Simon Property Group Announces Second Quarter Results
In the second quarter of 2009, the Company recognized a non-cash impairment charge of $140.5 million, or $0.42 per share diluted, representing the decline in the value of the Company's investment in Liberty International, PLC ("Liberty"). As of June 30, 2009, the Company owned 35.4 million shares at a weighted average price of 574 pence. Liberty's quoted market price as of June 30, 2009 was 397 pence. As of August 3, 2009, Liberty shares were trading at 436 pence.
FFO for the second quarter of 2009 reflects dilution of $0.14 per share as a result of the issuance of 17.25 million shares of common stock by the Company in March and an additional 23 million shares in May of 2009.
Net loss attributable to common stockholders for the quarter ended June 30, 2009 was $(20.8) million, or $(0.08) per share diluted. Excluding the impact of the non-cash impairment charge, net income attributable to common stockholders was $93.9 million, or $0.35 per share diluted. Net income attributable to common stockholders for the quarter ended June 30, 2008 was $76.6 million, or $0.34 per share diluted.
"Our operating fundamentals remained sound, which resulted in a solid second quarter in the face of a difficult retail environment," said David Simon, Chairman and Chief Executive Officer. "Our 2009 capital activity, including the issuance of 40.25 million shares of common stock and $1.25 billion of unsecured notes, strengthened one of the industry's leading balance sheets and resulted in a current liquidity position of approximately $6 billion, including $2.9 billion of cash. The cash raised through these transactions demonstrated the Company's ability to access capital and positions SPG for future growth."
U.S. Portfolio Statistics(1)
As of As of
June 30, 2009 June 30, 2008
------------- -------------
Occupancy
---------
Regional Malls(2) 90.9% 91.8%
Premium Outlet Centers(R) (3) 97.0% 98.3%
Comparable Sales per Sq. Ft.
----------------------------
Regional Malls(4) $442 $494
Premium Outlet Centers(3) $493 $510
Average Rent per Sq. Ft.
------------------------
Regional Malls(2) $40.29 $38.81
Premium Outlet Centers(3) $32.74 $26.66
(1) Statistics do not include the community/lifestyle center properties
or the Mills portfolio of assets.
(2) For mall stores.
(3) For all owned gross leasable area (GLA).
(4) For mall stores less than 10,000 square feet.
Dividends
The Company announced today that the Board of Directors approved the declaration of a quarterly common stock dividend of $0.60 per share, consisting of a combination of cash and shares of the Company's common stock. The Company intends that the cash component of the dividend will not exceed 20% in the aggregate, or $0.12 per share. The dividend is payable on September 18, 2009 to stockholders of record on August 17, 2009.
In accordance with the provisions of IRS Revenue Procedure 2008-68, stockholders may elect to receive payment of the dividend all in cash or all in common shares. To the extent that more than 20% of cash is elected, the cash portion will be prorated. Stockholders who elect to receive the dividend in cash will receive a cash payment of at least $0.12 per share. Stockholders who do not make an election will receive this dividend 20% in cash and 80% in common stock. The Company reserves the right to pay the dividend entirely in cash.
The number of shares issued as a result of the dividend will be calculated based on the volume weighted average trading prices of the Company's common stock on September 9, September 10 and September 11, 2009.
An information letter and election form will be mailed to stockholders of record promptly after August 17, 2009. The properly completed election form to receive cash or common shares must be received by the Company's transfer agent prior to 5:00 p.m. Eastern Daylight Time on September 8, 2009. Registered stockholders with questions regarding the dividend election may call BNY Mellon Shareowner Services, the Company's transfer agent, at (800) 454-9768. If your shares are held through a bank, broker or nominee, and you have questions regarding the dividend election please contact such bank, broker or nominee, who will also be responsible for distributing to you the letter and election form and submitting the election form on your behalf.
Today the Company also declared dividends on its two outstanding public issues of preferred stock:
-- 6% Series I Convertible Perpetual Preferred (NYSE:SPGPrI) dividend of
$0.75 per share is payable on August 31, 2009 to stockholders of record
on August 17, 2009.
-- 8 3/8% Series J Cumulative Redeemable Preferred (NYSE:SPGPrJ) dividend
of $1.046875 per share is payable on September 30, 2009 to stockholders
of record on September 16, 2009.
