MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW 10 Simon Property Group, Inc. ● generating interest income on cash deposits and investments in loans, including those made to related entities. ● selling or leasing land adjacent to our shopping center properties, commonly referred to as “outlots” or “outparcels,” and ● offering property operating services to our tenants and others, including waste handling and facility services, and the  provision of energy services, ● establishing our malls as leading market resource providers for retailers and other businesses and consumer-focused  corporate alliances, including: payment systems (such as handling fees relating to the sales of bank-issued prepaid  cards), national marketing alliances, static and digital media initiatives, business development, sponsorship, and events, ● attracting and retaining high quality tenants and utilizing economies of scale to reduce operating expenses, ● expanding and re-tenanting existing highly productive locations at competitive rental rates, ● selectively acquiring or increasing our interests in high quality real estate assets or portfolios of assets, ● generating consumer traffic in our retail properties through marketing initiatives and strategic corporate alliances, and ● selling selective non-core assets. ● base minimum rents, ● 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 taxes,  repair and maintenance, and advertising and promotional expenditures. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto that are  included in this Annual Report to Stockholders. Simon Property Group, Inc., or Simon Property, is a Delaware corporation that operates as a self-administered and self- managed real estate investment trust, or REIT, under the Internal Revenue Code. To qualify as a REIT, among other things, a  company must distribute at least 90% of its taxable income to its stockholders annually. Taxes are paid by stockholders on  dividends received and any capital gains distributed. Most states also follow this federal treatment and do not require REITs to pay  state income tax. Simon Property Group, L.P., or the Operating Partnership, is a majority-owned partnership subsidiary that owns  all of our real estate properties and other assets. In this discussion, the terms “we”, “us” and “our” refer to Simon Property, the  Operating Partnership, and its subsidiaries. We own, develop and manage retail real estate properties, which consist primarily of regional malls, Premium Outlets ® ,  The Mills ® , and community/lifestyle centers. As of December 31, 2011, we owned or held an interest in 326 income-producing  properties in the United States, which consisted of 151 regional malls, 58 Premium Outlets, 66 community/lifestyle centers, 36  properties in the Mills portfolio, and 15 other shopping centers or outlet centers in 41 states and Puerto Rico. Of the 36 properties  acquired in the Mills portfolio, 16 of these properties are The Mills, 16 are regional malls, and four are community centers.  Internationally, as of December 31, 2011, we had an ownership interest in a joint venture which owned 45 shopping centers in  Italy. We sold our entire ownership in this joint venture to our venture partner, Auchan S.A., on January 9, 2012. Additionally, we  had ownership interests in eight Premium Outlets in Japan, two Premium Outlets in South Korea, one Premium Outlet in Mexico,  and one Premium Outlet in Malaysia. We generate the majority of our revenues from leases with retail tenants including: Revenues of our management company, after intercompany eliminations, consist primarily of management fees that are  typically based upon the revenues of the property being managed. We invest in real estate properties to maximize total financial return which includes both operating cash flows and capital  appreciation. We seek growth in earnings, funds from operations, or FFO, and cash flows by enhancing the profitability and  operation of our properties and investments. We seek to accomplish this growth through the following: We also grow by generating supplemental revenue from the following activities: