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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-155742
In
accordance with Rule 457(r), a registration fee of $668.38 has been
calculated for 459,019 shares of Common Stock with an aggregate offering
price of $11,978,109. Pursuant to Rule 457(p), filing fees of $467.06 have
already been paid with respect to unsold securities that were previously
registered pursuant to Registration Statement on Form S-3 (No. 333-155742) by
The Macerich Company on May 22, 2009, and is offset against the registration
fee due for this offering. The remaining registration fee of $201.32 has been
paid with respect to this offering. Pursuant to Rule 416 of the Securities
Act of 1933, as amended, the Registrant common stock offered hereby shall be
deemed to cover additional securities to be issued to prevent dilution
resulting from stock splits, stock dividends or similar transactions.
Prospectus
Supplement
(To
Prospectus dated November 26, 2008)
459,019 Shares
Common
Stock
Unless the context otherwise requires, or unless
otherwise specified, all references in this prospectus supplement to the terms we,
us, our and our Company refer to The Macerich Company, which we refer to
as Macerich, together with its subsidiaries, including The Macerich
Partnership, L.P., which we refer to as our Operating Partnership.
This prospectus supplement relates to the issuance of
up to an aggregate of 459,019
shares of our common stock, par value $.01 per share (Common Stock), that we
may issue in one of the following transactions:
(1)
the payment of a distribution that the Operating
Partnership has declared on its outstanding common units of limited partnership
interest in the Operating Partnership and long term incentive plan units of
limited partnership in the Operating Partnership (collectively, OP Units),
payable (a) partially in cash and (b) partially in Common Stock or
additional OP Units pursuant to elections described in this prospectus
supplement, to those holders of OP Units who make a valid election to receive
the non-cash component of such distribution in the form of Common Stock;
(2)
the tender for redemption of OP Units that holders of
currently outstanding OP Units who make a valid election to receive the
non-cash component of the distribution described in clause (1) above in
the form of additional OP Units will receive in connection with such
distribution (Distribution Units), whereby we will acquire such Distribution
Units from redeeming holders in exchange for shares of Common Stock that we
issue upon redemption if we do not elect to pay cash for the Distribution Units
tendered; or
(3)
the issuance of Common Stock in connection with
transactions described in clause (1) or (2) above to pledgees,
donees, transferees or other successors in interest of the current holders of
OP Units or Distribution Units.
The registration of shares of Common Stock pursuant to
this prospectus supplement does not necessarily mean that any of the holders of
OP Units will elect to receive Common Stock for the non-cash portion of the
Operating Partnerships distribution or exercise their redemption rights with
respect to Distribution Units, or that we will elect, in our sole and absolute
discretion, to redeem some or all of the Distribution Units for shares of
Common Stock instead of cash.
Macerich has declared a dividend of $0.60 per share of
Common Stock expected to be paid on September 21, 2009 in cash or Common
Stock, at the election of stockholders, subject to a limitation that the
aggregate amount of cash payable to stockholders will not exceed 10% of the
aggregate amount of the dividend.
Macerich is taxed as a real estate investment trust, or REIT, for
federal income tax purposes. In order to qualify as a REIT and minimize taxes,
we generally must distribute at least 90% of our annual taxable income, as
determined for federal income tax purposes, to our stockholders. In order to
comply with REIT taxable income distribution requirements, while retaining
capital and enhancing our financial flexibility, our Board of Directors
determined that the cash component of the dividend (other than cash paid in
lieu of fractional shares) will not exceed 10% in the aggregate, or $0.06 per
share.
Macerich has determined that in connection with its
dividend the Operating Partnership will make a comparable distribution of $0.60
per OP Unit (the Distribution) to unitholders of record as of the close of
business on August 12, 2009 (the Record Date). The Distribution is expected to be paid on September 21,
2009. Each OP Unitholder will receive
10% of the Distribution in cash (the Cash Limit) and has the option to elect
to receive the remaining 90% of the Distribution either (1) in shares of
Common Stock or (2) in Distribution Units, as described below under The
Election. We will pay cash in lieu of issuing any fractional shares, but cash
paid in lieu of fractional shares will not count toward the Cash Limit.
Fractional units will be paid in Distribution Units. As an alternative to
making the Distribution partially in the form of Common Stock or Distribution
Units, we reserve the right to determine, at any time up to midnight on September 20,
2009, to make the Distribution entirely in cash, notwithstanding any unitholder
elections we have received and without prior notice to unitholders.
The actual number of shares of Common Stock and/or
Distribution Units that will be issued in the Distribution will depend
primarily upon (1) unitholder elections, (2) the per share value of
the Common Stock, and (3) whether we exercise our right to pay the
Distribution entirely in cash, notwithstanding unitholder elections, all as
described in greater detail below. The
Common Stock is listed on the New York Stock Exchange under the symbol MAC.
The value per share of Common Stock for purposes of calculating the number of
shares of Common Stock and/or Distribution Units issuable as part of the
Distribution will be the volume weighted average of the trading prices of the
Common Stock on the New York Stock Exchange for the three-day period September 9,
September 10 and September 11, 2009 (with one Distribution Unit being
valued for this purpose the same as one share of Common Stock). The Distribution is expected to be paid on September 21,
2009.
If you want to make an election for payment of the
Distribution in Common Stock or Distribution Units, follow the instructions
under The Election in this prospectus supplement so that your election is
received by Macerich
prior to 5:00 P.M.,
Pacific time, on September 8, 2009
. If Macerich does not
receive a valid and properly completed election from you before that time, you
will receive the Distribution 10% in cash and 90% in Distribution Units.
Before making your election, you are urged to
carefully read the Risk Factors section of this prospectus supplement
beginning on page S-1.
Neither the U.S. Securities and Exchange Commission
(the SEC) nor any state securities commission has approved or disapproved of
these securities or determined if this prospectus supplement or prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The date of this
prospectus supplement is August 18, 2009.
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TABLE OF CONTENTS
This document consists of two parts. The first part is
this prospectus supplement, which describes the terms of the Distribution and
any potential redemption of Distribution Units and also adds to and updates
information contained in the accompanying prospectus and the documents
incorporated by reference into the prospectus. The second part is the
accompanying prospectus, which gives more general information, some of which
may not apply to the Distribution or any potential redemption of Distribution
Units. To the extent there is a conflict between the information contained in
this prospectus supplement, on the one hand, and the information contained in
the accompanying prospectus or any document incorporated by reference, on the
other hand, you should rely on the information in this prospectus supplement.
You
should rely only on the information contained in or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with information that is different from that
contained or incorporated by reference in this prospectus supplement or the
accompanying prospectus. The offering of shares of Common Stock may be
restricted by law in certain non-U.S. jurisdictions. This prospectus supplement
is not an offer to sell nor does it seek an offer to buy any shares of Common
Stock in any jurisdiction where the offer or sale is not permitted. Elections
made by any person in such a jurisdiction may be deemed invalid.
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RISK
FACTORS
In addition to other information
contained in this prospectus supplement and the accompanying prospectus, you
should carefully consider the risks described below and in the documents
incorporated by reference in this prospectus supplement before making an
investment decision. These risks are not the only ones facing our Company.
Additional risks not presently known to us or that we currently deem immaterial
may also impair our business operations. Our business, financial condition or
results of operations could be materially adversely affected by the
materialization of any of these risks. The trading price of the Common Stock
could decline due to the materialization of any of these risks, and you may
lose all or part of your investment. This prospectus supplement, the
accompanying prospectus and the documents incorporated herein by reference also
contain forward-looking statements that involve risks and uncertainties. Actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks described in the
documents incorporated herein by reference, including (i) Macerichs
Annual Report on Form 10-K, for the year ended December 31, 2008, (ii) Macerichs
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009
and June 30, 2009 and (iii) documents Macerich files with the SEC after
the date of this prospectus supplement and which are deemed incorporated by
reference in this prospectus supplement.
You should carefully consider the tax consequences of having your
Distribution Units redeemed, and of electing to receive shares of Common Stock
in lieu of Distribution Units in connection with the Distribution by the
Operating Partnership.
The exercise of your
right to require the redemption of your Distribution Units may be treated for
tax purposes as a sale of Distribution Units.
In addition, an election to receive Common Stock in connection with the
Distribution (a stock election) may be treated for tax purposes as an
issuance of OP Units by the Operating Partnership followed by a redemption of
such OP Units by the unitholder for Common Stock, or could otherwise also be
treated as a taxable sale of OP Units.
The Operating Partnership intends to treat a distribution of Common
Stock in connection with a stock election as if the U.S. Holder received OP
Units from the Operating Partnership and exchanged those OP Units for shares of
Common Stock in a sale transaction. In
addition, in order for certain holders of OP Units to elect to receive Common
Stock in the Distribution, such holders will be required to waive any claim to
indemnification for taxes resulting from any gain recognized as a result of the
stock election that such holder may otherwise have been entitled to make
pursuant to any tax indemnification agreement the holder is a party to with the
Operating Partnership. If a redemption or a stock election were treated as a sale,
this sale will be fully taxable to you, and you will be treated as realizing
for tax purposes an amount equal to the sum of (i) the cash and/or the
value of Common Stock received in the redemption or stock election plus (ii) the
amount of the Operating Partnership liabilities considered allocable to the
redeemed OP Units at the time of the redemption or stock election, including
the Operating Partnerships share of the liabilities of certain entities in
which the Operating Partnership owns an interest. Depending upon your
particular circumstances, the amount of gain recognized, or even the tax
liability resulting from that gain, could exceed the amount of cash and the
value of other property, e.g., the Common Stock, you receive. Accordingly,
unitholders may be required to fund the corresponding tax liability associated
with the redemption or the stock election from other sources. See Certain Material U.S. Federal Income Tax
ConsiderationsTax Considerations of Electing to Receive Shares of Common Stock
and Tax Treatment of Redemption of OP Units for more information on these
tax consequences.
THE
ELECTION
You will receive 10% of the Distribution in cash and
you may elect to receive the remaining 90% of the Distribution in the form of
Common Stock or Distribution Units, valued as described above. You may make
your election by choosing one of the election options in the accompanying
election form:
·
Common Stock Election.
You elect to receive payment
of 90% of the Distribution in the form of shares of Common Stock.
·
Distribution Units
Election.
You elect to receive payment of 90% of the
Distribution in Distribution Units.
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Your election may be limited by
the limitation on ownership of Common Stock, which is described below, and you
may not receive Common Stock to the extent this limitation requires that a
different allocation be made to you.
If a properly completed election
form is not received with respect to your OP Units before the deadline for
receipt by Macerich, you will receive the Distribution 10% in cash and 90% in
Distribution Units.
As an alternative to making the
Distribution in the form of cash and Common Stock or Distribution Units
pursuant to unitholder elections as described above, Macerich reserves the
right to determine, at any time up to midnight on September 20, 2009, to
make the Distribution entirely in cash, notwithstanding any elections Macerich
has received and without prior notice to holders of OP Units.
Because the per share value of the Common Stock for
purposes of determining the number of shares or units to be paid to unitholders
in the Distribution will be based on the volume weighted average of the trading
prices of the Common Stock on the New York Stock Exchange for the three-day
period September 9, September 10 and September 11, 2009 (the Calculation
Value), the market value of shares received on September 21, 2009, or the
shares underlying the Distribution Units received on September 21, 2009,
may be greater or less than their Calculation Value.
In order to make your election, please complete and
sign the accompanying election form and return it to Macerich in the enclosed
postage-prepaid, self-addressed envelope as soon as possible. For your election
to be effective, your properly completed election form must be received
by Macerich prior to 5:00 P.M., Pacific time, on September 8,
2009
. Delivery of the election form will be deemed made only when
actually received by Macerich. In all cases, you should allow sufficient time
to ensure delivery before the deadline. The submission of an election form with
respect to the Distribution will constitute your representation and warranty
that you have full power and authority to make your election.
Elections with respect to the Distribution on each
specific OP Unit may be made only by the holder of record of that unit at the
close of business on August 12, 2009, which is the record date for the
Distribution.
General
All questions as to the validity, form, eligibility
(including time of receipt) and acceptance by us of any distribution election
form will be resolved by Macerich, in Macerichs sole discretion, and Macerichs
determination as to the resolution of any such questions shall be final and
binding on all parties. Macerich reserves the absolute right to reject, in
Macerichs sole discretion, any and all election forms determined by us not to
be in proper form, not timely received, ineligible or otherwise invalid, or if
acceptance may, in the opinion of Macerichs counsel, be unlawful. Macerich
also reserve the absolute right to waive any defect or irregularity in the
election form submitted by any particular unitholder, whether or not Macerich
chooses to waive any similar defects or irregularities in the case of other
unitholders. No election will be deemed to have been validly made until all
defects and irregularities have been cured to Macerichs satisfaction or
waived. Neither Macerich nor any other person will be under any duty to give
notification of any defects or irregularities in election forms or incur any
liability for failure to give any such notification. Macerichs interpretation
of the terms and conditions of the Distribution and the terms and conditions of
unitholder elections will be final and binding.
All shares of Common Stock issued in the Distribution
will be issued only in book-entry form. This means that we will not issue any
certificates representing shares of Common Stock issued in payment of the
Distribution. On or about September 21, 2009, Computershare Trust Company
N.A., the transfer agent for the Common Stock, will issue and mail to each of
Macerichs unitholders that receives shares of Common Stock in the Distribution
a statement listing the number of shares credited to that unitholders
book-entry account.
All Distribution Units issued in the Distribution will
be issued in book-entry form. This means that we will not issue any
certificates representing Distribution Units issued in payment of the
Distribution. On or about September 21, 2009, Macerich will issue and mail
to each of Macerichs unitholders that receives units in the Distribution a
statement listing the number of Distribution Units credited to that unitholders
book-entry account.
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All payments of cash will be made by check or direct
deposit for any cash to which such unitholder is entitled (including, if
applicable, cash in lieu of fractional shares) in the Distribution.
Properly completed election forms must be delivered to
Macerich
prior to 5:00 P.M., Pacific
time, on September 8, 2009
, in the enclosed postage-prepaid,
self-addressed envelope. If you need to send the election form by overnight
courier or hand delivery, please use the following address:
Overnight
Courier or Hand Delivery:
The Macerich Company
Attn: Madonna Shannon
401 Wilshire Boulevard, No. 700
Santa Monica, California
90401
If you are an OP Unitholder and need additional
information about completing the election form or other matters relating to the
Distribution, please contact Madonna Shannon at Macerich at (310) 394-6000.
EFFECT OF OWNERSHIP LIMITATION
To maintain Macerichs qualification as a REIT for
federal income tax purposes, not more than 50% in value of our outstanding
stock may be owned, directly or indirectly, by or for five or fewer individuals
(which for this purpose include private foundations, charitable trusts and
certain other entities) at any time during the last half of any taxable year.
To maintain this qualification, and to otherwise address concerns about
concentrations of ownership of Macerichs stock, Macerichs charter restricts
ownership of more than 5% of the lesser of the number or value of our
outstanding shares of stock by any single stockholder or a group of
stockholders (with limited exceptions).
Under Macerichs charter, Macerichs Board of Directors may in its sole
discretion (subject to certain limitations) waive or modify the ownership limit
for one or more persons. Nonetheless, if you elect to receive Common Stock and
your receipt of Common Stock would cause you to exceed the applicable ownership
limit, absent a waiver or other satisfactory arrangement, you may receive OP
Units to the extent required to bring you within this ownership limit. If you
elect to receive Common Stock and it is issued to you in violation of the
applicable ownership limit, all of the remedies applicable under the ownership
limit will apply to this Common Stock. For a more detailed description of the
ownership limit and the remedies applicable thereunder, see Description of Our
Capital Stock in the accompanying prospectus.
REDEMPTION OF DISTRIBUTION UNITS
Holders of Distribution Units
Subject to the limitations set forth in the Operating Partnership Agreement, if
you receive any Distribution Units, you will have the right to redeem those
Distribution Units in whole or in part for an equal number of shares of Common
Stock, subject to adjustment in the event of certain dilutive or other capital
events. We have the right to pay you an amount of cash equal to the value of
the Common Stock otherwise issuable to you upon tender of your Distribution
Units, as determined in accordance with the Operating Partnership Agreement,
instead of issuing Common Stock to you. Macerich has determined that for
purposes of any Distribution Unit distributed on September 21, 2009 it
will waive the requirement that common units may be tendered for redemption
only in amounts of at least 2,000 common units but that any such tender
continues to be subject to all other restrictions applicable to redemptions of
common units, as set forth in the Operating Partnership Agreement.
Redemption and Conversion Procedures
A holder of Distribution Units may exercise the right
to redeem Distribution Units by providing to us an appropriate notice, as
described in the Operating Partnership Agreement. A holder may also be required
to furnish certain other certificates and forms. The Operating Partnership
Agreement establishes certain limitations on the right to redeem Distribution
Units.
Once we receive a notice of redemption with respect to
Distribution Units, we will determine whether to redeem the tendered
Distribution Units for cash or Common Stock.
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When a holder of Distribution Units redeems
Distribution Units, the holders right to receive distributions on the
Distribution Units so redeemed will cease for all periods thereafter. No
redemption can occur if delivery of Distribution Units on the specified date to
the holder seeking redemption would be prohibited under our charter, the
Operating Partnership Agreement or applicable federal or state securities laws.
DESCRIPTION OF COMMON UNITS
The material terms of the
common units, which include the Distribution Units, including a summary of
certain provisions of the Operating Partnership Agreement, as in effect as of
the date of this prospectus supplement, are set forth below. The following
description does not purport to be complete and is subject to and qualified in
its entirety by reference to applicable provisions of Delaware law and the
Operating Partnership Agreement. For a comparison of the voting and other
rights of holders of Distribution Units and our stockholders, see Comparison
of Ownership of Distribution Units and our Shares.
Rank
The common units rank
junior to the preferred OP Units issued by the Operating Partnership. Our
Company, as general partner, is authorized, in its sole discretion, to cause
the Operating Partnership to issue additional common units or other limited
partnership interests in the Operating Partnership for any partnership purpose
at any time to the limited partners or to other persons on terms established by
our Company within the boundaries set forth in the Operating Partnership
Agreement. The Operating Partnership may also issue preferred OP Units, having
such rights, preferences and other privileges, variations and designations as
our Company may determine in its sole and absolute discretion, as provided in
the Operating Partnership Agreement. The Operating Partnership Agreement
requires our Company to invest, contribute or otherwise transfer the net
proceeds of any sale of securities by our Company to the Operating Partnership
in exchange for equivalent securities of the Operating Partnership.
Voting
As the general partner of
the Operating Partnership, our Company has been granted by the limited partners
the right to vote and give consents and approvals on behalf of any absolute
majority of all common units and preferred OP Units held by the limited
partners as a class with respect to any matters that may require the vote,
consent or approval of the limited partners under the Operating Partnership
Agreement, with the exception of (i) a merger or sale of substantially all
of the Operating Partnerships assets, which would require the consent of 75%
of the outstanding units, or (ii) as otherwise provided by the terms of
any preferred OP Units.
Dividends
The Operating Partnership
Agreement generally provides that all or a portion of the net cash flow of the
Operating Partnership will be distributed from time to time (but at least
quarterly) as determined by our Company pro rata in accordance with the partners
percentage interest. Distributions to the common units rank junior to all
preferred OP Units issued by the Operating Partnership.
Liquidation Preference
The common units rank,
with respect to the payment of distributions and the distribution of amounts
upon voluntary or involuntary liquidation, dissolution or winding-up of the
Operating Partnership, junior to all classes of preferred OP Units issued by
the Operating Partnership.
Redemption
Subject to the
limitations set forth in the Operating Partnership Agreement, holders of the
common units have the right to redeem those common units in whole or in part
for an equal number of shares of our Common Stock, subject to adjustment in the
event of certain dilutive or other capital events. We have the right to pay
redeeming holders an amount of cash equal to the value of the common stock
otherwise issuable to them upon tender of their common units, as determined in
accordance with the Operating Partnership Agreement, instead of
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issuing our common stock. Any shares of our Common
Stock we issue will be subject to the ownership restrictions and limitations
set forth in Article Eighth of our charter, which is incorporated by
reference into the registration statement of which this prospectus supplement
is a part. See Description of our Capital Stock of the accompanying
prospectus.
Transfer Restrictions
The Operating Partnership
Agreement provides that, without the consent of our Company, as the general
partner, limited partners may not transfer, assign, sell, encumber or otherwise
dispose of their interest in the Operating Partnership, other than to
affiliates who agree to assume the obligations of the transferor under the
Operating Partnership Agreement.
COMPARISON
OF OWNERSHIP OF DISTRIBUTION UNITS AND OUR SHARES
The information below highlights a number of the
significant differences and similarities between the Operating Partnership and
our Company relating to, among other things, form of organization, investment
objectives, policies and restrictions, asset diversification, capitalization,
management structure, duties, liability, exculpation and indemnification of the
general partner and the directors and investor voting and other rights. These
comparisons are intended to assist unitholders in understanding how the
unitholders investment will be changed if the unitholder redeems Distribution
Units and receives stock in our Company. THE DISCUSSION BELOW IS ONLY A SUMMARY
OF THESE MATTERS, AND A UNITHOLDER SHOULD CAREFULLY REVIEW THE BALANCE OF THIS
PROSPECTUS FOR ADDITIONAL IMPORTANT INFORMATION.
Form of Organization and Purposes
Operating Partnership
The Operating Partnership is a limited partnership
organized under the laws of the State of Delaware. The Operating Partnership
primarily owns interests in regional malls and community shopping centers. The
Operating Partnership may also invest in other types of assets and in any
geographic areas that our Company deems appropriate. Our Company, as general
partner of the Operating Partnership, conducts the business of the Operating
Partnership in a manner intended to permit our Company to be classified as a
REIT under the Internal Revenue Code of 1986, as amended (the Code).
Our Company
Our Company is a Maryland corporation organized under
the Maryland General Corporation law. We are a self-administering and
self-managed REIT. Although our Company currently intends to continue to
qualify as a REIT under the Code and to operate as a self-administered REIT,
our Company is not under any contractual obligation to continue to qualify as a
REIT, and our Company may discontinue this qualification or mode of operation
in the future. Although our Company has no intention of ceasing to qualify as a
REIT, some other real estate companies that previously operated as REITs have
chosen to cease to qualify as REITs. Except as otherwise permitted in the
Operating Partnership Agreement, our Company is obligated to conduct its
activities through the Operating Partnership. Our Company is the sole general
partner of the Operating Partnership.
Nature of Investment
Operating Partnership
The Distribution Units constitute equity interests
entitling each limited partner in the Operating Partnership to his or her
proportionate share of cash distributions made to the limited partners in the
Operating Partnership, consistent with the class preferences provided for in
the Operating Partnership Agreement. See Description of Common Units for
further information about distributions to limited partners. The Distribution
Units entitle their holders to participate in the growth and income of the
Operating Partnership. The Operating Partnership Agreement grants our Company
broad discretion to determine the amount of distributions by the Operating
Partnership. Except in limited circumstances, we generally expect the Operating
Partnership to retain and reinvest proceeds of any asset
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sales or refinancings, or to use those proceeds to pay down debt or for
general partnership purposes, rather than to distribute the proceeds to its
partners, including our Company. Thus, limited partners in the Operating
Partnership will generally not be able to realize upon their investments
through distributions of sale and refinancing proceeds. Instead, limited
partners will be able to realize upon their investments primarily by redeeming
Distribution Units and, if our Company issues stock upon redemption of the
units, by subsequently selling the stock.
