Management’s Discussion & Analysis of Financial Condition and Results of Operations  Finally, we derive our liquidity primarily from our leases that generate positive net cash flow from operations and  distributions from unconsolidated entities that totaled $1.1 billion in 2003. In addition, we generate the majority of our  revenues from leases with retail tenants including: Revenues of M.S. Management Associates, Inc. (the “Management Company”), after intercompany eliminations,  consist primarily of management fees that are typically based upon the revenues of the property being managed. We generate  revenues from outlot land sales and, due to our size and tenant relationships, from the following: Our core business fundamentals remained stable during 2003. Regional mall comparable sales per square foot (“psf”)  strengthened in 2003, increasing 2.8% to $402 psf from $391 in 2002, as the overall economy begins to show signs of  recovery and as a result of our dispositions of lower quality Properties. Our regional mall average base rents increased 5.1% to  $32.26 psf from $30.70 psf. In addition, we maintained strong regional mall leasing spreads of $8.29 psf in 2003 increasing  from $7.77 psf in 2002. The regional mall leasing spread for 2003 includes new store leases signed at an average of $41.28  psf initial base rents as compared to $32.99 psf for store leases terminating or expiring in the same period. Our same store  leasing spread for 2003 was $7.29 or a 19.2% growth rate and is calculated by comparing leasing activity completed in 2003  with the prior tenants rents for those exact same spaces. Finally, our regional mall occupancy was down by 30 basis points to  92.4% as of December 31, 2003 from 92.7% as of December 31, 2002 primarily due to retailer bankruptcy-related closings  during the last four months of the year. Results Overview ● Base minimum rents, cart and kiosk rentals, ● Overage and percentage rents based on tenants’ sales volume, and  ● Recoveries of substantially all of our recoverable expenditures, which consist of property operating, real estate tax,  repairs and maintenance, and advertising and promotional expenditures.  ● Consumer focused strategic corporate alliances that Simon Brand enters into with third parties. ● Simon Business Network (“Simon Business”) property operating services to our tenants and others resulting  from its relationships with vendors. ● Simon Brand Ventures (“Simon Brand”) mall marketing initiatives, including the sale of gift cards. We  completed the roll-out of our Simon Gift Card program to substantially all our regional malls during 2003. ● On March 14, 2003, we purchased the remaining minority interest in The Forum Shops at Caesars (“Forum  Shops”) in Las Vegas, NV from the minority limited partner. ● On August 20, 2003, we purchased a 100% leasehold stake in Stanford Shopping Center in Palo Alto,  California from Stanford University. Stanford University holds, as lessor, a long-term ground lease underlying  the asset.  ● In the fourth quarter 2003, through a series of transactions we increased our ownership interest in Kravco  Investments L.P. (“Kravco”), a Philadelphia, PA based owner of regional malls to approximately 80% and to  50% in its affiliated management company. The portfolio consists of six regional malls, five of which are in  the Philadelphia metropolitan area, and four community centers.  In addition, during 2003, we realized the full year benefits of the acquisitions we made during 2002 consisting  primarily of the Rodamco North America, N.V. acquisition (the “Rodamco acquisition”). These acquisitions increased  consolidated total revenues in 2003 by $74.3 million and consolidated operating income by $22.1 million compared to the  year ended December 31, 2002. 26 simon property group, inc. During 2003, we completed acquisitions or increases in ownership of core Properties through the following transactions: