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| Simon Property Group Announces Third Quarter Results and Quarterly Dividends |
INDIANAPOLIS, Oct 30, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter ended September 30, 2006: * Funds from operations ("FFO") of the Simon portfolio for the quarter increased 9.4% to $369.5 million from $337.7 million in the third quarter of 2005. On a diluted per share basis the increase was 9.2% to $1.30 from $1.19 in 2005. FFO of the Simon portfolio for the nine months increased 9.5% to $1.087 billion from $992.4 million in 2005. On a diluted per share basis the increase was 9.5% to $3.82 per share from $3.49 per share in 2005. * Net income available to common stockholders for the quarter increased 27.2% to $94.6 million from $74.4 million in the third quarter of 2005. On a diluted per share basis the increase was 26.5% to $0.43 from $0.34 in 2005. Net income available to common stockholders for the nine months decreased 1.6% to $281.5 million from $286.2 million in 2005. On a diluted per share basis the decrease was 2.3% to $1.27 per share from $1.30 per share in 2005. "The third quarter of 2006 was a very busy and productive time for us," said David Simon, Chief Executive Officer. "We completed a $1.1 billion senior unsecured notes offering at favorable rates; successfully opened two new retail projects -- one in Poland and one in Austin, Texas; started construction on new projects in Philadelphia, Noblesville, Indiana, Panama City Beach, Florida, and China; moved into our new headquarters building; and generated significant increases in FFO and earnings per share. Strong growth in tenant sales and healthy releasing spreads for both our regional mall and Premium Outlet platforms are driving our results."
As of As of
September 30, 2006 September 30, 2005 Change
Occupancy
Regional Malls(1) 92.5% 92.6% 10 basis point
decrease
Premium Outlet(R)
Centers(2) 99.3% 99.6% 30 basis point
decrease
Community/Lifestyle
Centers(2) 90.7% 91.3% 60 basis point
decrease
Comparable Sales per
Sq. Ft.
Regional Malls(3) $474 $445 6.5% increase
Premium Outlet
Centers(2) $462 $436 6.0% increase
Community/Lifestyle
Centers(2) $220 $221 0.5% decrease
Average Rent per
Sq. Ft.
Regional Malls(1) $35.23 $34.30 2.7% increase
Premium Outlet
Centers(2) $24.05 $22.99 4.6% increase
Community/Lifestyle
Centers(2) $11.69 $11.23 4.1% increase
(1) For mall and freestanding stores.
(2) For all owned gross leasable area (GLA).
(3) For mall and freestanding stores with less than 10,000 square feet.
Dividends
Today the Company announced a quarterly common stock dividend of $0.76 per share. This dividend will be paid on November 30, 2006 to stockholders of record on November 16, 2006. The Company also declared dividends on its three outstanding public issues of preferred stock: * 7.89% Series G Cumulative Preferred (NYSE:SPGPrG) dividend of $0.98625 per share is payable on December 29, 2006 to stockholders of record on December 15, 2006. * 6% Series I Convertible Perpetual Preferred (NYSE:SPGPrI) dividend of $0.75 per share is payable on December 29, 2006 to stockholders of record on December 15, 2006. * 8 3/8% Series J Cumulative Redeemable Preferred (NYSE:SPGPrJ) dividend of $1.046875 per share is payable on December 29, 2006 to stockholders of record on December 15, 2006. U.S. Development Activity On August 3rd, the Company opened Round Rock Premium Outlets in Round Rock, Texas. Located just 20 minutes north of Austin, Round Rock Premium Outlets comprises 432,000 square feet and features 125 designer and name- branded outlet stores. The center opened 97% leased with tenants such as Adidas, AG Adriano Goldschmeid, Ann Taylor, Banana Republic, BCBG Max Azria, Brooks Brothers, Burberry, Calvin Klein, Coach, Cole Haan, Gap Outlet, J.Crew, Michael Kors, Miss Sixty/Energie, Nike, Polo Ralph Lauren, Puma, Swarovski and Theory. The Company continues construction on: * Coconut Point - a 1.2 million square foot open-air town center with village and community center components in Estero/Bonita Springs (Naples-Fort Myers corridor), Florida. The initial tenants in the community center component opened in phases earlier this year and the remainder of the project is scheduled to open on November 10, 2006. * Rio Grande Valley Premium Outlets - a 404,000 square foot upscale outlet center in Mercedes, Texas. The project is scheduled to open on November 2, 2006. * The Village at SouthPark - a mixed-use project comprised of residential and retail components located adjacent to Simon's highly successful SouthPark in Charlotte, North Carolina. Crate & Barrel is scheduled to open in November of 2006, followed by other retail in March of 2007 and the residential component in May 2007. * The Domain - a 700,000 square foot open-air center in Austin, Texas, anchored by Neiman Marcus and Macy's and including office, residential and hotel components. The Domain is scheduled to open in March 2007. * The Shops at Arbor Walk - a 460,000 square foot community center in Austin, Texas anchored by Home Depot. The project will open in phases from November 2006 through March 2007. The Company commenced construction on three new retail developments during the third quarter: * Philadelphia Premium Outlets - a 430,000 square foot upscale manufacturers' outlet center located in Limerick Township, Pennsylvania, just 35 miles northwest of Philadelphia. The center is scheduled to open in November of 2007. * Hamilton Town Center - a 950,000 square foot open-air retail center located in Noblesville, Indiana. The center is scheduled to open in March of 2008. * Pier Park - a 920,000 square foot community/lifestyle center located in Panama City Beach, Florida. The center is scheduled to open in March of 2008. International Activity On September 28th, our Simon Ivanhoe European joint venture opened Gliwice Shopping Center in Gliwice, Poland. This 380,000 square foot shopping center is anchored by Carrefour and Leroy Merlin and was 95% leased at opening. The Company owns 50% of this asset. On October 14th, our wholly-owned Chelsea subsidiary opened a 53,000 square foot expansion of Toki Premium Outlets in Toki, Japan. The Company owns 40% of this asset. On October 26th, Simon Ivanhoe opened the 200,000 square foot expansion of a Carrefour-anchored shopping center in Wasquehal, France. The Company owns 50% of this expansion. Several international projects are under construction or will begin construction later in 2006: * Construction continues on four shopping center projects in Italy, fully or partially owned by GCI, the Italian joint venture in which the Company owns a 49% interest. The shopping centers are located in Argine (Naples), Cinisello (Milan), Nola (Naples) and Porta di Roma (Rome). All are expected to open in 2007, with the exception of Argine which is scheduled to open in 2008. * Yeoju Premium Outlets is a 253,000 square foot upscale outlet center that will serve the greater Seoul, South Korea market. The center is under construction and is scheduled to open in spring 2007. The Company owns 50% of this project. * Through its wholly-owned Chelsea subsidiary, the Company owns 40% of five Premium Outlet centers in Japan. The Company has announced plans for the development of its sixth Premium Outlet in Japan, Kobe Sanda Premium Outlets. The project is located in the Kobe/Osaka market, 22 miles north of downtown Kobe. Construction on the 185,000 square foot first phase is expected to commence in November of 2006 for a projected summer 2007 opening. * Construction has commenced on four projects in China - Changshu, Hangzhou and Zhengzhou, scheduled to open in 2008, and Suzhou, scheduled to open in 2009. All centers will be anchored by Wal-Mart. Simon owns 32.5% of these projects through its partnership with Morgan Stanley Real Estate Fund and Shenzhen International Trust and Investment Company CP. Disposition Activity On July 27th, the Company sold Wabash Village, a 124,000 square foot community center in West Lafayette, Indiana. Trolley Square, a 225,000 square foot mall in Salt Lake City, Utah, was sold on August 3rd. Financing Activity On August 29th, the Company announced the closing of an offering of $1.1 billion of senior notes by its operating partnership subsidiary, Simon Property Group, L.P. (the "Operating Partnership"). The offering consisted of $600 million of 5.60% notes due 2011 and $500 million of 5.875% notes due 2017. The Operating Partnership used the proceeds to reduce the outstanding balance of its unsecured corporate credit facility. The Company also reported that the Operating Partnership settled certain forward-starting interest rate swap contracts concurrently with the pricing of the notes. If the impact of these settlements were applied to the notes, the effective interest rate of the 2011 notes and the 2017 notes would be 5.63% and 5.96%, respectively, and 5.78% on a blended basis, over the 7.5 year weighted average maturity of all the notes. On October 4th, the Company announced the completion of the redemption of all 8,000,000 of the outstanding shares of its 8 3/4% Series F Cumulative Redeemable Preferred Stock (NYSE: SPGPrF) (CUSIP 828806604). The Series F