Press Release

Simon Property Group Reports Third Quarter Results, Announces Increase In Quarterly Dividend And Raises 2012 Guidance

October 25, 2012
PDF Version

INDIANAPOLIS, Oct. 25, 2012 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") (NYSE:SPG) today reported results for the quarter and nine months ended September 30, 2012.

 

Results for the Quarter

  • Funds from Operations ("FFO") was $720.1 million, or $1.99 per diluted share, as compared to $606.2 million, or $1.71 per diluted share, in the prior year period. The increase on a per share basis was 16.4%.
  • Net income attributable to common stockholders was $254.9 million, or $0.84 per diluted share, as compared to $274.0 million, or $0.93 per diluted share, in the prior year period. 2011 results included a net gain from acquisition and disposition activities of $0.22 per share.

Results for the Nine Months

  • Funds from Operations ("FFO") was $2.057 billion, or $5.70 per diluted share, as compared to $1.760 billion, or $4.97 per diluted share, in the prior year period. The increase on a per share basis was 14.7%.
  • Net income attributable to common stockholders was $1.116 billion, or $3.71 per diluted share, as compared to $658.5 million, or $2.24 per diluted share, in the prior year period.

"It was an excellent quarter for our Company," said David Simon, Chairman and Chief Executive Officer.  "We generated 16.4% growth in FFO and continued to strengthen our retail real estate platform through significant development activities. The quality of our Mall and Premium Outlet portfolio is evident with continued increases in occupancy and sales and 4.7% growth in quarterly comparable property net operating income.  We are pleased to raise our dividend for the fifth consecutive quarter and once again increase guidance for 2012."

U.S. Operational Statistics(1)

 

As of

As of

%
 

September 30, 2012

September 30, 2011

Increase

Occupancy(2)

94.6%

93.8%

+ 80 basis points

Total Sales per Sq. Ft. (3)

$562

$514

9.3%

Base Minimum Rent per Sq. Ft. (2)

$40.33

$38.84

3.8%
         

(1) Combined information for U.S. Malls and Premium Outlets. 2011 statistics have been restated to include Malls previously owned by The Mills Limited Partnership, now owned by Simon Property Group, L.P., and Premium Outlets acquired in the 2010 acquisition of Prime Outlets Acquisition Company.

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

(3) Rolling 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.

Dividends

Today the Company announced that the Board of Directors declared a quarterly common stock dividend of $1.10 per share, an increase of 4.8% from the previous quarter and an increase of 22.2% from the year earlier period. The dividend is payable on November 30, 2012 to stockholders of record on November 16, 2012.

The Company also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE:SPGPrJ) of $1.046875 per share, payable on December 31, 2012 to stockholders of record on December 17, 2012.

 

Development Activity

On October 19th, the Company opened a 350,000 square foot upscale outlet center owned in a 50/50 joint venture with Tanger Factory Outlet Centers, Inc. in Texas City, Texas. The center, which was 97% leased at opening, is located approximately 30 miles south of downtown Houston and 20 miles north of Galveston on highly-traveled Interstate 45 at Exit 17 at Holland Road.

 

The Company started construction on St. Louis Premium Outlets on July 11th. The project is located in Chesterfield, Missouri and is a part of Chesterfield Blue Valley, a mixed-use development to include office space, hotel, restaurant and entertainment venues. Located on the south side of I-64/US Highway 40 east of the Daniel Boone Bridge, the center's first phase of 350,000 square feet and 85 stores will open in September of 2013. The Company owns a 60% interest in this project, which is a joint venture with Woodmont Outlets.

Construction is expected to commence shortly on the Company's first outlet center in Brazil. The project is located northwest of Sao Paulo, Brazil and is being developed in a 50/50 joint venture with BR Malls Participacoes S.A. The 310,000 square foot center is scheduled to open in November of 2013.

Construction continues on several new Premium Outlets:

  • In Shisui (Chiba), Japan – a 230,000 square foot upscale outlet center located one hour from central Tokyo and 15 minutes from Narita International Airport. The center is scheduled to open in April of 2013 with approximately 110 stores, including international brands, Japanese brands and restaurants. The Company owns a 40% interest in this project, its ninth Premium Outlet Center in Japan.
  • In Chandler (Phoenix), Arizona – an upscale outlet center adjacent to the Wild Horse Pass Hotel & Casino located on Interstate 10. Phase I of the project will be comprised of 360,000 square feet housing approximately 90 outlet stores featuring high-quality designer and name brands. The Company owns 100% of this project which is scheduled to open in April of 2013.
  • In Halton Hills (Toronto), Canada – a 360,000 square foot upscale outlet center that will house over 100 high quality outlet stores. Toronto Premium Outlets is expected to be the Canadian entry point for selected upscale, U.S. retailers and designer brands. The Company owns a 50% interest in this project which is scheduled to open in August of 2013.
  • In Busan, Korea – a 340,000 square foot upscale outlet center that will serve southeastern Korea, including the cities of Busan, Ulsan and Daegu, as well as local and overseas visitors. The center is scheduled to open in September of 2013. The Company owns a 50% interest in this project, which will be its third Premium Outlet Center in Korea.

