2014

Simon Property Group Reports Second Quarter Results and Announces Quarterly Dividend

INDIANAPOLIS, July 30 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter ended June 30, 2010.

Net income attributable to common stockholders was $152.5 million, or $0.52 per diluted share, in the second quarter of 2010 as compared to a net loss of $(20.8) million, or $(0.08) per diluted share, in the prior year period.  The 2009 results included a non-cash impairment charge of $140.5 million, or $0.43 per diluted share.

Funds from Operations ("FFO") was $487.7 million, or $1.38 per diluted share, in the second quarter of 2010 as compared to $313.1 million, or $0.96 per diluted share, in the prior year period. The impact of the non-cash impairment charge to FFO in 2009 was $0.42 per diluted share.

"Our positive momentum from the first quarter continued," said David Simon, Chairman and Chief Executive Officer. "The improvement in business conditions extended into the second quarter as demonstrated by higher occupancy and sales. Sales for our malls and Premium Outlets during the second quarter of 2010 were 4.9% higher than in the second quarter of 2009, and occupancy grew 90 basis points from March 31, 2010. Revenue growth and a continued focus on expense management resulted in positive comparable property net operating income growth in the quarter.

The Company utilized a portion of its cash during the first six months of 2010 to retire $1.5 billion of debt, acquire an outlet center in Puerto Rico, and increase its ownership interest in Houston Galleria, arguably one of the top five malls in the United States."

    
    
    U.S. Operational Statistics(1)
    -----------------------------
    
                                      As of           As of
                                  June 30, 2010   June 30, 2009
                                  -------------   -------------
    
    Occupancy(2)                       93.1%          92.3%
    
    Comparable Sales per Sq. Ft.(3)     $474           $456
    
    Average Rent per Sq. Ft.(2)       $38.62         $38.49
    
    
    (1)  Combined information for the U.S. regional malls and Premium Outlets.
         Does not include information for community/lifestyle centers, 
         properties owned by SPG-FCM (the Mills portfolio) or international 
         properties
    (2)  Represents mall stores in regional malls and all owned gross leasable
         area in Premium Outlets
    (3)  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 $0.60 per share payable in cash. This dividend is payable on August 31, 2010 to stockholders of record on August 17, 2010.

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 September 30, 2010 to stockholders of record on September 16, 2010.

Dispositions    

On April 29th, Gallerie Commerciali Italia, one of the Company's European joint venture investment entities, sold its interest in Porta di Roma, a 1.3 million square foot shopping center in Rome, Italy.  Simon owned a 19.6% interest in this asset. The sale price was euro 420 million including the assumption of debt. The Company recorded a gain on this transaction of approximately $20 million in the second quarter.  

On July 15th, the Company and Ivanhoe Cambridge (50/50 partners in Simon Ivanhoe, the Company's other European joint venture investment entity) completed the sale of their interests in Simon Ivanhoe (which owned seven shopping centers located in France and Poland) to Unibail-Rodamco. Simon and Ivanhoe Cambridge received consideration of euro 715 million for their interests. Simon expects to record a gain on this transaction of approximately $280 million in the third quarter.

Simon and Ivanhoe Cambridge entered into a joint venture with Unibail-Rodamco to pursue the development of four new retail projects in France. The Company has a 25% interest in this venture with the ability to determine, on a project by project basis, whether to retain its ownership interest in each project.  

Acquisitions

The Company completed two asset acquisitions during the quarter:

  • On May 13th, the Company acquired Prime Outlets – Puerto Rico, a 345,000 square foot outlet center in Barceloneta, Puerto Rico from Prime Outlets Acquisition Company and certain of its affiliated entities.  The 90 store center, featuring Kenneth Cole, Michael Kors, Nike and Polo Ralph Lauren, has been renamed Puerto Rico Premium Outlets.

  • On May 28th, the Company acquired an additional interest of approximately 19% in Houston Galleria in Houston, Texas.  The Company's ownership interest increased from 31.5% to 50.4%. Houston Galleria comprises over 2.2 million square feet of gross leasable area and is anchored by Macy's, Nordstrom, Neiman Marcus and Saks Fifth Avenue.

The total cost of the acquisitions was approximately $385 million, including the assumption of existing indebtedness.

Capital Markets    

During the first six months of 2010, the Company paid off $700 million of senior unsecured notes of Simon Property Group, L.P. ("SPGLP"), the Company's majority-owned partnership subsidiary, and unencumbered three assets by paying off approximately $800 million of mortgages at maturity.

As of June 30, 2010, the Company had approximately $2.6 billion of cash on hand, including its share of joint venture cash, and an additional $3.3 billion of available capacity on SPGLP's corporate credit facility.    

