Simon Property Group Reports Third Quarter Results and Announces 33% Increase in Quarterly Dividend From $0.60 to $0.80 Per Share
INDIANAPOLIS, Nov. 1, 2010 /PRNewswire via COMTEX/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today announced results for the quarter ended September 30, 2010.
Net income attributable to common stockholders was $230.6 million, or $0.79 per diluted share, in the third quarter of 2010 as compared to $105.5 million, or $0.38 per diluted share, in the prior year period. Third quarter 2010 results reflect the impact of transaction expenses of $47.6 million, or $0.14 per share, as well as the following transactions:
- In July, the Company sold its interests in a European joint venture resulting in a gain of $281.3 million, or $0.80 per diluted share.
- In August, the Company completed the successful tender of $1.3 billion of unsecured debt resulting in a loss on extinguishment of debt of $185.1 million, or $0.53 per diluted share.
Funds from Operations ("FFO") as adjusted was $503.6 million, or $1.43 per diluted share, in the third quarter of 2010 as compared to $473.1 million, or $1.38 per diluted share, in the prior year period. FFO as adjusted reflects the impact of the above-described transaction expenses of $0.14 per share, but excludes the gain on sale of interests in a European joint venture of $0.80 per share and the debt extinguishment charge of $0.53 per share. FFO including the debt extinguishment charge was $318.5 million, or $0.90 per diluted share.
"I am very pleased with our quarterly results and with today's significant dividend increase," said David Simon, Chairman and Chief Executive Officer. "Operating performance was strong as our U.S. regional mall and Premium Outlet portfolio generated comparable property net operating income growth of 3.6% in the third quarter. Our tenants also experienced a strong 10.6% increase in sales in the quarter as compared to the third quarter of 2009."
"It was also an eventful quarter, with the completion of several significant transactions including the acquisition of the Prime Outlets portfolio and the sale of our interests in Simon Ivanhoe. In addition, we continued enhancing our conservative balance sheet with the August $1.3 billion senior unsecured notes tender and $900 million notes issuance, extending the duration of our senior notes portfolio while decreasing the weighted average interest."
U.S. Operational Statistics(1)
As of As of
September 30, September 30,
2010 2009
-------------- --------------
Occupancy(2) 93.6% 92.8%
Comparable Sales per
Sq. Ft. (3) $483 $449
Average Rent per Sq. Ft. (2) $38.69 $38.35
- Combined information for U.S. regional malls and U.S. Premium Outlets. Does not include information for properties owned by SPG-FCM (the Mills portfolio) or the properties included in the Prime Outlets Acquisition Company transaction.
- Represents mall stores in regional malls and all owned gross leasable area in Premium Outlets.
- 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 $0.80 per share, an increase of 33%. This dividend is payable on November 30, 2010 to stockholders of record on November 16, 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 December 31, 2010 to stockholders of record on December 17, 2010.
Acquisitions
On August 30th, the Company announced the completion of its transaction with Prime Outlets Acquisition Company and certain of its affiliated entities ("Prime"). The Prime transaction consists of 21 outlet center properties, including the Barceloneta, Puerto Rico outlet center which Simon acquired in May of this year. As of September 30, 2010, the centers were 94.7% occupied with average base rents of $24.52 per square foot, and they generated sales per square foot of $406.
The completed transaction was valued at approximately $2.3 billion including the assumption of approximately $1.2 billion of existing mortgage debt.
In connection with the transaction, the Company signed a proposed Consent Agreement with the Staff of the Federal Trade Commission ("FTC"). The Consent Agreement is subject to review and approval by the Commissioners of the FTC.
Dispositions
On July 15th, the Company and Ivanhoe Cambridge completed the sale of their interests in Simon Ivanhoe to Unibail-Rodamco. The Company and Ivanhoe Cambridge each owned 50% interests in Simon Ivanhoe, which owns seven shopping centers in France and Poland. Simon and Ivanhoe Cambridge received consideration of euro 715 million for their interests. Simon recorded a gain on this transaction of $281.3 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.
