Press Release

Simon Property Group Reports Fourth Quarter Results And Raises Quarterly Dividend

January 31, 2014
PDF Version

INDIANAPOLIS, Jan. 31, 2014 /PRNewswire/ -- Simon Property Group, Inc. (NYSE: SPG) today reported results for the quarter and twelve months ended December 31, 2013.

Results for the Quarter

  • Funds from Operations ("FFO") was $894.8 million, or $2.47 per diluted share, as compared to $827.4 million, or $2.29 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 7.9%.
  • Net income attributable to common stockholders was $381.6 million, or $1.23 per diluted share, as compared to $315.4 million, or $1.01 per diluted share, in the prior year period.

Results for the Year

  • Funds from Operations ("FFO") was $3.206 billion, or $8.85 per diluted share, as compared to $2.885 billion, or $7.98 per diluted share, in the prior year period. The FFO increase on a per diluted share basis was 10.9%.
  • Net income attributable to common stockholders was $1.316 billion, or $4.24 per diluted share, as compared to $1.431 billion, or $4.72 per diluted share, in the prior year period. Results for 2012 include primarily non-cash net gains from acquisitions and dispositions of $1.41 per diluted share.

"This was an excellent quarter and year for Simon Property Group, capped off by our twentieth anniversary as a public company in December.  Over that 20-year period, we delivered a total return to shareholders of 1,915%," said David Simon, Chairman and CEO. "We produced strong financial and operating results in the fourth quarter, led by 5.5% growth in comparable property net operating income for our U.S. Malls and Premium Outlets. We also completed our acquisition of ownership interests in the European designer outlet business of McArthurGlen and opened significant redevelopments and expansions at several of our properties."

U.S. Malls and Premium Outlets Operating Statistics

 

As of

  
 

December 31,

%
 

2013

2012

Increase

Occupancy(1)

96.1%

95.3%

+ 80 basis points

Total Sales per sq. ft. (2)

$582

$568

2.5%

Base Minimum Rent per sq. ft. (1)

$42.34

$40.73

4.0%

Releasing Spread per sq. ft. (1)(3)

$8.94

$5.21

+ $3.73

Releasing Spread (percentage change) (1)(3)

16.8%

10.8%

+ 600 basis points
       

(1)

Represents mall stores in Malls and all owned square footage in Premium Outlets.

(2)

Trailing 12-month sales per square foot for mall stores less than 10,000 square feet in Malls and all owned square footage in Premium Outlets.

(3)

Same space measure that compares opening and closing rates on individual spaces leased during trailing 12-month period.

Dividends

Today the Company announced that the Board of Directors declared a quarterly common stock dividend of $1.25 per share.  This is an increase of $0.05 from the previous quarter, and a year over year increase of 8.7%.  The dividend will be payable on February 28, 2014 to stockholders of record on February 14, 2014.

The Company also 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, 2014 to stockholders of record on March 17, 2014.

Development Activity

In early October, we opened The Shops at Nanuet, a 750,000 square foot open-air, state-of-the-art center located in Rockland County, New York.  This project, which was 98% leased at opening, transformed the property from an enclosed mall to a main-street outdoor shopping destination providing customers with a wide variety of fashion and specialty retail, dining and entertainment opportunities.

During the fourth quarter, the Company completed expansions at the following properties:

  • Orlando Premium Outlets – Vineland Ave (Orlando, Florida) – 105,000 square feet, 100% leased at opening
  • Johor Premium Outlets (Johor, Malaysia) – 90,000 square feet, 100% leased at opening
  • Walt Whitman Shops (Huntington Station, New York) – 74,000 square feet, 100% leased at opening

We started construction on the transformational redevelopment and expansion of Roosevelt Field in Garden City, New York, during the fourth quarter, which will include the addition of Neiman Marcus.  Redevelopment and expansion projects, including the addition of new anchors, are underway at 25 properties in the U.S., Asia and Mexico. The Company's share of the cost of these projects is approximately $1.1 billion.

