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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C.  20549**

**FORM 10-Q**

**QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THESECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended June 30, 2001**

| **SIMON PROPERTY GROUP, L.P.**                          |
|---------------------------------------------------------|
|                                                         |
| (Exact name of  registrant as specified in its charter) |
|                                                    |
| **Delaware**                                            |
|                                                         |
| (State of  incorporation or organization)               |
|                                                    |
| **33-11491**                                            |
|                                                         |
| (Commission File No.)                                   |
|                                                    |
| **34-1755769**                                          |
|                                                         |
| (I.R.S. Employer  Identification No.)                   |
|                                                    |
| **National  City Center**                               |
| **115  West Washington Street, Suite 15 East**          |
| **Indianapolis,  Indiana  46204**                  |
|                                                         |
| (Address of principal  executive offices)               |
|                                                    |
| **(317)  636-1600**                                     |
|                                                         |
| (Registrant's  telephone number, including area code)   |

Indicate by check mark whether theRegistrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the Registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.            **YES**      ý         **NO**       o

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**SIMON PROPERTY GROUP, L.P.**

**FORM 10-Q**

**INDEX**

| **Part I - Financial Information** |                                                                                                  |
|------------------------------------|-------------------------------------------------------------------------------------------------------|
|                               |
|                               | Item 1:  Financial Statements                                                                    |
|                               |                                                                                                  |
|                               |                                                                                                  | Condensed  Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000 |
|                               |                                                                                                  |
|                               |                                                                                                  | Condensed  Consolidated Statements of Operations for the three-month and six-month  periods ended June 30, 2001 and 2000 |
|                               |                                                                                                  |
|                               |                                                                                                  | Condensed  Consolidated Statements of Cash Flows for the six-month periods ended June  30, 2001 and 2000 |
|                               |                                                                                                  |
|                               | Notes  to Unaudited Condensed Consolidated Financial Statements                                       |
|                               |                                                                                                  |
|                               | Item  2:  Management's Discussion and  Analysis of Financial Condition and Results of Operations |
|                               |                                                                                                  |
|                               | Item  3: Qualitative and Quantitative Disclosure About Market Risk                                    |
|                               |                                                                                                  |
| **Part II - Other Information**    |                                                                                                  |
|                               |
|                               | Items  1 through 6                                                                                    |
|                               |                                                                                                  |
| **Signature**                      |                                                                                                  |
|                                    |                                                                                                       |  |  |

** **

 

**Simon Property Group, L.P.*******Condensed Consolidated BalanceSheets*

(Dollarsin thousands)

|                                    | June 30,                                                                           |       | December 31, |       |
|-----------------------------------------|------------------------------------------------------------------------------------|------------|--------------|------------|
|                                    | 2001                                                                               |       | 2000         |       |
|                                    |                                                                               |       |         |       |
| ASSETS:                                 |                                                                               |       |         |       |
|                                    | Investment  properties, at cost                                                    | $          | 12,993,758   |       | $ | 12,883,471 |   |
|                                    | Less  — accumulated depreciation                                              | 1,657,741  |         | 1,471,178  |   |
|                                    |                                                                               |       |         |       |   |
|                                    |                                                                               | 11,336,017 |         | 11,412,293 |   |
|                                    | Cash  and cash equivalents                                                         | 168,930    |         | 209,755    |   |
|                                    | Tenant  receivables and accrued revenue, net                                       | 276,526    |         | 294,775    |   |
|                                    | Notes  and advances receivable from Management Company and affiliates              | 122,133    |         | 182,401    |   |
|                                    | Note  receivable from the SRC Operating Partnership (Interest at 8%, due 2009)     | 1,460      |         | 29,425     |   |
|                                    | Investment  in unconsolidated entities, at equity                                  | 1,273,148  |         | 1,308,838  |   |
|                                    | Goodwill,  net                                                                     | 37,798     |         | 38,384     |   |
|                                    | Deferred  costs and other assets, net                                              | 262,644    |         | 240,578    |   |
|                                    | Minority  interest                                                                 | 44,637     |         | 42,377     |   |
|                                    |                                                                               |       |         |       |
|                                    | Total  assets                                                                      | $          | 13,523,293   |       | $ | 13,758,826 |   |
|                                    |                                                                               |       |         |       |
|                                    |                                                                               |       |         |       |
| LIABILITIES:                            |                                                                               |       |         |       |
|                                    | Mortgages  and other indebtedness                                                  | $          | 8,730,012    |       | $ | 8,728,582 |   |
|                                    | Accrued  dividends                                                                 | 18,487     |         | 18,266     |   |
|                                    | Accounts  payable and accrued expenses                                             | 470,529    |         | 437,860    |   |
|                                    | Cash  distributions and losses in partnerships and joint ventures, at equity       | 48,252     |         | 44,634     |   |
|                                    | Other  liabilities                                                                 | 104,849    |         | 227,083    |   |
|                                    |                                                                               |       |         |       |
|                                    | Total  liabilities                                                                 | 9,372,129  |         | 9,456,425  |   |
|                                    |                                                                               |       |         |       |
|                                    |                                                                               |       |         |       |
| COMMITMENTS  AND CONTINGENCIES (Note 9) |                                                                               |       |         |       |
|                                    |                                                                               |       |         |       |
| PARTNERS'  EQUITY:                      |                                                                               |       |         |       |
|                                    |                                                                               |       |         |       |
|                                    | Preferred  units, 22,081,682 and 22,049,570 units outstanding,                     |       |         |       |   |
|                                    | respectively.  Liquidation values $1,058,697 and  $1,058,950, respectively    | 1,028,081  |         | 1,028,435  |   |
|                                    |                                                                               |       |         |       |   |
|                                    | General  Partners, 171,011,119 and 170,274,816 units outstanding,                  |       |         |       |   |
|                                    | respectively                                                                       | 2,350,313  |         | 2,451,452  |   |
|                                    |                                                                               |       |         |       |   |
|                                    | Limited  Partners, 64,889,347 and 64,966,226 units outstanding,  respectively | 891,815    |         | 935,321    |   |
|                                    |                                                                               |       |         |       |   |
|                                    | Note  receivable from SPG (Interest at 7.8%, due 2009)                             | (92,825    | )            | (92,825    | ) |
|                                    |                                                                               |       |         |       |   |
|                                    | Unamortized  restricted stock award                                                | (26,220    | )            | (19,982    | ) |
|                                    |                                                                               |       |         |       |
|                                    | Total  partners' equity                                                            | 4,151,164  |         | 4,302,401  |   |
|                                    |                                                                               |       |         |       |   |
|                                    | Total  liabilities and partners' equity                                            | $          | 13,523,293   |       | $ | 13,758,826 |   |
|                                    |                                                                               |       |         |       |
|                                         |                                                                                    |            |              |            |  |  |  |  |  |  |

*The accompanying notes are an integral part of thesestatements.*

**SimonProperty Group, L.P.*******Condensed ConsolidatedStatements of Operations***(Dollars in thousands, except per unitamounts)