Our Company
Our Common Stock constitutes equity interests in our
Company. For a more detailed description of our Common Stock, see Description
of Common Stock and Description of Capital Stock in the accompanying
prospectus. Our Company is entitled to receive its proportionate share of
distributions made by the Operating Partnership with respect to the common
units owned by it. The dividends payable to holders of our stock will generally
correspond to the distributions received by our Company from the Operating
Partnership. However, dividends payable by our Company are only paid if, when
and as authorized by the Board of Directors and declared by our Company out of
assets legally available to pay dividends. Each holder of Common Stock is
entitled to his or her proportionate share of any dividends or distributions
paid with respect to the Common Stock held, subject to the preferences on dividends
and distributions of any preferred stock issued and outstanding. To qualify as
a REIT, our Company must distribute to its stockholders at least 90% of its
taxable income excluding capital gains, and corporate income tax will apply to
any taxable income including capital gains not distributed.
Length of Investment
Operating Partnership
The Operating Partnership has a stated term expiring
on December 31, 2092 or earlier upon the happening of certain events,
including our election if certain conditions described in the Operating
Partnership Agreement are satisfied, any event which causes us to cease to be
the general partner of the Operating Partnership (unless the Operating
Partnership is continued in accordance with applicable law), disposition of all
of the Operating Partnerships assets, or dissolution of the Operating
Partnership by a court of competent jurisdiction. The Operating Partnership has
no specific plans for disposition of all of its assets. The Operating
Partnership is a vehicle for taking advantage of future investment
opportunities that may be available, primarily in the real estate market.
Our Company
Our Company has a perpetual term, and we intend to
continue our operations for an indefinite time period. Under our charter, the
dissolution of our Company must be approved by the affirmative vote of the
holders of not less than a majority of the shares of Common Stock entitled to
vote on dissolution. Our Company has an indirect interest in the properties and
assets owned by the Operating Partnership. Our stockholders are expected to
realize liquidity of their investments by trading their Common Stock on the New
York Stock Exchange.
Liquidity
Operating Partnership
The Distribution Units have not been registered as a
class under the Securities Act of 1933 (the Securities Act) or any state
securities laws and therefore may not be sold, pledged, hypothecated or
otherwise transferred unless first registered under the Securities Act and any
applicable state securities laws, or unless an exemption from registration is
available. Distribution Units also may not be sold or otherwise transferred
unless the other transfer restrictions discussed below have been satisfied. Our
Company and the Operating Partnership do not intend to register the Distribution
Units under the Securities Act or any state securities laws.
The Operating Partnership Agreement provides that,
without the consent of our Company, limited partners may not in any way dispose
of their interest in the Operating Partnership, other than to affiliates who
agree to assume the obligations of the transferor under the Operating
Partnership Agreement. Limited partners may be able to redeem their
Distribution Units for cash or other securities of our Company.
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Our Company
Any Common Stock issued upon redemption of any
outstanding Distribution Units will be registered under the Securities Act and
be freely transferable, as long as the stockholder complies with the ownership
limits in our charter. The Common Stock is currently listed on the New York
Stock Exchange under the ticker symbol MAC. The future breadth and strength
of this secondary market for the Common Stock will depend, among other things,
upon the amount of Common Stock outstanding, our Companys financial results
and prospects, the general interest in our Companys real estate investments
and real estate investments in general, and our Companys dividend yield
compared to that of other debt and equity securities.
Potential Dilution of Rights
Operating Partnership
Subject to the rights of the preferred OP Units, our
Company, as general partner of the Operating Partnership, is authorized, in its
sole discretion and without limited partner approval, to cause the Operating
Partnership to issue additional limited partnership interests and other
ownership interests for any partnership purpose at any time to the limited
partners or other persons on terms established by our Company. Our Company can
also cause the Operating Partnership to issue additional OP Units to our
Company, subject to certain terms and conditions. The interests of the limited
partners in any cash available for distribution may be diluted if our Company
causes the Operating Partnership to issue additional OP Units or other
ownership interests.
Our Company
The Board of Directors of our Company may, in its
discretion, authorize the issuance of additional Common Stock and other equity
securities of our Company, including one or more classes or series of common or
preferred stock, with the voting rights, dividend rates, preferences,
subordinations, conversion or redemption prices or rights, maturity dates,
distribution, exchange or liquidation rights or other rights that the Board of
Directors may specify at the time. The issuance of additional equity
securities, conversion of outstanding OP Units and other partnership units, and
the exercise of employee stock options and stock appreciation rights will
result in the dilution of the interests of the stockholders. As permitted by
applicable Maryland law, our charter contains a provision permitting the Board
of Directors, without any action by the stockholders of our Company, to authorize
the issuance of additional stock. Under our charter, although our stockholders
do not have any preemptive rights to subscribe to any securities of our
Company, the Board of Directors is authorized to create such rights.
Management Control
Operating Partnership
The Operating Partnership Agreement provides that a
decision to merge the Operating Partnership, sell all or substantially all of
its assets or liquidate must be approved by the holders of 75% of the
outstanding OP Units. Depending on the percentage of the outstanding OP Units
owned by us at the time, the concurrence of at least some of the other holders
of OP Units may be required to approve any merger, sale of all or substantially
all of the assets, or liquidation of the Operating Partnership. As of the date
of this prospectus supplement, we own 87% of the outstanding OP Units. Other
than the foregoing, all management powers over the business and affairs of the
Operating Partnership are vested in our Company as the general partner of the Operating
Partnership, and no limited partner of the Operating Partnership has any right
to participate in or exercise control or management power over the business and
affairs of the Operating Partnership. Our Company may not be removed as general
partner by the limited partners with or without cause.
Our Company
The Board of Directors has exclusive control over the
management of our Companys business and affairs, limited only by express
restrictions in our charter and bylaws, the Operating Partnership Agreement and
applicable law. The Board of Directors is currently divided into three classes
of directors with each class constituting one-third of the total number of
directors. Prior to our 2009 annual meeting, one class of our directors was
elected at each
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annual meeting of stockholders to serve a three-year term. At our 2008 annual meeting, our stockholders
approved an amendment to our charter to declassify our Board. As a result of
this charter amendment, a declassified Board structure will be phased in as
follows: (a) current directors will continue to serve the remainder of
their three-year terms, and (b) starting with the 2009 annual meeting,
directors will be elected annually, so that by our 2011 annual meeting of
stockholders, all directors will be elected annually.
The policies adopted by the Board of Directors may be
altered or eliminated without a vote of the stockholders. Stockholders have
limited rights to make proposals that will be considered and voted on at
stockholder meetings, including the right to nominate directors for election.
Stockholder proposals must be approved by the requisite number of stockholder
votes and depending on the type of proposal they may not be binding on our
Company. Accordingly, except for their vote in the elections of directors and
limited rights to make proposals for consideration at stockholder meetings,
stockholders have no control over the ordinary business policies of our
Company.
Because there are Board of Director elections at our
Companys annual meeting and the stockholders have limited rights to make
proposals for consideration at stockholder meetings, the stockholders have
greater control over the management of our Company than the limited partners
have over the Operating Partnership.
Duties of General Partner and Directors
Operating Partnership
Under Delaware law, our Company, as the general
partner of the Operating Partnership, is accountable to the Operating Partnership
as a fiduciary and, consequently, is required to exercise good faith and
integrity in all of its dealings with respect to partnership affairs. However,
under the Operating Partnership Agreement, our Company is expressly under no
obligation to consider the separate interests of the limited partners in
deciding whether to cause the Operating Partnership to take or decline to take
any actions, and our Company is not liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by limited partners as
a result of our Companys decisions, provided that the general partner has
acted in good faith and in accordance with the Operating Partnership Agreement.
Our Company
Under Maryland law, the directors of our Company are
required to perform their duties in good faith, in a manner that they
reasonably believe to be in the best interests of the corporation and with the
care of an ordinarily prudent person in a like position under similar
circumstances. The Maryland General Corporation Law presumes that a directors
standard of care has been satisfied.
Management Liability and Indemnification
Operating Partnership
As a matter of Delaware law, the general partner has
liability for the payment of the obligations and debts of the Operating
Partnership unless this liability is limited by the terms of the obligations or
debt. Under the Operating Partnership Agreement, the Operating Partnership has
agreed to indemnify our Company and any director or officer of our Company from
and against all losses, claims, damages, liabilities, costs and expenses
(including attorneys fees and costs), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operation of the Operating Partnership as set forth in the Operating
Partnership Agreement in which our Company or any director or officer of our
Company may be involved, unless the act or omission was in bad faith or the
result of active and deliberate dishonesty and was material to the action; the
party seeking indemnification received an improper personal benefit; or in the
case of any criminal proceeding, the party seeking indemnification had
reasonable cause to believe the act or omission was unlawful. Our Operating
Partnership Agreement and charter each provide that these indemnification
rights are non-exclusive of any other rights to which those seeking
indemnification may be entitled. The Operating Partnership Agreement also
provides for indemnification of the limited partners on substantially similar
terms.
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The Operating Partnership may advance reasonable
expenses incurred by an indemnified party before the final disposition of the
proceeding, upon receipt by the Operating Partnership of an affirmation by the
indemnified person of the indemnified persons good faith belief that it is
entitled to indemnification and an undertaking by the indemnified person to
repay the amount if it is ultimately adjudged not to have been entitled to
indemnification.
Our Company
Our charter includes provisions that limit the liability
of directors and officers to us and to our stockholders for money damages to
the fullest extent permitted under Maryland law. Our charter also requires us
to indemnify our present and former directors and officers to the maximum
extent permitted under Maryland law. These provisions apply to officers and
directors acting in their capacity as officers and directors of our Company or
of any other entity at the request of our Company. Our charter also requires us
to make payments to our officers and directors for expenses they incur in
advance of final determination of any claim or dispute for which they are
seeking indemnification, in accordance with the procedures and to the full
extent permitted by Maryland law. In addition, we have entered into indemnification
agreements with some of our officers and directors.
The Maryland General Corporation Law permits a
Maryland corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities, unless it is established that the act or omission of the director
or officer was material to the matter giving rise to the proceeding and (a) was
committed in bad faith or (b) was the result of active and deliberate
dishonesty; the director or officer actually received an improper personal
benefit in money, property or services; or in the case of any criminal
proceeding, the director or officer had reasonable cause to believe that the
act or omission was unlawful.
However, under the Maryland General Corporation Law, a
Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis
that personal benefit was improperly received, unless in either case a court
orders indemnification and then only for expenses. In addition, the Maryland
General Corporation Law permits a corporation to advance reasonable expenses to
a director or officer upon the corporations receipt of a written affirmation
by the director or officer of his good faith belief that he has met the
standard of conduct necessary for indemnification by the corporation, and a
written undertaking by him or on his behalf to repay the amount paid or
reimbursed by the corporation if it is ultimately determined that the standard
of conduct was not met.
Liability of Investors
Operating Partnership
Under the Operating Partnership Agreement and
applicable state law, the liability of the limited partners for the Operating
Partnerships debts and obligations generally is limited to the amount of their
investments in the Operating Partnership, together with their interest in the
Operating Partnerships undistributed income, if any. Also, if any limited
partner has guaranteed the Operating Partnerships indebtedness, as provided by
the Operating Partnership Agreement, the limited partner would be liable to the
extent provided in its guaranty.
Our Company
Under the Maryland General Corporation Law, our
stockholders are not liable for our Companys debts and obligations. Their risk
of loss is limited to the amount of their investments in our Company, together
with their interest in our Companys undistributed income, if any. The Common
Stock, upon issuance in accordance with this prospectus supplement, will be
fully paid and nonassessable. Thus, the limited partners in the Operating
Partnership and our stockholders have substantially the same limited personal
liability.
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Voting Rights
Operating Partnership
Under the Operating Partnership Agreement, the limited
partners have limited voting rights. The limited partners do not have the right
to vote on any proposed sale, exchange, transfer or disposal of assets except
when all or substantially all of the assets of the Operating Partnership are
being transferred, and then only to the extent that our Company does not own at
least 75% of the OP Units. In addition, the limited partners do not have the
right to propose amendments to the Operating Partnership Agreement, and certain
types of amendments can be approved without the vote of the limited partners.
However, certain amendments that would change the limited liability of a
limited partner or change specified provisions in the Operating Partnership
Agreement with respect to distributions and allocations or the right to redeem
units must be approved by each limited partner adversely affected by the
amendment.
Our Company
The business and affairs of our Company are managed
under the direction of the Board of Directors, which currently consists of nine
members. Prior to our 2009 annual
meeting, one class of our directors was elected at each annual meeting of
stockholders to serve a three-year term.
At our 2008 annual meeting, our stockholders approved an amendment to our
charter to declassify our Board. As a result of this charter amendment, a
declassified Board structure will be phased in as follows: (a) current
directors will continue to serve the remainder of their three-year terms, and (b) starting
with the 2009 annual meeting, directors will be elected annually, so that by
our 2011 annual meeting of stockholders, all directors will be elected
annually. Each share of Common Stock has
one vote. Maryland law requires that certain major corporate transactions,
including most amendments to our charter, may be consummated only with the
approval of stockholders. Our bylaws and Maryland law permit any action that
may be taken at a meeting of stockholders to be taken without a meeting if a
written consent to the action is signed by holders of all outstanding shares of
capital stock having a right to vote on the action. Maryland law also permits
the charter of a Maryland corporation to contain a provision permitting action
to be taken by the written or electronic consent of the holders of Common Stock
entitled to cast not less than the minimum number of votes that would be
necessary to take the action at a stockholders meeting. Our charter does not
contain such a provision.
Amendment of the Operating Partnership Agreement
or our Charter
Operating Partnership
Our Company generally has the power, without the
consent of any limited partners, to amend the Operating Partnership Agreement
as may be required to reflect any changes that our Company deems necessary or
appropriate in its sole discretion, provided that the amendment does not
adversely affect or eliminate any right granted to a limited partner that is
protected by special voting provisions. See Voting Rights.
Our Company
Under the Maryland General Corporation Law and our
charter, most amendments to our charter will require the affirmative vote of
the holders of at least two-thirds of the capital stock entitled to vote on the
amendment. However, subject to the rights of any class or series of preferred
stock, the Board of Directors may supplement the charter of our Corporation to
designate new classes or series of common or preferred stock without
stockholder approval.
Issuance of Additional Equity
Operating Partnership
The Operating Partnership is generally authorized to
issue OP Units and other partnership interests, including partnership interests
of different series or classes, as determined by our Company as the general
partner in its sole discretion. The Operating Partnership may issue OP Units
and other partnership interests to our Company as the general partner, as long
as these interests are issued to all of the partners in proportion to their
respective interests in the Operating
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Partnership. The Operating Partnership may also issue OP Units to our
Company in connection with a new issuance of securities of our Company,
provided that the proceeds of the new issuance of securities of our Company are
contributed to the Operating Partnership and the OP Units issued to our Company
have terms substantially identical to the new securities being issued by our
Company.
Our Company
The Board of Directors may authorize the issuance, in
its discretion, of additional Common Stock and other equity securities of our
Company, including one or more classes of common or preferred stock, with such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption as the Board of Directors may establish.
The Operating Partnership and our Company both have
substantial flexibility to raise equity through the sale of additional OP
Units, shares of capital stock or other securities to finance the business and
affairs of the Operating Partnership.
Borrowing Policies
Operating Partnership
The Operating Partnership has no restrictions on
borrowings, and our Company as general partner has full power and authority to
borrow money on behalf of the Operating Partnership.
Our Company
Our Company is not restricted under its charter from
borrowing. However, under the Operating Partnership Agreement, our Company, as
general partner, may not borrow money, except for the purpose of advancing
funds to the Operating Partnership for any proper purpose of the Operating
Partnership and except for certain loans from the Operating Partnership to our
Company.
Permitted Investments
Operating Partnership
The Operating Partnerships purpose is to conduct any
business that may be lawfully conducted by a Delaware limited partnership,
provided that this business is to be conducted in a manner that permits our
Company to be qualified as a REIT, unless our Company ceases to qualify as a
REIT for any reason. The Operating Partnership is authorized to perform any and
all acts for the furtherance of the purposes and business of the Operating
Partnership, including making investments or entering into joint ventures or
partnerships.
Our Company
Under its charter, our Company may engage in any
lawful activity permitted by the Maryland General Corporation Law. Under the
Operating Partnership Agreement, our Company, as general partner, must conduct
all of its business activities through the Operating Partnership. However, our
Company, as the general partner, is also permitted to hold, directly or
indirectly, up to a 1% interest in certain existing entities and may acquire an
interest in other additional properties but only if the Operating Partnership
is acquiring at least 99 times our proposed participation in the property.
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CERTAIN
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE INTERNAL REVENUE
SERVICE (THE IRS), WE INFORM YOU THAT ANY U.S. TAX ADVICE CONTAINED IN
THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY ATTACHMENTS) IS NOT INTENDED OR
WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF (I) AVOIDING
PENALTIES UNDER THE CODE OR (II) PROMOTING, MARKETING OR RECOMMENDING TO
ANOTHER PARTY ANY TRANSACTION OR MATTER ADDRESSED HEREIN.
The following discussion summarizes certain material
U.S. federal income tax considerations that may be relevant to a U.S. Holder
(as defined below) of OP Units who receives additional Distribution Units or
shares of Common Stock in connection with the Distribution. This summary is based upon the Code, the
regulations promulgated by the U.S. Treasury Department, rulings and other
administrative pronouncements issued by the IRS, and judicial decisions, all as
currently in effect, and all of which are subject to differing interpretations
or to change, possibly with retroactive effect. No assurance can be given
that the IRS would not assert, or that a court would not sustain, a position
contrary to any of the tax consequences described below. The summary is also
based upon the assumption that the operation of the Company and the Operating
Partnership, and each of their subsidiaries and other lower-tier and affiliated
entities, will in each case be in accordance with its applicable organizational
documents. This summary is for general information only and does not purport to
discuss all aspects of U.S. federal income taxation which may be important to a
particular investor in light of its specific investment or tax circumstances,
or if a particular investor is subject to special tax rules (for example,
if a particular investor is a financial institution, broker-dealer, insurance
company, tax-exempt organization, partnership, grantor trust or other
pass-through entity (or person holding OP Units through a partnership, grantor
trust or other pass-through entity) or, except to the extent discussed below, a
Non-U.S. Holder (as defined below) of OP Units, or if an investor received his
OP Units in connection with providing services to the Company or the Operating
Partnership, as determined for U.S. federal income tax purposes). Except
to the extent discussed below under Non-U.S. Holders, this discussion only
applies to unit holders that provide an affidavit to the Operating Partnership
at the time their OP Units are redeemed (or at the time a holder receives
Common Stock in connection with the Distribution), accurately stating, under
penalties of perjury, the holders taxpayer identification number and that the
holder is not a foreign person. This
summary also assumes that OP Units are held as capital assets. No advance
ruling has been or will be sought from the IRS, and no opinion of counsel will
be received, regarding the U.S. federal, state, local or foreign tax
consequences discussed herein. The U.S. federal income tax consequences to a
holder of OP Units that receives additional Distribution Units or shares of
Common Stock depends in some instances on determinations of fact and
interpretations of complex provisions of U.S. federal income tax law. No
clear precedent or authority may be available on some questions. This
summary supplements the discussion of Certain United States Federal Income Tax
Considerations in the accompanying prospectus.
If a partnership (including any entity or arrangement
treated as a partnership for U.S. federal income tax purposes) holds OP Units,
the tax treatment of such partnership, or a partner in the partnership,
generally will depend on the status of the partner and the activities of the
partnership. Partnerships holding OP
Units, and persons that are partners in partnerships holding OP Units, should
consult their own tax advisors regarding the tax consequences of the
transactions described herein.
As used herein, a U.S. Holder is a beneficial owner
of OP Units that is, for U.S. federal income tax purposes, (a) an
individual citizen or resident of the United States, (b) a corporation (or
other entity treated as a corporation for U.S. federal income tax purposes)
created or organized under the laws of the United States, a state therein or
the District of Columbia, (c) an estate the income of which is subject to
U.S. federal income taxation regardless of its source, or (d) a trust (i) if
a U.S. court is able to exercise primary supervision over the trusts
administration and one or more United States persons, as defined under Section 7701(a)(30)
of the Code, have authority to control all the trusts substantial decisions or
(ii) that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person. A Non-U.S. Holder means
a beneficial owner of OP Units (other than an entity treated as a partnership
for U.S. federal income tax purposes) that, for U.S. federal income tax
purposes, is a non-resident alien individual, foreign corporation, foreign
estate or foreign trust.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S.
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE RECEIPT OF
DISTRIBUTION UNITS
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OR SHARES OF COMMON STOCK IN CONNECTION WITH THE DISTRIBUTION AS WELL
AS THE TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF OP UNITS OR
COMMON STOCK, INCLUDING THE EXCHANGE OR REDEMPTION OF OP UNITS IN LIGHT OF
THEIR PARTICULAR CIRCUMSTANCES.
Allocation of Taxable Income
A U.S. Holder will be required to report on such
holders U.S. federal income tax return for its taxable year the full amount of
the Operating Partnerships income, gain, loss and deduction allocated to such
holder under the partnership agreement of the Operating Partnership, regardless
of whether the U.S. Holder receives cash and Distribution Units or cash and
shares of Common Stock in connection with the Distribution. Accordingly, a U.S. Holder is expected to be
allocated taxable income and gain in the current year in excess of the cash
distributed to such holder by the Operating Partnership, and a U.S. Holders
tax liability for the year in respect of its interest in the Operating
Partnership is likely to exceed such holders cash distributions. In such event, a U.S. Holder will have to
utilize other means to satisfy its tax liability.
Tax Considerations Relating to Cash Distribution
A portion of the distribution (10%) to be made by the
Operating Partnership will consist of cash.
In general, distributions of money by the Operating Partnership to a
U.S. Holder (including deemed distributions resulting from decreases in a
holders share of Operating Partnership liabilities) will not be subject to tax
except to the extent they exceed the U.S. Holders federal income tax basis in
its OP Units, in which case such holder would generally recognize a gain to the
extent of such excess. Subject to
certain rules under Section 751 of the Code, such gain would
generally be capital in nature. See Basis
of OP Units below for information about the tax basis of OP Units.
Tax Considerations of Electing to
Receive Distribution Units
If a U.S. Holder elects to receive Distribution Units
in the Distribution, a distribution of Distribution Units to such holder
generally would not be expected to be a taxable transaction. It is possible, however, that a distribution
of Distribution Units to U.S. Holders could result in certain holders having a
different capital account balance in respect of their OP Units than other
holders, including the Company in its capacity as a holder of OP Units. In this event, the Operating Partnership may
be required to specially allocate items of income, gain, loss and deduction to
align the holders capital accounts in a manner that reflects the economic
arrangements of the holders, which may increase allocations of taxable income
to one or more holders and decrease allocations of taxable income to other holders
following the Distribution.
Alternatively, the IRS could assert that a capital shift has occurred
among the holders, which may result in the creation and recognition of taxable
income for one or more holders upon the Distribution. U.S. Holders are urged to consult their tax
advisors regarding the economic and tax consequences to them of electing to
receive Distribution Units.
