Simon 2021 Annual Report

Simon Property Group, Inc. Simon Property Group, L.P. Notes to Consolidated Financial Statements (Dollars in thousands, except share, per share, unit and per unit amounts and where indicated as in millions or billions)

Estimated future amortization and the increasing (decreasing) effect on lease income for our above and below market leases as of December 31, 2021 are as follows: Below Above Impact to Market Market Lease Leases Leases Income, Net 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,957 $ (7,877) $ (1,920) 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,470 (5,511) (1,041) 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,510 (3,733) (223) 2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,374 (1,564) 810 2026. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,581 (459) 1,122 Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,721 (27) 3,694 $ 21,613 $ (19,171) $ 2,442 Derivative Financial Instruments We record all derivatives on our consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have designated a derivative as a hedge and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. We may use a variety of derivative financial instruments in the normal course of business to selectively manage or hedge a portion of the risks associated with our indebtedness and interest payments. Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps and caps. We require that hedging derivative instruments be highly effective in reducing the risk exposure that they are designated to hedge. We formally designate any instrument that meets these hedging criteria as a hedge at the inception of the derivative contract. We have no credit-risk-related hedging or derivative activities. As of December 31, 2021, we had the following outstanding interest rate derivatives related to managing our interest rate risk: Number of Notional Interest Rate Derivative Instruments Amount Interest Rate Swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 $375.0 million The carrying value of our interest rate swap agreements, at fair value, as of December 31, 2021 was a net asset balance of $0.6 million and is included in deferred costs and other assets. We had no outstanding interest rate derivatives as of December 31, 2020. We generally do not apply hedge accounting to interest rate caps, which had an insignificant value as of December 31, 2021 and 2020, respectively. Our exposure to market risk due to changes in interest rates primarily relates to our long-term debt obligations. We manage exposure to interest rate market risk through our risk management strategy by a combination of interest rate protection agreements to effectively fix or cap a portion of variable rate debt. We may enter into treasury lock agreements as part of an anticipated debt issuance. Upon completion of the debt issuance, the fair value of these instruments is recorded as part of accumulated other comprehensive income (loss) and is amortized to interest expense over the life of the debt agreement. The unamortized gain on our treasury locks and terminated hedges recorded in accumulated other comprehensive income was $6.9 million and $8.7 million as of December 31, 2021 and 2020, respectively. Within the next year, we expect to reclassify to earnings approximately $1.0 million of gains related to terminated interest rate swaps from the current balance held in accumulated other comprehensive income (loss).

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