Table of Contents



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



FORM 10-K/A

(Amendment No. 1)

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

For the fiscal year ended December 31, 2008



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

Delaware(State or other jurisdiction of
incorporation or organization)

333-11491(Commission File No.)

34-1755769(I.R.S. Employer
Identification No.)


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

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

Securities registered pursuant to Section 12 (b) of the Act: None

Securities registered pursuant to Section 12 (g) of the Act: None



Indicate by check mark if the Registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities
Act). Yes ý    No o

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No ý

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ý

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by checkmark whether the Registrant is a shell company (as defined in rule 12-b of the
Act). Yes o    No ý

Registrant had no publicly-traded voting equity as of June 30, 2008.

Registrant
has no common stock outstanding.



Documents Incorporated By Reference

None.



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EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A (the "Amendment") amends the Annual Report on
Form 10-K of Simon Property Group, L.P. ("we", "us", or "our"), for the year ended December 31, 2008, that we originally filed with the Securities and Exchange
Commission (the "SEC") on March 2, 2009 (the "Original Filing"). On May 8, 2009, we filed a Quarterly Report on Form 10-Q for the period ended March 31, 2009
(the "Quarterly Report"). The Quarterly Report reflects our adoption of Statement of Financial Accounting Standards No. 160,Noncontrolling Interests in Consolidated
Financial Statements, an amendment to ARB 51(SFAS 160) and the application of EITF Topic D-98,Classification and Measurement of
Redeemable Securities(EITF D-98), to certain redeemable securities, as further described in Note 3 to the Condensed Notes to Consolidated Financial
Statements included in the Quarterly Report. The Quarterly Report included reclassifications of prior period amounts to conform to the 2009 presentation. We are filing this Amendment to amend
Items 6, 7, 8, and 9A in Part II of the Original Filing in their entirety to conform to the 2009 presentation included in the Quarterly Report. In addition, in connection with the filing
of this Amendment and pursuant to the rules of the SEC, we are including with this Amendment exhibits consisting of an amended computation of the ratio of earnings to fixed charges, currently dated
certifications of our senior executives and a consent from our independent registered public accounting firm. Accordingly, Item 15 of Part IV has also been amended to reflect the filing
of these exhibits.

This
Form 10-K/A does not attempt to modify or update any other disclosures set forth in the Original Filing, except as required to reflect the amended information in
this Form 10-K/A. Additionally, this amended Form 10-K/A, except for the amended information included in Part II and Part IV, speaks as of the
filing date of the Original Filing and does not update or discuss any other developments affecting us subsequent to the date of the Original Filing.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries
Form 10-K/A
Year Ended December 31, 2008

Table of Contents





Page No.Part IIItem 6.

Selected Financial Data

3Item 7.

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

4Item 8.

Financial Statements and Supplementary Data

21Item 9A.

Controls and Procedures

60Part IVItem 15.

Exhibits, and Financial Statement Schedules

62Signatures

63


2

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Table of Contents

Part II

Item 6.    Selected Financial Data

The following tables set forth selected financial data. The selected financial data should be read in conjunction with the financial
statements and notes thereto and with Management's Discussion and Analysis of Financial Condition and Results of Operations. Other data we believe is important in understanding trends in our business
is also included in the tables. Certain information in this table has been retrospectively adjusted based upon the reclassifications discussed in Note 3 to the consolidated financial
statements.

As of or for the Year Ended December 31,2008

2007

2006

2005

2004 (1)(in thousands, except per share data)OPERATING DATA:Total consolidated revenue

$
3,783,155

$
3,650,799

$
3,332,154

$
3,166,853

$
2,567,774Consolidated income from continuing operations


599,560


674,605


729,727


470,303


463,452Net income available to common unitholders

$
529,726

$
549,678

$
614,911

$
510,581

$
380,711BASIC EARNINGS PER UNIT:Income from continuing operations

$
1.88

$
2.09

$
2.20

$
1.27

$
1.47Discontinued operations





(0.13
)




0.55


(0.04
)Net income attributable to unitholders

$
1.88

$
1.96

$
2.20

$
1.82

$
1.43Weighted average units outstanding


282,508


281,035


279,567


279,825


265,405DILUTED EARNINGS PER UNIT:Income from continuing operations

$
1.87

$
2.08

$
2.19

$
1.27

$
1.47Discontinued operations





(0.13
)




0.55


(0.04
)Net income attributable to unitholders

$
1.87

$
1.95

$
2.19

$
1.82

$
1.43Diluted weighted average units outstanding


283,059


281,813


280,471


280,696


266,272Distributions per unit (2)

$
3.60

$
3.36

$
3.04

$
2.80

$
2.60BALANCE SHEET DATA:Cash and cash equivalents

$
773,544

$
501,982

$
929,360

$
337,048

$
519,556Total assets


23,422,749


23,442,466


22,003,173


21,068,666


21,870,490Mortgages and other indebtedness


18,042,532


17,218,674


15,394,489


14,106,117


14,586,393Total equity

$
3,101,967

$
3,414,612

$
4,040,676

$
4,444,228

$
4,741,927OTHER DATA:Cash flow provided by (used in):Operating activities

$
1,634,484

$
1,559,432

$
1,316,148

$
1,195,141

$
1,099,518Investing activities


(1,020,872
)

(2,049,576
)

(607,432
)

(51,906
)

(2,742,542
)Financing activities

$
(342,050
)
$
62,766

$
(116,404
)
$
(1,325,743
)
$
1,633,544Ratio of Earnings to Fixed Charges (3)


1.46x


1.53x


1.73x


1.56x


1.63x


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Notes

3

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Table of Contents

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

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



Simon Property Group, L.P. is a Delaware limited partnership and the majority-owned 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 in five retail real estate platforms: regional malls, Premium Outlet Centers®, The Mills®,
community/lifestyle centers, and international properties. As of December 31, 2008, we owned or held an interest in 324 income producing properties in the United States, which consisted of 164
regional malls, 70 community/lifestyle centers, 16 additional regional malls and four additional community centers acquired as a result of the 2007 acquisition of The Mills Corporation, or the Mills
acquisition, 40 Premium Outlet Centers, 16 The Mills, and 14 other shopping centers or outlet centers in 41 states plus Puerto Rico. The Mills acquisition is described below in the "Results of
Operations" section. We also own interests in four parcels of land held in the United States for future development. In the United States, we have one new property currently under development
aggregating approximately 400,000 square feet which will open during 2009. Internationally, we have ownership interests in 52 European shopping centers (located in France, Italy, and Poland);
seven Premium Outlet Centers located in Japan, one Premium Outlet Center located in Mexico, one Premium Outlet Center located in Korea, and one shopping center located 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, a 40% interest in a Premium Outlet
Center in Japan, and a 32.5% interests in three additional shopping centers 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:



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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 major metropolitan areas that exhibit strong population and economic growth.

We
routinely review and evaluate acquisition opportunities based on their ability to complement our portfolio. Lastly, we are selectively expanding our international presence. 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:



As
more fully discussed in Notes 3 and 10 of the consolidated financial statements, we have retrospectively adopted SFAS 160 and concurrently applied certain provisions of
EITF D-98. This resulted in the recording of certain reclassifications related to previously-reported minority interests and preferred limited partner interests.
Minority interests are now reported and referred to as noncontrolling interests within this discussion and the consolidated financial statements. These reclassifications had no impact on previously
reported net income available to unitholders or earnings per unit.



Diluted earnings per unit of limited partnership interest, or units, decreased $0.08 during 2008, or 4.1%, to $1.87 from $1.95 for
2007. The decrease is primarily due to the $20.3 million loss relating to the redemption of remarketable debt securities, and $21.2 million in impairment charges in 2008, as compared to
net gains aggregating $1.7 million related to sales and disposition activity and impairment charges for the comparable period in 2007. Consolidated total revenues increased
$132.4 million, or 3.6%, driven by the full year effect of our 2007 openings and expansion activities and the releasing of space at higher rental rates per square foot, or psf. Releasing
spreads in the regional mall and Premium Outlet portfolios were strong at $8.02 psf (or 21.3%) and $12.48 psf (or 48.8%), respectively, due to continued demand for higher quality space in our
portfolio. Total operating expenses increased $106.9 million, or 5.0%, due to additional depreciation provisions related to the full year of operations for 2007 openings and 2008 new openings,
an increase in the provision for bad debts due to the estimated uncollectability of certain tenant receivables, and higher personnel and utility costs attributable to normal inflationary increases.
Interest costs remained relatively flat despite an increase in total debt due to lowered variable borrowing costs as a result of a reduced one-month LIBOR rate, the benchmark rate for most
of our floating rate debt.

In
the United States, business fundamentals were relatively stable, except for tenant sales psf which were mixed across the portfolio, and were dependent upon asset type, geographic
location, and mix of specialty and luxury tenants. Average base rents for the regional mall and domestic Premium Outlet portfolios were relatively stable for 2008. The regional malls average base rent
ended the year at $39.49 psf, or an increase of 6.5% over 2007. The domestic Premium Outlets average base rent ended the year at $27.65 psf, or an increase of 7.7%. The stability of the occupancy,
rent psf, and releasing rental spread fundamentals contributed to our ability to generate growth in our operating results despite the adverse effects the general economic pressures are creating for
our tenants and the consumer.

Internationally,
in 2008, we and our joint venture partners opened three additional centers (one each in Italy, China, and Japan) and expanded two existing Premium Outlet Centers which
added an aggregate 1 million square feet of retail space to the international portfolio. Also during 2008, we acquired shares of stock of Liberty International, PLC, or 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 (REIT) on

5

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January 1,
2007. Our interest in Liberty is less than 5% of their shares and is adjusted to their quoted market price, including a related foreign exchange component.

Our
effective overall borrowing rate for the year ended December 31, 2008, decreased 55 basis points to 5.12% as compared to the year ended December 31, 2007. This was a
result of a significant decrease in the base LIBOR rate applicable to a majority of our floating rate debt (0.44% at December 31, 2008, versus 4.60% at December 31, 2007) and also the
issuance of new unsecured and secured debt at favorable rates. Our financing activities for the year ended December 31, 2008, included:



6

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Table of Contents

United States Portfolio Data

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 four domestic platforms. We include acquired properties in this data beginning in the year of acquisition and remove properties sold in the year
disposed. We are separately reporting in this section the 16 regional malls we acquired in the 2007 acquisition of The Mills Corporation, or the Mills acquisition. We do not include any properties
located outside of the United States in this section. The following table sets forth these key operating statistics for:



2008

%/Basis Points
Change(1)

2007

%/Basis Points
Change(1)

2006

%/Basis Point
Change(1)Regional Malls:OccupancyConsolidated


92.6%


-130 bps


93.9%


+90 bps


93.0%


-30 bpsUnconsolidated


91.9%


-80 bps


92.7%


-80 bps


93.5%


+80 bpsTotal Portfolio


92.4%


-110 bps


93.5%


+30 bps


93.2%


+10 bpsAverage Base Rent per Square FootConsolidated

$
38.21


5.4%

$
36.24


4.2%

$
34.79


2.2%Unconsolidated

$
42.03


8.5%

$
38.73


6.2%

$
36.47


3.3%Total Portfolio

$
39.49


6.5%

$
37.09


4.8%

$
35.38


2.6%Comparable Sales per Square FootConsolidated

$
445


(5.6%
)
$
472


2.2%

$
462


6.2%Unconsolidated

$
523


(1.5%
)
$
530


4.9%

$
505


5.6%Total Portfolio

$
470


(4.3%
)
$
491


3.2%

$
476


5.8%Premium Outlet Centers:Occupancy


98.9%


-80 bps


99.7%


+30 bps


99.4%


-20 bpsAverage Base Rent per Square Foot

$
27.65


7.7%

$
25.67


5.9%

$
24.23


4.6%Comparable Sales per Square Foot

$
513


1.8%

$
504


7.0%

$
471


6.1%The Mills®:Occupancy


94.5%


+40 bps


94.1%








Average Base Rent per Square Foot

$
19.51


2.4%

$
19.06








Comparable Sales per Square Foot

$
372


0.1%

$
372








Mills Regional Malls:Occupancy


87.4%


-210 bps


89.5%








Average Base Rent per Square Foot

$
36.99


3.8%

$
35.63








Comparable Sales per Square Foot

$
418


(5.8%
)
$
444








Community/Lifestyle Centers:OccupancyConsolidated


89.3%


-360 bps


92.9%


+140 bps


91.5%


+200 bpsUnconsolidated


93.3%


-330 bps


96.6%


+10 bps


96.5%


+40 bpsTotal Portfolio


90.7%


-340 bps


94.1%


+90 bps


93.2%


+160 bpsAverage Base Rent per Square FootConsolidated

$
13.70


7.6%

$
12.73


7.0%

$
11.90


1.7%Unconsolidated

$
12.41


4.7%

$
11.85


1.5%

$
11.68


8.0%Total Portfolio

$
13.25


6.6%

$
12.43


5.2%

$
11.82


3.6%


---

Occupancy Levels and Average Base Rent Per Square Foot.Occupancy and average base rent are based on
mall and freestanding Gross Leasable Area, or
GLA, owned by us in the regional malls, and all tenants at The Mills, Premium Outlet Centers, and community/lifestyle centers. Our portfolio has maintained relatively stable occupancy and increased
the aggregate average base rents despite the current economic climate.

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Table of Contents

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 Mills and the Premium Outlet Centers and community/lifestyle centers. 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.

International Property Data

The following are selected key operating statistics for certain of our international properties.

2008

% Change

2007

% Change

2006European Shopping CentersOccupancy


98.4%





98.7%





97.1%Comparable sales per square foot


€411


-2.5%


€421


7.7%


€391Average rent per square foot


€30.11


1.8%


€29.58


12.5%


€26.29International Premium Outlet Centers(1)Occupancy


99.9%





100%





100%Comparable sales per square foot


¥92,000


-1.3%


¥93,169


4.4%


¥89,238Average rent per square foot


¥4,685


1.3%


¥4,626


-0.4%


¥4,646


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Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or
GAAP, requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base our estimates on historical experience and on various other
assumptions believed to be reasonable under the circumstances. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various
transactions had been different, it is possible that different accounting policies would have been applied resulting in a different presentation of our financial statements. From time to time, we
evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current information.
Below is a discussion of accounting policies that we consider critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain.
For a summary of our significant accounting policies, see Note 3 of the Notes to Consolidated Financial Statements.



8

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Table of Contents



Results of Operations

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



9

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



10

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Table of Contents



For
the purposes of the following comparisons between the years ended December 31, 2008 and 2007 and the years ended December 31, 2007 and 2006, 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 both the current and prior year.

In
2008 we had no consolidated property dispositions. During 2007, we disposed of five consolidated properties that had an aggregate book value of $91.6 million for aggregate
sales proceeds of $56.4 million, resulting in a net loss on sale of $35.3 million. The loss on sale of these assets has been reported as discontinued operations in the consolidated
statements of operations. The operating results of the properties that we sold or disposed during 2007 were not significant to our consolidated results of operations. The following is a list of
consolidated property dispositions and the date of disposition for which we have reported the operations or results of sale with discontinued operations:

Property

Date of DispositionLafayette Square

December 27, 2007University Mall

September 28, 2007Boardman Plaza

September 28, 2007Griffith Park Plaza

September 20, 2007Alton Square

August 2, 2007


We
sold the following properties in 2006. Due to the limited significance of these properties' operations and result of disposition on our consolidated financial statements, we did not
report these properties as discontinued operations.

Property

Date of DispositionNorthland Plaza


December 22, 2006Trolley Square


August 3, 2006Wabash Village


July 27, 2006


Year Ended December 31, 2008 vs. Year Ended December 31, 2007

Minimum rents increased $137.2 million in 2008, of which the property transactions accounted for $64.6 million of the
increase. Comparable rents increased $72.6 million, or 3.6%. This was primarily due to an increase in minimum rents of $82.1 million and an $8.5 million increase in
straight-line rents, offset by a $16.4 million decrease in comparable property activity, primarily attributable to lower amounts of fair market value of in-place lease
amortization.

Overage
rents decreased $9.8 million or 8.9%, as a result of a reduction in tenant sales for the period as compared to the prior year.

Tenant
reimbursements increased $42.8 million, due to a $26.9 million increase attributable to the property transactions and a $15.9 million, or 1.6%, increase in
the comparable properties due to our ongoing initiative to convert leases to a fixed reimbursement methodology for common area maintenance costs.

Management
fees and other revenues increased $18.7 million principally as a result of the full year of additional management fees derived from managing the properties acquired in
the Mills acquisition, and additional leasing and development fees as a result of incremental joint venture property activity.

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Table of Contents

Total
other income decreased $56.6 million, and was principally the result of the following:



These
decreases were offset by a $3.1 million increase in net other activity.

Depreciation
and amortization expense increased $63.8 million in 2008 primarily due to our acquisition, expansion and renovation activity and the accelerated depreciation of
tenant improvements for tenant leases terminated during the period and for properties scheduled for redevelopment.

Real
estate taxes increased $21.3 million from the prior period, $9.0 million of which is related to the property transactions, and $12.3 million from our
comparable properties due to the effect of increases resulting from reassessments, higher tax rates, and the effect of expansion and renovation activities.

Repairs
and maintenance decreased $12.3 million due to our cost savings efforts.

Provision
for credit losses increased $14.5 million primarily due to an increase in tenant bankruptcies and tenant delinquencies. This was reflected in total square footage lost
to tenant bankruptcies of 1,104,000 during 2008 as compared to only 69,000 square feet in 2007. We anticipate a challenging environment for our tenants continuing into 2009.

Home
and regional office expense increased $8.3 million primarily due to increased personnel costs, primarily the result of the Mills acquisition, and the increased expense from
certain incentive compensation plans.

Other
expenses increased $6.1 million due to increased consulting and professional fees, including legal fees and related costs.

Interest
expense increased $1.3 million despite an $823.9 million increase in consolidated borrowings to fund our development and redevelopment activities, and the full
year impact of our borrowings to fund the Mills-related loans, due to a 55 basis point decline in our weighted average borrowing rates. This decrease in weighted average borrowing rates was driven
primarily by a decline in the applicable LIBOR rate for a majority of our consolidated floating rate debt instruments, including the Credit Facility.

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

Income
tax expense of taxable REIT subsidiaries increased $14.9 million due primarily to a $19.5 million tax benefit recognized in 2007 related to the impairment charge
resulting from of the write-off of our investment in a land joint venture in Phoenix, Arizona.

Income
from unconsolidated entities decreased $5.9 million, due primarily to the impact of the Mills acquisition (net of eliminations). On a net basis, our share of loss from
SPG-FCM increased $4.7 million from the prior period due to a full year of SPG-FCM activity in 2008 as compared to only nine months of activity in 2007. The loss was
driven by depreciation and amortization expense on asset basis step-ups in purchase accounting.

In
2008, we recognized an impairment of $21.2 million primarily representing the write-down of a mall property to its estimated net realizable value and the
write-off of predevelopment costs for various development opportunities that we no longer plan to pursue. In 2007, we recognized an impairment of $55.1 million related to a land
joint venture in Phoenix, Arizona.

The
gain on sale of assets and interests in unconsolidated entities of $92.0 million in 2007 was primarily the result of Simon Ivanhoe selling its interest in certain assets
located in Poland.

In
2007, the loss on sale of discontinued operations of $35.3 million represents the net loss upon disposition of five non-core properties consisting of three
regional malls and two community/lifestyle centers.

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Preferred
unit distribution requirements decreased $17.9 million as a result of the conversion or exchange of preferred units to units and the redemption of the Series G
preferred units in the fourth quarter of 2007.

Year Ended December 31, 2007 vs. Year Ended December 31, 2006

Minimum rents increased $133.9 million in 2007, of which the property transactions accounted for $87.0 million of the
increase. Total amortization of the fair market value of in-place leases served to decrease minimum rents by $8.8 million due to certain in-place lease adjustments
becoming fully amortized. Comparable rents increased $46.8 million, or 2.3%. This was primarily due to the leasing of space at higher rents that resulted in an increase in minimum rents of
$54.6 million offset by a $9.2 million decrease in comparable property straight-line rents and fair market value of in-place lease amortization. In addition,
rents from carts, kiosks, and other temporary tenants increased comparable rents by $1.4 million.

Overage
rents increased $14.2 million or 14.9%, reflecting increases in tenant sales.

Tenant
reimbursements increased $76.6 million, of which the property transactions accounted for $40.2 million. The remainder of the increase of $36.4 million, or
3.8%, was in comparable properties and was due to inflationary increases in property operating costs and our ongoing initiative of converting our leases to a fixed reimbursement methodology for common
area maintenance costs.

Management
fees and other income increased $31.5 million principally as a result of additional management fees derived from the additional properties being managed from the Mills
acquisition and additional leasing and development fees as a result of incremental property activity.

Total
other income increased $62.5 million, and was principally the result of the following:



Property
operating expenses increased $13.3 million, or 3.0%, primarily as a result of the property transactions and inflationary increases.

Depreciation
and amortization expense increased $49.4 million and is primarily a result of the property transactions.

Real
estate taxes increased $13.1 million from the prior period, $10.4 million of which is related to the property transactions, and $2.7 million from our
comparable properties due to the effect of increases resulting from reassessments, higher tax rates, and the effect of expansion and renovation activities.

Repairs
and maintenance increased $14.2 million due to increased snow removal costs in 2007 over that of 2006, normal inflationary increases, and the effect of the property
transactions.

Advertising
and promotion increased $5.9 million primarily due to the effect of the property transactions.

Home
and Regional office expense increased $7.3 million primarily due to increased personnel costs, primarily the result of the Mills acquisition, and the effect of incentive
compensation plans.

General
and administrative expenses increased $2.9 million due to increased executive salaries, principally as a result of additional share-based payment amortization from the
vesting of restricted stock grants.

Interest
expense increased $124.0 million due principally to the following:



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Also
impacting interest expense was the consolidation of Town Center at Cobb, Gwinnett Place, and Mall of Georgia as a result of our acquisition of additional ownership interests, and
the assumption of debt related to the acquisition of Las Americas Premium Outlets.

Income
tax expense of taxable REIT subsidiaries decreased $22.7 million due primarily to a $19.5 million tax benefit recognized related to the impairment charge related to
our write-off of our entire investment in Surprise Grand Vista JV I, LLC, which is developing land located in Phoenix, Arizona, along with a reduction in the taxable income for the
management company as a result of structural changes made to our wholly-owned captive insurance entities.

Income
from unconsolidated entities decreased $72.7 million, due in part to the impact of the Mills transaction (net of eliminations). On a consolidated net income basis, our
share of income from SPG-FCM approximates a net loss of $58.7 million for the year due to additional depreciation and amortization expenses on asset basis step-ups in
purchase accounting approximating $102.2 million for the second through fourth quarters of 2007. Also contributing to the decrease is the prior year recognition of $15.6 million in
income related to a beneficial interest that we held in 2006 in a regional mall entity. This beneficial interest was terminated in November 2006.

In
2007, we recognized an impairment of $55.1 million related to our Surprise Grand Vista venture in Phoenix, Arizona. As described above, the charge to earnings resulted in a
$19.5 million tax benefit, resulting in a net charge to earnings, before consideration of the limited partners' interest, of $35.6 million.

We
recorded a $92.0 million net gain on the sales of assets and interests in unconsolidated entities in 2007 primarily as a result of the sale of five assets in Poland by Simon
Ivanhoe. In 2006, we recorded a gain related to the sale of a beneficial interest of $86.5 million, a $34.4 million gain on the sale of a 10.5% interest in Simon Ivanhoe, and the net
gain on the sale of four non-core properties, including one joint venture property, of $12.2 million.

In
2007, the loss on sale of discontinued operations of $35.3 million represents the net loss upon disposition of five non-core properties consisting of three
regional malls and two community/lifestyle centers.

Preferred
unit distribution requirements decreased $28.0 million as a result of the redemption of the Series G preferred units in the fourth quarter of 2007 and the
Series F preferred units in the fourth quarter of 2006.

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 by negotiating interest rates for each financing or
refinancing based on current market conditions. Floating rate debt currently comprises approximately 15% 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 $1.9 billion during 2008. In addition, the Credit Facility provides an alternative source of liquidity as our cash needs vary from time to time. Also, Simon
Property recently declared a dividend for the first quarter of 2009 that it intends to pay in cash and shares of Simon Property's common stock, with the cash component limited to 10% on an aggregate
basis. As a result, we would make a corresponding distribution to unitholders comprised of 10% cash, with the balance being paid with units. Paying 90% of the 2009 first quarter dividend, and as a
result our distributions, in a form other than cash allows Simon Property to satisfy its REIT taxable income distribution requirement while enhancing financial flexibility and balance sheet strength.

Our
balance of cash and cash equivalents increased $271.6 million during 2008 to $773.5 million as of December 31, 2008. December 31, 2008 and 2007 balances
include $29.8 million and $41.3 million, respectively, related to our co-branded gift card programs, which we do not consider available for general working capital purposes.

On
December 31, 2008, we had available borrowing capacity of approximately $2.4 billion under the Credit Facility, net of outstanding borrowings of $1.0 billion and
letters of credit of $15.7 million. During 2008, the maximum amount outstanding under the Credit Facility was $2.6 billion and the weighted average amount outstanding was
$1.4 billion. The weighted average interest rate was 3.49% for the year ended December 31, 2008. The Credit Facility is scheduled to mature on January 11, 2010, which we can
extend for another year at our option.

We
and/or Simon Property also have access to public equity and long term unsecured debt markets and access to private equity from institutional investors at the property level.

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Our
business model requires us to regularly access the debt and equity capital markets to raise funds for some of our acquisition activity, development and redevelopment capital, as
well as to refinance many of our existing debt maturities. We are currently seeing significant turmoil in the capital markets. This has impacted access to debt and
equity capital for many organizations, including ours. As demonstrated by recent financing activities (both secured and unsecured), we were able to successfully access capital in the third and fourth
quarters of 2008; however, there is no assurance we will be able to do so on similar terms or conditions in future periods. We believe we have sufficient cash on hand and availability under the Credit
Facility to address our debt maturities and capital needs through 2009.



On February 16, 2007, SPG-FCM, a 50/50 joint venture between one of our affiliates and funds managed by Farallon
Capital Management, L.L.C. ("Farallon"), entered into a definitive merger agreement to acquire all of the outstanding common stock of Mills for $25.25 per common share in cash. The acquisition of
Mills and its interests in the 36 properties that remain at December 31, 2008 was completed in April 2007. As of December 31, 2008, we and Farallon had each funded $650.0 million
into SPG-FCM to acquire all of the common stock of Mills. As part of the transaction, we also 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 preferred stock, during 2007. As of
December 31, 2008, the outstanding balance of our loan to SPG-FCM was $520.7 million, and the average outstanding balance during the twelve month period ended
December 31, 2008 of all loans made to SPG-FCM and Mills was approximately $534.1 million. During 2008 and 2007, we recorded approximately $15.3 million and
$39.1 million in interest income (net of inter-entity eliminations) related to these loans, respectively. We also recorded fee income, including fee income amortization related to
up-front fees on loans made to SPG-FCM and Mills, during 2008 and 2007 of approximately $3.1 million and $17.4 million (net of inter-entity eliminations),
respectively, for providing refinancing services to Mills' properties and SPG-FCM. The existing loan facility to SPG-FCM bears a rate of LIBOR plus 275 basis points and matures
on June 7, 2009, with three available one-year extensions. Fees charged on loans made to SPG-FCM and Mills are amortized on a straight-line basis over the
life of the loan.

The
Mills acquisition involved the purchase of all Mills' outstanding shares of common stock and common units for approximately $1.7 billion (at $25.25 per share or unit), the
assumption of $954.9 million of preferred stock, the assumption of a proportionate share of property-level mortgage debt, of which SPG-FCM's share approximated $3.8 billion,
the assumption of $1.2 billion in unsecured loans provided by us, costs to effect the acquisition, and certain liabilities and contingencies, including an ongoing investigation by the
Securities and Exchange Commission, for an aggregate purchase price of approximately $8 billion. SPG-FCM has completed its purchase price allocations for the Mills acquisition using
valuations developed with the assistance of a third-party professional appraisal firm.

In
conjunction with the Mills acquisition, we acquired a majority interest in two properties in which we previously held a 50% ownership interest (Town Center at Cobb and Gwinnett
Place) and as a result we have consolidated these two properties at the date of acquisition.

In
addition to the loans provided to SPG-FCM, we also provide management services to substantially all of the properties in which SPG-FCM holds an interest.



Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $1.9 billion
during 2008. In addition, we received net proceeds from our debt financing and repayment activities in 2008 of $764.8 million. These activities are further discussed below in "Financing and
Debt". 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 distributions to
partners necessary to maintain Simon

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Property's
REIT qualification on a long-term basis. 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:



We
expect to generate positive cash flow from operations in 2009, and we consider these projected cash flows in our sources and uses of cash. These cash flows are principally derived
from retail tenants, many of whom are experiencing considerable financial distress. A significant deterioration in projected cash flows from operations could cause us to increase our reliance on
available funds from the Credit Facility, curtail planned capital expenditures, or seek other additional sources of financing as discussed above.



Our unsecured debt currently consists of $10.7 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.

On
May 19, 2008, we issued two tranches of senior unsecured notes totaling $1.5 billion at a weighted average fixed interest rate of 5.74% consisting of a
$700.0 million tranche with a fixed interest rate of 5.30% due May 30, 2013 and a second $800.0 million tranche with a fixed interest rate of 6.125% due May 30, 2018. We
used proceeds from the offering to reduce borrowings on the Credit Facility and for general working capital purposes.

On
June 16, 2008, we completed the redemption of the $200.0 million outstanding principal amount of its 7% Mandatory Par Put Remarketed Securities, or MOPPRS. The
redemption was accounted for as an extinguishment and resulted in a charge in the second quarter of 2008 of approximately $20.3 million.

On
August 28, 2008, we repaid a $150.0 million unsecured note, which had a fixed rate of 5.38%.

During
the year ended December 31, 2008, we drew amounts from the Credit Facility to fund the redemption of the remarketable debt securities and the repayment of the
$150.0 million unsecured note. Other amounts drawn on the Credit Facility during the period were primarily for general working capital purposes. We repaid a total of $2.7 billion on the
Credit Facility during the year ended December 31, 2008. The total outstanding balance of the Credit Facility as of December 31, 2008 was $1.0 billion, and the maximum amount
outstanding during the year was approximately $2.6 billion. During the year ended December 31, 2008, the weighted average outstanding balance was approximately $1.4 billion. The
amount outstanding as of December 31, 2008 includes $446.3 million in Euro and Yen-denominated borrowings. In addition, subsequent to December 31, 2008, we repaid
$600 million in unsecured notes, consisting of two $300 million tranches that bore rates of 3.75% and 7.13%, respectively, using proceeds from the Credit Facility.



Total secured indebtedness was $6.3 billion and $5.3 billion at December 31, 2008 and 2007, respectively. During
the twelve-month period ended December 31, 2008, we repaid $274.0 million in mortgage loans, unencumbering five properties.

On
January 15, 2008, we entered into a swap transaction that effectively converted $300.0 million of variable rate debt to fixed rate debt at a rate of 3.21%.

On
March 6, 2008, we borrowed $705 million on a term loan that matures March 5, 2012 and bears a rate of LIBOR plus 70 basis points. On May 27, 2008, the
loan was increased to $735 million. This loan is secured by the cash flow distributed from six properties and has additional availability of $115 million through the maturity date.

On
July 30, 2008, we borrowed $190.0 million on a loan secured by Philadelphia Premium Outlets, which matures on July 30, 2014 and bears interest at a variable rate
of LIBOR plus 185 basis points. On January 2, 2009, we executed a swap agreement that fixes the interest rate on this loan at 4.19%.

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On
September 23, 2008, we borrowed $170.0 million on a term loan that matures September 23, 2013 and bears interest at a rate of LIBOR plus 195 basis points. On
November 4, 2008, the loan was increased to $220 million and on December 17, 2008, the loan was increased to its maximum availability of $260 million. This is a
cross-collateralized loan that is secured by The Domain, Shops at Arbor Walk, and Palms Crossing. On January 2, 2009, we executed a swap agreement that fixes the interest rate on
$200.0 million of this loan at 4.35%.



Our consolidated debt, adjusted to reflect one fair value derivative outstanding at December 31, 2007 and the effect of fixing
variable rate debt with interest rate swaps, and the effective weighted average interest rates for the years then ended consisted of the following (dollars in thousands):

Debt Subject to

Adjusted Balance
as of
December 31,
2008

Effective
Weighted
Average
Interest Rate

Adjusted Balance
as of
December 31,
2007

Effective
Weighted
Average
Interest RateFixed Rate

$
15,424,318


5.76%

$
14,056,008


5.88%Variable Rate


2,618,214


1.31%


3,162,666


4.73%$
18,042,532


5.12%

$
17,218,674


5.67%


As
of December 31, 2008, we had interest rate cap protection agreements on $281.8 million of consolidated variable rate debt. We also hold $505.0 million of
notional amount variable rate swap agreements that have a weighted average fixed pay rate of 3.29% and a weighted average variable receive rate of 2.75%. As of December 31, 2008, the net effect
of these agreements effectively converted $505.0 million of variable rate debt to fixed rate debt.

Contractual Obligations and Off-balance Sheet Arrangements:The following table summarizes the material
aspects of our future obligations
as of December 31, 2008 (dollars in thousands):

2009

2010 to 2011

2012 to 2014

After 2014

TotalLong Term DebtConsolidated(1)

$
1,475,510

$
5,352,250

$
6,333,770

$
4,863,803

$
18,025,333Pro Rata Share Of Long Term Debt:Consolidated(2)

$
1,464,866

$
5,304,346

$
6,164,777

$
4,815,638

$
17,749,627Joint Ventures(2)


437,040


1,391,663


2,568,964


2,223,629


6,621,296Total Pro Rata Share Of Long Term Debt


1,901,906


6,696,009


8,733,741


7,039,267


24,370,923Consolidated Capital Expenditure Commitments(3)


133,512


48,987








182,499Joint Venture Capital Expenditure Commitments(3)


8,536


609








9,145Consolidated Ground Lease Commitments(4)


16,530


32,626


49,821


653,052


752,029Total

$
2,060,484

$
6,778,231

$
8,783,562

$
7,692,319

$
25,314,596


---

Capital
expenditure commitments presented in the table above represent new developments, redevelopments or renovation/expansions that we have committed to the completion of
construction. The timing of these expenditures

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may
vary due to delays in construction or acceleration of the opening date of a particular project. In addition, the amount includes our share of committed costs for joint venture developments.

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 7 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 December 31, 2008, we had loan guarantees and other guarantee obligations to support $71.9 million and $6.6 million, respectively, to support
our total $6.6 billion share of joint venture mortgage and other indebtedness presented in the table above.



During 2008, the holders of 22,400 Series I preferred units exercised their rights to exchange the preferred units for shares of
Simon Property's Series I preferred stock; we issued 5,151,776 Units to holders of Series I preferred units who exercised their conversion rights; we issued 1,187,238 units as a result
of the conversion of 1,493,904 6% Convertible Perpetual Preferred Units; we issued 4,981 units as a result of the conversion of 6,583 7% Cumulative Convertible Preferred Units; and we redeemed 61,493
8% Cumulative Redeemable Preferred Units for cash.



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 best interests 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.The acquisition of high quality individual properties or portfolios of properties remains
an integral component of our growth strategy.
Effective January 1, 2008 we acquired an additional 1.8% interest in Oxford Valley Mall and Lincoln Plaza (which gives us a combined ownership interest in each of 64.99%). On
September 12, 2008 we acquired an additional 3.2% interest in White Oaks Mall (which gives us an ownership interest of 80.68%). On December 31, 2008 we acquired an additional 5% interest
in Gateway Shopping Center for $2.6 million (which gives us 100% interest in the asset).

Dispositions.We continue to pursue the sale of properties that no longer meet our strategic criteria or
that are not the primary retail venue within
their trade area. On December 30, 2008, the joint venture partnership in which we own a 50% interest sold Cincinnati Mills for $8.3 million. No material gain or loss was recorded on this
disposition. There were no other dispositions of properties during the year ended December 31, 2008.



New Domestic Developments.Given the significant downturn in the economy, we have substantially reduced
our development spending. We expect to
complete construction on Cincinnati Premium Outlets, a 400,000 square foot upscale manufacturers' outlet center located in Monroe, OH, during the third quarter of 2009. The estimated total cost of
this project is $92 million, and the carrying amount of the construction in progress as of December 31, 2008 was $43 million. We expect to fund this project with available cash
flow from operations and borrowings from the Credit Facility.

Strategic Domestic Expansions and Renovations.In addition to new development, we incur costs to
renovate and/or expand selected properties. Current
projects include a 600,000 square foot Phase II expansion at The Domain, a 220,000 square foot expansion of Camarillo Premium Outlets  The Promenade at, and the addition of
Nordstrom and small shops at South Shore Plaza. We expect to fund these capital projects with available cash flow from operations and borrowings from the Credit Facility. We expect to invest a total
of approximately $300 million (our share) on expansion and renovation activities in 2009.

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The following table summarizes total capital expenditures on consolidated properties on a cash basis:

2008

2007

2006New Developments and Other

$
327

$
432

$
317Renovations and Expansions


432


349


307Tenant Allowances


72


106


52Operational Capital Expenditures


43


130


92Total

$
874

$
1,017

$
768


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. We expect international development and
redevelopment/expansion activity for 2009 to include:



Currently,
our consolidated 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 and GCI, as of December 31, 2008, including all related components of other comprehensive income, was
$224.2 million. Our investments in Simon Ivanhoe and GCI are accounted for using the equity method of accounting. Currently two European developments are under construction which will add
approximately 942,000 square feet of GLA for a total net cost of approximately €221 million, of which our share is approximately €53 million, or
$74.8 million based on current Euro:USD exchange rates.

On
October 20, 2005, Ivanhoe Cambridge, Inc., or Ivanhoe, an affiliate of Caisse de dépôt et placement du Québec, effectively
acquired our former partner's 39.5% ownership interest in Simon Ivanhoe. On February 13, 2006, we sold a 10.5% interest in this joint venture to Ivanhoe for
€45.2 million, or $53.9 million and recorded a gain on the disposition of $34.4 million. This gain is reported in "gain on sales of interests in unconsolidated
entities" in the 2006 consolidated statements of operations. We then settled all remaining share purchase commitments from the company's founders, including the early settlement of some commitments by
purchasing an additional 25.8% interest for €55.1 million, or $65.5 million. As a result of these transactions, we and Ivanhoe each own a 50% interest in Simon Ivanhoe at
December 31, 2007 and 2008.

As
of December 31, 2008, the carrying amount of our 40% joint venture investment in the seven Japanese Premium Outlet Centers including all related components of other
comprehensive income was $312.6 million. Currently, Ami Premium Outlets, a 227,000 square foot Premium Outlet Center, is under construction in Ami, Japan. The
project's total projected net cost is JPY 15.5 billion, of which our share is approximately JPY 6.2 billion, or $68.5 million based on applicable Yen:USD exchange rates.

As
of December 31, 2008, the carrying amount of our 32.5% joint venture investment in GMI including all related components of other comprehensive income was $53.9 million.
Currently, one center is open in Changshu, China and three additional centers are under development. The three centers under development will add approximately 1.5 million square feet of GLA
for a total net cost of approximately CNY 1.6 billion, of which our share is approximately CNY 523 million, or $76.8 million based on applicable CNY:USD exchange rates.

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During
2008, we acquired shares of stock of Liberty International, PLC, or 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 (REIT) on January 1, 2007. Our interest in Liberty is less than 5% of their shares and is adjusted to their quoted market price, including a related foreign exchange component.

Distributions and Stock Repurchase Program

On January 30, 2009, Simon Property's Board of Directors approved a quarterly common stock dividend of $0.90 per share, to be
paid in a combination of cash and shares of its common stock. The distribution rate on our units is equal to the dividend rate on Simon Property's common stock. While our unitholders will have the
right to elect to receive their distribution in either cash or units, we have announced that the aggregate cash component of the distribution will not exceed 10% of the total distribution, or $0.09
per unit. If the number of unitholders electing to receive cash would result in the payment of cash in excess of this 10% limitation, we will allocate the cash payment on a pro rata basis among those
unitholders making the cash election. Simon Property has reserved the right to elect to pay the first quarter dividend, and as a result our distribution, all in cash. Simon Property's Board of
Directors reviews and approves Simon Property's dividends and, as a result, our distributions, on a quarterly basis, and no determination has been made about whether the remaining 2009 distributions
will be paid in a similar combination of cash and common stock. Paying all or a portion of its remaining 2009 dividends in a combination of cash and common stock allows Simon Property to satisfy its
REIT taxable income distribution requirement under existing IRS revenue procedures, while enhancing financial flexibility and balance sheet strength.

Distributions
during 2008 aggregated $3.60 per unit and distributions during 2007 aggregated $3.36 per unit all paid in cash. We must pay a minimum amount of distributions to maintain
Simon Property's status as a REIT. Our distributions typically exceed our consolidated net income generated in any given year primarily because of depreciation, which is a "non-cash"
expense. Future distributions will be determined by the Simon
Property Board of Directors based on actual results of operations, cash available for distributions, and what may be required to maintain Simon Property's status as a REIT.

On
July 26, 2007, Simon Property's Board of Directors authorized a stock repurchase program under which Simon Property may purchase up to $1.0 billion of its common stock
over the next twenty-four months as market conditions warrant. Simon Property may repurchase the shares in the open market or in privately negotiated transactions. During 2008, no
purchases were made as part of this program. The program had remaining availability of approximately $950.7 million at December 31, 2008. As Simon Property repurchases shares under this
program, we repurchase an equal number of our units from Simon Property.

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,
uncertainties and other factors. Such factors include, but are not limited to: the impact of a prolonged recession, our ability to meet debt service requirements, the availability and terms 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, 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,
competitive market forces, risks related to international activities, insurance costs and coverage, terrorist activities, and maintenance of our status as a real estate investment trust. We discuss
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 subsequent 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.

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Item 8.    Financial Statements and Supplementary Data

Index to Financial Statements



Page No.Report of Independent Registered Public Accounting Firm


22Consolidated Balance Sheets as of December 31, 2008 and 2007


23Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006


24Consolidated Statements of Cash Flow for the years ended December 31, 2008, 2007 and 2006


25Consolidated Statements of Equity for the years ended December 31, 2008, 2007 and 2006


26Notes to Financial Statements


27


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Report of Independent Registered Public Accounting Firm

The
Board of Directors of Simon Property Group, Inc.
and The Partners of Simon Property Group, L.P.:

We
have audited the accompanying consolidated balance sheets of Simon Property Group, L.P. and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated
statements of operations and comprehensive income,
equity and cash flows for each of the three years in the period ended December 31, 2008. Our audit also included the financial statement schedule listed in the Index at Item 15. These
financial statements and schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Simon Property Group, L.P. and
Subsidiaries at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in
conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Simon Property Group, L.P. and Subsidiaries' internal
control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 25, 2009, expressed an unqualified opinion thereon.

As
discussed in Notes 3 and 10 to the financial statements, Simon Property Group, L.P. and Subsidiaries have retrospectively applied certain reclassification adjustments
upon adoption of a new accounting pronouncement for noncontrolling interests.

