# SIMON PROPERTY GROUP INC. (SPG) FY 2023 MD&A Verbatim Item 7 Management's Discussion and Analysis from SIMON PROPERTY GROUP INC.'s 10-K for fiscal year 2023. SEC filing source: https://www.sec.gov/Archives/edgar/data/1063761/000155837024001532/spg-20231231x10k.htm Accession: 0001558370-24-001532 Filing date: 2024-02-22 Report date: 2023-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/SPG/ All MD&A years: /company/SPG/mda/ Previous year: /company/SPG/mda/fy2022/ (FY 2022) Next year: /company/SPG/mda/fy2024/ (FY 2024) Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the consolidated financial statements and notes thereto that are included in this Annual Report on Form 10-K. Overview Simon Property Group, Inc. is a Delaware corporation that operates as a self-administered and self-managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. REITs will generally not be liable for U.S. federal corporate income taxes as long as they distribute not less than 100% of their REIT taxable income. Simon Property Group, L.P. is our majority-owned Delaware partnership subsidiary that owns all of our real estate properties and other assets. In this discussion, unless stated otherwise or the context otherwise requires, references to "Simon" mean Simon Property Group, Inc. and references to the "Operating Partnership" mean Simon Property Group, L.P.  References to "we," "us" and "our" mean collectively Simon, the Operating Partnership and those entities/subsidiaries owned or controlled by Simon and/or the Operating Partnership. According to the Operating Partnership's partnership agreement, the Operating Partnership is required to pay all expenses of Simon. We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of malls, Premium Outlets®, and The Mills®. As of December 31, 2023, we owned or held an interest in 195 income-producing properties in the United States, which consisted of 93 malls, 69 Premium Outlets, 14 Mills, six lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico. We also own an 84% noncontrolling interest in The Taubman Realty Group, LLC, or TRG, which has an interest in 24 regional, super-regional, and outlet malls in the U.S. and Asia. In addition, we have redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at several properties in the North America, Europe and Asia. Internationally, as of December 31, 2023, we had ownership in 35 Premium Outlets and Designer Outlet properties primarily located in Asia, Europe, and Canada. As of December 31, 2023, we also owned a 22.4% equity stake in Klépierre SA, or Klépierre, a publicly traded, Paris-based real estate company, which owns, or has an interest in, shopping centers located in 14 countries in Europe. We also own investments in retail operations (J.C. Penney and SPARC Group); an intellectual property and licensing venture (Authentic Brands Group, LLC, or ABG); an e-commerce venture (Rue Gilt Groupe, or RGG), and Jamestown (a global real estate investment and management company), collectively, our other platform investments. We generate the majority of our lease income from retail, dining, entertainment, and other tenants including consideration received from: [[GREPCENT_TABLE]] [["","\u25cf","fixed minimum lease consideration and fixed common area maintenance (CAM) reimbursements, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","variable lease consideration primarily based on tenants\u2019 sales, as well as reimbursements for real estate taxes, utilities, marketing and certain other items."]] [[/GREPCENT_TABLE]] Revenues of our management company, after intercompany eliminations, consist primarily of management fees that are typically based upon the revenues of the property being managed. We invest in real estate properties to maximize total financial return which includes both operating cash flows and capital appreciation. We seek growth in earnings, funds from operations, or FFO, and cash flows by enhancing the profitability and operation of our properties and investments. We seek to accomplish this growth through the following: [[GREPCENT_TABLE]] [["","\u25cf","attracting and retaining high quality tenants and utilizing economies of scale to reduce operating expenses,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","expanding and re-tenanting existing highly productive locations at competitive rental rates,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","selectively acquiring or increasing our interests in high quality real estate assets or portfolios of assets,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","generating consumer traffic in our retail properties through marketing initiatives and strategic corporate alliances, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","selling selective non-core assets."]] [[/GREPCENT_TABLE]] 59 Table of Contents We also grow by generating supplemental revenues from the following activities: [[GREPCENT_TABLE]] [["","\u25cf","establishing our malls as leading market resource providers for retailers and other businesses and consumer-focused corporate alliances, including payment systems (such as handling fees relating to the sales of bank-issued prepaid cards), national marketing alliances, static and digital media initiatives, business development, sponsorship, and events,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","offering property operating services to our tenants and others, including waste handling and facility services, and the provision of energy services,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","selling or leasing land adjacent to our properties, commonly referred to as \u201coutlots\u201d or \u201coutparcels,\u201d and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","generating interest income on cash deposits and investments in loans, including those made to related entities."]] [[/GREPCENT_TABLE]] We focus on high quality real estate across the retail real estate spectrum. We expand or redevelop properties to enhance profitability and market share of existing assets when we believe the investment of our capital meets our risk-reward criteria. We selectively develop new properties in markets we believe are not adequately served by existing retail outlet properties. We routinely review and evaluate acquisition opportunities based on their ability to enhance our portfolio. Our international strategy includes partnering with established real estate companies and financing international investments with local currency to minimize foreign exchange risk. To support our growth, we employ a three-fold capital strategy: [[GREPCENT_TABLE]] [["","\u25cf","provide the capital necessary to fund growth,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","maintain sufficient flexibility to access capital in many forms, both public and private, including but not limited to, having in place, the Operating Partnership\u2019s $5.0 billion unsecured revolving credit facility, or the Credit Facility, its $3.5 billion supplemental unsecured revolving credit facility, or its Supplemental Facility, together, the Credit Facilities and its global unsecured commercial paper note program, or the Commercial Paper program, of $2.0 billion, or the non-U.S. dollar equivalent thereof, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","manage our overall financial structure in a fashion that preserves our investment grade credit ratings."]] [[/GREPCENT_TABLE]] We consider FFO, net operating income, or NOI, and portfolio NOI to be key measures of operating performance that are not specifically defined by accounting principles generally accepted in the United States, or GAAP. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Reconciliations of these measures to the most comparable GAAP measures are included below in this discussion. Results Overview Diluted earnings per share and diluted earnings per unit increased $0.46 during 2023 to $6.98 as compared to $6.52 in 2022. The increase in diluted earnings per share and diluted earnings per unit was primarily attributable to: [[GREPCENT_TABLE]] [["","\u25cf","improved operating performance and solid core business fundamentals in 2023, as discussed below,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","pre-tax gains in 2023 on the disposal, exchange, or revaluation of equity interests of $362.0 million, or $0.97 per diluted share/unit, of which $204.9 million, or $0.55 per diluted share/unit, was non-cash,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","increased lease income in 2023 of $259.2 million, or $0.69 per diluted share/unit,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","increased other income of $99.1 million, or $0.26 per diluted share/unit, primarily due to a $59.5 million, or $0.16 per diluted share/unit, increase in distributions and other income and a $56.6 million, or $0.15 per diluted share/unit, increase in interest income, partially offset by a decrease in lease settlement income of $17.0 million, or $0.05 per diluted share/unit,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","an unrealized favorable change in fair value of publicly traded equity instruments and derivative instrument, net of $73.1 million, or $0.20 per diluted share/unit, partially offset by"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","decreased income from unconsolidated entities of $272.3 million, or $0.73 per diluted share/unit, the majority of which is due to unfavorable year-over-year operations from other platform investments,"]] [[/GREPCENT_TABLE]] 60 Table of Contents [[GREPCENT_TABLE]] [["","\u25cf","a non-cash gain in 2022 on the disposal, exchange, or revaluation of equity interests, net of $121.2 million, or $0.32 per diluted share/unit,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","increased interest expense in 2023 of $93.4 million, or $0.25 per diluted share/unit, primarily due to new USD and EUR bond issuances as well as increases to rates on variable rate mortgages,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","increased other expenses in 2023 of $35.6 million, or $0.10 per diluted share/unit,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","increased depreciation and amortization in 2023 of $34.7 million, or $0.09 per diluted share/unit, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","increased property operating expenses in 2023 of $25.2 million, or $0.07 per diluted share/unit."]] [[/GREPCENT_TABLE]] Portfolio NOI increased 4.9% in 2023 as compared to 2022. Average base minimum rent for U.S. Malls and Premium Outlets increased 3.1% to $56.82 psf as of December 31, 2023, from $55.13 psf as of December 31, 2022. Ending occupancy for our U.S. Malls and Premium Outlets increased 0.9% to 95.8% as of December 31, 2023, from 94.9% as of December 31, 2022, primarily due to strong leasing demand. Our effective overall borrowing rate at December 31, 2023 on our consolidated indebtedness increased 27 basis points to 3.49% as compared to 3.22% at December 31, 2022. This increase was primarily due to an increase in the effective overall borrowing rate on variable rate debt of 198 basis points (5.91% at December 31, 2023 as compared to 3.93% at December 31, 2022) due to increasing benchmark rates, partially offset by a decrease in the amount of our variable rate debt and an increase in fixed rate debt. The weighted average years to maturity of our consolidated indebtedness was 8.1 years and 7.5 years at December 31, 2023 and 2022, respectively. Our financing activity for the year ended December 31, 2023 included: [[GREPCENT_TABLE]] [["","\u25cf","the Operating Partnership completing on November 14, 2023, the issuance of \u20ac750.0 million senior unsecured bonds ($808.0 million U.S. dollar equivalent) with a maturity date of November 14, 2026 and a fixed interest rate of 3.50%. The bonds are exchangeable into shares of Kl\u00e9pierre at the option of the holder of the bond at an initial common price of \u20ac27.2092. We may elect to settle the exchange with cash instead of shares. Proceeds were used to repay \u20ac750.0 million ($815.4 million U.S. dollar equivalent) outstanding under the Supplemental Facility on November 17, 2023."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the Operating Partnership completing on November 9, 2023, the issuance of the following senior unsecured notes: $500 million with a fixed interest rate of 6.25% and $500 million with a fixed interest rate of 6.65%, with maturity dates of January 15, 2034 and January 15, 2054, respectively."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","borrowing $180.0 million under the Credit Facility and subsequently unencumbering two properties,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","completing, on June 1, 2023 the redemption at par of the Operating Partnership\u2019s $600 million 2.75% notes at maturity,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the Operating Partnership completing on March 8, 2023, the issuance of the following senior unsecured notes: $650 million with a fixed interest rate of 5.5% and $650 million with a fixed interest rate of 5.85%, with maturity dates of March 8, 2033 and March 8, 2053, respectively. A portion of the net proceeds were used to fund the optional redemption at par of the Operating Partnerships $500 million floating interest rate notes due January 2024 on March 13, 2023, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","Amending, restating, extending, and increasing our existing $4.0 billion unsecured revolving credit facility on March 14, 2023 with a new $5.0 billion unsecured revolving credit facility."]] [[/GREPCENT_TABLE]] United States Portfolio Data The portfolio data discussed in this overview includes the following key operating statistics: ending occupancy, and average base minimum rent per square foot. We include acquired properties in this data beginning in the year of acquisition and remove disposed properties in the year of disposition. For comparative information purposes, we separate the information related to The Mills and TRG from our other U.S. operations. We also do not include any information for properties located outside the United States. 61 Table of Contents The following table sets forth these key operating statistics for the combined U.S. Malls and Premium Outlets: [[GREPCENT_TABLE]] [["","\u25cf","properties that are consolidated in our consolidated financial statements,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","properties we account for under the equity method of accounting as joint ventures, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","the foregoing two categories of properties on a total portfolio basis."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","%/Basis Point","\u200b","\u200b","\u200b","\u200b","%/Basis Point","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2023","","Change (1)","","2022","","Change (1)","","2021","\u200b"],["U.S. Malls and Premium Outlets:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Ending Occupancy","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Consolidated","\u200b","\u200b","95.7%","\u200b","80 bps","\u200b","\u200b","94.9%","\u200b","140 bps","\u200b","\u200b","93.5%","\u200b"],["Unconsolidated","\u200b","\u200b","96.1%","\u200b","120 bps","\u200b","\u200b","94.9%","\u200b","180 bps","\u200b","\u200b","93.1%","\u200b"],["Total Portfolio","\u200b","\u200b","95.8%","\u200b","90 bps","\u200b","\u200b","94.9%","\u200b","150 bps","\u200b","\u200b","93.4%","\u200b"],["Average Base Minimum Rent per Square Foot","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Consolidated","\u200b","$","55.47","\u200b","2.8%","\u200b","$","53.95","\u200b","2.6%","\u200b","$","52.59","\u200b"],["Unconsolidated","\u200b","$","60.59","\u200b","3.8%","\u200b","$","58.36","\u200b","1.4%","\u200b","$","57.55","\u200b"],["Total Portfolio","\u200b","$","56.82","\u200b","3.1%","\u200b","$","55.13","\u200b","2.3%","\u200b","$","53.91","\u200b"],["U.S. TRG:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Ending Occupancy","\u200b","","95.7%","\u200b","120 bps","\u200b","","94.5%","\u200b","330 bps","\u200b","","91.2%","\u200b"],["Average Base Minimum Rent per Square Foot","\u200b","$","65.01","\u200b","5.3%","\u200b","$","61.76","\u200b","5.2%","\u200b","$","58.69","\u200b"],["The Mills:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Ending Occupancy","\u200b","","97.8%","\u200b","-40 bps","\u200b","","98.2%","\u200b","60 bps","\u200b","","97.6%","\u200b"],["Average Base Minimum Rent per Square Foot","\u200b","$","36.38","\u200b","4.3%","\u200b","$","34.89","\u200b","3.2%","\u200b","$","33.80","\u200b"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Percentages may not recalculate due to rounding. Percentage and basis point changes are representative of the change from the comparable prior period."]] [[/GREPCENT_TABLE]] Ending Occupancy Levels and Average Base Minimum Rent per Square Foot.  Ending occupancy is the percentage of gross leasable area, or GLA, which is leased as of the last day of the reporting period. We include all company owned space except for mall anchors, mall majors, mall freestanding and mall outlots in the calculation. Base minimum rent per square foot is the average base minimum rent charge in effect for the reporting period for all tenants that would qualify to be included in ending occupancy. Current Leasing Activities During the twelve months ended December 31, 2023, we signed 1,185 new leases and 1,841 renewal leases (excluding mall anchors and majors, new development, redevelopment and leases with terms of one year or less) with a fixed minimum rent across our U.S. Malls and Premium Outlets portfolio, comprising approximately 10.9 million square feet, of which 8.3 million square feet related to consolidated properties. During 2022, we signed 1,262 new leases and 1,517 renewal leases with a fixed minimum rent, comprising approximately 9.1 million square feet, of which 7.0 million square feet related to consolidated properties. The average annual initial base minimum rent for new leases was $66.39 per square foot in 2023 and $55.41 per square foot in 2022 with an average tenant allowance on new leases of $64.31 per square foot and $53.01 per square foot, respectively. Japan Data The following are selected key operating statistics for our Premium Outlets in Japan. The information used to prepare these statistics has been supplied by the managing venture partner. [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","December 31,","","%/basis point","","December 31,","","%/basis point","","December 31,"],["\u200b","\u200b","2023","\u200b","Change","\u200b","2022","\u200b","Change","\u200b","2021"],["Ending Occupancy","\u200b","\u200b","99.7%","\u200b","-10 bps","\u200b","\u200b","99.8%","\u200b","0 bps","\u200b","\u200b","99.8%"],["Average Base Minimum Rent per Square Foot","\u200b","\u00a5","5,494","\u200b","-4.93%","\u200b","\u00a5","5,779","\u200b","4.90%","\u200b","\u00a5","5,509"]] [[/GREPCENT_TABLE]] ​ 62 Table of Contents Critical Accounting Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base our estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied resulting in a different presentation of our financial statements. From time to time, we reevaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information. Below is a discussion of accounting policies that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. For a summary of our significant accounting policies, see Note 3 of the notes to the consolidated financial statements. [[GREPCENT_TABLE]] [["","\u25cf","We, as a lessor, primarily under long-term leases, retain substantially all of the risks and benefits of ownership of the investment properties and account for our leases as operating leases. We accrue fixed lease income on a straight-line basis over the terms of the leases, when we believe substantially all lease income, including the related straight-line rent receivable, is probable of collection. Our assessment of collectability, primarily under long-term leases, incorporates available operational performance measures such as sales and the aging of billed amounts as well as other publicly available information with respect to our tenant\u2019s financial condition, liquidity and capital resources. When a tenant seeks to reorganize its operations through bankruptcy proceedings, we assess the collectability of receivable balances including, among other things, the timing of a tenant\u2019s bankruptcy filing and our expectations of the assumption by the tenant in bankruptcy proceeding of leases at the Company\u2019s properties on substantially similar terms. In the event that we determine accrued receivables are not probable of collection, lease income will be recorded on a cash basis, with the corresponding tenant receivable and straight-line rent receivable charged as a direct write-off against lease income in the period of the change in our collectability determination."