Press Release

Three Months Ended

September 30,

Nine Months Ended

September 30,

2014

2013

2014

2013

Reported FFO per share

$1.90

$2.21

$6.43

$6.38

   Add: Loss on extinguishment of debt

0.35

--

0.35

--

   Add: Spin-off transaction expenses

--

--

0.10

--

   Less: FFO from WPG properties

--

(0.24)

(0.40)

(0.72)

Comparable FFO per share

$2.25

$1.97

$6.48

$5.66

Comparable FFO per share growth

14.2%

14.5%

Reported earnings per share

$0.81

$1.00

$3.22

$3.01

Comparable earnings per share⁽¹⁾

$1.16

$0.89

$3.49

$2.64

(1) For a reconciliation of Reported EPS to Comparable EPS, please see Footnote H of the Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures.

U.S. Malls and Premium Outlets Operating Statistics

As of

September 30,

Year-over-Year

2014⁽¹⁾

2013

Change

Occupancy⁽²⁾

96.9%

95.5%

+140 bps

Base Minimum Rent

      per sq. ft. ⁽²⁾

$46.29

$41.73

+10.9%

Releasing Spread

      per sq. ft. ⁽²⁾⁽³⁾

$9.67

$8.05

+$1.62

Releasing Spread

     (percentage change)⁽²⁾⁽³⁾

17.3%

15.2%

+210 bps

Total Sales per sq. ft.⁽⁴⁾

$613

$579

+5.9%

(1)   Excludes WPG properties.

(2)   Represents mall stores 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.

(4)   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.

For the year ending December 31, 2014

Low

High

End

End

Estimated net income available to common stockholders

     per diluted share

$4.45

$4.49

Depreciation and amortization including Simon's share

     of unconsolidated entities

4.82

4.82

Gain upon acquisition of controlling interests, sale or disposal

     of assets and interests in unconsolidated entities, net

(0.43)

(0.43)

Estimated FFO per diluted share

$8.84

$8.88

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

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

2014

2013

2014

2013

REVENUE:

Minimum rent

$ 740,214

$ 690,904

$ 2,190,983

$ 2,038,486

Overage rent

52,502

55,115

123,336

129,458

Tenant reimbursements

350,595

320,179

1,018,316

921,136

Management fees and other revenues

36,396

33,613

101,145

95,156

Other income

54,987

47,066

139,918

108,457

Total revenue

1,234,694

1,146,877

3,573,698

3,292,693

EXPENSES:

Property operating

106,742

98,993

294,318

276,561

Depreciation and amortization

281,661

279,302

849,369

824,173

Real estate taxes

97,359

93,001

291,058

273,758

Repairs and maintenance

21,416

22,746

72,838

68,689

Advertising and promotion

38,359

28,455

99,128

75,128

Provision for credit losses

1,769

2,398

8,635

3,947

Home and regional office costs

40,753

34,171

120,999

106,021

General and administrative

14,388

14,546

44,842

44,476

Other

24,690

24,787

62,457

59,040

Total operating expenses

627,137

598,399

1,843,644

1,731,793

OPERATING INCOME

607,557

548,478

1,730,054

1,560,900

Interest expense

(249,780)

(270,700)

(758,945)

(808,235)

Loss on extinguishment of debt

(127,573)

-

(127,573)

-

Income and other taxes

(6,589)

(7,700)

(20,078)

(29,773)

Income from unconsolidated entities

55,631

47,563

168,473

157,811

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

  and interests in unconsolidated entities, net

17,717

11,071

154,242

85,754

Consolidated income from continuing operations

296,963

328,712

1,146,173

966,457

Discontinued operations 

-

38,581

67,524

135,830

Discontinued operations transaction expenses

-

-

(38,163)

-

CONSOLIDATED NET INCOME

296,963

367,293

1,175,534

1,102,287

Net income attributable to noncontrolling interests 

44,161

54,784

172,828

165,035

Preferred dividends

834

834

2,503

2,503

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 251,968

$ 311,675

$ 1,000,203

$ 934,749

BASIC EARNINGS PER COMMON SHARE:

Income from continuing operations

$ 0.81

$ 0.89

$ 3.14

$ 2.64

Discontinued operations

-

0.11

0.08

0.37

Net income attributable to common stockholders

$ 0.81

$ 1.00

$ 3.22

$ 3.01

DILUTED EARNINGS PER COMMON SHARE:

Income from continuing operations

$ 0.81

$ 0.89

$ 3.14

$ 2.64

Discontinued operations

-

0.11

0.08

0.37

Net income attributable to common stockholders

$ 0.81

$ 1.00

$ 3.22

$ 3.01

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

September 30,

December 31,

2014

2013

ASSETS:

Investment properties at cost

$ 31,022,776

$ 30,336,639

Less - accumulated depreciation

8,728,977

8,092,794

22,293,799

22,243,845

Cash and cash equivalents

817,998

1,691,006

Tenant receivables and accrued revenue, net

516,857

520,361

Investment in unconsolidated entities, at equity

2,458,704

2,429,845

Investment in Klepierre, at equity

1,868,461

2,014,415

Deferred costs and other assets

1,716,346

1,422,788

Total assets of discontinued operations

-

3,002,314

Total assets

$ 29,672,165

$ 33,324,574

LIABILITIES:

Mortgages and unsecured indebtedness

$ 21,202,360

$ 22,669,917

Accounts payable, accrued expenses, intangibles, and deferred revenues

1,150,900

1,223,102

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

1,166,887

1,050,278

Other liabilities

259,824

250,371

Total liabilities of discontinued operations

-

1,117,789

Total liabilities

23,779,971

26,311,457

Commitments and contingencies

Limited partners' preferred interest in the Operating Partnership and noncontrolling

redeemable interests in properties

25,537

190,485

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

44,144

44,390

Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 314,314,502 and

314,251,245 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

9,406,656

9,217,363

Accumulated deficit

(4,200,226)

(3,218,686)

Accumulated other comprehensive loss

(125,414)

(75,795)

Common stock held in treasury at cost, 3,540,427 and 3,650,680 shares, respectively

(103,870)

(117,897)

Total stockholders' equity

5,021,321

5,849,406

Noncontrolling interests

845,336

973,226

Total equity

5,866,657

6,822,632

Total liabilities and equity

$ 29,672,165

$ 33,324,574

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

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

2014

2013

2014

2013

Revenue:

Minimum rent

$ 436,580

$ 396,539

$ 1,289,263

$ 1,165,611

Overage rent

42,760

40,707

133,146

128,320

Tenant reimbursements

202,973

193,288

588,772

555,681

Other income

54,157

40,760

228,793

122,152

Total revenue

736,470

671,294

2,239,974

1,971,764

Operating Expenses:

Property operating

141,083

122,550

434,147

356,089

Depreciation and amortization

147,946

131,689

442,141

378,284

Real estate taxes

59,934

53,593

167,523

154,271

Repairs and maintenance

16,289

15,172

51,874

46,290

Advertising and promotion

18,535

13,977

54,458

43,638

Provision for credit losses

210

311

4,288

1,823

Other

43,760

37,819

141,243

109,602

Total operating expenses

427,757

375,111

1,295,674

1,089,997

Operating Income

308,713

296,183

944,300

881,767

Interest expense

(147,817)

(147,928)

(449,512)

(442,620)

Income from Continuing Operations

160,896

148,255

494,788

439,147

Income from operations of discontinued joint venture interests

-

3,464

5,079

10,093

Gain on disposal of discontinued operations, net

-

6,580

-

24,936

Net Income

$ 160,896

$ 158,299

$ 499,867

$ 474,176

Third-Party Investors' Share of Net Income

$ 81,810

$ 85,211

$ 259,340

$ 263,926

Our Share of Net Income

79,086

73,088

240,527

210,250

Amortization of Excess Investment ^(A)

(26,187)

(25,733)

(76,168)

(75,415)

Our Share of Income from Unconsolidated Discontinued Operations

-

(353)

(652)

(852)

Income from Unconsolidated Entities ^(B)

$ 52,899

$ 47,002

$ 163,707

$ 133,983

Note: The above financial presentation does not include any information related to our investment in  Klepierre S.A. ("Klepierre").
      For additional information, see footnote B.

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

September 30,

December 31,

2014

2013

Assets:

Investment properties, at cost

$ 15,854,182

$ 15,355,700

Less - accumulated depreciation

5,358,302

5,080,832

10,495,880

10,274,868

Cash and cash equivalents

753,133

781,554

Tenant receivables and accrued revenue, net

353,619

302,902

Investment in unconsolidated entities, at equity

11,701

38,352

Deferred costs and other assets

575,776

579,480

Total assets of discontinued operations

-

281,000

Total assets

$ 12,190,109

$ 12,258,156

Liabilities and Partners' Deficit:

Mortgages

$ 12,900,691

$ 12,753,139

Accounts payable, accrued expenses, intangibles, and deferred revenue

979,723

834,898

Other liabilities

491,959

513,897

Total liabilities of discontinued operations

-

286,252

Total liabilities

14,372,373

14,388,186

Preferred units

67,450

67,450

Partners' deficit

(2,249,714)

(2,197,480)

Total liabilities and partners' deficit

$ 12,190,109

$ 12,258,156

Our Share of:

Partners' deficit

$ (615,394)

$ (717,776)

Add: Excess Investment ^(A)

1,907,211

2,059,584

Add: Our Share of investment in discontinued unconsolidated entities, at equity

-

37,759

Our net Investment in unconsolidated entities, at equity

$ 1,291,817

$ 1,379,567

Note: The above financial presentation does not include any information related to our investment in Klepierre.
          For additional information, see footnote B attached hereto.

