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TABLE OF CONTENTS

Table of Contents

SIMON PROPERTY GROUP

 



EARNINGS RELEASE & SUPPLEMENTAL INFORMATION
UNAUDITED SECOND QUARTER 2018

GRAPHIC


Table of Contents

TABLE OF CONTENTS

EARNINGS RELEASE AND SUPPLEMENTAL INFORMATION
FOR THE QUARTER ENDED JUNE 30, 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

    27-28  

Development Activity Report

    29-30  

U.S. Tenant Openings of Note

    31-32  

Densification Projects

    33  

Balance Sheet Information

       

Common and Preferred Stock Information

    34  

Changes in Common Share and Limited Partnership Unit Ownership

    34  

Preferred Stock/Units Outstanding

    34  

Credit Profile

    35  

Summary of Indebtedness

    36  

Total Debt Amortization and Maturities by Year (Our Share)

    37  

Property and Debt Information

   
38-47
 

Other

       

Non-GAAP Pro-Rata Financial Information

    48  
(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 RECORD SECOND QUARTER 2018 RESULTS AND RAISES QUARTERLY DIVIDEND AND FULL YEAR 2018 GUIDANCE

INDIANAPOLIS, July 30, 2018 - Simon, a global leader in premier shopping, dining and entertainment destinations, today reported results for the quarter ended June 30, 2018.

RESULTS FOR THE QUARTER

Net income attributable to common stockholders was $547.0 million, or $1.77 per diluted share, as compared to $382.0 million, or $1.23 per diluted share, in the prior year period. Results for the second quarter 2017 included a charge of $0.36 per diluted share related to the early redemption of certain senior notes of Simon Property Group, L.P.

Funds from Operations ("FFO") was $1.061 billion, or $2.98 per diluted share, as compared to $884.7 million, or $2.47 per diluted share, in the prior year period, a 20.6% increase. FFO in the second quarter 2017 includes the aforementioned charge related to the redemption of certain of our senior notes.

RESULTS FOR THE SIX MONTHS

Net income attributable to common stockholders was $1.168 billion, or $3.77 per diluted share, as compared to $859.7 million, or $2.75 per diluted share, in the prior year period. Results for the six months ended 2018 include net gains of $144.9 million, or $0.41 per diluted share, primarily related to disposition activity. Results for the six months ended 2017 include the $0.36 per diluted share charge on the extinguishment of debt.

FFO was $2.087 billion, or $5.85 per diluted share, as compared to $1.870 billion, or $5.20 per diluted share, in the prior year period, a 12.5% increase. FFO for the six months ended 2017 includes the aforementioned charge on the extinguishment of debt.

"This was an excellent quarter for our Company, with strong financial and operational performance and the successful opening of our fourth outlet center in Canada," said David Simon, Chairman and Chief Executive Officer. "Based upon our results to date and expectations for the remainder of 2018, today, we raised our quarterly dividend and are again 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 June 30, 2018 was $646, an increase of 4.6%.

Occupancy was 94.7% at June 30, 2018.

Base minimum rent per square foot was $53.84 at June 30, 2018, an increase of 3.3% compared to the prior year period.

Leasing spread per square foot for the trailing 12-months ended June 30, 2018 was $7.32, an increase of 10.7%.

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

Total portfolio NOI growth for the six months ended June 30, 2018 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 six months ended June 30, 2018 was 2.3%.

DIVIDENDS

Today, Simon's Board of Directors declared a quarterly common stock dividend of $2.00 per share. This is an 11.1% increase year-over-year. The dividend will be payable on August 31, 2018 to shareholders of record on August 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 September 28, 2018 to shareholders of record on September 14, 2018.

 
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EARNINGS RELEASE

DEVELOPMENT ACTIVITY

On May 2, 2018, Premium Outlet Collection Edmonton International Airport (Edmonton, Alberta, Canada) opened with 424,000 square feet of high-quality, name brand stores. Simon owns a 50% interest in this center.

Construction continues on four 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.

Cannock Designer Outlet (Cannock, United Kingdom); scheduled to open in spring 2020. Simon owns a 20% interest in this project.

