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

FORM 10-K

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

For the fiscal year ended December 31, 2006

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

Delaware   333-11491   34-1755769
(State of incorporation
or organization)		   (Commission File No.)   (I.R.S. Employer
Identification No.)

225 West Washington Street
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: None

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 o    NO ý

            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. ý

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

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

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

            Registrant had no publicly-traded voting equity as of June 30, 2006.

            Registrant has no common stock outstanding.

Documents Incorporated By Reference

            None.

Simon Property Group, L.P. and Subsidiaries
Annual Report on Form 10-K
December 31, 2006

TABLE OF CONTENTS


Item No.
 
 
 
Page No.
Part I

1.
 
Business
 
3
1A.   Risk Factors   9
1B.   Unresolved Staff Comments   14
2.   Properties   14
3.   Legal Proceedings   44
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   47
7A.   Quantitative and Qualitative Disclosure About Market Risk   63
8.   Financial Statements and Supplementary Data   63
9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   63
9A.   Controls and Procedures   63
9B.   Other Information   65

Part III

10.
 
Directors, Executive Officers and Corporate Goverance
 
65
11.   Executive Compensation   65
12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   65
13.   Certain Relationships and Related Transactions, and Director Independence   65
14.   Principal Accountant Fees and Services   65

Part IV

15.
 
Exhibits and Financial Statement Schedules
 
66

Signatures
 
107

2


Part I

Item 1. Business

Background

            Simon Property Group, L.P. is a Delaware limited partnership and a majority owned subsidiary of Simon Property Group, Inc. In this report, the terms the "Operating Partnership", "we", "us" and "our" refer to Simon Property Group, L.P. and its subsidiaries and the term "Simon Property" refers specifically to Simon Property Group, Inc.

            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, 2006, we owned or held an interest in 286 income-producing properties in the United States, which consisted of 171 regional malls, 36 Premium Outlet centers, 69 community/lifestyle centers, and 10 other shopping centers or outlet centers in 38 states and Puerto Rico (collectively, the "Properties", and individually, a "Property"). We also own interests in five parcels of land held for future development (together with the Properties, the "Portfolio"). In the United States, we have five new properties currently under development aggregating approximately 3.5 million square feet which will open during 2007 or early 2008. Internationally, we have ownership interests in 53 European shopping centers (in France, Italy and Poland), five Premium Outlet centers in Japan, and one Premium Outlet center in Mexico. We also have begun construction on a Premium Outlet center in which we will hold a 50% interest located in South Korea and, through a joint venture arrangement, we will have a 32.5% interest in five shopping centers (four of which are under construction) in China.

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. The Simon Property Board of Directors ("Board") may amend or rescind these policies from time to time at its discretion without a vote of our limited partners.

            Our primary business objectives are to increase operating results and the value of our Properties while maintaining a strong, stable balance sheet consistent with our financing policies. We intend to achieve these objectives by:

•
developing new shopping centers which meet our economic criteria;
•
renovating and/or expanding our Properties where appropriate;
•
acquiring additional shopping centers and portfolios of other retail real estate companies that meet our investment criteria;
•
pursuing a leasing strategy that capitalizes on the desirable location of our Properties;
•
generating additional revenues through merchandising, marketing and promotional activities;
•
adding mixed-use elements to our Portfolio through our asset intensification initiatives, such as multifamily, condominiums, hotel and self-storage elements at selected locations; and
•
improving the performance of our Properties by using the economies of scale that result from our size to help control operating costs.

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

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

            While we emphasize equity real estate investments, we may, at our discretion, invest in mortgages and other real estate interests consistent with Simon Property's qualification as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended ("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

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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.

            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 to maintain Simon Property's qualification as a REIT. These REIT limitations mean that Simon Property cannot make an investment that would cause its real estate assets to be less than 75% of its total assets. In addition, at least 75% of Simon Property's gross income must be derived directly or indirectly from investments relating to real property or mortgages on real property, including "rents from real property," dividends from other REIT's and, in certain circumstances, interest from certain types of temporary investments. At least 95% of Simon Property's income must be derived from such real property investments, and from dividends, interest and gains from the sale or dispositions of stock or securities or from other combinations of the foregoing.

            Subject to these REIT limitations, 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 the debt agreements that limit our ratio of debt to total market valuation. For example, our lines of credit and the indentures for our debt securities contain covenants that restrict the total amount of debt to 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 Simon Property's equity securities and our debt securities.

            We may raise additional capital through debt financing, creating joint ventures with existing ownership interests in Properties, retention of cash flows or a combination of these methods. If the Board determines to raise additional equity capital at the Operating Partnership level, we may, without limited partner approval, issue additional units of limited partnership interests or units. We may issue units in any manner and on such terms and for such consideration as we deem appropriate. This may include issuing units in exchange for property. The units may be preferred units and may be senior to the outstanding classes of our units and may be convertible into units. Existing holders of units will have no preemptive right to purchase units in any subsequent offerings. Any such offering could dilute a unitholder's investment in us.

            We anticipate that any additional borrowings would be made in the form of bank borrowings, publicly and privately placed debt instruments, or purchase money obligations to the sellers of properties. Any of such indebtedness may be unsecured or may be secured by any or all of our assets, or any existing or new property-owning partnership. Any such indebtedness may also have full or limited recourse to all or any portion of the assets of any of the foregoing. Although we may borrow to fund the payment of 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 units, preferred units or be accompanied by warrants to purchase equity interests or be exchangeable for stock of Simon Property. We also may sell or securitize our lease receivables. The proceeds from any borrowings or financings may be used for the following:

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

            We also may determine to finance acquisitions through the following:

•
issuance of additional units;

4

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

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

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

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

            We maintain policies and have entered into agreements designed to reduce or eliminate potential conflicts of interest. Simon Property has adopted governance principles governing its affairs and the affairs of its subsidiaries and the Board, as well as written charters for each of the standing Committees of the Board. In addition, the Board has a Code of Business Conduct and Ethics, which applies to all of its officers, directors, and employees. At least a majority of the members of the 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 who are significant stockholders. Any transaction between us and the Simons or the DeBartolos, including property acquisitions, service and property management agreements and retail space leases, must be approved by a majority of non-affiliated directors.

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

            We intend to make investments which are consistent with Simon Property's qualification as a REIT, unless the Board determines that it is no longer in Simon Property's 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 units of our equity interests or other securities in exchange for property. We also have authority to repurchase or otherwise reacquire our units or any other securities. We may engage in such activities in the future. We may also repurchase units subject to Board approval. It is our policy to not make any loans to the directors or executive officers of Simon Property for any purpose. We may make loans 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.

5


            Leasing.    We pursue a leasing strategy that includes:

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

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

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

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

            We are the manager of 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:

•
Simon Brand Ventures ("Simon Brand") obtains revenues from establishing our malls as leading market resource providers for retailers and other businesses and consumer-focused corporate alliances. Simon Brand revenues sources include: payment systems (including marketing fees relating to the sales of bank-issued prepaid cards), national marketing alliances, static and digital media initiatives, business development, sponsorship, and events.
•
Simon Business Network ("Simon Business") revenues are derived from the offering of products and property operating services, resulting from its relationships with vendors, to our tenants and others. These services include such items as waste handling, facility services, and energy services, as well as major capital expenditures such as roofing, parking lots and energy systems.

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

            International Expansion.    Our investments in properties that are under operation in Europe, Japan, and Mexico are 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 Simon Ivanhoe S.à.r.l. ("Simon Ivanhoe") 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 have also formed a joint venture in South Korea to develop a Premium Outlet Center. We and our partner, Shinsegae Co., Ltd. and Shinsegae International Co., Ltd. (collectively "Shinsegae"), each own 50% of this partnership. Lastly, we have formed joint ventures with Morgan Stanley Real Estate Fund ("MSREF") and SZITIC Commercial Property Co., Ltd. ("SZITIC CP") to develop five shopping centers in China. Four of these centers are currently under construction. 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 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."

6


            The acquisition of high quality individual properties or portfolios of properties remain an integral component of our growth strategies. On November 1, 2006, we acquired the remaining 50% interest in Mall of Georgia, a regional mall Property, from our partner for $252.6 million, including the assumption of $96.0 million of debt. As a result, we now own 100% of Mall of Georgia, and the property was consolidated as of the acquisition date.

            During 2006, we also acquired an additional 15.3% net ownership in Simon Ivanhoe, increasing our ownership interest in this joint venture to 50% effective in the first quarter of 2006.

            As part of our strategic plan to own high 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 and 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 the year ended December 31, 2006, we disposed of three consolidated properties and one joint venture property in which we held a 50% interest and accounted for under the equity method. We received net proceeds of $52.7 million and recorded our share of a net gain on the disposals totaling $12.2 million. We do not believe the sale of these properties will have a material impact on our future results of operations or cash flows. We believe the disposition of these properties will enhance the average overall quality of our Portfolio. In addition, we also received capital transaction proceeds related to a beneficial interest that we held during 2006 in a mall partnership, which resulted in an $86.5 million gain, terminating our beneficial interests in this entity.

Competition

            We consider our principal competitors to be ten 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 non-physical based forms of retailing, such as catalog companies 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 real estate company. In addition, we own or have an interest in more regional malls than any other publicly-traded company. We believe that we have a competitive advantage in the retail real estate business as a result of:

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

            Our size reduces our dependence upon individual retail tenants. Approximately 4,200 different retailers occupy more than 24,000 stores in our Properties and no retail tenant represents more than 3.8% of our Properties' total minimum rents.

Certain Activities

            During the past three years, we have:

•
issued 6,563,725 units to Simon Property upon the exchange of units for common stock of Simon Property;

7

•
issued 1,026,274 units to other partners upon the conversion of 1,061,580 Series C preferred units and 283,907 Series I preferred units;
•
issued 966,830 units upon the conversion of preferred units;
•
issued 120,671 units in 2004;
•
issued 4,277 7.5% Cumulative Redeemable Preferred Units;
•
issued 1,181,241 restricted units to Simon Property, net of forfeitures, with respect to the issuance of a like number of restricted shares of common stock issued under The Simon Property Group 1998 Stock Incentive Plan;
•
issued 1,014,066 units to Simon Property in exchange for cash contributed resulting from the exercise of stock options under The Simon Property Group 1998 Stock Incentive Plan;
•
purchased and retired 181,000 common units;
•
repurchased 3,132,700 common units for $202.8 million;
•
redeemed 587,670 limited partner units for cash;
•
issued 4,652,232 units to limited partners and 12,978,795 units to Simon Property in connection with the October 2004 acquisition of Chelsea Property Group, Inc. and its subsidiary CPG Partners, L.P. (collectively "Chelsea"), (the "Chelsea Acquisition");
•
repurchased 78,012 Series H preferred units in 2004;
•
issued and subsequently converted for cash 1,156,039 Series D preferred units in 2004 and redeemed 19,287 Series D preferred units in 2005;
•
redeemed all outstanding Series E preferred units;
•
redeemed all outstanding Series F preferred units;
•
issued 4,753,794 Series I preferred units to Chelsea limited partners and 13,261,712 Series I preferred units to Simon Property in the Chelsea Acquisition and redeemed 14,677 Series I preferred units in 2005 and 2006;
•
issued 796,948 Series J preferred units in the Chelsea Acquisition;
•
issued 1,602,821 units to Simon Property in exchange for the economic rights of Ocean County Mall;
•
issued and repurchased 8,000,000 Series K preferred units in 2006;
•
borrowed a maximum amount of $2.0 billion under our unsecured revolving credit facility; the outstanding amount of borrowings under this facility as of December 31, 2006, was $305.1 million;
•
as a co-borrower with Simon Property, borrowed $1.8 billion under an unsecured acquisition facility in connection with the Chelsea Acquisition, that has been fully repaid as of December 31, 2006;
•
not made loans to other entities or persons, including Simon Property's executive officers and directors, other than to certain joint venture properties;
•
not invested in the securities of other issuers for the purpose of exercising control, other than certain wholly-owned subsidiaries and to acquire interests in real estate;
•
not underwritten securities of other issuers; and
•
not engaged in the purchase and sale or turnover of investments for the purpose of trading.

Employees

            At January 26, 2007, we and our affiliates employed approximately 4,300 persons at various properties and offices throughout the United States, of which approximately 1,600 were part-time. Approximately 1,000 of these employees were located at our corporate headquarters in Indianapolis, IN and 140 were located at our Chelsea offices in Roseland, NJ.

Corporate Headquarters

            Our corporate headquarters are located at 225 West Washington Street, Indianapolis, Indiana 46204, and our telephone number is (317) 636-1600.

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.

8


Item 1A. Risk Factors

            The following factors, among others, could cause our 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, 2006, our consolidated mortgages and other indebtedness, excluding the related premium and discount, totaled $15.3 billion, of which approximately $1.7 billion matures during 2007, 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 if developments at the Property, such as the entry of new competitors or the loss of major tenants, cause a reduction in the income from the 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 the preferred stock of Simon Property 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. The credit rating of our senior unsecured notes and Simon Property's preferred stock 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.

            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. Termination of these hedging agreements typically involve costs, such as transaction fees or breakage costs.

            As of December 31, 2006, approximately $0.8 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

9

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.

Factors Affecting Real Estate Investments and Operations

            We face risks associated with the acquisition, development and expansion of properties.

            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. In addition, 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:

•
construction costs of a project may be higher than projected, potentially making the project unfeasible or unprofitable;
•
we may not be able to obtain financing or to refinance construction loans on favorable terms, if at all;
•
we may be unable to obtain zoning, occupancy or other governmental approvals;
•
occupancy rates and rents may not meet our projections and the project may not be profitable; and
•
we may need the consent of third parties such as anchor tenants, mortgage lenders and joint venture partners, and those consents may be withheld.

            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:

•
the risks normally associated with changes in the general economic climate;
•
trends in the retail industry;
•
creditworthiness of tenants;
•
competition for tenants and customers;
•
consumer confidence;
•
impact of terrorist activities;
•
changes in tax laws;
•
interest and foreign currency exchange rates;
•
the availability of financing; and
•
potential liability under environmental and other laws.

            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

            As owners of real estate, we can face liabilities for environmental contamination.

            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

10


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 our 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 our 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:

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

Retail Operations Risks

            Our concentration in the retail 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.

            Regional malls are typically anchored by department stores and other large nationally recognized tenants. The value of some of our Properties could be adversely affected if these tenants fail to comply with their contractual obligations, seek concessions in order to continue operations, or cease their operations. Department store and larger store, also referred to as "big box", consolidations typically result in the closure of existing stores or duplicate or geographically overlapping 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 could 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.

11

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, 2006, we owned interests in 146 income-producing properties with other parties. Of those, 19 Properties are included in our consolidated financial statements. We account for the other 127 properties under the equity method of accounting, which we refer to as joint venture properties. We serve as general partner or property manager for 58 of these 127 properties; however, certain major decisions, such as selling or refinancing these properties, require the consent of the other owners. Of these properties we do not serve as general partner or property manager, 59 are in our international joint ventures. 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, 2006, we have loan guarantees and other guarantee obligations to support $43.6 million and $19.0 million, respectively, of our total $3.5 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.

            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.

12


            We hold interests in joint venture properties that are under operation in Europe, Japan and Mexico. We have also established arrangements to develop joint venture properties in China and South 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:

•
adverse effects of changes in exchange rates for foreign currencies;
•
changes in foreign political environments, regionally, nationally, and locally;
•
challenges of complying with a wide variety of foreign laws including corporate governance, operations, taxes, and litigation;
•
differing lending practices;
•
differences in cultures;
•
changes in applicable laws and regulations in the United States that affect foreign operations;
•
difficulties in managing international operations; and
•
obstacles to the repatriation of earnings and cash.

            Although our international activities currently are a relatively small portion of our business (international properties represented less than 7% of the GLA of all of our properties at December 31, 2006), to the extent that we expand our international activities, these risks could increase in significance which in turn could 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 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.

13

            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

            Two of our subsidiaries have elected to be treated 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 any of these subsidiaries fails to qualify as a REIT and any available relief provisions do not apply:

•
The subsidiary will not be allowed a deduction for distributions to us in computing its taxable income;
•
The subsidiary will be subject to corporate level income tax, including any applicable alternative minimum tax, on its taxable income at regular corporate rates;
•
Unless entitled to relief under relevant statutory provisions, the subsidiary will also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost; and
•
Simon Property would also fail to qualify as a REIT as a result of the subsidiary's failure and the same adverse consequences would apply to it and its stockholders.

            As a result, net income and funds available for distribution to our unitholders would be reduced for those years in which any of the REIT subsidiaries fails to qualify as a REIT. Although we currently intend to operate our REIT subsidiaries so as to qualify each as a REIT, we cannot assure you we will succeed or that future economic, market, legal, tax or other considerations might cause us to revoke the REIT election of any of the REIT subsidiaries.


Item 1B. Unresolved Staff Comments

            None.


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 120.2 million square feet ("Owned GLA"). Total estimated retail sales at the Properties in 2006 were approximately $53 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) connecting the anchors. Additional stores ("Freestanding" stores) are usually located along the perimeter of the parking area. Our 171 regional malls are generally enclosed centers and range in size from approximately 400,000 to 2.0 million square feet of GLA. Our regional malls contain in the aggregate more than 17,800 occupied stores, including approximately 675 anchors, which are mostly national retailers.

            Premium Outlet centers generally contain a wide variety of retailers located in open-air manufacturers' outlet centers. Our 36 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., and San Francisco; or within 20 miles of major tourist destinations including Palm Springs, Napa Valley, Orlando, Las Vegas, and Honolulu.

            Community/lifestyle centers are generally unenclosed and smaller than our regional malls. Our 69 community/lifestyle centers generally range in size from approximately 100,000 to 600,000 square feet of GLA. Community/

14


lifestyle centers are designed to serve a larger trade area and typically contain anchor stores 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.

            We also have interests in 10 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, 2006:

 
   Regional
Malls
   Premium
Outlet
Centers
   Community/
Lifestyle
Centers
   Other Properties
  
% of total Property annualized base rent   80.7 % 12.8 % 6.1 % 0.4 %
% of total Property GLA   82.8 % 6.9 % 9.5 % 0.8 %
% of Owned Property GLA   76.0 % 11.6 % 11.1 % 1.3 %

            As of December 31, 2006, approximately 93.2% of the Mall and Freestanding Owned GLA in regional malls and the retail space of the other Properties was leased, approximately 99.4% of Owned GLA in the Premium Outlet centers was leased and approximately 93.2% of Owned GLA in the community/lifestyle centers was leased.

            We own 100% of 199 of our 286 Properties, effectively control 19 Properties in which we have a joint venture interest, and hold the remaining 68 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, 2006.

15

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

 
    
    
    
    
    
    
    
   Gross Leasable Area
    
 
   Property Name
   State
   City (Metropolitan area)
   Ownership Interest (Expiration if Lease) (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
 
64.3
%
426,315
 
211,655
 
637,970
 
Macy's, JCPenney, Sears, Old Navy
2.   Anderson Mall   SC   Anderson (Greenville)   Fee   100.0 % Built 1972   95.8 % 404,394   229,988   634,382   Belk Ladies Fashion Store, Belk Men's & Home Store, JCPenney, Sears
3.   Apple Blossom Mall   VA   Winchester   Fee   49.1 % (4) Acquired 1999   95.9 % 229,011   213,619   442,630   Belk, JCPenney, Sears, Dick's Sporting Goods (6)
4.   Arsenal Mall   MA   Watertown (Boston)   Fee   100.0 % Acquired 1999   95.8 % 191,395   310,130 (18) 501,525   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   99.4 % —   205,751   205,751   Borders Books & Music
6.   Auburn Mall   MA   Auburn (Boston)   Fee   49.1 % (4) Acquired 1999   93.3 % 417,620   174,350   591,970   Macy's, Macy's Home Store, Sears
7.   Aventura Mall (1)   FL   Miami Beach   Fee   33.3 % (4) Built 1983   96.1 % 1,257,638   662,622   1,920,260   Bloomingdale's, Macy's, Macy's Mens & Home Furniture, JCPenney, Sears, Nordstrom (6)
8.   Avenues, The   FL   Jacksonville   Fee   25.0 % (4) (2) Built 1990   99.1 % 754,956   362,409   1,117,365   Belk, Dillard's, JCPenney, Parisian (19), Sears
9.   Bangor Mall   ME   Bangor   Fee   66.4 % (15) Acquired 2003   92.2 % 416,582   237,494   654,076   Macy's, JCPenney, Sears, Dick's Sporting Goods
10.   Barton Creek Square   TX   Austin   Fee   100.0 % Built 1981   97.5 % 922,266   508,229   1,430,495   Nordstrom, Macy's, Dillard's Women's & Home, Dillard's Men's & Children's, JCPenney, Sears
11.   Battlefield Mall   MO   Springfield   Fee and Ground Lease (2056)   100.0 % Built 1970   92.1 % 770,111   433,482   1,203,593   Macy's, Dillard's Women's, Dillard's Men's, Children's & Home, JCPenney, Sears
12.   Bay Park Square   WI   Green Bay   Fee   100.0 % Built 1980   98.1 % 447,508   267,756   715,264   Younkers, Elder-Beerman, Kohl's, ShopKo
13.   Bowie Town Center   MD   Bowie (Washington, D.C.)   Fee   100.0 % Built 2001   99.3 % 355,557   328,588   684,145   Macy's, Sears, Barnes & Noble, Bed Bath & Beyond
14.   Boynton Beach Mall   FL   Boynton Beach (W. Palm Beach)   Fee   100.0 % Built 1985   87.7 % 714,210   300,364   1,014,574   Macy's, Dillard's Men's & Home, Dillard's Women, JCPenney, Sears
15.   Brea Mall   CA   Brea (Orange County)   Fee   100.0 % Acquired 1998   99.6 % 874,802   443,789   1,318,591   Nordstrom, Macy's, JCPenney, Sears
16.   Broadway Square   TX   Tyler   Fee   100.0 % Acquired 1994   99.8 % 427,730   200,966   628,696   Dillard's, JCPenney, Sears
17.   Brunswick Square   NJ   East Brunswick (New York)   Fee   100.0 % Built 1973   98.6 % 467,626   299,792   767,418   Macy's, JCPenney, Barnes & Noble
18.   Burlington Mall   MA   Burlington (Boston)   Ground Lease (2048)   100.0 % Acquired 1998   96.8 % 642,411   432,201   1,074,612   Macy's, Lord & Taylor, Sears, Nordstrom (20)
19.   Cape Cod Mall   MA   Hyannis (Barnstable — Yarmouth)   Ground Leases (2009-2073) (7)   49.1 % (4) Acquired 1999   98.9 % 420,199   303,618   723,817   Macy's, Macy's, Sears, Best Buy, Marshalls, Barnes & Noble
20.   Castleton Square   IN   Indianapolis   Fee   100.0 % Built 1972   97.3 % 908,481   352,398   1,260,879   Macy's, Von Maur, JCPenney, Sears, Dick's Sporting Goods, Borders Books & Music (6)
21.   Century III Mall   PA   West Mifflin (Pittsburgh)   Fee   100.0 % Built 1979   85.8 % 831,439   459,191 (18) 1,290,630   Macy's, Macy's Furniture Galleries, JCPenney, Sears, Dick's Sporting Goods, Steve & Barry's University Sportswear
22.   Charlottesville Fashion Square   VA   Charlottesville   Ground Lease (2076)   100.0 % Acquired 1997   100.0 % 381,153   190,533   571,686   Belk Women's & Children's, Belk Men's & Home, JCPenney, Sears
23.   Chautauqua Mall   NY   Lakewood (Jamestown)   Fee   100.0 % Built 1971   84.4 % 213,320   218,858   432,178   Sears, JCPenney, Bon Ton, Office Max

16

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

24.
 
Chesapeake Square
 
VA
 
Chesapeake (Norfolk — VA Beach)
 
Fee and Ground Lease (2062)
 
75.0
% (12)
Built 1989
 
93.0
%
534,760
 
271,842
 
806,602
 
Macy's, Dillard's Women's, Dillard's Men's, Children's & Home, JCPenney, Sears, Target
25.   Cielo Vista Mall   TX   El Paso   Fee and Ground Lease (2012) (7)   100.0 % Built 1974   96.7 % 793,716   443,825   1,237,541   Macy's, Dillard's Women's & Furniture, Dillard's Men's, Children's & Home, JCPenney, Sears
26.   Circle Centre   IN   Indianapolis   Property Lease (2098)   14.7 % (4) (2) Built 1995   87.0 % 350,000   435,963 (18) 785,963   Nordstrom, Carson Pirie Scott
27.   Coconut Point   FL   Estero   Fee   50.0 % (4) Built 2006   94.6 % 424,636   594,758   1,019,394   Dillard's, Barnes & Noble, Bed Bath & Beyond, Best Buy, DSW, Office Max, Old Navy, PetsMart, Pier 1 Imports, Ross Dress for Less, Cost Plus World Market, T.J. Maxx
28.   Coddingtown Mall   CA   Santa Rosa   Fee   50.0 % (4) Acquired 2005   77.2 % 547,090   309,812   856,902   Macy's, JCPenney, Gottschalk's, (8)
29.   College Mall   IN   Bloomington   Fee and Ground Lease (2048) (7)   100.0 % Built 1965   88.7 % 356,887   286,028   642,915   Macy's, Sears, Target, Dick's Sporting Goods, Bed Bath & Beyond, Pier One (6)
30.   Columbia Center   WA   Kennewick   Fee   100.0 % Acquired 1987   92.0 % 408,052   346,895   754,947   Macy's, Macy's Mens & Children, JCPenney, Sears, Toys 'R Us, Barnes & Noble
31.   Copley Place   MA   Boston   Fee   98.1 % Acquired 2002   98.0 % 150,847   1,080,822 (18) 1,231,669   Nieman Marcus, Barneys New York
32.   Coral Square   FL   Coral Springs (Miami — Ft. Lauderdale)   Fee   97.2 % Built 1984   96.9 % 648,144   296,802   944,946   Macy's Mens, Children & Home, Macy's Women, Dillard's, JCPenney, Sears
33.   Cordova Mall   FL   Pensacola   Fee   100.0 % Acquired 1998   90.4 % 395,875   463,085   858,960   Dillard's Men's, Dillard's Women's, Parisian (19), Best Buy, Bed, Bath & Beyond, Cost Plus World Market, Ross Dress for Less
34.   Cottonwood Mall   NM   Albuquerque   Fee   100.0 % Built 1996   96.9 % 631,556   409,278   1,040,834   Macy's, Dillard's, JCPenney, Sears, Mervyn's
35.   Crossroads Mall   NE   Omaha   Fee   100.0 % Acquired 1994   63.0 % 522,119   231,298   753,417   Dillard's, Sears, Target, Barnes & Noble, Old Navy
36.   Crystal Mall   CT   Waterford (New London — Norwich)   Fee   74.6 % (4) Acquired 1998   92.1 % 442,311   351,861   794,172   Macy's, JC Penney, Sears, Old Navy, (17)
37.   Crystal River Mall   FL   Crystal River   Fee   100.0 % Built 1990   76.5 % 302,495   121,844   424,339   JCPenney, Sears, Belk, Kmart
38.   Dadeland Mall   FL   Miami   Fee   50.0 % (4) Acquired 1997   96.9 % 1,132,072   335,524   1,467,596   Saks Fifth Avenue, Nordstrom, Macy's, Macy's Children & Home, JCPenney
39.   DeSoto Square   FL   Bradenton (Sarasota — Bradenton)   Fee   100.0 % Built 1973   96.9 % 435,467   244,499   679,966   Macy's, Dillard's, JCPenney, Sears
40.   Eastland Mall   IN   Evansville   Fee   50.0 % (4) Acquired 1998   94.8 % 489,144   375,307   864,451   Macy's, JCPenney, Bed Bath & Beyond, Marshalls, Dillard's (6)
41.   Edison Mall   FL   Fort Myers   Fee   100.0 % Acquired 1997   93.0 % 742,667   310,695   1,053,362   Dillard's, Macy's Mens, Children & Home, Macy's Women, JCPenney, Sears
42.   Emerald Square   MA   North Attleboro (Providence — Fall River)   Fee   49.1 % (4) Acquired 1999   94.2 % 647,372   375,125   1,022,497   Macy's, Macy's Mens & Home Store, JCPenney, Sears

17

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

43.
 
Empire Mall (1)
 
SD
 
Sioux Falls
 
Fee and Ground Lease (2033) (7)
 
50.0
% (4)
Acquired 1998
 
92.4
%
497,341
 
548,004
 
1,045,345
 
Macy's, Younkers, JCPenney, Sears, Gordmans, Old Navy
44.   Fashion Centre at Pentagon City, The   VA   Arlington (Washington, DC)   Fee   42.5 % (4) Built 1989   98.0 % 472,729   517,384 (18) 990,113   Nordstrom, Macy's
45.   Fashion Mall at Keystone   IN   Indianapolis   Ground Lease (2067)   100.0 % Acquired 1997   99.0 % 249,721   433,601 (18) 683,322   Saks Fifth Avenue, Parisian (16), Crate & Barrel, Nordstrom (20)
46.   Fashion Valley Mall   CA   San Diego   Fee   50.0 % (4) Acquired 2001   100.0 % 1,053,305   655,681   1,708,986   Saks Fifth Avenue, Neiman-Marcus, Bloomingdale's, Nordstrom, Macy's, JCPenney
47.   Firewheel Town Center   TX   Garland   Fee   100.0 % Built 2005   95.7 % 298,857   618,845 (18) 917,702   Dillard's, Macy's, Barnes & Noble, Circuit City, Linens 'n Things, Old Navy, Pier One, DSW, Cost Plus World Market
48.   Florida Mall, The   FL   Orlando   Fee   50.0 % (4) Built 1986   99.8 % 1,232,416   615,288   1,847,704   Saks Fifth Avenue, Nordstrom, Macy's, Dillard's, JCPenney, Sears, (8)
49.   Forest Mall   WI   Fond Du Lac   Fee   100.0 % Built 1973   93.4 % 327,260   174,031   501,291   JCPenney, Kohl's, Younkers, Sears
50.   Forum Shops at Caesars, The   NV   Las Vegas   Ground Lease (2050)   100.0 % Built 1992   99.4 % —   635,939   635,939    
51.   Galleria, The   TX   Houston   Fee and Ground Lease (2029) (7)   31.5 % (4) Acquired 2002   93.9 % 1,164,982   1,185,561   2,350,543   Saks Fifth Avenue, Neiman Marcus, Nordstrom, Macy's (2 locations), Borders Books & Music, University Club
52.   Granite Run Mall   PA   Media (Philadelphia)   Fee   50.0 % (4) Acquired 1998   90.9 % 500,809   535,456   1,036,265   JCPenney, Sears, Boscov's
53.   Great Lakes Mall   OH   Mentor (Cleveland)   Fee   100.0 % Built 1961   90.0 % 879,300   378,525   1,257,825   Dillard's Men's, Dillard's Women's, Macy's, JCPenney, Sears
54.   Greendale Mall   MA   Worcester (Boston)   Fee and Ground Lease (2009) (7)   49.1 % (4) Acquired 1999   92.6 % 132,634   298,732 (18) 431,366   Marshalls, T.J. Maxx 'N More, Best Buy, DSW
55.   Greenwood Park Mall   IN   Greenwood (Indianapolis)   Fee   100.0 % Acquired 1979   99.0 % 754,928   408,820   1,163,748   Macy's, Von Maur, JCPenney, Sears, Dick's Sporting Goods, Barnes & Noble (6)
56.   Gulf View Square   FL   Port Richey (Tampa — St. Pete)   Fee   100.0 % Built 1980   98.4 % 461,852   292,028   753,880   Macy's, Dillard's, JCPenney, Sears, Best Buy, Linens 'n Things
57.   Gwinnett Place   GA   Duluth (Atlanta)   Fee   50.0 % (4) Acquired 1998   89.5 % 843,609   434,254   1,277,863   Macy's, Parisian (19), JCPenney, Sears, (17)
58.   Haywood Mall   SC   Greenville   Fee and Ground Lease (2017) (7)   100.0 % Acquired 1998   98.3 % 902,400   328,159   1,230,559   Macy's, Dillard's, JCPenney, Sears, Belk
59.   Highland Mall (1)   TX   Austin   Fee and Ground Lease (2070)   50.0 % (4) Acquired 1998   86.2 % 732,000   359,126   1,091,126   Dillard's Women's & Home, Dillard's Men's & Children's, Macy's
60.   Independence Center   MO   Independence (Kansas City)   Fee   100.0 % Acquired 1994   98.6 % 499,284   526,154   1,025,438   Dillard's, Macy's, Sears
61.   Indian River Mall   FL   Vero Beach   Fee   50.0 % (4) Built 1996   94.9 % 445,552   302,881   748,433   Dillard's, Macy's, JCPenney, Sears
62.   Ingram Park Mall   TX   San Antonio   Fee   100.0 % Built 1979   93.9 % 750,888   375,484   1,126,372   Dillard's, Dillard's Home Store, Macy's, JCPenney, Sears, Bealls
63.   Irving Mall   TX   Irving (Dallas — Ft. Worth)   Fee   100.0 % Built 1971   98.1 % 637,415   406,712   1,044,127   Macy's, Dillard's, Sears, Circuit City, Burlington Coat Factory, (8)
64.   Jefferson Valley Mall   NY   Yorktown Heights (New York)   Fee   100.0 % Built 1983   96.3 % 310,095   278,290   588,385   Macy's, Sears

18

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

65.
 
