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TABLE OF CONTENTS

Table of Contents

SIMON PROPERTY GROUP

 



EARNINGS RELEASE & SUPPLEMENTAL INFORMATION
UNAUDITED FIRST QUARTER 2018

GRAPHIC


Table of Contents

TABLE OF CONTENTS

EARNINGS RELEASE AND SUPPLEMENTAL INFORMATION
FOR THE QUARTER ENDED MARCH 31, 2018


 
PAGE  

 

       

Earnings Release(1)

    2-13  

Overview

       

The Company

    14  

Stock Information, Credit Ratings and Senior Unsecured Debt Covenants

    15  

Financial Data

       

Selected Financial and Equity Information

    16  

Net Operating Income (NOI) Composition

    17  

Net Operating Income Overview

    18  

Reconciliations of Non-GAAP Financial Measures

    19  

Consolidated Net Income to NOI

    19  

FFO of the Operating Partnership to Funds Available for Distribution (Our Share)

    20  

Other Income, Other Expense and Capitalized Interest

    21  

Operational Data

       

U.S. Malls and Premium Outlets Operating Information

    22  

The Mills and International Operating Information

    23  

U.S. Malls and Premium Outlets Lease Expirations

    24  

U.S. Malls and Premium Outlets Top Tenants

    25  

Development Activity

       

Capital Expenditures

    26  

Development Activity Summary

    27  

Development Activity Report

    28-29  

U.S. Anchor/Big Box Openings

    30-31  

Densification Projects

    32  

Balance Sheet Information

       

Common and Preferred Stock Information

    33  

Changes in Common Share and Limited Partnership Unit Ownership

    33  

Preferred Stock/Units Outstanding

    33  

Credit Profile

    34  

Summary of Indebtedness

    35  

Total Debt Amortization and Maturities by Year (Our Share)

    36  

Property and Debt Information

   
37-46
 

Other

       

Non-GAAP Pro-Rata Financial Information

    47-49  
(1)
Includes reconciliation of consolidated net income to funds from operations.
 
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EARNINGS RELEASE

LOGO

Contacts:   FOR IMMEDIATE RELEASE
Tom Ward   317-685-7330 Investors    
Les Morris   317-263-7711 Media    


SIMON PROPERTY GROUP REPORTS FIRST QUARTER 2018 RESULTS AND RAISES FULL YEAR 2018 GUIDANCE

INDIANAPOLIS, April 27, 2018 - Simon, a global leader in premier shopping, dining and entertainment destinations, today reported results for the quarter ended March 31, 2018.

RESULTS FOR THE QUARTER

Net income attributable to common stockholders was $620.7 million, or $2.00 per diluted share, as compared to $477.7 million, or $1.53 per diluted share, in the prior year period. The first quarter 2018 results include net gains primarily related to disposition activity of $135.3 million, or $0.38 per diluted share.

FFO was $1.026 billion, or $2.87 per diluted share, as compared to $985.0 million, or $2.74 per diluted share, in the prior year period, an increase of 4.7%.

Year-over-year increase in quarterly common stock dividend of 11.4%.

"We delivered strong results to start the year," said David Simon, Chairman and Chief Executive Officer. "Portfolio net operating income increased 4.8% over the prior year, driven by growth in operating income from our comparable properties and the accretive impact of our new developments, redevelopments, expansions and investments. Given our accomplishments this quarter and our current view for the remainder of 2018, today we are increasing our full-year 2018 guidance."

 
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EARNINGS RELEASE

U.S. MALLS AND PREMIUM OUTLETS OPERATING STATISTICS

Reported retailer sales per square foot for the trailing 12-months ended March 31, 2018 was $641, an increase of 4.2%.

Occupancy was 94.6% at March 31, 2018.

Base minimum rent per square foot was $53.54 at March 31, 2018, an increase of 3.2% compared to the prior year period.

Leasing spread per square foot for the trailing 12-months ended March 31, 2018 was $8.45, an increase of 12.6%.

PORTFOLIO NET OPERATING INCOME ("NOI") AND COMPARABLE PROPERTY NOI

Total portfolio NOI growth for the three months ended March 31, 2018 was 4.8%. Total portfolio NOI includes comparable property NOI, NOI from new development, redevelopment, expansion and acquisitions, NOI from international properties and our share of NOI from investments. Comparable property NOI growth for the three months ended March 31, 2018 was 2.3%.

DIVIDENDS

Today, Simon's Board of Directors declared a quarterly common stock dividend of $1.95 per share. This is an 11.4% increase year-over-year. The dividend will be payable on May 31, 2018 to stockholders of record on May 17, 2018.

Simon's Board of Directors also declared the quarterly dividend on its 83/8% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share, payable on June 29, 2018 to stockholders of record on June 15, 2018.

 
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EARNINGS RELEASE

DEVELOPMENT ACTIVITY

The Company recently announced transformational redevelopment plans for former Sears stores at five key locations. The properties involved are: Brea Mall (Brea, CA), Burlington Mall (Burlington, MA), Midland Park Mall (Midland, TX), Ocean County Mall (Toms River, NJ) and Ross Park Mall (Pittsburgh, PA). These redevelopments will significantly benefit the existing retailers in these destinations as well as the communities in which they operate. The projects will feature significant enhancements to the properties such as entertainment, fitness, restaurants and dining pavilions, residential, hotel and office as well as new retail brands. Construction is slated to commence on a number of these projects in 2018.

During the first quarter, construction started on a transformational redevelopment at Southdale Center (Edina, MN), replacing a former department store with a Life Time Athletic, Life Time Sport and Work, specialty shops and restaurants.

On May 2, 2018, Premium Outlet Collection Edmonton IA (Edmonton, Alberta, Canada) will open with 428,000 square feet of high-quality, name brand stores. Simon owns a 50% interest in this center.

Construction continues on three new development projects including:

Denver Premium Outlets (Thornton, Colorado); scheduled to open in September 2018. Simon owns 100% of this project.

Queretaro Premium Outlets (Queretaro, Mexico); scheduled to open in December 2018. Simon owns a 50% interest in this project.

Malaga Designer Outlet (Malaga, Spain); scheduled to open in spring 2019. Simon owns a 46% interest in this project.

Construction also continues on significant redevelopment and expansion projects at other properties including Town Center at Boca Raton and Toronto Premium Outlets.

At quarter-end, redevelopment and expansion projects, including the addition of new anchors, were underway at 28 properties in the U.S., Canada and Asia.

During the first quarter, construction started on a 197,000 square foot upscale outlet center located in Cannock, United Kingdom, projected to open in spring 2020. Simon owns 20% of this project.

 
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EARNINGS RELEASE

FINANCING ACTIVITY

The Company was active in both the unsecured and secured credit markets in the first quarter.

During the quarter, the Company amended and extended its $3.5 billion unsecured multi-currency revolving credit facility. This facility can be increased to $4.5 billion during its term. The facility will mature on June 30, 2022 but at our sole option can be extended for an additional year to June 30, 2023. The pricing on the facility was reduced to LIBOR plus 77.5 basis points.

With regard to secured debt activity, we closed or committed on six mortgage loans totaling approximately $513 million, (U.S. dollar equivalent), of which Simon's share is $220 million. The weighted average interest rate and weighted average term on these loans is 3.39% and 4.6 years, respectively.

As of March 31, 2018, Simon had more than $7.0 billion of liquidity consisting of cash on hand, including its share of joint venture cash, and available capacity under its revolving credit facilities.

COMMON STOCK REPURCHASE PROGRAM

During the quarter ended March 31, 2018, the Company repurchased 1,473,588 shares of its common stock.

2018 GUIDANCE

The Company currently estimates net income to be within a range of $7.33 to $7.43 per diluted share for the year ending December 31, 2018 and that FFO will be within a range of $11.95 to $12.05 per diluted share.

