MAC 8-K/A Ontario 3-14


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K/A
 
(Amendment No. 1)
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported) November 14, 2014
 
THE MACERICH COMPANY
(Exact Name of Registrant as Specified in Charter)
 
MARYLAND
 
1-12504
 
95-4448705
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
401 Wilshire Boulevard, Suite 700, Santa Monica, California 90401
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s telephone number, including area code (310) 394-6000
 
N/A
(Former Name or Former Address, if Changed Since Last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))














This Form 8-K/A (Amendment No. 1) is being filed for the purpose of filing the financial statements and pro forma financial information required by Item 9.01 with respect to the Current Report on Form 8-K filed by The Macerich Company on November 18, 2014 regarding the acquisition of the remaining ownership interests in Pacific Premier Retail LP and Queens JV LP from 1700480 Ontario Inc.
 
ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.
 
Listed below are the financial statements, pro forma financial information and exhibits furnished as part of this report:
 
(a)
Financial Statements under Rule 3-14 of Regulation S-X
 
 
 
 
 
 
 
 
 
 
 
(b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(d)
Exhibits
 
 
 
23.1 Consent of KPMG LLP


2



Independent Auditors’ Report
 
The Board of Directors of
The Macerich Company:
 
We have audited the accompanying combined statements of revenues and certain expenses and the related notes (Historical Summary) of the Pacific Premier Retail LP and Queens JV LP, collectively referred to herein as the "PPRLP/Queens Portfolio" for each of the years in the three-year period ended December 31, 2013.
Management's Responsibility for the Historical Summary
Management is responsible for the preparation and fair presentation of the Historical Summary in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Historical Summary that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on Historical Summary based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Historical Summary. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the Historical Summary, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the Historical Summary in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Historical Summary.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the revenues and certain expenses described in note 1 of the PPRLP/Queens Portfolio for each of the years in the three-year period ended December 31, 2013 in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter
We draw attention to note 1 to the Historical Summary, which describes that the accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of Securities and Exchange Commission (for inclusion in the filing of Form 8-K/A of The Macerich Company) and is not intended to be a complete presentation of the PPRLP/Queens Portfolio’s revenues and expenses. Our opinion is not modified with respect to this matter.

 
/s/ KPMG LLP
 
Los Angeles, California
January 26, 2015


3


PPRLP/QUEENS PORTFOLIO
 
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
 
(Dollars in thousands)
 
 
 
For the Nine Months Ended September 30, 2014 (Unaudited)
 
For the Years Ended December 31,
 
 
 
2013
 
2012
 
2011
Revenues:
 
 

 
 

 
 
 
 
Minimum rents
 
$
117,130

 
$
156,171

 
$
151,038

 
$
147,810

Percentage rents
 
1,873

 
4,047

 
4,310

 
4,473

Tenant recoveries
 
54,589

 
70,458

 
68,604

 
65,753

Other
 
10,725

 
14,903

 
13,938

 
12,890

Total revenues
 
184,317

 
245,579

 
237,890

 
230,926

Certain expenses:
 
 

 
 

 
 
 
 
Real estate taxes
 
20,222

 
26,287

 
24,363

 
23,676

Maintenance and repairs
 
13,523

 
18,632

 
19,246

 
18,161

Utilities
 
7,190

 
8,683

 
9,305

 
9,660

General and administrative
 
6,009

 
7,050

 
7,207

 
8,130

Security
 
3,925

 
5,696

 
5,737

 
5,410

Insurance
 
1,245

 
1,650

 
1,583

 
1,642

Ground rent
 
601

 
802

 
775

 
755

Interest
 
46,166

 
63,606

 
65,885

 
63,336

Total expenses
 
98,881

 
132,406

 
134,101

 
130,770

Revenues in excess of certain expenses
 
$
85,436

 
$
113,173

 
$
103,789

 
$
100,156


   The accompanying notes are an integral part of these combined statements of revenues and certain expenses.



