10-K 1 a2073846z10-k.htm 10-K
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	Securities and Exchange Commission Washington, D.C. 20549
	FORM 10-K
(Mark one)
ý	Annual Report Pursuant to Section 13 OR 15(D) of the Securities Exchange Act of 1934
	For the fiscal year ended December 31, 2001 or
o	Transition Report Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934 (no fee required)
	For the transition period from to
	Commission File Number 1-12504
	The Macerich Company
	(Exact name of registrant as specified in its charter)
	Maryland (State or other jurisdiction of Incorporation or organization) 401 Wilshire Boulevard, # 700 Santa Monica, California 90401 (Address of principal executive offices and zip code)
	95-4448705 (I.R.S. Employer Identification No.)
	Registrant's telephone number, including area code: (310) 394-6000
	Securities registered pursuant to Section 12(b) of the Act:
	Title of each class Common Stock, $0.01 Par Value Preferred Share Purchase Rights	Name of each exchange on which registered New York Stock Exchange New York Stock Exchange
	Securities registered pursuant to Section 12(g) of the Act: None
	Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such report(s)) and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /.
	Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. / /
	As of February 28, 2002, the aggregate market value of the 28,934,500 shares of Common Stock held by non-affiliates of the registrant was $791 million based upon the closing price ($27.35) on the New York Stock Exchange composite tape on such date. (For this computation, the registrant has excluded the market value of all shares of its Common Stock reported as beneficially owned by executive officers and directors of the registrant and certain other shareholders; such exclusion shall not be deemed to constitute an admission that any such person is an "affiliate" of the registrant.) As of February 28, 2002, there were 36,045,146 shares of Common Stock outstanding.
	DOCUMENTS INCORPORATED BY REFERENCE
	Portions of the proxy statement for the annual stockholders meeting to be held in 2002 are incorporated by reference into Part III.

THE MACERICH COMPANY

Annual Report on Form 10-K

For The Year Ended December 31, 2001

TABLE OF CONTENTS

Item No.		Page No.

Part I

1.	Business	1-11

2.	Properties	12-17

3.	Legal Proceedings	17

4.	Submission of Matters to a Vote of Security Holders	17

Part II

5.	Market for the Registrant's Common Equity and Related Stockholder Matters	18

6.	Selected Financial Data	19-21

7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22-37

7A.	Quantitative and Qualitative Disclosures About Market Risk	38

8.	Financial Statements and Supplementary Data	39

9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	39

Part III

10.	Directors and Executive Officers of the Company	39

11.	Executive Compensation	39

12.	Security Ownership of Certain Beneficial Owners and Management	39

13.	Certain Relationships and Related Transactions	39

Part IV

14.	Exhibits, Financial Statements, Financial Statement Schedules and Reports on Form 8-K	40-100

Signatures		101-102

Part I

Item I. Business

General

The Macerich Company (the "Company") is involved in the acquisition, ownership, redevelopment, management and leasing of regional and community shopping centers located throughout the United States. The Company is the sole general partner of, and owns a majority of the ownership interests in, The Macerich Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"). The Operating Partnership owns or has an ownership interest in 46 regional shopping centers and four community shopping centers aggregating approximately 41 million square feet of gross leasable area ("GLA"). These 50 regional and community shopping centers are referred to hereinafter as the "Centers", unless the context otherwise requires. The Company is a self-administered and self-managed real estate investment trust ("REIT") and conducts all of its operations through the Operating Partnership and the Company's three management companies, Macerich Property Management Company, LLC, a single-member Delaware limited liability company, Macerich Manhattan Management Company, a California corporation, and Macerich Management Company, a California corporation (collectively, the "Management Companies").

The Company was organized as a Maryland corporation in September 1993 to continue and expand the shopping center operations of Mace Siegel, Arthur M. Coppola, Dana K. Anderson and Edward C. Coppola and certain of their business associates.

All references to the Company in this Form 10-K include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise.

Recent Developments

A. Equity Offerings

B. Refinancings

During 2001, the Company's line of credit facility was increased from $150.0 million to $200.0 million. The new line of credit matures in May 2002 with a one-year extension option subject to certain terms and conditions. The interest rate ranges from LIBOR plus 1.35% to 1.80%, depending on leverage levels.

On May 2, 2001, the Company refinanced the debt on Capitola Mall. The prior loan of $36.4 million, at a fixed interest rate of 9.25%, was paid in full and a new note was issued for $48.5 million bearing interest at a fixed rate of 7.13% and maturing May 15, 2011.

On July 10, 2001, the Company refinanced the debt on Pacific View. The prior bank construction loan of $89.3 million, at a floating interest rate (LIBOR plus 1.75%), was paid in full and a new permanent loan was issued for $89.0 million, which may be increased up to $96.0 million subject to certain conditions, bearing interest at a fixed rate of 7.16% and maturing August 31, 2011.

MACERICH 2001 Financial Statements

On October 9, 2001, the Company refinanced the debt on Rimrock Mall. The prior loan of $29.3 million, at a fixed interest rate of 7.70%, was paid in full and a new note was issued for $46.0 million bearing interest at a fixed rate of 7.45% and maturing October 1, 2011.

C. Redevelopment

In the second quarter of 2001, the new $36.0 million expansion opened at Lakewood Mall. The expansion included 60,000 square feet of specialty tenant space and a second level food court. A new 210,000 square foot Macy's and a new Mervyn's department store anchor the expansion wing.

In the third quarter of 2001, the Company completed a $10.0 million interior and exterior renovation of Vintage Faire Mall.

On December 28, 2001, the Company, as part of its proposed redevelopment and expansion of Queens Center, purchased a five-acre parcel of land adjacent to the center. The project will involve both the renovation of the existing center as well as an expansion of the center from 623,876 square feet to approximately 1 million square feet, including the addition of 250,000 square feet of mall shops. Construction is expected to begin in the second quarter of 2002 with completion estimated to be, in phases, through late 2004. Additionally, Swedish apparel retailer Hennes and Monritz opened a 19,427 square feet store in 2001 at this Center.

D. Stock Repurchase Program

On November 10, 2000, the Company's Board of Directors approved a stock repurchase program of up to 3.4 million shares of common stock. As of December 31, 2000, the Company repurchased 564,000 shares of its common stock at an average price of $19.02 per share. No shares of common stock were repurchased by the Company in 2001.

E. Other Events

On December 14, 2001, Villa Marina Marketplace, a 448,262 square foot community shopping center, located in Marina Del Rey, California, a wholly-owned property of the Company, was sold. The center, which the Company originally acquired on January 25, 1996, was sold for approximately $99.0 million, including the assumption of the existing mortgage of $58.0 million, which resulted in a $24.7 million gain. The Company used approximately $26 million of the net proceeds from this sale to retire $25.7 million of its outstanding convertible subordinated debentures due December 2002. The remaining balance of the proceeds was used for general corporate purposes.

On March 19, 2002, the Company sold Boulder Plaza, a 159,238 square foot community center in Boulder, Colorado for $24.7 million. The proceeds from the sale will be used for general corporate purposes.

The Shopping Center Industry

General

There are several types of retail shopping centers, which are differentiated primarily based on size and marketing strategy. Regional shopping centers generally contain in excess of 400,000 square feet of GLA, are typically anchored by two or more department or large retail stores ("Anchors") and are referred to as "Regional Shopping Centers" or "Malls". Regional Shopping Centers also typically contain numerous diversified retail stores ("Mall Stores"), most of which are national or regional retailers typically located along corridors connecting the Anchors. Community Shopping Centers, also referred to as "strip centers,"

2 MACERICH 2001 Financial Statements

are retail shopping centers that are designed to attract local or neighborhood customers and are typically anchored by one or more supermarkets, discount department stores and/or drug stores. Community Shopping Centers typically contain 100,000 square feet to 400,000 square feet of GLA. In addition, freestanding retail stores are located along the perimeter of the shopping centers ("Freestanding Stores"). Anchors, Mall and Freestanding Stores and other tenants typically contribute funds for the maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operation of the shopping center.

Regional Shopping Centers

A Regional Shopping Center draws from its trade area by offering a variety of fashion merchandise, hard goods and services and entertainment, generally in an enclosed, climate controlled environment with convenient parking. Regional Shopping Centers provide an array of retail shops and entertainment facilities and often serve as the town center and the preferred gathering place for community, charity, and promotional events.

The Company focuses on the acquisition, redevelopment, management and leasing of Regional Shopping Centers. Regional Shopping Centers have generally provided owners with relatively stable growth in income despite the cyclical nature of the retail business. This stability is due both to the diversity of tenants and to the typical dominance of Regional Shopping Centers in their trade areas. Regional Shopping Centers are difficult to develop because of the significant barriers to entry, including the limited availability of capital and suitable development sites, the presence of existing Regional Shopping Centers in most markets, a limited number of Anchors, and the associated development costs and risks. Consequently, the Company believes that few new Regional Shopping Centers will be built in the next five years.

Regional Shopping Centers have different strategies with regard to price, merchandise offered and tenant mix, and are generally tailored to meet the needs of their trade areas. Anchor tenants are located along common areas in a configuration designed to maximize consumer traffic for the benefit of the Mall Stores. Mall GLA, which generally refers to gross leasable area contiguous to the Anchors for tenants other than Anchors, is leased to a wide variety of smaller retailers. Mall Stores typically account for the majority of the revenues of a Regional Shopping Center.

Although a variety of retail formats compete for consumer purchases, the Company believes that Regional Shopping Centers will continue to be a preferred shopping destination. The combination of a climate controlled shopping environment, a dominant location, and a diverse tenant mix has resulted in Regional Shopping Centers generating higher tenant sales than are generally achieved at smaller retail formats. Further, the Company believes that department stores located in Regional Shopping Centers will continue to provide a full range of current fashion merchandise at a limited number of locations in any one market, allowing them to command the largest geographical trade area of any retail format.

Community Shopping Centers

Community Shopping Centers are designed to attract local and neighborhood customers and are typically open-air shopping centers, with one or more supermarkets, drugstores or discount department stores. National retailers such as Kids-R-Us at Bristol Shopping Center and Saks Fifth Avenue at Carmel Plaza provide the Company's Community Shopping Centers with the opportunity to draw from a much larger trade area than a typical supermarket or drugstore anchored Community Shopping Center.

MACERICH 2001 Financial Statements 3

Business of the Company

Management and Operating Philosophy

The Company believes that the shopping center business requires specialized skills across a broad array of disciplines for effective and profitable operations. For this reason, the Company has developed a fully integrated real estate organization with in-house acquisition, accounting, construction, finance, leasing, legal, marketing, property management and redevelopment expertise. In addition, the Company emphasizes a philosophy of decentralized property management, leasing and marketing performed by on-site professionals. The Company believes that this strategy results in the optimal operation, tenant mix and drawing power of each Center as well as the ability to quickly respond to changing competitive conditions of the Center's trade area.

Property Management and Leasing. The Company believes that on-site property managers can most effectively operate the Centers. Each Center's property manager is responsible for overseeing the operations, marketing, maintenance and security functions at the Center. Property managers focus special attention on controlling operating costs, a key element in the profitability of the Centers, and seek to develop strong relationships with and to be responsive to the needs of retailers.

The Company believes strongly in decentralized leasing and accordingly, most of its leasing managers are located on-site to better understand the market and the community in which a Center is located. Leasing managers are charged with more than the responsibility of leasing space; they continually assess and fine tune each Center's tenant mix, identify and replace underperforming tenants and seek to optimize existing tenant sizes and configurations.

Acquisitions. Since its initial public offering ("IPO"), the Company has acquired interests in shopping centers nationwide. These acquisitions were identified and consummated by the Company's staff of acquisition professionals who are strategically located in Santa Monica, Dallas, Denver, and Atlanta. The Company believes that it is geographically well positioned to cultivate and maintain ongoing relationships with potential sellers and financial institutions and to act quickly when acquisition opportunities arise. The Company focuses on assets that are or can be dominant in their trade area, have a franchise and intrinsic value.

On February 18, 1999, the Company, along with a joint venture partner, acquired a portfolio of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers totaling approximately 3.6 million square feet. The Company is a 51% owner of this portfolio. The second phase of this transaction, which closed on July 12, 1999, consisted of the acquisition of the office component of the mixed-use development. The two non-contiguous community shopping centers were subsequently sold in October and November of 1999. Additionally, the Company acquired Los Cerritos Center in Cerritos, California, on June 2, 1999 and Santa Monica Place in Santa Monica, California, on October 29, 1999. Together, these properties are known as the "1999 Acquisition Centers."

During 2000 and 2001, market conditions, including the cost of capital and the lack of attractive opportunities, resulted in the first years subsequent to the Company's IPO in which there were no acquisitions. The Company believes the market conditions for acquisitions will improve in 2002.

4 MACERICH 2001 Financial Statements

Redevelopment. One of the major components of the Company's growth strategy is its ability to redevelop acquired properties. For this reason, the Company has built a staff of redevelopment professionals who have primary responsibility for identifying redevelopment opportunities that will result in enhanced long-term financial returns and market position for the Centers. The redevelopment professionals oversee the design and construction of the projects in addition to obtaining required governmental approvals.

The Centers. As of December 31, 2001, the Centers consist of 46 Regional Shopping Centers and four Community Shopping Centers aggregating approximately 41 million square feet of GLA. The 46 Regional Shopping Centers in the Company's portfolio average approximately 884,911 square feet of GLA and range in size from 2.1 million square feet of GLA at Lakewood Mall to 328,895 square feet of GLA at Panorama Mall. The Company's four Community Shopping Centers, Boulder Plaza, Bristol Shopping Center, Carmel Plaza, and Great Falls Marketplace, have an average of 161,279 square feet of GLA. The 46 Regional Shopping Centers presently include 182 Anchors totaling approximately 23.1 million square feet of GLA and approximately 6,258 Mall and Freestanding Stores totaling approximately 18.2 million square feet of GLA.

Total revenues, including joint ventures at their pro rata share of $171.1 million in 2001 and $166.0 million in 2000, increased to $505.7 million in 2001 from $486.1 million in 2000 primarily due to releasing space at higher rents. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." No Center generated more than 10% of shopping center revenues during 2000 and 2001.

Cost of Occupancy

The Company's management believes that in order to maximize the Company's operating cash flow, the Centers' Mall Store tenants must be able to operate profitably. A major factor contributing to tenant profitability is cost of occupancy. The following table summarizes occupancy costs for Mall Store tenants in the Centers as a percentage of total Mall Store sales for the last three years:

	For the Years Ended December 31,

	1999(2)	2000	2001

Minimum rents	7.4%	7.3%	7.7%
Percentage rents	0.5%	0.5%	0.4%
Expense recoveries(1)	2.9%	3.0%	3.1%

Mall tenant occupancy costs	10.8%	10.8%	11.2%

(1): Represents real estate tax and common area maintenance charges.
(2): Excludes 1999 Acquisition Centers.