Financing Update
During the second quarter of 2009, the following transactions were completed:
-- On May 12th, the Company completed the sale of 23 million shares of
common stock at a public offering price of $50 per share.
-- On May 15th, the Company's majority-owned partnership subsidiary,
Simon Property Group, L.P. ("SPGLP"), issued $600 million
aggregate principal amount of 6.75% senior unsecured notes due 2014 in
an underwritten public offering. The notes were priced at 98.960% of the
principal amount to yield 7.00% to maturity.
-- On June 30th, the Company retired $85 million of SPGLP's 8%
cumulative redeemable preferred units, at par value.
-- The Company completed two refinancings during the quarter for $230
million, and on July 30, 2009, closed an additional $400 million of
mortgage financings for three regional malls.
As of June 30, 2009, the Company had over $2.9 billion of cash on hand, including its share of joint venture cash, and over $3.0 billion of available capacity on its revolving credit facility.
U.S. New Development and Redevelopment Activity
On April 23rd, the Company opened The Promenade at Camarillo Premium Outlets in Camarillo, California. The 220,000 square-foot expansion brings the property to a total of 674,000 square feet of gross leasable area and 160 stores. New stores at The Promenade include Neiman Marcus Last Call, Aldo, Charlotte Russe, Columbia Sportswear Company, Converse, Crocs, DC Shoes, Ecco, Esprit, Etnies:exs, Journeys, Karen Kane, Le Creuset, Loft Outlet, Michael Brandon, New Balance, Papaya, Rack Room Shoes, Robert Wayne Footwear, Tommy Bahama, Vans, and Zumiez.
The Company continues construction on the following development projects:
-- Cincinnati Premium Outlets, a 400,000 square foot upscale
manufacturers' outlet center serving the greater Cincinnati and
Dayton markets. The center is 100% owned by Simon and is scheduled to
open on August 6, 2009.
-- A 600,000 square foot Phase II expansion of The Domain in Austin, Texas.
The expansion will include Dillard's, a Village Road Show theater,
Dick's Sporting Goods (scheduled to open in October of 2009),
136,000 square feet of small shops and restaurants, and 78,000 square
feet of office space. The Company owns 100% of this project, slated for
an opening in February of 2010.
-- Addition of Nordstrom, Target and 146,000 square feet of small shops at
South Shore Plaza in Braintree (Boston), Massachusetts. Nordstrom and
the small shops are scheduled to open in March of 2010, with Target
scheduled to open in October of 2010. The center is 100% owned by Simon.
International Activity
On July 7th, the Company opened Ami Premium Outlets, the eighth Premium Outlet Center in Japan. The 225,000 square-foot first phase of the project opened fully leased to over 100 merchants including Adidas, Beams, BCBG Max Azria, Brooks Brothers, Coach, Cole Haan, Diesel, Fauchon, Lanvin en Bleu, Mayson Grey, Pal Zileri, Ray Ban, Tommy Hilfiger, True Religion and Viaggio Blu. Simon owns 40% of this property.
Construction continues on the following international development projects:
-- Argine (Naples, Italy) - a 300,000 square foot shopping center scheduled
to open in March of 2010. Simon owns a 24% interest in this project.
-- Catania (Sicily, Italy) - a 642,000 square foot shopping center
scheduled to open in June of 2010. Simon owns a 24% interest in this
project.
-- Three projects in China located in Hangzhou, Suzhou, and Zhengzhou. The
centers range in size from 310,000 to 750,000 square feet, will be
anchored by Wal-Mart, and are scheduled to open in the fall of 2009.
Simon owns a 32.5% interest in each of these projects.
2009 Guidance
Today the Company reaffirmed the guidance provided on May 1, 2009, after giving effect to the impact of the mid-May equity and senior notes offerings and the second quarter non-cash impairment charge, estimating that diluted FFO will be within a range of $5.35 to $5.50 per share for the year, and that diluted net income will be within a range of $1.05 to $1.20 per share.