The following table provides the reconciliation for the expected range of estimated net income available to common stockholders per diluted share to estimated FFO per diluted share:

For the year ending December 31, 2018

 
  LOW END   HIGH END  

Estimated net income available to common stockholders per diluted share

  $ 7.33   $ 7.43  

Depreciation and amortization including Simon's share of unconsolidated entities

    5.00     5.00  

Gain upon acquisition of controlling interest, sale or disposal of assets and interests in unconsolidated entities, net

    (0.38)     (0.38)  

Estimated FFO per diluted share

  $ 11.95   $ 12.05  
 
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EARNINGS RELEASE

CONFERENCE CALL

Simon will hold a conference call to discuss the quarterly financial results today at 8:30 a.m. Eastern Time, Friday, April 27, 2018. A live webcast of the conference call will be accessible in listen-only mode at investors.simon.com. An audio replay of the conference call will be available until May 3, 2018. To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 9738947.

SUPPLEMENTAL MATERIALS AND WEBSITE

Supplemental information on our first quarter 2018 performance is available at investors.simon.com. This information has also been furnished to the SEC in a current report on Form 8-K.

We routinely post important information online on our investor relations website, investors.simon.com. We use this website, press releases, SEC filings, quarterly conference calls, presentations and webcasts to disclose material, non-public information in accordance with Regulation FD. We encourage members of the investment community to monitor these distribution channels for material disclosures. Any information 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 per share, portfolio net operating income growth and comparable property net operating income growth, which are financial performance measures not defined by generally accepted accounting principles in the United States ("GAAP"). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release and in Simon's supplemental information for the quarter. FFO and comparable property net operating income growth are financial performance measures widely used in the REIT industry. Our definitions of these non-GAAP measures may not be the same as similar measures reported by other REITs.

 
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EARNINGS RELEASE

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 its expectations will be attained, and it is possible that the Company's 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: changes in economic and market conditions that may adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; decreases in market rental rates; the intensely competitive market environment in the retail industry; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; risks related to international activities, including, without limitation, the impact of the United Kingdom's vote to leave the European Union; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in the value of our investments in foreign entities; our ability to hedge interest rate and currency risk; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties; environmental liabilities; changes in insurance costs, the availability of comprehensive insurance coverage; security breaches that could compromise our information technology or infrastructure; natural disasters; the potential for terrorist activities; and the loss of key management personnel. 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 except as required by law, 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 is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations and an S&P 100 company (Simon Property Group, NYSE:SPG). Our properties across North America, Europe and Asia provide community gathering places for millions of people every day and generate billions in annual sales. For more information, visit simon.com.

 
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EARNINGS RELEASE

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

 
  FOR THE THREE MONTHS
ENDED MARCH 31,
 
 
 
2018
 
2017
 

REVENUE:

             

Minimum rent

  $ 860,172   $ 846,798  

Overage rent

    32,990     28,204  

Tenant reimbursements

    380,363     378,915  

Management fees and other revenues

    28,181     30,547  

Other income

    98,108     61,299  

Total revenue

    1,399,814     1,345,763  

EXPENSES:

             

Property operating

    113,448     104,048  

Depreciation and amortization

    316,936     310,832  

Real estate taxes

    114,187     106,659  

Repairs and maintenance

    27,684     25,601  

Advertising and promotion

    34,800     35,948  

Provision for credit losses

    5,632     5,210  

Home and regional office costs

    41,064     42,979  

General and administrative

    12,628     14,001  

Other

    31,502     23,814  

Total operating expenses

    697,881     669,092  

OPERATING INCOME

    701,933     676,671  

Interest expense

    (205,492)     (198,202)  

Income and other tax (expense) benefit

    (6,220)     3,521  

Income from unconsolidated entities

    90,026     69,085  

Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities and impairment, net

    135,277      

CONSOLIDATED NET INCOME

    715,524     551,075  

Net income attributable to noncontrolling interests

    94,036     72,505  

Preferred dividends

    834     834  

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 620,654   $ 477,736  

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

             

Net income attributable to common stockholders

  $ 2.00   $ 1.53  
 
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EARNINGS RELEASE

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

 
  MARCH 31, 2018   DECEMBER 31, 2017  

ASSETS:

             

Investment properties, at cost

  $ 36,383,699   $ 36,393,464  

Less — accumulated depreciation

    12,074,719     11,935,949  

    24,308,980     24,457,515  

Cash and cash equivalents

    367,207     1,482,309  

Tenant receivables and accrued revenue, net

    686,158     742,672  

Investment in unconsolidated entities, at equity

    2,268,956     2,266,483  

Investment in Klépierre, at equity

    2,011,919     1,934,676  

Deferred costs and other assets

    1,374,640     1,373,983  

Total assets

  $ 31,017,860   $ 32,257,638  

LIABILITIES:

             

Mortgages and unsecured indebtedness

  $ 23,647,623   $ 24,632,463  

Accounts payable, accrued expenses, intangibles, and deferred revenues

    1,180,851     1,269,190  

Cash distributions and losses in unconsolidated entities, at equity

    1,421,879     1,406,378  

Other liabilities

    532,491     520,363  

Total liabilities

    26,782,844     27,828,394  

Commitments and contingencies

             

Limited partners' preferred interest in the Operating Partnership and noncontrolling redeemable interests in properties

    201,680     190,480  

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 83/8% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation value of $39,847

   
42,994
   
43,077
 

             

Common stock, $0.0001 par value, 511,990,000 shares authorized, 320,328,774 and 320,322,774 issued and outstanding, respectively

    32     32  

             

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

         

             

Capital in excess of par value

    9,647,272     9,614,748  

Accumulated deficit

    (4,774,442)     (4,782,173)  

Accumulated other comprehensive loss

    (102,747)     (110,453)  

Common stock held in treasury, at cost, 10,638,880 and 9,163,920 shares, respectively

    (1,307,203)     (1,079,063)  

Total stockholders' equity

    3,505,906     3,686,168  

Noncontrolling interests

    527,430     552,596  

Total equity

    4,033,336     4,238,764  

Total liabilities and equity

  $ 31,017,860   $ 32,257,638  
 
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EARNINGS RELEASE

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

 
  FOR THE THREE MONTHS
ENDED MARCH 31,
 
 
 
2018
 
2017
 

REVENUE:

             

Minimum rent

  $ 475,956   $ 451,055  

Overage rent

    59,661     51,369  

Tenant reimbursements

    223,490     215,780  

Other income

    81,108     64,327  

Total revenue

    840,215     782,531  

OPERATING EXPENSES:

   
 
   
 
 

Property operating

    146,293     132,985  

Depreciation and amortization

    159,836     153,455  

Real estate taxes

    68,267     66,583  

Repairs and maintenance

    23,196     20,230  

Advertising and promotion

    24,224     22,198  

Provision for credit losses

    6,501     3,777  

Other

    49,732     43,355  

Total operating expenses

    478,049     442,583  

OPERATING INCOME

   
362,166
   
339,948
 

Interest expense

    (150,932)     (142,204)  

NET INCOME

  $ 211,234   $ 197,744  

Third-Party Investors' Share of Net Income

  $ 106,183   $ 99,686  

Our Share of Net Income

    105,051     98,058  

Amortization of Excess Investment (A)

    (21,527)     (22,457)  

Income from Unconsolidated Entities (B)

  $ 83,524   $ 75,601  

Note:
The above financial presentation does not include any information related to our investments in Klépierre S.A. ("Klépierre") and HBS Global Properties ("HBS"). For additional information, see footnote B.
 
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EARNINGS RELEASE

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

 
  MARCH 31, 2018   DECEMBER 31, 2017  

Assets:

             

Investment properties, at cost

  $ 18,514,552   $ 18,328,747  

Less - accumulated depreciation

    6,508,984     6,371,363  

    12,005,568     11,957,384  

Cash and cash equivalents

   
963,029
   
956,084
 

Tenant receivables and accrued revenue, net

    382,153     403,125  

Deferred costs and other assets

    361,497     355,585  

Total assets

  $ 13,712,247   $ 13,672,178  

Liabilities and Partners' Deficit:

   
 
   
 
 

Mortgages

  $ 14,886,840   $ 14,784,310  

Accounts payable, accrued expenses, intangibles, and deferred revenue

    930,075     1,033,674  

Other liabilities

    392,747     365,857  

Total liabilities

    16,209,662     16,183,841  

Preferred units

   
67,450
   
67,450
 

Partners' deficit

    (2,564,865)     (2,579,113)  

Total liabilities and partners' deficit

  $ 13,712,247   $ 13,672,178  

Our Share of:

   
 
   
 
 

Partners' deficit

  $ (1,136,015)   $ (1,144,620)  

Add: Excess Investment (A)

    1,721,330     1,733,063  

Our net Investment in unconsolidated entities, at equity

  $ 585,315   $ 588,443  
Note:
The above financial presentation does not include any information related to our investments in Klépierre and HBS Global Properties. For additional information, see footnote B.
 