Competition

The 46 Regional Shopping Centers are generally located in developed areas in middle to upper income markets where there are relatively few other Regional Shopping Centers. In addition, 44 of the 46 Regional Shopping Centers contain more than 400,000 square feet of GLA. The Company intends to consider additional expansion and renovation projects to maintain and enhance the quality of the Centers and their competitive position in their trade areas.

There are numerous owners and developers of real estate that compete with the Company in its trade areas. There are nine other publicly traded mall companies and several large private mall companies, any of which under certain circumstances could compete against the Company for an acquisition, an Anchor or

MACERICH 2001 Financial Statements 5

a tenant. This results in competition for both acquisition of centers and for tenants to occupy space. The existence of competing shopping centers could have a material impact on the Company's ability to lease space and on the level of rent that can be achieved. There is also increasing competition from other retail formats and technologies, such as factory outlet centers, power centers, discount shopping clubs, mail-order services, internet shopping and home shopping networks that could adversely affect the Company's revenues.

Major Tenants

The Centers derived approximately 91.6% of their total rents for the year ended December 31, 2001 from Mall and Freestanding Stores. One tenant accounted for approximately 4.6% of annual base rents of the Company, and no other single tenant accounted for more than 3.5% as of December 31, 2001.

The following tenants (including their subsidiaries) represent the 10 largest tenants in the Company's portfolio (including joint ventures) based upon minimum rents in place as of December 31, 2001:

Tenant	Number of Locations in the Portfolio	% of Total Minimum Rents as of December 31, 2001

The Limited, Inc.	153	4.6%
The Gap, Inc.	75	3.5%
AT&T Wireless Services	5	2.9%
Foot Locker, Inc.	107	2.4%
J.C. Penney Company, Inc.	32	1.9%
Luxottica Group, Inc.	84	1.3%
The Musicland Group, Inc.	51	1.1%
Zale Corporation	76	1.2%
Claire Stores, Inc.	93	1.1%
Federated Department Stores	25	1.0%

Mall and Freestanding Stores

Mall and Freestanding Store leases generally provide for tenants to pay rent comprised of a fixed base (or "minimum") rent and a percentage rent based on sales. In some cases, tenants pay only a fixed minimum rent, and in some cases, tenants pay only percentage rents. Most leases for Mall and Freestanding Stores contain provisions that allow the Centers to recover their costs for maintenance of the common areas, property taxes, insurance, advertising and other expenditures related to the operations of the Center.

The Company uses tenant spaces 10,000 square feet and under for comparing rental rate activity. Tenant space 10,000 square feet and under in the portfolio at December 31, 2001, comprises 69.7% of all Mall and Freestanding Store space. The Company believes that to include space over 10,000 square feet would provide a less meaningful comparison.

When an existing lease expires, the Company is often able to enter into a new lease with a higher base rent component. The average base rent for new Mall and Freestanding Store leases, 10,000 square feet and under, commencing during 2001 was $33.33 per square foot, or 18.5% higher than the average base rent for all Mall and Freestanding Stores (10,000 square feet and under) at December 31, 2001 of $28.13 per square foot.

6 MACERICH 2001 Financial Statements

The following table sets forth for the Centers the average base rent per square foot of Mall and Freestanding GLA, for tenants 10,000 square feet and under, as of December 31 for each of the past three years:

December 31,	Average Base Rent Per Square Foot(1)	Average Base Rent Per Sq. Ft. on Leases Commencing During the Year(2)	Average Base Rent Per Sq. Ft. on Leases Expiring During the Year(3)

1999	$25.60	$29.76	$27.29
2000	$27.09	$32.95	$28.56
2001	$28.13	$33.33	$27.12

(1): Average base rent per square foot is based on Mall and Freestanding Store GLA for spaces 10,000 square feet and under occupied as of December 31 for each of the Centers owned by the Company in 1999, 2000 and 2001.
(2): The base rent on lease signings during the year represents the actual rent to be paid on a per square foot basis during the first twelve months. New Centers are excluded in the year of acquisition. Additionally, lease signings for the expansion area of Queens Center are excluded.
(3): The average base rent on leases expiring during the year represents the final year minimum rent, on a cash basis, for all tenant leases 10,000 square feet and under expiring during the year. On a comparable space basis, average initial rents, excluding the impact of straight lining of rent, on leases 10,000 square feet and under commencing in 2001 was $34.20 compared to expiring rents of $27.12. The average base rent on leases expiring in 1999 excludes the 1999 Acquisition Centers.

Bankruptcy and/or Closure of Retail Stores

A decision by an Anchor or another significant tenant to cease operations at a Center could have an adverse effect on the Company. The bankruptcy and/or closure of an Anchor, or its sale to a less desirable retailer, could adversely affect customer traffic in a Center and thereby reduce the income generated by that Center. Furthermore, the closing of an Anchor could, under certain circumstances, allow certain other Anchors or other tenants to terminate their leases or cease operating their stores at the Center or otherwise adversely affect occupancy at the Center. In addition, mergers, acquisitions, consolidations or dispositions in the retail industry could result in the loss of tenants at one or more Centers.

Retail stores at the Centers other than Anchors may also seek the protection of the bankruptcy laws and/or close stores, which could result in the termination of such tenants' leases and thus cause a reduction in the cash flow generated by the Centers. Although no single retailer accounts for greater than 4.6% of total rents, the bankruptcy and/or closure of stores could result in decreased occupancy levels, reduced rental income or otherwise adversely impact the Centers. Although certain tenants have filed for bankruptcy, the Company does not believe such filings and any subsequent closures of their stores will have a material adverse impact on its operations.

MACERICH 2001 Financial Statements 7

Lease Expirations

The following table shows scheduled lease expirations (for Centers owned as of December 31, 2001) of Mall and Freestanding Stores 10,000 square feet and under for the next ten years, assuming that none of the tenants exercise renewal options:

Year Ending December 31,	Number of Leases Expiring	Approximate GLA of Expiring Leases(1)	% of Total Leased GLA Represented by Expiring Leases(2)	Ending Base Rent per Square Foot of Expiring Leases(1)

2002	534	828,426	11.28%	$27.23
2003	487	759,621	10.34%	$26.27
2004	468	695,515	9.47%	$28.46
2005	469	812,547	11.06%	$28.84
2006	441	759,779	10.34%	$30.69
2007	391	733,269	9.98%	$29.45
2008	379	690,906	9.41%	$31.20
2009	278	531,647	7.24%	$31.60
2010	334	588,753	8.01%	$32.65
2011	307	599,615	8.16%	$32.16

(1): Includes joint ventures at pro rata share. Currently 29% of leases have provisions for future consumer price index increases which are not reflected in ending lease rent.
(2): For leases 10,000 square feet and under

Anchors

Anchors have traditionally been a major factor in the public's identification with Regional Shopping Centers. Anchors are generally department stores whose merchandise appeals to a broad range of shoppers. Although the Centers receive a smaller percentage of their operating income from Anchors than from Mall and Freestanding Stores, strong Anchors play an important part in maintaining customer traffic and making the Centers desirable locations for Mall and Freestanding Store tenants.

Anchors either own their stores, the land under them and in some cases adjacent parking areas, or enter into long-term leases with an owner at rates that are lower than the rents charged to tenants of Mall and Freestanding Stores. Each Anchor which owns its own store, and certain Anchors which lease their stores, enter into reciprocal easement agreements with the owner of the Center covering among other things, operational matters, initial construction and future expansion.

Anchors accounted for approximately 8.4% of the Company's total rent for the year ended December 31, 2001.

8 MACERICH 2001 Financial Statements

The following table identifies each Anchor, each parent company that owns multiple Anchors and the number of square feet owned or leased by each such Anchor or parent company in the Company's portfolio at December 31, 2001:

Name			Number of Anchor Stores	GLA Owned By Anchor	GLA Leased By Anchor	Total GLA Occupied By Anchor

J.C. Penney			32	1,167,084	3,197,245	4,364,329
Sears			30	2,197,192	1,631,297	3,828,489
Target Corp.
	Marshall Field's		2	115,193	100,790	215,983
	Mervyn's		12	571,016	413,337	984,353
	Target(1)		10	581,260	585,266	1,166,526

		Total	24	1,267,469	1,099,393	2,366,862
Federated Department Stores
	Macy's(2)		14	1,558,964	666,741	2,225,705
	Lazarus		1	159,068	–	159,068
	The Bon Marche(3)		2	–	181,000	181,000

		Total	17	1,718,032	847,741	2,565,773
May Department Stores Co.
	Robinsons-May		6	530,678	640,352	1,171,030
	Foley's		4	725,316	–	725,316
	Hechts		2	140,000	143,426	283,426
	Famous Barr		1	180,000	–	180,000
	Meier & Frank		2	242,505	200,000	442,505

		Total	15	1,818,499	983,778	2,802,277
Dillard's(1)			17	1,434,280	818,202	2,252,482
Saks, Inc.
	Younker's		6	–	609,177	609,177
	Herberger's		5	269,969	202,778	472,747

		Total	11	269,969	811,955	1,081,924
Gottschalks			6	332,638	333,772	666,410
Nordstrom			5	226,853	503,369	730,222
Von Maur			3	186,686	59,563	246,249
Belk			2	–	156,750	156,750
Boscov's			2	–	314,717	314,717
Wal-Mart			2	281,455	–	281,455
Beall's			1	–	40,000	40,000
DeJong			1	–	43,811	43,811
Emporium			1	–	50,625	50,625
Gordman's			1	–	60,000	60,000
Home Depot			1	–	133,029	133,029
Kohl's			1	–	92,466	92,466
Peebles			1	–	42,090	42,090
Service Merchandise(4)			1	–	60,000	60,000
Vacant(1)			8	289,485	659,875	949,360

			182	11,189,642	11,939,678	23,129,320

(1): Montgomery Ward filed for bankruptcy on December 28, 2000 and announced the closing of all its stores including the seven located at the Centers. Montgomery Ward assigned two of these leases to Dillard's (at Northpark Mall and Southpark Mall) and one to Target (at Lakewood Mall). The Target store is scheduled to open in late 2003.
(2): Macy's will open at Capitola Mall in May 2002.
(3): Federated Department Stores will open a new 110,000 square foot Bon Marche store at Redmond Town Center in the Fall of 2003.
(4): Service Merchandise closed this store in February 2002. They filed for bankruptcy in March 1999 and recently announced plans to close all their stores in 2002.

MACERICH 2001 Financial Statements 9

Environmental Matters

Under various federal, state and local laws, ordinances and regulations, a current or prior owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on, under or in such property. Such laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The costs of investigation, removal or remediation of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner's or operator's ability to sell or rent such property or to borrow using such property as collateral. Persons or entities who arrange for the disposal or treatment of hazardous or toxic substances may also be liable for the costs of removal or remediation of a release of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person or entity. Certain environmental laws impose liability for release of asbestos-containing materials ("ACMs") into the air and third parties may seek recovery from owners or operators of real properties for personal injury associated with exposure to ACMs. In connection with the ownership (direct or indirect), operation, management and development of real properties, the Company may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and therefore potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property.

Each of the Centers has been subjected to a Phase I audit (which involves review of publicly available information and general property inspections, but does not involve soil sampling or ground water analysis) completed by an environmental consultant.

Based on these audits, and on other information, the Company is aware of the following environmental issues that are reasonably possible to result in costs associated with future investigation or remediation, or in environmental liability:

•: Asbestos. The Company has conducted ACM surveys at various locations within the Centers. The surveys indicate that ACMs are present or suspected in certain areas, primarily vinyl floor tiles, mastics, roofing materials, drywall tape and joint compounds. The identified ACMs are generally non-friable, in good condition, and possess low probabilities for disturbance. At certain Centers where ACMs are present or suspected, however, some ACMs have been or may be classified as "friable," and ultimately may require removal under certain conditions. The Company has developed and implemented an operations and maintenance (O&M) plan to manage ACMs in place.
•: Underground Storage Tanks. Underground storage tanks ("USTs") are or were present at certain of the Centers, often in connection with tenant operations at gasoline stations or automotive tire, battery and accessory service centers located at such Centers. USTs also may be or have been present at properties neighboring certain Centers. Some of these tanks have either leaked or are suspected to have leaked. Where leakage has occurred, investigation, remediation, and monitoring costs may be incurred by the Company if responsible current or former tenants, or other responsible parties, are unavailable to pay such costs.
•: Chlorinated Hydrocarbons. The presence of chlorinated hydrocarbons such as perchloroethylene ("PCE") and its degradation byproducts have been detected at certain of the Centers, often in connection with tenant dry cleaning operations. Where PCE has been detected, the Company may incur investigation, remediation and monitoring costs if responsible current or former tenants, or other responsible parties, are unavailable to pay such costs.

PCE has been detected in soil and groundwater in the vicinity of a dry cleaning establishment at North Valley Plaza, formerly owned by a joint venture of which the Company was a 50% member. The property

10 MACERICH 2001 Financial Statements

was sold on December 18, 1997. The California Department of Toxic Substances Control ("DTSC") advised the Company in 1995 that very low levels of Dichloroethylene ("1,2 DCE"), a degradation byproduct of PCE, had been detected in a municipal water well located ¹/4 mile west of the dry cleaners, and that the dry cleaning facility may have contributed to the introduction of 1,2 DCE into the water well. According to DTSC, the maximum contaminant level ("MCL") for 1,2 DCE which is permitted in drinking water is 6 parts per billion ("ppb"). The 1,2 DCE was detected in the water well at a concentration of 1.2 ppb, which is below the MCL. The Company has retained an environmental consultant and has initiated extensive testing of the site. The joint venture agreed (between itself and the buyer) that it would be responsible for continuing to pursue the investigation and remediation of impacted soil and groundwater resulting from releases of PCE from the former dry cleaner. A total of $67,873 and $187,976 have already been incurred by the joint venture for remediation, and professional and legal fees for the years ending December 31, 2001 and 2000, respectively. An additional $188,325 remains reserved by the joint venture as of December 31, 2001, which management has estimated as its remaining obligation for the remediation. The joint venture has been sharing costs with former owners of the property.

The Company acquired Fresno Fashion Fair in December 1996. Asbestos has been detected in structural fireproofing throughout much of the Center. Testing data conducted by professional environmental consulting firms indicates that the fireproofing is largely inaccessible to building occupants and is well adhered to the structural members. Additionally, airborne concentrations of asbestos were well within OSHA's permissible exposure limit ("PEL") of .1 fcc. The accounting for this acquisition includes a reserve of $3.3 million to cover future removal of this asbestos, as necessary. The Company incurred $147,597 and $25,939 in remediation costs for the years ending December 31, 2001 and 2000, respectively. An additional $2.6 million remains reserved at December 31, 2001.

