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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) : August 13, 1996
SIMON PROPERTY GROUP, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-12618 35-1901999
- --------------- ----------- ------------
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)
<PAGE 1>
Item 5. Other Events
On August 13, 1996 the Registrant made available additional ownership and
operation information concerning the Registrant, Simon Property Group, L.P.,
and the properties owned or managed by it as of June 30, 1996, 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 June 30, 1996
<PAGE 2>
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: August 13, 1996
SIMON PROPERTY GROUP, INC.
By: Dennis Cavanagh
---------------
Dennis Cavanagh,
Senior Vice President,
Financial Services
<PAGE 3>
SUPPLEMENTAL INFORMATION
Table of Contents
As of June 30, 1996
Information Page
----------- -----
Overview 5
Ownership Structure 6-7
Reconciliation of Net Income to Funds
from Operations ("FFO") 8
Selected Financial Information 9-10
Portfolio GLA, Occupancy & Rent Data 11
Rent Information 12
Lease Expirations 13-14
Scheduled Debt Amortization and Maturities 15
Summary of Mortgage Indebtedness by Maturity 16-20
Summary of Variable Rate Debt and Interest
Rate Protection Agreements 21
Development Activities 22-23
Renovation/Expansion Activities 24
Capital Expenditures 25
Gains on Sales of Peripheral Land 26
Teleconference Text - August 7, 1996 27-31
<PAGE 4>
SIMON PROPERTY GROUP
Overview
THE COMPANY
- -----------
Simon Property Group, Inc. (the "Company") was the sole general partner
of, and owned a controlling 61.1% interest in, Simon Property Group, L.P.
("SPG") as of June 30, 1996. In December 1993, the Company completed its
Initial Public Offering in which it sold 43.4 million shares of common stock at
$22.25 per share. In April 1995, the Company completed an add-on offering of
6.2 million shares at $24.125 per share. In October 1995, the Company issued 4
million convertible preferred shares at $25.00 per share. The terms of the
preferred shares are summarized in the Company's December 31, 1995 Form 10-K -
footnote 11 to the financial statements.
On August 9, 1996, Simon Property Group, Inc. and DeBartolo Realty Corporation
(NYSE:EJD) completed a merger of the two companies, creating a combined
company, Simon DeBartolo Group, Inc. (NYSE:SPG). Under the terms of the
merger, DeBartolo shareholders will receive 0.68 share of Simon common stock
for each share of DeBartolo common stock owned.
Simon DeBartolo Group owns or has an interest in 184 properties which consist
of existing regional malls, community shopping centers and specialty and mixed-
use properties containing an aggregate of 110 million square feet of gross
leasable area in 33 states. Simon DeBartolo Group, together with its
affiliated management company, manages approximately 127 million square feet of
gross leasable area in retail and mixed-use properties.
This supplemental package was prepared for Simon Property Group as of June 30,
1996, therefore, does not include information on the DeBartolo portfolio.
THE PURPOSE OF THIS PACKAGE
- ---------------------------
In this Supplemental Package, we have attempted to address the topics on
which we receive the most questions. We believe the key benefits from
providing a supplemental information package are as follows:
* It summarizes key information in one location.
* It provides debt information in a format that should be more useful to
users.
* It should be especially useful for any new shareholders or analysts
attempting to learn about SPG or setting up financial models.
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.
<PAGE 5>
SIMON PROPERTY GROUP
OWNERSHIP STRUCTURE
As of June 30, 1996
SIMON PROPERTY GROUP, L.P. (the "Operating Partnership")
Total Common Shares and Units Outstanding = 95,842,853 (1)
Operational Assets:
-------------------
62 Regional Malls (2)
55 Community Shopping Centers
2 Specialty Retail Centers
3 Mixed-Use Properties
Partners: %
--------- -----
Simon Property Group, Inc.
Public Shareholders 57.5%
Simon Family and Executive Management 3.6%
Limited Partners
Simon Family and Executive Management 35.7%
Other 3.2%
------
100.0%
Simon Property Group, Inc. (the "Company")
61.1% General Partner of Operating Partnership
Common Shareholders Shares %
-------------------- ---------- ------
Public Shareholders 55,117,859 94.1%
Simon Family and Executive Management 3,442,366 5.9%
---------- -----
58,560,225 100.0%
Limited Partners ("Limited Partners")
38.9% Limited Partners of Operating Partnership
Unitholders Units %
----------- ---------- ------
Simon Family and Executive Management 34,204,708 91.7%
Other Limited Partners 3,077,920 8.3%
---------- ------
37,282,628 100.0%
========== ======
(1) Excludes 4 million shares of preferred stock issued on October 27, 1995.
(2) Does not include Cottonwood Mall in Albuquerque, New Mexico which opened
on July 31.
<PAGE 6>
SIMON PROPERTY GROUP
Changes in Common Stock and Unit Ownership
For the Period from December 31, 1995 through June 30, 1996
SPG, L.P. SPG, Inc.
Units Common Shares
---------- --------------
Number Outstanding at December 31, 1995 37,282,628 58,360,195
March 22 Award of Restricted Stock
(Stock Incentive Program) - 200,030
Number Outstanding at June 30, 1996 37,282,628 58,560,225
Total Common Shares and Units Outstanding at June 30, 1996: 95,842,853
==========
<PAGE 7>
SIMON PROPERTY GROUP
Reconciliation of Net Income to Funds From
Operations ("FFO") (1)
As of June 30, 1996
(In thousands, except per share data)
Six
Months
Ended
June 30,
-------------------
Simon Property Group, L.P. (the "Operating 1996 1995
Partnership") ------- -------
Income of the Operating Partnership before
Extraordinary Item $47,800 $45,735
Plus: Depreciation and Amortization from
Consolidated Properties 51,038 42,959
Less: Minority Interest Portion of
Depreciation, Amortization and
Extraordinary Item (1,514) (1,561)
Plus: SPG's Share of Depreciation and
Amortization from Unconsolidated
Affiliates 5,950 3,012
Less: Preferred Dividends (4,062) -
Less: Gain on Sale of Asset - (2,350)
Funds from Operations of the Operating
Partnership $99,212 $87,795
Percent Increase 13.0%
Weighted Average Common Shares and Units
Outstanding 95,754 89,868
FFO per Share/Unit $1.04 $0.98
Percent Increase 6.1%
Simon Property Group, Inc. (the "Company")
FFO Allocable to SPG, Inc. $60,619 $51,357
Percent Increase 18.0%
Weighted Average Common Shares Outstanding 58,471 52,536
FFO per Share $1.04 $0.98
Percent Increase 6.1%
Distributions per Common Share/Unit $0.4925 $0.4925
(1) FFO amounts were calculated in accordance with the National
Association of Real Estate Investment Trust's revised
definition of FFO. Please see detailed discussion of FFO in
the Company's June 30, 1996, Form 10-Q.
