Simon Property Group, the US shopping centre REIT, is to buy outlet shopping centre company Prime Outlets in a $2.3bn deal.

Simon said today it would pay equity of around $0.7bn, which will be 80% in cash and 20% in Simon shares, and assume Prime Outlets’ debt.

Prime Outlets owns 22 outlet centres in the US, located in major metropolitan markets such as Washington DC, Baltimore, and San Antonio, and popular tourist destinations, such as Orlando and Williamsburg.

At 30 June Prime Outlets’ centres were 92% occupied and generated annual sales of $370/sq ft.

The purchase will increase the size of Simon’s outlet portfolio to 63 centres, comprising 25m sq ft.

“Prime Outlets is an excellent opportunity for Simon as it represents a strong strategic fit for our existing Premium Outlet portfolio and enhances our leadership position in the outlet business,” said Simon chairman and CEO David Simon.

By James Whitmore

Source : www.propertyweek.com, 08.12.2009