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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

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 StreetIndianapolis, Indiana 46204 (Address of principal executive offices)
(317) 636-1600 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


	Title of each class	Trading Symbols	Name of each exchange on which registered
Simon Property Group, Inc.	Common stock, $0.0001 par value	SPG	New York Stock Exchange
Simon Property Group, Inc.	83/8% Series J Cumulative Redeemable Preferred Stock, $0.0001 par value	SPGJ	New York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files).


Simon Property Group, Inc. Yes ⌧ No ◻	Simon Property Group, L.P. Yes ⌧ No ◻

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:

Simon Property Group, Inc.:
Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻	Smaller reporting company ◻
			Emerging growth company ◻

Simon Property Group, L.P.:
Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ⌧	Smaller 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 Registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

	Simon Property Group, Inc. Yes ◻ No ⌧		Simon Property Group, L.P. Yes ◻ No ⌧

As of September 30, 2021, Simon Property Group, Inc. had 328,611,163 shares of common stock, par value $0.0001 per share, and 8,000 shares of Class B common stock, par value $0.0001 per share, outstanding. Simon Property Group, L.P. has no common stock outstanding.

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarterly period ended September 30, 2021 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 September 30, 2021, Simon owned an approximate 87.4% ownership interest in the Operating Partnership, with the remaining 12.6% 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 quarterly reports on Form 10-Q 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 condensed 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 2. Unregistered Sales of Equity Securities and Use of Proceeds sections related to each entity.

This report also includes separate Part I, Item 4. 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.

Form 10-Q

INDEX

			Page
Part I — Financial Information

	Item 1.	Consolidated Financial Statements of Simon Property Group, Inc. (Unaudited)
		Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	5
		Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2021 and 2020	6
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	7
		Consolidated Statements of Equity at September 30, 2021 and 2020	8

		Consolidated Financial Statements of Simon Property Group, L.P. (Unaudited)
		Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	10
		Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2021 and 2020	11
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020	12
		Consolidated Statements of Equity at September 30, 2021 and 2020	13

		Condensed Notes to Consolidated Financial Statements	15
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
	Item 3.	Qualitative and Quantitative Disclosures About Market Risk	53
	Item 4.	Controls and Procedures	53

Part II — Other Information

	Item 1.	Legal Proceedings	54
	Item 1A.	Risk Factors	54
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
	Item 3.	Defaults Upon Senior Securities	54
	Item 4.	Mine Safety Disclosures	54
	Item 5.	Other Information	54
	Item 6.	Exhibits	55

Signatures			56

Simon Property Group, Inc.

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except share amounts)


	September 30,		December 31,
	2021		2020
ASSETS:
Investment properties, at cost	$	37,984,645	$	38,050,196
Less - accumulated depreciation		15,410,030		14,891,937
		22,574,615		23,158,259
Cash and cash equivalents		438,423		1,011,613
Tenant receivables and accrued revenue, net		935,053		1,236,734
Investment in TRG, at equity		3,396,169		3,451,897
Investment in Klépierre, at equity		1,672,858		1,729,690
Investment in other unconsolidated entities, at equity		2,972,049		2,603,571
Right-of-use assets, net		506,236		512,914
Investments held in trust - special purpose acquisition company		345,000		—
Deferred costs and other assets		1,105,736		1,082,168
Total assets	$	33,946,139	$	34,786,846
LIABILITIES:
Mortgages and unsecured indebtedness	$	25,584,372	$	26,723,361
Accounts payable, accrued expenses, intangibles, and deferred revenues		1,324,603		1,311,925
Cash distributions and losses in unconsolidated entities, at equity		1,573,563		1,577,393
Dividend payable		1,452		486,922
Lease liabilities		509,071		515,492
Other liabilities		525,361		513,515
Total liabilities		29,518,422		31,128,608
Commitments and contingencies
Limited partners’ preferred interest in the Operating Partnership and noncontrolling redeemable interests		553,025		185,892
EQUITY:
Stockholders’ Equity
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):
Series J 83/8% cumulative redeemable preferred stock, 1,000,000 shares authorized, 796,948 issued and outstanding with a liquidation value of $39,847		41,845		42,091
Common stock, $0.0001 par value, 511,990,000 shares authorized, 342,907,608 and 342,849,037 issued and outstanding, respectively		34		34
Class B common stock, $0.0001 par value, 10,000 shares authorized, 8,000 issued and outstanding		—		—
Capital in excess of par value		11,201,333		11,179,688
Accumulated deficit		(5,789,329)		(6,102,314)
Accumulated other comprehensive loss		(191,274)		(188,675)
Common stock held in treasury, at cost, 14,296,445 and 14,355,621 shares, respectively		(1,884,511)		(1,891,352)
Total stockholders’ equity		3,378,098		3,039,472
Noncontrolling interests		496,594		432,874
Total equity		3,874,692		3,472,346
Total liabilities and equity	$	33,946,139	$	34,786,846

The accompanying notes are an integral part of these statements.

Simon Property Group, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income

(Dollars in thousands, except per share amounts)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
REVENUE:
Lease income	$	1,207,923	$	993,831	$	3,511,806	$	3,269,572
Management fees and other revenues		27,024		21,345		78,381		71,545
Other income		61,607		45,498		200,465		134,957
Total revenue		1,296,554		1,060,674		3,790,652		3,476,074
EXPENSES:
Property operating		108,556		91,236		291,248		267,479
Depreciation and amortization		311,381		333,755		942,851		986,157
Real estate taxes		117,094		112,311		347,800		347,075
Repairs and maintenance		21,735		18,971		62,126		57,482
Advertising and promotion		38,635		14,751		87,685		60,967
Home and regional office costs		48,667		39,960		132,365		130,420
General and administrative		6,909		3,016		20,739		17,206
Other		31,253		42,650		84,180		99,527
Total operating expenses		684,230		656,650		1,968,994		1,966,313
OPERATING INCOME BEFORE OTHER ITEMS		612,324		404,024		1,821,658		1,509,761
Interest expense		(199,772)		(201,858)		(602,207)		(586,545)
Loss on extinguishment of debt		(28,593)		—		(31,552)		—
Gain on exchange of equity interests (Note 6)		159,828		—		159,828		—
Income and other tax (expense) benefit		(67,262)		(2,779)		(108,367)		3,065
Income from unconsolidated entities		198,524		61,823		562,138		156,610
Unrealized losses in fair value of equity instruments		(4,944)		(1,279)		(8,121)		(20,125)
Gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net		108,543		(91,285)		201,600		(98,168)
CONSOLIDATED NET INCOME		778,648		168,646		1,994,977		964,598
Net income attributable to noncontrolling interests		97,878		21,886		249,421		124,351
Preferred dividends		834		834		2,503		2,503
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	679,936	$	145,926	$	1,743,053	$	837,744
BASIC AND DILUTED EARNINGS PER COMMON SHARE:
Net income attributable to common stockholders	$	2.07	$	0.48	$	5.30	$	2.74

Consolidated Net Income	$	778,648	$	168,646	$	1,994,977	$	964,598
Unrealized gain (loss) on derivative hedge agreements		8,280		(49,175)		45,366		(51,034)
Net gain reclassified from accumulated other comprehensive loss into earnings		(404)		(477)		(7,022)		(1,435)
Currency translation adjustments		(11,199)		20,525		(40,968)		(18,983)
Changes in available-for-sale securities and other		(71)		(27)		(304)		245
Comprehensive income		775,254		139,492		1,992,049		893,391
Comprehensive income attributable to noncontrolling interests		97,451		18,074		249,091		115,008
Comprehensive income attributable to common stockholders	$	677,803	$	121,418	$	1,742,958	$	778,383

The accompanying notes are an integral part of these statements.

Simon Property Group, Inc.

Unaudited Consolidated Statements of Cash Flows

(Dollars in thousands)


	For the Nine Months Ended
	September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated Net Income	$	1,994,977	$	964,598
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization		985,116		1,017,517
Loss on debt extinguishment		31,552		—
(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net		(201,600)		98,168
Gain on exchange of equity interests		(159,828)		—
Unrealized losses in fair value of equity instruments		8,121		20,125
Straight-line lease loss		19,014		6,539
Equity in income of unconsolidated entities		(562,138)		(156,610)
Distributions of income from unconsolidated entities		319,041		152,712
Changes in assets and liabilities
Tenant receivables and accrued revenue, net		260,470		(625,107)
Deferred costs and other assets		(51,079)		(87,027)
Accounts payable, accrued expenses, intangibles, deferred revenues and other liabilities		108,825		40,706
Net cash provided by operating activities		2,752,471		1,431,621
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions		(157,080)		(107,797)
Funding of loans to related parties		(15,419)		(6,393)
Repayments of loans to related parties		8,381		—
Capital expenditures, net		(419,477)		(396,004)
Cash impact from the consolidation of properties		5,595		—
Investments in unconsolidated entities		(48,156)		(172,598)
Purchase of equity instruments		(16,769)		(30,427)
Proceeds from sales of equity instruments		—		30,000
Insurance proceeds for property restoration		7,030		8,746
Distributions of capital from unconsolidated entities and other		137,031		214,389
Net cash used in investing activities		(498,864)		(460,084)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock and other, net of transaction costs		(246)		(247)
Purchase of shares related to stock grant recipients' tax withholdings		(2,318)		(854)
Redemption of limited partner units		(57)		(16,087)
Purchase of treasury stock		—		(152,589)
Proceeds from the special purpose acquisition company IPO, net of transaction costs		338,121		—
Establishment of trust account for special purpose acquisition company		(345,000)		—
Distributions to noncontrolling interest holders in properties		(1,640)		(5,766)
Contributions from noncontrolling interest holders in properties		16,736		28
Preferred distributions of the Operating Partnership		(1,436)		(1,436)
Distributions to stockholders and preferred dividends		(1,809,156)		(1,044,591)
Distributions to limited partners		(258,995)		(158,650)
Cash paid to extinguish debt		(30,009)		—
Proceeds from issuance of debt, net of transaction costs		7,353,120		11,363,272
Repayments of debt		(8,085,917)		(10,541,677)
Net cash used in financing activities		(2,826,797)		(558,597)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(573,190)		412,940
CASH AND CASH EQUIVALENTS, beginning of period		1,011,613		669,373
CASH AND CASH EQUIVALENTS, end of period	$	438,423	$	1,082,313

The accompanying notes are an integral part of these statements.