FFO guidance is as follows:
For the year ending
December 31, 2009
-------------------
Low High
End End
--- ---
May 1, 2009 guidance $6.05 $6.20
Non-cash impairment charge (0.42) (0.42)
Dilution from mid-May equity and senior notes
offerings (0.28) (0.28)
----- -----
August 4, 2009 guidance $5.35 $5.50
===== =====
This guidance is a forward-looking statement and is subject to the risks
and other factors described elsewhere in this release.
The following table provides the reconciliation of the range of estimated
diluted net income available to common stockholders per share to estimated
diluted FFO per share.
For the year ending
December 31, 2009
-------------------
Low High
End End
--- ---
Estimated diluted net income available to common
stockholders per share $1.05 $1.20
Depreciation and amortization including our share
of joint ventures 4.36 4.36
Impact of additional dilutive securities (0.06) (0.06)
---- ----
Estimated diluted FFO per share $5.35 $5.50
===== =====
Conference Call
The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investor Relations 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 Daylight Time (New York time) today, August 4, 2009. An online replay will be available for approximately 90 days at www.simon.com, www.earnings.com, and www.streetevents.com.
Supplemental Materials and Financial Statements
The Company will publish a supplemental information package which will be available at 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.
The Company's financial statements have been adjusted to reflect the retrospective adoption of Statement of Financial Accounting Standard No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment to ARB 51 ("FAS 160") which became effective for us on January 1, 2009. The financial statements also reflect certain reclassifications related to the applicability of EITF Topic D-98, Classification and Measurement of Redeemable Securities ("D-98"). The adoption of FAS 160 and the Company's concurrent review of the application of D-98 resulted in the reclassification of noncontrolling interests within the equity section of our consolidated balance sheets, and the classification outside of permanent equity for any redeemable securities not meeting the requirements for permanent equity. The adoption of FAS 160 also resulted in the reclassifications of noncontrolling interests in the consolidated statement of operations. None of these reclassifications had any effect on our net income attributable to common stockholders or per share amounts previously reported.
Forward-Looking Statements
Certain statements made in this press release may be deemed "forwardlooking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forwardlooking 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 forwardlooking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: the Company's ability to meet debt service requirements, the availability and terms of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, changes in value of investments in foreign entities, the ability to hedge interest rate risk, risks associated with the acquisition, development, expansion, leasing and management of properties, general risks related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic climates, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in its periodic reports, but otherwise the Company undertakes no duty or obligation to update or revise these forwardlooking 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").
About Simon Property Group
Simon Property Group, Inc. is an S&P 500 company and the largest public U.S. real estate company. Simon is a fully integrated real estate company which operates from five retail real estate platforms: regional malls, Premium Outlet Centers(R), The Mills(R), community/lifestyle centers and international properties. It currently owns or has an interest in 386 properties comprising 262 million square feet of gross leasable area in North America, Europe and Asia. The Company is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide. Simon Property Group, Inc. is publicly traded on the NYSE under the symbol SPG. For further information, visit the Company's website at www.simon.com.
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
REVENUE:
Minimum rent $567,633 $566,199 $1,139,047 $1,116,881
Overage rent 13,493 17,836 25,993 34,487
Tenant reimbursements 257,532 259,803 516,294 510,051
Management fees and other
revenues 30,055 34,879 60,706 67,899
