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What changed in Simon Property Group's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Simon Property Group's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+337 added−296 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in Simon Property Group's 2023 10-K

337 paragraphs added · 296 removed · 242 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeCertain Activities During the past three years, we have: ● issued 354,455 shares of Simon common stock upon the exchange of units in the Operating Partnership; ● issued 751,042 restricted shares of Simon common stock and 108,694 long-term incentive performance units, or LTIP units, net of forfeitures, under The Simon Property Group 1998 Stock Incentive Plan, as amended, or the 1998 Plan, and the Simon Property Group, L.P. 2019 Stock Incentive Plan, or the 2019 Plan; 8 Table of Contents ● purchased 3,075,676 shares of Simon common stock in the open market for $333.0 million pursuant to our Repurchase Programs; ● issued 22,137,500 shares of common stock in a public offering at a public offering price of $72.50 per share, before underwriting discounts and commissions; ● issued 955,705 units in the Operating Partnership as part of the consideration for the acquisition of an 80% interest in TRG; ● redeemed 147,103 units in the Operating Partnership at an average price of $137.17 per unit in cash; ● amended and replaced in its entirety the Operating Partnership’s existing Credit Facility in March 2020, by entering into an unsecured credit facility compromised of (i) an amendment and extension of the Credit Facility and (ii) a $2.0 billion delayed-draw term loan facility, or Term Facility; ● amended the Credit Facility to transition the borrowing rates from LIBOR to successor benchmark indexes in November 2021; ● amended, restated, and extended the Supplemental Facility in October 2021; ● borrowed a maximum amount of $3.9 billion under the Credit Facilities; the outstanding amount of borrowings under the Credit Facility and Supplemental Facility as of December 31, 2022, were $125.0 million and $802.8 million, respectively; ● borrowed a maximum amount of $2.0 billion under the Term Facility; there were no outstanding borrowings as of December 31, 2022; ● there were no outstanding borrowings of Commercial Paper notes as of December 31, 2022; and ● provided annual reports containing financial statements audited by our independent registered public accounting firm and quarterly reports containing unaudited financial statements to our security holders.
Biggest changeWe believe that there are numerous factors that make our properties highly desirable to retailers, including: ● the quality, location and diversity of our properties; ● our management and operational expertise; ● our extensive experience and relationships with retailers, lenders and suppliers; ● our marketing initiatives and consumer focused strategic corporate alliances; and ● the sustainability of physical retail. 8 Table of Contents Certain Activities During the past three years, we have: ● issued 61,251 shares of Simon common stock upon the exchange of units in the Operating Partnership; ● issued 579,197 restricted shares of Simon common stock and 72,442 long-term incentive performance units, or LTIP units, net of forfeitures, under the Simon Property Group, L.P. 2019 Stock Incentive Plan, or the 2019 Plan; ● purchased 3,103,755 shares of Simon common stock in the open market for $321.0 million pursuant to our Repurchase Program; ● issued 1,725,000 units in the Operating Partnership as part of the consideration for the acquisition of an additional 4% interest in TRG, bringing our noncontrolling ownership interest in TRG to 84%; ● redeemed 144,686 units in the Operating Partnership at an average price of $121.61 per unit in cash; ● amended the Credit Facility to transition the borrowing rates from LIBOR to successor benchmark indexes in November 2021; ● amended, restated, extended, and increased our existing $4.0 billion unsecured revolving credit facility on March 14, 2023 with a new $5.0 billion unsecured revolving credit facility. ● amended, restated, and extended the Supplemental Facility in October 2021; ● borrowed a maximum amount of $3.2 billion under the Credit Facilities; the outstanding amount of borrowings under the Credit Facility was $305.0 million as of December 31, 2023.
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%.
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%.
Although we may borrow to fund the payment of dividends, we currently have no expectation that we will regularly do so. The Operating Partnership has a $4.0 billion unsecured revolving credit facility, or the Credit Facility and a $3.5 billion supplemental unsecured revolving credit facility, or Supplemental Facility, or together, the Credit Facilities.
Although we may borrow to fund the payment of dividends, we currently have no expectation that we will regularly do so. The Operating Partnership has a $5.0 billion unsecured revolving credit facility, or the Credit Facility, and a $3.5 billion supplemental unsecured revolving credit facility, or Supplemental Facility, or together, the Credit Facilities.
For a description of our operational strategies and developments in our business during 2022, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K. Other Policies The following is a discussion of our investment policies, financing policies, conflict of interest policies and policies with respect to certain other activities.
For a description of our operational strategies and developments in our business during 2023, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K. Other Policies The following is a discussion of our investment policies, financing policies, conflict of interest policies and policies with respect to certain other activities.
As of December 31, 2022, we are not aware of any environmental conditions or material costs of complying with environmental or other regulations that would have a material adverse effect on our overall business, financial condition, or results of operations.
As of December 31, 2023, we are not aware of any environmental conditions or material costs of complying with environmental or other regulations that would have a material adverse effect on our overall business, financial condition, or results of operations.
The Credit Facility can be extended for two additional six-month periods to June 30, 2025, at our sole option, subject to satisfying certain customary conditions precedent.
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.
For example, the Operating Partnership’s lines of credit and the indentures 5 Table of Contents for the Operating Partnership’s debt securities contain covenants that restrict the total amount of debt of the Operating Partnership to 65%, or 60% in relation to certain debt, of total assets, as defined under the related agreements, and secured debt to 50% of total assets.
For example, the Operating Partnership’s lines of credit and the indentures for the Operating Partnership’s debt securities contain covenants that restrict the total amount of debt of the Operating Partnership to 65%, or 60% in relation to certain debt, of total assets, as defined under the related agreements, and secured debt to 50% of total assets.
The Credit Facility can be increased in the form of additional commitments in an aggregate amount not to exceed $1.0 billion, for a total aggregate size of $5.0 billion, subject to obtaining additional lender commitments and satisfying certain customary conditions precedent. The initial maturity date of the Credit Facility is June 30, 2024.
The Credit Facility can be increased in the form of additional commitments in an aggregate amount 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. The initial maturity date of the Credit Facility is June 30, 2027.
Simon has adopted governance principles governing the function, conduct, selection, orientation and duties of its subsidiaries and Simon’s Board of Directors and the Company, as well as written charters for each of the standing Committees of Simon’s Board of Directors.
Simon has adopted governance principles governing the function, conduct, selection, orientation and duties of its subsidiaries and Simon’s Board of Directors and the Company, as well as written charters for each of the standing 7 Table of Contents Committees of Simon’s Board of Directors.
In addition, the Audit and Compensation and Human Capital Committees 7 Table of Contents of Simon’s Board of Directors are comprised entirely of independent members who meet the additional independence and financial expert requirements of the NYSE as required.
In addition, the Audit and Compensation and Human Capital Committees of Simon’s Board of Directors are comprised entirely of independent members who meet the additional independence and financial expert requirements of the NYSE as required.
McDade 43 Executive Vice President and Chief Financial Officer Adam J. Reuille 48 Senior Vice President and Chief Accounting Officer Donald G. Frey ​ 47 ​ Treasurer and Executive Vice President Kevin M. Kelly ​ 42 ​ Assistant General Counsel and Assistant Secretary ​ The executive officers of Simon serve at the pleasure of Simon’s Board of Directors. Mr.
McDade 44 Executive Vice President and Chief Financial Officer Adam J. Reuille 49 Senior Vice President and Chief Accounting Officer Donald G. Frey ​ 48 ​ Treasurer and Executive Vice President Kevin M. Kelly ​ 43 ​ Assistant General Counsel and Assistant Secretary ​ The executive officers of Simon serve at the pleasure of Simon’s Board of Directors. Mr.
Human Capital At December 31, 2022, we and our affiliates employed approximately 3,300 persons at various properties and offices throughout the United States, of which approximately 800 were part-time. Approximately 1,000 of these employees were located at our corporate headquarters in Indianapolis, Indiana. We believe our employees are the driving force behind our success.
Human Capital At December 31, 2023, we and our affiliates employed approximately 3,000 persons at various properties and offices throughout the United States, of which approximately 500 were part-time. Approximately 1,000 of these employees were located at our corporate headquarters in Indianapolis, Indiana. We believe our employees are the driving force behind our success.
We also own an 80% 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. Internationally, as of December 31, 2022, we had ownership interests in 34 Premium Outlets and Designer Outlet properties primarily located in Asia, Europe and Canada.
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. Internationally, as of December 31, 2023, we had ownership interests in 35 Premium Outlets and Designer Outlet properties primarily located in Asia, Europe and Canada.
As of December 31, 2022, we owned or held an interest in 196 income-producing properties in the United States, which consisted of 94 malls, 69 Premium Outlets, 14 Mills, six lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico.
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.
Information about our Executive Officers The following table sets forth certain information with respect to Simon’s executive officers as of February 23, 2023. ​ ​ ​ ​ ​ Name Age Position David Simon 61 Chairman of the Board, Chief Executive Officer and President John Rulli 66 Chief Administrative Officer Steven E. Fivel 62 General Counsel and Secretary Brian J.
Information about our Executive Officers The following table sets forth certain information with respect to Simon’s executive officers as of February 22, 2024. ​ ​ ​ ​ ​ Name Age Position David Simon 62 Chairman of the Board, Chief Executive Officer and President John Rulli 67 Chief Administrative Officer Steven E. Fivel 63 General Counsel and Secretary Brian J.
As of December 31, 2022, 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.
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.
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 6 Table of Contents 0.650% and 1.400% or (ii) for loans denominated in U.S.
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 our continued compliance with the terms thereof. 6 Table of Contents 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.
Financing Policies Because Simon’s REIT qualification requires us to distribute at least 90% of its REIT taxable income, we regularly access the debt markets to raise the funds necessary to finance acquisitions, develop and redevelop properties, and refinance maturing debt.
Additionally we have and may in the future make investments in entities engaged in non-real estate activities, primarily through a taxable REIT subsidiary, similar to the investments we currently hold in certain retail operations. 5 Table of Contents Financing Policies Because Simon’s REIT qualification requires us to distribute at least 90% of its REIT taxable income, we regularly access the debt markets to raise the funds necessary to finance acquisitions, develop and redevelop properties, and refinance maturing debt.
On May 16, 2022, Simon's Board of Directors authorized a common stock repurchase plan, 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.
On May 9, 2022, Simon’s Board of Directors authorized a common stock repurchase plan commencing on May 16, 2022, or the Repurchase Program.
The Supplemental Facility’s initial borrowing capacity of $3.5 billion may be increased to $4.5 billion during its term. 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 our continued compliance with the terms thereof.
The Supplemental Facility’s initial borrowing capacity of $3.5 billion may be increased to $4.5 billion during its term.
Removed
Additionally we have and may in the future make investments in entities engaged in non-real estate activities, primarily through a taxable REIT subsidiary, similar to the investments we currently hold in certain retail operations.
Added
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.
Removed
We believe that there are numerous factors that make our properties highly desirable to retailers, including: ● the quality, location and diversity of our properties; ● our management and operational expertise; ● our extensive experience and relationships with retailers, lenders and suppliers; ● our marketing initiatives and consumer focused strategic corporate alliances; and ● the sustainability of physical retail.
Added
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.
Added
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. As Simon repurchases shares under these programs, the Operating Partnership repurchases an equal number of units from Simon.
Added
There were no borrowings under the Supplemental Facility as of December 31, 2023; ● there were no outstanding borrowings of Commercial Paper notes as of December 31, 2023; and ● provided annual reports containing financial statements audited by our independent registered public accounting firm and quarterly reports containing unaudited financial statements to our security holders.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe failure to maintain Simon’s or the Subsidiary REITs’ qualifications as REITs or changes in applicable tax laws or regulations could result in adverse tax consequences. ● If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences. 11 Table of Contents ● Complying with REIT requirements might cause us to forgo otherwise attractive acquisition opportunities or liquidate otherwise attractive investments. ● Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted on arm’s-length terms. ● Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our shares. ● The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes. ● REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan. ● Partnership tax audit rules could have a material adverse effect on us. ● Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors. ● Provisions in Simon’s charter and by-laws and in the Operating Partnership’s partnership agreement could prevent a change of control. ● We have a substantial debt burden that could affect our future operations. ● The agreements that govern our indebtedness contain various covenants that impose restrictions on us that might affect our ability to operate freely. ● Disruption in the capital and credit markets may adversely affect our ability to access external financings for our growth and ongoing debt service requirements. ● Adverse changes in our credit ratings could affect our borrowing capacity and borrowing terms. ● An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt on attractive terms, or at all; our hedging interest rate protection arrangements may not effectively limit our interest rate risk. ● We have limited control with respect to some properties that are partially owned or managed by third parties, which may adversely affect our ability to sell or refinance them. ● The Operating Partnership guarantees debt or otherwise provides support for a number of joint venture properties. ● We face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems. ● An increased focus on metrics and reporting related to environmental, social and governance (“ESG”) factors, may impose additional costs and expose us to new risks. ● Our international activities may subject us to risks that are different from or greater than those associated with our domestic operations. ● Our success depends, in part, on our ability to attract, retain and develop talented employees, and our failure to do so, including the loss of any one of our key personnel, could adversely impact our business. ​ Risk Related to Tenant Operations at Our Properties ​ Conditions that adversely affect the general retail environment could materially and adversely affect us. ​ Our primary source of revenue is derived from retail tenants which means that we could be materially and adversely affected by conditions that materially and adversely affect the retail environment generally, including, without limitation: ​ ● domestic issues, such as government policies and regulations, tariffs, energy prices, market dynamics, rising interest rates, inflation and limited growth in consumer income as well as from actual or perceived changes in economic conditions, which can result from global events such as international trade disputes, a foreign debt crisis, foreign currency volatility, natural disasters, war, such as the conflict in Ukraine, epidemics and pandemics, the fear of spread of contagious diseases, civil unrest and terrorism, as well as from; ● levels of consumer spending, changes in consumer confidence, income levels, and fluctuations in seasonal spending in the United States and internationally; 12 Table of Contents ● supply chain disruptions and labor shortages; ● consumers avoiding in-person shopping due to a heightened level of concern for safety in public places due to heightened sensitivity to risks associated with transmission of disease, as occurred during the COVID-19 pandemic, or consumer perception of increased risk of criminal activity and civil unrest, including acts of terrorism, riots, random acts of violence, mass shootings or inappropriate or unacceptable behavior of other patrons; ● significant reductions in international travel and tourism, resulting in fewer international retail consumers; ● consumer perceptions of the safety, convenience and attractiveness of our properties; ● the impact on our retail tenants and demand for retail space at our properties from the increasing use of the Internet by retailers and consumers, which accelerated during the COVID-19 pandemic; ● the creditworthiness of our retail tenants and the availability of new creditworthy tenants and the related impact on our occupancy levels and lease income; ● local real estate conditions, such as an oversupply of, or reduction in demand for, retail space or retail goods, decreases in rental rates and declines in real estate values; ● the willingness of retailers to lease space in our properties at attractive rents, or at all; ● changes in regional and local economies, which may be affected by increased rates of unemployment, increased foreclosures, higher taxes, decreased tourism, industry slowdowns, adverse weather conditions, and other factors; ● increased operating costs and capital expenditures, whether from redevelopments, replacing tenants or otherwise; ● changes in applicable laws and regulations, including tax, environmental, safety and zoning; and ● epidemics, pandemics or other public health crises, like the COVID-19 pandemic, and the governmental reaction thereto. ​ To the extent that any or a portion of these conditions occur, they are likely to impact the retail industry, our retail tenants, the emergence of new tenants, our own investments in certain retailers and brands, the demand for retail space, market rents and rent growth, the vacancy levels at our properties, the value of our properties, which could directly or indirectly materially and adversely affect our financial condition, operating results and overall asset value. ​ Additionally, a portion of our lease income is derived from overage rents based on sales over a stated base amount that directly depend on the sales volume of our retail tenants.
Biggest changeThe failure to maintain Simon’s or the Subsidiary REITs’ qualifications as REITs or changes in applicable tax laws or regulations could result in adverse tax consequences. ● If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, we will cease to qualify as a REIT and suffer other adverse consequences. 11 Table of Contents ● Complying with REIT requirements might cause us to forgo otherwise attractive acquisition opportunities or liquidate otherwise attractive investments. ● Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted on arm’s-length terms. ● Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our shares. ● The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes. ● REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan. ● Partnership tax audit rules could have a material adverse effect on us. ● Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors. ● Provisions in Simon’s charter and by - laws and in the Operating Partnership’s partnership agreement could prevent a change of control. ● We have a substantial debt burden that could affect our future operations. ● The agreements that govern our indebtedness contain various covenants that impose restrictions on us that might affect our ability to operate freely. ● Disruption in the capital and credit markets may increase the cost of capital and may adversely affect our ability to access external financings for our growth and ongoing debt service requirements. ● Adverse changes in our credit ratings could affect our borrowing capacity and borrowing terms. ● An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt on attractive terms, or at all; our hedging interest rate protection arrangements may not effectively limit our interest rate risk. ● We have limited control with respect to some properties that are partially owned or managed by third parties, which may adversely affect our ability to sell or refinance them. ● The Operating Partnership guarantees debt or otherwise provides support for a number of joint venture properties. ● An increased focus on metrics and reporting related to environmental, social and governance (“ESG”) factors, may impose additional costs and expose us to new risks. ● Our success depends, in part, on our ability to attract, motivate, retain and develop talented employees, and our failure to do so, including the loss of any one of our key personnel, could adversely impact our business. ● We face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our computer systems, hardware, technology infrastructure, online sites and related systems. ● Our international activities may subject us to risks that are different from or greater than those associated with our domestic operations.
Although we believe that our portfolio is in substantial compliance with U.S. federal, state and local environmental laws and regulations regarding hazardous or toxic substances, this belief is based on limited testing. Nearly all of our properties have been subjected to Phase I or similar environmental audits.
Although we believe that our portfolio is in substantial compliance with U.S. federal, state and local environmental laws and regulations regarding hazardous or toxic substances, this belief is based on limited testing. Nearly all of our U.S. properties have been subjected to Phase I or similar environmental audits.
Competition for these individuals is intense, and we cannot assure you that we will retain our executive management team and other key employees or that we will be able to attract, retain and/or develop other highly qualified individuals for these positions in the future.
Competition for these individuals is intense, and we cannot assure you that we will retain our executive management team and other key employees or that we will be able to attract, motivate, retain and/or develop other highly qualified individuals for these positions in the future.
We anticipate that the aggregate value of the stock and securities of any TRS and other nonqualifying assets that Simon or each such Subsidiary 20 Table of Contents REIT owns will be less than 25% (or, in the case of securities of TRSs, 20%) of the value of Simon’s or such subsidiary’s total assets, and we will monitor the value of these investments to ensure compliance with applicable ownership limitations.
We anticipate that the aggregate value of the stock and securities of any TRS and other nonqualifying assets that Simon or each such Subsidiary REIT owns will be less than 25% (or, in the case of securities of TRSs, 20%) of the value of Simon’s or such subsidiary’s total assets, and we will monitor the value of these investments to ensure compliance with applicable ownership limitations.
We apply the equity method of accounting to the other 82 properties (the joint venture properties) and our investments in Klépierre (a publicly traded, Paris-based real estate company), The Taubman Realty Group, LLC, or TRG, and Jamestown, as well as our investments in certain entities involved in retail operations, such as J.C.
We apply the equity method of accounting to the other 81 properties (the joint venture properties) and our investments in Klépierre (a publicly traded, Paris-based real estate company), The Taubman Realty Group, LLC, or TRG, and Jamestown, as well as our investments in certain entities involved in retail operations, such as J.C.
Additionally, partners or other owners could have economic or other business interests or goals that are inconsistent with our own business interests or goals, and could be in a position to take actions contrary to our policies or objectives. ​ These investments, and other future similar investments, also have the potential risk of creating impasses on decisions, such as a sale, financing or development, because neither we nor our partner or other owner has full control over the partnership or joint venture.
Additionally, partners or other owners could have economic or other business interests or goals that are inconsistent with our own business interests or goals, and could be in a position to take actions contrary to our policies or objectives. 23 Table of Contents These investments, and other future similar investments, also have the potential risk of creating impasses on decisions, such as a sale, financing or development, because neither we nor our partner or other owner has full control over the partnership or joint venture.
Should these laws or regulations change, the amount of taxes we pay may increase accordingly. ​ If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse consequences. ​ We believe that the Operating Partnership is treated as a partnership for federal income tax purposes.
Should these laws or regulations change, the amount of taxes we pay may increase accordingly. If the Operating Partnership fails to qualify as a partnership for federal income tax purposes, we will cease to qualify as a REIT and suffer other adverse consequences. We believe that the Operating Partnership is treated as a partnership for federal income tax purposes.
If such events occur, and if available relief provisions do not apply: ​ ● Simon or any such subsidiary will not be allowed a deduction for distributions to stockholders in computing taxable income; ● Simon or any such subsidiary will be subject to corporate-level income tax on taxable income at the corporate rate; ● Simon may be subject to the one-percent excise tax on stock repurchases imposed by the 2022 Inflation Reduction Act; ● Simon or any such Subsidiary REIT could be subject to the federal alternative minimum tax for taxable years prior to 2018; and ● unless entitled to relief under relevant statutory provisions, Simon or any such subsidiary will also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost.
If such events occur, and if available relief provisions do not apply: ● Simon or any such subsidiary will not be allowed a deduction for distributions to stockholders in computing taxable income; ● Simon or any such subsidiary will be subject to corporate-level income tax on taxable income at the corporate rate; ● Simon may be subject to the one-percent excise tax on stock repurchases imposed by the 2022 Inflation Reduction Act; ● Simon or any such Subsidiary REIT could be subject to a federal alternative minimum tax for taxable years prior to 2018 or for taxable years commencing after December 31, 2022; and ● unless entitled to relief under relevant statutory provisions, Simon or any such subsidiary will also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost.
A breach or significant and extended disruption in the functioning of our systems, including our primary website, could damage our reputation and cause us to lose customers, tenants and revenues, generate third party claims, cause operational disruption, result in the unintended and/or unauthorized public disclosure or the misappropriation of proprietary, personal identifying and/or confidential information, and require us to incur significant expenses to address and remediate or otherwise resolve these kinds of issues.
A breach or significant and extended disruption in the functioning of our systems, including our primary website, could damage our reputation and cause us to lose customers, tenants and revenues, generate third party claims, cause operational disruption, result in the unintended and/or unauthorized public disclosure or the misappropriation of Confidential Information, and require us to incur significant expenses to address and remediate or otherwise resolve these kinds of issues.
We serve as general partner or property manager for 51 of these 82 joint venture properties; however, certain major decisions, such as approving the operating budget and selling, refinancing, and redeveloping the properties, require the consent of the other owners.
We serve as general partner or property manager for 51 of these 81 joint venture properties; however, certain major decisions, such as approving the operating budget and selling, refinancing, and redeveloping the properties, require the consent of the other owners.
Accordingly, there can be no assurance that Simon or any of the Subsidiary REITs has operated in accordance with these requirements or will continue to operate in a manner so as to qualify or remain qualified as a REIT. ​ If Simon or any of the Subsidiary REITs fail to comply with those provisions, Simon or any such Subsidiary REIT may be subject to monetary penalties or ultimately to possible disqualification as REITs.
Accordingly, there can be no assurance that Simon or any of the Subsidiary REITs has operated in accordance with these requirements or will continue to operate in a manner so as to qualify or remain qualified as a REIT. 18 Table of Contents If Simon or any of the Subsidiary REITs fail to comply with those provisions, Simon or any such Subsidiary REIT may be subject to monetary penalties or ultimately to possible disqualification as REITs.
Refer to the following pages of this section for additional details regarding these summarized risk factors and other additional risk factors identified by the Company. ​ ● Conditions that adversely affect the general retail environment could materially and adversely affect us. ● Some of our properties depend on anchor stores or other large nationally recognized tenants to attract shoppers and we could be materially and adversely affected by the loss of one or more of these anchors or tenants. ● We face potential adverse effects from tenant bankruptcies. ● Vacant space at our properties could materially and adversely affect us. ● We may not be able to lease newly developed properties to or renew leases and relet space at existing properties with an appropriate mix of tenants or at desired rents, if at all. ● Acts of violence, civil unrest or criminal activity and actual or threatened terrorist attacks could adversely affect our business operations. ● We face a wide range of competition that could affect our ability to operate profitably, including e-commerce, and the evolution of consumer preferences and purchasing habits. ● The ongoing COVID-19 pandemic and governmental reactions thereto, as well as other future epidemics, pandemics or public health crises, could have a significant negative impact on our and our tenants’ business, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our shareholders. ● Some of our properties are subject to potential natural or other disasters. ● Some of our potential losses may not be covered by insurance. ● We face risks associated with climate change. ● As owners of real estate, we can face liabilities for environmental contamination, and our efforts to identify environmental liabilities may not be successful. ● We face risks associated with the acquisition, development, redevelopment and expansion of properties. ● Real estate investments are relatively illiquid. ● Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs in the United States.
Refer to the following pages of this section for additional details regarding these summarized risk factors and other additional risk factors identified by the Company. ● Conditions that adversely affect the general retail environment could materially and adversely affect us. ● Some of our properties depend on anchor stores or other large nationally recognized tenants to attract shoppers and we could be materially and adversely affected by the loss of one or more of these anchors or tenants. ● We face potential adverse effects from tenant bankruptcies. ● Vacant space at our properties could materially and adversely affect us. ● We may not be able to lease newly developed properties to or renew leases and relet space at existing properties with an appropriate mix of tenants or at desired rents, if at all. ● Acts of violence, civil unrest or criminal activity, actual or threatened terrorist attacks and inappropriate and unacceptable behavior by consumers at our properties could adversely affect our business operations. ● We face a wide range of competition that could affect our ability to operate profitably, including e-commerce, and the evolution of consumer preferences and purchasing habits. ● Epidemics, pandemics or other public health crisis, and governmental reactions thereto, could have a significant negative impact on our and our tenants’ business, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our shareholders. ● Some of our properties are subject to potential natural or other disasters. ● We face risks associated with climate change. ● Some of our potential losses may not be covered by insurance. ● As owners of real estate, we can face liabilities for environmental contamination, and our efforts to identify environmental liabilities may not be successful. ● We face risks associated with the acquisition, development, redevelopment and expansion of properties. ● Real estate investments are relatively illiquid. ● Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs in the United States.
