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Simon Property Group Announces Fourth Quarter Results and Quarterly Dividends and Provides 2009 Guidance

INDIANAPOLIS, Jan. 30 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter and twelve months ended December 31, 2008:

-- Funds from operations ("FFO") for the quarter increased 6.5% to $540.5 million from $507.7 million in the fourth quarter of 2007. On a diluted per share basis the increase was 5.7% to $1.86 from $1.76 in 2007. Included in fourth quarter 2008 FFO was an impairment charge of $21.2 million, or $0.07 per share, related to the write-off of certain predevelopment projects that have been abandoned and the write-down of an operating asset to its estimated net realizable value.

-- FFO for the twelve months increased 9.5% to $1.852 billion from $1.692 billion in 2007. On a diluted per share basis the increase was 8.8% to $6.42 from $5.90 in 2007.

-- Net income available to common stockholders for the quarter increased 28.6% to $145.2 million from $112.9 million in the fourth quarter of 2007. On a diluted per share basis the increase was 25.5% to $0.64 from $0.51 in 2007.

-- Net income available to common stockholders for the twelve months decreased 3.1% to $422.5 million from $436.2 million in 2007. On a diluted per share basis the decrease was 4.1% to $1.87 from $1.95 in 2007.


    U.S. Portfolio Statistics(1)

                               As of               As of
                         December 31, 2008   December 31, 2007     Change

    Occupancy
    Regional Malls(2)          92.4 %              93.5 %      110 basis point
                                                                    decrease
    Premium Outlet
     Centers(R) (3)            98.9 %              99.7 %       80 basis point
                                                                    decrease

    Comparable Sales per
     Sq. Ft.
    Regional Malls(4)          $470                $491         4.3% decrease
    Premium Outlet
     Centers(3)                $513                $504         1.8% increase
    Average Rent per Sq.
     Ft.
    Regional Malls(2)        $39.49              $37.09         6.5% increase
    Premium Outlet
     Centers(3)              $27.65              $25.67         7.7% increase


    (1) Statistics do not include the community/lifestyle center properties or
        the Mills portfolio of assets.
    (2) For mall stores.
    (3) For all owned gross leasable area (GLA).
    (4) For mall stores with less than 10,000 square feet.

"We are very pleased to report such strong performance, especially in these difficult economic times. It is a testament to our high quality portfolio and strong balance sheet that we delivered FFO growth of 8.8% for the year," said David Simon, Chairman and Chief Executive Officer. "We recognized well over a year ago that the economy was deteriorating and adopted aggressive cost control measures, significantly reduced our development spending, and enhanced our liquidity position. The retail environment has been and will continue to be challenging in the upcoming months, however, we are experienced in working through difficult economic cycles. We believe we are positioned to deliver earnings and FFO growth in 2009.

Our Board of Directors has made the prudent decision to pay our quarterly dividend of $0.90 per share in a combination of 10% cash and 90% common stock. We believe this change in composition will fortify one of the industry's strongest balance sheets (rated A-/A3) as it will permit us to retain over $925 million of cash if adopted for all of 2009. This decision is a reflection of our conservative stance on capital allocation and liability management and is not in response to the current retail operating environment."

Dividends

Today the Company announced that its Board of Directors approved the declaration of a quarterly common stock dividend of $0.90 per share, consisting of a combination of cash and shares of the Company's common stock. The Company intends that the aggregate cash component of the dividend will not exceed 10% in the aggregate, or $0.09 per share. The dividend is payable on March 18, 2009 to stockholders of record on February 12, 2009.

Paying 90% of the 2009 dividend in shares of SPG common stock allows SPG to satisfy its REIT taxable income distribution requirement while enhancing its already considerable financial flexibility and balance sheet strength.

In accordance with the provisions of IRS Revenue Procedure 2008-68, stockholders may elect to receive payment of the dividend all in cash or all in common shares. To the extent that more than 10% of cash is elected, the cash portion will be prorated. Stockholders who elect to receive the dividend in cash will receive a cash payment of at least $0.09 per share. Stockholders who do not make an election will receive 10% in cash and 90% in common stock.

The Company expects the dividend to be a taxable dividend to its stockholders, without regard to whether a particular stockholder receives the dividend in the form of cash or shares, and reserves the right to pay the dividend entirely in cash.

