annual report 1998

The Macerich Company

[creating windows of opportunity] financial highlights

Macerich had a record-setting year in terms of acquisitions, occupancy, new lease signings and growth in total Funds from Operations (FFO). Our internal growth, which helped fuel our 1998 results, will benefit from our recent acquisitions, as we access the intrinsic value of these assets. For additional financial and other information about Macerich, we have included in this Annual Report our Form 10-K for the year ended December 31, 1998 for your review. Pro Forma as Reported 1998 1997 1996 1995 for 1994 (All amounts in thousands, except per share and property data) Operating Data: Total revenues $ 283,861 $ 221,214 $ 155,059 $ 102,469 $ 88,157 Shopping center expenses $ 89,991 $ 70,901 $ 50,792 $ 31,580 $ 28,373 REIT general and administrative expenses $ 4,373 $ 2,759 $ 2,378 $ 2,011 $ 1,954 Earnings before interest, income taxes, depreciation, amortization, minority interest, equity in income (loss) of unconsolidated entities, extraordinary items, gain (loss) on sale of assets and preferred dividends (EBITDA) $ 189,497 $ 147,554 $ 101,889 $ 68,878 $ 57,592 Net income $ 44,075 $ 22,046 $ 18,911 $ 11,303 $ 10,450 Net income per share - diluted $ 1.06 $ 0.85 $ 0.89 $ 0.73 $ 0.72 Other Data: Funds from operations - diluted (1) $ 120,518 $ 83,427 $ 62,428 $ 44,938 $ 39,343 Cash distributions declared per common share $ 1.865 $ 1.78 $ 1.70 $ 1.66 N/A FFO per share - diluted (1) $ 2.426 $ 2.172 $ 1.874 $ 1.669 $ 1.534 Portfolio occupancy at year end 93.2% 91.8% 91.6% 92.0% 92.9% Average tenant sales per square foot - mall & freestanding stores $ 319 $ 317 $ 290 $ 284 $ 262 Balance Sheet Data: Investment in real estate (before accumulated depreciation) $ 2,213,125 $1,607,429 $1,273,085 $ 833,998 $ 554,788 Total assets $2,322,056 $1,505,002 $ 1,187,753 $ 763,398 $ 485,903 Total mortgage, notes and debentures payable $ 1,507,118 $1,122,959 $ 789,239 $ 485,193 $ 313,632 Minority interest (2) $ 165,524 $ 100,463 $ 112,242 $ 95,740 $ 72,376 Stockholders' equity $ 577,413 $ 216,295 $ 237,749 $ 158,345 $ 86,939

(1) “FFO” represents net income (loss) (computed in accordance with generally accepted accounting principles (GAAP)), excluding gains (or losses) from debt restructuring and sales or write-down of assets, plus depreciation and amortization (excluding depreciation on personal property and amortization of loan and financial instrument costs), and after adjustments for unconsolidated entities. Adjustments for unconsolidated entities are calculated on the same basis. FFO does not represent cash flow from operations as defined by GAAP and is not necessarily indicative of cash available to fund all cash flow needs. (2) “Minority Interest” reflects the ownership interest in The Macerich Partnership, L.P. not owned by the REIT (Macerich).

Forward-Looking Statements. This Annual Report contains or incorporates statements that constitute forward-looking statements. Those statements appear in a number of places in this Annual Report and include statements regarding, among other matters, the Company’s growth and acquisition opportunities, the Company’s acquisition strate- gy, regulatory matters pertaining to compliance with governmental regulations and other factors affecting the Company’s financial condition or results of operations. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and “should” and variations of these words and similar expression, are used in many cases to identify these forward-looking statements. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company or industry results to vary materially from the Company’s future results, performance or achievements, or those of the industry, expressed or implied in such forward-looking statements. Such factors include, among others, general indus- try, economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of current and prospec- tive tenants, lease rents, availability and cost of financing and operating expenses; adverse changes in the real estate markets including, among other things, competition with other companies, retail formats and technology, risks of real estate development and acquisition; governmental actions and initiatives; environmental and safety requirements; and Year 2000 compliance issues of the Company and third parties and related service interruptions or payment delays. The Company will not update any forward-looking information to reflect actual results or changes in the factors affecting the forward-looking information. dear fellow stockholders and partners

