Simon Property Group Announces Third Quarter Results and Quarterly Dividends

INDIANAPOLIS, Oct. 29 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company" or "Simon") today announced results for the quarter ended September 30, 2007:

-- Funds from operations ("FFO") of the Simon portfolio for the quarter increased 13.3% to $418.7 million from $369.5 million in the third quarter of 2006. On a diluted per share basis the increase was 12.3% to $1.46 from $1.30 in 2006. FFO of the Simon portfolio for the nine months increased 8.9% to $1.184 billion from $1.087 billion in 2006. On a diluted per share basis the increase was 8.4% to $4.14 per share from $3.82 per share in 2006. -- Net income available to common stockholders for the quarter increased 74.3% to $164.9 million from $94.6 million in the third quarter of 2006. On a diluted per share basis the increase was 72.1% to $0.74 from $0.43 in 2006. Net income available to common stockholders for the nine months increased 14.8% to $323.2 million from $281.5 million in 2006. On a diluted per share basis the increase was 14.2% to $1.45 per share from $1.27 per share in 2006. The increase in net income for the quarter and nine months is primarily attributable to higher gains recognized in 2007 on the sale of assets and interests in unconsolidated entities partially offset by lower income from unconsolidated entities as a result of increased depreciation expense attributable to the acquisition of the Mills portfolio of assets. As of As of September 30, September 30, 2007 (4) 2006 Change Occupancy Regional Malls(1) 92.7% 92.5% 20 basis point increase Premium Outlet Centers(R) (2) 99.6% 99.3% 30 basis point increase Community/Lifestyle Centers(2) 92.8% 90.7% 210 basis point increase Comparable Sales per Sq. Ft. Regional Malls(3) $491 $474 3.6% increase Premium Outlet Centers(2) $499 $462 8.0% increase Average Rent per Sq. Ft. Regional Malls(1) $36.92 $35.23 4.8% increase Premium Outlet Centers(2) $25.45 $24.05 5.8% increase Community/Lifestyle Centers(2) $12.15 $11.69 3.9% increase (1) For mall and freestanding stores. (2) For all owned gross leasable area (GLA). (3) For mall and freestanding stores with less than 10,000 square feet. (4) Statistics do not include the Mills portfolio of assets. Dividends

Today the Company announced a quarterly common stock dividend of $0.84 per share. This dividend will be paid on November 30, 2007 to stockholders of record on November 16, 2007.

The Company also declared dividends on its two outstanding public issues of preferred stock:

-- 6% Series I Convertible Perpetual Preferred dividend of $0.75 per share is payable on November 30, 2007 to stockholders of record on November 16, 2007. -- 8 3/8% Series J Cumulative Redeemable Preferred dividend of $1.046875 per share is payable on December 31, 2007 to stockholders of record on December 17, 2007. 2007 Guidance

Today the Company announced that it expects to achieve at least the high end of its previously updated guidance range of $5.83 to $5.88 per share for diluted FFO for the year ending December 31, 2007. The Company's original guidance for 2007 diluted FFO was a range of $5.70 to $5.80 per share. The Company expects diluted net income available to common stockholders for 2007 to be approximately $2.13 per share.

The following table provides the reconciliation of estimated diluted net income available to common stockholders per share to estimated diluted FFO per share.