|                                                                                                    | For  the Three Months Ended June 30, |    | For  the Six Months Ended June 30, |    |
|---------------------------------------------------------------------------------------------------------|--------------------------------------|---------|------------------------------------|---------|
|                                                                                                    |                                 |    |                               |    |
|                                                                                                    | 2001                                 |    | 2000                               |    | 2001 |   | 2000 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| REVENUE:                                                                                                |                                 |    |                               |    |   |   |   |   |
|                                                                                                    | Minimum  rent                        | $       | 304,421                            |    | $ | 291,321 |   | $ | 608,595 |   | $ | 584,895 |   |
|                                                                                                    | Overage  rent                        | 7,085   |                               | 6,663   |   | 16,954 |   | 18,672 |   |
|                                                                                                    | Tenant  reimbursements               | 144,750 |                               | 152,600 |   | 291,859 |   | 295,854 |   |
|                                                                                                    | Other  income                        | 28,313  |                               | 33,866  |   | 54,370 |   | 58,494 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |   |
|                                                                                                    | Total  revenue                       | 484,569 |                               | 484,450 |   | 971,778 |   | 957,915 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| EXPENSES:                                                                                               |                                 |    |                               |    |   |   |   |   |
|                                                                                                    | Property  operating                  | 81,571  |                               | 78,303  |   | 159,635 |   | 152,950 |   |
|                                                                                                    | Depreciation  and amortization       | 105,726 |                               | 98,199  |   | 211,284 |   | 195,751 |   |
|                                                                                                    | Real  estate taxes                   | 47,714  |                               | 48,739  |   | 99,784 |   | 96,339 |   |
|                                                                                                    | Repairs  and maintenance             | 19,260  |                               | 16,106  |   | 38,845 |   | 35,498 |   |
|                                                                                                    | Advertising  and promotion           | 12,472  |                               | 15,046  |   | 26,119 |   | 30,924 |   |
|                                                                                                    | Provision  for credit losses         | 2,275   |                               | 2,182   |   | 5,234 |   | 4,357 |   |
|                                                                                                    | Other                                | 6,604   |                               | 7,355   |   | 13,497 |   | 14,975 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |   |
|                                                                                                    | Total  operating expenses            | 275,622 |                               | 265,930 |   | 554,398 |   | 530,794 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| OPERATING INCOME                                                                                        | 208,947                              |    | 218,520                            |    | 417,380 |   | 427,121 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| INTEREST EXPENSE                                                                                        | 149,970                              |    | 155,830                            |    | 307,894 |   | 314,514 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| INCOME BEFORE MINORITY INTEREST                                                                         | 58,977                               |    | 62,690                             |    | 109,486 |   | 112,607 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| MINORITY INTEREST                                                                                       | (3,115                               | )       | (2,353                             | )       | (5,353 | ) | (4,787 | ) |
| GAIN (LOSS) ON SALES OF ASSETS, NET OF ASSET  WRITE DOWNS OF $0, $10,572, $0, AND $10,572, RESPECTIVELY | (28                                  | )       | 1,562                              |    | 2,683 |   | 8,658 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| INCOME BEFORE UNCONSOLIDATED ENTITIES                                                                   | 55,834                               |    | 61,899                             |    | 106,816 |   | 116,478 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| INCOME FROM UNCONSOLIDATED ENTITIES                                                                     | 13,969                               |    | 15,883                             |    | 25,711 |   | 33,213 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| INCOME BEFORE EXTRAORDINARY ITEMS AND  CUMULATIVE EFFECT OF ACCOUNTING CHANGE                           | 69,803                               |    | 77,782                             |    | 132,527 |   | 149,691 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| EXTRAORDINARY ITEMS - DEBT RELATED  TRANSACTIONS                                                        | —                               |    | —                             |    | (25 | ) | (440 | ) |
| CUMULATIVE EFFECT OF ACCOUNTING CHANGE (Note  5)                                                        | —                               |    | —                             |    | (1,638 | ) | (12,311 | ) |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| NET INCOME                                                                                              | 69,803                               |    | 77,782                             |    | 130,864 |   | 136,940 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| PREFERRED UNIT REQUIREMENT                                                                              | (19,346                              | )       | (19,368                            | )       | (38,777 | ) | (38,740 | ) |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| NET INCOME AVAILABLE TO UNITHOLDERS                                                                     | $                                    | 50,457  |                               | $       | 58,414 |   | $ | 92,087 |   | $ | 98,200 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
| NET INCOME AVAILABLE TO UNITHOLDERS ATTRIBUTABLE  TO:                                                   |                                 |    |                               |    |   |   |   |   |
|                                                                                                    | General  Partners:                   |    |                               |    |   |   |   |   |   |
|                                                                                                    | SPG  (Managing General Partner)      | $       | 12,227                             |    | $ | 14,336 |   | $ | 22,253 |   | $ | 24,052 |   |
|                                                                                                    | SPG  Properties                      | 24,335  |                               | 27,974  |   | 44,448 |   | 47,058 |   |
|                                                                                                    | Limited  Partners                    | 13,895  |                               | 16,104  |   | 25,386 |   | 27,090 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |   |
|                                                                                                    | Net  income                          | $       | 50,457                             |    | $ | 58,414 |   | $ | 92,087 |   | $ | 98,200 |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
|                                                                                                    |                                 |    |                               |    |   |   |   |   |
|                                                                                                         |                                      |         |                                    |         |  |  |  |  |  |  |  |  |  |  |  |

 

 

| BASIC AND DILUTED EARNINGS PER UNIT:                                                                                  |                                                                          |   |   |   |   |   |   |    |
|-----------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|
|                                                                                                                  | Income before extraordinary items  and cumulative effect of accounting change | $      | 0.21   |   | $      | 0.25   |   | $       | 0.40 |   | $ | 0.46 |   |
|                                                                                                                  |                                                                          |   |   |   |   |   |   |    |
|                                                                                                                  | Net  income                                                                   | $      | 0.21   |   | $      | 0.25   |   | $       | 0.39 |   | $ | 0.41 |   |
|                                                                                                                  |                                                                          |   |   |   |   |   |   |    |
|                                                                                                                  |                                                                          |   |   |   |   |   |   |    |
| Net Income                                                                                                            | $                                                                             | 69,803 |   | $      | 77,782 |   | $      | 130,864 |   | $ | 136,940 |   |
| Cumulative effect of accounting change                                                                                | —                                                                        |   | — |   | (1,995 | )      | — |    |
| Unrealized loss on interest rate hedge agreements                                                                     | 111                                                                           |   | — |   | (6,093 | )      | — |    |
| Net losses on derivative instruments  reclassified from accumulated other comprehensive income into interest  expense | 905                                                                           |   | — |   | 1,663  |   | — |    |
| Unrealized loss on investment                                                                                         | (1,980                                                                        | )      | 7,813  |   | (1,980 | )      | 6,756  |    |
|                                                                                                                  |                                                                          |   |   |   |   |   |   |    |
| Comprehensive Income                                                                                                  | $                                                                             | 68,839 |   | $      | 85,595 |   | $      | 122,459 |   | $ | 143,696 |   |
|                                                                                                                  |                                                                          |   |   |   |   |   |   |    |

*Theaccompanying notes are an integral part of these statements.*

**Simon Property Group, L.P.*******Condensed ConsolidatedStatements of Cash Flows*

(Dollarsin thousands)

|                                            | For  the Six Months Ended June 30,                                                      |     |
|-------------------------------------------------|-----------------------------------------------------------------------------------------|----------|
|                                            |                                                                                    |     |
|                                            | 2001                                                                                    |     | 2000 |   |
|                                            |                                                                                    |     |   |   |
| CASH  FLOWS FROM OPERATING ACTIVITIES:          |                                                                                    |     |   |   |
|                                            | Net income                                                                              | $        | 130,864 |   | $ | 136,940 |   |
|                                            | Adjustments to reconcile net  income to net cash provided by operating activities— |     |   |   |   |
|                                            | Depreciation and amortization                                                           | 216,403  |   | 200,855 |   |
|                                            | Extraordinary items                                                                     | 25       |   | 440 |   |
|                                            | Gain on sales of assets, net of  asset write downs of $0 and $10,572, respectively      | (2,683   | ) | (8,658 | ) |
|                                            | Cumulative effect of accounting  change                                                 | 1,638    |   | 12,311 |   |
|                                            | Straight-line rent                                                                      | (4,580   | ) | (8,302 | ) |
|                                            | Minority interest                                                                       | 5,353    |   | 4,787 |   |
|                                            | Equity in income of  unconsolidated entities                                            | (25,711  | ) | (33,213 | ) |
|                                            | Changes in assets and  liabilities—                                                |     |   |   |   |
|                                            | Tenant receivables and accrued  revenue                                                 | 33,236   |   | 46,769 |   |
|                                            | Deferred costs and other assets                                                         | (19,777  | ) | 7,822 |   |
|                                            | Accounts payable, accrued  expenses and other liabilities                               | (57,719  | ) | (89,542 | ) |
|                                            |                                                                                    |     |   |   |   |
|                                            | Net cash provided by operating  activities                                              | 277,049  |   | 270,209 |   |
|                                            |                                                                                    |     |   |   |
|                                            |                                                                                    |     |   |   |
| CASH  FLOWS FROM INVESTING ACTIVITIES:          |                                                                                    |     |   |   |
|                                            | Capital expenditures                                                                    | (151,385 | ) | (216,711 | ) |
|                                            | Cash from consolidation of ASP                                                          | 8,156    |   | — |   |
|                                            | Net proceeds from sale of assets                                                        | 19,550   |   | 108,993 |   |
|                                            | Investments in unconsolidated  entities                                                 | (20,433  | ) | (103,876 | ) |
|                                            | Distributions from unconsolidated  entities                                             | 112,014  |   | 183,852 |   |
|                                            | Investment in and advances  (to)/from the Management Company and affiliate              | (2,230   | ) | (1,821 | ) |
|                                            | Loan  to the SRC Operating Partnership                                                  | 4,136    |   | (12,478 | ) |
|                                            |                                                                                    |     |   |   |   |
|                                            | Net cash used in investing  activities                                                  | (30,192  | ) | (42,041 | ) |
|                                            |                                                                                    |     |   |   |
|                                            |                                                                                    |     |   |   |
| CASH  FLOWS FROM FINANCING ACTIVITIES:          |                                                                                    |     |   |   |
|                                            | Partnership contributions                                                               | 4,097    |   | 289 |   |
|                                            | Partnership distributions                                                               | (281,612 | ) | (279,136 | ) |
|                                            | Minority interest distributions,  net                                                   | (7,613   | ) | (8,234 | ) |
|                                            | Mortgage and other note proceeds,  net of transaction costs                             | 665,134  |   | 790,007 |   |
|                                            | Mortgage and other note principal  payments                                             | (667,688 | ) | (751,007 | ) |
|                                            |                                                                                    |     |   |   |   |
|                                            | Net cash used in financing  activities                                                  | (287,682 | ) | (248,081 | ) |
|                                            |                                                                                    |     |   |   |
|                                            |                                                                                    |     |   |   |
| DECREASE  IN CASH AND CASH EQUIVALENTS          | (40,825                                                                                 | )        | (19,913 | ) |
|                                            |                                                                                    |     |   |   |
| CASH  AND CASH EQUIVALENTS, beginning of period | 209,755                                                                                 |     | 153,743 |   |
|                                            |                                                                                    |     |   |   |
| CASH  AND CASH EQUIVALENTS, end of period       | $                                                                                       | 168,930  |   | $ | 133,830 |   |
|                                            |                                                                                    |     |   |   |
|                                                 |                                                                                         |          |  |  |  |  |  |  |  |  |

*The accompanying notes are an integral part of thesestatements.*

**SIMON PROPERTY GROUP, L.P.**

**Notes to Unaudited Condensed Consolidated Financial Statements**

(Dollarsin thousands, except per unit amounts and where indicated as in billions)

**Note 1– Organization**

             SimonProperty Group, L.P. (the “SPG Operating Partnership”), a Delaware limitedpartnership, is a majority owned subsidiary of Simon Property Group, Inc.(“SPG”), a Delaware corporation. SPG is a self-administered and self-managedreal estate investment trust (“REIT”) under the Internal Revenue Code of 1986,as amended (the “Code”). Each share of common stock of SPG is paired (“PairedShares”) with a beneficial interest in 1/100th of a share of commonstock of SPG Realty Consultants, Inc., also a Delaware corporation (“SRC” andtogether with SPG, the “Companies”). Units of ownership interest (“Units”) inthe SPG Operating Partnership are paired (“Paired Units”) with a Unit in SPGRealty Consultants, L.P. (the “SRC Operating Partnership” and together with theSPG Operating Partnership, the “Operating Partnerships”). The SRC OperatingPartnership is the primary subsidiary of SRC.

