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Simon Property Group Reports Third Quarter Results and Announces 33% Increase in Quarterly Dividend From $0.60 to $0.80 Per Share

INDIANAPOLIS, Nov. 1, 2010 /PRNewswire via COMTEX/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter ended September 30, 2010.

Net income attributable to common stockholders was $230.6 million, or $0.79 per diluted share, in the third quarter of 2010 as compared to $105.5 million, or $0.38 per diluted share, in the prior year period. Third quarter 2010 results reflect the impact of transaction expenses of $47.6 million, or $0.14 per share, as well as the following transactions:

  • In July, the Company sold its interests in a European joint venture resulting in a gain of $281.3 million, or $0.80 per diluted share.
  • In August, the Company completed the successful tender of $1.3 billion of unsecured debt resulting in a loss on extinguishment of debt of $185.1 million, or $0.53 per diluted share.

Funds from Operations ("FFO") as adjusted was $503.6 million, or $1.43 per diluted share, in the third quarter of 2010 as compared to $473.1 million, or $1.38 per diluted share, in the prior year period. FFO as adjusted reflects the impact of the above-described transaction expenses of $0.14 per share, but excludes the gain on sale of interests in a European joint venture of $0.80 per share and the debt extinguishment charge of $0.53 per share. FFO including the debt extinguishment charge was $318.5 million, or $0.90 per diluted share.

"I am very pleased with our quarterly results and with today's significant dividend increase," said David Simon, Chairman and Chief Executive Officer. "Operating performance was strong as our U.S. regional mall and Premium Outlet portfolio generated comparable property net operating income growth of 3.6% in the third quarter. Our tenants also experienced a strong 10.6% increase in sales in the quarter as compared to the third quarter of 2009."

"It was also an eventful quarter, with the completion of several significant transactions including the acquisition of the Prime Outlets portfolio and the sale of our interests in Simon Ivanhoe. In addition, we continued enhancing our conservative balance sheet with the August $1.3 billion senior unsecured notes tender and $900 million notes issuance, extending the duration of our senior notes portfolio while decreasing the weighted average interest."

    U.S. Operational Statistics(1)


                                       As of             As of
                                   September 30,     September 30,
                                        2010              2009
                                  --------------    --------------
    Occupancy(2)                        93.6%             92.8%
    Comparable Sales per
     Sq. Ft. (3)                        $483              $449
    Average Rent per Sq. Ft. (2)      $38.69            $38.35


  1. Combined information for U.S. regional malls and U.S. Premium Outlets. Does not include information for properties owned by SPG-FCM (the Mills portfolio) or the properties included in the Prime Outlets Acquisition Company transaction.
  2. Represents mall stores in regional malls and all owned gross leasable area in Premium Outlets.
  3. Rolling 12 month comparable sales per square foot for mall stores less than 10,000 square feet in regional malls and all owned gross leasable area in Premium Outlets.

Dividends

Today the Company announced that the Board of Directors approved the declaration of a quarterly common stock dividend of $0.80 per share, an increase of 33%. This dividend is payable on November 30, 2010 to stockholders of record on November 16, 2010.

The Company also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred (NYSE: SPGPrJ) Stock of $1.046875 per share, payable on December 31, 2010 to stockholders of record on December 17, 2010.

Acquisitions

On August 30th, the Company announced the completion of its transaction with Prime Outlets Acquisition Company and certain of its affiliated entities ("Prime"). The Prime transaction consists of 21 outlet center properties, including the Barceloneta, Puerto Rico outlet center which Simon acquired in May of this year. As of September 30, 2010, the centers were 94.7% occupied with average base rents of $24.52 per square foot, and they generated sales per square foot of $406.

The completed transaction was valued at approximately $2.3 billion including the assumption of approximately $1.2 billion of existing mortgage debt.

In connection with the transaction, the Company signed a proposed Consent Agreement with the Staff of the Federal Trade Commission ("FTC"). The Consent Agreement is subject to review and approval by the Commissioners of the FTC.

