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Simon Property (SPG) Closes $5B Credit Facility, Ups Liquidity

Simon Property Group’s SPG majority-owned operating partnership subsidiary, Simon Property Group, L.P., has closed a new $5 billion multi-currency unsecured revolving credit facility, replacing the existing $4 billion senior unsecured revolving credit facility. The move boosts the company’s liquidity position and financial flexibility.

The new credit facility matures on Jun 30, 2027, and can be prolonged by a year to Jun 30, 2028, at the company’s discretion.

The facility’s interest rate for U.S. Dollar borrowings was unchanged at secured overnight financing rate (SOFR) plus 82.5 basis points (inclusive of a 10 basis point SOFR spread adjustment), based on SPG’s operating partnership subsidiary’s current credit ratings.

Per David Simon, chairman, CEO and president of SPG, “The new $5.0 billion credit facility enhances our already strong financial flexibility, and when combined with our existing $3.5 billion senior unsecured credit facility provides us with $8.5 billion of total revolving credit capacity.”

Simon Property has been focusing on premium acquisitions and transformative redevelopments to enhance its portfolio and has invested billions in transforming its properties over the past few years.

In December 2022, SPG acquired a 50% noncontrolling legal ownership interest in Jamestown, a global real estate investment and asset management company, for total cash consideration of $173.4 million.

Additionally, Simon Property has been exploring the mixed-use development option, which has gained immense popularity in recent years as it helps capture the attention of people who prefer to live, work and play in the same area.

Furthermore, it capitalized on purchasing recognized retail brands in bankruptcy. Investments in them seem strategic for Simon Property as the brands have been generating a decent amount from digital sales.

With added balance-sheet strength and ample financial flexibility, the company is well-positioned to capitalize on long-term growth opportunities.

Shares of SPG have gained 12.5% in the past six months, outperforming its industry’s growth of 4.4%.

Analysts, too, seem bullish on this Zacks Rank #3 (Hold) stock. The Zacks Consensus Estimate for the company’s 2023 funds from operations (FFO) per share indicates a favorable outlook as it has increased marginally upward over the past month.

Zacks Investment Research
Zacks Investment Research

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Stocks to Consider

Some better-ranked stocks from the retail REIT sector are Federal Realty Investment Trust FRT and Essential Properties Realty Trust EPRT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Federal Realty’s current-year FFO per share is pegged at $6.45.

The Zacks Consensus Estimate for Essential Properties Realty Trust’s ongoing year’s FFO per share stands at $1.64.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

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