Simon, SZITIC CP and MSREF Join Forces to Develop Retail in China

Beijing —

Simon Property Group, Inc. (NYSE:SPG), America’s largest owner, developer and manager of retail real estate, has signed a Co-operation Framework Agreement with the Morgan Stanley Real Estate Funds (“MSREF”) and SZITIC Commercial Property Co. Ltd (“SZITIC CP”), retail property subsidiary of the Chinese state-owned trust and investment firm, Shenzhen International Trust & Investment Co., Ltd (“SZITIC”), to develop retail shopping center projects in China. Simon and MSREF will each own 32.5% of the enterprise while SZITIC CP will own 35%.

Each project will be an urban, multi-level, retail destination of between 40,000 sq. m and 70,000 sq. m (430,000 and 750,000 sq. ft.), anchored in all cases by a Wal-Mart store. Warner Theaters may also be an anchor tenant in some of the projects. SPG and MSREF will be the preferred partners of SZITIC CP for each project that SZITIC CP proposes to develop in the Yangzte River delta, which includes the cities of Shanghai, Nanjing and Hangzhou.

The venture’s first project will be a 46,000 sq. m (500,000 sq. ft.) mall in Hangzhou, a historic city of six million people located two hours from Shanghai. Construction is scheduled to commence in October with an expected completion date in spring 2007. More than 12 potential projects have been identified, and if the parties proceed with development those projects will comprise a total area of approximately 750,000 sq. m (8,000,000 sq. ft).

“We are very excited about the retail development opportunities in China,” said David Simon, CEO of Simon Property Group, “and we believe that being the first U.S.-domiciled REIT to enter this critical 21st century market further solidifies our position as one of the world’s preeminent retail real estate companies.” Being a pioneer is nothing new to SPG. Simon noted that SPG was one of the first U.S. retail REIT’s to develop projects in France, Poland, and Italy and today has interests in 52 European shopping centers with additional projects under development.

Mr. Li Nanfeng, Chairman of SZITIC and SZITIC CP, said, “We are confident in the outlook for China’s emerging retail property market and delighted to be working alongside such experienced partners as Simon and MSREF. We believe that our complementary strengths will allow us to develop successful landmark shopping and entertainment destinations for local communities.”

Head of MSREF Asia, Sonny Kalsi, said, “MSREF looks forward to working with SZITIC CP and Simon on this important initiative.”

Ben Cornish, Vice President of Development for Wal-Mart in China commented, "Wal-Mart China is extremely excited to have a world-class retail developer like Simon entering the China market and working with us on our aggressive expansion program throughout the country. The joint venture between Simon, Morgan Stanley and SZITIC will add an entirely new level of mall development and management expertise to the China retail landscape. Wal-Mart China is proud to be associated with these fine companies and looks forward to working with them in the future."

SZITIC’s Mr. Li Nanfeng added that the cooperation “has a real competitive advantage within China as it brings together the key elements to successful retail property development, namely local insight and experience, a strong development and investment capability, a stable core tenant base and an outstanding management team.”

Simon Property Group, Inc., headquartered in Indianapolis, Indiana, is a real estate investment trust engaged in the ownership, development and management of retail real estate, primarily regional malls, Premium Outlet® centers and community/lifestyle centers. The Company's current total market capitalization is approximately $39 billion. Through its subsidiary partnership, it currently owns or has an interest in 294 properties in the United States containing an aggregate of 201 million square feet of gross leasable area in 40 states plus Puerto Rico. Simon also holds interests in 52 European shopping centers in France, Italy, Poland and Portugal; 5 Premium Outlet centers in Japan; one Premium Outlet center in Mexico; and one shopping center in Canada. Additional Simon Property Group information is available at www.simon.com.

SZITIC CP is a retail property development company, established by SZITIC to coordinate with Wal-Mart’s rapid development in China. SZITIC is a shareholder in Wal-Mart SZITIC Department Store Co., Ltd. With rich experience in site selection, project design and property development, SZITIC CP has 18 centers completed or under construction with a total leasable area of 750,000 sq. m (8,000,000 sq. ft).

Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking, and Lending. Since 1991, Morgan Stanley has acquired more than $67.7 billion of real estate assets worldwide and currently manages $36.2 billion in real estate assets on behalf of its clients. Using its own capital, Morgan Stanley also originates upwards of $11 billion in commercial mortgages annually. In addition, Morgan Stanley Real Estate provides a complete range of investment banking services including merger, acquisition and restructuring advisory and recapitalizations, as well as public and private debt and equity financing. Morgan Stanley established its real estate organization in 1969. With more than 600 offices in 28 countries, Morgan Stanley (NYSE: MWD) is a global financial services Firm and a market leader in securities, investment management, and credit services.


Contacts:

Les Morris, Simon Property Group: (317) 263-7711

lmorris@simon.com

Linxiong Zhong, SZITIC Commercial Property

zhonglinxiong@sitic-cpd.com.cn

Nick Footitt, Morgan Stanley Asia Pacific: (852) 2848 6847