Simon Property Group, Inc. (SPG, NYSE)
Industry: REIT - Retail
Annual report, fiscal year 2017


# INNOVATING
THE FUTURE
OF THE
SHOPPING
EXPERIENCE

## CONTENTS

From the Chairman & CEO ii
Financial Highlights iv
Sustainability Highlights xi
Investment Highlights xii
Board of Directors & Management xiv
10-K 1
Management's Discussion & Analysis 55
Financial Statements 75

Simon Property Group, Inc. (NYSE: SPG) is an S&P100 company and a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations.






## ICONIC
SHOPPING
FOR EVERY
STYLE AND
TASTE

## THE SHOPS
AT CLEARFORK



# FROM THE
CHAIRMAN
& CEO



Dear Fellow Shareholders,

As we enter our 25 \( ^{th} \)  year as a public company (58 \( ^{th} \)  year in total!), I could start this letter describing how we have changed for the better, but the real purpose of this letter is to reinforce to you, our shareholders, that we are focused on the future. Certainly our success in transforming our business since 1993 (our first year as a public company) is a good indicator that we are always adjusting and improving. Our organization lives for challenges, is driven to succeed, and is among the best-of-breed. We started our public company as a middle market mall company with 56 regional malls that were 85% occupied and generated approximately 250 in sales per square foot. Then our change began and I assure you will always continue.

## David Simon

Chairman and
Chief Executive Officer

We led our industry in leasing, development and acquisitions, knowing before others that scale could accelerate our growth. We got away from the private real estate developer yearning to have too much leverage, creating the soundest financial company in our sector. We redefined our company well over a decade ago as a retail real estate company that branched into highly successful product types beyond the mall and today operate four distinct platforms – Malls, Premium Outlets \( ^{®} \) , The Mills \( ^{®} \) , as well as our international business. Today, we own over 190 retail destinations throughout the country that are on average 95% occupied and produce approximately 630 in sales per square foot. We also have a growing international business with 27 assets located in 11 different countries, in addition to our 21% stake in Klépierre, a leading pan-European retail real estate company. Our domestic places generate over 2 billion visits per year with a distinct customer base of nearly 100 million customers! Which leads me to my next point. We are more than a retail real estate company – we are a company that owns premier shopping, dining, entertainment and mixed-use destinations. These destinations provide gathering places for millions of people every day and generate billions in annual sales. However, that is not enough, so what can you expect from us in the future?

Here is what I expect:

Industry-leading financial results.

Industry-leading balance sheet.

Ongoing investment in our product.

■ More live, work, stay and play elements at our destinations.

Experimenting with technology to enhance the value of the shopping trip for the consumer from many different points of view, including discovery and convenience.

We have no bigger priority than continuing our work on our revolution in connecting directly with our consumer. Our goal is to do this in a way that adds value for the consumer, but can enable our retailer base in the services that they provide to the consumer. This is a work-in-progress and is a terrific opportunity for our company.

■ Adding new and exciting retailers and uses to our destinations.

■ The redevelopment of our product as we reclaim certain department stores.

■ Building on our four successful platforms – Malls, Premium Outlets \( ^{®} \) , The Mills \( ^{®} \)  and International – and our fifth platform will be focused on the consumer.

This list represents our priorities, but we are not limited to only these. It will always change, and I hope that the transformation you have seen over the last 25 years will give you the confidence that our future is bright and we will profitably move forward.




▲ NORFOLK PREMIUM OUTLETS
Norfolk, VA

Now in case you thought we weren’t busy or working hard, here are some highlights for you to consider.

## FINANCIAL RESULTS

We achieved record and sector-leading results in 2017, including:

■ Consolidated revenue increased 2% to $5.539 billion (record).

■ Net income was $1.945 billion, or $6.24 per share (record).

■ Funds from Operations (“FPO”) increased 6% to $4.021 billion, or $11.21 per diluted share (record).

■ 2017 is the first year our FFO surpassed the $4 billion threshold (record).

■ Our annual FFO has increased almost $1 billion over the last four years, despite the spin-off of Washington Prime Group.

We have achieved a compound annual FFO per share growth rate of 8% over the last three years and more than 12% over the last seven years.

■ Our FFO per share growth rate has outpaced the growth rate of all equity REITs by more than 400 basis points over the last seven years and has been more than double the rate of earnings per share growth for the S&P 500 over the same time period.

■ Total portfolio net operating income (“NOI”) grew 4.5%, or more than $265 million year-over-year.
■ Comparable property NOI increased 3.2% for our U.S. Malls, Premium Outlets \( ^{®} \)  and The Mills \( ^{®} \)  (sector leading).

■ Our company generated over $1.4 billion in excess free cash flow, after dividends, in 2017.

■ Unfortunately, our stock price performance did not reflect this financial success, however we did outperform our peer group.

## OPERATING METRICS

■ Occupancy for our U.S. Malls and Premium Outlets \( ^{®} \)  ended the year at 95.6% and The Mills \( ^{®} \)  occupancy ended the year at 98.4%.

■ U.S. Malls and Premium Outlets \( ^{®} \)  occupancy has been over 95% for the last six years (certainly in contrast to the narrative on retail that you might see from the media).

■ Base minimum rent for our U.S. Malls and Premium Outlets \( ^{®} \)  ended the year at $53.11, approximately 3% higher than the prior year, and leasing spreads were 11.4%.

■ Reported retailer sales across our portfolio were $628 per square foot, an increase of more than 2% year-over-year.

■ Retailer sales productivity increased five consecutive quarters through the end of 2017 reinforcing the importance of high-quality brick and mortar locations to a retailer’s strategy.
$5.5 billion

Consolidated Revenue

$1.9 billion
Net Income

$4.0 billion
FFO

$5.3 billion
Our Share Total NOI

$7.15
Dividends Per Share



## FINANCIAL
HIGHLIGHTS

Year ended December 31,
(dollars in millions, except per share figures)

Consolidated Revenue
Net Income Per Share (Diluted)
Funds from Operations (FFO)
FFO Per Share (Diluted)
Dividends Per Share
Common Stock Price at December 31
Total Equity Capitalization
Total Market Capitalization \( ^{(1)} $ 

(1) Includes our share of consolidated and joint venture debt.

CONSOLIDATED
REVENUE
$ IN BILLIONS



FFO PER DILUTED SHARE



DIVIDENDS PER
DILUTED SHARE



EQUITY MARKET
CAPITALIZATION
$ IN BILLIONS



This annual report contains a number of forward-looking statements. For more information, refer to the Company's fourth quarter and full-year 2017 results and SEC filings on our website at investors.simon.com. This report also references non-GAAP financial measures including funds from operations, or FFO, FFO per share, portfolio net operating income growth and comparable property net operating income growth. These financial measures are commonly used in the real estate industry and we believe they provide useful information to investors when used in conjunction with GAAP measures. For a definition of FFO and reconciliations of each of the non-GAAP measures used in this report to the most directly comparable GAAP measure, refer to the Company's fourth quarter and full-year 2017 results, SEC filings and Non-GAAP Reconciliations section under Financials at investors.simon.com.

## TOTAL RETURN PERFORMANCE

Simon Property Group, Inc.

FTSE NAREIT Equity REIT Index

S&P 500 Index



<table><tr><td colspan="8">YEAR-END</td><td rowspan="2">2017 ANNUAL RETURN</td><td colspan="2">COMPOUND ANNUAL RETURN</td></tr><tr><td></td><td>2012</td><td>2013</td><td>2014</td><td>2015</td><td>2016</td><td>2017</td><td>3-YEAR</td><td>5-YEAR</td></tr><tr><td>Simon Property Group, Inc.</td><td>100.00</td><td>99.07</td><td>129.97</td><td>143.27</td><td>135.36</td><td>136.68</td><td>1.0%</td><td>1.7%</td><td>6.4%</td></tr><tr><td>FTSE NAREIT Equity REIT Index</td><td>100.00</td><td>102.47</td><td>133.35</td><td>137.61</td><td>149.33</td><td>157.14</td><td>5.2%</td><td>5.6%</td><td>9.5%</td></tr><tr><td>S&amp;P 500 Index</td><td>100.00</td><td>132.39</td><td>150.51</td><td>152.59</td><td>170.84</td><td>208.14</td><td>21.8%</td><td>11.4%</td><td>15.8%</td></tr></table>

The line graph above compares the percentage change in the cumulative total shareholder return on our common stock as compared to the cumulative total return of the S&P 500 Index and the FTSE NAREIT Equity REIT Index for the period December 31, 2012 through December 31, 2017. The graph assumes an investment of $100 on December 31, 2012, a reinvestment of dividends and actual increase in the market value of the common stock relative to an initial investment of $100. The comparisons in this table are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance.




THE FORUM SHOPS AT CAESARS PALACE
Las Vegas, NV

## RETURNING CAPITAL
TO SHAREHOLDERS

■ Capital returned to shareholders in 2017 totaled nearly $3.0 billion, comprised of approximately $2.6 billion in dividends and more than $400 million in share buybacks.

■ Common stock dividends in 2017 of $7.15 per share, an increase of 10.0% from 2016, and we expect to distribute at least $7.80 per share in 2018.

■ Our dividend per share has increased 12% on a compound annual basis over the last five years.

■ Since your Board of Directors authorized the share repurchase program in April, 2015, we have repurchased about 5.8 million shares for approximately $1.0 billion through year-end 2017.

## BALANCE SHEET

■ Our balance sheet is the strongest in our industry and we have the highest investment grade credit ratings of A/A2 in the REIT sector.

■ Our industry-leading balance sheet metrics at the end of 2017 included:

Net debt to EBITDA was 5.5 times.

Total interest coverage ratio was 5.0 times.

Unsecured interest coverage ratio was 6.0 times.

■ Our liquidity is approximately $7 billion and we have no consolidated secured or unsecured maturities coming due in 2018, very little in 2019 and 94% of our debt is fixed rate, so little exposure to the potential of higher interest rates.

■ Our balance sheet provides a distinct advantage and should not be overlooked. Our capital structure provides us the financial flexibility to execute on our business and growth strategy.

## REDEVELOPMENT OF OUR
IRREPLACEABLE REAL ESTATE
AND RECAPTURE OF
DEPARTMENT STORES

■ We completed more than 40 redevelopment projects across all of our platforms (Malls, Premium Outlets \( ^{®} \)  and The Mills \( ^{®} \) ) in the U.S. and abroad.

■ Total investment in redevelopment projects in 2017 was more than $630 million with an average return on investment of approximately 8%.

■ Redevelopment and expansion projects ranged from the addition of new anchor/big boxes, to theatres, athletic and wellness facilities, restaurants as well as new and exciting specialty retailers.

■ Opened 34 anchor/big box replacements in 2017 and expect to complete and open another 35 projects in 2018.

■ Completed a 221,000 square foot expansion of La Plaza Mall in McAllen, Texas, by adding four anchors, six restaurants and 25 specialty shops at the site of a former Sears store. (Great example of what can be accomplished with our old Sears stores!)

■ Opened a new upscale wing featuring 35 new small shops and restaurants in the former Saks Fifth Avenue space at The Galleria in Houston, Texas, including the iconic restaurant Nobu.

■ Replacing a former JCPenney store at Southdale Center in Edina (Minneapolis), Minnesota, with a Life Time Athletic, Life Time Sport and Work, specialty shops and restaurants, and a 146-room hotel. (Southdale Center is a great example of the appeal of well-located real estate. It was the first enclosed mall built in the U.S. and continues to evolve today. 70 years later!)

■ Acquired or gained control of 12 Sears stores in our portfolio.
■ We acquired from Seritage Growth Properties the 50% interest in five of the Sears stores in our joint venture: Brea Mall, Burlington Mall, Midland Park Mall, Ocean County Mall and Ross Park Mall. Sears will be closing these stores soon and we will begin redevelopment of these old stores shortly after closing.

■ We acquired the right to terminate five Sears leases at Broadway Square, Cape Cod Mall, Northshore Mall, South Hills Village and Tacoma Mall.

■ We also bought two Sears stores at Stoneridge Shopping Center and West Town Mall.

■ We have exciting redevelopment plans for each of these locations, including the addition of big boxes, athletic resorts, specialty shops, restaurants, entertainment and other mixed-uses. We will begin construction on a number of these projects during 2018.

## DENSFICATION

■ We add mixed-use components to create compelling, integrated environments for consumers to live, work, stay and play.

■ Densifying our centers is not new for us, as we have been doing this for over a decade. In just the last several years, we have built 10 hotels and residential projects representing nearly 3,000 units.

■ During 2017, we opened three hotels (more than 300 rooms), a 120,000 square foot Class A office space and a more-than-300-unit multi-family residential project.

■ At Phipps Plaza in Atlanta, Georgia, we will replace a former Belk department store with the Southeast’s premier mixed-use development headlined by a new 150-room Nobu Hotel and restaurant, a Life Time Athletic healthy living and entertainment destination, a unique,




## DENVER PREMIUM OUTLETS
Thornton, CO

curated dining experience, and a 12-story Class A office building.

At King of Prussia outside Philadelphia, Pennsylvania, we will replace a JCPenney store with a variety of mixed-use components including a 300-room hotel, Class A office building, open-air retail, dining and entertainment options.

At Northgate Mall in Seattle, Washington, we are pursuing a complete re-imagining of the center to include Class A office, residential and a hotel, as well as abundant green and public space that will be open to the broader neighborhood. (Northgate Mall, like Southdale Center, is one of the oldest malls in the country. The theme is, you can’t replace great real estate.)

We have well over 20 additional opportunities in planning or under review with further prospects in the future.

## NEW DEVELOPMENT

We opened two new centers in the U.S.

The Shops at Clearfork, a 500,000 square foot, open-air luxury shopping, dining, entertainment and mixed-use destination located in Fort Worth, Texas. Anchored by Neiman Marcus, the center offers luxury, home furnishing and distinctive retail destinations, as well as a mix of unique regional and national restaurants and entertainment options and two office buildings totaling 120,000 square feet.

Norfolk Premium Outlets, a 332,000 square foot center in Norfolk, Virginia which offers an exciting selection of name brand stores where consumers can enjoy significant savings every day.

We have one new Premium Outlet Center under construction in Denver, Colorado, that will open in the fall of 2018. I encourage you to visit as the consumer elements will be top-notch.

## INTERNATIONAL

Our international platform contributes approximately 10% of our earnings, is growing, and is extremely profitable.

■ Opened Siheung Premium Outlets, a 444,000 square foot center and our fourth Premium Outlet Center in South Korea.

■ Opened Genting Highlands Premium Outlets in Kuala Lumpur, a 278,000 square foot center and our second Premium Outlet Center in Malaysia.

With our partner McArthurGlen (“MGE”), we opened Provence Designer Outlet, a 269,000 square foot center, the first outlet in the south of France.

■ Completed a 125,000 square foot expansion of Roermond Designer Outlet, Northern Europe’s biggest and most successful designer outlet.

■ Our MGE partnership acquired Rosada Designer Outlet in Roesendaal, Netherlands.

■ We have four new outlet centers under construction in international locations:

■ Premium Outlet Collection Edmonton International Airport in Edmonton, Alberta, Canada.

Malaga Designer Outlet in Malaga, Spain.

■ Queretaro Premium Outlets in Queretaro, Mexico.

■ Cannock Designer Outlet in West Midlands, United Kingdom.

Our 21% investment in Klépierre continues to grow in value as the company executes on their strategy to constantly enhance the quality of their leading pan-European portfolio. Klépierre produced another record year, increasing earnings by 7.4% from €2.31 to €2.48 per share. Including dividends and the increase in Klépierre’s share price, we have generated over 40% return on our investment.

## LEASING

■ Signed nearly 4,000 leases totaling more than 12 million square feet in 2017.

Launched The Edit @ Roosevelt Field, a first-of-its-kind, scalable, turnkey platform that brings together both established and emerging brands to pilot new products in an interactive and experiential space. This revolutionary retail model enables brands and new concepts to come to market faster and more visibly than ever before. Go see it at Roosevelt Field.

■ Exciting and diverse new brands in the initial collection of The Edit @ Roosevelt Field included Winky Lux, Beltology, Vitaly Design, JARS by dani, Raden, Cuzin’s Duzin, Fit Bar by Happy Returns, Rhone, Go Dream, LIVELY, Gold no. 8 and Skinny Dip London.

■ International brands coming to the U.S. for the first time and wanting to capitalize on the distinctive opportunity The Edit @ Roosevelt Field presents will be part of a new rotation in 2018. Brands such as Bruhket, Parfois, O Bag, Hawkers and Bratletboro are just some of the unique brands that will debut this year.

■ Enhanced experiential offerings through the addition of new theatres and the redesign of existing theatres that offer reclining seats, cocktails and dining options, such as the AMC DINE-IN at The Shops at Riverside or CMX at Brickell City Centre. We opened four new theaters and redeveloped six additional theaters and in 2018, we will open four new or redeveloped theaters.

Launched unique entertainment concepts to create interactive experiences such as Dance with Me, Field House, Madame Tussauds, Le Funland, Billy Beez and The Escape Game. Will open additional distinctive entertainment concepts this year



From top left:
COPLEY PLACE
Boston, MA

From bottom left to right:

STANFORD SHOPPING CENTER, Palo Alto, CA







including SkyWheel, Pinstripes, Bricks and Blocks, 10 Pin Eatery and XD Ride.

■ Added more than 60 new restaurants across the portfolio in 2017.

We are adding sophisticated restaurants to our portfolio and first-to-market concepts like Nobu, Fig & Olive and Spice Route in Houston at The Galleria, Din Tai Fung in Los Angeles at Del Amo Fashion Center and The Slanted Door in Las Vegas at The Forum Shops.

■ Added chef-inspired restaurants including Craft Kitchen (Tom Colicchio), Buddy V's (Buddy Valastro) and Genuine Pizza (Michael Schwartz).

■ Introduced healthy and responsibly-sourced restaurants such as True Food Kitchen, Tender Greens, Public Kitchen & Bar, Zoë's Kitchen and Gusto Street to Table.

We are elevating the dining experience and transforming the environment in which food operators conduct their business at many of our major centers with the creation of “dining districts.”

“Savor” is our branded dining experience that offers a carefully curated collection of eclectic eateries in an exceptional social ambiance integrated with a media center, customer lounge and an amenity center for children and families.

Savor Westchester (The Westchester) features the best New York City and Tri-State brands in casual dining including Mighty Quinn's BBQ, Whitman's NY, Hai Street Kitchen and more. The extraordinary dining area is also enhanced by an outdoor dining terrace, Simon concierge, a media center, co-working lounge and a children's interactive play and event area.

■ Our portfolio generates over $3.5 billion in food sales per year through approximately 2,500 restaurants/dining pavilions.

## NEW CONCEPTS OPENED

We have been at the forefront of the industry’s evolution, whether through expanding our tenant base beyond traditional apparel, or bringing previously pure-play e-tailers and powerful international brands to our centers.

■ With brick and mortar stores as the cornerstone to any retailer’s successful strategy, we continued to open locations for many formerly online-only retailers such as B8TA, Blue Nile, Boon + Gable, Eyebobs, Fabletics, Indochino, M. Giemi, Mackage, Peloton, ThredUp, Tommy John, Untuckit, Warby Parker and many others.

We have a platform for pure-play e-tailers to test their concepts in our brick and mortar locations. We partnered with Casper on a creative strategy to activate their first brick and mortar locations, starting with pop up stores. After significant success, Casper has opened a number of permanent locations across our portfolio.

■ Identified over 130 new and unique brands as part of our new business program which resulted in over 230 new deals in 2017.

■ Debuted health and beauty concepts such as Drybar, Flywheel Sports, Orange Theory Fitness and SoulCycle.

■ Continued to open locations for emerging domestic and international brands such as Calzedonia, Flying Tiger, Fuego, Havaianas, Intimissimi, Kendra Scott, and Nespresso.

We are on the prowl for new concepts emerging daily.

## MARKETING

■ More than 6 billion advertising impressions delivered across all media channels.

■ More than 200 million website visits.

■ More than 14 million email subscribers with over 640 million emails sent.
■ More than 7 million social media followers with over 1.3 billion impressions.

■ More than 8 million loyalty members.

■ Executed the first Virtual Reality video and social media activation promoting Coach stores at Simon Malls.

■ Launched an industry-first "Today at Apple" social/digital campaign to promote local programming at Apple stores in Simon Centers.

■ Established a partnership with Disney Junior for quarterly events and co-branded Play Zones at select centers.

■ Welcomed over 3.6 million international visitors from 30 countries.

■ Created an industry-first Simon site on WeChat, enhancing our visibility with Chinese tourists.

■ Created one-of-a-kind dynamic national partnerships with key travel partners to attract more tourists and drive traffic with unique retail offers.

■ Launched the “Touch, Try, Buy” marketing campaign. This campaign was an innovative and creative approach to extolling the virtues of shopping in real life by highlighting the well-known truth that what consumers see online isn’t always what arrives in the mail.

■ Launched the “What’s New Now” program at 48 centers—includes center-specific content featuring the latest new deals, brands, merchandise and programming. The program is curated and showcased through our digital assets, giving our shoppers a convenient way of learning what’s new at their favorite center.

■ Hosted a Create & Cultivate Style Summit at The Galleria in Houston. In conjunction with the opening of the new Saks Fifth Avenue wing, fashion industry hopefuls and stylish bloggers-in-training gathered for an




empowering day to glean the sage advice of seasoned bloggers and the ever-stylish activist, Sophia Bush.

■ Activated The Shops at Crystals Signature Event in Las Vegas. In partnership with Vogue and GQ, The Shops at Crystals hosted a new luxury shopping event featuring 29 of the most exclusive brands, gathered in a gorgeous “crystal” pop up shop at the center.

■ Introduced an entertainment marketing campaign at The Mills \( ^{®} \)  themed “Come to Shop, Stay to Play. FUN FOR ALL” in partnership with center entertainment venues







drawing new family shoppers and highlighting property points of differentiation.

Launched Privée at The Colonnade Outlets at Sawgrass Mills in Miami. This by-invitation-only luxury shopping experience and VIP lounge offered a personalized fashion selling experience and provided a unique benefit for retailers' clienteling efforts.

■ Executed a successful campaign for Tax Free and Back-to-School shopping including digital, social, print, programming and blogger content that drove over 100 million impressions and over 250,000 visits to our centers. In markets without official Tax Free holidays such as Atlanta and Boston, Simon created its own “Better than Tax Free” campaign generating significant sales for retailers at our centers.

■ Executed the Woodbury Common “More Premium Than Ever” marketing campaign in conjunction with the extensive transformation of the center that included luxury shopping events, a Metro North “takeover,” a New York Penn Station “domination campaign,” direct mail, shopping videos highlighting the center’s redevelopment and expansion, Market Hall and key retailers and consumer amenities, and extensive hosting of international tourism groups from all over the world.

Launched the “Fall For It All” fashion campaign that utilized proprietary research, demographic and propensity-based data to target fashion-forward consumers. Using a combination of direct mail and on-mail advertising along with inspirational editorial-based content we drove consumers to participating retailers.

## SIMON BRAND VENTURES

Simon Brand Ventures continues to provide brands and retailers with unique opportunities to reach shoppers both online and in our centers.

■ Our unmatched go-to-market strategy leads the industry, consistently outperforming industry benchmarks and delivering significant bottom line impact to our company.

■ Continued to grow Simon Brand Ventures revenue, outperforming the out-of-home advertising market and our industry by a wide margin over the last several years.

■ Increased revenue by double-digits year-over-year from our national network of digital screens in our centers.

■ Significantly grew advertising revenue from our digital assets including our websites and e-mail programs.

■ Generated gross Simon Brand Ventures revenues of over $160 million.

■ Continued to generate significant demand in the retail category from brands and retailers eager to leverage our media assets to drive incremental traffic to their stores.

■ Achieved a record year in gift card sales and lead our industry in gift card sales by a wide margin. Executed 34 retailer gift card promotions, driving significant growth for retailers.

## INNOVATION

Launched an industry-first, enterprise-wide Facebook Messenger bot – a 24/7 self-service digital concierge for all platforms/centers that works across desktop computers and mobile devices. Added a localized Santa Gift Finder to the Facebook Messenger bot that aided shoppers in finding the best retailers that sell specific types of products.




JAY MANUEL
BEAUTY \( ^{®} \) 

MAIN LEVEL, NEAR BLOOMINGDALE'S

■ Released Snapchat geo-filters for many centers – custom center-specific geo-filters that allow shoppers to creatively add the brand identity of their local centers to their snaps. This unique functionality received significant shopper engagement.

■ Launched a mall-wide search function to allow shoppers to conveniently search their favorite mall for specific brands or product categories.

■ Launched the Family at Simon app – an augmented reality mobile app that featured virtual reality-like game play across iOS and Android platforms.

■ Re-launched the largest industry loyalty program including full digitization of all VIP Savings Passport content and members-only access to special deals and promotions.
■ Launched the Happy Returns program in select properties. This program enables free in-person returns for online shoppers by accepting returns from participating retailers.





■ Added industry-leading Simon Interactive Directories to 57 centers; continue to enhance the functionality, including the addition of an augmented reality (AR) feature.

■ Launched a new reserved parking solution in many properties which provides shoppers the opportunity to reserve a parking spot during busy shopping times.

■ Tested a new on-property refueling service as an added convenience for shoppers.

■ Developing new logistics/supply chain-related services for both consumers and retailers.

■ Testing new artificial intelligence-enabled security robots and autonomous cleaning vehicles.

■ Collaborating with leading CRM providers to enhance and build-out our big data capabilities.

## SIMON VENTURES

■ Simon Ventures is an early stage venture capital fund focused on making investments in companies that are operating at the intersection of retail and technology to drive forward innovative consumer experiences.

■ Evaluate on average, more than 30 investment opportunities per month, seeing deal flow from key retail and technology markets.

■ Investment criteria skews heavily towards a very select group of companies that simultaneously demonstrate strong growth and cash flow potential.
■ We proactively work with our portfolio companies to leverage our proprietary assets and resources, as well as network to offer differentiated insights, talent and strategic access to provide advantages in the path to scale.

■ Our companies are bringing their brands to life through focused and impactful store identities, including MeUndies, FabFitFun, Grailed, Dirty Lemon and Appear Here. In leveraging physical retail to drive experience and emotional connection, our companies are engaging with consumers at one of the most relevant touchpoints to build valuable relationships.

## SUSTAINABILITY

■ Our sustainability vision is to be recognized as a leader in sustainable development and operations of retail properties in the U.S.

■ Achieved the highest Leadership recognition for top sustainability performance granted by CDP for a second consecutive year and received a Green Star rating, the highest designation for sustainability in the real estate industry awarded by the Global Real Estate Sustainability Benchmark (GRESB) for four consecutive years.

■ Achieved a 34% reduction in electricity consumption across the portfolio which represents 337,468,558 Kwh (2003 to 2016).

■ Reduced greenhouse gas emissions by 37% eliminating 220,674 metric tons of carbon dioxide equivalents (2003 to 2016).

■ Reduced water consumption by 7.4% which represents approximately 844,845 cubic meters of water (2013 to 2016).






## COMMUNITY

■ Our centers are more than places to shop, dine and be entertained. We strive to make them a source of pride in the community. We understand engaging with our communities is essential to our success.

■ By supporting nonprofit organizations in a range of activities throughout the year, we take a localized approach for identifying social initiatives to meet the specific needs of each community. Some of the nonprofit organizations we support include the American Red Cross, American Cancer Society, American Heart Association, K.A.R.E. for Kids, Make-A-Wish Foundation and the Salvation Army.

■ Emergency response teams provided critical support and essential supplies to centers and communities in Texas, Florida, Puerto Rico and California impacted by extraordinary natural disasters from hurricanes to wildfires.

■ Far exceeded 2017 fundraising goal of $1 million for Susan G. Komen and committed to raise another $1 million in 2018, including Project: OM, a yoga event co-sponsored by Manduka and Susan G. Komen that took place over Mother’s Day weekend at many of our centers.
■ Partnered with The University of Texas MD Anderson Children’s Cancer Hospital to raise funds for pediatric research at The Galleria in Houston, coordinating events at the Little Galleria play area.

■ Hosted National Night Out at Lehigh Valley Mall, with more than 20 organizations participating to bring the community together to heighten knowledge of crime prevention and create safer neighborhoods.

■ Offered Minnesota a chance to drive electric vehicles at Albertville Premium Outlets, answering their questions and giving them firsthand experience with the vehicles.

■ Opened The Market at Potomac Mills, one of Northern Virginia’s newest farmers’ markets, featuring more than 50 local farmers and artisans each week.

■ Graduated nearly 16,000 students from Simon Youth Foundation’s (“SYF”) 30 academies across 12 states in the U.S., while also awarding nearly $17 million in scholarships over the last 19 years. (We are so proud of the work SYF does!)

## CLOSING

In summary, we are always evolving and, improving. The last 25 years provides that as a roadmap. Our business has always changed and it will continue to do so, but our people, our vision, our financial wherewithal and our culture will allow us to seize upon the opportunities ahead of us.

I would like to thank our Board of Directors for their contributions in 2017. I would also like to welcome Stefan Selig and Marta Stewart, our two newest members, who joined our Board during the last year.

I cannot conclude this letter without thanking all of my Simon colleagues for their continued commitment, dedication and support. 2017 was a year like none other.
It was a year that saw natural disasters on an unprecedented scale strike America, from hurricanes to wildfires, and our Simon team and their families were in the path of all of these events. Our people were united in how they responded, with extraordinary commitment and courage. They proved that the spirit of Simon is stronger than fires, floods and storms. I could have written this entire letter with stories about the sacrifices and selfless acts our people made to assist co-workers, protect our assets and support our communities. Across the country, anywhere help was needed and dedication was called for, the people of Simon were there, showing their loyalty and living their commitment to the spirit that binds us all together. I couldn't be more proud of the entire Simon team who continue to demonstrate courage, resilience and perseverance in everything they do. I am very proud of our organization.

Finally, I also thank you, our shareholders, for your continued support. Your comments and thoughts are always welcome and appreciated.



David Simon
Chairman and
Chief Executive Officer
March 20, 2018



## SUSTAINABILITY
HIGHLIGHTS

For Simon, sustainability is a business approach that enhances the communities in which we operate as well as long-term shareholder value by embracing opportunities, improving our bottom line and mitigating environmental and social risks.

Our sustainability vision is to be recognized as a leader in sustainable development and operations of retail properties in the U.S. We define and implement sustainability initiatives that consider all stages of our business. The four areas of our sustainability framework are outlined below:

## SUSTAINABILITY FOCUS AREAS



## Properties

Strive for efficiency in operating our properties with innovative solutions that lower operational costs and reduce our environmental footprint



## Customers

Anticipate customers' needs and enhance the shopping experience at Simon centers while assisting our tenants to be successful in their business



## Communities

Create meaningful social and economic impact in the communities we operate and build strong communities through development and engagement activities



## Employees

Strive for high levels of employee engagement by creating a culture that attracts and retains the industry’s best talent

## Key Accomplishments:

We continuously monitor our performance and set ambitious targets for our sustainability initiatives. Key accomplishments include¹:

■ Achieved a 34% reduction in electricity consumption across the portfolio which represents 337,468,558 Kwh (2003-2016).

■ Reduced GHG emissions by 37% across the portfolio which represents 220,674 metric tons of carbon dioxide equivalents (2003-2016).

■ Executed LED retrofit projects at over 150 properties across the U.S. and installed 446 electric vehicle charging stations at over 107 properties across the U.S.

■ Completed feasibility review for on-site solar and battery storage projects across the portfolio. Pilot projects initiated across select sites in the U.S.
■ Launched Simon Sustainability Tenant Engagement Program, collaborating with select tenants on identifying opportunities for achieving their respective corporate sustainability objectives.

■ Awarded nearly $17 million in scholarships to approximately 4,500 students through Simon Youth Foundation at its 30 academies across 12 states in the U.S.

We are engaged in sustainability thought leadership by conducting a lifecycle assessment to measure impact of online versus brick and mortar shopping behaviors. The results of the study concluded that online shopping can have a 7% larger negative environmental impact than in mall shopping.

## INTERNATIONAL RECOGNITION

Simon has consistently been recognized for its sustainability disclosure and performance:







■ Achieved highest Leadership recognition for top sustainability performance granted by CDP for a second consecutive year

■ Received a Green Star rating, the highest designation for sustainability in the real estate industry awarded by the Global Real Estate Sustainability Benchmark (GRESB) for four consecutive years

■ Recognized as Stormready by National Weather Service (2016-2017)

CDP has built the most comprehensive collection of self-reported environmental data in the world. Their network of investors and purchasers, representing over $100 trillion, along with policy makers around the globe, use this data and insights to make better informed decisions.

GRESB is an industry-driven organization committed to assessing the ESG performance of real assets globally, including real estate portfolios. More than 250 members, of which about 60 are pension funds and their fiduciaries, use the GRESB data in their investment management and engagement process.

Read more about progress on our sustainability goals in the Company’s 2017 Sustainability Report at simon.com/sustainability.



## INVESTMENT
HIGHLIGHTS

## NEW DEVELOPMENT



THE SHOPS AT CLEARFORK
Ft. Worth, TX



NORFOLK PREMIUM OUTLETS
Norfolk, VA

## INTERNATIONAL
INVESTMENT



PROVENCE DESIGNER OUTLET
Provence, France



GENTING HIGHLANDS PREMIUM OUTLETS
Kuala Lumpur, Malaysia



SIHEUNG PREMIUM OUTLETS
Siheung (Seoul), Sorth Korea



## TRANSFORMATION



PHIPPS PLAZA
Atlanta, GA





THE WESTCHESTER
White Plains, NY






## BOARD OF DIRECTORS, EXECUTIVE OFFICERS
AND MEMBERS OF SENIOR MANAGEMENT

## BOARD OF DIRECTORS

Glyn F. Aeppel
President and Chief Executive Officer
of Glencove Capital

Larry C. Glasscock
Former Chairman of Anthem, Inc.

Karen N. Horn, Ph.D.
Senior Managing Director
of Brock Capital Group

Allan Hubbard
Co-Founder, Chairman and
Partner of E&A Companies

Reuben S. Leibowitz
Managing Member, JEN Partners

Gary M. Rodkin
Retired Chief Executive Officer
of ConAgra Foods, Inc.

Stefan M. Selig
Founder of BridgePark Advisors LLC

David Simon
Chairman of the Board and
Chief Executive Officer of
Simon Property Group, Inc.

Herbert Simon
Chairman Emeritus of the Board of
Simon Property Group, Inc.

Daniel C. Smith, Ph.D.
President and Chief Executive Officer of the
Indiana University Foundation and Professor
of Marketing, Kelley School of Business,
Indiana University

J. Albert Smith, Jr.
Chairman, Chase Indiana and
Managing Director, JPMorgan Private Bank

Richard S. Sokolov
President and Chief Operating Officer of
Simon Property Group, Inc.

Marta R. Stewart
Retired Executive Vice President and
Chief Financial Officer of
Norfolk Southern Corporation

## Audit Committee:

J. Albert Smith, Jr., Chairman,
Larry C. Glasscock, Reuben S. Leibowitz,
Stefan M. Selig, Marta R. Stewart

## Compensation Committee:

Reuben S. Leibowitz, Chairman,
Allan Hubbard, Daniel C. Smith, Ph.D.,
J. Albert Smith, Jr.

Governance and Nominating Committee:
Karen N. Horn, Ph.D., Chairman,
Glyn F. Aeppel, Larry C. Glasscock,
Allan Hubbard, Gary M. Rodkin

## EXECUTIVE OFFICERS

David Simon
Chairman and Chief Executive Officer

Richard S. Sokolov
Director, President and
Chief Operating Officer

Steven E. Fivel
General Counsel and Secretary

Andrew Juster
Executive Vice President and
Chief Financial Officer

John Ruili
President of Malls and
Chief Administrative Officer

Brian McDade
Senior Vice President and Treasurer

Alexander L. W. Snyder
Assistant General Counsel and
Assistant Secretary

## MALLS

Michael E. McCarty
Chief Operating Officer—Malls

Vicki Hanor
Senior Executive Vice President and
Managing Director—Luxury Leasing

Bruce Tobin
Senior Executive Vice President—Leasing

Jonathan Murphy
Executive Vice President—Leasing

Michael J. Nevins
Executive Vice President—Leasing

Sharon Polonia
Executive Vice President—Leasing

Eric Sadi
Executive Vice President—Leasing

Michael Romstad
Executive Vice President—Management

Charles Davis
Senior Vice President—Development

John Phipps
Senior Vice President—Development

Kathleen Shields
Senior Vice President—Development

## THE MILLS

Gregg M. Goodman
President

Gary Duncan
Executive Vice President—Leasing

## PREMIUM OUTLETS

Stephen Yalof
Chief Executive Officer

Larry Weinstein
Executive Vice President—Leasing

Peter Baxter
Executive Vice President—Leasing

Danielle De Vita
Executive Vice President—Real Estate

Leslie Swanson
Executive Vice President—Management

## CORPORATE

Mikael Thygesen
Chief Marketing Officer and
President—Simon Brand Ventures

Stanley Shashoua
Chief Investment Officer

Andres Lugo
Executive Vice President—
Construction Group

Mark J. Silvestri
Executive Vice President—Corporate Real Estate Development

Chidi Achara
Senior Vice President and
Chief Creative Officer

Steven K. Broadwater
Senior Vice President and
Chief Accounting Officer

Michelle M. Desrosiers
Senior Vice President and
Chief Human Resources Officer

David Schacht
Senior Vice President and
Chief Information Officer

David L. Campbell
Senior Vice President—Finance

Natalie Hwang
Managing Director—Simon Ventures

Adam J. Reuille
Vice President and Corporate Controller

Thomas Ward
Senior Vice President—Investor Relations

Brian J. Warnock
Senior Vice President—Acquisitions and Financial Analysis



# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2017

# SIMON PROPERTY GROUP, INC.
SIMON PROPERTY GROUP, L.P.

(Exact name of registrant as specified in its charter)

Delaware
(Simon Property Group, Inc.)
Delaware
(Simon Property Group, L.P.)
(State of Incorporation or organization)

001-14469
(Simon Property Group, Inc.)
001-36110
(Simon Property Group, L.P.)
(Commission File No.)

04-6268599
(Simon Property Group, Inc.)
34-1755769
(Simon Property Group, L.P.)
(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:
Securities registered pursuant to Section 12(g) of the Act: None

Simon Property Group, Inc.

Simon Property Group, Inc.

Simon Property Group, L.P.

Title of each class

Common stock, $0.0001 par value

8 \( ^{3} \) /8% Series J Cumulative Redeemable Preferred Stock,

$0.0001 par value

2.375% Senior Unsecured Notes due 2020

Name of each exchange on which registered

New York Stock Exchange

New York Stock Exchange

New York Stock Exchange

Indicate by check mark if the Registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).

Simon Property Group, Inc. Yes ☒ No ☐ Simon Property Group, L.P. Yes ☒ No ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Simon Property Group, Inc. Yes ☐ No ☒ Simon Property Group, L.P. Yes ☐ No ☒

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.

Simon Property Group, Inc. Yes ☒ No ☐ Simon Property Group, L.P. Yes ☒ No ☐

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).

Simon Property Group, Inc. Yes ☒ No ☐ Simon Property Group, L.P. Yes ☒ No ☐

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. □

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

Simon Property Group, Inc.:
Large accelerated filer ☒

Accelerated filer ☐

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

Smaller reporting company ☐

Simon Property Group, L.P.:
Large accelerated filer ☐

Accelerated filer ☐

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

Emerging growth company ☐

Smaller reporting company ☐

reporting company)

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Simon Property Group, Inc. □

Simon Property Group, L.P. □

Indicate by check mark whether the Registrant is a shell company (as defined in rule 12-b of the Act).

Simon Property Group, Inc. Yes ☐ No ☒

Simon Property Group, L.P. Yes ☐ No ☒

The aggregate market value of shares of common stock held by non-affiliates of Simon Property Group, Inc. was approximately $49,945 million based on the closing sale price on the New York Stock Exchange for such stock on June 30, 2017.

As of January 31, 2018, Simon Property Group, Inc. had 320,328,774 and 8,000 shares of common stock and Class B common stock outstanding, respectively.

Simon Property Group, L.P. had no publicly-traded voting equity as of June 30, 2017. Simon Property Group, L.P. has no common stock outstanding.

Documents Incorporated By Reference

Portions of Simon Property Group, Inc.'s Proxy Statement in connection with its 2018 Annual Meeting of Stockholders are incorporated by reference in Part III.



## EXPLANATORY NOTE

This report combines the annual reports on Form 10-K for the annual period ended December 31, 2017 of Simon Property Group, Inc., a Delaware corporation, and Simon Property Group, L.P., a Delaware limited partnership. Unless stated otherwise or the context otherwise requires, references to "Simon" mean Simon Property Group, Inc. and references to the "Operating Partnership" mean Simon Property Group, L.P. References to "we," "us" and "our" mean collectively Simon, the Operating Partnership and those entities/subsidiaries owned or controlled by Simon and/or the Operating Partnership.

Simon is a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. We are structured as an umbrella partnership REIT under which substantially all of our business is conducted through the Operating Partnership, Simon's majority-owned partnership subsidiary, for which Simon is the general partner. As of December 31, 2017, Simon owned an approximate 86.9% ownership interest in the Operating Partnership, with the remaining 13.1% ownership interest owned by limited partners. As the sole general partner of the Operating Partnership, Simon has exclusive control of the Operating Partnership's day-to-day management.

We operate Simon and the Operating Partnership as one business. The management of Simon consists of the same members as the management of the Operating Partnership. As general partner with control of the Operating Partnership, Simon consolidates the Operating Partnership for financial reporting purposes, and Simon has no material assets or liabilities other than its investment in the Operating Partnership. Therefore, the assets and liabilities of Simon and the Operating Partnership are the same on their respective financial statements.

We believe that combining the annual reports on Form 10-K of Simon and the Operating Partnership into this single report provides the following benefits:

- enhances investors’ understanding of Simon and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

- eliminates duplicative disclosure and provides a more streamlined presentation since substantially all of the disclosure in this report applies to both Simon and the Operating Partnership; and

• creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

We believe it is important for investors to understand the few differences between Simon and the Operating Partnership in the context of how we operate as a consolidated company. The primary difference is that Simon itself does not conduct business, other than acting as the general partner of the Operating Partnership and issuing equity or equity-related instruments from time to time. In addition, Simon itself does not incur any indebtedness, as all debt is incurred by the Operating Partnership or entities/subsidiaries owned or controlled by the Operating Partnership.

The Operating Partnership holds, directly or indirectly, substantially all of our assets, including our ownership interests in our joint ventures. The Operating Partnership conducts substantially all of our business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity issuances by Simon, which are contributed to the capital of the Operating Partnership in exchange for, in the case of common stock issuances by Simon, common units of partnership interest in the Operating Partnership, or units, or, in the case of preferred stock issuances by Simon, preferred units of partnership interest in the Operating Partnership, or preferred units, the Operating Partnership, directly or indirectly, generates the capital required by our business through its operations, the incurrence of indebtedness, proceeds received from the disposition of certain properties and joint ventures and the issuance of units or preferred units to third parties.

The presentation of stockholders' equity, partners' equity and noncontrolling interests are the main areas of difference between the consolidated financial statements of Simon and those of the Operating Partnership. The differences between stockholders' equity and partners' equity result from differences in the equity issued at the Simon and Operating Partnership levels. The units held by limited partners in the Operating Partnership are accounted for as partners' equity in the Operating Partnership's financial statements and as noncontrolling interests in Simon's financial statements. The noncontrolling interests in the Operating Partnership's financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in Simon's financial statements include the same noncontrolling interests at the Operating Partnership level and, as previously stated, the units held by limited partners of the Operating Partnership. Although classified differently, total equity of Simon and the Operating Partnership is the same.

To help investors understand the differences between Simon and the Operating Partnership, this report provides:

• separate consolidated financial statements for Simon and the Operating Partnership;



- a single set of notes to such consolidated financial statements that includes separate discussions of noncontrolling interests and stockholders' equity or partners' equity, accumulated other comprehensive income (loss) and per share and per unit data, as applicable;

- a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that also includes discrete information related to each entity; and

- separate Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities sections related to each entity.

This report also includes separate Part II, Item 9A. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Simon and the Operating Partnership in order to establish that the requisite certifications have been made and that Simon and the Operating Partnership are each compliant with Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 and 18 U.S.C. §1350. The separate discussions of Simon and the Operating Partnership in this report should be read in conjunction with each other to understand our results on a consolidated basis and how management operates our business.

In order to highlight the differences between Simon and the Operating Partnership, the separate sections in this report for Simon and the Operating Partnership specifically refer to Simon and the Operating Partnership. In the sections that combine disclosure of Simon and the Operating Partnership, this report refers to actions or holdings of Simon and the Operating Partnership as being "our" actions or holdings. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures, holds assets and incurs debt, we believe that references to "we," "us" or "our" in this context is appropriate because the business is one enterprise and we operate substantially all of our business through the Operating Partnership.



## Simon Property Group, Inc.
Simon Property Group, L.P.
Annual Report on Form 10-K
December 31, 2017

## TABLE OF CONTENTS

Item No. Page No.
Part I
1. Business ..... 5
1A. Risk Factors ..... 11
1B. Unresolved Staff Comments ..... 21
2. Properties ..... 22
3. Legal Proceedings ..... 49
4. Mine Safety Disclosures ..... 49
Part II
5. Market for the Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities ..... 50
6. Selected Financial Data ..... 53
7. Management's Discussion and Analysis of Financial Condition and Results of Operations ..... 55
7A. Qualitative and Quantitative Disclosure About Market Risk ..... 74
8. Financial Statements and Supplementary Data ..... 75
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..... 127
9A. Controls and Procedures ..... 127
9B. Other Information ..... 128
Part III
10. Directors, Executive Officers and Corporate Governance ..... 129
11. Executive Compensation ..... 129
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..... 129
13. Certain Relationships and Related Transactions and Director Independence ..... 129
14. Principal Accountant Fees and Services ..... 129
Part IV
15. Exhibits, and Financial Statement Schedules ..... 130
16. Form 10-K Summary ..... 130
Signatures ..... 136



## Part I

## Item 1. Business

Simon Property Group, Inc. is a Delaware corporation that operates as a self-administered and self-managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. REITs will generally not be liable for U.S. federal corporate income taxes as long as they distribute not less than 100% of their REIT taxable income. Simon Property Group, L.P. is our majority-owned Delaware partnership subsidiary that owns all of our real estate properties and other assets. Unless stated otherwise or the context otherwise requires, references to "Simon" mean Simon Property Group, Inc. and references to the "Operating Partnership" mean Simon Property Group, L.P. References to "we," "us" and "our" mean collectively Simon, the Operating Partnership and those entities/subsidiaries owned or controlled by Simon and/or the Operating Partnership. According to the Operating Partnership's partnership agreement, the Operating Partnership is required to pay all expenses of Simon.

We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of Simon \( ^{®} \)  malls, Premium Outlets \( ^{®} \) , and The Mills \( ^{®} \) . As of December 31, 2017, we owned or held an interest in 207 income-producing properties in the United States, which consisted of 107 malls, 68 Premium Outlets, 14 Mills, four lifestyle centers, and 14 other retail properties in 37 states and Puerto Rico. In addition, we have redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 25 properties in the United States, Canada and Asia. We have one outlet under development in the United States. Internationally, as of December 31, 2017, we had ownership interests in nine Premium Outlets in Japan, four Premium Outlets in South Korea, two Premium Outlets in Canada, two Premium Outlets in Malaysia, and one Premium Outlet in Mexico. We also own an interest in eight Designer Outlet properties in Europe, of which six properties are consolidated, and one Designer Outlet property in Canada. Of the eight properties in Europe, two are located in Italy, two are located in the Netherlands and one each is located in Austria, France, Germany and the United Kingdom. We also have three international outlet properties under development. As of December 31, 2017, we also owned a 21.0% equity stake in Klépierre SA, or Klépierre, a publicly traded, Paris-based real estate company, which owns, or has an interest in, shopping centers located in 16 countries in Europe.

For a description of our operational strategies and developments in our business during 2017, see Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.

## Other Policies

The following is a discussion of our investment policies, financing policies, conflict of interest policies and policies with respect to certain other activities. One or more of these policies may be amended or rescinded from time to time without a stockholder vote.

## Investment Policies

While we emphasize equity real estate investments, we may also provide secured financing to or invest in equity or debt securities of other entities engaged in real estate activities or securities of other issuers consistent with Simon's qualification as a REIT. However, any of these investments would be subject to the percentage ownership limitations and gross income tests necessary for REIT qualification. These REIT limitations mean that Simon cannot make an investment that would cause its real estate assets to be less than 75% of its total assets. Simon must also derive at least 75% of its gross income directly or indirectly from investments relating to real property or mortgages on real property, including "rents from real property," dividends from other REITs and, in certain circumstances, interest from certain types of temporary investments. In addition, Simon must also derive at least 95% of its gross income from such real property investments, and from dividends, interest and gains from the sale or dispositions of stock or securities or from other combinations of the foregoing.

Subject to Simon’s REIT limitations, we may invest in the securities of other issuers in connection with acquisitions of indirect interests in real estate. Such an investment would normally be in the form of general or limited partnership or membership interests in special purpose partnerships and limited liability companies that own one or more properties. We may, in the future, acquire all or substantially all of the securities or assets of other REITs, management companies or similar entities where such investments would be consistent with our investment policies.



## Financing Policies

Because Simon’s REIT qualification requires us to distribute at least 90% of its REIT taxable income, we regularly access the debt markets to raise the funds necessary to finance acquisitions, develop and redevelop properties, and refinance maturing debt. We must comply with the covenants contained in our financing agreements that limit our ratio of debt to total assets or market value, as defined. For example, the Operating Partnership’s lines of credit and the indentures for the Operating Partnership’s debt securities contain covenants that restrict the total amount of debt of the Operating Partnership to 65%, or 60% in relation to certain debt, of total assets, as defined under the related agreements, and secured debt to 50% of total assets. In addition, these agreements contain other covenants requiring compliance with financial ratios. Furthermore, the amount of debt that we may incur is limited as a practical matter by our desire to maintain acceptable ratings for the debt securities of the Operating Partnership. We strive to maintain investment grade ratings at all times for various business reasons, including their effect on our ability to access attractive capital, but we cannot assure you that we will be able to do so in the future.

If Simon’s Board of Directors determines to seek additional capital, we may raise such capital by offering equity or incurring debt, creating joint ventures with existing ownership interests in properties, entering into joint venture arrangements for new development projects, retaining cash flows or a combination of these methods. If Simon’s Board of Directors determines to raise equity capital, it may, without stockholder approval, issue additional shares of common stock or other capital stock. Simon’s Board of Directors may issue a number of shares up to the amount of our authorized capital or may issue units in any manner and on such terms and for such consideration as it deems appropriate. We may also raise additional capital by issuing common units of partnership interest in the Operating Partnership, or units. Such securities also may include additional classes of Simon’s preferred stock or preferred units of partnership interest in the Operating Partnership, or preferred units, which may be convertible into common stock or units, as the case may be. Existing stockholders and unitholders have no preemptive right to purchase shares or units in any subsequent issuances of securities by us. Any issuance of equity could dilute a stockholder’s investment in Simon or a limited partner’s investment in the Operating Partnership.

We expect most future borrowings will be made through the Operating Partnership or its subsidiaries. We might, however, incur borrowings through other entities that would be reloaned to the Operating Partnership. Borrowings may be in the form of bank borrowings, publicly and privately placed debt instruments, or purchase money obligations to the sellers of properties. Any such indebtedness may be secured or unsecured. Any such indebtedness may also have full or limited recourse to the borrower or be cross-collateralized with other debt, or may be fully or partially guaranteed by the Operating Partnership. We issue unsecured debt securities through the Operating Partnership, but we may issue other debt securities which may be convertible into common or preferred stock or be accompanied by warrants to purchase common or preferred stock. We also may sell or securitize our lease receivables. Although we may borrow to fund the payment of dividends, we currently have no expectation that we will regularly do so.

