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## ENHANCE PROFITABILITY OF THE CORE PORTFOLIO 

The strength of our core assets was never more evident than in  . Average base rent per square foot for our entire mall portfolio increased  % to  .  . Perhaps even more noteworthy was that the average initial base rent for new mall store leases signed during  was  % higher, at  .  per square foot, than the rent for tenants who closed or whose leases expired. I am also pleased to report that our North American mall portfolio (with  malls and over  million square feet of small shop space) generated sales in excess of   per square foot in  . 

There is still progress to be made and our profit margins can be improved in  . A significant way to accomplish this goal is through the aggressive leasing and re-leasing of our retail space. 

## COMPARATIVE PERFORMANCE 

(December 31, 2000 to December 31, 2003) 

 During the past three years, the market price of Simon Property Group’s common stock advanced 93% to $46.34 per share. The S&P 500 declined by 16% over this same period. 

Over the next five years, approximately  million square feet of leases will expire in the Simon mall portfolio at an average base rent of   per square foot. There is considerable revenue growth available in the leasing of this space at today’s market rates. I also believe that the overall occupancy rate of our mall portfolio can be increased over the next few years providing an additional source of revenue growth. In   we will also utilize our economies of scale to continue to drive down operating costs, positively impacting our profit margins. 

We remain focused on increasing cash flow and enhancing our core assets through renovations, expansions, and the addition of new retailers. These in- 

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ternally-generated opportunities offer significant returns on investment and will accelerate earnings growth. 

In  we completed the renovation and expansion of The Galleria in Houston, Texas, one of the nation’s most successful regional malls; the addition of Nordstom and  ,  square feet of small shops at Barton Creek Square in Austin, Texas; and the addition of Younkers and  ,  square feet of small shops at Bay Park Square in Green Bay, Wisconsin. 

In March  , we opened Nordstrom and  ,  square feet of small shops at SouthPark Mall in Charlotte, North Carolina in the continuation of a multi-phase redevelopment at this market-leading 