King of Prussia Mall
 
PA
 
King of Prussia (Philadelphia)
 
Fee
 
12.4
% (4) (15)
Acquired 2003
 
96.4
%
1,545,812
 
1,065,157
(18)
2,610,969
 
Neiman Marcus, Bloomingdale's, Nordstrom, Lord & Taylor, Macy's (Plaza), Macy's (Court), JCPenney, Sears
66.   Knoxville Center   TN   Knoxville   Fee   100.0 % Built 1984   94.0 % 597,028   384,086   981,114   Dillard's, JCPenney, Belk, Sears, The Rush Fitness Center
67.   La Plaza Mall   TX   McAllen   Fee and Ground Lease (2040) (7)   100.0 % Built 1976   99.9 % 776,397   427,124   1,203,521   Macy's, Macy's Home Store, Dillard's, JCPenney, Sears, Bealls, Joe Brand
68.   Lafayette Square   IN   Indianapolis   Fee   100.0 % Built 1968   81.4 % 937,223   269,504   1,206,727   Macy's, Sears, Burlington Coat Factory, Steve & Barry's University Sportswear, (8)
69.   Laguna Hills Mall   CA   Laguna Hills (Orange County)   Fee   100.0 % Acquired 1997   88.6 % 536,500   329,260   865,760   Macy's, JCPenney, Sears
70.   Lake Square Mall   FL   Leesburg (Orlando)   Fee   50.0 % (4) Acquired 1998   85.3 % 296,037   264,953   560,990   JCPenney, Sears, Belk, Target, Best Buy (6)
71.   Lakeline Mall   TX   Austin   Fee   100.0 % Built 1995   97.3 % 745,179   355,783   1,100,962   Dillard's, Macy's, JCPenney, Sears
72.   Lehigh Valley Mall   PA   Whitehall (Allentown — Bethlehem)   Fee   37.6 % (4) (15) Acquired 2003   98.7 % 564,353   482,855 (18) 1,047,208   Macy's, Boscov's, JCPenney, Linens 'n Things, Barnes & Noble (6)
73.   Lenox Square   GA   Atlanta   Fee   100.0 % Acquired 1998   93.3 % 821,356   628,752   1,450,108   Neiman Marcus, Bloomingdale's, Macy's
74.   Liberty Tree Mall   MA   Danvers (Boston)   Fee   49.1 % (4) Acquired 1999   97.7 % 498,000   359,251   857,251   Marshalls, The Sports Authority, Target, Bed, Bath & Beyond, Kohl's, Super Stop & Shop, Best Buy, Staples, AC Moore, Old Navy, Pier 1 Imports, K&G Fashion Superstore
75.   Lima Mall   OH   Lima   Fee   100.0 % Built 1965   95.2 % 541,861   203,770   745,631   Macy's, JCPenney, Elder-Beerman, Sears
76.   Lincolnwood Town Center   IL   Lincolnwood (Chicago)   Fee   100.0 % Built 1990   94.0 % 220,830   201,110   421,940   Kohl's, Carson Pirie Scott
77.   Lindale Mall (1)   IA   Cedar Rapids   Fee   50.0 % (4) Acquired 1998   84.3 % 305,563   388,024   693,587   Von Maur, Sears, Younkers
78.   Livingston Mall   NJ   Livingston (New York)   Fee   100.0 % Acquired 1998   96.3 % 616,128   363,871   979,999   Macy's, Lord & Taylor, Sears, Steve & Barry's
79.   Longview Mall   TX   Longview   Fee   100.0 % Built 1978   87.1 % 402,843   209,472   612,315   Dillard's, JCPenney, Sears, Bealls, (17)
80.   Mall at Chestnut Hill   MA   Newton (Boston)   Lease (2039) (9)   47.2 % (4) Acquired 2002   97.0 % 297,253   180,109   477,362   Bloomingdale's, Bloomingdale's Home Furnishing and Men's Store
81.   Mall at Rockingham Park, The   NH   Salem (Boston)   Fee   24.6 % (4) Acquired 1999   97.5 % 638,111   381,676   1,019,787   Macy's, JCPenney, Sears, (8)
82.   Mall at The Source, The   NY   Westbury (New York)   Fee   25.5 % (4) (2) Built 1997   96.0 % 210,798   515,250   726,048   Fortunoff, Off 5th-Saks Fifth Avenue, Nordstrom Rack, Circuit City, David's Bridal, Steve & Barry's, Golf Galaxy
83.   Mall of Georgia   GA   Buford (Atlanta)   Fee   100.0 % Built 1999   91.8 % 1,069,590   716,341   1,785,931   Nordstrom, Dillard's, Macy's, JCPenney, Belk, Dick's Sporting Goods, Barnes & Noble, Haverty's Furniture, Bed Bath & Beyond
84.   Mall of New Hampshire   NH   Manchester (Boston)   Fee   49.1 % (4) Acquired 1999   97.9 % 444,889   362,807   807,696   Macy's, JCPenney, Sears, Best Buy, Old Navy, A.C. Moore
85.   Maplewood Mall   MN   Minneapolis   Fee   100.0 % Acquired 2002   92.0 % 588,822   341,972   930,794   Macy's, JCPenney, Sears, Kohl's, Barnes & Noble
86.   Markland Mall   IN   Kokomo   Ground Lease (2041)   100.0 % Built 1968   94.8 % 273,094   141,692   414,786   Sears, Target, (8)

19

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

87.
 
McCain Mall
 
AR
 
N. Little Rock
 
Fee and Ground Lease (2032) (10)
 
100.0
%
Built 1973
 
93.5
%
554,156
 
221,474
 
775,630
 
Dillard's, JCPenney, Sears, M.M. Cohn
88.   Melbourne Square   FL   Melbourne   Fee   100.0 % Built 1982   90.5 % 416,167   294,373   710,540   Macy's, Dillard's Men's, Children's & Home, Dillard's Women's, JCPenney, Dick's Sporting Goods, Circuit City
89.   Menlo Park Mall   NJ   Edison (New York)   Fee   100.0 % Acquired 1997   95.4 % 527,591   756,358 (18) 1,283,949   Nordstrom, Macy's, Barnes & Noble, Steve & Barry's
90.   Mesa Mall (1)   CO   Grand Junction   Fee   50.0 % (4) Acquired 1998   89.2 % 441,208   443,015   884,223   Sears, Herberger's, JCPenney, Target, Mervyn's
91.   Miami International Mall   FL   South Miami   Fee   47.8 % (4) Built 1982   97.5 % 778,784   294,825   1,073,609   Macy's Mens & Home, Macy's Women & Children, Dillard's, JCPenney, Sears
92.   Midland Park Mall   TX   Midland   Fee   100.0 % Built 1980   92.3 % 339,113   279,430   618,543   Dillard's, Dillard's Mens & Juniors, JCPenney, Sears, Bealls, Ross Dress for Less
93.   Miller Hill Mall   MN   Duluth   Ground Lease (2008)   100.0 % Built 1973   97.4 % 429,508   379,884   809,392   JCPenney, Sears, Younkers, Barnes & Noble, Old Navy, DSW
94.   Montgomery Mall   PA   Montgomeryville (Philadelphia)   Fee   53.5 % (15) Acquired 2003   90.9 % 684,855   434,306   1,119,161   Macy's, JCPenney, Sears, Boscov's
95.   Muncie Mall   IN   Muncie   Fee   100.0 % Built 1970   90.5 % 435,756   204,894   640,650   Macy's, JCPenney, Sears, Elder Beerman
96.   Nanuet Mall   NY   Nanuet (New York)   Fee   100.0 % Acquired 1998   74.7 % 583,711   331,764   915,475   Macy's, Boscov's, Sears
97.   North East Mall   TX   Hurst (Dallas — Ft. Worth)   Fee   100.0 % Built 1971   95.2 % 1,194,589   452,659   1,647,248   Nordstrom, Dillard's, Macy's, JCPenney, Sears, Dick's Sporting Goods (6)
98.   Northfield Square Mall   IL   Bourbonnais (Chicago)   Fee   31.6 % (12) Built 1990   79.0 % 310,994   246,672   557,666   Carson Pirie Scott Women's, Carson Pirie Scott Men's, Children's & Home, JCPenney, Sears
99.   Northgate Mall   WA   Seattle   Fee   100.0 % Acquired 1987   98.2 % 688,391   291,003   979,394   Nordstrom, Macy's, JCPenney, Toys 'R Us, Barnes & Noble (6), Bed Bath & Beyond (6), DSW (6)
100.   Northlake Mall   GA   Atlanta   Fee   100.0 % Acquired 1998   96.4 % 665,745   296,626   962,371   Macy's, Parisian (19), JCPenney, Sears
101.   NorthPark Mall   IA   Davenport   Fee   50.0 % (4) Acquired 1998   84.7 % 650,456   423,484   1,073,940   Dillard's, Von Maur, Younkers, JCPenney, Sears
102.   Northshore Mall   MA   Peabody (Boston)   Fee   49.1 % (4) Acquired 1999   91.3 % 677,433   688,876   1,366,309   Macy's, JCPenney, Sears, Filene's Basement, Nordstrom (20), Macy's Home (6)
103.   Northwoods Mall   IL   Peoria   Fee   100.0 % Acquired 1983   93.8 % 472,969   221,068   694,037   Macy's, JCPenney, Sears
104.   Oak Court Mall   TN   Memphis   Fee   100.0 % Acquired 1997   91.3 % 532,817   314,264 (18) 847,081   Dillard's, Dillard's Mens, Macy's
105.   Ocean County Mall   NJ   Toms River (New York)   Fee   100.0 % Acquired 1998   93.9 % 616,443   274,856   891,299   Macy's, Boscov's, JCPenney, Sears
106.   Orange Park Mall   FL   Orange Park (Jacksonville)   Fee   100.0 % Acquired 1994   94.8 % 528,551   381,658   910,209   Dillard's, JCPenney, Sears, Belk, Dick's Sporting Goods (6)
107.   Orland Square   IL   Orland Park (Chicago)   Fee   100.0 % Acquired 1997   98.2 % 773,295   437,045   1,210,340   Macy's, Carson Pirie Scott, JCPenney, Sears
108.   Oxford Valley Mall   PA   Langhorne (Philadelphia)   Fee   63.2 % (15) Acquired 2003   94.0 % 762,558   558,957 (18) 1,321,515   Macy's, JCPenney, Sears, Boscov's
109.   Paddock Mall   FL   Ocala   Fee   100.0 % Built 1980   93.7 % 387,378   167,723   555,101   Macy's, JCPenney, Sears, Belk
110.   Palm Beach Mall   FL   West Palm Beach   Fee   100.0 % Built 1967   92.2 % 749,288   335,086   1,084,374   Dillard's, Macy's, JCPenney, Sears, Borders Books & Music, DSW
111.   Penn Square Mall   OK   Oklahoma City   Ground Lease (2060)   94.5 % Acquired 2002   99.4 % 588,137   462,542   1,050,679   Macy's, Dillard's Women's, Dillard's Men's, Children's & Home, JCPenney
112.   Pheasant Lane Mall   NH   Nashua (Boston)   (14)   (14)   Acquired 2002   96.7 % 675,759   313,615   989,374   Macy's, JCPenney, Sears, Target

20

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

113.
 
Phipps Plaza
 
GA
 
Atlanta
 
Fee
 
100.0
%
Acquired 1998
 
98.9
%
472,385
 
347,202
 
819,587
 
Saks Fifth Avenue, Nordstrom, Parisian (19)
114.   Plaza Carolina   PR   Carolina (San Juan)   Fee   100.0 % Acquired 2004   97.1 % 504,796   609,476 (18) 1,114,272   JCPenney, Sears
115.   Port Charlotte Town Center   FL   Port Charlotte (Punta Gorda)   Fee   80.0 % (12) Built 1989   87.6 % 458,251   323,692   781,943   Dillard's, Macy's, JCPenney, Bealls, Sears, DSW
116.   Prien Lake Mall   LA   Lake Charles   Fee and Ground Lease (2025) (7)   100.0 % Built 1972   90.2 % 644,124   177,626   821,750   Dillard's, Macy's, JCPenney, Sears
117.   Quaker Bridge Mall   NJ   Lawrenceville   Fee   38.0 % (4) (15) Acquired 2003   97.5 % 686,760   412,636   1,099,396   Macy's, Lord & Taylor, JCPenney, Sears, Old Navy
118.   Raleigh Springs Mall   TN   Memphis   Fee and Ground Lease (2018) (7)   100.0 % Built 1971   66.0 % 691,230   226,100   917,330   Sears, (8), (17)
119.   Richardson Square Mall   TX   Richardson (Dallas — Ft. Worth)   Fee   100.0 % Built 1977   28.6 % 460,055   284,240   744,295   Dillard's, Sears, Super Target, Ross Dress for Less
120.   Richmond Town Square   OH   Richmond Heights (Cleveland)   Fee   100.0 % Built 1966   98.9 % 685,251   331,663   1,016,914   Macy's, JCPenney, Sears, Barnes & Noble, Steve & Barry's
121.   River Oaks Center   IL   Calumet City (Chicago)   Fee   100.0 % Acquired 1997   88.5 % 834,588   533,914 (18) 1,368,502   Macy's, Carson Pirie Scott, JCPenney, Sears
122.   Rockaway Townsquare   NJ   Rockaway (New York)   Fee   100.0 % Acquired 1998   97.5 % 786,626   462,038   1,248,664   Macy's, Lord & Taylor, JCPenney, Sears
123.   Rolling Oaks Mall   TX   San Antonio   Fee   100.0 % Built 1988   83.5 % 596,308   288,109   884,417   Dillard's, Macy's, JC Penney, Sears
124.   Roosevelt Field   NY   Garden City (New York)   Fee and Ground Lease (2090) (7)   100.0 % Acquired 1998   94.9 % 1,430,425   778,656 (18) 2,209,081   Bloomingdale's, Bloomingdale's Furniture Gallery, Nordstrom, Macy's, JCPenney, Dick's Sporting Goods
125.   Ross Park Mall   PA   Pittsburgh   Fee   100.0 % Built 1986   98.5 % 622,215   406,902   1,029,117   Macy's, JCPenney, Sears, Nordstrom (20)
126.   Rushmore Mall (1)   SD   Rapid City   Fee   50.0 % (4) Acquired 1998   88.6 % 470,660   362,653   833,313   JCPenney, Herberger's, Sears, Hobby Lobby, Target
127.   Santa Rosa Plaza   CA   Santa Rosa   Fee   100.0 % Acquired 1998   96.9 % 428,258   270,565   698,823   Macy's, Mervyn's, Sears
128.   Seminole Towne Center   FL   Sanford (Orlando)   Fee   45.0 % (4) (2) Built 1995   94.1 % 768,798   367,781   1,136,579   Macy's, Dillard's, Belk, JCPenney, Sears
129.   Shops at Mission Viejo, The   CA   Mission Viejo (Orange County)   Fee   100.0 % Built 1979   100.0 % 677,215   472,585   1,149,800   Saks Fifth Avenue, Nordstrom, Macy's (2 locations)
130.   Shops at Sunset Place, The   FL   Miami   Fee   37.5 % (4) (2) Built 1999   96.0 % —   510,056   510,056   NikeTown, Barnes & Noble, GameWorks, Virgin Megastore, Z Gallerie, LA Fitness
131.   Smith Haven Mall   NY   Lake Grove (New York)   Fee   25.0 % (4) Acquired 1995   95.9 % 666,283   416,035   1,082,318   Macy's, Macy's Furniture, JCPenney, Sears, Dick's Sporting Goods (6), Barnes & Noble (6)
132.   Solomon Pond Mall   MA   Marlborough (Boston)   Fee   49.1 % (4) Acquired 1999   93.0 % 538,843   371,326   910,169   Macy's, JCPenney, Sears, Linens 'n Things
133.   South Hills Village   PA   Pittsburgh   Fee   100.0 % Acquired 1997   97.6 % 655,987   485,604   1,141,591   Macy's, Sears, Boscov's, Barnes & Noble
134.   South Shore Plaza   MA   Braintree (Boston)   Fee   100.0 % Acquired 1998   96.3 % 547,287   613,809   1,161,096   Macy's, Lord & Taylor, Sears, Nordstrom (20)
135.   Southern Hills Mall (1)   IA   Sioux City   Fee   50.0 % (4) Acquired 1998   87.2 % 372,937   431,916   804,853   Younkers, JCPenney, Sears, Sheel's Sporting Goods, Barnes & Noble
136.   Southern Park Mall   OH   Boardman (Youngstown)   Fee   100.0 % Built 1970   94.9 % 811,858   383,660   1,195,518   Macy's, Dillard's, JCPenney, Sears
137.   SouthPark Mall   IL   Moline (Davenport — Moline)   Fee   50.0 % (4) Acquired 1998   87.7 % 578,056   447,804   1,025,860   Dillard's, Von Maur, Younkers, JCPenney, Sears, Old Navy
138.   SouthPark   NC   Charlotte   Fee & Ground Lease (2040) (11)   100.0 % Acquired 2002   99.8 % 1,044,742   530,839   1,575,581   Neiman Marcus, Nordstrom, Macy's, Dillard's, Belk, Dick's Sporting Goods, Crate & Barrel

21

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

139.
 
SouthRidge Mall (1)
 
IA
 
Des Moines
 
Fee
 
50.0
% (4)
Acquired 1998
 
76.6
%
388,752
 
523,443
 
912,195
 
JCPenney, Younkers, Sears, Target, (8)
140.   Springfield Mall (1)   PA   Springfield (Philadelphia)   Fee   38.0 % (4) (15) Acquired 2005   87.5 % 367,176   221,489   588,665   Macy's, (8)
141.   Square One Mall   MA   Saugus (Boston)   Fee   49.1 % (4) Acquired 1999   94.4 % 608,601   324,669   933,270   Macy's, Sears, Best Buy, T.J. Maxx N More, Best Buy, Old Navy, Dick's Sporting Goods (6)
142.   St. Charles Towne Center   MD   Waldorf (Washington, D.C.)   Fee   100.0 % Built 1990   96.7 % 631,602   350,574   982,176   Macy's, Macy's Home Store, JCPenney, Sears, Kohl's, Dick Sporting Goods
143.   St. Johns Town Center   FL   Jacksonville   Fee   50.0 % (4) Built 2005   100.0 % 653,291   379,212   1,032,503   Dillard's, Target, Ashley Furniture Home Store, Barnes & Noble, Dick's Clothing & Sporting Goods, Ross Dress for Less, Staples, DSW, JoAnn Fabrics, PetsMart, Old Navy
144.   Stanford Shopping Center   CA   Palo Alto (San Francisco)   Ground Lease (2054)   100.0 % Acquried 2003   97.7 % 849,153   528,750 (18) 1,377,903   Neiman Marcus, Bloomingdale's, Nordstrom, Macy's, Macy's Mens Store
145.   Summit Mall   OH   Akron   Fee   100.0 % Built 1965   93.0 % 432,936   330,976   763,912   Dillard's Women's & Children's, Dillard's Men's & Home, Macy's
146.   Sunland Park Mall   TX   El Paso   Fee   100.0 % Built 1988   94.4 % 575,837   342,234   918,071   Macy's, Dillard's Women's & Children's, Dillard's Men's & Home, Mervyn's, Sears
147.   Tacoma Mall   WA   Tacoma   Fee   100.0 % Acquired 1987   98.9 % 924,045   407,010   1,331,055   Nordstrom, Macy's, JCPenney, Sears, Mervyn's
148.   Tippecanoe Mall   IN   Lafayette   Fee   100.0 % Built 1973   89.8 % 537,790   322,694   860,484   Macy's, JCPenney, Sears, Kohl's, Dick's Sporting Goods, H.H. Gregg
149.   Town Center at Aurora   CO   Aurora (Denver)   Fee   100.0 % Acquired 1998   85.2 % 676,637   401,903   1,078,540   Macy's, Dillard's, JCPenney, Sears
150.   Town Center at Boca Raton   FL   Boca Raton (W. Palm Beach)   Fee   100.0 % Acquired 1998   99.3 % 1,085,312   493,628   1,578,940   Saks Fifth Avenue, Neiman Marcus, Bloomingdale's, Nordstrom, Macy's, Sears, Crate & Barrel (6)
151.   Town Center at Cobb   GA   Kennesaw (Atlanta)   Fee   50.0 % (4) Acquired 1998   96.1 % 866,381   406,050   1,272,431   Macy's, Macy's Home & Furniture, Parisian (19), JCPenney, Sears
152.   Towne East Square   KS   Wichita   Fee   100.0 % Built 1975   88.0 % 779,490   358,838   1,138,328   Dillard's, Von Maur, JCPenney, Sears
153.   Towne West Square   KS   Wichita   Fee   100.0 % Built 1980   83.1 % 619,269   332,287   951,556   Dillard's Women's & Home, Dillard's Men's & Children, JCPenney, Sears, Dick's Sporting Goods
154.   Treasure Coast Square   FL   Jensen Beach (Ft. Pierce)   Fee   100.0 % Built 1987   92.8 % 511,372   350,369   861,741   Macy's, Dillard's, JCPenney, Sears, Borders Books & Music
155.   Tyrone Square   FL   St. Petersburg (Tampa — St. Pete)   Fee   100.0 % Built 1972   96.2 % 748,269   372,971   1,121,240   Macy's, Dillard's, JCPenney, Sears, Borders Books & Music
156.   University Mall   AR   Little Rock   Ground Lease (2026)   100.0 % Built 1967   62.0 % 364,992   153,534   518,526   JCPenney, M.M. Cohn, (8)
157.   University Mall   FL   Pensacola   Fee   100.0 % Acquired 1994   85.0 % 478,449   230,952   709,401   JCPenney, Sears, Belk
158.   University Park Mall   IN   Mishawaka (South Bend)   Fee   60.0 % Built 1979   95.3 % 499,876   319,620   819,496   Macy's, JCPenney, Sears
159.   Upper Valley Mall   OH   Springfield (Dayton — Springfield)   Fee   100.0 % Built 1971   77.7 % 479,418   262,978   742,396   Macy's, JCPenney, Sears, Elder-Beerman
160.   Valle Vista Mall   TX   Harlingen   Fee   100.0 % Built 1983   82.5 % 389,781   265,886   655,667   Dillard's, JCPenney, Mervyn's, Sears, Marshalls, Steve & Barry's
161.   Valley Mall   VA   Harrisonburg   Fee   50.0 % (4) Acquired 1998   94.6 % 315,078   190,648   505,726   JCPenney, Belk, Target, Old Navy, (8)

22

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

162.
 
Virginia Center Commons
 
VA
 
Glen Allen (Richmond)
 
Fee
 
100.0
%
Built 1991
 
96.6
%
506,639
 
280,817
 
787,456
 
Macy's, Dillard's Women's, Dillard's Men's, Children's & Home, JCPenney, Sears
163.   Walt Whitman Mall   NY   Huntington Station (New York)   Ground Lease (2012)   100.0 % Acquired 1998   90.6 % 742,214   294,140   1,036,354   Saks Fifth Avenue, Bloomingdale's, Lord & Taylor, Macy's
164.   Washington Square   IN   Indianapolis   Fee   100.0 % Built 1974   79.2 % 616,109   348,781   964,890   Macy's, Sears, Target, Dick's Sporting Goods, Burlington Coat Factory, Steve & Barry's
165.   West Ridge Mall   KS   Topeka   Fee   100.0 % Built 1988   86.4 % 716,811   281,646   998,457   Macy's, Dillard's, JCPenney, Sears, Burlington Coat Factory (6)
166.   West Town Mall   TN   Knoxville   Ground Lease (2042)   50.0 % (4) Acquired 1991   97.3 % 878,311   451,465   1,329,776   Parisian (19), Dillard's, JCPenney, Belk, Sears
167.   Westchester, The   NY   White Plains (New York)   Fee   40.0 % (4) Acquired 1997   97.0 % 349,393   478,254 (18) 827,647   Neiman Marcus, Nordstrom
168.   Westminster Mall   CA   Westminster (Orange County)   Fee   100.0 % Acquired 1998   94.1 % 716,939   496,376   1,213,315   Macy's, JCPenney, Sears, Target (6)
169.   White Oaks Mall   IL   Springfield   Fee   77.5 % Built 1977   94.0 % 556,831   379,688   936,519   Macy's, Bergner's, Sears, 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   505,461   1,267,109   Macy's, Dillard's, JCPenney, Sears
171.   Woodland Hills Mall   OK   Tulsa   Fee   94.5 % Acquired 2002   98.8 % 706,159   382,115   1,088,274   Macy's, Dillard's, JCPenney, Sears
                               
 
 
   
        Total Regional Mall GLA                   100,739,129   65,637,622   166,376,751    
                               
 
 
   

 
 
PREMIUM OUTLET CENTERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1.
 
Albertville Premium Outlets
 
MN
 
Albertville (Minneapolis/St. Paul)
 
Fee
 
100.0
%
Acquired 2004
 
98.1
%
—
 
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   98.9 % —   412,792   412,792   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   95.4 % —   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 % —   454,089   454,089   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
6.   Carolina Premium Outlets   NC   Smithfield (Raleigh — Durham — Chapel Hill)   Ground Lease (2029)   100.0 % Acquired 2004   100.0 % —   439,445   439,445   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

23

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

8.
 
Clinton Crossing Premium Outlets
 
CT
 
Clinton (Hartford)
 
Fee
 
100.0
%
Acquired 2004
 
100.0
%
—
 
276,163
 
276,163
 
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 % —   498,837   498,837   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   100.0 % —   377,717   377,717   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   100.0 % —   299,351   299,351   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   100.0 % —   577,305   577,305   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   100.0 % —   285,775   285,775   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   96.7 % —   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   91.5 % —   150,491   150,491   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.   Las Vegas Outlet Center   NV   Las Vegas   Fee   100.0 % Acquired 2004   100.0 % —   477,002   477,002   Liz Claiborne, Nike, Reebok, Tommy Hilfiger, VF Outlet, Adidas, Calvin Klein
19.   Leesburg Corner Premium Outlets   VA   Leesburg (Washington DC)   Fee   100.0 % Acquired 2004   100.0 % —   463,288   463,288   Barneys New York, Kenneth Cole, Liz Claiborne, Nike, Polo Ralph Lauren, Williams-Sonoma, Ann Taylor, Banana Republic, Coach, Restoration Hardware
20.   Liberty Village Premium Outlets   NJ   Flemington (New York — Philadelphia)   Fee   100.0 % Acquired 2004   97.8 % —   173,067   173,067   Calvin Klein, Ellen Tracy, Jones New York, L.L. Bean, Polo Ralph Lauren, Tommy Hilfiger, Timberland, Waterford Wedgwood
21.   Lighthouse Place Premium Outlets   IN   Michigan City (Chicago)   Fee   100.0 % Acquired 2004   100.0 % —   456,466   456,466   Burberry, Coach, Gap Outlet, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger, Ann Taylor, Nike
22.   Napa Premium Outlets   CA   Napa (Napa Valley)   Fee   100.0 % Acquired 2004   100.0 % —   179,348   179,348   Banana Republic, Barneys New York, Calvin Klein, J. Crew, Kenneth Cole, Nautica, Tommy Hilfiger, TSE, Coach

24

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

23.
 
North Georgia Premium Outlets
 
GA
 
Dawsonville (Atlanta)
 
Fee
 
100.0
%
Acquired 2004
 
100.0
%
—
 
539,757
 
539,757
 
Calvin Klein, Coach, Hugo Boss, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger, Williams-Sonoma, J. Crew, Nike, Restoration Hardware
24.   Orlando Premium Outlets   FL   Orlando   Fee   100.0 % Acquired 2004   100.0 % —   435,695   435,695   Barneys New York, Burberry, Coach, Fendi, Giorgio Armani, Hugo Boss, MaxMara, Nike, Polo Ralph Lauren, Dior, LaCoste, Salvatore Ferragamo
25.   Osage Beach Premium Outlets   MO   Osage Beach   Fee   100.0 % Acquired 2004   99.0 % —   391,381   391,381   Brooks Brothers, Calvin Klein, Coach, Gap Outlet, Liz Claiborne, Polo Ralph Lauren, Tommy Hilfiger
26.   Petaluma Village Premium Outlets   CA   Petaluma (San Francisco)   Fee   100.0 % Acquired 2004   99.6 % —   195,837   195,837   Brooks Brothers, Coach, Gap Outlet, Liz Claiborne, Off 5th-Saks Fifth Avenue, Puma
27.   Rio Grande Valley Premium Outlets   TX   Mercedes   Fee   100.0 % Built 2006   95.2 %     403,207   403,207   Adidas, Ann Taylor, Banana Republic, BCBG Max Azria, Burberry, Calvin Klein, Coach, Gap Outlet, Guess, Nike, Sony
28.   Round Rock Premium Outlets   TX   Round Rock (Austin)   Fee   100.0 % Built 2006   99.2 %     431,621   431,621   Adidas, Ann Taylor, Banana Republic, Burberry, Calvin Klein, Coach, Gap Outlet, Michael Kors, Nike, Polo Ralph Lauren, Theory
29.   Seattle Premium Outlets   WA   Seattle   Ground Lease (2035)   100.0 % Built 2005   100.0 % —   402,668   402,668   Banana Republic, Burberry, Calvin Klein, Nike, Polo Ralph Lauren, Liz Claiborne, Adidas, Adrienne Vittadini, Restoration Hardware
30.   St. Augustine Premium Outlets   FL   St. Augustine (Jacksonsville)   Fee   100.0 % Acquired 2004   99.0 % —   328,489   328,489   Banana Republic, Brooks Brothers, Calvin Klein, Coach, Gap Outlet, Movado, Nike, Polo Ralph Lauren, Reebok, Tommy Bahama
31.   The Crossings Premium Outlets   PA   Tannersville   Fee and Ground Lease (2009) (7)   100.0 % Acquired 2004   100.0 % —   411,774   411,774   Ann Taylor, Coach, Liz Claiborne, Polo Ralph Lauren, Reebok, Tommy Hilfiger, Banana Republic, Calvin Klein, Burberry
32.   Vacaville Premium Outlets   CA   Vacaville   Fee   100.0 % Acquired 2004   100.0 % —   444,252   444,252   Ann Taylor, Banana Republic, Burberry, Calvin Klein, Coach, Nike, Polo Ralph Lauren, Restoration Hardware
33.   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
34.   Waterloo Premium Outlets   NY   Waterloo   Fee   100.0 % Acquired 2004   98.3 % —   417,577   417,577   Brooks Brothers, Calvin Klein, Coach, Gap Outlet, J. Crew, Liz Claiborne, Polo Ralph Lauren, Banana Republic
35.   Woodbury Common Premium Outlets   NY   Central Valley (New York City)   Fee   100.0 % Acquired 2004   100.0 % —   844,553   844,553   Banana Republic, Brooks Brothers, Chanel, Dior, Coach, Giorgio Armani, Gucci, Neiman Marcus Last Call, Polo Ralph Lauren, Frette
36.   Wrentham Village Premium Outlets   MA   Wrentham (Boston)   Fee   100.0 % Acquired 2004   100.0 % —   615,713   615,713   Barneys New York, Burberry, Coach, Hugo Boss, Kenneth Cole, Lacoste, Nike, Polo Ralph Lauren, Salvatore Ferragmo, Sony, Williams Sonoma
                               
 
 
   
        Total Premium Outlet Center GLA                   —   13,925,335   13,925,335    
                               
 
 
   

25

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

1.
 
Arboretum at Great Hills
 
TX
 
Austin
 
Fee
 
100.0
%
Acquired 1998
 
93.6
%
35,773
 
167,628
 
203,401
 
Barnes & Noble, Pottery Barn
2.   Bloomingdale Court   IL   Bloomingdale   Fee   100.0 % Built 1987   98.3 % 467,513   162,846   630,359   Best Buy, T.J. Maxx N More, Office Max, Old Navy, Linens 'n Things, Wal-Mart, Circuit City, Dick's Sporting Goods, Jo-Ann Fabrics
3.   Boardman Plaza   OH   Youngstown   Fee   100.0 % Built 1951   73.2 % 365,507   240,730   606,237   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
5.   Celina Plaza   TX   El Paso   Fee and Ground Lease (2012) (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    
7.   Chesapeake Center   VA   Chesapeake   Fee   100.0 % Built 1989   70.4 % 213,651   92,284   305,935   K-Mart, Movies 10, Petsmart, Michaels, Value City Furniture (6)
8.   Clay Terrace   IN   Carmel (Indianapolis)   Fee   50.0 % (4) (18) Built 2004   90.0 % 161,281   336,375   497,656   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   99.4 % 206,680   58,781   265,461   Dick's Sporting Goods, Kmart, Office Max
10.   Countryside Plaza   IL   Countryside   Fee   100.0 % Built 1977   82.1 % 308,489   95,267   403,756   Best Buy, Home Depot, PetsMart, Jo-Ann Fabrics, Office Depot, Value City Furniture, (8)
11.   Crystal Court   IL   Crystal Lake   Fee   35.0 % (4) (13) Built 1989   78.4 % 201,993   76,977   278,970   Wal-Mart, Garden Fresh (6)
12.   Dare Centre   NC   Kill Devil Hills   Ground Lease (2058)   100.0 % Acquired 2004   98.7 % 127,172   41,391   168,563   Belk, Food Lion
13.   DeKalb Plaza   PA   King of Prussia   Fee   50.3 % (15) Acquired 2003   81.9 % 81,368   20,374   101,742   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
15.   Eastland Plaza   OK   Tulsa   Fee   100.0 % Built 1986   70.9 % 152,451   33,623   186,074   Marshalls, Target, Toys 'R Us
16.   Empire East (1)   SD   Sioux Falls   Fee   50.0 % (4) Acquired 1998   98.1 % 248,181   49,097   297,278   Kohl's, Target, Bed Bath & Beyond
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   84.5 % 324,794   100,584   425,378   Kohl's, Marshalls, Michael's, Factory Card Outlet, Office Max, T.J. Maxx, Bed Bath & Beyond, Petco, Circuit City (6), Babies 'R Us (6)
19.   Gaitway Plaza   FL   Ocala   Fee   23.3 % (4) (13) Built 1989   99.1 % 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   99.4 % 329,576   182,790   512,366   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.   Greenwood Plus   IN   Greenwood   Fee   100.0 % Built 1979   100.0 % 134,141   21,178   155,319   Best Buy, Kohl's
23.   Griffith Park Plaza   IN   Griffith   Fee   100.0 % Built 1979   73.4 % 175,595   88,455   264,050   K-Mart
24.   Henderson Square   PA   King of Prussia   Fee   76.0 % (15) Acquired 2003   100.0 % 72,683   34,690   107,373   Staples, Genuardi's Family Market

26

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

25.
 
Highland Lakes Center
 
FL
 
Orlando
 
Fee
 
100.0
%
Built 1991
 
79.2
%
352,405
 
140,862
 
493,267
 
Marshalls, Bed Bath & Beyond, American Signature Furniture, Save-Rite Supermarkets, Ross Dress for Less, Office Max, Burlington Coat Factory, K&G Menswear, (8)
26.   Indian River Commons   FL   Vero Beach   Fee   50.0 % (4) Built 1997   100.0 % 233,358   19,396   252,754   Lowe's, Best Buy, Ross Dress for Less, Bed Bath & Beyond, Michael's
27.   Ingram Plaza   TX   San Antonio   Fee   100.0 % Built 1980   100.0 % —   111,518   111,518   Bealls, Cost Plus World Market
28.   Keystone Shoppes   IN   Indianapolis   Ground Lease (2067)   100.0 % Acquired 1997   100.0 % —   29,140   29,140    
29.   Knoxville Commons   TN   Knoxville   Fee   100.0 % Built 1987   100.0 % 91,483   88,980   180,463   Office Max, Circuit City, Carolina Pottery
30.   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
31.   Lake View Plaza   IL   Orland Park (Chicago)   Fee   100.0 % Built 1986   94.6 % 261,856   109,396   371,252   Factory Card Outlet, Linens 'n Things, Best Buy, Petco, Jo-Ann Fabrics, Golf Galaxy, Value City Furniture, Loehmann's
32.   Lakeline Plaza   TX   Austin   Fee   100.0 % Built 1998   98.5 % 275,754   111,709   387,463   Linens 'n Things, T.J. Maxx, Old Navy, Best Buy, Ross Dress for Less, Office Max, PetsMart, Party City, Cost Plus World Market, Toys 'R Us
33.   Lima Center   OH   Lima   Fee   100.0 % Built 1978   89.0 % 189,584   47,294   236,878   Kohl's, Hobby Lobby, T.J. Maxx
34.   Lincoln Crossing   IL   O'Fallon   Fee   100.0 % Built 1990   100.0 % 229,820   13,446   243,266   Wal-Mart, PetsMart, The Home Depot
35.   Lincoln Plaza   PA   King of Prussia   Fee   63.2 % (15) Acquired 2003   99.7 % 143,649   123,582   267,231   Burlington Coat Factory, Circuit City, Lane Home Furnishings, AC Moore, Michaels, T.J. Maxx, Home Goods (6)
36.   MacGregor Village   NC   Cary   Fee   100.0 % Acquired 2004   83.7 % —   143,563   143,563   Spa Health Club, Tuesday Morning
37.   Mall of Georgia Crossing   GA   Buford (Atlanta)   Fee   100.0 % Built 1999   98.7 % 341,503   99,109   440,612   Best Buy, American Signature Furniture, T.J. Maxx, Nordstrom Rack, Staples, Target
38.   Markland Plaza   IN   Kokomo   Fee   100.0 % Built 1974   100.0 % 49,051   41,476   90,527   Best Buy, Bed Bath & Beyond
39.   Martinsville Plaza   VA   Martinsville   Space Lease (2046)   100.0 % Built 1967   97.1 % 60,000   42,105   102,105   Rose's
40.   Matteson Plaza   IL   Matteson   Fee   100.0 % Built 1988   94.3 % 230,885   40,070   270,955   Michael's, Dominick's, Value City Department Store, (8)
41.   Muncie Plaza   IN   Muncie   Fee   100.0 % Built 1998   98.6 % 271,626   27,195   298,821   Kohl's, Shoe Carnival, T.J. Maxx, (17)
42.   New Castle Plaza   IN   New Castle   Fee   100.0 % Built 1966   100.0 % 24,912   66,736   91,648   Goody's, Jo-Ann Fabrics
43.   North Ridge Plaza   IL   Joliet   Fee   100.0 % Built 1985   97.5 % 190,323   114,747   305,070   Hobby Lobby, Office Max, Fun In Motion, Minnesota Fabrics, Burlington Coat Factory (6)
44.   North Ridge Shopping Center   NC   Raleigh   Fee   100.0 % Acquired 2004   97.1 % 43,247   122,906   166,153   Ace Hardware, Kerr Drugs, Harris-Teeter Grocery
45.   Northwood Plaza   IN   Fort Wayne   Fee   100.0 % Built 1974   85.4 % 136,404   71,841   208,245   Target
46.   Park Plaza   KY   Hopkinsville   Fee   100.0 % Built 1968   91.8 % 82,398   32,526   114,924   Big Lots, Peddler's Mall
47.   Plaza at Buckland Hills, The   CT   Manchester   Fee   35.0 % (4) (13) Built 1993   95.6 % 252,179   82,348   334,527   Linens 'n Things, CompUSA, Jo-Ann Fabrics, Party City, The Maytag Store, Toys 'R Us, Michaels, PetsMart, (17)

27

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

48.
 
Regency Plaza
 
MO
 
St. Charles
 
Fee
 
100.0
%
Built 1988
 
95.5
%
210,627
 
76,846
 
287,473
 
Wal-Mart, Sam's Wholesale Club
49.   Ridgewood Court   MS   Jackson   Fee   35.0 % (4) (13) Built 1993   96.9 % 185,939   54,732   240,671   T.J. Maxx, Lifeway Christian Bookstore, Bed Bath & Beyond, Best Buy, Michaels, Marshalls
50.   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
51.   Rockaway Town Plaza   NJ   Rockaway (New York)   Fee   100.0 % Acquired 1998   100.0 % 407,501   51,316   458,817   Target, Pier 1 Imports, PetsMart, Dick's Sporting Goods
52.   Royal Eagle Plaza   FL   Coral Springs (Miami — Ft. Lauderale)   Fee   35.0 % (4) (13) Built 1989   98.4 % 124,479   77,624   202,103   K Mart, Stein Mart
53.   Shops at Arbor Walk, The   TX   Austin   Ground Lease (2055)   100.0 % Built 2006   89.1 % 126,610   223,298   349,908   Home Depot, Marshall's, DSW, Golf Galaxy, Jo-Ann Fabrics (6)
54.   Shops at North East Mall, The   TX   Hurst   Fee   100.0 % Built 1999   98.2 % 265,595   99,148   364,743   Michael's, PetsMart, Old Navy, Pier 1 Imports, T.J. Maxx, Bed Bath & Beyond, Nordstrom Rack, Best Buy
55.   St. Charles Towne Plaza   MD   Waldorf (Washington, D.C.)   Fee   100.0 % Built 1987   79.1 % 286,081   108,690   394,771   T.J. Maxx, Jo-Ann Fabrics, K & G Menswear, CVS, Shoppers Food Warehouse, Dollar Tree, Value City Furniture, Gallo, (8)
56.   Teal Plaza   IN   Lafayette   Fee   100.0 % Built 1962   100.0 % 98,337   2,750   101,087   Hobby Lobby, Circuit City, Pep Boys
57.   Terrace at the Florida Mall   FL   Orlando   Fee   100.0 % Built 1989   97.9 % 289,252   42,731   331,983   Marshalls, American Signature Furniture, Global Import, Target, Bed Bath & Beyond, (8)
58.   Tippecanoe Plaza   IN   Lafayette   Fee   100.0 % Built 1974   100.0 % 85,811   4,711   90,522   Best Buy, Barnes & Noble
59.   University Center   IN   Mishawaka   Fee   60.0 % Built 1980   87.5 % 104,347   46,177   150,524   Michael's, Best Buy, Linens 'n Things
60.   Village Park Plaza   IN   Carmel (Indianapolis)   Fee   35.0 % (4) (13) Built 1990   98.8 % 414,593   134,923   549,516   Bed Bath & Beyond, Ashley Furniture HomeStore, Kohl's, Wal-Mart, Marsh, Menards
61.   Washington Plaza   IN   Indianapolis   Fee   100.0 % Built 1976   100.0 % 21,500   28,607   50,107    
62.   Waterford Lakes Town Center   FL   Orlando   Fee   100.0 % Built 1999   100.0 % 622,244   329,446   951,690   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
63.   West Ridge Plaza   KS   Topeka   Fee   100.0 % Built 1988   89.5 % 182,161   59,226   241,387   Famous Footwear, T.J. Maxx, Toys 'R Us, Target
64.   West Town Corners   FL   Altamonte Springs   Fee   23.3 % (4) (13) Built 1989   99.2 % 263,782   121,477 (18) 385,259   Sports Authority, PetsMart, Winn-Dixie Marketplace, American Signature Furniture, Wal-Mart
65.   Westland Park Plaza   FL   Orange Park   Fee   23.3 % (4) (13) Built 1989   99.1 % 123,548   39,606   163,154   Sports Authority, PetsMart, Burlington Coat Factory
66.   White Oaks Plaza   IL   Springfield   Fee   100.0 % Built 1986   98.9 % 275,703   115,723   391,426   T.J. Maxx, Office Max, Kohl's Babies 'R Us, Kids 'R Us, Cub Foods
67.   Whitehall Mall   PA   Whitehall   Fee   38.0 % (15) (4) Acquired 2003   91.2 % 444,916   143,168   588,084   Sears, Kohl's, Bed Bath & Beyond, Borders Books & Music, Gold's Gym

28

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

68.
 
Willow Knolls Court
 
IL
 
Peoria
 
Fee
 
35.0
% (4) (13)
Built 1990
 
98.4
%
309,440
 
72,937
 
382,377
 
Willow Knolls 14, Burlington Coat Factory, Kohl's, Sam's Wholesale Club
69.   Wolf Ranch   TX   Georgetown (Austin)   Fee   100.0 % Built 2005   77.4 % 395,071   218,908   613,979   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                   13,152,921   5,968,456   19,121,377    
                               
 
 
   

 
 
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   83.3 % —   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   96.5 % —   176,615   176,615   Bass, Dress Barn, Van Heusen
5.   Factory Stores of America-Graceville   FL   Graceville   Fee   100.0 % Acquired 2004   98.0 % —   83,962   83,962   Factory Brand Shoes, VF Outlet, Van Heusen
6.   Factory Stores of America-Lebanon   MO   Lebanon   Fee   100.0 % Acquired 2004   100.0 % —   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   100.0 % —   89,646   89,646   Bass, Dress Barn, VF Outlet
8.   Factory Stores of America-Story City   IA   Story City   Fee   100.0 % Acquired 2004   84.0 % —   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   98.4 % —   223,402   223,402   Adidas, Bass, Carter's, Eddie Bauer, Nike, OshKosh B'Gosh, Samsonite, Gap Outlet
10.   The Factory Shoppes at Branson Meadows   MO   Branson   Ground Lease (2021)   100.0 % Acquired 2004   88.6 %     286,924   286,924   Branson Meadows Cinemas, Dress Barn Woman, VF Outlet
                               
 
 
   
        Total Other GLA                   —   1,591,675   1,591,675    
                               
 
 
   
        Total U.S. Properties GLA                   113,892,050   87,123,088   201,015,138    
                               
 
 
   

29

Simon Property Group, L.P. and Subsidiaries

Property Table

U.S. Properties

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

1.
 
Domain, The
 
TX
 
Austin
 
Fee
 
100.0
%
3/07
 
N/A
 
—
 
—
 
—
 
Neiman Marcus, Macy's
2.   Philadelphia Premium Outlets   PA   Limerick   Fee   100.0 % 11/07   N/A   —   —   —    
3.   Palms Crossing   TX   McAllen   Fee   100.0 % 11/07   N/A   —   —   —   Bealls, DSW, Barnes & Noble, Babies 'R Us, Sports Authority, Guitar Center, Cavendar's Boot City
4.   Pier Park   FL   Panama City Beach   Fee   100.0 % 3/08   N/A   —   —   —   Dillard's, JCPenney, Target, Old Navy, Borders Books & Music
5.   Hamilton Town Center   IN   Noblesville (Indianapolis)   Fee   50.0 % 3/08   N/A   —   —   —   JCPenney

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 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 or advance.

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

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

(15)
The 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.

30

(18)
Mall & Freestanding GLA includes office space as follows:

 
 
 
Arsenal Mall — 105,807 sq. ft.   Lenox Square — 2,674 sq. ft.
Century III Mall — 35,929 sq. ft.   Menlo Park Mall — 50,615 sq. ft.
Circle Centre Mall — 9,123 sq. ft.   Oak Court Mall — 126,319 sq. ft.
Copley Place — 856,586 sq. ft.   Oxford Valley Mall — 109,832 sq. ft.
Fashion Centre at Pentagon City, The — 169,089 sq. ft.   Plaza Carolina — 28,192 sq. ft.
Fashion Mall at Keystone, The — 10,927 sq. ft.   River Oaks Center — 118,311 sq. ft.
Firewheel Town Center — 75,000 sq. ft.   Roosevelt Field — 1,610 sq. ft.
Greendale Mall — 119,860 sq. ft.   Stanford Shopping Center — 5,748 sq. ft.
The Plaza & Court at King of Prussia — 13,627 sq. ft.   The Westchester — 820 sq. ft.
Lehigh Valley Mall — 11,754 sq. ft.    
(19)
Parisian locations will convert to Belk nameplate in 2007.

(20)
Nordstrom to open stores in locations previously operated by others at Burlington Mall (2008), Ross Park Mall (2008), Fashion Mall at Keystone (2008), South Shore Plaza (2009), and Northshore Mall (2010).

31

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, 2006:

Joint Venture Investment
   Ownership
Interest
   Properties open
and operating
   Countries of
Operation
Gallerie Commerciali Italia, S.p.A. ("GCI")   49.0 % 41   Italy
Simon Ivanhoe S.à.r.l. ("Simon Ivanhoe")   50.0 % 12   France, Poland

            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. Simon Ivanhoe also operates through a wholly-owned subsidiary, Groupe BEG, S.A. ("BEG"). Simon Ivanhoe 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 joint ventures in Japan operate Premium Outlet centers in various cities in Japan and have over 1.4 million square feet of GLA. These centers were 100% leased as of December 31, 2006 and contained 600 stores with approximately 300 different tenants. The Premium Outlet center in Mexico is 85% leased as of December 31, 2006.

            The following summarizes these six Premium Outlet centers in international joint ventures:

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%

            We also have begun construction on Yeoju Premium Outlets, a 253,000 square foot center located in South Korea. We have a 50% interest in this property with the remaining 50% interest owned by Shinsegae. Also, through a joint venture arrangement with MSREF and SZITIC CP, we have a 32.5% interest in four shopping centers that are under construction in China aggregating 1.9 million square feet of GLA.

            The following property table summarizes certain data on our properties that are under operation in Europe, Japan, and Mexico at December 31, 2006.

32

Simon Property Group, L.P. 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)   Fee   50.0 % 2003   132,400   408,900   541,300   Carrefour, Leroy Merlin
2.   Bay 1   Torcy (Paris)   Fee   50.0 % 2004   —   336,300   336,300   Conforama, Go Sport
3.   Bel'Est   Bagnolet (Paris)   Fee   17.5 % 1992   150,700   63,000   213,700   Auchan
4.   Villabé A6   Villabé (Paris)   Fee   7.5 % 1992   102,300   104,500   206,800   Carrefour
5.   Wasquehal   Wasquehal (Lille)   Fee   50.0 % 2006   129,200   102,100   231,300   Carrefour
                       
 
 
   
        Subtotal France           514,600   1,014,800   1,529,400    

 
 
ITALY
 
 
 
 
 
 
 
 
 
 
 
 
6.   Ancona — Senigallia   Senigallia (Ancona)   Fee   49.0 % 1995   41,200   41,600   82,800   Cityper
7.   Ascoli Piceno — Grottammare   Grottammare (Ascoli Piceno)   Fee   49.0 % 1995   38,900   55,900   94,800   Cityper, Scarpe & Scarpe
8.   Ascoli Piceno — Porto Sant'Elpidio   Porto Sant'Elpidio (Ascoli Piceno)   Fee   49.0 % 1999   48,000   114,300   162,300   Cityper, Comet
9.   Bari — Casamassima   Casamassima (Bari)   Fee   49.0 % 1995   159,000   388,800   547,800   Auchan, Coin, Eldo, Leroy Merlin, Decathlon, Oviesse, Kiabi, Upim
10.   Bari — Modugno (5)   Modugno (Bari)   Fee   49.0 % 2004   96,900   46,600   143,500   Auchan
11.   Brescia — Mazzano   Mazzano (Brescia)   Fee/Leasehold (2)   49.0 % (2) 1994   103,300   127,400   230,700   Auchan, Bricocenter, Upim, Trony
12.   Brindisi — Mesagne   Mesagne (Brindisi)   Fee   49.0 % 2003   88,000   140,600   228,600   Auchan, Euronics
13.   Cagliari — Santa Gilla   Cagliari   Fee/Leasehold (2)   49.0 % (2) 1992   75,900   114,800   190,700   Auchan, Bricocenter, Trony
14.   Catania — La Rena   Catania   Fee   49.0 % 1998   124,100   22,100   146,200   Auchan
15.   Cuneo   Cuneo (Torino)   Fee   49.0 % 2004   80,700   201,500   282,200   Auchan, Bricocenter, Decathlon, Upim, Euronics
16.   Giugliano   Giugliano (Napoli)   Fee   19.6 % 2006   130,000   618,300   748,300   Auchan, Decathlon, Leroy Merlin, Oviesse, Conbipel, Scarpe & Scarpe, Eldo, Euronics
17.   Milano — Rescaldina   Rescaldina (Milano)   Fee   49.0 % 2000   165,100   212,000   377,100   Auchan, Bricocenter, Decathlon, Media World, Upim
18.   Milano — Vimodrone   Vimodrone (Milano)   Fee   49.0 % 1989   110,400   80,200   190,600   Auchan, Bricocenter
19.   Napoli — Pompei   Pompei (Napoli)   Fee   49.0 % 1990   74,300   17,100   91,400   Auchan
20.   Padova   Padova   Fee   49.0 % 1989   73,300   32,500   105,800   Auchan
21.   Palermo   Palermo   Fee   49.0 % 1990   73,100   9,800   82,900   Auchan
22.   Pesaro — Fano   Fano (Pesaro)   Fee   49.0 % 1994   56,300   56,000   112,300   Auchan
23.   Pescara   Pescara   Fee   49.0 % 1998   96,300   65,200   161,500   Auchan, Upim, Euronics
24.   Pescara — Cepagatti   Cepagatti (Pescara)   Fee   49.0 % 2001   80,200   189,600   269,800   Auchan, Bata, Emmezeta Marcatone Z
25.   Piacenza — San Rocco al Porto   San Rocco al Porto (Piacenza)   Fee   49.0 % 1992   104,500   74,700   179,200   Auchan, Darty
26.   Roma — Collatina   Collatina (Roma)   Fee   49.0 % 1999   59,500   4,100   63,600   Auchan
27.   Sassari — Predda Niedda   Predda Niedda (Sassari)   Fee/Leasehold (2)   49.0 % (2) 1990   79,500   154,200   233,700   Auchan, Bricocenter, Upim, Media World

33

Simon Property Group, L.P. 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)                        
28.   Taranto   Taranto   Fee   49.0 % 1997   75,200   126,500   201,700   Auchan, Bricocenter, Upim
29.   Torino   Torino   Fee   49.0 % 1989   105,100   66,700   171,800   Auchan, Upim
30.   Torino — Venaria   Venaria (Torino)   Fee   49.0 % 1982   101,600   64,000   165,600   Auchan, Bricocenter
31.   Venezia — Mestre   Mestre (Venezia)   Fee   49.0 % 1995   114,100   132,600   246,700   Auchan, Oviesse
32.   Vicenza   Vicenza   Fee   49.0 % 1995   78,400   20,100   98,500   Auchan
33.   Ancona   Ancona   Leasehold (3)   49.0 % (3) 1993   82,900   82,300   165,200   Auchan, Upim
34.   Bergamo   Bergamo   Leasehold (3)   49.0 % (3) 1976   103,000   16,900   119,900   Auchan
35.   Brescia — Concesio   Concesio (Brescia)   Leasehold (3)   49.0 % (3) 1972   89,900   27,600   117,500   Auchan, Bata
36.   Cagliari — Marconi   Cagliari   Leasehold (3)   49.0 % (3) 1994   83,500   109,900   193,400   Auchan, Bricocenter, Bata, Trony
37.   Catania — Misterbianco   Misterbianco (Catania)   Leasehold (3)   49.0 % (3) 1989   83,300   16,000   99,300   Auchan
38.   Merate — Lecco   Merate (Lecco)   Leasehold (3)   49.0 % (3) 1976   73,500   88,500   162,000   Auchan, Bricocenter
39.   Milano — Cesano Boscone   Cesano Boscone (Milano)   Leasehold (3)   49.0 % (3) 2005   163,800   120,100   283,900   Auchan
40.   Milano — Nerviano   Nerviano (Milano)   Leasehold (3)   49.0 % (3) 1991   83,800   27,800   111,600   Auchan
41.   Napoli — Mugnano di Napoli   Mugnano di Napoli   Leasehold (3)   49.0 % (3) 1992   98,000   94,900   192,900   Auchan, Bricocenter, Upim
42.   Olbia   Olbia   Leasehold (3)   49.0 % (3) 1993   49,000   48,800   97,800   Auchan
43.   Roma — Casalbertone   Roma   Leasehold (3)   49.0 % (3) 1998   62,700   84,900   147,600   Auchan, Upim
44.   Sassari — Centro Azuni   Sassari   Leasehold (3)   49.0 % (3) 1995   —   35,600   35,600   Oviesse
45.   Torino — Rivoli   Rivoli (Torino)   Leasehold (3)   49.0 % (3) 1986   61,800   32,300   94,100   Auchan
46.   Verona — Bussolengo   Bussolengo (Verona)   Leasehold (3)   49.0 % (3) 1975   89,300   75,300   164,600   Auchan, Bricocenter
                       
 
 
   
        Subtotal Italy           3,557,400   4,038,100   7,595,500    

 
 
POLAND
 
 
 
 
 
 
 
 
 
 
 
 
47.   Arkadia Shopping Center   Warsaw   Fee   50.0 % 2004   202,100   902,200   1,104,300   Carrefour, Leroy Merlin, Media, Saturn, Cinema City, H & M, Zara, Royal Collection, Peek & Clopperburg
48.   Borek Shopping Center   Wroclaw   Fee   50.0 % 1999   119,900   129,300   249,200   Carrefour
49.   Dabrowka Shopping Center   Katowice   Fee   50.0 % 1999   121,000   172,900   293,900   Carrefour, Castorama
50.   Gliwice Shopping Center   Gliwice   Fee   50.0 % 2006   140,700   239,000   379,700   Carrefour
51.   Turzyn Shopping Center   Szczecin   Fee   50.0 % 2001   87,200   121,900   209,100   Carrefour
52.   Wilenska Station Shopping Center   Warsaw   Fee   50.0 % 2002   92,700   215,900   308,600   Carrefour
53.   Zakopianka Shopping Center   Krakow   Fee   50.0 % 1998   120,200   425,400   545,600   Carrefour, Castorama
                       
 
 
   
        Subtotal Poland           883,800   2,206,600   3,090,400    

34

Simon Property Group, L.P. 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                            
54.   Gotemba Premium Outlets   Gotemba City (Tokyo)   Fee   40.0 % 2000   —   390,000   390,000   Bally, Coach, Diesel, Gap, Gucci, Jill Stuart, L.L. Bean, Nike, Tod's
55.   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
56.   Sano Premium Outlets   Sano (Tokyo)   Ground Lease (2022)   40.0 % 2003   —   318,200   318,200   Bally, Brooks Brothers, Coach, Nautica, New Yorker, Nine West, Timberland
57.   Toki Premium Outlets   Toki (Nagoya)   Ground Lease (2024)   40.0 % 2005   —   231,200   231,200   Adidas, Brooks Brothers, Bruno Magli, Coach, Eddie Bauer, Furla, Nautica, Nike, Timberland, Versace
58.   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           —   1,447,400   1,447,400    

 
 
MEXICO
 
 
 
 
 
 
 
 
 
 
 
 
59.   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           4,955,800   8,938,900   13,894,700    
                       
 
 
   

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 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.

35

            We have direct or indirect ownership interests in five parcels of land held in the United States for future development, containing an aggregate of approximately 400 acres located in three states.

            Also, on December 28, 2005, we invested $50.0 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. The site 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. The entitlement, planning, and design processes are ongoing and 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 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.

36


Mortgage and Other Debt on Portfolio Properties
As of December 31, 2006
(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 % $ 28,634   $ 2,216   10/10/12  
Arsenal Mall — 1   6.75 %   31,433     2,724   09/28/08  
Arsenal Mall — 2   8.20 %   1,326     286   05/05/16  
Aventura Mall Credit Facility   6.32%   (1)   27,369     1,730   (2) 10/27/07  
Bangor Mall   7.06 %   22,038     2,302   12/01/07  
Battlefield Mall   4.60 %   97,839     6,154   07/01/13  
Bloomingdale Court   7.78 %   27,532   (4)   2,578   11/01/09  
Boardman Plaza   5.94 %   23,598     1,402   (2) 07/01/14  
Brunswick Square   5.65 %   85,659     5,957   08/11/14  
Carolina Premium Outlets — Smithfield   9.10 %   20,231   (6)   2,114   03/10/13  
Century III Mall   6.20 %   84,525   (9)   6,541   10/10/12  
Chesapeake Square   5.84 %   72,658     5,162   08/01/14  
Cielo Vista Mall   9.38 %   47,433   (5)   5,828   05/01/07  
College Mall — 1   7.00 %   32,630   (8)   3,908   01/01/09  
College Mall — 2   6.76 %   10,710   (8)   935   01/01/09  
Copley Place   7.44 %   171,126     16,266   08/01/07  
Coral Square   8.00 %   85,740     8,065   10/01/10  
The Crossings Premium Outlets   5.85 %   56,707     4,649   03/13/13  
Crossroads Mall   6.20 %   42,451     3,285   10/10/12  
Crystal River   7.63 %   15,341     1,385   11/11/10   (25)
Dare Centre   9.10 %   1,684   (6)   176   03/10/13   (25)
DeKalb Plaza   5.28 %   3,301     284   01/01/15  
Desoto Square   5.89 %   64,153     3,779   (2) 07/01/14  
The Factory Shoppes at Branson Meadows   9.10 %   9,409   (6)   983   03/10/13   (25)
Factory Stores of America — Boaz   9.10 %   2,752   (6)   287   03/10/13   (25)
Factory Stores of America — Georgetown   9.10 %   6,521   (6)   681   03/10/13   (25)
Factory Stores of America — Graceville   9.10 %   1,937   (6)   202   03/10/13   (25)
Factory Stores of America — Lebanon   9.10 %   1,628   (6)   170   03/10/13   (25)
Factory Stores of America — Nebraska City   9.10 %   1,529   (6)   160   03/10/13   (25)
Factory Stores of America — Story City   9.10 %   1,891   (6)   198   03/10/13   (25)
Forest Mall   6.20 %   17,000   (10)   1,316   10/10/12  
Forest Plaza   7.78 %   15,101   (4)   1,414   11/01/09  
Forum Shops at Caesars, The   4.78 %   541,935     34,564   12/01/10  
Gateway Shopping Center   5.89 %   87,000     5,124   (2) 10/01/11  
Gilroy Premium Outlets   6.99 %   64,144   (7)   6,236   07/11/08   (25)
Greenwood Park Mall — 1   7.00 %   27,329   (8)   3,273   01/01/09  
Greenwood Park Mall — 2   6.76 %   55,331   (8)   4,831   01/01/09  
Henderson Square   6.94 %   15,063     1,270   07/01/11  
Highland Lakes Center   6.20 %   15,670   (9)   1,213   10/10/12  
Ingram Park Mall   6.99 %   79,499   (20)   6,724   08/11/11  
Keystone at the Crossing   7.85 %   57,514     5,642   07/31/07  
Kittery Premium Outlets   6.99 %   10,619   (7)   1,028   07/11/08   (25)
Knoxville Center   6.99 %   60,201   (20)   5,092   08/11/11  
Lake View Plaza   7.78 %   20,073   (4)   1,880   11/01/09  
Lakeline Mall   7.65 %   64,999     6,300   05/01/07  
Lakeline Plaza   7.78 %   22,008   (4)   2,061   11/01/09  
Lighthouse Place Premium Outlets   6.99 %   44,261   (7)   4,286   07/11/08   (25)
Lincoln Crossing   7.78 %   3,038   (4)   285   11/01/09  
Longview Mall   6.20 %   31,814   (9)   2,462   10/10/12  
MacGregor Village   9.10 %   6,775   (6)   708   03/10/13   (25)
Mall of Georgia   7.09 %   191,520     16,649   07/01/10  
Markland Mall   6.20 %   22,509   (10)   1,742   10/10/12  
Matteson Plaza   7.78 %   8,840   (4)   828   11/01/09  
McCain Mall   9.38 %   22,148   (5)   2,721   05/01/07  
Midland Park Mall   6.20 %   32,860   (10)   2,543   10/10/12  
Montgomery Mall   5.17 %   92,508     6,307   05/11/14   (25)
Muncie Plaza   7.78 %   7,643   (4)   716   11/01/09  
                       

37

Northfield Square   6.05 %   30,382     2,485   02/11/14  
Northlake Mall   6.99 %   69,450   (20)   5,874   08/11/11  
North Ridge Shopping Center   9.10 %   8,275   (6)   865   03/10/13   (25)
Oxford Valley Mall   6.76 %   79,924     7,801   01/10/11  
Palm Beach Mall   6.20 %   52,567     4,068   10/10/12  
Penn Square Mall   7.03 %   68,258     6,003   03/01/09   (25)
Plaza Carolina — Fixed   5.10 %   94,714     7,085   05/09/09  
Plaza Carolina — Variable Capped   6.22%   (29)   95,744     7,895   05/09/09   (3)
Plaza Carolina — Variable Floating   6.22%   (1)   57,445     4,737   05/09/09   (3)
Port Charlotte Town Center   7.98 %   52,007     4,680   12/11/10   (25)
Regency Plaza   7.78 %   4,143   (4)   388   11/01/09  
Richmond Towne Square   6.20 %   46,156   (10)   3,572   10/10/12  
SB Trolley Square Holding   9.03 %   28,408     2,880   08/01/10  
St. Charles Towne Plaza   7.78 %   26,518   (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)   35,315     3,768   01/01/26  
Tacoma Mall   7.00 %   126,763     10,778   10/01/11  
Towne East Square — 1   7.00 %   44,339     4,711   01/01/09  
Towne East Square — 2   6.81 %   22,330     1,958   01/01/09  
Towne West Square   6.99 %   52,039   (20)   4,402   08/11/11  
University Park Mall   7.43 %   56,825     4,958   10/01/07  
Upper Valley Mall   5.89 %   47,904     2,822   (2) 07/01/14  
Valle Vista Mall   9.38 %   29,335   (5)   3,598   05/01/07  
Washington Square   5.94 %   30,693     1,823   (2) 07/01/14  
Waterloo Premium Outlets   6.99 %   35,649   (7)   3,452   07/11/08   (25)
West Ridge Mall   5.89 %   68,711     4,047   (2) 07/01/14  
West Ridge Plaza   7.78 %   5,342   (4)   500   11/01/09  
White Oaks Mall   5.54 %   50,000     2,768   (2) 11/01/16  
White Oaks Plaza   7.78 %   16,298   (4)   1,526   11/01/09  
Wolfchase Galleria   7.80 %   70,716     6,911   06/30/07  
Woodland Hills Mall   7.00 %   81,587     7,185   01/01/09   (25)
       
           
Total Consolidated Secured Indebtedness       $ 4,405,024            

38


Unsecured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Simon Property Group, LP:                      
Unsecured Revolving Credit Facility — USD   5.70%   (15) $ —   $ —   (2) 01/11/11   (3)
Revolving Credit Facility — Yen Currency   0.85%   (15)   14,673     125   (2) 01/11/11   (3)
Revolving Credit Facility — Euro Currency   4.01%   (15)   290,459     11,643   (2) 01/11/11   (3)
Medium Term Notes — 2   7.13 %   180,000     12,825   (14) 09/20/07  
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 — 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  
Unsecured Notes — 14 A   5.75 %   400,000     23,000   (14) 05/01/12  
Unsecured Notes — 14 B   6.10 %   400,000     24,400   (14) 05/01/16  
Unsecured Notes — 15 A   5.60 %   600,000     33,600   (14) 09/01/11  
Unsecured Notes — 15 B   5.88 %   500,000     29,375   (14) 03/01/17  
Unsecured Notes — 16 A   5.00 %   600,000     30,000   (14) 03/01/12  
Unsecured Notes — 16 B   5.25 %   650,000     34,125   (14) 12/01/16  
Mandatory Par Put Remarketed Securities   7.00 %   200,000     14,000   (14) 06/15/08   (16)
       
           
          9,935,132            

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:
 
 
 
 
 
 
 
 
 
 
 
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  
       
           
          675,000            
       
           
  Total Consolidated Unsecured Indebtedness       $ 10,935,132            
       
           
  Total Consolidated Indebtedness at Face Amounts       $ 15,340,156            
  Fair Value Interest Rate Swaps         (9,428)   (24)          
  Net Premium on Indebtedness         93,732            
  Net Discount on Indebtedness         (29,971 )          
       
           
  Total Consolidated Indebtedness       $ 15,394,489   (19)          
       
           

39


Joint Venture Indebtedness:
 
 
 
 
 
 
 
 
 
 
 

Secured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Apple Blossom Mall   7.99 % $ 38,219   $ 3,607   09/10/09  
Arkadia Shopping Center   4.67 %  (31)   135,062     6,312   05/31/12  
Atrium at Chestnut Hill   6.89 %   46,025     3,880   03/11/11   (25)
Auburn Mall   7.99 %   44,744     4,222   09/10/09  
Aventura Mall   6.61 %   200,000     13,220   (2) 04/06/08  
Avenues, The   5.29 %   75,588     5,325   04/01/13  
Bay 1 (Torcy)   4.42 %  (31)   18,575     822   05/31/11  
Bay 2 (Torcy)   4.42 %  (31)   69,290     3,065   06/30/11  
Borek Shopping Center   5.93 %   16,396     973   02/06/12  
Cape Cod Mall   6.80 %   93,520     7,821   03/11/11  
Castleton Storage   7.37 %  (1)   256     19   (2) 07/31/09   (3)
Circle Centre Mall   5.02 %   75,624     5,165   04/11/13  
Clay Terrace   5.08 %   115,000     5,842   (2) 10/01/15  
Coconut Point   5.83 %   230,000     13,409   (2) 12/10/16  
Coddingtown Mall   6.57 %  (1)   10,500     690   (2) 07/14/07  
Crystal Mall   5.62 %   99,883     7,319   09/11/12   (25)
Dabrowka Shopping Center   6.04 %  (31)   4,978     301   07/03/14  
Dadeland Mall   6.75 %   189,252     15,566   02/11/12   (25)
Domain Residential   6.47 %  (1)   21,673     1,403   (2) 03/03/11   (3)
Eastland Mall   5.79 %   168,000     9,734   (2) 06/01/16  
Emerald Square Mall   5.13 %   137,050     9,479   03/01/13  
Empire Mall   5.79 %   176,300     10,215   (2) 06/01/16  
Fashion Centre Pentagon Retail   6.63 %   156,904     12,838   09/11/11   (25)
Fashion Centre Pentagon Office   6.07 %  (30)   40,000     2,429   (2) 07/09/09   (3)
Fashion Valley Mall — 1   6.49 %   158,720     13,218   10/11/08   (25)
Fashion Valley Mall — 2   6.58 %   29,124     1,915   (2) 10/11/08   (25)
Firewheel Residential   7.17 %  (1)   606     43   (2) 06/20/09  
Florida Mall, The   7.55 %   254,151     22,766   12/10/10  
Galleria Commerciali Italia — Facility A   4.77 %  (18)   328,859     21,411   12/22/11   (3)
Galleria Commerciali Italia — Facility B   4.87 %  (27)   324,885     22,565   12/22/11  
Galleria Commerciali Italia — Cinisello   4.12 %   29,545     1,218   06/20/07  
Gaitway Plaza   4.60 %   13,900   (17)   640   (2) 07/01/15  
Granite Run Mall   5.83 %   121,189     8,622   06/01/16  
Greendale Mall   6.00 %   45,000     2,699   (2) 10/01/16  
Gotemba Premium Outlets — Fixed   2.00 %   8,398   (26)   1,176   10/25/14  
Gotemba Premium Outlets — Variable   2.30 %  (12)   16,208   (26)   3,900   09/30/07  
Gwinnett Place — 1   7.54 %   35,621     3,412   04/01/07  
Gwinnett Place — 2   7.25 %   79,239     7,070   04/01/07  
Hamilton Town Center   6.32 %  (1)   9,398     594   (2) 03/31/07  
Highland Mall   6.83 %   66,744     5,634   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 %   162,777     23,183   01/01/17  
King of Prussia Mall — 2   8.53 %   11,314     1,685   01/01/17  
Lehigh Valley Mall   5.88 %  (1)   150,000     8,823   (2) 08/09/10   (3)
Liberty Tree Mall   5.22 %   35,000     1,827   (2) 10/11/13  
Mall at Rockingham   7.88 %   93,242     8,705   09/01/07  
Mall at Chestnut Hill   8.45 %   14,172     1,396   02/02/10  
Mall of New Hampshire — 1   6.96 %   96,202     8,345   10/01/08   (25)
Mall of New Hampshire — 2   8.53 %   7,989     786   10/01/08  
Mesa Mall   5.79 %   87,250     5,055   (2) 06/01/16  
Miami International Mall   5.35 %   97,198     6,533   10/01/13  
Northshore Mall   5.03 %   210,000     10,553   (2) 03/11/14   (25)
Quaker Bridge Mall   7.03 %   21,627     2,407   04/01/16  
Plaza at Buckland Hills, The   4.60 %   24,800   (17)   1,142   (2) 07/01/15  
Ridgewood Court   4.60 %   14,650   (17)   674   (2) 07/01/15  
                       

40

Rinku Premium Outlets   2.34 %   31,276   (26)   4,857   10/25/14  
Rushmore Mall   5.79 %   94,000     5,446   (2) 06/01/16  
Sano Premium Outlets   2.39 %   46,214   (26)   7,371   05/31/16  
St. Johns Town Center   5.06 %   170,000     8,602   (2) 03/11/15  
St. John's Town Center Phase II   6.17 %  (1)   17,530     1,082   (2) 02/27/07  
Seminole Towne Center   5.97 %  (22)   70,000     4,180   (2) 07/09/09   (3)
Shops at Sunset Place, The   6.07 %  (21)   90,867     7,250   05/09/09   (3)
Smith Haven Mall   5.16 %   180,000     9,283   (2) 03/01/16  
Solomon Pond   3.97 %   113,206     6,505   08/01/13  
Source, The   6.65 %   124,000     8,246   (2) 03/11/09  
Southern Hills Mall   5.79 %   101,500     5,881   (2) 06/01/16  
SouthPark Residential   6.72 %  (1)   20,319     1,366   (2) 10/31/08  
Springfield Mall   6.42 %  (1)   76,500     4,913   (2) 12/01/10   (3)
Square One   6.73 %   90,038     7,380   03/11/12  
Surprise Grand Vista   10.61 %   249,306     26,455   (2) 12/28/10   (3)
Toki Premium Outlets   1.22 %  (12)   21,248   (26)   3,283   10/30/09  
Tosu Premium Outlets   2.60 %   10,617   (26)   1,852   08/24/13  
Town Center at Cobb — 1   7.54 %   45,383     4,347   04/01/07  
Town Center at Cobb — 2   7.25 %   60,303     5,381   04/01/07  
Turzyn Shopping Center   6.32 %   24,162     1,528   06/06/14  
University Storage   7.37 %  (1)   2,344     173   (2) 07/31/09   (3)
Valley Mall   5.83 %   47,184     3,357   06/01/16  
Villabe A6 — Bel'Est   4.72 %  (31)   11,577     547   08/31/11  
Village Park Plaza   4.60 %   29,850   (17)   1,374   (2) 07/01/15  
West Town Corners   4.60 %   18,800   (17)   865   (2) 07/01/15  
West Town Mall   6.90 %   76,000     5,244   (2) 05/01/08   (25)
Westchester, The   4.86 %   500,000     24,300   (2) 06/01/10  
Whitehall Mall   6.77 %   13,072     1,282   11/01/08  
Wilenska Station Shopping Center   5.12 %  (31)   39,524     2,025   08/31/11  
Zakopianka Shopping Center   6.60 %   14,865     981   12/28/11  
       
           
  Total Joint Venture Secured Indebtedness at Face Amounts       $ 7,996,332            

Unsecured Indebtedness:
 
 
 
 
 
 
 
 
 
 
 
Galleria Commerciali Italia — Facility C   4.28 %  (28)   61,129     2,618   (2) 12/22/08   (3)
       
           
Total Joint Venture Unsecured Indebtedness         61,129            
 
Net Premium on Indebtedness
 
 
 
 
0
 
 
 
 
 
 
  Net Discount on Indebtedness         (1,606 )          
       
           
  Total Joint Venture Indebtedness       $ 8,055,855   (23)          
       
           

(Footnotes on following page)

41

(Footnotes for preceding pages)

(1)
Variable rate loans based on LIBOR plus interest rate spreads ranging from 37.5 bps to 205 bps. LIBOR as of December 31, 2006 was 5.32%.

(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, 2006, 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 5.37%.

(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, 2006 was 0.4738%.

(13)
Lender also participates in a percentage of certain gross receipts above a specified base. This threshold was met and additional interest was paid in 2006.

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

(15)
$3,000,000 Credit Facility. As of December 31, 2006, the Credit Facility bears interest at LIBOR + 0.375% and provides for different pricing based upon the Operating Partnership's investment grade rating. As of December 31, 2006, $2.7 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 redemption on June 15, 2008.

(17)
Loans secured by these five Properties are cross-collateralized and cross-defaulted.

(18)
Debt is denominated in Euros and bears interest at 3 month Euribor + 1.05%. Debt consists of a Euros 269.0 million tranche of which Euros 249.1 million is drawn.

(19)
Our share of consolidated indebtedness was $15,203,980.

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

(21)
LIBOR + 0.750%, with LIBOR capped at 7.500%.

(22)
LIBOR + 0.650%, with LIBOR capped at 8.500%.

(23)
Our share of joint venture indebtedness was $3,472,228. Our share of indebtedness for joint ventures excludes our share of indebtedness of $79.5 million in joint venture entities in which a non-controlling interest is held by Gallerie Commerciali Italia, an entity which we have a 49% interest.

(24)
Represents the fair market value of interest rate swaps entered into by the Operating Partnership.

(25)
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.

(26)
Amounts shown in US Dollar Equivalent. Yen equivalent 15,950.7 million

(27)
Debt is denominated in Euros and bears interest at 3 month Euribor + 1.15%. Debt consists of a Euros 255 million tranche which Euros 246.1 million is drawn.

(28)
Debt is denominated in Euros and bears interest at Euribor + 0.650%. Debt consists of a Euros 150 million tranche of which Euros 46.3 million is drawn.

(29)
LIBOR + 0.900%, with LIBOR capped at 8.250%.

(30)
LIBOR + 0.750%, with LIBOR capped at 8.250%.

(31)
Associated with these loans are interest rate swap agreements with a total combined Euro 199.3 million notional amount that effectively fixed these loans at a combined 4.66%.

42


Mortgage and Other Debt on Portfolio Properties
and Investments in Real Estate
As of December 31, 2006
(Dollars in thousands)

            The changes in mortgages and other indebtedness for the years ended December 31, 2006, 2005, 2004 are as follows:

 
   2006
   2005
   2004
  
Balance, Beginning of Year   $ 14,106,117   $ 14,586,393   $ 10,266,388  
  Additions during period:                    
    New Loan Originations     2,810,239     2,484,264     4,509,640  
    Loans assumed in acquisitions and consolidations     192,272     —     1,387,182  
    Net Premium/(Discount)     (5,031 )   (11,328 )   132,905  
  Deductions during period:                    
    Loan Retirements     (1,619,148 )   (2,764,438 )   (1,652,022 )
    Loans Related to Deconsolidations     —     (100,022 )   —  
    Amortization of Net (Premiums)/Discounts     (25,784 )   (33,710 )   (14,043 )
    Scheduled Principal Amortization     (64,176 )   (55,042 )   (43,657 )
   
 
 
 
Balance, End of Year   $ 15,394,489   $ 14,106,117   $ 14,586,393  
   
 
 
 

43


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. We filed our own actions for declaratory judgment actions in Federal district courts in each of the three states.

            With respect to the New Hampshire litigation, on August 1, 2006, the Federal district court in New Hampshire granted our motion for summary judgment and held that the gift card program that has been in existence since September 1, 2005, is a banking product and state law regulation is preempted by Federal banking laws. However, the Attorney General's appeal of this judgment in our favor in Federal district court in New Hampshire is pending. In February 2007, we entered into a voluntary, no-fault settlement agreement regarding the elements of the New Hampshire action which related to the program that existed before September 1, 2005. This settlement did not have a significant impact on the results of our operations.

            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 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 pending 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.

            As previously disclosed, we were a defendant in a suit brought against us by a partner in a partnership in which we previously held ownership in, Mall of America Associates ("MOAA"). Effective November 2, 2006, all parties agreed to settle the lawsuit and all claims with no settlement payment due by either party. We had most currently been a beneficial interest holder in the operations of MOAA which entitled us the right to receive cash flow distributions and capital transaction proceeds, or approximately a 25% interest in the underlying operations. Concurrently with the settlement of the litigation, the Simon family partner in MOAA sold its entire interest in MOAA. We received $102.2 million of capital transaction proceeds related to this transaction, terminating our beneficial interests, which resulted in a gain of $86.5 million.

            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

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

 
   Declared
Distribution
2006      
1st Quarter   $ 0.76
2nd Quarter     0.76
3rd Quarter     0.76
4th Quarter     0.76

2005
 
 
 
1st Quarter   $ 0.70
2nd Quarter     0.70
3rd Quarter     0.70
4th Quarter     0.70

            The number of holders of units was 245 as of February 19, 2007.

            We make distributions to our unitholders including Simon Property in order to maintain Simon Property's qualification as a REIT. Simon Property is required each year to distribute to its stockholders at least 90% of its taxable income after certain adjustments. Future distributions will be determined at the discretion of the Board based on actual results of operations, cash available for distribution, and what may be required to maintain Simon Property's status as a REIT.

            During the fourth quarter of 2006, we issued 106,400 units to Simon Property related to employee stock options that were exercised during the quarter. We used the net proceeds from the option exercised of approximately $3.2 million for general working capital purposes. Also during the fourth quarter of 2006, we issued 8,000,000 of Series K Variable Rate Redeemable Preferred Units (Series K Preferred Units) to Simon Property for cash proceeds in the amount of $200.0 million. The cash proceeds received from Simon Property were obtained by Simon Property from the sale of a similar series of preferred stock to a single institutional investor. We used the proceeds to fund the redemption of the Series F Cumulative Redeemable Preferred Units held by Simon Property, which in turn then redeemed a similar series of preferred stock. The issuance of the units and Series K Preferred Units were exempt from registration under the Securities Act of 1933 as amended, in reliance upon Section 4(2) as private offerings.

45


Item 6. Selected Financial Data

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

 
   As of or for the Year Ended December 3l,
  
 
   2006
   2005
   2004 (1)
   2003 (1)
   2002 (1)
  
 
   (in thousands, except per unit data)

  
OPERATING DATA:                                
  Total consolidated revenue   $ 3,332,154   $ 3,166,853   $ 2,567,774   $ 2,227,373   $ 2,038,936  
  Income from continuing operations     719,083     457,328     454,358     433,963     527,888  
  Net income available to common unitholders   $ 614,911   $ 510,581   $ 380,711   $ 412,532   $ 482,575  
BASIC EARNINGS PER UNIT:                                
  Income from continuing operations   $ 2.20   $ 1.27   $ 1.47   $ 1.48   $ 1.86  
  Discontinued operations     —     0.55     (0.04 )   0.18     0.13  
   
 
 
 
 
 
  Net income   $ 2.20   $ 1.82   $ 1.43   $ 1.66   $ 1.99  
   
 
 
 
 
 
  Weighted average units outstanding     279,567     279,825     265,405     248,926     242,041  
DILUTED EARNINGS PER UNIT:                                
  Income from continuing operations   $ 2.19   $ 1.27   $ 1.47   $ 1.47   $ 1.86  
  Discontinued operations     —     0.55     (0.04 )   0.18     0.13  
   
 
 
 
 
 
  Net income   $ 2.19   $ 1.82   $ 1.43   $ 1.65   $ 1.99  
   
 
 
 
 
 
  Diluted weighted average units outstanding     280,471     280,696     266,272     249,750     243,631  
  Distributions per unit (2)   $ 3.04   $ 2.80   $ 2.60   $ 2.40   $ 2.18  
BALANCE SHEET DATA:                                
  Cash and cash equivalents   $ 929,360   $ 337,048   $ 519,556   $ 529,036   $ 390,644  
  Total assets     22,084,455     21,131,039     21,921,902     15,522,063     14,741,116  
  Mortgages and other indebtedness     15,394,489     14,106,117     14,586,393     10,266,388     9,546,081  
  Partners' equity   $ 5,089,868   $ 5,489,518   $ 5,779,870   $ 4,213,993   $ 4,328,196  
OTHER DATA:                                
  Cash flow provided by (used in):                                
    Operating activities   $ 1,273,367   $ 1,170,371   $ 1,079,092   $ 945,092   $ 880,279  
    Investing activities     (601,851 )   (51,906 )   (2,742,542 )   (760,000 )   (784,495 )
    Financing activities   $ (79,204 ) $ (1,300,973 ) $ 1,653,970   $ (46,700 ) $ 42,688  
  Ratio of Earnings to Fixed Charges (3)     1.73x     1.56x     1.63x     1.65x     1.80x  
   
 
 
 
 
 

Notes

(1)
On October 14, 2004 Simon Property acquired Chelsea Property Group, Inc. On May 3, 2002, Simon Property and other parties 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)
Represents distributions declared per period.

(3)
The ratios for 2004, 2003, and 2002 have been restated for the reclassification of discontinued operations described in Note 3. 2002 includes $162.0 million of gains on sales of assets, net, and excluding these gains the ratio would have been 1.42x.

46


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

            You should read the following discussion in conjunction with the consolidated financial statements and notes thereto that are included in this report. Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and it is possible that our actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Those risks and uncertainties include, but are not limited to: our ability to meet debt service requirements, the availability of financing, changes in our credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, the ability to hedge interest rate risk, risks associated with the acquisition, development and expansion of properties, general risks related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic climates, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, impact of terrorist activities, inflation and maintenance of Simon Property's REIT status. We discuss these and other risks and uncertainties under the heading "Risk Factors" in our Annual Report on Form 10-K. The risks and uncertainties could cause our actual results to differ materially from the forward-looking statements that we make. We may update that discussion in subsequent quarterly reports, but otherwise we undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Overview

            Simon Property Group, L.P. is a Delaware limited partnership and a majority owned subsidiary of Simon Property Group, Inc. In this report, the terms the "Operating Partnership", "we", "us" and "our" refer to Simon Property Group, L.P. and its subsidiaries and the term "Simon Property" refers specifically to Simon Property Group, Inc.

            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, 2006, we owned or held an interest in 286 income-producing properties in the United States, which consisted of 171 regional malls, 69 community/lifestyle centers, 36 Premium Outlet centers and 10 other shopping centers or outlet centers in 38 states plus Puerto Rico (collectively, the "Properties", and individually, a "Property"). We also own interests in five parcels of land held in the United States for future development (together with the Properties, the "Portfolio"). In the United States, we have five new properties currently under development aggregating approximately 3.5 million square feet which will open during 2007 or early 2008. Internationally, we have ownership interests in 53 European shopping centers (France, Italy, and Poland); five Premium Outlet centers in Japan; and one Premium Outlet center in Mexico. We also have begun construction on a Premium Outlet center in which we will hold a 50% interest located in South Korea and, through a joint venture arrangement, we will have a 32.5% interest in five shopping centers (four of which are under construction) in China.

Operating Fundamentals

            We generate the majority of 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 a significant portion of our operating expenses, including common area maintenance, real estate taxes, and insurance.

            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, and cash flows by enhancing the profitability and operation of our properties and investments. We seek to accomplish this growth through the following:

•
Focusing on leasing to increase revenues and utilization of economies of scale to reduce operating expenses,
•
Expanding and re-tenanting existing franchise locations at competitive market rates,

47

•
Adding mixed-use elements to our Portfolio through our asset intensification initiatives. This may include adding elements such as multifamily, condominiums, hotel and self-storage at selected locations,
•
The acquisition of high quality real estate assets or portfolios of assets, and
•
Selling non-core assets.

            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:

•
Simon Brand Ventures ("Simon Brand") mall marketing initiatives revenue sources which include: payment systems (including marketing fees relating to the sales of bank-issued prepaid cards), national marketing alliances, static and digital media initiatives, business development, sponsorship, and events.
•
Simon Business Network ("Simon Business") offers property operating services to our tenants and others resulting from its relationships with vendors.

            We focus on high quality real estate across the retail real estate spectrum. We expand or renovate 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 routinely review and evaluate acquisition opportunities based on their complement to our Portfolio. Lastly, we are selectively expanding our international presence. Our international strategy 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:

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

Results Overview

            Diluted earnings per common unit increased $0.37 during 2006, or 20.3%, to $2.19 from $1.82 for 2005. The 2006 results include a $34.4 million gain (or $0.12 per diluted unit) from the sale of partnership interests in one of our European joint ventures to our new partner, Ivanhoe Cambridge, Inc. ("Ivanhoe"), an affiliate of Caisse de dépôt et placement du Québec, an $86.5 million gain related to our receipt of capital transaction proceeds and recognition of $15.6 million in income during 2006 (aggregating $0.36 per diluted unit) from contributed beneficial interests, representing the right to receive cash flow, capital distributions, and related profits and losses of Mall of America Associates ("MOAA"), and increases in Portfolio operations. Included in 2005 results is a $125.1 million gain (or $0.45 per diluted unit) realized upon the disposition of the Riverway and O'Hare International Center office building properties.

            Our core business fundamentals remained strong during 2006. Regional mall comparable sales per square foot ("psf") strengthened in 2006, increasing 5.8% to $476 psf from $450 psf in 2005, reflecting robust retail sales activity. Our regional mall average base rents increased 2.6% to $35.38 psf from $34.49 psf. In addition, our regional mall leasing spreads were $6.48 psf as of December 31, 2006, compared to $7.40 psf as of December 31, 2005, principally as a result of changes in leasing mix. The operating fundamentals of the Premium Outlet centers and community/lifestyle centers also contributed to the improved 2006 operating results, as seen in the following section entitled Portfolio Data. Finally, regional mall occupancy was 93.2% as of December 31, 2006, as compared to 93.1% as of December 31, 2005. During 2006, we disposed of three consolidated properties that had an aggregate book value of $39.4 million for aggregate sales proceeds of $43.9 million, resulting in a net gain on sale of $4.5 million. We also sold a property accounted for under the equity method of accounting for $8.8 million and recorded a gain of $7.7 million on its disposition.

            We continue to identify additional opportunities in various international markets. We look to continue focus on our joint venture interests in Europe, Japan, and other market areas abroad. In 2005, we realigned the interests in Simon Ivanhoe S.à.r.l. ("Simon Ivanhoe") with the result that our ownership and our new partner's ownership were increased to 50% each in the first quarter of 2006. In 2006, we increased our presence in Europe with the opening of Gliwice Shopping Center in Poland, a 380,000 square-foot center, and Giugliano in Italy, a 748,000 square foot center.

48


We also opened expansions to a Premium Outlet center in Toki, Japan and a shopping center in Wasquehal, France. We expect international development and redevelopment/expansion activity for 2007 to include:

•
Continuing construction by our Italian joint venture, Gallerie Commerciali Italia ("GCI"), of four shopping centers in Napoli, Roma, Nola (Napoli), and Milano with a gross leasable area ("GLA") of nearly 3.0 million square feet;
•
Completing and opening of Kobe-Sanda Premium Outlets, a 185,000 square foot Premium Outlet center located in Kobe, Japan, in which we hold a 40% ownership interest;
•
Completing and opening of Yeoju Premium Outlets, a 253,000 square foot Premium Outlet center located in South Korea. We hold a 50% ownership interest this property; and
•
Continuing construction on four Wal-Mart anchored shopping centers, and commencement of a fifth shopping center, all located in China. We hold a 32.5% ownership interest in these centers.

            Despite a significantly increasing interest rate environment that resulted in an approximate 93 basis point increase in LIBOR (5.32% at December 31, 2006, versus 4.39% at December 31, 2005), our effective overall borrowing rate for the twelve months ended December 31, 2006, decreased five basis points as compared to the twelve months ended December 31, 2005. Our financing activities for the twelve months ended December 31, 2006, are highlighted by the following:

•
We repaid $609.1 million in unsecured notes and term loans that bore interest ranging from 6.875% to 7.38%.
•
We paid off seven mortgages, unencumbering four properties, totaling $275.8 million that bore interest at fixed rates ranging from 6.76% to 8.25% and a variable rate of LIBOR plus 138 basis points.
•
We made the final $600 million payment on the facility we used to fund the cash portion of our 2004 acquisition of Chelsea Property Group, Inc. ("Chelsea").
•
On March 31, 2006, Standard & Poor's Rating Services raised our corporate credit rating to ‘A-‘ from ‘BBB+‘ which resulted in a decrease in the interest rate applicable to borrowings on our unsecured revolving $3 billion credit facility (the "Credit Facility") to 37.5 basis points over LIBOR from 42.5 basis points over LIBOR. The revision to our rating also decreased the facility fee on the Credit Facility to 12.5 basis points from 15 basis points.
•
We issued two tranches of senior unsecured notes in May totaling $800 million at a weighted average fixed interest rate of 5.93%. We used the net proceeds of $803.9 million, which includes $10.1 million proceeds from terminated forward-starting swap arrangements, to reduce the borrowings on our Credit Facility.
•
We issued two tranches of senior unsecured notes in August totaling $1.1 billion at a weighted average fixed interest rate of 5.73%. We used the proceeds of the offering to reduce borrowings on our Credit Facility.
•
We issued two tranches of senior unsecured notes in December totaling $1.25 billion at a weighted average fixed interest rate of 5.13%. We used the proceeds of the offering to reduce borrowings on our Credit Facility and reinvested the remaining $577.4 million to be used for general working capital purposes.
•
The outstanding balance of our Credit Facility decreased to approximately $305.1 million during the twelve months ended December 31, 2006, principally as a result of the above repayments. The December 31, 2006 outstanding balance consisted of Euro and Yen denominated borrowings only.
•
As a result of the acquisition of the remaining 50% interest in Mall of Georgia on November 1, 2006, we now own 100% of the mall, and the property was consolidated as of the acquisition date. This included the consolidation of the $192.0 million fixed rate mortgage on this property.

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 for our three domestic platforms. 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:

•
Properties that are consolidated in our consolidated financial statements,
•
Properties we account for under the equity method of accounting as joint ventures, and
•
the foregoing two categories of Properties on a total Portfolio basis.

49

 
   2006
   %/basis points
Change (1)
   2005
   %/basis points
Change (1)
   2004
   %/basis point
Change (1)
Regional Malls:                              
Occupancy                              
Consolidated     93.0%     -30 bps     93.3%   +60 bps     92.7%   +50 bps
Unconsolidated     93.5%   +80 bps     92.7%   +10 bps     92.6%   -10 bps
Total Portfolio     93.2%   +10 bps     93.1%   +40 bps     92.7%   +30 bps

Average Base Rent per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 34.79   2.2%   $ 34.05   3.8%   $ 32.81   4.9%
Unconsolidated   $ 36.47   3.3%   $ 35.30   1.5%   $ 34.78   3.1%
Total Portfolio   $ 35.38   2.6%   $ 34.49   3.0%   $ 33.50   3.8%

Comparable Sales Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 462   6.2%   $ 435   5.8%   $ 411   5.9%
Unconsolidated   $ 505   5.6%   $ 478   3.9%   $ 460   7.8%
Total Portfolio   $ 476   5.8%   $ 450   5.4%   $ 427   6.1%

Premium Outlet Centers:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy     99.4%   -20 bps     99.6%   +30 bps     99.3%   —
Average Base Rent per Square Foot   $ 24.23   4.6%   $ 23.16   6.0%   $ 21.85   —
Comparable Sales Per Square Foot   $ 471   6.1%   $ 444   7.8%   $ 412   —

Community/Lifestyle Centers:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Occupancy                              
Consolidated     91.5%   +200 bps     89.5%   -100 bps     90.5%   +340 bps
Unconsolidated     96.5%   +40 bps     96.1%   -140 bps     94.7%   -160 bps
Total Portfolio     93.2%   +160 bps     91.6%   -30 bps     91.9%   +170 bps

Average Base Rent per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 11.90   1.7%   $ 11.70   5.2%   $ 11.12   1.0%
Unconsolidated   $ 11.68   8.0%   $ 10.81   3.1%   $ 10.49   7.4%
Total Portfolio   $ 11.82   3.6%   $ 11.41   4.6%   $ 10.91   3.0%

Comparable Sales Per Square Foot
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated   $ 233   2.2%   $ 228   2.7%   $ 222   5.5%
Unconsolidated   $ 202   (1.0%)   $ 204   2.0%   $ 200   (2.9%)
Total Portfolio   $ 222   0.9%   $ 220   2.3%   $ 215   2.9%
(1)
Percentages may not recalculate due to rounding.

            Occupancy Levels and Average Base Rent Per Square Foot.    Occupancy and average base rent are based on mall and freestanding Gross Leaseable Area ("GLA") owned by us ("Owned GLA") in the regional malls, all tenants at the Premium Outlet centers, and all tenants at community/lifestyle centers. Our Portfolio has maintained stable occupancy and increased average base rents despite the current economic climate.

            Comparable Sales Per Square Foot.    Comparable sales include total reported retail tenant sales at Owned GLA (for mall and freestanding stores with less than 10,000 square feet) in the regional malls and all reporting tenants at the 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 charged, the percentage rent realized, and the recoverable expenses (common area maintenance, real estate taxes, etc.) that tenants can afford to pay.

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International Property Data

            The following key operating statistics are provided for our international properties which are accounted for using the equity method of accounting.

 
   2006
   2005
   2004
European Shopping Centers            
Occupancy   97.1%   98.1%   96.0%
Comparable sales per square foot   €391   €380   €386
Average rent per square foot   €26.29   €25.72   €25.03

International Premium Outlet Centers (1)
 
 
 
 
 
 
Occupancy   100%   100%   100%
Comparable sales per square foot   ¥89,238   ¥84,791   ¥88,925
Average rent per square foot   ¥4,646   ¥4,512   ¥4,358
(1)
Does not include our center in Mexico (Premium Outlets Punta Norte), which opened December 2004.

Critical Accounting Policies

            The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied resulting in a different presentation of our financial statements. From time to time, we evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information. Below is a discussion of accounting policies that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. For a summary of all of our significant accounting policies, see Note 3 of the Notes to Consolidated Financial Statements.

•
We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and account for our leases as operating leases. We accrue minimum rents on a straight-line basis over the terms of their respective leases. Substantially all of our retail tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. We recognize overage rents only when each tenant's sales exceeds its sales threshold.
•
We review Properties for impairment on a case-by-case basis whenever events or changes in circumstances indicate that our carrying value may not be recoverable. These circumstances include, but are not limited to, declines in cash flows, occupancy and sales per square foot. Changes in our estimates of the future undiscounted cash flows as well as the holding period for each Property could affect our conclusion on whether an impairment charge is necessary. We recognize an impairment of investment property when we estimate that the undiscounted cash flows are less than the carrying value of the Property. To the extent an impairment has occurred, we charge to income the excess of the carrying value of the Property over its estimated fair value. We may decide to sell Properties that are held for use and the sales prices of these Properties may differ from their carrying values.
•
To maintain Simon Property's qualification as a REIT under the Internal Revenue Code of 1986, as amended (the "Code"), Simon Property is required to distribute at least 90% of its taxable income in any given year and meet certain asset and income tests. The American Jobs Creation Act of 2004 builds in some flexibility to the REIT tax rules and imposes at most, monetary penalties in lieu of REIT disqualification, for the failure to meet certain REIT rules. These REIT savings provisions apply to issues discovered by the REIT after October 22, 2004. Simon Property monitors its business and transactions that may potentially impact its REIT status. In the unlikely event that Simon Property fails to maintain its REIT status, and it is not able to avail itself of the REIT savings provisions, then it would be required to pay federal income taxes at regular corporate income tax rates during the period it did not qualify as a REIT. If Simon Property lost its REIT status, it could not elect to be taxed as a REIT for four years unless its failure was due to reasonable cause

51

•
We make estimates as part of our allocation of the purchase price of acquisitions to the various components of the acquisition based upon the relative value of each component. The most significant components of our allocations are typically the allocation of fair value to the buildings as-if-vacant, land and the market value of in-place leases. In the case of the fair value of buildings and the allocation of value to land and other intangibles, our estimates of the values of these components will affect the amount of depreciation we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the market value of in-place leases, we make our best estimates of the tenants' ability to pay rents based upon the tenants' operating performance at the property, including the competitive position of the property in its market as well as sales psf, rents psf, and overall occupancy cost for the tenants in place at the acquisition date. Our assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases.
•
A variety of costs are incurred in the acquisition, development and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. Our capitalization policy on development properties is guided by SFAS No. 34 "Capitalization of Interest Cost" and SFAS No. 67 "Accounting for Costs and the Initial Rental Operations of Real Estate Properties." The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy and cease capitalization of costs upon opening.

Results of Operations

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

•
On November 2, 2006, we opened Rio Grande Valley Premium Outlets, a 404,000 square foot upscale outlet center in Mercedes, Texas, 20 miles east of McAllen, Texas, and 10 miles from the Mexico border.
•
On November 2, 2006, we received capital transaction proceeds of $102.2 million related to beneficial interests in a mall contributed to us in 2006 by the Simon family members who were partners in the underlying mall partnership. This transaction terminated our beneficial interests and resulted in the recognition of a $86.5 million gain.
•
On November 1, 2006, we acquired the remaining 50% interest in Mall of Georgia from our partner for $252.6 million, including the assumption of our $96.0 million share of debt.
•
On August 4, 2006, we opened Round Rock Premium Outlets, a 432,000 square foot Premium Outlet center located 20 minutes North of Austin, Texas in Round Rock, Texas.
•
In November 2005, we opened Rockaway Plaza, a 450,000 square foot community center located in Rockaway, New Jersey, adjacent to our Rockaway Townsquare.
•
On October 7, 2005, we opened Firewheel Town Center, a 785,000 square foot open-air regional mall located 15 miles northeast of downtown Dallas in Garland, Texas.
•
On July 15, 2005, we opened Wolf Ranch, a 600,000 square foot open-air community center located in Georgetown, Texas.
•
On May 6, 2005, we opened the 400,000 square foot Seattle Premium Outlets.
•
On March 15, 2005, we and our joint venture partner completed the construction of, obtained permanent financing for, and opened St. Johns Town Center (St. Johns), a 1.5 million square foot open-air retail project in Jacksonville, Florida. Prior to the project's completion, we consolidated St. Johns as we were responsible for 85% of the development costs and were deemed to be the Property's primary beneficiary. At opening and permanent financing, the ownership percentages were each adjusted to 50%, and we began to account for St. Johns using the equity method of accounting.

52

•
On January 1, 2005, Simon Property assigned the economic rights of Ocean County Mall, the only Property held directly by Simon Property, to us in exchange for 1,602,821 units and the settlement of an $88.8 million note receivable. We now consolidate the Property in our financial statements.
•
On December 15, 2004, we increased our ownership interest in Woodland Hills, located in Tulsa, Oklahoma, to approximately 94.5% for $119.5 million, including the assumption of our $39.7 million share of debt, resulting in this Property now being consolidated.
•
On November 19, 2004, we increased our ownership interest in Lehigh Valley, located in Whitehall, Pennsylvania, to 37.6% for approximately $42.3 million, including the assumption of our $25.9 million share of debt.
•
On October 22, 2004, Phase III of The Forum Shops at Caesars in Las Vegas opened.
•
On October 14, 2004, we and Simon Property completed the acquisition of Chelsea. The acquisition included 32 Premium Outlet centers, 4 Premium Outlet centers in Japan, 3 community/lifestyle centers, 21 other retail centers, 1 Premium Outlet in Mexico, and its development portfolio. The purchase price was approximately $5.2 billion including the assumption of debt. As a result, the remaining 50% interests in two Premium Outlet centers in Las Vegas and Chicago was acquired, which resulted in our owning a 100% interest in these Properties which were previously accounted for under the equity method of accounting.
•
On May 4, 2004, we purchased a 100% interest in Plaza Carolina in San Juan, Puerto Rico for approximately $309.0 million.
•
On April 27, 2004, we increased our ownership interest in Bangor Mall and Montgomery Mall to approximately 67.6% and 54.4%, respectively, for approximately $67.0 million and the assumption of our $16.8 million share of debt.
•
On April 1, 2004, we increased our ownership interest in Mall of Georgia Crossing from 50% to 100% for approximately $26.3 million, including the assumption of our $16.5 million share of debt.
•
On February 5, 2004 we purchased a 95% interest in Gateway Shopping Center in Austin, Texas for approximately $107.0 million.

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

•
On November 10, 2006, we opened Coconut Point, in Bonita Springs, Florida, a 1.2 million square foot, open-air shopping center complex with village, lakefront and community center areas.
•
On October 26, 2006, we opened the 200,000 square foot expansion of a shopping center in Wasquehal, France.
•
On October 14, 2006, we opened a 53,000 square foot expansion of Toki Premium Outlets.
•
On September 28, 2006, our Simon Ivanhoe joint venture opened Gliwice Shopping Center, a 380,000 square foot shopping center in Gliwice, Poland.
•
On May 31, 2006, GCI opened Giugliano, an 800,000 square foot center anchored by a hypermarket, in Italy.
•
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.
•
In March 2005, we opened Toki Premium Outlets in Japan.
•
On January 11, 2005, Metrocenter, a regional mall located in Phoenix, Arizona, was sold. We held a 50% interest in Metrocenter.
•
On October 14, 2004, we opened Clay Terrace, a 500,000 square foot lifestyle center located in Carmel, Indiana.
•
On May 10, 2004, we and our then joint venture partner (Chelsea) completed the construction and opened Chicago Premium Outlets.
•
On April 7, 2004, we sold the joint venture interest in a hotel property held by our management company.
•
On August 6, 2004, we completed the court ordered sale of our joint venture interest in Mall of America, in Minneapolis, Minnesota.

            For the purposes of the following comparisons between the years ended December 31, 2006 and 2005 and the years ended December 31, 2005 and 2004, 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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            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

            We sold the following properties in 2006 on the indicated date. Due to the limited significance of these properties on our financial statements, we did not report these properties as discontinued operations.

Property
   Date of Disposition    
Wabash Village   July 27, 2006
Trolley Square   August 3, 2006
Northland Plaza   December 22, 2006

Year Ended December 31, 2006 vs. Year Ended December 31, 2005

            Minimum rents, excluding rents from our consolidated Simon Brand and Simon Business initiatives, increased $75.7 million during the period, of which the Property Transactions accounted for $21.2 million of the increase. Total amortization of the fair market value of in-place leases increased minimum rents by $5.3 million. Comparable rents, excluding rents from Simon Brand and Simon Business, increased $54.5 million, or 2.9%. This was primarily due to leasing space at higher rents, resulting in an increase in base rents of $51.9 million. In addition, rents from carts, kiosks, and other temporary tenants increased comparable rents by $4.3 million in 2006.

            Overage rents increased $10.2 million or 12.0%, reflecting the increases in tenants' rents, particularly in the Premium Outlet centers.

            Tenant reimbursements, excluding Simon Business initiatives, increased $46.9 million. The Property Transactions accounted for $11.8 million. The remainder of the increase of $35.1 million, or 4.0%, was in comparable Properties and was due to inflationary increases in property operating costs.

            Management fees and other revenues increased $4.5 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, increased $22.8 million. The aggregate increase in other income included the following significant activity:

•
$11.9 million increase in our land sales activity on consolidated Properties;
•
$6.4 million increase in interest income as a result of increasing investment rates;
•
$3.7 million increase related to a gain on sale of a holding in a technology venture by Chelsea; and
•
a $0.8 million increase in other net activity of the comparable Properties.

            Consolidated revenues from Simon Brand and Simon Business initiatives increased $5.1 million to $162.2 million from $157.1 million. The increase in revenues is primarily due to increased event and sponsorship income, offset by decreased revenue as a result of structural changes to the gift card program.

            Simon Brand and Simon Business expenses decreased $11.4 million that primarily resulted from decreased operating expenses of the co-branded gift card program, which are included in total property operating expenses.

54


            Property operating expenses increased $19.6 million, $18.4 million of which was on comparable properties (representing an increase of 4.4%) and was principally as a result of inflationary increases.

            Home office and regional costs increased $12.0 million due to increased personnel costs, which is primarily due to the effect of the increase in our stock price on our stock-based compensation program.

            Other expenses increased $6.6 million primarily due to increases in ground rent expenses of $3.9 million and increased professional fees.

            Interest expense increased $22.8 million due to the impact of increased debt, primarily as a result of the issuances of unsecured notes in May, August, and December of 2006, and the annualized effect of our unsecured notes issued in June and November of 2005.

            Income from unconsolidated entities and beneficial interests increased $29.0 million primarily due to favorable results of operations at the joint venture properties, plus the increase in ownership of Simon Ivanhoe and the recording of income from our beneficial interest in MOAA of $15.6 million.

            We recorded a $132.8 million net gain on the sales of assets and interests in unconsolidated entities in 2006 that included a gain related to the sale of a beneficial interest of $86.5 million, a $34.4 million gain on the sale of 10.5% interest in Simon Ivanhoe, and the net gain on the sale of four non-core properties, including one joint venture property, of $12.2 million.

            Discontinued operations for 2005 included the net operating results of properties sold, including the sale of underlying ground adjacent to the Riverway and O'Hare International Center properties. There were no discontinued operations in 2006.

            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.

            Preferred unit distribution requirements increased due to the net impact of the redemption of the Series F Preferred Units, which resulted in a $7.0 million charge to net income related to the redemption.

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 $405.4 million during the period. The net effect of the Property Transactions increased minimum rents $368.0 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 $37.5 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 $40.8 million. In addition, increased rents from carts, kiosks, and other temporary tenants increased comparable rents by $8.2 million. Straight-line rents also increased by $12.9 million year over year.

            Overage rents increased $19.6 million of which $16.1 million related to the Property Transactions, principally the Chelsea Acquisition. Comparable overage rents increased $3.5 million.

            Tenant reimbursements, excluding Simon Business initiatives, increased $148.7 million. The Property Transactions accounted for $128.4 million, $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 support activities for new joint venture Properties.

            Total other income, excluding consolidated Simon Brand and Simon Business initiatives, decreased $3.9 million. The aggregate decrease in other income included the following significant activity:

•
$21.9 million decrease in our land sales activity on consolidated Properties;
•
the effect of the Property Transactions, principally Chelsea, which contributed $5.7 million to the increase for the ancillary fees received from the Japanese Premium Outlet Properties;

55

•
increase in interest income of $1.0 million;
•
collection of a $4.1 million note receivable that had been previously reserved for;
•
$2.5 million gain on the sale of air rights at the Villages at Southpark in North Carolina;
•
$2.2 million in gains related to the sale of stock received in prior period bankruptcy proceedings; and
•
$2.5 million in other net activity of the comparable Properties.

            Consolidated revenues from Simon Brand and Simon Business initiatives increased $24.2 million to $155.8 million from $131.6 million. The increase in revenues is primarily due to:

•
increased revenue from fees derived from our co-branded gift card programs,
•
increased rents and fees from service providers,
•
increased advertising rentals, and
•
increased event and sponsorship income.

            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 $68.5 million, $14.8 million of which was on comparable properties (representing an increase of 4.5%) 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 $247.6 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.

            Real estate taxes increased $49.2 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 $9.2 million, or 4.0%.

            Repairs and maintenance increased $16.8 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 $24.3 million, of which $25.4 million was due to the Property Transactions, offset by a $1.1 million decrease on comparable properties.

            Provision for credit losses decreased $8.8 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 $18.1 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:

•
the effect of the borrowings to finance the Property Transactions, including $41.4 million related to the Acquisition Facility,
•
the consolidation and/or acquisition of debt related to Property Transactions, principally the Chelsea Acquisition, which increased interest expense by $50.4 million,
•
increased average borrowings resulting from the impact of an unsecured note offering in August of 2004, and
•
increases in our average borrowing rates for our variable rate debt.

            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.

56

            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.

            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.

            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.

            Finally, preferred unit distribution requirements increased $38.4 million due to the issuance of preferred units in conjunction with the Chelsea Acquisition.

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 at or below 15-25% of total outstanding indebtedness by setting interest rates for each financing or refinancing based on current market conditions. Because of attractive fixed-rate debt opportunities in the past three years, floating rate debt currently comprises approximately 6% of our total consolidated debt. 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 $1.5 billion during 2006. 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 increased $592.3 million during 2006 to $929.4 million as of December 31, 2006, principally as a result of excess proceeds resulting from the issuance of additional unsecured notes in December of 2006. The December 31, 2006 and 2005 balances include $27.2 million and $42.3 million, respectively, related to our co-branded gift card programs, which we do not consider available for general working capital purposes.

            On December 31, 2006, our Credit Facility had available borrowing capacity of approximately $2.7 billion, net of outstanding borrowings of $305.1 million and letters of credit of $20.0 million. During 2006, the maximum amount outstanding under our Credit Facility was $2.0 billion and the weighted average amount outstanding was $1.1 billion. The weighted average interest rate was 4.80% for the year ended December 31, 2006.

            On March 31, 2006, Standard & Poor's Rating Services raised its corporate credit rating for us to 'A-' from 'BBB+' which resulted in a decrease in the interest rate applicable to borrowings on our unsecured revolving $3 billion credit facility (the "Credit Facility") to 37.5 basis points over LIBOR from 42.5 basis points over LIBOR. The revision to our rating also decreased the facility fee on our Credit Facility to 12.5 basis points from 15 basis points. On November 1, Moody's Investors Service raised our senior unsecured debt rating to A3.

            We and/or Simon Property also have access to public equity and long term unsecured debt markets and access to private equity from institutional investors at the Property level.

            On February 16, 2007, SPG-FCM Ventures, LLC ("SPG-FCM"), a newly formed joint venture owned 50% by the Operating Partnership and 50% by funds managed by Farallon Capital Management, L.L.C. ("Farallon"), entered into a definitive merger agreement with The Mills Corporation ("Mills") pursuant to which SPG-FCM will acquire Mills for $25.25 per common share in cash. The total value of the transaction is approximately $1.64 billion for all of the outstanding common stock of Mills and common units of The Mills Limited Partnership ("Mills LP") not owned by Mills, and approximately $7.3 billion, including assumed debt and preferred stock.

            The acquisition will be completed through a cash tender offer at $25.25 per share for all outstanding shares of Mills common stock, which is expected to conclude in late March or early April 2007. If successful, the tender offer will be followed by a merger in which all shares not acquired in the offer will be converted into the right to receive the offer price. Completion of the tender offer is subject to the receipt of valid tenders of sufficient shares to result in ownership of a majority of Mills' fully diluted common shares and the satisfaction of other customary conditions. As part of the

57


merger following the successful completion of the tender offer, Mills LP common unitholders will receive $25.25 per unit in cash, subject to certain qualified unitholders having the option to exchange their units for limited partnership units of the Operating Partnership based upon a fixed exchange ratio of 0.211 Operating Partnership units for each unit of Mills LP.

            In connection with the proposed transaction, we made a loan to Mills on February 16, 2007 to permit it to repay a loan facility provided by a previous bidder for Mills. The $1.188 billion loan to Mills carries a rate of LIBOR plus 270 basis points. The loan facility also permits Mills to borrow an additional $365 million on a revolving basis for working capital requirements and general corporate purposes. We or an affiliate of Mills will serve as the manager for all or a portion of the 38 properties that SPG-FCM will acquire an interest in following the completion the tender offer.

            We will be required to provide at least 50% of the funds necessary to complete the tender offer and any additional amounts required to complete the acquisition of Mills. We have and intend to obtain all funds necessary to fulfill our equity requirement for SPG-FCM, as well as any funds that we have or will provide in the form of loans to Mills, from available cash and the Credit Facility.

            Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $1.5 billion during 2006. We also received proceeds of $209.0 million from the sale of partnership interests and the sales of assets during 2006. In addition, we received net proceeds from all of our debt financing and repayment activities in 2006 of $1.1 billion. These activities are further discussed below in "Financing and Debt". We also:

•
repurchased units and preferred units amounting to $409.7 million,
•
paid unitholder distributions totaling $849.5 million,
•
paid preferred unit distributions totaling $104.7 million,
•
funded consolidated capital expenditures of $767.7 million. These capital expenditures include development costs of $317.2 million, renovation and expansion costs of $306.6 million, and tenant costs and other operational capital expenditures of $143.9 million, and
•
funded investments in unconsolidated entities of $157.3 million.

            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 necessary to maintain Simon Property's REIT qualification for 2007 and on a long-term basis. In addition, we expect to be able to obtain capital for nonrecurring capital expenditures, such as acquisitions, major building renovations and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from:

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

            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 5.3 years.

            On May 15, 2006, we sold two tranches of senior unsecured notes totaling $800 million at a weighted average fixed interest rate of 5.93%. The first tranche is $400.0 million at a fixed interest rate of 5.75% due May 1, 2012, and the second tranche is $400.0 million at a fixed interest rate of 6.10% due May 1, 2016. We used the proceeds of the offering and the termination of forward-starting interest rate swap arrangements to reduce borrowings on our Credit Facility.

            On August 29, 2006, we sold two tranches of senior unsecured notes totaling $1.1 billion at a weighted average fixed interest rate of 5.73%. The first tranche is $600.0 million at a fixed interest rate of 5.60% due September 1, 2011, and the second tranche is $500.0 million at a fixed interest rate of 5.875% due March 1, 2017. We used proceeds from the offering to reduce borrowings on our Credit Facility.

58


            On December 12, 2006, we sold two tranches of senior unsecured notes totaling $1.25 billion at a weighted average fixed interest rate of 5.13%. The first tranche is $600.0 million at a fixed interest rate of 5.00% due March 1, 2012, and the second tranche is $650.0 million at a fixed interest rate of 5.25% due December 1, 2016. We used proceeds from the offering to reduce borrowings on our Credit Facility and reinvested the remainder of the proceeds of approximately $577.4 million to be used for general working capital purposes.

            Credit Facility.    Other significant draws on our Credit Facility during the twelve-month period ended December 31, 2006 were as follows:

Draw Date
   Draw Amount
   Use of Credit Line Proceeds
01/03/06   $ 59,075   Repayment of a Term Loan (CPG Partners, L.P.), which had a rate of 7.26%.
01/06/06     140,000   Repayment of a mortgage, which had a rate of LIBOR plus 137.5 basis points.
01/20/06     300,000   Repayment of unsecured notes, which had a fixed rate of 7.375%.
03/27/06     600,000   Early repayment of the $1.8 billion facility we and Simon Property used to finance our acquisition of Chelsea in 2004.
04/03/06     58,000   Repayment of two secured mortgages which each bore interest at 8.25%.
11/01/06     200,000   Repayment of the preferred stock issued to fund the redemption of our Series F Preferred Stock.
11/15/06     250,000   Repayment of unsecured notes, which had a fixed rate of 6.875%.

            Other amounts drawn on our Credit Facility during the period were primarily for general working capital purposes. We repaid a total of $2.8 billion on our Credit Facility during the year ended December 31, 2006. The total outstanding balance on our Credit Facility as of December 31, 2006, was $305.1 million, and the maximum amount outstanding during the year was approximately $2.0 billion. During the year ended December 31, 2006, the weighted average outstanding balance on our Credit Facility was approximately $1.1 billion.

            Acquisition Facility.    We and Simon Property borrowed $1.8 billion in 2004 to finance the cash portion of our acquisition of Chelsea. As disclosed above, this facility has been fully repaid.

            Total secured indebtedness was $4.4 billion and $4.6 billion at December 31, 2006 and 2005, respectively. During the twelve-month period ended December 31, 2006, we repaid $275.8 million in mortgage loans, unencumbering four properties.

            As a result of the acquisition of the November 1, 2006 purchase of the remaining 50% interest in Mall of Georgia from our partner, we now own 100% of this Property, and consolidated it as of the acquisition date. This included the consolidation of its $192.0 million 7.09% fixed-rate mortgage.

            Our consolidated debt, adjusted to reflect outstanding derivative instruments and the effective weighted average interest rates for the years then ended consisted of the following (dollars in thousands):

Debt Subject to    
   Adjusted Balance
as of December 31, 2006
   Effective
Weighted Average
Interest Rate
   Adjusted Balance
as of December 31, 2005
   Effective
Weighted Average
Interest Rate
Fixed Rate   $ 14,548,226   6.02%   $ 11,908,050   6.22%
Variable Rate     846,263   5.01%     2,198,067   4.95%
   
 
 
 
    $ 15,394,489   5.97%   $ 14,106,117   6.02%
   
     
   

            As of December 31, 2006, we had interest rate cap protection agreements on $95.7 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 5.36% and a weighted average fixed receive rate of 3.72%. As of December 31, 2006 and December 31, 2005, these agreements effectively converted $370.0 million and $310.9 million of fixed rate debt to variable rate debt, respectively.

59


            Contractual Obligations and Off-balance Sheet Arrangements:    The following table summarizes the material aspects of our future obligations as of December 31, 2006 (dollars in thousands):

 
   2007
   2008 to 2009
   2010 to 2012
   After 2012
   Total
Long Term Debt                              
Consolidated (1)   $ 1,683,966   $ 2,463,153   $ 6,117,971   $ 5,075,066   $ 15,340,156
   
 
 
 
 
Pro Rata Share Of Long Term Debt:                              
  Consolidated (2)   $ 1,644,109   $ 2,449,549   $ 6,067,580   $ 4,989,902   $ 15,151,140
  Joint Ventures (2)     208,137     500,399     1,496,570     1,267,911     3,473,017
   
 
 
 
 
Total Pro Rata Share Of Long Term Debt     1,852,246     2,949,948     7,564,150     6,257,813     18,624,157
Consolidated Capital Expenditure Commitments (3)     718,187     161,448     —     —     879,635
Joint Venture Capital Expenditure Commitments (3)     160,649     29,277     —     —     189,926
Consolidated Ground Lease Commitments(4)     16,790     33,999     50,309     688,868     789,966
   
 
 
 
 
Total   $ 2,747,872   $ 3,174,672   $ 7,614,459   $ 6,946,681   $ 20,483,684
   
 
 
 
 
(1)
Represents principal maturities only and therefore, excludes net premiums and discounts and fair value swaps of $54,333.

(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.

(4)
Represents only the minimum non-cancellable lease period, excluding applicable lease extension and renewal options.

            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 consist primarily of our investments in real estate joint ventures which are common in the real estate industry and are described in Note 7 of the notes to the accompanying financial statements. Joint venture debt is the liability of the joint venture, is typically secured by the joint venture Property, and is non-recourse to us. As of December 31, 2006, we have loan guarantees and other guarantee obligations to support $43.6 million and $19.0 million, respectively, to support our total $3.5 billion share of joint venture mortgage and other indebtedness presented in the table above.

            During 2006, the holders of 230,486 Series I Preferred units exercised their rights to exchange the preferred units for shares of Simon Property's Series I Preferred Stock, and 11,377 Series I Preferred units were redeemed for cash. In addition, 42 unitholders converted 1,149,077 units of the 7% Cumulative Convertible Preferred Units into 869,574 units of the Operating Partnership. On October 4, 2006, we redeemed all 8,000,000 units of the 83/4% Series F Cumulative Redeemable Preferred Units held by Simon Property. The funds to effect this redemption were obtained from the issuance of a new series of preferred unit (Series K) to Simon Property, which was repurchased prior to year end. As a result of the redemption transaction, we recorded a $7.0 million charge to net income.

            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 venture properties may initiate these provisions at any time and if we determine it is in Simon Property's stockholders' best interests for us to purchase the joint venture interest and we believe we have adequate liquidity to execute the purchases of the interests

60

without hindering our cash flows or liquidity, then we may elect to buy. 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 or to reinvest in development, redevelopment, or expansion opportunities.

            Acquisitions.    The acquisition of high quality individual properties or portfolios of properties remain an integral component of our growth strategies.

            On November 1, 2006, we acquired the remaining 50% interest in Mall of Georgia, a regional mall Property, from our partner for $252.6 million, including the assumption of our $96.0 million share of debt. As a result, we now own 100% of Mall of Georgia and the property was consolidated as of the acquisition date.

            Dispositions.    We continue to pursue the sale of Properties that no longer meet our strategic criteria. In 2006, we disposed of three consolidated properties and one property in which we held a 50% interest and accounted for under the equity method. We received net proceeds of $52.7 million and recorded our share of a gain on the disposals totaling $12.2 million. We do not believe the sale of these properties will have a material impact on our future results of operations or cash flows. We believe the disposition of these properties will enhance the average overall quality of our Portfolio. In addition, we also received capital transaction proceeds related to a beneficial interest that we held during 2006 in a mall partnership, which resulted in an $86.5 million gain, terminating our beneficial interests in this entity.

            New U.S. Developments.    The following describes certain of our new development projects, the estimated total cost, and our share of the estimated total cost and our share of the construction in progress balance as of December 31, 2006 (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:                        
Domain, The   Austin, TX   700,000   195   195   140   1st Quarter 2007
Hamilton Town Center   Noblesville, IN   950,000   118   59   7   1st Quarter 2008
Palms Crossing   McAllen, TX   385,000   65   65   22   4th Quarter 2007
Philadelphia Premium Outlets   Limerick, PA   430,000   114   114   34   4th Quarter 2007
Pier Park   Panama City Beach, FL   920,000   127   127   43   1st Quarter 2008
Village at SouthPark, The   Charlotte, NC   81,000   26   26   15   1st Quarter 2007
(a)
Represents the project costs net of land sales, tenant reimbursements for construction, and other items (where applicable).

            We expect to fund these projects with available cash flow from operations, borrowings from our Credit Facility, or project specific construction loans. We expect our share of total 2007 new development costs for these and our other new development projects to be approximately $600 million.

            Strategic Expansions and Renovations.    In addition to new development, we also incur costs related to construction for significant renovation and/or expansion projects at our properties. Included in these projects are the renovation and addition of Crate & Barrel and Nordstrom at Burlington Mall, expansions and life-style additions at Lehigh Valley Mall, Smith Haven Mall and Town Center at Boca Raton, a Neiman Marcus expansion at Lenox Square, addition of Phase II expansions at Las Vegas Premium Outlets, Orlando Premium Outlets, and St. Johns Town Center, and the acquisition and renovation of several anchor stores previously operated by Federated.

            We expect to fund these capital projects with available cash flow from operations or borrowings from our Credit Facility. We expect to invest a total of approximately $675 million (our share) on expansion and renovation activities in 2007.

61


            Capital Expenditures on Consolidated Properties.    The following table summarizes total capital expenditures on consolidated Properties on a cash basis:

 
   2006
   2005
   2004
New Developments   $ 317   $ 341   $ 215
Renovations and Expansions     307     252     244
Tenant Allowances     52     69     73
Operational Capital Expenditures     92     64     17
   
 
 
Total   $ 768   $ 726   $ 549
   
 
 

            International.    We typically reinvest net cash flow from our international investments to fund future international development activity. We believe this strategy mitigates some of the risk of our initial investment and our exposure to changes in foreign currencies. We have also funded our European investments with Euro-denominated borrowings that act as a natural hedge against local currency fluctuations. This has also been the case with our Premium Outlet joint ventures in Japan and Mexico where we use Yen and Peso denominated financing. We expect our share of international development for 2007 to approximate $200 million.

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

            The carrying amount of our total combined investment in Simon Ivanhoe and Gallerie Commerciali Italia ("GCI"), as of December 31, 2006, net of the related cumulative translation adjustment, was $338.1 million. Our investments in Simon Ivanhoe and GCI are accounted for using the equity method of accounting. Currently four European developments are under construction which will add approximately 3 million square feet of GLA for a total net cost of approximately €571 million, of which our share is approximately €151 million, or $199 million based on current Euro:USD exchange rates.

            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 Simon Ivanhoe. On February 13, 2006, we sold a 10.5% interest in this joint venture to Ivanhoe for €45.2 million, or $53.9 million and recorded a gain on the disposition of $34.4 million. This gain is reported in "gain on sales of interests in unconsolidated entities" in the consolidated statements of operations. We then settled all remaining share purchase commitments from the company's founders, 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 Simon Ivanhoe to 50% each.

            As of December 31, 2006, the carrying amount of our 40% joint venture investment in the five Japanese Premium Outlet centers net of the related cumulative translation adjustment was $281.2 million. Currently, Kobe-Sanda Premium Outlets, a 185,000 square foot Premium Outlet Center, is under construction in Kobe, Japan. The project's total projected net cost is JPY 5.9 billion, of which our share is approximately JPY 2.4 billion, or $19.8 million based on current Yen:USD exchange rates.

            In addition to the developments in Europe and Japan, construction has begun on Yeoju Premium Outlets, a 253,000 square foot center near Seoul, South Korea. The project's total projected net cost is KRW 78.7 billion, of which our share is approximately KRW 39.1 billion, or approximately $42.6 million based on current KRW:USD exchange rates.

            During 2006, we finalized the formation of joint venture arrangements to develop and operate shopping centers in China. The shopping centers will be anchored by Wal-Mart stores and will be through a 32.5% ownership in a joint venture entity, Great Mall Investments, Ltd. ("GMI"). We are planning on initially developing five centers in China, four of which are under construction as of December 31, 2006. Our total equity commitment for these centers approximates $60 million and as of December 31, 2006, our combined investment in GMI is approximately $15.9 million.

62

Distributions

            On February 2, 2007, Simon Property's Board of Directors ("Board") approved an increase in the annual distribution rate by 10.5% to $3.36 per unit. Distributions during 2006 aggregated $3.04 per unit and distributions during 2005 aggregated $2.80 per unit. We are required to pay a minimum level of distributions to maintain Simon Property's status as a REIT. Our distributions typically exceed our net income generated in any given year primarily because of depreciation, which is a "non-cash" expense. Future distributions will be determined by the Board based on actual results of operations, cash available for distributions, and what may be required to maintain Simon Property's status as a REIT.


Item 7A. Qualitative and Quantitative Disclosure About Market Risk

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


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 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, 2006.

            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 2006 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of asset;
•
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, 2006. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

            Based on our assessment, we believe that, as of December 31, 2006, our internal control over financial reporting is effective based on those criteria.

            Our independent registered public accounting firm has issued an audit report on our assessment of our internal control over financial reporting. Their report is included within Item 9A of this Form 10-K.

63

Report Of Independent Registered Public Accounting Firm

The Board of Directors of Simon Property Group, Inc. and The Partners of
Simon Property Group, L.P.:

            We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, included within Item 9A of this Form 10-K, that Simon Property Group, L.P. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Simon Property Group, L.P. 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 Partnership's internal control over financial reporting based on our audit.

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

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

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

            In our opinion, management's assessment that Simon Property Group, L.P. and Subsidiaries maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Simon Property Group, L.P. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on the COSO criteria.

            We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Simon Property Group, L.P. and Subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations and comprehensive income, partners' equity and cash flows for each of the three years in the period ended December 31, 2006 and the financial statement schedule listed in the Index at Item 15, and our report dated March 14, 2007 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP                                

Indianapolis, Indiana
March 14, 2007

64


Item 9B. Other Information

            None.


Part III

Item 10. Directors, Executive Officers and Corporate Governance

            We are a limited partnership and Simon Property is our sole general partner. We do not have directors or executive officers or any equity securities registered under the Securities Exchange Act of 1934, as amended.


Item 11. Executive Compensation

            We are a limited partnership and Simon Property is our sole general partner. We do not have directors or executive officers or any equity securities registered under the Securities Exchange Act of 1934, as amended.


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

            We are a limited partnership and Simon Property is our sole general partner. We do not have directors or executive officers or any equity securities registered under the Securities Exchange Act of 1934, as amended.


Item 13. Certain Relationships and Related Transactions, and Director Independence

            We are a limited partnership and Simon Property is our sole general partner. We do not have directors or executive officers or any equity securities registered under the Securities Exchange Act of 1934, as amended.


Item 14. Principal Accountant Fees and Services

            The Audit Committee of Simon Property's Board of Directors pre-approves all audit and permissible non-audit services to be provided by Ernst & Young LLP, our independent registered public accounting firm, prior to commencement of services. The Audit Committee has delegated to the Chairman of the Audit Committee the authority to pre-approve specific services up to specified individual and aggregate fee amounts. These pre-approval decisions are presented to the full Audit Committee at the next scheduled meeting after such approvals are made.

            We have incurred fees as shown below for services from Ernst & Young as our independent registered public accounting firm. Ernst & Young has advised us that it has billed or will bill these indicated amounts for the following categories of services for the years ended December 31, 2006 and 2005, respectively:

 
   2006
   2005
Audit Fees (1)   $ 2,362,400   $ 2,797,000
Audit-Related Fees (2)     3,834,400     3,575,450
Tax Fees     105,600     58,520
All other Fees     —     —
(1)
Audit Fees include fees for the audit of the financial statements and the attestation on management's report on internal control over financial reporting and the effectiveness of internal control over financial reporting for Simon Property, Simon Property Group, L.P. and certain of their subsidiaries and services associated with SEC registration statements, periodic reports, and other documents issued in connection with securities offerings.

(2)
Audit-Related Fees include audits of individual properties and schedules of recoverable common area maintenance costs to comply with lender, joint venture partner or tenant requirements as well as accounting consultation and due diligence services.

65


Part IV

Item 15. Exhibits and Financial Statement Schedules

 
    
   Page No.
(1)   Financial Statements    
    Report of Independent Registered Public Accounting Firm   67
    Consolidated Balance Sheets as of December 31, 2006 and 2005   68
    Consolidated Statements of Operations for the years ended December 31, 2006, 2005 and 2004   69
    Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004   70
    Consolidated Statements of Partners' Equity for the years ended December 31, 2006, 2005 and 2004   71
    Notes to Financial Statements   72
(2)   Financial Statement Schedule    
    Simon Property Group, L.P. Schedule III — Schedule of Real Estate and Accumulated Depreciation   109
    Notes to Schedule III   116
(3)   Exhibits    
    The Exhibit Index attached hereto is hereby incorporated by reference to this Item   117

66

Report Of Independent Registered Public Accounting Firm

The Board of Directors of
Simon Property Group, Inc. and The Partners of Simon Property Group, L.P.:

            We have audited the accompanying consolidated balance sheets of Simon Property Group, L.P. and Subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations and comprehensive income, partners' equity and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements are the responsibility of Simon Property Group, L.P. and Subsidiaries' management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

            In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Simon Property Group, L.P. and Subsidiaries at December 31, 2006 and 2005, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the base financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

            We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Simon Property Group, L.P. and Subsidiaries' internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2007, expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP                                

Indianapolis, Indiana
March 14, 2007

67


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

 
   December 31,
2006
   December 31,
2005
ASSETS:            
  Investment properties, at cost   $ 22,863,963   $ 21,745,309
  Less — accumulated depreciation     4,606,130     3,809,293
   
 
      18,257,833     17,936,016
  Cash and cash equivalents     929,360     337,048
  Tenant receivables and accrued revenue, net     380,128     357,079
  Investment in unconsolidated entities, at equity     1,526,235     1,562,595
  Deferred costs and other assets     990,899     938,301
   
 
    Total assets   $ 22,084,455   $ 21,131,039
   
 

LIABILITIES:
 
 
 
 
 
 
  Mortgages and other indebtedness   $ 15,394,489   $ 14,106,117
  Accounts payable, accrued expenses, intangibles, and deferred revenue     1,109,190     1,092,334
  Cash distributions and losses in partnerships and joint ventures, at equity     227,588     194,476
  Other liabilities, minority interest, and accrued distributions     178,250     163,524
   
 
    Total liabilities     16,909,517     15,556,451
   
 

COMMITMENTS AND CONTINGENCIES
 
 
 
 
 
 

7.75%/8.00% Cumulative Redeemable Preferred Units, 850,698 units issued and outstanding, respectively, at liquidation value
 
 
85,070
 
 
85,070

PARTNERS' EQUITY:
 
 
 
 
 
 
  Preferred units, 23,456,495 and 32,900,856 units outstanding, respectively. Liquidation values $1,151,325 and $1,398,263, respectively     1,157,010     1,396,679
 
General Partner, 221,431,071 and 220,361,581 units outstanding, respectively
 
 
3,095,022
 
 
3,227,274
 
Limited Partners, 59,113,438 and 58,522,624 units outstanding, respectively
 
 
837,836
 
 
865,565
   
 
    Total partners' equity     5,089,868     5,489,518
   
 
    Total liabilities and partners' equity   $ 22,084,455   $ 21,131,039
   
 

The accompanying notes are an integral part of these statements.

68


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

 
   For the Year Ended December 31,
  
 
   2006
   2005
   2004
  
REVENUE:                    
  Minimum rent   $ 2,020,856   $ 1,937,657   $ 1,528,669  
  Overage rent     95,767     85,536     65,906  
  Tenant reimbursements     946,554     896,901     741,653  
  Management fees and other revenues     82,288     77,766     72,737  
  Other income     186,689     168,993     158,809  
   
 
 
 
    Total revenue     3,332,154     3,166,853     2,567,774  
   
 
 
 
EXPENSES:                    
  Property operating     441,203     421,576     353,051  
  Depreciation and amortization     856,202     849,911     602,275  
  Real estate taxes     300,174     291,113     241,923  
  Repairs and maintenance     105,983     105,489     88,713  
  Advertising and promotion     88,480     92,377     68,074  
  Provision for credit losses     9,500     8,127     16,902  
  Home and regional office costs     129,334     117,374     91,178  
  General and administrative     16,652     17,701     16,776  
  Other     64,397     57,762     39,627  
   
 
 
 
    Total operating expenses     2,011,925     1,961,430     1,518,519  
   
 
 
 
OPERATING INCOME     1,320,229     1,205,423     1,049,255  
Interest expense     (821,858 )   (799,092 )   (653,793 )
Minority interest in income of consolidated entities     (11,524 )   (13,743 )   (9,687 )
Income tax expense of taxable REIT subsidiaries     (11,370 )   (16,229 )   (11,770 )
Income from unconsolidated entities and beneficial interests, net     110,819     81,807     81,113  
Gain (loss) on sales of assets and interests in unconsolidated entities, net     132,787     (838 )   (760 )
   
 
 
 
    Income from continuing operations     719,083     457,328     454,358  
Results of operations from discontinued operations     418     8,242     (9,829 )
Gain (loss) on disposal or sale of discontinued operations, net     84     146,945     (252 )
   
 
 
 
NET INCOME     719,585     612,515     444,277  
Preferred unit requirement     (104,674 )   (101,934 )   (63,566 )
   
 
 
 
NET INCOME AVAILABLE TO UNITHOLDERS   $ 614,911   $ 510,581   $ 380,711  
   
 
 
 
NET INCOME AVAILABLE TO UNITHOLDERS ATTRIBUTABLE TO:                    
    General Partner   $ 486,145   $ 401,895   $ 295,954  
    Limited Partners     128,766     108,686     84,757  
   
 
 
 
    Net income   $ 614,911   $ 510,581   $ 380,711  
   
 
 
 
BASIC EARNINGS PER UNIT                    
    Income from continuing operations   $ 2.20   $ 1.27   $ 1.47  
    Discontinued operations     —     0.55     (0.04 )
   
 
 
 
    Net Income   $ 2.20   $ 1.82   $ 1.43  
   
 
 
 
DILUTED EARNINGS PER UNIT                    
    Income from continuing operations   $ 2.19   $ 1.27   $ 1.47  
    Discontinued operations     —     0.55     (0.04 )
   
 
 
 
    Net Income   $ 2.19   $ 1.82   $ 1.43  
   
 
 
 
Net income   $ 719,585   $ 612,515   $ 444,277  
Unrealized gain on interest rate hedges     6,518     3,619     5,410  
Net income on derivative instruments reclassified from accumulated other comprehensive income (loss) into interest expense     2,263     (1,814 )   (4,548 )
Currency translation adjustments     1,706     (9,400 )   3,970  
Other income (loss)     1,404     (1,015 )   (463 )
   
 
 
 
Comprehensive Income   $ 731,476   $ 603,905   $ 448,646  
   
 
 
 

            The accompanying notes are an integral part of these statements.

69


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

 
   For the Year Ended December 31,
  
 
   2006
   2005
   2004
  
CASH FLOWS FROM OPERATING ACTIVITIES:                    
  Net income   $ 719,585   $ 612,515   $ 444,277  
    Adjustments to reconcile net income to net cash provided by
operating activities —		                    
      Depreciation and amortization     812,718     818,468     615,902  
      Impairment on Investment Properties     -     -     18,000  
      (Gain) loss on sales of assets and interests in unconsolidated entities     (132,787 )   838     760  
      (Gain) loss on disposal or sale of discontinued operations, net     (84 )   (146,945 )   252  
      Straight-line rent     (17,020 )   (21,682 )   (8,981 )
      Minority interest     11,524     13,743     9,687  
      Minority interest distributions     (37,200 )   (24,770 )   (20,426 )
      Equity in income of unconsolidated entities     (110,819 )   (81,807 )   (81,113 )
      Distributions of income from unconsolidated entities     94,605     106,954     97,666  
   
Changes in assets and liabilities —
 
 
 
 
 
 
 
 
 
 
      Tenant receivables and accrued revenue, net     (3,799 )   22,803     (34,900 )
      Deferred costs and other assets     (132,570 )   (38,417 )   (59,037 )
      Accounts payable, accrued expenses, intangibles, deferred revenues and
other liabilities		     69,214     (91,329 )   97,005  
   
 
 
 
        Net cash provided by operating activities     1,273,367     1,170,371     1,079,092  
   
 
 
 

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
  Acquisitions     (158,394 )   (37,505 )   (2,359,056 )
  Capital expenditures, net     (767,710 )   (726,386 )   (546,149 )
  Cash from acquisitions     —     —     51,189  
  Cash impact from the consolidation and de-consolidation of properties     8,762     (8,951 )   2,507  
  Net proceeds from sale of partnership interest, other assets and discontinued operations     209,039     384,104     51,271  
  Investments in unconsolidated entities     (157,309 )   (76,710 )   (84,876 )
  Distributions of capital from unconsolidated entities and other     263,761     413,542     142,572  
   
 
 
 
    Net cash used in investing activities     (601,851 )   (51,906 )   (2,742,542 )
   
 
 
 

CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
  Partnership contributions and issuance of units     217,237     13,811     5,756  
  Purchase of preferred units, partnership units, and treasury units     (16,150 )   (193,837 )   (40,195 )
  Preferred Unit redemptions     (393,558 )   (579 )   (59,681 )
  Minority interest contributions     2,023     -     464  
  Partnership distributions     (954,159 )   (885,351 )   (741,354 )
  Mortgage and other indebtedness proceeds, net of transaction costs     5,507,735     3,962,778     5,710,886  
  Mortgage and other indebtedness principal payments     (4,442,332 )   (4,197,795 )   (3,221,906 )
   
 
 
 
    Net cash used in financing activities     (79,204 )   (1,300,973 )   1,653,970  
   
 
 
 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
 
592,312
 
 
(182,508
)
 
(9,480
)

CASH AND CASH EQUIVALENTS, beginning of year
 
 
337,048
 
 
519,556
 
 
529,036
 
   
 
 
 

CASH AND CASH EQUIVALENTS, end of year
 
$
929,360
 
$
337,048
 
$
519,556
 
   
 
 
 

            The accompanying notes are an integral part of these statements.

