The CEO of struggling Pennsylvania Real Estate Trust said on a conference call with investors earlier this month that a merger or sale could be on the horizon in 2023.
“During the coming year, we will explore all possible options available to the company as our credit facility matures, including refinancing, merger, sale, joint ventures, sale of high-quality assets and other initiatives,” said PREIT’s Chairman and CEO. , Joe Coradino, said. during the November 8 call.
No specific assets that may be on the block have been named, but PREIT owns several shopping centers in the area, including the Springfield Mall, Willow Grove Park Mall and Philadelphia Fashion Center.
Despite operating at a net loss of $71.3 million in the third quarter — compared with a loss of $38.4 million for the third quarter of 2021 — Coradino said the publicly traded company has “significantly improve” over the second quarter of 2022.
PREIT has sold more than $110 million in assets and reduced debt by $148 million, he said, with plans to raise another $125 million in capital.
The trust recently closed on the $45 million sale of the Cumberland Mall and has another $130 million in assets under agreement, Coradino added, many in the final stages of negotiations.
PREIT has seen its share valuation fall by more than 98% over the past five years, starting with a decline that was evident even before the COVID-19 pandemic. It narrowly avoided being delisted from the New York Stock Exchange earlier this year and disclosed in an annual Securities and Exchange filing in March that it had “substantial doubt” about its ability to survive given its $1.2 billion debt. PREIT traded for just $2.61 per share on Friday.
However, Coradino said in the Nov. 8 call that the trust has implemented a plan to “bulletproof” its portfolio by selling properties in secondary and tertiary markets, and highlighted gains at several malls.
He also applauded PREIT’s ability to navigate a wave of department store consolidations and the pandemic by restructuring debt and selling assets. The company briefly entered Chapter 11 bankruptcy in late 2020.
“Now we find ourselves facing economic upheaval, rising rates, inflation, a constrained financing environment,” Coradino said. “Having said all that, we have dramatically improved the portfolio in markets with high entry barriers that are irreplaceable. And our plan – and, I repeat, and our plan – is to spend the coming year exploring all possible options available to the company as our credit facility matures, including refinancing, merger, sale, joint ventures, sale of high quality assets and more.”
PREIT’s portfolio consists of 22 operating retail properties and one development property, according to the most recent overview provided to the SEC. The operating properties total 18.3 million square feet, and include 19 shopping centers and three other retail properties.