Tuesday, May 24, 2011
Morgan Stanley willing to buy half of King of Prussia (Updated)
Morgan Stanley Prime Property Fund has agreed to buy Australian property investor Lend Lease Group's half of the giant King of Prussia shopping complex, the biggest indoor mall in the East, effective in August. Statement here.
If the deal goes through, Lend Lease will collect around $545 million in cash from the Morgan Stanley sale, after paying off its debt, leaving a net profit of $100 million. The company invested $110 million to buy half the complex in 1996. "We're going to decline to comment," said Morgan Stanley spokesman Matt Burkhard.
Morgan Stanley's price "is down a little" from what King of Prussia would have sold for in the mid-2000s, but it's still "attractive," given King of Prussia's high-traffic location and high-quality store tenants, analyst Jonathan Miniman at ING Clarion in Radnor told me.
U.S. mall stocks rose modestly in morning trading, as investors welcomed renewed interest in shopping centers, whose value fell in recent years as the recession shut stores and shoppers moved online.
The price could go higher. The deal "is subject to customary conditions precedent for a sale of this type of partnership asset," Lend Lease said, raising the possibility that Simon Property Group of Indianapolis, the other big investor in the shopping complex, may make a higher bid. Simon didn't return calls.
Lend Lease cancelled an attempt to sell its half of the complex in 2008 as the property markets collapsed. The complex is managed and part-owned by Kravco Simon, a partnership between Kravco, the King of Prussia-based firm that developed the mall, and Simon.
Posted by Joseph N. DiStefano @ 10:20 AM Permalink | 9 comments
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