             TheSPG Operating Partnership is engaged primarily in the ownership, operation,management, leasing, acquisition, expansion and development of real estateproperties, primarily regional malls and community shopping centers. As of June30, 2001, the SPG Operating Partnership owned or held an interest in 249income-producing properties, which consisted of 163 regional malls, 72community shopping centers, five specialty retail centers, four office andmixed-use properties and five value-oriented super-regional malls in 36 states(the “Properties”) and six additional retail real estate properties operatingin Europe and Canada. The SPG Operating Partnership also owned an interest inone property currently under construction and 11 parcels of land held forfuture development, which together with the Properties are hereafter referredto as the “Portfolio Properties”. The SPG Operating Partnership also holdssubstantially all of the economic interest in M.S. Management Associates, Inc.(the “Management Company”). Effective January 1, 2001, the Management Companyelected to become a taxable REIT subsidiary (“TRS”).  Effective March 31, 2001, the SPG Operating Partnership purchasedclixnmortar.com, a technology venture of the Companies, from the SRC OperatingPartnership at its carrying value utilizing the inter-company note.  The SPG Operating Partnership subsequentlycontributed clixnmortar.com to the Management Company in exchange for preferredstock of the Management Company.

             SimonBrand Ventures, LLC (“SBV”) and Simon Business Network (“SBN”) continue toexpand upon certain mall marketing initiatives to take advantage of the SPGOperating Partnership’s size and tenant relationships, primarily throughstrategic corporate alliances. SBV is focused on leveraging the SPG Operating Partnership’s100 million unique shoppers and their 2 billion annual shopping visits tocontribute to the SPG Operating Partnership’s second-curve revenuestrategy.  The SBV concept andinitiatives were started in 1997 to create a new medium for connecting consumerswith retailers and sponsors by developing a combination of shopping,entertainment and community.  SBN isfocused on leveraging the SPG Operating Partnership’s assets to create newbusinesses, which will drive greater value to its Portfolio Properties,retailers and other developers and generate new sources of revenue for the SPGOperating Partnership.  SBN’s strategyis to provide a competitively valued, broad-based offering of products andservices via a unique and dominant marketplace and service network focused onthe real estate industry and their tenants. SBV has also entered into cost sharing arrangements with the ManagementCompany similar to those of the SPG Operating Partnership.  Effective January 1, 2001, the SPG OperatingPartnership purchased SBV from SRC at approximately its carrying valueutilizing the intercompany note.

             On April 1, 2001, the SPG OperatingPartnership became the managing generalpartner of SPG Administrative Services Partnership L.P.  (“ASP”). In addition, the SPG OperatingPartnership acquired an additional 24%partnership interest in ASP from the Management Company.  As a result, the SPG OperatingPartnership gained control of ASPconsistent with the SPG Operating Partnership’s consolidation principles. ASP was previously consolidated as part ofthe Management Company.  The change incontrol and consolidation of ASP will not have a material impact on the resultsof operations of the SPG Operating Partnership and the other aspects of the transaction were not material.   ASP was organized to provide for theallocation of the salaries and other costs associated with employees whoperform services for the Management Company and its affiliates as well asmultiple entities controlled by the SPG Operating Partnership.

**Note 2 - Basis of Presentation**

             Theaccompanying financial statements are unaudited; however, they have beenprepared in accordance with generally accepted accounting principles forinterim financial information and in conjunction with the rules and regulationsof the Securities and Exchange Commission. Accordingly, they do not include allof the disclosures required by generally accepted accounting principles forcomplete financial statements. In the opinion of management, all adjustmentsnecessary for fair presentation, consisting of only normal recurringadjustments, have been included. The results for the interim period ended June30, 2001 are not necessarily indicative of the results to be obtained for thefull fiscal year. These unaudited financial statements have been prepared inaccordance with the accounting policies described in the SPG OperatingPartnership’s annual report on Form 10-K for the year ended December 31, 2000,except for the change in accounting policy discussed in Note 5, and should be readin conjunction therewith.  Investmentsin securities classified as available for sale are reflected in deferred costsand other assets in the accompanying balance sheets at market value with thechanges in market value reflected as comprehensive income or loss in partners’equity.

             Theaccompanying condensed consolidated financial statements of the SPG OperatingPartnership include all accounts of all entities owned or controlled by the SPGOperating Partnership. All significant intercompany amounts have beeneliminated.

             Netoperating results of the SPG Operating Partnership are allocated afterpreferred distributions, based on its partners’ weighted average ownershipinterests during the period. SPG’s weighted average direct and indirectownership interest in the SPG Operating Partnership for the six-month periodsended June 30, 2001 and 2000 was 72.4%.

             Certainreclassifications of prior period amounts have been made in the financialstatements to conform to the 2001 presentation. These reclassifications have noimpact on the net operating results previously reported.

**Note 3- Per Unit Data**

             Basicearnings per Unit is based on the weighted average number of Units outstandingduring the period and diluted earnings per Unit is based on the weightedaverage number of Units combined with the incremental weighted average Unitsthat would have been outstanding if all dilutive potential Units would havebeen converted into Units at the earliest date possible. The following tablesets forth the computation for the SPG Operating Partnership’s basic anddiluted earnings per Unit.

|                                                                                                                     | For the Three Months  Ended  June 30, |   | For the Six Months  Ended   June 30, |   |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------|--------|--------------------------------------|--------|
|                                                                                                                     |                                  |   |                                 |   |
|                                                                                                                     | 2001                                  |   | 2000                                 |   | 2001 |   | 2000 |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
| Income  before extraordinary items and cumulative effect of accounting change, and  after the preferred Unit requirement | $                                     | 50,457 |                                 | $      | 58,414 |   | $ | 93,750 |   | $ | 110,951 |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
| Extraordinary  items                                                                                                     | --                                    |   | --                                   |   | (25 | ) | (440 | ) |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
| Cumulative  effect of accounting change                                                                                  | --                                    |   | --                                   |   | (1,638 | ) | (12,311 | ) |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
| Net  Income available to Unitholders                                                                                     | $                                     | 50,457 |                                 | $      | 58,414 |   | $ | 92,087 |   | $ | 98,200 |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
| Weighted  Average Units Outstanding – Basic                                                                         | 235,708,099                           |   | 237,439,435                          |   | 235,490,837 |   | 237,217,279 |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
| Effect  of stock options                                                                                                 | 319,616                               |   | 143,016                              |   | 239,714 |   | 122,045 |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |
| Weighted  Average Units Outstanding  - Diluted                                                                      | 236,027,715                           |   | 237,582,451                          |   | 235,730,551 |   | 237,339,324 |   |
|                                                                                                                     |                                  |   |                                 |   |   |   |   |   |

 

|                                                                                                                     | For the Three Months  Ended  June 30, |   | For the Six Months  Ended  June 30, |   |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                     |                                  |   |                                |   |
|                                                                                                                     | 2001                                  |   | 2000                                |   | 2001 |   | 2000 |   |
|                                                                                                                     |                                  |   |                                |   |   |   |   |   |
| Basic  and Diluted Per Unit:                                                                                             |                                  |   |                                |   |   |   |   |   |
| Income  before extraordinary items and cumulative effect of accounting change, and  after the preferred Unit requirement | $                                     | 0.21   |                                | $      | 0.25 |   | $ | 0.40 |   | $ | 0.46 |   |
|                                                                                                                     |                                  |   |                                |   |   |   |   |   |
| Extraordinary  items                                                                                                     | --                                    |   | --                                  |   | -- |   | -- |   |
|                                                                                                                     |                                  |   |                                |   |   |   |   |   |
| Cumulative  effect of accounting change                                                                                  | --                                    |   | --                                  |   | (0.01 | ) | (0.05 | ) |
|                                                                                                                     |                                  |   |                                |   |   |   |   |   |
| Net  Income available to Unitholders                                                                                     | $                                     | 0.21   |                                | $      | 0.25 |   | $ | 0.39 |   | $ | 0.41 |   |
|                                                                                                                     |                                  |   |                                |   |   |   |   |   |

             PreferredUnits issued and outstanding during the comparative periods did not have adilutive effect on earnings per Unit. Paired Units held by limited partners inthe Operating Partnerships may be exchanged for Paired Shares, on a one-for-onebasis in certain circumstances. If exchanged, the paired Units would not have adilutive effect.