<PAGE 8>
<TABLE>
SIMON PROPERTY GROUP
Selected Financial Information
As of June 30, 1996
(In thousands, except as noted)
Six Months
Ended
June 30,
--------------------------
Financial Highlights 1996 1995 %
Change
- ------------------------ ------ ------ ------
<S> <C> <C> <C>
Total Revenues - Consolidated Properties $ 283,204 $ 260,255 8.8%
Total EBITDA of Portfolio Properties $ 231,981 $ 208,027 11.5%
EBITDA After Minority Interest $ 184,936 $ 169,363 9.2%
Net Income Available to Common
Shareholders $ 26,566 $ 26,594 (0.1)%
Net Income Available to Common
Shareholders per Share $ 0.45 $ 0.51 (11.8)%
Funds from Operations of the Operating
Partnership $ 99,212 $ 87,795 13.0%
Funds from Operations Allocable to Simon
Property Group, Inc. $ 60,619 $ 51,357 18.0%
Funds from Operations per Common Share $ 1.04 $ 0.98 6.1%
Common Stock Distributions Declared, per
Common share $ 0.4925 $ 0.4925 -
Occupancy at End of Period:
Regional Malls (1) 83.1%(5) 84.6% (1.5)%
Community Shopping Centers (2) 92.6% 94.6% (2.0)%
Average Base Rent per Square Foot:
Regional Malls (1) $ 19.79 $ 18.06 9.6%
Community Shopping Centers (2) $ 7.44 $ 7.21 3.2%
Total Tenant Sales Volume, in millions (3)
Regional Malls (4) $ 1,572 $ 1,385 13.5%
Community Shopping Centers (2) $ 542 $ 584 (7.2)%
Number of Properties Open at End of Period 122 119 2.5%
Units Outstanding at End of Period 37,283 37,285 0.0%
Common Shares Outstanding at End of Period 58,560 57,038 2.7%
------ ------
Total Common Shares and Units Outstanding
at End of Period 95,843 94,323 1.6%
====== ======
Weighted Average Units Outstanding 37,283 37,332 (0.1)%
Weighted Average Common Shares
Outstanding 58,471 52,536 11.3%
------ ------
Weighted Average Common Shares and Units
Outstanding 95,754 89,868 6.5%
====== ======
(1) Includes mall and freestanding stores.
(2) Includes all Owned GLA.
(3) Represents only those tenants who report sales.
(4) Based upon the new standard definition of sales for regional malls
adopted by the International Council of Shopping Centers which includes
only mall and freestanding stores.
(5) The Company is actively de-leasing two centers, Charles Towne Square and
Southtown Mall, in anticipation of de-malling these properties. The SPG
regional mall portfolio occupancy excluding these centers is 84.5%, as
compared to the reported 83.1%.
</TABLE>
<PAGE 9>
SIMON PROPERTY GROUP
Selected Financial Information
As of June 30, 1996
(In thousands, except as noted)
June 30, December 31,
Selected Balance Sheet Information and Statistics 1996 1995
---------- ----------
Total Assets $2,679,081 $ 2,556,436
Consolidated Debt $2,178,539 $ 1,980,759
Joint Venture Debt $ 457,578 $ 410,652
SPG Share of Joint Venture Debt $ 154,532 $ 167,644
Common Stock Price at End of Period $ 24.500 $ 24.375
Equity(1) $2,448,150 $ 2,431,294
Total Capitalization - Consolidated Debt Only $4,626,689 $ 4,412,053
Debt-to-Market Capitalization - Consolidated Only 47.1% 44.9%
Total Capitalization - Including SPG Share of JV
Debt $4,781,221 $ 4,579,697
Debt-to-Market Capitalization - Including SPG
Share of JV Debt 48.8% 46.9%
(1) Market value of Common Stock and Partnership Units plus book value of
Preferred Stock.
<PAGE 10>
SIMON PROPERTY GROUP
Portfolio GLA, Occupancy & Rent Data
As of June 30, 1996
% of Average
Owned Annualized
GLA Base Rent
Total % of Which per Leased
Type of GLA Owned Owned is Sq. Ft. of
Property Sq. Ft. GLA GLA Leased Owned GLA
- ---------- ------- ----------- ------ ------- ---------
Regional Malls
- --------------
- -Anchor 30,559,944 9,705,228 26.0% 97.3% $3.00
- -Mall Store 17,295,319 17,295,320 46.5% 82.8% 20.20
- -Freestanding 1,109,786 458,263 1.2% 95.4% 6.55
Subtotal 18,405,105 17,753,583 47.7% 83.1% $19.79
Regional
Mall Total 48,965,049 27,458,811 73.7% 88.2% $13.14
Community Shopping Centers
- --------------------------
- -Anchor 8,096,208 5,121,065 13.7% 93.3% $6.07
- -Mall Store 3,021,730 2,940,640 7.9% 90.6% 9.91
- -Freestanding 765,868 284,809 0.8% 100.0% 7.06
Community
Center Total 11,883,806 8,346,514 22.4% 92.6% $7.44
Mixed-Use Properties
- --------------------
- -Office Portion 1,454,916 1,454,916 3.9% 92.3% $20.34
GRAND TOTAL 62,303,771 37,260,241 100.0% 89.3% $12.10
Occupancy History
Community
As of Regional Malls(1) Shopping Centers(2)
------- ----------------- -------------------
6/30/96 83.1%(3) 92.6%
6/30/95 84.6% 94.6%
12/31/95 86.4% 95.1%
12/31/94 86.2% 94.6%
12/31/93 85.6% 89.3%
12/31/92 84.6% 89.3%
(1) Includes mall and freestanding stores.
(2) Includes all Owned GLA.
(3) The Company is actively de-leasing two centers, Charles Towne Square
and Southtown Mall, in anticipation of de-malling these properties.
The SPG regional mall portfolio occupancy excluding these centers is
84.5%, as compared to the reported 83.1%.
<PAGE 11>
SIMON PROPERTY GROUP
Rent Information
As of June 30, 1996
Average Base Rent
Mall & Freestanding % Community %
As of Stores at Regional Malls Change Shopping Centers Change
6/30/96 $19.79 9.6% $7.44 3.2%
6/30/95 18.06 - 7.21 -
12/31/95 18.68 7.2 7.27 2.5
12/31/94 17.43 3.1 7.09 3.1
12/31/93 16.91 4.8 6.88 1.5
12/31/92 16.14 7.9 6.78 8.1
Rental Rates
- ------------
Base Rent (1)
-------------
Store Openings Store Closings Amount of Change
Year During Period During Period Dollar Percentage
------------- ------------- ------ ----------
Regional Malls:
- ---------------
1996 (YTD) $22.20 $16.81 $5.39 32.1%
1995 21.92 16.54 5.38 32.5
1994 18.67 13.35 5.32 39.9
1993 21.45 15.18 6.27 41.3
1992 20.09 14.21 5.88 41.4
Community Shopping Centers:
- ---------------------------
1996 (YTD) $9.52 $7.18 $2.34 32.6%
1995 10.00 8.78 1.22 13.9
1994 10.43 11.33 (0.90) (7.9)
1993 11.66 9.59 2.07 21.6
1992 9.40 9.08 0.32 3.5
(1)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 who closed or whose leases expired.
<PAGE 12>
SIMON PROPERTY GROUP
Lease Expirations(1)
As of June 30, 1996
Number of Avg. Base Rent
Leases Square per Square Foot
Year Expiring Feet at 6/30/96
- ------------------ --------- ------- --------------
Regional Malls -
Mall & Freestanding Stores
1996 (7/1 - 12/31) 83 188,394 $17.97
1997 675 1,573,382 17.44
1998 604 1,009,841 20.91
1999 586 1,346,366 20.50
2000 530 1,187,246 22.16
2001 513 1,357,279 19.05
2002 323 1,014,870 20.63
2003 336 982,755 21.02
2004 357 1,116,345 20.78
2005 327 1,195,650 19.12
2006 495 1,534,259 22.10
----- ---------- ------
TOTALS 4,829 12,506,387 $20.28
===== ========== ======
Regional Malls -
Anchor Tenants
1996 (7/1 - 12/31) 2 127,230 $2.24
1997 6 592,036 1.59
1998 6 871,029 1.68
1999 8 1,082,410 1.72
2000 6 723,869 2.56
2001 8 924,778 2.08
2002 2 222,540 1.78
2003 3 255,227 3.54
2004 9 715,572 4.54
2005 6 675,033 2.31
2006 7 755,481 4.01
-- --------- -----
TOTALS 63 6,945,205 $2.50
== ========= =====
Community Centers - Mall
Stores & Freestanding Stores
1996 (7/1 - 12/31) 8 31,095 $5.58
1997 118 310,943 10.71
1998 126 345,090 11.11
1999 118 396,470 10.73
2000 110 486,074 9.03
2001 78 253,949 11.17
2002 26 138,877 8.62
2003 21 157,684 8.94
2004 20 121,352 11.13
2005 23 210,946 7.76
2006 11 117,143 8.98
--- --------- -----
TOTALS 659 2,569,623 $9.90
=== ========= =====
<PAGE 13>
Community Centers -
Anchor Tenants
1996 (7/1 - 12/31) 3 61,256 $6.64
1997 10 291,550 5.55
1998 1 55,695 5.49
1999 7 263,019 4.39
2000 5 217,813 4.43
2001 10 397,756 3.73
2002 3 146,520 6.13
2003 7 248,553 6.57
2004 6 150,943 5.80
2005 9 437,915 7.01
2006 7 460,400 5.95
--- --------- -----
TOTALS 68 2,731,420 $5.57
=== ========= =====
(1) Does not consider the impact of options that may be
contained in leases.
<PAGE 14>
<TABLE>
Simon Property Group
Scheduled Debt Amortization and Maturities
As of June 30, 1996
(In thousands)
SPG's Share SPG's Share
Scheduled Scheduled of Scheduled of Scheduled
Year Amortization Maturities Total Amortization Maturities Total
<S> <C> <C> <C> <C> <C> <C>
Consolidated
Properties
1996 3,684 63,079 66,763 3,684 63,079 66,763
1997 11,823 107,200 119,023 11,823 107,200 119,023
1998 10,104 285,880 295,984 10,104 278,439 288,543
1999 12,673 253,339 266,012 12,673 253,339 266,012
2000 14,220 326,005 340,225 14,220 282,814 297,034
2001 15,299 0 15,299 15,299 0 15,299
2002 14,278 86,144 100,422 14,278 86,144 100,422
2003 8,486 275,150 283,636 8,486 275,150 283,636
2004 3,745 161,256 165,001 3,745 161,256 165,001
2005 4,092 0 4,092 4,092 0 4,092
Thereafter 0 211,082 211,082 0 211,082 211,082
------- ---------- ---------- ------- ---------- ----------
$98,404 $1,769,135 $1,867,539 $98,404 $1,718,503 $1,816,907
Short Term
Credit Facilities
1996 0 0 0 0 0 0
1997 0 0 0 0 0 0
1998 0 311,000 311,000 0 311,000 311,000
Total ------- ---------- ---------- ------- ---------- ----------
Consolidated Debt $98,404 $2,080,135 $2,178,539 $98,404 $2,029,503 $2,127,907
======= ========== ========== ======= ========== ==========
Joint Ventures
1996 112 5,000 5,112 56 2,500 2,556
1997 241 0 241 120 0 120
1998 267 0 267 134 0 134
1999 295 142,330 142,625 148 49,272 49,420
2000 119 21,639 21,758 36 10,820 10,856
2001 2,221 0 2,221 775 0 775
2002 2,384 0 2,384 832 0 832
2003 2,559 0 2,559 892 0 892
2004 2,747 0 2,747 957 0 957
2005 0 160,471 160,471 0 58,144 58,144
Thereafter 0 117,193 117,193 0 29,846 29,846
------- ---------- --------- ------ --------- ----------
