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

FORM 10-K

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

For the fiscal year ended December 31, 2005

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

Delaware
(State or other jurisdiction
of incorporation or organization)		   001-14469
(Commission File No.)		   04-6268599
(I.R.S. Employer
Identification No.)

115 West Washington Street, Suite 15 East
Indianapolis, Indiana 46204
(Address of principal executive offices) (ZIP Code)

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

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class
   Name of each exchange
on which registered
Common stock, $0.0001 par value   New York Stock Exchange
8.75% Series F Cumulative Redeemable Preferred Stock, $.0001 par value   New York Stock Exchange
7.89% Series G Cumulative Step-Up Premium Rate Preferred Stock, $.0001 par value   New York Stock Exchange
6% Series I Convertible Perpetual Preferred Stock, $.0001 par value   New York Stock Exchange
83/8% Series J Cumulative Redeemable Preferred Stock, $.0001 par value   New York Stock Exchange

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

            Indicate by check mark if the Registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act). YES ý    NO o

            Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o    NO ý

            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. o

            Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.

ý  Large accelerated filer                      o  Accelerated filer                      o  Non-accelerated filer

            Indicate by checkmark whether the Registrant is a shell company (as defined in rule 12-b of the Act). YES o  NO ý

            The aggregate market value of shares of common stock held by non-affiliates of the Registrant was approximately $15,574 million based on the closing sale price on the New York Stock Exchange for such stock on June 30, 2005.

            As of January 31, 2006, Simon Property Group, Inc. had 220,381,156, 8,000 and 4,000 shares of common stock, Class B common stock and Class C common stock outstanding, respectively.

Documents Incorporated By Reference

            Portions of the Registrant's Annual Report to Stockholders are incorporated by reference into Parts I, II and IV; and portions of the Registrant's Proxy Statement in connection with its 2006 Annual Meeting of Stockholders are incorporated by reference in Part III.

Simon Property Group, Inc. and Subsidiaries
Annual Report on Form 10-K
December 31, 2005

TABLE OF CONTENTS


Item No.
 
 
 
Page No.
Part I

1.
 
Business
 
3
1A.   Risk Factors   10
1B.   Unresolved Staff Comments   15
2.   Properties   16
3.   Legal Proceedings   43
4.   Submission of Matters to a Vote of Security Holders   44

Part II

5.
 
Market for the Registrant's Common Equity, Related Stockholder Matters,
and Issuer Purchases of Equity Securities
 
45
6.   Selected Financial Data   46
7.   Management's Discussion and Analysis of Financial Condition
and Results of Operations		   46
    Management's Report on Internal Control Over Financial Reporting   46
7A.   Quantitative and Qualitative Disclosure About Market Risk   46
8.   Financial Statements and Supplementary Data   46
9.   Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure		   46
9A.   Controls and Procedures   46
9B.   Other Information   46

Part III

10.
 
Directors and Executive Officers of the Registrant
 
47
11.   Executive Compensation   47
12.   Security Ownership of Certain Beneficial Owners and Management   47
13.   Certain Relationships and Related Transactions   47
14.   Principal Accountant Fees and Services   47

Part IV

15.
 
Exhibits, and Financial Statement Schedules
 
48

Signatures
 
49

2


Part I

Item 1. Business

Background

            Simon Property Group, Inc. ("Simon Property") is a Delaware corporation that operates as a self-administered and self-managed real estate investment trust ("REIT"). Simon Property Group, L.P. (the "Operating Partnership") is a majority-owned partnership subsidiary of Simon Property that owns all of our real estate properties. In these notes to the audited consolidated financial statements, the terms "we", "us" and "our" refer to Simon Property, the Operating Partnership and their subsidiaries.

            We are engaged primarily in the ownership, development, and management of retail real estate, primarily regional malls, Premium Outlet® centers and community/lifestyle centers. As of December 31, 2005, we owned or held an interest in 286 income-producing properties in the United States, which consisted of 171 regional malls, 33 Premium Outlet centers, 71 community/lifestyle centers, and 11 other shopping centers or outlet centers in 39 states and Puerto Rico (collectively, the "Properties", and individually, a "Property"). We also own interests in ten parcels of land held for future development (together with the Properties, the "Portfolio"). Finally, we have ownership interests in 51 European shopping centers (in France, Italy and Poland), five Premium Outlet centers in Japan, and one Premium Outlet center in Mexico.

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. One or more of these policies may be amended or rescinded from time to time without a stockholder vote.

            We conduct our investment activities through the Operating Partnership and its subsidiaries. Our primary business objectives are to increase Funds From Operations ("FFO") per share, 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:


            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 our 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.

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            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 REIT qualification under the Code. These REIT limitations mean that we cannot make an investment that would cause our real estate assets to be less than 75% of our total assets. In addition, at least 75% of our 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 our 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, we may 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 of the Operating Partnership that limit our ratio of debt to total market valuation. For example, the Operating Partnership's lines of credit and the indentures for the Operating Partnership's debt securities contain covenants that restrict the total amount of debt of the Operating Partnership to 65%, or 60% in relation to certain debt, of total assets, as defined under the related arrangement, and secured debt to 50% of 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 our equity securities and the debt securities of the Operating Partnership.

            If the Board of Directors ("Board") determines to seek additional capital, we may raise such capital through additional equity offerings, 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 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 Board determines to raise additional equity capital, it may, without stockholder approval, issue additional shares of common stock or other capital stock. The Board may issue a number of shares up to the amount of our authorized capital in any manner and on such terms and for such consideration as it deems appropriate. This may include issuing stock in exchange for property. Such securities may be senior to the outstanding classes of common stock. Such securities also may include additional classes of preferred stock, which may be convertible into common stock. Existing stockholders will have no preemptive right to purchase shares in any subsequent offering of our securities. Any such offering could dilute a stockholder's investment in us.

            We anticipate that any additional borrowings would be made through the Operating Partnership or its subsidiaries. We might, however, incur borrowings that would be reloaned to the Operating Partnership. Borrowings may be 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, the Operating Partnership 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 dividends, 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 capital stock or be accompanied by warrants to purchase capital stock. We also may sell or securitize our lease receivables. The proceeds from any borrowings or financings may be used for the following:

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            We also may determine to finance acquisitions through the following:

            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 advantageous for us since certain investors may be limited in the number of shares of our capital stock that they may purchase.

            If the Board 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 through the Operating Partnership. 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, 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. We have adopted governance principles governing our affairs and the Board, as well as written charters for each of the standing Committees of the Board. In addition, we have a Code of Business Conduct and Ethics, which applies to all of our officers, directors, and employees. At least a majority of the members of our Board must qualify as independent under the listing standards for New York Stock Exchange companies and cannot be affiliated with the Simon or 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 by the Operating Partnership of any property that it owns may have an adverse tax impact on the Simons or the DeBartolos and the other limited partners of the Operating Partnership. In order to avoid any conflict of interest between Simon Property and the limited partners of the Operating Partnership, our charter requires that at least six of our independent directors must authorize and require the Operating Partnership to sell any property it owns. 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 REIT requirements of the Code, unless the Board determines that it is no longer in our best interests to qualify as a REIT. The Board may make such a determination because of changing circumstances or changes in the REIT requirements. We have authority to offer shares of our capital stock 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 issue shares of our common stock to holders of units of limited partnership interest in the Operating Partnership in future periods upon exercise of such holders' rights under the Operating Partnership agreement. We may also repurchase shares of our common stock

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subject to Board approval. We have not made loans to persons, including our officers and directors. It is our policy to not make any loans to our directors or executive officers for any purpose. We may make loans to our management company and to joint ventures in which we participate.

Operating Strategies

            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:


            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:

            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 the activities of:

            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, and Mexico are currently conducted through joint ventures. In Europe, we have investments in partnerships with Groupe Auchan (known as Gallerie Commerciali Italia ("GCI") in Italy) and Ivanhoe Cambridge, Inc. (known as European Retail Enterprises, B.V. ("ERE") in France and Poland). 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 international joint venture activities under the equity method of accounting, as defined by accounting policies generally accepted in the United States. We are also evaluating additional investments opportunities in Korea and China through additional joint venture relationships.

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            We believe that the expertise we have gained through the development, leasing, management, and marketing of our Properties in the United States can be utilized in retail properties abroad. There are risks inherent in international operations that may be beyond our control which are described in the following section entitled "Risk Factors."

            Mergers and acquisitions have been a significant component of the growth and development of our business. In 2005, we completed two acquisitions that added to our overall Portfolio:


            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. We expect that any earnings dilution from the sales on our results of operations from these dispositions will be offset by the positive impact of acquisition, development and redevelopment activities.

            During 2005, we sold or disposed of sixteen previously consolidated non-core properties, consisting of four regional malls, one community/lifestyle center, nine other Outlet centers, and two office buildings. The properties and the month and year of disposition were:

Regional Malls:   Community/Lifestyle Center:
•   Cheltenham Square — November 2005   •   Grove at Lakeland Square — July 2005
•   Southgate Mall — November 2005   Outlet Centers:
•   Eastland Mall (Oklahoma) — December 2005   •   Lakeland Factory Outlet Mall — March 2005
•   Biltmore Square — December 2005   •   Factory Stores of America
Office Buildings:       (Various properties — all December 2005):
•   Riverway — June 2005       — Draper, Arcadia, Hanson, Tri-Cities, Tupelo,
•   O'Hare International Center — June 2005       Union City, West Frankfort, and Patriot Plaza

            The sale of these properties resulted in our recording an aggregate gain on the sale or disposition of these properties of $146.1 million, $146.9 million of which was reported as gain on disposal or sale of discontinued operations, net. In addition, on January 11, 2005, Metrocenter, a regional mall located in Phoenix, Arizona, in which we held a 50% interest, was sold. On December 22, 2005, we sold our 38% interest in our Canadian property, Forum Entertainment Centre. Both of these properties were accounted for on the equity method of accounting.

Competition

            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 and investments are of the same type and are within the same market area as competitor 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 other forms of retailing, such as catalog and e-commerce websites, that offer retail products and services.

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

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            Our size reduces our dependence upon individual retail tenants. Approximately 4,200 different retailers occupy more than 24,000 stores in our Properties and no retail tenant represents more than 4.0% of our Properties' total minimum rents.

Certain Activities

            During the past three years, we have:

Employees

            At January 24, 2006 we and our affiliates employed approximately 4,700 persons at various properties and offices throughout the United States, of which approximately 1,700 were part-time. Approximately 1,000 of these employees were located at our corporate headquarters in Indianapolis, IN and 160 were located at the Chelsea offices in Roseland, NJ.

8

Corporate Headquarters

            Our corporate headquarters are located at National City Center, 115 West Washington Street, Indianapolis, Indiana 46204, and our telephone number is (317) 636-1600. During 2006, we will be moving our corporate headquarters to our new office building located at 225 West Washington Street, located in Indianapolis, Indiana 46204.

Available information

            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/Financial Information" 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 corporate governance documents are also available through the About Simon/Investor Relations/Corporate Governance section of our Internet website or may be obtained in print form by request of our Investor Relations Department: Governance Principles, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominating Committee Charter, Governance Committee Charter, and Executive Committee Charter.

Executive Officers of the Registrant

            The following table sets forth certain information with respect to the executive officers of Simon Property as of December 31, 2005.

Name
   Age
   Position
Melvin Simon (1)   79   Co-Chairman
Herbert Simon (1)   71   Co-Chairman
David Simon (1)   44   Chief Executive Officer
Richard S. Sokolov   56   President and Chief Operating Officer
David C. Bloom   49   Chairman of the Board — Chelsea Property Group, Inc.
Gary L. Lewis   47   Executive Vice President — Leasing
Stephen E. Sterrett   50   Executive Vice President and Chief Financial Officer
J. Scott Mumphrey   54   Executive Vice President — Property Management
John Rulli   49   Executive Vice President — Chief Operating Officer — Operating Properties
James M. Barkley   54   General Counsel; Secretary
Andrew A. Juster   53   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. For biographical information of Melvin Simon, Herbert Simon, David Simon, David C. Bloom, Richard S. Sokolov, Stephen E. Sterrett, and James M. Barkley, see Item 10 of this report.

            Mr. Lewis is the Executive Vice President — Leasing of Simon Property. Mr. Lewis joined Melvin Simon & Associates, Inc. ("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. 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.

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            Mr. Rulli serves as Simon Property's Executive Vice President — Chief Operating Officer — Operating Properties and previously served as Executive Vice President and Chief Administrative Officer. 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. 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.


Item 1A. Risk Factors.

            The following factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by our management from time to time. These factors, among others, may have a material adverse effect on our business, financial condition, operating results and cash flows, and you should carefully consider them. It is not possible to predict or identify all such factors. You should not consider this list to be a complete statement of all potential risks or uncertainties. Past performance should not be considered an indication of future performance.

Risks Relating to Debt and the Financial Markets

            As of December 31, 2005, our consolidated mortgages and other indebtedness, net of the related premium and discount, totaled $14.0 billion, of which approximately $1.4 billion matures during 2006, including recurring principal amortization. We are subject to the risks normally associated with debt financing, including the risk that our cash flow from operations will be insufficient to meet required debt service. Our debt service costs generally will not be reduced when developments, such as the entry of new competitors or the loss of major tenants, could cause a reduction in income from a Property. Should such events occur, our operations may be adversely affected. If a Property is mortgaged to secure payment of indebtedness and income from the Property is insufficient to pay that indebtedness, the Property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value.

            We depend, primarily, on external financings, principally debt financings, to fund the growth of our business and to ensure that we can meet ongoing maturities of our outstanding debt. Our access to financing depends on our credit rating, the willingness of banks to lend to us and conditions in the capital markets in general. We cannot assure you that we will be able to obtain the financing we need for future growth or to meet our debt service as obligations mature, or that the financing available to us will be on acceptable terms.

            Our outstanding senior unsecured notes and preferred stock are periodically rated by nationally recognized credit rating agencies. The credit ratings are based on our operating performance, liquidity and leverage ratios, overall financial position, and other factors viewed by the credit rating agencies as relevant to our industry and the economic outlook in general. Our credit rating can affect the amount of capital we can access, as well as the terms of any financing we obtain. Since we depend primarily on debt financing to fund our growth, adverse changes in our credit rating could have a negative effect on our future growth.

            As of December 31, 2005, approximately $2.2 billion of our total consolidated debt, adjusted to reflect outstanding derivative instruments, was subject to floating interest rates. In a rising interest rate environment, these debt service costs will increase. Increased debt service costs would adversely affect our cash flow. The impact of changes in market rates of interest on the fair value of our debt and, in turn, our future earnings and cash flows appears elsewhere in this report.

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            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 refinance fixed rate debt at times when we believe rates and terms are appropriate. Our efforts to manage these exposures may not be successful.

            Our use of interest rate hedging arrangements to manage risk associated with interest rate volatility may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may fail to honor its obligations. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that our hedging activities will have the desired beneficial impact on our results of operations or financial condition. Our termination of these hedging agreements typically involve costs, such as transaction fees or breakage costs.

            One of the factors that may influence the price of our equity securities in public markets is the annual distribution rate we pay as compared with the yields on alternative investments. Any significant increase in interest rates could lead holders of our equity securities to seek higher yields through other investments, which could adversely affect the market price of our equity securities.

Factors Affecting Real Estate Investments and Operations

            We regularly acquire and develop new properties and expand and redevelop existing Properties, and these activities are subject to various risks. We may not be successful in pursuing acquisition, development or redevelopment/expansion opportunities, and newly acquired, developed or redeveloped/expanded properties may not perform as well as expected. We are subject to other risks in connection with any acquisition, development and redevelopment/expansion activities, including the following:

            If a development or redevelopment/expansion project is unsuccessful, either because it is not meeting our expectations when operational or was not completed according to the project planning, we could lose our investment in the project. Further, if we guarantee the property's financing, our loss could exceed our investment in the project.

            We are subject to risks incidental to the ownership and operation of retail real estate. These risks include, among others:

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            Our Properties represent a substantial portion of our total consolidated assets. These investments are relatively illiquid. As a result, our ability to sell one or more of our Properties or investments in real estate in response to any changes in economic or other conditions is limited. If we want to sell a Property, we cannot assure you that we will be able to dispose of it in the desired time period or that the sales price of a Property will exceed the cost of our investment.

Environmental Risks

            Federal, state and local laws and regulations relating to the protection of the environment may require us, as a current or previous owner or operator of real property, to investigate and clean up hazardous or toxic substances or petroleum product releases at a Property or at impacted neighboring properties. These laws often impose liability regardless of whether the property owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. These laws and regulations may require the abatement or removal of asbestos containing materials in the event of damage, demolition or renovation, reconstruction or expansion of a Property and also govern emissions of and exposure to asbestos fibers in the air. Those laws and regulations also govern the installation, maintenance and removal of underground storage tanks used to store waste oils or other petroleum products. Many of our Properties contain, or at one time contained, asbestos containing materials or underground storage tanks (primarily related to auto service center establishments or emergency electrical generation equipment). The costs of investigation, removal or remediation of hazardous or toxic substances may be substantial and could adversely affect our results of operations or financial condition but is not estimable. The presence of contamination, or the failure to remediate contamination, may also adversely affect our ability to sell, lease or redevelop a Property or to borrow using a Property as collateral.

            Although we believe that the Portfolio is in substantial compliance with Federal, state and local environmental laws, ordinances and regulations regarding hazardous or toxic substances, this belief is based on limited testing. Nearly all of the Properties have been subjected to Phase I or similar environmental audits. 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 or financial condition. However, we cannot assure you that:


Retail Operations Risks

            Our concentration in the real estate market means that we are subject to the risks that affect the retail environment generally, including the levels of consumer spending, seasonality, the willingness of retailers to lease space in our shopping centers, tenant bankruptcies, changes in economic conditions, consumer confidence and terrorist activities. Any one or more of these factors could adversely affect our results of operations or financial condition.

            We may not be able to lease new Properties to an appropriate mix of tenants or for rents that are consistent with our projections. Also, when leases for our existing Properties expire, the premises may not be relet or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the current lease terms. To the extent that our leasing plans are not achieved, our cash generated before debt repayments and capital expenditures could be adversely affected.

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            Regional malls are typically anchored by department stores and other large tenants. The value of certain of our Properties could be adversely affected if department stores or other large tenants fail to comply with their contractual obligations, seek concessions in order to continue operations, or cease their operations. Department store and larger store, or "big box", consolidations typically result in the closure of existing stores or duplicate store locations. We do not control the disposition of those department stores or larger stores that we do not own. We also may not control the vacant space that is not re-leased in those stores we do own. Other tenants may be entitled to modify the terms of their existing leases in the event of such closures. The modification could be unfavorable to us as the lessor and decrease rents or expense recovery charges. Additionally, major tenant closures may result in decreased customer traffic which could lead to decreased sales at other stores. If the sales of stores operating in our Properties were to decline significantly due to closing of anchors, economic conditions, or other reasons, tenants may be unable to pay their minimum rents or expense recovery charges. In the event of default by a tenant or anchor store, we may experience delays and costs in enforcing our rights as landlord to recover amounts due to us under the terms of our agreements with those parties.

            Bankruptcy filings by retailers occur frequently in the course of our operations. We are continually re-leasing vacant spaces resulting from tenant terminations. The bankruptcy of a tenant, particularly an anchor tenant, may make it more difficult to lease the remainder of the affected Properties. Future tenant bankruptcies could adversely affect our Properties or impact our ability to successfully execute our re-leasing strategy.

Risks Relating to Joint Venture Properties

            As of December 31, 2005, we owned interests in 146 income-producing properties with other parties. Of those, 20 Properties are included in our consolidated financial statements. We account for the other 126 properties under the equity method of accounting (joint venture properties). We serve as general partner or property manager for 59 of these 146 properties; however, certain major decisions, such as selling or refinancing these properties, require the consent of the other owners. The other owners also have other participating rights that we consider substantive for purposes of determining control over the properties' assets. The remaining joint venture properties are managed by third parties. These limitations may adversely affect our ability to sell, refinance, or otherwise operate these properties.

            Joint venture debt is the liability of the joint venture and is typically secured by a mortgage on the joint venture Property. As of December 31, 2005, we have guaranteed or have provided letters of credit to support $41.6 million of our total $3.2 billion share of joint venture mortgage and other indebtedness. A default by a joint venture under its debt obligations may expose us to liability under a guaranty or letter of credit.

Other Factors Affecting Our Business

            CAM costs typically include allocable energy costs, repairs, maintenance and capital improvements to common areas, janitorial services, administrative, property and liability insurance costs, and security costs. We historically have used leases with variable CAM provisions that adjust to reflect inflationary increases. However, we are making a concerted effort to shift from variable to fixed CAM contributions for our cost recoveries which will fix our tenants' CAM contributions to us. As a result, our CAM contributions may not allow us to recover all operating costs and, we cannot assure you that we will succeed in our efforts to recover a substantial portion of these costs in the future.

13

            Our Properties compete with other retail properties for tenants on the basis of the rent charged and location. The principal competition may come from existing or future developments in the same market areas and from discount shopping centers, outlet malls, catalogues, discount shopping clubs and electronic commerce. The presence of competitive properties also affects our ability to lease space and the level of rents we can obtain. Renovations and expansions at competing malls could also negatively affect our Properties.

            We also compete with other retail property developers to acquire prime development sites. In addition, we compete with other retail property companies for attractive tenants and qualified management.

            We hold interests in joint venture properties in Europe, Japan and Mexico. We have also established arrangements to develop joint venture properties in China and Korea, and expect to pursue additional expansion opportunities outside the United States. International development and ownership activities carry risks that are different from those we face with our domestic Properties and operations. These risks include:

            Although our international activities currently are a relatively small portion of our business (international properties represented less than 6% of the GLA of all of our properties at December 31, 2005), to the extent that we expand our international activities, these risks could increase in significance and adversely affect our results of operations and financial condition.

            We maintain commercial general liability "all risk" property coverage including fire, flood, extended coverage and rental loss insurance on our Properties. One of our subsidiaries indemnifies our general liability carrier for a specific layer of losses. A similar policy written through our subsidiary also provides a portion of our initial coverage for property insurance and certain windstorm risks at the Properties located in Florida. Even insured losses could result in a serious disruption to our business and delay our receipt of revenue.

            There are some types of losses, including lease and other contract claims that generally are not insured. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a Property, as well as the anticipated future revenue from the Property. If this happens, we may still remain obligated for any mortgage debt or other financial obligations related to the Property.

            The events of September 11, 2001 significantly 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 Non-Certified (Domestic) acts of terrorism. The coverage is written on an "all risk" policy form. In December of 2005, the President signed into law the Terrorism Risk Insurance Extension Act (TRIEA) of 2005, thereby extending the federal terrorism insurance backstop through 2007. TRIEA narrows terms and conditions afforded by TRIA for 2006 and 2007 by: 1) excluding lines of coverage for commercial automobile, surety, burglary and theft, farm owners' multi-peril and professional liability; 2) raising the certifiable event trigger mechanism from $5 million to $50 million during 2006 and to $100 million during 2007; and 3) increasing the deductibles and co-pays assigned to insurance companies. Upon the

14


expiration of TRIEA in 2007, we could pay higher premiums for comparable terrorism coverage and/or obtain or be otherwise able to secure less coverage than we have currently.

            Our higher profile Properties or markets they operate in could be potential targets for terrorism attacks, due to the large quantities of people at the Property or in the surrounding areas. Threatened or actual terrorist attacks in these high profile markets could directly or indirectly impact our Properties by resulting in lower property values, a decline in revenue, or a decline in customer traffic and, in turn, a decline in our tenants' sales.

            Although inflation has not materially impacted our operations in the recent past, increased inflation could have a more pronounced negative impact on our mortgage and debt interest and general and administrative expenses, as these costs could increase at a rate higher than our rents. Also, inflation may adversely affect tenant leases with stated rent increases, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending which could impact our tenants' sales and, in turn, our overage rents, where applicable.

Risks Relating to Federal Income Taxes

            We cannot assure you that we will remain qualified as a REIT. Qualification as a REIT for federal income tax purposes is governed by highly technical and complex Internal Revenue Code provisions for which there are only limited judicial or administrative interpretations. If we fail to qualify as a REIT and any available relief provisions do not apply:

            As a result, net income and funds available for distribution to our stockholders will be reduced for those years in which we fail to qualify as a REIT. Also, we would no longer be required to distribute money to our stockholders. Although we currently intend to operate so as to qualify as a REIT, future economic, market, legal, tax or other considerations might cause us to revoke our REIT election.

            On October 22, 2004 President Bush signed the American Jobs Creation Act which included several provisions of the REIT Improvement Act, which builds in some flexibility to the REIT rules. This Act provides for monetary penalties in lieu of REIT disqualification. This better matches the severity of the penalty to the REIT's error and therefore reduces the possibility of disqualification.

Item 1B. Unresolved Staff Comments

            None.

15


Item 2. Properties

            Our Properties primarily consist of regional malls, Premium Outlet® centers, community/lifestyle centers, and other properties. Our Properties contain an aggregate of approximately 200 million square feet of GLA, of which we own approximately 121.7 million square feet ("Owned GLA"). Total estimated retail sales at the Properties in 2005 were approximately $51 billion.

            Regional malls typically contain at least one traditional department store anchor or a combination of anchors and big box retailers with 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 400,000 to 2.0 million square feet of GLA. Our regional malls contain in the aggregate more than 18,300 occupied stores, including approximately 700 anchors, which are mostly national retailers. Our regional mall totals include certain lifestyle centers when the center contains a traditional department store anchor.

            Community/lifestyle centers are generally unenclosed and smaller than our regional malls. Our 71 community/lifestyle centers generally range in size from approximately 100,000 to 600,000 square feet of GLA. Community/lifestyle centers are designed to serve a larger trade area and typically contain at least two anchors and other tenants that are usually national retailers among the leaders in their markets. These tenants generally occupy a significant portion of the GLA of the center. We also own traditional community shopping 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 own open-air centers adjacent to our regional malls designed to take advantage of the drawing power of the mall.

            Premium Outlet centers generally contain a wide variety of retailers located in open-air manufacturer's outlet centers. Our 33 Premium Outlet centers range in size from approximately 200,000 to 600,000 square feet of GLA. The Premium Outlet centers 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 11 other shopping centers or outlet centers. These other Properties range in size from approximately 85,000 to 300,000 square feet of GLA. The combined other Properties represent less than 1% of our total operating income before depreciation.

            The following table provides representative data for our Properties as of December 31, 2005:

 
   Regional
Malls
   Premium
Outlet
Centers
   Community/
Lifestyle
Centers
   Other
Properties
  
% of total Property annualized base rent   81.5 % 11.7 % 5.9 % 0.9 %
% of total Property GLA   82.7 % 6.3 % 10.0 % 1.0 %
% of Owned Property GLA   76.0 % 10.5 % 11.8 % 1.7 %

            As of December 31, 2005, approximately 93.1% of the Mall and Freestanding Owned GLA in regional malls and the retail space of the other Properties was leased, approximately 99.6% of Owned GLA in the Premium Outlet centers was leased and approximately 91.6% of Owned GLA in the community/lifestyle centers was leased.

            We own 100% of 197 of our 286 Properties, effectively control 20 Properties in which we have a joint venture interest, and hold the remaining 69 Properties through unconsolidated joint venture interests. We are the managing or co-managing general partner or member of 276 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 Outlet centers, and community/lifestyle centers located in the United States, including Puerto Rico, as of December 31, 2005.

16

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
    REGIONAL MALLS                                

1.
 
Alton Square
 
IL
 
Alton (St. Louis)
 
Fee
 
100.0
%
Acquired 1993
 
74.6
%
426,315
 
213,142
 
639,457
 
Sears, JCPenney, Famous-Barr (23), Old Navy
2.   Anderson Mall   SC   Anderson (Greenville)   Fee   100.0 % Built 1972   92.1 % 404,394   230,472   634,866   JCPenney, Belk Ladies Fashion Store, Belk Men's & Home Store, Sears, Goody's
3.   Apple Blossom Mall   VA   Winchester   Fee   49.1 % (4) Acquired 1999   90.6 % 229,011   213,457   442,468   Belk, JCPenney, Sears, Best Buy (6), Dick's Sporting Goods (6)
4.   Arsenal Mall   MA   Watertown (Boston)   Fee   100.0 % Acquired 1999   94.4 % 191,395   310,602  (18) 501,997   Marshalls, The Home Depot, Linens ‘n Things, Filene's Basement, Old Navy
5.   Atrium Mall   MA   Chestnut Hill (Boston)   Fee   49.1 % (4) Acquired 1999   98.8 % —   206,673   206,673   Borders Books & Music, Cheesecake Factory, Tiffany & Co.
6.   Auburn Mall   MA   Auburn (Boston)   Fee   49.1 % (4) Acquired 1999   96.3 % 417,620   174,201   591,821   Filene's (23), Filene's Home Store (23), Sears
7.   Aventura Mall (1)   FL   Miami Beach   Fee   33.3 % (4) Built 1983   95.1 % 1,257,638   662,700   1,920,338   Macy's Mens & Home, Sears, Bloomingdale's, JCPenney, Macy's, Nordstrom (6)
8.   Avenues, The   FL   Jacksonville   Fee   25.0 % (4) (2) Built 1990   97.8 % 754,956   361,099   1,116,055   Belk, Dillard's, JCPenney, Parisian (25), Sears
9.   Bangor Mall   ME   Bangor   Fee   66.4 % (15) Acquired 2003   87.6 % 416,582   236,923   653,505   Dick's Sporting Goods, JCPenney, Filene's (23), Sears
10.   Barton Creek Square   TX   Austin   Fee   100.0 % Built 1981   99.4 % 922,266   507,902   1,430,168   Dillard's Women's & Home, Dillard's Men's & Children's, Foley's (23), Sears, Nordstrom, JCPenney
11.   Battlefield Mall   MO   Springfield   Fee and Ground Lease (2056)   100.0 % Built 1970   95.2 % 770,111   420,373   1,190,484   Dillard's Women's, Dillard's Men's, Children's & Home, Famous-Barr (23), Sears, JCPenney
12.   Bay Park Square   WI   Green Bay   Fee   100.0 % Built 1980   97.3 % 447,508   268,196   715,704   Younkers, Elder-Beerman, Kohl's, ShopKo
13.   Bowie Town Center   MD   Bowie (Washington, D.C.)   Fee   100.0 % Built 2001   100.0 % 357,000   328,670   685,670   Hecht's (23), Sears, Barnes & Noble, Bed Bath & Beyond
14.   Boynton Beach Mall   FL   Boynton Beach (W. Palm Beach)   Fee   100.0 % Built 1985   94.5 % 714,210   301,559   1,015,769   Macy's, Sears, Dillard's Mens & Home, Dillard's Women, JCPenney, Muvico Theater (6)
15.   Brea Mall   CA   Brea (Orange County)   Fee   100.0 % Acquired 1998   99.6 % 874,802   443,010   1,317,812   Macy's, JCPenney, Robinsons-May (23), Nordstrom, Sears
16.   Broadway Square   TX   Tyler   Fee   100.0 % Acquired 1994   98.2 % 427,730   192,579   620,309   Dillard's, JCPenney, Sears
17.   Brunswick Square   NJ   East Brunswick (New York)   Fee   100.0 % Built 1973   95.2 % 467,626   302,443   770,069   Macy's, JCPenney, Barnes & Noble
18.   Burlington Mall   MA   Burlington (Boston)   Ground Lease (2048)   100.0 % Acquired 1998   97.2 % 836,236   423,123   1,259,359   Macy's, Lord & Taylor (24), Nordstrom (22), Sears, Cheesecake Factory
19.   Cape Cod Mall   MA   Hyannis (Barnstable — Yarmouth)   Ground Leases (2009-2073) (7)   49.1 % (4) Acquired 1999   98.0 % 420,199   303,861   724,060   Macy's, Filene's (23), Marshalls, Sears, Best Buy, Barnes & Noble
20.   Castleton Square   IN   Indianapolis   Fee   100.0 % Built 1972   99.6 % 1,105,913   353,422   1,459,335   Dick's Sporting Goods, L.S. Ayres (19), Macy's, JCPenney, Sears, Von Maur
21.   Century III Mall   PA   West Mifflin (Pittsburgh)   Fee   100.0 % Built 1979   83.5 % 831,439   459,265  (18) 1,290,704   Steve & Barry's University Sportswear, Dick's Sporting Goods, JCPenney, Kaufmann's (23), Sears, Kaufmann's Furniture Galleries (23)
22.   Charlottesville Fashion Square   VA   Charlottesville   Ground Lease (2076)   100.0 % Acquired 1997   97.6 % 381,153   190,645   571,798   Belk Women's & Children's, Belk Men's & Home, JCPenney, Sears
23.   Chautauqua Mall   NY   Lakewood (Jamestown)   Fee   100.0 % Built 1971   87.7 % 213,320   218,349   431,669   Sears, JCPenney, Bon Ton, Office Max
24.   Chesapeake Square   VA   Chesapeake (Norfolk — VA Beach)   Fee and Ground Lease (2062)   75.0 % (12) Built 1989   92.6 % 534,760   272,092   806,852   Dillard's Women's, Dillard's Men's, Children's & Home, JCPenney, Sears, Hecht's (23), Target
25.   Cielo Vista Mall   TX   El Paso   Fee and Ground Lease (2005) (7)   100.0 % Built 1974   97.3 % 793,716   445,458   1,239,174   Dillard's Women's & Furniture, Dillard's Men's, Children's & Home, JCPenney, Foley's (23), Sears

17

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
26.   Circle Centre   IN   Indianapolis   Property Lease (2097)   14.7 % (4) (2) Built 1995   88.2 % 350,000   432,913  (18) 782,913   Nordstrom, Parisian (25)
27.   Coddingtown Mall   CA   Santa Rosa   Fee   50.0 % (4) Acquired 2005   79.1 % 547,090   310,020   857,110   Macy's, JCPenney, Gottschalk's
28.   College Mall   IN   Bloomington   Fee and Ground Lease (2048) (7)   100.0 % Built 1965   88.6 % 356,887   255,656   612,543   Sears, L.S. Ayres (23), Target, Dick's Sporting Goods, Bed Bath & Beyond (6), Pier One (6)
29.   Columbia Center   WA   Kennewick   Fee   100.0 % Acquired 1987   96.6 % 408,052   333,700   741,752   Sears, JCPenney, Macy's, Macy's Mens & Children, Toys 'R Us, Barnes & Noble
30.   Copley Place   MA   Boston   Fee   98.1 % Acquired 2002   97.2 % 104,332   1,110,199  (18) 1,214,531   Nieman Marcus, Tiffany & Co., Barneys New York (6)
31.   Coral Square   FL   Coral Springs (Miami — Ft. Lauderdale)   Fee   97.2 % Built 1984   96.4 % 648,144   296,987   945,131   Dillard's, JCPenney, Sears, Macy's Men, Children & Home, Macy's Women
32.   Cordova Mall   FL   Pensacola   Fee   100.0 % Acquired 1998   92.1 % 395,875   465,599   861,474   Parisian (25), Dillard's Men's, Dillard's Women's, Best Buy, Bed, Bath & Beyond, Cost Plus World Market, Ross Dress for Less
33.   Cottonwood Mall   NM   Albuquerque   Fee   100.0 % Built 1996   96.6 % 631,556   410,195   1,041,751   Dillard's, Foley's (23), JCPenney, Mervyn's, Sears
34.   Crossroads Mall   NE   Omaha   Fee   100.0 % Acquired 1994   69.5 % 405,669   232,839   638,508   Dillard's, Sears, Target, Old Navy
35.   Crystal Mall   CT   Waterford (New London — Norwich)   Fee   74.6 % (4) Acquired 1998   93.3 % 442,311   351,693   794,004   Macy's, Filene's (19), JC Penney, Sears
36.   Crystal River Mall   FL   Crystal River   Fee   100.0 % Built 1990   90.0 % 302,495   121,835   424,330   JCPenney, Sears, Belk, Kmart
37.   Dadeland Mall   FL   N. Miami Beach   Fee   50.0 % (4) Acquired 1997   97.2 % 1,132,072   335,568   1,467,640   Saks Fifth Avenue, Nordstrom, JCPenney, Macy's, Macy's Children & Home, The Limited/Express
38.   DeSoto Square   FL   Bradenton (Sarasota — Bradenton)   Fee   100.0 % Built 1973   96.9 % 435,467   255,024   690,491   JCPenney, Sears, Dillard's, Macy's
39.   Eastland Mall   IN   Evansville   Fee   50.0 % (4) Acquired 1998   97.3 % 489,144   375,572   864,716   JCPenney, Famous Barr (19), Macy's
40.   Edison Mall   FL   Fort Myers   Fee   100.0 % Acquired 1997   94.3 % 742,667   296,226   1,038,893   Dillard's, JCPenney, Sears, Macy's Men, Children & Home, Macy's Women
41.   Emerald Square   MA   North Attleboro (Providence — Fall River)   Fee   49.1 % (4) Acquired 1999   97.1 % 647,372   375,355   1,022,727   Filene's (23), Filene's Mens & Home Store (23), JCPenney, Sears
42.   Empire Mall (1)   SD   Sioux Falls   Fee and Ground Lease (2013) (7)   50.0 % (4) Acquired 1998   93.6 % 497,341   549,433   1,046,774   JCPenney, Younkers, Sears, Gordmans, Marshall Field's (23), Old Navy
43.   Fashion Centre at Pentagon City, The   VA   Arlington (Washington, DC)   Fee   42.5 % (4) Built 1989   99.2 % 472,729   517,230  (18) 989,959   Macy's, Nordstrom
44.   Fashion Mall at Keystone   IN   Indianapolis   Ground Lease (2067)   100.0 % Acquired 1997   98.3 % 249,721   430,507  (18) 680,228   Parisian (25), Saks Fifth Avenue, Crate & Barrel, Landmark Theaters
45.   Fashion Valley Mall   CA   San Diego   Fee   50.0 % (4) Acquired 2001   99.5 % 1,053,305   654,732   1,708,037   JCPenney, Macy's, Neiman-Marcus, Nordstrom, Bloomingdale's (20), Saks Fifth Avenue
46   Firewheel Town Center   TX   Garland   Fee   100.0 % Built 2005   95.9 % 298,857   485,051   783,908   Dillard's, Foley's (23), Barnes & Noble, Circuit City, Linens ‘n Things, Old Navy, Pier One, DSW, AMC Theatre
47.   Florida Mall, The   FL   Orlando   Fee   50.0 % (4) Built 1986   98.7 % 1,232,416   616,312   1,848,728   Dillard's, JCPenney, Lord & Taylor (24), Saks Fifth Avenue, Sears, Macy's, Nordstrom
48.   Forest Mall   WI   Fond Du Lac   Fee   100.0 % Built 1973   88.4 % 327,260   173,418   500,678   JCPenney, Kohl's, Younkers, Sears
49.   Forum Shops at Caesars, The   NV   Las Vegas   Ground Lease (2050)   100.0 % Built 1992   99.1 % —   635,134   635,134    
50.   Galleria, The   TX   Houston   Fee and Ground Lease (2029)   31.5 % (4) Acquired 2002   92.1 % 1,164,982   1,093,584   2,258,566   University Club, Neiman Marcus, Macy's (19), Saks Fifth Avenue, Nordstrom, Foley's (23)
51.   Granite Run Mall   PA   Media (Philadelphia)   Fee   50.0 % (4) Acquired 1998   90.9 % 500,809   545,697   1,046,506   JCPenney, Sears, Boscov's