Capital Markets
On August 9th, the Company commenced an any and all cash tender offer for three issues of outstanding senior unsecured notes of its operating partnership subsidiary, Simon Property Group, L.P., or SPGLP, maturing in 2013 and 2014. On August 17th, the Company announced that approximately $1.33 billion of notes were tendered and accepted for purchase. These notes had a weighted average remaining duration of 3.5 years and a weighted average coupon of 6.06%. A $185.1 million charge to earnings and FFO was recorded in August of 2010 in connection with this transaction.
Also, on August 9th, the Company announced the sale by SPGLP of $900 million of senior unsecured notes in an underwritten public offering. The offering consisted of $900 million of 4.375% notes due 2021. The notes were priced at 99.605% of the principal amount to yield 4.42% to maturity. This was the lowest coupon for a 10-year REIT bond offering in history. Net proceeds from the offering were used to partially fund the cash purchase of the senior unsecured notes tendered.
The aggregate result of the tender offer, combined with the sale of unsecured notes, was an extension of the duration of our senior notes portfolio from 6.8 years to 7.5 years and a decrease in the weighted average interest rate of the Company's bond portfolio.
As of September 30, 2010, the Company had approximately $1.3 billion of cash on hand, including its share of joint venture cash, and an additional $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.
During the third quarter, construction started on two upscale outlet centers:
- Johor Premium Outlets, a 175,000 square foot center located in Johor, Malaysia. The center is located one hour's drive from Singapore and is projected to open in November of 2011. The Company owns 50% of this center in a joint venture with the Genting Group.
- Merrimack Premium Outlets in Merrimack, New Hampshire. This 380,000 square foot center is located one hour north of metropolitan Boston and is projected to open in June of 2012. The Company owns 100% of 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 and is expected to open in April of 2011. The Company owns a 50% interest in this project.
- A 52,000 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 provided updated guidance for 2010, estimating that FFO as adjusted will be within a range of $5.90 to $5.95 per diluted share for the year ending December 31, 2010, an increase of $0.13 in the low end and an increase of $0.08 in the high end of guidance provided on July 30, 2010. FFO as adjusted excludes the loss on extinguishment of debt charges of $350.7 million ($1.00 per diluted share) related to SPGLP's January and August tender offers. After giving effect to these charges, the Company expects 2010 FFO per diluted share to be within a range of $4.90 to $4.95. Diluted net income is expected to be within a range of $2.03 to $2.08 per share.
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 $2.03 $2.08
Depreciation and amortization including the
Company's share of joint ventures 3.80 3.80
Gain upon acquisition of controlling interest, and
on sale or disposal of assets and interests in
unconsolidated entities (0.92) (0.92)
Impact of additional dilutive securities (0.01) (0.01)
----- -----
Estimated diluted FFO per share $4.90 $4.95
Charges in connection with January and August
2010 tender offers 1.00 1.00
---- ----
Estimated diluted FFO as adjusted per share $5.90 $5.95
===== =====
Conference Call
The Company will provide an online simulcast of its quarterly conference call at http://www.simon.com/ (Investors tab), http://www.earnings.com/, and http://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, November 1, 2010. An online replay will be available for approximately 90 days at http://www.simon.com/, http://www.earnings.com/, and http://www.streetevents.com/. A fully searchable podcast of the conference call will also be available at http://www.reitcafe.com/.
Supplemental Materials and Website
The Company will publish a supplemental information package which will be available at http://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, http://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, comparable property net operating income growth 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 or the Company's supplemental information package that was included in this morning's Form 8-K. FFO and comparable property net operating income growth are financial performance measures 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 393 retail real estate properties comprising 264 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 http://www.simon.com/.