As we reflect on 1998, we find ourselves recalling the opening of our 1995 stockholders’ letter. “Retail sales are flat, Chapter 11 filings by retail chains are the talk of the industry. The regional mall business is maturing and a tiering is developing as the strong get stronger and the weak get weaker. Questions are raised by ‘experts’ about the future of specialty retailing and the mall business as we know it today. Retailers of all product types are searching for their identities. These times are changing and challenging - to say the least.” $1.53 $1.67 $1.87 $2.43 $2.17 We then went on to list the reasons we were so optimistic about our future in this uncertain industry. 1994 1995 1996 1997 1998

In fact, our optimism was justified. Our 1995 results were good, and subse- ffo per share quently we have posted three very strong years of growth. At the time of our diluted, annual 1995 stockholders’ letter, there was considerable concern about our industry. There has been consistent However, looking at the issues addressed in that letter, we now find ourselves FFO per share growth with in an industry with the following strong fundamentals: an annual compounded growth rate of 12.3%. • Compared to the flat retail sales picture of March 1996, retail sales in our portfolio grew by 5% in 1998, over 1997 on a comparable store basis, with similar results for the sector. • Chapter 11 filings by retail chains have slowed dramatically in the regional mall industry. This has promoted strong occupancy gains both in our portfo- lio and in regional mall portfolios owned by other public real estate compa- nies. In fact, the few retailers that have filed for bankruptcy protection have created revenue and tenant enhancing opportunities because they generally have occupied excellent locations within our malls at rents we believe are lower than what we could achieve in today’s leasing environment. • The mall business definitely is maturing and the strong are getting stronger, with significant consolidation. Macerich and most of the public mall companies have increased the size of their portfolios substantially over the past three years. $0.9 $1.2 $1.8 $2.2 $3.2 Virtually all of the concerns present in the spring of 1996 have been addressed 1994 1995 1996 1997 1998 by us – each in a positive way. Leasing is extremely vibrant. Our comparable total market center sales increases are excellent, with sales productivity per square foot ris- capitalization at ing from $284 per square foot at the end of 1995 to a level of over $330 per year end square foot at the end of 1998. (In billions) The Company has success- Considering our past performance, it is with a high degree of optimism fully accessed the private and that we address the current concerns expressed by investors in the REIT public capital markets to industry and the shopping center industry specifically. These concerns fund its rapid growth. include the following:

1 Liquidity Crisis - Although the liquidity crisis limited the availability of capi- tal, it was beneficial to our business in a variety of ways. As construction loans became more difficult to obtain, the likelihood of substantial construction coming into play in the mall business diminished. In addition, the mall sector is unique in terms of its attractiveness to long-term lenders. The debt market remains favorable, with life insurance companies and the CMBS markets pur- suing loans secured by regional malls. We have closed several competitive loans $86.0 $102.5 $155.1 $221.2 $283.9 (i.e., 6.70% to 6.75% interest for 10-year fixed rate loans) in the last three months. Also, the illiquidity in the overall market is creating alluring acquisi-

1994 1995 1996 1997 1998 tion opportunities with fewer competitors. total revenues (In millions) External Growth - From an external growth viewpoint, we have completed an excellent year of acquisitions — in excess of $1 billion of real estate at estimat- The 35% compounded annual growth rate in ed returns approximating 8.5% on an unleveraged basis. In addition, we cur- total revenues reflects the rently have a substantial number of redevelopment projects available within Company’s fourfold growth our portfolio to profitably deploy our capital at what we believe will be very since its 1994 IPO. favorable returns. Internal Growth - In our experience, the most significant growth in an asset occurs in the second to fifth year of ownership. Our internal growth helped fuel our growth in FFO in 1998 and we believe strong internal growth will continue to be generated in 1999. New Construction - The mall business is simply not conducive to new com- petition resulting from new building. The department stores help secure the dominant position most of our malls enjoy in their trade areas, thereby mini- mizing the threat of new malls. In addition, the liquidity crunch of late 1998 inhibited the development of new malls, further limiting any adverse impact on the very positive leasing environment, high occupancy levels, and strong $251 $262 $284 $290 $317 $337* sales per square foot we currently enjoy. Recession - There is widespread concern that we are at the top of the real

1993 1994 1995 1996 1997 1998 estate cycle and may be facing a general economic slowdown and perhaps even

average tenant a real estate recession. We feel the mall business is especially resilient not only sales per square to recessions, but also to inflationary periods because of the long-term leases foot in place, the high credit tenancy and the low volatility in the property type. In * Excluding 1998 acquisitions addition, the regional mall business operates on a much longer business cycle The sales productivity of than any other real estate property type, making recession less of a threat to our portfolio continues to improve, surpassing the the mall business. $300-per-square-foot If we face an economic slowdown, history provides an important record benchmark. regarding the potential impact of a recession on regional mall activities. During 1989-1993, the country was experiencing a significant recession.

2 During that period, our portfolio actually enjoyed same center increases in net operating income of 26%, a strong growth rate even in robust economic periods. The Internet - Although much has been written about the possible threat posed by the Internet to our sector, we believe the Internet will be a tremen- dous asset — helping us access investors, tenants and customers alike. Currently, investors can access a variety of information about the company through the Macerich website — www.macerich.com. This site also acts as a leasing tool, providing information on demographics as well as leasing oppor- tunities to prospective tenants. While the Internet may substantially impact the least social forms of retailing activities such as catalogue shopping and power center sales, we believe online shopping will have little impact on the “town center” concept, which is the

foundation of each of our regional malls. Regional mall shopping is social in $1.66 $1.70 $1.78 $1.87 nature and as long as consumers desire the human element of shopping, we feel any adverse impact of the Internet on mall sales will be limited. In fact, 1995 1996 1997 1998 we believe that E-commerce technology can actually improve our sales pene- dividend paid per share tration within markets because we can use that technology to utilize the The Company has increased regional mall as a distribution facility where customers can order goods and its dividend each year since then pick them up in person or have them delivered. We are currently working becoming a public company. on several projects to tap into this technology, which we believe will demon- strate to investors that the Internet in fact is not a problem for our industry, but is a tremendous opportunity. Macerich had a great year of leasing, operations and acquisitions, which will be discussed in depth later in this report. As we approach midyear 1999, we are most optimistic about all fundamentals in our business. We look forward to reporting to you the results of our operations in the upcoming year. Very truly yours,

Mace Siegel Arthur M. Coppola Chairman of the Board President, Chief Executive Officer and Director

3 [ acquisition] case study #1

Queens Center Queens, New York

queens center $12.6 1995 1996 1997$12.2 1998million acquisition: $11.9 million Acquired in 1995, this 624,000- $10.5 million net million square-foot center is located in the operating $740 income $690 densely populated borough of $657

sales $633 Queens, New York. The only mall in per square the borough, it serves a primary mar- foot ket of 1.3 million residents within a 100% 97.5% 100% 100% year-end four-mile ring and a secondary occupancy level market encompassing the entire borough of Queens.