18

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
52.   Great Lakes Mall   OH   Mentor (Cleveland)   Fee   100.0 % Built 1961   96.4 % 879,300   388,720   1,268,020   Dillard's Men's, Dillard's Women's, Kaufmann's (23), JCPenney, Sears
53.   Greendale Mall   MA   Worcester (Boston)   Fee and Ground Lease (2009) (7)   49.1 % (4) Acquired 1999   93.5 % 132,634   298,750  (18) 431,384   Marshalls, T.J. Maxx ‘N More, Best Buy, DSW
54.   Greenwood Park Mall   IN   Greenwood (Indianapolis)   Fee   100.0 % Acquired 1979   99.7 % 909,928   413,053   1,322,981   JCPenney, Macy's, L.S. Ayres (19), Sears, Von Maur, Dick's Sporting Goods
55.   Gulf View Square   FL   Port Richey (Tampa — St. Pete)   Fee   100.0 % Built 1980   97.3 % 461,852   291,948   753,800   Sears, Dillard's, JCPenney, Macy's, Best Buy, Linens ‘n Things
56.   Gwinnett Place   GA   Duluth (Atlanta)   Fee   50.0 % (4) Acquired 1998   88.6 % 843,609   434,711   1,278,320   Parisian (25), Macy's, JCPenney, Sears, (8)
57.   Haywood Mall   SC   Greenville   Fee and Ground Lease (2017) (7)   100.0 % Acquired 1998   96.6 % 902,400   327,710   1,230,110   Macy's, Sears, Dillard's, JCPenney, Belk
58.   Highland Mall (1)   TX   Austin   Fee and Ground Lease (2070)   50.0 % (4) Acquired 1998   86.0 % 732,000   359,749   1,091,749   Dillard's Women's & Home, Dillard's Men's & Children's, Foley's (23), JCPenney
59.   Independence Center   MO   Independence (Kansas City)   Fee   100.0 % Acquired 1994   99.8 % 499,284   523,483   1,022,767   Dillard's, Sears, The Jones Store Co. (23)
60.   Indian River Mall   FL   Vero Beach   Fee   50.0 % (4) Built 1996   92.7 % 445,552   302,738   748,290   Sears, JCPenney, Dillard's, Macy's
61.   Ingram Park Mall   TX   San Antonio   Fee   100.0 % Built 1979   95.8 % 751,704   378,280   1,129,984   Dillard's, Dillard's Home Store, Foley's (23), JCPenney, Sears, Bealls
62.   Irving Mall   TX   Irving (Dallas — Ft. Worth)   Fee   100.0 % Built 1971   97.7 % 637,415   406,604   1,044,019   Foley's (23), Dillard's, Sears, Circuit City, Burlington Coat Factory, (8)
63.   Jefferson Valley Mall   NY   Yorktown Heights (New York)   Fee   100.0 % Built 1983   96.3 % 310,095   276,137   586,232   Macy's, Sears, H&M
64.   King of Prussia Mall   PA   King of Prussia (Philadelphia)   Fee   12.4 % (4) (15) Acquired 2003   96.6 % 1,545,812   1,064,661  (18) 2,610,473   Macy's, Bloomingdale's, J.C. Penney, Sears, Strawbridge's (19), Nordstrom, Neiman Marcus, Lord & Taylor (24)
65.   Knoxville Center   TN   Knoxville   Fee   100.0 % Built 1984   88.4 % 597,028   383,991   981,019   Dillard's, JCPenney, Belk, Sears, The Rush Fitness Center
66.   La Plaza Mall   TX   McAllen   Fee and Ground Lease (2040) (7)   100.0 % Built 1976   100.0 % 776,397   426,769   1,203,166   JCPenney, Foley's Home Store (23), Foley's (23), Dillard's, Sears, Bealls, Joe Brand
67.   Lafayette Square   IN   Indianapolis   Fee   100.0 % Built 1968   85.3 % 937,223   269,609   1,206,832   L.S. Ayres (23), Sears, Burlington Coat Factory, Steve & Barry's University Sportswear, (8)
68.   Laguna Hills Mall   CA   Laguna Hills (Orange County)   Fee   100.0 % Acquired 1997   99.6 % 536,500   330,691   867,191   Macy's, JCPenney, Sears
69.   Lake Square Mall   FL   Leesburg (Orlando)   Fee   50.0 % (4) Acquired 1998   83.1 % 296,037   264,753   560,790   JCPenney, Sears, Belk, Target, Best Buy (6)
70.   Lakeline Mall   TX   Austin   Fee   100.0 % Built 1995   97.3 % 745,179   355,629   1,100,808   Dillard's, Foley's (23), Sears, JCPenney, (8)
71.   Lehigh Valley Mall   PA   Whitehall (Allentown — Bethlehem)   Fee   37.6 % (4) (15) Acquired 2003   96.9 % 564,353   484,090  (18) 1,048,443   JCPenney, Macy's, Boscov's (21), Linens ‘n Things
72.   Lenox Square   GA   Atlanta   Fee   100.0 % Acquired 1998   98.4 % 821,356   655,714   1,477,070   Neiman Marcus, Macy's, Bloomingdale's
73.   Liberty Tree Mall   MA   Danvers (Boston)   Fee   49.1 % (4) Acquired 1999   97.1 % 498,000   359,552   857,552   Marshalls, The Sports Authority, Target, Bed, Bath & Beyond, Kohl's, Super Stop & Shop, Best Buy, Staples, AC Moore, Loews 16-Plex, Old Navy, Pier 1 Imports, K&G Menswear
74.   Lima Mall   OH   Lima   Fee   100.0 % Built 1965   89.1 % 541,861   204,090   745,951   Elder-Beerman, Sears, Macy's, JCPenney
75.   Lincolnwood Town Center   IL   Lincolnwood (Chicago)   Fee   100.0 % Built 1990   95.5 % 220,830   200,719   421,549   Kohl's, Carson Pirie Scott
76.   Lindale Mall (1)   IA   Cedar Rapids   Fee   50.0 % (4) Acquired 1998   89.8 % 305,563   387,825   693,388   Von Maur, Sears, Younkers, (8)
77.   Livingston Mall   NJ   Livingston (New York)   Fee   100.0 % Acquired 1998   99.1 % 616,128   363,693   979,821   Macy's, Sears, Lord & Taylor (24), Steve & Barry's

19

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
78.   Longview Mall   TX   Longview   Fee   100.0 % Built 1978   66.4 % 402,843   209,932   612,775   Dillard's, Dillard's Men's, JCPenney, Sears, Bealls
79.   Mall at Chestnut Hill   MA   Newton (Boston)   Lease (2039) (9)   47.2 % (4) Acquired 2002   99.2 % 297,253   180,979   478,232   Bloomingdale's, Filene's (23)
80.   Mall at Rockingham Park, The   NH   Salem (Boston)   Fee   24.6 % (4) Acquired 1999   100.0 % 638,111   382,047   1,020,158   Macy's (19), Filene's (23), JCPenney, Sears
81.   Mall at The Source, The   NY   Westbury (New York)   Fee   25.5 % (4) (2) Built 1997   96.2 % 210,798   515,005   725,803   Fortunoff, Off 5th-Saks Fifth Avenue, Nordstrom Rack, Circuit City, David's Bridal, Steve & Barry's, H&M, Golf Galaxy (6)
82.   Mall of Georgia   GA   Mill Creek (Atlanta)   Fee   50.0 % (4) Built 1999   97.9 % 1,069,590   716,069   1,785,659   JCPenney, Dick's Sporting Goods, Nordstrom, Dillard's, Macy's, Barnes & Noble, Haverty's Furniture, Regal Cinema, Belk (6)
83.   Mall of New Hampshire   NH   Manchester (Boston)   Fee   49.1 % (4) Acquired 1999   95.9 % 444,889   363,264   808,153   JCPenney, Filene's (23), Sears, Best Buy, Old Navy, A.C. Moore
84.   Maplewood Mall   MN   Minneapolis   Fee   100.0 % Acquired 2002   98.0 % 588,822   341,642   930,464   Sears, Marshall Field's (23), Kohl's, Barnes & Noble, JCPenney
85.   Markland Mall   IN   Kokomo   Ground Lease (2041)   100.0 % Built 1968   92.2 % 273,094   141,558   414,652   Sears, Target, (8)
86.   McCain Mall   AR   N. Little Rock   Fee and Ground Lease (2032) (10)   100.0 % Built 1973   96.4 % 554,156   221,849   776,005   Sears, Dillard's, JCPenney, M.M. Cohn
87.   Melbourne Square   FL   Melbourne   Fee   100.0 % Built 1982   89.1 % 371,167   259,007   630,174   Dillard's Men's, Children's & Home, Dillard's Women's, JCPenney, Macy's, Dick's Sporting Goods (6), Circuit City (6)
88.   Menlo Park Mall   NJ   Edison (New York)   Fee   100.0 % Acquired 1997   96.5 % 527,591   756,297  (18) 1,283,888   Macy's Women, Macy's Men, Macy's Children & Home, Nordstrom, Barnes & Noble, Steve & Barry's (6)
89.   Mesa Mall (1)   CO   Grand Junction   Fee   50.0 % (4) Acquired 1998   87.2 % 441,208   443,083   884,291   Sears, Herberger's, JCPenney, Target, Mervyn's
90.   Miami International Mall   FL   South Miami   Fee   47.8 % (4) Built 1982   94.4 % 778,784   293,586   1,072,370   Sears, Dillard's, JCPenney, Macy's Men & Home, Macy's Women & Children
91.   Midland Park Mall   TX   Midland   Fee   100.0 % Built 1980   93.3 % 339,113   278,861   617,974   Dillard's, Dillard's Mens & Juniors, JCPenney, Sears, Bealls, Ross Dress for Less
92.   Miller Hill Mall   MN   Duluth   Ground Lease (2008)   100.0 % Built 1973   97.6 % 429,508   379,488   808,996   JCPenney, Sears, Younkers, Barnes & Noble, DSW
93.   Montgomery Mall   PA   Montgomeryville (Philadelphia)   Fee   53.5 % (15) Acquired 2003   89.3 % 684,855   434,876   1,119,731   JCPenney, Macy's, Sears, Boscov's (21)
94.   Muncie Mall   IN   Muncie   Fee   100.0 % Built 1970   96.4 % 435,756   205,946   641,702   JCPenney, L.S. Ayres (23), Sears, Elder Beerman
95.   Nanuet Mall   NY   Nanuet (New York)   Fee   100.0 % Acquired 1998   77.4 % 583,711   332,990   916,701   Macy's, Boscov's, Sears
96.   North East Mall   TX   Hurst (Dallas — Ft. Worth)   Fee   100.0 % Built 1971   97.4 % 1,194,589   467,785   1,662,374   Saks Fifth Avenue, Nordstrom, Dillard's, JCPenney, Sears, Foley's (23), Rave Motion Pictures
97.   Northfield Square Mall   IL   Bourbonnais (Chicago)   Fee   31.6 % (12) Built 1990   78.0 % 310,994   247,802   558,796   Sears, JCPenney, Carson Pirie Scott Women's, Carson Pierie Scott Men's, Children's & Home
98.   Northgate Mall   WA   Seattle   Fee   100.0 % Acquired 1987   95.2 % 688,391   295,417   983,808   Nordstrom, JCPenney, Macy's, Toys 'R Us, Barnes & Noble (6)
99.   Northlake Mall   GA   Atlanta   Fee   100.0 % Acquired 1998   95.1 % 665,745   296,866   962,611   Parisian (25), Macy's, Sears, JCPenney
100.   NorthPark Mall   IA   Davenport   Fee   50.0 % (4) Acquired 1998   85.5 % 651,533   423,187   1,074,720   Von Maur, Younkers, Dillard's, JCPenney, Sears
101.   Northshore Mall   MA   Peabody (Boston)   Fee   49.1 % (4) Acquired 1999   93.7 % 979,755   688,630   1,668,385   Nordstrom (22), Filene's (23), JCPenney, Lord & Taylor (24), Sears, Filene's Basement
102.   Northwoods Mall   IL   Peoria   Fee   100.0 % Acquired 1983   95.8 % 472,969   218,903   691,872   Famous Barr (23), JCPenney, Sears
103.   Oak Court Mall   TN   Memphis   Fee   100.0 % Acquired 1997   91.8 % 532,817   315,009  (18) 847,826   Dillard's, Macy's, Dillard's Mens

20

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
104.   Ocean County Mall   NJ   Toms River (New York)   Fee   100.0 % Acquired 1998   89.4 % 616,443   275,921   892,364   Macy's, Boscov's, JCPenney, Sears
105.   Orange Park Mall   FL   Orange Park (Jacksonville)   Fee   100.0 % Acquired 1994   95.9 % 528,551   388,958   917,509   Dillard's, JCPenney, Sears, Belk, Dick's Sporting Goods (6)
106.   Orland Square   IL   Orland Park (Chicago)   Fee   100.0 % Acquired 1997   99.7 % 773,295   437,229   1,210,524   JCPenney, Marshall Field's (23), Sears, Carson Pirie Scott
107.   Oxford Valley Mall   PA   Langhorne (Philadelphia)   Fee   63.2 % (15) Acquired 2003   94.1 % 762,558   559,976  (18) 1,322,534   J.C. Penney, Sears, Boscov's (21), Macy's
108.   Paddock Mall   FL   Ocala   Fee   100.0 % Built 1980   92.0 % 387,378   166,825   554,203   JCPenney, Sears, Belk, Macy's
109.   Palm Beach Mall   FL   West Palm Beach   Fee   100.0 % Built 1967   90.5 % 749,288   335,230   1,084,518   Dillard's, JCPenney, Sears, Macy's, Borders Books & Music, DSW Shoe Warehouse
110.   Penn Square Mall   OK   Oklahoma City   Ground Lease (2060)   94.5 % Acquired 2002   99.3 % 588,137   444,030   1,032,167   Foley's (23), JCPenney, Dillard's Women's, Dillard's Men's, Children's & Home
111.   Pheasant Lane Mall   NH   Nashua (Boston)   (14)   (14)   Acquired 2002   97.0 % 675,759   313,485   989,244   Macy's (19), Filene's (23), JCPenney, Sears, Target
112.   Phipps Plaza   GA   Atlanta   Fee   100.0 % Acquired 1998   97.1 % 472,385   347,107   819,492   Nordstrom, Parisian (25), Saks Fifth Avenue
113.   Plaza Carolina   PR   Carolina (San Juan)   Fee   100.0 % Acquired 2004   96.8 % 504,796   608,908  (18) 1,113,704   JCPenney, Sears
114.   Port Charlotte Town Center   FL   Port Charlotte (Punta Gorda)   Fee   80.0 % (12) Built 1989   82.9 % 458,251   323,979   782,230   Dillard's, JCPenney, Bealls, Sears, Macy's, DSW Shoe Warehouse
115.   Prien Lake Mall   LA   Lake Charles   Fee and Ground Lease (2025) (7)   100.0 % Built 1972   92.7 % 644,124   176,139   820,263   Dillard's, JCPenney, Foley's (23), Sears, Cinemark Theaters
116.   Quaker Bridge Mall   NJ   Lawrenceville   Fee   38.0 % (4) (15) Acquired 2003   92.9 % 686,760   418,582   1,105,342   JCPenney, Lord & Taylor (24), Macy's, Sears, Old Navy
117.   Raleigh Springs Mall   TN   Memphis   Fee and Ground Lease (2018) (7)   100.0 % Built 1971   65.9 % 691,230   226,173   917,403   Sears, (8)
118.   Richardson Square Mall   TX   Richardson (Dallas — Ft. Worth)   Fee   100.0 % Built 1977   55.4 % 460,055   284,171   744,226   Dillard's, Sears, Super Target, Ross Dress for Less
119.   Richmond Town Square   OH   Richmond Heights (Cleveland)   Fee   100.0 % Built 1966   93.2 % 685,251   331,713   1,016,964   Sears, JCPenney, Kaufmann's (23), Barnes & Noble, Loews Cineplex, Steve & Barry's (6)
120.   River Oaks Center   IL   Calumet City (Chicago)   Fee   100.0 % Acquired 1997   92.1 % 834,588   544,483  (18) 1,379,071   Sears, JCPenney, Carson Pirie Scott, Marshall Field's (23)
121.   Rockaway Townsquare   NJ   Rockaway (New York)   Fee   100.0 % Acquired 1998   97.6 % 786,626   462,618   1,249,244   Macy's, Lord & Taylor (24), JCPenney, Sears
122.   Rolling Oaks Mall   TX   San Antonio   Fee   100.0 % Built 1988   84.3 % 596,984   286,261   883,245   Sears, Dillard's, Foley's (23), JC Penney
123.   Roosevelt Field   NY   Garden City (New York)   Fee and Ground Lease (2090) (7)   100.0 % Acquired 1998   98.0 % 1,430,425   758,507  (18) 2,188,932   Macy's, Bloomingdale's, JCPenney, Nordstrom, Bloomingdale's Furniture Gallery, Dick's Sporting Goods
124.   Ross Park Mall   PA   Pittsburgh   Fee   100.0 % Built 1986   96.3 % 827,015   406,458   1,233,473   Macy's (19), JCPenney, Sears, Kaufmann's (23)
125.   Rushmore Mall (1)   SD   Rapid City   Fee   50.0 % (4) Acquired 1998   88.6 % 470,660   360,123   830,783   JCPenney, Sears, Herberger's, Hobby Lobby, Target
126.   Santa Rosa Plaza   CA   Santa Rosa   Fee   100.0 % Acquired 1998   95.7 % 428,258   270,479   698,737   Macy's, Mervyn's, Sears
127.   Seminole Towne Center   FL   Sanford (Orlando)   Fee   45.0 % (4) (2) Built 1995   86.3 % 768,798   383,683   1,152,481   Belk, Macy's, Dillard's, Sears, JCPenney
128.   Shops at Mission Viejo, The   CA   Mission Viejo (Orange County)   Fee   100.0 % Built 1979   100.0 % 677,215   472,491   1,149,706   Macy's (19), Saks Fifth Avenue, Robinsons-May (23), Nordstrom
129.   Shops at Sunset Place, The   FL   Miami   Fee   37.5 % (4) (2) Built 1999   87.8 % —   506,792   506,792   NikeTown, Barnes & Noble, GameWorks, Virgin Megastore, Z Gallerie, LA Fitness, AMC Theatre
130.   Smith Haven Mall   NY   Lake Grove (New York)   Fee   25.0 % (4) Acquired 1995   96.2 % 666,283   414,833   1,081,116   Macy's, Sears, JCPenney, H&M, Cheesecake Factory, Dick's Sporting Goods, Barnes & Noble, Macy's Furniture
131.   Solomon Pond Mall   MA   Marlborough (Boston)   Fee   49.1 % (4) Acquired 1999   94.5 % 538,843   371,206   910,049   Filene's (23), Sears, JCPenney, Linens ‘n Things

21

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
132.   South Hills Village   PA   Pittsburgh   Fee   100.0 % Acquired 1997   94.5 % 655,987   486,626   1,142,613   Sears, Boscov's (21), Macy's, Barnes & Noble
133.   South Shore Plaza   MA   Braintree (Boston)   Fee   100.0 % Acquired 1998   97.9 % 847,603   612,832   1,460,435   Nordstrom (22), Filene's (23), Lord & Taylor (24), Sears
134.   Southern Hills Mall (1)   IA   Sioux City   Fee   50.0 % (4) Acquired 1998   82.0 % 372,937   431,709   804,646   Younkers, Sears, Sheel's Sporting Goods, JCPenney, Barnes & Noble
135.   Southern Park Mall   OH   Boardman (Youngstown)   Fee   100.0 % Built 1970   96.3 % 811,858   383,412   1,195,270   Dillard's, JCPenney, Sears, Kaufmann's (23), Jillian's
136.   SouthPark Mall   IL   Moline (Davenport — Moline)   Fee   50.0 % (4) Acquired 1998   81.6 % 578,056   448,482   1,026,538   JCPenney, Younkers, Sears, Von Maur, Dillard's
137.   SouthPark   NC   Charlotte   Fee & Ground Lease (2040) (11)   100.0 % Acquired 2002   99.1 % 964,742   483,832   1,448,574   Nordstrom, Hecht's (23), Belk, Dillard's, Dick's Sporting Goods, Neiman Marcus (6)
138.   SouthRidge Mall (1)   IA   Des Moines   Fee   50.0 % (4) Acquired 1998   67.4 % 497,806   504,332   1,002,138   Sears, Younkers, JCPenney, Target, (8)
139.   Springfield Mall (1)   PA   Springfield (Philadelphia)   Fee   38.0 % (4) (15) Acquired 2005   94.8 % 367,176   221,484   588,660   Macy's, Strawbridge's (19)
140.   Square One Mall   MA   Saugus (Boston)   Fee   49.1 % (4) Acquired 1999   95.7 % 540,101   324,659   864,760   Filene's (23), Sears, Best Buy, T.J. Maxx ‘N More, Best Buy, Old Navy, Dick's Sporting Goods (6)
141.   St. Charles Towne Center   MD   Waldorf (Washington, D.C.)   Fee   100.0 % Built 1990   96.7 % 631,602   349,817   981,419   Sears, JCPenney, Kohl's, Hecht's (23), Hecht's Home Store (23), Dick Sporting Goods
142.   St. Johns Town Center   FL   Jacksonville   Fee   50.0 % (4) Built 2005   100.0 % 650,982   379,212   1,030,194   Ashley Furniture Home Store, Dillard's, Barnes & Noble, Dick's Clothing & Sporting Goods, Target, Ross Dress for Less, Staples, DSW Shoe Warehouse, JoAnn Fabrics, PetsMart, Old Navy, Maggiano's Little Italy, Cheesecake Factory
143.   Stanford Shopping Center   CA   Palo Alto (San Francisco)   Ground Lease (2054)   100.0 % Acquried 2003   95.7 % 849,153   529,028  (18) 1,378,181   Macy's, Neiman Marcus, Nordstrom, Bloomingdale's, Macy's Men's Store
144.   Summit Mall   OH   Akron   Fee   100.0 % Built 1965   95.4 % 432,936   330,513   763,449   Dillard's Women's & Children's, Dillard's Men's & Home, Kaufmann's (23)
145.   Sunland Park Mall   TX   El Paso   Fee   100.0 % Built 1988   90.0 % 575,837   342,410   918,247   Mervyn's, Sears, Dillard's Women's & Children's, Dillard's Men's & Home, Foley's (23)
146.   Tacoma Mall   WA   Tacoma   Fee   100.0 % Acquired 1987   98.0 % 924,045   404,895   1,328,940   Nordstrom, Sears, JCPenney, Macy's, Mervyn's, Davids Bridal
147.   Tippecanoe Mall   IN   Lafayette   Fee   100.0 % Built 1973   92.3 % 537,790   322,663   860,453   L.S. Ayres (23), Dick's Sporting Goods, JCPenney, Sears, Kohl's, H.H. Gregg
148.   Town Center at Aurora   CO   Aurora (Denver)   Fee   100.0 % Acquired 1998   80.1 % 496,637   408,095   904,732   JCPenney, Foley's (23), Sears, Dillard's (6)
149.   Town Center at Boca Raton   FL   Boca Raton (W. Palm Beach)   Fee   100.0 % Acquired 1998   99.7 % 1,085,312   492,901   1,578,213   Saks Fifth Avenue, Nordstrom, Neiman Marcus, Bloomingdale's, Sears, Macy's
150.   Town Center at Cobb   GA   Kennesaw (Atlanta)   Fee   50.0 % (4) Acquired 1998   92.9 % 866,381   408,283   1,274,664   Macy's, Parisian (25), Sears, JCPenney, Macy's Home & Furniture
151.   Towne East Square   KS   Wichita   Fee   100.0 % Built 1975   90.2 % 779,490   389,677   1,169,167   Dillard's, JCPenney, Sears, Von Maur
152.   Towne West Square   KS   Wichita   Fee   100.0 % Built 1980   91.4 % 619,269   332,178   951,447   Dillard's Women's & Home, Dillard's Men's & Children, Sears, JCPenney, Dick's Sporting Goods
153.   Treasure Coast Square   FL   Jensen Beach (Ft. Pierce)   Fee   100.0 % Built 1987   90.1 % 511,372   349,214   860,586   Dillard's, Sears, JCPenney, Macy's, Borders Books & Music, Regal 16 Cinema
154.   Trolley Square   UT   Salt Lake City   Fee   90.0 % Acquired 1986   88.0 % —   224,987   224,987    
155.   Tyrone Square   FL   St. Petersburg (Tampa — St. Pete)   Fee   100.0 % Built 1972   98.2 % 748,269   367,684   1,115,953   Dillard's, JCPenney, Sears, Macy's, Borders Books & Music
156.   University Mall   AR   Little Rock   Ground Lease (2026)   100.0 % Built 1967   51.6 % 364,992   153,010   518,002   JCPenney, M.M. Cohn, (8)

22

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
157.   University Mall   FL   Pensacola   Fee   100.0 % Acquired 1994   75.4 % 478,449   230,767   709,216   JCPenney, Sears, Belk
158.   University Park Mall   IN   Mishawaka (South Bend)   Fee   60.0 % Built 1979   97.3 % 622,508   320,468   942,976   L.S. Ayres (23), JCPenney, Sears, Marshall Field's (19)
159.   Upper Valley Mall   OH   Springfield (Dayton — Springfield)   Fee   100.0 % Built 1971   75.8 % 479,418   263,011   742,429   Macy's, JCPenney, Sears, Elder-Beerman
160.   Valle Vista Mall   TX   Harlingen   Fee   100.0 % Built 1983   75.8 % 389,781   265,767   655,548   Dillard's, Mervyn's, Sears, JCPenney, Marshalls, Steve & Barry's (6)
161.   Valley Mall   VA   Harrisonburg   Fee   50.0 % (4) Acquired 1998   92.9 % 315,078   194,124   509,202   JCPenney, Belk, Peebles, Target, Old Navy
162.   Virginia Center Commons   VA   Glen Allen (Richmond)   Fee   100.0 % Built 1991   98.7 % 506,639   281,597   788,236   Dillard's Women's, Dillard's Men's, Children's & Home, Hecht's (23), JCPenney, Sears
163.   Walt Whitman Mall   NY   Huntington Station (New York)   Ground Lease (2012)   100.0 % Acquired 1998   90.4 % 742,214   292,606   1,034,820   Macy's, Lord & Taylor (24), Bloomingdale's, Saks Fifth Avenue
164.   Washington Square   IN   Indianapolis   Fee   100.0 % Built 1974   73.6 % 616,109   352,252   968,361   L.S. Ayres (23), Dick's Sporting Goods, Target, Sears, Burlington Coat Factory, Kerasotes Showplace 12, Steve & Barry's (6)
165.   West Ridge Mall   KS   Topeka   Fee   100.0 % Built 1988   80.9 % 716,811   299,856   1,016,667   Dillard's, JCPenney, The Jones Store Co. (23), Sears, (8)
166.   West Town Mall   TN   Knoxville   Ground Lease (2042)   50.0 % (4) Acquired 1991   96.0 % 878,311   446,545   1,324,856   Parisian (25), Dillard's, JCPenney, Belk, Sears
167.   Westchester, The   NY   White Plains (New York)   Fee   40.0 % (4) Acquired 1997   95.9 % 349,393   478,337  (18) 827,730   Neiman Marcus, Nordstrom
168.   Westminster Mall   CA   Westminster (Orange County)   Fee   100.0 % Acquired 1998   94.7 % 716,939   507,652   1,224,591   Sears, JCPenney, Robinsons-May (23), Macy's (19)
169.   White Oaks Mall   IL   Springfield   Fee   77.5 % Built 1977   89.0 % 556,831   380,095   936,926   Famous Barr (23), Sears, Bergner's, Linens'n Things, Cost Plus World Market, Dick's Sporting Goods
170.   Wolfchase Galleria   TN   Memphis   Fee   94.5 % Acquired 2002   99.3 % 761,648   505,776   1,267,424   Macy's, JCPenney, Sears, Dillard's
171.   Woodland Hills Mall   OK   Tulsa   Fee   94.5 % Acquired 2002   98.6 % 709,447   382,755   1,092,202   Foley's (23), JCPenney, Sears, Dillard's
                               
 
 
   
        Total Regional Mall GLA                   101,368,400   65,024,345   166,392,745    
                               
 
 
   

 
 
PREMIUM OUTLET CENTERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1.
 
Albertville Premium Outlets
 
MN
 
Albertville (Minneapolis/St. Paul)
 
Fee
 
100.0
%
Acquired 2004
 
98.5
%
—
 
429,534
 
429,534
 
Banana Republic, Calvin Klein, Kenneth Cole, Liz Claiborne, Gap Outlet, Old Navy, Polo Ralph Lauren, Tommy Hilfiger, Coach, Nike
2.   Allen Premium Outlets   TX   Allen (Dallas)   Fee   100.0 % Acquired 2004   97.5 % —   413,492   413,492   Brooks Brothers, Cole-Haan, Kenneth Cole, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger, Ann Taylor, Nike
3.   Aurora Farms Premium Outlets   OH   Aurora (Cleveland)   Fee   100.0 % Acquired 2004   99.0 % —   300,181   300,181   Ann Taylor, Brooks Brothers, Calvin Klein, Gap Outlet, Liz Claiborne, Nautica, Off 5th-Saks Fifth Avenue Outlet, Polo Ralph Lauren, Tommy Hilfiger, Coach
4.   Camarillo Premium Outlets   CA   Camarillo (Los Angeles)   Fee   100.0 % Acquired 2004   100.0 % —   454,070   454,070   Ann Taylor, Banana Republic, Barneys New York, Coach, Hugo Boss, Polo Ralph Lauren, St. John, Diesel, Kenneth Cole, Nike, Sony
5.   Carlsbad Premium Outlets   CA   Carlsbad   Fee   100.0 % Acquired 2004   100.0 % —   287,936   287,936   Adidas, Banana Republic, Barneys New York, BCBG Max Azria, Calvin Klein, Coach, Gap Outlet, Guess, Kenneth Cole, Polo Ralph Lauren

23

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
6.   Carolina Premium Outlets   NC   Smithfield (Raleigh — Durham — Chapel Hill)   Ground Lease (2029)   100.0 % Acquired 2004   100.0 % —   439,398   439,398   Banana Republic, Brooks Brothers, Gap Outlet, Liz Claiborne, Nike, Polo Ralph Lauren, Timberland, Tommy Hilfiger, Coach
7.   Chicago Premium Outlets   IL   Aurora (Chicago)   Fee   100.0 % Built 2004   100.0 % —   437,800   437,800   Ann Taylor, Banana Republic, Calvin Klein, Coach, Diesel, Dooney & Bourke, Elie Tahari, Gap Outlet, Giorgio Armani, Max Mara, Polo Ralph Lauren, Salvatore Ferragamo
8.   Clinton Crossing Premium Outlets   CT   Clinton (Hartford)   Fee   100.0 % Acquired 2004   100.0 % —   272,351   272,351   Barneys New York, Calvin Klein, Coach, Dooney & Bourke, Gap Outlet, Kenneth Cole, Liz Claiborne, Nike, Polo Ralph Lauren
9.   Columbia Gorge Premium Outlets   OR   Troutdale (Portland — Vancouver)   Fee   100.0 % Acquired 2004   99.2 % —   163,815   163,815   Adidas, Carter's, Gap Outlet, Samsonite, Van Heusen, Liz Claiborne
10.   Desert Hills Premium Outlets   CA   Cabazon (Palm Springs — Los Angeles)   Fee   100.0 % Acquired 2004   100.0 % —   498,516   498,516   Burberry, Coach, Giorgio Armani, Gucci, MaxMara, Polo Ralph Lauren, Salvatore Ferragamo, Versace, Yves Saint Laurent Rive Gauche, Zegna
11.   Edinburgh Premium Outlets   IN   Edinburgh (Indianapolis)   Fee   100.0 % Acquired 2004   98.0 % —   371,117   371,117   Banana Republic, Coach, Gap Outlet, Nautica, Nike, Polo Ralph Lauren, Tommy Hilfiger, Calvin Klein, J. Crew
12.   Folsom Premium Outlets   CA   Folsom (Sacramento)   Fee   100.0 % Acquired 2004   99.0 % —   299,270   299,270   Brooks Brothers, Gap Outlet, Guess, Kenneth Cole, Liz Claiborne, Nautica, Nike, Nine West, Off 5th-Saks Fifth Avenue
13.   Gilroy Premium Outlets   CA   Gilroy (San Jose)   Fee   100.0 % Acquired 2004   99.2 % —   577,295   577,295   Banana Republic, Brooks Brothers, Calvin Klein, Coach, J. Crew, Hugo Boss, Nike, Polo Ralph Lauren, Timberland, Tommy Hilfiger
14.   Jackson Premium Outlets   NJ   Jackson   Fee   100.0 % Acquired 2004   99.8 % —   285,552   285,552   Calvin Klein, Gap Outlet, Nike, Polo Ralph Lauren, Banana Republic, J. Crew, Liz Claiborne
15.   Johnson Creek Premium Outlets   WI   Johnson Creek   Fee   100.0 % Acquired 2004   98.5 % —   277,585   277,585   Calvin Klein, Gap Outlet, Lands' End, Nike, Old Navy Outlet, Polo Ralph Lauren, Tommy Hilfiger, Adidas, Banana Republic
16.   Kittery Premium Outlets   ME   Kittery (Boston)   Ground Lease (2009)   100.0 % Acquired 2004   98.8 % —   150,564   150,564   Ann Klein, Banana Republic, Gap Outlet, Coach, J. Crew, Polo Ralph Lauren, Reebok
17.   Las Vegas Premium Outlets   NV   Las Vegas   Fee   100.0 % Built 2003   100.0 % —   434,978   434,978   Ann Taylor, A -- X Armani Exchange, Banana Republic, Calvin Klein, Coach, Dolce & Gabbana, Elie Tahari, Polo Ralph Lauren
18.   Leesburg Corner Premium Outlets   VA   Leesburg (Washington DC)   Fee   100.0 % Acquired 2004   98.8 % —   463,288   463,288   Barneys New York, Kenneth Cole, Liz Claiborne, Nike, Polo Ralph Lauren, Williams-Sonoma, Ann Taylor, Banana Republic, Coach, Restoration Hardware
19.   Liberty Village Premium Outlets   NJ   Flemington (New York — Philadelphia)   Fee   100.0 % Acquired 2004   98.8 % —   173,645   173,645   Calvin Klein, Ellen Tracy, Jones New York, L.L. Bean, Polo Ralph Lauren, Tommy Hilfiger, Timberland, Waterford Wedgwood
20.   Lighthouse Place Premium Outlets   IN   Michigan City (Chicago)   Fee   100.0 % Acquired 2004   99.5 % —   472,489   472,489   Burberry, Coach, Gap Outlet, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger, Ann Taylor, Nike
21.   Napa Premium Outlets   CA   Napa (Napa Valley)   Fee   100.0 % Acquired 2004   99.6 % —   179,348   179,348   Banana Republic, Barneys New York, Calvin Klein, J. Crew, Kenneth Cole, Nautica, Tommy Hilfiger, TSE, Coach

24

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
22.   North Georgia Premium Outlets   GA   Dawsonville (Atlanta)   Fee   100.0 % Acquired 2004   99.6 % —   539,757   539,757   Calvin Klein, Coach, Hugo Boss, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger, Williams-Sonoma, J. Crew, Nike, Restoration Hardware
23.   Orlando Premium Outlets   FL   Orlando   Fee   100.0 % Acquired 2004   100.0 % —   435,813   435,813   Barneys New York, Burberry, Coach, Fendi, Giorgio Armani, Hugo Boss, MaxMara, Nike, Polo Ralph Lauren, Dior, LaCoste, Salvatore Ferragamo
24.   Osage Beach Premium Outlets   MO   Osage Beach   Fee   100.0 % Acquired 2004   98.9 % —   391,381   391,381   Brooks Brothers, Calvin Klein, Coach, Gap Outlet, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger
25.   Petaluma Village Premium Outlets   CA   Petaluma (San Francisco)   Fee   100.0 % Acquired 2004   99.3 % —   195,837   195,837   Brooks Brothers, Coach, Gap Outlet, Liz Claiborne, Off 5th-Saks Fifth Avenue, Puma
26.   Seattle Premium Outlets   WA   Seattle   Ground Lease (2035)   100.0 % Built 2005   99.0 % —   381,154   381,154   Banana Republic, Burberry, Calvin Klein, Nike, Polo Ralph Lauren, Liz Claiborne, Adidas, Adrienne Vittadini, Restoration Hardware
27.   St. Augustine Premium Outlets   FL   St. Augustine (Jacksonsville)   Fee   100.0 % Acquired 2004   98.2 % —   329,003   329,003   Banana Republic, Brooks Brothers, Calvin Klein, Coach, Gap Outlet, Movado, Nike, Polo Ralph Lauren, Reebok, Tommy Bahama
28.   The Crossings Premium Outlets   PA   Tannersville   Fee   100.0 % Acquired 2004   100.0 % —   411,391   411,391   Ann Taylor, Coach, Liz Claiborne, Polo Ralph Lauren, Reebok, Tommy Hilfiger, Banana Republic, Calvin Klein, Burberry
29.   Vacaville Premium Outlets   CA   Vacaville   Fee   100.0 % Acquired 2004   98.5 % —   444,212   444,212   Ann Taylor, Banana Republic, Burberry, Calvin Klein, Coach, Nike, Polo Ralph Lauren, Restoration Hardware
30.   Waikele Premium Outlets   HI   Waipahu (Honolulu)   Fee   100.0 % Acquired 2004   100.0 % —   209,846   209,846   A -- X Armani Exchange, Banana Republic, Barneys New York, Calvin Klein, Coach, Guess, Kenneth Cole, MaxMara, Polo Ralph Lauren
31.   Waterloo Premium Outlets   NY   Waterloo   Fee   100.0 % Acquired 2004   100.0 % —   417,519   417,519   Brooks Brothers, Calvin Klein, Coach, Gap Outlet, J. Crew, Liz Claiborne, Polo Ralph Lauren, Banana Republic
32.   Woodbury Common Premium Outlets   NY   Central Valley (New York City)   Fee   100.0 % Acquired 2004   100.0 % —   844,488   844,488   Banana Republic, Brooks Brothers, Chanel, Dior, Coach, Giorgio Armani, Gucci, Neiman Marcus Last Call, Polo Ralph Lauren, Frette
33.   Wrentham Village Premium Outlets   MA   Wrentham (Boston)   Fee   100.0 % Acquired 2004   96.9 % —   600,613   600,613   Barneys New York, Burberry, Coach, Hugo Boss, Kenneth Cole, Lacoste, Nike, Polo Ralph Lauren, Salvatore Ferragmo, Sony, Williams Sonoma
                               
 
 
   
        Total Premium Outlet Center GLA                   —   12,583,238   12,583,238    
                               
 
 
   

 
 
COMMUNITY/LIFESTYLE CENTERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1.
 
