Simon FFO Essentially Flat

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Indianapolis-based Simon Property Group Inc. (NYSE: SPG) is reporting fourth quarter Funds From Operations of $896.7 million, compared to $894.8 million during the same quarter the previous year. Chief Executive Officer David Simon says the "very strong" quarter was due in part to record year-end occupancy.

January 30, 2015

News Release

Indianapolis, Ind. -- Simon, a leading global retail real estate company, today reported results for the quarter and twelve months ended December 31, 2014.

Results for the Quarter

--Funds from Operations ("FFO") was $896.7 million, or $2.47 per diluted share, as compared to $894.8 million, or $2.47 per diluted share, in the prior year period. FFO per diluted share for the quarter includes a $0.04 impact from the Company's share of Klepierre's costs related to both their recent bond tender offer and tender offer for Corio, as well as the unfavorable effects of foreign currency devaluations during the quarter.

--Net income attributable to common stockholders was $405.0 million, or $1.30 per diluted share, as compared to $381.6 million, or $1.23 per diluted share, in the prior year period.

Results for the Year

--Funds from Operations ("FFO") was $3.235 billion, or $8.90 per diluted share, as compared to $3.206 billion, or $8.85 per diluted share, in the prior year period.

--Net income attributable to common stockholders was $1.405 billion, or $4.52 per diluted share, as compared to $1.316 billion, or $4.24 per diluted share, in the prior year period.

Effect of Washington Prime Group Inc. Spin-Off

--Results for the three and twelve months ended December 31, 2013 included FFO per diluted share of $0.27 and $0.99, respectively, from the Washington Prime Group Inc. ("WPG") properties that were spun-off effective May 28, 2014. Results for the three months ended December 31, 2014 do not include any effect of the WPG properties while results for the twelve months ended December 31, 2014 include a net $0.30 of FFO per diluted share ($0.40 of FFO from the WPG properties' operations net of $0.10 of spin-off related transaction expenses). Results for the twelve months also include a $0.35 per diluted share charge related to the cash tender offers and early notes redemption completed in the third quarter of 2014.

--Growth in FFO per diluted share for the three and twelve month periods in 2014 was 12.3% and 13.9%, respectively, excluding the FFO from the WPG properties and transaction costs related to the spin-off, as well as the loss on the extinguishment of debt related to the cash tender and early redemption transactions as detailed in the table below.

"We had a very strong fourth quarter concluding an exceptional year," said David Simon, Chairman and CEO. "We produced strong financial and operating results in the fourth quarter, led by growth in comparable net operating income and record year-end occupancy. We continue to strengthen our retail real estate platform through our investment activities resulting in cash flow and FFO per share growth. We are also pleased to again announce an increase in our quarterly dividend to $1.40 per share, growth of 7.7% from last quarter."

Comparable Property Net Operating Income

Comparable property NOI growth for the three months ended December 31, 2014 was 4.0%. The full year growth for the twelve months ended December 31, 2014 was 5.1%. Comparable properties include U.S. Malls, Premium Outlets and The Mills.

Total sales from the U.S. Malls (less anchors) and Premium Outlets increased 2.3% in the fourth quarter of 2014 compared to the fourth quarter of 2013.

Dividends

Today Simon's Board of Directors declared a quarterly common stock dividend of $1.40 per share. This is an increase of $0.10 from the previous quarter, and a year-over-year increase of 12%. The dividend will be payable on February 27, 2015 to stockholders of record on February 13, 2015.

Simon's Board of Directors also declared the quarterly dividend on its 8 3/8% Series J Cumulative Redeemable Preferred Stock (NYSE: SPGPrJ) of $1.046875 per share, payable on March 31, 2015 to stockholders of record on March 17, 2015.

Development Activity

Premium Outlets Montreal opened on October 30th. This new 365,000 square foot center offers more than 80 outlet stores featuring high-quality designer and name brands. Simon owns a 50% interest in this property.

During the fourth quarter, construction started on significant projects at Phipps Plaza, including the addition of a 166-room AC Hotel by Marriott and 319 luxury residences.

Construction continues on other significant expansion projects including Roosevelt Field Mall, Del Amo Fashion Center, King of Prussia Mall, Woodbury Common Premium Outlets, Las Vegas North Premium Outlets, Livermore Premium Outlets and Chicago Premium Outlets.

Redevelopment and expansion projects, including the addition of new anchors, are underway at 27 properties in the U.S. and Asia.

Construction continues on three new Premium Outlets opening in 2015:

--Gloucester Premium Outlets in Gloucester, New Jersey, serving the greater Philadelphia metropolitan area, is a 375,000 square foot center scheduled to open in August of 2015. Simon owns a 50% interest in this project.

--Tucson Premium Outlets is a 366,000 square foot center scheduled to open in October of 2015. Simon owns 100% of this project.

--Tampa Premium Outlets is a 441,000 square foot center scheduled to open in October of 2015. Simon owns 100% of this project.

Simon's share of the costs of all development and redevelopment projects currently under construction is approximately $2.1 billion.

The Company announced plans to develop the first phase of retail at The Shops at Clearfork in Ft. Worth, Texas. The center will be a 500,000 square foot shopping destination anchored by Neiman Marcus and include 100 high-end specialty stores, a premium luxury theater, and distinctive restaurants. Construction will commence in the spring of 2015 with a planned grand opening in February of 2017. Simon owns a 45% interest in this project.

Acquisitions

In January 2015, we completed the acquisition of two properties – Jersey Gardens in Elizabeth, New Jersey (renamed The Mills at Jersey Gardens) and University Park Village in Fort Worth, Texas. The aggregate purchase price was $1.09 billion, including the assumption of existing mortgage debt of $405 million.

Financing Activity

The Company was active in both the unsecured and secured debt markets in 2014 continuing to lower our effective borrowing costs and extend our maturity profile.

During the year, we retired $2.9 billion of senior notes at a weighted average coupon rate of 5.76% and we completed two senior notes offerings totaling $2.5 billion, with a weighted average coupon rate of 3.32% and weighted average duration of 12.0 years. The two new notes offerings were 244 basis points lower in rate than the notes we retired during the year.

The Company also amended and extended its $4.0 billion revolving credit facility, which reduced pricing to LIBOR plus 80 basis points and the facility fee to 10 basis points while extending the term to June 30, 2019.

With regard to secured debt activity, we closed 16 new loans totaling approximately $2.8 billion, of which SPG's share is $1.6 billion. The weighted average interest rate on these loans is 3.29% and term is 8.4 years.

In addition to the above capital markets activity, the Company also became the first U.S. REIT to establish a global commercial paper program. The Company had approximately $400 million of CP issuance, split evenly between U.S. dollars and Euros, at December 31, 2014.

As of December 31, 2014, Simon had over $6 billion of liquidity consisting of $1.133 billion of cash on hand, including its share of joint venture cash, and its available revolving credit capacity.

2015 Guidance

The Compan