WHERE BRANDS & COMMUNITIES COME TOGETHER 2b SM SM SM SM 2013 ANNUAL REPORT PAGE ii PAGE v PAGE viii FROM THE FINANCIAL INVESTMENT CHAIRMAN & CEO HIGHLIGHTS HIGHLIGHTS PAGE xi PAGE xii PAGE 1 SUSTAINABILITY BOARD OF 10-K HIGHLIGHTS DIRECTORS AND MANAGEMENT PAGE 46 Management’s Discussion & Analysis PAGE 66 Financial Statements Simon Property Group, Inc. (NYSE: SPG) is an S&P100 company and a leader in the global retail real estate industry. SCALE LARGEST GLOBAL OWNER OF RETAIL REAL ESTATE QUALITY ICONIC, IRREPLACEABLE PROPERTIES IN GREAT LOCATIONS INVESTMENT ACTIVE PORTFOLIO MANAGEMENT INCREASES PRODUCTIVITY AND RETURNS GROWTH CORE BUSINESS AND STRATEGIC ACQUISITIONS DRIVE PERFORMANCE EXPERIENCE DECADES OF EXPERTISE IN DEVELOPMENT, OWNERSHIP, MANAGEMENT ii iii FROM THE CHAIRMAN & CEO Dear Fellow Stockholders, First and foremost, if I may, let me start by thanking my colleagues for delivering a record-breaking year to you, our stockholders. From our maintenance and management staff to our leasing and development personnel at headquarters and all in between, everyone did their part in delivering these impressive results. The quality of the people at Simon Property Group (“SPG”) and, of course, our properties combined to generate record-setting results. Our funds from operations (“FFO”) increased from a strong 2012 by 10.9% to $8.85 per share. Since the great recession, the growth per share of FFO has totaled 76%. We increased our dividend for 2013 by 13.4% to a total of $4.65 per common share, an increase of 79% since the great recession, and with the recent increase in the first quarter of 2014 to $1.25 per share we are now on track to pay $5.00 per share this year. Our FFO per share of $8.85 is also a record for the REIT industry. Once again, I am so proud of how the company has delivered financial and operational results coming out of the great recession, as well as over our 20-year history as a public company which we quietly celebrated at the the end of last year. Now if I can, let’s briefly look back over the last 20 years. Our to durable goods that was cyclical in nature, an increase in company has achieved growth and scale that few could have income taxes, and general economic and political uncertainty. imagined possible: our FFO has grown from $150 million in However temporary this slowdown in the fourth quarter and 1993 to $3.2 billion in 2013, total consolidated revenues have the early part of 2014 is, we will react as if it is not and will increased more than twelve times from $424 million to continue to improve our customer experience while driving $5.2 billion, and the market value of our portfolio increased traffic to our shopping centers. from $3 billion to $85 billion. In addition to adding quality real estate to our portfolio, we’ve added new markets and new Before we turn to 2013 highlights, let’s focus on our stock product types, while always sticking with what we know best: performance for 2013. Clearly we were disappointed the retail real estate. Across 20 years of history, our commitment stock was relatively flat given the S&P 500 had such a strong to business growth that generates shareholder value has year. This is a rarity for us. In fact, we have outperformed the remained our top priority. From our IPO in December of S&P 500 12 times in the last 14 years. Also, given the strength 1993 through year-end 2013, ownership of common stock of our earnings it is not something we would have anticipated. of Simon Property Group (SPG) provided a total return to However, it happens and we won’t waiver from our strategy stockholders of 1,915%. If I may quote Adam Sandler as that has produced industry-leading results year after year. Mr. Longfellow Deeds, “that’s not too shabby.” We can attribute last year’s stock price performance (or lack thereof) to sector rotation and investor concern over the Our core strengths of capital allocation, balance sheet impact of potentially rising interest rates that overlooked our management, and operating expertise continue to fuel strong fundamentals. Fortunately, your stock has increased our growth, making it possible to deliver our impressive this year to date. financial results. We continually set the bar higher as property owners and as stewards of capital. This is not Now let’s turn to 2013 highlights. new for us, and we will always be looking for additional opportunities to deliver results. 2013 FINANCIAL AND OPERATIONAL HIGHLIGHTS We reached new heights in 2013 for consolidated We measure our success through growth of our operating revenue and FFO: income, and I am pleased to report that we continued this positive trend for our twentieth year. Our share of net • Consolidated revenue increased 5.9% to $5.170 billion. operating income (NOI) in 2013 increased 10% to more than • Net income was $1.316 billion. $4.8 billion. By comparison, our share of NOI in 1993 was • FFO increased to $3.206 billion, or $8.85 per diluted share, $296 million. It would be easy to rest on our laurels and take a year over year increase of 10.9%. a breath and not find new and exciting ways to improve our product and ultimately our cash flow, but our culture Our U.S. Malls and Premium Outlets once again delivered won’t allow that nor will our people. So that was the last strong financial and operational results: 20 years, and now we are focusing on the future. • Comparable property NOI growth was 5.2%. Active management, smart acquisitions, and continued • Total sales on a rolling 12 month basis increased by investment in our properties will continue. And let me 2.5% to $582 per square foot. reiterate what I said in my 2008 shareholder letter paraphrasing • Occupancy improved by 80 basis points to 96.1%. Mark Twain, “The death of the mall is greatly exaggerated.” The proof as they say is in the pudding. I respectfully ask you • The releasing spread for the rolling 12 months was to review our results and hopefully you will come to the same $8.94 per square foot — rent for spaces leased in 2013 was conclusion. As I look back on 2013, there was little debate 16.8% higher than prior rent paid for the same spaces. on this for the first six months of the year as our retailers continued to post sales increases. However, as the year went 20-YEAR GROWTH IN KEY PERFORMANCE METRICS on and the weaker than expected holiday shopping season 1993 2013 transpired, it became the topic du jour. Of course, I was Consolidated Revenue $424 million $5.2 billion disappointed in overall retail sales, but I don’t attribute it to a paradigm shift away from quality retail real estate. Instead, Our Share of NOI $296 million $4.8 billion I believe we had a perfect storm (literally and figuratively) FFO $150 million $3.2 billion that led to anemic sales for our retailers (not SPG), including Sales Per Square Foot $279 $582 a short holiday selling season compared to 2012, a shift Occupancy 85.6% 96.1% 2013 ANNUAL REPORT iv v 2013 NEW INVESTMENTS The market has responded positively to Klépierre’s new We have a strong investment track record of making smart, strategic direction, as well as its execution since we made our accretive, value-enhancing acquisitions to diversify and investment. We bought our Klépierre stake at €28.00 per share increase the quality of our portfolio, which takes advantage and the stock closed at €33.68 on December 31. Including of our scale, and allows us to enter new markets. In 2013 we dividends and currency impact, we have realized a 37% return invested approximately $1.05 billion in strategic acquisitions on our investment in the first 21 months of ownership. and joint ventures, enhancing our domestic footprint and extending our international asset base on an accretive basis. 2013 OPENINGS McArthurGlen New Development In June 2013, we announced a joint venture with the In 2013, we opened a record number of five new Premium McArthurGlen Group, the leader in upscale European Outlets in North America and Asia, a positive reflection of designer outlets, for an investment of approximately the growth opportunity, capacity and reach of the Premium $500 million. We are excited about this partnership and its Outlets platform. contribution to the global footprint of our Premium Outlet In Japan, Shisui Premium Outlets opened to visitors in April. portfolio. Europe, now combined with North America and The first phase of this project, located near Tokyo’s Narita Asia, gives us an unparalleled global platform for our retailers International Airport, has 120 stores in 235,000 square feet and and consumers in the outlet sector. We are also pleased features a mix of international and Japanese brands, as well as to expand our interests within the European market, which restaurants with an expansion of 131,000 square feet about to we believe has positive long-term growth prospects for commence. Our third center in Korea, Busan Premium Outlets, high-quality retail real estate and where we have entered opened in August. The property features 180 stores and at a cyclical trough. With all elements of the joint venture 360,000 square feet of retail space and is located just north of transaction closed in October, we now have an ownership Busan, the country’s second largest city, on the Korean Peninsula. interest in six assets, including five existing designer outlet properties located in Austria, Italy, the Netherlands, and the In North America, Phoenix Premium Outlets, located in United Kingdom, as well as one property under construction Chandler, Arizona adjacent to the Wild Horse Pass Hotel in Vancouver, Canada expected to open in spring 2015.