Arboretum at Great Hills
 
TX
 
Austin
 
Fee
 
100.0
%
Acquired 1998
 
91.5
%
35,773
 
169,293
 
205,066
 
Barnes & Noble, Pottery Barn
2.   Bloomingdale Court   IL   Bloomingdale   Fee   100.0 % Built 1987   99.4 % 417,513   160,769   578,282   Best Buy, T.J. Maxx ‘N More, Office Max, Old Navy, Linens-N-Things, Wal-Mart, Circuit City, Jo-Ann Fabrics (6)
3.   Boardman Plaza   OH   Youngstown   Fee   100.0 % Built 1951   80.5 % 365,834   240,264   606,098   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   Safeway

25

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
5.   Celina Plaza   TX   El Paso   Fee and Ground Lease (2005) (11)   100.0 % Built 1978   100.0 % —   8,695   8,695    
6.   Charles Towne Square   SC   Charleston   Fee   100.0 % Built 1976   100.0 % 71,794   —   71,794   Regal Cinema
7.   Chesapeake Center   VA   Chesapeake   Fee   100.0 % Built 1989   70.4 % 213,651   92,284   305,935   K-Mart, Movies 10, Petsmart, Michaels (8)
8.   Clay Terrace   IN   Carmel (Indianapolis)   Fee   50.0 % (4) Built 2004   88.0 % 161,281   336,167   497,448   Dick's Sporting Goods, Wild Oats Natural Marketplace, DSW, Circuit City Superstore
9.   Cobblestone Court   NY   Victor   Fee and Ground Lease (2038) (7)   35.0 % (4) (13) Built 1993   100.0 % 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   85.3 % 308,489   116,525   425,014   Best Buy, Home Depot, PetsMart, Jo-Ann Fabrics, Office Depot, Value City Furniture
11.   Crystal Court   IL   Crystal Lake   Fee   35.0 % (4) (13) Built 1989   84.8 % 201,993   76,977   278,970   Cub Foods, Wal-Mart
12.   Dare Centre   NC   Kill Devil Hills   Ground Lease (2058)   100.0 % Acquired 2004   100.0 % 127,172   41,473   168,645   Belk, Food Lion
13.   DeKalb Plaza   PA   King of Prussia   Fee   50.3 % (15) Acquired 2003   100.0 % 81,368   20,345   101,713   Lane Home Furnishings, ACME Grocery
14.   Eastland Convenience Center   IN   Evansville   Ground Lease (2075)   50.0 % (4) Acquired 1998   96.1 % 126,699   48,940   175,639   Marshalls, Toys "R" Us, Bed Bath & Beyond, David's Bridal
15.   Eastland Plaza   OK   Tulsa   Fee   100.0 % Built 1986   79.1 % 152,451   33,695   186,146   Marshalls, Target, Toys "R" Us
16.   Empire East (1)   SD   Sioux Falls   Fee   50.0 % (4) Acquired 1998   81.9 % 248,181   48,580   296,761   Kohl's, Target
17.   Fairfax Court   VA   Fairfax   Fee   26.3 % (4) (13) Built 1992   100.0 % 169,043   80,615   249,658   Burlington Coat Factory, Circuit City Superstore, Offenbacher's
18.   Forest Plaza   IL   Rockford   Fee   100.0 % Built 1985   97.4 % 325,170   100,587   425,757   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   97.7 % 123,027   85,713   208,740   Books-A-Million, Office Depot, T.J. Maxx, Ross Dress for Less, Bed, Bath & Beyond
20.   Gateway Shopping Centers   TX   Austin   Fee   95.0 % 2004   100.0 % 396,494   115,825   512,319   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, Best Buy, Cost Plus World Market, Linens ‘n Things
22.   Great Northeast Plaza   PA   Philadelphia   Fee   50.0 % (4) Acquired 1989   98.3 % 237,151   57,600   294,751   Sears
23.   Greenwood Plus   IN   Greenwood   Fee   100.0 % Built 1979   100.0 % 134,141   15,146   149,287   Best Buy, Kohl's
24.   Griffith Park Plaza   IN   Griffith   Ground Lease (2060)   100.0 % Built 1979   26.1 % 175,595   88,455   264,050   K-Mart, (8)
25.   Henderson Square   PA   King of Prussia   Fee   76.0 % (15) Acquired 2003   100.0 % 72,683   34,661   107,344   Staples, Genuardi's Family Market
26.   Highland Lakes Center   FL   Orlando   Fee   100.0 % Built 1991   99.0 % 352,277   140,862   493,139   Marshalls, Bed, Bath & Beyond, American Signature Furniture, Save-Rite Supermarkets, Ross Dress for Less, Office Max, Burlington Coat Factory (8)
27.   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
28.   Ingram Plaza   TX   San Antonio   Fee   100.0 % Built 1980   100.0 % —   111,518   111,518   Bealls, Cost Plus World Market
29.   Keystone Shoppes   IN   Indianapolis   Ground Lease (2067)   100.0 % Acquired 1997   83.5 % —   29,140   29,140    
30.   Knoxville Commons   TN   Knoxville   Fee   100.0 % Built 1987   100.0 % 91,483   88,980   180,463   Office Max, Circuit City, Carolina Pottery
31.   Lake Plaza   IL   Waukegan   Fee   100.0 % Built 1986   100.0 % 170,789   44,673   215,462   Pick and Save Mega Mart, Home Owners Bargain Outlet

26

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
32.   Lake View Plaza   IL   Orland Park (Chicago)   Fee   100.0 % Built 1986   95.7 % 261,810   109,022   370,832   Factory Card Outlet, Linens ‘n Things, Best Buy, Petco, Jo-Ann Fabrics, Ulta Salon, Cosmetics & Fragrance, Golf Galaxy, Value City Furniture (8)
33.   Lakeline Plaza   TX   Austin   Fee   100.0 % Built 1998   98.4 % 307,966   79,497   387,463   Linens ‘n Things, T.J. Maxx, Old Navy, Best Buy, Ross Dress for Less, Office Max, PetsMart, Ulta Salon, Cosmetics & Fragrance, Party City, Cost Plus World Market, Toys R Us
34.   Lima Center   OH   Lima   Fee   100.0 % Built 1978   96.3 % 189,584   47,294   236,878   Kohl's, Hobby Lobby, T.J. Maxx, Regal Cinema
35.   Lincoln Crossing   IL   O'Fallon   Fee   100.0 % Built 1990   100.0 % 229,820   13,446   243,266   Wal-Mart, PetsMart, The Home Depot
36.   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 Home Furnishings, AC Moore, Michaels, T.J. Maxx
37.   MacGregor Village   NC   Cary   Fee   100.0 % Acquired 2004   80.4 % —   143,476   143,476   Spa Health Club, Tuesday Morning
38.   Mall of Georgia Crossing   GA   Mill Creek (Atlanta)   Fee   100.0 % Built 1999   98.3 % 341,503   99,109   440,612   Best Buy, American Signature Furniture, T.J. Maxx, Nordstrom Rack, Staples, Target
39.   Markland Plaza   IN   Kokomo   Fee   100.0 % Built 1974   100.0 % 49,051   41,476   90,527   Best Buy, Bed Bath & Beyond
40.   Martinsville Plaza   VA   Martinsville   Space Lease (2046)   100.0 % Built 1967   97.1 % 60,000   42,105   102,105   Rose's
41.   Matteson Plaza   IL   Matteson   Fee   100.0 % Built 1988   44.1 % 230,959   40,070   271,029   Michael's, Dominick's, Value City Department Store (8)
42.   Muncie Plaza   IN   Muncie   Fee   100.0 % Built 1998   100.0 % 271,626   27,195   298,821   Kohl's, Shoe Carnival, T.J. Maxx, Office Max, Target, Kerasotes Theater
43.   New Castle Plaza   IN   New Castle   Fee   100.0 % Built 1966   100.0 % 24,912   66,736   91,648   Goody's, Jo-Ann Fabrics
44.   North Ridge Plaza   IL   Joliet   Fee   100.0 % Built 1985   75.5 % 190,323   114,747   305,070   Hobby Lobby, Office Max, Fun In Motion, Minnesota Fabrics (8)
45.   North Ridge Shopping Center   NC   Raleigh   Fee   100.0 % Acquired 2004   98.0 % 43,247   123,214   166,461   Ace Hardware, Kerr Drugs, Harris-Teeter Grocery
46.   Northland Plaza   OH   Columbus   Fee and Ground Lease (2085) (7)   100.0 % Built 1988   50.2 % 118,304   91,230   209,534   (8)
47.   Northwood Plaza   IN   Fort Wayne   Fee   100.0 % Built 1974   88.4 % 136,404   71,841   208,245   Cinema Grill, Target
48.   Park Plaza   KY   Hopkinsville   Fee and Ground Lease (2039) (7)   100.0 % Built 1968   95.2 % 82,398   32,626   115,024   Big Lots
49.   Plaza at Buckland Hills, The   CT   Manchester   Fee   35.0 % (4) (13) Built 1993   95.6 % 252,179   82,834   335,013   Linens ‘n Things, CompUSA, Jo-Ann Fabrics, Party City, The Maytag Store, Toys R Us, Michaels, Office Depot, PetsMart
50.   Regency Plaza   MO   St. Charles   Fee   100.0 % Built 1988   100.0 % 210,627   76,846   287,473   Wal-Mart, Sam's Wholesale Club
51.   Ridgewood Court   MS   Jackson   Fee   35.0 % (4) (13) Built 1993   99.3 % 185,939   54,723   240,662   T.J. Maxx, Lifeway Christian Bookstore, Bed Bath & Beyond, Best Buy, Michaels, Marshalls
52.   Rockaway Convenience Center   NJ   Rockaway (New York)   Fee   100.0 % Acquired 1998   94.1 % 44,518   104,393   148,911   Best Buy, Acme, Cost Plus World Market, Office Depot
53.   Rockaway Town Plaza   NJ   Rockaway (New York)   Fee   100.0 % Acquired 1998   97.8 % 407,303   51,476   458,779   Target, Pier 1 Imports, PetsMart, Dick's Sporting Goods, Loews Cineplex
54.   Royal Eagle Plaza   FL   Coral Springs (Miami — Ft. Lauderale)   Fee   35.0 % (4) (13) Built 1989   99.3 % 124,479   77,593   202,072   K Mart, Stein Mart
55.   Shops at North East Mall, The   TX   Hurst   Fee   100.0 % Built 1999   100.0 % 265,595   99,097   364,692   Michael's, Office Max, PetsMart, Old Navy, Pier 1 Imports, Ulta Salon, Cosmetics & Fragrance, T.J. Maxx, Bed Bath & Beyond, Nordstrom Rack, Best Buy

27

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
56.   St. Charles Towne Plaza   MD   Waldorf (Washington, D.C.)   Fee   100.0 % Built 1987   72.1 % 285,716   118,008   403,724   T.J. Maxx, Jo-Ann Fabrics, K & G Menswear, CVS, Shoppers Food Warehouse, Dollar Tree, Value City Furniture (8)
57.   Teal Plaza   IN   Lafayette   Fee   100.0 % Built 1962   100.0 % 98,337   2,750   101,087   Hobby Lobby, Circuit City, Pep Boys
58.   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 Import, Target, Bed Bath & Beyond, (8)
59.   Tippecanoe Plaza   IN   Lafayette   Fee   100.0 % Built 1974   100.0 % 85,811   4,711   90,522   Best Buy, Barnes & Noble
60.   University Center   IN   Mishawaka   Fee   60.0 % Built 1980   91.4 % 98,264   46,177   144,441   Michael's, Best Buy, Linens ‘n Things, (8)
61.   Village Park Plaza   IN   Carmel (Indianapolis)   Fee   35.0 % (4) (13) Built 1990   94.5 % 430,368   112,419   542,787   Bed Bath & Beyond, Ashley Furniture HomeStore, Kohl's, Regal Cinema, Wal-Mart, Marsh, Menards
62.   Wabash Village   IN   West Lafayette   Ground Lease (2063)   100.0 % Built 1970   12.2 % 109,388   15,148   124,536   (8)
63.   Washington Plaza   IN   Indianapolis   Fee   100.0 % Built 1976   100.0 % 21,500   28,607   50,107    
64.   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 HomeStore, L.A. Fitness
65.   West Ridge Plaza   KS   Topeka   Fee   100.0 % Built 1988   100.0 % 182,161   59,226   241,387   Famous Footwear, T.J. Maxx, Toys R Us, Target
66.   West Town Corners   FL   Altamonte Springs   Fee   23.3 % (4) (13) Built 1989   98.7 % 263,782   121,455   385,237   Sports Authority, PetsMart, Winn-Dixie Marketplace, American Signature Furniture, Wal-Mart
67.   Westland Park Plaza   FL   Orange Park   Fee   23.3 % (4) (13) Built 1989   96.3 % 123,548   39,606   163,154   Sports Authority, PetsMart, Burlington Coat Factory
68.   White Oaks Plaza   IL   Springfield   Fee   100.0 % Built 1986   100.0 % 275,703   115,723   391,426   T.J. Maxx, Office Max, Kohl's Babies R Us, Kids R Us, Cub Foods
69.   Whitehall Mall   PA   Whitehall   Fee   38.0 % (15) (4) Acquired 2003   98.5 % 436,920   148,163   585,083   Sears, Kohl's, Bed Bath & Beyond, Weis Markets, Borders Books & Music
70.   Willow Knolls Court   IL   Peoria   Fee   35.0 % (4) (13) Built 1990   96.6 % 309,440   72,937   382,377   Willow Knolls 14, Burlington Coat Factory, Kohl's, Sam's Wholesale Club
71.   Wolf Ranch   TX   Georgetown (Austin)   Fee   100.0 % Built 2005   69.1 % 395,077   223,070   618,147   Kohl's, Target, Linens ‘n Things, Michaels, Best Buy, Office Depot, Old Navy, Pier 1 Imports, PetsMart, T.J. Maxx, DSW
                               
 
 
   
        Total Community/Lifestyle Center GLA                   13,534,026   5,833,065   19,367,091    
                               
 
 
   

 
 
OTHER PROPERTIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1.
 
Crossville Outlet Center
 
TN
 
Crossville
 
Fee
 
100.0
%
Acquired 2004
 
100.0
%
—
 
151,256
 
151,256
 
Bass, Dress Barn, Liz Claiborne, Van Heusen, VF Outlet
2.   Factory Merchants Branson   MO   Branson   Fee   100.0 % Acquired 2004   91.7 % —   269,307   269,307   Carter's, Izod, Nautica, Pfaltzgraff, Reebok, Pendelton, Tuesday Morning
3.   Factory Stores of America-Boaz   AL   Boaz   Ground Lease (2007)   100.0 % Acquired 2004   72.8 % —   111,909   111,909   Banister/Easy Spirit, Bon Worth, VF Outlet
4.   Factory Stores of America-Georgetown   KY   Georgetown   Fee   100.0 % Acquired 2004   89.6 % —   176,615   176,615   Bass, Dress Barn, Van Heusen

28

Simon Property Group

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (3)
   Legal Ownership
   Year Built or Acquired
   Occupancy (5)
   Anchor
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
5.   Factory Stores of America-Graceville   FL   Graceville   Fee   100.0 % Acquired 2004   92.0 % —   83,962   83,962   Factory Brand Shoes, VF Outlet, Van Heusen
6.   Factory Stores of America-Lebanon   MO   Lebanon   Fee   100.0 % Acquired 2004   98.2 % —   86,249   86,249   Dress Barn, VF Outlet, Van Heusen
7.   Factory Stores of America-Nebraska City   NE   Nebraska City   Fee   100.0 % Acquired 2004   88.0 % —   89,646   89,646   Bass, Dress Barn, VF Outlet
8.   Factory Stores of America-Story City   IA   Story City   Fee   100.0 % Acquired 2004   76.1 % —   112,405   112,405   Dress Barn, Factory Brand Shoes, VF Outlet, Van Heusen
9.   Factory Stores of North Bend   WA   North Bend   Fee   100.0 % Acquired 2004   100.0 % —   223,397   223,397   Adidas, Bass, Carter's, Eddie Bauer, Nike, OshKosh B'Gosh, Samsonite, Gap Outlet
10.   Las Vegas Outlet Center   NV   Las Vegas   Fee   100.0 % Acquired 2004   100.0 % —   476,985   476,985   Liz Claiborne, Nike, Reebok, Tommy Hilfiger, VF Outlet, Adidas, Calvin Klein
11.   The Factory Shoppes at Branson Meadows   MO   Branson   Ground Lease (2021)   100.0 % Acquired 2004   94.3 % —   286,924   286,924   Branson Meadows Cinemas, Dress Barn Woman, VF Outlet
                               
 
 
   
        Total Other GLA                   —   2,068,655   2,068,655    
                               
 
 
   
        Total U.S. Properties GLA                   114,902,426   85,509,303   200,411,729    
                               
 
 
   

 
 
PROPERTIES UNDER CONSTRUCTION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
    
    
    
    
   Expected Opening

    
    
    
    
    
1.   Coconut Point   FL   Estero/Bonita Springs   Fee   50.0 % 3/06 and 11/06                   Dillard's, Muvico Theatres, Barnes & Noble, Bed Bath & Beyond, Best Buy, DSW, Office Max, Old Navy, PetsMart, Pier 1 Imports, Ross Dress for Less, Ulta Salon, Cosmetics & Fragrance, Sports Authority, Party City, Cost Plus World Market
2.   Round Rock Premium Outlets   TX   Round Rock (Austin)   Fee   100.0 % Fall 2006                    
3.   Rio Grande Valley Premium Outlets   TX   Mercedes   Fee   100.0 % Fall 2006                    
4.   The Shops at Arbor Walk   TX   Austin   Ground Lease   100.0 % Fall 2006                   Home Depot, Marshall's, DSW, Golf Galaxy, Jo-Ann Fabrics
5.   The Domain   TX   Austin   Fee   100.0 %(12) 3/07                   Neiman Marcus, Macy's
6.   The Village at SouthPark   NC   Charlotte   Fee   100.0 % 3/07                   Crate & Barrel

29

FOOTNOTES:

(1)
This Property is managed by a third party.

(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)
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.

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

(5)
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/Lifestyle Centers—Executed leases for all company-owned GLA including majors, mall stores and freestanding stores.

(6)
Indicates anchor is currently under development.

(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, advance, or other partnership arrangement.

(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 Operating Partnership's indirect ownership interest is through an approximately 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)
Mall & Freestanding GLA includes office space as follows:
(19)
Indicates that Federated has announced its intention to close this store at this Property (mall Property number) in 2006; listing follows:
(20)
Federated has announced that these stores will be converted to Bloomingdale's. See footnote 19.

(21)
Federated announced sale of locations to Boscov's. See footnote 19.

(22)
Nordstrom has announced plans to open store in former Federated locations in Burlington Mall (2008), South Shore Plaza (2009), and Northshore Mall (2010). See footnote 19.

(23)
Federated has announced that these stores will be converted to Macy's stores in the Fall of 2006.

(24)
Federated announced its intent to sell all Lord & Taylor stores.

(25)
Saks announced its intent to sell all Parisian stores.

30

International Properties

            We own interests in properties outside the United States through the following international joint venture arrangements.

            The following summarizes our joint venture investments in Europe and the underlying countries in which these joint ventures own and operate real estate properties as of December 31, 2005:

Joint Venture Investment
   Ownership
Interest
   Properties open and operating
   Countries of Operation
Gallerie Commerciali Italia, S.p.A. ("GCI")   49.0 % 40   Italy
European Retail Enterprises, B.V. ("ERE") (1)   34.7 % 11   France, Poland
(1)
Subsequent to December 31, 2005, we and our partner acquired additional interests and now each own 50% of ERE.

            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 also our partner in GCI, or are anchored by the hypermarket Carrefour in France and Poland. Certain of these properties are subject to leaseholds whereby GCI leases all or a portion of the premises from a third party who is entitled to receive substantially all the economic benefits of that portion of the properties. Auchan and Carrefour are the two largest hypermarket operators in Europe.

            We also hold real estate interests in five joint ventures in Japan and one in Mexico. The five Premium Outlet centers in Japan have over 1.3 million square feet of GLA and were 100% leased as of December 31, 2005. These five Premium Outlet centers contained 576 stores with approximately 273 different tenants. The Premium Outlet center in Mexico opened in December of 2004.

            The following summarizes our six other international joint venture investments:

Joint Venture Investment Holdings
   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 %
Toki Premium Outlets — Toki (Nagoya), Japan   40.0 %
Tosu Premium Outlets — Fukuoka (Kyushu), Japan   40.0 %
Punta Norte Premium Outlets — Mexico City, Mexico   50.0 %

            The following property table summarizes certain data on our properties located in Europe, Japan, and Mexico at December 31, 2005.

31

Simon Property Group, Inc. and Subsidiaries

International Property Table

 
    
    
    
    
    
   Gross Leasable Area (1)
    
 
   COUNTRY/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 % (6) 2003   132,400   408,900   541,300   Carrefour, Leroy Merlin
2.   Bay 1   Torcy (Paris)   Freehold   34.7 % (6) 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

32

Simon Property Group, Inc. and Subsidiaries

International Property Table

 
    
    
    
    
    
   Gross Leasable Area (1)
    
 
   COUNTRY/Property Name
   City (Metropolitan area)
   Ownership
Interest
   SPG
Ownership
   Year Built
   Hypermarket/Anchor (4)
   Mall & Freestanding
   Total
   Retail Anchors and Major Tenants
    ITALY (continued)                        
37.   Milano — Cesano Boscone   Cesano Boscone (Milano)   Leasehold (3)   49.0 % (3) 2005   163,800   120,100   283,900   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           3,427,400   3,419,800   6,847,200    

 
 
POLAND
 
 
 
 
 
 
 
 
 
 
 
 
45.   Arkadia Shopping Center   Warsaw       34.7 % (6) 2004   202,100   902,200   1,104,300   Carrefour, Leroy Merlin, Media, Saturn, Cinema City, H&M, Zara, Royal Collection, Peek & Clopperburg
46.   Borek Shopping Center   Wroclaw   Freehold   34.7 % (6) 1999   119,900   129,300   249,200   Carrefour
47.   Dabrowka Shopping Center   Katowice   Freehold   34.7 % (6) 1999   121,000   172,900   293,900   Carrefour, Castorama
48.   Turzyn Shopping Center   Szczecin   Freehold   34.7 % (6) 2001   87,200   121,900   209,100   Carrefour
49.   Wilenska Station Shopping Center   Warsaw   Freehold   34.7 % (6) 2002   92,700   215,900   308,600   Carrefour
50.   Zakopianka Shopping Center   Krakow   Freehold   34.7 % (6) 1998   120,200   425,400   545,600   Carrefour, Castorama
                       
 
 
   
        Subtotal Poland           743,100   1,967,600   2,710,700    

 
 
PORTUGAL
 
 
 
 
 
 
 
 
 
 
 
 
51.   Minho center   Braga (Porto)   Leasehold (3)   34.7 % (3) (6) 1997   120,000   101,600   221,600   Carrefour, Toys R Us, Sport Zone
                       
 
 
   
                        120,000   101,600   221,600    

33

Simon Property Group, Inc. and Subsidiaries

International Property Table

 
    
    
    
    
    
   Gross Leasable Area (1)
    
 
   COUNTRY/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   —   229,000   229,000   Bally, Brooks Brothers, Coach, Nautica, New Yorker, Nine West, Timberland
55.   Toki Premium Outlets   Toki (Nagoya)   Ground Lease (2024)   40.0 % 2005   —   178,000   178,000   Adidas, Brooks Brothers, Bruno Magli, Coach, Eddie Bauer, Furla, Nautica, Nike, Timberland, Versace
56.   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           —   1,305,000   1,305,000    

 
 
MEXICO
 
 
 
 
 
 
 
 
 
 
 
 
57.   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    
                       
 
 
   
        TOTAL INTERNATIONAL ASSETS           4,675,900   7,938,700   12,614,600    
                       
 
 
   

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)
These properties are 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.

(6)
Subsequent to December 31, 2005, we acquired additional ownership interests and now hold a 50% ownership interest in ERE.

34

            We have direct or indirect ownership interests in ten parcels of land held in the United States for future development, containing an aggregate of approximately 560 acres located in five states.

            On December 28, 2005, we invested $50 million of equity for a 40% interest in a joint venture with Toll Brothers, Inc. (Toll Brothers) and Meritage Homes Corp. (Meritage Homes) to purchase a 5,485-acre land parcel in northwest Phoenix from DaimlerChrysler Corporation for $312 million. Toll Brothers and Meritage Homes each plan to build a significant number of homes on the site. We have the option to purchase a substantial portion of the commercial property for retail uses. Other parcels may also be sold to third parties. Initial plans call for a mixed-use master planned community, which will include approximately 4,840 acres of single-family homes and attached homes. Approximately 645 acres of commercial and retail development will include schools, community amenities and open space. Initial home sales are tentatively scheduled to begin in 2009. The joint venture, of which Toll Brothers is the managing member, expects to develop a master planned community of approximately 12,000 to 15,000 residential units.

            In 2003, we began monitoring and benchmarking our energy consumption and initiated a process to assess energy efficiency across our enclosed mall Properties. In 2004, we implemented a comprehensive strategy to improve energy efficiency. This included the launch of our Energy Best Practices Program which challenged managers of our enclosed mall Properties to examine their operating practices in an effort to reduce energy costs without affecting comfort, safety or reliability, and to develop strategic relationships for investing in cost-effective, energy- efficient projects. In 2005, we enhanced our monitoring capabilities with the implementation of a web-based energy tracking tool enabling management to review energy usage and costs on a real time basis.

            Through the energy management efforts implemented at comparable mall properties, we reduced electricity usage by 133 million kWh's for 2004 and 2005 combined, as compared to 2003. This represented a 6.8 percent reduction in electricity usage across a portfolio of comparable properties. The EPA estimates this reduction in electricity usage further translates to the avoidance of 84,038 metric tons of carbon dioxide. In addition, the EPA also calculates that this is equivalent to 18,190 cars not driven for one year, 689 acres of forest preserved from deforestation or saved electrical energy to power 10,788 US homes for a full year.

            As a result of these efforts, we were named a finalist for the 7th Annual Platts Global Energy Award for Industry Leadership. In their nominating letter, Platts said "Simon Property Group has illustrated tremendous leadership through its outstanding achievements." In addition, we received the Bronze Leader for the Light Award from the National Association of Real Estate Investment Trusts (NAREIT) in recognition of excellence in energy efficiency and is awarded in collaboration with the United States Environmental Protection Agency. Simon Property was the only retail REIT to receive this award.

            The following table sets forth certain information regarding the mortgages and other debt encumbering our Properties and the properties held by our international joint venture arrangements. Substantially all of the mortgage and property related debt is nonrecourse to us.

35


Mortgage and Other Debt on Portfolio Properties
and Investments in Real Estate
As of December 31, 2005
(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 % $ 29,036   $ 2,216   10/10/12  
Arsenal Mall — 1   6.75 %   31,985     2,724   09/28/08  
Arsenal Mall — 2   8.20 %   1,496     286   05/05/16  
Bangor Mall   7.06 %   22,757     2,302   12/01/07  
Battlefield Mall   4.60 %   99,388     6,154   07/01/13  
Bloomingdale Court   7.78 %   27,950   (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 %   20,466   (6)   2,114   03/10/13  
Century III Mall   6.20 %   85,712   (9)   6,541   10/10/12  
Chesapeake Square   5.84 %   73,000     4,263   (2) 08/01/14  
Cielo Vista Mall — 1   9.38 %   48,747   (5)   5,828   05/01/07  
Cielo Vista Mall — 3   6.76 %   35,411   (5)   3,039   05/01/07  
College Mall — 1   7.00 %   34,194   (8)   3,908   01/01/09  
College Mall — 2   6.76 %   10,913   (8)   935   01/01/09  
Copley Place   7.44 %   174,521     16,266   08/01/07  
Coral Square   8.00 %   86,895     8,065   10/01/10  
The Crossings Premium Outlets   5.85 %   57,953     4,649   03/13/13  
Crossroads Mall   6.20 %   43,048     3,285   10/10/12  
Crystal River   7.63 %   15,531     1,385   11/11/10   (26)
Dare Centre   9.10 %   1,704   (6)   176   03/10/13   (26)
DeKalb Plaza   5.28 %   3,407     284   01/01/15  
Desoto Square   5.89 %   64,153     3,779   (2) 07/01/14  
The Factory Shoppes at Branson Meadows   9.10 %   9,518   (6)   983   03/10/13   (26)
Factory Stores of America — Boaz   9.10 %   2,784   (6)   287   03/10/13   (26)
Factory Stores of America — Georgetown   9.10 %   6,597   (6)   681   03/10/13   (26)
Factory Stores of America — Graceville   9.10 %   1,960   (6)   202   03/10/13   (26)
Factory Stores of America — Lebanon   9.10 %   1,647   (6)   170   03/10/13   (26)
Factory Stores of America — Nebraska City   9.10 %   1,547   (6)   160   03/10/13   (26)
Factory Stores of America — Story City   9.10 %   1,913   (6)   198   03/10/13   (26)
Forest Mall   6.20 %   17,239   (10)   1,316   10/10/12  
Forest Plaza   7.78 %   15,330   (4)   1,414   11/01/09  
Forum Shops at Caesars, The   4.78 %   550,000     26,312   (2) 12/01/10  
Gateway Shopping Center   5.34 %  (1)   86,000     4,592   (2) 03/31/08   (3)
Gilroy Premium Outlets   6.99 %   65,748   (7)   6,236   07/11/08   (26)
Greenwood Park Mall — 1   7.00 %   28,639   (8)   3,273   01/01/09  
Greenwood Park Mall — 2   6.76 %   56,382   (8)   4,831   01/01/09  
Gulf View Square   8.25 %   32,471     3,652   10/01/06  
Henderson Square   6.94 %   15,265     1,270   07/01/11  
Highland Lakes Center   6.20 %   15,890   (9)   1,213   10/10/12  
Ingram Park Mall   6.99 %   80,549   (21)   6,724   08/11/11  
Keystone at the Crossing   7.85 %   58,594     5,642   07/01/27  
Kittery Premium Outlets   6.99 %   10,885   (7)   1,028   07/11/08   (26)
Knoxville Center   6.99 %   60,996   (21)   5,092   08/11/11  
Lake View Plaza   7.78 %   20,378   (4)   1,880   11/01/09  
Lakeline Mall   7.65 %   66,274     6,300   05/01/07  
Lakeline Plaza   7.78 %   22,342   (4)   2,061   11/01/09  
Las Vegas Outlet Center   8.12 %   19,772     3,712   12/10/12  
Lighthouse Place Premium Outlets   6.99 %   45,368   (7)   4,286   07/11/08   (26)
Lincoln Crossing   7.78 %   3,084   (4)   285   11/01/09  
Longview Mall   6.20 %   32,261   (9)   2,462   10/10/12  
MacGregor Village   9.10 %   6,854   (6)   708   03/10/13   (26)
Markland Mall   6.20 %   22,825   (10)   1,742   10/10/12  
Matteson Plaza   7.78 %   8,974   (4)   828   11/01/09  
McCain Mall — 1   9.38 %   22,761   (5)   2,721   05/01/07  
McCain Mall — 2   6.76 %   16,345   (5)   1,402   05/01/07  
                       

36

Midland Park Mall   6.20 %   33,322   (10)   2,543   10/10/12  
Montgomery Mall   5.17 %   93,922     6,307   05/11/14   (26)
Muncie Plaza   7.78 %   7,759   (4)   716   11/01/09  
North East Mall   5.77 %  (1)   140,000     8,071   (2) 05/20/06  
Northfield Square   6.05 %   30,985     2,485   02/11/14  
Northlake Mall   6.99 %   70,367   (21)   5,874   08/11/11  
North Ridge Shopping Center   9.10 %   8,371   (6)   865   03/10/13   (26)
Oxford Valley Mall   6.76 %   82,236     7,801   01/10/11  
Paddock Mall   8.25 %   25,825     2,905   10/01/06  
Palm Beach Mall   6.20 %   53,305     4,068   10/10/12  
Penn Square Mall   7.03 %   69,276     6,003   03/01/09   (26)
Plaza Carolina — Fixed   5.10 %   96,909     7,085   05/09/09  
Plaza Carolina — Variable Capped   5.29 %  (30)   97,531     7,219   05/09/09   (3)
Plaza Carolina — Variable Floating   5.29 %  (1)   58,518     4,332   05/09/09   (3)
Port Charlotte Town Center   7.98 %   52,460     4,680   12/11/10   (26)
Regency Plaza   7.78 %   4,206   (4)   388   11/01/09  
Richmond Towne Square   6.20 %   46,804   (10)   3,572   10/10/12  
St. Charles Towne Plaza   7.78 %   26,921   (4)   2,483   11/01/09  
Stanford Shopping Center   3.60 %  (11)   220,000     7,920   (2) 09/11/08  
Sunland Park Mall   8.63 %  (13)   36,010     3,773   01/01/26  
Tacoma Mall   7.00 %   128,597     10,778   10/01/11  
Towne East Square — 1   7.00 %   45,886     4,711   01/01/09  
Towne East Square — 2   6.81 %   22,751     1,958   01/01/09  
Towne West Square   6.99 %   52,726   (21)   4,402   08/11/11  
Trolley Square   9.03 %   28,675     2,880   08/01/10   (26)
University Park Mall   7.43 %   57,532     4,958   10/01/07  
Upper Valley Mall   5.89 %   47,904     2,822   (2) 07/01/14  
Valle Vista Mall — 1   9.38 %   30,147   (5)   3,604   05/01/07  
Valle Vista Mall — 2   6.81 %   7,270   (5)   626   05/01/07  
Washington Square   5.94 %   30,693     1,823   (2) 07/01/14  
Waterloo Premium Outlets   6.99 %   36,540   (7)   3,452   07/11/08   (26)
West Ridge Mall   5.89 %   68,711     4,047   (2) 07/01/14  
West Ridge Plaza   7.78 %   5,423   (4)   500   11/01/09  
White Oaks Mall   5.49 %  (1)   48,563     2,666   (2) 02/25/08   (3)
White Oaks Plaza   7.78 %   16,546   (4)   1,526   11/01/09  
Wolfchase Galleria   7.80 %   72,054     6,911   06/30/07  
Woodland Hills Mall   7.00 %   82,830     7,185   01/01/09   (26)
       
           
  Total Consolidated Secured Indebtedness       $ 4,522,632            

37


Unsecured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Simon Property Group, LP:                      
Unsecured Revolving Credit Facility   4.82 %  (15) $ 809,264   $ 38,966   (2) 01/11/11   (3)
Medium Term Notes — 2   7.13 %   180,000     12,825   (14) 09/20/07  
Unsecured 1.8B Chelsea Acquisition Facility   4.94 %  (1)   600,000     29,640   (2) 10/14/06  
Unsecured Notes — 1   6.88 %   250,000     17,188   (14) 11/15/06  
Unsecured Notes — 2B   7.00 %   150,000     10,500   (14) 07/15/09  
Unsecured Notes — 4C   7.38 %   200,000     14,750   (14) 06/15/18  
Unsecured Notes — 5B   7.13 %   300,000     21,375   (14) 02/09/09  
Unsecured Notes — 6A   7.38 %   300,000     22,125   (14) 01/20/06  
Unsecured Notes — 6B   7.75 %   200,000     15,500   (14) 01/20/11  
Unsecured Notes — 7   6.38 %   750,000     47,813   (14) 11/15/07  
Unsecured Notes — 8A   6.35 %   350,000     22,225   (14) 08/28/12  
Unsecured Notes — 8B   5.38 %   150,000     8,063   (14) 08/28/08  
Unsecured Notes — 9A   4.88 %   300,000     14,625   (14) 03/18/10  
Unsecured Notes — 9B   5.45 %   200,000     10,900   (14) 03/15/13  
Unsecured Notes — 10A   3.75 %   300,000     11,250   (14) 01/30/09  
Unsecured Notes — 10B   4.90 %   200,000     9,800   (14) 01/30/14  
Unsecured Notes — 11A   4.88 %   400,000     19,500   (14) 08/15/10  
Unsecured Notes — 11B   5.63 %   500,000     28,125   (14) 08/15/14  
Unsecured Notes — 12 A   5.10 %   600,000     30,600   (14) 06/15/15  
Unsecured Notes — 12 B   4.60 %   400,000     18,400   (14) 06/15/10  
Unsecured Notes — 13 A   5.38 %   500,000     26,875   (14) 06/01/11  
Unsecured Notes — 13 B   5.75 %   600,000     34,500   (14) 12/01/15  
Mandatory Par Put Remarketed Securities   7.00 %   200,000     14,000   (14) 06/15/08   (16)
       
           
          8,439,264            

The Retail Property Trust, subsidiary:
 
 
 
 
 
 
 
 
 
 
 
Unsecured Notes — CPI 4   7.18 %   75,000     5,385   (14) 09/01/13  
Unsecured Notes — CPI 5   7.88 %   250,000     19,688   (14) 03/15/16  
       
           
          325,000            

CPG Partners, LP, subsidiary:
 
 
 
 
 
 
 
 
 
 
 
Term Loan   7.26 %  (33)   59,075     5,690   04/27/10  
Unsecured Notes — CPG 2   7.25 %   125,000     9,063   (14) 10/21/07  
Unsecured Notes — CPG 3   3.50 %   100,000     3,500   (14) 03/15/09  
Unsecured Notes — CPG 4   8.63 %   50,000     4,313   (14) 08/17/09  
Unsecured Notes — CPG 5   8.25 %   150,000     12,375   (14) 02/01/11  
Unsecured Notes — CPG 6   6.88 %   100,000     6,875   (14) 06/15/12  
Unsecured Notes — CPG 7   6.00 %   150,000     9,000   (14) 01/15/13  
       
           
          734,075            
       
           
  Total Consolidated Unsecured Indebtedness       $ 9,498,339            
       
           
  Total Consolidated Indebtedness at Face Amounts       $ 14,020,971            
  Fair Value Interest Rate Swaps         (11,809)   (25)          
  Net Premium on Indebtedness         122,033            
  Net Discount on Indebtedness         (25,078 )          
       
           
  Total Consolidated Indebtedness       $ 14,106,117   (20)          
       
           

38


Joint Venture Indebtedness:
 
 
 
 
 
 
 
 
 
 
 

Secured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Apple Blossom Mall   7.99 % $ 38,708   $ 3,607   09/10/09  
Arkadia Shopping Center   4.55 %  (32)   123,239     10,585   11/01/14  
Atrium at Chestnut Hill   6.89 %   46,666     3,880   03/11/11   (26)
Auburn Mall   7.99 %   45,317     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 %   76,877     5,325   04/01/13  
Bay 1 (Torcy)   4.20 %  (32)   16,705     1,210   12/01/11  
Bay 2 (Torcy)   3.60 %  (32)   62,669     4,281   06/01/13  
Borek Shopping Center   6.19 %   15,515     2,553   02/01/12  
Cape Cod Mall   6.80 %   94,846     7,821   03/11/11  
Circle Centre Mall   5.02 %   76,905     5,165   04/11/13  
Clay Terrace Partners   5.08 %  (1)   115,000     5,842   (2) 10/01/15  
CMBS Loan — Fixed (encumbers 13 Properties)   7.52 %   357,100   (17)   26,871   (2) 05/15/06  
CMBS Loan — 1 Floating (encumbers 13 Properties)   4.80 %  (1)   186,500   (17)   8,952   (2) 05/15/06  
CMBS Loan — 2 Floating (encumbers 13 Properties)   4.76 %  (1)   81,400   (17)   3,874   (2) 05/15/06  
Coconut Point   5.49 %  (1)   57,473     3,155   (2) 05/19/10   (3)
Coddingtown Mall   5.64 %  (1)   10,500     592   (2) 07/14/07  
Crystal Mall   5.62 %   101,461     7,319   09/11/12   (26)
Dabrowka Shopping Center   6.22 %  (32)   4,666     681   07/01/14  
Dadeland Mall   6.75 %   191,773     15,566   02/11/12   (26)
Emerald Square Mall   5.13 %   139,162     9,479   03/01/13  
Fashion Centre Pentagon Retail   6.63 %   159,114     12,838   09/11/11   (26)
Fashion Centre Pentagon Office   5.14 %  (31)   40,000     2,056   (2) 07/09/09   (3)
Fashion Valley Mall — 1   6.49 %   161,413     13,255   10/11/08   (26)
Fashion Valley Mall — 2   6.58 %   29,124     1,915   (2) 10/11/08   (26)
Florida Mall, The   7.55 %   257,329     22,766   12/10/10  
Galleria Commerciali Italia — Facility A   3.53 %  (19)   285,410     15,188   12/22/11   (3)
Galleria Commerciali Italia — Facility B   3.63 %  (28)   297,505     16,826   12/22/11  
Gaitway Plaza   4.60 %   13,900   (18)   640   (2) 07/01/15  
Great Northeast Plaza   9.04 %   16,249     1,744   06/01/06  
Greendale Mall   8.23 %   39,895     3,779   12/10/06  
Gotemba Premium Outlets — Fixed   2.00 %   9,512   (27)   1,209   10/25/14  
Gotemba Premium Outlets — Variable   1.81 %  (12)   19,956   (27)   3,927   09/30/07  
Gwinnett Place — 1   7.54 %   36,282     3,412   04/01/07  
Gwinnett Place — 2   7.25 %   80,437     7,070   04/01/07  
Highland Mall   6.83 %   67,737     5,571   07/11/11  
Houston Galleria — 1   5.44 %   643,583     34,985   (2) 12/01/15  
Houston Galleria — 2   5.44 %   177,417     9,644   (2) 12/01/15  
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 %   173,339     23,183   01/01/17  
King of Prussia Mall — 2   8.53 %   12,002     1,685   01/01/17  
Lehigh Valley Mall   7.90 %   44,725     4,959   10/10/06  
Liberty Tree Mall   5.22 %   35,000     1,827   (2) 10/11/13  
Mall at Rockingham   7.88 %   94,636     8,705   09/01/07  
Mall at Chestnut Hill   8.45 %   14,362     1,396   02/02/10  
Mall of Georgia   7.09 %   194,713     16,649   07/01/10  
Mall of New Hampshire — 1   6.96 %   97,706     8,345   10/01/08   (26)
Mall of New Hampshire — 2   8.53 %   8,080     786   10/01/08  
Miami International Mall   5.35 %   97,500     5,216   (2) 10/01/13  
Northshore Mall   5.03 %   210,000     10,553   (2) 03/11/14   (26)
Quaker Bridge Mall   7.03 %   22,548     2,407   04/01/16  
Plaza at Buckland Hills, The   4.60 %   24,800   (18)   1,142   (2) 07/01/15  
Ridgewood Court   4.60 %   14,650   (18)   674   (2) 07/01/15  
Rinku Premium Outlets   2.34 %   35,796   (27)   5,007   10/25/14  
                       

39

Sano Premium Outlets   2.43 %   43,046   (27)   7,382   05/31/16  
St. Johns Town Center   5.06 %   170,000     8,602   (2) 03/11/15  
Seminole Towne Center   5.04 %  (23)   70,000     3,528   (2) 06/30/09   (3)
Shops at Sunset Place, The   5.14 %  (22)   94,100     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  
Springfield Mall   5.49 %  (1)   76,500     4,200   (2) 12/01/10   (3)
Square One   6.73 %   91,228     7,380   03/11/12  
Surprise Grand Vista JV I, LLC   10.85 %   191,000     20,723   12/28/10  
Toki Premium Outlets   0.80 %  (12)   12,824   (27)   1,631   10/30/09  
Tosu Premium Outlets   2.60 %   12,330   (27)   1,914   08/24/13  
Town Center at Cobb — 1   7.54 %   46,225     4,347   04/01/07  
Town Center at Cobb — 2   7.25 %   61,215     5,381   04/01/07  
Turzyn Shopping Center   6.56 %   22,440     2,934   06/01/14  
Villabe A6 — Bel'Est   3.40 %  (32)   11,101     800   08/01/11  
Village Park Plaza   4.60 %   29,850   (18)   1,374   (2) 07/01/15  
West Town Corners   4.60 %   18,800   (18)   865   (2) 07/01/15  
West Town Mall   6.90 %   76,000     5,244   (2) 05/01/08   (26)
Westchester, The   4.86 %   500,000     24,300   (2) 06/01/10  
Whitehall Mall   6.77 %   13,457     1,282   11/01/08  
Wilenska Station Shopping Center   4.35 %  (32)   36,473     3,446   11/01/13  
Zakopianka Shopping Center   6.82 %   14,191     2,650   12/01/11  
       
           
  Total Joint Venture Secured Indebtedness at Face Amounts       $ 7,475,982            

Unsecured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Galleria Commerciali Italia — Facility C   3.04 %  (29)   5,245     159   (2) 12/22/08   (3)
       
           
Total Joint Venture Unsecured Indebtedness         5,245            
 
Net Premium on Indebtedness
 
 
 
 
1,329
 
 
 
 
 
 
  Net Discount on Indebtedness         (3,197 )          
       
           
  Total Joint Venture Indebtedness       $ 7,479,359   (24)          
       
           

(Footnotes on following page)

40

(Footnotes for preceding pages)

(1)
Variable rate loans based on LIBOR plus interest rate spreads ranging from 37 bps to 150 bps. LIBOR as of December 31, 2005 was 4.39%.

