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Press Release

Simon Property Group Reports Fourth Quarter Results, Announces Increase In Quarterly Dividend and Provides 2012 Guidance

INDIANAPOLIS, Feb. 3, 2012 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today reported results for the quarter and year ended December 31, 2011.

Results for the Quarter

  • Net income attributable to common stockholders was $362.9 million, or $1.24 per diluted share, as compared to $217.9 million, or $0.74 per diluted share, in the prior year period. The increase on a per share basis was 67.6%.

  • Funds from Operations ("FFO") was $678.9 million, or $1.91 per diluted share, as compared to $638.7 million, or $1.80 per diluted share, in the prior year period. The increase on a per share basis was 6.1%.

Results for the Year

  • Net income attributable to common stockholders was $1.021 billion, or $3.48 per diluted share, as compared to $610.4 million, or $2.10 per diluted share, in the prior year. The increase on a per share basis was 65.7%.

  • FFO was $2.439 billion, or $6.89 per diluted share, as compared to $1.770 billion, or $5.03 per diluted share, in the prior year. The increase on a per share basis was 37.0%.  2010 FFO as adjusted for debt extinguishment charges was $2.121 billion or $6.03 per diluted share. The increase on an as adjusted per share basis was 14.3%.

"Our portfolio of high quality assets continues to demonstrate strength as our regional malls and Premium Outlets generated comparable property net operating income growth of 4.5% in the quarter," said David Simon, Chairman and Chief Executive Officer. "Occupancy in the portfolio was 30 basis points higher than one year ago and our tenants reported a robust increase in sales of 10.7%. Financing activities during the quarter enhanced our industry leading balance sheet and the ramping up of development and redevelopment activities positions us to continue to deliver strong results for our stockholders. Given our results in 2011 and our current view of 2012, we are also pleased to announce an increase in our quarterly dividend to $0.95 per share from $0.90."

U.S. Operational Statistics(1)



As of

As of

%


December 31, 2011

December 31, 2010

Increase

Occupancy(2)

94.8%

94.5%

+ 30 basis points

Total Sales per Sq. Ft. (3)

$536

$484

10.7%

Average Rent per Sq. Ft. (2)

$39.42

$37.77

4.4%


(1)  Combined information for U.S. regional malls and U.S. Premium Outlets, including the Prime portfolio. Prior period amounts have been restated to include Prime. Does not include information for properties owned by SPG-FCM (the Mills portfolio).

(2)  Represents mall stores in regional malls and all owned gross leasable area in Premium Outlets.

(3)  Rolling 12 month sales per square foot for mall stores less than 10,000 square feet in regional malls and all owned gross leasable area in Premium Outlets.



Dividends

Today the Company announced that the Board of Directors declared a quarterly common stock dividend of $0.95 per share, an increase of 5.6% from the previous quarter. This dividend is payable on February 29, 2012 to stockholders of record on February 15, 2012.

The Company also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred (NYSE: SPGPrJ) Stock of $1.046875 per share, payable on March 30, 2012 to stockholders of record on March 16, 2012.

Acquisitions and Dispositions

During the fourth quarter and subsequent to year-end, the Company completed several property transactions:

  • Exchanged its 50% ownership interests in six malls and one community center with the Macerich Company for their 50% ownership interests in five malls and one community center. No cash was exchanged other than customary net working capital adjustments. As a result of the transaction, Simon owns 100% of Empire Mall, Lindale Mall, Mesa Mall, Rushmore Mall, Southern Hills Mall and Empire East, and the Macerich Company owns 100% of Eastland Mall, Lake Square Mall, Northpark Mall, South Ridge Mall, Southpark Mall, Valley Mall and Eastland Convenience Center.

  • Disposed of its interests in three properties:  Gwinnett Place, Factory Merchants Branson and Crystal River Mall.

  • Acquired an additional 25% ownership interest in Del Amo Fashion Center, increasing its ownership interest to 50%.

  • Sold its 49% interest in Gallerie Commerciali Italia ("GCI") in the first quarter of 2012. As a result of this transaction, the Company no longer owns an interest in any assets in Italy.