The number of shares issued as a result of the dividend will be calculated based on the volume weighted average trading prices of the Company's common stock on March 11, March 12 and March 13, 2009.

An information letter and election form will be mailed to stockholders of record promptly after February 12, 2009. The properly completed election form to receive cash or common shares must be received by the Company's transfer agent prior to 5:00 p.m. Eastern Standard Time on March 10, 2009. Registered stockholders with questions regarding the dividend election may call BNY Mellon Shareowner Services, the Company's transfer agent, at (800)454-9768. If your shares are held through a bank, broker or nominee, and you have questions regarding the dividend election please contact such bank, broker or nominee, who will also be responsible for distributing to you the letter and election form and submitting the election form on your behalf.

The Company also declared dividends on its two outstanding public issues of preferred stock:

-- 6% Series I Convertible Perpetual Preferred (NYSE: SPGPrI) dividend of $0.75 per share is payable on February 27, 2009 to stockholders of record on February 13, 2009.

-- 8 3/8% Series J Cumulative Redeemable Preferred (NYSE: SPGPrJ) dividend of $1.046875 per share is payable on March 31, 2009 to stockholders of record on March 17, 2009.

2009 Guidance

After giving effect to the estimated impact of paying up to 90% of the Company's 2009 common stock dividends in common stock, the Company estimates that diluted FFO will be within a range of $6.40 to $6.60 per share for the year ending December 31, 2009, and diluted net income will be within a range of $1.95 to $2.15 per share.

The Company's 2009 guidance estimates are based upon its internal budgeting and planning process and management's view of current market and economic conditions, including those in the retail real estate business. The Company's expectations also reflect the weaker retail environment and weakened state of the U.S. economy, as well as the current dislocation in the U.S. capital markets.

The 2009 guidance assumes comparable property NOI growth for the following operating portfolios:

                    Regional Malls           Flat to 1.0%

                    Premium Outlet Centers   3.0% to 5.0%

The 2009 guidance assumes an interest rate environment that is consistent with the current forward yield curves for one month LIBOR and the 10 Year U.S. Treasury note and makes certain assumptions on debt spreads. The guidance assumes no future acquisition or disposition activities other than the impact in 2009 from 2008 activity.

This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release.

The following table provides the reconciliation of the range of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.


    For the year ending December 31, 2009
                                                  Low        High
                                                  End        End

    Estimated diluted net income available to
     common stockholders per share               $1.95       $2.15

    Depreciation and amortization including our
     share of joint ventures                      4.56        4.56

    Impact of additional dilutive securities     (0.11)      (0.11)

    Estimated diluted FFO per share              $6.40       $6.60

Capital Markets

During the fourth quarter, the Company completed seven asset financings, generating $583.9 million of proceeds (Simon's share of proceeds was $313.2 million). The financings were completed with a weighted average term of 5.7 years and at an average interest rate of 5.9% on the fixed rate financings and a rate at year-end of 2.4% on the floating rate loans.

As of December 31, 2008, the Company had approximately $1.1 billion of cash on hand, including its share of joint ventures, and over $2.4 billion of available capacity on its revolving credit facility.

U.S. New Development and Redevelopment Activity

On November 13th, the Company announced the opening of Jersey Shore Premium Outlets. Located in Tinton Falls, Jersey Shore Premium Outlets contains 435,000 square feet of gross leasable area and 120 designer and name-brand outlet stores. The center is currently 92% leased to tenants including Ann Taylor, BCBG Max Azria, Banana Republic, Brooks Brothers, Burberry, Calvin Klein, Cole Haan, Elie Tahari, Geox, Guess, J.Crew, Juicy Couture, Kate Spade, Kenneth Cole, Lucky Brand, Michael Kors, Nike, Sony, Theory and Tommy Hilfiger.

The Company continues construction on the following development projects:

-- Cincinnati Premium Outlets, a 400,000 square foot upscale manufacturers' outlet center serving the greater Cincinnati and Dayton markets. The center is 100% owned by Simon and is scheduled to open in August of 2009.