Development Activity

The 100% leased, 62,000 square foot expansion of Toki Premium Outlets in Toki, Japan, opened on July 14, 2010. The Company owns a 40% interest in this center.

Construction continues on the following projects:

  • A 116,000 square foot expansion of Houston Premium Outlets in Cypress (Houston), Texas. The expansion will be anchored by Saks Fifth Avenue Off 5th and is scheduled to be completed in November of 2010. The Company owns 100% of this center.

  • 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.  The center is expected to open in April of 2011.  The Company owns a 50% interest in this project.

  • A 54,000 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.

2010 Guidance

Today the Company affirmed the guidance for 2010 provided on April 30, 2010, estimating that FFO as adjusted will be within a range of $5.77 to $5.87 per diluted share for the year ending December 31, 2010.  Diluted net income has been adjusted to include gains on asset sales and is expected to be within a range of $2.49 to $2.59 per share.  FFO as adjusted excludes the impact of a $165.6 million loss on extinguishment of debt ($0.47 per diluted share) in the first quarter related to SPGLP's January tender offer.  After giving effect to this charge, the Company expects 2010 FFO per diluted share to be within a range of $5.30 to $5.40.

This guidance is a forward-looking statement and is subject to the risks and other factors described elsewhere in this release.

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 and estimated diluted FFO per share to estimated diluted FFO as adjusted per share.

    
    
    For the year ending December 31, 2010
    -------------------------------------
                                                                 Low    High
                                                                 End     End
                                                                 ---     ---
    
    Estimated diluted net income available to common
     stockholders per share                                     $2.49   $2.59
    
    Depreciation and amortization including the Company's
     share of joint ventures                                     3.70    3.70
    
    Gain on sale or disposal of assets and interests in
     unconsolidated entities                                    (0.87)  (0.87)
    
    Impact of additional dilutive securities                    (0.02)  (0.02)
                                                                -----   -----
    
    Estimated diluted FFO per share                             $5.30   $5.40
    
    Charge in connection with January 2010 tender offer          0.47    0.47
                                                                 ----    ----
    
    Estimated diluted FFO as adjusted per share                 $5.77   $5.87
                                                                =====   =====

The Company will update guidance for 2010 once it knows the precise timing for the closing of its transaction with Prime and its affiliates.

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, July 30, 2010. 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 will publish a supplemental information package which will be available at www.simon.com in the Investors section, Financial Information tab. It will also be 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 other operating performance measures that are not recognized by or have been 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.  FFO is a financial performance measure widely used in the REIT industry.

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 our expectations will be attained, and it is possible that 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: 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, environmental liabilities, international, national, regional and local economic climates, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, 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 forward-looking 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 373 retail real estate properties comprising 256 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 Ended For the Six Months Ended
                                 June 30,                  June 30,
                            2010          2009         2010        2009
                            ----          ----         ----        ----
    REVENUE:
    Minimum rent          $580,157      $567,633   $1,151,767  $1,139,047
    Overage rent            14,477        13,493       27,688      25,993
    Tenant reimbursements  255,693       257,532      511,621     516,294
    Management fees and
     other revenues         28,349        30,055       56,917      60,706
    Other income            54,890        34,899      110,644      80,064
                            ------        ------      -------      ------
       Total revenue       933,566       903,612    1,858,637   1,822,104
    
    EXPENSES:
    Property operating     101,234       106,836      200,002     212,983
    Depreciation
     and amortization      234,190       251,685      463,099     508,022
    Real estate taxes       78,658        83,076      168,387     171,319
    Repairs and
     maintenance            20,605        20,186       44,350      42,774
    Advertising and
     promotion              22,282        19,823       41,118      38,329
    Provision for
     credit losses           4,487         7,066        1,036      20,081
    Home and regional
     office costs           26,744        26,670       44,059      52,833
    General and
     administrative          5,627         5,310       10,739       9,358
    Impairment charge            -       140,478 (A)        -     140,478 (A)
    Transaction expenses    11,269 (B)         -       14,969 (B)       -
    Other                   13,003        17,784       28,495      37,013
                            ------        ------       ------      ------
       Total operating
        expenses           518,099       678,914    1,016,254   1,233,190
    
    OPERATING INCOME       415,467       224,698      842,383     588,914
    
    Interest expense      (261,463)     (244,443)    (525,422)   (470,479)
    Loss on
     extinguishment of
     debt                        -             -     (165,625)          -
    Income tax benefit
     of taxable REIT
     subsidiaries              510           143          308       2,666
    Income from
     unconsolidated
     entities               10,614         5,494       28,196      11,039
    Gain on sale or
     disposal of assets
     and interests in
     unconsolidated   
     entities               20,024             -       26,066           -
                            ------           ---       ------         ---
    