redevelopment: Macerich is evaluating opportunities to double both the size of the existing center and the number of its specialty stores. We are also working with a record-setting year Macy’s and J.C. Penney to improve 1998 was an exciting year for Macerich. It was a year of both remarkable inter- their stores, both of which are nal and external growth. It was a year when, as in years past, we raised the among the most productive in their quality of our portfolio with each and every acquisition by seeking franchise respective chains. properties in quality markets. And, it was a year when we managed to surpass even our own high expectations – truly living up to our commitment to “Make operations: Good Things Happen.” We executed 140,000 square feet of new leases in less than two years. For the first time in our history, we surpassed the $1 billion mark in acquisi- Since acquisition, sales per square tions, securing interests in 17 regional malls for a total consideration of $1.03 foot have increased from $633 to billion. At this writing, we have just closed on our acquisition of the Safeco $740 and net operating income has portfolio with properties in Portland and Seattle, which extends our West increased 6.3% on a compounded Coast dominance into the Pacific Northwest and distinguishes us as one of the annual basis. Our remerchandising largest owners of regional malls on the Pacific Rim. efforts have dramatically increased demand for space at the property in Our Pacific Rim acquisitions are truly significant. These markets – Seattle, advance of its pending expansion. Portland, San Francisco and Los Angeles – are characterized by desirable demographics, including above-average income levels, high population densi- ties and positive growth trends. These factors combine to create retail centers with market dominance, high sales per square foot, increasing rental rates and solid occupancy levels.

While we are particularly proud of our Pacific Rim acquisitions, all of our 1998 property acquisitions reflect the attributes mentioned above, providing Macerich with substantial internal growth potential. The following provides an overview of some of our 1998 acquisition activity.

5 Our initial 1998 acquisition, in February, was a portfolio of 12 regional malls, comprising 10.7 million square feet, purchased from ERE Yarmouth. Macerich purchased this portfolio through a 50/50 joint venture with Simon Property Group. This acquisition not only highlights the ability of Macerich to successfully integrate six regional malls into our management system, but also demonstrates our flexibility in structuring a profitable joint venture with

10.6 13.2 19.1 22.3 36.1 40.0 another major mall company. To date, this joint venture has proven to be quite successful, with operating results meeting our expectations. 1994 1995 1996 1997 1998 1999 through February Closer to home, Macerich acquired a dominant Los Angeles shopping desti- Total nation, the Westside Pavilion, in July 1998. This property, situated in West Portfolio Size (In millions of square feet) Los Angeles just five miles east of the Macerich headquarters in Santa Monica, is already proving to be a prodigious addition to our West Coast portfolio with sales of $375 per square foot and a strong occupancy rate of 91%. In an effort to maximize the Pavilion’s performance, we are now concentrating our efforts on replacing less productive tenants with tenants that will raise our sales-per- square-foot levels and draw additional customer traffic.

In late July of 1998, we publicly announced our concern that the acquisition market was becoming overheated and that we were not projecting additional acquisitions for the remainder of the year. However, shortly thereafter, a major divergence of treasury rates and interest rate spreads occurred, resulting in an unstable credit market, especially for Commercial Mortgage Backed Securities. While many companies were caught in a liquidity crisis, Macerich was able to capitalize on the inefficient real estate capital market. During this period, we acquired, through a joint venture with the Ontario Teachers’ Pension Plan Board (the largest pension fund in Canada), the Safeco portfolio of four key regional centers in the Pacific Northwest. Our ability to complete

6 1998 was an exciting year of acquisitions for Macerich.

The real excitement will come as these assets begin to flourish

under Macerich ownership and management. this acquisition at attractive pricing (an approximate 9.1% unleveraged yield) was directly related to our ability to create an affiliation with a strategic capital partner and submit a joint bid to the seller with strong financial credibility and a high probability of closure.

In December 1998, Macerich completed the year with the acquisition of Northwest Arkansas Mall, a promising property in Fayetteville, Arkansas, acquired from Tri State Joint Venture (a joint venture comprised of TIAA and the Rouse Company). We believe this franchise property, recently strength- ened by the addition of a new Dillard’s and J.C. Penney and the expansion of Sears, will attract high-quality retailers and will contribute to our internal growth in the future.