-- A 600,000 square foot Phase II expansion of The Domain in Austin, Texas. The expansion will include Dillard's, a Village Road Show theater, Dick's Sporting Goods, 136,000 square feet of small shops and restaurants, and 78,000 square feet of office space. Restaurant offerings at Domain II will include Maggiano's and BJ's Restaurant and Brewhouse. The Company owns 100% of this project, slated for an opening in November of 2009.

During the fourth quarter, the Company completed significant redevelopment projects at Northshore Mall in the Boston suburb of Peabody (with Nordstrom opening this March), Ross Park Mall in Pittsburgh, and Tacoma Mall in Tacoma, Washington as well as the expansion of Orlando Premium Outlets in Orlando, Florida.

Construction continues on two significant redevelopment projects:

-- Camarillo Premium Outlets-The Promenade - 220,000 square foot expansion of the upscale outlet center to be anchored by Saks Fifth Avenue Off 5th and Neiman Marcus Last Call, opening in April of 2009.

    -- South Shore Plaza - Addition of Nordstrom opening in March of 2010.

International Activity

On October 16th, the Company opened Sendai-Izumi Premium Outlets, the seventh Premium Outlet Center in Japan. The 172,000 square foot first phase of the project is 100% leased to 80 tenants including Beams, Brooks Brothers, Bose, Coach, Hush Puppies, Jill Stuart, Kipling, Laundry, Levi's, Miss Sixty, OshKosh B'Gosh, Pleats Please Issey Miyake, St. John, T-Fal, Tasaki, United Arrows, as well as the first outlet stores in Japan for PLS+T and Ray Ban. Simon owns 40% of this property.

Construction continues on the following international development projects:

-- Ami Premium Outlets - an upscale manufacturers' outlet center located approximately 34 miles northeast of central Tokyo. Phase I, comprising 225,000 square feet, is scheduled to open in July of 2009 with approximately 100 tenants, including global brands, domestic brands and restaurants. The center is expandable to approximately 360,000 square feet. Simon owns 40% of this project.

-- Argine (Naples, Italy) - a 300,000 square foot shopping center scheduled to open in December of 2009. Simon owns a 24% interest in this project.

-- Catania (Sicily, Italy) - a 642,000 square foot shopping center scheduled to open in June of 2010. Simon owns a 24% interest in this project.

-- Three projects in China located in Hangzhou, Suzhou, and Zhengzhou. The centers range in size from 310,000 to 750,000 square feet, will be anchored by Wal-Mart, and are scheduled to open in 2009. Simon owns a 32.5% interest in each of these projects.

Conference Call

The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investor Relations tab), www.earnings.com, and www.streetevents.com. To listen to the live call, please go to any of these websites at least fifteen minutes prior to the call to register, download and install any necessary audio software. The call will begin at 11:00 a.m. Eastern Standard Time (New York time) today, January 30, 2009. An online replay will be available for approximately 90 days at www.simon.com, www.earnings.com, and www.streetevents.com. A fully searchable podcast of the conference call will also be available at www.REITcafe.com shortly after completion of the call.

Supplemental Materials

The Company will publish a supplemental information package which will be available at www.simon.com in the Investor Relations section, Financial Information tab. It will also be furnished to the SEC as part of a current report on Form 8-K. If you wish to receive a copy via mail or email, please call 800-461-3439.

Forward-Looking Statements

Certain statements made in this press release may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that our expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: the Company's ability to meet debt service requirements, the availability and terms of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, the ability to hedge interest rate risk, risks associated with the acquisition, development, expansion, leasing and management of properties, general risks related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic climates, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in its periodic reports, but otherwise the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Funds from Operations ("FFO")

The Company considers FFO a key measure of its operating performance that is not specifically defined by accounting principles generally accepted in the United States ("GAAP").

About Simon Property Group

Simon Property Group, Inc. is an S&P 500 company and the largest public U.S. real estate company. Simon is a fully integrated real estate company which operates from five retail real estate platforms: regional malls, Premium Outlet Centers(R), The Mills(R), community/lifestyle centers and international properties. It currently owns or has an interest in 386 properties comprising 263 million square feet of gross leasable area in North America, Europe and Asia. The Company is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide. Simon Property Group, Inc. is publicly traded on the NYSE under the symbol SPG. For further information, visit the Company's website at www.simon.com.