Tax Considerations of Electing to
Receive Shares of Common Stock
If a
U.S. Holder instead elects to receive shares of Common Stock in connection with
the Distribution, such election may be treated for tax purposes as an issuance
of OP Units by the Operating Partnership followed by a redemption of such OP
Units by the holder for Common Stock, or could otherwise also be treated as a
taxable sale of OP Units. The Operating
Partnership intends to report such distribution of Common Stock as if the U.S.
Holder received OP Units from the Operating Partnership in the Distribution and
exchanged those units for shares of Common Stock (a deemed redemption). As such, a U.S. Holder that elects to receive
shares of Common Stock in connection with the Distribution should consider the
tax consequences of a deemed redemption, including the possible recognition of
income in connection with such holders negative capital account, if any, in
its OP Units. (See Tax Treatment of Redemption of OP Units below.) Depending upon a U.S. Holders particular
circumstances, the amount of gain recognized, or even the tax liability
resulting from that gain, could exceed the amount of cash and the value of
other property, e.g., the Common Stock, received. Accordingly, U.S. Holders may be required to
fund the corresponding tax liability associated with the stock election from
other sources.
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Notwithstanding the Operating Partnerships treatment
of a distribution of Common Stock as a deemed redemption as described above,
alternative tax characterizations are possible.
For example, one possibility is that the distribution of Common Stock
could be treated as a distribution of marketable securities, which would
generally be treated under the Code in the same manner as a distribution of
cash. (See Tax Considerations Relating
to Cash Distribution above).
To maintain the Companys
qualification as a REIT for U.S. federal income tax purposes, not more than 50%
in value of the Companys outstanding stock may be owned, directly or
indirectly, by or for five or fewer individuals (which for this purpose
include private foundations, charitable trusts and certain other entities) at
any time during the last half of any taxable year. To maintain this
qualification, and to otherwise address concerns about concentrations of
ownership of the Companys stock, the Companys charter restricts ownership of
more than 5% of the lesser of the number or value of the Companys outstanding
shares of stock by any single stockholder or a group of stockholders (with
limited exceptions). Under the Companys
charter, the Companys board of directors may in its sole discretion (subject
to certain limitations) waive or modify the ownership limit for one or more
persons. Nonetheless, if a holders receipt of Common Stock would cause such
holder to exceed the applicable ownership limit absent a waiver or other
satisfactory arrangement, the holder may receive OP Units to the extent
required to comply with this ownership limit.
If a holder elects to receive Common Stock and it is issued to such
holder in violation of the applicable ownership limit, all of the remedies
applicable under the ownership limit will apply to such Common Stock.
In addition, in order for
certain holders of OP Units to elect to receive Common Stock in the
Distribution, such holders will be required to waive any claim to
indemnification for taxes resulting from any gain recognized as a result of the
stock that such holders may otherwise have been entitled to make pursuant to
any tax indemnification agreement the holders entered into with the Operating
Partnership upon its contribution of property to the Operating Partnership.
For an
additional discussion regarding the U.S. federal income tax considerations of
ownership and disposition of Common Stock, see the discussion of Certain
United States Federal Income Tax Considerations in the accompanying
prospectus. This discussion does not purport to deal with all aspects of
taxation that may be relevant to particular U.S. Holders in light of their
personal investment or tax circumstances.
U.S. Holders are urged to consult their tax advisers regarding the
specific U.S. federal, state and local, and foreign income and other tax
consequences of electing to receive Common Stock in connection with the
Distribution and the acquisition, holding and disposition of such Common Stock
generally.
Tax Treatment of
Redemption of OP Units
If the Operating Partnership were to redeem OP Units
and if the Company were to satisfy that redemption with shares of Common Stock,
the partnership agreement for the Operating Partnership provides that the
Company, the Operating Partnership, and the holder will treat the redemption as
a sale of OP Units to the Company at the time the OP Units are redeemed. This
sale will be fully taxable to the holder. See Tax Treatment of Disposition of
OP Units by Holders Generally below.
If, instead, the Operating Partnership were to redeem
all of a U.S. Holders OP Units for cash, and such cash was not contributed by
the Company to the Operating Partnership for that purpose, the tax consequences
to the U.S. Holder would generally be as
described under Tax Treatment of Disposition of OP Units by Holders Generally
below. If, however, the Operating Partnership redeems less than all of a U.S.
Holders OP Units, such holder would recognize taxable gain only to the extent
that the amount the U.S. Holder would be treated as receiving (including the
cash plus the reduction, if any, of such holders share of the Operating Partnership
liabilities resulting from the redemption) exceeded the U.S. Holders adjusted
basis in all of its OP Units immediately before the redemption, and the U.S.
Holder would not be permitted to recognize any loss in respect of the
redemption.
Potential Application
of Disguised Sale Regulations to a Holders Original Contribution of Property
for OP Units upon a Redemption or Deemed Redemption of OP Units
In addition to the tax considerations of electing to
receive Common Stock in connection with the distribution discussed above
(including the treatment of such election as a deemed redemption treated as a
sale), if a
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U.S. Holder originally contributed property (including for this purpose
a partnership interest) to the Operating Partnership in exchange for OP Units,
a distribution of cash or Common Stock to the U.S. Holder (including upon a
redemption or deemed redemption of OP Units) may result in a disguised sale
of that contributed property. The Code and the Treasury regulations under the
Code generally provide that a holders contribution of property to the
Operating Partnership and a simultaneous or subsequent transfer of money or
other consideration from the Operating Partnership to the holder, including the
partnerships assumption of a liability or taking the property subject to a
liability, may be treated as a sale, in whole or in part, of the property by
the holder to the partnership. Further, the Treasury regulations provide
generally that, in the absence of an applicable exception, if the Operating
Partnership transfers money or other consideration (such as Common Stock) to a
holder within two years after the holder contributed property to the
partnership, the transactions will be presumed to be a sale of the contributed
property unless the facts and circumstances clearly establish that the
transfers do not constitute a sale. The Treasury regulations also provide that
if more than two years have passed between the time when a holder contributed
property to the partnership and the time when the partnership transferred money
or other consideration (such as Common Stock) to the holder, the transactions
will be presumed not to be a sale unless the facts and circumstances clearly
establish that the transfers constitute a sale.
Accordingly, if the Operating Partnership distributes
cash or Common Stock (including upon a redemption or deemed redemption of a
U.S. Holders OP Units), the IRS could contend that the distribution of cash or
Common Stock should be treated as part of a disguised sale of the original
contribution property because the U.S. Holder will receive cash or Common
Stock, as applicable, after having contributed property to the Operating
Partnership. If disguised sale treatment were to apply in whole or in part to
the original contribution and subsequent distribution of cash or Common Stock,
such holder would be treated for U.S. federal income tax purposes as if, on the
date of the holders contribution of property to the Operating Partnership, the
Operating Partnership transferred to the holder, in addition to any OP Units
not treated as part of the disguised sale, an obligation to pay the holder the
amount of the later distribution. In that case, the holder may be required
to recognize gain on the disguised sale in such earlier year and/or may have a
portion of the proceeds recharacterized as interest or be required to pay an
interest charge on any tax due.
Tax
Treatment of Disposition of OP Units by Holders Generally
If a U.S. Holder redeems OP Units in a manner that is
treated as a sale of the OP Units (including with respect to a distribution to
a unit holder of Common Stock by the Operating Partnership that is treated as a
deemed redemption), the U.S. Holders gain or loss from the redemption will
generally be equal to the difference between:
·
the amount realized for tax purposes; and
·
the U.S. Holders tax basis in the OP Units.
The amount realized will generally be the sum of:
·
the cash and fair market value of other property
received, including any Common Stock; plus
·
the reduction of the portion of the Operating
Partnerships liabilities allocable to the OP Units redeemed (or deemed
redeemed).
The amount of Operating Partnership liabilities
allocable to the OP Units redeemed (or deemed redeemed) will include the
Operating Partnerships share of the liabilities of certain entities in which
it owns an interest. See Basis of OP Units below for information about the
tax basis of OP Units.
A U.S. Holder will generally recognize gain to the
extent that the amount realized exceeds the U.S. Holders basis in the OP Units
redeemed or deemed redeemed. The amount of gain recognized or the tax liability
resulting from the gain could exceed the amount of cash and the value of any
other property, including Common Stock, received upon the redemption (or deemed
redemption) of the OP Units. A U.S. Holders adjusted tax basis in any Common Stock
received in exchange for OP Units will be the fair market value of those shares
on the date of the exchange. Similarly,
a U.S. Holders holding period in such shares will begin following the
exchange. The use of any losses recognized upon an exchange is subject to a
number of limitations set forth in the Code.
S-15
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Except as described below, any gain recognized upon a
redemption (or deemed redemption) of OP Units will be treated as gain
attributable to the sale or disposition of a capital asset. To the extent,
however, that the amount realized upon the redemption (or deemed redemption) of
an OP Unit attributable to a U.S. Holders share of unrealized receivables of
the Operating Partnership, as defined in Section 751 of the Code, exceeds
the basis attributable to those assets, this excess will be treated as ordinary
income. Unrealized receivables include, to the extent not previously included
in the Operating Partnerships income, any rights to payment for services
rendered or to be rendered. Unrealized receivables also include amounts that
would be subject to recapture as ordinary income if the Operating Partnership
had sold its assets at their fair market value at the time of the redemption of
an OP Unit.
For non-corporate U.S. Holders, the current maximum
rate of U.S. federal income tax on the net capital gain from the sale or
exchange of a capital asset held for more than one year is 15%. The maximum
rate for net capital gains attributable to the sale of depreciable real
property held for more than one year is 25% to the extent of the prior
deductions for depreciation that are not otherwise recaptured as ordinary
income under the depreciation recapture rules described above.
Basis
of OP Units
In general, if a U.S. Holder received OP Units in
exchange for contributing an interest in a partnership or for other property,
the holder has an initial tax basis in the OP Units equal to the holders basis
in the contributed partnership interest or other property, as applicable. The
U.S. Holders basis in OP Units generally is increased by:
·
the holders share of the Operating Partnerships
taxable and tax-exempt income; and
·
increases in the holders share of the liabilities of
the Operating Partnership, including the Operating Partnerships share of the
liabilities of some entities in which it owns an interest.
Generally, a U.S. Holders basis in OP Units is decreased by:
·
the holders share of Operating Partnership
distributions;
·
decreases in the holders share of liabilities of the
Operating Partnership, including the Operating Partnerships share of the
liabilities of some entities in which it owns an interest;
·
the holders share of losses of the Operating
Partnership; and
·
the holders share of nondeductible expenditures of
the Operating Partnership that are not chargeable to capital.
However, a U.S. Holders
basis will not decrease below zero.
If a U.S. Holder receives additional Distribution
Units in the Distribution, the receipt of additional Distribution Units alone
will not affect such holders aggregate basis in his interest in the Operating
Partnership. Rather, such holders basis in his OP Units prior to such
distribution of additional Distribution Units will generally be spread ratably
among all of the OP Units held by such holder following the distribution of the
additional Distribution Units.
Tax Reporting and Withholding
Information concerning a redemption or deemed
redemption may be required to be reported to the IRS. The Operating Partnership will be required to
withhold any applicable U.S. federal, state and local taxes from the
distribution by the Operating Partnership.
If the amount required to be withheld with respect to a unitholder
exceeds the cash portion of the distribution made to such unit holder, the U.S.
Holder may be required to pay such excess amount in cash to the Operating
Partnership or the Operating Partnership may withhold such excess amount from
future distributions.
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Non-U.S. Holders
Gain recognized by a Non-U.S. Holder on a sale,
exchange or redemption of an OP Unit will be subject to U.S. federal income tax
under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) at the
same rates generally applicable to U.S. Holders. The Company or the
Operating Partnership will be required, under the FIRPTA provisions of the
Code, to deduct and withhold 10% of the amount realized by Non-U.S. Holders on
the disposition and Non-U.S. Holders will be required to file a U.S. federal
income tax return to report any gain and pay any additional tax due. The
amount withheld would be creditable against the Non-U.S. Holders U.S. federal
income tax liability and, if the amount withheld exceeds the actual tax
liability, the Non-U.S. Holder could claim a refund from the IRS. State and
local taxes, withholding and tax return filing obligations may also apply.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S.
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF RECEIVING OP
UNITS OR SHARES OF COMMON STOCK IN CONNECTION WITH THE DISTRIBUTION MADE BY THE
OPERATING PARTNERSHIP INCLUDING THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF OP UNITS OR COMMON STOCK
AND OF REDEEMING OP UNITS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.
USE OF PROCEEDS
We will receive no cash proceeds from any issuance of
the Common Stock covered by this prospectus supplement, but we will acquire
additional common units of the Operating Partnership in exchange for any such
issuances. We intend to hold any Distribution Units which we acquire in the
Operating Partnership.
PLAN OF DISTRIBUTION
This prospectus supplement relates to the possible
issuance by us of up to 459,019 shares of Common Stock issued as part of the
Distribution and Common Stock issued to holders of Distribution Units, and any
of their pledgees, donees, transferees or other successors in interest. We may
only offer shares of Common Stock to the holders of Distribution Units if the
holders present them for redemption and we exercise our right to issue Common
Stock to them instead of paying a cash amount.
In connection with the issuance of shares of Common Stock as part of the
Distribution, our Operating Partnership may be deemed to be an underwriter
within the meaning of the Securities Act.
We will bear all costs, expenses and fees in
connection with the registration of the Common Stock.
LEGAL MATTERS
The validity of the securities offered hereby will be
passed upon for us by Goodwin Procter LLP.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the
Exchange Act, and in accordance with the Exchange Act we file annual,
quarterly, and current reports, proxy statements, and other information with
the SEC. You may read and copy any document we file at the SECs Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may
call the SEC at 1-800-SEC-0330 for further information on the operation of the
Public Reference Room. Macerichs SEC filings are also available to the public
from the SECs website at http://www.sec.gov. In addition, you may read
Macerichs SEC filings at the offices of the New York Stock Exchange, which is
located at 20 Broad Street, New York, New York 10005.
The information incorporated by reference herein is an
important part of this prospectus supplement. Any statement contained in a
document which is incorporated by reference in this prospectus supplement is
automatically updated and superseded if information contained in this
prospectus supplement, or information that we later file with the SEC prior to
the termination of this offering, modifies or replaces this information.
Macerichs SEC file number
S-17
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is 001-12504. We are incorporating by reference the documents listed
below, which were previously filed by us with the SEC:
·
our Annual Report on Form 10-K for the year ended
December 31, 2008, filed on February 27, 2009;
·
those portions of our definitive Proxy Statement for
the 2009 Annual Meeting of Stockholders that are incorporated by reference in
our Form 10-K;
·
our Quarterly Reports on Form 10-Q for the period
ended March 31, 2009, filed on May 11, 2009, and for the period ended
June 30, 2009, filed on August 7, 2009;
·
the descriptions of Common Stock which are contained
in registration statements filed under the Securities Exchange Act of 1934,
including any amendment or reports filed for the purpose of updating such
descriptions;
·
our Current Reports on Form 8-K filed on January
5, 2009, February 11, 2009 (with respect to Items 1.01, 5.03 and 9.01
only), May 1, 2009, May 27, 2009, May 28, 2009, June 12, 2009, June 23,
2009 and July 31, 2009; and
·
all documents filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus supplement and prior to the termination of this offering,
except as to any portion of any future report or document that is not deemed
filed under such provisions.
Upon request, we will provide, without charge, to each
person to whom a copy of this prospectus supplement is delivered a copy of the
documents incorporated by reference in this offering memorandum. You may
request a copy of these filings, and any exhibits we have specifically
incorporated by reference as an exhibit in this prospectus supplement, by
writing or telephoning us at the following:
The Macerich
Company
401 Wilshire
Boulevard, #700
Santa Monica, CA
90401-1452
Attention:
Corporate Secretary
(310) 394-6000
S-18
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PROSPECTUS
COMMON STOCK
PREFERRED STOCK
DEBT SECURITIES
WARRANTS
RIGHTS
UNITS
We, or any selling securityholders
to be identified in the future, may offer from time to time, in one or more
series:
·
shares of our common stock;
·
shares of our preferred stock;
·
senior and/or subordinated debt
securities;
·
warrants to purchase common stock,
preferred stock and/or debt securities;
·
rights to purchase common stock,
preferred stock and/or debt securities; and
·
units consisting of two or more of
these classes or series of securities.
We, or any selling
securityholders to be identified in the future, may offer these securities in
amounts, at prices and on terms determined at the time of offering. The specific plan of distribution for any
securities to be offered will be provided in a prospectus supplement. If we use agents, underwriters or dealers to
sell these securities, a prospectus supplement will name them and describe
their compensation.
The specific terms of any
securities to be offered will be described in a supplement to this
prospectus. The prospectus supplement
may also add, update or change information contained in this prospectus. You should read this prospectus and any
prospectus supplement, together with additional information described under the
heading Where You Can Find More Information, before you make an investment
decision.
Our common stock is
listed on the New York Stock Exchange under the symbol MAC.
Investing
in our securities involves a high degree of risk. See the Risk Factors section contained in
the applicable prospectus supplement and in the documents we incorporate by
reference in this prospectus to read about factors you should consider before
investing in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is November 26, 2008.
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ABOUT THIS PROSPECTUS
This prospectus is
part of an automatic shelf registration statement that we filed with the
United States Securities and Exchange Commission, or the SEC, as a well-known
seasoned issuer as defined in Rule 405 under the Securities Act of 1933,
as amended, or the Securities Act, using a shelf registration process. By using a shelf registration statement, we
may sell any combination of our common stock, preferred stock, debt securities,
warrants, rights and units from time to time and in one or more offerings. Each time we sell securities, we will provide
a supplement to this prospectus that contains specific information about the
securities being offered (if other than common stock) and the specific terms of
that offering. The supplement may also
add, update or change information contained in this prospectus. If there is any inconsistency between the
information in this prospectus and any prospectus supplement, you should rely
on the prospectus supplement. Before
purchasing any securities, you should carefully read both this prospectus and
any prospectus supplement, together with the additional information described
under the heading Where You Can Find More Information and Incorporation of
Certain Documents by Reference.
You should rely only on
the information contained or incorporated by reference in this prospectus and
in any prospectus supplement. We have
not authorized any other person to provide you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We will not make an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus and any prospectus supplement is accurate as of
the date on its respective cover, and that any information incorporated by
reference is accurate only as of the date of the document incorporated by
reference, unless we indicate otherwise.
Our business, financial condition, results of operations and prospects
may have changed since those dates.
Unless otherwise stated,
or the context otherwise requires, references in this prospectus to the Company,
we, us and our refer to The Macerich Company, those entities owned or
controlled by The Macerich Company and predecessors of The Macerich Company.
WHERE YOU CAN FIND MORE INFORMATION
We have filed our
registration statement on Form S-3 with the SEC under the Securities Act.
We also file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read
and copy any document that we file with the SEC, including the registration
statement and the exhibits to the registration statement, at the SECs public
reference facility at:
Securities and
Exchange Commission
Room 1500
100 F Street, N.E.
Washington D.C. 20549
You may call the
SEC at 1-800-SEC-0330 for further information. Our SEC filings are also
available to the public at the SECs web site at www.sec.gov. In addition, you may inspect and copy
reports, proxy statements and other information about us at the offices of the
New York Stock Exchange, Inc. at 20 Broad Street, New York, New York 10005.
This prospectus
and any prospectus supplement are part of a registration statement that we
filed with the SEC and do not contain all of the information in the
registration statement. The full
registration statement may be obtained from the SEC or us as indicated
below. Forms of the indenture and other
documents establishing the terms of the offered securities are filed as
exhibits to the registration statement or will be filed through an amendment to
our registration statement on Form S-3 or under cover of a Current Report
on Form 8-K and incorporated in this prospectus by reference. Statements in this prospectus or any
prospectus supplement about these documents are summaries and each statement is
qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for
a more complete description of the relevant matters.
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INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
The SEC allows us
to incorporate by reference in this prospectus the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information filed with the SEC will
update and supersede the information included or incorporated by reference in
this prospectus. We incorporate by reference in this prospectus the following
information:
·
our Annual Report on Form 10-K for the fiscal
year ended December 31, 2007;
·
Amendment No. 1 to our Annual Report on Form 10-K/A
for the fiscal year ended December 31, 2007;
·
our Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2008;
·
our Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2008;
·
our Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 2008;
·
our Current Report on Form 8-K filed on May 8,
2008 (Accession No. 000104659-08-031270);
·
our Current Report on Form 8-K filed on May 14,
2008;
·
our Current Report on Form 8-K filed on September 5,
2008;
·
our Current Report on Form 8-K filed on September 18,
2008;
·
our Current Report on Form 8-K filed on October 14,
2008; and
·
the description of our common stock, which is
contained in a registration statement filed under the Securities Exchange Act
of 1934, including any amendment or report filed for the purpose of updating
such description.
We also
incorporate by reference any future filings we may make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
prior to the termination of this offering, other than documents or information
deemed furnished and not filed in accordance with SEC rules.
You may request a
copy of these filings, at no cost, by writing or telephoning us at the
following address:
Corporate
Secretary
The Macerich Company
401 Wilshire Boulevard, No. 700
Santa Monica, California 90401
Telephone: (310) 394-6000
2
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FORWARD-LOOKING STATEMENTS
This prospectus contains
or incorporates by reference, and any prospectus supplement will contain or
incorporate by reference, statements that constitute forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E
of the Securities Exchange Act of 1934, as amended. Any statements that do not relate to historical
or current facts or matters are forward-looking statements. You can identify
some of the forward-looking statements by the use of forward-looking words,
such as may, will, could, should, expects, anticipates, intends, projects,
predicts, plans, believes, seeks, and estimates and variations of
these words and similar expressions. Statements concerning current conditions
may also be forward-looking if they imply a continuation of current conditions.
Forward-looking statements include statements regarding, among other matters:
·
expectations regarding our growth;
·
our
beliefs regarding our acquisition, redevelopment and development activities and
opportunities;
·
our
acquisition and other strategies;
·
regulatory
matters pertaining to compliance with governmental regulations;
·
our
capital expenditure plans and expectations for obtaining capital for
expenditures; and
·
our
expectations regarding our financial condition or results of operations.
We caution you
that any such forward-looking statements are not guarantees of future
performance and involve risks, uncertainties and other factors that may cause
our actual results, performance or achievements or the industry to differ
materially from our future results, performance or achievements, or those of
the industry, expressed or implied in such forward-looking statements. We urge you to carefully review the
disclosures we make concerning risks and other factors that may affect our
business and operating results, including those made in Item 1A. Risk
Factors of our Annual Report on Form 10-K/A for the year ended December 31,
2007 and in Item 1A. Risk Factors of our Quarterly Report on Form 10-Q
for the quarter ended September 30, 2008 and as such risk factors may be
updated in subsequent SEC filings, as well as our other reports filed with the
SEC and in any prospectus supplement. We caution you not to place undue
reliance on these forward-looking statements, which speak only as of the date
of this prospectus or any prospectus supplement. We do not intend, and we
undertake no obligation, to update any forward-looking information to reflect
events or circumstances after the date of this prospectus or any prospectus
supplement or to reflect the occurrence of unanticipated events, unless
required by law to do so.