Simon Property Group, Inc.

Unaudited Consolidated Statements of Equity

(Dollars in thousands)


					Accumulated						Common
					Other		Capital in				Stock
	Preferred		Common		Comprehensive		Excess of		Accumulated		Held in		Noncontrolling		Total
	Stock		Stock		Income (Loss)		Par Value		Deficit		Treasury		interests		Equity
December 31, 2020	$	42,091	$	34	$	(188,675)	$	11,179,688	$	(6,102,314)	$	(1,891,352)	$	432,874	$	3,472,346
Series J preferred stock premium amortization		(82)														(82)
Stock incentive program (37,976 common shares)								(7,214)				7,214				—
Redemption of limited partner units (316 units)								(34)						(3)		(37)
Amortization of stock incentive								4,231								4,231
Long-term incentive performance units														5,014		5,014
Issuance of unit equivalents and other								(4,313)		(2,681)				15,822		8,828
Unrealized gain on hedging activities						31,333								4,514		35,847
Currency translation adjustments						(20,878)								(3,005)		(23,883)
Changes in available-for-sale securities and other						(276)								(40)		(316)
Net gain reclassified from accumulated other comprehensive loss into earnings						(5,370)								(773)		(6,143)
Other comprehensive income						4,809								696		5,505
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								4,849						(4,849)		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(428,712)				(61,558)		(490,270)
Distributions to other noncontrolling interest partners														(577)		(577)
Net income, excluding $479 attributable to preferred interests in the Operating Partnership and an $897 loss attributable to noncontrolling redeemable interests in properties										446,694				64,184		510,878
March 31, 2021	$	42,009	$	34	$	(183,866)	$	11,177,207	$	(6,087,013)	$	(1,884,138)	$	451,603	$	3,515,836
Exchange of limited partner units (58,571 common shares, note 8)								539						(539)		—
Series J preferred stock premium amortization		(82)														(82)
Stock incentive program (41,574 common shares, net)								(1,945)				1,945				—
Redemption of limited partner units (170 units)								(19)						(1)		(20)
Amortization of stock incentive								5,204								5,204
Long-term incentive performance units														5,333		5,333
Issuance of unit equivalents and other (20,374 common shares repurchased)								9,336		(1,212)		(2,318)		1,135		6,941
Unrealized gain on hedging activities						1,079								160		1,239
Currency translation adjustments						(5,176)								(710)		(5,886)
Changes in available-for-sale securities and other						72								10		82
Net gain reclassified from accumulated other comprehensive loss into earnings						(416)								(59)		(475)
Other comprehensive income						(4,441)								(599)		(5,040)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								3,452						(3,452)		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(460,986)				(66,105)		(527,091)
Distributions to other noncontrolling interest partners														(54)		(54)
Net income, excluding $478 attributable to preferred interests in the Operating Partnership and a $1,021 loss attributable to noncontrolling redeemable interests in properties										618,092				88,320		706,412
June 30, 2021	$	41,927	$	34	$	(188,307)	$	11,193,774	$	(5,931,119)	$	(1,884,511)	$	475,641	$	3,707,439
Series J preferred stock premium amortization		(82)														(82)
Amortization of stock incentive								4,718								4,718
Long-term incentive performance units														(2,475)		(2,475)
Issuance of unit equivalents and other										(44,669)				(381)		(45,050)
Unrealized gain on hedging activities						7,239								1,040		8,279
Currency translation adjustments						(9,790)								(1,409)		(11,199)
Changes in available-for-sale securities and other						(62)								(9)		(71)
Net gain reclassified from accumulated other comprehensive loss into earnings						(354)								(50)		(404)
Other comprehensive income						(2,967)								(428)		(3,395)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								2,841						(2,841)		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(494,311)				(71,009)		(565,320)
Distributions to other noncontrolling interest partners														(54)		(54)
Net income, excluding $479 attributable to preferred interests in the Operating Partnership and a $742 loss attributable to noncontrolling redeemable interests in properties										680,770				98,141		778,911
September 30, 2021	$	41,845	$	34	$	(191,274)	$	11,201,333	$	(5,789,329)	$	(1,884,511)	$	496,594	$	3,874,692

The accompanying notes are an integral part of these statements.

Simon Property Group, Inc.

Unaudited Consolidated Statements of Equity

(Dollars in thousands)


					Accumulated						Common
					Other		Capital in				Stock
	Preferred		Common		Comprehensive		Excess of		Accumulated		Held in		Noncontrolling		Total
	Stock		Stock		Income (Loss)		Par Value		Deficit		Treasury		interests		Equity
December 31, 2019	$	42,420	$	32	$	(118,604)	$	9,756,073	$	(5,379,952)	$	(1,773,571)	$	384,852	$	2,911,250
Exchange of limited partner units (132,946 common shares, note 8)								1,076						(1,076)		—
Series J preferred stock premium amortization		(82)														(82)
Stock incentive program (1,081 common shares forfeited)								—								—
Redemption of limited partner units (116,072 units)								(15,127)						(940)		(16,067)
Amortization of stock incentive								1,891								1,891
Treasury stock purchase (1,245,654 shares)												(152,589)				(152,589)
Long-term incentive performance units														4,987		4,987
Issuance of unit equivalents and other								29		3,287				26		3,342
Unrealized gain on hedging activities						19,510								2,963		22,473
Currency translation adjustments						(20,505)								(3,099)		(23,604)
Changes in available-for-sale securities and other						715								109		824
Net gain reclassified from accumulated other comprehensive loss into earnings						(417)								(63)		(480)
Other comprehensive income						(697)								(90)		(787)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								24,233						(24,233)		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(645,259)				(98,099)		(743,358)
Distributions to other noncontrolling interest partners														(3,167)		(3,167)
Net income, excluding $479 attributable to preferred interests in the Operating Partnership and a $608 loss attributable to noncontrolling redeemable interests in properties										438,439				67,094		505,533
March 31, 2020	$	42,338	$	32	$	(119,301)	$	9,768,175	$	(5,583,485)	$	(1,926,160)	$	329,354	$	2,510,953
Series J preferred stock premium amortization		(82)														(82)
Stock incentive program (155,610 common shares, net)								(9,317)				9,317				—
Amortization of stock incentive								4,969								4,969
Long-term incentive performance units														3,229		3,229
Issuance of unit equivalents and other (15,561 common shares repurchased)								1		23,753		(855)		(2)		22,897
Unrealized loss on hedging activities						(21,116)								(3,216)		(24,332)
Currency translation adjustments						(13,815)								(2,088)		(15,903)
Changes in available-for-sale securities and other						(479)								(73)		(552)
Net gain reclassified from accumulated other comprehensive loss into earnings						(415)								(63)		(478)
Other comprehensive income						(35,825)								(5,440)		(41,265)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								(769)						769		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(398,499)				(60,510)		(459,009)
Distributions to other noncontrolling interest partners														(244)		(244)
Net income, excluding $478 attributable to preferred interests in the Operating Partnership and a $3,921 loss attributable to noncontrolling redeemable interests in properties										255,048				38,943		293,991
June 30, 2020	$	42,256	$	32	$	(155,126)	$	9,763,059	$	(5,703,183)	$	(1,917,698)	$	306,099	$	2,335,439
Exchange of limited partner units (61,968 common shares, note 8)								403						(403)		—
Series J preferred stock premium amortization		(83)														(83)
Stock incentive program (3,825 common shares forfeited)								—								—
Redemption of limited partner units (586 units)								(36)						16		(20)
Amortization of stock incentive								2,594								2,594
Long-term incentive performance units														(4,004)		(4,004)
Issuance of unit equivalents and other								1		1,830				5		1,836
Unrealized loss on hedging activities						(42,683)								(6,492)		(49,175)
Currency translation adjustments						17,778								2,746		20,524
Changes in available-for-sale securities and other						(23)								(4)		(27)
Net gain reclassified from accumulated other comprehensive loss into earnings						(414)								(63)		(477)
Other comprehensive income						(25,342)								(3,813)		(29,155)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership								(4,043)						4,043		—
Distributions to common stockholders and limited partners, excluding Operating Partnership preferred interests										(398,573)				(60,447)		(459,020)
Distributions to other noncontrolling interest partners														(43)		(43)
Net income, excluding $479 attributable to preferred interests in the Operating Partnership and a $505 loss attributable to noncontrolling redeemable interests in properties										146,760				21,912		168,672
September 30, 2020	$	42,173	$	32	$	(180,468)	$	9,761,978	$	(5,953,166)	$	(1,917,698)	$	263,365	$	2,016,216

The accompanying notes are an integral part of these statements.

Simon Property Group, L.P.

Unaudited Consolidated Balance Sheets

(Dollars in thousands, except unit amounts)


	September 30,		December 31,
	2021		2020
ASSETS:
Investment properties, at cost	$	37,984,645	$	38,050,196
Less — accumulated depreciation		15,410,030		14,891,937
		22,574,615		23,158,259
Cash and cash equivalents		438,423		1,011,613
Tenant receivables and accrued revenue, net		935,053		1,236,734
Investment in TRG, at equity		3,396,169		3,451,897
Investment in Klépierre, at equity		1,672,858		1,729,690
Investment in other unconsolidated entities, at equity		2,972,049		2,603,571
Right-of-use assets, net		506,236		512,914
Investments held in trust - special purpose acquisition company		345,000		—
Deferred costs and other assets		1,105,736		1,082,168
Total assets	$	33,946,139	$	34,786,846
LIABILITIES:
Mortgages and unsecured indebtedness	$	25,584,372	$	26,723,361
Accounts payable, accrued expenses, intangibles, and deferred revenues		1,324,603		1,311,925
Cash distributions and losses in unconsolidated entities, at equity		1,573,563		1,577,393
Distribution payable		1,452		486,922
Lease liabilities		509,071		515,492
Other liabilities		525,361		513,515
Total liabilities		29,518,422		31,128,608
Commitments and contingencies
Preferred units, various series, at liquidation value, and noncontrolling redeemable interests		553,025		185,892
EQUITY:
Partners’ Equity
Preferred units, 796,948 units outstanding. Liquidation value of $39,847		41,845		42,091
General Partner, 328,619,163 and 328,501,416 units outstanding, respectively		3,336,253		2,997,381
Limited Partners, 47,263,155 and 47,322,212 units outstanding, respectively		479,827		431,784
Total partners’ equity		3,857,925		3,471,256
Nonredeemable noncontrolling interests in properties, net		16,767		1,090
Total equity		3,874,692		3,472,346
Total liabilities and equity	$	33,946,139	$	34,786,846

The accompanying notes are an integral part of these statements.

