Management’s Discussion & Analysis of Financial Condition and Results of Operations  Acquisitions and Dispositions Development Activity  simon property group, inc. 38 We expect to fund these capital projects with either available cash flow from operations, borrowings from our  Credit Facility, or project specific construction loans. We expect total 2004 new development costs during the year to be  approximately $200 million.  New Developments.  The following describes our current new development projects, the estimated total cost, our share  of the estimated total cost and the construction in progress balance as of December 31, 2003 (dollars in millions):  Dispositions.  As part of our strategic plan to own quality retail real estate we continue to pursue the sale of Properties,  under the right circumstances, that no longer meet our strategic criteria. In 2003, we disposed of thirteen non-core Properties  that no longer met our strategic criteria. These consisted of seven regional malls, five community centers, and one mixed-use  property. We do not believe the sale of these Properties will have a material impact on our future results of operations or cash  flows and their removal from service and sale will not materially affect our ongoing operations. We believe the disposition of  these Properties will enhance the average overall quality of our Portfolio. Buy/sell provisions are common in real estate partnership agreements. Most of our partners are institutional investors  who have a history of direct investment in regional mall properties. Our partners in our joint ventures may initiate these  provisions at any time and if we determine it is in our shareholders’ best interests for us to purchase the joint venture interest,  we believe we have adequate liquidity to execute the purchases of the interests without hindering our cash flows or liquidity.  Should we decide to sell any of our joint venture interests, we would expect to use the net proceeds from any such sale to  reduce outstanding indebtedness. We purchased our interest in Forum Shops for $174.0 million in cash and assumed the minority limited partner’s  $74.2 million share of debt, and other partnership liabilities. In addition, we purchased our 100% stake in Stanford Shopping  Center for $333.0 million funded initially with borrowings from our Credit Facility and the proceeds from a $220.0 million  leasehold mortgage previously discussed. Acquisitions.  We acquired our additional interests in Kravco from certain private investors, The Rouse Company  ( “Rouse”) and Westfield America Trust (“Westfield”). We obtained our initial interest jointly with Rouse and Westfield  in connection with the Rodamco acquisition in 2002. The total consideration paid in 2003 for these transactions was  approximately $293.4 million and consisted of : ● issuance of $107.4 million of perpetual preferred units by the Operating Partnership, and ● cash of $82.0 million, ● the assumption of our share of mortgage debt and other payables of $104.0 million. Gross  Our Share  Our Share of  Leasable  Estimated  of Estimated Construction  Actual/Estimated Property  Location  Area  Total Cost (b)  Total Cost  in Progress (a)   Opening Date Under construction Chicago Premium Outlets  Chicago, IL  438,000  $ 67  $33  $29.6  2 nd  Quarter 2004 Clay Terrace  Carmel, IN  570,000  100  50  17.8  Fall 2004 St. Johns Town Center  Jacksonville, FL  1,500,000  126  107 (c) 34.8 (c) 1 st  Quarter 2005 Wolf Ranch  Georgetown, TX  670,000  62  62  29.5  3 rd  Quarter 2005 Firewheel Center  Garland, TX  785,000  96  96  16.2  Fall 2005 (a) Amounts include the portion of the project placed in service as of December 31, 2003, if any. (b) Represents the project costs net of land sales, tenant reimbursements for construction, and other items (where applicable). (c) Due to our preference in the joint venture partnership, we are contributing 85% of the project costs.