Insurance

The Centers have comprehensive liability, fire, flood, extended coverage and rental loss insurance. The Company or the joint venture owner, as applicable, also currently carries earthquake insurance covering the Centers located in California. Such policies are subject to a deductible equal to 5% of the total insured value of each Center, a $250,000 per occurrence minimum and a combined annual aggregate loss limit of $125 million on the Centers located in California. Management believes that such insurance policies have specifications and insured limits customarily carried for similar properties.

Qualification as a Real Estate Investment Trust

The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with its first taxable year ended December 31, 1994, and intends to conduct its operations so as to continue to qualify as a REIT under the Code. As a REIT, the Company generally will not be subject to federal and state income taxes on its net taxable income that it currently distributes to stockholders. Qualification and taxation as a REIT depends on the Company's ability to meet certain dividend distribution tests, share ownership requirements and various qualification tests prescribed in the Code.

Employees

The Company and the Management Companies employ approximately 1,605 persons, including eight executive officers, personnel in the areas of acquisitions and business development (4), property management (258), leasing (83), redevelopment/construction (25), financial services (49) and legal affairs (31). In addition, in an effort to minimize operating costs, the Company generally maintains its own security staff (617) and maintenance staff (530). Approximately 17 of these employees are represented by a union. The Company believes that relations with its employees are good.

MACERICH 2001 Financial Statements 11

Item 2. Properties

The following table sets forth certain information about each of the Centers as of December 31, 2001:

Company's Ownership %	Name of Center/ Location(1)	Year of Original Construction/ Acquisition	Year of Most Recent Expansion/ Renovation	Total GLA(2)	Mall and Free-standing GLA	Percentage of Mall and Free-standing GLA Leased	Anchors	Sales Per Square Foot(3)

100%	Boulder Plaza Boulder, Colorado	1969/1989	1991	159,238	159,238	99.1%	–	$226
100%	Bristol Shopping Center(4) Santa Ana, California	1966/1986	1992	163,637	163,637	95.1%	–	264
50%	Broadway Plaza(4) Walnut Creek, California	1951/1985	1994	698,815	253,318	96.4%	Macy's (two), Nordstrom	624
100%	Capitola Mall(4) Capitola, California	1977/1995	1988	586,735	197,018	99.0%	Gottschalks, Macy's(11), Mervyn's, Sears	334
100%	Carmel Plaza Carmel, California	1974/1998	1993	115,215	115,215	86.3%	–	379
100%	Chesterfield Towne Center Richmond, Virginia	1975/1994	1997	1,037,358	425,192	94.2%	Dillard's (two), Hechts, Sears, J.C. Penney	338
100%	Citadel, The Colorado Springs, Colorado	1972/1997	1995	1,040,917	445,577	86.9%	Dillard's, Foley's, J.C. Penney, Mervyn's	310
100%	Corte Madera, Village at Corte Madera, California	1985/1998	1994	429,839	211,839	91.9%	Macy's, Nordstrom	538
100%	County East Mall Antioch, California	1966/1986	1989	493,895	175,335	93.7%	Sears, Gottschalks, Mervyn's(5)	319
100%	Crossroads Mall Oklahoma City, Oklahoma	1974/1994	1991	1,267,572	527,884	90.4%	Dillard's, Foley's, J.C. Penney(5)	253
100%	Fresno Fashion Fair Fresno, California	1970/1996	1983	874,316	313,435	94.9%	Gottschalks, J.C. Penney, Macy's (two)	420
100%	Great Falls Marketplace Great Falls, Montana	1997/1997	–	207,024	207,024	97.4%	–	126
100%	Greeley Mall Greeley, Colorado	1973/1986	1987	576,564	233,202	89.3%	Dillard's (two), J.C. Penney, Sears(5)	234
100%	Green Tree Mall(4) Clarksville, Indiana	1968/1975	1995	780,201	336,205	87.0%	Dillard's, J.C. Penney, Sears, Target	339
100%	Holiday Village Mall(4) Great Falls, Montana	1959/1979	1992	566,905	263,067	75.0%	Herberger's, J.C. Penney, Sears(5)	218
100%	Northgate Mall San Rafael, California	1964/1986	1987	743,176	272,845	91.9%	Macy's, Mervyns, Sears	344
100%	Northwest Arkansas Mall Fayetteville, Arkansas	1972/1998	1997	823,514	309,844	95.6%	Dillard's (two), J.C. Penney, Sears	309
100%	Pacific View Ventura, California	1965/1996	2001	1,237,237	401,064	98.3%	J.C. Penney, Macy's, Robinsons-May, Sears(5)	352
50%	Panorama Mall Panorama, California	1955/1979	1980	328,895	163,895	97.2%	Wal-Mart	314
100%	Queens Center Queens, New York	1973/1995	1991	623,876	155,733	100.0%	J.C. Penney, Macy's	964
100%	Rimrock Mall Billings, Montana	1978/1996	1980	609,560	294,120	92.8%	Dillard's (two), Herbergers, J.C. Penney	303
100%	Salisbury, Centre at Salisbury, Maryland	1990/1995	1990	878,796	273,815	94.1%	Boscov's, J.C. Penney, Hechts, Sears(5)	348
100%	Santa Monica Place Santa Monica, California	1980/1999	1990	560,441	277,191	87.9%	Macy's, Robinsons-May	358
100%	South Plains Mall Lubbock, Texas	1972/1998	1995	1,144,495	402,708	95.6%	Beall's, Dillard's (two), J.C. Penney, Meryvn's, Sears	343
100%	South Towne Center Sandy, Utah	1987/1997	1997	1,241,484	464,972	86.3%	Dillard's, J.C. Penney, Mervyn's, Target, Meier & Frank	321

12 MACERICH 2001 Financial Statements

100%	Valley View Center Dallas, Texas	1973/1996	1996	1,504,818	446,921	89.9%	Dillard's, Foleys, J.C. Penney, Sears	296
100%	Vintage Faire Mall Modesto, California	1977/1996	2001	1,033,816	333,897	97.4%	Gottschalks, J.C. Penney, Macy's (two), Sears	386
19%	West Acres Fargo, North Dakota	1972/1986	2001	954,327	401,772	97.9%	Marshall Field's, Herberger's, J.C. Penney, Sears	382
100%	Westside Pavilion Los Angeles, California	1985/1998	2000	756,412	398,284	90.9%	Nordstrom, Robinsons-May	420

	Total/Average at December 31, 2001(a)			21,439,078	8,624,247	92.4%		$362

	Pacific Premier Retail Trust Properties(b):

51%	Cascade Mall Burlington, Washington	1989/1999	1998	584,549	260,313	82.0%	The Bon Marche, Emporium, J.C. Penney, Sears, Target	$316
51%	Kitsap Mall Silverdale, Washington	1985/1999	1997	850,264	340,281	80.3%	The Bon Marche, J.C. Penney, Gottschalks, Mervyn's, Sears	382
51%	Lakewood Mall Lakewood, California	1953/1975	2001	2,127,894	973,928	91.9%	Home Depot, Target(8), J.C. Penney, Macy's, Mervyn's, Robinsons-May	339
51%	Los Cerritos Center Cerritos, California	1971/1999	1998	1,298,205	496,924	98.1%	Macy's, Mervyn's, Nordstrom, Robinsons-May, Sears	453
51%	Redmond Town Center(4)(6) Redmond, Washington	1997/1999	2000	1,152,905	1,152,905	95.6%	(10)	336
51%	Stonewood Mall(4) Downey, California	1953/1997	1991	927,505	356,758	96.7%	J.C. Penney, Mervyn's, Robinsons-May, Sears	353
51%	Washington Square Portland, Oregon	1974/1999	1995	1,357,417	423,081	95.5%	J.C. Penney, Meier & Frank, Mervyn's, Nordstrom, Sears	560

	Total/Average Pacific Premier Retail Trust Properties			8,298,739	4,004,190	92.9%		$401

	SDG Macerich Properties, L.P. Properties:

50%	Eastland Mall(4) Evansville, Indiana	1978/1998	1995	1,072,787	479,832	96.3%	DeJong, Famous Barr, J.C. Penney, Lazarus, Service Merchandise(9)	$381
50%	Empire Mall(4) Sioux Falls, South Dakota	1975/1998	2000	1,286,193	596,086	91.9%	Marshall Field's, J.C. Penney, Gordman's, Kohl's, Sears, Target, Younkers	371
50%	Granite Run Mall Media, Pennsylvania	1974/1998	1993	1,047,283	546,474	98.3%	Boscov's, J.C. Penney, Sears	299
50%	Lake Square Mall Leesburg, Florida	1980/1998	1992	560,975	264,938	91.3%	Belk, J.C. Penney, Sears, Target	266
50%	Lindale Mall Cedar Rapids, Iowa	1963/1998	1997	693,366	387,803	86.5%	Sears, Von Maur, Younkers	293
50%	Mesa Mall Grand Junction, Colorado	1980/1998	1991	855,520	429,703	92.1%	Herberger's, J.C. Penney, Mervyn's, Sears, Target	318
50%	NorthPark Mall Davenport, Iowa	1973/1998	2001	1,056,596	405,063	94.7%	J.C. Penney, Dillard's(8), Sears, Von Maur, Younkers	240
50%	Rushmore Mall Rapid City, South Dakota	1978/1998	1992	835,138	430,478	96.1%	Herberger's, J.C. Penney, Sears, Target	294
50%	Southern Hills Mall Sioux City, Iowa	1980/1998	–	750,675	437,098	92.3%	Sears, Target, Younkers	309
50%	SouthPark Mall Moline, Illinois	1974/1998	1990	1,032,672	454,616	89.0%	Dillard's(8), J.C. Penney, Sears, Younkers, Von Maur	224

MACERICH 2001 Financial Statements 13

50%	SouthRidge Mall Des Moines, Iowa	1975/1998	1998	1,004,889	507,083	81.9%	Sears, Younkers, J.C. Penney, Target(5)	210
50%	Valley Mall Harrisonburg, Virginia	1978/1998	1992	511,889	197,026	96.8%	Belk, J.C. Penney, Wal-Mart, Peeble's	289

	Total/Average SDG Macerich Properties, L.P. Properties			10,707,983	5,136,200	92.1%		$293

	Grand Total/Average at December 31, 2001(c)			40,445,800	17,764,637	92.4%		$350

	Major Redevelopment Properties:

100%	Crossroads Mall(4) Boulder, Colorado	1963/1979	1998	533,933	215,496	(7)	Foley's, Sears(5)	(7)
100%	Park Lane Mall(4) Reno, Nevada	1967/1978	1998	371,296	241,576	(7)	Gottschalks	(7)

	Total Major Redevelopment Properties			905,229	457,072

	Grand Total at December 31, 2001			41,351,029	18,221,709

a): Excluding Pacific Premier Retail Trust Properties, SDG Macerich Properties, L.P. Properties and Major Redevelopment Properties
b): Includes five contiguous freestanding properties
c): Excluding Major Redevelopment Properties
(1): The land underlying thirty-nine of the Centers is owned in fee entirely by the Company or, in the case of jointly-owned Centers, by the joint venture property partnership or limited liability company. All or part of the land underlying the remaining Centers is owned by third parties and leased to the Company, property partnership or limited liability company pursuant to long-term ground leases. Under the terms of a typical ground lease, the Company, property partnership or limited liability company pays rent for the use of the land and is generally responsible for all costs and expenses associated with the building and improvements. In some cases, the Company, property partnership or limited liability company has an option or right of first refusal to purchase the land. The termination dates of the ground leases range from 2002 to 2070.
(2): Includes GLA attributable to Anchors (whether owned or non-owned) and Mall and Freestanding Stores as of December 31, 2001.
(3): Sales are based on reports by retailers leasing Mall and Freestanding Stores for the year ending December 31, 2001 for tenants which have occupied such stores for a minimum of twelve months. Sales per square foot are based on tenants 10,000 square feet and under, excluding theaters, that occupied their space for the entire year.
(4): Portions of the land on which the Center is situated are subject to one or more ground leases.
(5): These properties have a vacant Anchor location. The Company is contemplating various replacement tenant/redevelopment opportunities for these vacant sites.
(6): The office portion of this mixed-use development does not have retail sales.
(7): Certain spaces have been intentionally held off the market and remain vacant because of major redevelopment plans. As a result, the Company believes the percentage of Mall and Freestanding GLA leased and the sales per square foot at these major redevelopment properties is not meaningful data.
(8): Montgomery Ward filed for bankruptcy on December 28, 2000 and announced the closing of all its stores including the seven located at the Centers. Montgomery Ward assigned two of these leases to Dillard's (at NorthPark Mall and SouthPark Mall) and one to Target (at Lakewood Mall). The Target store is scheduled to open in late 2003.
(9): Service Merchandise closed this store in February 2002. They filed for bankruptcy in March 1999 and recently announced plans to close all of their stores in 2002.
(10): Federated Department Stores will open a new Bon Marche store at Redmond Town Center in the Fall of 2003.
(11): Macy's will open a store at Capitola Mall in May 2002.

14 MACERICH 2001 Financial Statements

Mortgage Debt

The following table sets forth certain information regarding the mortgages encumbering the Centers, including those Centers in which the Company has less than a 100% interest. The information set forth below is as of December 31, 2001.

