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|Simon Property Group Announces Increased Ownership in Kravco|
INDIANAPOLIS, Nov. 11 /PRNewswire-FirstCall/ -- Simon Property Group, Inc. (the "Company") (NYSE: SPG) announced today that it has completed an initial series of transactions to increase its ownership interests in Kravco Investments L.P. (KI), a Philadelphia, Pennsylvania-based owner of seven regional malls, and Kravco Company (KC), its affiliated property management company. Definitive documents have been executed for the remaining transactions, which should be completed within the next two weeks.
As was announced on October 30th, these transactions will increase SPG's ownership in KI to approximately 80% and in KC to 50%. Prior to these transactions, SPG owned approximately 18% of KI and 15% of KC. Members of the family of Arthur Powell, one of the original founders of the Kravco companies, will own the remaining interests. KI will be renamed Kravco Simon Investments (KSI) and KC will be renamed Kravco Simon Company (KSC), to reflect the new ownership.
KSI owns interests in seven regional malls, six of which are located in the Philadelphia metropolitan area, as identified below:
Property Location Bangor Mall Bangor, Maine King of Prussia Mall King of Prussia, Pennsylvania (Court and Plaza) Lehigh Valley Mall (1) Whitehall, Pennsylvania Montgomery Mall Montgomeryville, Pennsylvania Oxford Valley Mall Langhorne, Pennsylvania Quaker Bridge Mall Lawrenceville, New Jersey Whitehall Mall Whitehall, Pennsylvania (1) Economic interest evidenced through a note.
The portfolio averages over $400 in sales per square foot. KSI also owns interests in three community centers.
Total consideration for the purchases is approximately $300 million, including the assumption of $108 million of mortgage indebtedness with a weighted average interest rate of 7.12%. Simon Property Group, L.P., subsidiary partnership of the Company, expects to issue $120 million of perpetual preferred operating partnership units at interest rates ranging from 7.5% to 8.0%, and to fund the remainder from available cash. SPG expects the initial unlevered yield from the transactions to be approximately 8.8%.
"We are very pleased to complete this series of transactions," said David Simon, chief executive officer of SPG. "These are well-positioned assets wholly consistent with our acquisition strategy, and they give us a significant presence in the important Philadelphia market. We believe, working together with the Powell family, that we can meaningfully increase the cash flow of this portfolio. We look forward to a mutually beneficial working relationship."
Arthur Powell, one of the Kravco founders and Chairman of KSI, stated "We are very pleased that SPG is taking a larger ownership stake in our portfolio. Our family firmly believes that there are significant opportunities to profitably grow our business that can be unlocked with the help of SPG and its resources."
Certain matters discussed in this press release may be deemed forward- looking statements within the meaning of the federal securities laws. Although the Company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained, and it is possible that our actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties.
Those risks and uncertainties include, but are not limited to, the national, regional and local economic climate, competitive market forces, changes in market rental rates, trends in the retail industry, the inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise, acquisitions and changes in market rates of interest. The reader is directed to the Company's various filings with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K for a discussion of such risks and uncertainties.
Simon Property Group, Inc. (NYSE: SPG), headquartered in Indianapolis, Indiana, is a real estate investment trust engaged in the ownership and management of income-producing properties, primarily regional malls and community shopping centers. Through its subsidiary partnerships, it currently owns or has an interest in 236 properties containing an aggregate of 182 million square feet of gross leasable area in 36 states. The Company also holds interest in nine assets in Europe and Canada and ownership interests in other real estate assets. Additional Simon Property Group information is available at www.simon.com .
SOURCE Simon Property Group, Inc. -0- 11/11/2003 /CONTACT: Investors, Shelly Doran, +1-317-685-7330, or Media, Les Morris, +1-317-263-7711, both of Simon Property Group, Inc./ /Web site: http://www.simon.com / (SPG) CO: Simon Property Group, Inc.; Kravco Investments L.P.; Kravco Company ST: Indiana, Pennsylvania IN: FIN RLT SU: TNM JT-LA -- CLTU046 -- 3807 11/11/2003 16:30 EST http://www.prnewswire.com