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","We review investment properties for impairment on a property-by-property basis to identify and evaluate events or changes in circumstances which indicate that the carrying value of investment properties may not be recoverable. These circumstances include, but are not limited to, changes in a property\u2019s operational performance such as declining cash flows, occupancy or total sales per square foot, the Company\u2019s intent and ability to hold the related asset, and, if applicable, the remaining time to maturity of underlying financing arrangements. We measure any impairment of investment property when the estimated undiscounted operating income before depreciation and amortization during the anticipated holding period plus its residual value is less than the carrying value of the property. To the extent impairment has occurred, we charge to income the excess of carrying value of the property over our estimate of its fair value. We also review our investments, including investments in unconsolidated entities, to identify and evaluate whether events or changes in circumstances indicate that the carrying amount of our investments may not be recoverable. We will record an impairment charge if we determine the fair value of the investments are less than their carrying value and such impairment is other-than-temporary. Our evaluation of changes in economic or operating conditions and whether an impairment is other-than-temporary may include developing estimates of fair value, forecasted cash flows or operating income before depreciation and amortization. We estimate undiscounted cash flows and fair value using observable and unobservable data such as operating income, hold periods, estimated capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain impairments are other-than-temporary. Changes in economic and operating conditions, including changes in the financial condition of our tenants, and changes to our intent and ability to hold the related asset, that occur subsequent to our review of recoverability of investment property and other investments could impact the assumptions used in that assessment and could result in future charges to earnings if assumptions regarding those investments differ from actual results."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","To maintain Simon\u2019s status as a REIT, we must distribute at least 90% of REIT taxable income in any given year and meet certain asset and income tests. We monitor our business and transactions that may potentially impact Simon\u2019s REIT status. In the unlikely event that we fail to maintain Simon\u2019s REIT status, and available relief provisions do not apply, we would be required to pay U.S. federal income taxes at regular corporate income tax rates during the period Simon did not qualify as a REIT. If Simon lost its REIT status, it could not elect to be taxed as a REIT for four taxable years following the year during which qualification was lost unless its failure was due"]] [[/GREPCENT_TABLE]] 63 Table of Contents [[GREPCENT_TABLE]] [["","","to reasonable cause and certain other conditions were met. As a result, failing to maintain REIT status would result in a significant increase in the income tax expense recorded and paid during those periods."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","In the period of a significant acquisition of real estate, we make estimates as part of our valuation of the purchase price of asset acquisitions (including the components of excess investment in joint ventures) to the various components of the acquisition based upon the relative fair value of each component. The most significant components of our real estate valuations are typically the determination of relative fair value to the buildings as-if-vacant, land and market value of in-place leases. In the case of the fair value of buildings and fair value of land and other intangibles, our estimates of the values of these components will affect the amount of depreciation or amortization we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the market value of in-place leases, we make our best estimates of the tenants\u2019 ability to pay rents based upon the tenants\u2019 operating performance at the property, including the competitive position of the property in its market as well as sales psf, rents psf, and overall occupancy cost for the tenants in place at the acquisition date. Our assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases."]] [[/GREPCENT_TABLE]] Results of Operations The following acquisitions, dispositions, and openings of consolidated properties affected our consolidated results in the comparative periods: [[GREPCENT_TABLE]] [["","\u25cf","On April 27, 2023, we opened Paris-Giverny Designer Outlet, a 228,000 square foot center in Vernon, France. We own a 74% interest in this center."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On June 17, 2022, we acquired an additional interest in Gloucester Premium Outlets from a joint venture, resulting in the consolidation of this property."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During the second quarter of 2022, we disposed of one retail property."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During 2021, we disposed of three retail properties."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During the first quarter of 2021, we consolidated one Designer Outlet property in Europe that had previously been accounted for under the equity method."]] [[/GREPCENT_TABLE]] The following acquisitions, dispositions, and openings of noncontrolling interests in joint venture entities affected our income from unconsolidated entities in the comparative periods: [[GREPCENT_TABLE]] [["","\u25cf","During 2023, ABG completed multiple capital transactions which resulted in the dilution of our ownership and multiple deemed disposals of a proportional interest of our investment. In addition, we sold a portion of our interest in ABG on November 29, 2023. These transactions reduced our ownership from 12.3% to 9.6%."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During the third quarter of 2023, we disposed of our interest in one unconsolidated retail property through foreclosure in satisfaction of its $114.8 million non-recourse loan. We recognized no gain or loss in connection with this disposal."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On September 7, 2023, we acquired an additional 4% ownership in TRG for approximately $199.6 million by issuing 1,725,000 units in the Operating Partnership, bringing our noncontrolling ownership interest in TRG to 84%."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During the third quarter of 2023, SPARC Group issued equity to a third party resulting in the dilution of our ownership to 33.3% and a deemed disposal of a proportional interest of our investment. As a result, we recognized a non-cash pre-tax gain on the deemed disposal of $145.8 million."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During the fourth quarter of 2022, we disposed of one retail property."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During the fourth quarter of 2022, we sold to ABG all of our interests in the licensing venture of Eddie Bauer for additional interests in ABG. Our noncontrolling interest in ABG was approximately 12.3% after this transaction."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On December 19, 2022, we completed the acquisition of a 50% noncontrolling legal ownership interest in Jamestown, a global real estate investment and asset management company, as well as separate interests in certain real estate and working capital, for total cash consideration of $173.4 million."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On November 3, 2022, we opened Fukaya-Hanazono Premium Outlets, a 296,300 square foot center in Fukaya City, Japan. We own a 40% interest in this center."]] [[/GREPCENT_TABLE]] 64 Table of Contents [[GREPCENT_TABLE]] [["","\u25cf","During the third quarter of 2022, we disposed of one retail property."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","During the fourth quarter of 2021, we disposed of our noncontrolling interest in one retail property."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On December 20, 2021, we sold a portion of our interest in ABG for cash consideration of $65.5 million and purchased additional interests in ABG for cash consideration of $100.0 million."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On October 15, 2021, we opened Jeju Premium Outlets, a 92,000 square foot center in Jeju Province, South Korea. We own a 50% interest in this center."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On July 1, 2021, we sold to ABG all of our interests in the licensing ventures of Forever 21 and Brooks Brothers for additional interests in ABG."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On June 1, 2021, we and our partner, ABG, acquired the licensing rights of Eddie Bauer. Our noncontrolling interest in the licensing venture is 49% and was acquired for cash consideration of $100.8 million."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","On April 12, 2021, we opened West Midlands Designer Outlet, a 197,000 square foot center in Cannock, United Kingdom. We own a 23.2% interest in this center."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","In the first quarter of 2021, we and our partner, ABG, both acquired additional 12.5% interests in the licensing and operations of Forever 21 for $56.3 million bringing our interest to 50%. Subsequently the Forever 21 operations were merged into SPARC Group."]] [[/GREPCENT_TABLE]] For the purposes of the following comparisons between the years ended December 31, 2023 and 2022 and the years ended December 31, 2022 and 2021, the above transactions are referred to as the property transactions. In the following discussions of our results of operations, “comparable” refers to properties we owned and operated in both years in the year to year comparisons. Year Ended December 31, 2023 vs. Year Ended December 31, 2022 Lease income increased $259.2 million, due to an increase in fixed lease income of $286.7 million primarily due to an increase in fixed minimum lease consideration and higher occupancy, partially offset by a decrease in variable lease income based on tenant sales of $27.5 million.   Total other income increased $99.1 million, primarily due to a $56.6 million increase in interest income, a $52.0 million increase in mixed use and franchise operations income, a $13.1 million increase in dividend and distribution income and a $3.7 million increase in Simon Brand Ventures, fee and other income, partially offset by a $17.0 million decrease in lease settlement income and a $9.3 million decrease in land sale activity. Home and regional office costs increased $23.0 million primarily due to increased personnel and compensation costs. Other expense increased $35.6 million primarily due to increased mixed use and franchise operations expenses of $50.8 million, partially offset by the 2022 write-off of $13.4 million in development costs related to an international development project in Germany we no longer intended to pursue. Interest expense increased $93.4 million primarily related to new USD bond issuances during 2023 of $69.5 million, activity with regards to the Credit Facilities of $24.5 million and $8.8 million from increased variable rates, partially offset by a USD bond payoff during 2023 of $14.7 million and a Euro bond payoff during 2022 of $9.8 million. During 2023, SPARC Group issued equity to a third party resulting in the dilution of our ownership to 33.3% and a deemed disposal of a proportional interest of our investment. As a result, we recognized a non-cash pre-tax gain on the deemed disposal of $145.8 million. During 2023, ABG completed multiple capital transactions which resulted in the dilution of our ownership and multiple deemed disposals of a proportional interest of our investment. As a result, we recognized non-cash pre-tax gains on the deemed disposals of $59.1 million. During 2023, we also recorded our share of the gain on the sale of a portion of our ABG interests of $157.1 million.  