Simon Property Group Reports Third Quarter Results and Announces Increase In Dividend
Simon Property Group, Inc. (the "Company" or "Simon") (NYSE: SPG) today reported results for the quarter ended September 30, 2011.
- Net income attributable to common stockholders was $274.0 million, or $0.93 per diluted share, as compared to $230.6 million, or $0.79 per diluted share, in the prior year period. The increase on a per share basis was 17.7%.
- Funds from Operations ("FFO") was $606.2 million, or $1.71 per diluted share, as compared to $318.5 million, or $0.90 per diluted share, in the prior year period. Third quarter 2010 FFO as adjusted for a debt extinguishment charge was $503.6 million or $1.43 per diluted share. The increase on an as adjusted per share basis was 19.6%.
"Our mall and premium outlet operations continue to perform very well, delivering comparable property net operating income growth of 3.8% in the third quarter," said David Simon, Chairman and Chief Executive Officer. "I am pleased with our accomplishments this quarter, including the increase in our ownership of King of Prussia to 96%, and the early October completion of our new corporate credit facility. The Company continues to excel, resulting in today's announcement of $1.10 per share in total common stock dividends to be paid in the fourth quarter of 2011 versus $0.80 paid in the third quarter."
U.S. Operational Statistics(1)
------------------------------
As of As of
September 30, September 30, %
2011 2010 Increase
-------------- -------------- --------
Occupancy(2) 93.9% 93.8% + 10 basis points
Total Sales per Sq. Ft. (3) $517 $473 9.3%
Average Rent per Sq. Ft. (2) $38.87 $37.58 3.4%
- Combined information for U.S. regional malls and U.S. Premium Outlets, including the Prime portfolio. Prior period amounts have been restated to include Prime. Does not include information for properties owned by SPG-FCM (the Mills portfolio).
- Represents mall stores in regional malls and all owned gross leasable area in Premium Outlets.
- Rolling 12 month 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 has approved the declaration of the following dividends:
- A quarterly common stock dividend of $0.90 per share, an increase of 12.5% from the previous quarter. The dividend is payable on November 30, 2011 to stockholders of record on November 16, 2011.
- A special common stock dividend of $0.20 per share. The dividend is payable on December 30, 2011 to stockholders of record on December 16, 2011.
- The quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred (NYSE:SPGPrJ) Stock of $1.046875 per share, payable on December 30, 2011 to stockholders of record on December 16, 2011.
Dividends paid on the Company's common stock during the first three quarters of 2011 total $2.40 per share. After payment of the $1.10 in dividends declared above, dividends paid in 2011 will be $3.50 per share, or 100% of expected taxable income.
Acquisition and Disposition Activity
On July 19th, the Company acquired a 100% ownership interest in ABQ Uptown, a lifestyle center located in Albuquerque, New Mexico. The 222,000 square foot center is 95% leased and generates sales of approximately $650 per square foot.
On August 25th, the Company completed a series of transactions that increased its ownership of The Plaza at King of Prussia and The Court at King of Prussia (collectively "King of Prussia") from 12% to 96%. SPG also has the contractual ability to acquire the remaining interests in King of Prussia in the fall of 2013.
King of Prussia, serving the greater Philadelphia market, is one of the country's largest shopping centers with gross leasable area of 2.4 million square feet. It is also one of the country's most productive super regional malls, generating annual total retail sales in excess of $850 million. A major redevelopment of the center is currently underway, converting the former Strawbridge's building into specialty stores.
Corporate Credit Facility
On October 5th, the Company announced that it entered into a new unsecured revolving credit facility that increased the Company's revolving borrowing capacity to $4.0 billion. This facility, which can be increased to $5.0 billion during its term, will initially mature on October 30, 2015, and can be extended for an additional year to October 30, 2016 at the Company's sole option. The base interest rate on the Company's new facility is LIBOR plus 100 basis points. In addition, the new facility provides for a money market competitive bid option program that allows the Company to hold auctions to achieve lower pricing for short-term borrowings. The facility also includes a $2.0 billion multi-currency tranche.
Development Activity
In the U.S.
The Company has two new development projects under construction:
- Merrimack Premium Outlets in Merrimack, New Hampshire - a 409,000 square foot upscale outlet center located one hour north of metropolitan Boston and scheduled to open in June of 2012. It will have over 100 designer and brand outlet stores. The Company owns 100% of this project.