The Company's outlet business continues its robust expansion with four new Premium Outlets under construction:

  • Charlotte Premium Outlets in Charlotte, North Carolina is a 400,000 square foot center scheduled to open in July of 2014.  The Company owns a 50% interest in this project.
  • Twin Cities Premium Outlets in Eagan, Minnesota is a 410,000 square foot center scheduled to open in August of 2014.  The Company owns a 35% interest in this project.
  • Montreal Premium Outlets in Mirabel, Quebec, Canada is a 360,000 square foot center scheduled to open in October of 2014.  The Company owns a 50% interest in this project.
  • Vancouver Designer Outlet in Vancouver, British Columbia, Canada is a 242,000 square foot center scheduled to open in April of 2015.  The Company owns a 45% interest in this project.

Acquisitions and Dispositions

As previously announced, the Company completed the closing of its acquisition of ownership interests in four existing McArthurGlen Designer Outlets: Parndorf (Vienna, Austria), La Reggia (Naples, Italy), Noventa di Piave (Venice, Italy) and Roermond (Roermond, the Netherlands) during the fourth quarter.  The Company also owns an interest in the existing Ashford Designer Outlet in Kent, UK, Vancouver Designer Outlet (currently under construction), and a 50% ownership in McArthurGlen's management and development company. McArthurGlen is a leader in upscale, European designer outlet centers.

During the fourth quarter, the Company completed the sale of four assets – two community/lifestyle centers and two outlets.

In January, 2014, we acquired our joint venture partners' remaining interest in Kravco Simon Investments, a portfolio of 10 assets.  This transaction included the remaining interest in King of Prussia Mall, bringing our ownership to 100%.

Financing Activity

On October 2, 2013, Simon Property Group, L.P., the Company's majority-owned operating partnership subsidiary, issued €750 million 7-year senior unsecured notes at 2.375%.  This was the Company's first offering in the euro-denominated debt market.  Net proceeds from the public offering were used to repay euro-denominated borrowings under the Company's unsecured revolving credit facility and for general corporate purposes. 

The Company was also active in the secured debt markets in 2013.  During the fourth quarter, we closed or locked rates on 10 new loans totaling approximately $2.2 billion, of which SPG's share is $1.0 billion.  The weighted average interest rate on these new loans is 4.00% and the weighted average term is 7.4 years.  For the year, we closed or locked rates on 30 new loans totaling approximately $5.1 billion, of which SPG's share is $3.0 billion. The weighted average interest rate on these new loans is 3.31% and the weighted average term is 7.5 years.

In January, 2014, Simon Property Group, L.P., completed a $1.2 billion senior unsecured notes offering with a weighted average duration of 7.5 years and an average coupon rate of 2.975%.  The offering was comprised of $600 million of 2.20% five-year senior notes and $600 million of 3.75% ten-year senior notes.  Net proceeds from the public offering were used to repay debt and for general corporate purposes.

Spin Off

In December, 2013, Simon Property Group announced a plan to spin off all of its strip center business and 44 smaller enclosed malls into an independent, publicly traded REIT.  In conjunction with this transaction, we filed a Form 10 on December 24, 2013.  We continue to expect the transaction will be effective in the second quarter of 2014.

2014 Guidance

The Company estimates that FFO will be within a range of $9.50 to $9.60 per diluted share for the year ending December 31, 2014, and net income will be within a range of $4.55 to $4.65 per diluted share.   

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

For the year ending December 31, 2014                                                                         

 

Low

High
 

End

End
     

Estimated net income available to common stockholders per diluted share

$4.55

$4.65
     

Depreciation and amortization including the Company's share of unconsolidated entities

4.95

4.95
     

Estimated FFO per diluted share

$9.50

$9.60

 

This guidance does not take into consideration any impact from the previously mentioned spin-off transaction.

