8-KFinancial EventsOther Events

SIMON PROPERTY GROUP INC. 8-K Report, Financial Restatement (Jan 13, 2016)

Filed January 13, 2016For Securities:SPGSPG-PJ

Summary

Simon Property Group, Inc. (SPG) has filed a Form 8-K to report a non-reliance on previously issued interim financial statements for the first three quarters of 2015. This restatement is solely due to the recognition of a $206.9 million non-cash gain related to an equity method investment in Klépierre SA. The gain arose in the first quarter of 2015 when Klépierre's acquisition of Corio N.V. resulted in SPG's ownership stake decreasing from 28.9% to 18.3%. Importantly, management and the Audit Committee, in consultation with their independent auditor, concluded that this adjustment does not impact previously reported cash flows from operating activities or key non-GAAP performance metrics such as Funds From Operations (FFO), Net Operating Income (NOI), and Comparable Property NOI. Investors should note that while the reported net income and earnings per share for these periods will be higher, the core operational and cash-generating aspects of the business remain unchanged by this specific adjustment.

Key Highlights

  • 1SPG is restating its interim financial statements for Q1, Q2, and Q3 2015 due to a non-cash gain recognition.
  • 2The adjustment adds a $206.9 million non-cash gain related to an equity investment in Klépierre SA.
  • 3The gain occurred in Q1 2015 due to a change in SPG's ownership percentage in Klépierre following Klépierre's acquisition of Corio N.V.
  • 4SPG's ownership in Klépierre decreased from 28.9% to 18.3% in Q1 2015 and later increased to 20.3% in Q2 2015.
  • 5Crucially, this non-cash gain does NOT affect previously reported cash flows from operations.
  • 6Key non-GAAP performance metrics (FFO, NOI, Comparable Property NOI) remain unchanged by this restatement.
  • 7Amended 2015 Form 10-Q/As have been filed to reflect these changes.

Frequently Asked Questions

SPG is filing this 8-K to announce that it is restating its previously issued interim financial statements for the first three quarters of 2015. This restatement is to properly recognize a non-cash gain related to an equity investment.

The $206.9 million gain is a non-cash gain arising from a change in SPG's ownership percentage in Klépierre SA. When Klépierre acquired Corio N.V. and issued new shares, SPG's ownership stake was diluted, triggering a required gain recognition based on accounting rules for equity investments.

No, the filing explicitly states that this non-cash gain does not affect previously reported cash flows from operating activities. Furthermore, key non-GAAP performance measures like Funds From Operations (FFO), Net Operating Income (NOI), and Comparable Property NOI for the affected periods remain unchanged.

The recognition of the $206.9 million non-cash gain will increase the reported consolidated net income and diluted earnings per share for the first three quarters of 2015. For example, Q1 2015 diluted EPS increased by $0.57.