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TABLE OF CONTENTS

Table of Contents

SIMON PROPERTY GROUP

 



EARNINGS RELEASE & SUPPLEMENTAL INFORMATION
UNAUDITED THIRD QUARTER 2018

GRAPHIC


Table of Contents

TABLE OF CONTENTS

EARNINGS RELEASE AND SUPPLEMENTAL INFORMATION
FOR THE QUARTER ENDED SEPTEMBER 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

    31-33  

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  
(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 THIRD QUARTER 2018 RESULTS AND RAISES FULL YEAR 2018 GUIDANCE

INDIANAPOLIS, October 25, 2018 - Simon, a global leader in premier shopping, dining and entertainment destinations, today reported results for the quarter ended September 30, 2018.

RESULTS FOR THE QUARTER

Net income attributable to common stockholders was $556.3 million, or $1.80 per diluted share, as compared to $513.8 million, or $1.65 per diluted share, in the prior year period.

Funds from Operations ("FFO") was $1.086 billion, or $3.05 per diluted share, as compared to $1.035 billion, or $2.89 per diluted share, in the prior year period, an increase of 5.5% per diluted share.

RESULTS FOR THE NINE MONTHS

Net income attributable to common stockholders was $1.724 billion, or $5.57 per diluted share, as compared to $1.374 billion, or $4.41 per diluted share, in the prior year period.

FFO was $3.173 billion, or $8.90 per diluted share, as compared to $2.905 billion, or $8.09 per diluted share, in the prior year period, a 10.0% increase per diluted share.

"We produced another excellent quarter highlighted by strong financial and operational performance, the very successful openings of Denver Premium Outlets and the expansion of Shisui Premium Outlets, and another increase to our full-year 2018 guidance," said David Simon, Chairman and CEO.

 
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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 September 30, 2018 was $650, an increase of 4.5%.

Occupancy was 95.5% at September 30, 2018.

Base minimum rent per square foot was $53.88 at September 30, 2018, an increase of 2.8% compared to the prior year period.

Leasing spread per square foot for the trailing 12-months ended September 30, 2018 was $7.59, an increase of 13.9%.

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

Total portfolio NOI growth for the nine months ended September 30, 2018 was 4.1%. 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 nine months ended September 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 8.1% increase year-over-year. The dividend will be payable on November 30, 2018 to shareholders of record on November 16, 2018. The Company will pay $7.90 per share in common stock dividends in 2018, a 10.5% increase year-over-year.

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 December 31, 2018 to shareholders of record on December 17, 2018.

 
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EARNINGS RELEASE

DEVELOPMENT ACTIVITY

On September 27, 2018, we opened Denver Premium Outlets (Thornton, CO), a 330,000 square-foot LEED-certified center featuring a dynamic mix of merchandise, amenities and experiences. Simon owns 100% of this center.

During the quarter, the 68,000 square-foot, phase three expansion of Shisui Premium Outlets opened featuring new fashion and sports brands, in vogue cafes and an outdoor garden area. Simon owns 40% of this center.

Construction continues on three new international development projects including:

Queretaro Premium Outlets (Queretaro, Mexico); scheduled to open in spring 2019. Simon owns a 50% interest in this project.

Malaga Designer Outlet (Malaga, Spain); scheduled to open in summer 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, The Shops at Riverside (Hackensack, NJ) and Southdale Center (Edina (Minneapolis), MN).

During the third quarter, construction started on significant expansion projects at Paju Premium Outlets (Seoul, South Korea) and Tosu Premium Outlets (Kyushu, Japan).

Subsequent to quarter end, construction started on a transformative mixed-use redevelopment at Phipps Plaza. The dynamic, reimagined development is headlined by the arrival of Nobu Hotel and Restaurant Atlanta, along with a 90,000 square-foot Life Time healthy living and entertainment destination and a unique, curated dining experience. A 13-story, 350,000 square-foot Class A office building, One Phipps Plaza, is yet another element of the redevelopment.

