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Exhibit 99.1

SIMON PROPERTY GROUP




EARNINGS RELEASE & SUPPLEMENTAL INFORMATION
UNAUDITED FOURTH QUARTER 2017

GRAPHIC


Table of Contents

TABLE OF CONTENTS

EARNINGS RELEASE AND SUPPLEMENTAL INFORMATION
FOR THE QUARTER ENDED DECEMBER 31, 2017


 
PAGE  

 

       

Earnings Release(1)

    2-14  

Overview

   
 
 

The Company

    15  

Stock Information, Credit Ratings and Senior Unsecured Debt Covenants

    16  

Financial Data

       

Selected Financial and Equity Information

    17  

Net Operating Income (NOI) Composition

    18  

Net Operating Income Overview

    19  

Reconciliations of Non-GAAP Financial Measures

    20  

Consolidated Net Income to NOI

    20  

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

    21  

Other Income, Other Expense and Capitalized Interest

    22  

Operational Data

       

U.S. Malls and Premium Outlets Operating Information

    23  

The Mills and International Operating Information

    24  

U.S. Malls and Premium Outlets Lease Expirations

    25  

U.S. Malls and Premium Outlets Top Tenants

    26  

Development Activity

   
 
 

Capital Expenditures

    27  

Development Activity Summary

    28  

Development Activity Report

    29-30  

U.S. Anchor/Big Box Openings

    31-33  

Densification Projects

    34  

Balance Sheet Information

   
 
 

Common and Preferred Stock Information

    35  

Changes in Common Share and Limited Partnership Unit Ownership

    35  

Preferred Stock/Units Outstanding

    35  

Credit Profile

    36  

Summary of Indebtedness

    37  

Total Debt Amortization and Maturities by Year (Our Share)

    38  

Property and Debt Information

   
39-48
 

Other

   
 
 

Non-GAAP Pro-Rata Financial Information

    49-52  
(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 FOURTH QUARTER AND FULL YEAR 2017 RESULTS AND RAISES QUARTERLY DIVIDEND

INDIANAPOLIS, January 31, 2018 - Simon, a global leader in premier shopping, dining and entertainment destinations, today reported results for the quarter and twelve months ended December 31, 2017.

RESULTS FOR THE YEAR 1

Net income attributable to common stockholders was $1.945 billion, or $6.24 per diluted share, as compared to $1.836 billion, or $5.87 per diluted share, in the prior year period. The 2017 and 2016 results include charges related to the redemption of certain senior notes of Simon Property Group, L.P. of $0.36 and $0.38 per diluted share, respectively.

Funds from Operations ("FFO") was $4.021 billion, or $11.21 per diluted share, as compared to $3.793 billion, or $10.49 per diluted share, in the prior year period, an increase of 6.9%. The 2017 and 2016 results include the aforementioned charges related to the redemption of certain of our senior notes.

Growth in comparable FFO per diluted share for the twelve months ended December 31, 2017 was 6.4%.

RESULTS FOR THE QUARTER 1

Net income attributable to common stockholders was $571.1 million, or $1.84 per diluted share, as compared to $394.4 million, or $1.26 per diluted share, in the prior year period. Results for the fourth quarter of 2016 include a $0.38 per diluted share charge related to the redemption of certain senior notes.

FFO was $1.115 billion, or $3.12 per diluted share, as compared to $912.2 million, or $2.53 per diluted share, in the prior year period. FFO in the fourth quarter of 2016 includes the aforementioned charge related to the redemption of certain of our senior notes.

Growth in comparable FFO per diluted share for the three months ended December 31, 2017 was 7.2%.

   

1
For a reconciliation of FFO and net income per diluted share on a comparable basis, please see Footnote J of the Footnotes to Unaudited Financial Information.
 
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EARNINGS RELEASE

"We had a strong fourth quarter concluding another year of industry-leading growth with record earnings and dividends for our company," said David Simon, Chairman and Chief Executive Officer. "In 2017, we opened five new centers, delivered six significant property transformations and expansions, and completed several major financing transactions that further enhanced our strong balance sheet. We continue to strengthen our portfolio through our innovative and disciplined investment activities that will allow us to continue to deliver cash flow and FFO per share growth."

U.S. MALLS AND PREMIUM OUTLETS OPERATING STATISTICS

Occupancy was 95.6% at December 31, 2017.

Base minimum rent per square foot was $53.11 at December 31, 2017, an increase of 2.9% compared to the prior year period.

Leasing spread per square foot for the trailing 12-months ended December 31, 2017 was $7.42, an increase of 11.4%.

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

Total portfolio NOI growth for the twelve months ended December 31, 2017 was 4.5%. 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 twelve months ended December 31, 2017 was 3.2%.

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 February 28, 2018 to stockholders of record on February 14, 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 March 30, 2018 to stockholders of record on March 16, 2018.