/s/ ERNST & YOUNG LLPIndianapolis, Indiana


February 25, 2009, except for the retrospective adjustments described in Notes 3 and 10 as to which the date is April 29, 2009


22

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

December 31,
2008

December 31,
2007ASSETS:Investment properties, at cost

$
25,205,715

$
24,415,025Less  accumulated depreciation


6,184,285


5,312,09519,021,430


19,102,930Cash and cash equivalents


773,544


501,982Tenant receivables and accrued revenue, net


414,856


447,224Investment in unconsolidated entities, at equity


1,663,886


1,886,891Deferred costs and other assets


1,028,333


955,439Note receivable from related party


520,700


548,000Total assets

$
23,422,749

$
23,442,466LIABILITIES:Mortgages and other indebtedness

$
18,042,532

$
17,218,674Accounts payable, accrued expenses, intangibles, and deferred revenue


1,086,248


1,251,044Cash distributions and losses in partnerships and joint ventures, at equity


380,730


352,798Other liabilities and accrued distributions


155,151


155,937Total liabilities


19,664,661


18,978,453COMMITMENTS AND CONTINGENCIESPreferred units, various series, at liquidation value, and noncontrolling redeemable interests in properties


656,121


1,049,401EQUITY:Partners' EquityPreferred units, 891,183 and 897,766 units outstanding, respectively. Liquidation values $42,486 and $42,670, respectively


48,671


49,184General Partner, 231,319,644 and 223,034,282 units outstanding, respectively


2,576,307


2,783,828Limited Partners, 56,368,410 and 57,913,250 units outstanding, respectively


627,799


722,851Total partners' equity


3,252,777


3,555,863Noncontrolling nonredeemable deficit interests in properties, net


(150,810
)

(141,251
)Total equity


3,101,967


3,414,612Total liabilities and equity

$
23,422,749

$
23,442,466


The accompanying notes are an integral part of these statements.

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

For the Year Ended December 31,2008

2007

2006REVENUE:Minimum rent

$
2,291,919

$
2,154,713

$
2,020,856Overage rent


100,222


110,003


95,767Tenant reimbursements


1,065,957


1,023,164


946,554Management fees and other revenues


132,471


113,740


82,288Other income


192,586


249,179


186,689Total revenue


3,783,155


3,650,799


3,332,154EXPENSES:Property operating


455,874


454,510


441,203Depreciation and amortization


969,477


905,636


856,202Real estate taxes


334,657


313,311


300,174Repairs and maintenance


107,879


120,224


105,983Advertising and promotion


96,783


94,340


88,480Provision for credit losses


24,035


9,562


9,500Home and regional office costs


144,865


136,610


129,334General and administrative


20,987


19,587


16,652Other


69,061


62,987


65,277Total operating expenses


2,223,618


2,116,767


2,012,805OPERATING INCOME


1,559,537


1,534,032


1,319,349Interest expense


(947,140
)

(945,852
)

(821,858
)Loss on extinguishment of debt


(20,330
)




Income tax (expense) benefit of taxable REIT subsidiaries


(3,581
)

11,322


(11,370
)Income from unconsolidated entities


32,246


38,120


110,819Impairment charge


(21,172
)

(55,061
)

Gain on sale of assets and interests in unconsolidated entity





92,044


132,787Consolidated income from continuing operations


599,560


674,605


729,727Results of operations from discontinued operations


(25
)

(117
)

418Loss on disposal or sale of discontinued operations, net





(35,252
)

84CONSOLIDATED NET INCOME


599,535


639,236


730,229Net income attributable to noncontrolling interests


11,091


12,903


10,644Preferred unit requirement


58,718


76,655


104,674NET INCOME ATTRIBUTABLE TO UNITHOLDERS

$
529,726

$
549,678

$
614,911NET INCOME ATTRIBUTABLE TO UNITHOLDERS
ATTRIBUTABLE TO:General Partner

$
422,517

$
436,164

$
486,145Limited Partners


107,209


113,514


128,766Net income attributable to unitholders

$
529,726

$
549,678

$
614,911BASIC EARNINGS PER UNITIncome from continuing operations

$
1.88

$
2.09

$
2.20Discontinued operations

$



(0.13
)

Net income attributable to unitholders

$
1.88

$
1.96

$
2.20DILUTED EARNINGS PER UNITIncome from continuing operations

$
1.87

$
2.08

$
2.19Discontinued operations

$



(0.13
)

Net income attributable to unitholders

$
1.87

$
1.95

$
2.19Consolidated net income

$
599,535

$
639,236

$
730,229Unrealized (loss) income on interest rate hedges


(50,973
)

(10,760
)

6,518Net income (loss) on derivative instruments reclassified from accumulated other comprehensive income (loss) into interest expense


(3,205
)

902


2,263Currency translation adjustments


(6,953
)

6,297


1,706Changes in available-for-sale securities and other


(168,619
)

2,020


1,404Comprehensive income


369,785


637,695


742,120Comprehensive income attributable to noncontrolling interests


11,091


12,903


10,644Comprehensive income attributable to unitholders

$
358,694

$
624,792

$
731,476


The accompanying notes are an integral part of these statements.

24

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Table of Contents



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

For the Year Ended December 31,2008

2007

2006CASH FLOWS FROM OPERATING ACTIVITIES:Consolidated net income

$
599,535

$
639,236

$
730,229Adjustments to reconcile consolidated net income to net cash provided by operating activities Depreciation and amortization


956,827


875,284


812,718Gain on sale of interest in unconsolidated entity





(92,044
)

(132,787
)Impairment charge


21,172


55,061


(Loss) gain on disposal or sale of discontinued operations, net





35,252


(84
)Straight-line rent


(33,672
)

(20,907
)

(17,020
)Equity in income of unconsolidated entities


(32,246
)

(38,120
)

(110,819
)Distributions of income from unconsolidated entities


118,665


101,998


94,605Changes in assets and liabilities Tenant receivables and accrued revenue, net


(14,312
)

(40,976
)

(3,799
)Deferred costs and other assets


(22,698
)

(70,138
)

(126,989
)Accounts payable, accrued expenses, intangibles, deferred revenues and other liabilities


41,213


114,786


70,094Net cash provided by operating activities


1,634,484


1,559,432


1,316,148CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions





(263,098
)

(158,394
)Funding of loans to related parties


(8,000
)

(2,752,400
)

Repayments of loans from related parties


35,300


2,204,400


Capital expenditures, net


(874,286
)

(1,017,472
)

(767,710
)Cash impact from the consolidation and de-consolidation of properties





6,117


8,762Net proceeds from sale of partnership interest, other assets and discontinued operations





56,374


209,039Investments in unconsolidated entities


(137,509
)

(687,327
)

(157,309
)Purchase of marketable and non-marketable securities


(345,594
)

(12,655
)

(5,581
)Distributions of capital from unconsolidated entities and other


309,217


416,485


263,761Net cash used in investing activities


(1,020,872
)

(2,049,576
)

(607,432
)CASH FLOWS FROM FINANCING ACTIVITIES:Partnership contributions and issuance of units


11,106


156,710


217,237Purchase of preferred units and partnership units


(16,009
)

(83,993
)

(16,150
)Preferred unit redemptions


(1,845
)

(300,468
)

(393,558
)Distributions to noncontrolling interests


(28,251
)

(91,032
)

(37,200
)Contributions from noncontrolling interests


4,005


2,903


2,023Partnership distributions


(1,075,895
)

(1,020,674
)

(954,159
)Mortgage and other indebtedness proceeds, net of transaction costs


4,456,975


5,577,083


5,507,735Mortgage and other indebtedness principal payments


(3,692,136
)

(4,177,763
)

(4,442,332
)Net cash (used in) provided by financing activities


(342,050
)

62,766


(116,404
)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


271,562


(427,378
)

592,312CASH AND CASH EQUIVALENTS, beginning of year


501,982


929,360


337,048CASH AND CASH EQUIVALENTS, end of year

$
773,544

$
501,982

$
929,360


The accompanying notes are an integral part of these statements.

25

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Table of Contents



Simon Property Group, L.P. and SubsidiariesConsolidated Statements of Equity
(Dollars in thousands)

Preferred
Units

Simon Property
(Managing General
Partner)

Limited
Partners

Noncontrolling
interests

Total EquityBalance at December 31, 2005

$
427,764

$
3,202,242

$
858,918

$
(44,696
)
$
4,444,228General partner contributions (414,659 units)





14,906








14,906Series J preferred stock premium and amortization


(329
)










(329
)Accretion of preferred units


587











587Series C preferred units (1,149,077 units) converted to limited partner common units (869,552 units)


(32,174
)




32,174





-Series I preferred units (283,907 units) converted to common units (222,933 units)





14,195








14,195Limited partner units converted to common units (86,800 units)





1,247


(1,247
)




-Series F preferred stock redemption (8,000,000 units)


(192,989
)










(192,989
)Series K preferred stock issuance (8,000,000 units)


200,000











200,000Series K preferred stock redemption (8,000,000 units)


(200,000
)










(200,000
)Stock incentive program (415,098 units, net)














-Amortization of stock incentive





23,369








23,369Common units retired (70,000)





(6,405
)







(6,405
)Other (includes 191,938 limited partner units converted to cash)





1,500


(15,942
)

5,644


(8,798
)Adjustment to limited partners' interest from increased ownership in the Operating Partnership





(3,951
)

3,951





Distributions, excluding distributions on interests classified as temporary equity


(37,828
)

(671,812
)

(177,673
)

(36,049
)

(923,362
)Net income, excluding preferred distributions on temporary equity preferred units of $66,846


37,828


486,145


128,766


10,644


663,383Other comprehensive income (loss)





9,446


2,445





11,891Balance at December 31, 2006

$
202,859

$
3,070,882

$
831,392

$
(64,457
)
$
4,040,676General partner contributions (231,025 units)





7,604








7,604Series J preferred stock premium and amortization


(328
)










(328
)Accretion of preferred units


1,157











1,157Issuance of 147,241 limited partner common units for the purchase of Maine Premium Outlets








16,362





16,362Issuance of 67,309 limited partner common units to the Mills Limited Partners








8,055





8,055Series C preferred units (160,865 units) converted to limited partner common units (121,727 units)


(4,504
)




4,504





-Series I preferred units (65,907 units) converted to common units (51,987 units)





3,296








3,296Series I preferred units (606,400 units) converted to limited partner common units (478,144 units)








30,320





30,320Limited partner units converted to common units (1,692,474 units)





22,781


(22,781
)




-Series G preferred stock redemption (3,000,000 units)


(150,000
)










(150,000
)Series L preferred stock issuance (6,000,000 units)


150,000











150,000Series L preferred stock redemption (6,000,000 units)


(150,000
)










(150,000
)Treasury unit purchase (572,000 units)





(49,269
)







(49,269
)Stock incentive program (222,725 units, net)














-Amortization of stock incentive





26,779








26,779Common units retired (23,000)





(2,291
)







(2,291
)Other (includes 322,135 limited partner units converted to cash)





(8,236
)

(36,837
)

(7,687
)

(52,760
)Adjustment to limited partners' interest from increased ownership in the Operating Partnership





26,466


(26,466
)




(0
)Distributions, excluding distributions on interests classified as temporary equity


(13,268
)

(749,196
)

(194,823
)

(82,010
)

(1,039,297
)Net income, excluding preferred distributions on temporary equity preferred units of $63,387


13,268


436,164


113,514


12,903


575,849Other comprehensive income (loss)





(1,152
)

(389
)




(1,541
)Balance at December 31, 2007

$
49,184

$
2,783,828

$
722,851

$
(141,251
)
$
3,414,612General partner contributions (282,106 units)





11,886








11,886Series J preferred stock premium and amortization


(329
)










(329
)Series C preferred units (6,583 units) converted to limited partner common units (4,981 units)


(184
)




184





-Series I preferred units (6,437,072 units) converted to common units (5,151,776 units)





321,854








321,854Series I preferred units (1,493,904 units) converted to limited partner common units (1,187,238 units)








74,695





74,695Limited partner units converted to common units (2,574,608 units)





31,351


(31,351
)




-Stock incentive program (276,872 units, net)














-Amortization of stock incentive





28,640








28,640Other (includes 162,451 limited partner units converted to cash)





(5,834
)

(16,797
)

5,103


(17,528
)Adjustment to limited partners' interest from increased ownership in the Operating Partnership





(23,455
)

23,455





Distributions, excluding distributions on interests classified as temporary equity


(3,531
)

(811,327
)

(205,850
)

(25,753
)

(1,046,461
)Net income, excluding preferred distributions on temporary equity preferred units of $55,187


3,531


422,517


107,209


11,091


544,348Other comprehensive income (loss)





(183,153
)

(46,597
)




(229,750
)Balance at December 31, 2008

$
48,671

$
2,576,307

$
627,799

$
(150,810
)
$
3,101,967


The accompanying notes are an integral part of these statements.

26

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Table of Contents



Simon Property Group, L.P. and Subsidiaries        Notes to Consolidated Financial Statements        (Dollars in thousands, except unit and per unit amounts and
where indicated as 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 notes to 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 is a self-administered and self-managed real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the
"Code"). Pursuant to our partnership agreement, we are required to pay all expenses of Simon Property.

We
own, develop, and manage retail real estate in five retail real estate platforms: regional malls, Premium Outlet Centers®, The Mills®, community/lifestyle
centers, and international properties. As of December 31, 2008, we owned or held an interest in 324 income-producing properties in the United States, which consisted of 164 regional malls, 16
additional regional malls and four additional community centers acquired as a result of the 2007 acquisition of The Mills Corporation, or the Mills acquisition, 70 community/lifestyle centers, 16 The
Mills, 40 Premium Outlet Centers, and 14 other shopping centers or outlet centers in 41 states and Puerto Rico. We also own interests in four parcels of land held in the United States for future
development. Internationally, we have ownership interests in 52 European shopping centers (France, Italy, and Poland); seven Premium Outlet Centers in Japan; one Premium Outlet Center in
Mexico; one Premium Outlet Center in Korea;
and one shopping center 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, a 40% interest in a Premium Outlet Center in Japan, and a 32.5% interests in three additional shopping centers under construction in China.

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



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



2.    Basis of Presentation and Consolidation

The accompanying consolidated financial statements include the accounts of all majority-owned subsidiaries, and all significant intercompany amounts have been eliminated.

We
consolidate properties that are wholly owned or properties that we own less than 100% but we control. Control of a property is demonstrated by, among other factors, our ability
to:



27

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

2.    Basis of Presentation and Consolidation (Continued)



We
also consolidate all variable interest entities, or VIE, when we are determined to be the primary beneficiary. Our determination of the primary beneficiary of a VIE considers all
relationships between us and the VIE, including management agreements and other contractual arrangements, when determining the party obligated to absorb the majority of the expected losses, as defined
in FASB Interpretation No. 46 (revised), Consolidation of Variable Interest Entities (FIN 46(R)). There have been no changes during 2008 in conclusions about whether an entity qualifies
as a VIE or whether we are the primary beneficiary of any previously identified VIE. During 2008, we have not provided financial or other support to a previously identified VIE that we were not
previously contractually obligated to provide.

Investments
in partnerships and joint ventures represent our noncontrolling ownership interests in properties. We account for these investments using the equity method of accounting. We
initially record these investments at cost and we subsequently adjust for net equity in income or loss, which we allocate in accordance with the provisions of the applicable partnership or joint
venture agreement, and cash contributions and distributions. The allocation provisions in the partnership or joint venture agreements are not always consistent with the legal ownership interests held
by each general or limited partner or joint venture investee primarily due to partner preferences.

As
of December 31, 2008, we consolidated 203 wholly-owned properties and consolidated 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 165 properties using the equity method of accounting (joint venture properties). We manage the day-to-day
operations of 93 of the 165 joint venture properties but have determined that our partner or partners have substantive participating rights in regards to the assets and operations of these joint
venture properties. Additionally, we account for our investment in SPG-FCM Ventures, LLC, or SPG-FCM, which acquired The Mills Corporation and its majority-owned
subsidiary, The Mills Limited Partnership, or collectively Mills, in April 2007, using the equity method of accounting. We have determined that SPG-FCM is not a 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 our net operating results after preferred distributions based on our partners' respective ownership. In addition, Simon Property owns series of our preferred units that have
terms comparable to outstanding shares of Simon Property preferred stock. Simon Property's weighted average ownership interest in us was as follows:

For the Year Ended
December 31,2008

2007

2006Weighted average ownership interest


79.8
%

79.4
%

79.1
%


As
of December 31, 2008 and 2007, Simon Property's ownership interest was 80.4% and 79.4%, respectively. We adjust the limited partners' interest at the end of each period to
reflect their ownership interest. Preferred distributions in the accompanying statements of operations and cash flows represent distributions on outstanding preferred units of limited partnership
interest.



We made certain reclassifications of prior period amounts in the consolidated financial statements to conform to the 2008 presentation.
The reclassifications included the retrospective adoption of Statement of Financial Accounting Standard (SFAS) No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an
amendment to ARB 51" (SFAS 160), and the application of EITF Topic D-98, "Classification and Measurement of Redeemable Securities" (EITF D-98), to certain redeemable
securities, as further described in Note 3. The reclassifications had no impact on previously reported net income attributable to unitholders or earnings per unit.

28

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies



We record investment properties at cost. Investment properties include costs of acquisitions; development, predevelopment, and
construction (including allocable salaries and related benefits); tenant allowances and improvements; and interest and real estate taxes incurred related to construction. We capitalize improvements
and replacements from repair and maintenance when the repair and maintenance extend the useful life, increase capacity, or improve the efficiency of the asset. All other repair and maintenance items
are expensed as incurred. We capitalize interest on projects during periods of construction until the projects are ready for their intended purpose based on interest rates in place during the
construction period. The amount of interest capitalized during each year is as follows:

For the Year Ended
December 31,2008

2007

2006Capitalized interest

$
27,847

$
35,793

$
30,115


We
record depreciation on buildings and improvements utilizing the straight-line method over an estimated original useful life, which is generally 10 to 40 years. We
review depreciable lives of investment properties periodically and we make adjustments when necessary to reflect a shorter economic life. We record depreciation on tenant allowances, tenant
inducements and tenant improvements utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter. We record depreciation on equipment
and fixtures utilizing the straight-line method over seven to ten years.

We
review investment properties for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of
investment properties may not be recoverable. These circumstances include, but are not limited to, declines in cash flows, occupancy and comparable sales per square foot at the property. We recognize
an impairment of investment property when the estimated undiscounted operating income before depreciation and amortization plus its residual value is less than the carrying value of the property. To
the extent impairment has occurred, we charge to income the excess of carrying value of the property over its estimated fair value. We may decide to sell properties that are held for use and the sale
prices of these properties may differ from their carrying values.

Certain
of our real estate assets contain asbestos. The asbestos is appropriately contained, in accordance with current environmental regulations, and we have no current plans to remove
the asbestos. If these properties were demolished, certain environmental regulations are in place which specify the manner in which the asbestos must be handled and disposed. Because the obligation to
remove the asbestos has an indeterminable settlement date, we are not able to reasonably estimate the fair value of this asset retirement obligation.



We allocate the purchase price of acquisitions to the various components of the acquisition based upon the relative value of each
component in accordance with SFAS No. 141 "Business
Combinations" (SFAS 141). These components typically include buildings, land and intangibles related to in-place leases and we estimate:



29

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)



Amounts
allocated to building are depreciated over the estimated remaining life of the acquired building or related improvements. We amortize amounts allocated to tenant improvements,
in-place lease assets and other lease-related intangibles over the remaining life of the underlying leases. We also estimate the value of other acquired intangible assets, if any, which
are amortized over the remaining life of the underlying related leases or intangibles.



SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144) provides a
framework for the evaluation of impairment of long-lived assets, the treatment of assets held for sale or to be otherwise disposed of, and the
reporting of discontinued operations. SFAS 144 requires us to reclassify any material operations related to consolidated properties sold during the period to discontinued operations. During
2007, we reported the net loss upon sale on our five consolidated assets sold in "loss on sale of discontinued operations" in the consolidated statements of operations and comprehensive income. The
operating results of the assets disposed of in 2007 were not significant to our consolidated results of operations. There were no consolidated assets sold during 2008.



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 fair value. Cash equivalents generally consist of commercial paper, bankers acceptances, Eurodollars, repurchase agreements, and
money markets. Our gift card programs are administered by banks. We collect gift card funds at the point of sale and then remit those funds to the banks for further processing. As a result, cash and
cash equivalents, as of December 31, 2008 and 2007, includes a balance of $29.8 million and $41.3 million, respectively, related to these 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 trade accounts
receivable. We place our cash and cash equivalents with institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of FDIC and SIPC insurance
limits. See Notes 4, 8, and 10 for disclosures about non-cash investing and financing transactions.



Marketable securities consist primarily of the investments of our captive insurance subsidiaries, our investment in shares of 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. Non-marketable securities includes an investment that we acquired in 2008.

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 using discounted cash flows 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 owner of other retail assets throughout the U.K. Liberty is a U.K. FTSE 100 listed company. Liberty converted into a U.K. Real Estate Investment Trust
(REIT) on January 1, 2007. Our interest in Liberty is less than 5% of their shares and 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 and recorded in other income, and includes the effect of changes in
foreign exchange rates on foreign currency denominated investments. However, if we determine a decline

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)

in
value is other than temporary, then we recognize the unrealized loss in earnings to write down the investments to their net realizable value.

Our
insurance subsidiaries are required to maintain statutory minimum capital and surplus as well as maintain a minimum liquidity ratio. Therefore, our access to these securities 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 that earned the compensation. Changes in the values of these securities are recognized in earnings, but because of the matching liability the impact to
consolidated net income is zero. As of December 31, 2008 and 2007, we have investments of $53.4 million and $55.9 million, respectively, which must be used to fund the debt
service requirements of debt related to 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 fair value.



We hold marketable securities that total $316.7 million and $260.4 million at December 31, 2008 and 2007,
respectively, and are considered to have Level 1 fair value inputs. The underlying aggregate unrealized loss on our marketable securities as of December 31, 2008 was
$165.3 million. In addition, we have derivative instruments, primarily interest rate swap agreements, with a gross liability balance of $19.4 million and $6.8 million, at
December 31, 2008 and 2007, respectively, which are classified as having Level 2 inputs. As defined by SFAS No. 157, "Fair Value Measurements" (SFAS 157), 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 include observable information for similar
items in active or inactive markets. We appropriately consider counterparty creditworthiness in the valuations.