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THE MACERICH COMPANY
We are involved in
the acquisition, ownership, development, redevelopment, management, and leasing
of regional and community shopping centers located throughout the United
States. We are the sole general partner of, and own a majority of the ownership
interests in, The Macerich Partnership, L.P., a Delaware limited
partnership (the Macerich Partnership). As of September 30, 2008,
Macerich Partnership owned or had an ownership interest in 72 regional shopping
centers and 19 community shopping centers aggregating approximately
77 million square feet of gross leasable area.
We are a
self-administered and self-managed real estate investment trust, or REIT, and
conduct all of our operations through Macerich Partnership and our management
companies.
We were organized
as a Maryland corporation in September 1993. Our principal executive offices are located
at 401 Wilshire Boulevard, Suite 700, Santa Monica, California 90401. Our telephone number is (310) 394-6000. Our website address is www.macerich.com. Information on our website does not
constitute part of this prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
AND RATIO OF EARNINGS T
O
COMBINED
FIXED CHARGES AND PREFERRED SHARE DISTRIBUTIONS
The
table below presents our consolidated ratios of earnings to fixed charges for
each of the periods indicated. We
computed these ratios by dividing earnings by fixed charges. For this purpose, earnings consist of pretax
income from continuing operations before minority interest, unconsolidated
entities, cumulative effect of change in accounting principles, gain (loss) on
sale of assets, and loss on early extinguishment of debt. We further adjusted earnings by adding cash
distributions from unconsolidated joint ventures and the management companies
instead of the equity in their income and adding fixed charges net of
capitalized interest. Fixed charges
consist of interest expense, whether capitalized or expensed, amortization of
debt issuance costs, and preferred dividend requirements of consolidated
subsidiaries, if any.
Nine Months Ended
|
|
Year Ended December 31,
|
|
September 30, 2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
1.29x
|
|
1.63x
|
|
1.42x
|
|
1.42x
|
|
1.53x
|
|
1.45x
|
|
The
table below presents our consolidated ratios of earnings to combined fixed
charges and preferred share distributions for each of the periods
indicated. We computed these ratios by
dividing earnings by combined fixed charges and preferred share distributions.
The terms earnings and fixed charges have the meanings assigned above. The
ratios are based solely on historical financial information and no pro forma
adjustments have been made.
Nine Months Ended
|
|
Year Ended December 31,
|
|
September 30, 2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
1.27x
|
|
1.59x
|
|
1.38x
|
|
1.38x
|
|
1.46x
|
|
1.35x
|
|
USE OF
PROCEEDS
When we offer
particular securities, we will describe in a prospectus supplement relating to
the securities offered how we intend to use the proceeds from their sale. We may invest funds not required immediately
for such purposes in short-term investment grade securities. We will not receive any proceeds from the
sale of securities by selling securityholders.
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DESCRIPTION OF OUR CAPITAL STOCK
The following is a
summary description of the material terms of our capital stock. Provisions of
our charter and our bylaws fix or may affect some of the terms of our capital
stock. For a complete description of the terms of all of our capital stock,
including our common stock, we refer you to the Maryland General Corporation
Law, our charter and our bylaws. Our charter and our bylaws are incorporated by
reference as exhibits to the registration statement of which this prospectus is
a part.
Capitalization
Our charter authorizes us
to issue up to 220,000,000 shares of capital stock, consisting of 145,000,000
shares of common stock, $.01 par value per share, 15,000,000 shares of
preferred stock, $.01 par value per share, and 60,000,000 shares of excess
stock, $.01 par value per share (excess stock). As of November 1, 2008,
we had
·
76,272,874 shares of common stock (including shares of unvested
restricted common stock) issued and outstanding; and
·
1,961,345 shares of Series D Preferred Stock authorized, none of
which are outstanding.
In
addition, as of November 1, 2008, 143,934 shares of our common stock were
reserved for issuance upon exercise of outstanding employee stock options,
12,881,231 shares of our common stock were reserved for issuance upon
redemption of outstanding limited partnership units of Macerich Partnership and
MACWH, L.P., and 1,257,134 shares of our common stock were reserved for
issuance upon exercise of outstanding stock appreciation rights.
Shares of Series D
Preferred Stock, if issued, could be converted into shares of our common stock
based on a formula set forth in the applicable Articles Supplementary. As of
the date of this prospectus, the conversion ratio is one-for-one. Rights of
holders of Series D Preferred Stock include dividend and liquidation
preferences over the holders of shares of our common stock and voting rights in
some circumstances.
Our charter and Maryland
law permit our board of directors, or any duly authorized committee
thereof, to classify and reclassify any
unissued shares of our capital stock by setting or changing in any one or more
respects the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications or terms and conditions of redemption of the classified or
reclassified shares of our capital stock. The terms of any stock classified or
reclassified by our board of directors or a duly authorized committee thereof
in accordance with our charter will be set forth in articles supplementary
filed with the State Department of Assessments and Taxation of Maryland prior
to the issuance of any classified or reclassified stock.
Issuance
of Excess Stock
Our charter provides that
in the case of a prohibited event, the relevant stock will automatically be
exchanged for excess stock, to the extent necessary to ensure that the
purported transfer or other event does not result in a prohibited event. A prohibited event is a purported transfer of
stock or other event that will, if effective, result in any of the following:
·
a person owning shares of our stock in excess of the ownership limit as
determined in accordance with our charter or owning (directly or indirectly)
more than a specified percentage of our common stock as determined in
accordance with our charter (that persons percentage limitation);
·
shares of our common stock and preferred stock being owned by fewer
than 100 persons (determined without reference to any rules of
attribution);
·
our becoming closely held under Section 856(h) of the
Internal Revenue Code (the Code) (determined without regard to Code Section 856(h)(2) and
by deleting the words the last half of in the first sentence of Code Section 542(a)(2) in
applying Code Section 856(h)); or
·
our disqualification as a REIT.
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Outstanding shares of
excess stock will be held in trust. The trustee of the trust will be appointed
by us and will be independent of us, any purported record or beneficial
transferee and any beneficiary of such trust (the beneficiary). The
beneficiary will be one or more charitable organizations selected by the
trustee.
Our charter further
provides that shares of excess stock are entitled to the same dividends as the
shares of stock exchanged for excess stock (the original shares). The
trustee, as record holder of the excess stock, is entitled to receive all
dividends and distributions in respect of the excess stock as may be authorized
by the board of directors and declared by us and will hold the dividends or
distributions in trust for the benefit of the beneficiary. The trustee is also
entitled to cast all votes that holders of the excess stock are entitled to
cast. Shares of excess stock in the hands of the trustee will have the same
voting rights as original shares. Upon our liquidation, dissolution or winding
up, each share of excess stock will be entitled to receive ratably with each
other share of stock of the same class or series as the original shares, the
assets distributed to the holders of the class or series of stock. The trustee
will distribute to the purported transferee the amounts received upon our
liquidation, dissolution or winding up, but only up to the amount paid by the
purported transferee, or the market price for the original shares on the date
of the purported transfer, if no consideration was paid by the transferee, and
subject to additional limitations and offsets set forth in our charter.
If, after the purported
transfer or other event resulting in an exchange of stock for shares of excess
stock, dividends or distributions are paid with respect to the original shares,
then the dividends or distributions will be paid to the trustee for the benefit
of the beneficiary. While shares of excess stock are held in trust, excess
stock may be transferred by the trustee only to a person whose ownership of the
original shares will not result in a prohibited event. At the time of any
permitted transfer, the shares of excess stock will be automatically exchanged
for the same number of shares of the same type and class as the original
shares. Our charter contains provisions that prohibit the purported transferee
of shares of excess stock from receiving in return for the transfer an amount
that reflects any appreciation in the original shares during the period that
the shares of excess stock were outstanding. Our charter requires any amount
received by a purported transferee, in excess of the amount permitted to be
received, to be paid to the beneficiary.
Our charter further
provides that we may purchase, for a period of 90 days during the time the
shares of excess stock are held in trust, all or any portion of the excess
stock at the lesser of the price paid for the stock by the purported transferee
(or if no consideration was paid, the market price at the time of such
transaction) or the market price of the relevant shares as determined in
accordance with our charter. The 90-day period begins on the date of the
prohibited transfer if the purported transferee gives notice to the board of
directors of the transfer or, if no notice is given, the date the board of
directors determines in good faith that a prohibited transfer has been made.
These provisions
contained in our charter will not be automatically removed even if the REIT
provisions of the Code are changed so as to no longer contain any ownership
concentration limitation or if the ownership concentration limitation is
increased. Amendments to our charter require the affirmative vote of at least
two-thirds of the shares entitled to vote. In addition to preserving our status
as a REIT, the ownership limit may have the effect of precluding an acquisition
of control of us without the approval of the board of directors.
All certificates
representing shares of our common stock and our preferred stock bear or will
bear a legend referring to the restrictions described above.
All persons who own,
directly or by virtue of the attribution provisions of the Code, more than 5%
of our outstanding stock must file an affidavit with us containing the
information specified in our charter within 30 days after January 1
of each year. In addition, these and other significant stockholders are
required, upon demand, to disclose to us in writing the information with
respect to their direct, indirect and constructive ownership of shares of our
capital stock that our board of directors deems necessary to comply with the
provisions of the Code applicable to a REIT.
Restrictions
on Transfer and Ownership
For us to qualify as a
REIT under the Code, both of the following conditions relating to ownership of
shares must be satisfied:
·
not more than 50% in value of our outstanding stock
(after taking into account options to acquire stock) may be owned, directly or
indirectly, by five or fewer individuals (as defined under the
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Code to include some entities that would not ordinarily be considered individuals)
during the last half of a taxable year; and
·
shares of our capital stock must be beneficially owned
by 100 or more persons during at least 335 days of a taxable year of
12 months or during a proportionate part of a shorter taxable year.
See Certain United
States Federal Income Tax ConsiderationsTaxation of Our Company and Requirements
for Qualification.
Our
Charter Restricts the Ownership and Transfer of Shares of Our Capital Stock
Subject to exceptions
specified in our charter, no stockholder may own, or be deemed to own by virtue
of the attribution provisions of the Code, more than the ownership limit. The
attribution provisions are complex and may cause stock owned directly or
indirectly by a group of related individuals or entities to be deemed to be
owned by one individual or entity. As a result, the acquisition of less than 5%
in value or in number of shares of stock (or the acquisition of an interest in
an entity which owns stock) by an individual or entity could cause that
individual or entity (or another individual or entity) to be deemed to own in
excess of 5% in value or in number of shares of our outstanding capital stock,
and thus subject that stock to the ownership limit. The board of directors, in
its sole discretion (subject to certain limitations), may waive the ownership
limit with respect to our stockholders, but is under no obligation to do so. As
a condition of a waiver of the ownership limit, the board of directors may require
opinions of counsel satisfactory to it or other conditions as it may direct,
including an agreement from the applicant that the applicant will not act to
threaten our REIT status. Our charter excludes from the ownership limit some
persons and their respective families and affiliates, but provides that no
excluded participant may own (directly or indirectly) more than the excluded
participants percentage limitation, as described under Issuance of Excess
Stock.
Our charter provides that
any purported transfer or issuance of shares, or other event, will be null and
void if it results in a prohibited event. The intended transferee or purported
owner in a transaction that results in a prohibited event will not acquire, and
will retain no rights to, or economic interest in, those shares of stock. See Issuance
of Excess Stock.
Selected
Provisions of Maryland Law and of Our Charter and Bylaws
In addition to the
ownership limit, certain provisions of our charter and bylaws may delay, defer
or prevent a change of control or other transaction in which holders of some,
or a majority, of our common stock might receive a premium for their common
stock over the then prevailing market price or which such holders might believe
to be otherwise in their best interests. The following paragraphs summarize a
number of these provisions, as well as selected provisions of the Maryland
General Corporation Law.
Staggered
Board of Directors
Prior to our 2008 annual
meeting, our charter provided that our directors be divided into three classes,
with each director holding office for a term of three years and until their
successors are duly elected and qualify.
This classification made the replacement of the majority of our
incumbent directors more time consuming and difficult. At our 2008 annual meeting, our stockholders
approved a board proposal to amend our charter to eliminate the classified
board of directors. Our declassified
board structure will be phased in as follows:
·
current directors, including those elected to three-year terms at our
2008 annual meeting, will continue to serve the remainder of their elected
terms; and
·
starting with the 2009 annual meeting of stockholders, directors will
be elected annually so that by our 2011 annual meeting of stockholders, all
directors will be elected annually.
Advance
Notice of Director Nominations and New Business; Procedures for Special
Meetings Requested by Stockholders
Our charter and bylaws
provide that for any stockholder proposal to be presented in connection with an
annual meeting or special meeting of our stockholders, including a proposal to
nominate a director, the stockholder must have given timely written notice of
the proposal to our secretary. The bylaws provide that nominations to the board
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of directors and the
proposal of business to be considered by stockholders at an annual meeting of
stockholders may be made only:
·
pursuant to our notice of the meeting;
·
by or at the direction of the board of directors; or
·
by a stockholder who is a stockholder of record at the time such
stockholder gives the notice required by our bylaws, who is entitled to vote at
the meeting and who has complied with the advance notice procedures, including
minimum and maximum time periods, set forth in our charter and bylaws.
Our bylaws also provide
that only the business specified in our notice of meeting may be brought before
a special meeting of stockholders. Nominations of persons for election to the
board of directors at a special meeting of stockholders may be made only:
·
pursuant to our notice of the meeting;
·
by or at the direction of the board of directors; or
·
if the board of directors has determined that directors shall be
elected at such meeting, by a stockholder who is a stockholder of record at the
time such stockholder gives the notice required by our bylaws, who is entitled
to vote at the meeting and who has complied with the advance notice provisions,
including minimum and maximum time periods, set forth in our charter or bylaws.
Our bylaws also contain
special procedures applicable to a special meeting of stockholders that is
called at the request of stockholders entitled to cast not less than a majority
of all the votes entitled to be cast at the meeting.
Exemptions
for the Principals from the Maryland Business Combination Law
Under Maryland law, business
combinations between a Maryland corporation and an interested stockholder or
an affiliate of an interested stockholder are prohibited for five years after
the most recent date on which the interested stockholder becomes an interested
stockholder. These business combinations include a merger, consolidation, share
exchange, or, in circumstances specified in the statute, an asset transfer or
issuance or reclassification of equity securities. An interested stockholder is
defined as:
·
any person who beneficially owns 10% or more of the voting power of the
corporations voting stock; or
·
an affiliate or associate of the corporation who, at any time within
the two-year period prior to the date in question, was the beneficial owner of
10% or more of the voting power of the then outstanding voting stock of the
corporation.
After the five-year
prohibition, any business combination between the Maryland corporation and an
interested stockholder generally must be recommended by the board of directors
of the corporation and approved by two super-majority stockholder votes,
unless, among other conditions, the holders of the corporations common stock
receive a minimum price, as defined by Maryland law, for their shares and the
consideration is received in cash or in the same form as previously paid by the
interested stockholder for its common stock. None of these provisions of
Maryland law will apply, however, to business combinations that are approved or
exempted by the board of directors of the corporation before the time that the
interested stockholder becomes an interested stockholder. Furthermore, a person
is not an interested stockholder if the transaction by which he or she would
otherwise have become an interested stockholder is approved in advance by the
board of directors.
As permitted by Maryland
law, our charter exempts from these provisions any business combination between
us and Mace Siegel, Arthur M. Coppola, Dana K. Anderson and Edward C. Coppola
(the principals) and their respective affiliates or related persons. As a result, these persons may be able to enter
into business combinations with us that may not be in the best interest of our
stockholders without compliance with the super-majority vote requirements and
the other provisions of the statute.
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Non-Stockholder
Constituencies
Under our charter, for
the purpose of determining our and our stockholders best interests with
respect to a proposed business combination or other transaction involving a
change of control of us, our board of directors must give due consideration to
all relevant factors, including, without limitation, the interests of our
employees, the economy, community and societal interests and our and our
stockholders long-term as well as short-term interests, including the
possibility that these interests may be best served by our continued
independence.
Other
Provisions of Our Charter
Our charter authorizes
our board of directors to classify and reclassify unissued shares and issue one
or more series of common stock or preferred stock and authorizes the creation
and issuance of rights entitling holders thereof to purchase from us shares of
stock or other securities or property.
Control
Share Acquisitions
Maryland law provides
that the acquirer of certain levels of voting power in electing directors of a
Maryland corporation (one-tenth or more, but less than one-third, one-third or
more but less than a majority, and a majority or more) is not entitled to vote
the shares in excess of the applicable threshold unless voting rights for the
shares are approved at a meeting by holders of two-thirds of the disinterested
shares or unless the acquisition of the shares has been specifically or
generally approved or exempted from the statute by a provision in the
corporations charter or bylaws adopted before the acquisition of the shares.
Our charter exempts from these provisions voting rights of shares owned by the
principals and their respective affiliates and related persons. Our bylaws also
contain a provision exempting from this statute any acquisition by any person
of shares of our common stock. There can be no assurance that this bylaw will
not be amended or eliminated in the future.
Amendment
to Our Charter and Bylaws
Amendments to our charter
require the affirmative vote of holders of not less than two-thirds of all the
votes entitled to be cast on the matter. Our board of directors has the
exclusive power to adopt, alter or repeal any provision of our bylaws and to
make new bylaws.
Director
Removal
Subject to the rights of
holders of any series of preferred stock, our charter provides that a director
may be removed only for cause and only by the affirmative vote of the holders
of shares entitled to cast at least two-thirds of the votes entitled to be cast
generally in the election of directors.
Our
Dissolution
Our dissolution must be
approved by our board of directors and by the affirmative vote of not less than
a majority of all of the votes entitled to be cast on the matter.
Supermajority
Vote for Extraordinary Corporate Actions
Under Maryland law, a
Maryland corporation generally cannot dissolve, amend its charter, merge, sell
all or substantially all of its assets, or engage in a share exchange or in a
similar extraordinary corporate action unless approved by the corporations
board of directors and the affirmative vote of holders of at least two-thirds
of the votes entitled to be cast on the matter, unless a lesser percentage (but
not less than a majority of all of the votes entitled to be cast on the matter)
is set forth in the corporations charter. Except for Article Ninth of our
charter, which provides that dissolution must be approved by the vote of
holders of a majority of our outstanding shares of common stock entitled to
vote on the matter, our charter does not provide for a lesser percentage in
these situations.
Limitation
of Liability of Directors
Our charter includes
provisions that limit the liability of our directors and officers to us and to
our stockholders for money damages to the fullest extent permitted under
Maryland law. Our charter also requires us to indemnify our present directors
and officers to the maximum extent permitted under Maryland law. In addition,
we have entered into indemnification agreements with our directors and some of
our officers.
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DESCRIPTION OF OUR COMMON STOCK
Subject to the provisions
of our charter regarding excess stock (as described above), the holders of our
common stock have full voting rights, one vote for each share held of record.
Subject to the provisions of our charter regarding excess stock and the rights
of any holders of preferred stock, holders of our common stock are entitled to
receive the dividends authorized by our board of directors out of funds legally
available for this purpose. Upon our liquidation, dissolution or winding up
(but subject to the provisions of our charter and the rights of holders of any
preferred stock), the assets legally available for distribution to holders of
our common stock will be distributed ratably among the holders of our common
stock. Holders of our common stock have no preemptive or other subscription or
conversion rights and no liability for further calls upon shares. See Description
of Our Capital StockSelected Provisions of Maryland Law and of Our Charter and
Bylaws. Our common stock is not subject to assessment.
The transfer agent and
registrar for our common stock is Computershare Trust Company, N.A.
Under Maryland law and
our bylaws, stockholders are entitled to receive prior notice of our annual and
special meetings of stockholders. Notice is given to a stockholder when it is
personally delivered to him or her, left at his or her residence or usual place
of business, mailed to him or her at his or her address as it appears on our
records or transmitted to him or her by electronic mail or other electronic
means.
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DESCRIPTION OF OUR PREFERRED STOCK
Under our charter, we may
issue shares of preferred stock from time to time, in one or more series as
authorized by our board of directors. Prior to issuance of shares of each
series, our board of directors is required by the Maryland General Corporation
Law to adopt resolutions and file Articles Supplementary with the State
Department of Assessments and Taxation of Maryland, fixing for each series the
designations, powers, preferences, conversion and other rights, voting powers,
qualifications, limitations as to dividends, restrictions and terms and
conditions of redemption. Our board of directors could authorize the issuance of
shares of preferred stock with terms and conditions which could have the effect
of discouraging a takeover or other transaction which holders of some, or a
majority, of shares of our common stock might believe to be in their best
interests or in which holders of some, or a majority, of shares of our common
stock might receive a premium for their shares over the then market price of
those shares. The preferred stock will, when issued, be fully paid and
nonassessable and will not have, or be subject to, any preemptive or similar
rights. The terms of any preferred stock
we offer under a prospectus supplement may differ from the terms we describe
below.
The prospectus supplement
relating to the series of preferred stock offered by that supplement will
describe the specific terms of those securities, including:
·
the title and stated value of that preferred stock;
·
the number of shares of that preferred stock offered,
the liquidation preference per share and the offering price of that preferred
stock;
·
the dividend rates, periods and/or payment dates or
methods of calculation thereof applicable to that preferred stock;
·
whether dividends will be cumulative or non-cumulative
and, if cumulative, the date from which dividends on that preferred stock will
accumulate;
·
the voting rights applicable to that preferred stock;
·
the procedures for any auction and remarketing, if
any, for that preferred stock;
·
the provisions for a sinking fund, if any, for that
preferred stock;
·
the provisions for redemption, if applicable, of that
preferred stock;
·
any listing of that preferred stock on any securities
exchange;
·
the terms and conditions, if applicable, upon which
that preferred stock will be convertible into shares of common stock, including
the conversion price (or manner of calculation of the conversion price) and
conversion period;
·
a discussion of federal income tax considerations
applicable to that preferred stock;
·
any limitations on issuance of any series of preferred
stock ranking senior to or on a parity with that series of preferred stock as
to dividend rights and rights upon our liquidation, dissolution or winding up;
·
in addition to those limitations described elsewhere
in this prospectus and any prospectus supplement, any other limitations on
actual and constructive ownership and restrictions on transfer, in each case as
may be appropriate to preserve our status as a REIT; and
·
any other specific terms, preferences, rights,
limitations or restrictions of that preferred stock.
Rank
Unless otherwise
specified in the applicable prospectus supplement, the preferred stock will,
with respect to dividend rights and rights upon our liquidation, dissolution or
winding up, rank:
·
senior to all classes or series of common stock and to
all equity securities issued by us the terms of which expressly provide that
those equity securities rank junior to the preferred stock;
·
on a parity with all equity securities issued by us
the terms of which so provide or which do not expressly provide that those equity
securities rank junior or senior to the preferred stock; and
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·
junior to all equity securities issued by us the terms
of which expressly provide that those equity securities rank senior to the
preferred stock.
The term equity
securities does not include convertible debt securities.
Dividends
Holders of shares of our
preferred stock will be entitled to receive, when, as and if authorized by our
board of directors and declared by us, out of our assets legally available for
payment, cash dividends at rates and on dates as will be set forth in the
applicable prospectus supplement. Each dividend will be payable to holders of
record as they appear on our stock transfer books on the record dates as may be
fixed by our board of directors.