A net gain was recorded in the fourth quarter of 2011 as a result of the Macerich Company transaction and three U.S. property dispositions.

Capital Markets

On October 5th, the Company announced that it entered into a new unsecured revolving credit facility that increased the Company's borrowing capacity to $4.0 billion. This facility, which can be increased to $5.0 billion during its term, will initially mature on October 30, 2015, and can be extended for an additional year to October 30, 2016 at the Company's sole option. The base interest rate on the Company's new facility is LIBOR plus 100 basis points.

On November 10th, the Company announced the sale of $1.2 billion of senior unsecured notes in an underwritten public offering by its majority-owned partnership subsidiary, Simon Property Group, L.P. The offering consisted of $500.0 million of 2.800% notes due 2017 and $700.0 million of 4.125% notes due 2021. Net proceeds from the offering were used to partially repay the outstanding U.S. dollar balance of the senior unsecured credit facility and for general business purposes.

Development Activity

In the U.S.

The Company has two new development projects under construction:

  • Merrimack Premium Outlets in Merrimack, New Hampshire – a 409,000 square foot upscale outlet center located one hour north of metropolitan Boston and scheduled to open on June 14, 2012. Over 100 designer and brand outlet stores will be represented at the center. The Company owns 100% of this project.
  • Tanger OutletsTexas City – a 350,000 square foot upscale outlet center located in Texas City, Texas. The center is located approximately 30 miles south of Houston and 20 miles north of Galveston and is scheduled to open in October of 2012. The Company owns a 50% interest in this project.

Renovation and expansion projects are underway at 23 centers in addition to the restoration of Opry Mills in Nashville, Tennessee. Opry Mills has been closed since it was damaged by a historic flood in May of 2010.  The center is scheduled to reopen on March 29, 2012.

In 2011, the Company opened 38 new anchors and big box tenants, aggregating 1.7 million square feet of activity. Approximately 30 anchors and big boxes are currently scheduled to open in 2012 and 2013.  

International

On December 8th, the Company completed the 90,000 square foot expansion of Ami Premium Outlets in Ibaraki Prefecture, Japan. The expansion was 100% leased at opening. The Company owns a 40% interest in this project.

The grand opening of Johor Premium Outlets, the Company's first Premium Outlet Center® in Southeast Asia, was held on December 11th. The center encompasses 190,000 square feet of gross leasable area featuring 80 stores and is strategically located in Johor, Malaysia. Johor Premium Outlets is close to Senai Airport and less than an hour's drive from the city center of Singapore and about three hours from Kuala Lumpur. The center was 100% leased at opening. The Company owns the property in a 50/50 partnership with Genting Berhad.

Today marks the groundbreaking for Busan Premium Outlets, a 240,000 square foot upscale outlet center that will serve southeastern Korea, including the cities of Busan, Ulsan and Daegu, as well as local and overseas visitors. The Company owns a 50% interest in this project, which will be its third Premium Outlet Center in Korea.

2012 Guidance

The Company estimates that FFO will be within a range of $7.20 to $7.30 per diluted share for the year ending December 31, 2012, and diluted net income will be within a range of $3.28 to $3.38 per share.  

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

For the year ending December 31, 2012


Low

High


End

End




Estimated diluted net income available to common stockholders per share

$3.28

$3.38




Gain on sale of interest in GCI

(0.08)

(0.08)




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

4.00

4.00




Estimated diluted FFO per share

$7.20

$7.30



The 2012 guidance reflects management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, capital spend on new and redevelopment activities, and the earnings impact of the events referenced in this release and previously disclosed. The guidance also reflects management's view of future capital market conditions, which is generally consistent with the current forward rates for LIBOR and U.S. Treasury bonds. The estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, possible capital markets activity or possible future impairment charges. The guidance takes into account the impact of all transactions that have already occurred, including the initial FFO dilution from the sale of the Company's 49% interest in GCI. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. By definition, FFO does not include real estate-related depreciation and amortization or gains or losses resulting from the sale of, or impairment charges relating to, previously depreciated operating properties. This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release.