Total Joint
Venture Debt $10,945 $446,633 $457,578 $3,950 $150,582 $154,532
<PAGE 15>
</TABLE>
<TABLE>
SIMON PROPERTY GROUP
Summary of Mortgage
Indebtedness By Maturity
As of June 30, 1996
(In thousands)
Principal SPG Share Weighted Average
Property Maturity Interest Balance of Loan Interest Rate
Name Date Rate 6/30/96 Balance by Year
- ------------------------ -------- -------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Consolidated Properties:
Fixed Rate Debt:
Subtotal 1996-1997 0 0
White Oaks Mall 03/01/98 7.70% 16,500 9,061
Ross Park Mall 08/15/98 6.14% 60,000 60,000
------ ------
Subtotal 1998 76,500 69,061 6.48%
West Ridge Mall 06/01/99 8.00% 50,306 50,306
Ingram Park Mall 11/01/99 9.63% 7,000 7,000
Ingram Park Mall 12/01/99 8.10% 49,423 49,423
Barton Creek Square 12/30/99 8.10% 63,958 63,958
La Plaza Mall 12/30/99 8.25% 50,815 50,815
Subtotal 1999 221,502 221,502 8.16%
Windsor Park Mall 06/01/00 8.00% 6,044 6,044
Trolley Square 07/23/00 5.81% 19,000 17,100
Bloomingdale Court 12/01/00 8.75% 29,009 29,009
Forest Plaza 12/01/00 8.75% 17,354 17,354
Fox River Plaza 12/01/00 8.75% 12,654 12,654
Lake View Plaza 12/01/00 8.75% 22,169 22,169
Lincoln Crossing 12/01/00 8.75% 997 997
Matteson Plaza 12/01/00 8.75% 11,159 11,159
Regency Plaza 12/01/00 8.75% 1,878 1,878
St. Charles Towne Pl 12/01/00 8.75% 30,887 30,887
West Ridge Plaza 12/01/00 8.75% 4,612 4,612
White Oaks Plaza 12/01/00 8.75% 12,345 12,345
Subtotal 2000 168,108 166,208 8.39%
Subtotal 2001 0 0
Crossroads Mall 07/31/02 7.75% 41,440 41,440
North Riverside Park 09/01/02 9.38% 4,155 4,155
North Riverside Park 09/01/02 10.00% 3,698 3,698
Hutchinson Mall 10/01/02 8.44% 11,523 11,523
Markland Mall 12/15/02 6.75% 10,000 10,000
Muncie Mall 12/15/02 6.75% 24,000 24,000
Subtotal 2002 94,816 94,816 7.63%
<PAGE 16>
Battlefield Mall 06/01/03 7.50% 51,271 51,271
South Park Mall 06/15/03 7.25% 24,748 24,748
Anderson Mall 12/15/03 6.74% 19,000 19,000
Forest Mall 12/15/03 6.74% 12,800 12,800
Forest Village Park 12/15/03 6.16% 20,600 20,600
Golden Ring Mall 12/15/03 6.74% 29,750 29,750
Longview Mall 12/15/03 6.16% 22,100 22,100
Midland Park Mall 12/15/03 6.31% 22,500 22,500
Miller Hill Mall 12/15/03 6.74% 34,500 34,500
North Towne Square 12/15/03 6.31% 23,500 23,500
Towne West Square 12/15/03 6.16% 40,250 40,250
Subtotal 2003 301,019 301,019 6.69%
Cielo Vista Mall 07/01/04 8.13% 2,413 2,413
College Mall 07/01/04 7.00% 43,727 43,727
Greenwood Park Mall 07/01/04 7.00% 36,623 36,623
Tippecanoe Mall 07/01/04 8.45% 47,913 47,913
Towne East Square 07/01/04 7.00% 57,813 57,813
Subtotal 2004 188,489 188,489 7.38%
Subtotal 2005-2006 0 0
Cielo Vista Mall 05/01/07 9.25% 56,585 56,585
Irving Mall 05/01/07 9.25% 43,573 43,573
McCain Mall 05/01/07 9.25% 26,424 26,424
Valle Vista Mall 05/01/07 9.25% 34,996 34,996
Subtotal 2007 161,578 161,578 9.25%
Subtotal 2008-2011 0 0
Windsor Park Mall 05/01/12 8.00% 9,005 9,005
Subtotal 2012 9,005 9,005 8.00%
O'Hare International 12/31/13 7.50% 27,500 27,500
Subtotal 2013 27,500 27,500 7.50%
Subtotal 2014-2025 0 0
Sunland Park Mall 01/01/26 8.63% 40,325 40,325
Subtotal 2026 40,325 40,325 8.63%
--------- --------- ----
Total Consolidated Fixed Rate Debt 1,288,842 1,279,503 7.73%
<PAGE 17>
Variable Rate Debt:
Lincolnwood Town Ctr 12/27/96 6.06% 63,079 63,079
Subtotal 1996 63,079 63,079 6.06%
Eastland Mall 11/01/97 6.65% 30,000 30,000
St. Charles Towne Ctr 12/31/97 6.37% 77,200 77,200
Subtotal 1997 107,200 107,200 6.45%
East Towne Mall 09/29/98 6.56% 55,000 55,000
Eastgate Consumer 12/31/98 6.50% 25,429 25,429
Riverway 12/31/98 6.38% 85,571 85,571
Riverway 12/31/98 6.38% 45,879 45,879
Subtotal 1998 211,879 211,879 6.44%
Cottonwood Mall (1) 02/01/99 7.48% 38,398 38,398
Subtotal 1999 38,398 38,398 7.48%
Jefferson Valley Mall 01/12/00 6.05% 50,000 50,000
The Forum Shops 02/23/00 6.47% 100,000 59,521
Trolley Square 07/23/00 6.94% 4,641 4,177
Trolley Square 07/23/00 6.94% 3,500 3,150
Subtotal 2000 158,141 116,848 6.36%
--------- --------- ----
Total Consolidated Variable Rate Debt 578,697 537,404 6.45%
--------- --------- ----
Total Consolidated Properties 1,867,539 1,816,907 7.33%
========= ========= ====
Joint Venture Properties:
Fixed Rate Debt:
The Source 12/21/96 N/A 5,000 2,500
Subtotal 1996 5,000 2,500
Subtotal 1997-1999 0 0
North East Mall 09/01/00 10.00% 22,554 11,277
Subtotal 2000 22,554 11,277 10.00%
Subtotal 2001-2004 0 0
<PAGE 18>
Cobblestone Court 11/30/05 7.22% 6,180 2,163
Crystal Court 11/30/05 7.22% 3,570 1,249
Fairfax Court 11/30/05 7.22% 10,320 2,709
