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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K


ý
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

SIMON PROPERTY GROUP, L.P.
(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation or organization)

33-11491
(Commission File No.)

34-1755769
(I.R.S. Employer Identification No.)

National City Center
115 West Washington Street, Suite 15 East
Indianapolis, Indiana 46204
(Address of principal executive offices)

(317) 636-1600
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act: None

            Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.            YES    ý        NO    o

            Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.            N/A

            Indicate by check mark whether Registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act of 1934).            YES    o        NO    ý

            Registrant had no publicly-traded voting equity as of June 30, 2004.

            Registrant has no common stock outstanding.

Documents Incorporated By Reference

            Portions of Simon Property Group, Inc.'s Proxy Statement in connection with its 2004 Annual Meeting of Stockholders are incorporated by reference in Part III.

Simon Property Group, L.P. and Subsidiaries
Annual Report on Form 10-K
December 31, 2004

TABLE OF CONTENTS

Item No.
    
   Page No.
Part I

1.
 
Business
 
3
2.   Properties   12
3.   Legal Proceedings   42
4.   Submission of Matters to a Vote of Security Holders   42

Part II

5.
 
Market for the Registrant's Common Equity and Related Stockholder Matters
 
43
6.   Selected Financial Data   44
7.   Management's Discussion and Analysis of Financial Condition and Results of Operations   45
7A.   Quantitative and Qualitative Disclosure About Market Risk   63
8.   Financial Statements and Supplementary Data   64
9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   64
9A.   Controls and Procedures   64
9B.   Other Information   65

Part III

10.
 
Directors and Executive Officers of the Registrant
 
66
11.   Executive Compensation   66
12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   66
13.   Certain Relationships and Related Transactions   66
14.   Principal Accountant Fees and Services   66

Part IV

15.
 
Exhibits and Financial Statement Schedules
 
67

Signatures
 
108

2


Part I

Item 1. Business

            Simon Property Group, L.P. (the "Operating Partnership") is a Delaware limited partnership and a majority owned subsidiary of Simon Property Group, Inc. ("Simon Property"). Simon Property is a self-administered and self-managed real estate investment trust ("REIT"). In this report, the terms "we", "us" and "our" refer to the Operating Partnership and its subsidiaries.

            We are engaged primarily in the ownership, operation, leasing, management, acquisition, expansion and development of real estate properties. Our real estate properties consist primarily of regional malls, Premium Outlet® centers and community shopping centers. As of December 31, 2004, we owned or held an interest in 296 income-producing properties in the United States, which consisted of 171 regional malls, 71 community shopping centers, 31 Premium Outlet centers and 23 other properties in 40 states plus Puerto Rico (collectively, the "Properties", and individually, a "Property"). Our other Properties include retail space, office space, and/or hotel components. In addition, we also own interests in twelve parcels of land held in the United States for future development (together with the Properties, the "Portfolio"). Finally, we have ownership interests in 51 European shopping centers (located in France, Italy, Poland and Portugal); four Premium Outlet centers in Japan; one Premium Outlet center in Mexico; and one shopping center in Canada.

            Our wholly-owned subsidiary, M.S. Management Associates, Inc. (the "Management Company"), provides leasing, management, and development services to most of the Properties. In addition, insurance subsidiaries of the Management Company insure: the self-insured retention portion of our general liability program; the deductible associated with our workers' compensation programs; and provide reinsurance for the primary layer of general liability coverage to our third party maintenance providers while performing services under contract with us. Third party insurers provide coverage above the insurance subsidiaries' limits.

            Mergers and acquisitions have been a significant component of the growth and development of our business. In 2004, we completed a series of acquisitions that added to our overall Portfolio:

•
On February 5, 2004 we purchased a 95% interest in Gateway Shopping Center in Austin, Texas for approximately $107.0 million.

•
On April 1, 2004, we increased our ownership interest in Mall of Georgia Crossing from 50% to 100% for approximately $26.3 million, including the assumption of $16.5 million of debt.

•
On April 27, 2004, we increased our ownership interest in Bangor Mall and Montgomery Mall to approximately 67.6% and 54.4%, respectively, for approximately $67.0 million and the assumption of our $16.8 million share of debt.

•
On May 4, 2004, we purchased a 100% interest in Plaza Carolina in San Juan, Puerto Rico for approximately $309.0 million.

•
On October 14, 2004 we completed our acquisition of Chelsea Property Group, Inc. (Chelsea). The acquisition included 32 Premium Outlets in the United States, 4 Premium Outlets in Japan, 3 community centers, 21 other retail centers, and its development portfolio. The purchase price was approximately $5.2 billion including the assumption of our $1.5 billion share of debt.

•
On November 19, 2004 we increased our ownership interest in Lehigh Valley, located in Whitehall, Pennsylvania, to 37.6% for approximately $42.3 million, including the assumption of our $25.9 million share of debt.

•
Finally, on December 15, 2004, we increased our ownership interest in Woodland Hills, located in Tulsa, Oklahoma, to approximately 94.5% for approximately $119.5 million, including the assumption of our $39.7 million share of debt.

3

            As part of our strategic plan to own quality retail real estate, we continually evaluate our properties and sell those which no longer meet our strategic criteria. We may use the capital generated from these dispositions to invest in higher-quality, higher-growth properties. We believe that the sale of these non-core Properties will not have a material impact on our future results of operations or cash flows nor will their sale materially affect our ongoing operations. Generally, any earnings dilution from the sales on our results of operations from these dispositions will be offset by the positive impact of our acquisitions and development and redevelopment activities.

            During 2004, we sold five non-core Properties, consisting of three regional malls, one community center and one Premium Outlet. The Properties and their dates of sale were:

•
Hutchinson Mall on June 15, 2004
•
Bridgeview Court on July 22, 2004
•
Woodville Mall on September 1, 2004
•
Santa Fe Premium Outlets on December 28, 2004
•
Heritage Park Mall on December 29, 2004

            In addition, on April 7, 2004, we sold a joint venture interest in a hotel property held by the Management Company. On April 8, 2004, we sold our joint venture interest in Yards Plaza, in Chicago, Illinois, and on August 6, 2004, we completed the court ordered sale of our joint venture interest in Mall of America, in Minneapolis, Minnesota (see Item 3).

            The sales of these properties did not result in any significant gain or loss.

Operating Policies and Strategies

            The following is a discussion of our investment policies, financing policies, conflict of interest policies and policies with respect to certain other activities, which are consistent with those of Simon Property, our general partner. The Simon Property Board of Directors may amend or rescind these policies from time to time at its discretion without a stockholder vote.

            Our primary business objectives are to increase Funds From Operations ("FFO") per unit, operating results and the value of our Properties while maintaining a stable balance sheet consistent with our financing policies. We intend to achieve these objectives by:

•
pursuing a leasing strategy that capitalizes on the desirable location of our Properties;
•
improving the performance of our Properties by using the economies of scale that result from our size to help control operating costs and by generating additional revenues through merchandising, marketing and promotional activities;
•
renovating and/or expanding our Properties where appropriate;
•
developing new shopping centers which meet our economic criteria; and
•
acquiring additional shopping centers and the portfolios of other retail real estate companies that meet our investment criteria.

            We cannot assure you that we will achieve our business objectives.

            We develop and acquire properties to generate both current income and long-term appreciation in value. We do not limit the amount or percentage of assets that may be invested in any particular property or type of property or in any geographic area. We may purchase or lease properties for long-term investment or develop, redevelop, and/or sell our Properties, in whole or in part, when circumstances warrant. We participate with other entities in property ownership, through joint ventures or other types of co-ownership. These equity investments may be subject to existing mortgage financing and other indebtedness that have priority over our equity interest.

            While we emphasize equity real estate investments, we may, at our discretion, invest in mortgages and other real estate interests consistent with Simon Property's qualification as a REIT under the Internal Revenue Code ("Code"). We do not currently intend to invest to a significant extent in mortgages or deeds of trust, however, we hold an interest in one Property through a mortgage note which results in us receiving 100% of the economics of the Property. We may invest in participating or convertible mortgages if we conclude that we may benefit from the cash flow or any appreciation in the value of the property.

4


            We may also invest in securities of other entities engaged in real estate activities or securities of other issuers. However, any of these investments would be subject to the percentage ownership limitations and gross income tests necessary for Simon Property's REIT qualification under the Code. These REIT limitations mean that we cannot make an investment that would cause Simon Property's real estate assets to be less than 75% of its total assets. In addition, at least 75% of Simon Property's gross income must be derived directly or indirectly from investments relating to real property or mortgages on real property, including "rents from real property," dividends from other REIT's and, in certain circumstances, interest from certain types of temporary investments. At least 95% of Simon Property's income must be derived from such real property investments, and from dividends, interest and gains from the sale or dispositions of stock or securities or from other combinations of the foregoing.

            Subject to these REIT limitations which apply to Simon Property, we may, along with Simon Property, invest in the securities of other issuers in connection with acquisitions of indirect interests in real estate. Such an investment would normally be in the form of general or limited partnership or membership interests in special purpose partnerships and limited liability companies that own one or more properties. We may, in the future, acquire all or substantially all of the securities or assets of other REITs, management companies or similar entities where such investments would be consistent with our investment policies.

            We must comply with the covenant restrictions of debt agreements that limit our ratio of debt to total market valuation. For example, our lines of credit and the indentures for our debt securities contain covenants that restrict the total amount of debt to 60% of adjusted total assets, as defined, and secured debt to 55% of adjusted total assets. In addition, these agreements contain other covenants requiring compliance with financial ratios. Furthermore, the amount of debt that we may incur is limited as a practical matter by our desire to maintain acceptable ratings for Simon Property's equity securities and our debt securities.

            If the Simon Property Board of Directors determines to seek additional capital, we may raise such capital through additional debt financing, creation of joint ventures with existing ownership interests in Properties, retention of cash flows or a combination of these methods. Our ability to retain cash flows is subject to Code provisions applicable to Simon Property requiring REITs to distribute a certain percentage of their taxable income. We must also take into account taxes that would be imposed on undistributed taxable income. If the Simon Property Board of Directors determines to raise additional equity capital at the Operating Partnership level, it may as our general partner, without limited partner approval, issue additional units. The Simon Property Board of Directors may issue units in any manner and on such terms and for such consideration, as it deems appropriate. This may include issuing units in exchange for property. Such securities may be senior to the outstanding classes of our units. Such securities also may include additional classes of preferred units which may be convertible into units. Existing unitholders will have no preemptive right to purchase units in any subsequent offering of our securities. Any such offering could dilute a unitholder's investment in us.

            We anticipate that any additional borrowings would be made in the form of bank borrowings, publicly and privately placed debt instruments, or purchase money obligations to the sellers of properties. Any of such indebtedness may be unsecured or may be secured by any or all of our assets or any existing or new property-owning partnership. Any such indebtedness may also have full or limited recourse to all or any portion of the assets of any of the foregoing. Although we may borrow to fund the payment of distributions, we currently have no expectation that we will regularly be required to do so.

            We may obtain unsecured or secured lines of credit. We also may determine to issue debt securities. Any such debt securities may be convertible into equity interests or be accompanied by warrants to purchase equity interests. We also may sell or securitize our lease receivables. The proceeds from any borrowings or financings may be used for the following:

•
financing acquisitions;
•
developing or redeveloping properties;
•
refinancing existing indebtedness;
•
working capital or capital improvements; or
•
meeting the income distribution requirements applicable to REITs if Simon Property has income without the receipt of cash sufficient to enable it to meet such distribution requirements.

5

            We also may determine to finance acquisitions through the following:

•
issuance of additional units of limited partnership interest;
•
issuance of preferred units;
•
issuance of other securities; or
•
sale or exchange of ownership interests in Properties.

            The ability to offer units of limited partnership interest to transferors may result in beneficial tax treatment for the transferors. This is because the exchange of units for properties may defer the recognition of gain for tax purposes by the transferor. It may also be an advantage for us since certain transferors may be limited in the number of units that they may purchase.

            If the Simon Property Board of Directors determines to obtain additional debt financing, we intend to do so generally through mortgages on Properties, drawings against revolving lines of credit or term loan facilities, or the issuance of unsecured debt. We may do this directly or through an entity owned or controlled by us. The mortgages may be non-recourse, recourse, or cross-collateralized. We do not have a policy limiting the number or amount of mortgages that may be placed on any particular property. Mortgage financing instruments, however, usually limit additional indebtedness on such properties.

            Typically, we invest in or form special purpose entities only to obtain permanent financing for Properties on attractive terms. Permanent financing for Properties is typically structured as a mortgage loan on one or a group of Properties in favor of an institutional third party or as a joint venture with a third party or as a securitized financing. For securitized financings, we are required to create special purpose entities to own the Properties. These special purpose entities are structured so that they would not be consolidated with us in the event we would ever become subject to a bankruptcy proceeding. We decide upon the structure of the financing based upon the best terms then available to us and whether the proposed financing is consistent with our other business objectives. For accounting purposes, we include the outstanding securitized debt of special purpose entities owning consolidated Properties as part of our consolidated indebtedness.

            We maintain policies and have entered into agreements designed to reduce or eliminate potential conflicts of interest. Simon Property has adopted governance principles governing its affairs and the Simon Property Board of Directors, as well as written charters for each of the standing Committees of the Board of Directors. In addition, the Simon Property Board of Directors has a Code of Business Conduct and Ethics which applies to all of its officers, directors, and employees. At least a majority of the members of the Simon Property Board of Directors must qualify as independent under the listing standards for New York Stock Exchange companies and cannot be affiliated with the Simon and DeBartolo families. Any transaction between us and the Simons or the DeBartolos, including property acquisitions, service and property management agreements and retail space leases, must be approved by a majority of non-affiliated directors.

            The sale of any property may have an adverse tax impact on the Simons or the DeBartolos and the other limited partners. In order to avoid any conflict of interest between Simon Property and our limited partners, the Simon Property charter requires that at least six of the independent directors may authorize and require us to sell any property we own. Any such sale is subject to applicable agreements with third parties. Noncompetition agreements executed by each of the Simons contain covenants limiting the ability of the Simons to participate in certain shopping center activities in North America.

            We intend to make investments which are consistent with the Code requirements applicable to Simon Property, unless the Simon Property Board of Directors determines that it is no longer in our best interests to qualify as a REIT. The Simon Property Board of Directors may make such a determination because of changing circumstances or changes in the REIT requirements. We have authority to offer units of our equity interests or other securities in exchange for property. We also have authority to repurchase or otherwise reacquire our shares or any other securities. We may engage in such activities in the future. We may also repurchase units of our common stock subject to Board approval. We have not made loans to persons, including Simon Property's officers and directors. It is our policy to not make any loans to Simon Property's directors and executive officers for any purpose and all loans previously made to current

6

executive officers have been repaid in full. We may make loans to the Management Company and to joint ventures in which we participate.

            We plan to achieve our primary business objectives through a variety of methods discussed below, although we cannot assure you that we will achieve such objectives.

            Leasing.    We pursue a leasing strategy that includes:

•
marketing available space to maintain or increase occupancy levels;
•
renewing existing leases and originating new leases at higher base rents per square foot;
•
negotiating leases that allow us to recover from our tenants the majority of our property operating, real estate tax, repairs and maintenance, and advertising and promotion expenditures; and
•
executing leases that provide for percentage or overage rents and/or regular or periodic fixed contractual increases in base rents.

            Management.    We draw upon our expertise gained through management of a geographically diverse Portfolio, nationally recognized as comprising high quality retail and other Properties. In doing so, we seek to maximize cash flow through a combination of:

•
an active merchandising program to maintain our shopping centers as inviting shopping destinations;
•
efforts to minimize overhead and operating costs which not only benefits our operations but also reduces the costs reimbursed to us from our tenants. A tenant's ability to pay rent is affected by the percentage of its sales represented by occupancy costs, which consist of rent and expense recoveries. As sales levels increase, if expenses subject to recovery are controlled, the tenant can afford to pay higher base rent.
•
coordinated marketing and promotional activities that establish and maintain customer loyalty; and
•
systematic planning and monitoring of results.

            We believe that if we are successful in our efforts to increase sales while controlling operating expenses we will be able to continue to increase base rents at the Properties.

            We manage substantially all our Properties held as joint venture Properties and as a result we derive revenues from management fees and other services.

            Other Revenues.    Due to our size, tenant and vendor relationships, we also generate revenues from other sources, including:

•
Simon Brand Venture ("Simon Brand") obtains revenues from establishing our malls as leading market resource providers for retailers and other businesses and consumer-focused corporate alliances. Simon Brand revenues include payment services, national media contracts, a national beverage contract and other contracts with national companies as well as the sale of bank-issued gift cards under the Simon brand.
•
Simon Business Network ("Simon Business") revenues are derived from the offering of products and property operating services, resulting from its relationships with vendors, to our tenants and others. These services include such items as waste handling, facility services, and energy services, as well as major capital expenditures such as roofing, parking lots and energy systems.

            We also generate other revenues through the sale or lease of land adjacent to our Properties commonly referred to as "outlots" or "outparcels."

            International Expansion.    Our investments in Europe, Japan, Mexico, and Canada are currently conducted through joint ventures. In Europe, we have investments in partnerships with LaRinacante/Auchan and Argo/Peabody (known as Gallerie Commercialai Italia ("GCI") and European Retail Enterprises, B.V. ("ERE")). In Japan, our investments are in partnerships with Mitsubishi Estate Co., Ltd. and Sojitz Corporation (formerly known as Nissho Iwai Corporation). Our Mexico investment is a joint venture with Sordo Madaleno y Asociados. We account for our European and international joint venture activities under the equity method of accounting as defined by accounting policies generally accepted in the United States.

7


            We believe that the expertise we have gained through the development, leasing, management, and marketing of our domestic Properties can be utilized in retail properties abroad. There are risks inherent in international operations that may be beyond our control including:

•
changes in foreign currency exchange rates;
•
declines in economic conditions abroad;
•
changes in foreign political environments; and
•
changes in applicable laws and regulations in the United States that affect foreign operations.

            We consider our principal competitors to be seven other major United States or internationally publicly-held companies that own or operate regional malls, outlet centers, and other shopping centers in the United States and abroad. We also compete with many commercial developers, real estate companies and other owners of retail real estate that operate in our trade areas. Some of our Properties are of the same type and are within the same market area as other competitive properties. The existence of competitive properties could have a material adverse effect on our ability to lease space and on the level of rents we can obtain. This results in competition for both the acquisition of prime sites (including land for development and operating properties) and for tenants to occupy the space that we and our competitors develop and manage. In addition, our Properties compete against non-physical based forms of retailing such as catalog companies and e-commerce websites that offer retail products.

            We believe that our Portfolio is the largest, as measured by gross leasable area ("GLA"), of any publicly-traded retail REIT or partnership. In addition, we own or have an interest in more regional malls than any other publicly-traded REIT or partnership. We believe that we have a competitive advantage in the retail real estate business as a result of:

•
the size, quality and diversity of our Properties;
•
our management and operational expertise;
•
our extensive experience and relationships with retailers and lenders;
•
our mall marketing initiatives and consumer focused strategic corporate alliances; including those developed by Simon Brand and Simon Business; and
•
our ability to use our size to reduce the total occupancy cost of our tenants.

            Our size reduces our dependence upon individual retail tenants. Approximately 3,800 different retailers occupy more than 24,400 stores in our Properties and no retail tenant represents more than 4.0% of our Properties' total minimum rents.

            General Compliance.    We believe that the Portfolio is in compliance, in all material respects, with all Federal, state and local environmental laws, ordinances and regulations regarding hazardous or toxic substances. Nearly all of the Portfolio have been subjected to Phase I or similar environmental audits (which generally involve only a review of records and visual inspection of the property without soil sampling or ground water analysis) by independent environmental consultants. Phase I environmental audits are intended to discover information regarding, and to evaluate the environmental condition of, the surveyed properties and surrounding properties. These environmental audits have not revealed, nor are we aware of, any environmental liability that we believe will have a material adverse effect on our results of operations. We cannot assure you that:

•
existing environmental studies with respect to the Portfolio reveal all potential environmental liabilities;
•
any previous owner, occupant or tenant of a Property did not create any material environmental condition not known to us;
•
the current environmental condition of the Portfolio will not be affected by tenants and occupants, by the condition of nearby properties, or by other unrelated third parties; or
•
future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or the interpretation thereof) will not result in environmental liabilities.

            Asbestos-Containing Materials.    Asbestos-containing materials are present in most of the Properties, primarily in the form of vinyl asbestos tile, mastics and roofing materials, which we believe are generally in good condition. Fireproofing and insulation containing asbestos is also present in certain Properties in limited concentrations or in

8


limited areas. The presence of such asbestos-containing materials does not violate currently applicable laws. Generally, we remove asbestos-containing materials as required in the ordinary course of any renovation, reconstruction, or expansion, and in connection with the retenanting of space.

            Mold Management.    From time to time, during normal maintenance activities, increased levels of moisture may be found in building materials and mechanical systems. When this occurs, the source of the moisture (typically, due to a plumbing system malfunction or weather related damage) is corrected and the impact to building operations is assessed. When active mold growth is reasonably suspected or identified, the services of environmental professionals are utilized to evaluate and address the situation appropriately.

            Underground Storage Tanks.    Several of the Properties contain, or at one time contained, underground storage tanks used to store waste oils or other petroleum products primarily related to auto service center establishments or emergency electrical generation equipment. We believe that regulated tanks have been removed, upgraded or abandoned in accordance with applicable environmental laws. Site assessments have revealed certain soil and groundwater contamination associated with such tanks at some of these Properties. Subsurface investigations (Phase II assessments) and remediation activities are either completed, ongoing, or scheduled to be conducted at such Properties. The costs of remediation with respect to such matters has not been material and we do not expect these costs will have a material adverse effect on our results of operations.

            Properties to be Developed or Acquired.    Land held for mall development or that may be acquired for development may contain residues or debris associated with the use of the land by prior owners or third parties. In certain instances, such residues or debris could be or could contain hazardous wastes or hazardous substances. Prior to exercising any option to acquire properties, we typically conduct environmental due diligence consistent with acceptable industry standards.

            During the past three years, we have:

•
issued 14,336,846 units to Simon Property upon the conversion of Series A and B preferred units;
•
issued 19,375 units to Simon Property in lieu of preferred dividends on Series A preferred units;
•
issued 7,248,369 units to Simon Property upon the exchange of common units of limited partnership interest for common stock of Simon Property;
•
issued 803,341 units to other partners upon the conversion of preferred units of limited partnership interest in the Operating Partnership;
•
issued 9,000,000 units in 2002 for $321 million.
•
issued 251,096 7.5% Cumulative Redeemable Preferred Units in 2003 for $25.1 million.
•
repurchased 317,300 units in 2004 for $20.4 million.
•
issued 725,367 restricted units to Simon Propety, net of forfeitures, in exchange for a like number of shares issued under The Simon Property Group 1998 Stock Incentive Plan;
•
issued 1,798,396 units to Simon Property in exchange for cash contributed resulting from the exercise of stock options under The Simon Property Group 1998 Stock Incentive Plan;
•
issued 4,652,232 units to limited partners and 12,978,795 common units to Simon Property in the Chelsea acquisition;
•
issued 3,328,540 Series H preferred units in 2003 and repurchased 3,250,528 units in 2003 and 78,012 units in 2004;
•
issued and subsequently converted for cash 1,156,039 Series D preferred units in 2004;
•
redeemed 1,000,000 Series E preferred units;
•
issued 4,753,794 Series I preferred units to Chelsea limited partners and 13,261,712 Series I preferred units to Simon Property in the Chelsea acquisition;
•
issued 796,948 Series J preferred units to Simon Property in the Chelsea acquisition;
•
borrowed a maximum amount of $743.0 million under our $1.25 billion unsecured revolving credit facility; the outstanding amount of borrowings under this facility as of December 31, 2004 was $425.0 million;
•
borrowed a maximum of $1.8 billion under an unsecured acquisition facility in connection with the Chelsea acquisition; the outstanding amount of borrowings under this facility as of December 31, 2004 was $1.8 billion;

9

•
borrowed a maximum of $600 million under a $600 million 12-month acquisition credit facility taken out in connection with the Rodamco acquisition; this acquisition credit facility was paid off during the third quarter of 2002;
•
not made loans to other entities or persons, including Simon Property's officers and directors, other than to the Management Company and certain officers to pay income taxes due upon the vesting of restricted stock; all loans previously made to current executive officers have been repaid in full and our Code of Conduct prohibits us from making any further loans to officers and directors;
•
not invested in the securities of other issuers for the purpose of exercising control, other than in real estate;
•
not underwritten securities of other issuers;
•
not engaged in the purchase and sale or turnover of investments; and
•
provided annual reports containing financial statements certified by our independent registered public accounting firm and quarterly reports containing unaudited financial statements to our security holders.

            At February 25, 2005 we and our affiliates employed approximately 4,600 persons at various properties and offices throughout the United States, of which approximately 1,590 were part-time. Approximately 916 of these employees were located at our corporate headquarters in Indianapolis, IN and 151 were located at the Chelsea offices in Roseland, NJ.

            Our corporate headquarters are located at National City Center, 115 West Washington Street, Indianapolis, Indiana 46204, and our telephone number is (317) 636-1600.

            Our Internet website address is www.simon.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available or may be accessed free of charge through the About Simon /Investor Relations section of our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

            The following table sets forth certain information with respect to the executive officers of Simon Property, the general partner of the Operating Partnership, as of December 31, 2004.

Name
   Age
   Position
Melvin Simon (1)   78   Co-Chairman
Herbert Simon (1)   70   Co-Chairman
David Simon (1)   43   Chief Executive Officer
Richard S. Sokolov   55   President and Chief Operating Officer
Hans C. Mautner   67   Chairman, Simon Global Limited and President, International Division
Gary L. Lewis   46   Executive Vice President — Leasing
Stephen E. Sterrett   49   Executive Vice President and Chief Financial Officer
J. Scott Mumphrey   53   Executive Vice President — Property Management
John Rulli   48   Executive Vice President — Chief Operating Officer — Operating Properties
James M. Barkley   53   General Counsel; Secretary
Andrew A. Juster   52   Senior Vice President and Treasurer
(1)
Melvin Simon is the brother of Herbert Simon and the father of David Simon.

            Set forth below is a summary of the business experience of the executive officers of Simon Property. The executive officers of Simon Property serve at the pleasure of the Board of Directors. For biographical information of Melvin Simon, Herbert Simon, David Simon, Hans C. Mautner, and Richard S. Sokolov, see Item 10 of this report.

10


            Mr. Lewis is the Executive Vice President — Leasing of Simon Property. Mr. Lewis joined Melvin Simon & Associates ("MSA") in 1986 and held various positions with MSA and Simon Property prior to becoming Executive Vice President in charge of Leasing of Simon Property in 2002.

            Mr. Sterrett serves as Simon Property's Executive Vice President and Chief Financial Officer. He joined MSA in 1989 and held various positions with MSA until 1993 when he became Simon Property's Senior Vice President and Treasurer. He became Simon Property's Chief Financial Officer in 2001.

            Mr. Mumphrey serves as Simon Property's Executive Vice President — Property Management. He joined MSA in 1974 and also held various positions with MSA before becoming Senior Vice President of property management in 1993. In 2000, he became the President of Simon Business Network. Mr. Mumphrey became Executive Vice President — Property Management in 2002.

            Mr. Rulli serves as Simon Property's Executive Vice President — Chief Operating Officer—Operating Properties and served as Executive Vice President and Chief Administrative Officer for the majority of 2003. He joined MSA in 1988 and held various positions with MSA before becoming Simon Property's Executive Vice President in 1993 and Chief Administrative Officer in 2000. In December 2003, he was appointed to Executive Vice President — Chief Operating Officer — Operating Properties.

            Mr. Barkley serves as Simon Property's General Counsel and Secretary. Mr. Barkley holds the same position for MSA. He joined MSA in 1978 as Assistant General Counsel for Development Activity.

            Mr. Juster serves as Simon Property's Senior Vice President and Treasurer. He joined MSA in 1989 and held various financial positions with MSA until 1993 and thereafter has held various positions with Simon Property. Mr. Juster became Treasurer in 2001.

11

Item 2. Properties

            Our Properties primarily consist of regional malls, Premium Outlets, community shopping centers, and other properties. Our Properties contain an aggregate of approximately 202 million square feet of GLA, of which we own approximately 121 million square feet ("Owned GLA"). Total estimated retail sales at the Properties in 2004 were approximately $48 billion.

            Regional malls generally contain two or more anchors and a wide variety of smaller stores ("Mall" stores) located in enclosed malls connecting the anchors. Additional stores ("Freestanding" stores) are usually located along the perimeter of the parking area. Our 171 regional malls range in size from approximately 200,000 to 2.6 million square feet of GLA, with all but four regional malls over 400,000 square feet. Our regional malls contain in the aggregate more than 18,200 occupied stores, including approximately 700 anchors, which are mostly national retailers. Our regional mall totals include certain life-style centers when the center contains a traditional department store anchor.

            Community shopping centers are generally unenclosed and smaller than regional malls. Our 71 community shopping centers generally range in size from approximately 50,000 to 950,000 square feet of GLA. Community shopping centers generally are of three types. First, we own "power centers" that are designed to serve a larger trade area and contain at least two anchors, and usually as many as 5 to 7 other tenants, that are usually national retailers among the leaders in their markets and occupy more than 70% of the GLA in the center. Second, we own traditional community centers that focus primarily on value-oriented and convenience goods and services. These centers are usually anchored by a supermarket, discount retailer, or drugstore and are designed to service a neighborhood area. Finally, we also own open air centers adjacent to our regional malls designed to take advantage of the drawing power of the mall. Our community center totals also include life-style centers when the center does not contain a traditional department store anchor.

            Premium Outlets generally contain a wide variety of retailers located in open-air manufacturer's outlet centers. Our 31 Premium Outlets range in size from approximately 75,000 to 840,000 square feet of GLA. The Premium Outlets are generally located near metropolitan areas including New York City, Los Angeles, Chicago, Boston, Washington, D.C., San Francisco, Sacramento, Atlanta, and Dallas; or within 20 miles of major tourist destinations including Palm Springs, Napa Valley, Orlando, Las Vegas and Honolulu.

            We also have interests in 23 other Properties, which are comprised of retail and office Properties. The other Properties range in size from approximately 60,000 to 819,000 square feet of GLA. Two of these Properties contain primarily office space. The combined office and other Properties total less than 3.5% of our total GLA and no more than 2% of our total operating income before depreciation.

            The following table provides data as of December 31, 2004:

 
   Regional Malls
   Premium Outlets®
   Community Centers
   Other
  
% of total annualized base rent   80.0 % 10.5 % 5.5 % 4.0 %
% of total GLA   81.6 % 5.7 % 9.3 % 3.4 %
% of Owned GLA   73.9 % 9.5 % 11.1 % 5.5 %

            As of December 31, 2004, approximately 92.7% of the Mall and Freestanding Owned GLA in regional malls and the retail space of the other Properties was leased, approximately 99.3% of Owned GLA in the Premium Outlets was leased and approximately 91.9% of Owned GLA in the community shopping centers was leased.

            We own 100% of 209 of our 296 Properties, control 20 Properties in which we have a joint venture interest, and hold the remaining 67 Properties through unconsolidated joint venture interests. We are the managing or co-managing general partner or member of 287 of our Properties. Substantially all of our joint venture Properties are subject to rights of first refusal, buy-sell provisions, or other sale rights for all partners which are customary in real estate partnership agreements and the industry. Our partners in our joint ventures may initiate these provisions at any time, which will result in either the use of available cash or borrowings to acquire their partnership interest or the disposal of our partnership interest.

            The following property table summarizes certain data on our regional malls, Premium Outlets, and community centers located in the United States as of December 31, 2004.

12

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants
    REGIONAL MALLS                            

1.
 
Alton Square
 
IL
 
Alton (St. Louis)
 
Fee
 
100.0
%
Acquired 1993
 
69.9
%
426,315
 
212,897
 
639,212
 
Sears, JCPenney, Famous-Barr
2.   Anderson Mall   SC   Anderson (Greenville)   Fee   100.0 % Built 1972   87.3 % 404,394   212,667   617,061   JCPenney, Belk Ladies & Children, Belk Men's, Home Store
3.   Apple Blossom Mall   VA   Winchester   Fee   49.1 % (4) Acquired 1999   82.7 % 229,011   213,381   442,392   Belk, JCPenney, Sears
4.   Arsenal Mall   MA   Watertown (Boston)   Fee   100.0 % Acquired 1999   93.5 % 191,395   310,546   (19) 501,941   Marshalls, Home Depot, Linens-N-Things, Filene's Basement
5.   Atrium Mall   MA   Chestnut Hill (Boston)   Fee   49.1 % (4) Acquired 1999   97.8 % —   206,591   206,591   Border Books & Music, Cheesecake Factory, Tiffany
6.   Auburn Mall   MA   Auburn (Boston)   Fee   49.1 % (4) Acquired 1999   95.8 % 417,620   174,366   591,986   Filene's, Filene's Home Store, Sears
7.   Aurora Mall   CO   Aurora (Denver)   Fee   100.0 % Acquired 1998   79.8 % 611,637   418,551   1,030,188   JCPenney, Foley's, Foley's Mens & Home, Sears, Dillard's (6)
8.   Aventura Mall (5)   FL   Miami Beach   Fee   33.3 % (4) Built 1983   98.1 % 1,242,098   662,423   1,904,521   Macy's, Sears, Bloomingdales, JCPenney, Burdines-Macy's
9.   Avenues, The   FL   Jacksonville   Fee   25.0 % (4) (2) Built 1990   95.3 % 754,956   362,554   1,117,510   Belk, Dillard's, JCPenney, Parisian, Sears
10.   Bangor Mall   ME   Bangor   Fee   66.4 % (15) Acquired 2003   87.5 % 416,582   236,753   653,335   Dick's Sporting Goods, JCPenney, Hannafords, Filene's, Sears
11.   Barton Creek Square   TX   Austin   Fee   100.0 % Built 1981   99.6 % 922,266   507,906   1,430,172   Dillard's Womens & Home, Dillard's Mens & Children, Foley's, Sears, Nordstrom, JCPenney
12.   Battlefield Mall   MO   Springfield   Fee and Ground Lease (2056)   100.0 % Built 1970   98.5 % 770,111   423,399   1,193,510   Dillard's Women, Dillard's Mens, Children & Home, Famous-Barr, Sears, JCPenney, Steve & Barry's
13.   Bay Park Square   WI   Green Bay   Fee   100.0 % Built 1980   96.6 % 447,508   268,378   715,886   Younkers, Elder-Beerman, Kohl's, ShopKo
14.   Biltmore Square   NC   Asheville   Fee   100.0 % Built 1989   73.5 % 242,576   251,285   493,861   Belk, Dillard's, Proffitt's
15.   Bowie Town Center   MD   Bowie (Washington, D.C.)   Fee   100.0 % Built 2001   100.0 % 338,567   328,698   667,265   Hecht's, Sears, Barnes & Noble, Bed Bath & Beyond, Best Buy
16.   Boynton Beach Mall   FL   Boynton Beach (W. Palm Beach)   Fee   100.0 % Built 1985   94.6 % 883,720   299,843   1,183,563   Burdines-Macy's, Sears, Dillard's Mens & Home, Dillard's Women, JCPenney
17.   Brea Mall   CA   Brea (Orange County)   Fee   100.0 % Acquired 1998   98.5 % 874,802   442,557   1,317,359   Macy's, JCPenney, Robinson-May, Nordstrom, Sears
18.   Broadway Square   TX   Tyler   Fee   100.0 % Acquired 1994   95.6 % 427,730   189,388   617,118   Dillard's, JCPenney, Sears
19.   Brunswick Square   NJ   East Brunswick (New York)   Fee   100.0 % Built 1973   96.4 % 467,626   301,415   769,041   Macy's, JCPenney, Barnes & Noble
20.   Burlington Mall   MA   Burlington (Boston)   Ground Lease (2048)   100.0 % Acquired 1998   99.0 % 836,236   410,439   1,246,675   Macy's, Lord & Taylor, Filene's, Sears
21.   Cape Cod Mall   MA   Hyannis (Barnstable — Yarmouth)   Ground Leases (2009-2073) (7)   49.1 % (4) Acquired 1999   100.0 % 420,199   303,966   724,165   Macy's, Filene's, Marshalls, Sears, Best Buy, Barnes & Noble
22.   Castleton Square   IN   Indianapolis   Fee   100.0 % Built 1972   96.0 % 1,105,913   363,264   1,469,177   Dick's Sporting Goods, L.S. Ayres, Lazarus-Macy's, JCPenney, Sears, Von Maur

13

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

23.
 
Century III Mall
 
PA
 
West Mifflin (Pittsburgh)
 
Fee
 
100.0
%
Built 1979
 
85.3
%
831,439
 
454,993
  (19)
1,286,432
 
Steve & Barry's, Dick's Sporting Goods, JCPenney, Kaufmann's, Sears, Kaufmann's Furniture Galleries
24.   Charlottesville Fashion Square   VA   Charlottesville   Ground Lease (2076)   100.0 % Acquired 1997   100.0 % 381,153   191,236   572,389   Belk Womens & Children, Belk Mens & Home, JCPenney, Sears
25.   Chautauqua Mall   NY   Lakewood (Jamestown)   Fee   100.0 % Built 1971   91.5 % 213,320   218,646   431,966   Sears, JCPenney, The Bon Ton, Office Max
26.   Cheltenham Square   PA   Philadelphia   Fee   100.0 % Built 1981   92.3 % 368,266   271,394   639,660   Burlington Coat Factory, Home Depot, Value City, Shop Rite
27.   Chesapeake Square   VA   Chesapeake (Norfolk-VA Beach)   Fee and Ground Lease (2062)   75.0 % (12) Built 1989   96.3 % 537,279   271,291   808,570   Dillard's Women, Dillard's Mens, Children & Home, JCPenney, Sears, Hecht's, Target
28.   Cielo Vista Mall   TX   El Paso   Fee and Ground Lease (2005) (7)   100.0 % Built 1974   95.8 % 793,716   399,387   1,193,103   Dillard's Womens & Furniture, Dillard's Mens, Children & Home, JCPenney, Foley's, Sears
29.   Circle Centre   IN   Indianapolis   Property Lease (2097)   14.7 % (4) Built 1995   85.2 % 350,000   441,037 (19 ) 791,037   Nordstrom, Parisian
30.   College Mall   IN   Bloomington   Fee and Ground Lease (2048) (7)   100.0 % Built 1965   93.8 % 356,887   235,197   592,084   Sears, L.S. Ayres, Target, Dick's Sporting Goods (6), Linens-N-Things (6), Pier One (6)
31.   Columbia Center   WA   Kennewick   Fee   100.0 % Acquired 1987   96.4 % 408,052   333,727   741,779   Sears, JCPenney, Bon-Macy's, Bon-Macy's Mens & Children, Toys ‘R Us
32.   Copley Place   MA   Boston   Fee   98.1 % Acquired 2002   95.3 % 104,332   1,108,133   (19) 1,212,465   Nieman Marcus, Barney's (6)
33.   Coral Square   FL   Coral Springs (Miami-Ft. Lauderdale)   Fee   97.2 % Built 1984   96.2 % 648,144   296,873   945,017   Dillard's, JCPenney, Sears, Burdines-Macy's Mens, Children & Home, Burdines-Macy's Women
34.   Cordova Mall   FL   Pensacola   Fee   100.0 % Acquired 1998   89.3 % 437,477   395,875   833,352   Parisian, Dillard's Men, Dillard's Women, Best Buy, Bed, Bath & Beyond, Cost Plus World Market, Ross Dress for Less (6)
35.   Cottonwood Mall   NM   Albuquerque   Fee   100.0 % Built 1996   91.5 % 631,556   410,124   1,041,680   Dillard's, Foley's, JCPenney, Mervyn's, Sears
36.   Crossroads Mall   NE   Omaha   Fee   100.0 % Acquired 1994   78.9 % 609,669   248,841   858,510   Dillard's, Sears, Younkers, Target (6)
37.   Crystal Mall   CT   Waterford (New London-Norwich)   Fee   74.6 % (4) Acquired 1998   94.9 % 442,311   351,515   793,826   Macy's, Filene's, JC Penney, Sears
38.   Crystal River Mall   FL   Crystal River   Fee   100.0 % Built 1990   89.5 % 302,495   121,847   424,342   JCPenney, Sears, Belk, Kmart
39.   Dadeland Mall   FL   N. Miami Beach   Fee   50.0 % (4) Acquired 1997   97.7 % 1,132,072   335,565   1,467,637   Saks Fifth Avenue, Nordstrom, JCPenney, Burdines-Macy's, Burdines-Macy's Children & Home, The Limited/Express
40.   DeSoto Square   FL   Bradenton (Sarasota-Bradenton)   Fee   100.0 % Built 1973   92.1 % 435,467   254,786   690,253   JCPenney, Sears, Dillard's, Burdines-Macy's
41.   Eastland Mall   IN   Evansville   Fee   50.0 % (4) Acquired 1998   95.3 % 532,955   365,956   898,911   JCPenney, Famous Barr, Lazarus-Macy's

14

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

42.
 
Eastland Mall
 
OK
 
Tulsa
 
Fee
 
100.0
%
Built 1986
 
53.6
%
435,843
 
264,841
 
700,684
 
Dillard's, Mervyn's, Mickey's, Buyer's Bargains, (8)
43.   Edison Mall   FL   Fort Myers   Fee   100.0 % Acquired 1997   93.0 % 742,667   299,622   1,042,289   Dillard's, JCPenney, Sears, Burdines-Macy's Mens, Children & Home, Burdines-Macy's Women
44.   Emerald Square   MA   North Attleboro (Providence — Fall River)   Fee   49.1 % (4) Acquired 1999   98.0 % 647,372   374,011   1,021,383   Filene's, Filene's Home Store, JCPenney, Sears, Filene's Mens Store (6)
45.   Empire Mall (5)   SD   Sioux Falls   Fee and Ground Lease (2013) (7)   50.0 % (4) Acquired 1998   88.2 % 497,341   551,245   1,048,586   JCPenney, Younkers, Sears, Richman Gordman, Marshall Field's
46.   Fashion Centre at Pentagon City, The   VA   Arlington (Washington, DC)   Fee   42.5 % (4) Built 1989   99.4 % 472,729   518,046   (19) 990,775   Macy's, Nordstrom
47.   Fashion Mall at Keystone, The   IN   Indianapolis   Ground Lease (2067)   100.0 % Acquired 1997   96.8 % 249,721   398,403   (19) 648,124   Parisian, Saks Fifth Avenue, Crate & Barrel (6)
48.   Fashion Valley Mall   CA   San Diego   Fee   50.0 % (4) Acquired 2001   97.6 % 1,053,305   654,697   1,708,002   JCPenney, Macy's, Neiman-Marcus, Nordstrom, Robinsons-May, Saks Fifth Avenue
49.   Florida Mall, The   FL   Orlando   Fee   50.0 % (4) Built 1986   97.6 % 1,232,416   615,508   1,847,924   Dillard's, JCPenney, Lord & Taylor (16), Saks Fifth Avenue, Sears, Burdines-Macy's, Nordstrom
50.   Forest Mall   WI   Fond Du Lac   Fee   100.0 % Built 1973   83.1 % 327,260   173,393   500,653   JCPenney, Kohl's, Younkers, Sears
51.   Forum Shops at Caesars, The   NV   Las Vegas   Ground Lease (2050)   100.0 % Built 1992   97.9 % —   635,741   635,741    
52.   Galleria, The   TX   Houston   Fee   31.5 % (4) Acquired 2002   92.6 % 1,300,466   1,102,436   2,402,902   University Club, Neiman Marcus, Lord & Taylor (16), Macy's, Saks Fifth Avenue, Nordstrom, Foley's
53.   Granite Run Mall   PA   Media (Philadelphia)   Fee   50.0 % (4) Acquired 1998   93.7 % 500,809   546,249   1,047,058   JCPenney, Sears, Boscov's, Kohls
54.   Great Lakes Mall   OH   Mentor (Cleveland)   Fee   100.0 % Built 1961   85.4 % 879,300   422,727   1,302,027   Dillard's Men, Dillard's Women, Kaufmann's, JCPenney, Sears
55.   Greendale Mall   MA   Worcester (Boston)   Fee and Ground Lease (2009) (7)   49.1 % (4) Acquired 1999   93.4 % 132,634   298,703   (19) 431,337   Marshalls, T.J. Maxx ‘N More, Best Buy
56.   Greenwood Park Mall   IN   Greenwood (Indianapolis)   Fee   100.0 % Acquired 1979   95.2 % 909,928   414,737   1,324,665   JCPenney, Lazarus-Macy's, L.S. Ayres, Sears, Von Maur, Dick's Sporting Goods
57.   Gulf View Square   FL   Port Richey (Tampa-St. Pete)   Fee   100.0 % Built 1980   95.6 % 461,852   292,059   753,911   Sears, Dillard's, JCPenney, Burdines-Macy's, Best Buy, Linens-N-Things
58.   Gwinnett Place   GA   Duluth (Atlanta)   Fee   50.0 % (4) Acquired 1998   86.3 % 843,609   434,067   1,277,676   Parisian, Rich's-Macy's, JCPenney, Sears, (8)
59.   Haywood Mall   SC   Greenville   Fee and Ground Lease (2017) (7)   100.0 % Acquired 1998   95.8 % 902,400   330,255   1,232,655   Rich's-Macy's, Sears, Dillard's, JCPenney, Belk
60.   Highland Mall (5)   TX   Austin   Fee and Ground Lease (2070)   50.0 % (4) Acquired 1998   90.2 % 732,000   359,671   1,091,671   Dillard's Women & Home, Dillard's Mens & Children, Foley's, JCPenney
61.   Independence Center   MO   Independence (Kansas City)   Fee   100.0 % Acquired 1994   98.8 % 499,284   521,445   1,020,729   Dillard's, Sears, The Jones Store Co.
62.   Indian River Mall   FL   Vero Beach   Fee   50.0 % (4) Built 1996   86.8 % 445,552   302,456   748,008   Sears, JCPenney, Dillard's, Burdines-Macy's

15

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

63.
 