                                    SIMON
                    Consolidated Statements of Operations
                                  Unaudited
                                (In thousands)

                       For the Three Months Ended  For the Twelve Months Ended
                               December 31,                December 31,
                             2008        2007           2008          2007
    REVENUE:
    Minimum rent           $607,100    $585,385      $2,291,919    $2,154,713
    Overage rent             39,440      46,428         100,222       110,003
    Tenant reimbursements   289,290     292,384       1,065,957     1,023,164
    Management fees and
     other revenues          31,222      40,371         132,471       113,740
    Other income             62,264      71,013         192,586       249,179
       Total revenue      1,029,316   1,035,581       3,783,155     3,650,799

    EXPENSES:
    Property operating      103,687     111,463         455,874       454,510
    Depreciation and
     amortization           268,902     235,092         969,477       905,636
    Real estate taxes        80,586      77,127         334,657       313,311
    Repairs and maintenance  32,621      36,151         107,879       120,224
    Advertising and
     promotion               32,729      32,854          96,783        94,340
    Provision for credit
     losses                   6,668       4,462          24,035         9,562
    Home and regional
     office costs            36,099      40,665         144,865       136,610
    General and
     administrative           5,555       4,682          20,987        19,587
    Other                    16,651      19,236          67,721        61,954
       Total operating
        expenses            583,498     561,732       2,222,278     2,115,734

    OPERATING INCOME        445,818     473,849       1,560,877     1,535,065

    Interest expense       (244,933)   (241,565)       (947,140)     (945,852)
    Loss on extinguishment
     of debt                      -           -         (20,330)            -
    Minority interest in
     income of consolidated
     entities                (3,986)     (4,838)        (12,431)      (13,936)
    Income tax (expense)
     benefit of taxable REIT
     subsidiaries            (2,005)     12,727          (3,581)       11,322
    Income from
     unconsolidated entities 19,186         397          32,246        38,120
    Impairment charge       (21,172)    (55,061)        (21,172)      (55,061)
    Gain on sale of assets
     and interests in
     unconsolidated entities      -         409               -        92,044
    Limited partners'
     interest in the
     Operating Partnership  (36,345)    (34,749)       (107,214)     (120,818)
    Preferred distributions
     of the Operating
     Partnership             (4,201)     (5,362)        (17,599)      (21,580)

    Income from continuing
     operations             152,362     145,807         463,656       519,304

    Discontinued operations,
     net of limited partners'
     interest                   (20)         78             (20)          (93)
    Loss on sale of
     discontinued operations,
     net of limited partners'
     interest                     -     (20,880)              -       (27,972)

    NET INCOME              152,342     125,005         463,636       491,239

    Preferred dividends      (7,139)    (12,076)        (41,119)      (55,075)


    NET INCOME AVAILABLE TO
     COMMON STOCKHOLDERS   $145,203    $112,929        $422,517      $436,164



                                    SIMON
                                Per Share Data
                                  Unaudited

                                            For the Three     For the Twelve
                                             Months Ended      Months Ended
                                             December 31,      December 31,
                                            2008     2007     2008     2007

    Basic Earnings Per Common Share:

       Income from continuing operations    $0.64    $0.60    $1.88    $2.09

       Discontinued operations                  -    (0.09)       -    (0.13)

       Net income available to common
        stockholders                        $0.64    $0.51    $1.88    $1.96

          Percentage Change                  25.5%             -4.1%

    Diluted Earnings Per Common Share:

       Income from continuing operations    $0.64    $0.60    $1.87    $2.08

       Discontinued operations                  -    (0.09)       -    (0.13)

       Net income available to common
        stockholders                        $0.64    $0.51    $1.87    $1.95

          Percentage Change                  25.5%             -4.1%



                                    SIMON
                         Consolidated Balance Sheets
                                  Unaudited
                       (In thousands, except as noted)

                                               December 31,      December 31,
                                                  2008              2007
    ASSETS:
     Investment properties, at cost            $25,205,715       $24,415,025
       Less - accumulated depreciation           6,184,285         5,312,095
                                                19,021,430        19,102,930
     Cash and cash equivalents                     773,544           501,982
     Tenant receivables and accrued
      revenue, net                                 414,856           447,224
     Investment in unconsolidated
      entities, at equity                        1,663,886         1,886,891
     Deferred costs and other assets             1,202,256         1,118,635
     Note receivable from related party            520,700           548,000
        Total assets                           $23,596,672       $23,605,662

