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Dynamic quotes 
OFFON

THE MACERICH COMPANY

(MAC)
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MACERICH : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/06/2021 | 04:43pm EDT
IMPORTANT INFORMATION RELATED TO FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q of The Macerich Company (the "Company")
contains or incorporates statements that constitute forward-looking statements
within the meaning of the federal securities laws. Any statements that do not
relate to historical or current facts or matters are forward-looking statements.
You can identify some of the forward-looking statements by the use of
forward-looking words, such as "may," "will," "could," "should," "expects,"
"anticipates," "intends," "projects," "predicts," "plans," "believes," "seeks,"
"estimates," "scheduled" and variations of these words and similar expressions.
Statements concerning current conditions may also be forward-looking if they
imply a continuation of current conditions. Forward-looking statements appear in
a number of places in this Form 10-Q and include statements regarding, among
other matters:
•expectations regarding the Company's growth;
•the Company's beliefs regarding its acquisition, redevelopment, development,
leasing and operational activities and opportunities, including the performance
and financial stability of its retailers;
•the Company's acquisition, disposition and other strategies;
•regulatory matters pertaining to compliance with governmental regulations;
•the Company's capital expenditure plans and expectations for obtaining capital
for expenditures;
•the Company's expectations regarding income tax benefits;
•the Company's expectations regarding its financial condition or results of
operations; and
•the Company's expectations for refinancing its indebtedness, entering into and
servicing debt obligations and entering into joint venture arrangements.
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 the industry to differ materially from the Company's future results,
performance or achievements, or those of the industry, expressed or implied in
such forward-looking statements. Such factors include, among others, general
industry, as well as national, regional and local 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, anchor or tenant bankruptcies, closures, mergers or consolidations,
lease rates, terms and payments, interest rate fluctuations, availability, terms
and cost of financing and operating expenses; adverse changes in the real estate
markets including, among other things, competition from other companies, retail
formats and technology, risks of real estate development and redevelopment,
acquisitions and dispositions; the continuing adverse impact of the novel
coronavirus ("COVID-19") on the U.S., regional and global economies and the
financial condition and results of operations of the Company and its tenants;
the liquidity of real estate investments, governmental actions and initiatives
(including legislative and regulatory changes); environmental and safety
requirements; and terrorist activities or other acts of violence which could
adversely affect all of the above factors. You are urged to carefully review the
disclosures we make concerning these risks and other factors that may affect our
business and operating results, including those made in "Item 1A. Risk Factors"
in our Annual Report on Form 10-K for the year ended December 31, 2020, as well
as our other reports filed with the Securities and Exchange Commission (the
"SEC"), which disclosures are incorporated herein by reference. You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this document. The Company does not intend, and
undertakes no obligation, to update any forward-looking information to reflect
events or circumstances after the date of this document or to reflect the
occurrence of unanticipated events, unless required by law to do so.
Management's Overview and Summary
The Company is involved in the acquisition, ownership, development,
redevelopment, management and leasing of regional and community/power 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. (the "Operating Partnership"). As of June 30, 2021, the
Operating Partnership owned or had an ownership interest in 46 regional shopping
centers and five community/power shopping centers. These 51 regional and
community/power shopping centers (which include any related office space)
consist of approximately 50 million square feet of gross leasable area and are
referred to herein as the "Centers". The Centers consist of consolidated Centers
("Consolidated Centers") and unconsolidated joint venture Centers
("Unconsolidated Joint Venture Centers"), unless the context otherwise requires.
The property management, leasing and redevelopment of the Company's portfolio is
provided by the Company's seven management companies (collectively referred to
herein as the "Management Companies"). 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 Management Companies.

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The following discussion is based primarily on the consolidated financial
statements of the Company for the three and six months ended June 30, 2021 and
2020. It compares the results of operations for the three months ended June 30,
2021 to the results of operations for the three months ended June 30, 2020. It
also compares the results of operations and cash flows for the six months ended
June 30, 2021 to the results of operations and cash flows for the six months
ended June 30, 2020.
This information should be read in conjunction with the accompanying
consolidated financial statements and notes thereto.
Dispositions:
On March 29, 2021, the Company sold Paradise Valley Mall in Phoenix, Arizona to
a newly formed joint venture for $100 million, resulting in a gain on sale of
assets of approximately $5.6 million. Concurrent with the sale, the Company
elected to reinvest into the new joint venture at a 5% ownership interest. The
Company used the $95.3 million of net proceeds from the sale to pay down its
line of credit (See "Liquidity and Capital Resources").
Financing Activities:
On September 15, 2020, the Company closed on a loan extension agreement for the
$191.0 million loan on Danbury Fair Mall. Under the extension agreement, the
original loan maturity date of October 1, 2020 was extended to April 1, 2021.
The loan was further extended to October 1, 2021. The loan amount and interest
rate are unchanged following the extensions.
On November 17, 2020, the Company's joint venture in Tysons VITA, the
residential tower at Tysons Corner Center, placed a new $95.0 million loan on
the property that bears interest at an effective rate of 3.43% and matures on
December 1, 2030. Initial loan funding for the Company's joint venture was $90.0
million with future advance potential of up to $5.0 million. The Company used
its share of the initial proceeds of $45.0 million for general corporate
purposes.
On December 10, 2020, the Company made a loan (the "Partnership Loan") to the
Company's joint venture in Fashion District Philadelphia to fund the entirety of
a $100.0 million repayment to reduce the mortgage loan on Fashion DistrictPhiladelphia from $301.0 million to $201.0 million. This mortgage loan now
matures on January 22, 2024, assuming exercise of a one-year extension option,
and bears interest at LIBOR plus 3.5%, with a LIBOR floor of 0.50%. The
partnership agreement for the joint venture was amended in connection with the
Partnership Loan, and pursuant to the amended agreement, the Partnership Loan
plus 15% accrued interest must be repaid prior to the resumption of 50/50 cash
distributions to the Company and its joint venture partner.
On December 15, 2020, the Company closed on a loan extension agreement for the
$101.5 million loan on Fashion Outlets of Niagara. Under the extension agreement
the original loan maturity date of October 6, 2020 was extended to October 6,
2023. The loan amount and interest rate are unchanged following the extension.
On December 29, 2020, the Company's joint venture closed on a one-year maturity
date extension for the FlatIron Crossing loan to January 5, 2022. The interest
rate increased from 3.85% to 4.10%, and the Company's joint venture repaid $15.0
million, $7.6 million at the Company's pro rata share, of the outstanding loan
balance at closing.
On January 22, 2021, the Company closed on a one-year extension for the Green
Acres Mall$258.2 million loan to February 3, 2022, which also includes a
one-year extension option to February 3, 2023. The interest rate remained
unchanged, and the Company repaid $9 million of the outstanding loan balance at
closing.
On March 25, 2021, the Company closed on a two-year extension for the Green
Acres Commons$124.6 million loan to March 29, 2023. The interest rate is LIBOR
plus 2.75% and the Company repaid $4.7 million of the outstanding loan balance
at closing.
During the second quarter of 2020 and in July 2020, the Company secured
agreements with its mortgage lenders on 19 mortgage loans to defer approximately
$47.2 million of both second and third quarter of 2020 debt service payments at
the Company's pro rata share during the COVID-19 pandemic. Of the deferred
payments, $28.1 million and $36.9 million was repaid in the three months and
twelve months ended December 31, 2020, respectively; and the remaining balance
was fully repaid during the first quarter of 2021.
On April 14, 2021, the Company terminated its existing credit facility and
entered into a new credit agreement, which provides for an aggregate $700
million facility, including a $525 million revolving loan facility that matures
on April 14, 2023, with a one-year extension option, and a $175 million term
loan facility that matures on April 14, 2024 (See "Liquidity and Capital
Resources").