The Operating Partnership has a $4.0 billion unsecured revolving credit facility, or Credit Facility. On March 17, 2017, the Operating Partnership amended and extended the Credit Facility. The Credit Facility's initial borrowing capacity of $4.0 billion may be increased to $5.0 billion during its term. The initial maturity date of the Credit Facility was extended to June 30, 2021 and can be extended for an additional year to June 30, 2022 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Credit Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points. The Operating Partnership also has a $3.5 billion supplemental unsecured revolving credit facility, or Supplemental Facility, and together with the Credit Facility, the Credit Facilities. The Supplemental Facility's initial borrowing capacity of $3.5 billion may be increased to $4.25 billion during its term. The initial maturity date of the Supplemental Facility is June 30, 2019, which can be extended for an additional year to June 30, 2020 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Supplemental Facility is LIBOR plus 80 basis points, with an additional facility fee of 10 basis points. The Credit Facilities provide for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars.

On February 15, 2018, the Operating Partnership amended and extended the Supplemental Facility. The Supplemental Facility’s initial borrowing capacity of $3.5 billion may be increased to $4.5 billion during its term. The initial maturity date of the Supplemental Facility was extended to June 30, 2022 and can be extended for an additional year to June 30, 2023 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Supplemental Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points.

The Operating Partnership also has available a global unsecured commercial paper note program, or the Commercial Paper program, of $1.0 billion, or the non-U.S. dollar equivalent thereof. The Operating Partnership may issue



unsecured commercial paper notes, denominated in U.S. dollars, Euro and other currencies. Notes issued in non-U.S. currencies may be issued by one or more subsidiaries of the Operating Partnership and are guaranteed by the Operating Partnership. These notes are sold under customary terms in the U.S. and Euro commercial paper note markets and rank (either by themselves or as a result of the guarantee described above) pari passu with the Operating Partnership's other unsecured senior indebtedness. The Commercial Paper program is supported by the Credit Facilities and, if necessary or appropriate, we may make one or more draws under either Credit Facility to pay amounts outstanding from time to time on the Commercial Paper program.

We may also finance our business through the following:

• issuance of shares of common stock or preferred stock or warrants to purchase the same;

• issuance of additional units;

• issuance of preferred units;

• issuance of other securities, including unsecured notes and mortgage debt;

• draws on our Credit Facilities;

• borrowings under the Commercial Paper program; or

• sale or exchange of ownership interests in properties.

The Operating Partnership may also issue units to contributors of properties or other partnership interests which may permit the contributor to defer tax gain recognition under the Internal Revenue Code.

We do not have a policy limiting the number or amount of mortgages that may be placed on any particular property. Mortgage financing instruments, however, typically limit additional indebtedness on such properties. Additionally, the Credit Facilities, our unsecured note indentures and other contracts may limit our ability to borrow and contain limits on mortgage indebtedness we may incur as well as certain financial covenants we must maintain.

Typically, we invest in or form special purpose entities to assist us in obtaining secured permanent financing at attractive terms. Permanent financing may be structured as a mortgage loan on a single property, or on a group of properties, and generally requires us to provide a mortgage lien on the property or properties in favor of an institutional third party, as a joint venture with a third party, or as a securitized financing. For securitized financings, we create special purpose entities to own the properties. These special purpose entities, which are common in the real estate industry, are structured so that they would not be consolidated in a bankruptcy proceeding involving a parent company. We decide upon the structure of the financing based upon the best terms then available to us and whether the proposed financing is consistent with our other business objectives. For accounting purposes, we include the outstanding securitized debt of special purpose entities owning consolidated properties as part of our consolidated indebtedness.

## Conflict of Interest Policies

We maintain policies and have entered into agreements designed to reduce or eliminate potential conflicts of interest. Simon has adopted governance principles governing the function, conduct, selection, orientation and duties of its subsidiaries and Simon's Board of Directors and the Company, as well as written charters for each of the standing Committees of Simon's Board of Directors. In addition, Simon's Board of Directors has a Code of Business Conduct and Ethics, which applies to all of its officers, directors, and employees and those of its subsidiaries. At least a majority of the members of Simon's Board of Directors must qualify as independent under the listing standards of the New York Stock Exchange, or NYSE, and cannot be affiliated with the Simon family, who are significant stockholders and/or unitholders in the Operating Partnership. In addition, the Audit and Compensation Committees of Simon's Board of Directors are comprised entirely of independent members who meet the additional independence and financial expert requirements of the NYSE. Any transaction between us and the Simon family, including property acquisitions, service and property management agreements and retail space leases, must be approved by a majority of Simon's non-affiliated directors.

The sale by the Operating Partnership of any property that it owns may have an adverse tax impact on the Simon family or other limited partners of the Operating Partnership. In order to avoid any conflict of interest, the Simon charter requires that at least three-fourths of Simon's independent directors must authorize and require the Operating Partnership to sell any property it owns. Any such sale is subject to applicable agreements with third parties. Noncompetition agreements executed by David Simon, Simon's Chairman and Chief Executive Officer, and Herbert Simon, Simon's



Chairman Emeritus, as well as David Simon’s employment agreement, contain covenants limiting their ability to participate in certain shopping center activities.

## Policies With Respect To Certain Other Activities

We intend to make investments which are consistent with Simon’s qualification as a REIT, unless Simon’s Board of Directors determines that it is no longer in Simon’s best interests to so qualify as a REIT. Simon’s Board of Directors may make such a determination because of changing circumstances or changes in the REIT requirements. Simon has authority to issue shares of its capital stock or other securities in exchange for property. We also have authority to repurchase or otherwise reacquire our shares, our units, or any other securities. On February 13, 2017, Simon’s Board of Directors authorized a two-year extension of the previously authorized $2.0 billion common stock repurchase plan, or the Repurchase Program, through March 31, 2019. Under the Repurchase Program, Simon may repurchase the shares in the open market, or in privately negotiated transactions. At December 31, 2017, we had remaining authority to repurchase $1.0 billion of common stock. Simon may also issue shares of its common stock, or pay cash at its option, to holders of units in future periods upon exercise of such holders’ rights under the partnership agreement of the Operating Partnership. Our policy prohibits us from making any loans to the directors or executive officers of Simon for any purpose. We may make loans to the joint ventures in which we participate. Additionally, we may make or buy interests in loans secured by real estate properties owned by others or make investments in companies that own real estate assets.

## Competition

The retail real estate industry is dynamic and competitive. We compete with numerous merchandise distribution channels, including malls, outlet centers, community/lifestyle centers, and other shopping centers in the United States and abroad. We also compete with internet retailing sites and catalogs which provide retailers with distribution options beyond existing brick and mortar retail properties. The existence of competitive alternatives could have a material adverse effect on our ability to lease space and on the level of rents we can obtain. This results in competition for both the tenants to occupy the properties that we develop and manage as well as for the acquisition of prime sites (including land for development and operating properties). We believe that there are numerous factors that make our properties highly desirable to retailers, including:

• the quality, location and diversity of our properties;

• our management and operational expertise;

• our extensive experience and relationships with retailers, lenders and suppliers; and

• our marketing initiatives and consumer focused strategic corporate alliances.

## Certain Activities

During the past three years, we have:

• issued 6,010,621 shares of Simon common stock up on the exchange of units in the Operating Partnership;

• issued 203,722 restricted shares of Simon common stock and 987,923 long-term incentive performance units, or LTIP units, net of forfeitures, under The Simon Property Group 1998 Stock Incentive Plan, as amended, or the 1998 Plan;

• purchased 5,781,167 shares of Simon common stock in the open market for $1.0 billion pursuant to our Repurchase Program;

• redeemed 944,359 units in the Operating Partnership for $172.27 per unit in cash;

• amended and extended the Supplemental Facility in March 2015 to increase our borrowing capacity and extend its term, and amended the Supplemental Facility in April 2016 to further increase our borrowing capacity;

• amended and extended the Credit Facility in March 2017 to extend its term and reduce the base interest rate of the Credit Facility;

- borrowed a maximum amount of $960.9 million under the Credit Facilities; the outstanding amount of borrowings under the Credit Facilities as of December 31, 2017 was $322.6 million, of which $197.6 million was related to the U.S. dollar equivalent of Yen-denominated borrowings;



• increased the borrowing capacity of the Commercial Paper program from $500.0 million to $1.0 billion; the outstanding amount of Commercial Paper notes as of December 31, 2017 was $978.5 million; and

• provided annual reports containing financial statements audited by our independent registered public accounting firm and quarterly reports containing unaudited financial statements to our security holders.

## Employees

At December 31, 2017, we and our affiliates employed approximately 5,000 persons at various properties and offices throughout the United States, of which approximately 1,700 were part-time. Approximately 1,000 of these employees were located at our corporate headquarters in Indianapolis, Indiana.

## Corporate Headquarters

Our corporate headquarters are located at 225 West Washington Street, Indianapolis, Indiana 46204, and our telephone number is (317) 636-1600.

## Available Information

Simon is a large accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or Exchange Act) and is required, pursuant to Item 101 of Regulation S-K, to provide certain information regarding our website and the availability of certain documents filed with or furnished to the Securities and Exchange Commission, or SEC. Our Internet website address is www.simon.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available or may be accessed free of charge through the "About Simon/Investor Relations/Financial Information" section of our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our Internet website and the information contained therein or connected thereto are not, and are not intended to be, incorporated into this Annual Report on Form 10-K.

The following corporate governance documents are also available through the “About Simon/Investor Relations/Corporate Governance” section of our Internet website or may be obtained in print form by request of our Investor Relations Department: Governance Principles, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, and Governance and Nominating Committee Charter.

In addition, we intend to disclose on our Internet website any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be publicly disclosed pursuant to rules of the SEC and the NYSE.

## Executive Officers

The following table sets forth certain information with respect to Simon’s executive officers as of February 23, 2018.

<table><tr><td>Name</td><td>Age</td><td>Position</td></tr><tr><td>David Simon</td><td>56</td><td>Chairman of the Board and Chief Executive Officer</td></tr><tr><td>Richard S. Sokolov</td><td>68</td><td>President and Chief Operating Officer</td></tr><tr><td>Andrew Juster</td><td>65</td><td>Executive Vice President and Chief Financial Officer</td></tr><tr><td>John Rulli</td><td>61</td><td>President of Malls and Chief Administrative Officer</td></tr><tr><td>Steven E. Fivel</td><td>57</td><td>General Counsel and Secretary</td></tr><tr><td>Alexander L. W. Snyder</td><td>48</td><td>Assistant General Counsel and Assistant Secretary</td></tr><tr><td>Steven K. Broadwater</td><td>51</td><td>Senior Vice President and Chief Accounting Officer</td></tr><tr><td>Brian J. McDade</td><td>38</td><td>Senior Vice President and Treasurer</td></tr></table>

The executive officers of Simon serve at the pleasure of Simon’s Board of Directors, except for David Simon who is subject to an employment agreement which may call for certain payments upon termination.

Mr. Simon has served as the Chairman of Simon’s Board of Directors since 2007 and Chief Executive Officer of Simon or its predecessor since 1995. Mr. Simon has also been a director of Simon or its predecessor since its incorporation in 1993. Mr. Simon was the President of Simon’s predecessor from 1993 to 1996. From 1988 to 1990, Mr. Simon was Vice President of Wasserstein Perella & Company. From 1985 to 1988, he was an Associate at First Boston Corp. He is the son of the late Melvin Simon and the nephew of Herbert Simon.



Mr. Sokolov has served as President and Chief Operating Officer of Simon or its predecessor since 1996. Mr. Sokolov has also been a director of Simon or its predecessor since 1996. Mr. Sokolov was President and Chief Executive Officer of DeBartolo Realty Corporation from its incorporation in 1994 until it merged with our predecessors in 1996. Mr. Sokolov joined its predecessor, The Edward J. DeBartolo Corporation, in 1982 as Vice President and General Counsel and was named Senior Vice President, Development and General Counsel in 1986.

Mr. Juster serves as Simon’s Executive Vice President and Chief Financial Officer. Mr. Juster joined Melvin Simon & Associates, Inc., or MSA, in 1989 and held various financial positions with MSA until 1993 and thereafter has held various positions with Simon. Mr. Juster became Treasurer in 2001 and was promoted to Executive Vice President in 2008 and Chief Financial Officer in 2014.

Mr. Rulli serves as Simon’s Senior Executive Vice President and Chief Administrative Officer. Mr. Rulli joined MSA in 1988 and held various positions with MSA and Simon thereafter. Mr. Rulli became Chief Administrative Officer in 2007 and was promoted to Senior Executive Vice President in 2011. Mr. Rulli was promoted to President of Malls in 2017.

Mr. Fivel serves as Simon’s General Counsel and Secretary. Prior to rejoining Simon in 2011 as Assistant General Counsel and Assistant Secretary, Mr. Fivel served as Executive Vice President, General Counsel and Secretary of Brightpoint, Inc. Mr. Fivel was previously employed by MSA from 1988 until 1993 and then by Simon from 1993 to 1996.

Mr. Snyder serves as Simon’s Assistant General Counsel and Assistant Secretary. Mr. Snyder joined Simon in 2016 as Senior Deputy General Counsel. Immediately prior to joining Simon, Mr. Snyder was Managing Partner of the Crimson Fulcrum Strategic Institute. Mr. Snyder previously served as Executive Vice President, General Counsel and Corporate Secretary for Beechcraft Corporation as well as Chief Counsel Mergers & Acquisitions for Koch Industries, Inc.

Mr. Broadwater serves as Simon’s Senior Vice President and Chief Accounting Officer and prior to that as Simon’s Vice President and Corporate Controller. Mr. Broadwater joined Simon in 2004 and was promoted to Senior Vice President and Chief Accounting Officer in 2009.

Mr. McDade serves as Simon’s Senior Vice President and Treasurer. Mr. McDade joined Simon in 2007 as the Director of Capital Markets and was promoted to Senior Vice President of Capital Markets in 2013. Mr. McDade was promoted to Treasurer in 2014.



## Item 1A. Risk Factors

The following factors, among others, could cause our actual results to differ materially from those expressed or implied in forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by our management from time to time. These factors may have a material adverse effect on our business, financial condition, liquidity, results of operations, funds from operations, or FFO, and prospects, which we refer to herein as a material adverse effect on us or as materially and adversely affecting us, and you should carefully consider them. Additional risks and uncertainties not presently known to us or which are currently not believed to be material may also affect our actual results. We may update these factors in our future periodic reports.

## Risks Relating to Retail Operations

## Overall economic and market conditions may adversely affect the general retail environment.

Our concentration in the retail real estate market means that we are subject to a number of factors that could adversely affect the retail environment generally, including, without limitation:

• changes in international, national, regional and local economic conditions;

• tenant bankruptcies and a resulting rejection of our leases;

- the impact on our retail tenants and demand for retail space at our properties from the increasing use of the Internet by retailers and consumers;

- local real estate conditions, such as an oversupply of, or reduction in demand for, retail space or retail goods, decreases in rental rates, declining real estate values and the availability and creditworthiness of tenants;

• levels of consumer spending, changes in consumer confidence and fluctuations in seasonal spending;

• the willingness of retailers to lease space in our properties;

• increased operating costs;

• changes in applicable laws and regulations, including tax, environmental, safety and zoning;

• perceptions by consumers of the safety, convenience and attractiveness of our properties;

• casualties and other natural disasters; and

• the potential for terrorist activities.

We derive our operating results primarily from retail tenants, many of whom have been and continue to be under some degree of economic stress. A significant deterioration in the creditworthiness of our retail tenants could have a material adverse effect on us.

Some of our properties depend on anchor stores or other major tenants to attract shoppers and could be adversely affected by the loss of one or more of these anchor stores or major tenants.

Our properties are typically anchored by department stores and other large nationally recognized tenants. The value of some of our properties could be materially and adversely affected if these anchors or other major tenants fail to comply with their contractual obligations or cease their operations.

For example, among department stores and other large stores — often referred to as “big box” stores — corporate merger activity typically results in the closure of duplicate or geographically overlapping store locations. Further, sustained adverse pressure on the results of our department stores and major tenants may have a similarly sustained adverse impact upon our own results. Certain department stores and other national retailers have experienced, and may continue to experience for the foreseeable future given current macroeconomic uncertainty and less-than-desirable levels of consumer confidence, considerable decreases in customer traffic in their retail stores, increased competition from alternative retail options such as those accessible via the Internet and other forms of pressure on their business models. As pressure on these department stores and national retailers increases, their ability to maintain their stores, meet their obligations both to us and to their external lenders and suppliers, withstand takeover attempts by investors or rivals or avoid bankruptcy and/or liquidation may be impaired and result in closures of their stores or their seeking of a lease modification with us. Any lease modification could be unfavorable to us as the lessor and could decrease rents or expense recovery charges. Other tenants



may be entitled to modify the economic or other terms of, or terminate, their existing leases with us in the event of such closures.

If a department store or major tenant were to close its stores at our properties, we may experience difficulty and delay and incur significant expense in replacing the tenant, as well as in leasing spaces in areas adjacent to the vacant department store or major tenant, at attractive rates, or at all. Additionally, department store or major tenant closures may result in decreased customer traffic, which could lead to decreased sales at our properties. If the sales of stores operating in our properties were to decline significantly due to the closing of anchor stores or other national retailers, adverse economic conditions, or other reasons, tenants may be unable to pay their minimum rents or expense recovery charges. In the event of any default by a tenant, we may not be able to fully recover, and/or may experience delays and costs in enforcing our rights as landlord to recover, amounts due to us under the terms of our agreements with such parties.

## We face potential adverse effects from tenant bankruptcies.

Bankruptcy filings by retailers can occur regularly in the course of our operations. If a tenant files for bankruptcy, the tenant may have the right to reject and terminate one or more of its leases with us, and we cannot be sure that it will affirm one or more of its leases and continue to make rental payments to us in a timely manner. A bankruptcy filing by, or relating to, one of our tenants would bar all efforts by us to collect pre-bankruptcy debts from that tenant, or from their property, unless we receive an order permitting us to do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of its bankruptcy. If a lease is assumed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. However, if a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages in connection with such balances. If a bankrupt tenant vacates a space, it might not do so in a timely manner, and we might be unable to re-lease the vacated space during that time at attractive rates, or at all. Furthermore, we may be required to incur significant expense in replacing the bankrupt tenant. Any unsecured claim we hold against a bankrupt tenant might be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims, and there are restrictions under bankruptcy laws that limit the amount of the claim we can make if a lease is rejected. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. We continually seek to re-lease vacant spaces resulting from tenant terminations. The bankruptcy of a tenant, particularly an anchor tenant or a national tenant with multiple locations, may make the re-leasing of their space difficult and costly, and it also may be more difficult to lease the remainder of the space at the affected properties. Future tenant bankruptcies may impact our ability to successfully execute our re-leasing strategy and could materially and adversely affect us.

## We face a wide range of competition that could affect our ability to operate profitably.

Our properties compete with other retail properties and other forms of retailing such as catalogs and e-commerce websites. Competition may come from malls, outlet centers, community/lifestyle centers, and other shopping centers, both existing as well as future development and redevelopment/expansion projects, as well as catalogs and e-commerce. The presence of competitive alternatives affects our ability to lease space and the level of rents we can obtain. New construction, renovations and expansions at competing sites could also negatively affect our properties.

We also compete with other major real estate investors and developers for attractive investment opportunities and prime development sites. Competition for the acquisition of existing properties and development sites may result in increased purchase prices and may adversely affect our ability to make attractive investments on favorable terms, or at all. In addition, we compete with other retail property companies for tenants and qualified management.

## We may not be able to lease newly developed properties and renew leases and relet space at existing properties.

We may not be able to lease new properties to an appropriate mix of tenants. Also, when leases for our existing properties expire, the premises may not be relet or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the current lease terms. To the extent that our leasing goals are not achieved, we could be materially and adversely affected.



## Risks Relating to Real Estate Investments and Operations

Our international activities may subject us to different or greater risk from those associated with our domestic operations.

As of December 31, 2017, we held interests in consolidated and joint venture properties that operate in Austria, France, Italy, Germany, Japan, Malaysia, Mexico, the Netherlands, South Korea, Canada, and the United Kingdom. We also have an equity stake in Klépierre, a publicly-traded European real estate company, which operates in 16 countries in Europe. Accordingly, our operating results and the value of our international operations may be impacted by any unhedged movements in the foreign currencies in which those operations transact and in which our net investment in the international operation is held. We may pursue additional investment, development and redevelopment/expansion opportunities outside the United States. International investment, ownership, development and redevelopment/expansion activities carry risks that are different from those we face with our domestic properties and operations. These risks include, but are not limited to:

• adverse effects of changes in exchange rates for foreign currencies;

• changes in foreign political and economic environments, regionally, nationally, and locally;

• challenges of complying with a wide variety of foreign laws, including corporate governance, operations, taxes and litigation;

• differing lending practices;

• differences in cultures;

• changes in applicable laws and regulations in the United States that affect international operations;

• changes in applicable laws and regulations in these foreign jurisdictions;

• difficulties in managing international operations; and

• obstacles to the repatriation of earnings and cash.

Our international activities represented approximately 5.1% of consolidated net income and 9.0% of our net operating income, or NOI, for the year ended December 31, 2017. To the extent that we expand our international activities, the above risks could increase in significance, which in turn could have a material adverse effect on us.

We are subject to numerous laws and regulations that could adversely affect our operations or expose us to liability.

Our properties are subject to numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to varying judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, competition laws, rules and agreements, landlord-tenant laws, property tax regulations, changes in real estate assessments and other laws and regulations generally applicable to business operations. Noncompliance with such laws and regulations, and any associated litigation could expose us to liability.

We face risks associated with the acquisition, development, redevelopment and expansion of properties.

We regularly acquire and develop new properties and redevelop and expand existing properties, and these activities are subject to various risks. We may not be successful in pursuing acquisition, development or redevelopment/expansion opportunities. In addition, newly acquired, developed or redeveloped/expanded properties may not perform as well as expected, impacting our anticipated return on investment. We are subject to other risks in connection with any acquisition, development and redevelopment/expansion activities, including the following:

• acquisition or construction costs of a project may be higher than projected, potentially making the project unfeasible or unprofitable;

• development, redevelopment or expansions may take considerably longer than expected, delaying the commencement and amount of income from the property;

• we may not be able to obtain financing or to refinance loans on favorable terms, or at all;

• we may be unable to obtain zoning, occupancy or other governmental approvals;



• occupancy rates and rents may not meet our projections and the project may not be profitable; and

• we may need the consent of third parties such as department stores, anchor tenants, mortgage lenders and joint venture partners, and those consents may be withheld.

If a development or redevelopment/expansion project is unsuccessful, either because it is not meeting our expectations when operational or was not completed according to the project planning, we could lose our investment in the project. Further, if we guarantee the property’s financing, our loss could exceed our investment in the project.

## Real estate investments are relatively illiquid.

Our properties represent a substantial portion of our total consolidated assets. These investments are relatively illiquid. As a result, our ability to sell one or more of our properties or investments in real estate in response to any changes in economic, industry, or other conditions may be limited. The real estate market is affected by many factors, such as general economic conditions, availability and terms of financing, interest rates and other factors, including supply and demand for space, that are beyond our control. If we want to sell a property, we cannot assure you that we will be able to dispose of it in the desired time period or at all or that the sales price of a property will be attractive at the relevant time or even exceed the carrying value of our investment. Moreover, if a property is mortgaged, we may not be able to obtain a release of the lien on that property without the payment of the associated debt and/or a substantial prepayment penalty, which could restrict our ability to dispose of the property, even though the sale might otherwise be desirable.

## Risks Relating to Debt and the Financial Markets

## We have a substantial debt burden that could affect our future operations.

As of December 31, 2017, our consolidated mortgages and unsecured indebtedness, excluding related premium, discount and debt issuance costs, totaled $24.7 billion. As a result of this indebtedness, we are required to use a substantial portion of our cash flows for debt service, including selected repayment at scheduled maturities, which limits our ability to use those cash flows to fund the growth of our business. We are also subject to the risks normally associated with debt financing, including the risk that our cash flows from operations will be insufficient to meet required debt service or that we will be able to refinance such indebtedness on acceptable terms, or at all. Our debt service costs generally will not be reduced if developments at the applicable property, such as the entry of new competitors or the loss of major tenants, cause a reduction in the income from the property. Our indebtedness could also have other adverse consequences on us, including reducing our access to capital or increasing our vulnerability to general adverse economic, industry and market conditions. In addition, if a property is mortgaged to secure payment of indebtedness and income from such property is insufficient to pay that indebtedness, the property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value. If any of the foregoing occurs, we could be materially and adversely affected.

## Disruption in the capital and credit markets may adversely affect our ability to access external financings for our growth and ongoing debt service requirements.

We depend on external financings, principally debt financings, to fund the growth of our business and to ensure that we can meet ongoing maturities of our outstanding debt. Our access to financing depends on the willingness of lending institutions and other debt investors to grant credit to us and conditions in the capital markets in general. An economic recession may cause extreme volatility and disruption in the capital and credit markets. We rely upon the Credit Facilities as sources of funding for numerous transactions. Our access to these funds is dependent upon the ability of each of the participants to the Credit Facilities to meet their funding commitments to us. When markets are volatile, access to capital and credit markets could be disrupted over an extended period of time and one or more financial institutions may not have the available capital to meet their previous commitments to us. The failure of one or more participants to the Credit Facilities to meet their funding commitments to us could have a material adverse effect on us, including as a result of making it difficult to obtain the financing we may need for future growth and/or meeting our debt service requirements. We cannot assure you that we will be able to obtain the financing we need for the future growth of our business or to meet our debt service requirements, or that a sufficient amount of financing will be available to us on favorable terms, or at all.

## Adverse changes in our credit rating could affect our borrowing capacity and borrowing terms.

The Operating Partnership’s outstanding senior unsecured notes, Credit Facilities, the Commercial Paper program, and Simon’s preferred stock are periodically rated by nationally recognized credit rating agencies. The credit ratings are based on our operating performance, liquidity and leverage ratios, financial condition and prospects, and other factors



viewed by the credit rating agencies as relevant to our industry and the economic outlook in general. Our credit rating can affect the amount of capital we can access, as well as the terms of any financing we obtain. Since we depend primarily on debt financing to fund the growth of our business, an adverse change in our credit rating, including actual changes and changes in outlook, or even the initiation of a review of our credit rating that could result in an adverse change, could have a material adverse effect on us.

The agreements that govern our indebtedness contain various covenants that impose restrictions on us that might affect our ability to operate freely.

We have a variety of unsecured debt, including the Credit Facilities, and secured property-level debt. Certain of the agreements that govern our indebtedness contain covenants, including, among other things, limitations on our ability to incur secured and unsecured indebtedness, sell all or substantially all of our assets and engage in mergers and certain acquisitions. In addition, certain of the agreements that govern our indebtedness contain financial covenants that require us to maintain certain financial ratios, including certain coverage ratios. These covenants may restrict our ability to pursue certain business initiatives or certain transactions that might otherwise be advantageous to us. In addition, our ability to comply with these provisions might be affected by events beyond our control. Failure to comply with any of our financing covenants could result in an event of default, which, if not cured or waived, could accelerate the related indebtedness as well as other of our indebtedness, which could have a material adverse effect on us.

## Our hedging interest rate protection arrangements may not effectively limit our interest rate risk.

We selectively manage our exposure to interest rate risk by a combination of interest rate protection agreements to effectively fix or cap all or a portion of our variable rate debt. In addition, we refinance fixed rate debt at times when we believe rates and other terms are appropriate. Our efforts to manage these exposures may not be successful.

Our use of interest rate hedging arrangements to manage risk associated with interest rate volatility may expose us to additional risks, including a risk that a counterparty to a hedging arrangement may fail to honor its obligations or that we could be required to fund our contractual payment obligations under such arrangements in relatively large amounts or on short notice. Developing an effective interest rate risk strategy is complex and no strategy can completely insulate us from risks associated with interest rate fluctuations. There can be no assurance that our hedging activities will have the desired beneficial impact on our results of operations, liquidity or financial condition. Termination of these hedging agreements typically involves costs, such as transaction fees or breakage costs.

## Risks Relating to Income Taxes

Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs in the United States and certain international operations also are structured to be taxed in a manner similar to the REIT structure. The failure to maintain Simon’s or these subsidiaries’ qualifications as REITs or changes in local tax laws or regulations in certain of our international operations could result in adverse tax consequences.

We are subject to certain income-based taxes, both domestically and internationally, and other taxes, including state and local taxes, franchise taxes, and withholding taxes on dividends from certain of our international investments. We currently follow local tax laws and regulations in various domestic and international jurisdictions. Should these laws or regulations change, the amount of taxes we pay may increase accordingly.

In the United States, Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs under Sections 856 through 860 of the Internal Revenue Code. We believe Simon and these subsidiaries have been organized and operated in a manner which allows them to qualify for taxation as REITs under the Internal Revenue Code. We intend to continue to operate in this manner. However, qualification and taxation as REITs depend upon the ability of Simon and these subsidiaries to satisfy several requirements (some of which are outside our control), including tests related to our annual operating results, asset diversification, distribution levels and diversity of stock ownership. The various REIT qualification tests required by the Internal Revenue Code are highly technical and complex. Accordingly, there can be no assurance that Simon or any of these subsidiaries has operated in accordance with these requirements or will continue to operate in a manner so as to qualify or remain qualified as a REIT.

If Simon or any of these subsidiaries fail to comply with those provisions, Simon or any such subsidiary may be subject to monetary penalties or ultimately to possible disqualification as REITs. If such events occur, and if available relief provisions do not apply:



- Simon or any such subsidiary will not be allowed a deduction for distributions to stockholders in computing taxable income;

- Simon or any such subsidiary will be subject to corporate level income tax on taxable income at the corporate rate; and

- unless entitled to relief under relevant statutory provisions, Simon or any such subsidiary will also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost.

Any such corporate tax liability could be substantial and would reduce the amount of cash available for, among other things, our operations and distributions to stockholders. In addition, if Simon fails to qualify as a REIT, it will not be required to make distributions to our stockholders. Moreover, a failure by any subsidiary of the Operating Partnership that has elected to be taxed as a REIT to qualify as a REIT would also cause Simon to fail to qualify as a REIT, and the same adverse consequences would apply to it and its stockholders. Failure by Simon or any of these subsidiaries to qualify as a REIT also could impair our ability to expand our business and raise capital, which could materially and adversely affect us.

The tax imposed on REITs engaging in “prohibited transactions” may limit our ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.

REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.

In order for Simon and certain subsidiaries of the Operating Partnership to qualify to be taxed as REITs, and assuming that certain other requirements are also satisfied, Simon and each such subsidiary generally must distribute at least 90% of their respective REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to their respective equity holders each year. To this point, Simon and each such subsidiary have historically distributed at least 100% of taxable income and thereby avoided income tax altogether. To the extent that Simon or any such subsidiary satisfies this distribution requirement and qualifies for taxation as a REIT, but distributes less than 100% of its REIT taxable income, Simon or any such subsidiary will be subject to U.S. federal corporate income tax on its undistributed net taxable income and could be subject to a 4% nondeductible excise tax if the actual amount that is distributed to equity holders in a calendar year is less than “the required minimum distribution amount” specified under U.S. federal income tax laws. We intend to make distributions to the equity holders of Simon and the aforementioned subsidiaries of the Operating Partnership to comply with the REIT requirements of the Internal Revenue Code.

From time to time, Simon and the aforementioned subsidiaries of the Operating Partnership might generate taxable income greater than their respective cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves, or required debt or amortization payments. If Simon and these subsidiaries do not have other funds available in these situations, Simon and these subsidiaries could be required to access capital on unfavorable terms (the receipt of which cannot be assured), sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt, or make taxable distributions of capital stock or debt securities to make distributions sufficient to enable them to pay out enough of their respective REIT taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase costs or reduce our equity. Further, amounts distributed will not be available to fund the growth of our business. Thus, compliance with the REIT requirements may adversely affect our liquidity and our ability to execute our business plan.

Complying with REIT requirements might cause us to forego otherwise attractive acquisition opportunities or liquidate otherwise attractive investments.

To qualify to be taxed as REITs for U.S. federal income tax purposes, Simon and certain subsidiaries of the Operating Partnership must ensure that, at the end of each calendar quarter, at least 75% of the value of their respective



assets consist of cash, cash items, government securities and “real estate assets” (as defined in the Internal Revenue Code), including certain mortgage loans and securities. The remainder of their respective investments (other than government securities, qualified real estate assets and securities issued by a taxable REIT subsidiary, or TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.

Additionally, in general, no more than 5% of the value of Simon’s and these subsidiaries’ total assets (other than government securities, qualified real estate assets and securities issued by a TRS) can consist of the securities of any one issuer, and no more than 25% (20% for taxable years beginning after December 31, 2017) of the value of their respective total assets can be represented by securities of one or more TRSs. If Simon or any of these subsidiaries fails to comply with these requirements at the end of any calendar quarter, Simon or any such subsidiary must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing its REIT qualification and suffering adverse tax consequences. As a result, we might be required to liquidate or forego otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to equity holders.

In addition to the asset tests set forth above, to qualify to be taxed as REITs, Simon and these subsidiaries must continually satisfy tests concerning, among other things, the sources of their respective income, the amounts they distribute to equity holders and the ownership of their respective shares. We might be unable to pursue investments that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements for qualifying as REITs. Thus, compliance with the REIT requirements may hinder our ability to make certain attractive investments.

## Partnership tax audit rules could have a material adverse effect on us.

The Bipartisan Budget Act of 2015 changes the rules applicable to U.S. federal income tax audits of partnerships. Under the rules (which are generally effective for taxable years beginning after December 31, 2017), among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner's distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto could be assessed and collected, at the partnership level. Although it is uncertain how these rules will be implemented, it is possible that they could result in partnerships in which we directly or indirectly invest, being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as a direct or indirect partner of these partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though Simon and certain subsidiaries of the Operating Partnership, as REITs, may not otherwise have been required to pay additional corporate-level taxes had they owned the assets of the partnership directly. The partnership tax audit rules will apply to the Operating Partnership and its subsidiaries that are classified as partnerships for U.S. federal income tax purposes. The changes created by these rules are sweeping and, accordingly, there can be no assurance that these rules will not have a material adverse effect on us.

## Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process, and by the IRS and the U.S. Department of the Treasury, or the Treasury. Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect us and our investors. New legislation (including the recently enacted Tax Cuts and Jobs Act and any technical corrections legislation), Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect the ability of Simon and certain subsidiaries of the Operating Partnership to qualify to be taxed as REITs and/or the U.S. federal income tax consequences to us and our investors of such qualification.

## Risks Relating to Joint Ventures

We have limited control with respect to some properties that are partially owned or managed by third parties, which may adversely affect our ability to sell or refinance them.

As of December 31, 2017, we owned interests in 100 income-producing properties with other parties. Of those, 19 properties are included in our consolidated financial statements. We account for the other 81 properties, or the joint venture properties, as well as our investments in Klépierre (a publicly traded, Paris-based real estate company), Aéropostale, and HBS Global Properties, or HBS, using the equity method of accounting. We serve as general partner or property manager for 58 of these 81 joint venture properties; however, certain major decisions, such as approving the



operating budget and selling, refinancing and redeveloping the properties, require the consent of the other owners. Of the joint venture properties for which we do not serve as general partner or property manager, 19 are in our international joint ventures. These international properties are managed locally by joint ventures in which we share control of the properties with our partner. The other owners have participating rights that we consider substantive for purposes of determining control over the joint venture properties' assets. The remaining joint venture properties, Klépierre, and our joint ventures with Aéropostale and HBS, are managed by third parties.

These investments, and other future similar investments could involve risks that would not be present were a third party not involved, including the possibility that partners or other owners might become bankrupt, suffer a deterioration in their creditworthiness, or fail to fund their share of required capital contributions. Partners or other owners could have economic or other business interests or goals that are inconsistent with our own business interests or goals, and could be in a position to take actions contrary to our policies or objectives.

These investments, and other future similar investments, also have the potential risk of creating impasses on decisions, such as a sale or financing, because neither we nor our partner or other owner has full control over the partnership or joint venture. Disputes between us and partners or other owners might result in litigation or arbitration that could increase our expenses and prevent Simon's officers and/or directors from focusing their time and efforts on our business. Consequently, actions by, or disputes with, partners or other owners might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition, we risk the possibility of being liable for the actions of our partners or other owners.

## The Operating Partnership guarantees debt or otherwise provides support for a number of joint venture properties.

Joint venture debt is the liability of the joint venture and is typically secured by a mortgage on the joint venture property, which is non-recourse to us. Nevertheless, the joint venture's failure to satisfy its debt obligations could result in the loss of our investment therein. As of December 31, 2017, the Operating Partnership guaranteed joint venture related mortgage indebtedness of $211.6 million (of which we have a right of recovery from our joint venture partners of $10.8 million). A default by a joint venture under its debt obligations would expose us to liability under a guaranty. We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not typically required contractually or otherwise.

## Risks Relating to Environmental Matters

## As owners of real estate, we can face liabilities for environmental contamination.

U.S. federal, state and local laws and regulations relating to the protection of the environment may require us, as a current or previous owner or operator of real property, to investigate and clean up hazardous or toxic substances or petroleum product releases at a property or at impacted neighboring properties. These laws often impose liability regardless of whether the property owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. These laws and regulations may require the abatement or removal of asbestos containing materials in the event of damage, demolition or renovation, reconstruction or expansion of a property and also govern emissions of and exposure to asbestos fibers in the air. Those laws and regulations also govern the installation, maintenance and removal of underground storage tanks used to store waste oils or other petroleum products. Many of our properties contain, or at one time contained, asbestos containing materials or underground storage tanks (primarily related to auto service center establishments or emergency electrical generation equipment). We may be subject to regulatory action and may also be held liable to third parties for personal injury or property damage incurred by the parties in connection with any such laws and regulations or hazardous or toxic substances. The costs of investigation, removal or remediation of hazardous or toxic substances, and related liabilities, may be substantial and could materially and adversely affect us. The presence of hazardous or toxic substances, or the failure to remediate the related contamination, may also adversely affect our ability to sell, lease or redevelop a property or to borrow money using a property as collateral.

## Our efforts to identify environmental liabilities may not be successful.

Although we believe that our portfolio is in substantial compliance with U.S. federal, state and local environmental laws and regulations regarding hazardous or toxic substances, this belief is based on limited testing. Nearly all of our properties have been subjected to Phase I or similar environmental audits. These environmental audits have not revealed,



nor are we aware of, any environmental liability that we believe is reasonably likely to have a material adverse effect on us. However, we cannot assure you that:

• previous environmental studies with respect to the portfolio reveal all potential environmental liabilities;

- any previous owner, occupant or tenant of a property did not create any material environmental condition not known to us;

- the current environmental condition of the portfolio will not be affected by tenants and occupants, by the condition of nearby properties, or by other unrelated third parties; or

- future uses or conditions (including, without limitation, changes in applicable environmental laws and regulations or the interpretation thereof) will not result in environmental liabilities.

## Other Factors Affecting Our Business

## Some of our potential losses may not be covered by insurance.

We maintain insurance coverage with third-party carriers who provide a portion of the coverage for specific layers of potential losses, including commercial general liability, fire, flood, extended coverage and rental loss insurance on all of our properties in the United States. The initial portion of coverage not provided by third-party carriers is either insured through our wholly-owned captive insurance company or other financial arrangements controlled by us. A third-party carrier has, in turn, agreed to provide, if required, evidence of coverage for this layer of losses under the terms and conditions of the carrier's policy. A similar policy either written through our captive insurance company or other financial arrangements controlled by us also provides initial coverage for property insurance and certain windstorm risks at the properties located in coastal windstorm locations.

There are some types of losses, including lease and other contract claims, which generally are not insured or are subject to large deductibles. If an uninsured loss or a loss in excess of insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue it could generate but may remain obligated for any mortgage debt or other financial obligation related to the property.

We currently maintain insurance coverage against acts of terrorism on all of our properties in the United States on an “all risk” basis in the amount of up to $1 billion. The current U.S. federal laws which provide this coverage are expected to operate through 2020. However, the U.S. government could in the future terminate its reinsurance of terrorism, which would increase the risk of uninsured losses for terrorist acts. Despite the existence of this insurance coverage, any threatened or actual terrorist attacks where we operate could materially and adversely affect us.

## We face risks associated with security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.

We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems, and other significant disruptions of our IT networks and related systems. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations and, in some cases, may be critical to the operations of certain of our tenants. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

A breach or significant and extended disruption in the functioning of our systems, including our primary website, could damage our reputation and cause us to lose customers, tenants and revenues, generate third party claims, result in the unintended and/or unauthorized public disclosure or the misappropriation of proprietary, personal identifying and confidential information, and require us to incur significant expenses to address and remediate or otherwise resolve these kinds of issues, and we may not be able to recover these expenses in whole or in any part from our service providers or responsible parties, or their or our insurers.



Our success depends, in part, on our ability to attract and retain talented employees, and the loss of any one of our key personnel could adversely impact our business.

The success of our business depends, in part, on the leadership and performance of our executive management team and key employees, and our ability to attract, retain and motivate talented employees could significantly impact our future performance. Competition for these individuals is intense, and we cannot assure you that we will retain our executive management team and other key employees or that we will be able to attract and retain other highly qualified individuals for these positions in the future. Losing any one or more of these persons could have a material adverse effect on us.

Provisions in Simon’s charter and by-laws and in the Operating Partnership’s partnership agreement could prevent a change of control.

Simon’s charter contains a general restriction on the accumulation of shares in excess of 8% of its capital stock. The charter permits the members of the Simon family and related persons to own up to 18% of Simon’s capital stock. Ownership is determined by the lower of the number of outstanding shares, voting power or value controlled. Simon’s Board of Directors may, by majority vote, permit exceptions to those levels in circumstances where Simon’s Board of Directors determines that Simon’s ability to qualify as a REIT will not be jeopardized. These restrictions on ownership may have the effect of delaying, deferring or preventing a transaction or a change in control that might otherwise be in the best interest of Simon’s stockholders or the Operating Partnership’s unitholders or preferred unitholders. Other provisions of Simon’s charter and by-laws could have the effect of delaying or preventing a change of control even if some of Simon’s stockholders or the Operating Partnership’s unitholders or preferred unitholders deem such a change to be in their best interests. These include provisions preventing holders of Simon’s common stock from acting by written consent and requiring that up to four directors in the aggregate may be elected by holders of Class B common stock. In addition, certain provisions of the Operating Partnership’s partnership agreement could have the effect of delaying or preventing a change of control. These include a provision requiring the consent of a majority in interest of units in order for Simon, as general partner of the Operating Partnership, to, among other matters, engage in a merger transaction or sell all or substantially all of its assets.

## We face possible risks associated with climate change.

We cannot determine with certainty whether global warming or cooling is occurring and, if so, at what rate. To the extent climate change causes changes in weather patterns, our properties in certain markets could experience increases in storm intensity and rising sea-levels. Over time, these conditions could result in volatile or decreased demand for retail space at certain of our properties or, in extreme cases, our inability to operate the properties at all. Climate change may also have indirect effects on our business by increasing the cost of (or making unavailable) insurance on favorable terms, or at all, and increasing the cost of energy and snow removal at our properties. Moreover, compliance with new laws or regulations related to climate change, including compliance with “green” building codes, may require us to make improvements to our existing properties or increase taxes and fees assessed on us or our properties. At this time, there can be no assurance that climate change will not have a material adverse effect on us.

The United Kingdom’s pending departure from the European Union could have a material adverse effect on us.

Following a national referendum in June 2016, the United Kingdom formally notified the European Council on March 29, 2017 of its intention to withdraw from the European Union ("EU") (commonly referred to as "Brexit"). Negotiations have commenced to determine the future terms of the United Kingdom's relationship with the EU, including, among other things, the terms of trade between the United Kingdom and the EU. However, the terms of any agreement governing the future relationship between the United Kingdom and the EU, as well as the legal and economic consequences of those terms, remain unclear. This continues to create political and economic uncertainty, which has affected, and may continue to affect, market and macro-economic conditions in both the United Kingdom and EU economies. In particular, prolonged uncertainty during Brexit negotiations may contribute to ongoing volatility in financial and foreign exchange markets in the United Kingdom and EU, including a fall in gross domestic product and volatility in the value of Pounds Sterling.

Brexit could also contribute to greater volatility in global financial and foreign exchange markets after the terms of the United Kingdom’s future relationships with the EU are settled. Further, financial and other markets may suffer losses as a result of any other countries determining to withdraw from the EU or from any future significant changes to the EU’s structure and/or regulations.

We currently hold, and may acquire additional, equity interests in properties located in the United Kingdom and



Europe, as well as other investments that are denominated in Pounds Sterling and Euro. In addition, our Operating Partnership has issued, and may issue in the future, senior unsecured notes denominated in Euro. Any of the effects of Brexit described above, and others we cannot anticipate, could have a material adverse effect on us, including the value of our properties and investments and our potential growth in Europe, and could amplify the currency risks faced by us.

## Item 1B. Unresolved Staff Comments

None.



## Item 2. Properties

## United States Properties

Our U.S. properties primarily consist of malls, Premium Outlets, The Mills, lifestyle centers and other retail properties. These properties contain an aggregate of approximately 182.3 million square feet of gross leasable area, or GLA.

Malls typically contain at least one traditional department store anchor or a combination of anchors and big box retailers with a wide variety of smaller stores connecting the anchors. Additional stores are usually located along the perimeter of the parking area. Our 107 malls are generally enclosed centers and range in size from approximately 260,000 to 2.7 million square feet of GLA. Our malls contain in the aggregate more than 13,200 occupied stores, including 500 anchors, which are predominantly national or international retailers.

Premium Outlets generally contain a wide variety of designer and manufacturer stores located in open-air centers. Our 68 Premium Outlets range in size from approximately 150,000 to 900,000 square feet of GLA. The Premium Outlets are generally located within a close proximity to major metropolitan areas and/or tourist destinations.

The 14 properties in The Mills generally range in size from 1.2 million to 2.3 million square feet of GLA and are located in major metropolitan areas. They have a combination of traditional mall, outlet center, and big box retailers and entertainment uses.

We also have interests in four lifestyle centers and 14 other retail properties. The lifestyle centers range in size from 160,000 to 900,000 square feet of GLA. The other retail properties range in size from approximately 160,000 to 890,000 square feet of GLA and are considered non-core to our business model. In total, the lifestyle centers and other retail properties represent approximately 0.6% of our NOI.

As of December 31, 2017, approximately 95.6% of the owned GLA in malls and Premium Outlets was leased and approximately 98.4% of the owned GLA for The Mills was leased.

We wholly own 134 of our properties, effectively control 13 properties in which we have a joint venture interest, and hold the remaining 60 properties through unconsolidated joint venture interests. We are the managing or co-managing general partner or member of 203 properties in the United States. Certain of our joint venture properties are subject to various rights of first refusal, buy-sell provisions, put and call rights, or other sale or marketing rights for partners which are customary in real estate partnership agreements and the industry. We and our partners in these joint ventures may initiate these provisions (subject to any applicable lock up or similar restrictions) which may result in either the sale of our interest or the use of available cash or borrowings, or the use of Operating Partnership units, to acquire the joint venture interest from our partner.

On April 13, 2015, we announced a joint venture with Sears Holdings, or Sears, whereby Sears contributed 10 of its properties located at our malls to the joint venture in exchange for a 50% noncontrolling interest in the joint venture. Seritage Growth Properties, or Seritage, a public REIT formed by Sears, now holds Sears' interest in the joint venture.

On November 3, 2017, we acquired additional interests in the real estate assets and/or rights to terminate leases related to twelve Sears stores located at our malls (including five stores previously held in our joint venture with Seritage), in order to redevelop these properties. Four of the Sears stores are at properties held in unconsolidated joint ventures. Our joint venture with Seritage now covers the former Sears properties located at five of our malls.



Simon Property Group, Inc.
Simon Property Group, P.L.
Property Table
U. S. Properties

The following property table summarizes certain data for our mails. Premium Outlets, The Lifestyle centers and other retail properties located in the United States, including Puerto Rico, as of December 31, 2017.