Department of the Treasury, or the Treasury. Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect us and our investors. We cannot predict how changes in the tax laws might affect our investors and us.
Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect us and our investors. We cannot predict how changes in the tax laws might affect our investors and us.
If we elect to pursue a “mixed use” redevelopment we expose ourselves to risks associated with each non-retail use (e.g. office, residential, hotel and entertainment), and the performance of our retail tenants in such properties may be negatively impacted by delays in opening and/or the performance of such non-retail uses.
If we elect to pursue a “mixed use” 14 Table of Contents redevelopment we expose ourselves to risks associated with each non-retail use (e.g., office, residential, hotel and entertainment), and the performance of our retail tenants in such properties may be negatively impacted by delays in opening and/or the performance of such non-retail uses.
As pressure on these department stores and other national retailers increases, their ability to maintain their stores, meet their obligations both to us and to their external lenders and suppliers, withstand takeover attempts or avoid bankruptcy and/or liquidation may be impaired and result in closures of their stores or their 13 Table of Contents seeking of a lease modification with us.
As pressure on these department stores and other national retailers increases, their ability to maintain their stores, meet their obligations both to us and to their external lenders and suppliers, withstand takeover attempts or avoid bankruptcy and/or liquidation may be impaired and result in closures of their stores or their seeking of a lease modification with us.
We may also be held liable to third parties for personal injury or property damage incurred 17 Table of Contents by the parties in connection with any such substances. The costs of investigation, removal or remediation of hazardous or toxic substances, and related liabilities, may be substantial and could materially and adversely affect us.
We may also be held liable to third parties for personal injury or property damage incurred by the parties in connection with any such substances. The costs of investigation, removal or remediation of hazardous or toxic substances, and related liabilities, may be substantial and could materially and adversely affect us.
Any lease modification could be unfavorable to us as the lessor and could decrease current or future effective rents or expense recovery charges. Certain other tenants are entitled to modify the economic or other terms of, or terminate, their existing leases with us in the event of such closures.
Any lease modification could be unfavorable to us as the lessor and could decrease 13 Table of Contents current or future effective rents or expense recovery charges. Certain other tenants are entitled to modify the economic or other terms of, or terminate, their existing leases with us in the event of such closures.
Over time, declines in our tenants’ sales performance can also negatively impact our ability to sign new and renewal leases at desired rents. ​ Some of our properties depend on anchor stores or other large nationally recognized tenants to attract shoppers and we could be materially and adversely affected by the loss of one or more of these anchors or tenants. ​ Our properties are typically anchored by department stores and other large nationally recognized tenants.
Over time, declines in our tenants’ sales performance can also negatively impact our ability to sign new and renewal leases at desired rents. Some of our properties depend on anchor stores or other large nationally recognized tenants to attract shoppers and we could be materially and adversely affected by the loss of one or more of these anchors or tenants.
Other provisions of Simon’s charter and by-laws could have the effect of delaying or preventing a change of control even if some of Simon’s stockholders or the Operating Partnership’s unitholders or preferred unitholders deem such a change to be in their best interests.
Other 21 Table of Contents provisions of Simon’s charter and by-laws could have the effect of delaying or preventing a change of control even if some of Simon’s stockholders or the Operating Partnership’s unitholders or preferred unitholders deem such a change to be in their best interests.
As a 19 Table of Contents partnership, the Operating Partnership is not subject to federal income tax on its income. Instead, each of its partners, including us, is allocated, and may be required to pay tax with respect to, such partner’s share of its income.
As a partnership, the Operating Partnership is not subject to federal income tax on its income. Instead, each of its partners, including us, is allocated, and may be required to pay tax with respect to, such partner’s share of its income.
As a result, we might be required to liquidate or forgo otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to equity holders.
As a 19 Table of Contents result, we might be required to liquidate or forgo otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to equity holders.
These risks, and the potential impact thereof, may be exacerbated by the volume and complexity of such activity, as well as inflationary pressures, rising interest rates, supply chain disruptions and labor shortages, like those experienced in 2022. We may not be successful in pursuing acquisition, development or redevelopment/expansion opportunities.
These risks, and the potential impact thereof, may be exacerbated by the volume and complexity of such activity, as well as inflationary pressures, rising interest rates, supply chain disruptions and labor shortages. We may not be successful in pursuing acquisition, development or redevelopment/expansion opportunities.
The occurrence of natural disasters at any of our properties, which could become more intense and more volatile in light of climate change, can adversely impact operations and development/redevelopment projects at our properties, increase investment costs to repair or replace damaged properties, increase future property insurance costs and negatively impact our tenants and the tenant demand for lease space.
The occurrence of natural disasters at any of our properties, which could occur more frequently, increase in intensity and may become more volatile in light of climate change, can adversely impact operations and development/redevelopment projects at our properties, increase investment costs to repair or replace damaged properties, increase future property insurance costs and negatively impact our tenants and the tenant demand for lease space.
Our efforts to manage these exposures may not be successful. ​ Our use of interest rate hedging arrangements to manage risk associated with interest rate volatility may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may fail to honor its obligations or that we could be required to fund our contractual payment obligations under such arrangements in relatively large amounts or on short notice.
Our use of interest rate hedging arrangements to manage risk associated with interest rate volatility may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may fail to honor its obligations or that we could be required to fund our contractual payment obligations under such arrangements in relatively large amounts or on short notice.
Governments and other authorities could respond to a resurgence of the COVID-19 pandemic, or other epidemics, pandemics and public health crises, by imposing or re-imposing measures intended to control the spread of disease, including restrictions on freedom of movement, group gatherings and business operations such as travel bans, border closings, business closures, quarantines, stay-at-home, shelter-in-place orders, density limitations and social distancing measures.
Governments and other authorities could respond to epidemics, pandemics or other health crises, by imposing or re-imposing measures intended to control the spread of disease, including restrictions on freedom of movement, group gatherings and business operations such as travel bans, border closings, business closures, quarantines, stay-at-home, shelter-in-place orders, density limitations and social distancing measures.
Tenant preferences 14 Table of Contents for properties may also change over time, like recent trends towards right-sizing portfolios, repositioning space and locations and pursuing new store concepts, and our properties may no longer align with such preferences.
Tenant preferences for properties may also change over time, like recent trends towards right-sizing portfolios, repositioning space and locations and pursuing new store concepts, and our properties may no longer align with such preferences.
When interest rates increase, then so does the interest costs on our unhedged variable rate debt, which could adversely affect our cash flows and our 23 Table of Contents ability to pay principal and interest on our debt and our ability to make distributions to our stockholders.
When interest rates increase, then so does the interest costs on our unhedged variable rate debt, which could adversely affect our cash flows and our ability to pay principal and interest on our debt and our ability to make distributions to our stockholders.
New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect the ability of Simon and certain subsidiaries of the Operating Partnership to qualify to be taxed as REITs and/or the U.S. federal income tax consequences to us and our investors of such qualification.
New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect the ability of Simon and the Subsidiary REITs to qualify to be taxed as REITs and/or the U.S. federal income tax consequences to us and our investors of such qualification.
However, we cannot assure you that: ​ ● previous environmental studies with respect to the portfolio reveal all potential environmental liabilities; ● any previous owner, occupant or tenant of a property did not create any material environmental condition not known to us; ● the current environmental condition of the portfolio will not be affected by tenants and occupants, by the condition of nearby properties, or by other unrelated third parties; or ● future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or the interpretation thereof) will not result in environmental liabilities.
However, we cannot assure you that: ● previous environmental studies with respect to the portfolio reveal all potential environmental liabilities; ● any previous owner, occupant or tenant of a property did not create any material environmental condition not known to us; ● the current environmental condition of the portfolio will not be affected by tenants and occupants, by the condition of nearby properties, or by other unrelated third parties; or ● future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or the interpretation thereof) will not result in environmental liabilities. 17 Table of Contents We face risks associated with the acquisition, development, redevelopment and expansion of properties.
Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) insurance on favorable terms, or at all, increasing the cost of energy at our properties or requiring us to spend funds to repair and protect our properties against such risks.
Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) insurance on favorable terms, or at all, increasing the cost of energy at our properties or requiring us to spend funds to repair and protect our properties against such risks. Some of our potential losses may not be covered by insurance.
Our indebtedness could also have other adverse consequences on us, 22 Table of Contents including reducing our access to capital or increasing our vulnerability to general adverse economic, industry and market conditions.
Our indebtedness could also have other adverse consequences on us, including reducing our access to capital or increasing our vulnerability to general adverse economic, industry and market conditions.
Additionally, a high interest rate environment, as we are currently experiencing, could prevent us from accessing capital at attractive interest rates, which could adversely impact our ability to refinance existing debt at maturity as well as our ability to fund development and/or opportunistic acquisition activities.
Additionally, a high interest rate environment, as we are currently experiencing, and which the Company believes will continue in 2024, could prevent us from accessing capital at attractive interest rates, which could adversely impact our ability to refinance existing debt at maturity as well as our ability to fund development and/or opportunistic acquisition activities.
In the event of any default by a tenant, we may not be able to fully recover, and/or may experience delays and costs in enforcing our rights as landlord to recover, amounts due to us under the terms of our leases with such parties. ​ We face potential adverse effects from tenant bankruptcies. ​ Bankruptcy filings by retailers can occur regularly in the course of our operations.
In the event of any default by a tenant, we may not be able to fully recover, and/or may experience delays and costs in enforcing our rights as landlord to recover, amounts due to us under the terms of our leases with such parties. We face potential adverse effects from tenant bankruptcies.
Penney, RGG, and SPARC Group are managed by third parties. ​ These investments, and other future similar investments, could involve risks that would not be present were a third party not involved, including the possibility that partners or other owners might become bankrupt, suffer a deterioration in their creditworthiness, or fail to fund their share of required capital contributions.
These investments, and other future similar investments, could involve risks that would not be present were a third party not involved, including the possibility that partners or other owners might become bankrupt, suffer a deterioration in their creditworthiness, or fail to fund their share of required capital contributions.
If Simon or the Subsidiary REITs do not have other funds available in these situations, Simon or such subsidiaries could be required to access capital on unfavorable terms (the receipt of which cannot be assured), sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of capital stock or debt securities to make distributions sufficient to enable them to pay out enough of their respective REIT taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and the 4% excise tax in a particular year.
If the applicable REIT does not have other funds available in these situations, it could be required to access capital on unfavorable terms (the receipt of which cannot be assured), sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of capital stock or debt securities to make distributions sufficient to enable it to pay out enough of its REIT taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and the 4% excise tax in a particular year.
Termination of these hedging agreements typically involves costs, such as transaction fees or breakage costs. ​ Risks Related to Joint Ventures ​ We have limited control with respect to some properties that are partially owned or managed by third parties, which may adversely affect our ability to sell or refinance them. ​ As of December 31, 2022, we owned interests in 100 income-producing properties with other parties.
Termination of these hedging agreements typically involves costs, such as transaction fees or breakage costs. Risks Related to Joint Ventures We have limited control with respect to some properties that are partially owned or managed by third parties, which may adversely affect our ability to sell or refinance them.
In addition, if a property is mortgaged to secure payment of indebtedness and income from such property is insufficient to pay that indebtedness, the property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value.
In addition, if a property is mortgaged to secure payment of indebtedness and income from such property is insufficient to pay that indebtedness, the property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value. If any of the foregoing occurs, we could be materially and adversely affected.
Thus, compliance with the REIT requirements may hinder our ability to make certain attractive investments. ​ Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted on arm’s-length terms. ​ We own securities in TRSs and may acquire securities in additional TRSs in the future.
Our ownership of TRSs is subject to certain restrictions, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRSs are not conducted on arm’s-length terms. We own securities in TRSs and may acquire securities in additional TRSs in the future.
We may also face significant disruptions due to natural disasters or other critical incidents. ​ The risk of a security breach or significant disruption has generally increased due to our increased reliance on technology, a rise in the number, intensity, and sophistication of attempted attacks globally, and the permanent nature of remote work as business travel has resumed and people now routinely work remotely outside of normal business hours.
The risk of a security breach or significant disruption has generally increased due to our increased reliance on technology, a rise in the number, intensity, and sophistication of attempted attacks globally, and the permanent nature of remote work as business travel has resumed and people now routinely work remotely outside of normal business hours.
If any of the foregoing occurs, we could be materially and adversely affected. ​ The agreements that govern our indebtedness contain various covenants that impose restrictions on us that might affect our ability to operate freely. ​ We have a variety of unsecured debt, including the Credit Facilities, senior unsecured notes and commercial paper, and secured property level debt.
The agreements that govern our indebtedness contain various covenants that impose restrictions on us that might affect our ability to operate freely. We have a variety of unsecured debt, including the Credit Facilities, senior unsecured notes and commercial paper, and secured property level debt.