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Redevelopment and Development Activities:
The Company's joint venture with Hudson Pacific Properties is redeveloping One
Westside into 584,000 square feet of creative office space and 96,000 square
feet of dining and entertainment space. The entire creative office space has
been leased to Google and is expected to be completed in 2022. The total cost of
the project is estimated to be between $500.0 million and $550.0 million, with
$125.0 million to $137.5 million estimated to be the Company's pro rata share.
The Company has funded $93.7 million of the total $374.8 million incurred by the
joint venture as of June 30, 2021. The joint venture expects to fund the
remaining costs of the development with its $414.6 million construction loan
(See "Financing Activities").
The Company has a 50/50 joint venture with Simon Property Group to develop Los
Angeles Premium Outlets, a premium outlet center in Carson, California that is
planned to open with approximately 400,000 square feet, followed by an
additional 165,000 square feet in the second phase. The Company has funded $40.4
million of the total $80.8 million incurred by the joint venture as of June 30,
2021.
In connection with the closures and lease rejections of several Sears stores
owned or partially owned by the Company, the Company anticipates spending
between $130.0 million to $160.0 million at the Company's pro rata share to
redevelop the Sears stores. The anticipated openings of such redevelopments are
expected to occur over several years. The estimated range of redevelopment costs
could increase if the Company or its joint venture decides to expand the scope
of the redevelopments. The Company has funded $39.4 million at its pro rata
share as of June 30, 2021.
Other Transactions and Events:
In March 2020, the COVID-19 outbreak was declared a pandemic by the World Health
Organization. As a result, all of the markets that the Company operates in were
subject to stay-at-home orders, and the majority of its properties were
temporarily closed in part or completely. Following staggered re-openings during
2020, all Centers have been open and operating since October 7, 2020. As of the
date of this Quarterly Report on Form 10-Q, government-imposed capacity
restrictions resulting from COVID-19 have been essentially eliminated across the
Company's markets.
On December 31, 2020, the Company and its joint venture partner, Seritage Growth
Properties ("Seritage"), entered into a distribution agreement. The joint
venture owned nine properties, including the former Sears parcels at the South
Plains Mall and the Arrowhead Towne Center. The joint venture distributed the
former Sears parcel at South Plains Mall to the Company and the former Sears
parcel at Arrowhead Towne Center to Seritage. The joint venture partners agreed
that the distributed properties were of equal value. The Company now owns 100%
of the former Sears parcel at South Plains Mall. Effective December 31, 2020,
the Company consolidates its 100% interest in the Sears parcel at South Plains
Mall in the Company's consolidated financial statements.
In March 2020, the Company declared a reduced second quarter dividend of $0.50
per share of its common stock, which was paid on June 3, 2020 in a combination
of cash and shares of common stock, at the election of the stockholder, subject
to a limitation that the aggregate amount of cash payable to holders of the
Company's common stock would not exceed 20% of the aggregate amount of the
dividend, or $0.10 per share, for all stockholders of record on April 22, 2020.
The amount of the dividend represented a reduction from the Company's first
quarter 2020 dividend, and was paid in a combination of cash and shares of
common stock to preserve liquidity in light of the impact and uncertainty
arising out of the COVID-19 pandemic. The Company declared a further reduced
cash dividend of $0.15 per share of its common stock for the third and fourth
quarters of 2020 and for the first and second quarters of 2021. On July 30,
2021, the Company declared a third quarter cash dividend of $0.15 per share of
its common stock, which will be paid on September 8, 2021 to stockholders of
record on August 19, 2021. The dividend amount will be reviewed by the Board on
a quarterly basis.
In connection with the commencement of separate "at the market" offering
programs, on each of February 1, 2021 and March 26, 2021, which are referred to
as the "February 2021 ATM Program" and the "March 2021 ATM Program,"
respectively, and collectively as the "ATM Programs," the Company entered into
separate equity distribution agreements with certain sales agents pursuant to
which the Company may issue and sell shares of its common stock having an
aggregate offering price of up to $500 million under each of the February 2021
ATM Program and the March 2021 ATM Program, or a total of $1 billion under the
ATM Programs.
See "Liquidity and Capital Resources" for a further discussion of the Company's
anticipated liquidity needs, and the measures taken by the Company to meet those
needs, including the ATM Programs and the Company's new credit facility.
Inflation:
In the last five 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 throughout the lease term. These rent
increases are either in fixed increments or based on using an annual multiple of
increases in the Consumer Price Index. In addition, approximately 3%

