-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NgjpEs/mLpqvzbSzRrDvM7izDiUPcX9goHrmSz3bPs6oSsq61R1LeA/h4Ppv16X4 DY+G8LgkAtQ9d0W+lFBJ0A== 0000911708-02-000013.txt : 20021220 0000911708-02-000013.hdr.sgml : 20021220 20021220125233 ACCESSION NUMBER: 0000911708-02-000013 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20021231 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 20021220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIME RETAIL INC/BD/ CENTRAL INDEX KEY: 0000911708 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 382559212 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13301 FILM NUMBER: 02864357 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4102340782 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 8-K 1 f8k02.txt FORM 8-K PERIOD ENDED 12/31/2002 - -------------------------------------------------------------------------------- United States Securities and Exchange Commission Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) December 6, 2002 PRIME RETAIL, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 0-23616 38-2559212 - ------------------------------- ---------------------- ---------------------- (State or other jurisdiction of (Commission File No.) (I.R.S. Employer incorporation or organization) Identification No.) 100 East Pratt Street Nineteenth Floor Baltimore, Maryland 21202 - ---------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) (410) 234-0782 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) No Change - -------------------------------------------------------------------------------- (Former name, former address, or former fiscal year, if changed since last report) - -------------------------------------------------------------------------------- PRIME RETAIL, INC. ITEM 2: Acquisition or Disposition of Assets On December 6, 2002, Prime Retail, Inc. (the "Company", "we", "us" or "our") completed two separate transactions involving the sale of three outlet centers for aggregate cash consideration of $132.5 million. The first transaction involved the sale of two outlet centers (collectively, the "Colorado Properties") located in Castle Rock, Colorado and Loveland, Colorado, which contain an aggregate of 808,000 square feet of gross leasable area ("GLA"). The Colorado Properties were sold for cash consideration of $96.0 million. The net proceeds from the sale of the Colorado Properties were $12.4 million, after (i) required defeasance of mortgage indebtedness, (ii) payment of closing costs and expenses and (iii) release of certain escrowed funds. The Colorado Properties were part of a collateral package of fifteen properties that secured a non-recourse mortgage loan (the "Mega Deal Loan"). The Mega Deal Loan has an interest rate of 7.782% and is scheduled to mature on November 11, 2003. The second transaction involved the sale of Prime Outlets of Puerto Rico (the "Puerto Rico Property"), an outlet center located in Barceloneta, Puerto Rico consisting of 176,000 square feet of GLA. The Puerto Rico Property was sold to PR Barceloneta, LLC for cash consideration of $36.5 million. The net proceeds from the sale were approximately $13.9 million, after (i) repayment in full of $19.2 million of existing first mortgage indebtedness on the Puerto Rico Property, (ii) payment of closing costs and fees, (iii) establishment of certain escrows at closing and (iv) release of certain escrowed funds. We will continue to manage, market and lease the Puerto Rico Property pursuant to a management agreement with the new owner. In connection with the sale of the Colorado Properties, $74.8 million of the sales proceeds were used to partially defease the Mega Deal Loan, reducing the outstanding principal balance of the Mega Deal Loan to $264.1 million. We used the net proceeds from these sales transactions and cash from operations to repay in full the remaining $30.2 million principal outstanding on a mezzanine loan (the "Mezzanine Loan") obtained in December 2000 in the original amount of $90.0 million. The Mezzanine Loan bore interest at 19.75% and was scheduled to mature in September 2003. On December 6, 2002, we issued a Press Release announcing the sales transactions described above. A copy of such Press Release, which is hereby incorporated into this filing in its entirety, is attached to this Form 8-K as Exhibit 99.1. On December 16, 2002, we issued a Press Release announcing we repaid the Mezzanine Loan in full. A copy of such Press Release, which is hereby incorporated into this filing in its entirety, is attached to this Form 8-K as Exhibit 99.2. PRIME