Conference Call

Simon Property Group will hold a conference call to discuss our financial results today at 10:00 a.m. Eastern Time, Friday, January 31, 2014.  Live streaming audio of the conference call will be accessible at investors.simon.com. An online replay will be available until February 14, 2014 at investors.simon.com.  

Supplemental Materials and Website

The Company has provided supplemental information on its fourth quarter performance 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 at 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 and comparable property 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 the Company's supplemental information for the quarter. FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs.

Forward-Looking Statements

Certain statements made in this press release may be deemed "forward‑looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward‑looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be attained, and it is possible that 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 and currency 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 conditions, 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, and the intensely competitive market environment in the retail industry, 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 our annual and quarterly reports filed with the SEC.  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 unless required by law.

About Simon Property Group

Simon Property Group, Inc. (NYSE:SPG) is an S&P 100 company and a global leader in the retail real estate industry.  The Company currently owns or has an interest in more than 325 retail real estate properties in North America, Asia and Europe comprising approximately 243 million square feet. We are headquartered in Indianapolis, Indiana and employ approximately 5,500 people in the U.S.  For more information, visit www.simon.com.

  

 

                 

Simon Property Group, Inc. and Subsidiaries

  

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,

  
 

2013

  

2012

  

2013

  

2012

  
                 

REVENUE:

                

Minimum rent

$ 850,082

  

$ 808,533

  

$ 3,201,958

  

$ 3,015,866

  

Overage rent

89,015

  

85,449

  

223,473

  

195,726

  

Tenant reimbursements

383,072

  

361,006

  

1,442,907

  

1,340,307

  

Management fees and other revenues

31,816

  

35,438

  

126,972

  

128,366

  

Other income

62,275

  

54,005

  

174,828

  

199,819

  

Total revenue

1,416,260

  

1,344,431

  

5,170,138

  

4,880,084

  
                 

EXPENSES:

                

Property operating

121,039

  

116,619

  

475,133

  

469,755

  

Depreciation and amortization

329,183

  

350,353

  

1,290,528

  

1,257,569

  

Real estate taxes

112,640

  

108,094

  

444,899

  

419,267

  

Repairs and maintenance

36,224

  

37,306

  

120,803

  

116,168

  

Advertising and promotion

44,866

  

41,028

  

126,210

  

118,790

  

Provision for credit losses

3,531

  

7,538

  

7,737

  

12,809

  

Home and regional office costs

34,911

  

28,907

  

140,931

  

123,926

  

General and administrative

15,327

  

14,358

  

59,803

  

57,144

  

Marketable and non-marketable securities charges and

                

  realized gains, net

-

  

(6,426)

  

-

  

(6,426)

  

Other

25,993

  

32,056

  

88,405

  

90,482

  

Total operating expenses

723,714

  

729,833

  

2,754,449

  

2,659,484

  
                 

OPERATING INCOME

692,546

  

614,598

  

2,415,689

  

2,220,600

  
                 

Interest expense

(287,657)

  

(291,492)

  

(1,137,139)

  

(1,127,025)

  

Income and other taxes

(9,790)

  

(6,008)

  

(39,734)

  

(15,880)

  

Income from unconsolidated entities

46,596

  

35,294

  

205,259

  

131,907

  

Gain upon acquisition of controlling interests, sale or

                

disposal of assets and interests in unconsolidated 

                

entities, and impairment charge on investment in

                

unconsolidated entities, net

7,609

  

18,104

  

107,515

  

510,030

(A)
                 

CONSOLIDATED NET INCOME

449,304

  

370,496

  

1,551,590

  

1,719,632

  
                 

Net income attributable to noncontrolling interests 

66,915

  

54,279

  

231,949

  

285,136

  

Preferred dividends

834

  

834

  

3,337

  

3,337

  
                 

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 381,555

  

$ 315,383

  

$ 1,316,304

  

$ 1,431,159

  
                 
                 

BASIC EARNINGS PER COMMON SHARE:

                

Net income attributable to common stockholders

$ 1.23

  

$ 1.01

  

$ 4.24

  

$ 4.72

  
                 