Other income 34,899 44,230 80,064 88,927
------- ------- --------- ---------
Total revenue 903,612 922,947 1,822,104 1,818,245
EXPENSES:
Property
operating 106,836 111,911 212,983 224,672
Depreciation and
amortization 251,685 236,617 508,022 464,660
Real estate taxes 83,076 85,450 171,319 169,970
Repairs and maintenance 20,186 25,845 42,774 54,866
Advertising and
promotion 19,823 21,739 38,329 41,112
Provision for credit
losses 7,066 6,781 20,081 13,363
Home and regional office
costs 26,670 34,844 52,833 74,444
General and administrative 5,310 5,095 9,358 10,397
Impairment charge 140,478 - 140,478 -
Other 17,784 15,627 37,013 33,948
------- ------- --------- ---------
Total operating expenses 678,914 543,909 1,233,190 1,087,432
------- ------- --------- ---------
OPERATING INCOME 224,698 379,038 588,914 730,813
Interest expense (244,443) (232,335) (470,479) (462,252)
Loss on extinguishment of
debt - (20,330) - (20,330)
Income tax benefit (expense)
of taxable REIT subsidiaries 143 (627) 2,666 (604)
Income (loss) from
unconsolidated entities 5,494 (11,393) 11,039 (4,252)
------- ------- --------- ---------
CONSOLIDATED NET (LOSS)
INCOME (14,108) 114,353 132,140 243,375
Net income attributable to
noncontrolling interests 123 26,436 33,074 56,174
Preferred dividends 6,529 11,345 13,058 22,696
------- -------- --------- ---------
NET (LOSS) INCOME ATTRIBUTABLE
TO COMMON STOCKHOLDERS $(20,760) $76,572 $86,008 $164,505
======== ======== ========= =========
Basic Earnings Per Common Share:
Net (loss) income
attributable to
common stockholders $(0.08) $0.34 $0.34 $0.73
======== ======= ========= =========
Percentage
Change -123.5% -53.4%
Diluted Earnings Per Common
Share:
Net (loss) income
attributable to
common stockholders $(0.08) $0.34 $0.34 $0.73
======= ======== ======== =========
Percentage Change -123.5% -53.4%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
June 30, December 31,
2009 2008
----------- -----------
ASSETS:
Investment properties, at cost $25,327,605 $25,205,715
Less - accumulated depreciation 6,604,384 6,184,285
----------- -----------
18,723,221 19,021,430
Cash and cash equivalents 2,628,431 773,544
Tenant receivables and accrued revenue,
net 343,365 414,856
Investment in unconsolidated entities, at
equity 1,552,303 1,663,886
Deferred costs and other assets 1,176,998 1,028,333
Note receivable from related party 586,000 520,700
----------- -----------
Total assets $25,010,318 $23,422,749
=========== ===========
LIABILITIES:
Mortgages and other indebtedness $17,936,403 $18,042,532
Accounts payable, accrued expenses,
intangibles, and deferred revenues 984,851 1,086,248
Cash distributions and losses in
partnerships and joint ventures, at
equity 413,272 380,730
Other liabilities and accrued dividends 178,817 155,151
----------- -----------
Total
liabilities 19,513,343 19,664,661
----------- -----------
Commitments and contingencies
Limited partners' preferred interest in
the Operating Partnership and
noncontrolling redeemable interests in
properties 191,324 276,608
Series I 6% convertible perpetual preferred
stock, 19,000,000 shares authorized,
7,593,604 and 7,590,264 issued and
outstanding, respectively, at liquidation
value 379,680 379,513
EQUITY:
Stockholders' equity:
Capital stock (750,000,000 total shares
authorized, $.0001 par value, 237,996,000
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 45,868 46,032
Common stock, $.0001 par value, 400,004,000
shares authorized, 285,182,886 and
235,691,040 issued and outstanding,
respectively 29 24
Class B common stock, $.0001 par value,
12,000,000 shares authorized, 8,000
issued and outstanding - -
Capital in excess of par value 7,206,229 5,410,147
Accumulated deficit (2,793,217) (2,491,929)
Accumulated other comprehensive loss (52,116) (165,066)
Common stock held in treasury at cost,
4,119,368 and 4,379,396 shares,
respectively (176,885) (186,210)
----------- -----------
Total stockholders' equity 4,229,908 2,612,998
Noncontrolling interests 696,063 488,969
----------- -----------
Total equity 4,925,971 3,101,967
----------- -----------
Total liabilities and equity $25,010,318 $23,422,749
=========== ===========
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Minimum rent $490,889 $478,418 $957,566 $948,481
Overage rent 30,358 26,813 50,937 45,529
Tenant reimbursements 239,202 244,593 476,644 473,338
Other income 40,663 37,427 78,907 83,518
------- ------- --------- ---------
Total revenue 801,112 787,251 1,564,054 1,550,866