<table><tr><td>Property Name</td><td>State</td><td>City (USBA)</td><td>Ownership Interest (Percent) (Lease(s))</td><td>Legal Status</td><td>Year Built</td><td>Occupancy</td><td>Total GLA</td><td>Retail Airports and Selected Major tenants</td></tr><tr><td>1. Malles</td><td>VA</td><td>Winchester</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>2. Adirondack Mall</td><td>FL</td><td>Manassas</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>3. Aurora Mall (1) (3)</td><td>FL</td><td>Manassas</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>4. Avonnes</td><td>FL</td><td>Avonnes</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>5. Bartlett Creek Square</td><td>FL</td><td>Fleming</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>6. Bartlett Creek Mall</td><td>MO</td><td>Springfield</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>7. Barrack Square</td><td>VA</td><td>Fleming</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>8. Bear Park</td><td>GA</td><td>Bear Park</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>9. Brierwood Mall</td><td>FL</td><td>Manassas</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>10. Brierwood Center</td><td>FL</td><td>Manassas</td><td></td><td></td><td></td><td></td><td></td><td></td><tr><td>11. Burlington Square</td><td>VA</td><td>Wayne</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>12. Burlington Mall</td><td>MD</td><td>Wayne</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>13. Care Coll Mill</td><td>MD</td><td>Hurst</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>14. Castleton Square</td><td>NJ</td><td>Indiana</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>15. Coley’s Vista Mall</td><td>TX</td><td>El Paso</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>16. Coconut Point</td><td>FL</td><td>Estero</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>17. College Mall</td><td>NJ</td><td>Bloomington</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>18. Columbia Center</td><td>WA</td><td>Kennewick</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>19. Copley Place</td><td>MA</td><td>Boston</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>20. Copart Square</td><td>FL</td><td>Springfield</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>21. Colorado Mall</td><td>FL</td><td>Mansfield</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>22. Crystal Mall</td><td>CT</td><td>Pewaukee</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>23. Dadehill Mall</td><td>FL</td><td>Manitowoc</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>24. Del Ray Fashion Center</td><td>CA</td><td>Torrance (Los Angeles)</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>25. Domina</td><td>TX</td><td>Austin</td><td></td><td></td><td></td><td></td><td></td><td></td></tr></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Proposed Table U.S. Properties

<table><tr><td>Property Name</td><td>State</td><td>City (USDA)</td><td>Ownership Interest (Epi)</td><td>Year Built</td><td>Total GLA</td><td>Retail/Industry and Selected Material Transportation</td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Proposed Table U.S. Properties

<table><tr><td>Property Name</td><td>State</td><td>City (USPS)</td><td>Ownership Interest (Expiration)</td><td>Legal Ownership</td><td>Year Built</td><td>Total GLA</td><td>Retail Address and Selected Mall Tenants:</td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Prospective Table U.S. Properties

<table><tr><td rowspan="2">Property Name</td><td rowspan="2">State</td><td rowspan="2">City (GBP)</td><td colspan="2">Ownership Interest (Epi/part in Leased) (3)</td><td colspan="2">Year Built</td><td colspan="2">Retail/Office and Selected Major tenants</td></tr><tr><td>Owner</td><td>Ownership</td><td>Occupancy (6)</td><td>Occupancy (6)</td><td>Occupancy (6)</td><td>Occupancy (</td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties

<table><tr><td>12</td><td>Canton Crossing Premium Outlets</td><td>State—CT</td><td>Ourish Interest (Eprtation if Lease)</td><td>Legal Ownership</td><td>Year Built or Acquired</td><td>Occurrence (%)</td><td>Total GA</td><td>Retail Anchors and Selected Major tenants</td></tr><tr><td>13</td><td>Dexter Hills Premium Outlets</td><td>CA</td><td>Cabazon (Palm Springs)</td><td>Fee</td><td>100.0 %</td><td>Acquired</td><td>97.0 %</td><td>Aerocontrol Industries, Inc. (Pty) Ltd, Bantam Road, Bantam, CA, 9170, Canada, and Bantam, Inc., 1000, New York, New York, 1000, New York, New York, 1000, New York, New York</td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties

<table><tr><td colspan="12">Simon Property Group, Inc.</td></tr><tr><td colspan="12">Simon Property Group, L.P.</td></tr><tr><td colspan="12">Property Table</td></tr><tr><td colspan="12">U.S. Properties</td></tr><tr><td colspan="12">Other U.S. Properties</td></tr><tr><td colspan="12">Other U.S. Properties</td></tr><tr><td>23. Jackson Premium Outlets</td><td>TX</td><td>State—</td><td>City/GBP</td><td>Ownership Interest (Capital 13)</td><td>Legal Ownership</td><td>Year Built or Built 2008</td><td>Occupancy 97.0 %</td><td>Total G.A.</td><td>Retail/Incomes and Selected Major Items</td><td></td><td></td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties

<table><tr><td rowspan="2">Property Name</td><td rowspan="2">City (GBP)</td><td colspan="3">Ownership Interest (Epartment in Leased)</td><td rowspan="2">Year Built</td><td rowspan="2">Occupancy (%)</td><td rowspan="2">Total G.A</td><td rowspan="2">Retail/In-store and Selected Major Items</td></tr><tr><td>State</td><td>IN</td><td>Local Ownership</td></tr><tr><td>33. Lithhouse Plaza Perrinin Outlets</td><td>—</td><td>—</td><td>—</td><td>100.0 %</td><td>—</td><td>—</td><td>—</td><td>Adults, Average Income, Education, Annual Total Revenue, Expenses, Population, Gross Value, Household Income, Nickel, Nickel, Nickel, Nickel, Nickel, Nickel, Nickel, Nickel, Nickel, Nickel, Nickel, Nick</td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties

<table><tr><td>Property Name</td><td>State—</td><td>City/GBP</td><td>Ownership Interest (Capitalized) (3)</td><td>Legal Ownership</td><td>Year Built</td><td>Occupancy</td><td>Retail/In-store and Selected Mall/Retail</td><td>Retail/Apollo</td><td>Retail/Apollo</td><td>Retail/Apollo</td><td>Retail/Apo</td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Proposed Table U.S. Properties

<table><tr><td>Property Name</td><td>State/ MO</td><td>City (GBP)</td><td>Ownership Interest (Equity) (3)</td><td>Legal Ownership</td><td>Year Built or Acquisitions</td><td>Occupancy (6)</td><td>Total G.A.</td><td>Retail/In-store and Selected Major Retail Stores</td></tr><tr><td>55 St. Louis Premium Outlets</td><td>MO</td><td>Free</td><td>0.00 % (4)</td><td>Built 2013</td><td>97.9 %</td><td></td><td></td><td></td></tr><tr><td>56 Tampa Premium Outlets</td><td>FL</td><td>Free</td><td>100.0 %</td><td>Built 2015</td><td>95.3 %</td><td></td><td></td><td></td></tr><tr><td>57 Tancre Quiltes - Columbus (1)</td><td>OH</td><td>Sunbury (Columbus City)</td><td>50.0 % (4)</td><td>Built 2016</td><td>92.6 %</td><td></td><td></td><td></td></tr><tr><td>58 Tancre Quiltes - Galveston Houston (1)</td><td>TX</td><td>Free</td><td>50.0 % (4)</td><td>Built 2012</td><td>98.1 %</td><td></td><td></td><td></td></tr><tr><td>59 The Crossroads Premium Outlets</td><td>PA</td><td>Free</td><td>100.0 %</td><td>Acquired 2004</td><td>99.5 %</td><td></td><td></td><td></td></tr><tr><td>60 Tuscon Premium Outlets</td><td>AZ</td><td>Free</td><td>100.0 %</td><td>Built 2015</td><td>87.4 %</td><td></td><td></td><td></td></tr><tr><td>61 Twin Cities Premium Outlets</td><td>MN</td><td>European Ground Lease (2019) (7)</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>62 Vacaville Premium Outlets</td><td>CA</td><td>Free</td><td>35.0 % (4)</td><td>Built 2014</td><td>97.5 %</td><td></td><td></td><td></td></tr><tr><td>63 Walnut Creek Premium Outlets</td><td>HI</td><td>Free</td><td>100.0 %</td><td>Acquired 2004</td><td>96.3 %</td><td></td><td></td><td></td></tr><tr><td>64 Waterloo Premium Outlets</td><td>NY</td><td>Free</td><td>100.0 %</td><td>Acquired 2004</td><td>98.4 %</td><td></td><td></td><td></td></tr><tr><td>65 Williamsburg Premium Outlets</td><td>VA</td><td>Free</td><td>100.0 %</td><td>Acquired 2010</td><td>97.9 %</td><td></td><td></td><td></td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties

<table><tr><td rowspan="2">Property Name</td><td rowspan="2">State/OR</td><td colspan="3">Ownership Interest (Expiration in Feet)</td><td rowspan="2">Year Built or Acquired</td><td rowspan="2">Occupancy (Years)</td><td rowspan="2">Total GLA</td><td rowspan="2">Additional Address</td><td rowspan="2">Mayor</td><td rowspan="2">Bianana</td><td rowspan="2">Republic,</td><td rowspan="2">Calif</td><td rowspan="2">Cincinnati</td><td rowspan="2">Kellin</td><td rowspan="2">Concach</td></tr><tr><td>Woodburn</td><td>BMSA (Portland)</td><td>Legal</td></tr><tr><td>66 Woodburn Premium Outlets</td><td>NY</td><td>Central Valley (New York)</td><td>Fee</td><td>—</td><td>100.0 %</td><td>Accquired 2013</td><td>99.0 %</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>Cleveland</td></tr><tr><td>67 Woodbury Common Premium Outlets</td><td>NY</td><td>Wellsville (Boston)</td><td>Fee</td><td>—</td><td>100.0 %</td><td>Accquired 2004</td><td>98.9 %</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>Cincinnati</td></tr><tr><td>68 Wetherham Village Premium Outlets</td><td>MA</td><td>Wetherham (Boston)</td><td>Fee</td><td>—</td><td>100.0 %</td><td>Accquired 2004</td><td>99.6 %</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>Cincinnati</td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U. S. Properties

<table><tr><td>Project/Name</td><td>State</td><td>Cty (GBS)</td><td>Ownership interest (Expiration %)</td><td>Legal Status</td><td>Year Built</td><td>Occupancy (%)</td><td>Total GLA</td><td>Retail/ Hozzles and Selected Major Tenant</td></tr><tr><td>The Mills</td><td>Az</td><td>Tempe (Phoenix)</td><td>Free</td><td>100.0 %</td><td>94.7 %</td><td>1,326.76</td><td>Masters/ Nemans/Masters, last call (5), Burlington/Cornell/Federal/ Seats/ Acquisitions/ Outlet/ Ross, At Home, Groupon, Chat/Food/ Groceries, At MIXA, Seats/ Acquisitions, At Combs, In Jewelry, In Jewelry, In Jewelry, In Jewelry, In Jewelry, In Jewel</td><td></td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties

<table><tr><td rowspan="2">11. Oroy Mills</td><td rowspan="2">Property Name</td><td rowspan="2">State</td><td rowspan="2">City/Neighborhood</td><td rowspan="2">Ownership Interest (Explanation if Lease?)</td><td rowspan="2">Year Built or Acquired</td><td rowspan="2">Occupancy (%)</td><td rowspan="2">Total GLA</td><td colspan="2">Retail Address and Selected Major tenants</td></tr><tr><td>Regal Mall Plaza A/B, B/B, B/B, B/B, B/B, B/B, B/B, B/B</td><td></td></tr><tr><td>12. Outlets at Orange, The</td><td>CA</td><td>Orange Hills</td><td>Los Angeles</td><td>100.0 %</td><td>Acquired 2007</td><td>99.6 %</td><td>867,381</td><td>Avon Ave, 8th St, Avon Ranch, Avon Ranch, Avon Ranch, Avon Ranch, Avon Ranch, Avon</td><td></td></tr></table>

Total Mills Properties GLA



Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties

<table><tr><td rowspan="2"></td><td rowspan="2">State</td><td rowspan="2">Ownership Interest (E per cent) (1)</td><td colspan="2">Year Built</td><td rowspan="2">Original GLA</td><td rowspan="2">Annual Income (2)</td><td rowspan="2">Annual Property Tax (3)</td><td rowspan="2">Annual Taxes and Selected Mill Rate (4)</td></tr><tr><td>Acquisition (5)</td><td>Occupancy (6)</td></tr><tr><td>1. Liberty Center</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>ABC DuPont</td><td>NM</td><td>Alluviumville (CBSA)</td><td>Legal</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Hamilton Town Center</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>2. Hamilton Town Center</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><tr><td>3. Per Park</td><td>FL</td><td>Fluviusville (CBSA)</td><td>Legal</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>4. University Park Village</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Total Liberty Center GLA</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>5. Other Properties</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>1. Other Properties</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><tr><td>2. Calhoun Outlet Marketplace</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>3. Circle Center</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>4. Circle Center</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><tr><td>5. Fair Oaks Outlet Marketplace</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>6. Interchange Marketplace</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr></tr></tr></table>

Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table
U.S. Properties



## United States Lease Expirations

The following table summarizes lease expiration data for our malls and Premium Outlets located in the United States, including Puerto Rico, as of December 31, 2017. The data presented does not consider the impact of renewal options that may be contained in leases.

## U.S. MALLS AND PREMIUM OUTLETS LEASE EXPIRATIONS (1)

<table><tr><td>Year</td><td>Number of Leases Expiring</td><td>Square Feet</td><td>Avg. Base Minimum Rent PSF at 12/31/17</td><td>Percentage of Gross Annual Rental Revenues (2)</td></tr><tr><td>Inline Stores and Freestanding</td><td></td><td></td><td></td><td></td></tr><tr><td>Month to Month Leases</td><td>538</td><td>1,620,804</td><td>$ 52.55</td><td>1.6 %</td></tr><tr><td>2018</td><td>2,308</td><td>7,771,584</td><td>$ 50.94</td><td>7.2 %</td></tr><tr><td>2019</td><td>2,402</td><td>8,614,995</td><td>$ 49.85</td><td>7.8 %</td></tr><tr><td>2020</td><td>2,040</td><td>7,061,647</td><td>$ 51.41</td><td>6.6 %</td></tr><tr><td>2021</td><td>1,912</td><td>7,494,766</td><td>$ 49.89</td><td>6.9 %</td></tr><tr><td>2022</td><td>1,951</td><td>7,450,008</td><td>$ 50.07</td><td>6.8 %</td></tr><tr><td>2023</td><td>1,911</td><td>7,590,037</td><td>$ 54.64</td><td>7.5 %</td></tr><tr><td>2024</td><td>1,541</td><td>5,863,148</td><td>$ 60.22</td><td>6.5 %</td></tr><tr><td>2025</td><td>1,428</td><td>5,337,111</td><td>$ 63.21</td><td>6.2 %</td></tr><tr><td>2026</td><td>1,304</td><td>4,649,649</td><td>$ 60.44</td><td>5.1 %</td></tr><tr><td>2027</td><td>1,013</td><td>3,721,038</td><td>$ 60.65</td><td>4.1 %</td></tr><tr><td>2028 and Thereafter</td><td>447</td><td>2,891,107</td><td>$ 45.97</td><td>2.5 %</td></tr><tr><td>Specialty Leasing Agreements w/ terms in excess of 12 months</td><td>1,177</td><td>3,232,193</td><td>$ 19.06</td><td>1.2 %</td></tr><tr><td>Anchors</td><td></td><td></td><td></td><td></td></tr><tr><td>2018</td><td>4</td><td>438,930</td><td>$ 4.41</td><td>0.0 %</td></tr><tr><td>2019</td><td>15</td><td>1,557,095</td><td>$ 4.16</td><td>0.1 %</td></tr><tr><td>2020</td><td>27</td><td>3,336,350</td><td>$ 4.79</td><td>0.3 %</td></tr><tr><td>2021</td><td>13</td><td>1,505,184</td><td>$ 4.75</td><td>0.1 %</td></tr><tr><td>2022</td><td>16</td><td>2,391,104</td><td>$ 6.00</td><td>0.2 %</td></tr><tr><td>2023</td><td>18</td><td>2,477,479</td><td>$ 6.85</td><td>0.3 %</td></tr><tr><td>2024</td><td>14</td><td>958,890</td><td>$ 11.04</td><td>0.2 %</td></tr><tr><td>2025</td><td>17</td><td>1,977,065</td><td>$ 8.58</td><td>0.3 %</td></tr><tr><td>2026</td><td>5</td><td>651,342</td><td>$ 4.52</td><td>0.1 %</td></tr><tr><td>2027</td><td>8</td><td>1,104,436</td><td>$ 4.87</td><td>0.1 %</td></tr><tr><td>2028 and Thereafter</td><td>20</td><td>2,508,498</td><td>$ 6.69</td><td>0.3 %</td></tr></table>

(1) Does not consider the impact of renewal options that may be contained in leases.

(2) Annual rental revenues represent domestic 2017 consolidated and joint venture combined base rental revenue.



## International Properties

Our ownership interests in properties outside the United States are primarily owned through joint venture arrangements. With the exception of our Premium Outlets in Canada, all of our international properties are managed by third parties.

## European Investments

At December 31, 2017, we owned 63,924,148 shares, or approximately 21.0%, of Klépierre, which had a quoted market price of $43.93 per share. Klépierre is a publicly traded, Paris-based real estate company, which owns, or has an interest in shopping centers located in 16 countries.

As of December 31, 2017, we had a controlling interest in a European investee with interests in nine Designer Outlet properties. Eight of the outlet properties are located in Europe and one outlet property is located in Canada. Of the eight properties in Europe, two are in Italy, two are in the Netherlands, and one each is in Austria, France, Germany and the United Kingdom. As of December 31, 2017, our legal percentage ownership interests in these entities ranged from 45% to 94%. On April 7, 2017, this European investee acquired an additional 15.7% investment in the Roermond Designer Outlets Phase 4 expansion, bringing its total noncontrolling interest in the expansion to 51.3%. On April 21, 2017, this European investee acquired a 100% interest in an outlet center in Roosendaal, Netherlands. In addition, we have a noncontrolling interest in a European property management and development company that provides services to the Designer Outlet properties.

We own a 14.6% interest in Value Retail PLC and affiliated entities, which own and operate nine luxury outlets throughout Europe. We also have a minority direct ownership in three of those outlets.

## Other International Investments

We also hold a 40% interest in nine operating joint venture properties in Japan, a 50% interest in four operating joint venture properties in South Korea, a 50% interest in one operating joint venture property in Mexico, a 50% interest in two operating joint venture properties in Malaysia, and a 50% interest in two operating joint venture properties in Canada. The nine Japanese Premium Outlets operate in various cities throughout Japan and comprise over 3.2 million square feet of GLA and were 99.9% leased as of December 31, 2017.

The following property tables summarize certain data for our international properties as of December 31, 2017 and do not include our equity investment in Klépierre or our cost method investment in Value Retail PLC and affiliated entities.



Simon Property Group, Inc.
Simon Property Group, P.L.

Property Table
International Properties

<table><tr><td rowspan="2">City</td><td rowspan="2">Ownership Interest</td><td rowspan="2">SQG Effective Ownership</td><td colspan="2">Total Area (ac)</td><td colspan="2">Retail/Aments and Major Terms</td></tr><tr><td>Fee</td><td>Fee</td><td>Fee</td><td>Fee</td></tr><tr><td>1</td><td>American (Tokyo)</td><td>40.0 %</td><td>200</td><td>31.5 100</td><td>Adults: Banana/Lemon, 1st Floor, 1st Floor, 1st Floor, 1st Floor, 1st</td><td></td></tr></table>

Simon Property Group, Inc.



<table><tr><td colspan="12">Simon Property Group, Inc.</td></tr><tr><td colspan="12">Simon Property Group, L.P.</td></tr><tr><td colspan="12">Property Table</td></tr><tr><td colspan="12">International Properties</td></tr><tr><td colspan="12">Total Areas (1)</td></tr><tr><td>Ownership Interest</td><td>SPG Effective Ownership</td><td>Year Built</td><td>Total Area (1)</td><td>Adults</td><td>Cain Hill</td><td>Chic Fence</td><td>Canton</td><td>Dodge</td><td>Gabbana</td><td>Lacoste</td><td>Levi&#x27;s</td></tr><tr><td>Mexico City</td><td>50.0 %</td><td>2004</td><td>333,300</td><td>Marmalata</td><td>Nail</td><td>Nail</td><td>Palladio</td><td>Outlet</td><td>Rebeck</td><td>Rockport</td><td>St. Valentine</td></tr><tr><td>Subtotal Mexico</td><td></td><td></td><td></td><td>Sewerocki</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>South KOR</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Young Premium Outlets</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>11.</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr></table>

Simon Property Group, Inc.
Simon Property Group, L.P.
Property Table

<table><tr><td>Montreal (Quebec)</td><td>Montreal (Quebec)</td></tr></table>



<table><tr><td colspan="12">Simon Property Group, Inc.</td></tr><tr><td colspan="12">Simon Property Group, L.P.</td></tr><tr><td colspan="12">Property Table</td></tr><tr><td colspan="12">International Properties</td></tr><tr><td colspan="12">International Properties</td></tr><tr><td colspan="12">International</td></tr><tr><td colspan="12">International</td></tr><tr><td colspan="12">International</td><td></td></tr></table>

(1) All gross leaseable area listed in square feet.
(2) Property is under negotiation and expansion.
(3) Indicates tenant is under development/construction or has announced plans for development.



## Land

We have direct or indirect ownership interests in approximately 380 acres of land held in the United States and Canada for future development.

## Sustainability

We incorporate sustainable thinking into many of the areas of our business; from how we plan, develop, and operate our properties, to how we do business with our customers, engage with our communities, and create a productive and positive work environment for our employees. Our sustainability framework focuses on four key areas: Properties, Customers, Communities, and Employees.

We leverage sustainability to achieve cost efficiencies in our operations. By implementing a range of energy management practices and continuous energy monitoring and reporting, we have reduced our energy consumption at comparable properties every year since 2003. As a result, excluding new developments, we have reduced the electricity usage over which we have direct control by 337 million kWh/s since 2003. This represents a 34% reduction in electricity usage across a portfolio of comparable properties.

Our reduction in greenhouse gas emissions resulting from our energy management efforts in the same time period is 220,674 metric tons of CO \( _{2} \) e. This figure includes emission streams that have been consistently tracked since 2003 including scope 1, scope 2, and for scope 3 only employee commuting and business travel. Additional emission streams, such as emissions generated from solid waste management, use of refrigerants and tenants' plug-load consumptions, were included in Simon's sustainability disclosure since 2013 and are reported in Simon's annual sustainability report published in accordance with the guidelines of the Global Reporting Initiatives (GRI), the most widely used international standard for sustainability reporting.

Simon’s sustainability performance was once again recognized by international organizations. In 2017, Simon was awarded a score of A- by CDP, identifying us as a leader in the retail real estate sector for driving significant reduction in emissions. Simon was also awarded a Green Star ranking - the highest designation awarded for leadership in sustainability performance by the Global Real Estate Sustainability Benchmark (GRESB).

## Mortgages and Unsecured Debt

The following table sets forth certain information regarding the mortgages encumbering our properties, and the properties held by our domestic and international joint venture arrangements, and also our unsecured corporate debt. Substantially all of the mortgage and property related debt is nonrecourse to us.



## Mortgage and Unsecured Debt
As of December 31, 2017
(Dollars in thousands)

<table><tr><td>Property Name</td><td>Rate</td><td>Amount</td><td>Service (1)</td><td>Date</td></tr><tr><td>Consolidated Indebtedness:</td><td></td><td></td><td></td><td></td></tr><tr><td>Secured Indebtedness:</td><td></td><td></td><td></td><td></td></tr><tr><td>Arizona Mills</td><td>5.76 %</td><td>$ 156,146</td><td>$ 12,268</td><td>07/01/20</td></tr><tr><td>Bangor Mall</td><td>6.15 %</td><td>80,000</td><td>4,918 (2)</td><td>10/01/17</td></tr><tr><td>Battlefield Mall</td><td>3.95 %</td><td>119,862</td><td>7,118</td><td>09/01/22</td></tr><tr><td>Birch Run Premium Outlets</td><td>4.21 %</td><td>123,000</td><td>5,177 (2)</td><td>02/06/26</td></tr><tr><td>Calhoun Outlet Marketplace</td><td>4.17 %</td><td>19,013 (19)</td><td>1,140</td><td>06/01/26</td></tr><tr><td>Carolina Premium Outlets</td><td>3.36 %</td><td>45,317</td><td>2,675</td><td>12/01/22</td></tr><tr><td>Domain, The</td><td>5.44 %</td><td>188,529</td><td>14,085</td><td>08/01/21</td></tr><tr><td>Ellenton Premium Outlets</td><td>4.30 %</td><td>178,000</td><td>7,651 (2)</td><td>12/01/25</td></tr><tr><td>Empire Mall</td><td>4.31 %</td><td>190,000</td><td>8,197 (2)</td><td>12/01/25</td></tr><tr><td>Florida Keys Outlet Marketplace</td><td>4.17 %</td><td>17,000</td><td>709 (2)</td><td>12/01/25</td></tr><tr><td>Gaffney Outlet Marketplace</td><td>4.17 %</td><td>30,713 (19)</td><td>1,841</td><td>06/01/26</td></tr><tr><td>Grand Prairie Premium Outlets</td><td>3.66 %</td><td>116,331</td><td>6,596</td><td>04/01/23</td></tr><tr><td>Grove City Premium Outlets</td><td>4.31 %</td><td>140,000</td><td>6,032 (2)</td><td>12/01/25</td></tr><tr><td>Gulfport Premium Outlets</td><td>4.35 %</td><td>50,000</td><td>2,174 (2)</td><td>12/01/25</td></tr><tr><td>Gurnee Mills</td><td>3.99 %</td><td>269,506</td><td>15,736</td><td>10/01/26</td></tr><tr><td>Hagerstown Premium Outlets</td><td>4.26 %</td><td>77,000</td><td>3,279 (2)</td><td>02/06/26</td></tr><tr><td>Independence Center</td><td>5.94 %</td><td>200,000</td><td>11,886 (2)</td><td>07/10/17</td></tr><tr><td>Ingram Park Mall</td><td>5.38 %</td><td>130,744</td><td>9,746</td><td>06/01/21</td></tr><tr><td>La Reggia Designer Outlets Phases 1 &amp; 2</td><td>2.50 %</td><td>159,500 (30)</td><td>8,435</td><td>02/15/22</td></tr><tr><td>Lee Premium Outlets</td><td>4.17 %</td><td>52,651 (19)</td><td>3,157</td><td>06/01/26</td></tr><tr><td>Merrimack Premium Outlets</td><td>3.78 %</td><td>124,287</td><td>7,247</td><td>07/01/23</td></tr><tr><td>Midland Park Mall</td><td>4.35 %</td><td>77,172</td><td>5,078</td><td>09/06/22</td></tr><tr><td>Mills at Jersey Gardens, The</td><td>3.83 %</td><td>350,000</td><td>13,405 (2)</td><td>11/01/20</td></tr><tr><td>Montgomery Mall</td><td>4.57 %</td><td>100,000</td><td>4,570 (2)</td><td>05/01/24</td></tr><tr><td>Noventa Di Piave Designer Outlet Phases 1, 2, 3</td><td>1.67 % (11)</td><td>131,718 (30)</td><td>2,201 (2)</td><td>06/30/20</td></tr><tr><td>Opry Mills</td><td>4.09 %</td><td>375,000</td><td>15,345 (2)</td><td>07/01/26</td></tr><tr><td>Oxford Valley Mall</td><td>4.77 %</td><td>62,538</td><td>4,456</td><td>12/07/20</td></tr><tr><td>Parndorf Designer Outlet</td><td>1.90 %</td><td>110,212 (30)</td><td>2,094 (2)</td><td>05/25/22</td></tr><tr><td>Penn Square Mall</td><td>3.84 %</td><td>310,000</td><td>11,910 (2)</td><td>01/01/26</td></tr><tr><td>Pismo Beach Premium Outlets</td><td>3.33 %</td><td>36,104 (20)</td><td>1,953</td><td>09/06/26</td></tr><tr><td>Plaza Carolina</td><td>2.66 % (1)</td><td>225,000</td><td>5,995 (2)</td><td>07/27/21</td></tr><tr><td>Pleasant Prairie Premium Outlets</td><td>4.00 %</td><td>145,000</td><td>5,793 (2)</td><td>09/01/27</td></tr><tr><td>Potomac Mills</td><td>3.46 %</td><td>416,000</td><td>14,383 (2)</td><td>11/01/26</td></tr><tr><td>Provence Designer Outlet</td><td>2.50 % (33)</td><td>94,174 (30)</td><td>2,354 (2)</td><td>07/27/22 (3)</td></tr><tr><td>Puerto Rico Premium Outlets</td><td>2.66 % (1)</td><td>160,000</td><td>4,263 (2)</td><td>07/26/21</td></tr><tr><td>Queenstown Premium Outlets</td><td>3.33 %</td><td>63,426 (20)</td><td>3,430</td><td>09/06/26</td></tr><tr><td>Roermond Designer Outlet</td><td>1.88 %</td><td>275,529 (30)</td><td>5,174 (2)</td><td>12/18/21</td></tr><tr><td>Rosada Designer Outlets</td><td>1.85 % (24)</td><td>71,877 (30)</td><td>1,330 (2)</td><td>05/25/24 (3)</td></tr><tr><td>Shops at Chestnut Hill, The</td><td>4.69 %</td><td>120,000</td><td>5,624 (2)</td><td>11/01/23</td></tr><tr><td>Shops at Riverside, The</td><td>3.37 %</td><td>130,000</td><td>4,382 (2)</td><td>02/01/23</td></tr><tr><td>Southdale Center</td><td>3.84 %</td><td>147,532</td><td>8,713</td><td>04/01/23</td></tr><tr><td>Southridge Mall</td><td>3.85 %</td><td>119,381</td><td>7,036</td><td>06/06/23</td></tr><tr><td>Summit Mall</td><td>3.31 %</td><td>85,000</td><td>2,817 (2)</td><td>10/01/26</td></tr><tr><td>The Crossings Premium Outlets</td><td>3.41 %</td><td>110,565</td><td>6,131</td><td>12/01/22</td></tr><tr><td>Town Center at Cobb</td><td>4.76 %</td><td>188,806</td><td>12,530</td><td>05/01/22</td></tr><tr><td>University Park Village</td><td>3.85 %</td><td>55,000</td><td>2,118 (2)</td><td>05/01/28</td></tr><tr><td>White Oaks Mall</td><td>4.31 % (28)</td><td>50,500</td><td>1,000</td><td>06/01/23 (3)</td></tr><tr><td>Williamsburg Premium Outlets</td><td>4.23 %</td><td>185,000</td><td>7,824 (2)</td><td>02/06/26</td></tr><tr><td>Wolfchase Galleria</td><td>4.15 %</td><td>162,022</td><td>9,620</td><td>11/01/26</td></tr><tr><td>Woodland Hills Mall</td><td>7.79 %</td><td>87,403</td><td>8,414</td><td>04/05/19</td></tr><tr><td>Total Consolidated Secured Indebtedness</td><td></td><td>$ 6,912,558</td><td></td><td></td></tr><tr><td>Unsecured Indebtedness:</td><td></td><td></td><td></td><td></td></tr><tr><td>Simon Property Group, L.P.</td><td></td><td></td><td></td><td></td></tr><tr><td>Global Commercial Paper - USD</td><td>1.40 % (16)</td><td>$ 978,467</td><td>$ 13,714 (2)</td><td>03/15/18</td></tr><tr><td>Supplemental Credit Facility - USD</td><td>2.36 % (15)</td><td>125,000</td><td>2,950 (2)</td><td>06/30/20 (3)(37)</td></tr><tr><td>Supplemental Credit Facility - Yen Currency</td><td>0.80 % (15)</td><td>197,636 (23)</td><td>1,581 (2)</td><td>06/30/20 (3)(37)</td></tr><tr><td>Unsecured Notes - 22C</td><td>6.75 %</td><td>600,000</td><td>40,500 (14)</td><td>02/01/40</td></tr><tr><td>Unsecured Notes - 23A</td><td>4.38 %</td><td>900,000</td><td>39,375 (14)</td><td>03/01/21</td></tr><tr><td>Unsecured Notes - 24B</td><td>4.13 %</td><td>700,000</td><td>28,875 (14)</td><td>12/01/21</td></tr><tr><td>Unsecured Notes - 25B</td><td>3.38 %</td><td>600,000</td><td>20,250 (14)</td><td>03/15/22</td></tr><tr><td>Unsecured Notes - 25C</td><td>4.75 %</td><td>550,000</td><td>26,125 (14)</td><td>03/15/42</td></tr><tr><td>Unsecured Notes - 26A</td><td>1.50 %</td><td>750,000</td><td>11,250 (14)</td><td>02/01/18 (34)</td></tr></table>



## Mortgage and Unsecured Debt
As of December 31, 2017
(Dollars in thousands)

<table><tr><td>Property Name</td><td>Rate</td><td>Amount</td><td>Service (1)</td><td>Date</td></tr><tr><td>Consolidated Indebtedness:</td><td></td><td></td><td></td><td></td></tr><tr><td>Unsecured Notes - 26B</td><td>2.75 %</td><td>$ 500,000</td><td>$ 13,750 (14)</td><td>02/01/23</td></tr><tr><td>Unsecured Notes - 27A</td><td>2.20 %</td><td>600,000</td><td>13,200 (14)</td><td>02/01/19</td></tr><tr><td>Unsecured Notes - 27B</td><td>3.75 %</td><td>600,000</td><td>22,500 (14)</td><td>02/01/24</td></tr><tr><td>Unsecured Notes - 28A</td><td>3.38 %</td><td>900,000</td><td>30,375 (14)</td><td>10/01/24</td></tr><tr><td>Unsecured Notes - 28B</td><td>4.25 %</td><td>400,000</td><td>17,000 (14)</td><td>10/01/44</td></tr><tr><td>Unsecured Notes - 29A</td><td>2.50 %</td><td>500,000</td><td>12,500 (14)</td><td>09/01/20</td></tr><tr><td>Unsecured Notes - 29B</td><td>3.50 %</td><td>600,000</td><td>21,000 (14)</td><td>09/01/25</td></tr><tr><td>Unsecured Notes - 30A</td><td>2.50 %</td><td>550,000</td><td>13,750 (14)</td><td>07/15/21</td></tr><tr><td>Unsecured Notes - 30B</td><td>3.30 %</td><td>800,000</td><td>26,400 (14)</td><td>01/15/26</td></tr><tr><td>Unsecured Notes - 31A</td><td>2.35 %</td><td>550,000</td><td>12,925 (14)</td><td>01/30/22</td></tr><tr><td>Unsecured Notes - 31B</td><td>3.25 %</td><td>750,000</td><td>24,375 (14)</td><td>11/30/26</td></tr><tr><td>Unsecured Notes - 31C</td><td>4.25 %</td><td>550,000</td><td>23,375 (14)</td><td>11/30/46</td></tr><tr><td>Unsecured Notes - 32A</td><td>2.63 %</td><td>600,000</td><td>15,750 (14)</td><td>06/15/22</td></tr><tr><td>Unsecured Notes - 32B</td><td>3.38 %</td><td>750,000</td><td>25,313 (14)</td><td>06/15/27</td></tr><tr><td>Unsecured Notes - 33A</td><td>2.75 %</td><td>600,000</td><td>16,500 (14)</td><td>06/01/23</td></tr><tr><td>Unsecured Notes - 33B</td><td>3.38 %</td><td>750,000</td><td>25,313 (14)</td><td>12/01/27</td></tr><tr><td>Unsecured Notes - Euro 1</td><td>2.38 %</td><td>898,464 (8)</td><td>21,339 (6)</td><td>10/02/20</td></tr><tr><td>Unsecured Notes - Euro 2</td><td>1.38 %</td><td>898,464 (13)</td><td>12,354 (6)</td><td>11/18/22</td></tr><tr><td>Unsecured Notes - Euro 3</td><td>1.25 %</td><td>598,976 (10)</td><td>7,487 (6)</td><td>05/13/25</td></tr><tr><td>Total Consolidated Unsecured Indebtedness</td><td></td><td></td><td></td><td></td></tr><tr><td>Total Consolidated Indebtedness at Face Amounts</td><td></td><td>$ 17,797,007</td><td></td><td></td></tr><tr><td>Premium on Indebtedness</td><td></td><td>$ 24,709,565</td><td></td><td></td></tr><tr><td>Discount on Indebtedness</td><td></td><td>16,869</td><td></td><td></td></tr><tr><td>Debt Issuance Costs on Fixed-Rate Indebtedness</td><td></td><td>(51,657)</td><td></td><td></td></tr><tr><td>Other Debt Obligations</td><td></td><td>(110,734)</td><td></td><td></td></tr><tr><td>Total Consolidated Indebtedness</td><td></td><td>68,420 (35)</td><td></td><td></td></tr><tr><td>Our Share of Consolidated Indebtedness</td><td></td><td>$ 24,632,463</td><td></td><td></td></tr><tr><td>Joint Venture Indebtedness:</td><td></td><td>$ 24,465,117</td><td></td><td></td></tr><tr><td>Secured Indebtedness:</td><td></td><td></td><td></td><td></td></tr><tr><td>Ami Premium Outlets</td><td>1.77 %</td><td>$ 54,967 (26)</td><td>$ 8,580</td><td>09/25/23</td></tr><tr><td>Ashford Designer Outlet</td><td>2.47 % (18)</td><td>56,522 (21)</td><td>1,397 (2)</td><td>02/22/22</td></tr><tr><td>Arundel Mills</td><td>4.29 %</td><td>385,000</td><td>16,509 (2)</td><td>02/06/24</td></tr><tr><td>Auburn Mall</td><td>6.02 %</td><td>37,785</td><td>3,027</td><td>09/01/20</td></tr><tr><td>Aventura Mall</td><td>3.75 %</td><td>1,200,000</td><td>45,002 (2)</td><td>12/01/20</td></tr><tr><td>Aventura Mall Expansion</td><td>3.51 % (1)</td><td>167,373</td><td>5,882 (2)</td><td>12/30/20 (3)</td></tr><tr><td>Avenues, The</td><td>3.60 %</td><td>110,000</td><td>3,960 (2)</td><td>02/06/23</td></tr><tr><td>Briarwood Mall</td><td>3.29 %</td><td>165,000</td><td>5,432 (2)</td><td>09/01/26</td></tr><tr><td>Busan Premium Outlets</td><td>3.40 %</td><td>106,344 (17)</td><td>3,611 (2)</td><td>06/20/22</td></tr><tr><td>Cape Cod Mall</td><td>5.75 %</td><td>90,392</td><td>7,003</td><td>03/06/21</td></tr><tr><td>Charlotte Premium Outlets</td><td>3.01 % (1)</td><td>90,000</td><td>2,713 (2)</td><td>11/24/19 (3)</td></tr><tr><td>Circle Centre</td><td>4.31 % (1)</td><td>66,000</td><td>3,558</td><td>12/06/24 (3)</td></tr><tr><td>Clarksburg Premium Outlets</td><td>3.95 %</td><td>160,000</td><td>6,320 (2)</td><td>01/01/28</td></tr><tr><td>Coconut Point</td><td>3.95 %</td><td>190,000</td><td>7,511 (2)</td><td>10/01/26</td></tr><tr><td>Colorado Mills - 1</td><td>4.28 %</td><td>135,814</td><td>5,718</td><td>11/01/24</td></tr><tr><td>Colorado Mills - 2</td><td>5.04 %</td><td>26,552</td><td>1,811</td><td>07/01/21</td></tr><tr><td>Concord Mills</td><td>3.84 %</td><td>235,000</td><td>9,015 (2)</td><td>11/01/22</td></tr><tr><td>Crystal Mall</td><td>4.46 %</td><td>89,519</td><td>5,749</td><td>06/06/22</td></tr><tr><td>Dadeland Mall</td><td>4.50 %</td><td>418,899</td><td>27,361</td><td>12/05/21</td></tr><tr><td>Del Amo Fashion Center</td><td>3.66 %</td><td>585,000</td><td>21,396 (2)</td><td>06/01/27</td></tr><tr><td>Domain Westin</td><td>4.12 %</td><td>67,318</td><td>4,069</td><td>09/01/25</td></tr><tr><td>Dover Mall</td><td>5.57 %</td><td>85,342</td><td>6,455</td><td>08/06/21</td></tr><tr><td>Emerald Square Mall</td><td>4.71 %</td><td>104,877</td><td>7,165</td><td>08/11/22</td></tr><tr><td>Falls, The</td><td>3.45 %</td><td>150,000</td><td>5,175 (2)</td><td>09/01/26</td></tr><tr><td>Fashion Centre Pentagon City Office</td><td>5.11 %</td><td>40,000</td><td>2,043 (2)</td><td>07/01/21</td></tr><tr><td>Fashion Centre Pentagon City Retail</td><td>4.87 %</td><td>410,000</td><td>19,957 (2)</td><td>07/01/21</td></tr><tr><td>Fashion Valley</td><td>4.30 %</td><td>441,098</td><td>28,208</td><td>01/04/21</td></tr><tr><td>Florida Mall, The</td><td>5.25 %</td><td>329,579</td><td>24,849</td><td>09/05/20</td></tr><tr><td>Galleria, The</td><td>3.55 %</td><td>1,200,000</td><td>42,598 (2)</td><td>03/01/25</td></tr><tr><td>Genting Highland Premium Outlets</td><td>5.37 % (7)</td><td>25,234 (9)</td><td>1,355 (2)</td><td>02/14/24</td></tr><tr><td>Gloucester Premium Outlets</td><td>2.96 % (1)</td><td>83,921</td><td>2,488 (2)</td><td>06/19/19 (3)</td></tr><tr><td>Grapevine Mills</td><td>3.83 %</td><td>268,000</td><td>10,272 (2)</td><td>10/01/24</td></tr><tr><td>Gotemba Premium Outlets</td><td>0.37 % (12)</td><td>2,329 (26)</td><td>4,669</td><td>02/28/18</td></tr><tr><td>Hamilton Town Center</td><td>4.81 %</td><td>80,613</td><td>5,293</td><td>04/01/22</td></tr></table>



## Mortgage and Unsecured Debt
As of December 31, 2017
(Dollars in thousands)

<table><tr><td>Property Name</td><td>Rate</td><td>Amount</td><td>Service (1)</td><td>Date</td></tr><tr><td>Consolidated Indebtedness:</td><td></td><td></td><td></td><td></td></tr><tr><td>Johor Premium Outlets.</td><td>5.02 % (7)</td><td>$ 5,370 (9)</td><td>$ 6,894</td><td>10/14/20</td></tr><tr><td>Katy Mills</td><td>3.49 %</td><td>140,000</td><td>4,886 (2)</td><td>12/06/22</td></tr><tr><td>Kobe-Sanda Premium Outlets.</td><td>0.44 % (12)</td><td>30,305 (26)</td><td>1,733</td><td>01/31/20</td></tr><tr><td>Lehigh Valley Mall</td><td>4.06 %</td><td>199,451</td><td>12,325</td><td>11/01/27</td></tr><tr><td>Liberty Tree Mall</td><td>3.41 %</td><td>31,762</td><td>1,866</td><td>05/06/23</td></tr><tr><td>Mall at Rockingham Park, The.</td><td>4.04 %</td><td>262,000</td><td>10,585 (2)</td><td>06/01/26</td></tr><tr><td>Mall at Tuttle Crossing, The.</td><td>3.56 %</td><td>121,317</td><td>6,789</td><td>05/01/23</td></tr><tr><td>Mall of New Hampshire, The.</td><td>4.11 %</td><td>150,000</td><td>6,162 (2)</td><td>07/01/25</td></tr><tr><td>Meadowood Mall</td><td>5.82 %</td><td>114,492</td><td>8,818</td><td>11/06/21</td></tr><tr><td>Miami International Mall</td><td>4.42 %</td><td>160,000</td><td>7,072 (2)</td><td>02/06/24</td></tr><tr><td>Northshore Mall</td><td>3.30 %</td><td>249,469</td><td>14,453</td><td>07/05/23</td></tr><tr><td>Ochtrup Designer Outlet.</td><td>2.49 % (27)</td><td>49,320 (30)</td><td>2,881</td><td>06/30/21</td></tr><tr><td>Ontario Mills</td><td>4.25 %</td><td>312,385</td><td>20,661</td><td>03/05/22</td></tr><tr><td>Outlets at Orange, The.</td><td>4.22 %</td><td>215,000</td><td>9,067 (2)</td><td>04/01/24</td></tr><tr><td>Paju Premium Outlets.</td><td>3.79 %</td><td>76,268 (17)</td><td>2,892 (2)</td><td>03/27/20</td></tr><tr><td>Phipps Plaza Residential</td><td>3.31 % (1)</td><td>38,274</td><td>1,268 (2)</td><td>10/16/19 (3)</td></tr><tr><td>Phipps Plaza Hotel.</td><td>3.56 % (1)</td><td>21,450</td><td>765 (2)</td><td>12/17/19 (3)</td></tr><tr><td>Premium Outlet Collection Edmonton IA</td><td>2.74 % (4)</td><td>54,298 (22)</td><td>1,488 (2)</td><td>11/10/21 (3)</td></tr><tr><td>Premium Outlets Montréal</td><td>3.10 %</td><td>95,602 (5)</td><td>2,964 (2)</td><td>06/01/24</td></tr><tr><td>Quaker Bridge Mall</td><td>4.50 %</td><td>180,000</td><td>8,100 (2)</td><td>05/01/26</td></tr><tr><td>Rinku Premium Outlets.</td><td>0.32 % (12)</td><td>8,877 (26)</td><td>1,803 (2)</td><td>07/31/22</td></tr><tr><td>Roermond 4 Designer Outlets.</td><td>1.40 % (36)</td><td>56,304 (30)</td><td>788 (2)</td><td>07/12/20</td></tr><tr><td>Sano Premium Outlets</td><td>0.45 % (12)</td><td>755 (26)</td><td>1,512</td><td>05/31/18</td></tr><tr><td>Sendai-Izumi Premium Outlets</td><td>0.41 % (12)</td><td>3,374 (26)</td><td>3,387</td><td>10/31/18</td></tr><tr><td>Shisui Premium Outlets - Variable</td><td>0.37 % (12)</td><td>27,340 (26)</td><td>5,071</td><td>05/31/18</td></tr><tr><td>Shisui Premium Outlets - Fixed</td><td>0.38 %</td><td>44,383 (26)</td><td>169 (2)</td><td>05/29/22</td></tr><tr><td>Shops at Clearfork</td><td>3.31 % (1)</td><td>130,420</td><td>4,322 (2)</td><td>03/18/21 (3)</td></tr><tr><td>Shops at Crystals.</td><td>3.74 %</td><td>550,000</td><td>20,592 (2)</td><td>07/01/26</td></tr><tr><td>Shops at Mission Viejo, The.</td><td>3.61 %</td><td>295,000</td><td>10,650 (2)</td><td>02/01/23</td></tr><tr><td>Siheung Premium Outlets.</td><td>3.28 %</td><td>140,543 (17)</td><td>4,610 (2)</td><td>03/15/23</td></tr><tr><td>Silver Sands Premium Outlets.</td><td>3.93 %</td><td>100,000</td><td>3,930 (2)</td><td>06/01/22</td></tr><tr><td>Smith Haven Mall.</td><td>2.76 % (1)</td><td>180,000</td><td>4,976 (2)</td><td>05/29/20 (3)</td></tr><tr><td>Solomon Pond Mall</td><td>4.01 %</td><td>99,650</td><td>6,309</td><td>11/01/22</td></tr><tr><td>Southdale Residential.</td><td>4.46 %</td><td>40,285</td><td>2,530</td><td>10/15/35</td></tr><tr><td>Springfield Mall</td><td>4.45 %</td><td>62,746</td><td>3,928</td><td>10/06/25</td></tr><tr><td>Square One Mall</td><td>5.47 %</td><td>91,333</td><td>6,793</td><td>01/06/22</td></tr><tr><td>Stoneridge Shopping Center.</td><td>3.50 %</td><td>330,000</td><td>11,550 (2)</td><td>09/05/26</td></tr><tr><td>St. Johns Town Center.</td><td>3.82 %</td><td>350,000</td><td>13,367 (2)</td><td>09/11/24</td></tr><tr><td>St. Louis Premium Outlets</td><td>4.06 %</td><td>95,000</td><td>3,858 (2)</td><td>10/06/24</td></tr><tr><td>Tanger Outlets Columbus.</td><td>3.21 % (1)</td><td>85,000</td><td>2,732 (2)</td><td>11/28/21 (3)</td></tr><tr><td>Tanger Outlets - Galveston/Houston</td><td>3.21 % (1)</td><td>80,000</td><td>2,571 (2)</td><td>07/01/22 (3)</td></tr><tr><td>Toki Premium Outlets - Fixed</td><td>0.38 %</td><td>26,630 (26)</td><td>100 (2)</td><td>11/30/19</td></tr><tr><td>Toki Premium Outlets - Variable</td><td>0.91 % (12)</td><td>5,523 (26)</td><td>50 (2)</td><td>05/31/20</td></tr><tr><td>Toronto Premium Outlets</td><td>3.13 %</td><td>135,436 (5)</td><td>4,234 (2)</td><td>06/01/22</td></tr><tr><td>Toronto Premium Outlets II.</td><td>2.64 % (4)</td><td>48,438 (22)</td><td>1,279 (2)</td><td>05/25/22 (3)</td></tr><tr><td>Tosu Premium Outlets</td><td>0.40 % (12)</td><td>14,469 (26)</td><td>2,099 (2)</td><td>07/31/21</td></tr><tr><td>Twin Cities Premium Outlets.</td><td>4.32 %</td><td>115,000</td><td>4,968 (2)</td><td>11/06/24</td></tr><tr><td>Vancouver Designer Outlet.</td><td>3.29 % (4)</td><td>87,050 (32)</td><td>2,865 (2)</td><td>06/19/18</td></tr><tr><td>West Town Mall</td><td>4.37 %</td><td>210,000</td><td>9,177 (2)</td><td>07/01/22</td></tr><tr><td>Westchester, The.</td><td>6.00 %</td><td>332,111</td><td>26,980</td><td>05/05/20</td></tr><tr><td>Woodfield Mall.</td><td>4.50 %</td><td>419,886</td><td>24,162 (2)</td><td>03/05/24</td></tr><tr><td>Yeoju Premium Outlets.</td><td>4.10 %</td><td>78,801 (17)</td><td>3,233 (2)</td><td>09/06/20</td></tr><tr><td>Total Joint Venture Secured Indebtedness at Face Value.</td><td></td><td>$ 14,409,595</td><td></td><td></td></tr><tr><td>TMLP Indebtedness at Face Value</td><td></td><td>427,895 (29)</td><td></td><td></td></tr><tr><td>Total Joint Venture and TMLP Indebtedness at Face Value</td><td></td><td>$ 14,837,490</td><td></td><td></td></tr><tr><td>Premium on Indebtedness</td><td></td><td>2,781</td><td></td><td></td></tr><tr><td>Debt Issuance Costs</td><td></td><td>(55,961)</td><td></td><td></td></tr><tr><td>Total Joint Venture Indebtedness.</td><td></td><td>$ 14,784,310</td><td></td><td></td></tr><tr><td>Our Share of Joint Venture Indebtedness.</td><td></td><td>$ 7,011,525 (31)</td><td></td><td></td></tr></table>



# Mortgage and Unsecured Debt
As of December 31, 2017
(Dollars in thousands)

(1) Variable rate loans based on one month (1M) LIBOR plus interest rate spreads ranging from 80 bps to 275 bps. 1M LIBOR as of December 31, 2017 was 1.56%.

(2) Requires monthly payment of interest only.

(3) Includes applicable extension available at the Applicable Borrower’s option.

(4) Variable rate loans based on 1M CDOR plus interest rate spreads ranging from 120 bps to 185 bps. 1M CDOR at December 31, 2017 was 1.44%.

(5) Amount shown in USD equivalent. CAD Equivalent is 290.0 million.

(6) Requires annual payment of interest only.

(7) Variable rate loans based on Cost of Fund plus interest rate spread of 150 bps to 175 bps. Cost of Fund as of December 31, 2017 was 3.52%.

(8) Amount shown in USD equivalent. Euro equivalent is 750.0 million.

(9) Amount shown in USD equivalent. Ringgit equivalent is 124.4 million.

(10) Amount shown in USD equivalent. Euro equivalent is 500.0 million.

(11) Variable rate loan based on three month (3M) EURIBOR plus an interest rate spread of 200 bps. 3M EURIBOR at December 31, 2017 was -0.33%. In addition, 3M EURIBOR is capped at 1.00%.

(12) Variable rate loans based on 1M TIBOR or six month (6M) TIBOR plus interest rate spreads ranging from 20 bps to 40 bps. As of December 31, 2017, 1M TIBOR and 6M TIBOR were 0.05% and 0.12%, respectively.

(13) Amount shown in USD equivalent. Euro equivalent is 750.0 million.

(14) Requires semi-annual payments of interest only.

(15) $3.5 Billion Supplemental Credit Facility. As of December 31, 2017, the Supplemental Credit Facility — USD Currency bears interest at LIBOR + 80 bps, the Supplemental Credit Facility — Yen Currency bears interest at Yen LIBOR + 80 bps and the Supplemental Credit Facility — Euro Currency bears interest at 1M EURO LIBOR + 80 bps. The Credit Facilities provide for different pricing based upon our investment grade rating. As of December 31, 2017, $6.2 billion was available after outstanding borrowings and letters of credit under our Credit Facilities.

(16) Reflects the latest maturity date and weighted average interest rate of all outstanding tranches of commercial paper at December 31, 2017.

(17) Amount shown in USD equivalent. Won equivalent is 429.0 billion.

(18) Variable rate loan based on 3M GBP LIBOR plus an interest rate spread of 195 bps. 1M GBP LIBOR at December 31, 2017 was 0.52%.

(19) Loans secured by these three properties are cross-collateralized and cross-defaulted.

(20) Loans secured by these two properties are cross-collateralized and cross-defaulted.

(21) Amount shown in USD equivalent. GBP equivalent is 41.9 million.

(22) Amounts shown in USD equivalent. CAD equivalent is 129.0 million.

(23) Amount shown in USD equivalent. Balances include borrowings on multi-currency tranche of Yen 22.3 billion.

(24) Variable rate loan based on 1M EURIBOR plus an interest rate spread of 185 bps. Through an interest rate floor agreement, 1M EURIBOR is currently fixed at 0.00%.

(25) Variable rate loan based on 3M EURIBOR plus an interest rate spread of 250 bps. Through an interest rate floor agreement, 3M EURIBOR is currently fixed at 0.00%.

(26) Amount shown in USD equivalent. Yen equivalent is 24.7 billion.

(27) Associated with this loan is an interest rate swap agreement that effectively fixes the interest rate on this loan at the all-in rate presented.



# Mortgage and Unsecured Debt
As of December 31, 2017
(Dollars in thousands)

(28) Variable rate loan based on 1M LIBOR plus an interest rate spread of 275 bps. In addition, 1M LIBOR is capped at 5.00%.

(29) Consists of two properties with interest rates ranging from 5.65% to 7.32% and maturities between 2018 and 2019.

(30) Amount shown in USD equivalent. Euro equivalent is 791.9 million.

(31) Our share of total indebtedness includes a pro rata share of the mortgage debt on joint venture properties. To the extent total indebtedness is secured by a property, it is non-recourse to us, with the exception of approximately $211.6 million of payment guarantees provided by the Operating Partnership (of which $10.8 million is recoverable from our venture partner under the partnership agreement).

(32) Amounts shown in USD equivalent. CAD equivalent is 109.3 million.

(33) Variable rate loan based on 3M EURIBOR plus an interest rate spread of 250 bps. Through an interest rate floor agreement, 3M EURIBOR is currently fixed at 0.00%. In addition, 3M EURIBOR is capped at 1.00%.

(34) Notes redeemed at par on January 3, 2018.

(35) City of Sunrise Bond Liability (Sawgrass Mills).

(36) Variable rate loan based on 3M EURIBOR plus an interest rate spread of 140 bps. Through an interest rate floor agreement, 3M EURIBOR is fixed at 0.00%.

(37) As discussed in Note 8 of the consolidated financial statements, the Operating Partnership amended and extended the Supplemental Credit Facility on February 15, 2018.

The changes in consolidated mortgages and unsecured indebtedness for the years ended December 31, 2017, 2016 and 2015 are as follows:

<table><tr><td></td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Balance, Beginning of Year.</td><td>$ 22,977,104</td><td>$ 22,416,682</td><td>$ 20,768,254</td></tr><tr><td>Additions during period:</td><td></td><td></td><td></td></tr><tr><td>New Loan Originations.</td><td>12,148,534</td><td>14,760,261</td><td>6,095,011</td></tr><tr><td>Loans assumed in acquisitions and consolidation.</td><td>42,266</td><td>448,559</td><td>405,000</td></tr><tr><td>Net (Discount)/Premium.</td><td>(11,636)</td><td>(9,822)</td><td>6,980</td></tr><tr><td>Net Debt Issuance Costs.</td><td>(34,606)</td><td>(34,048)</td><td>(10,908)</td></tr><tr><td>Deductions during period:</td><td></td><td></td><td></td></tr><tr><td>Loan Retirements.</td><td>(10,466,033)</td><td>(14,549,425)</td><td>(4,750,606)</td></tr><tr><td>Amortization of Net Discounts/(Premiums).</td><td>1,357</td><td>(14,583)</td><td>(16,107)</td></tr><tr><td>Debt Issuance Cost Amortization.</td><td>21,709</td><td>21,702</td><td>10,156</td></tr><tr><td>Scheduled Principal Amortization.</td><td>(46,232)</td><td>(62,222)</td><td>(91,098)</td></tr><tr><td>Balance, Close of Year.</td><td>$ 24,632,463</td><td>$ 22,977,104</td><td>$ 22,416,682</td></tr></table>



## Item 3. Legal Proceedings

We are involved from time-to-time in various legal and regulatory proceedings that arise in the ordinary course of our business, including, but not limited to, commercial disputes, environmental matters, and litigation in connection with transactions such as acquisitions and divestitures. We believe that our current proceedings will not have a material adverse effect on our financial condition, liquidity or results of operations. We record a liability when a loss is considered probable, and the amount can be reasonably estimated.

## Item 4. Mine Safety Disclosures

Not applicable.



## Part II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

## Simon

## Market Information

Simon’s common stock trades on the New York Stock Exchange under the symbol “SPG”. The quarterly price range for the shares and the dividends declared per share for each quarter in the last two fiscal years are shown below:

<table><tr><td></td><td>High</td><td>Low</td><td>Close</td><td>Declared Dividends</td></tr><tr><td>2016</td><td></td><td></td><td></td><td></td></tr><tr><td>1st Quarter</td><td>$ 208.12</td><td>$ 176.11</td><td>$ 207.69</td><td>$ 1.60</td></tr><tr><td>2nd Quarter</td><td>217.17</td><td>190.82</td><td>216.90</td><td>1.60</td></tr><tr><td>3rd Quarter</td><td>229.10</td><td>206.02</td><td>207.01</td><td>1.65</td></tr><tr><td>4th Quarter</td><td>206.29</td><td>173.11</td><td>177.67</td><td>1.65</td></tr><tr><td>2017</td><td></td><td></td><td></td><td></td></tr><tr><td>1st Quarter</td><td>$ 188.10</td><td>$ 163.55</td><td>$ 172.03</td><td>$ 1.75</td></tr><tr><td>2nd Quarter</td><td>176.17</td><td>150.15</td><td>161.76</td><td>1.75</td></tr><tr><td>3rd Quarter</td><td>167.12</td><td>152.51</td><td>161.01</td><td>1.80</td></tr><tr><td>4th Quarter</td><td>172.35</td><td>153.71</td><td>171.74</td><td>1.85</td></tr></table>

There is no established public trading market for Simon’s Class B common stock. Dividends on the Class B common stock are identical to the common stock.

## Holders

The number of holders of record of common stock outstanding was 1,128 as of February 14, 2018. The Class B common stock is subject to two voting trusts as to which Herbert Simon and David Simon are the trustees. Shares of Class B common stock convert automatically into an equal number of shares of common stock upon the occurrence of certain events and can be converted into shares of common stock at the option of the holders.

## Dividends

We must pay a minimum amount of dividends to maintain Simon’s status as a REIT. Simon’s future dividends and future distributions of the Operating Partnership will be determined by Simon’s Board of Directors, in its sole discretion, based on actual and projected financial condition, liquidity and results of operations, cash available for dividends and limited partner distributions, cash reserves as deemed necessary for capital and operating expenditures, financing covenants, if any, and the amount required to maintain Simon’s status as a REIT.

Common stock cash dividends during 2017 aggregated $7.15 per share. Common stock cash dividends during 2016 aggregated $6.50 per share. In January 2018, Simon’s Board of Directors declared a quarterly cash dividend of $1.95 per share of common stock payable on February 28, 2018 to stockholders of record on February 14, 2018.

We offer a dividend reinvestment plan that allows Simon’s stockholders to acquire additional shares by automatically reinvesting cash dividends. Shares are acquired pursuant to the plan at a price equal to the prevailing market price of such shares, without payment of any brokerage commission or service charge.



## Unregistered Sales of Equity Securities

During the fourth quarter of 2017, we issued an aggregate of 375,560 shares of common stock to limited partners of the Operating Partnership in exchange for an equal number of units pursuant to the partnership agreement of the Operating Partnership, as follows:

• 340,124 shares on December 13, 2017, and

• 35,436 shares on November 22, 2017.

In each case, the issuance of the shares of common stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

## Issuances Under Equity Compensation Plans

For information regarding the securities authorized for issuance under our equity compensation plans, see Item 12 of this Annual Report on Form 10-K.

## Issuer Purchases of Equity Securities

<table><tr><td>Period</td><td>Total number of shares purchased</td><td>Average price paid per share</td><td>Total number of shares purchased as part of publicly announced programs</td><td>Approximate value of shares that may yet be purchased under programs (1)</td></tr><tr><td>October 1, 2017-October 31, 2017</td><td>68,800</td><td>(1)\(</td><td>—</td><td>$ 1,005,557,111</td></tr><tr><td>November 1, 2017-November 30, 2017</td><td>68,800</td><td>(1)\(</td><td>68,800</td><td>$ 994,845,364</td></tr><tr><td>December 1, 2017-December 31, 2017</td><td>779</td><td>$ 155.86</td><td>779</td><td>$ 994,723,946</td></tr><tr><td></td><td>69,579</td><td>$ 155.70</td><td>69,579</td><td></td></tr></table>

(1) On February 13, 2017, Simon’s Board of Directors authorized a two-year extension of the previously authorized $2.0 billion Repurchase Program through March 31, 2019. Under the Repurchase Program, Simon may repurchase the shares in the open market or in privately negotiated transactions. As Simon repurchases shares under this program, the Operating Partnership repurchases an equal number of units from Simon.

## The Operating Partnership

## Market Information

There is no established trading market for units or preferred units. The following table sets forth for the periods indicated, the distributions declared on the Operating Partnership’s units:

<table><tr><td></td><td>Declared Dividends</td></tr><tr><td>2016</td><td></td></tr><tr><td>1st Quarter</td><td>$ 1.60</td></tr><tr><td>2nd Quarter</td><td>1.60</td></tr><tr><td>3rd Quarter</td><td>1.65</td></tr><tr><td>4th Quarter</td><td>1.65</td></tr><tr><td>2017</td><td></td></tr><tr><td>1st Quarter</td><td>$ 1.75</td></tr><tr><td>2nd Quarter</td><td>1.75</td></tr><tr><td>3rd Quarter</td><td>1.80</td></tr><tr><td>4th Quarter</td><td>1.85</td></tr></table>

## Holders

The number of holders of record of units was 269 as of February 14, 2018.



## Distributions

The Operating Partnership makes distributions on its units in amounts sufficient to maintain Simon’s qualification as a REIT. Simon is required each year to distribute to its stockholders at least 90% of its REIT taxable income after certain adjustments. Future distributions will be determined by Simon’s Board of Directors, in its sole discretion, based on actual and projected financial condition, liquidity and results of operations, cash available for distributions, cash reserves as deemed necessary for capital and operating expenditures, financing covenants, if any, and the distributions that may be required to maintain Simon’s status as a REIT.

Distributions during 2017 aggregated $7.15 per unit. Distributions during 2016 aggregated $6.50 per unit. In January 2018, Simon's Board of Directors declared a quarterly cash dividend of $1.95 per share. The distribution rate on the Operating Partnership's units is equal to the dividend rate on Simon's common stock.

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

None.



## 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.

<table><tr><td rowspan="3"></td><td colspan="6">As of or for the Year Ended December 31</td></tr><tr><td>2017 (1)</td><td>2016 (2)</td><td>2015 (3)</td><td>2014 (4)</td><td>2013</td><td></td></tr><tr><td colspan="6">(in thousands, except per share data)</td></tr><tr><td>OPERATING DATA:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Total consolidated revenue</td><td>$ 5,538,640</td><td>$ 5,435,229</td><td>$ 5,266,103</td><td>$ 4,870,818</td><td>$ 4,543,849</td><td></td></tr><tr><td>Consolidated income from continuing operations</td><td>2,244,903</td><td>2,134,706</td><td>2,139,375</td><td>1,622,165</td><td>1,366,793</td><td></td></tr><tr><td>Consolidated net income</td><td>2,244,903</td><td>2,134,706</td><td>2,139,375</td><td>1,651,526</td><td>1,551,590</td><td></td></tr><tr><td>Net income attributable to common stockholders - SPG Inc.</td><td>1,944,625</td><td>1,835,559</td><td>1,824,383</td><td>1,405,251</td><td>1,316,304</td><td></td></tr><tr><td>Net income attributable to unitholders - SPG L.P.</td><td>2,239,638</td><td>2,122,236</td><td>2,131,139</td><td>1,643,783</td><td>1,537,348</td><td></td></tr><tr><td>BASIC AND DILUTED EARNINGS PER SHARE/UNIT:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Simon Property Group, Inc.</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$ 6.24</td><td>$ 5.87</td><td>$ 5.88</td><td>$ 4.44</td><td>$ 3.73</td><td></td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>—</td><td>0.08</td><td>0.51</td><td></td></tr><tr><td>Net income attributable to common stockholders</td><td>$ 6.24</td><td>$ 5.87</td><td>$ 5.88</td><td>$ 4.52</td><td>$ 4.24</td><td></td></tr><tr><td>Basic weighted average shares outstanding</td><td>311,517</td><td>312,691</td><td>310,103</td><td>310,731</td><td>310,255</td><td></td></tr><tr><td>Diluted weighted average shares outstanding</td><td>311,517</td><td>312,691</td><td>310,103</td><td>310,731</td><td>310,255</td><td></td></tr><tr><td>Dividends per share (5)</td><td>$ 7.15</td><td>$ 6.50</td><td>$ 6.05</td><td>$ 5.15</td><td>$ 4.65</td><td></td></tr><tr><td>Simon Property Group, L.P.</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$ 6.24</td><td>$ 5.87</td><td>$ 5.88</td><td>$ 4.44</td><td>$ 3.73</td><td></td></tr><tr><td>Discontinued operations</td><td>—</td><td>—</td><td>—</td><td>0.08</td><td>0.51</td><td></td></tr><tr><td>Net income attributable to unitholders</td><td>$ 6.24</td><td>$ 5.87</td><td>$ 5.88</td><td>$ 4.52</td><td>$ 4.24</td><td></td></tr><tr><td>Basic weighted average units outstanding</td><td>358,777</td><td>361,527</td><td>362,244</td><td>363,476</td><td>362,356</td><td></td></tr><tr><td>Diluted weighted average units outstanding</td><td>358,777</td><td>361,527</td><td>362,244</td><td>363,476</td><td>362,356</td><td></td></tr><tr><td>Distributions per unit (5)</td><td>$ 7.15</td><td>$ 6.50</td><td>$ 6.05</td><td>$ 5.15</td><td>$ 4.65</td><td></td></tr><tr><td>BALANCE SHEET DATA:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash and cash equivalents</td><td>$ 1,482,309</td><td>$ 560,059</td><td>$ 701,134</td><td>$ 612,282</td><td>$ 1,691,006</td><td></td></tr><tr><td>Total assets</td><td>32,257,638</td><td>31,103,578</td><td>30,565,182</td><td>29,447,591</td><td>33,239,161</td><td></td></tr><tr><td>Mortgages and other indebtedness</td><td>24,632,463</td><td>22,977,104</td><td>22,416,682</td><td>20,768,254</td><td>22,584,504</td><td></td></tr><tr><td>Total equity</td><td>4,238,764</td><td>4,959,912</td><td>5,216,369</td><td>5,951,505</td><td>6,822,632</td><td></td></tr><tr><td>OTHER DATA:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Cash flow provided by (used in):</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Operating activities</td><td>$ 3,593,788</td><td>$ 3,372,694</td><td>$ 3,024,685</td><td>$ 2,730,420</td><td>$ 2,700,996</td><td></td></tr><tr><td>Investing activities</td><td>(761,467)</td><td>(969,026)</td><td>(1,462,720)</td><td>(897,266)</td><td>(948,088)</td><td></td></tr><tr><td>Financing activities</td><td>(1,910,071)</td><td>(2,544,743)</td><td>(1,473,113)</td><td>(2,937,735)</td><td>(1,220,563)</td><td></td></tr><tr><td>Simon Property Group, Inc.</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ratio of Earnings to Fixed Charges and Preferred Stock Dividends</td><td>3.26x</td><td>2.95x</td><td>2.70x</td><td>2.39x</td><td>2.22x</td><td></td></tr><tr><td>Funds from Operations (FFO) (6)</td><td>$ 4,020,505</td><td>$ 3,792,951</td><td>$ 3,571,237</td><td>$ 3,235,298</td><td>$ 3,205,693</td><td></td></tr><tr><td>Dilutive FFO allocable to common stockholders</td><td>$ 3,490,910</td><td>$ 3,280,590</td><td>$ 3,057,193</td><td>$ 2,765,819</td><td>$ 2,744,770</td><td></td></tr><tr><td>Diluted FFO per share</td><td>$ 11.21</td><td>$ 10.49</td><td>$ 9.86</td><td>$ 8.90</td><td>$ 8.85</td><td></td></tr><tr><td>Simon Property Group, L.P.</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ratio of Earnings to Fixed Charges</td><td>3.28x</td><td>2.97x</td><td>2.71x</td><td>2.40x</td><td>2.23x</td><td></td></tr><tr><td>Funds from Operations (FFO) (6)</td><td>$ 4,020,505</td><td>$ 3,792,951</td><td>$ 3,571,237</td><td>$ 3,235,298</td><td>$ 3,205,693</td><td></td></tr></table>

(1) During the year ended December 31, 2017, we recorded a $128.6 million loss on extinguishment of debt associated with the early redemption of a series of senior unsecured notes, reducing diluted earnings per share/units and diluted FFO per share by $0.36.

(2) During the year ended December 31, 2016, we recorded a $136.8 million loss on extinguishment of debt associated with the early redemption of a series of senior unsecured notes, reducing diluted earnings per share/units and diluted FFO per share by $0.38.

(3) During the year ended December 31, 2015, we recorded a $121.0 million loss on extinguishment of debt associated with the early redemption of two series of unsecured senior notes, reducing diluted earnings per share/units and diluted FFO per share



by $0.33. We also recorded a gain on sale of marketable securities of $80.2 million, increasing diluted earnings per share/unit and diluted FFO per share by $0.22.

(4) During the year ended December 31, 2014, we recorded a $127.6 million loss on extinguishment of debt associated with five unsecured note tender offers and one early unsecured note redemption, reducing diluted earnings per share/unit and diluted FFO per share by $0.35. We also recorded transaction expenses related to the spin-off of Washington Prime Group Inc., or Washington Prime, of $38.2 million or $0.10 per share/unit. 2014 FFO includes results for five months of Washington Prime of $146.2 million or $0.40 per share.

(5) Represents dividends per share of Simon common stock/distributions per unit of Operating Partnership units declared per period.

(6) FFO is a non-GAAP financial measure that we believe provides useful information to investors. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations for a definition and reconciliation of FFO to consolidated net income and, for Simon, FFO per share to net income per share.



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

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto that are included in this Annual Report on Form 10-K.

## Overview

Simon Property Group, Inc. is a Delaware corporation that operates as a self-administered and self-managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. REITs will generally not be liable for U.S. federal corporate income taxes as long as they distribute not less than 100% of their REIT taxable income. Simon Property Group, L.P. is our majority-owned Delaware partnership subsidiary that owns all of our real estate properties and other assets. In this discussion, unless stated otherwise or the context otherwise requires, references to "Simon" mean Simon Property Group, Inc. and references to the "Operating Partnership" mean Simon Property Group, L.P. References to "we," "us" and "our" mean collectively Simon, the Operating Partnership and those entities/subsidiaries owned or controlled by Simon and/or the Operating Partnership. According to the Operating Partnership's partnership agreement, the Operating Partnership is required to pay all expenses of Simon.

We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of Simon \( ^{®} \)  malls, Premium Outlets \( ^{®} \) , and The Mills \( ^{®} \) . As of December 31, 2017, we owned or held an interest in 207 income-producing properties in the United States, which consisted of 107 malls, 68 Premium Outlets, 14 Mills, four lifestyle centers, and 14 other retail properties in 37 states and Puerto Rico. In addition, we have redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 25 properties in the United States, Canada and Asia. We have one outlet under development in the United States. Internationally, as of December 31, 2017, we had ownership interests in nine Premium Outlets in Japan, four Premium Outlets in South Korea, two Premium Outlets in Canada, two Premium Outlets in Malaysia and one Premium Outlet in Mexico. We also own an interest in eight Designer Outlet properties in Europe, of which six properties are consolidated, and one Designer Outlet property in Canada. Of the eight properties in Europe, two are located in Italy, two are located in the Netherlands and one each is located in Austria, France, Germany and the United Kingdom. We also have three international outlet properties under development. As of December 31, 2017, we also owned a 21.0% equity stake in Klépierre SA, or Klépierre, a publicly traded, Paris-based real estate company, which owns, or has an interest in, shopping centers located in 16 countries in Europe.

We generate the majority of our revenues from leases with retail, dining, entertainment and other tenants, including:

• base minimum rents.

• overage and percentage rents based on tenants' sales volumes, and

• recoverable expenditures such as property operating, real estate taxes, repair and maintenance, and advertising and promotional expenditures.

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

We invest in real estate properties to maximize total financial return which includes both operating cash flows and capital appreciation. We seek growth in earnings, funds from operations, or FFO, and cash flows by enhancing the profitability and operation of our properties and investments. We seek to accomplish this growth through the following:

• attracting and retaining high quality tenants and utilizing economies of scale to reduce operating expenses,

• expanding and re-tenanting existing highly productive locations at competitive rental rates,

• selectively acquiring or increasing our interests in high quality real estate assets or portfolios of assets,

• generating consumer traffic in our retail properties through marketing initiatives and strategic corporate alliances, and

• selling selective non-core assets.

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

• establishing our malls as leading market resource providers for retailers and other businesses and consumer-focused corporate alliances, including payment systems (such as handling fees relating to the sales of



bank-issued prepaid cards), national marketing alliances, static and digital media initiatives, business development, sponsorship, and events,

• offering property operating services to our tenants and others, including waste handling and facility services, and the provision of energy services,

• selling or leasing land adjacent to our properties, commonly referred to as “outlots” or “outparcels,” and

• generating interest income on cash deposits and investments in loans, including those made to related entities.

We focus on high quality real estate across the retail real estate spectrum. We expand or redevelop properties to enhance profitability and market share of existing assets when we believe the investment of our capital meets our risk-reward criteria. We selectively develop new properties in markets we believe are not adequately served by existing retail outlet properties.

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

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

• provide the capital necessary to fund growth,

• maintain sufficient flexibility to access capital in many forms, both public and private, and

• manage our overall financial structure in a fashion that preserves our investment grade credit ratings.

We consider FFO, net operating income, or NOI, portfolio NOI and comparable property NOI (NOI for properties owned and operated in both periods under comparison) to be key measures of operating performance that are not specifically defined by accounting principles generally accepted in the United States, or GAAP. We use these measures internally to evaluate the operating performance of our portfolio and provide a basis for comparison with other real estate companies. Reconciliations of these measures to the most comparable GAAP measure are included below in this discussion.

## Results Overview

Diluted earnings per share and diluted earnings per unit increased $0.37 during 2017 to $6.24 as compared to $5.87 in 2016. The increase in diluted earnings per share and diluted earnings per unit was primarily attributable to:

• improved operating performance and solid core business fundamentals in 2017 and the impact of our acquisition and expansion activity,

• 2017 gains of $21.5 million, or $0.06 per diluted share/unit, from the sales of marketable securities,

• increased consolidated lease settlement activity in 2017 of $23.0 million, or $0.06 per diluted share/unit,

• decreased interest expense in 2017 of $48.2 million, or $0.13 per diluted share/unit,

• a decrease in charges on early extinguishment of debt of $8.2 million, or $0.02 per diluted share/unit, and

- a 2016 charge on the write-off of pre-development costs of $31.5 million, or $0.08 per diluted share/unit, partially offset by

- a 2016 gain on acquisitions and disposals of $84.6 million, or $0.23 per diluted share/unit, related to a non-cash gain on the consolidation of additional properties of $41.4 million, or $0.11 per diluted share/unit, a gain on the disposition of our interest in seven properties of $35.1 million, or $0.10 per diluted share/unit, and a gain related to Klépierre's sale of certain assets of which our share of the gain was $8.1 million, or $0.02 per diluted share/unit, and

- a 2016 gain related to the disposition of our interest in two multi-family residential investments of $29.0 million, net of taxes, or $0.08 per diluted share/unit.

Solid core business fundamentals during 2017 were primarily driven by strong leasing activity. Portfolio NOI grew by 4.5% in 2017 as compared to 2016. Comparable property NOI grew 3.2% for our portfolio of U.S. Malls, Premium Outlets, and The Mills. Total sales per square foot, or psf, increased to $628 psf at December 31, 2017 from $614 psf at



December 31, 2016 for our U.S. Malls and Premium Outlets. Average base minimum rent for U.S. Malls and Premium Outlets increased 2.9% to $53.11 psf as of December 31, 2017, from $51.59 psf as of December 31, 2016. Leasing spreads in our U.S. Malls and Premium Outlets were positive as we were able to lease available square feet at higher rents, resulting in an open/close leasing spread (based on total tenant payments — base minimum rent plus common area maintenance) of $7.42 psf ($72.68 openings compared to $65.26 closings) as of December 31, 2017, representing an 11.4% increase. Ending occupancy for our U.S. Malls and Premium Outlets decreased 1.2% to 95.6% as of December 31, 2017, from 96.8% as of December 31, 2016.

Our effective overall borrowing rate at December 31, 2017 on our consolidated indebtedness decreased 14 basis points to 3.25% as compared to 3.39% at December 31, 2016. This reduction was primarily due to a decrease in the effective overall borrowing rate on fixed rate debt of 16 basis points (3.30% at December 31, 2017 as compared to 3.46% at December 31, 2016) partially offset by an increase in the effective overall borrowing rate on variable rate debt of 45 basis points (2.19% at December 31, 2017 as compared to 1.74% at December 31, 2016). At December 31, 2017, the weighted average years to maturity of our consolidated indebtedness was 7.0 years as compared to 7.4 years at December 31, 2016.

Our financing activity for the year ended December 31, 2017 and material subsequent events included:

• Increasing our borrowings under the Operating Partnership’s global unsecured commercial paper note program, or the Commercial Paper program, by $104.1 million through the issuance of U.S. dollar denominated notes.

• Repaying our Euro denominated borrowings of $79.3 million (U.S. dollar equivalent) under the Commercial Paper program.

• Completing the issuance, on June 1, 2017, of $600.0 million of senior unsecured notes at a fixed annual interest rate of 2.63% with a maturity date of June 15, 2022 and $750.0 million of senior unsecured notes at a fixed annual interest rate of 3.38% with a maturity date of June 15, 2027.

• Completing the issuance, on December 11, 2017, of $600.0 million of senior unsecured notes at a fixed annual interest rate of 2.75% with a maturity date of June 1, 2023 and $750.0 million of senior unsecured notes at a fixed annual interest rate of 3.38% with a maturity date of December 1, 2027.

• Redeeming at par $600 million of senior unsecured notes with a fixed interest rate of 2.15%.

• Completing the early redemption of a series of senior unsecured notes comprising $1.25 billion with a fixed interest rate of 5.65%. We recorded a $128.6 million loss on extinguishment of debt in the second quarter of 2017 as a result of the early redemption.

• Redeeming at par $750.0 million of senior unsecured notes with a fixed interest rate of 1.50% on January 3, 2018.

## United States Portfolio Data

The portfolio data discussed in this overview includes the following key operating statistics: ending occupancy, average base minimum rent per square foot, and total sales per square foot for our domestic assets. We include acquired properties in this data beginning in the year of acquisition and remove disposed properties in the year of disposition. For comparative information purposes, we separate the information related to The Mills from our other U.S. operations. We also do not include any information for properties located outside the United States.



The following table sets forth these key operating statistics for:

• properties that are consolidated in our consolidated financial statements,

• properties we account for under the equity method of accounting as joint ventures, and

• the foregoing two categories of properties on a total portfolio basis.

<table><tr><td></td><td>2017</td><td>%/Basis Points Change (1)</td><td>2016</td><td>%/Basis Points Change (1)</td><td>2015</td></tr><tr><td>U.S. Malls and Premium Outlets:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ending Occupancy</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Consolidated</td><td>95.8 %</td><td>-130bps</td><td>97.1 %</td><td>+70 bps</td><td>96.4 %</td></tr><tr><td>Unconsolidated</td><td>95.1 %</td><td>-70bps</td><td>95.8 %</td><td>+50 bps</td><td>95.3 %</td></tr><tr><td>Total Portfolio</td><td>95.6 %</td><td>-120bps</td><td>96.8 %</td><td>+70 bps</td><td>96.1 %</td></tr><tr><td>Average Base Minimum Rent per Square Foot</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Consolidated</td><td>$ 51.34</td><td>2.8 %</td><td>$ 49.94</td><td>5.4 %</td><td>$ 47.39</td></tr><tr><td>Unconsolidated</td><td>$ 57.58</td><td>3.0 %</td><td>$ 56.19</td><td>4.8 %</td><td>$ 53.64</td></tr><tr><td>Total Portfolio</td><td>$ 53.11</td><td>2.9 %</td><td>$ 51.59</td><td>5.4 %</td><td>$ 48.96</td></tr><tr><td>Total Sales per Square Foot</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Consolidated</td><td>$ 613</td><td>2.2 %</td><td>$ 600</td><td>(1.2)%</td><td>$ 607</td></tr><tr><td>Unconsolidated</td><td>$ 671</td><td>1.7 %</td><td>$ 660</td><td>(0.8)%</td><td>$ 665</td></tr><tr><td>Total Portfolio</td><td>$ 628</td><td>2.3 %</td><td>$ 614</td><td>(1.0)%</td><td>$ 620</td></tr><tr><td>The Mills:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ending Occupancy</td><td>98.4 %</td><td>0 bps</td><td>98.4 %</td><td>-10bps</td><td>98.5 %</td></tr><tr><td>Average Base Minimum Rent per Square Foot</td><td>$ 30.98</td><td>6.6 %</td><td>$ 29.07</td><td>7.1 %</td><td>$ 27.14</td></tr><tr><td>Total Sales per Square Foot</td><td>$ 587</td><td>3.8 %</td><td>$ 565</td><td>(0.5)%</td><td>$ 568</td></tr></table>

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

Ending Occupancy Levels and Average Base Minimum Rent per Square Foot. Ending occupancy is the percentage of gross leasable area, or GLA, which is leased as of the last day of the reporting period. We include all company owned space except for mall anchors, mall majors, mall freestanding and mall outlets in the calculation. Base minimum rent per square foot is the average base minimum rent charge in effect for the reporting period for all tenants that would qualify to be included in ending occupancy.

Total Sales per Square Foot. Total sales include total reported retail tenant sales on a trailing 12-month basis at owned GLA (for mall stores with less than 10,000 square feet) in the malls and The Mills and stores with less than 20,000 square feet in the Premium Outlets. 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.

## Current Leasing Activities

During 2017, we signed 849 new leases and 1,302 renewal leases (excluding mall anchors and majors, new development, redevelopment and leases with terms of one year or less) with a fixed minimum rent across our U.S. Malls and Premium Outlets portfolio, comprising approximately 6.7 million square feet, of which 5.0 million square feet related to consolidated properties. During 2016, we signed 960 new leases and 1,270 renewal leases with a fixed minimum rent, comprising approximately 7.3 million square feet, of which 5.4 million square feet related to consolidated properties. The average annual initial base minimum rent for new leases was $59.45 per square foot in 2016 and $58.60 per square foot in 2017 with an average tenant allowance on new leases of $39.29 per square foot and $50.53 per square foot, respectively.



## Japan Data

The following are selected key operating statistics for our Premium Outlets in Japan. The information used to prepare these statistics has been supplied by the managing venture partner.

<table><tr><td></td><td>December 31, 2017</td><td>%/basis point Change</td><td>December 31, 2016</td><td>%/basis point Change</td><td>December 31, 2015</td></tr><tr><td>Ending Occupancy.</td><td>99.9%</td><td>40 bps</td><td>99.5%</td><td>-30 bps</td><td>99.8%</td></tr><tr><td>Total Sales per Square Foot.</td><td>105,138</td><td>5.17%</td><td>99,971</td><td>-1.60%</td><td>101,574</td></tr><tr><td>Average Base Minimum Rent per Square Foot.</td><td>5,062</td><td>0.48%</td><td>5,038</td><td>1.43%</td><td>4,967</td></tr></table>

## Critical Accounting Policies

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

- 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 its sales threshold.

- 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, a decline in a property's cash flows, occupancy or comparable sales per square foot. We measure any 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. We also review our investments, including investments in unconsolidated entities, if events or circumstances change indicating that the carrying amount of our investments may not be recoverable. We will record an impairment charge if we determine that a decline in the fair value of the investments below carrying value is other-than-temporary. Changes in economic and operating conditions that occur subsequent to our review of recoverability of investment property and other investments could impact the assumptions used in that assessment and could result in future charges to earnings if assumptions regarding those investments differ from actual results.

- To maintain Simon’s status as a REIT, we must distribute at least 90% of REIT taxable income in any given year and meet certain asset and income tests. We monitor our business and transactions that may potentially impact Simon’s REIT status. In the unlikely event that we fail to maintain Simon’s REIT status, and available relief provisions do not apply, we would be required to pay U.S. federal income taxes at regular corporate income tax rates during the period Simon did not qualify as a REIT. If Simon lost its REIT status, it could not elect to be taxed as a REIT for four taxable years following the year during which qualification was lost unless its failure was due to reasonable cause and certain other conditions were met. As a result, failing to maintain REIT status would result in a significant increase in the income tax expense recorded and paid during those periods.



• We make estimates as part of our valuation of the purchase price of acquisitions (including the components of excess investment in joint ventures) to the various components of the acquisition based upon the relative fair value of each component. The most significant components of our valuations are typically the determination of relative fair value to the buildings as-if-vacant, land and market value of in-place leases. In the case of the fair value of buildings and fair value of land and other intangibles, our estimates of the values of these components will affect the amount of depreciation or amortization we record over the estimated useful life of the property acquired or the remaining lease term. In the case of the market value of in-place leases, we make our best estimates of the tenants' ability to pay rents based upon the tenants' operating performance at the property, including the competitive position of the property in its market as well as sales psf, rents psf, and overall occupancy cost for the tenants in place at the acquisition date. Our assumptions affect the amount of future revenue that we will recognize over the remaining lease term for the acquired in-place leases.

• A variety of costs are incurred in the development and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves judgment. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy and cease capitalization of costs upon opening.

## Results of Operations

In addition to the activity discussed above in the “Results Overview” section, the following acquisitions, dispositions, and openings of consolidated properties affected our consolidated results in the comparative periods:

• On April 21, 2017, through our European investee, we acquired Rosada Designer Outlet, a 247,500 square foot center in Roosendaal, Netherlands. We have a 94% interest in this center.

• On April 13, 2017, through our European investee, we opened Provence Designer Outlet, a 269,000 square foot center in Miramas, France. We have a 90% interest in this new center.

• During 2016, we disposed of three retail properties.

• During the first quarter of 2016, we consolidated two Designer Outlet properties in Europe that had previously been accounted for under the equity method. During the third quarter of 2016, we consolidated two more Designer Outlet properties in Europe, which were previously accounted for under the equity method.

• On October 29, 2015, we opened Tampa Premium Outlets, a 441,000 square foot outlet center in Lutz (Tampa), Florida.

• On October 1, 2015, we opened Tucson Premium Outlets, a 366,000 square foot outlet center in Marana (Tucson), Arizona.

• On January 15, 2015, we acquired a 100% interest in Jersey Gardens (renamed The Mills at Jersey Gardens) in Elizabeth, New Jersey and University Park Village in Fort Worth, Texas.

In addition to the activities discussed above and in “Results Overview”, the following acquisitions, dispositions, and openings of joint venture properties affected our income from unconsolidated entities in the comparative periods:

• During 2017, we disposed of our interest in one retail property.

• On September 14, 2017, we and our partner opened The Shops at Clearfork, a 500,000 square foot center in Fort Worth, Texas. We have a 45% noncontrolling interest in this new center.

• On June 29, 2017, we and our partner opened Norfolk Premium Outlets, a 332,000 square foot center in Norfolk, Virginia. We have a 65% noncontrolling interest in this new center.

• On June 15, 2017, we and our partner opened Genting Highlands Premium Outlets in Kuala Lumpur, Malaysia. We have a 50% noncontrolling interest in this 278,000 square foot center.

• On April 6, 2017, we and our partner opened Siheung Premium Outlets, a 444,400 square foot center in Siheung (Seoul), South Korea. We have a 50% noncontrolling interest in this new center.



• During 2016, we disposed of our interests in four retail properties.

- On November 3, 2016, we and our partner opened a 500,000 square foot retail component of Brickell City Centre in Miami, Florida. We have a 25.0% noncontrolling interest in the retail component of this center.

- On October 27, 2016, we and our partner opened Clarksburg Premium Outlets, a 392,000 square foot outlet center in Clarksburg, Maryland. We have a 66.0% noncontrolling interest in this new center.

- On September 15, 2016, we were part of a consortium that completed the acquisition of Aéropostale, out of bankruptcy. Our noncontrolling interest in the retail operations venture and in the licensing venture is 49.05% and 28.45%, respectively.

- On June 24, 2016, we and our partner opened a 355,000 square foot outlet center in Columbus, Ohio. We have a 50% noncontrolling interest in this new center.

- On April 14, 2016, we acquired a 50.0% noncontrolling interest in The Shops at Crystals, a 262,000 square foot mall in Las Vegas, Nevada.

- On February 1, 2016, through our European investee, we and our partner acquired a 75.0% noncontrolling interest in an outlet center in Ochtrup, Germany.

• During 2015, we disposed of our interests in three retail properties.

- During the third quarter of 2015, we closed on our joint venture with Hudson’s Bay Company, or HBC, whereby we currently have an 11.7% noncontrolling interest in a newly formed entity, HBS Global Properties, or HBS. HBC contributed 42 of its properties in the U.S. to HBS. Later in the third quarter of 2015, the joint venture acquired an additional 41 properties in Germany concurrently with HBC’s acquisition of Galeria Holding, the parent company of Germany’s leading department store, Kaufhof, as further discussed in Note 7 of the notes to the consolidated financial statements. All of the joint venture’s properties have been leased to affiliates of HBC.

- On August 13, 2015, we and our partner opened Gloucester Premium Outlets, a 370,000 square foot outlet center. We have a 50% noncontrolling interest in this new center.

- On July 9, 2015, through our European investee, we and our partner opened Vancouver Designer Outlet, a 242,000 square foot outlet center. We have a 45% noncontrolling interest in this new center.

For the purposes of the following comparisons between the years ended December 31, 2017 and 2016 and the years ended December 31, 2016 and 2015, the above transactions are referred to as the property transactions. In the following discussions of our results of operations, “comparable” refers to properties we owned and operated in both years in the year-to-year comparisons.

During the third quarter of 2017, two of our wholly-owned properties located in Puerto Rico sustained significant damage as a result of Hurricane Maria. For purposes of the below comparisons, these properties are also included in the property transactions due to the fact they were not open for business during the entirety of the periods being compared.

## Year Ended December 31, 2017 vs. Year Ended December 31, 2016

Minimum rents increased $81.5 million during 2017, of which the property transactions accounted for $30.2 million of the increase. Comparable rents increased $51.3 million, or 1.6%, primarily attributable to an increase in base minimum rents as well as incremental revenue from our redevelopment and expansion activity. Overage rent decreased $14.0 million primarily as a result of an increase in the overage breakpoints as compared to 2016.

Tenant reimbursements increased $38.1 million, due to a $10.0 million increase attributable to the property transactions and a $28.1 million, or 2.0%, increase in the comparable properties due to annual fixed contractual increases related to common area maintenance and real estate tax recoveries.

Management fees and other revenues decreased $22.6 million related to final fees from Washington Prime in 2016 and lower development fees as compared to 2016.

Total other income increased $20.4 million, primarily due to a $23.0 million increase in lease settlement income, gains on the sales of marketable securities of $21.5 million, an $8.4 million increase in Simon Brand Venture and gift card revenues, a $3.0 million increase in dividend and net other revenue, and a $2.7 million increase in land and other non-retail



real estate sales, partially offset by a $38.2 million pre-tax gain during 2016 on the sale of our interests in two multi-family residential investments.

Depreciation and amortization expense increased $22.8 million primarily due to the additional depreciable assets related to the property transactions and our continued redevelopment and expansion activities.

Provision for credit losses increased $4.0 million as a result of an increase in tenant bankruptcies as compared to 2016.

Home and regional office costs decreased $23.3 million as a result of expense management and lower personnel expenses, including executive compensation.

General and administrative expenses decreased $13.1 million due to expense management and lower personnel expenses, including executive compensation.

Other expenses increased $14.5 million primarily due to an increase in legal fees and expenses.

Interest expense decreased $48.2 million primarily due to the net impact of our financing activities during 2017 and 2016 and the reduction in our effective overall borrowing rate as previously discussed.

During 2017, we recorded a loss on extinguishment of debt of $128.6 million as a result of an early redemption of a series of senior unsecured notes. During 2016, we recorded a loss on extinguishment of debt of $136.8 million as a result of an early redemption of senior unsecured notes.

Income and other taxes decreased $6.3 million primarily as a result of a taxable gain on the sale of a multi-family residential investment during 2016.

Income from unconsolidated entities increased $46.9 million primarily as a result of favorable results of operations from our international joint venture investments, our investment in Aeropostale and our acquisition and development activity.

During 2017, we recorded a $5.0 million gain related to Klépierre's sale of certain assets, partially offset by the disposition of our interest in one unconsolidated retail property that resulted in a loss of $1.3 million. During 2016, we recorded a gain related to Klépierre's sale of certain assets, our sale of three consolidated retail properties and disposition of our interests in four unconsolidated retail properties. The aggregate gain on the transactions was $43.2 million. We also recorded a non-cash remeasurement gain of $41.4 million related to the change in control of our interest in the European outlet properties as further discussed in Note 7 of the notes to the consolidated financial statements.

## Year Ended December 31, 2016 vs. Year Ended December 31, 2015

Minimum rents increased $216.2 million during 2016, of which the property transactions accounted for $73.5 million of the increase. Comparable rents increased $142.7 million, or 4.6%, primarily attributable to an increase in base minimum rents as well as incremental revenue from our redevelopment and expansion activity. Overage rent decreased $32.6 million as a result of decreased tenant sales and an increase in the overage breakpoints as compared to 2015.

Tenant reimbursements increased $49.2 million, due to a $22.2 million increase attributable to the property transactions and a $27.0 million, or 1.9%, increase in the comparable properties due to annual fixed contractual increases related to common area maintenance and real estate tax recoveries.

Total other income decreased $49.1 million, primarily due to an $80.2 million gain on the sale of marketable securities recorded during 2015 and a $25.0 million decrease in lease settlement income, partially offset by a $36.2 million pre-tax gain on the sale of our investments in two multi-family residential investments during 2016, a $7.6 million increase in land sale activity and an increase in Simon Brand Ventures and gift card revenue of $13.1 million.

Depreciation and amortization expense increased $75.1 million primarily due to the additional depreciable assets related to the property transactions and our continued redevelopment and expansion activities.

Other expenses increased $14.1 million primarily due to the write off of pre-development costs of $31.5 million related to the Copley residential tower project that we are no longer pursuing, partially offset by a decrease in legal fees and expenses and a more favorable net foreign currency revaluation impact on foreign currency-denominated assets and liabilities during 2015.

Interest expense decreased $66.1 million primarily due to the net impact of our financing activities during 2016 and 2015 and the reduction in our effective overall borrowing rate.



During 2016, we recorded a loss on extinguishment of debt of $136.8 million as a result of an early redemption of senior unsecured notes. During 2015, we recorded a loss on extinguishment of debt of $121.0 million as a result of an early redemption of senior unsecured notes.

Income and other taxes increased $9.5 million as a result of taxes due on the sale of one of the multi-family residential investments and taxes related to certain of our international investments.

Income from unconsolidated entities increased $68.5 million primarily due to favorable results of operations and financing activity of joint venture properties as well as our acquisition and development activity.

During 2016, we recorded a gain related to Klépierre's sale of certain assets, our sale of three consolidated retail properties and disposition of our interests in four unconsolidated retail properties. The aggregate gain on the transactions was $43.2 million. We also recorded a non-cash remeasurement gain of $41.4 million related to the change in control of our interest in the European outlet properties as further discussed in Note 7 of the notes to the consolidated financial statements. During 2015, we disposed of our interests in three unconsolidated retail properties, resulting in a gain of $43.6 million and we recorded a non-cash gain on Klépierre's acquisition of Corio of $206.9 million as discussed in Note 7 of the notes to the consolidated financial statements.

Simon’s net income attributable to noncontrolling interests decreased $15.8 million primarily due to a decrease in the net income of the Operating Partnership.

## Liquidity and Capital Resources

Because we own long-lived income-producing assets, our financing strategy relies primarily on long-term fixed rate debt. Floating rate debt comprised only 4.6% of our total consolidated debt at December 31, 2017. We also enter into interest rate protection agreements to manage our interest rate risk. We derive most of our liquidity from positive net cash flow from operations and distributions of capital from unconsolidated entities that totaled $4.0 billion in the aggregate during 2017. The Operating Partnership has a $4.0 billion unsecured revolving credit facility, or Credit Facility. The Operating Partnership also has a $3.5 billion supplemental unsecured revolving credit facility, or Supplemental Facility, and together with the Credit Facility, the Credit Facilities. The Credit Facilities and the Commercial Paper program provide alternative sources of liquidity as our cash needs vary from time to time. Borrowing capacity under these sources may be increased as discussed further below.

Our balance of cash and cash equivalents increased $922.3 million during 2017 to $1.5 billion as of December 31, 2017 as further discussed in “Cash Flows” below.

On December 31, 2017, we had an aggregate available borrowing capacity of approximately $6.2 billion under the Credit Facilities, net of outstanding borrowings of $322.6 million, amounts outstanding under the Commercial Paper program of $978.5 million and letters of credit of $20.9 million. For the year ended December 31, 2017, the maximum aggregate outstanding balance under the Credit Facilities was $960.9 million and the weighted average outstanding balance was $455.5 million. The weighted average interest rate was 1.31% for the year ended December 31, 2017.

Simon has historically had access to public equity markets and the Operating Partnership has historically had access to private and public long-term and short-term unsecured debt markets and access to secured debt and private equity from institutional investors at the property level.

Our business model and Simon’s status as a REIT require us to regularly access the debt markets to raise funds for acquisition, development and redevelopment activity, and to refinance maturing debt. Simon may also, from time to time, access the equity capital markets to accomplish our business objectives. We believe we have sufficient cash on hand and availability under the Credit Facilities and the Commercial Paper program to address our debt maturities and capital needs through 2018.

## Cash Flows

Our net cash flow from operating activities and distributions of capital from unconsolidated entities totaled $4.0 billion during 2017. In addition, we had net proceeds from our debt financing and repayment activities, including the $128.6 million debt extinguishment charge, of $1.1 billion in 2017. These activities are further discussed below under “Financing and Debt.” During 2017, we also:

• funded the acquisition of our interest in an international retail property, funded the acquisition of an additional interest in an existing international property, and funded the acquisition of additional interests in the real estate



assets and/or rights to terminate leases related to twelve Sears stores located at our malls, the aggregate cash portion of which was $264.5 million,

- paid stockholder dividends and unitholder distributions totaling approximately $2.6 billion and preferred unit distributions totaling $5.3 million,

- funded consolidated capital expenditures of $732.1 million (including development and other costs of $60.6 million, redevelopment and expansion costs of $473.4 million, and tenant costs and other operational capital expenditures of $198.1 million),

• funded investments in unconsolidated entities of $157.2 million,

• funded the repurchase of our common stock of $407.0 million, and

• received proceeds on the sale of marketable securities of $56.3 million.

In general, we anticipate that cash generated from operations will be sufficient to meet operating expenses, monthly debt service, recurring capital expenditures, and dividends to stockholders and/or distributions to partners necessary to maintain Simon's REIT qualification on a long-term basis. In addition, we expect to be able to generate or obtain capital for nonrecurring capital expenditures, such as acquisitions, major building redevelopments and expansions, as well as for scheduled principal maturities on outstanding indebtedness, from:

• excess cash generated from operating performance and working capital reserves,

• borrowings on the Credit Facilities and Commercial Paper program,

• additional secured or unsecured debt financing, or

• additional equity raised in the public or private markets.

We expect to generate positive cash flow from operations in 2018, and we consider these projected cash flows in our sources and uses of cash. These cash flows are principally derived from rents paid by our tenants. A significant deterioration in projected cash flows from operations could cause us to increase our reliance on available funds from the Credit Facilities and Commercial Paper program, curtail planned capital expenditures, or seek other additional sources of financing as discussed above.

## Financing and Debt

## Unsecured Debt

At December 31, 2017, our unsecured debt consisted of $16.5 billion of senior unsecured notes of the Operating Partnership, $322.6 million outstanding under the Operating Partnership's Supplemental Facility, and $978.5 million outstanding under the Operating Partnership's Commercial Paper program. The December 31, 2017 balance on the Supplemental Facility included $197.6 million (U.S. dollar equivalent) of Yen-denominated borrowings. Foreign currency denominated borrowings under the Supplemental Facility are designated as net investment hedges of a portion of our international investments.

On December 31, 2017, we had an aggregate available borrowing capacity of $6.2 billion under the Credit Facilities. The maximum aggregate outstanding balance under the Credit Facilities during the year ended December 31, 2017 was $960.9 million and the weighted average outstanding balance was $455.5 million. Letters of credit of $20.9 million were outstanding under the Credit Facilities as of December 31, 2017.

On March 17, 2017, the Operating Partnership amended and extended the Credit Facility. The initial borrowing capacity of $4.0 billion may be increased to $5.0 billion during its term and provides for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars. Borrowings in currencies other than the U.S. dollar are limited to 95% of the maximum revolving credit amount, as defined. The initial maturity date of the Credit Facility was extended to June 30, 2021 and can be extended for an additional year to June 30, 2022 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Credit Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points.

The Supplemental Facility’s borrowing capacity of $3.5 billion may be increased to $4.25 billion during its term. The initial maturity date of the Supplemental Facility is June 30, 2019, which can be extended for an additional year to June 30, 2020 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the



Supplemental Facility is LIBOR plus 80 basis points, with an additional facility fee of 10 basis points. The Supplemental Facility provides for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars.

On February 15, 2018, the Operating Partnership amended and extended the Supplemental Facility. The Supplemental Facility's initial borrowing capacity of $3.5 billion may be increased to $4.5 billion during its term. The initial maturity date of the Supplemental Facility was extended to June 30, 2022 and can be extended for an additional year to June 30, 2023 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Supplemental Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points.

The Operating Partnership also has available a Commercial Paper program of $1.0 billion, or the non-U.S. dollar equivalent thereof. The Operating Partnership may issue unsecured commercial paper notes, denominated in U.S. dollars, Euro and other currencies. Notes issued in non-U.S. currencies may be issued by one or more subsidiaries of the Operating Partnership and are guaranteed by the Operating Partnership. Notes will be sold under customary terms in the U.S. and Euro commercial paper note markets and rank (either by themselves or as a result of the guarantee described above) pari passu with the Operating Partnership's other unsecured senior indebtedness. The Commercial Paper program is supported by the Credit Facilities and if necessary or appropriate, we may make one or more draws under either of the Credit Facilities to pay amounts outstanding from time to time on the Commercial Paper program. On December 31, 2017, we had $978.5 million outstanding under the Commercial Paper program, fully comprised of U.S. dollar denominated notes with a weighted average interest rate of 1.40%. These borrowings mature on various dates through March 15, 2018 and reduce amounts otherwise available under the Credit Facilities.

On June 1, 2017, the Operating Partnership completed the issuance of $600.0 million of senior unsecured notes at a fixed interest rate of 2.63% with a maturity date of June 15, 2022 and $750.0 million of senior unsecured notes at a fixed interest rate of 3.38% with a maturity date of June 15, 2027. Proceeds from the unsecured notes offering were used to fund the early redemption of senior unsecured notes in June 2017 as discussed below, and to pay down the Credit Facility.

On December 11, 2017, the Operating Partnership completed the issuance of $600.0 million of senior unsecured notes at a fixed interest rate of 2.75% with a maturity date of June 1, 2023 and $750.0 million of senior unsecured notes at a fixed interest rate of 3.38% with a maturity date of December 1, 2027. Proceeds from the unsecured notes offering were used to redeem at par $750 million of senior unsecured notes with a fixed interest rate of 1.50% on January 3, 2018 and for general business purposes.

During 2017, the Operating Partnership redeemed at par $600.0 million of senior unsecured notes with a fixed interest rate of 2.15% and completed the early redemption of a series of senior unsecured notes comprising $1.25 billion with a fixed interest rate of 5.65%. The Operating Partnership recorded a $128.6 million loss on extinguishment of debt in the second quarter of 2017 as a result of the early redemption.

## Mortgage Debt

Total mortgage indebtedness was $6.9 billion and $6.5 billion at December 31, 2017 and 2016, respectively.

On April 21, 2017, as discussed in Note 7, through our European investee, we acquired Rosada Designer Outlet in Roosendaal, Netherlands, subject to an existing EURIBOR-based variable rate mortgage loan of $40.1 million (U.S. dollar equivalent).

## Covenants

Our unsecured debt agreements contain financial covenants and other non-financial covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender, including adjustments to the applicable interest rate. As of December 31, 2017, we were in compliance with all covenants of our unsecured debt.

At December 31, 2017, we or our subsidiaries were the borrowers under 47 non-recourse mortgage notes secured by mortgages on 50 properties, including two separate pools of cross-defaulted and cross-collateralized mortgages encumbering a total of five properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties that serve as collateral for that debt. If the applicable borrower under these non-recourse mortgage notes were to fail to comply with these covenants, the lender could accelerate the debt and enforce its rights against their collateral. At December 31, 2017, the applicable borrowers under these non-recourse



mortgage notes were in compliance with all covenants where non-compliance could individually or in the aggregate, giving effect to applicable cross-default provisions, have a material adverse effect on our financial condition, liquidity or results of operations.

## Summary of Financing

Our consolidated debt, adjusted to reflect outstanding derivative instruments, and the effective weighted average interest rates as of December 31, 2017 and 2016, consisted of the following (dollars in thousands):

<table><tr><td></td><td>Adjusted Balance as of December 31, 2017</td><td>Effective Weighted Average Interest Rate \( ^{(1)} \)</td><td>Adjusted Balance as of December 31, 2016</td><td>Effective Weighted Average Interest Rate \( ^{(1)} \)</td></tr><tr><td>Debt Subject to</td><td>December 31, 2017</td><td>3.30%</td><td>$ 22,083,330</td><td>3.46%</td></tr><tr><td>Fixed Rate</td><td>23,374,732</td><td>2.19%</td><td>893,774</td><td>1.74%</td></tr><tr><td>Variable Rate</td><td>1,189,311</td><td>3.25%</td><td>$ 22,977,104</td><td>3.39%</td></tr><tr><td></td><td>24,564,043</td><td></td><td></td><td></td></tr></table>

(1) Effective weighted average interest rate excludes the impact of net discounts, debt issuance costs and other debt obligations of $68.2 million.

