UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑K

FORM 10-K

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

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20152018

SIMON PROPERTY GROUP, INC.

SIMON PROPERTY GROUP, L.P.

(Exact name of registrant as specified in its charter)

225 West Washington Street
Indianapolis, Indiana 46204
(Address of principal executive offices) (ZIP Code)

(317) 636‑1600
(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-knownwell‑known seasoned issuer (as defined in Rule 405 of the Securities Act). Yes ý    No o

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

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. Yes ý    No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-TS‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant'sRegistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý☐

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

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. 

Indicate by check mark whether the Registrant is a shell company (as defined in rule 12-b12‑b of the Act). Yes o    No ý

The aggregate market value of shares of common stock held by non-affiliatesnon‑affiliates of the RegistrantSimon Property Group, Inc. was approximately $53,152$52,260 million based on the closing sale price on the New York Stock Exchange for such stock on June 30, 2015.2018.

As of January 29, 2016,31, 2019, Simon Property Group, Inc. had 314,806,649308,961,608 and 8,000 shares of common stock and Class B common stock outstanding, respectively.

Simon Property Group, L.P. had no publicly-traded voting equity as of June 30, 2018.  Simon Property Group, L.P. has no common stock outstanding.

Documents Incorporated By Reference

Portions of the Registrant'sSimon Property Group, Inc.’s Proxy Statement in connection with its 20162019 Annual Meeting of Stockholders are incorporated by reference in Part III.

Part I

Item 1.Business
Part I

Item 1.    Business

Simon Property Group, Inc., Simon or the Company, 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., or the Operating Partnership, is our majority-owned Delaware partnership subsidiary that owns all of our real estate properties and other assets. In this discussion,Unless stated otherwise or the terms "we",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" refer tomean collectively Simon, the Operating Partnership and its subsidiaries.those entities/subsidiaries owned or controlled by Simon and/or the Operating Partnership. According to the Operating Partnership's partnership agreement, the Operating Partnership is required to pay all expenses of Simon.

We own, develop and manage retail real estate properties,premier shopping, dining, entertainment and mixed-use destinations, which consist primarily of malls, Premium Outlets®Outlets®, and The Mills®Mills®. As of December 31, 2015,2018, we owned or held an interest in 209 income-producing206 income‑producing properties in the United States, which consisted of 108107 malls, 7169 Premium Outlets, 14 Mills, four lifestyle centers, and 12 other retail properties in 37 states and Puerto Rico. We opened four outlets in 2015 and have three outlets and two other significant retail projects under development. In addition, we have redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 29several properties in the U.S.United States, Canada, Europe and Europe.Asia. Internationally, as of December 31, 2015,2018, we had ownership interests in nine Premium Outlets in Japan, threefour Premium Outlets in South Korea, three Premium Outlets in Canada, two Premium Outlets in Canada, one Premium Outlet in Mexico,Malaysia, and one Premium Outlet in Malaysia. As of December 31, 2015, we had a noncontrolling ownershipMexico. We also own an interest in a joint venture that holds five outleteight Designer Outlet properties in Europe, of which six properties are consolidated, and one outletDesigner Outlet property in Canada. Of the fiveeight properties in Europe, two are located in Italy, two are located in the Netherlands and one each is located in Austria, the Netherlands,Germany, France and the United Kingdom. Additionally, asWe also have three international outlet properties under development. As of December 31, 2015,2018, we also owned a 20.3%21.3% equity stake in Klépierre SA, or Klépierre, a publicly traded, Paris-basedParis‑based real estate company, which owns, or has an interest in, shopping centers located in 16 countries in Europe.

For a description of our operational strategies and developments in our business during 2015,2018, see Item 7, "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” of this Form 10-K.10‑K.

Other Policies

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

Investment Policies

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

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

Financing Policies

Because ourSimon’s REIT qualification requires us to distribute at least 90% of ourits REIT taxable income, we regularly access the debt markets to raise the funds necessary to finance acquisitions, develop and redevelop properties, and refinance maturing debt. We must comply with the covenants contained in our financing agreements that limit our ratio of debt to total assets or market value, as defined. For example, the Operating Partnership's linePartnership’s lines of credit and the indentures for the Operating Partnership'sPartnership’s debt securities contain covenants that restrict the total amount of debt of the Operating Partnership to 65%, or 60% in relation to certain debt, of total assets, as defined under the related agreements, and secured debt to 50% of total assets. In addition, these agreements contain other covenants requiring compliance with financial

necessary or appropriate, we may make one or more draws under either the Credit FacilitiesFacility to pay amounts outstanding from time to time on the Commercial Paper program.

