Upload
jianhao-zeng
View
158
Download
0
Embed Size (px)
Citation preview
SimonPropertyGroup
Contact:Jianhao Michael ZengM.S. in Real Estate FinanceClass of 2015NYUSchack Institute of Real Estate
SPG Overview• Largest REIT in World by both Market Cap ($64.9b)
and Total Cap ($92.7b)
• 1,915% Total Return since IPO in 1993
• Interest in More than 350 Properties
• Located in North America, Europe & Asia
Globally Recognize Management Team
Costs of Asset Classes
Debt Preferred Stock
Common Stock
WACC0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%
4.78%
7.25%6.75%
6.13%
Corporate Debt
- Rated AA- Weighted Average Interest of Debt – 4.78%- Weighted Average Years to Maturity – 5.5
22%
51%
27%EquitySecured Debt (Mortgage)Unsecured Debt (Corporate Debt)
Debt Maturity Schedule (In thousand)
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
After
2024
0500,000
1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,000
Total Secured Debt ExpirationTotal Unsecured Debt Expiration
2010 Bond Issuance• Trades at a Premium - $116
• 5.62% Annual Coupon
• Matures in 2020
• Absolute Spread over 5-YR Treasury – 389 bps
• Relative Spread over 5-YR Treasury – 225 bps
New Price (IRR) – 50 BPS• Current Spread – 76 bps
• New Required Return – 2.99%
• New Price of Bond - $113.25
New Price (Duration) – 50 BPS• Formula = (126.32-114.67)/(2*116*.0005)
• Duration is 10 (I-Rate Risk)
• 50 BPS Increase – 5% Drop in Price
Preferred Shares• Only 255k of Preferred Shares Outstanding
• Less than 1% of SPG’s Capital Structure
• Redemption Price - $100
• Issue Quarterly Distributions @ 7.5% Annual Rate
Development & Redevelopment• Spend $500m to $1b Annually
0%6%
12%18%
7%12% 10%
19%
Projected IRR for each type of invesment
Asia Investment
• JV with Mitsubishi Estate Co. in Japan
• JV with Shinsegae in South Korea
Macerich• Simon has disclosed that it accumulated a 3.6% stake or
5.71M shares in Macerich and noted that it "may" request that Macerich waive its excess share provision of 5%.
• Macerich disclosed on 11/17 that it had waived that provision for Ontario Teachers’ Pension Plan (OTPP) in connection with Macerich's acquisition of Ontario Teachers' 49% stakes in five major malls.
• After the deal between OTPP and Macerich, SPG share is 3.39% and now with the 5% excess share provision from MAC, SPG will have the opportunity to acquire 8.417 million shares before triggering the excess share provision.
Klepierre • 21% ownership stake• 300 shopping centers in over 15 countries• Investing in emerging markets i.e. Poland, Czech
Republic, Slovakia, Slovenia & Hungary• Divesting away from Southern Europe• Formed strategic partnerships with Zara, Mango,
H&M and Sephora
Retail Sector• Forecasted to improve throughout the end of 2014
and into 2015• Strong organic growth through higher occupancies
and increasing rents• Retailers efficiently utilizing space• Total portfolio sales increased 3.5% y-o-y
WPG Spin-Off• Spun-Off all of its 98 strip-center businesses• New REIT – Washington Prime Group• Only contributed 3.5% of NOI• Majority of locations in depressed markets• Since Spin-Off, stock price fell by more than 25%
Mergers & Acquisitions
• SPG has engaged in M &A with a number of companies including:
Gallerie Commerciali Italia S.p.A. Silver Sands Factory Stores Paragon Outlets Grand Prairie Paragon Outlets Livermore Valley Arizona Mills Klepierre
JV and Accessing Capital• In 2007, SPG accessed capital from Farrallon Capital
to acquire a stake in Mills Corp, REIT.• Engaged in atleast 6 Joint Ventures that both
acquire and develop new properties MacAruthurGlen Klepierre Auchin S.A. Institutional Mall Investors (IMI) Mitsubishi Estate Co. Ltd. Shinsegae International Co.
FFO• FY13 - $3.2b (increase from $2.8b FY12)• FFO – $689m in 3Q14• 14% increase y-o-y after debt retirement• FY13 FFO/share – $8.85, record for REIT industry!• FY14 FFO/share - $9.25
Annual FFO Growth• Year 2018 forecasted to be 25% higher than 2014
2014 2015 2016 2017 2018$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$3,357,696 $3,536,561$3,930,483 $4,021,903 $4,189,873
Forecast FFO (in thousand)
AFFO/CAD• FY13 - $2.8b• FY14 - $3.1b• FY14 AFFO/share - $8.50• FY16 AFFO/share - $10.11
Annual ROA • SPG purchasing and developing profitable
properties• Able to increase net income in greater proportion to
value of assets
2014
2015
2016
2017
2018
19.00% 19.50% 20.00% 20.50% 21.00% 21.50% 22.00% 22.50% 23.00%
Annual ROA forecast
Debt/Total Capital• FY14 Debt/Cap – 29%• Dramatically decreasing from 2014 to 2018• Retirement of two largest debt issuance (2016 and
2018) serve as catalyst
IRR Comparison• YTD Return:
• Total XIRR if purchased on Mar 09, 2009 SPG: 44.09% GGP: 157.45%
YTD Return37.40%
36.27%
GGP SPG
More Return Comparison
Dividend; 11.36%
Capital Gain; 88.64%
SPG
Dividend Capital Gain
Dividend; 7.86%
Capital Gain; 92.71%
GGP
Dividend Capital Gain
Comparable
SPG GGP0.00%0.50%1.00%1.50%2.00%2.50%3.00%3.50%
Dividend Yield
Debt/Capital
Dividend Payout Ratio
Y-O-Y Total Return
0% 10% 20% 30% 40% 50% 60%
29.00%
52.53%
32.00%
45.00%
46.15%
33.00%
SPG GGP
FY14 FFO/Share $8.85 $1.30
P/FFO 19.6x 20.7x
Trading to NAV 1.54% -4.96%
Analyst Opinion
Three Months Ago Two Months Ago Last Month Current Month0
2
4
6
8
10
12
14
1614
13 1314
Analyst Opinion about SPG
Strong Buy BuyHold Underperform/Sell
Num
ber o
f Rec
omm
enda
tion
Conclusion• P/FFO multiple of 19.6x vs. 18.8x• Predominant Institutional Ownership i.e. Cohen &
Steers, Fidelity, T. Rowe Price