Gaitway Plaza 11/30/05 7.22% 7,350 1,715
Ridgewood Court 11/30/05 7.22% 7,980 2,793
Royal Eagle Plaza 11/30/05 7.22% 7,920 2,772
The Plaza at Buckland 11/30/05 7.22% 17,680 4,641
The Yards Plaza 11/30/05 7.22% 8,270 2,895
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
Seminole Towne Center 12/27/05 6.88% 70,500 31,724
Subtotal 2005 170,500 61,635 7.08%
Smith Haven Mall 06/17/06 7.86% 115,000 28,750
Subtotal 2006 115,000 28,750 7.86%
Subtotal 2007-2016 0 0
Total Joint Venture Fixed Rate Debt 313,054 104,162 7.46%
Variable Rate Debt:
Subtotal 1996-1998 0 0
Stratosphere (2) 03/13/99 7.50% 12,542 6,271
Ontario Mills (2) 05/07/99 8.25% 13,934 3,484
Lakeline Mall 05/16/99 5.88% 65,897 32,949
Circle Centre (2) 08/29/99 7.22% 52,151 7,666
Subtotal 1999 144,524 50,370 6.73%
Total Joint Venture Variable Rate Debt 144,524 50,370 6.73%
--------- --------- -----
Total Joint Venture Properties 457,578 154,532 7.23%
--------- --------- -----
Total Mortgage Debt 2,325,117 1,971,439 7.31%
========= ========= =====
<PAGE 19>
Corporate Credit Facilities:
Variable Rate Debt:
SPG, LP 08/07/98 6.77% 311,000 311,000
Subtotal 1998 311,000 311,000 6.77%
Corporate Credit Facilities 311,000 311,000 6.77%
(1) Option exists to extend maturity one year.
(2) Two one-year ptions exist to extend maturity.
</TABLE>
Reconciliation to Balance Sheets at June 30,1996
Principal SPG Share Weighted
Balance of Loan Average
6/30/96 Balance Interest Rate
--------- --------- -------
Consolidated Fixed Rate Debt 1,288,842 1,279,503 7.73%
Consolidated Variable Rate Debt 578,697 537,404 6.45%
Corporate Credit Facilities 311,000 311,000 6.77%
--------- --------- ----
Subtotal 889,697 848,404 6.56%
--------- --------- ----
Mortgage and Other Notes Payable
Consolidated Balance Sheets 2,178,539 2,127,907 7.25%
========= ========= ====
Joint Venture Fixed Rate Debt 313,054 104,162 7.46%
Joint Venture Variable Rate Debt 144,524 50,370 6.73%
Mortgage and Other Notes Payable --------- --------- ----
Partnerships and Joint Ventures 457,578 154,532 7.23%
========= ========= ====
<PAGE 20>
<TABLE>
SIMON PROPERTY GROUP
Summary of Variable Rate Debt and Interest Rate Protection Agreements
As of June 30, 1996
(In thousands)
Simon Terms of
Ownership SPG Interest
Principal % of Share of Interest Terms of Rate
Property Maturity Balance Joint Loan Rate Variable Protection
Name Date 6/30/96 Ventures Balance 6/30/96 Rate Agreement
<S> <C> <C> <C> <C> <C> <S> <S>
Consolidated Properties:
Variable Rate Debt:
Lincolnwood
Town Ctr 12/27/96 63,079 63,079 6.06% LIBOR + 1.25% LIBOR swapped at
4.81% through
maturity.
Eastland Mall 11/01/97 30,000 30,000 6.65% LIBOR + 1.50% LIBOR swapped at
5.15% through
maturity; lender
has right to
cancel swap
effective 1/1/97.
St. Charles
Towne Ctr 12/31/97 77,200 77,200 6.37% LIBOR + 1.25% $62,238 of loan
balance is LIBOR
swapped at 5.12%
through maturity;
lender has right
to cancel swap
effective 1/3/97.
East Towne Mall 09/29/98 55,000 55,000 6.56% LIBOR + 1.125%
Eastgate
Consumer 12/31/98 25,429 25,429 6.50% LIBOR + 1.50% LIBOR capped at
5.0% through
maturity.
Riverway 12/31/98 85,571 85,571 6.38% LIBOR + 1.375% LIBOR capped at
5.0% through
maturity.
Riverway 12/31/98 45,879 45,879 6.38% LIBOR + 1.375% LIBOR capped at
5.0% through
maturity.
Cottonwood Mall 02/01/99 (1) 38,398 38,398 7.48% LIBOR + 2.00% LIBOR rate can be
reduced based upon
mall performance.
Jefferson
Valley Mall 01/12/00 50,000 50,000 6.05% LIBOR + .55% LIBOR capped at
8.7% through
maturity.
The Forum Shops 02/23/00 100,000 59.5% 59,521 6.47% LIBOR + 1.0% See Footnote #2.
Trolley Square 07/23/00 4,641 90.0% 4,177 6.94% LIBOR + 1.50%
Trolley Square 07/23/00 3,500 90.0% 3,150 6.94% LIBOR + 1.50%
------- -------
Total Consolidated Properties 578,697 537,404
======= =======
Corporate Credit Facilities:
SPG, L.P. 08/07/98 311,000 311,000 6.77% LIBOR + 1.325% On March 13, 1995, the
Operating Partnership
Total Corporate Credit entered into a two-year cap agreement
Facilities 311,000 311,000 in the amount of $100 million. The
Operating Partnership may elect to use this
cap on any wholly-owned variable-
interest-rate debt. The LIBOR cap may
fluctuate through March 13, 1997.
LIBOR is initially capped at 7.5%
through maturity, however, if LIBOR
should equal or exceed 8.75% between
monthly reset dates, then LIBOR would
be capped at 8.5% for that period only.
Joint Venture Properties:
Variable Rate Debt:
Stratosphere 3/13/99 (3) 12,542 50.0% 6,271 7.50% LIBOR + 2.00% LIBOR rate can be
reduced based upon
project
performance.
