<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number 333-11491
SIMON PROPERTY GROUP, L.P.
(Exact name of registrant as specified in its charter)
Delaware 34-1755769
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
115 West Washington Street
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 636-1600
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO[_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. N/A
Documents Incorporated By Reference
Portions of Simon Property Group, Inc.'s Proxy Statement in connection with its
Annual Meeting of Shareholders to be held on May 10, 2000 are incorporated by
reference in Part III.
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1
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SIMON PROPERTY GROUP, L.P.
Annual Report on Form 10-K
December 31, 1999
TABLE OF CONTENTS
Item No. Page No.
- -------- --------
Part I
1. Business........................................................ 3
2. Properties...................................................... 8
3. Legal Proceedings............................................... 32
4. Submission of Matters to a Vote of Security Holders............. 32
Part II
5. Market for the Registrant and Related Unitholder Matters........ 33
6. Selected Financial Data......................................... 34
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 35
7A. Quantitative and Qualitative Disclosure About Market Risk....... 42
8. Financial Statements and Supplementary Data..................... 42
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure........................................ 42
Part III
10. Directors and Executive Officers of the Registrant.............. 43
11. Executive Compensation.......................................... 43
12. Security Ownership of Certain Beneficial Owners and Management.. 43
13. Certain Relationships and Related Transactions.................. 43
Part IV
14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K 44
Signatures............... 70
2
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Part I
Item 1. Business
Background
Simon Property Group, L.P. (the "SPG Operating Partnership"), a Delaware
limited partnership, is a majority owned subsidiary of Simon Property Group Inc.
("SPG"), a Delaware corporation. SPG is a self-administered and self-managed
real estate investment trust ("REIT"). Each share of common stock of SPG is
paired with a beneficial interest in 1/100th of a share of common stock of SPG
Realty Consultants, Inc., also a Delaware corporation. ("SRC" and together with
SPG, the "Companies"). Units of partnership interests ("Units") in the SPG
Operating Partnership are paired with a Unit in SPG Realty Consultants, L.P.
(the "SRC Operating Partnership"). The SRC Operating Partnership is the primary
subsidiary of SRC.
Mergers and Acquisitions
Mergers and acquisitions have been a significant component of the growth
and development of the SPG Operating Partnership's business. Beginning with the
$3.0 billion acquisition, through merger, of DeBartolo Realty Corporation
("DRC") in August of 1996 (the "DRC Merger"), the SPG Operating Partnership has
completed five major mergers and/or acquisitions that have helped shape the
current organization. During 1997, the SPG Operating Partnership completed the
acquisition of Retail Property Trust, along with its operating partnership,
Shopping Center Associates, for approximately $1.3 billion. In February of 1998,
the SPG Operating Partnership acquired a 50% ownership interest in a portfolio
of fourteen properties for approximately $0.5 billion. In September of 1998, SPG
and the SPG Operating Partnership completed the acquisition, through merger, of
Corporate Property Investors, Inc. ("CPI"), and Corporate Realty Consultants,
Inc. for approximately $5.9 billion (the "CPI Merger"). And most recently, the
NED Acquisition was completed in 1999, for approximately $1.8 billion, as
described below.
The NED Acquisition. During 1999, the SPG Operating Partnership acquired
ownership interests in 14 regional malls from New England Development Company
(the "NED Acquisition"). The SPG Operating Partnership acquired one of the
properties directly and formed a joint venture with three partners
("Mayflower"), of which the SPG Operating Partnership owns 49.1%, to acquire
interests in the remaining properties. The total costs of the NED Acquisition is
approximately $1.8 billion, of which the SPG Operating Partnership's share is
approximately $894 million. The SPG Operating Partnership assumed management
responsibilities for the portfolio, which includes approximately 10.7 million
square feet of GLA. The SPG Operating Partnership's share of the cost of the NED
Acquisition included the assumption of approximately $530 million of mortgage
indebtedness; $177 million in cash; and the issuance of approximately $187
million of common and preferred equity in the SPG Operating Partnership.
In addition to the NED Acquisition, the SPG Operating Partnership acquired
the remaining ownership interests in four existing Properties as well as 50% of
the economic benefits of Mall of America in Minneapolis, Minnesota in 1999 at a
combined cost of approximately $318 million.
Description of the Business
The SPG Operating Partnership is engaged primarily in the ownership,
operation, management, leasing, acquisition, expansion and development of real
estate properties, primarily regional malls and community shopping centers. As
of December 31, 1999, the SPG Operating Partnership owned or held an interest in
258 income-producing properties, which consisted of 167 regional malls, 78
community shopping centers, four specialty retail centers, five office and
mixed-use properties and four value-oriented super-regional malls in 36 states
(the "Properties") and five additional retail real estate properties operating
in Europe. The SPG Operating Partnership also owned interests in two regional
malls currently under construction and 11 parcels of land held for future
development, which together with the Properties are hereafter referred to as the
"Portfolio" or the "Portfolio Properties". The SPG Operating Partnership also
holds substantially all of the economic interest in M.S. Management Associates,
Inc. (the "Management Company"). The Management Company manages certain of the
Properties and certain other retail real estate properties not owned by the SPG
Operating Partnership, and also engages in certain property development
activities.
3
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General
During 1999, regional malls (including specialty retail centers and retail
space in the mixed-use Properties), community centers and the remaining
Portfolio comprised 91.5%, 5.1%, and 3.4%, respectively of consolidated rent
revenues and tenant reimbursements. The Properties contain an aggregate of
approximately 184.6 million square feet of GLA, of which 110.6 million square
feet is owned by the SPG Operating Partnership ("Owned GLA"). More than 4,400
different retailers occupy more than 20,100 stores in the Properties. Total
estimated retail sales at the Properties in 1999 were approximately $38 billion.
Operating Strategies
The SPG Operating Partnership's primary business objectives are to increase
cash generated from operations per Unit and the value of the Portfolio
Properties. The SPG Operating Partnership plans to achieve these objectives
through a variety of methods discussed below, although no assurance can be made
that such objectives will be achieved.
Leasing. The SPG Operating Partnership pursues an active leasing strategy,
which includes aggressively marketing available space; renewing existing
leases at higher base rents per square foot; and continuing to sign leases
that provide for percentage rents and/or regular or periodic fixed
contractual increases in base rents.
Management. Drawing upon the expertise gained through management of a
geographically diverse Portfolio nationally recognized as high quality
retail and mixed-use Properties, the SPG Operating Partnership seeks to
maximize cash flow through a combination of an active merchandising program
to maintain its shopping centers as inviting shopping destinations,
continuation of its successful efforts to minimize overhead and operating
costs, coordinated marketing and promotional activities directed towards
establishing and maintaining customer loyalty, and systematic planning and
monitoring of results.
E-Commerce. The Companies are actively developing several unique programs
designed to take advantage of new retail opportunities of the digital age.
Elements of the strategy include digitizing the existing assets of the
Properties by implementing internet web sites for each of the Properties,
creating products that leverage the digitalization of consumers and Simon
merchants through an enhanced broadband network called TenantConnect.net
and incubating concepts that leverage the physical and virtual worlds
through a venture creation subsidiary called clixnmortar.com.
Acquisitions. The SPG Operating Partnership intends to selectively acquire
individual properties and portfolios of properties that meet its investment
criteria as opportunities arise. Management believes, however, that due to
the rapid consolidation of the regional mall business, coupled with the
current status of the capital markets, that acquisition activity in the
near term will be a less significant component of the SPG Operating
Partnership's growth strategy.
Development. The SPG Operating Partnership's strategy is to selectively
develop new properties in major metropolitan areas that exhibit strong
population and economic growth. During 1999, the SPG Operating Partnership
opened one new regional mall, one specialty center, one value-oriented
super-regional mall and three new community shopping centers. These
additions added approximately 4.9 million square feet of GLA to the
Portfolio at a cost to the SPG Operating Partnership of approximately $505
million. The SPG Operating Partnership also has two additional projects
under construction, which are scheduled to open in 2000.
Strategic Expansions and Renovations. A key objective of the SPG Operating
Partnership is to increase the profitability and market share of the
Properties through the completion of strategic renovations and expansions.
During 1999, the SPG Operating Partnership invested approximately $277
million on redevelopment projects and completed four major redevelopment
projects. The SPG Operating Partnership has a number of renovation and/or
expansion projects currently under construction, or in preconstruction
development.
The SPG Operating Partnership also has direct or indirect interests in
eleven parcels of land being held for future development in eight states
totaling approximately 828 acres. Management believes the SPG Operating
Partnership is well positioned to pursue future development opportunities
as conditions warrant.
International Expansion. The SPG Operating Partnership's management
believes the expertise it has gained through the development and management
of its domestic Portfolio can be utilized in retail properties throughout
the world. The SPG Operating Partnership intends to continue pursuing
international opportunities on a selected basis to enhance the value of its
Units.
4
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Competition
The SPG Operating Partnership believes that it has a competitive advantage
in the retail real estate business as a result of (i) its use of innovative
retailing concepts, (ii) its management and operational expertise, (iii) its
extensive experience and relationship with retailers and lenders, (iv) the size,
quality and diversity of its Properties and (v) the mall marketing initiatives
of Simon Brand Ventures ("SBV"), which the SPG Operating Partnership believes is
the world's largest and most sophisticated mall marketing initiative. Management
believes that the Properties are the largest, as measured by GLA, of any
publicly traded REIT, with more regional malls than any other publicly traded
REIT. For these reasons, management believes the SPG Operating Partnership to be
the leader in the industry.
All of the Portfolio Properties are located in developed areas. With
respect to certain of such properties, there are other properties of the same
type within the market area. The existence of competitive properties could have
a material adverse effect on the SPG Operating Partnership's ability to lease
space and on the level of rents the SPG Operating Partnership can obtain.
There are numerous commercial developers, real estate companies and other
owners of real estate that compete with the SPG Operating Partnership in its
trade areas. This results in competition for both acquisition of prime sites
(including land for development and operating properties) and for tenants to
occupy the space that the SPG Operating Partnership and its competitors develop
and manage.
Environmental Matters
General Compliance. Management believes that the Portfolio Properties are
in compliance, in all material respects, with all Federal, state and local
environmental laws, ordinances and regulations regarding hazardous or toxic
substances (see Item 3. Legal Proceedings). Nearly all of the Portfolio
Properties have been subjected to Phase I or similar environmental audits (which
generally involve only a review of records and visual inspection of the property
without soil sampling or ground water analysis) by independent environmental
consultants. The Phase I environmental audits are intended to discover
information regarding, and to evaluate the environmental condition of, the
surveyed properties and surrounding properties. The environmental audits have
not revealed, nor is management aware of, any environmental liability that
management believes will have a material adverse effect on the SPG Operating
Partnership. No assurance can be given that existing environmental studies with
respect to the Portfolio Properties reveal all potential environmental
liabilities; that any previous owner, occupant or tenant of a Portfolio Property
did not create any material environmental condition not known to management;
that the current environmental condition of the Portfolio Properties will not be
affected by tenants and occupants, by the condition of nearby properties, or by
unrelated third parties; or that future uses or condition (including, without
limitation, changes in applicable environmental laws and regulations or the
interpretation thereof) will not result in imposition of additional
environmental liability.
Asbestos-Containing Materials. Asbestos-containing materials are present in
most of the Properties, primarily in the form of vinyl asbestos tile, mastics
and roofing materials, which are generally in good condition. Fireproofing and
insulation containing asbestos is also present in certain Properties in limited
concentrations or in limited areas. The presence of such asbestos-containing
materials does not violate currently applicable laws. The SPG Operating
Partnership will remove asbestos-containing materials in the ordinary course of
any renovation, reconstruction and expansion, and in connection with the
retenanting of space.
Underground Storage Tanks. Several of the Portfolio Properties contain or
at one time contained, underground storage tanks used to store waste oils or
other petroleum products primarily related to auto services center
establishments or emergency electrical generation equipment. All regulated tanks
have been removed, upgraded or abandoned in place in accordance with applicable
environmental laws. Site assessments have revealed certain soil and groundwater
contamination associated with such tanks at some of these Properties. Subsurface
investigations (Phase II assessments) and remediation activities are either
ongoing or scheduled to be conducted at such Properties. The cost of remediation
with respect to such matters has not been and is not expected to be material.
Properties to be Developed or Acquired. Land held for shopping mall
development or that may be acquired for development may contain residues or
debris associated with the use of the land by prior owners or third parties. In
certain instances, such residues or debris could be or contain hazardous wastes
or hazardous substances. Prior to exercising any option to acquire any of the
optioned properties, the SPG Operating Partnership will conduct environmental
due diligence consistent with past practice.
5
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Employees
The SPG Operating Partnership and its affiliates employ approximately 5,840
persons at various centers and offices throughout the United States, of which
2,940 are part-time. Approximately 1,000 employees are located at the SPG
Operating Partnership's headquarters in Indianapolis, Indiana.
Insurance
The SPG Operating Partnership has comprehensive liability, fire, flood,
extended coverage and rental loss insurance with respect to its Properties.
Management believes that such insurance provides adequate coverage.
Corporate Headquarters
The SPG Operating Partnership's executive offices are located at National
City Center, 115 West Washington Street, Indianapolis, Indiana 46204, and its
telephone number is (317) 636-1600.
Executive Officers of the Registrant
The following table sets forth certain information with respect to the
executive officers of SPG, which is the managing general partner of the SPG
Operating Partnership, as of December 31, 1999.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Melvin Simon (1) 73 Co-Chairman
Herbert Simon (1) 65 Co-Chairman
David Simon (1) 38 Chief Executive Officer
Hans C. Mautner 61 Vice Chairman; Chairman, Simon Global
Limited
Richard S. Sokolov 50 President and Chief Operating Officer
Randolph L. Foxworthy 55 Executive Vice President - Corporate
Development
William J. Garvey 60 Executive Vice President - Property
Development
James A. Napoli 53 Executive Vice President - Leasing
John R. Neutzling 47 Executive Vice President - Property
Management
James M. Barkley 48 General Counsel; Secretary
Stephen E. Sterrett 44 Treasurer
John Rulli 43 Senior Vice President - Human Resources &
Corporate Operations
James R. Giuliano, III 42 Senior Vice President
Karen D. Corsaro 42 President, Simon Brand Ventures; Senior
Vice President of Marketing
Melanie Alshab 36 President, clixnmortar.com; Senior Vice
President & Chief Information Officer
(1) Melvin Simon is the brother of Herbert Simon and the father of David Simon.
</TABLE>
Set forth below is a summary of the business experience of the executive
officers of SPG. The executive officers of SPG serve at the pleasure of the
Board of Directors and have served SPG's predecessor since its formation in
1993, with the exception of Mr. Mautner, who has held his office since the CPI
Merger and Mr. Sokolov, Mr. Giuliano and Ms. Alshab who have held their offices
since the DRC Merger. For biographical information of Melvin Simon, Herbert
Simon, David Simon, Hans C. Mautner, and Richard Sokolov, see Item 10 of this
report.
Mr. Foxworthy is the Executive Vice President - Corporate Development of SPG.
Mr. Foxworthy joined Melvin Simon & Associates, Inc. ("MSA") in 1980 and has
been an Executive Vice President in charge of Corporate Development of MSA since
1986 and has held the same position with SPG since 1993.
Mr. Garvey is the Executive Vice President - Property Development of SPG. Mr.
Garvey, who was Executive Vice President and Director of Development at MSA,
joined MSA in 1979 and held various positions with MSA.
6
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Mr. Napoli is the Executive Vice President - Leasing of SPG. Mr. Napoli
also served as Executive Vice President and Director of Leasing of MSA, which he
joined in 1989.
Mr. Neutzling is the Executive Vice President - Property Management of SPG.
Mr. Neutzling has also been an Executive Vice President of MSA since 1992
overseeing all property and asset management functions. He joined MSA in 1974
and has held various positions with MSA.
Mr. Barkley serves as SPG's General Counsel and Secretary. Mr. Barkley
holds the same position for MSA. He joined MSA in 1978 as Assistant General
Counsel for Development Activity.
Mr. Sterrett serves as SPG's Treasurer. He joined MSA in 1989 and has held
various positions with MSA.
Mr. Rulli holds the position of Senior Vice President - Human Resources and
Corporate Operations. He joined MSA in 1988 and has held various positions with
MSA.
Mr. Giuliano has served as Senior Vice President since the DRC Merger. He
joined DRC in 1993, where he served as Senior Vice President and Chief Financial
Officer up to the DRC Merger.
Ms. Corsaro is President of Simon Brand Ventures and Sr. Vice President of
Marketing for SPG. Ms. Corsaro joined MSA in 1983 and has served in various
business development positions.
Ms. Alshab is President of clixnmortar.com and the Senior Vice President &
Chief Information Officer of SPG. She joined DRC in 1995.
7
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Item 2. Properties
Portfolio Properties
The Properties primarily consist of two types: regional malls and community
shopping centers. Regional malls contain two or more anchors and a wide variety
of smaller stores ("Mall" stores) located in enclosed malls connecting the
anchors. Additional stores ("Freestanding" stores) are usually located along the
perimeter of the parking area. The 167 regional malls in the Properties range in
size from approximately 200,000 to 2.8 million square feet of GLA, with all but
five regional malls over 400,000 square feet. These regional malls contain in
the aggregate more than 17,000 occupied stores, including over 650 anchors which
are mostly national retailers. As of December 31, 1999, regional malls
(including specialty retail centers and retail space in the mixed-use
Properties) represented 85.0% of total GLA, 79.9% of Owned GLA and 86.4% of
total annualized base rent of the Properties.
Community shopping centers are generally unenclosed and smaller than
regional malls. Most of the 78 community shopping centers in the Properties
range in size from approximately 100,000 to 400,000 square feet of GLA.
Community shopping centers generally are of two types: (i) traditional community
centers, which focus primarily on value-oriented and convenience goods and
services, are usually anchored by a supermarket, drugstore or discount retailer
and are designed to service a neighborhood area; and (ii) power centers, which
are designed to serve a larger trade area and contain at least two anchors that
are usually national retailers among the leaders in their markets and occupy
more than 70% of the GLA in the center. As of December 31, 1999, community
shopping centers represented 10.6% of total GLA, 12.8% of Owned GLA and 6.0% of
the total annualized base rent of the Properties.
The SPG Operating Partnership also has joint venture interests in four
specialty retail centers, five office and mixed-use Properties and four value-
oriented super-regional malls. The specialty retail centers contain
approximately 1,272,000 square feet of GLA and do not have anchors; instead,
they feature retailers and entertainment facilities in a distinctive shopping
environment and location. The five office and mixed-use Properties range in size
from approximately 348,000 to 1,039,000 square feet of GLA. Two of these
Properties are regional malls with connected office buildings, two are located
in mixed-use developments and contain primarily office space and the remaining
one is solely office space. The value-oriented super-regional malls range in
size from approximately 1.2 million to 1.5 million square feet of GLA. These
Properties combine retail outlets, manufacturers' off-price stores and other
value-oriented tenants. As of December 31, 1999, value-oriented super-regional
malls represented 2.9% of total GLA, 4.7% of Owned GLA and 4.7% of the total
annualized base rent of the Properties.
As of December 31, 1999, approximately 90.6% of the Mall and Freestanding
Owned GLA in regional malls, specialty retail centers and the retail space in
the mixed use Properties was leased, approximately 95.1% of the Owned GLA in the
value-oriented super-regional malls was leased, and approximately 88.6% of Owned
GLA in the community shopping centers was leased.
Of the 258 Properties, 177 are owned 100% by the SPG Operating Partnership
and the remainder are held as joint venture interests. The SPG Operating
Partnership is the managing or co-managing general partner or member of all but
nine of the Properties held as joint venture interests.
8
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Additional Information
The following table sets forth certain information, as of December 31,
1999, regarding the Properties:
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchors/Specialty Anchors
------------- -------------------- ------------ ------------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
REGIONAL MALLS
1. Alton Square Fee 100.0 Acquired 639,640 Sears, JCPenney, Famous
Alton, IL 1993 Barr
2. Amigoland Mall Fee 100.0 Built 1974 558,707 Dillard's, JCPenney, Ward,
Brownsville, TX Beall's
3. Anderson Mall Fee 100.0 Built 1972 634,542 Belk (3), JCPenney, Sears
Anderson, SC
4. Apple Blossom Mall Fee 49.1 Acquired 438,133 Belk, JCPenney, Sears
Winchester, VA 1999
5. Arsenal Mall Fee 100.0 Acquired 500,924 Ann & Hope, Marshall's
Watertown, MA 1999 (4)
6. Atrium Mall Fee 49.1 Acquired 216,147 Border Books & Music
Chestnut Hill, MA 1999
7. Auburn Mall Fee 49.1 Acquired 595,316 Filene's, Sears, Caldor (5)
Auburn, MA 1999
8. Aurora Mall Fee 100.0 Acquired 1,014,019 JCPenney, Foley's (3), Sears
Aurora, CO 1998
9. Aventura Mall (6) Fee 33.3 Built 1983 1,922,783 Macy's, Sears, Bloomingdales,
Miami, FL JCPenney, Lord & Taylor,
Burdines, AMC Theatre
10. Avenues, The Fee 25.0 Built 1990 1,112,648 Belk, Dillard's, JCPenney,
Jacksonville, FL Parisian, Sears
11. Barton Creek Square Fee 100.0 Built 1981 1,399,358 Dillard's (3), Foley's,
Austin, TX JCPenney, Sears, Ward,
General Cinema
12. Battlefield Mall Fee and Ground 100.0 Built 1970 1,196,577 Dillard's, Famous Barr, Ward,
Springfield, MO Lease (2056) Sears, JCPenney
13. Bay Park Square Fee 100.0 Built 1980 665,323 Elder-Beerman, Kohl's, Ward,
Green Bay, WI Shopko
14. Bergen Mall Fee and Ground 100.0 Acquired 925,035 Off 5/th/-Saks Fifth Avenue
Paramus, NJ Lease (7) (2061) 1987 Outlet, Value City Furniture,
Stern's, Marshall's
15. Biltmore Square Fee (8) 66.7 Built 1989 494,811 Belk, Dillard's, Proffitt's,
Asheville, NC Goody's
16. Boynton Beach Mall Fee 100.0 Built 1985 1,186,321 Macy's, Burdines, Sears,
Boynton Beach, FL Dillard's (3), JCPenney
</TABLE>
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<TABLE>
<CAPTION>
Ownership
Interest
(Expiration Ownership Year Built Total
Name/Location if Lease) (1) Interest (2) or Acquired GLA Anchor/Specialty Anchors
------------- ------------- ------------ ----------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
17. Brea Mall Fee 100.0 Acquired 1,302,336 Macy's, JCPenney,
Brea, CA 1998 Robinsons-May, Nordstrom,
Sears
18. Broadway Square Fee 100.0 Acquired 619,600 Dillard's, JCPenney, Sears
Tyler, TX 1994
19. Brunswick Square Fee 100.0 Built 1973 768,961 Macy's, JCPenney, Barnes &
East Brunswick, NJ Noble, Brunswick Square
Movies
20. Burlington Mall Ground Lease 100.0 Acquired 1,251,266 Macy's, Lord & Taylor,
Burlington, MA (2048) 1998 Filene's, Sears
21. Cape Cod Mall Ground Leases (7) 49.1 Acquired 718,410 Macy's, Filene's,
Hyannis, MA (2009-2073) 1999 Marshall's, Sears, Best Buy,
Barnes & Noble (9), Hoyt's
Cinemas
22. Castleton Square Fee 100.0 Built 1972 1,455,078 Galyan's, LS Ayres, Lazarus,
Indianapolis, IN JCPenney, Sears, Von Maur
23. Century III Mall Fee 100.0 Built 1979 1,287,430 JCPenney, Sears, T.J. Maxx,
Pittsburgh, PA Kauufmann's (3), Wickes
Furniture
24. Charlottesville Fashion Ground Lease (2076) 100.0 Acquired 573,839 Belk (3), JCPenney, Sears
Square 1997
Charlottesville, VA
25. Chautauqua Mall Fee 100.0 Built 1971 440,688 Sears, JCPenney, Office Max,
Jamestown, NY Old Navy, The Bon Ton
26. Cheltenham Square Fee 100.0 Built 1981 636,441 Burlington Coat Factory, Home
Philadelphia, PA Depot, Value City, Seaman's
Furniture, Shop Rite, United
Artist Theatre
27. Chesapeake Square Fee and Ground (8) 75.0 Built 1989 800,176 Dillard's (3), JCPenney,
Chesapeake, VA Lease (2062) Sears, Ward, Hecht's
28. Cielo Vista Mall Fee and Ground 100.0 Built 1974 1,193,037 Dillard's (3), JCPenney,
El Paso, TX Lease (10) (2027) Ward, Sears
29. Circle Centre Property Lease 14.7 Built 1995 793,687 Nordstrom, Parisian, United
Indianapolis, IN (2097) Artists Theatre
30. College Mall Fee and Ground 100.0 Built 1965 708,127 Sears, Lazarus, L.S. Ayres,
Bloomington, IN Lease (10) (2048) Target, JCPenney
31. Columbia Center Fee 100.0 Acquired 772,524 Sears, JCPenney, Lamonts,
Kennewick, WA 1987 Barnes & Noble, The Bon
Marche, Regal Cinema
32. Coral Square Fee 50.0 Built 1984 946,615 Dillard's, JCPenney, Sears,
Coral Springs, FL Burdines (3)
33. Cordova Mall Fee 100.0 Acquired 853,654 Ward, Parisian, Dillard's (3)
Pensecola, FL 1998
34. Cottonwood Mall Fee 100.0 Built 1996 1,039,450 Dillard's, Foley's,
Albuquerque, NM JCPenney, Mervyn's, Ward, United
Artists Theatre
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest
(Expiration Ownership Year Built Total
Name/Location if Lease) (1) Interest (2) or Acquired GLA Anchor/Specialty Anchors
------------- ------------- ------------ ----------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
35. Crossroads Mall Fee 100.0 Acquired 865,528 Dillard's, Sears, Younkers,
Omaha, NE 1994 Barnes & Noble
36. Crystal Mall Fee 74.6 Acquired 780,988 Macy's, Filene's, JCPenney,
Waterford, CT 1998 Sears
37. Crystal River Mall Fee 100.0 Built 1990 425,885 JCPenney, Sears, Belk, Kmart,
Crystal River, FL Regal Cinema
38. Dadeland Mall Fee 50.0 Acquired 1,405,683 Saks Fifth Avenue, JCPenney,
Miami, FL 1997 Burdine's, Burdine's Home
Gallery, Limited, Lord &
Taylor
39. DeSoto Square Fee 100.0 Built 1973 688,452 JCPenney, Sears, Dillard's,
Bradenton, FL Burdines, Regal Cinema
40. Eastern Hills Mall Fee 100.0 Built 1971 997,894 Sears, JCPenney, The Bon Ton,
Buffalo, NY Kaufmann's, Burlington Coat
Factory
41. Eastland Mall Fee 50.0 Acquired 902,676 JC Penney, De Jong's, Famous
Evansville, IN 1998 Barr, Lazarus
42. Eastland Mall Fee 100.0 Built 1986 707,974 Dillard's, JCPenney,
Tulsa, OK Mervyn's, Hollywood Cinema,
(11)
43. Edison Mall Fee 100.0 Acquired 1,044,562 Dillard's, JCPenney, Sears,
Fort Meyers, FL 1997 Burdines (3)
44. Emerald Square Fee 49.1 Acquired 1,006,803 Filene's, JCPenney, Lord &
North Attleborough, MA 1999 Taylor, Sears
45. Empire Mall (6) Fee and Ground 50.0 Acquired 1,044,564 JCPenney, Younkers, Sears,
Sioux Falls, SD Lease (7) (2013) 1998 Daytons, (11)
46. Fashion Mall at Keystone Ground Lease (2067) 100.0 Acquired 651,315 Jacobsons, Parisian
at the Crossing, The 1997
Indianapolis, IN
47. Florida Mall, The Fee 50.0 Built 1986 1,633,929 Dillard's, JCPenney,
Orlando, FL Parisian, Saks Fifth Avenue,
Sears, Burdines
48. Forest Mall Fee 100.0 Built 1973 474,127 JCPenney, Kohl's, Younkers,
Fond Du Lac, WI Sears, Staples
49. Forest Village Park Mall Fee 100.0 Built 1980 417,967 JCPenney, Kmart
Forestville, MD
50. Fremont Mall Fee 100.0 Built 1966 199,110 JCPenney, 1/2 Price Store
Fremont, NE
51. Golden Ring Mall Fee 100.0 Built 1974 719,679 Hecht's, Ward, United
Baltimore, MD Artists, Caldor (5)
52. Granite Run Mall Fee 50.0 Acquired 1,022,984 JCPenney, Sears, Boscovs
Media, PA 1998
</TABLE>
11
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<TABLE>
<CAPTION>
Ownership
Interest
(Expiration Ownership Year Built Total
Name/Location if Lease) (1) Interest (2) or Acquired GLA Anchor/Specialty Anchors
------------- ------------- ------------ ----------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
53. Great Lakes Mall Fee 100.0 Built 1961 1,311,490 Dillard's (3), Kaufmann's,
Cleveland, OH JCPenney, Sears
54. Greendale Mall Fee and Ground 49.1 Acquired 430,769 Best Buy, Marshall's, T.J.
Worcester, MA Lease (7) (2009) 1999 (12) Maxx & More, (11)
55. Greenwood Park Fee 100.0 Acquired 1,269,512 JCPenney, JCPenney Home
Mall 1979 Store, Lazarus, L.S. Ayres,
Greenwood, IN Sears, Service Merchandise,
Von Maur
56. Gulf View Square Fee 100.0 Built 1980 802,592 Sears, Dillard's, Ward,
Port Richey, FL JCPenney, Burdines
57. Gwinnett Place Fee 50.0 Acquired 1,248,363 Parisian, Macy's, Rich's
Atlanta, GA 1998 JCPenney, Sears
58. Haywood Mall Fee and Ground 100.0 Acquired 1,244,330 Rich's, Sears, Dillard's,
Greensville, SC Lease (7) (2017) 1998 JCPenney, Belk Simpson
59. Heritage Park Mall Fee 100.0 Built 1978 607,800 Dillard's, Sears, Ward
Midwest City, OK
60. Highland Mall (6) Fee and Ground 50.0 Acquired 1,091,897 Dillard's (3), Foley's,
Austin, TX Lease (2070) 1998 JCPenney
61. Hutchinson Mall Fee 100.0 Built 1985 525,709 Dillard's, JCPenney, Sears,
Hutchinson, KS Hobby Lobby, Orscheln's Farm
Supply, Cinema 8
62. Independence Center Fee 100.0 Acquired 1,022,477 Dillard's, Sears (3), The
Independence, MO 1994 Jones Store Co.
