<PAGE>
CONTACTS:
Shelly Doran317.685.7330 Investors
Billie Scott317.263.7148 Media
FOR IMMEDIATE RELEASE
SIMON PROPERTY GROUP ANNOUNCES SECOND QUARTER
COMPARABLE FFO PER SHARE GROWTH OF 8.7%
Indianapolis, Indiana--August 3, 2000 . . . Simon Property Group, Inc. (the
"Company") (NYSE:SPG) today announced results for the quarter and six months
ended June 30, 2000. Diluted funds from operations for the quarter increased
5.6%, to $0.75 per share in 2000 from $0.71 per share in 1999. Total revenue
for the quarter increased 7.4%, to $487.7 million as compared to $454.0 million
in 1999. Diluted funds from operations for the six months increased 5.1%, to
$1.45 per share in 2000 from $1.38 per share in 1999. Total revenue for the six
months increased 7.3%, to $965.5 million as compared to $900.1 million in 1999.
On January 1, 2000, 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, the Company's share of 1999 diluted funds from
operations for the quarter would be reduced by $4.7 million, or $0.02 per
share, and funds from operations for the six months would be reduced by $8.4
million, or $0.04 per share. Accordingly, 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 six months was 8.7% and 8.2%, respectively.
Occupancy for mall and freestanding stores in the regional malls at June 30,
2000 increased 160 basis points to 90.0%, as compared to 88.4% at June 30,
1999. Comparable retail sales per square foot increased 5.2%, to $387 while
total retail sales per square foot increased 6.3% to $373. Average base rents
for mall and freestanding stores in the regional mall portfolio were $27.63 per
square foot at June 30, 2000, an increase of $1.48, or 5.7%, from June 30,
1999.
New Business Initiatives
On May 4th, Simon announced it's joining with leading real estate companies
across a broad range of property sectors to form a real estate technology
company, Constellation Real Estate Technologies. Constellation intends to form,
incubate and sponsor real estate-related Internet, e-commerce and broadband
enterprises; acquire interests in existing "best of breed" companies on a
synergistic basis; and act as an opportunistic consolidator across property
sectors in the emerging real estate technology area.
Constellation's founding membership includes the three largest public real
estate companies--Simon Property Group, Equity Office Properties and Equity
Residential Properties--as well as the three largest real estate service
companies by total market capitalization. Collectively, the total capital
commitment of the nine founding members is $135 million. Simon has committed
$15 million to Constellation.
On May 9th, the launch of MerchantWired (www.merchantwired.com) was
announced. MerchantWired, headquartered in Indianapolis, is a full-service
retail infrastructure company that connects the physical and virtual worlds in
the retail industry. Leading a consortium of property owners and infrastructure
partners, MerchantWired is dedicated to establishing the standard for retail
networks, providing retailers in any property across the country with the
infrastructure to meet their specific needs. Through strategic partnerships
with Cisco
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Systems, Inc., IBM and Intermedia Communications, MerchantWired is working with
leading property owners including SPG, The Macerich Company, The Rouse Company,
Taubman Centers, Inc., Urban Shopping Centers, Inc., and Westfield America,
Inc. to initially wire 350 retail properties nationwide.
MerchantWired is providing a complete packaged solution for retailers with a
core set of initial offerings that includes: 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.
Disposition Activities
During the second quarter of 2000, the Company sold the following assets in
conjunction with its ongoing strategy to dispose of its non-core assets:
<TABLE>
<CAPTION>
Asset Name Location Asset Type
-------------------------- --------------------------- ----------------
<S> <C> <C>
Lenox Office Building Atlanta, GA Office Building
Fremont Mall Fremont, NE Regional Mall
Buffalo Grove Towne Center Buffalo Grove (Chicago), IL Community Center
Arvada Plaza Arvada (Denver), CO Community Center
Marwood Plaza Indianapolis, IN Community Center
</TABLE>
The total proceeds from these sales of $92 million were utilized to repay
indebtedness.
New Development Activities
One new development project opened during the second quarter. Orlando
Premium Outlets, a new 430,000 square foot center located in Orlando, Florida,
began a phased opening in May, with more than 90 of the 110 stores
(representing 86% of the GLA) now operating. Traffic and sales to date have
been extremely strong, with many tenants ranking among the top performers in
their chains. Leading tenants include Anne Klein, BCBG Max Azaria, Bottega
Veneta, Burberry, Calvin Klein, DKNY, Ermenigildo Zegna, Max Mara, Polo Ralph
Lauren, Timberland, Tod's and Versace. Orlando Premium Outlets is ideally
located on Interstate 4 midway between Walt Disney World/EPCOT and Sea World
and was jointly developed by Simon and Chelsea GCA Realty. Simon's ownership
percentage: 50%.
