Simon Property Group
) operating partnership subsidiary, Simon Property Group, L.P.,
decided to raise capital through senior notes issuance. The
company planned to sell 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 two senior notes have an average coupon rate of 2.975% and
a combined weighted average duration of 7.5 years. Simon Property
Group, L.P plans to use the garnered amount from this offering to
pay off its debt and meet other corporate needs. The public
offering is expected to complete on Jan 21, 2014.
A consortium of financial institutions is assisting the
subsidiary of Simon Property in this offering, acting as joint
book running managers. Citigroup Global Markets Inc. of
), BBVA Securities Inc., Deutsche Bank Securities Inc. of
Deutsche Bank AG
) and Morgan Stanley & Co. LLC of
) were among them.
The aforementioned notes offeringis a strategic fit as it will
lower debt and consequently the interest expenses. Moreover,
increased financial flexibility will enable Simon Property to
pursue its portfolio restructuring activity that will go a long
way in enhancing its top-line growth.
Of late, Simon Property took its portfolio enhancement
initiative a notch higher to increase utilization of resources
for expanding its global portfolio of larger malls, mills and
premium outlets. As a part of it, in Dec 2013, the company
disclosed the spinoff of its strip center business and smaller
enclosed malls into a publicly traded REIT.
Currently referred to as "SpinCo," this new unit will
initially enjoy an ownership or will have stake in 54 strip
centers and 44 malls. With the economy showing signs of recovery,
the spending capacity of the richer consumers is improving and
the company seems to leverage on this trend through this move and
boost its top-line growth.
Simon Property is slated to report its fourth-quarter 2013
results on Jan 31, after the closing bell. The Zacks Consensus
Estimate for the fourth-quarter 2013 funds from operations (FFO)
per share is currently pegged at $2.43, representing a
year-over-year increase of 5.93%.
The company presently carries a Zacks Rank #3 (Hold).
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.
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SIMON PROPERTY (SPG): Free Stock Analysis
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