Prime Retail Five-Property Portfolio

Savills was retained by Prime Retail, Inc. to sell a portfolio of five outlet centers totaling 1.3 million square feet located in Massachusetts, South Carolina, Ohio, Georgia and California.

As part of Prime Retail's strategic recapitalization effort, cash equity from the sale was earmarked to pay down other company debt and fund the company's ongoing operations.

The transaction presented a number of challenges:

• The portfolio had limited operational synergies from a geographical perspective.
• The portfolio spanned five states.
• The properties were cross-collateralized by a single mortgage loan.
• Two of the properties were located in weak markets.

The assets were underperforming from a leasing perspective due to Prime Retail's inability to fund leasing commissions and tenant improvement costs.

Marketing occurred at a time of extreme financial distress at Prime Retail and amidst a general market perception that the seller was in a weak bargaining position and would have to accept distressed pricing.

At the time of the transaction, there were only a few major owners of outlet centers in the country and each was interested in individual assets rather than the whole portfolio.