0001063761 false 0001063761 2020-08-10 2020-08-10 0001063761 us-gaap:CommonStockMember 2020-08-10 2020-08-10 0001063761 spg:SeriesJPreferredStockMember 2020-08-10 2020-08-10 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

 

 

 

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): August 10, 2020

 

SIMON PROPERTY GROUP, INC.

 

(Exact name of registrant as specified in its charter)

 

Delaware 001-14469 04-6268599
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)

 

225 WEST WASHINGTON STREET

INDIANAPOLIS, Indiana

46204
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: 317. 636.1600

 

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:

 

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

 

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

 

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

 

¨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  ¨

 

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.  ¨

 

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

 

Title of each class   Trading Symbols   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

 

Page 1

 

 

 

Item 2.02. Results of Operations and Financial Condition

 

On August 10, 2020, Simon Property Group, Inc. issued a press release containing information on earnings for the quarter and six months ended June 30, 2020 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, 2020.

 

Item 9.01. Financial Statements and Exhibits

  

Financial Statements:

 

None

 

Exhibits:

 

Exhibit No.   Description
99.1   Earnings Release dated August 10, 2020 and supplemental information
104   The cover page from this Current Report on Form 8-K formatted in Inline XBRL (included as Exhibit 101)

  

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.

  

Page 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: August 10, 2020

 

SIMON PROPERTY GROUP, INC.

  

 
  By:    /s/ BRIAN J. MCDADE
    Brian J. McDade,
    Executive Vice President,
    Chief Financial Officer and
    Treasurer

  

Page 3

 

 


QuickLinks -- Click here to rapidly navigate through this document

GRAPHIC


TABLE OF CONTENTS

EARNINGS RELEASE AND SUPPLEMENTAL INFORMATION
FOR THE QUARTER ENDED JUNE 30, 2020


 
PAGE  

 

       

Earnings Release(1)

    2-11  

Overview

       

The Company

    12  

Stock Information, Credit Ratings and Senior Unsecured Debt Covenants

    13  

Financial Data

       

Selected Financial and Equity Information

    14  

Net Operating Income (NOI) Composition

    15  

Net Operating Income Overview

    16  

Reconciliations of Non-GAAP Financial Measures

    17  

Consolidated Net Income to NOI

    17  

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

    18  

Other Income, Other Expense and Capitalized Interest

    19  

Operational Data

       

U.S. Malls and Premium Outlets Operating Information

    20  

The Mills and International Operating Information

    21  

U.S. Malls and Premium Outlets Lease Expirations

    22  

U.S. Malls and Premium Outlets Top Tenants

    23  

Development Activity

       

Capital Expenditures

    24  

Development Activity Summary

    25  

Balance Sheet Information

   
 
 

Common and Preferred Stock Information

    26  

Changes in Common Share and Limited Partnership Unit Ownership

    26  

Preferred Stock/Units Outstanding

    26  

Credit Profile

    27  

Summary of Indebtedness

    28  

Total Debt Amortization and Maturities by Year (Our Share)

    29  

Property and Debt Information

   
30-39
 

Other

   
 
 

Non-GAAP Pro-Rata Financial Information

    40-43  
(1)
Includes reconciliation of consolidated net income to funds from operations.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 1

EARNINGS RELEASE

LOGO

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


SIMON PROPERTY GROUP REPORTS SECOND QUARTER 2020 RESULTS

INDIANAPOLIS, August 10, 2020 = Simon, a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment and mixed-use destinations, today reported results for the quarter ended June 30, 2020.

"We continue to navigate through the challenging times presented by the pandemic with a commitment to the safety of our employees, shoppers, retailers and the communities we serve," said David Simon, Chairman, Chief Executive Officer and President. "Despite losing nearly 10,500 shopping days in our U.S. portfolio in the second quarter, we produced solid profitability and positive cash flow from operations. We have generally been encouraged by the shopper response, particularly in certain locations, after re-opening. These trends reinforce that our portfolio is an attractive destination for consumers. We remain committed to supporting our thousands of local and regional small businesses and restaurant entrepreneurs by granting rent abatements for the period they were closed. Our Company is well-positioned through a combination of deep brand relationships, the best portfolio with a strong mix of geographic locations and product types and a strong balance sheet, to continue our leadership position in the retail real estate industry."

Results for the Quarter

Net income attributable to common stockholders was $254.2 million, or $0.83 per diluted share, as compared to $495.3 million, or $1.60 per diluted share in 2019.

Funds From Operations ("FFO") was $746.5 million, or $2.12 per diluted share, as compared to $1.064 billion, or $2.99 per diluted share, in the prior year period. The Company's domestic and international operations were negatively impacted by approximately $1.13 per diluted share primarily due to reduced lease income and ancillary property revenues as a result of the COVID-19 pandemic, partially offset by approximately $0.36 per diluted share from cost reduction initiatives.

Comparable property Net Operating Income ("NOI") for the three months ended June 30, 2020 declined 18.5% and portfolio NOI declined 21.0%.

Results for the Six Months

Net income attributable to common stockholders was $691.8 million, or $2.26 per diluted share, as compared to $1.044 billion, or $3.38 per diluted share in 2019. Results for the six months ended 2019 included a combined $83.6 million, or $0.24 per diluted share, of proceeds from an insurance settlement and a gain on the sale of our interest in a multi-family residential property.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 2

EARNINGS RELEASE

FFO was $1.727 billion, or $4.90 per diluted share, as compared to $2.146 billion, or $6.04 per diluted share, in the prior year period. FFO for the six months ended June 30, 2020 declined $0.79 per diluted share due to $0.02 per diluted share in the first quarter and $0.77 per diluted share negative impact in the second quarter to the Company's domestic and international operations as a result of the COVID-19 pandemic. The six months ended 2019 also included the $0.24 per diluted share noted above.

Comparable property NOI for the six months ended June 30, 2020 declined 9.3% and portfolio NOI declined 10.7%.

U.S. Malls and Premium Outlets Operating Statistics

Occupancy was 92.9% at June 30, 2020.

Base minimum rent per square foot was $56.02 at June 30, 2020, an increase of 2.8% year-over-year.

Leasing spread per square foot for the trailing 12 months ended June 30, 2020 was flat.

COVID-19 Business Update

On March 18, 2020, after extensive discussions with federal, state and local officials and in recognition of the need to address the spread of COVID-19, the Company closed all of its retail properties in the United States. Our properties reopened, when permitted to do so under applicable governmental orders, beginning May 1. All of the Company's retail properties were reopened as of July 10. Seven retail properties in California were subsequently closed on July 15, and remain closed, due to a new restrictive governmental order. The Company's retail properties were closed, in aggregate, for approximately 10,500 shopping days during the second quarter.

As of August 7, 91% of the tenants across the Company's U.S. retail properties were open and operating. More than half of the remaining unopened tenants are closed because of restrictive governmental orders limiting or prohibiting their operations.

The Company has collected from its U.S. retail portfolio, including some level of rent deferrals, approximately 51% of its contractual rent billed for April and May combined, approximately 69% for June and approximately 73% for July with only de minimis deferrals. These percentages have not been adjusted for any rent abatements granted.

Development Activity

On June 19, 2020, Siam Premium Outlets Bangkok (Bangkok, Thailand) opened with 264,000 square feet of high-quality, name brand stores. Siam Premium Outlets Bangkok is the first Premium Outlet® Center in Thailand. Simon owns a 50% interest in this center.

During the quarter, the 178,000 square-foot phase IV expansion of Gotemba Premium Outlets (Gotemba City, (Tokyo) Japan) opened adding enhanced amenities, elevated food offerings and more than 80 new, exciting brands, including many opening their first outlet store in Japan. Simon owns 40% of this center.

Construction continues on certain redevelopment and new development projects in the U.S. and internationally that are nearing completion. Simon's share of the remaining required cash funding for these projects, that are currently scheduled to be completed in 2020 or 2021, is approximately $140 million.

 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 3

EARNINGS RELEASE

Capital Markets and Balance Sheet Liquidity

As of June 30, 2020, Simon had approximately $8.5 billion of liquidity consisting of $3.6 billion of cash on hand, including its share of joint venture cash, and $4.9 billion of available capacity under its revolving credit facilities and term loan, net of $702 million outstanding under its U.S. commercial paper program.

Subsequent to the end of the quarter, the Company completed a three tranche senior notes offering totaling $2.0 billion. Two tranches totaling $1.5 billion were new issues of senior notes with a weighted average term of 20 years and a weighted average coupon rate of 3.23%. The third tranche of $500 million was issued as additional notes under an indenture pursuant to which Simon Property Group, L.P. previously issued 3.50% notes due September 2025.

In July, the Company used a combination of proceeds from the offering and cash on hand to repay $2.5 billion outstanding under its Credit Facilities.

Dividends

The Company paid its second quarter 2020 common stock dividend of $1.30 per share, in cash, on July 24, 2020. Simon's Board of Directors will declare a common stock dividend for the third quarter on or before September 30, 2020. The Company expects to pay at least $6.00 per share in common stock dividends for 2020, in cash, subject to the Board of Directors' approval.

Simon's Board of Directors 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, 2020 to shareholders of record on September 16, 2020.

Conference Call

Simon will hold a conference call to discuss the quarterly financial results today at 5:00 p.m. Eastern Time, Monday, August 10, 2020. 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 17, 2020. To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 2558073.

Supplemental Materials and Website

Supplemental information on our second quarter 2020 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.

 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 4

EARNINGS RELEASE

Non-GAAP Financial Measures

This press release includes FFO, FFO per share, comparable property Net Operating Income growth and portfolio 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.