**Note 4- Cash Flow Information**

             Cashpaid for interest, net of amounts capitalized, during the six months ended June30, 2001 was $297,342 as compared to $319,680 for the same period in 2000. SeeNotes 1 and 8 for information about non-cash transactions during the six monthsended June 30, 2001.

**Note 5- Cumulative Effect of Accounting Change**

             OnJanuary 1, 2001, the SPG Operating Partnership adopted SFAS 133  “Accounting for Derivative Instruments andHedging Activities,” as amended in June of 2000 by SFAS 138, “Accounting forDerivative Instruments and Hedging Activities.”  SFAS 133, as amended, establishes accounting and reportingstandards for derivative instruments and requires the SPG Operating Partnershipto record on the balance sheet all derivative instruments at fair value and torecognize certain non-cash changes in these fair values either in the incomestatement or other comprehensive income, as appropriate under SFAS 133.  SFAS 133 currently impacts the accountingfor the SPG Operating Partnership’s interest rate and foreign currency raterisk protection agreements.

             Onadoption of SFAS 133, the SPG Operating Partnership recorded the differencebetween the fair value of the derivative instruments and the previous carryingamount of those derivatives on its condensed consolidated balance sheets in netincome or other comprehensive income, as appropriate, as the cumulative effectof a change in accounting principle in accordance with APB 20 “AccountingChanges.”   On adoption, the SPGOperating Partnership’s net fair value of derivatives was ($2.0) million, ofwhich $3.1 million was recorded in other liabilities and $1.1 million wasrecorded in other assets. In addition, $2.0 million of unrecognized loss wasrecorded in other comprehensive income as a cumulative effect of accountingchange and an expense of $1.6 million was recorded as a cumulative effect ofaccounting change in the statement of operations, which includes the SPGOperating Partnership’s $1.4 million share of joint venture cumulative effectof accounting change.  The joint venturecumulative effect of accounting change was recorded in investment inunconsolidated entities.

             Withinthe next twelve months, the SPG Operating Partnership expects to reclassify toearnings approximately $3.0 million of expense of the current balance held inaccumulated other comprehensive income. Amounts included in these reclassifications attributable to jointventures and minority interests were not material.  The amount of hedge ineffectiveness recorded during the threemonths ended June 30, 2001 was not material.

             Thefollowing table summarizes the notional and fair values of the SPG OperatingPartnership’s derivative instruments as of June 30, 2001, in millions:

| Hedge Type                         | Index                      |   | Notional Amount |    | Interest Rate Range |        | Maturity Range |             | Fair Value |   |
|------------------------------------|----------------------------|--------|-----------------|---------|---------------------|-------------|----------------|------------------|------------|--------|
|                               |                       |
| **Consolidated:**                  |                       |   |            |    |                |        |           |             |       |   |
| Interest  Rate Swaps               | 1 month LIBOR              |   | $               | 100.0   |                | 5.80-7.24   | %              | 9/01-12/04       |       | $      | (1.4 | ) |
| Interest  Rate Caps                | 1 or 3 month LIBOR         |   | 238.0           |    | 6.40-16.77          | %           | 9/01-1/05      |             | 0.3        |   |
| Interest  Rate Cap - Collar        | 3 month LIBOR              |   | 85.0            |    | 5.89                | %           | 5/04           |             | 0.8        |   |
| Interest  Rate Floor - Collar      | 3 month LIBOR              |   | $               | 85.0    |                | 5.89        | %              | 5/04             |       | (2.5   | ) |
|                               |                       |   |            |    |                |        |           |             |       |   |
|                               |                       |   |            |    |                |        |           |             | $          | (2.8   | ) |
| Cross-Currency  Interest Rate Swap | 1 month EURIBOR and  Euros |   | 30.0 EUR        |    | 7.75% / 0.94        | EUR         | 7/03           |             | $          | (4.0   | ) |
|                               |                       |   |            |    |                |        |           |             |       |   |
|                               |                       |   |            |    |                |        |           |             | $          | (6.8   | ) |
|                               |                       |   |            |    |                |        |           |             |       |   |
| **Joint Ventures:**                |                       |   |            |    |                |        |           |             |       |   |
| Interest  Rate Caps                | 1 or 3 month LIBOR         |   | $               | 1,001.4 |                | 7.70%-11.83 | %              | 1/02 – 5/06 |       | $      | 0.2 |   |
| Interest  Rate Swap                | 3 month LIBOR              |   | $               | 71.0    |                | 6.01        | %              | 7/11             |       | 1.3    |   |
|                               |                       |   |            |    |                |        |           |             |       |   |
|                               |                       |   |            |    |                |        |           |             | $          | 1.5    |   |
|                               |                       |   |            |    |                |        |           |             |       |   |
|                                    |                            |        |                 |         |                     |             |                |                  |            |        |  |  |  |  |

             Asof June 30, 2001, the SPG Operating Partnership has recorded derivatives attheir fair values of $1.1 million included in other assets and $7.9 millionincluded in other liabilities. The SPG Operating Partnership’s exposure tomarket risk due to changes in interest rates primarily relates to the SPGOperating Partnership’s long-term debt obligations. Through its risk managementstrategy, the SPG Operating Partnership manages exposure to interest ratemarket risk by a combination of interest rate protection agreements toeffectively fix or cap a portion of variable rate debt and by refinancing fixedrate debt at times when rates and terms are appropriate. The SPG OperatingPartnership is also exposed to foreign currency risk on financings of certainforeign operations.  To manage foreigncurrency exchange rate risk as part of its risk management strategy, the SPGOperating Partnership has also entered into a foreign currency forwardcontract. The SPG Operating Partnership’s intent is to offset gains and lossesthat occur on the underlying exposures, with gains and losses on the derivativecontracts hedging these exposures. The SPG Operating Partnership does not enterinto either interest rate protection or foreign currency rate protectionagreements for speculative purposes.

***Accounting Policies for Derivatives***

             Inthe normal course of business, the SPG Operating Partnership uses a variety ofderivative financial instruments to manage, or hedge, interest rate and foreigncurrency risk and records all derivatives on the balance sheets at fair value.The SPG Operating Partnership may enter into derivative contracts relating toeither wholly owned or joint venture properties. The SPG Operating Partnershiprequires that hedging derivative instruments are effective in reducing the riskexposure that they are designated to hedge. For derivative instruments associatedwith the hedge of an anticipated transaction, hedge effectiveness criteria alsorequire that it be probable that the underlying transaction occurs. The SPGOperating Partnership may hedge its exposure to the variability in future cashflows for anticipated transactions over a maximum period of 12 months.  Any instrument that meets these hedgingcriteria is formally designated as a hedge at the inception of the derivativecontract.  When the terms of anunderlying transaction are modified resulting in some ineffectiveness, theportion of the change in the derivative fair value related to ineffectivenessfrom period to period will be included in net income. If any derivativeinstrument used for risk management does not meet the hedging criteria then itis marked-to-market each period, however, the SPG Operating Partnership intendsfor all derivative transactions to meet all the hedge criteria and qualify ashedges.

          Onan ongoing quarterly basis, the SPG Operating Partnership adjusts its balancesheets to reflect current fair market value of its derivatives.  Changes in the fair value of derivatives areto be recorded each period in earnings or comprehensive income, depending onwhether the derivative is designated and effective as part of a hedged transaction,and on the type of hedge transaction. To the extent that the change in value of a derivative does notperfectly offset the change in value of the instrument being hedged, theineffective portion of the hedge is immediately recognized in earnings. Overtime, the unrealized gains and losses held in accumulated other comprehensiveincome will be reclassified to earnings. This reclassification occurs when the hedged items are also recognizedin earnings.  Interest ratedifferentials that arise under interest rate swap contracts are settledperiodically based upon the terms of the contract and are recognized ininterest expense over the life of the contracts.  The SPG Operating Partnership has a policy of only entering intocontracts with major financial institutions based upon their credit ratings andother factors.

To determine the fair values ofderivative instruments, the SPG Operating Partnership uses a variety of methodsand assumptions that are based on market conditions and risks existing at eachbalance sheet date.   For mostderivatives, standard market conventions and techniques such as discounted cashflow analysis, option pricing models, and termination cost are used todetermine fair value. All methods of assessing fair value result in a generalapproximation of value, and such value may never actually be realized.

**Note 6- Investment in Unconsolidated Entities**

             Summaryfinancial information of the SPG Operating Partnership’s investment inpartnerships and joint ventures accounted for using the equity method ofaccounting and a summary of the SPG Operating Partnership’s investment in andshare of income from such partnerships and joint ventures follow:

|   | ***June 30,***                                                         |       | ***December 31,*** |       |
|--------|------------------------------------------------------------------------|------------|--------------------|------------|
|   | **BALANCE SHEETS**                                                     | ***2001*** |               | ***2000*** | *** *** |
|   | ******                                                            |       | ******        |       |
|   | **Assets:**                                                            |       |               |       |   |
|   | Investment  properties at cost, net                                    | $          | 6,514,328          |       | $ | 6,563,470 |   |
|   | Cash  and cash equivalents                                             | 180,726    |               | 191,687    |   |
|   | Tenant  receivables                                                    | 160,155    |               | 165,583    |   |
|   | Other  assets                                                          | 278,182    |               | 278,294    |   |
|   |                                                                   |       |               |       |
|   | Total  assets                                                          | $          | 7,133,391          |       | $ | 7,199,034 |   |
|   |                                                                   |       |               |       |
|   |                                                                   |       |               |       |
|   | **Liabilities and Partners' Equity:**                                  |       |               |       |   |
|   | Mortgages  and other notes payable                                     | $          | 5,245,429          |       | $ | 5,135,488 |   |
|   | Accounts  payable, accrued expenses and other liabilities              | 328,107    |               | 348,375    |   |
|   |                                                                   |       |               |       |
|   | Total  liabilities                                                     | 5,573,536  |               | 5,483,863  |   |
|   | Partners'  equity                                                      | 1,559,855  |               | 1,715,171  |   |
|   |                                                                   |       |               |       |   |
|   | Total  liabilities and partners' equity                                | $          | 7,133,391          |       | $ | 7,199,034 |   |
|   |                                                                   |       |               |       |
|   |                                                                   |       |               |       |
|   | **The SPG Operating Partnership’s Share of:**                     |       |               |       |   |
|   | Total  assets                                                          | $          | 2,906,400          |       | $ | 2,924,666 |   |
|   |                                                                   |       |               |       |   |
|   | Partners’  equity                                                 | $          | 609,107            |       | $ | 672,593 |   |
|   | Add:  Excess Investment                                                | 551,242    |               | 558,675    |   |
|   |                                                                   |       |               |       |
|   | The  SPG Operating Partnership’s net Investment in Joint Ventures | $          | 1,160,349          |       | $ | 1,231,268 |   |
|   |                                                                   |       |               |       |
|        |                                                                        |            |                    |            |  |  |  |  |  |

 

|   | ***For the Three Months Ended   June 30,***                                                          |       | ***For The Six Months Ended   June 30,*** |       |
|--------|------------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
|   | ******                                                                                          |       | ******                               |       |
|   | **STATEMENTS OF OPERATIONS**                                                                         | ***2001*** |                                      | ***2000*** |   | ***2001*** |   | ***2000*** |   |
|   | ******                                                                                          |       | ******                               |       | ******  |   | ******  |   |
|   | **Revenue:**                                                                                         |       |                                      |       |   |   |   |   |   |
|   | Minimum rent                                                                                         | $          | 200,925                                   |       | $ | 183,652 |   | $ | 399,443 |   | $ | 364,451 |   |
|   | Overage  rent                                                                                        | 3,719      |                                      | 3,184      |   | 9,525 |   | 9,028 |   |
|   | Tenant  reimbursements                                                                               | 99,531     |                                      | 92,576     |   | 196,399 |   | 184,110 |   |
|   | Other  income                                                                                        | 16,013     |                                      | 11,176     |   | 27,624 |   | 19,899 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |   |
|   | Total  revenue                                                                                       | 320,188    |                                      | 290,588    |   | 632,991 |   | 577,488 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |
|   | **Operating Expenses:**                                                                              |       |                                      |       |   |   |   |   |   |
|   | Operating  expenses and other                                                                        | 122,761    |                                      | 112,347    |   | 239,860 |   | 221,459 |   |
|   | Depreciation  and amortization                                                                       | 67,293     |                                      | 56,121     |   | 127,792 |   | 111,771 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |   |
|   | Total  operating expenses                                                                            | 190,054    |                                      | 168,468    |   | 367,652 |   | 333,230 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |
|   | **Operating Income**                                                                                 | 130,134    |                                      | 122,120    |   | 265,339 |   | 244,258 |   |
|   | **Interest Expense**                                                                                 | 92,073     |                                      | 86,730     |   | 186,817 |   | 171,138 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |   |
|   | **Income Before Extraordinary Items and Cumulative Effect of  Accounting Change (“IBEC”)** | 38,061     |                                      | 35,390     |   | 78,522 |   | 73,120 |   |
|   | **Extraordinary Items**                                                                              | (75        | )                                         | --         |   | (75 | ) | -- |   |
|   | **Cumulative Effect of Accounting Change**                                                           | --         |                                      | --         |   | (2,883 | ) | (3,948 | ) |
|   |                                                                                                 |       |                                      |       |   |   |   |   |   |
|   | **Net Income**                                                                                       | $          | 37,986                                    |       | $ | 35,390 |   | $ | 75,564 |   | $ | 69,172 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |   |
|   | **Third-Party Investors' Share of IBEC**                                                             | 23,720     |                                      | 19,752     |   | 50,160 |   | 42,607 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |
|   | **The SPG Operating Partnership’s Share of IBEC**                                               | $          | 14,341                                    |       | $ | 15,638 |   | $ | 28,362 |   | $ | 30,513 |   |
|   | **Amortization of Excess Investment**                                                                | 6,002      |                                      | 5,310      |   | 10,948 |   | 10,583 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |   |
|   | **Income from Unconsolidated Entities**                                                              | $          | 8,339                                     |       | $ | 10,328 |   | $ | 17,414 |   | $ | 19,930 |   |
|   |                                                                                                 |       |                                      |       |   |   |   |   |
|        |                                                                                                      |            |                                           |            |  |  |  |  |  |  |  |  |  |  |  |  |

             TheSPG Operating Partnership’s share of consolidated net income of the ManagementCompany, excluded from the tables above, after intercompany profiteliminations, was $5,630 and $5,555 for the three-month periods ended June 30,2001 and 2000, respectively, and $8,297 and $13,283 for the six month periodsended June 30, 2001 and 2000, respectively. The SPG Operating Partnership’s netinvestment in the Management Company was $64,547 and $32,936 as of June 30,2001 and December 31, 2000, respectively.

             Inaddition, Simon Group has guaranteed its pro rata share of a joint venture'slease obligations up to $55.4 million.**Note 7 - Debt**
             AtJune 30, 2001, of the SPG Operating Partnership’s consolidated debt $6,512,770was fixed-rate debt and $2,217,242 was variable-rate debt. The SPG OperatingPartnership’s pro rata share of indebtedness of the unconsolidated jointventure Properties as of June 30, 2001 was $2,214,475.

             OnJanuary 11, 2001, the SPG Operating Partnership issued $500,000 of unsecureddebt to institutional investors pursuant to Rule 144A in two tranches.  The first tranche is $300,000 bearing aninterest rate of 7 3/8% due January 20, 2006 and the second tranche is $200,000bearing an interest rate of 7 3/4% due January 20, 2011.  The net proceeds of the offering were usedto repay the remaining portion of the indebtedness under the CPI MergerFacility due March 24, 2001 and to repay a portion of the CPI Merger Facilitydue September 24, 2001.

             Subsequentto June 30, 2001, the SPG Operating Partnership retired the third and finaltranche of the CPI merger facility totaling $435.0 million.  Funds used to retire this debt weregenerated primarily from a $277.0 million financing of four mall properties ata fixed rate of 6.99% and a $110.0 million financing of one office complex atLIBOR plus 115 basis points.

**Note 8– Partners’ Equity**

             Duringthe first quarter of 2001, 474,625 Paired Shares of restricted stock weredeemed earned and awarded under The Simon Property Group 1998 Stock IncentivePlan (the “1998 Plan”), adopted by the SPG Operating Partnership and SPG, at avalue of $25.85 per Paired Share.  Thecost of restricted stock grants is based upon the stock’s fair market value atthe time such stock is earned, awarded and issued and is charged toshareholders’ equity and subsequently amortized against earnings of the SPGOperating Partnership over the vesting period. In addition, 1,032,583 stock options to purchase Paired Shares weregranted on the same day under the 1998 Plan.

             OnMay 22, 2001, 1,220 units of SPG’s Series A Convertible Preferred Units wereconverted into 46,355 Units.  Inaddition, another 442 Units were issued to the holders of the convertible unitsin lieu of the cash dividends allocable to those preferred units.

             Asof June 30, 2001, $8.4 million of accumulated other comprehensive income isincluded in Partners’ Equity, of which $6.1 million is included in GeneralPartners’ equity and $2.3 million is included in Limited Partners’ equity.  Accumulated other comprehensive incomeconsists of unrealized losses on derivative instruments of $6.4 million andunrealized losses on marketable securities of $2.0 million as of June 30,2001.  There was no accumulated othercomprehensive income as of December 31, 2000.

             EffectiveJuly 1, 2001, SPG Properties merged with and into SPG.  On January 27, 2000, SD Property Group, Inc.merged with and into SPG Properties, Inc.

**Note 9- Commitments and Contingencies**

***Litigation***

             *Triple Five of Minnesota, Inc., a Minnesotacorporation, v. Melvin Simon, et. al.*On or about November 9, 1999,Triple Five of Minnesota, Inc. (“Triple Five”) commenced an action in theDistrict Court for the State of Minnesota, Fourth Judicial District, against,among others, Mall of America, certain members of the Simon family and entitiesallegedly controlled by such individuals, and the SPG Operating Partnership.Two transactions form the basis of the complaint: (i) the sale by TeachersInsurance and Annuity Association of America of one-half of its partnershipinterest in Mall of America Company and Minntertainment Company to the SPGOperating Partnership and related entities (the “Teachers Sale”); and (ii) afinancing transaction involving a loan in the amount of $312,000 obtained fromThe Chase Manhattan Bank (“Chase”) that is secured by a mortgage placed on Mallof America’s assets (the “Chase Mortgage”).

             Thecomplaint, which contains twelve counts, seeks remedies of damages, rescission,constructive trust, accounting, and specific performance. Although thecomplaint names all defendants in several counts, the SPG Operating Partnershipis specifically identified as a defendant in connection with the Teachers Sale.

             TheSPG Operating Partnership has agreed to indemnify Chase and other nonparties tothe litigation that are related to the offering of certificates secured by theChase Mortgage against, among other things, (i) any and all litigation expensesarising as a result of litigation or threatened litigation brought by TripleFive, or any of its owners or affiliates, against any person regarding theChase Mortgage, the Teachers Sale, any securitization of the Chase Mortgage orany transaction related to the foregoing and (ii) any and all damages, awards,penalties or expenses payable to or on behalf of Triple Five (or payable to athird party as a result of such party’s obligation to pay Triple Five) arisingout of such litigation. These indemnity obligations do not extend toliabilities covered by title insurance.

          TheSPG Operating Partnership believes that the Triple Five litigation is withoutmerit and intends to defend the action vigorously. The SPG OperatingPartnership believes that neither the Triple Five litigation nor any potentialpayments under the indemnity, if any, will have a material adverse effect onthe SPG Operating Partnership. Given the early stage of the litigation it isnot possible to provide an assurance of the ultimate outcome of the litigationor an estimate of the amount or range of potential loss, if any.

             *CarloAngostinelli et al. v. DeBartolo Realty Corp. et al.*OnOctober 16, 1996, a complaint was filed in the Court of Common Pleas ofMahoning County, Ohio, captioned Carlo Angostinelli et al. v. DeBartoloRealty Corp. et al. The named defendants are SD Property Group, Inc., anindirect 99%-owned subsidiary of SPG, and DeBartolo Properties Management,Inc., a subsidiary of the Management Company, and the plaintiffs are 27 formeremployees of the defendants. In the complaint, the plaintiffs alleged that theywere recipients of deferred stock grants under the DeBartolo Realty Corporation(“DRC”) Stock Incentive Plan (the “DRC Plan”) and that these grants immediatelyvested under the DRC Plan’s “change in control” provision as a result of theDRC Merger. Plaintiffs asserted that the defendants’ refusal to issue themapproximately 542,000 shares of DRC common stock, which is equivalent toapproximately 370,000 Paired Shares computed at the 0.68 exchange ratio used inthe DRC Merger, constituted a breach of contract and a breach of the impliedcovenant of good faith and fair dealing under Ohio law. Plaintiffs soughtdamages equal to such number of shares of DRC common stock, or cash in lieuthereof, equal to all deferred stock ever granted to them under the DRC Plan,dividends on such stock from the time of the grants, compensatory damages forbreach of the implied covenant of good faith and fair dealing, and punitivedamages. The plaintiffs and the defendants each filed motions for summaryjudgment. On October 31, 1997, the Court of Common Pleas entered a judgment in favorof the defendants granting their motion for summary judgment. The plaintiffsappealed this judgment to the Seventh District Court of Appeals in Ohio. OnAugust 18, 1999, the District Court of Appeals reversed the summary judgmentorder in favor of the defendants entered by the Common Pleas Court and grantedplaintiffs’ cross motion for summary judgment, remanding the matter to theCommon Pleas Court for the determination of plaintiffs’ damages. The defendantspetitioned the Ohio Supreme Court asking that they exercise their discretion toreview and reverse the Appellate Court decision, but the Ohio Supreme Court didnot grant the petition for review. The case was remanded to the Court of CommonPleas of Mahoning County, Ohio, to conduct discovery relevant to eachplaintiff’s damages and the counterclaims asserted by the SPG OperatingPartnership. The Trial Court referred these matters to a Magistrate. Plaintiffsfiled a Supplemental Motion for Summary Judgment on the question of damages.  The Magistrate ruled on the counterclaimsand found in Defendants’ favor on one of them. On December 27, 2000, the TrialCourt rendered judgment for the plaintiffs in the combined total amount ofapproximately $12,000, which includes a set-off of approximately $2,000 withimpact to two of the plaintiffs. Defendants have appealed this judgment andplaintiffs have cross-appealed.  Thejudgment has accrued interest at 10% per annum from and after December 27,2000.  Those appeals are pending beforethe District Court of Appeals and there can be no execution upon the judgmentwhile the appeals are pending.  The SPGOperating Partnership recorded a $12,000 loss in the third quarter of 1999related to this litigation as an unusual item.

             *RoelVento et al v. Tom Taylor et al.*Anaffiliate of the SPG Operating Partnership is a defendant in litigationentitled Roel Vento et al v. Tom Taylor et al., in the District Court ofCameron County, Texas, in which a judgment in the amount of $7,800 was enteredagainst all defendants. This judgment includes approximately $6,500 of punitivedamages and is based upon a jury’s findings on four separate theories ofliability including fraud, intentional infliction of emotional distress,tortious interference with contract and civil conspiracy arising out of thesale of a business operating under a temporary license agreement at Valle VistaMall in Harlingen, Texas. The SPG Operating Partnership appealed the verdictand on May 6, 1999, the Thirteenth Judicial District (Corpus Christi) of theTexas Court of Appeals issued an opinion reducing the trial court verdict to$3,364 plus interest. The SPG Operating Partnership filed a petition for a writof certiorari to the Texas Supreme Court requesting that they review andreverse the determination of the Appellate Court. The Texas Supreme Courtgranted certiorari and heard oral arguments on October 4, 2000.  On April 26, 2001, the Texas Supreme Courtrendered a unanimous 9-0 opinion against the Ventos and ordered that they takenothing from the Simon defendants. Plaintiffs have filed a motion forreconsideration with the Texas Supreme Court. The court has not yet ruled onPlaintiff’s motion.

             TheSPG Operating Partnership currently is not subject to any other materiallitigation other than routine litigation, claims and administrative proceedingsarising in the ordinary course of business. On the basis of consultation withcounsel, management believes that such routine litigation, claims andadministrative proceedings will not have a material adverse impact on the SPGOperating Partnership's financial position or its results of operations.
******Note 10 - Real Estate Disposals***

             Duringthe first six months of 2001, the SPG Operating Partnership sold its ownershipinterest in one regional mall, one community center, and one office buildingfor a combined gross sales price of $20.3 million.  These sales resulted in a net combined gain of $2.7 million.

             On December 28, 2000, MontgomeryWard LLC and certain of its related entities (“Ward”) filed a voluntarypetition for relief under Chapter 11 of the Bankruptcy Code.   In late February 2001, a limited liabilitycompany, Kimsward LLC (“Kimsward”), was formed to designate persons or entitiesto whom the Ward real estate assets will be sold.  These transactions are subject to Bankruptcy Court approval.  The Management Company’s interest inKimsward is 18.5% and its remaining investment in Kimsward was $6.4 million asof June 30, 2001.  During the secondquarter of 2001 the Management Company recorded $10.1 million of equity inincome from Kimsward.  During the secondquarter, the SPG Operating Partnership charged the Management Company a $5.7million fee for services rendered to the Management Company in connection withthe Kimsward transactions, which is included in other income in theaccompanying condensed consolidated statements of operations.

**Note 11– New Accounting Pronouncements**

             OnJuly 20, 2001, the FASB issued SFAS No. 141, “Business Combinations” and SFASNo. 142 “Goodwill and Other Intangible Assets”.  SFAS 141 further clarifies the criteria to recognize intangibleassets separately from goodwill.  SFAS141 is effective for the SPG Operating Partnership for any business combinationaccounted for under the purchase method that is completed after June 30,2001.  SFAS No. 142 requires thatgoodwill and indefinite lived intangible assets are no longer amortized but arereviewed annually, or more frequently if impairment indicators arise, forimpairment.  Separable intangible assetsthat are not deemed to have an indefinite life will continue to be amortizedover their useful lives but with no maximum life.  The amortization provisions of SFAS 142 apply to goodwill andintangible assets acquired by the SPG Operating Partnership after June 30,2001.  With respect to goodwill andintangible assets acquired prior to July 1, 2001, the SPG Operating Partnershipis required to adopt SFAS 142 on January 1, 2002 at which time amortization ofthe remaining book value of goodwill will cease and the new impairment-onlyapproach will apply and may not be applied retroactively. The SPG OperatingPartnership is currently evaluating the impacts of SFAS 141 and SFAS 142

.**Item 2. Management's Discussion and Analysis ofFinancial Condition and Results of Operations**

             Youshould read the following discussion in conjunction with the financialstatements and notes thereto that are included in this Form 10-Q. Certainstatements made in this report may constitute “forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995.These forward-looking statements involve known and unknown risks, uncertaintiesand other factors which may cause our actual results, performance orachievements to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements.  Those risks and uncertainties include, butare not limited to, the national, regional and local economic climate,competitive market forces, changes in market rental rates, trends in the retailindustry, the inability to collect rent due to the bankruptcy or insolvency oftenants or otherwise, and changes in market rates of interest and maintenanceof REIT status.  We undertake no duty orobligation to update or revise these forward-looking statements, whether as aresult of new information, future developments, or otherwise.

