		436,775		1,049		2,079			618,778		41,949		576,829
Fresno Fashion Fair		17,966		72,194		—		39,454			17,966		110,613		1,035		—			129,614		31,068		98,546
Great Northern Mall		12,187		62,657		—		6,322			12,647		67,555		405		559			81,166		8,725		72,441
Green Tree Mall		4,947		14,925		332		28,883			4,947		43,540		600		—			49,087		32,336		16,751
Hilton Village		—		19,067		—		1,165			—		20,218		14		—			20,232		2,024		18,208
La Cumbre Plaza		18,122		21,492		—		18,185			17,280		38,198		125		2,196			57,799		6,313		51,486
Macerich Cerritos Adjacent, LLC		—		6,448		—		(5,692	)		—		756		—		—			756		154		602
Macerich Management Co.		—		2,237		26,562		48,051			580		5,845		64,079		6,346			76,850		26,678		50,172
Macerich Property Management Co., LLC		—		—		2,808		(1,664	)		—		1,144		—		—			1,144		1,060		84
MACWH, LP		—		25,771		—		1,306			—		27,770		849		(1,542	)		27,077		3,297		23,780
Northgate Mall		8,400		34,865		841		43,755			13,414		50,647		720		23,080			87,861		31,124		56,737
Northridge Mall		20,100		101,170		—		10,448			20,100		110,773		641		204			131,718		18,101		113,617
Oaks, The		32,300		117,156		—		215,795			44,710		274,688		702		45,151			365,251		26,502		338,749
One Scottsdale		—		—		—		94			—		—		—		94			94		—		94
Pacific View		8,697		8,696		—		110,573			7,854		118,406		1,273		433			127,966		28,813		99,153
Palisene		—		2,759		—		12,199			—		—		—		14,958			14,958		—		14,958
Panorama Mall		4,373		17,491		—		4,244			4,373		20,780		234		721			26,108		3,776		22,332
Paradise Valley Mall		24,565		125,996		—		28,054			22,580		125,801		889		29,345			178,615		23,866		154,749
Paradise Village Ground Leases		8,880		2,489		—		7,018			15,063		3,226		—		98			18,387		343		18,044
Prasada		6,365		—		—		19,589			—		—		—		25,954			25,954		—		25,954

