<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : March 4, 1999
SIMON PROPERTY GROUP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 001-14469 046268599
- --------------------------------------------------------------------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
115 WEST WASHINGTON STREET
INDIANAPOLIS, INDIANA 46204
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 317.636.1600
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
1 of 41
<PAGE>
Item 5. Other Events
On March 4, 1999, the Registrant made available additional ownership
and operation information concerning the Registrant, SPG Realty Consultants,
Inc. (the Registrant's paired-share affiliate), Simon Property Group, L.P., and
properties owned or managed as of December 31, 1998, in the form of a
Supplemental Information package, a copy of which is included as an exhibit to
this filing. The Supplemental Information package is available upon request as
specified therein.
Item 7. Financial Statements and Exhibits
Financial Statements:
None
Exhibits:
Page Number in
Exhibit No. Description This Filing
- ----------- ----------- -----------
99 Supplemental Information 4
as of December 31, 1998
2 of 41
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Dated: March 4, 1999
SIMON PROPERTY GROUP, INC.
By: /s/ Stephen E. Sterrett
---------------------------
Stephen E. Sterrett,
Treasurer
3 of 41
<PAGE>
Exhibit 99
SIMON PROPERTY GROUP
SUPPLEMENTAL INFORMATION
Table of Contents
As of December 31, 1998
Information Page
----------- ----
Overview 5
Ownership Structure 6-8
Reconciliation of Income to
Funds from Operations ("FFO") 9
Selected Financial Information 10-11
Portfolio GLA, Occupancy & Rent Data 12-14
Rent Information 15
Lease Expirations 16-17
Total Debt Amortization and Maturities by Year 18
Summary of Indebtedness 19
Summary of Indebtedness by Maturity 20-25
Summary of Variable Rate Debt and Interest Rate Protection Agreements 26-27
New Development Activities 28
Significant Renovation/Expansion Activities 29
Capital Expenditures 30
Gains on Sales of Peripheral Land 31
Teleconference Text - February 18, 1999 32-41
4 of 41
<PAGE>
SIMON PROPERTY GROUP
Overview
The Company
- -----------
Simon Property Group, Inc. ("SPG") (NYSE:SPG) is a self-administered and
self-managed real estate investment trust ("REIT"). Simon Property Group, L.P.
(the "Operating Partnership") is a subsidiary partnership of SPG. Shares of SPG
are paired with beneficial interests in shares of stock of SPG Realty
Consultants, Inc. ("SRC", and together with SPG, the "Company"). The Company and
the Operating Partnership (collectively the "Simon Group") are engaged primarily
in the ownership, operation, management, leasing, acquisition, expansion and
development of real estate properties, primarily regional malls and community
shopping centers.
On September 24, 1998, the merger between Simon DeBartolo Group, Inc. ("SDG")
and Corporate Property Investors, Inc. ("CPI"), a privately held real estate
investment trust and its "paired share" affiliate was completed. The CPI merger
added 22 high quality regional malls plus three office buildings to the Simon
Group portfolio.
At December 31, 1998, the Company, directly or through the Operating
Partnership, owned or had an interest in 242 properties which consisted of
regional malls, community shopping centers, and specialty and mixed-use
properties containing an aggregate of 166 million square feet of gross leasable
area (GLA) in 35 states and one asset in Europe. The Company, together with its
affiliated management companies, owned or managed approximately 180 million
square feet of GLA in retail and mixed-use properties.
On February 24, 1999, SPG announced that it has entered into a definitive
agreement to acquire a portfolio of up to 14 regional malls from New England
Development Company (NED) and assume management responsibilities from NED's
affiliated management company, WellsPark Management LLC. The purchase price for
this 10.6 million square foot portfolio is $1.725 billion, which includes ten
properties in Massachusetts, two in New Hampshire and one each in Connecticut
and Virginia.
This package was prepared to provide (1) ownership information, (2) certain
operational information, and (3) debt information as of December 31, 1998, for
the Company and the Operating Partnership.
Certain statements contained in this Supplemental Package may constitute
"forward-looking statements" made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
forward-looking statements involve risks and uncertainties which may affect the
business and prospects of the Company and the Operating Partnership, including
the risks and uncertainties discussed in other periodic filings made by the
Company and the Operating Partnership with the Securities and Exchange
Commission.
We hope you find this Supplemental Package beneficial. Any questions, comments
or suggestions should be directed to: Shelly J. Doran, Director of Investor
Relations-Simon Property Group, P.O. Box 7033, Indianapolis, IN 46207 (317)
685-7330.
5 of 41
<PAGE>
SIMON PROPERTY GROUP
ECONOMIC OWNERSHIP STRUCTURE (1)
DECEMBER 31, 1998
SIMON PROPERTY GROUP, L.P.
225,669,174 units
SD Property Group, Inc.(2)
%
------
SPG Properties, Inc. 99.99%
100 Individual Shareholders 0.01%
------
100.00%
37,873,965 Units
SPG Properties, Inc. (2)
%
-------
Simon Property Group, Inc. 99.99%
100 Individual Shareholders 0.01%
-------
100.00%
75,825,562 Units
Simon Property Group, Inc.(2)(3)(4)
Common Shareholders Shares %
------------------- ----------- -----
Public Shareholders 162,696,498 97.6%
Simon Family 3,318,421 2.0%
DeBartolo Family 31,623 0.0%
Executive Management (5) 728,489(5) 0.4%
---------- ------
166,775,031 100.0%
47,787,490 units
Limited Partners
("Limited Partners")
Unitholders Units %
----------- ---------- -----
Simon Family 34,584,455 53.9%
DeBartolo Family 22,222,599 34.6%
Executive Management (5) 153,498 0.2%
Other Limited Partners 7,221,605 11.3%
---------- ------
64,182,157 100.0%
---------- ------
Ownership of Simon Property Group, L.P.
%
-----
Simon Property Group, Inc.
Public Shareholders 69.8%
Simon Family 1.5%
DeBartolo Family 0.0%
Executive Management (5) 0.3%
------
Subtotal 71.6%
------
Limited Partners
Simon Family 15.3%
DeBartolo Family 9.8%
Executive Management (5) 0.1%
Other Limited Partners 3.2%
------
Total 28.4%
------
100.0%
------
(1) Schedule excludes preferred stock (see "Preferred Stock Outstanding") and
units not convertible into common stock.
(2) General partner of Simon Property Group, L.P.
(3) Shares of Simon Property Group, Inc. ("SPG") are paired with beneficial
interests in shares of stock of SPG Realty Consultants, Inc.
(4) The number of outstanding shares of common stock of SPG exceeds the number
of Simon Property Group, L.P. units owned by SPG by approximately 5.29
million. This is the result of the direct ownership of Ocean County Mall by
SPG.
(5) Executive management excludes Simon family members.
6 of 41
<PAGE>
SIMON PROPERTY GROUP
Changes in Common Stock and Unit Ownership
For the Period from December 31, 1997 through December 31, 1998
<TABLE>
<CAPTION>
Operating Company
Partnership Common
Units(1) Shares(2)
------- --------
<S> <C> <C>
Number Outstanding at December 31, 1997 61,850,762 109,643,001
Restricted Stock Awards (Stock Incentive Program), Net -- 495,131
Issuance of Stock and Units in Connection
with Acquisitions of Cordova Mall,
Lakeline Mall, The Westchester,
Rolling Oaks Mall, and Washington Plaza 2,344,199 519,889
Conversion of units into cash (9,904) --
Conversion of units into stock (2,900) 2,900
Shares Placed in Unit Investment Trusts -- 2,957,335
Issuance of Stock in connection with the DeBartolo Merger -- 32,062
Issuance of Stock in connection with the CPI Merger -- 53,078,564
Issuance of Stock for Stock Option Exercises -- 46,149
Number Outstanding at December 31, 1998(3) 64,182,157 166,775,031
</TABLE>
Total Common Shares and Units Outstanding at December 31, 1998:
230,957,188(3)
(1) Excludes units owned by the Company (shown here as Company Common Shares)
and units not convertible into common shares.
(2) Common shares prior to the CPI Merger reflected shares of Simon DeBartolo
Group, Inc.
(3) Excludes preferred units relating to preferred stock outstanding (see
Schedule of Preferred Stock).
7 of 41
<PAGE>
SIMON PROPERTY GROUP
Preferred Stock Outstanding
As of December 31, 1998
($ in 000's)
<TABLE>
<CAPTION>
Number Liquidation Ticker
Issuer Description of Shares Preference $ Symbol
Convertible:
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Simon Property Group, Inc. Series A Preferred 209,249 $1,000 $209,249 N/A
6.5% Convertible(1)
- ----------------------------------------------------------------------------------------------------------------------
Simon Property Group, Inc. Series B Preferred 4,844,331 $100 $484,433 SPGPrB
6.5% Convertible(2)
- ----------------------------------------------------------------------------------------------------------------------
Perpetual:
- ----------------------------------------------------------------------------------------------------------------------
SPG Properties, Inc. Series B Preferred 8,000,000 $25 $200,000 SGVPrB
83/4% Perpetual(3)
- ----------------------------------------------------------------------------------------------------------------------
SPG Properties, Inc. Series C Preferred 7.89% 3,000,000 $50 $150,000 N/A
Perpetual(4)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumed in connection with the CPI merger. Each share is convertible
into a number of shares of common stock obtained by dividing $1,000 by
$26.319 (conversion price), which is subject to adjustment as outlined
below. The stock is not redeemable, except as needed to maintain or
bring the direct or indirect ownership of the capital stock of the
Company into conformity with the requirements of Section 856(a)(6) of
the Code. Subsequent to December 31, 1998, the largest shareholder of
this issue elected to convert their preferred stock to common stock
(150,000 shares). This transaction was completed effective February 26,
1999.
(2) Issued as part of the consideration for the CPI merger. Each share is
convertible into a number of shares of common stock of the Company
obtained by dividing $100 by $38.669 (the conversion price), which is
subject to adjustment as outlined below. The Company may redeem the
stock 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. The shares are traded on the New York Stock
Exchange. The closing price on December 31, 1998, was $83.00 per share.
The conversion prices of the Series A and Series B Convertible
Preferred Stock are subject to adjustment by the Company in connection
with certain events including (i) any subdivision or combination of
shares of common stock of the Company or the declaration of a
distribution in the form of additional shares of common stock of the
Company, (ii) issuances of rights or warrants to the holders of common
stock of the Company, and (iii) any consolidation or merger to which
the Company is a party, any sale or conveyance to another person of all
or substantially all of the assets of the Company or any statutory
exchange of securities with another person.
(3) SPG Properties, Inc. may redeem the stock on or after September 29,
2006. The shares are not convertible into any other securities of SPG
Properties, Inc. or the Company. The shares are traded on the New York
Stock Exchange. The closing price on December 31, 1998, was $25.5625
per share.
(4) The Cumulative Step-Up Premium Rate Preferred Stock was issued at
7.89%. The shares are redeemable after September 30, 2007. Beginning
October 1, 2012, the rate increases to 9.89%.
8 of 41
<PAGE>
SIMON PROPERTY GROUP
Reconciliation of Income to Funds From Operations ("FFO")
As of December 31, 1998
(Amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
1998 1997
---- ----
<S> <C> <C>
Income Before Extraordinary Items $ 236,230 $ 203,133
Plus: Depreciation and Amortization from Consolidated Properties 267,423 200,084
Less: Minority Interest Portion of Depreciation and Amortization (7,307) (5,581)
Plus: Simon's Share of Depreciation, Amortization and
Extraordinary Items from Unconsolidated Affiliates
82,323 46,760
Plus: (Gain) Loss on Sales of Assets 7,283 (20)
Less: Preferred Dividends (41,471) (29,248)
--------- ---------
FFO of Simon Portfolio $ 544,481 $ 415,128
========= =========
Percent Increase 31.2%
FFO of Simon Portfolio $ 544,481 $ 415,128
Basic FFO per Paired Share:
- ---------------------------
Basic FFO Allocable to the Company $ 361,326 $ 258,049
Basic Weighted Average Paired Shares Outstanding 126,522 99,920
Basic FFO per Paired Share $ 2.86 $ 2.58
========= =========
Percent Increase 10.9%
Diluted FFO per Paired Share:
- -----------------------------
Diluted FFO Allocable to the Company $ 361,671 $ 258,401
Diluted Weighted Average Number of Equivalent Paired Shares 126,879 100,304
Diluted FFO per Paired Share $ 2.85 $ 2.58
========= =========
Percent Increase 10.5%
</TABLE>
9 of 41
<PAGE>
SIMON PROPERTY GROUP
Selected Financial Information
As of December 31, 1998
(In thousands, except as noted)
<TABLE>
<CAPTION>
As of or for the
Twelve Months Ended
December 31,
1998 1997 % Change
---- ---- --------
<S> <C> <C> <C>
Financial Highlights of the Company
- -----------------------------------
Total Revenue - Consolidated Properties $1,405,599 $ 1,054,157 33.3%
Total EBITDA of Simon Portfolio $1,361,432 $ 940,028 44.8%
EBITDA After Minority Interest $1,068,233 $ 746,842 43.0%
Net Income Available to Common Shareholders
$ 133,598 $ 107,989 23.7%
Basic Net Income per Common Share $ 1.06 $ 1.08 -1.9%
Diluted Net Income per Common Share
$ 1.06 $ 1.08 -1.9%
FFO of the Simon Portfolio $ 544,481 $ 415,128 31.2%
Basic FFO Allocable to the Company $ 361,326 $ 258,049 40.0%
Diluted FFO Allocable to the Company
$ 361,671 $ 258,401 40.0%
Basic FFO per Common Share $ 2.86 $ 2.58 10.9%
Diluted FFO per Common Share $ 2.85 $ 2.58 10.5%
Distributions per Common Share $ 2.0200 $ 2.0075 0.6%
Operational Statistics
- ----------------------
Occupancy at End of Period:
Regional Malls (1) 90.0% 87.3% 2.7%
Community Shopping Centers (2) 91.4% 91.3% 0.1%
Average Base Rent per Square Foot:
Regional Malls (1) $ 25.70 $ 23.65 8.7%
Community Shopping Centers (2) $ 7.68 $ 7.44 3.2%
Regional Malls:
Total Tenant Sales Volume,
in millions (3)(4) $ 12,936 $ 7,960 62.5%
Total Sales per Square Foot(4) $ 343 $ 315 8.9%
Comparable Sales per Square Foot (4) $ 346 $ 318 8.8%
Number of Properties Open at End of Period 242 202 19.8%
Total GLA at End of Period, in millions 165.9 128.8 28.8%
</TABLE>
(1) Includes mall and freestanding stores.
(2) Includes all Owned GLA.
(3) Represents only those tenants who report sales.
(4) Based upon the standard definition of sales for regional malls adopted by
the International Council of Shopping Centers which includes only mall and
freestanding stores less than 10,000 square feet.
10 of 41
<PAGE>
SIMON PROPERTY GROUP
Selected Financial Information
As of December 31, 1998
(In thousands, except as noted)
<TABLE>
<CAPTION>
December 31, December 31,
Equity Information 1998 1997
- ------------------ ----------- ------------
<S> <C> <C>
Limited Partner Units Outstanding at End of Period 64,182 61,851
Common Shares Outstanding at End of Period 166,775 109,643
----------- -----------
Total Common Shares and Units Outstanding at End of Period 230,957 171,494
=========== ===========
Basic Weighted Average Paired Shares Outstanding 126,522 99,920
Diluted Weighted Average Number of Equivalent Paired Shares (2) 126,879 100,304
December 31, December 31,
Debt Information 1998 1997
- ------------------ ----------- ------------
Consolidated Debt $ 7,973,372 $ 5,077,990
Simon Group's Share of Joint Venture Debt $ 1,227,044 $ 770,776
Debt-to-Market Capitalization
- -----------------------------
Common Stock Price at End of Period $ 28.50 $ 32.6875
Equity Market Capitalization (1) $ 7,608,188 $ 5,966,702
Total Consolidated Capitalization $15,581,560 $11,044,692
Consolidated Debt-to-Market Capitalization 51.2% 46.0%
Total Capitalization - Including Simon Group's Share of JV Debt $16,808,604 $11,815,468
Debt-to-Market Capitalization - Including Simon Group's Share of JV Debt 54.7% 49.5%
</TABLE>
(1) Market value of Common Stock, Units and all issues of Preferred Stock of
SPG and SPG Properties, Inc.
(2) The convertible preferred Series A and B shares are antidilutive securities
under the computation of diluted net income per share; therefore, the
securities have not been considered outstanding for purposes of computing
diluted FFO per share.
11 of 41
<PAGE>
SIMON PROPERTY GROUP
Portfolio GLA, Occupancy & Rent Data (Including CPI Portfolio)
As of December 31, 1998
<TABLE>
<CAPTION>
Avg.
% of Annualized
Owned GLA Base Rent Per
Type of GLA- Total % of Which is Leased Sq.Ft.
Property Sq. Ft. Owned GLA Owned GLA Leased of Owned GLA
- -------------------------------------------------------------------------------------------------------------------------
Regional Malls
- --------------
<S> <C> <C> <C> <C> <C>
- -Anchor 87,031,259 26,963,812 27.5% 98.2% $ 3.67
- -Mall Store 48,785,621 48,737,725 49.6% 89.9% $26.35
- -Freestanding 3,238,575 1,748,777 1.8% 92.5% $ 8.28
----------- ----------
Subtotal 52,024,196 50,486,502 51.4% 90.0% $25.70
Regional Mall Total 139,055,455 77,450,314 78.9% 92.8% $17.76
Community Shopping Centers
- -Anchor 12,379,916 8,082,007 8.2% 96.5% $ 6.11
- -Mall Store 4,868,525 4,782,767 4.9% 82.1% 10.90
- -Freestanding 1,009,927 479,877 .5% 97.9% 7.44
Community Ctr. Total 18,258,368 13,344,651 13.6% 91.4% $ 7.68
Office Portion
Of Mixed-Use Properties 2,760,926 2,760,926 2.8% 90.6% $19.86
Value-Oriented
Super-Regional Malls 3,777,314 3,635,719 3.7% 98.2% $16.40
Properties under
Redevelopment 2,028,615 983,392 1.0%
GRAND TOTAL 165,880,678 98,175,002 100.00%
</TABLE>
Occupancy History
Community
As of Regional Malls(1)* Shopping Centers(2)*
----- ----------------- --------------------
12/31/98 90.0% 91.4%
12/31/97 87.3% 91.3%
12/31/96 84.7% 91.6%
12/31/95(3) 85.5% 93.6%
12/31/94(3) 85.6% 93.9%
*Historical statistical data has not been restated to include the CPI portfolio.
(1) Includes mall and freestanding stores.
(2) Includes all Owned GLA.
(3) On a pro forma combined basis giving effect to the Merger with DeBartolo
Realty Corporation ("DRC") for periods presented.
12 of 41
<PAGE>
SIMON PROPERTY GROUP
Portfolio GLA, Occupancy & Rent Data (Excluding CPI Portfolio)
As of December 31, 1998
<TABLE>
<CAPTION>
Avg.
% of Annualized
Owned GLA Base Rent Per
Type of GLA- Total % of Which is Leased Sq.Ft.
Property Sq. Ft. Owned GLA Owned GLA Leased of Owned GLA
- -------------------------------------------------------------------------------------------------------------------------
Regional Malls
- --------------
<S> <C> <C> <C> <C> <C>
- -Anchor 70,875,179 24,089,514 28.1% 98.6% $ 3.42
- -Mall Store 39,872,471 39,839,875 46.5% 89.3% $23.96
- -Freestanding 2,922,641 1,612,405 1.9% 95.0% $ 8.20
----------- ----------- -----
Subtotal 42,795,112 41,452,280 48.4% 89.5% $23.28
Regional Mall
Total 113,670,291 65,541,794 76.5% 92.9% $15.61
Community Shopping Centers
- --------------------------
- -Anchor 12,358,987 8,061,078 9.4% 96.5% $ 6.11
- -Mall Store 4,766,329 4,680,571 5.4% 81.8% 10.92
- -Freestanding 997,769 479,877 .6% 97.9% 7.44
Community Ctr.Total 18,123,085 13,221,526 15.4% 91.4% $ 7.66
Office Portion
Of Mixed-Use
Properties 2,276,021 2,276,021 2.7% 91.0% $19.13
Value-Oriented
Super-Regional Malls 3,777,314 3,635,719 4.2% 98.2% $16.40
Properties under
Redevelopment 2,028,615 983,392 1.2%
GRAND TOTAL 139,875,326 85,658,452 100.00%
</TABLE>
Occupancy History
Community
As of Regional Malls(1) Shopping Centers(2)
----- --------------- ------------------
12/31/98 89.5% 91.4%
12/31/97 87.3% 91.3%
12/31/96 84.7% 91.6%
12/31/95(3) 85.5% 93.6%
12/31/94(3) 85.6% 93.9%
(1) Includes mall and freestanding stores.
(2) Includes all Owned GLA.
(3) On a pro forma combined basis giving effect to the merger with DeBartolo
Realty Corporation ("DRC") for periods presented.
13 of 41
<PAGE>
SIMON PROPERTY GROUP
Portfolio GLA, Occupancy & Rent Data (CPI Portfolio Only)
As of December 31, 1998
<TABLE>
<CAPTION>
Avg.
% of Annualized
Owned GLA Base Rent Per
Type of GLA- Total % of Which is Leased Sq.Ft.