Property Pledged As Collateral			Fixed or Floating	Annual Interest Rate		Principal Balance (000's)		Annual Debt Service (000's)		Maturity Date	Balance Due on Maturity (000's)		Earliest Date on which all Notes Can Be Defeased or Be Prepaid

Wholly-Owned Centers:
Capitola Mall(1)			Fixed	7.13	%	$	47,857	$	4,558	5/15/2011	$	32,724	Any Time
Carmel Plaza			Fixed	8.18	%		28,358		2,421	5/1/2009		25,642	Any Time
Chesterfield Towne Center(2)			Fixed	9.07	%		62,742		6,580	1/1/2024		1,087	1/1/2006
Citadel			Fixed	7.20	%		70,708		6,648	1/1/2008		59,962	1/1/2003
Corte Madera, Village at			Fixed	7.75	%		70,626		6,190	11/1/2009		62,941	10/4/2003
Crossroads Mall–Boulder			Fixed	7.08	%		34,025		3,948	12/15/2010		28,107	Any Time
Fresno Fashion Fair			Fixed	6.52	%		68,724		4,561	8/10/2008		62,890	Any Time
Greeley Mall			Fixed	8.50	%		14,348		2,245	9/15/2003		12,519	Any Time
Green Tree Mall/Crossroads–OK/
Salisbury			Fixed	7.23	%		117,714		8,499	3/5/2004		117,714	Any Time
Northwest Arkansas Mall			Fixed	7.33	%		59,867		5,209	1/10/2009		49,304	1/1/2004
Pacific View(3)			Fixed	7.16	%		88,715		7,221	8/31/2011		76,658	9/1/2003
Queens Center			Fixed	6.88	%		98,278		7,595	3/1/2009		88,651	2/4/2002
Rimrock Mall(4)			Fixed	7.45	%		45,966		3,841	10/1/2011		40,025	10/10/2003
Santa Monica Place			Fixed	7.70	%		84,275		7,272	11/1/2010		75,439	3/1/2003
South Plains Mall			Fixed	8.22	%		63,474		5,448	3/1/2009		57,557	2/17/2002
South Towne Center			Fixed	6.61	%		64,000		4,289	10/10/2008		64,000	Any Time
Valley View Mall			Fixed	7.89	%		51,000		4,080	10/10/2006		51,000	Any Time
Vintage Faire Mall			Fixed	7.89	%		69,245		6,099	9/1/2010		61,372	Any Time
Westside Pavilion			Fixed	6.67	%		99,590		6,529	7/1/2008		91,133	Any Time

		Total–Wholly Owned Centers				$	1,239,512

Joint Venture Centers (at pro rata share):
Broadway Plaza (50%)(5)			Fixed	6.68	%	$	35,328		3,089	8/1/2008		29,315	Any Time
Pacific Premier Retail Trust (51%)(5):
	Cascade Mall		Fixed	6.50	%		12,642		1,461	8/1/2014		141	Any Time
	Kitsap Mall/Kitsap Place(6)		Fixed	8.06	%		31,110		2,755	6/1/2010		28,143	Any Time
	Lakewood Mall(7)		Fixed	7.20	%		64,770		4,661	8/10/2005		64,770	Any Time
	Lakewood Mall(8)		Floating	4.38	%		8,224		372	7/25/2003		8,224	Any Time
	Los Cerritos Center		Fixed	7.13	%		59,385		5,054	7/1/2006		54,955	6/1/2002
	North Point Plaza		Fixed	6.50	%		1,747		190	12/1/2015		47	2/7/2004
	Redmond Town Center–Retail		Fixed	6.50	%		31,564		2,686	2/1/2011		23,850	Any Time
	Redmond Town Center–Office		Fixed	6.77	%		44,324		3,575	7/10/2009		26,223	6/1/2002
	Stonewood Mall		Fixed	7.41	%		39,653		3,298	12/11/2010		36,192	3/19/2003
	Washington Square		Fixed	6.70	%		58,339		5,051	1/1/2009		48,289	3/1/2004
	Washington Square Too		Fixed	6.50	%		6,088		634	12/1/2016		116	2/17/2004
SDG Macerich Properties L.P. (50%)(5)(9)			Fixed	6.54	%		185,306		13,440	5/15/2006		185,306	Any Time
SDG Macerich Properties L.P. (50%)(5)(9)			Floating	2.39	%		92,250		6,568	5/15/2003		92,250	Any Time
SDG Macerich Properties L.P. (50%)(5)(9)			Floating	2.27	%		40,700		1,425	5/15/2006		40,700	Any Time
West Acres Center (19%)(5)			Fixed	6.52	%		7,425		681	1/1/2009		5,684	1/4/2002
West Acres Center (19%)(5)(10)			Fixed	9.17	%		1,894		212	1/1/2009		1,517	Any Time

		Total–Joint Venture Centers(5)				$	720,749

		Total–All Centers				$	1,960,261

MACERICH 2001 Financial Statements 15

Notes:

(1): On May 2, 2001, the Company refinanced the debt on Capitola Mall. The prior loan of $36.4 million was paid in full and a new note was issued for $48.5 million bearing interest at a fixed rate of 7.13% and maturing May 15, 2011.
(2): The annual debt service payment represents the payment of principal and interest. In addition, contingent interest, as defined in the loan agreement, may be due to the extent that 35% of the gross receipts (as defined in the loan agreement) exceeds a base amount specified therein. Contingent interest recognized was $583,751, $416,814 and $385,556 for the years ended December 31, 2001, 2000 and 1999, respectively.
(3): This loan was issued on July 10, 2001 for $89.0 million, and may be increased up to $96.0 million, subject to certain conditions.
(4): On October 9, 2001, the Company refinanced the debt on Rimrock Mall. The prior loan of $29.3 million was paid in full and a new note was issued for $46.0 million bearing interest at a fixed rate of 7.45% and maturing October 1, 2011. The Company incurred a loss on early extinguishment of the prior debt in October 2001 of $1.7 million.
(5): Reflects the Company's pro rata share of debt.
(6): The loan is interest only until December 31, 2001. Effective January 1, 2002, monthly principal and interest of $450,150 will be payable through maturity. The debt is cross-collateralized by Kitsap Mall and Kitsap Place.
(7): In connection with the acquisition of this property, the joint venture assumed $127.0 million of collateralized fixed rate notes (the "Notes"). The Notes bear interest at an average fixed rate of 7.20% and mature in August 2005. The Notes require the joint venture to deposit all cash flow from the property operations with a trustee to meet its obligations under the Notes. Cash in excess of the required amount, as defined, is released. Included in cash and cash equivalents is $750,000 of restricted cash deposited with the trustee at December 31, 2001 and at December 31, 2000.
(8): On July 28, 2000, the joint venture placed a $16.1 million floating rate note on the property bearing interest at LIBOR plus 2.25% and maturing July 2003. At December 31, 2001, the total interest rate was 4.38%.
(9): In connection with the acquisition of these Centers, the joint venture assumed $485.0 million of mortgage notes payable, which are collateralized by the properties. At acquisition, the $300.0 million fixed rate portion of this debt reflected a fair value of $322.7 million, which included an unamortized premium of $22.7 million. This premium is being amortized as interest expense over the life of the loan using the effective interest method. At December 31, 2001 and December 31, 2000, the unamortized balance of the debt premium was $13.5 million and $16.1 million, respectively. This debt is due in May 2006 and requires monthly payments of $1.9 million. $184.5 million of this debt is due in May 2003 and requires monthly interest payments at a variable weighted average rate (based on LIBOR) of 2.39% and 7.21% at December 31, 2001 and December 31, 2000, respectively. This variable rate debt is covered by an interest rate cap agreement, which effectively prevents the interest rate from exceeding 11.53%. On April 12, 2000, the joint venture issued $138.5 million of additional mortgage notes, which are collateralized by the properties and are due in May 2006. $57.1 million of this debt requires fixed monthly interest payments of $387,000 at a weighted average rate of 8.13% while the floating rate notes of $81.4 million require monthly interest payments at a variable weighted average rate (based on LIBOR) of 2.27% and 7.08% at December 31, 2001 and 2000, respectively. This variable rate debt is covered by an interest rate cap agreement, which effectively prevents the interest rate from exceeding 11.83%.
(10): On September 27, 2001, the joint venture placed a $10.0 million loan on the property bearing interest at a fixed rate of 9.17% maturing December 1, 2009.

The Company has a credit facility of $200.0 million with a maturity of May, 2002 with a right to extend the facility for one year subject to certain conditions. The interest rate on such credit facility fluctuates between 1.35% and 1.80% over LIBOR, depending on leverage levels. As of December 31, 2001 and December 31, 2000, $159.0 million and $59.0 million of borrowings were outstanding under this line of credit at interest rates of 3.65% and 7.90%, respectively.

16 MACERICH 2001 Financial Statements

Additionally, as of December 31, 2001, the Company has obtained $0.8 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.

During January 1999, the Company entered into a bank construction loan agreement to fund $89.3 million of costs related to the redevelopment of Pacific View. The loan bore interest at LIBOR plus 2.25% through 2000. In January 2001, the interest rate was reduced to LIBOR plus 1.75% and the loan was scheduled to mature February 2002. Principal was drawn as construction costs were incurred. As of December 31, 2000, $88.3 million of principal had been drawn under the loan at an interest rate of 8.63%. On July 10, 2001, the Company paid off this loan in full and a permanent loan was issued for $89.0 million, which may be increased up to $96.0 million subject to certain conditions, bearing interest at a fixed rate of 7.16% and maturing August 31, 2011.

During 1997, the Company issued and sold $161.4 million of convertible subordinated debentures (the "Debentures"). The Debentures, which were sold at par, bear interest at 7.25% annually (payable semi-annually) and are convertible into common stock at any time, on or after 60 days, from the date of issue at a conversion price of $31.125 per share. In November and December 2000, the Company purchased and retired $10.6 million of the Debentures. The Company recorded a gain on early extinguishment of debt of $1.0 million related to the transaction. In December 2001, the Company purchased and retired an additional $25.7 million of the Debentures. The Debentures mature on December 15, 2002 and are callable by the Company after June 15, 2002 at par plus accrued interest. The Company is negotiating a credit facility with its bank group in which the proceeds are intended to retire the Debentures. The Company expects to put this facility in place during 2002 and fully retire the Debentures prior to their maturity.

Item 3. Legal Proceedings.

The Company, the Operating Partnership, the Management Companies and their respective affiliates are not currently involved in any material litigation nor, to the Company's knowledge, is any material litigation currently threatened against such entities or the Centers, other than routine litigation arising in the ordinary course of business, most of which is expected to be covered by liability insurance. For information about certain environmental matters, see "Business–Environmental Matters."

Item 4. Submission of Matters to a Vote of Security Holders.

None.

MACERICH 2001 Financial Statements 17

Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

The common stock of the Company is listed and traded on the New York Stock Exchange ("NYSE") under the symbol "MAC". The common stock began trading on March 10, 1994 at a price of $19 per share. In 2001, the Company's shares traded at a high of $26.70 and a low of $18.75.

As of February 28, 2002, there were approximately 551 stockholders of record. The following table shows high and low closing prices per share of common stock during each quarter in 2000 and 2001 and dividends/distributions per share of common stock declared and paid by quarter:

	Market Quotation Per Share
	Market Quotation Per Share		Dividends/Distributions Declared and Paid
Quarters Ended	High	Low	Dividends/Distributions Declared and Paid

March 31, 2000	$23.94	$19.00	$0.51
June 30, 2000	24.00	20.44	0.51
September 30, 2000	24.75	20.25	0.51
December 31, 2000	20.75	18.44	0.53
March 31, 2001	$21.95	$18.75	$0.53
June 30, 2001	24.80	21.31	0.53
September 30, 2001	25.20	21.50	0.53
December 31, 2001	26.60	21.85	0.55

The Company has issued 3,627,131 shares of its Series A cumulative convertible redeemable preferred stock ("Series A Preferred Stock"), and 5,487,471 shares of its Series B cumulative convertible redeemable preferred stock ("Series B Preferred Stock"). The Series A Preferred Stock and Series B Preferred Stock can be converted into shares of common stock on a one-to-one basis. There is no established public trading market for either the Series A Preferred Stock or the Series B Preferred Stock. All of the outstanding shares of the Series A Preferred Stock are held by Security Capital Preferred Growth Incorporated. All of the outstanding shares of the Series B Preferred Stock are held by Ontario Teachers' Pension Plan Board. The Series A Preferred Stock and Series B Preferred Stock were issued on February 25, 1998 and June 16, 1998, respectively. Preferred stock dividends are accrued quarterly and paid in arrears. The Series A Preferred Stock and Series B Preferred Stock can be converted on a one for one basis into common stock and will pay a quarterly dividend equal to the greater of $0.46 per share, or the dividend then payable on a share of common stock. No dividends will be declared or paid on any class of common or other junior stock to the extent that dividends on Series A Preferred Stock and Series B Preferred Stock have not been declared and/or paid. The following table shows the dividends per share of preferred stock declared and paid for each quarter in 2000 and 2001:

	Series A Preferred Stock Dividends		Series B Preferred Stock Dividends
Quarters Ended	Declared	Paid	Declared	Paid

March 31, 2000	$0.51	$0.51	$0.51	$0.51
June 30, 2000	$0.51	$0.51	$0.51	$0.51
September 30, 2000	$0.53	$0.51	$0.53	$0.51
December 31, 2000	$0.53	$0.53	$0.53	$0.53

Quarters Ended

March 31, 2001	$0.53	$0.53	$0.53	$0.53
June 30, 2001	$0.53	$0.53	$0.53	$0.53
September 30, 2001	$0.55	$0.53	$0.55	$0.53
December 31, 2001	$0.55	$0.55	$0.55	$0.55

18 MACERICH 2001 Financial Statements

Item 6. Selected Financial Data.

The following sets forth selected financial data for the Company on a historical basis. The following data should be read in conjunction with the financial statements (and the notes thereto) of the Company and "Management's Discussion and Analysis of Financial Condition and Results of Operations" each included elsewhere in this Form 10-K.

The Selected Financial Data is presented on a consolidated basis. The limited partnership interests in the Operating Partnership (not owned by the REIT) are reflected as minority interest. Centers and entities in which the Company does not have a controlling ownership interest (Panorama Mall, North Valley Plaza, Broadway Plaza, Manhattan Village, MerchantWired, LLC, Pacific Premier Retail Trust, SDG Macerich Properties, L.P. and West Acres Shopping Center) are referred to as the "Joint Venture Centers." Effective March 29, 2001, Macerich Property Management Company merged with and into Macerich Property Management Company, LLC ("MPMC, LLC"). MPMC, LLC is a single-member Delaware limited liability company and is 100% owned by the Operating Partnership. The ownership structure of Macerich Management Company has remained unchanged. The Joint Venture Centers and the Management Companies (exclusive of MPMC, LLC) are reflected in the selected financial data under the equity method of accounting. Accordingly, the net income from the Joint Venture Centers and the Management Companies that is allocable to the Company is included in the statement of operations as "Equity in income (loss) of unconsolidated joint ventures and Management Companies." Effective March 29, 2001, the Company consolidated the accounts for MPMC, LLC.