DILUTED EARNINGS PER COMMON SHARE:

                

Net income attributable to common stockholders

$ 1.23

  

$ 1.01

  

$ 4.24

  

$ 4.72

  
                 

  

 

     

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)
 
 
 
     
 

December 31,

December 31,
 

2013

2012

ASSETS:

    

Investment properties at cost

$ 35,126,344

$ 34,252,521

Less - accumulated depreciation

10,067,743

9,068,388
 

25,058,601

25,184,133

Cash and cash equivalents

1,716,863

1,184,518

Tenant receivables and accrued revenue, net

581,482

521,301

Investment in unconsolidated entities, at equity

2,433,399

2,108,966

Investment in Klepierre, at equity

2,014,415

2,016,954

Deferred costs and other assets

1,519,814

1,570,734

Total assets

$ 33,324,574

$ 32,586,606
     

LIABILITIES:

    

Mortgages and unsecured indebtedness

$ 23,588,531

$ 23,113,007

Accounts payable, accrued expenses, intangibles, and deferred revenues

1,374,113

1,374,172

Cash distributions and losses in partnerships and joint ventures, at equity

1,091,591

724,744

Other liabilities

257,222

303,588

Total liabilities

26,311,457

25,515,511
     

Commitments and contingencies

    

Limited partners' preferred interest in the Operating Partnership and noncontrolling

    

redeemable interests in properties

190,485

178,006
     

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

44,390

44,719
     

Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 314,251,245 and

    

313,658,419 issued and outstanding, respectively

31

31
     

Class B common stock, $ 0.0001 par value, 10,000 shares authorized, 8,000

    

issued and outstanding

-

-
     

Capital in excess of par value

9,217,363

9,175,724

Accumulated deficit

(3,218,686)

(3,083,190)

Accumulated other comprehensive loss

(75,795)

(90,900)

Common stock held in treasury at cost, 3,650,680 and 3,762,595 shares, respectively

(117,897)

(135,781)

Total stockholders' equity

5,849,406

5,910,603

Noncontrolling interests

973,226

982,486

Total equity

6,822,632

6,893,089

Total liabilities and equity

$ 33,324,574

$ 32,586,606
     

  

 

               

Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Statements of Operations

(Dollars in thousands)
               
 
 

For the Three Months

  

For the Year
 

Ended December 31,

  

Ended December 31,
 

2013

  

2012

  

2013

  

2012
               

Revenue:

              

  Minimum rent

$ 465,138

  

$ 395,853

  

$ 1,666,886

  

$ 1,487,554

  Overage rent

52,207

  

47,987

  

180,772

  

176,609

  Tenant reimbursements

196,313

  

182,866

  

765,357

  

691,564

  Other income

77,599

  

50,012

  

200,104

  

171,698

    Total revenue

791,257

  

676,718

  

2,813,119

  

2,527,425
               

Operating Expenses:

              

  Property operating

133,991

  

125,375

  

498,485

  

477,338

  Depreciation and amortization

138,474

  

132,803

  

528,317

  

508,083

  Real estate taxes

52,515

  

46,121

  

212,667

  

178,739

  Repairs and maintenance

20,960

  

19,894

  

69,116

  

65,163

  Advertising and promotion

18,175

  

15,575

  

62,339

  

55,175

  (Recovery of) provision for credit losses

(485)

  

2,071

  

1,287

  

1,824

  Other

45,986

  

42,376

  

156,115

  

170,510

    Total operating expenses

409,616

  

384,215

  

1,528,326

  

1,456,832
               

Operating Income

381,641

  

292,503

  

1,284,793

  

1,070,593
               

Interest expense

(241,331)

  

(147,818)

  

(694,904)

  

(599,400)

Income from Continuing Operations

140,310

  

144,685

  

589,889

  

471,193
               

Gain (loss) from operations of discontinued joint venture interests

385

  

457

  

46

  

(20,311)

Gain (loss) on disposal of discontinued operations, net

26,228

  

