Simon Property Group Inc, the largest owner of U.S. malls and outlet centers, will spin off its strip malls and smaller shopping centers — including Towne West Square in Wichita — into a publicly traded REIT to focus on its larger retail properties.
Simon Property said the spinoff, through a distribution to shareholders, would boost its sales per square foot, net operating income and occupancy rates.
The new company is expected to initially own or have an interest in 54 strip malls as well as in 44 smaller enclosed malls with annual net operating income of up to $10 million each.
The new company's funds from operations are expected to be about $300 million, or 80 cents per share, in the first year, Simon Property said.
Towne West is one of three Kansas properties that will be included in the spin off. The other two are West Ridge Mall and West Ridge Plaza, both in Topeka, according to documents from Simon.
Real estate investment trusts (REITs), which must pay out at least 90 percent of their taxable income to shareholders as dividends, are subject to lower taxes and pay higher dividends than other companies.
Simon Property said the REIT's dividend was estimated to be at least 50 cents per share in the first year, representing 100 percent of taxable income.
Richard Sokolow, Simon Property's president and chief operating officer, will be the chairman of the new company's board. Chief Executive David Simon will be a director.
Simon Property's portfolio includes the Towne East and Towne West malls in Wichita, as well as Roosevelt Field Mall and Woodbury Common Premium Outlets in New York, Forum Shops at Caesars Palace in Las Vegas and Lenox Square Mall in Atlanta.