RETAIL, INC. ITEM 7: Financial Statements and Exhibits A. Financial Statements: None B. Pro Forma Financial Information: The following presents Unaudited Pro Forma Condensed Consolidated Financial Statements as of September 30, 2002 and for the nine months ended September 30, 2002 for Prime Retail, Inc. The pro forma financial information reflects the elimination of the historical operating results of the Colorado Properties and the Puerto Rico Property for the nine months ended September 30, 2002 and the elimination of the historical balances of the Colorado Properties and the Puerto Rico Property as of September 30, 2002. The Colorado Properties and the Puerto Rico Property were sold on December 6, 2002. No additional adjustments have been made to reflect the required partial defeasance of the Mega Deal Loan or the repayment in full of the Mezzanine Loan. The pro forma financial information is presented for illustrative purposes only and are not necessarily indicative of what our actual results of operations would have been if the sales transactions had occurred on January 1, 2002, nor do they purport to represent our future results of operations. The Unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2001 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002. Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Nine Months Ended September 30, 2002 (in thousands, except per common share information)
Less: ---------------------------------- Pro Forma Consolidated Colorado Puerto Rico Consolidated Prime Retail, Inc.(1) Properties(2) Property(3) Prime Retail, Inc. --------------------- ------------- -------------- ------------------- Total revenues $ 114,552 $ (13,414) $ - $ 101,138 Total expenses 211,477 (10,643) - 200,834 ---------- --------- -------- --------- Loss before loss on sale of real estate (96,925) (2,771) - (99,696) Loss on sale of real estate (703) - - (703) ---------- --------- -------- --------- Loss from continuing operations (97,628) (2,771) - (100,399) Discontinued operations (14,383) - 14,391 8 ---------- --------- -------- --------- Net loss (112,011) (2,771) 14,391 (100,391) Income allocated to preferred shareholders (17,004) - - (17,004) ---------- --------- -------- --------- Net loss applicable to common shareholders $ (129,015) $ (2,771) $ 14,391 $(117,395) ========== ========= ======== ========= Basic and diluted earnings per common share: Loss from continuing operations $ (2.63) $ (2.69) Discontinued operations (0.33) - ---------- --------- Net loss $ (2.96) $ (2.69) ========== ========= Weighted-average common shares outstanding - basic and diluted 43,578 43,578 ========== =========
See accompanying notes. Unaudited Pro Forma Condensed Consolidated Balance Sheet As of September 30, 2002 (in thousands)
Less: ------------------------------ Pro Forma Consolidated Colorado Puerto Rico Consolidated Prime Retail, Inc. (Properties(2) Property(3) Prime Retail, Inc. ------------------ -------------- ----------- ------------------ Assets Investment in rental property, net $ 728,370 $ (84,178) $ 644,192 Cash and cash equivalents 6,039 (389) $ (509) 5,141 Restricted cash 36,764 (1,000) (995) 34,769 Accounts receivable, net 2,916 79 (506) 2,489 Deferred charges, net 5,571 (701) 4,870 Assets held for sale 33,022 (31,495) 1,527 Investments in partnerships 33,151 33,151 Other assets 5,276 (121) (92) 5,063 --------- --------- --------- --------- Total assets $ 851,109 $ (86,310) $ (33,597) $ 731,202 ========= ========= ========= ========= Liabilities and Shareholders' Equity Total debt $ 666,062 $ (56,048) $ (19,371) $ 590,643 Accrued interest 4,449 (244) (86) 4,119 Real estate taxes payable 8,777 (1,940) 52 6,889 Accounts payable and other liabilities 25,905 (59) (608) 25,238 --------- --------- --------- --------- Total liabilities 705,193 (58,291) (20,013) 626,889 Minority interests 1,487 1,487 Total shareholders' equity 144,429 (28,019) (13,584) 102,826 --------- --------- --------- --------- Total liabilities and shareholders' equity $ 851,109 $ (86,310) $ (33,597) $ 731,202 ========= ========= ========= =========