Construction also continues on significant redevelopment and expansion projects at other properties including Town Center at Boca Raton, Toronto Premium Outlets and Southdale Center (Edina (Minneapolis), MN).

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

During the second quarter, construction started on significant expansion projects at Vancouver Designer Outlet (Vancouver, British Columbia, Canada) and Ashford Designer Outlet (Kent, United Kingdom).

 
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EARNINGS RELEASE

FINANCING ACTIVITY

During the first six months of 2018, the Company closed on eight mortgage loans totaling approximately $2.4 billion, (U.S. dollar equivalent), of which Simon's share is approximately $850 million. The weighted average interest rate and weighted average term on these loans is 3.98% and 8.9 years, respectively.

As of June 30, 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 June 30, 2018, the Company repurchased 514,659 shares of its common stock.

2018 GUIDANCE

The Company currently estimates net income to be within a range of $7.46 to $7.54 per diluted share for the year ending December 31, 2018 and that FFO will be within a range of $12.05 to $12.13 per diluted share.

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

  $ 7.46   $ 7.54  

Depreciation and amortization including Simon's share of unconsolidated entities

    5.00     5.00  

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

    (0.41)     (0.41)  

Estimated FFO per diluted share

  $ 12.05   $ 12.13  
 
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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, Monday, July 30, 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 August 6, 2018. To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 5187818.

SUPPLEMENTAL MATERIALS AND WEBSITE

Supplemental information on our second 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 JUNE 30,
  FOR THE
SIX MONTHS
ENDED JUNE 30,
 
 
 
2018
 
2017
   
2018
   
2017
 

REVENUE:

                         

Minimum rent

  $ 857,106   $ 851,552   $ 1,717,277   $ 1,698,350  

Overage rent

    31,942     29,764     64,932     57,967  

Tenant reimbursements

    372,949     380,527     753,312     759,442  

Management fees and other revenues

    28,541     31,367     56,722     61,914  

Other income

    97,820     68,338     195,929     129,638  

Total revenue

    1,388,358     1,361,548     2,788,172     2,707,311  

EXPENSES:

                         

Property operating

    102,951     107,371     216,400     211,419  

Depreciation and amortization

    320,198     322,396     637,134     633,228  

Real estate taxes

    111,449     113,415     225,635     220,073  

Repairs and maintenance

    22,191     21,700     49,875     47,301  

Advertising and promotion

    36,491     36,496     71,291     72,444  

Provision for credit losses

    3,299     2,659     8,931     7,870  

Home and regional office costs

    32,316     36,476     73,380     79,455  

General and administrative

    10,913     13,074     23,542     27,075  

Other

    10,875     21,812     42,377     45,627  

Total operating expenses

    650,683     675,399     1,348,565     1,344,492  

OPERATING INCOME

    737,675     686,149     1,439,607     1,362,819  

Interest expense

    (206,624)     (207,174)     (412,115)     (405,373)  

Loss on extinguishment of debt

        (128,618)         (128,618)  

Income and other taxes

    (10,137)     (5,990)     (16,357)     (2,470)  

Income from unconsolidated entities

    100,828     92,017     190,854     161,101  

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

    9,672     4,989     144,949     4,989  

CONSOLIDATED NET INCOME

    631,414     441,373     1,346,938     992,448  

Net income attributable to noncontrolling interests

    83,576     58,549     177,611     131,053  

Preferred dividends

    834     834     1,669     1,669  

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 547,004   $ 381,990   $ 1,167,658   $ 859,726  

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

                         

Net income attributable to common stockholders

  $ 1.77   $ 1.23   $ 3.77   $ 2.75  
 
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EARNINGS RELEASE

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

 
  JUNE 30,
2018
  DECEMBER 31,
2017
 

ASSETS:

             

Investment properties, at cost

  $ 36,429,603   $ 36,393,464  

Less — accumulated depreciation

    12,354,966     11,935,949  

    24,074,637     24,457,515  

Cash and cash equivalents

    714,247     1,482,309  

Tenant receivables and accrued revenue, net

    681,551     742,672  

Investment in unconsolidated entities, at equity

    2,302,833     2,266,483  

Investment in Klépierre, at equity

    1,772,155     1,934,676  

Deferred costs and other assets

    1,297,717     1,373,983  

Total assets

  $ 30,843,140   $ 32,257,638  

LIABILITIES:

             

Mortgages and unsecured indebtedness

  $ 23,505,002   $ 24,632,463  

Accounts payable, accrued expenses, intangibles, and deferred revenues

    1,230,775     1,269,190  

Cash distributions and losses in unconsolidated entities, at equity

    1,531,136     1,406,378  

Other liabilities

    499,598     520,363  

Total liabilities

    26,766,511     27,828,394  

Commitments and contingencies

             

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

    198,001     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

   
42,912
   
43,077
 

             

Common stock, $0.0001 par value, 511,990,000 shares authorized, 320,324,839 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

    9,657,810     9,614,748  

Accumulated deficit

    (4,833,826)     (4,782,173)  

Accumulated other comprehensive loss

    (115,285)     (110,453)  

Common stock held in treasury, at cost, 11,115,156 and 9,163,920 shares, respectively

    (1,380,619)     (1,079,063)  

Total stockholders' equity

    3,371,024     3,686,168  

Noncontrolling interests

    507,604     552,596  

Total equity

    3,878,628     4,238,764  

Total liabilities and equity

  $ 30,843,140   $ 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 JUNE 30,
  FOR THE SIX MONTHS
ENDED JUNE 30,
 
 
 
2018
 
2017
   
2018
   
2017
 

REVENUE:

                         

Minimum rent

  $ 483,976   $ 465,705   $ 959,931   $ 916,760  

Overage rent

    51,067     46,447     110,728     97,816  

Tenant reimbursements

    220,426     212,465     443,916     428,246  

Other income

    78,378     71,753     159,487     136,079  

Total revenue

    833,847     796,370     1,674,062     1,578,901  

OPERATING EXPENSES:

   
 
   
 
   
 
   
 
 

Property operating

    139,553     132,028     285,845     265,013  

Depreciation and amortization

    166,299     159,748     326,134     313,202  

Real estate taxes

    68,576     63,977     136,843     130,560  

Repairs and maintenance

    20,736     20,471     43,933     40,701  

Advertising and promotion

    20,884     21,836     45,108     44,034  

Provision for credit losses

    5,577     2,789     12,078     6,566  

Other

    49,885     45,030     99,617     88,384  

Total operating expenses

    471,510     445,879     949,558     888,460  

OPERATING INCOME

   
362,337
   
350,491
   
724,504
   
690,441
 

Interest expense

    (190,751)     (146,440)     (341,684)     (288,647)  

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net

    25,792         25,792      

NET INCOME

  $ 197,378   $ 204,051   $ 408,612   $ 401,794  

Third-Party Investors' Share of Net Income

  $ 96,240   $ 104,265   $ 202,424   $ 203,950  

Our Share of Net Income

    101,138     99,786     206,188     197,844  

Amortization of Excess Investment (A)

    (21,395)     (22,979)     (42,921)     (45,436)  

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

    (9,672)         (9,672)      

Income from Unconsolidated Entities (B)

  $ 70,071   $ 76,807   $ 153,595   $ 152,408  

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)

 
  JUNE 30,
2018
  DECEMBER 31,
2017
 

Assets:

             

Investment properties, at cost

  $ 18,580,295   $ 18,328,747  

Less — accumulated depreciation

    6,618,858     6,371,363  

    11,961,437     11,957,384  

Cash and cash equivalents

    970,605     956,084  

Tenant receivables and accrued revenue, net

    386,980     403,125  

Deferred costs and other assets

    389,710     355,585  

Total assets

  $ 13,708,732   $ 13,672,178  

Liabilities and Partners' Deficit:

   
 
   
 
 