63. Indian River Mall Fee 50.0 Built 1996 747,614 Sears, JCPenney, Dillard's,
Vero Beach, FL Burdines, AMC Theatre
64. Ingram Park Mall Fee 100.0 Built 1979 1,129,905 Dillard's (3), Foley's,
San Antonio, TX JCPenney, Sears, Beall's
65. Irving Mall Fee 100.0 Built 1971 1,114,175 Foley's, Dillard's, Old Navy,
Irving, TX JCPenney, Mervyn's, Sears,
Barnes & Noble, General Cinema
66. Jefferson Valley Mall Fee 100.0 Built 1983 591,241 Macy's, Sears, United Artist
Yorktown Heights, NY Theatre, Home Decor
67. Knoxville Center Fee 100.0 Built 1984 981,354 Dillard's, JCPenney,
Knoxville, TN Proffitt's, Sears,
Regal Cinema, Service
Merchandise (5)
68. La Plaza Fee and Ground 100.0 Built 1976 997,077 Dillard's, JCPenney, Foley's,
McAllen, TX Lease (7) (2040) Foley's Home Store, Sears,
Beall's, Joe Brand-Lady Brand
69. Lafayette Square Fee 100.0 Built 1968 1,165,508 JCPenney, LS Ayres, Sears,
Indianapolis, IN Lazarus, Home Place,
Burlington Coat Factory
70. Laguna Hills Mall Fee 100.0 Acquired 868,144 Macy's, JCPenney, Sears
Laguna Hills, CA 1997
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
71. Lake Square Mall Fee 50.0 Acquired 561,077 JCPenney, Sears, Belk,
Leesburg, FL 1998 Target, AMC 6 Theatres
72. Lakeland Square (13) Fee 50.0 Built 1988 900,551 Belk, Dillard's (3), JCPenney,
Lakeland, FL Sears, Burdines
73. Lakeline Mall Fee 100.0 Built 1995 1,102,242 Dillard's, Foley's, Sears,
N. Austin, TX JCPenney, Mervyn's, Regal
Cinema
74. Lenox Square Fee 100.0 Acquired 1,427,394 Neiman Marcus, Macy's,
Atlanta, GA 1998 Rich's, United Artists
Theatres
75. Liberty Tree Mall Fee 49.1 Acquired 850,486 Ann & Hope, Marshall's,
Newton, MA 1999 Sports Authority, Target,
Loews Theatre
76. Lima Mall Fee 100.0 Built 1965 743,480 Elder-Beerman, Sears,
Lima, OH Lazarus, JCPenney
77. Lincolnwood Town Center Fee 100.0 Built 1990 441,162 JCPenney, Carson Pirie Scott
Lincolnwood, IL
78. Lindale Mall (6) Fee 50.0 Acquired 690,549 Von Maur, Sears, Younkers
Cedar Rapids, IA 1998
79. Livingston Mall Fee 100.0 Acquired 984,752 Macy's, Sears, Lord &
Livingston, NJ 1998 Taylor
80. Longview Mall Fee 100.0 Built 1978 616,505 Dillard's (3), JCPenney,
Longview, TX Sears, Service Merchandise,
Beall's
81. Machesney Park Mall Fee 100.0 Built 1979 555,984 JCPenney, Kohl's, Seventh
Rockford, IL Avenue Direct, Bergners,
Kerasotes Theatre
82. Mall at Rockingham Park Fee 24.6 Acquired 996,868 Macy's, Filene's, JCPenney,
Salem, NH 1999 Sears
83. Mall of America Fee (14) 27.5 Acquired 2,777,511 Macy's, Bloomingdales,
Minneapolis, MN 1999 Nordstrom, Sears, Knott's
Camp Snoopy, General
Cinema
84. Mall of Georgia Fee 50.0 Built 1999 1,491,432 Lord & Taylor, Rich's (9),
Gwinnett County, GA Dillard's, Galyan's,
Haverty's, JCPenney,
Nordstrom (9), Bed, Bath &
Beyond, Regal Cinema
85. Mall of New Hampshire Fee 49.1 Acquired 800,269 Filene's, JCPenney, Sears,
Manchester, NH 1999 Best Buy
86. Markland Mall Ground Lease 100.0 Built 1968 394,569 Lazarus, Sears, Target
Kokomo, IN (2041)
87. McCain Mall Ground Lease 100.0 Built 1973 776,918 Sears, Dillard's, JCPenney,
N. Little Rock, AR (15) (2032) M.M. Cohn
88. Melbourne Square Fee 100.0 Built 1982 737,824 Belk, Dillard's (3), JCPenney,
Melbourne, FL Burdines
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest
(Expiration Ownership Year Built Total
Name/Location if Lease) (1) Interest (2) or Acquired GLA Anchor/Specialty Anchors
------------- ------------- ------------ ----------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
89. Memorial Mall Fee 100.0 Built 1969 416,742 JCPenney, Kohl's, Sears
Sheboygan, WI
90. Menlo Park Mall Fee 100.0 Acquired 1,292,897 Macy's (3), Nordstrom,
Edison, NJ 1997 (16) Cineplex Odeon
91. Mesa Mall (6) Fee 50.0 Acquired 856,258 Sears, Herberger's, JCPenney,
Grand Junction, CO 1998 Target, Mervyn's
92. Metrocenter (17) Fee 50.0 Acquired 1,356,214 Macy's, Dillard's,
Phoenix, AZ 1998 Robinsons-May, JCPenney,
Sears, Harkins Theatres
93. Miami Fee 60.0 Built 1982 976,465 Sears, Dillard's, JCPenney,
International Mall Burdines (3)
Miami, FL
94. Midland Park Mall Fee 100.0 Built 1980 614,666 Dillard's (3), JCPenney,
Midland, TX Sears, Beall's
95. Miller Hill Mall Fee 100.0 Built 1973 815,244 JCPenney, Sears, Younkers,
Duluth, MN Northstar Ford
96. Mounds Mall Ground Lease (2033) 100.0 Built 1965 407,681 Elder-Beerman, JCPenney, Sears
Anderson, IN
97. Muncie Mall Fee 100.0 Built 1970 659,879 JCPenney, L.S. Ayres, Sears,
Muncie, IN Elder Beerman, (11)
98. Nanuet Mall Fee 100.0 Acquired 914,892 Macy's, Stern's, Sears
Nanuet, NY 1998
99. North East Mall Fee 100.0 Built 1971 1,213,305 Saks Fifth Avenue (9),
Hurst, TX Nordstrom (9), Dillard's,
JCPenney, Ward, Sears
100. North Towne Square Fee 100.0 Built 1980 749,070 Dillard's, Ward, (11)
Toledo, OH
101. Northfield Square Fee (8) 31.6 Built 1990 558,237 Sears, JCPenney, Cinemark
Bradley, IL Movies 10, Carson Pirie Scott
(3)
102. Northgate Mall Fee 100.0 Acquired 1,097,163 Nordstrom, JCPenney, Lamonts,
Seattle, WA 1987 (18) The Bon Marche
103. Northlake Mall Fee 100.0 Acquired 963,463 Parisian, Macy's, Sears,
Atlanta, GA 1998 JCPenney
104. Northpark Mall Fee 50.0 Acquired 1,040,868 Von Maur, Younkers, Ward,
Davenport, IA 1998 JCPenney, Sears
105. Northshore Mall Fee 49.1 Acquired 1,677,897 Macy's, Filene's, JCPenney,
Peabody, MA 1999 Lord & Taylor, Sears
106. Northwoods Mall Fee 100.0 Acquired 668,122 Famous Barr, JCPenney, Sears
Peoria, IL 1983
107. Oak Court Mall Fee 100.0 Acquired 852,085 Dillard's (3), Goldsmith's
Memphis, TN 1997 (19)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
108. Orange Park Mall Fee 100.0 Acquired 929,179 Dillard's, JCPenney, Sears,
Jacksonville, FL 1994 Belk, AMC 24 Theatres
109. Orland Square Fee 100.0 Acquired 1,246,381 JCPenney, Marshall Field,
Orland Park, IL 1997 Sears, Carson Pirie Scott
110. Paddock Mall Fee 100.0 Built 1980 560,087 JCPenney, Sears, Belk,
Ocala, FL Burdines
111. Palm Beach Mall Fee 100.0 Built 1967 1,016,396 Dillard's (9), JCPenney,
West Palm Beach, FL Sears, Lord & Taylor,
Burdines, Borders Books &
Music, Barnes & Noble (9)
112. Phipps Plaza Fee 100.0 Acquired 821,275 Lord & Taylor, Parisian, Saks
Atlanta, GA 1998 Fifth Avenue, AMC Theatres
113. Port Charlotte Ground Lease (8) 80.0 Built 1989 780,887 Dillard's, Ward, JCPenney,
Town Center (2064) Sears, Burdines, Regal
Port Charlotte, FL Cinema
114. Prien Lake Mall Fee and Ground 100.0 Built 1972 815,641 Dillards, JCPenney, Ward,
Lake Charles, LA Lease (7) (2025) Sears, The White House
115. Raleigh Springs Mall Fee and Ground 100.0 Built 1979 901,397 Dillard's, Sears, JCPenney,
Memphis, TN Lease (7) (2018) Malco Theatres, Goldsmith's
116. Randall Park Mall Fee 100.0 Built 1976 1,580,417 Dillard's, Kaufmann's,
Cleveland, OH JCPenney, Sears, Burlington
Coat Factory, Magic Johnson
Theatres
117. Richardson Square Fee 100.0 Built 1977 747,194 Dillard's, Sears, Stein Mart,
Dallas, TX Ward, Old Navy, Ross Dress
for Less, Barnes & Noble
118. Richmond Square Fee 100.0 Built 1966 390,703 Dillard's, JCPenney, Sears,
Richmond, IN Office Max
119. Richmond Town Square Fee 100.0 Built 1966 937,530 Sears, JCPenney, Kaufmann's,
Cleveland, OH Sony Theatres (9), Barnes &
Noble (9), Old Navy
120. River Oaks Center Fee 100.0 Acquired 1997 1,338,499 Sears, JCPenney, Carson Pirie
Calumet City, IL (20) Scott, Cineplex Odeon,
Marshall Field's
121. Rockaway Townsquare Fee 100.0 Acquired 1,240,089 Macy's, Lord & Taylor,
Rockaway, NJ 1998 JCPenney, Sears
122. Rolling Oaks Mall Fee 100.0 Built 1988 756,455 Sears, Dillard's, Foley's,
North San Antonio, TX Beall's
123. Roosevelt Field Mall Ground Lease (7) 100.0 Acquired 2,176,922 Macy's, Bloomingdale's,
Garden City, NY (2090) 1998 JCPenney, Nordstrom, Stern's
124. Ross Park Mall Fee 100.0 Built 1986 1,275,426 Lazarus, JCPenney, Sears,
Pittsburgh, PA Kaufmann's, Media Play (9)
125. Rushmore Mall (6) Fee 50.0 Acquired 834,384 JCPenney, Sears,
Rapid City, SD 1998 Herberger's, Hobby Lobby,
Target
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
126. St. Charles Towne Center Fee 100.0 Built 1990 1,053,050 Sears, JCPenney, Kohl's,
Waldorf, MD Ward, Hecht's
127. Santa Rosa Plaza Fee 100.0 Acquired 699,538 Macy's, Mervyn's, Sears
Santa Rosa, CA 1998
128. Seminole Towne Fee 45.0 Built 1995 1,153,761 Dillard's, JCPenney,
Center Parisian, Sears, Burdines
Sanford, FL
129. Shops at Mission Viejo Fee 100.0 Built 1979 1,038,380 Macy's, Saks Fifth Avenue,
Mall, The Robinsons - May (3), Nordstrom
Mission Viejo, CA
130. Smith Haven Mall Fee 25.0 Acquired 1,332,770 Macy's, Sears, JCPenney,
Lake Grove, NY 1995 Sterns
131. Solomon Pond Mall Fee 49.1 Acquired 880,512 Filene's, Sears, JCPenney,
Marlborough, MA 1999 Linens `N Things, Hoyt's
132. Source, The Fee 25.0 Built 1997 729,554 Off 5th-Saks Fifth Avenue,
Long Island, NY Fortunoff, Loehmann's,
Nordstrom Rack, Old Navy, ABC
Home, Circuit City, Virgin
Megastore
133. South Hills Village Fee 100.0 Acquired 1,118,985 Sears, Kaufmann's, Lazarus
Pittsburgh, PA 1997
134. South Park Mall Fee 100.0 Built 1975 858,667 Dillard's, JCPenney,
Shreveport, LA Burlington Coat Factory,
Regal Cinema, Stage, Ward (5)
135. South Shore Plaza Fee 100.0 Acquired 1,434,279 Macy's, Filene's, Lord &
Braintree, MA 1998 Taylor, Sears
136. Southern Hills Mall (6) Fee 50.0 Acquired 752,471 Younkers, Sears, Target,
Sioux City, IA 1998 Carmike Cinemas
137. Southern Park Mall Fee 100.0 Built 1970 1,201,466 Dillard's, JCPenney, Sears,
Youngstown, OH Kaufmann's
138. Southgate Mall Fee 100.0 Acquired 321,564 Sears, Dillard's, JCPenney,
Yuma, AZ 1988 Hastings
139. SouthPark Mall Fee 50.0 Acquired 1,034,852 JCPenney, Ward, Younkers,
Moline, IL 1998 Sears, Von Maur
140. SouthRidge Mall (6) Fee 50.0 Acquired 1,008,607 Sears, Younkers, JCPenney,
Des Moines, IA 1998 Target, Carmike Cinemas, (11)
141. Square One Mall Fee 49.1 Acquired 848,186 Filene's, Sears, Service
Saugus, MA 1999 Merchandise, TJMaxx & More
142. Summit Mall Fee 100.0 Built 1965 694,332 Dillard's (3), Kaufmann's
Akron, OH
143. Sunland Park Mall Fee 100.0 Built 1988 923,251 JCPenney, Mervyn's, Sears,
El Paso, TX Dillard's (3), General Cinemas
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
144. Tacoma Mall Fee 100.0 Acquired 1,270,949 Nordstrom, Sears, JCPenney,
Tacoma, WA 1987 The Bon Marche, Mervyn
145. Tippecanoe Mall Fee 100.0 Built 1973 856,114 Lazarus, Sears, L.S. Ayres
Lafayette, IN JCPenney, Kohl's
146. Town Center at Boca Fee 100.0 Acquired 1,228,330 Lord & Taylor, Saks Fifth
Raton 1998 Avenue, Bloomingdale's,
Boca Raton, FL Sears, Burdines, Nordstrom
(9)
147. Town Center at Cobb Fee 50.0 Acquired 1,272,498 Macy's, Parisian, Sears,
Atlanta, GA 1998 JCPenney, Rich's
148. Towne East Square Fee 100.0 Built 1975 1,148,431 Dillard's, JCPenney, Sears
Wichita, KS
149. Towne West Square Fee 100.0 Built 1980 965,592 Dillard's, Sears, JCPenney,
Wichita, KS Ward, Service Merchandise,
(11)
150. Treasure Coast Square Fee 100.0 Built 1987 783,513 Dillard's (3), Sears,
Jenson Beach, FL JCPenney, Burdines
151. Tyrone Square Fee 100.0 Built 1972 1,123,147 Dillard's, JCPenney, Sears,
St. Petersburg, FL Borders, Burdines
152. University Mall Ground Lease 100.0 Built 1967 565,400 JCPenney, M.M. Cohn, Ward
Little Rock, AR (2026)
153. University Mall Fee 100.0 Acquired 712,161 JCPenney, Sears, McRae's,
Pensacola, FL 1994 United Artists
154. University Park Mall Fee 60.0 Built 1979 942,215 LS Ayres, JCPenney, Sears,
South Bend, IN Marshall Fields
155. Upper Valley Mall Fee 100.0 Built 1971 751,682 Lazarus, JCPenney, Sears,
Springfield, OH Elder-Beerman
156. Valle Vista Mall Fee 100.0 Built 1983 656,085 Dillard's, Mervyn's, Sears,
Harlingen, TX JCPenney, Marshalls, Beall's
157. Valley Mall Fee 50.0 Acquired 482,370 JCPenney, Belk, Wal-Mart,
Harrisonburg, VA 1998 Peebles
158. Virginia Center Fee 100.0 Built 1991 786,927 Dillard's (3), Hecht's,
Commons JCPenney, Sears
Richmond, VA
159. Walt Whitman Mall Ground Rent 98.0 Acquired 1,028,086 Macy's, Lord & Taylor,
Huntington Station, NY (2012) 1998 Bloomingdale's, Saks Fifth
Avenue
160. Washington Square Fee 100.0 Built 1974 1,133,791 L.S. Ayres, Lazarus, Target,
Indianapolis, IN JCPenney, Sears
161. West Ridge Mall Fee 100.0 Built 1988 1,042,349 Dillard's, JCPenney, The
Topeka, KS (21) Jones Store, Sears, Ward
162. West Town Mall Ground Lease 50.0 Acquired 1,338,212 Parisian, Dillard's, JCPenney,
Knoxville, TN (2042) 1991 Proffitt's, Sears, Regal
Cinema
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
163. Westchester, The Fee 50.0 Acquired 827,660 Neiman Marcus, Nordstrom
White Plains, NY 1997
164. Westminster Mall Fee 100.0 Acquired 1,081,961 Sears, JCPenney, Robinsons-
Westminster, CA 1998 May Home Store, Robinsons-
May
165. White Oaks Mall Fee 77.0 Built 1977 903,013 Famous Barr, Ward, Sears,
Springfield, IL Bergner's
166. Windsor Park Mall Fee 100.0 Built 1976 1,093,212 Ward, Dillard's (3),
San Antonio, TX JCPenney, Mervyn's, Beall's
167. Woodville Mall Fee 100.0 Built 1969 772,889 Sears, Elder-Beerman,
Toledo, OH Andersons, (11)
VALUE-ORIENTED REGIONAL MALLS
- ---------------------------------------------------------------------------------------------------------------------------------
1. Arizona Mills (6) Fee 26.3 Built 1997 1,233,884 Off 5th-Saks Fifth Avenue
Tempe, AZ Outlet, JCPenney Outlet,
Burlington Coat Factory,
Oshman's Super Sport,
Rainforest Cafe,
GameWorks, Hi-Health,
Linens 'N Things, Ross Dress
for Less, Group USA
Harkins Theatre, Marshalls,
Last Call, Off Rodeo, Virgin
Megastore, American
Wilderness Experience
2. Concord Mills (6) Fee 37.5 Built 1999 1,281,240 Saks Fifth Avenue, Alabama
Concord, NC Grill, AMC, Bass Pro, Bed,
Bath & Beyond, Books-A-
Million, Burlington Coat
Factory, Group USA,
Jillian's, T.J. Maxx, F.Y.E.,
Jeepers
3. Grapevine Mills (6) Fee 37.5 Built 1997 1,323,407 Off 5th-Saks Fifth Avenue
Grapevine (Dallas/Ft. Outlet, JCPenney Outlet,
Worth), TX Books-A-Million, Burlington
Coat Factory, Rainforest
Cafe, Group USA, Bed, Bath
& Beyond, Polar Ice, AMC
Theatres, GameWorks,
American Wilderness
Experience
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
4. Ontario Mills (6) Fee 25.0 Built 1996 1,471,096 Off 5th-Saks Fifth Avenue
Ontario, CA Outlet, JCPenney Outlet, AMC
Theatres, Burlington Coat
Factory, Marshall's, Sports
Authority, Dave & Busters,
Group USA, American
Wilderness Experience, T.J.
Maxx, Foozles, Totally for
Kids, Bed, Bath & Beyond, Off
Rodeo, Mikasa, Virgin
Megastore, GameWorks
- -------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL CENTERS
1. The Forum Shops at Caesars Ground Lease (22) Built 1992 479,552 -
Las Vegas, NV (2050)
2. The Shops at Sunset Place Fee 37.5 Built 1996 507,511 Niketown, Barnes & Noble,
Miami, FL Gameworks, Virgin Megastore,
Z Gallerie
3. The Tower Shops Space Lease 50.0 Built 1996 59,079 -
Las Vegas, NV (2051)
4. Trolley Square Fee 90.0 Acquired 1986 225,535 -
Salt Lake City, UT
- -------------------------------------------------------------------------------------------------------------------------------
OFFICE AND MIXED-USE PROPERTIES
1. Fashion Centre at Fee 21.0 Built 1989 988,955 Macy's, Nordstrom, Sony
Pentagon City, The (23) Theatres
Arlington, VA
2. Lenox Building, The Fee 100.0 Acquired 348,152 -
Atlanta, GA 1998
3. New Orleans Fee and Ground 100.0 Built 1988 1,039,229 Macy's, Lord & Taylor
Centre/CNG Tower Lease (2084) (24)
New Orleans, LA
4. O'Hare International Fee 100.0 Built 1988 512,032 -
Center (25)
Rosemont, IL
5. Riverway Fee 100.0 Acquired 817,299 -
Rosemont, IL 1991 (26)
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest
(Expiration Ownership Year Built Total
Name/Location if Lease) (1) Interest (2) or Acquired GLA Anchor
------------- ------------- ------------ ----------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
COMMUNITY SHOPPING CENTERS
1. Arboretum, The Fee (27) 90.0 Acquired 212,391 Barnes & Noble, The Arbor
Austin, TX 1998 Theater
2. Arvada Plaza Fee 100.0 Built 1966 96,831 King Soopers
Arvada, CO
3. Aurora Plaza Ground Lease (2058) 100.0 Built 1965 150,209 King Soopers, MacFrugel's
Aurora, CO Bargains, Super Saver Cinema
4. Bloomingdale Fee 100.0 Built 1987 598,561 Wal-Mart, Best Buy, T.J. Maxx
Court N More, Cineplex Odeon,
Bloomingdale, IL Frank's Nursery, Marshalls,
Office Max, Old Navy, Service
Merchandise, Dress Barn
5. Boardman Plaza Fee 100.0 Built 1951 652,400 AMES, Burlington Coat
Youngstown, OH Factory, Giant Eagle,
Michael's, Linens-N-Things,
T.J. Maxx, (11)
6. Bridgeview Court Fee 100.0 Built 1988 278,184 Dominick's (5), (11)
Bridgeview, IL
7. Brightwood Plaza Fee 100.0 Built 1965 41,893 Preston Safeway
Indianapolis, IN
8. Buffalo Grove Towne Fee 100.0 Built 1988 187,359 Eagle County Market, Buffalo
Center Grove Theatres
Buffalo Grove, IL
9. Celina Plaza Fee and Ground 100.0 Built 1978 32,622
El Paso, TX Lease (28) (2027)
10. Century Mall Fee 100.0 Acquired 415,324 Burlington Coat Factory,
Merrillville, IN 1982 Ward
11. Charles Towne Square Fee 100.0 Built 1976 205,399 Ward, Regal Cinema
Charleston, SC (29)
12. Chesapeake Center Fee 100.0 Built 1989 299,604 Service Merchandise,
Chesapeake, VA Phar Mor, K-Mart
13. Cobblestone Court Fee and Ground 35.0 Built 1993 265,603 Dick's Sporting Goods,
Victor, NY Lease (10) (2038) Kmart, Office Max
14. Countryside Plaza Fee and Ground 100.0 Built 1977 435,532 Best Buy, Old Country
Countryside, IL Lease (10) (2058) Buffet, Kmart, (11)
15. Crystal Court Fee 35.0 Built 1989 284,743 Cub Foods, Wal-Mart,
Crystal Lake, IL Service Merchandise, (11)
16. Eastgate Consumer Mall Fee 100.0 Acquired 465,694 Burlington Coat Factory
Indianapolis, IN 1981
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
17. Eastland Convenience Ground Lease 50.0 Acquired 173,069 Service Merchandise,
Center (2075) 1998 Marshalls, Kids "R" Us,
Evansville, IN Toys "R" Us
18. Eastland Plaza Fee 100.0 Built 1986 188,229 Marshalls, Target, Toys "R" Us
Tulsa, OK
19. Empire East (6) Fee 50.0 Acquired 271,351 Kohl's, Target, Carmike
Sioux Falls, SD 1998 Cinemas
20. Fairfax Court Fee 26.3 Built 1992 258,746 Burlington Coat Factory,
Fairfax, VA Circuit City Superstore,
Today's Man
21. Forest Plaza Fee 100.0 Built 1985 413,886 Kohl's, Marshalls, Media
Rockford, IL Play, Michael's, Factory Card
Outlet, Office Max, T.J.
Maxx, Bed, Bath & Beyond
22. Fox River Plaza Fee 100.0 Built 1985 324,905 Big Lots, Builders Square
Elgin, IL (5), Kmart, (11)
23. Gaitway Plaza Fee 23.3 Built 1989 229,973 Ward, Books-A-Million, Office
Ocala, FL Depot, T.J. Maxx
24. Glen Burnie Mall Fee 100.0 Built 1963 456,372 Ward
Glen Burnie, MD
25. Great Lakes Plaza Fee 100.0 Built 1976 164,104 Circuit City, Best Buy,
Cleveland, OH Michael's, Cost Plus World
Market
26. Great Northeast Fee 50.0 Acquired 298,242 Sears, Phar Mor
Plaza 1989
Philadelphia, PA
27. Greenwood Plus Fee 100.0 Built 1979 188,480 Best Buy, Kohl's
Greenwood, IN
28. Griffith Park Plaza Ground Lease 100.0 Built 1979 274,230 Kmart, Service Merchandise,
Griffith, IN (2060) (11)
29. Grove at Lakeland Fee 100.0 Built 1988 215,591 Wal-Mart, Sports Authority
Square, The
Lakeland, FL
30. Hammond Square (30) Space Lease 100.0 Built 1974 87,705 Burlington Coat Factory,
Sandy Springs, GA (2011) Mimms Enterprises
31. Highland Lakes Fee 100.0 Built 1991 478,014 Target, Marshalls, Bed, Bath
Center & Beyond, Goodings Food
Orlando, FL Festival, Ross Dress for
Less, Office Max
32. Indian River Commons Fee 50.0 Built 1997 264,690 HomePlace, Lowe's, Office
Vero Beach, FL Max, (11)
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest
(Expiration Ownership Year Built Total
Name/Location if Lease) (1) Interest (2) or Acquired GLA Anchor
------------- ------------- ------------ ----------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
33. Ingram Plaza Fee 100.0 Built 1980 111,518 --
San Antonio, TX
34. Keystone Shoppes Ground Lease 100.0 Acquired 29,140 --
Indianapolis, IN (2067) 1997
35. Knoxville Commons Fee 100.0 Built 1987 180,355 Office Max, Silk Tree
Knoxville, TN Factory, Circuit City
36. Lake Plaza Fee 100.0 Built 1986 218,208 Pic `N Save, Home Owners
Waukegan, IL Buyer's Outlet, (11)
37. Lake View Plaza Fee 100.0 Built 1986 388,594 Service Merchandise, Best Buy
Orland Park, IL (3), Marshalls, Ulltra
Cosmetics, Factory Card
Outlet, Golf Galaxy,
Linens-N-Things (3), Pet
Care Plus, (11)
38. Lakeline Plaza Fee 100.0 Built 1998 344,669 Old Navy, Best Buy, Cost Plus
Austin, TX World Market, Linens-
N-Things, Office Max,
Petsmart, Ross Dress for
Less, T.J. Maxx, Party City,
Ulta Cosmetics
39. Lima Center Fee 100.0 Built 1978 201,154 AMES, Hobby Lobby, Regal
Lima, OH Cinema
40. Lincoln Crossing Fee 100.0 Built 1990 161,337 Wal-Mart, PetsMart
O'Fallon, IL
41. Mainland Crossing Fee (8) 80.0 Built 1991 390,987 Hobby Lobby, Sam's Club,
Galveston, TX Wal-Mart
42. Mall of Georgia Crossing Fee 50.0 Built 1999 440,512 Target, Nordstrom Rack, Best
Gwinnett County, GA Buy, Staples, T.J. Maxx N
More, (11)
43. Markland Plaza Fee 100.0 Built 1974 111,166 Spiece, (11)
Kokomo, IN
44. Martinsville Plaza Space Lease (2036) 100.0 Built 1967 102,162 Rose's
Martinsville, VA
45. Marwood Plaza Fee 100.0 Built 1962 105,785 Kroger
Indianapolis, IN
46. Matteson Plaza Fee 100.0 Built 1988 275,455 Service Merchandise,
Matteson, IL Dominick's, Michael's Arts &
Crafts, Value City
47. Memorial Plaza Fee 100.0 Built 1966 131,177 Office Max, (11)
Sheboygan, WI
48. Mounds Mall Cinema Fee 100.0 Built 1974 7,500 Kerasotes Theater
Anderson, IN
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
49. Muncie Plaza Fee 100.0 Built 1998 172,651 Kohl's, Office Max, Shoe
Muncie, IN Carnival, T.J. Maxx
50. New Castle Plaza Fee 100.0 Built 1966 91,648 Goody's
New Castle, IN
51. North Ridge Plaza Fee 100.0 Built 1985 367,282 Service Merchandise, Best
Joliet, IL Buy, Cub Foods, Hobby Lobby,
Office Max
52. North Riverside Park Plaza Fee 100.0 Built 1977 119,608 Dominick's
North Riverside, IL
53. Northland Plaza Fee and Ground 100.0 Built 1988 209,515 Marshalls, Phar-Mor, Service
Columbus, OH Lease (7) (2085) Merchandise (5)
54. Northwood Plaza Fee 100.0 Built 1974 209,374 Target, Cinema Grill, (11)
Fort Wayne, IN
55. Park Plaza Fee and Ground 100.0 Built 1968 109,480 Walmart (5)
Hopkinsville, KY Lease (7) (2039)
56. Plaza at Buckland Fee 35.0 Built 1993 336,935 Toys "R" Us, Jo-Ann Etc.,
Hills, The Kids "R" Us, Service
Manchester, CT Merchandise, Comp USA,
Linens-N-Thing's, Party City,
Bolton's, The Floor Store
57. Regency Plaza Fee 100.0 Built 1988 287,526 Wal-Mart, Sam's Wholesale
St. Charles, MO
58. Ridgewood Court Fee 35.0 Built 1993 240,844 T.J. Maxx, Service
Jackson, MS Merchandise, (11)
59. Rockaway Convenience Center Fee 100.0 Acquired 135,283 Kids "R" Us, AMCE Grocery,
Rockaway, NJ 1998 American Multi Cinema
60. Royal Eagle Plaza Fee 35.0 Built 1989 199,118 Kmart, Stein Mart
Coral Springs, FL
61. Shops at Northeast Plaza, Fee 100.0 Built 1999 226,611 Old Navy, Nordstrom Rack,
The Bed, Bath & Beyond, Office
Hurst, TX Max, Michael's, Petsmart,
T.J. Maxx, Ultra Cosmectics,
Best Buy
62. St. Charles Towne Plaza Fee 100.0 Built 1987 432,860 Value City Furniture, T.J.
Waldorf, MD Maxx, Ames, Jo Ann Fabrics,
CVS, Shoppers Food Warehouse,
(11)
63. Teal Plaza Fee 100.0 Built 1962 101,087 Circuit City, Hobby-Lobby,
Lafayette, IN The Pep Boys
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest
(Expiration Ownership Year Built Total
Name/Location if Lease) (1) Interest (2) or Acquired GLA Anchors
------------- ------------- ------------ ----------- ----- -------------------------
<S> <C> <C> <C> <C> <C>
64. Terrace at The Florida Fee 100.0 Built 1989 332,980 Marshalls, Service
Mall Merchandise, Target, Home
Orlando, FL Place, (11)
65. Tippecanoe Plaza Fee 100.0 Built 1974 94,598 Best Buy, Barnes & Noble
Lafayette, IN
66. University Center Fee 60.0 Built 1980 150,548 Best Buy, Michaels, Service
South Bend, IN Merchandise
67. Village Park Plaza Fee 35.0 Built 1990 503,070 Wal-Mart, Galyan's, Frank's
Westfield, IN Nursery, Jo-Ann Fabrics,
Kohl's, Marsh
68. Wabash Village Ground Lease (2063) 100.0 Built 1970 124,748 Kmart
West Lafayette, IN
69. Washington Plaza Fee 100.0 Built 1976 50,107 Kids "R" Us
Indianapolis, IN
70. Waterford Lakes Town Fee 100.0 Built 1999 544,048 Super Target, T.J. Maxx,
Center Barnes & Noble, Regal
Orlando, FL 20-Plex, Ross Dress for Less,
Petsmart, Bed, Bath & Beyond, (11)
71. West Ridge Plaza Fee 100.0 Built 1988 237,729 Target, T.J. Maxx, Toys "R"
Topeka, KS Us, Magic Forest
72. West Town Corners Fee 23.3 Built 1989 384,988 Wal-Mart, Service
Altamonte Springs, FL Merchandise, Sports
Authority, PetsMart, Winn Dixie
73. Westland Park Plaza Fee 23.3 Built 1989 163,154 Burlington Coat Factory,
Orange Park, FL PetsMart, Sports Authority
74. White Oaks Plaza Fee 100.0 Built 1986 400,303 Kohl's, Kids "R" Us, Office
Springfield, IL Max, T.J. Maxx, Toys "R" Us,
Cub Foods
75. Wichita Mall Ground Lease (2022) 100.0 Built 1969 379,461 Ward, Office Max, (11)
Wichita, KS
76. Willow Knolls Court Fee 35.0 Built 1990 382,377 Kohl's, Phar-Mor, Sam's
Peoria, IL Wholesale Club, Willow Knolls
Theaters 14
77. Wood Plaza Ground Lease (2045) 100.0 Built 1968 94,993 Country General
Fort Dodge, IA
78. Yards Plaza, The Fee 35.0 Built 1990 273,054 Burlington Coat Factory,
Chicago, IL Ward, Dominick's (5)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Ownership
Interest (Expiration Ownership Year Built or Total
Name/Location if Lease) (1) Interest (2) Acquired GLA Anchor/Specialty Anchors
------------- -------------------- ------------ ------------- ----- ------------------------
<S> <C> <C> <C> <C> <C>
PROPERTIES UNDER CONSTRUCTION
1. Arundel Mills Fee 37.5 (31) 1,400,000 Sun & Ski Sports, For Your
Anne Arundel, MD Entertainment, Iguana
Amerimex, Jillian's, Bed,
Bath & Beyond
2. Orlando Premium Outlets Fee 50.0 (32) 433,000
Orlando, FL
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Footnotes:
----------
(1) The date listed is the expiration date of the last renewal option available
to the SPG Operating Partnership under the ground lease. In a majority of
the ground leases, the lessee has either a right of first refusal or the
right to purchase the lessor's interest. Unless otherwise indicated, each
ground lease listed in this column covers at least 50% of its respective
Property.
(2) The SPG Operating Partnership's interests in some of the Properties held as
joint venture interests are subject to preferences on distributions in
favor of other partners or the SPG Operating Partnership.
(3) This retailer operates two stores at this Property.
(4) Primarily retail space with approximately 105,800 square feet of office
space.
(5) Indicates anchor has closed, but the SPG Operating Partnership still
collects rents and/or fees under an agreement.
(6) This Property is managed by a third party.
(7) Indicates ground lease covers less than 15% of the acreage of this
Property.
(8) The SPG Operating Partnership receives substantially all of the economic
benefit of these Properties.
(9) Indicates anchor is currently under construction.
(10) Indicates ground lease(s) cover(s) less than 50% of the acreage of the
Property.
(11) Includes an anchor space currently vacant.
(12) Primarily retail space with approximately 119,900 square feet of office
space.
(13) The SPG Operating Partnership sold its 50% interest effective January 31,
2000.
(14) The SPG Operating Partnership is entitled to 50% of the economic benefits
of this property.
(15) Indicates ground lease covers all of the Property except for parcels owned
in fee by anchors.
(16) Primarily retail space with approximately 52,000 square feet of office
space.
(17) The SPG Operating Partnership assumed management effective January 1, 2000.
(18) Primarily retail space with approximately 69,900 square feet of office
space.
(19) Primarily retail space with approximately 129,500 square feet of office
space.
(20) Primarily retail space with approximately 73,800 square feet of office
space.
(21) Includes outlots in which the SPG Operating Partnership has an 85% interest
and which represent less than 3% of the GLA and total annualized base rent
for the Property.
(22) The SPG Operating Partnership owns 60% of the original phase of this
Property and 55% of phase II.
(23) Primarily retail space with approximately 167,100 square feet of office
space.
(24) Primarily retail space with approximately 499,700 square feet of office
space.
(25) Primarily office space with approximately 12,800 square feet of retail
space.
(26) Primarily office space with approximately 24,300 square feet of retail
space.
(27) Effective January 1, 2000, the SPG Operating Partnership acquired the
remaining ownership interest in this property.
(28) Indicates ground lease covers outparcel only.
(29) The SPG Operating Partnership demolished the previously existing regional
mall, Charles Towne Square, and is in the process of rebuilding this
community center and a cinema on the land.
(30) The SPG Operating Partnership sold its interest effective February 18,
2000.
(31) Scheduled to open during the fall of 2000.
(32) Scheduled to open during the summer of 2000.
25
<PAGE>
Land Held for Development
The SPG Operating Partnership has direct or indirect ownership interests in
eleven parcels of land held for future development, containing an aggregate of
approximately 828 acres located in eight states. In addition, the SPG Operating
Partnership, through the Management Company, has interests in two parcels of
land in Mt. Juliet, Tennessee and Gwinnett County, Georgia totaling 243 acres,
which were previously held for development, but are now being marketed for sale.
Joint Ventures
At certain of the Properties held as joint ventures, the SPG Operating
Partnership and its partners each have rights of first refusal, subject to
certain conditions, to acquire additional ownership in the Property should the
other partner decide to sell its ownership interest. In addition, certain of the
Properties held as joint ventures contain "buy-sell" provisions, which gives the
partners the right to trigger a purchase or sale of ownership interest amongst
the partners.
Mortgage Financing on Properties
The following table sets forth certain information regarding the mortgages
and other debt encumbering the Properties. All mortgage and property related
debt is nonrecourse, although certain Unitholders have guaranteed a portion of
the property related debt in the aggregate amount of $643.7 million.
26
<PAGE>
MORTGAGE AND OTHER DEBT ON PORTFOLIO PROPERTIES
(Dollars in thousands)
<TABLE>
<CAPTION>
Interest Face Amount Annual Debt Maturity
Property Name Rate at 12/31/99 Service Date
- -------------------------------- -------- ----------- ----------- --------
Consolidated Indebtedness:
- --------------------------
Secured Indebtedness
<S> <C> <C> <C> <C>
Simon Property Group, L.P. :
Anderson Mall (1) 6.57% $ 19,000 $ 1,248 (2) 3/15/03 (4)
Anderson Mall (1) 7.01% 8,500 596 (2) 3/15/03 (4)
Arboretum 7.32% (3) 34,000 2,490 (2) 11/30/03 (4)
Arsenal Mall 6.75% 34,603 2,724 9/28/08
Arsenal Mall 8.20% 2,268 286 5/15/16
Battlefield Mall 7.50% 47,610 4,765 1/1/04
Battlefield Mall 6.81% 44,567 3,524 1/1/04
Biltmore Square 7.15% 25,765 2,795 1/1/01
Bloomingdale Court (5) 7.78% 29,879 2,578 10/1/09
Century III Mall 6.78% 66,000 4,475 (2) 7/1/03
Chesapeake Center 8.44% 6,563 554 (2) 5/15/15
Chesapeake Square 7.28% 46,739 4,883 1/1/01
Cielo Vista Mall (6) 9.38% 54,502 5,672 5/1/07
Cielo Vista Mall (6) 8.13% 1,731 156 11/1/05
Cielo Vista Mall (6) 6.76% 38,584 3,039 5/1/07
CMBS Loan - Fixed Component (7) 7.31% 175,000 12,790 (2) 12/15/07
CMBS Loan - Variable Component (7) 6.16% (8) 50,000 3,078 (2) 12/15/07
College Mall (9) 7.00% 41,598 3,908 1/1/09
College Mall (9) 6.76% 11,883 935 1/1/09
Columbia Center 7.62% 42,326 3,225 (2) 3/15/02
Crystal River 8.82% (10) 15,292 1,349 (2) 1/1/01
Eastgate Consumer Mall 6.82% (11) 22,929 1,564 (2) 3/29/02 (4)
Eastland Mall (OK) (12) 6.81% 15,000 1,022 (2) 3/15/03 (4)
Florida Mall, The 6.65% 90,000 5,985 (2) 2/28/00
Forest Mall (12) 6.57% 12,800 841 (2) 3/15/03 (4)
Forest Mall (12) 6.81% 2,750 187 (2) 3/15/03 (4)
Forest Plaza (5) 7.78% 16,388 1,414 10/1/09
Forest Village Park Mall (1) 6.57% 20,600 1,353 (2) 3/15/03 (4)
Forest Village Park Mall (1) 7.01% 1,250 88 (2) 3/15/03 (4)
Forum Phase I - Class A-1 7.13% 46,996 3,348 (2) 5/15/04
Forum Phase I - Class A-2 6.19% (13) 44,386 2,747 (2) 5/15/04
Forum Phase II - Class A-1 7.13% 43,004 3,064 (2) 5/15/04
Forum Phase II - Class A-2 6.19% (13) 40,614 2,514 (2) 5/15/04
Golden Ring Mall (12) 6.57% 29,750 1,955 (2) 3/15/03 (4)
Great Lakes Mall 6.74% 52,632 3,547 (2) 3/1/01
Great Lakes Mall 7.07% 8,489 600 (2) 3/1/01
Greenwood Park Mall (9) 7.00% 34,839 3,273 1/1/09
Greenwood Park Mall (9) 6.76% 61,397 4,831 1/1/09
Grove at Lakeland Square, The 8.44% 3,750 317 (2) 5/15/15
Gulf View Square 8.25% 37,064 3,652 10/1/06
Highland Lakes Center 7.32% (3) 14,377 1,053 (2) 3/1/02
Hutchinson Mall (12) 8.44% 11,382 1,108 3/15/03 (4)
Hutchinson Mall (12) 6.81% 4,500 306 (2) 3/15/03 (4)
Jefferson Valley Mall 6.37% (14) 50,000 3,186 (2) 1/12/00
Keystone at the Crossing 7.85% 63,569 5,642 7/1/27
Lake View Plaza (5) 7.78% 21,785 1,880 10/1/09
Lakeline Mall 7.65% 72,180 6,300 5/1/07
Lakeline Plaza (5) 7.78% 23,883 2,061 10/1/09
Lima Mall 7.12% 14,180 1,010 (2) 3/1/02
Lima Mall 7.12% 4,723 336 (2) 3/1/02
Lincoln Crossing (5) 7.78% 3,298 285 10/1/09
Longview Mall (1) 6.57% 22,100 1,452 (2) 3/15/03 (4)
Longview Mall (1) 7.01% 5,500 386 (2) 3/15/03 (4)
</TABLE>
27
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Mainland Crossing 7.32% (3) 1,603 117 (2) 3/31/02
Markland Mall (12) 6.57% 10,000 657 (2) 3/15/03 (4)
Matteson Plaza (5) 7.78% 9,593 828 10/1/09
McCain Mall (6) 9.38% 25,450 2,721 5/1/07
McCain Mall (6) 6.76% 17,809 1,402 5/1/07
Melbourne Square 7.42% 38,869 3,374 2/1/05
Miami International Mall 6.91% 45,920 3,758 12/21/03
Midland Park Mall (12) 6.57% 22,500 1,478 (2) 3/15/03 (4)
Midland Park Mall (12) 6.81% 5,500 375 (2) 3/15/03 (4)
Muncie Plaza (5) 7.78% 8,294 716 10/1/09
Net Lease (Atlanta) 8.00% 868 263 12/1/02
Net Lease (Braintree) 9.75% 22 66 4/1/00
Net Lease (Chattanooga) 6.80% 625 274 5/31/02
North East Mall 7.20% (15) 73,636 5,300 (2) 5/21/04 (4)
North Riverside Park Plaza 9.38% 3,769 452 9/1/02
North Riverside Park Plaza 10.00% 3,617 420 9/1/02
North Towne Square (12) 6.57% 23,500 1,544 (2) 3/15/03 (4)
Northgate Shopping Center 7.62% 79,035 6,022 (2) 3/15/02
Orland Square 7.74% (16) 50,000 3,871 (2) 9/1/01
Paddock Mall 8.25% 29,478 2,905 10/1/06
Palm Beach Mall 7.50% 49,419 4,803 12/15/02
Port Charlotte Town Center 7.28% 45,024 3,857 1/1/01
Port Charlotte Town Center 7.28% 7,075 591 1/1/01
Randall Park Mall 7.33% 35,000 2,566 (2) 7/11/08
Randall Park Mall 7.33% 5,000 367 (2) 7/11/08
Regency Plaza (5) 7.78% 4,497 388 10/1/09
Richmond Towne Square 6.82% (11) 45,898 3,131 (2) 7/15/03 (4)
River Oaks Center 8.67% 32,500 2,818 (2) 6/1/02
Shops @ Mission Viejo 6.87% (17) 110,068 7,564 (2) 9/14/03 (4)
South Park Mall (1) 7.25% 19,508 1,717 3/15/03 (4)
South Park Mall (1) 7.01% 6,876 570 3/15/03 (4)
St. Charles Towne Plaza (5) 7.78% 28,780 2,483 10/1/09
Sunland Park Mall (18) 8.63% 39,125 3,773 1/1/26
Tacoma Mall 7.62% 92,474 7,047 (2) 3/15/02
Terrace at Florida Mall, The 8.44% 4,688 396 (2) 5/15/15
Tippecanoe Mall (9) 8.45% 45,485 4,647 1/1/05
Tippecanoe Mall (9) 6.81% 15,845 1,253 1/1/05
Towne East Square (9) 7.00% 54,998 5,167 1/1/09
Towne East Square (9) 6.81% 24,758 1,958 1/1/09
Treasure Coast Square 7.42% 52,427 4,714 1/1/06
Treasure Coast Square 8.06% 11,992 1,127 1/1/06
Trolley Square 5.81% 19,000 1,104 (2) 7/23/00 (19)
Trolley Square 7.32% (3) 4,641 340 (2) 7/23/00
Trolley Square 7.32% (3) 3,500 256 (2) 7/23/00
University Park Mall 7.43% 59,500 4,421 (2) 10/1/07
Valle Vista Mall (6) 9.38% 33,707 3,604 5/1/07
Valle Vista Mall (6) 6.81% 7,916 626 5/1/07
Waterford Lakes 7.22% (20) 30,336 2,191 (2) 8/16/04 (4)
West Ridge Plaza (5) 7.78% 5,796 500 10/1/09
White Oaks Mall 7.41% (21) 16,500 1,223 (2) 3/1/00
White Oaks Plaza (5) 7.78% 17,688 1,526 10/1/09
Windsor Park Mall 8.00% 5,694 544 6/1/00
Windsor Park Mall 8.00% 8,749 787 5/1/12
-----------
Total Consolidated Secured Indebtedness $ 3,087,077
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Unsecured Indebtedness
<S> <C> <C> <C> <C>
Simon Property Group, L.P.:
Medium Term Notes - 1 7.13% 100,000 7,125 (22) 6/24/05
Medium Term Notes - 2 7.13% 180,000 12,825 (22) 9/20/07
Putable Asset Trust Securities 6.75% 100,000 6,750 (22) 11/15/03
Unsecured Term Loan 6.62% (23) 150,000 9,934 (2) 2/28/02 (4)
Unsecured Notes - 1 6.88% 250,000 17,188 (22) 11/15/06
Unsecured Notes - 2A 6.75% 100,000 6,750 (22) 7/15/04
Unsecured Notes - 2B 7.00% 150,000 10,500 (22) 7/15/09
Unsecured Notes - 3 6.88% 150,000 10,313 (22) 10/27/05
Unsecured Notes - 4A 6.63% 375,000 24,844 (22) 6/15/03
Unsecured Notes - 4B 6.75% 300,000 20,250 (22) 6/15/05
Unsecured Notes - 4C 7.38% 200,000 14,750 (22) 6/15/18
Unsecured Notes - 5A 6.75% 300,000 20,250 (22) 2/9/04
Unsecured Notes - 5B 7.13% 300,000 21,375 (22) 2/9/09
Unsecured Revolving Credit Facility 6.47% (24) 785,000 50,809 (2) 8/25/02
Acquisition Facility - 2 6.47% (25) 450,000 29,126 (2) 3/24/00
Acquisition Facility - 3 6.47% (25) 500,000 32,363 (2) 9/24/00
Mandatory Par Put Remarketed Securities 7.00% (26) 200,000 14,000 (22) 6/15/08
-------------
4,590,000
Shopping Center Associates:
Unsecured Notes - SCA 1 6.75% 150,000 10,125 (22) 1/15/04
Unsecured Notes - SCA 2 7.63% 110,000 8,388 (22) 5/15/05
-------------
260,000
The Retail Property Trust:
Unsecured Notes - CPI 1 9.00% 250,000 22,500 (22) 3/15/02
Unsecured Notes - CPI 2 7.05% 100,000 7,050 (22) 4/1/03
Unsecured Notes - CPI 3 7.75% 150,000 11,625 (22) 8/15/04
Unsecured Notes - CPI 4 7.18% 75,000 5,385 (22) 9/1/13
Unsecured Notes - CPI 5 7.88% 250,000 19,688 (22) 3/15/16
-------------
825,000
-------------
Total Consolidated Unsecured Indebtedness $ 5,675,000
-------------
Total Consolidated Indebtedness at Face Amounts $ 8,762,077
Net Premium on Indebtedness $ 6,764
-------------
Total Consolidated Indebtedness $ 8,768,841 (27)
=============
Joint Venture Indebtedness (28):
- --------------------------
Apple Blossom Mall 7.99% 40,926 3,874 9/10/09
Arizona Mills 7.12% (29) 142,216 10,129 (2) 2/1/02 (4)
Atrium at Chestnut Hill 7.29% 42,846 4,139 4/1/01
Atrium at Chestnut Hill 8.16% 11,725 1,125 4/1/01
Auburn Mall 7.99% 47,913 4,222 9/10/09
Aventura Mall 6.55% 141,000 9,231 (2) 4/6/08
Aventura Mall 6.60% 25,400 1,675 (2) 4/6/08
Aventura Mall 6.89% 33,600 2,314 (2) 4/6/08
Avenues, The 8.36% 56,951 5,555 5/15/03
Cape Cod Mall 7.62% (30) 59,665 4,548 (2) 4/1/03 (4)
Circle Centre Mall 6.26% (31) 60,000 3,758 (2) 1/31/04 (4)
Circle Centre Mall 7.32% (32) 7,500 549 (2) 1/31/04 (4)
CMBS Loan - Fixed Component (33) 7.41% 300,000 22,229 (2) 5/1/06
CMBS Loan - Floating Component (33) 6.32% 185,000 11,693 (2) 5/1/03
Cobblestone Court 7.22% (34) 6,180 446 (2) 11/30/05
Concord Mills 7.17% (35) 164,442 11,795 (2) 12/2/03 (4)
Coral Square 7.40% 53,300 3,944 (2) 12/1/00
</TABLE>
29
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Crystal Court 7.22% (34) 3,570 258 (2) 11/30/05
Crystal Mall 8.66% 49,235 5,384 2/1/03
Dadeland Mall 6.52% (36) 140,000 9,132 (2) 12/10/00
Emerald Square Mall 9.16% 157,500 14,427 (2) 4/1/00
Fairfax Court 7.22% (34) 10,320 745 (2) 11/30/05
Gaitway Plaza 7.22% (34) 7,350 531 (2) 11/30/05
Grapevine Mills 6.47% 155,000 10,029 (2) 10/1/08
Great Northeast Plaza 9.04% 17,519 2,110 6/1/06
Greendale Mall 8.23% 42,000 3,457 (2) 11/1/06
Gwinnett Place 7.54% 39,446 3,412 4/1/07
Gwinnett Place 7.25% 85,960 7,070 4/1/07
Highland Mall 9.75% 7,453 1,655 12/1/09
Highland Mall 8.50% 188 116 10/1/01
Highland Mall 9.50% 1,822 607 11/1/01
Indian River Commons 7.58% 8,399 637 (37) 11/1/04
Indian River Mall 7.58% 46,602 3,532 (37) 11/1/04
Lakeland Square 7.26% 51,840 4,368 12/22/03
Liberty Tree Mall 7.32% (3) 47,319 4,176 10/1/01
Liberty Tree Mall 9.98% (38) 8,377 925 10/1/01
Mall at Rockingham 7.62% (39) 100,000 7,793 (2) 8/24/00
Mall of America 6.69% (40) 312,000 20,881 (2) 11/19/03
Mall of Georgia 7.09% 200,000 14,180 (2) 7/1/10
Mall of Georgia Crossing 7.25% 23,931 1,735 (2) 6/10/06 (4)
Mall of New Hampshire 6.96% 104,779 8,345 10/1/08
Mall of New Hampshire 8.53% 8,483 987 10/1/08
Metrocenter 8.45% 30,769 3,028 2/28/08
Montreal Forum 6.50% (41) 11,011 716 (2) 1/31/02
Northfield Square 9.52% 23,753 2,575 4/1/00
Northshore Mall 9.05% 161,000 14,571 (2) 5/14/04
Ontario Mills 0.00% (42) 5,000 300 (40) 12/28/09
Ontario Mills 6.75% 143,594 11,042 11/2/08
Orlando Premium Outlets 7.32% (43) 20,845 1,526 (2) 2/12/04 (4)
Plaza at Buckland Hills, The 7.22% (34) 17,680 1,276 (2) 11/30/05
Ridgewood Court 7.22% (34) 7,980 576 (2) 11/30/05
Royal Eagle Plaza 7.22% (34) 7,920 572 (2) 11/30/05
Seminole Towne Center 6.88% 70,500 4,850 (2) 1/1/06
Shops at Sunset Place, The 7.07% (44) 102,191 7,227 (2) 6/30/02 (4)
Smith Haven Mall 7.86% 115,000 9,039 (2) 6/1/06
Solomon Pond 7.83% 96,250 8,564 2/1/04
Source, The 6.65% 124,000 8,246 (2) 11/6/08
Square One 8.40% 105,825 10,138 12/1/01
Tower Shops, The 7.02% (45) 12,900 906 3/13/00
Town Center at Cobb 7.54% 50,205 4,347 4/1/07
Town Center at Cobb 7.25% 65,471 5,381 4/1/07
Village Park Plaza 7.22% (34) 8,960 647 (2) 11/30/05
West Town Corners 7.22% (34) 10,330 746 (2) 11/30/05
West Town Mall 6.90% 76,000 5,244 (2) 5/1/08
Westchester, The 8.74% 150,849 14,478 9/1/05
Westchester, The 7.20% 53,674 4,402 9/1/05
Westland Park Plaza 7.22% (34) 4,950 357 (2) 11/30/05
Willow Knolls Court 7.22% (34) 6,490 469 (2) 11/30/05
Yards Plaza, The 7.22% (34) 8,270 597 (2) 11/30/05
------------
Total Joint Venture Indebtedness at Face Amounts $ 4,499,174
Premium on Indebtedness $ 22,521
------------
Total Joint Venture Indebtedness $ 4,521,695 (46)
============
(Footnotes on following page)
</TABLE>
30
<PAGE>
(Footnotes for preceding pages)
(1) Loans secured by these four Properties are cross-collateralized
and cross-defaulted.
(2) Requires monthly payment of interest only.
(3) LIBOR + 1.500%.
(4) Includes applicable extension available at the SPG Operating
Partnership's option.
(5) These eleven Properties are cross-collateralized and
cross-defaulted.
(6) These three Properties are cross-collateralized and
cross-defaulted.
(7) Secured by cross-collateralized and cross-dafaulted mortgages
encumbering seven of the Properties (Bay Park Square,
Boardman Plaza, Cheltenham Square, De Soto Square, Upper Valley
Mall, Washington Square, and West Ridge Mall).
(8) LIBOR + 0.365%, through an interest rate protection agreement is
effectively fixed at an all-in-one rate of 6.16%.
(9) Loans secured by these four Properties are cross-collateralized
and cross-defaulted.
(10) LIBOR + 3.000%.
(11) LIBOR + 1.000%.
(12) Loans secured by these seven Properties are cross-collateralized
and cross-defaulted.
(13) LIBOR + 0.300%, through an interest rate protection agreement is
effectively fixed at an all-in-one rate of 6.19%.
(14) LIBOR + 0.550%, with LIBOR capped at 8.700% through maturity.
(15) LIBOR + 1.375%.
(16) LIBOR + 0.500%, with LIBOR swapped at 7.24% through maturity.
(17) LIBOR + 1.050%.
(18) Lender also participates in a percentage of certain gross
receipts above a specified base.
(19) July 23, 2000 is the earliest date on which the lender may call
the bonds.
(20) LIBOR + 1.400%.
(21) LIBOR + 1.300%, with LIBOR set using a 90 day rate.
(22) Requires semi-annual payments of interest only.
(23) LIBOR + 0.800%.
(24) $1,250,000 unsecured revolving credit facility. Currently, bears
interest at LIBOR + 0.650% and provides for different pricing
based upon the SPG Operating Partnership's investment grade
rating. Two interest rate caps currently limit LIBOR on $90,000
and $50,000 of this indebtedness to 11.53% and 16.77%,
respectively. As of 12/31/99, $460,519 was available after
outstanding borrowings and letters of credit.
(25) LIBOR + 0.650%. Consists of two tranches of $450,000 and
$500,000 due 03/24/00 and 09/24/00, respectively. Commitments
have been received in excess of $450,000 to refinance the first
tranche for one year. SPG and the SPG Operating Partnership are
co-obligors of this debt.
(26) The MOPPRS have an actual maturity of June 15, 2028, but are
subject to mandatory tender on June 16, 2008.
(27) Includes minority interest partners' share of consolidated
indebtedness of $160,517.
(28) As defined in the accompanying consolidated financial
statements, Joint Venture Properties are those accounted for
using the equity method of accounting.
(29) LIBOR + 1.300%, with LIBOR capped at 9.500% through maturity.
(30) LIBOR + 1.800%.
(31) LIBOR + 0.440%, with LIBOR capped at 8.81% through maturity.
(32) LIBOR + 1.500%, with LIBOR capped at 7.75% through maturity.
(33) These Commercial Mortgage Notes are secured by cross-
collateralized mortgages encumbering thirteen Properties
(Eastland Mall, Empire East, Empire Mall, Granite Run Mall, Mesa
Mall, Lake Square, Lindale Mall, Northpark Mall, Southern Hills
Mall, Southpark Mall, Southridge Mall, Rushmore Mall, and Valley
Mall). A weighted average rate is used for each component. The
floating component has an interest protection agreement which
caps LIBOR at 11.67%.
(34) The interest rate on this cross-collateralized and cross-
defaulted mortgage is fixed at 7.22% through November of 2000
and thereafter the rate is the greater of 7.22% or 2.00% over
the then current yield of a six month treasury bill selected by
lender.
(35) LIBOR + 1.350%.
(36) LIBOR + 0.700%.
(37) Loans require monthly interest payments only until they begin
amortizing November, 2000.
(38) LIBOR + 4.160%.
(39) LIBOR + 1.970%.
(40) LIBOR + 0.870%, with LIBOR capped at 8.130% through April 30, 2000.
(41) Canadian Prime.
(42) Beginning January 2000, this note will bear interest at 6.000%.
(43) LIBOR + 1.500%, rate may be reduced based upon project performance.
(44) LIBOR + 1.250%, rate may be reduced based upon project performance.
(45) LIBOR + 1.200%.
(46) Includes outside partners' share of indebtedness of $2,635,335
and indebtedness of an affiliate of $37,097.
31
<PAGE>
Item 3. Legal Proceedings
Please refer to Note 13 of the attached audited financial statements for a
summary of material litigation.
The SPG Operating Partnership is subject to routine litigation and
administrative proceedings arising in the ordinary course of its business, none
of which are expected to have a material adverse effect on its financial
position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
None.
32
<PAGE>
Part II
Item 5. Market for the Registrant and Related Unitholder Matters
There is no established public trading market for the SPG Operating
Partnership's Units or preferred Units. The following table sets forth for
the periods indicated, the distributions declared on the Units:
<TABLE>
<CAPTION>
Declared
1999 Distribution
----- ------------
<S> <C>
1st Quarter $ 0.5050
2nd Quarter $ 0.5050
3rd Quarter $ 0.5050
4th Quarter $ 0.5050
1998
----
1st Quarter $ 0.5050
2nd Quarter $ 0.5050
3rd Quarter $ 0.5050
4th Quarter $ 0.5050 (1)
</TABLE>
(1) Includes a $0.4721 distribution declared in the third quarter of 1998,
but not payable until the fourth quarter of 1998, related to the CPI
Merger, designated to align the time periods of distribution payments
of the merged companies. The current annual distribution rate is $2.02
per Unit.
Holders
-------
The number of holders of Units was 237 as of March 16, 2000.
Unregistered Sales of Equity Securities
The Registrant did not issue any equity securities that were not required
to be registered under the Securities Act of 1933, as amended (the "Act") during
the fourth quarter of 1999, except as follows: On October 15, 1999, the
Registrant issued 1,000,000 8.00% Series E Cumulative Redeemable Preferred Units
to SPG in connection with a property acquisition. The foregoing transaction was
exempt from registration under the Act in reliance on Section 4 (2).
33
<PAGE>
Item 6. Selected Financial Data
The following tables set forth selected financial data for the SPG
Operating Partnership. The financial data should be read in conjunction with the
financial statements and notes thereto and with Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Other data management believes is important in understanding trends in the
SPG Operating Partnership's business is also included in the tables.
<TABLE>
<CAPTION>
As of or for the Year Ended December 3l,
----------------------------------------------------------------------------------
1999(1) 1998(1) 1997(1) 1996(2) 1995
----------- ----------- ----------- ---------- ----------
(in thousands, except per Unit data)
------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenue $ 1,880,235 $ 1,400,189 $ 1,054,167 $ 747,704 $ 553,657
Income before unusual and extraordinary
items 309,843 233,256 203,133 134,663 101,505
Net income available for Unitholders $ 221,815 $ 198,931 $ 173,943 $ 118,448 $ 96,730
BASIC EARNINGS PER UNIT:
Income before extraordinary items $ 0.98 $ 1.01 $ 1.08 $ 1.02 $ 1.08
Extraordinary items (0.03) 0.04 -- (0.03) (0.04)
----------- ----------- ----------- ---------- ----------
Net income $ 0.95 $ 1.05 $ 1.08 $ 0.99 $ 1.04
=========== =========== =========== ========== ==========
Weighted average Units outstanding 232,569 189,082 161,023 120,182 92,666
DILUTED EARNINGS PER UNIT:
Income before extraordinary items $ 0.98 $ 1.01 $ 1.08 $ 1.01 $ 1.08
Extraordinary items (0.03) 0.04 -- (0.03) (0.04)
----------- ----------- ----------- ---------- ----------
Net income $ 0.95 $ 1.05 $ 1.08 $ 0.98 $ 1.04
=========== =========== =========== ========== ==========
Diluted weighted average Units
outstanding 232,706 189,440 161,407 120,317 92,776
Distributions per Unit (3) $ 2.02 $ 2.02 $ 2.01 $ 1.63 $ 1.97
BALANCE SHEET DATA:
Cash and cash equivalents $ 153,743 $ 124,466 $ 109,699 $ 64,309 $ 62,721
Total assets 14,046,727 13,112,916 7,662,667 5,895,910 2,556,436
Mortgages and other indebtedness 8,768,841 7,972,381 5,077,990 3,681,984 1,980,759
Limited Partners' Interest -- -- -- -- 908,764
Partners' equity (deficit) $ 4,553,237 $ 4,587,801 $ 2,251,299 $1,945,174 $ (589,126)
OTHER DATA:
Cash flow provided by (used in):
Operating activities $ 619,850 $ 543,663 $ 370,907 $ 236,464 $ 194,336
Investing activities (595,460) (2,099,009) (1,243,804) (199,742) (222,679)
Financing activities 4,887 1,570,113 918,287 (35,134) (14,075)
Ratio of Earnings to Fixed Charges (4) 1.50x 1.56x 1.68x 1.64x 1.67x
=========== =========== =========== ========== ==========
</TABLE>
Notes
(1) Notes 3, 4 and 5 to the accompanying financial statements describe the NED
Acquisition and the CPI Merger, which occurred August 27, 1999 and
September 24, 1998, respectively, and other 1999, 1998 and 1997 real estate
acquisitions and development. Note 2 to the accompanying financial
statements describes the basis of presentation.
(2) Beginning August 9, 1996, results include the DRC Merger.
(3) Represents distributions declared per period, which, in 1996, includes a
distribution of $0.1515 per Unit declared on August 9, 1996, in connection
with the DRC Merger, designated to align the time periods of distributions
of the merged companies. The current annual distribution rate is $2.02 per
Unit.
(4) In 1999, includes a $12,000 unusual loss (see Note 13 to the accompanying
financial statements) and a total of $12,290 of asset write-downs.
Excluding these items, the ratio would have been 1.53x in 1999.
34
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the Selected
Financial Data, and all of the financial statements and notes thereto included
elsewhere herein. Certain statements made in this report may constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the SPG Operating Partnership (see
below) to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions, which will, among other things, affect demand for retail space or
retail goods, availability and creditworthiness of prospective tenants, lease
rents and the terms and availability of financing; adverse changes in the real
estate markets including, among other things, competition with other companies
and technology; risks of real estate development and acquisition; governmental
actions and initiatives; substantial indebtedness; conflicts of interests;
maintenance of REIT status; and environmental/safety requirements.
Overview
Simon Property Group, L.P. (the "SPG Operating Partnership"), a Delaware
limited partnership, is a majority owned subsidiary of Simon Property Group Inc.