Property Sq. Ft. Owned GLA Owned GLA Leased of Owned GLA
- -------------------------------------------------------------------------------------------------------------------------
Regional Malls
- --------------
<S> <C> <C> <C> <C> <C>
- -Anchor 16,156,080 2,874,298 23.0% 94.6% $ 6.08
- -Mall Store 8,913,150 8,897,850 71.1% 92.4% $36.36
- -Freestanding 315,934 136,372 1.0% 62.9% $17.70
---------- ---------- -----
Subtotal 9,229,084 9,034,222 72.1% 92.0% $36.34
Regional Mall Total 25,385,164 11,908,520 95.1% 92.6% $29.69
Community Shopping Centers
- --------------------------
- -Anchor 20,929 20,929 0.2% 100.0% $ 8.35
- -Mall Store 102,196 102,196 0.8% 96.4% 9.91
- -Freestanding 12,158 0 0.0% N/A N/A
----
Community Ctr. Total 135,283 123,125 1.0% 97.0% $ 9.64
Office Portion
Of Mixed-Use
Properties 484,905 484,905 3.9% 88.9% $23.39
GRAND TOTAL(4) 26,005,352 12,516,550 100.00%
</TABLE>
Occupancy History
Community
As of Regional Malls(1) Shopping Centers(2)
----- ---------------- ------------------
12/31/98 92.0% 97.0%
12/31/97 94.0% (3)
12/31/96 90.4% (3)
12/31/95 93.1% (3)
12/31/94 92.4% (3)
(1) Includes mall and freestanding stores.
(2) Includes all Owned GLA.
(3) Historical data not available and not material.
(4) Excludes Palm Beach Mall, 50% owned by SPG prior to the CPI merger.
14 of 41
<PAGE>
SIMON PROPERTY GROUP
Rent Information (Including CPI Portfolio)
As of December 31, 1998
<TABLE>
<CAPTION>
Average Base Rent
- -----------------
Mall & Freestanding % Community %
As of Stores at Regional Malls Change Shopping Centers Change
----- ------------------------ ------ ---------------- ------
<S> <C> <C> <C> <C>
12/31/98 $25.70 8.7% $7.68 3.2%
12/31/97 23.65 14.4 7.44 -2.7
12/31/96 20.68 7.8 7.65 4.9
12/31/95(1) 19.18 4.4 7.29 2.4
12/31/94(1) 18.37 3.8 7.12 N/A
</TABLE>
<TABLE>
<CAPTION>
Rental Rates
- ------------
Base Rent (2)
-------------
Store Openings Store Closings Amount of Change
Year During Period During Period Dollar Per Earnings
- ---- ------------- ------------- ------ ------------
Regional Malls:
- ---------------
<S> <C> <C> <C> <C>
1998 $27.33 $23.63 $3.70 15.7%
1997 29.66 21.26 8.40(3) 39.5(3)
1996 23.59 18.73 4.86 25.9
Community Shopping Centers:
- ---------------------------
1998 $10.43 $10.95 $(0.52) (4.7)%
1997 8.63 9.44 (0.81) (8.6)
1996 8.18 6.16 2.02 32.8
</TABLE>
(1) On a pro forma combined basis giving effect to the merger with DRC for
periods presented.
(2) Represents the average base rent in effect during the period for those
tenants who signed leases as compared to the average base rent in effect
during the period for those tenants whose leases terminated or expired.
(3) Including the acquisitions of Dadeland Mall, The Fashion Mall at Keystone
at the Crossing, the RPT properties and the opening of The Source.
Excluding these events, the spread was $6.57, or a 30.9% increase.
15 of 41
<PAGE>
SIMON PROPERTY GROUP
Lease Expirations(1) - (Including CPI Portfolio)
As of December 31, 1998
<TABLE>
<CAPTION>
Avg. Base Rent
Number of Square per Square Foot
Year Leases Expiring Feet at 12/31/98
Regional Malls - Mall & Freestanding Stores
- -------------------------------------------
<S> <C> <C> <C>
1999 1,611 3,363,036 24.85
2000 1,712 3,352,259 26.21
2001 1,477 3,388,029 24.98
2002 1,441 3,308,860 25.48
2003 1,611 3,979,060 26.48
2004 1,415 3,916,471 27.03
2005 1,283 4,038,931 26.35
2006 1,417 4,082,782 27.74
2007 1,219 3,551,788 30.36
2008 1,097 3,760,709 29.03
---------- -----------
TOTALS 14,283 36,741,925 $26.93
Regional Malls - Anchor Tenants
- -------------------------------
1999 13 1,599,354 2.24
2000 14 2,031,903 1.88
2001 13 1,759,973 1.92
2002 13 1,564,338 1.99
2003 16 1,949,474 2.49
2004 21 1,953,750 3.57
2005 13 1,429,815 3.02
2006 17 2,000,234 3.40
2007 7 636,374 2.79
2008 11 1,202,085 4.42
---------- -----------
TOTALS 138 16,127,300 $2.72
Community Centers - Mall Stores & Freestanding Stores
- -----------------------------------------------------
1999 130 381,136 11.02
2000 278 727,358 11.65
2001 189 545,945 11.78
2002 133 475,448 11.26
2003 130 568,836 11.16
2004 66 336,628 9.52
2005 34 258,105 9.63
2006 21 259,848 7.39
2007 18 155,360 11.66
2008 19 151,301 10.82
---------- -----------
TOTALS 1,018 3,859,965 $10.84
</TABLE>
16 of 41
<PAGE>
SIMON PROPERTY GROUP
Lease Expirations(1) - (Including CPI Portfolio)
As of December 31, 1998
<TABLE>
<CAPTION>
Avg. Base Rent
Number of Square per Square Foot
Year Leases Expiring Feet at 12/31/98
Community Centers - Anchor Tenants
- ----------------------------------
<S> <C> <C> <C>
1999 7 346,047 2.89
2000 10 339,367 5.26
2001 13 537,403 4.13
2002 9 365,636 5.57
2003 10 299,248 6.83
2004 9 232,700 6.64
2005 11 630,445 5.61
2006 10 660,361 5.46
2007 14 746,056 6.05
2008 10 399,376 7.70
---------- -----------
TOTALS 103 4,556,639 $5.58
</TABLE>
(1) Does not consider the impact of options that may be contained in leases.
17 of 41
<PAGE>
SIMON PROPERTY GROUP
SPG's Share of Total Debt Amortization and Maturities by Year
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's Share SPG's Share SPG's Share of SPG's
of Secured of Unsecured Unconsolidated Share of
Consolidated Consolidated Joint Venture Total
Year Debt Debt Secured Debt Debt
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 ............ 0 205,056 818,000 10,520 1,033,577
2000 ............ 1 379,085 1,083,000 124,314 1,586,400
2001 ............ 2 260,549 0 8,040 268,590
2002 ............ 3 584,607 250,000 102,678 937,285
2003 ............ 4 125,521 575,000 203,050 903,571
2004 ............ 5 426,710 400,000 41,848 868,558
2005 ............ 6 106,855 660,000 93,721 860,576
2006 ............ 7 117,801 250,000 214,932 582,734
2007 ............ 8 197,223 180,000 99,390 476,614
2008 ............ 9 44,924 0 245,608 290,532
Thereafter 287,775 875,000 72,507 1,235,281
---------- ---------- ---------- ----------
$2,736,106 $5,091,000 $1,216,610 $9,043,716
========== ========== ========== ==========
Premiums and Discounts on Indebtedness, Net
26,891
----------
SPG's Share of Total Indebtedness $9,070,607
==========
</TABLE>
18 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Indebtedness
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's
Total Share of Weighted Avg. Weighted Avg. Years
Indebtedness Indebtedness Interest Rate to Maturity
------------ ------------ ------------- -----------
Consolidated Indebtedness
<S> <C> <C> <C> <C>
Mortgage Debt
Fixed Rate 2,464,975 2,382,531 7.56% 5.9
Debt Swapped to Maturity 50,000 50,000 7.74% 2.7
Capped to Maturity, Currently "In the Money" 134,999 98,969 6.17% 5.7
Other Hedged Debt 50,000 50,000 5.61% 1.0
Floating Rate Debt 166,258 154,606 6.37% 3.4
--------- --------- ---- ----
Total Mortgage Debt 2,866,232 2,736,106 7.41% 5.6
Unsecured Debt
Fixed Rate 3,190,000 3,190,000 7.21% 8.2
Capped to Maturity, Currently "In the Money" 63,000 63,000 6.14% 1.1
Floating Rate Debt 70,000 70,000 5.71% 1.1
--------- --------- ---- ----
Subtotal 3,323,000 3,323,000 7.17% 7.9
CPI Merger Facility 900,000 900,000 5.71% 0.9
CPI Merger Facility (Swapped) 500,000 500,000 5.71% 1.7
Revolving Corporate Credit Facility 228,000 228,000 5.71% 0.7
Revolving Corporate Credit Facility (Hedged) 140,000 140,000 5.71% 0.7
--------- --------- ---- ----
Total Unsecured Debt 5,091,000 5,091,000 5.71% 5.5
Adjustment to Fair Market Value - Fixed Rate 14,865 15,174 N/A N/A
Adjustment to Fair Market Value - Variable Rate 1,275 1,283 N/A N/A
--------- --------- ---- ----
Consolidated Mortgages and Other Indebtedness 7,973,372 7,843,563 6.91% 5.5
========= ========= ==== ====
Joint Venture Mortgage Indebtedness
Fixed Rate 2,159,307 930,715 7.44% 7.6
Other Hedged Debt 385,984 138,403 5.77% 4.0
Floating Rate Debt 295,430 147,492 5.91% 2.7
--------- --------- ---- ----
Subtotal 2,840,721 1,216,610 7.00% 6.6
Adjustment to Fair Market Value - Fixed Rate 20,868 10,434 N/A N/A
--------- --------- ---- ----
Joint Venture Mortgages and Other Indebtedness 2,861,589 1,227,044 7.00% 6.6
========= ========= ==== ====
SPG's Share of Total Indebtedness
9,070,607 6.92% 5.6
--------- ---- ----
</TABLE>
19 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Indebtedness By Maturity
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's Weighted Avg
Property Maturity Interest Total Share of Interest Rate
Name Date Rate Indebtedness Indebtedness by Year
---- ---- ---- ------------ ------------ -------
Consolidated Indebtedness
Fixed Rate Mortgage Debt:
<S> <C> <C> <C> <C>
Great Lakes Mall - 2 3/1/99 7.07% 8,489 8,489
Ingram Park Mall - 2 12/30/99 9.63% 7,000 7,000
Ingram Park Mall - 1 12/30/99 8.10% 47,955 47,955
Barton Creek Square 12/30/99 8.10% 62,064 62,064
La Plaza Mall 12/30/99 8.25% 49,475 49,475
---------- ----------
Subtotal 1999 174,983 174,983 8.15%
Florida Mall, The - 2 2/28/00 6.65% 90,000 90,000
South Shore (3) 4/1/00 9.75% 82 82
Windsor Park Mall - 1 6/1/00 8.00% 5,771 5,771
Trolley Square - 1 7/23/00 5.81% 19,000 17,100
North East Mall 9/1/00 10.00% 21,934 21,934
Bloomingdale Court 12/1/00 8.75% 27,359 27,359
