Simon Property Group Reports Fourth Quarter and Full Year 2021 Results

February 7, 2022

INDIANAPOLIS, Feb. 7, 2022 /PRNewswire/ -- Simon, a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations, today reported results for the quarter and twelve months ended December 31, 2021.

"I am extremely pleased with our fourth quarter results, concluding a very productive year," said David Simon, Chairman, Chief Executive Officer and President. "In 2021, we generated record annual Funds From Operations of nearly $4.5 billion and returned approximately $2.7 billion to shareholders. We executed over 15 million square feet of leases, completed five significant domestic redevelopments, opened two new international shopping destinations, and substantially increased the profitability generated from our other platform investments during the year. Our Company is focused on unlocking value through unique and disciplined investment activities that will continue to deliver long-term growth in cash flow, FFO and dividends per share."

Results for the Year

Net income attributable to common stockholders was $2.246 billion, or $6.84 per diluted share, as compared to $1.109 billion, or $3.59 per diluted share in 2020. Results for 2021 included net gains of $189.3 million, or $0.50 per diluted share. Results for 2020 included a net charge of $115.0 million, or $0.32 per diluted share.
Funds From Operations ("FFO") was $4.487 billion, or $11.94 per diluted share, as compared to $3.237 billion, or $9.11 per diluted share, in the prior year, a 31.1% increase. FFO for 2021 includes the aforementioned net gains.
Domestic property net operating income ("NOI") increased 12.0% compared to 2020. Portfolio NOI, which includes NOI from domestic properties, international properties and NOI from the Company's investment in Taubman Realty Group, increased 22.3% compared to 2020.

Results for the Quarter

Net income attributable to common stockholders was $503.2 million, or $1.53 per diluted share, as compared to $271.5 million, or $0.86 per diluted share in 2020.
FFO was $1.160 billion, or $3.09 per diluted share, as compared to $786.6 million, or $2.17 per diluted share, in the prior year, a 42.4% increase.
Domestic property NOI increased 22.4% and Portfolio NOI increased 33.6% compared to the prior year period.

U.S. Malls and Premium Outlets Operating Statistics

Occupancy was 93.4% at December 31, 2021, compared to 91.3% at December 31, 2020.
Base minimum rent per square foot was $53.91 at December 31, 2021.

Development Activity

On October 15, 2021, Jeju Premium Outlets (Jeju Island, South Korea) opened with 92,000 square feet of high-quality, name brand stores. Jeju Premium Outlets is the fifth Premium Outlet® Center in South Korea. Simon owns a 50% interest in this center.

Construction continues on two new international development projects including:

Fukaya-Hanazono Premium Outlets® (Tokyo, Japan); projected to open in October 2022. Simon owns a 40% interest in this project.
Paris-Giverny Designer Outlet (Normandie, France); projected to open in spring 2023. Simon owns a 74% interest in this project.

Progress continues on the transformative mixed-use redevelopment of Phipps Plaza (Atlanta, GA), which will open in fall 2022. Nobu Hotel and Nobu Restaurant, Life Time Athletic and Work, Citizens food hall, and a 13-story Class A office tower will further elevate this premier destination.

Construction also continues on other significant redevelopment projects, including The Falls (Miami, FL), Roosevelt Field (Garden City, NY) and Stanford Shopping Center (Palo Alto, CA).

Capital Markets and Balance Sheet Liquidity

The Company was active in both the secured and unsecured credit markets in 2021.

During the year, the Company completed 25 non-recourse mortgage loans totaling approximately $3.3 billion (U.S. dollar equivalent), of which Simon's share was $1.9 billion. The weighted average interest rate on these loans was 3.14%.

In addition, during December 2021, the Company paid approximately $1.16 billion for the early retirement of non-recourse mortgage loans on nine of its consolidated properties.

During the quarter, the Company amended and extended its $3.5 billion unsecured multi-currency revolving credit facility. The facility will initially mature on January 31, 2026 and at our sole option, can be extended for an additional year to January 31, 2027. Based upon the Company's current credit ratings, the interest rate on the new revolver for U.S. Dollar borrowings is SOFR plus 72.5 points, plus a spread adjustment to account for the transition from LIBOR to SOFR.

As of December 31, 2021, Simon had approximately $7.0 billion of liquidity consisting of $1.2 billion of cash on hand, including its share of joint venture cash, and $5.8 billion of available capacity under its revolving credit facilities, net of $500 million outstanding under its U.S. commercial paper program.

Subsequent to the end of the quarter, the Company completed a two tranche senior notes offering totaling $1.2 billion. Net proceeds from the offering were used to repay indebtedness outstanding under the Company's $3.5 billion senior unsecured revolving credit facility and for general corporate purposes, increasing the Company's liquidity to approximately $8.0 billion.

Dividends

The Company paid its fourth quarter 2021 common stock dividend of $1.65 per share on December 31, 2021, a 26.9% increase year-over-year and 10.0% increase sequentially.

Simon's Board of Directors declared a quarterly common stock dividend of $1.65 on February 7, 2022, for the first quarter of 2022. This is a 26.9% increase year-over-year. The dividend will be payable on March 31, 2022 to shareholders of record on March 10, 2022.

Simon's Board of Directors declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share, payable on March 31, 2022 to shareholders of record on March 17, 2022.

2022 Guidance

The Company currently estimates net income to be within a range of $5.90 to $6.10 per diluted share and FFO will be within a range of $11.50 to $11.70 per diluted share for the year ending December 31, 2022.

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

For the year ending December 31, 2022

	Low End	High End
Estimated net income attributable to common stockholders
per diluted share	$5.90	$6.10
Depreciation and amortization including Simon's share
of unconsolidated entities	5.60	5.60
Estimated FFO per diluted share	$11.50	$11.70

Conference Call

Simon will hold a conference call to discuss the quarterly financial results today from 5:00 p.m. to 6:00 p.m. Eastern Time, Monday, February 7, 2022. 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 February 14, 2022. To access the audio replay, dial 1-844-512-2921 (international 1-412-317-6671) passcode 13725697.

Supplemental Materials and Website

Supplemental information on our fourth quarter 2021 performance is available at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K.

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

Non-GAAP Financial Measures

This press release includes FFO, FFO per share 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 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 business, 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; changes in economic and market conditions that may adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; the intensely competitive market environment in the retail industry, including e-commerce; an increase in vacant space at our properties; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; our international activities subjecting us to risks that are different from or greater than those associated with our domestic operations, including changes in foreign exchange rates; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations, including covenants in the governing agreements that impose restrictions on us that may affect our ability to operate freely; 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; the transition of LIBOR to an alternative reference rate; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties, including guarantees of certain joint venture indebtedness; environmental liabilities; natural disasters; the availability of comprehensive insurance coverage; the potential for terrorist activities; security breaches that could compromise our information technology or infrastructure; and the loss of key management personnel. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC. The Company may update that discussion in subsequent other periodic reports, but except as required by law, the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

About Simon
Simon is a 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.

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

	For the Three Months		For the Twelve Months
	Ended December 31,		Ended December 31,
	2021	2020	2021	2020

REVENUE:
Lease income	$ 1,224,913	$ 1,032,795	$ 4,736,719	$ 4,302,367
Management fees and other revenues	28,102	25,336	106,483	96,882
Other income	73,123	73,298	273,587	208,254
Total revenue	1,326,138	1,131,429	5,116,789	4,607,503

EXPENSES:
Property operating	124,472	81,675	415,720	349,154
Depreciation and amortization	319,864	331,851	1,262,715	1,318,008
Real estate taxes	111,153	110,067	458,953	457,142
Repairs and maintenance	34,265	23,376	96,391	80,858
Advertising and promotion	26,618	37,646	114,303	98,613
Home and regional office costs	52,295	41,249	184,660	171,668
General and administrative	9,600	5,366	30,339	22,572
Other	56,338	38,152	140,518	137,679
Total operating expenses	734,605	669,382	2,703,599	2,635,694

OPERATING INCOME BEFORE OTHER ITEMS	591,533	462,047	2,413,190	1,971,809

Interest expense	(193,504)	(197,855)	(795,712)	(784,400)
Loss on extinguishment of debt	(20,289)	-	(51,841)	-
Gain on sale or exchange of equity interests	18,844	-	178,672	-
Income and other tax (expense) benefit	(48,833)	1,572	(157,199)	4,637
Income from unconsolidated entities	220,699	63,260	782,837	219,870
Unrealized gains (losses) in fair value of equity instruments	26	494	(8,095)	(19,632)
Gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on,
assets and interests in unconsolidated entities and impairment, net	5,254	(16,792)	206,855	(114,960)

CONSOLIDATED NET INCOME	573,730	312,726	2,568,707	1,277,324

Net income attributable to noncontrolling interests	69,655	40,409	319,076	164,760
Preferred dividends	834	834	3,337	3,337

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ 503,241	$ 271,483	$ 2,246,294	$ 1,109,227


BASIC AND DILUTED EARNINGS PER COMMON SHARE:
Net income attributable to common stockholders	$ 1.53	$ 0.86	$ 6.84	$ 3.59

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

	December 31,	December 31,
	2021	2020
ASSETS:
Investment properties, at cost	$ 37,932,366	$ 38,050,196
Less - accumulated depreciation	15,621,127	14,891,937
	22,311,239	23,158,259
Cash and cash equivalents	533,936	1,011,613
Tenant receivables and accrued revenue, net	919,654	1,236,734
Investment in TRG, at equity	3,305,102	3,451,897
Investment in Klépierre, at equity	1,661,943	1,729,690
Investment in other unconsolidated entities, at equity	3,075,375	2,603,571
Right-of-use assets, net	504,119	512,914
Investments held in trust - special purpose acquisition company	345,000	-
Deferred costs and other assets	1,121,011	1,082,168
Total assets	$ 33,777,379	$ 34,786,846

LIABILITIES:
Mortgages and unsecured indebtedness	$ 25,321,022	$ 26,723,361
Accounts payable, accrued expenses, intangibles, and deferred revenues	1,433,216	1,311,925
Cash distributions and losses in unconsolidated entities, at equity	1,573,105	1,577,393
Dividend payable	1,468	486,922
Lease liabilities	506,931	515,492
Other liabilities	540,912	513,515
Total liabilities	29,376,654	31,128,608

Commitments and contingencies
Limited partners' preferred interest in the Operating Partnership and noncontrolling
redeemable interests	547,740	185,892

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	41,763	42,091

Common stock, $0.0001 par value, 511,990,000 shares authorized, 342,907,608 and
342,849,037 issued and outstanding, respectively	34	34

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

Capital in excess of par value	11,212,990	11,179,688
Accumulated deficit	(5,823,708)	(6,102,314)
Accumulated other comprehensive loss	(185,186)	(188,675)
Common stock held in treasury, at cost, 14,295,983 and 14,355,621 shares, respectively	(1,884,441)	(1,891,352)
Total stockholders' equity	3,361,452	3,039,472
Noncontrolling interests	491,533	432,874
Total equity	3,852,985	3,472,346
Total liabilities and equity	$ 33,777,379	$ 34,786,846

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

	For the Three Months Ended December 31,		For the Twelve Months Ended December 31,
	2021	2020	2021	2020

REVENUE:
Lease income	$ 743,395	$ 624,516	$ 2,797,221	$ 2,544,134
Other income	115,033	85,284	319,956	300,634
Total revenue	858,428	709,800	3,117,177	2,844,768

OPERATING EXPENSES:
Property operating	155,409	136,616	575,584	519,979
Depreciation and amortization	174,625	179,719	686,790	692,424
Real estate taxes	60,083	64,864	263,325	262,351
Repairs and maintenance	25,675	19,061	79,300	68,722
Advertising and promotion	19,962	24,764	72,441	67,434
Other	87,859	55,888	200,899	163,710
Total operating expenses	523,613	480,912	1,878,339	1,774,620

OPERATING INCOME BEFORE OTHER ITEMS	334,815	228,888	1,238,838	1,070,148

Interest expense	(152,445)	(152,703)	(605,591)	(616,332)
Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net	1,443	-	34,814	-

NET INCOME	$ 183,813	$ 76,185	$ 668,061	$ 453,816

Third-Party Investors' Share of Net Income	$ 89,779	$ 32,731	$ 333,304	$ 226,364

Our Share of Net Income	94,034	43,454	334,757	227,452
Amortization of Excess Investment (A)	(15,180)	(19,953)	(64,974)	(82,097)
Our Share of Gain on Sale or Disposal of Assets and Interests in
Other Income in the Consolidated Financial Statements	-	-	(14,941)	-
Our Share of Gain on Sale or Disposal of, or Recovery on, Assets and Interests in
Unconsolidated Entities, net	(541)	-	(541)	-

Income from Unconsolidated Entities (B)	$ 78,313	$ 23,501	$ 254,301	$ 145,355

Note: The above financial presentation does not include any information related to our investments in Klépierre S.A.
("Klépierre") and The Taubman Realty Group ("TRG"). For additional information, see footnote B.

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



	December 31,	December 31,
	2021	2020
Assets:
Investment properties, at cost	$ 19,724,242	$ 20,079,476
Less - accumulated depreciation	8,330,891	8,003,863
	11,393,351	12,075,613
Cash and cash equivalents	1,481,287	1,169,422
Tenant receivables and accrued revenue, net	591,369	749,231
Right-of-use assets, net	154,561	185,598
Deferred costs and other assets	394,691	380,087
Total assets	$ 14,015,259	$ 14,559,951

Liabilities and Partners' Deficit:
Mortgages	$ 15,223,710	$ 15,569,485
Accounts payable, accrued expenses, intangibles, and deferred revenue	995,392	969,242
Lease liabilities	158,372	188,863
Other liabilities	383,018	426,321
Total liabilities	16,760,492	17,153,911

Preferred units	67,450	67,450
Partners' deficit	(2,812,683)	(2,661,410)
Total liabilities and partners' deficit	$ 14,015,259	$ 14,559,951