	Initial Cost to Company									Gross Amount at Which Carried at Close of Period

	Initial Cost to Company						Cost Capitalized Subsequent to Acquisition			Gross Amount at Which Carried at Close of Period												Total Cost Net of Accumulated Depreciation
Shopping Centers Entities	Land		Building and Improvements		Equipment and Furnishings		Cost Capitalized Subsequent to Acquisition			Land		Building and Improvements		Furniture, Fixtures and Equipment		Construction in Progress		Total		Accumulated Depreciation		Total Cost Net of Accumulated Depreciation
Prescott Gateway	$	5,733	$	49,778	$	—	$	4,498		$	5,733	$	54,088	$	162	$	26	$	60,009	$	11,836	$	48,173
Prescott Peripheral		—		—		—		5,586			1,345		4,241		—		—		5,586		474		5,112
Promenade at Casa Grande		15,089		—		—		99,333			11,497		102,878		47		—		114,422		4,060		110,362
PVOP II		1,150		1,790		—		3,504			2,300		3,849		295		—		6,444		1,373		5,071
Queens Center		21,460		86,631		8		285,215			37,160		353,066		3,088		—		393,314		62,320		330,994
Rimrock Mall		8,737		35,652		—		10,243			8,737		45,411		450		34		54,632		14,832		39,800
Rotterdam Square		7,018		32,736		—		2,336			7,285		34,516		289		—		42,090		5,093		36,997
Salisbury, The Centre at		15,290		63,474		31		23,506			15,284		86,040		977		—		102,301		27,219		75,082
Santa Monica Place		26,400		105,600		—		81,166			11,945		5,624		—		195,597		213,166		508		212,658
SanTan Village Regional Center		7,827		—		—		180,776			6,344		181,546		645		68		188,603		9,912		178,691
SanTan Adjacent Land		29,414		—		—		1,393			—		—		—		30,807		30,807		—		30,807
Shoppingtown Mall		11,927		61,824		—		13,460			12,371		71,293		185		3,362		87,211		7,766		79,445
Somersville Town Center		4,096		20,317		1,425		15,133			4,099		36,373		499		—		40,971		18,685		22,286
South Plains Mall		23,100		92,728		—		11,953			23,100		102,464		872		1,345		127,781		29,149		98,632
South Towne Center		19,600		78,954		—		23,806			20,360		101,097		903		—		122,360		30,277		92,083
Superstition Springs Power Center		1,618		4,420		—		1			1,618		4,397		24		—		6,039		804		5,235
The Macerich Partnership, L.P.		—		2,534		—		11,246			212		1,593		5,268		6,707		13,780		932		12,848
The Shops at Tangerine (Marana)		36,158		—		—		(11,640	)		—		—		—		24,518		24,518		—		24,518
Towne Mall		6,652		31,184		—		1,137			6,890		31,999		84		—		38,973		4,545		34,428
The Marketplace at Flagstaff Mall		—		—		—		50,309			—		50,295		6		8		50,309		2,328		47,981
Tucson La Encantada		12,800		19,699		—		55,015			12,800		74,478		236		—		87,514		17,162		70,352
Twenty Ninth Street		50		37,793		64		199,700			23,599		213,168		840		—		237,607		41,319		196,288
Valley River		24,854		147,715		—		9,699			24,854		156,956		458		—		182,268		14,207		168,061
Valley View Center		17,100		68,687		—		48,797			23,862		108,872		1,730		120		134,584		35,076		99,508
Victor Valley, Mall at		15,700		75,230		—		43,713			22,564		111,127		875		77		134,643		13,822		120,821
Village Center		2,250		4,459		—		8,538			4,500		10,734		13		—		15,247		2,676		12,571
Village Crossroads		3,100		4,493		—		10,190			6,200		11,573		10		—		17,783		1,900		15,883
Village Fair North		3,500		8,567		—		14,587			7,000		19,642		12		—		26,654		4,088		22,566
Village Plaza		3,423		8,688		—		5,495			3,423		14,128		22		33		17,606		1,799		15,807
Village Square I		—		2,844		—		852			358		3,334		4		—		3,696		476		3,220
Village Square II		—		8,492		—		4,949			4,389		9,049		3		—		13,441		1,797		11,644
Vintage Faire Mall		14,902		60,532		—		45,021			14,696		93,713		680		11,366		120,455		28,534		91,921
Waddell Center West		12,056		—		—		2,088			—		—		—		14,144		14,144		—		14,144
Westcor / Queen Creek		—		—		—		279			—		—		—		279		279		—		279
Westside Pavilion		34,100		136,819		—		55,063			34,100		188,774		3,085		23		225,982		47,723		178,259
Wilton Mall		19,743		67,855		—		6,544			19,810		73,622		155		555		94,142		8,021		86,121

	$	1,164,711	$	3,894,722	$	32,073	$	2,264,197		$	1,135,013	$	5,517,926	$	101,991	$	600,773	$	7,355,703	$	984,384	$	6,371,319

Depreciation 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:

The changes in total real estate assets for the three years ended December 31, 2008 are as follows:

The changes in accumulated depreciation for the three years ended December 31, 2008 are as follows:

