Simon Property Group Inc. (SPG - Free Report) , a leading real estate investment trust (REIT), has recently announced a secondary offering of 8.5 million common shares at $137.00 each. The company had earlier announced its offer of 7 million shares, but was forced to increase the quantum of equity offering due to strong investor demand.
The company has also decided to grant the underwriters an option to purchase an additional 1.275 million shares to cover any over-allotments.
J.P. Morgan Securities LLC, the investment banking division of JPMorgan Chase & Co. (JPM - Free Report) ; BofA Merrill Lynch, the investment banking and wealth management division of Bank of America Corporation (BAC - Free Report) ; The Goldman Sachs Group, Inc. (GS - Free Report) , a full-service global investment banking and securities firm; Citigroup Global Markets Inc., the brokerage and securities arm of Citigroup Inc. (C - Free Report) ; Deutsche Bank Securities Inc. – the U.S. investment banking and securities arm of Deutsche Bank AG (DB - Free Report) ; and Morgan Stanley (MS - Free Report) , a global financial services firm are acting as joint book-running managers for the equity offering.
At the same time, Simon Property has also opted to sell $1.75 billion worth of aggregate principal amount of its senior unsecured notes consisting of $600 million of 2.150% notes due 2017, $600 million of 3.375% notes due 2022, and $550 million of 4.750% notes due 2042. The company intends to utilize the proceeds from both the offer to fund two recent acquisitions.
Simon Property acquired a 28.7% equity stake in Klépierre – a Paris-based real estate company that owns, manages and develops shopping centers, retail properties and offices across Continental Europe, from BNP Paribas for $2.0 billion. Klépierre’s portfolio includes 271 shopping centers in 13 countries, with 50% of its properties in France and Belgium, 25% in Scandinavia, and the remainder in Central and Southern Europe.
Simon Property also purchased its joint venture partner’s (Farallon Capital Management, L.L.C.) ownership stake in 26 assets of The Mills Limited Partnership in a transaction valued at $1.5 billion. The purchase price included the repayment of senior loan facility and mezzanine loan of the JV, and the retirement of preferred stock.
Headquartered in Indianapolis, Indiana, Simon Property is the largest publicly traded retail real estate company in North America with assets in almost all retail distribution channels. The company acquires, owns and leases a diverse portfolio of shopping malls in North America, Europe, and Asia.
Simon Property’s international presence gives it a more sustainable long-term growth story than its domestically focused peers. The geographic and product diversity of the company also insulates it from market volatility to a great extent and provides a steady source of income.
We maintain our Neutral recommendation on the stock, which presently has a Zacks #3 Rank translating into a short-term Hold rating.