For the year ending December 31, 2007 Estimated diluted net income available to common stockholders per share $2.13 Depreciation and amortization including our share of joint ventures 4.15 Gain on sale of assets and interests in unconsolidated entities, net (0.29) Impact of additional dilutive securities (0.11) Estimated diluted FFO per share $5.88 U.S. Development Activity The Company continues construction on: -- Philadelphia Premium Outlets - a 425,000 square foot upscale manufacturers' outlet center in Limerick, Pennsylvania, 35 miles northwest of Philadelphia. The center is scheduled to open on November 8, 2007. It is 98% leased to tenants including Ann Taylor, Banana Republic, Burberry, Coach, Elie Tahari, Kate Spade, Michael Kors, Neiman Marcus Last Call and Sony. Phase II of this project comprising 120,000 square feet is under construction and scheduled to open in April of 2008. -- Palms Crossing - a 396,000 square foot community center in McAllen, Texas. The first phase of the center is scheduled to open 92% leased on November 15, 2007. The center is anchored by Beall's, DSW, Barnes & Noble, Babies "R" Us, Sports Authority, Ulta Cosmetics and Ashley Furniture. Restaurants include P.F. Chang's, B.J.'s Restaurant and Brewery, Macaroni Grill and Houlihan's. -- Pier Park - a 920,000 square foot community/lifestyle center in Panama City Beach, Florida. Target and a 16-screen theater have already opened at the center. The remainder of the project is scheduled to open in May of 2008. -- Hamilton Town Center - a 950,000 square foot open-air retail center in Noblesville, Indiana. JCPenney opened at the project in October. The remainder of the 690,000 square foot first phase of the center is scheduled to open in May of 2008. -- Houston Premium Outlets - a 433,000 square foot upscale manufacturers' outlet center in Houston, Texas. The center is scheduled to open in March of 2008. -- Jersey Shore Premium Outlets - a 435,000 square foot upscale manufacturers' outlet center in Tinton Falls, New Jersey. The center is scheduled to open in the fall of 2008. International Activity Recent international activities include: -- On July 5th, the Company's Chelsea division opened Kobe-Sanda Premium Outlets, the sixth Premium Outlet Center in Japan and the second in the Kansai region. The project is located 22 miles north of downtown Kobe and 30 miles northwest of central Osaka. The 195,000 square-foot first phase of the project opened 100% leased to 90 tenants. Approximately 70% of the center has been leased to international brands and the balance to Japanese domestic brands. Kobe-Sanda Premium Outlets was developed by Chelsea Japan Co., Ltd., a joint venture of Simon Property Group (40% interest), Mitsubishi Estate Co., Ltd. and Sojitz Corporation (each 30%), and brings the joint venture's operating portfolio of Premium Outlet Centers to 1.6 million square feet of gross leasable area. -- On July 26th, the Company announced that the Porta di Roma shopping center in Rome, Italy opened to the public. The center is located on the north side of Rome adjacent to the Grande Annulare, the peripheral highway which circles the city. The 1.3 million square foot center (Italy's largest shopping center) opened 97% leased and is anchored by Auchan, LeRoy Merlin, IKEA and a 14-screen UGC Movie Theatre. The center's 210 small shops have been leased to significant national and international retailers. The trade area for Porta di Roma contains approximately 1.3 million people. The center is the joint development of the Lamaro Group, a major Rome- based construction and development organization, and Gallerie Commerciali Italia ("GCI"), Simon's Italian joint venture partnership with Groupe Auchan. GCI owns 40% of this project. -- On September 27th, GCI opened its 100% owned Cinisello shopping center in Milan, Italy. The 400,000 square foot center opened fully leased, is anchored by Auchan, and contains approximately 100 shops including H&M, Darty, Scarpe Scarpe, Nike, Calvin Klein, and Conbipel. Development projects: -- Construction continues on two shopping center projects in Italy partially owned by GCI - Nola (Naples) is expected to open in December of 2007 and Argine (Naples) is scheduled to open in late 2008. After the opening of these two projects, GCI will own interests in 45 shopping centers in Italy comprising approximately 10.6 million square feet of gross leasable area. -- Construction also continues on five projects in China located in Changshu, Hangzhou, Hefei, Suzhou, and Zhengzhou. The centers range in size from 300,000 to 720,000 square feet and will be anchored by Wal- Mart. A 2008 opening is scheduled for Changshu, followed by anticipated 2009 openings for Hangzhou, Hefei, Suzhou and Zhengzhou. Simon owns 32.5% of these projects through its partnership with Morgan Stanley Real Estate Fund and Shenzhen International Trust and Investment Company CP. Dispositions

During the quarter, the Company continued its program to divest non-core assets in the U.S. with the disposition of four properties:

-- Alton Square - a regional mall in the St. Louis suburb of Alton, Illinois -- University Mall - a regional mall in Little Rock, Arkansas -- Boardman Plaza - a community center in Youngstown, Ohio -- Griffith Park Plaza - a community center in the Chicago suburb of Griffith, Indiana

On July 5th, the Company's Simon Ivanhoe joint venture completed the sale of five non-core assets in Poland.

The net gain from these dispositions was $82.2 million. Financing Activity

On August 22nd, the Company announced the syndication of a senior loan facility for The Mills Limited Partnership ("TMLP"), an entity owned by SPG- FCM Ventures, LLC (a joint venture between a Simon subsidiary and funds managed by Farallon Capital Management, L.L.C.). The facility was initially closed for $925 million in June of 2007 by JPMorgan Chase and Bank of America, Joint Arrangers and Joint Book Managers, and included a $50 million revolving credit facility.

