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[LOGO]
CONTACTS:
Shelly Doran 317.685.7330 Investors
Billie Scott 317.263.7148 Media
FOR IMMEDIATE RELEASE
SIMON PROPERTY GROUP ANNOUNCES THIRD QUARTER RESULTS
Indianapolis, Indiana - November 7, 2000...Simon Property Group, Inc. (the
"Company") (NYSE:SPG) today announced results for the quarter and nine months
ended September 30, 2000. Diluted funds from operations for the quarter
increased 14%, to $0.80 per share in 2000 from $0.70 per share in 1999. Total
revenue for the quarter increased 5%, to $493.9 million as compared to $471.2
million in 1999. Diluted funds from operations for the nine months increased 8%,
to $2.25 per share in 2000 from $2.08 per share in 1999. Total revenue for the
nine months increased 6%, to $1,459.4 million as compared to $1,371.3 million in
1999.
Effective January 1, 2000, the Company made two reporting changes that have
impacted the comparability of financial results:
. The Company adopted Staff Accounting Bulletin No. 101 ("SAB 101"), which
addresses certain revenue recognition policies, including the accounting
for overage rent earned by a landlord. SAB 101 requires overage rent to be
recognized as revenue only when each tenant's sales exceed their sales
threshold. SAB 101 impacts the timing in which overage rent is recognized
throughout the year, but does not materially impact the total overage rent
recognized for the full year. If 1999 financial results were restated to
reflect adoption of SAB 101, diluted funds from operations for the quarter
would be reduced by $0.01 per share, and diluted funds from operations for
the nine months would be reduced by $0.06 per share.
. The Company adopted NAREIT's FFO definition clarification, which requires
the inclusion in FFO of the effects of non-recurring items not classified
as extraordinary under generally accepted accounting principles or
resulting from sales of depreciable real estate. As a result, SPG restated
FFO for the three and nine months ended September 30, 1999 to include a $12
million charge related to litigation, reducing diluted funds from
operations for the quarter and nine months by $0.05 per share.
After adjusting for the above items, on a comparable basis to last year, the
increase in the Company's share of diluted funds from operations on a per share
basis for the quarter and nine months was 8% and 9%, respectively.
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Occupancy for mall and freestanding stores in the regional malls at September
30, 2000 increased 200 basis points to 90.5%, as compared to 88.5% at September
30, 1999. Comparable retail sales per square foot increased 3.8%, to $385 while
total retail sales per square foot increased 5.3% to $375. Average base rents
for mall and freestanding stores in the regional mall portfolio were $27.97 per
square foot at September 30, 2000, an increase of $1.22, or 4.6%, from September
30, 1999.
The average initial base rent for new mall store leases signed during the third
quarter was $38.31, an increase of $7.02, or 22% over the tenants who closed or
whose leases expired. The average initial base rent for new mall store leases
signed during the first nine months of 2000 was $33.78, an increase of $3.68, or
12% over the tenants who closed or whose leases expired.
"We're pleased to report our 27/th/ consecutive quarter of FFO growth," stated
David Simon, chief executive officer. "Fundamentals in the mall business remain
healthy, including strong tenant demand for space, as evidenced by our 200 basis
point improvement in occupancy. And while retail sales nationally weakened
somewhat in the third quarter, the year-over-year sales trends in our mall
portfolio remain strong, which we believe is a testament to the quality of the
Simon portfolio."
Disposition Activities
----------------------
The Company continued its efforts to dispose of non-core assets. During the
third quarter of 2000 and in early October, the Company sold one community
center and its interest in one small specialty center for approximately $18
million. Proceeds from these asset sales were utilized to repay indebtedness.
