Prescott Acquires Six Value Retail Properties In U.S. For $110.4 Million

July 28, 2006 - Prescott Capital Management, LLC, the investment and asset management unit of The Prescott Group, LLC, announced today its acquisition of a national portfolio comprising six outlet center properties totaling 1,336,000 square feet from affiliates of Horizon Group Properties, Inc. of Chicago for $110.4 million, or $82 per square foot of gross leasable area.

The six value retail assets are located in California, Nevada, Missouri, Minnesota, Michigan, and Georgia. Approximately 86.5 percent of the portfolio’s operating gross leasable area was occupied at closing. The portfolio will be managed by Ariel Preferred Retail Group, Prescott's nationally-focused retail property management company specializing in the value retail sector (www.arielpreferred.com).

Prescott is a New York-based real estate merchant banking firm that undertakes property investment, asset management, and investment banking activities throughout the United States and internationally. Prescott Capital Management is the firm’s investment and asset management division, which sponsors a series of real estate investment vehicles comprised of commercial properties located throughout the nation.

"This portfolio is an especially attractive platform from which to capitalize on opportunities for market growth and continuing ownership concentration in the value retail industry," said Susan L. Stupin, managing director of Prescott. "The portfolio offers geographic diversification, strong operating cash flow, and excellent potential for capital appreciation over time, and is expected to provide very attractive investment returns."

"We were able to acquire these assets at attractive pricing levels that compare very favorably to those in other recent transactions involving outlet center properties. We expect market consolidation in the sector to accelerate as the industry matures, and it is Prescott’s objective to create a strong presence that will support marketing synergies and enhance operating performance."

Prescott has had a longstanding involvement in the value retail industry. Previously, Prescott’s investment banking unit arranged groundbreaking financing for properties owned by the McArthur/Glen Group prior to its initial public offering in 1993.

Theodore R. Gamble, Jr., managing director of Prescott said, "We gained experience in the value retail sector in the early 1990s while working closely with McArthur/Glen’s management team, and have always seen the industry’s tremendous potential. Over the next few years, we intend to aggressively expand our investment in value retail properties through additional acquisitions and the expansion of existing centers."

The properties in the portfolio include:
  • Tulare, California: The Tulare property includes 226,405 square feet of gross leasable area with expansion potential, and is currently 95.1 percent occupied. It is located near California Highway 99, and its trade area includes California’s growing Central Valley, spanning from Fresno to Bakersfield and is situated near major tourist destinations such as Yosemite National Park and Sequoia National Park. Major tenants include Gap, Polo Ralph Lauren, Tommy Hilfiger, Reebok, Liz Claiborne, Coach, Nautica, and Mikasa.
  • Laughlin, Nevada: The Laughlin property includes 256,741 square feet of gross leasable area with additional expansion potential, and is currently 89 percent occupied. Laughlin is a tourist destination situated on the Colorado River between Los Angeles and Las Vegas. Its trade area includes southwestern Nevada as well as parts of California and Arizona. Major tenants include Gap, Reebok, Factory Brand Shoes, Dress Barn, and Oshkosh B’Gosh children’s clothing.
  • Warrenton, Missouri: The Warrenton property includes 199,963 square feet of gross leasable area, which is currently 89 percent occupied. It is located near Interstate 70, the primary east-west highway through the Midwest, and its trade area spans from St. Louis to Columbia, Missouri. Major tenants include Nike, Gap, Liz Claiborne, Factory Brand Shoes, Levi, Bass, and Carters.
  • Medford, Minnesota: The Medford property includes 223,960 square feet of gross leasable area and is currently 87.5 percent occupied. It is located just off Interstate 35 and its trade area spans from Minneapolis/St. Paul to Rochester, Minnesota and includes northern Iowa. Major tenants include Gap, Nike, Eddie Bauer, Liz Claiborne, and Carters.
  • Traverse City, Michigan: The Traverse City property includes 153,975 square feet of gross leasable area, and is currently 73.8 percent occupied. The property is located near the historic downtown section of Traverse City, the center of a major year-round tourist and vacation area along Lake Michigan that serves the entire Midwest. Major tenants include Old Navy, Gap, Bass, Lenox, Oshkosh B’Gosh, and Pendleton.
  • Darien, Georgia: The Darien property currently includes 198,110 square feet of gross leasable area, which is currently 80.1 percent occupied. An additional area containing 76,385 square feet is being prepared for occupancy, with further expansion potential. The property is located just off Interstate 95 and its primary trade area spans from Savannah, Georgia to Jacksonville, Florida. Most vacationers traveling by car to Florida pass by the center. Major tenants include Gap, Polo Ralph Lauren, Tommy Hilfiger, Reebok, Liz Claiborne, Coach, Nautica, and Mikasa.

About The Prescott Group, LLC

Founded in 1987, The Prescott Group, LLC is a New York-based real estate merchant banking firm that undertakes property investment, asset management, and investment banking activities throughout the U.S. as well as internationally. Prescott brings institutional real estate investments in high quality commercial real estate assets, including office, industrial, retail, mixed-use, hotel, and multi-family product types, to private clients including high net worth individuals, families, and private investment groups as well as to trusts, endowments, foundations, and institutional investors.

In 2004, the firm partnered with the Gordon P. Getty Family Trusts to offer expanded real estate investment opportunities to significant private investors. The Getty Trusts made a substantive investment in Prescott at the corporate level and also participate in real estate investment vehicles sponsored by Prescott.

Prescott Capital Management is the firm’s investment and asset management subsidiary, working closely with groups providing wealth management services to significant individual investors. It sponsors a series of real estate investment vehicles comprised of commercial properties located throughout the U.S.; manages investment funds targeted toward specific strategies and segments of the property markets; and originates and manages separate account investment programs focused on the U.S. and international property markets.