    CONSOLIDATED NET
     INCOME (LOSS)         185,152       (14,108)     205,906     132,140
    
    Net income 
     attributable to
     noncontrolling
     interests              33,313           123       39,084      33,074
    Preferred dividends       (665)        6,529        4,945      13,058
                              ----         -----        -----      ------
    
    
    NET INCOME (LOSS)
     ATTRIBUTABLE TO
     COMMON STOCKHOLDERS  $152,504      $(20,760)    $161,877     $86,008
                           ========      ========     ========     =======
    
    Basic Earnings Per
     Common Share:
    
       Net income (loss)
        attributable
        to common
        stockholders         $0.52        $(0.08)       $0.56       $0.34
                             =====        ======        =====       =====
    
        Percentage Change   753.1%                      64.7%  
    
    Diluted Earnings
     Per Common Share:
    
       Net income (loss)
        attributable to
        common
        stockholders         $0.52        $(0.08)       $0.56       $0.34
                             =====        ======        =====       =====
    
        Percentage Change   753.1%                      64.7%
    
    
    
                                        SIMON
                             Consolidated Balance Sheets
                                      Unaudited
                           (In thousands, except as noted)
    
    
                                                   June 30,    December 31,
                                                     2010          2009
                                                     ----          ----
    ASSETS:
      Investment properties, at cost             $25,296,870   $25,336,189
        Less - accumulated depreciation            7,243,311     7,004,534
                                                   ---------     ---------
                                                  18,053,559    18,331,655
      Cash and cash equivalents                    2,293,242     3,957,718
      Tenant receivables and accrued revenue, net    343,588       402,729
      Investment in unconsolidated entities,
       at equity                                   1,404,367     1,468,577
      Deferred costs and other assets              1,168,360     1,155,587
      Note receivable from related party             661,500       632,000
                                                     -------       -------
        Total assets                             $23,924,616   $25,948,266
                                                 ===========   ===========
    
    LIABILITIES:
      Mortgages and other indebtedness           $17,071,022   $18,630,302
      Accounts payable, accrued expenses,
       intangibles, and deferred revenues            920,778       987,530
      Cash distributions and losses in
       partnerships and joint ventures, at equity    346,177       457,754
      Other liabilities and accrued dividends        178,141       159,345
                                                     -------       -------
        Total liabilities                         18,516,118    20,234,931
                                                  ----------    ----------
    
    Commitments and contingencies
    
    Limited partners' preferred interest in
     the Operating Partnership and
     noncontrolling redeemable interests
     in properties                                    82,997       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          45,540        45,704
    
        Common stock, $.0001 par value,
         511,990,000 shares authorized,
         296,815,422 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               7,934,140     7,547,959
      Accumulated deficit                         (3,154,723)   (2,955,671)
      Accumulated other comprehensive loss           (69,134)       (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                 4,589,417     4,458,137
    Noncontrolling interests                         736,084       724,825
                                                     -------       -------
        Total equity                               5,325,501     5,182,962
    
        Total liabilities and equity             $23,924,616   $25,948,266
                                                 ===========   ===========
    
    
    
                                           SIMON
                           Joint Venture Statements of Operations
                                         Unaudited
                                       (In thousands)
    
    
                           For the Three Months Ended For the Six Months Ended
                                      June 30,                 June 30,
                                 2010          2009       2010          2009
                                 ----          ----       ----          ----
    Revenue:
      Minimum rent            $485,304      $490,889   $979,118      $957,566
      Overage rent              25,159        30,358     56,337        50,937
      Tenant reimbursements    230,039       239,202    464,615       476,644
      Other income              52,687        40,663     98,727        78,907
                                ------        ------     ------        ------
        Total revenue          793,189       801,112  1,598,797     1,564,054
    
    Operating Expenses:
      Property operating       155,272       162,385    309,733       311,325
      Depreciation and
       amortization            197,047       198,025    396,084       385,488
      Real estate taxes         60,586        63,385    130,699       132,774
      Repairs and maintenance   26,065        24,912     53,774        50,635
      Advertising and
       promotion                13,613        14,636     30,223        28,931
      Provision for
       credit losses               565         4,960      1,439        15,387
      Other                     60,092        51,878    105,181        88,193
                                ------        ------    -------        ------
        Total operating
         expenses              513,240       520,181  1,027,133     1,012,733
                               -------       -------  ---------     ---------
    Operating Income           279,949       280,931    571,664       551,321
    
    Interest expense          (218,018)     (221,269)  (435,181)     (440,420)
    (Loss) income from
     unconsolidated entities      (602)        1,555     (1,041)          787
    Gain on sale or disposal
     of assets (net)            39,761             -     39,761             -
                                ------           ---     ------           ---
    Net Income                $101,090       $61,217   $175,203      $111,688
                              ========       =======   ========      ========
    Third-Party Investors'
     Share of Net Income       $58,653       $41,711   $103,689       $72,890
                               -------       -------   --------       -------
    Our Share of Net Income     42,437        19,506     71,514        38,798
    Amortization of excess
     investment (C)            (11,486)      (14,012)   (22,981)      (27,759)
    Our share of gain on
     sale or disposal of
     assets (net)              (20,337)            -    (20,337)            -
                               -------           ---    -------           ---
    Income from
     Unconsolidated
     Entities, Net             $10,614        $5,494    $28,196       $11,039
                               =======        ======    =======       =======
    
    
    
                                     SIMON
                         Joint Venture Balance Sheets
                                   Unaudited
                                 (In thousands)
    
    
                                            June 30,        December 31,
                                              2010              2009
                                              ----              ----
    Assets:
    Investment properties, at cost        $21,227,152       $21,555,729
    Less - accumulated depreciation         4,820,356         4,580,679
                                            ---------         ---------
                                           16,406,796        16,975,050
    
    Cash and cash equivalents                 802,650           771,045
    Tenant receivables and accrued
     revenue, net                             399,128           364,968
    Investment in unconsolidated
     entities, at equity                      165,048           235,173
    Deferred costs and other assets           485,445           477,223
                                              -------           -------
      Total assets                        $18,259,067       $18,823,459
                                          ===========       ===========
    
    Liabilities and Partners' Equity:
    Mortgages and other indebtedness      $16,069,893       $16,549,276
    Accounts payable, accrued expenses,
     intangibles and deferred revenue         755,785           834,668
    Other liabilities                         928,664           920,596
                                              -------           -------
      Total liabilities                    17,754,342        18,304,540
    Preferred units                            67,450            67,450
    Partners' equity                          437,275           451,469
                                              -------           -------
      Total liabilities and partners'
       equity                             $18,259,067       $18,823,459
                                          ===========       ===========
    
    Our Share of:
    Partners' equity                         $254,458          $316,800
    Add:  Excess Investment (C)               803,732           694,023
                                              -------           -------
    Our net Investment in Joint Ventures   $1,058,190        $1,010,823
                                           ==========        ==========
    
    
    
                                     SIMON
                       Footnotes to Financial Statements
                                   Unaudited
    
    Notes:
    
    (A)  In the second quarter of 2009, the Company recorded a non-cash 
         impairment charge of $140.5 million, representing the decline in the
         value of the Company's investment in Liberty International, PLC.
    
    (B)  In accordance with ASC Topic 805, acquisition-related costs are 
         required to be expensed as incurred for transactions entered into 
         after January 1, 2009.
    
    (C)  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.
    
    
    
                                         SIMON
                    Reconciliation of Non-GAAP Financial Measures (1)
                                       Unaudited
                             (In thousands, except as noted)
    
    Reconciliation of Consolidated Net Income (Loss) to FFO and FFO as 
     Adjusted
    ------------------------------------------------------------------
    
    
                          For the Three Months Ended  For the Six Months Ended
                                   June 30,                    June 30,
                             2010           2009          2010          2009
                             ----           ----          ----          ----
    
    Consolidated Net
     Income 
     (Loss)(2)(3)(4)(5)    $185,152      $(14,108)      $205,906     $132,140
    
    Adjustments to
     Consolidated
     Net Income
     (Loss) to
     Arrive at FFO:
    
      Depreciation and
       amortization
       from consolidated
       properties           230,724       248,042        456,154      500,955
    
      Simon's share of
       depreciation
       and amortization
       from unconsolidated
       entities              95,850        94,496        192,729      187,874
    
      Gain on sale or
       disposal of assets
       and interests in
       unconsolidated
       entities             (20,024)            -        (26,066)           -
    
      Net income
       attributable to
       noncontrolling
       interest holders
       in properties         (2,560)       (2,325)        (5,223)      (5,364)
    
      Noncontrolling
       interests portion
       of depreciation
       and amortization      (2,005)       (2,274)        (3,977)      (4,236)
    
      Preferred
       distributions
       and dividends            525       (10,682)        (6,303)     (21,388)
                                ---       -------         ------      -------
    
    FFO of the Operating
     Partnership            487,662       313,149       $813,220     $789,981
    
      Impairment charge           -       140,478              -      140,478
    
      Loss on debt
       extinguishment             -             -        165,625            -
                                ---           ---        -------          ---
    
    FFO as adjusted
     of the Operating
     Partnership           $487,662      $453,627       $978,845     $930,459
                           ========      ========       ========     ========
    
    Per Share 
     Reconciliation:
    ----------------
    
    Diluted net
     income (loss)
     attributable to
     common stockholders
     per share                $0.52        $(0.08)         $0.56        $0.34
    
    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        0.93         1.05            1.85         2.23
    
      Gain on sale or
       disposal of assets
       and interests in
       unconsolidated 
       entities               (0.06)           -           (0.07)           -
    
      Impact of additional
       dilutive securities
       for FFO per share      (0.01)       (0.01)          (0.02)       (0.04)
                              -----        -----           -----        -----
    
    Diluted FFO per
     share                    $1.38        $0.96           $2.32        $2.53
    
      Impairment charge           -         0.42               -         0.44
    
      Loss on debt
       extinguishment             -            -            0.47            -
                                ---          ---            ----          ---
      
    Diluted FFO as
     adjusted per share       $1.38        $1.38           $2.79        $2.97
                              =====        =====           =====        =====
    
    
    Details for per
     share calculations:
    --------------------
    
    FFO of the Operating
     Partnership           $487,662     $313,149        $813,220     $789,981
    
    Adjustments for
     dilution calculation:
    Impact of preferred
     stock and preferred
     unit conversions and
     option exercises (6)    (1,838)       6,877           3,676       13,755
                             ------        -----           -----       ------
    Diluted FFO of
     the Operating
     Partnership            485,824      320,026         816,896      803,736
    
    Diluted FFO
     allocable to
     unitholders            (80,756)     (54,594)       (134,921)    (144,180)
                            -------      -------        --------     --------
    Diluted FFO
     allocable to
     common stockholders   $405,068     $265,432        $681,975     $659,556
                           ========     ========        ========     ========
    
    Basic weighted
     average shares
     outstanding            292,324      268,290         289,241      251,152
    Adjustments for
     dilution calculation:
       Effect of stock
        options                 290          290             303          260
       Effect of
        contingently
        issuable shares
        from stock
        dividends                 -        1,001               -        1,542
       Impact of Series
        C preferred unit
        conversion                -           73               -           73
       Impact of Series
        I preferred unit
        conversion              101        1,266             479        1,245
       Impact of Series
        I preferred
        stock conversion        472        6,347           3,527        6,233
                                ---        -----           -----        -----
    
    Diluted weighted
     average shares
     outstanding            293,187      277,267         293,550      260,505
    
    Weighted average
     limited partnership
     units outstanding       58,451       57,030          58,076       56,947
                             ------       ------          ------       ------
    
    Diluted weighted
     average shares and
     units outstanding      351,638      334,297         351,626      317,452
                            =======      =======         =======      =======
    
    Basic FFO per share       $1.39        $0.97           $2.34        $2.57
        Percent Change        43.3%                        -8.9%
    
    Diluted FFO per share     $1.38        $0.96           $2.32        $2.53
        Percent Change        43.8%                        -8.3%
    
    Diluted FFO as 
     adjusted per share       $1.38        $1.38           $2.79        $2.97
        Percent Change         0.0%                        -6.1%
    
    
    
                                      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, FFO as adjusted 
         per share and estimated diluted 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 $1.4 million 
         and $2.0 million for the three months ended June 30, 2010 and 2009, 
         respectively and $3.1 million and $2.2 million for the six months 
         ended June 30, 2010 and 2009, respectively.
    
    (3)  Includes the Company's share of straight-line adjustments to minimum 
         rent of $9.6 million and $7.0 million for the three months ended June
         30, 2010 and 2009, respectively and $14.1 million and $17.5 
         million for the six months ended June 30, 2010 and 2009, 
         respectively.
    
    (4)  Includes the Company's share of the amortization of fair market value
         of leases from acquisitions of $4.9 million and $6.4 million for the
         three months ended June 30, 2010 and 2009, respectively and $9.8 
         million and $13.3 million for the six months ended June 30, 2010 and 
         2009, respectively.
    
    (5)  Includes the Company's share of debt premium amortization of $2.7 
         million and $3.5 million for the three months ended June 30, 2010 and
         2009, respectively and $6.4 million and $7.3 million for the six 
         months ended June 30, 2010 and 2009, respectively.
    
    (6)  Includes dividends and distributions of 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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