In January 2006, an entity controlled by the Simon family assigned to us its right to receive cash flow, capital distributions, and
related profits and losses with respect to a portion of its ownership interest in the Mall of America through Mall of America Associates, or MOAA. This beneficial interest was transferred subject to a
credit facility repayable from MOAA's distributions from the property. As a result of this assignment, we began recognizing our share of MOAA's income during the first quarter of 2006, including the
proportionate share of earnings of MOAA since August 2004 through the first quarter of 2006 of $10.2 million. This income is included with "income from unconsolidated entities" in our
consolidated statement of operations. We accounted for our beneficial interests in MOAA under the equity method of accounting. On November 2, 2006, the Simon family entity sold its partnership
interest to an affiliate of another partner in MOAA and settled all pending litigation, terminating our beneficial interests. As a result of this sale, we ceased recording income from this property's
operations, and recorded a gain of approximately $86.5 million as a result of the receipt of $102.2 million of capital transaction proceeds assigned to us from this arrangement which is
included in "gain on sale of assets and interests in unconsolidated entities" in the consolidated statements of operations and comprehensive income.



We prepared the accompanying consolidated financial statements in accordance with accounting principles generally accepted in the
United States, or GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and revenues and expenses during the reported period. Our actual results could differ from these estimates.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)



SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS 131) requires disclosure of
certain operating and financial data with respect to separate business activities within an enterprise. Our primary business is the ownership, development, and management of retail real estate. We
have aggregated our retail operations, including regional malls, Premium Outlet Centers, The Mills, and community/lifestyle centers, into one reportable segment because they have similar economic
characteristics and we provide similar products and services to similar types of tenants. Further, all material operations are within the United States and no customer or tenant comprises more than
10% of consolidated revenues.



Deferred costs and other assets include the following as of December 31:

2008

2007Deferred financing and lease costs, net

$
237,619

$
221,433In-place lease intangibles, net


33,280


66,426Acquired above market lease intangibles, net


32,812


49,741Marketable securities of our captive insurance companies


105,860


116,260Goodwill


20,098


20,098Other marketable securities


210,867


144,188Prepaids, notes receivable and other assets, net


387,797


337,293$
1,028,333

$
955,439


Deferred Financing and Lease Costs.Our deferred costs consist primarily of financing fees we incurred
in order to obtain long-term
financing and internal and external leasing commissions and related costs. We record amortization of deferred financing costs on a straight-line basis over the terms of the respective
loans or agreements. Our deferred leasing costs consist primarily of capitalized salaries and related benefits in connection with lease originations. We record amortization of deferred leasing costs
on a
straight-line basis over the terms of the related leases. Details of these deferred costs as of December 31 are as follows:

2008

2007Deferred financing and lease costs

$
444,220

$
401,153Accumulated amortization


(206,601
)

(179,720
)Deferred financing and lease costs, net

$
237,619

$
221,433


We
report amortization of deferred financing costs, amortization of premiums, and accretion of discounts as part of interest expense. Amortization of deferred leasing costs are a
component of depreciation and amortization expense. We amortize debt premiums and discounts, which are included in mortgages and other indebtedness, over the remaining terms of the related debt
instruments. These debt premiums or discounts arise either at the debt issuance or

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)

as
part of the purchase price allocation of the fair value of debt assumed in acquisitions. The accompanying statements of operations and comprehensive income includes amortization as follows:

For the Year Ended December 31,2008

2007

2006Amortization of deferred financing costs

$
17,044

$
15,467

$
18,716Amortization of debt premiums net of discounts


(14,701
)

(23,000
)

(28,163
)Amortization of deferred leasing costs


31,674


26,033


22,259


Intangible Assets.The average life of in-place lease intangibles is approximately 5.5 years and is
amortized over the remaining
life of the leases of the related property on the straight-line basis and is included with depreciation and amortization in the consolidated statements of operations and comprehensive
income. The fair market value of above and below market leases are amortized into revenue over the remaining lease life as a component of reported minimum rents. The weighted average remaining life of
these intangibles approximates 2 years. The unamortized amounts of below market leases are included in accounts payable, accrued expenses, intangibles and deferred revenues on the consolidated
balance sheets were $94.3 million and $146.7 million as of December 31, 2008 and 2007, respectively. The amount of amortization of above and below market leases, net for the year
ended December 31, 2008, 2007, and 2006 was $35.4 million, $44.6 million, and $53.3 million, respectively. If a lease is terminated prior to the original lease termination,
any remaining unamortized intangible is charged to the income statement.

Details
of intangible assets as of December 31 are as follows:

2008

2007In-place lease intangibles

$
160,125

$
190,151Accumulated amortization


(126,845
)

(123,725
)In-place lease intangibles, net

$
33,280

$
66,426Acquired above market lease intangibles

$
144,224

$
144,224Accumulated amortization


(111,412
)

(94,483
)Acquired above market lease intangibles, net

$
32,812

$
49,741


Estimated
future amortization, and the increasing (decreasing) effect on minimum rents for our above and below market leases recorded as of December 31, 2008 are as follows:

Below Market
Leases

Above Market
Leases

Increase to
Minimum
Rent, Net2009

$
33,590

$
(13,388
)
$
20,2022010


22,702


(6,958
)

15,7442011


17,228


(4,909
)

12,3192012


12,297


(3,703
)

8,5942013


5,105


(2,592
)

2,513Thereafter


3,372


(1,262
)

2,110$
94,294

$
(32,812
)
$
61,482


33

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)



We account for our derivative financial instruments pursuant to SFAS 133 "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS 138, "Accounting for Derivative Instruments and Hedging Activities." 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 as described in Note 8 and record all derivatives on our balance sheets at fair value. We require that hedging
derivative instruments be highly effective in reducing the risk exposure that they are designated to hedge. We formally designate any instrument that meets these hedging criteria as a hedge at the
inception of the derivative contract.

We
adjust our balance sheets on an ongoing basis to reflect the current fair market value of our derivatives. We record changes in the fair value of these derivatives each period in
earnings or other comprehensive income, as appropriate. The ineffective portion of the hedge is immediately recognized in earnings to the extent that the change in value of a derivative does not
perfectly offset the change in value of the instrument being hedged. The unrealized gains and losses held in accumulated other comprehensive income will be reclassified to earnings over time as the
hedged items are recognized in earnings. We have a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors.

We
use standard market conventions to determine the fair values of derivative instruments, and techniques such as discounted cash flow analysis, option pricing models, and termination
cost to determine fair value at each balance sheet date. All methods of assessing fair value result in a general approximation of value and such value may never actually be realized.



Effective January 1, 2009, we adopted the provisions of SFAS 160, 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. SFAS 160
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 retrospective adoption of SFAS 160, we also performed a concurrent review and retrospectively adopted the measurement provisions of EITF
D-98. Upon adoption, 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 upon the adoption of SFAS 160. These adjustments increased the December 31, 2005 carrying value of these noncontrolling redeemable interests by $31.7 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 their redemption
value at the end of each reporting period, were also reflected in partners' equity.

Our
reassessment of EITF D-98 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 Simon Property's directors 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

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)

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 and 2007 decreased by $720.2 million and $1.1 billion from the $3.8 billion and
$4.5 billion previously reported, respectively.

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 as of December 31 is included in Note 10.

The
adoption of FAS 160 also resulted in the reclassification to equity of noncontrolling nonredeemable (deficit) interests in properties. Further, as a result of the adoption of
SFAS 160, 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.

A
progression of noncontrolling nonredeemable interests in properties for the years ending December 31 is as follows:

2008

2007

2006Noncontrolling interests at January 1

$
(141,251
)
$
(64,457
)
$
(44,696
)Net income attributable to noncontrolling interests


11,091


12,903


10,644Distributions to noncontrolling interest holders


(25,753
)

(82,010
)

(36,049
)Other


5,103


(7,687
)

5,644Total noncontrolling nonredeemable interests in properties as of December 31

$
(150,810
)
$
(141,251
)
$
(64,457
)




The components of our accumulated other comprehensive income (loss) consisted of the following as of December 31:

2008

2007Cumulative translation adjustments

$
(2,524
)
$
4,429Accumulated derivative (losses) gains, net


(39,100
)

15,078Net unrealized (losses) gains on marketable securities, net


(165,336
)

3,283Total accumulated other comprehensive (loss) income

$
(206,960
)
$
22,790


Included
in cumulative translation adjustment is the gain related to the impact of exchange rate fluctuations on foreign currency denominated debt of $46.9 million and
$35.4 million at December 31, 2008 and 2007, respectively, that hedges the currency exposure related to certain of our foreign investments. The net unrealized losses as of
December 31, 2008 of $165.3 million represents the valuation and related currency adjustments for our marketable securities, primarily related to our investment in Liberty. We do not
consider the decline in value of any of our marketable securities to be an other-than-temporary decline in value as these market value declines have existed for a short period
of time, and we have the ability and intent to hold these securities. Further, as it relates to Liberty, we believe their underlying operating fundamentals remain substantially unchanged.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)



We, as a lessor, retain substantially all of the risks and benefits of ownership of the investment properties and account for our
leases as operating leases. We accrue minimum rents on a straight-line basis over the terms of their respective leases. Substantially all of our retail tenants are also required to pay
overage rents based on sales over a stated base amount during the lease year. We recognize overage rents only when each tenant's sales exceed the applicable sales threshold.

We
structure our leases to allow us to recover a significant portion of our property operating, real estate taxes, repairs and maintenance, and advertising and promotion expenses from
our tenants. A substantial portion of our leases, other than those for anchor stores, require the tenant to reimburse us for a substantial portion of our operating expenses, including common area
maintenance, or CAM, real estate taxes and insurance. This significantly reduces our exposure to increases in costs and operating expenses resulting from inflation. Such property operating expenses
typically include utility, insurance, security, janitorial, landscaping, food court and other administrative expenses. We accrue reimbursements from tenants for recoverable portions of all these
expenses as revenue in the period the applicable expenditures are incurred. For approximately 75% of our leases in the U.S. regional mall portfolio, we receive a fixed payment from the tenant for the
CAM component. We are continually working towards converting the remainder of our leases to the fixed payment methodology. Without the fixed-CAM component, CAM expense reimbursements are
based on the tenant's proportionate share of the allocable operating expenses and CAM capital expenditures for the property. We also receive escrow payments for these reimbursements from substantially
all our non-fixed CAM tenants and monthly fixed CAM payments throughout the year. We recognize differences between estimated recoveries and the final billed amounts in the subsequent year.
These differences were not material in any period presented. Our advertising and promotional costs are expensed as incurred.



Management fees and other revenues are generally received from our unconsolidated joint venture properties as well as third parties.
Management fee revenue is earned based on a contractual percentage of joint venture property revenue. Development fee revenue is earned on a contractual percentage of hard costs to develop a property.
Leasing fee revenue is earned on a contractual per square foot charge based on the square footage of current year leasing activity. We recognize revenue for these services provided when earned based
on the underlying activity.

Insurance
premiums written and ceded are recognized on a pro-rata basis over the terms of the policies. Insurance losses are reflected in property operating expenses in the
accompanying statements of operations and comprehensive income and include estimates for losses incurred but not reported as well as losses pending settlement. Estimates for losses are based on
evaluations by third-party actuaries and management's best estimates. Total insurance reserves for our insurance subsidiaries and other self-insurance programs as of December 31,
2008 and 2007 approximated $116.5 million and $121.4 million, respectively.

We
recognize fee revenues from our co-branded gift card programs when the fees are earned under the related arrangements with the card issuer. Generally, these revenues are
recorded at the issuance of the gift card for handling fees.



We record a provision for credit losses based on our judgment of a tenant's creditworthiness, ability to pay and probability of
collection. In addition, we also consider the retail sector in which the tenant operates and our historical collection experience in cases of bankruptcy, if applicable. Accounts are written off when
they are deemed to be no

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

3.    Summary of Significant Accounting Policies (Continued)

longer
collectible. Presented below is the activity in the allowance for credit losses and includes the activities related to discontinued operations during the following years:

For the Year Ended December 31,2008

2007

2006Balance at Beginning of Year

$
33,810

$
32,817

$
35,239Consolidation of previously unconsolidated entities





495


321Provision for Credit Losses


24,037


9,672


9,730Accounts Written Off


(13,197
)

(9,174
)

(12,473
)Balance at End of Year

$
44,650

$
33,810

$
32,817




As a partnership, the allocated share of our income or loss for each year is included in the income tax returns of the partners;
accordingly, no accounting for income taxes is required in the accompanying consolidated financials statements. State income, franchise or other taxes were not significant in any of the periods
presented.

Simon
Property and two of our subsidiaries are taxed as REITs under Sections 856 through 860 of the Internal Revenue Code and applicable Treasury regulations relating to REIT
qualification. In order to maintain this REIT status, the regulations require each REIT to distribute at least 90% of its taxable income to stockholders and meet certain other asset and income tests
as well as other requirements. We intend to continue to make distributions to Simon Property and to assist Simon Property in meeting the asset and income tests and other REIT requirements in order to
allow it to adhere to these requirements and maintain its REIT status. Our subsidiary REIT entities will generally not be liable for federal corporate income taxes as long as they continue to
distribute in excess of 100% of their taxable income. Thus, we made no provision for federal income taxes for these entities in the accompanying consolidated financial statements. If Simon Property or
either of our REIT subsidiaries fail to qualify as a REIT, Simon Property or that entity will be subject to tax at regular corporate rates for the years in which it failed to qualify. If Simon
Property lost its REIT status, it could not elect to be taxed as a REIT for four years unless its failure to qualify was due to reasonable cause and certain other conditions were satisfied.

Simon
Property has also elected taxable REIT subsidiary, or TRS, status for some of our subsidiaries. This enables us to provide services that would otherwise be considered
impermissible for REITs and participate in activities that don't qualify as "rents from real property". For these entities, deferred tax assets and liabilities are established for temporary
differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation
allowance for deferred tax assets is provided if we believe all or some portion of the deferred tax asset may not be realized. An increase or decrease in the valuation allowance that results from the
change in circumstances that causes a change in our judgment about the realizability of the related deferred tax asset is included in income.

As
of December 31, 2008 and 2007, we had a net deferred tax asset of $8.9 million and $19.8 million, respectively, related to our TRS subsidiaries. The net deferred
tax asset is included in deferred costs and other assets in the accompanying consolidated balance sheets and consists primarily of operating losses and other carryforwards for federal income tax
purposes as well as the timing of the deductibility of losses or reserves from insurance subsidiaries. No valuation allowance has been recorded as we believe these amounts will be realized. State
income, franchise or other taxes were not significant in any of the periods presented. The income tax benefit in 2007 results primarily from the tax deductibility of a $55.1 million impairment
charge.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

4.    Real Estate Acquisitions, Disposals, and Impairment

We acquire properties to generate both current income and long-term appreciation in value. We acquire individual properties or portfolios of other retail real estate
companies that meet our investment criteria. We sell properties which no longer meet our strategic criteria. Our consolidated acquisition and disposal activity for the periods presented are
highlighted as follows:



Effective January 1, 2008, we acquired additional interests in three existing consolidated properties of between 1.8% and 5%,
for an aggregate $6.2 million in cash. Two of the properties continue to have a noncontrolling interest holder. We now own 100% of the third property.



As a result of the Mills acquisition which is more fully discussed in Note 7, we consolidated two regional mall properties, Town
Center at Cobb and Gwinnett Place. In addition to the Mills acquisition, on March 1, 2007, we acquired the remaining 40% interest in both University Park Mall and University Center located in
Mishawaka, Indiana from our partner and as a result, we now own 100% of these properties. On March 28, 2007, we acquired The Maine Outlet, a 112,000 square foot outlet center located in
Kittery, Maine, adjacent to our Kittery Premium Outlets property. On August 23, 2007, we acquired Las Americas Premium Outlets, a 560,000 square foot upscale outlet center located in San Diego,
California. We also purchased an additional 1% interest in Bangor Mall on July 13, 2007, and an additional 6.5% interest in Montgomery Mall on November 1, 2007. The aggregate purchase
price of the consolidated assets acquired during 2007, excluding Town Center and Cobb and Gwinnett Place, was approximately $394.2 million, including the assumption of our share of debt of the
properties acquired.



On November 1, 2006, we acquired the remaining 50% interest in Mall of Georgia, a regional mall property for
$252.6 million, including the assumption of our $96.0 million share of debt. As a result, we now own 100% of Mall of Georgia and the property was consolidated as of the acquisition date.



We had no consolidated property dispositions during the year ended December 31, 2008.



During the year ended December 31, 2007, we sold five consolidated properties for which we received net proceeds of
$56.4 million and recorded our share of a loss on the disposals (net) totaling $35.3 million.



During the year ended December 31, 2006, we sold three consolidated properties and one property in which we held a 50% interest
and accounted for under the equity method. We received net proceeds of $52.7 million and recorded our share of a gain on the dispositions totaling $12.2 million.

Impairment.In 2008, we recorded an impairment charge of $21.2 million. This resulted primarily
from a $10.5 million reduction in the
carrying value of a regional mall to its estimated net realizable value and the write-off of predevelopment costs related to various projects that we no longer plan to pursue development.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

5.    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 dilutive potential common units were converted into units at the earliest
date possible. The following table sets forth the computation elements of our basic and diluted earnings per unit.

For the Year Ended December 31,2008

2007

2006Income attributable to unitholders from continuing operations, after preferred unit requirement

$
529,751

$
585,047

$
614,409Discontinued operations


(25
)

(35,369
)

502Net Income attributable to unitholders  Basic & Diluted

$
529,726

$
549,678

$
614,911Weighted Average Units Outstanding  Basic


282,508,087


281,034,711


279,567,279Effect of stock options of Simon Property


551,057


778,471


903,255Weighted Average Units Outstanding  Diluted


283,059,144


281,813,182


280,470,534


For
the year ending December 31, 2008, potentially dilutive securities include Simon Property stock options, convertible preferred stock and certain series of our preferred units
The only security that had a dilutive effect for the years ended December 31, 2008, 2007 and 2006 were Simon Property stock options.

We
accrue distributions when they are declared. The taxable nature of the distributions declared for each of the years ended as indicated is summarized as follows:

For the Year Ended
December 31,2008

2007

2006Total distributions paid per common unit

$
3.60

$
3.36

$
3.04Percent taxable as ordinary income


84.7
%

92.9
%

81.4
%Percent taxable as long-term capital gains


1.2
%

7.1
%

18.6
%Percent nontaxable as return of capital


14.1
%




100.0
%

100.0
%

100.0
%


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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

6.    Investment Properties

Investment properties consist of the following as of December 31:

2008

2007Land

$
2,795,026

$
2,798,452Buildings and improvements


22,112,944


21,364,915Total land, buildings and improvements


24,907,970


24,163,367Furniture, fixtures and equipment


297,745


251,658Investment properties at cost


25,205,715


24,415,025Less  accumulated depreciation


6,184,285


5,312,095Investment properties at cost, net

$
19,021,430

$
19,102,930Construction in progress included above

$
358,254

$
647,303


7.    Investments in Unconsolidated Entities

Joint ventures are common in the real estate industry. We use joint ventures, primarily with institutional investors, 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 U.S. as of December 31, 2008 and December 31, 2007. We also held interests
in two joint ventures which owned 52 European shopping centers as of December 31, 2008 and 51 as of December 31, 2007. We also held an interest in seven joint venture properties
under operation in Japan, one joint venture property in Mexico, one joint venture property in Korea, and one joint venture property in China. We account for these joint venture properties using the
equity method of accounting.

Substantially
all of our joint venture properties are subject to rights of first refusal, buy-sell provisions, or other sale 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 will
result in either the sale of our interest or the use of available cash or borrowings to acquire the joint venture interest.



On February 16, 2007, SPG-FCM, a 50/50 joint venture between one of our affiliates and funds managed by Farallon
Capital Management, L.L.C., or Farallon, entered into a definitive merger agreement to acquire all of the outstanding common stock of Mills for $25.25 per common share in cash. The acquisition of
Mills and its interests in the 36 properties that remain at December 31, 2008 was completed in April 2007. As of December 31, 2008, we and Farallon had each funded $650.0 million
into SPG-FCM to acquire all of the common stock of Mills. As part of the transaction, we also made loans to SPG-FCM and Mills 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 preferred stock, during 2007. As of December 31, 2008,
the outstanding balance of our loan to SPG-FCM was $520.7 million, and the average outstanding balance during the year ended December 31, 2008 of all loans made to
SPG-FCM and Mills was approximately $534.1 million. During 2008 and 2007, we recorded approximately $15.3 million and $39.1 million in interest income (net of inter-
entity eliminations) related to these loans, respectively. We also recorded fee income, including fee income amortization related to up-front fees on loans made to SPG-FCM and
Mills, during 2008 and 2007 of approximately $3.1 million and $17.4 million (net of inter-entity eliminations), respectively, for providing refinancing services to Mills' properties and
SPG-FCM. The existing loan facility to
SPG-FCM bears a rate of LIBOR plus 275 basis points and matures on June 7, 2009, with three available one-year extensions. Fees charged on loans made to
SPG-FCM and Mills are amortized on a straight-line basis over the life of the loan.

40

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

7.    Investments in Unconsolidated Entities (Continued)

As
a result of the change in control of Mills, holders of Mills' Series F convertible cumulative redeemable preferred stock had the right to require the repurchase of their
shares for cash equal to the liquidation preference per share plus accrued and unpaid dividends. During the second quarter of 2007, all of the holders of Mills' Series F preferred stock
exercised this right, and Mills redeemed this series of preferred stock for approximately $333.2 million, including accrued dividends. Further, as of August 1, 2007, The Mills
Corporation was liquidated and the holders of the remaining series' of Mills preferred stock were paid a liquidation preference of approximately $693.0 million, including accrued dividends.

