Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

SIMON PROPERTY GROUP, L.P.(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation or organization)

333-157794
(Commission File No.)

34-175576
(I.R.S. Employer Identification No.)

225
West Washington Street
Indianapolis, Indiana 46204
(Address of principal executive offices)

(317) 636-1600
(Registrant's telephone number, including area code)

Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for 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

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the Registrant was required to submit and post such files). Yes o    No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý

Smaller reporting company o(Do not check if a smaller
reporting company)


Indicate by check mark whether Registrant is a shell company (as defined by Rule 12b-2 of the Exchange
Act). Yes o    No ý

Registrant has no common stock outstanding.



---





Simon Property Group, L.P. and Subsidiaries

Form 10-Q

INDEX



PagePart I  Financial InformationItem 1.

Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008


3Consolidated Statements of Operations and Comprehensive Income for the three months and nine months ended September 30, 2009 and 2008


4Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008


5Condensed Notes to Consolidated Financial Statements


6Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations


20Item 3.

Qualitative and Quantitative Disclosures About Market Risk


33Item 4.

Controls and Procedures


33Part II  Other InformationItem 1.

Legal Proceedings


34Item 1A.

Risk Factors


34Item 5.

Other Information


34Item 6.

Exhibits


34Signatures


35


2

---





Table of Contents



Simon Property Group, L.P. and SubsidiariesConsolidated Balance Sheets
(Dollars in thousands, except unit amounts)

September 30,
2009

December 31,
2008Unaudited

As AdjustedASSETS:Investment properties, at cost

$
25,405,801

$
25,205,715Less  accumulated depreciation


6,837,803


6,184,28518,567,998


19,021,430Cash and cash equivalents


3,745,693


773,544Tenant receivables and accrued revenue, net


352,638


414,856Investment in unconsolidated entities, at equity


1,507,483


1,663,886Deferred costs and other assets


1,166,792


1,028,333Note receivable from related party


636,000


520,700Total assets

$
25,976,604

$
23,422,749LIABILITIES:Mortgages and other indebtedness

$
18,669,121

$
18,042,532Accounts payable, accrued expenses, intangibles, and deferred revenue


1,050,269


1,086,248Cash distributions and losses in partnerships and joint ventures, at equity


443,081


380,730Other liabilities and accrued distributions


182,722


155,151Total liabilities


20,345,193


19,664,661Commitments and contingenciesPreferred Units, various series, at liquidation value, and noncontrolling redeemable interests in properties


530,438


656,121EQUITY:Partners' EquityPreferred units, 796,948 and 891,183 units outstanding, respectively. Liquidation values $39,847 and $42,486, respectively


45,786


48,671General Partner, 283,309,181 and 231,319,644 units outstanding, respectively


4,326,639


2,576,307Limited Partners, 57,959,705 and 56,368,410 units outstanding, respectively


885,149


627,799Total partners' equity


5,257,574


3,252,777Nonredeemable noncontrolling deficit interests in properties, net


(156,601
)

(150,810
)Total equity


5,100,973


3,101,967Total liabilities and equity

$
25,976,604

$
23,422,749


The accompanying notes are an integral part of these statements.

3

---





Table of Contents



Simon Property Group, L.P. and SubsidiariesUnaudited Consolidated Statements of Operations and Comprehensive Income
(Dollars in thousands, except per unit amounts)

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,2009

2008

2009

2008As Adjusted



As AdjustedREVENUE:Minimum rent

$
570,100

$
567,938

$
1,709,147

$
1,684,819Overage rent


19,806


26,295


45,799


60,782Tenant reimbursements


268,611


266,616


784,905


776,667Management fees and other revenues


29,988


33,350


90,694


101,249Other income


36,427


41,395


116,491


130,322Total revenue


924,932


935,594


2,747,036


2,753,839EXPENSES:Property operating


113,815


127,515


326,798


352,187Depreciation and amortization


250,151


235,915


758,173


700,575Real estate taxes


79,854


84,101


251,173


254,071Repairs and maintenance


19,151


20,392


61,925


75,258Advertising and promotion


23,226


22,942


61,555


64,054(Recovery of) provision for credit losses


(745
)

4,004


19,336


17,367Home and regional office costs


26,899


34,322


79,732


108,766General and administrative


4,509


5,035


13,867


15,432Impairment charge








140,478


Other


15,895


18,016


52,908


51,964Total operating expenses


532,755


552,242


1,765,945


1,639,674OPERATING INCOME


392,177


383,352


981,091


1,114,165Interest expense


(257,881
)

(239,955
)

(728,360
)

(702,207
)Loss on extinguishment of debt











(20,330
)Income tax benefit (expense) of taxable REIT subsidiaries


238


(972
)

2,904


(1,576
)Income from unconsolidated entities


4,655


17,312


15,694


13,060CONSOLIDATED NET INCOME


139,189


159,737


271,329


403,112Net income attributable to noncontrolling interests


2,700


2,758


8,064


7,551Preferred unit requirements


8,662


15,550


30,050


47,378NET INCOME ATTRIBUTABLE TO UNITHOLDERS

$
127,827

$
141,429

$
233,215

$
348,183NET INCOME ATTRIBUTABLE TO UNITHOLDERS
ATTRIBUTABLE TO:General Partner

$
105,547

$
112,809

$
191,555

$
277,314Limited Partners


22,280


28,620


41,660


70,869Net income attributable to unitholders

$
127,827

$
141,429

$
233,215

$
348,183BASIC EARNINGS PER UNITNet income attributable to unitholders

$
0.38

$
0.50

$
0.73

$
1.23DILUTED EARNINGS PER UNITNet Income attributable to unitholders

$
0.38

$
0.50

$
0.73

$
1.23Consolidated net income

$
139,189

$
159,737

$
271,329

$
403,112Unrealized (loss) income on interest rate hedges


4,883


2,838


(6,346
)

(3,781
)Net (loss) gain on derivative instruments reclassified from accumulated other comprehensive income (loss) into interest expense


(3,769
)

(6,739
)

(10,816
)

(3,514
)Currency translation adjustments


5,928


(3,640
)

695


(11,328
)Changes in available-for-sale securities and other


38,362


13,185


204,965


7,843Comprehensive income


184,593


165,381


459,827


392,332Comprehensive income attributable to noncontrolling interests


2,700


2,758


8,064


7,551Comprehensive income attributable to unitholders

$
181,893

$
162,623

$
451,763

$
384,781


The accompanying notes are an integral part of these statements.

4

---





Table of Contents



Unaudited Simon Property Group, L.P. and SubsidiariesUnaudited Consolidated Statements of Cash Flows
(Dollars in thousands)

For the Nine Months
Ended September 30,2009

2008As AdjustedCASH FLOWS FROM OPERATING ACTIVITIES:Consolidated net income

$
271,329

$
403,112Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization


765,325


686,852Impairment charge


140,478


Straight-line rent


(20,376
)

(26,050
)Equity in income of unconsolidated entities


(15,694
)

(13,060
)Distributions of income from unconsolidated entities


75,883


84,296Changes in assets and liabilities Tenant receivables and accrued revenue, net


83,518


24,195Deferred costs and other assets


(38,415
)

(26,901
)Accounts payable, accrued expenses, intangibles, deferred revenues and other liabilities


79,236


82,920Net cash provided by operating activities


1,341,284


1,215,364CASH FLOWS FROM INVESTING ACTIVITIES:Funding of loans to related parties


(120,000
)

(8,000
)Repayments of loans from related parties


4,700


25,300Capital expenditures, net


(313,124
)

(668,239
)Investments in unconsolidated entities


(16,569
)

(66,315
)Purchase of marketable and non-marketable securities


(132,984
)

(355,994
)Sale of marketable and non-marketable securities


44,446


8,459Distributions of capital from unconsolidated entities and other


162,827


191,508Net cash used in investing activities


(370,704
)

(873,281
)CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of units


1,639,376


9,452Purchase of preferred units and partnership units





(14,361
)Preferred unit redemptions


(87,689
)

(1,845
)Distributions to noncontrolling interest holders in properties


(21,668
)

(18,131
)Contributions from noncontrolling interest holders in properties


2,798


1,835Partnership distributions


(136,880
)

(808,540
)Mortgage and other indebtedness proceeds, net of transaction costs


3,121,880


4,109,078Mortgage and other indebtedness principal payments


(2,516,248
)

(3,475,437
)Net cash provided by (used in) financing activities


2,001,569


(197,949
)INCREASE IN CASH AND CASH EQUIVALENTS


2,972,149


144,134CASH AND CASH EQUIVALENTS, beginning of period


773,544


501,982CASH AND CASH EQUIVALENTS, end of period

$
3,745,693

$
646,116


The accompanying notes are an integral part of these statements.

5

---





Table of Contents



Simon Property Group, L.P. and Subsidiaries
Condensed Notes to Consolidated Financial Statements
(Unaudited)

(Dollars
in thousands, except unit and per unit amounts and where indicated in millions or billions)

1.     Organization

Simon Property Group, L.P. is a Delaware limited partnership and the majority-owned subsidiary of Simon Property Group, Inc. In these condensed
notes to the unaudited consolidated financial statements, the terms "Operating Partnership", "we", "us" and "our" refer to Simon Property Group, L.P. and its subsidiaries and the term "Simon
Property" refers to Simon Property Group, Inc. Simon Property, a Delaware corporation, is a self-administered and self-managed real estate investment trust, or REIT,
under the Internal Revenue Code, as amended (the "Code"). According to our partnership agreement, we are required to pay all expenses of Simon Property.