Ingram Park Mall
 
TX
 
San Antonio
 
Fee
 
100.0
%
Built 1979
 
96.0
%
751,704
 
378,284
 
1,129,988
 
Dillard's, Dillard's Home Center, Foley's, JCPenney, Sears, Bealls
64.   Irving Mall   TX   Irving (Dallas-Ft. Worth)   Fee   100.0 % Built 1971   97.4 % 722,049   408,688   1,130,737   Foley's, Dillard's, Mervyn's, Sears, Circuit City, Burlington Coat Factory (6)
65.   Jefferson Valley Mall   NY   Yorktown Heights (New York)   Fee   100.0 % Built 1983   97.2 % 310,095   276,709   586,804   Macy's, Sears, H&M
66.   Knoxville Center   TN   Knoxville   Fee   100.0 % Built 1984   83.0 % 597,028   383,830   980,858   Dillard's, JCPenney, Proffitt's, Sears, The Rush
67.   La Plaza Mall   TX   McAllen   Fee and Ground Lease (2040) (7)   100.0 % Built 1976   98.3 % 776,397   426,765   1,203,162   JCPenney, Foley's Home Store, Foley's, Dillard's, Sears, Bealls, Joe Brand
68.   Lafayette Square   IN   Indianapolis   Fee   100.0 % Built 1968   87.1 % 937,223   270,158   1,207,381   L.S. Ayres, Sears, Burlington Coat Factory, Steve & Barry's, (8)
69.   Laguna Hills Mall   CA   Laguna Hills (Orange County)   Fee   100.0 % Acquired 1997   98.5 % 536,500   330,736   867,236   Macy's, JCPenney, Sears
70.   Lake Square Mall   FL   Leesburg (Orlando)   Fee   50.0 % (4) Acquired 1998   84.2 % 296,037   264,777   560,814   JCPenney, Sears, Belk, Target
71.   Lakeline Mall   TX   Austin   Fee   100.0 % Built 1995   92.2 % 745,179   355,463   1,100,642   Dillard's, Foley's, Sears, JCPenney, Mervyn's
72.   Lehigh Valley Mall   PA   Whitehall (Allentown — Bethlehem)   Fee   37.6 % (4) (15) Acquired 2003   94.4 % 564,353   494,641   (19) 1,058,994   JCPenney, Macy's, Strawbridge's
73.   Lenox Square   GA   Atlanta   Fee   100.0 % Acquired 1998   92.3 % 821,356   663,328   1,484,684   Neiman Marcus, Rich's-Macy's, Bloomingdale's
74.   Liberty Tree Mall   MA   Danvers (Boston)   Fee   49.1 % (4) Acquired 1999   97.9 % 498,000   359,075   857,075   Marshalls, The Sports Authority, Target, Bed, Bath & Beyond, Kohl's, Shop Rite, Best Buy, Staples
75.   Lima Mall   OH   Lima   Fee   100.0 % Built 1965   92.1 % 541,861   204,014   745,875   Elder-Beerman, Sears, Lazarus- Macy's, JCPenney
76.   Lincolnwood Town Center   IL   Lincolnwood (Chicago)   Fee   100.0 % Built 1990   96.9 % 220,830   200,632   421,462   Kohl's, Carson Pirie Scott
77.   Lindale Mall (5)   IA   Cedar Rapids   Fee   50.0 % (4) Acquired 1998   86.7 % 305,563   386,975   692,538   Von Maur, Sears, Younkers, (8)
78.   Livingston Mall   NJ   Livingston (New York)   Fee   100.0 % Acquired 1998   97.1 % 616,128   363,898   980,026   Macy's, Sears, Lord & Taylor
79.   Longview Mall   TX   Longview   Fee   100.0 % Built 1978   82.5 % 402,843   209,983   612,826   Dillard's, Dillard's Men, JCPenney, Sears, Beall's
80.   Mall at Chestnut Hill, The   MA   Newton (Boston)   Lease (2039) (9)   47.2 % (4) Acquired 2002   97.5 % 297,253   180,946   478,199   Bloomingdale's, Filene's
81.   Mall at Rockingham Park   NH   Salem (Boston)   Fee   24.6 % (4) Acquired 1999   99.1 % 638,111   382,046   1,020,157   Macy's, Filene's, JCPenney, Sears
82.   Mall of Georgia   GA   Mill Creek (Atlanta)   Fee   50.0 % (4) Built 1999   92.5 % 1,069,590   715,774   1,785,364   JCPenney, Dick's Sporting Goods, Nordstrom, Dillard's, Lord & Taylor (16), Rich's-Macy's, Barnes & Noble, Haverty's Furniture
83.   Mall of New Hampshire   NH   Manchester (Boston)   Fee   49.1 % (4) Acquired 1999   97.8 % 444,889   362,010   806,899   JCPenney, Filene's, Sears, Best Buy, A.C. Moore (6)
84.   Maplewood Mall   MN   Minneapolis   Fee   100.0 % Acquired 2002   96.5 % 588,822   339,302   928,124   Sears, Marshall Field's, Kohl's, Barnes & Noble, JCPenney (6)
85.   Markland Mall   IN   Kokomo   Ground Lease (2041)   100.0 % Built 1968   94.4 % 273,094   142,149   415,243   Lazarus-Macy's, Sears, Target

16

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

86.
 
McCain Mall
 
AR
 
N. Little Rock
 
Fee and Ground Lease (2032) (10)
 
100.0
%
Built 1973
 
97.5
%
554,156
 
222,340
 
776,496
 
Sears, Dillard's, JCPenney, M.M. Cohn
87.   Melbourne Square   FL   Melbourne   Fee   100.0 % Built 1982   88.4 % 471,173   258,729   729,902   Dillard's Mens, Children & Home, Dillard's Women, JCPenney, Burdines-Macy's, Dick's Sporting Goods (6), Circuit City (6)
88.   Menlo Park Mall   NJ   Edison (New York)   Fee   100.0 % Acquired 1997   94.5 % 527,591   755,332   (19) 1,282,923   Macy's Women, Macy's Men, Macy's Children & Home, Nordstrom, Barnes & Noble
89.   Mesa Mall (5)   CO   Grand Junction   Fee   50.0 % (4) Acquired 1998   86.2 % 425,817   440,141   865,958   Sears, Herberger's, JCPenney, Target, Mervyn's
90.   Metrocenter   AZ   Phoenix   Fee   50.0 % (4) (18) Acquired 1998   90.3 % 876,027   515,946   1,391,973   Macy's, Dillard's, Robinsons-May, JCPenney, Sears
91.   Miami International Mall   FL   South Miami   Fee   47.8 % (4) Built 1982   95.0 % 783,308   293,366   1,076,674   Sears, Dillard's, JCPenney, Burdines-Macy's Mens & Home, Burdines-Macy's Women & Children
92.   Midland Park Mall   TX   Midland   Fee   100.0 % Built 1980   92.6 % 339,113   278,980   618,093   Dillard's, Dillard's Mens & Juniors, JCPenney, Sears, Beall's, Ross Dress for Less
93.   Miller Hill Mall   MN   Duluth   Ground Lease (2008)   100.0 % Built 1973   96.5 % 429,508   379,651   809,159   JCPenney, Sears, Younkers, Barnes & Noble, DSW
94.   Montgomery Mall   PA   Montgomeryville (Philadelphia)   Fee   53.5 % (15) Acquired 2003   91.9 % 684,855   435,540   1,120,395   JCPenney, Macy's, Sears, Strawbridge's
95.   Muncie Mall   IN   Muncie   Fee   100.0 % Built 1970   99.5 % 435,756   214,360   650,116   JCPenney, L.S. Ayres, Sears, Elder Beerman
96.   Nanuet Mall   NY   Nanuet (New York)   Fee   100.0 % Acquired 1998   90.5 % 583,711   332,903   916,614   Macy's, Boscov's, Sears
97.   North East Mall   TX   Hurst (Dallas-Ft. Worth)   Fee   100.0 % Built 1971   97.3 % 1,194,589   467,610   1,662,199   Saks Fifth Avenue, Nordstrom, Dillard's, JCPenney, Sears, Foley's
98.   Northfield Square Mall   IL   Bourbonnais (Chicago)   Fee   31.6 % (12) Built 1990   75.0 % 310,994   247,535   558,529   Sears, JC Penney, Carson Pirie Scott Womens, Carson Pierie Scott Mens, Children & Home
99.   Northgate Mall   WA   Seattle   Fee   100.0 % Acquired 1987   94.1 % 688,391   297,324   985,715   Nordstrom, JCPenney, Gottschalks, Bon-Macy's, Toys ‘R Us
100.   Northlake Mall   GA   Atlanta   Fee   100.0 % Acquired 1998   96.2 % 665,745   297,027   962,772   Parisian, Rich's-Macy's, Sears, JCPenney
101.   NorthPark Mall   IA   Davenport   Fee   50.0 % (4) Acquired 1998   84.7 % 651,533   425,218   1,076,751   Von Maur, Younkers, Dillard's, JCPenney, Sears
102.   Northshore Mall   MA   Peabody (Boston)   Fee   49.1 % (4) Acquired 1999   91.2 % 989,277   697,782   1,687,059   Macy's, Filene's, JCPenney, Lord & Taylor, Sears, Filene's Basement
103.   Northwoods Mall   IL   Peoria   Fee   100.0 % Acquired 1983   96.7 % 472,969   223,816   696,785   Famous Barr, JCPenney, Sears
104.   Oak Court Mall   TN   Memphis   Fee   100.0 % Acquired 1997   97.9 % 535,000   318,098   (19) 853,098   Dillard's, Goldsmith's-Macy's, Dillard's Mens,
105.   Orange Park Mall   FL   Orange Park (Jacksonville)   Fee   100.0 % Acquired 1994   96.1 % 534,180   389,232   923,412   Dillard's, JCPenney, Sears, Belk

17

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

106.
 
Orland Square
 
IL
 
Orland Park (Chicago)
 
Fee
 
100.0%
 
Acquired 1997
 
98.2
%
773,295
 
436,343
 
1,209,638
 
JCPenney, Marshall Field's, Sears, Carson Pirie Scott
107.   Oxford Valley Mall   PA   Langhorne (Philadelphia)   Fee   63.2% (15) Acquired 2003   89.9 % 762,558   503,488   (19) 1,266,046   J.C. Penney, Sears, Strawbridge's, Macy's
108.   Paddock Mall   FL   Ocala   Fee   100.0%   Built 1980   94.4 % 387,378   166,851   554,229   JCPenney, Sears, Belk, Burdines-Macy's
109.   Palm Beach Mall   FL   West Palm Beach   Fee   100.0%   Built 1967   96.0 % 749,288   334,919   1,084,207   Dillard's, JCPenney, Sears, Burdines-Macy's, Borders, DSW
110.   Penn Square Mall   OK   Oklahoma City   Ground Lease (2060)   94.5%   Acquired 2002   98.2 % 588,137   443,798   1,031,935   Foley's, JCPenney, Dillard's Womens, Dillard's Mens, Children & Home
111.   Pheasant Lane Mall   NH   Nashua (Boston)   (14)     (14) Acquired 2002   98.2 % 675,759   313,478   989,237   Macy's, Filene's, JC Penney, Sears, Target
112.   Phipps Plaza   GA   Atlanta   Fee   100.0%   Acquired 1998   87.5 % 472,385   346,801   819,186   Parisian, Saks Fifth Avenue, Nordstrom (6)
113.   Plaza & Court at King of Prussia, The   PA   King of Prussia (Philadelphia)   Fee   12.4% (4) (15) Acquired 2003   96.8 % 1,545,812   1,074,658   (19) 2,620,470   Macy's, Bloomingdale's, J.C. Penney, Sears, Strawbridge's, Nordstrom, Neiman Marcus, Lord & Taylor
114.   Plaza Carolina   PR   Carolina (San Juan)   Fee   100.0%   2004   94.4 % 504,796   608,089   (19) 1,112,885   JCPenney, Pueblo Xtra, Sears
115.   Port Charlotte Town Center   FL   Port Charlotte (Punta Gorda)   Ground Lease (2064)   80.0% (12) Built 1989   87.4 % 458,554   321,871   780,425   Dillard's, JCPenney, Beall's, Sears, Burdines-Macy's, DSW
116.   Prien Lake Mall   LA   Lake Charles   Fee and Ground Lease (2025) (7)   100.0%   Built 1972   91.2 % 644,124   178,697   822,821   Dillard's, JCPenney, Foley's, Sears
117.   Quaker Bridge Mall   NJ   Lawrenceville   Fee   38.0% (4) (15) Acquired 2003   94.9 % 686,760   415,230   1,101,990   JCPenney, Lord & Taylor, Macy's, Sears
118.   Raleigh Springs Mall   TN   Memphis   Fee and Ground Lease (2018) (7)   100.0%   Built 1971   77.1 % 691,230   226,323   917,553   Sears, (8)
119.   Richardson Square Mall   TX   Richardson (Dallas-Ft. Worth)   Fee   100.0%   Built 1977   80.2 % 471,436   284,000   755,436   Dillard's, Sears, Super Target, Ross Dress for Less, Barnes & Noble
120.   Richmond Town Square   OH   Richmond Heights (Cleveland)   Fee   100.0%   Built 1966   97.5 % 685,251   331,752   1,017,003   Sears, JCPenney, Kaufmann's, Barnes & Noble, Steve & Barry's (6)
121.   River Oaks Center   IL   Calumet City (Chicago)   Fee   100.0%   Acquired 1997   96.2 % 834,588   545,236   (19) 1,379,824   Sears, JCPenney, Carson Pirie Scott, Marshall Field's
122.   Rockaway Townsquare   NJ   Rockaway (New York)   Fee   100.0%   Acquired 1998   93.0 % 786,626   462,881   1,249,507   Macy's, Lord & Taylor, JCPenney, Sears
123.   Rolling Oaks Mall   TX   San Antonio   Fee   100.0%   Built 1988   75.5 % 596,984   292,917   889,901   Sears, Dillard's, Foley's, JC Penney
124.   Roosevelt Field   NY   Garden City (New York)   Fee and Ground Lease (2090) (7)   100.0%   Acquired 1998   96.7 % 1,430,425   759,516   2,189,941   Macy's, Bloomingdale's, JCPenney, Nordstrom, Bloomingdale's Furniture, Dick's Sporting Goods
125.   Ross Park Mall   PA   Pittsburgh   Fee   100.0%   Built 1986   93.9 % 827,015   406,764   1,233,779   Lazarus-Macy's, JCPenney, Sears, Kaufmann's, Media Play, DSW Shoe Warehouse
126.   Rushmore Mall (5)   SD   Rapid City   Fee   50.0% (4) Acquired 1998   90.8 % 470,660   364,948   835,608   JCPenney, Sears, Herberger's, Hobby Lobby, Target
127.   Santa Rosa Plaza   CA   Santa Rosa   Fee   100.0%   Acquired 1998   94.0 % 428,258   269,950   698,208   Macy's, Mervyn's, Sears
128.   Seminole Towne Center   FL   Sanford (Orlando)   Fee   45.0% (4) (2) Built 1995   87.3 % 768,798   384,803   1,153,601   McRae's, Burdine's-Macy's, Dillard's, Sears, JCPenney

18

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

129.
 
Shops at Mission Viejo Mall, The
 
CA
 
Mission Viejo (Orange County)
 
Fee
 
100.0
%
Built 1979
 
100.0
%
677,215
 
472,409
 
1,149,624
 
Macy's, Saks Fifth Avenue, Robinsons-May, Nordstrom
130.   Shops at Sunset Place, The   FL   Miami   Fee   37.5 % (4) (2) Built 1999   87.8 % —   514,974   514,974   Niketown, Barnes & Noble, Gameworks, Virgin Megastore, Z Gallerie, LA Fitness
131.   Smith Haven Mall   NY   Lake Grove (New York)   Fee   25.0 % (4) Acquired 1995   93.0 % 902,595   455,084   1,357,679   Macy's, Sears, JCPenney, H&M
132.   Solomon Pond Mall   MA   Marlborough (Boston)   Fee   49.1 % (4) Acquired 1999   96.2 % 538,843   371,338   910,181   Filene's, Sears, JCPenney, Linens-N-Things
133.   Source, The   NY   Westbury (New York)   Fee   25.5 % (4) (2) Built 1997   92.1 % 210,798   516,283   727,081   Fortunoff, Off 5th-Saks Fifth Avenue, Nordstrom Rack, Circuit City, David's Bridal (6)
134.   South Hills Village   PA   Pittsburgh   Fee   100.0 % Acquired 1997   83.0 % 655,987   457,939   1,113,926   Sears, Kaufmann's, Lazarus-Macy's, Barnes & Noble (6)
135.   South Shore Plaza   MA   Braintree (Boston)   Fee   100.0 % Acquired 1998   96.3 % 847,603   615,019   1,462,622   Macy's, Filene's, Lord & Taylor, Sears
136.   Southern Hills Mall (5)   IA   Sioux City   Fee   50.0 % (4) Acquired 1998   83.0 % 372,937   431,254   804,191   Younkers, Sears, Sheel's Sporting Goods, JCPenney, Barnes & Noble

137.
 
Southern Park Mall
 
OH
 
Boardman (Youngstown)
 
Fee
 
100.0
%
Built 1970
 
95.1
%
811,858
 
386,481
 
1,198,339
 
Dillard's, JCPenney, Sears, Kaufmann's
138.   Southgate Mall   AZ   Yuma   Fee   100.0 % Acquired 1988   97.2 % 252,264   68,850   321,114   Sears, Albertson's, (8)
139.   Southpark Mall   IL   Moline (Davenport — Moline)   Fee   50.0 % (4) Acquired 1998   84.8 % 578,056   447,879   1,025,935   JCPenney, Younkers, Sears, Von Maur, Dillard's
140.   SouthPark Mall   NC   Charlotte   Fee & Ground Lease (2040) (11)   100.0 % Acquired 2002   94.1 % 964,742   456,171   1,420,913   Nordstrom, Hecht's, Belk, Dillard's, Dick's Sporting Goods, Neiman Marcus (6), Joseph Beth Booksellers (6)
141.   SouthRidge Mall (5)   IA   Des Moines   Fee   50.0 % (4) Acquired 1998   65.9 % 497,806   504,332   1,002,138   Sears, Younkers, JCPenney, Target, (8)
142.   Square One Mall   MA   Saugus (Boston)   Fee   49.1 % (4) Acquired 1999   98.2 % 540,101   324,558   864,659   Filene's, Sears, Best Buy, T.J. Maxx N More, Filene's Basement, Gold's Gym, Best Buy, Dick's Sporting Goods (6)
143.   St. Charles Towne Center   MD   Waldorf (Washington, D.C.)   Fee   100.0 % Built 1990   94.8 % 631,602   353,951   985,553   Sears, JCPenney, Kohl's, Hecht's, Hecht's Home Store, Dick Sporting Goods
144.   Stanford Shopping Center   CA   Palo Alto (San Francisco)   Ground Lease (2054)   100.0 % Acquried 2003   95.5 % 849,153   530,563   (19) 1,379,716   Macy's, Neiman Marcus, Nordstrom, Bloomingdales, Macy's Men's Store
145.   Summit Mall   OH   Akron   Fee   100.0 % Built 1965   94.4 % 432,936   331,302   764,238   Dillard's Women & Children, Dillard's Mens & Home, Kaufmann's
146.   Sunland Park Mall   TX   El Paso   Fee   100.0 % Built 1988   90.9 % 575,837   342,052   917,889   Mervyn's, Sears, Dillard's Women & Children, Dillard's Mens & Home, Foley's
147.   Tacoma Mall   WA   Tacoma   Fee   100.0 % Acquired 1987   95.7 % 924,045   415,754   1,339,799   Nordstrom, Sears, JCPenney, Bon-Macy's, Mervyn's, Davids Bridal

19

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

148.
 
Tippecanoe Mall
 
IN
 
Lafayette
 
Fee
 
100.0
%
Built 1973
 
96.7
%
537,790
 
322,291
 
860,081
 
L.S. Ayres, Dick's Sporting Goods, JCPenney, Sears, Kohl's, H.H. Gregg
149.   Town Center at Boca Raton   FL   Boca Raton (W. Palm Beach)   Fee   100.0 % Acquired 1998   99.6 % 1,067,197   493,062   1,560,259   Saks Fifth Avenue, Nordstrom, Bloomingdale's, Sears, Burdines-Macy's, Neiman Marcus (6)
150.   Town Center at Cobb   GA   Kennesaw (Atlanta)   Fee   50.0 % (4) Acquired 1998   93.2 % 851,346   422,138   1,273,484   Rich's-Macy's, Parisian, Sears, JCPenney, Rich's-Macy's Furniture
151.   Towne East Square   KS   Wichita   Fee   100.0 % Built 1975   93.7 % 779,490   389,676   1,169,166   Dillard's, JCPenney, Sears, Von Maur, Steve & Barry's
152.   Towne West Square   KS   Wichita   Fee   100.0 % Built 1980   83.8 % 619,269   335,778   955,047   Dillard's Women & Home, Dillard's Mens & Children, Sears, JCPenney, Dick's Sporting Goods
153.   Treasure Coast Square   FL   Jensen Beach (Ft. Pierce)   Fee   100.0 % Built 1987   92.7 % 511,372   357,982   869,354   Dillard's, Sears, JCPenney, Burdines-Macy's, Borders
154.   Trolley Square   UT   Salt Lake City   Fee   90.0 % Acquired 1986   83.1 % —   225,735   225,735    
155.   Tyrone Square   FL   St. Petersburg (Tampa-St. Pete)   Fee   100.0 % Built 1972   92.6 % 748,269   376,337   1,124,606   Dillard's, JCPenney, Sears, Burdines-Macy's, Borders
156.   University Mall   AR   Little Rock   Ground Lease (2026)   100.0 % Built 1967   98.0 % 369,015   153,009   522,024   JCPenney, M.M. Cohn, (8)
157.   University Mall   FL   Pensacola   Fee   100.0 % Acquired 1994   85.1 % 478,449   230,542   708,991   JCPenney, Sears, McRae's
158.   University Park Mall   IN   Mishawaka (South Bend)   Fee   60.0 % Built 1979   98.0 % 622,508   320,014   942,522   L.S. Ayres, JCPenney, Sears, Marshall Field's
159.   Upper Valley Mall   OH   Springfield (Dayton — Springfield)   Fee   100.0 % Built 1971   90.1 % 479,418   263,246   742,664   Lazarus-Macy's, JCPenney, Sears, Elder-Beerman
160.   Valle Vista Mall   TX   Harlingen   Fee   100.0 % Built 1983   78.5 % 389,781   265,109   654,890   Dillard's, Mervyn's, Sears, JCPenney, Marshalls
161.   Valley Mall   VA   Harrisonburg   Fee   50.0 % (4) Acquired 1998   89.6 % 191,343   179,631   370,974   JCPenney, Belk, Peebles, Target (6)
162.   Virginia Center Commons   VA   Glen Allen (Richmond)   Fee   100.0 % Built 1991   94.6 % 506,639   280,577   787,216   Dillard's Women, Dillard's Mens, Children & Home, Hecht's, JCPenney, Sears
163.   Walt Whitman Mall   NY   Huntington Station (New York)   Ground Lease (2012)   100.0 % Acquired 1998   97.1 % 742,214   292,494   1,034,708   Macy's, Lord & Taylor, Bloomingdale's, Saks Fifth Avenue
164.   Washington Square   IN   Indianapolis   Fee   100.0 % Built 1974   81.6 % 616,109   307,462   923,571   L.S. Ayres, Dick's Sporting Goods, Target, Sears, Burlington Coat Factory
165.   West Ridge Mall   KS   Topeka   Fee   100.0 % Built 1988   83.0 % 716,811   303,464   1,020,275   Dillard's, JCPenney, The Jones Store Co., Sears, (8)
166.   West Town Mall   TN   Knoxville   Ground Lease (2042)   50.0 %  (4) Acquired 1991   94.8 % 878,311   448,873   1,327,184   Parisian, Dillard's, JCPenney, Proffitt's, Sears
167.   Westchester, The   NY   White Plains (New York)   Fee   40.0 %  (4) Acquired 1997   94.8 % 349,393   477,816   827,209   Neiman Marcus, Nordstrom
168.   Westminster Mall   CA   Westminster (Orange County)   Fee   100.0 % Acquired 1998   89.7 % 716,939   502,347   1,219,286   Sears, JCPenney, Robinsons-May, Macy's
169.   White Oaks Mall   IL   Springfield   Fee   77.5 % Built 1977   91.8 % 724,147   361,878   1,086,025   Famous Barr, Sears, Bergner's, Linens-N-Things (6), Cost Plus World Market (6), Dick's Sporting Goods

20

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

170.
 
Wolfchase Galleria
 
TN
 
Memphis
 
Fee
 
94.5
%
Acquired 2002
 
100.0
%
761,648
 
506,451
 
1,268,099
 
Goldsmith's-Macy's, JC Penney, Sears, Dillard's
171.   Woodland Hills Mall   OK   Tulsa   Fee   94.5 % Acquired 2002   95.2 % 709,447   382,808   1,092,255   Foley's, JCPenney, Sears, Dillard's
                               
 
 
   
        Total Regional Mall GLA               102,194,338   64,577,341   166,771,679    
                               
 
 
   

 
 
PREMIUM OUTLET CENTERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1.
 
Albertville Premium Outlets
 
MN
 
Albertville (Minneapolis/St. Paul)
 
Fee
 
100.0
%
Acquired 2004
 
96.8
%
0
 
429,701
 
429,701
 
Banana Republic, Calvin Klein, Kenneth Cole, Gap, Old Navy, Polo Ralph Lauren, Tommy Hilfiger
2.   Allen Premium Outlets   TX   Allen (Dallas)   Fee   100.0 % Acquired 2004   99.3 % 0   348,549   348,549   Brooks Brothers, Calvin Klein, Cole-Haan, Crate & Barrel, Kenneth Cole, Liz Claiborne, Tommy Hilfiger.
3.   Aurora Farms Premium Outlets   OH   Aurora (Cleveland)   Fee   100.0 % Acquired 2004   98.7 % 0   300,181   300,181   Ann Taylor, Brooks Brothers, Calvin Klein, Coach, Gap, Liz Claiborne, Off 5th-Saks Fifth Avenue, Polo Ralph Lauren, Tommy Hilfiger
4.   Camarillo Premium Outlets   CA   Camarillo (Los Angeles)   Fee   100.0 % Acquired 2004   100.0 % 0   454,070   454,070   Banana Republic, Barneys New York, Coach, Polo Ralph Lauren, Sony, St. John, Versace
5.   Carlsbad Premium Outlets   CA   Carlsbad   Fee   100.0 % Acquired 2004   100.0 % 0   287,936   287,936   Banana Republic, Calvin Klein, Cole-Haan, Gap, Guess, Polo Ralph Lauren, Reebok, Tommy Hilfiger
6.   Carolina Premium Outlets   NC   Smithfield (Raleigh-Durham-Chapel Hill)   Ground Lease (2029)   100.0 % Acquired 2004   100.0 % 0   439,303   439,303   Brooks Brothers, Gap, Liz Claiborne, Nike, Polo Ralph Lauren, Timberland, Tommy Hilfiger
7.   Chicago Premium Outlets   IL   Aurora (Chicago)   Fee   100.0 % Built 2004   100.0 % 0   437,775   437,775   Ann Taylor, Banana Republic, Calvin Klein, Coach, Diesel, Dooney & Bourke, Elie Tahari, Gap, Giorgio Armani, Kate Spade, Nike, Polo Ralph Lauren
8.   Clinton Crossing Premium Outlets   CT   Clinton (Hartford)   Fee   100.0 % Acquired 2004   100.0 % 0   272,351   272,351   Barneys New York, Calvin Klein, Coach, Dooney & Bourke, Gap, Kenneth Cole, Liz Claiborne, Nike, Polo Ralph Lauren
9.   Columbia Gorge Premium Outlets   OR   Troutdale (Portland-Vancouver)   Fee   100.0 % Acquired 2004   100.0 % 0   164,039   164,039   Adidas, Bass, Carter's, Gap, Liz Claiborne, Samsonite, Van Heusen
10.   Desert Hills Premium Outlets   CA   Cabazon (Palm Springs-Los Angeles)   Fee   100.0 % Acquired 2004   100.0 % 0   498,516   498,516   Burberry, Christian Dior, Coach, Giorgio Armani, Gucci, Max Mara, Polo Ralph Lauren, Salvatore Ferragamo, Versace, Yves Saint Laurent, Zegna

21

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants
11.   Edinburgh Premium Outlets   IN   Edinburgh (Indianapolis)   Fee   100.0 % Acquired 2004   100.0 % 0   305,475   305,475   Banana Republic, Coach, Gap, Nautica, Nike, OshKosh, Polo Ralph Lauren, Tommy Hilfiger
12.   Folsom Premium Outlets   CA   Folsom (Sacramento)   Fee   100.0 % Acquired 2004   100.0 % 0   299,270   299,270   Bass, Brooks Brothers, Gap, Guess, Kenneth Cole, Liz Claiborne, Nike, Off 5th-Saks Fifth Avenue, Tommy Hilfilger
13.   Gilroy Premium Outlets   CA   Gilroy (San Jose)   Fee   100.0 % Acquired 2004   100.0 % 0   577,265   577,265   Brooks Brothers, Calvin Klein, Coach, J. Crew, Hugo Boss, Nike, Polo Ralph Lauren, Sony, Timberland, Tommy Hilfiger
14.   Kittery Premium Outlets   ME   Kittery (Boston)   Ground Lease (2009)   100.0 % Acquired 2004   94.1 % 0   150,564   150,564   Banana Republic, Calvin Klein, Coach, J. Crew, Polo Ralph Lauren, Reebok, Tumi
15.   Las Vegas Premium Outlets   NV   Las Vegas   Fee   100.0 % Built 2003   100.0 % 0   434,978   434,978   A / X Armani Exchange, Calvin Klein, Coach, Dolce & Gabbana, Elie Tahari, Lacoste, Polo Ralph Lauren, Theory
16.   Leesburg Corner Premium Outlets   VA   Leesburg (Washington DC)   Fee   100.0 % Acquired 2004   100.0 % 0   463,288   463,288   Ann Taylor, Barneys New York, Kenneth Cole, Liz Claiborne, Nike, Polo Ralph Lauren, Restoration Hardware, Williams-Sonoma
17.   Liberty Village Premium Outlets   NJ   Flemington (New York-Philadelphia)   Fee   100.0 % Acquired 2004   99.3 % 0   173,645   173,645   Calvin Klein, Ellen Tracy, Jones New York, L.L. Bean, Polo Ralph Lauren, Tommy Hilfiger, Timberland, Waterford Wedgwood
18.   Lighthouse Place Premium Outlets   IN   Michigan City (Chicago)   Fee   100.0 % Acquired 2004   99.4 % 0   475,806   475,806   Burberry, Coach, Crate & Barrel, Gap, Liz Claiborne, Old Navy, Polo Ralph Lauren, Tommy Hilfiger
19.   Napa Premium Outlets   CA   Napa (Napa Valley)   Fee   100.0 % Acquired 2004   100.0 % 0   179,348   179,348   Banana Republic, Barneys New York, Coach, J. Crew, Jones New York, Kenneth Cole, Nautica, Tommy Hilfiger, TSE
20.   North Georgia Premium Outlets   GA   Dawsonville (Atlanta)   Fee   100.0 % Acquired 2004   97.7 % 0   539,757   539,757   Ann Taylor, Coach, Escada, J. Crew, Liz Claiborne, Polo Ralph Lauren, Restoration Hardware, Tommy Hilfiger, Williams-Sonoma
21.   Orlando Premium Outlets   FL   Orlando   Fee   100.0 % Acquired 2004   100.0 % 0   427,743   427,743   Barneys New York, Coach, Giorgio Armani, Hugo Boss, Max Mara, Nike, Polo Ralph Lauren, Timberland
22.   Osage Beach Premium Outlets   MO   Osage Beach   Fee   100.0 % Acquired 2004   99.4 % 0   391,381   391,381   Brooks Brothers, Calvin Klein, Coach, Gap, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger
23.   Patriot Plaza   VA   Williamsburg (Norfolk-VA Beach)   Fee   100.0 % Acquired 2004   100.0 % 0   76,521   76,521   Plow & Hearth, WestPoint Stevens

22

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

24.
 
Petaluma Village Premium Outlets
 
CA
 
Petaluma (San Francisco)
 
Fee
 
100.0
%
Acquired 2004
 
93.2
%
0
 
195,837
 
195,837
 
Brooks Brothers, Coach, Gap, Guess, Jones New York, Liz Claiborne, Off 5th-Saks Fifth Avenue
25.   St. Augustine Premium Outlets   FL   St. Augustine (Jacksonsville)   Fee   100.0 % Acquired 2004   98.4 % 0   329,003   329,003   Banana Republic, Brooks Brothers, Coach, Gap, Movado, Nike, Polo Ralph Lauren, Reebok, Tommy Bahama, Tommy Hilfiger
26.   The Crossings Premium Outlets   PA   Tannersville   Fee   100.0 % Acquired 2004   97.9 % 0   411,391   411,391   Ann Taylor, Banana Republic, Coach, Liz Claiborne, Polo Ralph Lauren, Reebok, Tommy Hilfiger
27.   Vacaville Premium Outlets   CA   Vacaville   Fee   100.0 % Acquired 2004   100.0 % 0   447,512   447,512   Ann Taylor, Burberry, Coach, Gap, Liz Claiborne, Nike, Polo Ralph Lauren, Restoration Hardware
28.   Waikele Premium Outlets   HI   Waipahu (Honolulu)   Fee   100.0 % Acquired 2004   100.0 % 0   209,846   209,846   Adidas, A / X Armani Exchange, Banana Republic, Barneys New York, Coach, Guess, Max Mara, Polo Ralph Lauren
29.   Waterloo Premium Outlets   NY   Waterloo   Fee   100.0 % Acquired 2004   100.0 % 0   391,519   391,519   Ann Taylor, Brooks Brothers, Calvin Klein, Coach, Gap, J. Crew, Jones New York, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger
30.   Woodbury Common Premium Outlets   NY   Central Valley (New York City)   Fee   100.0 % Acquired 2004   100.0 % 0   844,179   844,179   Banana Republic, Brooks Brothers, Coach, Giorgio Armani, Gucci, Neiman Marcus Last Call, Polo Ralph Lauren, Salvatore Ferragamo, Zegna
31.   Wrentham Village Premium Outlets   MA   Wrentham (Boston)   Fee   100.0 % Acquired 2004   100.0 % 0   600,621   600,621   Barneys New York, Burberry, Hugo Boss, Kenneth Cole, Nike, Polo, Ralph Lauren, Sony, Versace
                               
 
 
   
        Total Premium Outlet Center GLA               0   11,557,370   11,557,370    
                               
 
 
   

 
 
COMMUNITY SHOPPING CENTERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1.
 
Arboretum, The
 
TX
 
Austin
 
Fee
 
100.0
%
Acquired 1998
 
92.8
%
35,773
 
169,253
 
205,026
 
Barnes & Noble
2.   Bloomingdale Court   IL   Bloomingdale   Fee   100.0 % Built 1987   97.8 % 436,255   165,120   601,375   Best Buy, T.J. Maxx N More, Village Bloomingdale Theatre, Office Max, Old Navy, Linens-N-Things, Wal-Mart, Circuit City, Dress Barn, Jo-Ann Fabrics (6)
3.   Boardman Plaza   OH   Youngstown   Fee   100.0 % Built 1951   81.3 % 366,992   266,744   633,736   Hobby Lobby, Alltel, Linens-N-Things, Burlington Coat Factory, Giant Eagle, (8)
4.   Brightwood Plaza   IN   Indianapolis   Fee   100.0 % Built 1965   100.0 % —   38,493   38,493   Preston Safeway
5.   Celina Plaza   TX   El Paso   Fee and Ground Lease (2005) (11)   100.0 % Built 1978   100.0 % —   8,695   8,695   (8)  

23

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

6.
 
Charles Towne Square
 
SC
 
Charleston
 
Fee
 
100.0
%
Built 1976
 
100.0
%
71,794
 
—
 
71,794
 
Regal Cinema, (8)
7.   Chesapeake Center   VA   Chesapeake   Fee   100.0 % Built 1989   70.5 % 213,609   92,284   305,893   K-Mart, SM Newco, Movies 10, (8)
8.   Clay Terrace   IN   Carmel (Indianapolis)   Fee   50.0 %  (4) Built 2004   84.4 % 161,281   280,464   441,745   Dick's Sporting Goods, Wild Oats, DSW Shoe Warehouse and Circuit City Superstore
9.   Cobblestone Court   NY   Victor   Fee and Ground Lease (2038) (7)   35.0 %  (4)   (13) Built 1993   98.8 % 206,680   58,819   265,499   Dick's Sporting Goods, Kmart, Office Max
10.   Countryside Plaza   IL   Countryside   Fee and Ground Lease (2058) (7)   100.0 % Built 1977   70.1 % 290,216   137,472   427,688   Best Buy, Old Country Buffet, Burlington Coat, Home Depot, (8)
11.   Crystal Court   IL   Crystal Lake   Fee   35.0 %  (4)  (13) Built 1989   85.6 % 201,993   76,978   278,971   Cub Foods, Wal-Mart, SM Newco
12.   Dare Centre   NC   Kill Devil Hills   Ground Lease (2058)   100.0 % Acquired 2004   100.0 % —   115,288   115,288   Fashion Bug, Food Lion
13.   DeKalb Plaza   PA   King of Prussia   Fee   50.3 %  (15) Acquired 2003   96.2 % 81,368   20,345   101,713   Lane Home Furnishings, ACME
14.   Eastland Convenience Center   IN   Evansville   Ground Lease (2075)   50.0 %  (4) Acquired 1998   88.4 % 48,940   126,699   175,639   Marshalls, Toys "R" Us, Bed Bath & Beyond, David's Bridal
15.   Eastland Plaza   OK   Tulsa   Fee   100.0 % Built 1986   88.4 % 152,451   33,695   186,146   Marshalls, Target, Toys "R" Us
16.   Empire East (5)   SD   Sioux Falls   Fee   50.0 %  (4) Acquired 1998   89.2 % 253,388   48,580   301,968   Kohl's, Target
17.   Fairfax Court   VA   Fairfax   Fee   26.3 %  (4)  (13) Built 1992   100.0 % 169,043   80,614   249,657   Burlington Coat Factory, Circuit City Superstore, Offenbacher's, (8)
18.   Forest Plaza   IL   Rockford   Fee   100.0 % Built 1985   98.2 % 325,170   100,588   425,758   Kohl's, Marshalls, Media Play, Michael's, Factory Card Outlet, Office Max, T.J. Maxx, Bed, Bath & Beyond, Petco
19.   Gaitway Plaza   FL   Ocala   Fee   23.3 %  (4)  (13) Built 1989   89.4 % 123,027   93,361   216,388   Books-A-Million, Office Depot, T.J. Maxx, Ross Dress for Less, Bed, Bath & Beyond
20.   Gateway Shopping Center   TX   Austin   Fee   95.0 % 2004   98.9 % 396,494   116,057   512,551   Regal Cinema, Star Furniture, Best Buy, Linens-N-Things, Recreational Equipment, Inc., Whole Foods, Crate & Barrel, CompUSA, The Container Store, Old Navy
21.   Great Lakes Plaza   OH   Mentor (Cleveland)   Fee   100.0 % Built 1976   100.0 % 142,229   21,875   164,104   Circuit City, Michael's, Handy Andy
22.   Great Northeast Plaza   PA   Philadelphia   Fee   50.0 %  (4) Acquired 1989   100.0 % 237,151   57,600   294,751   Sears
23.   Greenwood Plus   IN   Greenwood   Fee   100.0 % Built 1979   100.0 % 134,141   25,790   159,931   Best Buy, Kohl's
24.   Griffith Park Plaza   IN   Griffith   Ground Lease (2060)   100.0 % Built 1979   31.8 % 175,595   94,073   269,668   K-Mart
25.   Grove at Lakeland Square, The   FL   Lakeland   Fee   100.0 % Built 1988   86.0 % 142,317   73,274   215,591   Lakeland Square 10 Theatre, Wal-Mart, Sports Authority
26.   Henderson Square   PA   King of Prussia   Fee   76.0 %  (15) Acquired 2003   97.3 % 72,683   34,661   107,344   Staples, Genuardi's Family Market
27.   Highland Lakes Center   FL   Orlando   Fee   100.0 % Built 1991   90.4 % 352,277   140,799   493,076   Marshalls, Bed, Bath & Beyond, American Signature Home, Save-Rite, Ross Dress for Less, Office Max, Burlington Coat Factory, (8)
28.   Indian River Commons   FL   Vero Beach   Fee   50.0 %  (4) Built 1997   93.9 % 233,358   27,510   260,868   Lowe's, Best Buy, Ross Dress for Less, Bed, Bath & Beyond, Michael's
29.   Ingram Plaza   TX   San Antonio   Fee   100.0 % Built 1980   100.0 % —   111,518   111,518    

24

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

30.
 
Keystone Shoppes
 
IN
 
Indianapolis
 
Ground Lease (2067)
 
100.0
%
Acquired 1997
 
83.5
%
—
 
29,140
 
29,140
 
 
31.   Knoxville Commons   TN   Knoxville   Fee   100.0 % Built 1987   60.4 % 91,483   88,980   180,463   Office Max, Circuit City, (8)
32.   Lake Plaza   IL   Waukegan   Fee   100.0 % Built 1986   100.0 % 170,789   44,673   215,462   Pic ‘N Save, Home Owners Bargain Outlet
33.   Lake View Plaza   IL   Orland Park (Chicago)   Fee   100.0 % Built 1986   95.7 % 262,341   109,022   371,363   Marshalls, Factory Card Outlet, Linens-N-Things, Best Buy, Petco, Jo-Ann Fabrics, Ulta 3, Golf Galaxy, Value City Furniture
34.   Lakeline Plaza   TX   Austin   Fee   100.0 % Built 1998   99.2 % 310,529   79,446   389,975   Linens-N-Things, T.J. Maxx, Old Navy, Best Buy, Ross Dress for Less, Office Max, PetsMart, Ulta 3, Party City, Cost Plus World Market, Toys R Us, Ultimate Electronics
35.   Lima Center   OH   Lima   Fee   100.0 % Built 1978   94.2 % 159,584   47,294   206,878   Kohl's, Hobby Lobby, Regal Cinema
36.   Lincoln Crossing   IL   O'Fallon   Fee   100.0 % Built 1990   100.0 % 229,820   13,446   243,266   Wal-Mart, PetsMart
37.   Lincoln Plaza   PA   King of Prussia   Fee   63.2 %  (15) Acquired 2003   87.6 % 143,649   123,582   267,231   Burlington Coat Factory, Circuit City, Lane Furniture
38.   MacGregor Village   NC   Cary   Fee   100.0 % Acquired 2004   95.1 % —   145,579   145,579   Spa Health Club, Tuesday Morning
39.   Mall of Georgia Crossing   GA   Mill Creek (Atlanta)   Fee   100.0 % Built 1999   98.4 % 341,503   99,109   440,612   Best Buy, American Signature, T.J. Maxx, Nordstrom Rack, Staples, Target
40.   Markland Plaza   IN   Kokomo   Fee   100.0 % Built 1974   89.9 % 49,051   41,675   90,726   Best Buy, Bed Bath & Beyond
41.   Martinsville Plaza   VA   Martinsville   Space Lease (2046)   100.0 % Built 1967   97.1 % 60,000   42,105   102,105   Rose's, Food Lion
42.   Matteson Plaza   IL   Matteson   Fee   100.0 % Built 1988   43.5 % 230,959   44,570   275,529   Michael's, Dominick's, Value City, (8)
43.   Muncie Plaza   IN   Muncie   Fee   100.0 % Built 1998   100.0 % 271,656   27,195   298,851   Kohl's, Shoe Carnival, T.J. Maxx, Office Max, Target
44.   New Castle Plaza   IN   New Castle   Fee   100.0 % Built 1966   97.3 % 24,912   66,736   91,648   Goody's, Jo-Ann Fabrics
45.   North Ridge Plaza   IL   Joliet   Fee   100.0 % Built 1985   98.8 % 190,323   114,747   305,070   Hobby Lobby, Office Max, Fun In Motion, Minnesota Fabrics, (8)
46.   North Ridge Shopping Center   NC   Raleigh   Fee   100.0 % Acquired 2004   98.5 % —   166,006   166,006   Ace Hardware, Kerr Drugs, Winn Dixie
47.   Northland Plaza   OH   Columbus   Fee and Ground Lease (2085) (7)   100.0 % Built 1988   68.2 % 118,304   91,230   209,534   Hobby Lobby, Marshalls, (8)
48.   Northwood Plaza   IN   Fort Wayne   Fee   100.0 % Built 1974   88.4 % 136,404   71,841   208,245   Cinema Grill, Target
49.   Park Plaza   KY   Hopkinsville   Fee and Ground Lease (2039) (7)   100.0 % Built 1968   95.2 % 82,398   32,626   115,024   Wal-Mart (17)
50.   Plaza at Buckland Hills, The   CT   Manchester   Fee   35.0 %  (4)  (13) Built 1993   88.2 % 252,179   82,436   334,615   Linens-N-Things, CompUSA, Jo-Ann Fabrics, Party City, The Maytag Store, SM Newco, Toys R Us, (8)
51.   Regency Plaza   MO   St. Charles   Fee   100.0 % Built 1988   92.0 % 210,627   76,846   287,473   Wal-Mart, Sam's Wholesale Club
52.   Ridgewood Court   MS   Jackson   Fee   35.0 %  (4)  (13) Built 1993   100.0 % 185,939   54,723   240,662   T.J. Maxx, Lifeway Christian Bookstore, Bed Bath & Beyond, Best Buy, JLPK Jackson
53.   Rockaway Convenience Center   NJ   Rockaway (New York)   Fee   100.0 % Acquired 1998   100.0 % 131,438   103,934   235,372   Best Buy, Borders Books & Music, Linens-N-Things, Michael's, Acme

25

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

54.
 
