Summary
Simon Property Group, Inc. (SPG) filed an 8-K on April 28, 2014, detailing a significant corporate action: the planned separation of certain assets into a new, independent publicly traded REIT named Washington Prime Group Inc. (WPG). This separation, expected to occur in the second quarter of 2014, will be executed through a pro-rata special distribution of WPG's common shares to SPG's common stockholders, intended to be tax-free for U.S. federal income tax purposes. The new entity, WPG, will initially own substantially all of SPG's strip center business and smaller enclosed malls. Furthermore, the filing highlights voluntary waivers executed by the Company's CEO, David Simon, and several other senior executives. These executives have relinquished their rights to receive specific distributions (SPG L.P. Distribution) on their unearned Long-Term Incentive Plan (LTIP) units related to the separation. This decision is stated to benefit the company and other partners in SPG L.P. and does not alter the one-to-one correspondence between LTIP units and SPG L.P. units, though it acknowledges potential adjustments to FFO targets and other performance metrics due to the spin-off.
Key Highlights
- 1Simon Property Group (SPG) announced plans to spin off a portion of its business into a new REIT called Washington Prime Group Inc. (WPG).
- 2The spin-off, expected in Q2 2014, involves distributing WPG shares to SPG shareholders.
- 3The distribution is intended to be tax-free for U.S. federal income tax purposes.
- 4WPG will comprise substantially all of SPG's strip center business and smaller enclosed malls.
- 5CEO David Simon and other senior executives voluntarily waived their rights to receive specific distributions on unearned LTIP units related to the spin-off.
- 6These waivers are intended to benefit SPG and its other partners.
- 7The company reserves the right to modify or abandon the separation plan at any time.