New Development Activities
--------------------------
The Company currently has two projects scheduled for completion in November
2000:
. Arundel Mills is a 1.3 million square foot value-oriented super-regional
mall in Anne Arundel County, Maryland, in the middle of the highly
trafficked Baltimore/Washington, D.C. corridor. This project is the fifth
Simon joint venture with The Mills Corporation and is scheduled to open
November 17/th/. Anchors/major tenants: Jillian's, Bed Bath & Beyond, Sun &
Ski Sports, Muvico, Books-A-Million, Off Broadway Shoes, For Your
Entertainment, OFF 5TH-Saks Fifth Avenue, TJMaxx, Burlington Coat Factory
and Old Navy. Simon's ownership percentage: 37.5%.
. Waterford Lakes Town Center in Orlando, Florida, is a 982,000 square foot
power center. The 562,000 square foot first phase of the project opened in
November 1999. The first phase is 97% leased and includes anchors: Super
Target, TJMaxx, Ross Dress for Less, Bed Bath & Beyond, Barnes & Noble, Old
Navy, Regal 20-Plex Theatre and Dress Barn. The second phase comprises
420,000 square feet and will have a staggered opening throughout the fourth
quarter with OfficeMax, PetsMart and Best Buy as anchors. Simon's ownership
percentage: 100%.
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Construction continues on one additional new development that is scheduled to
open in 2001:
. Bowie Town Center in Annapolis, Maryland, is a 560,000 square foot open-air
regional shopping center with main street architecture and a 107,000 square
foot grocery retail component scheduled to open October 2001. Anchors/major
tenants: Hecht's, Sears, Old Navy, Barnes & Noble, Bed Bath & Beyond and
Safeway. Simon's ownership percentage: 100%.
On October 30th, Rich's opened at Mall of Georgia in Buford (Atlanta),
Georgia, bringing the number of department store anchors to five. Existing
anchors at Mall of Georgia, which opened in August of 1999, are Nordstrom, Lord
& Taylor, Dillard's and JCPenney.
Redevelopment Activities
------------------------
The Company recently completed five significant redevelopments at wholly-owned
properties:
. LaPlaza Mall in McAllen, Texas - Mall renovation, expansion of JCPenney,
small shop expansion and addition of Foley's Home Store opened November 2,
2000. Addition of Dillard's opened in March 2000.
. North East Mall in Hurst, Texas - Addition of Saks Fifth Avenue and mall
renovation completed in September 2000. New, expanded and relocated
Dillard's and small shop expansion opened in September 1999. Nordstrom and
Foley's are scheduled to open in March 2001 and fall 2001, respectively.
. Palm Beach Mall in West Palm Beach, Florida - Mall renovation, addition of
Old Navy, Designer Shoe Warehouse and Mars Music Store opened October 2000.
Addition of Dillard's and Borders opened February and April 2000,
respectively.
. Town Center at Boca Raton in Boca Raton, Florida - Addition of Nordstrom,
Lord & Taylor expansion, mall expansion and renovation, and new parking
structure opened November 3, 2000. New, expanded and relocated Saks Fifth
Avenue, new parking structure and expansion of Bloomingdale's opened during
the fourth quarter of 1999.
. Ross Park Mall in Pittsburgh, Pennsylvania - Mall renovation and tenant
remerchandising will open November 10th.
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New Business Initiatives
------------------------
In August, clixnmortar completed its beta test of the FastFrog and YourSherpa
wireless shopping product offerings in Atlanta. Subsequent to the beta test, SPG
formed an alliance with Found, Inc. Found has developed technology to integrate
retailers' on-line assets with their physical stores. Found and clixnmortar will
develop a single wishlist product, combining the best elements of FastFrog and
YourSherpa with the Found technology. The new product is scheduled to launch in
2001. In connection with this alliance, SPG made an investment in Found and
Found has an option to become an investor in clixnmortar.
In September, Constellation Real Technologies, of which Simon is a founding
member, announced its initial investment of $25 million in FacilityPro.com, a
business-to-business electronic marketplace designed for the efficient
procurement of facilities products and services. Simon Property Group is
currently implementing the FacilityPro.com platform and will utilize its
efficiencies in the Simon Business Network, the Company's division focused on
business-to-business initiatives.