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EARNINGS RELEASE

Simon Property Group, Inc.
Unaudited Reconciliation of Non-GAAP Financial Measures (C)
(Amounts in thousands, except per share amounts)

 
  RECONCILIATION OF CONSOLIDATED NET INCOME TO FFO
   
   
   
 
   
  FOR THE THREE MONTHS
ENDED MARCH 31,
   
 
   
   
2018
 
2017
   

 

Consolidated Net Income (D)

  $ 715,524   $ 551,075    

 

Adjustments to Arrive at FFO:

               

 

Depreciation and amortization from consolidated properties

    314,006     307,688    

 

Our share of depreciation and amortization from unconsolidated entities, including Klépierre and HBS

    134,925     131,218    

 

Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities and impairment, net

    (135,277)        

 

Unrealized change in fair value of equity instruments

    3,029        

 

Net loss attributable to noncontrolling interest holders in properties

    92     244    

 

Noncontrolling interests portion of depreciation and amortization

    (4,648)     (3,900)    

 

Preferred distributions and dividends

    (1,313)     (1,313)    

 

FFO of the Operating Partnership

  $ 1,026,338   $ 985,012    

 

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

               

 

Diluted net income per share

  $ 2.00   $ 1.53    

 

Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Klépierre and HBS, net of noncontrolling interests portion of depreciation and amortization

    1.24     1.21    

 

Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities and impairment, net

    (0.38)        

 

Unrealized change in fair value of equity instruments

    0.01        

 

Diluted FFO per share

  $ 2.87   $ 2.74    

   

 

 

               

 

 

Details for per share calculations:

               

 

 

FFO of the Operating Partnership

  $ 1,026,338   $ 985,012    

 

 

Diluted FFO allocable to unitholders

    (134,559)     (129,429)    
 

 

 

Diluted FFO allocable to common stockholders

  $ 891,779   $ 855,583    
 
 
 

 

 

Basic and Diluted weighted average shares outstanding

    310,584     312,810    

 

 

Weighted average limited partnership units outstanding

    46,863     47,320    
 

 

 

Basic and Diluted weighted average shares and units outstanding

    357,447     360,130    
 
 
 

 

 

Basic and Diluted FFO per Share

  $ 2.87   $ 2.74    

 

 

Percent Change

    4.7%          
 
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EARNINGS RELEASE

Simon Property Group, Inc.
Footnotes to Unaudited Financial Information

Notes:

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

(B)
The Unaudited Joint Venture Combined Statements of Operations do not include any operations or our share of net income or excess investment amortization related to our investments in Klépierre and HBS Global Properties. Amounts included in Footnotes D below exclude our share of related activity for our investments in Klépierre and HBS Global Properties. For further information on Klépierre, reference should be made to financial information in Klépierre's public filings and additional discussion and analysis in our Form 10-Q.

(C)
This report contains measures of financial or operating performance that are not specifically defined by GAAP, including FFO 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.

    We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT"). We determine FFO to be our share of consolidated net income computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding gains and losses from the sales or disposals of, or any impairment related to, previously depreciated retail operating properties, plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and all determined on a consistent basis in accordance with GAAP.

    We have adopted NAREIT's clarification of the definition of FFO that requires it to include the effects of nonrecurring items not classified as extraordinary, cumulative effect of accounting changes, or a gain or loss resulting from the sale or disposal of, or any impairment relating to, previously depreciated retail operating properties. We include in FFO gains and losses realized from the sale of land, outlot buildings, equity instruments and investment holdings of non-retail real estate. However, you should understand that FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity.

(D)
Includes our share of:

-
Gains on land sales of $1.3 million and $2.7 million for the three months ended March 31, 2018 and 2017, respectively.

-
Straight-line adjustments increased income by $8.6 million and $10.2 million for the three months ended March 31, 2018 and 2017, respectively.

-
Amortization of fair market value of leases from acquisitions increased income by $1.4 million and $1.7 million for the three months ended March 31, 2018 and 2017, respectively.
 
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OVERVIEW

THE COMPANY

Simon Property Group, Inc. (NYSE:SPG) is a self-administered and self-managed real estate investment trust ("REIT"). Simon Property Group, L.P., or the Operating Partnership, is our majority-owned partnership subsidiary that owns all of our real estate properties and other assets. In this package, the terms Simon, we, our, or the Company refer to Simon Property Group, Inc., the Operating Partnership, and its subsidiaries. We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of malls, Premium Outlets®, The Mills®, and International Properties. At March 31, 2018, we owned or had an interest in 233 properties comprising 190 million square feet in North America, Asia and Europe. Additionally, at March 31, 2018, we had a 21.1% ownership interest in Klépierre, a publicly traded, Paris-based real estate company, which owns shopping centers in 16 European countries.

This package was prepared to provide operational and balance sheet information as of March 31, 2018 for the Company and the Operating Partnership.

Certain statements made in this Supplemental Package may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained, and it is possible that our 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: changes in economic and market conditions that may adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; decreases in market rental rates; the intensely competitive market environment in the retail industry; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; risks related to international activities, including, without limitation, the impact of the United Kingdom's vote to leave the European Union; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in the value of our investments in foreign entities; our ability to hedge interest rate and currency risk; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties; environmental liabilities; changes in insurance costs, the availability of comprehensive insurance coverage; security breaches that could compromise our information technology or infrastructure; natural disasters; the potential for terrorist activities; and the loss of key management personnel. We discuss these and other risks and uncertainties under the heading "Risk Factors" in our annual and quarterly periodic reports filed with the SEC. We may update that discussion in subsequent other periodic reports, but, except as required by law, we undertake no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Any questions, comments or suggestions regarding this Supplemental Information should be directed to Tom Ward, Senior Vice President of Investor Relations (tom.ward@simon.com or 317.685.7330).

 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 14

Table of Contents

OVERVIEW

STOCK INFORMATION

The Company's common stock and one series of preferred stock are traded on the New York Stock Exchange under the following symbols:

 

Common Stock

  SPG                                   

 

8.375% Series J Cumulative Redeemable Preferred

  SPGPrJ        


CREDIT RATINGS

 

Standard & Poor's

 

 

 

 

 
 

 

Corporate

  A   (Stable Outlook)    

 

Senior Unsecured

  A   (Stable Outlook)    

 

Commercial Paper

  A1   (Stable Outlook)    

 

Preferred Stock

  BBB+   (Stable Outlook)    

 

Moody's

 

 

 

 

 
 

 

Senior Unsecured

  A2   (Stable Outlook)    

 

Commercial Paper

  P1   (Stable Outlook)    

 

Preferred Stock

  A3   (Stable Outlook)    

SENIOR UNSECURED DEBT COVENANTS (1)

  Required   Actual   Compliance

Total Debt to Total Assets (1)

  £65%   40%   Yes

Total Secured Debt to Total Assets (1)

  £50%   18%   Yes

Fixed Charge Coverage Ratio

  >1.5X   5.0X   Yes

Total Unencumbered Assets to Unsecured Debt

  ³125%   277%   Yes
(1)
Covenants for indentures dated June 7, 2005 and later. Total Assets are calculated in accordance with the indenture and essentially represent net operating income (NOI) divided by a 7.0% capitalization rate plus the value of other assets at cost.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 15

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SELECTED FINANCIAL AND EQUITY INFORMATION
(In thousands, except as noted)

 

THREE MONTHS ENDED
MARCH 31,
 
 

