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Lightstone Group buys up struggling Prime outlet malls

Lightstone Group LLC agreed Tuesday to buy Prime Retail Inc., a struggling real estate investment trust that operates a popular outlet mall in Ellenton.

The price is $115-million in cash plus the assumption of $523-million in debt.

Lightstone, a closely held Lakewood, N.J., real estate company, will pay 18 cents for each share of Prime Retail's common stock. The offer values Prime Retail at 50 percent more than its closing price of 12 cents a share Tuesday in over-the-counter trading. Shareholders would still have to approve the deal, which is expected to be completed in the fourth quarter.

Lightstone, which owns 15,000 apartments and an 8.5-million-square-foot portfolio of industrial and office buildings, will acquire retail centers in nine states in addition to the 12 it already operates, chief executive David Lichtenstein said in an interview with Bloomberg News. The company expects to achieve substantial cost savings from combining management of the retail centers and by refinancing Prime Retail's debt, Lichtenstein said.

"This merger will provide a solid platform for Lightstone to further expand its holdings into the retail arena, an area where I see great opportunity in the future," said Lichtenstein.

Based in Baltimore, Prime Retail owns or operates 27 outlets including Prime Outlets in Naples, Florida City and Ellenton. Prime Outlets Ellenton was reported 95 percent full in May. A fourth Prime Outlets in Vero Beach was taken back by lenders in a foreclosure.

With the boom years of factory outlet shopping centers long past, the industry has been shrinking for some time. Prime, which mainly built outdoor village-style shopping centers, has been one of the survivors. But the company has been limping along with decreasing occupancy rates and lower earnings since 2000. It's been searching for a buyer for the past month. In a May SEC filing Prime Retail said that without a new source of financing there was "substantial doubt" about its ability to continue as a going concern.

_ Information from Bloomberg News was used in this report. Mark Albright can be reached at or (727) 893-8252.