Even without strict governmental restrictions, the willingness of consumers to visit our properties may be reduced and our tenants’ businesses adversely affected, based upon many factors, including local transmission rates of disease, the emergence of new variants, the development, availability, distribution, effectiveness and acceptance of existing and new vaccines, the effectiveness and availability of cures or treatments, and overall sensitivity to risks associated with the transmission of diseases.
Even without strict governmental restrictions, such as those put in place during the COVID-19 pandemic, the willingness of consumers to visit our properties may be reduced and our tenants’ businesses adversely affected, based upon many factors, including local transmission rates of disease, the development, availability, distribution, effectiveness and acceptance of existing and new vaccines, the effectiveness and availability of cures or treatments, and overall sensitivity to risks associated with the transmission of diseases.
Further, if we guarantee the property’s financing, our loss could exceed our investment in the project. In the event that these risks were realized at the same time at multiple properties, we could be materially and adversely affected. ​ Real estate investments are relatively illiquid. ​ Our properties represent a substantial portion of our total consolidated assets.
In the event that these risks were realized at the same time at multiple properties, we could be materially and adversely affected. Real estate investments are relatively illiquid. Our properties represent a substantial portion of our total consolidated assets. These investments are relatively illiquid.
The remainder of their respective investments (other than government securities, qualified real estate assets and securities issued by a taxable REIT subsidiary, or TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. ​ Additionally, in general, no more than 5% of the value of Simon’s and the Subsidiary REITs’ total assets (other than government securities, qualified real estate assets and securities issued by a TRS) can consist of the securities of any one issuer, and no more than 20% of the value of their respective total assets can be represented by securities of one or more TRSs.
Additionally, in general, no more than 5% of the value of Simon’s and the Subsidiary REITs’ total assets (other than government securities, qualified real estate assets and securities issued by a TRS) can consist of the securities of any one issuer, and no more than 20% of the value of their respective total assets can be represented by securities of one or more TRSs.
In addition, some of our properties are located at or within a close proximity to tourist destinations, and these properties and our tenants’ businesses were, and may be in the future, heavily and adversely impacted by reductions in travel and tourism resulting from travel bans or restrictions and general concern regarding the risk of travel. ​ Additionally, the impact of the COVID-19 pandemic or other epidemics, pandemics or public health crises, and governmental reactions thereto, on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our shareholders could depend on additional factors, including: ​ ● the financial condition and viability of our tenants, and their ability or willingness to pay rent in full; ● state, local, federal and industry-initiated tenant relief efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent; ● the increased popularity and utilization of e-commerce; ● our ability to renew leases or re-lease available space in our properties on favorable terms or at all, including as a result of a deterioration in the economic and market conditions in the markets in which we own properties or due to restrictions intended to prevent the spread of disease, including any additional government mandated closures of businesses that frustrate our leasing activities; ● a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, all of which were experienced during the COVID-19 pandemic and which may affect our or our tenants' ability to access capital necessary to fund our or their respective business operations or repay, refinance or renew maturing liabilities on a timely basis, on attractive terms, or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and our tenants' ability to meet liquidity and capital expenditure requirements; ● a refusal or failure of one or more lenders under our credit facility to fund their respective financing commitment to us may affect our ability to access capital necessary to fund our business operations and to meet our liquidity and capital expenditure requirements; ● a reduction in the cash flows generated by our properties and the values of our properties that could result in impairments or limit our ability to dispose of them at attractive prices or obtain debt financing secured by our properties; ● the complete or partial closure of one or more of our tenants' manufacturing facilities or distribution centers, temporary or long-term disruption in our tenants' supply chains from local and international suppliers and/or delays in the delivery of our tenants' inventory, any of which could reduce or eliminate our tenants' sales, cause the temporary closure of our tenants' businesses, and/or result in their bankruptcy or insolvency; ● a negative impact on consumer discretionary spending caused by high unemployment levels, reduced economic activity or a severe or prolonged recession; ● our and our tenants' ability to manage our respective businesses to the extent our and their management or personnel (including on-site employees) are impacted in significant numbers or are otherwise not willing, available or allowed to conduct work, including any impact on our tenants' ability to deliver timely information to us that is necessary for us to make effective decisions; and ● our and our tenants' ability to ensure business continuity in the event our or our tenants' continuity of operations plan is (i) not effective or improperly implemented or deployed or (ii) compromised due to increased cyber and remote access activity during such epidemic, pandemic or other public health crisis. 16 Table of Contents To the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks described herein. ​ Risks Related to Real Estate Holdings and Operations ​ Some of our properties are subject to potential natural or other disasters. ​ A number of our properties are located in areas subject to a higher risk of natural disasters such as earthquakes, fires, hurricanes, floods, tornados, hail or tsunamis.
Additionally, the impact of epidemics, pandemics or other public health crises, and governmental reactions thereto, on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our shareholders could depend on additional factors, including: ● the financial condition and viability of our tenants, and their ability or willingness to pay rent in full; ● state, local, federal and industry-initiated tenant relief efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent; ● the increased popularity and further utilization of e-commerce; ● our ability to renew leases or re-lease available space in our properties on favorable terms or at all, including as a result of a deterioration in the economic and market conditions in the markets in which we own properties or due to restrictions intended to prevent the spread of disease, including any government mandated closures of businesses that frustrate our leasing activities; ● a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, which may affect our or our tenants' ability to access capital necessary to fund our or their respective business operations or repay, refinance or renew maturing liabilities on a timely basis, on attractive terms, or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and our tenants' ability to meet liquidity and capital expenditure requirements; ● a refusal or failure of one or more lenders under our existing or future credit facilities to fund their respective financing commitment to us may affect our ability to access capital necessary to fund our business operations and to meet our liquidity and capital expenditure requirements; ● a reduction in the cash flows generated by our properties and the values of our properties that could result in impairments or limit our ability to dispose of them at attractive prices or obtain debt financing secured by our properties; ● the complete or partial closure of one or more of our tenants' manufacturing facilities or distribution centers, temporary or long-term disruption in our tenants' supply chains from local and international suppliers and/or delays in the delivery of our tenants' inventory, any of which could reduce or eliminate our tenants' sales, cause the temporary closure of our tenants' businesses, and/or result in their bankruptcy or insolvency; ● a negative impact on consumer discretionary spending caused by high unemployment levels, reduced economic activity or a severe or prolonged recession; ● our and our tenants' ability to manage our respective businesses to the extent our and their management or personnel (including on-site employees) are impacted in significant numbers or are otherwise not willing, available or allowed to conduct work, including any impact on our tenants' ability to deliver timely information to us that is necessary for us to make effective decisions; and ● our and our tenants' ability to ensure business continuity in the event our or our tenants' continuity of operations plan is (i) not effective or improperly implemented or deployed or (ii) compromised due to increased cyber and remote access activity during such epidemic, pandemic or other public health crisis.
These investments are relatively illiquid. As a result, our ability to sell one or more of our properties or investments in real estate in response to any changes 18 Table of Contents in economic, industry, or other conditions may be limited.
As a result, our ability to sell one or more of our properties or investments in real estate in response to any changes in economic, industry, or other conditions may be limited.
The other owners have participating rights that we consider substantive for purposes of determining control over the joint venture properties’ assets. The remaining joint venture properties, Klépierre, TRG, Jamestown, and our joint ventures with ABG, J.C.
The other owners have participating rights that we consider substantive for purposes of determining control over the joint venture properties’ assets. The remaining joint venture properties, Klépierre, TRG, Jamestown, and our joint ventures with ABG, J.C. Penney, RGG, and SPARC Group are managed by third parties.
There can be no assurance that these rules will not have a material adverse effect on us. ​ Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors. ​ The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process, and by the IRS and the U.S.
Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process, and by the IRS and the U.S. Department of the Treasury, or the Treasury.
Moreover, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. ​ Provisions in Simon’s charter and by-laws and in the Operating Partnership’s partnership agreement could prevent a change of control. ​ Simon’s charter contains a general restriction on the accumulation of shares in excess of 8% of its capital stock.
Moreover, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. Provisions in Simon’s charter and by-laws and in the Operating Partnership’s partnership agreement could prevent a change of control.
We intend to make distributions to the equity holders of Simon and the Subsidiary REITs to comply with the REIT requirements of the Internal Revenue Code. ​ From time to time, Simon and the Subsidiary REITs might generate taxable income greater than their respective cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves, or required debt or amortization payments.
From time to time, Simon and the Subsidiary REITs might generate taxable income greater than their respective cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves, or required debt or amortization payments.
Among other causes, (1) there has historically been an increased number of bankruptcies of anchor stores and other national retailers, as well as store closures, and (2) there has been lower demand from retail tenants for space, due to certain retailers increasing their use of e-commerce websites to distribute their merchandise, with each of (1) and (2) accelerating as a result of the COVID-19 pandemic.
Among other causes, (1) in recent years there had been an increased number of bankruptcies of anchor stores and other national retailers, as well as store closures, and (2) there has been lower demand from retail tenants for space, due to certain retailers increasing their use of e-commerce websites to distribute their merchandise.
We are subject to other risks in connection with any acquisition, development and redevelopment/expansion activities, including the following: ​ ● we may not be able to obtain financing or to refinance loans on favorable terms, or at all; ● we may be unable to obtain zoning, occupancy or other governmental approvals; ● occupancy rates and rents may not meet our projections and the project may not be accretive; ● we may need the consent of third parties such as department stores, anchor tenants, mortgage lenders and joint venture partners, and those consents may be withheld; ● development, redevelopment or expansions may fail to appeal to the demographics of the communities they are intended to serve; and ● acquisitions of new properties will expose us to the liabilities of those properties, some of which we may not be aware of at the time of the acquisition. ​ If a development or redevelopment/expansion project is unsuccessful, either because it is not meeting our expectations when operational or was not completed according to the project planning, we could lose our investment in the project.
We are subject to other risks in connection with any acquisition, development and redevelopment/expansion activities, including the following: ● we may not be able to obtain financing or to refinance loans on favorable terms, or at all; ● we may be unable to obtain zoning, occupancy or other governmental approvals; ● occupancy rates and rents may not meet our projections and the project may not be accretive; ● we may need the consent of third parties such as department stores, anchor tenants, mortgage lenders and joint venture partners, and those consents may be withheld; ● development, redevelopment or expansions may fail to appeal to the demographics of the communities they are intended to serve, including a failure to incorporate the appropriate blend of available space for tenants; ● we may not be able to integrate an acquisition into our existing operations successfully; and ● acquisitions of new properties will expose us to the liabilities of those properties, some of which we may not be aware of at the time of the acquisition.
Examples may include, retailers and restaurants not reporting curbside pick-up sales or online sales fulfilled with store inventory, and tenants reducing store sales by including online returns processed in the store. ​ The ongoing COVID-19 pandemic and governmental reactions thereto, as well as other future epidemics, pandemics or public health crises, could have a significant negative impact on our and our tenants’ business, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our shareholders. ​ The COVID-19 pandemic has had, and resurgences or variants or other epidemics, pandemics or health crises could have, a material negative impact on economic and market conditions around the world and an adverse impact on economic activity in retail real estate.
Examples may include, retailers and restaurants not reporting curbside pick-up sales or online sales fulfilled with store inventory, and tenants reducing store sales by including online returns processed in the store Epidemics, pandemics or other public health crisis, and governmental reactions thereto, could have a significant negative impact on our and our tenants’ business, financial condition, results of operations, cash flow and liquidity and our ability to access the capital markets, satisfy our debt service obligations and make distributions to our shareholders.
We might be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements for qualifying as REITs.
We might be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements for qualifying as REITs. Thus, compliance with the REIT requirements may hinder our ability to make certain attractive investments.
The failure to maintain Simon’s or the Subsidiary REITs’ qualifications as REITs or changes in applicable tax laws or regulations could result in adverse tax consequences. ​ In the United States, Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs under Sections 856 through 860 of the Internal Revenue Code.
Risks Relating to Income Taxes and REIT Rules Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs in the United States. The failure to maintain Simon’s or the Subsidiary REITs’ qualifications as REITs or changes in applicable tax laws or regulations could result in adverse tax consequences.
There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax discussed above. ​ Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our shares. ​ Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates, currently at a maximum federal rate of 20%.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends, which may negatively affect the value of our shares. Income from “qualified dividends” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates, currently at a maximum federal rate of 20%.
Additionally, corporate merger or consolidation activity among department stores and other national retailers typically results in the closure of duplicate or geographically overlapping store locations. ​ If a department store or large nationally recognized tenant were to close its stores at our properties, we may experience difficulty and delay and incur significant expense in re-tenanting the space, as well as in leasing spaces in areas adjacent to the vacant store, at attractive rates, or at all.
If a department store or large nationally recognized tenant were to close its stores at our properties, we may experience difficulty and delay and incur significant expense in re-tenanting the space, as well as in leasing spaces in areas adjacent to the vacant store, at attractive rates, or at all.
Moreover, a failure by any subsidiary of the Operating Partnership that has elected to be taxed as a REIT to qualify as a REIT could also cause Simon to fail to qualify as a REIT, and the same adverse consequences would apply to it and its stockholders.
Moreover, a failure by any Subsidiary REIT could also cause Simon to fail to qualify as a REIT, and the same adverse consequences would apply to such Subsidiary REIT and its stockholders.