 
2018
2017  

Financial Highlights

             

Total Revenue - Consolidated Properties

  $ 1,399,814   $ 1,345,763  

Consolidated Net Income

 
$

715,524
 
$

551,075
 

Net Income Attributable to Common Stockholders

  $ 620,654   $ 477,736  

Basic and Diluted Earnings per Common Share (EPS)

  $ 2.00   $ 1.53  

Funds from Operations (FFO) of the Operating Partnership

 
$

1,026,338
 
$

985,012
 

Basic and Diluted FFO per Share (FFOPS)

  $ 2.87   $ 2.74  

Dividends/Distributions per Share/Unit

 
$

1.95
 
$

1.75
 


Stockholders' Equity Information

 


AS OF
MARCH 31,
2018





AS OF
DECEMBER 31,
2017
 

Limited Partners' Units Outstanding at end of period

    46,830     46,879  

Common Shares Outstanding at end of period

    309,698     311,167  

Total Common Shares and Limited Partnership Units Outstanding at end of period

    356,528     358,046  

Weighted Average Limited Partnership Units Outstanding

    46,863     47,260  

Weighted Average Common Shares Outstanding:

             

Basic and Diluted - for purposes of EPS and FFOPS

    310,584     311,517  

 

             

Debt Information

             

Share of Consolidated Debt

  $ 23,477,698   $ 24,465,117  

Share of Joint Venture Debt

    7,053,466     7,011,525  

Share of Total Debt

  $ 30,531,164   $ 31,476,642  

 

             

Market Capitalization

             

Common Stock Price at end of period

  $ 154.35   $ 171.74  

Common Equity Capitalization, including Limited Partnership Units

  $ 55,030,056   $ 61,490,902  

Preferred Equity Capitalization, including Limited Partnership Preferred Units

    82,607     82,527  

Total Equity Market Capitalization

  $ 55,112,663   $ 61,573,429  

Total Market Capitalization - Including Share of Total Debt

  $ 85,643,827   $ 93,050,071  

 

             

Debt to Total Market Capitalization

    35.6%     33.8%  
 
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NET OPERATING INCOME (NOI) COMPOSITION (1)
For the Three Months Ended March 31, 2018

 

GRAPHIC

(1)
Based on our share of total NOI and does not reflect any property, entity or corporate-level debt.
(2)
Includes Klépierre, international Premium Outlets, international Designer Outlets and distributions from other international investments.
(3)
Includes Lifestyle Centers.
 
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NET OPERATING INCOME OVERVIEW (1)
(In thousands)

 
FOR THE THREE MONTHS
ENDED MARCH 31,
  % GROWTH
 

 
2018
2017  

Comparable Property NOI (2)

  $ 1,348,947   $ 1,318,937   2.3%

NOI from New Development, Redevelopment, Expansion and Acquisitions (3)

   
18,785
   
20,526
   

International Properties (4)

    131,750     96,559    

Our share of NOI from Investments (5)

    67,138     58,367    

               

Portfolio NOI

  $ 1,566,620   $ 1,494,389   4.8%

Corporate and Other NOI Sources (6)

   
34,308
   
28,264
   

Total NOI - See reconciliation on following page

  $ 1,600,928   $ 1,522,653    

Less: Joint Venture Partners' Share of NOI

   
275,173
   
261,166
   

Our Share of Total NOI

  $ 1,325,755   $ 1,261,487    
(1)
All amounts are presented at gross values unless otherwise indicated as our share.
(2)
Includes Malls, Premium Outlets, The Mills and Lifestyle Centers opened and operating as comparable for the period.
(3)
Includes total property NOI for properties undergoing redevelopment as well as incremental NOI for expansion properties not yet included in comparable properties.
(4)
Includes International Premium Outlets (except for Canadian International Premium Outlets included in Comparable NOI), International Designer Outlets and distributions from other international investments.
(5)
Includes our share of NOI of Klépierre and HBS.
(6)
Includes income components excluded from Portfolio NOI and Comparable Property NOI (domestic lease termination income, interest income, land sale gains, straight line rent, above/below market lease adjustments), gains on sale of equity instruments, unrealized gains and losses on equity instruments, Simon management company operations, and other assets.
 
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RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(In thousands, except as noted)

RECONCILIATION OF NET INCOME TO NOI

    

           

 

THREE MONTHS ENDED
MARCH 31,
 

  2018   2017

Reconciliation of NOI of consolidated entities:

         

Consolidated Net Income

  $ 715,524   $ 551,075

Income and other tax expense (benefit)

  6,220     (3,521)

Interest expense

  205,492     198,202

Income from unconsolidated entities

  (90,026)     (69,085)

Gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities and impairment, net

  (135,277)    

Operating Income

  701,933     676,671

Depreciation and amortization

  316,936     310,832

NOI of consolidated entities

  $ 1,018,869   $ 987,503

Reconciliation of NOI of unconsolidated entities:

         

Net Income

  $ 211,234   $ 197,744

Interest expense

  150,932     142,204

Operating Income

  362,166     339,948

Depreciation and amortization

  159,836     153,455

NOI of unconsolidated entities

  $ 522,002   $ 493,403

Add: Our share of NOI from Klépierre, HBS and other corporate investments

  60,057     41,747

Total NOI

  $ 1,600,928   $ 1,522,653
 
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RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(In thousands, except as noted)

RECONCILIATION OF FFO OF THE OPERATING PARTNERSHIP TO FUNDS AVAILABLE FOR DISTRIBUTION (OUR SHARE)

       

    

       

 


THREE
MONTHS ENDED
MARCH 31,
2018
 

FFO of the Operating Partnership

  $ 1,026,338  

Non-cash impacts to FFO(1)

    8,776  

FFO of the Operating Partnership excluding non-cash impacts

    1,035,114  

Tenant allowances

    (37,156)  

Operational capital expenditures

    (33,578)  

Funds available for distribution

  $ 964,380  
 
 
 
(1)
Non-cash impacts to FFO of the Operating Partnership include:

    

       

 


THREE
MONTHS ENDED
MARCH 31,
2018
 

Deductions:

       

Straight-line rent

  $ (8,605)  

Fair value of debt amortization

    12  

Fair market value of lease amortization

    (1,373)  

Additions:

       

Stock based compensation expense

    9,252  

Mortgage, financing fee and terminated swap amortization expense

    9,490  

  $ 8,776  

This report contains measures of financial or operating performance that are not specifically defined by generally accepted accounting principles (GAAP) in the United States, including FFO, FFO per share, funds available for distribution, net operating income (NOI), portfolio NOI, and comparable property NOI. FFO and NOI are performance measures that are standard in the REIT business. We believe FFO and NOI provide investors with additional information concerning our operating performance and a basis to compare our performance with the performance 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 non-GAAP financial measures used in this report should not be considered as alternatives to net income as a measure of our operating performance or to cash flows computed in accordance with GAAP as a measure of liquidity nor are they indicative of cash flows from operating and financial activities. Reconciliations of other non-GAAP measures used in this report to the most-directly comparable GAAP measure are included in the tables on pages 18 –20 and in the Earnings Release for the latest period.

 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 20

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OTHER INCOME, OTHER EXPENSE AND CAPITALIZED INTEREST
(In thousands)

 

THREE MONTHS
ENDED MARCH 31,
 

 
2018
2017

Consolidated Properties

           

Other Income

           

Interest, dividend and distribution income  (1)

  $ 24,868   $ 3,381

Lease settlement income

    26,689     7,922

Gains on land sales

    1,274     2,710

Other  (2)

    45,277     47,286

Totals

  $ 98,108   $ 61,299

 

           

Other Expense

           

Ground leases

  $ 10,962   $ 9,982

Unrealized change in Fair Value of Equity Instruments

    3,029    

Professional fees and other

    17,511     13,832

Totals

  $ 31,502   $ 23,814

    

           

 

Capitalized Interest

 

THREE MONTHS
ENDED MARCH 31,
 

 
2018
2017

Interest Capitalized during the Period:

           

Our Share of Consolidated Properties

  $ 4,573   $ 10,035

Our Share of Joint Venture Properties

  $ 598   $ 561

           

           
(1)
Includes distributions from other international investments.

