Simon Property Group
) is infusing capital through $1.2 billion senior notes offering.
The company experienced a positive response for this with around
$4 billion of investor demand in the order books.
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In particular, the notes offering was made by its majority-owned
operating partnership subsidiary, Simon Property Group, L.P. It
included the sale of 2.200% senior notes worth $600 million (due
Feb 1, 2019) and 3.750% senior notes worth $600 million principal
amount (Feb 1, 2024).
The capital reaped through the offerings would help the company
lower debt and consequently the interest expenses. We believe
this would provide increased financial flexibility that would
enable Simon Property to pursue its portfolio restructuring
activities, which go a long way in enhancing its top-line growth.
In Dec 2013, the company disclosed its plan to spin off the strip
center business and smaller enclosed malls into a publicly traded
REIT. The move will help this retail real estate investment trust
(REIT) to increase focus on the larger retail properties, namely
malls, mills and premium outlets.
Simon Property is scheduled to release its fourth-quarter results
before the opening bell on Jan 31, 2014. The Zacks
Consensus Estimate for the fourth quarter currently stands at
$2.43 per share, reflecting 6.01% year-over-year growth.
Simon Property carries a Zacks Rank #3 (Hold). Investors
interested in the REIT industry may consider stocks like
American Assets Trust, Inc.
Cedar Realty Trust, Inc.
Federal Realty Investment Trust
). All these stocks carry a Zacks Rank #2 (Buy).
FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.