- Tanger Outlets - Texas City - a 350,000 square foot upscale outlet center located in Texas City, Texas. The center is located approximately 30 miles south of Houston and 20 miles north of Galveston and is scheduled to open in November of 2012. The Company owns a 50% interest in this project.
Renovation and expansion projects are underway at 22 centers including the 102,000 square foot expansion of Seattle Premium Outlets, which started construction earlier this month. In addition, the restoration of Opry Mills in Nashville, Tennessee, continues and is expected to be completed in March of 2012. This Mills asset has been closed since it was damaged by a historic flood in May of 2010.
In 2011, the Company plans to open a total of 39 new anchors/big boxes, aggregating 1.7 million square feet of leasing activity. Eighteen anchor/big box deals are currently scheduled to open in 2012 and 2013 comprising nearly 900,000 square feet.
International
On July 14th, the Company opened a 52,000 square foot expansion of Tosu Premium Outlets in Fukuoka, Japan, adding 28 new stores to the center. The Company owns a 40% interest in this project.
During October, the Company started construction on two additional expansion projects:
- A 103,000 square foot expansion of Rinku Premium Outlets in Izumisano (Osaka), Japan, expected to open in July of 2012. The Company owns a 40% interest in this project.
- A 78,000 square foot expansion of Kobe-Sanda Premium Outlets in Kobe (Osaka), Japan, expected to open in December of 2012. The Company owns a 40% interest in this project.
Construction continues on the following:
- Johor Premium Outlets, a new 173,000 square foot upscale outlet center located in Johor, Malaysia. The center is located one hour's drive from Singapore and is scheduled to open in December of 2011. The Company owns a 50% interest in this project.
- A 93,000 square foot expansion of Ami Premium Outlets in Ibaraki Prefecture, Japan, expected to open in December of 2011. The Company owns a 40% interest in this project.
2011 Guidance
On February 4, 2011, the Company initially provided FFO guidance with an estimate of FFO within a range of $6.45 to $6.60 per diluted share. Increased guidance was provided with first quarter results on April 29, 2011, and with second quarter results on July 26, 2011. Today the Company increased guidance once again, estimating that FFO will be within a range of $6.80 to $6.85 per diluted share for the year ending December 31, 2011, and diluted net income will be within a range of $3.00 to $3.05 per share.
The following table provides a reconciliation of the range of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.
For the year ending December 31, 2011
-------------------------------------
Low High
End End
----- -----
Estimated diluted net income available to common
stockholders per share $3.00 $3.05
Depreciation and amortization including the
Company's share of joint ventures 4.05 4.05
Gain on sale or disposal of assets (0.25) (0.25)
----- -----
Estimated diluted FFO per share $6.80 $6.85
===== =====
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, October 25, 2011. 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 has prepared a supplemental information package which is available at www.simon.com in the Investors section, Financial Information tab. It has also been 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, FFO as adjusted and comparable property net operating income growth, which are 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. 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, environ-mental 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.