MACERICH 2001 Financial Statements 19

(All amounts in thousands, except per share data)
			The Company
			2001			2000			1999			1998			1997

OPERATING DATA:
Revenues:
	Minimum rents		$	201,481		$	195,236		$	204,568		$	179,710		$	142,251
	Percentage rents			12,394			12,558			15,106			12,856			9,259
	Tenant recoveries			109,163			104,125			99,126			86,740			66,499
	Other			11,535			8,173			8,644			4,555			3,205

		Total revenues		334,573			320,092			327,444			283,861			221,214
Shopping center and operating expenses(1)				110,827			101,674			100,327			89,991			70,901
REIT general and administrative expenses				6,780			5,509			5,488			4,373			2,759
Depreciation and amortization				65,983			61,647			61,383			53,141			41,535
Interest expense				109,646			108,447			113,348			91,433			66,407

Income before minority interest, unconsolidated entities, extraordinary item and cumulative effect of change in accounting principle				41,337			42,815			46,898			44,923			39,612
Minority interest(2)				(19,001	)		(12,168	)		(38,335	)		(12,902	)		(10,567	)
Equity in income (loss) of unconsolidated joint ventures and management companies(1)				32,930			30,322			25,945			14,480			(8,063	)
Gain (loss) on sale of assets				24,491			(2,773	)		95,981			9			1,619
Extraordinary loss on early extinguishment of debt				(2,034	)		(304	)		(1,478	)		(2,435	)		(555	)
Cumulative effect of change in accounting principle(3)				–			(963	)		–			–			–

Net income				77,723			56,929			129,011			44,075			22,046
Less preferred dividends				19,688			18,958			18,138			11,547			–

Net income available to common stockholders			$	58,035		$	37,971		$	110,873		$	32,528		$	22,046

Earnings per share–basic:(4)
	Income before extraordinary item and cumulative effect of change in accounting principle		$	1.76		$	1.14		$	3.30		$	1.14		$	0.86
	Extraordinary item			(0.04	)		(0.01	)		(0.04	)		(0.08	)		(0.01	)
	Cumulative effect of change in accounting principle			–			(0.02	)		–			–			–

		Net income per share–basic	$	1.72		$	1.11		$	3.26		$	1.06		$	0.85

Earnings per share–diluted:(4)(7)(8)
	Income before extraordinary item and cumulative effect of change in accounting principle		$	1.76		$	1.14		$	3.01		$	1.11		$	0.86
	Extraordinary item			(0.04	)		(0.01	)		(0.02	)		(0.05	)		(0.01	)
	Cumulative effect of change in accounting principle			–			(0.02	)		–			–			–

Net income per share–diluted			$	1.72		$	1.11		$	2.99		$	1.06		$	0.85

OTHER DATA:
Funds from operations–diluted(5)			$	175,068		$	167,244		$	164,302		$	120,518		$	83,427
EBITDA(6)			$	216,967		$	212,909		$	221,629		$	189,497		$	147,554
EBITDA, including joint ventures at pro rata(6)			$	323,798		$	314,628		$	301,803		$	230,362		$	154,140
Cash flows provided by (used in):
	Operating activities		$	140,506		$	121,220		$	139,576		$	85,176		$	78,476
	Investing activities		$	(57,319	)	$	2,083		$	(243,228	)	$	(761,147	)	$	(215,006	)
	Financing activities		$	(92,990	)	$	(127,485	)	$	118,964		$	675,960		$	146,041
Number of centers at year end				50			51			52			47			30
Weighted average number of shares outstanding–basic(7)				44,963			45,050			46,130			43,016			37,982
Weighted average number of shares outstanding–diluted(5)(7)(8)				58,902			59,319			60,893			43,628			38,403
Cash distributions declared per common share			$	2.14		$	2.06		$	1.965		$	1.865		$	1.78

20 MACERICH 2001 Financial Statements

(All amounts in thousands)
	The Company
	December 31,
	2001		2000		1999		1998		1997

BALANCE SHEET DATA:
Investment in real estate (before accumulated depreciation)	$	2,227,833	$	2,228,468	$	2,174,535	$	2,213,125	$	1,607,429
Total assets	$	2,294,502	$	2,337,242	$	2,404,293	$	2,322,056	$	1,505,002
Total mortgage, notes and debentures payable	$	1,523,660	$	1,550,935	$	1,561,127	$	1,507,118	$	1,122,959
Minority interest(2)	$	113,986	$	120,500	$	129,295	$	132,177	$	100,463
Series A and Series B Preferred Stock	$	247,336	$	247,336	$	247,336	$	247,336		–
Common stockholders' equity	$	348,954	$	362,272	$	401,254	$	363,424	$	216,295

(1): Unconsolidated joint ventures include all Centers and entities in which the Company does not have a controlling ownership interest and for Macerich Management Company and Macerich Manhattan Management Company for all periods presented and for Macerich Property Management Company through March 28, 2001. Effective March 29, 2001, the Macerich Property Management Company merged with and into Macerich Property Management Company, LLC ("MPMC, LLC"). The Company accounts for the Management Companies (exclusive of MPMC, LLC), and joint ventures using the equity method of accounting. Effective March 29, 2001, the Company consolidated the accounts for MPMC, LLC.
(2): "Minority Interest" reflects the ownership interest in the Operating Partnership not owned by the REIT.
(3): In December 1999, the Securities and Exchange Committee issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"), which became effective for periods beginning after December 15, 1999. This bulletin modified the timing of revenue recognition for percentage rent received from tenants. This change will defer recognition of a significant amount of percentage rent for the first three calendar quarters into the fourth quarter. The Company applied this change in accounting principle as of January 1, 2000. The cumulative effect of this change in accounting principle at the adoption date of January 1, 2000, including the pro rata share of joint ventures, was approximately $1.8 million. If the Company had recorded percentage rent using the methodology prescribed in SAB 101, the Company's net income available to common stockholders would have been reduced by $1.3 million or $0.02 per diluted share, $1.1 million or $0.025 per diluted share and $0.6 million or $0.016 per diluted share for the years ended December 31, 1999, 1998 and 1997, respectively.
(4): Earnings per share is based on Statement of Financial Accounting Standards No. 128 ("SFAS No. 128") for all years presented.
(5): Funds from Operations ("FFO") represents net income (loss) (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from debt restructuring, sales or write-down of assets and cumulative effect of change in accounting principle, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs), and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. FFO does not represent cash flow from operations as defined by GAAP and is not necessarily indicative of cash available to fund all cash flow needs. FFO, as presented, may not be comparable to similarly titled measures reported by other real estate investment trusts. The computation of FFO–diluted and weighted average number of shares outstanding-diluted includes the effect of outstanding common stock options and restricted stock using the treasury method. The convertible debentures are dilutive for the twelve month periods ending December 31, 2001, 2000 and 1999 and are included in the FFO calculation. On February 25, 1998, the Company sold $100 million of its Series A Preferred Stock. On June 17, 1998, the Company sold $150 million of its Series B Preferred Stock. The preferred stock can be converted on a one-for-one basis for common stock. The preferred stock was dilutive to FFO in 2001, 2000, 1999 and 1998 and the preferred stock and the convertible debentures were dilutive to net income in 1999.
(6): EBITDA represents earnings before interest, income taxes, depreciation, amortization, minority interest, equity in income (loss) of unconsolidated entities, extraordinary items, gain (loss) on sale of assets, preferred dividends and cumulative effect of change in accounting principle. This data is relevant to an understanding of the economics of the shopping center business as it indicates cash flow available from operations to service debt and satisfy certain fixed obligations. EBITDA should not be construed by the reader as an alternative to operating income as an indicator of the Company's operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) or as a measure of liquidity. EBITDA, as presented, may not be comparable to similarly titled measures reported by other companies.
(7): Assumes that all OP Units are converted to common stock.
(8): Assumes issuance of common stock for in-the-money options and restricted stock calculated using the Treasury method in accordance with SFAS No. 128 for all years presented.

MACERICH 2001 Financial Statements 21

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

General Background and Performance Measurement

The Company believes that the most significant measures of its operating performance are Funds from Operations ("FFO") and EBITDA. FFO is defined as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring, sales or write-down of assets and cumulative effect of change in accounting principle, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs), and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. FFO does not represent cash flow from operations as defined by GAAP and is not necessarily indicative of cash available to fund all cash flow needs. FFO, as presented, may not be comparable to similarly titled measures reported by other real estate investment trusts.

EBITDA represents earnings before interest, income taxes, depreciation, amortization, minority interest, equity in income (loss) of unconsolidated entities, extraordinary items, gain (loss) on sale of assets, preferred dividends and cumulative effect of change in accounting principle. This data is relevant to an understanding of the economics of the shopping center business as it indicates cash flow available from operations to service debt and satisfy certain fixed obligations. EBITDA should not be construed as an alternative to operating income as an indicator of the Company's operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) or as a measure of liquidity. EBITDA, as presented, may not be comparable to similarly titled measures reported by other companies. While the performance of individual Centers and the Management Companies determines EBITDA, the Company's capital structure also influences FFO. The most important component in determining EBITDA and FFO is Center revenues. Center revenues consist primarily of minimum rents, percentage rents and tenant expense recoveries. Minimum rents will increase to the extent that new leases are signed at market rents that are higher than prior rents. Minimum rents will also fluctuate up or down with changes in the occupancy level. Additionally, to the extent that new leases are signed with more favorable expense recovery terms, expense recoveries will increase.

Percentage rents generally increase or decrease with changes in tenant sales. As leases roll over, however, a portion of historical percentage rent is often converted to minimum rent. It is therefore common for percentage rents to decrease as minimum rents increase. Accordingly, in discussing financial performance, the Company combines minimum and percentage rents in order to better measure revenue growth.

The following discussion is based primarily on the consolidated financial statements of the Company for the years ended December 31, 2001, 2000 and 1999. The following discussion compares the activity for the year ended December 31, 2001 to results of operations for the year ended December 31, 2000. Also included is a comparison of the activities for the year ended December 31, 2000 to the results for the year ended December 31, 1999. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

Forward-Looking Statements

This annual report on Form 10-K contains or incorporates statements that constitute forward-looking statements. Those statements appear in a number of places in this Form 10-K and include statements regarding, among other matters, the Company's growth, acquisition and redevelopment opportunities, the Company's acquisition and other strategies, regulatory matters pertaining to compliance with governmental regulations and other factors affecting the Company's financial condition or results of operations. Words

22 MACERICH 2001 Financial Statements

such as "expects," "anticipates," "intends," "projects," "predicts," "plans," "believes," "seeks," "estimates," and "should" and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company or industry to vary materially from the Company's future results, performance or achievements, or those of the industry, expressed or implied in such forward-looking statements. Such factors include the matters described herein and the following factors among others: general industry, economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of current and prospective tenants, tenant bankruptcies, lease rates and terms, availability and cost of financing, interest rate fluctuations and operating expenses; adverse changes in the real estate markets including, among other things, competition from other companies, retail formats and technologies, risks of real estate redevelopment, acquisitions and dispositions; governmental actions and initiatives (including legislative and regulatory changes); environmental and safety requirements; and terrorist activities that could adversely affect all of the above factors. The Company will not update any forward-looking information to reflect actual results or changes in the factors affecting the forward-looking information.

The following table reflects the Company's acquisitions in 1999. There were no acquisitions in 2001 or 2000.

	Date Acquired	Location

"1999 Acquisition Centers":

Pacific Premier Retail Trust(*)	February 18, 1999	Three regional malls, retail component of a mixed-use development and five contiguous properties in Washington and Oregon. The office component of the mixed-used development was acquired July 12, 1999.
PPR Albany Plaza LLC() PPR Eastland Plaza LLC()	February 18, 1999	Two non-contiguous community shopping Centers located in Oregon and Ohio, respectively.
Los Cerritos Center(*)	June 2, 1999	Cerritos, California
Santa Monica Place	October 29, 1999	Santa Monica, California

(*): denotes the Company owns its interests in these Centers through an unconsolidated joint venture or through one of the Management Companies.

The financial statements include the results of these Centers for periods subsequent to their acquisition.

On February 18, 1999, the Company formed Pacific Premier Retail Trust ("PPRT"), a 51/49 joint venture with Ontario Teachers' Pension Plan Board ("Ontario Teachers"), which closed on the acquisition of three regional malls, the retail component of a mixed-use development, five contiguous properties and two non-contiguous community shopping centers comprising approximately 3.6 million square feet for a total purchase price of approximately $427.0 million. On July 12, 1999, the Company closed on the acquisition of the office component of the mixed-use development for a purchase price of approximately $111.0 million.

On June 2, 1999, Macerich Cerritos, LLC ("Cerritos"), a wholly-owned subsidiary of Macerich Management Company, acquired Los Cerritos Center, a 1,302,374 square foot super regional mall in Cerritos, California. The total purchase price was $188.0 million, which was funded with $120.0 million of debt placed concurrently with the closing and a $70.8 million loan from the Company.

On October 26, 1999, 49% of the membership interests of Macerich Stonewood, LLC ("Stonewood"), Cerritos and Macerich Lakewood, LLC ("Lakewood"), were sold to Ontario Teachers' and

MACERICH 2001 Financial Statements 23

concurrently Ontario Teachers' and the Company contributed their 99% collective membership interests in Stonewood and Cerritos and 100% of their collective membership interests in Lakewood to PPRT, a real estate investment trust, owned approximately 51% by the Company and 49% by Ontario Teachers. Lakewood, Stonewood, and Cerritos own Lakewood Mall, Stonewood Mall and Los Cerritos Center, respectively. The total value of the transaction was approximately $535.0 million. The properties were contributed to PPRT subject to existing debt of $322.0 million. The net cash proceeds to the Company were approximately $104.0 million, which were used for reduction of debt and for general corporate purposes. Lakewood and Stonewood are referred to herein as the "Contributed JV Assets."

On October 27, 1999, Albany Plaza, a 145,462 square foot community center, which was owned 51% by the Macerich Management Company, was sold.

On October 29, 1999, Macerich Santa Monica, LLC, a wholly-owned indirect subsidiary of the Company, acquired Santa Monica Place, a 560,421 square foot regional mall located in Santa Monica, California. The total purchase price was $130.8 million, which was funded with $80.0 million of debt placed concurrently with the closing with the balance funded from proceeds from the PPRT transaction described above. Santa Monica Place is referred to herein as the "1999 Acquisition Center."

On November 12, 1999, Eastland Plaza, a 65,313 square foot community center, which was 51% owned by the Macerich Management Company, was sold.

On November 16, 1999, the Company sold Huntington Center. Huntington Center is a shopping center located in Huntington Beach, California that was purchased by the Company in December 1996. The Center was purchased as part of a package with Fresno Fashion Fair in Fresno, California, and Pacific View (formerly known as Buenaventura Mall) in Ventura, California. The Center was sold for $48.0 million and the net cash proceeds from the sale were used for general corporate purposes.

On September 30, 2000, Manhattan Village, a 551,847 square foot, regional shopping center, which was owned 10% by the Operating Partnership, was sold. The joint venture sold the property for $89.0 million, including a note receivable from the buyer for $79.0 million at a fixed interest rate of 8.75% payable monthly, until its maturity date of September 30, 2001. On December 28, 2001, the note receivable was paid down by $5.0 million and the maturity date was extended to September 30, 2002 at a new fixed interest rate of 9.50%.

On December 14, 2001, Villa Marina Marketplace, a 448,262 square foot community shopping center located in Marina del Rey, California, a wholly-owned property of the Company, was sold. The center was sold for approximately $99.0 million, including the assumption of the existing mortgage of $58.0 million, which resulted in a $24.7 million gain. The Company used approximately $26 million of the net proceeds from this sale to retire $25.7 million of its outstanding convertible subordinated debentures due December 2002. The remaining balance of the proceeds was used for general corporate purposes.

The properties acquired by PPRT and the Management Companies ("Joint Venture Acquisitions") are reflected using the equity method of accounting. The results of these acquisitions are reflected in the consolidated results of operations of the Company in equity in income of unconsolidated joint ventures and the Management Companies.