    LIABILITIES:
     Mortgages and other indebtedness          $18,042,532       $17,218,674
     Accounts payable, accrued expenses,
      intangibles, and deferred revenues         1,086,248         1,251,044
     Cash distributions and losses in
      partnerships and joint ventures, at
      equity                                       380,730           352,798
     Other liabilities, minority interest
      and accrued dividends                        179,970           180,644
        Total liabilities                       19,689,480        19,003,160

    COMMITMENTS AND CONTINGENCIES

    LIMITED PARTNERS' INTEREST IN THE
     OPERATING PARTNERSHIP                         637,140           731,406

    LIMITED PARTNERS' PREFERRED INTEREST
     IN THE OPERATING PARTNERSHIP                  229,869           307,713

    STOCKHOLDERS' EQUITY

     CAPITAL STOCK OF SIMON PROPERTY
      GROUP, INC. (750,000,000 total
      shares authorized, $.0001 par
      value, 237,996,000 shares of
      excess common stock):

      All series of preferred stock,
       100,000,000 shares authorized,
       8,387,212 and 14,801,884 issued
       and outstanding, respectively,
       and with liquidation values of
       $419,361 and $740,094, respectively         425,545           746,608

      Common stock, $.0001 par value,
       400,000,000 shares authorized,
       235,691,040 and 227,719,614 issued
       and outstanding, respectively                    24                23

      Class B common stock, $.0001 par
       value, 12,000,000 shares authorized,
       8,000 issued and outstanding                      -                 -

      Class C common stock, $.0001 par
       value, 0 and 4,000 shares authorized,
       issued and outstanding                            -                 -

     Capital in excess of par value              5,410,147         5,067,718
     Accumulated deficit                        (2,444,257)       (2,055,447)
     Accumulated other comprehensive income       (165,066)           18,087
     Common stock held in treasury at cost,
      4,379,396 and 4,697,332 shares,
      respectively                                (186,210)         (213,606)
      Total stockholders' equity                 3,040,183         3,563,383

      Total liabilities and stockholders'
       equity                                  $23,596,672       $23,605,662



                                    SIMON
                    Joint Venture Statements of Operations
                                  Unaudited
                                (In thousands)

                        For the Three Months Ended For the Twelve Months Ended
                                 December 31,              December 31,
                                2008       2007         2008         2007
    Revenue:
       Minimum rent           $521,062   $498,463    $1,956,129   $1,682,671
       Overage rent             58,110     55,044       130,549      119,134
       Tenant reimbursements   275,041    279,492     1,005,638      852,312
       Other income             54,394     64,368       199,774      201,075
          Total revenue        908,607    897,367     3,292,090    2,855,192

    Operating Expenses:
       Property operating      176,770    173,889       671,268      580,910
       Depreciation and
        amortization           203,631    227,695       775,887      627,929
       Real estate taxes        67,427     59,485       263,054      220,474
       Repairs and maintenance  35,187     35,826       124,272      113,517
       Advertising and
        promotion               25,184     24,145        70,425       62,182
       Provision for credit
        losses                   9,981      8,309        24,053       22,448
       Other                    54,053     58,717       177,298      162,570
          Total operating
           expenses            572,233    588,066     2,106,257    1,790,030
    Operating Income           336,374    309,301     1,185,833    1,065,162

    Interest expense          (242,141)  (259,214)     (969,420)    (853,307)
    (Loss) income from
     unconsolidated entities    (1,340)       207        (5,123)         665
    Loss on sale of assets           -       (823)            -       (6,399)
    Income from Continuing
     Operations                 92,893     49,471       211,290      206,121
    Income from consolidated
     joint venture interests (A)     -          -             -        2,562
    Income from discontinued
     joint venture interests (B)     -         26            47          202
    (Loss) gain on disposal or
     sale of discontinued
     operations, net                 -        (15)            -      198,956
    Net Income                 $92,893    $49,482      $211,337     $407,841
    Third-Party Investors'
     Share of Net Income       $60,708    $38,209      $132,111     $232,586
    Our Share of Net Income     32,185     11,273        79,226      175,255
    Amortization of Excess
     Investment                (12,999)   (10,467)      (46,980)     (46,503)
    Our Share of Net Gain
     Related to Properties Sold      -       (409)            -      (90,632)
    Income from Unconsolidated
     Entities, Net             $19,186       $397       $32,246      $38,120