Preferred Stock was redeemed at a redemption price of $25.00 per share plus accrued and unpaid distributions to the redemption date, or a total of $25.01823 per share. The Company sold a new issue of preferred stock to an institutional investor in a private transaction and used the proceeds to pay the aggregate redemption price. The Company will record a $7.0 million charge to net income related to this redemption during the fourth quarter of 2006, impacting both diluted earnings and diluted funds from operations by approximately $0.02 per share. This charge represents the difference between the carrying value of the Series F Preferred Stock and the liquidation value of $25 per Series F Preferred share. 2006 Guidance Today the Company increased its guidance for 2006 FFO to $5.36 per share, consistent with the current Wall Street consensus estimate. Current FFO guidance is three cents higher than the mid point of the range reported by the Company on July 31, 2006, and it includes a charge of two cents per share related to the Company's October preferred stock redemption described above. The Company's current guidance for diluted net income available to common stockholders is $1.89 per share. The following table provides the reconciliation of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.
For the year ending December 31, 2006
Estimated diluted net income available
to common stockholders per share $1.89*
Depreciation and amortization including
our share of joint ventures 3.73
Gain on sales of real estate, discontinued
operations and interests in
unconsolidated entities (0.18)
Impact of additional dilutive securities (0.08)
Estimated diluted FFO per share $5.36
* Includes a charge of $0.02 in the fourth quarter of 2006 related to the
Company's redemption of its Series F Preferred Stock.
Conference Call
The Company will provide an online simulcast of its quarterly conference call at http://www.simon.com(Investor Relations 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 10:00 a.m. Eastern Standard Time tomorrow, October 31, 2006. 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 shortly after completion of the call. Supplemental Materials The Company will publish a supplemental information package which will be available at http://www.simon.com in the Investor Relations section, Financial Information tab. It will also be furnished to the SEC as part of a current report on Form 8-K. If you wish to receive a copy via mail or email, please call 800-461-3439. Forward-Looking Statements Certain statements made in this press release may be deemed "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that our expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Those risks and uncertainties include, but are not limited to: the Company's ability to meet debt service requirements, the availability of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, the ability to hedge interest rate risk, risks associated with the acquisition, development and expansion 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, impact of terrorist activities, inflation and maintenance of REIT status. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its most recent Annual Report on Form 10-K that could cause the Company's actual results to differ materially from the forward-looking statements that the Company makes. The Company may update that discussion in subsequent quarterly reports, but otherwise the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise. Funds from Operations ("FFO") The Company considers FFO a key measure of its operating performance that is not specifically defined by accounting principles generally accepted in the United States ("GAAP"). The Company believes that FFO is helpful to investors because it is a widely recognized measure of the performance of real estate investment trusts ("REITs") 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. About Simon Simon Property Group, Inc., an S&P 500 company 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 $46 billion. Through its subsidiary partnership, it currently owns or has an interest in 284 properties in the United States containing an aggregate of approximately 200 million square feet of gross leasable area in 38 states plus Puerto Rico. Simon also owns interests in 53 European shopping centers in France, Italy, and Poland; 5 Premium Outlet centers in Japan; and one Premium Outlet center in Mexico. Additional Simon Property Group information is available at http://www.simon.com . Simon Property Group, Inc. is publicly traded on the NYSE under the symbol SPG.