	Initial Cost to Company								Gross Amount at Which Carried at Close of Period

	Initial Cost to Company						Cost Capitalized Subsequent to Acquisition		Gross Amount at Which Carried at Close of Period												Total Cost Net of Accumulated Depreciation
Shopping Centers Entities	Land		Building and Improvements		Equipment and Furnishings		Cost Capitalized Subsequent to Acquisition		Land		Building and Improvements		Furniture, Fixtures and Equipment		Construction in Progress		Total		Accumulated Depreciation		Total Cost Net of Accumulated Depreciation
Cascade Mall	$	8,200	$	32,843	$	—	$	4,303	$	8,200	$	36,780	$	366	$	—	$	45,346	$	9,964	$	35,382
Creekside Crossing		620		2,495		—		258		620		2,753		—		—		3,373		702		2,671
Cross Court Plaza		1,400		5,629		—		428		1,400		6,057		—		—		7,457		1,569		5,888
Kitsap Mall		13,590		56,672		—		4,339		13,486		60,973		142		—		74,601		16,295		58,306
Kitsap Place Mall		1,400		5,627		—		3,019		1,400		8,646		—		—		10,046		1,938		8,108
Lakewood Mall		48,025		125,759		—		65,092		48,025		171,253		811		18,787		238,876		37,651		201,225
Los Cerritos Center		65,179		146,497		—		24,133		65,271		153,976		2,127		14,435		235,809		35,278		200,531
Northpoint Plaza		1,400		5,627		—		681		1,397		6,311		—		—		7,708		1,574		6,134
Redmond Town Center		18,381		73,868		—		22,241		17,864		96,355		238		33		114,490		24,021		90,469
Redmond Office		20,676		90,929		—		15,235		20,676		106,164		—		—		126,840		25,260		101,580
Stonewood Mall		30,902		72,104		—		8,279		30,902		79,163		1,220		—		111,285		19,663		91,622
Washington Square Mall		33,600		135,084		—		71,274		33,600		204,482		1,873		3		239,958		45,392		194,566
Washington Square Too		4,000		16,087		—		812		4,000		16,275		57		567		20,899		4,149		16,750

	$	247,373	$	769,221	$	—	$	220,094	$	246,841	$	949,188	$	6,834	$	33,825	$	1,236,688	$	223,456	$	1,013,232

Depreciation 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:

The changes in total real estate assets for the three years ended December 31, 2008 are as follows:

The changes in accumulated depreciation for the three years ended December 31, 2008 are as follows:


Buildings and improvements		5-40 years
Tenant improvements		5-7 years
Equipment and furnishings		5-7 years


Deferred lease costs		1-15 years
Deferred financing costs		1-15 years
In-place lease values		Remaining lease term plus an estimate for renewal
Leasing commissions and legal costs		5-10 years

Property	Recourse Debt

Boulevard Shops	$	4,280	12/17/2010
Chandler Village Center		4,375	1/15/2011
Estrella Falls, The Market at		8,243	6/1/2011

	$	16,898

	Payment Due by Period

Contractual Obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than five years
Long-term debt obligations (includes expected interest payments)	$	6,276,989	$	632,115	$	3,270,702	$	1,484,349	$	889,823
Operating lease obligations(1)		778,472		7,495		15,845		15,001		740,131
Purchase obligations(1)		96,711		96,711		—		—		—
Other long-term liabilities(2)		403,891		338,581		19,760		12,931		32,619

	$	7,556,063	$	1,074,902	$	3,306,307	$	1,512,281	$	1,662,573


Buildings and improvements		5-40 years
Tenant improvements		5-7 years
Equipment and furnishings		5-7 years

		2008		2007			2006

Income (loss) before discontinued operations		$	12,520	$	8,308		$	(1,572	)
Discontinued operations:
	Gain (loss) on sale of assets		14,477		(354	)		38,231
	Income from discontinued operations		233		3,284			4,168

	Total noncontrolling interests in the Operating Partnership	$	27,230	$	11,238		$	40,827

		2008		2007

Assets(1):
	Properties, net	$	4,706,823	$	4,005,389
	Other assets		531,976		439,464

	Total assets	$	5,238,799	$	4,444,853

Liabilities and partners' capital(1):
	Mortgage notes payable(2)	$	4,244,270	$	3,865,593
	Other liabilities		215,975		160,115
	The Company's capital		434,504		260,112
	Outside partners' capital		344,050		159,033

	Total liabilities and partners' capital	$	5,238,799	$	4,444,853

	SDG Macerich Properties, L.P.		Pacific Premier Retail Trust		Tysons Corner LLC

As of December 31, 2008:
Total Assets	$	882,117	$	1,148,831	$	328,064
Total Liabilities	$	823,550	$	976,506	$	333,307
As of December 31, 2007:
Total Assets	$	904,186	$	1,026,973	$	333,966
Total Liabilities	$	826,291	$	842,816	$	340,785