70


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

 
   Preferred
Units
   Simon Property
(Managing General
Partner)
   Limited
Partners
   Note Receivable
from Simon
Property
   Total
Partners'
Equity
  
Balance at December 31, 2003   $ 543,444   $ 2,885,085   $ 876,627   $ (91,163 ) $ 4,213,993  
   
 
 
 
 
 
General partner contributions (392,943 units)           10,654                 10,654  
Repurchase of Series H Variable Rate Preferred Units (78,012 units)     (1,950 )                     (1,950 )
Limited Partner common units issued (120,671 units)                 6,000           6,000  
Issuance of 7.5% Cumulative Redeemable Preferred Units (4,277 units)     428                       428  
Issuance of limited partner Common Units in the Chelsea acquisition (4,652,232 units)                 263,223           263,223  
Issuance of Common Units in the Chelsea acquisition (12,978,795 units)           733,172                 733,172  
Issuance of Series I Convertible Perpetual Preferred Units (18,015,506 units)     900,776                       900,776  
Issuance of Series J Preferred Units in the Chelsea acquisition (796,948 units)     39,847                       39,847  
Accretion of preferred units     406                       406  
Series C Preferred units (1,061,580 units) converted to common units (803,341 units)     (29,724 )   29,724                 —  
Series C Preferred units (9,876 units) converted to limited partner common units (7,473 units)     (277 )         277           —  
Series D Preferred units repurchased (1,156,039 units)     (34,681 )                     (34,681 )
Series E Preferred unit redemption (1,000,000 units)     (25,000 )                     (25,000 )
Limited partner units converted to common units (4,194,117 units)           73,726     (73,726 )         —  
Treasury Unit purchase (317,300 units)           (20,400 )               (20,400 )
Stock incentive program (365,602 units, net)           (33 )               (33 )
Amortization of stock incentive           11,935                 11,935  
Common Units retired (93,000)           (5,385 )               (5,385 )
Other (includes 234,740 limited partner units converted to cash and payments on note)           26     (17,846 )   2,359     (15,461 )
Adjustment to limited partners' interest from increased ownership in the Operating Partnership           9,016     (7,777 )         1,239  
Distributions     (63,566 )   (532,164 )   (151,809 )         (747,539 )
Net income     63,566     295,954     84,757           444,277  
Other comprehensive income           3,779     590           4,369  
   
 
 
 
 
 
Balance at December 31, 2004   $ 1,393,269   $ 3,495,089   $ 980,316   $ (88,804 ) $ 5,779,870  
   
 
 
 
 
 
General partner contributions (206,464 units)           6,184                 6,184  
Series J Preferred Stock premium net of amortization     7,171                       7,171  
Accretion of preferred units     306                       306  
Series C Preferred units (118,679 units) converted to limited partner common units (89,805 units)     (3,324 )         3,324           —  
Series D Preferred units redeemed (19,287 units)     (578 )                     (578 )
Series I Preferred units redeemed (3,300 units)     (165 )                     (165 )
Limited partner units converted to common units (2,282,808 units)           37,381     (37,381 )         —  
Treasury Unit purchase (2,815,400 units)           (182,408 )               (182,408 )
Stock incentive program (400,541 units, net)           —                 —  
Amortization of stock incentive           14,320                 14,320  
Merger of SPG Realty Consultants LP into SPG LP           15,231     4,245           19,476  
Common Units retired (18,000)           (1,107 )               (1,107 )
Other (includes 160,992 limited partner units converted to cash)           505     (11,267 )         (10,762 )
Adjustment to limited partners' interest from increased ownership in the Operating Partnership           24,603     (24,603 )         0  
Assignment of economic interest in Ocean County (1,602,821 units)           39,289     10,953     88,804     139,046  
Distributions     (101,934 )   (617,136 )   (166,670 )         (885,740 )
Net income     101,934     401,895     108,686           612,515  
Other comprehensive income           (6,572 )   (2,038 )         (8,610 )
   
 
 
 
 
 
Balance at December 31, 2005   $ 1,396,679   $ 3,227,274   $ 865,565   $ —   $ 5,489,518  
   
 
 
 
 
 
General partner contributions (414,659 units)           14,906                 14,906  
Series J Preferred Stock premium and amortization     (329 )                     (329 )
Accretion of preferred units     587                       587  
Series C Preferred units (1,149,077 units) converted to limited partner common units (869,552 units)     (32,174 )         32,174           —  
Series I Preferred units redeemed (11,377 units)     (569 )                     (569 )
Series I Preferred units (283,907 units) converted to common units (222,933 units)     (14,195 )   14,195                 —  
Limited partner units converted to common units (86,800 units)           1,247     (1,247 )         —  
Series F Preferred Unit redemption (8,000,000 units)     (192,989 )                     (192,989 )
Series K Preferred Unit issuance (8,000,000 units)     200,000                       200,000  
Series K Preferred Unit redemption (8,000,000 units)     (200,000 )                     (200,000 )
Stock incentive program (415,098 units, net)           —                 —  
Amortization of stock incentive           23,369                 23,369  
Common Units retired (70,000)           (6,405 )               (6,405 )
Other (includes 191,938 limited partner units converted to cash)           608     (16,145 )         (15,537 )
Adjustment to limited partners' interest from increased ownership in the Operating Partnership           (3,951 )   3,951           0  
Distributions     (104,674 )   (671,812 )   (177,673 )         (954,159 )
Net income     104,674     486,145     128,766           719,585  
Other comprehensive income           9,446     2,445           11,891  
   
 
 
 
 
 
Balance at December 31, 2006   $ 1,157,010   $ 3,095,022   $ 837,836   $ —   $ 5,089,868  
   
 
 
 
 
 

             The accompanying notes are an integral part of these statements.

71


Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements

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

1.    Organization

            Simon Property Group, L.P. is a Delaware limited partnership and a majority owned subsidiary of Simon Property Group, Inc. In these notes to consolidated financial statements, the terms "Operating Partnership", "we", "us" and "our" refer to Simon Property Group, L.P. and its subsidiaries and the term "Simon Property" refers specifically to Simon Property Group, Inc. Simon Property is a self-administered and self-managed real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to our partnership agreement, we are required to pay all expenses of Simon Property.

            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, 2006, we owned or held an interest in 286 income-producing properties in the United States, which consisted of 171 regional malls, 69 community/lifestyle centers, 36 Premium Outlet centers and 10 other shopping centers or outlet centers in 38 states and Puerto Rico (collectively, the "Properties", and individually, a "Property"). We also own interests in five parcels of land held in the United States for future development (together with the Properties, the "Portfolio"). In the United States, we have five new properties currently under development aggregating approximately 3.5 million square feet which will open during 2007 or early 2008. Internationally, we have ownership interests in 53 European shopping centers (France, Italy, and Poland); five Premium Outlet centers in Japan; and one Premium Outlet center in Mexico. We also have begun construction on a Premium Outlet center in South Korea and, through a joint venture arrangement we have ownership interests in four shopping centers under construction in China.

            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 payment systems (including marketing fees relating to the sales of bank-issued prepaid cards), national marketing alliances, static and digital media initiatives, business development, sponsorships, and events,
•
Forming consumer focused strategic corporate alliances, and
•
Offering property operating services to our tenants and others resulting from our relationships with vendors.

Structural Simplification

            On January 1, 2005, we simplified our organizational structure by merging SPG Realty Consultants, L.P. ("SPG Realty"), a subsidiary of Simon Property, into the Operating Partnership. SPG Realty was the Operating Partnership's paired-unit affiliate that resulted from the business combination with Corporate Property Investors, Inc. The accompanying statement of partners' equity for the year ended December 31, 2005, reflects the additional partner's equity as a result of this merger.

2. Basis of Presentation and Consolidation

            The accompanying consolidated financial statements include the accounts of the Operating Partnership and its 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.

72

            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 or the joint venture partner is obligated to make additional contributions to the extent of any capital account deficits and 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 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, 2006, of our 345 properties we consolidated 199 wholly-owned properties and consolidated 19 additional properties that are less than wholly-owned, but which we control or for which we are the primary beneficiary. We account for the remaining 127 properties using the equity method of accounting (joint venture properties). We manage the day-to-day operations of 58 of the 127 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 our net operating results after preferred distributions based on our partners' respective ownership.

            In addition, Simon Property owns certain of our preferred units. Simon Property's weighted average ownership interest in the Operating Partnership was as follows:

 
   For the Year Ended December 31,
  
 
   2006
   2005
   2004
  
Weighted average ownership interest   79.1 % 78.7 % 77.7 %

            As of December 31, 2006 and 2005, Simon Property's ownership interest was 78.9% and 79.0%, respectively. We adjust the limited partners' interest at the end of each period to reflect their ownership interest.

            Preferred distributions in the accompanying statements of operations and cash flows represent distributions on outstanding preferred units of limited partnership interest.

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 repair 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

73

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 plus its residual value 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.

            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" (SFAS 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 and five properties sold during 2004, as described in Note 4 to discontinued operations in the accompanying consolidated statements of operations and comprehensive income for 2005 and 2004. Revenues included in discontinued operations were $29.3 million for the year ended December 31, 2005 and $62.7 million for the year ended December 31, 2004. There were no discontinued operations reported in 2006, as assets sold in 2006 were not material.

            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

74

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 to the banks for further processing. As a result, cash and cash equivalents, as of December 31, 2006, includes a balance of $27.2 million related to these 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.

            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.

            In January 2006, an entity controlled by the Simon family assigned to us its right to receive cash flow, capital distributions, and related profits and losses with respect to a portion of its ownership interest in the Mall of America through Mall of America Associates ("MOAA"). This beneficial interest was transferred subject to a credit facility repayable from MOAA's distributions from the property. As a result of this assignment, we began recognizing our share of MOAA's income during the first quarter of 2006, including the proportionate share of earnings of MOAA since August 2004 through the first quarter of 2006 of $10.2 million. This income is included with "income from unconsolidated entities and beneficial interests, net" in our consolidated statement of operations. We accounted for our beneficial interests in MOAA under the equity method of accounting. On November 2, 2006, the Simon family entity sold its partnership interest to an affiliate of another partner in MOAA and settled all pending litigation disclosed in Note 8, terminating our beneficial interests. As a result of this sale, we ceased recording income from this property's operations, and recorded a gain of approximately $86.5 million as a result of the receipt of $102.2 million of capital transaction proceeds assigned to us from this arrangement.

            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.

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            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,
 
   2006
   2005
   2004
Capitalized interest   $ 30,115   $ 14,433   $ 14,612

            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.

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

 
   2006
   2005
Deferred financing and lease costs, net   $ 204,645   $ 183,249
In-place lease intangibles, net     93,563     127,590
Fair market value of acquired above market lease intangibles, net     70,623     96,090
Marketable securities of our captive insurance companies     103,605     98,024
Goodwill     20,098     20,098
Minority interests     81,282     62,373
Prepaids, notes receivable and other assets, net     417,083     350,877
   
 
    $ 990,899   $ 938,301
   
 

            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:

 
   2006
   2005
  
Deferred financing and lease costs   $ 340,427   $ 337,919  
Accumulated amortization     (135,782 )   (154,670 )
   
 
 
Deferred financing and lease costs, net   $ 204,645   $ 183,249  
   
 
 

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

 
   For the Year Ended December 31,
  
 
   2006
   2005
   2004
  
Amortization of deferred financing costs   $ 18,716   $ 22,063   $ 17,188  
Amortization of debt premiums net of discounts     (28,163 )   (26,349 )   (8,401 )
Amortization of deferred leasing costs     22,259     20,606     19,209  

            We report amortization of deferred financing costs, amortization of premiums, and accretion of discounts as part of interest expense. Amortization of deferred leasing costs are a component of depreciation and amortization 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 4.5 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 $186.6 million and $261.9 million as of December 31, 2006 and 2005, respectively. The amount of amortization of above and below market leases, net for the year ended December 31, 2006, 2005, and 2004 was $53.3 million, $48.0 million, and $22.4 million, respectively.

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

 
   2006
   2005
  
In-place lease intangibles   $ 183,544   $ 183,544  
Accumulated amortization     (89,981 )   (55,954 )
   
 
 
In-place lease intangibles, net   $ 93,563   $ 127,590  
   
 
 
Fair market value of acquired above market lease intangibles   $ 144,224   $ 144,224  
Accumulated amortization     (73,601 )   (48,134 )
   
 
 
Fair market value of acquired above market lease intangibles, net   $ 70,623   $ 96,090  
   
 
 

            Estimated future amortization, and the increasing (decreasing) effect on minimum rents for our above and below market leases recorded as of December 31, 2006 are as follows:

 
   Below Market
Leases
   Above Market
Leases
   Increase to
Minimum Rent, Net
2007   $ 63,760   $ (20,881 ) $ 42,879
2008     44,617     (16,929 )   27,688
2009     29,907     (13,388 )   16,519
2010     18,681     (6,958 )   11,723
2011     12,628     (4,909 )   7,719
Thereafter     17,018     (7,558 )   9,460
   
 
 
    $ 186,611   $ (70,623 ) $ 115,988
   
 
 

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

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

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

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

 
   2006
   2005
  
Cumulative translation adjustment   $ (1,868 ) $ (3,574 )
Accumulated derivative gains, net     24,936     16,155  
Net unrealized gains (losses) on marketable securities     1,263     (141 )
   
 
 
Total accumulated comprehensive income   $ 24,331   $ 12,440  
   
 
 

            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 60% 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 the remainder of our leases to the fixed payment methodology. Under these leases, 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

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from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. We also receive escrow payments for these reimbursements from substantially all our 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 material in any period presented. Our advertising and promotional costs are expensed as incurred.

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

            Insurance premiums written and ceded are recognized on a pro-rata basis over the terms of the policies. Insurance losses are reflected in property operating expenses in the accompanying statements of operations and comprehensive income and include estimates for losses incurred but not reported as well as losses pending settlement. Estimates for losses are based on evaluations by actuaries and management's best estimates. Total insurance reserves for our insurance subsidiary as of December 31, 2006 and 2005 approximated $112.5 million and $93.6 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 issuer. Generally, these revenues are recorded at the issuance of the gift card for handling fees and, if applicable, at future dates for servicing fees.

            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,
  
 
   2006
   2005
   2004
  
Balance at Beginning of Year   $ 35,239   $ 36,917   $ 31,305  
Consolidation of previously unconsolidated entities     321     122     —  
Provision for Credit Losses     9,730     7,284     18,867  
Accounts Written Off     (12,473 )   (9,084 )   (13,255 )
   
 
 
 
Balance at End of Year   $ 32,817   $ 35,239   $ 36,917  
   
 
 
 

            As a partnership, the allocated share of our income or loss for each year is included in the income tax returns of the partners; accordingly, no accounting for income taxes is required in the accompanying consolidated financials statements. State income, franchise or other taxes were not significant in any of the periods presented.

            Simon Property and certain of our subsidiaries are taxed as REITs under Sections 856 through 860 of the 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 Simon Property to distribute at least 90% of its taxable income to

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stockholders and meet certain other asset and income tests as well as other requirements. We intend to continue to make distributions to Simon Property in order to allow it to adhere to these requirements and maintain its REIT status. As REITs, the subsidiary REIT 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.

            Simon Property has 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 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, 2006 and 2005, we had a net deferred tax asset of $12.8 million and $7.1 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 or reserves from insurance subsidiaries.

            We made certain reclassifications of prior period amounts in the financial statements to conform to the 2006 presentation. These reclassifications have no impact on net income previously reported. Also, significant property dispositions during 2004 and 2005 have been reclassified in the statements of operations and comprehensive income for the periods ended December 31, 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:

            As described in Note 7, on February 13, 2006, we sold 10.5% of our ownership interests in Simon Ivanhoe S.à.r.l. ("Simon Ivanhoe") to our partner, Ivanhoe Cambridge, Inc. ("Ivanhoe"), and recognized a gain upon this transaction of $34.4 million. We then settled all remaining share purchase commitments from the company's founders, 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 Simon Ivanhoe to 50% each.

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            On November 1, 2006, we acquired the remaining 50% interest in Mall of Georgia, a regional mall Property, from our partner for $252.6 million, including the assumption of our $96.0 million share of debt. As a result, we now own 100% of Mall of Georgia and the Property was consolidated as of the acquisition date.

            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 our 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 our 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 our Credit Facility.

            On November 19, 2004, we increased our ownership interest in Lehigh Valley Mall, 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, Simon Property 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 and Simon Property 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

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Simon Property common stock, and a fractional share of 0.3000 of Simon Property Series I 6% Convertible Perpetual Preferred Stock (Series I Preferred Stock). In total, Simon Property issued to Chelsea common stockholders at closing:

•
12,978,795 shares of common stock, and
•
13,261,712 shares of Series I Preferred Stock (liquidation value of $50 per share)

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

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

            As part of the Chelsea Acquisition, we issued to the limited partner of CPG Partners, L.P., the operating partnership subsidiary of Chelsea:

•
4,652,232 units; and
•
4,753,794 Series I 6% Convertible Perpetual Preferred Units (liquidation value of $50 per unit).

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

            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.

            The following unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2004 includes adjustments for the Chelsea Acquisition as if the transaction had occurred as of January 1, 2004. 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,
2004
Pro Forma Total Revenue   $ 2,954,983
Pro Forma Income from Continuing Operations     403,400
Pro Forma Net Income     403,400
Pro Forma Earnings Per Unit — Basic (a)   $ 1.06
Pro Forma Earnings Per Unit — Diluted (a)   $ 1.06

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            During the year ended December 31, 2006, we disposed of three consolidated properties and one property in which we held a 50% interest and accounted for under the equity method. We received net proceeds of $52.7 million and recorded our share of a gain on the disposals totaling $12.2 million.

            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.

            Certain of the net proceeds from these sales, net of repayment of outstanding debt, were 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 )
           
 
 

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            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).

            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.

5. Per Unit Data

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

 
   For the Year Ended December 31,
  
 
   2006
   2005
   2004
  
Income from continuing operations, after preferred unit requirement   $ 614,409   $ 355,394   $ 390,792  
Discontinued operations     502     155,187     (10,081 )
   
 
 
 
Net Income available to Unitholders — Basic & Diluted   $ 614,911   $ 510,581   $ 380,711  
   
 
 
 
Weighted Average Units Outstanding — Basic     279,567,279     279,825,351     265,405,033  
Effect of stock options of Simon Property     903,255     871,010     867,368  
   
 
 
 
Weighted Average Units Outstanding — Diluted     280,470,534     280,696,361     266,272,401  
   
 
 
 

            For the year ending December 31, 2006, potentially dilutive securities include the stock options of Simon Property and certain preferred units. The only potentially dilutive security that had a dilutive effect for the years ended December 31, 2006, 2005 and 2004 were stock options of Simon Property. Units may be exchanged for shares of Simon Property common stock, on a one-for one basis, in certain circumstances. We accrue distributions when they are declared.

6. Investment Properties

            Investment properties consist of the following as of December 31:

 
   2006
   2005
Land   $ 2,651,205   $ 2,560,335
Buildings and improvements     19,993,094     18,990,912
   
 
Total land, buildings and improvements     22,644,299     21,551,247
Furniture, fixtures and equipment     219,664     194,062
   
 
Investment properties at cost     22,863,963     21,745,309
Less — accumulated depreciation     4,606,130     3,809,293
   
 
Investment properties at cost, net   $ 18,257,833   $ 17,936,016
   
 
Construction in progress included above   $ 530,298   $ 384,096
   
 

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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 68 Properties as of December 31, 2006 and 69 as of December 31, 2005. We also held interests in two joint ventures which owned 53 European shopping centers as of December 31, 2006 and 51 as of December 31, 2005. We also held an interest in five joint venture properties under operation in Japan and one joint venture property in Mexico. We account for these Properties using the equity method of accounting.

            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.

            On May 10, 2006, we refinanced thirteen cross-collateralized mortgages with seven individual secured loans totaling $796.6 million with fixed rates ranging from 5.79% to 5.83%. The balance of the previous mortgages totaled $625.0 million, and bore interest at rates ranging from LIBOR plus 41 basis points to a fixed rate of 8.28%, and was scheduled to mature on May 15, 2006. We received our share of excess refinanced proceeds of approximately $86 million on the closing of the new mortgage loan.

            On November 1, 2006, we acquired the remaining 50% interest in Mall of Georgia, a regional mall Property, from our partner for $252.6 million, including the assumption of our $96.0 million share of debt. As a result, we now own 100% of Mall of Georgia and the property was consolidated as of the acquisition date. We have reclassified the results of this property in the Joint Venture Statement of Operations into "Consolidated Joint Venture Interests."

            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 $120.0 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 $50.0 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. The site 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. The entitlement, planning, and design processes are ongoing and 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.

            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, 2006. Balance sheet information as of December 31 is as follows:

 
   December 31,
2006
   December 31,
2005
BALANCE SHEETS            
Assets:            
Investment properties, at cost   $ 10,669,967   $ 9,915,521
Less — accumulated depreciation     2,206,399     1,951,749
   
 
      8,463,568     7,963,772
Cash and cash equivalents     354,620     334,714
Tenant receivables     258,185     207,153
Investment in unconsolidated entities     176,400     135,914
Deferred costs and other assets     307,468     304,825
   
 
Total assets   $ 9,560,241   $ 8,946,378
   
 
Liabilities and Partners' Equity:            
Mortgages and other indebtedness   $ 8,055,855   $ 7,479,359
Accounts payable, accrued expenses, and deferred revenue     513,472     403,390
Other liabilities     255,633     189,722
   
 
Total liabilities     8,824,960     8,072,471
Preferred units     67,450     67,450
Partners' equity     667,831     806,457
   
 
Total liabilities and partners' equity   $ 9,560,241   $ 8,946,378
   
 
Our Share of:            
Total assets   $ 4,113,051   $ 3,765,258
   
 
Partners' equity   $ 380,150   $ 429,942
Add: Excess Investment     918,497     938,177
   
 
Our net Investment in Joint Ventures   $ 1,298,647   $ 1,368,119
   
 
Mortgages and other indebtedness   $ 3,472,228   $ 3,169,662
   
 

            "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.

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            As of December 31, 2006, scheduled principal repayments on joint venture properties' mortgages and other indebtedness are as follows:

2007   $ 469,067  
2008     724,433  
2009     482,547  
2010     1,524,707  
2011     1,179,018  
Thereafter     3,677,689  
   
 
Total principal maturities     8,057,461  
Net unamortized debt discounts     (1,606 )
   
 
Total mortgages and other indebtedness   $ 8,055,855  
   
 

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            This debt becomes due in installments over various terms extending through 2017 with interest rates ranging from 1.22% to 10.61% and a weighted average rate of 5.89% at December 31, 2006.

 
   For the Year Ended December 31,
  
 
   2006
   2005
   2004
  
STATEMENTS OF OPERATIONS                    
Revenue:                    
Minimum rent   $ 1,092,514     1,035,351   $ 915,276  
Overage rent     90,125     81,766     43,296  
Tenant reimbursements     556,366     530,044     468,430  
Other income     150,468     126,232     64,188  
   
 
 
 
  Total revenue     1,889,473     1,773,393     1,491,190  
Operating Expenses:                    
Property operating     375,546     348,581     286,811  
Depreciation and amortization     324,042     317,339     274,053  
Real estate taxes     133,517     131,571     123,523  
Repairs and maintenance     84,766     82,369     69,073  
Advertising and promotion     43,968     36,759     36,553  
Provision for credit losses     4,659     9,332     11,100  
Other     126,172     120,230     65,223  
   
 
 
 
  Total operating expenses     1,092,670     1,046,181     866,336  
   
 
 
 
Operating Income     796,803     727,212     624,854  
Interest expense     (432,190 )   (387,027 )   (353,594 )
Income (loss) from unconsolidated entities     1,204     (1,892 )   (5,129 )
Gain (loss) on sale of asset     (6 )   1,423     —  
   
 
 
 
Income from Continuing Operations     365,811     339,716     266,131  
Income from joint venture interests before consolidation     912     2,497     20,601  
Income (loss) from discontinued joint venture interests     736     (2,452 )   13,513  
Gain on disposal or sale of discontinued operations, net     20,375     65,599     4,704  
   
 
 
 
Net Income   $ 387,834   $ 405,360   $ 304,949  
   
 
 
 
Third-Party Investors' Share of Net Income   $ 232,499   $ 238,265   $ 193,282  
   
 
 
 
Our Share of Net Income     155,335     167,095     111,667  
Amortization of Excess Investment     (49,546 )   (48,597 )   (30,554 )
Income from Beneficial Interests and Other, net     15,605     —     —  
Write-off of Investment Related to Properties Sold     (2,846 )   (38,666 )   —  
Our Share of Net Gain (Loss) Related to Properties Sold     (7,729 )   1,975     —  
   
 
 
 
Income from Unconsolidated Entities and Beneficial Interests, net   $ 110,819   $ 81,807   $ 81,113  
   
 
 
 

            On January 11, 2005, Metrocenter, a joint venture regional mall property was sold. We recognized our share of the gain of $11.8 million, 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. On April 25, 2006, Great Northeast Plaza, a joint venture community center was sold. We recognized our

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share of the gain of $7.7 million, net of the write-off of the related investment and received $8.8 million representing our share of the proceeds from this disposition.

            Our share of the net gain resulting from the sale of Metrocenter, The Forum Entertainment Centre, and Great Northeast Plaza are shown separately in "gain on sales of assets and interests in unconsolidated entities, net" in the consolidated statement of operations.

International Joint Venture Investments

            We conduct our international operations in Europe through our two European joint venture investment entities; Simon Ivanhoe S.à.r.l. ("Simon Ivanhoe") and Gallerie Commerciali Italia ("GCI"). The carrying amount of our total combined investment in these two joint venture investments is $338.1 million and $287.4 million as of December 31, 2006 and 2005, respectively, net of the related cumulative translation adjustments. The Operating Partnership has a 50% ownership in Simon Ivanhoe and a 49% ownership in GCI as of December 31, 2006.

            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 Simon Ivanhoe. On February 13, 2006, pursuant to the terms of our October 20, 2005 transaction with Ivanhoe, we sold a 10.5% interest in this joint venture to Ivanhoe for €45.2 million, or $53.9 million, and recorded a gain on the disposition of $34.4 million. This gain is reported in "gain on sales of interests in unconsolidated entities, net" in the consolidated statements of operations. We then settled all remaining share purchase commitments from the company's founders, including the early settlement of some commitments by purchasing an additional 25.8% interest in Simon Ivanhoe for €55.1 million, or $65.5 million. These transactions equalized our and Ivanhoe's ownership in Simon Ivanhoe to 50% each.

            We conduct our international Premium Outlet operations in Japan through joint venture partnerships with Mitsubishi Estate Co., Ltd. and Sojitz Corporation (formerly known as Nissho Iwai Corporation). The carrying amount of our investment in these Premium Outlet joint ventures in Japan is $281.2 million and $287.7 million as of December 31, 2006 and 2005, respectively, net of the related cumulative translation adjustments. We have a 40% ownership in these Japan Premium Outlet joint ventures. We also began construction on our first Premium Outlet in South Korea. As of December 31, 2006, our investment in our Premium Outlet in South Korea, for which we hold a 50% ownership interest, approximated $18.5 million.

            During 2006, we finalized the formation of joint venture arrangements to develop and operate shopping centers in China. The shopping centers will be anchored by Wal-Mart stores and will be through a 32.5% ownership in a joint venture entity, Great Mall Investments, Ltd. ("GMI"). We are planning on initially developing five centers, four of which are currently under construction, with our share of the total equity commitment of approximately $60 million. We account for our investments in GMI under the equity method of accounting. As of December 31, 2006, our combined investment in these shopping centers in GMI is approximately $15.9 million.

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8. Indebtedness and Derivative Financial Instruments

            Our mortgages and other indebtedness, excluding the impact of derivative instruments, consist of the following as of December 31:

 
   2006
   2005
  
Fixed-Rate Debt:              
Mortgages and other notes, including $41,579 and $53,669 net premiums, respectively. Weighted average interest and maturity of 6.39% and 4.0 years at December 31, 2006.   $ 4,266,045   $ 4,145,689  
Unsecured notes, including $17,513 and $38,523 net premiums, respectively. Weighted average interest and maturity of 5.77% and 5.7 years at December 31, 2006.     10,447,513     7,868,523  
7% Mandatory Par Put Remarketed Securities, including $4,669 and $4,761 premiums, respectively, due June 2028 and subject to redemption June 2008.     204,669     204,763  
   
 
 
Total Fixed-Rate Debt     14,918,227     12,218,975  
Variable-Rate Debt:              
Mortgages and other notes, at face value, respectively. Weighted average interest and maturity of 6.22% and 2.4 years.     153,189     430,612  
Credit Facility (see below).     305,132     809,264  
Acquisition Facility (see below).     —     600,000  
Aventura Mall Credit Facility. Weighted average rates and maturities of 6.32% and 0.8 years at December 31, 2006.     27,369     —  
Unsecured term loans.     —     59,075  
   
 
 
Total Variable-Rate Debt     485,690     1,898,951  
Fair value interest rate swaps     (9,428 )   (11,809 )
   
 
 
Total Mortgages and Other Indebtedness, Net   $ 15,394,489   $ 14,106,117  
   
 
 

            General.    At December 31, 2006, we have pledged 80 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 80 encumbered Properties, indebtedness of 20 of these encumbered Properties and our unsecured notes are subject to various financial performance covenants relating to leverage ratios, annual real property appraisal requirements, debt service coverage ratios, minimum net worth ratios, debt-to-market capitalization, and/or minimum equity values. Our mortgages and other indebtedness may be prepaid but are generally subject to prepayment of a yield-maintenance premium or defeasance. As of December 31, 2006, we are in compliance with all our debt covenants.

            Some of the limited partner Unitholders guarantee a portion of our consolidated debt through foreclosure guarantees. In total, 53 limited partner Unitholders provide guarantees of foreclosure of $447.3 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.

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Unsecured Debt

            We have $1.0 billion of unsecured notes issued by our subsidiaries 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 5.3 years.

            On March 31, 2006, Standard & Poor's Rating Services raised its corporate credit rating for us to 'A-' from 'BBB+' which resulted in a decrease in the interest rate applicable to borrowings on our unsecured revolving $3 billion credit facility (the "Credit Facility") to 37.5 basis points over LIBOR from 42.5 basis points over LIBOR. The revision to our rating also decreased the facility fee on our Credit Facility to 12.5 basis points from 15 basis points.

            On May 15, 2006, we issued two tranches of senior unsecured notes totaling $800 million at a weighted average fixed interest rate of 5.93%. The first tranche is $400.0 million at a fixed interest rate of 5.75% due May 1, 2012 and the second tranche is $400.0 million at a fixed interest rate of 6.10% due May 1, 2016. We used the proceeds of the offering and the termination of forward-starting swap arrangements to reduce borrowings on our Credit Facility.

            On August 29, 2006, we issued two tranches of senior unsecured notes totaling $1.1 billion at a weighted average fixed interest rate of 5.73%. The first tranche is $600.0 million at a fixed interest rate of 5.60% due September 1, 2011 and the second tranche is $500.0 million at a fixed interest rate of 5.875% due March 1, 2017. We used proceeds from the offering to reduce borrowings on our Credit Facility.

            On December 12, 2006, we issued two tranches of senior unsecured notes totaling $1.25 billion at a weighted average fixed interest rate of 5.13%. The first tranche is $600.0 million at a fixed interest rate of 5.00% due March 1, 2012 and the second tranche is $650.0 million at a fixed interest rate of 5.25% due December 1, 2016. We used proceeds from the offering to reduce borrowings on our Credit Facility and reinvested the remainder of the proceeds of approximately $577.4 million to be used for general working capital purposes.

            Credit Facility.    Other significant draws on our Credit Facility during the twelve-month period ended December 31, 2006 were as follows:

Draw Date
   Draw Amount
   Use of Credit Line Proceeds
01/03/06   $ 59,075   Repayment of a Term Loan (CPG Partners, L.P.), which had a rate of 7.26%.
01/06/06     140,000   Repayment of a mortgage, which had a rate of LIBOR plus 137.5 basis points.
01/20/06     300,000   Repayment of unsecured notes, which had a fixed rate of 7.375%.
03/27/06     600,000   Early repayment of the $1.8 billion facility we used to finance our acquisition of Chelsea in 2004.
04/03/06     58,000   Repayment of two secured mortgages which each bore interest at 8.25%.
11/01/06     200,000   Repayment of the preferred stock issued to fund the redemption of our Series F Preferred Stock.
11/15/06     250,000   Repayment of unsecured notes, which had a fixed rate of 6.875%.

            Other amounts drawn on our Credit Facility were primarily for general working capital purposes. We repaid a total of $2.8 billion on our Credit Facility during the year ended December 31, 2006. The total outstanding balance on our Credit Facility as of December 31, 2006 was $305.1 million, and the maximum amount outstanding during the year was approximately $2.0 billion. During the year ended December 31, 2006, the weighted average outstanding balance on our Credit Facility was approximately $1.1 billion.

            Acquisition Facility.    We and Simon Property borrowed $1.8 billion in 2004 to finance the cash portion of the acquisition of Chelsea. As disclosed above, this facility has been fully repaid.

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Secured Debt

            Mortgages and Other Indebtedness.    The balance of fixed and variable rate mortgage notes was $4.4 billion and $4.6 billion as of December 31, 2006 and 2005, respectively, including related premiums. Of the 2006 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. During the twelve-month period ended December 31, 2006, we repaid $275.8 million in mortgage loans, unencumbering four properties.

            As a result of the acquisition of our partner's 50% ownership interest in Mall of Georgia on November 1, 2006, we now own 100% of the mall and the Property was consolidated as of the acquisition date. This included the consolidation of the Property's $192.0 million 7.09% fixed-rate mortgage.

Debt Maturity and Other

            Our scheduled principal repayments on indebtedness as of December 31, 2006 are as follows:

2007   $ 1,683,966
2008     809,667
2009     1,653,486
2010     2,001,021
2011     2,309,420
Thereafter     6,882,596
   
Total principal maturities     15,340,156
Net unamortized debt premium and other     54,333
   
Total mortgages and other indebtedness   $ 15,394,489
   

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

 
   For the Year Ended December 31,
 
   2006
   2005
   2004
Cash paid for interest   $ 845,964   $ 822,906   $ 648,984

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, 2006, we have reflected the fair value of outstanding consolidated derivatives in other liabilities for $9.4 million. In addition, we recorded the benefits from our treasury lock and interest rate hedge

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agreements in accumulated comprehensive income and the unamortized balance of these agreements is $5.7 million as of December 31, 2006. The net benefits from terminated swap agreements are also recorded in accumulated comprehensive income and the unamortized balance is $12.2 million as of December 31, 2006. As of December 31, 2006, our outstanding LIBOR based derivative contracts consist of:

•
interest rate cap protection agreements with a notional amount of $95.7 million that mature in May 2007.
•
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 5.36% and a weighted average receive rate of 3.72%.

            Within the next twelve months, we expect to reclassify to earnings approximately $4.3 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:

 
   2006
   2005
  
Fair value of fixed-rate mortgages and other indebtedness   $ 14,479,171   $ 12,078,531  
Average discount rates assumed in calculation of fair value     6.53 %   6.11 %

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, 2006 are as follows:

2007   $ 1,619,178
2008     1,491,243
2009     1,339,472
2010     1,163,250
2011     976,740
Thereafter     2,921,770
   
    $ 9,511,653
   

            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.

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10. Partners' Equity

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

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

Unit Issuances and Repurchases

            In 2006, five limited partners exchanged 86,800 units for a like number of shares of common stock of Simon Property, increasing Simon Property's interest in us.

            We issued 414,659 units to Simon Property related to employee and director stock options exercised during 2006. We used the net proceeds from the option exercises of approximately $14.9 million for general working capital purposes.

            Beginning on April 3, 2006, holders of Simon Property's Series I 6% Convertible Perpetual Preferred units ("Series I Preferred Units") could elect to convert their units during the year into units pursuant to the preferred unit agreement. During the twelve months ended December 31, 2006, 283,907 units of Series I Preferred Units were converted into 222,933 units of Simon Property.

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Preferred Units

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

 
   2006
   2005
Series B 6.5% convertible preferred units, 5,000,000 authorized, none issued and outstanding   $ —   $ —
Series C 7.00% cumulative convertible preferred units, 2,700,000 units authorized, 261,683 and 1,410,760 issued and outstanding     7,327     39,502
Series D 8.00% cumulative redeemable preferred units, 2,700,000 units authorized, 1,425,573 issued and outstanding     42,767     42,767
Series E 8.00% cumulative redeemable preferred units, 1,000,000 units authorized, none issued and outstanding     —     —
Series F 8.75% cumulative redeemable preferred units, 8,000,000 units authorized, 0 and 8,000,000 issued and outstanding to the general partner     —     192,989
Series G 7.89% cumulative step-up premium rate convertible preferred units, 3,000,000 units authorized, issued and outstanding to the general partner     148,843     148,256
Series H Variable Rate Preferred Units, 3,328,540 units authorized, none issued and outstanding     —     —
6% Series I Convertible Perpetual Preferred Units, 19,000,000 units authorized, 17,716,918 and 18,012,202 issued and outstanding     885,847     900,610
Series J 83/8% Cumulative Redeemable Preferred Units, 1,000,000 units authorized, 796,948 issued and outstanding, including unamortized premium of 6,842 and 7,170 in 2006 and 2005, respectively.     46,689     47,018
Series K Variable Rate Redeemable Preferred Units, 8,000,000 units authorized, none issued and outstanding     —     —
7.5% Cumulative Redeemable Preferred Units, 260,000 authorized, 255,373 issued and outstanding     25,537     25,537
   
 
    $ 1,157,010   $ 1,396,679
   
 

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

            Series C 7.00% Cumulative Convertible Preferred Units.    Each Series C 7.00% cumulative convertible preferred unit has a liquidation value of $28.00 and accrues cumulative distributions at a rate of $1.96 annually, payable quarterly in arrears. The Series C preferred units are convertible at the holders' option on or after August 27, 2004, into either a like number of shares of 7.00% Cumulative Convertible Preferred Stock of Simon Property with terms substantially identical to the Series C preferred units or into units at a ratio of 0.75676 to one provided that the closing stock price of Simon Property common stock exceeds $37.00 for any three consecutive trading days prior to the conversion date. The Operating Partnership may redeem the Series C preferred units at their liquidation value plus accrued and unpaid distributions on or after August 27, 2009, payable in units. In the event of the death of a holder of Series C preferred units, or the occurrence of certain tax triggering events, the Operating Partnership may be required to redeem the Series C preferred units at their liquidation value payable at the option of the Operating Partnership in either cash (the payment of which may be made in four equal annual installments) or units. In 2006, 42 unitholders converted 1,149,077 of the preferred units into common units.

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

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

            Series F 8.75% Cumulative Redeemable Preferred Units.    The Series F 8.75% cumulative redeemable preferred units (the "Series F Preferred Units") were redeemable at any time on or after September 29, 2006, at a liquidation value of $25.00 per unit (payable solely out of the sale proceeds of other capital shares of Simon Property, which may include other series of preferred shares), plus accrued and unpaid dividends. Effective October 4, 2006, we redeemed all 8,000,000 units of our Series F Preferred Units at a liquidation preference of $25.00 per unit plus accrued dividends. Funds to redeem the Series F Preferred Units were obtained through the issuance of a new series of preferred units issued to Simon Property (Series K). These preferred units were subsequently repurchased prior to year end with borrowings from the Credit Facility. We recorded a $7.0 million charge to net income during the fourth quarter of 2006 related to this redemption.

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

            Series H Variable Rate Preferred Units.    To fund the redemption of the Series B Preferred Units, we issued 3,328,540 units of Series H Variable Rate Preferred Units to Simon Property for $83.2 million. We repurchased 3,250,528 units of the Series H preferred units for $81.3 million on December 17, 2003. On January 7, 2004, we repurchased the remaining 78,012 units for $1.9 million.

            Series I 6% Convertible Perpetual Preferred Units.    On October 14, 2004, the Operating Partnership issued 18,015,506 6% Convertible Perpetual Preferred Units in the Chelsea Acquisition. Distributions are made quarterly, at an annual rate of 6% per unit. On or after October 14, 2009, the Operating Partnership has the option to redeem the Series I Preferred Units, in whole or in part, for cash only at a liquidation preference of $50.00 per unit plus accumulated and unpaid distributions. However, if the redemption date falls between the record date and the distribution payment date, the redemption price will be equal to only the liquidation preference per unit, and will not

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include any amount of distributions declared and payable on the corresponding distribution 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 Series I Preferred Units are convertible into a number of fully paid and non-assessable common units upon the occurrence of a conversion triggering event. A conversion triggering event includes the following: (a) if the Series I Preferred Units are called for redemption by the Operating Partnership; or, (b) if Simon Property is a party to a consolidation, merger, binding share exchange, or sale of all or substantially all of its assets; or, (c) if the closing sale price of Simon Property's 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 are not permitted in the following fiscal quarter. If a holder of Series I Preferred Units converts its Series I Preferred Units into common units, then the holder may also elect to convert those units into common stock of Simon Property, on a one-for-one basis in accordance with our partnership agreement. The holder of Series I Preferred Units also has the option to exchange the Series I Preferred Units for an equal number of shares of Series I Preferred Stock of Simon Property; however, the Operating Partnership may elect to pay cash in lieu of the shares of Series I Preferred Stock of Simon Property. In 2006, holders of Series I Preferred Stock exchanged 230,486 Series I Preferred Units for an equal number of shares of Series I Preferred Stock of Simon Property. In years prior to 2006, 573,466 Series I Preferred Units were exchanged for an equal number of shares of Series I Preferred Stock of Simon Property.

            As of December 31, 2006, the conversion trigger price of $79.27 had been met and each Series I Preferred Unit became convertible into 0.78846 of a common unit beginning January 2, 2007, through March 30, 2007. During the twelve months ended December 31, 2006, the conversion trigger price was met beginning March 31, 2006, resulting in the conversion of 283,907 Series I Preferred Units were converted into 222,933 units.

            Series J 83/8% Cumulative Redeemable Preferred Units.    On October 14, 2004, we issued 796,948 units of Series J 83/8% Cumulative Redeemable Preferred Units in replacement of an existing series of Chelsea preferred units in the Chelsea Acquisition. On or after October 15, 2027, the Series J Preferred Units, in whole or in part, may be redeemed at our option at a price, payable in cash, of $50.00 per unit (payable solely out of the sale proceeds of other capital shares of Simon Property, which may include other series of preferred shares), plus accumulated and unpaid distributions. The Series J Preferred Units are not convertible or exchangeable for any other property or securities of the Operating Partnership. The Series J Preferred Stock was issued at a premium of $7,553 as of the date of the acquisition of Chelsea.

            Series K Variable Rate Redeemable Preferred Units.    To fund the redemption of the Series F Preferred Units in the fourth quarter of 2006, we issued 8,000,000 Series K Variable Rate Redeemable Preferred Units for $200.0 million to Simon Property. During the fourth quarter, we repurchased all 8,000,000 of these preferred units at the same price.

            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 Simon Property common stock. In the event of the death of a holder of the 7.5% Preferred Units, the occurrence of certain tax triggering events applicable to the holder, or on or after November 10, 2006, the preferred unitholder may require the Operating Partnership to redeem the 7.5% Preferred Units payable at the option of the Operating Partnership in either cash or shares of Simon Property common stock.

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Notes Receivable from Former CPI Stockholders

            Notes receivable of $17,261 from former Corporate Property Investors, Inc. ("CPI") stockholders resulted from securities issued under CPI's executive compensation program and were assumed in our merger with CPI. These notes are reflected as a deduction from capital in excess of par value in the consolidated statements of stockholders' equity in the accompanying financial statements. The notes do not bear interest and become due at the time the underlying shares are sold.

Note Receivable from Simon Property

            In 1999, Simon Property borrowed $92.8 million from us at 7.8% interest with a maturity of December 2009. Simon Property used the proceeds to purchase a non-controlling 88% interest in one Property. Simon Property contributed its interest in the Property to us in exchange for 3,617,070 units. The note receivable from Simon Property was recorded as a reduction of partners' equity. The amount of interest earned during 2004 was $7,046.

            On January 1, 2005, Simon Property assigned the economic rights of Ocean County Mall, the only Property held directly by Simon Property, to the Operating Partnership in exchange for 1,602,821 units and the settlement of an $88.8 million note receivable. The Property is now consolidated with the Operating Partnership. The assignment was a final step to align the ownership interests in the properties acquired as a result of the merger with Corporate Properties Inc. in 1998 and the acquisition of the Northshore Mall in 1999.

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

            Administration.    The 1998 Plan is administered by Simon Property's Compensation Committee (the "Committee"). The Committee, at its sole discretion, determines which eligible individuals may participate and the type, extent and terms of the Awards to be granted to them. In addition, the Committee interprets the 1998 Plan and makes all other determinations deemed advisable for the administration of the 1998 Plan. Options granted to employees ("Employee Options") become exercisable over the period determined by the Committee. The exercise price of an Employee Option may not be less than the fair market value of the shares on the date of grant. Employee Options generally vest over a three-year period and expire ten years from the date of grant. Simon Property has not granted Employee Options, except for a series of reload options as part of a prior business combination, since 2001.

            Automatic Awards For Eligible Directors.    The 1998 Plan provids for automatic annual grants of restricted stock to directors of Simon Property who are not employees of affiliates of Simon Property ("Eligible Directors"). Prior to May 11, 2006, each Eligible Director received 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 were re-elected as directors received a grant of 1,000 shares of restricted stock. In addition, Eligible Directors who served as chairpersons of the standing committees of the Board received 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).

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            Each award of restricted stock issued prior to May 11, 2006, vested 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 ceased to serve as a director before vesting, the unvested portion of the award terminated. Any unvested portion of a restricted stock award vested if the director died or became 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 vested in the event of a "Change in Control."

            Effective May 11, 2006, each Eligible Director receives on the first day of the first calendar month following his or her initial election as a director, an award of restricted stock with a value of $82,500 (pro-rated for partial years of service). Thereafter, as of the date of each annual meeting of the Company's stockholders, Eligible Directors who are re-elected as directors receive an award of restricted stock having a value of $82,500. In addition, Eligible Directors who serve as chairpersons of the standing committees of the Board of Directors (excluding the Executive Committee) receive an additional annual award of restricted stock having a value of $10,000 (in the case of the Audit Committee) or $7,500 (in the case of all other standing committees). The Lead Director also receives an annual restricted stock award having a value of $12,500. The restricted stock will vest in full after one year.

            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 achievement of certain financial and return-based performance measures 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 following 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 partners' equity and subsequently amortized against our earnings over the vesting period. Through December 31, 2006, a total of 4,238,812 shares of restricted stock, net of forfeitures, 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,
 
   2006
   2005
   2004
Restricted stock shares awarded during the year, net of forfeitures     415,098     400,541     365,602
Weighted average grant price of shares granted during the year   $ 84.33   $ 61.01   $ 56.86
Amortization expense for all awards vesting during the year   $ 23,369   $ 14,320   $ 11,935

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            The weighted average life of our outstanding options as of December 31, 2006, is 3.6 years. Information relating to Director Options and Employee Options from December 31, 2003, through December 31, 2006, 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, 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
   
 
 
 
Granted   —     N/A   70,000     90.87
Exercised   (18,000 )   27.68   (396,659 )   36.02
Forfeited   (3,000 )   24.25   (3,000 )   24.47
   
 
 
 
Shares under option at December 31, 2006   16,500   $ 28.57   1,198,263   $ 32.07
   
 
 
 
(1)
Principally Chelsea options issued to certain employees as part of acquisition consideration.

 
   Outstanding
    
    
 
   Exercisable
 
    
   Weighted Average
Remaining
Contractual Life
in Years
    
Director Options:
Range of Exercise Prices
   Options
   Weighted Average
Exercise Price Per
Share
   Options
   Weighted Average
Exercise Price Per
Share
$22.26-$33.68   16,500   3.07   $ 28.57   16,500   $ 28.57
   
     
 
 
  Total   16,500       $ 28.57   16,500   $ 28.57
   
     
 
 
 
   Outstanding
    
    
 
   Exercisable
 
    
   Weighted Average
Remaining
Contractual Life
in Years
    
Employee Options:
Range of Exercise Prices
   Options
   Weighted Average
Exercise Price Per
Share
   Options
   Weighted Average
Exercise Price Per
Share
$22.36-$30.38   989,539   3.35   $ 25.24   989,539   $ 25.24
$30.39-$46.97   59,749   7.10   $ 46.97   59,749   $ 46.97
$46.98-$63.51   78,975   5.24   $ 54.27   78,975   $ 54.27
$63.52-$90.87   70,000   1.72   $ 90.87   —     N/A
   
     
 
 
  Total   1,198,263       $ 32.07   1,128,263   $ 28.42
   
     
 
 

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

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Exchange Rights

            Limited partners in the Operating Partnership have the right to exchange all or any portion of their units for shares of Simon Property 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, 2006, we had reserved 79,592,963 shares of Simon Property common stock for possible issuance upon the exchange of units, exercise of options of Simon Property common stock, and conversion of Simon Property Class B and C common stock and certain convertible preferred stock of Simon Property.

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 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. We filed our own actions for declaratory judgment actions in Federal district courts in each of the three states.

            With respect to the New Hampshire litigation, on August 1, 2006, the Federal district court in New Hampshire granted our motion for summary judgment and held that the gift card program that has been in existence since September 1, 2005 is a banking product and state law regulation is preempted by Federal banking laws. However, the Attorney General's appeal of this judgment in our favor in Federal district court in New Hampshire is pending. In February 2007, we entered into a voluntary, no-fault settlement agreement regarding the elements of the New Hampshire action which related to the program that existed before September 1, 2005. This settlement did not have a significant impact on the results of our operations.

            In addition, we are a defendant in three other proceedings relating to the gift card program. Each of the three proceedings has been brought 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 pending 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.

            As previously disclosed, we were a defendant in a suit brought against us by a partner in a partnership in which we previously held ownership in, Mall of America Associates (MOAA). Effective November 2, 2006, all parties agreed to settle the lawsuit and all claims with no settlement payment due by either party. Prior to that date we were a beneficial interest holder in the operations of MOAA which entitled us the right to receive cash flow distributions and capital transaction proceeds, or approximately a 25% interest in the underlying mall operations. Concurrently with the settlement of the litigation, the Simon family partner in MOAA sold its interest in MOAA and we received $102.2 million of capital transaction proceeds related to this transaction, terminating our beneficial interests, and resulting in a gain of $86.5 million.

            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.

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Lease Commitments

            As of December 31, 2006, a total of 32 of the consolidated Properties are subject to ground leases. The termination dates of these ground leases range from 2007 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,
 
   2006
   2005
   2004
Ground lease expense   $ 29,301   $ 25,584   $ 20,689

            Future minimum lease payments due under such ground leases for years ending December 31, excluding applicable extension options, are as follows:

2007   $ 16,790
2008     17,036
2009     16,963
2010     16,746
2011     16,721
Thereafter     705,710
   
    $ 789,966
   

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 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, 2006, we have loan guarantees and other guarantee obligations of $43.6 million and $19.0 million, respectively, to support our total $3.5 billion share of joint venture mortgage and other

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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 and that property 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 474 of the approximately 1,000 anchor stores in the Properties as of December 31, 2006. 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 finite 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, 2006 and 2005, the estimated settlement value of these non-controlling interests was approximately $175 million and $145 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,
 
   2006
   2005
   2004
Amounts charged to unconsolidated joint ventures   $ 62,879   $ 58,450   $ 59,500
Amounts charged to properties owned by related parties     9,494     9,465     9,694

13. Recently Issued Accounting Pronouncements

            In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 153, "Exchanges of Nonmonetary Assets — an amendment of Accounting Principles Board ("APB") Opinion No. 29." SFAS No. 153 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 did not have a material impact on our financial position or results of operations.

            In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment," which revises SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123(R) supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees," and amends SFAS No. 95, "Statement of Cash Flows." This Statement requires that a public entity measure the cost of equity-based service awards based on the grant date fair value of the award. All share-

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based payments to employees, including grants of employee stock options, are required to be recognized in the income statement based on their fair value. SFAS No. 123(R) is effective as of the beginning of the first annual reporting period after June 15, 2005. Other than the reclassification of the unamortized portion of the restricted stock awards to capital in excess of par in the consolidated balance sheets, the adoption of this Statement did not have a material impact on our financial position or results of operations. We began expensing the vested portion of stock option awards to the recipients in the consolidated statements of operations in 2002.

            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 adoption of this Statement did not have a material impact on our financial position or results of operations.

            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.

            In June 2005, the FASB ratified its consensus in EITF 05-06, "Determining the Amortization Period of Leasehold Improvements" (Issue 05-06). The effective date for Issue 05-06 is June 29, 2005. The adoption of the provisions of EITF 05-06 did not have a material impact on our financial position or results of operations.

            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 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 our control. Under this standard, we 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 our year ended December 31, 2005. The adoption of FIN 47 did not have a material adverse effect on our consolidated financial statements. Certain of our real estate assets contain asbestos. The asbestos is appropriately contained, in accordance with current environmental regulations, and we have 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, we are not able to reasonably estimate the fair value of this asset retirement obligation.

            In June 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on description, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 becomes effective on January 1, 2007. We do not expect FIN 48 will have a material impact on our financial position or results of operations.

104

            In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". SFAS 157 is definitional and disclosure oriented and addresses how companies should approach measuring fair value when required by GAAP; it does not create or modify any current GAAP requirements to apply fair value accounting. The standard provides a single definition for fair value that is to be applied consistently for all accounting applications, and also generally describes and prioritizes according to reliability the methods and inputs used in valuations. SFAS 157 prescribes various disclosures about financial statement categories and amounts which are measured at fair value, if such disclosures are not already specified elsewhere in GAAP. The new measurement and disclosure requirements of SFAS 157 are effective for us in the first quarter of 2008. We do not expect the adoption of SFAS 157 will have a significant impact on our results of operations or financial position.

14. Quarterly Financial Data (Unaudited)

            Quarterly 2006 and 2005 data is summarized in the table below and, as disclosed in Note 3, the amounts have been reclassified from previously disclosed amounts due to the sale of properties in 2005. The results of operations of these sold properties were reclassified to discontinued operations:

 
   First
Quarter
   Second
Quarter
   Third
Quarter
   Fourth
Quarter
2006                        
Total revenue   $ 787,649   $ 798,738   $ 818,736   $ 927,031
Operating income     299,204     310,049     321,324     389,652
Income from continuing operations     156,841     130,134     144,794     287,314
Net income available to unitholders     131,605     104,788     119,554     258,964
Income from continuing operations per unit — Basic   $ 0.47   $ 0.37   $ 0.43   $ 0.93
Net income per unit — Basic   $ 0.47   $ 0.37   $ 0.43   $ 0.93
Income from continuing operations per unit — Diluted   $ 0.47   $ 0.37   $ 0.43   $ 0.92
Net income per unit — Diluted   $ 0.47   $ 0.37   $ 0.43   $ 0.92
Weighted average units outstanding     279,083,336     279,464,253     279,573,123     280,136,765
Diluted weighted average units outstanding     279,056,438     280,349,471     280,444,727     281,004,599
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 unitholders     72,730     196,829     94,218     146,804
Income from continuing operations per unit — Basic   $ 0.25   $ 0.27   $ 0.30   $ 0.45
Net income per unit — Basic   $ 0.26   $ 0.70   $ 0.34   $ 0.53
Income from continuing operations per unit — Diluted   $ 0.25   $ 0.27   $ 0.30   $ 0.44
Net income per unit — Diluted   $ 0.26   $ 0.70   $ 0.34   $ 0.52
Weighted average units outstanding     280,808,793     279,762,141     279,728,163     278,888,828
Diluted weighted average units outstanding     281,703,813     280,645,415     280,660,452     279,812,045

15. Subsequent Event — Acquisition of The Mills Corporation

            On February 16, 2007, SPG-FCM Ventures, LLC ("SPG-FCM"), a newly formed joint venture owned 50% by the Operating Partnership and 50% by funds managed by Farallon Capital Management, L.L.C. ("Farallon"), entered into a definitive merger agreement with The Mills Corporation ("Mills") pursuant to which SPG-FCM will acquire Mills for $25.25 per common share in cash. The total value of the transaction is approximately $1.64 billion for all of

105


the outstanding common stock of Mills and common units of The Mills Limited Partnership ("Mills LP") not owned by Mills, and approximately $7.3 billion, including assumed debt and preferred stock.

            The acquisition will be completed through a cash tender offer at $25.25 per share for all outstanding shares of Mills common stock, which is expected to conclude in late March or early April 2007. If successful, the tender offer will be followed by a merger in which all shares not acquired in the offer will be converted into the right to receive the offer price. Completion of the tender offer is subject to the receipt of valid tenders of sufficient shares to result in ownership of a majority of Mills' fully diluted common shares and the satisfaction of other customary conditions. Mills LP common unitholders will receive $25.25 per unit in cash, subject to certain qualified unitholders having the option to exchange their units for limited partnership units of the Operating Partnership based upon a fixed exchange ratio of 0.211 Operating Partnership units for each unit of Mills LP.

            In connection with the proposed transaction, we made a loan to Mills on February 16, 2007 to permit it to repay a loan facility provided by a previous bidder for Mills. The $1.188 billion loan to Mills carries a rate of LIBOR plus 270 basis points. The loan facility also permits Mills to borrow an additional $365 million on a revolving basis for working capital requirements and general corporate purposes. We or an affiliate of Mills will serve as the manager for all or a portion of the 38 properties that SPG-FCM will acquire an interest in following the completion of the tender offer.

            We will be required to provide at least 50% of the funds necessary to complete the tender offer and any additional amounts required to complete the acquisition of Mills. We have and intend to obtain all funds necessary to fulfill our equity requirement for SPG-FCM, as well as any funds that we have or will provide in the form of loans to Mills, from available cash and the Credit Facility.

106


SIGNATURES

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


 
SIMON PROPERTY GROUP, L.P.

 
By
 
    /s/  DAVID SIMON      
David Simon

March 16, 2007

            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 16, 2007

    /s/  HERBERT SIMON      
Herbert Simon
 
Co-Chairman of the Board of Directors
 
March 16, 2007

    /s/  MELVIN SIMON      
Melvin Simon
 
Co-Chairman of the Board of Directors
 
March 16, 2007

    /s/  RICHARD S. SOKOLOV      
Richard S. Sokolov
 
President, Chief Operating Officer and Director
 
March 16, 2007

    /s/  BIRCH BAYH      
Birch Bayh
 
Director
 
March 16, 2007

    /s/  MELVYN E. BERGSTEIN      
Melvyn E. Bergstein
 
Director
 
March 16, 2007

    /s/  LINDA WALKER BYNOE      
Linda Walker Bynoe
 
Director
 
March 16, 2007

    /s/  PIETER S. VAN DEN BERG      
Pieter S. van den Berg
 
Director
 
March 16, 2007
         

107


    /s/  REUBEN S. LEIBOWITZ      
Reuben S. Leibowitz
 
Director
 
March 16, 2007

    /s/  FREDRICK W. PETRI      
Fredrick W. Petri
 
Director
 
March 16, 2007

    /s/  J. ALBERT SMITH, JR.      
J. Albert Smith, Jr.
 
Director
 
March 16, 2007

    /s/  KAREN N. HORN      
Karen N. Horn
 
Director
 
March 16, 2007

    /s/  M. DENISE DEBARTOLO YORK      
M. Denise DeBartolo York
 
Director
 
March 16, 2007

    /s/  STEPHEN E. STERRETT      
Stephen E. Sterrett
 
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
 
March 16, 2007

    /s/  JOHN DAHL      
John Dahl
 
Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)
 
March 16, 2007

108

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2006
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized
Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Regional Malls                                                            
Alton Square, Alton, IL   $ —   $ 154   $ 7,641   $ —   $ 10,733   $ 154   $ 18,374   $ 18,528   $ 8,640   1993 (Note 4 )
Anderson Mall, Anderson, SC     28,635     1,712     15,227     1,363     9,753     3,075     24,980     28,055     11,301   1972  
Arsenal Mall, Watertown, MA     32,759     15,505     47,680     —     4,000     15,505     51,680     67,185     10,370   1999 (Note 4 )
Bangor Mall, Bangor, ME     22,038     5,478     59,740     —     4,953     5,478     64,693     70,171     10,574   2004 (Note 5 )
Barton Creek Square, Austin, TX     —     2,903     20,929     7,983     56,732     10,886     77,661     88,547     30,532   1981  
Battlefield Mall, Springfield, MO     97,839     3,919     27,231     3,225     59,011     7,144     86,242     93,386     36,191   1970  
Bay Park Square, Green Bay, WI     —     6,358     25,623     4,133     21,884     10,491     47,507     57,998     14,380   1980  
Bowie Town Center, Bowie, MD     —     2,710     65,044     235     4,995     2,945     70,039     72,984     15,244   2001  
Boynton Beach Mall, Boynton Beach, FL     —     22,240     78,804     4,636     22,671     26,876     101,475     128,351     26,972   1985  
Brea Mall, Brea, CA     —     39,500     209,202     —     19,297     39,500     228,499     267,999     53,969   1998 (Note 4 )
Broadway Square, Tyler, TX     —     11,470     32,431     —     12,750     11,470     45,181     56,651     15,683   1994 (Note 4 )
Brunswick Square, East Brunswick, NJ     85,659     8,436     55,838     —     25,583     8,436     81,421     89,857     25,371   1973  
Burlington Mall, Burlington, MA     —     46,600     303,618     —     51,960     46,600     355,578     402,178     74,600   1998 (Note 4 )
Castleton Square, Indianapolis, IN     —     26,250     98,287     7,434     37,437     33,684     135,724     169,408     39,877   1972  
Century III Mall, West Mifflin, PA     84,525     17,380     102,364     10     7,932     17,390     110,296     127,686     49,685   1979  
Charlottesville Fashion Square, Charlottesville, VA     —     —     54,738     —     12,549     —     67,287     67,287     18,336   1997 (Note 4 )
Chautauqua Mall, Lakewood, NY     —     3,257     9,641     —     15,918     3,257     25,559     28,816     9,125   1971  
Chesapeake Square, Chesapeake, VA     72,658     11,534     70,461     —     6,552     11,534     77,013     88,547     28,488   1989  
Cielo Vista Mall, El Paso, TX     47,433     867     14,447     608     41,903     1,475     56,350     57,825     24,626   1974  
College Mall, Bloomington, IN     43,340     1,003     16,245     722     35,821     1,725     52,066     53,791     20,919   1965  
Columbia Center, Kennewick, WA     —     18,285     66,580     —     15,334     18,285     81,914     100,199     22,503   1987  
Copley Place, Boston, MA     171,126     147     378,045     —     47,287     147     425,332     425,479     52,662   2002 (Note 4 )
Coral Square, Coral Springs, FL     85,740     13,556     93,630     —     3,594     13,556     97,224     110,780     35,736   1984  
Cordova Mall, Pensacola, FL     —     18,626     73,091     7,321     24,542     25,947     97,633     123,580     22,512   1998 (Note 4 )
Cottonwood Mall, Albuquerque, NM     —     10,122     69,958     —     1,721     10,122     71,679     81,801     26,618   1996  
Crossroads Mall, Omaha, NE     42,451     639     30,658     409     35,519     1,048     66,177     67,225     22,628   1994 (Note 4 )
Crystal River Mall, Crystal River, FL     15,341     5,661     20,241     —     5,024     5,661     25,265     30,926     7,647   1990  
DeSoto Square, Bradenton, FL     64,153     9,011     52,675     —     7,592     9,011     60,267     69,278     18,764   1973  
Edison Mall, Fort Myers, FL     —     11,529     107,350     —     22,400     11,529     129,750     141,279     31,249   1997 (Note 4 )
Fashion Mall at Keystone, Indianapolis, IN     57,513     —     120,579     —     34,425     —     155,004     155,004     38,215   1997 (Note 4 )
Firewheel Town Center, Garland, TX     —     11,551     82,627     —     10,227     11,551     92,854     104,405     5,116   2004  
Forest Mall, Fond Du Lac, WI     17,000     728     4,491     —     8,082     728     12,573     13,301     6,030   1973  
Forum Shops at Caesars, The, Las Vegas, NV     541,935     —     276,378     —     191,380     —     467,758     467,758     76,070   1992  

109

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2006
(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
  
Great Lakes Mall, Mentor, OH   —   12,302   100,362   —   14,777   12,302   115,139   127,441   34,062   1961  
Greenwood Park Mall, Greenwood, IN   82,660   2,423   23,445   5,275   78,371   7,698   101,816   109,514   36,796   1979  
Gulf View Square, Port Richey, FL   —   13,690   39,991   2,023   18,516   15,713   58,507   74,220   18,331   1980  
Haywood Mall, Greenville, SC   —   11,585   133,893   6   18,093   11,591   151,986   163,577   45,600   1998 (Note 4 )
Independence Center, Independence, MO   —   5,042   45,798   —   28,624   5,042   74,422   79,464   24,876   1994 (Note 4 )
Ingram Park Mall, San Antonio, TX   79,499   733   17,163   169   17,617   902   34,780   35,682   17,276   1979  
Irving Mall, Irving, TX   —   6,737   17,479   2,533   35,362   9,270   52,841   62,111   28,006   1971  
Jefferson Valley Mall, Yorktown Heights, NY   —   4,868   30,304   —   22,380   4,868   52,684   57,552   21,656   1983  
Knoxville Center, Knoxville, TN   60,201   5,006   21,617   3,712   34,229   8,718   55,846   64,564   23,340   1984  
La Plaza Mall, McAllen, TX   —   1,375   9,828   6,569   34,117   7,944   43,945   51,889   16,827   1976  
Lafayette Square, Indianapolis, IN   —   14,251   54,589   50   12,431   14,301   67,020   81,321   34,582   1968  
Laguna Hills Mall, Laguna Hills, CA   —   27,928   55,446   —   7,575   27,928   63,021   90,949   17,719   1997 (Note 4 )
Lakeline Mall, Austin, TX   64,999   10,088   81,568   14   2,883   10,102   84,451   94,553   27,834   1995  
Lenox Square, Atlanta, GA   —   38,213   492,411   —   40,709   38,213   533,120   571,333   121,013   1998 (Note 4 )
Lima Mall, Lima, OH   —   7,910   35,338   —   8,854   7,910   44,192   52,102   15,760   1965  
Lincolnwood Town Center, Lincolnwood, IL   —   7,907   63,480   28   6,759   7,935   70,239   78,174   29,933   1990  
Livingston Mall, Livingston, NJ   —   30,200   105,250   —   10,925   30,200   116,175   146,375   28,696   1998 (Note 4 )
Longview Mall, Longview, TX   31,814   259   3,567   124   7,120   383   10,687   11,070   4,796   1978  
Mall of Georgia, Mill Creek, GA   191,520   47,492   359,042   —   459   47,492   359,501   406,993   67,521   1999 (Note 5 )
Maplewood Mall, Minneapolis, MN   —   17,119   80,758   —   9,779   17,119   90,537   107,656   14,117   2002 (Note 4 )
Markland Mall, Kokomo, IN   22,509   —   7,568   —   7,891   —   15,459   15,459   7,435   1968  
McCain Mall, N. Little Rock, AR   22,148   —   9,515   —   10,255   —   19,770   19,770   13,902   1973  
Melbourne Square, Melbourne, FL   —   15,762   55,891   4,160   23,855   19,922   79,746   99,668   20,272   1982  
Menlo Park Mall, Edison, NJ   —   65,684   223,252   —   27,208   65,684   250,460   316,144   67,146   1997 (Note 4 )
Midland Park Mall, Midland, TX   32,860   687   9,213   —   10,467   687   19,680   20,367   10,975   1980  
Miller Hill Mall, Duluth, MN   —   2,537   18,092   —   21,927   2,537   40,019   42,556   21,647   1973  
Montgomery Mall, Montgomeryville, PA   92,508   27,105   86,915   —   2,889   27,105   89,804   116,909   15,896   2004 (Note 5 )
Muncie Mall, Muncie, IN   —   172   5,776   52   26,344   224   32,120   32,344   12,938   1970  
Nanuet Mall, Nanuet, NY   —   27,310   162,993   —   3,064   27,310   166,057   193,367   60,797   1998 (Note 4 )
North East Mall, Hurst, TX   —   128   12,966   19,010   142,405   19,138   155,371   174,509   47,806   1971  
Northfield Square Mall, Bourbonnais, IL   30,382   362   53,396   —   879   362   54,275   54,637   27,133   2004 (Note 5 )
Northgate Mall, Seattle, WA   —   24,392   115,992   —   56,894   24,392   172,886   197,278   38,071   1987  
Northlake Mall, Atlanta, GA   69,450   33,400   98,035   —   3,817   33,400   101,852   135,252   34,147   1998 (Note 4 )
Northwoods Mall, Peoria, IL   —   1,185   12,779   2,451   35,952   3,636   48,731   52,367   23,230   1983  
Oak Court Mall, Memphis, TN   —   15,673   57,304   —   7,940   15,673   65,244   80,917   18,163   1997 (Note 4 )
Ocean County Mall, Toms River, NJ   —   20,404   124,945   —   21,436   20,404   146,381   166,785   33,055   1998 (Note 4 )

110

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2006
(Dollars in thousands)

 
    
   Initial Cost (Note 3)
   Cost Capitalized
Subsequent to Acquisition (Note 3)
   Gross Amounts At Which
Carried At Close of Period
    
    
  
Name, Location
   Encumbrances
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Land
   Buildings and
Improvements
   Total (1)
   Accumulated
Depreciation (2)
   Date of
Construction
  
Orange Park Mall, Orange Park, FL   —   12,998   65,121   —   36,972   12,998   102,093   115,091   30,684   1994 (Note 4 )
Orland Square, Orland Park, IL   —   35,514   129,906   —   18,978   35,514   148,884   184,398   40,219   1997 (Note 4 )
Oxford Valley Mall, Langhorne, PA   79,924   24,544   100,287   —   3,637   24,544   103,924   128,468   34,884   2003 (Note 4 )
Paddock Mall, Ocala, FL   —   11,198   39,727   —   8,657   11,198   48,384   59,582   14,057   1980  
Palm Beach Mall, West Palm Beach, FL   52,567   11,962   112,437   —   35,228   11,962   147,665   159,627   63,467   1967  
Penn Square Mall, Oklahoma City, OK   68,258   2,043   155,958   —   24,824   2,043   180,782   182,825   37,112   2002 (Note 4 )
Pheasant Lane Mall, Nashua, NH   —   3,902   155,068   528   9,048   4,430   164,116   168,546   38,549   2004 (Note 5 )
Phipps Plaza, Atlanta, GA   —   19,200   210,610   —   18,565   19,200   229,175   248,375   54,330   1998 (Note 4 )
Plaza Carolina, Carolina, PR   247,903   15,493   279,560   —   2,285   15,493   281,845   297,338   25,486   2004 (Note 4 )
Port Charlotte Town Center, Port Charlotte, FL   52,007   5,471   58,570   —   13,802   5,471   72,372   77,843   23,149   1989  
Prien Lake Mall, Lake Charles, LA   —   1,842   2,813   3,091   38,428   4,933   41,241   46,174   15,262   1972  
Raleigh Springs Mall, Memphis, TN   —   9,137   28,604   —   12,369   9,137   40,973   50,110   23,705   1971  
Richardson Square Mall, Richardson, TX   —   4,532   6,329   1,268   11,212   5,800   17,541   23,341   11,326   1977  
Richmond Town Square, Richmond Heights, OH   46,156   2,600   12,112   —   60,930   2,600   73,042   75,642   29,417   1966  
River Oaks Center, Calumet City, IL   —   30,884   101,224   —   8,507   30,884   109,731   140,615   28,895   1997 (Note 4 )
Rockaway Townsquare, Rockaway, NJ   —   44,116   212,257   27   15,575   44,143   227,832   271,975   52,983   1998 (Note 4 )
Rolling Oaks Mall, San Antonio, TX   —   2,141   38,609   —   12,927   2,141   51,536   53,677   22,608   1988  
Roosevelt Field, Garden City, NY   —   164,058   702,008   2,117   34,460   166,175   736,468   902,643   170,033   1998 (Note 4 )
Ross Park Mall, Pittsburgh, PA   —   23,541   90,203   —   32,153   23,541   122,356   145,897   42,901   1986  
Santa Rosa Plaza, Santa Rosa, CA   —   10,400   87,864   —   7,640   10,400   95,504   105,904   23,156   1998 (Note 4 )
Shops at Mission Viejo, The, Mission Viejo, CA   —   9,139   54,445   7,491   144,257   16,630   198,702   215,332   59,931   1979  
South Hills Village, Pittsburgh, PA   —   23,445   125,840   —   14,010   23,445   139,850   163,295   36,241   1997 (Note 4 )
South Shore Plaza, Braintree, MA   —   101,200   301,495   —   31,625   101,200   333,120   434,320   74,602   1998 (Note 4 )
Southern Park Mall, Boardman, OH   —   16,982   77,767   97   21,701   17,079   99,468   116,547   31,938   1970  
SouthPark, Charlotte, NC   —   32,141   188,004   100   155,864   32,241   343,868   376,109   47,155   2002 (Note 4 )
St. Charles Towne Center, Waldorf, MD   —   7,710   52,934   1,180   14,875   8,890   67,809   76,699   31,386   1990  
Stanford Shopping Center, Palo Alto, CA   220,000   —   339,537   —   2,679   —   342,216   342,216   38,308   2003 (Note 4 )
Summit Mall, Akron, OH   —   15,374   51,137   —   18,762   15,374   69,899   85,273   22,127   1965  
Sunland Park Mall, El Paso, TX   35,315   2,896   28,900   —   6,286   2,896   35,186   38,082   17,569   1988  
Tacoma Mall, Tacoma, WA   126,763   37,803   125,826   —   28,390   37,803   154,216   192,019   44,934   1987  
Tippecanoe Mall, Lafayette, IN   —   2,897   8,439   5,517   42,856   8,414   51,295   59,709   27,966   1973  
Town Center at Aurora, Aurora, CO   —   9,959   56,766   6   55,528   9,965   112,294   122,259   24,185   1998 (Note 4 )
Town Center at Boca Raton, Boca Raton, FL   —   64,200   307,279   —   92,668   64,200   399,947   464,147   92,101   1998 (Note 4 )
Towne East Square, Wichita, KS   66,669   8,525   18,479   1,429   29,574   9,954   48,053   58,007   25,101   1975  

111

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2006
(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
  
Towne West Square, Wichita, KS   52,039   972   21,203   61   8,012   1,033   29,215   30,248   15,610   1980  
Treasure Coast Square, Jensen Beach, FL   —   11,124   72,990   3,067   27,314   14,191   100,304   114,495   28,695   1987  
Tyrone Square, St. Petersburg, FL   —   15,638   120,962   —   25,319   15,638   146,281   161,919   42,275   1972  
University Mall, Little Rock, AR   —   123   17,411   —   3,227   123   20,638   20,761   12,619   1967  
University Mall, Pensacola, FL   —   4,256   26,657   —   4,026   4,256   30,683   34,939   11,896   1994  
University Park Mall, Mishawaka, IN   56,825   15,105   61,100   —   23,722   15,105   84,822   99,927   75,952   1996 (Note 4 )
Upper Valley Mall, Springfield, OH   47,904   8,421   38,745   —   3,693   8,421   42,438   50,859   13,343   1979  
Valle Vista Mall, Harlingen, TX   29,335   1,398   17,159   372   13,345   1,770   30,504   32,274   14,474   1983  
Virginia Center Commons, Glen Allen, VA   —   9,764   50,547   4,149   7,944   13,913   58,491   72,404   20,275   1991  
Walt Whitman Mall, Huntington Station, NY   —   51,700   111,258   3,789   36,443   55,489   147,701   203,190   46,484   1998 (Note 4 )
Washington Square, Indianapolis, IN   30,693   16,800   36,495   462   27,233   17,262   63,728   80,990   25,982   1974  
West Ridge Mall, Topeka, KS   68,711   5,453   34,132   197   7,387   5,650   41,519   47,169   18,890   1988  
Westminster Mall, Westminster, CA   —   43,464   84,709   —   17,362   43,464   102,071   145,535   24,684   1998 (Note 4 )
White Oaks Mall, Springfield, IL   50,000   3,024   35,692   2,413   33,189   5,437   68,881   74,318   23,218   1977  
Wolfchase Galleria, Memphis, TN   70,716   16,274   128,276   —   7,973   16,274   136,249   152,523   35,316   2002 (Note 4 )
Woodland Hills Mall, Tulsa, OK   81,587   34,211   187,123   —   3,081   34,211   190,204   224,415   32,076   2004 (Note 5 )

Premium Outlet Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Albertville Premium Outlets, Albertville, MN   —   3,900   97,059   —   1,922   3,900   98,981   102,881   11,222   2004 (Note 4 )
Allen Premium Outlets, Allen, TX   —   13,855   43,687   97   18,884   13,952   62,571   76,523   7,293   2004 (Note 4 )
Aurora Farms Premium Outlets, Aurora, OH   —   2,370   24,326   —   1,676   2,370   26,002   28,372   7,113   2004 (Note 4 )
Camarillo Premium Outlets, Camarillo, CA   —   16,670   224,721   —   2,108   16,670   226,829   243,499   20,356   2004 (Note 4 )
Carlsbad Premium Outlets, Carlsbad, CA   —   12,890   184,990   96   683   12,986   185,673   198,659   16,781   2004 (Note 4 )
Carolina Premium Outlets, Smithfield, NC   20,231   3,170   59,863   —   1,049   3,170   60,912   64,082   8,798   2004 (Note 4 )
Chicago Premium Outlets, Aurora, IL   —   659   118,005   7,903   15,073   8,562   133,078   141,640   13,067   2004 (Note 4 )
Clinton Crossings Premium Outlets, Clinton, CT   —   2,060   107,557   32   1,218   2,092   108,775   110,867   11,797   2004 (Note 4 )
Columbia Gorge Premium Outlets, Troutdale, OR   —   7,900   16,492   —   789   7,900   17,281   25,181   4,143   2004 (Note 4 )
Desert Hills Premium Outlets, Cabazon, CA   —   3,440   338,679   —   213   3,440   338,892   342,332   26,998   2004 (Note 4 )
Edinburgh Premium Outlets, Edinburgh, IN   —   2,857   47,309   —   9,949   2,857   57,258   60,115   7,533   2004 (Note 4 )
Folsom Premium Outlets, Folsom, CA   —   9,060   50,281   —   1,666   9,060   51,947   61,007   8,254   2004 (Note 4 )
Gilroy Premium Outlets, Gilroy, CA   64,144   9,630   194,122   —   2,095   9,630   196,217   205,847   20,762   2004 (Note 4 )
Jackson Premium Outlets, Jackson, NJ   —   6,413   104,013   3   2,084   6,416   106,097   112,513   8,423   2004 (Note 4 )
Johnson Creek Premium Outlets, Johnson Creek, WI   —   2,800   39,546   —   2,217   2,800   41,763   44,563   3,489   2004 (Note 4 )
Kittery Premium Outlets, Kittery, ME   10,619   957   60,522   —   593   957   61,115   62,072   5,947   2004 (Note 4 )
Las Vegas Outlet Center, Las Vegas, NV   —   13,085   160,777   —   1,367   13,085   162,144   175,229   10,770   2004 (Note 4 )
Las Vegas Premium Outlets, Las Vegas, NV   —   25,435   134,973   —   21,228   25,435   156,201   181,636   14,205   2004 (Note 4 )

112

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2006
(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
  
Leesburg Corner Premium Outlets, Leesburg, VA   —   7,190   162,023   —   2,402   7,190   164,425   171,615   18,136   2004 (Note 4 )
Liberty Village Premium Outlets, Flemington, NJ   —   5,670   28,904   —   1,121   5,670   30,025   35,695   5,561   2004 (Note 4 )
Lighthouse Place Premium Outlets, Michigan City, IN   44,261   6,630   94,138   —   1,868   6,630   96,006   102,636   14,236   2004 (Note 4 )
Napa Premium Outlets, Napa, CA   —   11,400   45,023   —   643   11,400   45,666   57,066   5,151   2004 (Note 4 )
North Georgia Premium Outlets, Dawsonville, GA   —   4,300   132,325   —   1,482   4,300   133,807   138,107   15,177   2004 (Note 4 )
Orlando Premium Outlets, Orlando, FL   —   14,040   304,410   15,855   1,014   29,895   305,424   335,319   22,829   2004 (Note 4 )
Osage Beach Premium Outlets, Osage Beach, MO   —   9,460   85,804   3   1,470   9,463   87,274   96,737   11,115   2004 (Note 4 )
Petaluma Village Premium Outlets, Petaluma, CA   —   13,322   14,067   —   1,582   13,322   15,649   28,971   3,830   2004 (Note 4 )
Rio Grande Valley Premium Outlets, Mercedes, TX   —   12,693   41,547   —   —   12,693   41,547   54,240   251   2005  
Round Rock Premium Outlets, Round Rock, TX   —   22,911   82,252   —   —   22,911   82,252   105,163   1,043   2005  
Seattle Premium Outlets, Seattle, WA   —   13,557   103,722   —   2,765   13,557   106,487   120,044   7,257   2004 (Note 4 )
St. Augustine Premium Outlets, St. Augustine, FL   —   6,090   57,670   2   4,562   6,092   62,232   68,324   7,766   2004 (Note 4 )
The Crossings Premium Outlets, Tannersville, PA   56,707   7,720   172,931   —   7,381   7,720   180,312   188,032   15,661   2004 (Note 4 )
Vacaville Premium Outlets, Vacaville, CA   —   9,420   84,856   —   1,875   9,420   86,731   96,151   12,436   2004 (Note 4 )
Waikele Premium Outlets, Waipahu, HI   —   22,630   77,316   —   974   22,630   78,290   100,920   8,782   2004 (Note 4 )
Waterloo Premium Outlets, Waterloo, NY   35,649   3,230   75,277   —   4,963   3,230   80,240   83,470   10,803   2004 (Note 4 )
Woodbury Common Premium Outlets, Central Valley, NY   —   11,110   862,557   —   3,154   11,110   865,711   876,821   67,497   2004 (Note 4 )
Wrentham Village Premium Outlets, Wrentham, MA   —   4,900   282,031   —   2,399   4,900   284,430   289,330   26,646   2004 (Note 4 )

Community/Lifestyle Centers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Arboretum at Great Hills, Austin, TX   —   7,640   36,774   71   7,497   7,711   44,271   51,982   10,612   1998 (Note 4 )
Bloomingdale Court, Bloomingdale, IL   27,532   8,748   26,184   —   9,152   8,748   35,336   44,084   12,988   1987  
Boardman Plaza, Youngstown, OH   23,598   7,265   22,007   —   12,525   7,265   34,532   41,797   12,120   1951  
Brightwood Plaza, Indianapolis, IN   —   65   128   —   337   65   465   530   275   1965  
Celina Plaza, El Paso, TX   —   138   815   —   110   138   925   1,063   514   1978  
Charles Towne Square, Charleston, SC   —   —   1,768   370   10,636   370   12,404   12,774   4,835   1976  
Chesapeake Center, Chesapeake, VA   —   5,352   12,279   —   358   5,352   12,637   17,989   3,776   1989  

113

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2006
(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
  
Countryside Plaza, Countryside, IL   —   332   8,507   2,554   8,167   2,886   16,674   19,560   5,591   1977  
Dare Centre, Kill Devil Hills, NC   1,684   —   5,702   —   111   —   5,813   5,813   384   2004 (Note 4 )
DeKalb Plaza, King of Prussia, PA   3,301   1,955   3,405   —   898   1,955   4,303   6,258   1,122   2003 (Note 4 )
Eastland Plaza, Tulsa, OK   —   651   3,680   —   85   651   3,765   4,416   2,333   1986  
Forest Plaza, Rockford, IL   15,101   4,132   16,818   453   2,318   4,585   19,136   23,721   7,130   1985  
Gateway Shopping Centers, Austin, TX   87,000   24,549   81,437   —   7,084   24,549   88,521   113,070   10,160   2004 (Note 4 )
Great Lakes Plaza, Mentor, OH   —   1,028   2,025   —   3,643   1,028   5,668   6,696   2,413   1976  
Greenwood Plus, Greenwood, IN   —   1,131   1,792   —   3,735   1,131   5,527   6,658   2,308   1979  
Griffith Park Plaza, Griffith, IN   —   —   2,412   1,504   567   1,504   2,979   4,483   2,254   1979  
Henderson Square, King of Prussia, PA   15,063   4,223   15,124   —   132   4,223   15,256   19,479   1,863   2003 (Note 4 )
Highland Lakes Center, Orlando, FL   15,670   7,138   25,284   —   1,361   7,138   26,645   33,783   9,617   1991  
Ingram Plaza, San Antonio, TX   —   421   1,802   4   57   425   1,859   2,284   1,079   1980  
Keystone Shoppes, Indianapolis, IN   —   —   4,232   —   947   —   5,179   5,179   1,374   1997 (Note 4 )
Knoxville Commons, Knoxville, TN   —   3,731   5,345   —   1,738   3,731   7,083   10,814   3,906   1987  
Lake Plaza, Waukegan, IL   —   2,487   6,420   —   974   2,487   7,394   9,881   2,780   1986  
Lake View Plaza, Orland Park, IL   20,073   4,775   17,543   —   11,066   4,775   28,609   33,384   9,724   1986  
Lakeline Plaza, Austin, TX   22,008   5,822   30,875   —   7,140   5,822   38,015   43,837   10,899   1998  
Lima Center, Lima, OH   —   1,808   5,151   —   6,753   1,808   11,904   13,712   3,098   1978  
Lincoln Crossing, O'Fallon, IL   3,038   674   2,192   —   562   674   2,754   3,428   975   1990  
Lincoln Plaza, King of Prussia, PA   —   —   21,299   —   800   —   22,099   22,099   6,498   2003 (Note 4 )
MacGregor Village, Cary, NC   6,775   557   8,897   —   258   557   9,155   9,712   713   2004 (Note 4 )
Mall of Georgia Crossing, Mill Creek, GA   —   9,506   32,892   —   111   9,506   33,003   42,509   8,049   2004 (Note 5 )
Markland Plaza, Kokomo, IN   —   206   738   —   6,205   206   6,943   7,149   1,790   1974  
Martinsville Plaza, Martinsville, VA   —   —   584   —   328   —   912   912   680   1967  
Matteson Plaza, Matteson, IL   8,840   1,771   9,737   —   2,323   1,771   12,060   13,831   5,168   1988  
Muncie Plaza, Muncie, IN   7,643   267   10,509   87   663   354   11,172   11,526   3,184   1998  
New Castle Plaza, New Castle, IN   —   128   1,621   —   1,435   128   3,056   3,184   1,637   1966  
North Ridge Plaza, Joliet, IL   —   2,831   7,699   —   1,671   2,831   9,370   12,201   3,565   1985  
North Ridge Shopping Center, Raleigh, NC   8,275   462   12,838   —   348   462   13,186   13,648   910   2004 (Note 4 )
Northwood Plaza, Fort Wayne, IN   —   148   1,414   —   1,367   148   2,781   2,929   1,503   1974  
Park Plaza, Hopkinsville, KY   —   300   1,572   —   225   300   1,797   2,097   1,577   1968  
Regency Plaza, St. Charles, MO   4,143   616   4,963   —   507   616   5,470   6,086   1,925   1988  
Rockaway Convenience Center, Rockaway, NJ   —   5,149   26,435   —   6,297   5,149   32,732   37,881   5,131   1998 (Note 4 )
Rockaway Town Plaza, Rockaway, NJ   —   —   15,295   —   1,044   —   16,339   16,339   835   2004  
Shops at Arbor Walk, Austin, TX   —   930   42,546   —   —   930   42,546   43,476   58   2006  

114

SCHEDULE III

Simon Property Group, L.P. and Subsidiaries
Real Estate and Accumulated Depreciation
December 31, 2006
(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
  
Shops at North East Mall, The, Hurst, TX     —   12,541     28,177     402     5,316     12,943     33,493     46,436     10,832   1999  
St. Charles Towne Plaza, Waldorf, MD     26,518   8,377     18,993     —     2,300     8,377     21,293     29,670     8,264   1987  
Teal Plaza, Lafayette, IN     —   99     878     —     2,956     99     3,834     3,933     1,739   1962  
Terrace at the Florida Mall, Orlando, FL     —   2,150     7,623     —     4,050     2,150     11,673     13,823     2,884   1989  
Tippecanoe Plaza, Lafayette, IN     —   —     745     234     4,992     234     5,737     5,971     2,646   1974  
University Center, Mishawaka, IN     —   2,388     5,214     —     3,013     2,388     8,227     10,615     7,004   1980  
Washington Plaza, Indianapolis, IN     —   941     1,697     —     308     941     2,005     2,946     2,487   1976  
Waterford Lakes Town Center, Orlando, FL     —   8,679     72,836     —     12,807     8,679     85,643     94,322     24,347   1999  
West Ridge Plaza, Topeka, KS     5,342   1,376     4,560     —     1,570     1,376     6,130     7,506     2,399   1988  
White Oaks Plaza, Springfield, IL     16,298   3,169     14,267     —     944     3,169     15,211     18,380     5,585   1986  
Wolf Ranch, Georgetown, TX     —   22,118     51,509     —     491     22,118     52,000     74,118     2,811   2004  

Other Properties
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crossville Outlet Center, Crossville, TN     —   263     4,380     —     120     263     4,500     4,763     353   2004 (Note 4 )
Factory Merchants Branson, Branson, MO     —   1,383     19,637     1     682     1,384     20,319     21,703     1,870   2004 (Note 4 )
Factory Shoppes at Branson Meadows, Branson, MO     9,409   —     5,206     —     39     —     5,245     5,245     360   2004 (Note 4 )
Factory Stores of America — Boaz, AL     2,752   —     924     —     1     —     925     925     54   2004 (Note 4 )
Factory Stores of America — Georgetown, KY     6,521   148     3,610     —     25     148     3,635     3,783     233   2004 (Note 4 )
Factory Stores of America — Graceville, FL     1,937   12     408     —     36     12     444     456     26   2004 (Note 4 )
Factory Stores of America — Lebanon, MO     1,628   24     214     —     4     24     218     242     20   2004 (Note 4 )
Factory Stores of America — Nebraska City, NE     1,529   26     566     —     —     26     566     592     41   2004 (Note 4 )
Factory Stores of America — Story City, IA     1,891   7     526     —     —     7     526     533     33   2004 (Note 4 )
Factory Stores of North Bend, North Bend, WA     —   2,143     36,197     —     492     2,143     36,689     38,832     2,734   2004 (Note 4 )

Development Projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Domain, The, Austin, TX     —   39,504     138,302     —     —     39,504     138,302     177,806     —   2005  
Palms Crossing, McAllen, TX     —   16,436     8,291     —     —     16,436     8,291     24,727     —   2006  
Pier Park, Panama City Beach, FL     —   28,432     20,407     —     —     28,432     20,407     48,839     —   2006  
Philadelphia Premium Outlets, Limerick, PA     —   16,549     17,053     —     —     16,549     17,053     33,602     —   2006  
Other pre-development costs     —   54,322     37,175     —     —     54,322     37,175     91,497     —      
Other     —   5,172     67,915     665     2,184     5,837     70,099     75,936     4,452      
   
 
 
 
 
 
 
 
 
     
    $ 4,349,247   2,499,253   $ 16,707,854   $ 151,952   $ 3,285,240   $ 2,651,205   $ 19,993,094   $ 22,644,299   $ 4,479,198      
   
 
 
 
 
 
 
 
 
     

115

Simon Property Group, L.P. and Subsidiaries
Notes to Schedule III as of December 31, 2006
(Dollars in thousands)

(1) Reconciliation of Real Estate Properties:

            The changes in real estate assets for the years ended December 31, 2006, 2005, and 2004 are as follows:

 
   2006
   2005
   2004
  
Balance, beginning of year   $ 21,551,247   $ 21,082,582   $ 14,834,443  
  Acquisitions and consolidations     402,095     294,654     5,753,600  
  Improvements     772,806     661,569     624,610  
  Disposals and de-consolidations     (81,849 )   (487,558 )   (112,071 )
  Impairment write-down     —     —     (18,000 )
   
 
 
 
Balance, close of year   $ 22,644,299   $ 21,551,247   $ 21,082,582  
   
 
 
 

            The unaudited aggregate cost of real estate assets for federal income tax purposes as of December 31, 2006 was $14,516,444.

(2) Reconciliation of Accumulated Depreciation:

            The changes in accumulated depreciation and amortization for the years ended December 31, 2006, 2005, and 2004 are as follows:

 
   2006
   2005
   2004
  
Balance, beginning of year   $ 3,694,807   $ 3,066,604   $ 2,482,955  
  Acquisitions and consolidations (5)     64,818     2,627     76,121  
  Depreciation expense     767,726     768,028     545,882  
  Disposals     (48,153 )   (142,452 )   (38,354 )
   
 
 
 
Balance, close of year   $ 4,479,198   $ 3,694,807   $ 3,066,604  
   
 
 
 

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

•
Buildings and Improvements — typically 10-40 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 the Operating Partnership or its predecessors. The date of construction represents acquisition date.

(5)
Property initial cost for these properties is the cost at the date of consolidation for properties previously accounted for under the equity method of accounting. Accumulated depreciation amounts for properties consolidated which were previously accounted for under the equity method of accounting include the minority interest holders' portion of accumulated depreciation.

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Exhibits
    
2   Agreement and Plan of Merger, dated as of June 20, 2004, by and among Simon Property Group, L.P., 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 Current Report on Form 8-K filed by Simon Property Group, L.P. on June 22, 2004).
3.1   Second Amended and Restated Certificate of Limited Partnership, as amended (incorporated by reference to Exhibit 3.1 of its Annual Report on Form 10-K for 2002 filed by Simon Property Group,  L.P.).
3.2   Seventh Amended and Restated Limited Partnership Agreement (incorporated by reference to Exhibit 3.1 of its Annual Report on Form 10-K for 2001 filed by Simon Property Group, L.P.).
3.3   Amended and Restated Supplement to Seventh Amended and Restated Limited Partnership Agreement (Exhibits B-1 and B-2) dated October 14, 2004 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Simon Property Group, L.P. on October 20, 2004).
3.4   Agreement between Simon Property Group, Inc. and Simon Property Group, L.P. dated March 7, 2007, but effective as of August 27, 1999, regarding a prior agreement filed under an exhibit 99.1 to Form S-3/A of Simon Property Group, L.P. on November 20, 1996.
4(a)   Indenture, dated as of November 26, 1996, by and among Simon Property Group, L.P. and The Chase Manhattan Bank, as trustee (incorporated by reference to Exhibit 4.1 to the Registration Statement of Form S-3 filed on October 21, 1996 (Reg. No. 333-11491)).
10.1   Credit Agreement, dated as of October 12, 2004, among Simon Property Group, L.P., the Lenders named therein, and the Co-Agents named therein (incorporated by reference to Exhibit 10 of the Quarterly Report on Form 10-Q filed by Simon Property Group, Inc. 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*   Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Appendix G to the Definitive Proxy Statement on Schedule 14A dated April 7, 2003).
10.4(b)   Option Agreement to acquire the Excluded Retail Property (Previously filed as Exhibit 10.10).
10.5   Voting Agreement dated as of June 20, 2004 among Simon Property Group, Inc., Simon Property Group, L.P., and certain holders of shares of common stock of Chelsea Property Group, Inc. and/or common units of CPG Partners, L.P. (incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K filed by Simon Property Group, L.P. on June 22, 2004).
12   Statement regarding computation of ratios.
21   List of Subsidiaries of the Simon Property Group, L.P.
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.
(a)
Does not include supplemental indentures which authorize the issuance of debt securities series, none of which exceeds 10% of the total assets of Simon Property Group, L.P. on a consolidated basis. Simon Property Group, L.P. agrees to file copies of any such supplemental indentures upon the request of the Commission.

(b)
Incorporated by reference to the exhibit indicated filed with the Annual Report on Form 10-K for the year ended December 31, 1993 by a predecessor of Simon Property Group, L.P.

*
Represents a management contract, or compensatory plan, contract or arrangement required to be filed pursuant to Regulation S-K.

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TABLE OF CONTENTS
Part I
Mortgage and Other Debt on Portfolio Properties As of December 31, 2006 (Dollars in thousands)
Mortgage and Other Debt on Portfolio Properties and Investments in Real Estate As of December 31, 2006 (Dollars in thousands)
Part II
Part III
Part IV
Simon Property Group, L.P. and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except unit amounts)
Simon Property Group, L.P. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income (Dollars in thousands, except per unit amounts)
Simon Property Group, L.P. and Subsidiaries Consolidated Statements of Cash Flows (Dollars in thousands)
Simon Property Group, L.P. and Subsidiaries Consolidated Statements of Partners' Equity (Dollars in thousands)
Simon Property Group, L.P. and Subsidiaries Notes to Consolidated Financial Statements (Dollars in thousands, except unit and per unit amounts and where indicated as in millions or billions)
SIGNATURES

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Exhibit 3.4

AGREEMENT BETWEEN SIMON PROPERTY GROUP, INC.
AND SIMON PROPERTY GROUP, L.P.

        This Agreement is made as of the 7th day of March, 2007, but effective as of August 27, 1999, by and between Simon Property Group, Inc., a Delaware corporation and successor to Simon DeBartolo Group, Inc., a Maryland corporation ("SDG"), having a principal address of 225 W. Washington Street, Indianapolis, Indiana 46204 (the "Company"), and Simon Property Group, L.P., a Delaware limited partnership (f/k/a Simon DeBartolo Group, L.P.), having its principal address of 225 W. Washington Street, Indianapolis, Indiana 46204 (the "Partnership").

W I T N E S S E T H:

        SDG and the Partnership are parties to a certain agreement dated as of November 13, 1996, a true, correct and complete copy of which is attached hereto (the "Prior Agreement"). The Company, through a series of mergers, has succeeded to the interest of SDG under the Agreement and is currently the sole general partner of the Partnership. The Partnership is governed by the terms and conditions of a certain Seventh Amended and Restated Partnership Agreement of Simon Property Group, L.P., dated August 27, 1999 (the "Restated Partnership Agreement"). Capitalized terms used but not defined in this Agreement shall have the meanings given such terms in the Partnership Agreement.

        The parties or their predecessors entered into the Prior Agreement for the purpose of describing the process by which the Partnership will have access to the funds required to redeem Partnership Units owned by a Limited Partner based upon an election by the General Partner. Due to a scriven's error, the provisions of the Prior Agreement were not expressly incorporated into the Restated Partnership Agreement. The parties hereto now wish to reaffirm and ratify the terms and conditions of the Prior Agreement and incorporate the same by reference into the Partnership Agreement.

        NOW THEREFORE, in consideration of the premises and for good and valuable consideration paid to the Company, the receipt and sufficiency of which are hereby acknowledged, the Company hereby agrees to and with the Partnership as follows:

1

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.


 
SIMON PROPERTY GROUP, L.P.,
a Delaware limited partnership

 
By:
Simon Property Group, Inc., a Delaware corporation

 
By:
/s/ Stephen E. Sterrett
Stephen E. Sterrett
Executive Vice President and
Chief Financial Officer

 
SIMON PROPERTY GROUP, INC.,
a Delaware corporation, general partner

 
By:
/s/ Stephen E. Sterrett
Stephen E. Sterrett
Executive Vice President and
Chief Financial Officer

2

The following document below was filed on November 20, 1996 as an Exhibit 99.1 to the third amendment to a Form S-3 of Simon Property Group, L.P. and is being included as an attachment to the Agreement dated March 7, 2007, but effective as of August 27, 1999, with respect to the Seventh Amended and Restated Partnership Agreement of Simon Property Group, L.P.

#    #    #    #    #

EXHIBIT 99.1

THIS AGREEMENT is made as of the 13th day of November, 1996, by and between SIMON DeBARTOLO GROUP, INC., a Maryland corporation having its principal office at National City Center, 115 West Washington Street, Indianapolis, Indiana 46204 (the "Company"), and SIMON DeBARTOLO GROUP, L.P., a Delaware limited partnership having its principal office at National City Center, 115 West Washington Street, Indianapolis, Indiana 46204 (the "Partnership").

W I T N E S S E T H:

        The Company is the Non-Managing General Partner of the Partnership under and pursuant to the terms of the Fifth Amended and Restated Limited Partnership Agreement of the Partnership dated August 9, 1996 (the "Partnership Agreement"). Capitalized terms used and not defined in this Agreement shall have the meanings given such terms in the Partnership Agreement.

        Under the terms of Article 11 of the Partnership Agreement, each Limited Partner of the Partnership has the right, subject to certain conditions set forth therein, to exchange its Partnership Units for cash or Shares, as selected by the Company as Non-Managing General Partner. If in any instance the Company selects Shares, the Company becomes obligated to acquire the Partnership Units in question in exchange for the issuance by it to the Limited Partner which owns such Units of Shares equal in number to the number of Units being so exchanged (subject to certain adjustments provided for in said Article 11). If in any instance the Company selects cash, the Company becomes obligated to cause the Partnership to redeem the Partnership Units in question for a cash payment in the amount provided for in said Article 11.

        By virtue of the above-described arrangement, the Company can impose meaningful financial obligations on the Partnership by electing that Partnership Units tendered for exchange by Limited Partners pursuant to Article 11 of the Partnership Agreement be redeemed by the Partnership for cash, in lieu of being exchanged for Shares. In order to insure that the Partnership will have funds to meet such obligations, the Company has agreed to enter into this Agreement.

        NOW, THEREFORE, in consideration of the premises and for good and valuable consideration paid to the Company, the receipt and sufficiency of which are hereby acknowledged, the Company hereby agrees to and with the Partnership as follows:

        1.     The Company hereby agrees that the only manner in which it may hereafter elect to cause the Partnership redeem for cash any Partnership Units tendered for exchange pursuant to Article 11 of the Partnership Agreement, rather than electing to acquire such Partnership Units in exchange for Shares in accordance with said Article 11, is by contributing to the capital of the Partnership, in exchange for Additional Units, on or prior to the date of the closing established pursuant to said Article 11 for the exchange or redemption of such tendered Partnership Units, an amount in immediately available funds sufficient to enable the Partnership to effectuate such redemption.

        2.     The Company hereby further agrees that if on the date of any closing established pursuant to Article 11 of the Partnership Agreement, the Company shall not have made the capital contribution provided for in paragraph I above, it shall, as result, conclusively be deemed to have elected to acquire the tendered Partnership Units for Shares and shall be obligated at such closing to issue its Shares to the tendering Limited Partner, in the quantity established pursuant to said Article 11, in exchange for such Partnership Units.

3


        3.     The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. The provisions of this Agreement shall be governed by the laws of the State of Delaware.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.


 
SIMON DeBARTOLO GROUP, INC.

 
By:
/s/ RANDOLPH L. FOXWORTHY

 
Name: Randolph L. Foxworthy
Title: Executive Vice President

 
SIMON DeBARTOLO GROUP, L.P.

 
By:
SD PROPERTY GROUP, INC., Managing
General Partner

 
By:
/s/ RANDOLPH L. FOXWORTHY

 
Name: Randolph L. Foxworthy
Title: Executive Vice President

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AGREEMENT BETWEEN SIMON PROPERTY GROUP, INC. AND SIMON PROPERTY GROUP, L.P.

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Exhibit 12

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

 
   For the Year Ended December 31,
  
 
   2006
   2005
   2004
   2003
   2002
  
Earnings:                                
  Pre-tax income from continuing operations   $ 730,453   $ 473,557   $ 466,128   $ 441,560   $ 527,888  
  Add:                                
    Pre-tax income from 50% or greater than 50% owned unconsolidated entities     45,313     49,939     46,124     60,614     46,633  
    Minority interest in income of majority owned subsidiaries     11,524     13,743     9,687     7,277     10,498  
    Distributed income from less than 50% owned unconsolidated entities     53,000     66,165     45,909     42,939     37,811  
    Amortization of capitalized interest     5,027     2,772     2,533     1,845     1,872  
Fixed Charges     958,818     904,324     748,643     684,226     673,562  
Less:                                
    Income from unconsolidated entities     (110,819 )   (81,807 )   (81,113 )   (101,093 )   (77,389 )
    Interest capitalization     (34,073 )   (15,502 )   (15,546 )   (10,916 )   (5,507 )
   
 
 
 
 
 
Earnings   $ 1,659,243   $ 1,413,191   $ 1,222,357   $ 1,126,452   $ 1,215,368  
   
 
 
 
 
 
Fixed Charges:                                
  Portion of rents representative of the interest factor     9,052     8,869     7,077     5,489     4,236  
  Interest on indebtedness (including amortization of debt expense)     915,693     879,953     726,020     667,821     663,819  
  Interest capitalized     34,073     15,502     15,546     10,916     5,507  
   
 
 
 
 
 
Fixed Charges   $ 958,818   $ 904,324   $ 748,643   $ 684,226   $ 673,562  
   
 
 
 
 
 
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends     1.73x     1.56x     1.63x     1.65x     1.80x  
   
 
 
 
 
 

            For purposes of calculating the ratio of earnings to fixed charges, "earnings" have been computed by adding fixed charges, excluding capitalized interest, to pre-tax income from continuing operations including income from minority interests and our share of pre-tax income from 50%, or greater than 50%, owned unconsolidated entities which have fixed charges, and including distributed operating income from less than 50% owned unconsolidated joint ventures instead of income from the less than 50% owned 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, preferred distributions, and amortization of debt issue costs.

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Exhibit 21

List of Subsidiaries of Simon Property Group, L.P.

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

            Omits names of subsidiaries that as of December 31, 2006 were not, in the aggregate, a "significant subsidiary."

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Exhibit 23.1


Consent of Independent Registered Public Accounting Firm

            We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-68940) of Simon Property Group, L.P. and in the related prospectus of our reports dated March 14, 2007, with respect to the consolidated financial statements and schedule of Simon Property Group, L.P. and Subsidiaries, Simon Property Group, L.P. and Subsidiaries management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting of Simon Property Group, L.P. and Subsidiaries included in this Annual Report (Form 10-K) for the year ended December 31, 2006.

    /s/  ERNST & YOUNG LLP      
Indianapolis, Indiana
March 14, 2007		    

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Consent of Independent Registered Public Accounting Firm

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Exhibit 31.1


Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

        I, David Simon, certify that:

        1.     I have reviewed this Annual Report on Form 10-K of Simon Property Group, L.P.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):


Date: March 16, 2007
 
 

 
 
/s/ David Simon
David Simon
Chief Executive Officer of Simon Property Group, Inc., General Partner

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Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Exhibit 31.2


Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

        I, Stephen E. Sterrett, certify that:

        1.     I have reviewed this Annual Report on Form 10-K of Simon Property Group, L.P.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) for the registrant and have:

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):


Date: March 16, 2007
 
 

 
 
/s/ Stephen E. Sterrett
Stephen E. Sterrett
Executive Vice President and Chief Financial Officer of Simon Property Group, Inc., General Partner

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Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Exhibit 32


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

            In connection with the Annual Report of Simon Property Group, L.P. (the "Company"), on Form 10-K for the period ending December 31, 2006 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
of Simon Property Group, Inc., General Partner
March 16, 2007		    

/S/  STEPHEN E. STERRETT      
Stephen E. Sterrett
Executive Vice President and Chief Financial Officer of Simon Property Group, Inc., General Partner
March 16, 2007
 
 

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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