Simon Property Group Inc. (NYSE:SPG) Q4 2014 Earnings Conference Call - Final Transcript

Jan 30, 2015 • 11:00 am ET

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Simon Property Group Inc. (NYSE:SPG) Q4 2014 Earnings Conference Call - Final Transcript

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Q & A
Executive
Rick Sokolov

Analyst
Rich Moore

So normally this time of year you would be maybe half done, something like that or less.

Operator
operator

Scott ODonnell with MetLife. Please proceed.

Analyst
Scott ODonnell

I've got a quick question. You guys have been a great steward of the balance sheet for bondholders. I guess I have to ask the question, why the commercial paper program? How does that make sense from a strategic standpoint? And can you explain the strategy around exposing yourself to the short-term money markets.

Executive
David Simon

Scott we go back, it's handy. We go back for long time. As you know we've got a 70 billion equity market cap, it's less than 1% of our total market cap and it helps us. One of the things we're looking at is as we significantly want to roll down our debt cost we have a huge opportunity over the next two years as our average interest rate is about 5.65% on the $5 billion of debt it comes to. It allows us to look at potentially one prepaying some of our secure debt where we can borrow at was at 15 basis points to 16 basis points and there is absolutely no risk. It also diversifies our investor base. We've had significant strong investors.

Executive
Rick Sokolov

and there is really no risk because it is like in the olden days, as you know, when we used to have the banks fit on a competitive bid line now we just replace that with as you know commercial paper. And the regulations in the market is far, far different than it was five, ten years ago. So we had no problem. We started in October, there were some volatile market s. We had absolutely no problem rolling over any of our, if you would, euro paper or our USD paper and it's again something in a small way that we're going to continue to do and to be proactive and opportunistic.

Analyst
Scott ODonnell

So I get that. So you are viewing it more from a transactional flexibility standpoint rather than a strategic part of your capital structure because I think we have talked over the years about this. You guys have long-term assets and you tend to want to fund them long-term, right.

Executive
Rick Sokolov

Absolutely and that's why we significantly increased our average weighted term as we reduced the rate and that will continue to be the case.

Executive
David Simon

Any other questions operator.

Operator
operator

At this time, there are no further questions. I would now.

Executive
David Simon

Thank you, Ma'am. Thank you everybody. Have a healthy New Year, happy New Year and we'll talk to you soon.

Operator
operator

Thank you for joining today's conference. That concludes the presentation. You may now disconnect and have a great day.