We may also finance our business through the following:

•

issuance of shares of common stock or preferred stock;



•

issuance of additional common units of limited partnership interest in the Operating Partnership, or units;



•

issuance of preferred units of limited partnership interest in the Operating Partnership, or preferred units;



•

issuance of other securities including unsecured notes and mortgage debt;



•

draws on our Credit Facilities;



•

borrowings under the Commercial Paper program; or



•

sale or exchange of ownership interests in properties.

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

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

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

Conflict of Interest Policies

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

The sale by the Operating Partnership of any property that it owns may have an adverse tax impact on the SimonsSimon family or other limited partners of the Operating Partnership. In order to avoid any conflict of interest, between us and the Simons, ourSimon charter requires that at least three-fourths of ourSimon’s independent directors must authorize and require the Operating Partnership to sell any property it owns. Any such sale is subject to applicable agreements with third parties. Noncompetition agreements executed by David Simon, ourSimon’s Chairman, and Chief Executive Officer and President and Herbert Simon, ourSimon’s Chairman Emeritus, as well as David Simon's employment agreement, contain covenants limiting their ability to participate in certain shopping center activities.

Policies With Respect To Certain Other Activities

We intend to make investments which are consistent with ourSimon’s qualification as a REIT, unless ourSimon’s Board of Directors determines that it is no longer in ourSimon’s best interests to so qualify as a REIT. OurSimon’s Board of Directors may make such a determination because of changing circumstances or changes in the REIT requirements. We haveSimon has authority to issue shares of ourits capital stock or other securities in exchange for property. We also have authority to repurchase or otherwise reacquire ourSimon’s shares, the Operating Partnership’s units, or any other securities. On April 2, 2015, ourFebruary 13, 2017, Simon’s Board of Directors authorized us toa two-year extension of the previously authorized $2.0 billion common stock repurchase plan, or the Repurchase Program, through March 31, 2019 and on February 11, 2019, Simon's Board of Directors authorized a new common stock repurchase plan.  Under the new program, the Company may purchase up to $2.0 billion of ourits common stock over a twenty-four monthduring the two-year period as market conditions warrant, or the Repurchase Program.ending February 11, 2021. Under the Repurchase Program, weSimon may repurchase the shares in the open market, or in privately negotiated transactions. WeAt December 31, 2018, we had remaining authority to repurchase $640.6 million of common stock. Simon may also issue shares of ourits common stock, or pay cash at ourits option, to holders of units in future periods upon exercise of such holders'holders’ rights under the partnership agreement of the Operating Partnership. Our policy prohibits us from making any loans to ourthe directors or executive officers of Simon for any purpose. We may make loans to the joint ventures in which we participate. Additionally, we may make or buy interests in loans secured by real estate properties owned by others or make investments in companies that own real estate assets.

Competition

The retail real estate industry is dynamic and competitive. We compete with numerous merchandise distribution channels, including malls, outlet centers, community/lifestyle centers, and other shopping centers in the United States and abroad. We also compete with internet retailing sites and catalogs which provide retailers with distribution options beyond existing

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brick and mortar retail properties. The existence of competitive alternatives could have a material adverse effect on our ability to lease space and on the level of rents we can obtain. This results in competition for both the tenants to occupy the properties that we develop and manage as well as for the acquisition of prime sites (including land for development and operating properties). We believe that there are numerous factors that make our properties highly desirable to retailers, including:

•

the quality, location and diversity of our properties;



•

our management and operational expertise;



•

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



•

our mall marketing initiatives and consumer focused strategic corporate alliances.

Certain Activities

During the past three years, we have:

•

issued 1,155,633

·

issued 5,614,062 shares of Simon common stock upon the exchange of units in the Operating Partnership;

·

issued 191,740 restricted shares of Simon common stock and 586,720 long‑term incentive performance units, or LTIP units, net of forfeitures, under The Simon Property Group 1998 Stock Incentive Plan, as amended, or the 1998 Plan;

·

purchased 6,153,021 shares of Simon common stock in the open market for $1.02 billion pursuant to our Repurchase Program;

·

issued 475,183 units in the Operating Partnership in exchange for the remaining interest in a former joint venture property;

·

redeemed 454,704 units in the Operating Partnership at an average price of $179.25 per unit in cash;

·

amended the Supplemental Facility in April 2016 to increase our borrowing capacity, and amended and extended the Supplemental Facility in February 2018 to further increase our borrowing capacity, extend its term and reduce its base interest rate;

·

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

Employees

At December 31, 2015,2018, we and our affiliates employed approximately 5,000 persons at various properties and offices throughout the United States, of which approximately 1,8501,700 were part-time.part‑time. Approximately 1,1001,000 of these employees were located at our corporate headquarters in Indianapolis, Indiana.

Corporate Headquarters

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

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Available Information

            We areSimon is a large accelerated filer (as defined in Rule 12b-212b‑2 of the Securities Exchange Act of 1934, as amended, or the Exchange Act) and areis required, pursuant to Item 101 of Regulation S-K,S‑K, to provide certain information regarding our website and the availability of certain documents filed with or furnished to the Securities and Exchange Commission, or the SEC. Our Internet website address is www.simon.com. Our annual reports on Form 10-K,10‑K, quarterly reports on Form 10-Q,10‑Q, current reports on Form 8-K8‑K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available or may be accessed free of charge through the "About“About Simon/Investor Relations/Financial Information"Relations” section of our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our Internet website and the information contained therein or connected thereto are not, and are not intended to be, incorporated into this Annual Report on Form 10-K.10‑K.

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

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

Executive Officers of the Registrant

The following table sets forth certain information with respect to ourSimon’s executive officers as of February 26, 2016.22, 2019.

The executive officers of Simon serve at the pleasure of ourSimon’s Board of Directors, except for David Simon and Richard S. Sokolov who areis subject to an employment agreementsagreement which may call for certain payments upon termination.

Mr. Simon has served as the Chairman of ourSimon’s Board of SimonDirectors since 2007, and Chief Executive Officer of Simon or its predecessor since 1995.1995 and assumed the position of President in 2019. Mr. Simon has also been a director of Simon or its predecessor since its incorporation in 1993. Mr. Simon was the President of Simon'sSimon’s predecessor from 1993 to 1996. From 1988 to 1990, Mr. Simon was Vice President of Wasserstein Perella & Company. From 1985 to 1988, he was an Associate at First Boston Corp. He is the son of the late Melvin Simon and the nephew of Herbert Simon.

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

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

            Mr. Contis serves as Simon's Senior Executive Vice President and President of Simon Malls. Mr. Contis joined Simon in 2011. Prior to joining Simon, Mr. Contis served as the President of Real Estate at Equity Group Investments, LLC. Mr. Contis has over 35 years of domestic and international real estate experience including 25 years overseeing both public and private mall portfolios.

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

            Mr. Barkley serves as Simon's General Counsel and Secretary. Mr. Barkley joined MSA in 1978 as a staff attorney and was named Assistant General Counsel in 1984. He was named General Counsel in 1992 and Secretary in 1993.

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

  Mr. Broadwater serves as Simon's Senior Vice President and Chief Accounting Officer and prior to that as Simon's Vice President and Corporate Controller. Mr. Broadwater joined Simon in 2004 andFivel was promoted to Senior Vice PresidentGeneral Counsel and Chief Accounting OfficerSecretary in 2009.2017.

Mr. McDade serves as Simon's SeniorSimon’s Executive Vice President, Chief Financial Officer and Treasurer. Mr. McDade joined Simon in 2007 as the Director of Capital Markets and was promoted to Senior Vice President of Capital Markets in 2013. Mr. McDade became Treasurer in 2014 and was promoted to TreasurerExecutive Vice President and Chief Financial Officer in 2014.2018.

Mr. Snyder serves as Simon’s Assistant General Counsel and Assistant Secretary. Mr. Snyder joined Simon in 2016 as Senior Deputy General Counsel. Immediately prior to joining Simon, Mr. Snyder was Managing Partner of the Crimson Fulcrum Strategic Institute. Mr. Snyder previously served as Executive Vice President, General Counsel and Corporate Secretary for Beechcraft Corporation as well as Chief Counsel Mergers & Acquisitions for Koch Industries, Inc.  Mr. Snyder was promoted to Assistant General Counsel and Assistant Secretary in 2017.

Mr. Reuille serves as Simon’s Senior Vice President and Chief Accounting Officer and prior to that as Simon’s Vice President and Corporate Controller. Mr. Reuille joined Simon in 2009 and was promoted to Senior Vice President and Chief Accounting Officer in 2018.

Item 1A.  Risk Factors

The following factors, among others, could cause our actual results to differ materially from those containedexpressed or implied in forward-lookingforward‑looking statements made in this Annual Report on Form 10-K10‑K and presented elsewhere by our management from time to time. These factors may have a material adverse effect on our business, financial condition, liquidity, results of operations, funds from operations, or FFO, and prospects, which we refer to herein as a material adverse effect on us or as materially and adversely affecting us, and you should carefully consider them. Additional risks and uncertainties not presently known to us or which are currently not believed to be material may also affect our actual results. We may update these factors in our future periodic reports.

Risks Relating to Retail Operations

             Overall economic and market conditions mayConditions that adversely affect the general retail environment.environment could materially and adversely affect us.

Our concentration in the retail real estate market – our primary source of revenue is retail tenants – means that we are subject to a number of factorscould be materially and adversely affected by conditions that couldmaterially and adversely affect the retail environment generally, including, without limitation:

•

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



•

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



•

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



•

the willingness of retailers to lease space in our properties;



•

tenant bankruptcies and a resulting rejection of our leases;



•

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



•

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



•

increased operating costs;



•

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



•

casualties and other natural disasters; and



•

the potential for terrorist activities.

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

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

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

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

Our properties are typically anchored by department stores and other large nationally recognized tenants. The value of someCertain of our properties could be materiallyanchors and adversely affected if these anchorsother tenants have ceased their operations, downsized their brick-and-mortar presence or other major tenants failfailed to comply with their contractual obligations or cease their operations.to us and others. 

For example, among department stores and other large storesnational retailers — often referred to as "big box"“big box” stores — corporate merger activity typically results in the closure of duplicate or geographically overlapping store locations. Further, sustained adverse pressure on the results of our department stores and major tenantsother national retailers may have a similarly sustained adverse impact upon our own results. Certain department stores and other national retailers have experienced, and may continue to experience for the foreseeable future given(given current macroeconomic uncertainty and less-than-desirable levels of consumer

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confidence, confidence), considerable decreases in customer traffic in their retail stores, increased competition from alternative retail options such as those accessible via the Internet and other forms of pressure on their business models. As pressure on these department stores and other national retailers increases, their ability to maintain their stores, meet their obligations both to us and to their external lenders and suppliers, withstand takeover attempts by investors or rivals or avoid bankruptcy and/or liquidation may be impaired and result in closures of their stores or their seeking of a lease

modification with us. Any lease modification could be unfavorable to us as the lessor and could decrease current or future effective rents or expense recovery charges. Other tenants may be entitled to modify the economic or other terms of, or terminate, their existing leases with us in the event of such closures.

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

We face potential adverse effects from tenant bankruptcies.

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

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

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

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

Excess space at our properties could materially and adversely affect us.

Certain of our properties have had excess space available for prospective tenants, and those properties may continue to experience, and other properties may commence experiencing, such oversupply in the future.  Among other causes, (1) there has been an increased number of bankruptcies of anchor stores and other national retailers, as well as store closures, and (2) there has been lower demand from retail tenants for space, due to certain retailers increasing their use of e-commerce websites to distribute their merchandise.  As a result of the increased bargaining power of creditworthy retail tenants, there is downward pressure on our rental rates and occupancy levels, and this increased bargaining power may also result in us having to increase our spend on tenant improvements and potentially make other lease modifications, any of which, in the aggregate, could materially and adversely affect us.

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

We may not be able to lease new properties to an appropriate mix of tenants that generates optimal customer traffic. Also, when leases for our existing properties expire, the premises may not be relet or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the current lease terms. If we elect to pursue a “mixed use” redevelopment we expose ourselves to risks associated with each non-retail use (eg. office, residential, hotel and entertainment). To the extent that our leasing goals are not achieved, we could be materially and adversely affected.

Risks Relating to Real Estate Investments and Operations

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

As of December 31, 2018, we held interests in consolidated and joint venture properties that operate in Austria, Canada, France, Italy, Germany, Japan, Malaysia, Mexico, the Netherlands, South Korea, and the United Kingdom. We also have an equity stake in Klépierre, a publicly traded European real estate company, which operates in 16 countries in Europe. Accordingly, our operating results and the value of our international operations may be impacted by any unhedged movements in the foreign currencies in which those operations transact and in which our net investment in the international operation is held. We may pursue additional investment, development and redevelopment/expansion opportunities outside the United States. International investment, ownership, development and redevelopment/expansion activities carry risks that are different from those we face with our domestic properties and operations. These risks include, but are not limited to:

Our international activities represented approximately 5.1% of consolidated net income and 10.0% of our net operating income, or NOI, for the year ended December 31, 2018. To the extent that we expand our international activities, the above risks could increase in significance, which in turn could have a material adverse effect on us.