We
own, develop and manage retail real estate properties, which consist primarily of regional malls, Premium Outlet® centers, The Mills®, and community/lifestyle
centers. As of September 30, 2009, we owned or held an interest in 325 income-producing properties in the United States, which consisted of 163 regional malls, 41 Premium Outlet centers, 70
community/lifestyle centers, 36 properties acquired in the 2007 acquisition of The Mills Corporation, or the Mills acquisition, and 15 other shopping centers or outlet centers in 41 states and
Puerto Rico. Of the 36 properties acquired in the Mills portfolio, 16 of these properties are The Mills, 16 are regional malls, and four are community centers. We also own an interest in one
parcel of land held in the United States for future development. Internationally, as of September 30, 2009, we had ownership interests in 51 European shopping centers (France,
Italy and Poland), eight Premium Outlet centers in Japan, one Premium Outlet center in Mexico, one Premium Outlet center in South Korea, and three shopping centers in China. Also, through joint
venture arrangements we have ownership interest in the following properties under development internationally: a 24% interest in two shopping centers in Italy and a 32.5% interest in one additional
shopping center under construction in China.

2.     Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of all majority-owned subsidiaries, and all significant inter-company amounts
have been eliminated. Due to the seasonal nature of certain operational activities, the results for the interim period ended September 30, 2009 are not necessarily indicative of the results to
be expected for the full year.

These
consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required
by accounting principles generally accepted in the United States (GAAP) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial
statements. In the opinion of management, all adjustments necessary for fair presentation (including normal recurring accruals) have been included. The consolidated financial statements in this
Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes contained in our 2008 Annual Report on Form 10-K.

As
of September 30, 2009, we consolidated 204 wholly-owned properties and 18 additional properties that are less than wholly-owned, but which we control or for which we are the
primary beneficiary. We account for the remaining 167 properties, or the joint venture properties, using the equity method of accounting. We manage the day-to-day operations of
93 of the 167 joint venture properties, but have determined that our partner or partners have substantive participating rights with respect to the assets and operations of these joint venture
properties. Our investments in joint ventures in Japan, Europe, and Asia comprise 64 of the remaining 74 properties. The international properties are managed locally by joint ventures in which we
share oversight responsibility with our partner. Additionally, we account for our

6

---



Table of Contents

investment
in SPG-FCM Ventures, LLC, or SPG-FCM, which acquired The Mills Corporation and its majority-owned subsidiary, The Mills Limited Partnership, collectively
Mills, in April 2007, using the equity method of accounting. We have determined that SPG-FCM is not a variable interest entity (VIE) and that Farallon Capital Management, L.L.C., or
Farallon, our joint venture partner, has substantive participating rights with respect to the assets and operations of SPG-FCM pursuant to the applicable partnership agreements.

We
allocate net operating results after preferred distributions based on our partners' respective weighted average ownership. Simon Property owns a majority of our common units of
partnership interest, or units, and certain series of our preferred units. Simon Property's weighted average ownership interest in us was 82.1% and 79.7% for the nine months ended September 30,
2009 and 2008, respectively. As of September 30, 2009 and December 31, 2008, Simon Property's ownership interest in us was 83.0% and 80.4%, respectively. We adjust the limited partners'
interests at the end of each period to reflect their respective interests in us.

Preferred
unit requirements in the accompanying consolidated statements of operations and cash flows represent distributions on outstanding preferred units at the time of declaration of
partnership interests held by limited partners.



We made certain reclassifications of prior period amounts in the consolidated financial statements to conform to the 2009 presentation.
The reclassifications were to reflect the retrospective adoption of a newly issued accounting standard related to noncontrolling interests in consolidated financial statements and the reassessment of
the classification and measurement of redeemable securities, as further described in Note 3. These reclassifications had no impact on previously reported net income available to common
unitholders or earnings per unit.



We have evaluated the financial statements for subsequent events through the time of the filing of this Form 10-Q.

3.     Significant Accounting Policies



We consider all highly liquid investments purchased with an original maturity of 90 days or less to be cash and cash
equivalents. Cash equivalents are carried at cost, which approximates market value. Cash equivalents generally consist of commercial paper, banker acceptances, Eurodollars, repurchase agreements and
money market funds or accounts. Cash and cash equivalents, as of September 30, 2009, include a balance of $30.9 million related to our co-branded gift card programs which we
do not consider available for general working capital purposes. Financial instruments that potentially subject us to concentrations of credit risk include our cash and cash equivalents and our tenant
receivables. We place our cash and cash equivalents with high credit quality institutions. However, at certain times, the cash and cash equivalents deposited with any institution may be in excess of
FDIC and SIPC insurance limits.



Marketable securities consist primarily of the investments of our captive insurance subsidiaries, our investment in shares of common
stock of Liberty International PLC, or Liberty, our deferred compensation plan investments, and certain investments held to fund the debt service requirements of debt previously secured by
investment properties that have been sold.

7

---



Table of Contents

The
types of securities included in the investment portfolio of our captive insurance subsidiaries typically include U.S. Treasury or other U.S. government securities as
well as corporate debt securities with maturities ranging from 1 to 10 years. These securities are classified as available-for-sale and are valued based upon
quoted market prices or other observable inputs when quoted market prices are not available. The amortized cost of debt securities, which approximates fair value, held by our captive insurance
subsidiaries is adjusted for amortization of premiums and accretion of discounts to maturity. Our investment in Liberty is also accounted for as an available-for-sale security.
Liberty operates regional shopping centers and is the owner of other retail assets throughout the United Kingdom, as well as certain real estate assets in the U.S. Liberty is a
U.K. FTSE 100 listed company. Liberty elected to be treated as a U.K. Real Estate Investment Trust on January 1, 2007. Our interest in Liberty is adjusted to their quoted
market price, including a related foreign exchange component. Changes in the values of these securities are recognized in accumulated other comprehensive income (loss) until the gain or loss is
realized or until any unrealized loss is deemed to be other-than-temporary.

During
the quarterly period ended June 30, 2009, we recognized a non-cash charge of $140.5 million, or $0.42 per diluted unit, representing an
other-than-temporary impairment in fair value below the carrying value of our investment in Liberty. As of June 30 and September 30, 2009, we owned
35.4 million shares at a weighted average cost per share of £5.74. As of June 30, and September 30, 2009, Liberty's quoted market price was £3.97 and
£4.79 per share, respectively. As a result of the significance and duration of the decline in the total share price at June 30, 2009, including currency revaluations, the decline in
value was deemed an other-than-temporary impairment, which established a new cost basis of our investment in Liberty. As a result, changes in
available-for-sale securities and other in the consolidated statement of operations and comprehensive income include the reclassification of $140.5 million from
accumulated other comprehensive income to earnings related to this non-cash charge. Prior to the quarter ending June 30, 2009, the changes in value of our Liberty investment were
reflected in other comprehensive income. For the quarter ending September 30, 2009, we resumed marking our Liberty investment to market through other comprehensive income. The resulting
mark-to-market adjustment for the quarterly period ended September 30, 2009 was an increase in the value of Liberty of $37.7 million with a corresponding
adjustment in other comprehensive income.

Our
insurance subsidiaries are required to maintain statutory minimum capital and surplus as well as maintain a minimum liquidity ratio. Therefore, our access to this investment
portfolio may be limited. Our deferred compensation plan investments are classified as trading securities and are valued based upon quoted market prices. The investments have a matching liability
recorded as the amounts are fully payable to the employees who earned the compensation and who are in the deferred compensation plan. Changes in the values of these securities are recognized in
earnings, but because of the matching liability the impact to net income is zero. In addition, as of September 30, 2009 and December 31, 2008,
we had investments of $52.3 million and $53.4 million, respectively, which must be used to fund the debt service requirements of previously secured by investment properties sold. These
investments are classified as held-to-maturity and are recorded at amortized cost as we have the ability and intent to hold these investments to maturity.

During
2008, we made an investment of $70 million in a non-marketable security that we account for under the cost method. To the extent an
other-than-temporary decline in fair value is deemed to have occurred, we would adjust this investment to its estimated fair value.

The
net unrealized gains as of September 30, 2009 were approximately $39.6 million and represented the valuation and related currency adjustments for our marketable
securities. As of September 30, 2009, other than the adjustment related to our investment in Liberty recorded during the second quarter, we do not consider the decline in value of any of our
other marketable and non-marketable securities to be an other-than-temporary impairment, as these market value declines, if any, have existed for a short period of
time, and, in the case of debt securities, we have the ability and intent to hold these securities to maturity.

8

---



Table of Contents



We hold marketable securities that total $476.0 million at September 30, 2009, and are considered to have Level 1
fair value inputs. In addition, we have derivative instruments which are classified as having Level 2 inputs which consist primarily of interest rate swap agreements with a gross liability
balance of $16.7 million and interest rate cap agreements with a gross asset value of $3 million, which are offset by a corresponding counter position cap liability of the same amount.
Level 1 fair value inputs are quoted prices for identical items in active, liquid and visible markets such as stock exchanges, and Level 2 fair value inputs are observable information
for similar items in active or inactive markets, and appropriately consider counterparty creditworthiness in the valuations. See Note 6 for a discussion of fair value of debt.



Effective January 1, 2009, we adopted a newly issued accounting standard for noncontrolling interests, which requires a
noncontrolling interest in a subsidiary to be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest to be included within consolidated
net income. This standard also requires consistency in the manner of reporting changes in the parent's ownership interest and requires fair value measurement of any noncontrolling equity investment
retained in a deconsolidation. In connection with our adoption, we also reviewed and retrospectively adopted the measurement and classification provisions for redeemable securities as further
discussed below. As a result, we adjusted the carrying amounts of noncontrolling redeemable interests held by third parties in certain of our properties to redemption values at each reporting date.
Because holders of the noncontrolling redeemable interests in properties can require us to redeem these interests for cash, we have classified these noncontrolling redeemable interests outside of
permanent equity. These adjustments increased the December 31, 2007 carrying value of these noncontrolling redeemable interests by $41.5 million, with a corresponding decrease to
partners' equity. Subsequent adjustments to the carrying amounts of these noncontrolling redeemable interests in properties, to reflect the change in redemption value at the end of each reporting
period, are recorded to partners' equity.