If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue it could generate but may remain obligated for any mortgage debt or other financial obligation related to the property. ​ We currently maintain insurance coverage against acts of terrorism on all of our properties in the United States on an “all risk” basis in the amount of up to $1 billion.
If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue it could generate but may remain obligated for any mortgage debt or other financial obligation related to the property.
Moreover, if a property is mortgaged, we may not be able to obtain a release of the lien on that property without the payment of the associated debt and/or a substantial prepayment penalty, which could restrict our ability to dispose of the property, even though the sale might otherwise be desirable. ​ Risks Relating to Income Taxes and REIT Rules ​ Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs in the United States.
Moreover, if a property is mortgaged, we may not be able to obtain a release of the lien on that property without the payment of the associated debt and/or a substantial prepayment penalty, which could restrict our ability to dispose of the property, even though the sale might otherwise be desirable.
In addition, we intend to structure transactions with any TRSs that we own to ensure that they are entered into on arm’s-length terms to avoid incurring the 100% excise tax described above.
In addition, we intend to structure transactions with any TRSs that we own to ensure that they are entered into on arm’s-length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the above limitations or to avoid application of the 100% excise tax discussed above.
In addition, we risk the possibility of being liable for the actions of our partners or other owners. ​ The Operating Partnership guarantees debt or otherwise provides support for a number of joint venture properties. ​ Joint venture debt is the liability of the joint venture and is typically secured by a mortgage on the joint venture property, which is non-recourse to us.
In addition, we risk the possibility of being liable for the actions of our partners or other owners. The Operating Partnership guarantees debt or otherwise provides support for a number of joint venture properties.
Thus, compliance with the REIT requirements may adversely affect our liquidity and our ability to execute our business plan. ​ 21 Table of Contents Partnership tax audit rules could have a material adverse effect on us. ​ Under the rules applicable to U.S. federal income tax audits of partnerships, subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto could be assessed and collected, at the partnership level.
Under the rules applicable to U.S. federal income tax audits of partnerships, subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto could be assessed and collected, at the partnership level.
We cannot assure you that we will be able to obtain the financing we need for the future growth of our business, execution on our business model or to meet our debt service requirements, or that a sufficient amount of financing will be available to us on favorable terms, or at all. ​ Adverse changes in our credit ratings could affect our borrowing capacity and borrowing terms. ​ The Operating Partnership’s outstanding senior unsecured notes, the Credit Facilities, the Commercial Paper program, and Simon’s preferred stock are periodically rated by nationally recognized credit rating agencies.
We cannot assure you that we will be able to obtain the financing we need for the future growth of our business, execution on our business model or to meet our debt service requirements, or that a sufficient amount of financing will be available to us on favorable terms, or at all. 22 Table of Contents Adverse changes in our credit ratings could affect our borrowing capacity and borrowing terms.
While we occasionally enter into hedging agreements to manage our exposure to changes in foreign exchange rates, these agreements may not eliminate foreign currency risk entirely. ​ We may pursue additional investment, ownership, development and redevelopment/expansion opportunities outside the United States. Such international activities carry risks that are different from those we face with our domestic properties and operations.
While we occasionally enter into hedging agreements to manage our exposure to changes in foreign exchange rates, these agreements may not eliminate foreign currency risk entirely. 25 Table of Contents We may pursue additional investment, ownership, development and redevelopment/expansion opportunities outside the United States.
We face risks associated with the acquisition, development, redevelopment and expansion of properties. ​ We regularly acquire and develop new properties and redevelop and expand existing properties, and these activities are subject to various risks.
We regularly acquire and develop new properties and redevelop and expand existing properties, and these activities are subject to various risks.
As a result of the increased bargaining power of creditworthy retail tenants, there is downward pressure on our rental rates and occupancy levels, and this increased bargaining power may also result in us having to increase our spend on tenant improvements and potentially make other lease modifications in order to attract or retain tenants, any of which, in the aggregate, could materially and adversely affect us. ​ We may not be able to lease newly developed properties to or renew leases and relet space at existing properties with an appropriate mix of tenants or at desired rents, if at all. ​ We may not be able to lease new properties to an appropriate mix of tenants that generates optimal customer traffic.
As a result of the increased bargaining power of creditworthy retail tenants, there is downward pressure on our rental rates and occupancy levels, and this increased bargaining power may also result in us having to increase our spend on tenant improvements and potentially make other lease modifications in order to attract or retain tenants, any of which, in the aggregate, could materially and adversely affect us.
Moreover, if Simon or the Subsidiary REITs are compelled to liquidate their investments to meet any of the asset, income or distribution tests, or to repay obligations to lenders, Simon or such subsidiaries may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a 100% tax on any resulting gain if such sales constitute prohibited transactions. ​ In addition to the asset tests set forth above, to qualify to be taxed as REITs, Simon and the Subsidiary REITs must continually satisfy tests concerning, among other things, the sources of their respective income, the amounts they distribute to equity holders and the ownership of their respective shares.
Moreover, if Simon or the Subsidiary REITs are compelled to liquidate their investments to meet any of the asset, income or distribution tests, or to repay obligations to lenders, Simon or such subsidiaries may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a 100% tax on any resulting gain if such sales constitute prohibited transactions.
We also have an equity stake in Klépierre, a publicly traded European real estate company, which operates in 14 countries in Europe.
We also have an equity stake in Klépierre, a publicly traded European real estate company which operates in 14 countries in Europe, and in TRG, which has an interest in regional, super-regional, and outlet malls in the United States and Asia.
In addition, we refinance fixed rate debt at times when we believe rates and other terms are appropriate.
In addition, we refinance fixed rate debt at times when we believe rates and other terms are appropriate. Our efforts to manage these exposures may not be successful.
If insurance is unavailable to us or is unavailable on acceptable terms, or our insurance is not adequate to cover losses from these events, we could be materially and adversely affected. ​ Some of our potential losses may not be covered by insurance. ​ We maintain insurance coverage with third-party carriers who provide a portion of the coverage for specific layers of potential losses, including commercial general liability, fire, flood, extended coverage and rental loss insurance on all of our properties in the United States as well as cyber coverage.
We maintain insurance coverage with third-party carriers who provide a portion of the coverage for specific layers of potential losses, including commercial general liability, fire, flood, extended coverage and rental loss insurance on all of our properties in the United States as well as cyber coverage.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, such characterization is a factual determination (unless a sale or disposition qualifies under certain statutory safe harbors), and no guarantee can be given that the IRS, would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors. ​ REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan. ​ In order for Simon and the Subsidiary REITs to qualify to be taxed as REITs, and assuming that certain other requirements are also satisfied, Simon and each such Subsidiary REIT generally must distribute at least 90% of their respective REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to their respective equity holders each year.
Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, such characterization is a factual determination (unless a sale or disposition qualifies under certain statutory safe harbors), and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors. 20 Table of Contents REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.
Concern around safety risk may impact the willingness of consumers, tenants and tenants’ employees to shop and/or work at our properties, which could result in decreased consumer traffic and decreased sales at our properties, directly and indirectly impacting our revenue and overall asset value. ​ We face a wide range of competition that could affect our ability to operate profitably, including e-commerce, and the evolution of consumer preferences and purchasing habits. ​ Our properties compete with other forms of retailing such as pure online retail websites as well as other types of retail properties such as single user freestanding discounters (Costco, Walmart and Target).
We face a wide range of competition that could affect our ability to operate profitably, including e-commerce, and the evolution of consumer preferences and purchasing habits. Our properties compete with other forms of retailing such as pure online retail websites as well as other types of retail properties such as single user freestanding discounters (Costco, Walmart and Target).
Although we have not seen an increase in tenant bankruptcies in the last two years, in previous years a number of companies in the retail industry, including certain of our tenants, declared bankruptcy, especially during the height of the COVID-19 pandemic.
Bankruptcy filings by retailers can occur regularly in the course of our operations. Although we have not seen an increase in tenant bankruptcies in the last few years, in previous years a number of companies in the retail industry, including certain of our tenants, declared bankruptcy.
Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require us to make improvements to our existing properties or increase taxes and fees assessed on us or our properties. ​ As owners of real estate, we can face liabilities for environmental contamination, and our efforts to identify environmental liabilities may not be successful. ​ Many of our properties contain, or at one time contained, asbestos containing materials or underground storage tanks (primarily related to auto service center establishments or emergency electrical generation equipment), and as a result we may be subject to regulatory action in connection with U.S. federal, state and local laws and regulations relating to hazardous or toxic substances.
Many of our properties contain, or at one time contained, asbestos containing materials or underground storage tanks (primarily related to auto service center establishments or emergency electrical generation equipment), and as a result we may be subject to regulatory action in connection with U.S. federal, state and local laws and regulations relating to hazardous or toxic substances.
Future tenant bankruptcies may strain our resources and impact our ability to successfully execute our re-leasing strategy and could materially and adversely affect us. ​ Vacant space at our properties could materially and adversely affect us. ​ Certain of our properties have had vacant space available for prospective tenants, and those properties may continue to experience, and other properties may commence experiencing, such oversupply in the future.
Certain of our properties have had vacant space available for prospective tenants, and those properties may continue to experience, and other properties may commence experiencing, such oversupply in the future.
Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our common stock. ​ The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes. ​ A REIT’s net income from prohibited transactions is subject to a 100% penalty tax.
Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our common stock.
The partnership tax audit rules apply to the Operating Partnership and its subsidiaries that are classified as partnerships for U.S. federal income tax purposes.
The partnership tax audit rules apply to the Operating Partnership and its subsidiaries that are classified as partnerships for U.S. federal income tax purposes. There can be no assurance that these rules will not have a material adverse effect on us.
Nevertheless, the joint venture’s failure to satisfy its debt obligations could result in the loss of our investment therein. As of December 31, 2022, the Operating Partnership guaranteed joint venture-related mortgage indebtedness of $128.0 million. A default by a joint venture under its debt obligations would expose us to liability 24 Table of Contents under a guaranty.
As of December 31, 2023, the Operating Partnership guaranteed joint venture-related mortgage indebtedness of $139.2 million. A default by a joint venture under its debt obligations would expose us to liability under a guaranty.
Simon’s Board of Directors may, by majority vote, permit exceptions to those levels in circumstances where Simon’s Board of Directors determines that Simon’s ability to qualify as a REIT will not be jeopardized.
Ownership for such purpose is determined based on the number of outstanding shares, voting power or value controlled, whichever is most restrictive. Simon’s Board of Directors may, by majority vote, permit exceptions to those levels in circumstances where it determines that Simon’s ability to qualify as a REIT will not be jeopardized.
If we fail to identify and secure the right blend of tenants at our newly developed and existing properties, our properties may not appeal to the communities they serve.
If we fail to identify and secure the right blend of tenants at our newly developed and existing properties that offer diversified categories and uses, such as retail, specialty entertainment, restaurants, and health and wellness, and that keep up with evolving customer preferences, our properties may not appeal to the communities they serve.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities There were no unregistered purchases of equity securities made by Simon during the quarter ended December 31, 2022. The Operating Partnership Market Information There is no established trading market for units or preferred units. Holders The number of holders of record of units was 240 as of January 31, 2023.
Biggest changeAs Simon repurchases shares under these programs, the Operating Partnership repurchases an equal number of units from Simon. 57 Table of Contents The Operating Partnership Market Information There is no established trading market for units or preferred units. Holders The number of holders of record of units was 230 as of January 31, 2024.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities made by Simon during the quarter ended December 31, 2022. Issuances Under Equity Compensation Plans For information regarding the securities authorized for issuance under our equity compensation plans, see Item 12 of this Annual Report on Form 10-K.
Unregistered Sales of Equity Securities There were no unregistered sales of equity securities made by Simon during the quarter ended December 31, 2023. Issuances Under Equity Compensation Plans For information regarding the securities authorized for issuance under our equity compensation plans, see Item 12 of this Annual Report on Form 10-K.
The distribution rate on the Operating Partnership’s units is equal to the dividend rate on Simon’s common stock. Unregistered Sales of Equity Securities There were no unregistered sales of equity securities made by the Operating Partnership during the quarter ended December 31, 2022.
The distribution rate on the Operating Partnership’s units is equal to the dividend rate on Simon’s common stock. Unregistered Sales of Equity Securities There were no unregistered sales of equity securities made by the Operating Partnership during the quarter ended December 31, 2023.
Distributions The Operating Partnership makes distributions on its units in amounts sufficient to maintain Simon's qualification as a REIT. Simon is required each year to distribute to its stockholders at least 90% of its REIT taxable income after certain 57 Table of Contents adjustments.
Distributions The Operating Partnership makes distributions on its units in amounts sufficient to maintain Simon's qualification as a REIT. Simon is required each year to distribute to its stockholders at least 90% of its REIT taxable income after certain adjustments.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Simon Market Information Simon’s common stock trades on the New York Stock Exchange under the symbol “SPG”. Holders The number of holders of record of common stock outstanding was 1,109 as of January 31, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Simon Market Information Simon’s common stock trades on the New York Stock Exchange under the symbol “SPG”. Holders The number of holders of record of common stock outstanding was 1,080 as of January 31, 2024.
Common stock cash dividends paid during 2022 aggregated $6.90 per share. Common stock cash dividends during 2021 aggregated $7.15 per share. On February 6, 2023, Simon’s Board of Directors declared a quarterly cash dividend for the first quarter of 2023 of $1.80 per share, payable on March 31, 2023 to shareholders of record on March 10, 2023.
Common stock cash dividends paid during 2023 aggregated $7.45 per share. Common stock cash dividends during 2022 aggregated $6.90 per share. 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.
Distributions during 2022 aggregated $6.90 per unit. Distributions during 2021 aggregated $7.15 per unit. On February 6, 2023, Simon’s Board of Directors declared a quarterly cash distribution for the first quarter of 2023 of $1.80 per unit, payable on March 31, 2023 to unitholders of record on March 10, 2023.
Distributions during 2023 aggregated $7.45 per unit. Distributions during 2022 aggregated $6.90 per unit. 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.
Issuer Purchases of Equity Securities During the quarter ended December 31, 2022, the Operating Partnership redeemed 810 units from a limited partner for $0.09 million in cash.
Issuer Purchases of Equity Securities During the quarter ended December 31, 2023, the Operating Partnership redeemed 18,919 units from four limited partners for $2.6 million in cash.
Added
Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number ​ Approximate ​ ​ ​ ​ ​ ​ ​ of shares ​ value of shares ​ ​ ​ ​ ​ ​ purchased as ​ that may yet ​ Total number ​ Average ​ part of publicly ​ be purchased ​ ​ of shares ​ price paid ​ announced ​ under Period purchased per share plans plans (1) October 1, 2023 - October 31, 2023 316,368 ​ $ 108.32 ​ 316,368 ​ $ 1,679,728,717 November 1, 2023 - November 30, 2023 — ​ $ — ​ — ​ $ 1,679,728,717 December 1, 2023 - December 31, 2023 5,738 ​ $ 123.46 ​ 5,738 ​ $ 1,679,020,324 ​ 322,106 ​ $ 108.59 ​ 322,106 ​ ​ ​ (1) On May 9, 2022, Simon’s Board of Directors authorized a common stock repurchase plan commencing on May 16, 2022, or the Repurchase Program.
Added
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.
Added
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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

110 edited+35 added−45 removed66 unchanged
Biggest changeThe following schedule reconciles total FFO and comparable FFO to consolidated net income and, for Simon, diluted net income per share to diluted FFO per share. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 ​ ​ ​ (in thousands) ​ Consolidated Net Income ​ $ 2,452,385 ​ $ 2,568,707 ​ $ 1,277,324 ​ Adjustments to Arrive at FFO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization from consolidated properties ​ 1,214,441 ​ 1,254,039 ​ 1,308,419 ​ Our share of depreciation and amortization from unconsolidated entities, including Klépierre, TRG and other corporate investments (A) ​ 845,784 ​ 887,390 ​ 536,133 ​ (Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net ​ (5,647) ​ (206,855) ​ 114,960 ​ Unrealized losses in fair value of publicly traded equity instruments, net, excluded from FFO (B) ​ ​ — ​ ​ 3,177 ​ ​ 19,632 ​ Net (income) loss attributable to noncontrolling interest holders in properties ​ (2,738) ​ 6,053 ​ 4,378 ​ Noncontrolling interests portion of depreciation and amortization, gain on consolidation of properties, and gain on disposal of properties ​ (18,234) ​ (20,295) ​ (18,631) ​ Preferred distributions and dividends ​ (5,252) ​ (5,252) ​ (5,252) ​ FFO of the Operating Partnership ​ $ 4,480,739 ​ $ 4,486,964 ​ $ 3,236,963 ​ Unrealized losses in fair value of publicly traded equity instruments, net, included in FFO (B) ​ ​ 61,204 ​ ​ 4,918 ​ $ — ​ Non-cash gain related to the reversal of a deferred tax liability within an international investment ​ ​ — ​ ​ (118,428) ​ ​ — ​ Gain on disposal, exchange, or revaluation of equity interests, net (after tax) ​ ​ (88,314) ​ ​ (122,763) ​ ​ — ​ Debt related charges ​ ​ — ​ ​ 51,841 ​ ​ — ​ Comparable FFO of the Operating Partnership ​ $ 4,453,629 ​ $ 4,302,532 ​ $ 3,236,963 ​ FFO allocable to limited partners ​ ​ 564,946 ​ ​ 564,407 ​ ​ 424,063 ​ Dilutive FFO allocable to common stockholders ​ $ 3,915,793 ​ $ 3,922,557 ​ $ 2,812,900 ​ Diluted net income per share to diluted FFO per share reconciliation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted net income per share ​ $ 6.52 ​ $ 6.84 ​ $ 3.59 ​ Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Klépierre, TRG and other corporate investments, net of noncontrolling interests portion of depreciation and amortization (A) ​ 5.44 ​ 5.64 ​ 5.14 ​ (Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net ​ (0.01) ​ (0.55) ​ 0.32 ​ Unrealized losses in fair value of publicly traded equity instruments, net, excluded from FFO (B) ​ ​ — ​ ​ 0.01 ​ ​ 0.06 ​ Diluted FFO per share ​ $ 11.95 ​ $ 11.94 ​ $ 9.11 ​ Unrealized losses in fair value of publicly traded equity instruments, net, included in FFO (B) ​ ​ 0.16 ​ ​ 0.01 ​ $ — ​ Non-cash gain related to the reversal of a deferred tax liability within an international investment ​ ​ — ​ ​ (0.32) ​ ​ — ​ Gain on disposal, exchange, or revaluation of equity interests, net (after tax) ​ ​ (0.24) ​ ​ (0.33) ​ ​ — ​ Debt related charges ​ ​ — ​ ​ 0.14 ​ ​ — ​ Comparable FFO per share ​ $ 11.87 ​ $ 11.44 ​ $ 9.11 ​ Basic and Diluted weighted average shares outstanding ​ 327,817 ​ 328,587 ​ 308,738 ​ Weighted average limited partnership units outstanding ​ 47,295 ​ 47,280 ​ 46,544 ​ Basic and Diluted weighted average shares and units outstanding ​ 375,112 ​ 375,867 ​ 355,282 ​ (A) The twelve months ended December 31, 2022 and 2021 include amortization of our excess investment in TRG of $195.3 million and $201.7 million, respectively.
Biggest changeThe following schedule reconciles total FFO to consolidated net income and, for Simon, diluted net income per share to diluted FFO per share. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 ​ ​ ​ ​ (in thousands) ​ Consolidated Net Income ​ ​ $ 2,617,018 ​ $ 2,452,385 ​ $ 2,568,707 ​ Adjustments to Arrive at FFO: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization from consolidated properties ​ ​ 1,250,550 ​ 1,214,441 ​ 1,254,039 ​ Our share of depreciation and amortization from unconsolidated entities, including Klépierre, TRG and other corporate investments ​ ​ 841,862 ​ 845,784 ​ 887,390 ​ Loss (gain) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net ​ ​ 3,056 ​ (5,647) ​ (206,855) ​ Unrealized losses in fair value of publicly traded equity instruments, net, excluded from FFO (A) ​ ​ ​ — ​ ​ — ​ ​ 3,177 ​ Net loss (income) attributable to noncontrolling interest holders in properties ​ ​ 1,336 ​ (2,738) ​ 6,053 ​ Noncontrolling interests portion of depreciation and amortization, gain on consolidation of properties, and gain on disposal of properties ​ ​ (22,719) ​ (18,234) ​ (20,295) ​ Preferred distributions and dividends ​ ​ (5,237) ​ (5,252) ​ (5,252) ​ FFO of the Operating Partnership ​ ​ $ 4,685,866 ​ $ 4,480,739 ​ $ 4,486,964 ​ FFO allocable to limited partners ​ ​ ​ 597,727 ​ ​ 564,946 ​ ​ 564,407 ​ Dilutive FFO allocable to common stockholders ​ ​ $ 4,088,139 ​ $ 3,915,793 ​ $ 3,922,557 ​ Diluted net income per share to diluted FFO per share reconciliation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted net income per share ​ ​ $ 6.98 ​ $ 6.52 ​ $ 6.84 ​ Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Klépierre, TRG and other corporate investments, net of noncontrolling interests portion of depreciation and amortization ​ ​ 5.52 ​ 5.44 ​ 5.64 ​ Loss (gain) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net ​ ​ 0.01 ​ (0.01) ​ (0.55) ​ Unrealized losses in fair value of publicly traded equity instruments, net, excluded from FFO (A) ​ ​ ​ — ​ ​ — ​ ​ 0.01 ​ Diluted FFO per share ​ ​ $ 12.51 ​ $ 11.95 ​ $ 11.94 ​ Basic and Diluted weighted average shares outstanding ​ ​ 326,808 ​ 327,817 ​ 328,587 ​ Weighted average limited partnership units outstanding ​ ​ 47,782 ​ 47,295 ​ 47,280 ​ Basic and Diluted weighted average shares and units outstanding ​ ​ 374,590 ​ 375,112 ​ 375,867 ​ (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.
We own a 40% interest in this center. ● During the third quarter of 2022, we disposed of one retail property. 64 Table of Contents ● During the fourth quarter of 2021, we disposed of our noncontrolling interest in one retail property. ● 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. ● On October 15, 2021, we opened Jeju Premium Outlets, a 92,000 square foot center in Jeju Province, South Korea.
We own a 40% interest in this center. 64 Table of Contents ● During the third quarter of 2022, we disposed of one retail property. ● During the fourth quarter of 2021, we disposed of our noncontrolling interest in one retail property. ● 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. ● On October 15, 2021, we opened Jeju Premium Outlets, a 92,000 square foot center in Jeju Province, South Korea.
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%.
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%.
To support our growth, we employ a three-fold capital strategy: ● provide the capital necessary to fund growth, ● maintain sufficient flexibility to access capital in many forms, both public and private, including but not limited to, having in place, the Operating Partnership’s $4.0 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 ● manage our overall financial structure in a fashion that preserves our investment grade credit ratings.
To support our growth, we employ a three-fold capital strategy: ● provide the capital necessary to fund growth, ● maintain sufficient flexibility to access capital in many forms, both public and private, including but not limited to, having in place, the Operating Partnership’s $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 ● manage our overall financial structure in a fashion that preserves our investment grade credit ratings.
We consider FFO, comparable 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.
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.
Our noncontrolling interest in ABG is approximately 12.3% after this transaction. ● 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. ● On November 3, 2022, we opened Fukaya-Hanazono Premium Outlets, a 296,300 square foot center in Fukaya City, Japan.
Our noncontrolling interest in ABG was approximately 12.3% after this transaction. ● 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. ● On November 3, 2022, we opened Fukaya-Hanazono Premium Outlets, a 296,300 square foot center in Fukaya City, Japan.
On February 18, 2021 the SPAC announced the pricing of its initial public offering, which was consummated on February 23, 2021, generating 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.
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.
We also own an 80% 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.
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.
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 $5.0 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.
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 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 68 Table of Contents 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.
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.
Malls and Premium Outlets: ● properties that are consolidated in our consolidated financial statements, ● properties we account for under the equity method of accounting as joint ventures, and ● the foregoing two categories of properties on a total portfolio basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ %/Basis Point ​ ​ ​ ​ %/Basis Point ​ ​ ​ ​ ​ 2022 Change (1) 2021 Change (1) 2020 ​ U.S.
Malls and Premium Outlets: ● properties that are consolidated in our consolidated financial statements, ● properties we account for under the equity method of accounting as joint ventures, and ● the foregoing two categories of properties on a total portfolio basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ %/Basis Point ​ ​ ​ ​ %/Basis Point ​ ​ ​ ​ ​ 2023 Change (1) 2022 Change (1) 2021 ​ U.S.
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, 2022, we were in compliance with all covenants of our unsecured debt.
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.
We determine FFO to be our share of consolidated net income computed in accordance with GAAP: ● excluding real estate related depreciation and amortization, ● excluding gains and losses from extraordinary items, ● excluding gains and losses from the sale, disposal or property insurance recoveries of, or any impairment related to, depreciable retail operating properties, 75 Table of Contents ● plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and ● all determined on a consistent basis in accordance with GAAP.
We determine FFO to be our share of consolidated net income computed in accordance with GAAP: ● excluding real estate related depreciation and amortization, ● excluding gains and losses from extraordinary items, ● excluding gains and losses from the sale, disposal or property insurance recoveries of, or any impairment related to, depreciable retail operating properties, ● plus the allocable portion of FFO of unconsolidated joint ventures based upon economic ownership interest, and ● all determined on a consistent basis in accordance with GAAP.
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 2022.
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.
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 72 Table of Contents million non-recourse mortgage loans. We also disposed of our interest in an unconsolidated property resulting in a gain of $3.4 million.
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.
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: ● do not represent cash flow from operations as defined by GAAP, ● should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and ● are not an alternative to cash flows as a measure of liquidity.
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: ● do not represent cash flow from operations as defined by GAAP, 74 Table of Contents ● should not be considered as an alternative to net income determined in accordance with GAAP as a measure of operating performance, and ● are not an alternative to cash flows as a measure of liquidity.