("SPG"), a Delaware corporation. SPG is a self-administered and self-managed
real estate investment trust ("REIT"). Each share of common stock of SPG is
paired with a beneficial interest in 1/100th of a share of common stock of SPG
Realty Consultants, Inc., also a Delaware corporation. ("SRC" and together with
SPG, the "Companies"). Units of partnership interests ("Units") in the SPG
Operating Partnership are paired with a Unit in SPG Realty Consultants, L.P.
(the "SRC Operating Partnership"). The SRC Operating Partnership is the primary
subsidiary of SRC.
The SPG Operating Partnership is engaged primarily in the ownership,
operation, management, leasing, acquisition, expansion and development of real
estate properties, primarily regional malls and community shopping centers. As
of December 31, 1999, the SPG Operating Partnership owned or held an interest in
258 income-producing properties in the United States, which consisted of 167
regional malls, 78 community shopping centers, four specialty retail centers,
five office and mixed-use properties and four value-oriented super-regional
malls in 36 states (the "Properties"), five additional retail real estate
properties operating in Europe and two properties currently under construction
(the "Portfolio" or the "Portfolio Properties"). The SPG Operating Partnership
also holds substantially all of the economic interest in M.S. Management
Associates, Inc. (the "Management Company"). See Note 8 to the attached
financial statements for a description of the activities of the Management
Company.
Operating results of the SPG Operating Partnership for the two years ended
December 31, 1999 and 1998, and their comparability to the respective prior
periods, have been significantly impacted by a number of Property acquisitions
and openings beginning in 1997. The greatest impact on results of operations has
come from the September 24, 1998 acquisition, through merger, of Corporate
Property Investors, Inc. ("CPI") (the "CPI Merger") (see Note 4 to the financial
statements), and the acquisition of Shopping Center Associates (the "SCA
Acquisition"), which included a series of transactions from September 29, 1997
to June 1, 1998 (see Note 5 to the financial statements). In addition, the SPG
Operating Partnership acquired ownership interests in, or commenced operations
of, a number of other Properties throughout the comparative periods and, as a
result, increased the number of Properties it accounts for using the
consolidated method of accounting and sold interests in several Properties
throughout the comparative periods (together, the "Property Transactions").
Please refer to "Liquidity and Capital Resources" for additional information on
such 1999 activity and refer to Note 5 to the financial statements for
information about acquisitions, dispositions and development activity prior to
1999.
35
<PAGE>
Results of Operations
Year Ended December 31, 1999 vs. Year Ended December 31, 1998
Operating income increased $212.7 million or 33.2% in 1999 as compared to
1998. This increase is primarily the result of the CPI Merger ($141.3 million)
and the Property Transactions ($23.0 million). Excluding these transactions,
operating income increased approximately $48.5 million, primarily resulting from
an approximately $15.1 million increase in consolidated revenues realized from
marketing initiatives throughout the Portfolio from the SPG Operating
Partnership's strategic marketing division, Simon Brand Ventures ("SBV"); a
$39.1 million increase in minimum rents; a $6.3 million increase in gains from
sales of peripheral properties; a $7.2 million increase in interest income and a
$4.3 million increase in lease settlement income, partially offset by a $14.1
million increase in depreciation and amortization and an $8.6 million decrease
in fee income. The increase in minimum rent primarily results from increased
occupancy levels, the replacement of expiring tenant leases with renewal leases
at higher minimum base rents, and a $7.9 million increase in rents from tenants
operating under license agreements. The increase in depreciation and
amortization is primarily due to an increase in depreciable real estate realized
through renovation and expansion activities.
Interest expense increased $159.6 million, or 38.0% in 1999 as compared to
1998. This increase is primarily a result of the CPI Merger ($124.9 million) and
the Property Transactions ($18.0 million). The remaining increase includes
incremental interest resulting from the SPG Operating Partnership's 1998
issuance of $1,075 million of public notes, the proceeds of which were used
primarily to pay down the Credit Facility (see Liquidity and Capital Resources)
($4.5 million), and incremental interest on borrowings under the Credit Facility
to complete the NED Acquisition, and acquire ownership interests in the IBM
Properties and Mall of America ($6.3 million) (see Liquidity and Capital
Resources and Notes 3 & 5 to the financial statements).
Income from unconsolidated entities increased $21.5 million in 1999,
resulting from an increase in the SPG Operating Partnership's share of income
from partnerships and joint ventures ($22.6 million), partially offset by a
decrease in its share of the income from the Management Company ($1.1 million).
The increase in the SPG Operating Partnership's share of income from
partnerships and joint ventures is primarily the result of the joint venture
interests acquired in the CPI Merger ($11.4 million), the IBM Properties ($3.2
million) and the NED Acquisition ($3.1 million). The decrease in Management
Company income is primarily the result of losses associated with interests in
two parcels of land held by the Management Company ($7.3 million), partially
offset by increases in SBV revenues ($2.9 million), construction services
revenues ($1.3 million) and increased earnings from a subsidiary captive
insurance company ($1.1 million).
As discussed further in Note 13 to the financial statements, the $12.0
million unusual item in 1999 is the estimated result of damages arising from the
litigation surrounding the 1996 acquisition through merger of DeBartolo Realty
Corporation (the "DRC Merger"). The actual amount of damages has not yet been
determined by the courts.
The $6.7 million extraordinary loss and $7.1 million extraordinary gain in
1999 and 1998, respectively, are the net results from refinancings, early
extinguishments and/or forgiveness of debt.
Net income was $291.1 million during 1999, an increase of $50.7 million
over 1998, primarily for the reasons discussed above, and was allocated to the
Unitholders of the SPG Operating Partnership based upon their preferred Unit
preferences and weighted average ownership interests in the SPG Operating
Partnership during the period.
Year Ended December 31, 1998 vs. Year Ended December 31, 1997
Operating income increased $163.0 million or 34.2% in 1998 as compared to
1997. This increase is primarily the result of the CPI Merger ($60.3 million),
the SCA Acquisition ($55.1 million), the Property Transactions ($18.5 million)
and approximately $12.9 million from SBV. Excluding these transactions,
operating income increased approximately $16.2 million, primarily due to a $20.2
million increase in minimum rent, and increases in gains from sales of
peripheral properties ($3.4 million) and interest income ($2.8 million),
partially offset by a $6.3 million increase in depreciation and amortization and
a $4.3 million increase in recoverable expenses over tenant reimbursements. The
increase in minimum rents results from increased occupancy levels, the
replacement of expiring tenant leases with renewal leases at higher minimum base
rents, and a $4.3 million increase in rents from tenants operating under license
agreements. The increase in depreciation and amortization is primarily due to an
increase in depreciable real estate realized through renovation and expansion
activities.
36
<PAGE>
Interest expense increased $132.5 million, or 46.0% in 1998 as compared to
1997. This increase is primarily a result of the CPI Merger ($45.8 million), the
SCA Acquisition ($59.1 million) and the Property Transactions ($15.0 million)
and incremental interest ($12.7 million) on borrowings under the Credit Facility
to acquire the IBM Properties (see Note 5 to the financial statements).
The $7.3 million loss on the sale of an asset in 1998 is the result of the
June 30, 1998 sale of Southtown Mall for $3.3 million.
Income from unconsolidated entities increased $9.0 million from $19.2
million in 1997 to $28.1 million in 1998, resulting from an increase in the SPG
Operating Partnership's share of income from partnerships and joint ventures
($13.6 million), partially offset by a decrease in the SPG Operating
Partnership's share of income from the Management Company ($4.6 million). The
increase in the SPG Operating Partnership's share of income from partnerships
and joint ventures is primarily the result of the addition of the IBM Properties
($14.5 million) and the CPI Merger ($6.8 million), partially offset by the
increase in the amortization of the excess of the SPG Operating Partnership's
investment over their share of the equity in the underlying net assets of
unconsolidated joint-venture Properties ($8.7 million). The decrease in
Management Company includes a $6.0 million decrease in development fee income.
The $7.1 million gain from extraordinary items in 1998 is the result of
debt forgiveness, partially offset by prepayment penalties and write-offs of
mortgage costs associated with early extinguishments of debt.
Net income was $240.4 million in 1998, as compared to $203.2 million in
1997, reflecting an increase of $37.2 million, for the reasons discussed above,
and was allocated to the Unitholders of the SPG Operating Partnership based on
their preferred unit preferences and weighted average ownership interests in the
SPG Operating Partnership during the year.
Liquidity and Capital Resources
As of December 31, 1999, the SPG Operating Partnership's balance of
unrestricted cash and cash equivalents was $153.7 million, including $72.4
million related to the SPG Operating Partnership's gift certificate program,
which management does not consider available for general working capital
purposes. The SPG Operating Partnership has a $1.25 billion unsecured revolving
credit facility (the "Credit Facility") which had available credit of $461
million at December 31, 1999. The Credit Facility bears interest at LIBOR plus
65 basis points and has an initial maturity of August 2002, with an additional
one-year extension available at the SPG Operating Partnership's option. SPG and
the SPG Operating Partnership also have access to public equity and debt
markets.
Management anticipates that cash generated from operating performance will
provide the necessary funds on a short- and long-term basis for its operating
expenses, interest expense on outstanding indebtedness, recurring capital
expenditures, and distributions to Unitholders. Sources of capital for
nonrecurring capital expenditures, such as major building renovations and
expansions, as well as for scheduled principal payments, including balloon
payments, on outstanding indebtedness are expected to be obtained from: (i)
excess cash generated from operating performance; (ii) working capital reserves;
(iii) additional debt financing; and (iv) additional equity raised in the public
markets.
Sensitivity Analysis. The SPG Operating Partnership's future earnings, cash
flows and fair values relating to financial instruments are primarily dependent
upon prevalent market rates of interest, primarily LIBOR. Based upon
consolidated indebtedness and interest rates at December 31, 1999, a 0.25%
increase in the market rates of interest would decrease future earnings and cash
flows by approximately $5.8 million, and would decrease the fair value of debt
by approximately $170 million. A 0.25% decrease in the market rates of interest
would increase future earnings and cash flows by approximately $5.8 million, and
would increase the fair value of debt by approximately $180 million.
Financing and Debt
At December 31, 1999, the SPG Operating Partnership had consolidated debt
of $8,769 million, of which $6,275 million was fixed-rate debt, bearing interest
at a weighted average rate of 7.3% and $2,494 million was variable-rate debt
bearing interest at a weighted average rate of 6.6%. As of December 31, 1999,
the SPG Operating Partnership had interest rate protection agreements related to
$438 million of consolidated variable-rate debt. The SPG Operating Partnership's
interest rate protection agreements did not materially impact interest expense
or weighted average borrowing rates in 1999.
37
<PAGE>
The SPG Operating Partnership's share of total scheduled principal payments
of mortgage and other indebtedness, including unconsolidated joint venture
indebtedness over the next five years is $6,017 million, with $4,459 million
thereafter. The SPG Operating Partnership, together with SPG and the SRC
Operating Partnership (See Note 1 to the financial statements), have a combined
ratio of consolidated debt-to-market capitalization of 58.1% and 51.2% at
December 31, 1999 and 1998, respectively. The increase is primarily the result
of a decrease in the estimated value of the Units.
The following summarizes significant financing and refinancing transactions
completed in 1999:
Financings Related to the NED Acquisition. The SPG Operating Partnership's
approximately $894 million share of the cost of the NED Acquisition (see below)
included the assumption of approximately $530.0 million of mortgage
indebtedness; $177.1 million in cash; the issuance of 1,269,446 Units valued at
approximately $36.4 million; the issuance of 2,584,227 7% Convertible Preferred
Units in the SPG Operating Partnership valued at approximately $72.8 million;
and 2,584,227 8% Redeemable Preferred Units in the SPG Operating Partnership
valued at approximately $78.0 million. The SPG Operating Partnership's share of
the cash portion of the purchase price was financed primarily using the Credit
Facility.
In connection with the NED Acquisition, SPG borrowed $92.8 million from the
SPG Operating Partnership at 7.8% interest with a maturity of December 2009. SPG
used the proceeds to purchase a noncontrolling 88% interest in one of the NED
Properties. SPG contributed its interest in such Property to the SPG Operating
Partnership in exchange for 3,617,070 Units. The SPG Operating Partnership then
contributed its interest in such Property to Mayflower (see Note 3 to the
accompanying financial statements) in exchange for an ownership interest in
Mayflower.
Secured Indebtedness. During 1999, the SPG Operating Partnership refinanced
approximately $295 million of mortgage indebtedness on five of the Properties.
The SPG Operating Partnership's share of the refinanced debt is approximately
$270 million. The weighted average maturity of the indebtedness increased from
approximately 2.0 years to 7.4 years, while the weighted average interest rates
decreased from approximately 8.0% to 7.7%.
Credit Facility. During 1999, the SPG Operating Partnership obtained a
three-year extension on the Credit Facility to August 25, 2002, with an
additional one-year automatic extension available at the option of the SPG
Operating Partnership. The maximum and average amounts outstanding during 1999
under the Credit Facility were $785 million and $487 million, respectively.
Unsecured Notes. On February 4, 1999, the SPG Operating Partnership
completed the sale of $600 million of senior unsecured notes. The notes include
two $300 million tranches. The first tranche bears interest at 6.75% and matures
on February 4, 2004 and the second tranche bears interest at 7.125% and matures
on February 4, 2009. The SPG Operating Partnership used the net proceeds of
approximately $594 million to retire the $450 million initial tranche of the
$1.4 billion unsecured bridge loan, which financed the majority of the cash
portion of the CPI Merger (the "Merger Facility") and to pay $142 million on the
outstanding balance of the Credit Facility. Following this offering, the SPG
Operating Partnership had $250 million remaining on its debt shelf registration,
under which debt securities may be issued.
In addition to these transactions, the SPG Operating Partnership has also
received commitments from various lending institutions totaling $550 million to
payoff the second $450 million tranche of the Merger Facility, which becomes due
March 24, 2000 and bears interest at LIBOR plus 65 basis points. The new
facility will mature March 2001 and also bears interest at LIBOR plus 65 basis
points.
Acquisitions and Disposals
The NED Acquisition. During 1999, the SPG Operating Partnership acquired
ownership interests in 14 regional malls from New England Development Company
(the "NED Acquisition"). The SPG Operating Partnership acquired one of the
properties directly and formed a joint venture with three partners
("Mayflower"), of which the SPG Operating Partnership owns 49.1%, to acquire
interests in the remaining properties. The SPG Operating Partnership assumed
management responsibilities for the portfolio, which includes approximately 10.7
million square feet of GLA.
Other Acquisitions. During 1999, in addition to the NED Acquisition, the
SPG Operating Partnership acquired the remaining interests in four Properties,
and 50% of the economic benefits of Mall of America for a combined price of
approximately $318 million. The purchase price included the assumption of a $134
million pro rata share of mortgage indebtedness with a weighted average rate and
maturity of 6.8% and 4.4 years, respectively; the issuance of 1,000,000 shares
of 8% Redeemable Preferred Stock in SPG for $24 million and $160 million in cash
funded primarily from the Credit Facility.
38
<PAGE>
In exchange for the 8% Redeemable Preferred Stock issued as consideration in the
acquisition of an interest in Mall of America, the SPG Operating Partnership
issued preferred Units to SPG with the same economic terms as the preferred
stock.
See Note 5 to the financial statements for 1998 and 1997 acquisition
activity.
Management continues to review and evaluate a limited number of individual
property and portfolio acquisition opportunities. Management believes, however,
that due to the rapid consolidation of the regional mall business, coupled with
the current status of the capital markets, that acquisition activity in the near
term will be a less significant component of the SPG Operating Partnership's
growth strategy. Management believes that funds on hand, and amounts available
under the Credit Facility, together with the ability to issue Units, provide the
means to finance certain acquisitions. No assurance can be given that the SPG
Operating Partnership will not be required to, or will not elect to, even if not
required to, obtain funds from outside sources, including through the sale of
debt or equity securities, to finance significant acquisitions, if any.
Disposals. During 1999, the SPG Operating Partnership sold land at an
office building and a hotel, and two community centers for a total of $47
million, resulting in a net loss of $2 million. The net proceeds from these
sales were used primarily to reduce the outstanding balance on the Credit
Facility.
In addition to the Property sales described above, as a continuing part of
the SPG Operating Partnership's long-term strategic plan, management continues
to pursue the sale of its remaining non-retail holdings and a number of retail
assets that are no longer aligned with the SPG Operating Partnership's strategic
criteria. These include interests in one regional mall and one community center
sold in the first quarter of 2000 and one regional mall and four community
centers, which are under contract for sale. Management expects the sale prices
of its non-core assets, if sold, will not differ materially from the carrying
value of the related assets.
Development Activity
New Developments. Development activities are an ongoing part of the SPG
Operating Partnership's business. During 1999, the SPG Operating Partnership
opened six new Properties aggregating approximately 4.9 million square feet of
GLA. In total, the SPG Operating Partnership invested approximately $400 million
on new developments in 1999. With fewer new developments currently under
construction, the SPG Operating Partnership expects 2000 development costs to be
approximately $130 million.
Strategic Expansions and Renovations. A key objective of the SPG Operating
Partnership is to increase the profitability and market share of the Properties
through the completion of strategic renovations and expansions. During 1999, the
SPG Operating Partnership invested approximately $277 million on redevelopment
projects and completed four major redevelopment projects, which added
approximately 1.4 million square feet of GLA to the Portfolio. The SPG Operating
Partnership has a number of renovation and/or expansion projects currently under
construction, or in preconstruction development and expects to invest
approximately $270 million on redevelopment in 2000.
International Expansion. The SPG Operating Partnership and the Management
Company have a 25% ownership interest in European Retail Enterprises, B.V.
("ERE") and Groupe BEG, S.A. ("BEG"), respectively, which are accounted for
using the equity method of accounting. BEG and ERE are fully integrated European
retail real estate developers, lessors and managers. The SPG Operating
Partnership's total investment in ERE and BEG at December 31, 1999 was
approximately $41 million, with commitments for an additional $22 million,
subject to certain performance and other criteria, including the SPG Operating
Partnership's approval of development projects. The agreements with BEG and ERE
are structured to allow the SPG Operating Partnership to acquire an additional
25% ownership interest over time. As of December 31, 1999, BEG and ERE had three
Properties open in Poland and two in France.
39
<PAGE>
Other
On September 30, 1999, the SPG Operating Partnership entered into a five
year contract with Enron Energy Services for Enron to supply or manage all of
the energy commodity requirements throughout the Portfolio. The contract
includes electricity, natural gas and maintenance of energy conversion assets
and electrical systems including lighting. This alliance is designed to reduce
operating costs for the SPG Operating Partnership's tenants, as well as deliver
incremental profit to the SPG Operating Partnership.
Capital Expenditures on Consolidated Properties
1999 1998 1997
------- ------- -------
New Developments $ 226 $ 22 $ 80
Renovations and Expansions 248 250 197
Tenant Allowances 64 46 38
Recoverable Capital Expenditures 27 18 13
Other -- 12 4
------- ------- -------
Total $ 565 $ 348 $ 332
======= ======= =======
Distributions
The SPG Operating Partnership declared distributions in 1999 aggregating
$2.02 per Unit. On January 20, 2000, the SPG Operating Partnership declared a
distribution of $0.5050 per Unit payable on February 18, 2000, to Unitholders of
record on February 4, 2000. The current annual distribution rate is $2.02 per
Unit. Future distributions will be determined based on actual results of
operations and cash available for distribution.
Investing and Financing Activities
Cash used in investing activities during 1999 includes acquisitions of
$339 million, capital expenditures of $489 million, loans to affiliates of $10
million, investments in unconsolidated joint ventures of $83 million consisting
primarily of development funding and $47 million of investments in and advances
to the Management Company. Capital expenditures includes development costs of
$86 million, renovation and expansion costs of approximately $324 million and
tenant costs, and other operational capital expenditures of approximately $95
million. Acquisitions, including transaction costs, includes $183 million for
the NED Acquisition and $156 million for the remaining interests in four
existing Properties. These uses of cash are partially offset by distributions
from unconsolidated entities of $222 million; net proceeds of $47 million from
the sales of the SPG Operating Partnership's interests in the land at a hotel
and an office building, and two community centers; a loan repayment from an
affiliate of $21 million and cash of $83 million from the consolidations of the
SPG Operating Partnership's gift certificate program and four Properties.
Distributions from unconsolidated entities includes approximately $116 million
resulting from financing activities, with the remainder resulting primarily from
those entities' operating activities.
Cash provided by financing activities during 1999 was $5 million and
included net equity distributions of $552 million offset by net borrowings of
$557 million.
Year 2000 Project
The SPG Operating Partnership undertook a project (the "Y2K Project") to
identify and correct problems arising from the inability of information
technology hardware and software systems to process dates after December 31,
1999. The SPG Operating Partnership's Y2K Project focused first upon the SPG
Operating Partnership's key information technology systems (the "IT Component")
and secondly upon the information systems of key tenants and key third party
service providers as well as imbedded systems within common areas of
substantially all of the Properties (the "Non-IT Component"). Among other
things, the Y2K Project assessed year 2000 readiness of all critical items and
developed and implemented replacement and contingency plans based upon the
information collected.
The SPG Operating Partnership experienced no disruptions in its key
information technology systems or in the operation of its Properties as a result
of any year 2000 occurrence, nor is the SPG Operating Partnership aware that any
of its
40
<PAGE>
key tenants or key suppliers experienced any year 2000 issues which, in turn,
have had any material adverse impact upon the SPG Operating Partnership's
results of operations.
The SPG Operating Partnership is also aware that other dates may cause
similar problems for information technology hardware and software systems to
process dates thereafter. The SPG Operating Partnership believes that its Y2K
Project addressed those issues in the SPG Operating Partnership's IT Component
and Non-IT Component, but has put in place contingency plans substantially
similar to those designed for the Y2K Project to address information technology
issues that may arise on those future dates.
To date, the SPG Operating Partnership has expended $2.0 million on the Y2K
Project and anticipates expending an additional $180 thousand to complete the
implementation of any contingency and replacement plans in connection with its
Y2K Project. These cost estimates do not include costs expended by the SPG
Operating Partnership following the DRC Merger for software, hardware and
related costs necessary to upgrade its primary operating, financial accounting
and billing systems, which allowed those systems to, among other things, become
year 2000 ready.
Inflation
Inflation has remained relatively low during the past four years and has
had a minimal impact on the operating performance of the Properties.
Nonetheless, substantially all of the tenants' leases contain provisions
designed to lessen the impact of inflation. Such provisions include clauses
enabling the SPG Operating Partnership to receive percentage rentals based on
tenants' gross sales, which generally increase as prices rise, and/or escalation
clauses, which generally increase rental rates during the terms of the leases.
In addition, many of the leases are for terms of less than ten years, which may
enable the SPG Operating Partnership to replace existing leases with new leases
at higher base and/or percentage rentals if rents of the existing leases are
below the then-existing market rate. Substantially all of the leases, other than
those for anchors, require the tenants to pay a proportionate share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the SPG Operating Partnership's exposure to increases in costs
and operating expenses resulting from inflation.
However, inflation may have a negative impact on some of the SPG Operating
Partnership's other operating items. Interest and general and administrative
expenses may be adversely affected by inflation as these specified costs could
increase at a rate higher than rents. Also, for tenant leases with stated rent
increases, inflation may have a negative effect as the stated rent increases in
these leases could be lower than the increase in inflation at any given time.
Seasonality
The shopping center industry is seasonal in nature, particularly in the
fourth quarter during the holiday season, when tenant occupancy and retail sales
are typically at their highest levels. In addition, shopping malls achieve most
of their temporary tenant rents during the holiday season. As a result of the
above, earnings are generally highest in the fourth quarter of each year.
New Accounting Pronouncements
On June 15, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133 establishes accounting
and reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
133 requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting.
SFAS 133 will be effective for the SPG Operating Partnership beginning with
the 2001 fiscal year and may not be applied retroactively. Management is
currently evaluating the impact of SFAS 133, which it believes could increase
volatility in earnings and other comprehensive income.
On December 3, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), which addressed certain revenue
recognition policies, including the accounting for overage rent by a landlord.
SAB 101
41
<PAGE>
requires overage rent to be recognized as revenue only when each tenant's sales
exceeds their sales threshold. The SPG Operating Partnership currently
recognizes overage rent based on reported and estimated sales through the end of
the period, less the applicable prorated base sales amount. The SPG Operating
Partnership will adopt SAB 101 effective January 1, 2000. Management is
currently evaluating the impact of SAB 101 and expects to record a loss from the
cumulative effect of a change in accounting principle of approximately $13
million in the first quarter of 2000. In addition, SAB 101 will impact the
timing in which overage rent is recognized throughout the year, but will not
have a material impact on the total overage rent recognized in each full year.
Item 7A. Qualitative and Quantitative Disclosure About Market Risk
Reference is made to Item 7 of this Form 10-K under the caption "Liquidity
and Capital Resources".
Item 8. Financial Statements and Supplementary Data
Reference is made to the Index to Financial Statements contained in Item
14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
42
<PAGE>
Part III
Item 10. Directors and Executive Officers of the Registrant
The managing general partner of the SPG Operating Partnership is SPG. The
information required by this item is incorporated herein by reference to SPG's
definitive Proxy Statements for their annual meeting of shareholders to be filed
with the Commission pursuant to Regulation 14A and is included under the caption
"EXECUTIVE OFFICERS OF THE REGISTRANT" in Part I thereof.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference
to SPG's definitive Proxy Statements for its annual meeting of shareholders to
be filed with the Commission pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by reference
to SPG's definitive Proxy Statements for its annual meeting of shareholders to
be filed with the Commission pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated herein by reference
to SPG's definitive Proxy Statements for its annual meeting of shareholders to
be filed with the Commission pursuant to Regulation 14A.
43
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
<TABLE>
<CAPTION>
<S> <C>
(a) (1) Financial Statements Page No.
----------------------------- --------
Report of Independent Public Accountants 45
Consolidated Balance Sheets as of December 31, 1999 and 1998 46
Consolidated Statements of Operations for the years ended December 31, 1999, 1998 and 1997 47
Consolidated Statements of Changes in Partner's Equity for the years ended December 31, 1999,
1998 and 1997 48
Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 49
Notes to Financial Statements 50
(2) Financial Statement Schedules
-----------------------------
Report of Independent Public Accountants 72
Simon Property Group, L.P. Schedule III -- Schedule of Real Estate and Accumulated Depreciation 73
Notes to Schedule III 78
(3) Exhibits
--------
The Exhibit Index attached hereto is hereby incorporated by reference to this Item. 79
(b) Reports on Form 8-K
-------------------
None.
</TABLE>
44
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Simon Property Group, Inc.:
We have audited the accompanying consolidated balance sheets of Simon Property
Group, L.P. (a Delaware limited partnership) and subsidiaries as of December 31,
1999 and 1998, and the related consolidated statements of operations, partners'
equity and cash flows for each of the three years in the period ended December
31, 1999. These financial statements are the responsibility of the management of
Simon Property Group, L.P. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Simon Property
Group, L.P. and subsidiaries as of December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana
February 16, 2000.