Mortgages

  $ 15,252,252   $ 14,784,310  

Accounts payable, accrued expenses, intangibles, and deferred revenue

    859,475     1,033,674  

Other liabilities

    386,151     365,857  

Total liabilities

    16,497,878     16,183,841  

Preferred units

   
67,450
   
67,450
 

Partners' deficit

    (2,856,596)     (2,579,113)  

Total liabilities and partners' deficit

  $ 13,708,732   $ 13,672,178  

Our Share of:

             

Partners' deficit

  $ (1,240,838)   $ (1,144,620)  

Add: Excess Investment (A)

    1,693,800     1,733,063  

Our net Investment in unconsolidated entities, at equity

  $ 452,962   $ 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 JUNE 30,
  FOR THE SIX MONTHS
ENDED JUNE 30,
   
 
   
   
2018
   
2017
   
2018
 
2017
   

 

Consolidated Net Income (D)

  $ 631,414   $ 441,373   $ 1,346,938   $ 992,448    

 

Adjustments to Arrive at FFO:

                           

 

Depreciation and amortization from consolidated properties

    317,364     318,585     631,370     626,273    

 

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

    137,279     135,476     272,204     266,694    

 

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

    (9,672)     (4,989)     (144,949)     (4,989)    

 

Unrealized change in fair value of equity instruments

    (9,692)         (6,664)        

 

Net (income) loss attributable to noncontrolling interest holders in properties

    (279)     (74)     (186)     170    

 

Noncontrolling interests portion of depreciation and amortization

    (4,537)     (4,315)     (9,185)     (8,215)    

 

Preferred distributions and dividends

    (1,313)     (1,313)     (2,626)     (2,626)    

 

FFO of the Operating Partnership (E)

  $ 1,060,564   $ 884,743   $ 2,086,902   $ 1,869,755    

 

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

                           

 

Diluted net income per share

  $ 1.77   $ 1.23   $ 3.77   $ 2.75    

 

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

    1.27     1.25     2.51     2.46    

 

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

    (0.03)     (0.01)     (0.41)     (0.01)    

 

Unrealized change in fair value of equity instruments

    (0.03)         (0.02)        

 

Diluted FFO per share (F)

  $ 2.98   $ 2.47   $ 5.85   $ 5.20    

   

 

 

                           

 

 

Details for per share calculations:

                           

 

 

FFO of the Operating Partnership (E)

  $ 1,060,564   $ 884,743   $ 2,086,902   $ 1,869,755    

 

 

Diluted FFO allocable to unitholders

    (139,426)     (116,599)     (273,985)     (246,028)    
 

 

 

Diluted FFO allocable to common stockholders (G)

  $ 921,138   $ 768,144   $ 1,812,917   $ 1,623,727    
 
 
 

 

 

Basic and Diluted weighted average shares outstanding

    309,355     311,579     309,966     312,191    

 

 

Weighted average limited partnership units outstanding

    46,827     47,287     46,845     47,304    
 

 

 

Basic and Diluted weighted average shares and units outstanding

    356,182     358,866     356,811     359,495    
 
 
 

 

 

Basic and Diluted FFO per Share (F)

  $ 2.98   $ 2.47   $ 5.85   $ 5.20    

 

 

Percent Change

    20.6%           12.5%          
 
2Q 2018 SUPPLEMENTAL 2Q 2018 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-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 sale, disposal or property insurance recoveries 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, disposal or property insurance recoveries 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 $1.4 million and $5.0 million for the three months ended June 30, 2018 and 2017, respectively, and $2.7 million and $7.7 million for the six months ended June 30, 2018 and 2017, respectively.

-
Straight-line adjustments increased income by $6.4 million and $5.1 million for the three months ended June 30, 2018 and 2017, respectively, and $15.0 million and $15.3 million for the six months ended June 30, 2018 and 2017, respectively.

-
Amortization of fair market value of leases from acquisitions increased income by $1.0 million and $1.5 million for the three months ended June 30, 2018 and 2017, respectively, and $2.4 million and $3.2 million for the six months ended June 30, 2018 and 2017, respectively.

(E)
Includes a loss on the extinguishment of debt of $128.6 million for the three and six months ended June 30, 2017.