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 65 Table of Contents offset by the issuances of Euro and USD bonds and interest increases due to variable rates in 2022.
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.
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 2023 or 2024 is $199 million, primarily funded through reinvested joint venture cash flow and construction loans.
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.
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) benefit in the consolidated statements of operations and comprehensive income.
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.
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, such as in Ukraine, 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; the increased focus on ESG metrics and reporting; 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.
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.
For the purposes of the following comparisons between the years ended December 31, 2022 and 2021 and the years ended December 31, 2021 and 2020, the above transactions are referred to as the property transactions.
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.
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 63 Table of Contents relevant market multiples, leasing prospects and local market information and whether certain impairments are other-than-temporary.
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.
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 to reasonable cause and certain other conditions were met.
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 63 Table of Contents to reasonable cause and certain other conditions were met.
At December 31, 2022, our consolidated subsidiaries were the borrowers under 38 non-recourse mortgage notes secured by mortgages on 41 properties and other assets, including two separate pools of cross-defaulted and cross-collateralized mortgages encumbering a total of five properties.
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.
We seek a stabilized return on invested capital in the range of 7-10% for all of our new development, expansion and redevelopment projects. Summary of Capital Expenditures.
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.
For a summary of our significant accounting policies, see Note 3 of the notes to the consolidated financial statements. ● We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and account for our leases as operating leases.
For a summary of our significant accounting policies, see Note 3 of the notes to the consolidated financial statements. ● 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 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 2023. 67 Table of Contents Cash Flows Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $4.2 billion during 2022.
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.
Joint Venture Formation Activity and Other Investment Activity 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.
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.
Borrowings in currencies other than the U.S. dollar are limited to 95% of the maximum revolving credit amount, as defined. The initial maturity date of the Credit Facility is June 30, 2024. The Credit Facility can be extended for two additional six-month periods to June 30, 2025, at our sole option, subject to satisfying certain customary conditions precedent.
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.
The 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, 2022, we had no outstanding balance under the Commercial Paper program.
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.
(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. (3) Other Platform Investments include J.C. Penney, SPARC, ABG, and RGG.
(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. 76 Table of Contents (3) Other Platform Investments include J.C. Penney, SPARC Group, ABG, RGG, and Jamestown.
As Simon repurchased shares under this program, the Operating Partnership repurchased an equal number of units from Simon. 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.
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.
The weighted average years to maturity of our consolidated indebtedness was 7.5 years and 7.8 years at December 31, 2022 and 2021, respectively.
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.
These are included in a gain on acquisitions 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.
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.
Current Leasing Activities During the twelve months ended December 31, 2022, we signed 1,262 new leases and 1,517 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.
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.
The weighted average interest rate was 2.15% for the year ended December 31, 2022. 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.
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.
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, 2022, the Operating Partnership guaranteed joint venture-related mortgage indebtedness of $128.0 million.
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.
The Supplemental Facility’s borrowing capacity of $3.5 billion may be increased 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 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.
As of December 31, 2022, we owned or held an interest in 196 income-producing properties in the United States, which consisted of 94 malls, 69 Premium Outlets, 14 Mills, six lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico.
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 own a 23.2% interest in this center. ● 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%.
We own a 23.2% interest in this center. ● 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.
The information used to prepare these statistics has been supplied by the managing venture partner. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, %/basis point December 31, %/basis point December 31, ​ ​ 2022 ​ Change ​ 2021 ​ Change ​ 2020 Ending Occupancy ​ ​ 99.8% ​ 0 bps ​ ​ 99.8% ​ +30 bps ​ ​ 99.5% Average Base Minimum Rent per Square Foot ​ ¥ 5,779 ​ 4.90% ​ ¥ 5,509 ​ 1.14% ​ ¥ 5,447 ​ 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.
The information used to prepare these statistics has been supplied by the managing venture partner. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, %/basis point December 31, %/basis point December 31, ​ ​ 2023 ​ Change ​ 2022 ​ Change ​ 2021 Ending Occupancy ​ ​ 99.7% ​ -10 bps ​ ​ 99.8% ​ 0 bps ​ ​ 99.8% Average Base Minimum Rent per Square Foot ​ ¥ 5,494 ​ -4.93% ​ ¥ 5,779 ​ 4.90% ​ ¥ 5,509 ​ 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.
Internationally, as of December 31, 2022, we had ownership in 34 Premium Outlets and Designer Outlet properties primarily located in Asia, Europe, and Canada.
Internationally, as of December 31, 2023, we had ownership in 35 Premium Outlets and Designer Outlet properties primarily located in Asia, Europe, and Canada.
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: ● excess cash generated from operating performance and working capital reserves, ● borrowings on the Credit Facilities and Commercial Paper program, ● additional secured or unsecured debt financing, or ● additional equity raised in the public or private markets.
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: ● excess cash generated from operating performance and working capital reserves, ● borrowings on the Credit Facilities and Commercial Paper program, ● additional secured or unsecured debt financing, or ● additional equity raised in the public or private markets. 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.
Dividends, Distributions and Stock Repurchase Program Simon paid a common stock dividend of $1.80 per share in the fourth quarter of 2022 and $6.90 per share for the year ended December 31, 2022. The Operating Partnership paid distributions per unit for the same amounts.
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.
(4) Includes our share of NOI of Klépierre (at constant currency) and other corporate investments. 77 Table of Contents
(4) Includes our share of NOI of Klépierre (at constant currency) and other corporate investments.
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.
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.
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 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.
The following table summarizes total capital expenditures on consolidated properties on a cash basis (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 New Developments ​ $ 108 ​ $ 96 ​ $ 27 ​ Redevelopments and Expansions ​ 283 ​ 300 ​ 399 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tenant Allowances ​ 207 ​ 127 ​ 53 ​ Operational Capital Expenditures ​ 52 ​ 5 ​ 5 ​ Total ​ $ 650 ​ $ 528 ​ $ 484 ​ ​ ​ International Development Activity We typically reinvest net cash flow from our international joint ventures to fund future international development activity.
The following table summarizes total capital expenditures on consolidated properties on a cash basis (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 New Developments ​ $ 156 ​ $ 108 ​ $ 96 ​ Redevelopments and Expansions ​ 328 ​ 283 ​ 300 ​ Tenant Allowances ​ 209 ​ 207 ​ 127 ​ Operational Capital Expenditures ​ 100 ​ 52 ​ 5 ​ Total ​ $ 793 ​ $ 650 ​ $ 528 ​ ​ ​ International Development Activity We typically reinvest net cash flow from our international joint ventures to fund future international development activity.
Our share of the costs of all new development, redevelopment and expansion projects currently under construction is approximately $980 million. Simon’s share of remaining net cash funding required to complete the new development and redevelopment projects currently under construction is approximately $239 million. We expect to fund these capital projects with cash flows from operations.
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.
As of December 31, 2022, 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.
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.
Malls and Premium Outlets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending Occupancy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ 94.9% ​ 140 bps ​ ​ 93.5% ​ 200 bps ​ ​ 91.5% ​ Unconsolidated ​ ​ 94.9% ​ 180 bps ​ ​ 93.1% ​ 220 bps ​ ​ 90.9% ​ Total Portfolio ​ ​ 94.9% ​ 150 bps ​ ​ 93.4% ​ 210 bps ​ ​ 91.3% ​ Average Base Minimum Rent per Square Foot ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 53.95 ​ 2.6% ​ $ 52.59 ​ -2.6% ​ $ 53.98 ​ Unconsolidated ​ $ 58.36 ​ 1.4% ​ $ 57.55 ​ -5.6% ​ $ 60.97 ​ Total Portfolio ​ $ 55.13 ​ 2.3% ​ $ 53.91 ​ -3.4% ​ $ 55.80 ​ U.S.
Malls and Premium Outlets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending Occupancy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ 95.7% ​ 80 bps ​ ​ 94.9% ​ 140 bps ​ ​ 93.5% ​ Unconsolidated ​ ​ 96.1% ​ 120 bps ​ ​ 94.9% ​ 180 bps ​ ​ 93.1% ​ Total Portfolio ​ ​ 95.8% ​ 90 bps ​ ​ 94.9% ​ 150 bps ​ ​ 93.4% ​ Average Base Minimum Rent per Square Foot ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ $ 55.47 ​ 2.8% ​ $ 53.95 ​ 2.6% ​ $ 52.59 ​ Unconsolidated ​ $ 60.59 ​ 3.8% ​ $ 58.36 ​ 1.4% ​ $ 57.55 ​ Total Portfolio ​ $ 56.82 ​ 3.1% ​ $ 55.13 ​ 2.3% ​ $ 53.91 ​ U.S.
Malls and Premium Outlets portfolio, comprising approximately 9.1 million square feet, of which 7.0 million square feet related to consolidated properties. During 2021, we signed 992 new leases and 1,460 renewal leases with a fixed minimum rent, comprising approximately 8.3 million square feet, of which 6.5 million square feet related to consolidated properties.
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 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 $87.7 million during 2022 to $621.6 million as of December 31, 2022 as further discussed below.
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.
In 2021, Simon paid dividends of $1.65 and $7.15 per share for the three and twelve month periods ended December 31, 2021, respectively. 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 December 31, 2022, we had an aggregate available borrowing capacity of approximately $6.6 billion under the Facilities, net of outstanding borrowings of $927.8 million and letters of credit of $10.0 million. For the year ended December 31, 2022, the maximum aggregate outstanding balance under the Credit Facilities was $1.2 billion and the weighted average outstanding balance was $260.7 million.
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.
On February 6, 2023, Simon’s Board of Directors declared a quarterly cash dividend for the first quarter of 2023 of $1.80 per share, payable on March 31, 2023 to shareholders of record on March 10, 2023. The distribution rate on units is equal to the dividend rate on common stock.
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.
Results of Operations The following acquisitions, dispositions, and openings of consolidated properties affected our consolidated results in the comparative periods: ● On June 17, 2022, we acquired an additional interest in Gloucester Premium Outlets from a joint venture, resulting in the consolidation of this property. ● During the second quarter of 2022, we disposed of one retail property. ● During 2021, we disposed of three retail properties. ● During the first quarter of 2021, we consolidated one Designer Outlet property in Europe that had previously been accounted for under the equity method. ● During the fourth quarter of 2020, we disposed of one consolidated retail property.
We own a 74% interest in this center. ● On June 17, 2022, we acquired an additional interest in Gloucester Premium Outlets from a joint venture, resulting in the consolidation of this property. ● During the second quarter of 2022, we disposed of one retail property. ● During 2021, we disposed of three retail properties. ● During the first quarter of 2021, we consolidated one Designer Outlet property in Europe that had previously been accounted for under the equity method.
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.
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.
TRG: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending Occupancy ​ 94.5% ​ 330 bps ​ 91.2% ​ 60 bps ​ 90.6% ​ Average Base Minimum Rent per Square Foot ​ $ 61.76 ​ 5.2% ​ $ 58.69 ​ 5.3% ​ $ 55.75 ​ The Mills: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending Occupancy ​ 98.2% ​ 60 bps ​ 97.6% ​ 230 bps ​ 95.3% ​ Average Base Minimum Rent per Square Foot ​ $ 34.89 ​ 3.2% ​ $ 33.80 ​ 0.1% ​ $ 33.77 ​ (1) Percentages may not recalculate due to rounding.
TRG: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending Occupancy ​ 95.7% ​ 120 bps ​ 94.5% ​ 330 bps ​ 91.2% ​ Average Base Minimum Rent per Square Foot ​ $ 65.01 ​ 5.3% ​ $ 61.76 ​ 5.2% ​ $ 58.69 ​ The Mills: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending Occupancy ​ 97.8% ​ -40 bps ​ 98.2% ​ 60 bps ​ 97.6% ​ Average Base Minimum Rent per Square Foot ​ $ 36.38 ​ 4.3% ​ $ 34.89 ​ 3.2% ​ $ 33.80 ​ (1) Percentages may not recalculate due to rounding.
Portfolio NOI increased 5.7% in 2022 as compared to 2021. Average base minimum rent for U.S. Malls and Premium Outlets increased 2.3% to $55.13 psf as of December 31, 2022, from $53.91 psf as of December 31, 2021. Ending occupancy for our U.S.
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.
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, 2022 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Our ​ Our Share of ​ Our Share of ​ Projected/Actual ​ ​ ​ ​ Leasable ​ Ownership ​ Projected Net Cost ​ Projected Net Cost ​ Opening Property Location Area (sqft) Percentage (in Local Currency) (in USD) (1) Date New Development Projects: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fukaya-Hanazono Premium Outlets ​ Fukaya City, Japan ​ 296,300 ​ 40% ​ JPY 6,153 ​ $ 46.9 ​ Opened Oct. - 2022 Paris-Giverny Designer Outlet ​ Vernon (Normandy), France ​ 228,000 ​ 74% ​ EUR 128.9 ​ $ 137.9 ​ Apr. - 2023 Expansion: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Busan Premium Outlet Phase 2 ​ Busan, South Korea ​ 194,000 ​ 50% ​ KRW 72,933 ​ $ 57.8 ​ Oct. - 2024 (1) USD equivalent based upon December 31, 2022 foreign currency exchange rates.