SIMON
Consolidated Statements of Operations
Unaudited
(In thousands)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2010 2009 2010 2009
---- ---- ---- ----
REVENUE:
Minimum rent $605,146 $570,100 $1,756,913 $1,709,147
Overage rent 26,265 19,806 53,953 45,799
Tenant
reimbursements 274,013 268,611 785,634 784,905
Management
fees and
other
revenues 29,980 29,988 86,897 90,694
Other income 43,871 36,427 154,515 116,491
------ ------ ------- -------
Total
revenue 979,275 924,932 2,837,912 2,747,036
EXPENSES:
Property
operating 115,647 113,815 315,649 326,798
Depreciation
and
amortization 243,303 250,151 706,402 758,173
Real estate
taxes 86,680 79,854 255,067 251,173
Repairs and
maintenance 20,200 19,151 64,550 61,925
Advertising
And promotion 21,435 23,226 62,553 61,555
(Recovery of)
provision
for credit
losses (3,096) (745) (2,060) 19,336
Home and
regional
office costs 28,640 26,899 72,699 79,732
General
and
administrative 5,170 4,509 15,909 13,867
Impairment
charge - - - 140,478 (A)
Transaction
expenses 47,585 - 62,554 -
Other 15,917 15,895 44,412 52,908
------ ------ ------ ------
Total
operating
expenses 581,481 532,755 1,597,735 1,765,945
OPERATING
INCOME 397,794 392,177 1,240,177 981,091
Interest
expense (249,264) (257,881) (774,686) (728,360)
Loss on
extinguishment
of debt (185,063) - (350,688) -
Income tax
Benefit of
taxable REIT
subsidiaries 249 238 557 2,904
Income from
unconsolidated
entities 22,533 4,655 50,729 15,694
Gain upon
acquisition
of controlling
interest, and on
sale or disposal
of assets and
interests in
unconsolidated
entities,
net 294,283 - 320,349 -
------- --- ------- ---
CONSOLIDATED
NET
INCOME 280,532 139,189 486,438 271,329
Net income
Attributable to
noncontrolling
interests 49,074 27,103 88,158 60,177
Preferred
dividends 834 6,539 5,779 19,597
--- ----- ----- ------
NET INCOME
ATTRIBUTABLE
TO COMMON
STOCKHOLDERS $230,624 $105,547 $392,501 $191,555
======== ======== ======== ========
Basic
Earnings Per
Common Share:
Net income
attributable
to common
stockholders $0.79 $0.38 $1.35 $0.73
===== ===== ===== =====
Percentage
Change 107.9% 84.9%
Diluted Earnings
Per Common
Share:
Net income
attributable
to common
stockholders $0.79 $0.38 $1.35 $0.73
===== ===== ===== =====
Percentage
Change 107.9% 84.9%
SIMON
Consolidated Balance Sheets
Unaudited
(In thousands, except as noted)
September 30, December 31,
2010 2009
---- ----
ASSETS:
Investment properties, at cost $27,432,323 $25,336,189
Less-accumulated depreciation 7,468,070 7,004,534
--------- ---------
19,964,253 18,331,655
Cash and cash equivalents 1,011,574 3,957,718
Tenant receivables and accrued
revenue, net 383,168 402,729
Investment in unconsolidated
entities, at equity 1,412,207 1,468,577
Deferred costs and other assets 1,366,085 1,155,587
Note receivable from related
party 651,000 632,000
------- -------
Total assets $24,788,287 $25,948,266
=========== ===========
LIABILITIES:
Mortgages and other indebtedness $17,485,466 $18,630,302
Accounts payable, accrued
expenses, intangibles, and
deferred revenues 984,240 987,530
Cash distributions and losses in
partnerships and joint
ventures, at equity 411,023 457,754
Other liabilities and accrued
dividends 214,009 159,345
------- -------
Total liabilities 19,094,738 20,234,931
---------- ----------
Commitments and contingencies
Limited partners' preferred
interest in the Operating
Partnership and noncontrolling
redeemable interests in
properties 85,687 125,815
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 45,458 45,704
Common stock, $.0001 par value,
511,990,000 shares authorized,
296,897,334 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 8,051,544 7,547,959
Accumulated deficit (3,099,689) (2,955,671)
Accumulated other comprehensive
loss (25,851) (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 4,805,056 4,458,137
Noncontrolling interests 802,806 724,825
------- -------
