Prime Retail completes secondary stock offering A big step on the way into the spotlight

June 29, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Prime Retail Inc. has completed a major step in its plan to become more mainstream: a $43.5 million secondary stock offering that will reduce its debt and increase its recognition on Wall Street.

The Baltimore-based real estate investment trust's offering of 3.8 million shares -- its first since a March 1994 initial public offering -- comes on the heels of a re- cent conversion of 66 percent of one tier of its preferred stock to common shares, and a new $260 million loan commitment from its biggest lender.

The company hopes that the moves, along with a planned shift from Nasdaq to the New York Stock Exchange, will bolster institutional interest and increase analysts' coverage of the retail factory-outlet center owner.

"We think this creates a new platform for the company to move forward with its growth plan," said Abraham Rosenthal, Prime Retail's chief executive.

"It allows institutions to buy because now the stock will be more liquid, and it lifts us above $100 million worth of common stock outstanding, which for a number of analysts is a self-imposed standard by which they'll follow a company," he said.

With the secondary shares, Prime Retail now has more than $150 million worth of common stock outstanding.

The share sale will reduce Prime Retail's debt to roughly $266 million.

Initially, Prime Retail had expected to sell just $25 million of new stock.

Underwriters Friedman, Billings, Ramsay & Co. Inc.; Morgan Keegan & Co. Inc.; and Stifel, Nicolaus & Co. Inc. may also exercise an option to buy another 555,750 shares, which could raise an additional $6.3 million for Prime Retail.

Of the 3.8 million shares sold last week, 3 percent will be sold by an affiliate of Kemper Insurance, which has owned Prime Retail shares since the company's $300 million IPO.

"Most importantly, what this does is it puts their capital structure in line so the company can complete their development plans," said James Ulmer, an analyst with Aires Real Estate Services, a Hunt Valley investment firm.

By Thanksgiving, Prime Retail plans to complete new factory outlet centers in South Carolina and Ohio containing nearly 900,000 square feet. The company's current portfolio consists of 17 outlet centers totaling 4.3 million square feet.

Prime Retail's common stock price fell 19 cents in yesterday's trading to close at $11.31 cents per share.

Pub Date: 6/29/96

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