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

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

(11)
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, 2005, 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 4.355%.

(12)
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, 2005 was 0.04938%.

(13)
Lender also participates in a percentage of certain gross receipts above a specified base. No additional interest was due in 2005.

(14)
Requires semi-annual payments of interest only.

(15)
$3,000,000 Credit Facility. As of December 31, 2005, the Credit Facility bears interest at LIBOR + 0.425% and provides for different pricing based upon the Operating Partnership's investment grade rating. As of December 31, 2005, $2.2 billion was available after outstanding borrowings and letter of credits.

(16)
The MOPPRS have an actual maturity of June 15, 2028, but are subject to mandatory rate reset or a remarketing on June 15, 2008.

(17)
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.

(18)
Loans secured by these five Properties are cross-collateralized and cross-defaulted.

(19)
Debt is denominated in Euros and bears interest at Euribor + 1.05%. Debt consists of a Euros 269.0 million tranche of which Euros 241.0 million is drawn.

(20)
Our share of consolidated indebtedness was $13,912,933.

(21)
Loans secured by these four Properties are cross-collateralized and cross-defaulted.

(22)
LIBOR + 0.750%, with LIBOR capped at 7.500%.

(23)
LIBOR + 0.650%, with LIBOR capped at 8.500%.

(24)
Our share of joint venture indebtedness was $3,169,662.

(25)
Represents the fair market value of interest rate swaps entered into by the Operating Partnership.

(26)
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.

(27)
Amounts shown in US Dollar Equivalent. Yen equivalent 15,715.3 million.

(28)
Debt is denominated in Euros and bears interest at Euribor + 1.15%. Debt consists of a Euros 255 million tranche which Euros 251.2 million is drawn.

(29)
Debt is denominated in Euros and bears interest at Euribor + 0.650%. Debt consists of a Euros 150 million tranche of which Euros 4.4 million is drawn.

41

(30)
LIBOR + 0.900%, with LIBOR capped at 8.250%.

(31)
LIBOR + 0.750%, with LIBOR capped at 8.250%.

(32)
Associated with these loans are interest rate swap agreements with a total combined Euro 211.2 million notional amount that effectively fixed these loans at a combined 5.05%.

(33)
Through an interest rate swap agreement, effectively fixed through January 1, 2006 at the all-in interest rate presented.

            The changes in mortgages and other indebtedness for the years ended December 31, 2005, 2004, 2003 are as follows:

 
   2005
   2004
   2003
  
Balance, Beginning of Year   $ 14,586,393   $ 10,266,388   $ 9,546,081  
  Additions During Period:                    
    New Loan Originations     2,484,264     4,509,640     1,745,275  
    Loans assumed in acquisitions and consolidations     —     1,387,182     105,131  
    Net Premium/(Discount) and other     (11,328 )   132,905     (1,308 )
Deductions During Period:                    
  Loan Retirements     (2,764,438 )   (1,652,022 )   (1,079,855 )
  Loans Related to Deconsolidations     (100,022 )   —     —  
  Amortization of Net (Premiums)/Discounts     (33,710 )   (14,043 )   (13,142 )
  Scheduled Principal Amortization     (55,042 )   (43,657 )   (35,794 )
   
 
 
 
Balance, End of Year   $ 14,106,117   $ 14,586,393   $ 10,266,388  
   
 
 
 

42


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 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: 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; 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.

            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 "September Order"). In the September 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 the sum of $81.38 million within nine months of the September Order. On August 6, 2004, Triple Five closed on its purchase of our one-half partnership interest and 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 that date.

            As a result of the September 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 a 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 interests in unconsolidated entities and other assets, net" in the accompanying consolidated statements of operations and comprehensive income. We ceased recording any contribution to net income from the results of operations of Mall of America as of September 1, 2003.

            We appealed the September Order to the United States Court of Appeals for the Eighth Circuit. On April 21, 2005, the Court of Appeals issued its opinion, affirming in part and reversing in part the Order of the trial court. The Appellate Court opinion changes the equitable remedy contained in the September Order and requires that the one-half partnership interest Triple Five acquired from us pursuant to the September Order must instead be offered, for the same price, to Mall of America Associates, a general partnership in which Triple Five and an entity affiliated with the Simon family are 50/50 partners ("MOAA"). If MOAA refuses to purchase the interest, then Triple Five must transfer back to us one-half of the interest it acquired from us in August, 2004. Triple Five, as managing partner of MOAA, has elected to cause MOAA to acquire the one-half partnership interest. In addition, Triple Five asked the Trial Court to grant it additional relief, namely to cause the Simon family partner in MOAA to be disassociated from that partnership and to terminate the existing management contract for the Mall with our subsidiary. The trial court issued an order on December 23, 2005 ("December Order"), denying Triple Five's request for dissociation of the Simon family partner in MOAA, but granting Triple Five's request that they be permitted to terminate the existing management contract for the Mall with our subsidiary. We have appealed that portion of the December Order granting Triple Five the right to terminate the management contract. On January 18, 2006, Triple Five transferred to MOAA the partnership interest it acquired from us in August, 2004, for a purchase price of approximately $23.1 million. The purchase price was financed with a new credit facility secured by distributions payable to MOAA's partner. In connection with the resolution of this matter, the Simon family transferred, under certain circumstances, the right to receive cash flow distributions and capital transaction proceeds attributable to one-half of the interest that

43


MOAA acquired from Triple Five (or 25%), subject to the new credit facility, to the Operating Partnership. The Simon family did not transfer its partnership interest in MOAA to us, and the Simon family retains the right to make all decisions regarding that partnership interest. As a result of the transfer to us of the right to receive cash flow distributions and capital transaction proceeds, we will recognize a gain in the first quarter of 2006 to recognize this beneficial interest, including prior earnings of the partnership since August, 2004. We will also begin to record contributions to net income and FFO representing 25% of the results of operations at Mall of America as a result of this arrangement.

            We are involved in various other 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.


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

            None.

44


Part II

Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

            Our common stock trades on the New York Stock Exchange under the symbol "SPG". The quarterly price range on the NYSE for the shares and the distributions declared per share for each quarter in the last two fiscal years are shown below:

 
   High
   Low
   Close
   Declared
Distribution
2005                        
1st Quarter   $ 65.60   $ 58.29   $ 60.58   $ 0.70
2nd Quarter     74.06     59.29     72.49     0.70
3rd Quarter     80.97     70.52     74.12     0.70
4th Quarter     79.99     65.75     76.63     0.70

2004
 
 
 
 
 
 
 
 
 
 
 
 
1st Quarter   $ 58.62   $ 45.90   $ 58.44   $ 0.65
2nd Quarter     58.83     44.39     51.42     0.65
3rd Quarter     56.76     48.65     53.63     0.65
4th Quarter     65.87     53.45     64.67     0.65

            There is no established public trading market for Simon Property's Class B common stock or Class C common stock. Distributions per share of the Class B and Class C common stock are identical to the common stock.

            The number of holders of record of common stock outstanding was 2,098 as of December 31, 2005. The Class B common stock is held entirely by a voting trust to which Melvin Simon, Herbert Simon, David Simon and certain of their affiliates are parties and is exchangeable on a one-for-one basis into shares of common stock, and the Class C common stock is held entirely by NID Corporation, the successor corporation of Edward J. DeBartolo Corporation, and is also exchangeable on a one-for-one basis into shares of common stock.

            Simon Property qualifies as a REIT under the Code. We are required to pay a minimum level of dividends to maintain our status as a REIT. Our dividends and limited partner distributions typically exceed our net income generated in any given year primarily because of depreciation, which is a "non-cash" expense. Our future dividends and the distributions of the Operating Partnership will be determined by the Board based on actual results of operations, cash available for dividends and limited partner distributions, and what may be required to maintain our status as a REIT. The Board declared and we paid a common stock dividend of $0.70 per share in the fourth quarter of 2005.

            Simon Property offers an Automatic Dividend Reinvestment Plan for its common shares that allows stockholders, at their election, to acquire additional shares by automatically reinvesting cash dividends. Shares are acquired pursuant to the plan at a price equal to the prevailing market price of such shares, without payment of any brokerage commission or service charge.

            During the fourth quarter of 2005, we issued 519,706 shares of common stock to limited partners in exchange for an equal number of units. The issuance of the shares of common stock was made pursuant to the terms of the Partnership Agreement of the Operating Partnership and was exempt from registration under the Securities Act of 1933 as amended, in reliance upon Section 4(2) as a private offering. We will subsequently register the resale of these shares of common stock under the Securities Act during 2006.

            On May 11, 2005, the Board authorized a new common stock repurchase program under which we may purchase up to 6,000,000 shares of our common stock subject to a maximum aggregate purchase price of $250 million

45

over the next twelve months as market conditions warrant. We may repurchase the shares in the open market or in privately negotiated transactions. The program has 5,184,600 shares, limited to $191.4 million, remaining for our repurchase as of December 31, 2005. There were no purchases under this program during the fourth quarter of 2005.


Item 6. Selected Financial Data

            The information required by this item is incorporated herein by reference to the Selected Financial Data section of the 2005 Annual Report to Stockholders filed as Exhibit 13.1 to this Form 10-K.


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

            The information required by this item is incorporated herein by reference to the Management's Discussion and Analysis of Financial Condition and Results of Operations section of Simon Property's 2005 Annual Report to Stockholders filed as Exhibit 13.1 to this Form 10-K.


Item 7A. Qualitative and Quantitative Disclosure About Market Risk

            The information required by this item is incorporated herein by reference to the Management's Discussion and Analysis of Financial Condition and Results of Operations section of Simon Property's 2005 Annual Report to Stockholders under the caption "Liquidity and Capital Resources — Market Risk," filed as Exhibit 13.1 to this Form 10-K.


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 our 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 Annual Report on 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 of December 31, 2005.

            Management's Report on Internal Control over Financial Reporting.    Our management's report on internal control over financial reporting is set forth in our 2005 Annual Report to Stockholders as the last page of management's discussion and analysis of financial condition and results of operation, filed as Exhibit 13.1 to this Form 10-K and is incorporated herein by reference.

            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 2005 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Item 9B. Other Information

            None.

46


Part III

Item 10. Directors and Executive Officers of the Registrant

            The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its 2006 annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A and the information included under the caption "Executive Officers of the Registrants" in Part I hereof.


Item 11. Executive Compensation

            The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its 2006 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 2006 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 2006 annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A.


Item 14. Principal Accountant Fees and Services

            The information required by this item is incorporated herein by reference to Simon Property's definitive Proxy Statement for its 2006 annual meeting of stockholders to be filed with the Commission pursuant to Regulation 14A.

47


Part IV

Item 15. Exhibits and Financial Statement Schedules

(1)
Consolidated Financial Statements

            Simon Property Group, Inc. and Subsidiaries' consolidated financial statements and independent registered public accounting firm's reports are included in our 2005 Annual Report to Stockholders, filed as Exhibit 13.1 to this Form 10-K and are incorporated herein by reference.

 
    
   Page No.
(2)   Financial Statement Schedule    

 
 
Simon Property Group, Inc. and Subsidiaries Schedule III — Schedule of Real Estate and Accumulated Depreciation
 
53

 
 
Notes to Schedule III
 
61

(3)
 
Exhibits
 
 

 
 
The Exhibit Index attached hereto is hereby incorporated by reference to this Item.
 
51

48


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, INC.

 
By
 
    /s/  DAVID SIMON      
David Simon
Chief Executive Officer

March 8, 2006

            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 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 8, 2006

    /s/  HERBERT SIMON      
Herbert Simon
 
Co-Chairman of the Board of Directors
 
March 8, 2006

    /s/  MELVIN SIMON      
Melvin Simon
 
Co-Chairman of the Board of Directors
 
March 8, 2006

    /s/  RICHARD S. SOKOLOV      
Richard S. Sokolov
 
President, Chief Operating Officer and Director
 
March 8, 2006

    /s/  BIRCH BAYH      
Birch Bayh
 
Director
 
March 8, 2006

    /s/  MELVYN E. BERGSTEIN      
Melvyn E. Bergstein
 
Director
 
March 8, 2006

/s/  LINDA WALKER BYNOE      
Linda Walker Bynoe
 
Director
 
March 8, 2006

/s/  PIETER S. VAN DEN BERG      
Pieter S. van den Berg
 
Director
 
March 8, 2006
         

49


/s/  REUBEN S. LEIBOWITZ      
Reuben S. Leibowitz
 
Director
 
March 8, 2006

/s/  FREDRICK W. PETRI      
Fredrick W. Petri
 
Director
 
March 8, 2006

/s/  J. ALBERT SMITH, JR.      
J. Albert Smith, Jr.
 
Director
 
March 8, 2006

/s/  KAREN N. HORN      
Karen N. Horn
 
Director
 
March 8, 2006

/s/  M. DENISE DEBARTOLO YORK      
M. Denise DeBartolo York
 
Director
 
March 8, 2006

/s/  STEPHEN E. STERRETT      
Stephen E. Sterrett
 
Executive Vice President and Chief Financial
Officer (Principal Financial Officer)
 
March 8, 2006

    /s/  JOHN DAHL      
John Dahl
 
Senior Vice President (Principal Accounting Officer)
 
March 8, 2006

50

Exhibits
    
2   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 Acquisition II, LLC, Chelsea Property Group, Inc., and CPG Partners, L.P. (incorporated by reference to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed June 22, 2004).
3.1   Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 of the Form 8-K filed by the Registrant on October 9, 1998).
3.2   Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
3.3   Certificate of Powers, Designations, Preferences and Rights of the 7.00% Series C Cumulative Convertible Preferred Stock, $0.0001 Par Value (incorporated by reference to Exhibit 3.1 of the Registrant's Form 10-Q filed on November 15, 1999).
3.3a   Certificate of Correction Filed to Correct Certain Errors in Certificate of Powers, Designations, Preferences and Rights of the 7.00% Series C Cumulative Convertible Preferred Stock, $0.0001 Par Value (incorporated by reference to Exhibit 3.1a of the Registrant's Form 10-Q filed on November 15, 1999).
3.4   Certificate of Powers, Designations, Preferences and Rights of the 8.00% Series D Cumulative Redeemable Preferred Stock, $0.0001 Par Value (incorporated by reference to Exhibit 3.2 of the Registrant's Form 10-Q filed on November 15, 1999).
3.4a   Certificate of Correction Filed to Correct Certain Errors in Certificate of Powers, Designations, Preferences and Rights of the 8.00% Series D Cumulative Redeemable Preferred Stock, $0.0001 Par Value (incorporated by reference to Exhibit 3.2a of the Registrant's Form 10-Q filed on November 15, 1999).
3.5   Certificate of Powers, Designations, Preferences and Rights of the 83/4% Series F Cumulative Redeemable Preferred Stock, $.0001 Par Value (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-4 filed by the Registrant on May 9, 2001 (Reg. No. 333-60526)).
3.6   Certificate of Powers, Designations, Preferences and Rights of the 7.89% Series G Cumulative Step-Up Premium Rate Preferred Stock, $.0001 Par Value (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-4 filed by the Registrant on May 9, 2001 (Reg. No. 333-60526)).
3.7   Certificate of Powers, Designations, Preferences and Rights of the 6% Series I Convertible Perpetual Preferred Stock, $0.0001 Par Value (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed October 20, 2004).
3.8   Certificate of Powers, Designations, Preferences and Rights of the 83/8% Series J Cumulative Redeemable Preferred Stock, $0.0001 Par Value (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed October 20, 2004).
9.1   Second Amended and Restated Voting Trust Agreement, Voting Agreement and Proxy dated as of March 1, 2004 between Melvin Simon & Associates, Inc., on the one hand and Melvin Simon, Herbert Simon, and David Simon on the other hand (incorporated by reference to Exhibit 9.1 of the Registrant's Quarterly Report on Form 10-Q filed on May 10, 2004).
9.2   Voting Trust Agreement, Voting Agreement and Proxy dated as of March 1, 2004 between David Simon, Melvin Simon and Herbert Simon (incorporated by reference to Exhibit 9.2 of the Registrant's Quarterly Report on Form 10-Q filed on May 10, 2004).
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 on November 8, 2004).
10.2   $3,000,000,000 Credit Agreement, dated as of December 15, 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 99.2 of Simon Property Group, L.P.'s Current Report on Form 8-K filed on December 20, 2005).
10.3   Form of the Indemnity Agreement between the Registrant and its directors and officers. (incorporated by reference to Exhibit 10.7 of the Form S-4 filed by the Registrant on August 13, 1998 (Reg. No. 333-61399)).
10.4   Registration Rights Agreement, dated as of September 24, 1998, by and among the Registrant and the persons named therein. (incorporated by reference to Exhibit 4.4 of the Form 8-K filed by the Registrant on October 9, 1998).
10.5   Registration Rights Agreement, dated as of August 27, 1999 by and among the Registrant and the persons named therein (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-3 filed March 24, 2004 (Reg. No. 333-113884)).
10.6   Registration Rights Agreement, dated as of November 14, 1997, by and between O'Connor Retail Partners, L.P. and Simon DeBartolo Group, Inc. (incorporated by reference to Exhibit 4.8 to the Registration Statement on Form S-3 filed December 7, 2001 (Reg. No. 333-74722)).
10.7*   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).
10.8*   Form of Nonqualified Stock Option Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to this same Exhibit number of the 2004 Form 10-K filed by the Registrant).
     

51

10.9*   Form of Performance-Based Restricted Stock Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to this same Exhibit number of the 2004 Form 10-K filed by the Registrant).
10.10*   Form of Non-Employee Director Restricted Stock Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to this same Exhibit number of the 2004 Form 10-K filed by the Registrant).
10.11*   Employment Agreement dated June 20, 2004 between Chelsea Property Group, Inc. and David C. Bloom (incorporated by reference to Exhibit 99.5 to the Registration Statement on Form S-4 filed by the Registrant on September 9, 2004 (Reg. No. 333-118247)).
10.12*   First Amendment to Employment Agreement dated November 1, 2004 between Chelsea Property, Inc. and David C. Bloom.
10.13*   Second Amendment to Employment Agreement dated January 1, 2006 between Chelsea Property, Inc. and David C. Bloom.
10.14*   Employment Agreement between Richard S. Sokolov, the Registrant, and Simon Property Group Administrative Services Partnership, L.P. Dated March 26, 1996 (incorporated by reference to Exhibit 10.12 of the 2000 Form 10-K filed by the Registrant).
10.15*   Description of Director and Executive Compensation Agreements.
10.16   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 Registrant's Current Report on Form 8-K filed June 22, 2004).
12.1   Statement regarding computation of ratios.
13.1   Selected Financial Data, Management's Discussion and Analysis of Financial Condition and Results of Operations and Financial Statements of the Registrant as contained in the Registrant's 2005 Annual Report to Stockholders.
21.1   List of Subsidiaries of the Company.
23.1   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.
*
Represents a management contract, or compensatory plan, contract or arrangement required to be filed pursuant to Regulation S-K.

52

 
    
   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   $ —   $ 10,667   $ 154   $ 18,308   $ 18,462   $ 7,638   1993 (Note 4 )
Anderson Mall, Anderson, SC     29,036     1,712     15,227     1,363     9,265     3,075     24,492     27,567     9,757   1972  
Arsenal Mall, Watertown, MA     33,481     15,505     47,680     —     2,367     15,505     50,047     65,552     8,734   1999 (Note 4 )
Bangor Mall, Bangor, ME     22,757     5,478     59,740     —     5,138     5,478     64,878     70,356     8,022   2004 (Note 5 )
Barton Creek Square, Austin, TX     —     2,903     20,929     7,983     55,162     10,886     76,091     86,977     27,058   1981  
Battlefield Mall, Springfield, MO     99,388     3,919     27,231     3,225     47,095     7,144     74,326     81,470     32,936   1970  
Bay Park Square, Green Bay, WI     —     6,358     25,623     4,133     21,680     10,491     47,303     57,794     12,043   1980  
Bowie Town Center, Bowie, MD     —     2,710     65,044     235     5,348     2,945     70,392     73,337     12,742   2001  
Boynton Beach Mall, Boynton Beach, FL     —     22,240     78,804     5,556     17,747     27,796     96,551     124,347     23,904   1985  
Brea Mall, Brea, CA     —     39,500     209,202     —     16,617     39,500     225,819     265,319     46,929   1998 (Note 4 )
Broadway Square, Tyler, TX     —     11,470     32,431     —     11,859     11,470     44,290     55,760     13,839   1994 (Note 4 )
Brunswick Square, East Brunswick, NJ     86,000     8,436     55,838     —     24,134     8,436     79,972     88,408     22,461   1973  
Burlington Mall, Burlington, MA     —     46,600     303,618     —     17,772     46,600     321,390     367,990     65,227   1998 (Note 4 )
Castleton Square, Indianapolis, IN     —     26,250     98,287     2,500     32,897     28,750     131,184     159,934     35,207   1972  
Century III Mall, West Mifflin, PA     85,712     17,380     102,364     10     7,788     17,390     110,152     127,542     44,159   1979  
Charlottesville Fashion Square, Charlottesville, VA     —     —     54,738     —     12,213     —     66,951     66,951     16,138   1997 (Note 4 )
Chautauqua Mall, Lakewood, NY     —     3,257     9,641     —     15,594     3,257     25,235     28,492     8,348   1971  
Chesapeake Square, Chesapeake, VA     73,000     11,534     70,461     —     6,765     11,534     77,226     88,760     25,441   1989  
Cielo Vista Mall, El Paso, TX     84,158     867     14,447     608     39,515     1,475     53,962     55,437     21,642   1974  
College Mall, Bloomington, IN     45,107     1,003     16,245     722     31,719     1,725     47,964     49,689     19,087   1965  
Columbia Center, Kennewick, WA     —     18,285     66,580     —     8,926     18,285     75,506     93,791     20,042   1987  
Copley Place, Boston, MA     174,521     147     378,045     —     39,539     147     417,584     417,731     40,355   2002 (Note 4 )
Coral Square, Coral Springs, FL     86,895     13,556     93,630     —     2,379     13,556     96,009     109,565     30,911   1984  
Cordova Mall, Pensacola, FL     —     18,626     73,091     7,321     22,353     25,947     95,444     121,391     19,468   1998 (Note 4 )
Cottonwood Mall, Albuquerque, NM     —     10,122     69,958     —     812     10,122     70,770     80,892     23,912   1996  
Crossroads Mall, Omaha, NE     43,048     639     30,658     409     35,298     1,048     65,956     67,004     20,173   1994 (Note 4 )
Crystal River Mall, Crystal River, FL     15,531     5,661     20,241     —     4,687     5,661     24,928     30,589     6,688   1990  
DeSoto Square, Bradenton, FL     64,153     9,011     52,675     —     7,254     9,011     59,929     68,940     17,481   1973  
Edison Mall, Fort Myers, FL     —     11,529     107,350     —     9,700     11,529     117,050     128,579     27,666   1997 (Note 4 )
Fashion Mall at Keystone, The, Indianapolis, IN     58,594     —     120,579     —     32,045     —     152,624     152,624     32,562   1997 (Note 4 )
Firewheel Town Center, Garland, TX     —     12,154     82,627     —     —     12,154     82,627     94,781     990   2004  

53

SCHEDULE III

Simon Property Group, Inc. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2005
(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   17,239   728   4,491   —   7,874   728   12,365   13,093   5,411   1973  
Forum Shops at Caesars, The, Las Vegas, NV   550,000   —   276,378   —   192,249   —   468,627   468,627   61,314   1992  
Great Lakes Mall, Mentor, OH   —   12,304   100,362   432   9,191   12,736   109,553   122,289   30,656   1961  
Greenwood Park Mall, Greenwood, IN   85,021   2,423   23,445   5,275   73,898   7,698   97,343   105,041   34,031   1979  
Gulf View Square, Port Richey, FL   32,471   13,690   39,991   2,023   18,193   15,713   58,184   73,897   16,139   1980  
Haywood Mall, Greenville, SC   —   11,585   133,893   6   15,771   11,591   149,664   161,255   40,084   1998 (Note 4 )
Independence Center, Independence, MO   —   5,042   45,798   2   28,167   5,044   73,965   79,009   22,470   1994 (Note 4 )
Ingram Park Mall, San Antonio, TX   80,549   733   17,163   169   17,158   902   34,321   35,223   15,990   1979  
Irving Mall, Irving, TX   —   6,737   17,479   2,533   35,588   9,270   53,067   62,337   26,568   1971  
Jefferson Valley Mall, Yorktown Heights, NY   —   4,868   30,304   —   21,659   4,868   51,963   56,831   19,307   1983  
Knoxville Center, Knoxville, TN   60,996   5,006   21,617   3,712   33,872   8,718   55,489   64,207   21,213   1984  
La Plaza Mall, McAllen, TX   —   1,375   9,828   6,569   32,428   7,944   42,256   50,200   14,924   1976  
Lafayette Square, Indianapolis, IN   —   14,251   54,589   50   12,515   14,301   67,104   81,405   27,801   1968  
Laguna Hills Mall, Laguna Hills, CA   —   28,074   55,446   —   6,740   28,074   62,186   90,260   15,469   1997 (Note 4 )
Lakeline Mall, Austin, TX   66,274   10,383   81,568   14   1,778   10,397   83,346   93,743   24,851   1995  
Lenox Square, Atlanta, GA   —   38,213   492,411   —   15,224   38,213   507,635   545,848   105,104   1998 (Note 4 )
Lima Mall, Lima, OH   —   7,910   35,338   —   8,586   7,910   43,924   51,834   14,297   1965  
Lincolnwood Town Center, Lincolnwood, IL   —   7,907   63,480   28   6,588   7,935   70,068   78,003   27,520   1990  
Livingston Mall, Livingston, NJ   —   30,200   105,250   —   10,303   30,200   115,553   145,753   24,817   1998 (Note 4 )
Longview Mall, Longview, TX   32,261   259   3,567   124   7,028   383   10,595   10,978   4,568   1978  
Maplewood Mall, Minneapolis, MN   —   17,119   80,758   —   8,214   17,119   88,972   106,091   10,876   2002 (Note 4 )
Markland Mall, Kokomo, IN   22,825   —   7,568   —   7,798   —   15,366   15,366   6,654   1968  
McCain Mall, N. Little Rock, AR   39,106   —   9,515   —   9,878   —   19,393   19,393   12,879   1973  
Melbourne Square, Melbourne, FL   —   15,762   55,891   3,513   22,015   19,275   77,906   97,181   17,686   1982  
Menlo Park Mall, Edison, NJ   —   65,684   223,252   —   23,852   65,684   247,104   312,788   58,807   1997 (Note 4 )
Midland Park Mall, Midland, TX   33,322   687   9,213   —   9,886   687   19,099   19,786   9,732   1980  
Miller Hill Mall, Duluth, MN   —   2,537   18,092   —   21,680   2,537   39,772   42,309   19,027   1973  
Montgomery Mall, Montgomeryville, PA   93,922   27,105   86,915   —   1,978   27,105   88,893   115,998   12,054   2004 (Note 5 )
Muncie Mall, Muncie, IN   —   172   5,776   52   24,602   224   30,378   30,602   11,597   1970  
Nanuet Mall, Nanuet, NY   —   27,310   162,993   —   2,639   27,310   165,632   192,942   47,442   1998 (Note 4 )
North East Mall, Hurst, TX   140,000   128   12,966   19,010   142,524   19,138   155,490   174,628   42,348   1971  
Northfield Square Mall, Bourbonnais, IL   30,985   362   53,396   —   640   362   54,036   54,398   25,321   2004 (Note 5 )
Northgate Mall, Seattle, WA   —   27,073   115,992   —   37,415   27,073   153,407   180,480   32,811   1987  
Northlake Mall, Atlanta, GA   70,367   33,400   98,035   —   3,519   33,400   101,554   134,954   28,333   1998 (Note 4 )
Northwoods Mall, Peoria, IL   —   1,185   12,779   2,451   35,077   3,636   47,856   51,492   21,520   1983  
Oak Court Mall, Memphis, TN   —   15,673   57,304   —   6,230   15,673   63,534   79,207   15,718   1997 (Note 4 )

54

SCHEDULE III

Simon Property Group, Inc. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2005
(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
  
Ocean County Mall, Toms River, NJ   —   20,404   124,945   —   19,705   20,404   144,650   165,054   28,511   1998 (Note 4 )
Orange Park Mall, Orange Park, FL   —   12,998   65,121   —   29,923   12,998   95,044   108,042   27,762   1994 (Note 4 )
Orland Square, Orland Park, IL   —   35,514   129,906   —   17,734   35,514   147,640   183,154   35,130   1997 (Note 4 )
Oxford Valley Mall, Langhorne, PA   82,236   24,544   100,287   —   1,808   24,544   102,095   126,639   29,778   2003 (Note 4 )
Paddock Mall, Ocala, FL   25,825   11,198   39,727   —   7,801   11,198   47,528   58,726   12,147   1980  
Palm Beach Mall, West Palm Beach, FL   53,305   11,962   112,437   —   35,951   11,962   148,388   160,350   54,460   1967  
Penn Square Mall, Oklahoma City, OK   69,276   2,043   155,958   —   19,748   2,043   175,706   177,749   29,170   2002 (Note 4 )
Pheasant Lane Mall, Nashua, NH   —   3,902   155,068   —   865   3,902   155,933   159,835   33,934   2004 (Note 5 )
Phipps Plaza, Atlanta, GA   —   19,200   210,610   —   17,457   19,200   228,067   247,267   46,878   1998 (Note 4 )
Plaza Carolina, Carolina, PR   252,958   15,493   279,560   —   722   15,493   280,282   295,775   15,903   2004 (Note 4 )
Port Charlotte Town Center, Port Charlotte, FL   52,460   5,471   58,570   —   13,003   5,471   71,573   77,044   20,860   1989  
Prien Lake Mall, Lake Charles, LA   —   1,842   2,813   3,091   39,603   4,933   42,416   47,349   13,825   1972  
Raleigh Springs Mall, Memphis, TN   —   9,137   28,604   —   12,053   9,137   40,657   49,794   18,260   1971  
Richardson Square Mall, Richardson, TX   —   4,532   6,329   1,268   11,249   5,800   17,578   23,378   7,118   1977  
Richmond Town Square,
Richmond Heights, OH		   46,804   2,600   12,112   —   60,131   2,600   72,243   74,843   25,910   1966  
River Oaks Center, Calumet City, IL   —   30,884   101,224   —   7,264   30,884   108,488   139,372   25,492   1997 (Note 4 )
Rockaway Townsquare, Rockaway, NJ   —   44,116   212,257   27   12,819   44,143   225,076   269,219   45,942   1998 (Note 4 )
Rolling Oaks Mall, San Antonio, TX   —   2,180   38,609   —   11,773   2,180   50,382   52,562   21,024   1988  
Roosevelt Field, Garden City, NY   —   164,058   702,008   2,117   29,119   166,175   731,127   897,302   148,224   1998 (Note 4 )
Ross Park Mall, Pittsburgh, PA   —   23,541   90,203   —   24,902   23,541   115,105   138,646   38,353   1986  
Santa Rosa Plaza, Santa Rosa, CA   —   10,400   87,864   —   6,153   10,400   94,017   104,417   20,290   1998 (Note 4 )
Shops at Mission Viejo Mall,
Mission Viejo, CA		   —   9,139   54,445   7,491   143,547   16,630   197,992   214,622   52,505   1979  
South Hills Village, Pittsburgh, PA   —   23,445   125,840   —   13,096   23,445   138,936   162,381   31,790   1997 (Note 4 )
South Shore Plaza, Braintree, MA   —   101,200   301,495   —   13,492   101,200   314,987   416,187   65,325   1998 (Note 4 )
Southern Park Mall, Boardman, OH   —   16,982   77,767   97   21,323   17,079   99,090   116,169   28,572   1970  
SouthPark Mall, Charlotte, NC   —   32,141   188,004   100   117,849   32,241   305,853   338,094   34,517   2002 (Note 4 )
St Charles Towne Center, Waldorf, MD   —   7,710   52,934   1,180   13,496   8,890   66,430   75,320   29,143   1990  
Stanford Shopping Center, Palo Alto, CA   220,000   —   339,537   —   2,801   —   342,338   342,338   26,110   2003 (Note 4 )
Summit Mall, Akron, OH   —   15,374   51,137   —   17,864   15,374   69,001   84,375   19,491   1965  

55

SCHEDULE III

Simon Property Group, Inc. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2005
(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   36,010   2,896   28,900   —   5,808   2,896   34,708   37,604   16,385   1988  
Tacoma Mall, Tacoma, WA   128,597   37,803   125,826   —   23,502   37,803   149,328   187,131   40,162   1987  
Tippecanoe Mall, Lafayette, IN   —   2,897   8,439   5,517   43,025   8,414   51,464   59,878   25,782   1973  
Town Center at Aurora, Aurora, CO   —   9,959   56,766   6   53,147   9,965   109,913   119,878   19,224   1998 (Note 4 )
Town Center at Boca Raton, Boca Raton, FL   —   64,200   307,279   —   82,351   64,200   389,630   453,830   79,293   1998 (Note 4 )
Towne East Square, Wichita, KS   68,637   8,525   18,479   2,042   24,646   10,567   43,125   53,692   22,582   1975  
Towne West Square, Wichita, KS   52,726   972   21,203   76   8,220   1,048   29,423   30,471   14,822   1980  
Treasure Coast Square, Jensen Beach, FL   —   11,124   72,990   3,067   24,552   14,191   97,542   111,733   25,377   1987  
Trolley Square, Salt Lake City, UT   28,675   4,739   27,600   435   10,458   5,174   38,058   43,232   15,950   1986  
Tyrone Square, St. Petersburg, FL   —   15,638   120,962   —   21,986   15,638   142,948   158,586   37,422   1972  
University Mall, Little Rock, AR   —   123   17,411   —   783   123   18,194   18,317   10,650   1967  
University Mall, Pensacola, FL   —   4,554   26,657   —   3,982   4,554   30,639   35,193   10,866   1994  
University Park Mall, Mishawaka, IN   57,532   15,105   61,100   —   15,659   15,105   76,759   91,864   74,369   1996 (Note 4 )
Upper Valley Mall, Springfield, OH   47,904   8,421   38,745   —   3,816   8,421   42,561   50,982   12,647   1979  
Valle Vista Mall, Harlingen, TX   37,417   1,398   17,159   372   11,313   1,770   28,472   30,242   13,085   1983  
Virginia Center Commons, Glen Allen, VA   —   9,764   50,547   4,149   7,419   13,913   57,966   71,879   18,059   1991  
Walt Whitman Mall, Huntington Station, NY   —   51,700   111,258   3,789   35,022   55,489   146,280   201,769   41,798   1998 (Note 4 )
Washington Square, Indianapolis, IN   30,693   16,800   36,495   462   24,811   17,262   61,306   78,568   21,775   1974  
West Ridge Mall, Topeka, KS   68,711   5,453   34,132   197   7,707   5,650   41,839   47,489   17,504   1988  
Westminster Mall, Westminster, CA   —   43,464   84,709   —   15,378   43,464   100,087   143,551   21,312   1998 (Note 4 )
White Oaks Mall, Springfield, IL   48,563   3,024   35,692   2,413   31,716   5,437   67,408   72,845   20,693   1977  
Wolfchase Galleria, Memphis, TN   72,054   16,274   128,276   —   9,042   16,274   137,318   153,592   31,340   2002 (Note 4 )
Woodland Hills Mall, Tulsa, OK   82,830   34,211   187,123   —   532   34,211   187,655   221,866   23,524   2004 (Note 5 )

Premium Outlet Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Albertville Premium Outlets, Albertville, MN   —   3,900   97,059   —   809   3,900   97,868   101,768   6,310   2004 (Note 4 )
Allen Premium Outlets, Allen, TX   —   13,855   43,687   —   5,958   13,855   49,645   63,500   4,555   2004 (Note 4 )
Aurora Farms Premium Outlets, Aurora, OH   —   2,370   24,326   —   1,589   2,370   25,915   28,285   4,335   2004 (Note 4 )
Camarillo Premium Outlets, Camarillo, CA   —   16,670   224,721   —   1,065   16,670   225,786   242,456   10,912   2004 (Note 4 )
Carlsbad Premium Outlets, Carlsbad, CA   —   12,890   184,990   96   647   12,986   185,637   198,623   8,222   2004 (Note 4 )
Carolina Premium Outlets, Smithfield, NC   20,466   3,170   59,863   —   303   3,170   60,166   63,336   4,907   2004 (Note 4 )
Chicago Premium Outlets, Aurora, IL   —   659   118,005   —   3,564   659   121,569   122,228   7,183   2004 (Note 4 )
Clinton Crossings Premium Outlets, Clinton, CT   —   2,060   107,557   32   362   2,092   107,919   110,011   6,078   2004 (Note 4 )