Our
reassessment of the measurement and classification provisions for redeemable securities also resulted in the reclassification of our 6% Series I Convertible Perpetual
Preferred Units (Series I Preferred Units), our Series D 8% Cumulative Redeemable Preferred Units (Series D Preferred Units), and our 7.5% Cumulative Redeemable Preferred Units
(7.5% Preferred Units) from permanent equity to temporary equity due to the possibility that we could be required to redeem the securities for cash. For the Series I Preferred Units, the
reclassification to temporary equity resulted from the holders' ability to redeem this series of preferred units for cash upon the occurrence of a change in control event, which would include a change
in the majority of the directors on Simon Property Group's Board of Directors, or the Board, that occurs over a two year period. Such a change in Board composition could be deemed outside of our
control. For the Series D Preferred Units and 7.5% Preferred Units, the reclassification to temporary equity was required because redemption of these series of preferred units requires the
delivery of fully registered shares of Simon Property common stock. The previous and current carrying amount of all of these series of preferred units is equal to their liquidation value, which is the
amount payable upon the occurrence of any event that could potentially result in cash settlement.

As
a result of the reclassifications, total equity at December 31, 2008 decreased by $720.2 million from the $3.8 billion previously reported. Effective
June 30, 2009, we also reclassified $2.6 million to temporary equity related to our Series C Cumulative Redeemable Preferred Units which were subsequently redeemed during the
third quarter 2009.

Our
reassessment also involved an evaluation of the appropriateness of classifying the units held by Simon Property and by our limited partners within permanent equity. We considered
several significant factors in determining the appropriate classification of those units in the consolidated balance sheets. First, as a limited partnership, all routine decisions relating to our
operations and distributions are made by

9

---



Table of Contents

Simon
Property, acting as our sole General Partner. The decisions of the General Partner are made by the Board and Simon Property's management. We have no other governance structure. Secondly, the
sole asset of Simon Property is its interest in us. As a result, a share of Simon Property common stock (if owned by us) is best characterized as being similar to a treasury share and thus not an
asset of the Operating Partnership.

Limited
partners have the right under our partnership agreement to exchange their units for shares of Simon Property common stock or cash as selected by the General Partner. Accordingly,
we classify limited partner units in permanent equity because we have the unrestricted ability to issue shares of Simon Property common stock to limited partners exercising their exchange rights
rather than using cash or other assets. Under our partnership agreement, we are required to redeem units held by Simon Property only when Simon Property has redeemed shares of its common stock. We
classify units held by Simon Property in permanent equity because the decision to redeem those units would be made through our governance structure, with Simon Property making the decision on our
behalf.

The
detail of the carrying value, which is at liquidation value, of the preferred units and the carrying amount of the noncontrolling redeemable interests in properties classified in
temporary equity is as follows:

September 30,
2009

December 31,
20086% Series I Convertible Perpetual Preferred Units, 19,000,000 units authorized, 9,108,635 issued and outstanding

$
455,432

$
455,432Series D 8% Cumulative Redeemable Preferred Units, 2,700,000 units authorized, 1,356,814 units issued and outstanding at 2008





40,7047.5% Cumulative Redeemable Preferred Units, 260,000 units authorized, 255,373 issued and outstanding


25,537


25,5377.75%/8.00% Cumulative Redeemable Preferred Units, 850,698 units issued and outstanding at 2008





85,070Total carrying value of preferred units


480,969


606,743Noncontrolling redeemable interests in properties


49,469


49,378Total preferred units and noncontrolling redeemable interests in properties

$
530,438

$
656,121


The
adoption also resulted in the reclassification to equity of noncontrolling nonredeemable interests (deficit interests) in properties. Further, as a result of the adoption, net income
attributable to noncontrolling interests (which includes nonredeemable noncontrolling interests in consolidated properties) is now excluded from the determination of consolidated net income.
Corresponding changes have also been made to the accompanying consolidated statements of cash flows. Such changes result in a net increase to cash flows provided by operating activities with an
offsetting increase to cash flows used in financing activities related to distributions to noncontrolling interest holders in properties.

10

---



Table of Contents

A
rollforward of noncontrolling nonredeemable interests in properties for the three and nine month periods ending September 30 is as follows:

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,2009

2008

2009

2008Noncontrolling nonredeemable interests, beginning of period

$
(153,801
)
$
(145,675
)
$
(150,810
)
$
(141,251
)Net income attributable to noncontrolling nonredeemable interests


2,700


2,758


8,064


7,551Distributions to noncontrolling nonredeemable interest holders


(5,592
)

(4,363
)

(16,569
)

(16,153
)Other


92


2,497


2,714


5,070Total noncontrolling nonredeemable interests in properties, end of period

$
(156,601
)
$
(144,783
)
$
(156,601
)
$
(144,783
)




On January 1, 2009, we adopted newly issued accounting guidance on disclosures about derivative instruments and hedging
activities which amends and expands previous disclosure requirements. The guidance requires qualitative disclosures about objectives and strategies for using derivatives and quantitative disclosures
about the fair value of and gains and losses on derivative instruments. We record all derivatives on the balance sheet at fair value. The accounting for
changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and
whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. We use a variety of derivative financial instruments in the normal course of business to manage or
hedge the risks associated with our indebtedness and interest payments. Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to
interest rate movements. To accomplish this objective, we primarily use interest rate swaps and caps. We require that hedging derivative instruments be highly effective in reducing the risk exposure
that they are designated to hedge. As a result, there was no significant ineffectiveness from any of our derivative activities during the period. We formally designate any instrument that meets these
hedging criteria as a hedge at the inception of the derivative contract.

As
of September 30, 2009, we had the following outstanding interest rate derivatives related to interest rate risk:

Interest Rate Derivative

Number of Instruments

Notional AmountInterest Rate Swaps


4

$
695.0 millionInterest Rate Caps


3

$
390.0 million


The
carrying value of our interest rate swap agreements, at fair value, is included with other liabilities and was $15.3 million as of September 30, 2009. The interest rate
cap agreements were of no net value at September 30, 2009 and we generally do not apply hedge accounting to these arrangements. The total gross accumulated other comprehensive loss related to
our derivative activities, including our share of the other comprehensive loss from joint venture properties, approximated $56.3 million as of September 30, 2009.

We
are also exposed to fluctuations in foreign exchange rates on investments denominated in a foreign currency that we hold, primarily in Japan and Europe. We use currency forward
agreements to manage our exposure to changes in foreign exchange rates on certain Yen-denominated receivables. Currency forward agreements involve fixing the USD-Yen exchange
rate for delivery of a specified amount

11

---



Table of Contents

of
foreign currency on a specified date. The currency forward agreements are typically cash settled in US dollars for their fair value at or close to their settlement date. We entered into
USD-Yen forwards during 2009 for approximately ¥3 billion that we expect to receive through April 2011 at an average exchange rate of 97.1 USD:Yen, of which
approximately ¥1.6 billion remains as of September 30, 2009. The September 30, 2009 liability balance related to these forwards was $1.4 million and is included
in other liabilities. We have reflected the changes in fair value for these forward contracts in earnings. The underlying currency adjustments on the foreign-denominated receivables are also reflected
in income and generally offset the amounts in earnings for these forward contracts.

We
have no credit-risk-related hedging or derivative activities.

4.     Per Unit Data

We determine basic earnings per unit based on the weighted average number of units outstanding during the period. We determine diluted earnings per unit based on
the weighted average number of units outstanding combined with the incremental weighted average units that would have been outstanding assuming all potentially dilutive units were converted into units
at the earliest date possible. The following table sets forth the computation of our basic and diluted earnings per unit.

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,2009

2008

2009

2008Net Income available to Unitholders  Basic & Dilutive

$
127,827

$
141,429

$
233,215

$
348,183Weighted Average Units Outstanding  Basic


338,766,765


282,384,237


318,198,075


281,998,486Effect of stock options of Simon Property


336,896


569,458


291,433


592,850Effect of contingently issuable units from unit distributions


850,185





1,544,458


Weighted Average Units Outstanding  Diluted


339,953,846


282,953,695


320,033,966


282,591,336


For
the nine months ended September 30, 2009, potentially dilutive securities include options to purchase shares of Simon Property common stock , contingently issuable units from
unit distributions and preferred units that are convertible into or exchangeable for units. The only securities that had a
dilutive effect for the three and nine months ended September 30, 2009 were stock options of Simon Property and contingently issuable units from unit distributions. For the three and nine
months ended September 30, 2008, the only securities that had a dilutive effect were stock options of Simon Property. We accrue distributions when they are declared.

5.     Investment in Unconsolidated Entities



Joint ventures are common in the real estate industry. We use joint ventures to finance properties, develop new properties, and
diversify our risk in a particular property or portfolio. We held joint venture ownership interests in 103 properties in the United States as of September 30, 2009 and
December 31, 2008. We also held interests in two joint ventures which owned 51 European shopping centers as of September 30, 2009 and December 31, 2008. At
September 30, 2009, we also held interests in eight joint venture properties under operation in Japan, three joint venture properties in China, one joint venture property in Mexico, and one
joint venture property in South Korea. We account for these joint venture properties using the equity method of accounting.

12

---



Table of Contents

Substantially
all of our joint venture properties are subject to rights of first refusal, buy-sell provisions, or other sale or marketing rights for partners which are
customary in real estate joint venture agreements and the industry. Our partners in these joint ventures may initiate these provisions at any time (subject to any applicable lock up or similar
restrictions), which could result in either the sale of our interest or the use of available cash or borrowings to acquire a joint venture interest from our partner.