Rockaway Plaza
 
NJ
 
Rockaway (New York)
 
Fee
 
100.0
%
Acquired 1998
 
0.0
%
153,282
 
—
 
153,282
 
Target
55.   Royal Eagle Plaza   FL   Coral Springs (Miami-Ft. Lauderale)   Fee   35.0 %  (4)  (13) Built 1989   100.0 % 124,479   74,676   199,155   K Mart, Stein Mart
56.   Shops at North East Mall, The   TX   Hurst   Fee   100.0 % Built 1999   100.0 % 265,595   98,989   364,584   Michael's, Office Max, PetsMart, Old Navy, Pier 1 Imports, Ulta 3, T.J. Maxx, Bed Bath & Beyond, Nordstrom Rack, Best Buy
57.   St. Charles Towne Plaza   MD   Waldorf (Washington, D.C.)   Fee   100.0 % Built 1987   75.0 % 285,586   117,801   403,387   T.J. Maxx, Jo-Ann Fabrics, K & G Menswear, CVS, Shoppers Food Warehouse, Dollar Tree, Value City Furniture, (8)
58.   Teal Plaza   IN   Lafayette   Fee   100.0 % Built 1962   100.0 % 98,337   2,750   101,087   Hobby Lobby, Circuit City, Pep Boys
59.   Terrace at the Florida Mall   FL   Orlando   Fee   100.0 % Built 1989   96.3 % 281,252   47,531   328,783   Marshalls, American Signature Furniture, Global Imports, Target, Bed Bath & Beyond, (8)
60.   Tippecanoe Plaza   IN   Lafayette   Fee   100.0 % Built 1974   100.0 % 85,811   4,711   90,522   Best Buy, Barnes & Noble
61.   University Center   IN   Mishawaka   Fee   60.0 % Built 1980   84.7 % 104,347   46,177   150,524   Michael's, Best Buy, Linens-N-Things, (8)
62.   Village Park Plaza   IN   Carmel (Indianapolis)   Fee   35.0 %  (4)  (13) Built 1990   93.5 % 430,368   112,407   542,775   Bed Bath & Beyond, Ashley Furniture, Kohl's, Regal Cinema, Wal-Mart, Marsh, (8)
63.   Wabash Village   IN   West Lafayette   Ground Lease (2063)   100.0 % Built 1970   12.2 % 109,388   15,148   124,536    
64.   Washington Plaza   IN   Indianapolis   Fee   100.0 % Built 1976   100.0 % 21,500   28,607   50,107   Deals
65.   Waterford Lakes Town Center   FL   Orlando   Fee   100.0 % Built 1999   99.8 % 622,244   329,427   951,671   Regal Cinema, Ross Dress for Less, T.J. Maxx, Bed Bath & Beyond, Old Navy, Barnes & Noble, Best Buy, Jo-Ann Fabrics, Office Max, PetsMart, Target, Ashley Furniture, L.A. Fitness
66.   West Ridge Plaza   KS   Topeka   Fee   100.0 % Built 1988   100.0 % 182,161   55,622   237,783   Famous Footwear, T.J. Maxx, Toys R Us, Target
67.   West Town Corners   FL   Altamonte Springs   Fee   23.3 %  (4)  (13) Built 1989   98.0 % 263,782   121,455   385,237   Sports Authority, PetsMart, Winn-Dixie, American Signature Furniture, Wal-Mart
68.   Westland Park Plaza   FL   Orange Park   Fee   23.3 %  (4)  (13) Built 1989   95.6 % 123,548   39,606   163,154   Sports Authority, PetsMart, Burlington Coat Factory
69.   White Oaks Plaza   IL   Springfield   Fee   100.0 % Built 1986   99.6 % 275,703   115,723   391,426   T.J. Maxx, Office Max, Kohl's Babies R Us, Kids R Us, Cub Foods
70.   Whitehall Mall   PA   Whitehall   Fee   38.0 %  (15)  (4) Acquired 2003   97.2 % 378,642   174,933   553,575   Sears, Kohl's, Bed Bath & Beyond, Weis Markets
71.   Willow Knolls Court   IL   Peoria   Fee   35.0 %  (4)  (13) Built 1990   97.3 % 309,440   72,937   382,377   Willow Knolls 14, Burlington Coat Factory, Kohl's, Sam's Wholesale Club
                               
 
 
   
        Total Community Shopping Center GLA               12,793,578   5,872,090   18,665,668    
                               
 
 
   

26

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants
    OFFICE AND OTHER PROPERTIES                            

1.
 
Crossville Outlet Center
 
TN
 
Crossville
 
Fee
 
100.0
%
Acquired 2004
 
96.5
%
0
 
151,256
 
151,256
 
Bass, Liz Claiborne, OshKosh, Reebok, Van Heusen, VF Outlet
2.   Factory Merchants Branson   MO   Branson   Fee   100.0 % Acquired 2004   78.7 % 0   299,739   299,739   Carter's, Easy Spirit, Izod, Nautica, Pfaltzgraff, Van Heusen
3.   Factory Stores of America- Arcadia   LA   Arcadia   Fee   100.0 % Acquired 2004   94.2 % 0   89,528   89,528   Bass, VF Outlet, Van Heusen
4.   Factory Stores of America- Boaz   AL   Boaz   Ground Lease (2007)   100.0 % Acquired 2004   72.8 % 0   111,909   111,909   Banister Shoes, VF Outlet
5.   Factory Stores of America- Draper   UT   Draper   Fee   100.0 % Acquired 2004   91.3 % 0   183,827   183,827   Dress Barn, Samsonite, VF Outlet
6.   Factory Stores of America- Georgetown   KY   Georgetown   Fee   100.0 % Acquired 2004   96.3 % 0   176,615   176,615   Carolina Pottery, Dress Barn, Levi's, Van Heusen
7.   Factory Stores of America- Graceville   FL   Graceville   Fee   100.0 % Acquired 2004   98.0 % 0   83,962   83,962   Factory Brand Shoes, VF Outlet, Van Heusen
8.   Factory Stores of America- Hanson   KY   Hanson   Fee   100.0 % Acquired 2004   100.0 % 0   63,891   63,891   Banister Shoes, VF Outlet
9.   Factory Stores of America- Lebanon   MO   Lebanon   Fee   100.0 % Acquired 2004   92.1 % 0   86,249   86,249   Dress Barn, VF Outlet, Van Heusen
10.   Factory Stores of America- Nebraska City   NE   Nebraska City   Fee   100.0 % Acquired 2004   97.4 % 0   89,646   89,646   Dress Barn, VF Outlet
11.   Factory Stores of America- Story City   IA   Story City   Fee   100.0 % Acquired 2004   88.4 % 0   112,405   112,405   Dress Barn Woman, Factory Brand Shoes, VF Outlet, Van Heusen
12.   Factory Stores of America- Tupelo   MS   Tupelo   Fee   100.0 % Acquired 2004   96.4 % 0   129,412   129,412   Banister Shoes, VF Outlet
13.   Factory Stores of America- Union City   TN   Union City   Fee   100.0 % Acquired 2004   97.4 % 0   60,229   60,229   VF Outlet
14.   Factory Stores of America- West Frankfort   IL   West Frankfort   Fee   100.0 % Acquired 2004   82.3 % 0   91,063   91,063   VF Outlet
15.   Factory Stores of America-Tri-Cities   TN   Blountville   Fee   100.0 % Acquired 2004   78.9 % 0   132,908   132,908   Carolina Pottery, L'eggs Hanes Bali Playtex, Tri-Cities Cinemas
16.   Factory Stores of North Bend   WA   North Bend   Fee   100.0 % Acquired 2004   100.0 % 0   223,397   223,397   Adidas, Bass, Carter's, Eddie Bauer, Gap, Nike, OshKosh, Samsonite, VF Outlet
17.   Jackson Outlet Village   NJ   Jackson   Fee   100.0 % Acquired 2004   100.0 % 0   285,881   285,881   Brooks Brothers, Calvin Klein, Gap, Nike, Polo Ralph Lauren, Reebok, Timberland, Tommy Hilfiger
18.   Johnson Creek Outlet Center   WI   Johnson Creek   Fee   100.0 % Acquired 2004   97.6 % 0   277,517   277,517   Adidas, Calvin Klein, Gap, Lands' End, Nike, Old Navy, Polo Ralph Lauren, Tommy Hilfiger
19.   Lakeland Factory Outlet Mall   TN   Lakeland   Fee   100.0 % Acquired 2004   85.0 % 0   318,983   318,983   L'eggs Hanes Bali Playtex, VF Outlet, Van Heusen
20.   Las Vegas Outlet Center   NV   Las Vegas   Fee   100.0 % Acquired 2004   100.0 % 0   476,985   476,985   Calvin Klein, Liz Claiborne, Nike, Reebok, Tommy Hilfiger, VF Outlet, Waterford Wedgwood
21.   O'Hare International Center   IL   Rosemont   Fee   100.0 % Built 1988   81.9 % 0   494,504   494,504   (19) —

27

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City
(Metropolitan area)
   Ownership Interest
(Expiration
if Lease) (1)
   Legal
Ownership
   Year Built or
Acquired
   Occupancy (3)
   Anchor
   Mall &
Freestanding
   Total
   Retail Anchors and Major Tenants

22.
 
Riverway
 
IL
 
Rosemont
 
Fee
 
100.0
%
Acquired 1991
 
85.2
%
0
 
819,300
 
819,300
  (19)
—
23.   The Factory Shoppes at Branson Meadows   MO   Branson   Ground Lease (2021)   100.0 % Acquired 2004   80.2 %     286,924   286,924   Dress Barn Woman, Easy Spirit, VF Outlet
                               
 
 
   
        Total Office and Other GLA               0   5,046,130   5,046,130    
                               
 
 
   
        Total U.S. Properties GLA               114,987,916   87,052,931   202,040,847    
                               
 
 
   
    PROPERTIES UNDER CONSTRUCTION                            

 
 
 
 
 
 
 
 
 
 
 
 
Expected Opening
 
 
 
 
 
 
 
 
 
 
1.   Firewheel Town Center   TX   Garland       100.0 % 4th Quarter 2005                   Dillard's, Barnes & Noble, Dick's Sporting Goods, Target, Ross Dress for Less, Old Navy, Staples, DSW, JoAnn Fabrics, Pier One, PetsMart
2.   Rockaway Plaza   NJ   Rockaway (New York)       100.0 % 4th Quarter 2005/
1st Quarter 2006		                   Target, Dick's Sporting Goods, Loews Cineplex, PetsMart
3.   Seattle Premium Outlets   WA   Tulalip       100.0 % 2nd Quarter 2005                   Foley's, Dillard's, AMC Theater, Barnes & Noble, Circuit City, Linens ‘n Things, Old Navy, Pier One, DSW, Sports Authority
4.   St. Johns Town Center   FL   Jacksonville       50.0 %  (2) 1st Quarter 2005                   Kohl's, Target, Linens ‘n Things, Office Depot, Best Buy, T.J.Maxx, Michael's, Old Navy, Pier One, PetsMart
5.   Town Center at Coconut Point, The   FL   Estero/Bonita Springs       50.0 % 1st Quarter 2006                   Dillard's, Muvico Theatres, Barnes & Noble, Bed Bath & Beyond, Best Buy, DSW, Office Max, Old Navy, PetsMart, Pier One, Ross Dress for Less, Ulta Cosmetics, Golfsmith, Sports Authority, Party City
6.   Wolf Ranch   TX   Georgetown (Austin)       100.0 % 3rd Quarter 2005                    

28

FOOTNOTES:

(1)
The date listed is the expiration date of the last renewal option available to the operating entity under the ground lease. In a majority of the ground leases, we have a right of first refusal or the right to purchase the lessor's interest. Unless otherwise indicated, each ground lease listed in this column covers at least 50% of its respective Property.

(2)
The Operating Partnership's direct and indirect interests in some of the Properties held as joint venture interests are subject to preferences on distributions in favor of other partners or the Operating Partnership.

(3)
Regional Malls—Executed leases for all company-owned GLA in mall and freestanding stores, excluding majors. Premium Outlet Centers—Executed leases for all company-owned GLA (or total center GLA). Community Centers—Executed leases for all company-owned GLA including majors, mall stores and freestanding stores.

(4)
Joint Venture Properties accounted for under the equity method.

(5)
This Property is managed by a third party.

(6)
Indicates anchor is currently under construction or in predevelopment.

(7)
Indicates ground lease covers less than 50% of the acreage of this Property.

(8)
Indicates vacant anchor space(s).

(9)
The lease at the Mall at Chestnut Hill includes the entire premises including land and building.

(10)
Indicates ground lease covers all of the Property except for parcels owned in fee by anchors.

(11)
Indicates ground lease covers outparcel only.

(12)
The Operating Partnership receives substantially all the economic benefit of the property due to a preference or advance.

(13)
Outside partner receives substantially all of the economic benefit due to a partner preference.

(14)
The Operating Partnership owns a mortgage note that encumbers Pheasant Lane Mall that entitles it to 100% of the economics of this property.

(15)
The Company's indirect ownership interest, evidenced through an approximatley 76% ownership interest in Kravco Simon Investments.

(16)
Indicates anchor has announced its intent to close this location.

(17)
Indicates anchor has closed, but the Operating Partnership still collects rents and/or fees under an agreement.

(18)
Property was sold January 11, 2005.

(19)
Mall & Freestanding GLA includes office space as follows:

            Arsenal Mall—approx. 106,000 sq. ft.

            Century III Mall—approx. 32,000 sq. ft.

            Circle Centre Mall—approx. 9,000 sq. ft.

            Copley Place—approx. 847,000 sq. ft.

            Fashion Centre at Pentagon City, The—approx. 169,000 sq. ft.

            Fashion Mall at Keystone, The—approx. 30,000 sq. ft.

            Greendale Mall—approx. 120,000 sq. ft.

            The Plaza & Court at King of Prussia—approx. 14,000 sq. ft.

            Lehigh Valley Mall—approx. 12,000 sq. ft.

            Menlo Park Mall—approx. 50,000 sq. ft.

            Oak Court Mall—approx. 131,000 sq. ft.

            Oxford Valley Mall—approx. 111,000 sq. ft.

            Plaza Carolina—approx. 28,000 sq. ft.

            River Oaks Center—approx. 118,000 sq. ft.

            Stanford Shopping—approx. 6,000 sq. ft.

29

            The following summarizes our investments in Europe and the countries of real estate ownership and operation as of December 31, 2004:

Investment
   Ownership
Interest
   Properties
open and
operating
   Countries
Gallerie Commerciali Italia, S.p.A.   49.0 % 40   Italy
European Retail Enterprises ("ERE"), B.V.   34.7 % 11   France, Poland, Portugal

            In addition, we jointly hold with a third party an interest in one parcel of land for development near Paris, France outside of these two joint ventures. ERE also operates through a wholly-owned subsidiary, Groupe BEG, S.A. ("BEG"). ERE and BEG are fully integrated European retail real estate developers, owners and managers.

            Our properties in Europe consist primarily of hypermarket-anchored shopping centers. Substantially all of our European properties are anchored by either the hypermarket retailer Auchan, primarily in Italy, who is our partner in GCI, or are anchored by the hypermarket Carrefour in France, Poland, and Portugal. Certain of these properties are subject to leaseholds that entitle the lessor to receive substantially all the economic benefits of the leased portion of the property. Auchan and Carrefour are the two largest hypermarket operators in Europe.

            We also hold real estate interests in four joint ventures in Japan, one in Mexico, and one in Canada. The four centers in Japan are Premium Outlets that have over 1.1 million square feet of GLA and were 100% leased as of December 31, 2004. These four Premium Outlets contained 524 stores with approximately 270 different tenants. The Mexico Premium Outlet center opened in December of 2004 and our shopping center in Canada was opened in 2001.

            The following summarizes our ownership of our six other international joint venture Properties:

Investment
   Ownership
Interest
  
Gotemba Premium Outlets — Gotemba City (Tokyo), Japan   40.0 %
Rinku Premium Outlets — Izumisano (Osaka), Japan   40.0 %
Sano Premium Outlets — Sano (Tokyo), Japan   40.0 %
Tosu Premium Outlets — Fukuoka (Kyushu), Japan   40.0 %
Forum Entertainment Centre — Montreal, Canada   38.1 %
Punta Norte Premium Outlets — Mexico City, Mexico   50.0 %

            The following property table summarizes certain data on our properties located in Europe, Japan, Mexico, and Canada.

30

Simon Property Group, L.P. and Subsidiaries
International Property Table

 
    
    
    
    
    
   Gross Leasable Area (1)
    
 
   Property Name
   City (Metropolitan area)
   Ownership Interest
   SPG Ownership
   Year Built
   Hypermarket/
Anchor (4)
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
    FRANCE                        
1.   Bay 2   Torcy (Paris)   Freehold   34.7 % 2003   132,400   408,900   541,300   Carrefour, Leroy Merlin
2.   Bay 1   Torcy (Paris)   Freehold   34.7 % 2004   —   336,300   336,300   Conforama, Go Sport
3.   Bel'Est   Bagnolet (Paris)   Freehold   12.1 % 1992   150,700   63,000   213,700   Auchan
4.   Villabé A6   Villabé (Paris)   Freehold   5.2 % 1992   102,300   104,500   206,800   Carrefour
                       
 
 
   
        Subtotal France           385,400   912,700   1,298,100    

 
 
ITALY
 
 
 
 
 
 
 
 
 
 
 
 
5.   Ancona — Senigallia   Senigallia (Ancona)   Freehold   49.0 % 1995   41,200   41,600   82,800   Cityper
6.   Ascoli Piceno — Grottammare   Grottammare (Ascoli Piceno)   Freehold   49.0 % 1995   38,900   55,900   94,800   Cityper
7.   Ascoli Piceno — Porto Sant'Elpidio   Porto Sant'Elpidio (Ascoli Piceno)   Freehold   49.0 % 1999   48,000   114,300   162,300   Cityper
8.   Bari — Casamassima   Casamassima (Bari)   Freehold   49.0 % 1995   159,000   388,800   547,800   Auchan, Coin, Eldo, Bata, Leroy Merlin, Decathlon
9.   Bari — Modugno (5)   Modugno (Bari)   Freehold   49.0 % 2004   96,900   46,600   143,500   Auchan, euronics, Decathlon
10.   Brescia — Mazzano   Mazzano (Brescia)   Freehold/Leasehold (2)   49.0 % (2) 1994   103,300   127,400   230,700   Auchan, Bricocenter, Upim
11.   Brindisi — Mesagne   Mesagne (Brindisi)   Freehold   49.0 % 2003   88,000   140,600   228,600   Auchan
12.   Cagliari — Santa Gilla   Cagliari   Freehold   49.0 % (2) 1992   75,900   114,800   190,700   Auchan, Bricocenter
13.   Catania — La Rena   Catania   Freehold   49.0 % 1998   124,100   22,100   146,200   Auchan
14.   Cuneo   Cuneo (Torino)   Freehold   49.0 % 2004   80,700   201,500   282,200   Auchan, Bricocenter
15.   Milano — Rescaldina   Rescaldina (Milano)   Freehold   49.0 % 2000   165,100   212,000   377,100   Auchan, Bricocenter, Decathlon, Media World
16.   Milano — Vimodrone   Vimodrone (Milano)   Freehold   49.0 % 1989   110,400   80,200   190,600   Auchan, Bricocenter
17.   Napoli — Pompei   Pompei (Napoli)   Freehold   49.0 % 1990   74,300   17,100   91,400   Auchan
18.   Padova   Padova   Freehold   49.0 % 1989   73,300   32,500   105,800   Auchan
19.   Palermo   Palermo   Freehold   49.0 % 1990   73,100   9,800   82,900   Auchan
20.   Pesaro — Fano   Fano (Pesaro)   Freehold   49.0 % 1994   56,300   56,000   112,300   Auchan
21.   Pescara   Pescara   Freehold   49.0 % 1998   96,300   65,200   161,500   Auchan
22.   Pescara — Cepagatti   Cepagatti (Pescara)   Freehold   49.0 % 2001   80,200   189,600   269,800   Auchan, Bata
23.   Piacenza — San Rocco al Porto   San Rocco al Porto (Piacenza)   Freehold   49.0 % 1992   104,500   74,700   179,200   Auchan, Darty
24.   Roma — Collatina   Collatina (Roma)   Freehold   49.0 % 1999   59,500   4,100   63,600   Auchan
25.   Sassari — Predda Niedda   Predda Niedda (Sassari)   Freehold/Leasehold (2)   49.0 % (2) 1990   79,500   154,200   233,700   Auchan, Bricocenter
26.   Taranto   Taranto   Freehold   49.0 % 1997   75,200   126,500   201,700   Auchan, Bricocenter
27.   Torino   Torino   Freehold   49.0 % 1989   105,100   66,700   171,800   Auchan
28.   Torino — Venaria   Venaria (Torino)   Freehold   49.0 % 1982   101,600   64,000   165,600   Auchan, Bricocenter
29.   Venezia — Mestre   Mestre (Venezia)   Freehold   49.0 % 1995   114,100   132,600   246,700   Auchan
30.   Vicenza   Vicenza   Freehold   49.0 % 1995   78,400   20,100   98,500   Auchan
31.   Ancona   Ancona   Leasehold (3)   49.0 % (3) 1993   82,900   82,300   165,200   Auchan
32.   Bergamo   Bergamo   Leasehold (3)   49.0 % (3) 1976   103,000   16,900   119,900   Auchan
33.   Brescia — Concesio   Concesio (Brescia)   Leasehold (3)   49.0 % (3) 1972   89,900   27,600   117,500   Auchan
34.   Cagliari — Marconi   Cagliari   Leasehold (3)   49.0 % (3) 1994   83,500   109,900   193,400   Auchan, Bricocenter, Bata
35.   Catania — Misterbianco   Misterbianco (Catania)   Leasehold (3)   49.0 % (3) 1989   83,300   16,000   99,300   Auchan
36.   Merate — Lecco   Merate (Lecco)   Leasehold (3)   49.0 % (3) 1976   73,500   88,500   162,000   Auchan, Bricocenter

31

Simon Property Group, L.P. and Subsidiaries
International Property Table

 
    
    
    
    
    
   Gross Leasable Area (1)
    
 
   Property Name
   City (Metropolitan area)
   Ownership Interest
   SPG Ownership
   Year Built
   Hypermarket/ Anchor (4)
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
37.   Milano — Cinisello — Balsamo   Cinisello — Balsamo (Milano)   Leasehold (3)   49.0 % (3) 1993   68,400   18,600   87,000   Auchan
38.   Milano — Nerviano   Nerviano (Milano)   Leasehold (3)   49.0 % (3) 1991   83,800   27,800   111,600   Auchan
39.   Napoli — Mugnano di Napoli   Mugnano di Napoli   Leasehold (3)   49.0 % (3) 1992   98,000   94,900   192,900   Auchan, Bricocenter
40.   Olbia   Olbia   Leasehold (3)   49.0 % (3) 1993   49,000   48,800   97,800   Auchan
41.   Roma — Casalbertone   Roma   Leasehold (3)   49.0 % (3) 1998   62,700   84,900   147,600   Auchan
42.   Sassari — Centro Azuni   Sassari   Leasehold (3)   49.0 % (3) 1995   —   35,600   35,600    
43.   Torino — Rivoli   Rivoli (Torino)   Leasehold (3)   49.0 % (3) 1986   61,800   32,300   94,100   Auchan
44.   Verona — Bussolengo   Bussolengo (Verona)   Leasehold (3)   49.0 % (3) 1975   89,300   75,300   164,600   Auchan, Bricocenter
                       
 
 
   
        Subtotal Italy           3,332,000   3,318,300   6,650,300    

 
 
POLAND
 
 
 
 
 
 
 
 
 
 
 
 
45.   Arkadia Shopping Center   Warsaw       34.7 % 2004   202,100   902,400   1,104,500   Carrefour, Leroy Merlin, Media, Saturn, Cinema City, H & M, Zara, Royal Collection, Peek & Clopperburg
46.   Borek Shopping Center   Wroclaw   Freehold   34.7 % 1999   119,900   129,300   249,200   Carrefour
47.   Dabrowka Shopping Center   Katowice   Freehold   34.7 % 1999   121,000   172,900   293,900   Carrefour, Castorama
48.   Turzyn Shopping Center   Szczecin   Freehold   34.7 % 2001   87,200   120,900   208,100   Carrefour
49.   Wilenska Station Shopping Center   Warsaw   Freehold   34.7 % 2002   92,700   215,900   308,600   Carrefour
50.   Zakopianka Shopping Center   Krakow   Freehold   34.7 % 1998   120,200   425,400   545,600   Carrefour, Castorama
                       
 
 
   
        Subtotal Poland           743,100   1,966,800   2,709,900    

 
 
PORTUGAL
 
 
 
 
 
 
 
 
 
 
 
 
51.   Minho center   Braga (Porto)   Leasehold (3)   34.7 % (3) 1997   120,000   99,100   219,100   Carrefour, Toys R Us, Sport Zone
                       
 
 
   
                        120,000   99,100   219,100    

32

Simon Property Group, L.P. and Subsidiaries
International Property Table

 
    
    
    
    
    
   Gross Leasable Area (1)
    
 
   Property Name
   City (Metropolitan area)
   Ownership Interest
   SPG Ownership
   Year Built
   Hypermarket/
Anchor (4)
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants

 
 
JAPAN
 
 
 
 
 
 
 
 
 
 
 
 
52.   Gotemba Premium Outlets   Gotemba City (Tokyo)   Ground Lease (2019)   40.0 % 2000   —   390,000   390,000   Bally, Coach, Diesel, Gap, Gucci, Jill Stuart, L.L. Bean, Nike, Tod's
53.   Rinku Premium Outlets   Izumisano (Osaka)   Ground Lease (2020)   40.0 % 2000   —   321,000   321,000   Bally, Brooks Brothers, Coach, Eddie Bauer, Gap, Nautica, Nike, Timberland, Versace
54.   Sano Premium Outlets   Sano (Tokyo)   Ground Lease (2022)   40.0 % 2003   —   228,766   228,766   Bally, Brooks Brothers, Coach, Nautica, New Yorker, Nine West, Timberland
55.   Tosu Premium Outlets   Fukuoka (Kyushu)   Ground Lease (2023)   40.0 % 2004   —   187,000   187,000   BCBG, Bose, Coach, Cole Haan, Lego, Nike, Petit Bateau, Max Azria, Theory
                       
 
 
   
        Subtotal Japan           —   1,126,766   1,126,766    

 
 
MEXICO
 
 
 
 
 
 
 
 
 
 
 
 
56.   Punta Norte Premium Outlets   Mexico City   Fee   50.0 % 2004   —   232,000   232,000   Christian Dior, Sony, Nautica, Levi's, Nike Rockport, Reebok, Adidas, Samsonite
                       
 
 
   
        Subtotal Mexico           —   232,000   232,000    

 
 
CANADA
 
 
 
 
 
 
 
 
 
 
 
 
57.   Forum Entertainment Centre   Montreal   Fee   38.1 % 2001   —   247,000   247,000    
                       
 
 
   
        TOTAL INTERNATIONAL ASSETS           4,580,500   7,902,666   12,483,166    
                       
 
 
   

FOOTNOTES:

(1)
All gross leasable area listed in square feet.

(2)
This property is held partially in fee and partially encumbered by a leasehold on the premise which entitles the lessor to the majority of the economics of the portion of the property subject to the leasehold.

(3)
This property is encumbered by a leasehold on the entire premises which entitles the lessor the majority of the economics of the property.

(4)
Represents the sales area of the anchor and excludes any warehouse/storage areas.

(5)
Gallerie Commerciali Italia, in which we have a 49% joint venture interest, has been notified by an Italian appellate court that the center which opened in February 2004, though properly permitted, was not in accordance with the Modugno master plan. The joint venture is appealing the decision of the appellate court and is otherwise working to resolve the issue. The center remains open. The joint venture partner has indemnified us for the amount of our allocated investment in the project.

33

            We have direct or indirect ownership interests in twelve parcels of land held in the United States for future development, containing an aggregate of approximately 600 acres located in five states.

            The following table sets forth certain information regarding the mortgages and other debt encumbering the Properties. Substantially all of the mortgage and property related debt is nonrecourse to us.

34


Mortgage and Other Debt on Portfolio Properties
As of December 31, 2004
(Dollars in thousands)

Property Name
   Interest
Rate
   Face
Amount
   Annual Debt
Service
   Maturity
Date
  
Consolidated Indebtedness:                      

Secured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Simon Property Group, LP:                      
Anderson Mall   6.20 % $ 29,414   $ 2,216   10/10/12  
Arsenal Mall — 1   6.75 %   32,501     2,724   09/28/08  
Arsenal Mall — 2   8.20 %   1,652     286   05/05/16  
Bangor Mall   7.06 %   23,427     2,302   12/01/07  
Battlefield Mall   4.60 %   100,000     4,603   (2) 07/01/13  
Biltmore Square   7.95 %   26,000     2,067   (2) 12/11/10   (30)
Bloomingdale Court   7.78 %   28,337   (4)   2,578   11/01/09  
Boardman Plaza   5.94 %   23,598     1,402   (2) 07/01/14  
Brunswick Square   5.65 %   86,000     4,859   (2) 08/11/14  
Carolina Premium Outlets — Smithfield   9.10 %   20,681   (6)   2,114   03/10/13  
Century III Mall   6.20 %   86,827   (10)   6,541   10/10/12  
Cheltenham Square   5.89 %   54,941     3,236   07/01/14  
Chesapeake Center   8.44 %   6,563   (32)   554   (2) 06/15/05   (30)
Chesapeake Square   5.84 %   73,000     4,263   (2) 08/01/14  
Cielo Vista Mall — 1   9.38 %   49,943   (5)   5,828   05/01/07  
Cielo Vista Mall — 3   6.76 %   36,033   (5)   3,039   05/01/07  
College Mall — 1   7.00 %   35,653   (8)   3,908   01/01/09  
College Mall — 2   6.76 %   11,103   (8)   935   01/01/09  
Copley Place   7.44 %   177,677     16,266   08/01/07  
Coral Square   8.00 %   87,962     8,065   10/01/10  
The Crossings Premium Outlets   5.85 %   59,127     4,649   03/13/13  
Crossroads Mall   6.20 %   43,608     3,285   10/10/12  
Crystal River   7.63 %   15,707     1,385   11/11/10   (30)
Dare Centre   9.10 %   1,722   (6)   176   03/10/13   (30)
DeKalb Plaza   5.28 %   3,500     284   01/01/15  
Desoto Square   5.89 %   64,153     3,779   (2) 07/01/14  
The Factory Shoppes at Branson Meadows   9.10 %   9,618   (6)   983   03/10/13   (30)
Factory Stores of America — Boaz   9.10 %   2,813   (6)   287   03/10/13   (30)
Factory Stores of America — Georgetown   9.10 %   6,666   (6)   681   03/10/13   (30)
Factory Stores of America — Graceville   9.10 %   1,981   (6)   202   03/10/13   (30)
Factory Stores of America — Lebanon   9.10 %   1,664   (6)   170   03/10/13   (30)
Factory Stores of America — Nebraska City   9.10 %   1,563   (6)   160   03/10/13   (30)
Factory Stores of America — Story City   9.10 %   1,933   (6)   198   03/10/13   (30)
Forest Mall   6.20 %   17,463   (11)   1,316   10/10/12  
Forest Plaza   7.78 %   15,542   (4)   1,414   11/01/09  
Forum Shops at Caesars, The   4.78 %   550,000     26,312   (2) 12/01/10  
Gateway Shopping Center   3.35 %  (1)   86,000     2,881   (2) 03/31/08   (3)
Gilroy Premium Outlets   6.99 %   67,242   (7)   6,236   07/11/08   (30)
Greenwood Park Mall — 1   7.00 %   29,861   (8)   3,273   01/01/09  
Greenwood Park Mall — 2   6.76 %   57,365   (8)   4,831   01/01/09  
Grove at Lakeland Square, The   8.44 %   3,750   (32)   317   (2) 06/15/05   (30)
Gulf View Square   8.25 %   33,402     3,652   10/01/06  
Henderson Square   6.94 %   15,453     1,270   07/01/11  
Highland Lakes Center   6.20 %   16,097   (10)   1,213   10/10/12  
Ingram Park Mall   6.99 %   81,527   (24)   6,724   08/11/11  
Keystone at the Crossing   7.85 %   59,594     5,642   07/01/27  
Kittery Premium Outlets   6.99 %   11,132   (7)   1,028   07/11/08   (30)
Knoxville Center   6.99 %   61,737   (24)   5,092   08/11/11  
Lake View Plaza   7.78 %   20,660   (4)   1,880   11/01/09  
Lakeline Mall   7.65 %   67,455     6,300   05/01/07  
Lakeline Plaza   7.78 %   22,651   (4)   2,061   11/01/09  
Las Vegas Outlet Center   8.12 %   21,789     3,712   12/10/12  
Lighthouse Place Premium Outlets   6.99 %   46,399   (7)   4,286   07/11/08   (30)
Lincoln Crossing   7.78 %   3,127   (4)   285   11/01/09  
Longview Mall   6.20 %   32,681   (10)   2,462   10/10/12  
MacGregor Village   9.10 %   6,926   (6)   708   03/10/13   (30)
Mall of Georgia Crossing   4.40 %  (1)   32,575     2,825   06/09/06  
                       

35

Markland Mall   6.20 %   23,122   (11)   1,742   10/10/12  
Matteson Plaza   7.78 %   9,098   (4)   828   11/01/09  
McCain Mall — 1   9.38 %   23,320   (5)   2,721   05/01/07  
McCain Mall — 2   6.76 %   16,632   (5)   1,402   05/01/07  
Midland Park Mall   6.20 %   33,756   (11)   2,543   10/10/12  
Montgomery Mall   5.17 %   95,264     6,307   05/11/14   (30)
Muncie Plaza   7.78 %   7,866   (4)   716   11/01/09  
North East Mall   3.78 %  (1)   140,000     5,285   (2) 05/20/05  
Northfield Square   6.05 %   31,553     2,485   02/11/14  
Northlake Mall   6.99 %   71,221   (24)   5,874   08/11/11  
North Ridge Shopping Center   9.10 %   8,459   (6)   865   03/10/13   (30)
Oxford Valley Mall   6.76 %   84,397     7,801   01/10/11  
Paddock Mall   8.25 %   26,566     2,905   10/01/06  
Palm Beach Mall   6.20 %   53,999     4,068   10/10/12  
Penn Square Mall   7.03 %   70,305     6,003   03/01/09   (30)
Plaza Carolina — Fixed   5.10 %   98,996     7,085   05/09/09  
Plaza Carolina — Variable Capped   3.30 %  (36)   99,209     5,880   05/09/09   (3)
Plaza Carolina — Variable Floating   3.30 %  (1)   59,525     3,528   05/09/09   (3)
Port Charlotte Town Center   7.98 %   52,877     4,680   12/11/10   (30)
Raleigh Springs Mall   4.40 %  (31)   10,877     479   (2) 12/09/05  
Regency Plaza   7.78 %   4,264   (4)   388   11/01/09  
Richmond Towne Square   6.20 %   47,413   (11)   3,572   10/10/12  
Riverway   3.55 %  (18)   110,000     3,905   (2) 10/01/06   (3)
St. Charles Towne Plaza   7.78 %   27,294   (4)   2,483   11/01/09  
St. Johns Town Center   3.65 %  (1)   100,022     3,651   (2) 03/12/08   (3)
Stanford Shopping Center   3.60 %  (12)   220,000     7,920   (2) 09/11/08  
Sunland Park Mall   8.63 %  (14)   36,647     3,773   01/01/26  
Tacoma Mall   7.00 %   130,308     10,778   10/01/11  
Terrace at Florida Mall, The   8.44 %   4,688   (32)   396   (2) 06/15/05   (30)
Towne East Square — 1   7.00 %   47,329     4,711   01/01/09  
Towne East Square — 2   6.81 %   23,145     1,958   01/01/09  
Towne West Square   6.99 %   53,366   (24)   4,402   08/11/11  
Treasure Coast Square — 1   7.13 %   50,254     3,583   (2) 01/01/06  
Treasure Coast Square — 2   7.77 %   11,736     912   (2) 01/01/06  
Trolley Square   9.03 %   28,918     2,880   08/01/10   (30)
University Park Mall   7.43 %   58,189     4,958   10/01/07  
Upper Valley Mall   5.89 %   47,904     2,822   (2) 07/01/14  
Valle Vista Mall — 1   9.38 %   30,887   (5)   3,604   05/01/07  
Valle Vista Mall — 2   6.81 %   7,397   (5)   626   05/01/07  
Washington Square   5.94 %   30,693     1,823   07/01/14  
Waterloo Premium Outlets   6.99 %   37,370   (7)   3,452   07/11/08   (30)
West Ridge Mall   5.89 %   68,711     4,047   (2) 07/01/14  
West Ridge Plaza   7.78 %   5,498   (4)   500   11/01/09  
White Oaks Mall   3.50 %  (1)   48,563     1,700   (2) 02/25/08   (3)
White Oaks Plaza   7.78 %   16,775   (4)   1,526   11/01/09  
Wolfchase Galleria   7.80 %   73,292     6,911   06/30/07  
Woodland Hills Mall   7.00 %   84,180     7,185   01/01/09   (30)
       
           
  Total Consolidated Secured Indebtedness       $ 4,987,680            

36


Unsecured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Simon Property Group, LP:                      
Unsecured Revolving Credit Facility   3.05 %  (16) $ 425,000   $ 12,963   (2) 04/16/06   (3)
Medium Term Notes — 1   7.13 %   100,000     7,125   (15) 06/24/05  
Medium Term Notes — 2   7.13 %   180,000     12,825   (15) 09/20/07  
SPG, L.P. Unsecured Euro Term Loan   2.73 %  (9)   268,695     7,330   (2) 12/16/06   (3)
SPG, L.P. Unsecured Term Loan   3.05 %  (1)   250,000     7,625   (2) 04/01/07   (3)
Unsecured 1.8B Chelsea Acquisition Facility   2.95 %  (1)   1,800,000     53,100   (2) 10/14/06  
Unsecured Notes — 1   6.88 %   250,000     17,188   (15) 11/15/06  
Unsecured Notes — 2B   7.00 %   150,000     10,500   (15) 07/15/09  
Unsecured Notes — 3   6.88 %   150,000     10,313   (15) 10/27/05  
Unsecured Notes — 4B   6.75 %   300,000     20,250   (15) 06/15/05  
Unsecured Notes — 4C   7.38 %   200,000     14,750   (15) 06/15/18  
Unsecured Notes — 5B   7.13 %   300,000     21,375   (15) 02/09/09  
Unsecured Notes — 6A   7.38 %   300,000     22,125   (15) 01/20/06  
Unsecured Notes — 6B   7.75 %   200,000     15,500   (15) 01/20/11  
Unsecured Notes — 7   6.38 %   750,000     47,813   (15) 11/15/07  
Unsecured Notes — 8A   6.35 %   350,000     22,225   (15) 08/28/12  
Unsecured Notes — 8B   5.38 %   150,000     8,063   (15) 08/28/08  
Unsecured Notes — 9A   4.88 %   300,000     14,625   (15) 03/18/10  
Unsecured Notes — 9B   5.45 %   200,000     10,900   (15) 03/15/13  
Unsecured Notes — 10A   3.75 %   300,000     11,250   (15) 01/30/09  
Unsecured Notes — 10B   4.90 %   200,000     9,800   (15) 01/30/14  
Unsecured Notes — 11A   4.88 %   400,000     19,500   (15) 08/15/10  
Unsecured Notes — 11B   5.63 %   500,000     28,125   (15) 08/15/14  
Mandatory Par Put Remarketed Securities   7.00 %   200,000     14,000   (15) 06/15/08   (17)
       
           
          8,223,695            

Shopping Center Associates, subsidiary:
 
 
 
 
 
 
 
 
 
 
 
Unsecured Notes — SCA 2   7.63 %   110,000     8,388   (15) 05/15/05  
       
           
          110,000            

The Retail Property Trust, subsidiary:
 
 
 
 
 
 
 
 
 
 
 
Unsecured Notes — CPI 4   7.18 %   75,000     5,385   (15) 09/01/13  
Unsecured Notes — CPI 5   7.88 %   250,000     19,688   (15) 03/15/16  
       
           
          325,000            

CPG Partners, LP, subsidiary:
 
 
 
 
 
 
 
 
 
 
 
Term Loan   7.26 %  (39)   60,475     5,392   04/27/10  
Yen Credit Facility   1.31 %  (40)   11,845   (41)   155   (2) 04/01/05  
Peso Credit Facility   10.56 %  (29)   12,514   (42)   1,321   (2) 01/27/07  
8.375% Notes due August 2005   8.38 %   50,000     4,188   (15) 08/17/05  
7.250% Notes due October 2007   7.25 %   125,000     9,063   (15) 10/21/07  
3.500% Notes due March 2009   3.50 %   100,000     3,500   (15) 03/15/09  
8.625% Notes due August 2009   8.63 %   50,000     4,313   (15) 08/17/09  
8.250% Notes due February 2011   8.25 %   150,000     12,375   (15) 02/01/11  
6.875% Notes due June 2012   6.88 %   100,000     6,875   (15) 06/15/12  
6.000% Notes due January 2013   6.00 %   150,000     9,000   (15) 01/15/13  
       
           
          809,834            
       
           
  Total Consolidated Unsecured Indebtedness       $ 9,468,529            
       
           
  Total Consolidated Indebtedness at Face Amounts       $ 14,456,209            
  Fair Value Interest Rate Swaps         (4,447)   (28)          
  Net Premium on Indebtedness         161,826            
  Net Discount on Indebtedness         (27,195 )          
       
           
  Total Consolidated Indebtedness       $ 14,586,393   (23)          
       
           

37


Joint Venture Indebtedness:
 
 
 
 
 
 
 
 
 
 
 

Secured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Apple Blossom Mall   7.99 % $ 39,159   $ 3,607   09/10/09  
Arkadia Shopping Center   4.28 %  (38)   143,398     11,871   11/01/14  
Atrium at Chestnut Hill   6.89 %   47,264     3,880   03/11/11   (30)
Auburn Mall   7.99 %   45,845     4,222   09/10/09  
Aventura Mall — A   6.55 %   141,000     9,231   (2) 04/06/08  
Aventura Mall — B   6.60 %   25,400     1,675   (2) 04/06/08  
Aventura Mall — C   6.89 %   33,600     2,314   (2) 04/06/08  
Avenues, The   5.29 %   78,100     5,325   04/01/13  
Bay 1 (Torcy)   3.93 %  (38)   19,511     1,352   12/01/11  
Bay 2 (Torcy)   3.33 %  (38)   74,525     4,813   06/01/13  
Borek Shopping Center   6.19 %   19,634     3,050   02/01/12  
Cape Cod Mall   6.80 %   96,084     7,821   03/11/11  
Circle Centre Mall   5.02 %   78,122     5,165   04/11/13  
Clay Terrace Partners   3.90 %  (1)   80,008     3,120   (2) 01/20/08   (3)
CMBS Loan — Fixed (encumbers 13 Properties)   7.52 %   357,100   (19)   26,871   (2) 05/15/06  
CMBS Loan — 1 Floating (encumbers 13 Properties)   2.81 %  (1)   186,500   (19)   5,241   (2) 05/15/06  
CMBS Loan — 2 Floating (encumbers 13 Properties)   2.77 %  (1)   81,400   (19)   2,254   (2) 05/15/06  
Cobblestone Court   7.64 %   10,597   (20)   810   (2) 01/01/06  
Crystal Court   7.64 %   2,767   (20)   211   (2) 01/01/06  
Crystal Mall   5.62 %   102,952     7,319   09/11/12   (30)
Dabrowka Shopping Center   6.22 %   5,818   (38)   812   07/01/14  
Dadeland Mall   6.75 %   194,127     15,566   02/11/12   (30)
Emerald Square Mall   5.13 %   141,507     9,479   03/01/13  
Fairfax Court   7.64 %   12,997   (20)   993   (2) 01/01/06  
Fashion Centre Pentagon Retail   6.63 %   161,181     12,838   09/11/11   (30)
Fashion Centre Pentagon Office   3.15 %  (37)   40,000     1,260   (2) 07/09/09   (3)
Fashion Valley Mall — 1   6.49 %   163,936     13,255   10/11/08   (30)
Fashion Valley Mall — 2   6.58 %   29,124     1,915   (2) 10/11/08   (30)
Florida Mall, The   7.55 %   260,274     22,766   12/10/10  
Galleria Commerciali Italia — Facility A   3.18 %  (21)   295,256     15,289   12/22/11   (3)
Galleria Commerciali Italia — Facility B   3.28 %  (34)   347,922     18,364   12/22/11  
Gaitway Plaza   7.64 %   8,997   (20)   687   (2) 01/01/06  
Great Northeast Plaza   9.04 %   16,511     1,744   06/01/06  
Greendale Mall   8.23 %   40,326     3,779   12/10/06  
Gotemba Premium Outlets — Fixed   2.00 %   12,082   (33)   1,411   10/25/14  
Gotemba Premium Outlets — Variable   2.10 %  (13)   26,988   (33)   4,660   09/30/07  
Gwinnett Place — 1   7.54 %   36,894     3,412   04/01/07  
Gwinnett Place — 2   7.25 %   81,550     7,070   04/01/07  
Highland Mall   6.83 %   68,513     5,571   07/11/11  
Houston Galleria — 1   7.93 %   215,378     19,684   12/01/05   (30)
Houston Galleria — 2   3.90 %  (1)   84,711     3,304   (2) 06/25/07   (3)
Indian River Commons   5.21 %   9,645     503   (2) 11/01/14  
Indian River Mall   5.21 %   65,355     3,408   (2) 11/01/14  
King of Prussia Mall — 1   7.49 %   183,906     23,183   01/01/17  
King of Prussia Mall — 2   8.53 %   12,683     1,685   01/01/17  
Lehigh Valley Mall   7.90 %   46,091     4,959   10/10/06  
Liberty Tree Mall   5.22 %   35,000     1,827   (2) 10/11/13  
Mall at Rockingham   7.88 %   95,748     8,705   09/01/07  
Mall at Chestnut Hill   8.45 %   14,536     1,396   02/02/10  
Mall of Georgia   7.09 %   197,450     16,649   07/01/10  
Mall of New Hampshire — 1   6.96 %   99,108     8,345   10/01/08   (30)
Mall of New Hampshire — 2   8.53 %   8,164     786   10/01/08  
Metrocenter   8.45 %   28,154     3,031   02/28/08  
Miami International Mall   5.35 %   97,500     5,216   (2) 10/01/13  
Montreal Forum — Canada   5.76 %  (22)   46,278     2,666   (2) 08/08/06   (3)
Northshore Mall   5.03 %   210,000     10,553   (2) 03/11/14   (30)
Quaker Bridge Mall   7.03 %   23,339     2,407   04/01/16  
Plaza at Buckland Hills, The   7.64 %   17,072   (20)   1,304   (2) 01/01/06  
                       

38

Ridgewood Court   7.64 %   7,447   (20)   569   (2) 01/01/06  
Rinku Premium Outlets   2.33 %   45,114   (33)   5,834   10/25/14  
Sano Premium Outlets   2.45 %   50,226   (33)   6,941   08/31/09  
Seminole Towne Center   3.05 %  (26)   70,000     2,135   (2) 06/30/09   (3)
Shops at Sunset Place, The   3.15 %  (25)   98,276     5,395   05/09/09   (3)
Smith Haven Mall   7.86 %   115,000     9,039   (2) 06/01/06  
Solomon Pond   3.97 %   114,000     4,523   (2) 08/01/13  
Source, The   6.65 %   124,000     8,246   (2) 03/11/09  
Square One   6.73 %   92,341     7,380   03/11/12  
Toki Premium Outlets   1.14 %  (13)   15,590   (33)   1,932   10/30/09  
Tosu Premium Outlets   2.60 %   15,975   (33)   2,244   08/24/13  
Town Center at Cobb — 1   7.54 %   46,948     4,347   04/01/07  
Town Center at Cobb — 2   7.25 %   62,001     5,381   04/01/07  
Turzyn Shopping Center   6.56 %   27,494     3,488   06/01/14  
Villabe A6 — Bel'Est   3.13 %  (38)   13,790     918   08/01/11  
Village Park Plaza   7.64 %   18,377   (20)   1,404   (2) 01/01/06  
West Town Corners   7.64 %   10,997   (20)   840   (2) 01/01/06  
West Town Mall   6.90 %   76,000     5,244   (2) 05/01/08   (30)
Westchester, The — 1   8.74 %   142,640     14,478   09/01/05  
Westchester, The — 2   7.20 %   50,376     4,399   09/01/05  
Whitehall Mall   6.77 %   13,816     1,282   11/01/08  
Wilenska Station Shopping Center   4.08 %  (38)   44,112     3,941   11/01/13  
Willow Knolls Court   7.64 %   10,722   (20)   819   (2) 01/01/06  
Zakopianka Shopping Center   6.82 %   18,264     3,183   12/01/11  
       
           
  Total Joint Venture Secured Indebtedness at Face Amounts       $ 6,380,593            

Unsecured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Galleria Commerciali Italia — Facility C   2.78 %  (35)   17,191     478   (2) 12/22/08   (3)
       
           
Total Joint Venture Unsecured Indebtedness         17,191            
 
Net Premium on Indebtedness
 
 
 
 
4,664
 
 
 
 
 
 
  Net Discount on Indebtedness         (4,136 )          
       
           
  Total Joint Venture Indebtedness       $ 6,398,312   (27)          
       
           

(Footnotes on following page)

39

(Footnotes for preceding pages)

(1)
Variable rate loans based on LIBOR plus interest rate spreads ranging from 37 bps to 200 bps. LIBOR as of December 31, 2004 was 2.40%.