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

We regularly acquire and develop new properties and redevelop and expand existing properties, and these activities are subject to various risks. We may not be successful in pursuing acquisition, development or redevelopment/expansion opportunities. In addition, newly acquired, developed or redeveloped/expanded properties may not perform as well as

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expected, impacting our anticipated return on investment. We are subject to other risks in connection with any acquisition, development and redevelopment/expansion activities, including the following:

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

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

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

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

In the event that these risks were realized at the same time at multiple properties, we could be materially and adversely affected.

Real estate investments are relatively illiquid.

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

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

            As of December 31, 2015, we held interests in joint venture properties that operate in Austria, Italy, Japan, Malaysia, Mexico, the Netherlands, South Korea, Canada, and the United Kingdom. We also have an equity stake in Klépierre, a publicly-traded European real estate company which operates in 16 countries in Europe. Accordingly, our operating results and the value of our international operations may be impacted by any unhedged movements in the foreign currencies in which those operations transact and in which our net investment in the international operation is held. We may pursue additional investment, development and redevelopment/expansion opportunities outside the United States. International investment, ownership, development and redevelopment/expansion activities carry risks that are different from those we face with our domestic properties and operations. These risks include, but are not limited to:

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adverse effects of changes in exchange rates for foreign currencies;



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



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



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differing lending practices;



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differences in cultures;



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



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difficulties in managing international operations; and



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obstacles to the repatriation of earnings and cash.

            Our international activities represented approximately 7.9% of our net operating income, or NOI, for the year ended December 31, 2015. To the extent that we expand our international activities, the above risks could increase in significance, which in turn could have a material adverse effect on us.

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Risks Relating to Debt and the Financial Markets

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

As of December 31, 2015,2018, our consolidated mortgages and unsecured indebtedness, excluding related premium, discount and discount,debt issuance costs, totaled $22.5$23.4 billion. As a result of this indebtedness, we are required to use a substantial portion of our cash flows for debt service, including selected repayment at scheduled maturities, which limits our ability to use those cash flows to fund the growth of our business. We are also subject to the risks normally associated with debt financing, including the risk that our cash flows from operations will be insufficient to meet required debt service or that we will be able to refinance such indebtedness on acceptable terms, or at all. Our debt service costs generally will not be reduced if developments at the applicable property, such as the entry of new competitors or the loss of major tenants, cause a reduction in the income from the property. Our indebtedness could also have other adverse consequences on us, including reducing our access to capital or increasing our vulnerability to general adverse economic, industry and market conditions. In addition, if a property is mortgaged to secure payment of indebtedness and income from such property is insufficient to pay that indebtedness, the property could be foreclosed upon by the mortgagee resulting in a loss of income and a decline in our total asset value. If any of the foregoing occurs, we could be materially and adversely affected.

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

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

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

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

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

The Operating Partnership'sPartnership’s outstanding senior unsecured notes, Credit Facilities, the Commercial Paper program, and Simon'sSimon’s preferred stock are periodically rated by nationally recognized credit rating agencies. The credit ratings are based on our operating performance, liquidity and leverage ratios, financial condition and prospects, and other factors viewed by the credit rating agencies as relevant to us and our industry and the economic outlook in general. Our credit rating can affect the amount of capital we can access, as well as the terms of any financing we obtain. Since we depend primarily on debt financing to fund the growth of our business, an adverse change in our credit rating, including actual changes and changes in outlook, or even the initiation of a review of our credit rating that could result in an adverse change, could have a material adverse effect on us.

             The agreements that governAn increase in interest rates would increase our indebtedness contain various covenants that impose restrictionsinterest costs on us that might affectvariable rate debt and could adversely impact our ability to operate freely.

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

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

As of December 31, 2018, we had approximately $844 million of outstanding consolidated indebtedness that bears interest at variable rates, and we may incur more variable rate indebtedness in the future. If interest rates increase, then so would the interest costs on our unhedged variable rate debt, which could adversely affect our cash flows and our ability to pay principal and interest on our debt and our ability to make distributions to our stockholders. Further, rising interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense.

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

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

Risks Relating to Income Taxes

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

We are subject to certain income-based taxes, both domestically and internationally, and other taxes, including state and local taxes, franchise taxes, and withholding taxes on dividends from certain of our international investments. We

currently receive favorablefollow local tax treatmentlaws and regulations in various domestic and international jurisdictions through tax rules andjurisdictions. Should these laws or regulations or through international treaties. Should we no longer receive such benefits,change, the amount of taxes we pay may increase.increase accordingly.