(2)
Includes ancillary property revenues, gift cards, marketing, media, parking and sponsorship revenues, gains on sale of non-retail investments and other miscellaneous income items.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 21

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U.S. MALLS AND PREMIUM OUTLETS OPERATING INFORMATION

 
AS OF MARCH 31,
 

 
2018
2017

Total Number of Properties

  175     175

Total Square Footage of Properties (in millions)

 

151.2
   
151.8

Ending Occupancy (1):

 

 
   
 

Consolidated Assets

  94.7%     95.8%

Unconsolidated Assets

  94.5%     94.9%

Total Portfolio

  94.6%     95.6%

Total Sales per Square Foot (PSF) (2):

 

 
   
 

Consolidated Assets

  $ 625   $ 599

Unconsolidated Assets

  $ 686   $ 663

Total Portfolio

  $ 641   $ 615

Base Minimum Rent PSF (3):

 

 
   
 

Consolidated Assets

  $ 51.79   $ 50.29

Unconsolidated Assets

  $ 58.20   $ 56.29

Total Portfolio

  $ 53.54   $ 51.87

Open / Close Spread

     

RENT PSF
(BASE MINIMUM RENT & CAM)


     
         

 

SQUARE FOOTAGE
OF OPENINGS





AVERAGE
OPENING RATE
PSF  (4)






AVERAGE
CLOSING RATE
PSF  (4)





LEASING
SPREAD  (4)



SPREAD TO
CLOSE %

3/31/18

  6,044,658   $ 75.77   $ 67.32   $ 8.45   12.6%

12/31/17

    6,656,004   $ 72.68   $ 65.26   $ 7.42     11.4%

3/31/17

    6,579,494   $ 72.11   $ 63.80   $ 8.31     13.0%

Occupancy Cost as a Percentage of Sales (5):

3/31/18

  13.0%                        

12/31/17

    13.2%                        

3/31/17

    13.0%                        
(1)
Ending Occupancy is the percentage of total owned square footage (GLA) which is leased as of the last day of the reporting period. We include all company owned space except for mall anchors, mall majors, mall freestanding and mall outlots in the calculation.
(2)
Total Sales PSF is defined as total sales of the tenants open and operating in the center during the reporting period divided by the associated company owned and occupied GLA on a trailing 12-month basis. Includes tenant sales activity for all months a tenant is open within the trailing 12-month period. In accordance with the standard definition of sales for regional malls adopted by the International Council of Shopping Centers, stores with less than 10,000 square feet are included for malls and stores with less than 20,000 square feet are included for Premium Outlets.
(3)
Base Minimum Rent PSF is the average base minimum rent charge in effect for the reporting period for all tenants that would qualify to be included in Ending Occupancy as defined above.
(4)
The Open / Close Spread is a measure that compares opening and closing rates on all spaces, including spaces greater than 10,000 square feet except for mall anchors, mall majors, mall freestanding and mall outlots. The Opening Rate is the initial cash Rent PSF for spaces leased during the trailing 12-month period, and includes new leases, renewals, amendments and relocations (including expansions and downsizings) if lease term is greater than one year. The Closing Rate is the final cash Rent PSF as of the month the tenant terminates or closes. Rent PSF includes Base Minimum Rent and Common Area Maintenance (CAM) rents.
(5)
Occupancy Cost as a Percentage of Sales is the trailing 12-month Base Minimum Rent, plus all applicable ancillary charges, plus overage rent, if applicable (based on last 12 months of sales), divided by the trailing 12-month Total Sales PSF for the same tenants.
 
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THE MILLS AND INTERNATIONAL OPERATING INFORMATION

 
AS OF MARCH 31,
 

 
2018
2017

The Mills

         

Total Number of Properties

 

14
   
14

Total Square Footage of Properties (in millions)

 

21.1
   
21.1

Ending Occupancy(1)

 

98.3%
   
97.7%

Total Sales PSF(2)

 
$

599
 
$

562

Base Minimum Rent PSF(3)

 
$

31.38
 
$

29.53

Leasing Spread PSF(4)

 
$

9.00
 
$

17.44

Leasing Spread (Percentage Change)(4)

 

14.7%
   
32.1%

 

 

 
   
 

International Properties

 

 
   
 

Premium Outlets

 

 
   
 

Total Number of Properties

 

18
   
16

Total Square Footage of Properties (in millions)

 

6.6
   
5.9

Designer Outlets

 

 
   
 

Total Number of Properties

 

9
   
7

Total Square Footage of Properties (in millions)

 

2.2
   
1.5

Statistics for Premium Outlets in Japan(5)

 

 
   
 

Ending Occupancy

 

99.6%
   
99.8%

Total Sales PSF

 

¥ 106,210
   
¥ 100,747

Base Minimum Rent PSF

 

¥ 5,075
   
¥ 5,048
(1)
See footnote 1 on page 22 for definition, except Ending Occupancy is calculated on all company owned space.
(2)
See footnote 2 on page 22 for definition; calculation methodology is the same as for malls.
(3)
See footnote 3 on page 22 for definition.
(4)
See footnote 4 on page 22 for definition.
(5)
Information supplied by the managing venture partner; includes 9 properties.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 23

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS LEASE EXPIRATIONS (1)

YEAR

 


NUMBER OF
LEASES
EXPIRING




SQUARE FEET




AVG. BASE
MINIMUM
RENT
PSF AT 3/31/18







PERCENTAGE OF
GROSS ANNUAL
RENTAL
REVENUES  (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Inline Stores and Freestanding

                       

Month to Month Leases

   
933
   
3,391,405
 
$

51.76
   
3.2%

2018 (4/1 - 12/31)

    1,017     2,967,595   $ 55.06     2.9%

2019

    2,559     9,270,629   $ 49.78     8.3%

2020

    2,095     7,267,706   $ 51.16     6.8%

2021

    1,920     7,579,417   $ 50.18     7.0%

2022

    1,919     7,448,467   $ 50.60     6.9%

2023

    2,016     7,815,354   $ 55.58     7.9%

2024

    1,534     5,926,066   $ 60.27     6.5%

2025

    1,413     5,308,244   $ 64.01     6.2%

2026

    1,304     4,674,002   $ 61.49     5.2%

2027

    1,039     3,834,690   $ 61.88     4.2%

2028

    366     1,878,302   $ 53.16     1.8%

2029 and Thereafter

    319     1,750,035   $ 47.11     1.6%

Specialty Leasing Agreements w/ terms in excess of 12 months

    1,278     3,456,413   $ 18.88     1.2%

 

                       

Anchors

                       

2018 (4/1 - 12/31)

   
8
   
1,016,264
 
$

8.48
   
0.1%

2019

    15     1,556,975   $ 4.16     0.1%

2020

    26     3,021,350   $ 4.90     0.3%

2021

    13     1,505,184   $ 4.75     0.1%

2022

    15     2,219,546   $ 6.22     0.2%

2023

    19     2,657,471   $ 6.50     0.3%

2024

    14     958,890   $ 11.04     0.2%

2025

    12     1,219,739   $ 8.62     0.2%

2026

    5     651,342   $ 4.52     0.1%

2027

    7     1,053,832   $ 4.43     0.1%

2028

    7     785,403   $ 6.59     0.1%

2029 and Thereafter

    13     1,775,774   $ 5.62     0.2%
(1)
Does not consider the impact of renewal options that may be contained in leases.
(2)
Annual rental revenues represent 2017 consolidated and joint venture combined base rental revenue.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 24

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS TOP TENANTS

Top Inline Store Tenants (sorted by percentage of total base minimum rent for U.S. properties)

TENANT





NUMBER
OF
STORES






SQUARE
FEET
(000's)






PERCENT OF
TOTAL SQ. FT. IN
U.S. PROPERTIES





PERCENT OF TOTAL
BASE MINIMUM RENT
FOR U.S. PROPERTIES

 

                       

The Gap, Inc.

    359     3,648     2.0%     3.4%

L Brands, Inc.

