Simon Property Group Completes Spinoff of Washington Prime Group

This week is quite a busy week in the spinoff world. The action started yesterday with the completion of Simon Property Group’s (SPG) spinoff of the Washington Prime Group. The new company will hold interests in 98 retail assets including Simon’s strip center business and select, smaller malls. The new company, a REIT, is trading under the ticker ‘WPG‘ and Simon shareholders should have received 1 share of WPG for every 2 shares of SPG owned. Simon remains in the S&P 100 & 500, but Washington Prime Group joined the S&P Midcap 400 index.

The new company is helmed by Mark Odan who has a strong leadership background in the real estate space. Mr. Odan was previously the CEO of Sunrise Senior Living and of the Mills Corporation, both of which were ultimately sold off. Other leadership positions at WPG, including the COO, General Council and EVP, are being filled with Simon employees.

Simon is expected to maintain its current dividend and as a REIT, Washington Prime Group is expected to pay out most of its earnings so shareholders will see an effective dividend increase as a result of the transaction. More importantly though, by shedding some of its lesser and less exciting assets, Simon will boost its financial metrics and its image with Wall Street. In fact, the move was so well received that just a few months later, a competitor, Vornado Realty Trust (VNO), announced plans to follow along and spin off its strip center business.

Shares of WPG are trading down slightly in their first day of trading and given the index movement there is some possibility of forced selling. For additional information on the spinoff, check out its investor presentation and its Form 10 filing.

Disclosure: Author holds no position in any stock mentioned.