Dispositions

On July 15th, the Company and Ivanhoe Cambridge completed the sale of their interests in Simon Ivanhoe to Unibail-Rodamco. The Company and Ivanhoe Cambridge each owned 50% interests in Simon Ivanhoe, which owns seven shopping centers in France and Poland. Simon and Ivanhoe Cambridge received consideration of euro 715 million for their interests. Simon recorded a gain on this transaction of $281.3 million in the third quarter.

Simon and Ivanhoe Cambridge entered into a joint venture with Unibail-Rodamco to pursue the development of four new retail projects in France. The Company has a 25% interest in this venture with the ability to determine, on a project by project basis, whether to retain its ownership interest in each project.

Capital Markets

On August 9th, the Company commenced an any and all cash tender offer for three issues of outstanding senior unsecured notes of its operating partnership subsidiary, Simon Property Group, L.P., or SPGLP, maturing in 2013 and 2014. On August 17th, the Company announced that approximately $1.33 billion of notes were tendered and accepted for purchase. These notes had a weighted average remaining duration of 3.5 years and a weighted average coupon of 6.06%. A $185.1 million charge to earnings and FFO was recorded in August of 2010 in connection with this transaction.

Also, on August 9th, the Company announced the sale by SPGLP of $900 million of senior unsecured notes in an underwritten public offering. The offering consisted of $900 million of 4.375% notes due 2021. The notes were priced at 99.605% of the principal amount to yield 4.42% to maturity. This was the lowest coupon for a 10-year REIT bond offering in history. Net proceeds from the offering were used to partially fund the cash purchase of the senior unsecured notes tendered.

The aggregate result of the tender offer, combined with the sale of unsecured notes, was an extension of the duration of our senior notes portfolio from 6.8 years to 7.5 years and a decrease in the weighted average interest rate of the Company's bond portfolio.

As of September 30, 2010, the Company had approximately $1.3 billion of cash on hand, including its share of joint venture cash, and an additional $3 billion of available capacity on SPGLP's corporate credit facility.

Development Activity

The 100% leased, 62,000 square foot expansion of Toki Premium Outlets in Toki, Japan, opened on July 14, 2010. The Company owns a 40% interest in this center.

During the third quarter, construction started on two upscale outlet centers:

  • Johor Premium Outlets, a 175,000 square foot center located in Johor, Malaysia. The center is located one hour's drive from Singapore and is projected to open in November of 2011. The Company owns 50% of this center in a joint venture with the Genting Group.
  • Merrimack Premium Outlets in Merrimack, New Hampshire. This 380,000 square foot center is located one hour north of metropolitan Boston and is projected to open in June of 2012. The Company owns 100% of this center.

Construction continues on the following projects:

  • A 116,000 square foot expansion of Houston Premium Outlets in Cypress (Houston), Texas. The expansion will be anchored by Saks Fifth Avenue Off 5th and is scheduled to be completed in November of 2010. The Company owns 100% of this center.
  • A 70,000 square foot expansion of Las Vegas Outlet Center in Las Vegas, Nevada, expected to open in March of 2011. The Company owns 100% of this center.
  • Paju Premium Outlets, a new 328,000 square foot upscale outlet center with approximately 160 shops, located north of Seoul, South Korea. This will be the Company's second Premium Outlet Center in South Korea and is expected to open in April of 2011. The Company owns a 50% interest in this project.
  • A 52,000 square foot expansion of Tosu Premium Outlets in Fukuoka, Japan, expected to open in July of 2011. The Company owns a 40% interest in this project.

2010 Guidance

Today the Company provided updated guidance for 2010, estimating that FFO as adjusted will be within a range of $5.90 to $5.95 per diluted share for the year ending December 31, 2010, an increase of $0.13 in the low end and an increase of $0.08 in the high end of guidance provided on July 30, 2010. FFO as adjusted excludes the loss on extinguishment of debt charges of $350.7 million ($1.00 per diluted share) related to SPGLP's January and August tender offers. After giving effect to these charges, the Company expects 2010 FFO per diluted share to be within a range of $4.90 to $4.95. Diluted net income is expected to be within a range of $2.03 to $2.08 per share.

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 and estimated diluted FFO per share to estimated diluted FFO as adjusted per share.

    For the year ending December 31, 2010
    -------------------------------------
                                                         Low        High
                                                         End         End
                                                         ---         ---

    Estimated diluted net income available to common
     stockholders per share                             $2.03       $2.08

    Depreciation and amortization including the
     Company's share of joint ventures                   3.80        3.80

    Gain upon acquisition of controlling interest, and
     on sale or disposal of assets and interests in
     unconsolidated entities                            (0.92)      (0.92)

    Impact of additional dilutive securities            (0.01)      (0.01)
                                                         -----       -----

    Estimated diluted FFO per share                     $4.90       $4.95

    Charges in connection with January and August
     2010 tender offers                                  1.00        1.00
                                                         ----        ----

    Estimated diluted FFO as adjusted per share         $5.90       $5.95
                                                        =====       =====


Conference Call

The Company will provide an online simulcast of its quarterly conference call at http://www.simon.com/ (Investors tab), http://www.earnings.com/, and http://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 Time (New York time) today, November 1, 2010. An online replay will be available for approximately 90 days at http://www.simon.com/, http://www.earnings.com/, and http://www.streetevents.com/. A fully searchable podcast of the conference call will also be available at http://www.reitcafe.com/.

Supplemental Materials and Website

The Company will publish a supplemental information package which will be available at http://www.simon.com/ in the Investors 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.

We routinely post important information for investors on our website, http://www.simon.com/, in the "Investors" section. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Non-GAAP Financial Measures

This press release includes FFO, comparable property net operating income growth and other operating performance measures that are not recognized by or have been adjusted from financial performance measures defined by accounting principles generally accepted in the United States ("GAAP"). Reconciliations of these measures to the most directly comparable GAAP measures are included within this press release or the Company's supplemental information package that was included in this morning's Form 8-K. FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry.

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, changes in value of investments in foreign entities, 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.

About Simon

Simon Property Group, Inc. is an S&P 500 company and the largest real estate company in the U.S. The Company currently owns or has an interest in 393 retail real estate properties comprising 264 million square feet of gross leasable area in North America, Europe and Asia. Simon Property Group is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide. The Company's common stock is publicly traded on the NYSE under the symbol SPG. For further information, visit the Simon Property Group website at http://www.simon.com/.


                               SIMON
               Consolidated Statements of Operations
                             Unaudited
                           (In thousands)


                              For the Three              For the Nine
                               Months Ended              Months Ended
                              September 30,              September 30,
                          2010          2009         2010           2009
                          ----          ----         ----           ----
    REVENUE:
    Minimum rent      $605,146      $570,100   $1,756,913     $1,709,147
    Overage rent        26,265        19,806       53,953         45,799
    Tenant
     reimbursements    274,013       268,611      785,634        784,905
    Management
     fees and
     other
     revenues           29,980        29,988       86,897         90,694
    Other income        43,871        36,427      154,515        116,491
                        ------        ------      -------        -------
       Total
        revenue        979,275       924,932    2,837,912      2,747,036

    EXPENSES:
    Property
     operating         115,647       113,815      315,649        326,798
     Depreciation
     and
     amortization      243,303       250,151      706,402        758,173
    Real estate
     taxes              86,680        79,854      255,067        251,173
    Repairs and
     maintenance        20,200        19,151       64,550         61,925
     Advertising
     And promotion      21,435        23,226       62,553         61,555
    (Recovery of)
     provision
     for credit
     losses             (3,096)         (745)      (2,060)        19,336
    Home and
     regional
     office costs       28,640        26,899       72,699         79,732
    General
     and
     administrative      5,170         4,509       15,909         13,867
    Impairment
     charge                  -             -            -        140,478  (A)
     Transaction
     expenses           47,585             -       62,554              -
    Other               15,917        15,895       44,412         52,908
                        ------        ------       ------         ------
       Total
        operating
        expenses       581,481       532,755    1,597,735      1,765,945

    OPERATING
     INCOME            397,794       392,177    1,240,177        981,091

    Interest
     expense          (249,264)     (257,881)    (774,686)      (728,360)
    Loss on
     extinguishment
     of debt          (185,063)            -     (350,688)             -
    Income tax
     Benefit of
     taxable REIT
     subsidiaries          249           238          557          2,904
    Income from
     unconsolidated
     entities           22,533         4,655       50,729         15,694
    Gain upon
     acquisition
     of controlling
     interest, and on
     sale or disposal
        of assets and
        interests in
        unconsolidated
        entities,
        net            294,283             -      320,349              -
                       -------           ---      -------            ---

     CONSOLIDATED
     NET
     INCOME            280,532       139,189      486,438        271,329

    Net income
     Attributable to
     noncontrolling
     interests          49,074        27,103       88,158         60,177
    Preferred
     dividends             834         6,539        5,779         19,597
                           ---         -----        -----         ------


    NET INCOME
     ATTRIBUTABLE
     TO COMMON
     STOCKHOLDERS     $230,624      $105,547     $392,501       $191,555
                      ========      ========     ========       ========

    Basic
     Earnings Per
     Common Share:

       Net income
        attributable
        to common
        stockholders     $0.79         $0.38        $1.35          $0.73
                         =====         =====        =====          =====

        Percentage
         Change          107.9%                      84.9%

    Diluted Earnings
     Per Common
     Share:

       Net income
        attributable
        to common
        stockholders     $0.79         $0.38        $1.35          $0.73
                         =====         =====        =====          =====

        Percentage
         Change          107.9%                      84.9%



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


                                           September 30,     December 31,
                                                2010             2009
                                                ----             ----
    ASSETS:
      Investment properties, at cost        $27,432,323      $25,336,189
        Less-accumulated depreciation         7,468,070        7,004,534
                                              ---------        ---------
                                             19,964,253       18,331,655
      Cash and cash equivalents               1,011,574        3,957,718
      Tenant receivables and accrued
       revenue, net                             383,168          402,729
      Investment in unconsolidated
       entities, at equity                    1,412,207        1,468,577
      Deferred costs and other assets         1,366,085        1,155,587
      Note receivable from related
       party                                    651,000          632,000
                                                -------          -------
        Total assets                        $24,788,287      $25,948,266
                                            ===========      ===========

    LIABILITIES:
      Mortgages and other indebtedness      $17,485,466      $18,630,302
      Accounts payable, accrued
       expenses, intangibles, and
       deferred revenues                        984,240          987,530
      Cash distributions and losses in
       partnerships and joint
       ventures, at equity                      411,023          457,754
      Other liabilities and accrued
       dividends                                214,009          159,345
                                                -------          -------
        Total liabilities                    19,094,738       20,234,931
                                             ----------       ----------

    Commitments and contingencies

    Limited partners' preferred
     interest in the Operating
     Partnership and noncontrolling
      redeemable interests in
       properties                                85,687          125,815

    Series I 6% convertible
     perpetual preferred stock,
     19,000,000 shares authorized, 0
      and 8,091,155 issued and
       outstanding, respectively, at
       liquidation value                              -          404,558

    EQUITY:

    Stockholders' equity:
      Capital stock (850,000,000 total
       shares authorized, $.0001 par
       value, 238,000,000 shares of
       excess common stock, 100,000,000
         authorized shares of preferred
         stock):

        Series J 8 3/8% cumulative
         redeemable preferred stock,
         1,000,000 shares authorized,
          796,948 issued and outstanding,
           with a liquidation value of
           $39,847                               45,458           45,704

        Common stock, $.0001 par value,
         511,990,000 shares authorized,
         296,897,334 and 289,866,711
          issued and outstanding,
           respectively                              30               29

        Class B common stock, $.0001 par
         value, 10,000 shares
         authorized, 8,000 issued and
         outstanding                                  -                -

      Capital in excess of par value          8,051,544        7,547,959
      Accumulated deficit                    (3,099,689)     (2,955,671)
      Accumulated other comprehensive
       loss                                     (25,851)          (3,088)
      Common stock held in treasury at
       cost, 4,003,451 and 4,126,440
       shares, respectively                    (166,436)        (176,796)
                                               --------         --------
        Total stockholders' equity            4,805,056        4,458,137
    Noncontrolling interests                    802,806          724,825
                                                -------          -------
        Total equity                          5,607,862        5,182,962