56

SCHEDULE III

Simon Property Group, Inc. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2005
(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
  
Columbia Gorge Premium Outlets, Troutdale, OR   —   7,900   16,492   —   453   7,900   16,945   24,845   2,521   2004 (Note 4 )
Desert Hills Premium Outlets, Cabazon, CA   —   3,440   338,679   —   10   3,440   338,689   342,129   15,279   2004 (Note 4 )
Edinburgh Premium Outlet, Edinburgh, IN   —   2,866   47,309   —   8,229   2,866   55,538   58,404   3,843   2004 (Note 4 )
Folsom Premium Outlets, Folsom, CA   —   9,060   50,281   —   530   9,060   50,811   59,871   4,622   2004 (Note 4 )
Gilroy Premium Outlets, Gilroy, CA   65,748   9,630   194,122   —   1,382   9,630   195,504   205,134   11,206   2004 (Note 4 )
Jackson Premium Outlets, Jackson, NJ   —   6,413   104,013   3   2,055   6,416   106,068   112,484   4,554   2004 (Note 4 )
Johnson Creek Premium Outlets, Johnson Creek, WI   —   2,800   39,564   —   1,736   2,800   41,300   44,100   1,843   2004 (Note 4 )
Kittery Premium Outlets, Kittery, ME   10,885   971   60,522   —   282   971   60,804   61,775   3,086   2004 (Note 4 )
Las Vegas Premium Outlets, Las Vegas, NV   —   25,435   134,973   —   —   25,435   134,973   160,408   8,549   2004 (Note 4 )
Leesburg Corner Premium Outlets, Leesburg, VA   —   7,190   162,023   —   1,571   7,190   163,594   170,784   10,328   2004 (Note 4 )
Liberty Village Premium Outlets, Flemington, NJ   —   5,670   28,904   —   706   5,670   29,610   35,280   3,029   2004 (Note 4 )
Lighthouse Place Premium Outlets,
Michigan City, IN		   45,368   6,630   94,138   —   659   6,630   94,797   101,427   8,027   2004 (Note 4 )
Napa Premium Outlets, Napa, CA   —   11,400   45,023   —   265   11,400   45,288   56,688   2,984   2004 (Note 4 )
North Georgia Premium Outlets, Dawsonville, GA   —   4,300   132,325   —   1,408   4,300   133,733   138,033   8,303   2004 (Note 4 )
Orlando Premium Outlets, Orlando, FL   —   14,040   304,410   —   303   14,040   304,713   318,753   12,944   2004 (Note 4 )
Osage Beach Premium Outlets,
Osage Beach, MO		   —   9,460   85,804   3   799   9,463   86,603   96,066   5,843   2004 (Note 4 )
Petaluma Village Premium Outlets, Petaluma, CA   —   13,322   14,067   —   987   13,322   15,054   28,376   2,062   2004 (Note 4 )
Seattle Premium Outlets, Tulalip, WA   —   13,557   103,722   —   157   13,557   103,879   117,436   3,054   2004 (Note 4 )
St. Augustine Premium Outlets,
St. Augustine, FL		   —   6,090   57,670   2   3,184   6,092   60,854   66,946   4,123   2004 (Note 4 )
The Crossings Premium Outlets, Tannersville, PA   57,953   7,720   172,931   —   5,729   7,720   178,660   186,380   8,427   2004 (Note 4 )
Vacaville Premium Outlets, Vacaville, CA   —   9,420   84,856   —   1,002   9,420   85,858   95,278   6,862   2004 (Note 4 )
Waikele Premium Outlets, Waipahu, HI   —   22,630   77,316   —   850   22,630   78,166   100,796   4,736   2004 (Note 4 )
Waterloo Premium Outlets, Waterloo, NY   36,540   3,230   75,277   —   4,177   3,230   79,454   82,684   5,661   2004 (Note 4 )
Woodbury Common Premium Outlets,
Central Valley, NY		   —   11,110   862,557   —   1,848   11,110   864,405   875,515   36,977   2004 (Note 4 )
Wrentham Village Premium Outlets, Wrentham, MA   —   5,132   282,031   —   3,347   5,132   285,378   290,510   14,853   2004 (Note 4 )

57

SCHEDULE III

Simon Property Group, Inc. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2005
(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/Lifestyle Centers                                          
Arboretum at Great Hills, Austin, TX   —   7,640   36,774   71   6,349   7,711   43,123   50,834   9,177   1998 (Note 4 )
Bloomingdale Court, Bloomingdale, IL   27,950   8,748   26,184   —   8,569   8,748   34,753   43,501   11,521   1987  
Boardman Plaza, Youngstown, OH   23,598   7,265   22,007   —   11,759   7,265   33,766   41,031   9,999   1951  
Brightwood Plaza, Indianapolis, IN   —   65   128   —   309   65   437   502   251   1965  
Celina Plaza, El Paso, TX   —   138   815   —   110   138   925   1,063   472   1978  
Charles Towne Square, Charleston, SC   —   —   1,768   370   10,636   370   12,404   12,774   4,139   1976  
Chesapeake Center, Chesapeake, VA   —   5,352   12,279   —   319   5,352   12,598   17,950   3,399   1989  
Countryside Plaza, Countryside, IL   —   332   8,507   2,554   8,103   2,886   16,610   19,496   4,968   1977  
Dare Centre, Kill Devil Hills, NC   1,704   —   5,702   —   45   —   5,747   5,747   210   2004 (Note 4 )
DeKalb Plaza, King of Prussia, PA   3,407   1,955   3,405   —   882   1,955   4,287   6,242   912   2003 (Note 4 )
Eastland Plaza, Tulsa, OK   —   651   3,680   —   110   651   3,790   4,441   1,885   1986  
Forest Plaza, Rockford, IL   15,330   4,132   16,818   453   2,052   4,585   18,870   23,455   6,469   1985  
Gateway Shopping Center, Austin, TX   86,000   24,549   81,437   —   7,063   24,549   88,500   113,049   6,384   2004 (Note 4 )
Great Lakes Plaza, Mentor, OH   —   1,028   2,025   —   3,618   1,028   5,643   6,671   2,169   1976  
Greenwood Plus, Greenwood, IN   —   1,131   1,792   —   3,735   1,131   5,527   6,658   2,123   1979  
Griffith Park Plaza, Griffith, IN   —   —   2,412   1,504   567   1,504   2,979   4,483   2,038   1979  
Henderson Square, King of Prussia, PA   15,265   4,223   15,124   —   71   4,223   15,195   19,418   1,435   2003 (Note 4 )
Highland Lakes Center, Orlando, FL   15,890   7,138   25,284   —   948   7,138   26,232   33,370   8,166   1991  
Ingram Plaza, San Antonio, TX   —   421   1,802   4   21   425   1,823   2,248   1,030   1980  
Keystone Shoppes, Indianapolis, IN   —   —   4,232   —   934   —   5,166   5,166   1,206   1997 (Note 4 )
Knoxville Commons, Knoxville, TN   —   3,731   5,345   —   1,730   3,731   7,075   10,806   3,449   1987  
Lake Plaza, Waukegan, IL   —   2,487   6,420   —   890   2,487   7,310   9,797   2,510   1986  
Lake View Plaza, Orland Park, IL   20,378   4,775   17,543   —   10,558   4,775   28,101   32,876   8,370   1986  
Lakeline Plaza, Austin, TX   22,342   5,822   30,875   —   7,088   5,822   37,963   43,785   9,425   1998  
Lima Center, Lima, OH   —   1,808   5,151   —   6,713   1,808   11,864   13,672   2,557   1978  
Lincoln Crossing, O'Fallon, IL   3,084   674   2,192   —   492   674   2,684   3,358   882   1990  
Lincoln Plaza, King of Prussia, PA   —   —   21,299   —   763   —   22,062   22,062   5,656   2003 (Note 4 )
MacGregor Village, Cary, NC   6,854   557   8,897   —   148   557   9,045   9,602   364   2004 (Note 4 )
Mall of Georgia Crossing, Mill Creek, GA       9,506   32,892   —   100   9,506   32,992   42,498   6,721   2004 (Note 5 )
Markland Plaza, Kokomo, IN   —   206   738   —   6,089   206   6,827   7,033   1,439   1974  
Martinsville Plaza, Martinsville, VA   —   —   584   —   333   —   917   917   661   1967  
Matteson Plaza, Matteson, IL   8,974   1,771   9,737   —   2,328   1,771   12,065   13,836   4,724   1988  

58

SCHEDULE III

Simon Property Group, Inc. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2005
(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   7,759   267   10,509   87   633   354   11,142   11,496   2,813   1998  
New Castle Plaza, New Castle, IN   —   128   1,621   —   1,435   128   3,056   3,184   1,494   1966  
North Ridge Plaza, Joliet, IL   —   2,831   7,699   —   943   2,831   8,642   11,473   3,252   1985  
North Ridge Shopping Center, Raleigh, NC   8,371   462   12,838   —   109   462   12,947   13,409   493   2004 (Note 4 )
Northland Plaza, Columbus, OH   —   4,490   8,893   —   1,300   4,490   10,193   14,683   5,221   1988  
Northwood Plaza, Fort Wayne, IN   —   148   1,414   —   1,347   148   2,761   2,909   1,370   1974  
Park Plaza, Hopkinsville, KY   —   300   1,572   —   225   300   1,797   2,097   1,487   1968  
Regency Plaza, St. Charles, MO   4,206   616   4,963   —   449   616   5,412   6,028   1,732   1988  
Rockaway Convenience Center, Rockaway, NJ   —   5,149   26,435   —   5,795   5,149   32,230   37,379   4,143   1998 (Note 4 )
Rockaway Plaza, Rockaway, NJ   —   —   15,295   —   —   —   15,295   15,295   120   2004  
St. Charles Towne Plaza, Waldorf, MD   26,921   8,524   18,993   —   1,541   8,524   20,534   29,058   7,518   1987  
Shops at North East Mall, The, Hurst, TX   —   12,541   28,177   402   6,650   12,943   34,827   47,770   9,508   1999  
Teal Plaza, Lafayette, IN   —   99   878   —   2,930   99   3,808   3,907   1,553   1962  
Terrace at the Florida Mall, Orlando, FL   —   2,150   7,623   —   1,918   2,150   9,541   11,691   2,437   1989  
Tippecanoe Plaza, Lafayette, IN   —   —   745   234   4,957   234   5,702   5,936   2,424   1974  
University Center, Mishawaka, IN   —   2,388   5,214   —   2,588   2,388   7,802   10,190   6,611   1980  
Wabash Village, West Lafayette, IN   —   —   976   —   274   —   1,250   1,250   764   1970  
Washington Plaza, Indianapolis, IN   —   941   1,697   —   308   941   2,005   2,946   2,452   1976  
Waterford Lakes Town Center, Orlando, FL   —   8,679   72,836   —   12,597   8,679   85,433   94,112   20,803   1999  
West Ridge Plaza, Topeka, KS   5,423   1,376   4,560   —   1,449   1,376   6,009   7,385   2,149   1988  
White Oaks Plaza, Springfield, IL   16,546   3,169   14,267   —   751   3,169   15,018   18,187   5,101   1986  
Wolf Ranch, Georgetown, TX   —   23,172   51,509   —   —   23,172   51,509   74,681   788   2004  

Other Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crossville Outlet Center, Crossville, TN   —   263   4,380   —   120   263   4,500   4,763   187   2004 (Note 4 )
Factory Merchants Branson, Branson, MO   —   1,383   24,048   1   627   1,384   24,675   26,059   1,074   2004 (Note 4 )
Factory Shoppes at Branson Meadows, Branson, MO   9,518   —   5,206   —   16   —   5,222   5,222   189   2004 (Note 4 )
Factory Stores of America — Boaz, AL   2,784   —   924   —   1   —   925   925   29   2004 (Note 4 )
Factory Stores of America — Georgetown, KY   6,597   148   3,610   —   3   148   3,613   3,761   127   2004 (Note 4 )
Factory Stores of America — Graceville, FL   1,960   12   408   —   36   12   444   456   12   2004 (Note 4 )
Factory Stores of America — Lebanon, MO   1,647   24   214   —   2   24   216   240   10   2004 (Note 4 )
Factory Stores of America — Nebraska City, NE   1,547   26   566   —   —   26   566   592   23   2004 (Note 4 )
Factory Stores of America — Story City, IA   1,913   7   526   —   10   7   536   543   18   2004 (Note 4 )
Factory Stores of North Bend, WA   —   2,143   36,197   —   36   2,143   36,233   38,376   1,514   2004 (Note 4 )
Las Vegas Outlet Center, Las Vegas, NV   19,772   13,085   160,777   —   58   13,085   160,835   173,920   5,838   2004 (Note 4 )

59

SCHEDULE III

Simon Property Group, Inc. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2005
(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
Development Projects                                                        
Domain, The, Austin, TX     —   40,975     48,850     —     —     40,975     48,850     89,825     —   2005
Rio Grande Valley Premium Outlets, Mercedes, TX     —   —     17,361     —     —     —     17,361     17,361     —   2005
Round Rock Premium Outlets, Round Rock, TX     —   —     50,266     —     —     —     50,266     50,266     —   2005
Shops at Arbor Walk, The, Austin, TX     —   909     5,897     —     —     909     5,897     6,806     —   2005
Village at SouthPark, The, Charlotte, NC     —   —     2,385     —     —     —     2,385     2,385     —   2005
Other pre-development costs     —   119,311     58,362     —     —     119,311     58,362     177,673     —    
Other     —   5,171     8,494     668     351     5,839     8,845     14,684     2,680    
   
 
 
 
 
 
 
 
 
   
    $ 4,522,632   2,435,927   $ 16,126,837   $ 124,408   $ 2,864,075   $ 2,560,335   $ 18,990,912   $ 21,551,247   $ 3,694,807    
   
 
 
 
 
 
 
 
 
   

60

Simon Property Group, Inc. and Subsidiaries
Notes to Schedule III as of December 31, 2005
(Dollars in thousands)

(1)    Reconciliation of Real Estate Properties:

            The changes in real estate assets for the years ended December 31, 2005, 2004, and 2003 are as follows:

 
   2005
   2004
   2003
  
Balance, beginning of year   $ 21,082,582   $ 14,834,443   $ 14,129,739  
  Acquisitions and consolidations     294,654     5,753,600     761,179  
  Improvements     661,569     624,610     377,548  
  Disposals and de-consolidations     (487,558 )   (112,071 )   (434,023 )
  Impairment write-down     —     (18,000 )   —  
   
 
 
 
Balance, close of year   $ 21,551,247   $ 21,082,582   $ 14,834,443  
   
 
 
 

            The unaudited aggregate cost of real estate assets for federal income tax purposes as of December 31, 2005 was $14,146,679.

(2)    Reconciliation of Accumulated Depreciation:

            The changes in accumulated depreciation and amortization for the years ended December 31, 2005, 2004, and 2003 are as follows:

 
   2005
   2004
   2003
  
Balance, beginning of year   $ 3,066,604   $ 2,482,955   $ 2,168,281  
  Acquisitions and consolidations (5)     2,627     76,121     21,111  
  Depreciation expense     768,028     545,882     461,546  
  Disposals     (142,452 )   (38,354 )   (167,983 )
   
 
 
 
Balance, close of year   $ 3,694,807   $ 3,066,604   $ 2,482,955  
   
 
 
 

            Depreciation of Simon Property'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 10-40 years for the structure, 15 years for landscaping and parking lot, and 10 years for HVAC equipment.

•
Tenant Allowances and Improvements — 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. Initial cost also includes any new developments that are opened during the current year. Costs of disposals of property are first reflected as a reduction to cost capitalized subsequent to acquisition.

(4)
Not developed/constructed by Simon Property 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.

61



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TABLE OF CONTENTS
Part I
Item 1. Business
Mortgage and Other Debt on Portfolio Properties and Investments in Real Estate As of December 31, 2005 (Dollars in thousands)
Part II
Part III
Part IV
SIGNATURES

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Exhibit 10.12


FIRST AMENDMENT
TO EMPLOYMENT AGREEMENT

        FIRST AMENDMENT, dated as of November 1, 2004 (this "First Amendment") to the Employment Agreement (the "Employment Agreement") between David C. Bloom (the "Executive") and Chelsea Property Group, Inc., a Maryland corporation (the "Company") dated as of June 20, 2004. This First Amendment to the Employment Agreement becomes effective immediately and will govern the terms of the Executive's employment as of the Effective Date of the Merger Agreement.


W I T N E S S E T H:

        WHEREAS, Section 13 of the Employment Agreement provides that any alteration, amendment or modification of any of the terms of the Employment Agreement shall be valid only if made in writing and signed by the parties thereto; provided, however, that any such alteration, amendment or modification is consented to on the Company's behalf by the Board of Directors; and

        WHEREAS, the parties hereto desire to amend certain provisions of the Employment Agreement as more fully set forth herein, and the parties hereto shall seek the consent of the Board of Directors in connection with such amendment.

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the agreements herein, the parties hereto agree as follows:

        1.    Defined Terms.    Unless otherwise stated herein, all capitalized terms have the meanings ascribed to them in the Employment Agreement.

        2.    Amendments.    

        (a)   Section 3(d) of the Employment Agreement is hereby deleted and replaced in its entirety with the following:

        (b)   The first paragraph of Section 6(f) of the Employment Agreement is hereby deleted and replaced in its entirety with the following:

        (c)   The following new subsection (i) is hereby added to Section 6 of the Employment Agreement:

        (d)   Clause (D) of the second sentence of Section 7(a) of the Employment Agreement is hereby deleted and replaced in its entirety with the following:

        3.    Governing Law.    THIS FIRST AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

        4.    Counterparts.    This First Amendment may be executed in one or more counterparts (including by facsimile), each of which shall be deemed an original and all of which together shall be considered one and the same instrument.

        5.    Full force and effect of Employment Agreement.    Except as specifically amended herein, all other provisions of the Employment Agreement shall remain in full force and effect in accordance with its terms. All references in the Employment Agreement to "this Agreement" shall be deemed to refer to the Employment Agreement as amended by this First Amendment.

        [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2

        IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the date first above written.

    Chelsea Property Group, Inc.

 
 
By:
 
/s/  LESLIE T. CHAO      
        Name: Leslie T. Chao
        Title: President

 
 
By:
 
/s/  DAVID C. BLOOM      
David C. Bloom

3



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FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
W I T N E S S E T H

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Exhibit 10.13


SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT

        SECOND AMENDMENT, dated as of January 1, 2006, (this "Second Amendment") to the Employment Agreement (the "Employment Agreement"), between David C. Bloom (the "Executive") and Chelsea Property Group, Inc., a Maryland corporation (the "Company"), dated as of June 20, 2004 and the First Amendment to the Employment Agreement (the "First Amendment"), between the Executive and the Company dated as of November 1, 2004.


W I T N E S S E T H:

        WHEREAS, Section 13 of the Employment Agreement provides that any alteration, amendment or modification of any of the terms of the Employment Agreement shall be valid only if made in writing and signed by the parties thereto; provided, however, that any such alteration, amendment or modification is consented to on the Company's behalf by the Board of Directors; and

        WHEREAS, the parties hereto desire to amend certain provisions of the Employment Agreement as more fully set forth herein, and the parties hereto shall seek the consent of the Board of Directors in conjunction with such amendment.

        NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the agreements herein, the parties hereto agree as follows:

        1.    Defined Terms.    Unless otherwise stated herein, all capitalized terms have the meanings ascribed to them in the Employment Agreement.

        2.    Amendments.    

        3.    Governing Law.    This Second Amendment shall be governed and construed in accordance with the laws of the state of New Jersey applicable to contracts made and to be performed entirely within such state.

        4.    Full Force and Effect of Employment Agreement.    Except as specifically amended herein, all other provisions of the Employment Agreement as amended by the First Amendment thereto shall remain in full force and effect in accordance with its terms.

        IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the date first above written.

    CHELSEA PROPERTY GROUP, INC.

 
 
By:
 
/s/  LESLIE T. CHAO      
Leslie T. Chao, Chief Executive Officer

 
 
EXECUTIVE

 
 
By:
 
/s/  DAVID C. BLOOM      
David C. Bloom

2



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SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
W I T N E S S E T H

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Exhibit 10.15


DESCRIPTION OF DIRECTOR AND EXECUTIVE COMPENSATION ARRANGEMENTS
(March 8, 2006)

Compensation of Non-Employee Directors1

1
All stock-based elements are subject to approval of amendments to the 1998 Stock Incentive Plan (the "1998 Plan") at the 2006 Annual Meeting of Stockholders.

        Annual Retainer.    Non-employee members of the Board will receive a retainer in cash and restricted stock:

2
Grants of restricted stock will be valued at the value of the underlying common stock on the date of grant and will vest in full one year from the date of grant.

•
The retainer will be payable annually, upon election, re-election or appointment to the Board3.

        Committee Chair Retainers.    Each non-employee Committee Chair will receive:

        Meeting Fees.    Non-employee directors do not receive any fees for attending Board meetings. Non-employee directors receive $1,000 per committee meeting for attendance (whether in person, by telephone or video conference).

        Lead Director Compensation.    The non-employee director designated as Lead Director will receive an additional retainer of $25,000 annually, payable one-half in cash and one-half in restricted stock3.

3
Pro-rated for partial years of service.

        Vesting of Restricted Stock.    All restricted stock compensation received by non-employee directors will vest one year after the award.

        Director Ownership Guidelines.    Under the Company's Governance Principles, directors must own 3,000 shares or more of Company common stock within two years after their initial election or appointment and 5,000 shares or more three years from such date. Restricted stock will qualify for this purpose only after full vesting.

        Deferred Compensation.    Non-employee directors may elect to defer all or a portion of their cash compensation under the Company's Nonqualified Deferred Compensation Plan for Non-Employee Directors (the "Director Deferred Compensation Plan"). To date, none of our non-employee directors has elected to do so. All restricted stock issued to non-employee directors as retainers will be placed in the Director Deferred Compensation Plan. Dividends paid on the restricted stock in this account must be reinvested in Company common stock. Amounts in the Director Deferred Compensation Plan will not be released until a director retires and resigns from the Board or is not re-elected.

        Expense Reimbursement and Travel.    The Company pays or reimburses expenses for directors' travel on Board business. In most cases, and based on the director's preference, the Company will handle any travel arrangements, book airline and hotel reservations and cover billings.


Compensation of Named Executive Officers

        Base Salaries.    The executive officers of the Company serve at the discretion of the Board of Directors. The Compensation Committee of the Board determines the base salaries of the Company's Chief Executive Officer and its President and Chief Operating Officer based upon, among other things, information provided by third parties with regard to peers in the REIT industry in order to determine reasonable and competitive compensation levels. The Compensation Committee approves the base salaries of the other executive officers, which are recommended by the Chief Executive Officer. The following are the current annual base salary levels for the Company's Chief Executive Officer and its four other most highly compensated executive officers (the "Named Executive Officers") for 2005:

David Simon
Chief Executive Officer		   $ 800,000
David C. Bloom
Chairman of the Board — Chelsea Property Group, Inc.		     1,000,000
Richard S. Sokolov
President and Chief Operating Officer		     700,000
James M. Barkley
General Counsel and Secretary		     475,000
Steve Sterrett
Executive Vice President and Chief Financial Officer		     450,000

        Employment Agreements.    Mr. Bloom and Mr. Sokolov have entered into employment agreements with the Company, copies of which have been filed as exhibits to the Company's Annual Report on Form 10-K for the year ended December 31, 2004 (the "2004 10-K").

        Bonus Program.    Each of the Named Executive Officers is also eligible to receive an annual bonus under the Company's unwritten incentive bonus program (the "Bonus Program"). The Bonus Program is intended to provide senior executives and key employees with opportunities to earn cash incentives based upon the performance of the Company, the participant's business unit and the individual participant. The Company budgets bonus dollars each year based upon its targeted performance and the Company's overall budget is approved each year by the Board. Certain "stretch" levels of performance are also identified at the beginning of each year which may justify higher payments under the Bonus Program, but those will only be paid out to the extent the Company's performance exceeds its budget. Each participant's bonus award for the year is expressed as a percentage of base salary, a fixed dollar amount, or a percentage of the available incentive pool. The bonus opportunities for some senior executives are based upon objective performance criteria such as achievement of certain levels of EBITDA and/or specific performance objectives relative to their primary areas of responsibility. The bonus criteria for other senior executives are discretionary in nature. Where an executive's bonus criteria are objective and based upon clearly identified formulas, the calculation of that executive's bonus is reviewed with the Compensation Committee each year. Where the bonus opportunities of a senior executive are determined on a discretionary basis, the Compensation Committee makes the final determination of any bonus dollars paid to that executive. Bonus amounts for each year are determined in the following February with disbursement in March.

        Stock-Based Awards.    The Named Executive Officers are eligible to receive discretionary awards under the 1998 Plan. Under the 1998 Plan, the Compensation Committee may make the following types of equity-based awards: incentive stock options, nonqualified stock options, stock appreciation rights, performance units and restricted stock. The only type of award the Compensation Committee has made since 2002 is restricted stock which is subject to satisfaction of performance-based criteria set on an annual basis.

        Insurance and 401(k) Plan.    The Company pays employee and dependent life insurance premiums for each Named Executive Officer and makes annual contributions to the accounts of the Named Executive Officers under the Company's 401(k) retirement plan. The Company's basic contribution to the 401(k) retirement plan is equal to 1.5% of the Named Executive Officer's compensation and


becomes vested 30% after completion of three years of service, 40% after four years of service and an additional 20% after each additional year of service until fully vested after seven years. The Company matches 100% of the first 3% of the Named Executive Officer's contribution and 50% of the next 2% of the Named Executive Officer's contribution. Company matching contributions are vested when made. The Company's basic and matching contributions are subject to applicable IRS limits and regulations.

        Non-Qualified Plan.    The Named Executive Officers may also participate in the Simon Property Group, L.P. Deferred Compensation Plan (the "Non-Qualified Plan"), a non-qualified deferred compensation plan for the benefit of a group of highly compensated employees. While the Non-Qualified Plan is an unfunded plan for purposes of the Employee Retirement Income Security Act of 1974, as amended, certain assets have been set aside in the Simon Property Group, L.P. Deferred Compensation Plan Trust (the "Non-Qualified Trust") to be used to pay benefits to Non-Qualified Plan participants, except to the extent the Company becomes insolvent.

        The Non-Qualified Plan permits eligible employees to defer receipt of up to 100% of their compensation, including Company stock awarded under the 1998 Plan. The Non-Qualified Plan also authorizes the Company to make matching contributions based on each eligible employee's elective cash deferrals. Participants in the Non-Qualified Plan are 100% vested in all elective cash deferrals. Deferrals of Company stock awarded under the 1998 Plan vest in accordance with the terms of the 1998 Plan. Company matching contributions are vested 20% after one year of service, and an additional 20% for each year of service thereafter. Employee elective cash deferrals and matching contributions generate earnings based on hypothetical investment elections made by individual participants.

        Benefits are payable from the Non-Qualified Plan at such time as elected by each participant. Benefits are payable either in a single lump sum or in up to ten annual installments, as elected by the participant. Upon termination of the participant's employment for any reason other than death, prior to age 591/2 or prior to age 55 with completion of ten years of service, the employee's Non-Qualified Plan benefits will be paid in a single lump sum. As soon as possible following a "change of control" (as defined in the Non-Qualified Plan), each employee would be paid his or her Non-Qualified Plan benefit in a single lump sum.



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DESCRIPTION OF DIRECTOR AND EXECUTIVE COMPENSATION ARRANGEMENTS (March 8, 2006)

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Exhibit 12.1


SIMON PROPERTY GROUP, INC.
Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(in thousands)

 
   For the year ended December 31,
  
 
   2005
   2004
   2003
   2002
   2001
  
Earnings:                                
  Pre-tax income from continuing operations   $ 473,557   $ 471,711   $ 443,561   $ 530,281   $ 282,460  
  Add:                                
    Pre-tax income from 50% or greater than 50% owned unconsolidated entities     49,939     46,124     59,165     47,939     62,448  
    Minority interest in income of majority owned subsidiaries     13,743     9,687     7,277     10,498     10,593  
    Distributed income from less than 50% owned unconsolidated entities     66,165     45,909     42,939     37,811     51,740  
    Amortization of capitalized interest     2,772     2,533     1,850     1,876     1,706  
  Fixed Charges     932,404     769,883     696,289     684,955     726,007  
  Less:                                
    Income from unconsolidated entities     (81,807 )   (81,113 )   (99,645 )   (78,695 )   (67,116 )
    Interest capitalization     (15,502 )   (15,546 )   (11,059 )   (5,507 )   (10,325 )
    Preferred distributions of consolidated subsidiaries     (28,080 )   (21,220 )   (12,044 )   (11,340 )   (26,085 )
   
 
 
 
 
 
Earnings   $ 1,413,191   $ 1,227,968   $ 1,128,333   $ 1,217,818   $ 1,031,428  
   
 
 
 
 
 
Fixed Charges:                                
  Portion of rents representative of the interest factor     8,869     7,092     5,507     4,185     4,977  
  Interest on indebtedness (including amortization of debt expense)     879,953     726,025     667,679     663,923     684,620  
  Interest capitalized     15,502     15,546     11,059     5,507     10,325  
  Preferred distributions of consolidated subsidiaries     28,080     21,220     12,044     11,340     26,085  
   
 
 
 
 
 
Fixed Charges   $ 932,404   $ 769,883   $ 696,289   $ 684,955   $ 726,007  
   
 
 
 
 
 
  Preferred Stock Dividends     73,854     42,346     55,138     64,201     51,360  
   
 
 
 
 
 
Fixed Charges and Preferred Stock Dividends   $ 1,006,258   $ 812,229   $ 751,427   $ 749,156   $ 777,367  
   
 
 
 
 
 
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends     1.40 x   1.51 x   1.50 x   1.63 x   1.33 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 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, INC. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends (in thousands)

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Exhibit 13.1

        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. Amounts represent the combined amounts for Simon Property and SPG Realty Consultants, Inc. ("SPG Realty") for all periods as of or for the years ended December 31, 2001 to December 31, 2002 and Simon Property thereafter. SPG Realty, Simon Property's former "paired share" affiliate, merged into Simon Property on December 31, 2002. Other data we believe is important in understanding trends in Simon Property's business is also included in the tables.

Selected Financial Data

 
   As of or for the Year Ended December 3l,
  
 
   2005
   2004(1)
   2003(1)
   2002(1)
   2001(1)
  
 
   (in thousands, except per share data)

  
OPERATING DATA:                                
  Total consolidated revenue (2)   $ 3,166,853   $ 2,585,079   $ 2,242,399   $ 2,052,978   $ 2,048,835  
  Income from continuing operations (2)     457,328     459,941     435,964     530,281     282,460  
  Net income available to common stockholders   $ 401,895   $ 300,647   $ 313,577   $ 358,387   $ 147,789  

BASIC EARNINGS PER SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Income from continuing operations   $ 1.27   $ 1.49   $ 1.47   $ 1.86   $ 0.87  
  Discontinued operations     0.55     (0.04 )   0.18     0.13     —  
  Cumulative effect of accounting change     —     —     —     —     (0.01 )
   
 
 
 
 
 
  Net income   $ 1.82   $ 1.45   $ 1.65   $ 1.99   $ 0.86  
   
 
 
 
 
 
  Weighted average shares outstanding     220,259     207,990     189,475     179,910     172,669  

DILUTED EARNINGS PER SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Income from continuing operations   $ 1.27   $ 1.48   $ 1.47   $ 1.86   $ 0.86  
  Discontinued operations     0.55     (0.04 )   0.18     0.13     —  
  Cumulative effect of accounting change     —     —     —     —     (0.01 )
   
 
 
 
 
 
  Net income   $ 1.82   $ 1.44   $ 1.65   $ 1.99   $ 0.85  
   
 
 
 
 
 
  Diluted weighted average shares outstanding     221,130     208,857     190,299     181,501     173,028  
  Distributions per share (3)   $ 2.80   $ 2.60   $ 2.40   $ 2.18   $ 2.08  

BALANCE SHEET DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cash and cash equivalents   $ 337,048   $ 520,084   $ 535,623   $ 397,129   $ 259,760  
  Total assets     21,131,039     22,070,019     15,684,721     14,904,502     13,810,954  
  Mortgages and other indebtedness     14,106,117     14,586,393     10,266,388     9,546,081     8,841,378  
  Stockholders' equity   $ 4,307,296   $ 4,642,606   $ 3,338,627   $ 3,467,733   $ 3,214,691  

OTHER DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cash flow provided by (used in):                                
      Operating activities   $ 1,172,861   $ 1,082,858   $ 951,967   $ 882,990   $ 859,062  
      Investing activities     (52,434 )   (2,745,697 )   (761,663 )   (785,730 )   (351,310 )
      Financing activities   $ (1,303,463 ) $ 1,647,300   $ (51,810 ) $ 40,109   $ (471,103 )
    Ratio of Earnings to Fixed Charges and Preferred Stock Dividends (4)     1.40x     1.51x     1.50x     1.63x     1.33x  
   
 
 
 
 
 
  Funds from Operations (FFO) (5)   $ 1,411,368   $ 1,181,924   $ 1,041,105   $ 936,356   $ 786,635  
   
 
 
 
 
 
  FFO allocable to Simon Property   $ 1,110,933   $ 920,196   $ 787,467   $ 691,004   $ 571,974  
   
 
 
 
 
 

Notes

(1)
On October 14, 2004 Simon Property acquired Chelsea Property Group, Inc. On May 3, 2002, Simon Property jointly acquired Rodamco North America N.V. In the accompanying financial statements, Note 2 describes the basis of presentation and Note 4 describes acquisitions and disposals.

(2)
Before allocation to Limited Partners.

(3)
Represents distributions declared per period.

(4)
The ratios for 2004, 2003, and 2002 have been restated for the reclassification of discontinued operations described in Note 3. 2002 includes $162.0 million of gains on sales of assets, net, and excluding these gains the ratio would have been 1.42x. 2001 includes a $47,000 impairment charge. Excluding this charge the ratio would have been 1.39x in 2001.

(5)
FFO is a non-GAAP financial measure that we believe provides useful information to investors. Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations for a definition and reconciliation of FFO.

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Management's Discussion and Analysis of Financial Condition and Results of Operations

Simon Property Group, Inc. and Subsidiaries

            You should read the following discussion in conjunction with the financial statements and notes thereto that are included in this Annual Report to Stockholders. 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 include the matters disclosed in Simon Property's periodic reports from time to time as well as 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 REIT status, the availability of financing, changes in market rates of interest, and exchange rates for 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, Inc. ("Simon Property") is a Delaware corporation that operates as a self-administered and self-managed real estate investment trust ("REIT"). To qualify as a REIT, among other things, a company must distribute at least 90 percent of its taxable income to its stockholders annually. Taxes are paid by stockholders on ordinary dividends received and any capital gains. Most states also follow this federal treatment and do not require REITs to pay state income tax. Simon Property Group, L.P. (the "Operating Partnership") is a majority-owned partnership subsidiary of Simon Property that owns all of our real estate properties. In this discussion, the terms "we", "us" and "our" refer to Simon Property, the Operating Partnership, and their subsidiaries.

            We are engaged in the ownership, development, and management of retail real estate properties, primarily regional malls, Premium Outlet® centers and community/lifestyle centers. As of December 31, 2005, we owned or held an interest in 286 income-producing properties in the United States, which consisted of 171 regional malls, 71 community/lifestyle centers, 33 Premium Outlet centers and 11 other shopping centers or outlet centers in 39 states plus Puerto Rico (collectively, the "Properties", and individually, a "Property"). We also own interests in ten 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 (France, Italy, and Poland); five Premium Outlet centers in Japan; and one Premium Outlet center in Mexico.

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

            Revenues of our management company, after intercompany eliminations, consist primarily of management fees that are typically based upon the revenues of the property being managed.

            We seek growth in our earnings, funds from operations ("FFO"), and cash flows by enhancing the profitability and operation of our regional malls, Premium Outlet centers, community/lifestyle centers, and international investments. We seek to accomplish this growth through the following:

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            We also grow by generating supplemental revenues in our existing real estate portfolio, from outlot parcel sales and, due to our size and tenant relationships, from the following:

            We strive to develop high quality real estate across the retail real estate spectrum. We pursue 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 selectively develop new properties in major metropolitan areas that exhibit strong population and economic growth.

            We acquire high quality retail real estate within our three domestic platforms. As part of our acquisition strategy, we review and evaluate a number of acquisition opportunities based on their complement to our Portfolio.

            Lastly, we are selectively expanding our international presence. Our strategy to investing internationally includes partnering with established real estate companies and financing international investments with local currency to minimize foreign exchange risk.

            To support our overall growth goals, we employ a three-fold capital strategy:

Results Overview

            Our core business fundamentals remained stable during 2005. Regional mall comparable sales per square foot ("psf") strengthened in 2005, increasing 5.4% to $450 psf from $427 psf in 2004, reflecting robust retail demand and the disposition of lower quality properties. Our regional mall average base rents increased 3.0% to $34.49 psf from $33.50 psf. In addition, we maintained strong regional mall leasing spreads of $7.40 psf in 2005 increasing from $5.74 psf in 2004. The regional mall leasing spread for 2005 includes new store leases signed at an average of $43.18 psf initial base rents as compared to $35.78 psf for store leases terminating or expiring in the same period. Our same store leasing spread for 2005 was $7.00 psf or a 17.6% growth rate and is calculated by comparing leasing activity completed in 2005 with the prior tenants' rents for those exact same spaces. Finally, our regional mall occupancy increased by 40 basis points to 93.1% as of December 31, 2005 from 92.7% as of December 31, 2004.

            During 2005, we completed acquisitions of two joint venture Properties through the following transactions:

            During 2005, we invested approximately $593.0 million in development and redevelopment/expansion opportunities for our consolidated and joint venture Properties, highlighted by the following openings:

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            We continue to identify additional opportunities in various international markets. We look to continue to focus on our joint venture interests in Europe, Japan, and other market areas abroad. In 2005, we increased our presence in Japan with the opening of Toki Premium Outlets, a 178,000 square-foot center which opened fully leased in March of 2005. Also in 2005, we realigned the interests in European Retail Enterprises, B.V. ("ERE") with the result that our ownership and our new partner's ownership were increased to 50% each in the first quarter of 2006. We will continue to evaluate our development opportunities in future shopping centers located in China as well as additional expansion of the Premium Outlet center locations in other Far East markets. We expect international development and redevelopment/expansion activity for 2006 to include:

            Regarding financing activities, despite significantly increasing rate environments that have resulted in one-month LIBOR increasing approximately 200 basis points (4.39% at December 31, 2005 versus 2.40% at December 31, 2004), our effective weighted average interest rate increased by only 44 basis points during the year. Our financing activities were highlighted by the following:

United States Portfolio Data

            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 United States. The following table sets forth these key operating statistics for:

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

 
   2005
   %/basis points
Change(1)
   2004
   %/basis point
Change(1)
   2003
   %/basis point
Change(1)
Regional Malls:                              
Occupancy                              
Consolidated     93.3%   +60 bps     92.7%   +50 bps     92.2%   +10 bps
Unconsolidated     92.7%   +10 bps     92.6%     -10 bps     92.7%     -80 bps
Total Portfolio     93.1%   +40 bps     92.7%   +30 bps     92.4%     -30 bps

Average Base Rent per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 34.05   3.8%   $ 32.81   4.9%   $ 31.28   5.5%
Unconsolidated   $ 35.30   1.5%   $ 34.78   3.1%   $ 33.73   3.8%
Total Portfolio   $ 34.49   3.0%   $ 33.50   3.8%   $ 32.26   5.1%

Comparable Sales Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 435   5.8%   $ 411   5.9%   $ 388   3.8%
Unconsolidated   $ 478   3.9%   $ 460   7.8%   $ 427   0.5%
Total Portfolio   $ 450   5.4%   $ 427   6.1%   $ 402   2.9%

Premium Outlet Centers:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy     99.6%   +30 bps     99.3%   —     —   —
Average Base Rent per Square Foot   $ 23.16   6.0%   $ 21.85   —     —   —
Comparable Sales Per Square Foot   $ 444   7.8%   $ 412   —     —   —

Community/Lifestyle Centers:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy                              
Consolidated     89.5%   -100 bps     90.5%   +340 bps     87.1%   +220 bps
Unconsolidated     96.1%   -140 bps     94.7%     -160 bps     96.3%     -510 bps
Total Portfolio     91.6%     -30 bps     91.9%   +170 bps     90.2%   +330 bps

Average Base Rent per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 11.70   5.2%   $ 11.12   1.0%   $ 11.01   7.5%
Unconsolidated   $ 10.81   3.1%   $ 10.49   7.4%   $ 9.77   (0.9%)
Total Portfolio   $ 11.41   4.6%   $ 10.91   3.0%   $ 10.59   4.6%

Comparable Sales Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 228   2.7%   $ 222   5.5%   $ 210   6.6%
Unconsolidated   $ 204   2.0%   $ 200   (2.9%)   $ 206   1.6%
Total Portfolio   $ 220   2.3%   $ 215   2.9%   $ 209   4.8%
(1)
Percentages may not recalculate due to rounding.