As part of the Mills acquisition, we made loans to SPG-FCM and Mills primarily at rates of LIBOR plus 270-275
basis points. These funds were used by SPG-FCM and Mills to repay loans and other obligations, including the redemption of Mills' preferred stock. As of September 30, 2009 and
December 31, 2008, the outstanding balance of our remaining loan to SPG-FCM was $636.0 million and $520.7 million, respectively. During the first nine months of 2009
and 2008, we recorded approximately $6.9 million and $11.7 million in interest income (net of inter-entity eliminations), respectively, related to this loan. The loan facility bears
interest at a rate of LIBOR plus 275 basis points and matures on June 8, 2010, with two available one-year extensions.



European Joint Ventures.We conduct our international operations in Europe through two European joint ventures: Simon Ivanhoe
S.à.r.l., or Simon Ivanhoe, and Gallerie Commerciali Italia, or GCI. The carrying amount of our total combined investment in these two joint venture investments was
$226.8 million and $224.2 million as of September 30, 2009 and December 31, 2008, respectively, including all related components of accumulated other comprehensive income.
We have a 50% ownership in Simon Ivanhoe and a 49% ownership in GCI.

Asian Joint Ventures.We conduct our investment in the eight international Premium Outlet operations in Japan through joint
ventures in which we hold
a 40% ownership interest. The carrying amount of our investment in these joint ventures was $310.6 million and $312.6 million as of September 30, 2009 and December 31,
2008, respectively, including all related components of accumulated other comprehensive income. On June 1, 2007, we opened Yeoju Premium Outlets, our first Premium Outlet center in South Korea,
in which we hold a 50% ownership interest. Our investment in this property was $22.5 million and $18.0 million as of September 30, 2009 and December 31, 2008, respectively,
including all related components of accumulated other comprehensive income.

We
also own a 32.5% interest shopping center joint venture arrangements located in China, and a 32.5% ownership in the management operation overseeing these projects, collectively
referred to as Great Mall Investments, Ltd., or GMI. Currently three of the centers are open and operational, and one
additional center is under construction and due for completion in late 2009. Our combined investment in GMI was approximately $57.6 million and $53.9 million as of September 30,
2009 and December 31, 2008, respectively, including the related cumulative translation adjustments.

We
account for all of our international joint venture investments using the equity method of accounting.

13

---



Table of Contents



Summary financial information (in thousands) of all of our joint ventures and a summary of our investment in and share of income from
such joint ventures follow. We condensed into separate line items major captions of the statements of operations for joint venture interests sold or consolidated. Consolidation occurs when we acquire
an additional interest in the joint venture and, as a result, gain unilateral control of the property or are determined to be the primary beneficiary. We reclassify these line items into "Discontinued
Joint Venture Interests" and "Consolidated Joint Venture Interests" on the following balance sheets and statements of operations, if material, so that we may present comparative results of operations
for these joint venture properties held as of September 30, 2009.

September 30,
2009

December 31,
2008BALANCE SHEETSAssets:Investment properties, at cost

$
21,803,214

$
21,472,490Less  accumulated depreciation


4,390,644


3,892,95617,412,570


17,579,534Cash and cash equivalents


825,816


805,411Tenant receivables and accrued revenue, net


374,028


428,322Investment in unconsolidated entities, at equity


243,347


230,497Deferred costs and other assets


600,125


594,578Total assets

$
19,455,886

$
19,638,342Liabilities and Partners' Equity:Mortgages and other indebtedness

$
16,896,737

$
16,686,701Accounts payable, accrued expenses, intangibles, and deferred revenue


926,516


1,070,958Other liabilities


1,107,457


982,254Total liabilities


18,930,710


18,739,913Preferred units


67,450


67,450Partners' equity


457,726


830,979Total liabilities and partners' equity

$
19,455,886

$
19,638,342Our Share of:Total assets

$
7,994,929

$
8,056,873Partners' equity

$
369,166

$
533,929Add: Excess Investment


695,236


749,227Our net Investment in Joint Ventures

$
1,064,402

$
1,283,156Mortgages and other indebtedness

$
6,649,168

$
6,632,419


"Excess
Investment" represents the unamortized difference of our investment over our share of the equity in the underlying net assets of the joint ventures acquired. We amortize excess
investment over the life of the related properties, typically no greater than 40 years, and the amortization is included in the reported amount of income from unconsolidated entities.

14

---





Table of Contents

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,STATEMENTS OF OPERATIONS

2009

2008

2009

2008Revenue:Minimum rent

$
488,052

$
486,586

$
1,445,618

$
1,435,067Overage rent


34,204


26,910


85,141


72,439Tenant reimbursements


243,201


257,259


719,845


730,597Other income


37,039


61,862


115,946


145,380Total revenue


802,496


832,617


2,366,550


2,383,483Operating Expenses:Property operating


178,291


177,761


489,616


494,498Depreciation and amortization


194,727


192,787


580,215


572,256Real estate taxes


57,262


63,254


190,036


195,627Repairs and maintenance


26,413


28,582


77,048


89,085Advertising and promotion


16,005


16,119


44,936


45,241Provision for credit losses


3,523


6,244


18,910


14,072Other


43,487


37,640


131,680


123,245Total operating expenses


519,708


522,387


1,532,441


1,534,024Operating Income


282,788


310,230


834,109


849,459Interest expense


(221,166
)

(243,569
)

(661,586
)

(727,279
)(Loss) income from unconsolidated entities


(3,170
)

346


(2,383
)

(3,783
)Income from Continuing Operations


58,452


67,007


170,140


118,397Income from discontinued joint venture interests











47Net Income

$
58,452

$
67,007

$
170,140

$
118,444Third-Party Investors' Share of Net Income

$
39,710

$
37,846

$
112,600

$
71,403Our Share of Net Income


18,742


29,161


57,540


47,041Amortization of Excess Investment


(14,087
)

(11,849
)

(41,846
)

(33,981
)Income from Unconsolidated Entities

$
4,655

$
17,312

$
15,694

$
13,060


6.     Debt



Our unsecured debt currently consists of $11.6 billion of senior unsecured notes and our $3.5 billion unsecured credit
facility, or Credit Facility. The Credit Facility bears interest at LIBOR plus 37.5 basis points and an additional facility fee of 12.5 basis points. The Credit Facility matures January 11,
2010 and may be extended one year at our option.

During
the nine months ended September 30, 2009, we repaid five series of unsecured notes totaling $900.0 million, which had fixed rates ranging from 3.50% to 8.63%.

On
March 25, 2009, we issued $650.0 million of senior unsecured notes at a fixed interest rate of 10.35% due April 1, 2019. We used the proceeds from the offering to
reduce borrowings on the Credit Facility and for general working capital purposes.

On
May 15, 2009, we issued $600.0 million of senior unsecured notes at a fixed interest rate of 6.75% due May 15, 2014. On August 11, 2009, we issued an
additional $500.0 million of the same series of senior unsecured notes in a re-opening of the initial offering. We used the proceeds from the offerings for general working capital
purposes.

During
the nine months ended September 30, 2009, we drew amounts from the Credit Facility to fund the repayment of $600.0 million of maturing unsecured notes. We repaid a
total of $1.2 billion on the Credit Facility during the nine months ended September 30, 2009. The total outstanding balance of the

15

---



Table of Contents

Credit
Facility as of September 30, 2009 was $456.2 million, all related to the U.S. dollar equivalent of Euro and Yen-denominated borrowings, and the maximum amount
outstanding during the nine months ended September 30, 2009 was approximately $1.6 billion. During the nine months ended September 30, 2009, the weighted average outstanding
balance was approximately $739.8 million.



Total secured indebtedness was $6.6 billion and $6.3 billion at September 30, 2009 and December 31, 2008,
respectively.

On
July 30, 2009, we borrowed $400.0 million on a loan which matures on August 1, 2016 and bears interest at a fixed rate of 8.00%. This loan is secured by
cross-collateralized, cross-defaulted mortgages on Greenwood Park Mall, South Park Mall, and Walt Whitman Mall.



The carrying value of our variable-rate mortgages and other loans approximates their fair values. We estimate the fair
values of consolidated fixed-rate mortgages using cash flows discounted at current borrowing rates and other indebtedness using cash flows at current market rates. We estimate the fair
values of consolidated fixed-rate unsecured notes using quoted market prices, or, if no quoted market prices are available, we use quoted market prices for securities with similar terms
and maturities. The fair values of our fixed-rate debt at September 30, 2009 and December 31, 2008 was $16.5 billion and $12.4 billion, respectively, compared
to carrying values at those dates of $16.2 billion and $14.9 billion, respectively.

7.     Equity

The Compensation Committee of the Board awarded 242,183 shares of restricted stock of Simon Property to employees on February 27, 2009 as part of the 2008
stock incentive program created under The Simon Property Group, L.P. 1998 Stock Incentive Plan at a fair market value of $33.10 per share, 19,315 shares of restricted stock of Simon
Property on March 2, 2009 at a fair market value of $29.96 per share, and 764 shares of restricted stock of Simon Property on April 13, 2009 at a fair market value of $42.65 per
share. On May 8, 2009, Simon Property's non-employee Directors were awarded 11,178 shares of restricted stock of Simon Property under this plan at a fair market value of
$53.93 per share, and 3,250 shares of restricted stock on June 1, 2009 at a fair market value of $56.39 per share. The fair market value of the restricted stock of Simon Property awarded
on February 27, 2009, March 2, 2009 and April 13, 2009 is being recognized as expense over the four-year vesting service period. The fair market value of the
restricted stock of Simon Property awarded on May 8, 2009 and June 1, 2009, is being recognized as expense over a one-year vesting service period. In accordance with our
partnership agreement, we issued an equal number of units to Simon Property.