(F)
Includes Basic and Diluted FFO per share related to a loss on the extinguishment of debt of $0.36 for the three and six months ended June 30, 2017.

(G)
Includes Diluted FFO allocable to common stockholders related to a loss on the extinguishment of debt of $111.7 million for the three and six months ended June 30, 2017.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 13

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 June 30, 2018, we owned or had an interest in 234 properties comprising 191 million square feet in North America, Asia and Europe. Additionally, at June 30, 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 June 30, 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).

 
2Q 2018 SUPPLEMENTAL 2Q 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%   39%   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%   284%   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.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 15

Table of Contents

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

 
THREE MONTHS ENDED
JUNE 30,
 

SIX MONTHS ENDED
JUNE 30,
 
   

 
2018
2017  
2018
2017  

Financial Highlights

                         

Total Revenue - Consolidated Properties

  $ 1,388,358   $ 1,361,548   $ 2,788,172   $ 2,707,311  

Consolidated Net Income

 
$

631,414
 
$

441,373
 
$

1,346,938
 
$

992,448
 

Net Income Attributable to Common Stockholders

  $ 547,004   $ 381,990   $ 1,167,658   $ 859,726  

Basic and Diluted Earnings per Common Share (EPS)

  $ 1.77   $ 1.23   $ 3.77   $ 2.75  

Funds from Operations (FFO) of the Operating Partnership

 
$

1,060,564
 
$

884,743
 
$

2,086,902
 
$

1,869,755
 

Basic and Diluted FFO per Share (FFOPS)

  $ 2.98   $ 2.47   $ 5.85   $ 5.20  

Dividends/Distributions per Share/Unit

 
$

1.95
 
$

1.75
 
$

3.90
 
$

3.50
 


Stockholders' Equity Information

 


AS OF
JUNE 30,
2018





AS OF
DECEMBER 31,
2017
 

Limited Partners' Units Outstanding at end of period

    46,824     46,879  

Common Shares Outstanding at end of period

    309,218     311,167  

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

    356,042     358,046  

Weighted Average Limited Partnership Units Outstanding

    46,845     47,260  

Weighted Average Common Shares Outstanding:

             

Basic and Diluted - for purposes of EPS and FFOPS

    309,966     311,517  

 

             

Debt Information

             

Share of Consolidated Debt

  $ 23,344,483   $ 24,465,117  

Share of Joint Venture Debt

    7,175,646     7,011,525  

Share of Total Debt

  $ 30,520,129   $ 31,476,642  

 

             

Market Capitalization

             

Common Stock Price at end of period

  $ 170.19   $ 171.74  

Common Equity Capitalization, including Limited Partnership Units

  $ 60,594,803   $ 61,490,902  

Preferred Equity Capitalization, including Limited Partnership Preferred Units

    82,208     82,527  

Total Equity Market Capitalization

  $ 60,677,011   $ 61,573,429  

Total Market Capitalization - Including Share of Total Debt

  $ 91,197,140   $ 93,050,071  

 

             

Debt to Total Market Capitalization

    33.5%     33.8%  
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 16

Table of Contents

NET OPERATING INCOME (NOI) COMPOSITION (1)
For the Six Months Ended June 30, 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.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 17

Table of Contents

NET OPERATING INCOME OVERVIEW (1)
(In thousands)

 
FOR THE THREE MONTHS
ENDED JUNE 30,
  % GROWTH  
FOR THE SIX MONTHS
ENDED JUNE 30,
  % GROWTH
   

 
2018
2017    
2018
2017  

Comparable Property NOI (2)

  $ 1,373,384   $ 1,343,124   2.3%   $ 2,722,332   $ 2,662,061   2.3%

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

   
18,387
   
19,972
       
36,716
   
40,479
   

International Properties (4)

    113,923     101,021         245,673     197,580    

Our share of NOI from Investments (5)

    78,962     67,201         139,019     108,947    

                               

Portfolio NOI

  $ 1,584,656   $ 1,531,318   3.5%   $ 3,143,740   $ 3,009,067   4.5%

Corporate and Other NOI Sources (6)

   
80,815
   
54,667
       
122,658
   
99,570
   

Total NOI - See reconciliation on following page

  $ 1,665,471   $ 1,585,985       $ 3,266,398   $ 3,108,637    

Less: Joint Venture Partners' Share of NOI

   
279,336
   
269,148
       
554,510
   
530,315
   

Our Share of Total NOI

  $ 1,386,135   $ 1,316,837       $ 2,711,888   $ 2,578,322    
(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, HBS, and other corporate investments.
(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.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 18

Table of Contents

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

RECONCILIATION OF NET INCOME TO NOI

           

    

                       

 
THREE MONTHS ENDED
JUNE 30,
 

SIX MONTHS ENDED
JUNE 30,
   

  2018   2017   2018   2017

Reconciliation of NOI of consolidated entities:

                   

Consolidated Net Income

  $ 631,414   $ 441,373   $ 1,346,938   $ 992,448

Income and other tax expense

  10,137     5,990   16,357     2,470

Interest expense

  206,624     207,174   412,115     405,373

Income from unconsolidated entities

  (100,828)     (92,017)   (190,854)     (161,101)

Loss on extinguishment of debt

      128,618       128,618

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

  (9,672)     (4,989)   (144,949)     (4,989)

Operating Income

  737,675     686,149   1,439,607     1,362,819

Depreciation and amortization

  320,198     322,396   637,134     633,228

NOI of consolidated entities

  $ 1,057,873   $ 1,008,545   $ 2,076,741   $ 1,996,047

Reconciliation of NOI of unconsolidated entities:

                   

Net Income

  $ 197,378   $ 204,051   $ 408,612   $ 401,794

Interest expense

  190,751     146,440   341,684     288,647

Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net

  (25,792)       (25,792)    

Operating Income

  362,337     350,491   724,504     690,441

Depreciation and amortization

  166,299     159,748   326,134     313,202

NOI of unconsolidated entities

  $ 528,636   $ 510,239   $ 1,050,638   $ 1,003,643

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

  78,962     67,201   139,019     108,947

Total NOI

  $ 1,665,471   $ 1,585,985   $ 3,266,398   $ 3,108,637
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 19

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
JUNE 30,
2018
 


SIX
MONTHS ENDED
JUNE 30,
2018
 

FFO of the Operating Partnership

  $ 1,060,564   $ 2,086,902  

Non-cash impacts to FFO(1)

    10,943     19,719  

FFO of the Operating Partnership excluding non-cash impacts

    1,071,507     2,106,621  

Tenant allowances

    (56,185)     (93,341)  

Operational capital expenditures

    (27,346)     (60,924)  

Funds available for distribution

  $ 987,976   $ 1,952,356  
   
   
   
(1)
Non-cash impacts to FFO of the Operating Partnership include:

    

             

 


THREE
MONTHS ENDED
JUNE 30,
2018
 


SIX
MONTHS ENDED
JUNE 30,
2018
 

Deductions:

             

Straight-line rent

  $ (6,418)   $ (15,023)  

Fair value of debt amortization

    (4)     8  

Fair market value of lease amortization

    (993)     (2,366)  

Additions:

             

Stock based compensation expense

    7,490     16,742  

Mortgage, financing fee and terminated swap amortization expense

    10,868     20,358  

  $ 10,943   $ 19,719  

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.

 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 20

Table of Contents

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

 
THREE MONTHS
ENDED JUNE 30,
 

SIX MONTHS
ENDED JUNE 30,
   

 
2018
2017  
2018
2017

Consolidated Properties

                       

Other Income

                       

Interest, dividend and distribution income  (1)

  $ 5,130   $ 5,373   $ 29,998   $ 8,754

Lease settlement income

    4,946     15,215     31,635     23,136

Gains on land sales

    741     5,034     2,015     7,744

Other  (2)

    87,003     42,716     132,281     90,004

Totals

  $ 97,820   $ 68,338   $ 195,929   $ 129,638

 

                       

Other Expense

                       

Ground leases

  $ 10,298   $ 10,424   $ 21,260   $ 20,406

Unrealized change in Fair Value of Equity Instruments  (3)

    (9,692)         (6,664)    

Professional fees and other

    10,269     11,388     27,781     25,221

Totals

  $ 10,875   $ 21,812   $ 42,377   $ 45,627

    

                       

 

Capitalized Interest

 
THREE MONTHS
ENDED JUNE 30,
 

SIX MONTHS
ENDED JUNE 30,
   

 
2018
2017  
2018
2017

Interest Capitalized during the Period:

                       

Our Share of Consolidated Properties

  $ 4,683   $ 5,594   $ 9,256   $ 15,629

Our Share of Joint Venture Properties

  $ 634   $ 667   $ 1,232   $ 1,228

                       

                       
(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, non-real estate investments and other miscellaneous income items.

(3)
Relates to period value fluctuations of Washington Prime Group ("WPG") equity and amounts not included in FFO.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 21

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS OPERATING INFORMATION

 
AS OF JUNE 30,
 

 
2018
2017

Total Number of Properties

  175     176

Total Square Footage of Properties (in millions)

 

151.5
   
152.2

Ending Occupancy (1):

 

 
   
 

Consolidated Assets

  94.8%     95.3%

Unconsolidated Assets

  94.6%     94.7%

Total Portfolio

  94.7%     95.2%

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

 

 
   
 

Consolidated Assets

  $ 630   $ 602

Unconsolidated Assets

  $ 694   $ 665

Total Portfolio

  $ 646   $ 618

Base Minimum Rent PSF (3):

 

 
   
 

Consolidated Assets

  $ 52.14   $ 50.52

Unconsolidated Assets

  $ 58.37   $ 56.48

Total Portfolio

  $ 53.84   $ 52.10

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 %

6/30/18

  6,213,708   $ 75.55   $ 68.23   $ 7.32   10.7%

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%

6/30/17

    6,447,859   $ 71.25   $ 63.12   $ 8.13     12.9%

3/31/17

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

Occupancy Cost as a Percentage of Sales (5):

6/30/18

  12.9%                        

3/31/18

    13.0%                        

12/31/17

    13.2%                        

6/30/17

    13.0%                        

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.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 22

Table of Contents

THE MILLS AND INTERNATIONAL OPERATING INFORMATION

 
AS OF JUNE 30,
 

 
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)

 
$

604
 
$

581

Base Minimum Rent PSF(3)

 
$

31.53
 
$

30.56

Leasing Spread PSF(4)

 
$

8.63
 
$

13.49

Leasing Spread (Percentage Change)(4)

 

14.5%
   
24.9%

 

 

 
   
 

International Properties

 

 
   
 

Premium Outlets

 

 
   
 

Total Number of Properties

 

19
   
18

Total Square Footage of Properties (in millions)

 

7.1
   
6.6

Designer Outlets

 

 
   
 

Total Number of Properties

 

9
   
9

Total Square Footage of Properties (in millions)

 

2.2
   
2.2

Statistics for Premium Outlets in Japan(5)

 

 
   
 

Ending Occupancy

 

99.5%
   
99.7%

Total Sales PSF

 

¥ 106,641
   
¥ 102,308

Base Minimum Rent PSF

 

¥ 5,095
   
¥ 5,054
(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.
 
2Q 2018 SUPPLEMENTAL 2Q 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 6/30/18







PERCENTAGE OF
GROSS ANNUAL
RENTAL
REVENUES  (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Inline Stores and Freestanding

                       

Month to Month Leases

   
824
   
3,099,547
 
$

50.95
   
2.9%

2018 (7/1 - 12/31)

    616     1,695,397   $ 58.75     1.8%

2019

    2,637     9,480,434   $ 50.20     8.5%

2020

    2,121     7,352,608   $ 50.90     6.8%

2021

    1,989     7,732,601   $ 50.38     7.1%

2022

    1,913     7,419,654   $ 50.82     6.9%

2023

    2,103     8,101,027   $ 55.80     8.2%

2024

    1,546     6,021,468   $ 59.99     6.6%

2025

    1,416     5,348,626   $ 64.68     6.3%

2026

    1,293     4,603,416   $ 62.03     5.2%

2027

    1,041     3,853,211   $ 62.22     4.3%

2028

    535     2,500,758   $ 55.24     2.5%

2029 and Thereafter

    392     2,183,182   $ 45.54     1.9%

Specialty Leasing Agreements w/ terms in excess of 12 months

    1,325     3,412,823   $ 19.65     1.3%

 

