The Lightstone Group actively pursues new acquisitions throughout the country.
The Lightstone Group closed in August, 2010, on a deal with the Simon Property Group Inc. (SPG), the country’s largest owner of retail properties in terms of number, to acquire Prime Outlets for $2.325 billion, including $700 million in cash and stock and the assumption of $1.6 billion in debt. Under the agreement, SPG paid equity consideration for the owners’ interests comprised of 80 percent cash and 20 percent SPG common operating partnership units. Nearly all Prime Outlets interests were owned by the Lightstone Group and Lightstone Value Plus REIT. The deal was the largest of the year in the U.S. commercial real estate industry in 2009, the year it was announced.
Prime Outlets is a leading owner, manager, operator and developer of outlet centers in the United States. At the time of the transfer, their portfolio included 22 high quality outlet centers located in major metropolitan markets such as Washington, D.C., Baltimore, Md., and San Antonio, Texas, as well as popular tourist destinations such as Orlando, Fla., and Williamsburg, Va. All but one of these properties was part of the deal. As of mid-2009, Prime Outlets’ centers were 92 percent occupied and generated annual sales per square foot of approximately $370.
This extraordinarily successful transaction was all the more notable for having been achieved during a real estate downturn. The acquisition price represents a significant increase from the $638 million paid by the Lightstone Group for Prime Outlets in 2003, including $115 million in cash and the assumption of $523 million in debt. Lightstone is proud of the extraordinary return on this transaction, which is the product of outstanding management over seven years of ownership.
Lightstone purchased Fairfield Towers, a multifamily property located at 12205 Flatlands Ave. in Brooklyn, N.Y., for $31 million in February of 1999 and sold it in September of 2006 for $90 million to Taconic Investment Partners and Apollo Real Estate Advisors. The property consists of 19 mid-rise buildings with 983 apartments on 21 acres. The 1960s-era property, which includes one-, two- and three-bedroom apartments, had been converted to condos in 1991, but the original sponsor had sold only 167 of the complex's 1,152 units. Lightstone bought the unsold apartments, continuing to operate them as rental units with the ultimate goal of selling them to a condominium developer. By 2005, the surrounding neighborhood had improved and housing prices had increased to the point where condo sales became economically viable. In 2006, Lightstone felt the market was ripe for a condominium redevelopment and sold the property to Taconic Investment Partners and Apollo Real Estate Advisors to redevelop it into a moderately priced condominium community.
Lightstone purchased Somerset Estates, a garden-style apartment community at 271 Franklin Blvd. in the Somerset section of Franklin Township, N.J., for $9 million in June of 1995 and sold it 13 years later, in June of 2008, for $35 million to Fieldstone Properties. The community consists of 57 brick buildings with 398 garden apartments totaling 339,764 square feet of rentable space on approximately 25 acres. When Lightstone purchased the property, which was built in 1955, it was in tired physical condition and was underperforming financially. Recognizing the intrinsic value of a two- and three-bedroom garden-style community in a premier Somerset County/central New Jersey location close to Rutgers University, which is located in neighboring New Brunswick, Lightstone launched a significant exterior and interior improvements program and addressed other deferred maintenance and management issues. As a result of Lightstone’s expert management, the property was repositioned as a safe and affordable workforce housing community, resulting in higher rents, increased occupancy and a higher quality tenant base.