Simon Property Group Reports Fourth Quarter Results, Announces Quarterly Dividend and Provides 2011 Guidance
INDIANAPOLIS, Feb. 4, 2011 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today reported results for the quarter and year ended December 31, 2010.
Results for the Quarter Ended December 31, 2010
Net income attributable to common stockholders was $217.9 million, or $0.74 per diluted share, in the quarter as compared to $91.5 million, or $0.32 per diluted share, in the prior year period.
Funds from Operations ("FFO") as adjusted was $638.7 million, or $1.80 per diluted share, in the quarter as compared to $573.4 million, or $1.66 per diluted share, in the prior year period. FFO as adjusted excludes the impact of non-cash impairment charges of $0.02 per share in 2010 and $0.26 per share in 2009. FFO was $1.78 per diluted share in 2010 and $1.40 per diluted share in 2009.
Results for the Year Ended December 31, 2010
Net income attributable to common stockholders was $610.4 million, or $2.10 per diluted share, for the year as compared to $283.1 million, or $1.05 per diluted share, in the prior year period.
FFO as adjusted was $2.121 billion, or $6.03 per diluted share, for the year as compared to $1.977 billion, or $6.01 per diluted share, in the prior year period. FFO as adjusted excludes the $1.00 per diluted share loss on extinguishment of debt incurred in connection with two tender offers for outstanding senior notes in 2010 and the impact of non-cash impairment charges of $0.02 per share in 2010 and $0.68 per share in 2009. FFO was $5.01 per diluted share in 2010 and $5.33 per diluted share in 2009.
"We delivered impressive results in an improving, but still challenging environment," said David Simon, Chairman and Chief Executive Officer. "Funds from operations as adjusted per share were $1.80 for the quarter, an increase of 8.4% over the same period one year ago. Our regional mall and Premium Outlet portfolio generated comparable property net operating income growth of 3.4% in the period, fueled by increases in occupancy and sales."
U.S. Operational Statistics(1)
As of As of
December 31, December 31,
2010 2009
------------- -------------
Occupancy(2) 94.2% 93.4%
Comparable Sales per Sq. Ft. (3) $494 $452
Average Rent per Sq. Ft. (2) $38.87 $38.47
- Combined information for U.S. regional malls and U.S. Premium Outlets. Does not include information for properties owned by SPG-FCM (the Mills portfolio) or the properties acquired in the Prime Outlets transaction.
- Represents mall stores in regional malls and all owned gross leasable area in Premium Outlets.
- Rolling 12 month comparable sales per square foot for mall stores less than 10,000 square feet in regional malls and all owned gross leasable area in Premium Outlets.
Dividends
Today the Company announced that the Board of Directors approved the declaration of a quarterly common stock dividend of $0.80 per share. This dividend is payable on February 28, 2011 to stockholders of record on February 14, 2011.
The Company also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred (NYSE: SPGPrJ) Stock of $1.046875 per share, payable on March 31, 2011 to stockholders of record on March 17, 2011.
Development Activity
On November 11th, the Company opened the second phase of Houston Premium Outlets® in Cypress (Houston), Texas. The 114,000 square-foot expansion brings the property to a total of 536,000 square feet of gross leasable area and 145 stores.
The expansion added 25 new merchants including Saks Fifth Avenue Off 5th, A/X Armani Exchange, American Eagle Outfitters, Chico's, David Yurman, Ed Hardy, Esprit, Haggar Clothing Co., J.Crew, Jockey, Joe's Jeans, Jos. A. Bank, Lacoste, Merrell, Nautica, New York & Company, Nestle Toll House by Chip, Original Penguin, Talbots, Tory Burch, Tumi, White House / Black Market and Wilsons Leather. The Company owns 100% of this center.
During the fourth quarter, construction started on the expansion of Pheasant Lane Mall in Nashua, New Hampshire. The Company owns 100% of this addition, which includes Dick's Sporting Goods, small shops and restaurants. The project is expected to be completed in October of 2011.
Construction continues on the following projects:
- A 70,000 square foot expansion of Las Vegas Outlet Center in Las Vegas, Nevada, expected to open in March of 2011. The Company owns 100% of this center.
- Paju Premium Outlets, a new 328,000 square foot upscale outlet center with approximately 160 shops, located north of Seoul, South Korea. This will be the Company's second Premium Outlet Center in South Korea and is expected to open in March of 2011. The Company owns a 50% interest in this project.
- A 52,000 square foot expansion of Tosu Premium Outlets in Fukuoka, Japan, expected to open in July of 2011. The Company owns a 40% interest in this project.
- Johor Premium Outlets, a new 173,000 square foot upscale outlet center located in Johor, Malaysia. The center is located one hour's drive from Singapore and is projected to open in November of 2011. The Company owns a 50% interest in this project.
- Merrimack Premium Outlets in Merrimack, New Hampshire. This new 380,000 square foot upscale outlet center is located one hour north of metropolitan Boston and is projected to open in the summer of 2012. The Company owns 100% of this center.
2011 Guidance
The Company estimates that FFO will be within a range of $6.45 to $6.60 per diluted share for the year ending December 31, 2011, and diluted net income will be within a range of $2.55 to $2.70 per share.
The following table provides the reconciliation of the range of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.
For the year ending December 31, 2011
-------------------------------------
Low High
End End
--- ---
Estimated diluted net income available to common
stockholders per share $2.55 $2.70
Depreciation and amortization including the
Company's share of joint ventures 3.90 3.90
---- ----
Estimated diluted FFO per share $6.45 $6.60
===== =====
The 2011 guidance reflects management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and the earnings impact of the events referenced in this release and previously disclosed. The guidance also reflects management's view of future capital market conditions, which is generally consistent with the current forward rates for LIBOR and U.S. Treasury bonds. The estimates do not include possible future gains or losses or the impact on operating results from other possible future property acquisitions or dispositions, possible capital markets activity or possible future impairment charges. EPS estimates may be subject to fluctuations as a result of several factors, including changes in the recognition of depreciation and amortization expense and any gains or losses associated with disposition activity. By definition, FFO does not include real estate-related depreciation and amortization or gains or losses associated with property disposition activities. This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release.
Conference Call
The Company will provide an online simulcast of its quarterly conference call at www.simon.com (Investors tab), www.earnings.com, and www.streetevents.com. To listen to the live call, please go to any of these websites at least fifteen minutes prior to the call to register, download and install any necessary audio software. The call will begin at 11:00 a.m. Eastern Time (New York time) today, February 4, 2011. An online replay will be available for approximately 90 days at www.simon.com, www.earnings.com, and www.streetevents.com. A fully searchable podcast of the conference call will also be available at www.REITcafe.com.
Supplemental Materials and Website
The Company has prepared a supplemental information package which is available at www.simon.com in the Investors section, Financial Information tab. It has also been furnished to the SEC as part of a current report on Form 8-K. If you wish to receive a copy via mail or email, please call 800-461-3439.
We routinely post important information for investors on our website, www.simon.com, in the "Investors" section. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be 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 and comparable property net operating income growth, which are adjusted from financial performance measures defined by accounting principles generally accepted in the United States ("GAAP"). Reconciliations of these measures to the most directly comparable GAAP measures are included within this press release or the Company's supplemental information package. FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry.
Forward-Looking Statements
Certain statements made in this press release may be deemed "forwardlooking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forwardlooking statements are based on reasonable assumptions, the Company can give no assurance that our expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forwardlooking statements due to a variety of risks, uncertainties and other factors. Such factors include, but are not limited to: the Company's ability to meet debt service requirements, the availability and terms of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, changes in value of investments in foreign entities, the ability to hedge interest rate risk, risks associated with the acquisition, development, expansion, leasing and management of properties, general risks related to retail real estate, the liquidity of real estate investments, environ-mental liabilities, international, national, regional and local economic climates, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. 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 its periodic reports, but otherwise the Company undertakes no duty or obligation to update or revise these forwardlooking statements, whether as a result of new information, future developments, or otherwise.
About Simon
Simon Property Group, Inc. is an S&P 500 company and the largest real estate company in the U.S. The Company currently owns or has an interest in 393 retail real estate properties comprising 264 million square feet of gross leasable area in North America, Europe and Asia. Simon Property Group is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide. The Company's common stock is publicly traded on the NYSE under the symbol SPG. For further information, visit the Simon Property Group website at www.simon.com.
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
For the Three Months For the Twelve Months
Ended Ended
December 31, December 31,
2010 2009 2010 2009
---- ---- ---- ----
REVENUE:
Minimum rent $672,606 $607,691 $2,429,519 $2,316,838
Overage rent 56,668 39,123 110,621 84,922
Tenant reimbursements 298,146 277,322 1,083,780 1,062,227
Management fees and other
revenues 34,310 33,365 121,207 124,059
Other income 57,988 70,679 212,503 187,170
------ ------ ------- -------
Total revenue 1,119,718 1,028,180 3,957,630 3,775,216
EXPENSES:
Property operating 98,615 98,905 414,264 425,703
Depreciation and
amortization 276,418 239,425 982,820 997,598
Real estate taxes 90,893 82,784 345,960 333,957
Repairs and maintenance 37,875 29,811 102,425 91,736
Advertising and promotion 34,641 32,010 97,194 93,565
Provision for credit
losses 5,190 3,319 3,130 22,655
Home and regional office
costs 36,615 30,316 109,314 110,048
General and
administrative 5,358 4,257 21,267 18,124
Impairment charge - 56,875(A) - 197,353(A)
Transaction expenses 6,418 5,697 68,972 5,697
Other 23,633 19,180 68,045 72,088
------ ------ ------ ------
Total operating
expenses 615,656 602,579 2,213,391 2,368,524
------- ------- --------- ---------
OPERATING INCOME 504,062 425,601 1,744,239 1,406,692
Interest expense (252,405) (263,705) (1,027,091) (992,065)
Loss on extinguishment
of debt - - (350,688) -
Income tax (expense)
benefit of taxable
REIT subsidiaries (2,291) 2,316 (1,734) 5,220
Income from
unconsolidated entities 25,192 24,526 75,921 40,220
Impairment charge from
investments in
unconsolidated entities (8,169)(A) (42,697)(A) (8,169)(A) (42,697)(A)
Gain (loss) upon
acquisition of controlling
interest, and on sale or
disposal of assets and
interests in
unconsolidated entities,
net 687 (30,108) 321,036 (30,108)
--- ------- ------- -------
CONSOLIDATED NET INCOME 267,076 115,933 753,514 387,262
Net income attributable
to noncontrolling
interests 48,318 17,678 136,476 77,855
Preferred dividends 835 6,712 6,614 26,309
--- ----- ----- ------
NET INCOME ATTRIBUTABLE
TO COMMON STOCKHOLDERS $217,923 $91,543 $610,424 $283,098
======== ======= ======== ========
Basic Earnings Per Common
Share:
Net income attributable
to common stockholders $0.74 $0.32 $2.10 $1.06
===== ===== ===== =====
Percentage Change 131.3% 98.1%
Diluted Earnings Per
Common Share:
Net income
attributable to
common stockholders $0.74 $0.32 $2.10 $1.05
===== ===== ===== =====
Percentage Change 131.3% 100.0%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
December 31, December 31,
2010 2009
---- ----
ASSETS:
Investment properties, at cost $27,508,735 $25,336,189
Less - accumulated depreciation 7,711,304 7,004,534
--------- ---------
19,797,431 18,331,655
Cash and cash equivalents 796,718 3,957,718
Tenant receivables and accrued
revenue, net 426,736 402,729
Investment in unconsolidated entities,
at equity 1,390,105 1,468,577
Deferred costs and other assets 1,795,439 1,155,587
Note receivable from related party 651,000 632,000
------- -------
Total assets $24,857,429 $25,948,266
=========== ===========
LIABILITIES:
Mortgages and other indebtedness $17,473,760 $18,630,302
Accounts payable, accrued expenses,
intangibles, and deferred revenues 993,738 987,530
Cash distributions and losses in
partnerships and joint ventures, at
equity 485,855 457,754
Other liabilities and accrued
dividends 184,855 159,345
------- -------
Total liabilities 19,138,208 20,234,931
---------- ----------
Commitments and contingencies
Limited partners' preferred interest
in the Operating Partnership and
noncontrolling redeemable interests
in properties 85,469 125,815
Series I 6% convertible perpetual
preferred stock, 19,000,000 shares
authorized, 0 and 8,091,155 issued and
outstanding, respectively, at liquidation
value - 404,558
EQUITY:
Stockholders' equity:
Capital stock (850,000,000 total
shares authorized, $.0001 par value,
238,000,000 shares of excess
common stock, 100,000,000 authorized
shares of preferred stock):
Series J 8 3/8% cumulative redeemable
preferred stock, 1,000,000 shares
authorized, 796,948 issued and
outstanding, with a liquidation value
of $39,847 45,375 45,704
Common stock, $.0001 par value,
511,990,000 shares authorized,
296,957,360 and 289,866,711
issued and outstanding, respectively 30 29
Class B common stock, $.0001 par
value, 10,000 shares authorized,
8,000 issued and outstanding - -
Capital in excess of par value 8,059,852 7,547,959
Accumulated deficit (3,114,571) (2,955,671)
Accumulated other comprehensive income
(loss) 6,530 (3,088)
Common stock held in treasury at cost,
4,003,451 and 4,126,440 shares,
respectively (166,436) (176,796)
-------- --------
Total stockholders' equity 4,830,780 4,458,137
Noncontrolling interests 802,972 724,825
------- -------
Total equity 5,633,752 5,182,962
--------- ---------
Total liabilities and equity $24,857,429 $25,948,266
=========== ===========
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
--------------
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2010 2009 2010 2009
---- ---- ---- ----
Revenue:
Minimum rent $502,964 $519,947 $1,960,951 $1,965,565
Overage rent 53,156 47,119 147,776 132,260
Tenant
reimbursements 250,883 267,183 950,267 987,028
Other income 46,989 58,665 223,234 174,611
------ ------ ------- -------
Total revenue 853,992 892,914 3,282,228 3,259,464
Operating Expenses:
Property operating 158,560 166,783 635,946 656,399
Depreciation and
amortization 201,249 221,403 793,012 801,618
Real estate taxes 61,848 71,258 253,627 261,294
Repairs and
maintenance 29,399 33,558 105,042 110,606
Advertising and
promotion 18,564 20,188 61,814 65,124
Provision for
(recovery of)
credit losses 3,335 (2,787) 4,053 16,123
Impairment charge - 18,249 (A) - 18,249 (A)
Other 55,170 50,521 210,858 182,201
------ ------ ------- -------
Total operating
expenses 528,125 579,173 2,064,352 2,111,614
------- ------- --------- ---------
Operating Income 325,867 313,741 1,217,876 1,147,850
Interest expense (215,437) (222,953) (868,856) (884,539)
Income (loss) from
unconsolidated
entities 528 (2,356) (840) (4,739)
Impairment charge
from investments in
unconsolidated
entities (16,671) - (16,671) -
(Loss) gain on sale
or disposal of assets
and interests in
unconsolidated
entities, net (85) - 39,676 -
--- --- ------ ---
Net Income $94,202 $88,432 $371,185 $258,572
======= ======= ======== ========
Third-Party
Investors' Share of
Net Income $64,568 $57,665 $234,799 $170,265
------- ------- -------- --------
Our Share of Net
Income 29,634 30,767 136,386 88,307
Amortization of
Excess Investment(B) (12,653) (13,844) (48,329) (55,690)
Our Share of Loss
(Gain) on Sale or
Disposal of Assets
and Interests in
Unconsolidated
Entities, net 42 - (20,305) -
Our Share of
Impairment Charge
from Unconsolidated
Entities (C) 8,169 7,603 (A) 8,169 7,603 (A)
----- ----- ----- -----
Income from
Unconsolidated
Entities $25,192 $24,526 $75,921 $40,220
======= ======= ======= =======
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
December 31, December 31,
2010 2009
---- ----
Assets:
Investment properties, at cost $21,236,594 $21,555,729
Less - accumulated depreciation 5,126,116 4,580,679
--------- ---------
16,110,478 16,975,050
Cash and cash equivalents 802,025 771,045
Tenant receivables and accrued
revenue, net 353,719 364,968
Investment in unconsolidated
entities, at equity 158,116 235,173
Deferred costs and other assets 525,024 535,398
------- -------
Total assets $17,949,362 $18,881,634
=========== ===========
Liabilities and Partners' Equity:
Mortgages and other indebtedness $15,937,404 $16,549,276
Accounts payable, accrued expenses,
intangibles and deferred revenue 748,245 834,668
Other liabilities 961,284 978,771
------- -------
Total liabilities 17,646,933 18,362,715
Preferred units 67,450 67,450
Partners' equity 234,979 451,469
------- -------
Total liabilities and partners'
equity $17,949,362 $18,881,634
=========== ===========
Our Share of:
Partners' equity $146,578 $316,800
Add: Excess Investment (B) 757,672 694,023
------- -------
Our net Investment in Joint Ventures $904,250 $1,010,823
======== ==========
SIMON
Footnotes to Financial Statements
Unaudited
Notes:
(A) During the fourth quarter of 2010, the Company recorded an $8.2
million non-cash impairment charge related to an investment in an
operating property in Italy. During the fourth quarter of 2009, the
Company recorded non-cash impairment charges aggregating $88.1
million, net of tax benefit and adjusted for noncontrolling interest
holders' share, related to two operational regional malls, certain
parcels of land and non-retail real estate, and certain development
costs related to projects no longer being pursued. In the second
quarter of 2009, the Company recorded a non-cash impairment charge
of $140.5 million.
(B) Excess investment represents the unamortized difference of the
Company's investment over equity in the underlying net assets of the
partnerships and joint ventures. The Company generally amortizes
excess investment over the life of the related properties, typically
no greater than 40 years, and the amortization is included in income
from unconsolidated entities.
(C) The Company's share of impairment charge from unconsolidated
entities is included within the joint venture statements of
operations. This charge is presented separately on the consolidated
statements of operations along with $35.1 million of impairment
charges of investments in certain unconsolidated entities and for
which declines in value below our carrying amount were deemed other
than temporary.
SIMON
Reconciliation of Non-GAAP Financial Measures (1)
Unaudited
(In thousands, except as noted)
-------------------------------
Reconciliation of Consolidated Net Income to FFO and FFO as Adjusted
---------------------------------------------------------------------
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
2010 2009 2010 2009
---- ---- ---- ----
Consolidated Net
Income (2)(3)(4)(5) $267,076 $115,933 $753,514 $387,262
Adjustments to Consolidated
Net Income to Arrive at FFO:
Depreciation and amortization
from consolidated
properties 272,713 235,296 968,695 983,487
Simon's share of
depreciation and
amortization from
unconsolidated entities 98,048 111,608 388,565 399,509
(Gain) loss upon acquisition
of controlling interest,
and on sale or disposal of
assets and interests in
unconsolidated entities, net (687) 30,108 (321,036) 30,108
Net (income) loss attributable
to noncontrolling interest
holders in properties (3,298) 2,568 (10,640) (5,496)
Noncontrolling interests
portion of depreciation
and amortization (1,959) (2,143) (7,847) (8,396)
Preferred distributions and
dividends (1,313) (8,144) (8,929) (38,194)
------ ------ ------ -------
FFO of the Operating
Partnership $630,580 $485,226 $1,762,322 $1,748,280
Impairment charge 8,169 88,134 8,169 228,612
Loss on debt extinguishment - - 350,688 -
--- --- ------- ---
FFO as adjusted of the
Operating Partnership $638,749 $573,360 $2,121,179 $1,976,892
======== ======== ========== ==========
Per Share Reconciliation:
-------------------------
Diluted net income
attributable to common
stockholders per share $0.74 $0.32 $2.10 $1.05
Adjustments to arrive at FFO:
Depreciation and
amortization from
consolidated properties
and Simon's share of
depreciation and
amortization from
unconsolidated entities,
net of noncontrolling
interests portion of
depreciation and
amortization 1.05 1.01 3.86 4.22
(Loss) gain upon
acquisition of
controlling interest,
and on sale or disposal of
assets and interests in
unconsolidated entities, net - 0.09 (0.92) 0.09
Impact of additional
dilutive securities
for FFO per share (0.01) (0.02) (0.03) (0.03)
----- ----- ----- -----
Diluted FFO per share $1.78 $1.40 $5.01 $5.33
Impairment charge 0.02 0.26 0.02 0.68
Loss on debt extinguishment - - 1.00 -
--- --- ---- ---
Diluted FFO as adjusted per
share $1.80 $1.66 $6.03 $6.01
===== ===== ===== =====
Details for per
share calculations:
--------------------
FFO of the Operating
Partnership $630,580 $485,226 $1,762,322 $1,748,280
Adjustments for
dilution calculation:
Impact of preferred
stock and preferred unit
conversions and option
exercises (6) - 6,832 3,676 27,444
--- ----- ----- ------
Diluted FFO of the
Operating Partnership 630,580 492,058 1,765,998 1,775,724
Diluted FFO allocable to
unitholders (107,500) (81,132) (295,304) (305,150)
-------- ------- -------- --------
Diluted FFO allocable to
common stockholders $523,080 $410,926 $1,470,694 $1,470,574
======== ======== ========== ==========
Basic weighted average
shares outstanding 292,931 283,968 291,076 267,055
Adjustments for dilution
calculation:
Effect of stock options 230 366 274 316
Effect of contingently
issuable shares
from stock dividends - 628 - 1,101
Impact of Series C
preferred unit
conversion - - - 46
Impact of Series I
preferred unit
conversion - 1,155 238 1,228
Impact of Series I
preferred stock
conversion - 6,550 1,749 6,354
--- ----- ----- -----
Diluted weighted
average shares
outstanding 293,161 292,667 293,337 276,100
Weighted average
limited partnership
units outstanding 60,248 57,782 58,900 57,292
------- ------- ------- -------
Diluted weighted average
shares and units
outstanding 353,409 350,449 352,237 333,392
======= ======= ======= =======
Basic FFO per share $1.79 $1.42 $5.04 $5.39
Percent Change 26.1% -6.5%
Diluted FFO per share $1.78 $1.40 $5.01 $5.33
Percent Change 27.1% -6.0%
Diluted FFO as adjusted
per share $1.80 $1.66 $6.03 $6.01
Percent Change 8.4% 0.3%
SIMON
Footnotes to Reconciliation of Non-GAAP Financial Measures
Unaudited
Notes:
(1) This report contains measures of financial or operating
performance that are not specifically defined by accounting
principles generally accepted in the United States (“GAAP”),
including funds from operations (“FFO”), FFO as adjusted, FFO per
share and FFO as adjusted 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. As adjusted measures
exclude the effect of certain non-cash impairment and debt-
related charges. We believe these measures provide investors with
a basis to compare our current operating performance with previous
periods in which we did not have those charges. Our computation of
these non-GAAP measures may not be the same as similar measures
reported by other REITs.
The Company determines FFO based upon the definition set forth by
the National Association of Real Estate Investment Trusts
("NAREIT"). The Company determines FFO to be our share of
consolidated net income computed in accordance with GAAP, excluding
real estate related depreciation and amortization, excluding gains
and losses from extraordinary items, excluding gains and losses
from the sales of previously depreciated operating properties, plus
the allocable portion of FFO of unconsolidated joint ventures based
upon economic ownership interest, and all determined on a
consistent basis in accordance with GAAP.
The Company has adopted NAREIT's clarification of the definition of
FFO that requires it to include the effects of nonrecurring items
not classified as extraordinary, cumulative effect of accounting
changes, or a gain or loss resulting from the sale of previously
depreciated operating properties. We include in FFO gains and
losses realized from the sale of land, outlot buildings, marketable
and non-marketable securities, and investment holdings of non-
retail real estate. However, you should understand that FFO does
not represent cash flow from operations as defined by GAAP, should
not be considered as an alternative to net income determined in
accordance with GAAP as a measure of operating performance, and is
not an alternative to cash flows as a measure of liquidity.
(2) Includes the Company's share of gains on land sales of $2.4
million and $17.7 million for the three months ended December 31,
2010 and 2009, respectively, and $11.8 million and $19.9 million
for the twelve months ended December 31, 2010 and 2009,
respectively.
(3) Includes the Company's share of straight-line adjustments to
minimum rent of $8.3 million and $5.6 million for the three months
ended December 31, 2010 and 2009, respectively, and $32.1 million
and $30.9 million for the twelve months ended December 31, 2010 and
2009, respectively.
(4) Includes the Company's share of the amortization of fair market
value of leases from acquisitions of $5.1 million and $5.9 million
for the three months ended December 31, 2010 and 2009,
respectively, and $19.9 million and $24.9 million for the twelve
months ended December 31, 2010 and 2009, respectively.
(5) Includes the Company's share of debt premium amortization of
$3.3 million and $4.0 million for the three months ended December
31, 2010 and 2009, respectively, and $12.7 million and $14.8
million for the twelve months ended December 31, 2010 and 2009,
respectively.
(6) Includes dividends and distributions on Series I preferred
stock and Series C and Series I preferred units. All outstanding
Series C preferred units were redeemed in August 2009 and all
outstanding shares of Series I preferred stock and Series I
preferred units were redeemed on April 16, 2010.
SOURCE Simon Property Group, Inc.
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