Simon Property Group, Inc. and Subsidiaries

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 Nine Months Ended

September 30,

September 30,

2014

2013

2014

2013

Consolidated Net Income (D)

$    296,963

$    367,293

$ 1,175,534

$       1,102,287

Adjustments to Arrive at FFO:

Depreciation and amortization from consolidated 

     properties 

277,936

321,962

915,040

949,169

Our share of depreciation and amortization from

     unconsolidated entities, including Klepierre

135,131

130,055

410,848

376,432

Gain upon acquisition of controlling interests and sale or disposal

     of assets and interests in unconsolidated entities, net

(17,717)

(11,071)

(154,484)

(99,906)

Net income attributable to noncontrolling interest holders in

     properties

(750)

(1,958)

(1,720)

(6,517)

Noncontrolling interests portion of depreciation and amortization

(869)

(2,218)

(2,729)

(6,595)

Preferred distributions and dividends

(1,313)

(1,313)

(3,939)

(3,939)

FFO of the Operating Partnership (E)

$    689,381

$    802,750

$ 2,338,550

$       2,310,931

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

Diluted net income per share

$         0.81

$         1.00

$         3.22

$               3.01

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

1.14

1.24

3.64

3.65

Gain upon acquisition of controlling interests and sale or disposal

     of assets and interests in unconsolidated entities, net

(0.05)

(0.03)

(0.43)

(0.28)

Diluted FFO per share (F)

$         1.90

$         2.21

$         6.43

$               6.38

Details for per share calculations:

FFO of the Operating Partnership (E)

$    689,381

$    802,750

$ 2,338,550

$       2,310,931

Diluted FFO allocable to unitholders

(100,286)

(115,440)

(339,171)

(332,474)

Diluted FFO allocable to common stockholders (G)

$    589,095

$    687,310

$ 1,999,379

$       1,978,457

Basic and Diluted weighted average shares outstanding

310,772

310,333

310,713

310,195

Weighted average limited partnership units outstanding

52,873

52,122

52,709

52,127

Basic and Diluted weighted average shares and units outstanding

363,645

362,455

363,422

362,322

Basic and Diluted FFO per Share (F)

$         1.90

$         2.21

$         6.43

$               6.38

    Percent Change

-14.0%

0.8%

Simon Property Group, Inc. and Subsidiaries

Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures

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 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 D 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-Q.

(C)

This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO, FFO per share, comparable FFO per share and comparable earnings 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.

(D)

Includes our share of: 

-

Gains on land sales of $2.0 million and $4.2 million for the three months ended September 30, 2014 and 2013, respectively, $14.4 million and $5.4 million for the nine months ended September 30, 2014 and 2013, respectively.

-

Straight-line adjustments to minimum rent of $17.6 million and $13.6 million for the three months ended September 30, 2014 and 2013, respectively (including $0.0 million and $0.1 million related to WPG), and $44.9 million and $39.7 million for the nine months ended September 30, 2014 and 2013, respectively (including $0.3 million and ($0.1) million related to WPG).

-

Amortization of fair market value of leases from acquisitions of $3.7 million and $5.6 million for the three months ended September 30, 2014 and 2013 respectively (including $0.0 million and $0.3 million related to WPG), and $12.2 million and $21.9 million for the nine months ended September 30, 2014 and 2013, respectively (including $0.3 million and $1.1 million related to WPG).

-

Debt premium amortization of $5.2 million and $10.1 million for the three months ended September 30, 2014 and 2013, respectively (including $0.0 million and $0.1 million related to WPG), and $26.6 million and $32.3 million for the nine months ended September 30, 2014 and 2013, respectively (including $0.2 million and $0.3 million related to WPG). 

(E)

Includes FFO of the operating partnership and 2014 transaction expenses related to WPG of $86.4 million for the three months ended September 30, 2013, and $108.0 million and $262.1 million for the nine months ended September 30, 2014 and 2013, respectively. 

(F)

Includes Basic and Diluted FFO per share related to WPG operations and 2014 transaction expenses of $0.24 for the three months ended September 30, 2013, and $0.30 and $0.72 for the nine months ended September 30, 2014 and 2013, respectively.  

(G)

Includes Diluted FFO allocable to common stockholders and 2014 transaction expenses related to WPG of $74.0 million for the three months ended September 30, 2013, and $92.4 million and $224.4 million for the nine months ended September 30, 2014 and 2013, respectively.

(H)

Reconciliation of reported earnings per share to comparable earnings per share

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2014

2013

2014

2013

Reported earnings per share

$0.81

$1.00

$3.22

$3.01

Add: Loss on extinguishment of debt

0.35

--

0.35

--

Add: WPG spin-off transaction expenses

--

--

0.10

--

Less: Earnings per share from WPG properties 

--

(0.11)

(0.18)

(0.37)

Comparable earnings per share

$1.16

$0.89

$3.49

$2.64

Comparable earnings per share growth

30.3%

32.2%