Simon Property Group
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 391 retail real estate properties comprising 261 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 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,
--------------------- ----------------------
2011 2010 2011 2010
--------- -------- ---------- ----------
REVENUE:
Minimum rent $664,724 $605,146 $1,958,626 $1,756,913
Overage rent 36,653 26,265 75,774 53,953
Tenant reimbursements 294,305 274,013 861,352 785,634
Management fees and
other revenues 31,249 29,980 93,001 86,897
Other income 47,429 43,871 146,341 154,515
--------- -------- ---------- ----------
Total revenue 1,074,360 979,275 3,135,094 2,837,912
--------- -------- ---------- ----------
EXPENSES:
Property operating 122,446 115,647 331,013 315,649
Depreciation and
amortization 260,802 243,303 788,410 706,402
Real estate taxes 87,264 86,680 273,952 255,067
Repairs and maintenance 24,465 20,200 79,957 64,550
Advertising and
promotion 25,773 21,435 72,619 62,553
Provision for
(recovery of)
credit losses 1,501 (3,096) 3,180 (2,060)
Home and regional
office costs 30,525 28,640 91,035 72,699
General and
administrative 14,974 5,170 31,614 15,909
Transaction expenses - 47,585 - 62,554
Other 23,012 15,917 61,254 44,412
--------- -------- ---------- ----------
Total operating
expenses 590,762 581,481 1,733,034 1,597,735
--------- -------- ---------- ----------
OPERATING INCOME 483,598 397,794 1,402,060 1,240,177
Interest expense (244,384) (249,264) (737,018) (774,686)
Loss on
extinguishment of debt - (185,063) - (350,688)
Income tax (expense)
benefit of taxable
REIT subsidiaries (860) 249 (2,706) 557
Income from
unconsolidated entities 17,120 22,533 49,561 50,729
Gain upon acquisition of
controlling interest,
and on sale or disposal
of assets and interests
in unconsolidated
entities, net 78,307 294,283 92,072 320,349
CONSOLIDATED NET INCOME 333,781 280,532 803,969 486,438
Net income
attributable to
noncontrolling
interests 58,947 49,074 142,934 88,158
Preferred dividends 834 834 2,503 5,779
NET INCOME
ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ 274,000 $230,624 $ 658,532 $ 392,501
========= ======== ========== ==========
BASIC EARNINGS PER
COMMON SHARE:
Net income
attributable to
common stockholders $ 0.93 $ 0.79 $ 2.24 $ 1.35
========= ======== ========== ==========
DILUTED EARNINGS PER
COMMON SHARE:
Net income
attributable to
common stockholders $ 0.93 $ 0.79 $ 2.24 $ 1.35
========= ======== ========== ==========
Simon Property Group, Inc. and Subsidiaries
Unaudited Consolidated Balance Sheets
(Dollars in thousands, except share amounts)
September 30, December 31,
2011 2010
------------ -----------
ASSETS:
Investment properties, at cost $28,761,004 $27,508,735
Less -accumulated depreciation 8,239,402 7,711,304
------------ -----------
20,521,602 19,797,431
Cash and cash equivalents 575,817 796,718
Tenant receivables and accrued
revenue, net 413,922 426,736
Investment in unconsolidated
entities, at equity 1,461,694 1,390,105
Deferred costs and other assets 1,951,173 1,795,439
Notes receivable from related party 651,000 651,000
------------ -----------
Total assets $25,575,208 $24,857,429
=========== ===========
LIABILITIES:
Mortgages and other indebtedness $17,902,961 $17,473,760
Accounts payable, accrued
expenses, intangibles, and
deferred revenues 1,151,190 993,738
Cash distributions and losses in
partnerships and joint
ventures, at equity 575,570 485,855
Other liabilities and accrued
dividends 262,119 184,855
------------ -----------
Total liabilities 19,891,840 19,138,208
------------ -----------
Commitments and contingencies
Limited partners' preferred
interest in the Operating
Partnership and noncontrolling
redeemable interests in properties 171,358 85,469
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 45,129 45,375
Common stock, $ 0.0001 par value,
511,990,000 shares authorized,
297,671,666 and 296,957,360 issued
and outstanding, respectively 30 30
Class B common stock, $ 0.0001
par value, 10,000 shares authorized,
8,000 issued and outstanding - -
Capital in excess of par value 8,071,657 8,059,852
Accumulated deficit (3,220,052) (3,114,571)
Accumulated other comprehensive
(loss) income (102,004) 6,530
Common stock held in treasury at
cost, 3,884,305 and 4,003,451
shares, respectively (153,436) (166,436)
------------ -----------