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
For the Three Months Ended
September 30,
2006 2005
REVENUE:
Minimum rent $500,589 $475,912
Overage rent 21,931 18,484
Tenant reimbursements 233,278 225,973
Management fees and other revenues 20,780 19,746
Other income 42,158 42,894
Total revenue 818,736 783,009
EXPENSES:
Property operating 118,185 115,742
Depreciation and amortization 211,390 203,022
Real estate taxes 73,427 74,558
Repairs and maintenance 23,910 22,637
Advertising and promotion 17,718 20,974
Provision for credit losses 393 2,727
Home and regional office costs 32,703 27,068
General and administrative 4,422 4,993
Other 15,264 12,450
Total operating expenses 497,412 484,171
OPERATING INCOME 321,324 298,838
Interest expense 206,195 201,150
Income before minority interest 115,129 97,688
Minority interest (3,154) (3,174)
Income tax expense of taxable REIT
subsidiaries (2,536) (3,796)
Income before unconsolidated entities 109,439 90,718
Income from unconsolidated entities
and beneficial interests 25,898 18,662
Gain (loss) on sales of assets and
interests in unconsolidated
entities, net 9,457 (55)
Income from continuing operations 144,794 109,325
Results of operations from
discontinued operations 56 4,695
Gain on disposal or sale of
discontinued operations, net -- 5,605
Income before allocation to limited
partners 144,850 119,625
LESS:
Limited partners' interest in the
Operating Partnership 24,962 19,860
Preferred distributions of the
Operating Partnership 6,893 6,882
NET INCOME 112,995 92,883
Preferred dividends (18,403) (18,525)
NET INCOME AVAILABLE
TO COMMON STOCKHOLDERS $94,592 $74,358
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
For the Nine Months Ended
September 30,
2006 2005
REVENUE:
Minimum rent $1,474,503 $1,406,461
Overage rent 53,287 46,276
Tenant reimbursements 681,090 648,926
Management fees and other revenues 60,348 56,931
Other income 135,895 118,469
Total revenue 2,405,123 2,277,063
EXPENSES:
Property operating 331,389 315,827
Depreciation and amortization 632,200 617,814
Real estate taxes 225,636 217,175
Repairs and maintenance 74,704 75,250
Advertising and promotion 55,661 57,736
Provision for credit losses 4,853 3,331
Home and regional office costs 95,691 85,060
General and administrative 13,920 13,239
Other 40,492 34,375
Total operating expenses 1,474,546 1,419,807
OPERATING INCOME 930,577 857,256
Interest expense 611,010 594,136
Income before minority interest 319,567 263,120
Minority interest (7,512) (8,734)
Income tax expense of taxable REIT
subsidiaries (7,395) (11,216)
Income before unconsolidated
entities 304,660 243,170
Income from unconsolidated entities
and beneficial interests 75,703 51,045
Gain (loss) on sales of assets and
interests in unconsolidated
entities, net 51,406 12,552
Income from continuing operations 431,769 306,767
Results of operations from
discontinued operations 112 8,110
Gain on disposal or sale of
discontinued operations, net 84 125,385
Income before allocation to limited
partners 431,965 440,262
LESS:
Limited partners' interest in the
Operating Partnership 74,470 77,541
Preferred distributions of the
Operating Partnership 20,647 21,156
NET INCOME 336,848 341,565
Preferred dividends (55,371) (55,329)
NET INCOME AVAILABLE
TO COMMON STOCKHOLDERS $281,477 $286,236
SIMON
Per Share Data
Unaudited
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2006 2005 2006 2005
Basic Earnings Per Common Share:
Income from continuing operations $0.43 $0.30 $1.27 $0.82
Discontinued operations - results
of operations and