In the United States, weSimon and certain subsidiaries of the Operating Partnership have elected to be taxed as a REITREITs under Sections 856 through 860 of the Internal Revenue Code. We believe weSimon and these subsidiaries have been organized and operated in a manner which allows usthem to qualify for taxation as a REITREITs under the Internal Revenue Code. We intend to continue to operate in this manner. However, our qualification and taxation as a REITREITs depend upon the ability of Simon and these subsidiaries to satisfy several requirements (some of which are outside our abilitycontrol), including tests related to meet, through actualour annual operating results, asset diversification, distribution levels and diversity of stock ownership, theownership. The various REIT qualification tests imposed underrequired by the Internal Revenue Code. REIT qualification is governed byCode are highly technical and complex provisions for which there are only limited judicial or administrative interpretations.complex. Accordingly, there iscan be no assurance that we haveSimon or any of these subsidiaries has operated in accordance with these requirements or will continue to operate in a manner so as to qualify or remain qualified as a REIT.

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

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we

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

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

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

Any such corporate tax liability could be substantial and would reduce the amount of cash available for, among other things, our operations and distributions to stockholders. In addition, if Simon fails to qualify as a REIT, it will not be allowed a deduction forrequired to make distributions to stockholders in computing our REIT taxable income;



•

we willstockholders. Moreover, a failure by any subsidiary of the Operating Partnership that has elected to be subject to corporate level income tax, including any applicable alternative minimum tax, on our REIT taxable income at regular corporate rates; and



•

unless entitled to relief under relevant statutory provisions, we will also be disqualified from treatmenttaxed as a REIT to qualify as a REIT would also cause Simon to fail to qualify as a REIT, and the same adverse consequences would apply to it and its stockholders. Failure by Simon or any of these subsidiaries to qualify as a REIT also could impair our ability to expand our business and raise capital, which could materially and adversely affect us.

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

A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the four taxable years followingordinary course of business. Although we do not intend to hold any properties that would be characterized as held for sale to customers in the year during which qualification was lost.

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

In order for usSimon and certain subsidiaries of the Operating Partnership to qualify to be taxed as a REIT,REITs, and assuming that certain other requirements are also satisfied, weSimon and each such subsidiary generally must distribute at least 90% of ourtheir respective REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, to our stockholderstheir respective equity holders each year, so that federal corporateyear. To this point, Simon and each such subsidiary have historically distributed at least 100% of taxable income and thereby avoided income tax does not apply to earnings that we distribute.altogether. To the extent that we satisfySimon or any such subsidiary satisfies this distribution requirement and qualifyqualifies for taxation as a REIT, but distributedistributes less than 100% of ourits REIT taxable income, determined without regard to the dividends paid deduction and includingSimon or any net capital gains, wesuch subsidiary will be subject to U.S. federal corporate income tax on ourits undistributed net taxable income. In addition, we willincome and could be subject to a 4% nondeductible excise tax if the actual amount that we distributeis distributed to our stockholdersequity holders in a calendar year is less than "the“the required minimum distribution amount"amount” specified under U.S. federal income tax laws. We intend to make distributions to our stockholdersthe equity holders of Simon and the aforementioned subsidiaries of the Operating Partnership to comply with the REIT requirements of the Internal Revenue Code.

From time to time, weSimon and the aforementioned subsidiaries of the Operating Partnership might generate taxable income greater than ourtheir respective cash flow as a result of differences in timing between the recognition of taxable income and the actual receipt of cash or the effect of nondeductible capital expenditures, the creation of reserves, or required debt

or amortization payments. If weSimon and these subsidiaries do not have other funds available in these situations, weSimon and these subsidiaries could be required to access capital on unfavorable terms (the receipt of which cannot be assured), sell assets at disadvantageous prices, distribute amounts that would otherwise be invested in future acquisitions, capital

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expenditures or repayment of debt, or make taxable distributions of our capital stock or debt securities to make distributions sufficient to enable usthem to pay out enough of ourtheir respective REIT taxable income to satisfy the REIT distribution requirement and avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Further, amounts distributed will not be available to fund the growth of our business. Thus, compliance with the REIT requirements may adversely affect our liquidity and our ability to execute our business plan.

