Desert Hills Premium Outlets, Cabazon, CA
• Our diversified tenant mix is always changing and adapting, best illustrated by the fact that, compared to 30 years ago, only one retailer at that time is still a current top 10 tenant. Evolving retailers is the only constant and is not feared, but part of our everyday business as it allows us to meet the ever-changing demands of the consumer. Growth can lead to over-expansion that risks the financial soundness of a company and, let’s face it, we have seen this with other real estate companies in our sector time and again. This has not happened at SPG as our top management team and strong balance sheet (always a priority) enabled us to grow, but also manage through exogenous events, such as the Great Financial Crisis and Covid, as well as seismic changes in our industry including the growth of digital commerce. Consistent outperformance in cash flow growth, value creation and returns to shareholders, have been, and we expect will continue to be, hallmarks of Simon. We are committed to our
leasing activities, efficient property management, rigorous capital allocation criteria, and a disciplined capital structure. This commitment enables us to produce impressive financial results and maintain flexibility so we can be opportunistic. It is with great appreciation and admiration for the entire organization that I would like to highlight some of our achievements over the last three decades (1993 – 2023): • Consolidated revenue increased from $424 million to nearly $5.7 billion (9% CAGR). • Funds from Operations (“FFO”), an important industry measure, increased 30-times, from approximately $150 million to nearly $4.7 billion (12% CAGR). • Our beneficial interest of combined Net Operating Income (“NOI”) has increased from approximately $300 million to more than $6.2 billion (11% CAGR). • Total market capitalization has increased from approximately $3 billion to $90 billion . • Our balance sheet became investment grade rated in 1995 and has received an A rating since 2006.
• We have paid over $42 billion in dividends to shareholders. • Ownership of SPG common stock provided a total return to shareholders of 3,100% . During the last 30 years, many pundits have tried to kill off retail real estate (especially enclosed malls) and yet, even with the drumbeat of these constant naysayers, this has only made us more focused, determined to prove them wrong. The combination of our historical successes and our vision of where we want to take SPG in the future reinforces our optimism. We have shopping centers in our portfolio that have been in business for more than 60 years. These centers are still growing today, with many generating $100 million or more in annual NOI, as they are in great locations, have a large and loyal customer base, and have a diverse set of tenants. No other real estate type has the longevity, including the NOI generation and embedded future growth, that these centers have. Yes, they change, evolve, adapt, but they grow! Our portfolio cannot be replaced and is undervalued.
2023 ANNUAL REPORT
III
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