45
<PAGE>
Balance Sheets
Simon Property Group, L.P. Consolidated
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS:
Investment properties, at cost $12,640,146 $11,662,860
Less - accumulated depreciation 1,093,103 709,114
----------- -----------
11,547,043 10,953,746
Cash and cash equivalents 153,743 124,466
Tenant receivables and accrued
revenue, net 287,950 217,341
Notes and advances receivable from
Management Company and affiliate 162,082 115,378
Mortgage note receivable from the SRC
Operating Partnership (Interest at
6%, due 2013) -- 20,565
Note receivable from the SRC Operating
Partnership (Interest at 8%, due 2009) 9,848 --
Investment in partnerships and joint
ventures, at equity 1,512,671 1,303,251
Investment in Management Company and
affiliate 6,833 10,037
Other investment 41,902 50,176
Goodwill, net 39,556 58,134
Deferred costs and other assets 249,168 227,684
Minority interest 35,931 32,138
----------- -----------
Total assets $14,046,727 $13,112,916
=========== ===========
LIABILITIES:
Mortgages and other indebtedness $ 8,768,841 $ 7,972,381
Notes payable to the SRC Operating
Partnership (Interest at 8%, due 2008) -- 17,907
Accounts payable and accrued expenses 477,780 410,445
Cash distributions and losses in
partnerships and joint ventures,
at equity 32,995 29,139
Other liabilities 213,874 95,243
----------- -----------
Total liabilities 9,493,490 8,525,115
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 13)
PARTNERS' EQUITY:
Preferred units, 22,066,056 and
16,053,580 units outstanding,
respectively 1,032,320 1,057,245
General Partners, 171,494,311 and
161,487,017 units oustanding,
respectively 2,631,618 2,540,660
Limited Partners, 65,444,680 and
64,182,157 units outstanding,
respectively 1,004,263 1,009,646
Note receivable from SPG (Interest at
7.8%, due 2009) (92,825) --
Unamortized restricted stock award (22,139) (19,750)
----------- -----------
Total partners' equity 4,553,237 4,587,801
----------- -----------
Total liabilities and partners'
equity $14,046,727 $13,112,916
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
46
<PAGE>
Statements of Operations
Simon Property Group, L.P. Consolidated
(Dollars in thousands, except per unit amounts)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
REVENUE:
Minimum rent $1,134,297 $ 847,198 $ 641,352
Overage rent 60,720 49,441 38,810
Tenant reimbursements 578,752 427,921 322,416
Other income 106,466 75,629 51,589
---------- ---------- ----------
Total revenue 1,880,235 1,400,189 1,054,167
---------- ---------- ----------
EXPENSES:
Property operating 292,249 225,899 176,846
Depreciation and amortization 378,192 266,978 200,900
Real estate taxes 185,340 133,038 98,830
Repairs and maintenance 70,364 53,189 43,000
Advertising and promotion 65,216 50,521 32,891
Provision for credit losses 8,367 6,599 5,992
Other 27,796 23,956 18,678
---------- ---------- ----------
Total operating expenses 1,027,524 760,180 577,137
---------- ---------- ----------
OPERATING INCOME 852,711 640,009 477,030
INTEREST EXPENSE 579,848 420,280 287,823
---------- ---------- ----------
INCOME BEFORE MINORITY INTEREST 272,863 219,729 189,207
MINORITY INTEREST (10,719) (7,335) (5,270)
GAIN (LOSS) ON SALES OF ASSETS, NET (1,942) (7,283) 20
---------- ---------- ----------
INCOME BEFORE UNCONSOLIDATED ENTITIES 260,202 205,111 183,957
INCOME FROM UNCONSOLIDATED ENTITIES 49,641 28,145 19,176
---------- ---------- ----------
INCOME BEFORE UNUSUAL AND EXTRAORDINARY ITEMS 309,843 233,256 203,133
UNUSUAL ITEM (Note 13) (12,000) -- --
EXTRAORDINARY ITEMS--DEBT RELATED TRANSACTIONS (6,705) 7,146 58
---------- ---------- ----------
NET INCOME 291,138 240,402 203,191
PREFERRED UNIT REQUIREMENT (69,323) (41,471) (29,248)
---------- ---------- ----------
NET INCOME AVAILABLE TO UNITHOLDERS $ 221,815 $ 198,931 $ 173,943
========== ========== ==========
NET INCOME AVAILABLE TO UNITHOLDERS
ATTRIBUTABLE TO:
General Partner:
SPG $ 22,524 $ 14,243 $ --
SPG Properties and SD Property Group 137,764 116,509 107,989
Limited Partners 61,527 68,179 65,954
---------- ---------- ----------
Net income $ 221,815 $ 198,931 $ 173,943
========== ========== ==========
BASIC EARNINGS PER UNIT:
Income before extraordinary items $0.98 $1.01 $1.08
Extraordinary items (0.03) 0.04 --
---------- ---------- ----------
Net income $0.95 $1.05 $1.08
========== ========== ==========
DILUTED EARNINGS PER UNIT:
Income before extraordinary items $0.98 $1.01 $1.08
Extraordinary items (0.03) 0.04 --
---------- ---------- ----------
Net income $ 0.95 $ 1.05 $ 1.08
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
47
<PAGE>
Statements of Partners' Equity
Simon Property Group, L.P. Consolidated
(Dollars in thousands)
<TABLE>
<CAPTION>
General Partners
----------------------------------------
SPG (Managing SPG Properties and
Preferred Units General Partner) SD Property Group Limited Partners
--------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 292,912 -- 1,017,333 640,283
General Partner Contributions
(6,311,273 units) 200,920
Units issued in connection with
acquisitions (2,193,037 and
876,712, respectively) 70,000 26,408
Stock incentive program (448,753 units) 14,016
Amortization of stock incentive
Preferred units issued, net of
issuance costs (3,000,000 units) 146,072
Conversion of 4,000,000 Series A
preferred units into 3,809,523
common units (99,923) 99,923
Adjustment to allocate net equity of
the SPG Operating Partnership (82,869) 82,869
Distributions (29,248) (198,701) (122,442)
--------------- ---------------- ------------------ ----------------
Subtotal 309,813 -- 1,120,622 627,118
Comprehensive Income:
Unrealized gain on long-term investments 2,420 1,365
Net income 29,248 107,989 65,954
--------------- ---------------- ------------------ ----------------
Total Comprehensive Income 29,248 -- 110,409 67,319
--------------- ---------------- ------------------ ----------------
Balance at December 31, 1997 339,061 -- 1,231,031 694,437
General Partner Contributions
(2,957,335 units) 91,399
CPI Merger (Note 4):
Preferred Units (5,053,580) 717,916
Units (47,790,550) 1,605,638
Units issued in connection with
acquisitions (519,889 and 2,344,199
units, respectively) 17,176 76,263
Stock incentive program (495,131
units, net of forfeitures) 15,983
Amortization of stock incentive
Other (Accretion of Preferred Units,
81,111 general partner Units issued
and 12,804 limited partner Units redeemed) 268 340 2,160 (289)
Adjustment to allocate net equity of
the SPG Operating Partnership (866,564) 557,642 308,922
Distributions (41,471) (1,746) (240,857) (136,551)
--------------- ---------------- ------------------ ----------------
Subtotal 1,015,774 737,668 1,674,534 942,782
Comprehensive Income:
Net income 41,471 14,243 116,509 68,179
Unrealized loss on long-term investments 37 (2,331) (1,315)
--------------- ---------------- ------------------ ----------------
Total Comprehensive Income 41,471 14,280 114,178 66,864
--------------- ---------------- ------------------ ----------------
Balance at December 31, 1998 1,057,245 751,948 1,788,712 1,009,646
General Partner Contributions
(82,988 units) 2,131
Preferred Unit Conversion
(5,926,440 units) (199,320) 198,787
Units issued to pay dividend
(153,890 units) 4,016
NED Acquisition (Note 3):
Preferred Units (5,168,454) 149,885
Units (1,269,446) 36,180
Mall of America acquisition
(1,000,000 preferred units) 24,242
Units issued to SPG for Note
(3,617,070 Units) 92,825
Stock incentive program (537,861
units, net of forfeitures) 14,183 (596)
Amortization of stock incentive
Units purchased by subsidiary (310,955) (7,953)
Other (Accretion of Preferred Units,
and 6,923 limited partner Units redeemed) 268 (607)
Adjustment to allocate net equity
of the SPG Operating Partnership (111,227) 81,473 29,754
Distributions (69,323) (78,016) (258,975) (129,941)
--------------- ---------------- ------------------ ----------------
Subtotal 962,997 866,694 1,610,614 945,032
Comprehensive Income:
Net income 69,323 22,524 137,764 61,527
Unrealized gain on long-term investments (2,004) (3,974) (2,296)
--------------- ---------------- ------------------ ----------------
Total Comprehensive Income 69,323 20,520 133,790 59,231
--------------- ---------------- ------------------ ----------------
Balance at December 31, 1999 $1,032,320 $887,214 $1,744,404 $1,004,263
=============== ================ ================== ================
</TABLE>
(Dollars in thousands)
<TABLE>
<CAPTION>
Unamortized
Restricted Stock Note Receivable Total Partners'
Award from SPG Equity
---------------- --------------- ---------------
<S> <C> <C> <C>
Balance at December 31, 1996 (5,354) -- 1,945,174
General Partner Contributions
(6,311,273 units) 200,920
Units issued in connection with
acquisitions (2,193,037 and
876,712, respectively) 96,408
Stock incentive program (448,753 units) (13,262) 754
Amortization of stock incentive 5,386 5,386
Preferred units issued, net of
issuance costs (3,000,000 units) 146,072
Conversion of 4,000,000 Series A
preferred units into 3,809,523
common units --
Adjustment to allocate net equity of
the SPG Operating Partnership --
Distributions (350,391)
---------------- --------------- ---------------
Subtotal (13,230) -- 2,044,323
Comprehensive Income:
Unrealized gain on long-term investments 3,785
Net income 203,191
---------------- --------------- ---------------
Total Comprehensive Income -- -- 206,976
---------------- --------------- ---------------
Balance at December 31, 1997 (13,230) -- 2,251,299
General Partner Contributions
(2,957,335 units) 91,399
CPI Merger (Note 4):
Preferred Units (5,053,580) 717,916
Units (47,790,550) 1,605,638
Units issued in connection with
acquisitions (519,889 and
2,344,199 units, respectively) 93,439
Stock incentive program (495,131
units, net of forfeitures) (15,983) --
Amortization of stock incentive 9,463 9,463
Other (Accretion of Preferred Units,
81,111 general partner Units issued
and 12,804 limited partner Units
redeemed) 2,479
Adjustment to allocate net equity of
the SPG Operating Partnership --
Distributions (420,625)
---------------- --------------- ---------------
Subtotal (19,750) -- 4,351,008
Comprehensive Income:
Net income 240,402
Unrealized loss on long-term investments (3,609)
---------------- --------------- ---------------
Total Comprehensive Income -- -- 236,793
---------------- --------------- ---------------
Balance at December 31, 1998 (19,750) -- 4,587,801
General Partner Contributions
(82,988 units) 2,131
Preferred Unit Conversion
(5,926,440 units) (533)
Units issued to pay dividend
(153,890 units) 4,016
NED Acquisition (Note 3):
Preferred Units (5,168,454) 149,885
Units (1,269,446) 36,180
Mall of America acquisition
(1,000,000 preferred units) 24,242
Units issued to SPG for Note
(3,617,070 Units) (92,825) --
Stock incentive program (537,861
units, net of forfeitures) (12,990) 597
Amortization of stock incentive 10,601 10,601
Units purchased by subsidiary (310,955) (7,953)
Other (Accretion of Preferred Units,
and 6,923 limited partner Units
redeemed) (339)
Adjustment to allocate net equity of
the SPG Operating Partnership --
Distributions (536,255)
---------------- --------------- ---------------
Subtotal (22,139) (92,825) 4,270,373
Comprehensive Income:
Net income 291,138
Unrealized gain on long-term
investments (8,274)
---------------- --------------- ---------------
Total Comprehensive Income -- -- 282,864
---------------- --------------- ---------------
Balance at December 31, 1999 $(22,139) $(92,825) $4,553,237
================ =============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
48
<PAGE>
Statements of Cash Flows
Simon Property Group, L.P. Consolidated
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 291,138 $ 240,402 $ 203,191
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization 390,020 277,346 208,539
Extraordinary items 6,705 (7,146) (58)
Loss (gain) on sales of assets, net 1,942 7,283 (20)
Straight-line rent (17,666) (9,261) (9,769)
Minority interest 10,719 7,335 5,270
Equity in income of unconsolidated entities (49,641) (28,145) (19,176)
Changes in assets and liabilities--
Tenant receivables and accrued revenue (37,225) (13,316) (23,284)
Deferred costs and other assets (23,242) (7,289) (30,203)
Accounts payable, accrued expenses and other
liabilities 47,100 76,454 36,417
----------- ----------- -----------
Net cash provided by operating activities 619,850 543,663 370,907
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions (339,065) (1,942,724) (980,427)
Capital expenditures (488,712) (345,026) (305,178)
Cash from mergers, acquisitions and
consolidation of joint ventures, net 83,169 16,563 19,744
Change in restricted cash -- 7,686 (2,443)
Proceeds from sale of assets 46,750 46,087 599
Investments in unconsolidated entities (83,124) (55,523) (47,204)
Distributions from unconsolidated entities 221,509 195,497 144,862
Investments in and advances to the Management
Company and affiliate (46,704) (21,569) (18,357)
Mortgage loan payoff from the SRC Operating
Partnership 20,565 -- --
Loan to the SRC Operating Partnership (9,848) -- --
Other investing activities -- -- (55,400)
----------- ----------- -----------
Net cash used in investing activities (595,460) (2,099,009) (1,243,804)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Partnership contributions 1,463 92,570 344,438
Partnership distributions (538,807) (417,164) (350,391)
Minority interest distributions, net (14,923) (19,694) (219)
Loan payoff to the SRC Operating Partnership (17,907) -- --
Mortgage and other note proceeds, net of
transaction costs 2,168,069 3,782,314 2,976,222
Mortgage and other note principal payments (1,593,008) (1,867,913) (2,030,763)
Other refinancing transaction -- -- (21,000)
----------- ----------- -----------
Net cash provided by financing activities 4,887 1,570,113 918,287
----------- ----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 29,277 14,767 45,390
CASH AND CASH EQUIVALENTS, beginning of period 124,466 109,699 64,309
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 153,743 $ 124,466 $ 109,699
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
49
<PAGE>
SIMON PROPERTY GROUP, L.P.
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands, except per unit amounts and where indicated as in
billions)
1. Organization
Simon Property Group, L.P. (the "SPG Operating Partnership"), a Delaware
limited partnership, is a majority owned subsidiary of Simon Property Group,
Inc. ("SPG"), a Delaware corporation. SPG is a self-administered and self-
managed real estate investment trust ("REIT") under the Internal Revenue Code of
1986, as amended (the "Code"). Each share of common stock of SPG is paired
("Paired Shares") with a beneficial interest in 1/100th of a share of common
stock of SPG Realty Consultants, Inc., also a Delaware corporation ("SRC" and
together with SPG, the "Companies"). Units of ownership interest ("Units") in
the SPG Operating Partnership are paired ("Paired Units") with a Unit in SPG
Realty Consultants, L.P. (the "SRC Operating Partnership" and together with the
SPG Operating Partnership, the "Operating Partnerships"). The SRC Operating
Partnership is the primary subsidiary of SRC.
The SPG Operating Partnership, is engaged primarily in the ownership,
operation, management, leasing, acquisition, expansion and development of real
estate properties, primarily regional malls and community shopping centers. As
of December 31, 1999, the SPG Operating Partnership owned or held an interest in
258 income-producing properties, which consisted of 167 regional malls, 78
community shopping centers, four specialty retail centers, five office and
mixed-use properties and four value-oriented super-regional malls in 36 states
(the "Properties") and five additional retail real estate properties operating
in Europe. The SPG Operating Partnership also owned an interest in two
properties currently under construction and 11 parcels of land held for future
development, which together with the Properties are hereafter referred to as the
"Portfolio Properties". The SPG Operating Partnership also holds substantially
all of the economic interest in M.S. Management Associates, Inc. (the
"Management Company"). See Note 8 for a description of the activities of the
Management Company.
The SPG Operating Partnership is subject to risks incidental to the
ownership and operation of commercial real estate. These include, among others,
the risks normally associated with changes in the general economic climate,
trends in the retail industry, creditworthiness of tenants, competition for
tenants and customers, changes in tax laws, interest rate levels, the
availability of financing, and potential liability under environmental and other
laws. Like most retail properties, the SPG Operating Partnership's regional
malls and community shopping centers rely heavily upon anchor tenants. As of
December 31, 1999, 335 of the approximately 977 anchor stores in the Properties
were occupied by three retailers. An affiliate of one of these retailers is a
limited partner in the SPG Operating Partnership.
2. Basis of Presentation
The accompanying consolidated financial statements include accounts of all
entities owned or controlled by the SPG Operating Partnership. All significant
intercompany amounts have been eliminated. The consolidated financial statements
reflect the CPI Merger (see Note 4) as of the close of business on September 24,
1998.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles, which requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reported period.
Actual results could differ from these estimates.
Properties which are wholly-owned or owned less than 100% and are
controlled by the SPG Operating Partnership are accounted for using the
consolidated method of accounting. Control is demonstrated by the ability of the
general partner to manage day-to-day operations, refinance debt and sell the
assets of the partnership without the consent of the limited partner and the
inability of the limited partner to replace the general partner. The deficit
minority interest balance in the accompanying balance sheets represents outside
partners' interests in the net equity of certain Properties. Deficit minority
interests were recorded when a partnership agreement provided for the settlement
of deficit capital accounts before distributing the proceeds from the sale of
partnership assets and/or from the intent (legal or otherwise) and ability of
the partner to fund additional capital contributions. Investments in
partnerships and joint ventures which represent noncontrolling ownership
interests ("Joint Venture Properties") and the investment in the Management
Company (see Note 8) are accounted for using the equity method of accounting.
These investments are recorded initially at cost and subsequently adjusted for
net equity in income (loss), which is allocated in accordance with the
provisions of the applicable partnership or joint venture agreement, and cash
contributions
50
<PAGE>
and distributions. The allocation provisions in the partnership or joint venture
agreements are not always consistent with the ownership interests held by each
general or limited partner or joint venturer, primarily due to partner
preferences.
Net operating results of the SPG Operating Partnership are allocated after
preferred distributions (see Note 11), based on its partners' weighted average
ownership interests during the period. SPG's weighted average direct and
indirect ownership interest in the SPG Operating Partnership during 1999, 1998
and 1997 were 72.3%, 66.2% and 62.1%, respectively. At December 31, 1999 and
1998, SPG's direct and indirect ownership interest in the SPG Operating
Partnership was 72.4% and 71.6%, respectively.
3. NED Acquisition
During 1999, the SPG Operating Partnership acquired ownership interests in
14 regional malls from New England Development Company (the "NED Acquisition").
The SPG Operating Partnership acquired one of the Properties directly and formed
a joint venture with three partners ("Mayflower"), of which the SPG Operating
Partnership owns 49.1%, to acquire interests in the remaining Properties. The
total cost of the NED Acquisition is approximately $1.8 billion, of which the
SPG Operating Partnership's share is approximately $894 million. The SPG
Operating Partnership assumed management responsibilities for the portfolio,
which includes approximately 10.7 million square feet of GLA. The SPG Operating
Partnership's share of the cost of the NED Acquisition included the assumption
of approximately $530,000 of mortgage indebtedness; $177,050 in cash; the
issuance of 1,269,446 Paired Units valued at approximately $36,400; the issuance
of 2,584,227 7% Convertible Preferred Units in the SPG Operating Partnership
valued at approximately $72,800; and 2,584,227 8% Redeemable Preferred Units in
the SPG Operating Partnership valued at approximately $78,000. The SPG Operating
Partnership's share of the cash portion of the purchase price was financed
primarily using the Credit Facility (See Note 9).
In connection with the NED Acquisition, SPG borrowed $92.8 million from the
SPG Operating Partnership at 7.8% interest with a maturity of December 2009. SPG
used the proceeds to purchase a noncontrolling 88% interest in one of the NED
Properties. SPG contributed its interest in such Property to the SPG Operating
Partnership in exchange for 3,617,070 Paired Units. The SPG Operating
Partnership then contributed its interest in such Property to Mayflower in
exchange for an ownership interest in Mayflower. The note receivable from SPG is
recorded as a reduction of partners' equity.
4. CPI Merger
For financial reporting purposes, as of the close of business on September
24, 1998, the CPI Merger was consummated pursuant to the Agreement and Plan of
Merger dated February 18, 1998, among Simon DeBartolo Group, Inc. ("SDG"),
Corporate Property Investors, Inc. ("CPI"), and Corporate Realty Consultants,
Inc. ("CRC").The CPI Merger included the addition of 23 regional malls, one
community center, two office buildings and one regional mall and one community
center under construction.
As part of the merger consideration, immediately prior to the consummation
of the CPI Merger, the holders of CPI common stock were paid a merger dividend
consisting of (i) $90 in cash, (ii) 1.0818 additional shares of CPI common stock
and (iii) 0.19 shares of 6.50% Series B convertible preferred stock of CPI per
share of CPI common stock. Immediately prior to the CPI Merger, there were
25,496,476 shares of CPI common stock outstanding. The cash portion of the
merger consideration was financed with borrowings of $1.4 billion on the Merger
Facility and $237,000 on the Credit Facility (See Note 9). The remaining merger
consideration was liabilities assumed of approximately $2.3 billion. The
aggregate value associated with the completion of the CPI Merger was
approximately $5.9 billion, including transaction costs and liabilities assumed,
in accordance with the purchase method of accounting. The value of the
consideration paid by SDG has been allocated to the estimated fair value of the
CPI assets acquired and liabilities assumed and resulted in goodwill of $41,021,
as adjusted. Goodwill is amortized over the estimated life of the properties of
35 years.
In connection with the CPI Merger, CPI was renamed "Simon Property Group,
Inc." CPI's paired-share affiliate, Corporate Realty Consultants, Inc., was
renamed "SPG Realty Consultants, Inc." In addition SDG and Simon DeBartolo
Group, LP ("SDG,LP") were renamed "SPG Properties, Inc." and "Simon Property
Group, L.P.", respectively.
Upon completion of the CPI Merger, SPG transferred substantially all of the
CPI assets acquired (other than one regional mall, Ocean County Mall, and
certain net leased properties valued at approximately $153,100) to the SPG
Operating Partnership or one or more subsidiaries of the SPG Operating
Partnership in exchange for 47,790,550 Units and 5,053,580 preferred Units in
the SPG Operating Partnership. The preferred Units carry the same rights and
equal the number of preferred shares issued and outstanding as a direct result
of the CPI Merger. Likewise, the net assets of SRC, with a carrying value of
approximately $14,755, were transferred to the SRC Operating Partnership in
exchange for Units.
51
<PAGE>
SDG, LP contributed $14,000 cash to CRC and $8,000 cash to the SRC
Operating Partnership on behalf of the SDG common stockholders and the limited
partners of SDG, LP to obtain the beneficial interests in common stock of CRC,
which were paired with the shares of common stock issued by SPG, and to obtain
Units in the SRC Operating Partnership so that the limited partners of the SPG
Operating Partnership would hold the same proportionate interest in the SRC
Operating Partnership that they hold in the SPG Operating Partnership. The cash
contributed to CRC and the SRC Operating Partnership on behalf of the partners
of SDG, LP was accounted for as a distribution to the partners.
5. Other Real Estate Acquisitions, Disposals and Developments
Acquisitions
During 1999, in addition to the NED Acquisition, the SPG Operating
Partnership acquired the remaining interests in four Properties and a
noncontrolling 27.5% ownership interest in the 2.8 million square-foot Mall of
America for a combined price of approximately $317,850, including the assumption
of $134,300 of mortgage indebtedness, 1,000,000 shares of 8% Redeemable
Preferred Stock in SPG issued at $24,242, and the remainder in cash, financed
primarily through the Credit Facility and working capital. The SPG Operating
Partnership is entitled to 50% of the economic benefits of Mall of America, due
to a preference.
On February 27, 1998, the SPG Operating Partnership acquired a
noncontrolling 50% joint venture interest in a portfolio of twelve regional
malls and two community centers (the "IBM Properties") comprising approximately
10.7 million square feet of GLA. The SPG Operating Partnership's $487,250 share
of the purchase price included the assumption of indebtedness of $242,500. The
SPG Operating Partnership also assumed leasing and management responsibilities
for six of the regional malls and one community center. The SPG Operating
Partnership funded its share of the cash portion of the purchase price using
borrowings from an interim $300,000 unsecured revolving credit facility, which
was subsequently retired using borrowings from the Credit Facility.
During 1998, in addition to the CPI Merger and the acquisition of the IBM
Properties, the SPG Operating Partnership acquired 100% of one Property, a 90%
interest in another Property and additional interests in a total of six
Properties for approximately $199,200, including the assumption of $62,100 of
indebtedness and 2,864,088 Units valued at approximately $93,500, with the
remainder in cash financed primarily through the Credit Facility and working
capital. These transactions resulted in the addition of approximately 1.1
million square feet of GLA to the portfolio.
During 1997, the SPG Operating Partnership completed its cash tender offer
for all of the outstanding shares of beneficial interests of The Retail Property
Trust ("RPT"), a private REIT and the acquisition of RPT's operating
partnership, Shopping Center Associates ("SCA"), which owned or had interests in
twelve regional malls and one community center (the "SCA Properties"). In a
series of subsequent transactions, the SPG Operating Partnership acquired the
remaining ownership interest in three of the SCA Properties and sold its
interest in four of the SCA Properties. The Property sales, which generated net
cash proceeds of $43,050, were accounted for as an adjustment to the allocation
of the purchase price. At the completion of these transactions (the "SCA
Acquisition"), the SPG Operating Partnership owns 100% of eight of the nine SCA
Properties, and a noncontrolling 50% ownership interest in the remaining
Property. The total cost for the SCA Acquisition of approximately $1.3 billion
included shares of common stock of SPG valued at approximately $50,000, Units in
the SPG Operating Partnership valued at approximately $25,300, the assumption of
$398,500 of consolidated indebtedness. The SPG Operating Partnership's pro rata
share of joint venture indebtedness of $76,750, with the remainder comprised
primarily of cash financed using the SPG Operating Partnership's Credit
Facility. On September 15, 1998, RPT transferred its ownership interest in SCA
to the SPG Operating Partnership in exchange for 27,195,109 Units in the SPG
Operating Partnership.
Also in 1997, the SPG Operating Partnership acquired ownership interests in
four regional malls and one community center for an aggregate purchase price of
approximately $322,000. The purchase price included Units in the SPG Operating
Partnership valued at $1,100, common stock of SPG valued at approximately
$20,000 and the assumption of $64,772 of mortgage indebtedness, with the
remainder paid in cash primarily using proceeds from the Credit Facility, sales
of equity securities and working capital.
Disposals
During 1999, 1998 and 1997, the SPG Operating Partnership sold ownership
interests in two parcels of land and two properties; five properties; and one
property, respectively, at a combined sale price of $46,750, $120,000 and
$1,100, respectively. These sales generated net consolidated gains (losses) of
($1,942), ($7,283) and $20 in 1999, 1998 and 1997, respectively. The SPG
Operating Partnership is continuing to pursue the sale of its remaining non-
retail holdings, along with a number of retail assets that are no longer aligned
with the SPG Operating Partnership's strategic criteria. If these assets are
sold, management expects the sale prices will not differ materially from the
carrying value of the related assets.
52
<PAGE>
Development Activity
Development of new retail assets is an ongoing part of the SPG Operating
Partnership's strategy. The SPG Operating Partnership's share of development
costs in 1999 was approximately $400,000. Six Properties opened in 1999
aggregating approximately 4.9 million square feet of GLA. During 1998, the SPG
Operating Partnership opened two new community center Properties at a cost of
approximately $102,000, with approximately 577,000 square feet of GLA, and the
SPG Operating Partnership opened four new Properties in 1997 at a cost of
approximately $230,000 with approximately 3,600,000 square feet of GLA.
Construction also continues on two other new projects at an aggregate
construction cost of approximately $340,000, of which approximately $140,000 is
the SPG Operating Partnership's share. These developments are funded primarily
with borrowings from the Credit Facility, construction loans and working
capital.
In addition, the SPG Operating Partnership strives to increase
profitability and market share of the existing Properties through the completion
of strategic renovations and expansions. During 1999, 1998 and 1997, the SPG
Operating Partnership invested approximately $277,000, $337,000 and $229,000,
respectively on renovation and expansion of the Properties. These projects were
also funded primarily with borrowings from the Credit Facility, construction
loans and working capital.
Pro Forma
The following unaudited pro forma summary financial information excludes
any extraordinary items and reflects the consolidated results of operations of
the SPG Operating Partnership as if the CPI Merger had occurred on January 1,
1998, and was carried forward through December 31, 1998. Preparation of the pro
forma summary information was based upon assumptions deemed appropriate by
management. The pro forma summary information is not necessarily indicative of
the results which actually would have occurred if the CPI Merger had been
consummated on January 1, 1998, nor does it purport to represent the results of
operations for future periods.
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
------------
<S> <C>
Revenue $ 1,695,204
============
Net income (1) 273,088
============
Net income available to Unitholders 191,312
============
Basic net income per Unit (1) $ 0.85
============
Diluted net income per Unit $ 0.85
============
Basic weighted average number of Units 224,041,500
============
Diluted weighted average number of Units 224,398,649
============
</TABLE>
(1) Includes net gains on the sales of assets of $37,973, or $0.17 on a basic
earnings per Unit basis.
6. Summary of Significant Accounting Policies
Investment Properties
Investment Properties are recorded at cost (predecessor cost for Properties
acquired from certain of the SPG Operating Partnership's unitholders).
Investment Properties for financial reporting purposes are reviewed for
impairment on a Property-by-Property basis whenever events or changes in
circumstances indicate that the carrying value of investment Properties may not
be recoverable. Impairment of investment Properties is recognized when estimated
undiscounted operating income is less than the carrying value of the Property.
To the extent an impairment has occurred, the excess of carrying value of the
Property over its estimated fair value is charged to income.
Investment Properties include costs of acquisitions, development and
predevelopment, construction, tenant allowances and improvements, interest and
real estate taxes incurred during construction, certain capitalized improvements
and replacements, and certain allocated overhead. Depreciation on buildings and
improvements is provided utilizing the straight-line method over an estimated
original useful life, which is generally 35 years or the term of the applicable
tenant's lease in the case of tenant inducements. Depreciation on tenant
allowances and improvements is provided utilizing the straight-line method over
the term of the related lease.
53
<PAGE>
Certain improvements and replacements are capitalized when they extend the
useful life, increase capacity, or improve the efficiency of the asset. All
other repair and maintenance items are expensed as incurred.
Capitalized Interest
Interest is capitalized on projects during periods of construction.
Interest capitalized during 1999, 1998 and 1997 was $19,641, $10,567 and
$11,589, respectively.
Segment Disclosure
The SPG Operating Partnership's interests in its regional malls, community
centers and other assets represents one segment as they have similar economic
and environmental conditions, business processes, types of customers (i.e.
tenants) and services provided, and because resource allocation and other
operating decisions are based on an evaluation of the entire portfolio.
Long-term Investment
Investments in securities classified as available for sale are reflected in
other investment in the balance sheets at market value with the changes in
market value reflected as comprehensive income in partners' equity.
Deferred Costs
Deferred costs consist primarily of financing fees incurred to obtain long-
term financing, costs of interest rate protection agreements, and internal and
external leasing commissions and related costs. Deferred financing costs,
including interest rate protection agreements, are amortized on a straight-line
basis over the terms of the respective loans or agreements. Deferred leasing
costs are amortized on a straight-line basis over the terms of the related
leases. Deferred costs of $137,133 and $127,022 are net of accumulated
amortization of $121,468 and $115,283 in 1999 and 1998, respectively.
Interest expense in the accompanying Consolidated Statements of Operations
includes amortization of deferred financing costs of $17,535, $11,835, and
$8,338, for 1999, 1998 and 1997, respectively, and has been reduced by
amortization of debt premiums and discounts of $5,707, $1,465 and $699 for 1999,
1998 and 1997, respectively.
Revenue Recognition
The SPG Operating Partnership, as a lessor, has retained substantially all
of the risks and benefits of ownership of the investment Properties and accounts
for its leases as operating leases. Minimum rents are accrued on a straight-line
basis over the terms of their respective leases. Certain tenants are also
required to pay overage rents based on sales over a stated base amount during
the lease year. Through December 31, 1999, overage rents were recognized as
revenues based on reported and estimated sales for each tenant through December
31, less the applicable prorated base sales amount. Differences between
estimated and actual amounts are recognized in the subsequent year. As described
in Note 15, the SPG Operating Partnership's accounting for overage rent will be
modified effective January 1, 2000.
Reimbursements from tenants for real estate taxes and other recoverable
operating expenses are recognized as revenue in the period the applicable
expenditures are incurred.
54
<PAGE>
Allowance for Credit Losses
A provision for credit losses is recorded based on management's judgment of
tenant creditworthiness. The activity in the allowance for credit losses during
1999, 1998 and 1997 was as follows:
Balance at Provision Accounts Balance
Beginning for Credit Written at End of
Year Ended of Year Losses Off Year
---------- ----------- -------- ----------
December 31, l999 $14,476 $8,367 $(8,355) $14,488
========== =========== ======== ==========
December 31, l998 $13,804 $6,599 $(5,927) $14,476
========== =========== ======== ==========
December 31, l997 $ 7,918 $5,992 $ (106) $13,804
========== =========== ======== ==========
Income Taxes
As a partnership, the allocated share of income or loss for each year is
included in the income tax returns of the partners, accordingly, no accounting
for income taxes is required in the accompanying consolidated financial
statements. State and local taxes are not material.
The unaudited taxable income of the SPG Operating Partnership for the year
ended December 31, 1999, is estimated to be $483,500 and was $307,406 and
$172,943 for the years ended 1998 and 1997, respectively. Reconciling
differences between book income and tax income primarily result from timing
differences consisting of (i) depreciation expense, (ii) prepaid rental income
and (iii) straight-line rent. Furthermore, the SPG Operating Partnership's share
of income or loss from the affiliated Management Company is excluded from the
tax return of the SPG Operating Partnership.
Per Unit Data
In accordance with SFAS No. 128 Earnings Per Share, basic earnings per Unit
is based on the weighted average number of Units outstanding during the period
and diluted earnings per Unit is based on the weighted average number of Units
outstanding combined with the incremental weighted average Units that would have
been outstanding if all dilutive potential Units would have been converted into
Units at the earliest date possible. The weighted average number of Units used
in the computation for 1999, 1998 and 1997 was 232,569,029; 189,082,385; and
161,022,887, respectively. The diluted weighted average number of Units used in
the computation for 1999, 1998 and 1997 was 232,706,031; 189,439,534; and
161,406,951, respectively.
Preferred Units issued and outstanding during the comparative periods did
not have a dilutive effect on earnings per Unit. Paired Units held by limited
partners in the Operating Partnerships may be exchanged for Paired Shares, on a
one-for-one basis in certain circumstances. If exchanged, the Paired Units would
not have a dilutive effect. The increase in weighted average Units outstanding
under the diluted method over the basic method in every period presented for the
SPG Operating Partnership is due entirely to the effect of outstanding stock
options. Basic earnings and diluted earnings were the same for all periods
presented.
The SPG Operating Partnership accrues distributions when they are declared.
The SPG Operating Partnership declared distributions in 1999 and 1998
aggregating $2.02 per Unit, of which $1.07 and $0.97 represented a return of
capital measured using generally accepted accounting principles, respectively.
On a federal income tax basis, 10% of the SPG Operating Partnership's 1999
distributions represented a capital gain and 38% represented a return of
capital. In 1998, 1% of the SPG Operating Partnership's 1998 distributions
represented a capital gain and 48% represented a return of capital.
Statements of Cash Flows
For purposes of the Statements of Cash Flows, all highly liquid investments
purchased with an original maturity of 90 days or less are considered cash and
cash equivalents. Cash equivalents are carried at cost, which approximates
market value. Cash equivalents generally consist of commercial paper, bankers
acceptances, Eurodollars, repurchase agreements and Dutch auction securities.
Cash paid for interest, net of any amounts capitalized, during 1999, 1998
and 1997 was $566,156, $397,545 and $270,912, respectively.
55
<PAGE>
Noncash Transactions
Accrued and unpaid distributions were $876 and $3,428 at December 31, 1999
and 1998, respectively. Please refer to Notes 3, 4, 5 and 11 for additional
discussion of noncash transactions.
Reclassifications
Certain reclassifications have been made to the prior year financial
statements to conform to the current year presentation. These reclassifications
have no impact on net operating results previously reported.
7. Investment Properties
Investment properties consist of the following:
December 31,
---------------------------
1999 1998
----------- -----------
Land $ 2,109,096 $ 2,066,461
Buildings and improvements 10,456,974 9,537,310
----------- -----------
Total land, buildings and improvements 12,566,070 11,603,771
Furniture, fixtures and equipment 74,076 59,089
----------- -----------
Investment properties at cost 12,640,146 11,662,860
Less--accumulated depreciation 1,093,103 709,114
----------- -----------
Investment properties at cost, net $11,547,043 $10,953,746
=========== ===========
Investment properties includes $201,032 and $184,799 of construction in
progress at December 31, 1999 and 1998, respectively.