(2)
Requires monthly payment of interest only.

(3)
Includes applicable extension available at the Operating Partnership's option.

(4)
Loans secured by these eleven Properties are cross-collateralized and cross-defaulted.

(5)
Loans secured by these three Properties are cross-collateralized and cross-defaulted.

(6)
Loans secured by these eleven Properties are cross-collateralized and cross-defaulted.

(7)
Loans secured by these four Properties are cross-collateralized and cross-defaulted.

(8)
Loans secured by these two Properties are cross-collateralized and cross-defaulted.

(9)
Euribor + 0.600%. Euros 200 million term loan. As of December 31, 2004, Euros 3.1 million available after outstanding borrowings.

(10)
Loans secured by these three Properties are cross-collateralized.

(11)
Loans secured by these four Properties are cross-collateralized.

(12)
Simultaneous with the issuance of this loan, the Operating Partnership entered into a $70 million notional amount variable rate swap agreement which is designated as a hedge against this loan. As of December 31, 2004, after including the impacts of this swap, the terms of the loan are effectively $150 million fixed at 3.60% and $70 million variable rate at 2.3850%.

(13)
Variable rate loans based on Yen LIBOR plus interest rate spreads ranging from 50 bps to 187.5 bps. Yen LIBOR as of December 31, 2004 was 0.3938%.

(14)
Lender also participates in a percentage of certain gross receipts above a specified base. No additional interest was due in 2004.

(15)
Requires semi-annual payments of interest only.

(16)
$1,250,000 Credit Facility. As of December 31, 2004, the Credit Facility bears interest at LIBOR + 0.650% and provides for different pricing based upon the Operating Partnership's investment grade rating. As of December 31, 2004, an interest rate cap agreement limits LIBOR on $48,050 of this indebtedness to 12.787%. As of December 31, 2004, $786,869 was available after outstanding borrowings and letters of credit.

(17)
The MOPPRS have an actual maturity of June 15, 2028, but are subject to mandatory redemption on June 15, 2008.

(18)
LIBOR + 1.150% with LIBOR capped at 8.100%.

(19)
These Commercial Mortgage Notes are secured by cross-collateralized mortgages encumbering thirteen Properties (Eastland Mall, Empire East, Empire Mall, Granite Run Mall, Mesa Mall, Lake Square, Lindale Mall, Northpark Mall, Southern Hills Mall, Southpark Mall, Southridge Mall, Rushmore Mall, and Valley Mall). A weighted average rate is used for each component. The floating components have interest protection agreements which caps LIBOR at 10.63% and 11.83% respectively.

(20)
Loans secured by these nine Properties are cross-collateralized and cross-defaulted.

(21)
Debt is denominated in Euros and bears interest at Euribor + 1.05%. Debt consists of a Euros 269.0 million tranche of which Euros 216.4 million is drawn.

(22)
Canadian Banker's Acceptance Rate (CBAR) + 3.000%.

(23)
Our share of consolidated indebtedness was $14,343,726.

(24)
Loans secured by these four Properties are cross-collateralized and cross-defaulted.

(25)
LIBOR + 0.750%, with LIBOR capped at 7.500%.

(26)
LIBOR + 0.650%, with LIBOR capped at 8.500%.

(27)
Our share of joint venture indebtedness was $2,750,327.

(28)
Represents the fair market value of interest rate swaps entered into by the Operating Partnership.

(29)
Interbank Interest Equilibrium Rate (TIIE) + 0.8250%

(30)
The maturity date shown represents the Anticipated Maturity Date of the loan which is typically 10-20 years earlier than the stated Maturity Date of the loan. Should the loan not be repaid at the Anticipated Repayment Date the applicable interest rate shall increase as specified in the loan agreement.

40

(31)
LIBOR + 2.000%, with LIBOR floor at 1.800%.

(32)
Loans secured by these three Properties are cross-collateralized and cross-defaulted.

(33)
Amounts shown in US Dollar Equivalent. Yen equivalent 17,033.9 million

(34)
Debt is denominated in Euros and bears interest at Euribor + 1.15%. Debt consists of a Euros 255 million tranche which is fully drawn.

(35)
Debt is denominated in Euros and bears interest at Euribor + 0.650%. Debt consists of a Euros 150 million tranche of which Euros 12.6 million is drawn.

(36)
LIBOR + 0.900%, with LIBOR capped at 8.250%.

(37)
LIBOR + 0.750%, with LIBOR capped at 8.250%.

(38)
Associated with these loans are interest rate swap agreements with a total combined Euro 195.9 million notional amount that effectively fixed these loans at a combined 5.08%.

(39)
Through an interest rate swap agreement, effectively fixed through January 1, 2006 at the all-in interest rate presented.

(40)
Yen LIBOR + 1.250%

(41)
Amounts shown in USD Equivalent. Yen equivalent is 1,215.7 million.

(42)
Amounts shown in USD Equivalent. Peso equivalent is 139.5 million.

            The changes in mortgages and other indebtedness for the years ended December 31, 2004, 2003, 2002 are as follows:

 
   2004
   2003
   2002
  
Balance, Beginning of Year   $ 10,266,388   $ 9,546,081   $ 8,841,378  
  Additions during period:                    
    New Loan Originations     4,509,640     1,745,275     1,243,267  
    Loans assumed in acquisitions and consolidations     1,387,182     105,131     423,365  
    Net Premium/(Discount)     132,905     (1,308 )   34,536  
  Deductions during period:                    
    Loan Retirements     (1,652,022 )   (1,079,855 )   (922,772 )
    Cost of Mortgages Sold     —     —     (52,179 )
    Amortization of Net (Premiums)/Discounts     (14,043 )   (13,142 )   10,080  
    Scheduled Principal Amortization     (43,657 )   (35,794 )   (31,594 )
   
 
 
 
Balance, Close of Year   $ 14,586,393   $ 10,266,388   $ 9,546,081  
   
 
 
 

41


Item 3.    Legal Proceedings

            On November 15, 2004, the Attorneys General of Massachusetts, New Hampshire and Connecticut filed complaints in their respective state Superior Courts against us and our affiliate, SPGGC, Inc., alleging that the sale of co-branded, bank-issued gift cards sold in certain of its Portfolio Properties violated gift certificate statutes and consumer protection laws in those states. Each of these suits seeks injunctive relief, unspecified civil penalties and disgorgement of any fees determined to be improperly charged to consumers.

            In addition, we are a defendant in three other proceedings relating to the gift card program: Lisa Corbiles and Dana Walicky vs. Simon Property Group, Inc. d/b/a Simon Malls, Superior Court of New Jersey, County of Essex, Docket No: ESX-L-224-04, filed January 6, 2004; Betty Benson and Andrea Nay-Richardson vs. Simon Property Group, Inc., and Simon Property Group, L.P., Superior Court of Cobb County, State of Georgia, Case No.: 04-1-9617-42, filed December 9, 2004; Christopher Lonner vs. Simon Property Group, Inc., Supreme Court of the State of NY, County of Westchester, Case No.: 04-2246, filed February 18, 2004, Erin Reilly, individually and on behalf of all others similarly situated vs. SPG, Inc., SPG, L.P. and SPGGC, Inc., Lee County Circuit Court, Florida, filed February 8, 2005 and Aliza Goldman, individually and on behalf of all others similarly situated vs. Simon Property Group, Inc., Supreme Court of the State of New York, County of Nassau, filed February 7, 2005. Each of these proceedings has been brought by a private plaintiff as a purported class action and alleges violation of state consumer protection laws, state abandoned property and contract laws or state statutes regarding gift certificates or gift cards and seeks a variety of remedies including unspecified damages and injunctive relief.

            On February 3, 2005, the Attorney General of the State of New York filed a petition in the Supreme Court of New York, County of New York against us and Simon Property alleging violations of New York law with respect to gift card sales. The New York proceeding was settled on March 1, 2005.

            We believe that we have viable defenses under both state and federal laws to the gift card actions. Although it is not possible to provide any assurance of the ultimate outcome of any of these pending actions, management does not believe that an adverse outcome would have a material adverse effect on our financial position, results of operations or cash flow.

            Triple Five of Minnesota, Inc., a Minnesota corporation, v. Melvin Simon, et. al.    On or about November 9, 1999, Triple Five of Minnesota, Inc. commenced an action in the District Court for the State of Minnesota, Fourth Judicial District, against, among others, Mall of America, certain members of the Simon family and entities allegedly controlled by such individuals, and us. The action was later removed to federal court. On September 10, 2003, the court issued its decision in a Memorandum and Order (the "Order"). In the Order, the court found that certain entities and individuals breached their fiduciary duties to Triple Five. The court did not award Triple Five damages but instead awarded Triple Five equitable and other relief and imposed a constructive trust on that portion of the Mall of America owned by us. Specifically, as it relates to us, the court ordered that Triple Five was entitled to purchase from us the one-half partnership interest that we purchased in October 1999, provided Triple Five remits to us the sum of $81.38 million within nine months of the Order. On August 6, 2004, Triple Five closed on its purchase of our one-half partnership interest. The court further held that we must disgorge all "net profits" that we received as a result of our ownership interest in the Mall from October 1999 to the present.

            We have appealed the Order and the Ancillary Relief Order to the United States Court of Appeals for the Eighth Circuit. Briefing on the appeals is complete and oral argument took place on October 18, 2004. It is not possible to provide any assurance on the ultimate outcome of this litigation.

            As a result of the Order, we initially recorded a $6.0 million charge for our share of the estimated loss in 2003. In the first quarter of 2004, as a result of the May 3, 2004 memorandum issued by the court appointed mediator, which has now been affirmed by the court, we recorded an additional $13.5 million charge for our share of the loss that is included in "(Loss) gain on sales of assets and other, net" in the accompanying consolidated statements of operations and comprehensive income. We ceased recording any contribution to either net income or Funds from Operations ("FFO") from the results of operations of Mall of America as of September 1, 2003.

            We are also involved in various legal proceedings that arise in the ordinary course of our business. We believe that such routine litigation, claims and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate, the mid point in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded.


Item 4.    Submission of Matters to a Vote of Security Holders

            None.

42


Part II

Item 5.    Market for the Registrant's Common Equity and Related Stockholder Matters

            There is no established public trading market for our units or preferred units. The following table sets forth for the periods indicated, the distributions declared on the units:

 
   Declared
Distribution
2004      
1st Quarter   $ 0.65
2nd Quarter     0.65
3rd Quarter     0.65
4th Quarter     0.65

2003
 
 
 
1st Quarter     0.60
2nd Quarter     0.60
3rd Quarter     0.60
4th Quarter     0.60

            The number of holders of units was 252 as of March 4, 2005.

            We make distributions to Simon Property in order to maintain Simon Property's REIT status under the Internal Revenue Code. To maintain its status, Simon Property is required each year to distribute to its stockholders at least 90% of its taxable income after certain adjustments. Future distributions will be determined at the discretion of the Board of Directors results of operations, cash available for distribution, and what may be required to maintain Simon Property's status as a REIT.

            During the fourth quarter of 2004, we issued 4,652,232 units and 4,753,794 preferred units to the holders of partnership interests in Chelsea's operating partnership and 12,978,795 units and 14,058,660 preferred units to Simon Property with respect to the shares of common and preferred stock it issued to Chelsea shareholders. Also, we issued 116,810 units to Simon Property related to employee stock options that were exercised during the quarter. We used the net proceeds from the option exercises of approximately $3.3 million for general working capital purposes. All of the issuances of units during the quarter were exempt from registration under the Securities Act of 1933, as amended, in reliance upon Section 4(2) as private offerings.

43


Item 6.    Selected Financial Data

            The following tables set forth selected financial data. The selected financial data should be read in conjunction with the financial statements and notes thereto and with Management's Discussion and Analysis of Financial Condition and Results of Operations. Other data we believe is important in understanding trends in the Operating Partnership's business is also included in the tables.

 
   As of or for the Year Ended December 31,
  
 
   2004
   2003 (1)
   2002 (1)
   2001 (1)
   2000 (1)
  
 
   (in thousands, except per share data)

  
OPERATING DATA:                                
  Total consolidated revenue   $ 2,624,466   $ 2,285,188   $ 2,099,659   $ 2,033,310   $ 2,000,711  
  Income from continuing operations     444,822     447,077     539,439     281,196     352,709  
  Net income available to common unitholders   $ 380,711   $ 412,532   $ 482,575   $ 202,051   $ 262,988  

BASIC EARNINGS PER UNIT:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Income from continuing operations   $ 1.43   $ 1.53   $ 1.91   $ 0.87   $ 1.16  
  Discontinued operations     —     0.13     0.08     —     —  
  Cumulative effect of accounting change     —     —     —     (0.01 )   (0.05 )
   
 
 
 
 
 
  Net income   $ 1.43   $ 1.66   $ 1.99   $ 0.86   $ 1.11  
   
 
 
 
 
 
  Weighted average units outstanding     265,405     248,926     242,041     235,750     236,536  

DILUTED EARNINGS PER UNIT:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Income from continuing operations   $ 1.43   $ 1.52   $ 1.91   $ 0.87   $ 1.16  
  Discontinued operations     —     0.13     0.08     —     —  
  Cumulative effect of accounting change     —     —     —     (0.01 )   (0.05 )
   
 
 
 
 
 
  Net income   $ 1.43   $ 1.65   $ 1.99   $ 0.86   $ 1.11  
   
 
 
 
 
 
  Diluted weighted average units outstanding     266,272     249,750     243,631     236,109     236,635  
  Distributions per unit (2)   $ 2.60   $ 2.40   $ 2.18   $ 2.08   $ 2.02  

BALANCE SHEET DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents   $ 519,556   $ 529,036   $ 390,644   $ 252,172   $ 209,755  
  Total assets     21,921,902     15,522,063     14,741,116     13,644,246     13,758,826  
  Mortgages and other indebtedness     14,586,393     10,266,388     9,546,081     8,841,378     8,728,582  
  Partners' equity   $ 5,779,870   $ 4,213,993   $ 4,328,196   $ 4,023,426   $ 4,302,401  

OTHER DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flow provided by (used in): (4)                                
  Operating activities   $ 1,081,418   $ 946,190   $ 880,279   $ 852,212   $ 740,780  
    Investing activities     (2,742,542 )   (760,000 )   (784,495 )   (342,085 )   (144,167 )
    Financing activities   $ 1,651,644   $ (47,798 ) $ 42,688   $ (467,710 ) $ (540,601 )
    Ratio of Earnings to Fixed Charges (3)     1.61x     1.66x     1.81x     1.47x     1.53x  
   
 
 
 
 
 

Notes

(1)
On October 14, 2004 Chelsea Property Group, Inc. was acquired. On May 3, 2002, Rodamco North America N.V. was acquired. In the accompanying financial statements, Note 4 describes acquisitions and disposals.

(2)
Represents distributions declared per period.

(3)
The ratios for 2004, 2003, and 2002 have been restated for the reclassification of discontinued operations described in Note 3. 2002 includes $160.9 million of gains on sales of assets, net, and excluding these gains the ratio would have been 1.57x. 2001 includes a $47,000 impairment charge. Excluding this charge the ratio would have been 1.54x in 2001.

(4)
Certain reclassifications have been made to prior period cash flow information to conform to the current year presentation.

44


Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

            You should read the following discussion in conjunction with the financial statements and notes thereto that are included in this report. Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and it is possible that our 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 incidental to the ownership and operation of commercial real estate include, but are not limited to: national, international, regional and local economic climates, competitive market forces, changes in market rental rates, trends in the retail industry, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks associated with acquisitions, the impact of terrorist activities, environmental liabilities, maintenance of Simon Property's REIT status, the availability of financing, and changes in market rates of interest and fluctuations in exchange rates of foreign currencies. We undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Overview

            Simon Property Group, L.P. (the "Operating Partnership") is a Delaware limited partnership and a majority owned subsidiary of Simon Property Group, Inc. ("Simon Property"). Simon Property is a self-administered and self-managed real estate investment trust ("REIT"). In this discussion, the terms "we", "us" and "our" refer to the Operating Partnership and its subsidiaries.

            We are engaged primarily in the ownership, operation, leasing, management, acquisition, expansion and development of real estate properties. Our real estate properties consist primarily of regional malls, Premium Outlet® centers and community shopping centers. As of December 31, 2004, we owned or held an interest in 296 income-producing properties in the United States, which consisted of 171 regional malls, 71 community shopping centers, 31 Premium Outlet centers and 23 other properties in 40 states plus Puerto Rico (collectively, the "Properties", and individually, a "Property"). Other Properties are properties that include retail space, office space, and/or hotel components. In addition, we also own interests in twelve parcels of land held in the United States for future development (together with the Properties, the "Portfolio"). Finally, we have ownership interests in 51 European shopping centers (in France, Italy, Poland and Portugal); four Premium Outlet centers in Japan; one Premium Outlet center in Mexico; and one shopping center in Canada.

            Our wholly-owned subsidiary, M.S. Management Associates, Inc. (the "Management Company"), provides leasing, management, and development services to most of the Properties. In addition, insurance subsidiaries of the Management Company insure: the self-insured retention portion of our general liability program; the deductible associated with our workers' compensation programs; and provide reinsurance for the primary layer of general liability coverage to our third party maintenance providers while performing services under contract with us. Third party providers provide coverage above the insurance subsidiaries' limits.

            We seek growth in our earnings, funds from operations ("FFO"), and cash flows through:

•
focusing on our core business of regional malls,
•
acquiring individual properties or portfolios of properties, focusing on quality retail real estate. As part of our acquisition strategy, we review and evaluate a number of acquisition opportunities and evaluate each based on its compliment to our Portfolio,
•
pursuing new development as well as strategic expansion and renovation activity to enhance existing assets' profitability and market share when we believe the investment of our capital meets our risk-reward criteria. We seek to selectively develop new properties in major metropolitan areas that exhibit strong population and economic growth.

            To support this growth, our capital strategy is three-fold:

•
to provide the capital necessary to fund growth,
•
to maintain sufficient flexibility to access capital in many forms, both public and private, and
•
to manage our overall financial structure in a fashion that preserves our investment grade ratings.

45

            We own and operate investment properties which generate revenues primarily from long-term leases; therefore, our financing strategy relies primarily on long-term fixed rate debt. We manage our floating rate debt to be approximately 15-20% of total outstanding indebtedness by setting interest modalities for each financing or refinancing based on current market conditions. We also enter into interest rate swap agreements as appropriate to assist in managing our interest rate risk. We believe this strategy is the most appropriate for the long-term health of our company. Our credit facility (which was for a total of $1.25 billion at December 31, 2004) ("Credit Facility") provides a source of liquidity and flexibility in our capital strategy as our cash needs vary from time to time. In January of 2005, the Credit Facility was refinanced and was increased to $2 billion, at substantially equivalent terms, except that the rate was decreased 10 basis points.

            We derive our liquidity primarily from our leases that generate positive net cash flow from operations and distributions from unconsolidated entities that totaled $1.2 billion in 2004. We generate the majority of our revenues from leases with retail tenants including:

•
Base minimum rents, cart and kiosk rentals,
•
Overage and percentage rents based on tenants' sales volume, and
•
Recoveries of a significant amount of our recoverable expenditures, which consist of property operating, real estate tax, repairs and maintenance, and advertising and promotional expenditures.

            Revenues of the Management Company, after intercompany eliminations, consist primarily of management fees that are typically based upon the revenues of the property being managed. We generate revenues from outlot land sales and, due to our size and tenant relationships, from the following:

•
Simon Brand Ventures ("Simon Brand") mall marketing initiatives, including the sale of gift cards. Simon Brand revenues include payment services, national media contracts, a national beverage contract and other contracts with national companies as well as the sale of bank-issued gift cards under the Simon brand.
•
Simon Business Network ("Simon Business") property operating services to our tenants and others resulting from its relationships with vendors.

            Our core business fundamentals remained stable during 2004. Regional mall comparable sales per square foot ("psf") strengthened in 2004, increasing 6.1% to $427 psf from $402 in 2003, as the overall economy begins to show signs of recovery and as a result of the disposition of lower quality properties. Our regional mall average base rents increased 3.8% to $33.50 psf from $32.26 psf. In addition, we maintained strong regional mall leasing spreads of $5.74 psf in 2004 decreasing from $8.29 psf in 2003. The regional mall leasing spread for 2004 includes new store leases signed at an average of $39.33 psf initial base rents as compared to $33.59 psf for store leases terminating or expiring in the same period. Our same store leasing spread for 2004 was $4.99 or a 12.8% growth rate and is calculated by comparing leasing activity completed in 2004 with the prior tenants' rents for those exact same spaces. Finally, our regional mall occupancy was up by 30 basis points to 92.7% as of December 31, 2004 from 92.4% as of December 31, 2003.

            During 2004, we completed acquisitions of 62 properties and increased our ownership in five core Properties through the following transactions aggregating $5.8 billion:

•
On February 5, 2004 we purchased a 95% interest in Gateway Shopping Center in Austin, Texas for approximately $107.0 million.
•
On April 1, 2004, we increased our ownership interest in Mall of Georgia Crossing from 50% to 100% for approximately $26.3 million, including the assumption of our $16.5 million share of debt.
•
On April 27, 2004, we increased our ownership interest in Bangor Mall and Montgomery Mall to approximately 67.6% and 54.4%, respectively for approximately $67.0 million and the assumption of our $16.8 million share of debt.
•
On May 4, 2004, we purchased a 100% interest in Plaza Carolina in San Juan, Puerto Rico for approximately $309.0 million.
•
On October 14, 2004, we completed our acquisition of Chelsea Property Group, Inc. (Chelsea). The acquisition included 32 Premium Outlets, 4 Premium Outlets in Japan, 3 community centers, 21 other retail centers, 1 Premium Outlet in Mexico, and its development portfolio. The purchase price was approximately $5.2 billion including the assumption of debt. As a result, we acquired the remaining 50% interests in two

46

•
On November 19, 2004, we increased our ownership interest in Lehigh Valley, located in Whitehall, Pennsylvania, to 37.6% for approximately $42.3 million, including the assumption of our $25.9 million share of debt.
•
Finally, on December 15, 2004, we increased our ownership interest in Woodland Hills, located in Tulsa, Oklahoma, to approximately 94.5% for $119.5 million, including the assumption of our $39.7 million share of debt.

            We invested approximately $456.0 million in development and redevelopment/expansion opportunities in 2004 for our consolidated properties. We also invested additional amounts through our joint venture interests. We opened the following properties in 2004:

•
Clay Terrace, a 570,000 square foot upscale center located north of Indianapolis, Indiana. Clay Terrace is an open-air shopping center, incorporating a mix of anchor stores, specialty retail stores, unique restaurants and Class A office space. We own the center in a 50/50 joint venture.
•
Phase III expansion of The Forum Shops at Caesars in Las Vegas, a 175,000 square feet expansion for luxury designers, restaurants, and unique retailers. We own 100% of Forum Shops.
•
Chicago Premium Outlets, a 438,000 square foot center located in Aurora, Illinois, 35 miles West of Chicago.

            We expect to invest in excess of $304.5 million in 2005 on development and redevelopment/expansion opportunities on consolidated and joint venture Properties, including the following developments:

•
St. Johns Town Center, a 1.5 million square foot open-air retail project, is under construction in Jacksonville, Florida. The project is comprised of a village component, a community center and a hotel. We will own 85% of this project until certain financial performance hurdles are met, at which time ownership will be 50/50. Gross costs are expected to approximate $158 million.
•
Seattle Premium Outlets is an upscale outlet center under construction in Tulalip, Washington. The center will comprise 383,000 square feet. Gross costs are expected to approximate $58 million and we own 100% of this project.
•
Wolf Ranch is a 670,000 square foot community center located north of Austin, Texas in Georgetown. It will be an open-air, mixed-use shopping center containing a mix of anchor stores, specialty retail stores and unique restaurants. Gross costs are expected to approximate $98 million and we own 100% of this project.
•
Firewheel Town Center is a 785,000 square foot open-air regional shopping center located in Garland, Texas. Gross costs are expected to approximate $132 million and we own 100% of this project.
•
Rockaway Plaza is a 250,000 square foot community center located in Rockaway, New Jersey, adjacent to our Rockaway Townsquare. Gross costs are expected to approximate $39 million and we own 100% of this project.
•
The Town Center at Coconut Point is an open-air mainstreet regional shopping center that is part of a 482 acre master planned community named Coconut Point located in Estero/Bonita Springs, Florida. The Town Center at Coconut Point will contain approximately 1.2 million square feet of retail space, 45,000 square feet of office condominiums and 305 condominium units. Gross costs are expected to approximate $242 million. Town Center at Coconut Point is a 50/50 joint venture.

            Finally, we increased our international presence with the acquisition of Chelsea through its Premium Outlet centers in Japan. We continue to be alert to additional opportunities in the international markets and look to continue to focus on our joint venture interests in Europe. Development activities in 2004 related to our international joint ventures included the following:

•
Arkadia, a 1.1 million square foot shopping center located in Warsaw, Poland. The project incorporates a hypermarket, approximately 200 retail shops, a home improvement center and a cinema. We hold a 34.7% interest in the center through our joint venture with European Retail Enterprises, B.V.

            Further, we expect development and redevelopment/expansion activity for 2005 for our international joint ventures to include the following activity:

•
Our Italian joint venture will continue construction of three shopping centers in Roma, Nola, and Guigliano, Italy with a total GLA of nearly 4 million.
•
Our Premium Outlet in Nagoya, Japan will undergo a 178,000 square foot expansion.

47

            Regarding financing activities, we lowered our overall borrowing rate by 42 basis points during the year as a result of our financing activities related to consolidated indebtedness. Our financing activities were highlighted by five significant transactions:

•
On January 20, 2004, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $500.0 million at a weighted average fixed interest rate of 4.21%. We used the net proceeds to reduce borrowings on our Credit Facility, to unencumber one Property, exchange other indebtedness and for general working capital purposes. We subsequently completed an exchange offer in which notes registered under the Securities Act of 1933 with the same economic terms and conditions were exchanged for the Rule 144A notes.
•
On February 26, 2004, we obtained a $250.0 million unsecured term loan which bears interest at LIBOR plus 65 basis points. The proceeds from this financing were used to pay off various unsecured term loans, with rates ranging from LIBOR plus 65 basis points to LIBOR plus 80 basis points, and for general working capital purposes.
•
On June 15, 2004, we refinanced a pool of seven cross-collateralized mortgages totaling $219.4 million with a $220.0 million variable-rate term loan. The original mortgages were to mature on December 15, 2004 and had an effective interest rate of 7.06%. The refinanced mortgages have a new maturity date of July 1, 2014 and have a weighted average interest rate of 5.90%. We also unencumbered one Property as part of this refinancing activity.
•
On August 11, 2004, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $900.0 million at a weighted average fixed interest rate of 5.29%. We received net proceeds of $890.6 million and used $585.0 million of the net proceeds to reduce borrowings on our Credit Facility, $150.0 million to retire fixed rate 7.75% unsecured notes, $120.7 million to unencumber two consolidated Properties with rates of LIBOR plus 130 basis points and LIBOR plus 150 basis points, with the remaining portion being used for general working capital purposes.
•
On October 12, 2004, in connection with the acquisition of Chelsea, we entered into an agreement and obtained unsecured borrowings of $1.8 billion (the Acquisition Facility) which matures on October 12, 2006. Base rate loans under the Acquisition Facility bear interest at a rate per annum equal to LIBOR plus 55 basis points.

48

            The Portfolio data discussed in this overview includes the following key operating statistics: occupancy; average base rent per square foot; and comparable sales per square foot. We include acquired Properties in this data beginning in the year of acquisition and remove properties sold in the year disposed. We do not include any Properties located outside of the U.S. The following table sets forth these key operating statistics for:

•
Properties that we control and which are consolidated in our consolidated financial statements;
•
Properties which we do not control that we account for under the equity method as unconsolidated joint ventures; and,
•
all Properties on a total Portfolio basis.

            We believe the total Portfolio data provides you with information helpful in evaluating not only the quality and growth potential of the Portfolio, but also the effectiveness of our management.

 
   2004
   %
Change (1)
   2003
   %
Change (1)
   2002
   %
Change (1)
Regional Malls                              
Occupancy                              
Consolidated     92.7%         92.2%         92.3%    
Unconsolidated     92.6%         92.7%         93.5%    
Total Portfolio     92.7%         92.4%         92.7%    

Average Base Rent per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 32.81   4.9%   $ 31.28   5.5%   $ 29.66   4.5%
Unconsolidated   $ 34.78   3.1%   $ 33.73   3.8%   $ 32.50   5.3%
Total Portfolio   $ 33.50   3.8%   $ 32.26   5.1%   $ 30.70   4.8%

Comparable Sales Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 411   5.9%   $ 388   3.8%   $ 374   1.6%
Unconsolidated   $ 460   7.8%   $ 427   0.5%   $ 425   2.4%
Total Portfolio   $ 427   6.1%   $ 402   2.9%   $ 391   2.0%

Premium Outlets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy     99.3%         —         —    
Average Base Rent per Square Foot   $ 21.85         —         —    
Comparable Sales Per Square Foot   $ 412         —         —    

Community Shopping Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy                              
Consolidated     90.5%         87.1%         84.9%    
Unconsolidated     94.7%         96.3%         91.2%    
Total Portfolio     91.9%         90.2%         86.9%    

Average Base Rent per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 11.12   1.0%   $ 11.01   7.5%   $ 10.24   4.6%
Unconsolidated   $ 10.49   7.4%   $ 9.77   (0.9%)   $ 9.86   (0.6%)
Total Portfolio   $ 10.91   3.0%   $ 10.59   4.6%   $ 10.12   2.5%

Comparable Sales Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 222   5.5%   $ 210   6.6%   $ 197   2.0%
Unconsolidated   $ 200   (2.9%)   $ 206   1.6%   $ 203   (6.6%)
Total Portfolio   $ 215   2.9%   $ 209   4.8%   $ 199   (1.1%)
(1)
Percentages may not recalculate due to rounding.

49

            Occupancy Levels and Average Base Rents.    Occupancy and average base rent is based on mall and freestanding GLA owned by us ("Owned GLA") at mall and freestanding stores in the regional malls, all tenants at Premium Outlets, and all tenants at community shopping centers. We believe the continued growth in regional mall occupancy is primarily the result of the overall quality of our Portfolio. The result of the growth in occupancy is a direct or indirect increase in nearly every category of revenue. Our portfolio has maintained stable occupancy and increased average base rents, in the current economic climate.

            Comparable Sales per Square Foot.    Sales volume includes total reported retail sales at Owned GLA in the regional malls and all reporting tenants at Premium Outlets and community shopping centers. Retail sales at Owned GLA affect revenue and profitability levels because sales determine the amount of minimum rent that can be charged, the percentage rent realized, and the recoverable expenses (common area maintenance, real estate taxes, etc.) that tenants can afford to pay.

            The following key operating statistics are provided for our international properties all of which are accounted for on the equity method of accounting. Discussion regarding our results of operations for our investment in unconsolidated entities is included in our year over year comparisons to follow. The values for Premium Outlets are provided for 2004 only as these investments were acquired as part of our acquisition of Chelsea in the fourth quarter of 2004.

 
   2004
   2003
European Shopping Centers          
Number of shopping centers     51   47
Total GLA (in millions of square feet)     10.90   8.90
Occupancy     96.0%   99.3%
Comparable sales per square foot   $ 526   N/A
Average rent per square foot   $ 34   N/A

International Premium Outlets (1)
 
 
 
 
 
Total number of Premium Outlets     4   —
Total GLA (in millions of square feet)     1.13   —
Occupancy     100%   —
Comparable sales per square foot   $ 821   —
Average rent per square foot   $ 82   —
(1)
Does not include Premium Outlets Punta Norte in Mexico, which opened December 2004.

            Our significant accounting policies are described in detail in Note 3 of the Notes to Consolidated Financial Statements. The following briefly describes those accounting policies we believe are most critical to understanding our business:

•
We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and account for our leases as operating leases. We accrue minimum rents on a straight-line basis over the terms of their respective leases. Substantially all of our retail tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. We recognize overage rents only when each tenant's sales exceeds its sales threshold.
•
We review Properties for impairment on a case-by-case basis whenever events or changes in circumstances indicate that our carrying value may not be recoverable. These circumstances include, but are not limited to, declines in cash flows, occupancy and comparable sales per square foot. Changes in our estimates of the future undiscounted operating income before depreciation and amortization as well as the holding period for each Property could affect our conclusion on whether an impairment charge is necessary. We recognize an impairment of investment property when we estimate that the undiscounted operating income before depreciation and amortization is less than the carrying value of the Property. To the extent an impairment has occurred, we charge to income the excess of the carrying value of the Property over its estimated fair value.

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•
In order to maintain Simon Property's status as a REIT, it is required to distribute 90% of its taxable income in any given year and meet certain asset and income tests in addition to other requirements. Certain relief provisions were recently enacted, but are generally applicable for 2005 and subsequent years. Because substantially all of Simon Property's activities are conducted through us, we must also follow the REIT requirements. We monitor our business and transactions that may potentially impact its REIT status. If Simon Property fails to maintain its REIT status, then it would be required to pay federal income taxes at regular corporate income tax rates during the period that it did not qualify as a REIT. If Simon Property lost its REIT status, it could not elect to be taxed as a REIT for four years unless its failure was due to reasonable cause and certain other conditions were met. As a result, failing to maintain Simon Property's REIT status would result in a significant increase in the income tax expense recorded during those periods.
•
We make estimates as part of our allocation of the purchase price of acquisitions to the various components of the acquisition based upon the relative value of each component. The most significant components of our allocations are typically the market value in-place leases and the allocation of fair value to the buildings, as if vacant, and land. In the case of the market value of in-place leases, we make our best estimates of the tenants' ability to pay rents based upon the tenants' operating performance at the property, including the competitive position of the property in its market as well as sales psf, rents psf, and overall occupancy cost for the tenants in place at the acquisition date. Our assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases. In the case of the fair value of buildings and the allocation of value to land and other intangibles, our estimates of the values of these components will affect the amount of depreciation we record over the estimated useful life of the property acquired or the remaining lease term.

Results of Operations

            In addition to the 2004 acquisitions and dispositions previously discussed, the following acquisitions, dispositions, and openings affected our consolidated results from continuing operations in the comparative periods:

•
On October 22, 2004, Phase III of The Forum Shops at Caesars in Las Vegas opened.
•
On August 20, 2003, we acquired a 100% interest in Stanford Shopping Center.
•
In the fourth quarter of 2003, we increased our ownership in Kravco Investments L.P. ("Kravco") that resulted in the consolidation of four Properties.
•
We acquired a 100% interest in 31 Premium Outlet Properties located in the U.S., an equity interest in five international Premium Outlets (four in Japan and one in Mexico), and 100% interest in 3 community centers and 21 other Properties.
•
On July 19, 2002, we acquired the remaining ownership interest in Copley Place that resulted in our consolidation of this Property. Our initial joint venture interest in this Property was acquired as part of our acquisition of Rodamco North America, N.V. ("Rodamco").
•
On May 3, 2002, we completed the Rodamco acquisition that added five new consolidated Properties.
•
During 2002, we sold seven of the nine assets that were held for sale as of December 31, 2001. We also sold two other non-core Properties in the fourth quarter of 2002.

            In addition to the 2004 acquisitions and dispositions previously discussed, the following acquisitions, dispositions, and openings affected our income from unconsolidated entities in the comparative periods:

•
On October 14, 2004, Clay Terrace in Carmel, Indiana opened.
•
The Kravco transactions increased our ownership percentages in 11 joint venture properties. Four of the Properties we now control and therefore they have been consolidated.
•
On May 10, 2004, we and our joint venture partner completed the construction and opened Chicago Premium Outlets.
•
On April 7, 2004, we sold the joint venture interest in a hotel property held by the Management Company, and on August 6, 2004, we completed the court ordered sale of our joint venture interest in Mall of America, in Minneapolis, Minnesota (see Item 3).
•
On August 4, 2003, we and our joint venture partner completed construction and opened Las Vegas Premium Outlets.
•
On May 31, 2002, we sold our interests in our five value oriented super-regional malls to Mills Corporation.

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•
On May 3, 2002, we completed the Rodamco acquisition that added six new joint venture Properties during the period, including our initial interest in Copley Place.
•
On April 1, 2002, we sold our interest in Orlando Premium Outlets. This property was acquired in the merger with Chelsea on October 14, 2004.

            As a result of the adoption of Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51" ("FIN 46") on January 1, 2004, we consolidated the operations of two Properties, which were previously accounted for under the equity method.

            Our consolidated discontinued operations reflect results of the following Properties which were sold on various dates in 2003 and 2004:

•
Richmond Square, Mounds Mall, Mounds Mall Cinema and Memorial Mall on January 9, 2003
•
Forest Village Park Mall on April 29, 2003
•
North Riverside Park Plaza on May 8, 2003
•
Memorial Plaza on May 21, 2003
•
Fox River Plaza on May 22, 2003
•
Eastern Hills Mall on July 1, 2003
•
New Orleans Center on October 1, 2003
•
Mainland Crossing on October 28, 2003
•
SouthPark Mall on November 3, 2003
•
Bergen Mall on December 12, 2003
•
Hutchinson Mall on June 15, 2004
•
Bridgeview Court on July 22, 2004
•
Woodville Mall on September 1, 2004
•
Santa Fe Premium Outlets on December 28, 2004
•
Heritage Park Mall on December 29, 2004

            For the purposes of the following comparison between the years ended December 31, 2004 and December 31, 2003, the above transactions are referred to as the Property Transactions. In the following discussions of our results of operations, "comparable" refers to Properties open and operating throughout both the current and prior year.

            In addition to the Property Transactions, on March 14, 2003, we purchased the remaining ownership interest in Forum Shops which impacted our minority interest expense, depreciation expense, and interest expense. On January 1, 2003, the Operating Partnership acquired all of the remaining equity interests of the Management Company that resulted in the consolidation of the Management Company at that point. The Management Company was previously accounted for using the equity method during 2002.

            Minimum rents, excluding rents from our consolidated Simon Brand and Simon Business initiatives, increased $206.1 million during the period. The net effect of the Property Transactions increased minimum rents $172.5 million, including the amortization of $5.3 million of fair market value of acquired in-place leases as part of our acquisitions. Comparable base rents increased $33.6 million due principally to the leasing of space at higher rents that resulted in an increase in base rents of $23.5 million. In addition, increased rents from carts, kiosks, and renting unoccupied in-line space increased comparable rents from temporary tenant income by $12.6 million. Straight-line rents also increased by $5.1 million year over year.

            Overage rents increased $19.1 million of which $15.3 million related to the Property Transactions. Comparable overage rents increased $3.8 million.

            Tenant reimbursements increased $94.5 million of which the Property Transactions accounted for $79.2 million of the increase. The remaining portion of the increase was primarily due to increases in comparable recoverable expenditures amounting to $15.3 million.

            The Management Company recorded fee revenues of $53.2 million and insurance premium revenues of $17.3 million.

            Total other income, excluding consolidated Simon Brand and Simon Business initiatives, increased $3.1 million. The increase in other income was primarily due to increased outlot land sales of $8.5 million offset by a decline in lease settlement income of $2.7 million and interest income of $4.7 million.

            Consolidated revenues from Simon Brand and Simon Business initiatives increased $17.9 million to $117.2 million from $99.3 million. The increase in revenues is primarily due to:

•
increased revenue from our gift card program,
•
increased rents and fees from service providers,

52

•
increased advertising rentals, and
•
increased event and sponsorship income.

            The increased revenues from Simon Brand and Simon Business were offset by a $20.4 million increase in Simon Brand and Simon Business expenses that primarily resulted from increased gift card and other operating expenses included in property operating expenses.

            Property operating expenses increased $45.1 million, $8.4 million of which was on comparable properties. The remainder of the increase in property operating expenses was due to the effect of Property Transactions. Depreciation and amortization expenses increased $126.3 million primarily due to the net effect of the Property Transactions, while comparable properties accounted for $33.6 million of the increase. In 2003, we incurred $10.6 million of costs related to a withdrawn tender offer which did not recur in 2004. Other expenses increased $12.8 million and the increases in home office and regional office costs and general and administrative expenses were due to the effect of the Property Transactions and increased professional fees. We also recorded in the fourth quarter a non-cash impairment charge of $18 million related to one property.

            Interest expense increased $59.4 million. The increase is due primarily to an increase in our average borrowings of $1.8 billion. The increase in the average borrowings is primarily due to the financing of our 2004 and 2003 acquisitions, our $500 million unsecured note offering in January of 2004, our $900 million unsecured senior note offering in August of 2004, and the effect of slightly higher variable interest rate levels during 2004. The increases were offset by an overall decrease in weighted average interest rates as a result of refinancing activity which moved certain borrowings as previously described to lower borrowing rates. Our effective weighted average interest rate on fixed-rate borrowings decreased from 6.71% in 2003 to 6.48% in 2004. Conversely, our weighted average interest rate on variable rate borrowings increased from 2.61% in 2003 to 3.06% in 2004.

            Income from unconsolidated entities decreased $20.0 million in 2004 as compared to 2003. This was principally the result of the Property Transactions and the effect of development projects in joint venture operations that were placed into service during 2003 resulting in a full year of operations.

            We recorded a $0.8 million net loss on the sale of assets in 2004 (Mall of America loss offset by a gain on the disposition of our interests in the hotel property previously mentioned) as compared to a $5.1 million net loss for 2003. Included in the net loss for 2003 was a $6.0 million charge in connection with Mall of America.

            In 2004, discontinued operations were the result of our sale of five non-core Properties consisting of three regional malls, one community center, and one Premium Outlet. As a result of these transactions, we reclassified the results of operations from these consolidated Properties to discontinued operations. We believe these dispositions will not have a material effect on our results of operations or liquidity.

            Finally, preferred unit requirements were $63.6 million for 2004 as compared to $67.2 million for 2003. The impact of preferred units issued in connection with the Chelsea and Kravco transactions were offset by the conversion of Series B 6.5% Preferred Units into common units in the fourth quarter of 2003 and redemption of the Series E Preferred 8% Units in the fourth quarter of 2004.

            Minimum rents, excluding rents from our consolidated Simon Brand and Simon Business initiatives, increased $75.6 million during the period. The net effect of the Property Transactions increased minimum rents $45.1 million and the purchase accounting estimation of the fair market value of in-place leases as part of our acquisitions, increased rents by $6.2 million. Comparable rents increased $24.3 million. This was primarily due to the leasing of space at higher rents that resulted in an increase in base rents of $23.9 million. In addition, increased rents from carts, kiosks, and renting unoccupied in-line space increased comparable rents from temporary tenant income by $4.4 million. These increases were offset by a $4.1 million decrease in straight-line rent revenue.

            The Management Company recorded fee revenues of $58.5 million and insurance premium revenues of $16.2 million.

            Total other income, excluding consolidated Simon Brand and Simon Business initiatives, decreased $16.2 million. The impact of the consolidation of the Management Company included the addition of $7.0 million of investment income primarily from the insurance subsidiaries and the elimination of consolidated intercompany interest and dividend income that totaled $13.6 million in 2002 received from the Management Company previously recorded

53


in other income in 2002. In addition, outlot land sales decreased by $2.0 million due to higher than normal activity in 2002 and lease settlement income decreased $2.2 million. In addition, other income in 2002 included the impact of our hedges of the Rodamco acquisition in 2002, of which $7.8 million was included in other income and $0.7 million of expense is included in other expenses.

            Consolidated revenues from Simon Brand and Simon Business initiatives increased $19.3 million to $100.2 million from $80.9 million. This included a net $6.9 million increase from the Property Transactions primarily due to acquired parking services. The increase in revenues is primarily due to:

•
increased revenue from our gift card program,
•
increased rents and fees from service providers,
•
increased advertising rentals, and
•
increased event and sponsorship income.

            These increases were offset by revenues in 2002 that resulted from our settlement with Enron Corporation that totaled $8.6 million, net. The increased revenues from Simon Brand and Simon Business were offset by a $6.9 million increase in Simon Brand expenses that primarily resulted from increased gift card and other operating expenses included in property operating expenses.

            Tenant reimbursements increased $31.6 million of which the Property Transactions accounted for $17.3 million of the increase. The remaining portion of the increase was primarily due to increases in comparable recoverable expenditures. Depreciation and amortization expenses increased $30.0 million primarily due to the net effect of the Property Transactions, the consolidation of the Management Company, and the Forum Shops acquisition. The costs related to the withdrawn tender offer of $10.6 million relate to the write off of our deferred acquisition costs. Other expenses decreased $1.1 million due to expenses related to a litigation settlement in 2002. This was offset by increased ground rent expense of $4.0 million primarily due to the acquisition of Stanford Shopping Center. The increase in home office and regional office costs and general and administrative expenses was due to the consolidation of the Management Company that added $52.9 million of total operating expenses in 2003.

            Interest expense increased $4.4 million. Our average borrowings increased as a result of the full year impact of the financing of the Rodamco acquisition, the unsecured note offering in March of 2003, and financing of acquisition activities in 2003. This increase was offset by an overall decrease in weighted average interest rates as a result of refinancing activity, an increase in capitalized imputed interest due to increased development, renovation and expansion activity, and slightly lower variable interest rate levels.

            In 2003, we recorded a $5.1 million net loss on the sale of assets, which primarily consisted of the $6.0 million loss we recorded in connection with the Mall of America litigation. In 2002, gains on sales of assets and other, net, were $160.9 million as we sold several Properties and partnership interests that resulted in net proceeds of $430.2 million. We sold our interest in the specialty retail center, Orlando Premium Outlets, during 2002 to our partner in the joint venture. We sold our interests in five value oriented regional malls to our partner, the Mills Corporation, and sold two of the acquired Rodamco partnership interests and one existing partnership interest to Teachers Insurance and Annuity Association of America to fund a portion of the Rodamco acquisition. We sold one community center, two regional malls and two jointly held assets acquired in the Rodamco acquisition. In addition, as part of our disposition strategy we disposed of seven of the nine assets held for sale as of December 31, 2001. Finally, we made the decision to no longer pursue certain development projects and wrote-off the carrying amount of our predevelopment costs and land acquisition costs associated with these projects that totaled $17.1 million.

            During 2002, we also recognized $16.1 million in gains on the forgiveness of debt related to the disposition of two regional malls. Net cash proceeds from these dispositions were $3.6 million. In addition, we recognized $1.5 million of expenses related to the early extinguishment of debt that consisted of prepayment penalties and the write-off of unamortized mortgage costs. Our income tax expense of taxable REIT subsidiaries of $7.6 million is due to the consolidation of the Management Company.

            Income from unconsolidated entities increased $42.3 million in 2003 as compared to 2002. In 2002, income from unconsolidated entities included income from Management Company operations, excluding MerchantWired LLC, of approximately $14.1 million. This included our share of the gain of $8.4 million, net of tax, associated with the sale of land partnership interests previously discussed. In 2003, income from unconsolidated

54


entities owned by the Management Company in 2003 totaled $3.7 million. In addition, income from unconsolidated partnerships and joint ventures, excluding the Management Company, increased $17.2 million resulting from:

•
the full year impact of the Rodamco acquisition,
•
increased ownership interests in Kravco joint ventures,
•
the opening of Las Vegas Premium Outlets, and
•
our $8.3 million share increase from outlot land sales.

            These increases were offset by the loss of income due to the sale of our interests in the Mills Properties and Orlando Premium Outlets, and due to our cessation of recording any contribution to net income from Mall of America (see Note 11).

            Losses from MerchantWired LLC in 2002, included in income from unconsolidated entities, represents our indirect share of operating losses of $10.2 million, after a tax benefit of $6.2 million. These operating losses included our share of an impairment charge of $4.2 million, after tax, on certain technology assets. The Management Company recorded a net write-off of $22.5 million, after a tax benefit of $9.4 million, of its investment in MerchantWired LLC in September 2002. The total technology write-off related to MerchantWired LLC was $38.8 million before tax.

            Net income from the results of operations of the Management Company, excluding the losses of MerchantWired LLC, was flat during the period. Increased management fees as a result of the Rodamco acquisition and increased income from insurance subsidiaries were offset by the partnership interests sold in 2002 resulting in our share of a gain of $8.4 million, net of tax.

            We continued our disposition activities in 2003 with the sale of 13 non-core Properties consisting of seven regional malls, five community centers, and one mixed-use Property. These non-core Properties were sold for a total of $275.1 million that resulted in a net gain of $22.4 million. As a result of these transactions, we reclassified the results of operations from these consolidated Properties to discontinued operations. These dispositions will not have a material effect on our results of operations or liquidity.

            On October 8, 2003, we and Westfield America, Inc. ("Westfield"), the U.S. subsidiary of Westfield America Trust, withdrew our tender offer for all of the outstanding common shares of Taubman Centers, Inc. The withdrawal of the tender offer followed the enactment of a law amending the Michigan Control Share Acquisition Act and which allowed the Taubman family group to effectively block our ability to conclude the tender offer. As a result, we expensed deferred acquisition costs of $10.6 million, net, related to this acquisition during 2003.

            Finally, the 2003 preferred unit requirement decreased $8.4 million from 2002 due to the conversion of units of 6.5% Series B Preferred Units into common units.

Liquidity and Capital Resources

            Our balance of cash and cash equivalents decreased $9.5 million during 2004 to $519.6 million as of December 31, 2004, including a balance of $185.6 million related to our gift card program, which we do not consider available for general working capital purposes.

            On December 31, 2004, the Credit Facility had available borrowing capacity of $786.9 million net of outstanding borrowings of $425.0 million and letters of credit of $38.1 million. The Credit Facility bore interest at LIBOR plus 65 basis points with an additional 15 basis point facility fee on the entire $1.25 billion facility and provided for variable grid pricing based upon our corporate credit rating. The Credit Facility had an initial maturity of April 2005, with an additional one-year extension available at our option. In addition, the Credit Facility had a $100 million EURO sub-tranche that allows us to borrow Euros at EURIBOR plus 65 basis points and/or dollars at LIBOR plus 65 basis points, at our option, and had the same maturity date as the overall Credit Facility. The amount available under the $100 million EURO sub-tranche varied with changes in the exchange rate, however, we may have borrowed amounts available under this EURO sub-tranche in dollars, if necessary. During 2004, the maximum amount outstanding under the Credit Facility was $585.0 million and the weighted average amount outstanding was $370.3 million. The weighted average interest rate was 1.95% for the year ended December 31, 2004.

            On January 11, 2005, we refinanced the Credit Facility with a new $2.0 billion unsecured revolving credit facility. The new credit facility has a maturity date of January 11, 2008, with an additional one-year extension available at our option. The facility can be increased to $2.5 billion within the first two years of closing at our option subject to a fee approximating 25 basis points. The Credit Facility bears interest at LIBOR plus 55 basis points with an additional

55


15 basis point facility fee on the entire $2.0 billion facility and provides for variable grid pricing based upon our corporate credit rating. In addition, the new facility has a $500 million multi-currency tranche for Euro, Yen or Sterling borrowings and also includes a money market competitive bid option program that allows us to hold auctions to obtain lower pricing for short-term funds for up to $1.0 billion.

            We and/or Simon Property also have access to public equity and long term unsecured debt markets and we have access to private equity from institutional investors at the Property level. Our current senior unsecured debt ratings are Baa2 by Moody's Investors Service and BBB+ by Standard & Poor's.

            Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $1.2 billion during 2004. This includes $35.1 million of excess proceeds from refinancing activities primarily from three unconsolidated joint ventures. We assumed $51.2 million of cash from acquisitions. We also received $51.3 million primarily from the sale of seven non-core properties. We had net proceeds from all of our debt financing and repayment activities in 2004 of $2.5 billion, as discussed below in "Financing and Debt". We used part of these proceeds as follows:

•
to fund $2.4 billion in cash needs for our acquisitions which are detailed under the "Acquisitions" section of this discussion.
•
paid unitholder distributions totaling $684.0 million,
•
paid preferred unit distributions totaling $57.4 million,
•
funded consolidated capital expenditures of $546.1 million. These capital expenditures include development costs of $214.8 million, renovation and expansion costs of $240.7 million and tenant costs and other operational capital expenditures of $90.6 million, and
•
funded investments in unconsolidated entities of $84.9 million of which $48.9 million was used to fund new developments, redevelopments, and other capital expenditures.

            We met our maturing debt obligations in 2004 primarily through refinancings and borrowings on our Credit Facility.

            In general, we anticipate that cash generated from operations will be sufficient to meet operating expenses, monthly debt service, recurring capital expenditures, and distributions to unitholders necessary to maintain Simon Property's REIT qualification for 2005 and on a long-term basis. In addition, we expect to be able to obtain capital for nonrecurring capital expenditures, such as acquisitions, major building renovations and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from:

•
excess cash generated from operating performance and working capital reserves,
•
borrowings on our Credit Facility,
•
additional secured or unsecured debt financing, or
•
additional equity raised by Simon Property in the public or private markets.

            On January 15, 2004, we paid off $150.0 million of 6.75% unsecured notes that matured on that date with borrowings from the Credit Facility.

            On January 20, 2004, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $500.0 million at a weighted average fixed interest rate of 4.21%. The first tranche is $300.0 million at a fixed interest rate of 3.75% due January 30, 2009 and the second tranche is $200.0 million at a fixed interest rate of 4.90% due January 30, 2014. We received net proceeds of $383.4 million and we exchanged our $113.1 million Floating Rate Mandatory Extension Notes ("MAXES") with the holder. The MAXES were due November 15, 2014 and bore interest at LIBOR plus 80 basis points. The exchange of the MAXES for the notes instruments did not result in a significant modification of the terms in the debt arrangement. We used $277.0 million of the net proceeds to reduce borrowings on the Credit Facility, to unencumber one Property, and the remaining portion was used for general working capital purposes. Subsequently, we completed an exchange offer in which notes registered under the Securities Act of 1933 with the same economic terms and conditions were exchanged for the Rule 144A notes.

56

            Concurrent with the issuance of the Rule 144A notes, we entered into a five-year variable rate $300.0 million notional amount swap agreement to effectively convert the $300.0 million tranche to floating rate debt at an effective rate of six-month LIBOR. We completed this swap agreement, as our amount of variable rate indebtedness as a percent of our total outstanding debt was lower than our desired range.

            On February 9, 2004, we paid off $300.0 million of 6.75% unsecured notes that matured on that date with borrowings from the Credit Facility.

            On February 26, 2004, we obtained a $250.0 million unsecured term loan with an initial maturity date of April 1, 2005. The maturity date may be extended, at our option, for two, one-year extension periods. The unsecured term loan bears interest at LIBOR plus 65 basis points. The proceeds from this financing were used to pay off our $65.0 million unsecured term loan that matured on March 15, 2004 and our $150.0 million unsecured term loan that matured on February 28, 2004. The remaining proceeds were used for general working capital purposes. The $65.0 million unsecured term loan bore interest at LIBOR plus 80 basis points and the $150.0 million unsecured term loan bore interest at LIBOR plus 65 basis points.

            On July 15, 2004, we paid off $100.0 million of 6.75% unsecured notes that matured on that date with available working capital.

            On August 11, 2004, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $900.0 million at a weighted average fixed interest rate of 5.29%. The first tranche is $400.0 million at a fixed interest rate of 4.875% due August 15, 2010 and the second tranche is $500.0 million at a fixed interest rate of 5.625% due August 15, 2014. We received net proceeds of $890.6 million. We used $585.0 million of the net proceeds to reduce borrowings on our Credit Facility, $150.0 million to retire fixed rate 7.75% unsecured notes, $120.7 million to unencumber two consolidated Properties, and the remaining portion was used for general working capital purposes. Subsequently, we completed an exchange offer in which notes registered under the Securities Act of 1933 with the same economic terms and conditions were exchanged for the Rule 144A notes.

            On October 12, 2004, we obtained a $1.8 billion unsecured term loan ("Acquisition Facility") to finance the cash portion of our acquisition of Chelsea. The Acquisition Facility matures on October 12, 2006 and requires minimum principal repayments in three equal installments after twelve months, eighteen months, and at maturity. The Acquisition Facility bears interest at LIBOR plus 55 basis points and provides for variable grid pricing based upon our credit rating.

            On January 22, 2004, we paid off a $60.0 million variable rate mortgage, at LIBOR plus 125 basis points, that encumbered one consolidated Property with remaining proceeds from the senior unsecured notes mentioned above. In addition, we refinanced another consolidated mortgaged Property with a $32.0 million 6.05% fixed rate mortgage that matures on February 11, 2014. The balance of the previous mortgage was $34.7 million at a variable rate of LIBOR plus 250 basis points and was scheduled to mature on April 1, 2004.

            On March 31, 2004, we secured a $86.0 million variable rate mortgage, at LIBOR plus 95 basis points, to permanently finance a portion of the Gateway Shopping Center acquisition. The mortgage has an initial maturity date of March 31, 2005 with three, one-year extensions available at our option.

            On April 27, 2004, we secured a $96.0 million fixed rate mortgage at 5.17% to permanently finance a portion of the Montgomery Mall. A portion of the proceeds were used to purchase additional ownership interest. The mortgage has a maturity date of May 11, 2014.

            On May 19, 2004, we secured a $260.0 million mortgage to permanently finance a portion of the Plaza Carolina Mall acquisition. The mortgage consists of two fixed-rate tranches and three variable-rate tranches. The fixed-rate components total $100 million at a blended rate of 5.10% and have a maturity date of May 9, 2009. The $160.0 million variable-rate components bear interest at LIBOR plus 90 basis points and have an initial maturity of May 9, 2006 with three, one-year, extensions available at our option. The initial weighted average all-in interest rate was approximately 3.2%.

            On June 15, 2004, we refinanced a pool of seven cross-collateralized mortgages totaling $219.4 million with a $220.0 million variable-rate term loan. The original mortgages would have matured on December 15, 2004 and had an effective interest rate of 7.06% including the effect of an interest rate protection agreement on $48.1 million of variable-rate debt. The collateralized term loan bore interest at LIBOR plus 80 basis points. On June 30, 2004, we refinanced the term loan with individually secured fixed-rate mortgages on six of the seven original mortgages totaling

57


$290.0 million. The mortgages have a maturity date of July 1, 2014 and have a weighted average interest rate of 5.90%. One of the Properties was unencumbered as part of this refinancing.

            On July 1, 2004, we paid off, with available working capital, two mortgages encumbering one consolidated Property that were scheduled to mature on January 1, 2005. The first mortgage had a balance of $41.1 million, and bore interest at a fixed rate of 8.45%. The second mortgage had a balance of $14.9 million, and bore interest at a fixed rate of 6.81%.

            On July 12, 2004, we refinanced a consolidated Property with a $73.0 million, 5.84% fixed rate mortgage that matures on August 11, 2014. The balance of the previous mortgage was $47.0 million, bore interest at a variable rate of LIBOR plus 275 basis points and was scheduled to mature on July 1, 2005.

            On July 28, 2004, we refinanced a consolidated Property with a $86.0 million, 5.65% fixed rate mortgage that matures on August 11, 2014. The balance of the previous mortgage was $45.0 million, bore interest at a variable rate of LIBOR plus 150 basis points and was scheduled to mature on June 12, 2005.

            On November 25, 2004, we paid off one mortgage encumbering a consolidated Property that was scheduled to mature on February 1, 2005. The mortgage had a balance of $36.0 million and bore interest at a fixed rate of 7.42%.

            Our consolidated debt adjusted to reflect outstanding derivative instruments consisted of the following (dollars in thousands):

Debt Subject to
   Adjusted Balance
as of December 31,
2004
   Effective
Weighted Average
Interest Rate
   Adjusted Balance
as of December 31,
2003
   Effective
Weighted Average
Interest Rate
Fixed Rate   $ 10,766,015   6.48%   $ 8,499,750   6.71%
Variable Rate     3,820,378   3.06%     1,766,638   2.61%
   
 
 
 
    $ 14,586,393   5.58%   $ 10,266,388   6.00%
   
     
   

            As of December 31, 2004, we had interest rate cap protection agreements on $257.1 million of consolidated variable rate debt. We had interest rate protection agreements effectively converting variable rate debt to fixed rate debt on $65.5 million of consolidated variable rate debt. We also hold $370.0 million of notional amount variable rate swap agreements that have a weighted average variable pay rate of 2.71% and a weighted average fixed receive rate of 3.72% at December 31, 2004. As of December 31, 2004, the net effect of these agreements effectively converted $304.5 million of fixed rate debt to variable rate debt. As of December 31, 2003, the net effect of these agreements effectively converted $237.0 million of fixed rate debt to variable rate debt.

            Contractual Obligations and Off-balance Sheet Arrangements:    The following table summarizes the material aspects of our future obligations as of December 31, 2004 (dollars in thousands):

 
   2005
   2006 - 2007
   2008 - 2010
   After 2010
   Total
Long Term Debt                              
Consolidated (1)   $ 1,542,161   $ 4,692,333   $ 4,208,665   $ 4,013,050   $ 14,456,209
   
 
 
 
 
Pro Rata Share Of Long Term Debt:                              
  Consolidated (2)   $ 1,539,463   $ 4,649,859   $ 4,117,140   $ 3,909,760   $ 14,216,222
  Joint Ventures (2)     181,099     672,066     798,745     1,098,117     2,750,027
   
 
 
 
 
Total Pro Rata Share Of Long Term Debt     1,720,562     5,321,925     4,915,885     5,007,877     16,966,249
Consolidated Capital Expenditure Commitments (3)     296,571     65,929     -     -     362,500
Joint Venture Capital Expenditure Commitments (3)     57,145     16,074     -     -     73,219
Consolidated Ground Lease Commitments     13,993     30,782     46,831     635,911     727,517
   
 
 
 
 
Total   $ 2,088,271   $ 5,434,710   $ 4,962,716   $ 5,643,788   $ 18,129,485
   
 
 
 
 
(1)
Represents principal maturities only and therefore, excludes net premiums and discounts and fair value swaps of $130,184.

(2)
Represents our pro rata share of principal maturities and excludes net premiums and discounts.

58

(3)
Represents our pro rata share of capital expenditure commitments.

            Capital expenditure commitments presented in the table above represent new developments, redevelopments or renovation/expansions that we have committed to the completion of construction. The timing of these expenditures may vary due to delays in construction or acceleration of the opening date of a particular project. In addition, the amount includes our share of committed costs for joint venture developments.

            We expect to meet our 2005 debt maturities through refinancings, the issuance of new debt securities or borrowings on the Credit Facility. We expect to have access to capital markets to meet all future long-term obligations when they come due. Specific financing decisions will be made based upon market rates, property values, and our desired capital structure at the maturity date of each obligation. We incurred interest expense during 2004 of $662.1 million net of capitalized interest of $14.6 million.

            Our off-balance sheet arrangements consist primarily of our investments in real estate joint ventures which are common in the real estate industry and are described in Note 7 of the notes to the accompanying financial statements. Joint venture debt is the liability of the joint venture, is typically secured by the joint venture Property, and is non-recourse to us. As of December 31, 2004, we have guaranteed or have provided letters of credit to support $104.7 million of our total $2.8 billion share of joint venture mortgage and other indebtedness presented in the table above.

            Commensurate with the acquisition of Chelsea on October 14, 2004, we issued 18,015,506 6% Series I Convertible Perpetual Preferred Units and 796,948 Series J 83/8% Cumulative Redeemable Preferred Units.

            During 2004, all outstanding units of our 8% Series E Cumulative Redeemable Preferred Units were redeemed. We had 1,071,456 preferred units converted to common units. In addition 1,156,039 preferred units were repurchased. We also issued a total of 4,194,117 common units to the limited partner holders who exercised their conversion rights.

            Significant Acquisitions.    On October 14, 2004, Simon Property completed its $5.2 billion (including assumption of debt) acquisition of Chelsea Property Group, Inc. (Chelsea). We and Simon Property issued securities to Chelsea's stockholders and limited partners. Chelsea common stockholders received per share merger consideration of: $36.00 in cash; 0.2936 of a share of Simon Property common stock; and 0.3000 of a share of Simon Property Series I 6% Convertible Perpetual Preferred Stock (Series I Preferred Stock). In total, Simon Property issued the following shares of common and preferred stock to Chelsea common stockholders:

•
12,978,795 shares of Simon Property common stock; and,
•
13,261,712 shares of Series I Preferred Stock

            In accordance with our partnership agreement, we issued to Simon Property an equivalent number of our units based on the shares of common stock issued and an equivalent number of our preferred units, with terms substantially the same as the related Series I Preferred Stock that Simon Property issued to Chelsea common stockholders. The Series I 6% preferred units and the corresponding Series I Preferred Stock are further described in the footnotes to the consolidated financial statements.

            Further, each share of Chelsea Series A Preferred Stock was converted into the right to receive one share of Simon Property Series J 83/8% Cumulative Redeemable Preferred Stock (Series J Preferred Stock), which has terms substantially the same as the Chelsea Series A Preferred Stock. The fair value of the Chelsea Series A Preferred Stock at the acquisition date was $39.8 million, which resulted in the issuance of 796,948 shares of Series J Preferred Stock. As a result, we issued to Simon Property an equivalent number of Series J 83/8% Cumulative Redeemable Preferred Units with terms substantially the same as the related Series J Preferred Stock.

            As part of the transaction, we issued to the limited partners of CPG Partners, L.P., the operating partnership subsidiary of Chelsea, our units and convertible preferred units as follows.

•
4,652,232 units; and,
•
4,753,794 Series I 6% Convertible Perpetual Preferred Units.

            As a result, CPG Partners, L.P. and Chelsea are now our subsidiaries.

            Also during 2004, we:

•
acquired a 95% interest in Gateway Shopping Center in Austin, Texas for approximately $107.0 million,
•
acquired a 100% interest in Plaza Carolina in San Juan, Puerto Rico for approximately $309.0 million, and

59

•
acquired an increased ownership interest in Bangor Mall and Montgomery Mall for approximately $67.0 million.

            Dispositions.    As part of our strategic plan to own quality retail real estate we continue to pursue the sale of Properties, under the right circumstances, that no longer meet our strategic criteria. In 2004, we disposed of five non-core properties that no longer met our strategic criteria. These consisted of three regional malls, one community center, and one Premium Outlet. We do not believe the sale of these Properties will have a material impact on our future results of operations or cash flows and their removal from service and sale will not materially affect our ongoing operations. We believe the disposition of these Properties will enhance the average overall quality of our Portfolio.

            Joint Ventures.    Buy/sell provisions are common in real estate partnership agreements. Most of our partners are institutional investors who have a history of direct investment in regional mall properties. Our partners in our joint ventures may initiate these provisions at any time and if we determine it is in Simon Property's stockholders' best interests for us to purchase the joint venture interest, we believe we have adequate liquidity to execute the purchases of the interests without hindering our cash flows or liquidity. Should we decide to sell any of our joint venture interests, we would expect to use the net proceeds from any such sale to reduce outstanding indebtedness.

            New U.S. Developments.    The following describes selected new development projects, the estimated total net cost, our share of the estimated total net cost and construction in progress as of December 31, 2004 (dollars in millions):

Property
   Location
   Gross
Leasable
Area
   Estimated
Total Net
Cost (b)
   Our Share of
Estimated
Total Net
Cost
   Our Share of
Construction
in Progress (a)
   Actual/Estimated
Opening Date
The Town Center at Coconut Point   Estero/Bonita Springs, FL   1,200,000   $ 189   $ 95   $ 29.9   Spring 2006

St. Johns Town Center (c)
 
Jacksonville, FL
 
1,500,000
 
 
126
 
 
107
 
 
102.3
 
Spring 2005

Seattle Premium Outlets
 
Tulalip, WA
 
383,000
 
 
58
 
 
58
 
 
37.0
 
Spring 2005

Wolf Ranch
 
Georgetown, TX (Austin)
 
670,000
 
 
62
 
 
62
 
 
45.1
 
Summer 2005

Rockaway Plaza
 
Rockaway, NJ
 
250,000
 
 
8
 
 
8
 
 
7.4
 
Fall 2005

Firewheel Center
 
Garland, TX
 
785,000
 
 
98
 
 
98
 
 
54.6
 
Fall 2005
(a)
Amounts include the portion of the project placed in service as of December 31, 2004, if any.

(b)
Represents the project costs net of land sales, tenant reimbursements for construction, and other items (where applicable).

(c)
Due to our preference in the joint venture partnership, we are contributing 85% of the project costs.

            We expect to fund these capital projects with either available cash flow from operations, borrowings from our Credit Facility, or project specific construction loans. Our share of expected 2005 new development costs related to the above projects is approximately $150 million in 2005. In addition, we also expect to fund development/predevelopment costs related to certain other new U.S. developments amounting to $170 million in 2005.

            Strategic U.S. Expansions and Renovations.    The following describes our significant renovation and/or expansion projects currently under construction, the estimated total cost, our share of the estimated total cost and our share of construction in progress as of December 31, 2004 (dollars in millions):

Property
   Location
   Gross
Leasable
Area
   Estimated
Total Cost (b)
   Our Share of
Estimated
Total Cost
   Our Share of
Construction
in Progress (a)
   Actual/Estimated
Opening Date
Aurora Mall   Aurora, CO   380,000   $ 45   $ 45   $ 16.6   Fall 2005
Southpark Mall (Phase II)   Charlotte, NC   250,000     31     31     26.1   Summer 2005
(a)
Amounts include the portion of the project placed in service as of December 31, 2004, if any.

(b)
Represents the project costs net of land sales, tenant reimbursements for construction, and other items (where applicable).

            In addition to the above two projects, we also expect to fund development/predevelopment related to certain other new U.S. expansions and renovations amounting to $70 million in 2005.

60


            The following table summarizes total capital expenditures on consolidated Properties on a cash basis:

 
   2004
   2003
   2002
New Developments   $ 215   $ 105   $ 11
Renovations and Expansions     241     187     94
Tenant Allowances     74     54     60
Operational Capital Expenditures     16     6     46
   
 
 
  Total   $ 546   $ 352   $ 211
   
 
 

            International.    In 2003 we significantly increased our presence in Europe through our joint venture with the Rinascente Group, Gallerie Commerciali Italia ("GCI"). Our strategy is to invest capital internationally not only to acquire existing properties but also to use the net cash flow from the existing properties to fund other future developments. We believe reinvesting the cash flows derived overseas in foreign denominated development and redevelopment projects helps minimize our exposure to our initial investment and to the changes in foreign currencies on future investments that might otherwise significantly increase our cost and reduce our returns on these new projects and developments. In addition, to date we have funded the majority of our investments specific to Europe, with Euro-denominated borrowings that act as a natural hedge on our investments. This has also been the case with our Premium Outlet joint ventures in Japan and Mexico whereby Yen and Peso denominated financing have been secured for the financing of the affected properties.

            Currently, our net income exposure to changes in the volatility of the Euro, Yen, and Peso are not material. In addition, since cash flow from operations is currently being reinvested in other development projects, we do not expect to repatriate foreign denominated earnings for the next few years.

            The agreements for our 34.7% interest in European Retail Enterprises, B.V. ("ERE") are structured to allow us to acquire an additional 26.1% ownership interest over time. The future commitments to purchase shares from three of the existing stockholders of ERE are based upon a multiple of adjusted results of operations in the year prior to the purchase of the shares. Therefore, the actual amount of these additional commitments may vary. The current estimated additional commitments is approximately $60 million to purchase shares of stock of ERE, assuming that the three existing stockholders exercise their rights under put options. We expect these purchases to be made from 2006-2008. In addition, the agreements contain normal buy/sell provisions as previously described, as well as a marketing right which a partner may exercise. We and the other significant owner of ERE have the right to market the sale of the entire company, subject to a right of first offer to the non-selling partner. If the non-selling partner does not exercise its right for a specified price, then the selling partner can sell each partners' interest in ERE commencing in the second quarter of 2005. Our partner has initiated a process in order to exercise this marketing right but has not yet given us the notice required to formally commence the marketing right or allow us to exercise our right of first offer.

            The carrying amount of our total combined investment in ERE and GCI of December 31, 2004 net of the related cumulative translation adjustment was $320.6 million, including subordinated debt in ERE. Our investments in ERE and GCI are accounted for using the equity method of accounting. Currently a total of 3 European developments are under construction which will add approximately 3.9 million square feet of GLA for a total net cost of approximately €422 million, of which our share is approximately €85 million.

            As of December 31, 2004, the carrying amount of our 40% investment in the four Japanese Premium Outlet joint ventures was $398.3 million, and is accounted for using the equity method of accounting. There is a single project under expansion in Nagoya, Japan which contains 178,000 square feet of GLA to Toki Premium Outlets for a total net cost of $44 million, of which our share is approximately $18 million.

            On February 5, 2005, the Simon Property Board of Directors approved an increase in the annual distribution rate to $2.80 per unit. Distributions during 2004 aggregated $2.60 per unit and distributions during 2003 aggregated $2.40 per unit. We are required to pay a minimum level of distributions to maintain Simon Property's status as a REIT. Our distributions typically exceed our net income generated in any given year primarily because of depreciation, which is a "non-cash" expense. Our future distributions will be determined by the Simon Property Board of Directors based on actual results of operations, cash available for distributions, and what may be required to maintain Simon Property's status as a REIT.

61

Market Risk

            Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations. We manage our exposure to interest rate risk by a combination of interest rate protection agreements to effectively fix or cap a portion of our variable rate debt, or in the case of a fair value hedge, effectively convert fixed rate debt to variable rate debt. In addition, we manage this exposure by refinancing fixed rate debt at times when rates and terms are appropriate.

            We are also exposed to foreign currency risk on financings of foreign operations. Our intent is to offset gains and losses that occur on the underlying exposures, with gains and losses on the derivative contracts hedging these exposures. We do not enter into either interest rate protection or foreign currency rate protection agreements for speculative purposes.

            Our future earnings, cash flows and fair values relating to financial instruments are dependent upon prevalent market rates of interest, primarily LIBOR. Based upon consolidated indebtedness and interest rates at December 31, 2004, a 0.50% increase in the market rates of interest would decrease future earnings and cash flows by approximately $19.1 million, and would decrease the fair value of debt by approximately $252.2 million. A 0.50% decrease in the market rates of interest would increase future earnings and cash flows by approximately $19.1 million, and would increase the fair value of debt by approximately $260.8 million.

Retail Climate and Tenant Bankruptcies

            Bankruptcy filings by retailers are normal in the course of our operations. We are continually releasing vacant spaces resulting from tenant terminations. Pressures that affect consumer confidence, job growth, energy costs and income gains can affect retail sales growth, and a continuing soft economic cycle may impact our ability to retenant property vacancies resulting from store closings or bankruptcies. We lost approximately 500,000 square feet of mall shop tenants in 2004.

            The geographical diversity of our Portfolio mitigates some of the risk of an economic downturn. In addition, the diversity of our tenant mix also is important because no single retailer represents either more than 1.7% of total GLA or more than 4.0% of our annualized base minimum rent. Bankruptcies and store closings may, in some circumstances, create opportunities for us to release spaces at higher rents to tenants with enhanced sales performance. We have demonstrated an ability to successfully retenant anchor and inline store locations during soft economic cycles. While these factors reflect some of the inherent strengths of our portfolio in a difficult retail environment, we cannot assure you that we will successfully execute our releasing strategy.

Insurance

            We maintain commercial general liability "all risk" property coverage including fire, flood, extended coverage and rental loss insurance on our Properties. Rosewood Indemnity, Ltd, a wholly-owned subsidiary of the Management Company, indemnifies our general liability carrier for a specific layer of losses. The carrier has, in turn, agreed to provide evidence of coverage for this layer of losses under the terms and conditions of the carrier's policy. A similar policy written through Rosewood Indemnity, Ltd. also provides a portion of our initial coverage for property insurance and certain windstorm risks at the Properties located in Florida.

            The events of September 11, 2001 affected our insurance programs. Although insurance rates remain high, since the President signed into Law the Terrorism Risk Insurance Act (TRIA) in November of 2002, the price of terrorism insurance has steadily decreased, while the available capacity has been substantially increased. We have purchased terrorism insurance covering all Properties. The program provides limits up to $1 billion per occurrence for Certified (Foreign) acts of terrorism and $500 million per occurrence for Certified (Domestic) acts of terrorism. The coverage is written on an "all risk" policy form that eliminates the policy aggregates associated with our previous terrorism policies. This policy is in place throughout the remainder of 2005.

Inflation

            Inflation has remained relatively low in recent years and has had minimal impact on the operating performance of the Properties. Nonetheless, substantially all of the tenants' leases contain provisions designed to lessen our exposure to the impact of inflation. These provisions include clauses enabling us to receive percentage rentals based on tenants' gross sales, which generally increase as prices rise, and/or escalation clauses, which generally increase rental rates during the terms of the leases. In addition, many of the leases are for terms of less than ten years, which may enable us to replace existing leases with new leases at higher base and/or percentage rentals if rents of the existing leases are below the then-existing market rate. A substantial portion of our leases, other than those for anchors,

62


require the tenant to pay their proportionate share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. For most of our remaining leases, we receive fixed reimbursement from the tenant which is subject to annual adjustments.

            However, inflation may have a negative impact on some of our other operating items. Interest and general and administrative expenses may be adversely affected by inflation as these specified costs could increase at a rate higher than rents. Also, for tenant leases with stated rent increases, inflation may have a negative effect as the stated rent increases in these leases could be lower than the increase in inflation at any given time.

Seasonality

            The shopping center industry is seasonal in nature, particularly in the fourth quarter during the holiday season, when tenant occupancy and retail sales are typically at their highest levels. In addition, shopping malls achieve most of their temporary tenant rents during the holiday season. As a result, our earnings are generally highest in the fourth quarter of each year.

            In addition, given the number of Properties in warm summer climates our utility expenses are typically higher in the months of June through September due to higher electricity costs to supply air conditioning to our Properties. As a result some seasonality results in increased property operating expenses during these months; however, the majority of these costs are recoverable from tenants.

Environmental Matters

            Nearly all of the Properties have been subjected to Phase I or similar environmental audits. Such audits have not revealed nor is management aware of any environmental liability that we believe would have a material adverse impact on our financial position or results of operations. We are unaware of any instances in which we would incur significant environmental costs if any or all Properties were sold, disposed of or abandoned.


Item 7A.    Qualitative and Quantitative Disclosure About Market Risk

            Please refer to the Management's Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 under the caption Liquidity and Capital Resources.

63


Item 8.    Financial Statements and Supplementary Data

            Reference is made to the Index to Financial Statements contained in Item 15.


Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

            None.


Item 9A.    Controls and Procedures

            Evaluation of Disclosure Controls and Procedures.    We carried out an evaluation under the supervision and with participation of management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-K pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective as that date.

            Changes in Internal Control Over Financial Reporting.    There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f)) that occurred during the fourth quarter of 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

            Management's Report On Internal Control Over Financial Reporting.    We are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by Simon Property's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of the assets;

•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

            Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

            We assessed the effectiveness of our internal control over financial reporting as of December 31, 2004. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

            Based on our assessment, we believe that, as of December 31, 2004, our internal control over financial reporting is effective based on those criteria.

            Our independent registered public accounting firm has issued an audit report on our assessment of our internal control over financial reporting. Their report is included within this Form 10-K.

64

Report Of Independent Registered Public Accounting Firm On
Internal Control Over Financial Reporting

To the Board of Directors of Simon Property Group, Inc.:

            We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, included within Item 9A of this Form 10-K, that Simon Property Group, L.P. maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Simon Property Group L.P.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the partnership's internal control over financial reporting based on our audit.

            We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

            A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

            Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

            In our opinion, management's assessment that Simon Property Group, L.P. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Simon Property Group, L.P. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on the COSO criteria.

            We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Simon Property Group, L.P. and Subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive income, partners' equity and cash flows for each of the three years in the period ended December 31, 2004, and the financial statement schedule listed in the Index at Item 15, and our report dated March 14, 2005, expressed an unqualified opinion thereon.

    /s/  ERNST & YOUNG LLP      
Indianapolis, Indiana
March 14, 2005		    

Item 9B.    Other Information

            None.

65


Part III

Item 10.    Directors and Executive Officers of the Registrant

            The general partner of the Operating Partnership is Simon Property. The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A and is included under the caption "Executive Officers of the Registrant" in Part I thereof.


Item 11.    Executive Compensation

            The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A.


Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

            The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A.


Item 13.    Certain Relationships and Related Transactions

            The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A.


Item 14.    Principal Accounting Fees and Services

            The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A.

66


PART IV

Item 15.    Exhibits and Financial Statement Schedules

 
    
    
   Page No.
(1)   Financial Statements    

 
 
Report of Independent Registered Public Accounting Firm
 
68

 
 
 
 
Consolidated Balance Sheets as of December 31, 2004 and 2003
 
69

 
 
 
 
Consolidated Statements of Operations for the years ended December 31, 2004, 2003 and 2002
 
70

 
 
 
 
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002
 
71

 
 
 
 
Consolidated Statements of Partners' Equity for the years ended December 31, 2004, 2003 and 2002
 
72

 
 
Notes to Consolidated Financial Statements
 
73

(2)
 
Financial Statement Schedule
 
 

 
 
Simon Property Group, L.P. and Subsidiaries Schedule III — Schedule of Real Estate and Accumulated Depreciation
 
110

 
 
Notes to Schedule III
 
117

(3)
 
Exhibits
 
 

 
 
The Exhibit Index attached hereto is hereby incorporated by reference to this Item
 
118

67

Report Of Independent Registered Public Accounting Firm

To the Board of Directors of Simon Property Group, Inc.:

            We have audited the accompanying consolidated balance sheets of Simon Property Group, L.P. and Subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive income, partners' equity and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and schedule are the responsibility of Simon Property Group, L.P.'s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

            We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

            In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Simon Property Group, L.P. and Subsidiaries at December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

            We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Simon Property Group, L.P.'s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2005, expressed an unqualified opinion thereon.

    /s/  ERNST & YOUNG LLP      
Indianapolis, Indiana
March 14, 2005		    

68

Simon Property Group, L.P. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except unit amounts)

 
   December 31,
2004
   December 31,
2003
  
ASSETS:              
  Investment properties, at cost   $ 21,085,693   $ 14,805,073  
    Less — accumulated depreciation     3,136,195     2,534,898  
   
 
 
      17,949,498     12,270,175  
  Cash and cash equivalents     519,556     529,036  
  Tenant receivables and accrued revenue, net     358,990     302,507  
  Investment in unconsolidated entities, at equity     1,920,983     1,811,773  
  Deferred costs and other assets     1,172,875     608,572  
   
 
 
    Total assets   $ 21,921,902   $ 15,522,063  
   
 
 

LIABILITIES:
 
 
 
 
 
 
 
  Mortgages and other indebtedness   $ 14,586,393   $ 10,266,388  
  Accounts payable, accrued expenses, intangibles and deferred revenues     1,111,481     664,610  
  Cash distributions and losses in partnerships and joint ventures, at equity     37,739     14,412  
  Other liabilities, minority interest, and accrued distributions     324,160     280,401  
   
 
 
    Total liabilities     16,059,773     11,225,811  
   
 
 

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 
 

7.75%/8.00% Cumulative Redeemable Preferred Units, 822,588 units issued and outstanding, at liquidation value
 
 
82,259
 
 
82,259
 

PARTNERS' EQUITY:
 
 
 
 
 
 
 
  Preferred units, 33,042,122 and 17,530,898 units outstanding, respectively. Liquidation values $1,402,330 and $552,912, respectively     1,393,269     543,444  
 
General Partner, 218,635,551 and 200,311,053 units outstanding, respectively
 
 
3,516,902
 
 
2,898,045
 
 
Limited Partners, 60,876,619 and 60,591,896 units outstanding, respectively
 
 
980,316
 
 
876,627
 
 
Note receivable from Simon Property (interest at 7.8%, due 2009)
 
 
(88,804
)
 
(91,163
)
 
Unamortized restricted stock award
 
 
(21,813
)
 
(12,960
)
   
 
 
   
Total partners' equity
 
 
5,779,870
 
 
4,213,993
 
   
 
 
    Total liabilities and partners' equity   $ 21,921,902   $ 15,522,063  
   
 
 

The accompanying notes are an integral part of these statements.

69

Simon Property Group, L.P. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
(Dollars in thousands, except per unit amounts)

 
   For the Year Ended December 31,
  
 
   2004
   2003
   2002
  
REVENUE                    
  Minimum rent   $ 1,565,140   $ 1,356,157   $ 1,276,869  
  Overage rent     66,481     47,342     46,870  
  Tenant reimbursements     760,095     665,607     633,967  
  Management fees and other revenues     72,737     74,677     —  
  Other income     159,993     141,405     141,953  
   
 
 
 
    Total revenue     2,624,446     2,285,188     2,099,659  
   
 
 
 

EXPENSES:
 
 
 
 
 
 
 
 
 
 
  Property operating     363,386     318,322     301,190  
  Depreciation and amortization     617,785     491,450     461,486  
  Real estate taxes     251,959     215,282     206,065  
  Repairs and maintenance     91,390     83,365     72,989  
  Advertising and promotion     68,358     60,747     59,036  
  Provision for credit losses     17,608     14,364     8,736  
  Home and regional office costs     91,178     80,105     44,631  
  General and administrative     16,781     15,078     3,230  
  Costs related to withdrawn tender offer     —     10,581     —  
  Impairment charge     18,000     —     —  
  Other     39,990     27,239     28,332  
   
 
 
 
    Total operating expenses     1,576,435     1,316,533     1,185,695  
   
 
 
 

OPERATING INCOME
 
 
1,048,011
 
 
968,655
 
 
913,964
 
Interest expense     662,085     602,651     598,244  
   
 
 
 
Income before minority interest     385,926     366,004     315,720  
Minority interest     (9,687 )   (7,277 )   (10,498 )
(Loss) gain on sales of assets and other, net     (760 )   (5,146 )   160,877  
Gain from debt related transactions, net     —     —     14,577  
Income tax expense of taxable REIT subsidiaries     (11,770 )   (7,597 )   —  
   
 
 
 
Income before unconsolidated entities     363,709     345,984     480,676  
Income from unconsolidated entities     81,113     101,093     58,763  
   
 
 
 
Income from continuing operations     444,822     447,077     539,439  
Results of operations from discontinued operations     (293 )   10,243     18,677  
(Loss) gain on disposal or sale of discontinued operations, net     (252 )   22,394     —  
   
 
 
 

NET INCOME
 
 
444,277
 
 
479,714
 
 
558,116
 
Preferred unit requirement     (63,566 )   (67,182 )   (75,541 )
   
 
 
 

NET INCOME AVAILABLE TO UNITHOLDERS
 
$
380,711
 
$
412,532
 
$
482,575
 
   
 
 
 

NET INCOME AVAILABLE TO UNITHOLDERS ATTRIBUTABLE TO:
 
 
 
 
 
 
 
 
 
 
    General Partner   $ 295,954   $ 311,238   $ 355,369  
    Limited Partners     84,757     101,294     127,206  
   
 
 
 
    Net income   $ 380,711   $ 412,532   $ 482,575  
   
 
 
 

BASIC EARNINGS PER UNIT:
 
 
 
 
 
 
 
 
 
 
    Income from continuing operations   $ 1.43   $ 1.53   $ 1.91  
    Discontinued operations     —     0.13     0.08  
   
 
 
 
    Net income   $ 1.43   $ 1.66   $ 1.99  
   
 
 
 

DILUTED EARNINGS PER UNIT:
 
 
 
 
 
 
 
 
 
 
    Income from continuing operations   $ 1.43   $ 1.52   $ 1.91  
    Discontinued operations     —     0.13     0.08  
   
 
 
 
    Net income   $ 1.43   $ 1.65   $ 1.99  
   
 
 
 
 
Net Income
 
$
444,277
 
$
479,714
 
$
558,116
 
  Unrealized gain on interest rate hedge agreements     5,410     24,658     6,017  
  Net income on derivative instruments reclassified from accumulated other comprehensive
loss into interest expense		     (4,548 )   (5,888 )   (1,333 )
  Currency translation adjustment     3,970     4,045     —  
  Other     (463 )   1,337     (2,260 )
   
 
 
 
  Comprehensive Income   $ 448,646   $ 503,866   $ 560,540  
   
 
 
 

The accompanying notes are an integral part of these statements.

70

Simon Property Group, L.P. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)

 
   For the Year Ended
December 31,
  
 
   2004
   2003
   2002
  
CASH FLOWS FROM OPERATING ACTIVITIES:                    
  Net income   $ 444,277   $ 479,714   $ 558,116  
    Adjustments to reconcile net income to net cash provided by operating activities —                    
      Depreciation and amortization     606,293     513,713     487,200  
      Impairment on Investment Properties     18,000     —     —  
      Gain from debt related transactions, net     —     —     (14,307 )
      Loss (Gain) on sales of assets and other, net     760     5,146     (160,867 )
      Loss (Gain) on disposal or sale of discontinued operations, net     252     (22,394 )   —  
      Straight-line rent     (8,981 )   (3,468 )   (6,645 )
      Minority interest     9,687     7,277     10,498  
      Minority interest distributions     (20,426 )   (5,466 )   (13,214 )
      Equity in income of unconsolidated entities     (81,113 )   (101,093 )   (58,763 )
      Distributions of income from unconsolidated entities     97,666     87,453     80,141  
    Changes in assets and liabilities —                    
      Tenant receivables and accrued revenue     (34,900 )   35,586     17,408  
      Deferred costs and other assets     (47,102 )   (26,061 )   (9,457 )
      Accounts payable, accrued expenses, deferred revenues and other liabilities     97,005     (24,217 )   (9,831 )
   
 
 
 
        Net cash provided by operating activities     1,081,418     946,190     880,279  
   
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:                    
    Acquisitions     (2,359,056 )   (814,629 )   (1,129,139 )
    Capital expenditures, net     (546,149 )   (352,240 )   (211,282 )
    Cash from acquisitions     51,189     2,267     9,272  
    Cash from the consolidation of joint ventures and the Management Company     2,507     48,910     —  
    Net proceeds from sale of assets, partnership interest, and discontinued operations     51,271     278,066     433,829  
    Investments in unconsolidated entities     (84,876 )   (81,480 )   (91,488 )
    Distributions of capital from unconsolidated entities and other     142,572     159,106     191,314  
    Notes and advances to the Management Company and affiliate     —     —     12,999  
   
 
 
 
        Net cash used in investing activities     (2,742,542 )   (760,000 )   (784,495 )
   
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:                    
    Partnership contributions and issuance of units     3,430     99,725     340,390  
    Purchase of preferred units and units     (40,195 )   (93,954 )   —  
    Partnership unit redemptions     (59,681 )   —     —  
    Minority interest contributions, net     464     —     779  
    Partnership distributions     (741,354 )   (663,093 )   (603,580 )
    Mortgage and other indebtedness proceeds, net of transaction costs     5,710,886     2,536,498     2,408,685  
    Mortgage and other indebtedness principal payments     (3,221,906 )   (1,926,974 )   (2,103,586 )
   
 
 
 
        Net cash provided by (used in) financing activities     1,651,644     (47,798 )   42,688  
   
 
 
 

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
 
 
(9,480
)
 
138,392
 
 
138,472
 

CASH AND CASH EQUIVALENTS, beginning of year
 
 
529,036
 
 
390,644
 
 
252,172
 
   
 
 
 

CASH AND CASH EQUIVALENTS, end of year
 
$
519,556
 
$
529,036
 
$
390,644
 
   
 
 
 

The accompanying notes are an integral part of these statements.