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: uncertainties regarding the impact of the COVID-19 pandemic and governmental restrictions intended to prevent its spread on our tenants' businesses, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our stockholders; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; changes in economic and market conditions that may adversely affect the general retail environment; the intensely competitive market environment in the retail industry; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; the potential loss of anchor stores or major tenants; decreases in market rental rates; 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; general risks related to real estate investments, including the illiquidity of real estate investments; security breaches that could compromise our information technology or infrastructure; risks relating to our joint venture properties; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; changes in the value of our investments in foreign entities; our ability to hedge interest rate and currency risk; changes in insurance costs; the availability of comprehensive insurance coverage; natural disasters; the potential for terrorist activities; environmental liabilities; the loss of key management personnel; and the transition of LIBOR to an alternative reference rate. 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 real estate investment trust engaged 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.

 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 5

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,
 
 
 
2020
 
2019
   
2020
   
2019
 

REVENUE:

                         

Lease income

  $ 1,013,510   $ 1,298,567   $ 2,275,742   $ 2,578,623  

Management fees and other revenues

    21,035     28,248     50,201     55,792  

Other income

    27,496     70,371     89,458     215,604  

Total revenue

    1,062,041     1,397,186     2,415,401     2,850,019  

EXPENSES:

                         

Property operating

    70,620     106,119     176,243     217,669  

Depreciation and amortization

    324,140     352,606     652,402     681,249  

Real estate taxes

    117,221     115,914     234,764     231,372  

Repairs and maintenance

    14,080     21,850     38,511     49,772  

Advertising and promotion

    12,689     35,420     46,216     72,545  

Home and regional office costs

    36,090     46,467     90,460     99,027  

General and administrative

    7,296     10,359     14,190     19,496  

Other

    29,037     27,820     56,878     53,236  

Total operating expenses

    611,173     716,555     1,309,664     1,424,366  

OPERATING INCOME BEFORE OTHER ITEMS

    450,868     680,631     1,105,737     1,425,653  

Interest expense

    (197,061)     (198,425)     (384,688)     (397,160)  

Income and other tax benefit (expense)

    62     (7,010)     5,845     (17,112)  

Income from unconsolidated entities

    44,322     106,542     94,787     196,986  

Unrealized gains (losses) in fair value of equity instruments

    202     (12,317)     (18,846)     (7,000)  

(Loss) gain on sale or disposal of, or recovery on,

                         

assets and interests in unconsolidated entities and impairment, net

    (7,845)     2,681     (6,883)     2,681  

CONSOLIDATED NET INCOME

    290,548     572,102     795,952     1,204,048  

Net income attributable to noncontrolling interests

    35,501     75,944     102,465     158,580  

Preferred dividends

    834     834     1,669     1,669  

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 254,213   $ 495,324   $ 691,818   $ 1,043,799  

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

                         

Net income attributable to common stockholders

  $ 0.83   $ 1.60   $ 2.26   $ 3.38  
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 6

EARNINGS RELEASE

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

 
  June 30,
2020
  December 31,
2019
 

ASSETS:

             

Investment properties, at cost

  $ 37,972,093   $ 37,804,495  

Less — accumulated depreciation

    14,389,809     13,905,776  

    23,582,284     23,898,719  

Cash and cash equivalents

    3,306,100     669,373  

Tenant receivables and accrued revenue, net

    1,457,695     832,151  

Investment in unconsolidated entities, at equity

    2,385,946     2,371,053  

Investment in Klépierre, at equity

    1,644,020     1,731,649  

Right-of-use assets, net

    517,061     514,660  

Deferred costs and other assets

    1,133,064     1,214,025  

Total assets

  $ 34,026,170   $ 31,231,630  

LIABILITIES:

             

Mortgages and unsecured indebtedness

  $ 27,268,883   $ 24,163,230  

Accounts payable, accrued expenses, intangibles, and deferred revenues

    1,216,831     1,390,682  

Cash distributions and losses in unconsolidated entities, at equity

    1,576,679     1,566,294  

Dividend payable

    458,150      

Lease liabilities

    519,416     516,809  

Other liabilities

    463,380     464,304  

Total liabilities

    31,503,339     28,101,319  

Commitments and contingencies

             

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

    187,392     219,061  

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

   
42,256
   
42,420
 

             

Common stock, $0.0001 par value, 511,990,000 shares authorized, 320,555,104 and 320,435,256 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

    9,763,059     9,756,073  

Accumulated deficit

    (5,703,183)     (5,379,952)  

Accumulated other comprehensive loss

    (155,126)     (118,604)  

Common stock held in treasury, at cost, 14,667,884 and 13,574,296 shares, respectively

    (1,917,698)     (1,773,571)  

Total stockholders' equity

    2,029,340     2,526,398  

Noncontrolling interests

    306,099     384,852  

Total equity

    2,335,439     2,911,250  

Total liabilities and equity

  $ 34,026,170   $ 31,231,630  
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 7

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,
 
 
 
2020
 
2019
   
2020
   
2019
 

REVENUE:

                         

Lease income

  $ 574,246   $ 760,131   $ 1,318,096   $ 1,519,110  

Other income

    46,205     79,389     120,718     155,311  

Total revenue

    620,451     839,520     1,438,814     1,674,421  

OPERATING EXPENSES:

                         

Property operating

    107,309     140,262     254,339     284,983  

Depreciation and amortization

    165,511     170,407     336,989     340,664  

Real estate taxes

    60,634     67,809     129,023     136,526  

Repairs and maintenance

    13,589     18,832     33,204     41,209  

Advertising and promotion

    10,016     19,695     32,768     44,021  

Other

    15,734     47,743     65,964     97,058  

Total operating expenses

    372,793     464,748     852,287     944,461  

OPERATING INCOME BEFORE OTHER ITEMS

    247,658     374,772     586,527     729,960  

Interest expense

    (152,409)     (157,927)     (309,050)     (313,944)  

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

                21,587  

NET INCOME

  $ 95,249   $ 216,845   $ 277,477   $ 437,603  

Third-Party Investors' Share of Net Income

  $ 53,989   $ 110,620   $ 146,848   $ 223,287  

Our Share of Net Income

    41,260     106,225     130,629     214,316  

Amortization of Excess Investment (A)

    (20,761)     (20,774)     (41,601)     (41,567)  

Our Share of Gain on Sale or Disposal of Assets and Interests in

                         

Other Income in the Consolidated Financial Statements

                (9,155)  

Income from Unconsolidated Entities (B)

  $ 20,499   $ 85,451   $ 89,028   $ 163,594  
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.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 8

EARNINGS RELEASE

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

 
  June 30,
2020
  December 31,
2019
 

Assets:

             

Investment properties, at cost

  $ 19,670,435   $ 19,525,665  

Less — accumulated depreciation

    7,641,911     7,407,627  

    12,028,524     12,118,038  

Cash and cash equivalents

    733,224     1,015,864  

Tenant receivables and accrued revenue, net

    756,871     510,157  

Right-of-use assets, net

    180,952     185,302  

Deferred costs and other assets

    368,254     384,663  

Total assets

  $ 14,067,825   $ 14,214,024  

Liabilities and Partners' Deficit:

   
 
   
 
 

Mortgages

  $ 15,436,464   $ 15,391,781  

Accounts payable, accrued expenses, intangibles, and deferred revenue

    808,425     977,112  

Lease liabilities

    183,406     186,594  

Other liabilities

    395,429     338,412  

Total liabilities

    16,823,724     16,893,899  

Preferred units

   
67,450
   
67,450
 

Partners' deficit

    (2,823,349)     (2,747,325)  

Total liabilities and partners' deficit

  $ 14,067,825   $ 14,214,024  

Our Share of:

   
 
   
 
 

Partners' deficit

  $ (1,233,667)   $ (1,196,926)  

Add: Excess Investment (A)

    1,488,444     1,525,903  

Our net Investment in unconsolidated entities, at equity

  $ 254,777   $ 328,977  

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 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 9

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,
   
 
   
   
2020
   
2019
   
2020
 
2019
   

 

Consolidated Net Income (D)

  $ 290,548   $ 572,102   $ 795,952   $ 1,204,048    

 

Adjustments to Arrive at FFO:

                           

 

Depreciation and amortization from consolidated properties

    321,707     350,045     647,745     675,983    

 

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

    129,309     139,271     266,017     273,902    

 

Loss (gain) on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

    7,845     (2,681)     6,883     (2,681)    

 

Unrealized (gains) losses in fair value of equity instruments

    (202)     12,317     18,846     7,000    

 

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

    3,628     (400)     3,799     518    

 

Noncontrolling interests portion of depreciation and amortization

    (5,048)     (4,935)     (9,511)     (9,818)    

 

Preferred distributions and dividends

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

 

FFO of the Operating Partnership

  $ 746,474   $ 1,064,406   $ 1,727,105   $ 2,146,326    

 

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

                           

 

Diluted net income per share

  $ 0.83   $ 1.60   $ 2.26   $ 3.38    

 

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

    1.27     1.37     2.57     2.65    

 

Loss (gain) on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

    0.02     (0.01)     0.02     (0.01)    

 

Unrealized (gains) losses in fair value of equity instruments

        0.03     0.05     0.02    

 

Diluted FFO per share

  $ 2.12   $ 2.99   $ 4.90   $ 6.04    

   

 

 

                           

 

 

Details for per share calculations:

                           

 

 

FFO of the Operating Partnership

  $ 746,474   $ 1,064,406   $ 1,727,105   $ 2,146,326    

 

 

Diluted FFO allocable to unitholders

    (98,537)     (140,077)     (228,166)     (282,396)    
 

 

 

Diluted FFO allocable to common stockholders

  $ 647,937   $ 924,329   $ 1,498,939   $ 1,863,930    
 
 
 

 

 

Basic and Diluted weighted average shares outstanding

    305,882     308,709     306,193     308,843    

 

 

Weighted average limited partnership units outstanding

    46,528     46,783     46,608     46,791    

 

 

Basic and Diluted weighted average shares and units outstanding

    352,410     355,492     352,801     355,634    
 
 
 

 

 

Basic and Diluted FFO per Share

  $ 2.12   $ 2.99   $ 4.90   $ 6.04    

 

 

Percent Change

    –29.1%           –18.9%          
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 10

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 $1.1 million and $7.2 million for the three months ended June 30, 2020 and 2019, respectively, and $6.3 million and $11.6 million for the six months ended June 30, 2020 and 2019, respectively.

-
Straight-line adjustments (decreased) increased income by ($2.6) million and $27.2 million for the three months ended June 30, 2020 and 2019, respectively, and $9.4 million and $43.8 million for the six months ended June 30, 2020 and 2019, respectively.

-
Amortization of fair market value of leases from acquisitions increased income by $1.1 million and $1.4 million for the three months ended June 30, 2020 and 2019, respectively, and $2.4 million and $2.7 million for the six months ended June 30, 2020 and 2019, respectively.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 11

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, 2020, we owned or had an interest in 235 properties comprising 191 million square feet in North America, Asia and Europe. Additionally, at June 30, 2020, we had a 22.4% ownership interest in Klépierre, a publicly traded, Paris-based real estate company, which owns shopping centers in 15 European countries.

This package was prepared to provide operational and balance sheet information as of June 30, 2020 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: uncertainties regarding the impact of the COVID-19 pandemic and governmental restrictions intended to prevent its spread on our tenants' businesses, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our stockholders; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; changes in economic and market conditions that may adversely affect the general retail environment; the intensely competitive market environment in the retail industry; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; the potential loss of anchor stores or major tenants; decreases in market rental rates; 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; general risks related to real estate investments, including the illiquidity of real estate investments; security breaches that could compromise our information technology or infrastructure; risks relating to our joint venture properties; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; changes in the value of our investments in foreign entities; our ability to hedge interest rate and currency risk; changes in insurance costs; the availability of comprehensive insurance coverage; natural disasters; the potential for terrorist activities; environmental liabilities; the loss of key management personnel; and the transition of LIBOR to an alternative reference rate. 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 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 12

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   (Negative Outlook)    

 

Senior Unsecured

  A   (Negative Outlook)    

 

Commercial Paper

  A1   (Negative Outlook)    

 

Preferred Stock

  BBB+   (Negative Outlook)    

 

Moody's

 

 

 

 

 
 

 

Senior Unsecured

  A2   (Negative Outlook)    

 

Commercial Paper

  P1   (Negative Outlook)    

 

Preferred Stock

  A3   (Negative Outlook)    

SENIOR UNSECURED DEBT COVENANTS (1)

  Required   Actual   Compliance

Total Debt to Total Assets (1)

  £65%   44%   Yes

Total Secured Debt to Total Assets (1)

  £50%   19%   Yes

Fixed Charge Coverage Ratio

  >1.5X   4.8X   Yes

Total Unencumbered Assets to Unsecured Debt

  ³125%   244%   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 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 13

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

 
THREE MONTHS ENDED
JUNE 30,
 

SIX MONTHS ENDED
JUNE 30,
 
   

 
2020
2019  
2020
2019  

Financial Highlights

                         

Total Revenue – Consolidated Properties

  $ 1,062,041   $ 1,397,186   $ 2,415,401   $ 2,850,019  

Consolidated Net Income

 
$

290,548
 
$

572,102
 
$

795,952
 
$

1,204,048
 

Net Income Attributable to Common Stockholders

  $ 254,213   $ 495,324   $ 691,818   $ 1,043,799  

Basic and Diluted Earnings per Common Share (EPS)

  $ 0.83   $ 1.60   $ 2.26   $ 3.38  

Funds from Operations (FFO) of the Operating Partnership

 
$

746,474
 
$

1,064,406
 
$

1,727,105
 
$

2,146,326
 

Basic and Diluted FFO per Share (FFOPS)

  $ 2.12   $ 2.99   $ 4.90   $ 6.04  

Declared Dividends/Distributions per Share/Unit

 
$

1.30
 
$

2.05
 
$

3.40
 
$

4.10
 


Stockholders' Equity Information

 


AS OF
JUNE 30,
2020





AS OF
DECEMBER 31,
2019
 

Limited Partners' Units Outstanding at end of period

    46,528     46,740  

Common Shares Outstanding at end of period

    305,895     306,869  

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

    352,423     353,609  

Weighted Average Limited Partnership Units Outstanding

    46,608     46,744  

Weighted Average Common Shares Outstanding:

             

Basic and Diluted – for purposes of EPS and FFOPS

    306,193     307,950  

 

             

Debt Information

             

Share of Consolidated Debt

  $ 27,093,805   $ 23,988,186  

Share of Joint Venture Debt

    7,226,116     7,214,181  

Share of Total Debt

  $ 34,319,921   $ 31,202,367  

Share of Cash and Cash Equivalents

    3,632,196     1,114,490  

Share of Net Debt

  $ 30,687,725   $ 30,087,877  

 

             

Market Capitalization

             

Common Stock Price at end of period

  $ 68.38   $ 148.96  

Common Equity Capitalization, including Limited Partnership Units

  $ 24,098,699   $ 52,673,608  

Preferred Equity Capitalization, including Limited Partnership Preferred Units

    73,673     83,236  

Total Equity Market Capitalization

  $ 24,172,372   $ 52,756,844  

Total Market Capitalization – Including Share of Total Debt

  $ 58,492,293   $ 83,959,211  
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 14

NET OPERATING INCOME (NOI) COMPOSITION (1)
For the Six Months Ended June 30, 2020

 

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 and international Designer Outlets.
(3)
Includes Lifestyle Centers.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 15

NET OPERATING INCOME OVERVIEW (1)
(In thousands)

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

 
2020
2019   % Change  
2020
2019   % Change  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparable Property NOI  (2)

  $ 1,103,146   $ 1,353,240   –18.5%   $ 2,421,901   $ 2,671,376   –9.3%  

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

   
34,728
   
40,620
         
72,653
   
80,381
       

International Properties  (4)

    55,614     116,719           166,078     228,323        

 

                                     

Portfolio NOI

  $ 1,193,488   $ 1,510,579   –21.0%   $ 2,660,632   $ 2,980,080   –10.7%  

Our share of NOI from Investments  (5)

   
50,041
   
61,119
         
98,193
   
116,430
       

Our share of NOI from Retailer Investments  (6)

    (15,549)     8,802           (39,223)     6,632        

Corporate and Other NOI Sources  (7)

    73,115     125,863           160,713     318,703        

Combined NOI

  $ 1,301,095   $ 1,706,363         $ 2,880,315   $ 3,421,845        

Less: Joint Venture Partners' Share of NOI

   
224,462
   
289,719
         
496,089
   
566,206
       

Our Share of Total NOI

  $ 1,076,633   $ 1,416,644         $ 2,384,226   $ 2,855,639        
(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 as comparable for the period. Substantially all of the NOI decline in the first six months of 2020 related to the impact of COVID-19.

(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 at constant currency. Substantially all of the NOI decline in the first six months of 2020 related to the impact of COVID-19.

(5)
Includes our share of NOI of Klépierre (at constant currency) and HBS. Substantially all of the NOI decline in the first six months of 2020 related to the impact on our share of NOI from our investment in Klépierre resulting from property closures.

(6)
Includes our share of NOI of our retailer investments. Substantially all of the NOI decline in the first six months of 2020 related to the impact of COVID-19 on our retailer investments operations from store closures.

(7)
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), unrealized and realized gains/losses on non-real estate related equity instruments, Simon management company revenues, and other assets. The six months ended June 30, 2019 includes $83,582 related to the Opry Mills settlement and a gain on the sale of Phipps Residential.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 16

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,
     

  2020   2019   2020   2019

Reconciliation of NOI of consolidated entities:

                   

Consolidated Net Income

  $ 290,548   $ 572,102   $ 795,952   $ 1,204,048

Income and other tax (benefit) expense

  (62)     7,010   (5,845)     17,112

Interest expense

  197,061     198,425   384,688     397,160

Income from unconsolidated entities

  (44,322)     (106,542)   (94,787)     (196,986)

Unrealized (gains) losses in fair value of equity instruments

  (202)     12,317   18,846     7,000

Loss (gain) on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

  7,845     (2,681)   6,883     (2,681)

Operating Income Before Other Items

  450,868     680,631   1,105,737     1,425,653

Depreciation and amortization

  324,140     352,606   652,402     681,249

Home and regional office costs

  36,090     46,467   90,460     99,027

General and administrative

  7,296     10,359   14,190     19,496

NOI of consolidated entities

  $ 818,394   $ 1,090,063   $ 1,862,789   $ 2,225,425

Reconciliation of NOI of unconsolidated entities:

                   

Net Income

  $ 95,249   $ 216,845   $ 277,477   $ 437,603

Interest expense

  152,409     157,927   309,050     313,944

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

            (21,587)

Operating Income Before Other Items

  247,658     374,772   586,527     729,960

Depreciation and amortization

  165,511     170,407   336,989     340,664

NOI of unconsolidated entities

  $ 413,169   $ 545,179   $ 923,516   $ 1,070,624

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

  69,532     71,121   94,010     125,796

Combined NOI

  $ 1,301,095   $ 1,706,363   $ 2,880,315   $ 3,421,845
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 17

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, 2020
SIX
MONTHS ENDED
JUNE 30, 2020

FFO of the Operating Partnership

$ 746,474 $ 1,727,105

Non-cash impacts to FFO(1)

13,128 13,133

FFO of the Operating Partnership excluding non-cash impacts

759,602 1,740,238

Tenant allowances

4,180 (40,040)

Operational capital expenditures

(11,056) (29,444)

Funds available for distribution

$ 752,726 $ 1,670,754
(1)
Non-cash impacts to FFO of the Operating Partnership include:

    

   

THREE
MONTHS ENDED
JUNE 30, 2020
SIX
MONTHS ENDED
JUNE 30, 2020

Deductions:

   

Straight-line lease loss (income)

2,623 (9,394)

Fair market value of lease amortization

(1,157) (2,442)

Additions:

   

Stock based compensation expense

5,166 11,894

Fair value of debt amortization

98 181

Mortgage, financing fee and terminated swap amortization expense

6,398 12,894

$ 13,128 $ 13,133

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 Reconciliations of Non-GAAP Financial Measures and in the Earnings Release for the latest period.

 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 18

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

 
THREE MONTHS
ENDED JUNE 30,
 

SIX MONTHS
ENDED JUNE 30,
 
   

 
2020
2019  
2020
2019  

Consolidated Properties

                         

Other Income

                         

Interest, dividend and distribution income  (1)

  $ 5,203   $ 8,389   $ 9,777   $ 15,174  

Lease settlement income

    2,716     2,292     5,358     4,790  

Gains on land sales

    1,165     5,828     6,374     8,377  

Other  (2)(3)

    18,412     53,862     67,949     187,263  

Totals

  $ 27,496   $ 70,371   $ 89,458   $ 215,604  

 

                         

Other Expense

                         

Ground leases

  $ 9,174   $ 11,036   $ 20,040   $ 21,280  

Professional fees and other

    19,863     16,784     36,838     31,956  

Totals

  $ 29,037   $ 27,820   $ 56,878   $ 53,236  

    

                         

 

Capitalized Interest

 
THREE MONTHS
ENDED JUNE 30,
 

SIX MONTHS
ENDED JUNE 30,
 
   

 
2020
2019  
2020
2019  

Interest Capitalized during the Period:

                         

Our Share of Consolidated Properties

  $ 3,340   $ 8,193   $ 12,899   $ 14,621  

Our Share of Joint Venture Properties

  $ 220   $ 275   $ 571   $ 524  

                         

                         
(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.

(3)
The six months ended June 30, 2019 includes $83,582 related to the Opry Mills settlement and a gain on the sale of Phipps residential.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 19

U.S. MALLS AND PREMIUM OUTLETS OPERATING INFORMATION

 
AS OF JUNE 30,
 

 
2020
2019

Total Number of Properties

  168     176

Total Square Footage of Properties (in millions)

 

142.4
   
150.4

Ending Occupancy (1):

 

 
   
 

Consolidated Assets

  93.0%     94.6%

Unconsolidated Assets

  92.7%     93.9%

Total Portfolio

  92.9%     94.4%

Base Minimum Rent PSF (2):

 

 
   
 

Consolidated Assets

  $ 54.10   $ 52.91

Unconsolidated Assets

  $ 61.48   $ 58.74

Total Portfolio

  $ 56.02   $ 54.52

Open / Close Spread

     

RENT PSF
(BASE MINIMUM RENT & CAM)


     
         

 

SQUARE FOOTAGE
OF OPENINGS





AVERAGE
OPENING RATE
PSF  (3)






AVERAGE
CLOSING RATE
PSF  (3)





LEASING
SPREAD  (3)



SPREAD TO
CLOSE %

6/30/20

  6,593,808   $ 62.95   $ 63.21   ($ 0.26)   –0.4%

3/31/20

    7,948,232   $ 64.06   $ 61.26   $ 2.80     4.6%

12/31/19

    8,216,167   $ 62.39   $ 54.56   $ 7.83     14.4%

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%
(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)
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.
(3)
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.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 20

THE MILLS AND INTERNATIONAL OPERATING INFORMATION

 
AS OF JUNE 30,
 

 
2020
2019

The Mills

         

Total Number of Properties

 

14
   
14

Total Square Footage of Properties (in millions)

 

21.5
   
21.4

Ending Occupancy (1)

 

95.3%
   
97.1%

Base Minimum Rent PSF (2)

 
$

34.11
 
$

32.87

Leasing Spread PSF (3)

 
$

9.11
 
$

11.95

Leasing Spread (Percentage Change) (3)

 

23.4%
   
30.0%

 

 

 
   
 

International Properties

 

 
   
 

Premium Outlets

 

 
   
 

Total Number of Properties

 

21
   
20

Total Square Footage of Properties (in millions)

 

8.2
   
7.6

Designer Outlets

 

 
   
 

Total Number of Properties

 

10
   
9

Total Square Footage of Properties (in millions)

 

2.6
   
2.2

Statistics for Premium Outlets in Japan (4)

 

 
   
 

Ending Occupancy

 

99.3%
   
99.9%

Base Minimum Rent PSF

 

¥ 5,339
   
¥ 5,214
(1)
See footnote 1 on U.S. Malls and Premium Outlets Operating Information for definition, except Ending Occupancy is calculated on all company owned space.
(2)
See footnote 2 on U.S. Malls and Premium Outlets Operating Information for definition.
(3)
See footnote 3 on U.S. Malls and Premium Outlets Operating Information for definition.
(4)
Information supplied by the managing venture partner; includes 9 properties.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 21

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

YEAR

 


NUMBER OF
LEASES
EXPIRING




SQUARE FEET




AVG. BASE
MINIMUM
RENT
PSF AT 6/30/20







PERCENTAGE OF
GROSS ANNUAL
RENTAL
REVENUES (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Inline Stores and Freestanding

                       

Month to Month Leases

   
1,152
   
4,305,888
 
$

52.14
   
3.9%

2020 (7/1/20 - 12/31/20)

    624     1,659,312   $ 62.99     1.8%

2021

    2,553     9,481,122   $ 51.40     8.4%

2022

    2,326     8,892,119   $ 49.92     7.8%

2023

    2,220     9,194,908   $ 57.22     9.2%

2024

    1,846     7,282,635   $ 59.98     7.5%

2025

    1,547     6,109,265   $ 63.00     6.8%

2026

    1,266     4,796,457   $ 62.95     5.3%

2027

    951     3,623,992   $ 66.63     4.2%

2028

    827     3,582,593   $ 61.14     3.8%

2029

    720     3,092,148   $ 64.88     3.3%

2030

    292     1,494,672   $ 59.57     1.4%

2031 and Thereafter

    354     2,346,914   $ 42.06     1.8%

Specialty Leasing Agreements w/ terms in excess of 12 months

    1,563     4,034,155   $ 18.09     1.3%

 

                       

Anchors

                       

2020 (7/1/20 - 12/31/20)

   
1
   
138,409
 
$

1.18
   
0.0%

2021

    6     735,592   $ 4.72     0.1%

2022

    11     1,470,861   $ 6.06     0.2%

2023

    16     2,318,262   $ 6.00     0.3%

2024

    18     1,565,287   $ 8.59     0.2%

2025

    17     1,676,634   $ 6.63     0.2%

2026

    10     1,083,302   $ 4.86     0.1%

2027

    6     920,224   $ 4.16     0.1%

2028

    8     707,745   $ 8.27     0.1%

2029

    4     511,660   $ 2.44     0.0%

2030

    8     824,573   $ 6.91     0.1%

2031 and Thereafter

    19     1,751,746   $ 12.84     0.4%
(1)
Does not consider the impact of renewal options that may be contained in leases.
(2)
Annual rental revenues represent 2019 consolidated and joint venture combined base rental revenue.
 
2Q 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 22

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.

    403     3,752     2.1%     3.5%

L Brands, Inc.

    287     1,786     1.0%     2.2%

PVH Corporation

    234     1,464     0.8%     1.7%

Tapestry, Inc.

    248     1,013     0.6%     1.5%

Ascena Retail Group Inc

    350     1,898     1.1%     1.5%

Signet Jewelers, Ltd.

    337     491     0.3%     1.4%

Capri Holdings Limited

    139     536     0.3%     1.2%

American Eagle Outfitters, Inc

    199     1,278     0.7%     1.2%

Foot Locker, Inc.

    206     956     0.5%     1.2%

Luxottica Group SPA

    375     663     0.4%     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.

    103     19,935     11.0%     0.3%

J.C. Penney Co., Inc.

    57     9,372     5.2%     0.3%

Dillard's, Inc.

    36     6,532     3.6%     *

Nordstrom, Inc.

    27     4,556     2.5%     0.1%

Dick's Sporting Goods, Inc.

    34     2,309     1.3%     0.5%

Hudson's Bay Company

    17     2,174     1.2%     0.1%

Sears

    8     1,608     0.9%     *

The Neiman Marcus Group, Inc.

    12     1,458     0.8%     0.1%

Belk, Inc.

    7     1,194     0.7%     *

Target Corporation

    6     831     0.5%     0.1%

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 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 23

CAPITAL EXPENDITURES
(In thousands)

     

UNCONSOLIDATED
PROPERTIES
   

 
CONSOLIDATED
PROPERTIES

 
TOTAL  
OUR
SHARE

New development projects

  $ 21,779   $ 88,873   $ 41,025

Redevelopment projects with incremental square footage and/or anchor replacement

   
183,069
   
163,516
   
74,320

Redevelopment projects with no incremental square footage (1)

   
41,583
   
15,386
   
7,938

 

                 

Subtotal new development and redevelopment projects

  246,431   267,775   123,283

Tenant allowances

   
29,000
   
22,019
   
11,040

Operational capital expenditures at properties:

                 

CAM expenditures

    16,741     20,348     8,530

Non-CAM expenditures

    1,503     6,688     2,670

 

                 

Totals

  $ 293,675   $ 316,830   $ 145,523

Conversion from accrual to cash basis

   
43,792
   
12,862
   
5,907

 

                 

Capital Expenditures for the Six Months Ended 6/30/20 (2)

  $ 337,467   $ 329,692   $ 151,430

        

                 

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

  $ 403,346   $ 368,924   $ 155,132
(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 2020 SUPPLEMENTAL 2Q 2020 SUPPLEMENTAL 24

DEVELOPMENT ACTIVITY SUMMARY
As of June 30, 2020
(in millions, except percent)

 

 

PLATFORM
    PROJECT TYPE


 
 


OUR SHARE
OF NET
INVESTMENT



 



EXPECTED
STABILIZED
RATE OF
RETURN




 



ACTUAL
INVESTMENT
THRU
Q2 2020




 


FORECASTED
INVESTMENT
Q3 - Q4



 


FORECASTED
INVESTMENT
FY 2020



 


FORECASTED
INVESTMENT
FY 2021



 



FORECASTED
TOTAL
INVESTMENT
2020 - 2021




 

 

Malls

                                 

 

 

Redevelopments

      $ 411,096