8. Investments in Unconsolidated Entities
Joint Venture Properties
From January 1, 1997 through December 31, 1999, the number of Properties
the SPG Operating Partnership accounted for using the equity method of
accounting has increased from 30 to 69. Please refer to Notes 3, 4 and 5.
56
<PAGE>
Summary financial information of the Joint Venture Properties and a summary
of the SPG Operating Partnership's investment in and share of income from such
Properties follows.
<TABLE>
<CAPTION>
December 31,
-------------------------
BALANCE SHEETS 1999 1998
---------- ----------
<S> <C> <C>
Assets:
Investment properties at cost, net $6,471,992 $4,265,022
Cash and cash equivalents 169,763 171,553
Tenant receivables 160,431 140,579
Other assets 165,303 126,112
---------- ----------
Total assets $6,967,489 $4,703,266
========== ==========
Liabilities and Partners' Equity:
Mortgages and other notes payable $4,484,598 $2,861,589
Accounts payable, accrued expenses
and other liabilities 291,213 223,631
---------- ----------
Total liabilities 4,775,811 3,085,220
Partners' equity 2,191,678 1,618,046
---------- ----------
Total liabilities and partners' equity $6,967,489 $4,703,266
========== ==========
The SPG Operating Partnership's Share of:
Total assets $2,834,236 $1,905,459
========== ==========
Partners' equity $ 887,219 $ 565,496
Add: Excess Investment 592,457 708,616
---------- ----------
The SPG Operating Partnership's net Investment
in Joint Ventures $1,479,676 $1,274,112
========== ==========
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------
STATEMENTS OF OPERATIONS 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Minimum rent $570,902 $442,530 $256,100
Overage rent 25,957 18,465 10,510
Tenant reimbursements 276,223 204,936 120,380
Other income 45,140 30,564 19,364
-------- -------- --------
Total revenue 918,222 696,495 406,354
Operating Expenses:
Operating expenses and other 324,061 245,927 144,256
Depreciation and amortization 170,339 129,681 85,423
-------- -------- --------
Total operating expenses 494,400 375,608 229,679
-------- -------- --------
Operating Income 423,822 320,887 176,675
Interest Expense 235,179 176,669 96,675
Extraordinary Items - Debt Extinguishments (66) (11,058) (1,925)
-------- -------- --------
Net Income $188,577 $133,160 $ 78,075
======== ======== ========
Third-Party Investors' Share of Net Income 116,399 88,242 55,507
-------- -------- --------
The SPG Operating Partnership's Share of Net Income $ 72,178 $ 44,918 $ 22,568
Amortization of Excess Investment 27,252 22,625 13,878
-------- -------- --------
Income from Unconsolidated Entities $ 44,926 $ 22,293 $ 8,690
======== ======== ========
</TABLE>
As of December 31, 1999 and 1998, the unamortized excess of the SPG
Operating Partnership's investment over its share of the equity in the
underlying net assets of the partnerships and joint ventures acquired ("Excess
Investment") was $592,457 and $708,616, respectively, which is amortized over
the life of the related Properties. Amortization included in income from
unconsolidated entities for the years ended December 31, 1999, 1998 and 1997 was
$27,252, $22,625 and $13,878, respectively. Included in the 1999 amortization is
a $5,000 writedown on a joint venture investment.
57
<PAGE>
The Management Company
The SPG Operating Partnership holds 80% of the outstanding common stock, 5%
of the outstanding voting common stock, and all of the 8% cumulative preferred
stock of the Management Company. The remaining 20% of the outstanding common
stock of the Management Company (representing 95% of the voting common stock) is
owned directly by Melvin Simon, Herbert Simon and David Simon. Because the SPG
Operating Partnership exercises significant influence over the financial and
operating policies of the Management Company, it is reflected in the
accompanying statements using the equity method of accounting. The Management
Company, including its consolidated subsidiaries, provides management, leasing,
development, project management, accounting, legal, marketing and management
information systems services and property damage and general liability insurance
coverage to certain Portfolio Properties. The SPG Operating Partnership incurred
costs of $75,697, $58,748 and $45,509 on consolidated Properties, related to
services provided by the Management Company and its affiliates in 1999, 1998 and
1997, respectively. The Management Company also provides certain of such
services to Melvin Simon & Associates, Inc. ("MSA"), and certain other nonowned
properties for a fee. Fees for services provided by the Management Company to
MSA were $3,853, $3,301 and $3,073 for the years ended December 31, 1999, 1998
and 1997, respectively.
The SPG Operating Partnership manages substantially all wholly-owned
Properties and 40 Properties owned as joint venture interests, and, accordingly,
it reimburses a subsidiary of the Management Company for costs incurred relating
to the management of such Properties. Substantially all employees of the SPG
Operating Partnership (other than direct field personnel) are employed by such
Management Company subsidiary. The Management Company records costs net of
amounts reimbursed by the SPG Operating Partnership. Common costs are allocated
using assumptions that management believes are reasonable. The SPG Operating
Partnership's share of allocated common costs was $54,759, $42,457 and $35,341
for 1999, 1998 and 1997, respectively. As of December 31, 1999 and 1998, amounts
due from the Management Company for unpaid interest receivable and unpaid
accrued preferred dividends were not material to the consolidated financial
statements. Amounts due to the Management Company under cost-sharing
arrangements and management contracts are included in notes and advances
receivable from Management Company and affiliates.
Included in operating income of the Management Company for 1999 is a $7,290
loss resulting from interests in two parcels of land held for sale by the
Management Company, which were written down to their respective estimated fair
market values.
Summarized consolidated financial information of the Management Company and
a summary of the SPG Operating Partnership's investment in and share of income
from the Management Company follows.
December 31,
-----------------------------
BALANCE SHEET DATA: 1999 1998
-------- --------
Total assets $184,501 $198,952
Notes payable to the SPG Operating
Partnership at 11%, due 2008, and advances 162,082 115,378
Shareholders' equity 21,740 7,279
The SPG Operating Partnership's Share of:
Total assets $172,935 $184,273
======== ========
Shareholders' equity $ 23,889 $ 10,037
======== ========
For the Year Ended December 31,
--------------------------------------
OPERATING DATA: 1999 1998 1997
-------- -------- --------
Total revenue $115,761 $100,349 $85,542
Operating Income 5,573 8,067 13,766
Net Income Available for
Common Shareholders $ 4,173 $ 6,667 $12,366
======== ======== ========
The SPG Operating Partnership's
Share of Net Income after
intercompany profit elimination $ 4,715 $ 5,852 $10,486
======== ======== ========
58
<PAGE>
European Investment
The SPG Operating Partnership and the Management Company have a 25%
ownership interest in European Retail Enterprises, B.V. ("ERE") and Groupe BEG,
S.A. ("BEG"), respectively, which are accounted for using the equity method of
accounting. BEG and ERE are fully integrated European retail real estate
developers, lessors and managers. The SPG Operating Partnership and the
Management Company's total combined investment in ERE and BEG at December 31,
1999 was approximately $41,000, with commitments for an additional $22,000,
subject to certain performance and other criteria, including the SPG Operating
Partnership's approval of development projects. The agreements with BEG and ERE
are structured to allow the SPG Operating Partnership to acquire an additional
25% ownership interest over time. As of December 31, 1999, BEG and ERE had three
properties open in Poland and two in France.
The financial statements of the SPG Operating Partnership's European
operations are measured utilizing the Euro and translated into U.S. dollars in
accordance with SFAS No. 52, Foreign Currency Translation. Accordingly, results
of operations are translated at the weighted average exchange rate for the
period. The translation adjustment resulting from the conversion of BEG and
ERE's balance sheets were not significant for the years ended December 31, 1999
and 1998.
9. Indebtedness
The SPG Operating Partnership's consolidated mortgages and other notes
payable consist of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
Fixed-Rate Debt
- ---------------
Mortgages and other notes, including $28 and $1,917 net premiums, respectively.
Weighted average interest and maturity of 7.4% and 6.1 years. $2,304,325 $2,290,902
Unsecured notes, including ($275) and $7,992 net (discounts) premiums, respectively.
Weighted average interest and maturity of 7.2% and 7.1 years. 3,489,725 2,896,563
6 3/4% Putable Asset Trust Securities, including $913 and $1,111 premiums,
respectively, due November 2003. 100,913 101,111
7% Mandatory Par Put Remarketed Securities, including $5,214 and $5,273 premiums,
respectively, due June 2028 and subject to redemption June 2008. 205,214 205,273
Commercial mortgage pass-through certificates. Five classes bearing interest at
weighted average rates and maturities of 7.3% and 8.0 years. 175,000 175,000
---------- ----------
Total fixed-rate debt 6,275,177 5,668,849
Variable-Rate Debt
- ------------------
Mortgages and other notes, including $884 and $1,275 premiums, respectively. Weighted
average interest and maturity of 7.0% and 3.1 years. $ 558,664 $ 352,532
Credit Facility (see below) 785,000 368,000
Merger Facility (see below) 950,000 1,400,000
Commercial mortgage pass-through certificates, interest at 6.2%, due December 2007. 50,000 50,000
Unsecured term loans, interest at 6.6%, due February 2002. 150,000 133,000
---------- ----------
Total variable-rate debt 2,493,664 2,303,532
---------- ----------
Total mortgages and other notes payable, net $8,768,841 $7,972,381
========== ==========
</TABLE>
General. Certain of the Properties are cross-defaulted and cross-
collateralized as part of a group of properties. Under certain of the cross-
default provisions, a default under any mortgage included in the cross-defaulted
package may constitute a default under all such mortgages and may lead to
acceleration of the indebtedness due on each Property within the collateral
package. Certain indebtedness is subject to financial performance covenants
relating to leverage ratios, annual real property appraisal requirements, debt
service coverage ratios, minimum net worth ratios, debt-to-market
capitalization, and minimum equity values. Debt premiums and discounts are
amortized over the terms of the related debt instruments. Certain mortgages and
notes payable may be prepaid but are generally subject to a prepayment of a
yield-maintenance premium.
59
<PAGE>
Mortgages and Other Notes. Certain of the Properties are pledged as
collateral to secure the related mortgage notes. The fixed and variable mortgage
notes are nonrecourse; however certain notes have partial guarantees by
affiliates of approximately $643,667. The fixed-rate mortgages generally require
monthly payments of principal and/or interest. Variable-rate mortgages are
typically based on LIBOR.
Unsecured Notes. Certain of the SPG Operating Partnership's unsecured notes
totaling $825,000 with weighted average interests and maturities of 8.0% and 8.1
years, respectively, are structurally senior in right of payment to holders of
other SPG Operating Partnership unsecured notes to the extent of the assets and
related cash flows of certain Properties. Certain of the unsecured notes are
guaranteed by the SPG Operating Partnership.
On February 4, 1999, the SPG Operating Partnership completed the sale of
$600,000 of senior unsecured notes. These notes include two $300,000 tranches.
The first tranche bears interest at 6.75% and matures on February 4, 2004 and
the second tranche bears interest at 7.125% and matures on February 4, 2009. The
SPG Operating Partnership used the net proceeds of approximately $594,000 to
retire the $450,000 initial tranche of the Merger Facility (see below) and to
pay $142,000 on the outstanding balance of the Credit Facility (see below).
Credit Facility. The Credit Facility is a $1,250,000 unsecured revolving
credit facility. During 1999, the SPG Operating Partnership obtained a three-
year extension on the Credit Facility to August of 2002, with an additional one-
year extension available at the SPG Operating Partnership's option. The Credit
Facility bears interest at LIBOR plus 65 basis points, with an additional 15
basis point facility fee on the entire $1,250,000. The maximum and average
amounts outstanding during 1999 under the Credit Facility were $785,000 and
$487,255, respectively. The Credit Facility is primarily used for funding
acquisition, renovation and expansion and predevelopment opportunities. At
December 31, 1999, the Credit Facility had an effective interest rate of 6.47%,
with $460,519 available after outstanding borrowings and letters of credit. The
Credit Facility contains financial covenants relating to a capitalization value,
minimum EBITDA and unencumbered EBITDA ratios and minimum equity values.
The Merger Facility. In conjunction with the CPI Merger, the SPG Operating
Partnership and SPG, as co-borrowers, closed a $1,400,000 medium term unsecured
bridge loan (the "Merger Facility"). The Merger Facility bears interest at a
base rate of LIBOR plus 65 basis points and $450,000 of the remaining balance
will mature on March 24, 2000, with the remaining $500,000 due on September 24,
2000. The Merger Facility is subject to covenants and conditions substantially
identical to those of the Credit Facility. Financing costs of $9,707, which were
incurred to obtain the Merger Facility, are amortized over 18 months.
Debt Maturity and Other
As of December 31, 1999, scheduled principal repayments on indebtedness
were as follows:
2000 $1,161,653
2001 268,436
2002 1,563,601
2003 1,135,047
2004 1,083,039
Thereafter 3,550,301
----------
Total principal maturities 8,762,077
Net unamortized debt premiums 6,764
----------
Total mortgages and other notes payable $8,768,841
==========
The Joint Venture Properties have $4,484,598 and $2,861,589 of mortgages
and other notes payable at December 31, 1999 and 1998, respectively. The SPG
Operating Partnership's share of this debt was $1,876,158 and $1,227,044 at
December 31, 1999 and 1998, respectively. This debt, including premiums of
$22,521 in 1999, becomes due in installments over various terms extending
through 2010, with interest rates ranging from 6.26% to 9.98% (weighted average
rate of 7.37% at December 31, 1999). The debt, excluding the $22,521 of
premiums, matures $502,705 in 2000; $226,374 in 2001; $268,646 in 2002; $844,459
in 2003; $406,161 in 2004 and $2,213,732 thereafter.
Interest Rate Protection Agreements
The SPG Operating Partnership has entered into interest rate protection
agreements, in the form of "cap" or "swap" arrangements, with respect to certain
of its variable-rate mortgages and other notes payable. Swap arrangements, which
60
<PAGE>
effectively fix the SPG Operating Partnership's interest rate on the respective
borrowings, have been entered into for $248,000 principal amount of consolidated
debt. Cap arrangements, which effectively limit the amount by which variable
interest rates may rise, have been entered into for $190,000 principal amount of
consolidated debt and cap LIBOR at rates ranging from 8.7% to 16.77% through the
related debt's maturity. Costs of the caps ($1,338) are amortized over the life
of the agreements. The unamortized balance of the cap arrangements was $187 and
$429 as of December 31, 1999 and 1998, respectively. The SPG Operating
Partnership's hedging activity as a result of interest swaps and caps resulted
in net interest (expense) savings of ($1,880), $263 and $1,586 for the years
ended December 31, 1999, 1998 and 1997, respectively. This did not materially
impact the SPG Operating Partnership's weighted average borrowing rate.
Fair Value of Financial Instruments
The carrying value of variable-rate mortgages and other loans represents
their fair values. The fair value of consolidated fixed-rate mortgages and other
notes payable, was approximately $5,649,467 and $6,100,000 at December 31, 1999
and 1998, respectively. The fair value of the consolidated interest rate
protection agreements at December 31, 1999 and 1998, was $6,600 and ($7,213),
respectively. At December 31, 1999 and 1998, the estimated discount rates were
8.06% and 6.70%, respectively.
10. Rentals under Operating Leases
The SPG Operating Partnership receives rental income from the leasing of
retail and mixed-use space under operating leases. Future minimum rentals to be
received under noncancelable operating leases for each of the next five years
and thereafter, excluding tenant reimbursements of operating expenses and
percentage rent based on tenant sales volume, as of December 31, 1999, are as
follows:
2000 $ 950,438
2001 890,852
2002 831,762
2003 753,945
2004 658,211
Thereafter 2,407,943
----------
$6,493,151
==========
Approximately 1.8% of future minimum rents to be received are attributable
to leases with an affiliate of a limited partner in the SPG Operating
Partnership.
11. Partners' Equity
Unit Issuances
As described in Note 3, as part of the consideration paid for the NED
Acquisition, the SPG Operating Partnership issued 1,269,446 Paired Units valued
at approximately $36,400; 2,584,227 7% Convertible Preferred Units in the SPG
Operating Partnership valued at approximately $72,800; and 2,584,227 8%
Redeemable Preferred Units in the SPG Operating Partnership valued at
approximately $78,000. In addition, as part of the NED Acquisition, the SPG
Operating Partnership issued 3,617,070 Paired Units to SPG in exchange for a
note receivable, which is recorded as a reduction of partners' equity.
During 1998, SPG issued 2,957,335 shares of its common stock in offerings
generating combined net proceeds of approximately $91,399. The net proceeds were
contributed to the SPG Operating Partnership in exchange for a like number of
Units. The SPG Operating Partnership used the net proceeds for general working
capital purposes.
On November 11, 1997, the SPG Operating Partnership issued 3,809,523 Units
upon the conversion of 4,000,000 8.125% Series A Preferred Units.
On September 19, 1997, SPG issued 4,500,000 shares of its common stock in a
public offering. SPG contributed the net proceeds of approximately $146,800 to
the SPG Operating Partnership in exchange for an equal number of Units. The SPG
Operating Partnership used the net proceeds to retire a portion of the
outstanding balance on the Credit Facility.
61
<PAGE>
Preferred Units
The following table summarizes each of the series of preferred Units of the
SPG Operating Partnership:
<TABLE>
<CAPTION>
As of December 31,
-------------------------------
1999 1998
----------- ----------
<S> <C> <C>
Series A 6.5% Convertible Preferred Units, 209,249 units authorized,
53,271 and 209,249 issued and outstanding, respectively $ 68,073 $ 267,393
Series B 6.5% Convertible Preferred Units, 5,000,000 units authorized,
4,844,331 issued and outstanding 450,523 450,523
Series B 8.75% Cumulative Redeemable Preferred Units, 8,000,000 units
authorized, issued and outstanding 192,989 192,989
Series C 7.89% Cumulative Step-Up Premium Rate/SM/ Convertible Preferred
Units, 3,000,000 units authorized, issued and outstanding 146,608 146,340
Series C 7.00% Cumulative Convertible Preferred Units, 2,700,000 units
authorized and 2,584,227 and 0 issued and outstanding, respectively 72,358 --
Series D 8.00% Cumulative Redeemable Preferred Units, 2,700,000 units
authorized and 2,584,227 and 0 issued and outstanding, respectively 77,527 --
Series E 8.00% Cumulative Redeemable Preferred Units, 1,000,000 units 24,242 --
authorized, 1,000,000 and 0 issued and outstanding, respectively
---------- ----------
$1,032,320 $1,057,245
========== ==========
</TABLE>
Series A Convertible Preferred Units. During 1999, 155,978 Series A
Convertible Preferred Units were converted into 5,926,440 Paired Units. In
addition, another 153,890 Paired Units were issued to the holders of the
converted units in lieu of the cash dividends allocable to those preferred
units. Each of the Series A Convertible Preferred Units has a liquidation
preference of $1,000 and is convertible into 37.995 Paired Units, subject to
adjustment under certain circumstances. The Series A Convertible Preferred Units
are not redeemable, except as needed to maintain or bring the direct or indirect
ownership of the capital stock of SPG into conformity with REIT requirements.
Series B Convertible Preferred Units. Each of the Series B Convertible
Preferred Units has a liquidation preference of $100 and is convertible into
2.586 Paired Units, subject to adjustment under circumstances identical to those
of the Series A Preferred Units. SPG may redeem the Series B Preferred Units on
or after September 24, 2003 at a price beginning at 105% of the liquidation
preference plus accrued dividends and declining to 100% of the liquidation
preference plus accrued dividends any time on or after September 24, 2008.
Series B Cumulative Redeemable Preferred Units. SPG Properties, Inc. ("SPG
Properties"), a general partner of the SPG Operating Partnership, has
outstanding 8,000,000 shares of 8.75% Series B Cumulative Redeemable Preferred
Stock, which it may redeem any time on or after September 29, 2006, at a
liquidation value of $25.00 per share, plus accrued and unpaid dividends. The
liquidation value (other than the portion thereof consisting of accrued and
unpaid dividends) is payable solely out of the sale proceeds of other capital
shares of SPG Properties, which may include other series of preferred shares.
SPG Properties holds preferred units in the SPG Operating Partnership with
economic terms substantially identical to those of the Series B Preferred Stock.
Series C Cumulative Step-Up Premium Rate/SM/ Preferred Units. SPG
Properties, Inc. also has outstanding 3,000,000 shares of its 7.89% Series C
Cumulative Step-Up Premium Rate/SM/ Preferred Stock (the "Series C Preferred
Shares") with a liquidation value of $50.00 per share. Beginning October 1,
2012, the rate increases to 9.89% per annum. Management intends to redeem the
Series C Preferred Shares prior to October 1, 2012. Beginning September 30,
2007, SPG Properties, Inc. may redeem the Series C Preferred Shares in whole or
in part, using only the sale proceeds of other capital stock of SPG Properties,
Inc., at a liquidation value of $50.00 per share, plus accrued and unpaid
distributions, if any, thereon. Additionally, the Series C Preferred Shares have
no stated maturity and are not subject to any mandatory redemption provisions,
nor are they convertible into any other securities of SPG Properties, Inc. SPG
Properties holds preferred units in the SPG Operating Partnership with economic
terms substantially identical to those of the Series B Preferred Stock.
Series C and D Preferred Units. In connection with the NED Acquisition, the
SPG Operating Partnership issued two new series of preferred Units during 1999
as a component of the consideration for the Properties acquired. The SPG
Operating Partnership authorized 2,700,000, and issued 2,584,227, 7.00%
Cumulative Convertible Preferred Units (the "7.00% Preferred Units") having a
liquidation value of $28.00 per Unit. The 7.00% Preferred Units accrue
cumulative dividends at a rate of
62
<PAGE>
$1.96 annually, which is payable quarterly in arrears. The 7.00% Preferred Units
are convertible at the holders' option on or after August 27, 2004, into either
a like number of shares of 7.00% Cumulative Convertible Preferred Stock of SPG
with terms substantially identical to the 7.00% Preferred Units or Paired Units
at a ratio of 0.75676 to one provided that the closing stock price of SPG's
Paired Shares exceeds $37.00 for any three consecutive trading days prior to the
conversion date. The SPG Operating Partnership may redeem the 7.00% Preferred
Units at their liquidation value plus accrued and unpaid distributions on or
after August 27, 2009, payable in Paired Units. In the event of the death of a
holder of the 7.00% Preferred Units, or the occurrence of certain tax triggering
events applicable to a holder, the SPG Operating Partnership may be required to
redeem the 7.00% Preferred Units at liquidation value payable at the option of
the SPG Operating Partnership in either cash (the payment of which may be made
in four equal annual installments) or Paired Shares.
The SPG Operating Partnership also authorized 2,700,000, and issued
2,584,227, 8.00% Cumulative Redeemable Preferred Units (the "8.00% Preferred
Units") having a liquidation value of $30.00. The 8.00% Preferred Units accrue
cumulative dividends at a rate of $2.40 annually, which is payable quarterly in
arrears. The 8.00% Preferred Units are each paired with one 7.00% Preferred Unit
or with the Paired Units into which the 7.00% Preferred Units may be converted.
The SPG Operating Partnership may redeem the 8.00% Preferred Units at their
liquidation value plus accrued and unpaid distributions on or after August 27,
2009, payable in either new preferred units of the SPG Operating Partnership
having the same terms as the 8.00% Preferred Units, except that the distribution
coupon rate would be reset to a then determined market rate, or in Paired Units.
The 8.00% Preferred Units are convertible at the holders' option on or after
August 27, 2004, into 8.00% Cumulative Redeemable Preferred Stock of SPG with
terms substantially identical to the 8.00% Preferred Units. In the event of the
death of a holder of the 8.00% Preferred Units, or the occurrence of certain tax
triggering events applicable to a holder, the SPG Operating Partnership may be
required to redeem the 8.00% Preferred Units owned by such holder at their
liquidation value payable at the option of the SPG Operating Partnership in
either cash (the payment of which may be made in four equal annual installments)
or Paired Shares.
Series E Cumulative Redeemable Preferred Units. As part of the
consideration for the purchase of ownership in Mall of America, SPG issued
1,000,000 shares of Series E Cumulative Redeemable Preferred Stock for $24,242.
The Series E Cumulative Redeemable Preferred Stock is redeemable beginning
August 27, 2004 at the liquidation value of $25 per share. SPG contributed the
interest in Mall of America to the SPG Operating Partnership in exchange for
cash and the preferred units with economic terms identical to the Series E
Preferred Stock.
Notes Receivable from Former CPI Shareholders
Notes receivable of $27,168 from former CPI shareholders, which result from
securities issued under CPI's executive compensation program and were assumed in
the CPI Merger, are reflected as a deduction from partners' equity in the
accompanying consolidated financial statements. Certain of such notes totaling
$9,519 bear interest at rates ranging from 5.31% to 6.00% and become due during
the period 2000 to 2002. The remainder of the notes do not bear interest and
become due at the time the underlying shares are sold.
The Simon Property Group 1998 Stock Incentive Plan
The SPG Operating Partnership and SPG have a stock incentive plan (the
"1998 Plan"), which provides for the grant of equity-based awards during a ten-
year period, in the form of options to purchase Paired Shares ("Options"), stock
appreciation rights ("SARs"), restricted stock grants and performance unit
awards (collectively, "Awards"). Options may be granted which are qualified as
"incentive stock options" within the meaning of Section 422 of the Code and
Options which are not so qualified. The Companies have reserved for issuance
6,300,000 Paired Shares under the 1998 Plan. Additionally, the partnership
agreements require the Companies to sell Paired Shares to the Operating
Partnerships, at fair value, sufficient to satisfy the exercising of stock
options, and for the Companies to purchase Paired Units for cash in an amount
equal to the fair market value of such Paired Shares.
Administration. The 1998 Plan is administered by SPG's Compensation
Committee (the "Committee"). The Committee, in its sole discretion, determines
which eligible individuals may participate and the type, extent and terms of the
Awards to be granted to them. In addition, the Committee interprets the 1998
Plan and makes all other determinations deemed advisable for the administration
of the 1998 Plan. Options granted to employees ("Employee Options") become
exercisable over the period determined by the Committee. The exercise price of
an Employee Option may not be less than the fair market value of the Paired
Shares on the date of grant. Employee Options generally vest over a three-year
period and expire ten years from the date of grant.
Director Options. The 1998 Plan provides for automatic grants of Options to
directors ("Director Options") of SPG who are not also employees of the SPG
Operating Partnership or its "affiliates" ("Eligible Directors"). Under the 1998
Plan, each Eligible Director is automatically granted Director Options to
purchase 5,000 Paired Shares upon the director's initial
63
<PAGE>
election to the Board of Directors, and upon each reelection, an additional
3,000 Director Options multiplied by the number of calendar years that have
elapsed since such person's last election to the Board of Directors. The
exercise price of the options is equal to the fair market value of the Paired
Shares on the date of grant. Director Options become vested and exercisable on
the first anniversary of the date of grant or at such earlier time as a "change
in control" of SPG (as defined in the 1998 Plan). Director Options terminate 30
days after the optionee ceases to be a member of the Board of Directors.
Restricted Stock. The 1998 Plan also provides for shares of restricted
common stock of the Companies to be granted to certain employees at no cost to
those employees, subject to growth targets established by the Committee (the
"Restricted Stock Program"). Restricted stock vests annually in four
installments of 25% each beginning on January 1 following the year in which the
restricted stock is awarded. During 1999, 1998 and 1997, a total of 537,861;
495,131 and 448,753 Paired Shares, respectively, net of forfeitures, were
awarded under the Restricted Stock Program and predecessor programs. Through
December 31, 1999 a total of 1,825,086 Paired Shares, net of forfeitures, were
awarded. Approximately $10,601, $9,463 and $5,386 relating to these awards were
amortized in 1999, 1998 and 1997, respectively. The cost of restricted stock
grants, which is based upon the stock's fair market value at the time such stock
is earned, awarded and issued, is charged to partners' equity and subsequently
amortized against earnings of the SPG Operating Partnership over the vesting
period.
The SPG Operating Partnership accounts for stock-based compensation
programs using the intrinsic value method, which measures compensation expense
as the excess, if any, of the quoted market price of the stock at the grant date
over the amount the employee must pay to acquire the stock. During 1999, the SPG
Operating Partnership awarded 159,000 additional options to directors and
employees. Director Options vest over a twelve-month period, while 62,500 of the
Employee Options granted during 1999 vest over two years, and 37,500 vested
immediately. The impact on pro forma net income and earnings per share as a
result of applying the fair value method, as prescribed by SFAS No. 123,
Accounting for Stock-Based Compensation, which requires entities to measure
compensation costs measured at the grant date based on the fair value of the
award, was not material.
The fair value of the options at the date of grant was estimated using the
Black-Scholes option pricing model with the following assumptions:
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------
1999 1998 1997
----------------- ------------------- -----------------
<S> <C> <C> <C>
Weighted Average Fair Value per Option
$ 3.27 $ 7.24 $ 3.18
Expected Volatility 19.78 - 19.89% 30.83 - 41.79% 17.63%
Risk-Free Interest Rate 5.25 - 5.78% 4.64 - 5.68% 6.82%
Dividend Yield 5.32 - 6.43% 6.24 - 6.52% 6.9%
Expected Life 10 years 10 years 10 years
</TABLE>
The weighted average remaining contract life for options outstanding as of
December 31, 1999 was 6.0 years.
64
<PAGE>
Information relating to Director Options and Employee Options from December
31, 1996 through December 31, 1999 is as follows:
<TABLE>
<CAPTION>
Director Options Employee Options
--------------------------------------- -------------------------------------
Option Price Option Price
Options per Share (1) Options per Share (1)
------------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares under option at December 31, 1996 85,080 $24.49 1,622,983 $23.00
------------------ ---------------- ---------------- ----------------
Granted 9,000 29.31 -- N/A
Exercised (8,000) 23.62 (361,902) 23.29
Forfeited -- N/A (13,484) 23.99
------------------ ---------------- ---------------- ----------------
Shares under option at December 31, 1997 86,080 $24.12 1,247,597 $22.90
------------------ ---------------- ---------------- ----------------
Granted -- N/A 385,000 30.40
CPI Options Assumed -- N/A 304,209 25.48
Exercised (8,000) 26.27 (38,149) 23.71
Forfeited (3,000) 29.31 (4,750) 25.25
------------------ ---------------- ---------------- ----------------
Shares under option at December 31, 1998 75,080 $24.11 1,893,907 $24.82
================== ================ ================ ================
Granted 59,000 26.79 100,000 25.29
Exercised (5,000) 22.25 (77,988) 23.21
Forfeited -- N/A (58,253) 23.48
------------------ ---------------- ---------------- ----------------
Shares under option at December 31, 1999 129,080 $25.41 1,857,666 $24.95
================== ================ ================ ================
Options exercisable at December 31, 1999 108,080 $24.69 1,636,833 $24.46
================== ================ ================ ================
</TABLE>
(1) Represents the weighted average price when multiple prices exist.
Exchange Rights
Limited partners in the Operating Partnerships have the right to exchange
all or any portion of their Paired Units for Paired Shares on a one-for-one
basis or cash, as selected by the Board of Directors. The amount of cash to be
paid if the exchange right is exercised and the cash option is selected will be
based on the trading price of the Companies' common stock at that time. The
Companies have reserved 65,444,680 Paired Shares for possible issuance upon the
exchange of Paired Units.
12. Employee Benefit Plans
The SPG Operating Partnership maintains a tax-qualified retirement 401(k)
savings plan. Under the plan, eligible employees can participate in a cash or
deferred arrangement permitting them to defer up to a maximum of 12% of their
compensation, subject to certain limitations. Participants' salary deferrals are
matched at specified percentages, and the plan provides annual contributions of
1.5% of eligible employees' compensation. The SPG Operating Partnership
contributed $3,189, $2,581 and $2,727 to the plan in 1999, 1998 and 1997,
respectively.
Except for the 401(k) plan, the SPG Operating Partnership offers no other
postretirement or postemployment benefits to its employees.