Conference Call

The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investors tab), www.earnings.com, and www.streetevents.com. To listen to the live call, please go to any of these websites at least fifteen minutes prior to the call to register, download and install any necessary audio software. The call will begin at 11:00 a.m. Eastern Time (New York time) today, February 3, 2012. An online replay will be available for approximately 90 days at www.simon.com, www.earnings.com, and www.streetevents.com. A fully searchable podcast of the conference call will also be available at www.REITcafe.com.

Supplemental Materials and Website

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

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

Non-GAAP Financial Measures

This press release includes FFO, FFO as adjusted and comparable property net operating income growth, which are adjusted from financial performance measures defined by accounting principles generally accepted in the United States ("GAAP"). Reconciliations of these measures to the most directly comparable GAAP measures are included within this press release or the Company's supplemental information package.  FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry.

Forward-Looking Statements

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

Simon Property Group

Simon Property Group, Inc. is an S&P 500 company and the largest real estate company in the U.S.  The Company currently owns or has an interest in 337 retail real estate properties comprising 245 million square feet in North America and Asia.  Simon Property Group is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide.  The Company's common stock is publicly traded on the NYSE under the symbol SPG.  For further information, visit the Simon Property Group website at www.simon.com.

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)





















For the Three Months


For the Twelve Months


Ended December 31,


Ended December 31,


2011


2010


2011


2010









REVENUE:








 Minimum rent

$ 706,099


$ 672,606


$ 2,664,724


$ 2,429,519

 Overage rent

65,068


56,668


140,842


110,621

 Tenant reimbursements

315,916


298,146


1,177,269


1,083,780

 Management fees and other revenues

35,009


34,310


128,010


121,207

 Other income

49,245


57,988


195,587


212,503

   Total revenue

1,171,337


1,119,718


4,306,432


3,957,630









EXPENSES:








 Property operating

105,559


98,615


436,571


414,264

 Depreciation and amortization

277,536


276,418


1,065,946


982,820

 Real estate taxes

95,803


90,893


369,755


345,960

 Repairs and maintenance

33,539


37,875


113,496


102,425

 Advertising and promotion

34,383


34,641


107,002


97,194

 Provision for credit losses

3,325


5,190


6,505


3,130

 Home and regional office costs

37,583


36,615


128,618


109,314

 General and administrative

14,705


5,358


46,319


21,267

 Transaction expenses

-


6,418


-


68,972

 Other

35,823


23,633


97,078


68,045

   Total operating expenses

638,256


615,656


2,371,290


2,213,391

OPERATING INCOME

533,081


504,062


1,935,142


1,744,239









Interest expense

(246,507)


(252,405)


(983,526)


(1,027,091)

Loss on extinguishment of debt

-


-


-


(350,688)

Income tax expense of taxable REIT subsidiaries

(877)


(2,291)


(3,583)


(1,734)

Income from unconsolidated entities

31,677


25,192


81,238


75,921

Impairment charge from investments in unconsolidated entities

-


(8,169)


-


(8,169)

Gain upon acquisition of controlling interests, and on sale or disposal








of assets and interests in unconsolidated entities, net

124,557


687


216,629


321,036

CONSOLIDATED NET INCOME

441,931


267,076


1,245,900


753,514









Net income attributable to noncontrolling interests

78,167


48,318


221,101


136,476

Preferred dividends

834


835


3,337


6,614









NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 362,930


$ 217,923


$ 1,021,462


$ 610,424

















BASIC EARNINGS PER COMMON SHARE:








   Net income attributable to common stockholders

$ 1.24


$ 0.74


$ 3.48


$ 2.10









DILUTED EARNINGS PER COMMON SHARE:








   Net income attributable to common stockholders

$ 1.24


$ 0.74


$ 3.48


$ 2.10



Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)













December 31,


December 31,


2011


2010

ASSETS:




   Investment properties at cost

$ 29,657,046


$ 27,508,735

       Less - accumulated depreciation

8,388,130


7,711,304


21,268,916


19,797,431

   Cash and cash equivalents

798,650


796,718

   Tenant receivables and accrued revenue, net

486,731


426,736

   Investment in unconsolidated entities, at equity

1,378,084


1,390,105

   Deferred costs and other assets

1,633,544


1,795,439

   Notes receivable from related party

651,000


651,000

       Total assets

$ 26,216,925


$ 24,857,429





LIABILITIES:




   Mortgages and other indebtedness

$ 18,446,440


$ 17,473,760

   Accounts payable, accrued expenses, intangibles, and deferred revenues

1,091,712


993,738

   Cash distributions and losses in partnerships and joint ventures, at equity

695,569


485,855

   Other liabilities and accrued dividends

170,971


184,855

       Total liabilities

20,404,692


19,138,208





Commitments and contingencies




Limited partners' preferred interest in the Operating Partnership and noncontrolling




   redeemable interests in properties

267,945


85,469





EQUITY:




Stockholders' equity




   Capital stock (850,000,000 total shares authorized, $ 0.0001 par value, 238,000,000




       shares of excess common stock, 100,000,000 authorized shares of preferred stock):




       Series J 8 3/8% cumulative redeemable preferred stock, 1,000,000 shares authorized,




           796,948 issued and outstanding with a liquidation value of $ 39,847

45,047


45,375

       Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 297,725,698 and




           296,957,360 issued and outstanding, respectively

30


30

       Class B common stock, $ 0.0001 par value, 10,000 shares authorized, 8,000




           issued and outstanding

-


-

   Capital in excess of par value

8,103,133


8,059,852

   Accumulated deficit

(3,251,740)


(3,114,571)

   Accumulated other comprehensive (loss) income

(94,263)


6,530

   Common stock held in treasury at cost, 3,877,448 and 4,003,451 shares, respectively

(152,541)


(166,436)

       Total stockholder's equity

4,649,666


4,830,780

Noncontrolling interests

894,622


802,972

       Total equity

5,544,288


5,633,752

       Total liabilities and equity

$ 26,216,925


$ 24,857,429



Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Statements of Operations

(Dollars in thousands)



















For the Three Months


For the Twelve Months


Ended December 31,


Ended December 31,


2011


2010


2011


2010









Revenue:








 Minimum rent

$ 482,040


$ 462,853


$ 1,844,774


$ 1,810,581

 Overage rent

59,083


50,052


161,993


143,018

 Tenant reimbursements

221,315


229,498


862,211


870,555

 Other income

48,813


44,283


175,430


214,728

   Total revenue

811,251


786,686


3,044,408


3,038,882









Operating Expenses:








 Property operating

157,020


148,462


602,989


595,733

 Depreciation and amortization

186,851


190,918


737,865


752,014

 Real estate taxes

52,616


56,356


220,955


230,326

 Repairs and maintenance

21,907


25,508


76,258


92,490

 Advertising and promotion

15,605


16,120


57,703


55,952

 Provision for credit losses

2,227


2,993


8,648


3,934

 Other

62,417


54,877


227,703


209,635

   Total operating expenses

498,643


495,234


1,932,121


1,940,084









Operating Income

312,608


291,452


1,112,287


1,098,798









Interest expense

(206,961)


(201,605)


(813,433)


(812,886)

(Loss) Income from unconsolidated entities

(857)


528


(4,644)


(840)

Impairment charge from investments in unconsolidated entities

-


(16,671)


-


(16,671)









Income from Continuing Operations

$ 104,790


$ 73,704


$ 294,210


$ 268,401









Income from discontinued joint venture interests

6,210


20,583


48,154


63,108

Gain (loss) on sale or disposal of assets and interests in








unconsolidated entities, net

332,078


(85)


347,640


39,676









Net Income

$ 443,078


$ 94,202


$ 690,004


$ 371,185









Third-Party Investors' Share of Net Income

$ 232,643


$ 64,568


$ 384,384


$ 234,799









Our Share of Net Income

$ 210,435


$ 29,634


$ 305,620


$ 136,386

Amortization of Excess Investment (A)

