Simon Property Group Reports Second Quarter Results and Announces Quarterly Dividend
INDIANAPOLIS, July 30, 2010 /PRNewswire via COMTEX/ --
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.
