Simon Property’s $115M Refinance of 411,223 SF PA Outlet Center Detailed in Prospectus

Crossings Premium Outlets

Crossings Premium Outlets in Tannersville, PA

The largest loans in the $1.14 billion MSBAM 2013-C8 CMBS conduit transaction, which is collateralized by 54 fixed rate commercial mortgage loans secured by 62 properties, have been detailed in a prospectus filed with the Securities and Exchange Commission.

The largest mortgage loan is the $115 million Crossings Premium Outlets Mortgage Loan, a refinance loan secured by a first priority fee mortgage encumbering the retail outlet shopping center in Tannersville, PA. It was originated in November 2012 by Bank of America, National Association.  

The Crossings Premium Outlets Mortgage Loan’s sponsor is Simon Property Group, L.P., which acquired The Crossings Premium Outlets Property in 2004. Simon has invested $13.4 million into the property.

The loan refinanced and paid off the previous loan, which had an existing balance of $47.5 million. It requires payments of interest only for its initial 36 months and payments of principal and interest for the remaining 84 months of the term with a scheduled maturity date of December 1, 2022.

The property is a one- and two- level, 411,223 square foot outlet shopping center on a 50.96-acre parcel. It is 37 miles south of Scranton and directly off of Interstate 80 within the Poconos Mountain range. The asset was built in 1991 and expanded in 1994 and renovated in 2005.

The Crossings Premium Outlets Property has 107 tenants, including Forever 21, Gap Outlet, Nike Factory Store and Reebok/Rockport Outlet. In-line shop space consists of retailers such as Levi’s Outlet, DKNY, Adidas and Juicy Couture, totaling 360,535 square feet inclusive of the food court and kiosks. The property has 2,214 surface parking spaces.

The property is 100 percent leased. In-line tenant sales for the twelve months prior to August 2012 were $484 PSF. Year end 2011 sales were $469 PSF.

The largest tenant, Forever 21, occupies 14,326 square feet at the center and does not pay fixed base rent but contributes rent based on a percentage of its sales. Specifically, Forever 21 pays 3 percent of gross sales up to $300.00 PSF, 2 percent of gross sales in excess of $300.00 PSF but less than $500.00 per square foot and 1 percent of gross sales beyond that. This has amounted to $131,878 as of the trailing twelve month period ended August 2012.

Gap Outlet occupies 13,100 square feet at the center. Its lease expired in November 2012. Gap is currently paying rent on a month-to-month basis and is negotiating a potential long term renewal. The lease provides for a rental rate of $18.50 PSF. Gap reported sales at The Crossings Premium Outlets Property of over $526 PSF for the trailing twelve month period ended August 2012.

Nike Factory Store occupies 11,744 SF under a 10-year lease that provides for a rental rate of $27.00 PSF. Nike reported sales at The Crossings Premium Outlets Property of approximately $633 PSF for the trailing twelve month period ended August 2012.

Reebok/Rockport Outlet occupies 11,700 SF under a lease that expires in September 2014. The lease provides for a rental rate of $17.50 PSF. Reebok reported sales at The Crossings Premium Outlets Property of approximately $260 PSF for the trailing twelve month period ended August 2012.