PROPOSED ACQUISITION OF THE COMPANY BY BROOKFIELD

3 Months Ended

Mar. 31, 2016

Mar. 31, 2015

Business Combinations [Abstract]

Proposed Acquisition of the Company by Brookfield

PROPOSED ACQUISITION OF THE COMPANY BY BROOKFIELD

On January 16, 2016, the Company’s Board of Directors received a written, unsolicited, non-binding proposal from Brookfield Asset Management on behalf of a real estate fund managed by Brookfield Asset Management, to acquire all the outstanding shares of the Company’s common stock, other than those shares currently held by Brookfield, collectively the beneficial owners of approximately 33.5% of the Company’s outstanding shares of common stock, for a purchase price of $17.00 per share in cash. The Company’s Board of Directors established a special committee of the Board (the “Special Committee”), comprised of all of the directors of the Board, other than those directors who are also representatives of Brookfield, to, among other matters, evaluate and negotiate the Brookfield proposal, solicit other proposals and/or evaluate alternatives to the Brookfield proposal, as determined by the Special Committee in its sole discretion.

On February 25, 2016, the Company entered into a definitive merger agreement (and other related agreements) to be acquired by affiliates of Brookfield Asset Management for $18.25 per share in an all-cash transaction, a portion of which may be paid out as a special dividend. Under the terms of the merger agreement, Brookfield will acquire all of the outstanding shares of the Company’s common stock, other than those shares currently held by Brookfield Property Partners L.P. ("BPY") and its affiliates, in a transaction valued at approximately $2.8 billion, including the Company’s indebtedness. The merger agreement prohibits the payment of any further dividends by the Company, other than as necessary to maintain the Company's REIT status and a closing dividend as part of the $18.25 per share consideration payable in the transaction. The purchase price represents a premium of approximately 35% over the Company’s closing stock price on January 15, 2016, the last trading day prior to Brookfield’s announcement of the proposal to acquire the Company. The Special Committee unanimously approved the merger agreement. Completion of the transaction is expected to occur by the third quarter of 2016, and is contingent upon customary closing conditions, including the approval of the holders of a majority of the outstanding shares of the Company’s common stock and a majority of the outstanding shares of the Company's common stock not currently held by BPY and its affiliates. The transaction is not subject to a financing contingency.

Retention Plan

In light of Brookfield’s unsolicited acquisition proposal, on January 29, 2016, the Special Committee approved a Retention Plan for the Company’s four named executive officers (Andrew Silberfein, Brian Harper, John Wain and Susan Elman) and certain other senior executives. The Retention Plan, which was developed with the advice of an independent compensation consultant, is intended to enhance retention of the Retention Plan participants. Under the terms of the Retention Plan, each participant will be eligible to receive an aggregate cash retention award based on a percentage of such participant’s 2015 base salary and 2015 target performance bonus. Awards under the Retention Plan are payable in two equal installments of 50% of the aggregate award payable to each participant. The first installment is payable on the earlier of (i) a determination by the Special Committee that it has terminated the process of considering and responding to Brookfield’s unsolicited offer and any related process to explore strategic alternatives thereto in which the Special Committee may decide to engage (a “Process Termination”) and (ii) the closing date of any merger, business combination or other similar transaction in respect of the Company. The second installment is payable on the earlier of (i) six months after any Process Termination and (ii) six months after the closing date of any merger, business combination or other similar transaction in respect of the Company.

A participant in the Retention Plan must be employed by the Company on a payment date in order to receive his or her award, unless the participant’s employment is terminated by the Company without cause, by the participant for good reason or due to the participant’s death or disability (as each such term is defined in the Retention Plan). If a participant’s employment is terminated under one of the foregoing circumstances prior to payment of the first retention award payment, such participant’s first and second installment will be paid when the first retention award installment is paid to the other participants (but in no event later than two months after the end of the year in which such termination occurs). If a participant’s employment is terminated under one of the foregoing circumstances after payment of the first installment but prior to payment of the second installment, such participant’s second installment will be paid at the time of such termination of the participant’s employment. The total retention awards that participants are eligible to receive under the Retention Plan, in the aggregate, is $7.5 million. As of March 31, 2016, $7.3 million is outstanding and payable and included in "Other" on the Company's Consolidated Statements of Operations and Comprehensive Income (Loss).

ACQUISITIONS

The Company includes the results of operations of real estate assets acquired in the Company's Consolidated Statements of Operations and Comprehensive Income (Loss) from the date of the related transactions.

The Company did not acquire any properties during the three months ended March 31, 2016. The following table presents the Company's acquisitions as of December 31, 2015:

	Date Acquired	Property Name	Location	Square Footage Acquired	Purchase Price
2015 Acquisitions					(In thousands)
	01/28/2015	Mt. Shasta Mall (1) (2)	Redding, CA	521,000	$	49,000
	06/03/2015	Fig Garden Village (1) (3)	Fresno, CA	301,459	106,100
	11/12/2015	The Shoppes at Carlsbad (1) (4)	Carlsbad, CA	1,117,040	170,000
			2015 Acquisitions Total	1,939,499	$	325,100

Explanatory Notes:

⁽¹⁾ Rouse acquired a 100% interest in the mall.

⁽²⁾   The Company closed on a new $31.9 million non-recourse mortgage loan that bears interest at 4.19%, matures in March 2025, is interest only for the first three years and amortizes over 30 years thereafter.

⁽³⁾ The Company closed on a new $74.2 million non-recourse mortgage loan that bears interest at 4.14%, matures in June 2025, is interest only for the first five years and amortizes over 30 years thereafter.

⁽⁴⁾ In conjunction with the closing of this transaction, Rouse Properties, L.P., our operating partnership (the "Operating Partnership'"), issued $140.0 million of its Series A Preferred Units of limited partnership interest (the "Series A Preferred Units"), to the seller. Distributions on the Series A Preferred Units accumulate at an annual rate of 5% and are payable quarterly. The Series A Preferred Units may be redeemed by the Company after three years (subject to certain tax protection payments if the Company redeems the Series A Preferred Units prior to 2022) and by the holder after ten years, in either case at par plus accumulated and unpaid distributions and in the form of cash or common units of limited partnership ("Common Units") of the Operating Partnership, as determined by us. (See Note 10 for further details on our non-controlling interest in the Operating Partnership.) In December 2015, The Shoppes at Carlsbad was added to the 2013 Senior Facility (as defined below) collateral pool (see Note 5 for details on the 2013 Senior Facility.

The following table presents certain additional information regarding the Company's acquisitions for the year ended December 31, 2015:

	Property Name	Land		Building and Improvements		Acquired Lease Intangibles		Acquired Above Market Lease Intangibles		Acquired Below Market Lease Intangibles			Other
2015 Acquisitions		(In thousands)
	Mt. Shasta Mall	$	7,809	$	38,008	$	3,779	$	915	$	(1,813	)	$	302
	Fig Garden Village	18,774		79,528		7,366		3,975		(2,907		)	(636		)
	The Shoppes at Carlsbad	49,452		111,671		11,841		4,109		(8,395		)	1,322
	Total	$	76,035	$	229,207	$	22,986	$	8,999	$	(13,115	)	$	988

The Company incurred acquisition and transaction related costs of $0.3 million and $0.4 million for the three months ended March 31, 2016 and 2015, respectively. Acquisition and transaction related costs consist of due diligence costs such as legal fees, environmental studies and closing costs. These costs were recorded in "Other" on the Company's Consolidated Statements of Operations and Comprehensive Income (Loss).

During the three months ended March 31, 2015, the Company recorded approximately $1.3 million in revenues and $0.03 million in net loss related to the acquisition of Mt. Shasta Mall. There were no acquisitions made during the three months ended March 31, 2016.

The following condensed pro forma financial information for the three months ended March 31, 2015 includes pro forma adjustments related to the acquisition of Mt. Shasta Mall which is presented assuming the acquisitions had been consummated as of January 1, 2015. The following condensed pro forma financial information is not necessarily indicative of what the actual results of operations of the Company would have been assuming the acquisitions had been consummated as of January 1, nor does it purport to represent the results of operations for future periods. Pro forma adjustments include above and below-market amortization, straight-line rent, interest expense, and depreciation and amortization.

	Three months ended March 31,
	2015
	As Adjusted (Unaudited)
	(Dollars in thousands, except per share amounts)
Total revenues	$	75,195
Net income	$	44,385
Net income per share - basic	$	0.77
Net income per share - diluted	$	0.76
Weighted average shares - basic	57,603,340
Weighted average shares - diluted	58,287,256