Indianapolis-based Simon Property Group Inc. (NYSE: SPG) Chief Executive Officer David Simon says a “strong start” to 2015 has led the company to increase its full-year guidance. The company is reporting first quarter Funds From Operations of $830.7 million, compared to $865.3 million during the same period the previous year.

April 24, 2015

News Release

Indianapolis, Ind. — Simon, a leading global retail real estate company, today reported results for the quarter ended March 31, 2015.

Results for the Quarter

Funds from Operations (“FFO”) was $830.7 million, or $2.28 per diluted share, as compared to $865.3 million, or $2.38 per diluted share, in the prior year period. Results for the three months ended March 31, 2014 included FFO per diluted share of $0.24 from the Washington Prime Group Inc. (“WPG”) properties that were spun-off effective May 28, 2014. On a comparable basis, FFO per diluted share was $2.28 in the first quarter of 2015 as compared to $2.14 in the first quarter of 2014.

Net income attributable to common stockholders was $362.2 million, or $1.16 per diluted share, as compared to $341.6 million, or $1.10 per diluted share, in the prior year period. On a comparable basis, net income per diluted share was $1.16 in the first quarter of 2015 as compared to $0.99 in the first quarter of 2014.

Growth in FFO per diluted share for the three months ended March 31, 2015 was 6.5%, excluding the FFO from the WPG properties.

“We are off to a strong start in 2015 with the acquisition of two significant properties and the reporting of strong financial and operational results,” said David Simon, Chairman and CEO. “Given our accomplishments this quarter and our current view for the remainder of 2015, today we raised our quarterly dividend and are increasing our full-year 2015 guidance.”

Comparable Property Net Operating Income

Comparable property NOI growth for the three months ended March 31, 2015 was 3.5%. Comparable properties include U.S. Malls, Premium Outlets and The Mills.

Dividends

Today Simon's Board of Directors declared a quarterly common stock dividend of $1.50 per share. This is a 15.4% increase year-over-year and an increase of $0.10 or 7.1% from the previous quarter. The dividend will be payable on May 29, 2015 to stockholders of record on May 15, 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 June 30, 2015 to stockholders of record on June 16, 2015.

Development Activity

During the quarter, we completed a 265,000 square foot expansion of Yeoju Premium Outlets, a highly productive center in Seoul, Korea.

Construction continues on other significant expansion projects including Roosevelt Field, Del Amo Fashion Center, King of Prussia, The Galleria in Houston, Woodbury Common Premium Outlets, Las Vegas North Premium Outlets, San Francisco Premium Outlets and Chicago Premium Outlets.

At quarter-end, redevelopment and expansion projects, including the addition of new anchors, were underway at 24 properties in the U.S. and Asia.

Construction continues on three new Premium Outlets and one new Designer Outlet opening in 2015:

Vancouver Designer Outlet in Vancouver, British Columbia, Canada is a 242,000 square foot center scheduled to open in July of 2015. Simon owns a 45% interest in this project.

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 September 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 under construction at quarter-end was approximately $2.1 billion.

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 which includes the assumption of existing mortgage debt of $405 million.

Joint Venture Transactions

In February 2015, we entered into an agreement with Hudson's Bay Company to form a joint venture. The joint venture will build on the strength of HBC's existing real estate assets and identify new real estate growth opportunities with a focus on credit tenant, net-leased and multi-tenanted retail buildings in the United States and internationally.

Subsequent to the quarter end, we created a joint venture with Sears Holdings Corporation that includes 10 Sears stores located at our malls. Sears Holdings will lease back and continue to operate the existing stores at the properties and the joint venture will have the ability to create additional value through re-developing the contributed properties and re-leasing space at each property to third-party tenants. In addition to the joint venture, we separately agreed to acquire a Sears Holdings store at the La Plaza Mall in McAllen, Texas.

Financing Activity

The Company was active in both the unsecured and secured debt markets in the first quarter continuing to lower our effective borrowing costs.

During the quarter, the Company extended and expanded its $2.0 billion revolving credit facility, increasing the revolver's capacity to $2.75 billion. This facility can be further increased to $3.5 billion during its term, which will initially mature on June 30, 2019 and can be extended for an additional year to June 30, 2020 at our sole option. The pricing on the facility was reduced to LIBOR plus 80 basis points and the facility fee was reduced to 10 basis points.

In addition, the Company also increased the maximum aggregate program size of its global commercial paper note program from $500 million to $1 billion, or the non-U.S. dollar equivalent thereof.

With regard to secured debt activity, we closed or locked rate on three new loans totaling approximately $1.9 billion, or the non-U.S. dollar equivalent thereof, of which SPG's share is $0.9 billion. The weighted average interest rate on these loans is 3.0% and term is 8.4 years.

As of March 31, 2015, Simon had over $6 billion of liquidity consisting of $1.2 billion of cash on hand, including its share of joint venture cash, and its available revolving credit facility capacity.

Common Stock Repurchase Program

Subsequent to the quarter end, the Company announced that its Board of Directors authorized a common stock repurchase program. Under the program, the Company may purchase up to $2 billion of its common stock over the next 24 months as market conditions warrant. The shares may be purchased in the open market or in privately negotiated transactions.

2015 Guidance

Today, the Company is raising both the low and high ends of its previously provided full year 2015 FFO range by $0.05 and currently estimates a range of $9.65 to $9.75 per diluted share for the year ending December 31, 2015, with net income to be within a range of $5.10 to $5.20 per diluted share.

About Simon

Simon is a global leader in retail real estate ownership, management and development and a S&P100 company (Simon Property Group, NYSE: SPG). Our industry-leading retail properties and investments across North America, Europe and Asia provide shopping experiences for millions of consumers every day and generate billions in annual retail sales. For more information, visit simon.com.

Source: Simon Property Group Inc.

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