24 MACERICH 2001 Financial Statements

Many of the variations in the results of operations, discussed below, occurred due to the 1999 Acquisition Centers and the partial sale and contribution of the Contributed JV Assets to PPRT during 1999. Many factors impact the Company's ability to acquire additional properties; including the availability and cost of capital, the overall debt to market capitalization level, interest rates and availability of potential acquisition targets that meet the Company's criteria. There were no acquisitions in 2001 or 2000 because of market conditions, including the cost of capital and the lack of attractive opportunities. Accordingly, management is uncertain whether in future years that there will be similar acquisitions and corresponding increases in equity in income of unconsolidated joint ventures and the Management Companies and Funds From Operations that occurred as a result of the 1999 Acquisition Centers. Pacific View (formerly known as Buenaventura Mall), Crossroads Mall-Boulder and Parklane Mall are currently under redevelopment or in the case of Pacific View, was recently redeveloped and are referred to herein as the "Redevelopment Centers." All other Centers, excluding the Redevelopment Centers, are referred to herein as the "Same Centers," unless the context otherwise requires.

Revenues include rents attributable to the accounting practice of straight lining of rents which requires rent to be recognized each year in an amount equal to the average rent over the term of the lease, including fixed rent increases over that period. The amount of straight lined rents, included in consolidated revenues, recognized in 2001 was $(0.1) million compared to $0.9 million in 2000 and $2.6 million in 1999. Additionally, the Company recognized through equity in income of unconsolidated joint ventures, $1.4 million as its pro rata share of straight lined rents from joint ventures in 2001 compared to $2.2 million in 2000 and $2.3 million in 1999. These decreases resulted from the Company structuring the majority of its new leases using annual Consumer Price Index ("CPI") increases, which generally do not require straight lining treatment. Currently, 29% of the mall and freestanding leases contain provisions for CPI rent increases periodically throughout the term of the lease. The Company believes that using 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.

The Company's historical growth in revenues, net income and Funds From Operations have been closely tied to the acquisition and redevelopment of shopping centers. Many factors, including those described above, will affect the Company's ability to acquire and redevelop additional properties in the future. In addition, the following describes some of the other significant factors that could impact the Company's future results of operations.

General Factors Affecting the Centers; Competition: Real property investments are subject to varying degrees of risk that may affect the ability of the Centers to generate sufficient revenues to meet operating and other expenses, including debt service, lease payments, capital expenditures and tenant improvements, and to make distributions to their owners and the Company's stockholders. Income from shopping center properties may be adversely affected by a number of factors, including: the national economic climate; the regional and local economy (which may be adversely impacted by plant closings, industry slowdowns, adverse weather conditions, natural disasters, terrorist activities, and other factors); local real estate conditions (such as an oversupply of, or a reduction in demand for, retail space or retail goods and the availability and creditworthiness of current and prospective tenants); perceptions by retailers or shoppers of the safety, convenience and attractiveness of the shopping center; and increased costs of maintenance, insurance and operations (including real estate taxes). There are numerous shopping facilities that compete with the Centers in attracting tenants to lease space, and an increasing number of new retail formats and technologies other than retail shopping centers that compete with the Centers for retail sales (see

MACERICH 2001 Financial Statements 25

"Business–Competition"). Increased competition could adversely affect the Company's revenues. Income from shopping center properties and shopping center values are also affected by such factors as applicable laws and regulations, including tax, environmental, safety and zoning laws (see "Business–Environmental Matters"), interest rate levels and the availability and cost of financing.

Dependence on Tenants: The Company's revenues and funds available for distribution would be adversely affected if a significant number of the Company's lessees were unable (due to poor operating results, bankruptcy or other reasons) to meet their obligations, if the Company were unable to lease a significant amount of space in the Centers on economically favorable terms, or if for any reason, the Company were unable to collect a significant amount of rental payments. A decision by an Anchor or another significant tenant to cease operations at a Center could also have an adverse effect on the Company. In addition, mergers, acquisitions, consolidations, dispositions or bankruptcies in the retail industry could result in the loss of tenants at one or more Centers. (See "Business-Bankruptcy and/or Closure of Retail Stores.") Furthermore, if the store sales of retailers operating in the Centers were to decline sufficiently, tenants might be unable to pay their minimum rents or expense recovery charges. In the event of a default by a lessee, the Center may also experience delays and costs in enforcing its rights as lessor.

Assets and Liabilities

Total assets decreased to $2,295 million at December 31, 2001 compared to $2,337 million at December 31, 2000 and $2,404 million at December 31, 1999. During that same period, total liabilities decreased from $1,626 million in 1999 to $1,607 million in 2000 and decreased to $1,584 million in 2001. These changes were primarily a result of the partial sale and contribution of the Contributed JV Assets to PPRT, the sale of Villa Marina Marketplace and related debt transactions.

Recent Developments

A. Equity Offerings

B. Refinancing

26 MACERICH 2001 Financial Statements

C. Redevelopment

In the third quarter of 2001, the Company completed a $10.0 million interior and exterior renovation of Vintage Faire Mall.

D. Stock Repurchase Program

E. Other Events

Comparison of Years Ended December 31, 2001 and 2000

Revenues

Minimum and percentage rents increased by 2.9% to $213.9 million in 2001 from $207.8 million in 2000. Approximately $4.4 million of the increase is attributed to the Same Centers primarily due to releasing space at higher rents and $1.9 million of the increase relates to the Redevelopment Centers primarily due to the recently completed redevelopment at Pacific View Mall. This is partially offset by $0.2 million relating to the sale of Villa Marina Marketplace.

MACERICH 2001 Financial Statements 27

Tenant recoveries increased to $109.2 million in 2001 from $104.1 million in 2000 due to increased recoverable shopping center and operating expenses. Approximately $5.0 million of the increase is attributable to the Same Centers and $0.4 million of the increase relates to the Redevelopment Centers. This is partially offset by $0.3 million relating to decreases from the sale of Villa Marina Marketplace.

Other income increased to $11.5 million in 2001 from $8.2 million in 2000. This increase related primarily from parking fees, investment income and new business initiatives such as advertising revenue and preferred vendor income.

Expenses

Shopping center and operating expenses increased to $110.8 million in 2001 compared to $101.7 million in 2000. The increase is a result of $3.2 million of increased property taxes, insurance and other recoverable expenses at the Centers and approximately $0.9 million relates to increases in bad debt expense and legal fees at the Centers. Additionally, effective March 29, 2001, the Macerich Property Management Company merged with and into Macerich Property Management Company, LLC ("MPMC, LLC"). Expenses for MPMC, LLC for periods commencing March 29, 2001, are now consolidated and represented $5.0 million of the change. Prior to March 29, 2001, MPMC, LLC was an unconsolidated entity accounted for using the equity method of accounting.

REIT general and administrative expenses increased to $6.8 million in 2001 from $5.5 million in 2000 primarily due to marking to market the stock-based incentive plans.

Interest Expense

Interest expense increased to $109.6 million in 2001 from $108.4 million in 2000. Capitalized interest was $5.7 million in 2001, down from $7.2 million in 2000 primarily due to the reduction of capitalized interest at the recently redeveloped Pacific View Mall. (See "Properties- Mortgage Debt").

Depreciation and Amortization

Depreciation and amortization increased to $66.0 million in 2001 from $61.6 million in 2000. Approximately $1.4 million of the increase is due to greater depreciation at Pacific View, which recently completed an $89.0 million redevelopment and $3.0 million relates to additional capital costs at the Same Centers.

Minority Interest

The minority interest represents the 24.8% weighted average interest of the Operating Partnership that was not owned by the Company during 2001. This compares to 24.3% not owned by the Company during 2000.

Income From Unconsolidated Joint Ventures and Management Companies

The income from unconsolidated joint ventures and the Management Companies was $32.9 million for 2001, compared to income of $30.3 million in 2000. A total of $0.6 million of the increase is attributable to the 1999 Joint Venture Acquisitions and the Contributed JV Assets and $2.6 million is attributable to the SDG Macerich Properties, L.P. portfolio. Additionally, income from the Management Companies increased by $3.0 million primarily due to MPMC, LLC being consolidated effective March 29, 2001. These increases are partially offset by $2.8 million of additional loss as a result of the Company's investment in MerchantWired, LLC compared to 2000.

28 MACERICH 2001 Financial Statements

Gain (loss) on Sale of Assets

A gain of $24.5 million in 2001 compares to a loss of $2.8 million in 2000. The 2001 gain was a result of the Company selling Villa Marina Marketplace on December 14, 2001 (See "Business-Recent Developments–Other Events").

Extraordinary Loss from Early Extinguishment of Debt

In 2001, the Company recorded a loss from early extinguishment of debt of $2.0 million which was a result of write offs of unamortized financing costs, compared to the write off of $0.3 million of unamortized financing costs in 2000.

Cumulative Effect of Change in Accounting Principle

A charge of $1.0 million in 2000 was recorded as a result of implementation of SAB 101 at January 1, 2000.

Net Income Available to Common Stockholders

Primarily as a result of the sale of Villa Marina Marketplace and the foregoing results, net income available to common stockholders increased to $58.0 million in 2001 from $38.0 million in 2000.

Operating Activities

Cash flow from operations was $140.5 million in 2001 compared to $121.2 million in 2000. The increase is primarily due to consolidating the results of MPMC, LLC effective March 29, 2001 and increased net operating income at the Centers as mentioned above.

Investing Activities

Cash used in investing activities was $57.3 million in 2001 compared to cash provided by investing activities of $2.1 million in 2000. The change resulted primarily from $24.0 million of increased property improvements, renovations and expansion of Centers, tenant allowances and deferred leasing charges in 2001 compared to 2000. Additionally, joint venture distributions in 2001 were $70.2 million less than 2000 due to the distribution of proceeds in 2000 from the additional debt placed on the SDG Macerich Properties, L.P. portfolio. These decreases are offset by the net cash proceeds received of $39.7 million in 2001 from the sale of Villa Marina Marketplace.

Financing Activities

Cash flow used in financing activities was $93.0 million in 2001 compared to cash flow used in financing activities of $127.5 million in 2000. The change resulted primarily from the refinancing of Centers in 2001 (See "Properties-Mortgage Debt").

EBITDA and Funds From Operations

Primarily because of the factors mentioned above, EBITDA, including joint ventures at pro rata, increased 2.9% to $323.8 million in 2001 from $314.6 million in 2000 and Funds from Operations–Diluted increased 4.7% to $175.1 million in 2001 from $167.2 million in 2000.

Comparison of Years Ended December 31, 2000 and 1999

Revenues

Minimum and percentage rents decreased by 5.4% to $207.8 million in 2000 from $219.7 million in 1999. Approximately $24.6 million of the decrease related to the contribution of 100% and 99% of the

MACERICH 2001 Financial Statements 29

membership interests of Lakewood Mall and Stonewood Mall, respectively, to the PPRT joint venture on October 26, 1999. The Company's pro rata share of results from those assets subsequent to the contribution to PPRT is reflected in Income from Unconsolidated Joint Ventures. The decreases due to the Contributed JV Assets are partially offset by revenue increases of $8.2 million relating to the 1999 acquisition of Santa Monica Place.

In December 1999, the Securities and Exchange Committee issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"), which became effective for periods beginning after December 15, 1999. This bulletin modified the timing of revenue recognition for percentage rent received from tenants. This change will defer recognition of a significant amount of percentage rent for the first three calendar quarters into the fourth quarter. The Company applied this change in accounting principle as of January 1, 2000. The cumulative effect of this change in accounting principle at the adoption date of January 1, 2000, including pro rata share of joint ventures, was approximately $1.8 million.

Tenant recoveries increased to $104.1 million in 2000 from $99.1 million in 1999. The increase resulted from the impact of Santa Monica Place, Pacific View and from the Same Centers. These increases were partially offset by revenue decreases of $7.7 million resulting from the Contributed JV Assets.

Other income decreased to $8.2 million in 2000 from $8.6 million in 1999.

Expenses

Shopping center expenses increased to $101.7 million in 2000 compared to $100.3 million in 1999. Approximately $6.4 million of the increase resulted from the 1999 acquisition of Santa Monica Place, $3.4 million of the increase resulted from increased property taxes and recoverable expenses at the Same Centers. These increases were partially offset by a decrease of $8.1 million from the Contributed JV Assets.

Interest Expense

Interest expense decreased to $108.4 million in 2000 from $113.3 million in 1999. Approximately $7.5 million of the decrease is from the Contributed JV Assets. This decrease is partially offset by the acquisition activity in 1999, which was partially funded with secured debt and borrowings under the Company's line of credit.

Depreciation and Amortization

Depreciation and amortization increased to $61.6 million in 2000 from $61.4 million in 1999. Approximately $2.5 million of the increase relates primarily to the 1999 Acquisition Center, which is partially offset by a decrease of $4.6 million relating to the Contributed JV Assets.

Minority Interest

The minority interest represents the 24.3% weighted average interest of the Operating Partnership that was not owned by the Company during 2000. This compares to 26.3% not owned by the Company during 1999.

Income From Unconsolidated Joint Ventures and Management Companies

The income from unconsolidated joint ventures and the Management Companies was $30.3 million for 2000, compared to income of $25.9 million in 1999. A total of $8.2 million of the increase is attributable to the 1999 Joint Venture Acquisitions and the Contributed JV Assets. Additionally, $1.1 million is attributable

30 MACERICH 2001 Financial Statements

to the gain from the sale of Manhattan Village on September 30, 2000. These increases are partially offset by the cumulative effect of the change in accounting principle for percentage rent required by SAB 101 of $0.8 million and additional interest expense from the debt restructuring at SDG Macerich Properties, L.P. of $4.8 million.

Gain (loss) on Sale of Assets

A loss of $2.8 million in 2000 compares to a gain of $96.0 million in 1999. The 1999 gain was a result of the Company selling approximately 49% of the membership interests of Stonewood and Lakewood to Ontario Teachers' in October of 1999 and the Company's sale of Huntington Center on November 16, 1999.

Extraordinary Loss from Early Extinguishment of Debt

In 2000, the Company recorded a loss from early extinguishment of debt of $0.3 million which was a result of write offs of $1.3 million of unamortized financing costs and is offset by a gain of $1.0 million relating to the Company's purchase and retirement of $10.6 million of the Debentures, compared to the write off of $1.5 million of unamortized financing costs in 1999.

Cumulative Effect of Change in Accounting Principle

A loss of $1.0 million in 2000 compared to no loss in 1999 is a result of implementation of SAB 101 at January 1, 2000.

Net Income Available to Common Stockholders

As a result of the foregoing, net income available to common stockholders decreased to $38.0 million in 2000 from $110.9 million in 1999.

Operating Activities

Cash flow from operations was $121.2 million in 2000 compared to $139.6 million in 1999. The decrease is primarily because of decreased net operating income from the factors mentioned above.

Investing Activities

Cash generated from investing activities was $2.1 million in 2000 compared to cash utilized by investing activities of $243.2 million in 1999. The change resulted primarily from the cash contributions for the joint venture acquisitions of $116.9 million in 1999 compared to $4.3 million in 2000. This is offset by increases in joint venture distributions of $104.4 million in 2000 compared to $30.0 million in 1999.

