Press Release

Low  

High

End

End

Estimated net income available to common stockholders

     per diluted share                                                            

$7.33

$7.43

Depreciation and amortization including Simon's share

     of unconsolidated entities                                            

5.00

5.00

Gain upon acquisition of controlling interest, sale or disposal

     of assets and interests in unconsolidated entities, net        

(0.38)

(0.38)

Estimated FFO per diluted share                                              

$11.95

$12.05

Simon Property Group, Inc.

Unaudited Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

For the Three Months

Ended March 31,

2018

2017

REVENUE:

Minimum rent

$ 860,172

$ 846,798

Overage rent

32,990

28,204

Tenant reimbursements

380,363

378,915

Management fees and other revenues

28,181

30,547

Other income

98,108

61,299

Total revenue

1,399,814

1,345,763

EXPENSES:

Property operating

113,448

104,048

Depreciation and amortization

316,936

310,832

Real estate taxes

114,187

106,659

Repairs and maintenance

27,684

25,601

Advertising and promotion

34,800

35,948

Provision for credit losses

5,632

5,210

Home and regional office costs

41,064

42,979

General and administrative

12,628

14,001

Other

31,502

23,814

Total operating expenses

697,881

669,092

OPERATING INCOME

701,933

676,671

Interest expense

(205,492)

(198,202)

Income and other tax (expense) benefit

(6,220)

3,521

Income from unconsolidated entities

90,026

69,085

Gain upon acquisition of controlling interests, sale or disposal of assets

  and interests in unconsolidated entities and impairment, net

135,277

-

CONSOLIDATED NET INCOME

715,524

551,075

Net income attributable to noncontrolling interests 

94,036

72,505

Preferred dividends

834

834

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 620,654

$ 477,736

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

Net income attributable to common stockholders

$ 2.00

$ 1.53

Simon Property Group, Inc.

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

March 31,

December 31,

2018

2017

ASSETS:

Investment properties, at cost

$ 36,383,699

$ 36,393,464

Less - accumulated depreciation

12,074,719

11,935,949

24,308,980

24,457,515

Cash and cash equivalents

367,207

1,482,309

Tenant receivables and accrued revenue, net

686,158

742,672

Investment in unconsolidated entities, at equity

2,268,956

2,266,483

Investment in Klépierre, at equity

2,011,919

1,934,676

Deferred costs and other assets

1,374,640

1,373,983

Total assets

$ 31,017,860

$ 32,257,638

LIABILITIES:

Mortgages and unsecured indebtedness

$ 23,647,623

$ 24,632,463

Accounts payable, accrued expenses, intangibles, and deferred revenues

1,180,851

1,269,190

Cash distributions and losses in unconsolidated entities, at equity

1,421,879

1,406,378

Other liabilities

532,491

520,363

Total liabilities

26,782,844

27,828,394

Commitments and contingencies

Limited partners' preferred interest in the Operating Partnership and noncontrolling

redeemable interests in properties

201,680

190,480

EQUITY:

Stockholders' Equity

Capital stock (850,000,000 total shares authorized,  $ 0.0001 par value, 238,000,000

shares of excess common stock, 100,000,000 authorized shares of preferred stock):

Series J 8 3/8% cumulative redeemable preferred stock, 1,000,000 shares authorized,

796,948 issued and outstanding with a liquidation value of $39,847

42,994

43,077

Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 320,328,774 and

320,322,774 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

9,647,272

9,614,748

Accumulated deficit

(4,774,442)

(4,782,173)

Accumulated other comprehensive loss

(102,747)

(110,453)

Common stock held in treasury, at cost, 10,638,880 and 9,163,920 shares, respectively

(1,307,203)

(1,079,063)

Total stockholders' equity

3,505,906

3,686,168

Noncontrolling interests

527,430

552,596

Total equity

4,033,336

4,238,764

Total liabilities and equity

$ 31,017,860

$ 32,257,638

Simon Property Group, Inc.

Unaudited Joint Venture Combined Statements of Operations

(Dollars in thousands)

For the Three Months Ended
March 31,

2018

2017

REVENUE:

Minimum rent

$ 475,956

$ 451,055

Overage rent

59,661

51,369

Tenant reimbursements

223,490

215,780

Other income

81,108

64,327

Total revenue

840,215

782,531

OPERATING EXPENSES:

Property operating

146,293

132,985

Depreciation and amortization

159,836

153,455

Real estate taxes

68,267

66,583

Repairs and maintenance

23,196

20,230

Advertising and promotion

24,224

22,198

Provision for credit losses

6,501

3,777

Other

49,732

43,355

Total operating expenses

478,049

442,583

OPERATING INCOME

362,166

339,948

Interest expense

(150,932)

(142,204)

NET INCOME

$ 211,234

$ 197,744

Third-Party Investors' Share of Net Income

$ 106,183

$ 99,686

Our Share of Net Income

105,051

98,058

Amortization of Excess Investment (A)

(21,527)

(22,457)

Income from Unconsolidated Entities (B)

$ 83,524

$ 75,601

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.

Simon Property Group, Inc.

Unaudited Joint Venture Combined Balance Sheets

(Dollars in thousands)

March 31,

December 31,

2018

2017

Assets:

Investment properties, at cost

$ 18,514,552

$ 18,328,747

Less - accumulated depreciation

6,508,984

6,371,363

12,005,568

11,957,384

Cash and cash equivalents

963,029

956,084

Tenant receivables and accrued revenue, net

382,153

403,125

Deferred costs and other assets

361,497

355,585

Total assets

$ 13,712,247

$ 13,672,178

Liabilities and Partners' Deficit:

Mortgages

$ 14,886,840

$ 14,784,310

Accounts payable, accrued expenses, intangibles, and deferred revenue

930,075

1,033,674

Other liabilities

392,747

365,857

Total liabilities

16,209,662

16,183,841

Preferred units

67,450

67,450

Partners' deficit

(2,564,865)

(2,579,113)

Total liabilities and partners' deficit

$ 13,712,247

$ 13,672,178

Our Share of:

Partners' deficit

$ (1,136,015)

$ (1,144,620)

Add: Excess Investment (A)

1,721,330

1,733,063

Our net Investment in unconsolidated entities, at equity

$ 585,315

$ 588,443

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.

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

March 31,

2018

2017

Consolidated Net Income (D)

$           715,524

$         551,075

Adjustments to Arrive at FFO:

Depreciation and amortization from consolidated 

          properties 

314,006

307,688

Our share of depreciation and amortization from

          unconsolidated entities, including Klépierre and HBS

134,925

131,218

Gain upon acquisition of controlling interests, sale or disposal of assets and 

          interests in unconsolidated entities and impairment, net

(135,277)

-

Unrealized change in fair value of equity instruments

3,029

-

Net loss attributable to noncontrolling interest holders in

          properties

92

244

Noncontrolling interests portion of depreciation and amortization

(4,648)

(3,900)

Preferred distributions and dividends

(1,313)

(1,313)

FFO of the Operating Partnership

$         1,026,338

$         985,012

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

Diluted net income per share

$                 2.00

$              1.53

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

1.24

1.21

Gain upon acquisition of controlling interests, sale or disposal of assets and 

     interests in unconsolidated entities and impairment, net

(0.38)

-

Unrealized change in fair value of equity instruments

0.01

-

Diluted FFO per share 

$                 2.87

$              2.74

Details for per share calculations:

FFO of the Operating Partnership

$         1,026,338

$         985,012

Diluted FFO allocable to unitholders

(134,559)

(129,429)

Diluted FFO allocable to common stockholders

$           891,779

$         855,583

Basic and Diluted weighted average shares outstanding

310,584

312,810

Weighted average limited partnership units outstanding

46,863

47,320

Basic and Diluted weighted average shares and units outstanding

357,447

360,130

Basic and Diluted FFO per Share

$                 2.87

$              2.74

    Percent Change

4.7%

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 properties.

(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 Footnotes 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-Q.

(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.

We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"). We determine 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 or disposals of, or any impairment related to, previously depreciated retail 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. 

We have 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 or disposal of, or any impairment relating to, previously depreciated retail operating properties. We include in FFO gains and losses realized from the sale of land, outlot buildings, equity instruments, 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.

(D)

Includes our share of: 

-

Gains on land sales of $1.3 million and $2.7 million for the three months ended March 31, 2018 and 2017, respectively.

-

Straight-line adjustments increased income by $8.6 million and $10.2 million for the three months ended March 31, 2018 and 2017, respectively.  

-

Amortization of fair market value of leases from acquisitions increased income by $1.4 million and $1.7 million for the three months ended March 31, 2018 and 2017, respectively.