             ***Overview***

             Whowe are - Simon Property Group, L.P. (the “SPG Operating Partnership”), aDelaware limited partnership, is a majority owned subsidiary of Simon PropertyGroup Inc. (“SPG”), a Delaware corporation. SPG is a self-administered andself-managed real estate investment trust (“REIT”). Each share of common stockof SPG is paired with a beneficial interest in 1/100th of a share ofcommon stock of SPG Realty Consultants, Inc., also a Delaware corporation(“SRC” and together with SPG, the “Companies”). Units of partnership interests(“Units”) in the SPG Operating Partnership are paired with a Unit in SPG RealtyConsultants, L.P. (the “SRC Operating Partnership”). The SRC OperatingPartnership is the primary subsidiary of SRC. In this report, the terms “we”,“us” and “our” refer to the SPG Operating Partnership and its subsidiaries.

             Thefollowing Property acquisitions and openings impacted our consolidated resultsof operations in the comparative periods. In May 2000, we opened OrlandoPremium Outlots, in November 2000, we opened Arundel Mills, and in May 2001, weopened Montreal Forum.  In addition, wesold interests in several Properties throughout the comparative periods(collectively the “Property Transactions”). See “Liquidity and Capital Resources” and Note 10 to the financialstatements for additional information about acquisitions, openings anddisposals during the comparative period.

***Results of Operations***

*ThreeMonths Ended June 30, 2001 vs. Three Months Ended June 30, 2000*

             Operatingincome decreased $9.6 million or 4.4% in 2001 as compared to 2000.  This decrease primarily resulted from an$8.4 million increase in depreciation and amortization, a $11.8 million decreasein net tenant reimbursements, and a $4.4 million decrease in outlot land sales,partially offset by a $12.0 million increase in minimum rents, excluding ourSimon Brand Venture ("SBV") and Simon Business Network("SBN") initiatives, a $0.4 million increase in consolidated revenuesrealized from our SBV and SBN initiatives, and a $2.0 million increase inmiscellaneous income.  The increase indepreciation and amortization is primarily due to an increase in depreciablereal estate realized through renovation and expansion activities.  The decrease in net tenant reimbursements isthe result of true-up billings and lower spending levels on recoverableexpenditures.  The increase inmiscellaneous income includes $5.7 million in fees associated with the Kimswardtransaction charged to the Management Company offset by a $3.7 million decreasein miscellaneous income items in the prior year.  The increase in minimum rent primarily results from increasedoccupancy levels and the replacement of expiring tenant leases with renewalleases at higher minimum base rents. The impact of Property Transactions is an increase in operating incomeof $0.5 million for the comparative period.

             Incomefrom unconsolidated entities decreased $1.9 million in 2001, resulting from a$2.0 million decrease in income from unconsolidated partnerships and jointventures and a $0.1 million increase in income from the ManagementCompany.   Included in income from theManagement Company is $4.0 million of income from Kimsward, net of fees chargedby SPG, L.P. offset by a decrease in fee revenues and an increase in income taxexpense. The decrease in joint venture income is primarily related to our prorata share in the technology start up activities of MerchantWired, LLC, whichis partially offset by lower interest rates and the full period impact ofopening two properties in 2000.

             Interestexpense during the three months ended June 30, 2001 decreased $5.9 million, or3.8% compared to the same period in 2000. This decrease is primarily due to lower interest rates during 2001 andreductions in the corporate credit facilities offset by the issuance of $500million of unsecured notes on January 11, 2001.

             Netincome was $69.8 million for the three months ended June 30, 2001, whichreflects a $8.0 million or 10.3% decrease compared to the same period in 2000,primarily for the reasons discussed above. Net income was allocated to thepartners of the SPG Operating Partnership based on their preferred Unitpreferences and weighted average ownership interests in the SPG OperatingPartnerships during the period.

             Preferreddistributions of the SPG Operating Partnership represent distributions onpreferred Units.

*SixMonths Ended June 30, 2001 vs. Six Months Ended June 30, 2000*

             Operatingincome decreased $9.7 million or 2.3% in 2001 as compared to 2000.  This decrease primarily resulted from a$17.3 million increase in depreciation and amortization, a $14.8 milliondecrease in net tenant reimbursements, a $6.4 million decrease in outlot landsales, and a $1.6 million decrease in overage rents, partially offset by a$22.7 million increase in minimum rents, excluding our SBV and SBN initiatives,a $10.2 million increase in consolidated revenues realized from our SBV and SBNinitiatives, a $0.6 million increase in miscellaneous income, and a $1.3million decrease in other expenses.  Theincrease in depreciation and amortization is primarily due to an increase indepreciable real estate realized through renovation and expansionactivities.  The decrease in net tenantreimbursements is the result of true-up billings and lower spending levels onrecoverable expenditures. The increase in miscellaneous income includes $5.7million in fees associated with the Kimsward transaction charged to theManagement Company offset by a $5.1 million decrease in various miscellaneousincome items in the prior year.  Theincrease in minimum rent primarily results from increased occupancy levels andthe replacement of expiring tenant leases with renewal leases at higher minimumbase rents.  The increase in SBV and SBNrevenues includes $5.6 million from a contract termination payment.  The decrease in other expenses reflectslower partnership taxes in select states and lower professional fees.  The impact of Property Transactions is adecrease in operating income of $3.2 million for the comparative period.

 

             Incomefrom unconsolidated entities decreased $7.5 million in 2001, resulting from a$5.0 million decrease in income from the Management Company and a $2.5 milliondecrease in income from unconsolidated partnerships and joint ventures.  Included in income from the ManagementCompany is $4.0 million of income from Kimsward, LLC net of fees charged bySPG, L.P. offset by a decrease in fee revenues and an increase in income taxexpense.  The decrease in joint ventureincome is primarily related to technology start up activities of MerchantWired,LLC, which is partially offset by lower interest rates and the full year impactof opening two properties in 2000.

             Interestexpense during the first six months of 2001 decreased $6.6 million, or 2.1%compared to the same period in 2000. This decrease is primarily due to lower interest rates during 2001 andreductions in the corporate credit facilities.

             Duringthe first quarter of 2001 we recorded a $1.6 million expense as a cumulativeeffect of an accounting change, which includes our $1.4 million share fromunconsolidated entities, due to the adoption of SFAS 133  “Accounting for Derivative Instruments andHedging Activities,” as amended.  SeeNote 5 of the Notes to Unaudited Condensed Financial Statements included inItem 1 of this Form 10-Q for a discussion of the cumulative effect ofaccounting change.  During the firstquarter of 2000 we recorded a $12.3 million expense as a cumulative effect ofan accounting change, which includes our $1.8 million share from unconsolidatedentities, due to the adoption of Staff Accounting Bulletin No. 101, whichaddressed certain revenue recognition policies, including the accounting foroverage rent by a landlord.

             The$2.7 million net gain on the sales of assets in 2001 results from the sale ofour interests in one regional mall, one community center, and an officebuilding for a gross sales price of approximately $20.3 million. In 2000, werecognized a net gain of $8.7 million on the sale of two regional malls, threecommunity centers, and one office building.

             Netincome was $130.9 million for the six months ended June 30, 2001, whichreflects a $6.1 million or 4.4% decrease compared to the same period in 2000,primarily for the reasons discussed above. Net income was allocated to thepartners of the SPG Operating Partnership based on their preferred Unitpreferences and weighted average ownership interests in the SPG OperatingPartnerships during the period.

             Preferreddistributions of the SPG Operating Partnership represent distributions onpreferred Units.

             ***Liquidity and Capital Resources***

             Asof June 30, 2001, our balance of unrestricted cash and cash equivalents was$168.9 million, including $50.1 million related to our gift certificateprogram, which we do not consider available for general working capitalpurposes.  We have a $1.25 billionunsecured revolving credit facility (the “Credit Facility”) which had availablecredit of $625.5 million at June 30, 2001. The Credit Facility bears interestat LIBOR plus 65 basis points and has an initial maturity of August 2002, withan additional one-year extension available at our option. SPG and the SPGOperating Partnership also have access to public equity and debt markets.  Our current corporate bond ratings are Baa1by Moody’s Investors Service and BBB+ by Standard & Poor’s.

          Weanticipate that cash generated from operating performance will provide thefunds we need on a short- and long-term basis for operating expenses, interestexpense on outstanding indebtedness, recurring capital expenditures, anddistributions to Unitholders so that SPG can comply with REIT requirements.Sources of capital for nonrecurring capital expenditures, such as majorbuilding renovations and expansions, as well as for scheduled principalpayments, including balloon payments, on outstanding indebtedness are expectedto be obtained from:
 •excess  cash generated from operating performance •working  capital reserves •additional  debt financing and •additional  equity raised in the public markets.
             *Financing and Debt*   At June 30, 2001, we had consolidated debt of $8.7 billion, ofwhich $6.5 billion was fixed-rate debt bearing interest at a weighted averagerate of 7.3% and $2.2 billion was variable-rate debt bearing interest at aweighted average rate of 5.0%.  As ofJune 30, 2001, we had interest rate protection agreements related toconsolidated variable-rate debt with a total carrying amount of $451.2 million.Our interest rate protection agreements did not materially impact interestexpense or weighted average borrowing rates for the six months ended June 30,2001 or 2000.

             Ourshare of total scheduled principal payments of mortgage and other indebtedness,including unconsolidated joint venture indebtedness over the next five years is$6.5 billion, with $4.3 billion thereafter. We, together with SPG and the SRCOperating Partnership, have a combined ratio of consolidated debt-to-marketcapitalization was 51.9% and 57.0% at June 30, 2001 and December 31, 2000,respectively.

