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.” The stock is being offered under a shelf registration, and the underwriters have been granted a 2.25 million-share overallotment option.
Simon’s outstanding float is about 180 million shares, so the new issue is dilutive by more than 6%. But 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. The company’s long-term debt is $18 billion and change.
Borrowing money to pay the mortgage is costing Simon this morning. 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.
Paul Ausick
March 20, 2009
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