4


PPRLP/QUEENS PORTFOLIO
 
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
 
NINE MONTHS ENDED SEPTEMBER 30, 2014 (UNAUDITED) AND THE YEARS ENDED
DECEMBER 31, 2013, 2012 and 2011
 
(Dollars in thousands)
 

1. Summary of Significant Accounting Policies:
Basis of Presentation:
The accompanying combined statements of revenues and certain expenses, include the accounts of Pacific Premier Retail LP and Queens JV LP (collectively referred to herein as the "PPRLP/Queens Portfolio"), and all significant intercompany amounts have been eliminated. The PPRLP/Queens Portfolio was owned 51% by The Macerich Company (the "Company") and 49% by 1700480 Ontario Inc ("Ontario") for all periods presented in the accompanying combined and statements of revenues and certain expenses.
The Company acquired full ownership of the PPRLP/Queens Portfolio on November 14, 2014 for a purchase price of $1,838,886. The purchase price was funded by the assumption of $672,109 of mortgage notes on the properties and the direct issuance to Ontario of 17,140,845 shares of the Company's common stock valued on the closing date at $1,166,777.
The PPRLP/Queens Portfolio consists of the following centers:
Name of Center
 
Location
 
Total Gross Leasable Area
Lakewood Center
 
Lakewood, California
 
2,066,000

Los Cerritos Center
 
Cerritos, California
 
1,309,000

Queens Center
 
Queens, New York
 
971,000

Stonewood Center
 
Downey, California
 
935,000

Washington Square
 
Portland, Oregon
 
1,443,000

The accompanying combined statements of revenues and certain expenses have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the U.S. Securities and Exchange Commission for the acquisition of one or more real estate properties which in aggregate are significant and, accordingly, are not representative of the actual results of operations for the periods presented. The PPRLP/Queens Portfolio is considered a group of related properties as the individual properties were acquired in a single transaction and were under common management by the Company. Therefore, combined statements of revenues and certain expenses for the nine months ended September 30, 2014 and the years ended December 31, 2013, 2012 and 2011 are presented. The combined statements of revenues and certain expenses exclude the following expenses which may not be comparable to the proposed future operations of the PPRLP/Queens Portfolio:
•Depreciation and amortization, and
•Management fees.
Revenue Recognition:
Minimum rental revenues are recognized on a straight-line basis over the terms of the related lease. Percentage rents are recognized on an accrual basis and are accrued when tenants’ specified sales targets have been met.
Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred. Other tenants pay a fixed rate and these tenant recoveries are recognized into revenue on a straight-line basis over the term of the related leases.

5


Management Estimates:
Management has made a number of estimates and assumptions related to the reporting and disclosure of revenues and certain expenses during each reporting period to prepare the statements of revenues and certain expenses in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.
Unaudited Interim Statement:
The statement of revenues and certain expenses for the nine months ended September 30, 2014 is unaudited. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the statement of revenues and certain expenses for the interim period have been made.
2. Mortgage Notes Payable:
Mortgage notes payable at September 30, 2014 and December 31, 2013 consist of the following:
 
 
Carrying Amount of Mortgage Notes
 
 
 
 
 
 
 
 
September 30, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
Property Pledged as Collateral
 
Related Party
 
Other
 
Related Party
 
Other
 
Effective Interest
Rate(1)
 
Monthly
Debt
Service(2)
 
Maturity
Date
Lakewood Center
 
$
—

 
$
250,000

 
$
—

 
$
250,000

 
5.43
%
 
$
1,127

 
2015
Los Cerritos Center (3)
 
94,749

 
94,749

 
96,093

 
96,093

 
4.50
%
 
1,009

 
2018
Queens Center
 
—

 
600,000

 
—

 
600,000

 
3.65
%
 
1,744

 
2025
Stonewood Mall
 
—

 
104,043

 
—

 
106,174

 
4.67
%
 
640

 
2017
Washington Square
 
—

 
229,904

 
—

 
232,971

 
6.04
%
 
1,499

 
2016
 
 
$
94,749

 
$
1,278,696

 
$
96,093

 
$
1,285,238

 
 

 
 

 
 

(1)
The interest rate disclosed represents the effective interest rate, including deferred finance costs.
(2)
The monthly debt service represents the payment of principal and interest.
(3)
Half of the loan proceeds were funded by Northwestern Mutual Life (“NML”), which is a joint venture partner of the Company.
Interest expense in connection with the loans from NML was $3,189 for the nine months ended September 30, 2014, and $4,321, $4,397 and $2,266 for the years ended December 31, 2013, 2012, and 2011, respectively.
Certain mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt.
Total interest costs capitalized for the nine months ended September 30, 2014 and the years ended December 31, 2013, 2012 and 2011 was $1,321, $258, $145 and $126, respectively. Amortization of deferred finance cost included in interest expense for the nine months ended September 30, 2014 and the years ended December 31, 2013, 2012 and 2011 was $955, $1,275, $853 and $898, respectively.
The estimated fair value of mortgage notes payable at September 30, 2014 and December 31, 2013 was $1,385,870 and $1,407,414, respectively, based on current interest rates for comparable loans. The method for computing fair value was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt.