During 2022, we recorded a $159.0 million non-cash gain as a result of the sale to ABG of all of our interests in the Eddie Bauer licensing venture for additional interests in ABG, partially offset by a loss of $37.8 million on the revaluation or disposal of other investments. Income and other tax expense decreased $1.6 million primarily related to the 2022 Eddie Bauer licensing transaction noted above of $39.7 million and an overall lower tax expense on our share of operating results from our other platform investments of approximately $27.2 million, partially offset by the tax impact of the SPARC and ABG transactions in 2023 noted above of $69.3 million. 65 Table of Contents Income from unconsolidated entities decreased $272.3 million primarily due to lower results of operations from our other platform investments. During 2023, we recorded an $11.2 million loss on the disposition of certain assets by Klépierre and an impairment on a joint venture property, our share of which was $8.6 million, partially offset by an $8.7 million gain on the disposition of certain assets by a joint venture investment and an $8.1 million gain on excess insurance proceeds.  During 2022, we recorded a $19.9 million gain on the disposition of one unconsolidated property, a $2.1 million gain related to excess insurance proceeds and a $1.3 million gain on the disposition of certain assets by Klépierre, partially offset by a $17.7 million loss primarily related to the disposition of one consolidated property.   Simon’s net income attributable to noncontrolling interests increased $21.0 million due to an increase in the net income of the Operating Partnership. Year Ended December 31, 2022 vs. Year Ended December 31, 2021 Lease income increased $168.5 million, of which the property transactions accounted for a $23.2 million decrease.  Comparable lease income increased $191.7 million, or 4.1%.  Total lease income increased primarily due to an increase in fixed lease income of $156.6 million primarily due to an increase in fixed minimum lease consideration, higher occupancy, and an increase in variable lease income of $11.9 million primarily related to higher consideration based on tenant sales.   Total other income decreased $4.2 million, primarily due to a decrease in lease settlement income of $38.8 million, a $14.9 million gain from the sale of our interest in a multi-family residential property in 2021, and a $6.8 million non-cash dilution gain on a non-retail investment in 2021, partially offset by an $20.8 million increase in fee and other income, a $17.9 million increase related to Simon Brand Ventures and gift card revenues, a $9.8 million increase related to land sale activity and a $7.8 million increase in interest income. Property operating expenses increased $48.4 million primarily due to the return to a more normalized operating environment following the peak of the COVID pandemic. Other expense increased $11.7 million primarily due to an increase in legal fees and foreign currency revaluations. Interest expense decreased $34.5 million primarily related to the early extinguishment of nine secured loans, the disposition of three retail properties, and the refinancing of two retail properties at lower interest rates in 2021, partially offset by the issuances of Euro and USD bonds and interest increases due to variable rates in 2022. During 2021, we recorded a loss on extinguishment of debt of $51.8 million as a result of the early redemption of unsecured notes and the payoff of mortgages at nine properties. During 2022, we recorded a $159.0 million non-cash gain as a result of the sale to ABG of all of our interests in the Eddie Bauer licensing venture for additional interests in ABG, partially offset by a loss of $37.8 million on the revaluation or disposal of other investments. During 2021, we recorded a non-cash gain of $159.8 million as a result of the sale to ABG of all of our interests in the licensing ventures of Forever 21 and Brooks Brothers for additional interests in ABG and a gain on the sale of a portion of our interest in ABG of $18.8 million, as discussed further in Note 6. Income and other tax expense decreased $73.7 million due to the impact in 2021 on deferred tax expense as a result of the ABG transaction noted above, which had a non-cash tax impact of $55.9 million, offset by the impact in 2022 on deferred tax expense of the 2022 ABG transaction noted above, which had a non-cash tax impact of $39.7 million, and lower tax expense in 2022 on our share of operating results from our other platform investments. Income from unconsolidated entities decreased $134.9 million primarily due to unfavorable results of operations year over year from our other platform investments of $216.1 million, as well as the reversal in 2021 of a previously established deferred tax liability at Klépierre resulting in a non-cash gain, of which our share was $118.4 million, partially offset by favorable year over year results of operations across the properties and TRG in 2022. During 2022, we recorded a $19.9 million gain on the disposition of one unconsolidated property, a $2.1 million gain related to excess insurance proceeds and a $1.3 million gain on the disposition of certain assets by Klépierre, partially offset by a $17.7 million loss primarily related to the disposition of one consolidated property.  During 2021, we recorded gains of $184.0 million related to the disposition of three consolidated properties, our interest in one unconsolidated property and the impact from the consolidation of one property that was previously unconsolidated, and gains of $21.2 million related to property insurance recoveries of previously depreciated assets. Simon’s net income attributable to noncontrolling interests decreased $6.2 million due to a decrease in the net income of the Operating Partnership.     66 Table of Contents Liquidity and Capital Resources Because we own long-lived income-producing assets, our financing strategy relies primarily on long-term fixed rate debt. Floating rate debt comprised 1.1% of our total consolidated debt at December 31, 2023. We also enter into interest rate protection agreements from time to time to manage our interest rate risk. We derive most of our liquidity from positive net cash flow from operations and distributions of capital from unconsolidated entities that totaled $4.2 billion in the aggregate during 2023. The Credit Facilities and the Commercial Paper program provide alternative sources of liquidity as our cash needs vary from time to time. Borrowing capacity under these sources may be increased as discussed further below. Our balance of cash and cash equivalents increased $547.4 million during 2023 to $1.2 billion as of December 31, 2023 as further discussed below. On December 31, 2023, we had an aggregate available borrowing capacity of approximately $8.1 billion under the Facilities, net of letters of credit of $58.6 million. For the year ended December 31, 2023, the maximum aggregate outstanding balance under the Credit Facilities was $1.1 billion and the weighted average outstanding balance was $962.6 million. The weighted average interest rate was 4.36% for the year ended December 31, 2023. Simon has historically had access to public equity markets and the Operating Partnership has historically had access to private and public, short and long-term unsecured debt markets and access to secured debt and private equity from institutional investors at the property level. Our business model and Simon’s status as a REIT require us to regularly access the debt markets to raise funds for acquisition, development and redevelopment activity, and to refinance maturing debt. Simon may also, from time to time, access the equity capital markets to accomplish our business objectives. We believe we have sufficient cash on hand and availability under the Credit Facilities and the Commercial Paper program to address our debt maturities and capital needs through 2024. Cash Flows Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $4.2 billion during 2023. In addition, we had net proceeds of debt from our debt financing and repayment activities of $971.3 million in 2023. These activities are further discussed below under “Financing and Debt.” During 2023, we also: [[GREPCENT_TABLE]] [["","\u25cf","paid stockholder dividends and unitholder distributions totaling approximately $2.8 billion and preferred unit distributions totaling $5.2 million,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","funded consolidated capital expenditures of $793.3 million (including development and other costs of $156.0 million, redevelopment and expansion costs of $328.8 million, and tenant costs and other operational capital expenditures of $308.5 million),"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","funded investments in unconsolidated entities of $84.0 million,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","funded the purchase of $1.0 billion of short-term investments,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","funded the repurchase of $140.6 million of Simon\u2019s common stock, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","received proceeds from the sale of equity instruments of $304.1 million."]] [[/GREPCENT_TABLE]] In general, we anticipate that cash generated from operations will be sufficient to meet operating expenses, monthly debt service, recurring capital expenditures, and dividends to stockholders and/or distributions to partners necessary to maintain Simon’s REIT qualification on a long-term basis.  