Simon Property plans debt sale to fund tender offer

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Simon Property Group Inc., the largest U.S. shopping-mall owner, plans to sell $750 million of notes to fund a tender offer
for outstanding debt for the second time this year.

The company plans to issue 10.5-year notes as soon as Monday, according to a person familiar with the transaction. Proceeds
will be used to finance a tender offer for outstanding debt maturing in 2013 and 2014, Simon said Monday in a regulatory filing
that didn’t specify the size, maturity or timing of the sale.

Simon, based in Indianapolis, is marketing debt after reporting earnings that rose as national retail sales improved and
rents climbed. Developers Diversified Realty Corp., the owner and manager of shopping centers in the U.S., Brazil and Canada,
is also selling notes Monday, as bonds issued by U.S. retail real estate investment trusts, or REITs, outperform overall corporate

Bonds sold by U.S. retail REITs have returned 12.5 percent this year through Aug. 6, including reinvested interest, according
to Bank of America Merrill Lynch’s U.S. Retail REIT index. That compares with the 8.8-percent return on overall U.S.
corporate debt, the data show.

Simon sold $2.25 billion of notes in three parts on Jan. 19 to help finance its tender offer for approximately $2.3 billion
of outstanding notes, according to its most recent quarterly filing.

Simon’s 5.65-percent, 10-year notes issued in January priced to yield 200 basis points more than similar-maturity Treasuries,
according to data compiled by Bloomberg. The notes traded on Aug. 5 at 109.803 cents on the dollar to yield 4.349 percent,
or a 144.5 basis-point spread, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Simon is seeking to repurchase its 5.3-percent senior notes due 2013, 6.75-percent senior notes due 2014 and 5.625 percent
senior securities due 2014, the company said Monday in a statement distributed by PR Newswire. There is $2.3 billion outstanding
of the debt, according to the statement.

Monday’s notes may be rated A3 by Moody’s Investors Service and A- by Standard & Poor’s, said the person,
who declined to be identified because terms aren’t set.
Developers Diversified Realty plans to sell $250 million of 10-year notes as soon as Monday, according to a person familiar
with the transaction, who declined to be identified because terms aren’t set. The Beachwood, Ohio-based company plans
to use proceeds from the offering to repay debt, according to a regulatory filing today.

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