    308     1,890     1.0%     2.2%

Ascena Retail Group Inc

    450     2,510     1.4%     1.9%

Signet Jewelers, Ltd.

    395     581     0.3%     1.6%

PVH Corporation

    238     1,449     0.8%     1.5%

Forever 21, Inc.

    83     1,339     0.7%     1.3%

Tapestry, Inc.

    223     891     0.5%     1.3%

Foot Locker, Inc.

    238     1,063     0.6%     1.3%

Abercrombie & Fitch Co.

    156     1,110     0.6%     1.2%

VF Corporation

    235     1,244     0.7%     1.2%

Top Anchors (sorted by percentage of total square footage in U.S. properties)  (1)

TENANT





NUMBER
OF
STORES






SQUARE
FEET
(000's)






PERCENT OF
TOTAL SQ. FT. IN
U.S. PROPERTIES





PERCENT OF TOTAL
BASE MINIMUM RENT
FOR U.S. PROPERTIES

 

                       

Macy's Inc.

    117     22,596     12.4%     0.4%

Sears Holdings Corporation (2)

    66     10,670     5.9%     0.4%

J.C. Penney Co., Inc.

    66     10,589     5.8%     0.3%

Dillard's, Inc.

    37     6,665     3.7%     *

Nordstrom, Inc.

    28     4,679     2.6%     0.1%

Hudson's Bay Company

    16     2,128     1.2%     0.1%

Dick's Sporting Goods, Inc.

    29     1,974     1.1%     0.5%

Belk, Inc.

    10     1,674     0.9%     0.1%

The Neiman Marcus Group, Inc.

    12     1,458     0.8%     0.1%

The Bon-Ton Stores, Inc.

    8     1,081     0.6%     *

Target Corporation

    5     751     0.4%     *
(1)
Includes space leased and owned by anchors in U.S. Malls; does not include Bloomingdale's The Outlet Store, Neiman Marcus Last Call, Nordstrom Rack, and Saks Fifth Avenue Off 5th.
(2)
Includes 5 stores contributed to a joint venture with Seritage.
*
Less than one-tenth of one percent.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 25

Table of Contents

CAPITAL EXPENDITURES
(In thousands)

     

UNCONSOLIDATED
PROPERTIES
   

 
CONSOLIDATED
PROPERTIES

 
TOTAL  
OUR
SHARE

New development projects

  $ 14,574   $ 42,997   $ 22,029

Redevelopment projects with incremental square footage and/or anchor replacement

   
68,849
   
55,853
   
35,676

Redevelopment projects with no incremental square footage

   
20,315
   
8,197
   
3,648

 

                 

Subtotal new development and redevelopment projects

  103,738   107,047   61,353

Tenant allowances

   
34,384
   
4,946
   
2,772

Operational capital expenditures at properties:

                 

CAM expenditures (1)

    17,445     24,110     10,670

Non-CAM expenditures

    2,549     7,096     2,914

 

                 

Totals

  $ 158,116   $ 143,199   $ 77,709

Conversion from accrual to cash basis

   
14,640
   
45,198
   
24,527

 

                 

Capital Expenditures for the Three Months Ended 3/31/18 (2)

  $ 172,756   $ 188,397   $ 102,236

        

                 

Capital Expenditures for the Three Months Ended 3/31/17 (2)

  $ 148,595   $ 278,217   $ 124,861
(1)
Expenditures included in the pool of charges allocated to tenants as CAM.
(2)
Agrees with the line item "Capital expenditures" on the Combined Statements of Cash Flows for the consolidated properties. No statement of cash flows is prepared for the joint venture properties; however, the above reconciliation was completed in the same manner as the reconciliation for the consolidated properties.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 26

Table of Contents

DEVELOPMENT ACTIVITY SUMMARY (1)
As of March 31, 2018
(in millions, except percent)

 

 

PLATFORM
    PROJECT TYPE


 
 

PROJECTED
GROSS COST (2)


 

PROJECTED
NET COST (3)


 


OUR
SHARE OF
NET COST (4)



 


EXPECTED
STABILIZED
RATE OF RETURN (4)



 


TOTAL
CONSTRUCTION
IN PROGRESS



 



OUR SHARE
OF TOTAL
CONSTRUCTION
IN PROGRESS




 

 

Malls

                         

 

 

Redevelopments

      $ 399       $ 398       $ 305         9%       $ 222       $ 172    

 

 

 

                                                               

 

 

Premium Outlets

                         

 

 

New Developments

      $ 538       $ 457       $ 233         8%       $ 128       $ 99    

 

 

Redevelopments

      $ 173       $ 160       $ 83         11%       $ 65       $ 32    

 

 

The Mills

                         

 

 

New Developments

      $ 168       $ 168       $ 84         6%       $ 120       $ 60    

 

 

Redevelopments

      $ 17       $ 16       $ 16         10%       $ 11       $ 11    

 

 

Totals

    $ 1,295     $ 1,199     $ 721     8%     $ 546     $ 374  
                                                                     

Notes:

(1)
Represents projects under construction; new development and redevelopment projects with budgeted gross costs in excess of $5 million; and anchor/big box/restaurant additions with budgeted gross costs in excess of $2 million. Includes both domestic and international properties.
(2)
Projected Gross Cost includes soft costs such as architecture and engineering fees, tenant costs (allowances/leasing commissions), development, legal and other fees, marketing costs, cost of capital, and other related costs.
(3)
Projected Net Cost includes cost recoveries such as land sales, tenant reimbursements, Tax Increment Financing (TIF), CAM, and other such recoveries.
(4)
Costs and returns are based upon current budget assumptions; actual costs may vary and no assurance can be given that expected returns will be achieved.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 27

Table of Contents

DEVELOPMENT ACTIVITY REPORT (1)
As of March 31, 2018

PROPERTY/
LOCATION


PROJECT DESCRIPTION
ACTUAL/
PROJECTED
OPENING



COMPANY'S
OWNERSHIP
PERCENTAGE
             
Malls - Redevelopments            

Cape Cod Mall - Hyannis, MA

 

Ten Pin Eatery

 

4/18

 

56%

Copley Place Office - Boston, MA

 

Wayfair expansion Phase IV

 

5/18

 

94%

Prien Lake Mall - Lake Charles, LA

 

T.J. Maxx/Home Goods

 

5/18

 

100%

West Town Mall - Knoxville, TN

 

Redevelopment

 

5/18

 

50%

Woodfield Mall - Schaumburg (Chicago), IL

 

Dining pavilion redevelopment

 

5/18

 

50%

Del Amo Fashion Center - Torrance (Los Angeles), CA

 

Marshalls (4/18) and Dave & Buster's (6/18)

 

6/18

 

50%

Northshore Mall - Peabody (Boston), MA

 

Redevelopment to include three new restaurants

 

6/18

 

56%

Phipps Plaza - Atlanta, GA

 

Relocation of Frontgate (opened 10/17) and addition of Grand Lux Café (6/18) and Public Kitchen (opened 3/18)

 

6/18

 

100%

West Town Mall - Knoxville, TN

 

Regal Cinema redevelopment into Cinnebare Theatre

 

6/18

 

50%

Plaza Carolina - Carolina (San Juan), PR

 

Caribbean Cinemas

 

8/18

 

100%

College Mall - Bloomington, IN

 

Redevelopment including the addition of Ulta and small shops (opened 10/17) and Fresh Thyme (9/18)

 

9/18

 

100%

Fashion Valley - San Diego, CA

 

North Italia

 

9/18

 

50%

King of Prussia - King of Prussia (Philadelphia), PA

 

Eddie V's Prime Seafood

 

9/18

 

100%

Lehigh Valley Mall - Whitehall, PA

 

Relocation and expansion of Apple

 

9/18

 

50%

Roosevelt Field - Garden City (New York), NY

 

Small Batch

 

9/18

 

100%

Penn Square Mall - Oklahoma City, OK

 

The Container Store

 

10/18

 

95%

Southdale Center - Edina (Minneapolis), MN

 

146 room Homewood Suites

 

10/18

 

50%

Copley Place Office - Boston, MA

 