During
the third quarter of 2007, the holders of less than 5,000 common units in the Mills' operating partnership, or Mills Units, received $25.25 in cash, and those holding 5,000 or
more Mills Units had the option to exchange for cash of $25.25, or units of the Operating Partnership based on a fixed exchange ratio of 0.211 Operating Partnership units for each Mills Unit. That
option expired on August 1, 2007. Holders electing to exchange received 66,036 units in the Operating Partnership for their Mills Units. The remaining Mills Units were exchanged for cash.

Effective
July 1, 2007, we or an affiliate of ours began serving as the manager for substantially all of the properties in which SPG-FCM holds an interest. In
conjunction with the Mills acquisition, we acquired a majority interest in two properties in which we previously held a 50% ownership interest (Town Center at Cobb and Gwinnett Place) and as a result
we have consolidated these two properties at the date of acquisition. We have reclassified the results of these properties in the Joint Venture Statement of Operations into "Income from consolidated
joint venture interests."

The
Mills acquisition involved the purchase of all of Mills' outstanding shares of common stock and common units for approximately $1.7 billion (at $25.25 per share or unit), the
assumption of $954.9 million of preferred stock, the assumption of a proportionate share of property-level mortgage debt, of which SPG-FCM's share approximated $3.8 billion,
the assumption of $1.2 billion in unsecured loans provided by us, costs to effect the acquisition, and certain liabilities and contingencies, including an ongoing investigation by the
Securities and Exchange Commission, for an aggregate purchase price of approximately $8 billion. SPG-FCM has finalized its purchase price allocations for the Mills acquisition. The
valuations were developed with the assistance of a third-party professional appraisal firm.

In
addition we sold our interest in Cincinnati Mills and Broward and Westland Malls, which we acquired through the Mills acquisition, and recognized no gain or loss on these
dispositions.

Joint Venture Property Refinancing Activity

The following joint venture property refinancing activity occurred during the period, some of which resulted in our receiving
significant excess refinancing proceeds or making contributions:

On
December 5, 2008, we refinanced Ontario Mills, a joint venture property in which we own a 25% interest, with a $75.0 million, LIBOR plus 296 basis points
variable-rate mortgage that matures December 5, 2013. We subsequently entered into a swap agreement that essentially fixes the interest rate at 5.13%. The balances of the previous
mortgages were $135.6 million and required a contribution by the partners to retire the loan. Our net share of the contribution was $15.7 million.

During
2008, we refinanced Fashion Valley Mall, a joint venture property in which we own a 50% interest, with a $200.0 million, LIBOR plus 200 bps variable-rate
mortgage that matures October 9, 2013. The balances of the two previous mortgages, which were repaid, were $153.6 million and $29.1 million and bore interest at a fixed rate of
6.49% and 6.58%, respectively. We received our share of the excess refinancing proceeds of approximately $7.1 million on the closing of the new mortgage loan.

On
October 1, 2008, we refinanced Mall of New Hampshire, a joint venture property in which we own a 49.14% interest, with a $136.7 million, 6.23% fixed-rate
mortgage that matures October 5, 2015. The balances of the two previous mortgages, which were repaid, were $93.5 million and $7.8 million and bore interest at a fixed rate of
6.96%

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

7.    Investments in Unconsolidated Entities (Continued)

and
8.53%, respectively. We received our share of the excess refinancing proceeds of approximately $18.7 million on the closing of the new mortgage loan.

On
November 15, 2007, we refinanced Aventura Mall, a joint venture property in which we own a 33.3% interest, with a $430.0 million, 5.905% fixed-rate mortgage
that matures on December 11, 2017. The balance of the previous $200.0 million 6.61% fixed-rate mortgage was repaid, and we received our share of the excess refinancing
proceeds of approximately $71.4 million.

On
November 1, 2007, we refinanced West Town Mall, a joint venture property in which we own a 50% interest, with a $210.0 million, 6.3375% fixed-rate mortgage
that matures on December 1, 2017. The balance of the previous $76.0 million 6.90% fixed-rate mortgage was repaid, and we received our share of the excess refinancing proceeds
of approximately $66.4 million.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

7.    Investments in Unconsolidated Entities (Continued)

Summary Financial Information

A summary of our investments in joint ventures 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 control of the property or become the primary beneficiary of a VIE. We reclassified these line items into "Income from discontinued joint venture interests" and "Income from consolidated joint
venture interests" so that we may present comparative results of operations for those joint venture interests held as of December 31, 2008. Balance sheet information for the joint ventures is
as follows:

December 31,
2008

December 31,
2007BALANCE SHEETSAssets:Investment properties, at cost

$
21,472,490

$
21,009,416Less  accumulated depreciation


3,892,956


3,217,44617,579,534


17,791,970Cash and cash equivalents


805,411


747,575Tenant receivables and accrued revenue, net


428,322


435,093Investment in unconsolidated entities, at equity


230,497


258,633Deferred costs and other assets


594,578


713,180Total assets

$
19,638,342

$
19,946,451Liabilities and Partners' Equity:Mortgages and other indebtedness

$
16,686,701

$
16,507,076Accounts payable, accrued expenses, intangibles, and deferred revenue


1,070,958


972,699Other liabilities


982,254


825,279Total liabilities


18,739,913


18,305,054Preferred units


67,450


67,450Partners' equity


830,979


1,573,947Total liabilities and partners' equity

$
19,638,342

$
19,946,451Our Share of:Total assets

$
8,056,873

$
8,040,987Partners' equity

$
533,929

$
776,857Add: Excess Investment


749,227


757,236Our net Investment in Joint Ventures

$
1,283,156

$
1,534,093Mortgages and other indebtedness

$
6,632,419

$
6,568,403


"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.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

7.    Investments in Unconsolidated Entities (Continued)

As
of December 31, 2008, scheduled principal repayments on joint venture properties' mortgages and other indebtedness are as follows:

2009

$
1,511,6632010


1,694,6332011


1,630,4372012


2,538,3812013


1,563,591Thereafter


7,724,784Total principal maturities


16,663,489Net unamortized debt premiums and discounts


23,212Total mortgages and other indebtedness

$
16,686,701


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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

7.    Investments in Unconsolidated Entities (Continued)

This
debt becomes due in installments over various terms extending through 2036 with interest rates ranging from 1.00% to 10.61% and a weighted average rate of 4.99% at
December 31, 2008.

For the Year Ended December 31,2008

2007

2006STATEMENTS OF OPERATIONSRevenue:Minimum rent

$
1,956,129

$
1,682,671

$
1,060,896Overage rent


130,549


119,134


89,968Tenant reimbursements


1,005,638


852,312


540,560Other income


199,774


201,075


147,549Total revenue


3,292,090


2,855,192


1,838,973Operating Expenses:Property operating


671,268


580,910


366,122Depreciation and amortization


775,887


627,929


318,589Real estate taxes


263,054


220,474


131,359Repairs and maintenance


124,272


113,517


83,331Advertising and promotion


70,425


62,182


42,096Provision for credit losses


24,053


22,448


4,620Other


177,298


162,570


125,976Total operating expenses


2,106,257


1,790,030


1,072,093Operating Income


1,185,833


1,065,162


766,880Interest expense


(969,420
)

(853,307
)

(415,425
)(Loss) income from unconsolidated entities


(5,123
)

665


1,204Loss on sale of asset





(6,399
)

(6
)Income from Continuing Operations


211,290


206,121


352,653Income from consolidated joint venture interests





2,562


14,070Income from discontinued joint venture interests


47


202


736Gain on disposal or sale of discontinued operations, net





198,956


20,375Net Income

$
211,337

$
407,841

$
387,834Third-Party Investors' Share of Net Income

$
132,111

$
232,586

$
232,499Our Share of Net Income


79,226


175,255


155,335Amortization of Excess Investment


(46,980
)

(46,503
)

(49,546
)Income from Beneficial Interests and Other, net








15,605Write-off of Investment Related to Properties Sold








(2,846
)Our Share of Net Gain Related to Properties/Assets Sold





(90,632
)

(7,729
)Income from Unconsolidated Entities, Net

$
32,246

$
38,120

$
110,819


2006 Acquisition and Disposition Activity

On November 1, 2006, we acquired the remaining 50% interest in Mall of Georgia, a regional mall property for
$252.6 million, which includes our $96.0 million share of debt. As a result, we now own 100% of Mall of Georgia and the property was consolidated as of the acquisition date. We have
reclassified the results of this property in the Joint Venture Statement of Operations into "Income from consolidated joint venture interests."

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

7.    Investments in Unconsolidated Entities (Continued)

Impairment Charge.On December 28, 2005, we invested $50.0 million of equity for a 40%
interest in a joint venture with Toll
Brothers, Inc. and Meritage Homes Corp. to purchase a 5,485-acre land parcel in northwest Phoenix from DaimlerChrysler Corporation for $312 million. The principal use of the
land upon attaining entitled status is to develop single-family homesites by our partners. As a result of the downturn in the residential market, during the fourth quarter of 2007, we recorded an
impairment charge of $55.1 million, $36.5 million net of tax benefit, representing our entire equity investment in this joint venture, including interest capitalized on our invested
equity.

International Joint Venture Investments

European Joint Ventures.We conduct our international operations in Europe through our two European
joint venture investment entities; 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 is $224.2 million
and $361.3 million as of December 31, 2008 and 2007, respectively, including all related components of other comprehensive income. We have a 50% ownership in Simon Ivanhoe and a 49%
ownership in GCI as of December 31, 2008.

On
October 20, 2005, Ivanhoe Cambridge, Inc., or Ivanhoe, an affiliate of Caisse de dépôt et placement du Québec, effectively
acquired our former partner's 39.5% ownership interest in Simon Ivanhoe. On February 13, 2006, pursuant to the terms of our October 20, 2005 transaction with Ivanhoe, we sold a 10.5%
interest in this joint venture to Ivanhoe for €45.2 million, or $53.9 million, and recorded a gain on the disposition of
$34.4 million. This gain is reported in "gain (loss) on sales of assets and interests in unconsolidated entities, net" in the 2006 consolidated statement of operations and comprehensive income
(loss). We then settled all remaining share purchase commitments from the company's founders, including the early settlement of some commitments by purchasing an additional 25.8% interest in Simon
Ivanhoe for €55.1 million, or $65.5 million. As a result of these transactions, we and Ivanhoe each own a 50% interest in Simon Ivanhoe at December 31, 2007 and
2008.

On
July 5, 2007, Simon Ivanhoe completed the sale of five non-core assets in Poland and we presented our share of the gain upon this disposition in "gain (loss) on
sale of assets and interests in unconsolidated entities, net" in the consolidated statement of operations and comprehensive income.

Asian Joint Ventures.We conduct our international Premium Outlet operations in Japan through joint
ventures with Mitsubishi
Estate Co., Ltd. and Sojitz Corporation. The carrying amount of our investment in these Premium Outlet joint ventures in Japan is $312.6 million and $273.0 million as of
December 31, 2008 and 2007, respectively, including all related components of other comprehensive income. We have a 40% ownership in these Japan Premium Outlet Centers through a joint venture
arrangement. During 2007, we also completed construction and opened our first Premium Outlet in Korea. As of December 31, 2008 and 2007 respectively, our investment in our Premium Outlet in
Korea, for which we hold a 50% ownership interest, approximated $18.0 million and $23.1 million including all related components of other comprehensive income.

During
2006, we finalized the formation of joint venture arrangements to develop and operate shopping centers in China. The shopping centers will be anchored by Wal-Mart
stores and we own a 32.5% interest in the joint venture entities, and a 32.5% ownership in the management operation overseeing these projects, collectively referred to as Great Mall
Investments, Ltd., or GMI. During 2008, we completed construction and opened our first center in China, and have three additional centers under construction and due for completion in 2009. As
of December 31, 2008 and 2007 respectively, our investment in our centers in China approximated $53.9 million and $33.7 million including all related components of other
comprehensive income. Our projected total equity commitment upon completion for all four centers in China is $53.7 million.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

8.    Indebtedness and Derivative Financial Instruments

Our mortgages and other indebtedness, excluding the impact of derivative instruments except for our fair value interest rate swaps, consist of the following as of
December 31:

2008

2007Fixed-Rate Debt:Mortgages and other notes, including $15,312 and $24,845 net premiums, respectively. Weighted average interest and maturity of 6.11% and 4.1 years at
December 31, 2008.

$
4,192,430

$
4,836,761Unsecured notes, including $1,887 and $9,680 net premiums, respectively. Weighted average interest and maturity of 5.69% and 4.7 years at
December 31, 2008.


10,726,887


9,384,6807% Mandatory Par Put Remarketed Securities, including $4,568 premiums in 2007 that were redeemed in June 2008.





204,568Total Fixed-Rate Debt


14,919,317


14,426,009Variable-Rate Debt:Mortgages and other notes, at face value, respectively. Weighted average interest and maturity of 2.00% and 3.3 years.


2,076,927


441,143Credit Facility (see below)


1,046,288


2,351,612Total Variable-Rate Debt


3,123,215


2,792,755Fair value interest rate swaps





(90
)Total Mortgages and Other Indebtedness, Net

$
18,042,532

$
17,218,674


General

At December 31, 2008, we have pledged 76 properties as collateral to secure related mortgage notes including 7 pools of
cross-defaulted and cross-collateralized mortgages encumbering a total of 39 properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted package may
constitute a default under all such mortgages and may lead to acceleration of the indebtedness due on each property within the collateral package. Of our 76 encumbered properties, indebtedness on 18
of these encumbered properties and our unsecured notes are subject to various financial performance covenants relating to leverage ratios, annual real property appraisal requirements, debt service
coverage ratios, minimum net worth ratios, debt-to-market capitalization, and/or minimum equity values. Our mortgages and other
indebtedness may be prepaid but are generally subject to payment of a yield-maintenance premium or defeasance. As of December 31, 2008, we were in compliance with all our debt covenants.

Some
of our limited partners guarantee a portion of our consolidated debt through foreclosure guarantees. In total, 53 limited partners provide guarantees of foreclosure of
$285.3 million of our consolidated debt at three consolidated properties. In each case, the loans were made by unrelated third party institutional lenders and the guarantees are for the benefit
of each lender. In the event of foreclosure of the mortgaged property, the proceeds from the sale of the property are first applied against the amount of the guarantee and also reduce the amount
payable under the guarantee. To the extent the sale proceeds from the disposal of the property do not cover the amount of the guarantee, then the limited partner is liable to pay the difference
between the sale proceeds and the amount of the guarantee so that the entire amount guaranteed to the lender is satisfied. The debt is non-recourse to us and our affiliates.

Unsecured Debt

Our unsecured debt currently consists of $10.7 billion of senior unsecured notes and $1.0 billion outstanding under our
$3.5 billion credit facility, or the Credit Facility. The Credit Facility bears interest at LIBOR plus 37.5 basis

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

8.    Indebtedness and Derivative Financial Instruments (Continued)

points
and an additional facility fee of 12.5 basis points. The Credit Facility is scheduled to mature on January 11, 2010, which we can extend for another year at our option if, among other
conditions, there is no default.

On
May 19, 2008, we issued two tranches of senior unsecured notes totaling $1.5 billion at a weighted average fixed interest rate of 5.74% consisting of a
$700.0 million tranche with a fixed interest rate of 5.30% due May 30, 2013 and a second $800.0 million tranche with a fixed interest rate of 6.125% due May 30, 2018. We
used proceeds from the offering to reduce borrowings on the Credit Facility and for general working capital purposes.

On
June 16, 2008, we completed redemption of the $200.0 million outstanding principal amount of its 7% Mandatory Par Put Remarketed Securities, or MOPPRS. The redemption
was accounted for as an extinguishment and resulted in a charge in the second quarter of 2008 of approximately $20.3 million.

On
August 28, 2008, we repaid a $150.0 million unsecured note, which had a fixed rate of 5.38%.

During
the year ended December 31, 2008, we drew amounts from the Credit Facility to fund the redemption of the remarketable debt securities and the repayment of the
$150.0 million unsecured note. Other amounts drawn on the Credit Facility were primarily for general working capital purposes. We repaid a total of $2.7 billion on the Credit Facility
during the year ended December 31, 2008. The total outstanding balance of the Credit Facility as of December 31, 2008 was $1.0 billion, and the maximum amount outstanding during
the year was approximately $2.6 billion. During the year ended December 31, 2008, the weighted average outstanding balance of the Credit Facility was approximately $1.4 billion.
The amount outstanding as of December 31, 2008 includes $446.3 million in Euro and Yen-denominated borrowings. In addition, subsequent to December 31, 2008, we repaid
$600 million in unsecured notes, consisting of two $300 million tranches that bore rates of 3.75% and 7.13%, respectively, using proceeds from the Credit Facility.

Secured Debt

The balance of fixed and variable rate mortgage notes was $6.3 billion and $5.3 billion as of December 31, 2008
and 2007, respectively. Of the 2008 amount, $5.3 billion is nonrecourse to us. The
fixed-rate mortgages generally require monthly payments of principal and/or interest. The interest rates of variable-rate mortgages are typically based on LIBOR. During the
twelve-month period ended December 31, 2008, we repaid $274.0 million in mortgage loans, unencumbering five properties.

On
January 15, 2008, we entered into a swap transaction that effectively converted $300.0 million of variable rate debt to fixed rate debt at a net rate of 3.21%.

On
March 6, 2008, we borrowed $705 million on a term loan that matures March 5, 2012 and bears interest at a rate of LIBOR plus 70 basis points. On May 27,
2008, the loan was increased to $735 million. This loan is secured by the cash flow distributed from six properties and has additional availability of $115 million through the maturity
date.

On
July 30, 2008, we borrowed $190.0 million on a loan secured by Philadelphia Premium Outlets, which matures on July 30, 2014 and bears interest at a variable rate
of LIBOR plus 185 basis points. On January 2, 2009, we executed a swap agreement that fixes the interest rate of this loan at 4.19%.

On
September 23, 2008, we borrowed $170.0 million on a term loan that matures September 23, 2013 and bears interest at a rate of LIBOR plus 195 basis points. On
November 4, 2008, the loan was increased to $220 million and on December 17, 2008, the loan was increased to its maximum availability of $260 million. This is a cross-
collateralized loan that is secured by The Domain, Shops at Arbor Walk, and Palms Crossing. On January 2, 2009, we executed a swap agreement that fixes the interest rate on
$200.0 million of this loan at 4.35%.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

8.    Indebtedness and Derivative Financial Instruments (Continued)

Debt Maturity and Other

Our scheduled principal repayments on indebtedness as of December 31, 2008 are as follows:

2009

$
1,475,5102010


2,301,6742011


3,050,5762012


2,938,3952013


2,034,735Thereafter


6,224,443Total principal maturities


18,025,333Net unamortized debt premium and other


17,199Total mortgages and other indebtedness

$
18,042,532


Our
cash paid for interest in each period, net of any amounts capitalized, was as follows:

For the Year Ended December 31,2008

2007

2006Cash paid for interest

$
1,001,718

$
983,219

$
845,964


Derivative Financial Instruments

Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations. We manage
exposure to interest rate market risk through our risk management strategy by a combination of interest rate protection agreements to effectively fix or cap a portion of variable rate debt, or in the
case of a fair value hedge, effectively convert fixed rate debt to variable rate debt. We are also exposed to foreign currency risk on financings of certain foreign operations. Our intent is to offset
gains and losses that occur on the underlying exposures, with gains and losses on the derivative contracts hedging these exposures. We do not enter into either interest rate protection or foreign
currency rate protection agreements for speculative purposes.

We
may enter into treasury lock agreements as part of an anticipated debt issuance. If the anticipated transaction does not occur, the cost is charged to consolidated net income. Upon
completion of the debt issuance, the cost of these instruments is recorded as part of accumulated other comprehensive income and is amortized to interest expense over the life of the debt agreement.

As
of December 31, 2008, we reflected the fair value of outstanding consolidated derivatives in other liabilities for $19.4 million. In addition, we recorded the benefits
from our treasury lock and interest rate hedge agreements in accumulated other comprehensive loss and the unamortized balance of these agreements is $3.3 million as of December 31, 2008.
The net deficit from terminated swap agreements is also recorded in accumulated other comprehensive loss and the unamortized balance is $3.4 million as of December 31, 2008. As of
December 31, 2008, our outstanding LIBOR based derivative contracts consisted of:



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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

8.    Indebtedness and Derivative Financial Instruments (Continued)



Within
the next year, we expect to reclassify to earnings approximately $10.9 million of loss of the current balance held in accumulated other comprehensive loss. The amount of
ineffectiveness relating to fair value and cash flow hedges recognized in income during the periods presented was not material.

Our
joint ventures may also enter into interest rate swaps or caps, which are recorded at fair value on the joint ventures' balance sheet. Included in our accumulated other
comprehensive income (loss) as of December 31, 2008 and 2007 is our share of the joint ventures accumulated derivative gains or (losses) of $(19.6) million and $(5.8) million, respectively.