6


The future maturities of mortgage notes payable for each of the next five years and thereafter as of December 31, 2013 were as follows:
2014
$
10,582

2015
261,135

2016
231,547

2017
101,314

2018
176,753

Thereafter
600,000

 
$
1,381,331

3. Future Revenues:
Under existing non-cancelable operating lease agreements, tenants are committed to pay the following minimum rental payments to the PPRLP/Queens Portfolio:
 
Year Ending December 31,
 
2014
$
141,679

2015
108,523

2016
93,121

2017
77,610

2018
67,467

Thereafter
243,228

 
$
731,628

 
4. Commitments:
The PPRLP/Queens Portfolio has certain properties subject to non-cancelable operating ground leases. Minimum future rental payments required under the leases are as follows:
 
Year Ending December 31,
 
2014
$
814

2015
814

2016
814

2017
814

2018
814

Thereafter
26,130

 
$
30,200

 
5. Subsequent Events:
 The management of the PPRLP/Queens Portfolio evaluated subsequent events through January 26, 2015, the date that these statements of revenues and certain expenses were issued.


7


THE MACERICH COMPANY
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
 
The following unaudited pro forma consolidated financial information has been prepared to give effect to the Company’s acquisition of the PPRLP/Queens Portfolio.  The Company acquired the PPRLP/Queens Portfolio on November 14, 2014 for a purchase price of approximately $1.8 billion.  The purchase price was funded by the assumption of $672.1 million of mortgage notes on the properties and the direct issuance to Ontario of 17,140,845 shares of the Company's common stock valued on the closing date at approximately $1.2 billion.
 
The pro forma consolidated balance sheet has been presented as if the the acquisition occurred on September 30, 2014 and the pro forma statements of operations have been presented as if the acquisition had occurred on January 1, 2013.
 
This pro forma consolidated financial information should be read in conjunction with the Company’s consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2013, the Company’s Form 10-Q for the quarterly period ended September 30, 2014, as filed with the Securities and Exchange Commission, and the statements of revenues and certain expenses of the PPRLP/Queens Portfolio and related notes thereto included elsewhere in this filing.
 
The purchase allocation adjustments made in connection with the unaudited pro forma consolidated financial statements are based on the information available at this time.  Subsequent adjustments to the allocation may be made based on additional information.
 
The pro forma consolidated financial statements do not purport to represent the Company’s financial position or results of operations that would actually have occurred assuming the acquisition of the PPRLP/Queens Portfolio had occurred on January 1, 2013; nor do they purport to project the Company’s financial position or results of operations as of any future date or for any future period.


8


THE MACERICH COMPANY
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF SEPTEMBER 30, 2014
(Dollars in thousands)
 
The Company (a)
 
Pro Forma Adjustments
 
Pro Forma Total
ASSETS:
 
 
 
 
 
 
Property, net
$
7,570,636

 
$
3,714,982

(b)
 
$
11,285,618

Cash and cash equivalents
58,479

 
28,890

(b)
 


 
 
 
(5,000
)
(d)
 
82,369

Restricted cash
14,121

 
5,113

(b)
 
19,234

Tenant and other receivables, net
107,968

 
5,438

(b)
 
113,406

Deferred charges and other assets, net
492,697

 
279,973

(b)
 
772,670

Loans to unconsolidated joint ventures
3,361

 
—

 
 
3,361

Due from affiliates
31,422

 
(2,680
)
(b)
 
28,742

Investments in unconsolidated joint ventures
927,424

 
—

 
 
927,424

Total assets
$
9,206,108

 
$
4,026,716

 
 
$
13,232,824

LIABILITIES AND EQUITY:
 
 
 
 
 
 
Mortgage notes payable:
 
 
 
 
 
 
Related parties
$
265,269

 
$
103,764

(c)
 
$
369,033

Others
4,118,969

 
1,310,895

(c)
 