gain on disposal or sale, net -- 0.04 -- 0.48
Net income available to common
stockholders $0.43 $0.34 $1.27 $1.30
Percentage Change 26.5% -2.3%
Diluted Earnings Per Common Share:
Income from continuing operations $0.43 $0.30 $1.27 $0.83
Discontinued operations - results
of operations and
gain on disposal or sale, net -- 0.04 -- 0.47
Net income available to common
stockholders $0.43 $0.34 $1.27 $1.30
Percentage Change 26.5% -2.3%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
September 30, December 31,
2006 2005
ASSETS:
Investment properties, at cost $22,227,899 $21,745,309
Less - accumulated depreciation 4,348,676 3,809,293
17,879,223 17,936,016
Cash and cash equivalents 322,952 337,048
Tenant receivables and accrued
revenue, net 312,948 357,079
Investment in unconsolidated
entities, at equity 1,492,522 1,562,595
Deferred costs and other assets 995,973 938,301
Total assets $21,003,618 $21,131,039
LIABILITIES:
Mortgages and other indebtedness $14,241,941 $14,106,117
Accounts payable, accrued expenses,
intangibles, and deferred revenue 1,036,219 1,092,334
Cash distributions and losses in
partnerships and joint ventures, at
equity 233,902 194,476
Other liabilities, minority interest
and accrued dividends 179,731 163,524
Total liabilities 15,691,793 15,556,451
COMMITMENTS AND CONTINGENCIES
LIMITED PARTNERS' INTEREST IN THE
OPERATING PARTNERSHIP 811,990 865,565
LIMITED PARTNERS' PREFERRED INTEREST
IN THE OPERATING PARTNERSHIP 395,843 401,727
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,
25,477,626 and 25,632,122 issued
and outstanding, respectively,
and with liquidation values of
$1,073,881 and $1,081,606,
respectively 1,072,252 1,080,022
Common stock, $.0001 par value,
400,000,000 shares authorized,
225,657,388
and 225,165,236 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 4,985,389 4,998,723
Accumulated deficit (1,777,373) (1,551,179)
Accumulated other comprehensive
income 17,377 9,793
Common stock held in treasury at
cost, 4,379,245 and 4,815,655
shares, respectively (193,676) (230,086)
Total stockholders' equity 4,103,992 4,307,296
Total liabilities and stockholders'
equity $21,003,618 $21,131,039
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
For the Three Months Ended
September 30,
2006 2005
REVENUE:
Minimum rent $276,572 $262,663
Overage rent 19,621 17,074
Tenant reimbursements 143,194 134,384
Other income 41,071 38,843
Total revenue 480,458 452,964
EXPENSES:
Property operating 103,044 100,477
Depreciation and amortization 82,840 81,546
Real estate taxes 35,265 33,186
Repairs and maintenance 20,678 19,088
Advertising and promotion 11,594 7,956
Provision for credit losses 2,425 2,679
Other 26,414 29,136
Total operating expenses 282,260 274,068
OPERATING INCOME 198,198 178,896
Interest expense 113,400 103,438
Income Before Gain on Sale of Asset 84,798 75,458
Gain on sale of asset -- --
Income Before Unconsolidated Entities 84,798 75,458
Income (loss) from unconsolidated
entities 480 --
Income from Continuing Operations 85,278 75,458
Income (loss) from discontinued joint
venture interests (B) 129 (1,025)
Gain (loss) on disposal or sale of
discontinued operations, net (329)(C) --
NET INCOME $85,078 $74,433
Third-party investors' share of net
income $51,049 $45,578
Our share of net income 34,029 28,855
Amortization of excess investment (12,164) (10,221)
Income from Beneficial Interests 4,033 --
Write-off of investment related to
properties sold 135 (C) 14
Our share of net gain related to
properties sold (135)(C) 14
Income from unconsolidated entities
and beneficial interests $25,898 $18,662
