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INDIANAPOLIS, Feb. 5 /PRNewswire-FirstCall/ -- Simon Property Group, Inc.
(the "Company") (NYSE: SPG) today announced results for the quarter and twelve
months ended December 31, 2003:
* Diluted funds from operations ("FFO") per share for the quarter
increased 6%, to $1.26 from $1.19 (as restated).
* Diluted earnings per share for the quarter increased 60%, to $0.83 from
$0.52.
* Diluted FFO per share for the twelve months increased 7%, to $4.04 from
$3.76 (as restated).
* Diluted earnings per share for the twelve months decreased 17%, to
$1.65 from $1.99.
The decline in net income for the twelve months is primarily attributable
to net gains on the sale of real estate and joint venture interests in real
estate in 2002 in excess of 2003 net gains. FFO for 2002 was restated to
comply with the SEC's Regulation G and its subsequent guidance.
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"). The Company believes that FFO is helpful to investors
because it is a widely recognized measure of the performance of real estate
investment trusts and provides a relevant basis for comparison among REITs. A
reconciliation of net income to FFO is provided in the financial statement
section of this press release.
Comparable retail sales per square foot increased 3%, to $402 as compared
to $391 at December 31, 2002, while total retail sales per square foot
increased 4%, to $401 at December 31, 2003 as compared to $386 at December 31,
2002. Average base rents for mall and freestanding stores in the regional
mall portfolio were $32.26 per square foot at December 31, 2003, an increase
of $1.56 or 5%, from December 31, 2002. The average initial base rent for new
mall store leases signed during 2003 was $41.28, an increase of $8.29 or 25%
over the tenants who closed or whose leases expired. Occupancy for mall and
freestanding stores in the regional malls at December 31, 2003 was 92.4%, as
compared to 92.7% at December 31, 2002.
"We are pleased with our growth in FFO for 2003 achieved even with the
write-off of costs related to an abandoned tender offer, the cessation of
earnings recognition from the Company's interest in Mall of America, and the
earnings dilution associated with the sale of non-core assets," said David
Simon, Chief Executive Officer. "We are poised for a successful 2004. Our
core business fundamentals remain solid with regional mall average base rent
growth of 5%, tenant sales growth of approximately 4%, and comparable property
NOI growth of 3.5% for the year. Occupancy was down slightly at year-end due
to a few retailer bankruptcy-related closings during the last three months of
the year. Our continued confidence in the Company was demonstrated by our
strong 8.3% dividend increase announced today."
Dividends
Today the Company also announced a common stock dividend of $0.65 per
share, an increase of 8.3%. This dividend will be paid on February 27, 2004
to shareholders of record on February 17, 2004.
The Company also declared dividends on its two public issues of preferred
stock, payable on March 31, 2004 to shareholders of record on March 17, 2004:
* Simon Property Group, Inc. 8.75% Series F Cumulative Redeemable
Preferred Stock (NYSE: SPGPrF) - $0.546875 per share.
* Simon Property Group, Inc. 7.89% Series G Cumulative Preferred Stock
(NYSE: SPGPrG)- $0.98625 per share.
Development Activities
The Company has five new development projects currently under
construction:
* Chicago Premium Outlets is the third development to be undertaken
jointly by Simon and Chelsea Property Group. A 50/50 joint venture, the site
is approximately 35 miles west of downtown Chicago on Interstate 88, also
known as the East-West Tollway, in Aurora, Illinois. This upscale
manufacturers' outlet shopping center will comprise 438,000 square feet. Net
costs are expected to approximate $92 million and the project is scheduled to
open May 19, 2004.
* Clay Terrace is a 570,000 square foot upscale lifestyle center located
at the southwest corner of U.S. 31 and 146th Street, approximately fifteen
miles north of downtown Indianapolis, Indiana. Clay Terrace is an open-air,
mixed-use shopping center project, incorporating a mix of "big box" anchor
stores, specialty retail stores, unique restaurants and Class A office space.
Clay Terrace tenants will include: Dick's Sporting Goods, Wild Oats, Circuit
City, Mitchell's Fish Market, and Designer Shoe Warehouse. The Company owns
the project in a 50/50 joint venture with Lauth Property Group. Gross costs
are expected to approximate $108 million and the project is scheduled to open
in the fourth quarter of 2004.
* St. Johns Town Center, a 1.5 million square foot open-air retail
project, is under construction in Jacksonville, Florida. The project will be
comprised of a village component with a mainstreet design and a community
center, and will feature Dillard's, Barnes & Noble, Dick's Sporting Goods,
Target, Ross Dress for Less, Designer Shoe Warehouse, Staples and PetsMart.
Restaurants will include The Cheesecake Factory, Maggiano's, and P.F. Chang's.
Simon is developing the project in conjunction with joint venture partner Ben
Carter Properties. The Company will own 85% of this project until certain
financial hurdles are met, at which time ownership reverts to 50/50. Gross
costs are expected to approximate $158 million and the project is scheduled to
open in the first quarter of 2005.
* Wolf Ranch will be a 670,000 square foot retail shopping complex
located at the southwest corner of I-35 and State Road 29 in Georgetown,
Texas. It will be an open-air, mixed-use shopping center containing a mix of
"big box" anchor stores, specialty retail stores and unique restaurants. Wolf
Ranch will be anchored by Target and Kohl's and contain eight junior anchors
including Linens N' Things, Office Depot and PetsMart. Gross costs are
expected to approximate $80 million, construction started on December 16,
2003, and the project is scheduled to open in the third quarter of 2005. The
Company owns 100% of this asset.
* Firewheel Center will be a 785,000 square foot open-air regional
shopping center located at the intersection of State Road 190 and President
George Bush Expressway and State Road 78 in Garland, Texas. The project will
feature Foley's, Dillard's, AMC Theaters, Barnes & Noble, Circuit City, Sports
Authority and Linens N' Things. The project will contain approximately
245,000 square feet of small shop space, four sit-down restaurants, plus
75,000 square feet of second level office space. Gross costs are expected to
approximate $126 million, construction will begin on February 26, 2004, and
the project is scheduled to open in the fall of 2005. The Company also owns
100% of this asset.
The Company's most significant expansion and redevelopment projects
underway are the redevelopment of SouthPark Mall in Charlotte, North Carolina
and the expansion of The Forum Shops at Caesars. At SouthPark, a new 153,000
square foot Nordstrom, 60,000 square foot Hecht's expansion, and 50,000
additional square feet of small shops will open in March of 2004. An
additional phase of the redevelopment of SouthPark is under construction which
will add Galyan's (opening in the third quarter of 2004) and two restaurants.
The phase III expansion of Forum Shops will open in October of 2004, adding
175,000 square feet of unique luxury designers, restaurants, and one-of-a kind
retailers.
The Company also recently announced the 2004 addition of Nordstrom to
Dadeland Mall in Miami, the 2005 addition of Nordstrom to Phipps Plaza in
Atlanta, and the 2005 addition of Neiman Marcus to Town Center at Boca Raton,
in Boca Raton, Florida.
The Company expects that its share of spending on development and
redevelopment activities will approximate $450 million in 2004.
Acquisitions
During the fourth quarter, the Company completed a series of transactions
that increased its ownership in Kravco Investments L.P. (KI), a Philadelphia,
Pennsylvania-based owner of regional malls, and Kravco Company (KC), its
affiliated property management company. These transactions increased SPG's
ownership in KI to approximately 80% and in KC to 50%. Members of the family
of Arthur Powell, one of the founders of these companies, retained ownership
of the remaining interests.
SPG acquired interests in KI and KC from certain private investors, The
Rouse Company and Westfield America Trust. SPG, Rouse and Westfield obtained
their interests in Kravco in connection with the 2002 acquisition of assets
from Rodamco North America, N.V.
KI was renamed Kravco Simon Investments (KSI) and KC was renamed Kravco
Simon Company (KSC) to reflect the new ownership. KSI owns interests in six
regional malls, five of which are located in the Philadelphia metropolitan
area. Included in the portfolio is an interest in the Plaza and Court at King
of Prussia, one of the country's most successful regional malls. Occupancy of
the KI mall portfolio was 93.4% at year-end and 2003 sales per square foot
were $424. KI also owns interests in four community shopping centers.
Total consideration paid by the Company in these transactions was
approximately $293 million, including the assumption of its pro rata share of
mortgage indebtedness. The Company's partnership subsidiary, Simon Property
Group, L.P., issued $107.4 million of perpetual preferred operating
partnership units as part of the consideration.
On December 30th, the Company announced the completion of its joint
venture with The Rinascente Group. Gallerie Commerciali Italia S.p.A ("GCI")
was created for the ownership, management and development of shopping centers
in Italy.
The Rinascente Group contributed its existing shopping center assets and
development opportunities to GCI, and then sold 49% of the new company to an
affiliate of the Company. The initial value of GCI is approximately euro 860
million. The Company's equity investment was approximately euro 187 million,
funded by a three-year unsecured term loan at Euro Libor plus 60 basis points
provided by JP Morgan, Bank of America, Citicorp and UBS AG. The Company has
the ability to elect three members to GCI's board of directors, including the
right to appoint its Chairman. Through their respective board
representatives, the Company and Rinascente have joint decision making power
over matters affecting the operation and management of GCI, including new
development opportunities and the acquisition and disposition of assets.
The portfolio consists of 38 shopping centers currently open and
operating, comprising approximately six million square feet (including
hypermarket space and certain small shop space not owned by GCI).
Additionally, GCI has several projects under construction and in
predevelopment that could add up to six million additional square feet over
the next five years. This transaction significantly increases the Company's
presence in Europe and partners the Company with Rinascente and Auchan, two of
Europe's leading retailers.
Dispositions
Three asset dispositions are reflected in fourth quarter results.
* On October 28th, the Company sold its 80% interest in Mainland
Crossing, a community center, in Texas City, Texas.
* On November 3rd, the Company sold its 100% interest in South Park Mall,
located in Shreveport, Louisiana.
* On December 12th, the Company sold its 100% interest in Bergen Mall,
located in Paramus, New Jersey.
Gross proceeds from the three transactions totaled approximately $154
million, resulting in a net gain of $48 million. The aggregate cap rate for
the dispositions was 7.1%.
Financing Activities
On December 16th, the Company announced that the holders of all but 18,340
shares of its approximately 4.3 million shares of 6.5% Series B Convertible
Preferred Stock called for redemption on December 15, 2003, exercised their
right to convert their preferred stock into common stock prior to the
redemption. The Company issued approximately 11.1 million shares of common
stock to the holders of the preferred stock who exercised their conversion
rights after November 13, 2003. The 18,340 shares of preferred stock not
converted were redeemed by the Company at a price of $106.34 per share, which
includes dividends accrued to the redemption date. The Company privately
issued preferred stock to cover the cost of the preferred stock redeemed.
On January 20, 2004, the Company's partnership subsidiary, Simon Property
Group, L.P., completed the issuance of $500 million of senior unsecured notes.
The issue included $300 million of 3.75% Notes due 2009 and $200 million of
4.90% Notes due in 2014.
Concurrent with the note pricing, the Company swapped the $300 million
five-year tranche to floating rate debt at an effective rate of six month
Libor in arrears plus less than one basis point. Net proceeds from the
offering were used to repay or exchange existing indebtedness. The
transaction was priced on January 13, 2004.
2004 Guidance
The Company reaffirmed guidance today, with diluted FFO expected to be
within a range of $4.24 to $4.32 per share for the year ending December 31,
2004 and diluted net income per share to be within a range of $1.72 to $1.80.
The following table provides the reconciliation of estimated diluted FFO
per share to estimated diluted net income per share.
For the twelve months ended December 31, 2004
Low High
Range Range
Estimated diluted FFO per share $4.24 $4.32
Depreciation and amortization including
our share of joint ventures (2.53) (2.53)
Impact of additional dilutive securities
for FFO per share 0.01 0.01
Estimated diluted net income per share $1.72 $1.80
Forward-Looking Statements
Estimates of future net income per share and FFO are by definition, and
certain other matters discussed in this press release may be, forward-looking
statements within the meaning of the federal securities laws. Although the
Company believes the expectations reflected in any forward-looking statements
are based on reasonable assumptions, it can give no assurance that its
expectations will be attained, and it is possible that our actual results may
differ materially from those indicated by these forward-looking statements due
to a variety of risks and uncertainties. The Company undertakes no obligation
to publicly update or revise any forward-looking statements whether as a
result of new information, future events or otherwise.
Those risks and uncertainties include, but are not limited to, the
national, regional and local economic climate, competitive market forces,
changes in market rental rates, trends in the retail industry, the inability
to collect rent due to the bankruptcy or insolvency of tenants or otherwise,
acquisitions and changes in market rates of interest or foreign currency. The
reader is directed to the Company's various filings with the Securities and
Exchange Commission, including quarterly reports on Form 10-Q, reports on Form
8-K and annual reports on Form 10-K for a discussion of such risks and
uncertainties.
Conference Call
The Company will provide an online simulcast of its quarterly conference
call at www.simon.com (in the About Simon section), www.companyboardroom.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) tomorrow, February 6th. An online
replay will be available for approximately 90 days at www.simon.com .
Supplemental Materials
The Company will publish a supplemental information package tomorrow
morning which will be available at www.simon.com in the Investor Relations
section, Other Financial Reports tab. It will also be furnished to the SEC as
part of a Form 8-K. If you wish to receive a copy via mail, please call
800-461-3439.
Simon Property Group, Inc. (NYSE: SPG), headquartered in Indianapolis,
Indiana, is a real estate investment trust engaged in the ownership and
management of income-producing properties, primarily regional malls and
community shopping centers. Through its subsidiary partnerships, it currently
owns or has an interest in 246 properties containing an aggregate of 190
million square feet of gross leasable area in 37 states, as well as ownership
interests in other real estate assets in North America. The Company holds
interests in 46 assets in Europe (in France, Italy and Poland). Additional
Simon Property Group information is available at www.simon.com .
SIMON(A)(B)(C)
Combined Statements of Operations
Unaudited
(In thousands, except as noted)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
REVENUE:
Minimum rent $381,759 $364,456 $1,375,407 $1,297,047
Overage rent 23,433 22,834 47,991 47,314
Tenant
reimbursements 175,196 180,887 674,854 643,049
Management fees
and other revenue 19,090 0 78,292 0
Other income 60,383 37,926 137,109 136,742
Total revenue 659,861 606,103 2,313,653 2,124,152
EXPENSES:
Property operating 83,192 76,686 327,819 307,411
Depreciation and
amortization 127,545 123,832 498,136 467,395
Real estate taxes 53,224 55,955 219,274 210,181
Repairs and
maintenance 23,421 22,013 84,623 74,098
Advertising and
promotion 23,804 22,694 61,765 59,857
Provision for
credit losses 3,651 2,418 14,253 9,014
Home and regional
office costs 23,534 12,665 80,105 45,159
General and
administrative 3,975 646 15,083 3,233
Costs related to
withdrawn
tender offer 81 0 10,581 0
Other 9,682 9,318 27,229 29,548
Total operating
expenses 352,109 326,227 1,338,868 1,205,896
OPERATING INCOME 307,752 279,876 974,785 918,256
Interest expense 151,016 152,078 602,510 599,266
Income before
minority interest 156,736 127,798 372,275 318,990
Minority interest (3,970) (4,129) (7,277) (10,498)
Gain (loss) on
sales of assets
and other, net (24) (8,372) (5,146) 162,011
Gain (loss) from
debt related
transactions, net 0 (10) 0 14,576
Income tax
expense of
taxable REIT
subsidiaries (1,147) 0 (7,597) 0
Income before
unconsolidated
entities 151,595 115,287 352,255 485,079
Loss from
MerchantWired,
LLC, net 0 0 0 (32,742)
Income from
other
unconsolidated
entities 28,656 26,628 99,645 92,811
Income from
continuing
operations 180,251 141,915 451,900 545,148
Results of
operations from
discontinued
operations 1,755 6,020 7,421 16,507
Gain on disposal
or sale of
discontinued
operations, net 48,086 0 22,394 0
Income before
allocation to
limited
partners 230,092 147,935 481,715 561,655
LESS:
Limited
partners'
interest in
the Operating
Partnership 53,039 33,109 100,956 127,727
Preferred
distributions
of the
Operating
Partnership 3,539 2,835 12,044 11,340
NET INCOME 173,514 111,991 368,715 422,588
Preferred dividends (8,090) (15,683) (55,138) (64,201)
NET INCOME AVAILABLE
TO COMMON
SHAREHOLDERS $165,424 $96,308 $313,577 $358,387
SIMON(A)(B)
Per Share Data and Selected Mall Operating Statistics
Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
PER SHARE DATA:
Basic Earnings Per Common Share:
Income from continuing operations $0.66 $0.50 $1.53 $1.92
Discontinued operations -
results of operations
and gain on disposal or
sale, net 0.20 0.02 0.12 0.07
Net Income available to Common
Shareholders $0.86 $0.52 $1.65 $1.99
Percentage Change 65.4% -17.1%
Diluted Earnings Per Common Share:
Income from continuing operations $0.64 $0.50 $1.53 $1.92
Discontinued operations -
results of operations
and gain on disposal or
sale, net 0.19 0.02 0.12 0.07
Net Income available to Common
Shareholders $0.83 $0.52 $1.65 $1.99
Percentage Change 59.6% -17.1%
SELECTED U.S. REGIONAL MALL OPERATING STATISTICS
December 31, December 31,
2003 2002
Occupancy(D) 92.4% 92.7%
Average rent per square foot(D) $32.26 $30.70
Total sales volume (in millions)(E) $19,486 $17,971
Comparable sales per square foot(E) $402 $391
Total sales per square foot(E) $401 $386
SIMON(A)(B)
Reconciliation of Net Income to FFO(F)
Unaudited
(In thousands, except as noted)
The Company considers FFO a key measure of its operating performance that
is not specifically defined by GAAP. The Company believes that FFO is helpful
to investors because it is a widely recognized measure of the performance of
REITs and it provides a relevant basis for comparison among REITs. The
Company also uses this measure internally to measure the operating performance
of the portfolio.
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002(G) 2003 2002(G)
Net Income(H)(I) $173,514 $111,991 $368,715 $422,588
Plus: Limited partners'
interest in the Operating
Partnership and preferred
distributions of the
Operating Partnership 56,578 35,944 113,000 139,067
Plus: Depreciation and
amortization from combined
consolidated properties and
discontinued operations 124,830 126,623 499,737 478,379
Plus: Simon's share of
depreciation and amortization
and other items from
unconsolidated entities 38,907 42,563 147,629 150,217
Plus: (Gain)/Loss on sales of
real estate and discontinued
operations (48,062) 8,372 (17,248) (162,011)
Less: Management Company gain
on sale of real estate, net 0 0 0 (8,400)
Less: Minority interest
portion of depreciation and
amortization (885) (2,268) (3,546) (7,943)
Less: Preferred distributions
and dividends (11,629) (18,518) (67,182) (75,541)
FFO of the Simon Portfolio $333,253 $304,707 $1,041,105 $936,356
FFO of the Simon Portfolio $333,253 $304,707 $1,041,105 $936,356
FFO Allocable to the LP
Unitholders (80,156) (78,462) (253,638) (245,352)
Basic FFO Allocable to the
Company 253,097 226,245 787,467 691,004
Impact of Series A, B and C
Preferred Stock Conversion
& Option Exercise (J) 5,279 10,187 34,702 38,167
Diluted FFO Allocable to the
Company $258,376 $236,432 $822,169 $729,171
Basic Weighted Average Shares
Outstanding 192,533 185,539 189,475 179,910
Effect of Stock Options 935 654 824 672
Impact of Series A Preferred
6.5% Convertible Stock 0 1 0 919
Impact of Series B Preferred
6.5% Convertible Stock 9,299 12,491 11,686 12,491
Impact of Series C Cumulative
Preferred 7% Convertible
Units 1,968 0 1,483 0
Diluted Weighted Average
Number of Equivalent Shares 204,735 198,685 203,468 193,992
Basic FFO Per Share:
Basic FFO Allocable to the
Company $253,097 $226,245 $787,467 $691,004
Basic Weighted Average Shares
Outstanding 192,533 185,539 189,475 179,910
Basic FFO per Share $1.31 $1.22 $4.16 $3.84
Percent Increase 7.4% 8.3%
Diluted FFO per Share:
Diluted FFO Allocable to the
Company $258,376 $236,432 $822,169 $729,171
Diluted Weighted Average
Number of Equivalent Shares 204,735 198,685 203,468 193,992
Diluted FFO per Share $1.26 $1.19 $4.04 $3.76
Percent Increase 5.9% 7.4%
SIMON(A)(B)(C)
Combined Balance Sheets
(In thousands, except as noted)
Unaudited
December 31, December 31,
2003 2002
ASSETS:
Investment properties, at cost $14,971,823 $14,249,615
Less - accumulated depreciation 2,556,578 2,222,242
12,415,245 12,027,373
Cash and cash equivalents 535,623 397,129
Tenant receivables and accrued
revenue, net 305,200 311,361
Notes and advances receivable from
Management Company and affiliates -- 75,105
Investment in unconsolidated
entities, at equity 1,811,773 1,665,654
Deferred costs, other assets, and
minority interest, net 616,880 427,880
Total assets $15,684,721 $14,904,502
LIABILITIES:
Mortgages and other indebtedness $10,266,388 $9,546,081
Accounts payable, accrued expenses
and deferred revenue 667,610 624,505
Cash distributions and losses in
partnerships and joint ventures,
at equity 14,412 13,898
Other liabilities, minority
interest and accrued dividends 280,414 228,508
Total liabilities 11,228,824 10,412,992
COMMITMENTS AND CONTINGENCIES
LIMITED PARTNERS' INTEREST IN THE
OPERATING PARTNERSHIP 859,050 872,925
LIMITED PARTNERS' PREFERRED INTEREST
IN THE OPERATING PARTNERSHIP 258,220 150,852
SHAREHOLDERS' 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,
12,078,012 and 16,830,057
issued and outstanding,
respectively. Liquidation
values $376,950 and $858,006,
respectively 367,483 814,254
Common stock, $.0001 par value,
400,000,000 shares authorized,
200,876,552 and 184,438,095 issued,
respectively 20 18
Class B common stock, $.0001 par
value, 12,000,000 shares
authorized, 3,200,000
issued and outstanding 1 1
Class C common stock, $.0001 par
value, 4,000 shares authorized,
issued and outstanding -- --
Capital in excess of par value 4,121,332 3,686,161
Accumulated deficit (1,097,317) (961,338)
Accumulated other comprehensive income 12,586 (8,109)
Unamortized restricted stock award (12,960) (10,736)
Common stock held in treasury at
cost, 2,098,555 shares (52,518) (52,518)
Total shareholders' equity 3,338,627 3,467,733
$15,684,721 $14,904,502
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands, except as noted)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
REVENUE:
Minimum rent $251,098 $227,453 $900,390 $805,537
Overage rent 16,696 15,969 31,086 29,279
Tenant reimbursements 129,175 115,338 468,049 406,856
Other income 51,878 20,223 198,512 55,375
Total revenue 448,847 378,983 1,598,037 1,297,047
EXPENSES:
Property operating 98,410 54,683 312,911 210,051
Depreciation and
amortization 75,932 63,658 272,746 234,264
Real estate taxes 35,736 34,371 140,261 126,390
Repairs and
maintenance 18,839 22,458 75,691 69,853
Advertising and
promotion 17,961 14,964 45,435 38,656
Provision for
credit losses (670) 5,211 8,684 9,131
Other 11,644 14,350 70,008 34,466
Total operating
expenses 257,852 209,695 925,736 722,811
OPERATING INCOME 190,995 169,288 672,301 574,236
Interest expense 93,752 89,316 364,740 337,119
Income Before
Minority Interest
and Unconsolidated
Entities 97,243 79,972 307,561 237,117
Income from
unconsolidated
entities 1,184 3,222 8,393 3,062
Minority interest (115) (362) (654) (751)
Income from
Continuing
Operations 98,312 82,832 315,300 239,428
Income from
discontinued
joint venture
interests(K) -- 700 1,295 16,063
NET INCOME $98,312 $83,532 $316,595 $255,491
Third-party
investors' share
of Net Income $62,148 $48,914 $190,535 $150,161
Our share of Net
Income 36,164 34,618 126,060 105,330
Amortization of
Excess Investment 7,508 9,432 26,415 26,635
Income from
Unconsolidated
Joint Ventures $28,656 $25,186 $99,645 $78,695
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands, except as noted)
December 31, December 31,
2003 2002
ASSETS:
Investment properties, at cost $10,239,929 $8,160,065
Less - accumulated depreciation 1,798,564 1,327,751
8,441,365 6,832,314
Cash and cash equivalents 308,781 199,634
Tenant receivables 262,893 199,675
Investment in unconsolidated entities 94,853 6,966
Other assets 227,485 190,561
Total assets $9,335,377 $7,429,150
LIABILITIES AND PARTNERS' EQUITY:
Mortgages and other notes payable $6,643,052 $5,306,465
Accounts payable and accrued expenses 310,190 289,793
Other liabilities 74,206 66,090
Total liabilities 7,027,448 5,662,348
Preferred units 152,450 125,000
Partners' equity 2,155,479 1,641,802
Total liabilities and partners' equity $9,335,377 $7,429,150
Our Share of:
Total assets $3,861,497 $3,123,011
Partners' equity $885,149 $724,511
Add: Excess Investment, net 912,212 831,728
Our net investment in joint ventures $1,797,361 $1,556,239
Mortgages and other notes payable $2,739,630 $2,279,609
Excess Investment represents the unamortized difference of our investment
over our share of the equity in the underlying net assets of the partnerships
and joint ventures acquired. We amortize excess investment over the life of
the related Properties, typically 35 years, and the amortization is included
in income from unconsolidated entities.
SIMON(A)
Footnotes to Financial Statements
Unaudited
Notes:
(A) On December 31, 2002, Simon Property Group, Inc. merged with its
paired share affiliate, SPG Realty Consultants, Inc. The Statements of
Operations and Balance Sheets represent the combined, condensed financial
statements of Simon Property Group, Inc. and SPG Realty Consultants, Inc. for
2002.
(B) The results reflect the acquisition of assets from Rodamco North
America N.V. on May 3, 2002. The portfolio acquired by Simon consists
primarily of interests in 13 high-quality, highly productive regional malls in
the United States.
(C) On January 1, 2003, the Company's partnership subsidiary, Simon
Property Group, L.P., acquired all of the remaining equity interests of M.S.
Management Associates, Inc. ("MSM"). MSM provides management, leasing and
other services for certain of the Company's properties. MSM is now a wholly
owned consolidated taxable REIT subsidiary ("TRS") of Simon Property Group,
L.P. As of January 1, 2003, financial results of MSM are reported on the
consolidated method. New line items on the Statements of Operations as a
result of the consolidation are: Management fees and other revenue, Home and
regional office costs, General and administrative expense, and Income tax
expense of taxable REIT subsidiaries.
In prior years, a portion of Home and regional office costs and General
and administrative expense incurred by MSM was allocated to the consolidated
properties and reported as Property operating expense. Effective with the
consolidation of MSM, this allocation is eliminated in 2003 and the
allocations in 2002 have been reclassified to conform with the current year
presentation. Home and regional office costs include salary and benefits,
office rent, office expenses and information services expenses incurred in the
Company's home office and regional offices. General and administrative
expense represents the costs of operating as a public company and includes
such items as stock exchange fees, public and investor relations expenses,
executive officers' compensation expenses, audit fees, and legal fees.
(D) Includes mall and freestanding stores.
(E) Based on the standard definition of sales for regional malls
adopted by the International Council of Shopping Centers, which includes only
mall and freestanding stores.
(F) As defined by NAREIT, FFO is 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 real estate, 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 change or resulting from the sale of
depreciable 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.
(G) FFO for the quarter ended December 31, 2002 has been restated for
the adoption of SFAS 141 and SFAS 142 to reflect the fair market value of
leases from acquisitions, increasing FFO by $5.0 million or $0.02 per share.
FFO for the twelve months ended December 31, 2002, has been restated for: the
recording of fair market value of leases from acquisitions (increasing FFO by
$5.0 million); the Company's gains on debt-related transactions previously
reported as extraordinary under GAAP (increasing FFO by a net $14.3 million)
and the Company's share of impairment of technology assets (reducing FFO by a
net $26.7 million). The impact of the restatements for the year on a per
share diluted basis was a net decrease of $0.03.
(H) Includes our share of gains on land sales of $18.3 million and
$11.1 million for the three months ended December 31, 2003 and 2002,
respectively, and $42.0 million and $39.4 million for the twelve months ended
December 31, 2003 and 2002, respectively.
(I) Includes our share of straight-line adjustments to minimum rent of
$1.6 million and $3.4 million for the three months ended December 30, 2003 and
2002, respectively, and $6.1 million and $10.2 million for the twelve months
ended December 31, 2003 and 2002, respectively.
(J) Includes dividends of Series A, B and C Preferred Stock allocable
to the Company as well as increased allocation of FFO to the Company as a
result of assumed increase in the number of common shares outstanding. The
Series A shares impacted only the 2002 results as they were converted during
2002.
(K) Discontinued Joint Venture Interests represent those partnership
interests that have been sold or consolidated. Consolidation occurs when the
Company acquires an additional ownership interest in a joint venture and has,
as a result, gained control of the joint venture. These interests have been
separated from operational interests to present comparative results of
operations for those joint ventures held as of December 31, 2003.
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./
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