71

Simon Property Group, L.P. and Subsidiaries
Consolidated Statements of Partners' Equity
(Dollars in thousands)

 
   Preferred Units
   Simon Property (Managing General Partner)
   Limited Partners
   Unamortized
Restricted
Stock Award
   Note Receivable from Simon Property
   Total Partners' Equity
  
Balance at December 31, 2001   $ 1,028,318   $ 2,266,472   $ 841,758   $ (20,297 ) $ (92,825 ) $ 4,023,426  
   
 
 
 
 
 
 
General partner contributions (671,836 units)           15,680                       15,680  
Conversion of 49,839 Series A Preferred Units into 1,893,651 units     (63,688 )   63,518                       (170 )
Units issued as dividend (19,375 units)           651                       651  
Common units issued (9,000,000 units)           321,390                       321,390  
Accretion of preferred units     476                             476  
Limited partner units converted to common units (173,442 units)           5,709     (5,709 )               —  
Stock incentive program (-21,070 forfeited units, net)           (602 )         604           2  
Amortization of stock incentive                       8,957           8,957  
Other (includes 10,895 units converted to cash)           400     (373 )               27  
Adjustment to limited partners' interest from increased ownership in the Operating Partnership           (67,741 )   67,726                 (15 )
Distributions     (75,541 )   (388,437 )   (138,790 )               (602,768 )
Net income     75,541     355,369     127,206                 558,116  
Other comprehensive income           1,800     624                 2,424  
   
 
 
 
 
 
 
Balance at December 31, 2002   $ 965,106   $ 2,574,209   $ 892,442   $ (10,736 ) $ (92,825 ) $ 4,328,196  
   
 
 
 
 
 
 

General partner contributions (733,617 units)
 
 
 
 
 
17,385
 
 
 
 
 
 
 
 
 
 
 
17,385
 
Conversion and redemption of 4,830,057 Series B Preferred Units into 12,443,195 units     (449,196 )   448,076                       (1,120 )
Issuance of 3,328,540 Series H Variable Rate Preferred Units     83,213                             83,213  
Repurchase of 3,250,528 Series H Variable Rate Preferred Units     (81,263 )                           (81,263 )
Accretion of preferred units     475                             475  
Limited partner units converted to common units (2,880,810 units)           39,704     (39,704 )               —  
Issuance of 251,096 7.5% Cumulative Redeemable Preferred Units     25,109                             25,109  
Stock incentive program (380,835 units, net)           12,546           (12,579 )         (33 )
Amortization of stock incentive                       10,355           10,355  
Acquisition of minority interest in Management Company           (2,334 )                     (2,334 )
Other (includes 273,307 units converted to cash and payments on note)           173     (10,980 )         1,662     (9,145 )
Adjustment to limited partners' interest from increased ownership in the Operating Partnership           (78,075 )   77,582                 (493 )
Distributions     (67,182 )   (445,544 )   (147,492 )               (660,218 )
Net income     67,182     311,238     101,294                 479,714  
Other comprehensive income           20,667     3,485                 24,152  
   
 
 
 
 
 
 
Balance at December 31, 2003   $ 543,444   $ 2,898,045   $ 876,627   $ (12,960 ) $ (91,163 ) $ 4,213,993  
   
 
 
 
 
 
 
General partner contributions (392,943 units)           10,654                       10,654  
Repurchase of Series H Variable Rate Preferred Units (-78,012 units)     (1,950 )                           (1,950 )
Limited partner units issued (120,671 units)                 6,000                 6,000  
Issuance of 7.5% Cumulative Redeemable Preferred Units (4,277 units)     428                             428  
Issuance of limited partner units in the Chelsea acquisition
(4,652,232 units)		                 263,223                 263,223  
Issuance of common units in the Chelsea acquisition (12,978,795 units)           733,172                       733,172  
Issuance of Series I Convertible Perpetual Preferred Units (18,015,506 units) (4,753,794 to limited partners, 13,261,712 to Simon Property)     900,776                             900,776  
Issuance of Series J Preferred Units in the Chelsea acquisition (796,948 units)     39,847                             39,847  
Accretion of preferred units     406                             406  
Series C Preferred Units (-1,061,580 units) converted to common units (803,341 units)     (29,724 )   29,724                       —  
Series C Preferred Units (-9,876 units) converted to limited partner units (7,473 units)     (277 )         277                 —  
Series D Preferred Units repurchased (-1,156,039 units)     (34,681 )                           (34,681 )
Series E Preferred Unit redemption (-1,000,000 units)     (25,000 )                           (25,000 )
Limited partner units converted to common units (4,194,117 units)           73,726     (73,726 )               —  
Other unit repurchases (-317,300 units)           (20,400 )                     (20,400 )
Stock incentive program (365,602 units, net)           20,755           (20,788 )         (33 )
Amortization of stock incentive                       11,935           11,935  
Common units retired (-93,000)           (5,385 )                     (5,385 )
Other (includes -301,536 limited partner units converted to cash and payments on note)           26     (17,846 )         2,359     (15,461 )
Adjustment to limited partners' interest from increased ownership in the Operating Partnership           9,016     (7,777 )               1,239  
Distributions     (63,566 )   (532,164 )   (151,809 )               (747,539 )
Net income     63,566     295,954     84,757                 444,277  
Other comprehensive income           3,779     590                 4,369  
   
 
 
 
 
 
 
Balance at December 31, 2004   $ 1,393,269   $ 3,516,902   $ 980,316   $ (21,813 ) $ (88,804 ) $ 5,779,870  
   
 
 
 
 
 
 

The accompanying notes are an integral part of these statements.

72


Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in thousands, except unit and per unit amounts and where indicated as in millions or billions)

1.    Organization

            Simon Property Group, L.P. (the "Operating Partnership") is a Delaware limited partnership and a majority owned subsidiary of Simon Property Group, Inc. ("Simon Property"). Simon Property is a self-administered and self-managed real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). In these notes, the terms "we", "us" and "our" refer to the Operating Partnership and its subsidiaries. Under the terms of our partnership agreement, we reimburse the operating expenses incurred by Simon Property.

            We are engaged primarily in the ownership, operation, leasing, management, acquisition, expansion and development of real estate properties. Our real estate properties consist primarily of regional malls, Premium Outlet® centers and community shopping centers. As of December 31, 2004, we owned or held an interest in 296 income-producing properties in the United States, which consisted of 171 regional malls, 71 community shopping centers, 31 Premium Outlet centers and 23 other properties in 40 states plus Puerto Rico (collectively, the "Properties", and individually, a "Property"). Other properties are properties that include retail space, office space, and/or hotel components. In addition, we also own interests in twelve parcels of land held in the United States for future development (together with the Properties, the "Portfolio"). Finally, we have ownership interests in 51 European shopping centers (in France, Italy, Poland and Portugal); four Premium Outlet centers in Japan; one Premium Outlet center in Mexico; and one shopping center in Canada.

            We generate the majority of our revenues from leases with retail tenants including:

•
Base minimum rents and cart and kiosk rentals,
•
Overage and percentage rents based on tenants' sales volume, and
•
Recoveries of substantially all of our recoverable expenditures, which consist of property operating, real estate tax, repairs and maintenance, and advertising and promotional expenditures.

            We also generate revenues due to our size and tenant relationships from:

•
Pursuing mall marketing initiatives, including the sale of gift cards,
•
Forming consumer focused strategic corporate alliances, and
•
Offering property operating services to our tenants and others resulting from our relationships with vendors.

            M.S. Management Associates, Inc. (the "Management Company") is our wholly-owned subsidiary that provides leasing, management, and development services to most of the Properties. In addition, insurance subsidiaries of the Management Company insure: the self-insured retention portion of our general liability program; the deductible associated with our workers' compensation programs; and provide reinsurance for the primary layer of general liability coverage to our third party maintenance providers while performing services under contract with us. Third party providers provide coverage above the insurance subsidiaries' limits.

            On January 1, 2003, we acquired all of the remaining equity interests of the Management Company from three Simon family members for a total purchase price of $425, which was equal to the appraised value of the interests as determined by an independent third party. The acquisition was approved by Simon Property's independent directors. As a result, the Management Company is now our wholly owned consolidated taxable REIT subsidiary ("TRS"). See Note 7 for further discussion of the operations of the Management Company for the year ended December 31, 2002.

2.    Basis of Presentation and Consolidation

            The accompanying consolidated financial statements include the accounts of the Operating Partnership and its subsidiaries. We eliminated all significant intercompany amounts.

73


            We consolidate Properties that are wholly owned or Properties that we own less than 100% but we control. Control of a Property is demonstrated by our ability to:

•
manage day-to-day operations,
•
refinance debt and sell the Property without the consent of any other partner or owner, and
•
the inability of any other partner or owner to replace us.

            We also consolidate all variable interest entities when we are determined to be the primary beneficiary.

            The deficit minority interest balances in the accompanying consolidated balance sheets represent outside partners' interests in the net equity of certain properties. We record deficit minority interests when a joint venture agreement provides for the settlement of deficit capital accounts before distributing the proceeds from the sale of joint venture assets, the joint venture partner is obligated to make additional contributions to the extent of any capital account deficits or the joint venture partner has the ability to fund such additional contributions.

            Investments in partnerships and joint ventures represent non-controlling ownership interests in Properties and prior to 2003 our investment in the Management Company. We account for these investments using the equity method of accounting. We initially record these investments at cost and we subsequently adjust for net equity in income or loss, which we allocate in accordance with the provisions of the applicable partnership or joint venture agreement, and cash contributions and distributions. The allocation provisions in the partnership or joint venture agreements are not always consistent with the legal ownership interests held by each general or limited partner or joint venture investee primarily due to partner preferences.

            As of December 31, 2004, of our 353 properties we consolidated 209 wholly-owned properties, consolidated 20 additional properties that are less than wholly-owned which we control, and accounted for 124 properties using the equity method. We manage the day-to-day operations of 58 of the 124 equity method properties.

            We allocate our net operating results after preferred distributions (see Note 10) based on our partners' respective ownership interests. In addition, Simon Property owns certain of our preferred units (Note 10). Simon Property's weighted average ownership interest in the Operating Partnership was as follows:

 
 For the Year Ended December 31,
 
 2004
   2003
   2002
  77.7%   75.4%   73.6%

            Simon Property's ownership interest in the Operating Partnership as of December 31, 2004 was 78.2% and at December 31, 2003 was 76.8%. We adjust the limited partners' interest at the end of each period to reflect their ownership interest in us. The adjustment is reflected in the accompanying consolidated statements of partners' equity.

3.    Summary of Significant Accounting Policies

            We record investment properties at cost. Investment properties include costs of acquisitions; development, predevelopment, and construction (including salaries and related benefits); tenant allowances and improvements; and interest and real estate taxes incurred related to construction. We capitalize improvements and replacements from repair and maintenance when the repairs and maintenance extend the useful life, increase capacity, or improve the efficiency of the asset. All other repair and maintenance items are expensed as incurred. We record depreciation on buildings and improvements utilizing the straight-line method over an estimated original useful life, which is generally 10 to 35 years. We review depreciable lives of investment properties periodically and we make adjustments when necessary to reflect a shorter economic life. We record depreciation on tenant allowances, tenant inducements and

74

tenant improvements utilizing the straight-line method over the term of the related lease. We record depreciation on equipment and fixtures utilizing the straight-line method over seven to ten years.

            We review investment properties for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of investment properties may not be recoverable. These circumstances include, but are not limited to, declines in cash flows, occupancy and comparable sales per square foot at the property. We recognize an impairment of investment property when the estimated undiscounted operating income before depreciation and amortization is less than the carrying value of the property. To the extent impairment has occurred, we charge to income the excess of carrying value of the property over its estimated fair value. We may decide to sell properties that are held for use and the sale prices of these properties may differ from their carrying values.

            Goodwill resulted from the merger with Corporate Property Investors, Inc. in 1998. We review goodwill for impairment at the reporting unit level on an annual basis or more frequently if an event occurs that would change the fair value of the reporting unit below its carrying amount. If we determine the reporting unit is impaired, the loss would be recognized as an impairment loss in income. Goodwill is reflected in "deferred costs and other assets" in the accompanying consolidated balance sheets.

            We allocate the purchase price of acquisitions to the various components of the acquisition based upon the relative value of each component in accordance with SFAS No. 141 "Business Combinations." These components typically include buildings, land and intangibles related to in-place leases and we estimate:

•
the fair value of the buildings on an as-if-vacant basis. The value allocated to land is determined either by real estate tax assessments, a third party or other relevant data.
•
the market value of in-place leases based upon our best estimate of current market rents and amortize the resulting market rent adjustment into revenues.
•
the value of costs to obtain tenants, including tenant allowances and improvements and leasing commissions.
•
the value of revenue and recovery of costs foregone during a reasonable lease-up period, as if the space was vacant.

            We amortize all of these amounts over the remaining estimated life of the building or average term of the acquired in-place leases, as appropriate. We also estimate the value of tenant or other customer relationships acquired, if any, which are amortized over the term of the related leases and any expected renewals. Any remaining amount of value will be allocated to in-place leases, as deemed appropriate under the circumstances.

            In 2002, we adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144 provides a framework for the evaluation of impairment of long-lived assets, the treatment of assets held for sale or to be otherwise disposed of, and the reporting of discontinued operations. SFAS No. 144 requires us to reclassify any material operations related to consolidated properties sold during the period to discontinued operations. We have reclassified the results of operations of the five properties sold during 2004, the thirteen properties sold in 2003, and the seven properties sold in 2002 as described in Note 4 to discontinued operations in the accompanying consolidated statements of operations and comprehensive income for all periods presented. Revenues included in discontinued operations were $6.0 million for the year ended December 31, 2004, $47.8 million for the year ended December 31, 2003 and $72.1 million for the year ended December 31, 2002.

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            We consider all highly liquid investments purchased with an original maturity of 90 days or less to be cash and cash equivalents. Cash equivalents are carried at cost, which approximates market value. Cash equivalents generally consist of commercial paper, bankers acceptances, Eurodollars, repurchase agreements, and money markets. Our balance of cash and cash equivalents includes a balance of $185.6 million related to our gift card program which we do not consider available for general working capital purposes. See Notes 4, 8, and 10 for disclosures about non-cash investing and financing transactions.

            Marketable securities consist primarily of the assets of the insurance subsidiaries of the Management Company and are included in deferred costs and other assets. The types of securities typically include U.S. Treasury or other U.S. government securities as well as corporate debt securities with maturities ranging from 1 to 10 years. These securities are classified as available-for-sale and are valued based upon quoted market prices or using discounted cash flows when quoted market prices are not available. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Changes in the values of these securities are recognized in accumulated other comprehensive income until the gain or loss is realized and recorded in other income. However, if we determine a decline in value is other than temporary, then we recognize the unrealized loss in income to write down the investments to their net realizable value.

            The insurance subsidiaries of the Management Company are required to maintain statutory minimum capital and surplus as well as maintain a minimum liquidity ratio. Therefore, our access to these securities may be restricted.

            We prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the United States ("GAAP"). GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Our actual results could differ from these estimates.

            We capitalize interest on projects during periods of construction until the projects are ready for their intended purpose. The amount of interest capitalized during each year is as follows:

 
 For the Year Ended December 31,
 
 2004
   2003
   2002
  $ 14,612   $ 10,562   $ 4,249

            The Financial Accounting Standards Board (the "FASB") issued Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("Statement 131"), in June of 1997. Statement 131 requires disclosure of certain operating and financial data with respect to separate business activities within an enterprise. Our primary business is the owning and operation of retail real estate. We have aggregated our retail operations, including regional malls, Premium Outlets and community centers, into one reportable segment because they have similar economic characteristics and provide similar products and services to similar types of tenants. Further, all material

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operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues.

            Deferred Financing and Lease Costs.    Our deferred costs consist primarily of financing fees we incurred in order to obtain long-term financing and internal and external leasing commissions and related costs. We record amortization of deferred financing costs on a straight-line basis over the terms of the respective loans or agreements. Our deferred leasing costs consist primarily of capitalized salaries and related benefits in connection with lease originations. We record amortization of deferred leasing costs on a straight-line basis over the terms of the related leases. We amortize debt premiums and discounts over the remaining terms of the related debt instruments. These debt premiums or discounts arise either at the debt issuance or as part of the purchase price allocation of the fair value of debt assumed in acquisitions. Details of deferred costs as of December 31 are as follows:

 
   2004
   2003
  
Deferred financing and lease costs   $ 418,447   $ 300,792  
Accumulated amortization     (238,758 )   (177,062 )
   
 
 
Deferred financing and lease costs, net   $ 179,689   $ 123,730  
   
 
 

            The accompanying statements of operations and comprehensive income includes amortization as follows:

 
   For the year ended December 31,
  
 
   2004
   2003
   2002
  
Amortization of deferred financing costs   $ 17,188   $ 15,710   $ 17,079  
Amortization of debt premiums net of discounts     (8,401 )   (5,723 )   (2,269 )
Amortization of deferred leasing costs     19,209     18,626     17,210  

            We record amortization of deferred financing costs, amortization of premiums, and accretion of discounts as part of interest expense.

            Intangible Assets.    Intangible assets are included in deferred costs and other assets on the accompanying consolidated balance sheets. Amounts allocated as a component of our 2004 acquisitions are based on our preliminary valuations and will be finalized within one year. The unamortized balance consists of the following as of December 31:

 
   Average
Life (years)
   2004
   2003
In-place lease intangibles   6.5   $ 173,224   $ 5,516
Fair market value of above market leases   6.5     126,338     8,752
Tenant relationship and other intangibles   10.0     176,250     —
       
 
        $ 475,812   $ 14,268
       
 

            We also recorded intangible liabilities that are included in accounts payable, accrued expenses, intangibles, and deferred revenues on the consolidated balance sheets related to the fair value of below market leases. The unamortized amounts as of December 31, 2004 and 2003 are $334.2 million and $81.7 million, respectively. The average life of these intangibles approximates 6 years.

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            Deferred costs and other assets also include the following items as of December 31:

 
   2004
   2003
Marketable securities of our captive insurance companies   $ 95,493   $ 49,579
Goodwill     20,098     20,098
Minority interests     51,412     41,467
Prepaids, notes receivable, and other assets     350,371     359,430
   
 
    $ 517,374   $ 470,574
   
 

            We account for our derivative financial instruments pursuant to SFAS 133 "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS 138, "Accounting for Derivative Instruments and Hedging Activities." We use a variety of derivative financial instruments in the normal course of business to manage or hedge the risks described in Note 8 and record all derivatives on our balance sheets at fair value. We require that hedging derivative instruments are effective in reducing the risk exposure that they are designated to hedge. We formally designate any instrument that meets these hedging criteria as a hedge at the inception of the derivative contract.

            We adjust our balance sheets on an ongoing basis to reflect the current fair market value of our derivatives. We record changes in the fair value of these derivatives each period in earnings or comprehensive income, as appropriate. The ineffective portion of the hedge is immediately recognized in earnings to the extent that the change in value of a derivative does not perfectly offset the change in value of the instrument being hedged. The unrealized gains and losses held in accumulated other comprehensive income will be reclassified to earnings over time as the hedged items are recognized in earnings. We have a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.

            We use standard market conventions to determine the fair values of derivative instruments, and techniques such as discounted cash flow analysis, option pricing models, and termination cost are used to determine fair value at each balance sheet date. All methods of assessing fair value result in a general approximation of value and such value may never actually be realized.

            The components of our accumulated comprehensive income consisted of the following as of December 31:

 
   2004
   2003
Cumulative translation adjustment   $ 5,826   $ 1,856
Accumulated derivative gains, net     14,350     13,488
Net unrealized gains on marketable securities     874     1,337
   
 
Total accumulated comprehensive income   $ 21,050   $ 16,681
   
 

            We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and account for our leases as operating leases. We accrue minimum rents on a straight-line basis over the terms of their respective leases. Substantially all of our retail tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. We recognize overage rents only when each tenant's sales exceeds its sales threshold.

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            We structure our leases to allow us to recover a significant portion of our property operating, real estate taxes, repairs and maintenance, and advertising and promotion expenses from our tenants. A substantial portion of our leases, other than those for anchors, require the tenant to pay their proportionate share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. For most of our remaining leases, we receive a fixed payment from the tenant which is subject to an annual adjustment. Such property operating expenses typically include utility, insurance, security, janitorial, landscaping, food court and other administrative expenses. Our advertising and promotional costs are expensed as incurred. We accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. We also receive escrow payments for these reimbursements from substantially all our tenants throughout the year. We do this to reduce the risk of loss on uncollectible accounts once we perform the final year-end billings for recoverable expenditures. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year and we believe these differences were not material in any period presented.

            Management fees and other revenues are generally received from our unconsolidated joint venture Properties as well as third parties. Management fee revenue is recognized based on a contractual percentage of joint venture property revenue. Development fee revenue is recognized on a contractual percentage of hard costs to develop a property. Leasing fee revenue is recognized on a contractual per square foot charge based on the square footage of current year leasing activity.

            Insurance premiums written and ceded are recognized on a pro-rata basis over the terms of the policies. Insurance losses are reflected in property operating expenses in the accompanying statements of operations and comprehensive income and include estimates for losses incurred but not reported as well as losses pending settlement. Estimates for losses are based on evaluations by actuaries and management's best estimates. Total insurance reserves for our insurance subsidiaries as of December 31, 2004 and 2003 approximated $80.0 million and $60.7 million, respectively.

            We recognize revenues from our gift card program when fees are earned according to the provisions of the card arrangements and respective terms and conditions.

            We record a provision for credit losses based on our judgment of a tenant's creditworthiness, ability to pay and probability of collection. In addition, we also consider the retail sector in which the tenant operates and our historical collection experience in cases of bankruptcy, if applicable. Presented below is the activity in the allowance for credit losses and includes the activities related to discontinued operations during the following years ended:

 
   For the year ended December 31,
  
 
   2004
   2003
   2002
  
Balance at Beginning of Year   $ 31,305   $ 20,120   $ 24,494  
Consolidation of Management Company     -     1,700     -  
Provision for Credit Losses     18,867     14,675     8,727  
Accounts Written Off     (13,255 )   (5,190 )   (13,101 )
   
 
 
 
Balance at End of Year   $ 36,917   $ 31,305   $ 20,120  
   
 
 
 

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            As a partnership, the allocated share of earnings for each year is included in the income tax returns of the partners; accordingly, income taxes are not provided in the accompanying consolidated financials statements. State income, franchise or other taxes were not significant in any of the periods presented.

            Simon Property has elected taxable REIT subsidiary ("TRS") status for some of our subsidiaries. This enables us to provide services that would otherwise be considered impermissible for REITs. For these entities, deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if we believe all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance that results from the change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in income.

            As a result of the consolidation of the Management Company, the deferred tax assets and liabilities and income tax expense of the Management Company are included in the accompanying consolidated financial statements as of and for the years ended December 31, 2004 and 2003. As of December 31, 2004 and 2003, we had a net deferred tax asset of $11.3 million and $22.0 million, respectively, related to TRS subsidiaries. The net deferred tax asset is included in deferred costs and other assets in the accompanying consolidated balance sheets and consists primarily of operating losses and other carryforwards for Federal income tax purposes as well as the timing of the deductibility of losses from insurance subsidiaries.

            We base basic earnings per unit on the weighted average number of units outstanding during the period. We determine diluted earnings per unit on the weighted average number of units outstanding combined with the incremental weighted average units that would have been outstanding assuming all dilutive potential common units were converted into units at the earliest date possible. The following table sets forth the computation for our basic and diluted earnings per unit.

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   For the Year Ended December 31,
 
   2004
   2003
   2002
Income from continuing operations, after the preferred unit requirement   $ 381,256   $ 379,895   $ 463,898
Discontinued operations     (545 )   32,637     18,677
   
 
 
Net Income available to unitholders — Basic   $ 380,711   $ 412,532   $ 482,575
   
 
 
Effect of dilutive securities:                  
Dilutive convertible preferred unit requirements     -     -     1,470
   
 
 
Net Income available to unitholders — Diluted   $ 380,711   $ 412,532   $ 484,045
   
 
 

Weighted Average units Outstanding — Basic
 
 
265,405,033
 
 
248,926,276
 
 
242,040,734
Effect of stock options     867,368     823,532     671,972
Effect of convertible preferred units     -     -     918,615
   
 
 
Weighted Average units Outstanding — Diluted     266,272,401     249,749,808     243,631,321
   
 
 
 
   For the Year Ended December 31,
 
   2004
   2003
   2002
Basic Earnings per unit:                  
Income from continuing operations, after the preferred unit requirement   $ 1.43   $ 1.53   $ 1.91
Discontinued operations     -     0.13     0.08
   
 
 
Net Income available to unitholders — Basic   $ 1.43   $ 1.66   $ 1.99
   
 
 

Diluted Earnings per unit:
 
 
 
 
 
 
 
 
 
Income from continuing operations, after the preferred unit requirement   $ 1.43   $ 1.52   $ 1.91
Discontinued operations     -     0.13     0.08
   
 
 
Net Income available to unitholders — Diluted   $ 1.43   $ 1.65   $ 1.99
   
 
 

            For the year ending December 31, 2004, potentially dilutive securities include stock options, and certain classes of preferred units. Units held by the limited partners may be exchanged for shares of common stock in Simon Property, on a one-for-one basis in certain circumstances. If exchanged, the units would not have a dilutive effect. We accrue distributions when they are declared.

            We made certain reclassifications of prior period amounts in the financial statements to conform to the 2003 presentation. These reclassifications have no impact on net income previously reported. These include reclassifying certain home office and regional office costs, and general and administrative expenses. Effective January 1, 2003, we adopted SFAS No. 145 "Rescission of FASB Statements No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections" ("SFAS No. 145") and therefore we have reclassified those items which no longer qualify as extraordinary items to income from continuing operations. In 2002, we reclassified $14.6 million, or $0.06 per unit, of gains from debt extinguishments of consolidated Properties to "gains from debt related transactions, net."

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4.    Real Estate Acquisitions, Disposals, and Impairment

            On February 5, 2004, we purchased a 95% interest in Gateway Shopping Center in Austin, Texas, for approximately $107.0 million. We initially funded this transaction with borrowings on the Credit Facility and with the issuance of 120,671 units of the Operating Partnership valued at approximately $6.0 million.

            On April 1, 2004, we increased our ownership interest in The Mall of Georgia Crossing from 50% to 100% for approximately $26.3 million, including the assumption of $16.5 million of debt. As a result of this transaction, this Property is now reported as a consolidated entity.

            On April 27, 2004, we increased our ownership in Bangor Mall in Bangor, Maine from 32.6% to 67.6% and increased our ownership in Montgomery Mall in Montgomery, Pennsylvania from 23.1% to 54.4%. We acquired these additional ownership interests from our partner in the properties for approximately $67.0 million and the assumption of $16.8 million of debt. We funded this transaction with the Montgomery Mall mortgage discussed in Note 8 and borrowings on the Credit Facility. Bangor Mall and Montgomery Mall were previously accounted for under the equity method. These Properties are now consolidated as a result of this acquisition.

            On May 4, 2004, we purchased a 100% interest in Plaza Carolina in San Juan, Puerto Rico for approximately $309.0 million. We funded this transaction with the mortgage discussed in Note 8 and borrowings on the Credit Facility.

            On October 14, 2004, Simon Property completed its $5.2 billion (including assumption of debt) acquisition of Chelsea Property Group, Inc. (Chelsea). We and Simon Property issued securities to Chelsea's stockholders and limited partners. Chelsea common stockholders received per share merger consideration of: $36.00 in cash; 0.2936 of a share of Simon Property common stock; and 0.3000 of a share of Simon Property Series I 6% Convertible Perpetual Preferred Stock (Series I Preferred Stock). In total, Simon Property issued the following shares of common and preferred stock to Chelsea common stockholders:

•
12,978,795 shares of Simon Property common stock; and,

•
13,261,712 shares of Series I Preferred Stock

            In accordance with our partnership agreement, we issued to Simon Property an equivalent number of our units based on the shares of common stock issued and an equivalent number of our preferred units, with terms substantially the same as the related Series I Preferred Stock that Simon Property issued to Chelsea common stockholders. The Series I 6% preferred units and the corresponding Series I Preferred Stock are further described in the footnotes to the consolidated financial statements.

            Further, each share of Chelsea Series A Preferred Stock was converted into the right to receive one share of Simon Property Series J 8 3/8% Cumulative Redeemable Preferred Stock (Series J Preferred Stock), which has terms substantially the same as the Chelsea Series A Preferred Stock. The fair value of the Chelsea Series A Preferred Stock at the acquisition date was $39.8 million, which resulted in the issuance of 796,948 shares of Series J Preferred Stock. As a result, we issued to Simon Property an equivalent number of Series J 8 3/8% Cumulative Redeemable Preferred Units with terms substantially the same as the related Series J Preferred Stock.

            As part of the transaction, we issued to the limited partner of CPG Partners, L.P., the operating partnership subsidiary of Chelsea, our units and convertible preferred units as follows.

•
4,652,232 units; and,

•
4,753,794 Series I 6% Convertible Perpetual Preferred Units.

            As a result CPG Partners, L.P. and Chelsea are now our subsidiaries.

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            The following summarized balance sheet represents the impact of the acquisition of Chelsea in 2004:

Investment properties, at cost   $ 4,685,738
Cash and cash equivalents     27,250
Tenant receivables     4,052
Investment in unconsolidated entities     417,439
Deferred costs and other assets (including intangibles)     499,523
   
  Total assets   $ 5,634,002
   

Mortgages and other indebtedness
 
$
1,611,184
Accounts payable, accrued expenses, intangibles and other     351,645
   
  Total liabilities   $ 1,962,829
   

            On November 19, 2004 we increased our ownership interest in Lehigh Valley, located in Whitehall, Pennsylvania, from 24.88% to 37.61% for approximately $42.3 million, including the assumption of our $25.9 million share of debt.

            On December 15, 2004, we increased our ownership in Woodland Hills in Tulsa, Oklahoma from 47.2% to 94.5%. We acquired this additional ownership interests from our partner in the property for approximately $119.5 million, including the assumption of $39.7 million of debt. Woodland Hills was previously accounted for under the equity method. This Property is now consolidated as a result of this acquisition.

            Purchase price allocations for all of the above 2004 business combinations are preliminary and will be finalized in 2005. Any adjustment to the values assigned to identified assets and liabilities in finalizing the purchase price allocation for these business combinations above are not expected to have a material effect on consolidated net income.

            On March 14, 2003, we purchased the remaining interest in The Forum Shops at Caesars in Las Vegas, NV from the minority limited partner who initiated the buy/sell provision of the partnership agreement. We purchased this interest for $174.0 million in cash and assumed the minority limited partner's $74.2 million share of debt, and other partnership liabilities. We funded this purchase with borrowings from our Credit Facility. We recorded minority interest expense relating to the minority limited partner's share of the results of operations of The Forum Shops at Caesars through March 14, 2003.

            On August 20, 2003, we purchased a 100% leasehold stake in Stanford Shopping Center in Palo Alto, California for $333.0 million from Stanford University. Stanford University holds, as lessor, a long-term ground lease underlying the asset. We funded this purchase with a mortgage, with borrowings from our Credit Facility, and with available working capital.

            In the fourth quarter 2003, through a series of transactions we increased our ownership interest in Kravco Investments L.P. ("Kravco"), a Philadelphia, PA based owner of regional malls, from approximately 18% to approximately 80% (which has been subsequently reduced to 76% in the fourth quarter of 2004) and in its affiliated management company from approximately 15% to 50%. The portfolio consists of six regional malls, five of which are in the Philadelphia metropolitan area, and four community centers. We acquired our interest in Kravco from certain private investor real estate companies. We acquired our initial interest jointly with these real estate companies in connection with the Rodamco acquisition in 2002. As a result of this acquisition, we consolidated four new

83


partnerships and account for six new partnerships as joint ventures. The total consideration paid in these transactions was approximately $293.4 million and consisted of:

•
cash of $82.0 million,
•
issuance of $107.4 million of perpetual preferred units by the Operating Partnership, and
•
the assumption of our share of mortgage debt and other payables of $104.0 million.

            On December 22, 2003, we jointly formed with The Rinascente Group the joint venture Gallerie Commerciali Italia S.p.A ("GCI"), which owns a geographically diverse portfolio in Italy of 40 existing shopping centers as of December 31, 2004 (38 as of December 31, 2003). The Rinascente Group contributed these 38 existing shopping centers as well as development opportunities to GCI and then sold 49% of GCI to one of our affiliates. The initial gross value of GCI was approximately €860 million, or approximately $1.1 billion, and our initial equity investment was approximately €187 million, or $232 million. We account for our interest in GCI under the equity method of accounting.

            On May 3, 2002, we purchased, jointly with certain private investor real estate companies, the partnership interests of Rodamco North America N.V. ("Rodamco") and its affiliates through the acquisition of Rodamco stock. Our portion of the acquisition includes the purchase of the remaining partnership interests in four of our existing joint venture Properties, new partnership interests in nine additional Properties, and other partnership interests and assets. We acquired these partnership interests as part of our acquisition strategy to acquire and own quality retail real estate thereby enhancing our overall Portfolio. The results of operations for the partnership interests acquired have been included in our results of operations since May 3, 2002.

            The purchase price was €2.5 billion for the 45.1 million outstanding shares of Rodamco stock, or €55 per share, and the assumption of certain Rodamco obligations. Our share of the total purchase price was approximately $1.6 billion, including €795.0 million or $720.7 million to acquire Rodamco shares, the assumption of $579 million of debt and preferred units, and cash of $268.8 million to pay off our share of corporate level debt and unwind interest rate swap agreements.

            We, and the Management Company, hold the other Rodamco partnership interests and assets jointly with two other real estate companies. We account for these assets under the equity method. These included our initial interest in Kravco, two notes receivable, an interest in a hotel, and three other retail properties. Some of these assets were considered held for sale and amounted to approximately $8 million. We sold two of the other retail properties in 2002 for no gain or loss for approximately $4.4 million and we sold the remaining asset held for sale in 2003 for $2.9 million and recognized a nominal gain.

            In connection with the Rodamco acquisition we entered into a series of hedging transactions to manage our €795 million exposure to fluctuations in the Euro currency, all of which were closed out at the completion of the acquisition. Our total net gains were $7.1 million on the hedging activities.

            We financed a portion of the Rodamco acquisition through the sale of two partnership interests acquired as part of the Rodamco acquisition and an existing partnership interest to Teacher's Insurance and Annuity Association ("Teachers"). We sold these partnership interests for approximately $391.7 million, including approximately $198.0 million of cash and approximately $193.7 million of debt assumed. Our sale of the existing partnership interest resulted in a net gain of $25.7 million.

            As a result of the Rodamco acquisition and the Teachers transaction, we consolidated five new partnerships and account for six new partnerships as joint ventures.

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            On July 19, 2002, we purchased the remaining two-thirds interest in Copley Place (we had acquired our initial interest in the Rodamco acquisition) for $241.4 million, including $118.3 million in cash and the assumption of $123.1 million of debt. We funded the acquisition with borrowings from our existing Credit Facility. As a result of this transaction, we have consolidated the results of operations of Copley Place since July 19, 2002.

            We sold five non-core properties, consisting of three regional malls, one community center and one Premium Outlet center. In total, we received net proceeds from these sales of approximately $34.3 million. As a result of these transactions, we recorded a net loss of $0.3 million during the twelve months ended December 31, 2004. The properties and their dates of sale consisted of:

•
Hutchinson Mall on June 15, 2004
•
Woodville Mall on September 1, 2004
•
Heritage Park Mall on December 29, 2004
•
Bridgeview Court on July 22, 2004
•
Santa Fe Premium Outlet on December 28, 2004

            As of December 31, 2003, the carrying value of the properties sold at cost, net of accumulated depreciation was $27.0 million.

            On April 7, 2004, we sold a joint venture interest in a hotel property held by the Management Company and on April 8, 2004 we sold our joint venture interest in Yards Plaza, in Chicago, Illinois for net proceeds of $17.0 million, resulting in a gain of $12.6 million, $8.3 million net of tax.

            On August 6, 2004, we completed the court ordered sale of our joint venture interest in Mall of America, in Minneapolis, Minnesota.

            On January 11, 2005, we sold our 50% interest in a joint venture Property that was accounted for on the equity method of accounting for $62.6 million resulting in a gain of $10.4 million.

            We sold 13 non-core properties, consisting of seven regional malls, five community centers and one mixed-use property. In total, we received net proceeds from these sales of $275.1 million. As a result of these transactions, we recorded a net gain of $22.4 million during the twelve months ended December 31, 2003. The properties and their dates of sale consisted of:

•
Richmond Square, Mounds Mall, Mounds Mall
•
Cinema and Memorial Mall on January 9, 2003
•
Forest Village Park Mall on April 29, 2003
•
North Riverside Park Plaza on May 8, 2003
•
Memorial Plaza on May 21, 2003
•
Fox River Plaza on May 22, 2003
•
Eastern Hills Mall on July 1, 2003
•
New Orleans Center on October 1, 2003
•
Mainland Crossing on October 28, 2003
•
SouthPark Mall on November 3, 2003
•
Bergen Mall on December 12, 2003

            As of December 31, 2002, the carrying value of the properties sold during 2003 at cost, net of accumulated depreciation was $259.1 million.

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            On April 1, 2002, we sold our interest in Orlando Premium Outlets, one of our joint venture properties, for a gross sales price of $76.3 million, including cash of $46.6 million and the assumption of our 50% share of $59.1 million of joint venture debt, resulting in a net gain of $39.0 million.

            In addition, on May 31, 2002, we sold our interests in the five joint venture value-oriented super-regional malls to the Mills Corporation, who was our partner in these properties and who managed these joint ventures. We disposed of these joint venture interests in order to fund a portion of the Rodamco acquisition. We sold these joint venture interests for approximately $421.8 million including $148.4 million of cash and the assumption of approximately $273.4 million of joint venture debt. The transaction resulted in a gain of $122.2 million. We were also relieved of all guarantees of the indebtedness related to these five properties. In connection with this transaction, the Management Company also sold its land partnership interests for $24.1 million that resulted in our $8.4 million share of gains, net of tax, recorded in income from unconsolidated entities. Also during 2002, we made the decision to no longer pursue certain development projects. As a result, we wrote-off the carrying amount of our predevelopment costs and land acquisition costs associated with these projects in the amount of $17.1 million, which is included in "gain (loss) on sales of assets and other, net" in the accompanying statements of operations and comprehensive income.

            During 2002, we disposed of seven of our nine assets held for sale as of December 31, 2001. The seven assets disposed included three community centers and four regional malls. The three community centers and two of the regional malls were sold for a net sales price of $28.1 million resulting in a net loss of $7.0 million. In addition, we negotiated with the lenders the sale of our interests in one regional mall to a third party resulting in net proceeds of $3.6 million and deeded one regional mall to the lender in satisfaction of the outstanding mortgage indebtedness. The two regional malls were encumbered with $52.2 million of indebtedness. The net impact of these two transactions resulted in a net gain on debt forgiveness of $16.1 million that is reflected in "gain from debt related transactions, net" in the accompanying statements of operations and comprehensive income.

            The cash flows and results of operations of the Properties disposed of during the three years ended December 31, 2004 were not material to our cash flows and results of operations. These Properties' removal from service will not materially affect our ongoing operations.

            Impairment.    In 2004, we recorded an $18.0 million impairment charge related to one Property. We evaluate our Properties for the potential impairment of our assets using a combination of estimations of the fair value based upon a multiple of the net cash flow of the Properties and discounted cash flows from the individual Properties' operations as well as contract prices, if applicable and available.

5.    Pro Forma Financial Information (Unaudited)

            The pro forma condensed consolidated statements of operations for the years ended December 31, 2004 and 2003 include adjustments for the acquisition of Chelsea as if the transaction had occurred as of January 1, 2003. The pro forma information does not purport to present what actual results would have been had the acquisitions, and related transactions, in fact, occurred at the previously mentioned date, or to project results for any future period.

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Other acquisitions during 2004 were not considered material business combinations for the purpose of presenting this pro forma financial information.

 
   For the Year Ended
December 31,
  
 
   2004
   2003
  
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS              
Revenue:              
  Minimum rent   $ 1,804,055   $ 1,642,339  
  Overage rent     90,650     77,099  
  Tenant reimbursements     829,018     754,672  
  Management fees and other revenues     72,595     74,377  
  Other income     158,665     143,342  
   
 
 
        Total revenue     2,954,983     2,691,829  
 
Property operating
 
 
415,803
 
 
374,641
 
  Depreciation and amortization     796,374     712,471  
  Real estate taxes     272,687     233,771  
  Repairs and maintenance     101,186     92,338  
  Advertising and promotion     93,293     83,812  
  Provision for credit losses     18,787     15,718  
  Home and regional office costs     90,545     80,105  
  General and administrative     29,469     27,472  
  Other (including impairment charge)     64,309     45,176  
   
 
 
        Total operating expenses     1,882,453     1,665,504  

Operating Income
 
 
1,072,530
 
 
1,026,325
 
Interest expense     738,267     692,313  
   
 
 
Income Before Minority Interest and Unconsolidated Entities     334,263     334,012  
Minority interest and other     (10,447 )   (12,423 )
Income tax expense of taxable REIT subsidiaries     (11,770 )   (7,597 )
   
 
 
Pro Forma Income before income from unconsolidated entities     312,046     313,992  
Income from unconsolidated entities     91,354     100,651  
   
 
 
Pro Forma Net Income     403,400     414,643  
Preferred unit requirement     106,053     121,127  
   
 
 
Pro Forma Net Income Available to Unitholders   $ 297,347   $ 293,516  
   
 
 
Pro Forma Earnings Per Unit — Basic   $ 1.06   $ 1.10  
   
 
 
Pro Forma Earnings Per Unit — Diluted   $ 1.06   $ 1.10  
   
 
 
(a)
Pro forma basic earnings per unit are based upon weighted average units of 279,362,929 for 2004 and 266,557,303 for 2003. Pro forma diluted earnings per unit are based upon weighted average units of 280,230,297 for 2004 and 267,380,835 for 2003.

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6.    Investment Properties

            Investment Properties consist of the following:

 
   As of December 31,
 
   2004
   2003
Land   $ 2,591,109   $ 2,046,120
Buildings and improvements     18,324,732     12,622,728
   
 
Total land, buildings and improvements     20,915,841     14,668,848
Furniture, fixtures and equipment     169,852     136,225
   
 
Investment properties at cost     21,085,693     14,805,073
Less — accumulated depreciation     3,136,195     2,534,898
   
 
Investment properties at cost, net   $ 17,949,498   $ 12,270,175
   
 
Construction in progress included in investment properties   $ 392,664   $ 243,520
   
 

7.    Investments in Unconsolidated Entities

            Joint ventures are common in the real estate industry. We use joint ventures to finance properties and diversify our risk in a particular property or trade area. We may also use joint ventures in the development of new properties. We held joint venture ownership interests in 67 Properties as of December 31, 2004 and 75 as of December 31, 2003, as well as joint venture interests in our investments in 51 European shopping centers; four Premium Outlet centers in Japan; one Premium Outlet in Mexico; and one shopping center in Canada as of December 31, 2004. We held 47 European shopping centers and one shopping center in Canada as of December 31, 2003. Since we do not control or otherwise have an interest that would require us to consolidate these joint venture Properties, accounting principles generally accepted in the United States currently require that we account for these Properties on the equity method. Substantially all of our joint venture Properties are subject to rights of first refusal, buy-sell provisions, or other sale rights for partners which are customary in real estate partnership agreements and the industry. Each partner in these joint ventures may initiate these provisions at any time, which would result in either the sale of or the use of available cash or borrowings to acquire the partnership interest.

            Summary financial information of the joint ventures and a summary of our investment in and share of income from such joint ventures follow. We condensed into separate line items major captions of the statements of operations for joint venture interests sold or consolidated. Consolidation occurs when we acquire an additional interest in the joint venture and as a result, gain unilateral control of the Property. We reclassified these line items into

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"Discontinued Joint Venture Interests" and "Consolidated Joint Venture Interests" so that we may present comparative results of operations for those joint venture interests held as of December 31, 2004.

 
   December 31,
 
   2004
   2003
BALANCE SHEETS            
Assets:            
Investment properties, at cost   $ 9,429,465   $ 8,787,816
Less — accumulated depreciation     1,745,498     1,427,291
   
 
      7,683,967     7,360,525
Cash and cash equivalents     292,770     227,921
Tenant receivables     209,040     236,023
Investment in unconsolidated entities     167,182     94,853
Deferred costs and other assets     322,660     176,477
Assets of Consolidated Joint Venture Interests     —     474,745
Assets of Discontinued Joint Venture Interests     —     764,833
   
 
  Total assets   $ 8,675,619   $ 9,335,377
   
 

Liabilities and Partners' Equity:
 
 
 
 
 
 
Mortgages and other indebtedness   $ 6,398,312   $ 5,936,104
Accounts payable, accrued expenses, and deferred revenue     373,887     273,704
Other liabilities     179,443     38,780
Mortgages and liabilities of Consolidated Joint Venture Interests     —     229,718
Mortgages and liabilities of Discontinued Joint Venture Interests     —     549,142
   
 
  Total liabilities     6,951,642     7,027,448
Preferred units     67,450     152,450
Partners' equity     1,656,527     2,155,479
   
 
  Total liabilities and partners' equity   $ 8,675,619   $ 9,335,377
   
 

Our Share of:
 
 
 
 
 
 
Total assets   $ 3,619,969   $ 3,861,497
   
 
Partners' equity   $ 779,252   $ 885,149
Add: Excess Investment     1,103,992     912,212
   
 
Our net Investment in Joint Ventures   $ 1,883,244   $ 1,797,361
   
 
Mortgages and other indebtedness   $ 2,750,327   $ 2,739,630
   
 

            "Excess Investment" represents the unamortized difference of our investment over our share of the equity in the underlying net assets of the joint ventures acquired. We generally amortize excess investment over the life of the related Properties, typically 35 years, and the amortization is included in income from unconsolidated entities. We periodically review our ability to recover the carrying values of our investments in the joint venture Properties. If we conclude that any portion of our investment, including the excess investment, is not recoverable, we record an adjustment to write off the unrecoverable amounts.

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            As of December 31, 2004, scheduled principal repayments on joint venture indebtedness were as follows:

2005   $ 500,885
2006     1,083,340
2007     512,958
2008     790,007
2009     526,266
Thereafter     2,984,328
   
Total principal maturities     6,397,784
Net unamortized debt premiums     528
   
Total mortgages and other indebtedness   $ 6,398,312
   

            This debt becomes due in installments over various terms extending through 2017 with interest rates ranging from 1.14% to 9.04% and a weighted average rate of 5.84% at December 31, 2004.

 
   For the Year Ended December 31,
  
 
   2004
   2003
   2002
  
STATEMENTS OF OPERATIONS                    
Revenue:                    
  Minimum rent   $ 960,934   $ 795,386   $ 728,294  
  Overage rent     44,494     28,486     26,621  
  Tenant reimbursements     490,023     400,921     352,669  
  Other income     67,233     78,069     47,496  
   
 
 
 
      Total revenue     1,562,684     1,302,862     1,155,080  
Operating Expenses:                    
  Property operating     300,656     229,146     179,208  
  Depreciation and amortization     290,256     230,578     205,721  
  Real estate taxes     128,578     118,193     104,920  
  Repairs and maintenance     71,649     64,247     63,021  
  Advertising and promotion     38,238     37,162     35,060  
  Provision for credit losses     11,354     7,728     8,143  
  Other     66,504     39,683     30,035  
   
 
 
 
      Total operating expenses     907,235     726,737     626,108  
   
 
 
 
Operating Income     655,449     576,125     528,972  
Interest Expense     375,884     335,494     316,872  
   
 
 
 
Income Before Minority Interest and Unconsolidated Entities     279,565     240,631     212,100  
(Loss) Income from Unconsolidated Entities     (5,129 )   8,393     3,062  
Minority interest     —     (654 )   (751 )
   
 
 
 
Income From Continuing Operations     274,436     248,370     214,411  
Income from Consolidated Joint Venture Interests     19,378     23,801     9,866  
Income from Discontinued Joint Venture Interests     6,431     44,424     28,600  
Gain on disposal or sale of Discontinued operations, net     4,704     —     —  
   
 
 
 
Net Income   $ 304,949   $ 316,595   $ 252,877  
   
 
 
 
Third-Party Investors' Share of Net Income   $ 193,282   $ 190,535   $ 148,853  
   
 
 
 
Our Share of Net Income     111,667     126,060     104,024  
Amortization of Excess Investment     30,554     24,967     26,635  
   
 
 
 
Income from Joint Ventures   $ 81,113   $ 101,093   $ 77,389  
   
 
 
 

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            The carrying amount of our total combined investment in two joint venture investments, European Retail Enterprises, B.V. ("ERE") and Gallerie Commerciali Italia ("GCI"), is $320.6 million as of December 31, 2004, net of the related cumulative translation adjustment, including subordinated debt in ERE. Our investments in ERE and GCI are accounted for using the equity method of accounting. The Operating Partnership has a 49% ownership in GCI and a current 34.7% ownership in ERE.

