Simon Properties Group to Acquire Prime Outlets

Simon Property Group has entered into an agreement to acquire the outlet shopping center business of Prime Outlets Acquisition Company and certain of its affiliated entities (“Prime Outlets”) in a transaction valued at approximately $2.325 billion, including the assumption of Prime Outlets’ existing indebtedness and preferred stock.

Prime Outlets is the owner, manager, operator, and developer of outlet centers in the U.S. Its portfolio includes 22 high-quality outlet centers located in major metropolitan markets such as Washington, D.C., Baltimore, and San Antonio, and popular tourist destinations such as Orlando and Williamsburg. As of June 30, 2009, Prime Outlets’ centers were 92 percent occupied and generated annual sales per square foot of approximately $370.

Under the terms of the agreement, Simon will pay equity consideration of approximately $0.7 billion for the owners’ interests in Prime Outlets. The equity consideration to Prime Outlets’ owners will generally be comprised of 80 percent in cash and 20 percent in SPG common operating partnership units, which will be based on a ten-day trading average of SPG common stock shortly before closing, subject to a 10 percent collar.

Commenting on the transaction, SPG Chairman/CEO David Simon stated: “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. Following the completion of this transaction, our outlet portfolio will have 63 centers comprising approximately 25 million square feet.”