Forest Plaza 12/1/00 8.75% 16,904 16,904
Fox River Plaza 12/1/00 8.75% 12,654 12,654
Lake View Plaza 12/1/00 8.75% 22,169 22,169
Lincoln Crossing 12/1/00 8.75% 997 997
Matteson Plaza 12/1/00 8.75% 11,159 11,159
Regency Plaza 12/1/00 8.75% 1,878 1,878
St. Charles Towne Plaza 12/1/00 8.75% 30,742 30,742
West Ridge Plaza 12/1/00 8.75% 4,612 4,612
White Oaks Plaza 12/1/00 8.75% 12,345 12,345
---------- ----------
Subtotal 2000 277,607 275,707 7.97%
Biltmore Square 1/1/01 7.15% 26,681 26,681
Chesapeake Square 1/1/01 7.28% 48,164 48,164
Port Charlotte Town Center - 1 1/1/01 7.28% 52,731 52,731
Great Lakes Mall - 1 3/1/01 6.74% 52,632 52,632
J.C. Penney/Net Leased (Norfolk) (3) 11/30/01 8.50% 991 991
---------- ----------
Subtotal 2001 181,199 181,199 7.11%
Lima Mall 3/1/02 7.12% 18,903 18,903
Columbia Center 3/15/02 7.62% 42,326 42,326
Northgate Shopping Center 3/15/02 7.62% 79,035 79,035
Tacoma Mall 3/15/02 7.62% 92,474 92,474
J.C. Penney/Net Leased (Chattanooga) (3) 5/31/02 6.80% 847 847
River Oaks Center 6/1/02 8.67% 32,500 32,500
North Riverside Park Plaza - 1 9/1/02 9.38% 3,918 3,918
North Riverside Park Plaza - 2 9/1/02 10.00% 3,617 3,617
Principal Mutual Mortgages - Pool 1 (1) 9/15/02 6.81% 103,698 103,698
Principal Mutual Mortgages - Pool 2 (2) 9/15/02 6.77% 137,823 137,823
Northlake Mall (3) 12/1/02 8.00% 1,053 1,053
Palm Beach Mall (4) 12/15/02 7.50% 50,471 50,471
---------- ----------
Subtotal 2002 566,665 566,665 7.32%
Miami International Mall 12/21/03 6.91% 46,483 27,890
---------- ----------
Subtotal 2003 46,483 27,890 6.91%
</TABLE>
20 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Indebtedness By Maturity
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's Weighted Avg
Property Maturity Interest Total Share of Interest Rate
Name Date Rate Indebtedness Indebtedness by Year
---- ---- ---- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Battlefield Mall - 1 1/1/04 7.50% 48,665 48,665
Battlefield Mall - 2 1/1/04 6.81% 45,000 45,000
Forum Phase I - Class A-1 5/15/04 7.13% 46,997 28,198
Forum Phase II - Class A-1 5/15/04 7.13% 43,004 23,652
CMBS Loan - Fixed Component 12/19/04 7.27% 175,000 175,000
---------- ----------
Subtotal 2004 358,666 320,515 7.22%
Tippecanoe Mall - 1 1/1/05 8.45% 46,255 46,255
Tippecanoe Mall - 2 1/1/05 6.81% 16,000 16,000
Melbourne Square 2/1/05 7.42% 39,404 39,404
Cielo Vista Mall - 2 11/1/05 8.13% 1,940 1,940
---------- ----------
Subtotal 2005 103,598 103,598 7.80%
Treasure Coast Square 1/1/06 7.42% 53,218 53,218
Gulf View Square 10/1/06 8.25% 37,633 37,633
Paddock Mall 10/1/06 8.25% 29,930 29,930
---------- ----------
Subtotal 2006 120,782 120,782 7.88%
Cielo Vista Mall - 1 5/1/07 9.38% 55,185 55,185
Cielo Vista Mall - 3 5/1/07 6.76% 39,000 39,000
McCain Mall - 1 5/1/07 9.38% 25,768 25,768
McCain Mall - 2 5/1/07 6.76% 18,000 18,000
Valle Vista Mall - 1 5/1/07 9.38% 34,130 34,130
Valle Vista Mall - 2 5/1/07 6.81% 8,000 8,000
University Park Mall 10/1/07 7.43% 59,500 35,700
---------- ----------
Subtotal 2007 239,583 215,783 8.27%
Randall Park Mall - 2 6/18/08 7.33% 35,000 35,000
---------- ----------
Subtotal 2008 35,000 35,000 7.33%
College Mall - 2 1/1/09 6.76% 12,000 12,000
Greenwood Park Mall - 2 1/1/09 6.76% 62,000 62,000
College Mall - 1 1/1/09 7.00% 42,360 42,360
Greenwood Park Mall - 1 1/1/09 7.00% 35,478 35,478
Towne East Square - 1 1/1/09 7.00% 56,006 56,006
Towne East Square - 2 1/1/09 6.81% 25,000 25,000
---------- ----------
Subtotal 2009 232,844 232,844 6.90%
Windsor Park Mall - 2 5/1/12 8.00% 8,863 8,863
---------- ----------
Subtotal 2012 8,863 8,863 8.00%
Chesapeake Center 5/15/15 8.44% 6,563 6,563
Grove at Lakeland Square, The 5/15/15 8.44% 3,750 3,750
Terrace at Florida Mall, The 5/15/15 8.44% 4,688 4,688
---------- ----------
Subtotal 2015 15,001 15,001 8.44%
Sunland Park Mall 1/1/26 8.63% 39,506 39,506
---------- ----------
Subtotal 2026 39,506 39,506 8.63%
Keystone at the Crossing 7/1/27 7.85% 64,194 64,194
---------- ----------
Subtotal 2027 64,194 64,194 7.85%
========== ========== =====
Total Consolidated Fixed Rate Mortgage Debt
2,464,975 2,382,531 7.56%
========== ========== =====
</TABLE>
21 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Indebtedness By Maturity
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's Weighted Avg
Property Maturity Interest Total Share of Interest Rate
Name Date Rate Indebtedness Indebtedness by Year
---- ---- ---- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Variable Rate Mortgage Debt:
White Oaks Mall 3/1/99 6.51% 16,500 9,062
---------- ----------
Subtotal 1999 16,500 9,062 6.51%
Jefferson Valley Mall 1/12/00 5.61% 50,000 50,000
Eastgate Consumer Mall 3/31/00 6.00% 22,929 22,929
Trolley Square 7/23/00 6.56% 8,141 7,327
---------- ----------
Subtotal 2000 81,070 80,256 5.81%
Crystal River 1/1/01 7.06% 16,000 16,000
Orland Square 9/1/01 7.74% 50,000 50,000
---------- ----------
Subtotal 2001 66,000 66,000 7.58%
Highland Lakes Center 3/1/02 6.56% 14,377 14,377
Mainland Crossing 3/31/02 6.56% 2,226 2,226
---------- ----------
Subtotal 2002 16,603 16,603 6.56%
Richmond Towne Square (7) 7/15/03 6.06% 14,526 14,526
Mission Viejo Mall (7) 9/14/03 6.11% 37,559 37,559
Arboretum (7) 12/1/03 6.56% 34,000 30,600
---------- ----------
Subtotal 2003 86,086 82,686 6.27%
Forum Phase I - Class A-2 5/15/04 6.19% 44,385 26,631
Forum Phase II - Class A-2 5/15/04 6.19% 40,614 22,338
CMBS Loan - Variable Component 12/19/04 6.16% 50,000 50,000
---------- ----------
Subtotal 2004 134,999 98,969 6.17%
========== ========== =====
Total Variable Rate Mortgage Debt 401,258 353,575 6.40%
========== ========== =====
Total Consolidated Mortgage Debt 2,736,106 7.41%
========== =====
Fixed Rate Unsecured Debt:
Unsecured Notes - CPI 1 (3) 3/15/02 9.00% 250,000 250,000
---------- ----------
Subtotal 2002 250,000 250,000 9.00%
Unsecured Notes - CPI 2 (3) 4/1/03 7.05% 100,000 100,000
SPG, LP (Bonds) 6/15/03 6.63% 375,000 375,000
SPG, LP (PATS) 11/15/03 6.75% 100,000 100,000
---------- ----------
Subtotal 2003 575,000 575,000 6.72%
SCA (Bonds) 1/15/04 6.75% 150,000 150,000
SPG, LP (Bonds) 7/15/04 6.75% 100,000 100,000
Unsecured Notes - CPI 3 (3) 8/15/04 7.75% 150,000 150,000
---------- ----------
Subtotal 2004 400,000 400,000 7.13%
SCA (Bonds) 5/15/05 7.63% 110,000 110,000
SPG, LP (Bonds) 6/15/05 6.75% 300,000 300,000
SPG, LP (MTN) 6/24/05 7.13% 100,000 100,000
SPG, LP (Bonds) 10/27/05 6.88% 150,000 150,000
---------- ----------
Subtotal 2005 660,000 660,000 6.98%
</TABLE>
22 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Indebtedness By Maturity
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's Weighted Avg
Property Maturity Interest Total Share of Interest Rate
Name Date Rate Indebtedness Indebtedness by Year
---- ---- ---- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
SPG, LP (Bonds) 11/15/06 6.88% 250,000 250,000
---------- ----------
Subtotal 2006 250,000 250,000 6.88%
SPG, LP (MTN) 9/20/07 7.13% 180,000 180,000
---------- ----------
Subtotal 2007 180,000 180,000 7.13%
SPG, LP (MOPPRS) 6/15/08 7.00% 200,000 200,000
---------- ----------
Subtotal 2008 200,000 200,000 7.00%
---------- ----------
SPG, LP (Bonds) 7/15/09 7.00% 150,000 150,000
---------- ----------
Subtotal 2009 150,000 150,000 7.00%
Unsecured Notes - CPI 4 (3) 9/15/13 7.18% 75,000 75,000
---------- ----------
Subtotal 2013 75,000 75,000 7.18%
Unsecured Notes - CPI 5 (3) 3/15/16 7.88% 250,000 250,000
---------- ----------
Subtotal 2016 250,000 250,000 7.88%
SPG, LP (Bonds) 6/15/18 7.38% 200,000 200,000
---------- ----------
Subtotal 2018 200,000 200,000 7.38%
---------- ----------
Total Unsecured Fixed Rate Debt
3,190,000 3,190,000 7.21%
========== ==========
Variable Rate Unsecured Debt:
CPI Merger Facility - 1 Chase (1.4B) (5) 6/24/99 5.71% 450,000 450,000
Corporate Revolving Credit Facility (7) 9/27/99 5.71% 368,000 368,000
---------- ----------
Subtotal 1999 818,000 818,000 5.71%
SPG, L.P. Unsecured Loan (6) 1/31/00 5.71% 70,000 70,000
SPG, L.P. Unsecured Loan (7) 1/31/00 6.14% 63,000 63,000
CPI Merger Facility - 2 Chase (1.4B) (5) 3/24/00 5.71% 450,000 450,000
CPI Merger Facility - 3 Chase (1.4B) (5) 9/24/00 5.71% 500,000 500,000
---------- ----------
Subtotal 2000 1,083,000 1,083,000 5.74%
---------- ----------
Total Unsecured Variable Rate Debt 1,901,000 1,901,000 5.73%
========== ==========
Total Unsecured Debt 5,091,000 6.66%
==========
Net Discount on Fixed-Rate Indebtedness 14,865 15,174 N/A
Net Premium on Variable-Rate Indebtedness 1,275 1,283 N/A
---------- -----
Total Consolidated Debt 7,843,563 6.91%
---------- -----
Joint Venture Indebtedness
Fixed Rate Mortgage Debt:
Northfield Square 4/1/00 9.52% 24,055 24,055
Coral Square 12/1/00 7.40% 53,300 26,650
---------- ----------
Subtotal 2000 77,355 50,705 8.41%
Highland Mall - 2 (3) 10/1/01 8.50% 306 153
Highland Mall - 3 (3) 11/1/01 9.50% 2,896 1,448
---------- ----------
Subtotal 2001 3,202 1,601 9.40%
</TABLE>
23 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Indebtedness By Maturity