 
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EARNINGS RELEASE

FINANCING ACTIVITY

During the first nine months of 2018, the Company closed on 13 mortgage loans totaling approximately $3.0 billion, (U.S. dollar equivalent), of which Simon's share is approximately $1.3 billion. The weighted average interest rate and weighted average term on these loans is 3.83% and 8.4 years, respectively.

As of September 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.

2018 GUIDANCE

The Company currently estimates net income to be within a range of $7.50 to $7.54 per diluted share for the year ending December 31, 2018 and that FFO will be within a range of $12.09 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

  $ 7.50   $ 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

  $ 12.09   $ 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, Thursday, October 25, 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 November 1, 2018. To access the audio replay, dial 1-855-859-2056 (international 404-537-3406) passcode 5597981.

SUPPLEMENTAL MATERIALS AND WEBSITE

Supplemental information on our third 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, if any, of the United Kingdom's exit from 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 SEPTEMBER 30,
  FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
 
 
 
2018
 
2017
   
2018
   
2017
 

REVENUE:

                         

Minimum rent

  $ 864,514   $ 861,184   $ 2,581,792   $ 2,559,535  

Overage rent

    39,601     36,634     104,533     94,601  

Tenant reimbursements

    385,543     386,713     1,138,855     1,146,156  

Management fees and other revenues

    28,784     28,946     85,506     90,860  

Other income

    90,563     90,161     286,491     219,796  

Total revenue

    1,409,005     1,403,638     4,197,177     4,110,948  

EXPENSES:

                         

Property operating

    119,021     118,807     335,420     330,226  

Depreciation and amortization

    316,175     317,037     953,309     950,265  

Real estate taxes

    119,315     111,953     344,950     332,027  

Repairs and maintenance

    23,632     25,352     73,507     72,654  

Advertising and promotion

    36,688     36,006     107,979     108,450  

Provision for credit losses

    4,984     2,895     13,915     10,765  

Home and regional office costs

    32,714     31,451     106,093     110,906  

General and administrative

    12,172     13,014     35,713     40,089  

Other

    26,913     57,055     69,293     102,678  

Total operating expenses

    691,614     713,570     2,040,179     2,058,060  

OPERATING INCOME

    717,391     690,068     2,156,998     2,052,888  

Interest expense

    (199,469)     (199,032)     (611,585)     (604,408)  

Loss on extinguishment of debt

                (128,618)  

Income and other taxes

    (10,118)     (14,511)     (26,475)     (16,981)  

Income from unconsolidated entities

    134,408     116,110     325,263     277,212  

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

            144,949     4,989  

CONSOLIDATED NET INCOME

    642,212     592,635     1,989,150     1,585,082  

Net income attributable to noncontrolling interests

    85,111     78,018     262,722     209,070  

Preferred dividends

    834     834     2,503     2,503  

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

  $ 556,267   $ 513,783   $ 1,723,925   $ 1,373,509  

BASIC AND DILUTED EARNINGS PER COMMON SHARE:

                         

Net income attributable to common stockholders

  $ 1.80   $ 1.65   $ 5.57   $ 4.41  
 
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EARNINGS RELEASE

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

 
  SEPTEMBER 30, 2018   DECEMBER 31, 2017  

ASSETS:

             

Investment properties, at cost

  $ 36,943,299   $ 36,393,464  

Less — accumulated depreciation

    12,638,409     11,935,949  

    24,304,890     24,457,515  

Cash and cash equivalents

    695,718     1,482,309  

Tenant receivables and accrued revenue, net

    722,730     742,672  

Investment in unconsolidated entities, at equity

    2,281,688     2,266,483  

Investment in Klépierre, at equity

    1,776,655     1,934,676  

Deferred costs and other assets

    1,298,012     1,373,983  

Total assets

  $ 31,079,693   $ 32,257,638  

LIABILITIES:

             