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31, 2008

Assets
Derivative Instruments	$	—	$	2	$	—	$	2
Liabilities
Derivative Instruments	$	—	$	56,434	$	—	$	56,434

	2008			2007

Land	$	1,135,013		$	1,146,096
Building improvements		5,190,049			5,121,442
Tenant improvements		327,877			285,395
Equipment and furnishings		101,991			83,199
Construction in progress		600,773			442,670

		7,355,703			7,078,802
Less accumulated depreciation		(984,384	)		(891,329	)

	$	6,371,319		$	6,187,473

	2008			2007

Government debt securities, at par value	$	29,108		$	30,544
Less discount		(1,165	)		(1,501	)

		27,943			29,043
Unrealized gain		4,347			2,183

Fair value	$	32,290		$	31,226


1 year or less	$	1,283
2 to 5 years		4,056
6 to 10 years		23,769

	$	29,108

		2008			2007

Leasing		$	139,374		$	139,343
Financing			54,256			47,406
Intangible assets resulting from SFAS No. 141 allocations(1):
	In-place lease values		175,428			201,863
	Leasing commissions and legal costs		57,832			35,728

			426,890			424,340
Less accumulated amortization(2)			(181,579	)		(175,353	)

			245,311			248,987
Other assets, net			94,351			137,815

		$	339,662		$	386,802

Year ending December 31,

2009	$	16,692
2010		14,259
2011		12,049
2012		10,368
2013		9,085
Thereafter		66,207

	$	128,660

	2008			2007

Above Market Leases
Original allocated value	$	71,808		$	65,752
Less accumulated amortization		(49,014	)		(38,530	)

	$	22,794		$	27,222

Below Market Leases
Original allocated value	$	185,976		$	156,667
Less accumulated amortization		(108,197	)		(93,090	)

	$	77,779		$	63,577

Year ending December 31,	Above Market		Below Market

2009	$	4,670	$	12,469
2010		3,578		10,981
2011		2,660		8,779
2012		1,601		7,172
2013		1,369		5,759
Thereafter		8,916		32,619

	$	22,794	$	77,779

Year Ending December 31,

2009	$	585,561
2010		218,076
2011		1,347,278
2012		262,456
2013		406,421
Thereafter		837,927

		3,657,719
Debt premiums		22,256

	$	3,679,975

Year Ending December 31,

2009	$	8,185
2010		1,538,979
2011		776
2012		727,986
2013		24,027

		2,299,953
Debt discount		(39,510	)

	$	2,260,443

	2008		2007		2006

Management Fees
MMC	$	12,584	$	10,727	$	10,520
Westcor Management Companies		7,830		7,088		6,812
Wilmorite Management Companies		1,699		1,608		1,551

	$	22,113	$	19,423	$	18,883

Development and Leasing Fees
MMC	$	794	$	535	$	704
Westcor Management Companies		8,263		9,995		5,136
Wilmorite Management Companies		1,752		1,364		79

	$	10,809	$	11,894	$	5,919

	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at January 1, 2008

Liabilities
Debt on Non-Rochester Properties	$	—	$	71,032	$	34,930	$	105,962

Year Ending December 31,

2009	$	459,798
2010		417,879
2011		376,139
2012		323,638
2013		292,542
Thereafter		1,286,554

	$	3,156,550

	2008		2007		2006

LTIP units	$	6,443	$	8,389	$	685
Stock awards		11,577		12,231		14,190
Stock options		596		194		—
SARs		2,605		—		—
Phantom stock units		653		595		535

	$	21,874	$	21,409	$	15,410

				Weighted Average Grant Date Fair Value

Balance at January 1, 2008		—		$	—
	Granted	1,257,134		$	7.68
	Vested	—		$	—
	Forfeited	(28,750	)	$	7.68

Balance at December 31, 2008		1,228,384		$	7.68

				Weighted Average Grant Date Fair Value

Balance at January 1, 2006		—
	Granted	215,709		$	52.18
	Vested	—		$	—
	Forfeited	—		$	—

Balance at December 31, 2006		215,709		$	52.18
	Granted	57,258		$	64.35
	Vested	(85,580	)	$	52.18
	Forfeited	—		$	—

Balance at December 31, 2007		187,387		$	55.90
	Granted	118,780		$	61.17
	Vested	(6,817	)	$	89.21
	Forfeited	—		$	—

Balance at December 31, 2008		299,350		$	57.02

			Weighted Average Exercise Price

Balance at January 1, 2006		2,500	$	39.43
	Granted	—	$	—
	Exercised	—	$	—
	Forfeited	—	$	—

Balance at December 31, 2006		2,500	$	39.43
	Granted	100,000	$	82.14
	Exercised	—	$	—
	Forfeited	—	$	—

Balance at December 31, 2007		102,500	$	81.10
	Granted	—	$	—
	Exercised	—	$	—
	Forfeited	—	$	—

Balance at December 31, 2008		102,500	$	81.10

	2008				2007				2006

Ordinary income	$	3.19	99.7	%	$	1.52	51.9	%	$	1.14	41.4	%
Qualified dividends		—	0.0	%		—	0.0	%		—	0.0	%
Capital gains		0.01	0.3	%		0.08	2.6	%		0.93	33.8	%
Unrecaptured Section 1250 gain		—	0.0	%		—	0.0	%		0.66	24.0	%
Return of capital		—	0.0	%		1.33	45.5	%		0.02	0.8	%

Dividends paid	$	3.20	100.0	%	$	2.93	100.0	%	$	2.75	100.0	%

	2008			2007			2006

Current	$	—		$	(8	)	$	(35	)
Deferred		(1,126	)		478			2

Total income tax (provision) benefit	$	(1,126	)	$	470		$	(33	)

	2008			2007			2006

Book income (loss) for Taxable REIT Subsidiaries	$	879		$	(3,812	)	$	466

Tax (provision) benefit at statutory rate on earnings from continuing operations before income taxes	$	(299	)	$	1,296		$	(158	)
Other		(827	)		(826	)		125

Income tax (provision) benefit	$	(1,126	)	$	470		$	(33	)

	2008			2007

Net operating loss carryforwards	$	15,939		$	14,875
Property, primarily differences in depreciation and amortization, the tax basis of land assets and treatment of certain other costs		(4,329	)		(4,005	)
Other		2,220			1,210

Net deferred tax assets	$	13,830		$	12,080


Unrecognized tax benefit at January 1, 2008	$	1,906
Gross increases for tax positions of current year		647
Gross decreases for lapse of statue of limitations		(352	)

Unrecognized tax benefit at December 31, 2008	$	2,201

	2008 Quarter Ended								2007 Quarter Ended

	Dec 31		Sep 30		Jun 30		Mar 31		Dec 31		Sep 30		Jun 30		Mar 31
Revenues(1)	$	242,435	$	224,735	$	216,789	$	217,531	$	225,068	$	202,124	$	194,323	$	192,799
Net income available to common stockholders	$	50,950	$	2,640	$	15,725	$	92,610	$	36,915	$	16,384	$	7,885	$	2,947
Net income available to common stockholders per share—basic	$	0.67	$	0.03	$	0.21	$	1.27	$	0.51	$	0.23	$	0.11	$	0.04
Net income available to common stockholders per share—diluted	$	0.67	$	0.03	$	0.21	$	1.25	$	0.51	$	0.22	$	0.11	$	0.04


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 Town Center		Redmond, Washington
Redmond Office		Redmond, Washington
Stonewood Mall		Downey, California
Washington Square Mall		Portland, Oregon
Washington Square Too		Portland, Oregon


Building and improvements			5 - 39 years
Tenant improvements			5 - 7 years
Equipment and furnishings			5 - 7 years


Deferred lease cost			1 - 9 years
Deferred finance costs			1 - 12 years

	2008			2007

Land	$	246,841		$	238,569
Building improvements		902,673			871,610
Tenant improvements		46,515			29,471
Equipment and furnishings		6,834			7,992
Construction in progress		33,825			30,133

		1,236,688			1,177,775
Less accumulated depreciation		(223,456	)		(198,796	)

	$	1,013,232		$	978,979