Dividends on any series
or class of our preferred stock may be cumulative or noncumulative, as provided
in the applicable prospectus supplement. Dividends, if cumulative, will be
cumulative from and after the date set forth in the applicable prospectus
supplement. If our board of directors fails to authorize a dividend payable on
a dividend payment date on any series or class of preferred stock for which
dividends are noncumulative, then the holders of that series or class of
preferred stock will have no right to receive a dividend in respect of the
dividend period ending on that dividend payment date, and we will have no obligation
to pay the dividend accrued for that period, whether or not dividends on such
series or class are declared or paid for any future period.
Except as provided in the
following paragraph, unless full cumulative dividends on the preferred stock of
that series or class have been or contemporaneously are authorized and paid or
authorized and a sum sufficient for that payment is set apart for payment for
all past dividend periods and the then current dividend period, no dividends
(other than in the common stock or other stock of ours ranking junior to the
preferred stock of that series or class as to dividends and upon liquidation)
may be authorized or paid or set aside for payment nor may any other
distribution be authorized or made on the common stock or any other stock of
ours ranking junior to or on a parity with the preferred stock of that series
or class as to dividends or upon liquidation. In addition, common stock or any
other stock of ours ranking junior to or on a parity with the preferred stock of
that series or class as to dividends or upon liquidation may not be redeemed,
purchased or otherwise acquired for any consideration (or any amounts be paid
to or made available for a sinking fund for the redemption of any shares of any
such stock) by us (except by conversion into or exchange for other stock of
ours ranking junior to the preferred stock of that series or class as to
dividends and upon liquidation).
When dividends for all
past dividend periods are not paid in full (or a sum sufficient for the full
payment is not set apart) upon the shares of preferred stock of any series or
class and the shares of any other series or class of preferred stock ranking on
a parity as to dividends with the preferred stock of that series or class, then
all dividends authorized on shares of preferred stock of that series or class
and any other series or class of preferred stock ranking on a parity as to
dividends with that series or class of preferred stock will be authorized pro
rata, so that the amount of dividends authorized per share on the preferred
stock of that series or class and such other series or class of preferred stock
will in all cases bear to each other the same ratio that accrued dividends per
share on the shares of preferred stock of that series or class (which will not
include any accumulation in respect of unpaid dividends for prior dividend
periods if the preferred stock does not have a cumulative dividend) and that
other series or class of preferred stock bear to each other. No interest, or sum
of money in lieu of interest, will be payable in respect of any dividend
payment or payments on preferred stock of that series or class that may be in
arrears.
Any dividend payment made
on shares of a series or class of preferred stock will first be credited
against the earliest accrued but unpaid dividend due with respect to shares of
that series or class that remains payable.
In determining whether a
distribution by dividend, redemption or other acquisition of stock or otherwise
is permitted under Maryland law, amounts that would be needed, if we were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of stockholders whose preferential rights on dissolution are
superior to those receiving the distribution will not be added to our total
liabilities.
Redemption
If the applicable
prospectus supplement so states, the shares of preferred stock will be subject
to mandatory redemption or redemption at our option, in whole or in part, in
each case on the terms, at the times and at the redemption prices set forth in
that prospectus supplement.
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The prospectus supplement
relating to a series or class of preferred stock that is subject to mandatory
redemption will specify the number of shares of that preferred stock that are
to or may be redeemed by us in each year commencing after a date to be
specified, at a redemption price per share to be specified, together with an
amount equal to all accumulated and unpaid dividends on that preferred stock
(which will not, if that preferred stock does not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in cash
or other property, as specified in the applicable prospectus supplement. If the
redemption price for preferred stock of any series or class is payable only
from the net proceeds of the issuance of our stock, the terms of that preferred
stock may provide that, if no such stock shall have been issued or to the
extent the net proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, that preferred stock will automatically
and mandatorily be converted into shares of our applicable stock pursuant to
conversion provisions specified in the applicable prospectus supplement.
Notwithstanding
the foregoing, unless full cumulative dividends on all outstanding shares of
that series or class of preferred stock have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for that payment is set
apart for payment for all past dividend periods and the then current dividend
period, we may not redeem any shares of that series or class of preferred stock
unless all outstanding shares of preferred stock of that series or class are
simultaneously redeemed and may not purchase or otherwise acquire directly or indirectly
any shares of preferred stock of that series or class (except by conversion
into or exchange for our stock ranking junior to the preferred stock of that
series or class as to dividends and upon liquidation). However, this will not
prevent the purchase or acquisition of shares of preferred stock of that series
or class to preserve our REIT status or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of preferred
stock of that series or class.
If fewer than all of the
outstanding shares of preferred stock of any series or class are to be
redeemed, the number of shares to be redeemed will be determined by us, and
those shares may be redeemed pro rata from the holders of record of those
shares in proportion to the number of those shares held by those holders (with
adjustments to avoid redemption of fractional shares) or any other equitable
method determined by us.
Notice of redemption will
be mailed at least 30 days but not more than 90 days before the
redemption date to each holder of record of a share of preferred stock of any
series to be redeemed at the address shown on our stock transfer books. Each
notice will state:
·
the redemption date;
·
the number of shares and series of the preferred stock
to be redeemed;
·
the redemption price;
·
the place or places where certificates for the
preferred stock are to be surrendered for payment of the redemption price;
·
that dividends on the shares to be redeemed will cease
to accrue on the redemption date; and
·
the date upon which the holders conversion rights, if
any, as to the shares will terminate.
If fewer than all the
shares of preferred stock of any series are to be redeemed, the notice mailed
to each holder will also specify the number of shares of preferred stock to be
redeemed from each holder. If notice of redemption of any shares of preferred
stock has been given, and if the funds necessary for that redemption have been
irrevocably set apart by us in trust for the benefit of the holders of any
shares of preferred stock so called for redemption, then from and after the
redemption date, dividends will cease to accrue on those shares of preferred
stock, those shares of preferred stock will no longer be deemed outstanding and
all rights of the holders of those shares will terminate, except the right to
receive the redemption price.
Liquidation
Preference
Upon our voluntary or
involuntary liquidation, dissolution or winding up, then, before we will make
any distribution or payment to the holders of common stock or any other series
or class of stock ranking junior to any series or class of the preferred stock
in the distribution of assets upon any liquidation, dissolution or winding up,
the holders of that series or class of preferred stock will be entitled to
receive, after payment or provision for payment of our debts and other
liabilities and amounts due to stockholders whose preferential rights are
senior to those of that series or class of preferred stock, out of our assets
legally available for distribution to stockholders, liquidating
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distributions in the
amount of the liquidation preference per share (set forth in the applicable
prospectus supplement), plus an amount equal to all dividends accrued and
unpaid on the preferred stock (which will not include any accumulation in
respect of unpaid dividends for prior dividend periods if the preferred stock
does not have a cumulative dividend). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of preferred
stock will have no right or claim to any of our remaining assets.
If, upon any voluntary or
involuntary liquidation, dissolution or winding up, our legally available
assets are insufficient to pay the amount of the liquidating distributions on
all outstanding shares of any series or class of preferred stock and the
corresponding amounts payable on all shares of other classes or series of our
stock ranking on a parity with that series or class of preferred stock in the
distribution of assets upon liquidation, dissolution or winding up, then the
holders of that series or class of preferred stock and all other such classes
or series of stock will share ratably in any distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
If liquidating
distributions have been made in full to all holders of any series or class of
preferred stock, we will distribute our remaining assets among the holders of
any other classes or series of stock ranking junior to that series or class of
preferred stock upon liquidation, dissolution or winding up, according to their
respective rights and preferences and in each case according to their
respective number of shares. For these purposes, none of the following will be
deemed to constitute a liquidation, dissolution or winding up of our affairs: (i) a
consolidation, merger or other business combination of our Company with one or
more corporations, REITs or other entities, (ii) our dissolution,
liquidation, winding up, or reorganization immediately followed by
incorporation of another entity to which such assets are distributed, (iii) a
sale, lease, conveyance or other disposition of all or substantially all of our
assets, properties or business to another entity or (iv) a statutory share
exchange by us.
Voting
Rights
Holders of preferred
stock will not have any voting rights, except as set forth below or as
indicated in the applicable prospectus supplement.
Unless provided otherwise
for any series or class of preferred stock, so long as any shares of preferred
stock of a series or class remain outstanding, we will not:
·
without the affirmative vote or consent of the holders
of at least a majority of the shares outstanding at that time of that series or
class of preferred stock (voting as a single class with all other series or
classes of preferred stock upon which like voting rights have been conferred
and are exercisable), given in person or by proxy, either in writing or at a
meeting, authorize or create, or increase the authorized or issued amount of,
any class or series of stock ranking senior to that series or class of
preferred stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up or reclassify any authorized
stock into any of those shares, or create,
authorize or issue any obligation or security convertible into or evidencing
the right to purchase any of those shares; or
·
without the affirmative vote or consent of the holders
of at least a majority of the shares outstanding at that time of that series or
class of preferred stock (voting as a single class with any other series or
classes of preferred stock upon which like voting rights have been conferred
and are exercisable), given in person or by proxy, either in writing or at a
meeting, amend, alter or repeal the provisions of our charter or articles
supplementary for such series or class of preferred stock so as to materially
and adversely alter or change the rights, preferences or privileges of that
series or class of preferred stock.
However, no such vote or
consent is required in connection with (i) any increase in the total
number of our authorized shares; (ii) the authorization or increase of any
class or series of shares of stock ranking, as to distribution rights and
liquidation preference, on a parity with or junior to that series or class of
preferred stock; (iii) any merger or consolidation in which we are the
surviving entity if, immediately after the merger or consolidation, there are
outstanding no shares of stock and no securities convertible into shares of
stock ranking as to distribution rights or liquidation preference senior to
that series or class of preferred stock other than our securities outstanding
prior to such merger or consolidation; (iv) any merger or consolidation in
which we are not the surviving entity if, as result of the merger or
consolidation, the holders of that series or class of preferred stock receive
shares of stock or other equity securities with preferences, rights and
privileges substantially identical with the preferences, rights and privileges
of that series or class of preferred stock and there are outstanding no shares
of stock or stock or other
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equity securities of the
surviving entity ranking as to distribution rights or liquidation preference
senior to that series or class of preferred stock other than our securities
outstanding prior to such merger or consolidation; or (v) the dissolution,
liquidation or winding up of our Company.
These voting provisions
will not apply if, at or prior to the time when the act with respect to which
that vote would otherwise be required will be effected, all outstanding shares
of that series or class of preferred stock have been redeemed or called for
redemption upon proper notice and (i) sufficient funds have been deposited
in trust to effect that redemption or (ii) in a case involving an issuance
of stock ranking senior to such series or class of preferred stock, the redemption
price (other than any portion thereof consisting of accrued and unpaid
dividends) is to be paid solely from the proceeds of such issuance.
Conversion
Rights
The terms and conditions,
if any, upon which shares of any series or class of preferred stock are
convertible into shares of common stock will be set forth in the applicable
prospectus supplement. The terms will include:
·
the number of shares of common stock into which the
preferred stock is convertible;
·
the conversion price (or manner of calculation of the
conversion price);
·
the conversion period;
·
provisions as to whether conversion will be at our
option or the option of the holders of the preferred stock;
·
the events requiring an adjustment of the conversion
price; and
·
provisions affecting conversion in the event of the
redemption of the preferred stock.
Transfer
Agent
The transfer agent and
registrar for any series or class of preferred stock will be set forth in the
applicable prospectus supplement.
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DESCRIPTION OF DEBT SECURITIES
The following
description, together with the additional information we include in any
applicable prospectus supplements, summarizes the material terms and provisions
of the debt securities that we may offer under this prospectus. While the terms we have summarized below will
generally apply to any future debt securities we may offer under this prospectus,
we will describe the particular terms of any debt securities that we may offer
in more detail in the applicable prospectus supplement. The terms of any debt securities we offer
under a prospectus supplement may differ from the terms we describe below.
We will issue any senior notes under the senior indenture which we will
enter into with the trustee named in the senior indenture. We will issue any subordinated notes under
the subordinated indenture which we will enter into with the trustee named in the
subordinated indenture. We have filed
forms of these documents as exhibits to the registration statement of which
this prospectus is a part. We use the
term indentures to refer to both the senior indenture and the subordinated
indenture.
The indentures will be
qualified under the Trust Indenture Act of 1939. We use the term trustee to refer to either
the senior trustee or the subordinated trustee, as applicable.
The following summaries
of material provisions of the senior notes, the subordinated notes and the
indentures are subject to, and qualified in their entirety by reference to, all
the provisions of the indenture applicable to a particular series of debt
securities. We urge you to read the
applicable prospectus supplements related to the debt securities that we sell
under this prospectus, as well as the complete indentures that contain the
terms of the debt securities. Except as
we may otherwise indicate, the terms of the senior indenture and the subordinated
indenture are identical.
General
The
indentures do not limit the aggregate principal amount of debt securities that
may be issued thereunder. The debt securities may be issued from time to time
in one or more series. We will describe
in the applicable prospectus supplement the terms relating to a series of debt
securities, including:
·
the title;
·
the principal amount being offered, and, if a series,
the total amount authorized and the total amount outstanding;
·
any limit on the amount that may be issued;
·
whether or not we will issue the series of debt
securities in global form and, if so, the terms and who the depositary will be;
·
the maturity date(s);
·
the principal amount due at maturity, and whether the
debt securities will be issued with any original issue discount;
·
whether and under what circumstances, if any, we will
pay additional amounts on any debt securities held by a person who is not a
United States person for tax purposes, and whether we can redeem the debt
securities if we have to pay such additional amounts;
·
the interest rate(s), which may be fixed or variable,
or the method for determining the rate, the date interest will begin to accrue,
the dates interest will be payable and the regular record dates for interest
payment dates or the method for determining such dates;
·
whether or not the debt securities will be secured or
unsecured, and the terms of any secured debt;
·
the terms of the subordination of any series of
subordinated debt;
·
the place where payments will be payable;
·
restrictions on transfer, sale or other assignment, if
any;
·
our right, if any, to defer payment of interest and
the maximum length of any such deferral period;
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·
the date, if any, after which, the conditions upon
which, and the price at which we may, at our option, redeem the series of debt
securities pursuant to any optional or provisional redemption provisions, and
any other applicable terms of those redemption provisions;
·
provisions for a sinking fund, purchase or other
analogous fund, if any;
·
the date, if any, on which, and the price at which we
are obligated, pursuant to any mandatory sinking fund or analogous fund provisions
or otherwise, to redeem, or at the holders option to purchase, the series of
debt securities;
·
a discussion of any material or special United States
federal income tax considerations applicable to the debt securities;
·
information describing any book-entry features;
·
the procedures for any auction and remarketing, if
any;
·
the denominations in which we will issue the series of
debt securities, if other than denominations of $1,000 and any integral
multiple thereof;
·
if other than U.S. dollars, the currency in which the
series of debt securities will be denominated; and
·
any other specific terms, preferences, rights or
limitations of, or restrictions on, the debt securities, including any events
of default that are in addition to those described in this prospectus or any
covenants, including restrictive covenants, provided with respect to the debt
securities, and any terms which may be required by us or advisable under
applicable laws or regulations or advisable in connection with the marketing of
the debt securities.
One or more series
of the debt securities may be issued as discounted debt securities (bearing no
interest or interest at a rate which at the time of issuance is below market
rates) to be sold at a substantial discount below their stated principal
amount. Material United States federal income tax consequences and other
special considerations applicable to any such discounted debt securities will
be described in the prospectus supplement relating thereto.
Conversion
or Exchange Rights
We will set forth in the
prospectus supplement the terms on which a series of debt securities may be
convertible into or exchangeable for our common stock or other securities,
including the conversion or exchange rate, as applicable, or how it will be
calculated, and the applicable conversion or exchange period. We will include provisions as to whether
conversion or exchange is mandatory, at the option of the holder or at our
option. We may include provisions
pursuant to which the number of our securities that the holders of the series
of debt securities receive upon conversion or exchange would, under the
circumstances described in those provisions, be subject to adjustment, or
pursuant to which those holders would, under those circumstances, receive other
property upon conversion or exchange, for example in the event of our merger or
consolidation with another entity.
Consolidation,
Merger or Sale
The indentures in the
forms initially filed as exhibits to the registration statement of which this
prospectus is a part do not contain any covenant that restricts our ability to
merge or consolidate, or sell, convey, transfer or otherwise dispose of all or
substantially all of our assets.
However, any successor of ours or acquiror of such assets must assume
all of our obligations under the indentures and the debt securities.
If the debt securities
are convertible into our other securities, the person with whom we consolidate
or merge or to whom we sell all of our property must make provisions for the
conversion of the debt securities into securities similar to the debt
securities which the holders of the debt securities would have received if they
had converted the debt securities before the consolidation, merger or sale.
Events
of Default Under the Indentures
The following are events
of default under the indentures with respect to any series of debt securities
that we may issue:
·
if we fail to pay interest when due and payable and
our failure continues for 30 days and the time for payment has not been
extended or deferred;
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·
if we fail to pay the principal, or premium, if any,
when due and payable and the time for payment has not been extended or delayed;
·
if we fail to observe or perform any other covenant
contained in the debt securities or the indentures, other than a covenant
solely for the benefit of another series of debt securities, and our failure
continues for 90 days after we receive notice from the trustee or holders of at
least 25% in aggregate principal amount of the outstanding debt securities of
the applicable series; and
·
if specified events of bankruptcy, insolvency or
reorganization occur.
If an event of default
with respect to debt securities of any series occurs and is continuing, other
than an event of default specified in the last bullet point above, the trustee
or the holders of at least 25% in aggregate principal amount of the outstanding
debt securities of that series, by notice to us in writing, and to the trustee
if notice is given by such holders, may declare the unpaid principal or,
premium, if any, and accrued interest, if any, due and payable immediately. If an event of default specified in the last
bullet point above occurs with respect to us, the principal amount of and
accrued interest, if any, of each series of debt securities then outstanding
shall be due and payable without any notice or other action on the part of the
trustee or any holder.
The holders of a majority
in principal amount of the outstanding debt securities of an affected series
may waive any default or event of default with respect to the series and its
consequences, except defaults or events of default regarding payment of
principal, premium, if any, or interest, unless we have cured the default or
event of default in accordance with the applicable indenture.
Subject to the terms of
the indentures, if an event of default under an indenture shall occur and be
continuing, the trustee will be under no obligation to exercise any of its
rights or powers under such indenture at the request or direction of any of the
holders of the applicable series of debt securities, unless such holders have
offered the trustee reasonable indemnity.
The holders of a majority in principal amount of the outstanding debt
securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, with respect to the
debt securities of that series, provided that:
·
the direction so given by the holder is not in
conflict with any law or the applicable indenture; and
·
subject to its duties under the Trust Indenture Act of
1939, the trustee need not take any action that might involve it in personal
liability or might be unduly prejudicial to the holders not involved in the
proceeding.
A holder of the debt
securities of any series will only have the right to institute a proceeding
under the indentures or to appoint a receiver or trustee, or to seek other
remedies if:
·
the holder has given written notice to the trustee of
a continuing event of default with respect to that series;
·
the holders of at least 25% in aggregate principal
amount of the outstanding debt securities of that series have made written
request, and such holders have offered reasonable indemnity to the trustee, to
institute the proceeding as trustee; and
·
the trustee does not institute the proceeding, and
does not receive from the holders of a majority in aggregate principal amount
of the outstanding debt securities of that series other conflicting directions,
within 90 days after the notice, request and offer.
These limitations do not
apply to a suit instituted by a holder of debt securities if we default in the
payment of the principal, premium, if any, or interest on, the debt securities.
We will periodically file
statements with the trustee regarding our compliance with the covenants in the
indentures.
Modification
of Indentures; Waiver
We and the trustee may
change an indenture without the consent of any holders with respect to specific
matters, including:
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·
to fix any ambiguity, omission, defect or
inconsistency in the indenture;
·
to comply with the provisions described above under Consolidation,
Merger or Sale;
·
to comply with any requirements of the SEC in
connection with the qualification of any indenture under the Trust Indenture
Act of 1939;
·
to evidence and provide for the acceptance of
appointment by a successor trustee;
·
to provide for uncertificated debt securities;
·
to add to, delete from, or revise the conditions,
limitations and restrictions on the authorized amount, terms or purposes of
issuance, authorization and delivery of debt securities of any unissued series;
·
to add any additional events of default;
·
to provide for the issuance of and establish the form
and terms and conditions of any series of debt securities as provided in an
indenture, to establish the form of any certifications required to be furnished
pursuant to an indenture or any series
of debt securities, or to add to the rights of the holders of any series of
debt securities;
·
to add to our covenants such new covenants,
restrictions, conditions or provisions for the protection of the holders, to
make the occurrence, or the occurrence and the continuance, of a default in any
such additional covenants, restrictions, conditions or provisions an event of
default, or to surrender any of our rights or powers under the indenture; or
·
to make any other provisions with respect to matters
or questions arising under an indenture, provided that such action shall not
adversely affect the interests of holders or any related coupons in any
material respect; provided further, that any change to an indenture to conform
it to this prospectus or the applicable prospectus supplement shall be deemed
not to adversely affect the interests of holders in any material respect.
In addition, under the
indentures, the rights of holders of a series of debt securities may be changed
by us and the trustee with the written consent of the holders of at least a
majority in aggregate principal amount of the outstanding debt securities of
each series that is affected. However,
we and the trustee may make the following changes only with the consent of each
holder of any outstanding debt securities affected:
·
changing the stated fixed maturity of, or any payment
date of any installment of interest on, the debt securities;
·
reducing the principal amount, reducing the rate of
interest on, or reducing any premium payable upon the redemption of any debt
securities; or
·
reducing the percentage of debt securities, the
holders of which are required to consent to any supplemental indenture.
Defeasance
and Discharge
The indentures provide
that we may elect, with respect to the debt securities of any series to
terminate (and be deemed to have satisfied) any and all obligations in respect
of such debt securities (except for certain obligations to register the
transfer or exchange of debt securities, to replace stolen, lost or mutilated
debt securities, to maintain paying agencies and hold monies for payment in
trust and, if so specified with respect to the debt securities of a certain
series, to pay the principal of (and premium, if any) and interest, if any, on
such specified debt securities) on the 91st day after the deposit with the
trustee, in trust, of money and/or U.S. government obligations which through
the payment of interest and principal thereof in accordance with their terms
will provide money in an amount sufficient to pay any installment of principal
(and premium, if any (and interest, if any)), on and any mandatory sinking fund
payments in respect of such debt securities on the stated maturity of such
payments in accordance with the terms of the Indenture and such debt
securities.
Such a trust may be
established only if, among other things, we have delivered to the trustee an
opinion of counsel (who may be counsel to us) to the effect that, based upon
applicable U.S. federal income tax law or a ruling published by the U.S.
Internal Revenue Service (which opinion must be based on a change in applicable
U.S. federal income tax law after the date of the indenture or a ruling
published by the U.S. Internal Revenue Service after the date of the
indenture), such a defeasance and discharge will not be deemed, or result in, a
taxable event with respect
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to holders of such debt
securities. The designation of such provisions, U.S. federal income tax
consequences and other considerations applicable thereto will be described in
the prospectus supplement relating thereto. If so specified with respect to the
debt securities of a series, such a trust may be established only if
establishment of the trust would not cause the debt securities of any such
series listed on any nationally recognized securities exchange to be de-listed
as a result thereof.