In addition, we expect to be able to generate or obtain capital for nonrecurring capital expenditures, such as acquisitions, major building redevelopments and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from the following, however a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, may affect our ability to access necessary capital: [[GREPCENT_TABLE]] [["","\u25cf","excess cash generated from operating performance and working capital reserves,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","borrowings on the Credit Facilities and Commercial Paper program,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","additional secured or unsecured debt financing, or"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","additional equity raised in the public or private markets."]] [[/GREPCENT_TABLE]] 67 Table of Contents We expect to generate positive cash flow from operations in 2024, and we consider these projected cash flows in our sources and uses of cash. These cash flows are principally derived from rents paid by our tenants. A significant deterioration in projected cash flows from operations, could cause us to increase our reliance on available funds from the Credit Facilities and Commercial Paper program, further curtail planned capital expenditures, or seek other additional sources of financing. Financing and Debt Unsecured Debt At December 31, 2023, our unsecured debt consisted of $20.7 billion of senior unsecured notes of the Operating Partnership, $305.0 million outstanding under the Credit Facility.   The Credit Facility can be increased in the form of additional commitments in an aggregate not to exceed $1.0 billion, for a total aggregate size of $6.0 billion, subject to obtaining additional lender commitments and satisfying certain customary conditions precedent.  Borrowings may be denominated in U.S. dollars, Euro, Yen, Pounds, Sterling, Canadian dollars and Australian dollars. Borrowings in currencies other than the U.S. dollar are limited to 97% of the maximum revolving credit amount, as defined. The initial maturity date of the Credit Facility is June 30, 2027. The Credit Facility can be extended for two additional six-month periods to June 30, 2028, at our sole option, subject to satisfying certain customary conditions precedent. Borrowings under the Credit Facility bear interest, at our election, at either (i) (x) for Term Benchmark Loans, the Adjusted Term SOFR Rate, the applicable Local Rate, the Adjusted EURIBOR Rate, or the Adjusted TIBOR Rate, (y) for RFR Loans, if denominated in Sterling, SONIA plus a benchmark adjustment and if denominated in Dollars, Daily Simple SOFR plus a benchmark adjustment, or (z) for Daily SOFR Loans, the Adjusted Floating Overnight Daily SOFR Rate, in each case of clauses (x) through (z) above, plus a margin determined by our corporate credit rating of between 0.650% and 1.400% or (ii) for loans denominated in U.S. Dollars only, the base rate (which rate is equal to the greatest of the prime rate, the federal funds effective rate plus 0.500% or Adjusted Term SOFR Rate for one month plus 1.000%) (the “Base Rate”), plus a margin determined by our corporate credit rating of between 0.000% and 0.400%. The Credit Facility includes a facility fee determined by our corporate credit rating of between 0.100% and 0.300% on the aggregate revolving commitments under the Credit Facility.  Based upon our current credit ratings, the interest rate on the Credit Facility is SOFR plus 72.5 basis points, plus a spread adjustment to account for the transition from LIBOR to SOFR. The Supplemental Facility, has a borrowing capacity of $3.5 to $4.5 billion during its term and provides for borrowings denominated in U.S. dollars, Euro, Yen, Pounds, Sterling, Canadian dollars and Australian dollars. Borrowings in currencies other than the U.S. dollar are limited to 100% of the maximum revolving credit amount, as defined. The initial maturity date of the Supplemental Facility is January 31, 2026 and can be extended for an additional year to January 31, 2027 at our sole option, subject to satisfying certain customary conditions precedent. Borrowings under the Supplemental Facility bear interest, at our election, at either (i) (x) for Term Benchmark Loans, the Adjusted Term SOFR Rate, the applicable Local Rate, the Adjusted EURIBOR Rate, or the Adjusted TIBOR Rate, (y) for RFR Loans, if denominated in Sterling, SONIA plus a benchmark adjustment and if denominated in Dollars, Daily Simple SOFR plus a benchmark adjustment, or (z) for Daily SOFR Loans, the Adjusted Floating Overnight Daily SOFR Rate, in each case of clauses (x) through (z) above, plus a margin determined by our corporate credit rating of between 0.650% and 1.400% or (ii) for loans denominated in U.S. Dollars only, the base rate (which rate is equal to the greatest of the prime rate, the federal funds effective rate plus 0.500% or Adjusted Term SOFR Rate for one month plus 1.000%) (the “Base Rate”), plus a margin determined by our corporate credit rating of between 0.000% and 0.400%. The Supplemental Facility includes a facility fee determined by our corporate credit rating of between 0.100% and 0.300% on the aggregate revolving commitments under the Supplemental Facility.  Based upon our current credit ratings, the interest rate on the Supplemental Facility is SOFR plus 72.5 basis points, plus a spread adjustment to account for the transition from LIBOR to SOFR. On December 31, 2023 we had an aggregate available borrowing capacity of $8.1 billion under the Credit Facilities. The maximum aggregate outstanding balance under the Facilities during the year ended December 31, 2023 was $1.1 billion and the weighted average outstanding balance was $962.6 million. Letters of credit of $58.6 million were outstanding under the Facilities as of December 31, 2023. Under the Commercial Paper program, the Operating Partnership may issue unsecured commercial paper notes, denominated in U.S. dollars, Euro and other currencies. Notes issued in non-U.S. currencies may be issued by one or more subsidiaries of the Operating Partnership and are guaranteed by the Operating Partnership.  Notes will be sold under customary terms in the U.S. and Euro commercial paper note markets and rank (either by themselves or as a result of the guarantee described above) pari passu with the Operating Partnership's other unsecured senior indebtedness.  The 68 Table of Contents Commercial Paper program is supported by the Credit Facilities, and if necessary or appropriate, we may make one or more draws under either of the Credit Facilities to pay amounts outstanding from time to time on the Commercial Paper program. On December 31, 2023, we had no outstanding balance under the Commercial Paper program.  Borrowings under the Commercial Paper program reduce amounts otherwise available under the Credit Facilities. On January 11, 2022, the Operating Partnership completed the issuance of the following senior unsecured notes: $500 million with a floating interest rate of SOFR plus 43 basis points, and $700 million with a fixed interest rate of 2.650%, with maturity dates of January 11, 2024 and February 1, 2032, respectively. The proceeds were used to repay $1.05 billion outstanding under the Supplemental Facility on January 12, 2022. On November 16, 2022, the Operating Partnership drew €750.0 million ($779.0 million U.S. dollar equivalent) under the Supplemental Facility and used the proceeds on November 17, 2022 to repay €750.0 million ($777.1 million U.S. dollar equivalent) of senior unsecured notes at maturity. On January 10, 2023, the Operating Partnership completed interest rate swap agreements with a combined notional value at €750.0 million to swap the interest rate of the Euro denominated borrowings outstanding under the Supplemental Facility to an all-in fixed rate of 3.81%. These interest rate swaps were terminated in connection with the repayment of these borrowings on November 14, 2023. On March 8, 2023, the Operating Partnership completed the issuance of the following senior unsecured notes: $650 million with a fixed interest rate 5.50%, and $650 million with a fixed interest rate of 5.85%, with maturity dates of March 8, 2033 and March 8, 2053, respectively. The Operating Partnership used a portion of the net proceeds of the offering to fund the optional redemption of its $500 million floating rate notes due January 2024 on March 13, 2023. On April 28, 2023 the Operating Partnership completed a borrowing of $180.0 million under the Credit Facility and subsequently unencumbered two properties. On June 1, 2023, the Operating Partnership completed the redemption, at par, of its $600 million 2.75% notes at maturity. On  November 9, 2023, the Operating Partnership completed the issuance of the following senior unsecured notes: $500 million with a fixed interest rate of 6.25% and $500 million with a fixed interest rate of 6.65%, with maturity dates of January 15, 2034 and January 15, 2054, respectively. The proceeds were used to redeem, at par, its $600 million 3.75% notes at maturity on February 1, 2024. On November 14, 2023, the Operating Partnership completed the issuance of €750.0 million senior unsecured bonds ($808.0 million U.S. dollar equivalent) with a maturity date of November 14, 2026 and a fixed interest rate of 3.50%.  The bonds are exchangeable into shares of Klépierre at the option of the holder of the bond at an initial common price of €27.2092.  We may elect to settle the exchange with cash instead of shares.  The proceeds were used to repay €750.0 million ($815.4 million U.S. dollar equivalent) outstanding under the Supplemental Facility on November 17, 2023. The exchangeable option within the bonds has been determined to meet the criteria for bifurcation. Mortgage Debt Total mortgage indebtedness was $5.2 billion and $5.5 billion at December 31, 2023 and 2022, respectively. Covenants Our unsecured debt agreements contain financial covenants and other non-financial covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender, including adjustments to the applicable interest rate. As of December 31, 2023, we were in compliance with all covenants of our unsecured debt. At December 31, 2023, our consolidated subsidiaries were the borrowers under 35 non-recourse mortgage notes secured by mortgages on 38 properties and other assets, including two separate pools of cross-defaulted and cross-collateralized mortgages encumbering a total of five properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties that serve as collateral for that debt. If the applicable borrower under these non-recourse mortgage notes were to fail to comply with these covenants, the lender could accelerate the debt and enforce its rights against their collateral. At December 31, 2023, the applicable borrowers under these non-recourse mortgage notes were in compliance with all covenants where non-compliance could individually 69 Table of Contents or in the aggregate, giving effect to applicable cross-default provisions, have a material adverse effect on our financial condition, liquidity or results of operations. Summary of Financing Our consolidated debt, adjusted to reflect outstanding derivative instruments, and the effective weighted average interest rates as of December 31, 2023 and 2022, consisted of the following (dollars in thousands): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","\u200b","\u200b","","Effective","","\u200b","\u200b","","Effective"],["\u200b","\u200b","Adjusted Balance","\u200b","Weighted","\u200b","Adjusted","\u200b","Weighted"],["\u200b","\u200b","as of","\u200b","Average","\u200b","Balance as of","\u200b","Average"],["Debt Subject to","\u200b","December 31, 2023","","Interest Rate(1)","\u200b","December 31, 2022","","Interest Rate(1)","\u200b"],["Fixed Rate","\u200b","$","25,705,396","","3.47%","\u200b","$","22,673,703","","3.15%","\u200b"],["Variable Rate","\u200b","","328,027","","5.91%","\u200b","","2,286,583","","3.93%","\u200b"],["\u200b","\u200b","$","26,033,423","","3.49%","\u200b","$","24,960,286","","3.22%","\u200b"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Effective weighted average interest rate excludes the impact of net discounts and debt issuance costs."]] [[/GREPCENT_TABLE]] Contractual Obligations and Off-balance Sheet Arrangements In regards to long-term debt arrangements, the following table summarizes the material aspects of these future obligations on our consolidated indebtedness as of December 31, 2023, and subsequent years thereafter (dollars in thousands) assuming the obligations remain outstanding through initial maturities: [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2024","","2025-2026","","2027-2028","","After 2028","","Total"],["Long Term Debt (1)","\u200b","$","2,946,165","\u200b","$","7,399,732","\u200b","$","3,620,285","\u200b","$","12,220,079","\u200b","$","26,186,261","\u200b"],["Interest Payments (2)","\u200b","","889,753","\u200b","","1,491,379","\u200b","","1,030,652","\u200b","","5,374,793","\u200b","","8,786,577","\u200b"],["Lease Commitments (3)","\u200b","","33,822","\u200b","","72,730","\u200b","","72,828","\u200b","","959,496","\u200b","","1,138,876","\u200b"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Represents principal maturities only and, therefore, excludes net discounts and debt issuance costs."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Variable rate interest payments are estimated based on the SOFR or other applicable rate at December 31, 2023."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(3)","Represents only the minimum non-cancellable lease period, excluding applicable lease extension and renewal options, unless reasonably certain of exercise."]] [[/GREPCENT_TABLE]] Our off-balance sheet arrangements consist primarily of our investments in joint ventures which are common in the real estate industry and are described in Note 6 of the notes to the consolidated financial statements. Our joint ventures typically fund their cash needs through secured non-recourse debt financings obtained by and in the name of the joint venture entity. The joint venture debt is secured by a first mortgage, is without recourse to the joint venture partners, and does not represent a liability of the partners, except to the extent the partners or their affiliates expressly guarantee the joint venture debt. As of December 31, 2023, the Operating Partnership guaranteed joint venture-related mortgage indebtedness of $139.2 million. Mortgages guaranteed by the Operating Partnership are secured by the property of the joint venture which could be sold in order to satisfy the outstanding obligation and which has an estimated fair value in excess of the guaranteed amount. We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not required contractually or otherwise. Hurricane Impacts During the year ended December 31, 2021, we recorded $2.1 million as business interruption income, which was recorded in other income in the accompanying consolidated statements of operations and comprehensive income.  During the year ended December 31, 2021, we also recorded a $21.0 million gain related to property insurance recovery of previously depreciated assets.  This amount was recorded in (loss) gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net, in the accompanying consolidated statements of operations and comprehensive income.     Acquisitions and Dispositions Buy-sell, marketing rights, and other exit mechanisms are common in real estate partnership agreements. Most of our partners are institutional investors who have a history of direct investment in retail real estate. We and our partners in 70 Table of Contents our joint venture properties may initiate these provisions (subject to any applicable lock up or similar restrictions). If we determine it is in our best interests for us to purchase the joint venture interest and we believe we have adequate liquidity to execute the purchase without hindering our cash flows, then we may initiate these provisions or elect to buy our partner’s interest. If we decide to sell any of our joint venture interests, we expect to use the net proceeds to reduce outstanding indebtedness or to reinvest in development, redevelopment, or expansion opportunities. Acquisitions.   On June 17, 2022, we acquired an additional interest in Gloucester Premium Outlets from a joint venture partner for $14.0 million in cash consideration, including a pro-rata share of working capital, resulting in the consolidation of this property. The property is subject to an $85.7 million 3.29% variable rate mortgage loan. We accounted for this transaction as an asset acquisition and substantially all of our investment has been determined to relate to investment property. The Company sponsored, through a wholly-owned subsidiary, a special purpose acquisition corporation, or SPAC, named Simon Property Group Acquisition Holdings, Inc. On February 18, 2021 the SPAC announced the pricing of its initial public offering, which was consummated on February 23, 2021, and generated gross proceeds of $345.0 million.  The SPAC was a consolidated VIE which was formed for the purpose of effecting a business combination and was targeting innovative businesses that operate within Simon’s “Live, Work, Play, Stay, Shop” ecosystem.   Dispositions.  We may continue to pursue the disposition of properties that no longer meet our strategic criteria or that are not a primary retail venue within their trade area. During 2023, we disposed of our interest in one unconsolidated retail property through foreclosure in satisfaction of the $114.8 million non-recourse mortgage loan.  We recognized no gain or loss in connection with this disposal. In December 2022, the SPAC was liquidated and dissolved.  In connection with this event, we recorded a loss of $10.2 million, representing our sponsor investment in the SPAC. During 2022, we disposed of our interest in one consolidated retail property. The proceeds from this transaction were $59.0 million, resulting in a loss of $15.6 million. We also recorded a non-cash gain of $19.9 million related to the disposition of one unconsolidated retail property in satisfaction of its $99.6 million non-recourse mortgage loan. These are included in (loss) gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interest in unconsolidated entities and impairment, net in the accompanying consolidated statement of operations and comprehensive income. During 2021, we recorded net gains of $176.8 million primarily related to disposition activity which included the foreclosure of three consolidated retail properties in satisfaction of their respective $180.0 million, $120.9 million and $100.0 million non-recourse mortgage loans. We also disposed of our interest in an unconsolidated property resulting in a gain of $3.4 million. Joint Venture Formation Activity and Other Investment Activity During the fourth quarter of 2023, we sold a portion of our interest in ABG, resulting in a pre-tax gain of $157.1 million, which is included in gain on disposal, exchange, or revaluation of equity interests, net, in the consolidated statement of operations. In connection with this transaction, we recorded tax expense of $39.3 million which is included in income and other tax expense in the consolidated statement of operations and comprehensive income. Concurrently, ABG completed a capital transaction resulting in the dilution of our ownership to approximately 9.6% and a deemed disposal of a proportional interest of our investment. As a result, we recognized a non-cash pre-tax gain on the deemed disposal of $10.3 million, which is included in gain on disposal, exchange, or revaluation of equity interests, net in the consolidated statement of operations and comprehensive income. This non-cash investing activity is excluded from our consolidated statement of cash flows. In connection with this transaction, we recorded deferred taxes of $2.6 million, which is included in income and other tax expense in the consolidated statement of operations and comprehensive income. On September 7, 2023, we acquired an additional 4% ownership in TRG for approximately $199.6 million by issuing 1,725,000 units in the Operating Partnership, bringing our noncontrolling ownership interest in TRG to 84%. During the third quarter of 2023, ABG completed a capital transaction resulting in the dilution of our ownership from approximately 11.8% to approximately 11.7% and a deemed disposal of a proportional interest of our investment. As a result, we recognized a non-cash pre-tax gain on the deemed disposal of $12.4 million, which is included in gain on disposal, exchange, or revaluation of equity interests, net in the consolidated statement of operations and comprehensive income. This non-cash investing activity is excluded from our consolidated statement of cash flows. In connection with this 71 Table of Contents transaction, we recorded deferred taxes of $3.1 million, which is included in income and other tax expense in the consolidated statement of operations and comprehensive income. During the second quarter of 2023, ABG completed a capital transaction resulting in a dilution of our ownership and a deemed disposal of a proportional interest of our investment. As a result, we recognized a non-cash pre-tax gain on the deemed disposal of $36.4 million, which is included in gain on disposal, exchange, or revaluation of equity interests, net in the consolidated statement of operations and comprehensive income. This non-cash investing activity is excluded from our consolidated statement of cash flows. In connection with this transaction, we recorded deferred taxes of $9.1 million, which is included in income and other tax expense in the consolidated statement of operations and comprehensive income. During the third quarter of 2023, SPARC Group issued equity to a third party resulting in the dilution of our ownership to 33.3% and a deemed disposal of a proportional interest of our investment. As a result, we recognized a non-cash pre-tax gain on the deemed disposal of $145.8 million, which is included in gain on disposal, exchange, or