The Company currently has three projects under construction in the U.S.:
. 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. Anchors/major
tenants: Jillian's, Bed Bath & Beyond, Sun & Ski Sports, Muvico, Books-
A-Million, Off Broadway Shoes, For Your Entertainment and Off Fifth-Saks
Fifth Avenue. Simon's ownership percentage: 37.5%. Scheduled opening:
November 2000.
. 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 100% leased and includes
anchors: Super Target, TJMaxx, Ross Dress for Less, Bed Bath & Beyond,
Barnes & Noble, Old Navy, Regal 20-Plex Theatre, Zany Brainy and Dress
Barn. The second phase comprises 420,000 square feet and is scheduled to
open in November 2000 with OfficeMax, PetsMart and Best Buy as anchors.
Simon's ownership percentage: 100%.
. 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, Zany Brainy and Safeway. Simon's ownership percentage:
100%.
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Redevelopment Activities
The Company continues its redevelopment program with the following major
projects scheduled for 2000 completion:
. LaPlaza Mall in McAllen, Texas--Addition of Dillard's (March 2000) and
expansion of JCPenney, small shops and new Foley's Home Store (November
2000).
. North East Mall in Hurst, Texas--Saks Fifth Avenue, Nordstrom and
Foley's are scheduled to open in September 2000, March 2001 and fall
2001, respectively. Mall renovation is to be completed in conjunction
with Saks' opening. New, expanded and relocated Dillard's and small shop
expansion opened in September 1999.
. Palm Beach Mall in West Palm Beach, Florida--Addition of Dillard's, Old
Navy, Borders, Designer Shoe Warehouse and Mars Music Store.
. Town Center at Boca Raton in Boca Raton, Florida--Addition of Nordstrom,
Lord & Taylor expansion, mall expansion and renovation, and new parking
structure (November 2000). New, expanded and relocated Saks Fifth
Avenue, new parking structure and expansion of Bloomingdale's opened
during the fourth quarter of 1999.
Management Announcement
The Company today announced the promotion of Stephen E. Sterrett to chief
financial officer. Mr. Sterrett joined the Simon organization in 1988, and has
held various financial management positions since that date, most recently as
senior vice president and treasurer.
Dividends
On July 21, 2000, the Company declared a common stock dividend of $0.5050
per share. This dividend will be paid on August 18, 2000 to shareholders of
record on August 4, 2000. The Company also declared dividends on its three
public issues of preferred stock, all payable on October 2, 2000 to
shareholders of record on September 15, 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 253 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 June 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 second 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 web
sites at least fifteen minutes prior to the call to register, download and
install any necessary audio software. The call will begin at 4:00 p.m. Eastern
Daylight Time today, August 3rd. An online replay will be available for
approximately 90 days.
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. 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 Six Months Ended
Ended June 30, June 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Minimum rent.......................... $294,265 $276,394 $590,727 $550,243
Overage rent.......................... 6,718 14,586 18,756 28,026
Tenant reimbursements................. 154,303 139,555 299,147 276,838
Other income.......................... 32,373 23,471 56,880 44,992
-------- -------- -------- --------
Total revenue....................... 487,659 454,006 965,510 900,099
Expenses:
Property operating.................... 79,459 72,003 156,441 140,507
Depreciation and amortization......... 99,140 89,765 197,628 179,525
Real estate taxes..................... 49,729 44,123 98,151 91,043
Repairs and maintenance............... 16,195 16,976 35,760 36,888
Advertising and promotion............. 15,245 14,854 31,255 29,552
Provision for credit losses........... 2,214 2,951 4,345 4,794
Other................................. 9,375 6,691 18,484 14,249
-------- -------- -------- --------
Total operating expenses............ 271,357 247,363 542,064 496,558
Operating Income...................... 216,302 206,643 423,446 403,541
Interest Expense...................... 155,207 142,734 313,866 283,856
-------- -------- -------- --------
Income before Minority Interest....... 61,095 63,909 109,580 119,685
Minority Interest..................... (2,283) (3,688) (4,717) (5,503)
Gain (Loss) on Sales of Real Estate,
net(B)............................... 1,562 (9,308) 8,658 (9,308)
Income Tax Benefit of SRC............. -- 3,374 -- 3,374
-------- -------- -------- --------
Income before Unconsolidated
Entities............................. 60,374 54,287 113,521 108,248
Income from Unconsolidated Entities... 15,538 13,051 33,527 26,478
-------- -------- -------- --------
Income before Extraordinary Items and
Cumulative Effect of Accounting
