The company has shelled out $2.5 million for the parcel, which it had previously leased. The acquisition, which has occurred pursuant to an option to buy contained in the lease, is expected to cause a significant increase in cash flow for the company, since HGP had been paying $580,000 per year in ground rent.
According to the terms of the agreement, 20% of the price has been paid in cash at closing. In addition, the undisclosed seller has taken a note for the remainder of the purchase price. The seller's note is self-amortizing over its 10-year term, with the initial interest rent payable on the note at 5.074%. The interest rate will be adjusted annually at the cost of funds index for the 11th District Savings Institutions as published by the Federal Home Loan Bank Board, plus 2%.
Horizon Outlet Center is currently more than 90% leased, with tenants including Gap, Reebok, Geoffrey Beene and Izod. In addition, the complex houses a 24,000-sf CineMax theater.
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