revaluation of equity interests, net in the consolidated statement of operations and comprehensive income. This non-cash investing activity is excluded from our consolidated statement of cash flows. In connection with this transaction, we recorded deferred taxes of $36.9 million, which is included in income and other tax expense in the consolidated statement of operations and comprehensive income. On December 19, 2022, we completed the acquisition of a 50% noncontrolling legal ownership interest in Jamestown, a global real estate investment and asset management company, as well as separate interests in certain real estate and working capital, for total cash consideration of $173.4 million. During the fourth quarter of 2022, we sold to ABG our interests in the licensing venture of Eddie Bauer for additional interests in ABG. As a result, in the fourth quarter of 2022, we recognized a non-cash pre-tax gain of $159.0 million, representing the difference between the fair value of the interests received and the $98.8 million carrying value of the intellectual property licensing venture less costs to sell. On July 1, 2021, we sold to ABG all of our interests in both the Forever 21 and Brooks Brothers licensing ventures for additional interests in ABG. As a result, in the third quarter of 2021, we recognized a non-cash pre-tax gain of $159.8 million, representing the difference between the fair value of the interests received and the $102.7 million carrying value of the intellectual property licensing ventures less costs to sell. On December 20, 2021, we sold a portion of our interest in ABG, resulting in a pre-tax gain of $18.8 million. In connection with this transaction, we recorded tax expense of $8.0 million which is included in income and other tax expense in the consolidated statement of operations and comprehensive income. Subsequently, we acquired additional interests in ABG for cash consideration of $100.0 million. During the first quarter of 2022, SPARC Group acquired certain assets and operations of Reebok and entered into a long-term strategic partnership with ABG to become the core licensee and operating partner for Reebok in the United States. Development Activity We routinely incur costs related to construction for significant redevelopment and expansion projects at our properties. Redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants are underway at several properties in North America, Europe, and Asia. Construction continues on certain redevelopment and new development projects in the U.S. and internationally that are nearing completion.  Our share of the costs of all new development, redevelopment and expansion projects currently under construction is approximately $1,344 million.  Simon’s share of remaining net cash funding required to complete the new development and redevelopment projects currently under construction is approximately $498 million.  We expect to fund these capital projects with cash flows from operations. We seek a stabilized return on invested capital in the range of 7-10% for all of our new development, expansion and redevelopment projects. 72 Table of Contents Summary of Capital Expenditures.  The following table summarizes total capital expenditures on consolidated properties on a cash basis (in millions): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","2023","","2022","","2021"],["New Developments","\u200b","$","156","\u200b","$","108","\u200b","$","96","\u200b"],["Redevelopments and Expansions","\u200b","","328","\u200b","","283","\u200b","","300","\u200b"],["Tenant Allowances","\u200b","","209","\u200b","","207","\u200b","","127","\u200b"],["Operational Capital Expenditures","\u200b","","100","\u200b","","52","\u200b","","5","\u200b"],["Total","\u200b","$","793","\u200b","$","650","\u200b","$","528","\u200b"]] [[/GREPCENT_TABLE]] ​ ​ International Development Activity   We typically reinvest net cash flow from our international joint ventures to fund future international development activity. We believe this strategy mitigates some of the risk of our initial investment and our exposure to changes in foreign currencies. We have also funded most of our foreign investments with local currency-denominated borrowings that act as a natural hedge against fluctuations in exchange rates. Our consolidated net income exposure to changes in the volatility of the Euro, Yen, Peso, Won, and other foreign currencies is not material. We expect our share of estimated committed capital for international development projects to be completed with projected delivery in 2024 or 2025 is $94 million, primarily funded through reinvested joint venture cash flow and construction loans. The following table describes recently completed and new development and expansion projects as well as our share of the estimated total cost as of December 31, 2023 (in millions): [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","Gross","\u200b","Our","\u200b","Our Share of","\u200b","Our Share of","\u200b","Projected/Actual"],["\u200b","\u200b","\u200b","\u200b","Leasable","\u200b","Ownership","\u200b","Projected Net Cost","\u200b","Projected Net Cost","\u200b","Opening"],["Property","","Location","","Area (sqft)","","Percentage","","(in Local Currency)","","(in USD) (1)","","Date"],["New Development Projects:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Paris-Giverny Designer Outlet","\u200b","Vernon, France","\u200b","228,000","\u200b","74%","\u200b","EUR","136.8","\u200b","$","151.0","\u200b","Opened Apr. - 2023"],["Jakarta Premium Outlets","\u200b","Jakarta, Indonesia","\u200b","300,000","\u200b","50%","\u200b","IDR","931,782","\u200b","$","60.5","\u200b","Feb. - 2025"],["Expansion:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Busan Premium Outlet Phase 2","\u200b","Busan, South Korea","\u200b","194,000","\u200b","50%","\u200b","KRW","72,933","\u200b","$","56.3","\u200b","Oct. - 2024"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","USD equivalent based upon December 31, 2023 foreign currency exchange rates."]] [[/GREPCENT_TABLE]] Dividends, Distributions and Stock Repurchase Program Simon paid a common stock dividend of $1.90 per share in the fourth quarter of 2023 and $7.45 per share for the year ended December 31, 2023. The Operating Partnership paid distributions per unit for the same amounts. In 2022, Simon paid dividends of $1.80 and $6.90 per share for the three and twelve month periods ended December 31, 2022, respectively. The Operating Partnership paid distributions per unit for the same amounts. On February 5, 2024, Simon’s Board of Directors declared a quarterly cash dividend for the first quarter of 2024 of $1.95 per share, payable on March 29, 2024 to shareholders of record on March 8, 2024.  The distribution rate on units is equal to the dividend rate on common stock. In order to maintain its status as a REIT, Simon must pay a minimum amount of dividends. Simon’s future dividends and the Operating Partnership’s future distributions will be determined by Simon’s Board of Directors, in its sole discretion, based on actual and projected financial condition, liquidity and results of operations, cash available for dividends and limited partner distributions, cash reserves as deemed necessary for capital and operating expenditures, financing covenants, if any, and the amount required to maintain Simon’s status as a REIT. On May 9, 2022, Simon’s Board of Directors authorized a common stock repurchase plan commencing on May 16, 2022, or the Repurchase Program.  Under the program, the Company may purchase up to $2.0 billion of its common stock during the two-year period ending May 16, 2024 in open market or privately negotiated transactions, at prices that the Company deems appropriate and subject to market conditions, applicable law, and other factors deemed relevant in the Company’s sole discretion.  On February 8, 2024, Simon’s Board of Directors authorized a new common stock repurchase program which replaces the existing Repurchase Program immediately where, the Company may purchase up to $2.0 billion of its common stock over the next 24 months.  During the year ended December 31, 2023, Simon purchased 1,273,733 shares at an average price of $110.38 per share.  During the year ended December 31, 2022, Simon purchased 1,830,022 shares at an average price of $98.57 per share.  As Simon repurchases shares under this program, the Operating Partnership repurchases an equal number of units from Simon.     73 Table of Contents 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 its expectations will be attained, and it is possible that the Company's actual results may differ materially from those indicated by these forward–looking statements due to a variety of risks, uncertainties, and other factors. Such factors include, but are not limited to: changes in economic and market conditions that may adversely affect the general retail environment, including but not limited to those caused by inflation, recessionary pressures, wars, escalating geopolitical tensions as a result of the war in Ukraine and the conflicts in the Middle East, and supply chain disruptions; the inability to renew leases and relet vacant space at existing properties on favorable terms; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; an increase in vacant space at our properties; the potential for violence, civil unrest, criminal activity or terrorist activities at our properties;  natural disasters; the availability of comprehensive insurance coverage; the intensely competitive market environment in the retail industry, including e-commerce; security breaches that could compromise our information technology or infrastructure; reducing emissions of greenhouse gases; environmental liabilities; our international activities subjecting us to risks that are different from or greater than those associated with our domestic operations, including changes in foreign exchange rates; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; the inability to lease newly developed properties on favorable terms; the loss of key management personnel; uncertainties regarding the impact of pandemics, epidemics or public health crises, and the associated governmental restrictions on our business, financial condition, results of operations, cash flow and liquidity; changes in market rates of interest; the impact of our substantial indebtedness on our future operations, including covenants in the governing agreements that impose restrictions on us that may affect our ability to operate freely; any disruption in the financial markets that may adversely affect our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; risks relating to our joint venture properties, including guarantees of certain joint venture indebtedness; and general risks related to real estate investments, including the illiquidity of real estate investments. The Company discusses these and other risks and uncertainties under the heading "Risk Factors" in Part 1, Item 1A of the Annual Report on Form 10-K.  