At our IPO in March of 1994, our centers produced tenant sales of $251 per square foot. Just over four years later at the end of 1998, Macerich has quadrupled in size from 10 properties and 9 million square feet in 1994, to 47 properties and more than 36 million square feet, with tenant sales well in excess of $300 per square foot. Including the Safeco portfolio, the first phase of which closed in February 1999, Macerich has a total of 53 properties with 40 million square feet of gross leasable area.

Yes, 1998 was an exciting year of acquisitions for Macerich. But the excitement of this rapid growth doesn’t end with the acquisition of the extraordinary group of assets we added to our portfolio in the past year. The real excitement will come as these assets begin to flourish under Macerich ownership and management. As these properties are redeveloped and assimilated into the Macerich system, we expect to create greater productivity and provide fuel for our future internal growth.

7 [ operations] case study #2

Chesterfield Towne Center

Richmond, Virginia

chesterfield towne center $9.9 1995 1996 1997$9.2 1998million $9.0 million acquisition: $8.7 million net million Although served originally by only operating $317 income $309 three relatively small anchors,

$289 Chesterfield Towne Center, located sales $276 per 96.0% in an affluent Richmond, Virginia square foot 90.2% 94.5% suburb, was poised for increased 95.1% Dillard’s I year-end productivity. Macerich acquired the Dillard’s II occupancy Hechts level Sears 608,500-square-foot mall in Hechts Leggetts 1994. major Proffits anchors

redevelopment: Shortly after acquisition, construction began on a new 145,000-square- foot Sears. The store opened in April 1996 and served as a catalyst for the renovation and expansion of Hechts to strong internal growth 140,000-square feet. Dillard’s The people responsible for the successful assimilation of our acquisitions are acquired the Profitts and Belk stores, the highly skilled members of our management team. At Macerich, we are and converted them into Dillard’s proud of our team management philosophy and believe it to be the key to our Men and Dillard’s Women, creating a 140,000-square-foot store. The success. In 1998, among other accomplishments, this unique management planned addition of a 145,000- approach allowed us to: square-foot J.C. Penney will give the • Successfully assimilate 17 new properties into our portfolio. mall a fifth anchor. • Have a record year for new lease signings (over l million square feet). operations: • Achieve a year-end occupancy level of 93.2%. Along with the improvement of the • Make significant progress on major redevelopments in the portfolio, including anchor stores, Macerich implemented the May 1998 groundbreaking of Pacific View, a $90 million redevelopment an intensive program to improve the project to create a two-level, four-anchor super-regional mall. quality and productivity of the mall merchants, completing more than The ultimate objective of our team approach is to enhance stockholder value 110,000 square feet of new leases in by increasing FFO per share. Once we have acquired a mall that meets our three years to add a number of better investment criteria, our team works together to generate internal growth by national tenants. Since acquisition, maximizing cash flow from existing space and by redeveloping, expanding and occupancy increased from 94.2% to renovating our malls. 96% and sales per square foot rose from $273 to $317. Since our primary responsibility is the effective and profitable operation of our properties, Property Teams are at the top of our corporate organizational structure with all other teams in place to support their efforts. The multidisci- plinary professionals on our Property Teams work on-site and are responsible

9 for the day-to-day operations of our assets. In addition to their management function, our Property Teams provide us with a personal connection to the communities where we do business. It is our policy that our leasing personnel live in their property’s community and not in a distant corporate office. This provides our Property Team members with a deep understanding of not only their specific property but also of the people it serves. $136 $244 $415 $319 $1,033 Supporting the efforts of our Property Team are the members of our Specialist Team. This network of professionals stands ready to provide whatever development, 1994 1995 1996 1997 1998 financial, MIS, legal and acquisition services our Property Team might require. total acquisitions The task of coordinating the efforts of our Property and Specialist Teams falls (In millions) to our Operations Team. Made up of 12 senior officers, each of whom has an The Company had a record average of 15 years of real estate experience, Operations represents every year with over $1 billion in discipline and is a vital link in our management chain. acquisitions in 1998. Finally, Macerich’s strategic objectives are established and overseen by the eight executive officers of our Leaders Team.