Total stockholder's equity 4,641,324 4,830,780
Noncontrolling Interests 870,686 802,972
------------ -----------
Total equity 5,512,010 5,633,752
------------ -----------
Total liabilities and equity $25,575,208 $24,857,429
============ ===========
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,
-------------------- ----------------------
2011 2010 2011 2010
-------- -------- ---------- ----------
Revenue:
Minimum rent $491,742 $478,869 $1,464,092 $1,457,987
Overage rent 42,941 38,283 104,951 94,620
Tenant reimbursements 235,309 234,769 694,914 699,384
Other income 43,209 77,518 134,660 176,245
-------- -------- ---------- ----------
Total revenue 813,201 829,439 2,398,617 2,428,236
Operating Expenses:
Property operating 167,655 167,653 473,959 477,386
Depreciation and
amortization 197,604 195,679 578,802 591,763
Real estate taxes 59,014 61,080 185,724 191,779
Repairs and
maintenance 20,005 21,869 62,958 75,643
Advertising and
promotion 15,022 13,027 44,716 43,250
Provision for
(recovery of) credit
losses 2,571 (721) 7,247 718
Other 56,182 50,507 165,532 155,688
-------- -------- ---------- ----------
Total operating
expenses 518,053 509,094 1,518,938 1,536,227
-------- -------- ---------- ----------
Operating Income 295,148 320,345 879,679 892,009
Interest expense (218,079) (218,238) (644,549) (653,419)
Loss from
unconsolidated
entities (1,665) (327) (3,787) (1,368)
Gain on sale or
disposal of assets
and interests in
unconsolidated entities 78 - 15,583 39,761
Net Income $ 75,482 $101,780 $ 246,926 $ 276,983
======== ======== ========== ==========
Third-Party Investors'
Share of Net Income $ 45,271 $ 66,542 $ 151,741 $ 170,231
-------- -------- ---------- ----------
Our Share of Net
Income 30,211 35,238 95,185 106,752
Amortization of
Excess Investment(A) (13,052) (12,695) (37,832) (35,676)
Our Share of Gain on
Sale or Disposal of
Assets and Interests in
Unconsolidated Entities,
net (39) (10) (7,792) (20,347)
-------- -------- ---------- ----------
Income from
Unconsolidated
Entities $ 17,120 $ 22,533 $ 49,561 $ 50,729
======== ======== ========== ==========
Simon Property Group, Inc. and Subsidiaries
Unaudited Joint Venture Balance Sheets
(Dollars in thousands)
September 30, December 31,
2011 2010
------------ -----------
Assets:
Investment properties, at cost $21,409,839 $21,236,594
Less - accumulated depreciation 5,459,929 5,126,116
------------ -----------
15,949,910 16,110,478
Cash and cash equivalents 816,324 802,025
Tenant receivables and accrued revenue,
net 376,910 353,719
Investment in unconsolidated entities,
at equity 153,459 158,116
Deferred costs and other assets 569,067 525,024
------------ -----------
Total assets $17,865,670 $17,949,362
============ ===========
Liabilities and Partners' (Deficit)
Equity:
Mortgages and other indebtedness $16,010,090 $15,937,404
Accounts payable, accrued expenses,
intangibles, and deferred revenue 827,826 748,245
Other liabilities 967,981 961,284
------------ -----------
Total liabilities 17,805,897 17,646,933
Preferred units 67,450 67,450
Partners' (deficit) equity (7,677) 234,979
------------ -----------
Total liabilities and partners'
(deficit) equity $17,865,670 $17,949,362
============ ===========
Our Share of:
Partners' equity $ 156,981 $ 146,578
Add: Excess Investment(A) 729,143 757,672
------------ -----------
Our net Investment in Joint Ventures $ 886,124 $ 904,250
============ ===========
Simon Property Group, Inc. and Subsidiaries
Footnotes to Unaudited Financial Statements
-------------------------------------------
Notes:
(A) 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 Property Group, Inc. and Subsidiaries
Unaudited Reconciliation of Non-GAAP Financial Measures (1)
(Amounts in thousands, except per share amounts)
----------------------------------------------------------
Reconciliation of Consolidated Net Income to FFO and FFO as Adjusted
--------------------------------------------------------------------
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
-------- -------- ---------- ----------
Consolidated Net
Income (2)(3)(4)(5) 333,781 280,532 803,969 486,438
Adjustments to
Consolidated Net
Income to Arrive at
FFO:
Depreciation and
amortization from
consolidated
properties 257,172 239,828 777,489 695,982
Simon's share of
depreciation and
amortization from
unconsolidated
entities 98,601 97,788 286,358 290,517