Ontario Mills 5/7/99 (3) 13,934 25.0% 3,484 8.25% LIBOR + 2.75% LIBOR rate can be
reduced based upon
project
performance.
Lakeline Mall 5/16/99 65,897 50.0% 32,949 5.88% LIBOR + .375%
Circle Centre 8/29/99 (3) 52,151 14.7% 7,666 7.22% LIBOR + 2.375%
Total Joint Venture ------- ------
Properties 144,524 50,370
------- ======
Total Variable Mortgage ---------
and Other Indebtedness 1,034,221
=========
Footnotes:
(1) Option exists to extend maturity one year.
(2) Cap agreement was made on $89,000 of total loan balance; LIBOR capped @ 7% through
12/23/96; however if LIBOR should increase more than 0.6% between monthly reset dates,
the cap will be increased by 0.25%, but shall not exceed 8.25%.
(3) Two one-year options exist to extend maturity.
</TABLE>
<PAGE 21>
<TABLE>
SIMON PROPERTY GROUP
Development Activities
As of June 30, 1996
Non-Anchor Projected
SPG Sq. Footage Anchors/ Actual/ Developmnt
GLA Ownership Leased/ Major Projected Cost
Mall/Location (sq. ft.) Percentage Committed(1) Tenants Opening (in millions)
<S> <C> <C> <C> <S> <C> <C>
Recently Opened
Cottonwood Mall 1,035,000 100.0% 87% Dillard's 7/31/96 $75
Albuquerque, NM Foley's
(Opened 7/31/96) JCPenney
Mervyn's
Montgomery Ward
United Artist Entertainment
Complex
Under
Construction
Tower Shops at 89,000 50.0% 87% Rainforest Cafe 8/96 $25
Stratosphere (Phase I) Stratosphere
Casino(2)
Las Vegas, NV
Ontario Mills 1,400,000 25.0% 81% AMC Theatres 11/96 $168
Ontario, CA Marshalls
(Los Angeles) Totally 4 Kids
Sports Authority
TJMaxx
Burlington
Bed Bath &
Beyond
Mikasa
Off 5th-Saks Fifth
Avenue Outlet
JCPenney Outlet
American Wilderness
Experience
Dave & Buster's
Bernini - Off
Rodeo
Group USA
IWERKS
Virgin Records
The Source 730,000 50.0% (3) Fortunoff 8/97 $151
Long Island, NY Nordstrom Rack
Off 5th-Saks Fifth
Avenue Outlet
Cheesecake
Factory
Rainforest Cafe
Just for Feet
Bertolini's
<PAGE 22>
Arizona Mills 1,225,000 25.0% (3) Oshmans 11/97 $182
Tempe, Arizona Supersport
Off 5th-Saks Fifth
Avenue Outlet
(Groundbreaking Burlington Coat
8/1/96) Factory
Ross Dress for
Less
Grapevine Mills 1,450,000 37.5% (3) Books-A-Million 11/97 $186
Grapevine, Texas Burlington Coat
Factory
(Dallas/Ft. Worth) Off 5th-Saks Fifth
Avenue Outlet
(Groundbreaking Group USA
7/10/96)
Rainforest Cafe
Under Development
Shops at Sunset 500,000 75.0% (3) AMC 24 Theatre 4/98 $130
Place
South Miami, FL
(Construction
start projected
9/96)
(1) As of July 31, 1996.
(2) Not a tenant per se; directly connected to the Tower Shops at Stratosphere.
(3) Leasing still in preliminary stage since project will not open until after 1996.
</TABLE>
<PAGE 23>
<TABLE>
SIMON PROPERTY GROUP
Renovation/Expansion Activities
As of June 30, 1996
Anticipated Projected
Name/Location Completion Cost Scope of Construction
(in millions)
<S> <C> <C> <S>
The Forum Shops 9/97 $90 Addition of 250,000 square feet, 92%
at Caesars leased and committed. Tenants include:
Las Vegas, NV Virgin Records, FAO Schwarz, Cheesecake
(Expansion) Factory and NikeTown.
College Mall 11/96 $4 Renovation of common area including new
Bloomington, IN floor treatment, skylights and entrances,
(Renovation & Expansion) as well as upgrading of parking lot lighting
and signage.
Greenwood Plus 11/96 $4 21,000 square foot expansion of Kohl's and
Greenwood, In 9,000 square foot expansion of Best Buy.
(Expansion)
Muncie Mall 9/97 $21 Renovation of common area including new floor
Muncie, IN treatment and skylights. Addition of 120,000
(Renovation & Expansion) square foot L.S. Ayres store with a projected
opening of 11/96. Additional 41,000 square feet
of small shops leading to new Ayres projected to open
spring 1997. Existing Ayres store to be converted into
food court, restaurants and retail with a scheduled
opening of 9/97.
Tippecanoe Plaza 5/97 $4 Relocation/expansion of Service
Lafayette, IN Merchandise. Reconfiguration of old
Service
(Renovation) Merchandise for new Barnes & Noble.
</TABLE>
<PAGE 24>
SIMON PROPERTY GROUP
Capital Expenditures
As of June 30, 1996
(In millions)
Joint Venture Properties
Consolidated SPG's
Properties Total Share
Acquisitions $43.9 - -
New Developments 32.1 $126.7 $46.2
Renovations and Expansions 23.4 (1) 0.3 -
Tenant Allowances-Retail 11.2 0.7 0.3
Tenant Allowances-Office 4.3 (2) - -
Capital Expenditures
Recovered from Tenants 1.0 0.2 -
Other (3) 1.5 0.6 0.1
Totals $117.4 $128.5 $46.6
(1)Costs were incurred primarily at The Forum Shops at Caesars, Tippecanoe
Plaza, Muncie Mall and Greenwood Plus.
(2)Includes $3.3 million in tenant improvements to be paid over a 7-year
period: $500,000/year from 1996 to 2000 and $400,000 to be paid in 2001 and
2002.
(3)Primarily represents capital expenditures not recovered from tenants.
<PAGE 25>
SIMON PROPERTY GROUP
Gains on Sales of Peripheral Land
As of June 30, 1996
(In millions)
Six Months Ended
June 30,
1996 1995
---- ----
Consolidated Properties $1.0 $1.2
SPG's Share of Joint Venture Properties 1.6 0.8
Totals $2.6 $2.0
<PAGE 26>
SIMON PROPERTY GROUP
Teleconference Text
August 7, 1996
Good afternoon and welcome to our second quarter earnings teleconference. Rick
Sokolov is also here with me.
We issued the earnings press release yesterday and I assume that all of you
have copies by now. In the interest of time, I will not go into the details
included in that release. Instead, I'd like to take this opportunity to
discuss key trends noted for the first six months of 1996, to update you on the
status of our merger with DeBartolo Realty Corporation, and for Rick to provide
you with a brief overview of DeBartolo's second quarter highlights.
SPG's Funds from Operations for the second quarter of 1996, under NAREIT's
revised definition, were $0.53 per share. This represented an increase of 6.0%
from the $0.50 per share for the same period in 1995. FFO in gross dollars
increased 10.2% to $50.5 million in the second quarter and increased 13.0% to
$99.2 million for the six months ended June 30th. Our quarter and year-to-date
per share amounts have been impacted by the 6.2 million share secondary
offering we did in April 1995.
Under the previous method of reporting, FFO would have been $0.55 per share for
the second quarter of 1996, and for the first six months would have been $1.09
per share. We expect NAREIT's new definition to reduce 1996 FFO by $0.10 or
$0.11 per share as compared to the old definition. $0.07 of this is directly
tied to IPO and public company formation costs.
Let me now turn to some of the operational highlights of the second quarter:
Small shop occupancy at June 30 in the regional mall segment was down 1.5
percentage points to 83.1% from 84.6% one year earlier. As we discussed in our
first quarter teleconference, the driving factor behind this decline was the
1996 closings from tenants who filed bankruptcy in 1995, including Edison
Brothers, Petrie Stores and Merry Go Round. We have made reasonable progress
in responding to bankruptcy created vacancies, as evidenced, we have over 1.0
million square feet of leases currently out for signature for 1996 store
openings, almost 300,000 square feet of which is for space currently vacant.
We also continued our demalling effort at two properties. Without these
properties, which are being actively de-leased, occupancy in the mall portfolio
would have been 84.5%.
Average base rent at June 30, 1996, was $19.79 for the regional malls, up
$1.73, or 9.6%, from $18.06 at June 30, 1995. Excluding the impact of non-
comparable centers (centers not included in SPG portfolio during the same
period in 1995), average base rent was $18.96, for a 5.0% increase over the
1995 level. Releasing spreads at the regional malls have remained strong, with
new leases signed averaging $5.39 per square foot in excess of those leases
expiring or tenants that closed.
Utilizing the new standard ICSC definition of sales for regional malls which
excludes anchors, sales volume for the first six months was up 13.5%, to $1,572
million in 1996 from $1,385 million for the same period in 1995. Excluding the
non-comparable centers, the volume was $1,411 million, for an increase of 3%.
Comparable tenant sales on a per square foot basis within the regional mall
portfolio were up 3% over 1995. Strong growth was noted in the following tenant
categories within our portfolio: jewelry, shoes, mens and womens wear, family
wear, and ladies' specialty. When you consider the tenant loss due to
bankruptcy and the effect of adverse winter weather earlier this year, sales
for our regional mall portfolio have been extremely positive.
We've continued to see a rebound at our Texas border properties. Sales growth
for the first half of 1996 over the first half of 1995 for these properties was
5.9%. As we have noted previously, we experienced a $.02 decline in 1995 FFO
as a result of the Mexican peso devaluation, primarily as a result of lower
percentage rents at those five properties. Although we are clearly not back to
pre-devaluation 1994 sales levels, we are encouraged by the improvement and
optimistic about the upward trending of sales for the remainder of 1996.
Development and Acquisition Activities
Now I'd like to spend a few minutes discussing our recent development and
acquisition activities:
Cottonwood Mall, 100% owned by SPG, in Albuquerque, New Mexico, had a hugely
successful grand opening on July 31st. The 125,000 first day visitors is
comparable to nearly one-fourth of the city's entire population. Cottonwood
Mall, Albuquerque's first new regional mall in three decades, marks Simon's
entry into the state of New Mexico, raising the Company's national presence to
retail properties in 29 states.
Cottonwood Mall is the first major retail development on Albuquerque's rapidly
growing West Mesa and is anchored by Dillard's, Foley's, JCPenney, Mervyn's
California and Montgomery Ward. This 1.0 million square foot super-regional
mall opened 87% leased and committed and boasts many popular retailers
including GAP and GAP Kids, The Disney Store, Cache, Rampage, Laura Ashley, and
Garden Botanika. A United Artists nine screen theatre and STARPORT
entertainment complex is scheduled to open by the end of 1996.
Construction continues on The Source, a 730,000-square-foot value-oriented
retail center scheduled to open in August 1997 in Westbury, Long Island. SPG
owns 50% of this joint venture which has a projected development cost of $151
million. Our partner is Fortunoff who has a 200,000 square-foot existing store
generating $165 million in annual sales volume which will be incorporated into
the center. Tenants committed to the project include Nordstrom Rack, Off 5th-
Saks Fifth Avenue Outlet, Cheesecake Factory, Rainforest Cafe, Just for Feet,
and Bertolini's.
Construction of the expansion of Forum Shops at Caesars continues as scheduled.
This 250,000 square foot addition is nearly 100% leased and committed and is
scheduled to open in September, 1997. Pro forma rents are approaching $100 per
square foot on this $90 million project that will feature tenants including
Virgin Records, FAO Schwarz, Cheesecake Factory, and NikeTown.
Construction also continues on an expansion and renovation of Muncie Mall. A
new 120,000 square foot L.S. Ayres department store is under construction and
scheduled to open in November 1996. A reconfiguration of the existing L.S.
Ayres store, a new food court and additional small shops are scheduled to open
in spring 1997.
We have completed demolition of the existing Bakery Centre in South Miami,
Florida in preparation for the development of The Shops at Sunset Place. We
are continuing pre-development efforts for this 550,000-square-foot retail and
entertainment center and plan to start construction yet in 1996.
Ontario Mills near Los Angeles, a joint venture development with The Mills
Corporation, is scheduled to open this November. This 1.4 million square foot
super-regional value-oriented center is over 80% leased and committed. Anchor
tenants for this project include AMC Theatres, Marshalls, Sports Authority,
TJMaxx, Off 5th-Saks Fifth Avenue Outlet, JCPenney Outlet, IWERKS, and Dave &
Buster's. SPG owns 25% of this $168 million project.