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to 18% of the leases for spaces 10,000 square feet and under 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. The Company has generally entered into leases that require tenants
to pay a stated amount for operating expenses, generally excluding property
taxes, regardless of the expenses actually incurred at any Center, which places
the burden of cost control on the Company. Additionally, certain leases require
the tenants to pay their pro rata share of operating expenses.
Critical Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Some of these estimates and assumptions include judgments on revenue
recognition, estimates for common area maintenance and real estate tax accruals,
provisions for uncollectible accounts, impairment of long-lived assets, the
allocation of purchase price between tangible and intangible assets,
capitalization of costs and fair value measurements. The Company's significant
accounting policies are described in more detail in Note 2-Summary of
Significant Accounting Policies in the Company's Notes to the Consolidated
Financial Statements. However, the following policies are deemed to be critical.
Acquisitions:
Upon the acquisition of real estate properties, the Company evaluates whether
the acquisition is a business combination or asset acquisition. For both
business combinations and asset acquisitions, the Company allocates the purchase
price of properties to acquired tangible assets and intangible assets and
liabilities. For asset acquisitions, the Company capitalizes transaction costs
and allocates the purchase price using a relative fair value method allocating
all accumulated costs. For business combinations, the Company expenses
transaction costs incurred and allocates purchase price based on the estimated
fair value of each separately identified asset and liability. The Company
allocates the estimated fair value of acquisitions to land, building, tenant
improvements and identified intangible assets and liabilities, based on their
estimated fair values. In addition, any assumed mortgage notes payable are
recorded at their estimated fair values. The estimated fair value of the land
and buildings is determined utilizing an "as if vacant" methodology. Tenant
improvements represent the tangible assets associated with the existing leases
valued on a fair value basis at the acquisition date prorated over the remaining
lease terms. The tenant improvements are classified as an asset under property
and are depreciated over the remaining lease terms. Identifiable intangible
assets and liabilities relate to the value of in-place operating leases which
come in three forms: (i) leasing commissions and legal costs, which represent
the value associated with "cost avoidance" of acquiring in-place leases, such as
lease commissions paid under terms generally experienced in the Company's
markets; (ii) value of in-place leases, which represents the estimated loss of
revenue and of costs incurred for the period required to lease the "assumed
vacant" property to the occupancy level when purchased; and (iii) above or
below-market value of in-place leases, which represents the difference between
the contractual rents and market rents at the time of the acquisition,
discounted for tenant credit risks. Leasing commissions and legal costs are
recorded in deferred charges and other assets and are amortized over the
remaining lease terms. The value of in-place leases are recorded in deferred
charges and other assets and amortized over the remaining lease terms plus any
below-market fixed rate renewal options. Above or below-market leases are
classified in deferred charges and other assets or in other accrued liabilities,
depending on whether the contractual terms are above or below-market, and the
asset or liability is amortized to minimum rents over the remaining terms of the
leases. The remaining lease terms of below-market leases may include certain
below-market fixed-rate renewal periods. In considering whether or not a lessee
will execute a below-market fixed-rate lease renewal option, the Company
evaluates economic factors and certain qualitative factors at the time of
acquisition such as tenant mix in the Center, the Company's relationship with
the tenant and the availability of competing tenant space.
Remeasurement gains and losses are recognized when the Company becomes the
primary beneficiary of an existing equity method investment that is a variable
interest entity to the extent that the fair value of the existing equity
investment exceeds the carrying value of the investment, and remeasurement
losses to the extent the carrying value of the investment exceeds the fair
value. The fair value is determined based on a discounted cash flow model, with
the significant unobservable inputs including discount rate, terminal
capitalization rate and market rents.
Asset Impairment:
The Company assesses whether an indicator of impairment in the value of its
properties exists by considering expected future operating income, trends and
prospects, as well as the effects of demand, competition and other economic
factors. Such factors include projected rental revenue, operating costs and
capital expenditures as well as estimated holding periods and capitalization
rates. If an impairment indicator exists, the determination of recoverability is
made based upon the estimated undiscounted future net cash flows, excluding
interest expense. The amount of impairment loss, if any, is determined by

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comparing the fair value, as determined by a discounted cash flows analysis or a
contracted sales price, with the carrying value of the related assets. The
Company generally holds and operates its properties long-term, which decreases
the likelihood of their carrying values not being recoverable. A shortened
holding period increases the risk that the carrying value of a long-lived asset
is not recoverable. Properties classified as held for sale are measured at the
lower of the carrying amount or fair value less cost to sell.
The Company reviews its investments in unconsolidated joint ventures for a
series of operating losses and other factors that may indicate that a decrease
in the value of its investments has occurred which is other-than-temporary. The
investment in each unconsolidated joint venture is evaluated periodically, and
as deemed necessary, for recoverability and valuation declines that are
other-than-temporary.
Fair Value of Financial Instruments:
The fair value hierarchy distinguishes between market participant assumptions
based on market data obtained from sources independent of the reporting entity
and the reporting entity's own assumptions about market participant assumptions.
Level 1 inputs utilize quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access. Level 2 inputs are
inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 2 inputs may include
quoted prices for similar assets and liabilities in active markets, as well as
inputs that are observable for the asset or liability (other than quoted
prices), such as interest rates, foreign exchange rates and yield curves that
are observable at commonly quoted intervals. Level 3 inputs are unobservable
inputs for the asset or liability, which is typically based on an entity's own
assumptions, as there is little, if any, related market activity. In instances
where the determination of the fair value measurement is based on inputs from
different levels of the fair value hierarchy, the level in the fair value
hierarchy within which the entire fair value measurement falls is based on the
lowest level input that is significant to the fair value measurement in its
entirety. The Company's assessment of the significance of a particular input to
the fair value measurement in its entirety requires judgment, and considers
factors specific to the asset or liability.
The Company calculates the fair value of financial instruments and includes this
additional information in the Notes to the Consolidated Financial Statements
when the fair value is different than the carrying value of those financial
instruments. When the fair value reasonably approximates the carrying value, no
additional disclosure is made.
The Company records its Financing Arrangement (See Note 12-Financing Arrangement
in the Company's Notes to the Consolidated Financial Statements) obligation at
fair value on a recurring basis with changes in fair value being recorded as
interest expense in the Company's consolidated statements of operations. The
fair value is determined based on a discounted cash flow model, with the
significant unobservable inputs including discount rate, terminal capitalization
rate, and market rents. The fair value of the Financing Arrangement obligation
is sensitive to these significant unobservable inputs and a change in these
inputs may result in a significantly higher or lower fair value measurement.
Results of Operations
Many of the variations in the results of operations, discussed below, occurred
because of the transactions affecting the Company's properties described in
Management's Overview and Summary above, including the Redevelopment Properties
and the Disposition Property (as defined below).
For purposes of the discussion below, the Company defines "Same Centers" as
those Centers that are substantially complete and in operation for the entirety
of both periods of the comparison. Non-Same Centers for comparison purposes
include those Centers or properties that are going through a substantial
redevelopment often resulting in the closing of a portion of the Center
("Redevelopment Properties"), those properties that have recently transitioned
to or from equity method joint ventures to or from consolidated assets ("JV
Transition Centers") and properties that have been disposed of ("Disposition
Property"). The Company moves a Center in and out of Same Centers based on
whether the Center is substantially complete and in operation for the entirety
of both periods of the comparison. Accordingly, the Same Centers consist of all
consolidated Centers, excluding the Redevelopment Properties, the JV Transition
Centers and the Disposition Property, for the periods of comparison.
For the comparison of the three and six months ended June 30, 2021 to the three
and six months ended June 30, 2020, the JV Transition Centers are Fashion
District Philadelphia and Sears South Plains. For the comparison of the three
and six months ended June 30, 2021 to the three and six months ended June 30,
2020, the Disposition Property is Paradise Valley Mall.
Unconsolidated joint ventures are reflected using the equity method of
accounting. The Company's pro rata share of the results from these Centers is
reflected in the Consolidated Statements of Operations as equity in income of
unconsolidated joint ventures.

