Simon Property Group spinoff includes Lindale Mall

New venture involves redevelopment projects

George Ford
Published: December 13 2013 | 12:28 pm - Updated: 29 March 2014 | 12:49 am in
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Lindale Mall in Cedar Rapids will be getting a new owner in the first half of 2014.

Simon Property Group of Indianapolis announced Friday that it is spinning off all of its smaller enclosed malls and strip center business into an independent, publicly traded real estate investment trust.

Simon, the nation's largest mall owner, said the spinoff will enable it to focus on redeveloping its top regional malls, opening outlet centers and investing overseas to boost growth.

The new company, with the working name of SpinCo, also will own Southern Hills Mall in Sioux City, Simon's only other Iowa property. It will own all or part of 54 strip centers and 44 malls and is expected to generate net operating income of more than $400 million in its first year

Lindale, which opened in 1960, is 98.5 percent leased, according to investor materials provided Friday by Simon. The 688,000-square-foot property is undergoing physical expansion and remodeling.

The 794,000-square-foot Southern Hills, which Simon acquired in 1998, is 87.1 percent leased.

In a statement, the company said no changes are planned for the remainder of the holiday shopping season. "Simon will continue to manage Lindale Mall and it will be operated as business as usual."

Simon said SpinCo plans redevelopment projects totaling about $300 million. Simon expects the new company to have about $2 billion of debt and it intends to pursue an investment-grade rating.

The spinoff, expected to be completed in the first half of 2014, will increase Simon's sales per square foot, net operating income growth and occupancy rates, according to the company.

Simon's current dividend of $4.80 per share will be maintained and is expected to grow in line with its funds from operations and taxable income. SpinCo's initial dividend is expected to be at least 50 cents per share.

Bloomberg News contributed to this story.

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