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

To qualify to be taxed as a REITREITs for U.S. federal income tax purposes, weSimon and certain subsidiaries of the Operating Partnership must ensure that, at the end of each calendar quarter, at least 75% of the value of ourtheir respective assets consist of cash, cash items, government securities and "real“real estate assets"assets” (as defined in the Internal Revenue Code), including certain mortgage loans and securities. The remainder of ourtheir respective investments (other than government securities, qualified real estate assets and securities issued by a taxable REIT subsidiary, or TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.

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

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

             New partnershipPartnership tax audit rules could have a material adverse effect on us.

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

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

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

The TCJA has significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. A change made by the TCJA that could affect us and our stockholders is that it generally limits the deduction for net business interest expense in excess of 30% of a business’s adjusted taxable income except for taxpayers that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system for certain property).

Risks Relating to Joint Ventures

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

As of December 31, 2015,2018, we owned interests in 9499 income-producing properties with other parties. Of those, 1318 properties are included in our consolidated financial statements. We account for the other 81 properties, or the joint venture properties, as well as our investmentinvestments in Klépierre (a publicly traded, Paris-based real estate company), Aéropostale, Authentic Brands Group, LLC, or ABG, and our joint ventures with Seritage GrowthHBS Global Properties, or Seritage, and Hudson's Bay Company, or HBC,HBS, using the equity method of accounting. We serve as general partner or property manager for 5857 of these 81 joint venture properties; however, certain major decisions, such as approving the operating budget and selling, refinancing, and redeveloping the properties, require the consent of the other owners. Of the joint venture properties for which we do not serve as general partner or property manager, 20 are in our international joint ventures. TheThese international properties are managed locally by joint ventures in which we share control of the properties with our partner. The other owners have participating rights that we consider substantive for purposes of determining control over the properties'joint venture properties’ assets. The remaining joint venture properties, Klépierre, (a publicly traded, Paris-based real estate company), and our joint ventureventures with HBCAéropostale, ABG, and HBS, are managed by third parties.

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

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

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

Joint venture debt is the liability of the joint venture and is typically secured by a mortgage on the joint venture property, which is non-recourse to us. Nevertheless, the joint venture'sventure’s failure to satisfy its debt obligations could result in the loss of our investment therein. As of December 31, 2015,2018, the Operating Partnership guaranteed joint venture related mortgage indebtedness of $353.7$216.1 million (of which we have a right of recovery from our joint venture partners of $112.8$10.8 million). A default by a joint venture under its debt obligations maywould expose us to liability under a guaranty. We may elect to fund cash needs of a joint venture through equity contributions (generally on a basis proportionate to our ownership interests), advances or partner loans, although such fundings are not typically required contractually or otherwise.

Risks Relating to Environmental Matters

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

            Federal,U.S. federal, state and local laws and regulations relating to the protection of the environment may require us, as a current or previous owner or operator of real property, to investigate and clean up hazardous or toxic substances or petroleum product releases at a property or at impacted neighboring properties. These laws often impose liability regardless of whether the property owner or operator knew of, or was responsible for, the presence of hazardous or toxic substances. These laws and regulations may require the abatement or removal of asbestos containing materials in the event of damage, demolition or renovation, reconstruction or expansion of a property and also govern emissions of and exposure to asbestos fibers in the air. Those laws and regulations also govern the installation, maintenance and removal of underground storage

tanks used to store waste oils or other petroleum products. Many of our properties contain, or at one time contained, asbestos containing materials or underground storage tanks (primarily related to auto service center establishments or emergency electrical generation equipment). We may be subject to regulatory action and may also be held liable to third parties for personal injury or property damage incurred by the parties in connection with any such laws and regulations or hazardous or toxic substances. The costs of investigation, removal or remediation of hazardous or toxic substances, and related liabilities, may be substantial and could materially and adversely affect us. The presence of hazardous or toxic substances, or the failure to remediate the related contamination, may also adversely affect our ability to sell, lease or redevelop a property or to borrow money using a property as collateral.

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Our efforts to identify environmental liabilities may not be successful.

Although we believe that our portfolio is in substantial compliance with U.S. federal, state and local environmental laws and regulations regarding hazardous or toxic substances, this belief is based on limited testing. Nearly all of our properties have been subjected to Phase I or similar environmental audits. These environmental audits have not revealed, nor are we aware of, any environmental liability that we believe is reasonably likely to have a material adverse effect on us. However, we cannot assure you that:

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



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



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



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

We face possible risks associated with climate change.