Mortgages and unsecured indebtedness

  $ 23,678,264   $ 24,632,463  

Accounts payable, accrued expenses, intangibles, and deferred revenues

    1,268,099     1,269,190  

Cash distributions and losses in unconsolidated entities, at equity

    1,534,550     1,406,378  

Other liabilities

    503,342     520,363  

Total liabilities

    26,984,255     27,828,394  

Commitments and contingencies

             

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

    197,937     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

   
42,830
   
43,077
 

             

Common stock, $0.0001 par value, 511,990,000 shares authorized, 320,411,571 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

    9,736,720     9,614,748  

Accumulated deficit

    (4,896,754)     (4,782,173)  

Accumulated other comprehensive loss

    (118,593)     (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

    3,383,616     3,686,168  

Noncontrolling interests

    513,885     552,596  

Total equity

    3,897,501     4,238,764  

Total liabilities and equity

  $ 31,079,693   $ 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 SEPTEMBER 30,
  FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
 
 
 
2018
 
2017
   
2018
   
2017
 

REVENUE:

                         

Minimum rent

  $ 483,685   $ 466,601   $ 1,443,617   $ 1,383,361  

Overage rent

    52,417     52,560     163,144     150,376  

Tenant reimbursements

    222,153     215,774     666,068     644,020  

Other income

    73,259     74,208     232,747     210,287  

Total revenue

    831,514     809,143     2,505,576     2,388,044  

OPERATING EXPENSES:

   
 
   
 
   
 
   
 
 

Property operating

    151,873     145,288     437,718     410,301  

Depreciation and amortization

    161,964     156,682     488,098     469,884  

Real estate taxes

    60,654     54,668     197,497     185,228  

Repairs and maintenance

    20,035     18,811     63,968     59,512  

Advertising and promotion

    20,318     19,837     65,425     63,871  

Provision for credit losses

    1,300     1,063     13,378     7,629  

Other

    43,916     45,174     143,533     133,558  

Total operating expenses

    460,060     441,523     1,409,617     1,329,983  

OPERATING INCOME

   
371,454
   
367,620
   
1,095,959
   
1,058,061
 

Interest expense

    (163,855)     (149,746)     (505,540)     (438,393)  

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

            25,792      

NET INCOME

  $ 207,599   $ 217,874   $ 616,211   $ 619,668  

Third-Party Investors' Share of Net Income

  $ 101,750   $ 110,581   $ 304,174   $ 314,531  

Our Share of Net Income

    105,849     107,293     312,037     305,137  

Amortization of Excess Investment (A)

    (21,526)     (22,608)     (64,447)     (68,045)  

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

            (9,672)      

Income from Unconsolidated Entities (B)

  $ 84,323   $ 84,685   $ 237,918   $ 237,092  

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)

 
  SEPTEMBER 30, 2018
  DECEMBER 31, 2017
 

Assets:

             

Investment properties, at cost

  $ 18,632,287   $ 18,328,747  

Less - accumulated depreciation

    6,672,267     6,371,363  

    11,960,020     11,957,384  

Cash and cash equivalents

   
1,013,153
   
956,084
 

Tenant receivables and accrued revenue, net

    403,315     403,125  

Deferred costs and other assets

    395,144     355,585  

Total assets

  $ 13,771,632   $ 13,672,178  

Liabilities and Partners' Deficit:

   
 
   
 
 

Mortgages

  $ 15,231,476   $ 14,784,310  

Accounts payable, accrued expenses, intangibles, and deferred revenue

    903,599     1,033,674  

Other liabilities

    351,116     365,857  

Total liabilities

    16,486,191     16,183,841  

Preferred units

   
67,450
   
67,450
 

Partners' deficit

    (2,782,009)     (2,579,113)  

Total liabilities and partners' deficit

  $ 13,771,632   $ 13,672,178  

Our Share of:

   
 
   
 
 

Partners' deficit

  $ (1,204,237)   $ (1,144,620)  

Add: Excess Investment (A)

    1,614,277     1,733,063  

Our net Investment in unconsolidated entities, at equity

  $ 410,040   $ 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 SEPTEMBER 30,
  FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
   
 
   
   
2018
   
2017
   
2018
 
2017
   

 

Consolidated Net Income (D)

  $ 642,212   $ 592,635   $ 1,989,150   $ 1,585,082    

 

Adjustments to Arrive at FFO:

                           

 

Depreciation and amortization from consolidated properties

    313,245     313,194     944,615     939,468    

 

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

    131,573     134,998     403,777     401,692    

 

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

            (144,949)     (4,989)    

 

Unrealized change in fair value of equity instruments

    5,452         (1,212)        

 

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

    (497)     550     (684)     721    

 

Noncontrolling interests portion of depreciation and amortization

    (4,380)     (4,605)     (13,564)     (12,821)    

 

Preferred distributions and dividends

    (1,313)     (1,313)     (3,939)     (3,939)    

 

FFO of the Operating Partnership (E)

  $ 1,086,292   $ 1,035,459   $ 3,173,194   $ 2,905,214    

 

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

                           

 

Diluted net income per share

  $ 1.80   $ 1.65   $ 5.57   $ 4.41    

 

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

    1.23     1.24     3.74     3.69    

 

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

            (0.41)     (0.01)    

 

Unrealized change in fair value of equity instruments

    0.02                

 

Diluted FFO per share (F)

  $ 3.05   $ 2.89   $ 8.90   $ 8.09    

   

 

 

                           

 

 

Details for per share calculations:

                           

 

 

FFO of the Operating Partnership (E)

  $ 1,086,292   $ 1,035,459   $ 3,173,194   $ 2,905,214    

 

 

Diluted FFO allocable to unitholders

    (142,710)     (136,632)     (416,694)     (382,660)    
 

 

 

Diluted FFO allocable to common stockholders (G)

  $ 943,582   $ 898,827   $ 2,756,500   $ 2,522,554    
 
 
 

 

 

Basic and Diluted weighted average shares outstanding

    309,294     310,853     309,740     311,740    

 

 

Weighted average limited partnership units outstanding

    46,779     47,263     46,822     47,290    
 

 

 

Basic and Diluted weighted average shares and units outstanding

    356,073     358,116     356,562     359,030    
 
 
 

 

 

Basic and Diluted FFO per Share (F)

  $ 3.05   $ 2.89   $ 8.90   $ 8.09    

 

 

Percent Change

    5.5%           10.0%          
 
3Q 2018 SUPPLEMENTAL 3Q 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 Footnote 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 $1.2 million and $2.4 million for the three months ended September 30, 2018 and 2017, respectively, and $3.9 million and $10.1 million for the nine months ended September 30, 2018 and 2017, respectively.

-
Straight-line adjustments increased income by $6.8 million and $11.8 million for the three months ended September 30, 2018 and 2017, respectively, and $21.8 million and $27.1 million for the nine months ended September 30, 2018 and 2017, respectively.

-
Amortization of fair market value of leases from acquisitions increased income by $0.6 million and $1.4 million for the three months ended September 30, 2018 and 2017, respectively, and $3.0 million and $4.6 million for the nine months ended September 30, 2018 and 2017, respectively.

(E)
Includes a loss on the extinguishment of debt of $128.6 million for the nine months ended September 30, 2017.

(F)
Includes Basic and Diluted FFO per share related to a loss on the extinguishment of debt of $0.36 for the nine months ended September 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 nine months ended September 30, 2017.
 
3Q 2018 SUPPLEMENTAL 3Q 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 September 30, 2018, we owned or had an interest in 235 properties comprising 191 million square feet in North America, Asia and Europe. Additionally, at September 30, 2018, we had a 21.2% 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 September 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).