            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 Outlet centers, and all tenants at community/lifestyle 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 Outlet centers and community/lifestyle centers. Retail sales at Owned GLA affect revenue and profitability levels because sales determine the amount of minimum rent that can be

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charged, the percentage rent realized, and the recoverable expenses (common area maintenance, real estate taxes, allocable energy, administrative, repairs, maintenance, and capital improvements) that tenants can afford to pay.

International Property Data

            The following key operating statistics are provided for our investments in 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 international Premium Outlet centers for 2004 are provided for comparative purposes. These investments were acquired as part of our acquisition of Chelsea in the fourth quarter of 2004.

 
   2005
   2004
   2003
European Shopping Centers                
Occupancy     98.1%     96.0%   99.3%
Comparable sales per square foot (1)   $ 450   $ 526   N/A
Average rent per square foot (1)   $ 30.47   $ 34.11   N/A

International Premium Outlet Centers (2)
 
 
 
 
 
 
 
 
Occupancy     100%     100%   —
Comparable sales per square foot (3)   $ 828   $ 821   —
Average rent per square foot (3)   $ 40.56   $ 40.32   —
(1)
Based on a conversion factor (Euro:USD) of 1.1845 for 2005 and 1.3644 for 2004.

(2)
Does not include Premium Outlets Punta Norte in Mexico, which opened December 2004.

(3)
Based on a conversion factor (USD:Yen) of 110.45 for 2005 and 108.17 for 2004.

Significant Accounting Policies

            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 important to understanding our business:

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Results of Operations

            In addition to the 2005 acquisitions, dispositions and Property openings previously discussed in the Results Overview, the following acquisitions, dispositions, and Property openings affected our consolidated results from continuing operations in the comparative periods:

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            In addition to the 2005 acquisitions, dispositions, and Property openings previously discussed in the Results Overview, the following acquisitions, dispositions, and Property openings affected our income from unconsolidated entities in the comparative periods:

            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 significant property dispositions on the indicated date:

Property
   Date of Disposition    
Hutchinson Mall   June 15, 2004
Bridgeview Court   July 22, 2004
Woodville Mall   September 1, 2004
Heritage Park Mall   December 29, 2004
Riverway (office)   June 1, 2005
O'Hare International Center (office)   June 1, 2005
Grove at Lakeland Square   July 1, 2005
Cheltenham Square   November 17, 2005
Southgate Mall   November 28, 2005
Eastland Mall (Tulsa, OK)   December 16, 2005
Biltmore Square   December 28, 2005

            For the purposes of the following comparisons between the years ended December 31, 2005 and 2004 and the years ended December 31, 2004 and 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.

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Year Ended December 31, 2005 vs. Year Ended December 31, 2004

            Minimum rents, excluding rents from our consolidated Simon Brand and Simon Business initiatives, increased $393.3 million during the period. The net effect of the Property Transactions increased minimum rents $355.9 million of which $299.7 million was due to the operations of the Premium Outlet centers and other Properties acquired from Chelsea in October of 2004 (the "Chelsea Acquisition"). Total amortization of the fair market value of in-place leases increased minimum rents by $25.1 million, including the impact of the Property Transactions, principally the result of the Chelsea Acquisition. Comparable rents, excluding rents from Simon Brand and Simon Business, increased $37.4 million, or 2.7%. This was primarily due to the leasing of space at higher rents that resulted in an increase in base rents of $30.1 million. In addition, increased rents from carts, kiosks, and other temporary tenants increased comparable rents by $6.7 million. Straight-line rents also increased by $12.9 million year over year.

            Overage rents increased $19.2 million of which $15.7 million related to the Property Transactions, principally the Chelsea Acquisition. Comparable overage rents increased $3.5 million.

            Tenant reimbursements, excluding Simon Business initiatives, increased $142.3 million. The Property Transactions accounted for $122.0 million of this increase, $98.3 million of which was due to the Chelsea Acquisition. The remainder of the increase of $20.3 million, or 2.8%, was in comparable Properties and was due to inflationary increases in property operating expenses, resulting in higher reimbursements.

            Management fees and other revenues increased $5.0 million primarily due to increased leasing and development fees generated through our support activities provided to new joint venture Properties.

            Total other income, excluding consolidated Simon Brand and Simon Business initiatives, decreased $1.3 million. The aggregate decrease in other income included the following significant activity:

            Consolidated revenues from Simon Brand and Simon Business initiatives increased $23.3 million to $155.0 million from $131.7 million. The increase in revenues is primarily due to:

            The increased revenues from Simon Brand and Simon Business were offset by a $1.9 million increase in Simon Brand and Simon Business expenses that primarily resulted from increased gift card and other operating expenses, which are reported with property operating expenses in our consolidated statements of operations and comprehensive income.

            Property operating expenses increased $65.9 million, $14.8 million of which was on comparable properties (representing an increase of 4.4%) and was principally as a result of inflationary increases. The remainder of the increase in property operating expenses was due to the effect of Property Transactions, principally the Chelsea Acquisition.

            Depreciation and amortization expenses increased $242.8 million primarily due in large part to the net effect of the Property Transactions. The Chelsea Acquisition accounted for $191.1 million of the increase. Comparable properties depreciation and amortization increased $9.6 million, or 1.8%, due to the effect of our expansion and renovation activities.

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            Real estate taxes increased $46.2 million, due principally to the Property Transactions. The Chelsea Acquisition accounted for $32.3 million of the increase. The increase for the comparable properties was $9.3 million, or 4.0%.

            Repairs and maintenance increased $16.2 million due principally to the Property Transactions. The Chelsea Acquisition accounted for $9.7 million of the increase. The comparable properties increased $4.5 million, or 5.4%.

            Advertising and promotion expenses increased $23.6 million, of which $24.7 million was due to the Property Transactions, offset by a $1.1 million decrease on comparable properties.

            Provision for credit losses decreased $8.9 million from the prior period due to a reduction of gross receivables, an overall improvement in quality of the receivables, and recoveries of amounts previously written off or provided for in prior periods.

            Home office and regional costs increased $26.2 million due to the Property Transactions, primarily due to the Chelsea Acquisition and the additional costs of operating the Roseland, NJ offices, and incentive compensation arrangements.

            Other expenses increased $18.3 million due to increases in ground rent expenses of $5.1 million and increases in professional fees and legal fees.

            Interest expense increased $145.3 million due to the following:

            Income from unconsolidated entities for 2005 was comparable to the results of our income from consolidated entities for 2004. This includes an increase in the aggregate operations of our joint venture Properties, as a result of our acquisition activity and redevelopment/expansion, offset by an increase in the amount of depreciation and amortization related to acquired properties, principally as a result of the Chelsea Acquisition. The total number of joint venture properties increased from 124 in 2004 to 126 in 2005.

            We recorded a $0.8 million net loss on the sales of interests in unconsolidated entities in 2005 that included our share of the loss on the sale of Forum Entertainment Center of $13.7 million, offset by our share of the gain on the sale of Metrocenter of $11.8 million and a $1.3 million net gain on the sale of a property management entity acquired as part of the Rodamco acquisition in 2002.

            In 2005, the gain on sale of discontinued operations of $146.9 million principally represents the net gain upon disposition of seven non-core Properties consisting of four regional malls, two office buildings, and one community/lifestyle center.

            The results of operations from discontinued operations includes the net operating results of properties sold, including the sale of underlying ground adjacent to the Riverway and O'Hare International Center properties. We believe these dispositions will not have a material adverse effect on our results of operations or liquidity.

            Preferred distributions of the Operating Partnership increased by $6.9 million and preferred dividends increased $31.5 million due to the preferred stock and preferred units issued in the Chelsea Acquisition.

Year Ended December 31, 2004 vs. Year Ended December 31, 2003

            Minimum rents, excluding rents from our consolidated Simon Brand and Simon Business initiatives, increased $207.0 million during the period. The net effect of the Property Transactions increased minimum rents $136.2 million, including the amortization of $6.5 million of fair market value of acquired in-place leases as part of our acquisitions. Comparable base rents, excluding rents from Simon Brand and Simon Business, increased $70.8 million, including $7.7 million for the amortization of fair market value of in-place leases. Leasing of space at higher rents also resulted

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in an increase in base rents of $54.9 million. In addition, increased rents from carts, kiosks, and renting unoccupied in-line space increased comparable rents from temporary tenant income by $7.8 million. Straight-line rents also increased by $5.7 million year over year.

            Overage rents increased $19.2 million of which $13.6 million related to the Property Transactions. Comparable overage rents increased $5.6 million.

            Tenant reimbursements, excluding Simon Business initiatives, increased $80.0 million. The Property Transactions accounted for $57.5 million of the increase. The remaining portion of the increase was primarily due to increases in comparable recoverable expenditures amounting to $22.5 million, or 3.4%.

            Our management company recorded fee revenues of $55.4 million and insurance premium revenues of $17.3 million.

            Total other income, excluding consolidated Simon Brand and Simon Business initiatives, increased $6.6 million. The increase in other income was primarily due to increased outlot land sales of $11.2 million offset by a decline in lease settlement income of $2.3 million and interest income of $4.6 million.

            Consolidated revenues from Simon Brand and Simon Business initiatives increased $31.8 million to $131.7 million from $99.9 million. The increase in revenues is primarily due to:

            The increased revenues from Simon Brand and Simon Business were offset by a $20.2 million increase in Simon Brand and Simon Business expenses that primarily resulted from increased gift card and other operating expenses, which are reported with property operating expenses in our consolidated statement of operations and comprehensive income.

            Property operating expenses increased $46.2 million, $18.5 million of which was on comparable properties (representing an increase of 5.8%) and was principally as a result of inflationary increases and increased gift card expenses discussed above. The remainder of the increase in property operating expenses was due to the effect of the Property Transactions.

            Depreciation and amortization expenses increased $125.8 million due in large part to the net effect of the Property Transactions. Comparable properties accounted for $53.0 million of the increase due to redevelopment and expansion activity.

            Real estate taxes increased $35.2 million, of which the Property Transactions accounted for $24.4 million of the increase. The increase for the comparable properties was $10.6 million, or 5.1%.

            Repairs and maintenance increased $8.3 million due principally to the Property Transactions.

            Advertising and promotion expenses increased $7.7 million, of which $14.1 million was due to the Property Transactions offset by a decrease of $6.4 million on comparable properties.

            Home office and regional costs increased $11.1 million due to the Property Transactions.

            In 2003, we incurred $10.6 million of costs related a withdrawn tender offer which did not recur in 2004.

            Other expenses increased $12.6 million due to increases in ground rent expenses of $4.9 million and increases in professional fees and legal fees.

            Interest expense increased $58.8 million as a result of the following:

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            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 $18.5 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. The total number of joint venture properties increased from 76 in 2003 to 124 in 2004.

            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 a hotel property) 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 the sale of five non-core properties during 2004, consisting of three regional malls, one community/lifestyle center, and one Premium Outlet center. Our discontinued operations also include the significant property dispositions during 2005. 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.

            Preferred distributions of the Operating Partnership increased by $9.2 million for 2004 as a result of the issuance of additional units in the Chelsea acquisition and Kravco transaction in the fourth quarter of 2003. The Limited Partners' weighted average interest in the Operating Partnership was 22.3% and 24.6% for 2004 and 2003, respectively.

            Finally, preferred dividends decreased $12.8 million due to the conversion of shares of 6.5% Series B Preferred Stock into common stock in the fourth quarter of 2003 and redemption of the Series E Preferred 8% Stock in the fourth quarter of 2004, partially offset by preferred dividends on the recently issued Series I and J Preferred Stock issued in connection with the acquisition of Chelsea.

Liquidity and Capital Resources

            Because we generate revenues primarily from long-term leases, our financing strategy relies primarily on long-term fixed rate debt. We manage our floating rate debt to be approximately 15-25% of total outstanding indebtedness by setting interest rates for each financing or refinancing based on current market conditions. We also enter into interest rate protection agreements as appropriate to assist in managing our interest rate risk. We derive most of our liquidity from leases that generate positive net cash flow from operations and distributions of capital from unconsolidated entities that totaled $1.6 billion during 2005. In addition, our Credit Facility provides an alternative source of liquidity as our cash needs vary from time to time.

            Our balance of cash and cash equivalents decreased $183.0 million during 2005 to $337.0 million as of December 31, 2005, principally as a result of changes to our co-branded gift card programs whereby funds are now held by the card-issuer banks. The December 31, 2005 cash and cash equivalent, included a balance of $42.3 million related to the co-branded gift card programs, which we do not consider available for general working capital purposes.

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Management's Discussion and Analysis of Financial Condition and Results of Operations

Simon Property Group, Inc. and Subsidiaries

            We refinanced the Credit Facility twice in 2005. On January 11, 2005, we increased the facility from $1.25 billion to $2.0 billion. On December 15, 2005, we refinanced the Credit Facility increasing it to $3.0 billion. The Credit Facility has a maturity date of January 11, 2010, with an additional one-year extension available at our option. The facility can also be increased to $3.5 billion within the first two years of closing at our option. The Credit Facility bears interest at LIBOR plus 42.5 basis points with an additional 15 basis point facility fee on the entire facility and provides for variable grid pricing based upon our corporate credit rating. Prior to December 15, 2005, the rate on the Credit Facility was LIBOR plus 55 basis points. In addition, the Credit Facility has a $750 million U.S. dollar equivalent 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 $1.5 billion On December 31, 2005, the Credit Facility had available borrowing capacity of $2.2 billion net of outstanding borrowings of $809.3 million and letters of credit of $2.5 million. During 2005, the maximum amount outstanding under the Credit Facility was $1.2 billion and the weighted average amount outstanding was $813.5 million. The weighted average interest rate was 3.75% for the year ended December 31, 2005.

            We and the Operating Partnership 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 Baa1 by Moody's Investors Service, BBB+ by Standard & Poor's, and BBB+ by Fitch.

            Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $1.6 billion during 2005. We also received $384.1 million primarily from the sale of sixteen non-core Properties. We received net payments from our debt financing and repayment activities in 2005 of $235.0 million, as discussed below in "Financing and Debt". We also:

            We met our maturing debt obligations in 2005 primarily through our refinancing and borrowing activities.

            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 stockholders and unitholders necessary to maintain our REIT qualification for 2006 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:


            We have $1.0 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 7.02% and weighted average maturities of 6.3 years.

            On June 7, 2005, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $1.0 billion at a weighted average fixed interest rate of 4.90%. The first tranche is $400.0 million at

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a fixed interest rate of 4.60% due June 15, 2010, and the second tranche is $600.0 million at a fixed interest rate of 5.10% due June 15, 2015. We received net proceeds of $993.0 million. We used $358.0 million of the net proceeds to reduce borrowings on our Credit Facility, $600.0 million to reduce a $1.8 billion term loan we used to finance part of our acquisition of Chelsea (the "Acquisition Facility"), and the remaining portion was used for general working capital purposes. All of the Rule 144A notes were exchanged in July of 2005 in a transaction registered under the Securities Act of 1933 for notes having the same economic terms and conditions.

            On November 8, 2005, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $1.1 billion at a weighted average fixed interest rate of 5.58%. The first tranche is $500.0 million at a fixed interest rate of 5.375% due June 1, 2011, and the second tranche is $600.0 million at a fixed interest rate of 5.75% due December 1, 2015. We received net proceeds of $1.09 billion. We used $475.0 million of the net proceeds to reduce borrowings on our Credit Facility, $600.0 million to reduce the Acquisition Facility, and the remaining portion was used for general working capital purposes. All of the Rule 144A notes are expected to be exchanged in 2006 in a transaction registered under the Securities Act of 1933 for notes having the same economic terms and conditions.

            Credit Facility.    Other significant activity on the Credit Facility during the twelve-month period ended December 31, 2005 was as follows:

Draw Date
   Draw Amount
   Use of Credit Line Proceeds
January 20, 2005   $ 200,000   •   To repay a $250 million unsecured term loan, which had a rate of LIBOR plus 65 basis points.
March 31, 2005     17,268   •   Repayment of Chelsea's Yen unsecured loan facility, which had a rate of TIBOR plus 125 basis points.
May 16, 2005     110,000   •   Repayment of $110 million unsecured notes, which had a fixed rate of 7.625%.
June 15, 2005     300,000   •   Repayment of $300 million of unsecured notes, which had a fixed rate of 6.75%.
June 24, 2005     100,000   •   Repayment of $100 million Medium Term Notes, which had a fixed rate of 7.125%.
Various dates     155,000   •   Repayment of various series of unsecured notes, which had fixed rates ranging from 6.875% to 8.375%.
August 30, 2005     63,000   •   To repay two secured mortgages for one regional mall, which had fixed rates of 7.13% and 7.77%, respectively.
December 15, 2005     242,475   •   To repay a 200 million Euro-denominated unsecured term loan, which had a rate of EURIBOR plus 60 basis points.

            Other amounts drawn on the Credit Facility were primarily for general working capital purposes. The total aggregate amount of our repayments on the Credit Facility during the twelve month period ended December 31, 2005 was $1.5 billion. The total outstanding balance of the Credit Facility was $809.3 million as of December 31, 2005. During 2005, the maximum amount outstanding under the Credit Facility was $1.2 billion and the weighted average amount outstanding was $813.5 million.

            Acquisition Facility.    We borrowed the $1.8 billion Acquisition Facility in 2004 to finance the cash portion of the Chelsea Acquisition. Acquisition Facility matures on October 12, 2006 and has one remaining principal payment, due 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. There is also a 7.5 basis point lenders' fee from the 13th to the 18th month, increasing to 10 basis points from the 18th month to maturity.

            Total secured indebtedness, excluding net premiums, was $4.5 billion and $5.0 billion at December 31, 2005 and December 31, 2004, respectively. During the twelve-month period ended December 31, 2005, we repaid $116.7 million in mortgage loans, unencumbering five separate Properties. In addition, on June 1, 2005, we repaid a $110 million

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mortgage related to our disposition of Riverway, which bore interest at LIBOR plus 115 basis points, and had a maturity date of October 1, 2006. On November 17, 2005, we sold Cheltenham Square, which held a $54.9 million mortgage that bore interest at a fixed rate of 5.89%, and had a maturity date of July 1, 2014. Finally, on December 28, 2005, the deed for Biltmore Square was surrendered to the bank in full consideration of the $26 million mortgage on the property, which bore interest at a fixed rate of 7.95%, and had an anticipated maturity date of December 11, 2010.

            We incurred interest expense during 2005 of $799.1 million net of capitalized interest of $14.4 million. Our consolidated debt, adjusted to reflect outstanding derivative instruments, as of December 31, and effective weighted average interest rate for the years then ended consisted of the following (dollars in thousands):

Debt Subject to          
   Adjusted Balance
as of
December 31, 2005
   Effective
Weighted
Average
Interest Rate
   Adjusted Balance
as of
December 31, 2004
   Effective
Weighted
Average
Interest Rate
Fixed Rate   $ 11,908,050   6.22%   $ 10,766,015   6.48%
Variable Rate     2,198,067   4.95%     3,820,378   3.06%
   
 
 
 
    $ 14,106,117   6.02%   $ 14,586,393   5.58%
   
     
   

            As of December 31, 2005, we had interest rate cap protection agreements on $207.4 million of consolidated variable rate debt. We had interest rate protection agreements effectively converting variable rate debt to fixed rate debt on $59.1 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 4.64% and a weighted average fixed receive rate of 3.72% at December 31, 2005. As of December 31, 2005 and December 31, 2004, the net effect of these agreements effectively converted $310.9 million and $304.5 million of fixed rate debt to variable rate debt, respectively.

            We expect to meet our 2006 debt maturities principally 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.

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            Contractual Obligations and Off-balance Sheet Arrangements:    The following table summarizes the material aspects of our future obligations as of December 31, 2005 (dollars in thousands):

 
   2006
   2007 to 2008
   2009 to 2011
   After 2011
   Total
Long Term Debt                              
Consolidated (1)   $ 1,414,042   $ 2,602,090   $ 5,667,985   $ 4,336,854   $ 14,020,971
   
 
 
 
 
Pro Rata Share Of Long Term Debt:                              
  Consolidated (2)   $ 1,411,005   $ 2,549,186   $ 5,608,659   $ 4,261,090   $ 13,829,940
  Joint Ventures (2)     421,516     476,464     1,218,656     1,053,931     3,170,567
   
 
 
 
 
Total Pro Rata Share Of Long Term Debt     1,832,521     3,025,650     6,827,315     5,315,021     17,000,507
Consolidated Capital Expenditure Commitments (3)     705,305     528,413     —     —     1,233,718
Joint Venture Capital Expenditure Commitments (3)     171,568     310,520     —     —     482,088
Consolidated Ground Lease Commitments     16,612     33,744     50,279     705,986     806,621
   
 
 
 
 
Total   $ 2,726,006   $ 3,898,326   $ 6,877,594   $ 6,021,008   $ 19,522,934
   
 
 
 
 
(1)
Represents principal maturities only and therefore, excludes net premiums and discounts and fair value swaps of $85,146.

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

(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.

            Our off-balance sheet arrangements relate primarily to 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, 2005, we have guaranteed, provided letters of credit, or have entered into the other guarantee obligations to support $41.6 million of our total $3.2 billion share of joint venture mortgage and other indebtedness presented in the table above.

            During 2005, seven unitholders exchanged 197,155 units of the 6% Convertible Perpetual Preferred Units for an equal number of shares of Series I Preferred Stock, and we redeemed 3,300 units of Series I Preferred Units for cash.

            Acquisitions.    In 2005 we acquired ownership interest in the following Properties:

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            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 2005, we disposed of sixteen non-core Properties that no longer met our strategic criteria. These consisted of four regional malls, two office buildings, one community/lifestyle center, and nine other outlet centers. 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 retail real estate. Our partners in our joint ventures may initiate these provisions at any time and if we determine it is in our 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. On January 11, 2005, Metrocenter, a regional mall located in Phoenix, Arizona was sold. On December 22, 2005, our Canadian property, Forum Entertainment Centre was sold. We held a 50% interest in Metrocenter and a 38% interest in Forum Entertainment Centre.

            New Developments.    The following describes our new development projects, the estimated total cost, our share of the estimated total cost and our share of the construction in progress balance as of December 31, 2005 (dollars in millions):

Property
   Location
   Gross
Leasable
Area
   Estimated
Total
Cost(a)
   Our Share of
Estimated
Total
Cost
   Our Share of
Construction in
Progress
   Estimated Opening
Date
Under Construction:                              
The Town Center at Coconut Point   Estero/Bonita Springs, FL   1,200,000   $ 213   $ 107   $ 54   2nd Quarter 2006 (b)
The Domain   Austin, TX   700,000     195     195     90   1st Quarter 2007
Rio Grande Valley Premium Outlets   Mercedes, TX   404,000     59     59     17   4th Quarter 2006
Round Rock Premium Outlets   Round Rock, TX (Austin)   433,000     106     106     50   3rd Quarter 2006
The Shops at Arbor Walk   Austin, TX   460,000     52     52     7   1st Quarter 2007
The Village at SouthPark   Charlotte, NC   81,000     26     26     2   1st Quarter 2007
(a)
Represents the project costs net of land sales, tenant reimbursements for construction, and other items (where applicable).

(b)
The estimated opening date represents Phase I only. Phase II estimated opening date is 4th quarter 2006.

            We expect to fund these capital projects with available cash flow from operations, borrowings from our Credit Facility, or project specific construction loans. We expect our share of the total 2006 new development costs during the year to be approximately $450.0 million.

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            Strategic 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 the construction in progress balance as of December 31, 2005 (dollars in millions):

Property
   Location
   Incremental
Gross
Leasable
Area
   Estimated
Total
Cost(a)
   Our Share
of
Estimated
Total Cost
   Our Share
of
Construction
in Progress
   Estimated Opening
Date
Under Construction:                              
Lenox Square   Atlanta, GA   65,300   $ 44   $ 44   $ 4   4th Quarter 2007
Northgate Mall   Seattle, WA   114,600     39     39     2   2nd Quarter 2007
Smith Haven Mall   Lake Grove
(New York), NY		   20,900     65     16     3   4th Quarter 2006
(a)
Represents the project costs net of land sales, tenant reimbursements for construction, and other items (where applicable).

            We expect to fund these capital projects with available cash flow from operations or borrowings from the Credit Facility. We have other renovation and/or expansion projects currently under construction or in preconstruction development and expect to invest a total of approximately $175.0 million (our share) on expansion and renovation activities in 2006.

            On December 28, 2005, we invested $50 million of equity for a 40% interest in a joint venture with Toll Brothers, Inc. (Toll Brothers) and Meritage Homes Corp. (Meritage Homes) to purchase a 5,485-acre land parcel in northwest Phoenix from DaimlerChrysler Corporation for $312 million. Toll Brothers and Meritage Homes each plan to build a significant number of homes on the site. We have the option to purchase a substantial portion of the commercial property for retail uses. Other parcels may also be sold to third parties. Initial plans call for a mixed-use master planned community, which will include approximately 4,840 acres of single-family homes and attached homes. Approximately 645 acres of commercial and retail development will include schools, community amenities and open space. Initial home sales are tentatively scheduled to begin in 2009. The joint venture, of which Toll Brothers is the managing member, expects to develop a master planned community of approximately 12,000 to 15,000 residential units.

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

 
   2005
   2004
   2003
New Developments   $ 341   $ 215   $ 105
Renovations and Expansions     252     244     187
Tenant Allowances     69     73     54
Operational Capital Expenditures     64     17     8
   
 
 
Total   $ 726   $ 549   $ 354
   
 
 

            International.    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.

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

            We operate in Europe through two separate joint ventures: European Retail Enterprises, B.V. ("ERE"), in which we hold a 34.7% interest and Gallerie Commerciali Italia ("GCI"), in which we hold a 49% interest. The carrying amount of our total combined investment in ERE and GCI as of December 31, 2005 net of the related cumulative translation adjustment was $287.4 million. Currently a total of seven European developments are under construction that will add approximately 4.4 million square feet of GLA for a total net cost of approximately €683.1 million, of which our share is approximately €183.7 million.

            On October 20, 2005, Ivanhoe Cambridge, Inc. ("Ivanhoe"), an affiliate of Caisse de dépôt et placement du Québec, effectively acquired our former partner's 39.5% ownership interest in ERE. On February 13, 2006, pursuant to the terms of our October 20, 2005 transaction with Ivanhoe, we sold a 10.5% interest in ERE to Ivanhoe for €45.2 million, or $53.9 million. We then settled all remaining share purchase commitments from the founders of ERE, including the early settlement of some commitments by purchasing an additional 25.8% interest for €55.1 million, or $65.5 million. The result of these transactions equalized our and Ivanhoe's ownership in ERE to 50% each. We expect to record a gain on this transaction in the first quarter of 2006.

            As of December 31, 2005, the carrying amount of our 40% joint venture investment in the five Japanese Premium Outlet centers net of the related cumulative translation adjustment was $287.7 million. There is one project under expansion in Sano, Japan which contains total GLA of 91,000 square feet for a total net cost of ¥2.4 billion, of which our share is approximately ¥1.0 billion.

Distributions

            On February 3, 2006, our Board of Directors ("Board") approved an increase in the annual distribution rate to $3.04 per share. Dividends during 2005 aggregated $2.80 per share and dividends during 2004 aggregated $2.60 per share. We are required to pay a minimum level of dividends to maintain our status as a REIT. Our dividends and limited partner distributions typically exceed our net income generated in any given year primarily because of depreciation, which is a "non-cash" expense. Our future dividends and the distributions of the Operating Partnership will be determined by the Board based on actual results of operations, cash available for dividends and limited partner distributions, and what may be required to maintain our status as a REIT.

Non-GAAP Financial Measure — Funds from Operations

            Industry practice is to evaluate real estate properties in part based on funds from operations ("FFO"). We consider FFO to be a key measure of our operating performance that is not specifically defined by accounting principles generally accepted in the United States ("GAAP"). We believe that FFO is helpful to investors because it is a widely recognized measure of the performance of REITs and provides a relevant basis for comparison among REITs. We also use this measure internally to measure the operating performance of our Portfolio.

            As defined by the National Association of Real Estate Investment Trusts ("NAREIT"), FFO is consolidated net income computed in accordance with GAAP:

•
excluding real estate related depreciation and amortization,

•
excluding gains and losses from extraordinary items and cumulative effects of accounting changes,

•
excluding gains and losses from the sales of real estate,

•
plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and

•
all determined on a consistent basis in accordance with GAAP.

81

            We have adopted NAREIT's clarification of the definition of FFO that requires us to include the effects of nonrecurring items not classified as extraordinary, cumulative effect of accounting change or resulting from the sale or disposal of depreciable real estate. However, you should understand that FFO:

•
does not represent cash flow from operations as defined by GAAP,

•
should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and

•
is not an alternative to cash flows as a measure of liquidity.

82

            The following schedule sets forth total FFO before allocation to the limited partners of the Operating Partnership and FFO allocable to Simon Property. This schedule also reconciles net income, which we believe is the most directly comparable GAAP financial measure, to FFO for the periods presented.

 
   For the Year Ended December 31,
  
 
   2005
   2004
   2003
  
 
   (in thousands)

  
Funds from Operations   $ 1,411,368   $ 1,181,924   $ 1,041,105  
   
 
 
 
Increase in FFO from prior period     19.4 %   13.5 %   11.2 %
   
 
 
 
Net Income   $ 475,749   $ 342,993   $ 368,715  
Adjustments to Net Income to Arrive at FFO:                    
  Limited partners' interest in the Operating Partnership, preferred distributions of the Operating Partnership and preferred dividends     136,766     106,867     113,000  
  Depreciation and amortization from consolidated properties and discontinued operations     850,519     615,195     499,737  
  Our share of depreciation and amortization and other items from unconsolidated entities     205,981     181,999     147,629  
  (Gain)/loss on sales of real estate and discontinued operations     (146,107 )   1,012     (17,248 )
  Tax (provision) benefit related to sale     (428 )   4,281     —  
  Minority interest portion of depreciation and amortization     (9,178 )   (6,857 )   (3,546 )
  Preferred distributions and dividends     (101,934 )   (63,566 )   (67,182 )
   
 
 
 
Funds from Operations   $ 1,411,368   $ 1,181,924   $ 1,041,105  
   
 
 
 
  FFO Allocable to Simon Property   $ 1,110,933   $ 920,196   $ 787,467  

Diluted net income per share to diluted FFO per share reconciliation:
 
 
 
 
 
 
 
 
 
 

Diluted net income per share
 
$
1.82
 
$
1.44
 
$
1.65
 
  Depreciation and amortization from consolidated Properties and our share of depreciation and amortization from unconsolidated affiliates, net of minority interest portion of depreciation and amortization     3.73     2.94     2.55  
  Gain on sales of other assets, and real estate and discontinued operations     (0.52 )   —     (0.07 )
  Tax provision related to sale     0.00     0.02     0.00  
  Impact of additional dilutive securities for FFO per share     (0.07 )   (0.01 )   (0.09 )
   
 
 
 
Diluted FFO per share   $ 4.96   $ 4.39   $ 4.04  
   
 
 
 
Basic weighted average shares outstanding     220,259     207,990     189,475  
Adjustments for dilution calculation:                    
Effect of stock options     871     867     824  
Impact of Series B preferred 6.5% convertible stock     —     —     11,686  
Impact of Series C cumulative preferred 7% convertible units     1,086     1,843     1,483  
Impact of Series I preferred 6% Convertible Perpetual stock     10,736     2,286     —  
Impact of Series I preferred 6% Convertible Perpetual units     3,369     759     —  
   
 
 
 
Diluted weighted average shares outstanding     236,321     213,745     203,468  

Weighted average limited partnership units outstanding
 
 
59,566
 
 
59,086
 
 
61,122
 
   
 
 
 
Diluted weighted average shares and units outstanding     295,887     272,831     264,590  
   
 
 
 

83


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 our 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, 2005. 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 that assessment, we believe that, as of December 31, 2005, 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 appears on the following page of this Annual Report.

84


Report Of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of
Simon Property Group, Inc.:

            We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting immediately preceding this report, that Simon Property Group, Inc. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, 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, Inc. and Subsidiaries' 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 company'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, Inc. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Simon Property Group, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, 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, Inc. and Subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2005, and our report dated March 7, 2006 expressed an unqualified opinion thereon.

    /s/ ERNST & YOUNG LLP
Indianapolis, Indiana
March 7, 2006		    

85


Report Of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of
Simon Property Group, Inc.:

            We have audited the accompanying consolidated balance sheets of Simon Property Group, Inc. and Subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations and comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements 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, Inc. and Subsidiaries at December 31, 2005 and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

            We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Simon Property Group, Inc. and Subsidiaries' internal control over financial reporting as of December 31, 2005, 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 7, 2006, expressed an unqualified opinion thereon.

    /s/ ERNST & YOUNG LLP
Indianapolis, Indiana
March 7, 2006		    

86


Simon Property Group, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share amounts)

 
   December 31,
2005
   December 31,
2004
  
ASSETS:              
  Investment properties, at cost   $ 21,745,309   $ 21,253,761  
    Less — accumulated depreciation     3,809,293     3,162,523  
   
 
 
      17,936,016     18,091,238  
  Cash and cash equivalents     337,048     520,084  
  Tenant receivables and accrued revenue, net     357,079     361,590  
  Investment in unconsolidated entities, at equity     1,562,595     1,920,983  
  Deferred costs and other assets     938,301     1,176,124  
   
 
 
    Total assets   $ 21,131,039   $ 22,070,019  
   
 
 
LIABILITIES:              
  Mortgages and other indebtedness   $ 14,106,117   $ 14,586,393  
  Accounts payable, accrued expenses, intangibles, and deferred revenues     1,092,334     1,113,645  
  Cash distributions and losses in partnerships and joint ventures, at equity     194,476     37,739  
  Other liabilities, minority interest and accrued dividends     163,524     311,592  
   
 
 
    Total liabilities     15,556,451     16,049,369  
   
 
 
COMMITMENTS AND CONTINGENCIES              

LIMITED PARTNERS' INTEREST IN THE OPERATING PARTNERSHIP
 
 
865,565
 
 
965,204
 

LIMITED PARTNERS' PREFERRED INTEREST IN THE OPERATING PARTNERSHIP
 
 
401,727
 
 
412,840
 

STOCKHOLDERS' EQUITY:
 
 
 
 
 
 
 
  CAPITAL STOCK (750,000,000 total shares authorized, $.0001 par value, 237,996,000 shares of excess common stock):              
      All series of preferred stock, 100,000,000 shares authorized, 25,632,122 and 25,434,967 issued and outstanding, respectively, and with liquidation values of $1,081,606 and $1,071,748, respectively     1,080,022     1,062,687  
      Common stock, $.0001 par value, 400,000,000 shares authorized, 225,165,236 and 222,710,350 issued and outstanding, respectively     23     23  
      Class B common stock, $.0001 par value, 12,000,000 shares authorized, 8,000 issued and outstanding     —     —  
      Class C common stock, $.0001 par value, 4,000 shares authorized, issued and outstanding     —     —  
  Capital in excess of par value     5,030,652     4,993,698  
  Accumulated deficit     (1,551,179 )   (1,335,436 )
  Accumulated other comprehensive income     9,793     16,365  
  Unamortized restricted stock award     (31,929 )   (21,813 )
  Common stock held in treasury at cost, 4,815,655 and 2,415,855 shares, respectively     (230,086 )   (72,918 )
   
 
 
    Total stockholders' equity     4,307,296     4,642,606  
   
 
 
    Total liabilities and stockholders' equity   $ 21,131,039   $ 22,070,019  
   
 
 

The accompanying notes are an integral part of these statements.

87

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

 
   For the Year Ended December 31,
  
 
   2005
   2004
   2003
  
REVENUE:                    
  Minimum rent   $ 1,937,657   $ 1,541,281   $ 1,331,538  
  Overage rent     85,536     66,385     47,207  
  Tenant reimbursements     896,901     748,262     654,267  
  Management fees and other revenues     77,766     72,737     74,677  
  Other income     168,993     156,414     134,710  
   
 
 
 
    Total revenue     3,166,853     2,585,079     2,242,399  
   
 
 
 

EXPENSES:
 
 
 
 
 
 
 
 
 
 
  Property operating     421,576     355,719     309,512  
  Depreciation and amortization     849,911     607,071     481,317  
  Real estate taxes     291,113     244,941     209,697  
  Repairs and maintenance     105,489     89,297     81,005  
  Advertising and promotion     92,377     68,775     61,090  
  Provision for credit losses     8,127     17,010     15,881  
  Home and regional office costs     117,374     91,178     80,105  
  General and administrative     17,701     16,776     15,073  
  Costs related to withdrawn tender offer     —     —     10,581  
  Other     57,762     39,469     26,835  
   
 
 
 
    Total operating expenses     1,961,430     1,530,236     1,291,096  
   
 
 
 

OPERATING INCOME
 
 
1,205,423
 
 
1,054,843
 
 
951,303
 
Interest expense     799,092     653,798     594,964  
   
 
 
 
Income before minority interest     406,331     401,045     356,339  
Minority interest     (13,743 )   (9,687 )   (7,277 )
Income tax expense of taxable REIT subsidiaries     (16,229 )   (11,770 )   (7,597 )
   
 
 
 
Income before unconsolidated entities     376,359     379,588     341,465  
Income from unconsolidated entities     81,807     81,113     99,645  
Loss on sales of interests in unconsolidated entities and other assets, net     (838 )   (760 )   (5,146 )
   
 
 
 
Income from continuing operations     457,328     459,941     435,964  
Results of operations from discontinued operations     8,242     (9,829 )   23,357  
Gain (loss) on disposal or sale of discontinued operations, net     146,945     (252 )   22,394  
   
 
 
 
Income before allocation to limited partners     612,515     449,860     481,715  

LESS:
 
 
 
 
 
 
 
 
 
 
  Limited partners' interest in the Operating Partnership     108,686     85,647     100,956  
  Preferred distributions of the Operating Partnership     28,080     21,220     12,044  
   
 
 
 

NET INCOME
 
 
475,749
 
 
342,993
 
 
368,715
 
Preferred dividends     (73,854 )   (42,346 )   (55,138 )
   
 
 
 

NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
 
$
401,895
 
$
300,647
 
$
313,577
 
   
 
 
 

BASIC EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
    Income from continuing operations   $ 1.27   $ 1.49   $ 1.47  
    Discontinued operations     0.55     (0.04 )   0.18  
   
 
 
 
    Net income   $ 1.82   $ 1.45   $ 1.65  
   
 
 
 

DILUTED EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
    Income from continuing operations   $ 1.27   $ 1.48   $ 1.47  
    Discontinued operations     0.55     (0.04 )   0.18  
   
 
 
 
    Net income   $ 1.82   $ 1.44   $ 1.65  
   
 
 
 
  Net Income   $ 475,749   $ 342,993   $ 368,715  
  Unrealized gain on interest rate hedge agreements     2,988     4,514     21,135  
  Net income on derivative instruments reclassified from accumulated other comprehensive income (loss) into interest expense     (1,428 )   (3,535 )   (4,442 )
  Currency translation adjustments     (7,342 )   3,130     2,993  
  Other (loss) income     (790 )   (330 )   1,009  
   
 
 
 
  Comprehensive Income   $ 469,177   $ 346,772   $ 389,410  
   
 
 
 

             The accompanying notes are an integral part of these statements.

