Under the terms of the transaction, Prime Retail will continue to manage, market and lease the complex, which was the its sole property outside of the US mainland. The deal was done simultaneously to Prime's separate sale of two outlet centers near Denver, CO to TGS Realty for a reported $96 million. (Read related story.)

New York-based Granite Partners and Citibank NA were exclusive reps for the seller, while Sean Donahue, Lightstone's director of acquisitions, was responsible for closing the transaction. "The elements of this transaction were a perfect match for what we consider to be our investment criteria," according to Donahue.

"Prime will use the net proceeds to make a substantial payment toward its corporate mezzanine loan," according to John Williams, SVP of Granite Partners. "This is another positive step for Prime in its ongoing restructuring. Lightstone will earn an attractive initial yield, which will increase with the expansion of the property."

"In this climate, finding good deals is challenging," David Lichtenstein, Lightstone chairman and principal, tells GlobeSt.com. "In this acquisition, we've found a diamond in the rough. We've built our portfolio based on a diversification strategy, and we love this type of deal because it reflects what we do best.

"We saw the expansion potential in Puerto Rico, which has only about six sf of retail space per resident, compared to around 22 sf per resident in the US," he continues. "Also, it's hard to build there for topographical and 'green' reasons, and the government is anti-development. So if you have a center that's been approved there, it as a lot of value."

Going forward, "we are currently allocating a lot of money to look at sites that may be a little beyond where a lot of people would look," Lichtenstein says. "We're looking nationally - we would like to add two million feet of retail in the next year. We're in 17 states already, and if the numbers are right we'll go anywhere. Prime retail came to us with this deal because they knew we were one of the most aggressive buyers in the country."

Located about 35 miles west of San Juan on one of Puerto Rico's main highways, Prime Outlets has a tenant roster that includes Gap, Polo Ralph Lauren, Liz Claiborne, Brooks Brothers, Timberland, Tommy Hilfiger, Levi's and Reebok, along with a 10-tenant food court. Three of the five pad sites are occupied by Ponderosa restaurant, Banco Popular and Fast Lane Lube & Wash, and Caribbean Cinemas is slated to open a 55,000-sf multi-screen cinema next year.