Redevelopment and expansion projects are underway at 24 properties in the U.S. and one property in Japan.  During the first nine months of 2012, 34 new anchor and big box tenants opened in the Company's U.S. portfolio and more than 40 are currently scheduled to open in the fourth quarter of 2012 and 2013.  

Capital Markets

On July 20th, the Company redeemed 2.0 million limited partnership units of its majority-owned operating partnership subsidiary, Simon Property Group, L.P. (the "Operating Partnership"), owned by an affiliate of JCPenney for $124.00 per unit in cash.   

Sale of Investment in Marketable Securities

On October 23rd, the Company completed the sale of its entire investment in the marketable securities of Capital Shopping Centres Group PLC (35.4 million shares) and Capital & Counties Properties PLC (38.9 million shares) generating proceeds of approximately $327 million.   

 

2012 Guidance

Today the Company updated and raised its guidance for 2012, stating that it expects FFO, excluding activity related to investments in marketable securities, will be within a range of $7.80 to $7.85 per diluted share for the year ending December 31, 2012, and diluted net income will be within a range of $4.61 to $4.66 per share. 

The following table provides a reconciliation of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.

 

For the year ending December 31, 2012                                                                         

   
 

Low 
End

 High

 End

Estimated diluted net income available to common stockholders per share    

$4.61

$4.66
     

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

    

    interests in unconsolidated entities, and impairment charge on investment

    

    in unconsolidated entities, net                                                

(1.36)

(1.36)

Depreciation and amortization including the Company's share of equity

   

    method investments                                    

4.55

4.55

Estimated diluted FFO per share                                               

$7.80

$7.85

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, 2012. 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 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 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 and currency risk, risks associated with the acquisition, development, expansion, leasing and management of properties, general risks related to retail real estate, the liquidity of real estate investments, 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, intensely competitive market environment in the retail industry, risks related to international activities, insurance costs and coverage, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in 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. (NYSE:SPG) is an S&P 100 company and the largest real estate company in the world.  The Company currently owns or has an interest in 333 retail real estate properties in North America and Asia comprising 242 million square feet. We are headquartered in Indianapolis, Indiana and employ approximately 5,500 people in the U.S.  For more 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,
 

2012

  

2011

  

2012

  

2011
               

REVENUE:

              

  Minimum rent

$ 759,039

  

$ 664,724

  

$2,207,334

  

$1,958,626

  Overage rent

51,170

  

36,653

  

110,277

  

75,774

  Tenant reimbursements

342,443

  

294,305

  

979,300

  

861,352

  Management fees and other revenues

32,294

  

31,249

  

92,928

  

93,001

  Other income

43,671

  

47,429

  

145,813

  

146,341

    Total revenue

1,228,617

  

1,074,360

  

3,535,652

  

3,135,094
               

EXPENSES:

              

  Property operating

132,378

  

122,446

  

353,136

  

331,013

  Depreciation and amortization

310,244

  

260,802

  

907,217

  

788,410

  Real estate taxes

105,694

  

87,264

  

311,173

  

273,952

  Repairs and maintenance

26,556

  

24,465

  

78,862

  

79,957

  Advertising and promotion

28,114

  

25,773

  

77,762

  

72,619

  (Recovery of) provision for credit losses

(1,180)

  

1,501

  

5,271

  

3,180

  Home and regional office costs

27,057

  

30,525

  

95,019

  

91,035

  General and administrative

14,165

  

14,974

  

42,787

  

31,614

  Other

24,637

  

23,012

  

66,510

  

61,254

    Total operating expenses

667,665

  

590,762

  

1,937,737

  

1,733,034
               

OPERATING INCOME

560,952

  

483,598

  

1,597,915

  

1,402,060
               

Interest expense

(288,896)

  

(244,384)

  

(835,532)

  

(737,018)

Income tax benefit (expense) of taxable REIT subsidiaries

97

  

(860)

  

(1,786)

  

(2,706)

Income from unconsolidated entities

37,129

  

17,120

  

96,613

  

49,561

(Loss) gain upon acquisition of controlling interests, 

              

sale or disposal of assets and interests in unconsolidated 

              

entities, and impairment charge on investment

              

in unconsolidated entities, net (A)

(2,911)

  

78,307

  

491,926

  

92,072
               

CONSOLIDATED NET INCOME

306,371

  

333,781

  

1,349,136

  

803,969
               

Net income attributable to noncontrolling interests 

50,616

  

58,947

  

230,857

  

142,934

Preferred dividends

834

  

834

  

2,503

  

2,503
               

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$ 254,921

  

$ 274,000

  

$1,115,776

  

$ 658,532
               
               

BASIC EARNINGS PER COMMON SHARE:

              

    Net income attributable to common stockholders

$ 0.84

  

$ 0.93

  

$ 3.71

  

$ 2.24
               

DILUTED EARNINGS PER COMMON SHARE:

              

    Net income attributable to common stockholders

$ 0.84

  

$ 0.93

  

$ 3.71

  

$ 2.24
               

 

Simon Property Group, Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)
 
       
 

September 30,

  

December 31,
 

2012

  

2011

ASSETS:

      

    Investment properties at cost

$ 34,366,668

  

$29,657,046

        Less - accumulated depreciation

9,101,007

  

8,388,130
 

25,265,661

  

21,268,916

    Cash and cash equivalents

452,712

  

798,650

    Tenant receivables and accrued revenue, net

456,397

  

486,731

    Investment in unconsolidated entities, at equity

2,013,651

  

1,378,084

    Investment in Klepierre, at equity

1,945,128

  

-

    Deferred costs and other assets

1,844,428

  

1,633,544

    Notes receivable from related party

-

  

651,000

        Total assets

$ 31,977,977

  

$26,216,925
       

LIABILITIES:

      

    Mortgages and other indebtedness

$ 22,569,634

  

$18,446,440

    Accounts payable, accrued expenses, intangibles, and deferred revenues

1,204,438

  

1,091,712

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

728,470

  

695,569

    Other liabilities

300,388

  

170,971

        Total liabilities

24,802,930

  

20,404,692
       

Commitments and contingencies

      

Limited partners' preferred interest in the Operating Partnership and noncontrolling

      

    redeemable interests in properties

354,006

  

267,945
       

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

44,801

  

45,047
       

        Common stock, $ 0.0001 par value, 511,990,000 shares authorized, 313,103,803 and

    

            297,725,698 issued and outstanding, respectively

31

  

30
       

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

      

            issued and outstanding

-

  

-
       

    Capital in excess of par value

9,054,730

  

8,103,133

    Accumulated deficit

(3,057,328)

  

(3,251,740)

    Accumulated other comprehensive loss

(64,776)

  

(94,263)

    Common stock held in treasury at cost, 3,762,595 and 3,877,448 shares, respectively

(135,781)

  

(152,541)

        Total stockholders' equity

5,841,677

  

4,649,666

Noncontrolling interests

979,364

  

894,622

        Total equity

6,821,041

  

5,544,288

        Total liabilities and equity

$ 31,977,977

  

$26,216,925

 

 

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,
 

2012

  

2011

  

2012

  

2011
               

Revenue:

              

  Minimum rent

$ 370,183

  

$ 356,155

  

$ 1,091,701

  

$ 1,046,992

  Overage rent

44,002

  

36,923

  

128,622

  

94,114

  Tenant reimbursements

176,544

  

169,911

  

508,698

  

490,276

  Other income

34,754

  

36,041

  

121,686

  

107,449

    Total revenue

625,483

  

599,030

  

1,850,707

  

1,738,831
               

Operating Expenses:

              

  Property operating

125,162

  

123,506

  

351,963

  

339,699

  Depreciation and amortization

125,512

  

125,260

  

374,333

  

361,345

  Real estate taxes

45,068

  

40,897

  

132,618

  

127,831

  Repairs and maintenance

15,418

  

14,954

  

45,269

  

46,005

  Advertising and promotion

11,706

  

12,632

  

39,600

  

37,123

  (Recovery of) provision for credit losses

(646)

  

1,411

  

(247)

  

3,624

  Other

36,089

  

37,100

  

128,134

  

109,765

    Total operating expenses

358,309

  

355,760

  

1,071,670

  

1,025,392
               

Operating Income

267,174

  