5,429,864

Total
4,384,238

 
1,414,659

(b)
 
5,798,897

Bank and other notes payable
546,301

 
—

 
 
546,301

Accounts payable and accrued expenses
89,659

 
5,669

(b)
 
95,328

Other accrued liabilities
317,515

 
230,210

(b)
 
547,725

Distributions in excess of investments in unconsolidated joint ventures
253,673

 
(208,735
)
(b)
 
44,938

Co-venture obligation
75,669

 
—

 
 
75,669

Total liabilities
5,667,055

 
1,441,803

 
 
7,108,858

Commitments and contingencies
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
 
Common stock
1,409

 
171

(d)
 
1,580

Additional paid-in capital
3,930,317

 
1,161,606

(d)
 
5,091,923

(Accumulated deficit) retained earnings
(740,906
)
 
1,423,136

(b)
 
682,230

Total stockholders' equity
3,190,820

 
2,584,913

 
 
5,775,733

Noncontrolling interests
348,233

 
—

 
 
348,233

Total equity
3,539,053

 
2,584,913

 
 
6,123,966

Total liabilities and equity
$
9,206,108

 
$
4,026,716

 
 
$
13,232,824

   The accompanying notes are an integral part of this pro forma consolidated balance sheet (unaudited).

9


THE MACERICH COMPANY
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF SEPTEMBER 30, 2014
(Dollars in thousands, except per share data)

(a)
This information represents the Company's historical consolidated balance sheet as of September 30, 2014, which was included in the Company's previously filed Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.

(b)
Includes the pro forma effect of the Company's acquisition of PPRLP/Queens Portfolio. The purchase price was allocated to assets acquired and liabilities assumed based on preliminary estimates of fair values as follows:

        
Property
$
3,714,982

Deferred charges
152,250

Cash and cash equivalents
28,890

Restricted cash
5,113

Tenant receivables
5,438

Other assets
127,723

   Total assets acquired
4,034,396

Mortgage note payable
1,414,659

Accounts payable
5,669

Due to affiliates
2,680

Other accrued liabilities
230,210

   Total liabilities assumed
1,653,218

Fair value of the acquired net assets (at 100% ownership)
$
2,381,178

The Company determined that the purchase price represented the fair value of the additional ownership interest in the PPRLP/Queens Portfolio that was acquired:
Fair value of existing ownership interest (at 51% ownership)
$
1,214,401

Distributions in excess of investment
208,735

Gain on remeasurement
$
1,423,136


The following is the reconciliation of the purchase price to the fair value of of the acquired net assets:

Purchase price
$
1,838,886

Less debt assumed
(672,109
)
Distributions in excess of investment
(208,735
)
Remeasurement gain
1,423,136

Fair value of the acquired net assets (at 100% ownership)
$
2,381,178


The purchase price allocation of PPRLP/Queens Portfolio is preliminary and subject to change.

10



(c)
Represents the Company's assumption of $1,371,651 of mortgage notes payable on the PPRLP/Queens Portfolio, including the effect of the allocated net premium of $43,008 at acquisition.

Property Pledged as Collateral
 
Related Party
 
Other
 
Effective Interest
Rate
 
Maturity
Date
Lakewood Center
 
$
—

 
$
254,880

 
1.80
%
 
6/1/2015
Los Cerritos Center
 
103,764

 
103,764

 
1.65
%
 
7/1/2018
Queens Center
 
—

 
600,000

 
3.49
%
 
1/1/2025
Stonewood Mall
 
—

 
111,910

 
1.80
%
 
11/1/2017
Washington Square
 
—

 
240,341

 
1.65
%
 
1/1/2016
 
 
$
103,764

 
$
1,310,895

 
 
 
 

(d)
Represents the direct issuance to Ontario of 17,140,845 shares of the Company's common stock valued on the closing date at $68.07 per share to fund the acquisition, net of issuance cost.