(450)

  

51,164

  

(5,354)

Net Income

$ 166,923

  

$ 144,692

  

$ 641,099

  

$ 445,528
               

Third-party investors' share of net income

$   89,782

  

$   76,823

  

$ 353,708

  

$ 239,931
               

Our share of net income

77,141

  

67,869

  

287,391

  

205,597

Amortization of Excess Investment (B)

(27,460)

  

(28,341)

  

(102,875)

  

(83,400)

Our share of loss on sale or disposal of assets and

              

  interests in unconsolidated entities, net

-

  

-

  

-

  

9,245

Income from Unconsolidated Entities (C)

$   49,681

  

$   39,528

  

$ 184,516

  

$ 131,442
               
               

Note: The above financial presentation does not include any information related to our investment in Klepierre S.A. ("Klepierre"). 

           For additional information, see footnote C.

  
               

  

       

Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Balance Sheets

(Dollars in thousands)
       
 
 
 

BALANCE SHEETS

December 31,

  

December 31,
 

2013

  

2012

Assets:

      

Investment properties, at cost

$ 15,824,689

  

$ 14,607,291

Less - accumulated depreciation

5,294,578

  

4,926,511
 

10,530,111

  

9,680,780

Cash and cash equivalents

792,751

  

619,546

Tenant receivables and accrued revenue, net

310,320

  

252,774

Investment in unconsolidated entities, at equity

38,352

  

39,589

Deferred costs and other assets

586,622

  

438,399

Total assets

$ 12,258,156

  

$ 11,031,088
       

Liabilities and Partners' Deficit:

      

Mortgages

$ 13,024,257

  

$ 11,584,863

Accounts payable, accrued expenses, intangibles, and deferred revenues

849,107

  

672,483

Other liabilities

514,822

  

447,132

Total liabilities

14,388,186

  

12,704,478
       

Preferred units

67,450

  

67,450

Partners' deficit

(2,197,480)

  

(1,740,840)

Total liabilities and partners' deficit

$ 12,258,156

  

$ 11,031,088
       

Our Share of:

      

Partners' deficit

$ (717,776)

  

$ (799,911)

Add: Excess Investment (B)

2,059,584

  

2,184,133

Our net Investment in Joint Ventures

$ 1,341,808

  

$ 1,384,222
       

Note: The above financial presentation does not include any information related to our investment in

Klepierre.  For additional information, see footnote C attached hereto.
       
       

  

                         

Simon Property Group, Inc. and Subsidiaries

  

Unaudited Reconciliation of Non-GAAP Financial Measures (D)

  

(Amounts in thousands, except per share amounts)

  
                         

Reconciliation of Consolidated Net Income to FFO 

  
                 
         

For the Three Months

  

For the Twelve Months

  
         

Ended December 31, 

  

Ended December 31,

  
         

2013

  

2012

  

2013

  

2012

  
                         

Consolidated Net Income (E)

$  449,304

  

$  370,496

  

$  1,551,590

  

$  1,719,632

  

Adjustments to Arrive at FFO:

                
                         
 

Depreciation and amortization from consolidated 

                
 

     properties 

324,478

  

346,594

  

1,273,646

  

1,242,741

  
 

Our share of depreciation and amortization from

                
 

     unconsolidated entities, including Klepierre

134,768

  

134,692

  

511,200

  

456,011

  
 

Gain upon acquisition of controlling interests, sale or disposal

                
 

     of assets and interests in unconsolidated entities, and 

                
 

     impairment charge on investment in unconsolidated entities, net

(7,609)

  

(18,104)

  

(107,515)

  

(510,030)

  
 

Net income attributable to noncontrolling interest holders in

                
 

     properties

(2,474)

  

(2,092)

  

(8,990)

  

(8,520)

  
 

Noncontrolling interests portion of depreciation and amortization

(2,391)

  

(2,831)

  

(8,986)

  

(9,667)

  
 

Preferred distributions and dividends

(1,313)

  

