Simon Property Spins Off Washington Prime

Zacks Equity Research

Retail real estate investment trust (:REIT) – Simon Property Group, Inc. (SPG) – finally accomplished the spin off of Washington Prime Group Inc., which joins the regular trading board on the NYSE today under the symbol “WPG.” This independent public company’s portfolio includes 98 retail assets, including the strip center business, that were previously under Simon Property’s ownership.

Simon stockholders received one Washington Prime common share on May 28 for every 2 shares of Simon common stock held as of the close of business on May 16, via a special dividend distribution announced earlier by Simon's board. For fractional shares, the shareholders of Simon will receive cash.

Notably, Washington Prime shares have already traded on a "when issued" basis under the symbol "WPG.WI” on the NYSE since May 14. This allowed shareholders to trade the right to receive shares of Washington Prime on the distribution date.

The move is a win-win situation for both Simon Property and Washington Prime. It would help Simon Property to increase utilization of resources for expanding its global portfolio of larger malls, mills and premium outlets. With the economy showing signs of recovery, spending of the richer consumers is improving and the company seems to leverage on this trend.

On the other hand, for Washington Prime, the move will help unleash the potential of diversified portfolios of strip centers and malls that are owned by it as well as benefit from the flexible balance sheet and significant scale.

Simon currently holds a Zacks Rank #3 (Hold). Some better-ranked retail REITs include Acadia Realty Trust (AKR), General Growth Properties, Inc (GGP) and Retail Properties of America, Inc. (RPAI). All of these stocks sport a Zacks Rank #2 (Buy).

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