Simon Property Group, L.P.

Unaudited Consolidated Statements of Operations and Comprehensive Income

(Dollars in thousands, except per unit amounts)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
REVENUE:
Lease income	$	1,207,923	$	993,831	$	3,511,806	$	3,269,572
Management fees and other revenues		27,024		21,345		78,381		71,545
Other income		61,607		45,498		200,465		134,957
Total revenue		1,296,554		1,060,674		3,790,652		3,476,074
EXPENSES:
Property operating		108,556		91,236		291,248		267,479
Depreciation and amortization		311,381		333,755		942,851		986,157
Real estate taxes		117,094		112,311		347,800		347,075
Repairs and maintenance		21,735		18,971		62,126		57,482
Advertising and promotion		38,635		14,751		87,685		60,967
Home and regional office costs		48,667		39,960		132,365		130,420
General and administrative		6,909		3,016		20,739		17,206
Other		31,253		42,650		84,180		99,527
Total operating expenses		684,230		656,650		1,968,994		1,966,313
OPERATING INCOME BEFORE OTHER ITEMS		612,324		404,024		1,821,658		1,509,761
Interest expense		(199,772)		(201,858)		(602,207)		(586,545)
Loss on extinguishment of debt		(28,593)		—		(31,552)		—
Gain on exchange of equity interests (Note 6)		159,828		—		159,828		—
Income and other tax (expense) benefit		(67,262)		(2,779)		(108,367)		3,065
Income from unconsolidated entities		198,524		61,823		562,138		156,610
Unrealized losses in fair value of equity instruments		(4,944)		(1,279)		(8,121)		(20,125)
Gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net		108,543		(91,285)		201,600		(98,168)
CONSOLIDATED NET INCOME		778,648		168,646		1,994,977		964,598
Net loss attributable to noncontrolling interests		(405)		(753)		(2,875)		(4,551)
Preferred unit requirements		1,313		1,313		3,939		3,939
NET INCOME ATTRIBUTABLE TO UNITHOLDERS	$	777,740	$	168,086	$	1,993,913	$	965,210
NET INCOME ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO:
General Partner	$	679,936	$	145,928	$	1,743,053	$	837,744
Limited Partners		97,804		22,158		250,860		127,466
Net income attributable to unitholders	$	777,740	$	168,086	$	1,993,913	$	965,210
BASIC AND DILUTED EARNINGS PER UNIT:
Net income attributable to unitholders	$	2.07	$	0.48	$	5.30	$	2.74

Consolidated Net Income	$	778,648	$	168,646	$	1,994,977	$	964,598
Unrealized gain (loss) on derivative hedge agreements		8,280		(49,175)		45,366		(51,034)
Net gain reclassified from accumulated other comprehensive loss into earnings		(404)		(477)		(7,022)		(1,435)
Currency translation adjustments		(11,199)		20,525		(40,968)		(18,983)
Changes in available-for-sale securities and other		(71)		(27)		(304)		245
Comprehensive income		775,254		139,492		1,992,049		893,391
Comprehensive income attributable to noncontrolling interests		336		(246)		(215)		483
Comprehensive income attributable to unitholders	$	774,918	$	139,738	$	1,992,264	$	892,908

The accompanying notes are an integral part of these statements.

Simon Property Group, L.P.

Unaudited Consolidated Statements of Cash Flows

(Dollars in thousands)


	For the Nine Months Ended
	September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated Net Income	$	1,994,977	$	964,598
Adjustments to reconcile consolidated net income to net cash provided by operating activities
Depreciation and amortization		985,116		1,017,517
Loss on debt extinguishment		31,552		—
(Gain) loss on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net		(201,600)		98,168
Gain on exchange of equity interests		(159,828)		—
Unrealized losses in fair value of equity instruments		8,121		20,125
Straight-line lease loss		19,014		6,539
Equity in income of unconsolidated entities		(562,138)		(156,610)
Distributions of income from unconsolidated entities		319,041		152,712
Changes in assets and liabilities
Tenant receivables and accrued revenue, net		260,470		(625,107)
Deferred costs and other assets		(51,079)		(87,027)
Accounts payable, accrued expenses, intangibles, deferred revenues and other liabilities		108,825		40,706
Net cash provided by operating activities		2,752,471		1,431,621
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions		(157,080)		(107,797)
Funding of loans to related parties		(15,419)		(6,393)
Repayments of loans to related parties		8,381		—
Capital expenditures, net		(419,477)		(396,004)
Cash impact from the consolidation of properties		5,595		—
Investments in unconsolidated entities		(48,156)		(172,598)
Purchase of equity instruments		(16,769)		(30,427)
Proceeds from sale of equity instruments		—		30,000
Insurance proceeds for property restoration		7,030		8,746
Distributions of capital from unconsolidated entities and other		137,031		214,389
Net cash used in investing activities		(498,864)		(460,084)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of units and other		(246)		(247)
Purchase of units related to stock grant recipients' tax withholdings		(2,318)		(854)
Redemption of limited partner units		(57)		(16,087)
Purchase of general partner units		—		(152,589)
Proceeds from the special purpose acquisition company IPO, net of transaction costs		338,121		—
Establishment of trust account for special purpose acquisition company		(345,000)		—
Distributions to noncontrolling interest holders in properties		(1,640)		(5,766)
Contributions from noncontrolling interest holders in properties		16,736		28
Partnership distributions		(2,069,587)		(1,204,677)
Cash paid to extinguish debt		(30,009)		—
Mortgage and unsecured indebtedness proceeds, net of transaction costs		7,353,120		11,363,272
Mortgage and unsecured indebtedness principal payments		(8,085,917)		(10,541,677)
Net cash used in financing activities		(2,826,797)		(558,597)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(573,190)		412,940
CASH AND CASH EQUIVALENTS, beginning of period		1,011,613		669,373
CASH AND CASH EQUIVALENTS, end of period	$	438,423	$	1,082,313

The accompanying notes are an integral part of these statements.

Simon Property Group, L.P.

Unaudited Consolidated Statements of Equity

(Dollars in thousands)


	Preferred		Simon (Managing		Limited		Noncontrolling		Total
	Units		General Partner)		Partners		interests		Equity
December 31, 2020	$	42,091	$	2,997,381	$	431,784	$	1,090	$	3,472,346
Series J preferred stock premium and amortization		(82)								(82)
Stock incentive program (37,976 common units)				—						—
Amortization of stock incentive				4,231						4,231
Redemption of limited partner units (316 units)				(34)		(3)				(37)
Long-term incentive performance units						5,014				5,014
Issuance of unit equivalents and other				(6,994)				15,822		8,828
Unrealized gain on hedging activities				31,333		4,514				35,847
Currency translation adjustments				(20,878)		(3,005)				(23,883)
Changes in available-for-sale securities and other				(276)		(40)				(316)
Net gain reclassified from accumulated other comprehensive loss into earnings				(5,370)		(773)				(6,143)
Other comprehensive income				4,809		696				5,505
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership				4,849		(4,849)				—
Distributions to limited partners, excluding preferred interests classified as temporary equity		(834)		(427,878)		(61,558)		(577)		(490,847)
Net income, excluding preferred distributions on temporary equity preferred units of $479 and an $897 loss attributable to noncontrolling redeemable interests in properties		834		445,860		64,225		(41)		510,878
March 31, 2021	$	42,009	$	3,022,224	$	435,309	$	16,294	$	3,515,836
Series J preferred stock premium and amortization		(82)								(82)
Limited partner units exchanged to common units (58,571 units)				539		(539)				—
Stock incentive program (41,574 common units, net)				—						—
Amortization of stock incentive				5,204						5,204
Redemption of limited partner units (170 units)				(19)		(1)				(20)
Long-term incentive performance units						5,333				5,333
Issuance of unit equivalents and other (20,374 common units)				5,806				1,135		6,941
Unrealized gain on hedging activities				1,079		160				1,239
Currency translation adjustments				(5,176)		(710)				(5,886)
Changes in available-for-sale securities and other				72		10				82
Net gain reclassified from accumulated other comprehensive loss into earnings				(416)		(59)				(475)
Other comprehensive income				(4,441)		(599)				(5,040)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership				3,452		(3,452)				—
Distributions to limited partners, excluding preferred interests classified as temporary equity		(835)		(460,151)		(66,105)		(54)		(527,145)
Net income, excluding preferred distributions on temporary equity preferred units of $478 and a $1,021 loss attributable to noncontrolling redeemable interests in properties		835		617,257		88,830		(510)		706,412
June 30, 2021	$	41,927	$	3,189,871	$	458,776	$	16,865	$	3,707,439
Series J preferred stock premium and amortization		(82)								(82)
Amortization of stock incentive				4,718						4,718
Long-term incentive performance units						(2,475)				(2,475)
Issuance of unit equivalents and other				(44,669)		(1)		(380)		(45,050)
Unrealized gain on hedging activities				7,239		1,040				8,279
Currency translation adjustments				(9,790)		(1,409)				(11,199)
Changes in available-for-sale securities and other				(62)		(9)				(71)
Net gain reclassified from accumulated other comprehensive loss into earnings				(354)		(50)				(404)
Other comprehensive income				(2,967)		(428)				(3,395)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership				2,841		(2,841)				—
Distributions to limited partners, excluding preferred interests classified as temporary equity		(834)		(493,477)		(71,009)		(54)		(565,374)
Net income, excluding preferred distributions on temporary equity preferred units of $479 and a $742 loss attributable to noncontrolling redeemable interests in properties		834		679,936		97,805		336		778,911
September 30, 2021	$	41,845	$	3,336,253	$	479,827	$	16,767	$	3,874,692

The accompanying notes are an integral part of these statements.