Financing Activities

Cash flow used in financing activities was $127.5 million in 2000 compared to cash provided by financing activities of $119.0 million in 1999. The change resulted primarily from the refinancing of Centers in 1999.

EBITDA and Funds From Operations

Primarily because of the factors mentioned above, EBITDA, including joint ventures at pro rata, increased 4.2% to $314.6 million in 2000 from $301.8 million in 1999 and Funds from Operations–Diluted increased 1.8% to $167.2 million in 2000 from $164.3 million in 1999.

MACERICH 2001 Financial Statements 31

Liquidity and Capital Resources

The Company intends to meet its short term liquidity requirements through cash generated from operations and working capital reserves and borrowing under its line of credit. The Company anticipates that revenues will continue to provide necessary funds for its operating expenses and debt service requirements, and to pay dividends to stockholders in accordance with REIT requirements. The Company anticipates that cash generated from operations, together with cash on hand, will be adequate to fund capital expenditures which will not be reimbursed by tenants, other than non-recurring capital expenditures. The following table summarizes capital expenditures incurred at the wholly-owned Centers for the twelve months ending December 31,:

(Dollars in Millions)
		2001		2000

Renovations, expansions and acquisitions of property, equipment and improvements		$	68.2	$	50.4
Tenant allowances			9.9		5.9
Deferred leasing charges			13.7		11.4

	Total	$	91.8	$	67.7

Management expects similar levels to be incurred in future years for tenant allowances and deferred leasing charges and to incur between $20 million to $50 million in 2002 for renovations and expansions, excluding Queens Center expansion which will be separately financed. Capital for major expenditures or major redevelopments has been, and is expected to continue to be, obtained from equity or debt financings which include borrowings under the Company's line of credit and construction loans. However, many factors impact the Company's ability to access capital, such as its overall debt level, interest rates, interest coverage ratios and prevailing market conditions.

On February 28, 2002, the Company issued 1,968,957 common shares with total net proceeds of $52.2 million. The proceeds from the sale of the common shares will be used principally to finance a portion of the Queens Center expansion and redevelopment project and for general corporate purposes. The Queens Center expansion and redevelopment is anticipated to cost between $250 million and $275 million. The Company is currently negotiating construction and permanent loans, which will be secured by the Queens Center property to finance the remaining project costs. Construction is expected to begin in the second quarter of 2002 with completion estimated to be, in phases, through late 2004.

The Company believes that it will have access to the capital necessary to expand its business in accordance with its strategies for growth and maximizing Funds from Operations. The Company presently intends to obtain additional capital necessary for these purposes through a combination of debt or equity financings, joint ventures and the sale of non-core assets. The Company believes joint venture arrangements have in the past and may in the future provide an attractive alternative to other forms of financing, whether for acquisitions or other business opportunities.

The Company's total outstanding loan indebtedness at December 31, 2001 was $2.2 billion (including its pro rata share of joint venture debt). This equated to a debt to Total Market Capitalization (defined as total debt of the Company, including its pro rata share of joint venture debt, plus aggregate market value of outstanding shares of common stock, assuming full conversion of OP Units and preferred stock into common stock) ratio of approximately 61% at December 31, 2001. The Company's debt consists primarily of fixed-rate conventional mortgages payable secured by individual properties.

32 MACERICH 2001 Financial Statements

The Company has filed a shelf registration statement, effective December 8, 1997, to sell securities. The shelf registration is for a total of $500 million of common stock, common stock warrants or common stock rights. The Company sold a total of 7,920,181 shares of common stock in 1998 and 1,968,957 shares of common stock in 2002 under this shelf registration. The aggregate offering price of these transactions was approximately $267.9 million, leaving approximately $232.1 million available under the shelf registration statement.

The Company has an unsecured line of credit for up to $200.0 million with a maturity of May 2002 with a right to extend the facility for one year subject to certain conditions. It is anticipated that subsequent to December 31, 2001, the line of credit will be extended to May 2003. There were $159.0 million of borrowings outstanding at December 31, 2001.

The Company has $125.1 million of convertible subordinated debentures (the "Debentures") which mature December 15, 2002. The Debentures are callable on June 15, 2002 at par plus accrued interest. The Company is negotiating a credit facility with its bank group in which the proceeds are intended to retire these Debentures. The Company expects to put this credit facility in place during 2002 and plans to fully retire the Debentures prior to their maturity.

At December 31, 2001, the Company had cash and cash equivalents available of $26.5 million.

The Company has certain guarantees totaling $6.8 million relating to its ownership interest in MerchantWired, LLC.

The Company has a 2.9% interest in Constellation Real Technologies, LLC, a joint venture investing in real estate technology initiatives and opportunities. The Company funded $1.0 million in 2001 and has committed to fund up to an additional $3.0 million to this joint venture.

Funds From Operations

The Company believes that the most significant measure of its performance is FFO. FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") to be: Net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring, sales or write-down of assets and cumulative effect of change in accounting principle, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs) and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. FFO does not represent cash flow from operations, as defined by GAAP, and is not necessarily indicative of cash available to fund all cash flow needs. FFO, as presented, may not be comparable to

MACERICH 2001 Financial Statements 33

similarly titled measures reported by other real estate investment trusts. The following reconciles net income available to common stockholders to FFO:

(amounts in thousands)
		2001				2000
		Shares	Amount			Shares	Amount

Net income–available to common stockholders			$	58,035			$	37,971
Adjustments to reconcile net income to FFO-basic:
	Minority interest			19,001				12,168
	Loss on early extinguishment of debt			2,034				304
	(Gain) loss on sale of wholly-owned assets			(24,491	)			2,773
	(Gain) loss on sale or write-down of assets from unconsolidated entities (pro rata)			(191	)			(235	)
	Depreciation and amortization on wholly owned centers			65,983				61,647
	Depreciation and amortization on joint ventures and from the management companies (pro rata)			28,077				24,472
	Cumulative effect of change in accounting principle–wholly owned centers			–				963
	Cumulative effect of change in accounting principle–prorata unconsolidated entities			128				787
Less: depreciation on personal property and amortization of loan costs and interest rate caps				(4,969	)			(5,106	)

FFO–basic(1)		44,963	$	143,607		45,050	$	135,744
Additional adjustment to arrive at FFO-diluted
	Impact of convertible preferred stock	9,115		19,688		9,115		18,958
	Impact of stock options and restricted stock using the treasury method	(n/a–antidilutive)				(n/a–antidilutive)
	Impact of convertible debentures	4,824		11,773		5,154		12,542

FFO–diluted(2)		58,902	$	175,068		59,319	$	167,244

(1): Calculated based upon basic net income as adjusted to reach basic FFO. Weighted average number of shares includes the weighted average shares of common stock outstanding for 2001 assuming the conversion of all outstanding OP Units. As of December 31, 2001, 11.2 million of OP Units were outstanding.
(2): The computation of FFO-diluted and diluted average number of shares outstanding includes the effect of outstanding common stock options and restricted stock using the treasury method. The debentures are dilutive at December 31, 2001 and 2000 and are included in the FFO calculation. On February 25, 1998, the Company sold $100 million of its Series A Preferred Stock. On June 17, 1998, the Company sold $150 million of its Series B Preferred Stock. The preferred stock can be converted on a one-for-one basis for common stock. The preferred shares are assumed converted for purposes of 2001 and 2000 FFO-diluted as they are dilutive to that calculation.

Included in minimum rents were rents attributable to the accounting practice of straight lining of rents. The amount of straight lining of rents that impacted minimum rents was ($72,029) for 2001, $865,259 for 2000 and $2,628,000 for 1999. The decline in straight-lining of rents from 1999 to 2001 is due to the Company structuring its new leases using rent increases tied to the change in CPI rather than using contractually fixed rent increases. CPI increases do not generally require straight-lining of rent treatment.

Inflation

In the last three years, inflation has not had a significant impact on the Company because of a relatively low inflation rate. Most of the leases at the Centers have rent adjustments periodically through the lease

34 MACERICH 2001 Financial Statements

term. These rent increases are either in fixed increments or based on increases in the CPI. In addition, about 8%-12% 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, most of the leases require the tenants to pay their pro rata share of operating expenses. This reduces the Company's exposure to increases in costs and operating expenses resulting from inflation.

Seasonality

The shopping center industry is seasonal in nature, particularly in the fourth quarter during the holiday season when retailer occupancy and retail sales are typically at their highest levels. In addition, shopping malls achieve a substantial portion of their specialty (temporary retailer) rents during the holiday season and the majority of percentage rent is recognized in the fourth quarter. As a result of the above, plus the change in accounting principle discussed below for percentage rent, earnings are generally higher in the fourth quarter of each year.

Statement on Critical Accounting Policies

The Securities and Exchange Commission ("SEC") recently issued disclosure guidance for "critical accounting policies." The SEC defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.

The preparation of financial statements in conformity with accounting principles generally accepted 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 judgements on revenue recognition, estimates for common area maintenance and real estate tax accruals, provisions for uncollectable accounts and estimates for environmental matters. The Company's significant accounting policies are described in more detail in Note 2 to the Consolidated Financial Statements. However, the following policies could be deemed to be critical within the SEC definition.

Revenue Recognition:

Minimum rental revenues are recognized on a straight-line basis over the terms of the related lease. The difference between the amount of rent due in a year and the amount recorded as rental income is referred to as the "straight lining of rent adjustment." Currently, 29% of the mall and freestanding leases contain provisions for CPI rent increases periodically throughout the term of the lease. The Company believes that using 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 on an accrual basis. Recoveries from tenants for real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred.

Property:

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

MACERICH 2001 Financial Statements 35

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. Realized gains and losses are recognized upon disposal or retirement of the related assets and are reflected in earnings.

Property is recorded at cost and is depreciated using a straight-line method over the estimated useful lives of the assets as follows:


Buildings and improvements		5-40 years
Tenant improvements		initial term of related lease
Equipment and furnishings		5-7 years

The Company assesses whether there has been an impairment in the value of its long-lived assets by considering factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other economic factors. Such factors include the tenants' ability to perform their duties and pay rent under the terms of the leases. The Company may recognize an impairment loss if the income stream is not sufficient to cover its investment. Such a loss would be determined as the difference between the carrying value and the fair value of a center.

Deferred Charges:

Costs relating to obtaining tenant leases are deferred and amortized over the initial term of the agreement using the straight-line method. Cost 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. The range of the terms of the agreements are as follows:


Deferred lease costs		1-15 years
Deferred financing costs		1-15 years

New Pronouncements Issued

In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB 101"), which became effective for periods beginning after December 15, 1999. This bulletin modified the timing of revenue recognition for percentage rent received from tenants. This change will defer recognition of a significant amount of percentage rent for the first three calendar quarters into the fourth quarter. The Company applied this change in accounting principle as of January 1, 2000. The cumulative effect of this change in accounting principle at the adoption

36 MACERICH 2001 Financial Statements

date of January 1, 2000, including the pro rata share of joint ventures, was approximately $1.8 million. If the Company had recorded percentage rent using the methodology prescribed in SAB 101, the Company's net income available to common stockholders would have been reduced by $1.3 million or $0.02 per diluted share, $1.1 million or $0.025 per diluted share and $0.6 million or $0.016 per diluted share for the years ended December 31, 1999, 1998 and 1997, respectively.

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities," ("SFAS 133") which requires companies to record derivatives on the balance sheet, measured at fair value. Changes in the fair values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. In June 1999, the FASB issued SFAS 137, "Accounting for Derivative Instruments and Hedging Activities," which delayed the implementation of SFAS 133 from January 1, 2000 to January 1, 2001. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities–an Amendment of FASB Statement No. 133," ("SFAS138"), which amended the accounting and reporting standards of SFAS 133. As a result of the adoption of SFAS 133 on January 1, 2001, the Company recorded a transition adjustment of $7.1 million to accumulated other comprehensive income related to treasury rate lock transactions settled in prior years. The entire transition adjustment was reflected in the quarter ended March 31, 2001.The Company expects that $1.3 million will be reclassified from accumulated other comprehensive income to earnings for the year ended December 31, 2002.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," which is effective for fiscal years beginning after June 15, 2002. The statement provides accounting and reporting standards for recognizing obligations related to asset retirement costs associated with the retirement of tangible long-lived assets. Under this statement, legal obligations associated with the retirement of long-lived assets are to be recognized at their fair value in the period in which they are incurred if a reasonable estimate of fair value can be made. The fair value of the asset retirement costs is capitalized as part of the carrying amount of the long-lived asset and expensed using a systematic and rational method over the assets' useful life. Any subsequent changes to the fair value of the liability will be expensed. The Company does not believe that the adoption of SFAS No. 143 will have a material impact on its consolidated financial statements.

On July 1, 2001, the Company adopted SFAS No. 141, "Business Combinations" ("SFAS 141"). SFAS 141 requires that the purchase method of accounting be used for all business combinations for which the date of acquisition is after June 30, 2001. SFAS 141 also establishes specific criteria for the recognition of intangible assets. The Company has determined that the adoption of SFAS 141 will not have an impact on its consolidated financial statements.

In October 2001, the FASB issued SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). SFAS 144 establishes a single accounting model, based on the framework established in SFAS 121, for long-lived assets to be disposed of by sale. The Company adopted SFAS 144 on January 1, 2002. The Company has determined that the adoption of SFAS 144 will not have a material impact on its consolidated financial statements.

MACERICH 2001 Financial Statements 37

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company's primary market risk exposure is interest rate risk. The Company has managed and will continue to manage interest rate risk by (1) maintaining a conservative ratio of fixed rate, long-term debt to total debt such that variable rate exposure is kept at an acceptable level, (2) reducing interest rate exposure on certain long-term variable rate debt through the use of interest rate caps with appropriately matching maturities, (3) using treasury rate locks where appropriate to fix rates on anticipated debt transactions, and (4) taking advantage of favorable market conditions for long-term debt and/or equity.

The following table sets forth information as of December 31, 2001 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 Ended December 31,
		2002			2003			2004			2005			2006			Thereafter			Total			FV

Long term debt:
	Fixed rate	$	13,585		$	26,838		$	132,200		$	15,671		$	67,851		$	983,367		$	1,239,512		$	1,262,099
	Average interest rate		7.39	%		7.39	%		7.39	%		7.39	%		7.36	%		7.36	%		7.38	%		–
	Fixed rate–Debentures		125,148			–			–			–			–			–			125,148			125,784
	Average interest rate		7.25	%		–			–			–			–			–			7.25	%		–
	Variable rate		159,000			–			–			–			–			–			159,000			159,000
	Average interest rate		6.00	%		–			–			–			–			–			6.00	%		–

Total debt–Wholly owned Centers		$	297,733		$	26,838		$	132,200		$	15,671		$	67,851		$	983,367		$	1,523,660		$	1,546,883

Joint Venture Centers:
(at Company's pro rata share)
	Fixed rate	$	7,766		$	8,655		$	9,241		$	74,752		$	64,023		$	415,138		$	579,575		$	579,910
	Average interest rate		6.87	%		6.87	%		6.87	%		6.83	%		6.97	%		6.97	%		6.90	%		–
	Variable rate		–			100,474			–			–			40,700			–			141,174			141,174
	Average interest rate		–			4.80	%		–			–			4.54	%		–			4.75	%		–

Total debt–Joint Ventures		$	7,766		$	109,129		$	9,241		$	74,752		$	104,723		$	415,138		$	720,749		$	721,084

Total debt–All Centers		$	305,499		$	135,967		$	141,441		$	90,423		$	172,574		$	1,398,505		$	2,244,409		$	2,267,967

The $159.0 million of variable debt maturing in 2002 represents the outstanding borrowings under the Company's credit facility. It is anticipated that subsequent to December 31, 2001, the line of credit will be extended to May 2003.