88

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

 
   For the Year Ended December 31,
  
 
   2005
   2004
   2003
  
CASH FLOWS FROM OPERATING ACTIVITIES:                    
  Net income   $ 475,749   $ 342,993   $ 368,715  
    Adjustments to reconcile net income to net cash provided by operating activities —                    
      Depreciation and amortization     806,638     611,090     518,560  
      Impairment on Investment Properties     —     18,000     —  
      Loss on sales of interests in unconsolidated entities and other assets, net     838     760     5,146  
      (Gain) loss on disposal or sale of discontinued operations, net     (146,945 )   252     (22,394 )
      Limited partners' interest in the Operating Partnership     108,686     85,647     100,956  
      Preferred distributions of the Operating Partnership     28,080     21,220     12,044  
      Straight-line rent     (21,682 )   (8,981 )   (3,630 )
      Minority interest     13,743     9,687     7,277  
      Minority interest distributions     (24,770 )   (20,426 )   (5,466 )
      Equity in income of unconsolidated entities     (81,807 )   (81,113 )   (99,645 )
      Distributions of income from unconsolidated entities     106,954     97,666     87,453  
    Changes in assets and liabilities —                    
      Tenant receivables and accrued revenue, net     22,803     (37,166 )   34,277  
      Deferred costs and other assets     (24,097 )   (47,012 )   (26,396 )
      Accounts payable, accrued expenses, intangibles, deferred revenues and other liabilities     (91,329 )   90,241     (24,930 )
   
 
 
 
        Net cash provided by operating activities     1,172,861     1,082,858     951,967  
   
 
 
 

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
    Acquisitions     (37,505 )   (2,359,056 )   (814,629 )
    Capital expenditures, net     (726,386 )   (549,304 )   (353,903 )
    Cash from acquisitions     —     51,189     2,267  
    Cash impact from the consolidation and de-consolidation of properties     (9,479 )   2,507     48,910  
    Net proceeds from sale of partnership interests, other assets and discontinued operations     384,104     51,271     278,066  
    Investments in unconsolidated entities     (76,710 )   (84,876 )   (81,480 )
    Distributions of capital from unconsolidated entities and other     413,542     142,572     159,106  
   
 
 
 
      Net cash used in investing activities     (52,434 )   (2,745,697 )   (761,663 )
   
 
 
 

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
    Proceeds from sales of common and preferred stock and other     11,321     3,430     99,725  
    Purchase of limited partner units and treasury stock     (193,837 )   (40,195 )   (93,954 )
    Preferred Stock redemptions     (579 )   (59,681 )   —  
    Minority interest contributions     —     464     —  
    Preferred distributions of the Operating Partnership     (28,080 )   (21,220 )   (12,044 )
    Preferred dividends and distributions to stockholders     (690,654 )   (572,669 )   (507,569 )
    Distributions to limited partners     (166,617 )   (151,809 )   (147,492 )
    Mortgage and other indebtedness proceeds, net of transaction costs     3,962,778     5,710,886     2,536,498  
    Mortgage and other indebtedness principal payments     (4,197,795 )   (3,221,906 )   (1,926,974 )
   
 
 
 
      Net cash (used in) provided by financing activities     (1,303,463 )   1,647,300     (51,810 )
   
 
 
 

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
 
 
(183,036
)
 
(15,539
)
 
138,494
 

CASH AND CASH EQUIVALENTS, beginning of year
 
 
520,084
 
 
535,623
 
 
397,129
 
   
 
 
 
CASH AND CASH EQUIVALENTS, end of year   $ 337,048   $ 520,084   $ 535,623  
   
 
 
 

The accompanying notes are an integral part of these statements.

89

Simon Property Group, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(Dollars in thousands)

 
   Preferred Stock
   Common Stock
   Accumulated Other
Comprehensive Income
   Capital in Excess
of Par Value
   Accumulated Deficit
   Unamortized
Restricted Stock
Award
   Common Stock Held in
Treasury
   Total Stockholders'
Equity
  
Balance at December 31, 2002   $ 814,254   $ 19   $ (8,109 ) $ 3,686,161   $ (961,338 ) $ (10,736 ) $ (52,518 ) $ 3,467,733  
   
 
 
 
 
 
 
 
 
Conversion of Limited Partner Units (2,880,810 Common Shares, Note 10)           1           39,704                       39,705  
Series B Preferred stock conversion (12,443,195 Common Shares)     (447,485 )   1           447,484                       —  
Series B Preferred stock redemption for cash (18,340 Preferred Shares)     (1,711 )                                       (1,711 )
Series H Variable Rate Preferred stock issuance (3,328,540 preferred shares)     83,213                                         83,213  
Series H Variable Rate Preferred stock repurchase (3,250,528 net preferred shares)     (81,263 )                                       (81,263 )
Stock options exercised (733,617 Common Shares)                       17,451                       17,451  
Series E and Series G Preferred stock accretion     475                                         475  
Stock incentive program (380,835 Common Shares, Net)                       12,579           (12,579 )         —  
Amortization of stock incentive                                   10,355           10,355  
Acquisition of minority interest in Management Company                       (2,334 )                     (2,334 )
Other                       173                       173  
Adjustment to limited partners' interest from increased ownership in the Operating Partnership                       (79,886 )                     (79,886 )
Distributions                             (504,694 )               (504,694 )
Other comprehensive income                 20,695                             20,695  
Net income                             368,715                 368,715  
   
 
 
 
 
 
 
 
 
Balance at December 31, 2003   $ 367,483   $ 21   $ 12,586   $ 4,121,332   $ (1,097,317 ) $ (12,960 ) $ (52,518 ) $ 3,338,627  
   
 
 
 
 
 
 
 
 
Conversion of Limited Partner Units (4,997,458 Common Shares, Note 10)           1           103,450                       103,451  
Series H Variable Rate Preferred stock repurchase (78,012 net preferred shares)     (1,950 )                                       (1,950 )
Stock options exercised (392,943 Common Shares)                       10,689                       10,689  
Common Stock Issuance (12,978,795 Shares)           1           734,339                       734,340  
Series I Preferred Stock issuance (13,261,712 Shares)     663,086                                         663,086  
Series I Preferred Unit Conversion to Series I Preferred Stock (376,307 shares)     18,815                                         18,815  
Series J Preferred Stock issuance (796,948 Preferred Shares)     39,847                                         39,847  
Series D Preferred Stock issuance (1,156,039 shares)     34,681                                         34,681  
Series D Preferred Stock redemption (1,156,039 shares)     (34,681 )                                       (34,681 )
Series E Preferred Stock redemption (1,000,000 shares)     (25,000 )                                       (25,000 )
Treasury Stock purchase (317,300 Shares)                                         (20,400 )   (20,400 )
Series E and Series G Preferred stock accretion     406                                         406  
Stock incentive program (365,602 Common Shares, Net)                       20,788           (20,788 )         -  
Common Stock retired (-93,000 Shares)                       (3,127 )   (2,258 )               (5,385 )
Amortization of stock incentive                                   11,935           11,935  
Other                       26                       26  
Adjustment to limited partners' interest from increased ownership in the Operating Partnership                       6,201                       6,201  
Distributions                             (578,854 )               (578,854 )
Other comprehensive income                 3,779                             3,779  
Net income                             342,993                 342,993  
   
 
 
 
 
 
 
 
 
Balance at December 31, 2004   $ 1,062,687   $ 23   $ 16,365   $ 4,993,698   $ (1,335,436 ) $ (21,813 ) $ (72,918 ) $ 4,642,606  
   
 
 
 
 
 
 
 
 
Conversion of Limited Partner Units (2,281,481 Common Shares, Note 10)                       37,381                       37,381  
Stock options exercised (206,464 Common Shares)                       6,184                       6,184  
Series I Preferred Unit Conversion to Series I Preferred Stock (197,155 Preferred Shares)     9,858                                         9,858  
Series J Preferred Stock Premium net of Amortization     7,171                                         7,171  
Treasury Stock purchase (2,815,400 Shares)                                         (182,408 )   (182,408 )
Series G Preferred stock accretion     306                                         306  
Stock incentive program (400,541 Common Shares, Net)                       (804 )         (24,436 )   25,240     —  
Common Stock retired (-18,000 Shares)                       (605 )   (502 )               (1,107 )
Amortization of stock incentive                                   14,320           14,320  
Other                       505                       505  
Adjustment to limited partners' interest from increased ownership in the Operating Partnership                       (5,707 )                     (5,707 )
Distributions                             (690,990 )               (690,990 )
Other comprehensive income (loss)                 (6,572 )                           (6,572 )
Net income                             475,749                 475,749  
   
 
 
 
 
 
 
 
 
Balance at December 31, 2005   $ 1,080,022   $ 23   $ 9,793   $ 5,030,652   $ (1,551,179 ) $ (31,929 ) $ (230,086 ) $ 4,307,296  
   
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these statements.

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Simon Property Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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

1.    Organization

            Simon Property Group, Inc. ("Simon Property") is a Delaware corporation that operates as a self-administered and self-managed real estate investment trust ("REIT"). Simon Property Group, L.P. (the "Operating Partnership") is a majority-owned partnership subsidiary of Simon Property that owns all of our real estate properties. In these notes to consolidated financial statements, the terms "we", "us" and "our" refer to Simon Property, the Operating Partnership, and their subsidiaries.

            We are engaged primarily in the ownership, development, and management of retail real estate, primarily regional malls, Premium Outlet® centers and community/lifestyle centers. As of December 31, 2005, we owned or held an interest in 286 income-producing properties in the United States, which consisted of 171 regional malls, 71 community/lifestyle centers, 33 Premium Outlet centers and 11 other shopping centers or outlet centers in 39 states and Puerto Rico (collectively, the "Properties", and individually, a "Property"). We also own interests in ten 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 (France, Italy, and Poland); five Premium Outlet centers in Japan; and one Premium Outlet center in Mexico.

            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 our co-branded gift card programs,
•
Forming consumer focused strategic corporate alliances, and
•
Offering property operating services to our tenants and others resulting from our relationships with vendors.

2.    Basis of Presentation and Consolidation

            The accompanying consolidated financial statements of Simon Property include the accounts of all majority-owned subsidiaries, and all significant intercompany amounts have been eliminated.

            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, among other factors, 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 included in deferred costs and other assets 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 noncontrolling ownership interests in Properties. 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

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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, 2005, of our 343 properties we consolidated 197 wholly-owned properties and consolidated 20 additional properties that are less than wholly-owned, which we control or for which we are the primary beneficiary. We account for the remaining 126 properties using the equity method of accounting (joint venture properties). We manage the day-to-day operations of 59 of the 126 joint venture properties but have determined that our partner or partners have substantive participating rights in regards to the assets and operations of these joint venture properties.

            We allocate net operating results of the Operating Partnership after our and the Operating Partnership's preferred distributions to third parties and Simon Property based on the partners' respective weighted average ownership interests in the Operating Partnership.

            Our weighted average ownership interest in the Operating Partnership was as follows:

 
   For the Year Ended December 31,
  
 
   2005
   2004
   2003
  
Weighted average ownership interest   78.7 % 77.7 % 75.4 %

            As of December 31, 2005 and 2004, our ownership interest in the Operating Partnership was 79.0% and 78.2%, respectively. We adjust the limited partners' interest in the Operating Partnership at the end of each period to reflect their interest in the Operating Partnership. The adjustment is reflected in the accompanying consolidated statements of stockholders' 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 40 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 tenant improvements utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter. 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.

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            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" (FAS 141). 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 and related improvements is determined either by real estate tax assessments, a third party valuation specialist, 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.

            Amounts allocated to building are depreciated over the estimated remaining life of the acquired building or related improvements. We amortize amounts allocated to tenant improvements, in-place lease assets and other lease-related intangibles over the remaining life of the underlying leases, either on a specific lease methodology for a portfolio acquisition or an average of total property leases methodology, generally applied for a single property acquisition, depending on the availability of estimates by lease. We also estimate the value of other acquired intangible assets, if any, which are amortized over the remaining life of the underlying related leases or intangibles. Any remaining amount of value will be allocated to in-place leases, as deemed appropriate under the circumstances.

            SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("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 seven regional malls, community/lifestyle centers, and office building properties disposed during 2005, the five properties sold during 2004, and the thirteen properties sold in 2003 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 $29.3 million for the year ended December 31, 2005, $62.7 million for the year ended December 31, 2004, and $105.6 million for the year ended December 31, 2003.

            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. During 2005, independent banks assumed responsibility for the gift card programs. We collect gift card funds at the point of sale and then remit those funds onto the banks for further processing. As a result, significantly all of the cash collected from the issuance of a gift card is now held by the banks. Further, the banks also now bear the related liability for funds which will be owed to retailers which honor a gift card for tender of goods and services. Our balance of cash and cash equivalents includes a balance of $42.3 million related to our co-branded gift card programs 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.

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            Marketable securities consist primarily of the assets of our insurance subsidiaries 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. Our insurance subsidiaries are required to maintain statutory minimum capital and surplus as well as maintain a minimum liquidity ratio. Therefore, our access to their securities may be limited.

            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,
 
   2005
   2004
   2003
Capitalized interest   $ 14,433   $ 14,612   $ 10,705

            The Financial Accounting Standards Board (the "FASB") Statement No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("Statement 131") requires disclosure of certain operating and financial data with respect to separate business activities within an enterprise. Our primary business is the ownership, development, and management of retail real estate. We have aggregated our retail operations, including regional malls, Premium Outlet centers and community/lifestyle centers, into one reportable segment because they have similar economic characteristics and we provide similar products and services to similar types of tenants. Further, all material operations are within the United States and no customer or tenant comprises more than 10% of consolidated revenues.

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

 
   2005
   2004
Deferred financing and lease costs, net   $ 183,249   $ 180,040
In-place lease intangibles, net     127,590     173,224
Fair market value of acquired above market lease intangibles     96,090     130,061
Marketable securities of our captive insurance companies     98,024     95,493
Goodwill     20,098     20,098
Minority interests     62,373     51,412
Prepaids, notes receivable and other assets, net     350,877     525,796
   
 
    $ 938,301   $ 1,176,124
   
 

            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, which are included in mortgages and other indebtedness, 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 these deferred costs as of December 31 are as follows:

 
   2005
   2004
  
Deferred financing and lease costs   $ 337,919   $ 419,258  
Accumulated amortization     (154,670 )   (239,218 )
   
 
 
Deferred financing and lease costs, net   $ 183,249   $ 180,040  
   
 
 

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

 
   For the year ended December 31,
  
 
   2005
   2004
   2003
  
Amortization of deferred financing costs   $ 22,063   $ 17,188   $ 15,710  
Amortization of debt premiums net of discounts     (26,349 )   (8,401 )   (5,723 )
Amortization of deferred leasing costs     20,606     19,281     18,684  

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

            Intangible Assets.    The average life of the in-place lease intangibles is approximately 6.5 years and is amortized over the remaining life of the leases of the related property on the straight-line basis and is included with depreciation and amortization in the consolidated statements of operations and comprehensive income. The fair market value of above and below market leases are amortized into revenue over the remaining lease life as a component of reported minimum rents. The weighted average remaining life of these intangibles approximates 5 years. The unamortized amounts of below market leases are included in accounts payable, accrued expenses, intangibles and deferred revenues on the consolidated balance sheets and are $261.9 million and $334.2 million as of December 31, 2005 and 2004,

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respectively. The amount of amortization of above and below market leases, net for the year ended December 31, 2005, 2004, and 2003 was $48.0 million, $22.4 million, and $8.3 million, respectively.

            Details of intangible assets as of December 31 are as follows:

 
   2005
   2004
  
In-place lease intangibles   $ 183,554   $ 192,263  
Accumulated amortization     (55,954 )   (19,039 )
In-place lease intangibles, net   $ 127,590   $ 173,224  
   
 
 
Fair market value of acquired above market lease intangibles   $ 144,224   $ 149,046  
Accumulated amortization     (48,134 )   (18,985 )
Fair market value of acquired above market lease intangibles, net   $ 96,090   $ 130,061  
   
 
 

            Estimated future amortization, and the increasing (decreasing) effect on minimum rents for our above and below market leases recorded as of December 31, 2005 are as follows:

 
   Below Market
Leases
   Above Market
Leases
   Increase to
Minimum
Rent, Net
2006   $ 78,674   $ (25,467 ) $ 53,207
2007     63,145     (20,881 )   42,264
2008     43,915     (16,929 )   26,986
2009     29,206     (13,388 )   15,818
2010     17,980     (6,958 )   11,022
Thereafter     29,022     (12,467 )   16,555
   
 
 
    $ 261,942   $ (96,090 ) $ 165,852
   
 
 

            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

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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:

 
   2005
   2004
Cumulative translation adjustment   $ (2,811 ) $ 4,531
Accumulated derivative gains, net     12,715     11,155
Net unrealized gains (losses) on marketable securities     (111 )   679
   
 
Total accumulated comprehensive income   $ 9,793   $ 16,365
   
 

            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 the applicable sales threshold.

            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 anchor stores, require the tenant to reimburse us for a substantial portion of our operating expenses, including common area maintenance (CAM), real estate taxes and insurance. This significantly reduces our exposure to increases in costs and operating expenses resulting from inflation. For approximately 40% of our leases, we receive a fixed payment from the tenant for the CAM component, which is subject to an annual adjustment. We are continually working toward converting an increased number of our leases to the fixed payment methodology. For the remainder of our leases, these CAM expense reimbursements are based on the tenant's proportionate share of the allocable operating expenses and CAM capital expenditures for the property. Such property operating expenses typically include utility, insurance, security, janitorial, landscaping, food court and other administrative expenses. We accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. Our advertising and promotional costs are expensed as incurred. We also receive escrow payments for these reimbursements from substantially all our non-fixed CAM tenants and monthly fixed CAM payments 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. These differences were not, and are not expected to be, 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

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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 subsidiary as of December 31, 2005 and 2004 approximated $93.6 million and $79.0 million, respectively.

            We recognize fee revenues from our co-branded gift card programs when the fees are earned under the related arrangements with the card issuers. Generally, these revenues are recorded at the issuance of the gift card for handling fees and, if applicable, at future dates for servicing fees in the event of non-use of the card.

            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:

 
   For the year Ended December 31,
  
 
   2005
   2004
   2003
  
Balance at Beginning of Year   $ 37,039   $ 31,473   $ 20,490  
Consolidation of previously unconsolidated entities     —     —     1,700  
Provision for Credit Losses     7,284     18,975     14,630  
Accounts Written Off     (9,084 )   (13,409 )   (5,347 )
   
 
 
 
Balance at End of Year   $ 35,239   $ 37,039   $ 31,473  
   
 
 
 

            Simon Property and certain other subsidiaries are taxed as REITs under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code") and applicable Treasury regulations relating to REIT qualification. In order to maintain this REIT status, the regulations require us to distribute at least 90% of our taxable income to stockholders and meet certain other asset and income tests as well as other requirements. We intend to continue to adhere to these requirements and maintain the REIT status of Simon Property and the REIT subsidiaries. As REITs, these entities will generally not be liable for federal corporate income taxes as long as they continue to distribute in excess of 100% of their taxable income. Thus, we made no provision for federal income taxes for these entities in the accompanying consolidated financial statements. If Simon Property or any of our REIT subsidiaries fail to qualify as a REIT, it will be subject to tax at regular corporate rates for the years in which it failed to qualify. If we lose our REIT status we could not elect to be taxed as a REIT for four years unless our failure to qualify was due to reasonable cause and certain other conditions were satisfied.

            On October 22, 2004, President Bush signed the American Jobs Creation Act which included several provisions of the REIT Improvement Act, which builds in some flexibility to the REIT rules. This Act provides for monetary penalties in lieu of REIT disqualification. This better matches the severity of the penalty to the REIT's error and therefore reduces the possibility of disqualification.

            State income, franchise or other taxes were not significant in any of the periods presented.

            We have also 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 and participate in activities that don't qualify as "rents from real property". 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

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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 of December 31, 2005 and 2004, we had a net deferred tax asset of $7.1 million and $11.3 million, respectively, related to our 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 made certain reclassifications of prior period amounts in the financial statements to conform to the 2005 presentation. These reclassifications have no impact on net income previously reported. Also, the statements of operations and comprehensive income for the periods ended December 31, 2003 and 2004 have been reclassified to reflect significant property dispositions during 2003, 2004, and 2005.

4.    Real Estate Acquisitions, Disposals, and Impairment

            We acquire properties to generate both current income and long-term appreciation in value. We acquire individual properties or portfolios of other retail real estate companies that meet our investment criteria. We sell properties which no longer meet our strategic criteria. Our acquisition and disposal activity for the periods presented are highlighted as follows:

            On November 18, 2005, we purchased a 37.99% interest in Springfield Mall in Springfield, Pennsylvania, for approximately $39.3 million, including the issuance of our share of debt of $29.1 million. On November 21, 2005, we purchased a 50% interest in Coddingtown Mall in Santa Rosa, California, for approximately $37.1 million, including the assumption of our share of debt of $10.5 million. Both of these Properties are being accounted for on the equity method of accounting.

            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 a mortgage 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 a mortgage and borrowings on the Credit Facility.

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            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 interest 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.

            On October 14, 2004, we acquired all of the outstanding common stock of Chelsea Property Group, Inc. ("Chelsea") and the limited partnership units of its operating partnership subsidiary in a transaction valued at approximately $5.2 billion, including the assumption of $1.5 billion of debt (the "Chelsea Acquisition"). Chelsea had interests in 37 Premium Outlet centers and 24 other shopping centers containing 16.6 million square feet of gross leasable area in 31 states, Japan and Mexico. We funded the cash portion of this acquisition with a $1.8 billion unsecured term loan facility discussed in Note 8. Chelsea common stockholders received consideration of $36.00 per share for each share of Chelsea's common stock in cash, a fractional share of 0.2936 of our common stock, and a fractional share of 0.3000 of Simon 6% Series I convertible perpetual preferred stock. The holders of Chelsea's operating partnership subsidiary's limited partnership common units exchanged their units for common and convertible preferred units of the Operating Partnership. The following shares and units were issued at closing:

•
12,978,795 shares of common stock
•
4,652,232 Operating Partnership common units
•
13,261,712 shares of Simon Property 6% Series I Convertible Perpetual Preferred Stock (liquidation value of $50 per share)
•
4,753,794 Operating Partnership 6% Convertible Perpetual Preferred Units (liquidation value of $50 per unit)

            During 2005, we finalized the purchase price allocation for the Chelsea Acquisition as required by FAS 141, as described in our purchase accounting allocation policy in Note 3. Our valuation of the Chelsea assets was developed in consultation with independent valuation specialists. The final purchase price allocation reflects reallocations between tangible assets and finite life intangible assets. However, these adjustments did not have a significant impact on our consolidated results of operations.

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            The following summarized balance sheet represents the final purchase price allocation related to this business combination:

Investment properties   $ 4,978,821
Cash and cash equivalents     33,700
Tenant receivables     3,897
Investments in unconsolidated entities     320,833
Deferred costs and other assets     64,367
In-place lease intangibles     112,852
Fair market value of above market leases     130,795
   
  Total assets   $ 5,645,265

Mortgages and other indebtedness, including premium of $129,021
 
$
1,611,184
Fair market value of below market leases     268,246
Accounts payable, accrued expenses, intangibles and other     94,662
   
  Total liabilities   $ 1,974,092

            The following unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2004 and 2003 includes adjustments for the Chelsea Acquisition 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 this acquisition, and the related transaction, in fact, occurred at the previously mentioned date, or to project results for any future period. Our other acquisitions during the periods presented were not considered material business combinations for the purpose of presenting this pro forma financial information.

 
   For the Year Ended December 31,
Pro Forma Consolidated Statement of Operations (Unaudited)
  2004
   2003
Pro Forma Total Revenue   $ 2,979,479   $ 2,714,174
Pro Forma Income from Continuing Operations     416,032     425,268
Pro Forma Net Income     308,665     325,543
Pro Forma Earnings Per Common Share — Basic (a)   $ 1.06   $ 1.11
Pro Forma Earnings Per Common Share — Diluted (a)   $ 1.05   $ 1.11


 


            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

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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 was 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/lifestyle 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 partnerships and account for the other six 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.

            During the year ended December 31, 2005, we sold or disposed of sixteen non-core properties, consisting of four regional malls, one community/lifestyle center, nine other outlet centers and two office buildings. Our significant dispositions are summarized as follows (dollars in millions):

Properties
   Previous
Ownership %
   Date of Disposal
   Sales Price
   Gain/(Loss)
  
Riverway and O'Hare International Center   100%   June 1, 2005   $ 257.3   $ 125.1  
Grove at Lakeland Square   100%   July 1, 2005     10.4     (0.1 )
Cheltenham Square   100%   November 17, 2005     71.5     19.7  
Southgate Mall   100%   November 28, 2005     8.5     1.1  
Eastland Mall (Tulsa, OK)   100%   December 16, 2005     1.5     (1.1 )
Biltmore Square   100%   December 28, 2005     26.0     2.2  
           
 
 
            $ 375.2   $ 146.9  
           
 
 

            The disposition of Biltmore Square was accomplished through a transfer of the deed to the property to the lender in settlement of the remaining balance of the non-recourse debt on the property. Additionally, nine other insignificant non-core properties were sold which resulted in no gain or loss.

            We disposed of two joint venture properties during 2005. On January 11, 2005, Metrocenter was sold for $62.6 million and we recognized our share of the gain of $11.8 million. On December 22, 2005, our Canadian property, Forum Entertainment Centre, was sold and we recognized our share of the loss of $13.7 million.

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            Certain of the net proceeds from these sales, net of repayment of outstanding debt, are held in escrow to complete IRS Section 1031 exchanges while the remainder was used for general working capital purposes.

            During the year ended December 31, 2004, we sold five non-core properties, consisting of three regional malls, one community/lifestyle center and one Premium Outlet center. The significant properties and their dates of sale consisted of:

Properties
   Previous
Ownership %
   Date of Disposal
   Sales Price
   Gain/(Loss)
  
Hutchinson Mall   100%   June 15, 2004   $ 16.3   $ 0.2  
Bridgeview Court   100%   July 22, 2004     5.3     2.3  
Woodville Mall   100%   September 1, 2004     2.5     (2.7 )
Santa Fe Premium Outlets   100%   December 28, 2004     7.7     —  
Heritage Park Mall   100%   December 29, 2004     4.1     (0.2 )
           
 
 
            $ 35.9   $ (0.4 )
           
 
 

            We disposed of three joint venture properties during 2004. On April 7, 2004, we sold a joint venture interest in a hotel for $17.0 million, resulting in a gain of $12.6 million, $8.3 million net of tax. On April 8, 2004 we sold our joint venture interest in Yards Plaza resulting in no gain or loss on this disposition. On August 6, 2004, we completed the court ordered sale of our joint venture interest in Mall of America (see Note 11).

            During the year ended December 31, 2003, we sold 13 non-core properties, consisting of seven regional malls, five community centers and one mixed-use property. The properties and their dates of sale consisted of:

Properties
   Previous
Ownership %
   Date of Disposal
   Sales Price
   Gain/(Loss)
  
Richmond Square   100%   January 9, 2003   $ 18.0   $ (3.3 )
Mounds Mall, Mounds Mall Cinema   100%   January 9, 2003     0.9     (0.1 )
Memorial Mall   100%   January 9, 2003     15.1     7.7  
Forest Village Park Mall   100%   April 29, 2003     20.5     12.1  
North Riverside Park Plaza   100%   May 8, 2003     12.7     8.2  
Memorial Plaza   100%   May 21, 2003     4.2     2.7  
Fox River Plaza   100%   May 22, 2003     4.3     (1.1 )
Eastern Hills Mall   100%   July 1, 2003     17.0     (38.9 )
New Orleans Center   100%   October 1, 2003     36.0     (13.4 )
Mainland Crossing   80%   October 28, 2003     6.1     2.7  
South Park Mall   100%   November 3, 2003     2.7     (5.3 )
Bergen Mall   100%   December 12, 2003     145.0     51.1  
           
 
 
            $ 282.5   $ 22.4  
           
 
 

            Impairment.    In 2004, we recorded an $18.0 million impairment charge related to one Property. We evaluate our Properties for impairment 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.

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5.    Per Share Data

            We determine basic earnings per share based on the weighted average number of shares of common stock outstanding during the period. We determine diluted earnings per share based on the weighted average number of shares of common stock outstanding combined with the incremental weighted average shares that would have been outstanding assuming all dilutive potential common shares were converted into shares at the earliest date possible. The following table sets forth the computation of our basic and diluted earnings per share. The amounts presented in the reconciliation below represent the common stockholders' pro rata share of the respective line items in the statements of operations and is after considering the effect of preferred dividends.

 
   For the Year ended December 31,
 
   2005
   2004
   2003
Common Stockholders' share of:                  
Income from continuing operations   $ 279,742   $ 308,483   $ 279,059
Discontinued operations     122,153     (7,836 )   34,518
   
 
 
Net Income available to Common Stockholders — Basic     401,895     300,647     313,577
   
 
 
Effect of dilutive securities:                  
Impact to General Partner's interest in Operating Partnership from all dilutive securities and options     337     279     333
   
 
 
Net Income available to Common Stockholders — Diluted   $ 402,232   $ 300,926   $ 313,910
   
 
 
Weighted Average Shares Outstanding — Basic     220,259,480     207,989,585     189,475,124
Effect of stock options     871,010     867,368     823,532
   
 
 
Weighted Average Shares Outstanding — Diluted     221,130,490     208,856,953     190,298,656
   
 
 

            For the year ending December 31, 2005, potentially dilutive securities include stock options, certain preferred units of limited partnership interest of the Operating Partnership, certain contingently convertible preferred stock and the units of limited partnership interest ("Units") in the Operating Partnership which are exchangeable for common stock.

            We accrue distributions when they are declared. The taxable nature of the dividends declared for each of the years ended as indicated is summarized as follows:

 
   For the Year Ended December 31,
  
 
   2005
   2004
   2003
  
Total dividends paid per share   $ 2.80   $ 2.60   $ 2.40  
   
 
 
 
Percent taxable as ordinary income     85.8 %   88.0 %   95.1 %
Percent taxable as long-term capital gains     14.2 %   6.0 %   0.9 %
Percent non-taxable as return of capital     —     6.0 %   4.0 %
   
 
 
 
      100.0 %   100.0 %   100.0 %
   
 
 
 

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6.    Investment Properties

            Investment properties consist of the following as of December 31:

 
   2005
   2004
Land   $ 2,560,335   $ 2,611,543
Buildings and improvements     18,990,912     18,471,039
   
 
Total land, buildings and improvements     21,551,247     21,082,582
Furniture, fixtures and equipment     194,062     171,179
   
 
Investment properties at cost     21,745,309     21,253,761
Less — accumulated depreciation     3,809,293     3,162,523
   
 
Investment properties at cost, net   $ 17,936,016   $ 18,091,238
   
 
Construction in progress included above   $ 384,096   $ 393,769
   
 

7.    Investments in Unconsolidated Entities

            Joint ventures are common in the real estate industry. We use joint ventures to finance properties, develop new properties, and diversify our risk in a particular property or portfolio. We held joint venture ownership interests in 69 Properties as of December 31, 2005 and 67 as of December 31, 2004. We also held interests in two joint ventures which owned 51 European shopping centers as of December 31, 2005 and 2004. We also held an interest in five joint venture properties in Japan and one joint venture property in Mexico. We account for these Properties using the equity method of accounting.

            During 2005, we and our joint venture partner completed the construction of, obtained permanent financing for, and opened St. Johns Town Center (St. Johns). Prior to the completion of construction and opening of the center, we were responsible for 85% of the development costs, and guaranteed this same percentage of the outstanding construction debt. As a result, we consolidated St. Johns during its construction phase. Upon obtaining permanent financing, the guarantee was released, and our partner's and our ownership percentages were each adjusted to 50%. We received a distribution from the partnership of $15.7 million in repayment of our capital contributions to equalize our ownership interests, and this Property is now accounted for using the equity method of accounting.

            On June 1, 2005, we refinanced Westchester Mall, a joint venture Property, with a $500.0 million, 4.86% fixed-rate mortgage that matures on June 1, 2010. The balances of the two previous mortgages, which were repaid, were $142.0 million and $50.1 million and bore interest at fixed rates of 8.74% and 7.20%, respectively. Both were scheduled to mature on September 1, 2005. We received our share of the excess refinancing proceeds of approximately $120 million on the closing of the new mortgage loan.

            On November 29, 2005, we refinanced Houston Galleria, a joint venture Property, with a $821.0 million, 5.436% fixed-rate mortgage that matures on December 1, 2015. The balances of the two previous mortgages, which were repaid, were $213.2 million and $84.7 million and bore interest at a fixed rate of 7.93% and at LIBOR plus 150 basis points, respectively. They were scheduled to mature on December 1, 2005 and December 31, 2006, respectively. We received our share of the excess refinancing proceeds of approximately $165.0 million on the closing of the new mortgage loan.

            On December 28, 2005, we invested $50 million of equity for a 40% interest in a joint venture with Toll Brothers, Inc. (Toll Brothers) and Meritage Homes Corp. (Meritage Homes) to purchase a 5,485-acre land parcel in northwest Phoenix from DaimlerChrysler Corporation for $312 million. Toll Brothers and Meritage Homes each plan to build a significant number of homes on the site. We have the option to purchase a substantial portion of the commercial property for retail uses. Other parcels may also be sold to third parties. Initial plans call for a mixed-use master planned community, which will include approximately 4,840 acres of single-family homes and attached homes.

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Approximately 645 acres of commercial and retail development will include schools, community amenities and open space. Initial home sales are tentatively scheduled to begin in 2009. The joint venture, of which Toll Brothers is the managing member, expects to develop a master planned community of approximately 12,000 to 15,000 residential units.

            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 joint venture agreements and the industry. Our partners in these joint ventures may initiate these provisions at any time (subject to any applicable lock up or similar restrictions), which will result in either the sale of our interest or the use of available cash or borrowings to acquire the joint venture 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 or became the primary beneficiary and as a result, gain unilateral control of the Property. We reclassified these line items into "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, 2005. Balance sheet information as of December 31 is as follows:

 
   2005
   2004
BALANCE SHEETS            
Assets:            
Investment properties, at cost   $ 9,915,521   $ 9,429,465
Less — accumulated depreciation     1,951,749     1,745,498
   
 
      7,963,772     7,683,967
Cash and cash equivalents     334,714     292,770
Tenant receivables     207,153     209,040
Investment in unconsolidated entities     135,914     167,182
Deferred costs and other assets     304,825     322,660
   
 
  Total assets   $ 8,946,378   $ 8,675,619
   
 
Liabilities and Partners' Equity:            
Mortgages and other indebtedness   $ 7,479,359   $ 6,398,312
Accounts payable, accrued expenses, and deferred revenue     403,390     373,887
Other liabilities     189,722     179,443
   
 
  Total liabilities     8,072,471     6,951,642
Preferred units     67,450     67,450
Partners' equity     806,457     1,656,527
   
 
  Total liabilities and partners' equity   $ 8,946,378   $ 8,675,619
   
 
Our Share of:            
Total assets   $ 3,765,258   $ 3,619,969
   
 
Partners' equity   $ 429,942   $ 779,252
Add: Excess Investment     938,177     1,103,992
   
 
Our net Investment in Joint Ventures   $ 1,368,119   $ 1,883,244
   
 
Mortgages and other indebtedness   $ 3,169,662   $ 2,750,327
   
 

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            "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 amortize excess investment over the life of the related Properties, typically no greater than 40 years, and the amortization is included in the reported amount of income from unconsolidated entities.

            As of December 31, 2005, scheduled principal repayments on joint venture properties' mortgages and other indebtedness are as follows:

2006   $ 932,188  
2007     432,720  
2008     669,375  
2009     491,294  
2010     1,344,303  
Thereafter     3,611,347  
   
 
Total principal maturities     7,481,227  
Net unamortized debt premiums     (1,868 )
   
 
Total mortgages and other indebtedness   $ 7,479,359  
   
 

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            This debt becomes due in installments over various terms extending through 2017 with interest rates ranging from 0.80% to 9.04% and a weighted average rate of 5.77% at December 31, 2005.

 
   For the Year Ended December 31,
  
 
   2005
   2004
   2003
  
STATEMENTS OF OPERATIONS                    
Revenue:                    
  Minimum rent   $ 1,063,851   $ 942,877   $ 777,198  
  Overage rent     82,951     44,151     28,024  
  Tenant reimbursements     543,022     480,419     390,370  
  Other income     126,845     66,121     74,461  
   
 
 
 
    Total revenue     1,816,669     1,533,568     1,270,053  
Operating Expenses:                    
  Property operating     356,293     294,294     223,246  
  Depreciation and amortization     327,946     285,463     225,884  
  Real estate taxes     133,853     125,816     115,367  
  Repairs and maintenance     83,856     70,436     62,968  
  Advertising and promotion     37,591     37,481     36,346  
  Provision for credit losses     9,616     11,373     5,458  
  Other     120,766     65,730     38,554  
   
 
 
 
    Total operating expenses     1,069,921     890,593     707,823  
   
 
 
 
Operating Income     746,748     642,975     562,230  
Interest expense     403,734     370,363     330,060  
   
 
 
 
Income Before Minority Interest and Gain on Sale of Asset     343,014     272,612     232,170  
Minority interest     —     —     (654 )
Gain on sale of asset     1,423     —     —  
   
 
 
 
Income Before Unconsolidated Entities     344,437     272,612     231,516  
(Loss) income from unconsolidated entities     (1,892 )   (5,129 )   8,393  
   
 
 
 
Income from Continuing Operations     342,545     267,483     239,909  
Income from consolidated joint venture interests     —     19,378     23,801  
(Loss) income from discontinued joint venture interests     (2,784 )   13,384     52,885  
Gain on disposal or sale of discontinued operations, net     65,599     4,704     —  
   
 
 
 
Net Income   $ 405,360   $ 304,949   $ 316,595  
   
 
 
 
Third-Party Investors' Share of Net Income   $ 238,265   $ 193,282   $ 190,535  
   
 
 
 
Our Share of Net Income     167,095     111,667     126,060  
Amortization of Excess Investment     48,597     30,554     26,415  
Write-off of Investment Related to Properties Sold     38,666     —     —  
Our Share of Net Loss Related to Properties Sold     (1,975 )   —     —  
   
 
 
 
Income from Unconsolidated Entities   $ 81,807   $ 81,113   $ 99,645  
   
 
 
 

            On January 11, 2005, Metrocenter, a joint venture regional mall property was sold. We recognized our share of the gain of $11.8, net of the write-off of the related investment and received $62.6 million representing our share of the proceeds from this disposition. On December 22, 2005, The Forum Entertainment Centre, our Canadian property, was sold. We recognized our share of the loss of $13.7 million, net of the write-off of the related investment, from the disposition of this property. The result of these two dispositions is included in the loss on sales of interests in unconsolidated entities and other assets, net in the 2005 consolidated statements of operations and comprehensive income.

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International Joint Venture Investments

            The carrying amount of our total combined investment in two joint venture investments, European Retail Enterprises, B.V. ("ERE") and GCI, is $287.4 million as of December 31, 2005, net of the related cumulative translation adjustment. 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.