Total equity 5,607,862 5,182,962
Total liabilities and equity $24,788,287 $25,948,266
=========== ===========
SIMON
Joint Venture Statements of Operations
Unaudited
(In thousands)
For the Three Months For the Nine Months
Ended Ended
September 30, September 30,
2010 2009 2010 2009
---- ---- ---- ----
Revenue:
Minimum rent $478,869 $488,052 $1,457,987 $1,445,618
Overage rent 38,283 34,204 94,620 85,141
Tenant
reimbursements 234,769 243,201 699,384 719,845
Other income 77,518 37,039 176,245 115,946
------ ------ ------- -------
Total revenue 829,439 802,496 2,428,236 2,366,550
Operating
Expenses:
Property
operating 167,653 178,291 477,386 489,616
Depreciation
and
amortization 195,679 194,727 591,763 580,215
Real estate
taxes 61,080 57,262 191,779 190,036
Repairs and
maintenance 21,869 26,413 75,643 77,048
Advertising
And promotion 13,027 16,005 43,250 44,936
(Recovery of)
Provision for
credit losses (721) 3,523 718 18,910
Other 50,507 43,487 155,688 131,680
------ ------ ------- -------
Total
operating
expenses 509,094 519,708 1,536,227 1,532,441
------- ------- --------- ---------
Operating
Income 320,345 282,788 892,009 834,109
Interest
expense (218,238) (221,166) (653,419) (661,586)
Loss from
unconsolidated
entities (327) (3,170) (1,368) (2,383)
Gain on sale or
disposal of assets
and interests in
unconsolidated
entities, net - - 39,761 -
--- --- ------ ---
Net Income $101,780 $58,452 $276,983 $170,140
======== ======= ======== ========
Third-Party
Investors'
Share of Net
Income $66,542 $39,710 $170,231 $112,600
------- ------- -------- --------
Our Share of
Net Income 35,238 18,742 106,752 57,540
Amortization
of excess
investment (B) (12,695) (14,087) (35,676) (41,846)
Our share of
gain on sale
or disposal
of assets
and interests in
unconsolidated
entities,
net (10) - (20,347) -
--- ---
Income from
Unconsolidated
Entities,
Net $22,533 $4,655 $50,729 $15,694
======= ====== ======= =======
SIMON
Joint Venture Balance Sheets
Unaudited
(In thousands)
September 30, December 31,
2010 2009
---- ----
Assets:
Investment
properties, at cost $21,120,220 $21,555,729
Less-accumulated
depreciation 4,941,621 4,580,679
--------- ---------
16,178,599 16,975,050
Cash and cash
equivalents 795,166 771,045
Tenant receivables
and accrued
revenue, net 339,448 364,968
Investment in
unconsolidated
entities, at equity 177,136 235,173
Deferred costs and
other assets 535,925 477,223
------- -------
Total assets $18,026,274 $18,823,459
=========== ===========
Liabilities and
Partners' Equity:
Mortgages and other
indebtedness $15,862,783 $16,549,276
Accounts payable,
accrued expenses,
intangibles and
deferred revenue 778,213 834,668
Other liabilities 921,254 920,596
------- -------
Total liabilities 17,562,250 18,304,540
Preferred units 67,450 67,450
Partners' equity 396,574 451,469
------- -------
Total liabilities
and partners'
equity $18,026,274 $18,823,459
=========== ===========
Our Share of:
Partners' equity $235,502 $316,800
Add: Excess
Investment (B) 765,682 694,023
------- -------
Our net Investment
in Joint Ventures $1,001,184 $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) 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 to FFO and FFO as Adjusted
--------------------------------------------------------------------
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2010 2009 2010 2009
---- ---- ---- ----
Consolidated
Net Income
(2)(3)(4)(5) $280,532 $139,189 $486,438 $271,329
Adjustments
to Consolidated
Net Income to
Arrive at FFO:
Depreciation
and
amortization
from
consolidated
properties 239,828 247,236 695,982 748,191
Simon's
share of
depreciation
and
amortization
from
unconsolidated
entities 97,788 100,027 290,517 287,901
Gain upon
acquisition
of
controlling
interest,
and on sale or
disposal of
assets and
interests in
unconsolidated
entities, net (294,283) - (320,349) -
Net income
attributable
to
noncontrolling