By decentralizing duties to the property level and coordinating action between property and corporate disciplines, Macerich has set itself apart from other mall companies.

Redevelopment - 1998 also saw the initiation of a variety of redevelopment projects (all currently in various stages of the development process) that we anticipate will represent significant internal growth for the Company in 1999 and beyond. Our extensive redevelopment expertise allows us to identify and pursue those opportunities that represent the best use of our capital to pro- duce continued earnings growth, while prudently managing the leasing and

10 1998 also saw the initiation of a variety of redevelopment

projects that we anticipate will represent significant internal growth

for the Company in 1999. construction risk inherent in redevelopment work. Queens Center, Chesterfield Towne Center and Pacific View, explored in depth in this report, are excellent examples of our acquisition and redevelopment strategy.

In addition to these three major projects, we have opportunities for redevel- opment that we expect will create internal growth at a number of properties in our portfolio, in particular Valley View Mall, Huntington Beach Center, Crossroads Mall-Boulder, Vintage Faire Mall, Crossroads Mall-Oklahoma and Lakewood Mall.

Increasing Productivity of Assets - Macerich executed more than 1 million square feet of new leases in 1998. While maintaining a high level of store design standards, our leasing personnel expedited the opening of a record number of new stores throughout our portfolio. To smoothly, efficiently and profitably complete this volume of activity, our leasing personnel employed the combined expertise of our tenant coordination and construction special- ists to identify ways to reconfigure or expand existing retail space to maximize retail income during the remerchandising and re-leasing process.

Business Initiatives - We are always seeking new and innovative ways for our properties to generate additional income. We established our Business Initiatives program to pursue new revenue-generating projects and ideas. From pay phones to rooftop satellite dishes, we’ve added a new array of goods and services to our properties to enhance the shopping experience of our cus- tomers. We are excited by the potential of this program and expect it to gener- ate additional internal growth.

11 [ redevelopment] case study #3

Pacific View Ventura, California pacific view before after 1,200,000 801,000 acquisition: square footage J.C. Penney Acquired in late 1996, this two- Macy’s J.C. Penney Robinsons-May anchor mall shared its trade area with Macy’s Sears major anchors another nearby mall. Macerich recog- $350 nized that the Macy’s purchase of the projected sales $269 Broadway store at this location would per square foot provide the impetus to consolidate retail sales there and eliminate the competing center.

redevelopment: Macerich negotiated to recapture the existing J.C. Penney building, arrang- ing for J.C. Penney to build a new two-level, 125,000-square-foot prototype store. Robinsons-May will Specialty Leasing - As the seasons change, so do the needs of our customers. take over the former J.C. Penney Specialty Leasing brings unique, fun and seasonal merchants to our properties building, and will leave a competing to sell merchandise from carts, kiosks and temporarily vacant tenant locations. center. Simultaneously, Macerich We significantly improved the revenues generated by this program by adding secured the commitment of Sears to more personnel devoted to Specialty Leasing to the majority of our properties. build a new 165,000-square-foot store and close its store at the compet- Corporate Website - We radically redesigned our website to appeal to a wider ing center. With four giants – Macy’s, audience, including potential stockholders, retailers and consumers. We plan Robinsons-May, J.C. Penney and to continue to utilize the vast power of the Internet to improve operations, Sears – now together in one center, disseminate information about Macerich and its properties and, perhaps most Macerich invested $90 million to importantly, to provide a platform to benefit the needs of our in-mall retail- redevelop and expand the existing cen- ter into a dynamic two-level retail ers and their customers. environment. Looking Toward 1999 - The future holds numerous opportunities for us to grow and improve our own performance. We plan to capitalize on economies operations: of scale to generate additional revenues while decreasing our expenses and In an 18-month period, we will improving our operating margins. While we may acquire additional proper- expect to complete approximately 100 ties, our main focus will be to achieve robust internal growth through opera- leases for more than 300,000 tional excellence and to successfully execute the significant redevelopment square feet. During construction, we opportunities across our portfolio. successfully relocated numerous ten- ants and kept the mall and its tenants Because, at Macerich, “We Make Good Things Happen” is not just a slogan. open. Upon completion of the rede- It’s a commitment. velopment, specialty store sales are expected to increase from $290 to $350 per square foot.