Fair Value of Financial Instruments

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 discounted at current market rates. We estimate
the fair values of consolidated fixed-rate unsecured notes using quoted market prices, or, if no quoted prices are available, we use quoted market prices for securities with similar terms
and maturities. The fair values of financial instruments and our related discount rate assumptions used in the estimation of fair value for our consolidated fixed-rate mortgages and other
indebtedness as of December 31 is summarized as follows:

2008

2007Fair value of fixed-rate mortgages and other indebtedness (in millions)

$
12,385

$
14,742Average discount rates assumed in calculation of fair value of fixed-rate mortgages


6.33
%

5.23
%


9.    Rentals under Operating Leases

Future minimum rentals to be received under noncancelable tenant operating leases for each of the next five years and thereafter, excluding tenant reimbursements of operating
expenses
and percentage rent based on tenant sales volume as of December 31, 2008 are as follows:

2009

$
1,898,1102010


1,762,6582011


1,584,0122012


1,402,7182013


1,209,345Thereafter


3,731,109$
11,587,952


Approximately
0.6% of future minimum rents to be received are attributable to leases with an affiliate of one of our limited partners.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

10.    Equity

Temporary Equity

As discussed in Note 3, as a result of the retrospective adoption of SFAS 160 and the application of EITF
D-98, we classify as temporary equity those securities for which there is the possibility that we could be required to redeem the security for cash, irrespective of the probability of such
a possibility. As a result, we reclassified three series of preferred units from permanent equity to temporary equity, and we maintained in permanent equity two series of preferred units. We also
reclassified into temporary equity one series of preferred units that was previously reported as mezzanine equity. The noncontrolling redeemable interests in properties included in temporary equity is
more fully discussed in Note 3. The carrying values for those securities classified in temporary equity are discussed below and summarized as follows as of December 31:

2008

20076% Series I Convertible Perpetual Preferred Units, 19,000,000 units authorized, 9,108,635 and 17,039,611 issued and outstanding,
respectively

$
455,432

$
851,981Series D 8% Cumulative Redeemable Preferred Units, 2,700,000 units authorized, 1,356,814 and 1,418,307 issued and outstanding,
respectively


40,704


42,5497.5% 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


85,070


85,070Total carrying value of preferred units


606,743


1,005,137Noncontrolling redeemable interests in properties


49,378


44,264Total preferred units and noncontrolling redeemable interests in properties

$
656,121

$
1,049,401


Series I 6% Convertible Perpetual Preferred Units.On October 14, 2004, we issued 18,015,506
Series I 6% convertible perpetual
preferred units as part of our acquisition of Chelsea Property Group (Chelsea). Distributions are made
quarterly, at an annual rate of 6% per unit. On or after October 14, 2009, we can redeem the Series I preferred units, in whole or in part, for cash only equal to the liquidation
preference of $50.00 per unit plus accumulated and unpaid distributions. However, if the redemption date falls between the record date and the distribution payment date, the redemption price will be
the liquidation preference only. The redemption may occur only if, for 20 trading days within a period of 30 consecutive trading days ending on the trading day before notice of redemption is issued,
the closing price per share of common stock exceeds 130% of the applicable conversion price. The Series I preferred units are convertible into a number of fully paid and
non-assessable common units upon the occurrence of a conversion triggering event. A conversion triggering event includes the following: (a) if we call the Series I preferred
units for redemption; or, (b) if Simon Property is a party to a consolidation, merger, share exchange, or sale of all or substantially all of its assets; or, (c) if during any fiscal
quarter after the fiscal quarter ending December 31, 2004, the closing sale price of Simon Property's common stock for at least 20 trading days in a period of 30 consecutive trading days ending
on the last trading day of the preceding fiscal quarter exceeds 125% of the applicable conversion price. If the closing trigger price condition is not met at the end of any quarter, then conversions
are not permitted in the following quarter. This series of preferred units can also be put to us for cash upon the occurrence of a change of control event, which would include a change in the majority
of Simon Property's directors that occurs over a two year period. As a result, this series of preferred units is classified outside permanent equity because such a change in Board composition could be
deemed outside our control. The carrying amount of the Series I preferred units of $455,432 and $851,981 as of December 31, 2008 and 2007, respectively, is equal to its liquidation
value, which is the amount payable upon the occurrence of such event.

If
a holder of Series I preferred units converts its Series I preferred units into units, then the holder may also elect to exchange those units into cash or shares of
common stock of Simon Property as determined by Simon Property in its sole discretion, subject to an agreement between Simon Property and us as described in the Exchange Rights section of
Note 10 below. Limited partner holders of Series I preferred units also have the option to exchange the

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

10.    Equity (Continued)

Series I
preferred units for an equal number of shares of Series I preferred stock of Simon Property; however, Simon Property may elect to pay cash in lieu of the conversion. In 2008,
holders of Series I preferred units exchanged 22,400 Series I preferred units for an equal number of shares of Series I preferred stock of Simon Property. In prior years,
1,093,042 Series I preferred units were exchanged for an equal number of shares of Series I preferred stock of Simon Property. During 2008, we also issued 1,187,238 units to holders of
limited partner preferred interests as a result of the conversion of 1,493,904 Series I preferred units.

As
of December 31, 2008, the conversion trigger price of $77.88 was not met and, as a result, conversion of the Series I preferred units will not be permitted through
March 31, 2009. However, during 2008, an additional 6,437,072 Series I preferred units held by Simon Property were converted into 5,151,776 units related to the conversion of Simon
Property's Series I preferred stock to its common stock as a result of the conversion trigger price being met at certain quarterly determination dates during 2008.

Series D 8.00% Cumulative Redeemable Preferred Units.This series of preferred units accrues
cumulative quarterly distributions at a rate of
$2.40 annually. The preferred units are paired with one 7.00% preferred unit or with the number of units into which the 7.00% preferred units may be converted. We may redeem the preferred units at
their liquidation value ($30.00 per preferred unit) plus accrued and unpaid distributions on or after August 27, 2009, payable in either a new series of preferred units having the same terms as
the preferred units, except that the distribution rate would be reset to a then determined market rate, or in units. The preferred units are
convertible at the holder's option on or after August 27, 2004, into 8.00% Cumulative Redeemable Preferred Stock of Simon Property with terms substantially identical to the preferred units. In
the event of the death of a holder of the preferred units, or the occurrence of certain tax triggering events, we may be required to redeem the preferred units owned by such holder at their
liquidation value payable at our option in either cash (the payment of which may be made in four equal annual installments) or fully registered shares of Simon Property common stock. During 2008, one
holder redeemed 61,493 of the preferred units for $1.8 million in cash.

7.50% Cumulative Redeemable Preferred Units.This series of preferred units accrues cumulative quarterly
distributions at a rate of $7.50 annually.
We may redeem the preferred units on or after November 10, 2013, unless there is the occurrence of certain tax triggering events such as death of the initial holder, or the transfer of any
units to any person or entity other than the persons or entities entitled to the benefits of the original holder. The redemption price is the liquidation value ($100.00 per preferred unit) plus
accrued and unpaid distributions, payable either in cash or fully registered shares of common stock of Simon Property. In the event of the death of a holder of the preferred units, the occurrence of
certain tax triggering events applicable to the holder, or on or after November 10, 2006, the holder may require us to redeem the preferred units at the same redemption price payable at our
option in either cash or fully registered shares of common stock of Simon Property.

7.75%/8.00% Cumulative Redeemable Preferred Units.This series of preferred units accrues cumulative
distributions at a rate of 8.00% through
December 31, 2009, 10.00% of the liquidation value for the period beginning January 1, 2010, and ending December 31, 2010, and 12% of the liquidation value thereafter. A holder
may require us to repurchase the preferred units on or after January 1, 2009, or any time that the aggregate liquidation value of the outstanding units exceeds 10% of the book value of our
partners' equity. We may redeem the preferred units on or after January 1, 2011, or earlier upon the occurrence of certain tax triggering events. Our intent is to redeem these units after
January 1, 2009, upon the occurrence of a tax-triggering event. The redemption price is the liquidation value ($100.00 per preferred unit) plus accrued and unpaid distributions,
payable in cash or an interest in one or more properties mutually agreed upon.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

10.    Equity (Continued)

Permanent Equity

Preferred units.The following table summarizes the carrying values of each series of preferred units
that were outstanding as of December 31
and are classified within permanent equity:

2008

2007Series C 7.00% Cumulative Convertible Preferred Units, 2,700,000 units authorized, 94,235 and 100,818 issued and outstanding, respectively

$
2,639

$
2,823Series J 83/8% Cumulative Redeemable Preferred Units, 1,000,000 units authorized, 796,948 issued and outstanding, including
unamortized premium of $6,185 and $6,514 in 2008 and 2007, respectively


46,032


46,361Total preferred units

$
48,671

$
49,184


Series C 7.00% Cumulative Convertible Preferred Units.Each Series C 7.00% preferred unit has
a liquidation value of $28.00 and accrues
cumulative distributions at a rate of $1.96 annually, payable quarterly in arrears. The Series C preferred units are convertible at the holders' option on or after August 27, 2004, into
either a like number of shares of 7.00% Cumulative Convertible Preferred Stock of Simon Property with terms substantially identical to the Series C preferred units or into our common units at a
ratio of 0.75676 to one provided that the closing stock price of Simon Property common stock exceeds $37.00 for any three consecutive trading days prior to the conversion date. We may redeem the
Series C preferred units at their liquidation value plus accrued and unpaid distributions on or after August 27, 2009, payable in units. In the event of the death of a holder of
Series C preferred units, or the occurrence of certain tax triggering events, we may be required to redeem the Series C preferred units at their liquidation value payable at our option
in either cash (the payment of which may be made in four equal annual installments) or shares of Simon Property common stock. During 2008, holders converted 6,583 of the preferred units into 4,981
units.

Series J 83/8% Cumulative Redeemable Preferred Units.We issued this
series of preferred units in 2004 to replace a series of
Chelsea preferred units. Distributions accrue quarterly at an annual rate of 83/8% per unit. We can redeem this series, in whole or in part, on and after October 15, 2027 at a
redemption price of $50.00 per unit, plus accumulated and unpaid distributions. These preferred units were issued at a premium of $7,553 as of the date of our acquisition of Chelsea.

The
following series of preferred units had previously issued units in years prior to 2007, but had no shares outstanding at the end of 2008 and 2007, and the authorized units for each
series are as follows: Series B 6.5% Convertible Preferred Units (5,000,000 units); Series E 8.00% Cumulative Redeemable Preferred Units (1,000,000
units); Series F 8.75% Cumulative Redeemable Preferred Units (8,000,000 units); Series G 7.89% Cumulative Step-Up Premium Rate Convertible Preferred Units (3,000,000
units); Series H Variable Rate Preferred Units (4,530,000 units); Series K Variable Rate Redeemable Preferred Units (8,000,000 units); and Series L Variable Rate Redeemable
Preferred Units (6,000,000 units).



In 2008, eight limited partners exchanged 2,574,608 units for an equal number of shares of common stock of Simon Property. We issued an
equal number of units to Simon Property, increasing its ownership interest in us.

We
issued 282,106 units to Simon Property related to employee and director stock options exercised during 2008. We used the net proceeds from the option exercises of approximately
$11.9 million for general working capital purposes.

On
July 26, 2007, the Simon Property Board of Directors authorized a common stock repurchase program under which Simon Property may purchase up to $1.0 billion of its
common stock over the next twenty-four months as market conditions warrant. Simon Property may purchase the shares in the open market or in privately negotiated

53

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

10.    Equity (Continued)

transactions.
During 2008, no purchases were made as part of this program. Simon Property's share repurchase program had remaining availability of approximately $950.7 million at
December 31, 2008.

Other Equity Activity

Notes Receivable from Former CPI Stockholders.Notes receivable of $17,199 from stockholders of an
entity we acquired in 1998 are reflected as a
deduction from equity in the accompanying financial statements. The notes do not bear interest and become due at the time the underlying shares are sold.

The Simon Property Group 1998 Stock Incentive Plan.We, along with Simon Property, have a stock
incentive plan (the "1998 Plan"), which provides for
the grant of awards with respect to the equity of Simon Property during a ten-year period, in the form of options to purchase shares of Simon Property common stock ("Options"), stock
appreciation rights ("SARs"), restricted stock grants and performance unit awards (collectively, "Awards"). Options may be granted which are qualified as "incentive stock options" within the meaning
of Section 422 of the Code and Options which are not so qualified. An aggregate of 11,300,000 shares of common stock have been reserved for issuance under the 1998 Plan. Additionally, the
partnership agreement requires Simon Property to sell shares to us, at fair value, sufficient to satisfy the exercising of stock options, and for Simon Property to purchase common units for cash in an
amount equal to the fair market value of such shares issued on the exercise of stock options.

Administration.The 1998 plan is administered by Simon Property's Compensation Committee of the Board of
Directors. The committee determines which
eligible individuals may participate and the type, extent and terms of the awards to be granted to them. In addition, the committee interprets the 1998 plan and makes all other determinations deemed
advisable for its administration. Options granted to employees become exercisable over the period determined by the committee. The exercise price of an employee option may not be less than the fair
market value of the shares on the date of grant. Employee options generally vest over a three-year period and expire ten years from the date of grant. Since 2001, Simon Property has not
granted any options to employees, except for a series of reload options we assumed as part of a prior business combination.

Automatic Awards For Eligible Directors.Directors of Simon Property who are not employees or employees
of affiliates of Simon Property ("Eligible
Directors") receive automatic awards under the 1998 plan. Until 2003, these awards took the form of stock options. Since then, the awards have been shares of restricted stock of Simon Property.

Each
eligible director receives on the first day of the first calendar month following his or her initial election an award of restricted stock with a value of $82,500
(pro-rated for partial years of service). Thereafter, as of the date of each annual meeting of stockholders, eligible directors who are re-elected receive an award of
restricted stock having a value of $82,500. In addition, eligible directors who serve as chairpersons of the standing committees (excluding the Executive Committee) receive an additional annual award
of restricted stock having a value of $10,000 (in the case of the Audit Committee) or $7,500 (in the case of all other standing committees). The Lead Director also receives an annual restricted stock
award having a value of $12,500. The restricted stock vests in full after one year.

Once
vested, the delivery of the shares of restricted stock (including reinvested dividends) is deferred under our Director Deferred Compensation Plan until the director retires, dies
or becomes disabled or otherwise no longer serves as a director. The directors may vote and are entitled to receive dividends on the underlying shares; however, any dividends on the shares of
restricted stock must be reinvested in shares of common stock and held in the deferred compensation plan until the shares of restricted stock are delivered to the former director.

In
addition to automatic awards, eligible directors may be granted discretionary awards under the 1998 plan.

Restricted Stock.The 1998 Plan also provides for shares of restricted common stock of Simon Property to
be granted to certain employees at no cost
to those employees, subject to achievement of certain financial and return-based performance measures established by the Compensation Committee related to the most recent year's performance (the
"Restricted Stock Program"). Restricted Stock Program grants vest annually over a four-year period (25% each year) beginning on January 1 of the year following the year in which the
restricted stock award is granted.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

10.    Equity (Continued)

The
cost of restricted stock grants, which is based upon the stock's fair market value on the grant date, is charged to partners' equity and subsequently amortized against our earnings over the
vesting period. Through December 31, 2008 a total of 4,738,409 shares of restricted stock, net of forfeitures, have been awarded under the plan. Information regarding restricted stock awards
are summarized in the following table for each of the years presented:

For the Year Ended December 31,2008

2007

2006Restricted stock shares awarded during the year, net of forfeitures


276,872


222,725


415,098Weighted average fair value of shares granted during the year

$
85.77

$
120.55

$
84.33Amortization expense

$
28,640

$
26,779

$
23,369


The
weighted average life of our outstanding options as of December 31, 2008 is 2.3 years. Information relating to Director Options and Employee Options from
December 31, 2005 through December 31, 2008 is as follows:

Director Options

Employee OptionsOptions

Weighted Average
Exercise Price
Per Share

Options

Weighted Average
Exercise Price
Per ShareShares under option at December 31, 2005


37,500

$
27.80


1,527,922

$
30.39Granted





N/A


70,000


90.87Exercised


(18,000
)

27.68


(396,659
)

36.02Forfeited


(3,000
)

24.25


(3,000
)

24.47Shares under option at December 31, 2006


16,500

$
28.57


1,198,263

$
32.07Granted





N/A


23,000


99.03Exercised, none were forfeited during the period


(16,500
)

28.57


(214,525
)

32.62Shares under option at December 31, 2007




$



1,006,738

$
33.48Granted











Exercised, none were forfeited during the period








(282,106
)

41.96Shares under option at December 31, 2008




$



724,632

$
30.18




Outstanding and ExercisableEmployee Options:
Range of Exercise Prices

Options

Weighted
Average
Remaining
Contractual
Life in
Years

Weighted
Average
Exercise Price
Per Share$22.36 - $30.38


615,583


1.96

$
25.13$30.39 - $46.97


59,749


5.09


46.97$46.98 - $63.51


26,300


5.17


50.17$63.52 - $99.03


23,000


0.24


99.03Total


724,632




$
30.18


We
also maintain a tax-qualified retirement 401(k) savings plan and offer no other postretirement or post employment benefits to our employees.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

10.    Equity (Continued)

Exchange Rights

Limited partners have the right to exchange all or any portion of their units for cash or shares of Simon Property common stock as
determined by Simon Property in its sole discretion. If Simon Property selects cash, Simon Property cannot cause us to redeem for cash without contributing cash to us as partners' equity sufficient to
effect the redemption. If sufficient cash is not contributed, Simon Property will be deemed to have elected to exchange the units for shares of Simon Property common stock. The amount of cash to be
paid if the exchange right is exercised and the cash option is selected will be based on the trading price of Simon Property's common stock at that time. The number of shares of Simon Property's
common stock issued will be the same as the number of units exchanged.

Unit Distributions

On January 30, 2009, Simon Property's Board of Directors approved a quarterly common stock dividend of $0.90 per share, to be
paid in a combination of cash and shares of its common stock. The distribution rate on our units is equal to the dividend rate on Simon Property's common stock. While our unitholders will have the
right to elect to receive their distribution in either cash or units, we have announced that the aggregate cash component of the distribution will not exceed 10% of the total distribution, or $0.09
per unit. If the number of unitholders electing to receive cash would result in our payment of cash in excess of this 10% limitation, we will allocate the cash payment on a pro rata basis among those
unitholders making the cash election. Simon Property has reserved the right to elect to pay the first quarter dividend, and as a result our distribution, all in cash. Simon Property's Board of
Directors reviews and approves Simon Property's dividends and, as a result, our distributions, on a quarterly basis, and no determination has been made about whether the remaining 2009 dividends will
be paid in a similar combination of cash and common stock. Paying all or a portion of its remaining 2009 dividends in a combination of cash and common stock allows Simon Property to satisfy its REIT
taxable income distribution requirement under existing IRS revenue procedures, while enhancing financial flexibility and balance sheet strength.

11.    Commitments and Contingencies

Litigation

As previously disclosed, for several years we have been defending actions brought by the Attorneys General of Massachusetts, New
Hampshire and Connecticut in their respective state courts and similar litigation brought by other parties alleging that the sale of co-branded, bank-issued gift cards by our
affiliate, SPGGC, Inc., at certain of our properties, violated state gift certificate and consumer protection laws. We previously reported the dismissal of the New Hampshire litigation. During
the fourth quarter of 2008, the complaint in the Massachusetts litigation was dismissed and we settled the Connecticut litigation. The only remaining legal proceedings involving gift card sales are
two purported class actions brought by private parties in New York. With the resolution of the remaining Attorneys General's actions in 2008, we no longer believe that the ultimate outcome of these
related actions would have a material adverse effect on our financial position, results of operations or cash flows and, accordingly, we do not expect to report further developments in these actions.

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

Lease Commitments

As of December 31, 2008, a total of 29 of the consolidated properties are subject to ground leases. The termination dates of
these ground leases range from 2009 to 2090. These ground leases generally require us to make fixed annual rental payments, or a fixed annual rental plus a percentage rent component based upon the
revenues or

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

11.    Commitments and Contingencies (Continued)

total
sales of the property. Some of these leases also include escalation clauses and renewal options. We incurred ground lease expense included in other expense as follows:

For the Year Ended December 31,2008

2007

2006Ground lease expense

$
30,681

$
30,499

$
29,301


Future
minimum lease payments due under these ground leases for years ending December 31, excluding applicable extension options, are as follows:

2009

$
16,5302010


16,2882011


16,3382012


16,4512013


16,699Thereafter


669,723$
752,029


Insurance

We maintain commercial general liability, fire, flood, extended coverage and rental loss insurance on all of our properties in the
United States through wholly-owned captive insurance entities and other self-insurance mechanisms. Rosewood Indemnity, Ltd. and Bridgewood Insurance Company, Ltd. are our
wholly-owned captive insurance subsidiaries, and have agreed to indemnify our general liability carrier for a specific layer of losses for the properties that are covered under these arrangements. The
carrier has, in turn, agreed to provide evidence of coverage for this layer of losses under the terms and conditions of the carrier's policy. A similar policy written through these captive insurance
entities also provides initial coverage for property insurance and certain windstorm risks at the properties located in coastal windstorm locations.

We
currently maintain insurance coverage against acts of terrorism on all of our properties in the United States on an "all risk" basis in the amount of up to $1 billion per
occurrence for certified foreign acts of terrorism and $500 million per occurrence for non-certified domestic acts of terrorism. The current federal laws which provide this coverage
are expected to operate through 2014. Despite the existence of this insurance coverage, any threatened or actual terrorist attacks in high profile markets could adversely affect our property values,
revenues, consumer traffic and tenant sales.

Guarantees of Indebtedness

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 December 31, 2008, we had loan guarantees and other guarantee obligations of $71.9 million and $6.6 million, respectively, to support our
total $6.6 billion share of joint venture mortgage and other indebtedness in the event the joint venture partnership 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 could be sold in order to satisfy the outstanding obligation.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

11.    Commitments and Contingencies (Continued)

Concentration of Credit Risk

We are subject to risks incidental to the ownership and operation of commercial real estate. These risks include, among others, the
risks normally associated with changes in the general economic climate, trends in the retail industry, creditworthiness of tenants, competition for tenants and customers, changes in tax laws, interest
rate and foreign currency levels, the availability of financing, and potential liability under environmental and other laws. Our regional malls, Premium Outlet Centers, The Mills, and
community/lifestyle centers rely heavily upon anchor tenants like most retail properties. Four retailers occupied 532 of the approximately 1,376 anchor stores in the properties as of
December 31, 2008. An affiliate of one of these retailers is one of our limited partners.

Limited Life Partnerships

FASB Statement No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity"
(SFAS 150) establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify
a financial instrument that is within its scope as a liability. The effective date of a portion of the Statement has been indefinitely postponed by the FASB. We have certain transactions,
arrangements, or financial instruments that have been identified that appear to meet the criteria for liability recognition in accordance with paragraphs 9 and 10 under SFAS 150 due to
the finite life of certain joint venture arrangements. However, SFAS 150 requires disclosure of the estimated settlement value of these non-controlling interests. As of
December 31, 2008 and 2007, the estimated settlement value of these non-controlling interests was approximately $130 million and $145 million, respectively. The
noncontrolling interest amount recognized as a liability on the consolidated balance sheets related to these noncontrolling interests was approximately $23 million as of December 31,
2008 and 2007.