             Subsequentto June 30, 2001, we retired the third and final tranche of the CPI mergerfacility totaling $435.0 million. We generated the funds used to retire thisdebt primarily from our $277.0 million financing of four mall properties atfixed rate of 6.99%, our $110.0 million financing of one office complex atLIBOR plus 115 basis points and along with excess cash flow.

             SeeNote 7 of the Notes to Unaudited Condensed Financial Statements included inItem 1 of this Form 10-Q for a discussion of the unsecured debt issued onJanuary 11, 2001.

             *Acquisitions and Disposals*

             Wecontinue to review and evaluate a limited number of acquisition opportunities.We believe that acquisition activity in the near term will be a lesssignificant component of our growth strategy and amounts available under theCredit Facility, together with the ability to issue Units, provide adequatemeans to finance certain acquisitions. We cannot assure you that we will not berequired to, or will not elect to, even if not required to, obtain funds fromoutside sources, including through the sale of debt or equity securities, tofinance significant acquisitions, if any.

             *Dispositions*

             During the first six months of2001, we sold our interests in one regional mall, one community center, and oneoffice building for a combined gross sales price of $20.3 million, resulting ina net combined gain of $2.7 million. The net proceeds of approximately $19.6million, were used for general working capital purposes.

             Inaddition to the Property sales described above, as a continuing part of ourlong-term strategic plan, we continue to pursue the sale of our remainingnon-retail holdings and a number of retail assets that are no longer alignedwith our strategic criteria, including four Properties currently under contractfor sale. We expect the sale prices of our non-core assets, if sold, will notdiffer materially from the carrying value of the related assets.

             DevelopmentActivity

             *New Developments.*Development activities are an ongoing part of our business. During2000, we opened two new Properties aggregating approximately 1.7 million squarefeet of GLA. In total, we invested approximately $179.6 million on newdevelopments in 2000. With fewer new developments currently under construction,we expect 2001 development costs to be approximately $76.2 million.

             *Strategic Expansions and Renovations.*Oneof our key objectives is to increase the profitability and market share of theProperties through the completion of strategic renovations and expansions.During 2000, we invested approximately $201.6 million on redevelopment projectsand completed five major redevelopment projects, which added approximately 1.2million square feet of GLA to the Portfolio. We have a number of renovationand/or expansion projects currently under construction, or in preconstructiondevelopment and expect to invest approximately $121.0 million on redevelopmentin 2001.

             *International Expansion*. The SPG OperatingPartnership and the Management Company have a combined 29% ownership interestin European Retail Enterprises, B.V. (“ERE”), which is accounted for using theequity method of accounting.  Prior toJanuary 2001, the Management Company had a 29% ownership interest in GroupeBEG, S.A. (“BEG”), which was accounted for using the equity method ofaccounting.  In January 2001, BEG mergedwith ERE and became a wholly-owned subsidiary of ERE.  BEG and ERE are fully integrated European retail real estatedevelopers, lessors and managers. Our total cash investment in ERE and BEG atJune 30, 2001 was approximately $45.8 million. The current estimated additional commitment is approximately $24.5million.  However, since our futurecommitments are subject to certain performance and other criteria, includingour approval of development projects, these additional commitments may vary. Theagreements with BEG and ERE are structured to allow us to acquire an additional32.5% ownership interest over time. As of June 30, 2001, BEG and ERE had three Propertiesopen in Poland and two in France.

             OnMay 4, 2001 Montreal Forum opened in Montreal, Canada.  We have a 35.625% ownership interest in this243,000 square foot specialty retail center.

             *Technology Initiatives.*We continue with our technology initiativesthrough our association with several third party participants.  Our technology initiatives includeMerchantWired LLC, clixnmortar, and Constellation Real Technologies includingits investment in FacilityPro.com as described in our annual report. TheSPG Operating Partnership owns an approximately 53% noncontrolling interest inMerchantWired LLC and accounts for it using the equity method of accounting.

             Theseactivities may generate losses in the initial years of operation, whileprograms are being developed and customer bases are being established. We haveinvestments with a total carrying amount of approximately $51.2 million relatedto such programs through June 30, 2001. We expect to continue to invest in these programs over the next twoyears and together with the other members of MerchantWired, LLC have guaranteedour pro rata share of certain equipment lease payments.  We cannot assure you that our technologyprograms will succeed.

             *Distributions.*The SPG Operating Partnership declared a distribution of $0.525 perUnit in the second quarter of 2001, which represents a 4.0% increase over theprevious quarter. The current annual distribution rate is $2.10 per Unit.  Distributions during 2000 aggregated $2.02per Unit. Future distributions will be determined based on actual results ofoperations and cash available for distribution.

             ***Investing and Financing Activities***

             Cashused in investing activities of $30.2 million for the six months ended June 30,2001 includes capital expenditures of $151.4 million, investments inunconsolidated joint ventures of $20.5 million, and advances to the ManagementCompany of $2.2 million.  Capitalexpenditures include development costs of $40.9 million, renovation andexpansion costs of $78.8 million and tenant costs and other operational capitalexpenditures of $31.7 million.  Thesecash uses are partially offset by distributions from unconsolidated entities of$112.0 million, cash from the consolidation of ASP of $8.2 million, $4.1million in loan proceeds from the SRC Operating Partnership, and net proceedsof $19.6 million from the sale of three properties previously mentioned.

             Cashused in financing activities for the six months ended June 30, 2001 was $287.7million and includes net distributions of $285.1 million, and net payments of$2.6 million.

             ***Inflation***

             Inflationhas remained relatively low during the past four years and has had a minimalimpact on the operating performance of the Properties. Nonetheless,substantially all of the tenants’ leases contain provisions designed to lessenthe impact of inflation. These provisions include clauses enabling us toreceive percentage rentals based on tenants’ gross sales, which generallyincrease as prices rise, and/or escalation clauses, which generally increase rentalrates during the terms of the leases. In addition, many of the leases are forterms of less than ten years, which may enable us to replace existing leaseswith new leases at higher base and/or percentage rentals if rents of theexisting leases are below the then-existing market rate. Substantially all ofthe leases, other than those for anchors, require the tenants to pay aproportionate share of operating expenses, including common area maintenance,real estate taxes and insurance, thereby reducing our exposure to increases incosts and operating expenses resulting from inflation.

             However,inflation may have a negative impact on some of our other operating items.Interest and general and administrative expenses may be adversely affected byinflation as these specified costs could increase at a rate higher than rents.Also, for tenant leases with stated rent increases, inflation may have anegative effect as the stated rent increases in these leases could be lowerthan the increase in inflation at any given time.

             ***Seasonality***

             Theshopping center industry is seasonal in nature, particularly in the fourthquarter during the holiday season, when tenant occupancy and retail sales aretypically at their highest levels. In addition, shopping malls achieve most oftheir temporary tenant rents during the holiday season. As a result of theabove, our earnings are generally highest in the fourth quarter of each year.

             ***Retail Climate and TenantBankruptcies***

             Anumber of local, regional, and national retailers, including both in-line andanchor tenants, have recently announced store closings or filed forbankruptcy.  Some changeover in tenantsis normal in our business.  We lost800,000 square feet of tenants in 2000 and 1,200,000 square feet in the firstsix months of 2001 to bankruptcies. Pressures which affect consumer confidence, job growth, energy costs andincome gains, however, can affect retail sales growth and a continuing softeconomic cycle may impact our ability to retenant property vacancies resultingfrom these store closings or bankruptcies.

The geographical diversity of ourportfolio mitigates some of our risk in the event of an economic downturn.  In addition, the diversity of our tenant mixalso is a factor because no single retailer represents neither more than 2.0%of total GLA nor more than 3.5% of our annualized base minimum rent.  Bankruptcies and store closings may, in somecircumstances, create opportunities for us to release spaces at higher rents totenants with enhanced sales performance. Our previously demonstrated ability to successfully retenant anchor andin line store locations reflects our resilience to fluctuations in economiccycles.  While these factors reflectsome of the inherent strengths of our portfolio in a difficult retail environment,successful execution of a releasing strategy is not assured.

**Item 3. Qualitative and Quantitative Disclosure About MarketRisk**

             *Sensitivity Analysis.* Our future earnings,cash flows and fair values relating to financial instruments are dependent uponprevalent market rates of interest, primarily LIBOR. Based upon consolidatedindebtedness and interest rates at June 30, 2001, a 0.50% increase in themarket rates of interest would decrease annual future earnings and cash flowsby approximately $10.0 million, and would decrease the fair value of debt byapproximately $446.8 million. A 0.50% decrease in the market rates of interestwould increase annual future earnings and cash flows by approximately $10.0million, and would increase the fair value of debt by approximately $513.8million.  We manage our exposure tointerest rate risk by a combination of interest rate protection agreements toeffectively fix or cap a portion of our variable rate debt and by refinancingfixed rate debt at times when rates and terms are appropriate.

**Part II - Other Information**
 Item 1:   Legal Proceedings     Please  refer to Note 9 of the financial statements for a summary of material pending  litigation.     Item  6:  Exhibits and Reports on Form 8-K     (a)  Exhibits     None.     (b)  Reports on Form 8-K     None. 
 

**SIGNATURE**

             Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.
 **SIMON PROPERTY GROUP, L.P.** **By: Simon Property Group, Inc.** **General Partner**   /s/  Stephen E. Sterrett    Stephen  E. Sterrett, Executive  Vice President and Chief Financial Officer   Date:  August 14, 2001
 ***