interest
holders in
properties (2,119) (2,700) (7,342) (8,064)
Noncontrolling
interests
portion of
depreciation
and
amortization (1,911) (2,017) (5,888) (6,253)
Preferred
distributions
and dividends (1,313) (8,662) (7,616) (30,050)
------ ------ ------ -------
FFO of the
Operating
Partnership 318,522 473,073 $1,131,742 $1,263,054
Impairment
charge - - - 140,478
Loss on debt
extinguishment 185,063 - 350,688 -
------- --- ------- ---
FFO as adjusted
of the
Operating
Partnership $503,585 $473,073 $1,482,430 $1,403,532
======== ======== ========== ==========
Per Share
Reconciliation:
----------------
Diluted net
income
attributable
to common
stockholders
per share $0.79 $0.38 $1.35 $0.73
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 0.95 1.02 2.81 3.24
Gain upon
acquisition
of controlling
interest, and on
sale or disposal
of assets and
interests in
unconsolidated
entities, net (0.84) - (0.92) -
Impact of
additional
dilutive
securities for
FFO per share - (0.02) (0.01) (0.05)
--- ----- ----- -----
Diluted FFO per
share $0.90 $1.38 $3.23 $3.92
Impairment
charge - - - 0.43
Loss on debt
extinguishment 0.53 - 1.00 -
---- --- ---- ---
Diluted FFO as
Adjusted per
share $1.43 $1.38 $4.23 $4.35
===== ===== ===== =====
Details for per
share calculations:
-------------------
FFO of the
Operating
Partnership $318,522 $473,073 $1,131,742 $1,263,054
Adjustments
For dilution
calculation:
Impact of
preferred
stock and
preferred
unit
conversions
and option
exercises(6) - 6,857 3,676 20,612
--- ----- ----- ------
Diluted
FFO of the
Operating
Partnership 318,522 479,930 1,135,418 1,283,666
Diluted FFO
allocable
to unitholders (53,505) (79,349) (188,608) (223,818)
------- ------- -------- --------
Diluted FFO
allocable
to common
stockholders $265,017 $400,581 $946,810 $1,059,848
======== ======== ======== ==========
Basic weighted
average shares
outstanding 292,830 281,430 290,451 261,355
Adjustments
For dilution
calculation:
Effect of
stock
options 259 337 288 291
Effect of
contingently
issuable
shares from
stock
dividends - 707 - 1,261
Impact of
Series C
preferred
unit
conversion - 40 - 61
Impact of
Series I
preferred
unit
conversion - 1,269 318 1,253
Impact of
Series I
preferred
stock
conversion - 6,394 2,339 6,287
--- ----- ----- -----
Diluted
weighted
average
shares
outstanding 293,089 290,177 293,396 270,508
Weighted
average
limited
partnership
units
outstanding 59,173 57,480 58,446 57,126
Diluted
weighted
average
shares
and
units
outstanding 352,262 347,657 351,842 327,634
======= ======= ======= =======
Basic FFO per
share $0.90 $1.40 $3.24 $3.97
Percent
Change -35.7% -18.4%
Diluted FFO per
share $0.90 $1.38 $3.23 $3.92
Percent
Change -34.8% -17.6%
Diluted FFO as
adjusted
per share $1.43 $1.38 $4.23 $4.35
Percent
Change 3.6% -2.8%
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 $1.0 million for the three months ended September 30,
2010, and $4.1 million and $2.2 million for the nine
months ended September 30, 2010 and 2009, respectively.
(3) Includes the Company's share of straight-line
adjustments to minimum rent of $9.7 million and $7.8
million for the three months ended September 30, 2010 and
2009, respectively and $23.8 million and $25.3 million
for the nine months ended September 30, 2010 and 2009,
respectively.
(4) Includes the Company's share of the amortization of
fair market value of leases from acquisitions of $5.0
million and $5.7 million for the three months ended
September 30, 2010 and 2009, respectively and $14.8
million and $19.0 million for the nine months ended
September 30, 2010 and 2009, respectively.
(5) Includes the Company's share of debt premium
amortization of $3.0 million and $3.5 million for the
three months ended September 30, 2010 and 2009,
respectively and $9.4 million and $10.8 million for the
nine months ended September 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.
