Prime Retail sells Ind. mall for $27 million

Most of funds to be used to pay down large debt

April 03, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Prime Retail Inc., the nation's second-largest outlet center owner, said yesterday that it sold a 70-store outlet center in Indiana for $27 million, part of a previously announced plan this year to pare down its massive debt through asset sales.

Prime sold the 305,000- square-foot Edinburgh center, about 40 miles outside Indianapolis, to the nation's No. 1 outlet center owner, Chelsea Property Group Inc. The sale was completed Monday.

The Baltimore real estate investment trust received net cash proceeds for its sale of Prime Outlets at Edinburgh of $25.9 million, according to a company statement.

It was a critical deal for cash-strapped Prime, which has just under $900 million in debt and said last week that it believes it may default on some of its loans this year.

Prime will use the proceeds to pay $16.3 million toward existing mortgage debt on the center and $9.2 million will go toward paying down the principal of a high-interest $90 million loan the company obtained in December 2000.

Under the terms of that loan, Prime was required to make a principal prepayment of at least $8.9 million by May 1. Robert A. Brvenik, Prime's chief financial officer, said a $9.2 million payment was made yesterday. The outstanding principal balance on the $90 million loan is currently $37.9 million, Prime said.

The outlet owner must still make a $15.2 million payment by July 1 - a deadline that can be extended to Oct. 31 - and another $1 million by Nov. 1. More property sales or refinancing likely will be necessary to satisfy the July 1 deadline.

Making the July payment "would require one more significant capital event to do that," Brvenik said. He declined to say what other centers are being considered for sale.

Prime is making "strategic asset sales as part of our goal of paying down our debt," he said. " ... It's just another step along the road to meeting our business plan."

In a statement yesterday, Chelsea said the Edinburgh center is 98 percent occupied, with tenants that include Eddie Bauer, Nautica, Nike and Tommy Hilfiger.

Chelsea has grown its portfolio in part by acquiring Prime's properties in recent years. Chelsea has bought one property outright from Prime and, through a joint venture, paid Prime $240 million for another four properties in December 2000.

Prime now owns 43 outlet centers in 25 states - including three in Maryland - with about 12.1 million square feet.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.