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Simon Property Infusing Capital - Analyst Blog

Posted: 1/22/2014 6:20:00 PM
Referenced Stocks: AAT;CDR;FRT;SPG

Simon Property Group ( SPG ) 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.  

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. ( AAT ), Cedar Realty Trust, Inc. ( CDR ) and Federal Realty Investment Trust ( FRT ). All these stocks carry a Zacks Rank #2 (Buy).

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.

AMER ASSETS TR (AAT): Free Stock Analysis Report

CEDAR SHOPN CTR (CDR): Free Stock Analysis Report

FED RLTY INV (FRT): Free Stock Analysis Report

SIMON PROPERTY (SPG): Free Stock Analysis Report

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