During
the first nine months of 2009, fifty-eight limited partners exchanged 1,345,567 of our units for an equal number of shares of Simon Property common stock. These transactions
increased Simon Property's ownership interest in us.

On
September 18, 2009, we issued 2,029,044 units to Simon Property and 411,489 units to limited partners related to our quarterly distribution. The price per share of the
Simon Property common stock on September 18, 2009 was $73.97.

On
June 19, 2009, we issued 2,525,204 units to Simon Property and 514,720 units to limited partners related to our quarterly distribution. The price per share of the
Simon Property common stock on June 19, 2009 was $52.92.

On
May 12, 2009, Simon Property issued 23,000,000 shares of common stock in a public offering at a public offering price of $50.00 per share. As a result, we issued
23,000,000 units to Simon Property and used the proceeds from the offering for general working capital purposes.

16

---



Table of Contents

On
March 25, 2009, Simon Property issued 17,250,000 shares of common stock in a public offering at a public offering price of $31.50 per share. As a result, we issued 17,250,000
units to Simon Property and used the proceeds from the offering to repay amounts drawn on the Credit Facility and for general working capital purposes.

On
March 18, 2009, we issued 5,519,765 units to Simon Property and 1,345,151 units to limited partners related to our quarterly distribution. The price per share of the Simon
Property common stock on March 18, 2009 was $35.38.

The
Board had authorized the repurchase of up to $1.0 billion of Simon Property common stock through July 2009. No purchases were made as part of this program in 2009. The program
was not renewed and has now expired.



For the quarter ending September 30, 2009, holders of our Series I Preferred Units were not eligible to convert their
preferred units during the quarter into units as the triggering price of $77.07 was not met as of June 30, 2009. As of September 30, 2009, the conversion trigger price of $75.34 had
again not been met. On June 30, 2009, we redeemed all outstanding 7.75%/8.00% Cumulative Redeemable Preferred Units for cash in the aggregate amount of $85,070. The redemption price was the
liquidation value of the preferred units which was also its carrying value. On August 27, 2009, we redeemed all outstanding 7.50% Cumulative Redeemable Preferred Units and 7.00% Cumulative
Redeemable Preferred Units for units. The redemption price was the liquidation values of $25,537 and $1,875, respectively, which were also their carrying values.



The following table provides a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to
partners and equity attributable to noncontrolling interests:

Preferred
Units

Simon Property
(Managing General
Partner)

Limited
Partners

Noncontrolling
interests

Total EquityJanuary 1, 2009

$
48,671

$
2,576,307

$
627,799

$
(150,810
)
$
3,101,967General partner contributions





1,586








1,586Proceeds of public offering of Simon Property stock





1,638,340








1,638,340Limited partner units converted to common units





16,079


(16,079
)




Preferred units converted to limited partner units








40,724





40,724Other


(2,885
)

11,614


537


2,714


11,980Adjustment to limited partners' interest from increased ownership in the Operating Partnership





(170,655
)

170,655





Distributions (and units issued) to limited partners, excluding preferred interests classified as temporary equity


(2,502
)

(88,095
)

(18,737
)

(16,569
)

(125,903
)Comprehensive income, excluding preferred distributions on temporary equity preferred units of $27,547


2,502


341,463


80,250


8,064


432,279September 30, 2009

$
45,786

$
4,326,639

$
885,149

$
(156,601
)
$
5,100,973


17

---



Table of Contents

8.     Commitments and Contingencies



There have been no material developments with respect to the pending litigation disclosed in our 2008 Annual Report on
Form 10-K and no new material developments or litigation have arisen since those disclosures were made.

We
are involved in various other legal proceedings that arise in the ordinary course of our business. We believe that such routine litigation, claims and administrative proceedings will
not have a material adverse impact on our financial position, results of operations or cash flows. We record a contingent liability when a loss is considered probable and the amount can be reasonably
estimated.



Joint venture debt is the liability of the joint venture, and is typically secured by the joint venture property, which is
non-recourse to us. As of September 30, 2009, we have loan guarantees of $48.2 million to support our total $6.6 billion share of joint venture mortgage and other
indebtedness in the event that the joint venture borrower defaults under the terms of the underlying arrangement. Mortgages which are guaranteed by us are secured by the property of the joint venture
and that property may be sold in order to satisfy the outstanding obligation.

9.     Real Estate Acquisitions and Dispositions

We had no consolidated property acquisitions or dispositions during the nine months ended September 30, 2009.

10.   Recent Financial Accounting Standards

In December 2007, the Financial Accounting Standards Board (FASB) issued new accounting guidance on business combinations and noncontrolling interests in
consolidated financial statements which requires an acquirer to measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values
on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. The guidance is effective for financial statements issued for fiscal years beginning after
December 15, 2008. On January 1, 2009, we adopted
the guidance which did not have a significant impact on our financial position, results of operations or cash flows.

In
February 2008, the FASB issued a staff position which permitted a one-year deferral for the implementation of previously issued guidance related to fair value measurements
with regard to nonfinancial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). On January 1, 2009,
we adopted the fair value measurement guidance as it relates to nonfinancial assets and nonfinancial liabilities that are not recognized or disclosed at fair value in the financial statements on at
least an annual basis. The adoption had no impact on our financial position, results of operations or cash flows. The provisions of the guidance are applied at such time as a fair value measurement of
a nonfinancial asset or nonfinancial liability is required, which may result in a fair value that is materially different than would have been calculated prior to adoption.

In
June 2008, the FASB ratified guidance which provides an entity use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to
its own stock, including evaluating the instrument's contingent exercise and settlement provisions. On January 1, 2009, we adopted the guidance which had no impact on our financial position,
results of operations or cash flows.

On
January 1, 2009, we adopted guidance on determining whether instruments granted in share-based payment transactions are participating securities. Under this guidance, unvested
share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are

18

---



Table of Contents

participating
securities and are included in the computation of earnings per share pursuant to the two-class method. The adoption of the guidance did not have a significant impact on our
reported earnings per unit.

In
May 2009, the FASB issued guidance which established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial
statements are issued or are available to be issued. The statement introduces new terminology but is based on the same principles that previously existed in the accounting standards. The guidance
requires disclosure of the date through which management has evaluated subsequent events and whether that date represents the date the financial statements were issued or the date the financial
statements were available to be issued. The guidance was effective for interim and annual periods ending after June 15, 2009. The adoption of this statement did not have any impact on our
financial position, results of operations or cash flows.

In
June 2009, the FASB issued the FASB Accounting Standards Codification (Codification) which is effective for interim and annual periods ending after September 15, 2009. The
Codification defines a new hierarchy for U.S. GAAP and establishes the Codification as the sole source for authoritative
guidance to be applied by nongovernmental entities. The adoption of the Codification changed the manner in which U.S. GAAP guidance is referenced, but did not have any impact on our financial
position, results of operations or cash flows.

In
June 2009, the FASB also issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs). This amendment requires an
enterprise to perform a qualitative analysis when determining whether or not it must consolidate a VIE. The amendment also requires an enterprise to continuously reassess whether it must consolidate a
VIE. Additionally, the amendment requires enhanced disclosures about an enterprise's involvement with VIEs and any significant change in risk exposure due to that involvement, as well as how its
involvement with VIEs impacts the enterprise's financial statements. Finally, an enterprise will be required to disclose significant judgments and assumptions used to determine whether or not to
consolidate a VIE. This amendment is effective for financial statements issued for fiscal years beginning after November 15, 2009. Management is in the process of determining the impact of
adopting this amendment.

19

---





Table of Contents

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

You should read the following discussion in conjunction with the financial statements and notes thereto included in this report.

Overview

Simon Property Group, L.P. is a Delaware limited partnership and the majority-owned partnership subsidiary of Simon Property Group,
Inc. In this discussion, the terms
"Operating Partnership", "we", "us" and "our" refer to Simon Property Group, L.P. and its subsidiaries and the term "Simon Property" refers specifically to Simon Property Group, Inc.

We
own, develop, and manage retail real estate properties, primarily regional malls, Premium Outlet® centers, The Mills®, and community/lifestyle centers. As of
September 30, 2009, we owned or held an interest in 325 income-producing properties in the United States, which consisted of 163 regional malls, 41 Premium Outlet centers, 70
community/lifestyle centers, 36 properties acquired in the 2007 acquisition of The Mills Corporation, or Mills, and 15 other shopping centers or outlet centers in 41 states plus
Puerto Rico. Of the 36 properties in the Mills portfolio, 16 of these properties are The Mills, 16 are regional malls, and four are community centers. We also own an interest in one
parcel of land held in the United States for future development. Internationally, we have ownership interests in 51 European shopping centers (France, Italy and Poland), eight Premium Outlet
centers in Japan, one Premium Outlet center in Mexico, one Premium Outlet center in South Korea, and three shopping centers in China. Also, through joint venture arrangements we have ownership
interests in the following properties under development internationally: a 24% interest in two shopping centers in Italy and a 32.5% interest in one additional shopping center under construction in
China.

We
generate the majority of our revenues from leases with retail tenants including:



Revenues
of our management company, after intercompany eliminations, consist primarily of management fees that are typically based upon the revenues of the property being managed.

We
seek growth in earnings and cash flows by enhancing the profitability and operation of our properties and investments. We seek to accomplish this growth through the
following:



We
also grow by generating supplemental revenues from the following activities:



20

---



Table of Contents



We
focus on high quality real estate across the retail real estate spectrum. We expand or renovate to enhance existing assets' profitability and market share when we believe the
investment of our capital meets our risk-reward criteria. We selectively develop new properties in metropolitan areas that exhibit strong population and economic growth.

We
routinely review and evaluate acquisition opportunities based on their ability to complement our portfolio. Our international strategy includes partnering with established real estate
companies and financing international investments with local currency to minimize foreign exchange risk.

To
support our growth, we employ a three-fold capital strategy:



Diluted earnings per unit decreased $0.50 during the first nine months of 2009, or 40.7%, to $0.73 from $1.23 for the same period last
year. The decrease in diluted earnings per unit was attributable to a $140.5 million, or $0.45 per unit, other-than-temporary impairment charge related to our investment
in Liberty International, PLC, or Liberty, a U.K. REIT. We recorded the other-than-temporary charge in the second quarter of 2009 due to the significance and duration of
the decline in quoted fair value, including related currency exchange component, below the carrying value of the securities. During the nine months ended September 30, 2008, we recorded a
$20.3 million loss on extinguishment of debt related to our redemption of the 7% MandatOry Par Put Remarketed Securities, or MOPPRS. For the three and nine month periods, we also had additional
dilution to earnings per unit from Simon Property's 2009 equity offerings of approximately $0.06 and $0.12 per unit, respectively.

Core
business fundamentals were affected by the difficult economic environment during the first nine months of 2009. Regional mall comparable sales per square foot, or psf, declined
11.2% during the first nine months of 2009 to $438 psf from $493 psf for the same period in 2008. However, our regional mall average base rents increased 2.0% to $40.05 psf as of
September 30, 2009, from $39.26 psf as of September 30, 2008 due to releasing of space at higher rents. We were able to lease available square feet at higher rents than the
expiring rental rates in the regional mall portfolio resulting in a leasing spread of $4.04 psf as of September 30, 2009, representing a 10.6% increase over expiring rents. Regional mall
occupancy was 91.4% as of September 30, 2009, as compared to 92.5% as of September 30, 2008 driven by higher bankruptcies and lease terminations. The more stable operating fundamentals
of the Premium Outlet centers contributed to the positive operating results for the nine month period as occupancy of the portfolio remained high at 97.5% while comparable sales psf decreased 4.5% to
$492 as consumers continued to prefer retail value, offset by the impact of the economic downturn. Premium Outlet leasing spreads were $9.25, or 32.0% above expiring rents.

As
of September 30, 2009, our effective overall borrowing rate decreased two basis points to 5.62% as compared to September 30, 2008. This is a result of a significant
decrease in the base LIBOR rate applicable to a majority of our floating rate debt (0.25% at September 30, 2009, versus 3.93% at September 30, 2008). This decrease was partially offset
by an increase of our fixed rate debt of $1.4 billion ($16.9 billion at September 30, 2009 versus $15.4 billion at September 30, 2008), which increased the

21

---



Table of Contents

weighted
average rate 34 basis points as compared to September 30, 2008. Financing activities for the nine months ended September 30, 2009 included:



22

---







Table of Contents



The portfolio data discussed in this overview includes the following key operating statistics: occupancy, average base rent per square
foot, and comparable sales per square foot for our domestic asset platforms. We include acquired properties in this data beginning in the year of acquisition and remove properties sold in the year
disposed. We do not include any properties located outside of the United States. The following table sets forth these key operating statistics for:



September 30,
2009

September 30,
2008

%/basis point
Change(1)Regional Malls:OccupancyConsolidated


91.6%


92.9%


-130 bpsUnconsolidated


90.9%


91.7%


-80 bpsTotal Portfolio


91.4%


92.5%


-110 bpsAverage Base Rent per Square FootConsolidated

$
38.51

$
38.09


1.1%Unconsolidated

$
43.18

$
41.58


3.8%Total Portfolio

$
40.05

$
39.26


2.0%Comparable Sales Per Square FootConsolidated

$
418

$
466


-10.3%Unconsolidated

$
481

$
553


-13.0%Total Portfolio

$
438

$
493


-11.2%Premium Outlet Centers:Occupancy


97.5%


98.8%


-130 bpsAverage Base Rent per Square Foot

$
32.95

$
27.12


21.5%Comparable Sales per Square Foot

$
492

$
515


-4.5%The Mills®:Occupancy


92.4%


94.4%


-200 bpsAverage Base Rent per Square Foot

$
19.66

$
19.46


1.0%Comparable Sales per Square Foot

$
369

$
378


-2.4%Mills Regional Malls:Occupancy


88.9%


87.6%


+130 bpsAverage Base Rent per Square Foot

$
35.64

$
37.19


-4.2%Comparable Sales per Square Foot

$
388

$
442


-12.2%Community/Lifestyle Centers:Occupancy


88.9%


91.5%


-260 bpsAverage Base Rent per Square Foot

$
13.34

$
13.00


2.6%


(1)Percentages
may not recalculate due to rounding. Percentages and basis point changes are representative of the change from the comparable prior period.


23

---



Table of Contents




Occupancy Levels and Average Base Rent Per Square Foot.Occupancy and average base rent are based on mall gross leasable area,
or GLA, owned by us in
the regional malls, all tenants at the Premium Outlet centers, all tenants in the Mills portfolio, and all tenants at community/lifestyle centers. Our portfolio has maintained stable occupancy and
increased average base rents.

Comparable Sales Per Square Foot.Comparable sales include total reported retail tenant sales at owned GLA (for mall and
freestanding stores with
less than 10,000 square feet) in the regional malls and all reporting tenants at the Premium Outlet centers and the Mills portfolio. Retail sales at Owned GLA affect revenue and profitability levels
because sales determine the amount of minimum rent that can be
charged, the percentage rent realized, and the recoverable expenses (common area maintenance, real estate taxes, etc.) that tenants can afford to pay.



The following key operating statistics are provided for our international properties, which we account for using the equity method of
accounting.

September 30,
2009

September 30,
2008

%/basis point
ChangeEuropean Shopping Centers:Occupancy


95.8%


98.1%


-230 bpsComparable Sales per Square Foot

€
409

€
429


-5.4%Average Base Rent per Square Foot

€
32.56

€
30.11


5.1%International Premium Outlets(1)Occupancy


99.7%


98.9%


+80 bpsComparable Sales per Square Foot

¥
93,930

¥
94,387


-0.5%Average Base Rent per Square Foot

¥
4,711

¥
4,651


1.3%


(1)Does
not include our centers in Mexico (Premium Outlets Punta Norte), South Korea (Yeoju Premium Outlets), or China (Changshu In City Plaza).


Results of Operations

In addition to the activity discussed above in the "Results Overview" section, the following property openings and other activity
affected our consolidated results from continuing operations in the comparative periods:



24

---



Table of Contents

In
addition to the activities discussed in "Results Overview," the following dispositions and property openings affected our income from unconsolidated entities in the comparative
periods:



For
the purposes of the following comparison between the nine months ended September 30, 2009, and 2008, the above transactions are referred to as the "property transactions". In
the following discussions of our results of operations, "comparable" refers to properties open and operating throughout the periods in both 2009 and 2008.



Minimum rents increased $2.2 million during the period. The property transactions accounted for a $6.9 million increase
offset by a decrease in comparable minimum rents of $4.7 million, or 0.9%. The decrease in comparable minimum rents was primarily attributable to a $2.7 million decline in the fair
market value of in-place lease amortization, a $2.9 million decrease in straight-line rents, and a $0.8 million decrease in base minimum rents, offset by a
$1.7 million increase in comparable rents from carts, kiosks, and other temporary tenants.

Overage
rents decreased $6.5 million, or 25%, as a result of a reduction in tenant sales for the period as compared to the prior year.

Tenant
reimbursements increased $2.0 million, due to a $3.1 million increase attributable to the property transactions offset by a $1.1 million, or 0.4%, decrease in
the comparable properties as a result of a decrease in expenditures allocable to tenants paying common area maintenance on a proportionate basis. We continue to migrate our tenants' payments of common
area maintenance contributions to a fixed-payment methodology, which serves to offset the variability of this revenue in relation to variability in the underlying expenses.

Management
fees and other revenues decreased $3.4 million principally as a result of decreased earned premiums of our wholly-owned captive insurance entities and lower fee revenue
due to the reduction in development, leasing and joint venture property refinancing activity.

25

---



Table of Contents

Total
other income decreased $5.0 million, and was principally the result of a $5.8 million net decrease in interest income, primarily attributable to lower reinvestment
rates and the lower rate applicable to our loan facility with SPG-FCM (the joint venture that acquired Mills in 2007).

Property
operating costs decreased $13.7 million, or 10.7%, primarily related to our cost control and cost reduction initiatives.

Depreciation
and amortization expense increased $14.2 million due to the impact of our prior year openings and expansion activity and acceleration of depreciation for certain
properties scheduled for redevelopment.

The
provision for bad debts, net of recoveries, decreased $4.7 million primarily due to the recovery of receivables which had been previously reserved.

Home
and regional office expense decreased $7.4 million primarily due to decreased personnel costs attributable to our cost control initiatives and lower incentive compensation
levels.

Interest
expense increased $17.9 million primarily related to our issuance of $500 million of unsecured notes on August 11, 2009, $600 million of senior
unsecured notes on May 15, 2009 and $650 million of senior unsecured notes on March 25, 2009, offset by decreased interest expense on our Credit Facility due to the payoff of the
US tranche.

Income
from unconsolidated entities decreased $12.7 million primarily due to the gain recognized in 2008 from our disposition of an investment in a 50% owned multi-family
residential facility adjacent to one of our regional mall operating properties.

Preferred
unit distribution requirements decreased $6.9 million as a result of the conversion or exchange of preferred units to units during 2008.



Minimum rents increased $24.3 million during the period, of which the property transactions accounted for $22.5 million
of the increase. Comparable minimum rents increased $1.8 million, or 0.1%. This was primarily due to a $11.5 million increase in minimum rents due to releasing of space, a
$3.2 million increase in rents from carts, kiosks, and other temporary tenants, offset by a $12.9 million decrease in comparable property activity, primarily attributable to a decline in
the fair market value of in-place lease amortization.