As part of the syndication, the senior loan facility was increased to $1.025 billion, consisting of a $975 million senior term loan and a $50 million revolving credit facility. The facility matures in June 2009 and contains three, one-year extensions, at TMLP's option. The interest rate for the facility is LIBOR plus 125 basis points.

On October 4th, the Company announced the successful implementation of the $500 million accordion feature in its existing unsecured corporate credit facility, thereby increasing the Company's revolving borrowing capacity from $3.0 billion to $3.5 billion. The expanded credit facility includes a larger $875 million multi-currency tranche for Euro, Yen and Sterling borrowings. The facility will mature in January 2010 and contains a one-year extension at the Company's sole option. The base interest rate on the Company's facility is currently LIBOR plus 37.5 basis points.

On October 2nd, the Company announced the completion of the redemption of all 3,000,000 of the outstanding shares of its 7.89% Series G Cumulative Step- Up Premium Rate Preferred Stock. The Series G Preferred was redeemed at a redemption price of $50.00 per share plus accrued and unpaid distributions to the redemption date, or a total of $50.011 per share. The Company sold a new issue of preferred stock to an institutional investor in a private transaction and used the proceeds to pay the aggregate redemption price.

Conference Call

The Company will provide an online simulcast of its quarterly conference call at http://www.simon.com/ (Investor Relations tab), http://www.earnings.com/, and http://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 today, October 29, 2007. An online replay will be available for approximately 90 days at http://www.simon.com/, http://www.earnings.com/, and http://www.streetevents.com/. A fully searchable podcast of the conference call will also be available at http://www.reitcafe.com/ shortly after completion of the call.

Supplemental Materials

The Company will publish a supplemental information package which will be available at http://www.simon.com/ in the Investor Relations section, Financial Information tab. It will also be furnished to the SEC as part of a current report on Form 8-K. If you wish to receive a copy via mail or email, please call 800-461-3439.

Forward-Looking Statements

Certain statements made in this press release may be deemed "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the Company can give no assurance that our expectations will be attained, and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Those risks and uncertainties include, but are not limited to: the Company's ability to meet debt service requirements, the availability of financing, changes in the Company's credit rating, changes in market rates of interest and foreign exchange rates for foreign currencies, the ability to hedge interest rate risk, risks associated with the acquisition, development and expansion of properties, general risks related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic climates, changes in market rental rates, trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties, costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, impact of terrorist activities, inflation and maintenance of REIT status. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in its annual and quarterly periodic reports filed with the SEC that could cause the Company's actual results to differ materially from the forward-looking statements that the Company makes. The Company may update that discussion in its periodic reports, but otherwise the Company undertakes no duty or obligation to update or revise these forward-looking statements, whether as a result of new information, future developments, or otherwise.

Funds from Operations ("FFO")

The Company considers FFO a key measure of its operating performance that is not specifically defined by accounting principles generally accepted in the United States ("GAAP"). The Company believes that FFO is helpful to investors because it is a widely recognized measure of the performance of real estate investment trusts ("REITs") and provides a relevant basis for comparison among REITs. The Company determines FFO in accordance with the definition set forth by the National Association of Real Estate Investment Trusts ("NAREIT").

About Simon

Simon Property Group, Inc. is an S&P 500 company and the largest public U.S. real estate company. Simon is a fully integrated real estate company which operates from five retail real estate platforms: regional malls, Premium Outlet Centers(R), The Mills(R), community/lifestyle centers and international properties. It currently owns or has an interest in 378 properties comprising 257 million square feet of gross leasable area in North America, Europe and Asia. The Company is headquartered in Indianapolis, Indiana and employs more than 5,000 people worldwide. Simon Property Group, Inc. is publicly traded on the NYSE under the symbol SPG. For further information, visit the Company's website at http://www.simon.com/.