On July 10, we broke ground on Grapevine Mills in Grapevine (Dallas/Ft. Worth),
Texas. SPG owns 37.5% of this 1.45 million square foot project that is
projected to open in late 1997. Anchor tenants include Books-A-Million,
Burlington Coat Factory, Off 5th-Saks Fifth Avenue Outlet, Group USA, and
Rainforest Cafe. Total costs are projected at $186 million.
Just a few days ago on August 1, we broke ground on Arizona Mills in Tempe,
Arizona. This 1.2 million square foot mall is a joint venture development
between Taubman, Mills and SPG and features Oshmans Supersport, Off 5th-Saks
Fifth Avenue Outlet, Burlington Coat Factory, and Ross Dress for Less. SPG
will own 25% of this project which has an anticipated opening in late 1997.
Total costs are projected at $182 million.
Construction also continues for the initial phase of the Tower Shops at
Stratosphere in Las Vegas. We are nearly 100% leased for this small 89,000
square foot retail complex at average pro forma rents in excess of $100 per
square foot. SPG owns 50% of this $25 million project, which was financed with
a construction loan and $3 million of equity from each partner. We are
cognizant of the disappointing operating results of the Stratosphere
Corporation, and met with representatives of the company last week. Visitor
traffic to the tower, which is a key factor to the retail component, has
remained steady and tenant interest in the project remains strong.
I'd also like to reiterate some of the major tenant activity in our portfolio
we announced yesterday:
* At Alton Square in Alton, Illinois, we are adding a new Sears store,
scheduled for a fall 1997 opening. Alton Square is a small regional mall north
of St. Louis, and the addition of Sears should reinforce this mall as the
primary shopping destination for the river bank area.
* At Smith Haven Mall, we are adding JCPenney as a new anchor in place of
Steinbach. Penney will open in the spring of 1997. We were able to effect
this improvement to the center only 7 months after acquiring it.
* At Orange Park Mall, AMC Theatre is opening a 24 screen theatre complex in
the fall of 1997. We think this project will improve an already very solid
center and differentiate it from its competition in the Jacksonville market.
And finally,
* At St. Charles Towne Center in Waldorf, Maryland, a 100,000 square foot
Kohl's will soon be under construction for a spring 1997 opening. Kohl's will
be the 5th anchor at this very productive super-regional mall southeast of
Washington, D.C.
As we discussed previously, SPG acquired the remaining third party ownership
interest in Ross Park Mall in April 1996 at an acquisition price of $44 million
plus the assumption of the joint venture partner's share of existing debt. A
$54 million mortgage on the property was retired concurrent with the
acquisition. Funds from SPG's unsecured line of credit were utilized for these
transactions. Located in the suburbs of Pittsburgh, Pennsylvania, Ross Park
Mall has been the dominant mall in its trade area since its opening in 1986.
Mall stores sales per square foot approached $400 in 1995 and at June 30, 1996,
mall stores occupancy were 93.1% leased.
I'd like to ask Rick now to briefly discuss some of the highlights of
DeBartolo's second quarter.
EJD COMMENTS
SPG/EJD Merger
As we informed you via press release yesterday, the DeBartolo shareholders
overwhelmingly approved the merger with SPG with an 83% favorable vote. Less
than 1% of the votes cast opposed the merger. A 2/3 vote was required to
approve the merger.
SPG shareholders tendered proxies in favor of the merger for over 79% of the
outstanding shares, well in excess of the 50% required to approve the merger.
Less than 1% of the proxies tendered opposed the merger. However, we are also
seeking amendments to the SPG charter to, among other things, expand the board
from 9 to 13 members. These amendments, which we believe are in the best
interests of the shareholders, require an 80% shareholder vote.
As a result, we adjourned our special shareholders meeting until 4:00 p.m.
Indianapolis time today, at which time we expect to be in a position to certify
the shareholder vote for the merger and the amendments to the SPG charter.
The senior management team for Simon DeBartolo Group has been substantially
identified, and detailed transition and integration plans to consolidate the
two organizations have been developed for each function.
The coordination, exchange of knowledge and discussions between the two
companies has been intense in the months since the merger was announced. We
have organized and empowered numerous "integration teams" who have been meeting
on a regular basis to identify the "best practices" and develop detailed
integration and transition plans on an individual function and process basis.
The conclusions of our work to date have reinforced our original beliefs that
there are substantial synergies from putting these two companies together.
We expect to realize approximately $20 million of annual overhead savings from
combining the two home office staffs. This is well in excess of the $10
million level we had utilized in the pro forma financial statements in our
joint proxy. Some of this savings will be realized yet in 1996, with the
majority to occur by mid year 1997, when we expect the integration process to
be substantially complete.
The major components of this $20 million in annual savings are:
* redundant public company costs 2 million
* lower benefit costs from lower employee base 3 million
* streamling of core disciplines (leasing development, management)5 million
* consolidation of back office functions 10 million
We are in the process of realigning the 13 operating regions of the two mall
portfolios into a new combined regional alignment which will assist in our
development, leasing, property management and marketing efforts. We expect to
have the core disciplines of leasing, property management and development fully
integrated within the next 60 days.
On the operations side, we have completed a number of analysis and comparisons,
and identified opportunities for income enhancement and cost savings. For
example, we have completed a detailed study of both companies' Retail
Development Programs and have identified additional opportunities for income
generation which could aggregate $5 million annually by 1997. Additionally, a
detailed analysis of operating expense levels at comparable Simon and DeBartolo
properties has resulted in identification of ways the best practices of each
organization can be adopted to lower overall CAM costs.
Upon closing, which is scheduled for Friday, August 9, we will immediately
begin to implement the integration and transition plans.
We remain thoroughly convinced that through this merger we will create a new
real estate company of unparalleled size, talent and financial strength. It
offers enhanced opportunities for future growth in addition to the cost savings
and operating efficiencies which will be of immediate benefit to the company.
We have been in in-depth discussions with the rating agencies since the merger
announcement, and expect to file both debt and equity shelf registration
statements for the merged company in the next couple of weeks. We expect to
maintain our investment grade ratings, and in fact have been recently placed on
"positive outlook" by Moody's.
This concludes our prepared remarks for this conference call. We are now ready
to take questions from the participants.
<PAGE 27-31>
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