Overage
rents decreased $15.0 million, or 25%, as a result of a reduction in tenant sales for the period as compared to the prior year.

Tenant
reimbursements increased $8.2 million, due to a $9.2 million increase attributable to the property transactions offset by a $1.0 million decrease in the
comparable properties as a result of a decrease in expenditures allocable to tenants paying common area maintenance on a proportionate basis.

Management
fees and other revenues decreased $10.6 million principally as a result of decreased earned premiums of our wholly-owned captive insurance entities and lower fee
revenue due to the reduction in development, leasing and joint venture property refinancing activity.

Total
other income decreased $13.7 million, and was the result of a $14.6 million net decrease in interest income primarily attributable to lower reinvestment rates and the
lower rate applicable to our loan facility with SPG-FCM offset by an increase of net other activity of $0.9 million.

Property
operating costs decreased $25.4 million, or 7.2%, primarily related to our cost control and cost reduction initiatives.

26

---



Table of Contents

Depreciation
and amortization expense increased $57.6 million due to the impact of our prior year openings and expansion activity and acceleration of depreciation for certain
properties scheduled for redevelopment.

Repairs
and maintenance decreased $13.3 million primarily due to our cost savings efforts.

Home
and regional office expense decreased $29.0 million primarily due to decreased personnel costs attributable to our cost control initiatives and lower incentive compensation
levels.

During
the quarter ended June 30, 2009, we recognized a non-cash charge of $140.5 million representing the other-than-temporary impairment in the fair value
below the carrying value of our investment in Liberty. We recorded the charge to earnings due to the significance and duration of the decline in the total share price, including currency revaluations.
As a result, the decline in value was deemed an other-than-temporary impairment, which established a new cost basis of our investment in Liberty.

Interest
expense increased $26.2 million primarily related to our issuance of $500 million of unsecured notes on August 11, 2009, $600 million senior
unsecured notes on May 15, 2009 and $650 million senior unsecured notes on March 25, 2009, offset by decreased interest expense on our Credit Facility due to the payoff of the US
tranche and other property debt refinancings.

We
recognized a loss on extinguishment of debt of $20.3 million in the second quarter of 2008 related to the redemption of the $200 million outstanding principal amount of
MOPPRS. We extinguished this debt because the remarketing reset base rate of the MOPPRS was above the rate for 30-year U.S. Treasury securities at the time of redemption.

Income
from unconsolidated entities increased $2.6 million as a result of our 2008 joint venture openings and expansion activity, interest rate savings from favorable interest
rates and debt refinancings, and additional depreciation provisions related to the finalization of purchase accounting on asset basis step-ups in the 2008 period associated with the
acquisition of Mills, offset by the gain recognized in 2008 from our disposition of an investment in a 50% owned multi-family residential facility adjacent to one of our regional mall operating
properties.

Preferred
unit distribution requirements decreased $17.3 million as a result of the conversion of preferred units to units during 2008.

Liquidity and Capital Resources

Because we generate revenues primarily from long-term leases, our financing strategy relies primarily on
long-term fixed rate debt. We manage our floating rate debt to be at or below 15-25% of total outstanding indebtedness. Floating rate debt currently comprises only
approximately 9.7% of our total consolidated debt. We also enter into interest rate protection agreements as appropriate to assist in managing our interest rate risk. We derive most of our liquidity
from leases that generate positive net cash flow from operations and distributions of capital from unconsolidated entities that totaled $1.5 billion during the first nine months of 2009. In
addition, the Credit Facility provides an alternative source of liquidity as our cash needs vary from time to time.

Our
balance of cash and cash equivalents increased $3.0 billion during the first nine months of 2009 to $3.7 billion as of September 30, 2009. Our balance of cash
and cash equivalents as of September 30, 2009, and December 31, 2008, includes $30.9 million and $29.8 million, respectively, related to our co-branded gift
card programs, which we do not consider available for general working capital purposes. The excess cash is held in a number of financial institutions and is generally invested in overnight investment
funds and is available to us as an immediate source of liquidity.

Our
business model requires us to regularly access the debt and equity capital markets to raise funds for acquisition and development activity, redevelopment capital, and to refinance
maturing debt. The

27

---



Table of Contents

turmoil
in the capital markets that began in 2008 and which now shows signs of abating had an impact on many businesses', including ours, ability to access debt and equity capital. We raised
approximately $3.4 billion in the public capital markets in the first nine months of 2009; however, there is no assurance we will be able to continue to do so in future periods or on similar
terms or conditions. We believe we have sufficient cash on hand and availability under our corporate Credit Facility to address our debt maturities and capital needs through 2010.



As part of the Mills acquisition, we made loans to SPG-FCM and Mills primarily at rates of LIBOR plus 270-275
basis points. These funds were used by SPG-FCM and Mills to repay loans and other obligations of Mills, including the redemption of Mills' preferred stock. As of September 30, 2009
and December 31, 2008, the outstanding balance of our remaining loan to SPG-FCM was
$636.0 million and $520.7 million, respectively. During the first nine months of 2009 and 2008, we recorded approximately $6.9 million and $11.7 million in interest income
(net of inter-entity eliminations), respectively, related to this loan. The loan facility bears interest at a rate of LIBOR plus 275 basis points and matures on June 8, 2010, with two available
one-year extensions.

Cash Flows

Our net cash flow from operating activities and distributions of capital from unconsolidated entities for the nine months ended
September 30, 2009, totaled $1.5 billion. In addition, we received net proceeds from all of our debt financing and repayment activities in this period of $605.6 million. These
activities are further discussed below in "Financing and Debt." During the 2009 period we also:



In
general, we anticipate that cash generated from operations will be sufficient to meet operating expenses, monthly debt service, recurring capital expenditures, and the cash portion of
distributions necessary to maintain Simon Property's REIT qualification for 2009. In addition, we expect to be able to obtain capital for nonrecurring capital expenditures, such as acquisitions, major
building renovations and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from excess cash generated from operations and working capital reserves, and from
borrowings on our Credit Facility.

28

---



Table of Contents

Financing and Debt



Our unsecured debt currently consists of $11.6 billion of senior unsecured notes and the Credit Facility. The Credit Facility
bears interest at LIBOR plus 37.5 basis points and an additional facility fee of 12.5 basis points. The Credit Facility matures January 11, 2010 and may be extended one year at our option.

During
the nine months ended September 30, 2009, we drew amounts from our $3.5 billion Credit Facility to fund the redemption of $600.0 million in maturing series of
unsecured notes. We repaid a total of $1.2 billion on our Credit Facility during the nine months ended September 30, 2009. The total outstanding balance of the Credit Facility as of
September 30, 2009 was $456.2 million, all of which was comprised of the U.S. dollar equivalent of Euro and Yen-denominated borrowings. The maximum outstanding balance during
the nine months ended September 30, 2009 was approximately $1.6 billion. During the nine months ended September 30, 2009, the weighted average outstanding balance on the Credit
Facility was approximately $739.8 million.



Total secured indebtedness was $6.6 billion and $6.3 billion at September 30, 2009 and December 31, 2008,
respectively.



Our consolidated debt, adjusted to reflect outstanding derivative instruments, and the effective weighted average interest rates as of
September 30, 2009, and December 31, 2008, consisted of the following (dollars in thousands):

Debt Subject to

Adjusted Balance
as of
September 30, 2009

Effective
Weighted Average
Interest Rate

Adjusted Balance
as of
December 31, 2008

Effective
Weighted Average
Interest RateFixed Rate

$
16,877,970


6.10
%
$
15,424,318


5.76
%Variable Rate


1,791,151


1.11
%

2,618,214


1.31
%$
18,669,121


5.62
%
$
18,042,532


5.12
%


As
of September 30, 2009, we had $695.0 million of notional amount fixed rate swap agreements that have a weighted average fixed pay rate of 2.91% and a weighted average
variable receive rate of 0.60%. As of September 30, 2009, the net effect of these agreements effectively converted $695.0 million of variable rate debt to fixed rate debt.

Contractual Obligations and Off-Balance Sheet Arrangements.There have been no material changes to our outstanding capital
expenditure
commitments previously disclosed in our 2008 Annual Report on Form 10-K.

29

---



Table of Contents

In
regards to long-term debt arrangements, the following table summarizes the material aspects of these future obligations as of September 30, 2009, for the remainder
of 2009 and subsequent years thereafter (dollars in thousands):

2009

2010-2011

2012-2014

After 2014

TotalLong-Term DebtConsolidated(1)

$
162,738

$
4,778,374

$
7,637,183

$
6,078,153

$
18,656,448Pro rata share of Long-Term Debt:Consolidated(2)

$
162,008

$
4,730,258

$
7,467,812

$
6,019,743

$
18,379,821Joint Ventures(2)


262,349


1,497,879


2,638,354


2,241,936


6,640,518Total Pro Rata Share of Long-Term Debt

$
424,357

$
6,228,137

$
10,106,166

$
8,261,679

$
25,020,339


(1)Represents
principal maturities only and therefore, excludes net premiums and discounts of $12,673 and all required interest payments. We incurred interest
expense of $728.4 million, net of capitalized interest of $11.7 million, for the nine months ended September 30, 2009.(2)Represents
our pro rata share of principal maturities and excludes net premiums and discounts.


Our
off-balance sheet arrangements consist primarily of our investments in real estate joint ventures which are common in the real estate industry and are described in Note 5 of
the notes to the accompanying financial statements. Joint venture debt is the liability of the joint venture, is typically secured by the joint venture property, and is non-recourse to us.
As of September 30, 2009, we had loan guarantees of $48.2 million to support our total $6.6 billion share of joint venture mortgage and other indebtedness presented in the table
above.

