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PREIT makes progress on debt repayment with $35 million in asset sales

The interior of Cherry Hill Mall in August 2021. For years, the South Jersey Mall has been the best performing asset in PREIT’s portfolio of enclosed malls.

PREIT has made progress on a crucial part of its strategy to survive a looming debt crisis.

The Philadelphia-based, mall-focused REIT announced on Tuesday that it has reached deals for $35 million in land sales at its malls, split between $32.5 million from the sale of 11 plots properties and a separate sale of $2.5 million of land planned for a hotel development at the Springfield Town Center mall in Fairfax County, Virginia.

PREIT expects the sale of the Springfield Town Center site to close in December, while all 11 off-plot sales will close in a staggered fashion, some as early as late June, according to the announcement. These represent a portion of the $109 million in revenue from closed sales that PREIT expects to achieve by the end of June and $275 million in ongoing deals, as the company said in its report. on the first quarter results on May 5.

Land sales surrounding its shopping centers are central to PREIT’s dual strategy of generating cash to pay off short-term debt costs and creating mixed uses in its shopping centers through the development of multi-family and hotel properties. on the land it sells. PREIT also agreed in March to sell its entire Exton Square Mall property in suburban Philadelphia to local developer Brandywine Realty Trust for $27.5 million, reports the Philadelphia Business Journal.

An additional parcel in downtown Springfield and an outdoor parcel at the Moorestown Mall in South Jersey are among pending sales for the multi-family development that PREIT included in its calculation of $275 million in pending transactions, a said PREIT CEO Joe Coradino during the company’s first quarter earnings call in May. 5.

PREIT’s highest-priority debt securities are the impending maturity of its credit facility, which accounts for nearly three-quarters of the company’s cash and can be extended for another year; a loan initially backed by its Fashion District Philadelphia development with a balance of $194 million coming in January; and upcoming loan maturities against Woodland Mall in Michigan and Cumberland Mall and Cherry Hill Mall in South Jersey, Coradino said on the earnings call.

Although Coradino said the three malls with upcoming deadlines are up in terms of occupancy and sales, Cherry Hill Mall has been the top performer in PREIT’s portfolio for years.

Although news of the $35 million in land sales sent PREIT’s stock at the start of Tuesday’s trading up 8% over the previous four days, its price was still $0.48 per share at 14 a.m. 30 ET, less than half the $1 per share price the company must meet by Aug. 4 to avoid being delisted by the New York Stock Exchange.

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