Recently, American Eagle Outfitters and Finish Line announced the selection of
MerchantWired as the broadband infrastructure provider for all of their retail
locations (with a combined total of approximately 1,000 stores). The managed
network service that MerchantWired is providing American Eagle and Finish Line
is one of a suite of value-added services to be offered to the retail industry.
A core set of initial offerings for retailers include: Internet provider in-mall
network, secure managed network services, secure access to the internet, voice
over IP infrastructure in the store, and redundant WAN infrastructure connecting
retailers with their home offices, business partners and customers. The Company
owns approximately 50% of MerchantWired. Over 300 malls owned by SPG and other
owners of MerchantWired (The Macerich Company, The Rouse Company, Taubman
Centers, Inc., Urban Shopping Centers, Inc., and Westfield America, Inc.) are
wired and operational.
On November 6th, Simon Brand Ventures announced that it has joined forces with
Cingular Wireless to promote SBC and BellSouth wireless plans during the holiday
season. Shoppers who sign-up for one of Cingular's brands at retail stores or
kiosks at more than 100 Simon malls nationwide will receive a free Santa photo
package valued at $25. Shoppers in 50 malls will have the added benefit of
making a free 2-minute cellular phone call while in line to have their photo
taken with Santa. Simon Brand Ventures is the Company's division focused on
business-to-consumer initiatives.
Today the Company announced the early renewal of its marketing and vending
alliance with Pepsi- Cola Company. As part of this renewal, Pepsi will remain
Simon's preferred soft drink provider for the next two years. Terms of the
agreement include Simon and Pepsi partnering in the development of exclusive
integrated marketing programs on a national and regional basis. Each program
will channel Pepsi's key programs and brand messages through Simon's multiple
marketing platforms - live events, sampling, promotions and on-mall advertising
- to reach targeted consumer audiences on the local level.
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Dividends
---------
On October 18, 2000, the Company declared a common stock dividend of $0.5050 per
share. This dividend will be paid on November 17, 2000 to shareholders of record
on November 3, 2000. The Company also declared dividends on its three public
issues of preferred stock, all payable on January 2, 2001 to shareholders of
record on December 19, 2000:
. Simon Property Group, Inc. 6.50% Series B Convertible Preferred Stock
(NYSE:SPGPrB) - $1.625 per share
. SPG Properties, Inc. 8.75% Series B Cumulative Redeemable Preferred Stock
(NYSE:SGVPrB) - $0.546875 per share
. SPG Properties, Inc. 7.89% Series C Cumulative Preferred Stock -$0.98625 per
share.
Simon Property Group, Inc., headquartered in Indianapolis, Indiana, is a
self-administered and self-managed real estate investment trust which, through
its subsidiary partnerships, is engaged in the ownership, development,
management, leasing, acquisition and expansion of income-producing properties,
primarily regional malls and community shopping centers. It currently owns or
has an interest in 251 properties containing an aggregate of 184 million square
feet of gross leasable area in 36 states and five assets in Europe. Together
with its affiliated management company, Simon owns or manages approximately 190
million square feet of gross leasable area in retail and mixed-use properties.
Shares of Simon Property Group, Inc. are paired with beneficial interests in
shares of stock of SPG Realty Consultants, Inc. Additional Simon Property Group
information is available at www.shopsimon.com.
Supplemental Materials
----------------------
The Company's September 30, 2000 Form 10-Q and supplemental information package
(8-K) may be requested in e-mail or hard copy formats by contacting Shelly Doran
- Director of Investor Relations, Simon Property Group, P.O. Box 7033,
Indianapolis, IN 46207 or via e-mail at [email protected].
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Conference Call
---------------
The Company will provide an online simulcast of its third quarter conference
call at www.shopsimon.com, www.vcall.com, www.streetfusion.com and
----------------- ------------- --------------------
www.streetevents.com. To listen to the live call, please go to any of these
--------------------
websites at least fifteen minutes prior to the call to register, download and
install any necessary audio software. The call will begin at 11:00 a.m. Eastern
Daylight Time tomorrow, November 8th. An online replay will be available for
approximately 90 days at www.shopsimon.com and www.vcall.com.