 
3Q 2018 SUPPLEMENTAL 3Q 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   5.1X   Yes

Total Unencumbered Assets to Unsecured Debt

  ³125%   288%   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.
 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 15

Table of Contents

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

 

THREE MONTHS ENDED
SEPTEMBER 30,




NINE MONTHS ENDED
SEPTEMBER 30,
 
     

 
2018

2017

2018
2017  

Financial Highlights

                         

Total Revenue - Consolidated Properties

  $ 1,409,005   $ 1,403,638   $ 4,197,177   $ 4,110,948  

Consolidated Net Income

 
$

642,212
 
$

592,635
 
$

1,989,150
 
$

1,585,082
 

Net Income Attributable to Common Stockholders

  $ 556,267   $ 513,783   $ 1,723,925   $ 1,373,509  

Basic and Diluted Earnings per Common Share (EPS)

  $ 1.80   $ 1.65   $ 5.57   $ 4.41  

Funds from Operations (FFO) of the Operating Partnership

 
$

1,086,292
 
$

1,035,459
 
$

3,173,194
 
$

2,905,214
 

Basic and Diluted FFO per Share (FFOPS)

  $ 3.05   $ 2.89   $ 8.90   $ 8.09  

Dividends/Distributions per Share/Unit

 
$

2.00
 
$

1.80
 
$

5.90
 
$

5.30
 


Stockholders' Equity Information

 


AS OF
SEPTEMBER 30,
2018





AS OF
DECEMBER 31,
2017
 

Limited Partners' Units Outstanding at end of period

    47,213     46,879  

Common Shares Outstanding at end of period

    309,304     311,167  

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

    356,517     358,046  

Weighted Average Limited Partnership Units Outstanding

    46,822     47,260  

Weighted Average Common Shares Outstanding:

             

Basic and Diluted - for purposes of EPS and FFOPS

    309,740     311,517  

 

             

Debt Information

             

Share of Consolidated Debt

  $ 23,501,273   $ 24,465,117  

Share of Joint Venture Debt

    7,160,084     7,011,525  

Share of Total Debt

  $ 30,661,357   $ 31,476,642  

 

             

Market Capitalization

             

Common Stock Price at end of period

  $ 176.75   $ 171.74  

Common Equity Capitalization, including Limited Partnership Units

  $ 63,014,428   $ 61,490,902  

Preferred Equity Capitalization, including Limited Partnership Preferred Units

    82,081     82,527  

Total Equity Market Capitalization

  $ 63,096,509   $ 61,573,429  

Total Market Capitalization - Including Share of Total Debt

  $ 93,757,866   $ 93,050,071  

 

             

Debt to Total Market Capitalization

    32.7%     33.8%  
 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 16

Table of Contents

NET OPERATING INCOME (NOI) COMPOSITION (1)
For the Nine Months Ended September 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.
 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 17

Table of Contents

NET OPERATING INCOME OVERVIEW (1)
(In thousands)

 
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
  % GROWTH   FOR THE NINE MONTHS ENDED SEPTEMBER 30,   % GROWTH
   

 
2018
2017    
2018
2017  

Comparable Property NOI (2)

  $ 1,383,043   $ 1,350,935   2.4%   $ 4,105,374   $ 4,012,996   2.3%

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

   
15,732
   
19,882
       
52,448
   
60,364
   

International Properties (4)

    124,512     110,217         370,185     307,798    

Our share of NOI from Investments (5)

    94,781     83,658         233,799     192,604    

                               

Portfolio NOI

  $ 1,618,068   $ 1,564,692   3.4%   $ 4,761,806   $ 4,573,762   4.1%

Corporate and Other NOI Sources (6)

   
88,583
   
94,837
       
308,163
   
300,935
   

                               

Combined NOI

  $ 1,706,651   $ 1,659,529       $ 5,069,969   $ 4,874,697    

Less: Joint Venture Partners' Share of NOI

   
281,223
   
274,604
       
835,734
   
804,919
   

Our Share of Total NOI

  $ 1,425,428   $ 1,384,925       $ 4,234,235   $ 4,069,778    
(1)
All amounts are presented at gross values unless otherwise indicated as our share. See reconciliation on following page.
(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 revenues, and other assets.
 
3Q 2018 SUPPLEMENTAL 3Q 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
SEPTEMBER 30,
 
NINE MONTHS ENDED SEPTEMBER 30,
   

  2018   2017   2018   2017

Reconciliation of NOI of consolidated entities:

                   

Consolidated Net Income

  $ 642,212   $ 592,635   $ 1,989,150   $ 1,585,082

Income and other tax expense

  10,118     14,511   26,475     16,981

Interest expense

  199,469     199,032   611,585     604,408

Income from unconsolidated entities

  (134,408)     (116,110)   (325,263)     (277,212)

Loss on extinguishment of debt

            128,618

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

        (144,949)     (4,989)

Operating Income

  717,391     690,068   2,156,998     2,052,888

Depreciation and amortization

  316,175     317,037   953,309     950,265

Home and regional office costs

  32,714     31,451   106,093     110,906

General and administrative

  12,172     13,014   35,713     40,089

NOI of consolidated entities

  $ 1,078,452   $ 1,051,570   $ 3,252,113   $ 3,154,148

Reconciliation of NOI of unconsolidated entities:

                   

Net Income

  $ 207,599   $ 217,874   $ 616,211   $ 619,668

Interest expense

  163,855     149,746   505,540     438,393

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

        (25,792)    

Operating Income

  371,454     367,620   1,095,959     1,058,061

Depreciation and amortization

  161,964     156,682   488,098     469,884

NOI of unconsolidated entities

  $ 533,418   $ 524,302   $ 1,584,057   $ 1,527,945

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

  94,781     83,657   233,799     192,604

Combined NOI

  $ 1,706,651   $ 1,659,529   $ 5,069,969   $ 4,874,697
 
3Q 2018 SUPPLEMENTAL 3Q 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
SEPTEMBER 30,
2018







NINE
MONTHS ENDED
SEPTEMBER 30,
2018
 

FFO of the Operating Partnership

  $ 1,086,292   $ 3,173,194  

Non-cash impacts to FFO(1)

    10,208     29,927  

FFO of the Operating Partnership excluding non-cash impacts

    1,096,500     3,203,121  

Tenant allowances

    (51,557)     (144,898)  

Operational capital expenditures

    (49,331)     (110,255)  

Funds available for distribution

  $ 995,612   $ 2,947,968  
   
   
   
(1)
Non-cash impacts to FFO of the Operating Partnership include:

    

             

 



THREE
MONTHS ENDED
SEPTEMBER 30,
2018







NINE
MONTHS ENDED
SEPTEMBER 30,
2018
 

Deductions:

             

Straight-line rent

  $ (6,739)   $ (21,762)  

Fair value of debt amortization

    8     16  

Fair market value of lease amortization

    (619)     (2,985)  

Additions:

             

Stock based compensation expense

    8,371     25,113  

Mortgage, financing fee and terminated swap amortization expense

    9,187     29,545  

  $ 10,208   $ 29,927  

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.

 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 20

Table of Contents

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

 

THREE MONTHS
ENDED SEPTEMBER 30,




NINE MONTHS
ENDED SEPTEMBER 30,
     

 
2018

2017

2018
2017

Consolidated Properties

                       

Other Income

                       

Interest, dividend and distribution income  (1)

  $ 12,628   $ 8,601   $ 42,626   $ 17,355

Lease settlement income

    9,839     13,284     41,473     36,420

Gains on land sales

    1,232     1,790     3,247     9,534

Realized gains on sales of marketable securities

        21,541         21,541

Other  (2)

    66,864     44,945     199,145     134,946

Totals

  $ 90,563   $ 90,161   $ 286,491   $ 219,796

 

                       

Other Expense

                       

Ground leases

  $ 10,466   $ 9,933   $ 31,726   $ 30,340

Unrealized change in fair value of equity instruments  (3)

    5,452         (1,212)    

Professional fees and other

    10,995     47,122     38,779     72,338

Totals

  $ 26,913   $ 57,055   $ 69,293   $ 102,678

    

