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Simon Property (SPG) Taps Equity Market to Finance Taubman Deal
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Simon Property Group (SPG - Free Report) recently priced an upsized public offering of 19.25 million shares of common stock, up from the 17.5 million disclosed earlier, at $72.50 per share for net proceeds of $1.35 billion. Moreover, the underwriters have been granted an overallotment option to purchase up to an additional 2.9 million shares of common stock.
This comes as part of the company’s move to finance the Taubman Centers, Inc. transaction, wherein Simon Property will acquire an 80% interest in The Taubman Realty Group Limited Partnership, while the Taubman family will remain a 20% partner. The company also intends to use the proceeds for other general business needs, including repaying or repurchasing indebtedness, working capital and capital expenditures.
Particularly, after backing out of the merger deal with Taubman Centers this June, Simon Property recently negotiated the price for purchasing the majority stake in the former company. Both companies have reached a definitive agreement to change certain terms of the original merger agreement. Now, Simon Property will pay the purchase price of $43 per share in cash.The merger is anticipated to close in late 2020 or early 2021, conditional to Taubman Centers’ shareholder approval and customary closing norms.
Notably, the retail real estate market had already been battling dwindling traffic issues, store closures and retailer bankruptcies, and now the pandemic is only adding to its woes. Like other retail REITs, including Macerich (MAC - Free Report) and Kimco Realty (KIM - Free Report) , Simon Property too is not immune to move-outs, store closures and retailer bankruptcies. In addition, the coronavirus pandemic-induced headwinds translated to financial stress on retail tenants, impacting their ability to pay rent, affecting the company’s ability to recognize revenues in terms of rent collection and lease income.
However, amid the retail apocalypse narrative, adoption of an omni-channel strategy and successful tie-ups with premium retailers has been on the agenda for Simon Property. Recently, the company and Narvar tied up to facilitate easy drop-off returns for retail brands. Specifically, the service lets consumers make quick drop-off returns from roughly two dozen brands at a participating Simon location, per the company. Moreover, reliance on value-creating opportunities and the purchase of bankrupt retailers have been on the agenda for Simon Property in recent years and the mall owner is committed to the same.
Nevertheless, the retail real estate market fundamentals are likely to remain choppy until the current health crisis is resolved and the economy progresses. As such, Simon Property’s performance will likely remain stretched in the near term.
Shares of Simon Property have depreciated 48.6% so far in the year compared with the industry’s decline of 12.5%. It carries a Zacks Rank #5 (Strong Sell) at present.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Simon Property (SPG) Taps Equity Market to Finance Taubman Deal
Simon Property Group (SPG - Free Report) recently priced an upsized public offering of 19.25 million shares of common stock, up from the 17.5 million disclosed earlier, at $72.50 per share for net proceeds of $1.35 billion. Moreover, the underwriters have been granted an overallotment option to purchase up to an additional 2.9 million shares of common stock.
This comes as part of the company’s move to finance the Taubman Centers, Inc. transaction, wherein Simon Property will acquire an 80% interest in The Taubman Realty Group Limited Partnership, while the Taubman family will remain a 20% partner. The company also intends to use the proceeds for other general business needs, including repaying or repurchasing indebtedness, working capital and capital expenditures.
Particularly, after backing out of the merger deal with Taubman Centers this June, Simon Property recently negotiated the price for purchasing the majority stake in the former company. Both companies have reached a definitive agreement to change certain terms of the original merger agreement. Now, Simon Property will pay the purchase price of $43 per share in cash.The merger is anticipated to close in late 2020 or early 2021, conditional to Taubman Centers’ shareholder approval and customary closing norms.
Notably, the retail real estate market had already been battling dwindling traffic issues, store closures and retailer bankruptcies, and now the pandemic is only adding to its woes. Like other retail REITs, including Macerich (MAC - Free Report) and Kimco Realty (KIM - Free Report) , Simon Property too is not immune to move-outs, store closures and retailer bankruptcies. In addition, the coronavirus pandemic-induced headwinds translated to financial stress on retail tenants, impacting their ability to pay rent, affecting the company’s ability to recognize revenues in terms of rent collection and lease income.
However, amid the retail apocalypse narrative, adoption of an omni-channel strategy and successful tie-ups with premium retailers has been on the agenda for Simon Property. Recently, the company and Narvar tied up to facilitate easy drop-off returns for retail brands. Specifically, the service lets consumers make quick drop-off returns from roughly two dozen brands at a participating Simon location, per the company. Moreover, reliance on value-creating opportunities and the purchase of bankrupt retailers have been on the agenda for Simon Property in recent years and the mall owner is committed to the same.
Nevertheless, the retail real estate market fundamentals are likely to remain choppy until the current health crisis is resolved and the economy progresses. As such, Simon Property’s performance will likely remain stretched in the near term.
Shares of Simon Property have depreciated 48.6% so far in the year compared with the industry’s decline of 12.5%. It carries a Zacks Rank #5 (Strong Sell) at present.
Currently, Taubman Centers carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>