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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Our ​ Our Share of ​ Our Share of ​ Projected/Actual ​ ​ ​ ​ Leasable ​ Ownership ​ Projected Net Cost ​ Projected Net Cost ​ Opening Property Location Area (sqft) Percentage (in Local Currency) (in USD) (1) Date New Development Projects: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paris-Giverny Designer Outlet ​ Vernon, France ​ 228,000 ​ 74% ​ EUR 136.8 ​ $ 151.0 ​ Opened Apr. - 2023 Jakarta Premium Outlets ​ Jakarta, Indonesia ​ 300,000 ​ 50% ​ IDR 931,782 ​ $ 60.5 ​ Feb. - 2025 Expansion: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Busan Premium Outlet Phase 2 ​ Busan, South Korea ​ 194,000 ​ 50% ​ KRW 72,933 ​ $ 56.3 ​ Oct. - 2024 (1) USD equivalent based upon December 31, 2023 foreign currency exchange rates.
On December 31, 2022 we had an aggregate available borrowing capacity of $6.6 billion under the Facilities. The maximum aggregate outstanding balance under the Facilities during the year ended December 31, 2022 was $1.2 billion and the weighted average outstanding balance was $260.7 million. Letters of credit of $10.0 million were outstanding under the Facilities as of December 31, 2022.
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.
Simon’s net income attributable to noncontrolling interests increased $154.3 million due to an increase in the net income of the Operating Partnership. 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 9.0% of our total consolidated debt at December 31, 2022.
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.
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 our joint venture properties may initiate these provisions (subject to any applicable lock up or similar restrictions).
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).
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 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.
We also grow by generating supplemental revenues from the following activities: ● 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, 59 Table of Contents ● offering property operating services to our tenants and others, including waste handling and facility services, and the provision of energy services, ● selling or leasing land adjacent to our properties, commonly referred to as “outlots” or “outparcels,” and ● generating interest income on cash deposits and investments in loans, including those made to related entities .
We seek to accomplish this growth through the following: ● attracting and retaining high quality tenants and utilizing economies of scale to reduce operating expenses, ● expanding and re-tenanting existing highly productive locations at competitive rental rates, ● selectively acquiring or increasing our interests in high quality real estate assets or portfolios of assets, ● generating consumer traffic in our retail properties through marketing initiatives and strategic corporate alliances, and ● selling selective non-core assets. 59 Table of Contents We also grow by generating supplemental revenues from the following activities: ● 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, ● offering property operating services to our tenants and others, including waste handling and facility services, and the provision of energy services, ● selling or leasing land adjacent to our properties, commonly referred to as “outlots” or “outparcels,” and ● generating interest income on cash deposits and investments in loans, including those made to related entities .
Simon’s net income attributable to noncontrolling interests decreased $6.2 million due to a decrease in the net income of the Operating Partnership. Year Ended December 31, 2021 vs. Year Ended December 31, 2020 Lease income increased $434.4 million, of which the property transactions accounted for a $17.6 million decrease. Comparable lease income increased $452.0 million, or 10.6%.
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%.
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. On June 1, 2021, we and our partner, ABG, acquired the intellectual property of Eddie Bauer.
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.
Subsequent to December 31, 2022, 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%. This interest rate swap matures on January 17, 2024.
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.
Our assessment of collectability 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’s financial condition, liquidity and capital resources, including declines in such conditions due to, or amplified by, the COVID-19 pandemic.
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’s financial condition, liquidity and capital resources.
This increase was primarily due to an increase in the effective overall borrowing rate on variable rate debt of 273 basis points (3.93% at December 31, 2022 as compared to 1.20% at December 31, 2021) offset by a decrease in the effective overall borrowing rate on fixed rate debt of 13 basis points (3.15% at December 31, 2022 as compared to 3.28% at December 31, 2021).
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.
In addition, we had net repayments of debt from our debt financing and repayment activities of $0.3 billion in 2022.
In addition, we had net proceeds of debt from our debt financing and repayment activities of $971.3 million in 2023.
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, comparable FFO, diluted FFO per share, NOI, and portfolio NOI.
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.
These activities are further discussed below under “Financing and Debt.” During 2022, we also: ● funded the acquisition of a noncontrolling interest in Jamestown for cash consideration of $173.4 million, ● paid stockholder dividends and unitholder distributions totaling approximately $2.6 billion and preferred unit distributions totaling $5.3 million, ● funded consolidated capital expenditures of $650.0 million (including development and other costs of $108.2 million, redevelopment and expansion costs of $282.5 million, and tenant costs and other operational capital expenditures of $259.3 million), ● funded investments in unconsolidated entities of $235.8 million, and ● funded the repurchase of $180.4 million of Simon’s common stock.
These activities are further discussed below under “Financing and Debt.” During 2023, we also: ● paid stockholder dividends and unitholder distributions totaling approximately $2.8 billion and preferred unit distributions totaling $5.2 million, ● 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), ● funded investments in unconsolidated entities of $84.0 million, ● funded the purchase of $1.0 billion of short-term investments, ● funded the repurchase of $140.6 million of Simon’s common stock, and ● received proceeds from the sale of equity instruments of $304.1 million.
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. 76 Table of Contents The following schedule reconciles consolidated net income to our beneficial share of NOI. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year ​ ​ Ended December 31, ​ 2022 2021 ​ ​ (in thousands) Reconciliation of NOI of consolidated entities: ​ ​ ​ ​ Consolidated Net Income ​ $ 2,452,385 ​ $ 2,568,707 Income and other tax expense ​ 83,512 ​ 157,199 Gain on disposal, exchange, or revaluation of equity interests, net ​ ​ (121,177) ​ ​ (178,672) Interest expense ​ 761,253 ​ 795,712 Income from unconsolidated entities ​ (647,977) ​ (782,837) Loss on extinguishment of debt ​ ​ -- ​ ​ 51,841 Unrealized losses in fair value of publicly traded equity instruments, net ​ 61,204 ​ 8,095 Gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net ​ (5,647) ​ (206,855) Operating Income Before Other Items ​ 2,583,553 ​ 2,413,190 Depreciation and amortization ​ 1,227,371 ​ 1,262,715 Home and regional office costs ​ ​ 184,592 ​ ​ 184,660 General and administrative ​ ​ 34,971 ​ ​ 30,339 Other expenses (1) ​ ​ 13,413 ​ ​ 19,811 NOI of consolidated entities ​ $ 4,043,900 ​ $ 3,910,715 Less: Noncontrolling interest partners share of NOI ​ ​ (27,685) ​ ​ (20,720) Beneficial NOI of consolidated entities ​ $ 4,016,215 ​ $ 3,889,995 Reconciliation of NOI of unconsolidated entities: ​ ​ ​ ​ ​ ​ Net Income ​ $ 807,435 ​ $ 668,061 Interest expense ​ 599,245 ​ 605,591 Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net ​ (50,336) ​ (34,814) Operating Income Before Other Items ​ 1,356,344 ​ 1,238,838 Depreciation and amortization ​ 666,762 ​ 686,790 Other expenses (1) ​ ​ 1,309 ​ ​ 26,013 NOI of unconsolidated entities ​ $ 2,024,415 ​ $ 1,951,641 Less: Joint Venture partners share of NOI ​ ​ (1,059,095) ​ ​ (1,021,839) Beneficial NOI of unconsolidated entities ​ $ 965,320 ​ $ 929,802 Add: Beneficial interest of NOI from TRG ​ ​ 474,214 ​ ​ 430,965 Add: Beneficial interest of NOI from Other Platform Investments and Investments ​ ​ 604,750 ​ ​ 743,213 Beneficial interest of Combined NOI ​ $ 6,060,499 ​ $ 5,993,975 Less: Beneficial interest of Corporate and Other NOI Sources (2) ​ 138,315 ​ 230,046 Less: Beneficial interest of NOI from Other Platform Investments (3) ​ ​ 355,019 ​ ​ 533,299 Less: Beneficial interest of NOI from Investments (4) ​ ​ 230,984 ​ ​ 182,422 Beneficial interest of Portfolio NOI ​ $ 5,336,181 ​ $ 5,048,208 Beneficial interest of Portfolio NOI Change ​ ​ 5.7 % ​ ​ (1) Represents the write-off of pre-development costs, our beneficial interest of which was $11.4 million and $18.3 million with respect to consolidated entities and $0.4 million and $13.0 million with respect to our share of unconsolidated entities, for the year ended December 31, 2022 and 2021, respectively.
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. 75 Table of Contents The following schedule reconciles consolidated net income to our beneficial share of NOI. ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year ​ ​ Ended December 31, ​ 2023 2022 ​ ​ (in thousands) Reconciliation of NOI of consolidated entities: ​ ​ ​ ​ Consolidated Net Income ​ $ 2,617,018 ​ $ 2,452,385 Income and other tax expense ​ 81,874 ​ 83,512 Gain on disposal, exchange, or revaluation of equity interests, net ​ ​ (362,019) ​ ​ (121,177) Interest expense ​ 854,648 ​ 761,253 Income from unconsolidated entities ​ (375,663) ​ (647,977) Unrealized (gains) losses in fair value of publicly traded equity instruments and derivative instrument, net ​ (11,892) ​ 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 ​ 3,056 ​ (5,647) Operating Income Before Other Items ​ 2,807,022 ​ 2,583,553 Depreciation and amortization ​ 1,262,107 ​ 1,227,371 Home and regional office costs ​ ​ 207,618 ​ ​ 184,592 General and administrative ​ ​ 38,513 ​ ​ 34,971 Other expenses (1) ​ ​ 320 ​ ​ 13,413 NOI of consolidated entities ​ $ 4,315,580 ​ $ 4,043,900 Less: Noncontrolling interest partners share of NOI ​ ​ (30,918) ​ ​ (27,685) Beneficial NOI of consolidated entities ​ $ 4,284,662 ​ $ 4,016,215 Reconciliation of NOI of unconsolidated entities: ​ ​ ​ ​ ​ ​ Net Income ​ $ 853,986 ​ $ 807,435 Interest expense ​ 685,193 ​ 599,245 Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net ​ (20,529) ​ (50,336) Operating Income Before Other Items ​ 1,518,650 ​ 1,356,344 Depreciation and amortization ​ 656,089 ​ 666,762 Other expenses (1) ​ ​ 143 ​ ​ 1,309 NOI of unconsolidated entities ​ $ 2,174,882 ​ $ 2,024,415 Less: Joint Venture partners share of NOI ​ ​ (1,132,334) ​ ​ (1,059,095) Beneficial NOI of unconsolidated entities ​ $ 1,042,548 ​ $ 965,320 Add: Beneficial interest of NOI from TRG ​ ​ 503,858 ​ ​ 474,214 Add: Beneficial interest of NOI from Other Platform Investments and Investments ​ ​ 399,341 ​ ​ 604,750 Beneficial interest of Combined NOI ​ $ 6,230,409 ​ $ 6,060,499 Less: Beneficial interest of Corporate and Other NOI Sources (2) ​ 287,231 ​ 154,309 Less: Beneficial interest of NOI from Other Platform Investments (3) ​ ​ 138,686 ​ ​ 355,019 Less: Beneficial interest of NOI from Investments (4) ​ ​ 233,562 ​ ​ 238,695 Beneficial interest of Portfolio NOI ​ $ 5,570,930 ​ $ 5,312,476 Beneficial interest of Portfolio NOI Change ​ ​ 4.9 % ​ ​ (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.
Malls and Premium Outlets increased 1.5% to 94.9% as of December 31, 2022, from 93.4% as of December 31, 2021, primarily due to leasing activity, partially offset by 2021 tenant bankruptcy activity. Our effective overall borrowing rate at December 31, 2022 on our consolidated indebtedness increased 36 basis points to 3.22% as compared to 2.86% at December 31, 2021.
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.
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.
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.
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, 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.
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.
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.
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.
The average annual initial base minimum rent for new leases was $55.41 per square foot in 2022 and $55.90 per square foot in 2021 with an average tenant allowance on new leases of $53.01 per square foot 62 Table of Contents and $53.75 per square foot, respectively.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeBased upon consolidated indebtedness and interest rates at December 31, 2022, a 50 basis point increase in the market rates of interest would decrease future earnings and cash flows by approximately $11.5 million, and would decrease the fair value of debt by approximately $721.7 million. ​ 78 Table of Contents
Biggest changeBased upon consolidated indebtedness and interest rates at December 31, 2023, a 50 basis point increase in the market rates of interest would decrease future earnings and cash flows by approximately $0.8 million, and would decrease the fair value of debt by approximately $823.4 million. ​ 77 Table of Contents
Item 7A. Qualitative and Quantitative Disclosures About Market Risk Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations. We manage exposure to interest rate market risk through our risk management strategy by a combination of interest rate protection agreements to effectively fix or cap a portion of variable rate debt.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations. We manage exposure to interest rate market risk through our risk management strategy by a combination of interest rate protection agreements to effectively fix or cap a portion of variable rate debt.
Our future earnings, cash flows and fair values relating to financial instruments are dependent upon prevalent market rates of interest, primarily SOFR and LIBOR.
Our future earnings, cash flows and fair values relating to financial instruments are dependent upon prevalent market rates of interest, primarily SOFR.

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