Operating Expenses:
Property operating 162,385 163,813 311,325 316,737
Depreciation and
amortization 198,025 207,770 385,488 379,469
Real estate taxes 63,385 66,629 132,774 132,373
Repairs and maintenance 24,912 30,165 50,635 60,503
Advertising and
promotion 14,636 14,826 28,931 29,122
Provision for credit
losses 4,960 2,795 15,387 7,828
Other 51,878 47,628 88,193 85,605
------- ------- --------- ---------
Total operating
expenses 520,181 533,626 1,012,733 1,011,637
------- ------- --------- ---------
Operating Income 280,931 253,625 551,321 539,229
Interest expense (221,269) (234,837) (440,420) (483,710)
Income (loss) from
unconsolidated entities 1,555 (4,150) 787 (4,129)
------- ------- --------- ---------
Income from Continuing
Operations 61,217 14,638 111,688 51,390
Income from discontinued
joint venture interests
(A) - - - 47
Net Income $61,217 $14,638 $111,688 $51,437
======= ======= ========= =========
Third-Party Investors'
Share of Net Income $41,711 $14,906 $72,890 $33,557
------- -------- --------- ---------
Our Share of Net Income
(Loss) 19,506 (268) 38,798 17,880
Amortization of Excess
Investment (14,012) (11,125) (27,759) (22,132)
Income (Loss) from
Unconsolidated Entities,
Net $5,494 $(11,393) $11,039 $(4,252)
======= ======== ========= =========
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
June 30, December 31,
2009 2008
----------- -----------
Assets:
Investment properties, at cost $21,504,051 $21,472,490
Less - accumulated depreciation 4,184,876 3,892,956
----------- -----------
17,319,175 17,579,534
Cash and cash equivalents 740,085 805,411
Tenant receivables and accrued
revenue, net 365,331 428,322
Investment in unconsolidated
entities, at equity 238,698 230,497
Deferred costs and other assets 577,251 594,578
----------- -----------
Total assets $19,240,540 $19,638,342
=========== ===========
Liabilities and Partners' Equity:
Mortgages and other indebtedness $16,610,441 $16,686,701
Accounts payable, accrued expenses,
intangibles and deferred revenue 908,549 1,070,958
Other liabilities 1,038,611 982,254
----------- -----------
Total liabilities 18,557,601 18,739,913
Preferred units 67,450 67,450
Partners' equity 615,489 830,979
----------- -----------
Total liabilities and partners'
equity $19,240,540 $19,638,342
=========== ===========
Our Share of:
Total assets $7,897,076 $8,056,873
=========== ===========
Partners' equity $444,877 $533,929
Add: Excess Investment (B) 694,154 749,227
----------- -----------
Our net Investment in Joint Ventures 1,139,031 1,283,156
----------- -----------
Mortgages and other indebtedness $6,513,659 $6,632,419
========== ==========
SIMON
Footnotes to Financial Statements
Unaudited
Notes:
(A) Discontinued joint venture interests represent assets and
partnership interests that have been sold.
(B) Excess investment represents the unamortized difference of
the Company's investment over equity in the underlying net assets of
the partnerships and joint ventures. The Company generally
amortizes excess investment over the life of the related properties,
typically no greater than 40 years, and the amortization is included
in income from unconsolidated entities.
SIMON
Reconciliation of Consolidated Net (Loss) Income to FFO (1)
Unaudited
(In thousands, except as noted)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Consolidated Net (Loss)
Income(2)(3)(4)(5) $(14,108) $114,353 $132,140 $243,375
Adjustments to
Consolidated Net (Loss)
Income to Arrive at FFO:
Depreciation and
amortization from
consolidated
properties 248,042 232,449 500,955 457,505
Simon's share of
depreciation and
amortization from
unconsolidated
entities 94,496 101,487 187,874 188,115
Net income attributable
to noncontrolling
interest holders in
properties (2,325) (2,692) (5,364) (4,793)
Noncontrolling interests
portion of depreciation
and amortization (2,274) (2,169) (4,236) (4,467)
Preferred distributions
and dividends (10,682) (15,573) (21,388) (31,828)
-------- -------- -------- --------
FFO of the Operating
Partnership $313,149 $427,855 $789,981 $847,907
======== ======== ======== ========
Per Share Reconciliation:
-------------------------
Diluted net (loss)
income attributable to
common stockholders per
share $(0.08) $0.34 $0.34 $0.73
Adjustments to arrive at FFO:
Depreciation and
amortization from
consolidated properties
and Simon's share of
depreciation and
amortization from
unconsolidated entities,
net of noncontrolling
interests portion of
depreciation and
amortization 1.05 1.18 2.23 2.28
Impact of additional
dilutive securities
for FFO per share (0.01) (0.03) (0.04) (0.06)
-------- -------- -------- --------
Diluted FFO per share $0.96 $1.49 $2.53 $2.95
======== ======== ======== ========
Details for per share
calculations:
---------------------
FFO of the Operating
Partnership $313,149 $427,855 $789,981 $847,907
Adjustments for dilution
calculation:
Impact of preferred stock
and preferred unit
conversions and
option exercises (6) 6,877 11,726 13,755 24,115
-------- -------- -------- --------
Diluted FFO of the
Operating Partnership 320,026 439,581 803,736 872,022
Diluted FFO allocable to
unitholders (54,594) (85,379) (144,180) (169,983)
-------- -------- -------- --------
Diluted FFO allocable to
common stockholders $265,432 $354,202 $659,556 $702,039
======== ======== ======== ========
Basic weighted average
shares outstanding 268,290 224,983 251,152 224,219
Adjustments for dilution
calculation:
Effect of stock
options 290 589 260 605
Effect of contingently
issuable shares from
stock dividends 1,001 - 1,542 -
Impact of Series C
preferred unit
conversion 73 76 73 76
Impact of Series I
preferred unit
conversion 1,266 1,327 1,245 1,786
Impact of Series I
preferred stock
conversion 6,347 11,155 6,233 11,140
-------- -------- -------- --------
Diluted weighted average
shares outstanding 277,267 238,130 260,505 237,826
Weighted average limited
partnership units
outstanding 57,030 57,400 56,947 57,585
-------- -------- -------- --------
Diluted weighted average
shares and units
outstanding 334,297 295,530 317,452 295,411
======== ======== ======== ========
Basic FFO per share $0.97 $1.52 $2.57 $3.01
Percent Change -36.2% -14.6%
Diluted FFO per share $0.96 $1.49 $2.53 $2.95
Percent Change -35.6% -14.2%
SIMON
Footnotes to Reconciliation of Consolidated Net (Loss) 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.
The Company determines FFO based upon the definition set forth by the
National Association of Real Estate Investment Trusts ("NAREIT"). The
Company determines FFO to be our share of consolidated net income
computed in accordance with GAAP, excluding real estate related
depreciation and amortization, excluding gains and losses from
extraordinary items, excluding gains and losses from the sales of
previously depreciated operating properties, plus the allocable
portion of FFO of unconsolidated joint ventures based upon economic
ownership interest, and all determined on a consistent basis in
accordance with GAAP.
The Company has adopted NAREIT's clarification of the definition of
FFO that requires it to include the effects of nonrecurring items not
classified as extraordinary, cumulative effect of accounting changes,
or a gain or loss resulting from the sale of previously depreciated
operating properties. We include in FFO gains and losses realized
from the sale of land, outlot buildings, marketable and
non-marketable securities, and investment holdings of non-retail real
estate. However, you should understand that FFO does not represent
cash flow from operations as defined by GAAP, should not be
considered as an alternative to net income determined in accordance
with GAAP as a measure of operating performance, and is not an
alternative to cash flows as a measure of liquidity.
(2) Includes the Company's share of gains on land sales of $2.0 million
and $6.4 million for the three months ended June 30, 2009 and 2008,
respectively, and $2.2 million and $7.6 million for the six months
ended June 30, 2009 and 2008, respectively.
(3) Includes the Company's share of straight-line adjustments to minimum
rent of $7.0 million and $13.3 million for the three months ended
June 30, 2009 and 2008, respectively, and $17.5 million and $21.5
million for the six months ended June 30, 2009 and 2008,
respectively.
(4) Includes the Company's share of the fair market value of leases from
acquisitions of $6.4 million and $13.7 million for the three
months ended June 30, 2009 and 2008, respectively, and $13.3 million
and $27.4 million for the six months ended June 30, 2009 and 2008,
respectively.
(5) Includes the Company's share of debt premium amortization of $3.5
million and $5.3 million for the three months ended June 30, 2009 and
2008, respectively, and $7.3 million and $10.2 million for the six
months ended June 30, 2009 and 2008, respectively.
(6) Includes dividends and distributions of Series I preferred stock and
Series C and Series I preferred units.
SOURCE Simon Property Group, Inc.
http://www.simon.com