Form,
Exchange and Transfer
We will issue the debt
securities of each series only in fully registered form without coupons and,
unless we otherwise specify in the applicable prospectus supplement, in
denominations of $1,000 and any integral multiple thereof. The indentures provide that we may issue debt
securities of a series in temporary or permanent global form and as book-entry
securities that will be deposited with, or on behalf of, The Depository Trust
Company or another depositary named by us and identified in a prospectus
supplement with respect to that series.
At the option of the
holder, subject to the terms of the indentures and the limitations applicable
to global securities described in the applicable prospectus supplement, the
holder of the debt securities of any series can exchange the debt securities
for other debt securities of the same series, in any authorized denomination
and of like tenor and aggregate principal amount.
Subject to the terms of
the indentures and the limitations applicable to global securities set forth in
the applicable prospectus supplement, holders of the debt securities may
present the debt securities for exchange or for registration of transfer, duly
endorsed or with the form of transfer endorsed thereon duly executed if so
required by us or the security registrar, at the office of the security
registrar or at the office of any transfer agent designated by us for this
purpose. Unless otherwise provided in
the debt securities that the holder presents for transfer or exchange, we will
make no service charge for any registration of transfer or exchange, but we may
require payment of any taxes or other governmental charges.
We will name in the
applicable prospectus supplement the security registrar, and any transfer agent
in addition to the security registrar, that we initially designate for any debt
securities. We may at any time designate
additional transfer agents or rescind the designation of any transfer agent or
approve a change in the office through which any transfer agent acts, except
that we will be required to maintain a transfer agent in each place of payment
for the debt securities of each series.
If we elect to redeem the
debt securities of any series, we will not be required to:
·
issue, register the transfer of, or
exchange any debt securities of any series being redeemed in part during a
period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of any debt securities that may be selected for
redemption and ending at the close of business on the day of the mailing; or
·
register the transfer of or exchange any debt
securities so selected for redemption, in whole or in part, except the
unredeemed portion of any debt securities we are redeeming in part.
Information
Concerning the Trustee
The trustee, other than
during the occurrence and continuance of an event of default under an
indenture, undertakes to perform only those duties as are specifically set
forth in the applicable indenture. Upon
an event of default under an indenture, the trustee must use the same degree of
care as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the
trustee is under no obligation to exercise any of the powers given it by the
indentures at the request of any holder of debt securities unless it is offered
reasonable security and indemnity against the costs, expenses and liabilities
that it might incur.
Payment
and Paying Agents
Unless we otherwise
indicate in the applicable prospectus supplement, we will make payment of the
interest on any debt securities on any interest payment date to the person in
whose name the debt securities, or one or more predecessor securities, are
registered at the close of business on the regular record date for the
interest.
We will pay principal of,
and any premium and interest on, the debt securities of a particular series at
the office of the paying agents designated by us, except that, unless we
otherwise indicate in the applicable prospectus
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supplement, we may make
payments of principal or interest by check which we will mail to the holder or
by wire transfer to certain holders.
Unless we otherwise indicate in a prospectus supplement, we will
designate an office or agency of the trustee in the City of New York as our
paying agent for payments with respect to debt securities of each series. We will name in the applicable prospectus supplement
any other paying agents that we initially designate for the debt securities of
a particular series. We will maintain a
paying agent in each place of payment for the debt securities of a particular
series.
All money we pay to a
paying agent or the trustee for the payment of the principal of or any premium
or interest on any debt securities which remains unclaimed at the end of two
years after such principal, premium or interest has become due and payable will
be repaid to us, and the holder of the debt security thereafter may look only
to us for payment thereof.
Governing
Law
The indentures and the
debt securities will be governed by and construed in accordance with the laws
of the State of New York, except to the extent that the Trust Indenture Act of
1939 is applicable.
Subordination
of Subordinated Debt Securities
The subordinated debt
securities will be subordinate and junior in priority of payment to certain of
our other indebtedness to the extent described in a prospectus supplement.
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DESCRIPTION OF WARRANTS
We may issue warrants for
the purchase of shares of our common stock, shares of our preferred stock or
debt securities. We may issue warrants independently of or together with shares
of our common stock, shares of our preferred stock or debt securities offered
by any prospectus supplement, and we may attach the warrants to, or issue them
separately from, shares of common stock, shares of preferred stock or debt
securities. Each series of warrants will be issued under a separate warrant
agreement to be entered into between us and a bank or trust company, as warrant
agent, all as set forth in the prospectus supplement relating to the particular
issue of offered warrants. The warrant agent will act solely as our agent in
connection with the warrant certificates relating to the warrants and will not
assume any obligation or relationship of agency or trust with any holders of
warrant certificates or beneficial owners of warrants. The following summaries
of certain provisions of the warrant agreements and warrants do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the warrant agreement and the warrant
certificates relating to each series of warrants which we will file with the
SEC and incorporate by reference as an exhibit to the registration statement of
which this prospectus is a part at or prior to the time of the issuance of any
series of warrants.
General
The applicable prospectus
supplement will describe the terms of the warrants, including as applicable:
·
the offering price;
·
the aggregate number or amount of
underlying securities purchasable upon exercise of the warrants and the
exercise price;
·
the number of warrants being offered;
·
the date, if any, after which the
warrants and the underlying securities will be transferable separately;
·
the date on which the right to exercise
the warrants will commence, and the date on which the right will expire (the Expiration
Date);
·
the number of warrants outstanding, if
any;
·
any material United States federal income
tax consequences;
·
the terms, if any, on which we may
accelerate the date by which the warrants must be exercised; and
·
any other terms of the warrants,
including terms, procedures and limitations relating to the exchange and
exercise of the warrants.
Warrants will be offered
and exercisable for United States dollars only and will be in registered form
only.
Holders of warrants will
be able to exchange warrant certificates for new warrant certificates of
different denominations, present warrants for registration of transfer, and
exercise warrants at the corporate trust office of the warrant agent or any
other office indicated in the applicable prospectus supplement. Prior to the
exercise of any warrants, holders of the warrants to purchase shares of common
stock or preferred stock will not have any rights of holders of shares of
common stock or preferred stock, including the right to receive payments of
dividends, if any, or to exercise any applicable right to vote.
Certain
Risk Considerations
Any warrants we issue
will involve a degree of risk, including risks arising from fluctuations in the
price of the underlying shares of common stock, shares of preferred stock or
debt securities and general risks applicable to the securities market (or
markets) on which the underlying securities trade, as applicable.
Prospective purchasers of
the warrants will need to recognize that the warrants may expire worthless and,
thus, purchasers should be prepared to sustain a total loss of the purchase
price of their warrants. This risk reflects the nature of a warrant as an asset
which, other factors held constant, tends to decline in value over time and
which may, depending on the price of the underlying securities, become
worthless when it expires. The trading price of a warrant at any time is
expected to increase if the price of or, if applicable, dividend rate on, the
underlying securities increases. Conversely, the trading price of a warrant is
expected to decrease as the time remaining to expiration of
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the warrant decreases and
as the price of or, if applicable, dividend rate on, the underlying securities,
decreases. Assuming all other factors are held constant, the more a warrant is out-of-the-money
(i.e., the more the exercise price exceeds the price of the underlying
securities and the shorter its remaining term to expiration), the greater the
risk that a purchaser of the warrant will lose all or part of his or her
investment. If the price of the underlying securities does not rise before the
warrant expires to an extent sufficient to cover a purchasers cost of the
warrant, the purchaser will lose all or part of his or her investment in the
warrant upon expiration.
In addition, prospective
purchasers of the warrants should be experienced with respect to options and
option transactions, should understand the risks associated with options and
should reach an investment decision only after careful consideration, with
their financial advisers, of the suitability of the warrants in light of their
particular financial circumstances and the information discussed in this
prospectus and, if applicable, the prospectus supplement. Before purchasing,
exercising or selling any warrants, prospective purchasers and holders of warrants
should carefully consider, among other things:
·
the trading price of the warrants;
·
the price of the underlying securities at
that time;
·
the time remaining to expiration; and
·
any related transaction costs.
Some of the factors
referred to above are in turn influenced by various political, economic and
other factors that can affect the trading price of the underlying securities
and should be carefully considered prior to making any investment decisions.
Purchasers of the
warrants should further consider that the initial offering price of the
warrants may be in excess of the price that a purchaser of options might pay
for a comparable option in a private, less liquid transaction. In addition, it
is not possible to predict the price at which the warrants will trade in the
secondary market or whether any such market will be liquid. We may, but will
not be obligated to, file an application to list any warrants on a United
States national securities exchange. To the extent that any warrants are exercised,
the number of warrants outstanding will decrease, which may result in a
lessening of the liquidity of the warrants. Finally, the warrants will
constitute our direct, unconditional and unsecured obligations, and as such
will be subject to any changes in our perceived creditworthiness.
Exercise
of Warrants
Each holder of a warrant
will be entitled to purchase that number or amount of underlying securities, at
the exercise price, as will in each case be described in the prospectus
supplement relating to the offered warrants. After the close of business on the
Expiration Date (which may be extended by us), unexercised warrants will become
void.
Holders may exercise
warrants by delivering to the warrant agent payment as provided in the
applicable prospectus supplement of the amount required to purchase the
underlying securities purchasable upon exercise, together with the information
set forth on the reverse side of the warrant certificate. Warrants will be
deemed to have been exercised upon receipt of payment of the exercise price,
subject to the receipt within five business days of the warrant certificate
evidencing the exercised warrants. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the warrant agent or any other office indicated in the applicable prospectus
supplement, we will, as soon as practicable, issue and deliver the underlying
securities purchasable upon such exercise. If fewer than all of the warrants
represented by a warrant certificate are exercised, we will issue a new warrant
certificate for the remaining amount of warrants.
Amendments
and Supplements to Warrant Agreements
We may amend or
supplement the warrant agreement without the consent of the holders of the
warrants issued under the agreement to effect changes that are not inconsistent
with the provisions of the warrants and that do not adversely affect the
interests of the holders.
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DESCRIPTION OF RIGHTS
We may issue rights for
the purchase of shares of our common stock, shares of our preferred stock or
debt securities. Each series of rights will be issued under a separate rights
agreement which we will enter into with a bank or trust company, as rights
agent, all as set forth in the applicable prospectus supplement. The rights
agent will act solely as our agent in connection with the certificates relating
to the rights and will not assume any obligation or relationship of agency or
trust with any holders of rights certificates or beneficial owners of rights.
We will file the rights agreement and the rights certificates relating to each
series of rights with the SEC, and incorporate them by reference as an exhibit
to the registration statement of which this prospectus is a part on or before
the time we issue a series of rights.
The applicable prospectus
supplement will describe the terms of any rights we issue, including as
applicable:
·
the date for determining the persons
entitled to participate in the rights distribution;
·
the aggregate number or amount of
underlying securities purchasable upon exercise of the rights and the exercise
price;
·
the aggregate number of rights being
issued;
·
the date, if any, on and after which the
rights may be transferable separately;
·
the date on which the right to exercise
the rights commences and the date on which the right expires;
·
the number of rights outstanding, if any;
·
any material United States federal income
tax consequences; and
·
any other terms of the rights, including
the terms, procedures and limitations relating to the distribution, exchange
and exercise of the rights.
Rights will be
exercisable for United States dollars only and will be in registered form only.
DESCRIPTION
OF UNITS
We may issue securities in units, each consisting of two or more types
of securities. For example, we might issue units consisting of a combination of
debt securities and warrants to purchase common stock. If we issue units, the
prospectus supplement relating to the units will contain the information
described above with regard to each of the securities that is a component of
the units. In addition, the prospectus supplement relating to units will
describe the terms of any units we issue, including as applicable:
·
the date, if any, on and after which the units may be
transferable separately;
·
whether we will apply to have the units traded on a
securities exchange or securities quotation system;
·
any material United States federal income tax
consequences; and
·
how, for United States federal income tax purposes,
the purchase price paid for the units is to be allocated among the component
securities.
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CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSIDERATIONS
The following discussion
summarizes the material U.S. federal income tax considerations regarding our
qualification and taxation as a REIT and the material U.S. federal income tax
considerations to U.S. Holders and Non-U.S. Holders (as defined below) of the
purchase, ownership and disposition of our securities. This discussion is based upon the provisions
of the Code, the final and temporary Treasury regulations promulgated
thereunder and administrative rulings and judicial decisions now in effect, all
of which are subject to change (possibly with retroactive effect) or different
interpretations. This summary does not
purport to deal with all aspects of U.S. federal income taxation that may be
relevant to an investors decision to purchase shares of our common stock, nor
any tax consequences arising under the laws of any state, locality or foreign
jurisdiction or under any federal tax laws other than U.S. federal income tax
laws. This summary is not intended to be
applicable to all categories of investors, such as dealers in securities, banks,
thrifts, or other financial institutions, insurance companies, regulated
investment companies, tax-exempt organizations, U.S. expatriates, persons that
hold common stock as part of a straddle, conversion transaction, or hedge,
partnerships or other pass-through entities and persons holding our common
stock through a partnership or other pass-through entity, a holder who received
our stock through the exchange of employee stock options or otherwise as
compensation, persons deemed to sell our common stock under the constructive
sale provisions of the Code, persons whose functional currency is other than
the U.S. dollar, holders subject to the alternative minimum tax, foreign
governments or international organizations, each of which may be subject to
special rules. In addition, this
discussion is limited to persons who hold our common stock as capital assets
(generally, property held for investment) within the meaning of Section 1221
of the Code.
The sections of the Code
relating to qualification and operation as a REIT, and the U.S. federal income
tax treatment of a REIT and its stockholders, are highly technical and
complex. The following discussion sets
forth only the material aspects of those sections. This summary is qualified in its entirety by
the applicable Code provisions and the related rules and Treasury
regulations.
THIS SECTION IS NOT
A SUBSTITUTE FOR CAREFUL TAX PLANNING.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE SPECIFIC FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES TO YOU REGARDING THE PURCHASE,
OWNERSHIP AND SALE OF THE SECURITIES BEING OFFERED BY THIS PROSPECTUS. YOU SHOULD ALSO CONSULT WITH YOUR TAX ADVISOR
REGARDING THE IMPACT OF POTENTIAL CHANGES IN THE APPLICABLE TAX LAWS.
Taxation
of Our Company
We have elected to be
taxed as a REIT under Sections 856 through 860 of the Code, commencing with our
taxable year ending December 31, 1994.
We believe that we are organized and have operated in a manner that
qualifies us for taxation as a REIT under the Code. We further believe that our proposed future
method of operation will enable us to continue to qualify as a REIT. However, no assurances can be given that our
beliefs or expectations will be fulfilled, since qualification as a REIT
depends on our continuing to satisfy numerous asset, income and distribution
tests described below, which in turn depends, in part, on our operating
results.
We generally are not
subject to U.S. federal income tax on the portion of our taxable income or
capital gain that is distributed to stockholders annually as long as we qualify
as a REIT. This treatment substantially
eliminates the double taxation (at the corporate and stockholder levels) that
typically results from investment in a corporation.
Notwithstanding our
qualification as a REIT, we are subject to U.S. federal income tax as follows:
·
we are taxed at normal corporate rates on any
undistributed net income (including undistributed net capital gains);
·
if we fail to satisfy either the 75% or the 95% gross
income tests (discussed below), but nonetheless maintain our qualification as a
REIT because other requirements are met, we will be subject to a 100% tax on
the greater of (1) the amount by which we fail the 75% test and (2) the
excess of 95% of our gross income over the amount of gross income attributable
to sources that qualify under the 95% test, in either case, multiplied by a
fraction intended to reflect our profitability;
·
pursuant to provisions in recently enacted
legislation, if we should fail to satisfy the asset or other requirements applicable
to REITs, as described below, yet nonetheless maintain our qualification as a
REIT because there is reasonable cause for the failure and other applicable
requirements are met, we may be subject to an excise tax;
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·
we are subject to a tax of 100% on net income from any
prohibited transaction;
·
we are subject to tax, at the highest corporate rate,
on net income from (1) the sale or other disposition of foreclosure
property which is held primarily for sale to customers in the ordinary course
of business or (2) other non-qualifying income from foreclosure property;
·
if we fail to distribute during each calendar year at
least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95%
of our REIT capital gain income for the year and (3) any undistributed
taxable income from prior years, we will be subject to a 4% excise tax on the
excess of the required distribution over the sum of (a) the amounts
actually distributed plus (b) the amounts with respect to which certain
taxes are imposed on us;
·
if we acquire any asset from a C corporation (that
is, a corporation generally subject to the full corporate level tax) in a
transaction in which the basis of the asset in our hands is determined by
reference to the basis of the asset in the hands of the C corporation, and we
recognize gain on the disposition of the asset during a ten-year period
beginning on the date that we acquired the asset, then the assets built-in
gain generally will be subject to tax at the highest regular corporate rate;
·
we are subject to the corporate alternative minimum
tax, as well as additional taxes if we find ourselves in situations not
presently contemplated; and
·
a 100% tax may be imposed on certain transactions
between a REIT and a taxable REIT subsidiary that do not reflect arms length
terms.
Our management companies
that are referred to as taxable REIT subsidiaries (within the meaning of Section 856(l)(1) of
the Code), including Macerich Management Company and Westcor Partners, LLC, are
taxed on their income at regular corporate rates. We use the calendar year both for U.S.
federal income tax purposes and for financial reporting purposes.
Requirements
for Qualification
To qualify as a REIT for
U.S. federal income tax purposes, we must elect to be treated as a REIT, and we
must meet various (a) organizational requirements, (b) gross income
tests, (c) assets tests and (d) annual distribution requirements.
Organizational Requirements.
We must be organized as a corporation, trust or association:
(1)
that is managed by one or more trustees
or directors;
(2)
the beneficial ownership of which is
evidenced by transferable shares, or by transferable certificates of beneficial
interest;
(3)
that would be taxable as a domestic
corporation, but for Sections 856 through 860 of the Code;
(4)
that is neither a financial institution
nor an insurance company subject to specified provisions of the Code;
(5)
the beneficial ownership of which is held
by 100 or more persons;
(6)
during the last half of each taxable year
not more than 50% in value of the outstanding stock of which is owned, directly
or indirectly, or by application of certain constructive ownership rules, by
five or fewer individuals (as defined in the Code to include some entities that
would not ordinarily be considered individuals); and
(7)
that meets other tests, described below,
regarding the nature of its income and assets.
The Code provides that
conditions (1) through (4) must be met during our entire taxable
year, and that condition (5) must be met during at least 335 days of
a taxable year of 12 months, or during a proportionate part of a taxable
year of less than 12 months. Our
charter provides for restrictions regarding transfer of our capital stock, in
order to assist us
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in continuing to satisfy
the share ownership requirements described in (5) and (6) above. These transfer restrictions are described in Description
of Our Capital StockRestrictions on Transfer and Ownership.
We are treated as having
satisfied condition (6) above if we comply with the regulatory
requirements to request information from our stockholders regarding their
actual ownership of our stock, and do not know, or in exercising reasonable
diligence would not have known, that we failed to satisfy this condition. If we fail to comply with these regulatory
requirements for any taxable year we will be subject to a penalty of $25,000,
or $50,000 if such failure was intentional.
However, if our failure to comply was due to reasonable cause and not
willful neglect, no penalties will be imposed.
Gross Income Tests.
We must
satisfy the following two separate gross income tests each year:
·
75% Gross Income Test.
At least 75% of our gross income (excluding gross income from prohibited
transactions and certain foreign currency gains recognized after July 30,
2008) must consist of income derived directly or indirectly from investments
relating to real property or mortgages on real property (generally including
rents from real property, dividends from other REITs, and, in some
circumstances, interest on mortgages), or some types of temporary investment
income.
·
95% Gross Income Test. At least 95% of our gross income (excluding
gross income from prohibited transactions, certain hedging transactions and
certain foreign currency gains recognized after July 30, 2008) must
consist of items that satisfy the 75% gross income test and certain other
items, including dividends, interest and gain from the sale or disposition of
stock or securities (or from any combination of these types of income).
Rents from Real Property.
Rents received
by us qualify as rents from real property in satisfying the gross income
tests described above if the following conditions are met. First, the amount of rent must not be based,
in whole or in part, on the income or profits of any person. An amount received or accrued generally is
not excluded from the term rents from real property solely because the amount
is based on a fixed percentage or percentages of receipts or sales. Second, we, or an owner of 10% or more of our
equity securities, must not directly or constructively own 10% or more of a
tenant. Third, if more than 15% of the
total rent we receive under a lease is attributable to personal property leased
in connection with a lease of real property, then the portion of rent
attributable to that personal property does not qualify as rents from real
property. Finally, we generally must not operate or manage the property, or
furnish or render services to the tenants of the property, other than through
an independent contractor from whom we do not derive revenue. However, we may directly perform services
that are usually or customarily rendered in connection with the rental of
space for occupancy only or are not otherwise considered rendered to the
occupant for its convenience. A de
minimis amount of up to 1% of the gross income may be received by us from each
property from the provision of non-customary services without disqualifying all
other amounts received from that property as rents from real property.
However, the de minimis amount itself will not qualify as rents from real
property for purposes of the 75% and 95% gross income tests. In addition, we may furnish certain services
(including non-customary services) through a taxable REIT subsidiary, which
includes a corporation other than a REIT in which we hold stock and that has
made a joint election with us to be treated as a taxable REIT subsidiary. As mentioned above, a taxable REIT subsidiary
is subject to U.S. federal income tax at regular corporate rates.
For purposes of the
above, rents received from a tenant that is a taxable REIT subsidiary, however,
will not be excluded from the definition of rents from real property if at
least 90% of the space at the property to which the rents relate is leased to
third parties, and the rents paid by our taxable REIT subsidiary are
substantially comparable to rents by our other tenants for comparable
space. Whether rents paid by a taxable
REIT subsidiary are substantially comparable to rents paid by other tenants is
determined at the time the lease with the taxable REIT subsidiary is entered
into, extended, or modified, if such modification increases the rents due under
such lease. Notwithstanding the
foregoing, however, if a lease with a controlled taxable REIT subsidiary is
modified and such modification results in an increase in the rents payable by
such taxable REIT subsidiary, any such increase will not qualify as rents from
real property. For purposes of this rule, a controlled taxable REIT
subsidiary is a taxable REIT subsidiary in which we own stock representing
more than 50% of the total voting power or value of the outstanding stock of
such taxable REIT subsidiary.
Certain of our affiliates,
including Macerich Property Management Company, LLC and Macerich Westcor
Management, LLC, have provided and will continue to provide services with
respect to shopping centers wholly owned by us (Centers) and any
newly-acquired, wholly-owned property of the Macerich Partnership our operating
partnership or certain of our property partnerships. We believe that all of the services so
provided were and will be of the type usually or customarily rendered in connection
with the rental of space for occupancy only.
Therefore, the
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provision of those
services will not cause the rents received with respect to the Centers or
newly-acquired centers to fail to qualify as rents from real property for
purposes of the 75% and 95% gross income tests.
In addition, we have elected taxable REIT subsidiary status with respect
to certain of our affiliates. If
Macerich Partnership or a property partnership contemplates providing services
in the future that reasonably might be expected to fail the usual or customary
standard, it will arrange to have those services provided by an independent
contractor from which neither Macerich Partnership nor any property partnership
receives any income, or by one of our taxable REIT subsidiaries.
Prohibited Transactions.