On December 15, 2002, the Company has $125.1 million of Debentures which will mature. The Debentures are callable on June 15, 2002 at par plus accrued interest. The Company is negotiating a credit facility with its bank group in which the proceeds are intended to retire these Debentures. The Company expects to put this credit facility in place during 2002 and plans to fully retire the Debentures prior to their maturity.

In addition, the Company has assessed the market risk for its variable rate debt and believes that a 1% increase in interest rates would decrease future earnings and cash flows by approximately $3.0 million per year based on $300.2 million outstanding at December 31, 2001.

The fair value of the Company's long term debt is estimated based on discounted cash flows at interest rates that management believes reflect the risks associated with long term debt of similar risk and duration.

38 MACERICH 2001 Financial Statements

Item 8. Financial Statements and Supplementary Data

Refer to the Index to Financial Statements and Financial Statement Schedules for the required information.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Part III

Item 10. Directors and Executive Officers of the Company.

There is hereby incorporated by reference the information which appears under the captions "Election of Directors," "Executive Officers" and "Section 16 Reporting" in the Company's definitive proxy statement for its 2002 Annual Meeting of Stockholders.

Item 11. Executive Compensation.

There is hereby incorporated by reference the information which appears under the caption "Executive Compensation" in the Company's definitive proxy statement for its 2002 Annual Meeting of Stockholders; provided, however, that the Report of the Compensation Committee on executive compensation and the Stock Performance Graph set forth therein shall not be incorporated by reference herein, in any of the Company's prior or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such report or stock performance graph by reference therein and shall not be otherwise deemed filed under either of such Acts.

Item 12. Security Ownership of Certain Beneficial Owners and Management

There is hereby incorporated by reference the information which appears under the captions "Principal Stockholders," "Information Regarding Nominees and Directors" and "Executive Officers" in the Company's definitive proxy statement for its 2002 Annual Meeting of Stockholders.

Item 13. Certain Relationships and Related Transactions

There is hereby incorporated by reference the information which appears under the captions "Certain Transactions" in the Company's definitive proxy statement for its 2002 Annual Meeting of Stockholders.

MACERICH 2001 Financial Statements 39

Part IV

Item 14. Exhibits, Financial Statements, Financial Statement Schedules and Reports on Form 8-K

			Page

(a)	1.	Financial Statements of the Company
		Report of Independent Accountants	42
		Consolidated balance sheets of the Company as of December 31, 2001 and 2000	43
		Consolidated statements of operations of the Company for the years ended December 31, 2001, 2000 and 1999	44
		Consolidated statements of common stockholders' equity of the Company for the years ended December 31, 2001, 2000 and 1999	45
		Consolidated statements of cash flows of the Company for the years ended December 31, 2001, 2000 and 1999	46
		Notes to consolidated financial statements	47-69
	2.	Financial Statements of Pacific Premier Retail Trust
		Report of Independent Accountants	70
		Consolidated balance sheets of Pacific Premier Retail Trust as of December 31, 2001 and 2000	71
		Consolidated statements of operations of Pacific Premier Retail Trust for the years ended December 31, 2001 and 2000 and for the period from February 18, 1999 (Inception) through December 31, 1999	72
		Consolidated statements of stockholders' equity of Pacific Premier Retail Trust for the years ended December 31, 2001 and 2000 and for the period from February 18, 1999 (Inception) through December 31, 1999	73
		Consolidated statements of cash flows of Pacific Premier Retail Trust for the years ended December 31, 2001 and 2000 and for the period from February 18, 1999 (Inception) through December 31, 1999	74
		Notes to consolidated financial statements	75-83
	3.	Financial Statements of SDG Macerich Properties, L.P.
		Independent Auditors' Report	84
		Balance sheets of SDG Macerich Properties, L.P. as of December 31, 2001 and 2000	85
		Statements of operations of SDG Macerich Properties, L.P. for the years ended December 31, 2001, 2000 and 1999	86
		Statements of cash flows of SDG Macerich Properties, L.P. for the years ended December 31, 2001, 2000 and 1999	87
		Statements of partners' equity of SDG Macerich Properties, L.P. for years ended December 31, 2001, 2000 and 1999	88
		Notes to financial statements	89-93

40 MACERICH 2001 Financial Statements

	4.	Financial Statement Schedules
		Schedule III–Real estate and accumulated depreciation of the Company	94-95
		Schedule III–Real estate and accumulated depreciation of Pacific Premier Retail Trust	96-97
		Schedule III–Real estate and accumulated depreciation of SDG Macerich Properties, L.P	98-100
(b)	1.	Reports on Form 8-K
		Current Report on Form 8-K, event date February 19, 2002, filing the Company's February 19, 2002 earnings release (as modified).
		Current Report on Form 8-K, event date February 25, 2002, filing various agreements relating to the Company's sale of 1,968,957 shares of Common Stock on February 28, 2002.
(c)	1.	Exhibits
		The Exhibit Index attached hereto is incorporated by reference under this item

MACERICH 2001 Financial Statements 41

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of The Macerich Company:

In our opinion, based on our audits and the report of other auditors, the consolidated financial statements listed in the index appearing under Item 14(a)(1) present fairly, in all material respects, the financial position of The Macerich Company (the "Company") at December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 14(a)(4) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We did not audit the financial statements of SDG Macerich Properties, L.P. (the "Partnership"), the investment in which is reflected in the accompanying consolidated financial statements using the equity method of accounting. The investment in the Partnership represents approximately 7.3% and 7.2% of the Company's consolidated total assets at December 31, 2001 and 2000, respectively, and the equity in income represents approximately 21.7%, 22.1% and 13.7% of the related consolidated net income for each of the three years in the period ended December 31, 2001. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for the Partnership, is based solely on the report of the other auditors. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2000, the Company adopted Staff Accounting Bulletin 101. Additionally, as discussed in Note 2 to the consolidated financial statements, effective January 1, 2001, the Company adopted Statement of Financial Accounting Standard No. 133.

PricewaterhouseCoopers LLP

Los Angeles, CA
February 13, 2002

42 MACERICH 2001 Financial Statements

THE MACERICH COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

				December 31,
				2001			2000

ASSETS:
Property, net				$	1,887,329		$	1,933,584
Cash and cash equivalents					26,470			36,273
Tenant receivables, including accrued overage rents of $6,390 in 2001 and $6,486 in 2000					42,537			38,922
Deferred charges and other assets, net					59,640			55,323
Investments in joint ventures and the Management Companies					278,526			273,140

		Total assets		$	2,294,502		$	2,337,242

LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS' EQUITY:
Mortgage notes payable:
	Related parties			$	81,882		$	133,063
	Others				1,157,630			1,119,684

	Total				1,239,512			1,252,747
Bank notes payable					159,000			147,340
Convertible debentures					125,148			150,848
Accounts payable and accrued expenses					26,161			24,681
Due to affiliates					998			8,800
Other accrued liabilities					28,394			17,887
Preferred stock dividend payable					5,013			4,831

		Total liabilities			1,584,226			1,607,134

Minority interest in Operating Partnership					113,986			120,500

Commitments and contingencies (Note 11)
Series A cumulative convertible redeemable preferred stock, $.01 par value, 3,627,131 shares authorized, issued and outstanding at December 31, 2001 and 2000					98,934			98,934
Series B cumulative convertible redeemable preferred stock, $.01 par value, 5,487,471 shares authorized, issued and outstanding at December 31, 2001 and 2000					148,402			148,402

					247,336			247,336

Common stockholders' equity:
	Common stock, $.01 par value, 100,000,000 shares authorized, 33,981,946 and 33,612,462 shares issued and outstanding at December 31, 2001 and 2000, respectively				340			338
	Additional paid in capital				366,349			359,306
	Accumulated (deficit) earnings				(4,944	)		10,314
	Accumulated other comprehensive loss				(5,820	)		–
	Unamortized restricted stock				(6,971	)		(7,686	)

		Total common stockholders' equity			348,954			362,272

			Total liabilities, preferred stock and common stockholders' equity	$	2,294,502		$	2,337,242

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

MACERICH 2001 Financial Statements 43

THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

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

			For the years ended December 31,
			2001			2000			1999

REVENUES:
	Minimum rents		$	201,481		$	195,236		$	204,568
	Percentage rents			12,394			12,558			15,106
	Tenant recoveries			109,163			104,125			99,126
	Other			11,535			8,173			8,644

		Total revenues		334,573			320,092			327,444

EXPENSES:
	Shopping center and operating expenses			110,827			101,674			100,327
	General and administrative expense			6,780			5,509			5,488

				117,607			107,183			105,815

	Interest expense:
		Related parties		6,935			10,106			10,170
		Others		102,711			98,341			103,178

		Total interest expense		109,646			108,447			113,348

	Depreciation and amortization			65,983			61,647			61,383
Equity in income of unconsolidated joint ventures and the management companies				32,930			30,322			25,945
Gain (loss) on sale of assets				24,491			(2,773	)		95,981

Income before extraordinary item, cumulative effect of change in accounting principle and minority interest				98,758			70,364			168,824
Extraordinary loss on early extinguishment of debt				(2,034	)		(304	)		(1,478	)
Cumulative effect of change in accounting principle				–			(963	)		–

Income of the Operating Partnership				96,724			69,097			167,346
Less minority interest in net income of the Operating Partnership				19,001			12,168			38,335

Net income				77,723			56,929			129,011
Less preferred dividends				19,688			18,958			18,138

Net income available to common stockholders			$	58,035		$	37,971		$	110,873

Earnings per common share–basic:
	Income before extraordinary item and cumulative effect of change in accounting principle		$	1.76		$	1.14		$	3.30
	Extraordinary item			(0.04	)		(0.01	)		(0.04	)
	Cumulative effect of change in accounting principle			–			(0.02	)		–

Net income–available to common stockholders			$	1.72		$	1.11		$	3.26

Weighted average number of common shares outstanding–basic				33,809,000			34,095,000			34,007,000

Weighted average number of common shares outstanding–basic, assuming full conversion of operating units outstanding				44,963,000			45,050,000			46,130,000

Earnings per common share–diluted:
	Income before extraordinary item and cumulative effect of change in accounting principle		$	1.76		$	1.14		$	3.01
	Extraordinary item			(0.04	)		(0.01	)		(0.02	)
	Cumulative effect of change in accounting principle			–			(0.02	)		–

Net income–available to common stockholders			$	1.72		$	1.11		$	2.99

Weighted average number of common shares outstanding–diluted for EPS				44,963,000			45,050,000			60,893,000

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

44 MACERICH 2001 Financial Statements

THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY

(Dollars in thousands, except share data)

			Common Stock (# shares)		Common Stock Par Value	Additional Paid In Capital		Accumulated Earnings (Deficit)		Accumulated Other Comprehensive Loss		Unamortized Restricted Stock		Total Common Stockholders' Equity

Balance December 31, 1998			33,901,963		$338	$367,610		–		–		$(4,524	)	$363,424
	Issuance costs					(198	)							(198	)
	Issuance of restricted stock		176,600			4,007								4,007
	Unvested restricted stock		(176,600	)								(4,007	)	(4,007	)
	Restricted stock vested in 1999		51,675									2,037		2,037
	Exercise of stock options		88,250			1,705								1,705
	Distributions paid $(1.965) per share							$(67,359	)					(67,359	)
	Preferred dividends							(18,138	)					(18,138	)
	Net income							129,011						129,011
	Conversion of OP units to common stock		30,737			441								441
	Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership					(9,669	)							(9,669	)

Balance December 31, 1999			34,072,625		338	363,896		43,514		–		(6,494	)	401,254
	Issuance costs					(7	)							(7	)
	Issuance of restricted stock		169,556			3,412								3,412
	Unvested restricted stock		(169,556	)								(3,412	)	(3,412	)
	Restricted stock vested in 2000		82,733									2,220		2,220
	Exercise of stock options		20,704			388								388
	Common stock repurchase		(563,600	)		(10,739	)							(10,739	)
	Distributions paid $(2.06) per share							(71,171	)					(71,171	)
	Preferred dividends							(18,958	)					(18,958	)
	Net income							56,929						56,929
	Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership					2,356								2,356

Balance December 31, 2000			33,612,462		338	359,306		10,314		–		(7,686	)	362,272
	Comprehensive income:
		Net income						77,723						77,723
		Cumulative effect of change in accounting principle								$(7,148	)			(7,148	)
		Reclassification of deferred losses								1,328				1,328

	Total comprehensive income							77,723		(5,820	)			71,903
	Issuance costs					90								90
	Issuance of restricted stock		145,602			3,196								3,196
	Unvested restricted stock		(145,602	)								(3,196	)	(3,196	)
	Restricted stock vested in 2001		120,852									3,911		3,911
	Exercise of stock options		248,632		2	4,848								4,850
	Distributions paid $(2.14) per share							(73,293	)					(73,293	)
	Preferred dividends							(19,688	)					(19,688	)
	Adjustment to reflect minority interest on a pro rata basis according to year end ownership percentage of Operating Partnership					(1,091	)							(1,091	)

Balance December 31, 2001			33,981,946		$340	$366,349		$(4,944	)	$(5,820	)	$(6,971	)	$348,954

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

MACERICH 2001 Financial Statements 45

THE MACERICH COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

		For the years ended December 31,
		2001			2000		1999

Cash flows from operating activities:
	Net income–available to common stockholders	$	58,035		$	37,971	$	110,873
	Preferred dividends		19,688			18,958		18,138

	Net income		77,723			56,929		129,011
	Adjustments to reconcile net income to net cash provided by operating activities:
	Extraordinary loss on early extinguishment of debt		2,034			304		1,478
	Cumulative effect of change in accounting principle		–			963		–
	(Gain) loss on sale of assets		(24,491	)		2,773		(95,981	)
	Depreciation and amortization		65,983			61,647		61,383
	Amortization of net discount on trust deed note payable		33			33		191
	Minority interest in the net income of the Operating Partnership		19,001			12,168		38,335
	Changes in assets and liabilities: