INDIANAPOLIS, July 28 /PRNewswire-FirstCall/ -- Simon Property Group, Inc.
(the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter
and six months ended June 30, 2005:
* Net income available to common stockholders for the quarter increased
119.0% to $154.8 million from $70.7 million in 2004. On a diluted per share
basis the increase was 105.9% to $0.70 from $0.34 in the second quarter of
2004. Net income available to common stockholders for the six months
increased 77.9% to $211.9 million from $119.1 million in 2004. On a diluted
per share basis the increase was 65.5% to $0.96 per share from $0.58 per share
in 2004. The increase in net income for the quarter and six months is
primarily attributable to net gains on the sale of two Chicago office building
complexes.
* Diluted funds from operations ("FFO") of the Simon portfolio for the
quarter increased 30.1% to $349.4 million from $268.5 million in 2004. On a
per share basis the increase was 16.8% to $1.18 from $1.01 in the second
quarter of 2004. Diluted FFO of the Simon portfolio for the six months
increased 30.7% to $683.2 million from $522.8 million in 2004. On a per share
basis the increase was 17.3% to $2.31 per share from $1.97 per share in 2004.
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 GAAP reported net income to FFO is provided in the financial
statement section of this press release.
The Company's core fundamentals continue to demonstrate strength as
evidenced by growth in operating metrics for all three domestic business
platforms:
As of As of
June 30, 2005 June 30, 2004 Increase
Occupancy
Regional Malls(1) 92.2% 91.3% 90 basis points
Premium Outlet(R) Centers(2) 99.2% 98.0%(3) 120 basis points
Community/Lifestyle Centers(2) 91.5% 91.5% No change
Comparable Sales per Sq. Ft.
Regional Malls(4) $442 $419 5.5%
Premium Outlet(R) Centers(2) $426 $397(3) 7.3%
Community/Lifestyle Centers(2) $218 $213 2.3%
Average Rent per Sq. Ft.
Regional Malls(1) $34.16 $32.92 3.8%
Premium Outlet(R) Centers(2) $22.83 $21.16(3) 7.9%
Community/Lifestyle Centers(2) $11.13 $10.77 3.3%
(1) For mall and freestanding stores.
(2) For all owned gross leasable area (GLA).
(3) The Company acquired Chelsea Property Group on October 14, 2004.
(4) For mall and freestanding stores with less than 10,000 square feet.
"We reported strong financial results and robust operating fundamentals
for the second quarter," said David Simon, Chief Executive Officer. "We also
completed the efficient execution of a $1 billion unsecured notes offering,
sold over $250 million of non-core assets, and announced additional
international development initiatives."
Dividends
Today the Company announced a quarterly common stock dividend of $0.70 per
share to be paid on August 31, 2005 to stockholders of record on August 17,
2005.
The Company also declared dividends on its four outstanding issues of
preferred stock:
* 8.75% Series F Cumulative Redeemable Preferred (NYSE: SPGPrF) dividend
of $0.546875 per share is payable on September 30, 2005 to stockholders of
record on September 16, 2005.
* 7.89% Series G Cumulative Preferred (NYSE: SPGPrG) dividend of $0.98625
per share is payable on September 30, 2005 to stockholders of record on
September 16, 2005.
* 6% Series I Convertible Perpetual Preferred (NYSE: SPGPrI) dividend of
$0.75 per share is payable on August 31, 2005 to stockholders of record on
August 17, 2005.
* 8 3/8% Series J Cumulative Redeemable Preferred (NYSE: SPGPrJ) dividend
of $1.046875 per share is payable on September 30, 2005 to stockholders of
record on September 16, 2005.
Development Activity
On May 5, 2005, the Company opened Phase I of Seattle Premium Outlets(R),
a 381,000 square foot upscale outlet center in Tulalip, Washington, 35 miles
north of Seattle. The center is located off I-5 on the Tulalip Tribes
Reservation. Tenants include: Adidas, Adrienne Vittadini, Ann Taylor, Banana
Republic, Brooks Brothers, Burberry, Calvin Klein, Crabtree & Evelyn, Coach,
Gap, Guess, Izod, J.Crew, Le Creuset, Mikasa, Movado, Nike, Polo Ralph Lauren,
Sony, Tommy Hilfiger, and Tumi. Gross costs were $58 million. The Company
owns 100% of this project.
Wolf Ranch, a 670,000 square foot community center located north of
Austin, Texas in Georgetown, opened earlier this month. It is an open-air,
mixed-use shopping center containing a mix of anchor stores, specialty retail
stores and unique restaurants. Wolf Ranch is anchored by Target, Linens 'n
Things, Michaels, Office Depot, Old Navy, Pier One Imports, PetsMart and T.J.
Maxx. Three additional anchors -- Kohl's, Best Buy and DSW -- are under
construction and scheduled to open during October and November of this year.
Gross costs are expected to approximate $98 million. The Company owns 100% of
this project.
During the quarter, the Company started construction on three new
projects:
* Round Rock Premium Outlets -- a 433,000 square foot upscale outlet
center in Round Rock (Austin), Texas. The project is scheduled to open in the
fall of 2006.
* The Domain -- a master-planned urban village in Austin, Texas, that
will include 700,000 square feet of retail and restaurants, 75,000 square feet
of Class A office space and 390 multi-family residential units. The retail
portion will be anchored by Neiman Marcus and Foley's. The Domain is
scheduled to open in March 2007.
* The Village at SouthPark -- a mixed-use project comprised of
residential and retail components located adjacent to Simon's highly
successful SouthPark Mall in Charlotte, North Carolina. The retail component
is scheduled to open in March 2007, followed by the residential component in
May 2007.
The Company continues construction on:
* Firewheel Town Center -- a 785,000 square foot open-air regional
shopping center in Garland, Texas. The project is scheduled to open on
October 7, 2005.
* Coconut Point -- an open-air, mixed-use mainstreet regional shopping
center in Estero/Bonita Springs, Florida. The community center component is
expected to open in March 2006, followed by the remainder of the project in
September 2006.
Construction also continues on three development projects in Italy,
partially owned by Gallerie Commerciali Italia, the Company's Italian joint
venture.
International Activity
On April 19, 2005, the Company announced that it signed an agreement with
Seoul-based Shinsegae Co., Ltd. and Shinsegae International Co., Ltd. to
jointly develop Premium Outlet centers in South Korea. The joint venture will
adapt Chelsea's Premium Outlet concept to the development of upscale, fashion-
oriented outlet centers in South Korea. Chelsea will contribute leasing,
design, marketing and operations expertise to the venture; Shinsegae will
manage the venture's entitlement, development and construction activities.
The initial focus will be on the development of a Premium Outlet center to
serve the greater Seoul market.
On May 23, 2005, the Company announced the opening of a regional office in
Hong Kong. Operating as Simon/Chelsea International Ltd., a newly formed
subsidiary, the office will be responsible for Simon's retail real estate
activities in Asia. Located in the Central district of Hong Kong, the new
regional office will be headed by Renee Ting, Managing Director, a real estate
professional with extensive experience in Hong Kong, Beijing and Shanghai.
On July 25, 2005, SPG announced the execution of a Cooperation Framework
Agreement with the Morgan Stanley Real Estate Funds ("MSREF") and SZITIC
Commercial Property Co. Ltd. ("SZITIC CP"), retail property subsidiary of the
Chinese state-owned trust and investment firm, Shenzhen International Trust &
Investment Co., Ltd. ("SZITIC"), to develop retail shopping center projects in
China. Simon and MSREF will each own 32.5% of the enterprise while SZITIC CP
will own 35%. Each project will be an urban, multi-level, retail destination
of between 40,000 sq. m and 70,000 sq. m (430,000 and 750,000 sq. ft.),
anchored in all cases by a Wal-Mart store.
Disposition Activity
On June 1, 2005, the Company sold its Chicago office portfolio -- three
buildings at Riverway and two buildings at O'Hare International Center -- for
$257 million. In addition, the Company has completed or expects to complete
the sale of land at Riverway underlying two additional buildings owned by the
current ground lessees for $19 million during the third quarter. The Company
recorded a gain of $119.7 million in the second quarter in conjunction with
the sale of Riverway and O'Hare.
Financing Activity
On June 7, 2005, the Company announced the closing of a private offering
of $1 billion of senior notes by its operating partnership subsidiary, Simon
Property Group, L.P. (the "Operating Partnership"). The offering consisted of
$400 million of 4.60% notes due 2010 and $600 million of 5.10% notes due 2015.
The notes were offered within the United States to qualified institutional
buyers pursuant to Rule 144A and outside the United States in accordance with
Regulation S under the Securities Act of 1933, as amended. The five-year
notes were issued at an offering price of 99.870% and the ten-year notes at
99.967%. The net proceeds of the offering were used to reduce outstanding
borrowings on two credit facilities of the Operating Partnership. An offer to
exchange these notes for registered notes is underway and is expected to be
completed during the third quarter.
2005 Guidance
Today the Company updated its guidance for 2005. The Company expects
diluted FFO to be within a range of $4.80 to $4.85 per share for the year
ending December 31, 2005, and diluted net income to be within a range of $1.67
to $1.72 per share.
The following table provides the reconciliation of estimated diluted net
income per share to diluted FFO per share.
For the twelve months ended December 31, 2005
Low High
Estimated diluted net income per share $1.67 $1.72
Depreciation and amortization including joint ventures 3.65 3.65
Gain on sales of real estate and discontinued
operations, net of tax effect (0.46) (0.46)
Impact of additional dilutive securities for FFO per
share (0.06) (0.06)
Estimated diluted FFO per share $4.80 $4.85
Forward-Looking Statements
Estimates of future net income and FFO per share, and other statements
regarding future developments and operations, are forward-looking statements
within the meaning of the federal securities laws. Forward-looking statements
often contain words such as "estimated," "expects," "anticipates," "intends,"
"plans," "believes," "seeks," or "will." Actual results may differ materially
from those indicated by forward-looking statements due to a variety of risks
and uncertainties. Those risks and uncertainties include, but are not limited
to, international, national, regional and local economic climates, 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, risks associated with acquisitions, the impact of terrorist
activities, environmental liabilities, pending litigation, maintenance of REIT
status, changes in applicable laws, rules and regulations, changes in market
rates of interest and fluctuations in exchange rates of foreign currencies.
The reader is directed to the Company's various filings with the Securities
and Exchange Commission for a discussion of such 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.
Conference Call
The Company will provide an online simulcast of its quarterly conference
call at http://www.simon.com (in the About Simon section),
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 4:00 p.m. Eastern Daylight Time (New York) today,
July 28, 2005. An online replay will be available for approximately 90 days
at http://www.simon.com.
Supplemental Materials
The Company will publish a supplemental information package which will be
available at http://www.simon.com in the Investor Relations section, Other
Financial Reports 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.
About Simon
Simon Property Group, Inc., headquartered in Indianapolis, Indiana, is a
real estate investment trust engaged in the ownership, development and
management of retail real estate, primarily regional malls, Premium Outlet(R)
centers and community/lifestyle centers. The Company's current total market
capitalization is approximately $39 billion. Through its subsidiary
partnership, it currently owns or has an interest in 294 properties in the
United States containing an aggregate of 201 million square feet of gross
leasable area in 40 states plus Puerto Rico. Simon also holds interests in
51 European shopping centers in France, Italy, Poland and Portugal; 5 Premium
Outlet centers in Japan; one Premium Outlet center in Mexico; and one shopping
center in Canada. Additional Simon Property Group information is available at
http://www.simon.com .
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2005 2004 2005 2004
REVENUE:
Minimum rent $470,387 $355,455 $937,026 $703,781
Overage rent 14,423 8,538 27,731 18,019
Tenant
reimbursements 213,873 174,947 425,470 345,180
Management fees
and other
revenues 17,505 18,490 37,185 36,403
Other income 40,074 34,133 76,769 61,137
Total revenue 756,262 591,563 1,504,181 1,164,520
EXPENSES:
Property
operating 100,916 84,821 202,567 167,824
Depreciation and
amortization 206,444 142,906 418,070 277,697
Real estate
taxes 71,783 58,687 143,892 117,139
Repairs and
maintenance 24,904 19,886 53,230 41,833
Advertising and
promotion 18,687 12,720 36,860 25,325
Provision for
credit losses
(recoveries) (1,688) 3,213 824 6,656
Home and
regional office
costs 30,802 21,267 57,992 42,232
General and
administrative 4,459 3,460 8,251 7,021
Other 11,107 7,627 21,958 16,482
Total
operating
expenses 467,414 354,587 943,644 702,209
OPERATING INCOME 288,848 236,976 560,537 462,311
Interest expense 199,153 156,218 395,763 308,879
Income before
minority
interest 89,695 80,758 164,774 153,432
Minority
interest (2,253) (3,820) (5,560) (4,681)
Gain (loss) on
sales of assets
and other, net 2,134 11,619 12,607 (1,881)
Income tax
expense of
taxable REIT
subsidiaries (2,734) (6,632) (7,420) (8,642)
Income before
unconsolidated
entities 86,842 81,925 164,401 138,228
Income from
unconsolidated
entities 14,456 19,836 32,383 36,908
Income from
continuing
operations 101,298 101,761 196,784 175,136
Results of
operations from
discontinued
operations 1,596 1,688 4,073 3,889
Gain on disposal
or sale of
discontinued
operations, net 119,692 197 119,780 288
Income before
allocation to
limited
partners 222,586 103,646 320,637 179,313
LESS:
Limited
partners'
interest in
the Operating
Partnership 42,018 20,201 57,681 34,776
Preferred
distributions
of the
Operating
Partnership 7,350 4,900 14,274 9,805
NET INCOME 173,218 78,545 248,682 134,732
Preferred
dividends (18,407) (7,834) (36,804) (15,670)
NET INCOME
AVAILABLE
TO COMMON
STOCKHOLDERS $154,811 $70,711 $211,878 $119,062
SIMON
Per Share Data
Unaudited
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
2005 2004 2005 2004
PER SHARE DATA:
Basic Earnings Per Common Share:
Income from continuing operations $0.27 $0.33 $0.52 $0.56
Discontinued operations - results
of operations and
gain on disposal or sale, net 0.43 0.01 0.44 0.02
Net income available to common
stockholders $0.70 $0.34 $0.96 $0.58
Percentage Change 105.9% 65.5%
Diluted Earnings Per Common Share:
Income from continuing operations $0.27 $0.33 $0.52 $0.56
Discontinued operations - results
of operations and
gain on disposal or sale, net 0.43 0.01 0.44 0.02
Net income available to common
stockholders $0.70 $0.34 $0.96 $0.58
Percentage Change 105.9% 65.5%
SIMON
Reconciliation of Net Income to FFO (A)
Unaudited
(In thousands, except as noted)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
2005 2004 2005 2004
Net Income(B)(C)(D)(E) $173,218 $78,545 $248,682 $134,732
Plus: Limited partners' interest
in the Operating Partnership and
preferred distributions
of the Operating Partnership 49,368 25,101 71,955 44,581
Plus: Depreciation and
amortization from consolidated
properties and
discontinued operations 205,858 143,547 417,576 279,798
Plus: Simon's share of
depreciation and amortization
from unconsolidated entities 55,567 42,140 103,298 83,632
Plus: (Gain)/loss on sales of
real estate and other assets
and discontinued operations (121,826) (11,816) (132,387) 1,593
Plus: Tax provision
related to sale 1,533 4,415 1,533 4,415
Less: Minority interest portion of
depreciation and amortization (2,792) (1,938) (4,841) (3,019)
Less: Preferred distributions and
dividends (25,757) (12,734) (51,078) (25,475)
FFO of the Simon Portfolio $335,169 $267,260 $654,738 $520,257
Per Share Reconciliation:
Diluted net income per share $0.70 $0.34 $0.96 $0.58
Plus: Depreciation and
amortization from consolidated
properties and the Company's share
of depreciation and amortization
from unconsolidated affiliates,
net of minority interest
portion of depreciation and
amortization 0.92 0.70 1.83 1.36
Plus: (Gain)/loss on sales of real
estate and other assets
and discontinued operations (0.43) (0.04) (0.47) 0.01
Plus: Tax provision related to
sale 0.01 0.02 0.01 0.02
Less: Impact of additional
dilutive securities for FFO
per share (0.02) (0.01) (0.02) 0.00
Diluted FFO per share $1.18 $1.01 $2.31 $1.97
Details for per share calculations:
FFO of the Simon Portfolio $335,169 $267,260 $654,738 $520,257
Adjustments for dilution
calculation:
Impact of preferred stock and
preferred unit conversions and
option exercises (F) 14,209 1,275 28,421 2,549
Diluted FFO of the Simon Portfolio 349,378 268,535 683,159 522,806
Diluted FFO allocable to
unitholders (70,309) (58,283) (138,244) (116,401)
Diluted FFO allocable to common
stockholders $279,069 $210,252 $544,915 $406,405
Basic weighted average shares
outstanding 220,228 205,553 220,306 203,901
Adjustments for dilution
calculation:
Effect of stock options 883 808 887 888
Impact of Series C preferred unit
conversion 1,078 1,968 1,105 1,968
Impact of Series I preferred unit
conversion 3,424 0 3,426 0
Impact of Series I preferred stock
conversion 10,682 0 10,680 0
Diluted weighted average shares
outstanding 236,295 208,329 236,404 206,757
Weighted average limited
partnership units outstanding 59,535 57,605 59,975 59,096
Diluted weighted average shares
and units outstanding 295,830 265,934 296,379 265,853
Basic FFO per share $1.20 $1.01 $2.34 $1.98
Percent Increase 18.8% 18.2%
Diluted FFO per share $1.18 $1.01 $2.31 $1.97
Percent Increase 16.8% 17.3%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
June 30, December 31,
2005 2004
ASSETS:
Investment properties, at cost $21,161,935 $21,253,761
Less - accumulated depreciation 3,440,838 3,162,523
17,721,097 18,091,238
Cash and cash equivalents 375,575 520,084
Tenant receivables and accrued
revenue, net 310,606 361,590
Investment in unconsolidated
entities, at equity 1,709,899 1,920,983
Deferred costs and other assets 1,200,889 1,176,124
Total assets $21,318,066 $22,070,019
LIABILITIES:
Mortgages and other indebtedness $14,247,220 $14,586,393
Accounts payable, accrued expenses,
intangibles, and deferred revenue 1,016,179 1,113,645
Cash distributions and losses in
partnerships and joint ventures, at
equity 111,694 37,739
Other liabilities, minority interest
and accrued dividends 163,755 311,592
Total liabilities 15,538,848 16,049,369
COMMITMENTS AND CONTINGENCIES
LIMITED PARTNERS' INTEREST IN THE
OPERATING PARTNERSHIP 917,598 965,204
LIMITED PARTNERS' PREFERRED INTEREST
IN THE OPERATING PARTNERSHIP 409,340 412,840
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,
25,479,963 and 25,434,967 issued
and outstanding, respectively,
and with liquidation values of
$1,073,998 and $1,071,748,
respectively 1,072,392 1,062,687
Common stock, $.0001 par value,
400,000,000 shares authorized,
224,574,876 and 222,710,350
issued and outstanding, respectively 23 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, 4,000 shares authorized,
issued and outstanding - -
Capital in excess of par value 5,016,631 4,993,698
Accumulated deficit (1,432,864) (1,335,436)
Accumulated other comprehensive
income 7,053 16,365
Unamortized restricted stock award (39,517) (21,813)
Common stock held in treasury at
cost, 4,000,255 and 2,415,855
shares, respectively (171,438) (72,918)
Total stockholders' equity 4,452,280 4,642,606
Total liabilities and stockholders'
equity $21,318,066 $22,070,019
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2005 2004 2005 2004
REVENUE:
Minimum rent $262,318 $225,055 $515,287 $452,972
Overage rent 19,653 3,525 31,621 8,758
Tenant reimbursements 131,020 118,437 258,183 232,657
Other income 33,035 16,160 57,663 28,738
Total revenue 446,026 363,177 862,754 723,125
EXPENSES:
Property operating 91,552 66,918 172,784 136,124
Depreciation and
amortization 84,707 67,508 160,876 134,655
Real estate taxes 33,013 30,742 66,093 63,533
Repairs and
maintenance 18,276 16,920 39,872 33,915
Advertising and
promotion 8,129 8,475 15,836 16,514
Provision for
credit losses 1,725 2,446 5,100 4,629
Other 29,390 15,964 53,891 32,433
Total operating
expenses 266,792 208,973 514,452 421,803
OPERATING INCOME 179,234 154,204 348,302 301,322
Interest expense 99,458 92,622 196,965 185,617
Income Before
Minority Interest
and Unconsolidated
Entities 79,776 61,582 151,337 115,705
Loss from
unconsolidated
entities (637) (1,612) (1,892) (2,301)
Income from
Continuing
Operations 79,139 59,970 149,445 113,404
Income from
consolidated joint
venture
interests(G) - 4,363 - 10,334
Income from
discontinued joint
venture interests (G) 542 (H) 9,704 1,004 (H) 6,560
Gain on disposal or
sale of
discontinued
operations, net (34)(H) 4,704 98,359 (H) 4,704
NET INCOME $79,647 $78,741 $248,808 $135,002
Third-party
investors' share
of net income $49,305 $52,831 $141,067 $85,851
Simon's share of
net income 30,342 25,910 107,741 49,151
Amortization of
excess investment 15,903 6,074 26,179 12,243
Write-off of
investment related
to property sold (945)(H) - 37,778 (H) -
Simon's share of
net gain related
to property sold 928 (H) - 11,401 (H) -
Income from
unconsolidated
joint ventures $14,456 $19,836 $32,383 $36,908
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
June 30, December 31,
2005 2004
ASSETS:
Investment properties, at cost $9,454,830 $9,429,465
Less - accumulated depreciation 1,833,801 1,745,498
7,621,029 7,683,967
Cash and cash equivalents 285,919 292,770
Tenant receivables 185,988 209,040
Investment in unconsolidated entities 134,453 167,182
Deferred costs and other assets 337,460 322,660
Total assets $8,564,849 $8,675,619
LIABILITIES AND PARTNERS' EQUITY:
Mortgages and other indebtedness $6,738,891 $6,398,312
Accounts payable, accrued expenses
and deferred revenue 347,324 373,887
Other liabilities 207,941 179,443
Total liabilities 7,294,156 6,951,642
Preferred units 67,450 67,450
Partners' equity 1,203,243 1,656,527
Total liabilities and
partners' equity $8,564,849 $8,675,619
Simon's Share of:
Total assets $3,589,234 $3,619,969
Partners' equity 564,620 779,252
Add: Excess Investment(I) 1,033,585 1,103,992
Simon's net investment in joint
ventures $1,598,205 $1,883,244
Mortgages and other indebtedness $2,903,088 $2,750,327
SIMON
Footnotes to Financial Statements
Unaudited
Notes:
(A) 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. The Company's computation of FFO may not be
comparable to FFO reported by other REITs.
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.
(B) Includes our share of gains on land sales of $8.8 million and $10.3
million for the three months ended June 30, 2005 and 2004, respectively, and
$17.9 million and $14.6 million for the six months ended June 30, 2005 and
2004, respectively.
(C) Includes our share of straight-line adjustments to minimum rent of
$5.4 million and $0.8 million for the three months ended June 30, 2005 and
2004, respectively, and $9.5 million and $3.0 million for the six months ended
June 30, 2005 and 2004, respectively.
(D) Includes our share of the fair market value of leases from
acquisitions of $13.5 million and $9.7 million for the three months ended
June 30, 2005 and 2004, respectively, and $27.1 million and $17.1 million for
the six months ended June 30, 2005 and 2004, respectively.
(E) Includes our share of debt premium amortization of $8.1 million and
$1.9 million for the three months ended June 30, 2005 and 2004, respectively,
and $16.2 million and $3.7 million for the six months ended June 30, 2005 and
2004, respectively.
(F) Includes dividends and distributions of Series I preferred stock and
Series C and I preferred units.
(G) 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
June 30, 2005. Discontinued joint venture interests represent those
partnership interests that have been sold.
(H) Relates to Metrocenter, a regional mall in Phoenix, Arizona sold on
January 11, 2005.
(I) 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 generally amortize excess
investment over the life of the related Properties, typically 35 years, and
the amortization is included in income from unconsolidated entities.
SOURCE Simon Property Group, Inc.
CONTACT: Shelly Doran, +1-317-685-7330 Investors, or Les Morris,
+1-317-263-7711 Media, both of Simon Property Group, Inc./
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