 
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DEVELOPMENT ACTIVITY

During the quarter, the Company announced plans to create the Southeast's premier mixed-use development at Atlanta's Phipps Plaza, headlined by the arrival of a new Nobu Hotel and Nobu Atlanta Restaurant. Additional elements of this exciting new development call for a unique, curated dining experience, a 90,000 square-foot Life Time® Athletic healthy living and entertainment destination, and a 12-story Class A office building, complete with a three-story lower level parking garage. Construction is slated to commence in 2018 with a phased opening beginning in spring 2020.

During the quarter, we started construction on two new development projects scheduled to open in 2018, including:

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

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

Construction continues on two new development projects scheduled to open in 2018, including:

Premium Outlet Collection Edmonton IA (Edmonton, Alberta, Canada); scheduled to open in May. Simon owns a 50% interest in this project.

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

Construction also continues on significant redevelopment and expansion projects at properties including Aventura Mall, 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 25 properties in the U.S., Canada and Asia.

 
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FINANCING ACTIVITY

The Company was active in both the unsecured and secured credit markets in 2017, continuing to lower our effective borrowing costs.

The Company completed two senior notes offerings totaling $2.7 billion, with a weighted average coupon rate of 3.07% and a weighted average term of 7.9 years.

During 2017, and subsequent to year-end, we retired three series of senior notes comprising approximately $2.6 billion at a weighted average coupon rate of 3.65%. The two new notes offerings had a weighted average coupon rate approximately 60 basis points lower than the notes that were retired.

The Company also amended and extended its $4.0 billion multi-currency revolving credit facility, which reduced pricing to LIBOR plus 77.5 basis points and extended the term to June 30, 2022.

With regard to secured debt activity, we closed or committed on 20 mortgage loans totaling approximately $2.9 billion, (U.S. dollar equivalent), of which Simon's share is $1.8 billion. The weighted average interest rate and weighted average term on these loans is 3.37% and 6.7 years, respectively.

As of December 31, 2017, Simon had approximately $8.0 billion of liquidity consisting of cash on hand, including its share of joint venture cash, and available capacity under its revolving credit facilities.

2018 GUIDANCE

The Company currently estimates net income to be within a range of $6.90 to $7.02 per diluted share for the year ending December 31, 2018 and that FFO will be within a range of $11.90 to $12.02 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

  $ 6.90   $ 7.02  

Depreciation and amortization including Simon's share of unconsolidated entities

    5.00     5.00  

Estimated FFO per diluted share

  $ 11.90   $ 12.02  
 
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CONFERENCE CALL

Simon will hold a conference call to discuss the quarterly financial results today at 8:30 a.m. Eastern Time, Wednesday, January 31, 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 February 6, 2018. To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 4376318.

SUPPLEMENTAL MATERIALS AND WEBSITE

Supplemental information on our fourth quarter 2017 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 at 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, comparable FFO per share, comparable earnings 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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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 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 adversely affects 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 DECEMBER 31,
  FOR THE TWELVE MONTHS
ENDED DECEMBER 31,
 
 
 
2017
 
2016
   
2017
   
2016
 

REVENUE (1) :

                         

Minimum rent

  $ 880,475   $ 874,937   $ 3,440,009   $ 3,358,498  

Overage rent

    52,870     61,253     147,471     161,508  

Tenant reimbursements

    386,767     377,941     1,532,923     1,494,804  

Management fees and other revenues

    30,400     34,277     121,259     143,875  

Other income

    77,180     77,558     296,978     276,544  

Total revenue

    1,427,692     1,425,966     5,538,640     5,435,229  

EXPENSES:

                         

Property operating

    112,951     104,479     443,177     432,394  

Depreciation and amortization

    325,187     336,717     1,275,452     1,252,673  

Real estate taxes

    107,976     110,374     440,003     439,030  

Repairs and maintenance

    24,247     27,638     96,900     99,723  

Advertising and promotion

    42,416     38,896     150,865     142,801  

Provision for (recovery of) credit losses

    539     (542)     11,304     7,319  

Home and regional office costs

    24,243     37,867     135,150     158,406  

General and administrative

    11,883     19,939     51,972     65,082  

Other

    28,798     50,097     131,477     116,973  

Total operating expenses           

    678,240     725,465     2,736,300     2,714,401  

OPERATING INCOME

    749,452     700,501     2,802,340     2,720,828  

Interest expense

    (204,986)     (209,508)     (809,393)     (857,554)  

Loss on extinguishment of debt

        (136,777)     (128,618)     (136,777)  

Income and other taxes

    (6,362)     (1,052)     (23,343)     (29,678)  

Income from unconsolidated entities

    123,059     94,344     400,270     353,334  

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

                         

and interests in unconsolidated entities, net

    (1,342)     8,094     3,647     84,553  

CONSOLIDATED NET INCOME

    659,821     455,602     2,244,903     2,134,706  

Net income attributable to noncontrolling interests

    87,871     60,337     296,941     295,810  

Preferred dividends

    834     834     3,337     3,337  

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 571,116   $ 394,431   $ 1,944,625   $ 1,835,559  

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

                         

Net income attributable to common stockholders

  $ 1.84   $ 1.26   $ 6.24   $ 5.87  
(1)
No revenue was recognized for the three months ended December 31, 2017 from the Company's two centers in Puerto Rico as a result of ongoing repair and restoration efforts due to the impact of Hurricane Maria.
 
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Simon Property Group, Inc.
Unaudited Consolidated Balance Sheets
(Dollars in thousands, except share amounts)

 
  DECEMBER 31,
2017
  DECEMBER 31,
2016
 

ASSETS:

             

Investment properties, at cost

  $ 36,393,464   $ 35,226,089  

Less — accumulated depreciation

    11,935,949     10,865,754  

    24,457,515     24,360,335  

Cash and cash equivalents

    1,482,309     560,059  

Tenant receivables and accrued revenue, net

    742,672     664,619  

Investment in unconsolidated entities, at equity

    2,266,483     2,367,583  

Investment in Klépierre, at equity

    1,934,676     1,797,394  

Deferred costs and other assets

    1,373,983     1,353,588  

Total assets

  $ 32,257,638   $ 31,103,578  
            

LIABILITIES:

             

Mortgages and unsecured indebtedness

  $ 24,632,463   $ 22,977,104  

Accounts payable, accrued expenses, intangibles, and deferred revenues

    1,269,190     1,214,022  

Cash distributions and losses in unconsolidated entities, at equity

    1,406,378     1,359,738  

Other liabilities

    520,363     455,040  

Total liabilities

    27,828,394     26,005,904  

Commitments and contingencies

             

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

    190,480     137,762  

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

   
43,077
   
43,405
 

Common stock, $0.0001 par value, 511,990,000 shares authorized, 320,322,774 and 319,823,322 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

   
9,614,748
   
9,523,086
 

Accumulated deficit

    (4,782,173)     (4,459,387)  

Accumulated other comprehensive loss

    (110,453)     (114,126)  

Common stock held in treasury, at cost, 9,163,920 and 6,756,748 shares, respectively

    (1,079,063)     (682,562)  

Total stockholders' equity

    3,686,168     4,310,448  

Noncontrolling interests

    552,596     649,464  

Total equity

    4,238,764     4,959,912  

Total liabilities and equity

  $ 32,257,638   $ 31,103,578  
            
 
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Simon Property Group, Inc.
Unaudited Joint Venture Combined Statements of Operations
(Dollars in thousands)

 
  FOR THE THREE MONTHS
ENDED DECEMBER 31,
  FOR THE TWELVE MONTHS
ENDED DECEMBER 31,
 
 
 
2017
 
2016
   
2017
   
2016
 

REVENUE:

                         

Minimum rent

  $ 485,253   $ 472,245   $ 1,868,613   $ 1,823,674  

Overage rent

    60,533     59,047     210,909     200,638  

Tenant reimbursements

    216,759     216,160     860,778     862,155  

Other income

    80,225     68,739     290,515     237,782  

Total revenue

    842,770     816,191     3,230,815     3,124,249  

OPERATING EXPENSES:

   
 
   
 
   
 
   
 
 

Property operating

    141,584     136,284     551,885     538,002  

Depreciation and amortization           

    170,402     154,045     640,286     588,666  

Real estate taxes

    60,419     58,126     245,646     239,917  

Repairs and maintenance

    21,797     20,350     81,309     76,380  

Advertising and promotion

    22,609     26,766     86,480     88,956  

(Recovery of) provision for credit losses

    (984)     2,162     6,645     7,603  

Other

    50,477     49,786     184,037     183,435  

Total operating expenses

    466,304     447,519     1,796,288     1,722,959  

OPERATING INCOME

   
376,466
   
368,672
   
1,434,527
   
1,401,290
 

Interest expense

    (154,669)     (141,473)     (593,062)     (585,958)  

(Loss) gain on sale or disposal of assets and interests in unconsolidated entities

    (2,239)         (2,239)     101,051  

NET INCOME

  $ 219,558   $ 227,199   $ 839,226   $ 916,383  

Third-Party Investors' Share of Net Income

  $ 110,001   $ 115,353   $ 424,533   $ 452,844  

Our Share of Net Income

    109,557     111,846     414,693     463,539  

Amortization of Excess Investment (A)

    (21,760)     (23,542)     (89,804)     (94,213)  

Our Share of Loss (Gain) on Sale or Disposal of Assets and Interests in Unconsolidated Entities, net

    1,342         1,342     (22,636)  

