MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Development Activity Capital Expenditures on Consolidated Properties. 24 Simon Property Group, Inc. On July 14, 2011, Tosu Premium Outlets Phase III, a 52,000 square foot expansion to the Tosu Premium Outlet located in  Fukuoka, Japan, opened and, on December 8, 2011, Ami Premium Outlets Phase II, a 90,000 square foot expansion to the Ami  Premium Outlets located in Ami, Japan, opened. The combined projected net cost of these projects is ¥ 6.8 billion, of which our  share is approximately ¥2.7 billion, or $35.3 million based on applicable Yen: USD exchange rates. Rinku Premium Outlets Phase  IV, a 103,000 square foot expansion to the Rinku Premium Outlet located in Osaka, Japan, is under construction and is expected  to open in July 2012. The projected net cost of this project is ¥3.4 billion, of which our share is approximately ¥1.4 billion, or $17.5  million based on current Yen: USD exchange rates. On March 17, 2011, Paju Premium Outlets, a 328,000 square foot center located in Seoul, South Korea, opened. The net cost  of this project is KRW 115.1 billion, of which our share is approximately KRW 57.5 billion, or $52.1 million based on applicable  KRW: USD exchange rates. International Development Activity. We typically reinvest net cash flow from our international investments to fund future  international development activity. We believe this strategy mitigates some of the risk of our initial investment and our exposure to  changes in foreign currencies. We have also funded our foreign investments with local currency-denominated borrowings that act  as a natural hedge against local currency fluctuations. This has been the case with our Premium Outlets in Japan, South Korea,  and Malaysia where we use Yen, Won, and Ringgit denominated financing, respectively. Currently, our consolidated net income  exposure to changes in the volatility of the Euro, Yen, Won, Peso and other foreign currencies is not material. We expect our share  of international development costs for 2012 will be approximately $67.0 million, primarily funded through reinvested joint venture  cash flow and construction loans. The following table summarizes total capital expenditures on consolidated properties on a cash basis (in millions): Domestic Expansions and Renovations.  We routinely incur costs related to construction for significant renovation and expansion  projects at our properties. We also have reinstituted redevelopment and expansion initiatives which we previously reduced given  the downturn in the economy. Renovation and expansion projects are currently underway at numerous centers, and we expect our  share of development costs for 2012 related to renovation or expansion initiatives to be approximately $800.0 million. We expect  to fund these capital projects with cash flows from operations. Our estimated stabilized return on invested capital ranges between  8-12% for all of our new development, expansion and renovation projects. During 2010, we began construction on Merrimack Premium Outlets located in Merrimack, New Hampshire. This new center,  which is wholly-owned by us, is expected to open in the second quarter of 2012. The estimated cost of this project is $144.0  million, and the carrying amount of the construction in progress as of December 31, 2011 was $100.7 million. Other than these  two projects, our share of other 2011 new developments is not significant. New Domestic Developments.  In August 2011, we began construction on Tanger Outlets — Galveston located in Texas City,  Texas. We have a 50.0% interest in this new center through a joint venture with Tanger Factory Outlets Centers. Our estimated  share of the cost of this project is $32.2 million. 2011 2010 2009 New Developments and Other  $ 68 $ 39 $ 160 Renovations and Expansions  157 96 159 Tenant Allowances  119 103 43 Operational Capital Expenditures  101 18 14 Total $ 445 $ 256 $ 376