243,270

  

779,037

  

713,439
               

Interest expense

(148,891)

  

(149,839)

  

(451,581)

  

(441,396)

Loss from unconsolidated entities

(316)

  

(596)

  

(947)

  

(1,054)

Income from Continuing Operations

117,967

  

92,835

  

326,509

  

270,989
               

Loss from operations of discontinued joint venture interests

(1,978)

  

(17,431)

  

(20,769)

  

(39,646)

(Loss) gain on disposal of discontinued operations, net

(4,904)

  

78

  

(4,904)

  

15,583

Net Income

$ 111,085

  

$ 75,482

  

$ 300,836

  

$ 246,926
               

Third-Party Investors' Share of Net Income

$ 66,308

  

$ 45,271

  

$ 163,108

  

$ 151,741
               

Our Share of Net Income

44,777

  

30,211

  

137,728

  

95,185

Amortization of Excess Investment (B)

(21,726)

  

(13,052)

  

(55,059)

  

(37,832)

Our Share of Loss (Gain) on Sale or Disposal of Assets and

              

  Interests in Unconsolidated Entities, net

9,245

  

(39)

  

9,245

  

(7,792)

Income from Unconsolidated Entities (C)

$ 32,296

  

$ 17,120

  

$ 91,914

  

$ 49,561
               

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

 For additional information, see footnote C attached hereto.
 

 

Simon Property Group, Inc. and Subsidiaries

Unaudited Joint Venture Balance Sheets

(Dollars in thousands)
       
 
 

September 30,

  

December 31,
 

2012

  

2011

Assets:

      

Investment properties, at cost

$ 14,128,861

  

$ 20,481,657

Less - accumulated depreciation

4,680,199

  

5,264,565
 

9,448,662

  

15,217,092

Cash and cash equivalents

554,116

  

806,895

Tenant receivables and accrued revenue, net

235,507

  

359,208

Investment in unconsolidated entities, at equity

39,539

  

133,576

Deferred costs and other assets

352,392

  

526,101

Total assets

$ 10,630,216

  

$ 17,042,872
       

Liabilities and Partners' Deficit:

      

Mortgages and other indebtedness

$ 11,106,661

  

$ 15,582,321

Accounts payable, accrued expenses, intangibles, and deferred revenue

607,805

  

775,733

Other liabilities

326,564

  

981,711

Total liabilities

12,041,030

  

17,339,765
       

Preferred units

67,450

  

67,450

Partners' deficit

(1,478,264)

  

(364,343)

Total liabilities and partners' deficit

$ 10,630,216

  

$ 17,042,872
       

Our Share of:

      

Partners' deficit

$ (675,359)

  

$ (32,000)

Add: Excess Investment (B)

1,960,540

  

714,515

Our net Investment in unconsolidated entities

$ 1,285,181

  

$ 682,515
       

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

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

 

 

Simon Property Group, Inc. and Subsidiaries

Unaudited Reconciliation of Non-GAAP Financial Measures (D)

(Amounts in thousands, except per share amounts)
                       

Reconciliation of Consolidated Net Income to FFO

               
         

For the Three Months Ended

  

For the Nine Months Ended
         

September 30,

  

September 30,
         

2012

  

2011

  

2012

  

2011
                       

Consolidated Net Income (E) (F) (G) (H)

$     306,371

  

$         333,781

  

$  1,349,136

  

$     803,969

Adjustments to Consolidated Net Income to Arrive at FFO:

              
 

Depreciation and amortization from consolidated

             
 

     properties

   

306,612

  

257,172

  

896,147

  

777,489
 

Simon's share of depreciation and amortization from

              
 

     unconsolidated entities, including Klepierre

110,188

  

98,601

  

321,318

  

286,358
 

Loss (gain) upon acquisition of controlling interests, sale or disposal

              
 

     of assets and interests in unconsolidated entities, and

             
 

     impairment charge on investment in unconsolidated entities, net

2,911

  

(78,307)

  

(491,926)

  

(92,072)
 

Net income attributable to noncontrolling interest holders in

              
 

     properties

    

(2,464)

  

(1,829)

  

(6,427)

  

(5,879)
 

Noncontrolling interests portion of depreciation and amortization

(2,253)

  

(1,870)

  

(6,835)

  

(6,080)
 

Preferred distributions and dividends

(1,313)

  

(1,313)

  

(3,939)

  

(3,939)

FFO of the Operating Partnership

$     720,052

  

$         606,235

  

$  2,057,474

  

$  1,759,846
                       

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

              