            On October 20, 2005, Ivanhoe Cambridge, Inc. ("Ivanhoe"), an affiliate of Caisse de dépôt et placement du Québec, effectively acquired our former partner's 39.5% ownership interest in ERE. On February 13, 2006, pursuant to the terms of our October 20, 2005 transaction with Ivanhoe, we sold a 10.5% interest in ERE to Ivanhoe for €45.2 million, or $53.9 million. We then settled all remaining share purchase commitments from the founders of ERE, including the early settlement of some commitments by purchasing an additional 25.8% interest for €55.1 million, or $65.5 million. The result of these transactions equalized our and Ivanhoe's ownership in ERE to 50% each. We expect to record a gain on this transaction in the first quarter of 2006.

            As of December 31, 2005, the net carrying amount of our 40% investment in the five Japanese Premium Outlet joint ventures net of the related cumulative translation adjustment was $287.7 million.

8.    Indebtedness and Derivative Financial Instruments

            Our mortgages and other indebtedness consist of the following as of December 31:

 
   2005
   2004
  
Fixed-Rate Debt:              
Mortgages and other notes, including $53,669 and $68,746 net premiums, respectively. Weighted average interest and maturity of 6.42% and 5.1 years at December 31, 2005.   $ 4,145,689   $ 4,369,655  
Unsecured notes, including $38,523 and $61,034 net premiums, respectively. Weighted average interest and maturity of 5.97% and 5.6 years at December 31, 2005.     7,868,523     6,501,034  
7% Mandatory Par Put Remarketed Securities, including $4,761 and $4,851 premiums, respectively, due June 2028 and subject to redemption June 2008.     204,763     204,851  
   
 
 
Total Fixed-Rate Debt     12,218,975     11,075,540  

Variable-Rate Debt:
 
 
 
 
 
 
 
Mortgages and other notes, at face value, respectively. Weighted average interest and maturity of 5.48% and 2.0 years.     430,612     686,771  
Credit Facility (see below)     809,264     425,000  
Acquisition Facility (see below)     600,000     1,800,000  
Alternative Currency Facilities     —     24,359  
Unsecured term loans. Weighted average rates and maturities of 7.26% and 4.3 years at December 31, 2005.     59,075     579,170  
   
 
 
Total Variable-Rate Debt     1,898,951     3,515,300  
Fair value interest rate swaps     (11,809 )   (4,447 )
   
 
 
Total Mortgages and Other Indebtedness, Net   $ 14,106,117   $ 14,586,393  
   
 
 

            General.    At December 31, 2005, we have pledged 84 Properties as collateral to secure related mortgage notes including 8 pools of cross-defaulted and cross-collateralized mortgages encumbering a total of 42 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 84 encumbered Properties, indebtedness of 22 of these encumbered Properties and our

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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, 2005, we are in compliance with all our debt covenants.

            Mortgages and Other Indebtedness.    The balance of fixed and variable rate mortgage notes was $4.6 billion as of December 31, 2005, including related premiums, and, of this amount $4.3 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 the limited partner Unitholders guarantee a portion of our consolidated debt through foreclosure guarantees. In total, 48 limited partner Unitholders provide guarantees of foreclosure of $344.1 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 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 Unitholder 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.

Unsecured Debt

            We have $1.0 billion of unsecured notes issued by a subsidiary 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 7.02% and weighted average maturities of 6.3 years.

            During 2005, we refinanced our unsecured revolving credit facility (the "Credit Facility") twice. On January 11, 2005, we increased the facility from $1.25 billion to $2.0 billion. On December 15, 2005, we refinanced the Credit Facility increasing it to $3.0 billion. The Credit Facility now has a maturity date of January 11, 2010, and can be extended one year at our option. The Credit Facility can also be increased to $3.5 billion within the first two years at our option. The Credit Facility bears interest at LIBOR plus 42.5 basis points with an additional 15 basis point facility fee on the entire facility and provides for variable grid pricing based upon our corporate credit rating. Prior to December 15, 2005, the rate on the Credit Facility was LIBOR plus 55 basis points. In addition, the Credit Facility has a $750 million U.S. dollar equivalent multi-currency tranche for Euro, Yen or Sterling borrowings. The Credit Facility contains financial covenants relating to capitalization value and leverage criteria, minimum EBITDA and unencumbered EBITDA coverage ratio requirements and a minimum equity value.

            On June 7, 2005, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $1.0 billion at a weighted average fixed interest rate of 4.90%. The first tranche is $400.0 million at a fixed interest rate of 4.60% due June 15, 2010, and the second tranche is $600.0 million at a fixed interest rate of 5.10% due June 15, 2015. We received net proceeds of $993.0 million. We used $358.0 million of the net proceeds to reduce borrowings on our Credit Facility, $600.0 million to reduce a $1.8 billion term loan we used to finance part of our acquisition of Chelsea (the "Acquisition Facility"), and the remaining portion was used for general working capital purposes. All of the Rule 144A notes were exchanged in July of 2005 in a transaction registered under the Securities Act of 1933 for notes having the same economic terms and conditions.

            On November 8, 2005, we issued two tranches of senior unsecured notes to institutional investors pursuant to Rule 144A totaling $1.1 billion at a weighted average fixed interest rate of 5.58%. The first tranche is $500.0 million at a fixed interest rate of 5.375% due June 1, 2011, and the second tranche is $600.0 million at a fixed interest rate of 5.75% due December 1, 2015. We received net proceeds of $1.09 billion. We used $475.0 million of the net proceeds to

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reduce borrowings on our Credit Facility, $600.0 million to reduce the Acquisition Facility and the remaining portion was used for general working capital purposes. All of the Rule 144A notes will be exchanged in 2006 in a transaction registered under the Securities Act of 1933 for notes having the same economic terms and conditions.

            Credit Facility.    Significant activity on the Credit Facility during the twelve-month period ended December 31, 2005 was as follows:

Draw Date
   Draw Amount
   Use of Credit Facility Proceeds
January 20, 2005   $ 200,000   • To repay a $250 million unsecured term loan, which had a rate of LIBOR plus 65 basis points.
March 31, 2005     17,268   • Repayment of Chelsea's Yen unsecured loan facility, which had a rate of TIBOR plus 125 basis points.
May 16, 2005     110,000   • Repayment of $110 million unsecured notes, which had a fixed rate of 7.625%.
June 15, 2005     300,000   • Repayment of $300 million of unsecured notes, which had a fixed rate of 6.75%.
June 24, 2005     100,000   • Repayment of $100 million Medium Term Notes, which had a fixed rate of 7.125%.
Various dates     155,000   • Repayment of various series of unsecured notes, which had fixed rates ranging from 6.875% to 8.375%.
August 30, 2005     63,000   • To repay two secured mortgages for one regional mall, which had fixed rates of 7.13% and 7.77%, respectively.
December 15, 2005     242,475   • To repay a 200 million Euro-denominated unsecured term loan, which had a rate of EURIBOR plus 60 basis points.

            Other amounts drawn on the Credit Facility were primarily for general working capital purposes. The total aggregate amount of our repayments on the Credit Facility during the twelve month period ended December 31, 2005 was $1.51 billion. During 2005, the maximum amount outstanding under the Credit Facility was $1.15 billion and the weighted average amount outstanding was $813.5 million. The Credit Facility's weighted average interest for the year ended December 31, 2005 was 3.75%.

            Acquisition Facility.    We borrowed the $1.8 billion Acquisition Facility in 2004 to finance the cash portion of our acquisition of Chelsea. Acquisition Facility matures on October 12, 2006 and has one remaining principal payment, due 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. There is also a 7.5 basis point lenders' fee from the 13th to the 18th month, increasing to 10 basis points from the 18th month to maturity.

Secured Debt

            Total secured indebtedness was $4.6 billion and $5.1 billion at December 31, 2005 and December 31, 2004, respectively. During the twelve-month period ended December 31, 2005, we repaid $116.7 million in mortgage loans, unencumbering five separate Properties. In addition on June 1, 2005, we repaid a $110 million mortgage related to our disposition of Riverway, which bore interest at LIBOR plus 115 basis points, and had a maturity date of October 1, 2006. On November 17, 2005, we sold Cheltenham Square, which held a $54.9 million mortgage, which bore interest at a fixed rate of 5.89%, and had a maturity date of July 1, 2014. Finally, on December 28, 2005, the deed for Biltmore Square was transferred to the lender in settlement of a $26 million non-recourse mortgage on the property. The mortgage which bore interest at a fixed rate of 7.95%, and had a maturity date of December 11, 2010.

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Debt Maturity and Other

            Our scheduled principal repayments on indebtedness as of December 31, 2005 are as follows:

2006   $ 1,414,042
2007     1,657,409
2008     944,681
2009     1,653,307
2010     1,883,252
Thereafter     6,468,280
   
Total principal maturities     14,020,971
Net unamortized debt premium and other     85,146
   
Total mortgages and other indebtedness   $ 14,106,117
   

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

 
   For the year ended December 31,
 
   2005
   2004
   2003
Cash paid for interest   $ 822,906   $ 648,984   $ 596,274

Derivative Financial Instruments

            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, 2005, we have reflected the fair value of outstanding consolidated derivatives in other liabilities for $11.8 million. In addition, we recorded the benefits from our treasury lock and interest rate hedge agreements in accumulated comprehensive income and the unamortized balance of these agreements is $7.0 million as of December 31, 2005. The net benefits from terminated swap agreements are also recorded in accumulated comprehensive income and the unamortized balance is $5.7 million as of December 31, 2005. As of December 31, 2005, our outstanding LIBOR based derivative contracts consist of:

•
interest rate cap protection agreements with a notional amount of $207.4 million that mature in May 2006.

•
interest rate protection agreements effectively converting variable rate debt to fixed rate debt on $59.1 million of consolidated variable rate debt that matures in January 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 4.64% and a weighted average receive rate of 3.72%.

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            Within the next twelve months, we expect to reclassify to earnings approximately $3.3 million of income 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.

Fair Value of Financial Instruments

            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 as of December 31 is summarized as follows:

 
   2005
   2004
  
Fair value of fixed-rate mortgages and other indebtedness   $ 12,078,531   $ 11,357,011  
Average discount rates assumed in calculation of fair value     6.11 %   5.20 %

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, 2005 are as follows:

2006   $ 1,537,710
2007     1,415,158
2008     1,253,067
2009     1,101,068
2010     928,280
Thereafter     2,728,947
   
    $ 8,964,230
   

            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.    Capital Stock

            The Board of Directors ("Board") is authorized to reclassify the excess common stock into one or more additional classes and series of capital stock, to establish the number of shares in each class or series and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, and qualifications and terms and conditions of redemption of such class or series, without any further vote or action by the stockholders. The issuance of additional classes or series of capital stock may have the effect of delaying, deferring or preventing a change in control of Simon Property without further action of the stockholders. The ability of the Board to issue additional classes or series of capital stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of the outstanding voting stock of Simon Property.

            The holders of common stock of Simon Property are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, other than for the election of directors. At the time of the initial public offering of Simon Property's predecessor in 1993, the charter of the predecessor gave Melvin Simon, Herbert Simon, David Simon and certain of their affiliates (the "Simons") the right to elect four of the thirteen members of the Board,

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conditioned upon the Simons, or entities they control, maintaining specified levels of equity ownership in Simon Property's predecessor, the Operating Partnership and all of their subsidiaries. In addition, at that time, Melvin Simon & Associates, Inc. ("MSA"), acquired 3,200,000 shares of Class B common stock. MSA placed the Class B common stock into a voting trust under which the Simons were the sole trustees. These voting trustees had the authority to elect the four members of the Board. These same arrangements were incorporated into Simon Property's Charter in 1998 during the combination of its predecessor and Corporate Property Investors, Inc. Shares of Class B common stock convert automatically into an equal number of shares of common stock upon the sale or transfer thereof to a person not affiliated with Melvin Simon, Herbert Simon or David Simon. The holder of the Class C common stock is entitled to elect two of the thirteen members of the board. Shares of Class C common stock convert automatically into an equal number of shares of common stock upon the sale or transfer thereof to a person not affiliated with the members of the DeBartolo family or entities controlled by them. The Class B and Class C shares can be converted into shares of common stock at the option of the holders. At the initial offering we reserved 3,200,000 and 4,000 shares of common stock for the possible conversion of the outstanding Class B and Class C shares, respectively.

            On March 1, 2004, Simon Property and the Simons completed a restructuring transaction in which MSA exchanged 3,192,000 Class B common shares for an equal number of shares of common stock in accordance with our Charter. Those shares continue to be owned by MSA and remain subject to a voting trust under which the Simons are the sole voting trustees. MSA exchanged the remaining 8,000 Class B common shares with David Simon for 8,000 shares of common stock and David Simon's agreement to create a new voting trust under which the Simons as voting trustees, hold and vote the remaining 8,000 shares of Class B common stock acquired by David Simon. As a result, these voting trustees have the authority to elect four of the members of the Board contingent on the Simons maintaining specified levels of equity ownership in Simon Property, the Operating Partnership and their subsidiaries.

Common Stock Issuances and Repurchases

            In 2005, sixteen limited partners exchanged 2,205,188 units for 2,205,188 shares of common stock. On March 2, 2005 two limited partners converted 100,817 preferred units to units, and immediately thereafter to 76,293 shares of common stock.

            We issued 206,464 shares of common stock related to employee and director stock options exercised during 2005. We used the net proceeds from the option exercises of approximately $6.2 million to acquire additional units of the Operating Partnership. The Operating Partnership used the net proceeds for general working capital purposes.

            During the first quarter of 2005, we repurchased 2,000,000 shares of common stock in the open market at an average price of $61.88 under a $250 million repurchase program that expired on May 6, 2005.

            On May 11, 2005, the Board authorized a new repurchase program under which we may purchase up to 6,000,000 shares of our common stock subject to a maximum aggregate purchase price of $250 million over the next twelve months as market conditions warrant. We may repurchase the shares in the open market or in privately negotiated transactions. During the third quarter of 2005, we repurchased 815,400 shares at an average price of $71.93 as part of this program. The program has 5,184,600 shares, limited to $191.4 million, remaining for our potential repurchase.

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Preferred Stock

            The following table summarizes each of the authorized series of preferred stock of Simon Property as of December 31:

 
   2005
   2004
Series B 6.5% Convertible Preferred Stock, 5,000,000 shares authorized, none issued and outstanding   $ —   $ —
Series C 7.00% Cumulative Convertible Preferred Stock, 2,700,000 shares authorized, none issued or outstanding     —     —
Series D 8.00% Cumulative Redeemable Preferred Stock, 2,700,000 shares authorized, none issued or outstanding     —     —
Series E 8.00% Cumulative Redeemable Preferred Stock, 1,000,000 shares authorized, none issued and outstanding     —     —
Series F 8.75% Cumulative Redeemable Preferred Stock, 8,000,000 shares authorized, 8,000,000 issued and outstanding     192,989     192,989
Series G 7.89% Cumulative Step-Up Premium Rate Preferred Stock, 3,000,000 shares authorized, 3,000,000 issued and outstanding     148,256     147,950
Series H Variable Rate Preferred Stock, 4,530,000 shares authorized, none issued and outstanding     —     —
Series I 6% Convertible Perpetual Preferred Stock, 19,000,000 shares authorized, 13,835,174 and 13,638,019 issued and outstanding     691,759     681,901
Series J 83/8% Cumulative Redeemable Preferred Stock, 1,000,000 shares authorized, 796,948 issued and outstanding, including unamortized premium of $7,171 in 2005     47,018     39,847
   
 
    $ 1,080,022   $ 1,062,687
   
 

            Dividends on all series of preferred stock are calculated based upon the preferred stock's preferred return multiplied by the preferred stock's corresponding liquidation value. The Operating Partnership pays preferred distributions to Simon Property equal to the dividends paid on the preferred stock issued.

            Series B Convertible Preferred Stock.    During 2003, all of the outstanding shares of our 6.5% Series B Convertible Preferred Stock were either converted into shares of common stock or were redeemed at a redemption price of $106.34 per share. We issued an aggregate of 1,628,400 shares of common stock to the holders who exercised their conversion rights. The remaining 18,340 shares of Series B preferred stock were redeemed for cash.

            Series C Cumulative Convertible Preferred Stock and Series D Cumulative Redeemable Preferred Stock. On August 27, 1999, Simon Property authorized these two new series of preferred stock to be available for issuance upon conversion by the holders or redemption by the Operating Partnership of the 7.00% Preferred Units or the 8.00% Preferred Units, described below. Each of these new series of preferred stock had terms that were substantially identical to the respective series of Preferred Units.

            Series E Cumulative Redeemable Preferred Stock.    We issued the Series E Cumulative Redeemable Preferred Stock for $24.2 million. These preferred shares were being accreted to their liquidation value. The Series E Cumulative Redeemable Preferred Stock was redeemed on November 10, 2004 at the liquidation value of $25 per share.

            Series F Cumulative Redeemable Preferred Stock and Series G Cumulative Step-Up Premium Rate Preferred Stock.    The 8.75% Series F Cumulative Redeemable Preferred Stock may be redeemed at any time on or after September 29, 2006 at a liquidation value of $25.00 per share (payable solely out of the sale proceeds of other capital stock of Simon Property, which may include other series of preferred shares), plus accrued and unpaid dividends. The 7.89% Series G

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Cumulative Step-Up Premium Rate Preferred Stock are being accreted to their liquidation value and may be redeemed at any time on or after September 30, 2007 at a liquidation value of $50.00 per share (payable solely out of the sale proceeds of other capital stock of Simon Property, which may include other series of preferred shares), plus accrued and unpaid dividends. Beginning October 1, 2012, the rate on this series of preferred stock increases to 9.89% per annum. We intend to redeem the Series G Preferred Shares prior to October 1, 2012. Neither of these series of preferred stock has a stated maturity or is convertible into any other securities of Simon Property. Neither series is subject to any mandatory redemption provisions, except as needed to maintain or bring the direct or indirect ownership of the capital stock of Simon Property into conformity with REIT requirements. The Operating Partnership pays a preferred distribution to Simon Property equal to the dividends paid on the preferred stock.

            Series H Variable Rate Preferred Stock.    To fund the redemption of the Series B Preferred Stock in 2003, we issued 3,328,540 shares of Series H Variable Rate Preferred Stock for $83.2 million. Series H Variable Rate Preferred Stock is not redeemable at the option of the holders, but was redeemable at any time prior to March 15, 2004 or after March 15, 2009 at specified prices. We repurchased 3,250,528 shares of the Series H Preferred Stock for $81.3 million on December 17, 2003. On January 7, 2004 we repurchased the remaining 78,012 shares for $1.9 million.

            Series I 6% Convertible Perpetual Preferred Stock.    On October 14, 2004, we issued 13,261,712 shares of this new series of preferred stock in the Chelsea Acquisition. The terms of this new series of preferred stock is substantially identical to those of the respective series of Preferred Units. Subsequent to the initial issuance, three unitholders exchanged 376,307 units of the 6% Convertible Perpetual Preferred Units for an equal number of shares of Series I Preferred Stock. Distributions are to be made quarterly beginning November 30, 2004 at an annual rate of 6% per share. On or after October 14, 2009, we shall have the option to redeem the 6% Convertible Perpetual Preferred Stock, in whole or in part, for shares of common stock only at a liquidation preference of $50.00 per share plus accumulated and unpaid dividends. However, if the redemption date falls between the record date and dividend payment date the redemption price will be equal to only the liquidation preference per share, and will not include any amount of dividends declared and payable on the corresponding dividend payment date. 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 common stock exceeds 130% of the applicable conversion price. The 6% Convertible Perpetual Preferred Stock shall be convertible into a number of fully paid and non-assessable common shares upon the occurrence of a conversion triggering event at a conversion rate of 0.7853 of a common share (or a conversion triggering price per share of $79.59 at December 31, 2005). A conversion triggering event includes the following: (a) if the 6% Convertible Perpetual Preferred Share is called for redemption by us; or, (b) if we are a party to a consolidation, merger, binding share exchange, or sale of all or substantially all of our assets; or, (c) if during any fiscal quarter after the fiscal quarter ending December 31, 2004, the closing sale price of the 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.

            Series J 83/8% Cumulative Redeemable Preferred Stock.    On October 14, 2004, we issued 796,948 shares of Series J 83/8% Cumulative Redeemable Preferred Stock in replacement of an existing series of Chelsea preferred stock in the Chelsea Acquisition. On or after October 15, 2027, the Series J Preferred Stock, in whole or in part, may be redeemed at our option at a price, payable in cash, of $50.00 per share plus accumulated and unpaid dividends. The Series J Preferred Stock is not convertible or exchangeable for any other property or securities of Simon Property. The Series J Preferred Stock was issued at a premium of $7,553 as of the date of our acquisition of Chelsea. For our preliminary purchase price allocation, the premium related to this financing component as of December 31, 2004 was included with the other financing related premiums attributable to this business combination.

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Limited Partners' Preferred Interests in the Operating Partnership

            The following table summarizes each of the authorized preferred units of the Operating Partnership as of December 31:

 
   2005
   2004
6% Series I Convertible Perpetual Preferred Units, 19,000,000 units authorized, 4,177,028 and 4,377,487 issued and outstanding   $ 208,852   $ 218,874
7.75% / 8.00% Cumulative Redeemable Preferred Units, 900,000 shares authorized, 850,698 and 822,588 issued and outstanding     85,070     82,259
7.5% Cumulative Redeemable Preferred Units, 260,000 units authorized, 255,373 issued and outstanding     25,537     25,537
7% Cumulative Convertible Preferred Units, 2,700,000 units authorized, 1,410,760 and 1,529,439 issued and outstanding     39,501     42,824
8.00% Cumulative Redeemable Preferred Units, 2,700,000 units authorized, 1,425,573 and 1,444,856 issued and outstanding     42,767     43,346
   
 
    $ 401,727   $ 412,840
   
 

            6% Series I Convertible Perpetual Preferred Units.    On October 14, 2004, the Operating Partnership issued 4,753,794 6% Convertible Perpetual Preferred Units in the Chelsea Acquisition. Subsequent to the initial issuance, we had three unitholders exchange 376,307 Preferred Units into an equal number of shares of the Series I Preferred Stock. The Series I Units have terms that are substantially identical to the respective series of Preferred Stock, except that as it relates to the Series I Units, we have the option to satisfy the holder's exchange of Series I Preferred Units for cash or Series I Preferred Stock.

            7.75%/8.00% Cumulative Redeemable Preferred Units.    During 2003, in connection with the purchase of additional interest in Kravco, the Operating Partnership 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. 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.

            7.5% Cumulative Redeemable Preferred Units.    The Operating Partnership 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 unitholder, 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

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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.

            7.00% Cumulative Convertible Preferred Units.    The 7.00% Cumulative Convertible Preferred Units (the "7.00% Preferred Units") accrue cumulative dividends at a rate of $1.96 annually, which is payable quarterly in arrears. The 7.00% 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 7.00% Preferred Units or Units of the Operating Partnership at a ratio of 0.75676 to one provided that the closing stock price of Simon Property's common stock exceeds $37.00 for any three consecutive trading days prior to the conversion date. The Operating Partnership may redeem the 7.00% 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 the 7.00% Preferred Units, or the occurrence of certain tax triggering events applicable to a holder, the Operating Partnership may be required to redeem the 7.00% Preferred Units at 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 shares of common stock.

            8.00% Cumulative Redeemable Preferred Units.    The 8.00% Cumulative Redeemable Preferred Units (the "8.00% Preferred Units") accrue cumulative dividends at a rate of $2.40 annually, which is payable quarterly in arrears. The 8.00% Preferred Units are each paired with one 7.00% Preferred Unit or with the Units into which the 7.00% Preferred Units may be converted. The Operating Partnership may redeem the 8.00% 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 8.00% Preferred Units, except that the distribution coupon rate would be reset to a then determined market rate, or in Units. The 8.00% Preferred Units are convertible at the holders' option on or after August 27, 2004, into 8.00% Cumulative Redeemable Preferred Stock of Simon Property with terms substantially identical to the 8.00% Preferred Units. In the event of the death of a holder of the 8.00% Preferred Units, or the occurrence of certain tax triggering events applicable to a holder, the Operating Partnership may be required to redeem the 8.00% 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 shares of common stock.

            Notes Receivable from Former CPI Stockholders.    Notes receivable of $17,787 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 consolidated statements of stockholders' equity in the accompanying financial statements. A total of $138 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.

            The Simon Property Group 1998 Stock Incentive Plan.    We have a stock incentive plan (the "1998 Plan"), which provides for the grant of equity-based awards during a ten-year period, in the form of options to purchase shares ("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. An aggregate of 11,300,000 shares of common stock have been reserved for issuance under the 1998 Plan. Additionally, the partnership agreement requires us to sell shares to the Operating Partnership, at fair value, sufficient to satisfy the exercising of stock options, and for us 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

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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" 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 annually. 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 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 the Compensation Committee or full Board 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 and other factors established by the Compensation Committee related to the most recent year's performance (the "Restricted Stock Program"). Restricted Stock Program grants vests annually over a four-year period (25% each year) beginning on January 1 of the year in which the restricted stock award is granted. The cost of restricted stock grants, which is based upon the stock's fair market value on the grant date, is charged to stockholders' equity and subsequently amortized against our earnings over the vesting period. Through December 31, 2005 a total of 3,823,714 shares of restricted stock, net of forfeitures,

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have been awarded under the plan. Information regarding restricted stock awards are summarized in the following table for each of the years presented:

 
   For the Year Ended December 31,
 
   2005
   2004
   2003
Restricted stock shares awarded, net of forfeitures     400,541     365,602     380,835
Weighted average grant price of shares granted   $ 61.01   $ 56.86   $ 33.03
Amortization expense   $ 14,320   $ 11,935   $ 10,355

            The weighted average life of our outstanding options as of December 31, 2005 is 4.3 years. Information relating to Director Options and Employee Options from December 31, 2002 through December 31, 2005 is as follows:

 
   Director Options
   Employee Options
 
   Options
   Weighted Average
Exercise Price
Per Share
   Options
   Weighted Average
Exercise Price
Per Share
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 (1)   —     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
   
 
 
 
Granted   —     N/A   18,000     61.48
Exercised   (22,860 )   25.25   (183,604 )   27.20
Forfeited   (3,930 )   25.51   (2,500 )   25.54
   
 
 
 
Shares under option at December 31, 2005   37,500   $ 27.80   1,527,922   $ 30.39
   
 
 
 
(1)
Principally Chelsea options issued to certain employees as part of acquisition consideration.

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   Outstanding
   Exercisable
Director Options:

Range of Exercise Prices
   Options
   Weighted
Average
Remaining
Contractual
Life in Years
   Weighted
Average
Exercise Price
Per Share
   Options
   Weighted
Average
Exercise Price
Per Share
$0.00 - $22.25   —   N/A     N/A   —     N/A
$22.26 - $33.68   37,500   3.90   $ 27.80   37,500   $ 27.80
   
     
 
 
  Total   37,500       $ 27.80   37,500   $ 27.80
   
     
 
 
 
   Outstanding
   Exercisable
Employee Options:

Range of Exercise Prices
   Options
   Weighted
Average
Remaining
Contractual
Life in Years
   Weighted
Average
Exercise Price
Per Share
   Options
   Weighted
Average
Exercise Price
Per Share
$0.00 - $22.35   —   N/A     N/A   —     N/A
$22.36 - $30.38   1,288,673   4.07   $ 26.16   1,288,673   $ 26.16
$30.39 - $46.97   59,749   8.10   $ 46.97   59,749   $ 46.97
$46.98 - $63.51   179,500   4.79   $ 55.19   161,500   $ 54.49
   
     
 
 
  Total   1,527,922       $ 30.39   1,509,922   $ 30.01
   
     
 
 

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

Exchange Rights

            Limited partners in the Operating Partnership have the right to exchange all or any portion of their Units for shares of common stock on a one-for-one basis or cash, as selected by the Board. 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. At December 31, 2005, we had reserved 80,001,088 shares of common stock for possible issuance upon the exchange of Units, options, Class B and C common stock and certain convertible preferred stock.

11.    Commitments and Contingencies

Litigation

            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.

            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,

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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 "September Order"). In the September 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 the sum of $81.38 million within nine months of the September Order. On August 6, 2004, Triple Five closed on its purchase of our one-half partnership interest and 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 that date.

            As a result of the September 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 a 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 interests in unconsolidated entities and other assets, net" in the accompanying consolidated statements of operations and comprehensive income. We ceased recording any contribution to net income from the results of operations of Mall of America as of September 1, 2003.

            We appealed the September Order to the United States Court of Appeals for the Eighth Circuit. On April 21, 2005, the Court of Appeals issued its opinion, affirming in part and reversing in part the Order of the trial court. The Appellate Court opinion changes the equitable remedy contained in the September Order and requires that the one-half partnership interest Triple Five acquired from us pursuant to the September Order must instead be offered, for the same price, to Mall of America Associates, a general partnership in which Triple Five and an entity affiliated with the Simon family are 50/50 partners ("MOAA"). If MOAA refuses to purchase the interest, then Triple Five must transfer back to us one-half of the interest it acquired from us in August, 2004. Triple Five, as managing partner of MOAA, has elected to cause MOAA to acquire the one-half partnership interest. In addition, Triple Five asked the Trial Court to grant it additional relief, namely to cause the Simon family partner in MOAA to be disassociated from that partnership and to terminate the existing management contract for the Mall with our subsidiary. The trial court issued an order on December 23, 2005 ("December Order"), denying Triple Five's request for dissociation of the Simon family partner in MOAA, but granting Triple Five's request that they be permitted to terminate the existing management contract for the Mall with our subsidiary. We have appealed that portion of the December Order granting Triple Five the right to terminate the management contract. On January 18, 2006, Triple Five transferred to MOAA the partnership interest it acquired from us in August, 2004, for a purchase price of approximately $23.1 million. The purchase price was financed with a new credit facility secured by distributions payable to MOAA's partner. In connection with the resolution of this matter, the Simon family transferred, under certain circumstances, the right to receive cash flow distributions and capital transaction proceeds attributable to one-half of the interest that MOAA acquired from Triple Five (or 25%), subject to the new credit facility, to the Operating Partnership. The Simon family did not transfer its partnership interest in MOAA to us, and the Simon family retains the right to make all decisions regarding that partnership interest. As a result of the transfer to us of the right to receive cash flow distributions and capital transaction proceeds, we will recognize a gain in the first quarter of 2006 to recognize this beneficial interest, including prior earnings of the partnership since August, 2004. We will also begin to record contributions to net income and FFO representing 25% of the results of operations at Mall of America as a result of this arrangement.

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            We are involved in various other 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.

Lease Commitments

            As of December 31, 2005, a total of 34 of the consolidated Properties are subject to ground leases. The termination dates of these ground leases range from 2006 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,
 
   2005
   2004
   2003
Ground lease expense   $ 25,584   $ 20,689   $ 17,028

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

2006   $ 16,612
2007     16,749
2008     16,995
2009     16,909
2010     16,694
Thereafter     722,662
   
    $ 806,621
   

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 our 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 Non-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. In December of 2005, the President signed into law the Terrorism Risk Insurance Extension Act (TRIEA) of 2005, thereby extending the federal terrorism insurance backstop through 2007. TRIEA narrows terms and conditions afforded by TRIA for 2006 and 2007 by: 1) excluding lines of coverage for commercial automobile, surety, burglary and theft, farm owners' multi-peril and professional liability; 2) raising the certifiable event trigger

123


mechanism from $5 million to $50 million in 2006 and $100 million in 2007; and, 3) increasing the deductibles and co-pays assigned to insurance companies.

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, 2005, we have guaranteed or provided letters of credit and have other guarantee obligations of $12.8 million and $28.7 million, respectively, to support our total $3.2 billion share of joint venture mortgage and other indebtedness in the event the joint venture partnership defaults under the terms of the underlying arrangement. Mortgages which are guaranteed by us are secured by the property of the joint venture partnership and could be sold in order to satisfy the outstanding obligation.

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/lifestyle centers rely heavily upon anchor tenants like most retail properties. Four retailers occupied 408 of the approximately 992 anchor stores in the Properties as of December 31, 2005. An affiliate of one of these retailers is a limited partner in the Operating Partnership.

Limited Life Partnerships

            FASB Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 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. We have certain 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. However, SFAS 150 requires disclosure of the estimated settlement value of these non-controlling interests. As of December 31, 2005 and 2004, the estimated settlement value of these non-controlling interests was approximately $145 million and $100 million, respectively.

12.    Related Party Transactions

            Our 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 our management company and its affiliates to our unconsolidated joint ventures and other related parties were as follows:

 
   For the year ended December 31,
 
   2005
   2004
   2003
Amounts charged to unconsolidated joint ventures   $ 58,450   $ 59,500   $ 59,631
Amounts charged to properties owned by related parties     9,465     9,694     4,850

13.    Recently Issued Accounting Pronouncements

            During 2005, the FASB issued Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. 143, Asset Retirement Obligations" ("FIN 47"). FIN 47 provides clarification of the term "conditional asset retirement obligation" as used in SFAS 143, defined as a legal

124


obligation to perform an asset retirement activity in which the timing or method of settlement are conditional on a future event that may or may not be within the control of the Company. Under this standard, a company must record a liability for a conditional asset retirement obligation if the fair value of the obligation can be reasonably estimated. FIN 47 became effective for the Company's year ended December 31, 2005. The adoption of FIN 47 did not have a material adverse effect on the Company's consolidated financial statements. Certain of the Company's real estate assets contain asbestos. The asbestos is appropriately contained, in accordance with current environmental regulations, and the Company has no current plans to remove the asbestos. If these properties were demolished, certain environmental regulations are in place which specify the manner in which the asbestos must be handled and disposed. Because the obligation to remove the asbestos has an indeterminable settlement date, the Company is not able to reasonably estimate the fair value of this asset retirement obligation.

            In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets — an amendment of APB Opinion No. 29." This Statement requires exchanges of productive assets to be accounted for at fair value, rather than at carryover basis, unless (a) neither the asset received nor the asset surrendered has a fair value that is determinable within reasonable limits, or (b) the transactions lack commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this Statement is not anticipated to have a material impact on our financial position or results of operations.

            In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections." SFAS No. 154 is a replacement of APB Opinion No. 20, "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements." This Statement requires voluntary changes in accounting to be accounted for retrospectively and all prior periods to be restated as if the newly adopted policy had always been used, unless it is impracticable. APB Opinion No. 20 previously required most voluntary changes in accounting to be recognized by including the cumulative effect of the change in accounting in net income in the period of change. This Statement also requires a change in method of depreciation, amortization or depletion for a long-lived asset be accounted for as a change in estimate that is affected by a change in accounting principle. SFAS No. 154 is effective for fiscal years beginning after December 15, 2005. The provisions of this Statement could have an impact on prior year consolidated financial statements if we have a change in accounting.

            In June 2005, the FASB ratified its consensus in EITF Issue 04-05, "Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights" (Issue 04-05). The effective date for Issue 04-05 is June 29, 2005 for all new or modified partnerships and January 1, 2006 for all other partnerships for the applicable provisions. The adoption of the provisions of EITF 04-05 did not have a material impact on our financial position or results of operations for new partnerships after June 29, 2005 and is not expected to have a material impact on adoption for our remaining partnerships.

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14.    Quarterly Financial Data (Unaudited)

            Quarterly 2005 and 2004 data is summarized in the table below and the amounts have been reclassified from previously disclosed amounts due to the sale of properties in 2005 and 2004. The results of operations of these sold properties were reclassified to discontinued operations:

 
   First
Quarter
   Second
Quarter
   Third
Quarter
   Fourth
Quarter
2005                        

Total revenue
 
$
741,969
 
$
752,082
 
$
783,012
 
$
889,790
Operating income     269,595     288,824     298,837     348,167
Income from Continuing Operations     94,797     102,646     109,324     150,561
Net income available to common stockholders     57,067     154,811     74,358     115,659
Income from Continuing Operations per share — Basic   $ 0.25   $ 0.27   $ 0.30   $ 0.45
Net income per share — Basic   $ 0.26   $ 0.70   $ 0.34   $ 0.53
Income from Continuing Operations per share — Diluted   $ 0.25   $ 0.27   $ 0.30   $ 0.44
Net income per share — Diluted   $ 0.26   $ 0.70   $ 0.34   $ 0.52
Weighted average shares outstanding     220,386,301     220,227,523     220,558,724     219,861,205
Diluted weighted average shares outstanding     221,281,321     221,110,797     221,491,013     220,784,422

2004
 
 
 
 
 
 
 
 
 
 
 
 

Total revenue
 
$
567,956
 
$
586,832
 
$
608,914
 
$
821,377
Operating income     224,209     236,301     245,227     349,106
Income from Continuing Operations     73,364     102,185     106,716     177,676
Net income available to common stockholders     48,351     70,711     74,141     107,444
Income from Continuing Operations per share — Basic   $ 0.23   $ 0.33   $ 0.36   $ 0.54
Net income per share — Basic   $ 0.24   $ 0.34   $ 0.36   $ 0.49
Income from Continuing Operations per share — Diluted   $ 0.23   $ 0.33   $ 0.36   $ 0.54
Net income per share — Diluted   $ 0.24   $ 0.34   $ 0.36   $ 0.49
Weighted average shares outstanding     202,249,926     205,552,968     206,057,105     218,009,468
Diluted weighted average shares outstanding     203,214,344     206,361,031     206,897,726     218,896,387

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Management's Discussion and Analysis of Financial Condition and Results of Operations Simon Property Group, Inc. and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of Operations Simon Property Group, Inc. and Subsidiaries
Management's Report On Internal Control Over Financial Reporting
Report Of Independent Registered Public Accounting Firm
Report Of Independent Registered Public Accounting Firm
Simon Property Group, Inc. and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except share amounts)
Simon Property Group, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except share and per share amounts and where indicated as in millions or billions)

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Exhibit 21.1


List of Subsidiaries of Simon Property

Subsidiary
   Jurisdiction
Simon Property Group, L.P.   Delaware
The Retail Property Trust   Massachusetts
Simon Property Group (Illinois), L.P.   Illinois
Simon Property Group (Texas), L.P.   Texas
Shopping Center Associates   New York
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   Indiana
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, L.P.   Delaware

            Omits names of subsidiaries that as of December 31, 2005 were not, in the aggregate, a "significant subsidiary".

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List of Subsidiaries of Simon Property

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Exhibit 23.1


Consent of Independent Registered Public Accounting Firm

            We consent to the incorporation by reference in this Annual Report (Form 10-K) of Simon Property Group, Inc. of our reports dated March 7, 2006, with respect to the consolidated financial statements of Simon Property Group, Inc. as of December 31, 2005 and 2004 and for the three years in the period ended December 31, 2005 and Simon Property Group, Inc.'s management assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting of Simon Property Group, Inc. as of December 31, 2005 included in the 2005 Annual Report to Stockholders of Simon Property Group, Inc.

            Our audits also included the financial statement schedule of Simon Property Group, Inc. listed in Item 15(a). This schedule is the responsibility of Simon Property Group, Inc.'s management. Our responsibility is to express an opinion based on our audit. In our opinion, as to which the date is March 7, 2006, the financial statement schedule listed in Item 15(a), 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 consent to the incorporation by reference in the following Registration Statements:

of our report dated March 7, 2006, with respect to the consolidated financial statements of Simon Property Group, Inc. incorporated herein by reference, our report dated March 7, 2006, with respect to Simon Property Group, Inc. 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, Inc., incorporated by reference herein, and our report included in the preceding paragraph with respect to the financial statement schedule of Simon Property Group, Inc. included in this Annual Report (Form 10-K) of Simon Property Group, Inc.

    /s/  ERNST & YOUNG LLP      
Indianapolis, Indiana
March 7, 2006		    

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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, Inc.;

        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 8, 2006
 
 

 
 
/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, Inc.;

        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 8, 2006
 
 

 
 
/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, Inc. ("Simon Property"), on Form 10-K for the period ending December 31, 2005 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 8, 2006		    

/S/  STEPHEN E. STERRETT      
Stephen E. Sterrett
Executive Vice President and
    Chief Financial Officer
March 8, 2006
 
 

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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