"Prime Outlets is an excellent opportunity for Simon as it represents a strong strategic fit for our existing Premium Outlet portfolio and enhances our leadership position in the outlet business," says David Simon, chairman and CEO, in a statement. "Following the completion of this transaction our outlet portfolio will have 63 centers comprising approximately 25 million square feet."

Prime Outlets owns 22 outlet centers throughout the US. Some of its major properties are located in Baltimore, San Antonio, Orlando and Washington DC. Simon will be acquiring a 92% occupied portfolio. The average center has annual sales per square foot of $370.

"The complementary fit of our two businesses and Simon's skills in property management offer a significant value creation opportunity," says David Lichtenstein, CEO and founder of Lightstone, in a release. "I am very proud of the company we were able to build over the past seven years and equally delighted that we were able to sell Prime to a world-class company like Simon. This is truly a win-win transaction."

Simon will pay $0.7 billion for the owner's interest. Of that, 80% will be in cash while 20% will be paid through SPG common operating partnership units. The purchase will be completed by using existing sources of capital.

This deal comes on the heels of speculation that Simon might be in the market to make a bid for General Growth properties Inc. GGP filed for Chapter 11 bankruptcy protection in April, listing 166 regional malls in the court documents. While no offer was made, GGP is now on the cusp of emerging from bankruptcy after renegotiating mortgage loans on 92 properties.

Also, earlier today, Simon entered into an unsecured corporate credit facility, which provides an initial revolving borrowing capacity of $3.57 billion. The credit facility is set to mature on March 31, 2013 and is an increase over its current $3.5 billion revolver.

Simon's current portfolio includes 385 properties, which total 262 million square feet of gross leasable space. It holds properties in North America, Europe and Asia.

Instant Insights /

Simon To Acquire Prime Outlets for $2.3B

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