Simon Property Group (SPG) Boosts Flexibility With $3.5B Revolving Credit Facility

Simon Property SPG recently announced that its majority-owned operating partnership subsidiary, Simon Property Group, L.P., has amended, restated and extended its multi-currency unsecured revolving credit facility amounting to $3.5 billion.

This $3.5 billion credit facility strengthens the retail REIT’s existing strong financial flexibility. When combined with the company’s existing $5 billion senior unsecured credit facility, it provides $8.5 billion of total revolving credit capacity.

The facility is set to mature on Jan. 31, 2029, with the possibility of a one-year extension to Jan. 31, 2030, at the sole discretion of the Simon Property Group, L.P.

Given the current credit ratings of the operating partnership subsidiary, the interest rate for U.S. Dollar borrowings remains unchanged with the previous facility, calculated at SOFR plus 82.5 basis points, which includes a 10-basis point adjustment for the SOFR spread. This facility is backed by a diverse group of 28 banks from around the globe.

Summing-Up Simon Property

Simon Property owns a diversified portfolio of premium retail assets in some of the key markets across the United States and globally. Solid retail-real-estate demand in the near term is likely to drive healthy demand for its properties, aiding leasing activity, occupancy levels and rent growth. Focus on supporting omnichannel retailing and developing mixed-use assets are encouraging.

Simon Property has been restructuring its portfolio, aiming at premium acquisitions and transformative redevelopments. In fact, over the past years, the company has been investing billions to transform its properties, focusing on creating value and driving footfall.

Simon Property has been making efforts to bolster its financial flexibility. This enabled the company to exit the second quarter of 2024 with $11.2 billion of liquidity. As of June 30, 2024, Simon Property’s total secured debt to total assets was 17%, while the fixed-charge coverage ratio was 4.3, ahead of the required level.

Moreover, the company enjoys a corporate investment-grade credit rating of A- (stable outlook) from Standard and Poor's and a senior unsecured rating of A3 (stable outlook) from Moody’s. With solid balance sheet strength and available capital resources, it remains well-poised to tide over any mayhem and bank on growth opportunities.

However, growing e-commerce adoption and limited consumers’ willingness to spend amid persistent macroeconomic uncertainties raise concerns.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 14.3% compared with the industry’s growth of 15.8%.