SIMON Consolidated Statements of Operations Unaudited (In thousands) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2007 2006 2007 2006 REVENUE: Minimum rent $536,377 $500,589 $1,569,328 $1,474,503 Overage rent 27,049 21,931 63,575 53,287 Tenant reimbursements 262,183 233,278 730,780 681,090 Management fees and other revenues 34,952 20,780 73,369 60,348 Other income 46,584 42,158 178,166 135,895 Total revenue 907,145 818,736 2,615,218 2,405,123 EXPENSES: Property operating 121,698 118,185 343,047 331,389 Depreciation and amortization 224,662 211,390 670,544 632,200 Real estate taxes 77,939 73,427 236,184 225,636 Repairs and maintenance 26,322 23,910 84,073 74,704 Advertising and promotion 22,192 17,718 61,486 55,661 Provision for credit losses 3,134 393 5,100 4,853 Home and regional office costs 32,976 32,703 95,945 95,691 General and administrative 4,887 4,422 14,905 13,920 Other 14,636 15,264 42,718 40,492 Total operating expenses 528,446 497,412 1,554,002 1,474,546 OPERATING INCOME 378,699 321,324 1,061,216 930,577 Interest expense (238,155) (206,195) (704,287) (611,010) Minority interest in income of consolidated entities (3,052) (3,154) (9,098) (7,512) Income tax expense of taxable REIT subsidiaries (648) (2,536) (1,405) (7,395) Income from unconsolidated entities, net 8,491 25,898 37,723 75,703 Gain on sale of assets and interests in unconsolidated entities, net 82,197 9,457 82,697 51,406 Limited Partners' interest in the Operating Partnership (42,897) (24,951) (84,223) (74,429) Preferred distributions of the Operating Partnership (5,382) (6,893) (16,218) (20,647) Income from continuing operations 179,253 112,950 366,405 336,693 Discontinued operations, net of Limited Partners' interest (26) 45 (171) 89 Gain on sale of discontinued operations, net of Limited Partners' interest - - - 66 NET INCOME 179,227 112,995 366,234 336,848 Preferred dividends (14,290) (18,403) (42,999) (55,371) NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $164,937 $ 94,592 $323,235 $281,477 PER SHARE DATA: Basic Earnings per Common Share $0.74 $0.43 $1.45 $1.27 Diluted Earnings per Common Share $0.74 $0.43 $1.45 $1.27 SIMON Consolidated Balance Sheets Unaudited (In thousands, except as noted) September 30, December 31, 2007 2006 ASSETS: Investment properties, at cost $24,138,267 $22,863,963 Less - accumulated depreciation 5,139,607 4,606,130 18,998,660 18,257,833 Cash and cash equivalents 389,968 929,360 Tenant receivables and accrued revenue, net 370,443 380,128 Investment in unconsolidated entities, at equity 1,996,540 1,526,235 Deferred costs and other assets 1,133,175 990,899 Notes receivable from related parties 769,580 - Total assets $23,658,366 $22,084,455 LIABILITIES: Mortgages and other indebtedness $17,266,451 $15,394,489 Accounts payable, accrued expenses, intangibles, and deferred revenue 1,131,257 1,109,190 Cash distributions and losses in partnerships and joint ventures, at equity 231,972 227,588 Other liabilities, minority interest and accrued dividends 182,019 178,250 Total liabilities 18,811,699 16,909,517 COMMITMENTS AND CONTINGENCIES LIMITED PARTNERS' INTEREST IN THE OPERATING PARTNERSHIP 761,238 837,836 LIMITED PARTNERS' PREFERRED INTEREST IN THE OPERATING PARTNERSHIP 308,393 357,460 STOCKHOLDERS' EQUITY CAPITAL STOCK OF SIMON PROPERTY GROUP, INC. (750,000,000 total shares authorized, $.0001 par value, 237,996,000 shares of excess common stock): All series of preferred stock, 100,000,000 shares authorized, 17,812,029 and 17,578,701 issued and outstanding, respectively, and with liquidation values of $890,601 and $878,935, respectively 897,197 884,620 Common stock, $.0001 par value, 400,000,000 shares authorized, 227,691,621 and 225,797,566 issued and outstanding, respectively 23 23 Class B common stock, $.0001 par value, 12,000,000 shares authorized, 8,000 issued and outstanding - - Class C common stock, $.0001 par value, 4,000 shares authorized, issued and outstanding - - Capital in excess of par value 5,051,664 5,010,256 Accumulated deficit (1,979,517) (1,740,897) Accumulated other comprehensive income 21,275 19,239 Common stock held in treasury at cost, 4,697,332 and 4,378,495 shares, respectively (213,606) (193,599) Total stockholders' equity 3,777,036 3,979,642 Total liabilities and stockholders' equity $23,658,366 $22,084,455 SIMON Joint Venture Statements of Operations Unaudited (In thousands) For the Three Months Ended For the Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Revenue: Minimum rent $466,933 $262,417 $1,184,208 $771,054 Overage rent 26,448 19,094 64,090 51,518 Tenant reimbursements 220,621 136,080 572,820 386,064 Other income 47,841 