11


THE MACERICH COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(Dollars in thousands, except per share amounts)
 
The Company (a)
 
PPRLP/Queens Portfolio (b)
 
Pro Forma Adjustments
 
Pro Forma Total
Revenues:
 
 
 
 
 
 
 
 
Minimum rents
$
451,248

 
$
117,130

 
$
11,067

(c)
 
$
579,445

Percentage rents
9,295

 
1,873

 
—

 
 
11,168

Tenant recoveries
264,909

 
54,589

 
—

 
 
319,498

Management Companies
25,248

 
—

 
(6,141
)
(d)
 
19,107

Other
31,638

 
10,725

 
—

 
 
42,363

Total revenues
782,338

 
184,317

 
4,926

 
 
971,581

Expenses:
 
 
 
 
 
 
 
 
Shopping center and operating expenses
257,583

 
52,715

 
935

(e)
 
311,233

Management Companies' operating expenses
65,185

 
—

 
—

 
 
65,185

REIT general and administrative expenses
17,339

 
—

 
—

 
 
17,339

Depreciation and amortization
266,199

 
—

 
74,536

(f)
 
340,735

 
606,306

 
52,715

 
75,471

 
 
734,492

Interest expense:
 
 
 
 
 
 
 
 
Related parties
11,069

 
3,189

 
(1,931
)
(g)
 
12,327

Other
128,872

 
42,977

 
(5,315
)
(g)
 
166,534

 
139,941

 
46,166

 
(7,246
)
 
 
178,861

Loss on extinguishment of debt
405

 
—

 
—

 
 
405

Total expenses
746,652

 
98,881

 
68,225

 
 
913,758

Equity in income of unconsolidated joint ventures
44,607

 
—

 
(22,910
)
(h)
 
21,697

Co-venture expense
(6,175
)
 
—

 
—

 
 
(6,175
)
Income tax benefit
3,759

 
—

 
—

 
 
3,759

Loss on remeasurement, sale or write down of assets, net
(1,504
)
 
—

 
—

 
 
(1,504
)
Net income
76,373

 
85,436

 
(86,209
)
 
 
75,600

Less net income attributable to noncontrolling interests
6,552

 
—

 
(52
)
(i)
 
6,500

Net income attributable to the Company
$
69,821

 
$
85,436

 
$
(86,157
)
 
 
$
69,100

Earnings per common share attributable to Company:
 
 
 
 
 
 
 
 
Net income - basic
$
0.49

 
 

 
$
(0.06
)
 
 
$
0.43

Net income - diluted
$
0.49

 
 

 
$
(0.06
)
 
 
$
0.43

Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
140,859,000

 
 

 
17,141,000

(j)
 
158,000,000

Diluted
140,975,000

 
 

 
17,141,000

(j)
 
158,116,000

   The accompanying notes are an integral part of this pro forma consolidated statement of operations (unaudited).
.


12


THE MACERICH COMPANY
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(Dollars in thousands)
(a)
This information represents the Company's historical consolidated statement of operations for the nine months ended September 30, 2014, which was included in the Company's previously filed Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.

(b)
This information represents the combined revenues and certain expenses of the PPRLP/Queens Portfolio for the nine months ended September 30, 2014, which was included in this Report on Form 8-K/A.

(c)
Represents the pro forma amortization of above and below market leases based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio and the impact of straight-line rents, which was based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(d)
Represents the reduction of management fee revenue attributed to the PPRLP/Queens Portfolio that were included in the historical consolidated statement of operations for the nine months ended September 30, 2014.

(e)
Represents the pro forma amortization of an above market ground lease based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio, which is based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(f)
Represents the pro forma depreciation and amortization expense based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio, which is based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(g)
Represents the pro forma amortization of debt premium on the mortgage notes payable based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio, which is based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(h)
Represents the reduction of equity in income of unconsolidated joint ventures that was attributed to the PPRLP/Queens Portfolio that was included in the historical consolidated statement of operations for the nine months ended September 30, 2014.

(i)
Represents the pro forma effect of the acquisition of the PPRLP/Queens Portfolio attributable to noncontrolling interests.

(j)
Represents common shares issued to Ontario in connection with the acquisition of the PPRLP/Queens Portfolio.