        Total liabilities and equity        $24,788,287      $25,948,266
                                            ===========      ===========



                                      SIMON
                     Joint Venture Statements of Operations
                                    Unaudited
                                 (In thousands)


                          For the Three Months        For the Nine Months
                                  Ended                      Ended
                              September 30,              September 30,
                           2010           2009        2010            2009
                           ----           ----        ----            ----
    Revenue:
      Minimum rent     $478,869       $488,052  $1,457,987      $1,445,618
      Overage rent       38,283         34,204      94,620          85,141
      Tenant
       reimbursements   234,769        243,201     699,384         719,845
      Other income       77,518         37,039     176,245         115,946
                         ------         ------     -------         -------
        Total revenue   829,439        802,496   2,428,236       2,366,550

    Operating
     Expenses:
      Property
       operating        167,653        178,291     477,386         489,616
      Depreciation
       and
       amortization     195,679        194,727     591,763         580,215
      Real estate
       taxes             61,080         57,262     191,779         190,036
      Repairs and
       maintenance       21,869         26,413      75,643          77,048
      Advertising
       And promotion     13,027         16,005      43,250          44,936
      (Recovery of)
       Provision for
       credit losses       (721)         3,523         718          18,910
      Other              50,507         43,487     155,688         131,680
                         ------         ------     -------         -------
        Total
         operating
         expenses       509,094        519,708   1,536,227       1,532,441
                        -------        -------   ---------       ---------
    Operating
     Income             320,345        282,788     892,009         834,109

    Interest
     expense          (218,238)      (221,166)    (653,419)       (661,586)
    Loss from
     unconsolidated
     entities              (327)        (3,170)     (1,368)         (2,383)
    Gain on sale or
     disposal of assets
     and interests in
     unconsolidated
      entities, net           -              -      39,761               -
                            ---            ---      ------             ---
    Net Income         $101,780        $58,452    $276,983        $170,140
                       ========        =======    ========        ========
    Third-Party
     Investors'
     Share of Net
     Income             $66,542        $39,710    $170,231        $112,600
                        -------        -------    --------        --------
    Our Share of
     Net Income          35,238         18,742     106,752          57,540
    Amortization
     of excess
     investment (B)     (12,695)       (14,087)    (35,676)        (41,846)
    Our share of
     gain on sale
     or disposal
     of assets
     and interests in
       unconsolidated
       entities,
       net                  (10)             -     (20,347)              -
                                           ---                         ---
    Income from
     Unconsolidated
     Entities,
     Net                $22,533         $4,655     $50,729         $15,694
                        =======         ======     =======         =======



                              SIMON
                   Joint Venture Balance Sheets
                            Unaudited
                          (In thousands)



                               September 30,          December 31,
                                   2010                  2009
                                   ----                  ----
    Assets:
    Investment
     properties, at cost        $21,120,220           $21,555,729
    Less-accumulated
     depreciation                 4,941,621             4,580,679
                                  ---------             ---------
                                 16,178,599            16,975,050

    Cash and cash
     equivalents                    795,166               771,045
    Tenant receivables
     and accrued
     revenue, net                   339,448               364,968
    Investment in
     unconsolidated
     entities, at equity            177,136               235,173
    Deferred costs and
     other assets                   535,925               477,223
                                    -------               -------
      Total assets              $18,026,274           $18,823,459
                                ===========           ===========

    Liabilities and
     Partners' Equity:
    Mortgages and other
     indebtedness               $15,862,783           $16,549,276
    Accounts payable,
     accrued expenses,
     intangibles and
      deferred revenue              778,213               834,668
    Other liabilities               921,254               920,596
                                    -------               -------
      Total liabilities          17,562,250            18,304,540
    Preferred units                  67,450                67,450
    Partners' equity                396,574               451,469
                                    -------               -------
      Total liabilities
       and partners'
       equity                   $18,026,274           $18,823,459
                                ===========           ===========

    Our Share of:
    Partners' equity               $235,502              $316,800
    Add:  Excess
     Investment (B)                 765,682               694,023
                                    -------               -------
    Our net Investment
     in Joint Ventures           $1,001,184            $1,010,823
                                 ==========            ==========



                                      SIMON
                        Footnotes to Financial Statements
                                    Unaudited

    Notes:


    (A)      In the second quarter of 2009, the Company recorded a non-cash
             impairment charge of $140.5 million, representing the decline
             in the value of the Company's investment in Liberty
             International, PLC.

    (B)      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 Non-GAAP Financial Measures (1)
                                  Unaudited
                       (In thousands, except as noted)
    Reconciliation of Consolidated Net Income to FFO and FFO as Adjusted
    --------------------------------------------------------------------

                          For the Three                  For the Nine
                           Months Ended                  Months Ended
                           September 30,                 September 30,
                        2010           2009           2010           2009
                        ----           ----           ----           ----

     Consolidated
      Net Income
      (2)(3)(4)(5)    $280,532       $139,189       $486,438       $271,329

     Adjustments
      to Consolidated
      Net Income to
      Arrive at FFO:

       Depreciation
       and
       amortization
       from
       consolidated
       properties      239,828        247,236        695,982        748,191

      Simon's
       share of
       depreciation
       and
       amortization
       from
       unconsolidated
       entities         97,788        100,027        290,517        287,901

      Gain upon
       acquisition
       of
       controlling
       interest,
       and on sale or
       disposal of
       assets and
       interests in
       unconsolidated
       entities, net  (294,283)             -       (320,349)             -

      Net income
       attributable
       to
       noncontrolling
       interest
       holders in
       properties       (2,119)        (2,700)        (7,342)        (8,064)

       Noncontrolling
       interests
       portion of
       depreciation
       and
       amortization     (1,911)        (2,017)        (5,888)        (6,253)

       Preferred
       distributions
       and dividends    (1,313)        (8,662)        (7,616)       (30,050)
                         ------         ------         ------        -------

    FFO of the
     Operating
     Partnership       318,522        473,073     $1,131,742     $1,263,054

       Impairment
       charge                -              -              -        140,478

      Loss on debt
       extinguishment  185,063              -        350,688              -
                       -------            ---        -------            ---

    FFO as adjusted
     of the
     Operating
     Partnership      $503,585       $473,073     $1,482,430     $1,403,532
                      ========       ========     ==========     ==========

    Per Share
     Reconciliation:
    ----------------

    Diluted net
     income
     attributable
     to common
     stockholders
     per share           $0.79          $0.38          $1.35          $0.73

     Adjustments
      to arrive at FFO:

       Depreciation
       And amortization
       from consolidated
       properties
        and Simon's
        share of
        depreciation
        and amortization
        from
        unconsolidated
        entities, net of
        noncontrolling
        interests
        portion of
        depreciation and
        amortization      0.95           1.02           2.81           3.24

      Gain upon
       acquisition
       of controlling
       interest, and on
       sale or disposal
       of assets and
       interests in
       unconsolidated
       entities, net     (0.84)             -          (0.92)             -

      Impact of
       additional
       dilutive
       securities for
       FFO per share         -          (0.02)         (0.01)         (0.05)
                           ---          -----          -----          -----

    Diluted FFO per
     share               $0.90          $1.38          $3.23          $3.92

       Impairment
       charge                -              -              -           0.43

      Loss on debt
       extinguishment     0.53              -           1.00              -
                          ----            ---           ----            ---

    Diluted FFO as
     Adjusted per
     share               $1.43          $1.38          $4.23          $4.35
                         =====          =====          =====          =====



    Details for per
     share calculations:
    -------------------

    FFO of the
     Operating
     Partnership      $318,522       $473,073     $1,131,742     $1,263,054

     Adjustments
     For dilution
     calculation:
    Impact of
     preferred
     stock and
     preferred
     unit
     conversions
     and option
     exercises(6)            -          6,857          3,676         20,612
                           ---          -----          -----         ------
    Diluted
     FFO of the
     Operating
     Partnership       318,522        479,930      1,135,418      1,283,666