                                    SIMON
                         Joint Venture Balance Sheets
                                  Unaudited
                                (In thousands)

                                              December 31,       December 31,
                                                  2008               2007
    Assets:
    Investment properties, at cost             $21,472,490        $21,009,416
    Less - accumulated depreciation              3,892,956          3,217,446
                                                17,579,534         17,791,970

    Cash and cash equivalents                      805,411            747,575
    Tenant receivables and accrued
     revenue, net                                  428,322            435,093
    Investment in unconsolidated
     entities, at equity                           230,497            258,633
    Deferred costs and other assets                594,578            713,180
      Total assets                             $19,638,342        $19,946,451

    Liabilities and Partners' Equity:
    Mortgages and other indebtedness           $16,686,701        $16,507,076
    Accounts payable, accrued expenses,
     intangibles and deferred revenue            1,070,958            972,699
    Other liabilities                              982,254            825,279
      Total liabilities                         18,739,913         18,305,054
    Preferred units                                 67,450             67,450
    Partners' equity                               830,979          1,573,947
      Total liabilities and partners'
       equity                                  $19,638,342        $19,946,451

    Our Share of:
    Total assets                                $8,056,873         $8,040,987
    Partners' equity                              $533,929           $776,857
    Add:  Excess Investment (C)                    749,227            757,236
    Our net Investment in Joint Ventures         1,283,156          1,534,093
    Mortgages and other indebtedness            $6,632,419         $6,568,403



                                    SIMON
                      Footnotes to Financial Statements
                                  Unaudited

    Notes:

(A) Consolidation occurs when the Company acquires an additional ownership interest in a joint venture and, as a result, gains control of the joint venture. These interests have been separated from operational interests to present comparative results of operations.

(B) Discontinued joint venture interests represent assets and partnership interests that have been sold.


    (C) Excess investment represents the unamortized difference of the
Company's investment over equity in the underlying net assets of the
partnerships and joint ventures.  The Company generally amortizes excess
investment over the life of the related properties, typically no greater than
40 years, and the amortization is included in income from unconsolidated
entities.



                                    SIMON
                   Reconciliation of Net Income to FFO (1)
                                  Unaudited
                       (In thousands, except as noted)

                                  For the Three Months For the Twelve Months
                                         Ended                 Ended
                                      December 31,          December 31,
                                     2008      2007        2008        2007


    Net Income(2)(3)(4)(5)         $152,342  $125,005    $463,636    $491,239

    Adjustments to Net Income to
     Arrive at FFO:

       Limited partners' interest
        in the Operating Partnership
        and preferred distributions
        of  the Operating
        Partnership                  40,546    40,111     124,813     142,398

       Limited partners' interest
        in discontinued operations       (5)       20          (5)        (24)

       Depreciation and amortization
        from consolidated properties
        and discontinued operations 264,465   232,162     954,494     892,488

       Simon's share of depreciation
        and amortization from
        unconsolidated entities      96,631   109,462     376,670     315,159

       Loss (gain) on sales of
        assets and interests in
        unconsolidated entities,
        net of limited partners'
        interest                          -    20,471           -     (64,072)

       Minority interest portion
        of depreciation and
        amortization                 (2,112)   (2,051)     (8,559)     (8,646)

       Preferred distributions and
        dividends                   (11,340)  (17,438)    (58,718)    (76,655)

    FFO of the Operating
     Partnership                   $540,527  $507,742  $1,852,331  $1,691,887

    Per Share Reconciliation:

    Diluted net income available
     to common stockholders per
     share                            $0.64     $0.51       $1.87       $1.95

    Adjustments to net income to
     arrive at FFO:

       Depreciation and amortization
        from consolidated properties
        and Simon's share of
        depreciation and amortization
        from unconsolidated entities,
        net of minority interest
        portion of depreciation and
        amortization                   1.26      1.21        4.69        4.27

       Loss (gain) on sales of
        assets and interests in
        unconsolidated entities, net
        of limited partners' interest     -      0.09           -       (0.20)

