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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2019

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

Delaware
(State or other jurisdiction
of incorporation)
  001-14469
(Commission
File Number)
  04-6268599
(IRS Employer
Identification No.)
225 WEST WASHINGTON STREET
INDIANAPOLIS, INDIANA
(Address of principal executive offices)
  46204
(Zip Code)
Registrant's telephone number, including area code: 317.636.1600

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

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common stock, $0.0001 par value   SPG   New York Stock Exchange
83/8% Series J Cumulative Redeemable Preferred Stock, $0.0001 par value   SPGJ   New York Stock Exchange

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

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. o


Item 2.02.    Results of Operations and Financial Condition

On July 31, 2019, Simon Property Group, Inc. issued a press release containing information on earnings for the quarter and six months ended June 30, 2019 and other matters. A copy of the press release is furnished with this report as Exhibit 99.1, and is incorporated by reference into this report.

Item 7.01.    Regulation FD Disclosure

Exhibit 99.1 also includes supplemental financial and operating information for the quarter and six months ended June 30, 2019.

Item 9.01.    Financial Statements and Exhibits

Financial Statements:

Exhibits:

Exhibit No.   Description
99.1   Earnings Release dated July 31, 2019 and supplemental information

The exhibit filed with this report contains measures of financial or operating performance that are not specifically defined by generally accepted accounting principles ("GAAP") in the United States, including funds from operations ("FFO"), FFO per share, funds available for distribution, net operating income ("NOI"), portfolio NOI, and comparable property NOI. FFO and NOI are performance measures that are standard in the REIT business. We believe FFO and NOI provide investors with additional information concerning our operating performance and a basis to compare our performance with the performance of other REITs. We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.

These non-GAAP financial measures should not be considered as alternatives to net income as a measure of our operating performance or to cash flows computed in accordance with GAAP as a measure of liquidity nor are they indicative of cash flows from operating and financial activities.

Reconciliations of each of these non-GAAP measures to the most-directly comparable GAAP measure are included in the exhibit.

The information in this report and the exhibit filed herewith is being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Items 2.02 and 7.01 of Form 8-K, will not be incorporated by reference into any filing under the Securities Act of 1933, as amended.

2



SIGNATURES

Pursuant to the requirements 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.

Dated: July 31, 2019

    SIMON PROPERTY GROUP, INC.

 

 

By:

 

/s/ BRIAN J. MCDADE

Brian J. McDade,
Executive Vice President,
Chief Financial Officer and
Treasurer

3




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TABLE OF CONTENTS

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Table of Contents

TABLE OF CONTENTS

EARNINGS RELEASE AND SUPPLEMENTAL INFORMATION
FOR THE QUARTER ENDED JUNE 30, 2019


 
PAGE  

 

       

Earnings Release(1)

    2-13  

Overview

       

The Company

    14  

Stock Information, Credit Ratings and Senior Unsecured Debt Covenants

    15  

Financial Data

       

Selected Financial and Equity Information

    16  

Net Operating Income (NOI) Composition

    17  

Net Operating Income Overview

    18  

Reconciliations of Non-GAAP Financial Measures

    19  

Consolidated Net Income to NOI

    19  

FFO of the Operating Partnership to Funds Available for Distribution (Our Share)

    20  

Other Income, Other Expense and Capitalized Interest

    21  

Operational Data

       

U.S. Malls and Premium Outlets Operating Information

    22  

The Mills and International Operating Information

    23  

U.S. Malls and Premium Outlets Lease Expirations

    24  

U.S. Malls and Premium Outlets Top Tenants

    25  

Development Activity

       

Capital Expenditures

    26  

Development Activity Summary

    27-28  

Development Activity Report

    29-30  

Densification Projects

    31  

Balance Sheet Information

       

Common and Preferred Stock Information

    32  

Changes in Common Share and Limited Partnership Unit Ownership

    32  

Preferred Stock/Units Outstanding

    32  

Credit Profile

    33  

Summary of Indebtedness

    34  

Total Debt Amortization and Maturities by Year (Our Share)

    35  

Property and Debt Information

   
36-45
 

Other

       

Non-GAAP Pro-Rata Financial Information

    46-49  
(1)
Includes reconciliation of consolidated net income to funds from operations.
 
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EARNINGS RELEASE

LOGO

Contacts:   FOR IMMEDIATE RELEASE
Tom Ward   317-685-7330 Investors    
Ali Slocum   317-264-3079 Media    


SIMON PROPERTY GROUP REPORTS SECOND QUARTER 2019 RESULTS AND RAISES QUARTERLY DIVIDEND

INDIANAPOLIS, July 31, 2019 - Simon, a global leader in premier shopping, dining, entertainment and mixed-use destinations, today reported results for the quarter ended June 30, 2019.

RESULTS FOR THE QUARTER

Net income attributable to common stockholders was $495.3 million, or $1.60 per diluted share, as compared to $547.0 million, or $1.77 per diluted share in 2018. The prior year period included a non-cash investment gain of $35.6 million, or $0.10 per diluted share. The current year period includes a $12.3 million, or $0.03 per diluted share, unrealized loss in fair value of equity instruments compared to a gain of $9.7 million, or $0.03 per diluted share, in the prior year period.

Funds from Operations ("FFO") was $1.064 billion, or $2.99 per diluted share, as compared to $1.061 billion, or $2.98 per diluted share, in the prior year period. Adjusting the prior year for the non-cash investment gain and the $11.0 million impact from the adoption of ASC 842, or approximately $0.13 per diluted share combined, FFO per diluted share increased 4.9%.

RESULTS FOR THE SIX MONTHS

Net income attributable to common stockholders was $1.044 billion, or $3.38 per diluted share, as compared to $1.168 billion, or $3.77 per diluted share in 2018. The prior year period also included net gains of $180.5 million, or $0.51 per diluted share, primarily related to disposition activity.

Funds from Operations ("FFO") was $2.146 billion, or $6.04 per diluted share, as compared to $2.087 billion, or $5.85 per diluted share, in the prior year period, an increase of 3.2% per diluted share. Adjusting the prior year for the non-cash investment gain, higher income related to distributions from an international investment and the $22.3 million impact from the adoption of ASC 842, or approximately $0.22 per diluted share combined, FFO per diluted share increased 7.3%.

"I am very pleased with our quarterly results including our continued financial and operational performance which resulted in continued cash flow growth," said David Simon, Chairman, Chief Executive Officer and President. "During the quarter, we broke ground on a new outlet in Normandy, our third outlet in France. After completing the four new outlets currently under construction, we will have interests in forty-two international outlets, with nine in Japan; four each in Canada and South Korea; three each in England, France, Germany, Italy, and Spain; two each in Malaysia, Mexico and The Netherlands; and one each in Austria, Belgium, Ireland and Thailand. We continue to strengthen our real estate communities through our development, redevelopment and densification activities as well as capitalizing on our unique, innovative investment opportunities, resulting in cash flow and FFO per share growth."

 
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EARNINGS RELEASE

U.S. MALLS AND PREMIUM OUTLETS OPERATING STATISTICS

Reported retailer sales per square foot was $669, an increase of 3.5%, for the trailing 12-months ended June 30, 2019.

Occupancy was 94.4% at June 30, 2019.

Base minimum rent per square foot was $54.52 at June 30, 2019.

Leasing spread per square foot for the trailing 12-months ended June 30, 2019 was $16.53, an increase of 32.3%.

PORTFOLIO NET OPERATING INCOME ("NOI") AND COMPARABLE PROPERTY NOI

Comparable property NOI growth for the three months ended June 30, 2019 was 2.0% and was 1.8% for the six months ended June 30, 2019. Total portfolio NOI growth for the three months ended June 30, 2019 was 1.6% and was 1.7% for the six months ended June 30, 2019. Total portfolio NOI includes NOI from comparable properties, new developments, redevelopments, expansions, acquisitions, international properties and our share of NOI from investments.

DIVIDENDS

Today, Simon's Board of Directors declared a quarterly common stock dividend of $2.10 per share. This is a 5.0% increase year-over-year. The dividend will be payable on August 30, 2019 to shareholders of record on August 16, 2019.

Simon's Board of Directors also declared the quarterly dividend on its 83/8% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share, payable on September 30, 2019 to shareholders of record on September 16, 2019.

 
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EARNINGS RELEASE

DEVELOPMENT ACTIVITY

During the quarter, construction started on a 229,000 square foot upscale outlet located in Normandy, France, projected to open in summer 2021. Simon owns 81% of this project.

Construction continues on three new international development projects including:

Malaga Designer Outlet (Malaga, Spain); scheduled to open in October 2019. Simon owns a 46% interest in this project.

Siam Premium Outlets Bangkok (Bangkok, Thailand); scheduled to open in February 2020. Simon owns a 50% interest in this project.

West Midlands Designer Outlet (Cannock, England); scheduled to open in October 2020. Simon owns a 20% interest in this project.

Construction also continues on other significant redevelopment, expansion and densification projects including Southdale Center (Edina (Minneapolis), MN), The Shops at Riverside (Hackensack, NJ), Burlington Mall (Burlington (Boston), MA), Phipps Plaza (Atlanta, GA), Paju Premium Outlets (Seoul, South Korea) and Gotemba Premium Outlets (Gotemba, Japan).

At quarter-end, redevelopment and expansion projects, including the redevelopment of former department store spaces, were underway at more than 30 properties in the U.S., Canada, Asia and Europe. Simon's share of the costs of all new development and redevelopment projects under construction at quarter-end was approximately $1.7 billion.

 
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EARNINGS RELEASE

BALANCE SHEET ACTIVITY

As of June 30, 2019, Simon had more than $6.8 billion of liquidity consisting of cash on hand, including its share of joint venture cash, and available capacity under its revolving credit facilities.

The Company ended the second quarter with strong credit profile metrics, including:

Net debt to NOI of 5.1X.

Fixed charge coverage of 5.1X.

COMMON STOCK REPURCHASE PROGRAM

During the quarter ended June 30, 2019, the Company repurchased 1,046,580 shares of its common stock.

2019 GUIDANCE

The Company currently estimates net income to be within a range of $7.04 to $7.14 per diluted share for the year ending December 31, 2019 and reaffirms its previous financial guidance that FFO will be within a range of $12.30 to $12.40 per diluted share.

The following table provides the reconciliation for the expected range of estimated net income attributable to common stockholders per diluted share to estimated FFO per diluted share:

For the year ending December 31, 2019

 
  LOW END   HIGH END  

Estimated net income attributable to common stockholders per diluted share

  $ 7.04   $ 7.14  

Depreciation and amortization including Simon's share of unconsolidated entities

    5.25     5.25  

Unrealized losses (gains) in fair value of equity instruments

    0.02     0.02  

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

    (0.01)     (0.01)  

Estimated FFO per diluted share

  $ 12.30   $ 12.40  
 
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EARNINGS RELEASE

CONFERENCE CALL

Simon will hold a conference call to discuss the quarterly financial results today at 8:30 a.m. Eastern Time, Wednesday, July 31, 2019. A live webcast of the conference call will be accessible in listen-only mode at investors.simon.com. An audio replay of the conference call will be available until August 7, 2019. To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 1226926.

SUPPLEMENTAL MATERIALS AND WEBSITE

Supplemental information on our second quarter 2019 performance is available at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K.

We routinely post important information online on our investor relations website, investors.simon.com. We use this website, press releases, SEC filings, quarterly conference calls, presentations and webcasts to disclose material, non-public information in accordance with Regulation FD. We encourage members of the investment community to monitor these distribution channels for material disclosures. Any information accessed through our website is not incorporated by reference into, and is not a part of, this document.

NON-GAAP FINANCIAL MEASURES

This press release includes FFO, FFO per share, portfolio net operating income growth and comparable property net operating income growth, which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release and in Simon's supplemental information for the quarter. FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs.

 
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EARNINGS RELEASE

FORWARD-LOOKING STATEMENTS

Certain statements made in this press release may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained, and it is possible that the Company's actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: changes in economic and market conditions that may adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; decreases in market rental rates; the intensely competitive market environment in the retail industry; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; risks related to international activities, including, without limitation, the impact, if any, of the United Kingdom's exit from the European Union; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in the value of our investments in foreign entities; our ability to hedge interest rate and currency risk; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties; environmental liabilities; changes in insurance costs, the availability of comprehensive insurance coverage; security breaches that could compromise our information technology or infrastructure; natural disasters; the potential for terrorist activities; and the loss of key management personnel. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in subsequent other periodic reports, but except as required by law, the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

ABOUT SIMON

Simon is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE:SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales. For more information, visit simon.com.

 
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EARNINGS RELEASE

Simon Property Group, Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)

 
  FOR THE THREE MONTHS
ENDED JUNE 30,
  FOR THE SIX MONTHS
ENDED JUNE 30,
 
 
 
2019
 
2018
   
2019
   
2018
 

REVENUE:

                         

Lease income

  $ 1,298,567   $ 1,258,698   $ 2,578,623   $ 2,526,590  

Management fees and other revenues

    28,248     28,541     55,792     56,722  

Other income

    70,371     97,820     215,604     195,929  

Total revenue

    1,397,186     1,385,059     2,850,019     2,779,241  

EXPENSES:

                         

Property operating

    106,119     102,951     217,669     216,400  

Depreciation and amortization

    352,606     320,198     681,249     637,134  

Real estate taxes

    115,914     111,449     231,372     225,635  

Repairs and maintenance

    21,850     22,191     49,772     49,875  

Advertising and promotion

    35,420     36,491     72,545     71,291  

Home and regional office costs

    46,467     32,316     99,027     73,380  

General and administrative

    10,359     10,913     19,496     23,542  

Other

    27,820     20,567     53,236     49,041  

Total operating expenses

    716,555     657,076     1,424,366     1,346,298  

OPERATING INCOME BEFORE OTHER ITEMS

    680,631     727,983     1,425,653     1,432,943  

Interest expense

    (198,425)     (206,624)     (397,160)     (412,115)  

Income and other taxes

    (7,010)     (10,137)     (17,112)     (16,357)  

Income from unconsolidated entities

    106,542     100,828     196,986     190,854  

Unrealized (losses) gains in fair value of equity instruments

    (12,317)     9,692     (7,000)     6,664  

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

    2,681     9,672     2,681     144,949  

CONSOLIDATED NET INCOME

    572,102     631,414     1,204,048     1,346,938  

Net income attributable to noncontrolling interests

    75,944     83,576     158,580     177,611  

Preferred dividends

    834     834     1,669     1,669  

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 495,324   $ 547,004   $ 1,043,799   $ 1,167,658  

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

                         

Net income attributable to common stockholders

  $ 1.60   $ 1.77   $ 3.38   $ 3.77  
 
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EARNINGS RELEASE

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

 
  JUNE 30,
2019
  DECEMBER 31,
2018
 

ASSETS:

             

Investment properties, at cost

  $ 37,458,909   $ 37,092,670  

Less — accumulated depreciation

    13,444,275     12,884,539  

    24,014,634     24,208,131  

Cash and cash equivalents

    479,776     514,335  

Tenant receivables and accrued revenue, net

    736,362     763,815  

Investment in unconsolidated entities, at equity

    2,141,745     2,220,414  

Investment in Klépierre, at equity

    1,718,402     1,769,488  

Deferred costs and other assets

    1,641,996     1,210,040  

Total assets

  $ 30,732,915   $ 30,686,223  

LIABILITIES:

             

Mortgages and unsecured indebtedness

  $ 23,324,679   $ 23,305,535  

Accounts payable, accrued expenses, intangibles, and deferred revenues

    1,227,799     1,316,861  

Cash distributions and losses in unconsolidated entities, at equity

    1,567,474     1,536,111  

Other liabilities

    1,017,966     500,597  

Total liabilities

    27,137,918     26,659,104  

Commitments and contingencies

             

Limited partners' preferred interest in the Operating Partnership and noncontrolling redeemable interests in properties

    231,325     230,163  

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 83/8% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation value of $39,847

   
42,584
   
42,748
 

             

Common stock, $0.0001 par value, 511,990,000 shares authorized, 320,435,256 and 320,411,571 issued and outstanding, respectively

    32     32  

             

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

         

             

Capital in excess of par value

    9,723,378     9,700,418  

Accumulated deficit

    (5,122,281)     (4,893,069)  

Accumulated other comprehensive loss

    (128,743)     (126,017)  

Common stock held in treasury, at cost, 12,421,713 and 11,402,103 shares, respectively

    (1,595,305)     (1,427,431)  

Total stockholders' equity

    2,919,665     3,296,681  

Noncontrolling interests

    444,007     500,275  

Total equity

    3,363,672     3,796,956  

Total liabilities and equity

  $ 30,732,915   $ 30,686,223  
 
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EARNINGS RELEASE

Simon Property Group, Inc.
Unaudited Joint Venture Combined Statements of Operations
(Dollars in thousands)

 
  FOR THE THREE MONTHS
ENDED JUNE 30,
  FOR THE SIX MONTHS
ENDED JUNE 30,
 
 
 
2019
 
2018
   
2019
   
2018
 

REVENUE:

                         

Lease income

  $ 760,131   $ 749,892   $ 1,519,110   $ 1,502,497  

Other income

    79,389     78,378     155,311     159,487  

Total revenue

    839,520     828,270     1,674,421     1,661,984  

OPERATING EXPENSES:

   
 
   
 
   
 
   
 
 

Property operating

    140,262     139,553     284,983     285,845  

Depreciation and amortization

    170,407     166,299     340,664     326,134  

Real estate taxes

    67,809     68,576     136,526     136,843  

Repairs and maintenance

    18,832     20,736     41,209     43,933  

Advertising and promotion

    19,695     20,884     44,021     45,108  

Other

    47,743     49,885     97,058     99,617  

Total operating expenses

    464,748     465,933     944,461     937,480  

OPERATING INCOME BEFORE OTHER ITEMS

   
374,772
   
362,337
   
729,960
   
724,504
 

Interest expense

    (157,927)     (190,751)     (313,944)     (341,684)  

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net

        25,792     21,587     25,792  

NET INCOME

  $ 216,845   $ 197,378   $ 437,603   $ 408,612  

Third-Party Investors' Share of Net Income

  $ 110,620   $ 96,240   $ 223,287   $ 202,424  

Our Share of Net Income

    106,225     101,138     214,316     206,188  

Amortization of Excess Investment (A)

    (20,774)     (21,395)     (41,567)     (42,921)  

Our Share of Gain on Sale or Disposal of Assets and Interests in Other Income in the Consolidated Financial Statements

            (9,155)      

Our Share of Gain on Sale or Disposal of, or Recovery on, Assets and Interests in Unconsolidated Entities, net

        (9,672)         (9,672)  

Income from Unconsolidated Entities (B)

  $ 85,451   $ 70,071   $ 163,594   $ 153,595  

Note:
The above financial presentation does not include any information related to our investments in Klépierre S.A. ("Klépierre") and HBS Global Properties ("HBS"). For additional information, see footnote B.
 
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EARNINGS RELEASE

Simon Property Group, Inc.
Unaudited Joint Venture Combined Balance Sheets
(Dollars in thousands)

 
  JUNE 30,
2019
  DECEMBER 31,
2018
 

Assets:

             

Investment properties, at cost

  $ 19,124,164   $ 18,807,449  

Less - accumulated depreciation

    7,119,224     6,834,633  

    12,004,940     11,972,816  

Cash and cash equivalents

   
882,158
   
1,076,398
 

Tenant receivables and accrued revenue, net

    425,658     445,148  

Deferred costs and other assets

    618,538     390,818  

Total assets

  $ 13,931,294   $ 13,885,180  

Liabilities and Partners' Deficit:

   
 
   
 
 

Mortgages

  $ 15,253,009   $ 15,235,415  

Accounts payable, accrued expenses, intangibles, and deferred revenue

    881,032     976,311  

Other liabilities

    554,459     344,205  

Total liabilities

    16,688,500     16,555,931  

Preferred units

   
67,450
   
67,450
 

Partners' deficit

    (2,824,656)     (2,738,201)  

Total liabilities and partners' deficit

  $ 13,931,294   $ 13,885,180  

Our Share of:

   
 
   
 
 

Partners' deficit

  $ (1,227,185)   $ (1,168,216)  

Add: Excess Investment (A)

    1,564,970     1,594,198  

Our net Investment in unconsolidated entities, at equity

  $ 337,785   $ 425,982  

Note:
The above financial presentation does not include any information related to our investments in Klépierre and HBS Global Properties. For additional information, see footnote B.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 11

Table of Contents

EARNINGS RELEASE

Simon Property Group, Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures (C)
(Amounts in thousands, except per share amounts)

 
  RECONCILIATION OF CONSOLIDATED NET INCOME TO FFO
   
   
   
   
   
 
   
  FOR THE THREE MONTHS
ENDED JUNE 30,
  FOR THE SIX MONTHS
ENDED JUNE 30,
   
 
   
   
2019
   
2018
   
2019
 
2018
   

 

Consolidated Net Income (D)

  $ 572,102   $ 631,414   $ 1,204,048   $ 1,346,938    

 

Adjustments to Arrive at FFO:

                           

 

Depreciation and amortization from consolidated properties

    350,045     317,364     675,983     631,370    

 

Our share of depreciation and amortization from unconsolidated entities, including Klépierre and HBS

    139,271     137,279     273,902     272,204    

 

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

    (2,681)     (9,672)     (2,681)     (144,949)    

 

Unrealized losses (gains) in fair value of equity instruments

    12,317     (9,692)     7,000     (6,664)    

 

Net (income) loss attributable to noncontrolling interest holders in properties

    (400)     (279)     518     (186)    

 

Noncontrolling interests portion of depreciation and amortization

    (4,935)     (4,537)     (9,818)     (9,185)    

 

Preferred distributions and dividends

    (1,313)     (1,313)     (2,626)     (2,626)    

 

FFO of the Operating Partnership

  $ 1,064,406   $ 1,060,564   $ 2,146,326   $ 2,086,902    

 

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

                           

 

Diluted net income per share

  $ 1.60   $ 1.77   $ 3.38   $ 3.77    

 

Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Klépierre and HBS, net of noncontrolling interests portion of depreciation and amortization

    1.37     1.27     2.65     2.51    

 

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

    (0.01)     (0.03)     (0.01)     (0.41)    

 

Unrealized losses (gains) in fair value of equity instruments

    0.03     (0.03)     0.02     (0.02)    

 

Diluted FFO per share

  $ 2.99   $ 2.98   $ 6.04   $ 5.85    

   

 

 

                           

 

 

Details for per share calculations:

                           

 

 

FFO of the Operating Partnership

  $ 1,064,406   $ 1,060,564   $ 2,146,326   $ 2,086,902    

 

 

Diluted FFO allocable to unitholders

    (140,077)     (139,426)     (282,396)     (273,985)    
 

 

 

Diluted FFO allocable to common stockholders

  $ 924,329   $ 921,138   $ 1,863,930   $ 1,812,917    
 
 
 

 

 

Basic and Diluted weighted average shares outstanding

    308,709     309,355     308,843     309,966    

 

 

Weighted average limited partnership units outstanding

    46,783     46,827     46,791     46,845    
 

 

 

Basic and Diluted weighted average shares and units outstanding

    355,492     356,182     355,634     356,811    
 
 
 

 

 

Basic and Diluted FFO per Share

  $ 2.99   $ 2.98   $ 6.04   $ 5.85    

 

 

Percent Change

    0.3%           3.2%          
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 12

Table of Contents

EARNINGS RELEASE

Simon Property Group, Inc.
Footnotes to Unaudited Financial Information

Notes:

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

(B)
The Unaudited Joint Venture Combined Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investments in Klépierre and HBS Global Properties. Amounts included in Footnote D below exclude our share of related activity for our investments in Klépierre and HBS Global Properties. For further information on Klépierre, reference should be made to financial information in Klépierre's public filings and additional discussion and analysis in our Form 10-K.

(C)
This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO and FFO per share. FFO is a performance measure that is standard in the REIT business. We believe FFO provides investors with additional information concerning our operating performance and a basis to compare our performance with those of other REITs. We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.
(D)
Includes our share of:

-
Gains on land sales of $7.2 million and $1.4 million for the three months ended June 30, 2019 and 2018, respectively, and $11.6 million and $2.7 million for the six months ended June 30, 2019 and 2018, respectively.

-
Straight-line adjustments increased income by $27.2 million and $6.4 million for the three months ended June 30, 2019 and 2018, respectively, and $43.8 million and $15.0 million for the six months ended June 30, 2019 and 2018, respectively.

-
Amortization of fair market value of leases from acquisitions increased income by $1.4 million and $1.0 million for the three months ended June 30, 2019 and 2018, respectively, and $2.7 million and $2.4 million for the six months ended June 30, 2019 and 2018, respectively.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 13

Table of Contents

OVERVIEW

THE COMPANY

Simon Property Group, Inc. (NYSE:SPG) is a self-administered and self-managed real estate investment trust ("REIT"). Simon Property Group, L.P., or the Operating Partnership, is our majority-owned partnership subsidiary that owns all of our real estate properties and other assets. In this package, the terms Simon, we, our, or the Company refer to Simon Property Group, Inc., the Operating Partnership, and its subsidiaries. We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of malls, Premium Outlets®, The Mills®, and International Properties. At June 30, 2019, we owned or had an interest in 235 properties comprising 190 million square feet in North America, Asia and Europe. Additionally, at June 30, 2019, we had a 21.9% ownership interest in Klépierre, a publicly traded, Paris-based real estate company, which owns shopping centers in 16 European countries.

This package was prepared to provide operational and balance sheet information as of June 30, 2019 for the Company and the Operating Partnership.

Certain statements made in this Supplemental Package 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, uncertainties and other factors. Such factors include, but are not limited to: changes in economic and market conditions that may adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; decreases in market rental rates; the intensely competitive market environment in the retail industry; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; risks related to international activities, including, without limitation, the impact of the United Kingdom's vote to leave the European Union; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in the value of our investments in foreign entities; our ability to hedge interest rate and currency risk; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties; environmental liabilities; changes in insurance costs, the availability of comprehensive insurance coverage; security breaches that could compromise our information technology or infrastructure; natural disasters; the potential for terrorist activities; and the loss of key management personnel. We discuss these and other risks and uncertainties under the heading "Risk Factors" in our annual and quarterly periodic reports filed with the SEC. We may update that discussion in subsequent other periodic reports, but, except as required by law, 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.

Any questions, comments or suggestions regarding this Supplemental Information should be directed to Tom Ward, Senior Vice President of Investor Relations (tom.ward@simon.com or 317.685.7330).

 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 14

Table of Contents

OVERVIEW

STOCK INFORMATION

The Company's common stock and one series of preferred stock are traded on the New York Stock Exchange under the following symbols:

 

Common Stock

  SPG                                   

 

8.375% Series J Cumulative Redeemable Preferred

  SPGPrJ        


CREDIT RATINGS

 

Standard & Poor's

 

 

 

 

 
 

 

Corporate

  A   (Stable Outlook)    

 

Senior Unsecured

  A   (Stable Outlook)    

 

Commercial Paper

  A1   (Stable Outlook)    

 

Preferred Stock

  BBB+   (Stable Outlook)    

 

Moody's

 

 

 

 

 
 

 

Senior Unsecured

  A2   (Stable Outlook)    

 

Commercial Paper

  P1   (Stable Outlook)    

 

Preferred Stock

  A3   (Stable Outlook)    

SENIOR UNSECURED DEBT COVENANTS (1)

  Required   Actual   Compliance

Total Debt to Total Assets (1)

  £65%   39%   Yes

Total Secured Debt to Total Assets (1)

  £50%   18%   Yes

Fixed Charge Coverage Ratio

  >1.5X   5.1X   Yes

Total Unencumbered Assets to Unsecured Debt

  ³125%   290%   Yes
(1)
Covenants for indentures dated June 7, 2005 and later. Total Assets are calculated in accordance with the indenture and essentially represent net operating income (NOI) divided by a 7.0% capitalization rate plus the value of other assets at cost.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 15

Table of Contents

SELECTED FINANCIAL AND EQUITY INFORMATION
(In thousands, except as noted)

 

THREE MONTHS ENDED
JUNE 30,




SIX MONTHS ENDED
JUNE 30,
 
     

 
2019

2018

2019
2018  

Financial Highlights

                         

Total Revenue - Consolidated Properties

  $ 1,397,186   $ 1,385,059   $ 2,850,019   $ 2,779,241  

Consolidated Net Income

 
$

572,102
 
$

631,414
 
$

1,204,048
 
$

1,346,938
 

Net Income Attributable to Common Stockholders

  $ 495,324   $ 547,004   $ 1,043,799   $ 1,167,658  

Basic and Diluted Earnings per Common Share (EPS)

  $ 1.60   $ 1.77   $ 3.38   $ 3.77  

Funds from Operations (FFO) of the Operating Partnership

 
$

1,064,406
 
$

1,060,564
 
$

2,146,326
 
$

2,086,902
 

Basic and Diluted FFO per Share (FFOPS)

  $ 2.99   $ 2.98   $ 6.04   $ 5.85  

Dividends/Distributions per Share/Unit

 
$

2.05
 
$

1.95
 
$

4.10
 
$

3.90
 


Stockholders' Equity Information

 


AS OF
JUNE 30,
2019





AS OF
DECEMBER 31,
2018
 

Limited Partners' Units Outstanding at end of period

    46,782     46,807  

Common Shares Outstanding at end of period

    308,022     309,018  

Total Common Shares and Limited Partnership Units Outstanding at end of period

    354,804     355,825  

Weighted Average Limited Partnership Units Outstanding

    46,791     46,893  

Weighted Average Common Shares Outstanding:

             

Basic and Diluted - for purposes of EPS and FFOPS

    308,843     309,627  

 

             

Debt Information

             

Share of Consolidated Debt

  $ 23,160,397   $ 23,139,977  

Share of Joint Venture Debt

    7,163,348     7,160,392  

Share of Total Debt

  $ 30,323,745   $ 30,300,369  

 

             

Market Capitalization

             

Common Stock Price at end of period

  $ 159.76   $ 167.99  

Common Equity Capitalization, including Limited Partnership Units

  $ 56,683,509   $ 59,775,015  

Preferred Equity Capitalization, including Limited Partnership Preferred Units

    80,527     80,287  

Total Equity Market Capitalization

  $ 56,764,036   $ 59,855,302  

Total Market Capitalization - Including Share of Total Debt

  $ 87,087,781   $ 90,155,671  

 

             

Debt to Total Market Capitalization

    34.8%     33.6%  
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 16

Table of Contents

NET OPERATING INCOME (NOI) COMPOSITION (1)
For the Six Months Ended June 30, 2019

 

GRAPHIC

(1)
Based on our share of total NOI and does not reflect any property, entity or corporate-level debt.
(2)
Includes Klépierre, international Premium Outlets, international Designer Outlets and distributions from other international investments.
(3)
Includes Lifestyle Centers.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 17

Table of Contents

NET OPERATING INCOME OVERVIEW (1)
(In thousands)

 
FOR THE THREE MONTHS
ENDED JUNE 30,
  % GROWTH  
FOR THE SIX MONTHS
ENDED JUNE 30,
  % GROWTH
   

 
2019
2018    
2019
2018    

Comparable Property NOI (2)

  $ 1,373,086   $ 1,345,519   2.0%   $ 2,712,599   $ 2,664,138   1.8%

NOI from New Development, Redevelopment, Expansion and Acquisitions (3)

   
48,684
   
49,929
       
89,962
   
91,178
   

International Properties (4)

    117,749     112,631         232,245     223,714    

Our share of NOI from Investments (5)

    71,121     76,989         125,796     129,435    

                               

Portfolio NOI

  $ 1,610,640   $ 1,585,068   1.6%   $ 3,160,602   $ 3,108,465   1.7%

Corporate and Other NOI Sources (6)

   
95,723
   
113,940
       
261,243
   
248,191
   

Combined NOI

  $ 1,706,363   $ 1,699,008       $ 3,421,845   $ 3,356,656    

Less: Joint Venture Partners' Share of NOI

   
289,719
   
279,338
       
566,206
   
554,510
   

Our Share of Total NOI

  $ 1,416,644   $ 1,419,670       $ 2,855,639   $ 2,802,146    
(1)
All amounts are presented at gross values unless otherwise indicated as our share. See reconciliation on following page.
(2)
Includes Malls, Premium Outlets, The Mills and Lifestyle Centers opened and operating as comparable for the period.
(3)
Includes total property NOI for properties undergoing redevelopment as well as incremental NOI for expansion properties not yet included in comparable properties.
(4)
Includes International Premium Outlets (except for Canadian International Premium Outlets included in Comparable NOI) and International Designer Outlets.
(5)
Includes our share of NOI of Klépierre, HBS, and other corporate investments.
(6)
Includes income components excluded from Portfolio NOI and Comparable Property NOI (domestic lease termination income, interest income, land sale gains, straight line lease income, above/below market lease adjustments), gains on sale of equity instruments, the results of our joint venture with Seritage, Northgate, Simon management company revenues, and other assets.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 18

Table of Contents

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(In thousands, except as noted)

RECONCILIATION OF NET INCOME TO NOI

           

    

                       

 
THREE MONTHS ENDED JUNE 30,

SIX MONTHS ENDED JUNE 30,
     

  2019   2018   2019   2018

Reconciliation of NOI of consolidated entities:

                   

Consolidated Net Income

  $ 572,102   $ 631,414   $ 1,204,048   $ 1,346,938

Income and other tax expense

  7,010     10,137   17,112     16,357

Interest expense

  198,425     206,624   397,160     412,115

Income from unconsolidated entities

  (106,542)     (100,828)   (196,986)     (190,854)

Unrealized losses (gains) in fair value of equity instruments

  12,317     (9,692)   7,000     (6,664)

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

  (2,681)     (9,672)   (2,681)     (144,949)

Operating Income Before Other Items

  680,631     727,983   1,425,653     1,432,943

Depreciation and amortization

  352,606     320,198   681,249     637,134

Home and regional office costs

  46,467     32,316   99,027     73,380

General and administrative

  10,359     10,913   19,496     23,542

NOI of consolidated entities

  $ 1,090,063   $ 1,091,410   $ 2,225,425   $ 2,166,999

Reconciliation of NOI of unconsolidated entities:

                   

Net Income

  $ 216,845   $ 197,378   $ 437,603   $ 408,612

Interest expense

  157,927     190,751   313,944     341,684

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net

      (25,792)   (21,587)     (25,792)

Operating Income Before Other Items

  374,772     362,337   729,960     724,504

Depreciation and amortization

  170,407     166,299   340,664     326,134

NOI of unconsolidated entities

  $ 545,179   $ 528,636   $ 1,070,624   $ 1,050,638

Add: Our share of NOI from Klépierre, HBS and other corporate investments

  71,121     78,962   125,796     139,019

Combined NOI

  $ 1,706,363   $ 1,699,008   $ 3,421,845   $ 3,356,656
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 19

Table of Contents

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(In thousands, except as noted)

RECONCILIATION OF FFO OF THE OPERATING PARTNERSHIP TO FUNDS AVAILABLE FOR DISTRIBUTION (OUR SHARE)

    

   

THREE
MONTHS ENDED
JUNE 30,
2019




SIX
MONTHS ENDED
JUNE 30,
2019

FFO of the Operating Partnership

$ 1,064,405 $ 2,146,326

Non-cash impacts to FFO(1)

(14,220) (17,654)

FFO of the Operating Partnership excluding non-cash impacts

1,050,185 2,128,672

Tenant allowances

(47,365) (89,507)

Operational capital expenditures

(41,135) (69,825)

Funds available for distribution

$ 961,685 $ 1,969,340
(1)
Non-cash impacts to FFO of the Operating Partnership include:

    

   

THREE
MONTHS ENDED
JUNE 30,
2019




SIX
MONTHS ENDED
JUNE 30,
2019

Deductions:

   

Straight-line lease income

$ (27,185) $ (43,845)

Fair value of debt amortization

(29) (52)

Fair market value of lease amortization

(1,400) (2,738)

Additions:

   

Stock based compensation expense

6,733 13,843

Mortgage, financing fee and terminated swap amortization expense

7,661 15,138

$ (14,220) $ (17,654)

This report contains measures of financial or operating performance that are not specifically defined by generally accepted accounting principles (GAAP) in the United States, including FFO, FFO per share, funds available for distribution, net operating income (NOI), portfolio NOI, and comparable property NOI. FFO and NOI are performance measures that are standard in the REIT business. We believe FFO and NOI provide investors with additional information concerning our operating performance and a basis to compare our performance with the performance of other REITs. We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.

The non-GAAP financial measures used in this report should not be considered as alternatives to net income as a measure of our operating performance or to cash flows computed in accordance with GAAP as a measure of liquidity nor are they indicative of cash flows from operating and financial activities. Reconciliations of other non-GAAP measures used in this report to the most-directly comparable GAAP measure are included in the tables on pages 18 - 20 and in the Earnings Release for the latest period.

 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 20

Table of Contents

OTHER INCOME, OTHER EXPENSE AND CAPITALIZED INTEREST
(In thousands)

 

THREE MONTHS
ENDED JUNE 30,




SIX MONTHS
ENDED JUNE 30,
     

 
2019

2018

2019
2018

Consolidated Properties

                       

Other Income

                       

Interest, dividend and distribution income  (1)

  $ 8,389   $ 5,130   $ 15,174   $ 29,998

Lease settlement income

    2,292     4,946     4,790     31,635

Gains on land sales

    5,828     741     8,377     2,015

Other  (2)

    53,862     87,003     187,263     132,281

Totals

  $ 70,371   $ 97,820   $ 215,604   $ 195,929

 

                       

Other Expense

                       

Ground leases

  $ 11,036   $ 10,298   $ 21,280   $ 21,260

Professional fees and other

    16,784     10,269     31,956     27,781

Totals

  $ 27,820   $ 20,567   $ 53,236   $ 49,091

    

                       

 

Capitalized Interest

 

THREE MONTHS
ENDED JUNE 30,




SIX MONTHS
ENDED JUNE 30,
     

 
2019

2018

2019
2018

Interest Capitalized during the Period:

                       

Our Share of Consolidated Properties

  $ 8,193   $ 4,683   $ 14,621   $ 9,256

Our Share of Joint Venture Properties

  $ 275   $ 634   $ 524   $ 1,232

                       

                       
(1)
Includes distributions from other international investments.

(2)
Includes ancillary property revenues, gift cards, marketing, media, parking and sponsorship revenues, gains on sale of non-retail investments, non-real estate investments, insurance proceeds from business interruption and other miscellaneous income items.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 21

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS OPERATING INFORMATION

 
AS OF JUNE 30,
 

 
2019
2018

Total Number of Properties

  176     175

Total Square Footage of Properties (in millions)

 

150.4
   
151.5

Ending Occupancy (1):

 

 
   
 

Consolidated Assets

  94.6%     94.8%

Unconsolidated Assets

  93.9%     94.6%

Total Portfolio

  94.4%     94.7%

Total Sales per Square Foot (PSF) (2):

 

 
   
 

Consolidated Assets

  $ 646   $ 630

Unconsolidated Assets

  $ 733   $ 694

Total Portfolio

  $ 669   $ 646

Base Minimum Rent PSF (3):

 

 
   
 

Consolidated Assets

  $ 52.91   $ 52.14

Unconsolidated Assets

  $ 58.74   $ 58.37

Total Portfolio

  $ 54.52   $ 53.84

Open / Close Spread

     

RENT PSF
(BASE MINIMUM RENT & CAM)


     
         

 

SQUARE FOOTAGE
OF OPENINGS





AVERAGE
OPENING RATE
PSF  (4)






AVERAGE
CLOSING RATE
PSF  (4)





LEASING
SPREAD  (4)



SPREAD TO
CLOSE %

6/30/19

  7,227,529   $ 67.76   $ 51.23   $ 16.53   32.3%

3/31/19

    7,499,068   $ 66.00   $ 51.83   $ 14.17     27.3%

12/31/18

    8,722,732   $ 62.04   $ 54.29   $ 7.75     14.3%

6/30/18

    6,213,708   $ 75.55   $ 68.23   $ 7.32     10.7%

3/31/18

    6,044,658   $ 75.77   $ 67.32   $ 8.45     12.6%

Occupancy Cost as a Percentage of Sales (5):

6/30/19

  12.8%                        

3/31/19

    12.8%                        

12/31/18

    12.8%                        

6/30/18

    12.9%                        

3/31/18

    13.0%                        
(1)
Ending Occupancy is the percentage of total owned square footage (GLA) which is leased as of the last day of the reporting period. We include all company owned space except for mall anchors, mall majors, mall freestanding and mall outlots in the calculation.
(2)
Total Sales PSF is defined as total sales of the tenants open and operating in the center during the reporting period divided by the associated company owned and occupied GLA on a trailing 12-month basis. Includes tenant sales activity for all months a tenant is open within the trailing 12-month period. In accordance with the standard definition of sales for regional malls adopted by the International Council of Shopping Centers, stores with less than 10,000 square feet are included for malls and stores with less than 20,000 square feet are included for Premium Outlets.
(3)
Base Minimum Rent PSF is the average base minimum rent charge in effect for the reporting period for all tenants that would qualify to be included in Ending Occupancy as defined above.
(4)
The Open / Close Spread is a measure that compares opening and closing rates on all spaces. The Opening Rate is the initial cash Rent PSF for spaces leased during the trailing 12-month period, and includes new leases, renewals, amendments and relocations (including expansions and downsizings) if lease term is greater than one year. The Closing Rate is the final cash Rent PSF as of the month the tenant terminates or closes. Rent PSF includes Base Minimum Rent and Common Area Maintenance (CAM) rents.
(5)
Occupancy Cost as a Percentage of Sales is the trailing 12-month Base Minimum Rent, plus all applicable ancillary charges, plus overage rent, if applicable (based on last 12 months of sales), divided by the trailing 12-month Total Sales PSF for the same tenants.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 22

Table of Contents

THE MILLS AND INTERNATIONAL OPERATING INFORMATION

 
AS OF JUNE 30,
 

 
2019
2018

The Mills

         

Total Number of Properties

 

14
   
14

Total Square Footage of Properties (in millions)

 

21.4
   
21.1

Ending Occupancy(1)

 

97.1%
   
98.3%

Total Sales PSF(2)

 
$

614
 
$

604

Base Minimum Rent PSF(3)

 
$

32.87
 
$

31.53

Leasing Spread PSF(4)

 
$

11.95
 
$

8.63

Leasing Spread (Percentage Change)(4)

 

30.0%
   
14.5%

 

 

 
   
 

International Properties

 

 
   
 

Premium Outlets

 

 
   
 

Total Number of Properties

 

20
   
19

Total Square Footage of Properties (in millions)

 

7.6
   
7.1

Designer Outlets

 

 
   
 

Total Number of Properties

 

9
   
9

Total Square Footage of Properties (in millions)

 

2.2
   
2.2

Statistics for Premium Outlets in Japan(5)

 

 
   
 

Ending Occupancy

 

99.9%
   
99.5%

Total Sales PSF

 

¥ 108,598
   
¥ 106,641

Base Minimum Rent PSF

 

¥ 5,214
   
¥ 5,095
(1)
See footnote 1 on page 22 for definition, except Ending Occupancy is calculated on all company owned space.
(2)
See footnote 2 on page 22 for definition; calculation methodology is the same as for malls.
(3)
See footnote 3 on page 22 for definition.
(4)
See footnote 4 on page 22 for definition.
(5)
Information supplied by the managing venture partner; includes 9 properties.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 23

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS LEASE EXPIRATIONS (1)

YEAR

 


NUMBER OF
LEASES
EXPIRING




SQUARE FEET




AVG. BASE
MINIMUM
RENT
PSF AT 6/30/19







PERCENTAGE OF
GROSS ANNUAL
RENTAL
REVENUES  (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Inline Stores and Freestanding

                       

Month to Month Leases

   
997
   
3,688,417
 
$

54.43
   
3.6%

2019 (7/1/19 - 12/31/19)

    523     1,651,654   $ 51.29     1.5%

2020

    2,532     8,754,795   $ 50.58     7.7%

2021

    2,243     8,471,115   $ 50.00     7.5%

2022

    2,137     8,357,325   $ 50.35     7.5%

2023

    2,178     8,364,969   $ 57.79     8.5%

2024

    1,793     7,129,000   $ 58.68     7.4%

2025

    1,422     5,457,808   $ 65.29     6.3%

2026

    1,270     4,547,785   $ 64.18     5.2%

2027

    1,005     3,809,922   $ 63.74     4.3%

2028

    865     3,688,386   $ 58.61     3.8%

2029

    520     2,609,069   $ 58.19     2.5%

2030 and Thereafter

    371     2,024,098   $ 42.83     1.6%

Specialty Leasing Agreements w/ terms in excess of 12 months

    1,713     4,326,999   $ 18.81     1.5%

 

                       

Anchors

                       

2019 (7/1/19 - 12/31/19)

   
1
   
94,337
 
$

10.60
   
0.0%

2020

    11     1,142,103   $ 6.55     0.1%

2021

    10     1,251,264   $ 5.20     0.1%

2022

    15     1,973,754   $ 6.36     0.2%

2023

    17     2,386,762   $ 6.67     0.3%

2024

    24     2,027,154   $ 8.49     0.3%

2025

    15     1,356,790   $ 6.74     0.2%

2026

    7     804,111   $ 4.29     0.1%

2027

    6     920,224   $ 4.16     0.1%

2028

    9     857,119   $ 7.58     0.1%

2029

    5     577,562   $ 5.02     0.1%

2030 and Thereafter

    14     1,525,221   $ 7.49     0.2%
(1)
Does not consider the impact of renewal options that may be contained in leases.
(2)
Annual rental revenues represent 2018 consolidated and joint venture combined base rental revenue.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 24

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS TOP TENANTS

Top Inline Store Tenants (sorted by percentage of total base minimum rent for U.S. properties)

TENANT





NUMBER
OF
STORES






SQUARE
FEET
(000's)






PERCENT OF
TOTAL SQ. FT. IN
U.S. PROPERTIES





PERCENT OF TOTAL
BASE MINIMUM RENT
FOR U.S. PROPERTIES

 

                       

The Gap, Inc.

    411     3,846     2.1%     3.4%

L Brands, Inc.

    305     1,886     1.0%     2.1%

Ascena Retail Group Inc

    438     2,435     1.3%     1.8%

PVH Corporation

    237     1,476     0.8%     1.6%

Signet Jewelers, Ltd.

    363     527     0.3%     1.4%

Tapestry, Inc.

    248     988     0.5%     1.4%

Forever 21, Inc.

    99     1,499     0.8%     1.4%

Foot Locker, Inc.

    230     1,050     0.6%     1.3%

Luxottica Group SPA

    387     690     0.4%     1.2%

Abercrombie & Fitch Co.

    153     1,087     0.6%     1.2%

Top Anchors (sorted by percentage of total square footage in U.S. properties) (1)

TENANT





NUMBER
OF
STORES






SQUARE
FEET
(000's)






PERCENT OF
TOTAL SQ. FT. IN
U.S. PROPERTIES





PERCENT OF TOTAL
BASE MINIMUM RENT
FOR U.S. PROPERTIES

 

                       

Macy's Inc.

    115     21,898     12.1%     0.4%

J.C. Penney Co., Inc.

    65     10,421     5.8%     0.3%

Dillard's, Inc.

    38     6,779     3.8%     *

Nordstrom, Inc.

    27     4,556     2.5%     0.1%

Sears Holdings Corporation

    25     4,274     2.4%     *

Dick's Sporting Goods, Inc.

    32     2,175     1.2%     0.5%

Hudson's Bay Company

    16     2,128     1.2%     0.1%

Belk, Inc.

    9     1,504     0.8%     *

The Neiman Marcus Group, Inc.

    12     1,458     0.8%     0.1%

Target Corporation

    6     831     0.5%     *

Von Maur, Inc.

    6     768     0.4%     *
(1)
Includes space leased and owned by anchors in U.S. Malls; does not include Bloomingdale's The Outlet Store, Neiman Marcus Last Call, Nordstrom Rack, and Saks Fifth Avenue Off 5th.
*
Less than one-tenth of one percent.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 25

Table of Contents

CAPITAL EXPENDITURES
(In thousands)

     

UNCONSOLIDATED
PROPERTIES
   

 
CONSOLIDATED
PROPERTIES

 
TOTAL  
OUR
SHARE

New development projects

  $ 41,530   $ 147,783   $ 51,966

Redevelopment projects with incremental square footage and/or anchor replacement

   
230,568
   
176,561
   
84,930

Redevelopment projects with no incremental square footage (1)

   
28,751
   
14,705
   
4,198

 

                 

Subtotal new development and redevelopment projects

  300,849   339,049   141,094

Tenant allowances

   
76,725
   
29,275
   
12,782

Operational capital expenditures at properties:

                 

CAM expenditures

    45,271     23,065     10,514

Non-CAM expenditures

    12,572     3,043     1,468

 

                 

Totals

  $ 435,417   $ 394,432   $ 165,858

Conversion from accrual to cash basis

   
(32,071)
   
(25,508)
   
(10,726)

 

                 

Capital Expenditures for the Six Months Ended 6/30/19 (2)

  $ 403,346   $ 368,924   $ 155,132

        

                 

Capital Expenditures for the Six Months Ended 6/30/18 (2)

  $ 334,674   $ 355,888   $ 169,418
(1)
Includes restoration projects as a result of property damage from natural disasters.
(2)
Agrees with the line item "Capital expenditures" on the Combined Statements of Cash Flows for the consolidated properties. No statement of cash flows is prepared for the joint venture properties; however, the above reconciliation was completed in the same manner as the reconciliation for the consolidated properties.
 
2Q 2019 SUPPLEMENTAL 2Q 2019 SUPPLEMENTAL 26

Table of Contents

DEVELOPMENT ACTIVITY SUMMARY (1)
As of June 30, 2019
(in millions, except percent)

 

 

PLATFORM
    PROJECT TYPE


 
 

PROJECTED
GROSS COST (2)


 

PROJECTED
NET COST (3)


 


OUR
SHARE OF
NET COST (4)



 


EXPECTED
STABILIZED
RATE OF RETURN (4)



 


TOTAL
CONSTRUCTION
IN PROGRESS



 



OUR SHARE
OF TOTAL
CONSTRUCTION
IN PROGRESS




 

 

Malls

                         

 

 

Redevelopments