Simon to Sell $1.5B in Senior Notes

In a time when borrowing can be a daunting task, even for entities with sterling credit histories, companies are turning to other means to raise the capital they need, according to industry experts. Pursuing just such a financing strategy, retail property giant Simon Property Group unveiled plans today to sell $1.5 billion of senior notes of its majority-owned partnership subsidiary, Simon Property Group L.P. Indianapolis-based Simon isn’t alone, even among major real estate companies. Late last month, for example, industrial property specialist ProLogis announced its intention to sell a total of $700 million worth of convertible senior notes and fixed-rate senior notes. The Simon public offering will be underwritten through Banc of America Securities L.L.C., Citi Markets & Banking, Deutsche Bank Securities and Goldman, Sachs & Co., as joint book-running managers, and Daiwa Securities America Inc., ING Wholesale, Piper Jaffray and Scotia Capital as co-managers. The offering consists of $700 million of 5.3 percent notes due 2013 and $800 million of 6.125 percent notes due 2018. Each tranche of notes is priced to yield 235 basis points above its respective Treasury benchmark. The offering is expected to close on May 19. According to Simon, it will use net proceeds from the offering to reduce the outstanding balance on its corporate credit facility, and for other purposes. The REIT currently owns or has an interest in 382 properties totaling 260 million square feet worldwide.