Press Release

U.S. Malls and Premium Outlets Operating Statistics

As of

March 31,  

Year-over-Year

2014

2013

Change

Occupancy ⁽¹⁾  

95.5%

94.7%

+ 80 basis points

Total Sales per sq. ft. ⁽²⁾   

$576

$575

+0.2%

Base Minimum Rent per sq. ft. ⁽¹⁾ 

$42.77

$41.05

+4.2%

Releasing Spread per sq. ft. ⁽¹⁾⁽³⁾ 

$9.90

$7.00

+ $2.90

Releasing Spread (percentage change) ⁽¹⁾⁽³⁾  

19.5%

13.4%

+ 610 basis points

(1)

Represents mall stores in Malls and all owned square footage in Premium Outlets.

(2)

Trailing 12-month sales per square foot for mall stores less than 10,000 square feet in Malls and all owned square footage in Premium Outlets.

(3)

Same space measure that compares opening and closing rates on individual spaces leased during trailing 12-month period.

For the year ending December 31, 2014  

Low 

High

End 

End

Estimated net income available to common stockholders per diluted share 

$4.55

$4.65

Depreciation and amortization including the Company's share of unconsolidated entities   

5.06

5.06

Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities, net

(0.01)

(0.01)

Estimated FFO per diluted share 

$9.60

$9.70

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

For the Three Months

Ended March 31,

2014

2013

REVENUE:

Minimum rent

$ 828,920

$ 777,907

Overage rent

33,784

37,699

Tenant reimbursements

372,639

338,969

Management fees and other revenues

30,607

29,729

Other income

49,041

30,754

Total revenue

1,314,991

1,215,058

EXPENSES:

Property operating

121,087

109,910

Depreciation and amortization

326,461

316,633

Real estate taxes

114,252

109,705

Repairs and maintenance

36,916

29,725

Advertising and promotion

24,571

21,259

Provision for credit losses

5,209

2,734

Home and regional office costs

35,288

34,894

General and administrative

14,855

14,509

Other

20,480

18,000

Total operating expenses

699,119

657,369

OPERATING INCOME

615,872

557,689

Interest expense

(268,151)

(285,026)

Income and other taxes

(6,938)

(13,193)

Income from unconsolidated entities

57,423

54,231

Gain upon acquisition of controlling interests and sale or disposal

  of assets and interests in unconsolidated entities, net

2,897

20,767

CONSOLIDATED NET INCOME

401,103

334,468

Net income attributable to noncontrolling interests 

58,621

50,496

Preferred dividends

834

834

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 341,648

$ 283,138

BASIC EARNINGS PER COMMON SHARE:

Net income attributable to common stockholders

$ 1.10

$ 0.91

DILUTED EARNINGS PER COMMON SHARE:

Net income attributable to common stockholders

$ 1.10

$ 0.91

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

March 31,

December 31,

2014

2013

ASSETS:

Investment properties at cost

$ 35,598,458

$ 35,126,344

Less - accumulated depreciation

10,309,988

10,067,743

25,288,470

25,058,601

Cash and cash equivalents

1,013,368

1,716,863

Tenant receivables and accrued revenue, net

530,479

581,482

Investment in unconsolidated entities, at equity

2,347,523

2,433,399

Investment in Klepierre, at equity

2,010,771

2,014,415

Deferred costs and other assets

1,564,988

1,519,814

Total assets

$ 32,755,599

$ 33,324,574

LIABILITIES:

Mortgages and unsecured indebtedness

$ 23,186,610

$ 23,588,531

Accounts payable, accrued expenses, intangibles, and deferred revenues

1,259,452

1,374,113

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

1,139,034

1,091,591

Other liabilities

198,610

257,222

Total liabilities

25,783,706

26,311,457

Commitments and contingencies

Limited partners' preferred interest in the Operating Partnership and noncontrolling

redeemable interests in properties

107,612

190,485

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

44,308

44,390

Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 314,299,970 and

314,251,245 issued and outstanding, respectively

31

31

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

issued and outstanding

-

-

Capital in excess of par value

9,288,321

9,217,363

Accumulated deficit

(3,273,092)

(3,218,686)

Accumulated other comprehensive loss

(67,579)

(75,795)

Common stock held in treasury at cost, 3,649,434 and 3,650,680 shares, respectively

(117,696)

(117,897)

Total stockholders' equity

5,874,293

5,849,406

Noncontrolling interests

989,988

973,226

Total equity

6,864,281

6,822,632

Total liabilities and equity

$ 32,755,599

$ 33,324,574

Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Statements of Operations

(Dollars in thousands)

For the Three Months 

Ended March 31,

2014

2013

Revenue:

Minimum rent

$ 436,519

$ 394,153

Overage rent

48,932

47,767

Tenant reimbursements

197,452

184,399

Other income

112,908

42,074

Total revenue

795,811

668,393

Operating Expenses:

Property operating

164,150

115,869

Depreciation and amortization

156,077

127,686

Real estate taxes

56,812

54,706

Repairs and maintenance

20,614

16,164

Advertising and promotion

19,088

15,921

Provision for credit losses

3,230

1,245

Other

53,060

35,682

Total operating expenses

473,031

367,273

Operating Income

322,780

301,120

Interest expense

(155,199)

(147,486)

Income from Continuing Operations

167,581

153,634

Loss from operations of discontinued joint venture interests

-

(320)

Net Income

$ 167,581

$ 153,314

Third-party investors' share of net income

$ 89,313

$ 83,766

Our share of net income

78,268

69,548

Amortization of Excess Investment ^(A)

(25,598)

(24,829)

Income from Unconsolidated Entities ^(B)

$ 52,670

$ 44,719

  Note: The above financial presentation does not include any information related to our investment in

          Klepierre S.A. ("Klepierre"). For additional information, see footnote B.

Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Balance Sheets

(Dollars in thousands)

March 31,

December 31,

2014

2013

Assets:

Investment properties, at cost

$ 16,019,083

$ 15,824,689

Less - accumulated depreciation

5,339,813

5,294,578

10,679,270

10,530,111

Cash and cash equivalents

747,103

792,751

Tenant receivables and accrued revenue, net

287,777

310,320

Investment in unconsolidated entities, at equity

28,832

38,352

Deferred costs and other assets

520,058

586,622

Total assets

$ 12,263,040

$ 12,258,156

Liabilities and Partners' Deficit:

Mortgages

$ 13,013,998

$ 13,024,257

Accounts payable, accrued expenses, intangibles, and deferred revenue

977,038

849,107

Other liabilities

542,950

514,822

Total liabilities

14,533,986

14,388,186

Preferred units

67,450

67,450

Partners' deficit

(2,338,396)

(2,197,480)

Total liabilities and partners' deficit

$ 12,263,040

$ 12,258,156

Our Share of:

Partners' deficit

$ (763,064)

$ (717,776)

Add: Excess Investment ^(A)

1,971,553

2,059,584

Our net Investment in Joint Ventures

$ 1,208,489

$ 1,341,808

Note: The above financial presentation does not include any information related to our investment in Klepierre. 

          For additional information, see footnote B attached hereto.

Simon Property Group, Inc. and Subsidiaries

Unaudited Reconciliation of Non-GAAP Financial Measures ^(C)

(Amounts in thousands, except per share amounts)

Reconciliation of Consolidated Net Income to FFO 

For the Three Months

Ended March 31,

2014

2013

Consolidated Net Income (D)

$    401,103

$    334,468

Adjustments to Arrive at FFO:

Depreciation and amortization from consolidated 

     properties 

322,604

312,585

Our share of depreciation and amortization from

     unconsolidated entities, including Klepierre

147,256

121,549

Gain upon acquisition of controlling interests and sale or disposal

     of assets and interests in unconsolidated entities, net

(2,897)

(20,767)

Net income attributable to noncontrolling interest holders in

     properties

(523)

(2,461)

Noncontrolling interests portion of depreciation and amortization

(897)

(2,173)

Preferred distributions and dividends

(1,313)

(1,313)

FFO of the Operating Partnership

$    865,333

$    741,888

Diluted Net Income Per Share to Diluted FFO Per Share Reconciliation:

Diluted net income per share

$          1.10

$          0.91

Depreciation and amortization from consolidated properties

     and our share of depreciation and amortization from 

     unconsolidated entities, including Klepierre, net of noncontrolling 

     interests portion of depreciation and amortization

1.29

1.20

Gain upon acquisition of controlling interests and sale or disposal

     of assets and interests in unconsolidated entities, net

(0.01)

(0.06)

Diluted FFO per share

$          2.38

$          2.05

Details for per share calculations:

FFO of the Operating Partnership

$    865,333

$    741,888

Diluted FFO allocable to unitholders

(124,878)

(106,687)

Diluted FFO allocable to common stockholders

$    740,455

$    635,201

Basic and Diluted weighted average shares outstanding

310,623

309,987

Weighted average limited partnership units outstanding

52,386

52,065

Basic and Diluted weighted average shares and units outstanding

363,009

362,052

Basic and Diluted FFO per Share

$          2.38

$          2.05

    Percent Change

16.1%

Simon Property Group, Inc. and Subsidiaries

Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures

Notes:  

(A)

Excess investment represents the unamortized difference of our investment over equity in the underlying net assets of the related partnerships and joint ventures shown therein.  The Company generally amortizes excess investment over the life of the related properties.

(B)

The Unaudited Joint Venture Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investment in Klepierre.  Amounts included in Footnotes D below exclude our share of related activity for our investment in Klepierre.  For further information, reference should be made to financial information in Klepierre's public filings and additional discussion and analysis in our Form 10-Q.

(C)

This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO and FFO 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. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.

We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"). We determine 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 or disposals of, or any impairment charges related to, previously depreciated retail 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. 

We have 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 or disposal of, or any impairment charges relating to, previously depreciated retail 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.

(D)

Includes our share of: 

-

Gains on land sales of $6.8 million and $0.4 million for the three months ended March 31, 2014 and 2013, respectively

-

Straight-line adjustments to minimum rent of $14.0 million and $12.8 million for the three months ended March 31, 2014 and 2013, respectively

-

Amortization of fair market value of leases from acquisitions of $5.4 million and $10.7 million for the three months ended March 31, 2014 and 2013, respectively

-

Debt premium amortization of $16.1 million and $10.9 million for the three months ended March 31, 2014 and 2013, respectively.