Our Share of Gain on Sale or Disposal of Assets and Interests Included in Other Income in the Consolidated Financial Statements

                (36,153)  

Income from Unconsolidated Entities (B)

  $ 89,139   $ 88,304   $ 326,231   $ 310,537  

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

 
  DECEMBER 31,
2017
  DECEMBER 31,
2016
 

Assets:

             

Investment properties, at cost

  $ 18,328,747   $ 17,549,078  

Less - accumulated depreciation

    6,371,363     5,892,960  

    11,957,384     11,656,118  

Cash and cash equivalents

   
956,084
   
778,455
 

Tenant receivables and accrued revenue, net

    403,125     348,139  

Deferred costs and other assets

    355,585     351,098  

Total assets

  $ 13,672,178   $ 13,133,810  

Liabilities and Partners' Deficit:

   
 
   
 
 

Mortgages

  $ 14,784,310   $ 14,237,576  

Accounts payable, accrued expenses, intangibles, and deferred revenue

    1,033,674     867,003  

Other liabilities

    365,857     325,078  

Total liabilities

    16,183,841     15,429,657  

Preferred units

   
67,450
   
67,450
 

Partners' deficit

    (2,579,113)     (2,363,297)  

Total liabilities and partners' deficit

  $ 13,672,178   $ 13,133,810  

Our Share of:

   
 
   
 
 

Partners' deficit

  $ (1,144,620)   $ (1,018,755)  

Add: Excess Investment (A)

    1,733,063     1,791,691  

Our net Investment in unconsolidated entities, at equity

  $ 588,443   $ 772,936  
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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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 DECEMBER 31,
  FOR THE TWELVE MONTHS
ENDED DECEMBER 31,
   
 
   
   
2017
   
2016
   
2017
 
2016
   

 

Consolidated Net Income (D)

  $ 659,821   $ 455,602   $ 2,244,903   $ 2,134,706    

 

Adjustments to Arrive at FFO:

                           

 

Depreciation and amortization from consolidated properties

    321,397     330,708     1,260,865     1,236,476    

 

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

    139,026     140,046     540,718     527,976    

 

Loss (gain) upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net (E)

    1,342     (8,094)     (3,647)     (80,154)    

 

Net income attributable to noncontrolling interest holders in properties

    (734)     (563)     (13)     (7,218)    

 

Noncontrolling interests portion of depreciation and amortization

    (4,248)     (4,159)     (17,069)     (13,583)    

 

Preferred distributions and dividends

    (1,313)     (1,313)     (5,252)     (5,252)    

 

FFO of the Operating Partnership (G)

  $ 1,115,291   $ 912,227   $ 4,020,505   $ 3,792,951    

 

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

                           

 

Diluted net income per share

  $ 1.84   $ 1.26   $ 6.24   $ 5.87    

 

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

    1.28     1.29     4.98     4.84    

 

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

        (0.02)     (0.01)     (0.22)    

 

Diluted FFO per share (H)

  $ 3.12   $ 2.53   $ 11.21   $ 10.49    

   

 

 

                           

 

 

Details for per share calculations:

                           

 

 

FFO of the Operating Partnership (G)

  $ 1,115,291   $ 912,227   $ 4,020,505   $ 3,792,951    

 

 

Diluted FFO allocable to unitholders

    (146,935)     (119,780)     (529,595)     (512,361)    
 

 

 

Diluted FFO allocable to common stockholders (I)

  $ 968,356   $ 792,447   $ 3,490,910   $ 3,280,590    
 
 
 

 

 

Basic and Diluted weighted average shares outstanding

    310,856     313,685     311,517     312,691    

 

 

Weighted average limited partnership units outstanding

    47,169     47,502     47,260     48,836    
 

 

 

Basic and Diluted weighted average shares and units outstanding

    358,025     361,187     358,777     361,527    
 
 
 

 

 

Basic and Diluted FFO per Share (H)

  $ 3.12   $ 2.53   $ 11.21   $ 10.49    

 

 

Percent Change

    23.3%           6.9%          
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 12

Table of Contents

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-K.

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

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

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

(D)
Includes our share of:

-
Gains on land sales of $2.2 million and $8.8 million for the three months ended December 31, 2017 and 2016, respectively, and $12.3 million and $14.0 million for the twelve months ended December 31, 2017 and 2016, respectively.

-
Straight-line adjustments increased income by $7.4 million and $12.5 million for the three months ended December 31, 2017 and 2016, respectively, and $34.5 million and $56.8 million for the twelve months ended December 31, 2017 and 2016, respectively.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 13

Table of Contents

    -
    Amortization of fair market value of leases from acquisitions increased income by $1.4 million and $2.3 million for the three months ended December 31, 2017 and 2016, respectively, and $6.0 million and $9.6 million for the twelve months ended December 31, 2017 and 2016, respectively.