Diluted net income per share

  

$          0.84

  

$              0.93

  

$          3.71

  

$          2.24
 

Depreciation and amortization from consolidated properties

              
 

     and Simon's share of depreciation and amortization from

             
 

     unconsolidated entities, including Klepierre, net of noncontrolling

             
 

     interests portion of depreciation and amortization

1.14

  

1.00

  

3.35

  

2.99
 

Loss (gain) upon acquisition of controlling interests, sale or disposal

              
 

     of assets and interests in unconsolidated entities, and

             
 

     impairment charge on investment in unconsolidated entities, net

0.01

  

(0.22)

  

(1.36)

  

(0.26)

Diluted FFO per share

  

$          1.99

  

$              1.71

  

$          5.70

  

$          4.97
                       

Details for per share calculations:

                
                       

FFO of the Operating Partnership

  

$     720,052

  

$         606,235

  

$  2,057,474

  

$  1,759,846
                       

Adjustments for dilution calculation:

              

Diluted FFO of the Operating Partnership

720,052

  

606,235

  

2,057,474

  

1,759,846

Diluted FFO allocable to unitholders

(116,207)

  

(103,971)

  

(342,704)

  

(300,458)

Diluted FFO allocable to common stockholders

$     603,845

  

$         502,264

  

$  1,714,770

  

$  1,459,388
                       

Basic weighted average shares outstanding

304,108

  

293,736

  

301,029

  

293,397

Adjustments for dilution calculation:

              

   Effect of stock options

  

1

  

22

  

1

  

88
                       

Diluted weighted average shares outstanding

304,109

  

293,758

  

301,030

  

293,485

Weighted average limited partnership units outstanding

58,524

  

60,809

  

60,162

  

60,423
                       

Diluted weighted average shares and units outstanding

362,633

  

354,567

  

361,192

  

353,908
                       

Basic FFO per Share

    

$          1.99

  

$              1.71

  

$          5.70

  

$          4.97

    Percent Change

    

16.4%

      

14.7%

    

Diluted FFO per Share

    

$          1.99

  

$              1.71

  

$          5.70

  

$          4.97

    Percent Change

    

16.4%

      

14.7%

    
                       

 

Simon Property Group, Inc. and Subsidiaries

Footnotes to Unaudited Reconciliation of Non-GAAP Financial Measures
                     

Notes:  

                  
                     

(A)

Primarily consists of 2012 and 2011 non-cash gains resulting from our acquisition activity and the remeasurement of our previously held interest to fair value for those properties in which we now have a controlling interest.
                     

(B)

Excess investment represents the unamortized difference of the Company's investment over equity in the underlying net assets of the related partnerships and joint ventures shown therein.  The Company generally amortizes excess investment over the life of the related properties.
                     

(C)

The Unaudited Joint Venture Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investment in Klepierre.  Amounts included in Footnotes E - H 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.
                     

(D)

This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO and FFO per share.  FFO is a performance measure that is standard in the REIT business.  We believe FFO provides investors with additional information concerning our operating performance and a basis to compare our performance with those of other REITs.  We also use these measures internally to monitor the operating performance of our portfolio. Our computation of these non-GAAP measures may not be the same as similar measures reported by other REITs.
                     
 

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, or any impairment charges related to, 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, or any impairment charges relating to, 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.
                     

(E)

Includes the Company's share of gains on land sales of $1.9 million and $0.1 million for the three months ended September 30, 2012 and 2011, respectively, and $11.7 million and $4.5 million for the nine months ended September 30, 2012 and 2011, respectively.
                     

(F)

Includes the Company's share of straight-line adjustments to minimum rent of $11.5 million and $10.8 million for the three months ended September 30, 2012 and 2011, respectively, and $31.7 million and $26.2 million for the nine months ended September 30, 2012 and 2011, respectively.
                     

(G)

Includes the Company's share of the amortization of fair market value of leases from acquisitions of $5.5 million and $6.0 million for the three months ended September 30, 2012 and 2011, respectively, and $16.2 million and $17.7 million for the nine months ended September 30, 2012 and 2011, respectively.
   

(H)

Includes the Company's share of debt premium amortization of $9.6 million and $2.3 million for the three months ended September 30, 2012 and 2011, respectively, and $29.7 million and $7.0 million for the nine months ended September 30, 2012 and 2011, respectively.

 

 

 

SOURCE Simon Property Group, Inc.

Investors: Shelly Doran, +1-317-685-7330 or Media: Les Morris, +1- 317-263-7711