Simon Property Group sells $1.5 billion of senior notes

Simon Property Group sells $1.5 billion of senior notes

Simon Property Group, a leading real estate investment trust (REIT), has announced the sale of $1.5 billion in senior notes through its operating partnership subsidiary. The offering, which is expected to close on August 19, 2025, subject to customary closing conditions, consists of two new issues of senior notes: $700 million in 4.375% Notes due 2030 and $800 million in 5.125% Notes due 2035 [1].

The new notes have a weighted average term of 7.8 years and a weighted average coupon rate of 4.775%. The proceeds from this offering will primarily be used to repay the $1.1 billion of 3.500% notes due September 2025, with any remaining funds allocated for general corporate purposes [1].

The refinancing demonstrates Simon Property Group's strong access to capital markets, with four major financial institutions serving as joint book-runners: BBVA Securities Inc., J.P. Morgan Securities LLC, TD Securities (USA) LLC, and Wells Fargo Securities, LLC [1]. This strategic move extends the company's weighted average debt maturity profile to 7.8 years, proactively addressing the upcoming $1.1 billion 3.5% notes maturity in September 2025 [2].

However, the refinancing comes at a cost in today's higher interest rate environment. The new weighted average coupon rate of 4.775% represents a significant increase of 1.275% over the maturing 3.5% notes. On the $1.1 billion portion being refinanced, this translates to approximately $14 million in additional annual interest expense, which will modestly impact funds from operations [2].

While the refinancing increases interest costs, it strengthens Simon Property Group's liquidity position and debt maturity schedule, providing greater financial flexibility as the retail real estate sector navigates economic uncertainties, inflation pressures, and evolving consumer behaviors [1].

References:
[1] https://www.prnewswire.com/news-releases/simon-property-group-sells-1-5-billion-of-senior-notes-302528292.html
[2] https://www.stocktitan.net/news/SPG/simon-property-group-sells-1-5-billion-of-senior-0pl3xyjpjj2y.html