10-Q 1 mac-20220331.htm 10-Q mac-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File No.: 1-12504
THE MACERICH COMPANY
(Exact name of registrant as specified in its charter)
Maryland95-4448705
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification Number)
401 Wilshire Boulevard,Suite 700,Santa Monica,California90401
(Address of principal executive office)(Zip Code)
(310) 394-6000
 (Registrant's telephone number, including area code)
N/A
 (Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Securities Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, $0.01 Par ValueMACNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety (90) days. Yes ☒   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding twelve (12) months (or for such shorter period that the registrant was required to submit such files). Yes         No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerxAccelerated FilerNon-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes        No
Number of shares outstanding as of May 9, 2022 of the registrant's common stock, par value $0.01 per share: 214,645,240 shares








THE MACERICH COMPANY
FORM 10-Q
INDEX
Part IFinancial Information 
Part IIOther Information 

2


THE MACERICH COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
(Unaudited)
March 31,
2022
December 31,
2021
ASSETS:  
Property, net$6,223,984 $6,284,206 
Cash and cash equivalents128,244 112,454 
Restricted cash55,933 54,517 
Tenant and other receivables, net159,653 211,361 
Right-of-use assets, net131,547 110,638 
Deferred charges and other assets, net242,890 254,908 
Due from affiliates4,177  
Investments in unconsolidated joint ventures1,263,252 1,317,571 
Total assets$8,209,680 $8,345,655 
LIABILITIES AND EQUITY:  
Mortgage notes payable$4,414,557 $4,423,554 
Bank and other notes payable63,388 104,811 
Accounts payable and accrued expenses58,011 59,228 
Due to affiliates 327 
Lease liabilities101,236 80,711 
Other accrued liabilities216,935 254,279 
Distributions in excess of investments in unconsolidated joint ventures130,518 127,608 
Financing arrangement obligation121,531 118,988 
Total liabilities5,106,176 5,169,506 
Commitments and contingencies
Equity:  
Stockholders' equity:  
Common stock, $0.01 par value, 500,000,000 shares authorized at March 31, 2022 and December 31, 2021, and 214,901,377 and 214,797,057 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
2,148 2,147 
Additional paid-in capital5,493,662 5,488,440 
Accumulated deficit(2,513,179)(2,443,696)
Accumulated other comprehensive income (loss)7 (24)
Total stockholders' equity2,982,638 3,046,867 
Noncontrolling interests120,866 129,282 
Total equity3,103,504 3,176,149 
Total liabilities and equity$8,209,680 $8,345,655 
   The accompanying notes are an integral part of these consolidated financial statements.
3

THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
 For the Three Months Ended March 31,
 20222021
Revenues:  
Leasing revenue$203,412 $179,535 
Other6,327 5,321 
Management Companies6,405 5,568 
Total revenues216,144 190,424 
Expenses:  
Shopping center and operating expenses72,920 76,155 
Leasing expenses7,611 5,166 
Management Companies' operating expenses16,945 14,843 
REIT general and administrative expenses6,862 8,087 
Depreciation and amortization72,856 78,396 
177,194 182,647 
Interest expense:  
Related parties8,002 1,319 
Other43,859 52,577 
51,861 53,896 
Total expenses229,055 236,543 
Equity in (loss) income of unconsolidated joint ventures(29,097)1,910 
Income tax expense(1,799)(2,238)
Gain (loss) on sale or write down of assets, net6,453 (21,283)
Net loss(37,354)(67,730)
Less: net loss attributable to noncontrolling interests(172)(4,126)
Net loss attributable to the Company$(37,182)$(63,604)
Loss per common share—attributable to common stockholders:  
Basic$(0.17)$(0.40)
Diluted$(0.17)$(0.40)
Weighted average number of common shares outstanding:  
Basic214,819,000 158,580,000 
Diluted214,819,000 158,580,000 
   The accompanying notes are an integral part of these consolidated financial statements.
4

THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Dollars in thousands, except per share amounts)
 For the Three Months Ended March 31,
 20222021
Net loss$(37,354)$(67,730)
Other comprehensive income:
Interest rate cap/swap agreements31 2,694 
Comprehensive loss(37,323)(65,036)
Less: net loss attributable to noncontrolling interests(172)(4,126)
Comprehensive loss attributable to the Company$(37,151)$(60,910)
   The accompanying notes are an integral part of these consolidated financial statements.




5

THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended March 31, 2022 and 2021
 Stockholders' Equity  
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
(Loss) Income
Total
Stockholders'
Equity
  
 SharesPar
Value
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2022214,797,057 $2,147 $5,488,440 $(2,443,696)$(24)$3,046,867 $129,282 $3,176,149 
Net loss(37,182)(37,182)(172)(37,354)
Interest rate cap agreement31 31 31 
Amortization of share and unit-based plans104,320 1 6,061 6,062 6,062 
Stock offerings, net— — (70)(70)(70)
Distributions paid ($0.15 per share)
(32,301)(32,301)(32,301)
Distributions to noncontrolling interests— (9,013)(9,013)
Adjustment of noncontrolling interests in Operating Partnership(769)(769)769  
Balance at March 31, 2022214,901,377 $2,148 $5,493,662 $(2,513,179)$7 $2,982,638 $120,866 $3,103,504 
 Stockholders' Equity  
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
  
 SharesPar
Value
Noncontrolling
Interests
Total
Equity
Balance at January 1, 2021149,770,575 $1,498 $4,603,378 $(2,339,619)$(8,208)$2,257,049 $188,211 $2,445,260 
Net loss— — — (63,604)— (63,604)(4,126)(67,730)
Interest rate cap/swap agreements— — — — 2,694 2,694 — 2,694 
Amortization of share and unit-based plans94,753 1 5,030 — — 5,031 — 5,031 
Stock offerings, net45,992,318 460 637,684 — — 638,144 — 638,144 
Distributions paid ($0.15 per share)
— — — (23,332)— (23,332)— (23,332)
Distributions to noncontrolling interests— — — — — — (3,338)(3,338)
Contributions from noncontrolling interests— — — — — — 577 577 
Conversion of noncontrolling interests to common shares1,178,530 12 22,206 — — 22,218 (22,218) 
Redemption of noncontrolling interests— — — — — — (1)(1)
Adjustment of noncontrolling interests in Operating Partnership— — (4,304)— — (4,304)4,304  
Balance at March 31, 2021197,036,176 $1,971 $5,263,994 $(2,426,555)$(5,514)$2,833,896 $163,409 $2,997,305 

The accompanying notes are an integral part of these consolidated financial statements.
6

THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
For the Three Months Ended March 31,
 20222021
Cash flows from operating activities:  
Net loss$(37,354)$(67,730)
Adjustments to reconcile net loss to net cash provided by operating activities:  
(Gain) loss on sale or write down of assets, net(6,453)21,283 
Depreciation and amortization75,673 80,812 
Amortization of share and unit-based plans4,869 4,030 
Straight-line rent and amortization of above and below market leases1,589 (4,959)
Provision for doubtful accounts567 3,208 
Income tax expense1,799 2,238 
Equity in loss (income) of unconsolidated joint ventures29,097 (1,910)
Change in fair value of financing arrangement obligation2,543 (863)
Changes in assets and liabilities, net of dispositions:  
Tenant and other receivables28,098 52,684 
Other assets210 5,969 
Due from affiliates(4,504)(3,619)
Accounts payable and accrued expenses790 (7,328)
Other accrued liabilities(31,480)(31,596)
Net cash provided by operating activities65,444 52,219 
Cash flows from investing activities:  
Development, redevelopment, expansion and renovation of properties(13,377)(14,819)
Property improvements(7,022)(8,653)
Proceeds from repayment of notes receivable 1,300 
Deferred leasing costs(372)(91)
Distributions from unconsolidated joint ventures40,062 21,341 
Contributions to unconsolidated joint ventures(19,422)(25,673)
Proceeds from collection of receivable in connection with sale of joint venture property21,000  
Proceeds from sale of assets26,085 100,334 
Net cash provided by investing activities46,954 73,739 
7

THE MACERICH COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Dollars in thousands)
(Unaudited)
For the Three Months Ended March 31,
20222021
Cash flows from financing activities:  
Payments on mortgages, bank and other notes payable(53,237)(23,986)
Deferred financing costs (3,472)
Payments on finance leases(571)(552)
Net (costs) proceeds from stock offerings(70)597,007 
Redemption of noncontrolling interests (1)
Contribution from noncontrolling interests 125 
Dividends and distributions(41,314)(26,670)
Net cash (used in) provided by financing activities(95,192)542,451 
Net increase in cash, cash equivalents and restricted cash17,206 668,409 
Cash, cash equivalents and restricted cash, beginning of period166,971 482,659 
Cash, cash equivalents and restricted cash, end of period$184,177 $1,151,068 
Supplemental cash flow information:  
Cash payments for interest, net of amounts capitalized$46,463 $61,041 
Non-cash investing and financing transactions:  
Accrued development costs included in accounts payable and accrued expenses and other accrued liabilities$18,881 $25,248 
Conversion of Operating Partnership Units to common stock$ $22,218 
Accrued receivable of net proceeds from stock offering$ $41,137 
Lease liabilities recorded in connection with right-of-use assets$24,929 $ 
The accompanying notes are an integral part of these consolidated financial statements.
8


THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)

1. Organization:
The Macerich Company (the "Company") is involved in the acquisition, ownership, development, redevelopment, management and leasing of regional town centers and community/power shopping centers (the "Centers") located throughout the United States.
The Company commenced operations effective with the completion of its initial public offering on March 16, 1994. As of March 31, 2022, the Company was the sole general partner of and held a 96% ownership interest in The Macerich Partnership, L.P. (the "Operating Partnership"). The Company was organized to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code").
The property management, leasing and redevelopment of the Company's portfolio is provided by the Company's management companies, Macerich Property Management Company, LLC, a single member Delaware limited liability company, Macerich Management Company, a California corporation, Macerich Arizona Partners LLC, a single member Arizona limited liability company, Macerich Arizona Management LLC, a single member Delaware limited liability company, Macerich Partners of Colorado LLC, a single member Colorado limited liability company, MACW Mall Management, Inc., a New York corporation, and MACW Property Management, LLC, a single member New York limited liability company. All seven of the management companies are collectively referred to herein as the "Management Companies."
All references to the Company in this Quarterly Report on Form 10-Q include the Company, those entities owned or controlled by the Company and predecessors of the Company, unless the context indicates otherwise.
2. Summary of Significant Accounting Policies:
Basis of Presentation:
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They do not include all of the information and footnotes required by GAAP for complete financial statements and have not been audited by an independent registered public accounting firm.
The Company's sole significant asset is its investment in the Operating Partnership and as a result, substantially all of the Company's assets and liabilities represent the assets and liabilities of the Operating Partnership. In addition, the Operating Partnership has investments in a number of consolidated variable interest entities ("VIEs"), including Fashion District Philadelphia and SanTan Village Regional Center.
The Operating Partnership's consolidated VIEs included the following assets and liabilities:
March 31,
2022
December 31,
2021
Assets:  
Property, net$453,841 $458,964 
Other assets86,961 83,685 
Total assets$540,802 $542,649 
Liabilities:  
Mortgage notes payable$413,948 $413,925 
Other liabilities56,829 56,947 
Total liabilities$470,777 $470,872 
All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

9

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)

2. Summary of Significant Accounting Policies: (Continued)

The unaudited interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements for the interim periods have been made. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accompanying consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements but does not include all disclosures required by GAAP. The following table presents a reconciliation of the beginning of period and end of period cash, cash equivalents and restricted cash reported on the Company's consolidated balance sheets to the totals shown on its consolidated statements of cash flows:

For the Three Months Ended March 31,
20222021
Beginning of period
Cash and cash equivalents$112,454 $465,297 
Restricted cash54,517 17,362 
Cash, cash equivalents and restricted cash$166,971 $482,659 
End of period
Cash and cash equivalents$128,244 $1,083,813 
Restricted cash55,933 67,255 
Cash, cash equivalents and restricted cash$184,177 $1,151,068 

COVID-19 Pandemic:
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 and government-imposed capacity restrictions resulting from COVID-19 have been essentially eliminated across the Company’s markets.
COVID-19 Lease Accounting:
In April 2020, the Financial Accounting Standards Board issued a Staff Question-and-Answer (“Q&A”) to clarify whether lease concessions related to the effects of COVID-19 require the application of the lease modification guidance under Accounting Standards Codification ("ASC") 842, "Leases" ("the lease modification accounting framework"). Under ASC 842, the Company would have to determine, on a lease-by-lease basis, if a lease concession was the result of a new arrangement reached with the tenant or an enforceable right and obligation within the existing lease. The Q&A allows for the bypass of a lease-by-lease analysis, and allows the Company to elect to either apply the lease modification accounting framework or not to all of its lease concessions with similar characteristics and circumstances. The Company has elected to apply the lease modification accounting framework to lease concessions that include the abatement of rent in its consolidated financial statements for the three months ended March 31, 2022 and 2021.