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's Weighted Avg
Property Maturity Interest Total Share of Interest Rate
Name Date Rate Indebtedness Indebtedness by Year
---- ---- ---- ------------ ------------ -------
<S> <C> <C> <C> <C> <C> <C>
Crystal Mall (3) 2/1/03 8.66% 50,305 25,152
Avenues, The 5/15/03 8.36% 57,710 14,427
Century III Mall -1 7/1/03 6.78% 66,000 33,000
Lakeland Square 12/22/03 7.26% 52,421 26,210
---------- ----------
Subtotal 2003 226,435 98,790 7.62%
Indian River Commons 11/1/04 7.58% 8,399 4,200
Indian River Mall 11/1/04 7.58% 46,602 23,301
---------- ----------
Subtotal 2004 55,001 27,501 7.58%
Westchester, The 9/1/05 8.74% 152,104 76,052
Cobblestone Court 11/30/05 7.22% 6,180 2,163
Crystal Court 11/30/05 7.22% 3,570 1,250
Fairfax Court 11/30/05 7.22% 10,320 2,709
Gaitway Plaza 11/30/05 7.22% 7,350 1,715
Plaza at Buckland Hills, The 11/30/05 7.22% 17,680 6,055
Ridgewood Court 11/30/05 7.22% 7,980 2,793
Royal Eagle Plaza 11/30/05 7.22% 7,920 2,772
Village Park Plaza 11/30/05 7.22% 8,960 3,136
West Town Corners 11/30/05 7.22% 10,330 2,411
Westland Park Plaza 11/30/05 7.22% 4,950 1,155
Willow Knolls Court 11/30/05 7.22% 6,490 2,272
Yards Plaza, The 11/30/05 7.22% 8,270 2,895
---------- ----------
Subtotal 2005 252,104 107,377 8.30%
Seminole Towne Center 1/1/06 6.88% 70,500 31,725
IBM CMBS Loan - Fixed Component (8) 5/1/06 7.40% 300,000 150,000
Great Northeast Plaza 6/1/06 9.04% 17,671 8,836
Smith Haven Mall 6/1/06 7.86% 115,000 28,750
---------- ----------
Subtotal 2006 503,171 219,311 7.45%
Town Center at Cobb (3) 4/1/07 7.54% 50,793 25,397
Gwinnett Place (3) 4/1/07 7.54% 39,866 19,933
Lakeline Mall 5/1/07 7.65% 72,927 61,988
---------- ----------
Subtotal 2007 163,587 107,318 7.60%
Metrocenter (3) 2/28/08 8.45% 31,181 15,591
Aventura Mall - A 4/6/08 6.55% 141,000 47,000
Aventura Mall - B 4/6/08 6.60% 25,400 8,467
Aventura Mall - C 4/6/08 6.89% 33,600 11,200
West Town Mall 5/1/08 6.90% 76,000 38,000
Ontario Mills - 5 11/2/08 6.75% 144,902 36,226
Source, The - 2 11/6/08 6.65% 124,000 31,000
Grapevine Mills - 2 10/1/08 6.47% 155,000 58,125
---------- ----------
Subtotal 2008 731,084 245,608 6.76%
Highland Mall - 1 (3) 12/1/09 9.75% 7,651 3,826
Ontario Mills - 4 (9) 12/28/09 0.00% 4,717 1,179
---------- ----------
Subtotal 2009 12,368 5,005 7.45%
Mall of Georgia (3) 7/1/10 7.09% 135,000 67,500
---------- ----------
Subtotal 2010 135,000 67,500 7.09%
---------- ---------- -----
Total Joint Venture Fixed Rate Mortgage Debt 2,159,306 930,715 7.44%
========== ========== =====
</TABLE>
24 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Indebtedness By Maturity
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
SPG's Weighted Avg
Property Maturity Interest Total Share of Interest Rate
Name Date Rate Indebtedness Indebtedness by Year
---- ---- ---- ------------ ------------ -------
Variable Rate Mortgage Debt:
<S> <C> <C> <C> <C> <C> <C>
Tower Shops, The (6) 3/13/99 6.26% 13,500 6,750
---------- ----------
Subtotal 1999 13,500 6,750 6.26%
Dadeland Mall (7) 12/10/00 5.76% 140,000 70,000
---------- ----------
Subtotal 2000 140,000 70,000 5.76%
Arizona Mills 2/1/02 6.36% 140,984 37,101
Lakeline Plaza - 1 6/6/02 5.44% 30,500 25,925
Shops at Sunset Place, The (7) 6/30/02 6.31% 87,180 32,692
---------- ----------
Subtotal 2002 258,664 95,718 6.10%
IBM CMBS Loan - Floating Component (8) 5/1/03 5.56% 185,000 92,500
Concord Mills (7) 12/2/03 6.41% 24,250 12,125
---------- ----------
Subtotal 2003 209,250 104,625 5.66%
Circle Centre Mall 1/31/04 5.50% 60,000 8,802
---------- ----------
Subtotal 2004 60,000 8,802 5.50%
---------- ---------- -----
Total Joint Venture Variable Rate Debt 681,414 285,895 5.84%
========== ========== =====
IBM CMBS Loan - Fixed Premium 20,868 10,434
----------
Total Joint Venture Debt 1,227,044 7.00%
---------- -----
SPG's Share of Total Indebtedness 9,070,607 6.92%
---------- -----
</TABLE>
(1) This Principal Mutual Pool 1 loan is secured by cross-collateralized
mortgages encumbering four of the Properties (Anderson, Forest Village
Park, Longview and South Park). A weighted average rate is used for these
Pool 1 Properties.
(2) This Principal Mutual Pool 2 loan is secured by cross-collateralized
mortgages encumbering seven of the Properties (Eastland, Forest Mall,
Golden Ring, Hutchinson, Markland, Midland, and North Towne). A weighted
average rate is used for these Pool 2 Properties.
(3) Represents debt assumed in connection with the CPI merger.
(4) The Operating Partnership acquired the remaining 50% ownership percentage
as part of the CPI Merger.
(5) This Facility consist of (i) a $450 million nine-month term loan, (ii) a
$450 million 18-month term loan, and (iii) a $500 million 24-month term
loan. Interest rate protection agreements relating to $500 million of the
$1.4 billion were obtained on September 24, 1998. Under these agreements
LIBOR is swapped at a weighted average rate of 5.057%.
(6) Two one-year options exist to extend maturity.
(7) Includes applicable extensions available at Simon Group's option.
(8) Represents debt assumed in connection with the acquisition of certain
Properties on February 27, 1998 by a joint venture in which the Simon Group
participated. This is $485 million of Commercial Mortgage Notes secured by
cross-collateralized mortgages encumbering thirteen of the Properties. The
Simon Group's share is $242 million. A weighted average rate is used.
(9) Notes for purchase of land from Ontario Redevelopment Agency at 6%
commencing January 2000.
25 of 41
<PAGE>
SIMON PROPERTY GROUP
Summary of Variable Rate Debt and Interest Rate Protection Agreements
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Principal SPG SPG's Interest
Property Maturity Balance Ownership Share of Rate Terms of
Name Date 12/31/98 % Loan Balance 12/31/98 Variable Rate
- --------------------------------------------------------------------------------------------------------------------------------
Consolidated Properties:
Secured Debt:
<S> <C> <C> <C> <C> <C> <C>
Eastgate Consumer Mall 3/31/00 22,929 100.00% 22,929 6.000% LIBOR + 1.000%
White Oaks Mall 3/1/99 16,500 54.92% 9,062 6.511% LIBOR + 1.250%
Jefferson Valley Mall 1/12/00 50,000 100.00% 50,000 5.614% LIBOR + 0.550%
Trolley Square 7/23/00 8,141 90.00% 7,327 7.219% LIBOR + 1.500%
Crystal River 1/1/01 16,000 100.00% 16,000 7.064% LIBOR + 2.000%
Richmond Towne Square 7/15/03 14,526 100.00% 14,526 6.064% LIBOR + 1.000%
Orland Square 9/1/01 50,000 100.00% 50,000 7.742% LIBOR + 0.500%
Mission Viejo Mall 9/14/03 37,559 100.00% 37,559 6.114% LIBOR + 1.050%
Arboretum 12/1/03 34,000 90.00% 30,600 6.564% LIBOR + 1.500%
Highland Lakes Center 3/1/02 14,377 100.00% 14,377 6.564% LIBOR + 1.500%
Mainland Crossing 3/31/02 2,226 100.00% 2,226 6.564% LIBOR + 1.500%
Forum Phase I - Class A-2 5/15/04 44,385 60.00% 26,631 6.190% LIBOR + 0.300%
Forum Phase II - Class A-2 5/15/04 40,614 55.00% 22,338 6.190% LIBOR + 0.300%
CMBS Loan - Variable Component 12/19/04 50,000 100.00% 50,000 6.155% LIBOR + 0.365%
--------- ---------
Total Consolidated Secured Debt 401,258 353,575
========= =========
Unsecured Debt:
SPG, L.P. Unsecured Loan 1/31/00 70,000 100.00% 70,000 5.714% LIBOR + 0.650%
SPG, L.P. Unsecured Loan 1/31/00 63,000 100.00% 63,000 6.140% LIBOR + 0.650%
CPI Merger Facility - 1 Chase (1.4B) 6/24/99 450,000 100.00% 450,000 5.714% LIBOR + 0.650%
CPI Merger Facility - 2 Chase (1.4B) 3/24/00 450,000 100.00% 450,000 5.714% LIBOR + 0.650%
CPI Merger Facility - 3 Chase (1.4B) 9/24/00 500,000 100.00% 500,000 5.714% LIBOR + 0.650%
Unsecured Revolving Credit Facility - UBS 9/27/99 368,000 100.00% 368,000 5.714% LIBOR + 0.650%
(1.25B) --------- ---------
Total Consolidated Unsecured Debt 1,901,000 1,901,000
========= =========
Net Premium on Variable-Rate Indebtedness 1,275 1,283
--------- ---------
Consolidated Variable Rate Debt 2,303,533 2,255,858
========= =========
<CAPTION>
Property Terms of
Name Interest Rate Protection Agreement
- -------------------------------------------------------------------------------------------
<S> <C>
Consolidated Properties:
Secured Debt:
Eastgate Consumer Mall
White Oaks Mall 90-day LIBOR set on November 30, 1998
Jefferson Valley Mall LIBOR Capped at 8.70% through maturity
Trolley Square
Crystal River
Richmond Towne Square
Orland Square LIBOR Swapped at 7.24% through maturity
Mission Viejo Mall
Arboretum
Highland Lakes Center
Mainland Crossing
Forum Phase I - Class A-2 Through an interest rate protection agreement,
effectively fixed
at an all-in-one rate of 6.19%
Forum Phase II - Class A-2 Through an interest rate protection agreement,
effectively fixed
at an all-in-one rate of 6.19%
CMBS Loan - Variable Component Through an interest rate protection agreement,
effectively fixed
at an all-in-one rate of 6.16%
Total Consolidated Secured Debt
Unsecured Debt:
SPG, L.P. Unsecured Loan
SPG, L.P. Unsecured Loan A two year interest rate protection agreement, which
effectively fixes the interest
rate at an all-in-one rate of 6.14% was obtained on
January 15, 1998.