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The Company considers tenant annual sales, occupancy rates (excluding large
retail stores or "Anchors") and releasing spreads (i.e. a comparison of initial
average base rent per square foot on leases executed during the trailing twelve
months to average base rent per square foot at expiration for the leases
expiring during the trailing twelve months based on the spaces 10,000 square
feet and under) to be key performance indicators of the Company's internal
growth.
Portfolio monthly comparable tenant sales from spaces less than 10,000 square
feet continued to improve, with April 2021 portfolio comparable tenant sales
exceeding pre-COVID April 2019 sales by 9.9%, May 2021 portfolio comparable
tenant sales surpassing pre-COVID May 2019 sales by 15.2% and June 2021
portfolio comparable tenant sales surpassing pre-COVID June 2019 sales by 14.9%.
During the second quarter of 2021, comparable tenant sales from spaces less than
10,000 square feet across the portfolio increased by 13.4% relative to pre-COVID
sales during the second quarter of 2019. The leased occupancy rate decreased
from 91.3% at June 30, 2020 to 89.4% at June 30, 2021, but sequentially improved
by 0.90% from 88.5% at March 31, 2021. Releasing spreads were essentially flat
as the Company executed leases at an average rent of $55.61 for new and renewal
leases executed compared to $55.70 on leases expiring, resulting in a releasing
spread decrease of $0.09 per square foot representing a 0.16% decrease for the
trailing twelve months ended June 30, 2021. This was a sequential improvement
relative to re-leasing spreads for the twelve months ended March 31, 2021, which
were a decrease of 2.1%.
The Company continues to renew or replace leases that are scheduled to expire in
the remainder of 2021. As of June 30, 2021, the Company has executed leases or
commitments from retailers that are in lease documentation for 81% of the leased
space expiring in 2021. The remaining leases expiring in 2021 represented
approximately 0.5 million square feet, and the Company is negotiating letters of
intent for those spaces. These amounts exclude leases for stores that have
closed or for stores that tenants have indicated they intend to close.
The Company has entered into 173 leases for new stores totaling approximately
863,000 square feet that have opened or are planned for opening in 2021. While
there may be additional new store openings in 2021, any such leases are not yet
executed.
During the trailing twelve months ended June 30, 2021, the Company signed 196
new leases and 550 renewal leases comprising approximately 2.6 million square
feet of GLA, of which 1.5 million square feet is related to the consolidated
Centers. The average tenant allowance was $18.47 per square foot. The Company's
COVID-19 related lease amendments are excluded from these numbers.
Outlook
The Company has a long-term four-pronged business strategy that focuses on the
acquisition, leasing and management, redevelopment and development of Regional
Shopping Centers. Although overall regional shopping center fundamentals in its
markets are improving, the Company expects that its results for 2021 will be
negatively impacted by the COVID-19 pandemic, Anchor closures and tenant
bankruptcies, among other factors.
All Centers have been open and operating since October 7, 2020. As of the date
of this Quarterly Report on Form 10-Q, government-imposed capacity restrictions
resulting from COVID-19 have been essentially eliminated across the Company's
markets. The Company experienced a positive impact to its leasing revenue and
improvement in occupancy recovery during the three months ending June 30, 2021.
Leasing revenue increased by 13%, including joint ventures at the Company's
share, compared to the three months ended June 30, 2020. This increase was
primarily due to increases in percentage rent, which was primarily driven by
accelerating tenant sales and that the Company's Centers were primarily closed
in the second quarter of 2020, and a decrease in bad debt reserves offset by
$15.4 million of retroactive rent abatements incurred in the second quarter of
2021. During the three and six months ended June 30, 2021, certain of the
Company's previously reserved accounts receivable were collected resulting in a
reduction of bad debt expense. These collections were a result of improving
economic conditions that have become evident as the impact of the pandemic has
eased as well as collection efforts by the Company.
As a result of government-imposed capacity restrictions resulting from COVID-19
essentially being eliminated across the Company's markets, combined with pent up
demand, the positive economic impacts of consumer savings, fiscal stimulus and
other factors, sales and traffic at the Company's Centers continued to greatly
improve during the second quarter of 2021 with extremely high customer
conversion rates. Traffic levels continue to range in the low 90%'s relative to
2019, with the strongest traffic trends in the Company's Phoenix area
properties, where traffic is generally back to pre-COVID 2019 levels given that
Phoenix has been the Company's least impacted major market in terms of
regulatory restrictions. Comparable tenant sales from spaces less than 10,000
square feet across the portfolio increased by 13.4% relative to pre-COVID sales
during the second quarter of 2019. For the first half of 2021, comparable tenant
sales from spaces less than 10,000 square feet across the portfolio increased by
5.3% relative to pre-COVID sales during the first half of 2019. Further, May and
June 2021 each mark the first months since March 2020 for which portfolio sales
within the Company's capacity-restricted food and beverage category have trended
positive relative to the same pre-COVID months during 2019.


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During the second quarter of 2021, the Company signed 223 leases for
approximately 692,000 square feet (excluding COVID-19 workout deals), which
represents a 15% increase in the number of leases and a 6% increase in the
leased square feet relative to what was leased during the pre-COVID second
quarter of 2019. For the six months ended June 30, 2021, the Company has signed
488 leases for approximately 1.86 million square feet, which represents an 18%
increase in the number of leases and a 34% increase in the amount of leased
square feet relative to what was leased over the same pre-COVID six month period
ended June 30, 2019. 2019 was the highest volume leasing year for the Company
since 2015.
As of June 30, 2021, the leased occupancy rate increased to 89.4% compared to
the leased occupancy rate at March 31, 2021 of 88.5%.
The Company's rent collections have continued to significantly improve and are
now comparable to pre-COVID levels. The Company has made significant progress in
its negotiations with national and local tenants to secure rental payments,
despite a significant portion of the Company's tenants requesting rental
assistance, whether in the form of deferral or rent reduction. This effort of
negotiating COVID rental assistance agreements is essentially now completed. The
lease amendments negotiated by the Company have resulted in a combination of
rent payment deferrals and rent abatements. The majority of the Company's leases
required continued payment of rent by the Company's tenants during the period of
government mandated closures caused by COVID-19. Additionally, many of the
Company's leases contain co-tenancy clauses. Certain Anchor or small tenant
closures have become permanent following the re-opening of the Company's
Centers, and co-tenancy clauses within certain leases may be triggered as a
result. The Company does not anticipate any negative impact of such clauses on
lease revenue will be significant.
During the year ended December 31, 2020, the Company incurred $56.4 million of
rent abatements at the Company's share relating primarily to 2020 rents as a
result of COVID-19 and negotiated $32.9 million of rent deferrals during the
year ended December 31, 2020 at the Company's share. During the three and six
months ended June 30, 2021, the Company incurred $15.4 million and $44.3
million, respectively, of rent abatements at the Company's share relating
primarily to 2020 rents as a result of COVID-19, and negotiated $4.3 million and
$4.9 million, respectively, of rent deferrals during the three and six months
ended June 30, 2021, each at the Company's share. As of June 30, 2021, $8.6
million of the rent deferrals remain outstanding, with $5.2 million scheduled to
be repaid during the remainder of 2021 and the balance scheduled for repayment
in 2022 and 2023.
During 2020, there were 42 bankruptcy filings involving the Company's tenants,
totaling 322 leases and involving approximately 6.0 million square feet and
$85.4 million of annual leasing revenue at the Company's share. During 2021, the
pace of such filings has decreased substantially, as there were eight bankruptcy
filings involving the Company's tenants, totaling 57 leases and involving
approximately 355,000 square feet and $10.9 million of annual leasing revenue at
the Company's share. This included two leases totaling 139,000 square feet with
a single department store retailer that quickly emerged from bankruptcy and
assumed both of its leases with the Company. Excluding this department store
retailer, bankruptcy filings during 2021 are only 216,000 square feet. The
current pace of 2021 bankruptcy filings is well lower than the past several
years, dating back to 2016 and 2015.
During 2021, the Company expects to generate significant cash flow from
operations after recurring operating capital expenditures, leasing capital
expenditures and payment of dividends. This assumption does not include any
potential capital generated from dispositions, refinancings or issuances of
common equity. This expected surplus will be used to de-lever the Company's
balance sheet as well as to fund the Company's development pipeline.
Given the continued disruption and uncertainties from COVID-19 and the related
impacts on the capital markets, the Company has secured extensions of term from
one to three years of its near-term maturing non-recourse mortgage loans on
Danbury Fair Mall, Fashion Outlets of Niagara, FlatIron Crossing, Green Acres
Mall and Green Acres Commons (See "Financing Activities" in Management's
Overview and Summary).
On April 14, 2021, the Company repaid and terminated its existing credit
facility and entered into a new credit agreement, which provides for an
aggregate $700 million facility, including a $525 million revolving loan
facility that matures on April 14, 2023, with a one-year extension option, and a
$175 million term loan facility that matures on April 14, 2024. Concurrent with
the closing of this credit facility, the Company repaid $985.0 million of debt
(See "Liquidity and Capital Resources").
Rising interest rates could increase the cost of the Company's borrowings due to
its outstanding floating-rate debt and lead to higher interest rates on new
fixed-rate debt. In certain cases, the Company may limit its exposure to
interest rate fluctuations related to a portion of its floating-rate debt by
using interest rate cap and swap agreements. Such agreements, subject to current
market conditions, allow the Company to replace floating-rate debt with
fixed-rate debt in order to achieve its desired ratio of floating-rate to
fixed-rate debt. In today's decreasing interest rate environment, the swap
agreements that the Company has entered into have resulted in increases in
interest expense. Those swap agreements expire in September 2021.

