"After careful consideration, the Macerich Board of Directors unanimously determined that
In reaching its conclusion, the Macerich Board considered a number of factors, including, among others:
- The irreplaceable nature of
Macerich's portfolio of high quality, regional shopping centers in prime locations. - The Board's confidence in
Macerich's strategic plan and the Company's ability to successfully execute the plan. - The success of
Macerich's portfolio transformation over the past two years, during which the Company has sold lower quality malls and recycled the capital into value-enhancing redevelopment opportunities, thereby increasing the Company's sales per square foot from$517 to $587 . - The Company's highly valuable development pipeline. Over the next five years,
Macerich plans to spend$400 million to $500 million per year on high-return-on-cost projects that it expects will materially enhance stockholder value. Macerich's inability to evaluateSimon Property Group's claims regarding its margins becauseSimon Property Group does not disclose separate performance data between mall and outlet portfolios.- The Board's belief that there are significant obstacles to consummating the transaction
Simon Property Group has proposed due to serious questions arising under applicable state and federal law, including those raised bySimon Property Group's stock accumulation and other issues. - The Board's belief that Simon's
Property Group's partnership withGeneral Growth Properties is stockholder-unfriendly and raises questions of legality.
The following is the text of the letter that was sent on
March 17, 2015 Mr.
David E. Simon
Chairman & Chief Executive OfficerSimon Property Group, Inc. 225 West Washington Street Indianapolis, Indiana 46204Dear David:
I am writing to you at the direction of the Board of Directors of The
Macerich Company in response to your letter datedMarch 9, 2015 .Our board carefully reviewed your proposal with the assistance of its financial and legal advisors. After thoroughly considering your proposal, the board unanimously concluded that your proposal substantially undervalues
Macerich and its prospects for continued growth and stockholder value creation. Therefore, the board determined that your proposal is not in the best interests ofMacerich , its stockholders and other constituencies.As you know,
Macerich owns and operates a high quality portfolio of regional shopping centers in prime locations. Our portfolio contains many trophy assets of a kind that rarely become available for sale and cannot be replicated. Most could not be built today and substitutes do not exist.Our board has complete confidence in our strategic plan and the ability of our experienced management team to successfully execute it. Over the past two years we sold lower quality malls and recycled the capital into value enhancing redevelopment and acquisition opportunities, increasing our sales per square foot from
$517 to $587 . Our board recognizes that, as a competitor, these trends present a challenge for you on multiple fronts. We plan to continue delivering industry leading growth and to generate long-term value for our stockholders. Over the next five years,Macerich plans to spend$400 million to $500 million per year on development and redevelopment opportunities. These are high-return-on-cost projects that we expect will materially enhance stockholder value.In your
March 9 letter, you claim to operate at superior margins. This is impossible for anyone to verify as you do not disclose separate performance data between your mall and outlet portfolios. However, you may recall that we formed a joint venture inFebruary 1998 to acquire twelve similar properties primarily in the Midwest, with each of us operating six of these malls. Over the last 10-years of this joint venture, theMacerich -operated properties saw same-store NOI increase by 8.8% while the Simon-managed properties experienced an 8.4% decline.Further, it appears from your press release, which indicates your belief that there is "no legal or other impediment to completing the proposed transaction," that you have not given consideration to the serious questions arising under applicable state and federal laws including those raised by your stock accumulation and other issues which present significant obstacles to consummating the transaction that you have proposed. Moreover, your partnership with GGP - the reasons for which are not explained in your letter - is problematic and not only stockholder-unfriendly but also raises questions of legality.
In light of the foregoing and for the reasons stated above, our board has authorized me to inform you that it has unanimously rejected your proposal.
Sincerely,
Arthur M. Coppola
Chairman & Chief Executive Officer
TheMacerich Company
About
Forward Looking Statements
This release contains statements that constitute forward-looking statements which can be identified by the use of words, such as "expects," "anticipates," "assumes," "projects," "estimated" and "scheduled" and similar expressions that do not relate to historical matters. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to vary materially from those anticipated, expected or projected. Such factors include, among others, general industry, as well as national, regional and local economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of current and prospective tenants, anchor or tenant bankruptcies, closures, mergers or consolidations, lease rates, terms and payments, interest rate fluctuations, availability, terms and cost of financing and operating expenses; adverse changes in the real estate markets including, among other things, competition from other companies, retail formats and technology, risks of real estate development and redevelopment, acquisitions and dispositions; the liquidity of real estate investments, governmental actions and initiatives (including legislative and regulatory changes); environmental and safety requirements; the outcome of
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SOURCE
John Perry, Senior Vice President-Investor Relations, 424-229-3345; or Jean Wood, Vice President-Investor Relations, 424-229-3366; or Joele Frank / Andrew Siegel / Scott Bisang; or Joele Frank, Wilkinson Brimmer Katcher, 212-355-4449