CPI Merger Facility - 1 Chase (1.4B)
CPI Merger Facility - 2 Chase (1.4B)
CPI Merger Facility - 3 Chase (1.4B) LIBOR Swapped at a weighted average rate of 5.06%.
Unsecured Revolving Credit Facility - UBS See Footnote (1)
(1.25B)
Total Consolidated Unsecured Debt
Net Premium on Variable-Rate Indebtedness
Consolidated Variable Rate Debt
</TABLE>
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<PAGE>
SIMON PROPERTY GROUP
Summary of Variable Rate Debt and Interest Rate Protection Agreements
As of December 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Principal SPG SPG's Interest
Property Maturity Balance Ownership Share of Rate Terms of
Name Date 12/31/98 % Loan Balance 12/31/98 Variable Rate
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joint Venture Properties:
Tower Shops, The 3/13/99 13,500 50.00% 6,750 6.264% LIBOR + 1.200%
Dadeland Mall 12/10/00 140,000 50.00% 70,000 5.764% LIBOR + 0.700%
Shops at Sunset Place, The 6/30/02 87,180 37.50% 32,692 6.314% LIBOR + 1.250%
Arizona Mills 2/1/02 140,984 26.32% 37,101 6.364% LIBOR + 1.300%
Concord Mills 12/2/03 24,250 50.00% 12,125 6.414% LIBOR + 1.350%
Lakeline Plaza - 1 6/6/02 30,500 85.00% 25,925 5.439% LIBOR + 0.375%
IBM CMBS Loan - Floating Component 5/1/03 185,000 50.00% 92,500 5.562% See Footnote (3)
Circle Centre Mall 1/31/04 60,000 14.67% 8,802 5.504% LIBOR + 0.440%
--------- ---------
Total Joint Venture Properties 681,414 285,895
========= =========
Total Variable Mortgage
and Other Indebtedness 2,984,946 2,541,753
========= =========
<CAPTION>
Property Terms of
Name Interest Rate Protection Agreement
- -------------------------------------------------------------------------------------------
<S> <C>
Joint Venture Properties:
Tower Shops, The Two one-year extensions exist to extend maturity.
Dadeland Mall
Shops at Sunset Place, The See Footnote (2)
Arizona Mills LIBOR Capped at 9.50% through maturity
Concord Mills
Lakeline Plaza - 1
IBM CMBS Loan - Floating Component The Operating Partnership took assignment of an
interest rate protection
agreement (LIBOR cap of 11.67%) relating to this
debt.
Circle Centre Mall LIBOR Capped at 8.81% through maturity
Total Joint Venture Properties
Total Variable Mortgage
and Other Indebtedness
</TABLE>
Footnotes:
(1) An 11.53% LIBOR cap on $90M and a 16.77% LIBOR cap on $50M has been
transferred from Forum and CMBS Loan - Floating Component, respectively.
(2) Rate can be reduced based upon project performance.
(3) Represents the weighted average interest rate.
The following table summarizes variable rate debt:
Total SPG Share
---------- -----------
Swapped debt 550,000 550,000
Capped debt "in the money" 197,999 161,969
Other hedged variable rate debt 575,984 328,403
Unhedged variable rate debt 1,660,963 1,501,381
---------- ------------
2,984,946 2,541,753
========== ============
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<PAGE>
SIMON PROPERTY GROUP
New Development Activities
As of December 31, 1998
<TABLE>
<CAPTION>
Simon Non-Anchor
Group's Actual/ Projected Sq.Footage
Mall/ Ownership Projected Cost Leased/ GLA
Location Percentage Opening (in millions) Committed(1) (Sq.ft)
- -------------------------------------------------------------------------------------------------------------------------
Projects Under Construction
- ---------------------------
<S> <C> <C> <C> <C> <C>
Shops at Sunset Place 37.5% 1/99 $150 95% 510,000
South Miami, FL
Anchors/Major Tenants: AMC 24 Theatre, NIKETOWN, Barnes & Noble,
IMAX Theatre, Virgin Megastore, Z Gallerie,
GameWorks, FAO Schwarz
- -------------------------------------------------------------------------------------------------------------------------
The Mall of Georgia 50% 8/99 $246 65% 1,500,000
Buford, Georgia
(Atlanta)
Anchors/Major Tenants: Nordstrom (opening 3/00), Dillard's, Lord & Taylor,
JCPenney, Galyan's, Bed Bath & Beyond, Haverty's,
Barnes & Noble
- -------------------------------------------------------------------------------------------------------------------------
The Mall of Georgia 50% 10/99 $38 87% 444,000
Crossing
Buford, GA
(Atlanta)
Anchors/Major Tenants: Target, Nordstrom Rack, Best Buy, Upton's, Staples,
TJMaxx & More
- -------------------------------------------------------------------------------------------------------------------------
Concord Mills 37.5% 9/99 $210 70% 1,400,000
Concord, NC
(Charlotte)
Anchors/Major Tenants: Books-A-Million, Bed Bath & Beyond, TJMaxx,
Burlington Coat Factory, Bass Pro Outdoor World,
AMC Theatres, Jillian's, Alabama Grill, Group USA,
Embassy Suites Hotel, Host Marriot Services (food
court)
- -------------------------------------------------------------------------------------------------------------------------
The Shops at Northeast 100% 11/99 $42 69% 323,000
Plaza
Hurst, TX
Anchors/Major Tenants: Michael's, OfficeMax, PetsMart, Cost Plus, TJMaxx,
Bed Bath & Beyond, Party City
- -------------------------------------------------------------------------------------------------------------------------
Waterford Lakes Town Center 100% 11/99 and $84 66% 920,000
11/00 (Phase I)
Orlando, FL
Anchors/Major Tenants: Regal 20-Plex, Super Target, TJMaxx, Ross Dress for
Less, Barnes & Noble, Waves Music, Party City,
OfficeMax
- -------------------------------------------------------------------------------------------------------------------------
Projects Under Development
- --------------------------
Orlando Premium Outlets 50% Summer 2000 $91 (2) 433,000
Orlando, FL
Anchors/Major Tenants: To be announced
</TABLE>
(1) Community Center leased/committed percentage includes owned anchor GLA.
(2) Leasing still in preliminary stage.
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<PAGE>
SIMON PROPERTY GROUP
Significant Renovation/Expansion Activities
As of December 31, 1998
<TABLE>
<CAPTION>
Projected Total New or
SPG Actual/ Cost Existing Incremental
Mall/ Ownership Projected (in GLA GLA
Location Percentage Opening millions) (sq. ft.) (sq. ft.)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Florida Mall 50% 11/99 $86 1,120,000 608,000
Orlando, FL
Project Description: New Burdine's, mall GLA expansion and renovation,
food court renovation, Dillard's, Parisian
(formerly Gayfers) and JCPenney expansion
- ---------------------------------------------------------------------------------------------------------------------------------
LaPlaza Mall 100% 11/99, 3/00 $35 989,000 215,000
McAllen, TX and 11/00
Project Description: Renovation of existing center (opening 11/99);
expansion of mall GLA and new Dillard's store
(opening 3/00); JCPenney expansion and new small
shop retrofitted from the existing Dillard's store
(opening 11/00) from the existing Dillard's store
(opening 11/00)
- ---------------------------------------------------------------------------------------------------------------------------------
Mission Viejo 100% 11/99 $146 818,000 427,000
Mission Viejo, CA
Project Description: Macy's (opening 11/00) & Robinson-May
expansions; Saks & Nordstrom additions new parking
structure and renovation of the existing parking
structure; small shop expansion, mall renovation and
food court addition (opening 10/00)
- ---------------------------------------------------------------------------------------------------------------------------------
North East Mall 100% 11/99 and $103 1,141,000 308,000
Fall 2000
Hurst, TX
Project Description: New Dillard's and mall expansion (to open 11/99);
recapture of two Dillard's stores and replace with
new Nordstrom and Saks Fifth Avenue; JCPenney and
Montgomery Ward expansions; mall renovation
- ---------------------------------------------------------------------------------------------------------------------------------
Palm Beach Mall 100% 11/99 $34 1,205,000 (1) 61,000
West Palm Beach, FL
Project Description: New Dillard's; renovations of Burdine's, JCPenney
and Sears; new Borders and Old Navy; mall
renovation
- ---------------------------------------------------------------------------------------------------------------------------------
Richmond Town Square 100% 11/99 $60 873,000 (1) 10,000
Cleveland, OH
Project Description: New Kaufmann's, JCPenney remodel and renovation
(opened 11/98); new Sony Cinema, Sears remodel and
new food court
- ---------------------------------------------------------------------------------------------------------------------------------
Town Center at Boca Raton 100% 11/00 $70 1,327,000 228,000
Boca Raton, FL
Project Description: New Nordstrom, relocation of Saks Fifth Avenue into
old Mervyn's (opening 8/99), Lord & Taylor and
Bloomingdale's expansions; mall renovation with
small shop expansion
</TABLE>
(1) Total existing GLA differs from 1998 square footage in 10-K property table
due to redevelopment activity in 1998.