(1,313)

  

(5,252)

  

(5,252)

  

FFO of the Operating Partnership

$  894,763

  

$  827,442

  

$  3,205,693

  

$  2,884,915

  
                         
                         

Diluted Net Income Per Share to Diluted FFO Per Share Reconciliation:

                

Diluted net income per share

$       1.23

  

$       1.01

  

$          4.24

  

$          4.72

  
 

Depreciation and amortization from consolidated properties

                
 

     and our share of depreciation and amortization from 

                
 

     unconsolidated entities, including Klepierre, net of noncontrolling 

                
 

     interests portion of depreciation and amortization

1.26

  

1.33

  

4.91

  

4.67

  
 

Gain upon acquisition of controlling interests, sale or disposal

                
 

     of assets and interests in unconsolidated entities, and 

                
 

     impairment charge on investment in unconsolidated entities, net

(0.02)

  

(0.05)

  

(0.30)

  

(1.41)

  

Diluted FFO per share

$       2.47

  

$       2.29

  

$          8.85

  

$          7.98

  
                         

Details for per share calculations:

                
                         

FFO of the Operating Partnership

$  894,763

  

$  827,442

  

$  3,205,693

  

$  2,884,915

  

Diluted FFO allocable to unitholders

(128,419)

  

(119,633)

  

(460,923)

  

(464,567)

  

Diluted FFO allocable to common stockholders

$  766,344

  

$  707,809

  

$  2,744,770

  

$  2,420,348

  
                         

Basic weighted average shares outstanding

310,434

  

309,417

  

310,255

  

303,137

  

Adjustments for dilution calculation:

                

   Effect of stock options

-

  

1

  

-

  

1

  
                         

Diluted weighted average shares outstanding

310,434

  

309,418

  

310,255

  

303,138

  

Weighted average limited partnership units outstanding

52,021

  

52,297

  

52,101

  

58,186

  
                         

Diluted weighted average shares and units outstanding

362,455

  

361,715

  

362,356

  

361,324

  
                         

Basic and Diluted FFO per Share

$       2.47

  

$       2.29

  

$          8.85

  

$          7.98

  

    Percent Change

7.9%

      

10.9%

      
                         
                         

 

Simon Property Group, Inc. and Subsidiaries

Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures
                     

Notes:  

                  
                     

(A)

2012 primarily represents non-cash gains resulting from our acquisition/disposition activity and the remeasurement of our previously held interest to fair value for those properties in which we now have a controlling interest.
                     

(B)

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.
                     

(C)

The Unaudited Joint Venture Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investment in Klepierre.  Amounts included in Footnotes E below exclude our share of related activity for our investment in Klepierre.  For further information, reference should be made to financial information in Klepierre's public filings and additional discussion and analysis in our Form 10-K.
                     

(D)

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 charges 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 charges relating to, previously depreciated retail 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.
                     

(E)

Includes our share of: 

      
                     

-

Gains on land sales of $2.2 million and $7.9 million for the three months ended December 31, 2013 and 2012, respectively, and $7.6 million and $19.6 million for the twelve months ended December 31, 2013 and 2012, respectively
                     

-

Straight-line adjustments to minimum rent of $18.1 million and $12.6 million for the three months ended December 31, 2013 and 2012, respectively, and $57.8 million and $44.3 million for the twelve months ended December 31, 2013 and 2012, respectively
                     

-

Amortization of fair market value of leases from acquisitions of $5.8 million and $4.8 million for the three months ended December 31, 2013 and 2012, and $27.7 million and $21.0 million for the twelve months ended December 31, 2013 and 2012, respectively
   

-

Debt premium amortization of $9.6 million and $12.1 million for the three months ended December 31, 2013 and 2012, respectively, and $41.9 million and $41.8 million for the twelve months ended December 31, 2013 and 2012, respectively

 

SOURCE Simon Property Group, Inc.

Liz Zale, 212.745.9623, Investors, or Les Morris, 317.263.7711, Media