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)

acquisition of our interest, the Forever 21 joint venture recorded a non-cash bargain purchase gain in the second quarter of 2020, of which our share of $35.0 million pre-tax is included in income from unconsolidated entities in the consolidated statement of operations and comprehensive income. In the first quarter of 2021, we and our partner, ABG, each acquired additional 12.5% interests in the licensing and operations of Forever 21, our share of which was $56.3 million, bringing our respective interests to 50%. Subsequently, the Forever 21 operations were merged into SPARC Group. On October 16, 2019, we contributed approximately $276.8 million consisting of cash and the Shop Premium Outlets, or SPO, assets for a 45% noncontrolling interest in RGG to create a new multi-platform venture dedicated to digital value shopping. We attributed substantially all of our investment to goodwill and certain amortizing and non-amortizing intangibles. On September 19, 2019, as discussed in note 4, we acquired the remaining 50% interest in a hotel adjacent to one of our properties from our joint venture partner. As a result of this acquisition, we now own 100% of this property. During the first quarter of 2019, we disposed of our interests in a multi-family residential investment. Our share of the gross proceeds was $17.9 million. The gain of $16.2 million is included in other income in the accompanying consolidated statement of operations and comprehensive income. In 2016, we and a group of co-investors acquired certain assets and liabilities of Aéropostale, a retailer of apparel and accessories, out of bankruptcy and subsequently renamed SPARC Group. The interests were acquired through two separate joint ventures, a licensing venture and an operating venture. In April 2018, we contributed our entire interest in the licensing venture in exchange for additional interests in ABG, a brand development, marketing, and entertainment company. In January 2020, we acquired additional interests of 5.05% and 1.37% in SPARC Group and ABG, respectively, for $6.7 million and $33.5 million, respectively. During the third quarter of 2020, SPARC acquired certain assets and operations of Brooks Brothers and Lucky Brands out of bankruptcy. During the second quarter of 2021, SPARC Group acquired certain assets and operations of Eddie Bauer. At December 31, 2021, our noncontrolling equity method interests in the operations venture of SPARC Group was 50.0%. International Investments We conduct our international operations primarily through joint venture arrangements and account for the majority of these international joint venture investments using the equity method of accounting. European Investments At December 31, 2021, we owned 63,924,148 shares, or approximately 22.4%, of Klépierre, which had a quoted market price of $23.65 per share. Our share of net income, net of amortization of our excess investment, was $145.1 million, $26.5 million and $145.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. Based on applicable Euro:USD exchange rates and after our conversion of Klépierre’s results to GAAP, Klépierre’s total assets, total liabilities, and noncontrolling interests were $18.1 billion, $11.9 billion, and $1.3 billion, respectively, as of December 31, 2021 and $20.9 billion, $14.4 billion, and $1.4 billion, respectively, as of December 31, 2020. Klépierre’s total revenues, operating income before other items and consolidated net income were approximately $1.2 billion, $380.5 million and $848.1 million, respectively, for the year ended December 31, 2021, $1.3 billion, $327.3 million and $211.2 million, respectively, for the year ended December 31, 2020, and $1.5 billion, $626.3 million and $655.5 million, respectively, for the year ended December 31, 2019, before consolidation of the amortization of our excess investment. During the year ended December 31, 2021, Klépierre elected to step-up the tax basis of certain assets in Italy, which triggered a one-time payment at a significantly reduced tax rate. As a result of the step-up in tax basis, a previously established deferred tax liability was reversed resulting in a non-cash gain, of which our share was $118.4 million. During the year ended December 31, 2021, we recorded a net gain of $1.2 million related to the disposition of certain assets of Klépierre. During the year ended December 31, 2020, we recorded a $4.3 million net loss related to the impairment and disposition of certain assets of Klépierre. During the year ended December 31, 2019, we recorded a gain of $58.6 million related to the disposition of certain assets of Klépierre. These transactions are included in gain (loss) on acquisition

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