Simon Property Group, L.P.

Unaudited Consolidated Statements of Equity

(Dollars in thousands)


	Preferred		Simon (Managing		Limited		Noncontrolling		Total
	Units		General Partner)		Partners		interests		Equity
December 31, 2019	$	42,420	$	2,483,978	$	378,339	$	6,513	$	2,911,250
Series J preferred stock premium and amortization		(82)								(82)
Limited partner units exchanged to common units (132,946 units)				1,076		(1,076)				—
Stock incentive program (1,081 common units forfeited)				—						—
Amortization of stock incentive				1,891						1,891
Redemption of limited partner units (116,072 units)				(15,127)		(940)				(16,067)
Treasury unit purchase (1,245,654 units)				(152,589)						(152,589)
Long-term incentive performance units						4,987				4,987
Issuance of unit equivalents and other (38,148 common units)				3,316				26		3,342
Unrealized gain on hedging activities				19,510		2,963				22,473
Currency translation adjustments				(20,505)		(3,099)				(23,604)
Changes in available-for-sale securities and other				715		109				824
Net gain reclassified from accumulated other comprehensive loss into earnings				(417)		(63)				(480)
Other comprehensive income				(697)		(90)				(787)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership				24,233		(24,233)				—
Distributions to limited partners, excluding preferred interests classified as temporary equity		(834)		(644,425)		(98,099)		(3,167)		(746,525)
Net income, excluding preferred distributions on temporary equity preferred units of $479 and a $608 loss attributable to noncontrolling redeemable interests in properties		834		437,605		66,658		436		505,533
March 31, 2020	$	42,338	$	2,139,261	$	325,546	$	3,808	$	2,510,953
Series J preferred stock premium and amortization		(82)								(82)
Stock incentive program (155,610 common units, net)				—						—
Amortization of stock incentive				4,969						4,969
Long-term incentive performance units						3,229				3,229
Issuance of unit equivalents and other (1,264 units and 15,561 common units)				22,899		(2)				22,897
Unrealized loss on hedging activities				(21,116)		(3,216)				(24,332)
Currency translation adjustments				(13,815)		(2,088)				(15,903)
Changes in available-for-sale securities and other				(479)		(73)				(552)
Net gain reclassified from accumulated other comprehensive loss into earnings				(415)		(63)				(478)
Other comprehensive income				(35,825)		(5,440)				(41,265)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership				(769)		769				—
Distributions to limited partners, excluding preferred interests classified as temporary equity		(835)		(397,664)		(60,510)		(244)		(459,253)
Net income, excluding preferred distributions on temporary equity preferred units of $478 and a $3,921 loss attributable to noncontrolling redeemable interests in properties		835		254,213		38,650		293		293,991
June 30, 2020	$	42,256	$	1,987,084	$	302,242	$	3,857	$	2,335,439
Series J preferred stock premium and amortization		(83)								(83)
Limited partner units exchanged to common units (61,968 units)				403		(403)				—
Stock incentive program (3,825 common units forfeited)				—						—
Amortization of stock incentive				2,594						2,594
Redemption of limited partner units (586 units)				(36)		16				(20)
Long-term incentive performance units						(4,004)				(4,004)
Issuance of unit equivalents and other (632 units)				1,831		5				1,836
Unrealized loss on hedging activities				(42,683)		(6,492)				(49,175)
Currency translation adjustments				17,778		2,746				20,524
Changes in available-for-sale securities and other				(23)		(4)				(27)
Net gain reclassified from accumulated other comprehensive loss into earnings				(414)		(63)				(477)
Other comprehensive income				(25,342)		(3,813)				(29,155)
Adjustment to limited partners’ interest from change in ownership in the Operating Partnership				(4,043)		4,043				—
Distributions to limited partners, excluding preferred interests classified as temporary equity		(834)		(397,739)		(60,447)		(43)		(459,063)
Net income, excluding preferred distributions on temporary equity preferred units of $479 and a $505 loss attributable to noncontrolling redeemable interests in properties		834		145,926		22,158		(246)		168,672
September 30, 2020	$	42,173	$	1,710,678	$	259,797	$	3,568	$	2,016,216

The accompanying notes are an integral part of these statements.

Simon Property Group, Inc. Simon Property Group, L.P. Condensed Notes to Consolidated Financial Statements (Unaudited) (Dollars in thousands, except share, per share, unit and per unit amounts and where indicated 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. According to the Operating Partnership’s partnership agreement, the Operating Partnership is required to pay all expenses of Simon. In these condensed notes to the consolidated financial statements, 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 condensed notes to consolidated financial statements apply to both Simon and the Operating Partnership.

We own, develop and manage premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of malls, Premium Outlets®, and The Mills®. As of September 30, 2021, we owned or held an interest in 201 income-producing properties in the United States, which consisted of 95 malls, 69 Premium Outlets, 14 Mills, six lifestyle centers, and 17 other retail properties in 37 states and Puerto Rico. We also own an 80% noncontrolling interest in the Taubman Realty Group, LLC, or TRG, which has an interest in 24 regional, super-regional, and outlet malls in the U.S. and Asia. Internationally, as of September 30, 2021, we had ownership in 32 Premium Outlets and Designer Outlet properties primarily located in Asia, Europe, and Canada. As of September 30, 2021, we also owned a 22.4% 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 15 countries in Europe.

2. Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of all controlled subsidiaries, and all significant intercompany amounts have been eliminated. Due to the seasonal nature of certain operational activities, the results for the interim periods ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year.

These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by accounting principles generally accepted in the United States (GAAP) for interim reporting. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments necessary for a fair presentation (including normal recurring accruals) have been included. The consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes contained in the combined 2020 Annual Report on Form 10-K of Simon and the Operating Partnership. Certain reclassifications considered necessary for a fair presentation have been made to the prior period financial statements in order to conform to the current year presentation. These reclassifications have not changed the results of operations.

As of September 30, 2021, we consolidated 131 wholly-owned properties and 18 additional properties that are less than wholly-owned, but which we control or for which we are the primary beneficiary. We account for the remaining 84 properties, or the joint venture properties, as well as our investments in Klépierre, HBS Global Properties, or HBS, TRG, and our retailer investments in Authentic Brands Group, LLC, or ABG, J.C. Penney, Rue Gilt Groupe, or RGG and SPARC Group, which includes Forever 21 as of February 17, 2021, 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 53 of the 84 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, Thailand, Canada, Spain, and the United Kingdom comprise 23 of the remaining 31 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 Simon 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. Simon’s weighted average ownership interest in the Operating Partnership was 87.4% and 86.8% for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021 and December 31, 2020, Simon’s ownership interest in the Operating Partnership was 87.4%. We adjust the noncontrolling limited partners’ interests 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. Significant Accounting Policies

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.

Equity Instruments and Debt Securities

Equity instruments and debt securities consist primarily of equity instruments, our deferred compensation plan investments, the debt securities of our captive insurance subsidiary, and certain investments held to fund the debt service requirements of debt previously secured by investment properties. At September 30, 2021 and December 31, 2020, we had equity instruments with readily determinable fair values of $94.2 million and $41.9 million, respectively. Changes in the fair value of these equity instruments are recorded in unrealized losses in fair value of equity instruments in our consolidated statements of operations and comprehensive income. At September 30, 2021 and December 31, 2020, we had equity instruments without readily determinable fair values of $250.2 million and $309.3 million, respectively, for which we have elected the measurement alternative. We regularly evaluate these investments for any impairment in their estimated fair value, as well as any observable price changes for an identical or similar equity instrument of the same issuer, and recorded a $14.0 million loss in the third quarter of 2021, which is included in unrealized losses in fair value of equity instruments in our consolidated statements of operations and comprehensive income.

Our deferred compensation plan equity instruments 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.

At September 30, 2021 and December 31, 2020, we held debt securities of $56.9 million and $40.5 million, respectively, in our captive insurance subsidiary. The types of securities included in the investment portfolio of our captive insurance subsidiary are typically U.S. Treasury or other U.S. government securities as well as corporate debt securities with maturities ranging from less than one year to ten 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 subsidiary 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 is recorded and a new cost basis is established.

Our captive 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.

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 equity instruments with readily determinable fair values we held at September 30, 2021 and December 31, 2020 were primarily classified as having Level 1 and Level 2 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 asset balance of $3.9 million at September 30, 2021 and an insignificant gross asset balance at December 31, 2020, and a gross liability balance of $0.1 million and $44.6 million at September 30, 2021 and December 31, 2020, respectively.

Note 7 includes a discussion of the fair value of debt measured using Level 2 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.

Noncontrolling Interests

Simon

Details of the carrying amount of our noncontrolling interests are as follows:


	As of		As of
	September 30,		December 31,
	2021		2020
Limited partners’ interests in the Operating Partnership	$	479,827	$	431,784
Nonredeemable noncontrolling interests in properties, net		16,767		1,090
Total noncontrolling interests reflected in equity	$	496,594	$	432,874

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.

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.

Accumulated Other Comprehensive Income (Loss)

Simon

The total accumulated other comprehensive income (loss) related to Simon’s currency translation adjustment was ($177.0) million and ($136.2) million as of September 30, 2021 and December 31, 2020, respectively.

The reclassifications out of accumulated other comprehensive income (loss) consisted of the following:


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,

	2021		2020		2021		2020		Affected line item where net income is presented
Currency translation adjustments	$	—	$	—	$	5,660	$	—	Gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net
		—		—		(712)		—	Net income attributable to noncontrolling interests
	$	—	$	—	$	4,948	$	—

Accumulated derivative gains	$	404	$	477	$	1,362	$	1,435	Interest expense
		(50)		(63)		(171)		(189)	Net income attributable to noncontrolling interests
	$	354	$	414	$	1,191	$	1,246

The Operating Partnership

The total accumulated other comprehensive income (loss) related to the Operating Partnership’s currency translation adjustment was ($202.4) million and ($155.8) million as of September 30, 2021 and December 31, 2020, respectively.