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Statements in this press release that are not historical may be deemed
forward-looking statements within the meaning of the federal securities laws.
Although the Company believes the expectations reflected in any forward-looking
statements are based on reasonable assumptions, it can give no assurance that
its expectations will be attained and it is possible that our actual results may
differ materially from those indicated by these forward-looking statements due
to a variety of risks and uncertainties. The reader 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.
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SIMON
Combined Financial Highlights(A)
Unaudited
(In thousands, except as noted)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Minimum rent $299,708 $280,920 $ 890,435 $ 831,163
Overage rent(B) 9,700 12,307 28,456 40,333
Tenant reimbursements 145,237 156,514 444,384 433,352
Other income 39,281 21,430 96,161 66,422
------- ------- --------- ---------
Total revenue 493,926 471,171 1,459,436 1,371,270
Expenses:
Property operating 78,779 76,172 235,220 216,679
Depreciation and amortization 106,983 93,402 304,611 272,927
Real estate taxes 49,032 48,151 147,183 139,194
Repairs and maintenance 15,930 15,365 51,690 52,253
Advertising and promotion 11,473 15,883 42,728 45,435
Provision for credit losses 3,326 2,043 7,671 6,837
Other 8,990 5,373 27,474 19,622
------- ------- --------- ---------
Total operating expenses 274,513 256,389 816,577 752,947
Operating Income 219,413 214,782 642,859 618,323
Interest Expense 160,668 144,015 474,534 427,871
------- ------- --------- ---------
Income before Minority Interest 58,745 70,767 168,325 190,452
Minority Interest (2,382) (2,236) (7,099) (7,739)
Gain (Loss) on Sales of Real Estate, net(C) 151 - 8,809 (9,308)
Income Tax Benefit of SRC - - - 3,374
------- ------- --------- ---------
Income before Unconsolidated Entities 56,514 68,531 170,035 176,779
Income from Unconsolidated Entities 20,920 18,594 54,447 45,072
------- ------- --------- ---------
Income before Extraordinary Items and
Cumulative Effect of Accounting Change 77,434 87,125 224,482 221,851
Unusual Item(D) - (12,000) - (12,000)
Extraordinary Items - Debt Related Transactions - (410) (440) (2,227)
Cumulative Effect of Accounting Change(E) - - (12,342) -
------- ------- --------- ---------
Income before Allocation to Limited Partners 77,434 74,715 211,700 207,624
Less: Limited Partners' Interest in
the Operating Partnerships (16,075) (15,590) (42,346) (41,255)
Less: Preferred Distributions of the
SPG Operating Partnership (2,816) (612) (8,450) (612)
Less: Preferred Dividends of Subsidiary (7,333) (7,333) (22,001) (22,001)
------- ------- --------- ---------
Net Income 51,210 51,180 138,903 143.756
Preferred Dividends (9,185) (8,745) (27,623) (27,905)
------- ------- --------- ---------
Net Income Available to Common Shareholders $42,025 $42,435 $ 111,280 $115,851
======= ======= ========= =========
</TABLE>
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SIMON
Combined Financial Highlights- Continued(A)
Unaudited
(In thousands, except as noted)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
----- ------ ------ ------
<S> <C> <C> <C> <C>
PER SHARE DATA:
--------------
Basic Income per Paired Share:
Before Extraordinary Items $0.24 $ 0.25 $ 0.69 $ 0.68
Extraordinary Items - (0.01) - (0.01)
Cumulative Effect of Accounting Change - - (0.05) -
----- ------ ------ ------
Net Income Available to Common Sharcholdcrs $0.24 $ 0.24 $ 0.64 $ 0.67
===== ====== ====== ======
Diluted Income per Paired Share:
Before Extraordinary Items $0.24 $ 0.25 $ 0.69 $ 0.68
Extraordinary Items - (0.01) - (0.01)
Cumulative Effect of Accounting Change - - (0.05) -
----- ------ ------ ------
Net Income Available to Common Shareholders $0.24 $ 0.24 $ 0.64 $ 0.67
===== ====== ====== ======
<CAPTION>
SELECTED BALANCE SHEET INFORMATION
-----------------------------------------------
September 30, December 31,
2000 1999
---- ----
<S> <C> <C>
Cash and Cash Equivalents $ 114,420 $ 157,632
Investment Properties, net $11,581,035 $11,703,171
Mortgages and Other Indebtedness $ 8,792,597 $ 8,768,951
SELECTED REGIONAL MALL OPERATING STATISTICS
------------------------------------------- September 30,
2000 1999
---- ----
Occupancy(F) 90.5% 88.5%
Average Rent per Square Foot(F) $ 27.97 $26.75
Total Sales Volume (in millions)(G) $10,842 $9,624
Comparable Sales per Square Foot(G) $ 385 $ 371
Total Sales per Square Foot(G) $ 375 $ 356
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(A) Represents combined condensed financial statements of Simon Property Group,
Inc. and its paired share affiliate, SPG Realty Consultants, Inc. ("SRC").
