Simon Property's Subsidiary Issues Notes - Analyst Blog

By
A A A

Simon Property Group 's ( SPG ) 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 Citigroup, Inc. ( C ), BBVA Securities Inc., Deutsche Bank Securities Inc. of Deutsche Bank AG ( DB ) and Morgan Stanley & Co. LLC of Morgan Stanley ( MS ) 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).

Note: 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.



CITIGROUP INC (C): Free Stock Analysis Report

DEUTSCHE BK AG (DB): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

SIMON PROPERTY (SPG): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: C , DB , MS , SPG

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Quick on Your Feet
Quick on Your Feet                  
Early Entrepreneurship
Early Entrepreneurship              

Stocks

Referenced

73%
56%
73%
0%

Most Active by Volume

48,099,947
  • $16.09 ▲ 0.50%
40,277,806
  • $102.50 ▲ 0.24%
40,236,499
  • $19.57 ▲ 2.35%
31,092,510
  • $49.75 ▲ 0.65%
30,795,218
  • $34.92 ▲ 0.78%
29,910,855
  • $3.63 ▲ 0.83%
24,019,154
  • $13.06 ▼ 0.38%
23,753,906
  • $74.82 ▲ 1.31%
As of 8/29/2014, 04:04 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com