Tuesday, December 8, 2009

SPG taking down Prime Outlets

I didn't see that coming - Simon paying $700mm, $2.325 bln total valuation. Lightstone needed cash from somewhere because no one would accidentally confuse them with savvy real estate investors. Probably a real good deal for Simon.

Prime Outlets Property Roster
Property City / State GLA (sq. ft.)
Prime Outlets Orlando Orlando, FL 773,368
Prime Outlets Birch Run Birch Run, MI 681,621
Prime Outlets San Marcos San Marcos, TX 672,093
Prime Outlets Grove City Grove City, PA 532,152
Prime Outlets Williamsburg Williamsburg, VA 521,604
Prime Outlets Hagerstown Hagerstown, MD 484,906
Prime Outlets Ellenton Ellenton, FL 476,755
Prime Outlets Jeffersonville Jeffersonville, OH 409,869
Prime Outlets Pleasant Prairie Pleasant Prairie, WI 401,436
Prime Outlets St. Augustine St. Augustine, FL 338,414
Prime Outlets Barceloneta Barceloneta, PR 331,813
Prime Outlets Gaffney Gaffney, SC 303,602
Prime Outlets Gulfport Gulfport, MS 302,783
Prime Outlets Queenstown Queenstown, MD 298,409
Prime Outlets Huntley Huntley, IL 278,759
Prime Outlets Calhoun Calhoun, GA 253,667
Prime Outlets Lebanon Lebanon, TN 226,869
Prime Outlets Lee Lee, MA 224,519
Prime Outlets Florida City Florida City, FL 207,873
Outlet Marketplace Orlando, FL 204,866
Prime Outlets Pismo Beach Pismo Beach, CA 147,416
Prime Outlets Naples Naples, FL


Rational Realist said...

It looks like $315 a square foot. Is this a good deal? Any information on the cap rate?

Dark Space said...

Fair point - I get $282.89 ($2.325bln / 8.2mm sq ft). Sales, per article, are $370 psf.

Loan data implies a 6.7% cap rate, give or take a little. Take a look at the Prime Outlets Pool in WBCMT 2006-C23 and WBCMT 2006-C25 (which lists Lichenstein personally as the sponsor) - you have 3.7mm square feet in these 10 properties. @ $282.89 per, you have a $1 billion value. Last year's NOI on these 10 properties was $67 mm, giving you a cap of 6.7%.

However, same methodology shows some substantial drift in the cap rates. The Homestead FL property, for instance, is coming in at < 1% for whatever reason, and others are as high as 10%.

Rational Realist said...

Thanks for the clarification. That looks like an encouraging cap rate.

crabsofsteel said...

the CDO meltdown CRE flavor bgins


REIT Wrecks said...

Is the Prime Outlets CMBS debt even pre-payable? I would be surprised if the borrowing entities aren't locked out until 2011. Does anyone know if this is the case?? If so, Lichtenstein is paying a heavy price for liquidity.

Concrete Jungle said...

Well, it's in defeasance for the net 65 months, but Simon's offer is contingent on assumption of the current debt maturing in Jan. 2016. I read the deal was slated for July 2010 closing pending FTC approval, etc. I don't anticipate any roadblocks to Simon being able to assume the debt - no matter what you think of either company, Simon is a much better sponsor than Lichenstein.

REIT Wrecks said...

Re: Simon a better sponsor - no question about that. The deal is apparently hitting some road blocks though, and I suspect it's because of the existing debt.

Lichtenstein and crew now say the deal may have to close in pieces rather than in one fell swoop, and a July closing is apparently no longer in the cards. There are also issues with the TIA, and that also may be related to the debt.

Basically, it sounds like the CMBS debt is not pre-payable, defeased or not, and Lichtenstein is having trouble buying/litigating his way out of the lockout!

REIT Wrecks said...

Ahh, got it. Simon is assuming the debt. Still, there are issues, and according to Lightstone, the closing ain't happening in July. It's not anti-trust/FTC related. They said it was related to the debt and the TIA.

Concrete Jungle said...

You know more than me, then. I haven't heard any update either way.

BUT, I did just go to your website. Your RSS feed changed, and that's how I viewed you - I thought you had gone away, but that's not the case at all. Site is updated, more content than ever... Good stuff. Sorry I've been missing out.

REIT Wrecks said...

Thanks! I thought I had that feed issue fixed but I guess not. I will try to figure it out once again...there's a lot of great stuff over here too.