Wayfair expansion Phase V

 

11/18

 

94%

Falls, The - Miami, FL

 

Shake Shack

 

11/18

 

50%

Phipps Plaza - Atlanta, GA

 

Ecco Restaurant

 

11/18

 

100%

Town Center at Boca Raton - Boca Raton (Miami), FL

 

Redevelopment

 

11/18

 

100%

Southdale Center - Edina (Minneapolis), MN

 

Shake Shack

 

12/18

 

100%

Auburn Mall - Auburn, MA

 

Redevelopment of the former Macy's Home Store building

 

2/19

 

56%

Forum Shops at Caesars, The - Las Vegas, NV

 

The Slanted Door

 

2/19

 

100%

Roosevelt Field - Garden City (New York), NY

 

Residence Inn Hotel

 

7/19

 

50%

Southdale Center - Edina (Minneapolis), MN

 

Redevelopment of the former JCPenney building with Life Time Athletic and Life Time Sport/Work

 

12/19

 

100%
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 28

Table of Contents

DEVELOPMENT ACTIVITY REPORT (1)
As of March 31, 2018

PROPERTY/
LOCATION


PROJECT DESCRIPTION
ACTUAL/
PROJECTED
OPENING



COMPANY'S
OWNERSHIP
PERCENTAGE
             
Premium Outlets - New Developments            

Denver Premium Outlets - Thornton (Denver), CO

 

328,000 SF upscale Premium Outlet Center

 

9/18

 

100%

Queretaro Premium Outlets - Queretaro, Mexico

 

294,000 SF upscale Premium Outlet Center

 

12/18

 

50%

 

 

 

 

 

 

 

Designer Outlets - New Developments

 

 

 

 

 

 

Malaga Designer Outlet - Malaga, Spain

 

191,000 SF upscale Designer Outlet Center

 

3/19

 

46%

Cannock Designer Outlet - Cannock, U.K.

 

197,000 SF upscale Designer Outler Center

 

5/20

 

20%

 

 

 

 

 

 

 

Premium Outlets - Expansions

 

 

 

 

 

 

Allen Premium Outlets - Allen (Dallas), TX

 

H&M

 

5/18

 

100%

Waterloo Premium Outlets - Waterloo, NY

 

H&M

 

8/18

 

100%

Shisui Premium Outlets - Shisui, Japan

 

68,000 SF Phase III expansion

 

10/18

 

40%

Desert Hills Premium Outlets - Cabazon (Palm Springs), CA

 

Redevelopment

 

11/18

 

100%

Toronto Premium Outlets - Toronto, Ontario, Canada

 

Redevelopment and 145,000 SF expansion (11/18) and addition of parking deck (opened 11/17)

 

11/18

 

50%

Johor Premium Outlets - Johor, Malaysia

 

45,000 SF Phase III expansion

 

12/18

 

50%

 

 

 

 

 

 

 

The Mills - New Development

 

 

 

 

 

 

Premium Outlet Collection Edmonton IA - Edmonton, Canada

 

428,000 SF upscale Premium Outlet Center

 

5/18

 

50%

 

 

 

 

 

 

 

The Mills - Redevelopments

 

 

 

 

 

 

Gurnee Mills - Gurnee (Chicago), IL

 

Redevelopment (7/18) including the addition of Dick's Sporting Goods (5/18)

 

7/18

 

100%

Sawgrass Mills - Sunrise (Miami), FL

 

Season's 52

 

1/19

 

100%
(1)
Projects listed represent projects that are under construction; new development and redevelopment projects with budgeted gross costs in excess of $5 million; and anchor/big box/restaurant additions with budgeted gross costs in excess of $2 million.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 29

Table of Contents

U.S. ANCHOR/BIG BOX OPENINGS

PROPERTY NAME/LOCATION

  PROPERTY TYPE   NEW TENANT   FORMER TENANT

Openings during the First Three Months of 2018

           

Galleria, The - Houston, TX

  Mall   Fig & Olive   Saks Fifth Avenue  (1)

Lehigh Valley Mall - Whitehall, PA

  Mall   Bob's Discount Furniture   H.H. Gregg

Ontario Mills - Ontario (Riverside), CA

  Mills   Aki-Home   Sports Authority

Phipps Plaza - Atlanta, GA

  Mall   The Public Kitchen & Bar   N/A

Tyrone Square - St. Petersburg (Tampa), FL

  Mall   Dick's Sporting Goods   Sears

 

           

Openings Projected for the Remainder of 2018

           

Allen Premium Outlets - Allen (Dallas), TX

  Premium Outlets   H&M   Last Call Neiman Marcus

Cape Cod Mall - Hyannis, MA

  Mall   Ten Pin Eatery   N/A

College Mall - Bloomington, IN

  Mall   Fresh Thyme   Sears

Del Amo Fashion Center - Torrance (Los Angeles), CA

  Mall   Dave & Buster's   N/A

      EMC Seafood   N/A

      Marshalls   N/A

Falls, The - Miami, FL

  Mall   Bulla Gastrobar   N/A

      Shake Shack   N/A

Fashion Valley - San Diego, CA

  Mall   North Italia   N/A

Galleria, The - Houston, TX

  Mall   Blanco Tacos + Tequila   Saks Fifth Avenue  (1)

      Nobu   Saks Fifth Avenue  (1)

      Spice Route   Saks Fifth Avenue  (1)

Gulfport Premium Outlets - Gulfport, MS

  Premium Outlets   H&M   Gap  (1)

Gurnee Mills - Gurnee (Chicago), IL

  Mills   Dick's Sporting Goods   Sports Authority

      The Room Place   T.J.Maxx

Ingram Park Mall - San Antonio, TX

  Mall   Outback Steakhouse   N/A

King of Prussia - King of Prussia (Philadelphia), PA

  Mall   Eddie V's Prime Seafood   N/A

Lehigh Valley Mall - Whitehall, PA

  Mall   Apple  (1)   J. Crew/Ann Taylor

Orland Square - Orland Park (Chicago), IL

  Mall   Apple  (1)   Forever 21  (1)

Penn Square Mall - Oklahoma City, OK

  Mall   The Container Store   N/A

Phipps Plaza - Atlanta, GA

  Mall   Ecco Restaurant   N/A

      Grand Lux Café   N/A

Pier Park - Panama City Beach, FL

  Lifestyle Center   SkyWheel   N/A

Plaza Carolina - Carolina (San Juan), PR

  Mall   Caribbean Cinemas   Sports Authority

Premium Outlets Montréal - Montréal (Quebec), Canada

  Premium Outlets   H&M   N/A

Prien Lake Mall - Lake Charles, LA

  Mall   T.J. Maxx/HomeGoods   JCPenney  (2)

Roosevelt Field - Garden City (New York), NY

  Mall   Small Batch   Houston's

San Francisco Premium Outlets - Livermore (San Francisco), CA

  Premium Outlets   H&M   Last Call Neiman Marcus

Shops at Clearfork, The - Fort Worth, TX

  Mall   AMC Theatres   N/A

      Pinstripes   N/A

Shops at Riverside, The - Hackensack (New York), NJ

  Mall   Barnes & Noble  (1)   Saks Fifth Avenue

Southdale Center - Edina (Minneapolis), MN

  Mall   Shake Shack   N/A
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 30

Table of Contents

U.S. ANCHOR/BIG BOX OPENINGS

PROPERTY NAME/LOCATION

  PROPERTY TYPE   NEW TENANT   FORMER TENANT

Southridge Mall - Greendale (Milwaukee), WI

  Mall   Dick's Sporting Goods   Sears

      Round 1   Sears

Stanford Shopping Center - Palo Alto (San Jose), CA

  Mall   Jeffrey   Ralph Lauren

Tyrone Square - St. Petersburg (Tampa), FL

  Mall   Lucky's Market   Sears

      PetSmart   Sears

Waterloo Premium Outlets - Waterloo, NY

  Premium Outlets   H&M   Eddie Bauer

West Town - Knoxville, TN

  Mall   Cinebarre Theatre   Regal Cinema

 

           