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Comparison of Three Months Ended June 30, 2021 and 2020
Revenues:
Leasing revenue increased by $28.2 million, or 16.7%, from 2020 to 2021. The
increase in leasing revenue is attributed to increases of $15.3 million from the
Same Centers and $14.2 million from the JV Transition Centers offset in part by
a decrease of $1.3 million from the Disposition Property. Leasing revenue
includes the amortization of above and below-market leases, the amortization of
straight-line rents, lease termination income, percentage rent and the provision
for bad debts. The amortization of above and below-market leases increased from
$0.4 million in 2020 to $0.6 million in 2021. The amortization of straight-line
rents increased from $(1.8) million in 2020 to $6.0 million in 2021. Lease
termination income increased from $1.5 million in 2020 to $5.2 million in 2021.
Percentage rent increased from $0.9 million in 2020 to $10.3 million in 2021.
Provision for bad debts decreased from $27.8 million in 2020 to $(9.1) million
in 2021. The increase in leasing revenue and decrease in bad debt at the Same
Centers is primarily the result of the Centers being opened in 2021 compared to
being closed in second quarter of 2020 and an increase in tenant sales to
pre-COVID 2019 levels (See "Other Transactions and Events" in Management's
Overview and Summary).
Other income increased from $3.0 million in 2020 to $11.9 million in 2021. This
is primarily due to increased parking garage income resulting from increased
traffic at the Centers.
Management Companies' revenue decreased from $6.8 million in 2020 to $6.6
million in 2021.
Shopping Center and Operating Expenses:
Shopping center and operating expenses increased $10.5 million, or 18.4%, from
2020 to 2021. The increase in shopping center and operating expenses is
attributed to increases of $7.0 million from the Same Centers and $4.3 million
from the JV Transition Centers offset in part by a decrease of $0.8 million from
the Disposition Property. The increase in shopping center and operating expenses
at the Same Centers is primarily the result of the Centers being closed in the
second quarter of 2020 (See "Other Transactions and Events" in Management's
Overview and Summary).
Leasing Expenses:
Leasing expenses decreased from $6.7 million in 2020 to $6.6 million in 2021.
Management Companies' Operating Expenses:
Management Companies' operating expenses decreased $1.4 million from 2020 to
2021 primarily due to a decrease in compensation expense.
REIT General and Administrative Expenses:
REIT general and administrative expenses decreased $1.6 million from 2020 to
2021 primarily due to a decrease in compensation and consulting expense.
Depreciation and Amortization:
Depreciation and amortization decreased $2.7 million from 2020 to 2021. The
decrease in depreciation and amortization is attributed to a decrease of $4.1
million from the Same Centers and $1.4 million from the Disposition Property
offset in part by an increase of $2.8 million from the JV Transition Centers.
Interest Expense:
Interest expense increased $34.9 million from 2020 to 2021. The increase in
interest expense is attributed to an increase of $35.8 million from the
Financing Arrangement (See Note 12-Financing Arrangement in the Company's Notes
to the Consolidated Financial Statements) and $1.5 million from the JV
Transition Centers offset in part by decreases of $1.4 million from the
Company's revolving line of credit and $1.0 million from the Same Centers. The
increase in interest expense from the Financing Arrangement is primarily due to
the change in fair value of the underlying properties and the mortgage notes
payable on the underlying properties.



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Equity in (Loss) Income of Unconsolidated Joint Ventures:
Equity in (loss) income of unconsolidated joint ventures increased $34.2 million
from 2020 to 2021. The increase in equity in (loss) income of unconsolidated
joint ventures is primarily due to an increase in leasing revenue, percentage
rent, other income and a decrease in the provision for bad debt as a result of
the Centers being opened in 2021 compared to being closed in the second quarter
of 2020 (See "Other Transactions and Events" in Management's Overview and
Summary).
Loss on Sale or Write Down of Assets, net:
The loss on sale or write down of assets, net was a loss of $3.9 million in each
of 2020 and 2021.
Net Loss:
Net loss decreased $22.7 million from 2020 to 2021. The decrease in net loss is
primarily due to the variances noted above.
Funds From Operations ("FFO"):
Primarily as a result of the factors mentioned above, FFO attributable to common
stockholders and unit holders-diluted, excluding financing expense in connection
with Chandler Freehold increased 110.8% from $60.5 million in 2020 to $127.6
million in 2021. For a reconciliation of net loss attributable to the Company,
the most directly comparable GAAP financial measure, to FFO attributable to
common stockholders and unit holders, excluding financing expense in connection
with Chandler Freehold and FFO attributable to common stockholders and unit
holders-diluted, excluding financing expense in connection with Chandler
Freehold, see "Funds From Operations ("FFO")" below.
Comparison of Six Months Ended June 30, 2021 and 2020
Revenues:
Leasing revenue decreased by $3.0 million, or 0.8%, from 2020 to 2021. The
decrease in leasing revenue is attributed to decreases of $19.1 million from the
Same Centers and $1.7 million from the Disposition Property offset in part by
increases of $17.8 million from the JV Transition Centers. Leasing revenue
includes the amortization of above and below-market leases, the amortization of
straight-line rents, lease termination income, percentage rent and the provision
for bad debts. The amortization of above and below-market leases increased from
$0.8 million in 2020 to $1.0 million in 2021. Straight-line rents increased from
$0.4 million in 2020 to $10.8 million in 2021. Lease termination income
increased from $2.7 million in 2020 to $8.1 million in 2021. Percentage rent
increased from $3.7 million in 2020 to $17.2 million in 2021. Provision for bad
debts decreased from $28.7 million in 2020 to $(5.9) million in 2021. The
decrease in leasing revenue at the Same Centers is primarily the result of
COVID-19 (See "Other Transactions and Events" in Management's Overview and
Summary).
Other income increased from $12.3 million in 2020 to $17.2 million in 2021. This
increase is primarily due to increased parking garage income resulting from
increased traffic at the Centers in 2021 compared to 2020 (See "Other
Transactions and Events" in Management's Overview and Summary).
Management Companies' revenue decreased from $13.8 million in 2020 to $12.2
million in 2021 due to a decrease in management fees and development fees.
Shopping Center and Operating Expenses:
Shopping center and operating expenses increased $16.0 million, or 12.5%, from
2020 to 2021. The increase in shopping center and operating expenses is
attributed to increases of $9.2 million from the JV Transition Centers and $7.8
million from the Same Centers. The increase in shopping center and operating
expenses at the Same Centers is primarily the result of the Centers being closed
in the second quarter of 2020 (See "Other Transactions and Events" in
Management's Overview and Summary).
Leasing Expenses:
Leasing expenses decreased from $14.1 million in 2020 to $11.8 million in 2021
due to a decrease in compensation expense.
Management Companies' Operating Expenses:
Management Companies' operating expenses decreased $2.8 million from 2020 to
2021 due to a decrease in compensation expense.