            The agreements for our 34.7% interest in ERE are structured to allow us to acquire an additional 26.1% ownership interest over time. The future commitments to purchase shares from three of the existing stockholders of ERE are based upon a multiple of adjusted results of operations in the year prior to the purchase of the shares. Therefore, the actual amount of these additional commitments may vary. The current estimated additional commitments is approximately $60 million to purchase shares of stock of ERE, assuming that the three existing stockholders exercise their rights under put options. We expect these purchases to be made from 2006-2008. In addition, the agreements contain normal buy/sell provisions as previously described, as well as a marketing right which a partner may exercise. We and the other significant owner of ERE have the right to market the sale of the entire company, subject to a right of first offer to the non-selling partner. If the non-selling partner does not exercise its right for a specified price, then the selling partner can sell each partners' interest in ERE commencing in the second quarter of 2005. Our partner has initiated a process in order to exercise this marketing right but has not yet given us the notice required to formally commence the marketing right or allow us to exercise our right of first offer.

            On January 1, 2003, we acquired all of the remaining equity interests of the Management Company, and as a result, the Management Company is now a consolidated taxable REIT subsidiary. Prior to this, we owned voting and non-voting common stock and three classes of participating preferred stock of the Management Company; however, 95% of the voting common stock was owned by three Simon family members. Prior to that date, we accounted for our investment in the Management Company using the equity method of accounting. At that time, we exercised significant influence but did not control the financial and operating policies of the Management Company. Our preferred and common interest and our note receivable from the Management Company entitled us to approximately 98% of the after-tax economic benefits of the Management Company's operations.

            Prior to the consolidation of the Management Company, common costs were allocated by the Management Company to us, based primarily on minimum and overage rent, using assumptions that we believe are reasonable. The following data summarizes interest income and preferred dividends from the Management Company for the year ended December 31, 2002, included in other income, and total costs incurred on consolidated properties related to services provided by the Management Company:

Interest and preferred dividends   $ 13,620
Total costs incurred on consolidated properties   $ 76,469

            Summarized consolidated operating data of the Management Company for the year ended December 31, 2002 is as follows:

Total revenue   $ 130,988  
   
 
Operating income   $ 33,571  
   
 
Net loss attributable to common stockholders   $ (18,626 )
   
 

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8.    Indebtedness and Derivative Financial Instruments

            Our mortgages and other indebtedness consist of the following:

 
   December 31,
 
   2004
   2003
Fixed-Rate Debt            
Mortgages and other notes, including $68,746 and $21,742 net premiums, respectively. Weighted average interest and maturity of 6.45% and 6.1 years.   $ 4,369,655   $ 3,360,917
Unsecured notes, including $61,034 net premiums and $16,547 net discounts, respectively. Weighted average interest and maturity of 6.32% and 5.2 years.     6,501,034     4,998,453
7% Mandatory Par Put Remarketed Securities, including $4,851 and $4,933 premiums, respectively, due June 2028 and subject to redemption June 2008.     204,851     204,933
Commercial mortgage pass-through, due December 2004     —     172,290
   
 
Total fixed-rate debt     11,075,540     8,736,593

Variable-Rate Debt
 
 
 
 
 
 
Mortgages and other notes, at face value, respectively. Weighted average interest and maturity of 3.58% and 2.5 years.   $ 686,771   $ 619,763
Floating Rate Mandatory Extension Notes, due November 15, 2014.     —     113,100
Credit Facility (see below)     425,000     327,901
Acquisition Facility (see below)     1,800,000     —
Alternative Currency Facilities     24,359     —
Commercial mortgage pass-through certificates, due December 2004.     —     48,157
Unsecured term loans. Weighted average rates and maturities of 3.34% and 2.4 years.     579,170     419,679
   
 
Total variable-rate debt     3,515,300     1,528,600
Fair value interest rate swaps     (4,447 )   1,195
   
 
Total mortgages and other indebtedness, net   $ 14,586,393   $ 10,266,388
   
 

            General.    We have pledged 94 Properties as collateral to secure related mortgage notes including 9 pools of cross-defaulted and cross-collateralized mortgages encumbering a total of 45 Properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted package may constitute a default under all such mortgages and may lead to acceleration of the indebtedness due on each Property within the collateral package. Of our 94 encumbered Properties, indebtedness of 23 of these encumbered Properties and our unsecured notes are subject to various financial performance covenants relating to leverage ratios, annual real property appraisal requirements, debt service coverage ratios, minimum net worth ratios, debt-to-market capitalization, and/or minimum equity values. Our mortgages and other indebtedness may be prepaid but are generally subject to prepayment of a yield-maintenance premium or defeasance. As of December 31, 2004, we are in compliance with all our debt covenants.

            Mortgages and Other Indebtedness.    We have 94 encumbered consolidated properties at December 31, 2004. The balance of fixed and variable rate mortgage notes was $5.0 billion as of December 31, 2004 and of this amount $4.7 billion is nonrecourse to us. The fixed-rate mortgages generally require monthly payments of principal and/or interest. The interest rates of variable-rate mortgages are typically based on LIBOR.

            Some of our limited partners guarantee a portion of our consolidated debt through foreclosure guarantees. In total, 53 limited partners provide guarantees of foreclosure of $354.8 million of our consolidated debt at 12 consolidated Properties. In each case, the loans were made by unrelated third party institutional lenders and the guarantees are for the benefit of each lender. In the event of foreclosure of the mortgaged property, the proceeds from the sale of the property are first applied against the amount of the guarantee and also reduce the amount payable

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under the guarantee. To the extent the sale proceeds from the disposal of the property do not cover the amount of the guarantee, then the limited partner is liable to pay the difference between the sale proceeds and the amount of the guarantee so that the entire amount guaranteed to the lender is satisfied. The debt is non-recourse to us and our affiliates.

            On January 22, 2004, we paid off a $60.0 million variable rate mortgage, at LIBOR plus 125 basis points, that encumbered one consolidated Property with proceeds from a senior unsecured notes offering. In addition, we refinanced another consolidated mortgaged Property with a $32.0 million 6.05% fixed rate mortgage that matures on February 11, 2014. The balance of the previous mortgage was $34.7 million at a variable rate of LIBOR plus 250 basis points and was scheduled to mature on April 1, 2004.

            On March 31, 2004, we secured a $86.0 million variable rate mortgage, at LIBOR plus 95 basis points, to permanently finance a portion of the Gateway Shopping Center acquisition. The mortgage has an initial maturity date of March 31, 2005 with three, one-year, extensions available at our option.

            On April 27, 2004, we secured a $96.0 million fixed rate mortgage at 5.17% to permanently finance a portion of the Montgomery Mall acquisition. The mortgage has an anticipated maturity date of May 11, 2014.

            On May 19, 2004, we secured a $260.0 million mortgage to permanently finance a portion of the Plaza Carolina Mall acquisition. The mortgage consists of two fixed-rate tranches and three variable-rate tranches. The fixed-rate components total $100 million at a blended rate of 5.10% and have a maturity date of May 9, 2009. The $160.0 million variable-rate components bear interest at LIBOR plus 90 basis points and have an initial maturity of May 9, 2006 with three, one-year extensions available at our option. The initial weighted average all-in interest rate was approximately 3.2%.

            On June 15, 2004, we refinanced a pool of seven cross-collateralized mortgages totaling $219.4 million with a $220.0 million variable-rate term loan. The original mortgages would have matured on December 15, 2004 and had an effective interest rate of 7.06% including the effect of an interest rate protection agreement on $48.1 million of variable-rate debt. The collateralized term loan bore interest at LIBOR plus 80 basis points. On June 30, 2004, we refinanced the term loan with individually secured fixed-rate mortgages on six of the seven original Properties totaling $290.0 million. The mortgages have a maturity date of July 1, 2014 and have a weighted average interest rate of 5.90%. One of the Properties was unencumbered as part of this refinancing.

            On July 1, 2004, we paid off, with available working capital, two mortgages encumbering one consolidated Property that were scheduled to mature on January 1, 2005. The first mortgage had a balance of $41.1 million, and bore interest at a fixed rate of 8.45%. The second mortgage had a balance of $14.9 million, and bore interest at a fixed rate of 6.81%.

            On July 12, 2004, we refinanced a consolidated Property with a $73.0 million, 5.84% fixed rate mortgage that matures on August 1, 2014. The balance of the previous mortgage was $47.0 million, bore interest at a variable rate of LIBOR plus 275 basis points and was scheduled to mature on July 1, 2005.

            On July 28, 2004, we refinanced a consolidated Property with a $86.0 million, 5.65% fixed rate mortgage that matures on August 11, 2014. The balance of the previous mortgage was $45.0 million, bore interest at a variable rate of LIBOR plus 150 basis points and was scheduled to mature on June 12, 2005.

            On November 25, 2004, we paid off, with available working capital, one mortgage encumbering one consolidated Property that was scheduled to mature on February 1, 2005. The mortgage had a balance of $36.0 million, and bore interest at a fixed rate of 7.42%.

            Unsecured Notes.    We have $1.2 billion of unsecured notes that are structurally senior in right of payment to holders of other unsecured notes to the extent of the assets and related cash flows of certain Properties. These unsecured notes have a weighted average interest rate of 7.14% and weighted average maturities of 6.4 years.

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            On January 15, 2004, we paid off $150.0 million of 6.75% unsecured notes that matured on that date with borrowings from our $1.25 billion unsecured revolving credit facility ("Credit Facility").

            On January 20, 2004, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $500.0 million at a weighted average fixed interest rate of 4.21%. The first tranche is $300.0 million at a fixed interest rate of 3.75% due January 30, 2009 and the second tranche is $200.0 million at a fixed interest rate of 4.90% due January 30, 2014. We received net proceeds of $383.4 million and we exchanged our $113.1 million Floating Rate Mandatory Extension Notes ("MAXES") with the holder. The MAXES were due November 15, 2014 and bore interest at LIBOR plus 80 basis points. The exchange of the MAXES for the notes instruments did not result in a significant modification of the terms in the debt arrangement. We used $277.0 million of the net proceeds to reduce borrowings on the Credit Facility, to unencumber one Property, and the remaining portion was used for general working capital purposes. We subsequently completed an exchange offer in which notes registered under the Securities Act of 1933 with the same economic terms and conditions were exchanged for the Rule 144A notes.

            Concurrent with the issuance of the Rule 144A notes, we entered into a five-year variable rate $300.0 million notional amount swap agreement to effectively convert the $300.0 million tranche to floating rate debt at an effective rate of six-month LIBOR.

            On February 9, 2004, we paid off $300.0 million of 6.75% unsecured notes that matured on that date with borrowings from the Credit Facility.

            On February 26, 2004, we obtained a $250.0 million unsecured term loan with an initial maturity date of April 1, 2005. The maturity date may be extended, at our option, for two, one-year extension periods. The unsecured term loan bears interest at LIBOR plus 65 basis points. The proceeds from this financing were used to pay off our $65.0 million unsecured term loan that matured on March 15, 2004 and our $150.0 million unsecured term loan that matured on February 28, 2004. The remaining proceeds were used for general working capital purposes. The $65.0 million unsecured term loan bore interest at LIBOR plus 80 basis points and the $150.0 million unsecured term loan bore interest at LIBOR plus 65 basis points.

            On July 15, 2004, we paid off $100.0 million of 6.75% unsecured notes that matured on that date with available working capital.

            On August 11, 2004, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $900.0 million at a weighted average fixed interest rate of 5.29%. The first tranche is $400.0 million at a fixed interest rate of 4.875% due August 15, 2010 and the second tranche is $500.0 million at a fixed interest rate of 5.625% due August 15, 2014. We received net proceeds of $890.6 million. We used $585.0 million of the net proceeds to reduce borrowings on our Credit Facility, $150.0 million to retire fixed rate 7.75% unsecured notes, $120.7 million to unencumber two consolidated Properties, and the remaining portion was used for general working capital purposes. We subsequently completed an exchange offer in which notes registered under the Securities Act of 1933 with the same economic terms and conditions were exchanged for the Rule 144A notes.

            Credit Facility.    As of December 31, 2004, the Credit Facility was a $1.25 billion unsecured revolving credit facility with a maturity date of April 16, 2005 and a one-year extension of the maturity date available at our option. The Credit Facility bore interest at LIBOR plus 65 basis points and provided for different pricing based upon our corporate credit rating, with an additional 15 basis point facility fee on the entire $1.25 billion. The Credit Facility had available a EURO sub-tranche for up to $100 million U.S. dollar equivalent which provides availability for Euros at EURIBOR plus 65 basis points and dollars at LIBOR plus 65 basis points, at our option. We use the Credit Facility primarily for funding acquisition, renovation and expansion and predevelopment opportunities and general corporate purposes. The Credit Facility contains financial covenants relating to a capitalization value and leverage criteria, minimum EBITDA and unencumbered EBITDA coverage ratio requirements and a minimum equity value.

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            A summary of the Credit Facility is as follows:

 
   As of December 31,
  
 
   2004
   2003
  
Total Facility Amount   $ 1,250,000   $ 1,250,000  
Borrowings     (425,000 )   (327,901 )
Letters of credit     (38,131 )   (24,081 )
   
 
 
Remaining Availability   $ 786,869   $ 898,018  
   
 
 
Effective Interest rate     1.95%     1.94%  
   
 
 
Maximum borrowings during the period ended   $ 585,000   $ 667,067  
   
 
 
Average borrowings during the period ended   $ 370,315   $ 396,250  
   
 
 

            On January 11, 2005, we refinanced the Credit Facility with a new $2.0 billion unsecured revolving credit facility (the "New Credit Facility"). The New Credit Facility has a maturity date of January 11, 2008, with an additional one-year extension available at our option. The facility can be increased to $2.5 billion within the first two years of closing at our option. The New Credit Facility bears interest at LIBOR plus 55 basis points with an additional 15 basis point facility fee on the entire $2.0 billion facility and provides for variable grid pricing based upon our corporate credit rating. In addition, the New Credit Facility has a $500 million U.S. dollar equivalent multi-currency tranche for Euro, Yen or Sterling borrowings. The New Credit Facility contains financial covenants relating to a capitalization value and leverage criteria, minimum EBITDA and unencumbered EBITDA coverage ratio requirements and a minimum equity value.

            Acquisition Facility.    On October 12, 2004, we obtained a $1.8 billion unsecured term loan ("Acquisition Facility") to finance the cash portion of our acquisition of Chelsea. The Acquisition Facility matures on October 12, 2006 and requires minimum principal repayments in three equal installments after twelve months, eighteen months, and at maturity. The Acquisition Facility bears interest at LIBOR plus 55 basis points with an additional 15 basis point facility fee on all loans outstanding, and provides for variable grid pricing based upon our credit rating.

            Our scheduled principal repayments on indebtedness as of December 31, 2004 was as follows:

2005   $ 1,542,161
2006     2,772,108
2007     1,920,225
2008     1,044,997
2009     1,653,507
Thereafter     5,523,211
   
Total principal maturities     14,456,209
Net unamortized debt premium and other     130,184
   
Total mortgages and other indebtedness   $ 14,586,393
   

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            Our cash paid for interest in each period, net of any amounts capitalized, was as follows:

 
   For the year ended December 31,
 
   2004
   2003
   2002
    $ 648,984   $ 596,274   $ 591,328

            Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations. We manage exposure to interest rate market risk through our risk management strategy by a combination of interest rate protection agreements to effectively fix or cap a portion of variable rate debt, or in the case of a fair value hedge, effectively convert fixed rate debt to variable rate debt. We are also exposed to foreign currency risk on financings of certain foreign operations. Our intent is to offset gains and losses that occur on the underlying exposures, with gains and losses on the derivative contracts hedging these exposures. We do not enter into either interest rate protection or foreign currency rate protection agreements for speculative purposes.

            We may enter into treasury lock agreements as part of an anticipated debt issuance. If the anticipated transaction does not occur, the cost is charged to net income. Upon completion of the debt issuance, the cost of these instruments is recorded as part of accumulated other comprehensive income and is amortized to interest expense over the life of the debt agreement.

            As of December 31, 2004, we have reflected the fair value of outstanding consolidated derivatives in other liabilities for $6.2 million. In addition, we recorded the benefits from our treasury lock agreements in accumulated comprehensive income and the unamortized balance of these agreements is $8.2 million as of December 31, 2004. As of December 31, 2004, our outstanding LIBOR based derivative contracts consist of:

•
interest rate cap protection agreements with a notional amount of $257.1 million that mature from January 2005 to May 2006.
•
variable rate swap agreements with a notional amount of $370.0 million that mature in September 2008 and January 2009 and have a weighted average pay rate of 2.71% and a weighted average receive rate of 3.72%.

            Within the next twelve months, we expect to reclassify to earnings approximately $2.7 million of the current balance held in accumulated other comprehensive income. The amount of ineffectiveness relating to fair value and cash flow hedges recognized in income during the periods presented was not material.

            The carrying value of our variable-rate mortgages and other loans approximates their fair values. We estimated the fair values of combined fixed-rate mortgages using cash flows discounted at current borrowing rates and other indebtedness using cash flows discounted at current market rates. The fair values of financial instruments and our related discount rate assumptions used in the estimation of fair value for our consolidated fixed-rate mortgages and other indebtedness are summarized as follows:

 
   As of December 31,
 
   2004
   2003
Fair value of fixed-rate mortgages and other indebtedness   $ 11,357,011   $ 9,189,538
Discount rates assumed in calculation of fair value     5.20%     4.81%

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9.    Rentals under Operating Leases

            Future minimum rentals to be received under noncancelable tenant operating leases for each of the next five years and thereafter, excluding tenant reimbursements of operating expenses and percentage rent based on tenant sales volume, as of December 31, 2004, are as follows:

2005   $ 1,502,992
2006     1,382,260
2007     1,223,110
2008     1,060,439
2009     901,345
Thereafter     2,755,755
   
    $ 8,825,901
   

            Approximately 0.8% of future minimum rents to be received are attributable to leases with an affiliate of a limited partner in the Operating Partnership.

10.    Partners' Equity

            Preferred units whose redemption is outside our control have been classified as temporary equity in the accompanying consolidated balance sheets. Such units are described in the following paragraph.

            7.75%/8.00% Cumulative Redeemable Preferred Units.    During 2003, in connection with the purchase of additional interest in Kravco, we issued 7.75%/8.00% Cumulative Redeemable Preferred Units (the "7.75% Preferred Units") that accrue cumulative dividends at a rate of 7.75% of the liquidation value for the period beginning December 5, 2003 and ending December 31, 2004, 8.00% of the liquidation value for the period beginning January 1, 2005 and ending December 31, 2009, 10.00% of the liquidation value for the period beginning January 1, 2010 and ending December 31, 2010, and 12% of the liquidation value thereafter. These dividends are payable quarterly in arrears. A unitholder may require the Operating Partnership to repurchase the 7.75% Preferred Units on or after January 1, 2009 or any time the aggregate liquidation value of the outstanding units exceeds 10% of the book value of partners' equity of the Operating Partnership. The Operating Partnership may redeem the 7.75% Preferred Units on or after January 1, 2011 or earlier upon the occurrence of certain tax triggering events. Our intent is to redeem these units after January 1, 2009 after the occurrence of a tax-triggering event which we expect to be in 2009. The redemption price is the liquidation value plus accrued and unpaid distributions, payable in cash or interest in one or more properties mutually agreed upon.

            In 2004, fifty-five limited partners exchanged 4,194,117 units for 4,194,117 shares of common stock of Simon Property. As a result, we issued a like number of units to Simon Property. On November 5, 2004 thirty-one limited partners converted 1,061,580 preferred units into 803,341 units which were then exchanged for shares of Simon Property common stock. As a result, we issued a like number of units to Simon Property.

            We issued 392,943 units to Simon Property related to employee stock options exercised during 2004. We used the net proceeds from the option exercises of approximately $10.7 million for general working capital purposes.

            In connection with the Chelsea transaction, we issued common and preferred units as described in Note 4.

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            Certain series of preferred units are held by Simon Property when a corresponding series of Simon Property preferred stock exists. The following table summarizes each of the authorized series of preferred units of the Operating Partnership, except for mezzanine equity previously described:

 
   As of December 31,
 
   2004
   2003
Series B 6.5% Convertible Preferred Units, 5,000,000 units authorized, none issued and outstanding to the general partner   $ —   $ —
Series C 7.00% Cumulative Convertible Preferred Units, 2,700,000 units authorized, 1,529,439 and 2,600,895 issued and outstanding     42,823     72,824
Series D 8.00% Cumulative Redeemable Preferred Units, 2,700,000 units authorized, 1,444,856 and 2,600,895 issued and outstanding     43,347     78,028
Series E 8.00% Cumulative Redeemable Preferred Units, 1,000,000 units authorized, 0 and 1,000,000 issued and outstanding to the general partner     —     24,863
Series F 8.75% Cumulative Redeemable Preferred Units, 8,000,000 units authorized, issued and outstanding to the general partner     192,989     192,989
Series G 7.89% Cumulative Step-up Premium Rate Convertible Preferred Units, 3,000,000 units authorized, issued and outstanding to the general partner     147,950     147,681
Series H Variable Rate Preferred Units, 3,328,540 units authorized, 0 and 78,012 issued and outstanding     —     1,950
Series I 6% Convertible Perpetual Preferred Units, 19,000,000 units authorized, 18,015,506 and 0 issued and outstanding     900,776     —
Series J 83/8% Cumulative Redeemable Preferred Units, 1,000,000 unit authorized, 796,948 and 0 issued and outstanding     39,847     —
7.5% Cumulative Redeemable Preferred Units, 260,000 units authorized, 255,373 and 251,096 issued and outstanding     25,537     25,109
   
 
    $ 1,393,269   $ 543,444
   
 

            Series B Convertible Preferred Units.    During 2003, all of the outstanding units of our 6.5% Series B Convertible Preferred Units were either converted into common units or were redeemed at a redemption price of $106.34 per unit.

            Series C 7.00% Cumulative Convertible Preferred Units.    Each Series C 7.00% cumulative convertible preferred unit has a liquidation value of $28.00 and accrues cumulative distributions at a rate of $1.96 annually, which is payable quarterly in arrears. The Series C preferred units are convertible at the holders' option on or after August 27, 2004, into either a like number of shares of 7.00% Cumulative Convertible Preferred Stock of Simon Property with terms substantially identical to the Series C preferred units or into units at a ratio of 0.75676 to one provided that the closing stock price of Simon Property common stock exceeds $37.00 for any three consecutive trading days prior to the conversion date. The Operating Partnership may redeem the Series C preferred units at their liquidation value plus accrued and unpaid distributions on or after August 27, 2009, payable in units. In the event of the death of a holder of Series C preferred units, or the occurrence of certain tax triggering events, the Operating Partnership may be required to redeem the Series C preferred units at their liquidation value payable at the option of the Operating Partnership in either cash (the payment of which may be made in four equal annual installments) or units. On November 5, 2004 thirty-one holders of the 7% Cumulative Convertible Preferred Units converted 1,061,580 of the units into 803,341 common units which were then exchanged for shares of Simon Property common stock.

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            Series D 8.00% Cumulative Redeemable Preferred Units.    Each Series D 8.00% cumulative redeemable preferred unit has a liquidation value of $30.00 and accrues cumulative distributions at a rate of $2.40 annually, which is payable quarterly in arrears. The Series D preferred units are each paired with one Series C preferred unit or the units into which the Series C preferred units may be converted. The Operating Partnership may redeem the Series D preferred units at their liquidation value plus accrued and unpaid distributions on or after August 27, 2009, payable in either new preferred units of the Operating Partnership having the same terms as the Series D preferred units, except that the distribution coupon rate would be reset to a market rate, or in units. The Series D preferred units are convertible at the holder's option on or after August 27, 2004, into 8.00% Cumulative Redeemable Preferred Stock of Simon Property with terms substantially identical to the Series D preferred units. In the event of the death of a holder or the occurrence of certain tax triggering events, the Operating Partnership may be required to redeem the Series D preferred units owned by such holder at their liquidation value payable at the option of the Operating Partnership in either cash (the payment of which may be made in four equal annual installments) or units. On December 1, 2004 we repurchased 1,156,039 units of Series D 8.00% Cumulative Redeemable Preferred Units for $36.9 million.

            Series E 8.00% Cumulative Redeemable Preferred Units.    Each Series E 8.00% cumulative redeemable preferred unit has a liquidation value of $25.00 per unit and accrues cumulative distributions at the rate of $2.00 annually. The corresponding series of Simon Property preferred stock was redeemable beginning August 27, 2004 at $25.00 per share plus accrued dividends. The carrying value was being accreted to the liquidation value over the non-redeemable period. The corresponding series of Simon Property preferred stock was redeemed on November 10, 2004 at the liquidation value of $25 per unit, plus accrued dividends. Accordingly, the Series E preferred units were also redeemed.

            Series F 8.75% Cumulative Redeemable Preferred Units.    Each Series F 8.75% cumulative redeemable preferred unit has a liquidation value of $25.00 and accrues distributions at the rate of $2.1875 annually. The corresponding series of Simon Property preferred stock may be redeemed any time on or after September 29, 2006, at $25.00 per share, plus accrued dividends. The liquidation value (other than the portion thereof consisting of accrued and unpaid dividends) is payable solely out of the sale proceeds of other capital shares of Simon Property, which may include other series of preferred shares. If the corresponding series of preferred stock is redeemed, the Series F preferred units would also be redeemed.

            Series G 7.89% Cumulative Step-Up Premium Rate Preferred Units.    Each Series G 7.89% cumulative step-up premium rate preferred unit has a liquidation value of $50.00 and currently accrues distributions at the rate of $3.945 annually. Beginning October 1, 2012, the annual distribution rate increases to $4.945. Management intends to redeem the corresponding series of Simon Property preferred stock prior to October 1, 2012. Beginning September 30, 2007, Simon Property may redeem the corresponding preferred stock in whole or in part, using the proceeds of other capital stock of Simon Property, at the liquidation value of $50.00 per share, plus accrued dividends. If the corresponding series of preferred stock is redeemed, the Series G preferred units would also be redeemed.

            Series H Variable Rate Preferred Units.    To fund the redemption of the Series B Preferred Units, we issued 3,328,540 units of Series H Variable Rate Preferred Units to Simon Property for $83.2 million. The Series H preferred units were redeemable at any time prior to March 15, 2004 or after March 15, 2009 at specified prices. We repurchased 3,250,528 units of the Series H preferred units for $81.3 million on December 17, 2003. On January 7, 2004 we repurchased the remaining 78,012 units for $1.9 million.

            Series I 6% Convertible Perpetual Preferred Units.    On October 14, 2004, we issued 18,015,506 Series I 6% Convertible Perpetual Preferred Units in the Chelsea acquisition. We issued 4,753,794 Series I Preferred Units to limited partners of the Chelsea operating partnership and the remaining 13,261,712 Series I Preferred Units to Simon Property which had issued an equal number of shares of a corresponding Series of Simon Property preferred stock to Chelsea stockholders. Distributions are made quarterly at an annual rate of 6% per unit. On or after October 14, 2009, Simon Property has the option to redeem the Series I 6% preferred stock, in whole or in part, for cash only at a

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liquidation preference of $50.00 per share plus accumulated and unpaid dividends. The redemption may occur only if, for 20 trading days within a period of 30 consecutive trading days ending on the trading day before notice of redemption is issued, the closing price per share of Simon Property common stock exceeds 130% of the applicable conversion price. The Series I 6% preferred stock is convertible into common stock upon the occurrence of a conversion triggering event at an initial conversion rate of 0.783 of a share of common stock for each share of preferred stock. A conversion triggering event includes the following: (a) if the Series I 6% preferred stock is called for redemption; or, (b) if Simon Property is a party to a consolidation, merger, binding share exchange, or sale of all or substantially all of its assets; or, (c) if during any fiscal quarter after the fiscal quarter ending December 31, 2004, the closing sale price of the Simon Property common stock for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter exceeds 125% of the applicable conversion price. If the closing price condition is not met at the end of any fiscal quarter, then conversions will not be permitted in the following fiscal quarter. The terms of the Series I 6% preferred stock have terms substantially the same as the corresponding units, except that as it relates to the Series I 6% preferred units, Simon Property has the option to satisfy the holder's exchange of Series I Preferred Units for cash or Series I preferred stock of Simon Property.

            Series J 83/8% Cumulative Redeemable Preferred Units.    On October 14, 2004, we issued 796,948 Series J 83/8% Cumulative Redeemable Preferred Units in the acquisition of Chelsea to Simon Property which had issued an equal number of shares of a corresponding series of Simon Property preferred stock to Chelsea stockholders. On or after October 15, 2027, the Series J preferred stock, in whole or in part, may be redeemed at Simon Property's option at a price, payable in cash, of $50.00 per share plus accumulated and unpaid dividends. If the corresponding series of preferred stock is redeemed, the Series J 83/8% Preferred Units would also be redeemed. The Series J 83/8% Preferred Units are not convertible or exchangeable for any other property or securities of the Operating Partnership.

            7.5% Cumulative Redeemable Preferred Units.    We issued 7.5% Cumulative Redeemable Preferred Units (the "7.5% Preferred Units") in connection with the purchase of additional interest in Kravco. The 7.5% Preferred Units accrue cumulative dividends at a rate of $7.50 annually, which is payable quarterly in arrears. The Operating Partnership may redeem the 7.5% Preferred Units on or after November 10, 2013 unless there is the occurrence of certain tax triggering events such as death of the initial unit holder, or the transfer of any units to any person or entity other than the persons or entities entitled to the benefits of the original holder. The 7.5% Preferred Units' redemption price is the liquidation value plus accrued and unpaid distributions, payable either in cash or shares of common stock. In the event of the death of a holder of the 7.5% Preferred Units, the occurrence of certain tax triggering events applicable to the holder, or on or after November 10, 2006, the preferred unitholder may require the Operating Partnership to redeem the 7.5% Preferred Units payable at the option of the Operating Partnership in either cash or shares of common stock of Simon Property. On August 16, 2004, we issued an additional 4,277 of these preferred units.

            Notes Receivable from Former CPI Stockholders.    Notes receivable of $17,926 from former Corporate Property Investors, Inc. ("CPI") stockholders, which result from securities issued under CPI's executive compensation program and were assumed in our merger with CPI, are reflected as a deduction from capital in excess of par value in the statements of partners' equity in the accompanying consolidated financial statements. A total of $277 of these notes bear interest at rates ranging from 6.00% to 7.50%. The remainder of the notes do not bear interest and become due at the time the underlying shares are sold.

            Note Receivable from Simon Property.    In 1999, Simon Property borrowed $92.8 million from us at 7.8% interest with a maturity of December 2009. Simon Property used the proceeds to purchase a non-controlling 88% interest in one Property. Simon Property contributed its interest in the Property to us in exchange for 3,617,070 units. The note

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receivable from Simon Property and accrued interest is recorded as a reduction of partners' equity. The amount of interest earned during each year is as follows:

 
   For the year ended December 31,
    
 
   2004
   2003
   2002
    
    $ 7,046   $ 7,173   $ 7,256    

The Simon Property Group 1998 Stock Incentive Plan

            We, along with Simon Property, have a stock incentive plan (the "1998 Plan"), which provides for the grant of awards with respect to the equity of Simon Property during a ten-year period, in the form of options to purchase shares of Simon Property common stock ("Options"), stock appreciation rights ("SARs"), restricted stock grants and performance unit awards (collectively, "Awards"). Options may be granted which are qualified as "incentive stock options" within the meaning of Section 422 of the Code and Options which are not so qualified. As of December 31, 2004, Simon Property had reserved 11,300,000 shares for issuance under the 1998 Plan. Additionally, the partnership agreement requires Simon Property to sell shares to us, at fair value, sufficient to satisfy the exercising of stock options, and for Simon Property to purchase Units for cash in an amount equal to the fair market value of such shares.

            Administration.    The 1998 Plan is administered by Simon Property's Compensation Committee (the "Committee"). The Committee, at its sole discretion, determines which eligible individuals may participate and the type, extent and terms of the Awards to be granted to them. In addition, the Committee interprets the 1998 Plan and makes all other determinations deemed advisable for the administration of the 1998 Plan. Options granted to employees ("Employee Options") become exercisable over the period determined by the Committee. The exercise price of an Employee Option may not be less than the fair market value of the shares on the date of grant. Employee Options generally vest over a three-year period and expire ten years from the date of grant.

            Automatic Awards For Eligible Directors.    Prior to May 7, 2003, the 1998 Plan provided for automatic grants of Options to directors ("Director Options") of Simon Property who are not also our employees or employees of our affiliates ("Eligible Directors"). Each Eligible Director was automatically granted Director Options to purchase 5,000 shares upon the director's initial election to the Board, and upon each re-election, an additional 3,000 Director Options multiplied by the number of calendar years that had elapsed since such person's last election to the Board. The exercise price of Director Options is equal to the fair market value of the shares on the date of grant. Director Options vest and become exercisable on the first anniversary of the date of grant or in the event of a "Change in Control" of Simon Property as defined in the 1998 Plan. The last year during which Eligible Directors received awards of Director Options was 2002.

            Pursuant to an amendment to the 1998 Plan approved by the stockholders effective May 7, 2003, Eligible Directors now receive annual grants of restricted stock in lieu of Director Options. Each Eligible Director receives on the first day of the first calendar month following his or her initial election as a director, a grant of 1,000 shares of restricted stock. Thereafter, as of the date of each annual meeting of Simon Property's stockholders, Eligible Directors who are re-elected as directors receive a grant of 1,000 shares of restricted stock. In addition, Eligible Directors who serve as chairpersons of the standing committees of the Board of Directors receive an additional annual grant in the amount of 500 shares of restricted stock (in the case of the Audit Committee) or 300 shares of restricted stock (in the case of all other standing committees).

            Each award of restricted stock vests in four equal annual installments on January 1 of each year, beginning in the year following the year in which the award occurred. If a director otherwise ceases to serve as a director before vesting, the unvested portion of the award terminates. Any unvested portion of a restricted stock award vests if the director dies or becomes disabled while in office or has served a minimum of five annual terms as a director, but only if

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the Compensation Committee or full Board of Directors determines that such vesting is appropriate. The restricted stock also vests in the event of a "Change in Control".

            Once vested, the delivery of any shares with respect to a restricted stock award (including reinvested dividends) is deferred under our Director Deferred Compensation Plan until the director retires, dies or becomes disabled or otherwise no longer serves as a director. The Eligible Directors may vote and are entitled to receive dividends on the shares underlying the restricted stock awards; however, any dividends on the shares underlying restricted stock awards must be reinvested in shares and held in the Director Deferred Compensation Plan until the shares underlying a restricted stock award are delivered to the former director.

            In addition to automatic awards, Eligible Directors may be granted discretionary awards under the 1998 Plan.

            Restricted Stock.    The 1998 Plan also provides for shares of restricted common stock of Simon Property to be granted to certain employees at no cost to those employees, subject to growth targets established by the Compensation Committee (the "Restricted Stock Program"). Restricted stock is issued on the grant date and vests annually in four installments of 25% each beginning on January 1 following the year in which the restricted stock is awarded. The cost of restricted stock grants, which is based upon the stock's fair market value on the grant date, is charged to partners' equity and subsequently amortized against our earnings over the vesting period. Through December 31, 2004 a total of 3,423,173 shares of restricted stock of Simon Property, net of forfeitures, have been awarded under the plan. As a result, we have issued a like number of units as called for in our partnership agreement.

            Information regarding restricted stock awards are summarized in the following table for each of the years presented:

 
   For the Year Ended December 31,
  
 
   2004
   2003
   2002
  
Restricted stock shares awarded, net of forfeitures     365,602     380,835     (21,070 )
Weighted average grant price of shares granted   $ 56.86   $ 33.03     n/a  
Amortization expense   $ 11,935   $ 10,355   $ 8,957  

            The fair value of the options at the date of grant was estimated using the Black-Scholes option pricing model for our 2002 grants.

            The weighted average life of our outstanding options as of December 31, 2004 is 5.3 years.

            During 2002, we changed our method of accounting for options and began expensing options in the consolidated statement of operations.

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            Information relating to Director Options and Employee Options from December 31, 2001 through December 31, 2004 is as follows:

 
   Director Options
   Employee Options
 
   Options
   Option Price per
Share (1)
   Options
   Option Price per
Share (1)
Shares under option at December 31, 2001   169,720   $ 25.86   3,177,751   $ 25.03
   
 
 
 
Granted   24,000     33.68   —     —
Exercised   (6,360 )   22.29   (665,476 )   23.44
Forfeited   (9,000 )   27.05   (7,225 )   24.25
   
 
 
 
Shares under option at December 31, 2002   178,360   $ 26.97   2,505,050   $ 25.46
   
 
 
 

Granted
 
—
 
 
N/A
 
—
 
 
N/A
Exercised   (86,000 )   26.43   (647,617 )   23.44
Forfeited   —     N/A   (5,400 )   25.54
   
 
 
 
Shares under option at December 31, 2003   92,360   $ 27.48   1,852,033   $ 26.16
   
 
 
 

Granted and other (2)
 
—
 
 
N/A
 
263,884
 
 
49.79
Exercised   (28,070 )   29.13   (364,873 )   27.05
Forfeited   —     N/A   (55,018 )   24.15
   
 
 
 
Shares under option at December 31, 2004   64,290   $ 26.75   1,696,026   $ 29.71
   
 
 
 
Exercise price range options 2003 and prior       $ 22.25-$33.68       $ 22.35-$30.38
       
     
Exercise price range 2004 options         N/A       $ 46.97-$63.51
       
     
Options exercisable at December 31, 2002   154,360   $ 25.93   1,695,750   $ 25.67
   
 
 
 
Options exercisable at December 31, 2003   92,360   $ 27.48   1,552,983   $ 26.28
   
 
 
 
Options exercisable at December 31, 2004   64,290   $ 26.75   1,603,026   $ 28.08
   
 
 
 
(1)
Represents the weighted average price when multiple prices exist.

(2)
Principally includes Chelsea options issued to certain employees as part of acquisition consideration.

            We also maintain a tax-qualified retirement 401(k) savings plan and offer no other postretirement or post employment benefits to our employees.

            Limited partners in the Operating Partnership have the right to exchange all or any portion of their Units for shares of common stock of Simon Property on a one-for-one basis or cash, as selected by the Simon Property Board of Directors. The amount of cash to be paid if the exchange right is exercised and the cash option is selected will be based on the trading price of Simon Property's common stock at that time. If the cash option is selected, Simon Property is obligated to contribute to us the capital necessary to complete the exchange. At December 31, 2004, Simon Property had reserved 83,121,284 shares of common stock for possible issuance upon the exchange of units, options, Class B and C common stock and certain convertible preferred stock.

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11.    Commitments and Contingencies

            On November 15, 2004, the Attorneys General of Massachusetts, New Hampshire and Connecticut filed complaints in their respective state Superior Courts against us and our affiliate, SPGGC, Inc., alleging that the sale of co-branded, bank-issued gift cards sold in certain of its Portfolio Properties violated gift certificate statutes and consumer protection laws in those states. Each of these suits seeks injunctive relief, unspecified civil penalties and disgorgement of any fees determined to be improperly charged to consumers.

            In addition, we are a defendant in three other proceedings relating to the gift card program. Each of the three proceedings has been brought by a private plaintiff as a purported class action and alleges violation of state consumer protection laws, state abandoned property and contract laws or state statutes regarding gift certificates or gift cards and seeks a variety of remedies including unspecified damages and injunctive relief.

            On February 3, 2005, the Attorney General of the State of New York filed a petition in the Supreme Court of New York, County of New York against Simon Property and the Operating Partnership alleging violations of New York law with respect to gift card sales. The New York proceeding was settled on March 1, 2005.

            We believe that we have viable defenses under both state and federal laws to the above gift card actions. Although it is not possible to provide any assurance of the ultimate outcome of any of these pending actions, management does not believe that an adverse outcome would have a material adverse effect on our financial position, results of operations or cash flow.

            Triple Five of Minnesota, Inc., a Minnesota corporation, v. Melvin Simon, et. al.    On or about November 9, 1999, Triple Five of Minnesota, Inc. commenced an action in the District Court for the State of Minnesota, Fourth Judicial District, against, among others, Mall of America, certain members of the Simon family and entities allegedly controlled by such individuals, and us. The action was later removed to federal court. On September 10, 2003, the court issued its decision in a Memorandum and Order (the "Order"). In the Order, the court found that certain entities and individuals breached their fiduciary duties to Triple Five. The court did not award Triple Five damages but instead awarded Triple Five equitable and other relief and imposed a constructive trust on that portion of the Mall of America owned by us. Specifically, as it relates to us, the court ordered that Triple Five was entitled to purchase from us the one-half partnership interest that we purchased in October 1999, provided Triple Five remits to us the sum of $81.38 million within nine months of the Order. On August 6, 2004, Triple Five closed on its purchase of our one-half partnership interest. The court further held that we must disgorge all "net profits" that we received as a result of our ownership interest in the Mall from October 1999 to the present.

            We have appealed the Order and the Ancillary Relief Order to the United States Court of Appeals for the Eighth Circuit. Briefing on the appeals is complete and oral argument took place on October 18, 2004. It is not possible to provide any assurance on the ultimate outcome of this litigation.

            As a result of the Order, we initially recorded a $6.0 million charge for our share of the estimated loss in 2003. In the first quarter of 2004, as a result of the May 3, 2004 memorandum issued by the court appointed mediator, which has now been affirmed by the court, we recorded an additional $13.5 million charge for our share of the loss that is included in "(Loss) gain on sales of assets and other, net" in the accompanying consolidated financial statements of operations and comprehensive income. We ceased recording any contribution to either net income or Funds from Operations ("FFO") from the results of operations of Mall of America as of September 1, 2003.

            We are involved in various legal proceedings that arise in the ordinary course of our business. We believe that such routine litigation, claims and administrative proceedings will not have a material adverse impact on our financial position or our results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, and no amount within the range is a better estimate, the mid point in the range is accrued. If a loss is not probable or a probable loss cannot be reasonably estimated, no liability is recorded.

104


            As of December 31, 2004, a total of 38 of the consolidated Properties are subject to ground leases. The termination dates of these ground leases range from 2005 to 2090. These ground leases generally require us to make payments of a fixed annual rent, or a fixed annual rent plus a participating percentage over a base rate based upon the revenues or total sales of the property. Some of these leases also include escalation clauses and renewal options. We incurred ground lease expense included in other expense and discontinued operations as follows:

 
 For the year ended December 31,
 
 2004
   2003
   2002
  $ 20,639   $ 16,974   $ 14,139

            Future minimum lease payments due under such ground leases for each of the next five years ending December 31 and thereafter are as follows:

2005   $ 13,993
2006     15,271
2007     15,511
2008     15,757
2009     15,655
Thereafter     651,330
   
    $ 727,517
   

            Insurance.    We maintain commercial general liability, fire, flood, extended coverage and rental loss insurance on our Properties. Rosewood Indemnity, Ltd, a wholly-owned subsidiary of the Management Company, has agreed to indemnify our general liability carrier for a specific layer of losses. The carrier has, in turn, agreed to provide evidence of coverage for this layer of losses under the terms and conditions of the carrier's policy. A similar policy written through Rosewood Indemnity, Ltd. also provides initial coverage for property insurance and certain windstorm risks at the Properties located in Florida.

            The events of September 11, 2001 affected our insurance programs. Although insurance rates remain high, since the President signed into Law the Terrorism Risk Insurance Act (TRIA) in November of 2002, the price of terrorism insurance has steadily decreased, while the available capacity has been substantially increased. We have purchased terrorism insurance covering all Properties. The program provides limits up to $1 billion per occurrence for Certified (Foreign) acts of terrorism and $500 million per occurrence for Certified (Domestic) acts of terrorism. The coverage is written on an "all risk" policy form that eliminates the policy aggregates associated with our previous terrorism policies. This policy is in place throughout the remainder of 2005.

            Guarantees of Indebtedness.    Joint venture debt is the liability of the joint venture, and is typically secured by the joint venture Property, which is non-recourse to us. As of December 31, 2004, we have guaranteed or have provided letters of credit to support $104.7 million of our total $2.8 billion share of joint venture mortgage and other indebtedness in the event the joint venture partnership defaults under the terms of the mortgage. The mortgages guaranteed are secured by the property of the joint venture partnership and could be sold in order to satisfy the outstanding obligation.

            Environmental Matters.    Nearly all of the Properties have been subjected to Phase I or similar environmental audits. Such audits have not revealed nor is management aware of any environmental liability that we believe would have a material adverse impact on our financial position or results of operations. We are unaware of any instances in which we would incur significant environmental costs if we disposed of or abandoned any or all Properties.

105

            Taubman Centers, Inc. Tender Offer.    On December 5, 2002, Simon Property Acquisitions, Inc., a wholly-owned subsidiary of Simon Property, commenced a tender offer to acquire all of the outstanding shares of Taubman Centers, Inc. ("Taubman") and on January 15, 2003, Westfield America, Inc., the U.S. subsidiary of Westfield America Trust, joined Simon Property's tender offer. On October 8, 2003, Simon Property and Westfield America, Inc. withdrew their joint tender offer. Under the terms of our partnership agreement, we reimburse the operating expenses incurred by Simon Property. As a result we expensed deferred acquisition costs of $10.6 million, net, related to this acquisition. These expenses are included in "Costs related to withdrawn tender offer" in the accompanying statement of operations and comprehensive income. The withdrawal of the tender offer followed the enactment of a law, which amended the Michigan Control Share Acquisitions Act and which allowed the Taubman family group to effectively block the ability to conclude the tender offer.

            Concentration of Credit Risk.    We are subject to risks incidental to the ownership and operation of commercial real estate. These risks include, among others, the risks normally associated with changes in the general economic climate, trends in the retail industry, creditworthiness of tenants, competition for tenants and customers, changes in tax laws, interest rate and foreign currency levels, the availability of financing, and potential liability under environmental and other laws. Our regional malls, Premium Outlet centers and community shopping centers rely heavily upon anchor tenants like most retail properties. Four retailers' anchor stores occupied 414 of the approximately 960 anchor stores in the Properties as of December 31, 2004. An affiliate of one of these retailers is a limited partner in the Operating Partnership.

            Limited Life Partnerships.    In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150"). SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability. The effective date of a portion of the Statement has been indefinitely postponed by the FASB. As a result, we have no transactions, arrangements, or financial instruments that have been identified that appear to meet the criteria for liability recognition in accordance with paragraphs 9 and 10 under SFAS 150 due to the indefinite life of certain joint venture arrangements. SFAS 150 requires disclosure of the estimated settlement value of these non-controlling interests. As of December 31, 2004 and 2003, the estimated settlement value of these non-controlling interests was approximately $100 million and $40 million, respectively.