Openings Projected for 2019 and Beyond

           

Brea Mall - Brea (Los Angeles), CA

  Mall   Life Time Athletic   Sears

Forum Shops at Caesars, The - Las Vegas, NV

  Mall   The Slanted Door   N/A

Mall at Rockingham Park, The - Salem (Boston), NH

  Mall   Cinemark Theatre   N/A

Mall of Georgia - Buford (Atlanta), GA

  Mall   Seasons 52   N/A

Midland Park Mall - Midland, TX

  Mall   Dillards  (1)   Sears

Orland Square - Orland Park (Chicago), IL

  Mall   AMC Theatre   Sears

Phipps Plaza - Atlanta, GA

  Mall   Life Time Athletic   Belk

Pier Park - Panama City Beach, FL

  Lifestyle Center   I Love Sugar   N/A

      Paula Deen's Family Kitchen   N/A

Sawgrass Mills - Sunrise (Miami), FL

  Mills   Primark   JCPenney Outlet

      Seasons 52   N/A

Southdale Center - Edina (Minneapolis), MN

  Mall   Life Time Athletic & Sport/Work   JCPenney

      Restoration Hardware   N/A

Summit Mall - Akron, OH

  Mall   Arhaus   N/A

Woodfield Mall - Schaumburg (Chicago), IL

  Mall   Shake Shack   N/A
(1)
Tenant has an existing store at this center but will relocate or has relocated to a new location.
(2)
Tenant to remain in a portion of its existing space.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 31

Table of Contents

DENSIFICATION PROJECTS

PROPERTY NAME/LOCATION

  PROPERTY TYPE   PROJECT DESCRIPTION  

 

Openings in 2016

         

 

Phipps Plaza - Atlanta, GA

 

Hotel

 

166 room AC Hotel by Marriott

 

 

 

 

 

 

 

 

 

Openings in 2017

         

 

Phipps Plaza - Atlanta, GA

 

Residential

 

319 residential units

 

 

The Shops at Clearfork - Fort Worth, TX

 

Office

 

130,000 SF of Class A office space

 

 

Houston Premium Outlets - Cypress (Houston), TX

 

Hotel

 

95 room Holiday Inn Express

 

 

Coconut Point - Estero, FL

 

Hotel

 

114 room Town Place Suites

 

 

Woodland Hills Mall - Tulsa, OK

 

Hotel

 

110 room Holiday Inn Express

 

 

 

 

 

 

 

 

 

Openings in 2018

         

 

Allen Premium Outlets - Allen (Dallas), TX

 

Hotel

 

101 room Staybridge Suites

 

 

Arundel Mills - Hanover (Baltimore), MD

 

Hotel

 

310 room Live! Hotel with 1,500 seat concert venue

 

 

Colorado Mills - Lakewood (Denver), CO

 

Hotel

 

127 room SpringHill Suites

 

 

Southdale Center - Edina (Minneapolis), MN

 

Hotel

 

146 room Homewood Suites

 

 

 

 

 

 

 

 

 

Openings Projected for 2019 and Beyond

         

 

Auburn Mall - Auburn, MA

 

Office

 

Reliant Medical - 88,000 SF

 

 

Firewheel Town Center - Garland (Dallas), TX

 

Hotel

 

90 room Fairfield Inn

 

 

Roosevelt Field - Garden City (New York), NY

 

Hotel

 

163 room Residence Inn by Marriott

 

 

Round Rock Premium Outlets - Round Rock (Austin), TX

 

Hotel

 

170 room Embassy Suites

 

 

Round Rock Premium Outlets - Round Rock (Austin), TX

 

Residential

 

460 residential units

 

 

Phipps Plaza - Atlanta, GA

 

Hotel

 

150 room Nobu Hotel

 

 

Phipps Plaza - Atlanta, GA

 

Office

 

300,000 SF of Class A office space

 

 

Sawgrass Mills - Sunrise (Miami), FL

 

Hotel

 

170 room AC Hotel by Marriott

 

 

Shops at Mission Viejo, The - Mission Viejo (Los Angeles), CA

 

Office

 

105,000 SF of Class A medical office space

 

 

Wolfchase Galleria - Memphis, TN

 

Hotel

 

112 room Courtyard by Marriott

 

 

 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 32

Table of Contents

COMMON AND PREFERRED STOCK INFORMATION

                    CHANGES IN COMMON SHARE AND LIMITED PARTNERSHIP UNIT OWNERSHIP
                    
For the Period December 31, 2017 through March 31, 2018

 
COMMON
SHARES (1)

 


LIMITED
PARTNERSHIP
UNITS (2)

Number Outstanding at December 31, 2017

    311,166,854     46,879,625

Activity During the First Three Months of 2018:

   
 
   
 

Exchange of Limited Partnership Units for Common Stock

   
6,000
   
(6,000)

Redemption of Limited Partnership Units for Cash

   
   
(43,781)

Treasury Shares Acquired Related to Stock Grant Recipients' Tax Obligations and Other

   
(1,608)
   

Restricted Stock Awards (3)

   
236
   

Repurchase of Simon Property Group Common Stock in open market

   
(1,473,588)
   

Number Outstanding at March 31, 2018

   
309,697,894
   
46,829,844

Number of Limited Partnership Units and Common Shares at March 31, 2018

   
356,527,738
     

                    PREFERRED STOCK/UNITS OUTSTANDING AS OF MARCH 31, 2018
                    
($ in 000's, except per share amounts)

ISSUER

  DESCRIPTION  
NUMBER OF
SHARES/UNITS

 


PER SHARE
LIQUIDATION
PREFERENCE


 


AGGREGATE
LIQUIDATION
PREFERENCE


 

TICKER
SYMBOL

Preferred Stock:

                           

Simon Property Group, Inc.

 

Series J 8.375% Cumulative Redeemable (4)

   
796,948
 
$

50.00
 
$

39,847
   
SPGPrJ

Preferred Units:

 

 

   
 
   
 
   
 
   
 

Simon Property Group, L.P.

 

7.50% Cumulative Redeemable (5)

   
255,373
 
$

100.00
 
$

25,537
   
N/A
(1)
Excludes Limited Partnership preferred units relating to preferred stock outstanding.
(2)
Excludes units owned by the Company (shown here as Common Shares) and Limited Partnership Units not exchangeable for common shares.
(3)
Represents restricted stock awards issued pursuant to the Operating Partnership's 1998 Stock Incentive Plan, net of forfeitures.
(4)
Each share is redeemable on or after October 15, 2027. The shares are traded on the New York Stock Exchange. The closing price on March 31, 2018 was $71.61 per share.
(5)
Each preferred unit is redeemable upon the occurrence of certain tax triggering events.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 33

Table of Contents

CREDIT PROFILE
(As of March 31, unless otherwise indicated)

GRAPHIC

(1)
Includes WPG properties NOI and FFO through the effective date of the WPG spin-off, net of transaction expenses related to the spin-off of WPG.
(2)
Includes a $0.35 per share charge for loss on extinguishment of debt.
(3)
Includes a $0.33 per share charge for loss on extinguishment of debt and $0.22 per share for gain upon sale of marketable securities.
(4)
Includes a charge for loss on extinguishment of debt of $0.38 per share and $0.36 per share in 2016 and 2017, respectively.
 
1Q 2018 SUPPLEMENTAL 1Q 2018 SUPPLEMENTAL 34

Table of Contents

SUMMARY OF INDEBTEDNESS
As of March 31, 2018
(In thousands)

 

TOTAL
INDEBTEDNESS


     


OUR
SHARE OF
INDEBTEDNESS



     



WEIGHTED
AVERAGE
END OF PERIOD
INTEREST RATE




     



WEIGHTED
AVERAGE
YEARS TO
MATURITY




 

Consolidated Indebtedness

                                                   

Mortgage Debt

                                                   

Fixed Rate

  $ 5,819,146           $ 5,702,487             4.06%             6.1    

Variable Rate Debt

    909,325             855,130             2.65%             3.7    

Total Mortgage Debt

    6,728,471             6,557,617             3.88%             5.8    

Unsecured Debt