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REIT General and Administrative Expenses:
REIT general and administrative expenses decreased $0.3 million from 2020 to
2021.
Depreciation and Amortization:
Depreciation and amortization decreased $6.5 million from 2020 to 2021. The
decrease in depreciation and amortization is attributed to decreases of $10.9
million from the Same Centers and $1.6 million from the Disposition Property
offset in part by an increase of $6.0 million from the JV Transition Centers.
Interest Expense:
Interest expense increased $80.7 million from 2020 to 2021. The increase in
interest expense was attributed to an increase of $81.3 million from the
Financing Arrangement (See Note 12-Financing Arrangement in the Company's Notes
to the Consolidated Financial Statements) and $3.3 million from the JV
Transition Centers offset in part by decreases of $3.3 million from the Same
Centers and $0.6 million from the Company's revolving line of credit. The
increase in interest expense from the Financing Arrangement is primarily due to
the change in fair value of the underlying properties and the mortgage notes
payable on the underlying properties.
Equity in Income (Loss) of Unconsolidated Joint Ventures:
Equity in income (loss) of unconsolidated joint ventures increased $26.4 million
from 2020 to 2021. The increase in equity in income (loss) of unconsolidated
joint ventures is primarily due to a decrease in the provision for bad debts and
an increase in percentage rent in 2021 compared to 2020.
Loss on Sale or Write Down of Assets, net:
Loss on sale or write down of assets, net decreased $15.4 million from 2020 to
2021. The decrease in loss on sale or write down of assets, net is primarily due
to the $36.7 million of impairment losses on Wilton Mall and Paradise Valley
Mall in 2020 and $19.8 million gain in land sales in 2021 offset in part by the
sale and impairment loss of $41.6 million on Estrella Falls in 2021. The
impairment losses were due to the reduction in the estimated holding periods of
the properties.
Net Loss:
Net loss decreased $53.8 million from 2020 to 2021. The decrease in net loss is
primarily the result of COVID-19 (See "Other Transactions and Events" in
Management's Overview and Summary).
Funds From Operations ("FFO"):
Primarily as a result of the factors mentioned above, FFO attributable to common
stockholders and unit holders-diluted, excluding financing expense in connection
with Chandler Freehold increased 10.9% from $183.2 million in 2020 to $203.1
million in 2021. For a reconciliation of net loss attributable to the Company,
the most directly comparable GAAP financial measure, to FFO attributable to
common stockholders and unit holders, excluding financing expense in connection
with Chandler Freehold and FFO attributable to common stockholders and unit
holders-diluted, excluding financing expense in connection with Chandler
Freehold, see "Funds From Operations ("FFO")" below.
Operating Activities:
Cash provided by operating activities increased $128.4 million from 2020 to
2021. The increase is primarily due to the changes in assets and liabilities and
the results, as discussed above.
Investing Activities:
Cash provided by investing activities increased $214.0 million from 2020 to
2021. The increase in cash provided by investing activities is primarily
attributed to proceeds from the sale of assets of $149.7 million, proceeds from
notes receivable of $1.3 million, a decrease in contributions to unconsolidated
joint ventures of $40.9 million and an increase of $21.8 million in
distributions from unconsolidated joint ventures.
Financing Activities:
Cash provided by financing activities decreased $955.2 million from 2020 to
2021. The decrease in cash provided by financing activities is primarily due to
decreases in proceeds from mortgages, bank and other notes payable of $165.0
million and a decrease in payments on mortgages, bank and other notes payable of
$1,616.4 million offset in part by net proceeds from sales of common shares
under the ATM Programs of $791.4 million and a decrease in dividends and
distributions of $62.0 million.

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Liquidity and Capital Resources
The Company has historically met its liquidity needs for its operating expenses,
debt service and dividend requirements for the next twelve months through cash
generated from operations, distributions from unconsolidated joint ventures,
working capital reserves and/or borrowings under its line of credit. Following
the uncertain environment brought about by COVID-19, the Company took a number
of previously disclosed measures to enhance its liquidity position over the
short-term, but currently anticipates meeting its liquidity needs as it has done
historically.

The following tables summarize capital expenditures incurred at the Centers (at the Company's pro rata share):

                                                                         For the Six Months Ended June 30,
(Dollars in thousands)                                                       2021                 2020
Consolidated Centers:
Acquisitions of property, building improvement and equipment            $      7,285$    6,986
Development, redevelopment, expansions and renovations of Centers             22,764              22,834
Tenant allowances                                                              8,141               5,186
Deferred leasing charges                                                       1,427               1,499
                                                                        $     39,617$   36,505
Joint Venture Centers:
Acquisitions of property, building improvement and equipment            $      3,365$    3,806
Development, redevelopment, expansions and renovations of Centers             24,585              54,169
Tenant allowances                                                              3,949                 638
Deferred leasing charges                                                       1,408                 865
                                                                        $     33,307$   59,478



The Company expects amounts to be incurred during the next twelve months for
tenant allowances and deferred leasing charges to be less than or comparable to
2020. The Company expects to incur less than $60.0 million during the remaining
period of 2021 for development, redevelopment, expansion and renovations. This
excludes the Company's share of the remaining development costs associated with
One Westside, which is fully funded by a non-recourse construction facility.
Capital for these expenditures, developments and/or redevelopments has been, and
is expected to continue to be, obtained from a combination of cash on hand, debt
financings, which are expected to include borrowings under the Company's line of
credit, from property financings and construction loans, each to the extent
available.
The Company has also generated liquidity in the past, and may continue to do so
in the future, through equity offerings and issuances, property refinancings,
joint venture transactions and the sale of non-core assets. Furthermore, the
Company has filed a shelf registration statement, which registered an
unspecified amount of common stock, preferred stock, depositary shares, debt
securities, warrants, rights, stock purchase contracts and units that may be
sold from time to time by the Company.
On each of February 1, 2021 and March 26, 2021, the Company registered a
separate "at the market" offering program, pursuant to which the Company may
issue and sell shares of its common stock having an aggregate offering price of
up to $500 million under each ATM Program, or a total of $1.0 billion under the
ATM Programs, in amounts and at times to be determined by the Company. The
following table sets forth certain information with respect to issuances made
under each of the ATM Programs as of June 30, 2021.
 (Dollars and shares in
thousands)                                    February 2021 ATM Program                                    March 2021 ATM Program(1)
                                   Number of                                                    Number of
For the Three Months Ended:      Shares Issued    Net Proceeds     Sales Commissions          Shares Issued    Net Proceeds     Sales Commissions
March 31, 2021                       36,001     $     477,283    $            9,746                9,991     $     119,724    $            2,449
June 30, 2021                           686     $      12,269    $              254               13,229     $     182,149    $            3,719
Total                                36,687     $     489,552    $           10,000               23,220     $     301,873    $            6,168

