Simon Says, “More Credit” (SPG)

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Simon Property Group (NYSE:SPG) announced it successfully increased its revolving credit facility from $3.0 Billion to a higher $3.5 Billion, which includes an $875 million multi-currency tranche.  The company said the extra $500 million had high interest with commitments from 26 institutions aggregating more than $1.1 Billion.  Simon’s revolving credit facility now includes 48 institutions.

What is interesting here is why the company needs a hike to its facility.  This doesn’t mean that it will actually borrow more, but this would give it more dry powder to make renovations or acquisitions.  It is already a huge retail shopping mall and center REIT that operates in the U.S. and Puerto Rico, and it has interests in Canada, the EU, Mexico, Japan and elsewhere.  IF it is going to acquire more properties, it would seem that the focus may be in international markets.

With a $23+ Billion market cap, it is the largest of the pure plays in shopping REITs.  The yield of roughly 3.20% seems low compared to other REITs but is basically in-line with the shopping sector.  Shares pulled back from over $105.00 to $104.00 on the news, but they have recovered slightly.  The 52-week trading range is $82.60 to $123.96.

Jon C. Ogg
October 4, 2007