GlobeSt.com UPDATE: Prime Retail Sells Three for $133M

BALTIMORE, MD-Outlet center REIT Prime Retail Inc. has revealed the recent completion of two deals involving three properties in transactions totaling $132.5 million. Proceeds from the disposition of the outlets–known as the Colorado Properties and the Puerto Rico Property, which together account for nearly 1 million sf of leasable space, will be used to pay down debts.

TGS Realty forked over $96 million in cash for the Colorado Properties. Both centers are located just outside of Denver, and consist of the decade-old, 478,000-sf Prime Outlets at Castle Rock, and the eight-year-old, 328,360-sf Prime Outlets at Loveland. Prime Retail steered $74.8 million from the deal toward the reduction of the balance on its non-recourse mortgage loan known as the Mega Deal Loan. Net proceeds from the disposition are expected to be in the neighborhood of $12.4 million.

The Barceloneta, Puerto Rico outlet center offers 176,000 sf of retail space among 37 stores, and will now belong to PR Barceloneta LLC for cash consideration of $36.5 million. The property is expandable to 450,000 sf, and includes out-parcels currently under development for non-outlet retail use. Having made its debut just over two years ago, Prime Outlets Puerto Rico was the REIT’s only center outside the US. But as a Prime Retail spokesman explained to GlobeSt.com last month, “the potential sale of Prime Outlets Puerto Rico is not part of a strategy to move out of the market.” Net proceeds from the Puerto Rico property are expected to reach nearly $14 million, and Prime Retail will stay on to manage, market and lease the property.

As for plans for the net proceeds from both deals, Prime Retail will use the money to pay down $25.2 million in mezzanine debt that started out as a $90 million loan. Explaining the company’s disposition strategy, Prime Retail’s Steven A. Sless tells GlobeSt.com, “We’ve stated in the past that we will take a look at offers on our properties and if they make financial sense for the company and for shareholders, we’ll consider them.” The sale of the Colorado Properties and the Puerto Rico outlet are not likely to be the last centers to exit the company’s portfolio. Sless adds that, “offers to Prime Retail to purchase any of the properties will be considered based upon merit and value to the company.”