    Diluted FFO
     allocable
     to unitholders    (53,505)       (79,349)      (188,608)      (223,818)
                        -------        -------       --------       --------
    Diluted FFO
     allocable
     to common
     stockholders     $265,017       $400,581       $946,810     $1,059,848
                      ========       ========       ========     ==========

    Basic weighted
     average shares
     outstanding       292,830        281,430        290,451        261,355

    Adjustments
     For dilution
     calculation:
       Effect of
        stock
        options            259            337            288            291
       Effect of
        contingently
        issuable
        shares from
        stock
        dividends            -            707              -          1,261
       Impact of
        Series C
        preferred
        unit
        conversion           -             40              -             61
       Impact of
        Series I
        preferred
        unit
        conversion           -          1,269            318          1,253
       Impact of
        Series I
        preferred
        stock
        conversion           -          6,394          2,339          6,287
                           ---          -----          -----          -----

    Diluted
     weighted
     average
     shares
     outstanding       293,089        290,177        293,396        270,508

    Weighted
     average
     limited
     partnership
     units
     outstanding        59,173         57,480         58,446         57,126


    Diluted
     weighted
     average
     shares
     and
     units
     outstanding       352,262        347,657        351,842        327,634
                       =======        =======        =======        =======

    Basic FFO per
     share               $0.90          $1.40          $3.24          $3.97
        Percent
         Change          -35.7%                        -18.4%

    Diluted FFO per
     share               $0.90          $1.38          $3.23          $3.92
        Percent
         Change          -34.8%                        -17.6%

    Diluted FFO as
     adjusted
     per share           $1.43          $1.38          $4.23          $4.35
        Percent
         Change            3.6%                        -2.8%



                                SIMON
     Footnotes to Reconciliation of Non-GAAP Financial Measures
                              Unaudited
                              ---------

    Notes:

    (1) This report contains measures of financial or
    operating performance that are not specifically defined
    by accounting principles generally accepted in the United
    States ("GAAP"), including funds from operations ("FFO"),
    FFO as adjusted, FFO per share, FFO as adjusted per share
    and estimated diluted FFO as adjusted per share.  FFO is
    a performance measure that is standard in the REIT
    business.  We believe FFO provides investors with
    additional information concerning our operating
    performance and a basis to compare our performance with
    those of other REITs.  We also use these measures
    internally to monitor the operating performance of our
    portfolio.  As adjusted measures exclude the effect of
    certain non-cash impairment and debt-related charges.
    We believe these measures provide investors with a basis
    to compare our current operating performance with
    previous periods in which we did not have those charges.
    Our computation of these non-GAAP measures may not be
    the same as similar measures 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 on land sales
    of $1.0 million for the three months ended September 30,
    2010, and $4.1 million and $2.2 million for the nine
    months ended September 30, 2010 and 2009, respectively.

    (3) Includes the Company's share of straight-line
    adjustments to minimum rent of $9.7 million and $7.8
    million for the three months ended September 30, 2010 and
    2009, respectively and $23.8 million and $25.3 million
    for the nine months ended September 30, 2010 and 2009,
    respectively.

    (4) Includes the Company's share of the amortization of
    fair market value of leases from acquisitions of $5.0
    million and $5.7 million for the three months ended
    September 30, 2010 and 2009, respectively and $14.8
    million and $19.0 million for the nine months ended
    September 30, 2010 and 2009, respectively.

    (5) Includes the Company's share of debt premium
    amortization of $3.0 million and $3.5 million for the
    three months ended September 30, 2010 and 2009,
    respectively and $9.4 million and $10.8 million for the
    nine months ended September 30, 2010 and 2009,
    respectively.

    (6) Includes dividends and distributions of Series I
    preferred stock and Series C and Series I preferred
    units. All outstanding Series C preferred units were
    redeemed in August 2009 and all outstanding shares of
    Series I preferred stock and Series I preferred units
    were redeemed on April 16, 2010.

SOURCE: Simon Property Group, Inc.

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