To the exits: Jacobs, Prime probe new strategies

CLEVELAND & BALTIMORE - Two major shopping center owners are exploring unique ways of exploiting the value of their assets.

The Richard E. Jacobs Group, Cleveland, has contracted with The Goldman Sachs Group Inc., New York, to explore the potential disposition of the majority of its 45 million sq. ft. portfolio. Jacobs Group's commercial real estate includes 38 malls, six office buildings, two corporate office parks and 19 hotels. Jacob's mall holdings - 41 million sq. ft. in 32 retail markets in 15 states - rank it among the largest privately held shopping center owners.

Richard E. Jacobs, chairman and CEO says, "Given the need for sound estate planning ... I have reached the conclusion that the best way to maximize the value of our holdings is to market the portfolio as the economics and timing make sense." Bill Fullington, vice president of marketing services says, the move is exploratory and that Jacobs Group is not leaving the retail scene just yet.

In a more definitive transaction, Baltimore-based Prime Retail has sold three factory outlet centers and two expansions for $274 million to a joint venture between itself and an affiliate of Orlando, Fla.-based Estein & Associates USA Ltd. The purchase price includes an $8 million payment to Prime for a 10-year convenant-not-to-compete and also a $6 million payment to Prime for a 10-year licensing agreement with the joint venture to continue using the Prime Outlets brand name. Closing on the three centers and two expansions is scheduled between November 1999 and September 2000.

Commencing on Jan. 1, 2009, Prime Retail has a six-month option to repurchase the three centers. If the company fails to exercise its option during the six-month period, Estein will have a three-month option to purchase the three centers. If neither party exercises its option, the parties agree to continue the term of the joint venture for up to 40-years.

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