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Prime Retail earnings at $29 million; Merger with company in Michigan gave boost to outlet center owner; REITs

THE BALTIMORE SUN

Prime Retail Inc. said yesterday that its fourth-quarter operational earnings nearly doubled to $29 million, an increase the real estate investment trust attributed largely to its merger with a Michigan company.

The increase in the outlet center mall owner's funds from operations -- to 40 cents per share in the quarter that ended Dec. 31, 29 percent higher than the fourth quarter of 1997 -- stemmed from a $1 billion deal in June with Horizon Group Inc., which added 22 projects to Prime Retail's portfolio.

Revenue in the 1998 quarter more than doubled, to $77.5 million.

For the year, Prime Retail generated funds from operations -- a key gauge of a REIT's financial health -- of $89 million, a 91 percent gain from 1997. On a per-share basis, its earnings rose 17.5 percent, to $1.41 per share.

Prime Retail's revenue for the year was $232.9 million, an increase of 80 percent from 1997.

Chief executive Abraham Rosenthal called the company's year's results "exceptional."

But against the backdrop of markedly higher earnings, the REIT's same-store sales and same-space sales fell 1.9 percent and 0.8 percent, respectively.

Same-store sales are the weighted average of sales by merchants open since January 1997. Same-space sales represent sales by merchants in space opened since that date.

The two sales figures represent a barometer of merchant viability and predict future sales, analysts say.

Prime Retail owns 50 outlet center malls in 26 states containing a total of 14.3 million square feet. At the end of last year, its projects were valued at $1.9 billion.

Pub Date: 2/02/99

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