(1) The table does not reflect shares sold at the end of the quarter that did not settle until July 2021 (See Note 14-Stockholders' Equity).

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As of June 30, 2021, including sales of shares that did not settle until July
2021, the Company had approximately $176.6 million of gross sales of its common
stock available under the March 2021 ATM Program. The February 2021 ATM Program
was fully utilized as of June 30, 2021 and is no longer active.
The capital and credit markets can fluctuate and, at times, limit access to debt
and equity financing for companies. The Company has been able to access capital;
however, there is no assurance the Company will be able to do so in future
periods or on similar terms and conditions as a result of COVID-19 or other
factors. 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. Increases in the Company's proportion of floating rate debt
will cause it to be subject to interest rate fluctuations in the future.
The Company's total outstanding loan indebtedness, which includes mortgages and
other notes payable, at June 30, 2021 was $7.5 billion (consisting of $4.9
billion of consolidated debt, less $456.7 million of noncontrolling interests,
plus $3.1 billion of its pro rata share of unconsolidated joint venture debt).
The majority of the Company's debt consists of fixed-rate conventional mortgage
notes collateralized by individual properties. The Company expects that all of
the maturities during the next twelve months will be refinanced, restructured,
extended and/or paid off from the Company's line of credit or cash on hand.
Given the continued disruption and uncertainties from COVID-19 and the related
impacts on the capital markets, the Company has secured extensions of term from
one to three years of its near-term maturing non-recourse mortgage loans on
Danbury Fair Mall, Fashion Outlets of Niagara, FlatIron Crossing, Green Acres
Mall and Green Acres Commons (See "Financing Activities" in Management's
Overview and Summary).
The Company believes that the pro rata debt provides useful information to
investors regarding its financial condition because it includes the Company's
share of debt from unconsolidated joint ventures and, for consolidated debt,
excludes the Company's partners' share from consolidated joint ventures, in each
case presented on the same basis. The Company has several significant joint
ventures and presenting its pro rata share of debt in this manner can help
investors better understand the Company's financial condition after taking into
account the Company's economic interest in these joint ventures. The Company's
pro rata share of debt should not be considered as a substitute for the
Company's total consolidated debt determined in accordance with GAAP or any
other GAAP financial measures and should only be considered together with and as
a supplement to the Company's financial information prepared in accordance with
GAAP.
On March 29, 2021, the Company sold Paradise Valley Mall to a newly formed joint
venture for $100 million. Concurrent with the sale, the Company elected to
reinvest into the joint venture at a 5% ownership interest. The Company received
$95.3 million of net proceeds (See "Dispositions" in Management's Overview and
Summary).
On April 14, 2021, the Company terminated its existing credit facility and
entered into a new credit agreement, which provides for an aggregate $700
million facility, including a $525 million revolving loan facility that matures
on April 14, 2023, with a one-year extension option, and a $175 million term
loan facility that matures on April 14, 2024. The revolving loan facility can be
expanded up to $800 million, subject to receipt of lender commitments and other
conditions. Concurrently with entering into the new credit agreement, the
Company drew the $175 million term loan in its entirety and drew $320 million of
the amount available under the revolving loan facility. Simultaneously with
entering into the new credit agreement, the Company repaid $985 million of debt,
which included terminating and repaying all amounts outstanding under its prior
revolving line of credit facility. All obligations under the facility are
guaranteed unconditionally by the Company and are secured in the form of
mortgages on certain wholly-owned assets and pledges of equity interests held by
certain of the Company's subsidiaries. The new credit facility bears interest at
LIBOR plus a spread of 2.25% to 3.25% depending on Company's overall leverage
level. As of June 30, 2021, the borrowing rate was LIBOR plus 2.25%, as compared
to LIBOR plus 2.5% when the facility closed in April 2021. As of June 30, 2021,
borrowings under the facility were $280 million less unamortized deferred
finance costs of $17.4 million for the revolving loan facility at a total
interest rate of 3.69% and $104.4 million for the term loan facility at a total
interest rate of 2.50%.
Previously, the Company had a $1.5 billion revolving line of credit that bore
interest at LIBOR plus a spread of 1.30% to 1.90%, depending on the Company's
overall leverage level, and was to mature on July 6, 2020. On April 8, 2020, the
Company exercised its option to extend the maturity of the facility to July 6,
2021. The line of credit could have been expanded, depending on certain
conditions, up to a total facility of $2.0 billion. Based on the Company's
leverage level as of December 31, 2020, the borrowing rate on the facility was
LIBOR plus 1.65%. On April 14, 2021, the Company repaid the $985 million of
outstanding debt and terminated this credit facility. The Company had four
interest rate swap agreements that effectively converted a total of $400 million
of the outstanding balance from floating rate debt of LIBOR plus 1.65% to fixed
rate debt of 4.50% until September 30, 2021. These swaps are now hedged against
the Santa Monica Place floating rate loan and a portion of the Green Acres
Commons floating rate loan effectively converting the Santa Monica Place loan
and a majority of the Green Acres Commons loan to fixed rate debt through
September 30, 2021 (See Note 5 - Derivative Instruments and Hedging Activities
and Note 10 - Mortgage Notes Payable in the Company's Notes to the Consolidated
Financial Statements).