Net income
from prohibited transactions is subject to a 100% tax. The term prohibited transaction generally
includes a sale or other disposition of property (other than foreclosure
property) that is held primarily for sale to customers in the ordinary course
of a trade or business. We believe that
none of the assets owned by Macerich Partnership, the property partnerships, or
us are held for sale to customers.
Further, the sale of any Center and associated property will not be in
the ordinary course of business of Macerich Partnership, the relevant property
partnership or us. We will attempt to
comply with the terms of the safe harbor provisions in the Code prescribing
when asset sales will not be characterized as prohibited transactions. However, we may not always comply with the
safe harbor and in the absence of the safe harbor whether property is held primarily
for sale to customers in the ordinary course of a trade or business depends on
the facts and circumstances, including those related to a particular
property. As such, complete assurance
cannot be given that we can comply with the safe harbor provisions of the Code
or avoid owning property that may be characterized as property held primarily
for sale to customers in the ordinary course of business.
Effect of Subsidiary Entities.
In the case of a REIT that is a partner in a partnership, Treasury
regulations provide that the REIT will be deemed to own its proportionate share
of the assets of the partnership and will be deemed to be entitled to the
income of the partnership attributable to such share. In addition, the character of the assets and
gross income of the partnership will remain the same in the hands of the REIT
for U.S. federal income tax purposes.
Thus, our proportionate share of the assets, liabilities and items of
income of Macerich Partnership and our property partnerships will be treated as
our assets, liabilities and items of income for purposes of applying the REIT
requirements described in this prospectus supplement.
Our investment in the
Centers directly or indirectly through Macerich Partnership and property
partnerships should give rise to qualifying income in the form of rents and
gains on the sales of Centers.
Substantially all income derived by us from our taxable REIT
subsidiaries will be in the form of dividends on the stock and equity interests
owned by Macerich Partnership. While
these dividends only satisfy the 95% (and not the 75%) gross income test, we
anticipate that non-qualifying income on our investments (including dividend
income) will not result in our failing any of the gross income tests.
Redetermined Rents.
Any redetermined
rents, redetermined deductions or excess interest we generate will be subject
to a 100% penalty tax. In general,
redetermined rents are rents from real property that are overstated as a result
of services furnished to any of our tenants by one of our taxable REIT
subsidiaries, and redetermined deductions and excess interest represent amounts
that are deducted by a taxable REIT subsidiary for amounts paid to us that are
in excess of the amounts that would have been deducted based on arms length
negotiations. Rents we receive will not
constitute redetermined rents if they qualify for the safe harbor provisions
contained in the Code. Safe harbor
provisions are provided where generally:
·
amounts are excluded from the definition of
impermissible tenant service income as a result of satisfying the 1% de minimis
exception;
·
the taxable REIT subsidiary renders a significant
amount of similar services to unrelated parties, and the charges for such
services are substantially comparable;
·
rents paid to the REIT by tenants who are not
receiving services from the taxable REIT subsidiary are substantially
comparable to the rents paid by the REITs tenants leasing comparable space who
are receiving such services from the taxable REIT subsidiary, and the charge
for services is separately stated; and
·
the taxable REIT subsidiarys gross income from the
services is not less than 150% of the subsidiarys direct cost in furnishing or
rendering the service.
Relief Provisions for Failing the 75% or the 95% Gross
Income Tests.
If we fail to satisfy one or both of the 75%
or 95% gross income tests for any taxable year, we may nevertheless qualify as
a REIT for that year if we are entitled to relief under provisions of the Code. Relief provisions are generally available if:
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·
following our identification of the failure to meet
the 75% or 95% gross income tests for any taxable year, we file a schedule
with the Internal Revenue Service (the IRS) setting forth each item of our
gross income for purposes of the 75% or 95% gross income tests for such taxable
year in accordance with forthcoming Treasury regulations; and
·
our failure to meet these tests was due to reasonable
cause and not willful neglect.
However, it is not
possible to state whether in all circumstances we would be entitled to the
benefit of these relief provisions. As
discussed above in Taxation of our Company, even if the relief provisions
apply, a tax will be imposed with respect to some or all of our excess
nonqualifying gross income, reduced by approximated expenses.
Asset Tests.
We must
satisfy the following four tests relating to the nature of our assets at the
close of each quarter of our taxable year:
·
at least 75% of the value of our total assets must be
represented by real estate assets (including (1) our allocable share of
real estate assets held by partnerships in which we own an interest, (2) stock
or debt instruments held for not more than one year purchased with the proceeds
of a stock offering or long-term (at least five years) debt offering of our
company, cash, cash items and government securities and (3) stock in other
REITs);
·
not more than 25% of our total assets may be
represented by securities other than those in the 75% asset class;
·
of the investments included in the 25% asset class,
the value of any one issuers securities owned by us may not exceed 5% of the
value of our total assets (unless the issuer is a taxable REIT subsidiary), and
we may not own more than 10% of the vote or value of any one issuers
outstanding securities (unless the issuer is a taxable REIT subsidiary or we
can avail ourselves of the rules relating to certain securities and straight
debt summarized below); and
·
not more than 20% of the value of our total assets
(25% for taxable years beginning after July 30, 2008) may be represented
by securities of one or more taxable REIT subsidiaries.
For purposes of these
tests, the term securities does not include equity or debt securities of a
qualified REIT subsidiary, mortgage loans that constitute real estate assets,
other securities included in the 75% asset class above, or equity interests in
a partnership. The term securities,
however, generally includes debt securities issued by a partnership or another
REIT. However, straight debt
securities and certain other obligations, including loans to individuals or
estates, certain specified loans to partnerships, certain specified rental
agreements and securities issued by REITs are not treated as securities for
purposes of the 10% value asset test. Straight
debt means a written unconditional promise to pay on demand or on a specified
date a sum certain in money if (i) the debt is not convertible, directly
or indirectly, into stock, (ii) the interest rate and interest payment
dates are not contingent on profits, the borrowers discretion, or similar
factors (subject to certain specified exceptions), and (iii) the issuer is
either not a corporation or partnership, or the only securities of the issuer
held by us, and certain of our taxable REIT subsidiaries, subject to a de
minimis exception, are straight debt and other specified assets.
Our investment in the
Centers through our interest in Macerich Partnership and property partnerships
will constitute qualified assets for purposes of the 75% asset test.
Macerich Partnership owns
100% of the outstanding stock of Macerich Management Company, which has elected
taxable REIT subsidiary status. In
addition, Macerich Partnership owns indirectly 100% of the interests in Westcor
Partners, LLC, which also has elected taxable REIT subsidiary status. Because we have a partnership interest in
Macerich Partnership, we are deemed to own our pro rata share of the assets of
Macerich Partnership, including the securities of Macerich Management Company
and the interests in Westcor Partners, LLC.
Macerich Property Management Company, LLC and Macerich Westcor Management,
LLC are both single member limited liability companies that are disregarded for
U.S. federal income tax purposes.
Because the management
companies are either taxable REIT subsidiaries or are disregarded entities for
U.S. federal income tax purposes, Macerich Partnership does not violate the
limitation on holding more than 10% of the voting securities of any one
issuer. In addition, not more than 20%
of our total assets consists of securities issued by the management companies
that have elected taxable REIT subsidiary status.
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The above asset tests
must be satisfied not only on the date that we acquire, directly or through
Macerich Partnership, securities in the applicable issuer, but also in each
quarter we acquire any security or other property, including as a result of
increasing our interest in Macerich Partnership. After initially meeting the asset tests at
the beginning of any quarter, we will not lose our REIT status if we fail to
satisfy the asset tests at the end of a later quarter solely by reason of
changes in the relative values of our assets.
If the failure to satisfy the asset tests results from the acquisition
of securities or other property during a quarter, the failure can be cured by a
disposition of sufficient non-qualifying assets or acquisition of sufficient
qualifying assets within 30 days after the close of that quarter. Although we believe we have satisfied the
asset tests and plan to take steps to ensure that we satisfy such steps for any
quarter with respect to which retesting is to occur, there can be no assurance
that such steps will always be successful, or will not require a reduction in
Macerich Partnerships overall interest in an issuer. If we fail to cure the noncompliance with the
asset tests within this 30-day period, we could fail to qualify as a REIT.
In certain cases, we may
avoid disqualification for any taxable year if we fail to satisfy the asset
tests after the 30 day cure period.
We will be deemed to have met certain of the REIT asset tests if the
value of our non-qualifying assets for such tests (i) does not exceed the
lesser of (a) 1% of the total value of our assets at the end of the
applicable quarter or (b) $10,000,000, and (ii) we dispose of the
non-qualifying assets within (a) six months after the last day of the
quarter in which the failure to satisfy the asset tests is discovered or (b) the
period of time prescribed by forthcoming Treasury regulations. For violations due to reasonable cause rather
than willful neglect that are in excess of the de minimis exception described
above, we may avoid disqualification as a REIT, after the 30 day cure
period, by taking steps including (i) the disposition of sufficient assets
to meet the asset test within (a) six months after the last day of the
quarter in which the failure to satisfy the asset tests is discovered or (b) the
period of time prescribed by forthcoming Treasury regulations, (ii) paying
a tax equal to the greater of (a) $50,000 or (b) the highest
corporate tax rate multiplied by the net income generated by the non-qualifying
assets, and (iii) disclosing certain information to the IRS. If we fail the asset test and cannot avail
ourselves of these relief provisions, we may fail to qualify as a REIT.
Annual Distribution Requirements.
We are required to distribute dividends (other than capital gain
dividends) to our stockholders in an amount at least equal to (A) the sum
of (1) 90% of our REIT taxable income (computed without regard to the
dividends paid deduction and our net capital gain) and (2) 90% of the net
income (after tax), if any, from foreclosure property, minus (B) the sum
of specified items of noncash income.
Dividends must be paid in the taxable year to which they relate, or in
the following taxable year if declared before we timely file our tax return for
that year and if paid on or before the first regular dividend payment after the
declaration. To the extent that we do
not distribute all of our net capital gain or distribute at least 90%, but less
than 100%, of our REIT taxable income, as adjusted, we will be subject to tax
on the undistributed amount at regular ordinary and capital gains corporate tax
rates, as applicable. We may designate
all or a portion of our undistributed net capital gains as being includable in
the income of our stockholders as gain from the sale or exchange of a capital
asset. If so, the stockholders receive
an increase in the basis of their stock in the amount of the income
recognized. Stockholders are also to be
treated as having paid their proportionate share of the capital gains tax
imposed on us on the undistributed amounts and receive a corresponding decrease
in the basis of their stock.
Furthermore, if we should fail to distribute during each calendar year
at least the sum of (1) 85% of our REIT ordinary income for that year, (2) 95%
of our REIT capital gain net income for that year and (3) any
undistributed taxable income from prior periods, we would be subject to a 4%
excise tax on the excess of the required distribution over the sum of (a) the
amounts actually distributed and (b) the amounts on which certain taxes
are imposed on us. We have made and
intend to make timely distributions sufficient to satisfy all annual
distribution requirements.
From time to time, we may
experience timing differences between (1) the actual receipt of income and
actual payment of deductible expenses and (2) the inclusion of that income
and deduction of those expenses in arriving at our taxable income. Further, from time to time, we may be
allocated a share of net capital gain attributable to the sale of depreciated
property which exceeds our allocable share of cash attributable to that
sale. Additionally, we may incur cash
expenditures that are not currently deductible for tax purposes. As such, we may have less cash available for
distribution than is necessary to meet our annual 90% distribution requirement
or to avoid tax with respect to capital gain or the excise tax imposed on
specified undistributed income. To meet
the 90% distribution requirement necessary to qualify as a REIT or to avoid tax
with respect to capital gain or the excise tax imposed on specified
undistributed income, we may find it appropriate to arrange for short-term (or
possibly long-term) borrowings or to pay distributions in the form of taxable
stock dividends. We are required to
arrange through Macerich Partnership any borrowings for the purpose of making
distributions to stockholders.
Under circumstances
relating to any IRS audit adjustments that increase income, we may be able to
rectify a failure to meet the distribution requirement for a year by paying deficiency
dividends to stockholders in a later year, which may be included in our
deduction for dividends paid for the earlier year. Thus, we may be able to avoid being
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disqualified as a REIT or
taxed on amounts distributed as deficiency dividends. However, we will be required to pay interest
based upon the amount of any deduction taken for deficiency dividends.
Record Keeping Requirements.
To elect taxation as a REIT under applicable Treasury regulations, we
must maintain records and request information from our stockholders designed to
disclose the actual ownership of our stock.
We have complied and intend to continue to comply with these requirements.
Affiliated REITs.
Macerich
Partnership owns 100% of the outstanding common stock of Macerich PPR Corp.,
which in turn owns a 51% interest in Pacific Premier Retail Trust. These affiliated REITs must also meet the
REIT tests discussed above. The failure
of either of these affiliated REITs to qualify as a REIT could cause us to fail
to qualify as a REIT, because we would then own (through Macerich Partnership)
more than 10% of the securities of an issuer that was neither a REIT, a
qualified REIT subsidiary nor a taxable REIT subsidiary. We believe that the affiliated REITs have
been organized and operated in a manner that will permit them to qualify as
REITs. The affiliated REITs, however,
may be personal holding companies within the meaning of the Code, and may
thereby be subject to the personal holding company tax.
Failure
to Qualify as a REIT
If we fail to qualify for taxation as a REIT for U.S.
federal income tax purposes in any taxable year and the relief provisions do
not apply, we will be subject to tax (including any applicable alternative
minimum tax) on our taxable income at regular corporate rates. Distributions to stockholders in any year in
which we fail to qualify will not be deductible by us, nor will we be required
to make those distributions. If we fail
to so qualify and the relief provisions do not apply, to the extent of current
and accumulated earnings and profits, all distributions to stockholders will be
taxable at capital gain rates (through 2010), and, subject to specified limitations
of the Code, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief
under specific statutory provisions, we will also be disqualified from taxation
as a REIT for the four taxable years following the year during which we ceased
to qualify as a REIT. It is not possible
to state whether in all circumstances we would be entitled to statutory relief.
We can invoke specified
cure provisions for any taxable year in the event we violate a provision of the
Code that would otherwise result in our failure to qualify as a REIT for U.S.
federal income tax purposes. These cure
provisions would limit the instances causing our disqualification as a REIT for
violations due to reasonable cause, and would instead require the payment of a
monetary penalty.
Tax
Aspects of Our Investments in Partnerships
We hold direct or
indirect interests in Macerich Partnership and the property partnerships (each
individually a Partnership and, collectively, the Partnerships). In general, partnerships are pass-through
entities which are not subject to U.S. federal income tax. Rather, partners are allocated their
proportionate shares of the items of income, gain, loss, deduction and credit
of a partnership. Further, the partners
are potentially subject to tax thereon without regard to whether the partners
receive a distribution from the partnership.
We will include our proportionate share of the items of income, gain,
loss, deduction and credit of the Partnerships for purposes of the various REIT
income tests. See above Requirements
for QualificationGross Income Tests. Any resulting increase in our REIT
taxable income will increase our distribution requirements (see above Requirements
for QualificationAnnual Distribution Requirements).
However, these increases
will not be subject to U.S. federal income tax in our hands provided that the
income is distributed by us to our stockholders. Moreover, for purposes of the REIT asset
tests (see above Requirements for QualificationAsset Tests), we will
include our proportionate share of assets held by the Partnerships.
Tax Allocations with Respect to Contributed Properties.
Under Section 704(c) of the Code, income, gain, loss and
deduction attributable to appreciated or depreciated property that is
contributed to a partnership in exchange for an interest in the partnership
must be allocated in a manner such that the contributing partner is charged
with, or benefits from, respectively, the unrealized gain or unrealized loss
associated with the property at the time of the contribution. The amount of the unrealized gain or
unrealized loss is generally equal to the difference between the fair market
value of contributed property at the time of contribution, and the adjusted tax
basis of the property at the time of contribution (a Book-Tax Difference). These allocations are solely for U.S. federal
income tax purposes and do not affect the book capital accounts or other
economic or legal arrangements among the partners. Macerich Partnership was formed principally
by way of contributions of appreciated property. Consequently, the Partnership Agreement
requires these allocations to be made in a manner consistent with Section 704(c) of
the Code.
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In general, the limited
partners of Macerich Partnership who contributed properties to it will be
allocated lower amounts of depreciation deductions for tax purposes and
increased taxable income and gain on sale by the Partnerships of the
contributed assets. This will tend to
eliminate the Book-Tax Difference over the life of the Partnerships. However, the special allocation rules of
Section 704(c) of the Code do not always rectify the Book-Tax
Difference on an annual basis or with respect to a specific taxable transaction
such as a sale. Under the applicable
Treasury regulations, special allocations of income and gain and depreciation
deductions must be made on a property-by-property basis. Depreciation deductions resulting from the
carryover basis of a contributed property are used to eliminate the Book-Tax
Difference by allocating these deductions to the non-contributing partners
(i.e., the REIT and the other non-contributing partners) up to the amount of
their share of book depreciation. Any
remaining tax depreciation for the contributed property would be allocated to
the partners that contributed the property.
Macerich Partnership intends to elect the traditional method of
rectifying the Book-Tax Difference under the applicable Treasury regulations,
under which, if depreciation deductions are less than the non-contributing
partners share of book depreciation, then the non-contributing partners lose
the benefit of these deductions (ceiling rule). When the property is sold, the resulting tax
gain is used to the extent possible to eliminate the Book-Tax Difference
(reduced by any previous book depreciation).
Because of the application of the ceiling rule it is anticipated
that tax depreciation will be allocated substantially in accordance with the
percentages of Macerich Partnership units held by us and the limited partners
of Macerich Partnership, notwithstanding Section 704(c) of the
Code. Thus, the carryover basis of the
contributed assets in the hands of the Partnerships will cause us to be
allocated lower depreciation and other deductions, and possibly greater amounts
of taxable income in the event of a sale of those contributed assets in excess
of the economic or book depreciation allocated to them, and possibly the
economic and book income or gain allocated to them as a result of the
sale. This may cause us to recognize
taxable income in excess of cash proceeds, which might adversely affect our
ability to comply with the REIT distribution requirements. See above Requirements for
QualificationAnnual Distribution Requirements.
Taxation
of Stockholders
Taxation of Taxable U.S. Holders
U.S.
Holder and Non-U.S. Holder.
For purposes
of this summary, a U.S. Holder is a beneficial owner of our common stock that
is:
·
a citizen or resident of the United States;
·
a corporation or entity treated as a corporation for
U.S. federal income tax purposes created or organized in or under the laws of
the United States or any political subdivision of the United States;
·
an estate, the income of which is subject to U.S.
federal income taxation regardless of its source; or
·
a trust if it (1) is subject to the primary
supervision of a court within the United States, and one or more U.S. persons
have authority to control all substantial decisions of the trust or (2) has
a valid election in effect under applicable Treasury regulations to be treated
as a U.S. person.
A beneficial owner of our
common stock that is an individual, a corporation or entity treated as a
corporation for U.S. federal income tax purposes, an estate or trust and not a
U.S. Holder is referred to herein as a Non-U.S. Holder.
If a partnership, or
entity treated as a partnership for U.S. federal income tax purposes, holds our
common stock, the tax treatment of a partner will generally depend upon the
status of the partner and upon the activities of the partnership. Persons holding our common stock through a
partnership or other entity treated as a partnership for U.S. federal income
tax purposes should consult their own tax advisors.
Distributions.
As long as we qualify as a REIT for U.S. federal income tax purposes,
distributions made to our taxable U.S. Holders on our common stock will be
taxed as follows:
·
Distributions out of current or accumulated earnings
and profits (and not designated as capital gain dividends) generally constitute
ordinary dividend income to U.S. Holders and will not be eligible for the
dividends received deduction for corporations.
·
Distributions in excess of current and accumulated
earnings and profits are not taxable to a U.S. Holder to the extent that they
do not exceed the adjusted basis of the U.S. Holders shares, but rather reduce
the adjusted basis of those shares. To
the extent that distributions in excess of current and accumulated
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earnings and profits exceed the adjusted basis of a
U.S. Holders shares, they are to be included in income as long-term capital
gain (or short-term capital gain if the shares have been held for one year or
less).
·
Distributions designated as capital gain dividends
constitute long-term capital gains (to the extent they do not exceed our actual
net capital gain for the taxable year) without regard to the period for which
the U.S. Holder has held its stock.
Corporate U.S. Holders may be required to treat up to 20% of some capital
gain dividends as ordinary income.
·
Distributions declared by us in October, November or
December of any year payable to a U.S. Holder of record on a specified
date in October, November or December will be treated as both paid by
us and received by the U.S. Holder on December 31 of that year, provided
that the distribution is actually paid by us during January of the
following calendar year.
·
U.S. Holders may not include in their individual
income tax returns any of our net operating losses or capital losses.
·
In determining the extent to which a distribution
constitutes a dividend for U.S. federal income tax purposes, the Companys
earnings and profits generally will be allocated first to distributions with
respect to our preferred stock prior to allocating any remaining earnings and
profits to distributions on our common stock.
If we have net capital gains and designate some or all of our
distributions as capital gain dividends to that extent, although the proper tax
treatment of those amounts is not entirely clear, we intend to allocate the
capital gain dividends among different classes of stock in proportion to the
allocation of earnings and profits as described above.
Tax
Rates.
The maximum tax rate applicable to
non-corporate taxable U.S. Holders for long-term capital gains, including
capital gain dividends, and for certain dividends, has generally been reduced
to 15%. Short-term capital gains
recognized by non-corporate taxpayers are taxed at ordinary income rates
(currently up to 35%). Gains recognized
by corporate taxpayers (other than tax-exempt taxpayers) are subject to U.S.
federal income tax at a maximum rate of 35%, whether or not classified as
long-term capital gains. The
deductibility of capital losses is subject to certain limitations.
In general,
dividends paid by REITs are not eligible for the reduced 15% tax rate on
corporate dividends, except to the extent the REITs dividends are attributable
either to dividends received from taxable corporations (such as our taxable
REIT subsidiaries), to income that was subject to tax at the corporate (REIT)
level or to dividends properly designated by us as capital gain dividends. The currently applicable provisions of the
U.S. federal income tax laws relating to the 15% tax rate are currently
scheduled to sunset or revert back to the provisions of prior law effective
for taxable years beginning after December 31, 2010, at which time the
capital gains tax rate will be increased to 20% and the rate applicable to
dividends will be increased to the tax rate then applicable to ordinary income.
Sale,
Exchange, Repurchase or Other
Disposition of the Common Stock.
Upon a sale,
repurchase or other taxable disposition of our common stock, a U.S. Holder
generally will recognize capital gain or loss equal to the difference between
the amount of cash and the fair market value of property received on the sale
or other disposition and such holders adjusted tax basis in the common
stock. Such capital gain or loss will be
long-term capital gain or loss if a U.S. Holders holding period for the common
stock is more than one year. In general,
any loss upon a sale or exchange of shares by a U.S. Holder, if such holder has
held the shares for six months or less (after applying certain holding period
rules), will be treated as a long-term capital loss to the extent of
distributions from us required to be treated by such holder as long-term
capital gain. The deductibility of
capital losses is subject to a number of limitations.
Backup
Withholding and Information Reporting.
Information
with respect to dividends paid on our common stock and proceeds from the sale
or other disposition of our common stock may be required to be reported to U.S.