       Impact of additional
        dilutive securities for
        FFO per share                 (0.04)    (0.05)      (0.14)      (0.12)

    Diluted FFO per share             $1.86     $1.76       $6.42       $5.90



    Details for per share
     calculations:

    FFO of the Operating
     Partnership                   $540,527  $507,742  $1,852,331  $1,691,887

    Adjustments for dilution
     calculation:
    Impact of preferred stock and
     preferred unit conversions
     and option exercises (6)         7,513    12,836      43,350      51,567
    Diluted FFO of the Operating
     Partnership                    548,040   520,578   1,895,681   1,743,454

    Diluted FFO allocable to
     unitholders                   (104,845) (102,155)   (366,868)   (342,434)
    Diluted FFO allocable to
     common stockholders           $443,195  $418,423  $1,528,813  $1,401,020

    Basic weighted average shares
     outstanding                    227,512   223,015     225,333     222,998
    Adjustments for dilution
     calculation:
       Effect of stock options          397       673         551         778
       Impact of Series C
        preferred unit conversion        71        78          75         122
       Impact of Series I
        preferred unit conversion     1,254     2,408       1,531       2,485
       Impact of Series I
        preferred stock conversion    9,657    11,102      10,773      11,065

    Diluted weighted average
     shares outstanding             238,891   237,276     238,263     237,448

    Weighted average limited
     partnership units outstanding   56,514    57,929      57,175      58,036

    Diluted weighted average
     shares and units outstanding   295,405   295,205     295,438     295,484

    Basic FFO per share               $1.90     $1.81       $6.56       $6.02
        Percent Increase               5.0%                  9.0%

    Diluted FFO per share             $1.86     $1.76       $6.42       $5.90
        Percent Increase               5.7%                  8.8%



                                    SIMON
               Footnotes to Reconciliation of Net Income to FFO
                                  Unaudited

    Notes:

(1) The Company considers FFO a key measure of its operating performance that is not specifically defined by GAAP and believes that FFO is helpful to investors because it is a widely recognized measure of the performance of REITs and provides a relevant basis for comparison among REITs. The Company also uses this measure internally to measure the operating performance of the portfolio. The Company's computation of FFO may not be comparable to FFO reported by other REITs.

The Company determines FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"). The Company determines FFO to be our share of consolidated net income computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding gains and losses from the sales of previously depreciated operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and all determined on a consistent basis in accordance with GAAP.

The Company has adopted NAREIT's clarification of the definition of FFO that requires it to include the effects of nonrecurring items not classified as extraordinary, cumulative effect of accounting changes, or a gain or loss resulting from the sale of previously depreciated operating properties. We include in FFO gains and losses realized from the sale of land, outlot buildings, marketable and non-marketable securities, and investment holdings of non-retail real estate. However, you should understand that FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity.

(2) Includes the Company's share of gains upon the sale of land and other non-retail real estate investments of $3.0 million and $8.0 million for the three months ended December 31, 2008 and 2007, respectively and $21.6 million and $19.8 million for the twelve months ended December 31, 2008 and 2007, respectively.

(3) Includes the Company's share of straight-line adjustments to minimum rent of $8.6 million and $8.5 million for the three months ended December 31, 2008 and 2007, respectively and $39.6 million and $27.5 million for the twelve months ended December 31, 2008 and 2007, respectively.

(4) Includes the Company's share of the fair market value of leases from acquisitions of $8.6 million and $12.1 million for the three months ended December 31, 2008 and 2007, respectively and $45.1 million and $53.4 million for the twelve months ended December 31, 2008 and 2007, respectively.

(5) Includes the Company's share of debt premium amortization of $4.7 million and $6.0 million for the three months ended December 31, 2008 and 2007, respectively and $19.4 million and $32.1 million for the twelve months ended December 31, 2008 and 2007, respectively.

(6) Includes dividends and distributions of Series I preferred stock and Series C and Series I preferred units.

SOURCE Simon Property Group, Inc.

CONTACT: Investors, Shelly Doran, +1-317-685-7330, or Media, Les Morris, +1-317-263-7711, both of Simon Property Group, Inc.

/Web site: http://www.simon.com

Simon Property Group, Inc.

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