(B) Decrease in 2000 primarily due to the adoption of SAB 101 on January 1,
2000, which requires overage rent to be recognized as revenue only when
each tenant's sales exceed their sales threshold. Previously, the Company
recognized overage rent based on reported and estimated sales through the
end of the period, less the applicable prorated base sales amount.
(C) Net of asset write downs of $10.57 million for the nine months ended
September 30, 2000.
(D) Relates to litigation filed by former employees/shareholders of DeBartolo
Realty Corporation (purchased by SPG in 1996) regarding stock incentive
plan shares. Judgment was rendered in favor of SPG in district court, but
reversed by appellate court on August 18, 1999.
(E) Due to the adoption of SAB 101 on January 1, 2000, as discussed in
footnote (B).
(F) Includes mall and freestanding stores.
(G) Based on the standard definition of sales for regional malls adopted by the
International Council of Shopping Centers which includes only mall and
freestanding stores.
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SIMON
Combined Financial Highlights- Continued/(A)/
Unaudited
(In thousands, except as noted)
--------------------------------------------------------------------------------
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS ("FFO")
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<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income Before Extraordinary Items and
Cumulative Effect of Accounting Change $ 77,434 $ 87,125 $224,482 $221,851
Plus: Real estate depreciation and amortization
from combined consolidated properties 105,600 93,182 302,742 272,263
Plus: Simon's share of real estate depreciation
and amortization and extraordinary items
from unconsolidated affiliates 30,395 17,900 87,251 59,191
Less: Unusual Item/(D)/ - (12,000) - (12,000)
Less: (Gain) loss on sale of real estate, net/(C)/ (151) - (8,809) 9,308
Less: Minority interest portion of real estate
depreciation and amortization (1,491) (1,516) (4,446) (3,566)
Less: Preferred distributions
(including those of subsidiary) (19,334) (16,690) (58,074) (50,518)
-------- -------- -------- --------
FFO of the Simon Portfolio $192,453 $168,001 $543,146 $496,529
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</TABLE>
<TABLE>
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<S> <C> <C> <C> <C>
FFO of the Simon Portfolio $192,453 $168,001 $543,146 $496,529
Basic FFO per Paired Share:
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Basic FFO Allocable to the Company $139,472 $122,205 $394,021 S361,564
Basic Weighted Average Paired Shares Outstanding 172,759 173,471 173,216 171,950
Basic FFO per Paired Share $O.81 $O.70 $2.27 $2.10
Diluted FFO per Paired Share:
-----------------------------
Diluted FFO Allocable to the Company $148,962 $131,364 $421,997 $390,933
Diluted Weighted Average Number of Equivalent 187,293 188,094 187,803 187,917
Paired Shares
Diluted FFO per Paired Share $0.80 $0.70 $2.25 $2.08
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