## Contractual Obligations and Off-balance Sheet Arrangements

In regards to long-term debt arrangements, the following table summarizes the material aspects of these future obligations on our consolidated indebtedness as of December 31, 2017, and subsequent years thereafter (dollars in thousands) assuming the obligations remain outstanding through initial maturities, including applicable exercise of available extension options:

<table><tr><td></td><td>2018</td><td>2019 - 2020</td><td>2021 - 2022</td><td>After 2022</td><td>Total</td></tr><tr><td>Long Term Debt (1) (5)</td><td>$ 2,060,959</td><td>$ 3,207,081</td><td>$ 6,679,635</td><td>$ 12,761,890</td><td>$ 24,709,565</td></tr><tr><td>Interest Payments (2)</td><td>837,976</td><td>1,603,005</td><td>1,200,005</td><td>3,191,334</td><td>6,832,320</td></tr><tr><td>Consolidated Capital Expenditure Commitments (3)</td><td>228,057</td><td>—</td><td>—</td><td>—</td><td>228,057</td></tr><tr><td>Lease Commitments (4)</td><td>26,401</td><td>50,765</td><td>47,947</td><td>655,309</td><td>780,422</td></tr></table>

(1) Excludes the impact of net discounts and debt issuance costs.

(2) Variable rate interest payments are estimated based on the LIBOR or other applicable rate at December 31, 2017.

(3) Represents contractual commitments for capital projects and services at December 31, 2017. Our share of estimated 2017 development, redevelopment and expansion activity is further discussed below under “Development Activity”.

(4) Represents only the minimum non-cancellable lease period, excluding applicable lease extension and renewal options.

(5) The amount due in 2018 includes $978.5 million in Global Commercial Paper – USD and $750.0 million of senior unsecured notes redeemed at par on January 3, 2018.

Our off-balance sheet arrangements consist primarily of our investments in joint ventures which are common in the real estate industry and are described in Note 7 of the notes to the consolidated financial statements. Our joint ventures typically fund their cash needs through secured debt financings obtained by and in the name of the joint venture entity. The joint venture debt is secured by a first mortgage, is without recourse to the joint venture partners, and does not represent a liability of the partners, except to the extent the partners or their affiliates expressly guarantee the joint venture debt. As of December 31, 2017, the Operating Partnership guaranteed joint venture related mortgage indebtedness of $211.6 million (of which we have a right of recovery from our venture partners of $10.8 million). Mortgages guaranteed by the Operating Partnership are secured by the property of the joint venture which could be sold in order to satisfy the outstanding obligation and which has an estimated fair value in excess of the guaranteed amount. We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not required contractually or otherwise.



## Hurricane Impacts

As discussed further in Note 11 of the notes to the consolidated financial statements, during the third quarter of 2017, certain of our properties experienced property damage and business interruption due to hurricane-related impacts in Texas, Florida and Puerto Rico.

## Acquisitions and Dispositions

Buy-sell, marketing rights, and other exit mechanisms are common in real estate partnership agreements. Most of our partners are institutional investors who have a history of direct investment in retail real estate. We and our partners in our joint venture properties may initiate these provisions (subject to any applicable lock up or similar restrictions). If we determine it is in our stockholders' best interests for us to purchase the joint venture interest and we believe we have adequate liquidity to execute the purchase without hindering our cash flows, then we may initiate these provisions or elect to buy our partner's interest. If we decide to sell any of our joint venture interests, we expect to use the net proceeds to reduce outstanding indebtedness or to reinvest in development, redevelopment, or expansion opportunities.

Acquisitions. In February 2016, we and our partner, through our European investee, acquired a noncontrolling 75% ownership interest in an outlet center in Ochtrup, Germany for cash consideration of approximately $38.3 million. On July 25, 2016, this European investee also acquired the remaining 33% interest in two Italian outlet centers in Naples and Venice as well as the remaining interests in related expansion projects and working capital for cash consideration of approximately $159.7 million. This resulted in the consolidation of these two properties on the acquisition date, requiring a remeasurement of our previously held equity interest to fair value and the recognition of a non-cash gain of $29.3 million in earnings during the third quarter of 2016.

On April 21, 2017, this European investee acquired a 100% interest in an outlet center in Roosendaal, Netherlands for cash consideration of $69.8 million and the assumption of existing mortgage debt of $40.1 million. In May 2017, the assumed loan was refinanced with a $69.0 million mortgage due in 2024, after available extension options, with an interest rate of EURIBOR plus 1.85%.

On April 14, 2016, we and our joint venture partner completed the acquisition of The Shops at Crystals, a 262,000 square foot luxury shopping center on the Las Vegas Strip, for $1.1 billion. The transaction was funded with a combination of cash on hand, cash from our partner, and a $550.0 million 3.74% fixed-rate mortgage financing that will mature on July 1, 2026. We have a 50% noncontrolling interest in this joint venture and manage the day-to-day operations.

Dispositions. We may continue to pursue the disposition of properties that no longer meet our strategic criteria or that are not a primary retail venue within their trade area.

During 2017, we disposed of our interests in one unconsolidated retail property. The loss recognized on this transaction was approximately $1.3 million. As discussed in Note 7 of the notes to the consolidated financial statements, Klépierre disposed of its interests in certain shopping centers, resulting in a gain of which our share was $5.0 million.

During 2016, we disposed of our interests in two unconsolidated multi-family residential investments, three consolidated retail properties, and four unconsolidated retail properties. Our share of the gross proceeds from these transactions was $81.8 million. The gain on the consolidated retail properties was $12.4 million. The gain on the unconsolidated retail properties was $22.6 million. The aggregate gain of $36.2 million from the sale of the two unconsolidated multi-family residential investments is included in other income and resulted in an additional $7.2 million in taxes included in income and other taxes. As discussed in Note 7 of the notes to the consolidated financial statements, Klépierre disposed of its interest in certain Scandinavian properties during the fourth quarter, resulting in a gain of which our share was $8.1 million.

## Joint Venture Formation Activity

On September 15, 2016, we and our partners, through two separate joint ventures, acquired certain assets and liabilities of Aeropostale, a retailer of apparel and accessories, out of bankruptcy. Our noncontrolling interest in the retail operations venture and in the licensing venture is 49.05% and 28.45%, respectively. Our aggregate investment in these ventures was $33.1 million, which includes our share of working capital funded into the retail business.

On July 22, 2015, we closed on our joint venture with HBC, to which HBC contributed 42 properties in the U.S. and we committed to contribute $100.0 million for improvements to the properties contributed by HBC in exchange for a noncontrolling equity interest in HBS. As of December 31, 2017, we have funded $68.3 million of this commitment. On



September 30, 2015, HBC announced it had closed on the acquisition of Galeria Holding, the parent company of Germany's leading department store, Kaufhof. In conjunction with the closing, HBS acquired 41 Kaufhof properties in Germany from HBC. All of these properties have been leased to affiliates of HBC. We contributed an additional $178.5 million to HBS upon closing of the Galeria Holding transaction. Our noncontrolling equity interest in HBS is approximately 11.7% at December 31, 2017.

On April 13, 2015, we announced a joint venture with Sears Holdings, or Sears, whereby Sears contributed 10 of its properties located at our malls to the joint venture in exchange for a 50% noncontrolling interest in the joint venture. Sears or its affiliates leased back each of the 10 properties from the joint venture. Seritage Growth Properties, or Seritage, a public REIT formed by Sears, now holds Sears' original 50% noncontrolling interest in the joint venture. We contributed $114.0 million in cash in exchange for a 50% noncontrolling interest in the joint venture. The joint venture has the right to recapture not less than 50% of the space leased to Sears to be used for purposes of redeveloping and releasing the recaptured space.

On November 3, 2017, we acquired additional interests in the real estate assets and/or rights to terminate leases related to twelve Sears stores located at our malls (including five stores previously held in our joint venture with Seritage), in order to redevelop these properties. The total cost of this transaction was $184.6 million which is reflected as investment property. Four of the Sears stores are at properties held in unconsolidated joint ventures, and should our partners participate in the transaction and related redevelopment, the cost of the transaction to us will be reduced by their proportionate share. Our joint venture with Seritage now covers the former Sears properties located at five of our malls.

## Development Activity

We routinely incur costs related to construction for significant redevelopment and expansion projects at our properties. Redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants are underway at 25 properties in the United States and Canada.

Our share of the costs of all new development, redevelopment and expansion projects currently under construction is approximately $0.7 billion. We expect to fund these capital projects with cash flows from operations. Our estimated stabilized return on invested capital typically ranges between 7-10% for all our new development, redevelopment and expansion projects.

Summary of Capital Expenditures. The following table summarizes total capital expenditures on consolidated properties on a cash basis (in millions):

<table><tr><td></td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>New Developments</td><td>$ 61</td><td>$ 103</td><td>$ 139</td></tr><tr><td>Redevelopments and Expansions</td><td>474</td><td>487</td><td>699</td></tr><tr><td>Tenant Allowances</td><td>127</td><td>110</td><td>91</td></tr><tr><td>Operational Capital Expenditures</td><td>70</td><td>98</td><td>92</td></tr><tr><td>Total</td><td>$ 732</td><td>$ 798</td><td>$ 1,021</td></tr></table>

## New Domestic Developments, Redevelopments and Expansions.

During 2017, the following properties opened:

- On September 14, 2017, we and our partner opened The Shops at Clearfork, a 500,000 square foot open-air luxury shopping, dining, entertainment and mixed-use property (including office) destination in Fort Worth, Texas. We own a 45% noncontrolling interest in this project. Our share of the cost of this project is $114.7 million.

- On June 29, 2017, we and our partner opened Norfolk Premium Outlets, a 332,000 square foot center in Norfolk, Virginia. We own a 65% noncontrolling interest in this project. Our share of the cost of this project is $70.9 million.

During the second quarter of 2017, construction began on Denver Premium Outlets, a 328,000 square foot project in Thornton (Denver), Colorado, projected to open in September 2018. We own a 100% interest in this project. The estimated cost of this project is $120.6 million.



## International Development Activity.

We typically reinvest net cash flow from our international joint ventures to fund future international development activity. We believe this strategy mitigates some of the risk of our initial investment and our exposure to changes in foreign currencies. We have also funded most of our foreign investments with local currency-denominated borrowings that act as a natural hedge against fluctuations in exchange rates. Our consolidated net income exposure to changes in the volatility of the Euro, Yen, Won, and other foreign currencies is not material. We expect our share of international development costs for 2018 will be approximately $251 million, primarily funded through reinvested joint venture cash flow and construction loans.

The following table describes these recently completed, new development and expansion projects as well as our share of the estimated total cost as of December 31, 2017 (in millions):

<table><tr><td>Property</td><td>Location</td><td>Gross Leasable Area (sqft)</td><td>Ownership Percentage</td><td>Our Share of Projected Net Cost (in Local Currency)</td><td>Our Share of Projected Net Cost (in USD)</td><td>Projected Opening Date</td></tr><tr><td>New Development Projects:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Genting Highlands</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Premium Outlets</td><td>Kuala Lumpur, Malaysia</td><td>278,000</td><td>50%</td><td>MYR</td><td>120.7</td><td>$29.7</td></tr><tr><td>Siheung Premium Outlets</td><td>Siheung, Korea</td><td>444,400</td><td>50%</td><td>KRW</td><td>123,695</td><td>$115.9</td></tr><tr><td>Provence</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Designer Outlet</td><td>Miramas, France</td><td>269,000</td><td>90%</td><td>EUR</td><td>106.8</td><td>$128.0</td></tr><tr><td>Premium Outlet Collection - Edmonton International Airport</td><td>Edmonton (Alberta), Canada</td><td>428,000</td><td>50%</td><td>CAD</td><td>108.2</td><td>$86.2</td></tr><tr><td>Querétaro</td><td>Querétaro, Mexico</td><td>294,000</td><td>50%</td><td>MXN</td><td>441.7</td><td>$22.4</td></tr><tr><td>Premium Outlets</td><td>Málaga, Spain</td><td>191,000</td><td>46%</td><td>EUR</td><td>41.4</td><td>$49.6</td></tr><tr><td>Málaga Designer Outlet</td><td>Málaga, Spain</td><td>191,000</td><td>46%</td><td>EUR</td><td>41.4</td><td>$49.6</td></tr><tr><td>Expansions:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Roermond Designer Outlet</td><td>Roermond, Netherlands</td><td>125,000</td><td>46%</td><td>EUR</td><td>29.0</td><td>$34.7</td></tr><tr><td>Phase 4</td><td>Shisui Premium Outlets Phase 3</td><td>Shisui (Chiba), Japan</td><td>68,000</td><td>40%</td><td>JPY</td><td>13.7</td></tr><tr><td>Toronto Premium Outlets Phase 2</td><td>Toronto (Ontario), Canada</td><td>145,000</td><td>50%</td><td>CAD</td><td>58.0</td><td>$46.2</td></tr></table>

## Dividends, Distributions and Stock Repurchase Program

Simon paid a common stock dividend of $1.85 per share in the fourth quarter of 2017 and $7.15 per share for the year ended December 31, 2017. The Operating Partnership paid distributions per unit for the same amounts. In 2016, Simon paid dividends of $1.65 and $6.50 per share for the three and twelve month periods ended December 31, 2016, respectively. The Operating Partnership paid distributions per unit for the same amounts. Simon's Board of Directors declared a quarterly cash dividend for the first quarter of 2018 of $1.95 per share of common stock payable on February 28, 2018 to stockholders of record on February 14, 2018. The distribution rate on units is equal to the dividend rate on common stock. In order to maintain its status as a REIT, Simon must pay a minimum amount of dividends. Simon's future dividends and the Operating Partnership's future distributions will be determined by Simon's Board of Directors, in its sole discretion, based on actual and projected financial condition, liquidity and results of operations, cash available for dividends and limited partner distributions, cash reserves as deemed necessary for capital and operating expenditures, financing covenants, if any, and the amount required to maintain Simon's status as a REIT.

On April 2, 2015, Simon’s Board of Directors authorized Simon to repurchase up to $2.0 billion of common stock over a twenty-four month period as market conditions warrant, and on February 13, 2017, Simon’s Board of Directors authorized a two-year extension of the program through March 31, 2019. Simon may repurchase the shares in the open market or in privately negotiated transactions as market conditions warrant. During the year ended December 31, 2017, Simon repurchased 2,468,630 shares at an average price of $164.87 per share of its common stock as part of this program.



During the year ended December 31, 2016, Simon repurchased 1,409,197 shares at an average price of $181.14 per share as part of this program. At December 31, 2017, we had remaining authority to repurchase approximately $1.0 billion of common stock. As Simon repurchases shares under this program, the Operating Partnership repurchases an equal number of units from Simon.

## Forward-Looking Statements

Certain statements made in this section or elsewhere in this Annual Report on Form 10-K 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: changes in economic and market conditions that adversely affect the general retail environment; the potential loss of anchor stores or major tenants; the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; decreases in market rental rates; the intensely competitive market environment in the retail industry; the inability to lease newly developed properties and renew leases and relet space at existing properties on favorable terms; risks related to international activities, including, without limitation, the impact of Brexit; changes to applicable laws or regulations or the interpretation thereof; risks associated with the acquisition, development, redevelopment, expansion, leasing and management of properties; general risks related to real estate investments, including the illiquidity of real estate investments; the impact of our substantial indebtedness on our future operations; any disruption in the financial markets that adversely affects our ability to access capital for growth and satisfy our ongoing debt service requirements; any change in our credit rating; changes in market rates of interest and foreign exchange rates for foreign currencies; changes in the value of our investments in foreign entities; our ability to hedge interest rate and currency risk; our continued ability to maintain our status as a REIT; changes in tax laws or regulations that result in adverse tax consequences; risks relating to our joint venture properties; environmental liabilities; changes in insurance costs, the availability of comprehensive insurance coverage; security breaches that could compromise our information technology or infrastructure; natural disasters; the potential for terrorist activities; and the loss of key management personnel. We discussed these and other risks and uncertainties under the heading "Risk Factors" in Part I, Item1A of this Annual Report on Form 10-K. We may update that discussion in subsequent other periodic reports, but, except as required by law, 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.

## Non-GAAP Financial Measures

Industry practice is to evaluate real estate properties in part based on performance measures such as FFO, diluted FFO per share, NOI, portfolio NOI and comparable property NOI. We believe that these non-GAAP measures are helpful to investors because they are widely recognized measures of the performance of REITs and provide a relevant basis for comparison among REITs. We also use these measures internally to measure the operating performance of our portfolio.

We determine FFO based on the definition set forth by the National Association of Real Estate Investment Trusts, or NAREIT, as consolidated net income computed in accordance with GAAP:

• excluding real estate related depreciation and amortization,

• excluding gains and losses from extraordinary items and cumulative effects of accounting changes,

• excluding gains and losses from the sales or disposals of previously depreciated retail operating properties,

• excluding impairment charges of depreciable real estate,

- plus the allocable portion of FFO of unconsolidated entities accounted for under the equity method of accounting based upon economic ownership interest, and

• all determined on a consistent basis in accordance with GAAP.

We have adopted NAREIT’s clarification of the definition of FFO that requires us to include the effects of nonrecurring items not classified as extraordinary, cumulative effect of accounting changes, or a gain or loss resulting from the sale of, or any impairment charges related to, previously depreciated retail operating properties.



We include in FFO gains and losses realized from the sale of land, outlet buildings, marketable and non-marketable securities, and investment holdings of non-retail real estate. We also include in FFO the impact of foreign currency exchange gains and losses, legal expenses, transaction expenses and other items required by GAAP.

You should understand that our computations of these non-GAAP measures might not be comparable to similar measures reported by other REITs and that these non-GAAP measures:

• do not represent cash flow from operations as defined by GAAP,

- should not be considered as alternatives to consolidated net income determined in accordance with GAAP as a measure of operating performance, and

• are not alternatives to cash flows as a measure of liquidity.



The following schedule reconciles total FFO to consolidated net income and, for Simon, diluted net income per share to diluted FFO per share.

<table><tr><td rowspan="2"></td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td colspan="3">(in thousands)</td></tr><tr><td>Funds from Operations (A) (B)</td><td>$ 4,020,505</td><td>$ 3,792,951</td><td>$ 3,571,237</td></tr><tr><td>Change in FFO from prior period</td><td>6.0 %</td><td>6.2 %</td><td>10.4 %</td></tr><tr><td>Consolidated Net Income</td><td>$ 2,244,903</td><td>$ 2,134,706</td><td>$ 2,139,375</td></tr><tr><td>Adjustments to Arrive at FFO:</td><td></td><td></td><td></td></tr><tr><td>Depreciation and amortization from consolidated properties</td><td>1,260,865</td><td>1,236,476</td><td>1,160,916</td></tr><tr><td>Our share of depreciation and amortization from unconsolidated entities, including Klépierre and HBS</td><td>540,718</td><td>527,976</td><td>533,330</td></tr><tr><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net (C)</td><td>(3,647)</td><td>(80,154)</td><td>(250,516)</td></tr><tr><td>Net income attributable to noncontrolling interest holders in properties</td><td>(13)</td><td>(7,218)</td><td>(2,984)</td></tr><tr><td>Noncontrolling interests portion of depreciation and amortization</td><td>(17,069)</td><td>(13,583)</td><td>(3,632)</td></tr><tr><td>Preferred distributions and dividends</td><td>(5,252)</td><td>(5,252)</td><td>(5,252)</td></tr><tr><td>FFO of the Operating Partnership (A) (B)</td><td>$ 4,020,505</td><td>$ 3,792,951</td><td>$ 3,571,237</td></tr><tr><td>FFO allocable to limited partners</td><td>529,595</td><td>512,361</td><td>514,044</td></tr><tr><td>Dilutive FFO allocable to common stockholders (A) (B)</td><td>$ 3,490,910</td><td>$ 3,280,590</td><td>$ 3,057,193</td></tr><tr><td>Diluted net income per share to diluted FFO per share reconciliation:</td><td></td><td></td><td></td></tr><tr><td>Diluted net income per share</td><td>$ 6.24</td><td>$ 5.87</td><td>$ 5.88</td></tr><tr><td>Depreciation and amortization from consolidated properties and our share of depreciation and amortization from unconsolidated entities, including Klépierre and HBS, net of noncontrolling interests portion of depreciation and amortization</td><td>4.98</td><td>4.84</td><td>4.67</td></tr><tr><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net (C)</td><td>(0.01)</td><td>(0.22)</td><td>(0.69)</td></tr><tr><td>Diluted FFO per share (A) (B)</td><td>$ 11.21</td><td>$ 10.49</td><td>$ 9.86</td></tr><tr><td>Basic and Diluted weighted average shares outstanding</td><td>311,517</td><td>312,691</td><td>310,103</td></tr><tr><td>Weighted average limited partnership units outstanding</td><td>47,260</td><td>48,836</td><td>52,141</td></tr><tr><td>Basic and Diluted weighted average shares and units outstanding</td><td>358,777</td><td>361,527</td><td>362,244</td></tr></table>

(A) Includes FFO of the Operating Partnership related to a gain on sale of marketable securities of $80.2 million, or $0.22 per diluted share/unit, for the year ended December 31, 2015. Includes Diluted FFO allocable to common stockholders of $68.6 million for the year ended December 31, 2015.

(B) Includes FFO of the Operating Partnership related to a loss on extinguishment of debt of $128.6 million, $136.8 million, and $121.0 million for the years ended December 31, 2017, 2016, and 2015, respectively. Includes Diluted FFO per share/unit related to a loss on extinguishment of debt of $0.36, $0.38, and $0.33 for the years ended December 31, 2017, 2016, and 2015, respectively. Includes Diluted FFO allocable to common stockholders of $111.7 million, $118.3 million, and $103.6 million for the years ended December 31, 2017, 2016, and 2015, respectively.

(C) Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities for the year ended December 31, 2016 was $84.6 million. Noncontrolling interest portion of the gain was $4.4 million, or $0.01 per diluted share/unit, for the year ended December 31, 2016.



The following schedule reconciles consolidated net income to NOI and sets forth the computations of portfolio NOI and comparable property NOI.

<table><tr><td rowspan="3"></td><td colspan="2">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td></tr><tr><td colspan="2">(in thousands)</td></tr><tr><td>Reconciliation of NOI of consolidated entities:</td><td></td><td></td></tr><tr><td>Consolidated Net Income</td><td>$ 2,244,903</td><td>$ 2,134,706</td></tr><tr><td>Income and other taxes</td><td>23,343</td><td>29,678</td></tr><tr><td>Interest expense</td><td>809,393</td><td>857,554</td></tr><tr><td>Income from unconsolidated entities</td><td>(400,270)</td><td>(353,334)</td></tr><tr><td>Loss on extinguishment of debt</td><td>128,618</td><td>136,777</td></tr><tr><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net</td><td>(3,647)</td><td>(84,553)</td></tr><tr><td>Operating Income</td><td>2,802,340</td><td>2,720,828</td></tr><tr><td>Depreciation and amortization</td><td>1,275,452</td><td>1,252,673</td></tr><tr><td>NOI of consolidated entities</td><td>$ 4,077,792</td><td>$ 3,973,501</td></tr><tr><td>Reconciliation of NOI of unconsolidated entities:</td><td></td><td></td></tr><tr><td>Net Income</td><td>$ 839,226</td><td>$ 916,383</td></tr><tr><td>Interest expense</td><td>593,062</td><td>585,958</td></tr><tr><td>Loss (gain) on sale or disposal of assets and interests in unconsolidated entities</td><td>2,239</td><td>(101,051)</td></tr><tr><td>Operating Income</td><td>1,434,527</td><td>1,401,290</td></tr><tr><td>Depreciation and amortization</td><td>640,286</td><td>588,666</td></tr><tr><td>NOI of unconsolidated entities</td><td>$ 2,074,813</td><td>$ 1,989,956</td></tr><tr><td>Add: Our share of NOI from Klépierre, HBS, and other corporate investments</td><td>279,028</td><td>248,705</td></tr><tr><td>Total NOI</td><td>$ 6,431,633</td><td>$ 6,212,162</td></tr><tr><td>Less: Corporate and Other NOI Sources (1)</td><td>169,373</td><td>217,610</td></tr><tr><td>Portfolio NOI</td><td>$ 6,262,260</td><td>$ 5,994,552</td></tr><tr><td>Portfolio NOI Growth</td><td>4.5%</td><td></td></tr><tr><td>Less: Our share of NOI from Klépierre and HBS</td><td>267,789</td><td>248,705</td></tr><tr><td>Less: International Properties (2)</td><td>450,454</td><td>398,734</td></tr><tr><td>Less: NOI from New Development, Redevelopment, Expansion and Acquisitions (3)</td><td>92,342</td><td>64,770</td></tr><tr><td>Comparable Property NOI (4)</td><td>$ 5,451,675</td><td>$ 5,282,343</td></tr><tr><td>Comparable Property NOI Growth</td><td>3.2%</td><td></td></tr></table>

(1) Includes income components excluded from portfolio NOI and comparable property NOI (domestic lease termination income, interest income, land sale gains, straight line rent, above/below market lease amortization), gains on sale of marketable securities, Simon management company operations and other assets.

(2) Includes International Premium Outlets and International Designer Outlets.

(3) Includes total property NOI for properties undergoing redevelopment as well as incremental NOI for expansion properties not yet included in comparable properties.

(4) Includes Malls, Premium Outlets, The Mills and Lifestyle Centers opened and operating as comparable for the period.



## Item 7A. Qualitative and Quantitative Disclosures About Market Risk

Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations. We manage exposure to interest rate market risk through our risk management strategy by a combination of interest rate protection agreements to effectively fix or cap a portion of variable rate debt. 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 anticipated issuances of senior notes. Upon completion of the debt issuance, the cost of these instruments is recorded as part of accumulated other comprehensive income (loss) and is amortized to interest expense over the life of the debt agreement.

Our future earnings, cash flows and fair values relating to financial instruments are dependent upon prevalent market rates of interest, primarily LIBOR. Based upon consolidated indebtedness and interest rates at December 31, 2017, a 50 basis point increase in the market rates of interest would decrease future earnings and cash flows by approximately $6.1 million, and would decrease the fair value of debt by approximately $696.4 million.



## Item 8. Financial Statements and Supplementary Data

## Report of Independent Registered Public Accounting Firm

The Stockholders and the Board of Directors of Simon Property Group, Inc.:

## Opinion on Internal Control over Financial Reporting

We have audited Simon Property Group, Inc.'s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Simon Property Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2017 and 2016, 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, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a), of the Company and our report dated February 23, 2018 expressed an unqualified opinion thereon.

## Basis for Opinion

The Company’s 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 Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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.

## Definition and Limitations of Internal Control Over Financial Reporting

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.

/s/ Ernst & Young LLP

Indianapolis, Indiana
February 23, 2018



# Report of Independent Registered Public Accounting Firm

The Stockholders and the Board of Directors of Simon Property Group, Inc.:

## Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Simon Property Group, Inc. (the Company) as of December 31, 2017 and 2016, 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, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 23, 2018 expressed an unqualified opinion thereon.

## Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Indianapolis, Indiana

February 23, 2018



# Report of Independent Registered Public Accounting Firm

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

## Opinion on Internal Control over Financial Reporting

We have audited Simon Property Group, L.P.'s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). In our opinion, Simon Property Group, L.P. (the Partnership) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2017 and 2016, 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, 2017, and the related notes and financial statement schedule listed in the Index at Item 15(a), of the Partnership and our report dated February 23, 2018 expressed an unqualified opinion thereon.

## Basis for Opinion

The Partnership’s 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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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.

## Definition and Limitations of Internal Control Over Financial Reporting

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.

/s/ Ernst & Young LLP

Indianapolis, Indiana

February 23, 2018



# Report of Independent Registered Public Accounting Firm

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

## Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Simon Property Group, L.P. (the Partnership) as of December 31, 2017 and 2016, 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, 2017 and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 23, 2018, expressed an unqualified opinion thereon.

## Basis for Opinion

These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ ERNST & YOUNG LLP

We have served as the Partnership’s auditor since 2002.

Indianapolis, Indiana

February 23, 2018



## Simon Property Group, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except share amounts)

<table><tr><td></td><td>December 31, 2017</td><td>December 31, 2016</td></tr><tr><td>ASSETS:</td><td></td><td></td></tr><tr><td>Investment properties, at cost</td><td>$ 36,393,464</td><td>$ 35,226,089</td></tr><tr><td>Less - accumulated depreciation</td><td>11,935,949</td><td>10,865,754</td></tr><tr><td></td><td>24,457,515</td><td>24,360,335</td></tr><tr><td>Cash and cash equivalents</td><td>1,482,309</td><td>560,059</td></tr><tr><td>Tenant receivables and accrued revenue, net</td><td>742,672</td><td>664,619</td></tr><tr><td>Investment in unconsolidated entities, at equity</td><td>2,266,483</td><td>2,367,583</td></tr><tr><td>Investment in Klépierre, at equity</td><td>1,934,676</td><td>1,797,394</td></tr><tr><td>Deferred costs and other assets</td><td>1,373,983</td><td>1,353,588</td></tr><tr><td>Total assets</td><td>$ 32,257,638</td><td>$ 31,103,578</td></tr><tr><td>LIABILITIES:</td><td></td><td></td></tr><tr><td>Mortgages and unsecured indebtedness</td><td>$ 24,632,463</td><td>$ 22,977,104</td></tr><tr><td>Accounts payable, accrued expenses, intangibles, and deferred revenues</td><td>1,269,190</td><td>1,214,022</td></tr><tr><td>Cash distributions and losses in unconsolidated entities, at equity</td><td>1,406,378</td><td>1,359,738</td></tr><tr><td>Other liabilities</td><td>520,363</td><td>455,040</td></tr><tr><td>Total liabilities</td><td>27,828,394</td><td>26,005,904</td></tr><tr><td>Commitments and contingencies</td><td></td><td></td></tr><tr><td>Limited partners&#x27; preferred interest in the Operating Partnership and noncontrolling redeemable interests in properties</td><td>190,480</td><td>137,762</td></tr><tr><td>EQUITY:</td><td></td><td></td></tr><tr><td>Stockholders&#x27; Equity</td><td></td><td></td></tr><tr><td>Capital stock (850,000,000 total shares authorized, $0.0001 par value, 238,000,000 shares of excess common stock, 100,000,000 authorized shares of preferred stock):</td><td></td><td></td></tr><tr><td>Series J 8^{3/8}% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation value of $39,847</td><td>43,077</td><td>43,405</td></tr><tr><td>Common stock, $0.0001 par value, 511,990,000 shares authorized, 320,322,774 and 319,823,322 issued and outstanding, respectively</td><td>32</td><td>32</td></tr><tr><td>Class B common stock, $0.0001 par value, 10,000 shares authorized, 8,000 issued and outstanding</td><td>—</td><td>—</td></tr><tr><td>Capital in excess of par value</td><td>9,614,748</td><td>9,523,086</td></tr><tr><td>Accumulated deficit</td><td>(4,782,173)</td><td>(4,459,387)</td></tr><tr><td>Accumulated other comprehensive loss</td><td>(110,453)</td><td>(114,126)</td></tr><tr><td>Common stock held in treasury, at cost, 9,163,920 and 6,756,748 shares, respectively</td><td>(1,079,063)</td><td>(682,562)</td></tr><tr><td>Total stockholders&#x27; equity</td><td>3,686,168</td><td>4,310,448</td></tr><tr><td>Noncontrolling interests</td><td>552,596</td><td>649,464</td></tr><tr><td>Total equity</td><td>4,238,764</td><td>4,959,912</td></tr><tr><td>Total liabilities and equity</td><td>$ 32,257,638</td><td>$ 31,103,578</td></tr></table>

The accompanying notes are an integral part of these statements.



## Simon Property Group, Inc.
Consolidated Statements of Operations and Comprehensive Income
(Dollars in thousands, except per share amounts)

<table><tr><td rowspan="3"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td></td><td></td><td></td></tr><tr><td>REVENUE:</td><td></td><td></td><td></td></tr><tr><td>Minimum rent</td><td>$ 3,440,009</td><td>$ 3,358,498</td><td>$ 3,142,347</td></tr><tr><td>Overage rent</td><td>147,471</td><td>161,508</td><td>194,070</td></tr><tr><td>Tenant reimbursements</td><td>1,532,923</td><td>1,494,804</td><td>1,445,623</td></tr><tr><td>Management fees and other revenues</td><td>121,259</td><td>143,875</td><td>158,466</td></tr><tr><td>Other income</td><td>296,978</td><td>276,544</td><td>325,597</td></tr><tr><td>Total revenue</td><td>5,538,640</td><td>5,435,229</td><td>5,266,103</td></tr><tr><td>EXPENSES:</td><td></td><td></td><td></td></tr><tr><td>Property operating</td><td>443,177</td><td>432,394</td><td>425,983</td></tr><tr><td>Depreciation and amortization</td><td>1,275,452</td><td>1,252,673</td><td>1,177,568</td></tr><tr><td>Real estate taxes</td><td>440,003</td><td>439,030</td><td>432,840</td></tr><tr><td>Repairs and maintenance</td><td>96,900</td><td>99,723</td><td>101,369</td></tr><tr><td>Advertising and promotion</td><td>150,865</td><td>142,801</td><td>134,854</td></tr><tr><td>Provision for credit losses</td><td>11,304</td><td>7,319</td><td>6,635</td></tr><tr><td>Home and regional office costs</td><td>135,150</td><td>158,406</td><td>154,816</td></tr><tr><td>General and administrative</td><td>51,972</td><td>65,082</td><td>60,329</td></tr><tr><td>Other</td><td>131,477</td><td>116,973</td><td>102,836</td></tr><tr><td>Total operating expenses</td><td>2,736,300</td><td>2,714,401</td><td>2,597,230</td></tr><tr><td>OPERATING INCOME</td><td>2,802,340</td><td>2,720,828</td><td>2,668,873</td></tr><tr><td>Interest expense</td><td>(809,393)</td><td>(857,554)</td><td>(923,697)</td></tr><tr><td>Loss on extinguishment of debt</td><td>(128,618)</td><td>(136,777)</td><td>(120,953)</td></tr><tr><td>Income and other taxes</td><td>(23,343)</td><td>(29,678)</td><td>(20,170)</td></tr><tr><td>Income from unconsolidated entities</td><td>400,270</td><td>353,334</td><td>284,806</td></tr><tr><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net</td><td>3,647</td><td>84,553</td><td>250,516</td></tr><tr><td>CONSOLIDATED NET INCOME</td><td>2,244,903</td><td>2,134,706</td><td>2,139,375</td></tr><tr><td>Net income attributable to noncontrolling interests</td><td>296,941</td><td>295,810</td><td>311,655</td></tr><tr><td>Preferred dividends</td><td>3,337</td><td>3,337</td><td>3,337</td></tr><tr><td>NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS</td><td>$ 1,944,625</td><td>$ 1,835,559</td><td>$ 1,824,383</td></tr><tr><td>BASIC AND DILUTED EARNINGS PER COMMON SHARE:</td><td></td><td></td><td></td></tr><tr><td>Net income attributable to common stockholders</td><td>$ 6.24</td><td>$ 5.87</td><td>$ 5.88</td></tr><tr><td>Consolidated Net Income</td><td>$ 2,244,903</td><td>$ 2,134,706</td><td>$ 2,139,375</td></tr><tr><td>Unrealized (loss) gain on derivative hedge agreements</td><td>(35,112)</td><td>39,472</td><td>17,122</td></tr><tr><td>Net (gain) loss reclassified from accumulated other comprehensive loss into earnings</td><td>(12,122)</td><td>149,622</td><td>(69,189)</td></tr><tr><td>Currency translation adjustments</td><td>45,766</td><td>(28,646)</td><td>(160,312)</td></tr><tr><td>Changes in available-for-sale securities and other</td><td>5,733</td><td>3,192</td><td>(11,200)</td></tr><tr><td>Comprehensive income</td><td>2,249,168</td><td>2,298,346</td><td>1,915,796</td></tr><tr><td>Comprehensive income attributable to noncontrolling interests</td><td>297,534</td><td>320,890</td><td>279,720</td></tr><tr><td>Comprehensive income attributable to common stockholders</td><td>$ 1,951,634</td><td>$ 1,977,456</td><td>$ 1,636,076</td></tr></table>

The accompanying notes are an integral part of these statements.



## Simon Property Group, Inc.
Consolidated Statements of Cash Flows
(Dollars in thousands)

<table><tr><td rowspan="3"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Consolidated Net Income</td><td>$ 2,244,903</td><td>$ 2,134,706</td><td>$ 2,139,375</td></tr><tr><td>Adjustments to reconcile consolidated net income to net cash provided by operating activities —</td><td></td><td></td><td></td></tr><tr><td>Depreciation and amortization</td><td>1,357,351</td><td>1,327,946</td><td>1,239,214</td></tr><tr><td>Loss on debt extinguishment</td><td>128,618</td><td>136,777</td><td>120,953</td></tr><tr><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net.</td><td>(3,647)</td><td>(84,553)</td><td>(250,516)</td></tr><tr><td>Pre-development project cost charge</td><td>—</td><td>31,490</td><td>—</td></tr><tr><td>Gains on sales of marketable securities</td><td>(21,541)</td><td>—</td><td>(80,187)</td></tr><tr><td>Straight-line rent</td><td>(26,543)</td><td>(46,656)</td><td>(54,129)</td></tr><tr><td>Equity in income of unconsolidated entities</td><td>(400,270)</td><td>(353,334)</td><td>(284,806)</td></tr><tr><td>Distributions of income from unconsolidated entities</td><td>374,101</td><td>331,627</td><td>271,998</td></tr><tr><td>Changes in assets and liabilities —</td><td></td><td></td><td></td></tr><tr><td>Tenant receivables and accrued revenue, net</td><td>(26,170)</td><td>16,277</td><td>9,918</td></tr><tr><td>Deferred costs and other assets</td><td>(132,945)</td><td>(43,797)</td><td>(122,677)</td></tr><tr><td>Accounts payable, accrued expenses, intangibles, deferred revenues and other liabilities.</td><td>99,931</td><td>(77,789)</td><td>35,542</td></tr><tr><td>Net cash provided by operating activities</td><td>3,593,788</td><td>3,372,694</td><td>3,024,685</td></tr><tr><td>CASH FLOWS FROM INVESTING ACTIVITIES:</td><td></td><td></td><td></td></tr><tr><td>Acquisitions</td><td>(264,488)</td><td>(499,976)</td><td>(1,410,881)</td></tr><tr><td>Funding of loans to related parties</td><td>(71,532)</td><td>—</td><td>—</td></tr><tr><td>Repayments of loans to related parties</td><td>—</td><td>8,207</td><td>—</td></tr><tr><td>Capital expenditures, net</td><td>(732,100)</td><td>(798,465)</td><td>(1,020,924)</td></tr><tr><td>Cash impact from the consolidation of properties</td><td>7,536</td><td>59,994</td><td>—</td></tr><tr><td>Net proceeds from sale of assets</td><td>19,944</td><td>36,558</td><td>33,015</td></tr><tr><td>Investments in unconsolidated entities</td><td>(157,173)</td><td>(312,160)</td><td>(329,928)</td></tr><tr><td>Purchase of marketable and non-marketable securities</td><td>(25,000)</td><td>(38,809)</td><td>(59,523)</td></tr><tr><td>Proceeds from sales of marketable and non-marketable securities</td><td>56,268</td><td>42,600</td><td>504,012</td></tr><tr><td>Distributions of capital from unconsolidated entities and other</td><td>405,078</td><td>533,025</td><td>821,509</td></tr><tr><td>Net cash used in investing activities</td><td>(761,467)</td><td>(969,026)</td><td>(1,462,720)</td></tr><tr><td>CASH FLOWS FROM FINANCING ACTIVITIES:</td><td></td><td></td><td></td></tr><tr><td>Proceeds from sales of common stock and other, net of transaction costs</td><td>(328)</td><td>(328)</td><td>(285)</td></tr><tr><td>Purchase of shares related to stock grant recipients&#x27; tax withholdings</td><td>(2,789)</td><td>(4,299)</td><td>(3,301)</td></tr><tr><td>Purchase of treasury stock and limited partner units</td><td>(407,002)</td><td>(255,267)</td><td>(505,691)</td></tr><tr><td>Distributions to noncontrolling interest holders in properties</td><td>(11,295)</td><td>(9,731)</td><td>(8,041)</td></tr><tr><td>Contributions from noncontrolling interest holders in properties</td><td>382</td><td>1,507</td><td>4,552</td></tr><tr><td>Preferred distributions of the Operating Partnership</td><td>(1,915)</td><td>(1,915)</td><td>(1,915)</td></tr><tr><td>Distributions to stockholders and preferred dividends</td><td>(2,231,259)</td><td>(2,037,542)</td><td>(1,879,182)</td></tr><tr><td>Distributions to limited partners</td><td>(338,602)</td><td>(316,428)</td><td>(314,944)</td></tr><tr><td>Loss on debt extinguishment</td><td>(128,618)</td><td>(136,777)</td><td>(120,953)</td></tr><tr><td>Proceeds from issuance of debt, net of transaction costs</td><td>11,668,026</td><td>14,866,205</td><td>10,468,667</td></tr><tr><td>Repayments of debt</td><td>(10,456,671)</td><td>(14,650,168)</td><td>(9,112,020)</td></tr><tr><td>Net cash used in financing activities</td><td>(1,910,071)</td><td>(2,544,743)</td><td>(1,473,113)</td></tr><tr><td>INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS</td><td>922,250</td><td>(141,075)</td><td>88,852</td></tr><tr><td>CASH AND CASH EQUIVALENTS, beginning of period</td><td>560,059</td><td>701,134</td><td>612,282</td></tr><tr><td>CASH AND CASH EQUIVALENTS, end of period</td><td>1,482,309</td><td>560,059</td><td>701,134</td></tr></table>

The accompanying notes are an integral part of these statements.



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

<table><tr><td></td><td>December 31, 2017</td><td>December 31, 2016</td></tr><tr><td>ASSETS:</td><td></td><td></td></tr><tr><td>Investment properties, at cost</td><td>$ 36,393,464</td><td>$ 35,226,089</td></tr><tr><td>Less — accumulated depreciation</td><td>11,935,949</td><td>10,865,754</td></tr><tr><td></td><td>24,457,515</td><td>24,360,335</td></tr><tr><td>Cash and cash equivalents</td><td>1,482,309</td><td>560,059</td></tr><tr><td>Tenant receivables and accrued revenue, net</td><td>742,672</td><td>664,619</td></tr><tr><td>Investment in unconsolidated entities, at equity</td><td>2,266,483</td><td>2,367,583</td></tr><tr><td>Investment in Klépierre, at equity</td><td>1,934,676</td><td>1,797,394</td></tr><tr><td>Deferred costs and other assets</td><td>1,373,983</td><td>1,353,588</td></tr><tr><td>Total assets</td><td>$ 32,257,638</td><td>$ 31,103,578</td></tr><tr><td>LIABILITIES:</td><td></td><td></td></tr><tr><td>Mortgages and unsecured indebtedness</td><td>$ 24,632,463</td><td>$ 22,977,104</td></tr><tr><td>Accounts payable, accrued expenses, intangibles, and deferred revenues</td><td>1,269,190</td><td>1,214,022</td></tr><tr><td>Cash distributions and losses in unconsolidated entities, at equity</td><td>1,406,378</td><td>1,359,738</td></tr><tr><td>Other liabilities</td><td>520,363</td><td>455,040</td></tr><tr><td>Total liabilities</td><td>27,828,394</td><td>26,005,904</td></tr><tr><td>Commitments and contingencies</td><td></td><td></td></tr><tr><td>Preferred units, various series, at liquidation value, and noncontrolling redeemable interests in properties</td><td>190,480</td><td>137,762</td></tr><tr><td>EQUITY:</td><td></td><td></td></tr><tr><td>Partners&#x27; Equity</td><td></td><td></td></tr><tr><td>Preferred units, 796,948 units outstanding. Liquidation value of $39,847</td><td>43,077</td><td>43,405</td></tr><tr><td>General Partner, 311,166,854 and 313,074,574 units outstanding, respectively</td><td>3,643,091</td><td>4,267,043</td></tr><tr><td>Limited Partners, 46,879,625 and 47,276,095 units outstanding, respectively</td><td>548,858</td><td>644,348</td></tr><tr><td>Total partners&#x27; equity</td><td>4,235,026</td><td>4,954,796</td></tr><tr><td>Nonredeemable noncontrolling interests in properties, net</td><td>3,738</td><td>5,116</td></tr><tr><td>Total equity</td><td>4,238,764</td><td>4,959,912</td></tr><tr><td>Total liabilities and equity</td><td>$ 32,257,638</td><td>$ 31,103,578</td></tr></table>

The accompanying notes are an integral part of these statements.



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

<table><tr><td rowspan="3"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td></td><td></td><td></td></tr><tr><td>REVENUE:</td><td></td><td></td><td></td></tr><tr><td>Minimum rent</td><td>$ 3,440,009</td><td>$ 3,358,498</td><td>$ 3,142,347</td></tr><tr><td>Overage rent</td><td>147,471</td><td>161,508</td><td>194,070</td></tr><tr><td>Tenant reimbursements</td><td>1,532,923</td><td>1,494,804</td><td>1,445,623</td></tr><tr><td>Management fees and other revenues</td><td>121,259</td><td>143,875</td><td>158,466</td></tr><tr><td>Other income</td><td>296,978</td><td>276,544</td><td>325,597</td></tr><tr><td>Total revenue</td><td>5,538,640</td><td>5,435,229</td><td>5,266,103</td></tr><tr><td>EXPENSES:</td><td></td><td></td><td></td></tr><tr><td>Property operating</td><td>443,177</td><td>432,394</td><td>425,983</td></tr><tr><td>Depreciation and amortization</td><td>1,275,452</td><td>1,252,673</td><td>1,177,568</td></tr><tr><td>Real estate taxes</td><td>440,003</td><td>439,030</td><td>432,840</td></tr><tr><td>Repairs and maintenance</td><td>96,900</td><td>99,723</td><td>101,369</td></tr><tr><td>Advertising and promotion</td><td>150,865</td><td>142,801</td><td>134,854</td></tr><tr><td>Provision for credit losses</td><td>11,304</td><td>7,319</td><td>6,635</td></tr><tr><td>Home and regional office costs</td><td>135,150</td><td>158,406</td><td>154,816</td></tr><tr><td>General and administrative</td><td>51,972</td><td>65,082</td><td>60,329</td></tr><tr><td>Other</td><td>131,477</td><td>116,973</td><td>102,836</td></tr><tr><td>Total operating expenses</td><td>2,736,300</td><td>2,714,401</td><td>2,597,230</td></tr><tr><td>OPERATING INCOME</td><td>2,802,340</td><td>2,720,828</td><td>2,668,873</td></tr><tr><td>Interest expense</td><td>(809,393)</td><td>(857,554)</td><td>(923,697)</td></tr><tr><td>Loss on extinguishment of debt</td><td>(128,618)</td><td>(136,777)</td><td>(120,953)</td></tr><tr><td>Income and other taxes</td><td>(23,343)</td><td>(29,678)</td><td>(20,170)</td></tr><tr><td>Income from unconsolidated entities</td><td>400,270</td><td>353,334</td><td>284,806</td></tr><tr><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net</td><td>3,647</td><td>84,553</td><td>250,516</td></tr><tr><td>CONSOLIDATED NET INCOME</td><td>2,244,903</td><td>2,134,706</td><td>2,139,375</td></tr><tr><td>Net income attributable to noncontrolling interests</td><td>13</td><td>7,218</td><td>2,984</td></tr><tr><td>Preferred unit requirements</td><td>5,252</td><td>5,252</td><td>5,252</td></tr><tr><td>NET INCOME ATTRIBUTABLE TO UNITHOLDERS</td><td>$ 2,239,638</td><td>$ 2,122,236</td><td>$ 2,131,139</td></tr><tr><td>NET INCOME ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO:</td><td></td><td></td><td></td></tr><tr><td>General Partner</td><td>$ 1,944,625</td><td>$ 1,835,559</td><td>$ 1,824,383</td></tr><tr><td>Limited Partners</td><td>295,013</td><td>286,677</td><td>306,756</td></tr><tr><td>Net income attributable to unitholders</td><td>$ 2,239,638</td><td>$ 2,122,236</td><td>$ 2,131,139</td></tr><tr><td>BASIC AND DILUTED EARNINGS PER UNIT:</td><td></td><td></td><td></td></tr><tr><td>Net income attributable to unitholders</td><td>$ 6.24</td><td>$ 5.87</td><td>$ 5.88</td></tr><tr><td>Consolidated net income</td><td>$ 2,244,903</td><td>$ 2,134,706</td><td>$ 2,139,375</td></tr><tr><td>Unrealized (loss) gain on derivative hedge agreements</td><td>(35,112)</td><td>39,472</td><td>17,122</td></tr><tr><td>Net (gain) loss reclassified from accumulated other comprehensive loss into earnings</td><td>(12,122)</td><td>149,622</td><td>(69,189)</td></tr><tr><td>Currency translation adjustments</td><td>45,766</td><td>(28,646)</td><td>(160,312)</td></tr><tr><td>Changes in available-for-sale securities and other</td><td>5,733</td><td>3,192</td><td>(11,200)</td></tr><tr><td>Comprehensive income</td><td>2,249,168</td><td>2,298,346</td><td>1,915,796</td></tr><tr><td>Comprehensive income attributable to noncontrolling interests</td><td>2,091</td><td>2,917</td><td>2,984</td></tr><tr><td>Comprehensive income attributable to unitholders</td><td>$ 2,247,077</td><td>$ 2,295,429</td><td>$ 1,912,812</td></tr></table>

The accompanying notes are an integral part of these statements.



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

<table><tr><td rowspan="3"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Consolidated Net Income</td><td>$ 2,244,903</td><td>$ 2,134,706</td><td>$ 2,139,375</td></tr><tr><td>Adjustments to reconcile consolidated net income to net cash provided by operating activities —</td><td></td><td></td><td></td></tr><tr><td>Depreciation and amortization</td><td>1,357,351</td><td>1,327,946</td><td>1,239,214</td></tr><tr><td>Loss on debt extinguishment</td><td>128,618</td><td>136,777</td><td>120,953</td></tr><tr><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net.</td><td>(3,647)</td><td>(84,553)</td><td>(250,516)</td></tr><tr><td>Pre-development project cost charge</td><td>—</td><td>31,490</td><td>—</td></tr><tr><td>Gains on sales of marketable securities</td><td>(21,541)</td><td>—</td><td>(80,187)</td></tr><tr><td>Straight-line rent</td><td>(26,543)</td><td>(46,656)</td><td>(54,129)</td></tr><tr><td>Equity in income of unconsolidated entities</td><td>(400,270)</td><td>(353,334)</td><td>(284,806)</td></tr><tr><td>Distributions of income from unconsolidated entities</td><td>374,101</td><td>331,627</td><td>271,998</td></tr><tr><td>Changes in assets and liabilities —</td><td></td><td></td><td></td></tr><tr><td>Tenant receivables and accrued revenue, net</td><td>(26,170)</td><td>16,277</td><td>9,918</td></tr><tr><td>Deferred costs and other assets</td><td>(132,945)</td><td>(43,797)</td><td>(122,677)</td></tr><tr><td>Accounts payable, accrued expenses, intangibles, deferred revenues and other liabilities.</td><td>99,931</td><td>(77,789)</td><td>35,542</td></tr><tr><td>Net cash provided by operating activities</td><td>3,593,788</td><td>3,372,694</td><td>3,024,685</td></tr><tr><td>CASH FLOWS FROM INVESTING ACTIVITIES:</td><td></td><td></td><td></td></tr><tr><td>Acquisitions</td><td>(264,488)</td><td>(499,976)</td><td>(1,410,881)</td></tr><tr><td>Funding of loans to related parties</td><td>(71,532)</td><td>—</td><td>—</td></tr><tr><td>Repayments of loans to related parties</td><td>—</td><td>8,207</td><td>—</td></tr><tr><td>Capital expenditures, net</td><td>(732,100)</td><td>(798,465)</td><td>(1,020,924)</td></tr><tr><td>Cash impact from the consolidation of properties</td><td>7,536</td><td>59,994</td><td>—</td></tr><tr><td>Net proceeds from sale of assets</td><td>19,944</td><td>36,558</td><td>33,015</td></tr><tr><td>Investments in unconsolidated entities</td><td>(157,173)</td><td>(312,160)</td><td>(329,928)</td></tr><tr><td>Purchase of marketable and non-marketable securities</td><td>(25,000)</td><td>(38,809)</td><td>(59,523)</td></tr><tr><td>Proceeds from sales of marketable and non-marketable securities</td><td>56,268</td><td>42,600</td><td>504,012</td></tr><tr><td>Distributions of capital from unconsolidated entities and other</td><td>405,078</td><td>533,025</td><td>821,509</td></tr><tr><td>Net cash used in investing activities</td><td>(761,467)</td><td>(969,026)</td><td>(1,462,720)</td></tr><tr><td>CASH FLOWS FROM FINANCING ACTIVITIES:</td><td></td><td></td><td></td></tr><tr><td>Issuance of units and other.</td><td>(328)</td><td>(328)</td><td>(285)</td></tr><tr><td>Purchase of units related to stock grant recipients&#x27; tax withholdings</td><td>(2,789)</td><td>(4,299)</td><td>(3,301)</td></tr><tr><td>Purchase of limited partner units</td><td>(407,002)</td><td>(255,267)</td><td>(505,691)</td></tr><tr><td>Distributions to noncontrolling interest holders in properties</td><td>(11,295)</td><td>(9,731)</td><td>(8,041)</td></tr><tr><td>Contributions from noncontrolling interest holders in properties</td><td>382</td><td>1,507</td><td>4,552</td></tr><tr><td>Partnership distributions</td><td>(2,571,776)</td><td>(2,355,885)</td><td>(2,196,041)</td></tr><tr><td>Loss on debt extinguishment</td><td>(128,618)</td><td>(136,777)</td><td>(120,953)</td></tr><tr><td>Mortgage and unsecured indebtedness proceeds, net of transaction costs</td><td>11,668,026</td><td>14,866,205</td><td>10,468,667</td></tr><tr><td>Mortgage and unsecured indebtedness principal payments</td><td>(10,456,671)</td><td>(14,650,168)</td><td>(9,112,020)</td></tr><tr><td>Net cash used in financing activities</td><td>(1,910,071)</td><td>(2,544,743)</td><td>(1,473,113)</td></tr><tr><td>INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS</td><td>922,250</td><td>(141,075)</td><td>88,852</td></tr><tr><td>CASH AND CASH EQUIVALENTS, beginning of period</td><td>560,059</td><td>701,134</td><td>612,282</td></tr><tr><td>CASH AND CASH EQUIVALENTS, end of period</td><td>$ 1,482,309</td><td>$ 560,059</td><td>$ 701,134</td></tr></table>

The accompanying notes are an integral part of these statements.