10

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)

3. Earnings Per Share ("EPS"):
The following table reconciles the numerator and denominator used in the computation of EPS for the three months ended March 31, 2022 and 2021 (shares in thousands):
 For the Three Months Ended March 31,
 20222021
Numerator  
Net loss$(37,354)$(67,730)
Less: net loss attributable to noncontrolling interests(172)(4,126)
Net loss attributable to the Company(37,182)(63,604)
Allocation of earnings to participating securities(223)(214)
Numerator for basic and diluted EPS—net loss attributable to common stockholders$(37,405)$(63,818)
Denominator  
Denominator for basic and diluted EPS—weighted average number of common shares outstanding(1)214,819 158,580 
EPS—net loss attributable to common stockholders  
Basic and diluted$(0.17)$(0.40)
(1)     Diluted EPS excludes 99,565 and 103,235 convertible preferred partnership units for the three months ended March 31, 2022 and 2021, respectively, as their impact was antidilutive. Diluted EPS also excludes 8,681,751 and 10,855,707 Operating Partnership units ("OP Units") for the three months ended March 31, 2022 and 2021, respectively, as their impact was antidilutive.

4. Investments in Unconsolidated Joint Ventures:
The Company has made the following recent financings or other events of its unconsolidated joint ventures:
On March 29, 2021, concurrent with the sale of Paradise Valley Mall (see Note 15 – Dispositions), the Company elected to reinvest into the newly formed joint venture at a 5% ownership interest for $3,819 in cash that is accounted for under the equity method of accounting.
On October 26, 2021, the Company's joint venture in The Shops at Atlas Park replaced the existing loan on the property with a new $65,000 loan that bears interest at a floating rate of LIBOR plus 4.15% and matures on November 9, 2026, including extension options. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 3.0% through November 7, 2023.
On December 31, 2021, the Company assigned its joint venture interest in The Shops at North Bridge in Chicago, Illinois to its partner in the joint venture. The assignment included the assumption by the joint venture partner of the Company’s share of the debt owed by the joint venture and no cash consideration was received by the Company. The Company recognized a loss of approximately $28,276 in connection with the assignment.
On December 31, 2021, the Company sold its joint venture interest in the undeveloped property at 443 North Wabash Avenue in Chicago, Illinois to its partner in the joint venture for $21,000. The Company recognized an immaterial gain in connection with the sale.
On February 2, 2022, the Company’s joint venture in FlatIron Crossing replaced the existing $197,011 loan on the property with a new $175,000 loan that bears interest at the Secured Overnight Financing Rate ("SOFR") plus 3.70% and matures on February 9, 2025, including extension options. The loan is covered by an interest rate cap agreement that effectively prevents SOFR from exceeding 4.0% through February 15, 2024.
11

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
4. Investments in Unconsolidated Joint Ventures: (Continued)
For the three months ended March 31, 2022, the Company’s joint venture with Seritage Growth Properties (“MS Portfolio LLC”) recorded an impairment loss as a result of shortening the holding periods on certain assets in the joint venture. The Company’s share of the loss was $30,426.
Combined and condensed balance sheets and statements of operations are presented below for all unconsolidated joint ventures.
Combined and Condensed Balance Sheets of Unconsolidated Joint Ventures:
March 31,
2022
December 31,
2021
Assets(1):  
Property, net$8,285,434 $8,289,412 
Other assets734,076 750,629 
Total assets$9,019,510 $9,040,041 
Liabilities and partners' capital(1):  
Mortgage and other notes payable$5,650,351 $5,686,500 
Other liabilities416,675 325,115 
Company's capital1,579,559 1,638,112 
Outside partners' capital1,372,925 1,390,314 
Total liabilities and partners' capital$9,019,510 $9,040,041 
Investments in unconsolidated joint ventures:  
Company's capital$1,579,559 $1,638,112 
Basis adjustment(2)(446,825)(448,149)
$1,132,734 $1,189,963 
Assets—Investments in unconsolidated joint ventures$1,263,252 $1,317,571 
Liabilities—Distributions in excess of investments in unconsolidated joint ventures(130,518)(127,608)
$1,132,734 $1,189,963 
(1)     These amounts include assets of $2,747,217 and $2,789,568 of Pacific Premier Retail LLC (the "PPR Portfolio") as of March 31, 2022 and December 31, 2021, respectively, and liabilities of $1,653,762 and $1,661,110 of the PPR Portfolio as of March 31, 2022 and December 31, 2021, respectively.
(2)     The Company amortizes the difference between the cost of its investments in unconsolidated joint ventures and the book value of the underlying equity into income on a straight-line basis consistent with the lives of the underlying assets. The amortization of this difference was $2,575 and $2,243 for the three months ended March 31, 2022 and 2021, respectively.
12