13


THE MACERICH COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2013
(Dollars in thousands, except per share amounts)
 
The Company (a)
 
PPRLP/Queens Portfolio (b)
 
Pro Forma Adjustments
 
Pro Forma Total
Revenues:
 
 
 
 
 
 
 
 
Minimum rents
$
578,113

 
$
156,171

 
$
12,044

(c)
 
$
746,328

Percentage rents
23,156

 
4,047

 
—

 
 
27,203

Tenant recoveries
337,772

 
70,458

 
—

 
 
408,230

Management Companies
40,192

 
—

 
(8,491
)
(d)
 
31,701

Other
50,242

 
14,903

 
—

 
 
65,145

Total revenues
1,029,475

 
245,579

 
3,553

 
 
1,278,607

Expenses:
 
 
 
 
 
 
 
 
Shopping center and operating expenses
329,795

 
68,800

 
1,246

(e)
 
399,841

Management Companies' operating expenses
93,461

 
—

 
—

 
 
93,461

REIT general and administrative expenses
27,772

 
—

 
—

 
 
27,772

Depreciation and amortization
357,165

 
—

 
111,387

(f)
 
468,552

 
808,193

 
68,800

 
112,633

 
 
989,626

Interest expense:
 
 
 
 
 
 
 
 
Related parties
15,016

 
4,321

 
(2,575
)
(g)
 
16,762

Other
182,231

 
59,285

 
(20,146
)
(g)
 
221,370

 
197,247

 
63,606

 
(22,721
)
 
 
238,132

Gain on extinguishment of debt, net
(1,432
)
 
—

 
—

 
 
(1,432
)
Total expenses
1,004,008

 
132,406

 
89,912

 
 
1,226,326

Equity in income of unconsolidated joint ventures
167,580

 
—

 
(30,725
)
(h)
 
136,855

Co-venture expense
(8,864
)
 
—

 
—

 
 
(8,864
)
Income tax benefit
1,692

 
—

 
—

 
 
1,692

Loss on remeasurement, sale or write down of assets, net
(26,852
)
 
—

 
—

 
 
(26,852
)
Income from continuing operations
159,023

 
113,173

 
(117,084
)
 
 
155,112

Less income from continuing operations attributable to noncontrolling interests
9,762

 
—

 
(258
)
(i)
 
9,504

Income from continuing operations attributable to the Company
$
149,261

 
$
113,173

 
$
(116,826
)
 
 
$
145,608

Earnings per common share attributable to Company:
 
 
 
 
 
 
 
 
Income from continuing operations - basic
$
1.07

 
 

 
$
(0.15
)
 
 
$
0.92

Income from continuing operations - diluted
$
1.06

 
 

 
$
(0.14
)
 
 
$
0.92

Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
139,598,000

 
 

 
17,141,000

(j)
 
156,739,000

Diluted
139,680,000

 
 

 
17,141,000

(j)
 
156,821,000

The accompanying notes are an integral part of this pro forma consolidated statement of operations (unaudited).


14


THE MACERICH COMPANY
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2013
(Dollars in thousands)

(a)
This information represents the Company's historical consolidated statement of operations for the year ended December 31, 2013, which was included in the Company's previously filed Annual Report on Form 10-K for the year ended December 31, 2013.

(b)
This information represents revenues and certain expenses of the PPRLP/Queens Portfolio for the year ended December 31, 2013, included in this Report on Form 8-K/A.

(c)
Represents the pro forma amortization of above and below market leases based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio and the impact of straight-line rents, which was based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(d)
Represents the reduction of management fee revenue attributed to the PPRLP/Queens Portfolio that were included in the historical consolidated statement of operations for the year ended December 31, 2013.

(e)
Represents the pro forma amortization of an above market ground lease based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio, which is based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(f)
Represents the pro forma depreciation and amortization expense based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio, which is based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(g)
Represents the pro forma amortization of debt premium on the mortgage notes payable based on the preliminary purchase price allocation of the PPRLP/Queens Portfolio, which is based on the information available at this time. Subsequent adjustment to the allocation may be made based on additional information.

(h)
Represents the reduction of equity in income of unconsolidated joint ventures that was attributed to the PPRLP/Queens Portfolio that was included in the historical consolidated statement of operations for the year ended December 31, 2013.

(i)
Represents the pro forma effect of the acquisition of the PPRLP/Queens Portfolio attributable to noncontrolling interests.

(j)
Represents common shares issued to Ontario in connection with the acquisition of the PPRLP/Queens Portfolio.




15


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, The Macerich Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  
 
THE MACERICH COMPANY
 
By: THOMAS E. O’HERN
 
 
 
/s/ THOMAS E. O’HERN
 
Senior Executive Vice President,
 
Chief Financial Officer
January 26, 2015
and Treasurer


16


EXHIBIT INDEX
 
EXHIBIT
NUMBER
 
NAME
23.1

 
Consent of KPMG LLP, dated January 26, 2015


17