SEC Filing | Simon Property Group, L.P.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2023

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

SIMON PROPERTY GROUP, INC.

SIMON PROPERTY GROUP, L.P.

(Exact name of registrant as specified in its charter)

Delaware (Simon Property Group, Inc.) Delaware (Simon Property Group, L.P.) (State of incorporation or organization)	001-14469 (Simon Property Group, Inc.) 001-36110 (Simon Property Group, L.P.) (Commission File No.)	04-6268599 (Simon Property Group, Inc.) 34-1755769 (Simon Property Group, L.P.) (I.R.S. Employer Identification No.)
225 West Washington Street Indianapolis, Indiana 46204 (Address of principal executive offices)
(317) 636-1600 (Registrant’s telephone number, including area code)

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


	Title of each class	Trading Symbols	Name of each exchange on which registered
Simon Property Group, Inc.	Common stock, $0.0001 par value	SPG	New York Stock Exchange
Simon Property Group, Inc.	8³/₈% Series J Cumulative Redeemable Preferred Stock, $0.0001 par value	SPGJ	New York Stock Exchange

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.


Simon Property Group, Inc. Yes ⌧ No ◻	Simon Property Group, L.P. Yes ⌧ No ◻

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).


Simon Property Group, Inc. Yes ⌧ No ◻	Simon Property Group, L.P. Yes ⌧ No ◻

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Simon Property Group, Inc.:
Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻	Smaller reporting company ◻
			Emerging growth company ◻

Simon Property Group, L.P.:
Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ⌧	Smaller reporting company ◻
			Emerging growth company ◻

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Simon Property Group, Inc. ◻

Simon Property Group, L.P. ◻

Indicate by check mark whether Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

Simon Property Group, Inc. Yes ◻ No ⌧

Simon Property Group, L.P. Yes ◻ No ⌧

As of March 31, 2023, Simon Property Group, Inc. had 326,988,470 shares of common stock, par value $0.0001 per share, and 8,000 shares of Class B common stock, par value $0.0001 per share, outstanding. Simon Property Group, L.P. has no common stock outstanding.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarterly period ended March 31, 2023 of Simon Property Group, Inc., a Delaware corporation, and Simon Property Group, L.P., a Delaware limited partnership. Unless stated otherwise or the context otherwise requires, references to “Simon” mean Simon Property Group, Inc. and references to the “Operating Partnership” mean Simon Property Group, L.P. References to “we,” “us” and “our” mean collectively Simon, the Operating Partnership and those entities/subsidiaries owned or controlled by Simon and/or the Operating Partnership.

Simon is a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. We are structured as an umbrella partnership REIT under which substantially all of our business is conducted through the Operating Partnership, Simon’s majority-owned partnership subsidiary, for which Simon is the general partner. As of March 31, 2023, Simon owned an approximate 87.4% ownership interest in the Operating Partnership, with the remaining 12.6% ownership interest owned by limited partners. As the sole general partner of the Operating Partnership, Simon has exclusive control of the Operating Partnership’s day-to-day management.

We operate Simon and the Operating Partnership as one business. The management of Simon consists of the same members as the management of the Operating Partnership. As general partner with control of the Operating Partnership, Simon consolidates the Operating Partnership for financial reporting purposes, and Simon has no material assets or liabilities other than its investment in the Operating Partnership. Therefore, the assets and liabilities of Simon and the Operating Partnership are the same on their respective financial statements.

We believe that combining the quarterly reports on Form 10-Q of Simon and the Operating Partnership into this single report provides the following benefits:

●

enhances investors’ understanding of Simon and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

●

eliminates duplicative disclosure and provides a more streamlined presentation since substantially all of the disclosure in this report applies to both Simon and the Operating Partnership; and

●

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

We believe it is important for investors to understand the few differences between Simon and the Operating Partnership in the context of how we operate as a consolidated company. The primary difference is that Simon itself does not conduct business, other than acting as the general partner of the Operating Partnership and issuing equity or equity-related instruments from time to time. In addition, Simon itself does not incur any indebtedness, as all debt is incurred by the Operating Partnership or entities/subsidiaries owned or controlled by the Operating Partnership.

The Operating Partnership holds, directly or indirectly, substantially all of our assets, including our ownership interests in our joint ventures. The Operating Partnership conducts substantially all of our business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity issuances by Simon, which are contributed to the capital of the Operating Partnership in exchange for, in the case of common stock issuances by Simon, common units of partnership interest in the Operating Partnership, or units, or, in the case of preferred stock issuances by Simon, preferred units of partnership interest in the Operating Partnership, or preferred units, the Operating Partnership, directly or indirectly, generates the capital required by our business through its operations, the incurrence of indebtedness, proceeds received from the disposition of certain properties and joint ventures and the issuance of units or preferred units to third parties.