The reclassifications out of accumulated other comprehensive income (loss) consisted of the following:


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,

	2021		2020		2021		2020		Affected line item where net income is presented
Currency translation adjustments	$	—	$	—	$	5,660	$	—	Gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net

Accumulated derivative gains	$	404	$	477	$	1,362	$	1,435	Interest expense

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. 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 September 30, 2021 and December 31, 2020, we had no outstanding interest rate derivatives. We generally do not apply hedge accounting to interest rate caps, which had a nominal value as of September 30, 2021 and December 31, 2020.

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 gain on our treasury locks and terminated hedges recorded in accumulated other comprehensive income was $7.1 million as of September 30, 2021, compared to an unamortized gain of $8.7 million as of December 31, 2020. Within the next 12 months, we expect to reclassify to earnings approximately $0.2 million of gains related to terminated interest rate swaps from the current balance held in accumulated other comprehensive income.

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 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, cross currency swap 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 designated as net investment hedges at September 30, 2021 and December 31, 2020 (in millions):


			Asset (Liability) Value as of
			September 30,		December 31,
Notional Value		Maturity Date	2021		2020
€	100.0	March 24, 2021		—		(3.9)
€	100.0	March 24, 2021		—		(3.8)
€	50.0	March 24, 2021		—		(2.3)
€	50.0	March 24, 2021		—		(2.2)
€	50.0	May 14, 2021		—		(2.2)
€	50.0	May 14, 2021		—		(2.2)
€	41.0	May 14, 2021		—		(1.9)
€	20.0	May 14, 2021		—		(1.7)
€	50.0	May 14, 2021		—		(2.1)
€	50.0	May 14, 2021		—		(6.4)
€	30.0	May 14, 2021		—		(2.6)
€	60.0	December 20, 2021		0.1		(4.2)
€	60.0	December 20, 2021		0.1		(4.1)
€	30.0	December 20, 2021		(0.1)		(2.2)
€	28.0	December 20, 2021		0.7		—
€	50.0	July 15, 2021		—		(0.1)
€	41.0	July 15, 2021		—		(0.1)
€	50.0	July 15, 2021		—		(0.1)
€	61.0	September 17, 2021		—		(1.3)
€	61.0	September 17, 2021		—		(1.2)
€	60.0	March 15, 2022		1.5		—
€	62.0	September 15, 2022		1.5		—

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 certain currency forward contracts and the cross-currency swap 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 investments.

The total accumulated other comprehensive income (loss) related to Simon’s derivative activities, including our share of other comprehensive income (loss) from unconsolidated entities, was ($14.8) million and ($53.2) million as of September 30, 2021

and December 31, 2020, respectively. The total accumulated other comprehensive income (loss) related to the Operating Partnership’s derivative activities, including our share of other comprehensive income (loss) from unconsolidated entities, was ($16.9) million and ($60.9) million as of September 30, 2021 and December 31, 2020, respectively.

Simon Property Group Acquisition Holdings, Inc.

The Company sponsored, through a wholly-owned subsidiary, a special purpose acquisition corporation, or SPAC, named Simon Property Group Acquisition Holdings, Inc. On February 18, 2021, the SPAC announced the pricing of its initial public offering, which was consummated on February 23, 2021, generating gross proceeds of $345.0 million, which have been placed in a trust account and is included in the accompanying consolidated balance sheet in Investments held in trust – special purpose acquisition company. The SPAC is a consolidated VIE which was formed for the purpose of effecting a business combination. The Company accounts for the noncontrolling interest in the SPAC as noncontrolling redeemable interests as these instruments are redeemable at the option of the holder and are classified as temporary equity at their redemption value in Simon’s accompanying consolidated balance sheet in Limited partners preferred interest in the Operating Partnership and noncontrolling redeemable interests and in the Operating Partnership’s accompanying consolidated balance sheet in Preferred units, various series, at liquidation value, and noncontrolling redeemable interests.

New Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update (ASU) 2020-04, “Reference Rate Reform,” which provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Additional optional expedients, exceptions, and clarifications were created in ASU 2021-01. The guidance is effective upon issuance and generally can be applied to any contract modifications or existing and new hedging relationships through December 31, 2022. We are currently evaluating the impact that the expected market transition from LIBOR to alternative references rates will have on our financial statements as well as the applicability of the aforementioned expedients and exceptions provided in ASU 2020-04 and ASU 2021-01.

4. Real Estate Acquisitions and Dispositions

Unless otherwise noted, gains and losses on property transactions are included in gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, 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 a minimal amount of transaction expenses during the nine months ended September 30, 2021 and 2020.

2021 Dispositions

In July 2021, we recorded a gain of $88.0 million related to the foreclosure of a consolidated property in satisfaction of its $120.9 million non-recourse mortgage.

During the first quarter of 2021, we recorded a gain of $89.3 million related to the foreclosure of a consolidated property in satisfaction of its $180 million non-recourse mortgage.

2020 Dispositions

On October 1, 2020, we disposed of our interest in one consolidated retail property. A portion of the gross proceeds on this transaction of $33.4 million was used to partially repay a cross-collateralized mortgage. Our share of the $12.3 million gain is included in gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net in the accompanying consolidated statement of operation and comprehensive income.

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 components of basic and diluted earnings per share and basic and diluted earnings per unit.

Simon


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Net Income attributable to Common Stockholders — Basic and Diluted	$	679,936	$	145,926	$	1,743,053	$	837,744
Weighted Average Shares Outstanding — Basic and Diluted		328,619,163		305,913,431		328,576,315		306,099,266

For the nine months ended September 30, 2021, 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 nine months ended September 30, 2021 and 2020. 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. On November 1, 2021 Simon’s Board of Directors declared a quarterly cash dividend for the fourth quarter of 2021 of $1.65 per share.

The Operating Partnership


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
Net Income attributable to Unitholders — Basic and Diluted	$	777,740	$	168,086	$	1,993,913	$	965,210
Weighted Average Units Outstanding — Basic and Diluted		375,882,318		352,420,845		375,864,921		352,673,474

For the nine months ended September 30, 2021, potentially dilutive securities include LTIP units. No securities had a material dilutive effect for the nine months ended September 30, 2021 and 2020. We accrue distributions when they are declared. On November 1, 2021 Simon’s Board of Directors declared a quarterly cash distribution for the fourth quarter of 2021 of $1.65 per unit.

6. Investment in Unconsolidated Entities and International Investments

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 84 properties as of September 30, 2021.

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 or 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 venture properties primarily in the form of interest bearing construction loans. As of September 30, 2021 and December 31, 2020, we had construction loans and other advances to these related parties totaling $93.4 million and $88.4 million, respectively, which are included in deferred costs and other assets in the accompanying consolidated balance sheets.

Unconsolidated Entity Transactions

On July 1, 2021, we contributed to ABG all of our interests in both the Forever 21 and Brooks Brothers licensing ventures in exchange for additional interests in ABG, bringing our total interest in ABG to approximately 11%. As a result, in the third quarter of 2021, we recognized a non-cash pre-tax gain of $159.8 million representing the difference between the fair value of the interests received determined using Level 3 inputs and the carrying value of the licensing ventures less costs to sell. In connection with this transaction, we recorded deferred taxes of $47.9 million which is included in income and other tax (expense) benefit in the consolidated statements of operations and comprehensive income.

On June 1, 2021, we and our partner, ABG, acquired the licensing rights of Eddie Bauer. Our non-controlling interest in the licensing venture is 49% and was acquired for cash consideration of $100.8 million.

During the second quarter of 2021, we sold our interest in one multi-family residential investment. Our share of the gross proceeds from this transaction was $27.1 million. The gain of $14.9 million on the sale is included in other income in the accompanying consolidated statement of operations and comprehensive income.

On December 29, 2020, we completed the acquisition of an 80% noncontrolling ownership interest in TRG, which has an interest in 24 regional, super-regional, and outlet malls in the U.S. and Asia. Under the terms of the transaction, we, through the Operating Partnership, acquired all of Taubman Centers, Inc., or Taubman, common stock for $43.00 per share in cash. Total consideration for the acquisition, including the redemption of Taubman’s $192.5 million 6.5% Series J Cumulative Preferred Shares and its $170.00 million 6.25% Series K Cumulative Preferred Shares, and the issuance of 955,705 Operating Partnership units, was approximately $3.5 billion. Our investment includes the 6.38% Series A Cumulative Redeemable Preferred Units for $362.5 million issued to us. The purchase price allocations are preliminary and subject to revision within the measurement period, not to exceed one year from the date of acquisition. Substantially all of our investment has preliminarily been determined to relate to investment property based on estimated fair values at the acquisition date. Our share of net (loss) income was ($11.5 million) and ($49.9 million) for the three and nine months ended September 30, 2021, which includes amortization of our excess investment of $31.6 million and $94.7 million, for the same periods. TRG’s total revenue, operating income before other items and consolidated net income were approximately $422.8 million, $137.3 million, and $55.3 million, respectively, for the nine months ended September 30, 2021, before consideration of the amortization of our excess investment.

On December 7, 2020, we and a group of co-investors acquired certain assets and liabilities of J.C. Penney, a department store retailer, out of bankruptcy. Our non-controlling interest in the venture is 41.67% and was acquired for cash consideration of $125.0 million. The purchase price allocations are preliminary and subject to revision within the measurement period, not to exceed one year from the date of acquisition.

In the third quarter of 2020, we recorded an other-than-temporary impairment charge of $55.2 million, representing our equity method investment balance in three joint venture properties, which is included in gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net, in the accompanying consolidated statements of operations and comprehensive income. Additionally, in the third quarter of 2020, we recorded an other-than-temporary impairment charge of $36.1 million, which is included in gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net, in the accompanying consolidated statements of operations and comprehensive income, to reduce our investment in HBS to its estimated fair value.

On February 19, 2020, we and a group of co-investors acquired certain assets and liabilities of Forever 21, a retailer of apparel and accessories, out of bankruptcy. The interests were acquired through two separate joint ventures, a licensing venture and an operating venture. Our aggregate investment in the ventures was $67.6 million. In connection with the acquisition of our interest, the Forever 21 joint venture recorded a non-cash bargain purchase gain in the second quarter of 2020, of which our share was $35.0 million pre-tax. In the first quarter of 2021, we and our partner, ABG, each acquired additional 12.5% interests in the licensing and operations of Forever 21, our share of which was $56.3 million, bringing our respective interests to 50%. Subsequently, the Forever 21 operations were merged into SPARC Group.

On September 15, 2016, we and a group of co-investors acquired certain assets and liabilities of Aéropostale, a retailer of apparel and accessories, out of bankruptcy, and subsequently renamed SPARC Group. The interests were acquired through two separate joint ventures, a licensing venture and an operating venture. In April 2018, we contributed our entire interest in the licensing venture in exchange for additional interests in ABG, a brand development, marketing, and entertainment company. In January 2020, we acquired additional interests of 5.05% and 1.37% in SPARC Group and ABG, respectively, for $6.7 million and $33.5 million, respectively. During the third quarter of 2020, SPARC Group acquired certain assets and operations of Brooks Brothers and Lucky Brands out of bankruptcy. During the second quarter of 2021, SPARC Group acquired certain assets and operations of Eddie Bauer. At September 30, 2021, our noncontrolling equity method interests in the operations venture of SPARC Group was 50.0%.

European Investments

At September 30, 2021, we owned 63,924,148 shares, or approximately 22.4%, of Klépierre, which had a quoted market price of $22.53 per share. Our share of net income, net of amortization of our excess investment, was $8.9 million and $4.3 million for the three months ended September 30, 2021 and 2020, respectively, and $115.9 million and $13.7 million for the nine months ended September 30, 2021 and 2020, respectively. Based on applicable Euro:USD exchange rates and after our conversion of Klépierre’s results to GAAP, Klépierre’s total revenues, operating income before other items and consolidated net income were approximately $840.4 million, $215.3 million and $619.9 million, respectively, for the nine months ended September 30, 2021 and $882.0 million, $195.2 million and $123.2 million, respectively, for the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, Klépierre elected to step-up the tax basis of certain assets in Italy, which triggered a one-time payment at a significantly reduced tax rate. As a result of the step-up in tax basis, a previously established deferred tax liability was reversed resulting in a non-cash gain, of which our share was $118.4 million.

During the nine months ended September 30, 2020, we recorded a $7.8 million net loss related to the impairment and disposition of certain assets of Klépierre. This transaction is included in gain (loss) on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net in the accompanying consolidated statements of operations and comprehensive income.

We have an interest in a European investee that had interests in 11 Designer Outlet properties as of September 30, 2021 and ten Designer Outlet properties as of December 31, 2020, seven of which are consolidated by us as of September 30, 2021. As of September 30, 2021, our legal percentage ownership interests in these properties ranged from 23% to 94%.

On January 1, 2021 our European investee gained control of Ochtrup Designer Outlets as a result of the expiration of certain participating rights held by a venture partner. This resulted in the consolidation of the property, requiring a remeasurement of our previously held equity interest to fair value and the recognition of a non-cash gain of $3.7 million in earnings during the first quarter of 2021, which includes 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 (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net in the accompanying consolidated statements of operations and comprehensive income. The determination of the fair value consisted of Level 2 and 3 inputs and was predominately allocated to investment property.

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.

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 also have a direct minority ownership in three of those outlets. At September 30, 2021 and December 31, 2020, the carrying value of these equity instruments without readily determinable fair values was $140.8 million and is included in deferred costs and other assets.

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 $211.1 million and $216.8 million as of September 30, 2021 and December 31, 2020, 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 $187.3 million and $184.7 million as of September 30, 2021 and December 31, 2020, respectively, including all related components of accumulated other comprehensive income (loss).

Summary Financial Information

A summary of the combined balance sheets and statements of operations of our equity method investments and share of income from such investments, excluding our investments in HBS, Klépierre, and TRG as well as our retailer investments in ABG, J.C. Penney, RGG and SPARC Group, follows.

COMBINED BALANCE SHEETS


	September 30,		December 31,
	2021		2020
Assets:
Investment properties, at cost	$	19,867,502	$	20,079,476
Less - accumulated depreciation		8,287,531		8,003,863
		11,579,971		12,075,613
Cash and cash equivalents		1,368,859		1,169,422
Tenant receivables and accrued revenue, net		567,034		749,231
Right-of-use assets, net		161,758		185,598
Deferred costs and other assets		415,768		380,087
Total assets	$	14,093,390	$	14,559,951
Liabilities and Partners’ Deficit:
Mortgages	$	15,311,572	$	15,569,485
Accounts payable, accrued expenses, intangibles, and deferred revenue		854,603		969,242
Lease liabilities		165,334		188,863
Other liabilities		405,134		426,321
Total liabilities		16,736,643		17,153,911
Preferred units		67,450		67,450
Partners’ deficit		(2,710,703)		(2,661,410)
Total liabilities and partners’ deficit	$	14,093,390	$	14,559,951
Our Share of:
Partners’ deficit	$	(1,161,814)	$	(1,130,713)
Add: Excess Investment		1,300,242		1,399,757
Our net Investment in unconsolidated entities, at equity	$	138,428	$	269,044

“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 properties, intangible assets, including goodwill, and debt premiums and discounts. We amortize excess investment over the life of the related depreciable components of assets acquired, typically no greater than 40 years, the terms of the applicable leases, the estimated useful lives of the finite lived intangibles, and the applicable debt maturity, respectively. The amortization is included in the reported amount of income from unconsolidated entities.

COMBINED STATEMENTS OF OPERATIONS


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
REVENUE:
Lease income	$	719,723	$	601,522	$	2,053,826	$	1,919,618
Other income		67,630		94,630		204,923		215,349
Total revenue		787,353		696,152		2,258,749		2,134,967
OPERATING EXPENSES:
Property operating		151,008		129,024		420,174		383,363
Depreciation and amortization		170,568		175,716		512,165		512,705
Real estate taxes		66,221		68,464		203,242		197,487
Repairs and maintenance		18,274		16,457		53,625		49,661
Advertising and promotion		18,238		9,901		52,479		42,669
Other		43,400		41,857		113,042		107,822
Total operating expenses		467,709		441,419		1,354,727		1,293,707
Operating Income Before Other Items		319,644		254,733		904,022		841,260
Interest expense		(154,501)		(154,579)		(453,145)		(463,629)
Gain on sale or disposal of, or recovery on, assets and interests in unconsolidated entities, net		—		—		33,371		—
Net Income	$	165,143	$	100,154	$	484,248	$	377,631
Third-Party Investors’ Share of Net Income	$	82,639	$	46,785	$	243,525	$	193,633
Our Share of Net Income		82,504		53,369		240,723		183,998
Amortization of Excess Investment		(15,199)		(20,543)		(49,794)		(62,144)
Our Share of Gain on Sale or Disposal of Assets and Interests in Other Income in the Consolidated Financial Statements		—		—		(14,941)		—
Income from Unconsolidated Entities	$	67,305	$	32,826	$	175,988	$	121,854

Our share of income from unconsolidated entities in the above table, aggregated with our share of results from our investments in HBS, Klépierre, and TRG as well as our retailer investments, 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 on acquisition of controlling interest sale or disposal of assets and interests in unconsolidated entities, net is reflected within gain (loss) on sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net in the accompanying consolidated statements of operations and comprehensive income.

7. Debt

Unsecured Debt

At September 30, 2021, our unsecured debt consisted of $18.4 billion of senior unsecured notes of the Operating Partnership, $125.0 million outstanding under the Operating Partnership’s $4.0 billion unsecured revolving credit facility, or Credit Facility, and $500.0 million outstanding under the Operating Partnership’s global unsecured commercial paper note program, or Commercial Paper program.

The Credit Facility also included an additional single, delayed-draw $2.0 billion term loan facility, or Term Facility, which the Operating Partnership drew on December 15, 2020.

At September 30, 2021, we had an aggregate available borrowing capacity of $6.9 billion under the Credit Facility and the Operating Partnership’s $3.5 billion unsecured revolving credit facility, or Supplemental Facility, and together with the Credit Facility, the Credit Facilities. The maximum aggregate outstanding balance under the Credit Facilities and the Term Facility, during the nine months ended September 30, 2021 was $2.1 billion and the weighted average outstanding balance was $583.8 million. Letters of credit of $12.4 million were outstanding under the Credit Facilities as of September 30, 2021.

The Credit Facility can be increased in the form of additional commitments under the Credit Facility in an aggregate amount not to exceed $1.0 billion, for a total aggregate size of $5.0 billion, subject to obtaining additional lender commitments and satisfying certain customary conditions precedent. Borrowings may be 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 is June 30, 2024. The Credit Facility can be extended for two additional six-month periods to June 30, 2025, at our sole option, subject to satisfying certain customary conditions precedent.

Borrowings under the Credit Facility bear interest, at the Operating Partnership’s election, at either (i) LIBOR plus a margin determined by the Operating Partnership’s corporate credit rating of between 0.65% and 1.40% or (ii) the base rate (which rate is equal to the greatest of the prime rate, the federal funds effective rate plus 0.50% or LIBOR plus 1.00%) (the “Base Rate”), plus a margin determined by the Operating Partnership’s corporate credit rating of between 0.00% and 0.40%. The Credit Facility includes a facility fee determined by the Operating Partnership’s corporate credit rating of between 0.10% and 0.30% on the aggregate revolving commitments under the Credit Facility. The Credit Facility contains a money market competitive bid option program that allows the Operating Partnership to hold auctions to achieve lower pricing for short-term borrowings.

The Supplemental Facility’s initial borrowing capacity of $3.5 billion may be increased to $4.5 billion during its term and provides for borrowings denominated in U.S. dollars, Euro, Yen, Sterling, Canadian dollars and Australian dollars. The initial maturity date of the Supplemental Facility is 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 is LIBOR plus 77.5 basis points with a facility fee of 10 basis points.

