Simon Property Group, the largest mall owner in the U.S., said late Monday it completed its $2.3 billion acquisition of 21 outlet shopping malls from Prime Outlets Acquisition.
Under the terms of the deal, first announced last December, Simon paid $700 million for the Prime's interests in Baltimore-based Prime Outlets and took on $1.55 billion of Prime's debt and preferred stock.
The deal was amended for Prime to retain several properties, including Prime Outlets-Saint Augustine and the Livermore and Grand Prairie development projects.RBC analyst Rich Moore noted that Simon said its retail tenants are looking at recovery plans in anticipation of economic recovery after weathering the financial crisis of the last two years. "Management indicated that, in general, retailers appear to have identified the bottom to the current economic environment," Moore said. "Most have moved to a mode of low expense growth and are maintaining reasonable levels of inventory to guard against a further deterioration in the economy. Likewise, most express a higher level of confidence to Simon in pursuing further store openings or maintaining existing stores." Retail bankruptcies have "returned to more typical levels," he added, which should help keep Simon's occupancy rates at healthy levels. While industry trends trends in the retail-focused real estate investment trust sector have been improving, trouble may yet be on the horizon. >>Retail REITs: Trouble Ahead