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

Other Factors Affecting Our Business

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

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

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

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

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

            We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber-attack or cyber intrusion, including by computer hackers, foreign

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governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations and, in some cases, may be critical to the operations of certain of our tenants. We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses,  hardware or software corruption or failure or poor product or vendor/developer selection (including managinga failure of security controls incorporated into or applied to such hardware or software), service provider error or failure, intentional or unintentional actions by employees (including the failure to follow our building systems).security protocols), and other significant disruptions of our IT networks and related systems. Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected. Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.

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

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

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

Provisions in ourSimon’s charter and by-lawsby‑laws and in the Operating Partnership'sPartnership’s partnership agreement could prevent a change of control.

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

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

Following a national referendum in June 2016, the United Kingdom formally notified the European Council on March 29, 2017 of its intention to withdraw from the European Union (“EU”) (commonly referred to as “Brexit”).  The timing of the proposed exit is currently scheduled for March 29, 2019, with a transition period running through December 2020.  A

withdrawal plan was presented to the UK parliament in January 2019 and rejected, creating further uncertainty in negotiations and the process of withdrawal.  The terms governing the future relationship between the United Kingdom and the EU, as well as the legal and economic consequences of those terms, remain unclear. This continues to create political and economic uncertainty, which has affected, and may continue to affect, market and macro-economic conditions in both the United Kingdom and EU economies. In particular, there may be ongoing and increased volatility in financial and foreign exchange markets in the United Kingdom and EU, including a fall in gross domestic product and volatility in the value of Pounds Sterling. Further, financial and other markets may suffer losses as a result of any other countries determining to withdraw from the EU or from any future significant changes to the EU’s structure and/or regulations.

We currently hold, and may acquire additional, equity interests in properties located in the United Kingdom and Europe, as well as other investments that are denominated in Pounds Sterling and Euro. In addition, our Operating Partnership and its subsidiaries have issued, and may issue in the future, senior unsecured notes denominated in Euro. Any of the effects of Brexit described above, and others we cannot anticipate, could have a material adverse effect on us, including the value of our properties and investments and our potential growth in Europe, as well as on our tenants’ businesses, and could amplify the currency risks faced by us.

Item 1B.  Unresolved Staff Comments

None.

Item 2.  Properties

United States Properties

Our U.S. properties primarily consist of malls, Premium Outlets, The Mills, lifestyle centers and other retail properties. These properties contain an aggregate of approximately 184.2181.1 million square feet of gross leasable area, or GLA.

Malls typically contain at least one traditional department store anchor or a combination of anchors and big box retailers with a wide variety of smaller stores connecting the anchors. Additional stores are usually located along the perimeter of the parking area. Our 108107 malls are generally enclosed centers and range in size from approximately 465,000260,000 to 2.62.7 million square feet of GLA. Our malls contain in the aggregate more than 13,700 occupied stores, including approximately 517 anchors, which are predominately national retailers.

Premium Outlets generally contain a wide variety of designer and manufacturer stores located in open-airopen‑air centers. Our 7169 Premium Outlets range in size from approximately 150,000 to 870,000900,000 square feet of GLA. The Premium Outlets are generally located within a close proximity to major metropolitan areas and/or tourist destinations.

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

We also have interests in four lifestyle centers and 12 other retail properties. The lifestyle centers range in size from 160,000170,000 to 900,000930,000 square feet of GLA. The other retail properties range in size from approximately 150,000160,000 to 730,000850,000 square feet of GLA and are considered non-corenon‑core to our business model. In total, the lifestyle centers and other retail properties represent approximately 1.0% of our total operating income before depreciation and amortization.

As of December 31, 2015,2018, approximately 96.1%95.9% of the owned GLA in malls and Premium Outlets was leased and approximately 98.5%97.6% of the owned GLA for The Mills was leased.

We wholly own 137135 of our properties, effectively control 1312 properties in which we have a joint venture interest, and hold the remaining 59 properties through unconsolidated joint venture interests. We are the managing or co-managingco‑managing general partner or member of 206202 properties in the United States. Certain of our joint venture properties are subject to various rights of first refusal, buy-sellbuy‑sell provisions, put and call rights, or other sale or marketing rights for partners which are customary in real estate partnership agreements and the industry. We and our partners in these joint ventures may initiate these provisions (subject to any applicable lock up or similar restrictions) which may result in either the sale of our interest or the use of available cash or borrowings, or the use of Operating Partnership units, to acquire the joint venture interest from our partner.

   On April 13, 2015, we announced a joint venture with Sears Holdings, or Sears, whereby Sears contributed 10

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Simon Property Group, Inc. and Subsidiaries

Simon Property Group, L.P.

Property Table

U.S. Properties