    -
    Debt premium amortization of $0.0 million and $5.1 million for the three months ended December 31, 2017 and 2016, respectively, and $0.2 million and $19.0 million for the twelve months ended December 31, 2017 and 2016, respectively.

(E)
Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities for the three and twelve months ended December 31, 2016 was $8.1 million and $84.6 million, respectively. Noncontrolling interest portion of the gain for the three and twelve months ended December 31, 2016 was $0.0 million and $4.4 million, respectively.

(F)
Includes noncontrolling interests gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities of $0.01 per share for the twelve months ended December 31, 2016.

(G)
Includes a loss on the extinguishment of debt of $128.6 million for the twelve months ended December 31, 2017. Includes a loss on the extinguishment of debt of $136.8 million for the three and twelve months ended December 31, 2016.

(H)
Includes Basic and Diluted FFO per share related to a loss on the extinguishment of debt of $0.36 for the twelve months ended December 31, 2017. Includes Basic and Diluted FFO per share related to a loss on the extinguishment of debt of $0.38 for the three and twelve months ended December 31, 2016.

(I)
Includes Diluted FFO allocable to common stockholders related to a loss on the extinguishment of debt of $111.7 million for the twelve months ended December 31, 2017. Includes Diluted FFO allocable to common stockholders related to a loss on the extinguishment of debt of $118.3 million for the three and twelve months ended December 31, 2016.

(J)
Reconciliation of reported earnings per share to comparable earnings per share and FFO per share to comparable FFO per share:
 
  THREE MONTHS
ENDED
DECEMBER 31,
  TWELVE MONTHS
ENDED
DECEMBER 31,
 
 
  2017   2016   2017   2016  

Reported earnings per share

  $ 1.84   $ 1.26   $ 6.24   $ 5.87  

Add: Loss on extinguishment of debt

    -     0.38     0.36     0.38  

Comparable earnings per share

  $ 1.84   $ 1.64   $ 6.60   $ 6.25  

Comparable earnings per share growth

    12.2%           5.6%        


 
  THREE MONTHS
ENDED
DECEMBER 31,
  TWELVE MONTHS
ENDED
DECEMBER 31,
 
 
  2017   2016   2017   2016  

Reported FFO per share

  $ 3.12   $ 2.53   $ 11.21   $ 10.49  

Add: Loss on extinguishment of debt

    -     0.38     0.36     0.38  

Comparable FFO per share

  $ 3.12   $ 2.91   $ 11.57   $ 10.87  

Comparable FFO per share growth

    7.2%           6.4%        
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 14

Table of Contents

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 December 31, 2017, we owned or had an interest in 234 properties comprising 191 million square feet in North America, Asia and Europe. Additionally, at December 31, 2017, we had a 21.0% 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 December 31, 2017 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: our ability to meet debt service requirements, the availability and terms of financing, changes in our credit rating or outlook, 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, environmental liabilities, international, national, regional and local economic conditions, changes in market rental rates, security breaches that could compromise our information technology or infrastructure or personally identifiable data of customers of our retail properties, 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, the intensely competitive market environment in the retail industry, costs of common area maintenance, risks related to international activities, including, without limitation, the impact of the United Kingdom's vote to leave the European Union, insurance costs and coverage, the loss of key management personnel, terrorist activities, changes in economic and market conditions and maintenance of our status as a real estate investment trust. 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).

 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 15

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%   263%   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.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 16

Table of Contents

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

 
THREE MONTHS ENDED
DECEMBER 31,
 

TWELVE MONTHS ENDED
DECEMBER 31,
 
   

 
2017
2016  
2017
2016  

Financial Highlights

                         

Total Revenue - Consolidated Properties

  $ 1,427,692   $ 1,425,966   $ 5,538,640   $ 5,435,229  

Consolidated Net Income

 
$

659,821
 
$

455,602
 
$

2,244,903
 
$

2,134,706
 

Net Income Attributable to Common Stockholders

  $ 571,116   $ 394,431   $ 1,944,625   $ 1,835,559  

Basic and Diluted Earnings per Common Share (EPS)

  $ 1.84   $ 1.26   $ 6.24   $ 5.87  

Funds from Operations (FFO) of the Operating Partnership

 
$

1,115,291
 
$

912,227
 
$

4,020,505
 
$

3,792,951
 

Basic and Diluted FFO per Share (FFOPS)

  $ 3.12   $ 2.53   $ 11.21   $ 10.49  

Dividends/Distributions per Share/Unit

 
$

1.85
 
$

1.65
 
$

7.15
 
$

6.50
 


Stockholders' Equity Information

 


AS OF
DECEMBER 31,
2017





AS OF
DECEMBER 31,
2016
 

Limited Partners' Units Outstanding at end of period

    46,879     47,276  

Common Shares Outstanding at end of period

    311,167     313,075  

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

    358,046     360,351  

Weighted Average Limited Partnership Units Outstanding

    47,260     48,836  

Weighted Average Common Shares Outstanding:

             

Basic and Diluted - for purposes of EPS and FFOPS

    311,517     312,691  

 

             

Debt Information

             

Share of Consolidated Debt

  $ 24,465,117   $ 22,836,945  

Share of Joint Venture Debt

    7,011,525     6,743,252  

Share of Total Debt

  $ 31,476,642   $ 29,580,197  

 

             

Market Capitalization

             

Common Stock Price at end of period

  $ 171.74   $ 177.67  

Common Equity Capitalization, including Limited Partnership Units

  $ 61,490,902   $ 64,023,503  

Preferred Equity Capitalization, including Limited Partnership Preferred Units

    82,527     79,204  

Total Equity Market Capitalization

  $ 61,573,429   $ 64,102,707  

Total Market Capitalization - Including Share of Total Debt

  $ 93,050,071   $ 93,682,904  

 

             

Debt to Total Market Capitalization

    33.8%     31.6%  
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 17

Table of Contents

NET OPERATING INCOME (NOI) COMPOSITION (1)
For the Twelve Months Ended December 31, 2017

 

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 and international Designer Outlets.
(3)
Includes Lifestyle Centers.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 18

Table of Contents

NET OPERATING INCOME OVERVIEW (1)
(In thousands)

 
FOR THE THREE MONTHS
ENDED DECEMBER 31,
  % GROWTH  
FOR THE TWELVE MONTHS
ENDED DECEMBER 31,
  % GROWTH
   

 
2017
2016    
2017
2016    

Comparable Property NOI (2)

  $ 1,430,030   $ 1,399,534   2.2%   $ 5,451,675   $ 5,282,343   3.2%

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

   
15,943
   
16,878
       
92,342
   
64,770
   

International Properties (4)

    124,816     106,763         450,454     398,734    

Our share of NOI from Investments (5)

    70,599     62,991         267,789     248,705    

                               

Portfolio NOI

  $ 1,641,388   $ 1,586,166   3.5%   $ 6,262,260   $ 5,994,552   4.5%

Corporate and Other NOI Sources (6)

   
66,542
   
36,760
       
169,373
   
217,610
   

Total NOI - See reconciliation on following page

  $ 1,707,930   $ 1,622,926       $ 6,431,633   $ 6,212,162    

Less: Joint Venture Partners' Share of NOI

   
287,070
   
275,632
       
1,091,989
   
1,054,221
   

Our Share of Total NOI

  $ 1,420,860   $ 1,347,294       $ 5,339,644   $ 5,157,941    
(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 and International Designer Outlets.
(5)
Includes our share of NOI of Klépierre and HBS.
(6)
Includes income components excluded from Portfolio NOI and Comparable NOI (domestic lease termination income, interest income, land sale gains, straight line rent, above/below market lease adjustments), gains on sale of marketable securities, Simon management company operations, and our TMLP interests and other assets.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 19

Table of Contents

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(In thousands, except as noted)

RECONCILIATION OF NET INCOME TO NOI

    

                       

 
THREE MONTHS ENDED
DECEMBER 31,
 

TWELVE MONTHS ENDED
DECEMBER 31,
   

  2017   2016   2017   2016

Reconciliation of NOI of consolidated entities:

                   

Consolidated Net Income

  $ 659,821   $ 455,602   $ 2,244,903   $ 2,134,706

Income and other taxes

  6,362     1,052   23,343     29,678

Interest expense

  204,986     209,508   809,393     857,554

Income from unconsolidated entities

  (123,059)     (94,344)   (400,270)     (353,334)

Loss on extinguishment of debt

      136,777   128,618     136,777

Loss (gain) upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net

  1,342     (8,094)   (3,647)     (84,553)

Operating Income

  749,452     700,501   2,802,340     2,720,828

Depreciation and amortization

  325,187     336,717   1,275,452     1,252,673

NOI of consolidated entities

  $ 1,074,639   $ 1,037,218   $ 4,077,792   $ 3,973,501

Reconciliation of NOI of unconsolidated entities:

                   

Net Income

  $ 219,558   $ 227,199   $ 839,226   $ 916,383

Interest expense

  154,669     141,473   593,062     585,958

Loss (gain) on sale or disposal of assets and interests in unconsolidated entities

  2,239       2,239     (101,051)

Operating Income

  376,466     368,672   1,434,527     1,401,290

Depreciation and amortization

  170,402     154,045   640,286     588,666

NOI of unconsolidated entities

  $ 546,868   $ 522,717   $ 2,074,813   $ 1,989,956

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

  86,423     62,991   279,028     248,705

Total NOI

  $ 1,707,930   $ 1,622,926   $ 6,431,633   $ 6,212,162
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 20