Gain upon
acquisition of
controlling
interest, and on
sale or disposal
of assets and
interests in
unconsolidated
entities, net (78,307) (294,283) (92,072) (320,349)
Net income
attributable to
noncontrolling
interest holders
in properties (1,829) (2,119) (5,879) (7,342)
Noncontrolling
interests portion
of depreciation
and amortization (1,870) (1,911) (6,080) (5,888)
Preferred
distributions and
dividends (1,313) (1,313) (3,939) (7,616)
-------- -------- ---------- ----------
FFO of the Operating
Partnership $606,235 $318,522 $1,759,846 $1,131,742
Loss on
extinguishment
of debt - 185,063 - 350,688
-------- -------- ---------- ----------
FFO as adjusted of
the Operating
Partnership $606,235 $503,585 $1,759,846 $1,482,430
======== ======== ========== ==========
Diluted net income
per share to
diluted FFO per
share reconciliation:
Diluted net income
per share $0.93 $0.79 $2.24 $1.35
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 1.00 0.95 2.99 2.81
Gain upon
acquisition of
controlling
interest, and on
sale or disposal
of assets and
interests in
unconsolidated
entities, net (0.22) (0.84) (0.26) (0.92)
Impact of
additional
dilutive
securities for
FFO per share - - - (0.01)
-------- -------- ---------- ----------
Diluted FFO
per share $ 1.71 $ 0.90 $ 4.97 $ 3.23
Loss on
debt
extinguishment - 0.53 - 1.00
-------- -------- ---------- ----------
Diluted FFO
as adjusted
per share $ 1.71 $ 1.43 $ 4.97 $ 4.23
======== ======== ========== ==========
Details for per
share calculations:
--------------------
FFO of the Operating
Partnership $606,235 $318,522 $1,759,846 $1,131,742
Adjustments for
dilution
calculation:
Impact of preferred
stock and preferred
unit conversions
and option
exercises (6) - - - 3,676
Diluted FFO of the
Operating
Partnership 606,235 318,522 1,759,846 1,135,418
Diluted FFO
allocable to
unitholders (103,971) (53,505) (300,458) (188,608)
-------- -------- ---------- ----------
Diluted FFO
allocable to
common
stockholders $502,264 $265,017 $1,459,388 $ 946,810
======== ======== ========== ==========
Basic weighted
average shares
outstanding 293,736 292,830 293,397 290,451
Adjustments for
dilution
calculation:
Effect of
stock options 22 259 88 288
Impact of
Series I
preferred
unit conversion - - - 318
Impact of
Series I
preferred
stock conversion - - - 2,339
Diluted weighted
average shares
outstanding 293,758 293,089 293,485 293,396
Weighted average
limited
partnership
units outstanding 60,809 59,173 60,423 58,446
Diluted weighted
average shares
and units
outstanding 354,567 352,262 353,908 351,842
======== ======== ========== ==========
Basic FFO
per Share $ 1.71 $ 0.90 $ 4.97 $ 3.24
Percent Change 90.0% 53.4%
Diluted FFO
per Share $ 1.71 $ 0.90 $ 4.97 $ 3.23
Percent Change 90.0% 53.9%
Diluted FFO as
adjusted per share $ 1.71 $ 1.43 $ 4.97 $ 4.23
Percent Change 19.6% 17.5%
Simon Property Group, Inc. and Subsidiaries
Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures
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 and 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 $0.1 million
and $1.0 million for the three months ended September 30, 2011 and
2010, respectively, and $4.5 million and $4.1 million for the nine
months ended September 30, 2011 and 2010, respectively.
(3) Includes the Company's share of straight-line adjustments to minimum
rent of $10.8 million and $9.7 million for the three months ended
September 30, 2011 and 2010, respectively, and $26.2 million and
$23.8 million for the nine months ended September 30, 2011 and 2010,
respectively.
(4) Includes the Company's share of the amortization of fair market value
of leases from acquisitions of $6.0 million and $5.0 million for the
three months ended September 30, 2011 and 2010, respectively, and
$17.7 million and $14.8 million for the nine months ended September
30, 2011 and 2010, respectively.
(5) Includes the Company's share of debt premium amortization of $2.3
million and $3.0 million for the three months ended September 30,
2011 and 2010, respectively, and $7.0 million and $9.4 million for
the nine months ended September 30, 2011 and 2010, respectively.
(6) Includes dividends and distributions on Series I preferred stock and
Series I preferred units. All outstanding shares of Series I
preferred stock and Series I preferred units were redeemed on April
16, 2010.
SOURCE Simon Property Group, Inc.