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
4. Investments in Unconsolidated Joint Ventures: (Continued)
Combined and Condensed Statements of Operations of Unconsolidated Joint Ventures:


PPR PortfolioOther
Joint
Ventures
Total
Three Months Ended March 31, 2022   
Revenues:   
Leasing revenue$43,850 $155,166 $199,016 
Other63 7,340 7,403 
Total revenues43,913 162,506 206,419 
Expenses:   
Shopping center and operating expenses10,719 57,865 68,584 
Leasing expenses469 1,321 1,790 
Interest expense15,372 35,746 51,118 
Depreciation and amortization24,276 65,177 89,453 
Total expenses50,836 160,109 210,945 
Loss on sale or write down of assets, net (58,691)(58,691)
Net loss$(6,923)$(56,294)$(63,217)
Company's equity in net loss$(1,792)$(27,305)$(29,097)
Three Months Ended March 31, 2021   
Revenues:   
Leasing revenue$36,771 $149,319 $186,090 
Other94 16,965 17,059 
Total revenues36,865 166,284 203,149 
Expenses:   
Shopping center and operating expenses9,365 58,842 68,207 
Leasing expenses403 1,353 1,756 
Interest expense15,803 37,213 53,016 
Depreciation and amortization24,307 66,540 90,847 
Total expenses49,878 163,948 213,826 
Gain on sale or write down of assets, net 54 54 
Net (loss) income$(13,013)$2,390 $(10,623)
Company's equity in net (loss) income$(5,507)$7,417 $1,910 

Significant accounting policies used by the unconsolidated joint ventures are similar to those used by the Company.

13

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
5. Derivative Instruments and Hedging Activities:
The Company uses an interest rate cap agreement to manage the interest rate risk on certain floating rate debt. The Company recorded other comprehensive income related to the marking-to-market of derivative instruments of $31 and $2,694 for the three months ended March 31, 2022 and 2021, respectively.
The following derivative was outstanding at March 31, 2022:
Fair Value
PropertyNotional AmountProductLIBOR RateMaturityMarch 31,
2022
December 31,
2021
Santa Monica Place$300,000 Cap4.00 %12/9/2022$27 $6 
The above derivative was valued with an aggregate fair value (Level 2 measurement) and was included in other accrued liabilities. The fair value of the Company's interest rate derivative was determined using discounted cash flow analysis on the expected cash flows of the derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements.
Although the Company has determined that the majority of the inputs used to value its derivative fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swap. As a result, the Company determined that its interest rate cap valuation in its entirety is classified in Level 2 of the fair value hierarchy.
6. Property, net:
Property, net consists of the following:    
March 31,
2022
December 31,
2021
Land$1,433,989 $1,441,858 
Buildings and improvements6,341,408 6,306,764 
Tenant improvements690,166 685,242 
Equipment and furnishings(1)190,498 191,266 
Construction in progress191,208 222,420 
8,847,269 8,847,550 
Less accumulated depreciation(1)(2,623,285)(2,563,344)
$6,223,984 $6,284,206 
(1)      Equipment and furnishings and accumulated depreciation include the cost and accumulated amortization of ROU assets in connection with finance leases at March 31, 2022 and December 31, 2021 (See Note 8—Leases).
Depreciation expense was $67,786 and $71,664 for the three months ended March 31, 2022 and 2021, respectively.



14

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
6. Property, net: (Continued)

Gain (loss) on sale or write-down of assets, net for the three months ended March 31, 2022 and 2021 consist of the following:
For the Three Months Ended March 31,
20222021
Gain on property sales, net(1)$ $4,229 
Loss on write-down of assets(2)(8,629)(29,608)
Gain on land sales, net15,082 4,096 
$6,453 $(21,283)
(1)    Includes $4,229 of gain related to the sale of Paradise Valley Mall (See Note 15-Dispositions).
(2)    Includes impairment loss of $5,492 relating to the Company's investment in MS Portfolio LLC (See Note 4-Investments in Unconsolidated Joint Ventures) during the three months ended March 31, 2022 and impairment loss of $27,281 on Estrella Falls during the three months ended March 31, 2021. The impairment losses were due to the reduction of the estimated holding periods of the properties. The remaining amounts for the three months ended March 31, 2022 and 2021 mainly pertain to the write off of development costs.