13. Commitments and Contingencies
Litigation
Triple Five of Minnesota, Inc., a Minnesota corporation, v. Melvin Simon,
et. al. On or about November 9, 1999, Triple Five of Minnesota, Inc. ("Triple
Five") commenced an action in the District Court for the State of Minnesota,
Fourth Judicial District, against, among others, Mall of America, certain
members of the Simon family and entities allegedly controlled by such
individuals, and the SPG Operating Partnership. Two transactions form the basis
of the complaint: (i) the
65
<PAGE>
sale by Teachers Insurance and Annuity Association of America of one-half of its
partnership interest in Mall of America Company and Minntertainment Company to
the SPG Operating Partnership and related entities (the "Teachers Sale"); and
(ii) a financing transaction involving a loan in the amount of $312,000 obtained
from The Chase Manhattan Bank ("Chase") that is secured by a mortgage placed on
Mall of America's assets (the "Chase Mortgage").
The complaint, which contains twelve counts, seeks remedies of damages,
rescission, constructive trust, accounting, and specific performance. Although
the complaint names all defendants in several counts, the SPG Operating
Partnership is specifically identified as a defendant in connection with the
Teachers Sale.
The SPG Operating Partnership has agreed to indemnify Chase and other
nonparties to the litigation that are related to the offering of certificates
secured by the Chase Mortgage against, among other things, (i) any and all
litigation expenses arising as a result of litigation or threatened litigation
brought by Triple Five, or any of its owners or affiliates, against any person
regarding the Chase Mortgage, the Teachers Sale, any securitization of the Chase
Mortgage or any transaction related to the foregoing and (ii) any and all
damages, awards, penalties or expenses payable to or on behalf of Triple Five
(or payable to a third party as a result of such party's obligation to pay
Triple Five) arising out of such litigation. These indemnity obligations do not
extend to liabilities covered by title insurance.
The SPG Operating Partnership believes that the Triple Five litigation is
without merit and intends to defend the action vigorously. To that end, all
defendants have removed the action to federal court and have served a motion,
which is pending, to dismiss Triple Five's complaint in its entirety on the
grounds that the complaint fails to state a claim. The SPG Operating Partnership
believes that neither the Triple Five litigation nor any potential payments
under the indemnity, if any, will have a material adverse effect on the SPG
Operating Partnership. Given the early stage of the litigation it is not
possible to provide an assurance of the ultimate outcome of the litigation or an
estimate of the amount or range of potential loss, if any.
Carlo Angostinelli et al. v. DeBartolo Realty Corp. et al. On October 16,
1996, a complaint was filed in the Court of Common Pleas of Mahoning County,
Ohio, captioned Carlo Angostinelli et al. v. DeBartolo Realty Corp. et al. The
named defendants are SD Property Group, Inc., an indirect 99%-owned subsidiary
of SPG, and DeBartolo Properties Management, Inc., a subsidiary of the
Management Company, and the plaintiffs are 27 former employees of the
defendants. In the complaint, the plaintiffs alleged that they were recipients
of deferred stock grants under the DeBartolo Realty Corporation ("DRC") Stock
Incentive Plan (the "DRC Plan") and that these grants immediately vested under
the DRC Plan's "change in control" provision as a result of the DRC Merger.
Plaintiffs asserted that the defendants' refusal to issue them approximately
542,000 shares of DRC common stock, which is equivalent to approximately 370,000
Paired Shares computed at the 0.68 exchange ratio used in the DRC Merger,
constituted a breach of contract and a breach of the implied covenant of good
faith and fair dealing under Ohio law. Plaintiffs sought damages equal to such
number of shares of DRC common stock, or cash in lieu thereof, equal to all
deferred stock ever granted to them under the DRC Plan, dividends on such stock
from the time of the grants, compensatory damages for breach of the implied
covenant of good faith and fair dealing, and punitive damages. The plaintiffs
and the defendants each filed motions for summary judgment. On October 31, 1997,
the Court of Common Pleas entered a judgment in favor of the defendants granting
their motion for summary judgment. The plaintiffs appealed this judgment to the
Seventh District Court of Appeals in Ohio. On August 18, 1999, the District
Court of Appeals reversed the summary judgement order in favor of the defendants
entered by the Common Pleas Court and granted plaintiffs' cross motion for
summary judgement, remanding the matter to the Common Pleas Court for the
determination of plaintiffs' damages. The defendants petitioned the Ohio Supreme
Court asking that they exercise their discretion to review and reverse the
Appellate Court decision, but the Ohio Supreme court issued an order changing
jurisdiction. The case has been remanded to the Court of Common Pleas of
Mahoning County, Ohio, to calculate Plaintiffs' damages and rule upon
counterclaims asserted by the SPG Operating Partnership. As a result of the
appellate court's decision, the SPG Operating Partnership recorded a $12,000
loss in 1999 related to this litigation in the accompanying consolidated
statements of operations as an unusual item.
Roel Vento et al v. Tom Taylor et al. An affiliate of the SPG Operating
Partnership is a defendant in litigation entitled Roel Vento et al v. Tom Taylor
et al., in the District Court of Cameron County, Texas, in which a judgment in
the amount of $7,800 was entered against all defendants. This judgment includes
approximately $6,500 of punitive damages and is based upon a jury's findings on
four separate theories of liability including fraud, intentional infliction of
emotional distress, tortious interference with contract and civil conspiracy
arising out of the sale of a business operating under a temporary license
agreement at Valle Vista Mall in Harlingen, Texas. The SPG Operating Partnership
appealed the verdict and on May 6, 1999, the Thirteenth Judicial District
(Corpus Christi) of the Texas Court of Appeals issued an opinion reducing the
trial court verdict to $3,364 plus interest. The SPG Operating Partnership filed
a petition for a writ of certiorari to the Texas Supreme Court requesting that
they review and reverse the determination of the Appellate Court. The Texas
Supreme Court has not yet determined whether it will take the matter up on
appeal. Management, based upon the advice of counsel, believes that the ultimate
outcome of this action will not have a material adverse effect on the SPG
Operating Partnership.
66
<PAGE>
The SPG Operating Partnership currently is not subject to any other
material litigation other than routine litigation and administrative proceedings
arising in the ordinary course of business. On the basis of consultation with
counsel, management believes that such routine litigation and administrative
proceedings will not have a material adverse impact on the SPG Operating
Partnership's financial position or its results of operations.
Lease Commitments
As of December 31, 1999, a total of 35 of the consolidated Properties are
subject to ground leases. The termination dates of these ground leases range
from 2000 to 2090. These ground leases generally require payments by the SPG
Operating Partnership of a fixed annual rent, or a fixed annual rent plus a
participating percentage over a base rate. Ground lease expense incurred by the
SPG Operating Partnership for the years ended December 31, 1999, 1998 and 1997,
was $13,365, $13,618 and $10,511, respectively.
Future minimum lease payments due under such ground leases for each of the
next five years ending December 31 and thereafter are as follows:
2000 $ 7,544
2001 7,645
2002 7,925
2003 7,864
2004 7,407
Thereafter 495,963
--------
$534,348
========
Long-term Contract
On September 30, 1999, the SPG Operating Partnership entered into a five
year contract with Enron Energy Services for Enron to supply or manage all of
the energy commodity requirements throughout the SPG Operating Partnership's
portfolio. The contract includes electricity, natural gas and maintenance of
energy conversion assets and electrical systems including lighting. The SPG
Operating Partnership has committed to pay Enron a fixed percentage of the
Portfolio's historical energy costs for these services over the term of the
agreement.
Environmental Matters
Nearly all of the Properties have been subjected to Phase I or similar
environmental audits. Such audits have not revealed nor is management aware of
any environmental liability that management believes would have a material
adverse impact on the SPG Operating Partnership's financial position or results
of operations. Management is unaware of any instances in which it would incur
significant environmental costs if any or all Properties were sold, disposed of
or abandoned.
14. Related Party Transactions
In preparation for the CPI Merger, on July 31, 1998, CPI, with the
assistance of the SPG Operating Partnership, completed the sale of the General
Motors Building in New York, New York for approximately $800,000. The SPG
Operating Partnership and certain third-party affiliates each received a $2,500
fee from CPI in connection with the sale.
15. New Accounting Pronouncement
On June 15, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133 establishes accounting
and reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
133 requires that changes in the derivative's fair value be recognized currently
in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement, and requires
that a company formally document, designate, and assess the effectiveness of
transactions that receive hedge accounting.
67
<PAGE>
SFAS 133 will be effective for the SPG Operating Partnership beginning with
the 2001 fiscal year and may not be applied retroactively. Management is
currently evaluating the impact of SFAS 133, which it believes could increase
volatility in earnings and other comprehensive income.
On December 3, 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), which addressed certain revenue
recognition policies, including the accounting for overage rent by a landlord.
SAB 101 requires overage rent to be recognized as revenue only when each
tenant's sales exceeds their sales threshold. The SPG Operating Partnership
currently recognizes overage rent based on reported and estimated sales through
the end of the period, less the applicable prorated base sales amount. The SPG
Operating Partnership will adopt SAB 101 effective January 1, 2000. Management
is currently evaluating the impact of applying SAB 101 and expects to record a
loss from the cumulative effect of a change in accounting principle of
approximately $13,000 in the first quarter of 2000. In addition, SAB 101 will
impact the timing in which overage rent is recognized throughout each year, but
will not have a material impact on the total overage rent recognized in each
full year.
16. Quarterly Financial Data (Unaudited)
Consolidated summarized quarterly 1999 and 1998 data is as follows:
<TABLE>
<CAPTION>
First Second Third Fourth Annual
Quarter Quarter Quarter Quarter Amount
------------ ------------ ------------ ------------ ------------
1999
- -----------------------------------
<S> <C> <C> <C> <C> <C>
Total revenue $ 441,194 $ 453,419 $ 466,913 $ 518,709 $ 1,880,235
Operating income 194,706 208,491 212,878 236,636 852,711
Income before unusual and
extraordinary items 66,638 67,735 84,164 91,306 309,843
Net income available to Unitholders 47,159 51,569 55,064 68,023 221,815
Net income before extraordinary
items per Unit (1) $ 0.21 $ 0.22 $ 0.24 $ 0.31 $ 0.98
Net income per Unit (1) $ 0.21 $ 0.22 $ 0.24 $ 0.29 $ 0.95
Weighted Average Units Outstanding 227,879,830 232,231,002 232,636,887 236,713,575 232,569,029
Diluted net income before
extraordinary items per Unit (1) $ 0.21 $ 0.22 $ 0.24 $ 0.31 $ 0.98
Diluted net income per Unit (1) $ 0.21 $ 0.22 $ 0.24 $ 0.29 $ 0.95
Diluted weighted Average Units
Outstanding 228,061,703 232,498,343 232,707,718 236,729,515 232,706,031
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
First Second Third Fourth Annual
Quarter Quarter Quarter Quarter Amount
------------ ------------ ------------ ------------ ------------
1998
- -----------------------------------
<S> <C> <C> <C> <C> <C>
Total revenue $ 300,257 $ 310,375 $ 321,987 $ 467,570 $ 1,400,189
Operating income 133,667 145,226 147,326 213,790 640,009
Income before extraordinary items 45,124 43,514 52,635 91,983 233,256
Net income available to Unitholders 37,790 43,204 44,539 73,398 198,931
Net income before extraordinary
items per Unit (1) $ 0.22 $ 0.21 $ 0.25 $ 0.32 $ 1.01
Net income per Unit (1) $ 0.22 $ 0.25 $ 0.25 $ 0.33 $ 1.05
Weighted Average Units Outstanding 173,084,147 176,098,843 180,987,067 225,670,566 189,082,385
Diluted net income before
extraordinary items per Unit (1) $ 0.22 $ 0.21 $ 0.25 $ 0.32 $ 1.01
Diluted net income per Unit (1) $ 0.22 $ 0.25 $ 0.25 $ 0.32 $ 1.05
Diluted weighted Average Units
Outstanding 173,471,370 176,489,839 181,312,399 225,972,148 189,439,534
</TABLE>
(1) Primarily due to the cyclical nature of earnings available for Units and the
issuance of additional Units during the periods, the sum of the quarterly
earnings per Unit sometimes varies from the annual earnings per Unit.
69
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SIMON PROPERTY GROUP, L.P.
By: Simon Property Group, Inc.,
Managing General Partner
By /s/ David Simon
----------------------------
David Simon
Chief Executive Officer
March 23, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C> <C>
/s/ David Simon Chief Executive Officer March 23, 2000
- ---------------------------------- and Director (Principal Executive Officer)
David Simon
/s/ Herbert Simon Co-Chairman of the Board of Directors March 23, 2000
- ----------------------------------
Herbert Simon
/s/ Melvin Simon Co-Chairman of the Board of Directors March 23, 2000
- ----------------------------------
Melvin Simon
/s/ Hans C. Mautner Vice Chairman of the Board of Directors March 23, 2000
- ----------------------------------
Hans C. Mautner
/s/ Richard Sokolov President, Chief Operating Officer March 23, 2000
- ---------------------------------- and Director
Richard Sokolov
/s/ Robert E. Angelica Director March 23, 2000
- ----------------------------------
Robert E. Angelica
/s/ Birch Bayh Director March 23, 2000
- ----------------------------------
Birch Bayh
/s/ Pieter S. van den Berg Director March 23, 2000
- ----------------------------------
Pieter S. van den Berg
/s/ G. William Miller Director March 23, 2000
- ----------------------------------
G. William Miller
/s/ Fredrick W. Petri Director March 23, 2000
- ----------------------------------
Fredrick W. Petri
/s/ J. Albert Smith Director March 23, 2000
- ----------------------------------
J. Albert Smith
/s/ Philip J. Ward Director March 23, 2000
- ----------------------------------
Philip J. Ward
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ M. Denise DeBartolo York Director March 23, 2000
- ----------------------------------
M. Denise DeBartolo York
/s/ John Dahl Senior Vice President March 23, 2000
- ---------------------------------- (Principal Accounting Officer)
John Dahl
Principal Financial Officers:
/s/ Stephen E. Sterrett Treasurer March 23, 2000
- ----------------------------------
Stephen E. Sterrett
/s/ James R. Giuliano III Senior Vice President March 23, 2000
- ----------------------------------
James R. Giuliano III
</TABLE>
71
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SCHEDULE
To Simon Property Group, Inc.:
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of SIMON PROPERTY GROUP,
L.P. included in this Form 10-K and have issued our report thereon dated
February 16, 2000. Our audit was made for the purpose of forming an opinion on
the basic financial statements taken as a whole. The schedule, "Schedule III:
Real Estate and Accumulated Depreciation", as of December 31, 1999, is the
responsibility of Simon Property Group, L.P.'s management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. The schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
February 16, 2000.
72
<PAGE>
SIMON PROPERTY GROUP, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999 SCHEDULE III
(Dollars in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Acquisition
------------------------ -----------------------
Buildings and Buildings and
Name, Location Encumbrances Land Improvements Land Improvements
- -------------- ------------ ---- ------------- ---- -------------
<S> <C> <C> <C> <C> <C>
Regional Malls
Alton Square, Alton, IL $ 0 $ 154 $ 7,641 $ 0 $11,835
Amigoland Mall, Brownsville, TX 0 1,045 4,518 0 954
Anderson Mall, Anderson, SC 27,500 1,712 18,122 1,363 4,506
Arsenal Mall, Watertown, MA 36,871 0 62,206 0 0
Arsenal Mall HCHP, Watertown, MA 0 0 3,922 0 0
Aurora Mall, Aurora, CO 0 11,400 55,692 0 1,024
Barton Creek Square, Austin, TX 0 4,414 20,699 771 31,860
Battlefield Mall, Springfield, MO 92,177 4,039 29,769 3,225 37,097
Bay Park Square, Green Bay, WI 24,848 6,864 25,623 362 2,653
Bergen Mall, Paramus, NJ 0 11,020 92,541 0 6,888
Biltmore Square, Asheville, NC 25,765 10,908 19,315 0 1,117
Boynton Beach Mall, Boynton Beach, FL 0 33,758 67,710 0 5,288
Brea Mall, Brea, CA 0 39,500 209,202 0 1,394
Broadway Square, Tyler, TX 0 11,470 32,439 0 3,862
Brunswick Square, East Brunswick, NJ 0 8,436 55,838 0 11,570
Burlington Mall, Burlington, MA 0 46,600 303,618 0 717
Castleton Square, Indianapolis, IN 0 44,860 80,963 2,500 28,145
Century III Mall, West Mifflin, PA 66,000 17,251 117,822 0 1,758
Charlottesville Fashion Square,
Charlottesville, VA 0 0 54,738 0 1,170
Chautauqua Mall, Jamestown, NY 0 3,257 9,641 0 13,740
Cheltenham Square, Philadelphia, PA 34,226 14,227 43,799 0 3,553
Chesapeake Square, Chesapeake, VA 46,739 11,534 70,461 0 2,737
Cielo Vista Mall, El Paso, TX 94,817 1,307 18,512 608 18,507
College Mall, Bloomington, IN 53,481 1,012 16,245 722 19,465
Columbia Center, Kennewick, WA 42,326 27,170 58,185 0 6,080
Cordova Mall, Pensacola, FL 0 18,800 75,880 (158) 1,335
Cottonwood Mall, Albuquerque, NM 0 13,145 69,173 (981) (77)
Crossroads Mall, Omaha, NE 0 884 37,293 409 28,715
Crystal River Mall, Crystal River, FL 15,292 11,650 14,252 0 3,569
DeSoto Square, Bradenton, FL 38,880 9,380 52,716 0 4,102
Eastern Hills Mall, Buffalo, NY 0 15,444 47,604 12 3,626
Eastland Mall, Tulsa, OK 15,000 3,124 24,035 518 6,625
Edison Mall, Fort Myers, FL 0 11,529 107,381 0 3,803
Fashion Mall at Keystone at the
Crossing, Indianapolis, IN 63,569 0 120,579 0 2,041
Forest Mall, Fond Du Lac, WI 15,550 728 4,498 0 5,979
Forest Village Park, Forestville, MD 21,850 1,212 4,625 757 4,303
Fremont Mall, Fremont, NE 0 26 1,280 265 3,003
Golden Ring Mall, Baltimore, MD 29,750 1,130 8,955 572 8,691
Great Lakes Mall, Cleveland, OH 61,121 14,607 100,362 0 4,265
Greenwood Park Mall, Greenwood, IN 96,236 2,607 23,500 5,275 58,683
Gulf View Square, Port Richey, FL 37,064 13,690 39,997 0 7,069
Haywood Mall, Greenville, SC 0 11,604 133,893 0 252
Heritage Park, Midwest City, OK 0 598 6,213 0 2,363
Hutchinson Mall, Hutchison, KS 15,882 1,683 18,427 0 2,998
Independence Center,
</TABLE>
<TABLE>
<CAPTION>
Gross Amounts At
Which Carried
At Close of Period
---------------------------------------
Buildings and Accumulated Date of
Name, Location Land Improvements Total(1) Depreciation(2) Construction
- -------------- ---- ------------ -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Regional Malls
Alton Square, Alton, IL $ 154 $ 19,476 $ 19,630 $ 3,142 1993 (Note 3)
Amigoland Mall, Brownsville, TX 1,045 5,472 6,517 1,890 1974
Anderson Mall, Anderson, SC 3,075 22,628 25,703 5,918 1972
Arsenal Mall, Watertown, MA 0 62,206 62,206 251 1999 (Note 4)
Arsenal Mall HCHP, Watertown, MA 0 3,922 3,922 14 1999 (Note 4)
Aurora Mall, Aurora, CO 11,400 56,716 68,116 2,024 1998 (Note 4)
Barton Creek Square, Austin, TX 5,185 52,559 57,744 10,939 1981
Battlefield Mall, Springfield, MO 7,264 66,866 74,130 14,716 1970
Bay Park Square, Green Bay, WI 7,226 28,276 35,502 2,706 1996 (Note 4)
Bergen Mall, Paramus, NJ 11,020 99,429 110,449 9,320 1996 (Note 4)
Biltmore Square, Asheville, NC 10,908 20,432 31,340 2,164 1996 (Note 4)
Boynton Beach Mall, Boynton Beach, FL 33,758 72,998 106,756 7,327 1996 (Note 4)
Brea Mall, Brea, CA 39,500 210,596 250,096 7,506 1998 (Note 4)
Broadway Square, Tyler, TX 11,470 36,301 47,771 5,447 1994 (Note 3)
Brunswick Square, East Brunswick, NJ 8,436 67,408 75,844 5,827 1996 (Note 4)
Burlington Mall, Burlington, MA 46,600 304,335 350,935 10,910 1998 (Note 4)
Castleton Square, Indianapolis, IN 47,360 109,108 156,468 9,540 1996 (Note 4)
Century III Mall, West Mifflin, PA 17,251 119,580 136,831 25,684 1999 (Note 4)
Charlottesville Fashion Square,
Charlottesville, VA 0 55,908 55,908 3,743 1997 (Note 4)
Chautauqua Mall, Jamestown, NY 3,257 23,381 26,638 2,309 1996 (Note 4)
Cheltenham Square, Philadelphia, PA 14,227 47,352 61,579 4,801 1996 (Note 4)
Chesapeake Square, Chesapeake, VA 11,534 73,198 84,732 7,045 1996 (Note 4)
Cielo Vista Mall, El Paso, TX 1,915 37,019 38,934 11,034 1974
College Mall, Bloomington, IN 1,734 35,710 37,444 10,114 1965
Columbia Center, Kennewick, WA 27,170 64,265 91,435 6,328 1996 (Note 4)
Cordova Mall, Pensacola, FL 18,642 77,215 95,857 4,395 1998 (Note 4)
Cottonwood Mall, Albuquerque, NM 12,164 69,096 81,260 9,351 1996
Crossroads Mall, Omaha, NE 1,293 66,008 67,301 8,850 1994 (Note 3)
Crystal River Mall, Crystal River, FL 11,650 17,821 29,471 1,713 1996 (Note 4)
DeSoto Square, Bradenton, FL 9,380 56,818 66,198 5,675 1996 (Note 4)
Eastern Hills Mall, Buffalo, NY 15,456 51,230 66,686 5,140 1996 (Note 4)
Eastland Mall, Tulsa, OK 3,642 30,660 34,302 6,700 1986
Edison Mall, Fort Myers, FL 11,529 111,184 122,713 7,117 1997 (Note 4)
Fashion Mall at Keystone at the
Crossing, Indianapolis, IN 0 122,620 122,620 6,974 1997 (Note 4)
Forest Mall, Fond Du Lac, WI 728 10,477 11,205 2,399 1973
Forest Village Park, Forestville, MD 1,969 8,928 10,897 2,479 1980
Fremont Mall, Fremont, NE 291 4,283 4,574 807 1966
Golden Ring Mall, Baltimore, MD 1,702 17,646 19,348 5,588 1974 (Note 3)
Great Lakes Mall, Cleveland, OH 14,607 104,627 119,234 10,386 1996 (Note 4)
Greenwood Park Mall, Greenwood, IN 7,882 82,183 90,065 17,666 1979
Gulf View Square, Port Richey, FL 13,690 47,066 60,756 4,260 1996 (Note 4)
Haywood Mall, Greenville, SC 11,604 134,145 145,749 11,174 1999 (Note 4)
Heritage Park, Midwest City, OK 598 8,576 9,174 2,804 1978
Hutchinson Mall, Hutchison, KS 1,683 21,425 23,108 5,147 1985
Independence Center,
</TABLE>
73
<PAGE>
SIMON PROPERTY GROUP, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999 SCHEDULE III
(Dollars in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Acquisition
-------------------- -------------------------
Buildings and Buildings and
Name, Location Encumbrances Land Improvements Land Improvements
- -------------- ------------ ---- ------------- ---- ------------
<S> <C> <C> <C> <C> <C>
Independence, MO 0 5,539 45,822 0 15,864
Ingram Park Mall, San Antonio, TX 0 820 17,163 169 14,644
Irving Mall, Irving, TX 0 6,737 17,479 2,533 24,468
Jefferson Valley Mall, Yorktown
Heights, NY 50,000 4,868 30,304 0 4,409
Knoxville Center, Knoxville, TN 0 5,006 21,965 3,712 34,547
Lakeline Mall, N. Austin, TX 72,180 14,948 81,568 0 210
La Plaza, McAllen, TX 0 2,194 9,828 7,454 14,173
Lafayette Square, Indianapolis, IN 0 25,546 43,294 0 9,361
Laguna Hills Mall, Laguna Hills, CA 0 28,074 55,689 0 3,239
Lenox Square, Atlanta, GA 0 41,900 492,411 0 1,842
Lima Mall, Lima, OH 18,903 7,910 35,495 0 3,733
Lincolnwood Town Center,
Lincolnwood, IL 0 11,197 63,490 28 1,286
Livingston Mall, Livingston, NJ 0 30,200 105,250 0 438
Longview Mall, Longview, TX 27,600 270 3,602 124 7,138
Machesney Park Mall, Rockford, IL 0 614 7,438 120 4,189
Markland Mall, Kokomo, IN 0 0 7,568 0 2,763
Mc Cain Mall, N. Little Rock, AR 43,259 0 9,515 0 8,099
Melbourne Square, Melbourne, FL 38,869 20,552 51,110 0 4,656
Memorial Mall, Sheboygan, WI 0 175 4,881 0 853
Menlo Park Mall, Edison, NJ 0 65,684 223,252 0 5,574
Miami International Mall, Miami, FL 45,920 13,794 69,701 8,942 4,105
Midland Park Mall, Midland, TX 28,000 687 9,213 0 6,533
Miller Hill Mall, Duluth, MN 0 2,537 18,113 0 9,208
Mission Viejo Mall, Mission Viejo, CA 110,068 9,139 54,445 5,613 117,736
Mounds Mall, Anderson, IN 0 0 2,689 0 2,291
Muncie Mall, Muncie, IN 8,294 172 5,964 52 21,231
Nanuet Mall, Nanuet, NY 0 27,700 162,993 0 991
North East Mall, Hurst, TX 73,636 1,347 13,473 2,961 119,444
North Towne Square, Toledo, OH 23,500 579 8,382 0 2,072
Northgate Mall, Seattle, WA 79,035 89,991 57,873 0 18,920
Northlake Mall, Atlanta, GA 0 33,400 98,035 0 149
Northwoods Mall, Peoria, IL 0 1,203 12,779 1,449 26,976
Oak Court Mall, Memphis, TN 0 15,673 57,304 0 1,666
Orange Park Mall, Jacksonville, FL 0 13,345 65,173 0 14,769
Orland Square, Orland Park, IL 50,000 36,770 129,906 0 2,098
Paddock Mall, Ocala, FL 29,478 20,420 30,490 0 4,743
Palm Beach Mall, West Palm Beach, FL 49,419 12,549 112,741 0 20,933
Phipps Plaza, Atlanta, GA 0 19,200 210,783 0 1,783
Port Charlotte Town Center,
Port Charlotte, FL 52,099 5,561 59,381 0 8,769
Prien Lake Mall, Lake Charles, LA 0 1,893 2,829 3,091 35,256
Raleigh Springs Mall, Memphis, TN 0 9,137 28,604 0 7,014
Randall Park Mall, Cleveland, OH 40,000 4,421 52,456 0 18,073
Richardson Square, Dallas, TX 0 4,867 6,329 1,075 11,338
Richmond Towne Square, Cleveland, OH 45,898 2,666 12,112 0 52,961
Richmond Square, Richmond, IN 0 3,410 11,343 0 9,037
</TABLE>
<TABLE>
<CAPTION>
Gross Amounts At
Which Carried
At Close of Period
-------------------------------------
Buildings and Accumulated Date of
Name, Location Land Improvements Total(1) Depreciation(2) Construction
- --------------------------------- ---- ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Independence, MO 5,539 61,686 67,225 8,017 1994 (Note 3)
Ingram Park Mall, San Antonio, TX 989 31,807 32,796 9,468 1979
Irving Mall, Irving, TX 9,270 41,947 51,217 10,991 1971
Jefferson Valley Mall, Yorktown
Heights, NY 4,868 34,713 39,581 8,690 1983
Knoxville Center, Knoxville, TN 8,718 56,512 65,230 8,836 1984
Lakeline Mall, N. Austin, TX 14,948 81,778 96,726 7,342 1999 (Note 4)
La Plaza, McAllen, TX 9,648 24,001 33,649 3,698 1976
Lafayette Square, Indianapolis, IN 25,546 52,655 78,201 5,184 1996 (Note 4)
Laguna Hills Mall, Laguna Hills, CA 28,074 58,928 87,002 3,818 1997 (Note 4)
Lenox Square, Atlanta, GA 41,900 494,253 536,153 17,609 1998 (Note 4)
Lima Mall, Lima, OH 7,910 39,228 47,138 3,819 1996 (Note 4)
Lincolnwood Town Center,
Lincolnwood, IL 11,225 64,776 76,001 14,756 1990
Livingston Mall, Livingston, NJ 30,200 105,688 135,888 3,763 1998 (Note 4)
Longview Mall, Longview, TX 394 10,740 11,134 2,684 1978
Machesney Park Mall, Rockford, IL 734 11,627 12,361 3,879 1979
Markland Mall, Kokomo, IN 0 10,331 10,331 2,165 1968
Mc Cain Mall, N. Little Rock, AR 0 17,614 17,614 5,950 1973
Melbourne Square, Melbourne, FL 20,552 55,766 76,318 5,378 1996 (Note 4)
Memorial Mall, Sheboygan, WI 175 5,734 5,909 1,613 1969
Menlo Park Mall, Edison, NJ 65,684 228,826 294,510 14,858 1997 (Note 4)
Miami International Mall, Miami, FL 22,736 73,806 96,542 21,944 1996 (Note 4)
Midland Park Mall, Midland, TX 687 15,746 16,433 4,739 1980
Miller Hill Mall, Duluth, MN 2,537 27,321 29,858 5,470 1973
Mission Viejo Mall, Mission Viejo, CA 14,752 172,181 186,933 6,877 1996 (Note 4)
Mounds Mall, Anderson, IN 0 4,980 4,980 2,054 1965
Muncie Mall, Muncie, IN 224 27,195 27,419 4,502 1970
Nanuet Mall, Nanuet, NY 27,700 163,984 191,684 5,877 1998 (Note 4)
North East Mall, Hurst, TX 4,308 132,917 137,225 5,349 1996 (Note 4)