12.    Related Party Transactions

            The Management Company provides management, insurance, and other services to Melvin Simon & Associates, Inc. ("MSA"), a related party, and other non-owned properties. Amounts for services provided by the Management Company and its affiliates to our unconsolidated joint ventures and other related parties were as follows:

 
   For the year ended December 31,
 
   2004
   2003
   2002
Amounts charged to unconsolidated joint ventures   $ 56,557   $ 59,631   $ 55,720
Amounts charged to properties owned by related parties     9,364     4,850     4,045

13.    Recently Issued Accounting Pronouncements

            In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51" ("FIN 46"). FIN 46 requires the consolidation of entities that meet the definition of a variable interest entity in which an enterprise absorbs the majority of the entity's expected losses, receives a majority of the entity's expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. Our joint venture interests in variable interest entities consist of real estate assets

106


and are for the purpose of owning, operating and/or developing real estate. Our property partnerships rely primarily on financing from third party lenders, which is secured by first liens on the Property of the partnership and partner equity. Our maximum exposure to loss as a result of our involvement in these partnerships is represented by the carrying amount of our investments in unconsolidated entities as disclosed on the accompanying balance sheets plus our guarantees of joint venture debt as disclosed in Note 11.

            We adopted FIN 46 on January 1, 2004 for variable interest entities that existed prior to February 1, 2003 and as a result we consolidated two joint ventures that hold two regional malls. During 2003, we consolidated one joint venture that was created in 2003 for the purpose of developing one regional mall. The aggregate carrying amount of the investment property for these properties was approximately $274.2 million as of December 31, 2004.

14.    Quarterly Financial Data (Unaudited)

            Summarized quarterly 2004 and 2003 data is summarized in the table below and the amounts have been reclassified from previously disclosed amounts due to the sale in 2004 and 2003 of properties. The results of operations of these properties were reclassified to discontinued operations:

 
   First
Quarter
   Second
Quarter
   Third
Quarter
   Fourth
Quarter
2004                        
Total revenue   $ 579,045   $ 597,713   $ 615,929   $ 831,759
Operating income     228,703     240,177     244,642     334,489
Income from Continuing Operations     76,019     104,236     103,862     160,705
Net income available to unitholders     62,772     90,945     90,793     136,201
Income from Continuing Operations per unit — Basic   $ 0.24   $ 0.35   $ 0.35   $ 0.49
Net income per unit — Basic   $ 0.24   $ 0.35   $ 0.35   $ 0.49
Income from Continuing Operations per unit — Diluted   $ 0.24   $ 0.35   $ 0.35   $ 0.49
Net income per unit — Diluted   $ 0.24   $ 0.35   $ 0.35   $ 0.49
Weighted Average units Outstanding     261,165,853     261,486,587     261,532,184     277,346,837
Diluted Weighted Average units Outstanding     262,130,271     262,294,650     262,372,805     278,233,756
 
   First
Quarter
   Second
Quarter
   Third
Quarter
   Fourth
Quarter
2003                        
Total revenue   $ 529,307   $ 546,504   $ 556,175   $ 653,202
Operating income     218,203     225,046     219,552     305,854
Income from Continuing Operations     84,558     97,136     86,597     178,786
Net income available to unitholders     74,040     63,392     57,320     217,780
Income from Continuing Operations per unit — Basic   $ 0.26   $ 0.32   $ 0.27   $ 0.67
Net income per unit — Basic   $ 0.29   $ 0.26   $ 0.23   $ 0.87
Income from Continuing Operations per unit — Diluted   $ 0.26   $ 0.31   $ 0.27   $ 0.64
Net income per unit — Diluted   $ 0.29   $ 0.25   $ 0.23   $ 0.83
Weighted Average units Outstanding     247,812,060     248,112,573     248,233,296     251,476,316
Diluted Weighted Average units Outstanding     248,486,429     248,902,601     249,127,927     261,710,249

107

SIGNATURES

            Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    SIMON PROPERTY GROUP, L.P.
    By: Simon Property Group, Inc., General Partner

 
 
By
/s/  DAVID SIMON      
David Simon
Chief Executive Officer

March 29, 2004

            Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the general partner of the registrant and in the capacities and on the dates indicated.

Signature
   Capacity
   Date

 
 
 
 
 
/s/  DAVID SIMON      
David Simon		   Chief Executive Officer and Director (Principal Executive Officer)   March 29, 2004

/s/  HERBERT SIMON      
Herbert Simon
 
Co-Chairman of the Board of Directors
 
March 29, 2004

/s/  MELVIN SIMON      
Melvin Simon
 
Co-Chairman of the Board of Directors
 
March 29, 2004

/s/  RICHARD SOKOLOV      
Richard Sokolov
 
President, Chief Operating Officer and Director
 
March 29, 2004

/s/  MELVYN E. BERGSTEIN      
Melvyn E. Bergstein
 
Director
 
March 29, 2004

/s/  BIRCH BAYH      
Birch Bayh
 
Director
 
March 29, 2004

/s/  LINDA WALKER BYNOE      
Linda Walker Bynoe
 
Director
 
March 29, 2004

/s/  PIETER S. VAN DEN BERG      
Pieter S. van den Berg
 
Director
 
March 29, 2004

/s/  G. WILLIAM MILLER      
G. William Miller
 
Director
 
March 29, 2004

/s/  FREDRICK W. PETRI      
Fredrick W. Petri
 
Director
 
March 29, 2004

/s/  J. ALBERT SMITH      
J. Albert Smith
 
Director
 
March 29, 2004
         

108


/s/  KAREN N. HORN      
Karen N. Horn
 
Director
 
March 29, 2004

/s/  M. DENISE DEBARTOLO YORK      
M. Denise DeBartolo York
 
Director
 
March 29, 2004

/s/  STEPHEN E. STERRETT      
Stephen E. Sterrett
 
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
March 29, 2004

/s/  JOHN DAHL      
John Dahl
 
Senior Vice President (Principal Accounting Officer)
 
March 29, 2004

109


SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2004
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Regional Malls                                                            
Alton Square, Alton, IL   $ —   $ 154   $ 7,641   $ —   $ 10,717   $ 154   $ 18,358   $ 18,512   $ 6,669   1993 (Note 4 )
Anderson Mall, Anderson, SC     29,414     1,712     15,227     1,363     8,800     3,075     24,027     27,102     8,575   1972  
Arsenal Mall, Watertown, MA     34,153     15,505     47,680     —     1,140     15,505     48,820     64,325     7,282   1999 (Note 4 )
Aurora Mall, Aurora, CO     —     11,400     55,692     6     32,057     11,406     87,749     99,155     15,223   1998 (Note 4 )
Bangor Mall, Bangor, ME     23,427     5,544     59,567     —     4,421     5,544     63,988     69,532     4,259   2004 (Note 5 )
Barton Creek Square, Austin, TX     —     2,903     20,699     7,983     52,831     10,886     73,530     84,416     23,611   1981  
Battlefield Mall, Springfield, MO     100,000     3,919     27,231     3,225     45,891     7,144     73,122     80,266     29,667   1970  
Bay Park Square, Green Bay, WI     —     6,358     25,623     4,133     21,393     10,491     47,016     57,507     9,887   1980  
Biltmore Square, Asheville, NC     26,000     6,641     23,582     —     1,539     6,641     25,121     31,762     7,321   1989  
Bowie Town Center, Bowie, MD     —     2,710     65,044     235     5,756     2,945     70,800     73,745     9,791   2001  
Boynton Beach Mall, Boynton Beach, FL     —     22,240     79,144     —     14,782     22,240     93,926     116,166     21,083   1985  
Brea Mall, Brea, CA     —     39,500     209,202     —     13,657     39,500     222,859     262,359     39,976   1998 (Note 4 )
Broadway Square, Tyler, TX     —     11,470     32,439     —     8,168     11,470     40,607     52,077     12,197   1994 (Note 4 )
Brunswick Square, East Brunswick, NJ     86,000     8,436     55,838     —     23,595     8,436     79,433     87,869     19,815   1973  
Burlington Mall, Burlington, MA     —     46,600     303,618     —     15,704     46,600     319,322     365,922     55,786   1998 (Note 4 )
Castleton Square, Indianapolis, IN     —     26,250     98,287     2,500     31,026     28,750     129,313     158,063     30,769   1972  
Century III Mall, West Mifflin, PA     86,827     17,380     102,364     10     7,528     17,390     109,892     127,282     38,180   1979  
Charlottesville Fashion Square, Charlottesville, VA     —     —     54,738     —     12,062     —     66,800     66,800     13,777   1997 (Note 4 )
Chautauqua Mall, Lakewood, NY     —     3,257     9,641     —     15,616     3,257     25,257     28,514     7,781   1971  
Cheltenham Square, Philadelphia, PA     54,941     14,206     43,699     —     4,678     14,206     48,377     62,583     12,589   1981  
Chesapeake Square, Chesapeake, VA     73,000     11,534     70,461     —     5,646     11,534     76,107     87,641     21,647   1989  
Cielo Vista Mall, El Paso, TX     85,976     1,307     18,512     608     24,685     1,915     43,197     45,112     23,046   1974  
College Mall, Bloomington, IN     46,756     1,003     16,245     722     30,603     1,725     46,848     48,573     17,591   1965  
Columbia Center, Kennewick, WA     —     18,285     66,580     —     8,232     18,285     74,812     93,097     17,648   1987  
Copley Place, Boston, MA     177,677     147     378,045     —     6,782     147     384,827     384,974     27,014   2002 (Note 4 )
Coral Square, Coral Springs, FL     87,962     13,556     93,630     —     2,192     13,556     95,822     109,378     26,571   1984  
Cordova Mall, Pensacola, FL     —     18,626     73,091     7,321     13,500     25,947     86,591     112,538     16,794   1998 (Note 4 )
Cottonwood Mall, Albuquerque, NM     —     10,414     69,958     —     162     10,414     70,120     80,534     21,324   1996  
Crossroads Mall, Omaha, NE     43,608     881     37,263     409     30,563     1,290     67,826     69,116     21,097   1994 (Note 4 )
Crystal River Mall, Crystal River, FL     15,707     5,661     20,241     —     4,570     5,661     24,811     30,472     5,796   1990  
DeSoto Square, Bradenton, FL     64,153     9,380     52,723     —     6,990     9,380     59,713     69,093     15,677   1973  
Eastland Mall, Tulsa, OK     —     3,124     6,035     518     6,986     3,642     13,021     16,663     13,876   1986  
Edison Mall, Fort Myers, FL     —     11,529     107,350     —     6,231     11,529     113,581     125,110     24,137   1997 (Note 4 )
Fashion Mall at Keystone, The, Indianapolis, IN     59,594     —     120,579     —     15,919     —     136,498     136,498     27,813   1997 (Note 4 )

110

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2004
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Forest Mall, Fond Du Lac, WI   17,463   728   4,491   —   7,825   728   12,316   13,044   5,471   1973  
Forum Shops at Caesars, The, Las Vegas, NV   550,000   —   276,378   —   186,986   —   463,364   463,364   42,749   1992  
Great Lakes Mall, Mentor, OH   —   12,304   100,362   432   7,888   12,736   108,250   120,986   27,210   1961  
Greenwood Park Mall, Greenwood, IN   87,226   2,559   23,445   5,277   72,451   7,836   95,896   103,732   30,771   1979  
Gulf View Square, Port Richey, FL   33,402   13,690   39,991   2,023   17,525   15,713   57,516   73,229   13,671   1980  
Haywood Mall, Greenville, SC   —   11,585   133,893   6   4,263   11,591   138,156   149,747   34,858   1998 (Note 4 )
Independence Center, Independence, MO   —   5,042   45,798   2   26,688   5,044   72,486   77,530   19,678   1994 (Note 4 )
Ingram Park Mall, San Antonio, TX   81,527   733   17,163   169   17,670   902   34,833   35,735   15,907   1979  
Irving Mall, Irving, TX   —   6,737   17,479   2,533   31,308   9,270   48,787   58,057   23,623   1971  
Jefferson Valley Mall, Yorktown Heights, NY.   —   4,868   30,304   —   20,774   4,868   51,078   55,946   17,165   1983  
Knoxville Center, Knoxville, TN   61,737   5,006   21,965   3,712   34,203   8,718   56,168   64,886   20,028   1984  
La Plaza Mall, McAllen, TX   —   1,375   9,828   6,569   31,790   7,944   41,618   49,562   13,080   1976  
Lafayette Square, Indianapolis, IN   —   14,251   54,589   50   12,977   14,301   67,566   81,867   21,295   1968  
Laguna Hills Mall, Laguna Hills, CA   —   28,074   55,689   —   5,709   28,074   61,398   89,472   13,580   1997 (Note 4 )
Lakeline Mall, Austin, TX   67,455   10,383   81,568   14   1,285   10,397   82,853   93,250   22,015   1995  
Lenox Square, Atlanta, GA   —   38,213   492,411   —   8,309   38,213   500,720   538,933   89,695   1998 (Note 4 )
Lima Mall, Lima, OH   —   7,910   35,338   —   8,372   7,910   43,710   51,620   12,464   1965  
Lincolnwood Town Center, Lincolnwood, IL   —   7,907   63,480   28   6,645   7,935   70,125   78,060   25,034   1990  
Livingston Mall, Livingston, NJ   —   30,200   105,250   —   8,127   30,200   113,377   143,577   21,029   1998 (Note 4 )
Longview Mall, Longview, TX   32,681   259   3,567   124   6,669   383   10,236   10,619   4,086   1978  
Maplewood Mall, Minneapolis, MN   —   17,119   80,758   —   7,243   17,119   88,001   105,120   7,737   2002 (Note 4 )
Markland Mall, Kokomo, IN   23,122   —   7,568   —   7,495   —   15,063   15,063   5,837   1968  
McCain Mall, N. Little Rock, AR   39,952   —   9,515   —   9,445   —   18,960   18,960   11,766   1973  
Melbourne Square, Melbourne, FL   —   15,762   55,891   2,963   14,783   18,725   70,674   89,399   15,430   1982  
Menlo Park Mall, Edison, NJ   —   65,684   223,252   —   20,787   65,684   244,039   309,723   50,830   1997 (Note 4 )
Midland Park Mall, Midland, TX   33,756   687   9,213   —   9,466   687   18,679   19,366   8,727   1980  
Miller Hill Mall, Duluth, MN   —   2,537   18,092   —   20,924   2,537   39,016   41,553   16,427   1973  
Montgomery Mall, Montgomeryville, PA   95,264   27,377   86,343   —   921   27,377   87,264   114,641   6,645   2004 (Note 5 )
Muncie Mall, Muncie, IN   —   172   5,833   52   24,443   224   30,276   30,500   10,338   1970  
Nanuet Mall, Nanuet, NY   —   27,310   162,993   —   2,323   27,310   165,316   192,626   34,324   1998 (Note 4 )
North East Mall, Hurst, TX   140,000   128   14,124   19,010   142,179   19,138   156,303   175,441   36,812   1971  
Northfield Square Mall, Bourbonnais, IL   31,553   362   53,396   —   46   362   53,442   53,804   23,575   2004 (Note 5 )
Northgate Mall, Seattle, WA   —   27,411   115,992   —   30,985   27,411   146,977   174,388   27,807   1987  
Northlake Mall, Atlanta, GA   71,221   33,400   98,035   —   3,385   33,400   101,420   134,820   22,547   1998 (Note 4 )
Northwoods Mall, Peoria, IL   —   1,193   12,779   2,451   29,791   3,644   42,570   46,214   19,388   1983  
Oak Court Mall, Memphis, TN   —   15,673   57,304   —   5,461   15,673   62,765   78,438   13,623   1997 (Note 4 )

111

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2004
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Orange Park Mall, Orange Park, FL   —   13,345   65,121   —   19,673   13,345   84,794   98,139   24,892   1994 (Note 4 )
Orland Square, Orland Park, IL   —   35,514   129,906   —   14,624   35,514   144,530   180,044   30,107   1997 (Note 4 )
Oxford Valley Mall, Langhorne, PA   84,397   24,544   100,287   —   286   24,544   100,573   125,117   23,927   2003 (Note 4 )
Paddock Mall, Ocala, FL   26,566   11,198   39,727   —   7,598   11,198   47,325   58,523   10,750   1980  
Palm Beach Mall, West Palm Beach, FL   53,999   11,962   112,741   —   37,287   11,962   150,028   161,990   46,433   1967  
Penn Square Mall, Oklahoma City, OK   70,305   2,043   155,958   —   17,154   2,043   173,112   175,155   21,299   2002 (Note 4 )
Pheasant Lane Mall, Nashua, NH   —   3,902   155,068   —   360   3,902   155,428   159,330   29,391   2004 (Note 5 )
Phipps Plaza, Atlanta, GA   —   19,200   210,610   —   13,505   19,200   224,115   243,315   40,299   1998 (Note 4 )
Plaza Carolina, Carolina, PR   257,730   15,489   279,395   —   187   15,489   279,582   295,071   4,699   2004 (Note 4 )
Port Charlotte Town Center, Port Charlotte, FL   52,877   5,561   58,570   —   11,728   5,561   70,298   75,859   18,447   1989  
Prien Lake Mall, Lake Charles, LA   —   1,842   2,813   3,091   41,780   4,933   44,593   49,526   15,072   1972  
Raleigh Springs Mall, Memphis, TN   10,877   9,137   28,604   —   12,069   9,137   40,673   49,810   12,838   1971  
Richardson Square Mall, Richardson, TX   —   4,532   6,329   1,268   11,510   5,800   17,839   23,639   5,931   1977  
Richmond Town Square, Richmond Heights, OH   47,413   2,600   12,112   —   60,048   2,600   72,160   74,760   21,937   1966  
River Oaks Center, Calumet City, IL   —   30,884   101,224   —   6,490   30,884   107,714   138,598   22,292   1997 (Note 4 )
Rockaway Townsquare, Rockaway, NJ   —   45,626   212,257   27   8,942   45,653   221,199   266,852   39,257   1998 (Note 4 )
Rolling Oaks Mall, San Antonio, TX   —   2,180   38,609   —   10,385   2,180   48,994   51,174   19,337   1988  
Roosevelt Field, Garden City, NY   —   164,058   702,008   2,117   13,700   166,175   715,708   881,883   127,264   1998 (Note 4 )
Ross Park Mall, Pittsburgh, PA   —   23,541   90,203   —   24,169   23,541   114,372   137,913   34,756   1986  
Santa Rosa Plaza, Santa Rosa, CA   —   10,400   87,864   —   5,016   10,400   92,880   103,280   17,270   1998 (Note 4 )
Shops at Mission Viejo Mall, Mission Viejo, CA   —   9,139   54,445   7,491   143,596   16,630   198,041   214,671   45,125   1979  
South Hills Village, Pittsburgh, PA   —   23,445   125,840   —   11,884   23,445   137,724   161,169   27,373   1997 (Note 4 )
South Shore Plaza, Braintree, MA   —   101,200   301,495   —   10,731   101,200   312,226   413,426   55,991   1998 (Note 4 )
Southern Park Mall, Boardman, OH   —   16,982   77,767   97   20,467   17,079   98,234   115,313   25,529   1970  
Southgate Mall, Yuma, AZ   —   1,817   7,974   —   3,598   1,817   11,572   13,389   5,249   1988  
SouthPark Mall, Charlotte, NC   —   32,141   188,004   100   98,403   32,241   286,407   318,648   22,559   2002 (Note 4 )
St Charles Towne Center, Waldorf, MD   —   7,710   52,934   1,180   12,772   8,890   65,706   74,596   26,988   1990  
Stanford Shopping Center, Palo Alto, CA   220,000   —   339,537   —   480   —   340,017   340,017   14,817   2003 (Note 4 )
Summit Mall, Akron, OH   —   15,374   51,137   —   17,541   15,374   68,678   84,052   16,934   1965  

112

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2004
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Sunland Park Mall, El Paso, TX   36,647   2,896   28,900   —   5,722   2,896   34,622   37,518   15,699   1988  
Tacoma Mall, Tacoma, WA   130,308   37,803   125,826   —   21,602   37,803   147,428   185,231   35,451   1987  
Tippecanoe Mall, Lafayette, IN   —   2,897   8,474   5,517   42,705   8,414   51,179   59,593   23,330   1973  
Town Center at Boca Raton, Boca Raton, FL   —   64,200   307,425   —   78,053   64,200   385,478   449,678   67,048   1998 (Note 4 )
Towne East Square, Wichita, KS   70,474   8,525   18,479   2,042   25,231   10,567   43,710   54,277   20,935   1975  
Towne West Square, Wichita, KS   53,366   972   21,203   76   7,552   1,048   28,755   29,803   13,760   1980  
Treasure Coast Square, Jensen Beach, FL   61,990   11,124   73,077   3,067   18,750   14,191   91,827   106,018   22,426   1987  
Trolley Square, Salt Lake City, UT   28,918   4,739   27,600   435   11,074   5,174   38,674   43,848   15,269   1986  
Tyrone Square, St. Petersburg, FL   —   15,638   120,962   —   16,670   15,638   137,632   153,270   33,156   1972  
University Mall, Little Rock, AR   —   123   17,411   —   728   123   18,139   18,262   8,762   1967  
University Mall, Pensacola, FL   —   4,554   26,657   —   4,110   4,554   30,767   35,321   9,983   1994  
University Park Mall, Mishawaka, IN   58,189   15,105   61,100   —   14,693   15,105   75,793   90,898   72,940   1996 (Note 4 )
Upper Valley Mall, Springfield, OH   47,904   8,421   38,745   —   3,625   8,421   42,370   50,791   11,255   1979  
Valle Vista Mall, Harlingen, TX   38,284   1,398   17,159   372   11,224   1,770   28,383   30,153   12,170   1983  
Virginia Center Commons, Glen Allen, VA   —   9,764   50,547   4,149   7,136   13,913   57,683   71,596   15,850   1991  
Walt Whitman Mall, Huntington Station, NY   —   51,700   111,258   3,789   34,377   55,489   145,635   201,124   35,703   1998 (Note 4 )
Washington Square, Indianapolis, IN   30,693   16,812   41,248   100   25,197   16,912   66,445   83,357   17,355   1974  
West Ridge Mall, Topeka, KS   68,711   5,453   34,132   197   6,579   5,650   40,711   46,361   16,161   1988  
Westminster Mall, Westminster, CA   —   43,464   84,709   —   13,532   43,464   98,241   141,705   18,010   1998 (Note 4 )
White Oaks Mall, Springfield, IL   48,563   3,024   35,692   2,413   27,232   5,437   62,924   68,361   18,219   1977  
Wolfchase Galleria, Memphis, TN   73,292   16,470   128,276   —   8,472   16,470   136,748   153,218   24,293   2002 (Note 4 )
Woodland Hills Mall, Tulsa, OK   84,180   34,211   187,498   —   135   34,211   187,633   221,844   14,842   2004 (Note 5 )

Premium Outlets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Albertville Premium Outlets, Albertville, MN   —   4,806   87,686   —   —   4,806   87,686   92,492   763   2004 (Note 4 )
Allen Premium Outlets, Allen, TX   —   14,187   50,719   —   3,548   14,187   54,267   68,454   624   2004 (Note 4 )
Aurora Farms Premium Outlets, Aurora, OH   —   2,627   32,442   —   248   2,627   32,690   35,317   504   2004 (Note 4 )
Camarillo Premium Outlets, Camarillo, CA   —   22,562   200,271   —   222   22,562   200,493   223,055   1,554   2004 (Note 4 )
Carlsbad Premium Outlets, Carlsbad, CA   —   13,890   158,874   —   7   13,890   158,881   172,771   1,267   2004 (Note 4 )
Carolina Premium Outlets, Smithfield, NC   20,681   3,463   60,935   —   63   3,463   60,998   64,461   677   2004 (Note 4 )

113

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2004
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Chicago Premium Outlets, Aurora, IL   —   886   115,360   —   209   886   115,569   116,455   2,114   2004 (Note 4 )
Clinton Crossings Premium Outlets, Clinton, CT   —   2,272   98,534   26   66   2,298   98,600   100,898   923   2004 (Note 4 )
Columbia Gorge Premium Outlets, Troutdale, OR   —   7,990   21,007   —   3   7,990   21,010   29,000   276   2004 (Note 4 )
Desert Hills Premium Outlets, Cabazon, CA   —   3,643   319,179   —   10   3,643   319,189   322,832   2,321   2004 (Note 4 )
Edinburgh Premium Outlet, Edinburgh, IN   —   3,124   48,077   —   396   3,124   48,473   51,597   493   2004 (Note 4 )
Folsom Premium Outlets, Folsom, CA   —   9,390   50,893   —   18   9,390   50,911   60,301   536   2004 (Note 4 )
Gilroy Premium Outlets, Gilroy, CA   67,242   10,542   168,823   —   256   10,542   169,079   179,621   1,322   2004 (Note 4 )
Kittery Premium Outlets, Kittery, ME   11,132   466   53,077   —   —   466   53,077   53,543   394   2004 (Note 4 )
Las Vegas Premium Outlets, Las Vegas, NV   —   25,986   138,273   —   —   25,986   138,273   164,259   4,777   2004 (Note 4 )
Leesburg Corner Premium Outlets, Leesburg, VA   —   7,456   143,699   —   490   7,456   144,189   151,645   1,436   2004 (Note 4 )
Liberty Village Premium Outlets, Flemington, NJ   —   6,295   34,723   —   435   6,295   35,158   41,453   390   2004 (Note 4 )
Lighthouse Place Premium Outlets, Michigan City, IN   46,399   7,018   93,640   —   13   7,018   93,653   100,671   854   2004 (Note 4 )
Napa Premium Outlets, Napa, CA   —   11,952   45,280   —   —   11,952   45,280   57,232   414   2004 (Note 4 )
North Georgia Premium Outlets, Dawsonville, GA   —   4,433   122,182   —   149   4,433   122,331   126,764   1,129   2004 (Note 4 )
Orlando Premium Outlets, Orlando, FL   —   14,924   288,018   —   82   14,924   288,100   303,024   1,923   2004 (Note 4 )
Osage Beach Premium Outlets, Osage Beach, MO   —   9,965   87,258   —   149   9,965   87,407   97,372   775   2004 (Note 4 )
Patriot Plaza, Williamsburg, VA   —   1,576   4,381   —   320   1,576   4,701   6,277   46   2004 (Note 4 )
Petaluma Village Premium Outlets, Petaluma, CA   —   22,446   11,276   —   523   22,446   11,799   34,245   115   2004 (Note 4 )
St. Augustine Premium Outlets, St. Augustine, FL   —   6,371   59,111   —   195   6,371   59,306   65,677   525   2004 (Note 4 )
The Crossings Premium Outlets, Tannersville, PA   59,127   8,557   145,938   —   4,186   8,557   150,124   158,681   990   2004 (Note 4 )
Vacaville Premium Outlets, Vacaville, CA   —   9,891   75,185   —   277   9,891   75,462   85,353   770   2004 (Note 4 )
Waikele Premium Outlets, Waipahu, HI   —   23,737   69,900   —   91   23,737   69,991   93,728   600   2004 (Note 4 )
Waterloo Premium Outlets, Waterloo, NY   37,370   3,511   75,953   —   373   3,511   76,326   79,837   670   2004 (Note 4 )
Woodbury Common Premium Outlets, Central Valley, NY   —   10,712   801,372   —   172   10,712   801,544   812,256   1,920   2004 (Note 4 )
Wrentham Village Premium Outlets, Wrentham, MA   —   5,030   266,467   —   330   5,030   266,797   271,827   885   2004 (Note 4 )

114

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2004
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  

Community Shopping Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arboretum, The, Austin, TX   —   7,640   36,778   71   6,318   7,711   43,096   50,807   7,779   1998 (Note 4 )
Bloomingdale Court, Bloomingdale, IL   28,337   8,748   26,184   —   6,750   8,748   32,934   41,682   9,871   1987  
Boardman Plaza, Youngstown, OH   23,598   7,443   23,801   —   9,996   7,443   33,797   41,240   8,421   1951  
Brightwood Plaza, Indianapolis, IN   —   65   128   —   289   65   417   482   231   1965  
Celina Plaza, El Paso, TX   —   138   815   —   107   138   922   1,060   430   1978  
Charles Towne Square, Charleston, SC   —   —   1,768   370   10,636   370   12,404   12,774   3,442   1976  
Chesapeake Center, Chesapeake, VA   6,563   5,352   12,279   —   275   5,352   12,554   17,906   3,022   1989  
Countryside Plaza, Countryside, IL   —   411   8,507   2,569   2,014   2,980   10,521   13,501   4,422   1977  
Dare Centre, Kill Devil Hills, NC   1,722   —   5,202   —   —   —   5,202   5,202   28   2004 (Note 4 )
DeKalb Plaza, King of Prussia, PA   3,499   1,955   3,405   —   845   1,955   4,250   6,205   685   2003 (Note 4 )
Eastland Plaza, Tulsa, OK   —   651   3,680   —   84   651   3,764   4,415   1,378   1986  
Forest Plaza, Rockford, IL   15,542   4,132   16,818   453   1,761   4,585   18,579   23,164   5,804   1985  
Gateway Shopping Center, Austin, TX   86,000   24,549   80,585   —   7,034   24,549   87,619   112,168   2,351   2004 (Note 4 )
Great Lakes Plaza, Mentor, OH   —   1,028   2,025   —   3,630   1,028   5,655   6,683   1,906   1976  
Greenwood Plus, Greenwood, IN   —   1,131   1,792   —   3,735   1,131   5,527   6,658   1,938   1979  
Griffith Park Plaza, Griffith, IN   —   —   2,412   1,664   515   1,664   2,927   4,591   1,818   1979  
Grove at Lakeland Square, The, Lakeland, FL   3,750   5,237   6,016   —   1,049   5,237   7,065   12,302   2,234   1988  
Henderson Square, King of Prussia, PA   15,453   4,223   15,124   —   —   4,223   15,124   19,347   1,005   2003 (Note 4 )
Highland Lakes Center, Orlando, FL   16,097   7,138   25,284   —   769   7,138   26,053   33,191   6,777   1991  
Ingram Plaza, San Antonio, TX   —   421   1,802   4   21   425   1,823   2,248   981   1980  
Keystone Shoppes, Indianapolis, IN   —   —   4,232   —   893   —   5,125   5,125   1,029   1997 (Note 4 )
Knoxville Commons, Knoxville, TN   —   3,731   5,345   —   1,730   3,731   7,075   10,806   2,993   1987  
Lake Plaza, Waukegan, IL   —   2,577   6,420   —   802   2,577   7,222   9,799   2,255   1986  
Lake View Plaza, Orland Park, IL   20,660   4,775   17,543   —   10,075   4,775   27,618   32,393   7,257   1986  
Lakeline Plaza, Austin, TX   22,651   5,822   30,875   —   6,957   5,822   37,832   43,654   8,030   1998  
Lima Center, Lima, OH   —   1,808   5,151   —   4,685   1,808   9,836   11,644   2,046   1978  
Lincoln Crossing, O'Fallon, IL   3,127   674   2,192   —   467   674   2,659   3,333   791   1990  
Lincoln Plaza, King of Prussia, PA   —   —   21,299   —   710   —   22,009   22,009   4,778   2003 (Note 4 )
MacGregor Village, Cary, NC   6,926   645   5,059   —   3   645   5,062   5,707   29   2004 (Note 4 )
Mall of Georgia Crossing, Mill Creek, GA   32,575   9,506   33,071   —   49   9,506   33,120   42,626   5,572   2004 (Note 5 )
Markland Plaza, Kokomo, IN   —   206   738   —   5,860   206   6,598   6,804   1,182   1974  
Martinsville Plaza, Martinsville, VA   —   —   584   —   328   —   912   912   630   1967  
Matteson Plaza, Matteson, IL   9,098   1,830   9,737   —   2,328   1,830   12,065   13,895   4,275   1988  

115

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2004
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Muncie Plaza, Muncie, IN     7,866     267     10,509     87     303     354     10,812     11,166     2,475   1998  
New Castle Plaza, New Castle, IN     —     128     1,621     —     1,435     128     3,056     3,184     1,347   1966  
North Ridge Plaza, Joliet, IL     —     2,831     7,699     —     880     2,831     8,579     11,410     2,933   1985  
North Ridge Shopping Center, Raleigh, NC     8,459     570     6,508     —     24     570     6,532     7,102     32   2004 (Note 4 )
Northland Plaza, Columbus, OH     —     4,490     8,893     —     1,308     4,490     10,201     14,691     3,787   1988  
Northwood Plaza, Fort Wayne, IN     —     148     1,414     —     1,271     148     2,685     2,833     1,233   1974  
Park Plaza, Hopkinsville, KY     —     300     1,572     —     225     300     1,797     2,097     1,395   1968  
Regency Plaza, St. Charles, MO     4,264     616     4,963     —     368     616     5,331     5,947     1,544   1988  
Rockaway Convenience Center, Rockaway, NJ     —     5,149     26,435     —     4,668     5,149     31,103     36,252     3,105   1998 (Note 4 )
St. Charles Towne Plaza, Waldorf, MD     27,294     8,524     18,993     —     1,146     8,524     20,139     28,663     6,800   1987  
Shops at North East Mall, The, Hurst, TX     —     12,541     28,177     402     7,130     12,943     35,307     48,250     7,988   1999  
Teal Plaza, Lafayette, IN     —     99     878     —     2,930     99     3,808     3,907     1,370   1962  
Terrace at the Florida Mall, Orlando, FL     4,688     2,150     7,623     —     1,812     2,150     9,435     11,585     1,936   1989  
Tippecanoe Plaza, Lafayette, IN     —     —     745     234     4,957     234     5,702     5,936     2,204   1974  
University Center, Mishawaka, IN     —     2,388     5,214     —     2,529     2,388     7,743     10,131     6,257   1980  
Wabash Village, West Lafayette, IN     —     —     976     —     274     —     1,250     1,250     693   1970  
Washington Plaza, Indianapolis, IN     —     941     1,697     —     308     941     2,005     2,946     2,302   1976  
Waterford Lakes Town Center, Orlando, FL     —     8,679     72,836     —     12,298     8,679     85,134     93,813     17,227   1999  
West Ridge Plaza, Topeka, KS     5,498     1,376     4,560     —     1,352     1,376     5,912     7,288     1,903   1988  
White Oaks Plaza, Springfield, IL     16,775     3,169     14,267     —     767     3,169     15,034     18,203     4,678   1986  

Other Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Las Vegas Outlet Center, Las Vegas, NV     21,789     13,860     183,961     —     —     13,860     183,961     197,821     1,064   2004 (Note 4 )
O'Hare International Center, Rosemont, IL     —     125     47,482     —     14,127     125     61,609     61,734     19,762   1988  
Riverway, Rosemont, IL     110,000     8,723     106,478     16     13,420     8,739     119,898     128,637     40,708   1991 (Note 4 )
Other Retail     26,238     16,016     204,648     —     582     16,016     205,230     221,246     1,305   2004 (Note 4 )

Development Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wolf Ranch, Georgetown, TX     —     23,539     21,473     —     —     23,539     21,473     45,012     —   2004  
St. Johns Town Center, Jacksonville, FL     100,022     17,858     96,021     —     —     17,858     96,021     113,879     —   2004  
Firewheel Town Center, Garland, TX     —     12,154     42,111     —     —     12,154     42,111     54,265     —   2004  
Rockaway Plaza, Rockaway, NJ     —     —     1,748     —     —     —     1,748     1,748     —   2004  
Seattle Premium Outlets, Tulalip, WA     —     3,875     42,660     —     —     3,875     42,660     46,535     —   2004 (Note 4 )
Other pre-development costs     —     131,649     15,237     —     —     131,649     15,237     146,886     —      
Other     —     6,319     5,544     279     337     6,598     5,881     12,479     547      
   
 
 
 
 
 
 
 
 
     
    $ 4,987,679   $ 2,472,958   $ 15,784,790   $ 118,151   $ 2,539,942   $ 2,591,109   $ 18,324,732   $ 20,915,841   $ 3,040,843      
   
 
 
 
 
 
 
 
 
     

116


Simon Property Group, L.P. and Subsidiaries

Notes to Schedule III as of December 31, 2004

(Dollars in thousands)

(1)   Reconciliation of Real Estate Properties:

            The changes in real estate assets for the years ended December 31, 2004, 2003, and 2002 are as follows:

 
   2004
   2003
   2002
  
Balance, beginning of year   $ 14,668,848   $ 13,966,450   $ 12,932,966  
  Acquisitions and consolidations     5,753,600     761,179     1,107,581  
  Improvements     621,755     366,345     207,007  
  Disposals and abandonments     (110,362 )   (425,126 )   (281,104 )
  Impairment write-down     (18,000 )   —        
   
 
 
 
Balance, close of year   $ 20,915,841   $ 14,668,848   $ 13,966,450  
   
 
 
 

            The unaudited aggregate cost for the Operating Partnership of real estate assets for federal income tax purposes as of December 31, 2004 was $13,958,769.

(2)   Reconciliation of Accumulated Depreciation:

            The changes in accumulated depreciation and amortization for the years ended December 31, 2004, 2003, and 2002 are as follows:

 
   2004
   2003
   2002
  
Balance, beginning of year   $ 2,461,634     2,151,014   $ 1,813,795  
  Acquisitions and consolidations (5)     76,121     21,111     16,491  
  Depreciation expense     541,442     456,960     413,142  
  Disposals and abandonments     (38,354 )   (167,451 )   (92,414 )
   
 
 
 
Balance, close of year   $ 3,040,843   $ 2,461,634   $ 2,151,014  
   
 
 
 

            Depreciation of the Operating Partnership's investment in buildings and improvements reflected in the consolidated statements of operations and comprehensive income is calculated over the estimated original lives of the assets as follows:

•
Buildings and Improvements — typically 10 - 35 years for the structure, 15 years for landscaping and parking lot, and 10 years for HVAC equipment.
•
Tenant Inducements — shorter of lease term or useful life.

(3)
Initial cost generally represents net book value at December 20, 1993 except for acquired properties and new developments after December 20, 1993. Costs of disposals of property are first reflected as a reduction to cost capitalized subsequent to acquisition. Property initial cost for properties acquired during 2004 are preliminary until purchase price allocations are finalized.

(4)
Not developed/constructed by the Operating Partnership or its predecessors. The date of construction represents acquisition date.

(5)
Property initial cost for these properties is the cost at the date of consolidation for properties previously accounted for under the equity method of accounting. Accumulated depreciation amounts for properties consolidated which were previously accounted for under the equity method of accounting include the minority interest holders' portion of accumulated depreciation.

117


INDEX TO EXHIBITS

Exhibits
    
  2.1   Agreement and Plan of Merger, dated as of June 20, 2004, by and among Simon Property Group, Inc., Simon Property Group, L.P., Simon Acquisition I, LLC, Simon Acquisitions II, LLC, Chelsea Property Group, Inc., and CPG Partners, L.P. (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed by Simon Property Group, Inc. on June 22, 2004).
  3.1   Second Amended and Restated Certificate of Limited Partnership, as amended (incorporated by reference to Exhibit 3.1 of its Annual Report on Form 10-K for 2002 filed by the Operating Partnership).
  3.2   Seventh Amended and Restated Limited Partnership Agreement (incorporated by reference to Exhibit 3.1 of its Annual Report on Form 10-K for 2001 filed by the Operating Partnership).
  3.3   Amended and Restated Supplement to Seventh Amended and Restated Limited Partnership Agreement (Exhibits B-1 and B-2) dated October 14, 2004 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Operating Partnership on October 20, 2004).
  4.1(a)   Indenture, dated as of November 26, 1996, by and among the Operating Partnership and The Chase Manhattan Bank, as trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 filed on October 21, 1996 (Reg. No. 333-11491)).
10.1   Credit Agreement, dated as of October 12, 2004, among Simon Property Group, L.P., the Lenders named therein, and the Co-Agents named therein (incorporated by reference to Exhibit 10 of the Registrant's Quarterly Report on Form 10-Q filed by Simon Property Group, Inc. on November 8, 2004).
10.2   $2,000,000,000 Credit Agreement, dated as of January 11, 2005, among Simon Property Group, L.P., the Institutions named therein as Lenders and the Institutions named therein as Co-Agents (incorporated by reference to Exhibit 99.1 of the Operating Partnership's Current Report on Form 8-K filed on January 18, 2005).
10.3   Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Appendix G to the Registrants' Definitive Proxy Statement on Schedule 14A dated April 7, 2003).
10.4(c)   Option Agreement to acquire the Excluded Retail Properties (Previously filed as Exhibit 10.10).
10.5   Voting Agreement dated as of June 20, 2004 among the Registrant, Simon Property Group, L.P., and certain holders of shares of common stock of Chelsea Property Group, Inc. and/or common units of CPG Partners, L.P. (incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K filed by Simon Property Group, Inc. on June 22, 2004).
12   Statement regarding computation of ratios.
21   List of Subsidiaries of the Operating Partnership.
23   Consent of Ernst & Young LLP.
31.1   Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2   Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32   Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(a)
Does not include supplemental indentures which authorize the issuance of debt securities which do not exceed 10% of the total assets of the Registrant on a consolidated basis. The Operating Partnership agrees to file copies of any such supplemental indentures upon the request of the Commission.

(b)
Represents a management contract, or compensatory plan, contract or arrangement required to be filed pursuant to Regulation S-K.

(c)
Incorporated by reference to the exhibit indicated filed with the Annual Report on Form 10-K for the year ended December 31, 1993 by Simon Property Group, LP, a predecessor of the Operating Partnership.

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TABLE OF CONTENTS
Part I
Part II
Part III
PART IV
INDEX TO EXHIBITS

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Exhibit 12


Simon Property Group, L.P. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(in thousands)

 
   For the year ended December 31,
  
 
   2004
   2003
   2002
   2001
   2000
  
Earnings:                                
  Pre-tax income from continuing operations   $ 456,592   $ 454,674   $ 539,439   $ 281,196   $ 352,709  
  Add:                                
    Pre-tax income from 50% or greater than 50% owned unconsolidated entities     46,124     60,614     46,633     62,611     51,799  
    Minority interest in income of majority owned subsidiaries     9,687     7,277     10,498     10,715     10,725  
    Distributed income from less than 50% owned unconsolidated entities     45,909     42,939     37,811     51,740     45,948  
    Amortization of capitalized interest     2,525     1,845     1,872     1,702     1,323  
  Fixed Charges     757,040     691,884     682,899     699,751     735,662  
  Less:                                
    Income from unconsolidated entities     (81,113 )   (101,093 )   (77,389 )   (67,291 )   (57,328 )
    Interest capitalization     (15,546 )   (10,916 )   (5,507 )   (10,325 )   (18,513 )
   
 
 
 
 
 
Earnings   $ 1,221,218   $ 1,147,224   $ 1,236,256   $ 1,030,099   $ 1,122,325  
   
 
 
 
 
 
Fixed Charges:                                
  Portion of rents representative of the interest factor     7,182     5,602     4,350     4,932     4,951  
  Interest on indebtedness (including amortization of debt expense)     734,312     675,366     673,042     684,494     712,198  
  Interest capitalized     15,546     10,916     5,507     10,325     18,513  
   
 
 
 
 
 
Fixed Charges   $ 757,040   $ 691,884   $ 682,899   $ 699,751   $ 735,662  
   
 
 
 
 
 
Ratio of Earnings to Fixed Charges     1.61 x   1.66 x   1.81 x   1.47 x   1.53 x
   
 
 
 
 
 

            For purposes of calculating the ratio of earnings to fixed charges, "earnings" have been computed by adding fixed charges, excluding capitalized interest, to income (loss) from continuing operations including income from minority interests and our share of income (loss) from 50%-owned affiliates which have fixed charges, and including distributed operating income from unconsolidated joint ventures instead of income from unconsolidated joint ventures. There are generally no restrictions on our ability to receive distributions from our joint ventures where no preference in favor of the other owners of the joint venture exists. "Fixed charges" consist of interest costs, whether expensed or capitalized, the interest component of rental expenses and amortization of debt issue costs.

            The computation of ratio of earnings to fixed charges has been restated to comply with FASB Statement No. 144 which requires the operating results the operating results of the properties sold in the current year to be reclassified to discontinued operations and requires restatement of previous years' operating results of the properties sold to discontinued operations.

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Simon Property Group, L.P. and Subsidiaries Computation of Ratio of Earnings to Fixed Charges (in thousands)

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Exhibit 21


List of Subsidiaries of the Operating Partnership

Subsidiary
   Jurisdiction
The Retail Property Trust   Massachusetts
Simon Property Group (Illinois), L.P.   Illinois
Simon Property Group (Texas), L.P.   Texas
Shopping Center Associates   New York
DeBartolo Capital Partnership   Delaware
Simon Capital Limited Partnership   Delaware
M.S. Management Associates, Inc.   Delaware
Rosewood Indemnity, Ltd.   Bermuda
Marigold Indemnity, Ltd.   Delaware
Simon Business Network, LLC   Delaware
Simon Brand Ventures, LLC   Delaware
Simon Global Limited   United Kingdom
Simon Services, Inc.   Delaware
Simon Property Group Administrative Services Partnership, L.P.   Delaware
SPGGC, Inc.   Virginia
Kravco Simon Investments, L.P.   Pennsylvania
Kravco Simon Company   Pennsylvania
Chelsea Property Group, Inc.   Delaware
CPG Partners, LP   Delaware

            Omits names of subsidiaries which as of December 31, 2004 were not, in the aggregate, a "significant subsidiary".

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List of Subsidiaries of the Operating Partnership

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Exhibit 23


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

            We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-68940) of Simon Property Group, L.P. and in the related prospectus of our reports dated March 14, 2005, with respect to the consolidated financial statements and schedule of Simon Property Group, L.P., Simon Property Group, L.P. management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting of Simon Property Group, L.P. included in this Annual Report (Form 10-K) for the year ended December 31, 2004.

    /s/  ERNST & YOUNG LLP      

   
Indianapolis, Indiana
March 29, 2005		    

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Exhibit 31.1


Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

        I, David Simon, certify that:

        1.     I have reviewed this Annual Report on Form 10-K of Simon Property Group, L.P.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):


Date: March 29, 2005
 
/s/  DAVID SIMON      
David Simon,
Chief Executive Officer

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Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Exhibit 31.2


Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

        I, Stephen E. Sterrett, certify that:

        1.     I have reviewed this Annual Report on Form 10-K of Simon Property Group, L.P.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):


Date: March 29, 2005
 
/s/  Stephen E. Sterrett      
Stephen E. Sterrett,
Executive Vice President and Chief Financial Officer

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Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Exhibit 32


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

            In connection with the Annual Report of Simon Property Group, L.P. (the "Company"), on Form 10-K for the period ending December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:


/s/  David Simon      
David Simon
Chief Executive Officer
March 29, 2005		    

/s/  Stephen E. Sterrett      
Stephen E. Sterrett
Chief Financial Officer
March 29, 2005
 
 

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CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002