40,138 136,707 107,979 Total revenue 761,843 457,729 1,957,825 1,316,615 Operating Expenses: Property operating 165,419 98,716 407,021 267,767 Depreciation and amortization 160,403 79,035 400,234 230,018 Real estate taxes 60,073 34,073 160,989 99,194 Repairs and maintenance 24,672 20,065 77,691 60,549 Advertising and promotion 14,997 11,029 38,037 24,569 Provision for credit losses 7,416 2,389 14,139 3,821 Other 35,494 26,265 103,853 86,417 Total operating expenses 468,474 271,572 1,201,964 772,335 Operating Income 293,369 186,157 755,861 544,280 Interest expense (248,588) (105,417) (594,093) (307,150) Income from unconsolidated entities 545 480 458 719 Gain on sale of assets 198,135 - 193,376 94 Income from Continuing Operations 243,461 81,220 355,602 237,943 Income from consolidated joint venture interests(A) (28) 4,058 2,562 9,565 Income from discontinued joint venture interests(B) - 129 176 631 Gain (loss) on disposal or sale of discontinued operations, net - (329) 19 20,375 Net Income $243,433 $85,078 $358,359 $268,514 Third-Party Investors' Share of Net Income $133,705 $51,049 $194,377 $160,488 Our Share of Net Income 109,728 34,029 163,982 108,026 Amortization of Excess Investment (11,014) (12,164) (36,036) (37,056) Income from Beneficial Interests and Other, Net - 4,033 - 15,309 Write-off of Investment Related to Properties Sold - 135 - (2,842) Our Share of Net Gain Related to Properties Sold (90,223) (135) (90,223) (7,734) Income from Unconsolidated Entities and Beneficial Interests, Net $8,491 $25,898 $37,723 $75,703 SIMON Joint Venture Balance Sheets Unaudited (In thousands) September 30, December 31, 2007 2006 Assets: Investment properties, at cost $20,913,688 $10,669,967 Less - accumulated depreciation 3,077,050 2,206,399 17,836,638 8,463,568 Cash and cash equivalents 680,139 354,620 Tenant receivables 346,567 258,185 Investment in unconsolidated entities 228,871 176,400 Deferred costs and other assets 847,169 307,468 Total assets $19,939,384 $9,560,241 Liabilities and Partners' Equity: Mortgages and other indebtedness $16,049,363 $8,055,855 Accounts payable, accrued expenses, and deferred revenue 987,600 513,472 Other liabilities 1,008,096 255,633 Total liabilities 18,045,059 8,824,960 Preferred units 67,450 67,450 Partners' equity 1,826,875 667,831 Total liabilities and partners' equity $19,939,384 $9,560,241 Our Share of: Total assets $8,150,966 $4,113,051 Partners' equity $994,310 $380,150 Add: Excess Investment (C) 770,258 918,497 Our net Investment in Joint Ventures $1,764,568 $1,298,647 Mortgages and other indebtedness $6,416,329 $3,472,228 SIMON Footnotes to Financial Statements Unaudited Notes: (A) Consolidation occurs when the Company acquires an additional ownership interest in a joint venture and, as a result, gains control of the joint venture. These interests have been separated from operational interests to present comparative results of operations. As a result of the consolidation of Mall of Georgia during the fourth quarter of 2006 and Town Center at Cobb and Gwinnett Mall as of March 31, 2007, we reclassified our share of the pre-consolidation earnings from these properties. (B) Discontinued joint venture interests represent assets and partnership interests that have been sold. (C) Excess investment represents the unamortized difference of the Company's investment over equity in the underlying net assets of the partnerships and joint ventures. The Company generally amortizes excess investment over the life of the related properties, typically no greater than 40 years, and the amortization is included in income from unconsolidated entities. SIMON Reconciliation of Net Income to FFO (1) Unaudited (In thousands, except as noted) For the Three Months For the Nine Months Ended Ended September 30, September 30, 2007 2006 2007 2006 Net Income(2)(3)(4)(5) $179,227 $112,995 $366,234 $336,848 Adjustments to Net Income to Arrive at FFO: Limited Partners' interest in the Operating Partnership and preferred distributions of the Operating Partnership 48,279 31,844 100,441 95,076 Limited Partners' interest in discontinued operations (6) 11 (44) 23 Depreciation and amortization from consolidated properties and discontinued operations 220,984 209,023 660,325 633,013 Simon's share of depreciation and amortization from unconsolidated entities 74,397 52,477 205,697 155,555 Gain on sales of assets and interests in unconsolidated entities and discontinued operations, net of Limited Partners' interest (82,197) (9,457) (82,697) (51,472) Minority interest portion of depreciation and amortization (2,302) (2,091) (6,595) (6,222) Preferred distributions and dividends (19,672) (25,296) (59,217) (76,018) FFO of the Simon Portfolio $418,710 $369,506 $1,184,144 $1,086,803 Per Share Reconciliation: Diluted net income available to common stockholders per share $0.74 $0.43 $1.45 $1.27 Adjustments to net income to arrive at FFO: Depreciation and amortization from consolidated properties and Simon's share of depreciation and amortization from unconsolidated entities, net of minority interest portion of depreciation and amortization 1.04 0.92 3.05 2.80 Gain on sales of assets and interests in unconsolidated entities and discontinued operations, net of Limited Partners' interest (0.29) (0.03) (0.29) (0.18) Impact of additional dilutive securities for FFO per share (0.03) (0.02) (0.07) (0.07) Diluted FFO per share $1.46 $1.30 $4.14 $3.82 Details for per share calculations: FFO of the Simon Portfolio $418,710 $369,506 $1,184,144 $1,086,803 Adjustments for dilution calculation: Impact of preferred stock and preferred unit conversions and option exercises (6) 12,843 14,092 38,731 42,407 Diluted FFO of the Simon Portfolio 431,553 383,598 1,222,875 1,129,210 Diluted FFO allocable to unitholders (84,635) (75,785) (240,259) (223,432) Diluted FFO allocable to common stockholders $346,918 $307,813 $982,616 $905,778 Basic weighted average shares outstanding 223,103 221,198 222,993 220,925 Adjustments for dilution calculation: Effect of stock options 746 872 814 911 Impact of Series C preferred unit conversion 89 1,041 136 1,050 Impact of Series I preferred unit conversion 2,414 3,261 2,510 3,270 Impact of Series I preferred stock conversion 11,081 10,724 11,052 10,796 Diluted weighted average shares outstanding 237,433 237,096 237,505 236,952 Weighted average limited partnership units outstanding 57,925 58,375 58,073 58,450 Diluted weighted average shares and units outstanding 295,358 295,471 295,578 295,402 Basic FFO per share $1.49 $1.32 $4.21 $3.89 Percent Increase 12.9% 8.2% Diluted FFO per share $1.46 $1.30 $4.14 $3.82 Percent Increase 12.3% 8.4% SIMON Footnotes to Reconciliation of Net Income to FFO Unaudited Notes: (1) The Company considers FFO a key measure of its operating performance that is not specifically defined by GAAP and believes that FFO is helpful to investors because it is a widely recognized measure of the performance of REITs and provides a relevant basis for comparison among REITs. The Company also uses this measure internally to measure the operating performance of the portfolio. The Company's computation of FFO may not be comparable to FFO reported by other REITs. As defined by NAREIT, FFO is consolidated net income computed in accordance with GAAP, excluding real estate related depreciation and amortization, excluding gains and losses from extraordinary items, excluding gains and losses from the sales of real estate, plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and all determined on a consistent basis in accordance with GAAP. The Company has adopted NAREIT's clarification of the definition of FFO that requires it to include the effects of nonrecurring items not classified as extraordinary, cumulative effect of accounting change or resulting from the sale of depreciable real estate. However, you should understand that FFO does not represent cash flow from operations as defined by GAAP, should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and is not an alternative to cash flows as a measure of liquidity. (2) Includes the Company's share of gains on land sales of $0.5 million and $8.3 million for the three months ended September 30, 2007 and 2006, respectively, and $11.8 million and $34.6 million for the nine months ended September 30, 2007 and 2006, respectively. (3) Includes the Company's share of straight-line adjustments to minimum rent of $8.3 million and $7.8 million for the three months ended September 30, 2007 and 2006, respectively and $19.0 million and $13.1 million for the nine months ended September 30, 2007 and 2006, respectively. (4) Includes the Company's share of the fair market value of leases from acquisitions of $15.1 million and $17.4 million for the three months ended September 30, 2007 and 2006, respectively, and $41.3 million and $52.6 million for the nine months ended September 30, 2007 and 2006, respectively. (5) Includes the Company's share of debt premium amortization of $4.1 million and $9.4 million for the three months ended September 30, 2007 and 2006, respectively, and $26.1 million and $22.8 million for the nine months ended September 30, 2007 and 2006, respectively. (6) Includes dividends and distributions of Series I preferred stock and Series C and Series I preferred units.