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<PAGE>
SIMON PROPERTY GROUP
Capital Expenditures
For the Twelve Months Ended December 31, 1998
(In millions)
Joint Venture Properties
------------------------
Simon
Consolidated Group's
Properties Total Share
---------- ----- -------
New Developments $ 22.0 $155.2 $ 77.1
Renovations and Expansions 311.5 64.6 26.4
Tenant Allowances-Retail 44.9 12.9 5.4
Tenant Allowances-Office .9 -- --
Capital Expenditures
Recoverable from Tenants 18.5 2.9 1.2
Other (1) 12.0 2.5 .8
------ ------ ------
Totals $409.8 $238.1 $110.9
====== ====== ======
(1) Primarily represents capital expenditures not recovered from tenants.
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<PAGE>
SIMON PROPERTY GROUP
Gains on Sales of Peripheral Land
For the Twelve Months Ended December 31, 1998 and 1997
(In millions)
Twelve Months Ended
December 31,
1998 1997
---- ----
Consolidated Properties $ 8.0 $ 5.5
Simon Group's Share of
Unconsolidated Entities 5.9 2.5
----- -----
Totals $13.9 $ 8.0
===== =====
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<PAGE>
SIMON PROPERTY GROUP
Conference Text
February 18, 1999
Forward Looking Statement (Steve Sterrett)
- -------------------------------------------
Good afternoon and welcome to the Simon Property Group fourth quarter and year
end 1998 earnings teleconference call.
Please be aware that statements in this teleconference call that are not
historical may be deemed forward-looking statements within the meaning of the
federal securities laws. Although the Company believes that the expectations
reflected in any forward-looking statements are based on reasonable assumptions,
it can give no assurance that its expectations will be attained. The listener is
directed to the Company's various filings with the Securities and Exchange
Commission, including quarterly reports on Form 10-Q, reports on Form 8-K and
annual reports on Form 10-K for a discussion of such risks and uncertainties.
Opening Comments (David Simon)
- -------------------------------
Good afternoon everyone. We are very pleased with our accomplishments for the
quarter and for the year, highlighted by the following activities:
- - We exceeded consensus expectations for both the quarter and the year,
growing FFO per share to $2.85, an annual growth rate of 10.5%.
- - We increased occupancy in the regional mall portfolio by 270 basis points
to 90%, including a 220 basis point increase for the existing SPG portfolio
prior to CPI.
- - We completed $5.7 billion in acquisitions, including the CPI and IBM
portfolios.
- - We completed our most active year of capital markets activity ever, raising
and arranging $7 billion in well-timed capital market transactions.
- - We invested $300 million in our ongoing redevelopment program, which will
generate double-digit returns as well as enhance the market position of
those assets.
- - SBV, in its first full calendar year of operation, exceeded our initial
expectations through the execution of strategic partnerships and alliances
with strong corporate partners such as Pepsi, VISA and the NFL,
Browning-Ferris Industries, DMX MallNet, JCDecaux, U.S. RealTel, and
GoldCan Recycling.
- - We have 5 million square feet of exciting new development projects under
construction, including new projects in growing markets such as Charlotte,
Orlando and Atlanta.
32 of 41
<PAGE>
SIMON PROPERTY GROUP
Conference Text
February 18, 1999
Financial and Operational Results (Steve Sterrett)
- ---------------------------------------------------
Our financial and operational results for the quarter and year ended December
31, 1998 are as follows:
For the year...
- - Diluted FFO per share increased 10.5% to $2.85 per share in 1998 from $2.58
per share in 1997.
- - FFO of the Simon portfolio was $544.5 million, an increase of 31.2% or
$129.4 million over the same period in 1997.
- - Total revenue for the year increased 33.4% to $1.406 billion as compared to
$1.054 billion in 1997.
For the quarter...
- - FFO on a per share basis increased 7.6% to $0.85 per share in 1998 from
$0.79 per share in 1997.
- - FFO of the Simon Portfolio was $196.0 million, an increase of 48.8% or
$64.3 million over the same period in 1997.
- - Total revenue increased 54.0% to $472.6 million as compared to $306.9
million over the same period in 1997.
In keeping with our customary levels of disclosure after the completion of large
transactions, operating statistics will be fully disclosed for both the "old"
SPG portfolio and the CPI portfolio, separately, in our 8-K package. Operating
statistics for the combined SPG portfolio--including the CPI assets--at 12/31/98
are as follows:
- - Occupancy at December 31, 1998, was 90.0%, an increase of 270 basis points
over the same period in 1997. Occupancy within the former SPG portfolio was
89.5% while the CPI portfolio occupancy was 92.0%.
- - Average base rent in the regional mall portfolio was $25.70 per square
foot, an increase of 8.7%.
- - Occupancy costs as a percentage of sales as of December 31, 1998 was 12.3%.
Included in this is a minimum rent to sales ratio of only 7.5%. As you
know, this is significantly below that of comparable quality portfolios,
and increasing this percentage is a major business focus for our company in
1999 and beyond, as we look to grow the profitability of SPG by delivering
a higher percentage of our tenants' sales to our bottom line.
- - Total sales per square foot for the twelve months ended 12/31/98 increased
8.9%, to $343 per square foot as compared to the prior year. The increase
for "comparable properties," that is properties owned
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<PAGE>
SIMON PROPERTY GROUP
Conference Text
February 18, 1999
for at least one year, was 4.7%. Total sales per square foot in the CPI
portfolio were $418 per square foot which is up 7.8% from a year ago.
- - Comparable sales per square foot for tenants who have been in place for at
least 24 months, increased 8.8%, to $346. Comparable sales per square foot
in the CPI portfolio were $422.
- - The average initial base rent for new mall store leases signed in 1998 was
$27.33 per square foot, an increase of $3.70, or 15.7% over the tenants who
closed or whose leases expired.
Same property NOI growth for 1998 in the "old" SPG portfolio was approximately
6%. This growth rate was positively impacted by growth in rents, occupancy, and
tenant sales as well as by our SBV initiatives and the positive effect of our
redevelopment efforts. Same property NOI growth for the CPI portfolio was 11.1%.
Acquisition Activities (David Simon)
- -------------------------------------
In addition to CPI, we acquired an additional $650 million of real estate in
1998:
- - Cordova Mall was acquired at a cost of $87 million and added to our
presence in Pensacola, Florida, where we now own both regional malls.
- - The IBM portfolio, encompassing 12 regional malls, added 10.7 million
square feet of GLA to the Company's portfolio in a 50/50 joint venture with
Macerich. Simon's share of the cost was $487.5 million.
- - During 1998 we acquired the remaining 50% of Rolling Oaks Mall in San
Antonio and an additional 35% interest in Lakeline Mall and Lakeline Plaza
in Austin, Texas.
- - And in December, we acquired The Arboretum in Austin, Texas. This 209,000
square foot open-air specialty center is anchored by Barnes & Noble, The
Pottery Barn, Structure, Bath & Body and The Arbor Theater with specialty
tenants such as The Sharper Image, Gap, Gap Kids, Banana Republic and
Victoria's Secret. This lifestyle center complements our existing Austin
assets, which include ownership of all three malls in the rapidly growing
Austin market.
The average initial unlevered yield on these acquisitions was 9%.
34 of 41
<PAGE>
SIMON PROPERTY GROUP
Conference Text
February 18, 1999
Financing Activities (Steve Sterrett)
- --------------------------------------
Despite the conditions prevalent in the capital markets, we completed $7 billion
worth of transactions in 1998. These transactions can be summarized as follows:
- New mortgage financings and refinancings $2.0 billion
- Corporate credit facilities (primarily
the CPI acquisition facility) $1.7 billion
- Issuance of senior unsecured notes $1.075 billion
- Equity issued in connection with the
CPI acquisition comprised of common
stock issued at $33 5/8 and preferred
stock which converts up 15% at $38.669 $2.3 billion
We also just completed a $600 million fixed rate senior unsecured note offering.
The two tranches--at $300 million each--mature in 2004 and 2009 and bear
interest at 6 3/4% and 7 1/8%, respectively. Proceeds were used primarily to pay
down the first tranche of our acquisition facility.
A few days ago, PGGM, the Dutch pension fund, notified us of their election to
convert their 6.5% Series A convertible preferred stock into SPG common stock.
This convert was assumed by SPG as part of the CPI acquisition. PGGM owns $150
million of the Series A stock, which will result in the issuance of 5.7 million
shares of common. This conversion will be completed at the end of February.
We believe this conversion demonstrates PGGM's confidence in the Company. We
welcome them as one of our largest common shareholders and look forward to a
long and mutually beneficial relationship.
Our capital markets activity is indicative of the financial strength of Simon
and the Company's ability to effectively access the capital markets. In
addition, our balance sheet is in excellent shape:
- - We have minimal near term debt maturities.
- - Our significant construction projects all have financing in place.
- - We have $900 million of available capacity on our current corporate credit
facility.
- - We have strong fixed charge and interest coverage, have maintained our
coverage ratios consistent with 1997 levels, and our senior unsecured debt
ratings were reaffirmed by S&P and Moody's at BBB+ and Baa1, respectively,
despite acquiring over $7 billion of property in the last two years.
- - And in 1999, we should generate over $200 million of "retained" cash flow
after payment of dividends.
35 of 41
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SIMON PROPERTY GROUP
Conference Text
February 18, 1999
Most importantly, we grew the company and its earnings stream and improved the
overall quality of our portfolio while maintaining the integrity of the balance
sheet and our strong capital base; resisting the temptation to "lever up" in
light of the capital markets situation during the latter half of 1998. We
continue to maintain significant financial liquidity, capacity and flexibility,
and are not bumping up against any of our debt covenants.
Development Activities (Rick Sokolov)
- --------------------------------------
Malls & Community Centers:
We opened two new community centers in 1998--Muncie Plaza and Lakeline Plaza.
Both of these centers complement their regional mall counterparts--Muncie Mall
in Muncie, Indiana, and Lakeline Mall in Austin, Texas.
Two of the three new community centers we currently have under construction are
also located adjacent to a Simon regional mall. This is a "win-win" situation--a
market dominant location combined with an extensive array of retail choices for
the consumer.
- - The Mall of Georgia Crossing will open in October, a couple of months after
the mall opening. This 442,000 square foot power center will be anchored by
Target, Uptons, TJMaxx & More, Best Buy, Nordstrom Rack and Staples. The
1.5 million square foot super-regional mall will be anchored by Nordstrom,
Dillard's, Lord & Taylor, JCPenney, Galyan's, Bed Bath & Beyond, Haverty's
and Barnes & Noble.
- - The Shops at Northeast Plaza is scheduled to open in November and will be
anchored by Michael's, OfficeMax, PetsMart, Cost Plus, TJMaxx, Bed Bath &
Beyond and Party City. This 323,000 square foot power center will be
located adjacent to North East Mall in Hurst, Texas, which is undergoing a
$100 million dollar renovation and expansion including the addition of a
new Nordstrom, Saks Fifth Avenue and a new relocated 300,000 square foot
Dillards.
The third power center under construction is Waterford Lakes Town Center in
Orlando, Florida. This 920,000 square foot center is scheduled to open in two
phases: November 1999 and November 2000. Waterford Lakes is located in the
fastest growing area in metro Orlando. The center will be anchored by Regal
20-Plex, Super Target, TJMaxx, Ross Dress for Less, Barnes & Noble, Waves Music,
Party City, Dress Barn and OfficeMax.
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<PAGE>
SIMON PROPERTY GROUP
Conference Text
February 18, 1999
Specialty Centers and Other:
We have always prided ourselves on being a retail developer not just a mall or
strip center developer. An example of this is our recent effort in the specialty
centers category. We opened The Shops at Sunset Place in South Miami, Florida in
January. The center opened 95% leased and features an appealing open-air
configuration and a unique blend of retail and entertainment with a tenant
line-up unparalleled in South Florida. The Shops at Sunset is a one-of-a-kind
specialty center, reflective of the innovativeness of the SPG organization, and
is anchored by AMC Theatres, FAO Schwarz, IMAX, GameWorks, NIKETOWN, Virgin
Megastore and Z Gallerie.
Early results from the Shops at Sunset have been extremely encouraging. AMC has
informed us that this complex was 29th in the nation for the last week reported.
This is not 29th in the AMC chain, but 29th of all theater complexes in the
United States. FAO Schwarz sales are 40% above plan; NIKETOWN sales are 30%
above plan; GAMEWORKS is #1 in their chain of 8 locations; and Virgin Megastore
is also reporting very strong sales.
Concord Mills is our fourth joint venture with The Mills Corporation. This 1.4
million square foot value-oriented super regional mall will be anchored by
Books-A-Million, Bed Bath & Beyond, TJMaxx, Bass Pro Outdoor World, AMC
Theatres, Burlington Coat Factory, Jillian's, Group USA, Alabama Grill, Embassy
Suites Hotel and Host Marriott Services. This center is projected to open in
September.
We are also nearing commencement of construction for our first joint venture
project with Chelsea, GCA Realty - the Orlando Premium Outlet Center in Orlando,
Florida. This project is exceptionally located, directly on I-4 less than 2
miles from the main entrance to Disney World. This 433,000 square foot center
will feature the traditional array of premium fashion tenants found in a Chelsea
center and is scheduled to open in the summer of 2000.
Redevelopment:
We are firmly committed to enhancing the performance of our existing assets as
evidenced by the $300 million invested in 1998. The measurable results of these
invested dollars comes in the form of increased sales and increased rental
income, thereby enhancing NOI growth.
In 1998 we completed major redevelopments at centers such as: Aventura Mall in
Miami; Barton Creek Square in Austin; Columbia Center in Columbia, Washington;
Crystal River Mall in Crystal River, Florida; Independence Center in
Independence, Missouri; Orange Park Mall in Jacksonville, Florida; and
Richardson Square in Dallas. In these centers, total sales volumes have
increased from 15 to 40%.
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SIMON PROPERTY GROUP
Conference Text
February 18, 1999
In the press release, we detailed some of the more significant redevelopment
projects currently under construction for completion in 1999 and beyond
including:
- - Florida Mall in Orlando, Florida
- - LaPlaza Mall in McAllen, Texas
- - Mission Viejo in Mission Viejo, California
- - North East Mall in Hurst, Texas
- - Palm Beach Mall in West Palm Beach, Florida
- - Richmond Town Square in Cleveland, Ohio and
- - Town Center at Boca Raton in Boca Raton, Florida.
Simon's share of the cost of these major redevelopment projects is approximately
$500 million. We anticipate that this capital spending should generate
stabilized returns of approximately 11%.
International Expansion (David Simon)
- --------------------------------------
Our expansion into Europe materialized with the Phase I opening of a development
in Krakow, Poland at the end of October. Total net costs of the project are
estimated at $25 million with an initial unleveraged return of 15% on cost.
We have invested an initial $15 million for a 22% interest in Groupe BEG and
will gradually, with Argo II (J.P. Morgan) and Charlesbank Capital Partners
(formerly Harvard Capital Group), acquire a majority controlling interest in the
Groupe pursuant to an earn out formula as the company moves forward.
There are currently two additional projects under construction and several in
pre-construction development phase, and we look forward to the opportunities
available through this joint venture to capitalize on under served and under
retailed Central Europe with the initial primary focus being in Poland.
Simon Brand Ventures (David Simon)
- ----------------------------------
It's now been 18 months since we announced the formation of Simon Brand
Ventures, our strategic marketing division. In assessing SBV, I think its fair
to say that the results to date have met or exceeded our original expectations.
We've developed a profitable business model that:
- - has enrolled over 2 million members in our frequent shopper loyalty
program, MALLPeRKS,
- - introduced major consumer brands like Pepsi and Visa to the mall
environment,
- - developed strategic relationships with companies like Browning Ferris
Industries to lower our tenants' operating costs, and most recently,
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SIMON PROPERTY GROUP
Conference Text
February 18, 1999
- - entered into a strategic relationship with Time, Inc. to produce "S", the
first national lifestyle magazine targeted to mall shoppers.
"S" will be distributed at over 140 SPG properties monthly beginning on March
1st, with an estimated circulation of 2.2 million copies per month. "S" will
balance national and local lifestyle features, promotions and other news useful
to Simon shoppers.
As part of the alliance, Simon and Time will partner to develop multimedia
programs for brand marketers who seek both an in-mall platform, including
event-marketing extensions, as well as a print medium to reach their targeted
audience.
Expect to hear more from us in 1999 regarding SBV. Significant discussions are
ongoing with potential strategic partners in several areas, and we are working
diligently to make the MALLPeRKS program even more successful.
And expect a major announcement from us next week regarding a topic we have
discussed with you for the last year, the branding of our Company.
Internet Shopping (Rick Sokolov)
- --------------------------------
About a week ago, the ICSC Research Quarterly published a compendium of all the
estimates from forecasters for E-commerce. The 1998 forecasts run anywhere from
$4 billion to $14.5 billion of sales of goods over the Internet to consumers.
The most likely number seems to be in the $6-$8 billion range. These same
forecasters indicate that in the year 2003 the estimates range from a low of
$20.5 billion to a high of $103 billion for the sale of consumer goods over the
Internet.
Now let us try and provide a frame of reference for these numbers.
- - In 1998, total non-auto retail sales in the United States were $1.9
trillion. More importantly, total catalog sales in 1998 were $75 billion.
Taken at its most optimistic, the Internet will probably approximate
catalogs as a channel of retail distribution in 2003. Women's Wear Daily
has written extensively on this topic, and it is their expectation that a
substantial portion of the sales over the internet will come out of the
catalog sector. In fact, the catalog merchandisers are shifting more and
more of their sales efforts to the Internet.
- - One last frame of reference - Wal-Mart did $115 billion of sales in 1998.
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February 18, 1999
The other thing to focus on is what is being bought on the Internet. Sixty
percent of the goods that are being bought over the Internet are goods that are
not customarily found in the regional mall setting. Consumer products, consumer
accessories, entertainment and airline tickets all make up a substantial portion
of the Internet sales in 1998. In the year 2002, it is estimated that
approximately 20% of the on-line sales will be consumer products; 15% will be
entertainment tickets; and the projections for apparel sales are approximately
$1.9 billion or less than 1% consummated over the Internet. Books and records
will also have a considerable portion of their sales generated over the
Internet. The expectation in 2002 is that 10% of book sales in the United States
will be consummated over the Internet or approximately $1.8 billion; and 17.9 %
of music sales will be consummated over the Internet or approximately 4% of
total sales in this category.
Regarding our perspective on books and music, Barnes & Noble, which is a
considerable on-line player itself in the book category, is still aggressively
expanding its large format bookstores throughout our portfolio, as is Borders.
On the music front, the Internet sector has already taken considerable
competitive pressures from both Circuit City and Best Buy, who are devoting
substantial portions of their floor space to selling music, at substantially
aggressive pricing, to drive traffic in their stores.
One last factual thing to bear in mind regarding the Internet is that there is
currently a 5% to 7% cost advantage for buying on the Internet, as mandated by
the federal government, because sales consummated over the Internet are not
subject to sales tax by state and local jurisdictions.
In January, the Wall Street Journal ran an article which indicated that the
state and local governments, which derive a substantial portion of their
operating revenues from sales taxes, are preparing to lobby very aggressively to
have the right to tax sales over the Internet on the same basis as sales that
are consummated in our properties. We anticipate that this will be a subject of
hot debate over the next year, but ultimately that this cost advantage will
dissipate.
As evidenced by our results and the results of our peer companies, retailer
demand for new additional space in the malls has never been greater. Whether
it's Gap planning to open 400 new stores this year or Limited rolling out a new
name plate, White Barn Candle; retailers continue to show significant commitment
to the mall. Major department store companies have all announced retailer
on-line initiatives--Federated buying Finger Hut; and Saks announcing their new
initiatives. At the same time, however, their capital commitment to our
properties has never been greater, and we still have a very extensive
development program featuring department stores of these companies at the same
time that they are making a commitment to on-line retailing.
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February 18, 1999
Let me walk you through a couple of initiatives that we currently have underway
to make our company and portfolio more Internet friendly. First, we are
undertaking steps to take our MALLPeRKS program and its 2 million members
on-line. In 1999, look for a MALLPeRKS Web page where members can view their
account status on-line and see promotional offerings of mall events.
Walk up terminals are also being installed in our new MALLPeRKS marketplaces,
which are replacing traditional customer service booths in SPG malls, bringing
technology into the mall itself. These vehicles will also serve as a marketing
medium for our retailers and strategic partner.
We are also embarking on a major development project, in conjunction with
technology and portal partners, to marry the concepts of multiple retailer
offerings, data capture, and efficient payment settlement in an on-line and
physical environment. Look for more from us on this project later in 1999.
Conclusion (David Simon)
- -------------------------
- - If there is any company out there that can effectively compete with
e-commerce, it is Simon Property Group. The Company's advantage is a
function of our branding efforts, our SBV initiatives focused on driving
and increasing customer loyalty, and all of the re-merchandising efforts
that our company is undertaking, including bringing lifestyle and
entertainment tenants to our properties. We've been at the forefront of
this movement in our industry.
- - We're obviously very disappointed in the current price level of our common
stock. SPG has undergone a significant transformation since we have gone
public. Not only have we grown 5-fold since our IPO five years ago, but our
portfolio now encompasses 50 million square feet of mall store space,
averaging almost $350 a foot in sales. And when you add in our hallmark
innovation, including cutting edge developments and our SBV initiatives, we
think we're doing a lot of the right things.
- - Nevertheless, the status of the capital markets will not detract from our
ability to grow the profitability of this company. We have strong embedded
growth opportunities in our new development and redevelopment pipeline, our
below market rents and our SBV initiatives. And we have always managed the
balance sheet with a long-term view, prudently financing our growth and
always keeping some powder dry. That philosophy continues.
- - When we came public in 1993, we promised you an industry-leading company
that would grow its FFO per share 8-12% per year and, coupled with a
dividend, would provide an attractive total return to investors. We have
delivered on that promise each year, including 1998, and we are poised to
deliver on that promise in 1999 and beyond.
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