Simon to spin off smaller properties into new public company

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Simon Property Group Inc. said Friday morning that it plans to spin off its strip centers and smaller enclosed malls into a new public company with a separate management team.

Existing Simon shareholders will receive shares in the as-yet-unnamed new business early next year. That company initially will own 54 strip centers and 44 malls. Simon overall owns more than 230 U.S. malls and strip centers, along with 66 outlet centers and 15 international retail developments.

“We believe we are creating a new company that has both a strong Simon heritage and all of the requisite tools to grow its business and succeed,” Simon Property Group CEO David Simon said in a prepared statement.

“At the same time, this transaction allows Simon to focus on our global portfolio of larger malls … and premium outlets while maintaining our considerable scale and conservative leverage profile.”

Occupancy of the targeted strip centers and malls is 94.2 percent and 90.4 percent, respectively, as of Sept. 30.  Each property has operating income below $10 million.

Simon did not disclose who will lead the new company. However, in Friday morning's news release, Simon said that its president and chief operating officer, Richard Sokolov, will be the company's chairman and that David Simon will be a member of the board of directors.

The news release said the spinoff will not diminish Simon's hefty quarterly dividend, which works out to $4.80 per year. The new company also will pay a dividend, expected to be at least 50 cents per year.

Simon will provide property-management services to the new company.

Simon is holding a conference call with analysts at 9 a.m. to discuss the spin-off plan.

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