## Simon Property Group, L.P.
Consolidated Statements of Equity
(Dollars in thousands)

<table><tr><td></td><td>Preferred Units</td><td>Simon (Managing General Partner)</td><td>Limited Partners</td><td>Noncontrolling Interests</td><td>Total Equity</td></tr><tr><td>Balance at December 31, 2014.</td><td>$ 44,062</td><td>$ 5,049,115</td><td>$ 858,557</td><td>$ (229)</td><td>$ 5,951,505</td></tr><tr><td>Series J preferred stock premium and amortization</td><td>(329)</td><td></td><td></td><td></td><td>(329)</td></tr><tr><td>Limited partner units exchanged to common units (489,291 units).</td><td></td><td>7,942</td><td>(7,942)</td><td></td><td>—</td></tr><tr><td>Stock incentive program (63,738 units, net).</td><td></td><td>—</td><td></td><td></td><td>—</td></tr><tr><td>Redemption of limited partner units (944,359 units).</td><td></td><td>(147,841)</td><td>(14,843)</td><td></td><td>(162,684)</td></tr><tr><td>Amortization of stock incentive</td><td></td><td>13,692</td><td></td><td></td><td>13,692</td></tr><tr><td>Treasury unit purchase (1,903,340 units).</td><td></td><td>(343,007)</td><td></td><td></td><td>(343,007)</td></tr><tr><td>Long-term incentive performance units</td><td></td><td></td><td>47,279</td><td></td><td>47,279</td></tr><tr><td>Issuance of unit equivalents and other (401,203 units and 17,030 common units).</td><td></td><td>(10,543)</td><td>—</td><td>4,537</td><td>(6,006)</td></tr><tr><td>Adjustment to limited partners&#x27; interest from change in ownership in the Operating Partnership.</td><td></td><td>101,480</td><td>(101,480)</td><td></td><td>—</td></tr><tr><td>Distributions, excluding distributions on preferred interests classified as temporary equity</td><td>(3,337)</td><td>(1,875,845)</td><td>(314,944)</td><td>(3,836)</td><td>(2,197,962)</td></tr><tr><td>Net income, excluding preferred distributions on temporary equity preferred units of $1,915.</td><td>3,337</td><td>1,824,383</td><td>306,756</td><td>2,984</td><td>2,137,460</td></tr><tr><td>Other comprehensive income.</td><td></td><td>(191,645)</td><td>(31,934)</td><td></td><td>(223,579)</td></tr><tr><td>Balance at December 31, 2015.</td><td>$ 43,733</td><td>$ 4,427,731</td><td>$ 741,449</td><td>$ 3,456</td><td>$ 5,216,369</td></tr><tr><td>Series J preferred stock premium and amortization</td><td>(328)</td><td></td><td></td><td></td><td>(328)</td></tr><tr><td>Limited partner units exchanged to common units (5,020,919 units).</td><td></td><td>73,756</td><td>(73,756)</td><td></td><td>—</td></tr><tr><td>Stock incentive program (63,324 common shares, net).</td><td></td><td>—</td><td></td><td></td><td>—</td></tr><tr><td>Amortization of stock incentive</td><td></td><td>12,024</td><td></td><td></td><td>12,024</td></tr><tr><td>Treasury unit purchase (1,409,197 units).</td><td></td><td>(255,267)</td><td></td><td></td><td>(255,267)</td></tr><tr><td>Long-term incentive performance units</td><td></td><td></td><td>48,324</td><td></td><td>48,324</td></tr><tr><td>Issuance of unit equivalents and other (482,779 units and 21,041 common units).</td><td></td><td>1,889</td><td>(2)</td><td>1,508</td><td>3,395</td></tr><tr><td>Adjustment to limited partners&#x27; interest from change in ownership in the Operating Partnership.</td><td></td><td>66,996</td><td>(66,996)</td><td></td><td>—</td></tr><tr><td>Distributions, excluding distributions on preferred interests classified as temporary equity</td><td>(3,337)</td><td>(2,034,205)</td><td>(316,428)</td><td>(2,765)</td><td>(2,356,735)</td></tr><tr><td>Net income, excluding preferred distributions on temporary equity preferred units of $1,915 and $4,301 attributable to noncontrolling redeemable interests in properties.</td><td>3,337</td><td>1,835,559</td><td>286,677</td><td>2,917</td><td>2,128,490</td></tr><tr><td>Other comprehensive income.</td><td></td><td>138,560</td><td>25,080</td><td></td><td>163,640</td></tr><tr><td>Balance at December 31, 2016.</td><td>$ 43,405</td><td>$ 4,267,043</td><td>$ 644,348</td><td>$ 5,116</td><td>$ 4,959,912</td></tr><tr><td>Series J preferred stock premium and amortization</td><td>(328)</td><td></td><td></td><td></td><td>(328)</td></tr><tr><td>Limited partner units exchanged to common units (500,411 units).</td><td></td><td>6,005</td><td>(6,005)</td><td></td><td>—</td></tr><tr><td>Stock incentive program (76,660 common shares, net).</td><td></td><td>—</td><td></td><td></td><td>—</td></tr><tr><td>Amortization of stock incentive</td><td></td><td>13,911</td><td></td><td></td><td>13,911</td></tr><tr><td>Treasury unit purchase (2,468,630 units).</td><td></td><td>(407,002)</td><td></td><td></td><td>(407,002)</td></tr><tr><td>Long-term incentive performance units</td><td></td><td></td><td>38,305</td><td></td><td>38,305</td></tr><tr><td>Issuance of unit equivalents and other (103,941 units and 16,161 common units).</td><td></td><td>(42,036)</td><td>1</td><td>382</td><td>(41,653)</td></tr><tr><td>Adjustment to limited partners&#x27; interest from change in ownership in the Operating Partnership.</td><td></td><td>84,794</td><td>(84,794)</td><td></td><td>—</td></tr><tr><td>Distributions, excluding distributions on preferred interests classified as temporary equity</td><td>(3,337)</td><td>(2,227,922)</td><td>(338,602)</td><td>(3,851)</td><td>(2,573,712)</td></tr><tr><td>Net income, excluding preferred distributions on temporary equity preferred units of $1,915 and $2,078 loss attributable to noncontrolling redeemable interests in properties.</td><td>3,337</td><td>1,944,625</td><td>295,013</td><td>2,091</td><td>2,245,066</td></tr><tr><td>Other comprehensive income.</td><td></td><td>3,673</td><td>592</td><td></td><td>4,265</td></tr><tr><td>Balance at December 31, 2017.</td><td>$ 43,077</td><td>$ 3,643,091</td><td>$ 548,858</td><td>$ 3,738</td><td>$ 4,238,764</td></tr></table>

The accompanying notes are an integral part of these statements.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## 1. Organization

Simon Property Group, Inc. is a Delaware corporation that operates as a self-administered and self-managed real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. REITs will generally not be liable for U.S. federal corporate income taxes as long as they distribute not less than 100% of their REIT taxable income. Simon Property Group, L.P. is our majority-owned Delaware partnership subsidiary that owns all of our real estate properties and other assets. Unless stated otherwise or the context otherwise requires, references to "Simon" mean Simon Property Group, Inc. and references to the "Operating Partnership" mean Simon Property Group, L.P. References to "we," "us" and "our" mean collectively Simon, the Operating Partnership and those entities/subsidiaries owned or controlled by Simon and/or the Operating Partnership. Unless otherwise indicated, these notes to consolidated financial statements apply to both Simon and the Operating Partnership. According to the Operating Partnership's partnership agreement, the Operating Partnership is required to pay all expenses of Simon.

We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of Simon \( ^{®} \)  malls, Premium Outlets \( ^{®} \) , and The Mills \( ^{®} \) . As of December 31, 2017, we owned or held an interest in 207 income-producing properties in the United States, which consisted of 107 malls, 68 Premium Outlets, 14 Mills, four lifestyle centers, and 14 other retail properties in 37 states and Puerto Rico. Internationally, as of December 31, 2017, we had ownership interests in nine Premium Outlets in Japan, four Premium Outlets in South Korea, two Premium Outlets in Canada, two Premium Outlets in Malaysia and one Premium Outlet in Mexico. We also own an interest in eight Designer Outlet properties in Europe, of which six properties are consolidated, and one Designer Outlet property in Canada. Of the eight properties in Europe, two are located in Italy, two are located in the Netherlands and one each is located in Austria, France, Germany and the United Kingdom. As of December 31, 2017, we also owned a 21.0% equity stake in Klépierre SA, or Klépierre, a publicly traded, Paris-based real estate company which owns, or has an interest in, shopping centers located in 16 countries in Europe.

We generate the majority of our revenues from leases with retail, dining, entertainment and other tenants, including:

• base minimum rents.

• overage and percentage rents based on tenants' sales volume, and

• recoverable expenditures such as property operating, real estate taxes, repair and maintenance, and advertising and promotional expenditures.

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 also grow by generating supplemental revenues from the following activities:

- establishing our properties as leading market resource providers for retailers and other businesses and consumer-focused corporate alliances, including payment systems (such as handling fees relating to the sales of bank-issued prepaid cards), national marketing alliances, static and digital media initiatives, business development, sponsorship, and events,

• offering property operating services to our tenants and others, including waste handling and facility services, and the provision of energy services,

• selling or leasing land adjacent to our properties, commonly referred to as “outlots” or “outparcels,” and

• generating interest income on cash deposits and investments in loans, including those made to related entities.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

## 2. Basis of Presentation and Consolidation

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

We consolidate properties that are wholly owned or properties where we own less than 100% but we control. Control of a property is demonstrated by, among other factors, our ability to refinance debt and sell the property without the consent of any other partner or owner and the inability of any other partner or owner to replace us.

We also consolidate a variable interest entity, or VIE, when we are determined to be the primary beneficiary. Determination of the primary beneficiary of a VIE is based on whether an entity has (1) the power to direct activities that most significantly impact the economic performance of the VIE and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our determination of the primary beneficiary of a VIE considers all relationships between us and the VIE, including management agreements and other contractual arrangements. There have been no changes during 2017 in previous conclusions about whether an entity qualifies as a VIE or whether we are the primary beneficiary of any previously identified VIE. During 2017 and 2016, we did not provide financial or other support to any identified VIE that we were not 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, cash contributions and distributions, and foreign currency fluctuations, if applicable. 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. We separately report investments in joint ventures for which accumulated distributions have exceeded investments in and our share of net income of the joint ventures within cash distributions and losses in partnerships and joint ventures, at equity in the consolidated balance sheets. The net equity of certain joint ventures is less than zero because of financing or operating distributions that are usually greater than net income, as net income includes non-cash charges for depreciation and amortization.

As of December 31, 2017, we consolidated 134 wholly-owned properties and 19 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 81 properties, or the joint venture properties, as well as our investment in Klépierre, Aéropostale, and HBS Global Properties, or HBS, using the equity method of accounting, as we have determined we have significant influence over their operations. We manage the day-to-day operations of 58 of the 81 joint venture properties, but have determined that our partner or partners have substantive participating rights with respect to the assets and operations of these joint venture properties. Our investments in joint ventures in Japan, South Korea, Mexico, Malaysia, Germany, Canada, and the United Kingdom comprise 19 of the remaining 23 properties. These international properties are managed by joint ventures in which we share control.

Preferred distributions of the Operating Partnership are accrued at declaration and represent distributions on outstanding preferred units of partnership interests, or preferred units, and are included in net income attributable to noncontrolling interests. We allocate net operating results of the Operating Partnership after preferred distributions to limited partners and to us based on the partners' respective weighted average ownership interests in the Operating Partnership. Net operating results of the Operating Partnership attributable to limited partners are reflected in net income attributable to noncontrolling interests.

Our weighted average ownership interest in the Operating Partnership was as follows:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Weighted average ownership interest</td><td>86.8 %</td><td>86.5 %</td><td>85.6 %</td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

As of December 31, 2017 and 2016, our ownership interest in the Operating Partnership was 86.9%. We adjust the noncontrolling limited partners' interest at the end of each period to reflect their interest in the net assets of the Operating Partnership.

Preferred unit requirements in the Operating Partnership’s accompanying consolidated statements of operations and comprehensive income represent distributions on outstanding preferred units and are recorded when declared.

## 3. Summary of Significant Accounting Policies

## Investment Properties

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 during construction. We capitalize improvements and replacements from repair and maintenance when the repair and maintenance extends the useful life, increases capacity, or improves 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:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Capitalized interest</td><td>$ 24,754</td><td>$ 31,250</td><td>$ 32,664</td></tr></table>

We record depreciation on buildings and improvements utilizing the straight-line method over an estimated original useful life, which is generally 10 to 35 years. We review depreciable lives of investment properties periodically and we make adjustments when necessary to reflect a shorter economic life. We amortize tenant allowances 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 a property's cash flows, ending occupancy or total sales per square foot. We measure any 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 estimate fair value using unobservable data such as operating income, estimated capitalization rates, or multiples, leasing prospects and local market information. We may decide to sell properties that are held for use and the sale prices of these properties may differ from their carrying values. We also review our investments, including investments in unconsolidated entities, if events or circumstances change indicating that the carrying amount of our investments may not be recoverable. We will record an impairment charge if we determine that a decline in the fair value of the investments is other-than-temporary. Changes in economic and operating conditions that occur subsequent to our review of recoverability of investment property and other investments could impact the assumptions used in that assessment and could result in future charges to earnings if assumptions regarding those investments differ from actual results.

During the fourth quarter of 2016, we determined we would no longer pursue the construction of the Copley residential tower given a change in property approval dynamics, construction pricing in the Boston market and the continued increase in residential supply in the market. Accordingly, we recorded a charge of approximately $31.5 million related to the write-off of pre-development costs, which is included in other expenses in the accompanying statement of operations and comprehensive income.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## Purchase Accounting

We allocate the purchase price of acquisitions and any excess investment in unconsolidated entities to the various components of the acquisition based upon the relative fair value of each component which may be derived from various observable or unobservable inputs and assumptions. Also, we may utilize third party valuation specialists. These components typically include buildings, land and intangibles related to in-place leases and we estimate:

• the fair value of land and related improvements and buildings on an as-if-vacant basis,

- the market value of in-place leases based upon our best estimate of current market rents and amortize the resulting market rent adjustment into revenues,

- the value of costs to obtain tenants, including tenant allowances and improvements and leasing commissions, and

- the value of revenue and recovery of costs foregone during a reasonable lease-up period, as if the space was vacant.

The relative fair value of buildings is depreciated over the estimated remaining life of the acquired building or related improvements. We amortize 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 intangibles.

## Cash and Cash Equivalents

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 market deposits or securities. 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 of high credit quality. However, at certain times, such cash and cash equivalents are in excess of Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insurance limits. See Notes 4 and 10 for disclosures about non-cash investing and financing transactions.

## Marketable and Non-Marketable Securities

Marketable securities consist primarily of the investments of our captive insurance subsidiary, available-for-sale securities, our deferred compensation plan investments, and certain investments held to fund the debt service requirements of debt previously secured by investment properties. At December 31, 2017 and 2016, we had marketable securities of $103.3 million and $156.2 million, respectively, generally accounted for as available-for-sale, which are adjusted to their quoted market price with a corresponding adjustment in other comprehensive income (loss). Net unrealized gains recorded in accumulated other comprehensive income (loss) as of December 31, 2017 and 2016 were approximately $0.4 million and $15.4 million, respectively, and represent the valuation adjustments for our marketable securities.

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 less than 1 year to 10 years. These securities are classified as available-for-sale and are valued based upon quoted market prices or other observable inputs when quoted market prices are not available. The amortized cost of debt securities, which approximates fair value, held by our captive insurance subsidiaries is adjusted for amortization of premiums and accretion of discounts to maturity. Changes in the values of these securities are recognized in accumulated other comprehensive income (loss) until the gain or loss is realized or until any unrealized loss is deemed to be other-than-temporary. We review any declines in value of these securities for other-than-temporary impairment and consider the severity and duration of any decline in value. To the extent an other-than-temporary impairment is deemed to have occurred, an impairment charge is recorded and a new cost basis is established.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

Our insurance subsidiary is 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 as the amounts are fully payable to the employees that earned the compensation. Changes in value of these securities and changes to the matching liability to employees are both recognized in earnings and, as a result, there is no impact to consolidated net income.

On July 26, 2017, we sold our investment in certain marketable securities that were accounted for as available-for-sale securities, with the value adjusted to the quoted market price through other comprehensive income (loss). The aggregate proceeds received from the sale were $53.9 million, and we recognized a gain on the sale of $21.5 million, which is included in other income in the accompanying consolidated statements of operations and comprehensive income for the year ended December 31, 2017.

On June 24, 2015, we sold our investment in certain marketable securities that were accounted for as available-for-sale securities, with the value adjusted to its quoted market price through other comprehensive income (loss). At the date of sale, we owned 5.71 million shares. The aggregate proceeds received from the sale were $454.0 million, and we recognized a gain on the sale of $80.2 million, which is included in other income in the accompanying consolidated statements of operations and comprehensive income for the year ended December 31, 2015.

At December 31, 2017 and 2016, we had investments of $227.5 million and $210.5 million, respectively, in non-marketable securities that we account for under the cost method. We regularly evaluate these investments for any other-than-temporary impairment in their estimated fair value and determined that no material adjustment in the carrying value was required.

## Fair Value Measurements

Level 1 fair value inputs are quoted prices for identical items in active, liquid and visible markets such as stock exchanges. Level 2 fair value inputs are observable information for similar items in active or inactive markets, and appropriately consider counterparty creditworthiness in the valuations. Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate. We have no investments for which fair value is measured on a recurring basis using Level 3 inputs.

The marketable securities we held at December 31, 2017 and 2016 were primarily classified as having Level 1 fair value inputs. In addition, we had derivative instruments which were classified as having Level 2 inputs, which consist primarily of foreign currency forward contracts and interest rate swap agreements with a gross liability balance of $18.1 million at December 31, 2017 and a gross asset value of $43.9 million at December 31, 2016.

Note 8 includes a discussion of the fair value of debt measured using Level 2 inputs. Notes 3 and 4 include discussions of the fair values recorded in purchase accounting using Level 2 and Level 3 inputs. Level 3 inputs to our purchase accounting and impairment analyses include our estimations of net operating results of the property, capitalization rates and discount rates.

## Gains on Issuances of Stock by Equity Method Investees

When one of our equity method investees issues additional shares to third parties, our percentage ownership interest in the investee may decrease. In the event the issuance price per share is higher or lower than our average carrying amount per share, we recognize a noncash gain or loss on the issuance, when appropriate. This noncash gain or loss is recognized in our net income in the period the change of ownership interest occurs.

In 2015, as discussed in Note 7, we recorded a non-cash gain of $206.9 million related to Klépierre's issuance of shares in connection with Klépierre's acquisition of Corio N.V., or Corio, which is included in gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net in the accompanying consolidated statements of operations and comprehensive income.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## Use of Estimates

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.

## Segment and Geographic Locations

Our primary business is the ownership, development, and management of premier shopping, dining, entertainment and mixed use real estate. We have aggregated our retail operations, including malls, Premium Outlets, The Mills, and our international investments into one reportable segment because they have similar economic characteristics and we provide similar products and services to similar types of, and in many cases, the same tenants. As discussed in Note 7, we consolidated various European assets in 2016. As of December 31, 2017, approximately 6.5% of our consolidated long-lived assets and 2.6% of our consolidated total revenues were derived from assets located outside the United States. As of December 31, 2016, approximately 5.3% of our consolidated long-lived assets and 1.5% of our consolidated total revenues were derived from assets located outside the United States.

## Deferred Costs and Other Assets

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

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Deferred lease costs, net</td><td>$ 250,442</td><td>$ 250,261</td></tr><tr><td>In-place lease intangibles, net</td><td>96,054</td><td>153,015</td></tr><tr><td>Acquired above market lease intangibles, net</td><td>92,405</td><td>112,024</td></tr><tr><td>Marketable securities of our captive insurance companies</td><td>55,664</td><td>58,142</td></tr><tr><td>Goodwill</td><td>20,098</td><td>20,098</td></tr><tr><td>Other marketable and non-marketable securities</td><td>275,130</td><td>308,591</td></tr><tr><td>Prepaids, notes receivable and other assets, net</td><td>584,190</td><td>451,457</td></tr><tr><td></td><td>$ 1,373,983</td><td>$ 1,353,588</td></tr></table>

## Deferred Lease Costs

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:

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Deferred lease costs</td><td>$ 485,977</td><td>$ 464,226</td></tr><tr><td>Accumulated amortization</td><td>(235,535)</td><td>(213,965)</td></tr><tr><td>Deferred lease costs, net</td><td>$ 250,442</td><td>$ 250,261</td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

Amortization of deferred leasing costs is a component of depreciation and amortization expense. The accompanying consolidated statements of operations and comprehensive income include amortization of deferred leasing costs as follows:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Amortization of deferred leasing costs</td><td>$ 54,323</td><td>$ 49,993</td><td>$ 43,788</td></tr></table>

## Intangibles

The average remaining life of in-place lease intangibles is approximately 3.0 years and is being amortized on a 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 is amortized into revenue over the remaining lease life as a component of reported minimum rents. The weighted average remaining life of these intangibles is approximately 2.7 years. The unamortized amount of below market leases is included in accounts payable, accrued expenses, intangibles and deferred revenues in the consolidated balance sheets and was $94.1 million and $116.1 million as of December 31, 2017 and 2016, respectively. The amount of amortization from continuing operations of above and below market leases, net, which increased revenue for the years ended December 31, 2017, 2016, and 2015, was $2.8 million, $5.4 million and $13.6 million, respectively. If a lease is terminated prior to the original lease termination, any remaining unamortized intangible is written off to earnings.

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

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>In-place lease intangibles</td><td>$ 328,811</td><td>$ 395,713</td></tr><tr><td>Accumulated depreciation</td><td>(232,757)</td><td>(242,698)</td></tr><tr><td>In-place lease intangibles, net</td><td>$ 96,054</td><td>$ 153,015</td></tr><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Acquired above market lease intangibles</td><td>$ 260,398</td><td>$ 254,581</td></tr><tr><td>Accumulated amortization</td><td>(167,993)</td><td>(142,557)</td></tr><tr><td>Acquired above market lease intangibles, net</td><td>$ 92,405</td><td>$ 112,024</td></tr></table>

Estimated future amortization and the increasing (decreasing) effect on minimum rents for our above and below market leases as of December 31, 2017 are as follows:

<table><tr><td></td><td>Below Market Leases</td><td>Above Market Leases</td><td>Impact to Minimum Rent, Net</td></tr><tr><td>2018.</td><td>$ 25,953</td><td>$ (24,932)</td><td>$ 1,021</td></tr><tr><td>2019.</td><td>22,048</td><td>(20,537)</td><td>1,511</td></tr><tr><td>2020.</td><td>17,376</td><td>(16,305)</td><td>1,071</td></tr><tr><td>2021.</td><td>8,395</td><td>(10,984)</td><td>(2,589)</td></tr><tr><td>2022.</td><td>5,506</td><td>(7,876)</td><td>(2,370)</td></tr><tr><td>Thereafter</td><td>14,820</td><td>(11,771)</td><td>3,049</td></tr><tr><td></td><td>$ 94,098</td><td>$ (92,405)</td><td>$ 1,693</td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## Derivative Financial Instruments

We record all derivatives on our consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have designated a derivative as a hedge and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. We may use a variety of derivative financial instruments in the normal course of business to selectively manage or hedge a portion of the risks associated with our indebtedness and interest payments. Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps and caps. We require that hedging derivative instruments be highly effective in reducing the risk exposure that they are designated to hedge. As a result, there is no significant ineffectiveness from any of our derivative activities. We formally designate any instrument that meets these hedging criteria as a hedge at the inception of the derivative contract. We have no credit-risk-related hedging or derivative activities.

As of December 31, 2017, we had no outstanding interest rate derivatives. As of December 31, 2016, we had the following outstanding interest rate derivative:

<table><tr><td>Interest Rate Derivative</td><td>Number of Instruments</td><td>Notional Amount</td></tr><tr><td>Interest Rate Swap</td><td>1</td><td>$250.0 million</td></tr></table>

The carrying value of our interest rate swap agreement, at fair value, as of December 31, 2016, was a net asset value of $21.1 million, all of which was included in deferred costs and other assets. We generally do not apply hedge accounting to interest rate caps, which had a nominal value as of December 31, 2017 and 2016, respectively.

We are also exposed to fluctuations in foreign exchange rates on financial instruments which are denominated in foreign currencies, primarily in Yen and Euro. We use currency forward contracts and foreign currency denominated debt to manage our exposure to changes in foreign exchange rates on certain Yen and Euro-denominated receivables and net investments. Currency forward contracts involve fixing the Yen:USD or Euro:USD exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward contracts are typically cash settled in U.S. dollars for their fair value at or close to their settlement date.

We had the following Euro:USD forward contracts at December 31, 2017 and 2016 (in millions):

<table><tr><td rowspan="2">Notional Value</td><td rowspan="2">Maturity Date</td><td colspan="2">Asset (Liability) Value as of</td></tr><tr><td>December 31, 2017</td><td>December 31, 2016</td></tr><tr><td>€ 50.0</td><td>August 11, 2017</td><td>$ —</td><td>$ 15.5</td></tr><tr><td>€ 50.0</td><td>May 15, 2019</td><td>(2.4)</td><td>3.9</td></tr><tr><td>€ 50.0</td><td>May 15, 2019</td><td>$ (4.9)</td><td>1.5</td></tr><tr><td>€ 50.0</td><td>May 15, 2020</td><td>(5.2)</td><td>1.1</td></tr><tr><td>€ 50.0</td><td>May 14, 2021</td><td>(5.5)</td><td>0.6</td></tr></table>

Asset balances in the above table are included in deferred costs and other assets. Liability balances in the above table are included in other liabilities. We have designated the above as net investment hedges. Accordingly, we report the changes in fair value in other comprehensive income (loss). Changes in the value of these forward contracts are offset by changes in the underlying hedged Euro-denominated joint venture investment.

The total gross accumulated other comprehensive income related to our derivative activities, including our share of the other comprehensive income from joint venture properties, approximated $9.3 million and $35.0 million as of December 31, 2017 and 2016, respectively.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## Noncontrolling Interests

## Simon

Details of the carrying amount of our noncontrolling interests are as follows as of December 31:

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Limited partners&#x27; interests in the Operating Partnership</td><td>$ 548,858</td><td>$ 644,348</td></tr><tr><td>Nonredeemable noncontrolling interests in properties, net</td><td>3,738</td><td>5,116</td></tr><tr><td>Total noncontrolling interests reflected in equity</td><td>$ 552,596</td><td>$ 649,464</td></tr></table>

Net income attributable to noncontrolling interests (which includes nonredeemable and redeemable noncontrolling interests in consolidated properties, limited partners' interests in the Operating Partnership, and preferred distributions payable by the Operating Partnership on its outstanding preferred units) is a component of consolidated net income. In addition, the individual components of other comprehensive income (loss) are presented in the aggregate for both controlling and noncontrolling interests, with the portion attributable to noncontrolling interests deducted from comprehensive income attributable to common stockholders.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

A rollforward of noncontrolling interests for the years ended December 31 is as follows:

<table><tr><td></td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Noncontrolling interests, beginning of period.</td><td>$ 649,464</td><td>$ 744,905</td><td>$ 858,328</td></tr><tr><td>Net income attributable to noncontrolling interests after preferred distributions and income attributable to redeemable noncontrolling interests in consolidated properties.</td><td>297,104</td><td>289,594</td><td>309,740</td></tr><tr><td>Distributions to noncontrolling interest holders</td><td>(342,453)</td><td>(319,193)</td><td>(318,780)</td></tr><tr><td>Other comprehensive (loss) income allocable to noncontrolling interests:</td><td></td><td></td><td></td></tr><tr><td>Unrealized (loss) gain on derivative hedge agreements</td><td>(4,607)</td><td>5,444</td><td>2,543</td></tr><tr><td>Net (gain) loss reclassified from accumulated other comprehensive loss into earnings.</td><td>(1,587)</td><td>19,629</td><td>(9,925)</td></tr><tr><td>Currency translation adjustments</td><td>6,040</td><td>(209)</td><td>(22,749)</td></tr><tr><td>Changes in available-for-sale securities and other.</td><td>746</td><td>216</td><td>(1,803)</td></tr><tr><td></td><td>592</td><td>25,080</td><td>(31,934)</td></tr><tr><td>Adjustment to limited partners&#x27; interest from change in ownership in the Operating Partnership</td><td>(84,794)</td><td>(66,996)</td><td>(101,480)</td></tr><tr><td>Units exchanged for common shares.</td><td>(6,005)</td><td>(73,756)</td><td>(7,942)</td></tr><tr><td>Units redeemed</td><td>—</td><td>—</td><td>(14,843)</td></tr><tr><td>Long-term incentive performance units</td><td>38,305</td><td>48,324</td><td>47,279</td></tr><tr><td>Contributions by noncontrolling interests, net, and other</td><td>383</td><td>1,506</td><td>4,537</td></tr><tr><td>Noncontrolling interests, end of period.</td><td>$ 552,596</td><td>$ 649,464</td><td>$ 744,905</td></tr></table>

## The Operating Partnership

Our evaluation of the appropriateness of classifying the Operating Partnership’s common units of partnership interest, or units, held by Simon and the Operating Partnership’s limited partners within permanent equity considered several significant factors. First, as a limited partnership, all decisions relating to the Operating Partnership’s operations and distributions are made by Simon, acting as the Operating Partnership’s sole general partner. The decisions of the general partner are made by Simon’s Board of Directors or management. The Operating Partnership has no other governance structure. Secondly, the sole asset of Simon is its interest in the Operating Partnership. As a result, a share of common stock of Simon, or common stock, if owned by the Operating Partnership, is best characterized as being similar to a treasury share and thus not an asset of the Operating Partnership.

Limited partners of the Operating Partnership have the right under the Operating Partnership’s partnership agreement to exchange their units for shares of common stock or cash, as selected by Simon as the sole general partner. Accordingly, we classify units held by limited partners in permanent equity because Simon may elect to issue shares of common stock to limited partners exercising their exchange rights rather than using cash. Under the Operating Partnership’s partnership agreement, the Operating Partnership is required to redeem units held by Simon only when Simon has repurchased shares of common stock. We classify units held by Simon in permanent equity because the decision to redeem those units would be made by Simon.

Net income attributable to noncontrolling interests (which includes nonredeemable and redeemable noncontrolling interests in consolidated properties) is a component of consolidated net income.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

A rollforward of noncontrolling interests for the years ended December 31 is as follows:

<table><tr><td></td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Noncontrolling nonredeemable interests (deficit) in properties, net — beginning of period</td><td>$ 5,116</td><td>$ 3,456</td><td>$ (229)</td></tr><tr><td>Net income attributable to noncontrolling nonredeemable interests</td><td>2,091</td><td>2,917</td><td>2,984</td></tr><tr><td>Distributions to noncontrolling nonredeemable interholders</td><td>(3,851)</td><td>(2,765)</td><td>(3,836)</td></tr><tr><td>Contributions by noncontrolling interests, net, and other</td><td>382</td><td>1,508</td><td>4,537</td></tr><tr><td>Noncontrolling nonredeemable interests in properties, net — end of period</td><td>$ 3,738</td><td>$ 5,116</td><td>$ 3,456</td></tr></table>

## Accumulated Other Comprehensive Income (Loss)

## Simon

The changes in components of our accumulated other comprehensive income (loss) consisted of the following net of noncontrolling interest as of December 31, 2017:

<table><tr><td></td><td>Currency translation adjustments</td><td>Accumulated derivative gains, net</td><td>Net unrealized gains (losses) on marketable securities</td><td>Total</td></tr><tr><td>Beginning balance</td><td>$ (157,864)</td><td>$ 30,374</td><td>$ 13,364</td><td>$ (114,126)</td></tr><tr><td>Other comprehensive income (loss) before reclassifications</td><td>39,726</td><td>(30,505)</td><td>4,987</td><td>14,208</td></tr><tr><td>Amounts reclassified from accumulated other comprehensive income (loss)</td><td>—</td><td>8,186</td><td>(18,721)</td><td>(10,535)</td></tr><tr><td>Net current-period other comprehensive income (loss)</td><td>39,726</td><td>(22,319)</td><td>(13,734)</td><td>3,673</td></tr><tr><td>Ending balance</td><td>$ (118,138)</td><td>$ 8,055</td><td>$ (370)</td><td>$ (110,453)</td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

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

<table><tr><td rowspan="2">Details about accumulated other comprehensive income (loss) components:</td><td colspan="2">2017</td><td colspan="2">2016</td><td colspan="2">2015</td></tr><tr><td>Amount reclassified from accumulated other comprehensive income (loss)</td><td>Amount reclassified from accumulated other comprehensive income (loss)</td><td>Amount reclassified from accumulated其他 comprehensive income (loss)</td><td>Amount reclassified from accumulated other comprehensive income (loss)</td><td>Affected line item where net income is presented</td><td></td></tr><tr><td>Currency translation adjustments</td><td>$</td><td>—</td><td>(136,806)</td><td>—</td><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net</td><td></td></tr><tr><td></td><td>—</td><td>—</td><td>17,948</td><td>—</td><td>Net income attributable to noncontrolling interests</td><td></td></tr><tr><td></td><td>—</td><td>—</td><td>(118,858)</td><td>—</td><td></td><td></td></tr><tr><td>Accumulated derivative losses, net</td><td>$</td><td>(9,419)</td><td>$</td><td>(12,230)</td><td>$</td><td>(10,998)</td></tr><tr><td></td><td>—</td><td>—</td><td>(586)</td><td>—</td><td>Interest expense</td><td></td></tr><tr><td></td><td>1,233</td><td>—</td><td>1,681</td><td>1,577</td><td>Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net</td><td></td></tr><tr><td></td><td>(8,186)</td><td>$</td><td>(11,135)</td><td>$</td><td>Net income attributable to noncontrolling interests</td><td></td></tr><tr><td>Realized gain on sale of marketable securities</td><td>$</td><td>21,541</td><td>$</td><td>—</td><td>Other income</td><td></td></tr><tr><td></td><td>(2,820)</td><td>—</td><td>—</td><td>(11,502)</td><td>Net income attributable to noncontrolling interests</td><td></td></tr><tr><td></td><td>18,721</td><td>$</td><td>—</td><td>$</td><td>68,685</td><td></td></tr></table>

## The Operating Partnership

The changes in accumulated other comprehensive income (loss) by component consisted of the following as of December 31, 2017:

<table><tr><td></td><td>Currency translation adjustments</td><td>Accumulated derivative gains, net</td><td>Net unrealized gains (losses) on marketable securities</td><td>Total</td></tr><tr><td>Beginning balance</td><td>$ (181,706)</td><td>$ 34,956</td><td>$ 15,383</td><td>$ (131,367)</td></tr><tr><td>Other comprehensive income (loss) before reclassifications</td><td>45,766</td><td>(35,112)</td><td>5,733</td><td>16,387</td></tr><tr><td>Amounts reclassified from accumulated other comprehensive income (loss)</td><td>—</td><td>9,419</td><td>(21,541)</td><td>(12,122)</td></tr><tr><td>Net current-period other comprehensive income (loss)</td><td>45,766</td><td>(25,693)</td><td>(15,808)</td><td>4,265</td></tr><tr><td>Ending balance</td><td>$ (135,940)</td><td>$ 9,263</td><td>$ (425)</td><td>$ (127,102)</td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

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

<table><tr><td>Details about accumulated other comprehensive income (loss) components:</td><td>2017</td><td>2016</td><td>2015</td><td></td></tr><tr><td>Currency translation adjustments . . .</td><td>Amount reclassified from accumulated other comprehensive income (loss)</td><td>Amount reclassified from accumulated other comprehensive income (loss)</td><td>Amount reclassified from Accumulated other comprehensive income (loss)</td><td>Affected line item where net income is presented Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net</td></tr><tr><td></td><td>$ —</td><td>$ (136,806)</td><td>$ —</td><td>—</td></tr><tr><td></td><td>$ —</td><td>$ (136,806)</td><td>$ —</td><td>—</td></tr><tr><td>Accumulated derivative losses, net . .</td><td>$ (9,419)</td><td>$ (12,230)</td><td>$ (10,998)</td><td>Interest expense Gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net</td></tr><tr><td></td><td>—</td><td>(586)</td><td>—</td><td>—</td></tr><tr><td></td><td>$ (9,419)</td><td>$ (12,816)</td><td>$ (10,998)</td><td></td></tr><tr><td>Realized gain on sale of marketable securities . . . . . . . . . . . . . . . . . . . .</td><td>$ 21,541</td><td>$ —</td><td>$ 80,187</td><td>Other income</td></tr><tr><td></td><td>$ 21,541</td><td>$ —</td><td>$ 80,187</td><td></td></tr></table>

## Revenue Recognition

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 amortize any tenant inducements as a reduction of revenue utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter.

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 or otherwise. Such property operating expenses typically include utility, insurance, security, janitorial, landscaping, food court and other administrative expenses. As of December 31, 2017, for substantially all of our leases in the U.S. mall portfolio, we receive a fixed payment from the tenant for the CAM component which is recognized as revenue when earned. When not reimbursed by 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 accrue reimbursements from tenants for recoverable portions of all these expenses as revenue in the period the applicable expenditures are incurred. 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.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## Management Fees and Other Revenues

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.

Revenues from insurance premiums charged to unconsolidated properties are recognized on a pro-rata basis over the terms of the policies. Insurance losses on these policies and our self-insurance for our consolidated properties are reflected in property operating expenses in the accompanying consolidated 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 estimates. Total insurance reserves for our insurance subsidiaries and other self-insurance programs as of December 31, 2017 and 2016 approximated $81.8 million and $83.5 million, respectively, and are included in other liabilities in the consolidated balance sheets. Information related to the securities included in the investment portfolio of our captive insurance subsidiary is included within the "Marketable and Non-Marketable Securities" section above.

## Allowance for Credit Losses

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 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 longer collectible. Presented below is the activity in the allowance for credit losses during the following years:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Balance, beginning of period</td><td>$ 22,498</td><td>$ 30,094</td><td>$ 33,282</td></tr><tr><td>Provision for credit losses</td><td>11,304</td><td>7,319</td><td>6,635</td></tr><tr><td>Accounts written off, net of recoveries</td><td>(10,342)</td><td>(14,915)</td><td>(9,823)</td></tr><tr><td>Balance, end of period</td><td>$ 23,460</td><td>$ 22,498</td><td>$ 30,094</td></tr></table>

## Income Taxes

Simon and certain subsidiaries of the Operating Partnership have elected to be taxed as REITs under Sections 856 through 860 of the Internal Revenue Code and applicable Treasury regulations relating to REIT qualification. In order to maintain this REIT status, the regulations require the entity to distribute at least 90% of REIT taxable income to its owners and meet certain other asset and income tests as well as other requirements. We intend to continue to adhere to these requirements and maintain Simon's REIT status and that of the REIT subsidiaries. As REITs, these entities will generally not be liable for U.S. federal corporate income taxes as long as they distribute in excess of 100% of their REIT taxable income. Thus, we made no provision for U.S. federal income taxes for these entities in the accompanying consolidated financial statements. If Simon or any of the REIT subsidiaries fail to qualify as a REIT, and if available relief provisions do not apply, Simon or that entity will be subject to tax at regular corporate rates for the years in which it failed to qualify. If Simon or any of the REIT subsidiaries loses its REIT status it could not elect to be taxed as a REIT for four taxable years following the year during which qualification was lost unless the failure to qualify was due to reasonable cause and certain other conditions were satisfied.

We have 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 do not qualify as “rents from real property”. For these entities, deferred tax assets and liabilities are established for temporary differences



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

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 a partnership, the allocated share of the Operating Partnership’s 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 financial statements other than as discussed above for our taxable REIT subsidiaries.

As of December 31, 2017 and 2016, we had net deferred tax liabilities of $301.7 million and $265.7 million, respectively, which primarily relate to the temporary differences between the carrying value of balance sheet assets and liabilities and their tax bases. These differences were primarily created through the consolidation of various European assets in 2016 as discussed further in Note 7. Additionally, we have deferred tax liabilities related to our TRS subsidiaries, consisting of operating losses and other carryforwards for U.S. federal income tax purposes as well as the timing of the deductibility of losses or reserves from insurance subsidiaries, though these amounts are not material to the financial statements. The net deferred tax liability is included in other liabilities in the accompanying consolidated balance sheets.

We are also subject to certain other taxes, including state and local taxes, franchise taxes, as well as income-based and withholding taxes on dividends from certain of our international investments, which are included in income and other taxes in the consolidated statements of operations and comprehensive income.

## Corporate Expenses

Home and regional office costs primarily include compensation and personnel related costs, travel, building and office costs, and other expenses for our corporate home office and regional offices. General and administrative expense primarily includes executive compensation, benefits and travel expenses as well as costs of being a public company, including certain legal costs, audit fees, regulatory fees, and certain other professional fees.

## New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue From Contracts With Customers.” ASU 2014-09 amends the existing accounting standards for revenue recognition. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property, including real estate.

Our revenues impacted by this standard primarily include management, development, leasing and financing fee revenues for services performed related to various domestic joint ventures that we manage, licensing fees earned from various international properties, sales of real estate, including land parcels and operating properties, and other ancillary income earned at our properties. For the years ended December 31, 2017 and 2016, these revenues were less than 6.0% and 7.0% of consolidated revenue, respectively. The amount and timing of revenue recognition from our services to joint ventures, licensing fee arrangements and ancillary income is consistent with the prior measurement and pattern of recognition. In addition, we do not actively sell operating properties as part of our core business strategy and, accordingly, the sale of properties does not generally constitute a significant part of our revenue and cash flows. We adopted the standard using the modified retrospective approach on January 1, 2018 and there was no cumulative effect adjustment to recognize.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities,” which will require entities to recognize changes in equity investments with readily determinable fair values in net income. We recognized a cumulative effect adjustment of $7.3 million to beginning retained earnings as of January 1, 2018 to reclassify unrealized gains and losses previously reported in accumulated other



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

comprehensive income for equity investments with readily determinable fair values that are currently being accounted for as available for sale securities and certain investments currently being accounted for using the cost method for which the measurement alternative described below is not elected. For those equity investments that do not have readily determinable fair values, the ASU permits the application of a measurement alternative using the cost of the investment, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer. This guidance will be applied prospectively upon the occurrence of an event which establishes fair value to all other investments we currently account for using the cost method.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which will result in lessees recognizing most leased assets and corresponding lease liabilities on the balance sheet. Lessor accounting will remain substantially similar to the current accounting; however, certain refinements were made to conform the standard with the recently issued revenue recognition guidance in ASU 2014-09, specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. ASU 2016-02 also limits the capitalization of leasing costs to initial direct costs, which will likely result in a reduction to our capitalized leasing costs and an increase in expenses, though the amount of such change is highly dependent upon the leasing compensation structures in place at the time of adoption.

Substantially all of our revenues and the revenues of our equity method investments are earned from arrangements that are within the scope of ASU 2016-02. Upon adoption of ASU 2016-02, consideration related to non-lease components identified in our lease arrangements will be accounted for using the guidance in ASU 2014-09, which we have determined would (i) necessitate that we reallocate consideration received under many of our lease arrangements between the lease and non-lease component, (ii) result in recognizing revenue allocated to our primary non-lease component (consideration received from fixed common area maintenance arrangements) on a straight-line basis and (iii) require separate presentation of revenue recognized from lease and non-lease components on our statement of operations. However, on January 5, 2018, the FASB issued an Exposure Draft that proposes targeted improvements to ASU 2016-02, which include creating a practical expedient that would provide lessors an option not to separate lease and non-lease components when certain criteria are met and instead account for those components as a single component. If the FASB adopts this proposed update, we believe we would meet the criteria to account for lease and non-lease components as a single component, which would alleviate the requirement upon adoption of ASU 2016-02 that we reallocate or separately present lease and non-lease components. We would, however, recognize consideration received from fixed common area maintenance arrangements on a straight-line basis.

Further, upon adoption of ASU 2016-02, leases of land and other arrangements where we are the lessee will be recognized on our balance sheet. Undiscounted future minimum lease payments due under long-term ground leases with termination dates which range from 2019 to 2090, excluding extension options, over the entire term of these leases total approximately $780.4 million. The adoption of the guidance will result in the recognition of leased assets and corresponding liabilities discounted over the life of the applicable leases.

We will adopt ASU 2016-02 and any subsequent amendments beginning in the first quarter of 2019. In the Exposure Draft issued on January 5, 2018, the FASB also proposed a transition option that would permit the application of the new guidance as of the adoption date rather than to all periods presented. We are currently evaluating the impact that the adoption of the new standard and the recently issued Exposure Draft will have on our consolidated financial statements and method of adoption.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which introduces new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments in leases as well as reinsurance and trade receivables. This standard will be effective for us in fiscal years beginning after December 15, 2019. We are currently evaluating the impact that the adoption of the new standard will have on our consolidated financial statements.



Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business,” which amends guidance that assists preparers in evaluating whether a transaction will be accounted for as an acquisition of an asset or a business, likely resulting in more acquisitions being accounted for as asset acquisitions. There are certain differences in accounting under these models, including the capitalization of transaction expenses and application of a cost accumulation model in an asset acquisition. The standard is effective for annual periods beginning after December 15, 2018. We adopted this standard early as of January 1, 2017 as permitted under the standard.

In February 2017, the FASB issued ASU 2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets,” which clarifies the scope and application of Accounting Standards Codification 610-20 on the sale or transfer of nonfinancial assets and in substance assets to noncustomers, including partial sales. The standard generally aligns the measurement of a retained interest in a nonfinancial asset with that of a retained interest in a business. It also eliminates the use of the carryover basis for contributions of real estate into a joint venture where control of the real estate is not retained, which will result in the recognition of a gain or loss upon contribution. We adopted the standard using the modified retrospective approach on January 1, 2018 and there was no cumulative effect adjustment to recognize.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which introduced amendments to the hedge accounting model to allow for better alignment with risk management practices in addition to simplifying the hedge accounting model. The provisions may permit more risk management strategies to qualify for hedge accounting, including interest rate hedges and foreign currency hedges. The new standard will be effective for us beginning on January 1, 2019 and early adoption is permitted. We early adopted the ASU on January 1, 2018. There was no impact on our consolidated financial statements at adoption.

## 4. Real Estate Acquisitions and Dispositions

We acquire interests in properties to generate both current income and long-term appreciation in value. We acquire interests in individual properties or portfolios of retail real estate companies that meet our investment criteria and sell properties which no longer meet our strategic criteria. Unless otherwise noted below, gains and losses on these transactions are included in gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net in the accompanying consolidated statements of operations and comprehensive income. We capitalize asset acquisition costs and expense costs related to business combinations, as well as disposition related costs as they are incurred. We incurred $4.4 million in transaction costs during 2015 in connection with the acquisitions of Jersey Gardens and University Park Village, which are included in other expenses in the accompanying consolidated statements of operations and comprehensive income. Other than these transaction costs, we incurred a minimal amount of transaction expenses during 2017, 2016, and 2015.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

Our consolidated and unconsolidated acquisition and disposition activity for the periods presented are as follows:

## 2017 Acquisition

On April 21, 2017, our controlled European investee acquired a 100% interest in an outlet center in Roosendaal, Netherlands for cash consideration of $69.8 million and the assumption of existing mortgage debt of $40.1 million. In May 2017, the assumed loan was refinanced with a $69.0 million mortgage due in 2024, after available extension options, with an interest rate of EURIBOR plus 1.85%.

## 2016 Acquisitions

On January 1, 2016, as discussed further in Note 7, we gained control of the European investee that held our interest in six Designer Outlet properties, requiring a remeasurement of our previously held equity interest to fair value and a corresponding non-cash gain of $12.1 million and which also resulted in the consolidation of two of the six properties, which had been previously unconsolidated. In February 2016, we and our partner, through this European investee, acquired a noncontrolling 75.0% ownership interest in an outlet center in Ochtrup, Germany for cash consideration of approximately $38.3 million. On July 25, 2016, as further discussed in Note 7, this European investee also acquired the remaining 33% interest in two Italian outlet centers in Naples and Venice. The consolidation of these two properties resulted in a remeasurement of our previously held equity interest to fair value and a corresponding non-cash gain of $29.3 million.

On April 14, 2016, as discussed further in Note 7, we acquired a 50% interest in The Shops at Crystals.

## 2015 Acquisitions

On January 15, 2015, we acquired a 100% interest in Jersey Gardens (renamed The Mills at Jersey Gardens) in Elizabeth, New Jersey, and University Park Village in Fort Worth, Texas, for $677.9 million of cash and the assumption of existing mortgage debt of $405.0 million.

## 2017 Dispositions

During 2017, we disposed of our interest in one unconsolidated retail property. The loss recognized on this transaction was approximately $1.3 million. As discussed in Note 7, Klépierre disposed of its interests in certain shopping centers during the second quarter, resulting in a gain of which our share was $5.0 million.

## 2016 Dispositions

During 2016, we disposed of our interests in two unconsolidated multi-family residential investments, three consolidated retail properties, and four unconsolidated retail properties. Our share of the gross proceeds from these transactions was $81.8 million. The gain on the consolidated retail properties was $12.4 million. The gain on the unconsolidated retail properties was $22.6 million. The aggregate gain of $36.2 million from the sale of the two unconsolidated multi-family residential investments is included in other income and resulted in an additional $7.2 million in taxes included in income and other taxes. As discussed in Note 7, Klépierre disposed of its interest in certain Scandinavian properties during the fourth quarter, resulting in a gain of which our share was $8.1 million.