13 Burlington Redmond Silverdale Great Falls Fargo

Billings Portland Albany Rapid City Sioux Falls

Sioux City Des Moines M Cedar Rapids Sandy Greeley Davenport Boulder Reno Colorado Springs

San Rafael Antioch Grand Junction Corte Madera Modesto Walnut Creek

Capitola Fresno Oklahoma City Fayetteville Carmel

Lubbock Los Angeles Ventura Dallas Panorama City Downey Marina del Rey Santa Ana Manhattan Beach Lakewood Huntington Beach

Albany, Oregon Cedar Rapids, Iowa Downey, California Greeley, Colorado Albany Plaza Lindale Mall Stonewood Mall Greeley Mall Antioch, California Clarksville, Indiana Evansville, Indiana Harrisonburg, Virginia County East Mall Green Tree Mall Eastland Mall Valley Mall Billings, Montana Colorado Springs, Fargo, North Dakota Huntington Beach, Rimrock Mall Colorado West Acres Mall California The Citadel Huntington Center Boulder, Colorado Fayetteville, Arkansas Crossroads Mall Columbus, Ohio Northwest Arkansas Mall Lakewood, California Eastland Plaza Lakewood Mall Boulder, Colorado Fresno, California Boulder Plaza Corte Madera, California Fresno Fashion Fair Leesburg, Florida The Village at Corte Madera Lake Square Mall Burlington, Washington Grand Junction, Cascade Mall Dallas, Texas Colorado Los Angeles, California Valley View Center Mesa Mall Westside Pavilion Capitola, California Capitola Mall Davenport, Iowa Great Falls, Montana Lubbock, Texas NorthPark Mall Holiday Village Mall South Plains Mall Carmel, California Carmel Plaza Des Moines, Iowa Great Falls, Montana Southridge Mall Great Falls Marketplace

14 Moline Columbus Queens Media

Clarksville Harrisonburg Evansville Salisbury Richmond

Since 1997, Macerich has expanded its national presence by acquiring 23 properties located in Leesburg 14 states.

Manhattan Beach, Panorama City, Sandy, Utah California California South Towne Center Manhattan Village Panorama Mall San Rafael, California Marina del Rey, Portland, Oregon The Mall At Northgate California Washington Square Mall Villa Marina Marketplace Santa Ana, California Queens, New York Bristol Center Media, Pennsylvania Queens Center Granite Run Mall Silverdale, Washington Rapid City, South Dakota Kitsap Mall Modesto, California Rushmore Mall Vintage Faire Mall Sioux City, Iowa Redmond, Washington Southern Hills Mall Moline, Illinois Redmond Town Center South Park Mall Sioux Falls, South Dakota Reno, Nevada Empire Mall Oklahoma City, Park Lane Mall Oklahoma Ventura, California Crossroads Mall Richmond, Virginia Pacific View Chesterfield Towne Center Walnut Creek, California Salisbury, Maryland Broadway Plaza Centre at Salisbury

15 Directors and Senior Officers Stock Exchange Listing Executive Officers scott burchard New York Stock Exchange mace siegel Business Initiatives Symbol: MAC Chairman of the Board michael j. busenhart The common stock of the Company is listed and trad- arthur m. coppola Acquisitions ed on the New York Stock Exchange (“NYSE”) under President, Chief Executive Officer lori a. gatto the symbol “MAC”. The common stock began trading and Director on March 10, 1994 at a price of $19 per share. In Asset Management dana anderson 1998 the Company’s shares traded at a high of 3/8 1 john m. genovese $30 and a low of $22 ⁄4. Vice Chairman of the Board Development edward c. coppola As of February 18, 1999 there were approximately genene m. kruger 300 stockholders of record. The following table shows Executive Vice President Human Resources high and low closing prices per share of common stock and Director thomas j. pendergrast for each quarter in 1996, 1997 and 1998 and divi- james s. cownie dends/distributions per share of common stock Acquisitions Director declared and paid by quarter. dane f. smith Private Investor Market Dividends/ theodore s. hochstim Leasing Quotation Distributions stephen l. spector Per Share Declared Director Quarters Ended High Low and Paid Real Estate Consultant Legal 1 1 March 31, 1996 $20 ⁄8 $19 ⁄4 $0.42 1 fred s. hubbell thomas c. unis June 30, 1996 21 ⁄4 19 0.42 7 Director Lease Management September 30, 1996 22 ⁄8 20 0.42 1 3 December 31, 1996 26 ⁄8 21 ⁄4 0.44 Executive Committee of susan m. valentine ING Financial Services International Marketing 5 3 March 31, 1997 $29 ⁄8 $25 ⁄8 $0.44 7 7 stanley a. moore charles p. waldron June 30, 1997 28 ⁄8 24 ⁄8 0.44 11 1 Director Management September 30, 1997 29 ⁄16 27 ⁄8 0.44 9 3/4 Chief Executive Officer December 31, 1997 29 ⁄16 24 0.46 Overton, Moore & Associates, Inc. christopher j. zecchini Accounting 3 dr. william p. sexton March 31, 1998 $30 ⁄8 $27 0.46 3 1 Director June 30,1998 29 ⁄4 26 ⁄16 0.46 Principal Outside Counsel 3 1 Vice President,University Relations September 30,1998 29 ⁄8 22 ⁄4 0.46 O’Melveny & Myers, LLP 7 University of Notre Dame December 31,1998 28 ⁄16 24 0.485 Los Angeles, California richard a. bayer Transfer Agent Executive Vice President Independent Auditor First Chicago Trust Company General Counsel and Secretary PricewaterhouseCoopers LLP of New York Los Angeles, California david j. contis 525 Washington Boulevard Executive Vice President and Jersey City, New Jersey 07303 Chief Operating Officer Annual Meeting May 20, 1999 thomas e. o’hern Dividend Reinvestment Plan Miramar-Sheraton Hotel Executive Vice President Stockholders may automatically reinvest their 101 Wilshire Boulevard Chief Financial Officer and Treasurer dividends in additional common stock of the Com- Santa Monica, California 90401 pany through the Direct Investment Program which larry e. sidwell also provides for purchase by voluntary cash contri- Executive Vice President, Development Corporate Headquarters butions. For additional information, please contact 401 Wilshire Boulevard First Chicago Trust Company of New York at Suite 700 800-567-0169. Santa Monica, California 90401 (310) 394-6000

Macerich Website For an electronic version of this annual report, please visit www.macerich.com

16 great people make good things happen

Since 1974, we have continued to stress that at the Macerich

Company, “We Make Good Things Happen.” In 1998, with

that commitment, we at Macerich chose to honor our “Great

People.” Developed as an employee-driven awards program,

each shopping center and office honors a fellow employee each

quarter. From the quarterly recipients, an employee of the year

is honored regionally and awarded with a one-week vacation

for two. We honor our great people for their efforts in making

good things happen for our customers, our community and our

fellow associates. Design: Kim Baer Design Associates, Los Angeles Photography: Michael Mayo 401 Wilshire Boulevard Suite 700 Santa Monica, CA 90401 310.394.6000 www.macerich.com