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Simon Property Group, Inc. (SPG - Analyst Report) disclosed the amendment and extension of its unsecured multi-currency revolving credit facility worth $4.0 billion. The move will enable this retail real estate investment trust (REIT) to reduce borrowing costs and extend its debt maturity.

In particular, this new facility has a reduced interest rate of LIBOR (London Inter-Bank Offer Rate) plus 80 bps (previous being LIBOR plus 95 bps). Through an accordion feature, the facility can be amplified to $5.0 billion. Moreover, the initial maturity date of Jun 30, 2018 can be extended to Jun 30, 2019, using the one additional year option.

Additionally, this new credit facility provides Simon Property a distinctive feature to borrow loan in other currencies, apart from U.S. Dollars, such as the Canadian Dollar, Euro, Australian Dollar, Sterling and Yen.

Notably, a consortium of leading financial giants assisted Simon Property in this transaction. Among them, JPMorgan Chase & Co. (JPM - Analyst Report) and Bank of America Merrill Lynch of Bank of America Corporation (BAC - Analyst Report) acted as joint lead arrangers and joint bookrunners.

We expect this strategic move to improve the company’s liquidity position. Moreover, with Simon Property's significant international presence, the multi-currency borrowing feature can help it to hedge the currency fluctuation risk to some extent. As a matter of fact, Simon Property has a strong balance sheet, with increasing cash level on a year-over-year basis. As of Dec 31, 2013, the company’s cash and cash equivalents stood at $1.7 billion, up from $1.2 billion as of Dec 31, 2012.

Simon Property is scheduled to report the first-quarter 2014 results on Apr 22, before the opening bell. The Zacks Consensus Estimate for funds from operations (FFO) for the quarter is currently pegged at $2.24 per share, representing year-over-year growth of 9.09%.

Simon Property currently carries a Zacks Rank #2 (Buy). Another well performing stock in the retail REIT industry is General Growth Properties, Inc (GGP - Snapshot Report) that has the same rank as Simon Property.

Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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