## 2015 Dispositions

During 2015, we disposed of our interests in three unconsolidated retail properties. The aggregate gain recognized on these transactions was approximately $43.6 million.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## 5. Per Share and Per Unit Data

We determine basic earnings per share and basic earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding during the period and we consider any participating securities for purposes of applying the two-class method. We determine diluted earnings per share and diluted earnings per unit based on the weighted average number of shares of common stock or units, as applicable, outstanding combined with the incremental weighted average number of shares or units, as applicable, that would have been outstanding assuming all potentially dilutive securities were converted into shares of common stock or units, as applicable, at the earliest date possible. The following tables set forth the computation of basic and diluted earnings per share and basic and diluted earnings per unit.

## Simon

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Net Income attributable to Common Stockholders — Basic and Diluted</td><td>$ 1,944,625</td><td>$ 1,835,559</td><td>$ 1,824,383</td></tr><tr><td>Weighted Average Shares Outstanding — Basic and Diluted</td><td>311,517,345</td><td>312,690,756</td><td>310,102,746</td></tr></table>

For the year ended December 31, 2017, potentially dilutive securities include units that are exchangeable for common stock and long-term incentive performance units, or LTIP units, granted under our long-term incentive performance programs that are convertible into units and exchangeable for common stock. No securities had a material dilutive effect for the years ended December 31, 2017, 2016, and 2015. We have not adjusted net income attributable to common stockholders and weighted average shares outstanding for income allocable to limited partners or units, respectively, as doing so would have no dilutive impact. We accrue dividends when they are declared.

## The Operating Partnership

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Net Income attributable to Unitholders —</td><td></td><td></td><td></td></tr><tr><td>Basic and Diluted</td><td>$ 2,239,638</td><td>$ 2,122,236</td><td>$ 2,131,139</td></tr><tr><td>Weighted Average Units Outstanding —</td><td></td><td></td><td></td></tr><tr><td>Basic and Diluted</td><td>358,776,632</td><td>361,526,633</td><td>362,244,154</td></tr></table>

For the year ended December 31, 2017, potentially dilutive securities include LTIP units. No securities had a material dilutive effect for the years ended December 31, 2017, 2016, and 2015. We accrue distributions when they are declared.

The taxable nature of the dividends declared and Operating Partnership distributions declared for each of the years ended as indicated is summarized as follows:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Total dividends/distributions paid per common share/unit</td><td>$ 7.15</td><td>$ 6.50</td><td>$ 6.05</td></tr><tr><td>Percent taxable as ordinary income</td><td>100.00 %</td><td>99.70 %</td><td>94.30 %</td></tr><tr><td>Percent taxable as long-term capital gains</td><td>0.00 %</td><td>0.30 %</td><td>5.70 %</td></tr><tr><td></td><td>100.00 %</td><td>100.00 %</td><td>100.00 %</td></tr></table>

In January 2018, Simon’s Board of Directors declared a quarterly cash dividend of $1.95 per share of common stock payable on February 28, 2018 to stockholders of record on February 14, 2018. The Operating Partnership’s distribution rate on our units is equal to the dividend rate on Simon’s common stock.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, 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:

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Land</td><td>$ 3,635,316</td><td>$ 3,568,935</td></tr><tr><td>Buildings and improvements</td><td>32,379,190</td><td>31,329,007</td></tr><tr><td>Total land, buildings and improvements</td><td>36,014,506</td><td>34,897,942</td></tr><tr><td>Furniture, fixtures and equipment</td><td>378,958</td><td>328,147</td></tr><tr><td>Investment properties at cost</td><td>36,393,464</td><td>35,226,089</td></tr><tr><td>Less — accumulated depreciation</td><td>11,935,949</td><td>10,865,754</td></tr><tr><td>Investment properties at cost, net</td><td>$ 24,457,515</td><td>$ 24,360,335</td></tr><tr><td>Construction in progress included above</td><td>$ 503,692</td><td>$ 506,211</td></tr></table>

## 7. Investments in Unconsolidated Entities

## Real Estate Joint Ventures and Investments

Joint ventures are common in the real estate industry. We use joint ventures to finance properties, develop new properties, and diversify our risk in a particular property or portfolio of properties. As discussed in Note 2, we held joint venture interests in 81 properties as of December 31, 2017 and 78 properties as of December 31, 2016.

Certain of our joint venture properties are subject to various rights of first refusal, buy-sell provisions, put and call rights, or other sale or marketing rights for partners which are customary in real estate joint venture agreements and the industry. We and our partners in these joint ventures may initiate these provisions (subject to any applicable lock up or similar restrictions), which may result in either the sale of our interest or the use of available cash, borrowings, or the use of limited partnership interests in the Operating Partnership, to acquire the joint venture interest from our partner.

We may provide financing to joint ventures primarily in the form of interest bearing construction loans. As of December 31, 2017 and 2016, we had construction loans and other advances to related parties totaling $87.0 million and $12.3 million, respectively, which are included in deferred costs and other assets in the accompanying consolidated balance sheets.

## Unconsolidated Property Transactions

On September 15, 2016, we and our partners, through two separate joint ventures, acquired certain assets and liabilities of Aeropostale, a retailer of apparel and accessories, out of bankruptcy. Our noncontrolling interest in the retail operations venture and in the licensing venture is 49.05% and 28.45%, respectively. Our aggregate investment in the ventures was $33.1 million, which included our share of working capital funded into the retail business. We eliminate our share of rents and other tenant charges on leasing activities with this venture.

On April 14, 2016, we and a joint venture partner completed the acquisition of The Shops at Crystals, a luxury shopping center on the Las Vegas Strip, for $1.1 billion. The transaction was funded with a combination of cash on hand, cash from our partner, and a $550.0 million, 3.74% fixed-rate mortgage financing that will mature on July 1, 2026. We have a 50% noncontrolling interest in this joint venture and manage the day-to-day operations. Substantially all of our investment has been determined to relate to investment property based on estimated fair values at the acquisition date.

On April 5, 2016, Quaker Bridge Mall, in which we own a 50% noncontrolling interest, completed a $180.0 million mortgage financing with a fixed interest rate of 4.50% that matures on May 1, 2026. Proceeds of approximately $180.0 million from the financing were distributed to the joint venture partners in April 2016.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

On July 22, 2015, we closed on our transaction with Hudson's Bay Company, or HBC, to which HBC contributed 42 properties in the U.S. and we committed to contribute $100.0 million for improvements to the properties contributed by HBC in exchange for a noncontrolling interest in the newly formed entity, HBS. As of December 31, 2017, we have funded $68.3 million of this commitment. On September 30, 2015, HBC announced it had closed on the acquisition of Galeria Holding, the parent company of Germany's leading department store, Kaufhof. In conjunction with the closing, HBS acquired 41 Kaufhof properties in Germany from HBC. All of these properties have been leased to affiliates of HBC. We contributed an additional $178.5 million to HBS upon closing of the Galeria Holding transaction. Our noncontrolling equity interest in HBS is approximately 11.7% at December 31, 2017. Our share of net income, net of amortization of our excess investment, was $4.8 million and $2.6 million for the three months ended December 31, 2017 and 2016, respectively, and $16.1 million and $15.2 million for the twelve months ended December 31, 2017 and 2016, respectively. Total assets and total liabilities of HBS as of December 31, 2017 were $4.4 billion and $2.9 billion, respectively. Total revenues, operating income and consolidated net income were approximately $351.0 million, $313.8 million and $220.2 million, respectively, for the year ended December 31, 2017 and $409.8 million, $233.2 million, and $128.7 million, respectively for the year ended December 31, 2016.

On April 13, 2015, we announced a joint venture with Sears Holdings, or Sears, whereby Sears contributed 10 of its properties located at our malls to the joint venture in exchange for a 50% noncontrolling interest in the joint venture. Sears or its affiliates leased back each of the 10 properties from the joint venture. Seritage Growth Properties, or Seritage, a public REIT formed by Sears, now holds Sears' original 50% noncontrolling interest in the joint venture. We contributed $114.0 million in cash in exchange for a 50% noncontrolling interest in the joint venture. The joint venture has the right to recapture not less than 50% of the space leased to Sears to be used for purposes of redeveloping and releasing the recaptured space.

On November 3, 2017, we acquired additional interests in the real estate assets and/or rights to terminate leases related to twelve Sears stores located at our malls (including five stores previously held in our joint venture with Seritage), in order to redevelop these properties. The total cost of this transaction was $184.6 million which is reflected as investment property. Four of the Sears stores are at properties held in unconsolidated joint ventures, and should our partners participate in the transaction and related redevelopment, the cost of the transaction to us will be reduced by their proportionate share. Our joint venture with Seritage now covers the former Sears properties located at five of our malls.

## International Investments

We conduct our international operations primarily through joint venture arrangements and account for the majority of these international joint venture investments using the equity method of accounting.

European Investments. At December 31, 2017, we owned 63,924,148 shares, or approximately 21.0%, of Klépierre, which had a quoted market price of $43.93 per share. On July 29, 2014, Klépierre announced that it had entered into a conditional agreement to acquire Corio pursuant to which Corio shareholders received 1.14 Klépierre ordinary shares for each Corio ordinary share. On January 15, 2015, the tender offer transaction closed and the merger was completed on March 31, 2015, reducing our ownership from 28.9% at December 31, 2014 to 18.3%, resulting in a non-cash gain of $206.9 million that was required to be recognized in the first quarter of 2015 as if we had sold a proportionate share of our investment. On May 11, 2015, we purchased 6,290,000 additional shares of Klépierre for $279.4 million bringing our ownership to 20.3%. All of the excess investment related to this additional purchase has been determined to relate to investment property. Our share of net income, net of amortization of our excess investment, was $50.0 million, $41.5 million and $6.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. Based on applicable Euro:USD exchange rates and after our conversion of Klépierre's results to GAAP, Klépierre's total assets, total liabilities, and noncontrolling interests were $21.8 billion, $13.7 billion, and $1.6 billion, respectively, as of December 31, 2017 and $19.8 billion, $11.8 billion, and $1.4 billion, respectively, as of December 31, 2016. Klépierre's total revenues, operating income and consolidated net income were approximately $1.5 billion, $545.7 million and $381.3 million, respectively, for the year ended December 31, 2017, $1.5 billion, $449.9 million and $310.9 million, respectively, for the year ended December 31, 2016, and $1.5 billion, $414.8 million and $181.2 million, respectively, for the year ended December 31, 2015.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

During 2017, Klépierre completed the disposal of its interest in certain shopping centers. In connection with these disposals, we recorded a gain of $5.0 million, representing our share of the gains recognized by Klépierre, which is included in gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net in the accompanying consolidated statements of operations and comprehensive income.

During the fourth quarter of 2016, Klépierre completed the disposal of certain properties. In connection with these transactions, we recorded a gain of $8.1 million, which is included in gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net in the accompanying consolidated statements of operations and comprehensive income.

We had an interest in a European investee that had interests in nine, seven, and six Designer Outlet properties, as of December 31, 2017, 2016, and 2015, respectively. On January 1, 2016, we gained control of the entity through terms of the underlying venture agreement requiring a remeasurement of our previously held equity interest to fair value resulting in a non-cash gain of $12.1 million in earnings during the first quarter of 2016, including amounts reclassified from accumulated other comprehensive income (loss) related to the currency translation adjustment previously recorded on our investment. The gain is included in gain upon acquisition of controlling interests and sale or disposal of assets and interests in unconsolidated entities, net in the accompanying consolidated statements of operations and comprehensive income. As a result of the change in control, we consolidated two of the outlet properties on January 1, 2016. The consolidation required us to recognize the entity's identifiable assets and liabilities at fair value in our consolidated financial statements along with the fair value of the related redeemable noncontrolling interest representing our partners' share. The fair value of the consolidated assets and liabilities relates primarily to investment property, investments in unconsolidated entities and assumed mortgage debt. Due to certain redemption rights held by our venture partner, the noncontrolling interest is presented (i) in the accompanying Simon consolidated balance sheets outside of equity in limited partners' preferred interest in the Operating Partnership and noncontrolling redeemable interests in properties and (ii) in the accompanying Operating Partnership consolidated balance sheets within preferred units, various series, at liquidation value, and noncontrolling redeemable interests in properties.

In February 2016, we and our partner, through this European investee, acquired a noncontrolling 75.0% ownership interest in an outlet center in Ochtrup, Germany for cash consideration of approximately $38.3 million.

On July 25, 2016, this European investee also acquired the remaining 33% interest in two Italian outlet centers in Naples and Venice, as well as the remaining interests in related expansion projects and working capital for cash consideration of $159.7 million. This resulted in the consolidation of these two properties on the acquisition date, requiring a remeasurement of our previously held equity interest to fair value and the recognition of a non-cash gain of $29.3 million in earnings during the third quarter of 2016. Substantially all of our investment has been determined to relate to investment property based on estimated fair value at the acquisition date.

On April 7, 2017, this European investee acquired an additional 15.7% investment in the Roermond Designer Outlets Phase 4 expansion for cash consideration of approximately $17.9 million, bringing its total noncontrolling interest in the expansion to 51.3%.

On April 21, 2017, this European investee acquired a 100% interest in an outlet center in Roosendaal, Netherlands for cash consideration of $69.8 million and the assumption of existing mortgage debt of $40.1 million. In May, the assumed loan was refinanced with a $69.0 million mortgage due in 2024, after available extension options, with an interest rate of EURIBOR plus 1.85%. Substantially all of our investment has been determined to relate to investment property based on estimated fair value at the acquisition date.

In addition, we have a 50.0% noncontrolling interest in a European property management and development company that provides services to the Designer Outlet properties.

As of December 31, 2017, our legal percentage ownership interests in these properties ranged from 45% to 94%.

We also have minority interests in Value Retail PLC and affiliated entities, which own or have interests in and operate nine luxury outlets located throughout Europe and we have a direct minority ownership in three of those outlets. Our



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

investment in these entities is accounted for under the cost method. At both December 31, 2017 and 2016, the carrying value of these non-marketable investments was $140.8 million and is included in deferred costs and other assets.

On March 19, 2015, we disposed of our interest in a joint venture which had held interests in rights to pre-development projects in Europe, for total proceeds of $19.0 million. We recognized a gain on the sale of $8.3 million, which is included in other income in the accompanying consolidated statements of operations and comprehensive income.

Asian Joint Ventures. We conduct our international Premium Outlet operations in Japan through a joint venture with Mitsubishi Estate Co., Ltd. We have a 40% noncontrolling ownership interest in this joint venture. The carrying amount of our investment in this joint venture was $230.3 million and $227.5 million as of December 31, 2017 and 2016, respectively, including all related components of accumulated other comprehensive income (loss). We conduct our international Premium Outlet operations in South Korea through a joint venture with Shinsegae International Co. We have a 50% noncontrolling ownership interest in this joint venture. The carrying amount of our investment in this joint venture was $149.1 million and $130.9 million as of December 31, 2017 and 2016, respectively, including all related components of accumulated other comprehensive income (loss).

## Summary Financial Information

A summary of our equity method investments and share of income from such investments, excluding Klépierre, our investment in Aéropostale, and HBS, follows. During 2017, we disposed of our interest in one retail property. During 2016, we disposed of our interests in four retail properties and our investments in two multi-family residential assets. During 2015, we disposed of our interests in three retail properties.



## Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## COMBINED BALANCE SHEETS

<table><tr><td></td><td>December 31, 2017</td><td>December 31, 2016</td></tr><tr><td>Assets:</td><td></td><td></td></tr><tr><td>Investment properties, at cost.</td><td>$ 18,328,747</td><td>$ 17,549,078</td></tr><tr><td>Less - accumulated depreciation</td><td>6,371,363</td><td>5,892,960</td></tr><tr><td></td><td>11,957,384</td><td>11,656,118</td></tr><tr><td>Cash and cash equivalents</td><td>956,084</td><td>778,455</td></tr><tr><td>Tenant receivables and accrued revenue, net.</td><td>403,125</td><td>348,139</td></tr><tr><td>Deferred costs and other assets.</td><td>355,585</td><td>351,098</td></tr><tr><td>Total assets</td><td>$ 13,672,178</td><td>$ 13,133,810</td></tr><tr><td>Liabilities and Partners&#x27; Deficit:</td><td></td><td></td></tr><tr><td>Mortgages</td><td>$ 14,784,310</td><td>$ 14,237,576</td></tr><tr><td>Accounts payable, accrued expenses, intangibles, and deferred revenue</td><td>1,033,674</td><td>867,003</td></tr><tr><td>Other liabilities</td><td>365,857</td><td>325,078</td></tr><tr><td>Total liabilities</td><td>16,183,841</td><td>15,429,657</td></tr><tr><td>Preferred units</td><td>67,450</td><td>67,450</td></tr><tr><td>Partners&#x27; deficit</td><td>(2,579,113)</td><td>(2,363,297)</td></tr><tr><td>Total liabilities and partners&#x27; deficit</td><td>$ 13,672,178</td><td>$ 13,133,810</td></tr><tr><td>Our Share of:</td><td></td><td></td></tr><tr><td>Partners&#x27; deficit</td><td>$ (1,144,620)</td><td>$ (1,018,755)</td></tr><tr><td>Add: Excess Investment</td><td>1,733,063</td><td>1,791,691</td></tr><tr><td>Our net Investment in unconsolidated entities, at equity</td><td>$ 588,443</td><td>$ 772,936</td></tr></table>

“Excess Investment” represents the unamortized difference of our investment over our share of the equity in the underlying net assets of the joint ventures or other investments acquired and has been determined to relate to the fair value of the investment property, lease related intangibles, and debt premiums and discounts. We amortize excess investment over the life of the related depreciable components of investment property, typically no greater than 40 years, the terms of the applicable leases and the applicable debt maturity, respectively. The amortization is included in the reported amount of income from unconsolidated entities.



## Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

As of December 31, 2017, scheduled principal repayments on joint venture properties' mortgage indebtedness are as follows:

<table><tr><td>2018</td><td>$ 359,688</td></tr><tr><td>2019</td><td>720,517</td></tr><tr><td>2020</td><td>2,597,803</td></tr><tr><td>2021</td><td>1,949,786</td></tr><tr><td>2022</td><td>1,773,635</td></tr><tr><td>Thereafter</td><td>7,436,061</td></tr><tr><td>Total principal maturities</td><td>14,837,490</td></tr><tr><td>Net unamortized debt premium</td><td>2,781</td></tr><tr><td>Debt issuance costs</td><td>(55,961)</td></tr><tr><td>Total mortgages and unsecured indebtedness</td><td>$ 14,784,310</td></tr></table>

This debt becomes due in installments over various terms extending through 2035 with interest rates ranging from 0.32% to 9.35% and a weighted average interest rate of 4.00% at December 31, 2017.



## Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## COMBINED STATEMENTS OF OPERATIONS

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>REVENUE:</td><td></td><td></td><td></td></tr><tr><td>Minimum rent</td><td>$ 1,868,613</td><td>$ 1,823,674</td><td>$ 1,801,023</td></tr><tr><td>Average rent</td><td>210,909</td><td>200,638</td><td>191,249</td></tr><tr><td>Tenant reimbursements</td><td>860,778</td><td>862,155</td><td>799,420</td></tr><tr><td>Other income</td><td>290,515</td><td>237,782</td><td>236,726</td></tr><tr><td>Total revenue</td><td>3,230,815</td><td>3,124,249</td><td>3,028,418</td></tr><tr><td>OPERATING EXPENSES:</td><td></td><td></td><td></td></tr><tr><td>Property operating</td><td>551,885</td><td>538,002</td><td>530,798</td></tr><tr><td>Depreciation and amortization</td><td>640,286</td><td>588,666</td><td>594,973</td></tr><tr><td>Real estate taxes</td><td>245,646</td><td>239,917</td><td>231,154</td></tr><tr><td>Repairs and maintenance</td><td>81,309</td><td>76,380</td><td>73,286</td></tr><tr><td>Advertising and promotion</td><td>86,480</td><td>88,956</td><td>75,773</td></tr><tr><td>Provision for credit losses</td><td>6,645</td><td>7,603</td><td>4,153</td></tr><tr><td>Other</td><td>184,037</td><td>183,435</td><td>169,504</td></tr><tr><td>Total operating expenses</td><td>1,796,288</td><td>1,722,959</td><td>1,679,641</td></tr><tr><td>Operating Income</td><td>1,434,527</td><td>1,401,290</td><td>1,348,777</td></tr><tr><td>Interest expense</td><td>(593,062)</td><td>(585,958)</td><td>(593,187)</td></tr><tr><td>(Loss) gain on sale or disposal of assets and interests in unconsolidated entities, net</td><td>(2,239)</td><td>101,051</td><td>67,176</td></tr><tr><td>Net Income</td><td>$ 839,226</td><td>$ 916,383</td><td>$ 822,766</td></tr><tr><td>Third-Party Investors&#x27; Share of Net Income</td><td>$ 424,533</td><td>$ 452,844</td><td>$ 405,456</td></tr><tr><td>Our Share of Net Income</td><td>$ 414,693</td><td>$ 463,539</td><td>$ 417,310</td></tr><tr><td>Amortization of Excess Investment</td><td>(89,804)</td><td>(94,213)</td><td>(94,828)</td></tr><tr><td>Our Share of Loss (Gain) on Sale or Disposal of Assets and Interests in Unconsolidated Entities, net</td><td>1,342</td><td>(22,636)</td><td>(43,589)</td></tr><tr><td>Our Share of Gain on Sale or Disposal of Assets and Interests Included in Other Income in the Consolidated Financial Statements</td><td>—</td><td>(36,153)</td><td>—</td></tr><tr><td>Income from Unconsolidated Entities</td><td>$ 326,231</td><td>$ 310,537</td><td>$ 278,893</td></tr></table>

Our share of income from unconsolidated entities in the above table, aggregated with our share of results of Klépierre, our investment in Aéropostale, and our share of results of HBS, is presented in income from unconsolidated entities in the accompanying consolidated statements of operations and comprehensive income. Unless otherwise noted, our share of the gain or loss on sale or disposal of assets and interests in unconsolidated entities, net is reflected within gain upon acquisition of controlling interests, sale or disposal of assets and interests in unconsolidated entities, net in the accompanying consolidated statements of operations and comprehensive income.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## 2017 Dispositions

In 2017, we disposed of our interest in one retail property. Our share of the net loss on disposition was $1.3 million.

## 2016 Dispositions

In 2016, we disposed of our interest in four retail properties and two multi-family residential investments. Our share of the net gain on disposition was $22.6 million and $36.2 million, respectively.

## 2015 Dispositions

In 2015, we disposed of our interests in three retail properties. Our share of the net gain on disposition was $43.6 million.

## 8. Indebtedness and Derivative Financial Instruments

Our mortgages and unsecured indebtedness, excluding the impact of derivative instruments, consist of the following as of December 31:

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Fixed-Rate Debt:</td><td></td><td></td></tr><tr><td>Mortgage notes, including $16,869 and $21,916 of net premiums and $16,106 and $15,965 of debt issuance costs, respectively. Weighted average interest and maturity of 4.04% and 6.4 years at December 31, 2017.</td><td>$ 6,020,552</td><td>$ 5,876,831</td></tr><tr><td>Unsecured notes, including $51,657 and $46,426 of net discounts and $68,535 and $65,801 of debt issuance costs, respectively. Weighted average interest and maturity of 3.16% and 7.8 years at December 31, 2017.</td><td>16,375,713</td><td>15,252,834</td></tr><tr><td>Commercial Paper (see below)</td><td>978,467</td><td>953,665</td></tr><tr><td>Total Fixed-Rate Debt</td><td>23,374,732</td><td>22,083,330</td></tr><tr><td>Variable-Rate Debt:</td><td></td><td></td></tr><tr><td>Mortgages notes, including $8,988 and $690 of debt issuance costs, respectively. Weighted average interest and maturity of 2.49% and 3.9 years at December 31, 2017.</td><td>883,781</td><td>592,655</td></tr><tr><td>Credit Facility (see below), including $17,106 and $15,380 of debt issuance costs, respectively, at December 31, 2017.</td><td>305,530</td><td>301,119</td></tr><tr><td>Total Variable-Rate Debt</td><td>1,189,311</td><td>893,774</td></tr><tr><td>Other Debt Obligations</td><td>68,420</td><td>—</td></tr><tr><td>Total Mortgages and Unsecured Indebtedness</td><td>$ 24,632,463</td><td>$ 22,977,104</td></tr></table>

General. Our unsecured debt agreements contain financial covenants and other non-financial covenants. If we were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lender, including adjustments to the applicable interest rate. As of December 31, 2017, we were in compliance with all covenants of our unsecured debt.

At December 31, 2017, we or our subsidiaries were the borrowers under 47 non-recourse mortgage notes secured by mortgages on 50 properties, including two separate pools of cross-defaulted and cross-collateralized mortgages encumbering a total of five properties. Under these cross-default provisions, a default under any mortgage included in the cross-defaulted pool may constitute a default under all mortgages within that pool and may lead to acceleration of the indebtedness due on each property within the pool. Certain of our secured debt instruments contain financial and other non-financial covenants which are specific to the properties that serve as collateral for that debt. If the applicable borrower



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

under these non-recourse mortgage notes were to fail to comply with these covenants, the lender could accelerate the debt and enforce its rights against their collateral. At December 31, 2017, the applicable borrowers under these non-recourse mortgage notes were in compliance with all covenants where non-compliance could individually or in the aggregate, giving effect to applicable cross-default provisions, have a material adverse effect on our financial condition, liquidity or results of operations.

## Unsecured Debt

At December 31, 2017, our unsecured debt consisted of $16.5 billion of senior unsecured notes of the Operating Partnership, $322.6 million outstanding under the Operating Partnership's $3.5 billion supplemental unsecured revolving credit facility, or Supplemental Facility, and $978.5 million outstanding under the Operating Partnership's global unsecured commercial paper program, or Commercial Paper program. The December 31, 2017 balance on the Supplemental Facility included $197.6 million (U.S. dollar equivalent) of Yen-denominated borrowings. Foreign currency denominated borrowings under the Supplemental Facility are designated as net investment hedges of a portion of our international investments.

On December 31, 2017, we had an aggregate available borrowing capacity of $6.2 billion under the Supplemental Facility and the Operating Partnership's $4.0 billion unsecured revolving credit facility, or Credit Facility, and together with the Supplemental Facility, the Credit Facilities. The maximum aggregate outstanding balance under the Credit Facilities during the year ended December 31, 2017 was $960.9 million and the weighted average outstanding balance was $455.5 million. Letters of credit of $20.9 million were outstanding under the Credit Facilities as of December 31, 2017.

On March 17, 2017, the Operating Partnership amended and extended the Credit Facility. The initial borrowing capacity of $4.0 billion may be increased to $5.0 billion during its term and provides for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars. Borrowings in currencies other than the U.S. dollar are limited to 95% of the maximum revolving credit amount, as defined. The initial maturity date of the Credit Facility was extended to June 30, 2021 and can be extended for an additional year to June 30, 2022 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Credit Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points.

The Supplemental Facility’s borrowing capacity of $3.50 billion may be increased to $4.25 billion during its term. The initial maturity date of the Supplemental Facility is June 30, 2019, which can be extended for an additional year to June 30, 2020 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Supplemental Facility is LIBOR plus 80 basis points, with an additional facility fee of 10 basis points. The Supplemental Facility provides for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars.

On February 15, 2018, the Operating Partnership amended and extended the Supplemental Facility. The Supplemental Facility's initial borrowing capacity of $3.5 billion may be increased to $4.5 billion during its term. The initial maturity date of the Supplemental Facility was extended to June 30, 2022 and can be extended for an additional year to June 30, 2023 at our sole option, subject to our continued compliance with the terms thereof. The base interest rate on the Supplemental Facility was reduced to LIBOR plus 77.5 basis points from LIBOR plus 80 basis points, with a facility fee of 10 basis points.

The Operating Partnership also has available a Commercial Paper program of $1.0 billion, or the non-U.S. dollar equivalent thereof. The Operating Partnership may issue unsecured commercial paper notes, denominated in U.S. dollars, Euro and other currencies. Notes issued in non-U.S. currencies may be issued by one or more subsidiaries of the Operating Partnership and are guaranteed by the Operating Partnership. Notes will be sold under customary terms in the U.S. and Euro commercial paper note markets and rank (either by themselves or as a result of the guarantee described above) pari passu with the Operating Partnership's other unsecured senior indebtedness. The Commercial Paper program is supported by the Credit Facilities and if necessary or appropriate, we may make one or more draws under either of the Credit Facilities to pay amounts outstanding from time to time on the Commercial Paper program. On December 31, 2017, we had $978.5 million outstanding under the Commercial Paper program, fully comprised of U.S. dollar denominated notes.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

with a weighted average interest rate of 1.40%. These borrowings mature on various dates through March 15, 2018 and reduce amounts otherwise available under the Credit Facilities.

On June 1, 2017, the Operating Partnership completed the issuance of $600.0 million of senior unsecured notes at a fixed interest rate of 2.63% with a maturity date of June 15, 2022 and $750.0 million of senior unsecured notes at a fixed interest rate of 3.38% with a maturity date of June 15, 2027. Proceeds from the unsecured notes offering were used to fund the early redemption of senior unsecured notes in June 2017, as discussed below, and to pay down the Credit Facility.

On December 11, 2017, the Operating Partnership completed the issuance of $600.0 million of senior unsecured notes at a fixed interest rate of 2.75% with a maturity date of June 1, 2023 and $750.0 million of senior unsecured notes at a fixed interest rate of 3.38% with a maturity date of December 1, 2027. Proceeds from the unsecured notes offering were used to redeem at par $750 million of senior unsecured notes with a fixed interest rate of 1.50% on January 3, 2018 and for general business purposes.

During 2017, the Operating Partnership redeemed at par $600.0 million of senior unsecured notes with a fixed interest rate of 2.15% and completed the early redemption of a series of senior unsecured notes comprising $1.25 billion with a fixed interest rate of 5.65%. We recorded a $128.6 million loss on extinguishment of debt in the second quarter of 2017 as a result of the early redemption.

## Mortgage Debt

Total mortgage indebtedness was $6.9 billion and $6.5 billion at December 31, 2017 and 2016, respectively.

On April 21, 2017, as discussed in Note 7, through our European investee, we acquired a controlling interest in Rosada Designer Outlet in Roosendaal, Netherlands, subject to an existing EURIBOR-based variable rate mortgage loan of $40.1 million (U.S. dollar equivalent).

## Debt Maturity and Other

Our scheduled principal repayments on indebtedness as of December 31, 2017 are as follows:

<table><tr><td>2018.</td><td>$ 2,060,959 (1)</td></tr><tr><td>2019.</td><td>741,849</td></tr><tr><td>2020.</td><td>2,465,232</td></tr><tr><td>2021.</td><td>3,157,745</td></tr><tr><td>2022.</td><td>3,521,890</td></tr><tr><td>Thereafter</td><td>12,761,890</td></tr><tr><td>Total principal maturities</td><td>24,709,565</td></tr><tr><td>Net unamortized debt discount</td><td>(34,788)</td></tr><tr><td>Debt issuance costs, net</td><td>(110,734)</td></tr><tr><td>Other Debt Obligations</td><td>68,420</td></tr><tr><td>Total mortgages and unsecured indebtedness</td><td>$ 24,632,463</td></tr></table>

(1) Includes $750.0 million aggregate principal amount of 1.50% senior unsecured notes redeemed at par on January 3, 2018.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

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

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Cash paid for interest</td><td>$ 814,729</td><td>$ 887,118</td><td>$ 943,683</td></tr></table>

## 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. 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. Upon completion of the debt issuance, the fair value of these instruments is recorded as part of accumulated other comprehensive income (loss) and is amortized to interest expense over the life of the debt agreement.

The unamortized loss on our treasury locks and terminated hedges recorded in accumulated other comprehensive income (loss) was $10.1 million and $35.4 million as of December 31, 2017 and 2016, respectively. As of December 31, 2016, our outstanding LIBOR based derivative contracts consisted of an interest rate swap agreement with a notional amount of $250.0 million. As of December 31, 2017, we had no outstanding interest rate derivatives.

Within the next year, we expect to reclassify to earnings approximately $7.0 million of losses related to terminated interest rate swaps from the current balance held in accumulated other comprehensive income (loss).

## Debt Issuance Costs

Our debt issuance costs consist primarily of financing fees we incurred in order to obtain long-term financing. We record amortization of debt issuance costs on a straight-line basis over the terms of the respective loans or agreements. Details of those debt issuance costs as of December 31 are as follows:

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Debt issuance costs</td><td>$ 200,646</td><td>$ 166,041</td></tr><tr><td>Accumulated amortization</td><td>(89,912)</td><td>(68,205)</td></tr><tr><td>Debt issuance costs, net</td><td>$ 110,734</td><td>$ 97,836</td></tr></table>

We report amortization of debt issuance costs, amortization of premiums, and accretion of discounts as part of interest expense. We amortize debt premiums and discounts, which are included in mortgages and unsecured indebtedness, over the remaining terms of the related debt instruments. These debt premiums or discounts arise either at the time of the debt issuance or as part of purchase accounting for the fair value of debt assumed in acquisitions. The accompanying consolidated statements of operations and comprehensive income include amortization from continuing operations as follows:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Amortization of debt issuance costs</td><td>$ 21,707</td><td>$ 21,703</td><td>$ 19,349</td></tr><tr><td>Amortization of debt discounts/(premiums)</td><td>1,357</td><td>(14,583)</td><td>(16,107)</td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

## Fair Value of Debt

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 market prices are available, we use quoted market prices for securities with similar terms and maturities. The book value of our consolidated fixed-rate mortgages and unsecured indebtedness including commercial paper was $23.4 billion and $22.1 billion as of December 31, 2017 and 2016, respectively. The fair values of these financial instruments and the related discount rate assumptions as of December 31 are summarized as follows:

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Fair value of fixed-rate mortgages and unsecured indebtedness</td><td>$ 24,003</td><td>$ 22,703</td></tr><tr><td>Weighted average discount rates assumed in calculation of fair value for fixed-rate mortgages</td><td>4.25 %</td><td>4.12 %</td></tr><tr><td>Weighted average discount rates assumed in calculation of fair value for unsecured indebtedness</td><td>4.10 %</td><td>3.83 %</td></tr></table>

## 9. Rentals under Operating Leases

Future minimum rentals to be received under non-cancelable 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, 2017 are as follows:

<table><tr><td>2018</td><td>$ 2,846,006</td></tr><tr><td>2019</td><td>2,568,106</td></tr><tr><td>2020</td><td>2,312,789</td></tr><tr><td>2021</td><td>2,021,629</td></tr><tr><td>2022</td><td>1,727,607</td></tr><tr><td>Thereafter</td><td>4,209,145</td></tr><tr><td></td><td>$ 15,685,282</td></tr></table>

## 10. Equity

Simon’s Board of Directors is authorized to reclassify excess common stock into one or more additional classes and series of capital stock, to establish the number of shares in each class or series and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, and qualifications and terms and conditions of redemption of such class or series, without any further vote or action by the stockholders. The issuance of additional classes or series of capital stock may have the effect of delaying, deferring or preventing a change in control of us without further action of the stockholders. The ability to issue additional classes or series of capital stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of Simon’s outstanding voting stock.

Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, other than for the election of directors. The holders of Simon's Class B common stock have the right to elect up to four members of Simon's Board of Directors. All 8,000 outstanding shares of the Class B common stock are subject to two voting trusts as to which Herbert Simon and David Simon are the trustees. Shares of Class B common stock convert automatically into an equal number of shares of common stock upon the occurrence of certain events and can be converted into shares of common stock at the option of the holders.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## Common Stock and Unit Issuances and Repurchases

In 2017, Simon issued 500,411 shares of common stock to sixteen limited partners of the Operating Partnership in exchange for an equal number of units pursuant to the partnership agreement of the Operating Partnership. These transactions increased Simon’s ownership interest in the Operating Partnership.

On February 13, 2017, Simon’s Board of Directors authorized a two-year extension of the previously authorized $2.0 billion common stock repurchase plan through March 31, 2019. Simon may repurchase the shares in the open market or in privately negotiated transactions as market conditions warrant. During the year ended December 31, 2017, Simon repurchased 2,468,630 shares at an average price of $164.87 per share as part of this program. During the year ended December 31, 2016, Simon repurchased 1,409,197 shares at an average price of $181.14 per share as part of this program. As Simon repurchases shares under this program, the Operating Partnership repurchases an equal number of units from Simon.

## Temporary Equity

## Simon

Simon classifies as temporary equity those securities for which there is the possibility that Simon could be required to redeem the security for cash irrespective of the probability of such a possibility. As a result, Simon classifies one series of preferred units in the Operating Partnership and noncontrolling redeemable interests in properties in temporary equity. Each of these securities is discussed further below.

Limited Partners’ Preferred Interest in the Operating Partnership and Noncontrolling Redeemable Interests in Properties. The redemption features of the preferred units in the Operating Partnership contain provisions which could require the Operating Partnership to settle the redemption in cash. As a result, this series of preferred units in the Operating Partnership remains classified outside permanent equity.

The remaining interests in a property or portfolio of properties which are redeemable at the option of the holder or in circumstances that may be outside Simon's control, are accounted for as temporary equity. The carrying amount of the noncontrolling interest is adjusted to the redemption amount assuming the instrument is redeemable at the balance sheet date. Changes in the redemption value of the underlying noncontrolling interest are recorded within accumulated deficit. There were no noncontrolling interests redeemable at amounts in excess of fair value as of December 31, 2017 and 2016. The following table summarizes the preferred units in the Operating Partnership and the amount of the noncontrolling redeemable interests in properties as of December 31.

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>7.50% Cumulative Redeemable Preferred Units, 260,000 units authorized, 255,373 issued and outstanding.</td><td>$ 25,537</td><td>$ 25,537</td></tr><tr><td>Other noncontrolling redeemable interests in properties.</td><td>164,943</td><td>112,225</td></tr><tr><td>Limited partners&#x27; preferred interest in the Operating Partnership and noncontrolling redeemable interests in properties.</td><td>$ 190,480</td><td>$ 137,762</td></tr></table>

7.50% Cumulative Redeemable Preferred Units. This series of preferred units accrues cumulative quarterly distributions at a rate of $7.50 annually. The preferred units are redeemable by the Operating Partnership upon the death of the survivor of the original holders, or the transfer of any preferred 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 at our election. 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 the Operating Partnership to redeem the preferred units at the same redemption price payable at the option of the Operating Partnership in either cash or shares of common stock.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

These preferred units have a carrying value of $25.5 million and are included in limited partners' preferred interest in the Operating Partnership in the consolidated balance sheets at December 31, 2017 and 2016.

## The Operating Partnership

The Operating Partnership classifies as temporary equity those securities for which there is the possibility that the Operating Partnership could be required to redeem the security for cash, irrespective of the probability of such a possibility. As a result, the Operating Partnership classifies one series of preferred units and noncontrolling redeemable interests in properties in temporary equity. Each of these securities is discussed further below.

Noncontrolling Redeemable Interests in Properties Redeemable instruments, which typically represent the remaining interest in a property or portfolio of properties, and which are redeemable at the option of the holder or in circumstances that may be outside our control, are accounted for as temporary equity. The carrying amount of the noncontrolling interest is adjusted to the redemption amount assuming the instrument is redeemable at the balance sheet date. Changes in the redemption value of the underlying noncontrolling interest are recorded within equity. There are no noncontrolling interests redeemable at amounts in excess of fair value as of December 31, 2017 and 2016. The following table summarizes the preferred units and the amount of the noncontrolling redeemable interests in properties as of December 31.

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>7.50% Cumulative Redeemable Preferred Units, 260,000 units authorized, 255,373 issued and outstanding.</td><td>$ 25,537</td><td>$ 25,537</td></tr><tr><td>Other noncontrolling redeemable interests in properties.</td><td>164,943</td><td>112,225</td></tr><tr><td>Total preferred units, at liquidation value, and noncontrolling redeemable interests in properties.</td><td>$ 190,480</td><td>$ 137,762</td></tr></table>

7.50% Cumulative Redeemable Preferred Units The 7.50% preferred units accrue cumulative quarterly distributions at a rate of $7.50 annually. We may redeem the preferred units upon the death of the survivor of the original holders, or the transfer of any preferred 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 at our election. In the event of the death of a holder of the 7.5% preferred units, the occurrence of certain tax triggering events applicable to the holder, or on or after November 10, 2006, the holder may require the Operating Partnership to redeem the preferred units at the same redemption price payable at the Operating Partnership's option in either cash or fully registered shares of common stock of Simon. These preferred units have a carrying value of $25.5 million and are included in preferred units, at liquidation value in the consolidated balance sheets at December 31, 2017 and 2016.

## Permanent Equity

## Simon

Preferred Stock. Dividends on all series of preferred stock are calculated based upon the preferred stock's preferred return multiplied by the preferred stock's corresponding liquidation value. The Operating Partnership pays preferred distributions to Simon equal to the dividends Simon pays on the preferred stock issued.

Series J 8 \( ^{3} \) / \( _{8} \) % Cumulative Redeemable Preferred Stock. Dividends accrue quarterly at an annual rate of 8 \( ^{3} $ / \( _{8} $ % per share. Simon can redeem this series, in whole or in part, on or after October 15, 2027 at a redemption price of 50.00 per share, plus accumulated and unpaid dividends. This preferred stock was issued at a premium of 7.5 million. The unamortized premium included in the carrying value of the preferred stock at December 31, 2017 and 2016 was 3.2 million and 3.6 million, respectively.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

## The Operating Partnership

Series J  $ 83^{1}/_{8} \) % Cumulative Redeemable Preferred Units. Distributions accrue quarterly at an annual rate of  $ 83^{1}/_{8} \) % per unit on the Series J  $ 83^{1}/_{8} \) % preferred units, or Series J preferred units. Simon owns all of the Series J preferred units which have the same economic rights and preferences of an outstanding series of Simon preferred stock. The Operating Partnership can redeem this series, in whole or in part, when Simon can redeem the related preferred stock, on and after October 15, 2027 at a redemption price of 50.00 per unit, plus accumulated and unpaid distributions. The Series J preferred units were issued at a premium of 7.5 million. The unamortized premium included in the carrying value of the preferred units at December 31, 2017 and 2016 was 3.2 million and 3.6 million, respectively. There are 1,000,000 Series J preferred units authorized and 796,948 issued and outstanding.

## Other Equity Activity

Notes Receivable from Former CPI Stockholders. Notes receivable of $14.5 million from stockholders of an entity we acquired in 1998 are reflected as a deduction from capital in excess of par value in the Simon consolidated statements of equity and as a deduction from general partner's equity in the Operating Partnership consolidated statements of 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, as amended. This plan, or the 1998 plan, provides for the grant of equity-based awards with respect to the equity of Simon in the form of options to purchase shares, stock appreciation rights, restricted stock grants and performance-based unit awards. Options may be granted which are qualified as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code and options which are not so qualified. An aggregate of 16,300,000 shares of common stock have been reserved for issuance under the 1998 plan. Additionally, the partnership agreement requires Simon to purchase units for cash in an amount equal to the fair market value of such shares.

Administration. The 1998 plan is administered by the Compensation Committee of Simon’s Board of Directors, or the Compensation Committee. The Compensation Committee determines which eligible individuals may participate and the type, extent and terms of the awards to be granted to them. In addition, the Compensation 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 Compensation 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.

Awards and Compensation for Eligible Directors. Directors who are not also our employees or employees of our affiliates are eligible to receive awards under the 1998 plan. Each independent director receives an annual cash retainer of 100,000, and an annual restricted stock award with a grant date value of 150,000. Committee chairs receive annual retainers for the Company's Audit, Compensation, and Governance and Nominating Committees of 35,000, 35,000 and 25,000, respectively. Directors receive fixed annual retainers for service on the Audit, Compensation and Governance and Nominating Committees, of 15,000, 15,000, and 10,000, respectively. The Lead Director receives an annual retainer of 50,000. These retainers are paid 50% in cash and 50% in restricted stock.

Restricted stock awards vest 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 Director Deferred Compensation Plan until the shares of restricted stock are delivered to the former director.



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

## Stock Based Compensation

Awards under our stock based compensation plans primarily take the form of LTIP units and restricted stock grants. Restricted stock and awards under the LTIP programs are all performance-based and are based on various individual, corporate and business unit performance measures as further described below. The expense related to these programs, net of amounts capitalized, is included within home and regional office costs and general and administrative costs in the accompanying statements of operations and comprehensive income.

LTIP Programs. The Compensation Committee has approved long-term, performance-based incentive compensation programs, or the LTIP programs, for certain senior executive officers. Awards under the LTIP programs take the form of LTIP units, a form of limited partnership interest issued by the Operating Partnership, and will be considered earned if, and only to the extent to which, certain performance measures are achieved during the performance period. Once earned, LTIP units are subject to a two year vesting period. One-half of the earned LTIP units will vest on January 1 of each of the second and third years following the end of the applicable performance period, subject to the participant maintaining employment with us through those dates and certain other conditions as described in those agreements. Awarded LTIP units not earned are forfeited. Earned and fully vested LTIP units are the equivalent of units. During the performance period, participants are entitled to receive distributions on the LTIP units awarded to them equal to 10% of the regular quarterly distributions paid on a unit of the Operating Partnership. As a result, we account for these LTIP units as participating securities under the two-class method of computing earnings per share.

From 2010 to 2016, the Compensation Committee approved LTIP unit grants as shown in the table below. Grant date fair values of the LTIP units are estimated using a Monte Carlo model, and the resulting expense is recorded regardless of whether the TSR performance measures are achieved if the required service is delivered. The grant date fair values are being amortized into expense over the period from the grant date to the date at which the awards, if any, would become vested. The extent to which LTIP units were earned, and the aggregate grant date fair value, are as follows:

<table><tr><td>LTIP Program</td><td>LTIP Units Earned</td><td>Grant Date Fair Value</td></tr><tr><td>2010 LTIP program</td><td></td><td></td></tr><tr><td>1-year 2010 LTIP program</td><td>133,673</td><td>1-year program — $7.2 million</td></tr><tr><td>2-year 2010 LTIP program</td><td>337,006</td><td>2-year program — $14.8 million</td></tr><tr><td>3-year 2010 LTIP program</td><td>489,654</td><td>3-year program — $23.0 million</td></tr><tr><td>2011-2013 LTIP program . . .</td><td>469,848</td><td>$35.0 million</td></tr><tr><td>2012-2014 LTIP program . . .</td><td>401,203</td><td>$35.0 million</td></tr><tr><td>2013-2015 LTIP program . . .</td><td>466,405</td><td>$28.5 million</td></tr><tr><td>2014-2016 LTIP program . . .</td><td>120,314</td><td>$27.5 million</td></tr><tr><td>2015-2017 LTIP program . . .</td><td>To be determined in 2018</td><td>$25.1 million</td></tr><tr><td>2016-2018 LTIP program . . .</td><td>To be determined in 2019</td><td>$26.3 million</td></tr></table>

The Compensation Committee did not establish a 2017-2019 LTIP program.

We recorded compensation expense, net of capitalization and reversal of expense for awards for which the requisite service was not provided, related to these LTIP programs of approximately $14.0 million, $31.0 million, and $24.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Restricted Stock. The 1998 plan also provides for shares of restricted stock to be granted to certain employees at no cost to those employees, subject to achievement of individual performance and certain financial and return-based performance measures established by the Compensation Committee related to the most recent year's performance. Once granted, the shares of restricted stock then vest annually over a three-year or a four-year period (as defined in the award). The cost of restricted stock grants, which is based upon the stock's fair market value on the grant date, is recognized as expense ratably over the vesting period. Through December 31, 2017 a total of 5,734,667 shares of restricted stock, net of



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

forfeitures, have been awarded under the 1998 plan. Information regarding restricted stock awards is summarized in the following table for each of the years presented:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Shares of restricted stock awarded during the year, net of forfeitures</td><td>76,660</td><td>63,324</td><td>63,738</td></tr><tr><td>Weighted average fair value of shares granted during the year</td><td>$ 170.81</td><td>$ 209.16</td><td>$ 197.17</td></tr><tr><td>Amortization expense</td><td>$ 13,911</td><td>$ 12,024</td><td>$ 13,692</td></tr></table>

We recorded compensation expense, net of capitalization, related to restricted stock for employees and non-employee directors of approximately $9.0 million, $9.1 million, and $9.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Other Compensation Arrangements. On July 6, 2011, in connection with the execution of an employment agreement, the Compensation Committee granted David Simon, Simon's Chairman and Chief Executive Officer, a retention award in the form of 1,000,000 LTIP units, or the Award, for his continued service as Simon's Chairman and Chief Executive Officer through July 5, 2019. Effective December 31, 2013, the Award was modified, or the Current Award, and as a result the LTIP units are earned and eligible to vest based on the attainment of Company-based performance goals, in addition to the service-based vesting requirement included in the original Award. If the relevant performance criteria are not achieved, all or a portion of the Current Award will be forfeited. The Current Award does not contain an opportunity for Mr. Simon to receive additional LTIP units above and beyond the original Award should our performance exceed the higher end of the performance criteria. The performance criteria of the Current Award are based on the attainment of specific funds from operations, or FFO, per share. If the performance criteria have been met, a maximum of 360,000 LTIP units, or the A units, 360,000 LTIP units, or the B units, and 280,000 LTIP units, or the C units, may become earned on December 31, 2015, December 31, 2016 and December 31, 2017, respectively. Based on the Company's performance in 2015, 360,000 A units were earned. Based on the Company's performance in 2016, 360,000 B units were earned. Based on the Company's performance in 2017, the Compensation Committee of our Board of Directors determined that all of the 280,000 C units were earned. The earned A units vested on January 1, 2018, earned B units will vest on January 1, 2019 and earned C units will vest on June 30, 2019, subject to Mr. Simon's continued employment through such applicable date. The grant date fair value of the retention award of $120.3 million is being recognized as expense over the eight-year term of his employment agreement on a straight-line basis through the applicable vesting periods of the A units, B units and C units.

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

## Exchange Rights

## Simon

Limited partners in the Operating Partnership have the right to exchange all or any portion of their units for shares of common stock on a one-for-one basis or cash, as determined by Simon's Board of Directors. 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's common stock at that time. At December 31, 2017, Simon had reserved 50,632,517 shares of common stock for possible issuance upon the exchange of units, stock options and Class B common stock.

## The Operating Partnership

Limited partners have the right under the partnership agreement to exchange all or any portion of their units for shares of Simon common stock on a one-for-one basis or cash, as determined by Simon in its sole discretion. If Simon



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

selects cash, Simon cannot cause the Operating Partnership to redeem the exchanged units for cash without contributing cash to the Operating Partnership as partners' equity sufficient to effect the redemption. If sufficient cash is not contributed, Simon will be deemed to have elected to exchange the units for shares of Simon 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's common stock at that time. The number of shares of Simon's common stock issued pursuant to the exercise of the exchange right will be the same as the number of units exchanged.

## 11. Commitments and Contingencies

## Litigation

We are involved from time-to-time in various legal and regulatory proceedings that arise in the ordinary course of our business, including, but not limited to, commercial disputes, environmental matters, and litigation in connection with transactions such as acquisitions and divestitures. We believe that current proceedings will not have a material adverse effect on our financial condition, liquidity, or results of operations. We record a liability when a loss is considered probable and the amount can be reasonably estimated.

In May 2010, Opy Mills sustained significant flood damage. Insurance proceeds of $50 million have been funded by the primary insurer and remediation and restoration work has been completed. The property re-opened on March 29, 2012. The excess insurance carriers (those providing coverage above $50 million) denied our claim under the policy for additional proceeds (of up to $150 million) to pay further amounts for restoration costs and business interruption losses. In the first quarter of 2015, summary judgment was granted by the trial court in our favor, concluding that up to $150 million of additional coverage is available under our excess insurance policies for this claim. In July and August 2015, trial on the damages portion of our claim was completed and the jury entered a verdict for damages in the amount of $204.1 million (inclusive of the $50.0 million previously paid by the primary carrier). In April 2016, the court entered final judgment in the amount of the jury verdict, which amount will bear interest from the date of the jury's verdict. We and the excess insurance carriers have appealed certain portions of the trial court's rulings and the jury's verdict, respectively. On January 26, 2018, the Court of Appeals of Tennessee reversed the trial court's summary judgment on the amount of available coverage and ruled that the policy limit was $50 million. The Company intends to seek review of this ruling by the Tennessee Supreme Court. We will continue our efforts through the conclusion of the pending litigation including any and all appeals to recover our losses, including consequential damages, under the excess insurance policies for Opy Mills and from our former insurance broker, Aon Risk Services Central Inc., who is a defendant in this case, but did not participate in the trial, but no assurance can be made that our efforts to recover these losses will be successful.