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
For the Nine Months Ended
September 30,
2006 2005
REVENUE:
Minimum rent $813,217 $774,671
Overage rent 52,312 48,677
Tenant reimbursements 405,910 390,522
Other income 110,842 96,188
Total revenue 1,382,281 1,310,058
EXPENSES:
Property operating 280,263 271,796
Depreciation and amortization 241,959 241,036
Real estate taxes 102,654 98,477
Repairs and maintenance 62,402 58,559
Advertising and promotion 26,309 23,780
Provision for credit losses 4,087 7,769
Other 86,884 82,818
Total operating expenses 804,558 784,235
OPERATING INCOME 577,723 525,823
Interest expense 331,028 298,162
Income Before Gain on Sale of Asset 246,695 227,661
Gain on sale of asset 94 --
Income Before Unconsolidated Entities 246,789 227,661
Income (loss) from unconsolidated
entities 719 (1,892)
Income from Continuing Operations 247,508 225,769
Income (loss) from discontinued joint
venture interests (B) 631 (887)
Gain (loss) on disposal or sale of
discontinued operations, net 20,375 (C) 98,359 (D)
NET INCOME $268,514 $323,241
Third-party investors' share of net
income $160,488 $186,617
Our share of net income 108,026 136,624
Amortization of excess investment (37,056) (36,400)
Income from Beneficial Interests 15,309 (A) --
Write-off of investment related to
properties sold (2,842)(C) (37,764)(D)
Our share of net gain related to
properties sold (7,734)(C) (11,415)(D)
Income from unconsolidated entities
and beneficial interests $75,703 $51,045
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
September 30, December 31,
2006 2005
ASSETS:
Investment properties, at cost $10,565,734 $9,915,521
Less - accumulated depreciation 2,191,105 1,951,749
8,374,629 7,963,772
Cash and cash equivalents 379,053 334,714
Tenant receivables 235,336 207,153
Investment in unconsolidated
entities 184,570 135,914
Deferred costs and other assets 325,337 304,825
Total assets $9,498,925 $8,946,378
LIABILITIES AND PARTNERS' EQUITY:
Mortgages and other indebtedness $8,166,550 $7,479,359
Accounts payable, accrued expenses
and deferred revenue 495,539 403,390
Other liabilities 227,673 189,722
Total liabilities 8,889,762 8,072,471
Preferred units 67,450 67,450
Partners' equity 541,713 806,457
Total liabilities and partners'
equity $9,498,925 $8,946,378
Our Share of:
Total assets $4,090,724 $3,765,258
Partners' equity 360,992 429,942
Add: Excess Investment(E) 897,628 938,177
Our net investment in joint
ventures $1,258,620 $1,368,119
Mortgages and other indebtedness $3,526,859 $3,169,662
SIMON
Footnotes to Financial Statements
Unaudited
Notes:
(A) Represents beneficial interest in earnings from Mall of America for the period from August 2004 through and including the third quarter of 2006 attributable to a transfer from a Simon family affiliate of rights to receive certain cash flow distributions, capital transaction proceeds and related profits and losses. (B) Discontinued joint venture interests represent those assets and partnership interests that have been sold. (C) On April 25, 2006, Great Northeast Plaza, a community center, was sold. (D) On January 11, 2005, Metrocenter, a regional mall in Phoenix, Arizona was sold.
(E) Excess investment represents the unamortized difference of the
Company's investment over equity in the underlying net assets of the
partnerships and joint ventures. The Company generally amortizes excess
investment over the life of the related properties, typically no greater than
40 years, and the amortization is included in income from unconsolidated
entities.