Acquisitions and Dispositions

Buy-sell provisions are common in real estate partnership agreements. Most of our partners are institutional investors who
have a history of direct investment in retail real estate. Our partners in our joint venture properties may initiate these provisions at any time. If we determine it is in our unitholders' best
interests for us to purchase the joint venture interest and we believe we have adequate liquidity to execute the purchase without hindering our cash flows, then we may initiate these provisions or
elect to buy. If we decide to sell any of our joint venture interests, we expect to use the net proceeds to reduce outstanding indebtedness or to reinvest in development, redevelopment, or expansion
opportunities.

Acquisitions.Although the acquisition of high quality individual properties or portfolios of properties remains an integral
component of our growth
strategies, we did not acquire any properties during the first nine months of 2009.

Dispositions.We continue to pursue the disposal of properties that no longer meet our strategic criteria or that are not the
primary retail venue
within their trade area. However, we did not dispose of any operating properties during the first nine months of 2009.

Development Activity

New Domestic Development.Given the significant downturn in the economy, we have substantially reduced our development spending.
During the third
quarter of 2009, we opened Cincinnati Premium Outlets, a 400,000 square foot upscale manufacturers' outlet center located in Monroe, OH. The estimated total cost to complete this project was
$93.0 million which was funded with available cash from operations. Other than this new property, we do not expect our share of any other 2009 new developments to be significant.

30

---



Table of Contents

Strategic Expansions and Renovations.In addition to new development, we incur costs related to construction for significant
renovation and/or
expansion projects at our properties. Included in these projects are the renovation and addition of Nordstrom at Northshore Mall, Ross Park Mall and South Shore Plaza; a life-style
addition at Tacoma Mall; and Phase II expansions at The Domain, Orlando Premium Outlets, and The Promenade at Camarillo. We expect to fund these capital projects with cash flow from operations.
Our share of the cost of other renovation or expansion projects that we expect to initiate or complete in 2009 is approximately $300.0 million.

International Development Activity.We typically reinvest net cash flow from our international investments to fund future
international development
activity. We believe this strategy mitigates some of the risk of our initial investment and our exposure to changes in foreign currencies. We have also funded our European investments with
Euro-denominated borrowings that act as a natural hedge against local currency fluctuations. This has also been the case with our Premium Outlet Centers in Japan and Mexico where we use
Yen and Peso denominated financing, respectively. We expect our share of international development costs for 2009 will be approximately $140 million. International development and
redevelopment/expansion activity for 2009 includes:



Currently,
our net income exposure to changes in the volatility of the Euro, Yen, Peso and other foreign currencies is not material. In addition, since cash flows from international
operations are currently being reinvested in other development projects, we do not expect to repatriate foreign denominated earnings in the near term.

The
carrying amount of our total combined investment in Simon Ivanhoe S.à.r.l., or Simon Ivanhoe, and GCI, as of September 30, 2009, including all related
components of accumulated other comprehensive income, was $226.8 million. Our investments in Simon Ivanhoe and GCI are accounted for using the equity method of accounting. The total net cost of
the 942,000 square feet of GLA under construction in Europe is approximately €221 million, of which our share is approximately €53 million, or
$77.4 million based on current Euro:USD exchange rates.

As
of September 30, 2009, the carrying amount of our 40% joint venture investment in the eight Japanese Premium Outlet Centers including all related components of accumulated
other comprehensive income was $310.6 million. To date in 2009, Ami Premium Outlets completed
construction and opened in Japan adding approximately 226,700 square feet of GLA at a total net cost of approximately JPY 15.4 billion, of which our share is approximately
JPY 6.2 billion, or $68.5 million based on applicable Yen:USD exchange rates. There is currently one project under construction in Japan, an expansion to Kobe-Sanda
Premium Outlets, that will add approximately 176,100 square feet of GLA at a total net cost of approximately JPY 7.6 billion, of which our share is approximately
JPY 3.0 billion, or $33.8 million based on applicable Yen:USD exchange rates. In addition, GCI is continuing construction on two shopping centers scheduled for 2010 opening: one
in Naples, and one in Sicily with a total gross leasable area, or GLA, of 942,000 square feet.

As
of September 30, 2009, the carrying amount of our 32.5% joint venture investment in Great Mall Investments, Ltd. including all related components of accumulated other
comprehensive income was $57.6 million. As of September 30, 2009, three centers are open in China and one additional center is under development. To date in 2009, two centers completed
construction and opened in China adding approximately 1.2 million square feet of GLA with an estimated total cost of CNY 1.6 billion, of which our

31

---



Table of Contents

share
is approximately CNY 527 million, or $77.3 million based on applicable CNY:USD exchange rates. There is currently one center under development that will add approximately
310,000 square feet of GLA for a total net cost of approximately CNY 513 million, of which our share is approximately CNY 167 million, or $24.4 million based on
applicable CNY:USD exchange rates.

During
2008 and 2009, we acquired approximately 35.4 million shares of stock of Liberty. Liberty operates regional shopping centers and is the owner of other prime retail assets
throughout the U.K. Liberty is a U.K. FTSE 100 listed company, with shareholders' funds of £4.7 billion and property investments of £8.6 billion, of which
its U.K. regional shopping centers comprise 75%. Assets of the group under control or joint control amount to £11.0 billion. Liberty converted into a U.K. Real Estate Investment
Trust on January 1, 2007. Our interest in Liberty is approximately 6% of their shares and is adjusted to their quoted market price, including a related foreign exchange component. During the
quarterly period ended June 30, 2009, we recognized a $140.5 million charge related to this investment as the significance and duration of the decline in fair value below its carrying
value was deemed to be an other-than-temporary impairment.

Distributions and Stock Repurchase Program

We paid a distribution of $0.60 per unit in the third quarter of 2009. The distribution was paid 20% in cash and 80% in units. We
issued 2,029,044 units to Simon Property and 411,489 units to limited partners on September 18, 2009. The closing price of a share of Simon Property common stock was $73.97 on the
payment date. Our distributions typically exceed our net income generated in any given year primarily because of depreciation, which is a "non-cash" expense. Our future distributions will
be determined by Simon Property's Board of Directors based on
actual results of operations, cash available for distributions, and the amount of distributions required to maintain Simon Property's status as a REIT.

Simon
Property recently announced that it intends to pay a quarterly common stock dividend for the fourth quarter of 2009 of $0.60 per share, consisting of a combination of cash and
Simon Property common stock. The cash component of this dividend will not exceed 20% in the aggregate, or $0.12 per share. We will make a corresponding distribution of $0.60 per unit, consisting of a
combination of cash and units. We reserve the right to pay the distribution entirely in cash.

Forward-Looking Statements

Certain statements made in this section or elsewhere in this report may be deemed "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance
that our expectations will be attained, and it is possible that our actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and
uncertainties. Such factors include, but are not limited to: our ability to meet debt service requirements, the availability of financing, changes in our credit rating, changes in market rates of
interest and foreign exchange rates for foreign currencies, the ability to hedge interest rate risk, risks associated with the acquisition, development and expansion of properties, general risks
related to retail real estate, the liquidity of real estate investments, environmental liabilities, international, national, regional and local economic climates, changes in market rental rates,
trends in the retail industry, relationships with anchor tenants, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, risks relating to joint venture properties,
costs of common area maintenance, competitive market forces, risks related to international activities, insurance costs and coverage, terrorist activities, changes in economic and market conditions
and maintenance of Simon Property's status as a real estate investment trust. We discussed these and other risks and uncertainties under the heading "Risk Factors" in our most recent Annual Report on
Form 10-K. We may update that discussion in our Quarterly Reports on Form 10-Q, but otherwise we undertake no duty or obligation to update or revise these
forward-looking statements, whether as a result of new information, future developments, or otherwise.

32

---



Table of Contents

Item 3.    Qualitative and Quantitative Disclosures About Market Risk

Sensitivity Analysis.We disclosed a comprehensive qualitative and quantitative analysis regarding market risk in the
Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our 2008 Annual Report on Form 10-K. There have been no material changes in the assumptions used or results
obtained regarding market risk since December 31, 2008.

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures.We carried out an evaluation under the supervision and with participation of
management, including
the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our "disclosure controls and procedures" (as defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2009.

Changes in Internal Control Over Financial Reporting.There have not been any changes in our internal control over financial
reporting (as defined in
Rule 13a-15(f)) that occurred during the quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

33

---





Table of Contents

Part II  Other Information

Item 1.    Legal Proceedings

There have been no material developments with respect to the pending litigation disclosed in our 2008 Annual Report on
Form 10-K and no new material developments or litigation have arisen since those disclosures were made.

We
are involved in various other legal proceedings that arise in the ordinary course of our business. We believe that such routine litigation, claims and administrative proceedings will
not have a material adverse impact on our financial position or our results of operations. We record a contingent liability when a loss is considered probable and the amount can be reasonably
estimated.

Item 1A.    Risk Factors

Through the period covered by this report, there were no significant changes to the Risk Factors disclosed in "Part 1: Business"
of our 2008 Annual Report on Form 10-K.

Item 5.    Other Information

During the quarter covered by this report, no services were pre-approved by the Audit Committee of Simon Property Group,
Inc.'s Board of Directors related to Ernst & Young, LLP, our independent registered public accounting firm. This disclosure is made pursuant to Section 10A(i)(2) of the Securities
Exchange Act of 1934, as added by Section 202 of the Sarbanes-Oxley Act of 2002.

Item 6.    Exhibits

Exhibit
Number

Exhibit Descriptions31.1

Certification by the Chief Executive Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification by the Chief Financial Officer pursuant to rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32

Certification by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


34

---





Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

SIMON PROPERTY GROUP, INC./s/ STEPHEN E. STERRETT Stephen E. Sterrett
Executive Vice President and Chief Financial Officer
Simon Property Group, Inc.
General Partner of Simon Property Group, L.P.Date: November 13, 2009


35

---