Our Share of:
Partners' deficit	$ (1,207,396)	$ (1,130,713)
Add: Excess Investment (A)	1,283,645	1,399,757
Our net Investment in unconsolidated entities, at equity	$ 76,249	$ 269,044

Note: The above financial presentation does not include any information related to our investments in Klépierre,
TRG and other platform investments. 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		For the Twelve Months Ended
		December 31,		December 31,
		2021	2020	2021	2020

Consolidated Net Income (D)		$ 573,730	$ 312,726	$ 2,568,707	$ 1,277,324
Adjustments to Arrive at FFO:

	Depreciation and amortization from consolidated
	properties	317,692	329,422	1,254,039	1,308,419
	Our share of depreciation and amortization from
	unconsolidated entities, including Klépierre, TRG and other corporate investments (E)	278,118	133,645	887,390	536,133
	(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,
	assets and interests in unconsolidated entities and impairment, net	(5,254)	16,792	(206,855)	114,960
	Unrealized (gains) losses in fair value of equity instruments (F)	-	(494)	3,177	19,632
	Net loss (gain) attributable to noncontrolling interest holders in
	properties	3,179	(173)	6,053	4,378
	Noncontrolling interests portion of depreciation and amortization, gain on consolidation of properties,
	and loss (gain) on disposal of properties	(5,941)	(3,966)	(20,295)	(18,631)
	Preferred distributions and dividends	(1,313)	(1,313)	(5,252)	(5,252)
FFO of the Operating Partnership		$ 1,160,211	$ 786,639	$ 4,486,964	$ 3,236,963


Diluted net income per share to diluted FFO per share reconciliation:
Diluted net income per share		$ 1.53	$ 0.86	$ 6.84	$ 3.59
	Depreciation and amortization from consolidated properties
	and our share of depreciation and amortization from unconsolidated
	entities, including Klépierre, TRG and other corporate investments, net of noncontrolling
	interests portion of depreciation and amortization (E)	1.57	1.27	5.64	5.14
	(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on,
	assets and interests in unconsolidated entities and impairment, net	(0.01)	0.05	(0.55)	0.32
	Unrealized (gains) losses in fair value of equity instruments (F)	-	(0.01)	0.01	0.06
Diluted FFO per share		$ 3.09	$ 2.17	$ 11.94	$ 9.11

Details for per share calculations:

FFO of the Operating Partnership		$ 1,160,211	$ 786,639	$ 4,486,964	$ 3,236,963
Diluted FFO allocable to unitholders		(145,859)	(100,472)	(564,407)	(424,063)
Diluted FFO allocable to common stockholders		$ 1,014,352	$ 686,167	$ 3,922,557	$ 2,812,900

Basic and Diluted weighted average shares outstanding		328,619	316,595	328,587	308,738
Weighted average limited partnership units outstanding		47,253	46,455	47,280	46,544

Basic and Diluted weighted average shares and units outstanding		375,872	363,050	375,867	355,282

Basic and Diluted FFO per Share		$ 3.09	$ 2.17	$ 11.94	$ 9.11
Percent Change		42.4%		31.1%

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, TRG and other platform investments. Amounts included in Footnote D below exclude our share of related activity for our investments in Klépierre, TRG and other platform investments. 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.

We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT") Funds From Operations White Paper - 2018 Restatement. Our main business includes acquiring, owning, operating, developing, and redeveloping real estate in conjunction with the rental of real estate. Gains and losses of assets incidental to our main business are included in FFO. 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 sale, disposal or property insurance recoveries of, or any impairment related to, depreciable 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. 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 (loss) on land sales of $0.7 million and ($0.1) million for the three months ended December 31, 2021 and 2020, respectively, and $7.1 million and $8.0 million for the twelve months ended December 31, 2021 and 2020, respectively.

Straight-line adjustments decreased income by ($5.0) million and ($19.6) million for the three months ended December 31, 2021 and 2020, respectively, and ($25.7) million and ($23.9) million for the twelve months ended December 31, 2021 and 2020, respectively.

Amortization of fair market value of leases increased (decreased) income by $0.0 million and $1.7 million for the three months ended December 31, 2021 and 2020, respectively, and ($0.6) million and $5.2 million for the twelve months ended December 31, 2021 and 2020, respectively.

(E)

The three and twelve months ended December 31, 2021 include amortization of our excess investment in TRG of $107.0 million and $201.7 million, respectively. The three months ended December 31, 2021 include $56.6 million of additional amortization expense related to the nine months ended September 30, 2021 as a result of the finalization of purchase accounting.

(F)

Amount of unrealized gain/loss in fair value of equity instruments in FFO reconciliation relates to retail real estate investments with readily determinable fair values.

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SOURCE Simon

Tom Ward, 317-685-7330, Investors OR Ali Slocum, 317-264-3079, Media

Press Release

Simon Property Group Reports Fourth Quarter and Full Year 2021 Results