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Mar-21-2009New Issue-Simon Property Group sells $650 mln notes(topic overview)
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Shares of Simon Property Group Inc. dipped roughly 6 percent in mid-morning trading after the company announced a plan to sell 15 million shares of common stock and about $500 million in senior notes. The Indianapolis-based shopping mall giant said it plans to use the proceeds to repay the outstanding balance of its $3.5 billion unsecured credit facility. Simon set a price for its public offering at $31.50 per share. [1] The Company has granted the underwriters a 30-day option to purchase 2,250,000 additional shares of common stock to cover over-allotments, if any. The Company will contribute the net proceeds of the offering to its majority-owned operating partnership subsidiary, Simon Property Group, L.P., which will use the amount contributed to partially repay the outstanding balance of its $3.5 billion unsecured credit facility and for general corporate purposes.[2] The stock has traded between $24.27 and $106.43 during the past 52 weeks. Late Thursday, the company also announced it plans to offer roughly $500 million of senior notes due 2019, along with its majority-owned subsidiary, Simon Property Group LP. Simon said it will use the proceeds from the offerings to repay some of its $3.5 billion unsecured credit facility, as well as for general corporate purposes.[3]
Proceeds should total about $1 billion.'' This is hitting shares, but this offering actually helps the company. Simon plans to use the net proceeds to "partially repay the outstanding balance of its $3.5 billion unsecured credit facility and for general corporate purposes."[4] The trading before the market's open reached $31.62, which was $2.76 off the closing price of $34.38 on Thursday. Simon, the largest U.S. public real-estate investment trust, expects to use the net proceeds of about $1.1 billion to partially repay the $1 billion outstanding balance of its $3.5 billion unsecured credit facility and for general corporate purposes, according to a Wall Street Journal report.[5]
The share portion of the offering was priced at $31.50, an 8.4% discount to Thursday's closing price. The nearly $1 billion of proceeds expected from the offerings, the stock portion of which could be increased by up to 15% depending on investor demand, will be used to partially repay the $1 billion outstanding balance of its $3.5 billion unsecured credit line and for general corporate purposes. Jim Sullivan, an analyst with Green Street Advisors Inc., said late Thursday that the offering could serve as a litmus test "in the depth of the appetite of the public market to give capital to those who deserve it."[6]
The offering is expected to close on March 25, 2009. Simon will use the net proceeds from this offering to reduce the outstanding balance on its unsecured credit facility and for general corporate purposes.[7]
The company said it would use the net proceeds to repay the outstanding balance of $3.5 billion in debt and also for general corporate purposes.[5]
DOW JONES NEWSWIRES Mall owner Simon Property Group Inc. (SPG) priced its planned stock offering which will boost shares outstanding by at least 6.6% and help the company pay down debt at a time rivals are doing the same. [6] INDIANAPOLIS - Mall owner Simon Property Group Inc. said Friday it has priced its public offering of 15 million shares of its common stock at $31.50 apiece.[3] The stock price at 10:45 a.m. was $32.74, down 4.5 percent. Indianapolis-based mall owner Simon Property Group saw its stock price drop as much as 8 percent in premarket trading today after announcing a plan to sell 15 million shares of common stock -- and possibly another 2.25 million - along with $500 million in senior notes.[5]
Simon Property Group announced today that it will price its public offering of 15 million shares at $31.50 per share, which is an 8.3 percent discount to Thursday's closing price of $34.38.[5] Simon Property Group, Inc. (NYSE: SPG) priced a secondary share offering of 15 million shares at $31.50/share.''[4]
The sale of the notes and 15 million shares were announced late Thursday and put pressure on Simon's stock, as many offerings that increase share count do.[6]
The common stock will be issued pursuant to the Company's shelf registration statement filed with the Securities and Exchange Commission. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction. Readers should carefully review the Company's financial statements and notes thereto, as well as the risk factors described in its Annual Report on Form 10-K for the year ended December 31, 2008, and other reports filed from time to time with the Securities and Exchange Commission.[2] Goldman Sachs, Deutsche Bank Securities and UBS Investment Bank are serving as joint bookrunning managers of the common stock offering.[3] Deutsche Bank Securities Inc., Goldman, Sachs & Co. and UBS Investment Bank acted as joint book-running managers of the offering.[2]
Goldman Sachs, JPMorgan and Banc of America Securities are serving as joint bookrunning managers of the notes offering.[3] Goldman, Sachs & Co., J.P. Morgan and Banc of America Securites LLC are serving as joint bookrunning managers of the senior note offering.[8]
The offering from the largest U.S. public real-estate investment trust coincides with the planned sale of $500 million of senior notes.[6] Simon also made a concurrent offer of approximately $500 million worth of 10-year senior notes.[4] March 20 (Reuters) - Simon Property Group LP, a subsidiary of Simon Property Group Inc SPG.N, on Friday sold $650 million in 10-year senior notes, said IFR, a Thomson Reuters service.[9]
The senior notes the company is selling are due in 2019. Simon stock was trading at $32.35 this morning.[1]
Shares are trading down nearly 6%, at $32.43, which is within half a buck of the company's 52-week low and down about 70% from last year's high.'' Usually, these deals of selling securities to meet demands come with more questions, but this one may come another sigh of relief for a very battered sector.[4] Simon shares lost a dollar, or 3 percent, to $33.38 in morning trading.[3]
The stock represents about 7.5 percent of Simon's outstanding shares, and Simon could use some of the proceeds to buy distressed malls, Jim Sullivan, an analyst with Green Street Advisors Inc., told the Journal.[5] Simon's outstanding float is about 180 million shares, so the new issue is dilutive by more than 6%.'' This will help to ease some of the woes of credit issues and credit maturities coming due as the commercial REIT sector has been locked out of the capital markets until recently.''[4]
The offerings are being conducted as public offerings under Simon's joint shelf registration statement filed with the Securities and Exchange Commission. [8] Any offer of securities will be made by means of the prospectus supplement and accompanying prospectus relating to each offering.[8]
SPG appears on the Investors Observer Hedged Dividend Income list. For a hedged play on this stock, look at a Jul '09 25 covered call (SVF GE) for a net debit in the $22.48 area. That is also the break even stock price for this trade. This covered call has a 121 day duration, provides 36.46% downside protection and an 11.21% assigned return rate for a 33.82% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the SPG Jan '10 12.50 Call (WVT AV) and selling the Jul '09 25 call (SVF GE) for a $10.55 debit. [10] Simon Property Group stock has been showing support around 30.65 and resistance in the 38.07 range.[10] Simon Property Group, Inc. is an S&P; 500 company and the largest public U.S. real estate company.[7]
Bank of America, Goldman Sachs and JP Morgan were the joint bookrunning managers for the sale. [9]
SOURCES
1. ibj.com Indianapolis Business Journal Simon stock falls on announcement to sell shares
2. Simon Property Group Announces Pricing of Public Offering of Common Stock
3. Simon Property prices stock offering at $31.50 - News Wires - CNBC.com
4. Simon's Dilution Takes Away Some Debt Worries (SPG) - 247 Wall Street
5. Simon discounts price in 15M stock offering | IndyStar.com | The Indianapolis Star
6. Simon Property Prices 15 Million-Share Offering At 8.4% Discount - EasyBourse actualit'
7. Simon Property Group Sells $650 Million of Senior Notes
8. Simon Property Group Announces Concurrent Offerings of Common Stock and Senior Notes
9. New Issue-Simon Property Group sells $650 mln notes | Deals | IPOs | Reuters
10. Simon Property Group (SPG) PriceWatch Alert Up To 33.82% Return
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