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BALTIMORE, MD-Struggling shopping outlet REIT Prime Retail Inc. has rejected an unsolicited offer to be bought out by New York-based Fortress Investment Group LLC for $66.2 million. Dutiful consideration of the June 4 recapitalization proposal led Prime Retail officials and advisors to conclude that the bid was “inadequate.”

Real estate investment and asset management company Fortess had proposed buying up Prime Retail’s outstanding capital for twenty cents per-share to $8.00 per-share, depending on the class of the stock. The deal would have given Fortress a 31% stake in the REIT’s remaining 40 shopping centers, which account for approximately 11.3 million sf. The deal also provided for the raising of $50 million through a rights-offering that would have allowed debt-burdened Prime Retail to apply funds to the outstanding $33.2 million on its mezzanine loan, of which a Fortress affiliate is half owner.

Prime Retail has been working to ease its financial troubles after having defaulted on debt payments over the summer. For the past few months, the company has been engaging in property disposition deals in an effort to pay down its debt. In July the company announced it had closed on the sale of six Prime Outlet shopping centers for $118.7 million, which allowed it to repay $111 million of recourse mortgage indebtedness. Similarly, in August, Prime Retail revealed it had brought in international investment bank Houlihan Lokey Howard & Zukin Capital to serve as financial advisor and “assist the Company in exploring recapitalization, restructuring, financing and other strategic alternatives designed to strengthen its financial position and address its long-term capital requirements.”

But Prime Retail’s decision to forego Fortress’s offer is no indication of the company’s willingness to seriously consider other proposals. “Together with our advisor, Houlihan Lokey, the company will meet with credible investors,” Prime Retail spokesman Steven A. Sless tells GlobeSt.com “But we are prohibited from discussing the status of those negotiations or any negotiations until such time as a public announcement is made.”

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