North Towne Square, Toledo, OH 579 10,454 11,033 4,730 1980
Northgate Mall, Seattle, WA 89,991 76,793 166,784 6,984 1996 (Note 4)
Northlake Mall, Atlanta, GA 33,400 98,184 131,584 3,502 1998 (Note 4)
Northwoods Mall, Peoria, IL 2,652 39,755 42,407 9,719 1983 (Note 3)
Oak Court Mall, Memphis, TN 15,673 58,970 74,643 3,901 1997 (Note 4)
Orange Park Mall, Jacksonville, FL 13,345 79,942 93,287 11,030 1994 (Note 3)
Orland Square, Orland Park, IL 36,770 132,004 168,774 8,206 1997 (Note 4)
Paddock Mall, Ocala, FL 20,420 35,233 55,653 3,366 1996 (Note 4)
Palm Beach Mall, West Palm Beach, FL 12,549 133,674 146,223 15,092 1998 (Note 4)
Phipps Plaza, Atlanta, GA 19,200 212,566 231,766 7,583 1998 (Note 4)
Port Charlotte Town Center,
Port Charlotte, FL 5,561 68,150 73,711 6,003 1996 (Note 4)
Prien Lake Mall, Lake Charles, LA 4,984 38,085 43,069 4,153 1972
Raleigh Springs Mall, Memphis, TN 9,137 35,618 44,755 3,068 1996 (Note 4)
Randall Park Mall, Cleveland, OH 4,421 70,529 74,950 6,019 1996 (Note 4)
Richardson Square, Dallas, TX 5,942 17,667 23,609 1,679 1996 (Note 4)
Richmond Towne Square, Cleveland, OH 2,666 65,073 67,739 2,416 1996 (Note 4)
Richmond Square, Richmond, IN 3,410 20,380 23,790 2,055 1996 (Note 4)
</TABLE>
74
<PAGE>
SIMON PROPERTY GROUP, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999 SCHEDULE III
(Dollars in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Acquisition
----------------------- -------------------------
Buildings and Buildings and
Name, Location Encumbrances Land Improvements Land Improvements
- -------------- ------------ ---- ------------- ---- -------------
<S> <C> <C> <C> <C> <C>
River Oaks Center, Calumet City, IL 32,500 30,884 101,224 0 2,064
Rockaway Townsquare, Rockaway, NJ 0 50,500 218,557 0 2,479
Rolling Oaks Mall, North San Antonio, TX 0 2,647 38,609 (70) 1,788
Roosevelt Field, Garden City, NY 0 165,006 702,008 2,096 3,657
Ross Park Mall, Pittsburgh, PA 0 14,557 50,995 9,617 48,819
Santa Rosa Plaza, Santa Rosa, CA 0 10,400 87,864 0 815
South Hills Village, Pittsburgh, PA 0 23,453 125,858 0 708
South Park Mall, Shreveport, LA 26,384 855 13,684 74 2,806
South Shore Plaza, Braintree, MA 0 101,200 301,495 0 1,339
Southern Park Mall, Youngstown, OH 0 16,982 77,774 97 16,294
Southgate Mall, Yuma, AZ 0 1,817 7,974 0 3,415
St Charles Towne Center
Waldorf, MD 28,780 9,329 52,974 1,180 10,833
Summit Mall, Akron, OH 0 23,742 42,769 0 13,191
Sunland Park Mall, El Paso, TX 39,125 2,896 28,900 0 4,682
Tacoma Mall, Tacoma, WA 92,474 39,263 125,826 0 10,289
Tippecanoe Mall, Lafayette, IN 61,330 4,187 8,474 5,517 33,545
Town Center at Boca Raton
Boca Raton, FL 0 64,200 307,511 0 17,927
Towne East Square, Wichita, KS 79,756 9,495 18,479 2,042 11,626
Towne West Square, Wichita, KS 0 972 21,203 76 7,947
Treasure Coast Square, Jenson Beach, FL 64,419 11,124 73,108 3,067 10,479
Tyrone Square, St. Petersburg, FL 0 15,638 120,962 0 12,662
University Mall, Little Rock, AR 0 123 17,411 0 1,117
University Mall, Pensacola, FL 0 4,741 26,657 0 3,506
University Park Mall, South Bend, IN 59,500 15,105 61,466 0 9,063
Upper Valley Mall, Springfield, OH 30,940 8,421 38,745 0 1,626
Valle Vista Mall, Harlingen, TX 41,623 1,398 17,266 372 8,158
Virginia Center Commons, Richmond, VA 0 9,764 50,547 4,149 3,462
Walt Whitman Mall, Huntington Station, NY 0 51,700 111,170 3,789 24,388
Washington Square, Indianapolis, IN 33,541 20,146 41,248 0 5,912
West Ridge Mall, Topeka, KS 5,796 5,652 34,132 197 5,553
Westminster Mall, Westminster, CA 0 45,200 84,709 0 899
White Oaks Mall, Springfield, IL 16,500 3,024 35,692 1,153 14,109
Windsor Park Mall, San Antonio, TX 14,442 1,194 16,940 130 3,430
Woodville Mall, Toledo, OH 0 1,831 4,454 0 951
Community Shopping Centers
Arboretum, The, Austin, TX 34,000 7,640 36,778 71 1,620
Arvada Plaza, Arvada, CO 0 70 342 608 825
Aurora Plaza, Aurora, CO 0 35 5,754 0 1,039
Bloomingdale Court, Bloomingdale, IL 29,879 8,764 26,184 0 1,889
Boardman Plaza, Youngstown, OH 18,277 8,189 26,355 0 2,024
Bridgeview Court, Bridgeview, IL 0 302 3,638 0 704
Brightwood Plaza, Indianapolis, IN 0 65 128 0 252
Buffalo Grove Towne Center, Buffalo
Grove, IL 0 1,345 6,602 121 379
Celina Plaza, El Paso, TX 0 138 815 0 100
Century Mall, Merrillville, IN 0 2,190 9,589 0 1,410
</TABLE>
<TABLE>
<CAPTION>
Gross Amounts At
Which Carried
At Close of Period
--------------------------------------
Buildings and Accumulated Date of
Name, Location Land Improvements Total (1) Depreciation (2) Construction
- -------------- ---- ------------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
River Oaks Center, Calumet City, IL 30,884 103,288 134,172 6,358 1997 (Note 4)
Rockaway Townsquare, Rockaway, NJ 50,500 221,036 271,536 7,843 1998 (Note 4)
Rolling Oaks Mall, North San Antonio, TX 2,577 40,397 42,974 10,877 1998 (Note 4)
Roosevelt Field, Garden City, NY 167,102 705,665 872,767 25,156 1998 (Note 4)
Ross Park Mall, Pittsburgh, PA 24,174 99,814 123,988 13,370 1996 (Note 4)
Santa Rosa Plaza, Santa Rosa, CA 10,400 88,679 99,079 3,186 1998 (Note 4)
South Hills Village, Pittsburgh, PA 23,453 126,566 150,019 7,629 1997 (Note 4)
South Park Mall, Shreveport, LA 929 16,490 17,419 5,417 1975
South Shore Plaza, Braintree, MA 101,200 302,834 404,034 10,860 1998 (Note 4)
Southern Park Mall, Youngstown, OH 17,079 94,068 111,147 9,307 1996 (Note 4)
Southgate Mall, Yuma, AZ 1,817 11,389 13,206 2,720 1988 (Note 3)
St Charles Towne Center
Waldorf, MD 10,509 63,807 74,316 15,715 1990
Summit Mall, Akron, OH 23,742 55,960 79,702 5,914 1996 (Note 4)
Sunland Park Mall, El Paso, TX 2,896 33,582 36,478 9,568 1988
Tacoma Mall, Tacoma, WA 39,263 136,115 175,378 13,015 1996 (Note 4)
Tippecanoe Mall, Lafayette, IN 9,704 42,019 51,723 11,774 1973
Town Center at Boca Raton
Boca Raton, FL 64,200 325,438 389,638 10,560 1998 (Note 4)
Towne East Square, Wichita, KS 11,537 30,105 41,642 9,189 1975
Towne West Square, Wichita, KS 1,048 29,150 30,198 8,264 1980
Treasure Coast Square, Jenson Beach, FL 14,191 83,587 97,778 7,560 1996 (Note 4)
Tyrone Square, St. Petersburg, FL 15,638 133,624 149,262 12,477 1996 (Note 4)
University Mall, Little Rock, AR 123 18,528 18,651 5,488 1967
University Mall, Pensacola, FL 4,741 30,163 34,904 4,648 1994 (Note 3)
University Park Mall, South Bend, IN 15,105 70,529 85,634 32,852 1996 (Note 4)
Upper Valley Mall, Springfield, OH 8,421 40,371 48,792 4,070 1996 (Note 4)
Valle Vista Mall, Harlingen, TX 1,770 25,424 27,194 6,430 1983
Virginia Center Commons, Richmond, VA 13,913 54,009 67,922 4,977 1996 (Note 4)
Walt Whitman Mall, Huntington Station, NY 55,489 135,558 191,047 6,720 1998 (Note 4)
Washington Square, Indianapolis, IN 20,146 47,160 67,306 4,407 1996 (Note 4)
West Ridge Mall, Topeka, KS 5,849 39,685 45,534 8,929 1988
Westminster Mall, Westminster, CA 45,200 85,608 130,808 3,036 1998 (Note 4)
White Oaks Mall, Springfield, IL 4,177 49,801 53,978 8,633 1977
Windsor Park Mall, San Antonio, TX 1,324 20,370 21,694 6,019 1976
Woodville Mall, Toledo, OH 1,831 5,405 7,236 663 1996 (Note 4)
Community Shopping Centers
Arboretum, The, Austin, TX 7,711 38,398 46,109 1,196 1998 (Note 4)
Arvada Plaza, Arvada, CO 678 1,167 1,845 404 1966
Aurora Plaza, Aurora, CO 35 6,793 6,828 2,086 1966
Bloomingdale Court, Bloomingdale, IL 8,764 28,073 36,837 4,985 1987
Boardman Plaza, Youngstown, OH 8,189 28,379 36,568 2,713 1996 (Note 4)
Bridgeview Court, Bridgeview, IL 302 4,342 4,644 985 1988
Brightwood Plaza, Indianapolis, IN 65 380 445 147 1965
Buffalo Grove Towne Center, Buffalo
Grove, IL 1,466 6,981 8,447 787 1988
Celina Plaza, El Paso, TX 138 915 1,053 221 1978
Century Mall, Merrillville, IN 2,190 10,999 13,189 4,019 1992 (Note 3)
</TABLE>
75
<PAGE>
SIMON PROPERTY GROUP, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999 SCHEDULE III
(Dollars in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Acquisition
--------------------- -------------------------
Buildings and Buildings and
Name, Location Encumbrances Land Improvements Land Improvements
- -------------------------------------------- ------------ ----- ------------ ---- ------------
<S> <C> <C> <C> <C> <C>
Charles Towne Square, Charleston, SC 0 446 1,768 425 11,090
Chesapeake Center, Chesapeake, VA 6,563 5,352 12,279 0 102
Countryside Plaza, Countryside, IL 0 1,243 8,507 0 602
Eastgate Consumer Mall, Indianapolis, IN 22,929 424 4,722 187 2,705
Eastland Plaza, Tulsa, OK 0 908 3,709 0 0
Forest Plaza, Rockford, IL 16,388 4,187 16,818 453 626
Fox River Plaza, Elgin, IL 0 2,908 9,453 0 148
Glen Burnie Mall, Glen Burnie, MD 0 7,422 22,778 0 2,595
Great Lakes Plaza, Cleveland, OH 0 1,028 2,025 0 3,366
Greenwood Plus, Greenwood, IN 0 1,350 1,792 0 3,757
Griffith Park Plaza, Griffith, IN 0 0 2,412 0 135
Grove at Lakeland Square, The, Lakeland, FL 3,750 5,237 6,016 0 1,031
Hammond Square, Sandy Springs, GA 0 0 27 0 1
Highland Lakes Center, Orlando, FL 14,377 13,951 18,490 0 454
Ingram Plaza, San Antonio, TX 0 421 1,802 4 21
Keystone Shoppes, Indianapolis, IN 0 0 4,232 0 (7)
Knoxville Commons, Knoxville, TN 0 3,731 5,345 0 1,787
Lake Plaza, Waukegan, IL 0 2,812 6,420 0 364
Lake View Plaza, Orland Park, IL 21,785 4,775 17,586 0 2,115
Lakeline Plaza, Austin, TX 23,883 5,929 25,732 0 5,696
Lima Center, Lima, OH 0 1,808 5,151 0 123
Lincoln Crossing, O'Fallon, IL 3,298 1,047 2,692 0 192
Mainland Crossing, Galveston, TX 1,603 1,609 1,737 0 221
Markland Plaza, Kokomo, IN 10,000 210 1,258 0 453
Martinsville Plaza, Martinsville, VA 0 0 584 0 50
Marwood Plaza, Indianapolis, IN 0 52 3,597 0 107
Matteson Plaza, Matteson, IL 9,593 1,830 9,737 0 1,986
Memorial Plaza, Sheboygan, WI 0 250 436 0 857
Mounds Mall Cinema, Anderson, IN 0 88 158 0 1
Muncie Plaza, Muncie, IN 0 626 10,626 (163) (5)
New Castle Plaza, New Castle, IN 0 128 1,621 0 645
Shops at North East Plaza, The, Hurst, TX 0 8,988 2,198 3,553 25,979
North Ridge Plaza, Joliet, IL 0 2,831 7,699 0 451
North Riverside Park Plaza,
N. Riverside, IL 7,386 1,062 2,490 0 644
Northland Plaza, Columbus, OH 0 4,490 8,893 0 1,034
Northwood Plaza, Fort Wayne, IN 0 302 2,922 0 584
Park Plaza, Hopkinsville, KY 0 300 1,572 0 211
Regency Plaza, St. Charles, MO 4,497 616 4,963 0 151
Rockaway Convenience Center
Rockaway, NJ 0 2,900 12,500 0 0
St. Charles Towne Plaza, Waldorf, MD 0 8,779 18,993 0 183
Teal Plaza, Lafayette, IN 0 99 878 0 2,957
Terrace at The Florida Mall, Orlando, FL 4,688 5,647 4,126 0 1,025
Tippecanoe Plaza, Lafayette, IN 0 265 440 305 4,967
University Center, South Bend, IN 0 2,388 5,214 0 339
Wabash Village, West Lafayette, IN 0 0 976 0 204
Washington Plaza, Indianapolis, IN 0 941 1,697 0 167
</TABLE>
<TABLE>
<CAPTION>
Gross Amounts At
Which Carried
At Close of Period
-----------------------------------------------------
Buildings and Accumulated Date of
Name, Location Land Improvements Total (1) Depreciation (2) Construction
- -------------------------------------------- ----- ------------ --------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Charles Towne Square, Charleston, SC 871 12,858 13,729 333 1976
Chesapeake Center, Chesapeake, VA 5,352 12,381 17,733 1,216 1996 (Note 4)
Countryside Plaza, Countryside, IL 1,243 9,109 10,352 2,507 1977
Eastgate Consumer Mall, Indianapolis, IN 611 7,427 8,038 3,216 1991 (Note 3)
Eastland Plaza, Tulsa, OK 908 3,709 4,617 725 1986
Forest Plaza, Rockford, IL 4,640 17,444 22,084 3,022 1985
Fox River Plaza, Elgin, IL 2,908 9,601 12,509 1,623 1985
Glen Burnie Mall, Glen Burnie, MD 7,422 25,373 32,795 2,535 1996 (Note 4)
Great Lakes Plaza, Cleveland, OH 1,028 5,391 6,419 663 1996 (Note 4)
Greenwood Plus, Greenwood, IN 1,350 5,549 6,899 950 1979 (Note 3)
Griffith Park Plaza, Griffith, IN 0 2,547 2,547 792 1979
Grove at Lakeland Square, The, Lakeland, FL 5,237 7,047 12,284 791 1996 (Note 4)
Hammond Square, Sandy Springs, GA 0 28 28 9 1974
Highland Lakes Center, Orlando, FL 13,951 18,944 32,895 1,934 1996 (Note 4)
Ingram Plaza, San Antonio, TX 425 1,823 2,248 670 1980
Keystone Shoppes, Indianapolis, IN 0 4,225 4,225 241 1997 (Note 4)
Knoxville Commons, Knoxville, TN 3,731 7,132 10,863 1,355 1987
Lake Plaza, Waukegan, IL 2,812 6,784 9,596 1,088 1986
Lake View Plaza, Orland Park, IL 4,775 19,701 24,476 2,953 1986
Lakeline Plaza, Austin, TX 5,929 31,428 37,357 1,280 1999 (Note 4)
Lima Center, Lima, OH 1,808 5,274 7,082 509 1996 (Note 4)
Lincoln Crossing, O'Fallon, IL 1,047 2,884 3,931 449 1990
Mainland Crossing, Galveston, TX 1,609 1,958 3,567 220 1996 (Note 4)
Markland Plaza, Kokomo, IN 210 1,711 1,921 613 1974
Martinsville Plaza, Martinsville, VA 0 634 634 400 1967
Marwood Plaza, Indianapolis, IN 52 3,704 3,756 842 1962
Matteson Plaza, Matteson, IL 1,830 11,723 13,553 2,033 1988
Memorial Plaza, Sheboygan, WI 250 1,293 1,543 407 1966
Mounds Mall Cinema, Anderson, IN 88 159 247 60 1974
Muncie Plaza, Muncie, IN 463 10,621 11,084 644 1998
New Castle Plaza, New Castle, IN 128 2,266 2,394 725 1966
Shops at North East Plaza, The, Hurst, TX 12,541 28,177 40,718 164
North Ridge Plaza, Joliet, IL 2,831 8,150 10,981 1,442 1985
North Riverside Park Plaza,
N. Riverside, IL 1,062 3,134 4,196 983 1977
Northland Plaza, Columbus, OH 4,490 9,927 14,417 1,523 1988
Northwood Plaza, Fort Wayne, IN 302 3,506 3,808 1,015 1974
Park Plaza, Hopkinsville, KY 300 1,783 2,083 457 1968
Regency Plaza, St. Charles, MO 616 5,114 5,730 793 1988
Rockaway Convenience Center
Rockaway, NJ 2,900 12,500 15,400 446 1998 (Note 4)
St. Charles Towne Plaza, Waldorf, MD 8,779 19,176 27,955 3,369 1987
Teal Plaza, Lafayette, IN 99 3,835 3,934 450 1962
Terrace at The Florida Mall, Orlando, FL 5,647 5,151 10,798 710 1996 (Note 4)
Tippecanoe Plaza, Lafayette, IN 570 5,407 5,977 1,106 1974
University Center, South Bend, IN 2,388 5,553 7,941 4,796 1996 (Note 4)
Wabash Village, West Lafayette, IN 0 1,180 1,180 348 1970
Washington Plaza, Indianapolis, IN 941 1,864 2,805 976 1996 (Note 4)
</TABLE>
76
<PAGE>
SIMON PROPERTY GROUP, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999 SCHEDULE III
(Dollars in thousands)
<TABLE>
<CAPTION>
Cost Capitalized
Initial Cost Subsequent to Acquisition
----------------------- -------------------------
Buildings and Buildings and
Name, Location Encumbrances Land Improvements Land Improvements
- -------------------------------------- ------------ ---- ------------ ---- ------------
<S> <C> <C> <C> <C> <C>
West Ridge Plaza, Topeka, KS 44,288 1,491 4,620 0 614
White Oaks Plaza, Springfield, IL 17,688 3,265 14,267 0 341
Wichita Mall, Wichita, KS 0 0 4,535 0 1,746
Wood Plaza, Fort Dodge, IA 0 45 380 0 867
Specialty Retail Centers
The Forum Shops at Caesars,
Las Vegas, NV 175,000 0 72,866 0 59,130
Trolley Square, Salt Lake City, UT 27,141 4,899 27,539 363 7,299
Office, Mixed-Use Properties and Other
Lenox Building, Atlanta, GA 0 0 57,778 0 332
Net Lease Properties, Various 0 10,363 0 0 0
New Orleans Centre/CNG Tower,
New Orleans, LA 0 3,679 41,231 0 6,223
O'Hare International Center,
Rosemont, IL 0 125 60,287 1 9,017
Riverway, Rosemont, IL 0 8,739 129,175 16 7,121
Development Projects
Bowie Town Center, Bowie, MD 0 6,000 570 0 1,648
Indian River Peripheral, Vero
Beach, FL 0 790 57 0 0
Victoria Ward, Honolulu, HI 0 0 1,400 0 729
Waterford Lakes, Orlando, FL 30,336 0 1,114 9,662 46,704
Land, Garland, TX 0 0 0 12,002 0
Other 0 0 314 0 1,128
Corporate, Indianapolis, IN 0 2,745 500 280 2,640
---------- ---------- ---------- -------- ----------
$2,995,561 $1,994,179 $8,874,693 $114,917 $1,582,281
========== ========== ========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Gross Amounts At
Which Carried
At Close of Period
------------------------------------------
Buildings and Accumulated Date of
Name, Location Land Improvements Total (1) Depreciation (2) Construction
- -------------------------------------- ---- ------------ --------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
West Ridge Plaza, Topeka, KS 1,491 5,234 6,725 895 1988
White Oaks Plaza, Springfield, IL 3,265 14,608 17,873 2,328 1986
Wichita Mall, Wichita, KS 0 6,281 6,281 2,014 1969
Wood Plaza, Fort Dodge, IA 45 1,247 1,292 333 1968
Specialty Retail Centers
The Forum Shops at Caesars,
Las Vegas, NV 0 131,996 131,996 21,738 1992
Trolley Square, Salt Lake City, UT 5,262 34,838 40,100 7,138 1986 (Note 3)
Office, Mixed-Use Properties and Other
Lenox Building, Atlanta, GA 0 58,110 58,110 2,096 1998 (Note 4)
Net Lease Properties, Various 10,363 0 10,363 0
New Orleans Centre/CNG Tower,
New Orleans, LA 3,679 47,454 51,133 4,249 1996 (Note 4)
O'Hare International Center,
Rosemont, IL 126 69,304 69,430 20,312 1988
Riverway, Rosemont, IL 8,755 136,296 145,051 39,949 1991
Development Projects
Bowie Town Center, Bowie, MD 6,000 2,218 8,218 0
Indian River Peripheral, Vero
Beach, FL 790 57 847 0 1996 (Note 4)
Victoria Ward, Honolulu, HI 0 2,129 2,129 0
Waterford Lakes, Orlando, FL 9,662 47,818 57,480 137
Land, Garland, TX 12,002 0 12,002 0
Other 0 1,442 1,442 0
Corporate, Indianapolis, IN 3,025 3,140 6,165 2,294
---------- ----------- ----------- ----------
$2,109,096 $10,456,974 $12,566,070 $1,066,200
========== =========== =========== ==========
</TABLE>
77
<PAGE>
SIMON PROPERTY GROUP, L.P.
NOTES TO SCHEDULE III AS OF DECEMBER 31, 1999
(Dollars in thousands)
(1) Reconciliation of Real Estate Properties:
The changes in real estate assets for the years ended December 31, 1999,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ------------ ----------
<S> <C> <C> <C>
Balance, beginning of year $11,603,771 $ 6,814,065 $5,273,465
Acquisitions 475,166 4,676,634 1,238,909
Improvements 544,956 356,829 312,558
Disposals (57,823) (126,454) (10,867)
Deconsolidation -- (117,303) --
----------- ------------ ----------
Balance, close of year $12,566,070 $11,603,771 $6,814,065
=========== =========== ==========
</TABLE>
The unaudited aggregate cost for federal income tax purposes as of
December 31, 1999 was $8,585,753.
(2) Reconciliation of Accumulated Depreciation:
The changes in accumulated depreciation and amortization for the years
ended December 31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- -------- --------
<S> <C> <C> <C>
Balance, beginning of year $ 688,955 $448,353 $270,637
Acquisitions 32,793 25,839 --
Depreciation expense 351,473 246,934 183,357
Disposals (7,021) (32,171) (5,641)
---------- -------- --------
Balance, close of year $1,066,200 $688,955 $448,353
========== ======== ========
</TABLE>
Depreciation of the SPG Operating Partnership's investment in buildings and
improvements reflected in the statements of operations is calculated over the
estimated original lives of the assets as follows:
Buildings and Improvements - typically 35 years
Tenant Inducements - shorter of lease term or useful life
(3) Initial cost represents net book value at December 20, 1993.
(4) Not developed/constructed by the SPG Operating Partnership or its
predecessors. The date of construction represents acquisition date.
78
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits Page
----
<S> <C>
2.1 Agreement and Plan of Merger among SPG, Sub and DRC, dated as of
March 26, 1996, as amended (included as Annex I to the
Prospectus/Joint Proxy Statement filed as part of Form S-4 of Simon
Property Group, Inc. (Registration No. 333-06933)).
2.2 Amendment and supplement to Offer to Purchase for Cash all
Outstanding Beneficial Interests in The Retail Property Trust
(incorporated by reference to Exhibit 99.1 of the Form 8-K filed by
the SPG Operating Partnership on September 12, 1997).
2.3 Agreement and Plan of Merger among SDG, CPI and CRC (incorporated by
reference to Exhibit 10.1 in the Form 8-K filed by SDG on
February 24, 1998).
3.1 Sixth Amended and Restated Limited Partnership Agreement of the SPG
Operating Partnership (incorporated by reference to Exhibit 4.1 of
the Form 8-K filed by the Companies on October 9, 1998).
3.2 Certificate of Powers, Designations, Preferences and Rights of the
7.00% Series C Cumulative Convertible Preferred Units, $0.0001 Par
Value (incorporated by reference to Exhibit 3.1 of the Form 10-Q
filed by the SPG Operating Partnership on November 15, 1999).
3.3 Certificate of Powers, Designations, Preferences and Rights of the
8.00% Series D Cumulative Redeemable Preferred Units, $0.0001 Par
Value (incorporated by reference to Exhibit 3.2 of the Form 10-Q
filed by the SPG Operating Partnership on November 15, 1999).
3.4 Certificate of Powers, Designations, Preferences and Rights of the
8.00% Series E Cumulative Redeemable Preferred Units, $0.0001 Par
Value (incorporated by reference to Exhibit 3.3 of the Form 10-Q
filed by the SPG Operating Partnership on November 15, 1999).
4.1 Indenture, dated as of November 26, 1996, by and among the SPG
Operating Partnership and The Chase Manhattan Bank, as trustee
(incorporated by reference to the form of this document filed as
Exhibit 4.1 to the Registration Statement on Form S-3 (Reg. No. 333-
11491)).
4.2 Supplemental Indenture, dated as of June 22, 1998, by and among the
SPG Operating Partnership and The Chase Manhattan Bank, as trustee,
relating to the Securities (incorporated by reference as Exhibit 4.2
to the Registration Statement of Simon DeBartolo Group, L.P. on Form
S-4 (Reg. No. 333-63645)).
10.1 Third Amended and Restated Credit Agreement Dated as of August 25,
1999 (incorporated by reference to Exhibit 10.1 of the Form 10-Q
filed by the SPG Operating Partnership on November 15, 1999).
10.2 Limited Partnership Agreement of SPG Realty Consultants, L.P.
(incorporated by reference to Exhibit 4.21 of the Form 8-K filed by
the Companies on October 9, 1998).
10.3 (a) The SPG Operating Partnership 1998 Stock Incentive Plan (incorporated
by reference to Exhibit 10.5 of the Form S-4 filed by CPI on August
13, 1998 (Reg. No. 333-61399)).
10.4 (a) Form of Employment Agreement between Hans C. Mautner and the
Companies (incorporated by reference to Exhibit 10.63 of the Form S-
4 filed by CPI on August 13, 1998 (Reg. No. 333-61399)).
10.5 (a) Form of Employment Agreement between Mark S. Ticotin and the
Companies (incorporated by reference to Exhibit 10.64 of the Form S-
4 filed by CPI on August 13, 1998 (Reg. No. 333-61399)).
10.6 (a) Form of Incentive Stock Option Agreement between the Companies and
Hans C. Mautner pursuant to the SPG Operating Partnership 1998 Stock
Incentive Plan (incorporated by reference to Exhibit 10.59 of the
Form S-4 filed by CPI on August 13, 1998 (Reg. No. 333-61399)).
10.7 (a) Form of Incentive Stock Option Agreement between the Companies and
Mark S. Ticotin pursuant to the SPG Operating Partnership 1998 Stock
Incentive Plan (incorporated by reference to Exhibit 10.60 of the
Form S-4 filed by CPI on August 13, 1998 (Reg. No. 333-61399)).
10.8 (a) Form of Nonqualified Stock Option Agreement between the Companies and
Hans C. Mautner pursuant to the SPG Operating Partnership 1998 Stock
Incentive Plan (incorporated by reference to Exhibit 10.61 of the
Form S-4 filed by CPI on August 13, 1998 (Reg. No. 333-61399)).
10.9 (a) Form of Nonqualified Stock Option Agreement between the Companies and
Mark S. Ticotin pursuant to the SPG Operating Partnership 1998 Stock
Incentive Plan (incorporated by
</TABLE>
79
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
reference to Exhibit 10.62 of the Form S-4 filed by CPI on August
13, 1998 (Reg. No. 333-61399)).
10.10 (a) CPI Executive Severance Policy, as amended and restated effective as
of August 11, 1998 (incorporated by reference to Exhibit 10.65 of
the Form S-4 filed by CPI on August 13, 1998 (Reg. No. 333-61399)).
10.11 (b) Option Agreement to acquire the Excluded Retail Properties
(Previously filed as Exhibit 10.10).
10.12 (b) Option Agreement to acquire the Excluded Properties--Land (Previously
filed as Exhibit 10.11).
10.13 (b) Option Agreements dated as of December 1, 1993 between the Management
Company and the SPG Operating Partnership (Previously filed as
Exhibit 10.20.)
10.14 (b) Option Agreement dated as of December 1, 1993 to acquire Development
Land. (Previously filed as Exhibit 10.22.)
10.15 (b) Option Agreement dated December 1, 1993 between the Management
Company and the SPG Operating Partnership (Previously filed as
Exhibit 10.25.)
10.16 (b) Lock-Up Agreement dated December 20, 1993 between MSA and the SPG
Operating Partnership (Previously filed as Exhibit 10.27.)
10.17 Purchase Option and Right of First Refusal Agreement between DRP, LP
and Edward J. DeBartolo (for Northfield Square) (Incorporated by
reference to the 1994 DRC Form 10-K Exhibit 10(o).)
10.18 Office Lease between the SPG Operating Partnership and an affiliate
of EJDC (Southwoods Executive Center).
10.19 Purchase Option and Right of First Refusal Agreement between DRP, LP
and EJDC (for SouthPark Center Development Site) (Incorporated by
reference to the 1994 DRC Form 10-K Exhibit 10(p)(2).)
10.20 Purchase Option and Right of First Refusal Agreement between DRP, LP
and Washington Mall Associates (for Washington, Pennsylvania Site)
(Incorporated by reference to the 1994 DRC Form 10-K Exhibit
10(p)(3).)
10.21 Purchase Option and Right of First Refusal Agreement between DRP, LP
and DeBartolo-Stow Associates (for University Town Center)
(Incorporated by reference to the 1994 DRC Form 10-K Exhibit 10(r).)
10.22 Acquisition Option Agreement between DRP, LP and Coral Square
Associates (for Coral Square) (Incorporated by reference to the 1994
DRC Form 10-K Exhibit 10(s)(1).)
10.23 Acquisition Option Agreement between DRP, LP and Lakeland Square
Associates (for Lakeland Square) (Incorporated by reference to the
1994 DRC Form 10-K Exhibit 10(s)(2).)
10.24 Fourth Amendment to Purchase Option Agreement, dated as of July 15,
1996, between JCP Realty, Inc., and DRP, LP (incorporated by
reference to Exhibit 10.61 of SPG's 1996 Form 10-K).
10.25 Limited Partnership Agreement of SDG Macerich Properties, L.P.
21.1 List of Subsidiaries of the SPG Operating Partnership. 81
23.1 Consent of Arthur Andersen LLP. 82
</TABLE>
(a) Represents a management contract, or compensatory plan, contract or
arrangement required to be filed pursuant to Regulation S-K.
(b) Incorporated by reference to the exhibit indicated of Old SPG's 1993
Form 10-K.
80
<PAGE>
EXHIBIT 21.1
List of Subsidiaries of the SPG Operating Partnership
-----------------------------------------------------
<TABLE>
<CAPTION>
Subsidiary Jurisdiction
- ---------- ------------
<S> <C>
The Retail Property Trust Massachusetts
Simon Property Group (Illinois), L.P. Illinois
Simon Property Group (Texas), L.P. Texas
Shopping Center Associates New York
DeBartolo Capital Partnership Delaware
Simon Capital Limited Partnership Delaware
SDG Macerich Properties, L.P. Delaware
M.S. Management Associates, Inc. Delaware
DeBartolo Properties Management, Inc. Ohio
Mayflower Realty LLC Delaware
</TABLE>
Omits names of subsidiaries which as of December 31, 1999 were not, in the
aggregate, a "significant subsidiary".
81
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports, included in this Form 10-K, into Simon Property Group, L.P.'s (formerly
Simon DeBartolo Group, L.P.) previously filed Registration Statement File No.
333-33545.
ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
March 27, 2000.
82
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001022344
<NAME> SIMON PROPERTY GROUP, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 153,743
<SECURITIES> 0
<RECEIVABLES> 302,438
<ALLOWANCES> 14,488
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 12,640,146
<DEPRECIATION> 1,093,103
<TOTAL-ASSETS> 11,547,043
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 8,768,841
0
1,032,320
<COMMON> 3,635,881
<OTHER-SE> (114,964)
<TOTAL-LIABILITY-AND-EQUITY> 12,640,146
<SALES> 0
<TOTAL-REVENUES> 1,880,235
<CGS> 0
<TOTAL-COSTS> 1,019,157
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,367
<INTEREST-EXPENSE> 579,848
<INCOME-PRETAX> 297,843
<INCOME-TAX> 0
<INCOME-CONTINUING> 297,843
<DISCONTINUED> 0
<EXTRAORDINARY> (6,705)
<CHANGES> 0
<NET-INCOME> 291,138
<EPS-BASIC> 0.95
<EPS-DILUTED> 0.95
<FN>
<F1> The SPG Operating Partnership does not report using a classified balance
sheet.
</FN>
</TABLE>