12.    Related Party Transactions

Our management company provides management, insurance, and other services to Melvin Simon & Associates, Inc.,
a related party, and other non-owned properties. Amounts for services provided by our management company and its affiliates to our unconsolidated joint ventures and other related parties
were as follows:

For the Year Ended December 31,2008

2007

2006Amounts charged to unconsolidated joint ventures

$
125,663

$
95,564

$
62,879Amounts charged to properties owned by related parties


4,980


5,049


9,494


During 2008 and 2007, we recorded interest income of $15.3 million and $39.1 million, respectively, and financing fee income of
$3.1 million and $17.4 million, respectively, net of inter-entity eliminations, related to the loans that we have provided to Mills and SPG-FCM and lending financing services
to those entities and the properties in which they hold an ownership interest.

13.    Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations", 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, and that costs of acquisition
be expensed as incurred. SFAS 141(R) is effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. We do not expect the
adoption of SFAS 141(R) will have a significant impact on our results of operations or financial position.

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Table of Contents

Simon Property Group, L.P. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

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

13.    Recently Issued Accounting Pronouncements (Continued)

In
March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities  an amendment of FASB Statement No. 133."
This statement amends and expands the disclosure requirements of SFAS 133. This statement is effective for fiscal years beginning after November 15, 2008, and interim periods within
those fiscal years. We are in the process of determining the impact of adopting this statement.

14.    Quarterly Financial Data (Unaudited)

Quarterly 2008 and 2007 data is summarized in the table below and, as disclosed in Note 3, the amounts have been reclassified from previously disclosed amounts in accordance
with
the discontinued operations provisions of SFAS No. 144 and reflect dispositions through December 31, 2008. Income from continuing operations, income from continuing operations per
unit  Basic, and income from continuing operations per unit  Diluted as previously reported in the September 30, 2007 Form 10-Q were
$227,532, $0.74, and $0.74, respectively, and are presented below as $239,269, $0.77, and $0.77, respectively. All other amounts previously reported are equal to the amounts reported below. Quarterly
amounts may not equal annual amounts due to rounding.

First Quarter

Second Quarter

Third Quarter

Fourth Quarter2008Total revenue

$
895,298

$
922,947

$
935,594

$
1,029,316Operating income


351,775


379,038


383,351


445,373Consolidated income from continuing operations


129,022


114,353


159,736


196,449Net income available to common unitholders


87,933


76,572


112,809


145,203Income from continuing operations per unit  Basic

$
0.39

$
0.34

$
0.50

$
0.65Net income per unit  Basic

$
0.39

$
0.34

$
0.50

$
0.65Income from continuing operations per unit  Diluted

$
0.39

$
0.34

$
0.50

$
0.64Net income per unit  Diluted

$
0.39

$
0.34

$
0.50

$
0.64Weighted average units outstanding


281,224,467


282,382,491


282,384,237


284,025,809Diluted weighted average units outstanding


281,841,042


282,971,297


282,953,695


284,422,9862007Total revenue

$
852,141

$
855,932

$
907,145

$
1,035,581Operating income


348,809


333,343


378,446


473,434Consolidated income from continuing operations


146,819


98,176


239,269


190,341Net income available to common unitholders


98,381


59,917


164,937


112,929Income from continuing operations per unit  Basic

$
0.44

$
0.27

$
0.77

$
0.60Net income per unit  Basic

$
0.44

$
0.27

$
0.74

$
0.51Income from continuing operations per unit  Diluted

$
0.44

$
0.27

$
0.77

$
0.60Net income per unit  Diluted

$
0.44

$
0.27

$
0.74

$
0.51Weighted average units outstanding


280,858,656


281,282,172


281,028,487


280,944,298Diluted weighted average units outstanding


281,716,125


281,119,027


281,774,055


281,617,542


59

---





Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures.We carried out an evaluation under the supervision and with
participation of management, including
Simon Property's chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by
this Annual Report on Form 10-K pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our management, including the chief executive officer and chief
financial officer, concluded that our disclosure controls and procedures were effective as of December 31, 2008.

Changes in Internal Control Over Financial Reporting.There was no change in our internal control over financial
reporting (as defined in
Rule 13a-15(f)) that occurred during the fourth quarter of 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.

Management's Report on Internal Control over Financial Reporting.We are responsible for establishing and
maintaining adequate internal control over
financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a
process designed by, or under the supervision of, Simon Property's Board of Directors, principal executive and principal financial officers and effected by Simon Property's management and other
personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that:



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We
assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, we used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based
on that assessment, we believe that, as of December 31, 2008, our internal control over financial reporting is effective based on those criteria.

Our
independent registered public accounting firm has issued an audit report on their assessment of our internal control over financial reporting. Their report is included within
Item 9A of this Form 10-K.

60

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Table of Contents

Report Of Independent Registered Public Accounting Firm

The
Board of Directors of Simon Property Group, Inc.
and The Partners of Simon Property Group, L.P.:

We
have audited Simon Property Group, L.P. and Subsidiaries' internal control over financial reporting as of December 31, 2008 based on criteria established in Internal
Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Simon Property Group, L.P. and
Subsidiaries' management is responsible for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Partnership's internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In
our opinion, Simon Property Group, L.P. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31,
2008, based on the COSO criteria.

We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Simon Property
Group, L.P. and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations and comprehensive income, equity and cash flows for each of the three
years in the period ended December 31, 2008 of Simon Property Group, L.P. and Subsidiaries, and the financial statement schedule listed in the Index at Item 15, and our report
dated February 25, 2009, except for the retrospective adjustments described in Notes 3 and 10, as to which the date is April 29, 2009, expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLPIndianapolis, Indiana
February 25, 2009


61

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Table of Contents

Part IV

Item 15.    Exhibits and Financial Statement Schedules

Page No.(1)Consolidated Financial StatementsSimon Property Group, L.P. and Subsidiaries' consolidated financial statements and independent registered public accounting firm's report are set forth in Item 8 of this Annual Report on Form 10-K/A and are
incorporated herein by reference.(2)Financial Statement ScheduleSimon Property Group, L.P. and Subsidiaries Schedule IIISchedule of Real Estate and Accumulated Depreciation


64Notes to Schedule III


71(3)ExhibitsThe Exhibit Index attached hereto is hereby incorporated by reference to this Item. The following exhibits listed on the Exhibit Index are filed with this Annual Report on Form 10-K/A.


72


Exhibit No.12.1

Statement regarding computation of ratios.23.1

Consent of Ernst & Young LLP.31.1

Certification by the Chief Executive Officer pursuant to Rule 13a-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) 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.


62

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Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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, L.P.By

/s/ STEPHEN E. STERRETT Stephen E. Sterrett
Executive Vice President and Chief Financial Officer of Simon Property Group, Inc., General Partner


May 8,
2009

63

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Table of Contents

SCHEDULE III

Simon Property Group, L.P. and SubsidiariesReal Estate and Accumulated Depreciation
December 31, 2008
(Dollars in thousands)

Initial Cost (Note 3)

Cost Capitalized
Subsequent to
Acquisition (Note 3)

Gross Amounts At Which
Carried At December 31, 2008Name, Location

Encumbrances

Land

Buildings and
Improvements

Land

Buildings and
Improvements

Land

Buildings and Improvements

Total (1)

Accumulated
Depreciation (2)

Date of
Construction or
AcquisitionRegional MallsAnderson Mall, Anderson, SC

$
27,755

$
1,712

$
15,227

$
1,363

$
19,920

$
3,075

$
35,147

$
38,222

$
13,173

1972Arsenal Mall, Watertown, MA


1,090


15,505


47,680





9,642


15,505


57,322


72,827


14,268

1999 (Note 4)Bangor Mall, Bangor, ME


80,000


5,478


59,740





8,336


5,478


68,076


73,554


16,533

2004 (Note 5)Barton Creek Square, Austin, TX





2,903


20,929


7,983


59,959


10,886


80,888


91,774


37,244

1981Battlefield Mall, Springfield, MO


94,530


3,919


27,231


3,225


61,405


7,144


88,636


95,780


44,137

1970Bay Park Square, Green Bay, WI





6,358


25,623


4,133


23,438


10,491


49,061


59,552


18,164

1980Bowie Town Center, Bowie, MD





2,710


65,044


235


5,206


2,945


70,250


73,195


20,419

2001Boynton Beach Mall, Boynton Beach, FL





22,240


78,804


4,666


25,616


26,906


104,420


131,326


33,023

1985Brea Mall, Brea, CA





39,500


209,202





25,119


39,500


234,321


273,821


68,588

1998 (Note 4)Broadway Square, Tyler, TX





11,470


32,431





21,590


11,470


54,021


65,491


19,376

1994 (Note 4)Brunswick Square, East Brunswick, NJ


83,452


8,436


55,838





27,827


8,436


83,665


92,101


31,304

1973Burlington Mall, Burlington, MA





46,600


303,618


19,600


87,961


66,200


391,579


457,779


96,968

1998 (Note 4)Castleton Square, Indianapolis, IN





26,250


98,287


7,434


69,346


33,684


167,633


201,317


51,133

1972Century III Mall, West Mifflin, PA


81,930


17,380


102,364


10


8,437


17,390


110,801


128,191


61,726

1979Charlottesville Fashion Square, Charlottesville, VA








54,738





13,580





68,318


68,318


22,858

1997 (Note 4)Chautauqua Mall, Lakewood, NY





3,257


9,641





16,214


3,257


25,855


29,112


10,859

1971Chesapeake Square, Chesapeake, VA


70,841


11,534


70,461





7,445


11,534


77,906


89,440


35,341

1989Cielo Vista Mall, El Paso, TX





1,005


15,262


608


43,508


1,613


58,770


60,383


30,773

1974College Mall, Bloomington, IN





1,003


16,245


720


43,130


1,723


59,375


61,098


25,054

1965Columbia Center, Kennewick, WA





17,441


66,580





21,461


17,441


88,041


105,482


28,211

1987Copley Place, Boston, MA


200,000





378,045





78,878





456,923


456,923


83,023

2002 (Note 4)Coral Square, Coral Springs, FL


83,134


13,556


93,630





13,987


13,556


107,617


121,173


44,897

1984Cordova Mall, Pensacola, FL





18,626


73,091


7,321


43,797


25,947


116,888


142,835


29,187

1998 (Note 4)Cottonwood Mall, Albuquerque, NM





10,122


69,958





3,316


10,122


73,274


83,396


30,708

1996Crossroads Mall, Omaha, NE


41,150


639


30,658


409


35,783


1,048


66,441


67,489


26,719

1994 (Note 4)Crystal River Mall, Crystal River, FL


14,916


5,393


20,241





4,857


5,393


25,098


30,491


9,077

1990DeSoto Square, Bradenton, FL


64,153


9,011


52,675





8,107


9,011


60,782


69,793


22,276

1973Domain, The, Austin, TX (Note 6)





45,152


197,010





52,560


45,152


249,570


294,722


15,462

2005Edison Mall, Fort Myers, FL





11,529


107,350





28,267


11,529


135,617


147,146


40,169

1997 (Note 4)Fashion Mall at Keystone, Indianapolis, IN








120,579





48,162





168,741


168,741


49,510

1997 (Note 4)Firewheel Town Center, Garland, TX





8,636


82,716





23,617


8,636


106,333


114,969


14,381

2004Forest Mall, Fond Du Lac, WI


16,478


721


4,491





8,792


721


13,283


14,004


7,180

1973Forum Shops at Caesars, The, Las Vegas, NV


524,657





276,567





204,235





480,802


480,802


108,579

1992


64

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Table of Contents

SCHEDULE III

Simon Property Group, L.P. and SubsidiariesReal Estate and Accumulated Depreciation
December 31, 2008
(Dollars in thousands)

Initial Cost (Note 3)

Cost Capitalized
Subsequent to
Acquisition (Note 3)

Gross Amounts At Which
Carried At December 31, 2008Name, Location

Encumbrances

Land

Buildings and
Improvements

Land

Buildings and
Improvements

Land

Buildings and Improvements

Total (1)

Accumulated
Depreciation (2)

Date of
Construction or
AcquisitionGreat Lakes Mall, Mentor, OH





12,302


100,362





10,656


12,302


111,018


123,320


41,141

1961Greenwood Park Mall, Greenwood, IN





2,423


23,445


5,275


114,688


7,698


138,133


145,831


44,094

1979Gulf View Square, Port Richey, FL





13,690


39,991


2,023


20,097


15,713


60,088


75,801


22,595

1980Gwinnett Place, Duluth, GA


115,000


17,051


141,191





4,210


17,051


145,401


162,452


38,335

1998 (Note 5)Haywood Mall, Greenville, SC





11,585


133,893


6


18,976


11,591


152,869


164,460


56,637

1998 (Note 4)Independence Center, Independence, MO


200,000


5,042


45,798





32,209


5,042


78,007


83,049


30,951

1994 (Note 4)Ingram Park Mall, San Antonio, TX


77,180


733


17,163


73


19,934


806


37,097


37,903


19,914

1979Irving Mall, Irving, TX





6,737


17,479


2,533


41,225


9,270


58,704


67,974


31,356

1971Jefferson Valley Mall, Yorktown Heights, NY





4,868


30,304





24,516


4,868


54,820


59,688


26,133

1983Knoxville Center, Knoxville, TN


58,446


5,006


21,617


3,712


35,324


8,718


56,941


65,659


27,153

1984La Plaza Mall, McAllen, TX





1,375


9,828


6,569


38,146


7,944


47,974


55,918


20,715

1976Laguna Hills Mall, Laguna Hills, CA





27,928


55,446





16,694


27,928


72,140


100,068


21,952

1997 (Note 4)Lakeline Mall, Austin, TX





10,088


81,568


14


15,742


10,102


97,310


107,412


34,197

1995Lenox Square, Atlanta, GA





38,213


492,411





58,481


38,213


550,892


589,105


154,881

1998 (Note 4)Lima Mall, Lima, OH





7,662


35,338





9,611


7,662


44,949


52,611


18,738

1965Lincolnwood Town Center, Lincolnwood, IL





7,907


63,480


28


7,435


7,935


70,915


78,850


34,674

1990Livingston Mall, Livingston, NJ





22,214


105,250





36,557


22,214


141,807


164,021


37,760

1998 (Note 4)Longview Mall, Longview, TX


30,839


259


3,567


124


7,931


383


11,498


11,881


5,461

1978Mall of Georgia, Mill Creek, GA


185,238


47,492


326,633





3,826


47,492


330,459


377,951


63,130

1999 (Note 5)Maplewood Mall, Minneapolis, MN





17,119


80,758





11,225


17,119


91,983


109,102


20,774

2002 (Note 4)Markland Mall, Kokomo, IN


21,818





7,568





10,056





17,624


17,624


8,852

1968McCain Mall, N. Little Rock, AR








9,515


10,530


12,180


10,530


21,695


32,225


15,541

1973Melbourne Square, Melbourne, FL





15,762


55,891


4,160


27,929


19,922


83,820


103,742


25,959

1982Menlo Park Mall, Edison, NJ





65,684


223,252





33,429


65,684


256,681


322,365


84,104

1997 (Note 4)Midland Park Mall, Midland, TX


31,852


687


9,213





12,459


687


21,672


22,359


12,438

1980Miller Hill Mall, Duluth, MN





2,998


18,092





27,471


2,998


45,563


48,561


26,800

1973Montgomery Mall, Montgomeryville, PA


89,460


27,105


86,915





25,243


27,105


112,158


139,263


23,114

2004 (Note 5)Muncie Mall, Muncie, IN


7,381


172


5,776


52


27,118


224


32,894


33,118


15,399

1970North East Mall, Hurst, TX





128


12,966


19,010


148,611


19,138


161,577


180,715


59,473

1971Northfield Square Mall, Bourbonnais, IL


29,067


362


53,396





1,240


362


54,636


54,998


30,675

2004 (Note 5)Northgate Mall, Seattle, WA





24,369


115,992





93,581


24,369


209,573


233,942


51,408

1987Northlake Mall, Atlanta, GA


67,423


33,400


98,035





4,324


33,400


102,359


135,759


45,679

1998 (Note 4)Northwoods Mall, Peoria, IL





1,185


12,779


2,451


37,093


3,636


49,872


53,508


27,003

1983Oak Court Mall, Memphis, TN





15,673


57,304





8,756


15,673


66,060


81,733


22,571

1997 (Note 4)Ocean County Mall, Toms River, NJ





20,404


124,945





23,684


20,404


148,629


169,033


42,213

1998 (Note 4)


65

---



Table of Contents

SCHEDULE III

Simon Property Group, L.P. and SubsidiariesReal Estate and Accumulated Depreciation
December 31, 2008
(Dollars in thousands)

Initial Cost (Note 3)

Cost Capitalized
Subsequent to
Acquisition (Note 3)

Gross Amounts At Which
Carried At December 31, 2008Name, Location

Encumbrances

Land

Buildings and
Improvements

Land

Buildings and
Improvements

Land

Buildings and Improvements

Total (1)

Accumulated
Depreciation (2)

Date of
Construction or
AcquisitionOrange Park Mall, Orange Park, FL





12,998


65,121





40,115


12,998


105,236


118,234


38,028

1994 (Note 4)Orland Square, Orland Park, IL





35,514


129,906





21,808


35,514


151,714


187,228


50,348

1997 (Note 4)Oxford Valley Mall, Langhorne, PA


74,805


24,544


100,287





7,881


24,544


108,168


132,712


44,939

2003 (Note 4)Paddock Mall, Ocala, FL





11,198


39,727





16,180


11,198


55,907


67,105


16,770

1980Penn Square Mall, Oklahoma City, OK


65,828


2,043


155,958





27,936


2,043


183,894


185,937


53,104

2002 (Note 4)Pheasant Lane Mall, Nashua, NH





3,902


155,068


550


14,786


4,452


169,854


174,306


48,112

2004 (Note 5)Phipps Plaza, Atlanta, GA





19,200


210,610





21,669


19,200


232,279


251,479


69,196

1998 (Note 4)Plaza Carolina, Carolina, PR


236,901


15,493


279,560





11,798


15,493


291,358


306,851


45,077

2004 (Note 4)Port Charlotte Town Center,
Port Charlotte, FL


50,998


5,471


58,570





15,396


5,471


73,966


79,437


28,559

1989Prien Lake Mall, Lake Charles, LA





1,842


2,813


3,091


36,807


4,933


39,620


44,553


17,982

1972Richmond Town Square,
Richmond Heights, OH


44,739


2,600


12,112





59,924


2,600


72,036


74,636


39,566

1966River Oaks Center, Calumet City, IL





30,884


101,224





10,726


30,884


111,950


142,834


35,903

1997 (Note 4)Rockaway Townsquare, Rockaway, NJ





44,116


212,257


27


31,359


44,143


243,616


287,759


67,050

1998 (Note 4)Rolling Oaks Mall, San Antonio, TX





1,929


38,609





14,027


1,929


52,636


54,565


24,504

1988Roosevelt Field, Garden City, NY





164,058


702,008


2,117


39,064


166,175


741,072


907,247


214,402

1998 (Note 4)Ross Park Mall, Pittsburgh, PA





23,541


90,203





71,846


23,541


162,049


185,590


52,602

1986Santa Rosa Plaza, Santa Rosa, CA





10,400


87,864





10,039


10,400


97,903


108,303


29,416

1998 (Note 4)Shops at Mission Viejo, The,
Mission Viejo, CA





9,139


54,445


7,491


145,967


16,630


200,412


217,042


74,101

1979South Hills Village, Pittsburgh, PA





23,445


125,840





16,698


23,445


142,538


165,983


45,546

1997 (Note 4)South Shore Plaza, Braintree, MA





101,200


301,495





68,214


101,200


369,709


470,909


94,453

1998 (Note 4)Southern Park Mall, Boardman, OH





16,982


77,767


97


23,786


17,079


101,553


118,632


38,609

1970SouthPark, Charlotte, NC





42,092


188,055


100


165,073


42,192


353,128


395,320


76,472

2002 (Note 4)St. Charles Towne Center, Waldorf, MD





7,710


52,934


1,180


26,829


8,890


79,763


88,653


35,872

1990Stanford Shopping Center, Palo Alto, CA


240,000





339,537





5,914





345,451


345,451


59,939

2003 (Note 4)Summit Mall, Akron, OH


65,000


15,374


51,137





37,647


15,374


88,784


104,158


27,201

1965Sunland Park Mall, El Paso, TX


33,734


2,896


28,900





7,120


2,896


36,020


38,916


19,949

1988Tacoma Mall, Tacoma, WA


122,687


37,803


125,826





73,353


37,803


199,179


236,982


55,789

1987Tippecanoe Mall, Lafayette, IN





2,897


8,439


5,517


44,478


8,414


52,917


61,331


32,228

1973Town Center at Aurora, Aurora, CO





9,959


56,832


6


56,463


9,965


113,295


123,260


34,436

1998 (Note 4)Town Center at Boca Raton, Boca Raton, FL





64,200


307,317





151,838


64,200


459,155


523,355


121,435

1998 (Note 4)Town Center at Cobb, Kennesaw, GA


280,000


32,585


158,225





10,577


32,585


168,802


201,387


42,921

1998 (Note 5)Towne East Square, Wichita, KS





8,525


18,479


1,429


39,772


9,954


58,251


68,205


30,712

1975


66

---



Table of Contents

SCHEDULE III

Simon Property Group, L.P. and SubsidiariesReal Estate and Accumulated Depreciation
December 31, 2008
(Dollars in thousands)

Initial Cost (Note 3)

Cost Capitalized
Subsequent to
Acquisition (Note 3)

Gross Amounts At Which
Carried At December 31, 2008Name, Location

Encumbrances

Land

Buildings and
Improvements

Land

Buildings and
Improvements

Land

Buildings and Improvements

Total (1)

Accumulated
Depreciation (2)