                       


Capitalized Interest

 

THREE MONTHS
ENDED SEPTEMBER 30,




NINE MONTHS
ENDED SEPTEMBER 30,
     

 
2018

2017

2018
2017

Interest Capitalized during the Period:

                       

Our Share of Consolidated Properties

  $ 5,928   $ 4,831   $ 15,184   $ 20,460

Our Share of Joint Venture Properties

  $ 436   $ 543   $ 1,668   $ 1,771

                       

                       
(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.
 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 21

Table of Contents

U.S. MALLS AND PREMIUM OUTLETS OPERATING INFORMATION

 
AS OF SEPTEMBER 30,
 

 
2018
2017

Total Number of Properties

  176     177

Total Square Footage of Properties (in millions)

 

151.8
   
152.9

       

Ending Occupancy (1):

 

     

Consolidated Assets

  95.5%     95.4%

Unconsolidated Assets

  95.5%     94.8%

Total Portfolio

  95.5%     95.3%

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

 

 
   
 

Consolidated Assets

  $ 633   $ 608

Unconsolidated Assets

  $ 701   $ 665

Total Portfolio

  $ 650   $ 622

Base Minimum Rent PSF (3):

 

 
   
 

Consolidated Assets

  $ 52.19   $ 50.82

Unconsolidated Assets

  $ 58.38   $ 56.80

Total Portfolio

  $ 53.88   $ 52.42

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 %

9/30/18

  8,084,281   $ 62.33   $ 54.74   $ 7.59   13.9%

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%

9/30/17

    6,254,415   $ 71.50   $ 64.29   $ 7.21     11.2%

Occupancy Cost as a Percentage of Sales (5):

9/30/18

  12.9%                        

6/30/18

    12.9%                        

3/31/18

    13.0%                        

12/31/17

    13.2%                        

9/30/17

    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. 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.
 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 22

Table of Contents

THE MILLS AND INTERNATIONAL OPERATING INFORMATION

 
AS OF SEPTEMBER 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)

 

98.5%
   
98.1%

Total Sales PSF(2)

 
$

609
 
$

582

Base Minimum Rent PSF(3)

 
$

31.75
 
$

30.71

Leasing Spread PSF(4)

 
$

8.83
 
$

10.80

Leasing Spread (Percentage Change)(4)

 

18.0%
   
19.9%

 

 

 
   
 

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

 

99.6%
   
99.9%

Total Sales PSF

 
¥

106,308
 
¥

104,243

Base Minimum Rent PSF

 
¥

5,127
 
¥

5,056
(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.
 
3Q 2018 SUPPLEMENTAL 3Q 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 9/30/18







PERCENTAGE OF
GROSS ANNUAL
RENTAL
REVENUES  (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Inline Stores and Freestanding

                       

Month to Month Leases

   
555
   
1,647,419
 
$

59.60
   
1.8%

2018 (10/1 - 12/31)

    310     891,437   $ 56.84     0.9%

2019

    2,636     9,524,289   $ 50.56     8.6%

2020

    2,238     7,798,864   $ 50.57     7.1%

2021

    2,117     8,145,411   $ 50.15     7.4%

2022

    1,929     7,484,420   $ 50.82     6.9%

2023

    2,227     8,461,042   $ 56.37     8.6%

2024

    1,593     6,356,009   $ 58.88     6.8%

2025

    1,428     5,424,568   $ 64.85     6.4%

2026

    1,285     4,599,787   $ 62.54     5.2%

2027

    1,041     3,868,325   $ 62.63     4.4%

2028

    727     3,158,444   $ 55.20     3.2%

2029 and Thereafter

    487     2,717,915   $ 44.83     2.3%

Specialty Leasing Agreements w/ terms in excess of 12 months

    1,476     3,789,163   $ 19.22     1.4%

 

                       

Anchors

                       

2018 (10/1 - 12/31)