## Lease Commitments

As of December 31, 2017, a total of 23 of the consolidated properties are subject to ground leases. The termination dates of these ground leases range from 2019 to 2090. These ground leases generally require us to make fixed annual rental payments, or a fixed annual rental payment plus a percentage rent component based upon the revenues or total sales of the property. In addition, we have several regional office locations that are subject to leases with termination dates ranging from 2018 to 2028. These office leases generally require us to make fixed annual rental payments plus pay our share of common area, real estate and utility expenses. Some of our ground and office leases include escalation clauses and renewal options. We incurred ground lease expense and office lease expense, which are included in other expense and home office and regional expense, respectively, as follows:

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Ground lease expense</td><td>$ 40,864</td><td>$ 38,764</td><td>$ 38,851</td></tr><tr><td>Office lease expense</td><td>4,481</td><td>4,105</td><td>4,067</td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts
and where indicated as in millions or billions)

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

<table><tr><td>2018</td><td>$ 26,401</td></tr><tr><td>2019</td><td>25,936</td></tr><tr><td>2020</td><td>24,829</td></tr><tr><td>2021</td><td>24,061</td></tr><tr><td>2022</td><td>23,886</td></tr><tr><td>Thereafter</td><td>655,309</td></tr><tr><td></td><td>$ 780,422</td></tr></table>

## Insurance

We maintain insurance coverage with third party carriers who provide a portion of the coverage for specific layers of potential losses, including commercial general liability, fire, flood, extended coverage and rental loss insurance on all of our properties in the United States. The initial portion of coverage not provided by third party carriers is either insured through our wholly-owned captive insurance company, Bridgewood Insurance Company, Ltd., or other financial arrangements controlled by us. If required, a third party 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 either written through our captive insurance company or other financial arrangement controlled by us, 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. The current U.S. federal laws which provide this coverage are expected to operate through 2020. Despite the existence of this insurance coverage, any threatened or actual terrorist attacks where we operate could adversely affect our property values, revenues, consumer traffic and tenant sales.

## Hurricane Impacts

During the third quarter of 2017, two of our wholly-owned properties located in Puerto Rico sustained significant damage as a result of Hurricane Maria. Due to the conditions on the island, we were unable to determine a reliable estimate or a range of reliable estimates of the extent of the damages at these properties at the end of the third quarter. During the fourth quarter, as additional information became available, we recorded an impairment of approximately $19.0 million related to damages at these properties, which is offset by an insurance recovery receivable.

We believe we maintain adequate insurance coverages for these properties and all property damage losses, as well as future losses from business interruption, are fully recoverable from insurance proceeds. The extent of the impact related to property damage is limited to our $1.0 million insurance deductible per occurrence, which was recorded in our statements of operations during the third quarter.

Damage to our properties from the hurricanes in Florida and Texas was minimal. The impact was primarily limited to repairs at the affected properties and, as such, we did not recognize any significant impairment charges. The extent of the impact related to the property damage in Texas was not significant. The extent of the impact related to the property damage in Florida is limited to our $1.0 million insurance deductible, which was recorded in our statements of operations during the third quarter.

## 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, 2017 and 2016, the Operating Partnership guaranteed joint venture related mortgage indebtedness of $211.6 million and $400.5 million, respectively (of which we have a right of recovery from our



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Consolidated Financial Statements
(Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

venture partners of $10.8 million and $87.3 million, respectively). Mortgages guaranteed by the Operating Partnership are secured by the property of the joint venture which could be sold in order to satisfy the outstanding obligation and which has an estimated fair value in excess of the guaranteed amount.

## Concentration of Credit Risk

Our U.S. Malls, Premium Outlets and Mills rely heavily upon anchor tenants to attract customers; however, anchor retailers do not contribute materially to our financial results as many anchor retailers own their spaces. All material operations are within the United States and no customer or tenant accounts for 5% or more of our consolidated revenues.

## 12. Related Party Transactions

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

<table><tr><td rowspan="2"></td><td colspan="3">For the Year Ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Amounts charged to unconsolidated joint ventures</td><td>$ 116,447</td><td>$ 138,496</td><td>$ 154,098</td></tr><tr><td>Amounts charged to properties owned by related parties</td><td>4,812</td><td>5,384</td><td>4,324</td></tr></table>

During 2017, 2016 and 2015, we recorded development, royalty and other fee income, net of elimination, related to our international investments of $15.5 million, $14.4 million and $13.6 million, respectively. Also during 2017, 2016 and 2015, we received fees related to financing services, net of elimination, provided to unconsolidated joint ventures of $1.6 million, $9.1 million and $2.3 million, respectively. The fees related to our international investments and financing activities are included in other income in the accompanying consolidated statements of operations and comprehensive income.



## 13. Quarterly Financial Data (Unaudited)

Quarterly 2017 and 2016 data is summarized in the table below. Quarterly amounts may not sum to annual amounts due to rounding.

<table><tr><td></td><td>First Quarter</td><td>Second Quarter</td><td>Third Quarter</td><td>Fourth Quarter</td></tr><tr><td>2017</td><td></td><td></td><td></td><td></td></tr><tr><td>Total revenue</td><td>$ 1,345,763</td><td>$ 1,361,548</td><td>$ 1,403,638</td><td>$ 1,427,692</td></tr><tr><td>Operating income</td><td>676,671</td><td>686,149</td><td>690,068</td><td>749,452</td></tr><tr><td>Consolidated net income</td><td>551,075</td><td>441,373</td><td>592,635</td><td>659,821</td></tr><tr><td>Simon Property Group, Inc.</td><td></td><td></td><td></td><td></td></tr><tr><td>Net income attributable to common stockholders</td><td>$ 477,736</td><td>$ 381,990</td><td>$ 513,783</td><td>$ 571,116</td></tr><tr><td>Net income per share — Basic and Diluted</td><td>$ 1.53</td><td>$ 1.23</td><td>$ 1.65</td><td>$ 1.84</td></tr><tr><td>Weighted average shares outstanding — Basic and Diluted</td><td>312,809,981</td><td>311,579,301</td><td>310,853,299</td><td>310,855,573</td></tr><tr><td>Simon Property Group, L.P.</td><td></td><td></td><td></td><td></td></tr><tr><td>Net income attributable to unitholders</td><td>$ 550,006</td><td>$ 439,986</td><td>$ 591,872</td><td>$ 657,774</td></tr><tr><td>Net income per unit — Basic and Diluted</td><td>$ 1.53</td><td>$ 1.23</td><td>$ 1.65</td><td>$ 1.84</td></tr><tr><td>Weighted average units outstanding — Basic and Diluted</td><td>360,130,442</td><td>358,865,806</td><td>358,115,572</td><td>358,025,108</td></tr><tr><td>2016</td><td></td><td></td><td></td><td></td></tr><tr><td>Total revenue</td><td>$ 1,336,715</td><td>$ 1,315,380</td><td>$ 1,357,168</td><td>$ 1,425,966</td></tr><tr><td>Operating income</td><td>684,901</td><td>659,236</td><td>676,191</td><td>700,501</td></tr><tr><td>Consolidated net income</td><td>563,839</td><td>527,325</td><td>587,940</td><td>455,602</td></tr><tr><td>Simon Property Group, Inc.</td><td></td><td></td><td></td><td></td></tr><tr><td>Net income attributable to common stockholders</td><td>$ 480,995</td><td>$ 455,389</td><td>$ 504,744</td><td>$ 394,431</td></tr><tr><td>Net income per share — Basic and Diluted</td><td>$ 1.55</td><td>$ 1.45</td><td>$ 1.61</td><td>$ 1.26</td></tr><tr><td>Weighted average shares outstanding — Basic and Diluted</td><td>309,416,266</td><td>313,399,467</td><td>314,234,418</td><td>313,684,810</td></tr><tr><td>Simon Property Group, L.P.</td><td></td><td></td><td></td><td></td></tr><tr><td>Net income attributable to unitholders</td><td>$ 561,797</td><td>$ 525,447</td><td>$ 581,266</td><td>$ 453,726</td></tr><tr><td>Net income per unit — Basic and Diluted</td><td>$ 1.55</td><td>$ 1.45</td><td>$ 1.61</td><td>$ 1.26</td></tr><tr><td>Weighted average units outstanding — Basic and Diluted</td><td>361,394,591</td><td>361,761,991</td><td>361,764,112</td><td>361,186,785</td></tr></table>



## Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

## Item 9A. Controls and Procedures

## Simon

## Management’s Evaluation of Disclosure Controls and Procedures

Simon maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to Simon's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Our management, with the participation of Simon’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of Simon’s disclosure controls and procedures as of December 31, 2017. Based on that evaluation, Simon’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017, Simon’s disclosure controls and procedures were effective at a reasonable assurance level.

## Management’s Report on Internal Control Over Financial Reporting

Simon is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, Simon's principal executive and principal financial officers and effected by Simon's Board of Directors, 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 U.S. generally accepted accounting principles and includes those policies and procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of assets;

- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our 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. 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 Simon’s internal control over financial reporting as of December 31, 2017. 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 (2013). Based on that assessment and criteria, we believe that, as of December 31, 2017, Simon’s internal control over financial reporting was effective.

## Attestation Report of the Registered Public Accounting Firm

The audit report of Ernst & Young LLP on their assessment of Simon’s internal control over financial reporting as of December 31, 2017 is set forth within Item 8 of this Form 10-K.

## Changes in Internal Control Over Financial Reporting

There have not been any changes in Simon’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the year ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, Simon’s internal control over financial reporting.



## The Operating Partnership

## Management’s Evaluation of Disclosure Controls and Procedures

The Operating Partnership maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including Simon's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Our management, with the participation of Simon’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Operating Partnership’s disclosure controls and procedures as of December 31, 2017. Based on that evaluation, Simon’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017, the Operating Partnership’s disclosure controls and procedures were effective at a reasonable assurance level.

## Management’s Report on Internal Control Over Financial Reporting

The Operating Partnership is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) under the Exchange Act as a process designed by, or under the supervision of, Simon’s principal executive and principal financial officers and effected by Simon’s Board of Directors, 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 U.S. generally accepted accounting principles and includes those policies and procedures that:

- Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of assets;

- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our 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. 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 the Operating Partnership’s internal control over financial reporting as of December 31, 2017. 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 (2013). Based on that assessment and criteria, we believe that, as of December 31, 2017, the Operating Partnership’s internal control over financial reporting was effective.

## Attestation Report of the Registered Public Accounting Firm

The audit report of Ernst & Young LLP on their assessment of the Operating Partnership’s internal control over financial reporting as of December 31, 2017 is set forth within Item 8 of this Form 10-K.

## Changes in Internal Control Over Financial Reporting

There have not been any changes in the Operating Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the year ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

## Item 9B. Other Information

During the fourth quarter of the year covered by this Annual Report on Form 10-K, the Audit Committee of Simon’s Board of Directors approved certain audit, audit-related and non-audit tax compliance and tax consulting services to be



provided by Ernst & Young LLP, our independent registered public accounting firm. This disclosure is made pursuant to Section 10A(i)(2) of the Exchange Act as added by Section 202 of the Sarbanes-Oxley Act of 2002.

## Part III

## Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated herein by reference to the definitive proxy statement for Simon’s 2018 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A and the information included under the caption “Executive Officers of the Registrant” in Part I hereof.

## Item 11. Executive Compensation

The information required by this item is incorporated herein by reference to the definitive proxy statement for Simon’s 2018 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A.

## Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated herein by reference to the definitive proxy statement for Simon’s 2018 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A.

## Item 13. Certain Relationships and Related Transactions and Director Independence

The information required by this item is incorporated herein by reference to the definitive proxy statement for Simon’s 2018 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A.

## Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to the definitive proxy statement for Simon’s 2018 annual meeting of stockholders to be filed with the SEC pursuant to Regulation 14A.

The Audit Committee of Simon’s Board of Directors pre-approves all audit and permissible non-audit services to be provided by Ernst & Young LLP, or Ernst & Young, Simon’s and the Operating Partnership’s independent registered public accounting firm, prior to commencement of services. The Audit Committee has delegated to the Chairman of the Audit Committee the authority to pre-approve specific services up to specified individual and aggregate fee amounts. These pre-approval decisions are presented to the full Audit Committee at the next scheduled meeting after such approvals are made. We have incurred fees as shown below for services from Ernst & Young as Simon’s and the Operating Partnership’s independent registered public accounting firm. Ernst & Young has advised us that it has billed or will bill these indicated amounts for the following categories of services for the years ended December 31, 2017 and 2016, respectively:

<table><tr><td></td><td>2017</td><td>2016</td></tr><tr><td>Audit Fees (1)</td><td>$ 3,959,000</td><td>$ 4,008,000</td></tr><tr><td>Audit Related Fees (2)</td><td>5,124,000</td><td>4,809,000</td></tr><tr><td>Tax Fees (3)</td><td>336,000</td><td>381,000</td></tr><tr><td>All Other Fees</td><td>—</td><td>—</td></tr></table>

(1) Audit Fees include fees for the audits of the financial statements and the effectiveness of internal control over financial reporting for Simon and the Operating Partnership and services associated with the related SEC registration statements, periodic reports, and other documents issued in connection with securities offerings.

(2) Audit-Related Fees include audits of individual or portfolios of properties and schedules of recoverable common area maintenance costs to comply with lender, joint venture partner or tenant requirements and accounting consultation and due diligence services. Our share of these Audit-Related Fees was approximately 59% for each of the years ended 2017 and 2016.

(3) Tax Fees include fees for international and other tax consulting services and tax return compliance services associated with the tax returns for certain joint ventures as well as other miscellaneous tax compliance services. Our share of these Tax Fees was approximately 79% and 81% for 2017 and 2016, respectively.



## Part IV

Item 15. Exhibits and Financial Statement Schedules
Page No.
(a) (1) Financial Statements
The following consolidated financial statements of Simon Property Group, Inc. and Simon Property Group, L.P. are set forth in Part II, item 8.
Reports of Independent Registered Public Accounting Firm. 75
Consolidated Financial Statements of Simon Property Group, Inc.
Consolidated Balance Sheets as of December 31, 2017 and 2016 79
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015 80
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015. 81
Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015 82
Consolidated Financial Statements of Simon Property Group, L.P.
Consolidated Balance Sheets as of December 31, 2017 and 2016 83
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2017, 2016 and 2015 84
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015. 85
Consolidated Statements of Equity for the years ended December 31, 2017, 2016 and 2015 86
Notes to Consolidated Financial Statements 87
(2) Financial Statement Schedule
Simon Property Group, Inc. and Simon Property Group, L.P. Schedule III — Schedule of Real Estate and Accumulated Depreciation 138
Notes to Schedule III 144
Other financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
(3) Exhibits
The Exhibit Index attached hereto is hereby incorporated by reference to this Item. 131

Item 16. Form 10-K Summary

None.



## EXHIBIT INDEX

## Exhibits

2.1 Separation and Distribution Agreement by and among Simon Property Group, Inc., Simon Property Group, L.P., Washington Prime Group Inc. and Washington Prime Group, L.P., dated as of May 27, 2014 (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed May 29, 2014).

3.1 Restated Certificate of Incorporation of Simon Property Group, Inc. (incorporated by reference to Appendix A of Simon Property Group, Inc.'s Proxy Statement on Schedule 14A filed March 27, 2009.

3.2 Amended and Restated By-Laws of Simon Property Group, Inc. as adopted on March 20, 2017 (incorporated by reference to Exhibit 3.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed March 24, 2017).

3.3 Certificate of Powers, Designations, Preferences and Rights of the  $ 8^{3}/_{8} \) % Series J Cumulative Redeemable Preferred Stock, $0.0001 Par Value (incorporated by reference to Exhibit 3.2 of Simon Property Group, Inc.'s Current Report on Form 8-K filed October 20, 2004.

3.4 Certificate of Designation of Series A Junior Participating Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed May 15, 2014).

3.5 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 filed March 31, 2003.

3.6 Eighth Amended and Restated Limited Partnership Agreement of Simon Property Group, L.P. dated as of May 8, 2008 (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed May 9.

3.7 Certificate of Designation of Series B Junior Participating Redeemable Preferred Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 3.1 of Simon Property Group, L.P.'s Quarterly Report on Form 10-Q filed August 8, 2014).

3.8 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 3.4 of Simon Property Group, L.P.'s Annual Report on Form 10-K filed March 16, 2007.

3.9 Agreement between Simon Property Group, Inc. and Simon Property Group, L.P. dated April 29, 2009, but effective as of October 14, 2004, regarding redemption of the Registrant's Series I Preferred Units (incorporated by reference to Exhibit 3.2 of Simon Property Group, L.P.'s Quarterly Report on Form 10-Q filed May 8, 2009.

4.1(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 of Simon Property Group, L.P.'s Registration Statement on Form S-3 filed October 21, 1996 (Reg. No. 333-11491)).

9.1 Second Amended and Restated Voting Trust Agreement, Voting Agreement and Proxy dated as of March 1, 2004 between Melvin Simon & Associates, Inc., on the one hand and Melvin Simon, Herbert Simon and David Simon on the other hand (incorporated by reference to Exhibit 9.1 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q filed May 10, 2004.

9.2 Voting Trust Agreement, Voting Agreement and Proxy dated as of March 1, 2004 between David Simon, Melvin Simon and Herbert Simon (incorporated by reference to Exhibit 9.2 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q filed May 10, 2004.

10.1 Form of the Indemnity Agreement between Simon Property Group, Inc. and its directors and officers (incorporated by reference to Exhibit 10.7 of Simon Property Group, Inc.'s Form S-4 filed August 13, 1998 (Reg. No. 333-61399)).

10.2 Registration Rights Agreement, dated as of September 24, 1998, by and among Simon Property Group, Inc. and the persons named therein (incorporated by reference to Exhibit 4.4 of Simon Property Group, Inc.'s Current Report on Form 8-K filed October 9, 1998.



## Exhibits

10.3 Registration Rights Agreement, dated as of August 27, 1999 by and among Simon Property Group, Inc. and the persons named therein (incorporated by reference to Exhibit 4.4 of the Registration Statement on Form S-3 filed March 24, 2004 (Reg. No. 333-113884)).

10.4 Registration Rights Agreement, dated as of November 14, 1997, by and between O'Connor Retail Partners, L.P. and Simon DeBartolo Group, Inc. (incorporated by reference to Exhibit 4.8 of the Registration Statement on Form S-3 filed December 7, 2001 (Reg. No. 333-74722)).

10.5 Form of Global Dealer Agreement, dated October 6, 2014 (incorporated by reference to Exhibit 10.2 of Simon Property Group, L.P.'s Current Report on Form 8-K filed October 7, 2014).

10.6* Simon Property Group, L.P. Amended and Restated 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed April 10, 2014).

10.7* Form of Nonqualified Stock Option Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.8 of Simon Property Group, Inc.'s Annual Report on Form 10-K filed March 16.

10.8* Form of Performance-Based Restricted Stock Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.9 of Simon Property Group, Inc.'s Annual Report on Form 10-K filed February 28, 2007.

10.9* Form of Performance-Based Restricted Stock Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.9 of Simon Property Group, Inc.'s Annual Report on Form 10-K filed February 28, 2007.

10.10* Employment Agreement between Simon Property Group, Inc. and David Simon effective as of July 6, 2011 (incorporated by reference to Exhibit 10.2 of Simon Property Group, Inc.'s Current Report on Form 8-K filed July 7, 2011).

10.11* First Amendment to Employment Agreement between Simon Property Group, Inc. and David Simon, dated as of March 29, 2013 (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed April 4, 2013).

10.12* Non-Qualified Deferred Compensation Plan dated as of December 31, 2008 (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q filed November 5, 2009.

10.13* Amendment — 2008 Performance Based-Restricted Stock Agreement dated as of March 6, 2009 (incorporated by reference to Exhibit 10.2 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q filed November 5, 2009.

10.14* Certificate of Designation of Series 2010 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.4 of Simon Property Group, Inc.'s Current Report on Form 8-K filed March 19, 2010).

10.15* Form of Series 2010 LTIP Unit (Three Year Program) Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed March 19, 2010).

10.16* Form of Series 2010 LTIP Unit (Two Year Program) Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 of Simon Property Group, Inc.'s Current Report on Form 8-K filed March 19, 2010).

10.17* Form of Series 2010 LTIP Unit (One Year Program) Award Agreement under the Simon Property Group, L.P. 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 of Simon Property Group, Inc.'s Current Report on Form 8-K filed March 19, 2010).

10.18* Certificate of Designation of Series CEO LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.3 of Simon Property Group, Inc.'s Current Report on Form 8-K filed July 7, 2011).

10.19* Simon Property Group Series CEO LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.4 of Simon Property Group, Inc.'s Current Report on Form 8-K filed July 7, 2011).



## Exhibits

10.20 \( ^{*} \)  First Amendment to Simon Property Group Series CEO LTIP Unit Award Agreement dated as of December 22, 2011 (incorporated by reference to Exhibit 10.24 of Simon Property Group, Inc.'s Annual Report on Form 10-K filed February 28, 2012).

10.21 \( ^{*} \)  Second Amendment to Simon Property Group Series CEO LTIP Unit Award Agreement, dated as of March 29, 2013 (incorporated by reference to Exhibit 10.2 of Simon Property Group, Inc.'s Current Report on Form 8-K filed April 4, 2013).

10.22 \( ^{*} \)  Simon Property Group Amended and Restated Series CEO LTIP Unit Award Agreement, dated as of December 31, 2013 (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed January 2, 2014).

10.23 \( ^{*} \)  Certificate of Designation of Series 2011 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.5 of Simon Property Group, Inc.'s Current Report on Form 8-K filed July 7, 2011).

10.24 \( ^{*} \)  Form of Simon Property Group Series 2011 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.6 of Simon Property Group, Inc.'s Current Report on Form 8-K filed July 7, 2011).

10.25 \( ^{*} \)  Certificate of Designation of Series 2012 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.2 of Simon Property Group, L.P.'s Quarterly Report on Form 10-Q filed May 11, 2012).

10.26 \( ^{*} \)  Amended and Restated Certificate of Designation of Series 2012 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.5 of Simon Property Group, L.P.'s Quarterly Report on Form 10-Q filed May 7, 2014).

10.27 \( ^{*} \)  Form of Simon Property Group Series 2012 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q filed May 8, 2012).

10.28 \( ^{*} \)  Simon Property Group Amended and Restated Series 2012 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Current Report on Form 8-K filed April 28, 2014).

10.29 \( ^{*} \)  Certificate of Designation of Series 2013 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.2 of Simon Property Group, L.P.'s Quarterly Report on Form 10-Q filed May 10, 2013).

10.30 \( ^{*} \)  Form of Simon Property Group Series 2013 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.3 of Simon Property Group, Inc.'s Current Report on Form 8-K filed April 4, 2013).

10.31 \( ^{*} \)  Form of Simon Property Group Executive Officer LTIP Waiver, dated April 18, 2014 (incorporated by reference to Exhibit 10.2 of Simon Property Group, Inc.'s Current Report on Form 8-K filed April 28, 2014).

10.32 \( ^{*} \)  Simon Property Group CEO LTIP Unit Adjustment Waiver, dated April 18, 2014 (incorporated by reference to Exhibit 10.3 of Simon Property Group, Inc.'s Current Report on Form 8-K filed April 28, 2014).

10.33 \( ^{*} \)  Form of Simon Property Group Series 2014 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.2 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q filed May 7, 2014).

10.34 \( ^{*} \)  Certificate of Designation of Series 2014 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.3 of Simon Property Group, L.P.'s Quarterly Report on Form 10-Q filed May 7, 2014).

10.35 Amended and Restated $2,750,000,000 Credit Agreement dated as of March 2, 2015 (incorporated by reference to Exhibit 10.1 of Simon Property Group, L.P.'s Current Report on Form 8-K filed March 3, 2015).

10.36 Notice of Increase of Maximum Amount Under Global Dealer Agreement dated as of February 27, 2015 (incorporated by reference to Exhibit 10.2 of Simon Property Group, L.P.'s Current Report on Form 8-K filed March 3, 2015).

10.37 \( ^{*} \)  Form of Simon Property Group Series 2015 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.3 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2015 filed on January 13, 2016).



## Exhibits

10.38 \( ^{*} \)  Certificate of Designation of Series 2015 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.4 of Simon Property Group, L.P.'s Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2015 filed on January 13, 2016).

10.39 \( ^{*} \)  Form of Simon Property Group Series 2016 LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.1 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed on May 5, 2016).

10.40 \( ^{*} \)  Form of Certificate of Designation of Series 2016 LTIP Units of Simon Property Group, L.P. (incorporated by reference to Exhibit 10.2 of Simon Property Group, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed on May 5, 2016).

10.41 Amendment No. 1 to Amended and Restated Credit Agreement, dated as of April 6, 2016 (incorporated by reference to Exhibit 10.1 of Simon Property Group, L.P.'s Current Report on Form 8-K filed April 7, 2016).

10.42 Amended and Restated $4,000,000,000 Credit Agreement, dated as of March 17, 2017 (incorporated by reference to Exhibit 99.2 of Simon Property Group, L.P.'s Current Report on Form 8-K filed March 20, 2017).

12.1 Simon Property Group, Inc. — Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.

12.2 Simon Property Group, L.P. — Computation of Ratio of Earnings to Fixed Charges.

21.1 List of Subsidiaries of Simon Property Group Inc. and Simon Property Group, L.P.

23.1 Simon Property Group, Inc. — Consent of Ernst & Young LLP.

23.2 Simon Property Group, L.P. — Consent of Ernst & Young LLP.

31.1 Simon Property Group, Inc. — 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 Simon Property Group, Inc. — 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.

31.3 Simon Property Group, L.P. — 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.

31.4 Simon Property Group, L.P. — 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.

32.1 Simon Property Group, Inc. — 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.

32.2 Simon Property Group, L.P. — 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.

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document



(a) Does not include supplemental indentures that authorize the issuance of debt securities series, none of which exceeds 10% of the total assets of Simon Property Group, L.P. on a consolidated basis. Simon Property Group, L.P. agrees to file copies of any such supplemental indentures upon the request of the Commission.

* Represents a management contract, or compensatory plan, contract or arrangement required to be filed pursuant to Regulation S-K.



## SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

## SIMON PROPERTY GROUP, INC.

By /s/ DAVID SIMON
David Simon
Chairman of the Board of Directors and Chief Executive Officer
Date: February 23, 2018

## SIMON PROPERTY GROUP, L.P.

/s/ DAVID SIMON
David Simon
Chairman of the Board of Directors and Chief Executive Officer of Simon Property Group, Inc., General Partner

Date: February 23, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Simon Property Group, Inc., for itself and in its capacity as General Partner of Simon Property Group, L.P., and in the capacities and on the dates indicated.

<table><tr><td>Signature</td><td>Capacity</td><td>Date</td></tr><tr><td>/s/ DAVID SIMON</td><td>Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)</td><td>February 23, 2018</td></tr><tr><td>David Simon</td><td></td><td></td></tr><tr><td>/s/ HERBERT SIMON</td><td>Chairman Emeritus and Director</td><td>February 23, 2018</td></tr><tr><td>Herbert Simon</td><td></td><td></td></tr><tr><td>/s/ RICHARD S. SOKOLOV</td><td>President, Chief Operating Officer and Director</td><td>February 23, 2018</td></tr><tr><td>Richard S. Sokolov</td><td></td><td></td></tr><tr><td>/s/ LARRY C. GLASSCOCK</td><td>Director</td><td>February 23, 2018</td></tr><tr><td>Larry C. Glasscock</td><td></td><td></td></tr><tr><td>/s/ REUBEN S. LEIBOWITZ</td><td>Director</td><td>February 23, 2018</td></tr><tr><td>Reuben S. Leibowitz</td><td></td><td></td></tr><tr><td>/s/ J. ALBERT SMITH, JR.</td><td>Director</td><td>February 23, 2018</td></tr><tr><td>J. Albert Smith, Jr.</td><td></td><td></td></tr><tr><td>/s/ KAREN N. HORN</td><td>Director</td><td>February 23, 2018</td></tr><tr><td>Karen N. Horn</td><td></td><td></td></tr><tr><td>/s/ ALLAN HUBBARD</td><td>Director</td><td>February 23, 2018</td></tr><tr><td>Allan Hubbard</td><td></td><td></td></tr><tr><td>/s/ DANIEL C. SMITH</td><td>Director</td><td>February 23, 2018</td></tr><tr><td>Daniel C. Smith</td><td></td><td></td></tr></table>



<table><tr><td>Signature</td><td>Capacity</td><td>Date</td></tr><tr><td>/s/ GARY M. RODKIN</td><td rowspan="2">Director</td><td rowspan="2">February 23, 2018</td></tr><tr><td>Gary M. Rodkin</td></tr><tr><td>/s/ GLYN F. AEPPEL</td><td rowspan="2">Director</td><td rowspan="2">February 23, 2018</td></tr><tr><td>Glyn F. Aeppel</td></tr><tr><td>/s/ STEFAN M. SELIG</td><td rowspan="2">Director</td><td rowspan="2">February 23, 2018</td></tr><tr><td>Stefan M. Selig</td></tr><tr><td>/s/ MARTA R. STEWART (1)</td><td rowspan="2">Director</td><td rowspan="2">February 23, 2018</td></tr><tr><td>Marta R. Stewart</td></tr><tr><td>/s/ ANDREW JUSTER</td><td rowspan="2">Executive Vice President and Chief Financial Officer (Principal Financial Officer)</td><td rowspan="2">February 23, 2018</td></tr><tr><td>Andrew Juster</td></tr><tr><td>/s/ STEVEN K. BROADWATER</td><td rowspan="2">Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)</td><td rowspan="2">February 23, 2018</td></tr><tr><td>Steven K. Broadwater</td></tr></table>

(1) Ms. Stewart was not appointed to the Simon Property Group, Inc. Board of Directors until February 12, 2018; as such, she was not a director during the fiscal year ended December 31, 2017, which is the period covered by this Annual Report on Form 10-K.



Simon Property Group, Inc.
Simon and Associates
Real Estate and Accumulated Depreciation

<table><tr><td>Name:</td><td>Location:</td><td>S</td><td>Earnings (a)</td><td>Initial cost (b)</td><td>Land (c)</td><td>Land (d)</td><td>Land (e)</td><td>Land (f)</td><td>Land (g)</td><td>Land (h)</td><td>Land (i)</td><td>Land (j)</td><td>Land (k)</td><td>Land (l)</td><td>Land (m)</td><td>Land (n)</td><td>Land (o)</td><td>Land (p)</td><td>Land (q)</td><td>Land (r)</td><td>Land (s)</td><td>Land (t)</td><td>Land (u)</td><td>Land (v)</td><td>Land (w)</td><td>Land (x)</td><td>Land (y)</td><td>Land (z)</td><td>Land (x)</td><td>Land (y)</td><td>Land (z)</td><td></td></tr></table>



Simon Property Group, Inc.
Simon Property Group, L.P.
Real Estate and Accumulated Depreciation
December 31, 2017

<table><tr><td rowspan="2">Name</td><td rowspan="2">Location</td><td colspan="2">Cost Accumulated</td><td colspan="2">Gross Amounts At Which Carried At Close of Period</td><td rowspan="2">Date of Construction or Acquisition</td></tr><tr><td>Initial Cost</td><td>Land</td><td>Buildings and Improvements</td><td>Land</td></tr><tr><td>Patrick R. Cox</td><td>Barcelona, P.R.</td><td>160,000</td><td>20,586</td><td>5</td><td>2,886</td><td>20,589</td></tr><tr><td>Outlooks</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Outlooks-Penninn</td><td>Queenstown (Fairbourne), MD</td><td>63,426</td><td>8,129</td><td>61,960</td><td>4,291</td><td>8,120</td></tr><tr><td>Outlooks-Village</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ro Group Access (Oakville)</td><td>Mercedes (Oakville), TX</td><td>—</td><td>1,229</td><td>451,47</td><td>2,379</td><td>1,222</td></tr><tr><td>Ro Group Access (Austin), TX</td><td>Round Rock, Austin</td><td>—</td><td>—</td><td>8222</td><td>3,533</td><td>—</td></tr><tr><td>Sun Financial Services</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Sun Financial Services (San Francisco), CA</td><td>University, San Francisco</td><td>—</td><td>1,925</td><td>308,640</td><td>50,512</td><td>1,617</td></tr><tr><td>Sun Financial Services</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Sun Financial Services (Austin, TX)</td><td>San Marcos (Austin and Austin), TX</td><td>—</td><td>13,180</td><td>103,729</td><td>39,811</td><td>13,180</td></tr><tr><td>Sun Financial Services</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Sun Financial Services</td><td></td><td></td><td></td><td></td><td></td><td></td><tr><td>Sun Financial Services</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Sun Financial Services</td><td></td><td></td><td></td><td></td><td></td><td></td></tr></table>



# Simon Property Group, Inc.
Simon Property Group, L.P.
Notes to Schedule III as of December 31, 2017
(Dollars in thousands)

## (1) Reconciliation of Real Estate Properties:

The changes in real estate assets for the years ended December 31, 2017, 2016, and 2015 are as follows:

<table><tr><td></td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Balance, beginning of year.</td><td>$ 34,897,942</td><td>$ 33,132,885</td><td>$ 31,014,133</td></tr><tr><td>Acquisitions and consolidations (7)</td><td>328,621</td><td>1,331,511</td><td>1,190,944</td></tr><tr><td>Improvements</td><td>731,863</td><td>658,734</td><td>995,964</td></tr><tr><td>Disposals and deconsolidations</td><td>(125,499)</td><td>(180,433)</td><td>(68,156)</td></tr><tr><td>Currency Translation Adjustment</td><td>181,579</td><td>(44,755)</td><td>—</td></tr><tr><td>Balance, close of year</td><td>$ 36,014,506</td><td>$ 34,897,942</td><td>$ 33,132,885</td></tr></table>

The unaudited aggregate cost of domestic consolidated real estate assets for U.S. federal income tax purposes as of December 31, 2017 was $21,055,936.

## (2) Reconciliation of Accumulated Depreciation:

The changes in accumulated depreciation for the years ended December 31, 2017, 2016, and 2015 are as follows:

<table><tr><td></td><td>2017</td><td>2016</td><td>2015</td></tr><tr><td>Balance, beginning of year.</td><td>$ 10,664,738</td><td>$ 9,696,420</td><td>$ 8,740,928</td></tr><tr><td>Depreciation expense (7)</td><td>1,121,863</td><td>1,089,347</td><td>1,018,078</td></tr><tr><td>Disposals and deconsolidations</td><td>(81,187)</td><td>(117,568)</td><td>(62,586)</td></tr><tr><td>Currency Translation Adjustment</td><td>(1,191)</td><td>(3,461)</td><td>—</td></tr><tr><td>Balance, close of year</td><td>$ 11,704,223</td><td>$ 10,664,738</td><td>$ 9,696,420</td></tr></table>

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 noted below.

• Buildings and Improvements — typically 10-35 years for the structure, 15 years for landscaping and parking lot, and 10 years for HVAC equipment.

• Tenant Allowances and Improvements — shorter of lease term or useful life.

(3) Initial cost generally represents net book value at December 20, 1993, except for acquired properties and new developments after December 20, 1993. Initial cost also includes any new developments that are opened during the current year. Costs of disposals and impairments of property are first reflected as a reduction to cost capitalized subsequent to acquisition.

(4) Not developed/constructed by us or our predecessors. The date of construction represents the initial acquisition date for assets in which we have acquired multiple interests.

(5) Initial cost for these properties is the cost at the date of consolidation for properties previously accounted for under the equity method of accounting.

(6) Encumbrances represent face amount of mortgage debt and exclude any premiums or discounts.

(7) Represents the original cost and does not include subsequent currency translation adjustments.



## SIMON PROPERTY GROUP, INC.
Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
Unaudited, (in thousands)

<table><tr><td rowspan="2"></td><td colspan="5">For the year ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td><td>2014</td><td>2013</td></tr><tr><td>Earnings:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Pre-tax income from continuing operations</td><td>$ 2,268,246</td><td>$ 2,164,384</td><td>$ 2,159,545</td><td>$ 1,650,250</td><td>$ 1,406,331</td></tr><tr><td>Add:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Distributions of income from</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>unconsolidated entities</td><td>374,101</td><td>331,627</td><td>271,998</td><td>201,614</td><td>177,354</td></tr><tr><td>Amortization of capitalized interest</td><td>6,033</td><td>5,267</td><td>4,527</td><td>3,925</td><td>3,900</td></tr><tr><td>Fixed Charges</td><td>976,442</td><td>1,039,811</td><td>1,092,286</td><td>1,152,166</td><td>1,112,808</td></tr><tr><td>Less:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Income from unconsolidated entities</td><td>(403,020)</td><td>(425,481)</td><td>(535,322)</td><td>(226,774)</td><td>(206,380)</td></tr><tr><td>Minority interest in pre-tax (income) loss of subsidiaries that have not incurred fixed charges</td><td>(419)</td><td>(434)</td><td>(399)</td><td>(347)</td><td>(1,063)</td></tr><tr><td>Interest capitalization</td><td>(24,754)</td><td>(31,250)</td><td>(32,664)</td><td>(16,500)</td><td>(15,585)</td></tr><tr><td>Preferred distributions of consolidated subsidiaries</td><td>(1,915)</td><td>(1,915)</td><td>(1,915)</td><td>(1,916)</td><td>(1,915)</td></tr><tr><td>Earnings</td><td>$ 3,194,714</td><td>$ 3,082,009</td><td>$ 2,958,056</td><td>$ 2,762,419</td><td>$ 2,475,450</td></tr><tr><td>Fixed Charges:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Portion of rents representative of the interest factor</td><td>11,762</td><td>12,315</td><td>13,057</td><td>13,577</td><td>13,227</td></tr><tr><td>Interest on indebtedness (including amortization of debt expense)</td><td>809,393</td><td>857,554</td><td>923,697</td><td>992,601</td><td>1,082,081</td></tr><tr><td>Interest capitalized</td><td>24,754</td><td>31,250</td><td>32,664</td><td>16,500</td><td>15,585</td></tr><tr><td>Loss on extinguishment of debt</td><td>128,618</td><td>136,777</td><td>120,953</td><td>127,573</td><td>—</td></tr><tr><td>Preferred distributions of consolidated subsidiaries</td><td>1,915</td><td>1,915</td><td>1,915</td><td>1,915</td><td>1,916</td></tr><tr><td>Fixed Charges</td><td>$ 976,442</td><td>$ 1,039,811</td><td>$ 1,092,286</td><td>$ 1,152,166</td><td>$ 1,112,808</td></tr><tr><td>Preferred Stock Dividends</td><td>3,337</td><td>3,337</td><td>3,337</td><td>3,337</td><td>3,336</td></tr><tr><td>Fixed Charges and Preferred Stock Dividends</td><td>$ 979,779</td><td>$ 1,043,148</td><td>$ 1,095,623</td><td>$ 1,155,503</td><td>$ 1,116,145</td></tr><tr><td>Ratio of Earnings to Fixed Charges and Preferred Stock Dividends</td><td>3.26x</td><td>2.95x</td><td>2.70x</td><td>2.39x</td><td>2.22x</td></tr></table>

For purposes of calculating the ratio of earnings to fixed charges and preferred stock dividends, the term "earnings" is the amount resulting from adding (a) pre-tax income from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or income or loss from equity investees, (b) fixed charges, (c) amortization of capitalized interest and (d) distributed income of equity investees, reduced by (a) interest capitalized and (b) the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges. "Fixed charges" consist of (a) interest expensed and capitalized, (b) amortized premiums, discounts and capitalized expenses related to indebtedness and (c) an estimate of the interest within rental expense.

There are generally no restrictions on our ability to receive distributions from our joint ventures where no preference in favor of the other owners of the joint venture exists.

Ratios have been revised for all years presented to reflect the spin-off of Washington Prime Group Inc.



## Simon Property Group, L.P.
Computation of Ratio of Earnings to Fixed Charges
Unaudited, (in thousands)

<table><tr><td rowspan="2"></td><td colspan="5">For the year ended December 31,</td></tr><tr><td>2017</td><td>2016</td><td>2015</td><td>2014</td><td>2013</td></tr><tr><td>Earnings:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Pre-tax income from continuing operations . Add:</td><td>$ 2,268,246</td><td>$ 2,164,384</td><td>$ 2,159,545</td><td>$ 1,650,250</td><td>$ 1,406,331</td></tr><tr><td>Distributions of income from unconsolidated entities</td><td>374,101</td><td>331,627</td><td>271,998</td><td>201,614</td><td>177,354</td></tr><tr><td>Amortization of capitalized interest</td><td>6,033</td><td>5,267</td><td>4,527</td><td>3,925</td><td>3,900</td></tr><tr><td>Fixed Charges</td><td>976,442</td><td>1,039,811</td><td>1,092,286</td><td>1,152,166</td><td>1,112,808</td></tr><tr><td>Less:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Income from unconsolidated entities</td><td>(403,020)</td><td>(425,481)</td><td>(535,322)</td><td>(226,774)</td><td>(206,380)</td></tr><tr><td>Minority interest in pre-tax (income) loss of subsidiaries that have not incurred fixed charges</td><td>(419)</td><td>(434)</td><td>(399)</td><td>(347)</td><td>(1,063)</td></tr><tr><td>Interest capitalization</td><td>(24,754)</td><td>(31,250)</td><td>(32,664)</td><td>(16,500)</td><td>(15,585)</td></tr><tr><td>Preferred distributions of consolidated subsidiaries</td><td>(1,915)</td><td>(1,915)</td><td>(1,915)</td><td>(1,195)</td><td>(1,915)</td></tr><tr><td>Earnings</td><td>$ 3,194,714</td><td>$ 3,082,009</td><td>$ 2,958,056</td><td>$ 2,762,419</td><td>$ 2,475,450</td></tr><tr><td>Fixed Charges:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Portion of rents representative of the interest factor</td><td>11,762</td><td>12,315</td><td>13,057</td><td>13,577</td><td>13,227</td></tr><tr><td>Interest on indebtedness (including amortization of debt expense)</td><td>809,393</td><td>857,554</td><td>923,697</td><td>992,601</td><td>1,082,081</td></tr><tr><td>Interest capitalized</td><td>24,754</td><td>31,250</td><td>32,664</td><td>16,500</td><td>15,585</td></tr><tr><td>Loss on extinguishment of debt</td><td>128,618</td><td>136,777</td><td>120,953</td><td>127,573</td><td>—</td></tr><tr><td>Fixed Charges</td><td>$ 974,527</td><td>$ 1,037,896</td><td>$ 1,090,371</td><td>$ 1,150,251</td><td>$ 1,110,893</td></tr><tr><td>Ratio of Earnings to Fixed Charges</td><td>3.28x</td><td>2.97x</td><td>2.71x</td><td>2.40x</td><td>2.23x</td></tr></table>

For purposes of calculating the ratio of earnings to fixed charges, the term “earnings” is the amount resulting from adding (a) pre-tax income from continuing operations before adjustment for noncontrolling interests in consolidated subsidiaries or income or loss from equity investees, (b) fixed charges, (c) amortization of capitalized interest and (d) distributed income of equity investees, reduced by (a) interest capitalized and (b) the noncontrolling interest in pre-tax income of subsidiaries that have not incurred fixed charges. “Fixed charges” consist of (a) interest expensed and capitalized, (b) amortized premiums, discounts and capitalized expenses related to indebtedness and (c) an estimate of the interest within rental expense.

There are generally no restrictions on our ability to receive distributions from our joint ventures where no preference in favor of the other owners of the joint venture exists.

Ratios have been revised for all years presented to reflect the spin-off of Washington Prime Group Inc.



## List of Subsidiaries of Simon Property Group, Inc.

<table><tr><td>Subsidiary</td><td>Jurisdiction</td></tr><tr><td>Simon Property Group, L.P.</td><td>Delaware</td></tr><tr><td>The Retail Property Trust</td><td>Massachusetts</td></tr><tr><td>Simon Property Group (Illinois), L.P.</td><td>Illinois</td></tr><tr><td>Simon Property Group (Texas), L.P.</td><td>Texas</td></tr><tr><td>M.S. Management Associates, Inc.</td><td>Delaware</td></tr><tr><td>Simon Property Group Administrative Services Partnership, L.P.</td><td>Delaware</td></tr><tr><td>Kravco Simon Investments, L.P.</td><td>Pennsylvania</td></tr><tr><td>Premium Outlet Partners, L.P.</td><td>Delaware</td></tr><tr><td>SPG Mayflower, LLC.</td><td>Delaware</td></tr><tr><td>Simon KP I S.a.r.l.</td><td>Luxembourg</td></tr><tr><td>Simon KP II S.a.r.l.</td><td>Luxembourg</td></tr></table>

## List of Subsidiaries of Simon Property Group, L.P.

<table><tr><td>Subsidiary</td><td>Jurisdiction</td></tr><tr><td>The Retail Property Trust</td><td>Massachusetts</td></tr><tr><td>Simon Property Group (Illinois), L.P.</td><td>Illinois</td></tr><tr><td>Simon Property Group (Texas), L.P.</td><td>Texas</td></tr><tr><td>M.S. Management Associates, Inc.</td><td>Delaware</td></tr><tr><td>Simon Property Group Administrative Services Partnership, L.P.</td><td>Delaware</td></tr><tr><td>Kravco Simon Investments, L.P.</td><td>Pennsylvania</td></tr><tr><td>Premium Outlet Partners, L.P.</td><td>Delaware</td></tr><tr><td>SPG Mayflower, LLC.</td><td>Delaware</td></tr><tr><td>Simon KP I S.a.r.l.</td><td>Luxembourg</td></tr><tr><td>Simon KP II S.a.r.l.</td><td>Luxembourg</td></tr></table>

Omits names of subsidiaries that as of December 31, 2017 were not, in the aggregate, “significant subsidiaries.”



## Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-3 No. 333-202562) of Simon Property Group, Inc.;

(2) Registration Statement (Form S-4 No. 333-118247) of Simon Property Group, Inc.;

(3) Registration Statements (Form S-8 Nos. 333-64313, 333-101185 and 333-183213) pertaining to the Simon Property Group 1998 Stock Incentive Plan;

(4) Registration Statement (Form S-8 No. 333-82471) pertaining to the Simon Property Group and Adopting Entities Matching Savings Plan; and

(5) Registration Statement (Form S-8 No. 333-63919) pertaining to the Corporate Property Investors, Inc. and Corporate Realty Consultants, Inc. Employee Share Purchase Plan;

of our reports dated February 23, 2018, with respect to the consolidated financial statements and schedule of Simon Property Group, Inc. and the effectiveness of internal control over financial reporting of Simon Property Group, Inc., included in this Annual Report (Form 10-K) of Simon Property Group, Inc. for the year ended December 31, 2017.

/s/ ERNST & YOUNG LLP



## Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-202562-01) of Simon Property Group, L.P. and in the related Prospectus of our reports dated February 23, 2018, with respect to the consolidated financial statements and schedule of Simon Property Group, L.P. and the effectiveness of internal control over financial reporting of Simon Property Group, L.P., included in this Annual Report (Form 10-K) of Simon Property Group L.P. for the year ended December 31, 2017.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana

February 23, 2018



# 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

I, David Simon, certify that:

1. I have reviewed this Annual Report on Form 10-K of Simon Property Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 23, 2018



## 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

I, Andrew Juster, certify that:

1. I have reviewed this Annual Report on Form 10-K of Simon Property Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 23, 2018



# CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David Simon, certify that:

1. I have reviewed this annual report on Form 10-K of Simon Property Group, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 23, 2018



# CERTIFICATION PURSUANT TO
RULE 13a-14(a)/15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew Juster, certify that:

1. I have reviewed this annual report on Form 10-K of Simon Property Group, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 23, 2018



# CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Simon Property Group, Inc. on Form 10-K for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Simon Property Group, Inc.

/s/ DAVID SIMON
David Simon
Chairman of the Board of Directors and
Chief Executive Officer
February 23, 2018
/s/ ANDREW JUSTER

Andrew Juster
Executive Vice President and
Chief Financial Officer
February 23, 2018



# CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Simon Property Group, L.P. (the "Company") on Form 10-K for the period ended December 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DAVID SIMON
David Simon
Chairman of the Board of Directors and
Chief Executive Officer of Simon Property Group, Inc.,
General Partner
Date: February 23, 2018

/s/ ANDREW JUSTER
Andrew Juster
Executive Vice President and
Chief Financial Officer of Simon Property Group, Inc.,
General Partner
Date: February 23, 2018



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## INVESTOR INFORMATION

## CORPORATE HEADQUARTERS

Simon Property Group, Inc.
225 West Washington Street
Indianapolis, IN 46204
317-636-1600

## TRANSFER AGENT AND REGISTRAR

Computershare, our transfer agent, maintains the records for our registered stockholders and can assist you with a variety of stockholder services including address changes, certificate replacement/transfer and dividends.

Stockholder correspondence should be mailed to:
P.O. Box 505000
Louisville, KY 40233-5000

Overnight correspondence should be mailed to:
Computershare
462 South 4th Street
Suite 1600
Louisville, KY, 40202

800-454-9768 or
781-575-2723 (Outside the U.S.)
800-952-9245 (TDD for Hearing Impaired)
www.computershare.com/investor

## DIRECT STOCK PURCHASE/DIVIDEND REINVESTMENT PROGRAM

Computershare administers a direct stock purchase and dividend reinvestment plan that allows interested investors to purchase Simon Property Group stock directly, rather than through a broker, and become a registered stockholder. The program offers many features including dividend reinvestment. For detailed information, contact Computershare at 800-454-9768 or www.computershare.com/investor.

## WEBSITE

Information such as financial results, corporate announcements, dividend news and corporate governance is available on Simon's website: investors.simon.com

## STOCKHOLDER INQUIRIES

800-461-3439
IRcontact@simon.com

## INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

Ernst & Young LLP
Indianapolis, IN

## ANNUAL REPORT ON FORM 10-K

A copy of the Simon Property Group, Inc. Annual Report on Form 10-K filed with the United States Securities and Exchange Commission can be obtained free of charge by:

Contacting the Investor Relations Department at 800-461-3439 or IRcontact@simon.com; or

Accessing the Financial Information page of the website at investors.simon.com

## ANNUAL MEETING

The Annual Meeting of Stockholders of Simon Property Group, Inc. will be held on Wednesday, May 8, 2018 at 225 W. Washington St., Indianapolis, IN, at 8:30 a.m., local time.

## COMPANY SECURITIES

Simon Property Group, Inc. common stock and one issue of preferred stock are traded on the New York Stock Exchange (“NYSE”) under the following symbols:

Common Stock
8.375% Series J Cumulative Preferred
SPG
SPGPrJ

The quarterly price range on the NYSE for the common stock and the dividends declared per share for each quarter in the last two fiscal years are shown below.

<table><tr><td>2016</td><td>HIGH</td><td>LOW</td><td>CLOSE</td><td>DECLARED DIVIDENDS</td></tr><tr><td>First Quarter</td><td>$208.12</td><td>$176.11</td><td>$207.69</td><td>$1.60</td></tr><tr><td>Second Quarter</td><td>217.17</td><td>190.82</td><td>216.90</td><td>1.60</td></tr><tr><td>Third Quarter</td><td>229.10</td><td>206.02</td><td>207.01</td><td>1.65</td></tr><tr><td>Fourth Quarter</td><td>206.29</td><td>173.11</td><td>177.67</td><td>1.65</td></tr></table>

<table><tr><td>2017</td><td>HIGH</td><td>LOW</td><td>CLOSE</td><td>DECLARED DIVIDENDS</td></tr><tr><td>First Quarter</td><td>$188.10</td><td>$163.55</td><td>$172.03</td><td>$1.75</td></tr><tr><td>Second Quarter</td><td>176.17</td><td>150.15</td><td>161.76</td><td>1.75</td></tr><tr><td>Third Quarter</td><td>167.12</td><td>152.51</td><td>161.01</td><td>1.80</td></tr><tr><td>Fourth Quarter</td><td>172.35</td><td>153.71</td><td>171.74</td><td>1.85</td></tr></table>

© 2018 Simon Property Group, Inc.

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