Table of Contents

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
DECEMBER 31,
2017







TWELVE
MONTHS ENDED
DECEMBER 31,
2017
 

FFO of the Operating Partnership

  $ 1,115,291   $ 4,020,505  

Non-cash impacts to FFO(1)

    10,077     36,481  

FFO of the Operating Partnership excluding non-cash impacts

    1,125,368     4,056,986  

Tenant allowances

    (43,670)     (157,439)  

Operational capital expenditures

    (56,207)     (127,827)  

Funds available for distribution

  $ 1,025,491   $ 3,771,720  
   
   
   
(1)
Non-cash impacts to FFO of the Operating Partnership include:

    

             

 



THREE
MONTHS ENDED
DECEMBER 31,
2017







TWELVE
MONTHS ENDED
DECEMBER 31,
2017
 

Deductions:

             

Straight-line rent

  $ (7,420)   $ (34,529)  

Fair value of debt amortization

    (42)     (200)  

Fair market value of lease amortization

    (1,383)     (5,977)  

Additions:

             

Stock based compensation expense

    9,725     39,245  

Mortgage, financing fee and terminated swap amortization expense

    9,197     37,942  

  $ 10,077   $ 36,481  

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, comparable FFO per share, comparable earnings 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 19 –21 and in the Earnings Release for the latest period.

 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 21

Table of Contents

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

 
THREE MONTHS
ENDED DECEMBER 31,
 

TWELVE MONTHS
ENDED DECEMBER 31,
   

 
2017
2016  
2017
2016

Consolidated Properties

                       

Other Income

                       

Interest and dividend income

  $ 8,446   $ 4,429   $ 25,802   $ 22,893

Lease settlement income

    9,567     5,697     45,987     22,997

Gains on land sales

    2,330     9,052     11,864     14,100

Realized gains on sales of marketable securities

            21,541    

Other  (1)

    56,837     58,380     191,784     216,554

Totals

  $ 77,180   $ 77,558   $ 296,978   $ 276,544

 

                       

Other Expense

                       

Ground leases

  $ 10,897   $ 10,014   $ 41,237   $ 39,156

Professional fees and other

    17,901     40,083     90,240     77,817

Totals

  $ 28,798   $ 50,097   $ 131,477   $ 116,973

    

                       

 

Capitalized Interest

 
THREE MONTHS
ENDED DECEMBER 31,
 

TWELVE MONTHS
ENDED DECEMBER 31,
   

 
2017
2016  
2017
2016

Interest Capitalized during the Period:

                       

Our Share of Consolidated Properties

  $ 4,294   $ 5,734   $ 24,754   $ 31,244

Our Share of Joint Venture Properties

  $ 381   $ 678   $ 2,152   $ 2,711
(1)
Includes ancillary property revenues, gift cards, marketing, media, parking and sponsorship revenues, gains on sale of non-retail investments and other miscellaneous income items.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 22

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS OPERATING INFORMATION

 
AS OF DECEMBER 31,
 

 
2017
2016

Total Number of Properties

  175     175

Total Square Footage of Properties (in millions)

 

151.1
   
152.0

Ending Occupancy (1):

 

 
   
 

Consolidated Assets

  95.8%     97.1%

Unconsolidated Assets

  95.1%     95.8%

Total Portfolio

  95.6%     96.8%

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

 

 
   
 

Consolidated Assets

  $ 613   $ 600

Unconsolidated Assets

  $ 671   $ 660

Total Portfolio

  $ 628   $ 614

Base Minimum Rent PSF (3):

 

 
   
 

Consolidated Assets

  $ 51.34   $ 49.94

Unconsolidated Assets

  $ 57.88   $ 56.19

Total Portfolio

  $ 53.11   $ 51.59

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 %

12/31/17

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

12/31/16

    8,168,101   $ 69.20   $ 61.38   $ 7.82     12.7%

Occupancy Cost as a Percentage of Sales (5):

12/31/17

  13.2%                        

12/31/16

    13.1%                        
(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.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 23

Table of Contents

THE MILLS AND INTERNATIONAL OPERATING INFORMATION

 
AS OF DECEMBER 31,
 

 
2017
2016

The Mills

         

Total Number of Properties

 

14
   
14

Total Square Footage of Properties (in millions)

 

21.1
   
21.1

Ending Occupancy (1)

 

98.4%
   
98.4%

Total Sales PSF (2)

 
$

587
 
$

565

Base Minimum Rent PSF (3)

 
$

30.98
 
$

29.07

Leasing Spread PSF (4)

 
$

11.36
 
$

13.06

Leasing Spread (Percentage Change) (4)

 

19.7%
   
25.3%

 

         

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

 

99.9%
   
99.5%

Total Sales PSF

 

¥ 105,138
   
¥ 99,971

Base Minimum Rent PSF

 