Change............................... 75,912 67,338 147,048 134,726
Extraordinary Items--Debt Related
Transactions......................... -- (43) (440) (1,817)
Cumulative Effect of Accounting
Change(C)............................ -- -- (12,342) --
-------- -------- -------- --------
Income before Allocation to Limited
Partners............................. 75,912 67,295 134,266 132,909
Less: Limited Partners' Interest in
the Operating Partnerships........... (15,532) (12,710) (26,271) (25,665)
Less: Preferred Distributions of the
SPG Operating Partnership............ (2,817) -- (5,634) --
Less: Preferred Dividends of
Subsidiary........................... (7,334) (7,334) (14,668) (14,668)
-------- -------- -------- --------
Net Income............................ 50,229 47,251 87,693 92,576
Preferred Dividends................... (9,217) (8,789) (18,438) (19,160)
-------- -------- -------- --------
Net Income Available to Common
Shareholders......................... $ 41,012 $ 38,462 $ 69,255 $ 73,416
======== ======== ======== ========
</TABLE>
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SIMON
Combined Financial Highlights--Continued (A)
Unaudited
(In thousands, except as noted)
<TABLE>
<CAPTION>
Three
Months Six Months
Ended Ended
June 30, June 30,
----------- ------------
2000 1999 2000 1999
----- ----- ----- -----
<S> <C> <C> <C> <C>
PER SHARE DATA:
Basic Income per Paired Share:
Before Extraordinary Items.......................... $0.24 $0.22 $0.45 $0.44
Extraordinary Items................................. -- -- -- (0.01)
Cumulative Effect of Accounting Change.............. -- -- (0.05) --
----- ----- ----- -----
Net Income Available to Common Shareholders......... $0.24 $0.22 $0.40 $0.43
===== ===== ===== =====
Diluted Income per Paired Share:
Before Extraordinary Items.......................... $0.24 $0.22 $0.45 $0.44
Extraordinary Items................................. -- -- -- (0.01)
Cumulative Effect of Accounting Change.............. -- -- (0.05) --
----- ----- ----- -----
Net Income Available to Common Shareholders......... $0.24 $0.22 $0.40 $0.43
===== ===== ===== =====
</TABLE>
SELECTED BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
Cash and Cash Equivalents....................... $ 143,478 $ 157,632
Investment Properties, net...................... $11,598,276 $11,703,171
Mortgages and Other Indebtedness................ $ 8,805,667 $ 8,768,951
</TABLE>
SELECTED REGIONAL MALL OPERATING STATISTICS
<TABLE>
<CAPTION>
June 30,
--------------
2000 1999
------ ------
<S> <C> <C>
Occupancy(D).................................................... 90.0% 88.4%
Average Rent per Square Foot(D)................................. $27.63 $26.15
Total Sales Volume (in millions)(E)............................. $7,075 $5,953
Comparable Sales per Square Foot(E)............................. $ 387 $ 368
Total Sales per Square Foot(E).................................. $ 373 $ 351
</TABLE>
--------
(A) Represents combined condensed financial statements of Simon Property Group,
Inc. and its paired share affiliate, SPG Realty Consultants, Inc.
(B) Net of asset write downs of $10.6 million for the three and six months
ended June 30, 2000.
(C) 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.
(D) Includes mall and freestanding stores.
(E) 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")
<TABLE>
<CAPTION>
Three Months Six Months Ended
Ended June 30, June 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income Before Extraordinary Items and
Cumulative Effect of Accounting
Change............................... $ 75,912 $ 67,338 $147,048 $134,726
Plus: Real estate depreciation and
amortization from combined
consolidated properties......... 98,906 89,544 197,142 179,081
Plus: Simon's share of real estate
depreciation and amortization
and extraordinary items from
unconsolidated affiliates....... 28,055 20,761 56,856 41,291
Less: Gain (loss) on sale of real
estate, net(B).................. (1,562) 9,308 (8,658) 9,308
Less: Minority interest portion of
real estate depreciation and
amortization.................... (1,475) (255) (2,955) (2,050)
Less: Preferred distributions
(including those of
subsidiary)..................... (19,368) (16,123) (38,740) (33,828)
-------- -------- -------- --------
FFO of the Simon Portfolio............ $180,468 $170,573 $350,693 $328,528
======== ======== ======== ========
Basic FFO per Paired Share:
Basic FFO Allocable to the Company.... $131,039 $125,099 $254,542 $239,359
Basic Weighted Average Paired Shares
Outstanding.......................... 173,672 173,342 173,448 171,177
Basic FFO per Paired Share............ $ 0.75 $ 0.72 $ 1.47 $ 1.40
======== ======== ======== ========
Diluted FFO per Paired Share:
Diluted FFO Allocable to the Company.. $140,364 $134,356 $273,039 $259,569
Diluted Weighted Average Number of
Equivalent Paired Shares............. 188,316 188,259 188,090 187,872
Diluted FFO per Paired Share.......... $ 0.75 $ 0.71 $ 1.45 $ 1.38
======== ======== ======== ========
</TABLE>
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