Date of
Construction or
AcquisitionTowne West Square, Wichita, KS


50,520


972


21,203


61


11,960


1,033


33,163


34,196


17,703

1980Treasure Coast Square, Jensen Beach, FL





11,124


72,990


3,067


34,067


14,191


107,057


121,248


36,073

1987Tyrone Square, St. Petersburg, FL





15,638


120,962





28,764


15,638


149,726


165,364


51,781

1972University Park Mall, Mishawaka, IN


100,000


16,768


112,158


7,000


47,833


23,768


159,991


183,759


79,097

1996 (Note 4)Upper Valley Mall, Springfield, OH


47,904


8,421


38,745





10,739


8,421


49,484


57,905


17,660

1979Valle Vista Mall, Harlingen, TX


40,000


1,398


17,159


372


20,659


1,770


37,818


39,588


18,165

1983Virginia Center Commons, Glen Allen, VA





9,764


50,547


4,149


9,454


13,913


60,001


73,914


24,645

1991Walt Whitman Mall, Huntington Station, NY





51,700


111,258


3,789


43,113


55,489


154,371


209,860


56,032

1998 (Note 4)Washington Square, Indianapolis, IN


30,194


16,800


36,495


462


27,599


17,262


64,094


81,356


36,259

1974West Ridge Mall, Topeka, KS


68,711


5,453


34,132


1,168


22,444


6,621


56,576


63,197


22,658

1988Westminster Mall, Westminster, CA





43,464


84,709





29,676


43,464


114,385


157,849


31,882

1998 (Note 4)White Oaks Mall, Springfield, IL


50,000


3,024


35,692


2,102


40,247


5,126


75,939


81,065


28,355

1977Wolfchase Galleria, Memphis, TN


225,000


15,881


128,276





9,358


15,881


137,634


153,515


45,898

2002 (Note 4)Woodland Hills Mall, Tulsa, OK


78,612


34,211


187,123





12,898


34,211


200,021


234,232


50,452

2004 (Note 5)Premium Outlet CentersAlbertville Premium Outlets, Albertville, MN





3,900


97,059





3,318


3,900


100,377


104,277


20,303

2004 (Note 4)Allen Premium Outlets, Allen, TX





13,855


43,687


97


22,194


13,952


65,881


79,833


13,097

2004 (Note 4)Aurora Farms Premium Outlets, Aurora, OH





2,370


24,326





2,285


2,370


26,611


28,981


11,525

2004 (Note 4)Camarillo Premium Outlets, Camarillo, CA





16,670


224,721


558


42,303


17,228


267,024


284,252


36,705

2004 (Note 4)Carlsbad Premium Outlets, Carlsbad, CA





12,890


184,990


96


1,679


12,986


186,669


199,655


28,057

2004 (Note 4)Carolina Premium Outlets, Smithfield, NC


19,696


3,170


59,863





2,038


3,170


61,901


65,071


15,197

2004 (Note 4)Chicago Premium Outlets, Aurora, IL





659


118,005


4,940


11,407


5,599


129,412


135,011


24,875

2004 (Note 4)Clinton Crossings Premium Outlets,
Clinton, CT





2,060


107,556


472


1,855


2,532


109,411


111,943


20,326

2004 (Note 4)Columbia Gorge Premium Outlets,
Troutdale, OR





7,900


16,492





785


7,900


17,277


25,177


6,402

2004 (Note 4)Desert Hills Premium Outlets, Cabazon, CA





3,440


338,679





3,522


3,440


342,201


345,641


48,475

2004 (Note 4)Edinburgh Premium Outlets, Edinburgh, IN





2,857


47,309





11,006


2,857


58,315


61,172


13,726

2004 (Note 4)Folsom Premium Outlets, Folsom, CA





9,060


50,281





2,717


9,060


52,998


62,058


13,571

2004 (Note 4)Gilroy Premium Outlets, Gilroy, CA





9,630


194,122





4,358


9,630


198,480


208,110


36,472

2004 (Note 4)Houston Premium Outlets, Cypress, TX





21,159


69,350





28,755


21,159


98,105


119,264


3,335

2007Jackson Premium Outlets, Jackson, NJ





6,413


104,013


3


2,778


6,416


106,791


113,207


16,211

2004 (Note 4)Jersey Shore Premium Outlets, Tinton Falls, NJ





16,141


50,979





73,424


16,141


124,403


140,544


858

2007Johnson Creek Premium Outlets,
Johnson Creek, WI





2,800


39,546





4,458


2,800


44,004


46,804


6,986

2004 (Note 4)Kittery Premium Outlets, Kittery, ME


43,556


11,832


94,994





4,557


11,832


99,551


111,383


12,049

2004 (Note 4)Las Americas Premium Outlets, San Diego, CA


180,000


45,168


251,878





1,252


45,168


253,130


298,298


10,166

2007 (Note 4)Las Vegas Outlet Center, Las Vegas, NV





13,085


160,777





4,144


13,085


164,921


178,006


21,023

2004 (Note 4)Las Vegas Premium Outlets, Las Vegas, NV





25,435


134,973





58,647


25,435


193,620


219,055


28,121

2004 (Note 4)


67

---



Table of Contents

SCHEDULE III

Simon Property Group, L.P. and SubsidiariesReal Estate and Accumulated Depreciation
December 31, 2008
(Dollars in thousands)

Initial Cost (Note 3)

Cost Capitalized
Subsequent to
Acquisition (Note 3)

Gross Amounts At Which
Carried At December 31, 2008Name, Location

Encumbrances

Land

Buildings and
Improvements

Land

Buildings and
Improvements

Land

Buildings and Improvements

Total (1)

Accumulated
Depreciation (2)

Date of
Construction or
AcquisitionLeesburg Corner Premium Outlets,
Leesburg, VA





7,190


162,023





2,930


7,190


164,953


172,143


32,161

2004 (Note 4)Liberty Village Premium Outlets,
Flemington, NJ





5,670


28,904





1,712


5,670


30,616


36,286


9,240

2004 (Note 4)Lighthouse Place Premium Outlets,
Michigan City, IN


88,623


6,630


94,138





4,019


6,630


98,157


104,787


23,683

2004 (Note 4)Napa Premium Outlets, Napa, CA





11,400


45,023





1,349


11,400


46,372


57,772


9,239

2004 (Note 4)North Georgia Premium Outlets,
Dawsonville, GA





4,300


132,325





1,709


4,300


134,034


138,334


25,352

2004 (Note 4)Orlando Premium Outlets, Orlando, FL





14,040


304,410


16,100


45,228


30,140


349,638


379,778


42,526

2004 (Note 4)Osage Beach Premium Outlets,
Osage Beach, MO





9,460


85,804


3


3,417


9,463


89,221


98,684


18,910

2004 (Note 4)Petaluma Village Premium Outlets,
Petaluma, CA





13,322


14,067





2,918


13,322


16,985


30,307


5,619

2004 (Note 4)Philadelphia Premium Outlets, Limerick, PA


190,000


16,676


105,249





15,481


16,676


120,730


137,406


6,310

2006Rio Grande Valley Premium Outlets,
Mercedes, TX





12,693


41,547


1


34,874


12,694


76,421


89,115


6,576

2005Round Rock Premium Outlets,
Round Rock, TX





21,977


82,252





2,796


21,977


85,048


107,025


10,897

2005Seattle Premium Outlets, Seattle, WA





13,557


103,722


12


3,181


13,569


106,903


120,472


16,207

2004 (Note 4)St. Augustine Premium Outlets,
St. Augustine, FL





6,090


57,670


2


6,825


6,092


64,495


70,587


14,436

2004 (Note 4)The Crossings Premium Outlets,
Tannersville, PA


53,992


7,720


172,931





8,821


7,720


181,752


189,472


28,388

2004 (Note 4)Vacaville Premium Outlets, Vacaville, CA





9,420


84,850





4,540


9,420


89,390


98,810


21,354

2004 (Note 4)Waikele Premium Outlets, Waipahu, HI





22,630


77,316





872


22,630


78,188


100,818


15,658

2004 (Note 4)Waterloo Premium Outlets, Waterloo, NY


72,822


3,230


75,277





5,701


3,230


80,978


84,208


18,137

2004 (Note 4)Woodbury Common Premium Outlets,
Central Valley, NY





11,110


862,559


1,658


3,182


12,768


865,741


878,509


125,123

2004 (Note 4)Wrentham Village Premium Outlets,
Wrentham, MA





4,900


282,031





3,124


4,900


285,155


290,055


47,852

2004 (Note 4)Community/Lifestyle CentersArboretum at Great Hills, Austin, TX





7,640


36,774


71


8,248


7,711


45,022


52,733


13,249

1998 (Note 4)Bloomingdale Court, Bloomingdale, IL


26,592


8,748


26,184





9,684


8,748


35,868


44,616


16,295

1987Brightwood Plaza, Indianapolis, IN





65


128





337


65


465


530


311

1965Charles Towne Square, Charleston, SC








1,768


370


10,636


370


12,404


12,774


6,225

1976Chesapeake Center, Chesapeake, VA





5,352


12,279





532


5,352


12,811


18,163


4,523

1989


68

---



Table of Contents

SCHEDULE III

Simon Property Group, L.P. and SubsidiariesReal Estate and Accumulated Depreciation
December 31, 2008
(Dollars in thousands)

Initial Cost (Note 3)

Cost Capitalized
Subsequent to
Acquisition (Note 3)

Gross Amounts At Which
Carried At December 31, 2008Name, Location

Encumbrances

Land

Buildings and
Improvements

Land

Buildings and
Improvements

Land

Buildings and Improvements

Total (1)

Accumulated
Depreciation (2)

Date of
Construction or
AcquisitionCountryside Plaza, Countryside, IL





332


8,507


2,554


9,002


2,886


17,509


20,395


7,031

1977Dare Centre, Kill Devil Hills, NC


1,640





5,702





189





5,891


5,891


747

2004 (Note 4)DeKalb Plaza, King of Prussia, PA


3,071


1,955


3,405





1,105


1,955


4,510


6,465


1,518

2003 (Note 4)Eastland Plaza, Tulsa, OK





651


3,680





80


651


3,760


4,411


3,280

1986Forest Plaza, Rockford, IL


14,585


4,132


16,818


453


9,689


4,585


26,507


31,092


8,573

1985Gateway Shopping Centers, Austin, TX


87,000


24,549


81,437





7,719


24,549


89,156


113,705


17,706

2004 (Note 4)Great Lakes Plaza, Mentor, OH





1,028


2,025





3,680


1,028


5,705


6,733


2,842

1976Greenwood Plus, Greenwood, IN





1,131


1,792





3,735


1,131


5,527


6,658


2,678

1979Henderson Square, King of Prussia, PA


14,616


4,223


15,124





147


4,223


15,271


19,494


2,705

2003 (Note 4)Highland Lakes Center, Orlando, FL


15,189


7,138


25,284





1,217


7,138


26,501


33,639


12,026

1991Ingram Plaza, San Antonio, TX





421


1,802


4


59


425


1,861


2,286


1,183

1980Keystone Shoppes, Indianapolis, IN








4,232





974





5,206


5,206


1,730

1997 (Note 4)Knoxville Commons, Knoxville, TN





3,731


5,345





1,738


3,731


7,083


10,814


4,819

1987Lake Plaza, Waukegan, IL





2,487


6,420





1,059


2,487


7,479


9,966


3,325

1986Lake View Plaza, Orland Park, IL


19,388


4,702


17,543





13,062


4,702


30,605


35,307


12,767

1986Lakeline Plaza, Austin, TX


21,256


5,822


30,875





6,984


5,822


37,859


43,681


13,634

1998Lima Center, Lima, OH





1,808


5,151





6,788


1,808


11,939


13,747


4,176

1978Lincoln Crossing, O'Fallon, IL


2,935


674


2,192





630


674


2,822


3,496


1,169

1990Lincoln Plaza, King of Prussia, PA








21,299





1,942





23,241


23,241


8,204

2003 (Note 4)MacGregor Village, Cary, NC


6,596


502


8,897





183


502


9,080


9,582


1,150

2004 (Note 4)Mall of Georgia Crossing, Mill Creek, GA





9,506


32,892





260


9,506


33,152


42,658


10,703

2004 (Note 5)Markland Plaza, Kokomo, IN





206


738





6,234


206


6,972


7,178


2,513

1974Martinsville Plaza, Martinsville, VA








584





408





992


992


720

1967Matteson Plaza, Matteson, IL


8,537


1,771


9,737





2,685


1,771


12,422


14,193


6,044

1988Muncie Plaza, Muncie, IN





267


10,509


87


1,350


354


11,859


12,213


3,959

1998New Castle Plaza, New Castle, IN





128


1,621





1,417


128


3,038


3,166


1,893

1966North Ridge Plaza, Joliet, IL





2,831


7,699





3,231


2,831


10,930


13,761


4,450

1985North Ridge Shopping Center, Raleigh, NC


8,056


385


12,838





406


385


13,244


13,629


1,768

2004 (Note 4)Northwood Plaza, Fort Wayne, IN





148


1,414





1,543


148


2,957


3,105


1,695

1974Palms Crossing, McAllen, TX (Note 6)





13,923


45,925





5,837


13,923


51,762


65,685


2,802

2006Park Plaza, Hopkinsville, KY





300


1,572





217


300


1,789


2,089


1,750

1968Pier Park, Panama City Beach, FL





25,992


73,158





41,120


25,992


114,278


140,270


3,404

2006Regency Plaza, St. Charles, MO


4,003


616


4,963





569


616


5,532


6,148


2,296

1988Richardson Square Mall, Richardson, TX





6,285





1,268


15,506


7,553


15,506


23,059


322

1977Rockaway Convenience Center, Rockaway, NJ





5,149


26,435





6,543


5,149


32,978


38,127


7,673

1998 (Note 4)Rockaway Town Plaza, Rockaway, NJ








18,698





1,765





20,463


20,463


2,335

2004Shops at Arbor Walk, Austin, TX (Note 6)





930


42,546





5,210


930


47,756


48,686


4,026

2005


69

---



Table of Contents

SCHEDULE III

Simon Property Group, L.P. and SubsidiariesReal Estate and Accumulated Depreciation
December 31, 2008
(Dollars in thousands)

Initial Cost (Note 3)

Cost Capitalized
Subsequent to
Acquisition (Note 3)

Gross Amounts At Which
Carried At December 31, 2008Name, Location

Encumbrances

Land

Buildings and
Improvements

Land

Buildings and
Improvements

Land

Buildings and Improvements

Total (1)

Accumulated
Depreciation (2)

Date of
Construction or
AcquisitionShops at North East Mall, The, Hurst, TX





12,541


28,177


402


5,782


12,943


33,959


46,902


13,879

1999St. Charles Towne Plaza, Waldorf, MD


25,613


8,377


18,993





2,918


8,377


21,911


30,288


9,784

1987Teal Plaza, Lafayette, IN





99


878





3,011


99


3,889


3,988


2,071

1962Terrace at the Florida Mall, Orlando, FL





2,150


7,623





5,201


2,150


12,824


14,974


4,043

1989Tippecanoe Plaza, Lafayette, IN








745


234


5,037


234


5,782


6,016


3,006

1974University Center, Mishawaka, IN





3,071


7,413





3,095


3,071


10,508


13,579


7,115

1980Washington Plaza, Indianapolis, IN





941


1,697





398


941


2,095


3,036


2,561

1976Waterford Lakes Town Center, Orlando, FL





8,679


72,836





14,176


8,679


87,012


95,691


31,000

1999West Ridge Plaza, Topeka, KS


5,158


1,376


4,560





1,770


1,376


6,330


7,706


2,866

1988White Oaks Plaza, Springfield, IL


15,741


3,169


14,267





1,392


3,169


15,659


18,828


6,595

1986Wolf Ranch, Georgetown, TX





22,118


51,547





5,489


22,118


57,036


79,154


7,695

2004Other PropertiesCrossville Outlet Center, Crossville, TN





263


4,380





229


263


4,609


4,872


712

2004 (Note 4)Factory Merchants Branson, Branson, MO





1,383


19,637


1


846


1,384


20,483


21,867


1,681

2004 (Note 4)Factory Shoppes at Branson Meadows, Branson, MO


9,160





5,205





228





5,433


5,433


707

2004 (Note 4)Factory Stores of America  Boaz, AL


2,678





924





7





931


931


104

2004 (Note 4)Factory Stores of America  Georgetown, KY


6,349


148


3,610





47


148


3,657


3,805


461

2004 (Note 4)Factory Stores of America  Graceville, FL


1,886


12


408





60


12


468


480


55

2004 (Note 4)Factory Stores of America  Lebanon. MO


1,586


24


214








24


214


238


40

2004 (Note 4)Factory Stores of America 
Nebraska City, NE


1,488


26


566





13


26


579


605


80

2004 (Note 4)Factory Stores of America  Story City, IA


1,841


7


526








7


526


533


64

2004 (Note 4)Factory Stores of North Bend,
North Bend, WA





2,143


36,197





1,901


2,143


38,098


40,241


5,498

2004 (Note 4)Nanuet Mall, Nanuet, NY





27,310


162,993





3,427


27,310


166,420


193,730


104,236

1998 (Note 4)Palm Beach Mall, West Palm Beach, FL


50,953


11,962


112,437





35,542


11,962


147,979


159,941


94,848

1967Raleigh Springs Mall, Memphis, TN





4,663


28,604





12,892


4,663


41,496


46,159


40,567

1971University Mall, Pensacola, FL





4,256


26,657





3,908


4,256


30,565


34,821


13,258

1994Development ProjectsCincinnati Premium Outlets, Monroe, OH





14,117


32,157








14,117


32,157


46,274




2008Other pre-development costs





31,890


26,844








31,890


26,844


58,734


Other





3,304


3,818


665


344


3,969


4,162


8,131


3,363$
5,208,029


2,606,933

$
17,523,294

$
188,093

$
4,589,650

$
2,795,026

$
22,112,944

$
24,907,970

$
6,015,677


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Table of Contents

Simon Property Group, L.P. and Subsidiaries        Notes to Schedule III as of December 31, 2008        (Dollars in thousands)

(1)    Reconciliation of Real Estate Properties:

The changes in real estate assets for the years ended December 31, 2008, 2007, and 2006 are as follows:

2008

2007

2006Balance, beginning of year

$
24,163,367

$
22,644,299

$
21,551,247Acquisitions and consolidations


7,640


743,457


402,095Improvements


797,717


1,057,663


772,806Disposals and de-consolidations


(60,754
)

(282,052
)

(81,849
)Balance, close of year

$
24,907,970

$
24,163,367

$
22,644,299


The
unaudited aggregate cost of real estate assets for federal income tax purposes as of December 31, 2008 was $18,390,068.

(2)    Reconciliation of Accumulated Depreciation:

The changes in accumulated depreciation and amortization for the years ended December 31, 2008, 2007, and 2006 are as follows:

2008

2007

2006Balance, beginning of year

$
5,168,565

$
4,479,198

$
3,694,807Acquisitions and consolidations (5)





12,714


64,818Depreciation expense


871,556


808,041


767,726Disposals


(24,444
)

(131,388
)

(48,153
)Balance, close of year

$
6,015,677

$
5,168,565

$
4,479,198


Depreciation
of our investment in buildings and improvements reflected in the consolidated statements of operations and comprehensive income is calculated over the estimated original
lives of the assets as follows:



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Exhibits2

Agreement and Plan of Merger, dated as February 12, 2007, by and among SPG-FCM Ventures, LLC, SPG-FCM Acquisitions, Inc., SPG-FCM
Acquisitions, L.P., The Mills Corporation, and The Mills Limited Partnership (incorporated by reference to Exhibit 2.1 to Simon Property Group, Inc.'s Current Report on Form 8-K filed February 23, 2007).3.1

Second Amended and Restated Certificate of Limited Partnership of the Limited Partnership (incorporated by reference to Exhibit 3.1 of
Simon Property Group, L.P.'s Annual Report on Form 10-K for 2002).3.2

Eighth Amended and Restated Limited Partnership Agreement (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s
Current Report on Form 8-K dated May 8, 2008).3.3

Agreement between Simon Property Group, Inc. and Simon Property Group, L.P. dated March 7, 2007, but effective as of
August 27, 1999, regarding a prior agreement filed under an exhibit 99.1 to Form S-3/A of Simon Property Group, L.P. on November 20, 1996 (incorporated by reference to Exhibit 3.3 of the Registrant's 2008
Form 10-K).4(a)

Indenture, dated as of November 26, 1996, by and among Simon Property Group, L.P. and The Chase Manhattan Bank, as trustee
(incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 filed on October 21, 1996 (Reg. No. 333-11491)).10.1

$3,500,000,000 Credit Agreement, dated as of December 15, 2005, among Simon Property Group, L.P., the Institutions named therein as
Lenders and the Institutions named therein as Co-Agents (incorporated by reference to Exhibit 99.2 of Simon Property Group, L.P.'s Current Report on Form 8-K filed on December 20, 2005).10.2

Amendment to Credit Agreement among Simon Property Group, L.P., the Institutions named therein as Lenders and the Institutions named
therein as Co-Agents, dated October 4, 2007 (incorporated by reference to Exhibit 10.3 of Simon Property Group, L.P.'s Annual Report on Form 10-K for 2007).10.3*

Simon Property Group, L.P. 1998 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.2 to Simon Property Group,
 Inc.'s Current Report on Form 8-K dated May 8, 2008).10.4(b)

Option Agreement to acquire the Excluded Retail Property (Previously filed as Exhibit 10.10).10.5

Voting Agreement dated as of June 20, 2004 among the Simon Property Group, Inc., Simon Property Group, L.P., and certain holders
of shares of common stock of Chelsea Property Group, Inc. and/or common units of CPG Partners, L.P. (incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K filed by Simon Property Group, L.P. on
June 22, 2004).12

Statement regarding computation of ratios.21

List of Subsidiaries of the Company (incorporated by reference to Exhibit 21 of the Registrant's 2008 Form 10-K).23.1

Consent of Ernst & Young LLP.31.1

Certification by the Chief Executive Officer pursuant to Rule 13a-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) 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.


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