In October 2021, we amended and extended the Supplemental Facility. The newly refinanced facility will initially mature on January 31, 2026 and can be extended for an additional year to January 31, 2027 at the Company’s sole option, subject to satisfying certain customary conditions precedent. The facility provides for borrowings denominated in U.S. Dollars, Euro, Yen, Sterling, Canadian Dollars, and Australian Dollars.

Borrowings under the Supplemental Facility bear interest, at the Company’s election, at either (i) (x) for Term Benchmark Loans, the Adjusted Term SOFR Rate, the applicable Local Rate, the Adjusted EURIBOR Rate, or the Adjusted TIBOR Rate, (y) for RFR Loans, if denominated in Sterling, SONIA plus a benchmark adjustment and if denominated in Dollars, Daily Simple SOFR plus a benchmark adjustment, or (z) for Daily SOFR Loans, the Adjusted Floating Overnight Daily SOFR Rate, in each case of clauses (x) through (z) above, plus a margin determined by the Company’s corporate credit rating of between 0.650% and 1.400% or (ii) for loans denominated in U.S. Dollars only, the base rate (which rate is equal to the greatest of the prime rate, the federal funds effective rate plus 0.500% or Adjusted Term SOFR Rate for one month plus 1.000%) (the “Base Rate”), plus a margin determined by the Company’s corporate credit rating of between 0.000% and 0.400%. The Supplemental Facility includes a facility fee determined by the Company’s corporate credit rating of between 0.100% and 0.300% on the aggregate revolving commitments

under the Supplemental Facility. Based upon the Company’s current credit ratings, the interest rate on the new revolver is SOFR plus 72.5 basis points, plus a spread adjustment to account for the transition from LIBOR to SOFR.

The Operating Partnership also has available a Commercial Paper program of $2.0 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 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 of the Credit Facilities to pay amounts outstanding from time to time on the Commercial Paper program. On September 30, 2021, we had $500.0 million outstanding under the Commercial Paper program, fully comprised of U.S. dollar-denominated notes with a weighted average interest rate of 0.20%. These borrowings have a weighted average maturity date of November 1, 2021 and reduce amounts otherwise available under the Credit Facilities.

On January 21, 2021, the Operating Partnership completed the issuance of the following senior unsecured notes: $800 million with a fixed interest rate of 1.75%, and $700 million with a fixed interest rate of 2.20%, with maturity dates of February 2028 and 2031, respectively.

On January 27, 2021, the Operating Partnership completed the optional redemption of its $550 million 2.50% notes due on July 15, 2021. We recorded a $3.0 million loss on extinguishment of debt as a result of the optional redemption. Further, on February 2, 2021, the Operating Partnership repaid $750 million under the Term Facility.

On March 19, 2021, the Operating Partnership completed the issuance of €750 million ($893.0 million U.S. dollar equivalent as of the issuance date) of senior unsecured notes at a fixed rate of 1.125% with a maturity date of March 19, 2033. Further, on March 23, 2021, the Operating Partnership repaid the remaining $1.25 billion under the Term Facility reducing it to zero.

On August 18, 2021, the Operating Partnership completed the issuance of the following senior unsecured notes: $550 million with a fixed interest rate of 1.375%, and $700 million with a fixed interest rate of 2.250%, with maturity dates of January 15 2027, and 2032, respectively.

In the third quarter, the Operating Partnership completed the optional redemption of all of its outstanding $550 million 2.350% notes due on January 30, 2022, $600 million 2.625% notes due on June 15, 2022, and $500 million 2.750% notes due on February 1, 2023. We recorded a $28.6 million loss on extinguishment of debt as a result of the optional redemptions.

Mortgage Debt

Total mortgage indebtedness was $6.6 billion and $7.0 billion at September 30, 2021 and December 31, 2020, respectively.

Covenants

Our unsecured debt agreements contain financial covenants and other non-financial covenants. The Facilities contain ongoing covenants relating to total and secured leverage to capitalization value, minimum earnings before interest, taxes, depreciation, and amortization, or EBITDA, and unencumbered EBITDA coverage requirements. Payment under the Facilities can be accelerated if the Operating Partnership or Simon is subject to bankruptcy proceedings or upon the occurrence of certain other events. 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 September 30, 2021, we were in compliance with all covenants of our unsecured debt.

At September 30, 2021, our consolidated subsidiaries were the borrowers under 46 non-recourse mortgage notes secured by mortgages on 49 properties and other assets, 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 September 30, 2021, 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.

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 $24.3 billion and $23.4 billion as of September 30, 2021 and December 31, 2020, respectively. The fair values of these financial instruments and the related discount rate assumptions as of September 30, 2021 and December 31, 2020 are summarized as follows:


	September 30,			December 31,
	2021			2020
Fair value of consolidated fixed rate mortgages and unsecured indebtedness (in millions)	$	25,791		$	25,327
Weighted average discount rates assumed in calculation of fair value for fixed rate mortgages		2.86	%		2.41	%
Weighted average discount rates assumed in calculation of fair value for unsecured indebtedness		3.24	%		2.63	%

8. Equity

During the nine months ended September 30, 2021, Simon issued 58,571 shares of common stock to seven limited partners of the Operating Partnership in exchange for an equal number of units pursuant to the partnership agreement of the Operating Partnership. During the nine months ended September 30, 2021, the Operating Partnership redeemed 486 units from two limited partners for $0.06 million. These transactions increased Simon’s ownership interest in the Operating Partnership.

On February 11, 2019, Simon's Board of Directors authorized a common stock repurchase plan. Under the plan, Simon was authorized to repurchase up to $2.0 billion of its common stock during the two-year period ending February 11, 2021 in the open market or in privately negotiated transactions as market conditions warrant. During the nine months ended September 30, 2020, Simon purchased 1,245,654 shares at an average price of $122.50 per share. As Simon repurchased shares under the program, the Operating Partnership repurchased an equal number of units from Simon.

We paid common stock dividends of $1.40 per share and $1.50 per share in the third quarter of 2021 and $5.50 per share for the nine months ended September 30, 2021. We paid a common stock dividend of $1.30 per share for the third quarter of 2020 and $3.40 per share for the nine months ended September 30, 2020. The Operating Partnership paid distributions per unit for the same amounts. On November 1, 2021, Simon’s Board of Directors declared a quarterly cash dividend for the fourth quarter of 2021 of $1.65 per share, payable on December 31, 2021 to shareholders of record on December 10, 2021. The distribution rate on units is equal to the dividend rate on common stock.

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 in the consolidated statements of equity in issuance of unit equivalents and other. There were no noncontrolling interests redeemable at amounts in excess of fair value as of September 30, 2021 and December 31, 2020. The following table summarizes the preferred units in the Operating Partnership and the amount of the noncontrolling redeemable interests in properties as follows:


	As of		As of
	September 30,		December 31,
	2021		2020
7.50% Cumulative Redeemable Preferred Units, 260,000 units authorized, 255,373 issued and outstanding	$	25,537	$	25,537
Other noncontrolling redeemable interests		527,488		160,355
Limited partners’ preferred interest in the Operating Partnership and noncontrolling redeemable interests in properties	$	553,025	$	185,892

Refer to Note 3 for discussion of the noncontrolling redeemable interest related to the SPAC.

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. The following table summarizes the preferred units and the amount of the noncontrolling redeemable interests in properties as follows:


	As of		As of
	September 30,		December 31,
	2021		2020
7.50% Cumulative Redeemable Preferred Units, 260,000 units authorized, 255,373 issued and outstanding	$	25,537	$	25,537
Other noncontrolling redeemable interests		527,488		160,355
Total preferred units, at liquidation value, and noncontrolling redeemable interests in properties	$	553,025	$	185,892

Refer to Note 3 for discussion of the noncontrolling redeemable interest related to the SPAC.

Stock Based Compensation

Our long-term incentive compensation awards under our stock based compensation plans primarily take the form of LTIP units, restricted stock grants, and restricted stock units. These awards are either market or 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. In the first quarter of 2021, the Compensation Committee established and made awards under a 2021 Long-Term Incentive Program, or 2021 LTI Program. Awards under the 2021 LTI Program, took the form of LTIP units and restricted stock units as further discussed below.

LTIP Programs. The Compensation Committee has approved long-term, performance based incentive compensation programs, or the LTIP programs, for certain senior employees. Awards under the LTIP programs take the form of LTIP units, a form of limited partnership interest issued by the Operating Partnership, which are subject to the participant maintaining employment with us through certain dates and other conditions as described in the applicable award agreements. Awarded LTIP units not earned in accordance with the conditions set forth in the applicable award agreements are forfeited. Earned and fully vested LTIP units are equivalent to units of the Operating Partnership. 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.

In 2018, the Compensation Committee established and granted awards under a redesigned LTIP program, or the 2018 LTIP program. Awards under the 2018 LTIP program were granted in two tranches, Tranche A LTIP units and Tranche B LTIP units. Each of the Tranche A LTIP units and the Tranche B LTIP units will be considered earned if, and only to the extent to which, the respective goals based on Funds From Operations, or FFO, per share or Relative TSR Goal performance criteria, as defined in the applicable award agreements, are achieved during the applicable two-year and three-year performance periods of the Tranche A LTIP units and Tranche B LTIP units, respectively. One half of the earned Tranche A LTIP units will vest on January 1, 2021 with the other one-half vesting on January 1, 2022.

The grant date fair value of the portion of the LTIP units based on achieving the target FFO performance criteria is $6.1 million for the Tranche A LTIP units and the Tranche B LTIP units, for a total of $12.1 million. The 2018 LTIP program provides that the value of the FFO-based award may be adjusted up or down based on the Company’s performance compared to the target FFO performance criteria and has a maximum potential fair value of $18.2 million.

In 2021 and 2019, the Compensation Committee established and granted awards under a redesigned LTIP program, or the 2021 LTIP program and the 2019 LTIP program, respectively. Awards under these programs will be considered earned if, and only to the extent to which, the respective performance conditions (based on Funds From Operations, or FFO, per share, and Objective Criteria Goals) and market conditions (based on Relative or absolute TSR performance), as defined in the applicable award agreements, are achieved during the applicable three-year measurement period, subject to the recipient’s continued employment through the applicable vesting dates. Any units determined to be earned LTIP units under the 2021 LTIP program will vest on January 1, 2025 and any units determined to be earned LTIP units under the 2019 LTIP program will vest on January 1, 2023. The 2021 LTIP program provides that the amount earned related to the performance-based portion of the awards is dependent on Simon’s FFO performance and achievement of certain objective criteria goals and has a maximum potential fair value at grant date of $18.4 million. The 2019 LTIP program provides that the amount earned related to the performance-based portion of the awards is dependent on Simon’s FFO performance and achievement of certain objective criteria goals and has a maximum potential fair value at issuance of $22.1 million.

The grant date fair values of any LTIP units for market-based awards are estimated using a Monte Carlo model, and the resulting fixed expense is recorded regardless of whether the market condition criteria are achieved if the required service is delivered. The grant date fair values of the market-based awards are being amortized into expense over the period from the grant date to the date at which the awards, if earned, would become vested. The expense of the performance-based award is recorded over the period from the grant date to the date at which the awards, if earned, would become vested, based on our assessment as to whether it is probable that the performance criteria will be achieved during the applicable performance periods.

The Compensation Committee approved LTIP unit grants as shown in the table below. The extent to which LTIP units were earned, and the aggregate grant date fair value, are as follows:


LTIP Program	LTIP Units Earned	Grant Date Fair Value of TSR Award	Grant Date Target Value of Performance-Based Awards
2018 LTIP program - Tranche A	38,148	$6.1 million	$6.1 million
2018 LTIP program - Tranche B	-	$6.1 million	$6.1 million
2019 LTIP program	To be determined in 2022	$9.5 million	$14.7 million
2021 LTIP program	To be determined in 2024	$5.7 million	$12.2 million

We recorded compensation expense, net of capitalization, related to these LTIP programs of approximately $7.5 million and $3.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Restricted Stock and Restricted Stock Units. The Compensation Committee awarded 25,715 shares of restricted stock to employees during the nine months ended September 30, 2021 at a weighted-average fair market value of $113.77 per share. During the nine months ended September 30, 2021, our non-employee Directors were awarded 15,859 shares of restricted stock at a weighted-average fair market value of $122.64 per share. These shares represent a portion of the compensation we pay our non-employee Directors, and all of the shares have been placed in a non-employee Director deferred compensation account maintained by us. The grant date fair value of the employee restricted stock awards is being recognized as expense over the three-year vesting service period. The grant date fair value of the non-employee Director restricted stock awards is being recognized as expense over the one-year vesting service period. In accordance with the Operating Partnership's partnership agreement, the Operating Partnership issued an equal number of units to Simon that are subject to the same vesting conditions as the restricted stock. During the first quarter of 2021, as part of the 2021 LTI Program the Compensation Committee established a grant of 37,976 time-based restricted stock units under the 2019 Plan at a weighted average fair market value of $112.92 per share. These awards will vest, subject to the grantee's continued service, on March 1, 2024. The $4.3 million grant date fair value of the awards is being recognized as expense over the three-year vesting service period. In accordance with the Operating Partnership's partnership agreement, the Operating Partnership issued an equal number of units to Simon that are subject to the same vesting conditions as the restricted stock.

During 2020, the Compensation Committee established a one-time grant of 312,263 time-based restricted stock units under the 2019 Plan at a weighted average fair market value of $84.37 per share. These awards will vest, subject to the grantee's continued service on each applicable vesting date, in one-third increments on January 1, 2022, January 1, 2023, and January 1, 2024. The grant date fair value of the awards of $26.3 million is being recognized as expense over the three-year vesting service period.

We recorded compensation expense, net of capitalization, related to restricted stock and restricted stock units of approximately $12.4 million and $8.2 million for the nine months ended September 30, 2021 and 2020, respectively.

9. Lease Income

Fixed lease income under our operating leases includes fixed minimum lease consideration and fixed common area maintenance, or CAM, reimbursements recorded on a straight-line basis. Variable lease income includes consideration based on

sales, as well as reimbursements for real estate taxes, utilities, marketing, and certain other items including negative variable lease income as discussed below.


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Fixed lease income	$	921,521	$	929,335	$	2,783,459	$	2,939,257
Variable lease income		286,402		64,496		728,347		330,315
Total lease income	$	1,207,923	$	993,831	$	3,511,806	$	3,269,572

Tenant receivables and accrued revenue in the accompanying consolidated balance sheets includes straight-line receivables of $573.9 million and $597.6 million at September 30, 2021 and December 31, 2020, respectively.

In April 2020, the FASB staff released guidance focused on treatment of concessions related to the effects of COVID-19 on the application of lease modification guidance in Accounting Standards Codification (ASC) 842, “Leases.” The guidance provides a practical expedient to forgo the associated reassessments required by ASC 842 when changes to a lease result in similar or lower future consideration. We have elected to generally account for rent abatements as negative variable lease consideration in the period granted, or in the period we determine we expect to grant an abatement. Further abatements granted in the future will reduce lease income in the period we grant, or determine we expect to grant, an abatement.

We have agreed to deferral or abatement arrangements with a number of our tenants as a result of the COVID-19 pandemic. Discussions with our tenants are ongoing and may result in further rent deferrals, lease amendments, abatements and/or lease terminations, as we deem appropriate on a case-by-case basis based on each tenant's unique financial and operating situation. In addition, uncollected rent due from certain of our tenants is subject to ongoing litigation, the outcome of which may affect our ability to collect in full the associated outstanding receivable balances.

In connection with rent deferrals or other accruals of unpaid rent payments, if we determine that rent payments are probable of collection, we will continue to recognize lease income on a straight-line basis over the lease term along with associated tenant receivables. However, if we determine that such deferred rent payments or other accrued but unpaid rent payments are not probable of collection, lease income will be recorded on the cash basis, with the corresponding tenant receivable and deferred rent receivable balances charged as a direct write-off against lease income in the period of the change in our collectability determination. Additionally, our assessment of collectability incorporates information regarding a tenant’s financial condition that is obtained from available financial data, the expected outcome of contractual disputes and other matters, and our communications and negotiations with the tenant.

When a tenant seeks to reorganize its operations through bankruptcy proceedings, we assess the collectability of receivable balances. Our ongoing assessment incorporates, among other things, the timing of a tenant’s bankruptcy filing and our expectations of the assumptions by the tenant in bankruptcy proceedings of leases at the Company’s properties on substantially similar terms.

10. 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.

Lease Commitments

As of September 30, 2021, a total of 23 of our consolidated properties are subject to ground leases. The termination dates of these ground leases range from 2022 to 2090, including periods for which exercising an extension option is reasonably assured. 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 2021 to 2028. These office leases generally require us to make fixed annual rental payments plus pay our share of common area, real estate taxes, and utility expenses. Some of our ground and office leases include escalation clauses. All of our lease arrangements are classified as operating leases. We incurred ground lease expense and office lease expense, which are included in other expense and home office and regional expense, respectively, as follows:


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Operating Lease Cost
Fixed lease cost	$	8,118	$	8,015	$	24,367	$	23,161
Variable lease cost		3,984		3,130		11,821		10,217
Sublease income		(187)		(187)		(560)		(560)
Total operating lease cost	$	11,915	$	10,958	$	35,628	$	32,818


	For the Nine Months Ended
	September 30,
	2021		2020
Other Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	36,098	$	33,301

Weighted-average remaining lease term - operating leases		33.8 years		34.6 years
Weighted-average discount rate - operating leases		4.87%		4.86%

Minimum lease payments due under these leases for years ending December 31, excluding applicable extension options and renewal options unless reasonably certain of exercise and any sublease income, are as follows:


2021	$	32,131
2022		32,838
2023		32,979
2024		33,114
2025		33,124
Thereafter		888,217
	$	1,052,403
Impact of discounting		(543,332)
Operating lease liabilities	$	509,071

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 September 30, 2021 and December 31, 2020, the Operating Partnership guaranteed joint venture related mortgage indebtedness of $209.2 million and $219.2 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 The Mills rely upon anchor tenants to attract customers; however, anchors do not contribute materially to our financial results as many anchors 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.

Hurricane Impacts

During the third quarter of 2020, one of our properties located in Texas experienced property damage and business interruption as a result of Hurricane Hanna. We wrote-off assets of approximately $9.6 million, and recorded an insurance recovery receivable, and have received $14.0 million of insurance proceeds from third-party carriers. The proceeds were used for property restoration and remediation and reduced the insurance recovery receivable. During the quarter ended September 30, 2021, we recorded a $3.5 million gain related to property insurance recovery of previously depreciated assets. This amount was recorded in gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairments, net.

During the third quarter of 2020, one of our properties located in Louisiana experienced property damage and business interruption as a result of Hurricane Laura. We wrote-off assets of approximately $11.1 million and recorded an insurance recovery receivable, and have received $27.5 million of insurance proceeds from third-party carriers. The proceeds were used for property restoration and remediation and reduced the insurance recovery receivable. During the quarter ended September 30, 2021, we recorded a $17.5 million gain related to property insurance recovery of previously depreciated assets. This amount was recorded in gain (loss) on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairments, net.

COVID-19

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus, or COVID-19, a global pandemic and recommended containment and mitigation measures worldwide. The COVID-19 pandemic has had a material negative impact on economic and market conditions around the world, and, notwithstanding the fact that vaccines are being administered in the United States and elsewhere, the pandemic continues to adversely impact economic activity in retail real estate. The impact of the COVID-19 pandemic continues to evolve and governments and other authorities, including where we own or hold interests in properties, have imposed measures intended to control its spread, including restrictions on freedom of movement, group gatherings and business operations such as travel bans, border closings, business closures, quarantines, stay-at-home, shelter-in-place orders, density limitations and social distancing measures. As a result of the COVID-19 pandemic and these measures, the Company has experienced and may continue to experience material impacts including changes in the ability to recognize revenue due to changes in our assessment of the probability of collection of lease income and asset impairment charges as a result of changing cash flows generated by our properties and investments.

Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 StreetIndianapolis, Indiana 46204 (Address of principal executive offices)
(317) 636-1600 (Registrant’s telephone number, including area code)