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Cash dividends and distributions for the six months ended June 30, 2021 were
$68.5 million, which were funded by operations.
At June 30, 2021, the Company was in compliance with all applicable loan
covenants under its agreements.
At June 30, 2021, the Company had cash and cash equivalents of $194.0 million.
Off-Balance Sheet Arrangements:
The Company accounts for its investments in joint ventures that it does not have
a controlling interest or is not the primary beneficiary using the equity method
of accounting and those investments are reflected on the consolidated balance
sheets of the Company as investments in unconsolidated joint ventures.
As of June 30, 2021, one of the Company's joint ventures had $50.0 million of
debt that could become recourse to the Company should the joint venture be
unable to discharge the obligation of the related debt.
Additionally, as of June 30, 2021, the Company was contingently liable for $40.9
million in letters of credit guaranteeing performance by the Company of certain
obligations relating to the Centers. As of June 30, 2021, $40.6 million of these
letters of credit were secured by restricted cash. The Company does not believe
that these letters of credit will result in a liability to the Company.
Contractual Obligations:
The following is a schedule of contractual obligations as of June 30, 2021 for
the consolidated Centers over the periods in which they are expected to be paid
(in thousands):
                                                                             Payment Due by Period
                                                              Less than             1 - 3                3 - 5              More than
Contractual Obligations                     Total               1 year              years                years              five years
Long-term debt obligations (includes
expected interest payments)(1)          $ 5,778,526$ 739,393$ 1,668,470$ 1,363,543$ 2,007,120
Lease liabilities(2)                        179,754             18,456               27,065               17,315              116,918
Purchase obligations(3)                       2,841              2,841                    -                    -                    -
Other long-term liabilities                 171,400             99,408               28,199               13,744               30,049
                                        $ 6,132,521$ 860,098$ 1,723,734$ 1,394,602$ 2,154,087

__________________________________________________________

(1)Interest payments on floating rate debt were based on rates in effect at
June 30, 2021.
(2)See Note 8-Leases in the Company's Notes to the Consolidated Financial
Statements.
(3)See Note 16-Commitments and Contingencies in the Company's Notes to the
Consolidated Financial Statements.














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Funds From Operations ("FFO")
The Company uses FFO in addition to net income to report its operating and
financial results and considers FFO and FFO -diluted as supplemental measures
for the real estate industry and a supplement to GAAP measures. The National
Association of Real Estate Investment Trusts defines FFO as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from sales of
properties, plus real estate related depreciation and amortization, impairment
write-downs of real estate and write-downs of investments in an affiliate where
the write-downs have been driven by a decrease in the value of real estate held
by the affiliate and after adjustments for unconsolidated joint ventures.
Adjustments for unconsolidated joint ventures are calculated to reflect FFO on
the same basis.
The Company accounts for its joint venture in Chandler Freehold as a financing
arrangement. In connection with this treatment, the Company recognizes financing
expense on (i) the changes in fair value of the financing arrangement
obligation, (ii) any payments to the joint venture partner equal to their pro
rata share of net income and (iii) any payments to the joint venture partner
less than or in excess of their pro rata share of net income. The Company
excludes from its definition of FFO the noted expenses related to the changes in
fair value and for the payments to the joint venture partner less than or in
excess of their pro rata share of net income.
The Company also presents FFO excluding financing expense in connection with
Chandler Freehold and loss on extinguishment of debt, net.
FFO and FFO on a diluted basis are useful to investors in comparing operating
and financial results between periods. This is especially true since FFO
excludes real estate depreciation and amortization, as the Company believes real
estate values fluctuate based on market conditions rather than depreciating in
value ratably on a straight-line basis over time. The Company believes that such
a presentation also provides investors with a meaningful measure of its
operating results in comparison to the operating results of other REITs. In
addition, the Company believes that FFO excluding financing expense in
connection with Chandler Freehold and non-routine costs associated with
extinguishment of debt provide useful supplemental information regarding the
Company's performance as they show a more meaningful and consistent comparison
of the Company's operating performance and allows investors to more easily
compare the Company's results. The Company further believes that FFO on a
diluted basis is a measure investors find most useful in measuring the dilutive
impact of outstanding convertible securities.
The Company believes that FFO does not represent cash flow from operations as
defined by GAAP, should not be considered as an alternative to net income as
defined by GAAP, and is not indicative of cash available to fund all cash flow
needs. The Company also cautions that FFO, as presented, may not be comparable
to similarly titled measures reported by other real estate investment trusts.
Management compensates for the limitations of FFO by providing investors with
financial statements prepared according to GAAP, along with this detailed
discussion of FFO and a reconciliation of net (loss) income to FFO and
FFO-diluted. Management believes that to further understand the Company's
performance, FFO should be compared with the Company's reported net (loss)
income and considered in addition to cash flows in accordance with GAAP, as
presented in the Company's consolidated financial statements.












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The following reconciles net loss attributable to the Company to FFO and
FFO-diluted attributable to common stockholders and unit holders-basic and
diluted, excluding financing expense in connection with Chandler Freehold for
the six months ended June 30, 2021 and 2020 (dollars and shares in thousands):
                                                                           

For the Three Months Ended June For the Six Months Ended June

                                                                                         30,                                    30,
                                                                               2021                2020               2021                2020
Net loss attributable to the Company                                       

$ (11,765)$ (25,116)$ (75,369)$ (17,594) Adjustments to reconcile net loss attributable to the Company to FFO attributable to common stockholders and unit holders-basic and diluted: Noncontrolling interests in the Operating Partnership

                              87             (1,851)             (4,269)            (1,294)
Loss on sale or write down of assets, net-consolidated assets                   3,927              3,867              25,210             40,570

Add: noncontrolling interests share of gain on sale or write down of assets-consolidated assets

                                                      5,902                  -               5,855                  -
Add: gain on sale of undepreciated assets-consolidated assets                  15,722                 40              19,818                 40

Less: noncontrolling interests share of gain of undepreciated assets-consolidated assets

                                                     (4,894)                 -              (6,085)                 -
Loss on write-down of non-real estate assets-consolidated assets               (1,000)            (2,793)             (2,200)            (2,793)

Loss on sale or write down of assets-unconsolidated joint ventures, net(1)

                                                                            106                  6                  79                  6

Depreciation and amortization-consolidated assets                              77,630             80,294             156,026            162,507

Less: noncontrolling interests in depreciation and amortization-consolidated assets

                                               (5,085)            (3,828)             (9,160)            (7,617)
Depreciation and amortization-unconsolidated joint ventures(1)                 46,126             46,418              93,232             95,927
Less: depreciation on personal property                                        (3,309)            (3,876)             (6,687)            (8,202)

FFO attributable to common stockholders and unit holders-basic and diluted

                                                                       123,447             93,161             196,450            261,550
Financing expense in connection with Chandler Freehold                          4,147            (32,626)              6,698            (78,333)

FFO attributable to common stockholders and unit holders, excluding financing expense in connection with Chandler Freehold-basic and diluted

$ 127,594$ 60,535$ 203,148$ 183,217

Weighted average number of FFO shares outstanding for: FFO attributable to common stockholders and unit holders-basic(2)

             215,576            154,606             192,633            153,260

Adjustments for impact of dilutive securities in computing FFO-diluted:

  Share and unit based compensation plans                                           -                  -                   -                  -

Weighted average number of FFO shares outstanding for FFO attributable to common stockholders and unit holders-basic and diluted(2)

                                                                    215,576            154,606             192,633            153,260


(1)   Unconsolidated joint ventures are presented at the Company's pro rata
share.
(2)   Calculated based upon basic net income as adjusted to reach basic FFO.
Includes 9.8 million and 10.5 million OP Units for the three months ended
June 30, 2021 and 2020, respectively, and 10.3 million and 10.5 million for the
six months ended June 30, 2021 and 2020, respectively.
The computation of FFO-diluted shares outstanding includes the effect of share
and unit-based compensation plans using the treasury stock method. It also
assumes the conversion of MACWH, LP common and preferred units to the extent
that they are dilutive to the FFO-diluted computation.

                                       42

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