(12,730)


(12,653)


(50,562)


(48,329)

Our Share of (Gain) Loss on Sale or Disposal of Assets and Interests








 in Unconsolidated Entities, net

(166,028)


42


(173,820)


(20,305)

Our Share of Impairment Charge from Investments in








 Unconsolidated Entities

-


8,169


-


8,169

Income from Unconsolidated Entities

$ 31,677


$ 25,192


$ 81,238


$ 75,921



Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Balance Sheets

(Dollars in thousands)













December 31,


December 31,


2011


2010

Assets:




Investment properties, at cost

$ 20,481,657


$ 21,236,594

Less - accumulated depreciation

5,264,565


5,126,116


15,217,092


16,110,478

Cash and cash equivalents

806,895


802,025

Tenant receivables and accrued revenue, net

359,208


353,719

Investment in unconsolidated entities, at equity

133,576


158,116

Deferred costs and other assets

526,101


525,024

       Total assets

$ 17,042,872


$ 17,949,362





Liabilities and Partners' (Deficit) Equity:




Mortgages and other indebtedness

$ 15,582,321


$ 15,937,404

Accounts payable, accrued expenses, intangibles, and deferred revenue

775,733


748,245

Other liabilities

981,711


961,284

       Total liabilities

17,339,765


17,646,933

Preferred units

67,450


67,450

Partners' (deficit) equity

(364,343)


234,979

       Total liabilities and partners' equity

$ 17,042,872


$ 17,949,362





Our Share of:




Partners' (deficit) equity

$ (32,000)


$ 146,578

Add: Excess Investment (A)

714,515


757,672

Our net Investment in Joint Ventures

$ 682,515


$ 904,250



Simon Property Group, Inc. and Subsidiaries

Footnotes to Unaudited Financial Statements



Notes:  





(A)

Excess investment represents the unamortized difference between the Company's investment and 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 Property Group, Inc. and Subsidiaries

Unaudited Reconciliation of Non-GAAP Financial Measures (1)

(Amounts in thousands, except per share amounts)










Reconciliation of Consolidated Net Income to FFO and FFO as Adjusted








For the Three Months Ended


For the Twelve Months Ended



December 31,


December 31,



2011


2010


2011


2010










Consolidated Net Income (2)(3)(4)(5)

$       441,931


$ 267,076


$ 1,245,900


$    753,514

Adjustments to Consolidated Net Income to Arrive at FFO:









Depreciation and amortization from consolidated









    properties

270,081


272,713


1,047,571


968,695


Simon's share of depreciation and amortization from









    unconsolidated entities

98,009


98,048


384,367


388,565


Impairment charges of depreciable real estate

-


8,169


-


8,169


Gain upon acquisition of controlling interests, and on sale or disposal









    of assets and interests in unconsolidated entities, net

(124,557)


(687)


(216,629)


(321,036)


Net income attributable to noncontrolling interest holders in









    properties

(2,679)


(3,298)


(8,559)


(10,640)


Noncontrolling interests portion of depreciation and amortization

(2,553)


(1,959)


(8,633)


(7,847)


Preferred distributions and dividends

(1,313)


(1,313)


(5,252)


(8,929)

FFO of the Operating Partnership

$       678,919


$ 638,749


$ 2,438,765


$ 1,770,491


Loss on extinguishment of debt

-


-


-


350,688

FFO as adjusted of the Operating Partnership

$       678,919


$ 638,749


$ 2,438,765


$ 2,121,179










Diluted net income per share to diluted FFO per share and diluted








   FFO as adjusted per share reconciliation:








Diluted net income per share

$             1.24


$       0.74


$          3.48


$          2.10


Depreciation and amortization from consolidated properties









    and Simon's share of depreciation and amortization from









    unconsolidated entities, net of noncontrolling interests portion of









    depreciation and amortization

1.02


1.04


4.02


3.86


Impairment charges of depreciable real estate

-


0.02


-


0.02


Gain upon acquisition of controlling interests, and on sale or disposal









    of assets and interests in unconsolidated entities, net

(0.35)


-


(0.61)


(0.92)


Impact of additional dilutive securities for FFO per share

-


-


-


(0.03)

Diluted FFO per share

$             1.91


$       1.80


$          6.89


$          5.03


Loss on debt extinguishment

-


-


-


1.00

Diluted FFO as adjusted per share

$             1.91


$       1.80


$          6.89


$          6.03










Details for per share calculations:

















FFO of the Operating Partnership

$       678,919


$ 638,749


$ 2,438,765


$ 1,770,491










Adjustments for dilution calculation:








Impact of preferred stock and preferred unit conversions and








   option exercises (6)

-


-


-


3,676

Diluted FFO of the Operating Partnership

678,919


638,749


2,438,765


1,774,167

Diluted FFO allocable to unitholders

(116,424)


(108,892)


(416,833)


(296,670)

Diluted FFO allocable to common stockholders

$       562,495


$ 529,857


$ 2,021,932


$ 1,477,497










Basic weighted average shares outstanding

293,822


292,931


293,504


291,076

Adjustments for dilution calculation:








  Effect of stock options

11


230


69


274

  Impact of Series I preferred unit conversion

-


-


-


238

  Impact of Series I preferred stock conversion

-


-


-


1,749










Diluted weighted average shares outstanding

293,833


293,161


293,573


293,337

Weighted average limited partnership units outstanding

60,816


60,248


60,522


58,900

Diluted weighted average shares and units outstanding

354,649


353,409


354,095


352,237










Basic FFO per Share

$             1.91


$       1.81


$          6.89


$          5.06

   Percent Change

5.5%




36.2%



Diluted FFO per Share

$             1.91


$       1.80


$          6.89


$          5.03

   Percent Change

6.1%




37.0%



Diluted FFO as adjusted per share

$             1.91


$       1.80


$          6.89


$          6.03

   Percent Change

6.1%




14.3%













Simon Property Group, Inc. and Subsidiaries

Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures



Notes:  



(1)

This report contains measures of financial or operating performance that are not specifically defined by accounting principles generally accepted in the United States (“GAAP”), including funds from operations (“FFO”), FFO as adjusted, FFO per share and FFO as adjusted per share.  FFO is a performance measure that is standard in the REIT business.  We believe FFO provides investors with additional information concerning our operating performance and a basis to compare our performance with those of other REITs.  We also use these measures internally to monitor the operating performance of our portfolio.  As adjusted measures exclude the effect of certain debt-related charges.  We believe these measures provide investors with a basis to compare our current operating performance with previous periods in which we did not have those charges. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.




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




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



(2)

Includes the Company's share of gains on land sales of $1.7 million and $2.4 million for the three months ended December 31, 2011 and 2010, respectively, and $6.2 million and $11.8 million for the twelve months ended December 31, 2011 and 2010, respectively.



(3)

Includes the Company's share of straight-line adjustments to minimum rent of $11.0 million and $8.3 million for the three months ended December 31, 2011 and 2010, respectively, and $37.2 million and $32.1 million for the twelve months ended December 31, 2011 and 2010, respectively.



(4)

Includes the Company's share of the amortization of fair market value of leases from acquisitions of $5.2 million and $5.1 million for the three months ended December 31, 2011 and 2010, respectively, and $22.9 million and $19.9 million for the twelve months ended December 31, 2011 and 2010, respectively.



(5)

Includes the Company's share of debt premium amortization of $3.0 million and $3.3 million for the three months ended December 31, 2011 and 2010, respectively, and $10.0 million and $12.7 million for the twelve months ended December 31, 2011 and 2010, respectively.



(6)

Includes dividends and distributions on Series I preferred stock and Series I preferred units. All outstanding shares of Series I preferred stock and Series I preferred units were redeemed on April 16, 2010.



SOURCE Simon Property Group, Inc.

Investors, Shelly Doran, +1-317-685-7330, or Media, Les Morris, +1-317-263-7711