E-mails show how David Simon faced financial crisis

Debt markets were frozen, rival General Growth Properties was flirting with bankruptcy, and Wall Street prognosticators were
predicting the demise of shopping malls.

The first few months of 2009 were not an easy time to be CEO of Simon Property Group Inc., the nation’s largest mall
owner.

Chairman and CEO David Simon and the rest of the company’s board had decided to sell new shares and debt at distressed
prices, and to pay the company’s quarterly dividend mostly in company stock to preserve cash.

David Simon

Simon was feeling pressure not just from shareholders, lenders and employees. Family members were beginning to feel the pinch
of living on smaller dividend payments from the company that made them multimillionaires.

Simon, tired of the sniping by two people in particular, unloaded in an e-mail at 8:19 a.m. on Saturday, March 7.

He sent the message from his Simon Property Group e-mail account to stepmother Bren Simon and company co-founder and Indiana
Pacers owner Herb Simon, David’s uncle.

Bren Simon

Bren frankly you and herb need to calm down. We are in unprecedented economic and financial times. The financial system
is broken like never before. Some of the best companies in the world are cutting dividends including GE jpmorgan dow chemical
wells fargo etc. GGP our number one competitor is broke. The consumer has shut down etc. And I am working my ass off trying
to navigate through this process and frankly we are doing a pretty good job all things considered.

Simon sent the e-mail about three months before doctors diagnosed his father Melvin, the company founder, with pancreatic
cancer. Melvin died that September. The message is part of a chain of e-mails that are now a courtroom exhibit in the battle
over Melvin’s $2 billion estate.

At the time, survival was uncertain for even the best-capitalized real estate companies. Without an active market for refinancing
upcoming debt maturities, Simon needed to raise cash, and fast.

The company raised $1.2 billion by selling 15 million new shares at $31.50 apiece—a mere third of the price the shares
had traded for six months earlier, and by selling $650 million in new senior debt paying an unheard-of-high 10.75 percent.
An analyst a few months later called it one of the most expensive bond deals of its kind in history.

The measures appear drastic today, but Simon’s predicament wasn’t that much different from General Growth’s—only
David Simon swallowed his pride and acted quickly to “eliminate the risk as best he could from a complete collapse in
the capital markets,” said analyst Rich Moore, who covers Simon for RBC Capital Markets.

“For people who didn’t really stop and take it all in, in hindsight it may seem to be an overreaction,”
Moore said. “But if you lived through it and watched what was going on, the lenders had no interest in lending to anyone,
period. If you’re a real estate entity that relies on debt, then that’s a pretty harrowing situation if suddenly
everyone says no more debt.”

In the e-mail, Simon pleaded for patience.

I am tired of the bitching and lack of support from both of you. I am also disappointed in the constant feedback I get
from people that you complain to about the steps we are taking. Everyone must sacrifice in tough times and support our collective
efforts not the constant back biting. Look at mgm and las vegas sands. Run by brilliant men that are broke. We are not in
that shape. If you have questions call me. No need to make accusations and copy the world on your thoughts.

Bren responded to David’s e-mail that afternoon, saying she had done nothing but support him. She told him she was
“grateful” he came to work for the company in 1990 after a stint on Wall Street and how proud Melvin felt about
his achievements.

She questioned the motives of the people telling David she has been griping about his moves at the helm of Simon Property
Group. She said she rarely speaks to Herb, who “speaks from both sides of his mouth depending on the day.”

“I know your (sic) under incredible stress,” Bren wrote. “I know your (sic) working your ass off to keep
things on tract (sic) and most of all, I know SPG will survive and thrive when we get through this economic crisis. I’ve
told you many times how much I appreciate you and what you’ve done for SPG. Why do you think otherwise?”

David snapped back the next day, telling her to keep the company’s decision to cut the dividend (from 90 cents to 60
cents and pay most of it in stock) in perspective. He said Melvin had earned $750 million from SPG dividends since the company
went public in 1993.

And finally if you think someone can do a better job in this world let’s sit down because I don’t need to
do this without your support. I seem to get support from long term shareholders, bond investors, employees etc but not you
two. Remember what is happening to our stock is not about what we are doing but short investors think there will never be
another mortgage placed and all malls are closing etc. Frankly I have to ask both of you through this constant crap I hear
about your indirect complaints what are you trying to achieve?

Simon Property Group survived the credit crisis and today its balance sheet is among the strongest in the real estate industry.
Simon is sitting on $2.6 billion in cash and has $3.3 billion available on a line of credit after it failed in a bid to acquire
General Growth out of bankruptcy.

“We are in a recovery mode,” David Simon, 48, declared on an earnings conference call in July.

The company plans to spend almost $200 million on development this year, double the original budget, mostly to remodel about
20 existing malls. A strong second quarter helped push the company’s shares to a 52-week high of $94.49 on Aug. 4.

Simon Property reinstated its cash dividend, now 60 cents per share, at the beginning of 2010.

And the dividend will probably go up next year to comply with rules governing real estate investment trusts. That’s
because the company is “at the bare, bare minimum of what we need to pay given where we are today,” Simon said.•