                       

Anchors

                       

2018 (7/1 - 12/31)

   
6
   
891,016
 
$

8.52
   
0.1%

2019

    14     1,486,975   $ 3.70     0.1%

2020

    26     3,021,350   $ 4.90     0.3%

2021

    12     1,422,205   $ 4.72     0.1%

2022

    15     2,219,546   $ 6.22     0.2%

2023

    20     2,738,767   $ 6.34     0.3%

2024

    15     1,028,890   $ 11.25     0.2%

2025

    12     1,219,739   $ 8.37     0.2%

2026

    6     734,321   $ 4.60     0.1%

2027

    7     1,063,832   $ 4.39     0.1%

2028

    9     857,119   $ 7.43     0.1%

2029 and Thereafter

    15     1,910,580   $ 6.29     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.
 
2Q 2018 SUPPLEMENTAL 2Q 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.

    360     3,684     2.0%     3.4%

L Brands, Inc.

    311     1,899     1.0%     2.1%

Ascena Retail Group Inc

    448     2,499     1.4%     1.9%

Signet Jewelers, Ltd.

    393     576     0.3%     1.6%

PVH Corporation

    237     1,446     0.8%     1.5%

Tapestry, Inc.

    227     909     0.5%     1.3%

Forever 21, Inc.

    83     1,339     0.7%     1.3%

Foot Locker, Inc.

    237     1,069     0.6%     1.3%

Abercrombie & Fitch Co.

    155     1,104     0.6%     1.2%

Luxottica Group SPA

    384     695     0.4%     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     22,450     12.4%     0.4%

J.C. Penney Co., Inc.

    66     10,589     5.8%     0.3%

Sears Holdings Corporation (2)

    59     9,545     5.3%     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.

    30     2,070     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.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 25

Table of Contents

CAPITAL EXPENDITURES
(In thousands)

     

UNCONSOLIDATED
PROPERTIES
   

 
CONSOLIDATED
PROPERTIES

 
TOTAL  
OUR
SHARE

New development projects

  $ 43,191   $ 100,597   $ 48,171

Redevelopment projects with incremental square footage and/or anchor replacement

   
118,793
   
102,059
   
49,727

Redevelopment projects with no incremental square footage (1)

   
62,826
   
18,957
   
8,165

 

                 

Subtotal new development and redevelopment projects

  224,810   221,613   106,063

Tenant allowances

   
79,811
   
28,016
   
13,530

Operational capital expenditures at properties:

                 

CAM expenditures (2)

    34,238     29,288     13,655

Non-CAM expenditures

    10,064     7,220     2,967

 

                 

Totals

  $ 348,923   $ 286,137   $ 136,215

Conversion from accrual to cash basis

   
(14,249)
   
69,751
   
33,204

 

                 

Capital Expenditures for the Six Months Ended 6/30/18 (3)

  $ 334,674   $ 355,888   $ 169,419

        

                 

Capital Expenditures for the Six Months Ended 6/30/17 (3)

  $ 318,948   $ 551,909   $ 254,599
(1)
Includes restoration projects as a result of property damage from natural disasters.
(2)
Expenditures included in the pool of charges allocated to tenants as CAM.
(3)
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.
 
2Q 2018 SUPPLEMENTAL 2Q 2018 SUPPLEMENTAL 26

Table of Contents

DEVELOPMENT ACTIVITY SUMMARY (1)
As of June 30, 2018
(in millions, except percent)

 

 

PLATFORM
    PROJECT TYPE


 
 

PROJECTED
GROSS COST (2)


 

PROJECTED
NET COST (3)


 


OUR
SHARE OF
NET COST (4)