¥ 5,062
   
¥ 5,038
(1)
See footnote 1 on page 23 for definition, except Ending Occupancy is calculated on all company owned space.
(2)
See footnote 2 on page 23 for definition; calculation methodology is the same as for malls.
(3)
See footnote 3 on page 23 for definition.
(4)
See footnote 4 on page 23 for definition.
(5)
Information supplied by the managing venture partner; includes 9 properties.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 24

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 12/31/17







PERCENTAGE OF
GROSS ANNUAL
RENTAL
REVENUES  (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Inline Stores and Freestanding

                       

Month to Month Leases

   
538
   
1,620,804
 
$

52.55
   
1.6%

2018

    2,308     7,771,584   $ 50.94     7.2%

2019

    2,402     8,614,995   $ 49.85     7.8%

2020

    2,040     7,061,647   $ 51.41     6.6%

2021

    1,912     7,494,766   $ 49.89     6.9%

2022

    1,951     7,450,008   $ 50.07     6.8%

2023

    1,911     7,590,037   $ 54.64     7.5%

2024

    1,541     5,863,148   $ 60.22     6.5%

2025

    1,428     5,337,111   $ 63.21     6.2%

2026

    1,304     4,649,649   $ 60.44     5.1%

2027

    1,013     3,721,038   $ 60.65     4.1%

2028 and Thereafter

    447     2,891,107   $ 45.97     2.5%

Specialty Leasing Agreements w/ terms in excess of 12 months

    1,177     3,232,193   $ 19.06     1.2%

 

                       

Anchors

                       

2018

   
4
   
438,930
 
$

4.41
   
0.0%

2019

    15     1,557,095   $ 4.16     0.1%

2020

    27     3,336,350   $ 4.79     0.3%

2021

    13     1,505,184   $ 4.75     0.1%

2022

    16     2,391,104   $ 6.00     0.2%

2023

    18     2,477,479   $ 6.85     0.3%

2024

    14     958,890   $ 11.04     0.2%

2025

    17     1,977,065   $ 8.58     0.3%

2026

    5     651,342   $ 4.52     0.1%

2027

    8     1,104,436   $ 4.87     0.1%

2028 and Thereafter

    20     2,508,498   $ 6.69     0.3%
(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.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 25

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.

    364     3,696     2.0%     3.5%

L Brands, Inc.

    305     1,890     1.0%     2.1%

Ascena Retail Group Inc

    458     2,557     1.4%     1.9%

Signet Jewelers, Ltd.

    409     606     0.3%     1.6%

PVH Corporation

    239     1,450     0.8%     1.5%

Tapestry, Inc.

    221     884     0.5%     1.3%

Forever 21, Inc.

    81     1,331     0.7%     1.3%

Foot Locker, Inc.

    249     1,091     0.6%     1.3%

Abercrombie & Fitch Co.

    158     1,125     0.6%     1.2%

VF Corporation

    235     1,241     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.

    118     22,710     12.5%     0.4%

Sears Holdings Corporation (2)

    67     10,809     5.9%     0.4%

J.C. Penney Co., Inc.

    66     10,589     5.8%     0.3%

Dillard's, Inc.

    38     6,839     3.8%     *

Nordstrom, Inc.

    28     4,679     2.6%     0.1%

Hudson's Bay Company

    15     2,020     1.1%     0.1%

Dick's Sporting Goods, Inc.

    29     1,975     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 five stores contributed to a joint venture with Seritage.
*
Less than one-tenth of one percent.
 
4Q 2017 SUPPLEMENTAL 4Q 2017 SUPPLEMENTAL 26

Table of Contents

CAPITAL EXPENDITURES
(In thousands)

     

UNCONSOLIDATED
PROPERTIES
   

 
CONSOLIDATED
PROPERTIES

 
TOTAL  
OUR
SHARE

New development projects

  $ 69,918   $ 506,518   $ 256,549

Redevelopment projects with incremental square footage and/or anchor replacement

   
331,376
   
241,149
   
107,829

Redevelopment projects with no incremental square footage

   
156,320
   
85,410
   
36,582

 

                 

Subtotal new development and redevelopment projects

  557,614   833,077   400,960

Tenant allowances

   
128,984
   
62,176
   
28,455

Operational capital expenditures at properties:

                 

CAM expenditures (1)

    87,314     42,347     19,460

Non-CAM expenditures

    17,628     7,759     3,425

 

                 

Totals

  $ 791,540   $ 945,359   $ 452,300

Conversion from accrual to cash basis

   
(59,440)
   
77,794
   
37,220

 

                 

Capital Expenditures for the Twelve Months Ended 12/31/17 (2)

  $ 732,100   $ 1,023,153   $ 489,520

        

                 

Capital Expenditures for the Twelve Months Ended 12/31/16 (2)

  $ 798,465   $ 1,065,463   $ 496,248
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