Simon Property prices $1.35 billion notes; PS Business brings deal; credit spreads tighten

By Cristal Cody

Tupelo, Miss., Nov. 30 – Simon Property Group LP tapped the high-grade bond market on Thursday with a $1.35 billion two-tranche offering of notes.

In other high-grade pricing action, PS Business Parks Inc. sold $200 million of cumulative preferred stock on Thursday.

Deal action thinned on Thursday following heavy supply in the first three sessions, while overall issuance is expected by market sources to continue at a brisk pace into mid-December.

The Markit CDX North American Investment Grade 29 index closed about 1 basis point tighter at a spread of 52 bps.

Simon prices $1.35 billion

Simon Property Group priced $1.35 billion of notes (A2/A/) in two tranches on Thursday, according to FWP filings with the Securities and Exchange Commission.

Simon Property Group priced $600 million of 2.75% notes due June 1, 2023 at 99.819 to yield 2.786% and a spread of 65 bps over Treasuries.

The company sold $750 million of 3.375% 10-year notes at 99.214 to yield 3.469%, or a spread of Treasuries plus 105 bps.

Barclays, Citigroup Global Markets Inc., RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc., BNP Paribas Securities Corp., Goldman Sachs & Co., Jefferies LLC, Scotia Capital (USA) LLC, TD Securities (USA) LLC and U.S. Bancorp Investments Inc. were the bookrunners.

Proceeds will be used to finance the company’s planned optional redemption of all $750 million of 1.5% notes due Feb. 1, 2018 at par and for general corporate purposes.

The real estate investment trust for retail properties is based in Indianapolis.

PS Business sells $200 million

PS Business Parks sold $200 million of 5.2% series Y cumulative preferred shares on Thursday, according to an FWP filing with the SEC.

The preferreds (Baa2/BBB/) were issued as 8 million depositary shares, which each represent 1/1,000th of an interest in a share of preferred stock and will have a liquidation preference of $25.00.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC were the bookrunners.

Dividends are payable quarterly on March 31, June 30, Sept. 30 and Dec. 31 of each year. The preferreds are redeemable on or after Dec. 7, 2022 at $1,000 per preferred, which is equivalent to $25.00 per depositary share, plus any unpaid dividends.

Proceeds will be used for the redemption of the company’s 6% series T cumulative preferred stock, to repay debt under its credit facility and for general corporate purposes.

The company plans to list the preferreds on the New York Stock Exchange under the symbol “PSBPrY.”

PS Business Parks is a Glendale, Calif.-based real estate investment trust.

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