The presentation of stockholders’ equity, partners’ equity and noncontrolling interests are the main areas of difference between the consolidated financial statements of Simon and those of the Operating Partnership. The differences between stockholders’ equity and partners’ equity result from differences in the equity issued at the Simon and Operating Partnership levels. The units held by limited partners in the Operating Partnership are accounted for as partners’ equity in the Operating Partnership’s financial statements and as noncontrolling interests in Simon’s financial statements. The noncontrolling interests in the Operating Partnership’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in Simon’s financial statements include the same noncontrolling interests at the Operating Partnership level and, as previously stated, the units held by limited partners of the Operating Partnership. Although classified differently, total equity of Simon and the Operating Partnership is the same.

To help investors understand the differences between Simon and the Operating Partnership, this report provides:

●

separate consolidated financial statements for Simon and the Operating Partnership;

●

a single set of condensed notes to such consolidated financial statements that includes separate discussions of noncontrolling interests and stockholders’ equity or partners’ equity, accumulated other comprehensive income (loss) and per share and per unit data, as applicable;

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●

a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that also includes discrete information related to each entity; and

●

separate Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds sections related to each entity.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Simon and the Operating Partnership in order to establish that the requisite certifications have been made and that Simon and the Operating Partnership are each compliant with Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 and 18 U.S.C. §1350. The separate discussions of Simon and the Operating Partnership in this report should be read in conjunction with each other to understand our results on a consolidated basis and how management operates our business.

In order to highlight the differences between Simon and the Operating Partnership, the separate sections in this report for Simon and the Operating Partnership specifically refer to Simon and the Operating Partnership. In the sections that combine disclosure of Simon and the Operating Partnership, this report refers to actions or holdings of Simon and the Operating Partnership as being “our” actions or holdings. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures, holds assets and incurs debt, we believe that references to “we,” “us” or “our” in this context is appropriate because the business is one enterprise and we operate substantially all of our business through the Operating Partnership.

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Simon Property Group, Inc.

Simon Property Group, L.P.

Form 10-Q

INDEX

			Page
Part I — Financial Information

	Item 1.	Consolidated Financial Statements of Simon Property Group, Inc. (Unaudited)
		Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	5
		Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2023 and 2022	6
		Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	7
		Consolidated Statements of Equity at March 31, 2023 and 2022	8

		Consolidated Financial Statements of Simon Property Group, L.P. (Unaudited)
		Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	10
		Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2023 and 2022	11
		Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	12
		Consolidated Statements of Equity at March 31, 2023 and 2022	13

		Condensed Notes to Consolidated Financial Statements	15
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
	Item 3.	Qualitative and Quantitative Disclosures About Market Risk	46
	Item 4.	Controls and Procedures	46

Part II — Other Information

	Item 1.	Legal Proceedings	47
	Item 1A.	Risk Factors	47
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
	Item 3.	Defaults Upon Senior Securities	47
	Item 4.	Mine Safety Disclosures	47
	Item 5.	Other Information	47
	Item 6.	Exhibits	48

Signatures			49

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Simon Property Group, Inc.

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)


	March 31,		December 31,
	2023		2022
ASSETS:
Investment properties, at cost	$	38,505,497	$	38,326,912
Less - accumulated depreciation		16,823,305		16,563,749
		21,682,192		21,763,163
Cash and cash equivalents		1,155,423		621,628
Tenant receivables and accrued revenue, net		779,702		823,540
Investment in TRG, at equity		3,062,030		3,074,345
Investment in Klépierre, at equity		1,541,743		1,561,112
Investment in other unconsolidated entities, at equity		3,440,532		3,511,263
Right-of-use assets, net		494,591		496,930
Deferred costs and other assets		1,141,583		1,159,293
Total assets	$	33,297,796	$	33,011,274
LIABILITIES:
Mortgages and unsecured indebtedness	$	25,569,968	$	24,960,286
Accounts payable, accrued expenses, intangibles, and deferred revenues		1,351,870		1,491,583
Cash distributions and losses in unconsolidated entities, at equity		1,703,448		1,699,828
Dividend payable		2,436		1,997
Lease liabilities		495,573		497,953
Other liabilities		497,210		535,736
Total liabilities		29,620,505		29,187,383
Commitments and contingencies
Limited partners’ preferred interest in the Operating Partnership and noncontrolling redeemable interests		224,419		212,239
EQUITY:
Stockholders’ Equity
Capital stock (850,000,000 total shares authorized, $0.0001 par value, 238,000,000 shares of excess common stock, 100,000,000 authorized shares of preferred stock):
Series J 8^3/8% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation value of $39,847		41,352		41,435
Common stock, $0.0001 par value, 511,990,000 shares authorized, 342,905,419 and 342,905,419 issued and outstanding, respectively		34		34
Class B common stock, $0.0001 par value, 10,000 shares authorized, 8,000 issued and outstanding		—		—
Capital in excess of par value		11,231,471		11,232,881
Accumulated deficit		(6,069,767)		(5,926,974)
Accumulated other comprehensive loss		(160,854)		(164,873)
Common stock held in treasury, at cost, 15,916,949 and 15,959,628 shares, respectively		(2,038,723)		(2,043,979)
Total stockholders’ equity		3,003,513		3,138,524
Noncontrolling interests		449,359		473,128
Total equity		3,452,872		3,611,652
Total liabilities and equity	$	33,297,796	$	33,011,274

The accompanying notes are an integral part of these statements.

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Simon Property Group, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income

(Dollars in thousands, except per share amounts)


	For the Three Months Ended
	March 31,
	2023		2022
REVENUE:
Lease income	$	1,248,185	$	1,207,867
Management fees and other revenues		28,949		27,587
Other income		73,715		60,468
Total revenue		1,350,849		1,295,922
EXPENSES:
Property operating		111,748		103,664
Depreciation and amortization		307,059		310,163
Real estate taxes		111,159		111,691
Repairs and maintenance		22,174		22,304
Advertising and promotion		24,159		25,263
Home and regional office costs		56,820		52,197
General and administrative		9,107		7,833
Other		45,900		42,416
Total operating expenses		688,126		675,531
OPERATING INCOME BEFORE OTHER ITEMS		662,723		620,391
Interest expense		(199,429)		(185,159)
Income and other tax benefit		13,453		1,435
Income from unconsolidated entities		21,900		81,184
Unrealized gains (losses) in fair value of publicly traded equity instruments, net		20,608		(31,032)
Gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net		—		1,491
CONSOLIDATED NET INCOME		519,255		488,310
Net income attributable to noncontrolling interests		66,594		60,846
Preferred dividends		834		834
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	451,827	$	426,630
BASIC AND DILUTED EARNINGS PER COMMON SHARE:
Net income attributable to common stockholders	$	1.38	$	1.30

Consolidated Net Income	$	519,255	$	488,310
Unrealized gain on derivative hedge agreements		5,672		16,833
Net gain reclassified from accumulated other comprehensive loss into earnings		(501)		(387)
Currency translation adjustments		(751)		1,305
Changes in available-for-sale securities and other		194		(521)
Comprehensive income		523,869		505,540
Comprehensive income attributable to noncontrolling interests		67,189		62,982
Comprehensive income attributable to common stockholders	$	456,680	$	442,558

The accompanying notes are an integral part of these statements.

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Simon Property Group, Inc.

Unaudited Consolidated Statements of Cash Flows

(Dollars in thousands)


	For the Three Months Ended
	March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated Net Income	$	519,255	$	488,310
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization		322,392		324,124
Gain upon acquisition of controlling interests, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net		—		(1,491)
Unrealized (gains) losses in fair value of equity instruments		(20,608)		31,032
Straight-line lease loss		6,912		9,254
Equity in income of unconsolidated entities		(21,900)		(81,184)
Distributions of income from unconsolidated entities		119,146		121,448
Changes in assets and liabilities
Tenant receivables and accrued revenue, net		25,774		89,958
Deferred costs and other assets		3,981		(41,214)
Accounts payable, accrued expenses, intangibles, deferred revenues and other		(126,271)		(148,368)
Net cash provided by operating activities		828,681		791,869
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions		(27,712)		—
Funding of loans to related parties		(6,500)		(125,357)
Repayments of loans to related parties		2,913		71,930
Capital expenditures, net		(166,070)		(154,649)
Investments in unconsolidated entities		(10,664)		(124,429)
Purchase of equity instruments		—		(6,390)
Proceeds from sales of equity instruments		978		25,986
Distributions of capital from unconsolidated entities and other		47,315		213,010
Net cash used in investing activities		(159,740)		(99,899)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock and other, net of transaction costs		(83)		(82)
Purchase of shares related to stock grant recipients' tax withholdings		(2,624)		(3,757)
Redemption of limited partner units		(2,858)		(147)
Distributions to noncontrolling interest holders in properties		(5,525)		(1,205)
Contributions from noncontrolling interest holders in properties		6,459		4,833
Preferred distributions of the Operating Partnership		(479)		(479)
Distributions to stockholders and preferred dividends		(590,434)		(543,010)
Distributions to limited partners		(85,163)		(78,024)
Proceeds from issuance of debt, net of transaction costs		1,412,721		2,433,167
Repayments of debt		(867,160)		(2,522,273)
Net cash used in financing activities		(135,146)		(710,977)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		533,795		(19,007)
CASH AND CASH EQUIVALENTS, beginning of period		621,628		533,936
CASH AND CASH EQUIVALENTS, end of period	$	1,155,423	$	514,929

The accompanying notes are an integral part of these statements.

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Simon Property Group, Inc.

Unaudited Consolidated Statements of Equity

(Dollars in thousands)


					Accumulated						Common
					Other		Capital in				Stock
	Preferred		Common		Comprehensive		Excess of		Accumulated		Held in		Noncontrolling		Total
	Stock		Stock		Income (Loss)		Par Value		Deficit		Treasury		interests		Equity
December 31, 2022	$	41,435	$	34	$	(164,873)	$	11,232,881	$	(5,926,974)	$	(2,043,979)	$	473,128	$	3,611,652
Series J preferred stock premium amortization		(83)														(83)
Stock incentive program (65,017 common shares)								(7,880)				7,880				—
Redemption of limited partner units (22,442 units)								(2,645)						(213)		(2,858)
Amortization of stock incentive								5,379								5,379
Long-term incentive performance units														3,382		3,382
Issuance of unit equivalents and other (22,338 common shares repurchased)										(5,020)		(2,624)		189		(7,455)
Unrealized gain on hedging activities						4,959								713		5,672
Currency translation adjustments						(671)								(80)		(751)
Changes in available-for-sale securities and other						169								25		194
Net gain reclassified from accumulated other comprehensive loss into earnings						(438)								(63)		(501)
Other comprehensive income (loss)						4,019								595		4,614
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								3,736						(3,736)		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(590,434)				(85,163)		(675,597)
Distributions to other noncontrolling interest partners														(4,366)		(4,366)
Net income, excluding $479 attributable to preferred interests in the Operating Partnership and $572 attributable to noncontrolling redeemable interests in properties										452,661				65,543		518,204
March 31, 2023	$	41,352	$	34	$	(160,854)	$	11,231,471	$	(6,069,767)	$	(2,038,723)	$	449,359	$	3,452,872

The accompanying notes are an integral part of these statements.

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Simon Property Group, Inc.

Unaudited Consolidated Statements of Equity

(Dollars in thousands)


					Accumulated						Common
					Other		Capital in				Stock
	Preferred		Common		Comprehensive		Excess of		Accumulated		Held in		Noncontrolling		Total
	Stock		Stock		Income (Loss)		Par Value		Deficit		Treasury		interests		Equity
December 31, 2021	$	41,763	$	34	$	(185,186)	$	11,212,990	$	(5,823,708)	$	(1,884,441)	$	491,533	$	3,852,985
Exchange of limited partner units (2,680 common shares, note 8)								27						(27)		—
Series J preferred stock premium amortization		(82)														(82)
Stock incentive program (47,804 common shares)								(6,864)				6,864				—
Redemption of limited partner units (1,000 units)								(137)						(10)		(147)
Amortization of stock incentive								3,705								3,705
Long-term incentive performance units														3,895		3,895
Issuance of unit equivalents and other (23,514 common shares repurchased)								1		(9,007)		(3,757)		(262)		(13,025)
Unrealized gain on hedging activities						14,715								2,118		16,833
Currency translation adjustments						1,170								135		1,305
Changes in available-for-sale securities and other						(455)								(66)		(521)
Net gain reclassified from accumulated other comprehensive loss into earnings						(338)								(49)		(387)
Other comprehensive income (loss)						15,092								2,138		17,230
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								3,899						(3,899)		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(543,010)				(78,024)		(621,034)
Distributions to other noncontrolling interest partners														(60)		(60)
Net income, excluding $479 attributable to preferred interests in the Operating Partnership and a $1,269 loss attributable to noncontrolling redeemable interests in properties										427,464				61,636		489,100
March 31, 2022	$	41,681	$	34	$	(170,094)	$	11,213,621	$	(5,948,261)	$	(1,881,334)	$	476,920