   
3
   
475,106
 
$

8.35
   
0.1%

2019

    12     1,264,186   $ 3.69     0.1%

2020

    25     2,968,085   $ 4.91     0.3%

2021

    12     1,422,205   $ 4.74     0.1%

2022

    15     2,219,546   $ 6.22     0.2%

2023

    19     2,568,767   $ 6.44     0.3%

2024

    18     1,346,016   $ 9.94     0.2%

2025

    12     1,219,739   $ 8.37     0.2%

2026

    5     633,170   $ 4.97     0.1%

2027

    6     920,224   $ 4.16     0.1%

2028

    9     857,119   $ 7.43     0.1%

2029 and Thereafter

    16     1,873,817   $ 6.56     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.
 
3Q 2018 SUPPLEMENTAL 3Q 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.

    369     3,792     2.1%     3.4%

L Brands, Inc.

    313     1,908     1.0%     2.2%

Ascena Retail Group Inc

    449     2,499     1.4%     1.9%

PVH Corporation

    240     1,469     0.8%     1.5%

Signet Jewelers, Ltd.

    390     570     0.3%     1.5%

Tapestry, Inc.

    243     966     0.5%     1.4%

Forever 21, Inc.

    93     1,438     0.8%     1.4%

Foot Locker, Inc.

    237     1,069     0.6%     1.3%

Luxottica Group SPA

    387     697     0.4%     1.2%

Abercrombie & Fitch Co.

    156     1,110     0.6%     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     22,449     12.3%     0.4%

J.C. Penney Co., Inc.

    66     10,589     5.8%     0.3%

Dillard's, Inc.

    37     6,665     3.7%     *

Sears Holdings Corporation (2)

    29     4,824     2.6%     *

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.

    9     1,504     0.8%     *

The Neiman Marcus Group, Inc.

    12     1,458     0.8%     0.1%

Target Corporation

    5     751     0.4%     *

Von Maur, Inc.

    5     607     0.3%     *
(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)
Excludes 17 stores expected to close by December 31, 2018.
*
Less than one-tenth of one percent.
 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 25

Table of Contents

CAPITAL EXPENDITURES
(In thousands)

     

UNCONSOLIDATED
PROPERTIES
   

 
CONSOLIDATED
PROPERTIES

 
TOTAL  
OUR
SHARE

New development projects

  $ 77,446   $ 212,599   $ 103,220

Redevelopment projects with incremental square footage and/or anchor replacement

   
224,385
   
166,782
   
80,386

Redevelopment projects with no incremental square footage (1)

   
93,894
   
38,517
   
16,659

 

                 

Subtotal new development and redevelopment projects

  395,725   417,898   200,265

Tenant allowances

   
117,324
   
57,186
   
27,574

Operational capital expenditures at properties:

                 

CAM expenditures (2)

    64,985     34,584     15,996

Non-CAM expenditures

    24,765     10,248     4,509

 

                 

Totals

  $ 602,799   $ 519,916   $ 248,344

Conversion from accrual to cash basis

   
(16,842)
   
100,608
   
48,056

 

                 

Capital Expenditures for the Nine Months Ended 9/30/18 (3)

  $ 585,957   $ 620,524   $ 296,400

        

                 

Capital Expenditures for the Nine Months Ended 9/30/17 (3)

  $ 487,321   $ 767,009   $ 350,597
(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.
 
3Q 2018 SUPPLEMENTAL 3Q 2018 SUPPLEMENTAL 26

Table of Contents

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

 

 

PLATFORM
    PROJECT TYPE


 
 

PROJECTED
GROSS COST (2)


 

PROJECTED
NET COST (3)


 


OUR
SHARE OF
NET COST (4)



 


EXPECTED
STABILIZED
RATE OF RETURN (4)



 


TOTAL
CONSTRUCTION
IN PROGRESS



 



OUR SHARE
OF TOTAL
CONSTRUCTION
IN PROGRESS




 

 

Malls

                         

 

 

Redevelopments

      $ 440       $ 435       $ 381