SIMON
Reconciliation of Net Income to FFO (1)
Unaudited
(In thousands, except as noted)
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
2006 2005 2006 2005
Net Income(2)(3)(4)(5) $112,995 $92,883 $336,848 $341,565
Adjustments to Net Income to
Arrive at FFO:
Limited partners' interest
in the Operating
Partnership and
preferred distributions of
the Operating Partnership 31,855 26,742 95,117 98,697
Depreciation and
amortization from
consolidated
properties, beneficial
interests and discontinued
operations 209,023 202,021 633,013 619,597
Simon's share of
depreciation and
amortization from
unconsolidated entities 52,477 49,136 155,555 152,434
Tax provision related to
sale -- -- -- 1,533
Gain on sales of real estate,
discontinued operations and
interests in unconsolidated
entities (9,457) (5,550) (51,490) (137,937)
Minority interest portion of
depreciation and
amortization (2,091) (2,152) (6,222) (6,993)
Preferred distributions and
dividends (25,296) (25,407) (76,018) (76,485)
FFO of the Simon Portfolio $369,506 $337,673 $1,086,803 $992,411
Per Share Reconciliation:
Diluted net income available to
common stockholders per share $0.43 $0.34 $1.27 $1.30
Adjustments to net income to
arrive at FFO:
Depreciation and amortization
from consolidated properties
and beneficial interests,
and the Company's share of
depreciation and amortization
from unconsolidated
entities, net of minority
interest portion of
depreciation and
amortization 0.92 0.89 2.80 2.72
Gain on sales of real estate,
discontinued operations and
interests in unconsolidated
entities (0.03) (0.02) (0.18) (0.49)
Tax provision related to
sale -- -- -- 0.01
Impact of additional
dilutive securities for FFO
per share (0.02) (0.02) (0.07) (0.05)
Diluted FFO per share $1.30 $1.19 $3.82 $3.49
Details for per share
calculations:
FFO of the Simon Portfolio $369,506 $337,673 $1,086,803 $992,411
Adjustments for dilution
calculation:
Impact of preferred stock and
preferred unit conversions and
option exercises (6) 14,092 14,203 42,407 42,624
Diluted FFO of the Simon
Portfolio 383,598 351,876 1,129,210 1,035,035
Diluted FFO allocable to
unitholders (75,785) (70,378) (223,432) (208,627)
Diluted FFO allocable to common
stockholders $307,813 $281,498 $905,778 $826,408
Basic weighted average shares
outstanding 221,198 220,559 220,925 220,391
Adjustments for dilution
calculation:
Effect of stock options 872 932 911 907
Impact of Series C preferred
unit conversion 1,041 1,068 1,050 1,092
Impact of Series I preferred
unit conversion 3,261 3,335 3,270 3,395
Impact of Series I preferred
stock conversion 10,724 10,771 10,796 10,711
Diluted weighted average shares
outstanding 237,096 236,665 236,952 236,496
Weighted average limited
partnership units outstanding 58,375 59,169 58,450 59,704
Diluted weighted average shares
and units outstanding 295,471 295,834 295,402 296,200
Basic FFO per share $1.32 $1.21 $3.89 $3.54
Percent Increase 9.1% 9.9%
Diluted FFO per share $1.30 $1.19 $3.82 $3.49
Percent Increase 9.2% 9.5%
SIMON
Footnotes to Reconciliation of Net Income to FFO
Unaudited
Notes:
(1) The Company considers FFO a key measure of its operating performance that is not specifically defined by GAAP and believes that FFO is helpful to investors because it is a widely recognized measure of the performance of REITs and provides a relevant basis for comparison among REITs. The Company also uses this measure internally to measure the operating performance of the portfolio. The Company's computation of FFO may not be comparable to FFO reported by other REITs. 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. (2) Includes the Company's share of gains on land sales of $8.3 million and $7.4 million for the three months ended September 30, 2006 and 2005, respectively, and $34.6 million and $25.3 million for the nine months ended September 30, 2006 and 2005, respectively. (3) Includes the Company's share of straight-line adjustments to minimum rent of $7.8 million and $6.2 million for the three months ended September 30, 2006 and 2005, respectively, and $13.1 million and $15.7 million for the nine months ended September 30, 2006 and 2005, respectively. (4) Includes the Company's share of the fair market value of leases from acquisitions of $17.4 million and $14.1 million for the three months ended September 30, 2006 and 2005, respectively, and $52.6 million and $41.2 million for the nine months ended September 30, 2006 and 2005, respectively. (5) Includes the Company's share of debt premium amortization of $9.4 million and $6.5 million for the three months ended September 30, 2006 and 2005, respectively, and $22.8 million and $22.7 million for the nine months ended September 30, 2006 and 2005, respectively. (6) Includes dividends and distributions of Series I preferred stock and Series C and Series I preferred units. SOURCE Simon Property Group, Inc. Investors: |