The Company may update that discussion in subsequent other periodic reports, but except as required by law, 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. Non-GAAP Financial Measures Industry practice is to evaluate real estate properties in part based on performance measures such as FFO, diluted FFO per share, NOI, and portfolio NOI. We believe that these non-GAAP measures are helpful to investors because they are widely recognized measures of the performance of REITs and provide a relevant basis for comparison among REITs. We also use these measures internally to measure the operating performance of our portfolio. We determine FFO based upon the definition set forth by the National Association of Real Estate Investment Trusts (“NAREIT”) Funds From Operations White Paper – 2018 Restatement.  Our main business includes acquiring, owning, operating, developing, and redeveloping real estate in conjunction with the rental of real estate.  Gains and losses of assets incidental to our main business are included in FFO.  We determine FFO to be our share of consolidated net income computed in accordance with GAAP: [[GREPCENT_TABLE]] [["","\u25cf","excluding real estate related depreciation and amortization,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","excluding gains and losses from extraordinary items,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","excluding gains and losses from the sale, disposal or property insurance recoveries of, or any impairment related to, depreciable retail operating properties,"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","all determined on a consistent basis in accordance with GAAP."]] [[/GREPCENT_TABLE]] You should understand that our computations of these non-GAAP measures might not be comparable to similar measures reported by other REITs and that these non-GAAP measures: [[GREPCENT_TABLE]] [["","\u25cf","do not represent cash flow from operations as defined by GAAP,"]] [[/GREPCENT_TABLE]] 74 Table of Contents [[GREPCENT_TABLE]] [["","\u25cf","should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["","\u25cf","are not an alternative to cash flows as a measure of liquidity."]] [[/GREPCENT_TABLE]] The following schedule reconciles total FFO to consolidated net income and, for Simon, diluted net income per share to diluted FFO per share. [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","","2023","","2022","","2021","\u200b"],["\u200b","\u200b","\u200b","(in thousands)","\u200b"],["Consolidated Net Income","\u200b","\u200b","$","2,617,018","\u200b","$","2,452,385","\u200b","$","2,568,707","\u200b"],["Adjustments to Arrive at FFO:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Depreciation and amortization from consolidated properties","\u200b","\u200b","","1,250,550","\u200b","","1,214,441","\u200b","","1,254,039","\u200b"],["Our share of depreciation and amortization from unconsolidated entities, including Kl\u00e9pierre, TRG and other corporate investments","\u200b","\u200b","","841,862","\u200b","","845,784","\u200b","","887,390","\u200b"],["Loss (gain) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net","\u200b","\u200b","","3,056","\u200b","","(5,647)","\u200b","","(206,855)","\u200b"],["Unrealized losses in fair value of publicly traded equity instruments, net, excluded from FFO (A)","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","3,177","\u200b"],["Net loss (income) attributable to noncontrolling interest holders in properties","\u200b","\u200b","","1,336","\u200b","","(2,738)","\u200b","","6,053","\u200b"],["Noncontrolling interests portion of depreciation and amortization, gain on consolidation of properties, and gain on disposal of properties","\u200b","\u200b","","(22,719)","\u200b","","(18,234)","\u200b","","(20,295)","\u200b"],["Preferred distributions and dividends","\u200b","\u200b","","(5,237)","\u200b","","(5,252)","\u200b","","(5,252)","\u200b"],["FFO of the Operating Partnership","\u200b","\u200b","$","4,685,866","\u200b","$","4,480,739","\u200b","$","4,486,964","\u200b"],["FFO allocable to limited partners","\u200b","\u200b","\u200b","597,727","\u200b","\u200b","564,946","\u200b","\u200b","564,407","\u200b"],["Dilutive FFO allocable to common stockholders","\u200b","\u200b","$","4,088,139","\u200b","$","3,915,793","\u200b","$","3,922,557","\u200b"],["Diluted net income per share to diluted FFO per share reconciliation:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Diluted net income per share","\u200b","\u200b","$","6.98","\u200b","$","6.52","\u200b","$","6.84","\u200b"],["Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Kl\u00e9pierre, TRG and other corporate investments, net of noncontrolling interests portion of depreciation and amortization","\u200b","\u200b","","5.52","\u200b","","5.44","\u200b","","5.64","\u200b"],["Loss (gain) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net","\u200b","\u200b","","0.01","\u200b","","(0.01)","\u200b","","(0.55)","\u200b"],["Unrealized losses in fair value of publicly traded equity instruments, net, excluded from FFO (A)","\u200b","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","0.01","\u200b"],["Diluted FFO per share","\u200b","\u200b","$","12.51","\u200b","$","11.95","\u200b","$","11.94","\u200b"],["Basic and Diluted weighted average shares outstanding","\u200b","\u200b","","326,808","\u200b","","327,817","\u200b","","328,587","\u200b"],["Weighted average limited partnership units outstanding","\u200b","\u200b","","47,782","\u200b","","47,295","\u200b","","47,280","\u200b"],["Basic and Diluted weighted average shares and units outstanding","\u200b","\u200b","","374,590","\u200b","","375,112","\u200b","","375,867","\u200b"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(A)","Unrealized losses in fair value of publicly traded equity instruments, net, excluded from FFO relate to mark-to-market adjustments of retail real estate. Unrealized losses in fair value of publicly traded equity instruments, net, included in FFO relate to mark-to-market adjustments of non-retail real estate."]] [[/GREPCENT_TABLE]] 75 Table of Contents The following schedule reconciles consolidated net income to our beneficial share of NOI. [[GREPCENT_TABLE]] [["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the Year"],["\u200b","\u200b","Ended December 31,"],["\u200b","","2023","","2022"],["\u200b","\u200b","(in thousands)"],["Reconciliation of NOI of consolidated entities:","\u200b","\u200b","","","\u200b","\u200b"],["Consolidated Net Income","\u200b","$","2,617,018","\u200b","$","2,452,385"],["Income and other tax expense","\u200b","","81,874","\u200b","","83,512"],["Gain on disposal, exchange, or revaluation of equity interests, net","\u200b","\u200b","(362,019)","\u200b","\u200b","(121,177)"],["Interest expense","\u200b","","854,648","\u200b","","761,253"],["Income from unconsolidated entities","\u200b","","(375,663)","\u200b","","(647,977)"],["Unrealized (gains) losses in fair value of publicly traded equity instruments and derivative instrument, net","\u200b","","(11,892)","\u200b","","61,204"],["Loss (gain) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net","\u200b","","3,056","\u200b","","(5,647)"],["Operating Income Before Other Items","\u200b","","2,807,022","\u200b","","2,583,553"],["Depreciation and amortization","\u200b","","1,262,107","\u200b","","1,227,371"],["Home and regional office costs","\u200b","\u200b","207,618","\u200b","\u200b","184,592"],["General and administrative","\u200b","\u200b","38,513","\u200b","\u200b","34,971"],["Other expenses (1)","\u200b","\u200b","320","\u200b","\u200b","13,413"],["NOI of consolidated entities","\u200b","$","4,315,580","\u200b","$","4,043,900"],["Less: Noncontrolling interest partners share of NOI","\u200b","\u200b","(30,918)","\u200b","\u200b","(27,685)"],["Beneficial NOI of consolidated entities","\u200b","$","4,284,662","\u200b","$","4,016,215"],["Reconciliation of NOI of unconsolidated entities:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net Income","\u200b","$","853,986","\u200b","$","807,435"],["Interest expense","\u200b","","685,193","\u200b","","599,245"],["Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net","\u200b","","(20,529)","\u200b","","(50,336)"],["Operating Income Before Other Items","\u200b","","1,518,650","\u200b","","1,356,344"],["Depreciation and amortization","\u200b","","656,089","\u200b","","666,762"],["Other expenses (1)","\u200b","\u200b","143","\u200b","\u200b","1,309"],["NOI of unconsolidated entities","\u200b","$","2,174,882","\u200b","$","2,024,415"],["Less: Joint Venture partners share of NOI","\u200b","\u200b","(1,132,334)","\u200b","\u200b","(1,059,095)"],["Beneficial NOI of unconsolidated entities","\u200b","$","1,042,548","\u200b","$","965,320"],["Add: Beneficial interest of NOI from TRG","\u200b","\u200b","503,858","\u200b","\u200b","474,214"],["Add: Beneficial interest of NOI from Other Platform Investments and Investments","\u200b","\u200b","399,341","\u200b","\u200b","604,750"],["Beneficial interest of Combined NOI","\u200b","$","6,230,409","\u200b","$","6,060,499"],["Less: Beneficial interest of Corporate and Other NOI Sources (2)","\u200b","","287,231","\u200b","","154,309"],["Less: Beneficial interest of NOI from Other Platform Investments (3)","\u200b","\u200b","138,686","\u200b","\u200b","355,019"],["Less: Beneficial interest of NOI from Investments (4)","\u200b","\u200b","233,562","\u200b","\u200b","238,695"],["Beneficial interest of Portfolio NOI","\u200b","$","5,570,930","\u200b","$","5,312,476"],["Beneficial interest of Portfolio NOI Change","\u200b","\u200b","4.9","%","\u200b","\u200b"]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(1)","Represents the write-off of pre-development costs, our beneficial interest of which was $0.3 million and $11.4 million with respect to consolidated entities and $0.1 million and $0.4 million with respect to our share of unconsolidated entities, for the year ended December 31, 2023 and 2022, respectively."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(2)","Includes income components excluded from portfolio NOI and domestic property NOI (domestic lease termination income, interest income, land sale gains, straight line lease income, above/below market lease adjustments), Simon management company revenues, foreign exchange impact, and other assets."]] [[/GREPCENT_TABLE]] 76 Table of Contents [[GREPCENT_TABLE]] [["(3)","Other Platform Investments include J.C. Penney, SPARC Group, ABG, RGG, and Jamestown."]] [[/GREPCENT_TABLE]] [[GREPCENT_TABLE]] [["(4)","Includes our share of NOI of Kl\u00e9pierre (at constant currency) and other corporate investments."]] [[/GREPCENT_TABLE]]