MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Year Ended December 31, 2010 vs. Year Ended December 31, 2009 Preferred dividends decreased $3.3 million as a result of the conversion and redemption of the remaining Series I 6%  Convertible Perpetual Preferred Stock, or Series I preferred stock, in the second quarter of 2010. Minimum rents increased $112.7 million during the 2010 period, due to an $80.9 million increase attributable to the property  transactions and an increase in comparable rents of $31.8 million, or 1.4%. The increase in comparable minimum rents was  primarily attributable to a $33.8 million increase in base minimum rents and a $6.5 million increase in comparable rents from  carts, kiosks, and other temporary tenants, partially offset by a $4.8 million decline in the fair market value of in-place lease  amortization and a $3.7 million decrease in straight-line rents. Overage rents increased $25.7 million, or 30.3%, as a result of an  increase in tenant sales for the period as compared to the prior year. Tenant reimbursements increased $21.6 million, due to a $24.5 million increase attributable to the property transactions,  offset by a $2.9 million, or 0.3%, decrease in the comparable properties as a result of a decrease in expenditures allocable to  tenants paying common area maintenance on a proportionate basis. Total other income increased $25.3 million, principally as a result of the following: Property operating expenses decreased $11.4 million, or 2.7%, primarily related to lower costs resulting from our cost control  and cost reduction initiatives and generally lower cost of utilities. An increase in property operating expenses in the fourth quarter  related to the Prime acquisition was offset by more favorable claims experience by our captive insurance subsidiaries. Depreciation and amortization expense decreased $14.8 million due to the impact of the acceleration of depreciation in 2009  for certain properties scheduled for redevelopment, offset by an increase in 2010 of $52.7 million related to the Prime acquisition  and an increase related to openings and expansion activity. The provision for credit losses decreased $19.5 million due to a reduction in the number of tenants in default and a decrease  in the number of tenants in bankruptcy proceedings compared to the same period in 2009. We also had strong collections of  receivables which we had previously established reserves for due to uncertainty of payment. During 2010, we incurred $69.0 million in transaction expenses related to acquisitions, potential acquisitions, and the  settlement of a transaction related dispute. Interest expense increased $35.0 million primarily related to the Operating Partnership’s issuances of new series of unsecured  notes totaling $3.2 billion in 2010 and $1.8 billion during 2009 and the result of new or refinanced debt at several properties  including debt associated with the Prime acquisition, offset by the purchase of unsecured notes in the January and August 2010  tender offers and mortgage loans which we repaid during the 2010 period. During 2010, we incurred a loss on extinguishment of debt of $350.7 million related to the two unsecured note tender offers. Income tax expense (benefit) of taxable REIT subsidiaries increased $7.0 million due to the recognition of a $5.8 million tax  benefit in 2009 related to the adjustment of the carrying value of our investment in an unconsolidated non-retail real estate entity. ● an increase in lease settlement income of $33.6 million due to a higher number of terminated leases in the period, and ● an increase in interest income of $10.1 million due to an increase in our available cash on deposit, ● offset by a $12.4 million decrease in land sale activity, and ● a $6.0 million decrease in net other activity. 18 Simon Property Group, Inc.