See accompanying notes. Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (in thousands) (1) - Represents historical unaudited condensed consolidated financial information of Prime Retail, Inc. See our Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 for additional information. (2) - Represents the elimination of the historical operating results or balances of the Colorado Properties that were sold on December 6, 2002. In connection with the sale of the Colorado Properties, we were required to use $74,764 of the sales proceeds to partially defease the Mega Deal Loan. The historically allocated debt for the Colorado Properties as of September 30, 2002 was $56,048. Total expenses for the Colorado Properties includes $3,484 of interest expense on such allocated debt. The Mega Deal Loan bears interest at 7.782%. (3) - Represents the elimination of the historical operating results or balances of the Puerto Rico Property that was sold on December 6, 2002. In accordance with the requirements of Statement of Financial Accounting Standard No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," the operating results of the Puerto Rico property are classified as discontinued operations in the unaudited condensed consolidated statement of operations for Prime Retail, Inc. Total revenues and expenses for the Puerto Rico Property were $4,552 and $18,943, respectively, for the nine months ended September 30, 2002. Included in total expenses is a non-recurring provision for asset impairment of $15,557 related to the write-down of the carrying value of the Puerto Rico Property to its estimated net realizable value based on the terms of the sales agreement. As of September 30, 2002, such net realizable value was classified as assets held for sale in the unaudited condensed consolidated balance sheet of Prime Retail, Inc. C. Exhibits in accordance with the provisions of Item 601 of Regulation S-K: Number Description 99.1 Press Release issued by the Company on December 6, 2002 regarding completion of sale of three outlet centers. 99.2 Press Release issued by the Company on December 16, 2002 regarding the repayment of a mezzanine loan in full. PRIME RETAIL, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PRIME RETAIL, INC. ------------------ (Registrant) Date: December 19, 2002 By: /s/ Robert A. Brvenik ------------------------- Name: Robert A. Brvenik Title: President, Chief Financial Officer and Treasurer EX-99 3 fex99102.txt EXHIBIT 99.1 PRESS RELEASE DATED 12/6/2002 FOR IMMEDIATE RELEASE FOR MORE INFORMATION CALL December 6, 2002 Investors: Robert A. Brvenik President and Chief Financial Officer (410) 234-1750 Media: Steven A. Sless Public Relations (410) 234-8333 PRIME RETAIL COMPLETES SALE OF THREE OUTLET CENTERS FOR $132.5 MILLION Mega Deal Loan reduced to $264.1 million at closing Net proceeds to be used to pay down Mezzanine Loan to approximately $5.0 million BALTIMORE - Prime Retail, Inc. (the "Company") (OTC Bulletin Board: PMRE, PMREP, PMREO) today announced the completion on December 6, 2002 of two separate transactions involving the sale of three outlet centers for aggregate cash consideration of $132.5 million. The first transaction involved the sale of two outlet centers (collectively, the "Colorado Properties") located in Castle Rock, Colorado and Loveland, Colorado, which contain an aggregate of 808,000 square feet of gross leasable area ("GLA"). The Colorado Properties were sold to TGS (U.S.) Realty for cash consideration of $96.0 million. The net proceeds from the sale of the Colorado Properties are expected to be approximately $12.4 million, after (i) required defeasance of mortgage indebtedness, (ii) payment of closing costs and expenses and (iii) release of certain escrowed funds. The Colorado Properties were part of a collateral package of fifteen properties that secured a non-recourse mortgage loan (the "Mega Deal Loan"). The Mega Deal Loan has an interest rate of 7.782% and is scheduled to mature on November 11, 2003. The second transaction involved the sale of Prime Outlets of Puerto Rico (the "Puerto Rico Property"), an outlet center located in Barceloneta, Puerto Rico consisting of 176,000 square feet of GLA. The Puerto Rico Property was sold to PR Barceloneta, LLC for cash consideration of $36.5 million. The net proceeds from the sale are expected to be approximately $13.9 million, after (i) repayment in full of $19.2 million of existing first mortgage indebtedness on the Puerto Rico Property, (ii) payment of closing costs and fees, (iii) establishment of certain escrows at closing and (iv) release of certain escrowed funds. The Company will continue to manage, market and lease Prime Outlets of Puerto Rico pursuant to a management agreement with the new owner. In connection with the sale of the Colorado Properties, $74.8 million of the sales proceeds were used to partially defease the Mega Deal Loan, reducing the outstanding principal balance of the Mega Deal Loan to $264.1 million. The Company expects to use the estimated net proceeds from the sale of the Colorado Properties and the Puerto Rico Property to make a principal pay down of approximately $25.2 million on a mezzanine loan (the "Mezzanine Loan") obtained in December 2000 in the original amount of $90.0 million. After the expected pay down, the remaining outstanding principal balance of the Mezzanine Loan will be approximately $5.0 million. As previously announced, under the terms of a modification to the Mezzanine Loan completed on November 1, 2002, the Company is required to make mandatory principal prepayments with net proceeds from asset sales or other capital transactions of not less than $12.0 million by December 31, 2002. The pay down of the Mezzanine Loan with the estimated net proceeds from the sale of the Colorado Properties and the Puerto Rico Property will satisfy this mandatory principal repayment requirement. Prime Retail is a self-administered, self-managed real estate investment trust engaged in the ownership, leasing, marketing and management of outlet centers throughout the United States. After the sales described herein, Prime Retail owns and/or manages 38 outlet centers totaling approximately 10.5 million square feet of GLA. The Company also owns 154,000 square feet of office space. Prime Retail has been an owner, operator and a developer of outlet centers since 1988. For additional information, visit Prime Retail's website at www.primeretail.com. Some of the statements contained herein which are not statements of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management's current views with respect to future events and financial performance. The words "believes," "expects," "anticipates," "estimates" and similar words or expressions are generally intended to identify forward-looking statements. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to, changes in general economic conditions, adverse changes in real estate markets as well as other risks and uncertainties included from time to time in the Company's filings with the Securities and Exchange Commission. Prime Retail accepts no responsibility for updating forward-looking statements. # # # EX-99 4 fex99202.txt EXHIBIT 99.2 PRESS RELEASE DATED 12/16/2002 FOR IMMEDIATE RELEASE FOR MORE INFORMATION CALL December 16, 2002 Investors: Robert A. Brvenik President and Chief Financial Officer (410) 234-1750 Media: Steven A. Sless Director of Public Relations (410) 234-8333 PRIME RETAIL REPAYS MEZZANINE LOAN IN FULL BALTIMORE - Prime Retail, Inc. (the "Company") (OTC Bulletin Board: PMRE, PMREP, PMREO) today announced it has repaid in full the remaining $30.2 million principal balance on a mezzanine loan (the "Mezzanine Loan") with (i) net proceeds from the previously announced two separate sales transactions completed on December 6, 2002 and (ii) cash from operations. The Mezzanine Loan, which was obtained on December 22, 2000, was in the original amount of $90.0 million, bore interest at 19.75% and was scheduled to mature in September 2003. Glenn D. Reschke, chairman and chief executive officer of the Company, stated, "The repayment of the entire Mezzanine Loan in less than two years is a significant milestone for Prime Retail. It is indicative of our diligent effort to reduce the overall debt levels of our Company and improve its financial condition." Prime Retail is a self-administered, self-managed real estate investment trust engaged in the ownership, leasing, marketing and management of outlet centers throughout the United States. Prime Retail owns and/or manages 38 outlet centers totaling approximately 10.5 million square feet of GLA. The Company also owns 154,000 square feet of office space. Prime Retail has been an owner, operator and a developer of outlet centers since 1988. For additional information, visit Prime Retail's website at www.primeretail.com. Some of the statements contained herein which are not statements of historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management's current views with respect to future events and financial performance. The words "believes," "expects," "anticipates," "estimates" and similar words or expressions are generally intended to identify forward-looking statements. Actual results may differ materially from those expected because of various risks and uncertainties, including, but not limited to, changes in general economic conditions, adverse changes in real estate markets as well as other risks and uncertainties included from time to time in the Company's filings with the Securities and Exchange Commission. Prime Retail accepts no responsibility for updating forward-looking statements. -----END PRIVACY-ENHANCED MESSAGE-----