Holders and to the IRS. This obligation,
however, does not apply with respect to payments to certain U.S. Holders,
including corporations and tax-exempt organizations.
A U.S. Holder may be
subject to backup withholding (currently at a rate of 28%) with respect to
distributions paid on our common stock, or with respect to proceeds received
from a sale or other disposition of our common stock. Backup withholding will not apply, however,
if the U.S. Holder (i) is a corporation or comes within certain other
exempt categories and, when required, demonstrates such fact or (ii) provides
a taxpayer identification number, certifies as to no loss of exemption from
backup withholding and otherwise complies with applicable backup
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withholding rules. To establish status as an exempt person, a
U.S. Holder will generally be required to provide certification on IRS Form W-9.
U.S. Holders should
consult their personal tax advisor regarding their qualification for an
exemption from backup withholding and the procedures of obtaining such an
exemption, if applicable. The backup
withholding tax is not an additional tax and taxpayers may use amounts withheld
as a credit against their U.S. federal income tax liability or may claim a
refund as long as they timely provide certain information to the IRS.
Treatment of Tax-Exempt Holders.
Distributions on our common stock by us to a tax-exempt employee pension
trust, or other domestic tax-exempt holder, generally will not constitute
unrelated business taxable income (UBTI), unless the holder has borrowed to
acquire or carry our common stock.
However, qualified trusts that hold more than 10% (by value) of some
REITs may be required to treat a specified percentage of those REITs
distributions as UBTI. This requirement
will apply only if (1) the REIT would not qualify as such for U.S. federal
income tax purposes but for the application of a look-through exception to
the five or fewer requirement applicable to shares held by qualified trusts
and (2) the REIT is predominantly held by qualified trusts (as defined
below). A REIT is predominantly held if
either (1) a single qualified trust holds more than 25% by value of the
REIT interests; or (2) one or more qualified trusts, each owning more than
10% by value of the REIT interests, hold in the aggregate more than 50% of the
REIT interests. The percentage of any
REIT dividend treated as UBTI is equal to the ratio of (a) the UBTI earned
by the REIT (treating the REIT as if it were a qualified trust and therefore
subject to tax on UBTI) to (b) the total gross income (less specified
associated expenses) of the REIT. A
de minimis
exception applies where the
ratio set forth in the preceding sentence is less than 5% for any year. For those purposes, a qualified trust is any
trust described in Section 401(a) of the Code and exempt from tax
under Section 501(a) of the Code.
Because the provisions requiring qualified trusts to treat a portion of
REIT distributions as UBTI will not apply if the REIT is able to satisfy the five
or fewer requirement without relying upon the look-through exception, the
restrictions on ownership of our stock in our Charter generally should prevent
application of the provisions treating a portion of REIT distributions as UBTI
to tax-exempt entities purchasing our stock, absent approval by our Board of
Directors.
Taxation of Non-U.S. Holders.
This section provides a brief summary of the complex rules governing
U.S. federal income taxation of Non-U.S. Holders. Prospective Non-U.S. Holders should consult
with their own tax advisors to determine the impact of federal, state and local
income tax laws with regard to an investment in our common stock, including any
reporting requirements.
Distributions.
Distributions that are not attributable to gain from sales or exchanges
by us of U.S. real property interests and that may not be designated by us as
capital gains dividends generally will be treated as dividends of ordinary
income to the extent that they are made out of our current or accumulated
earnings and profits. These
distributions will ordinarily be subject to a withholding tax of 30% of the
gross amount of the distribution, unless an applicable tax treaty reduces or
eliminates that tax. However, if income
from the investment in our common stock is treated as effectively connected
with the Non-U.S. Holders conduct of a U.S. trade or business (through a U.S.
permanent establishment, if a Non-U.S. Holder is entitled to the benefits of an
applicable tax treaty and such tax treaty so requires as a condition for
taxation), the Non-U.S. Holder generally will be subject to a tax at graduated
rates, in the same manner that U.S. Holders are taxed with respect to
distributions of this kind (and may also be subject to the 30% branch profits
tax in the case of a Non-U.S. Holder that is a foreign corporation). We expect to withhold U.S. income tax at the
rate of 30% on the gross amount of any distributions of this kind made to a
Non-U.S. Holder, unless the Non-U.S. Holder files (1) an accurate and
complete IRS Form W-8BEN with us certifying that a lower treaty rate
applies, or (2) an accurate and complete IRS Form W-8ECI with us
claiming that the distribution is effectively connected income.
Distributions in excess
of our current and accumulated earnings and profits will not be taxable to a
Non-U.S. Holder to the extent that these distributions do not exceed the
adjusted basis of a Non-U.S. Holders shares, but rather will reduce the adjusted
basis of those shares. To the extent
that distributions in excess of current accumulated earnings and profits exceed
the adjusted basis of a Non-U.S. Holders shares, these distributions will give
rise to tax liability if the Non-U.S. Holder would otherwise be subject to tax
on any gain from the sale or disposition of his or her shares in us, as
described below. If it cannot be
determined, at the time a distribution is made, whether or not that
distribution will be in excess of current and accumulated earnings and profits,
the distributions will be subject to withholding at the same rate as
dividends. However, amounts thus
withheld are refundable by the IRS if it is subsequently determined that the
distribution was, in fact, in excess of our current and accumulated earnings
and profits and the proper forms are filed with the IRS by the Non-U.S. Holder
on a timely basis.
Distributions to a
Non-U.S. Holder that are designated by us at the time of the distribution
as capital gain dividends, other than those arising from the disposition of a
U.S. real property interest, generally should not be subject to
U.S. federal income taxation unless: (1) the investment in our common
stock is effectively connected with the
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Non-U.S. Holders
U.S. trade or business (through a U.S. permanent establishment, if a
Non-U.S. Holder is entitled to the benefits of an applicable tax treaty
and such tax treaty so requires as a condition for taxation), in which case the
Non-U.S. Holder will be subject to the same treatment as U.S. Holders
with respect to any gain, except that a holder that is a foreign corporation
also may be subject to the 30% branch profits tax, as discussed above; or (2) the
Non-U.S. Holder is a nonresident alien individual who is present in the
United States for more than 182 days during the taxable year and certain
other requirements are met, in which case the nonresident alien individual will
be subject to a 30% tax on the individuals capital gains, reduced by certain
capital losses.
For any year in which we
qualify as a REIT for U.S. federal income tax purposes, distributions that are
attributable to gain from sales or exchanges by us of U.S. real property
interests will be taxed to a Non-U.S. Holder under the provisions of the
Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). Under FIRPTA, distributions attributable to
gain from sales of U.S. real property interests are taxed to a Non-U.S. Holder
as if the gain were effectively connected with a U.S. business. Non-U.S. Holders would thus be taxed at the
normal capital gain rates applicable to U.S. Holders (subject to applicable
alternative minimum tax and a special alternative minimum tax in the case of
nonresident alien individuals). Also,
distributions subject to FIRPTA may be subject to a 30% branch profits tax in
the hands of a foreign corporate stockholder not entitled to treaty
exemption. We are required by applicable
Treasury regulations to withhold 35% of any distribution that could be
designated by us as a capital gains dividend.
This amount is creditable against the Non-U.S. Holders FIRPTA tax
liability.
Notwithstanding the
foregoing, distributions that are attributable to gain from sales or exchanges
of U.S. real property interests (including capital gain distributions) with
respect to any class of stock of a REIT that is regularly traded on an
established securities market located in the United States will not be treated
as gain recognized from the sale or exchange of a U.S. real property interest
if the Non-U.S. Holder does not own more than 5% of such class of stock at any
time during the 1-year period ending on the date of distribution. Instead, any such distribution will be
treated as an ordinary dividend for U.S. federal income tax purposes.
Sale,
Exchange, Repurchase or Other Disposition of the Common Stock.
Gain recognized by a Non-U.S. Holder upon a sale, repurchase or other disposition
of our common stock generally will not be taxable to a Non-U.S. Holder in the
United States unless (1) investment in our common stock is effectively
connected with the Non-U.S. Holders U.S. trade or business (through a U.S.
permanent establishment, if a Non-U.S. Holder is entitled to the benefits of an
applicable tax treaty and such tax treaty so requires as a condition for
taxation), in which case the Non-U.S. Holder generally will be subject to the
same treatment as U.S. Holders with respect to the gain and if such Non-U.S.
Holder is a corporation, may also be subject to the branch profits tax
described above; (2) the Non-U.S. Holder is a nonresident alien individual
who was present in the United States for more than 182 days during the
taxable year and other requirements are met, in which case the nonresident
alien individual will be subject to a 30% tax on the individuals capital
gains, reduced by certain capital losses; or (3) we are not a domestically
controlled REIT (defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons), in which case gain recognized by a Non-U.S.
Holder will be taxable under FIRPTA.
We currently anticipate
that we constitute a domestically controlled REIT, although, because our common
stock is publicly traded, there can be no assurance that we have or will retain
that status. If we are not a
domestically controlled REIT, gain recognized by a Non-U.S. Holder with respect
to any class of our stock that is regularly traded on an established securities
market will nevertheless be exempt under FIRPTA if that Non-U.S. Holder at no time during the five-year period
ending on the date of disposition owned more than 5% of such class of
stock. If the gain on the sale of shares
were to be subject to taxation under FIRPTA, the Non-U.S. Holder would be
subject to the same treatment as U.S Holders with respect to the gain (subject
to applicable alternative minimum tax and a special alternative minimum tax in
the case of nonresident alien individuals).
In that case, withholding tax at a rate of 10% of the amount payable
could apply and any withholding tax withheld pursuant to the rules applicable
to dispositions of a U.S. real property interest would be creditable against
such Non-U.S. Holders U.S. federal income tax liability.
Non-U.S. Holders are
urged to consult their own tax advisors as to whether they will be subject to
tax under FIRPTA upon a disposition of their common stock.
Backup
Withholding and Information Reporting.
Information
may be required to be reported to Non-U.S.
Holders and to the IRS concerning the amount of any dividends paid on
our common stock. Under current U.S.
federal income tax law, backup withholding tax (at the rate of 28%) will not
apply to dividend payments on our common stock if the required certifications
of exempt status are received, provided in each case that the payor, including
a bank or its paying agent, as the case may be, does not have actual knowledge
or reason to know that the payee is a nonexempt person.
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Under the Treasury regulations,
payments on the sale, exchange or other disposition of our common stock
effected through a foreign office of a broker to its customer generally are not
subject to information reporting or backup withholding. However, if the broker is a U.S. person, a
controlled foreign corporation for U.S. federal income tax purposes, a foreign
person 50% or more of whose gross income is effectively connected with a U.S.
trade or business for a specified three-year period, a foreign partnership that
has significant U.S. ownership or at any time during its taxable year is
engaged in a U.S. trade or business, or a U.S. branch of a foreign bank or
insurance company, then information reporting will be required, unless the
broker has in its records documentary evidence that the beneficial owner of the
payment is not a U.S. person or is otherwise entitled to an exemption, and the
broker has no actual knowledge that the beneficial owner is not entitled to an
exemption. Backup withholding may apply
if the sale is subject to information reporting and the broker has actual
knowledge that the beneficial owner is a U.S. person.
The information reporting
and backup withholding rules will apply to payments effected at a U.S.
office of any U.S. or foreign broker, unless the broker has in its records
documentary evidence that the beneficial owner of the payment is not a U.S.
person or is otherwise entitled to an exemption, and the broker has no actual
knowledge that the beneficial owner is not entitled to an exemption.
Non-U.S. Holders should
consult their own tax advisors regarding the application of withholding,
information reporting and backup withholding in their particular circumstances
and the availability of and procedure for obtaining an exemption from
withholding, information reporting and backup withholding under the current
Treasury regulations. Backup withholding
does not represent an additional income tax.
Any amounts withheld from a payment to a holder under the backup
withholding rules will be allowed as a credit against the Non-U.S. Holders
U.S. federal income tax liability and may entitle the holder to a refund,
provided that the required information or returns are timely furnished by such
holder to the IRS.
Other
Tax Considerations
Taxable REIT Subsidiaries.
A
portion of the cash to be used by Macerich Partnership to fund distributions to
partners, including us, may come from the taxable REIT subsidiaries through
distributions on the stock or limited liability company interests that will be
held by Macerich Partnership. The
taxable REIT subsidiaries will receive income from Macerich Partnership, the
property partnerships and unrelated third parties. Because we, Macerich Partnership and the
taxable REIT subsidiaries are related through stock or other ownership, income
of the taxable REIT subsidiaries from services performed for us and Macerich
Partnership may be subject to rules under which additional income may be
allocated to the taxable REIT subsidiaries.
The taxable REIT subsidiaries will pay federal and state income tax at
the full applicable corporate rates on their income prior to payment of any
distributions. The taxable REIT
subsidiaries will attempt to minimize the amount of these taxes, but there can
be no assurance whether, or the extent to which, measures taken to minimize
taxes will be successful. To the extent
that the taxable REIT subsidiaries are required to pay federal, state or local
taxes, the cash available for distribution by us to stockholders or available
to service our indebtedness will be reduced accordingly.
Possible Legislative or Other Actions Affecting Tax
Consequences.
You should recognize that the present U.S.
federal income tax treatment of an investment in us may be modified by
legislative, judicial or administrative action at any time and that any such
action may affect investments and commitments previously made. The rules dealing with U.S. federal
income taxation are constantly under review by persons involved in the
legislative process and by the IRS and the Treasury, resulting in revisions of
regulations and revised interpretations of established concepts as well as
statutory changes. Revisions in federal
tax laws and interpretations thereof could affect the tax consequences of an
investment in us.
State and Local Taxes.
We and our
stockholders may be subject to state or local taxation in various
jurisdictions, including those in which we or they transact business or
reside. The state and local tax
treatment of us and our stockholders may not conform to the federal income tax
consequences discussed above.
Consequently, you should consult your own tax advisors regarding the
effect of state and local tax laws on an investment in any securities being
offered by this prospectus or a prospectus supplement to this prospectus.
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SELLING
SECURITYHOLDERS
Information about selling
securityholders, where applicable, will be set forth in a prospectus
supplement, in a post-effective amendment, or in filings we make with the SEC
that are incorporated into this prospectus by reference.
PLAN OF
DISTRIBUTION
We and any selling securityholders may sell the
securities under this prospectus in one or more of the following ways (or in
any combination) from time to time:
·
to or through one or more underwriters or dealers;
·
in short or long transactions;
·
directly to investors; or
·
through agents.
If underwriters or
dealers are used in the sale, the securities will be acquired by the
underwriters or dealers for their own account and may be resold from time to
time in one or more transactions, including:
·
in privately negotiated transactions;
·
in one or more transactions at a fixed price or prices,
which may be changed from time to time;
·
in at the market offerings, within the meaning of Rule 415(a)(4) of
the Securities Act, to or through a market maker or into an existing trading
market, on an exchange or otherwise;
·
at prices related to those prevailing market prices;
or
·
at negotiated prices.
As applicable, we,
any selling securityholders, and our respective underwriters, dealers or
agents, reserve the right to accept or reject all or part of any proposed
purchase of the securities. We will set forth in a prospectus supplement the
terms and offering of securities by us, including:
·
the names of any underwriters, dealers or agents;
·
any agency fees or underwriting discounts or
commissions and other items constituting agents or underwriters compensation;
·
any discounts or concessions allowed or reallowed or
paid to dealers;
·
details regarding over-allotment options under which
underwriters may purchase additional securities from us, if any;
·
the purchase price of the securities being offered and
the proceeds we will receive from the sale;
·
the public offering price; and
·
the securities exchanges on which such securities may
be listed, if any.
We and any selling
securityholders may enter into derivative transactions with third parties or
sell securities not covered by this prospectus to third parties in privately
negotiated transactions from time to time. If the applicable prospectus
supplement indicates, in connection with those derivative transactions, such
third parties (or affiliates of such third parties) may sell securities covered
by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, such third parties (or affiliates of such third
parties) may use securities pledged by us or any selling securityholders, as
the case may be, or borrowed from us or any selling securityholders, as the
case may be, or others to settle those sales or to close out any related open
borrowings of securities, and may use securities received from us or any
selling securityholders, as the case may be, in settlement of those derivative
transactions to close out any related open borrowings of securities. The third
parties (or affiliates of such third parties) in such sale transactions by us
will be underwriters and will be identified in an applicable prospectus
supplement (or a post-effective amendment).
We may also sell securities under this prospectus upon the exercise of
rights that may be issued to our securityholders.
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We may loan or
pledge securities to a financial institution or other third party that in turn
may sell the securities using this prospectus and an applicable prospectus
supplement. Such financial institution or third party may transfer its economic
short position to investors in our securities or in connection with a
simultaneous offering of other securities offered by this prospectus.
Underwriters,
Agents and Dealers
.
If underwriters are used in the sale of
our securities, the securities will be acquired by the underwriters for their
own account and may be resold from time to time in one or more transactions
described above. The securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by
underwriters. Generally, the underwriters obligations to purchase the
securities will be subject to conditions precedent and the underwriters will be
obligated to purchase all of the securities if they purchase any of the
securities. We may use underwriters with which we have a material relationship
and will describe in the prospectus supplement, naming the underwriter, the
nature of any such relationship.
We and any selling
securityholders may sell the securities through agents from time to time. When
we sell securities through agents, the prospectus supplement will name any
agent involved in the offer or sale of securities and any commissions we pay to
them. Generally, any agent will be acting on a best efforts basis for the
period of its appointment.
We may authorize
underwriters, dealers or agents to solicit offers by certain purchasers to
purchase our securities from us at the public offering price set forth in the
prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. The contracts will be
subject only to those conditions set forth in the prospectus supplement, and
the prospectus supplement will set forth any commissions we pay for
solicitation of these contracts.
Underwriters,
dealers and agents may contract for or otherwise be entitled to indemnification
by us against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments made by the
underwriters, dealers or agents, under agreements between us and the
underwriters, dealers and agents.
We may grant
underwriters who participate in the distribution of our securities an option to
purchase additional securities to cover over-allotments, if any, in connection
with the distribution.
Underwriters,
dealers or agents may receive compensation in the form of discounts,
concessions or commissions from us or our purchasers, as their agents in
connection with the sale of our securities. These underwriters, dealers or
agents may be considered to be underwriters under the Securities Act. As a
result, discounts, commissions or profits on resale received by the
underwriters, dealers or agents may be treated as underwriting discounts and
commissions. The prospectus supplement for any securities offered by us will
identify any such underwriter, dealer or agent and describe any compensation
received by them from us. Any public offering price and any discounts or
concessions allowed or re-allowed or paid to dealers may be changed from time
to time.
Any underwriter
may engage in over-allotment transactions, stabilizing transactions,
short-covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves sales in excess of the offering
size, which create a short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed
a specified maximum. Short-covering transactions involve purchases of our
securities in the open market after the distribution is completed to cover
short positions. Penalty bids permit the underwriters to reclaim a selling
concession from a dealer when the securities originally sold by the dealer are
purchased in a transaction to cover short positions. Those activities may cause
the price of the securities to be higher than it would otherwise be. If
commenced, the underwriters may discontinue any of the activities at any time.
We make no representation or prediction as to the direction or magnitude of any
effect these transactions may have on the price of our securities. For a
description of these activities, see the information under the heading Underwriting
in the applicable prospectus supplement.
Underwriters,
broker-dealers or agents who may become involved in the sale of our securities
may engage in transactions with and perform other services for us for which
they receive compensation.
Stabilization
Activities
. In
connection with an offering through underwriters, an underwriter may, to the
extent permitted by applicable rules and
regulations, purchase and sell securities in the open market. These
transactions, to the extent permitted by applicable rules and regulations, may include short
sales, stabilizing transactions and
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purchases to cover
positions created by short sales. Short sales involve the sale by the
underwriters of a greater number of securities than they are required to
purchase in the offering. Covered short sales are sales made in an amount not
greater than the underwriters option to purchase additional securities from us
in the offering, if any. If the underwriters have an over-allotment option to
purchase additional securities from us, the underwriters may consider, among
other things, the price of securities available for purchase in the open market
as compared to the price at which they may purchase securities through the
over-allotment option. Naked short sales, which may be prohibited or
restricted by applicable rules and regulations, are any sales in excess of
such option or where the underwriters do not have an over-allotment option. The
underwriters must close out any naked short position by purchasing securities
in the open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of
the securities in the open market after pricing that could adversely affect
investors who purchase in the offering.
Accordingly,
to cover these short sales positions or to otherwise stabilize or maintain the
price of the securities, the underwriters may bid for or purchase securities in
the open market and may impose penalty bids. If penalty bids are imposed,
selling concessions allowed to syndicate members or other broker-dealers
participating in the offering are reclaimed if securities previously
distributed in the offering are repurchased, whether in connection with
stabilization transactions or otherwise. The effect of these transactions may
be to stabilize or maintain the market price of the securities at a level above
that which might otherwise prevail in the open market. The imposition of a
penalty bid may also affect the price of the securities to the extent that it
discourages resale of the securities. The magnitude or effect of any stabilization
or other transactions is uncertain.
Direct
Sales
. We and any
selling securityholders may also sell securities directly to one or more
purchasers without using underwriters or agents. In this case, no agents,
underwriters or dealers would be involved. We may sell securities upon the
exercise of rights that we may issue to our securityholders. We and any selling
securityholders may also sell securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any sale of those securities.
Trading
Market and Listing of Securities
.
Any
common stock sold pursuant to a prospectus supplement will be listed on the New
York Stock Exchange. The securities other than common stock may or may not be
listed on a national securities exchange. It is possible that one or more
underwriters may make a market in a class or series of securities, but the
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot give any assurance as to the
liquidity of the trading market for any of the securities.
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Table of Contents
LEGAL
MATTERS
Certain legal
matters will be passed upon for us by OMelveny & Myers LLP, Newport
Beach, California, and by Venable LLP, Baltimore, Maryland, with respect to
matters of Maryland law.
EXPERTS
The consolidated
financial statements, and the related consolidated financial statement
schedules, incorporated in this Prospectus by reference from the Companys
Amendment No. 1 to the Annual Report on Form 10-K/A, and the
effectiveness of The Macerich Companys internal control over financial
reporting have been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their reports, which are
incorporated herein by reference (which reports (1) express an unqualified
opinion on the consolidated financial statements and consolidated financial
statement schedules and include an explanatory paragraph referring to the
restatement described in Note 25 and (2) express an adverse opinion on the
effectiveness of internal control over financial reporting because of a
material weakness). Such consolidated financial statements and
consolidated financial statement schedules have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The consolidated
financial statements of Pacific Premier Retail Trust as of and for the year
ended December 31, 2007 and the related consolidated financial statement
schedules, incorporated in this Prospectus by reference from Amendment No. 1
to The Macerich Companys Annual Report on Form 10-K/A have been audited
by Deloitte & Touche LLP, an independent registered public accounting
firm, as stated in their report, which is incorporated herein by
reference. Such consolidated financial statements and consolidated
financial statement schedules have been so incorporated in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The financial statements
of SDG Macerich Properties, L.P., as of December 31, 2007 and 2006 and for
each of the years in the three-year period ended December 31, 2007, have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, an independent registered public
accounting firm, as stated in their report appearing in Amendment No. 1 to
our Annual Report on Form 10-K/A for the year ended December 31,
2007, also incorporated by reference herein upon the authority of said firm as
experts in auditing and accounting.
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