The following table summarizes certain of the Company's assets that were measured on a nonrecurring basis as a result of the impairment losses recorded for the three months ended March 31, 2022 and 2021, as described above:
Total Fair Value MeasurementQuoted Prices in Active Markets for Identical AssetsSignificant Other Unobservable InputsSignificant Unobservable Inputs
(Level 1)(Level 2)(Level 3)
March 31, 2022$830 $ $830 $ 
The fair values relating to the 2022 impairment was based on a sales contract and is classified within Level 2 of the fair value hierarchy.
7. Tenant and Other Receivables, net:
Included in tenant and other receivables, net is an allowance for doubtful accounts of $13,899 and $14,917 at March 31, 2022 and December 31, 2021, respectively. Also included in tenant and other receivables, net are accrued percentage rents of $3,725 and $19,907 at March 31, 2022 and December 31, 2021, respectively, and a deferred rent receivable due to straight-line rent adjustments of $108,926 and $110,969 at March 31, 2022 and December 31, 2021, respectively.
8. Leases:
Lessor Leases:
The Company leases its Centers under agreements that are classified as operating leases. These leases generally include minimum rents, percentage rents and recoveries of real estate taxes, insurance and other shopping center operating expenses. Minimum rental revenues are recognized on a straight-line basis over the terms of the related leases. Percentage rents are recognized and accrued when tenants' specified sales targets have been met. Estimated recoveries from certain tenants for their pro rata share of real estate taxes, insurance and other shopping center operating expenses are recognized as revenues in the period the applicable expenses are incurred. Other tenants pay a fixed rate and these tenant recoveries are recognized as revenues on a straight-line basis over the term of the related leases. For leasing revenues in which collectability is not considered probable, lease income is recognized on a cash basis and all previously recognized tenant accounts receivables, including straight-line rent, are fully reserved in the period in which the lease income is determined not to be probable of collection.

15

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
8. Leases: (Continued)

The following table summarizes the components of leasing revenue for the three months ended March 31, 2022 and 2021:
For the Three Months Ended March 31,
20222021
Leasing revenue—fixed payments$135,209 $131,495 
Leasing revenue—variable payments68,770 51,248 
Provision for doubtful accounts, net(567)(3,208)
$203,412 $179,535 
The following table summarizes the future rental payments to the Company:
Twelve months ending March 31, 
2023$366,783 
2024322,512 
2025262,720 
2026214,103 
2027165,702 
Thereafter473,307 
$1,805,127 

Lessee Leases:
The Company has certain properties that are subject to non-cancelable operating leases. The leases expire at various times through 2098, subject in some cases to options to extend the terms of the lease. Certain leases provide for contingent rent payments based on a percentage of base rental income, as defined in the lease. In addition, the Company has five finance leases that expire at various times through 2024.
The following table summarizes the lease costs for the three months ended March 31, 2022 and 2021:
For the Three Months Ended March 31,
20222021
Operating lease costs$3,775 $3,815 
Finance lease costs:
   Amortization of ROU assets481 478 
   Interest on lease liabilities194 219 
$4,450 $4,512 
16

THE MACERICH COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share and square foot amounts)
(Unaudited)
8. Leases: (Continued)

The following table summarizes the future rental payments required under the leases:
March 31, 2022December 31, 2021
Year ending December 31,Operating
Leases
Finance LeasesOperating LeasesFinance Leases
2023$11,352 $4,461 $14,302 $4,461 
202411,876 2,043 8,452 2,043 
202511,054 9,072 6,471 9,072 
202611,231  6,513  
202711,343  6,470  
Thereafter120,534  109,358  
Total undiscounted rental payments177,390 15,576 151,566 15,576 
Less imputed interest(90,111)(1,619)(85,383)(1,048)
Total lease liabilities$87,279 $13,957 $66,183 $14,528 
Weighted average remaining term32.0 years1.9 years36.3 years2.1 years
Weighted average incremental borrowing rate7.3