The chief executive of struggling Pennsylvania Real Estate Trust said during a conference call with investors earlier this month that a merger or sale could be on the cards in 2023.
“Over the coming year, we will review all possible options available to the Company when our credit facility expires, including refinancing, merger, sale, joint ventures, sale of quality assets and other initiatives,” said Joe Coradino, Chairman and CEO by PREIT during the November 8 call.
No specific assets were mentioned that may be on the block, but PREIT owns several malls in the area, including Springfield Mall, Willow Grove Park Mall, and the Philadelphia Fashion Center.
Although Coradino continues to operate with a net loss of $71.3 million in the third quarter – compared to a loss of $38.4 million in the third quarter of 2021 – Coradino said the publicly traded company strengthened its position in the second quarter of 2022 ” clearly improved”.
PREIT sold more than $110 million in assets and reduced debt by $148 million, he said, with plans to raise an additional $125 million in capital.
The trust recently completed the $45 million sale of the Cumberland Mall and has an additional $130 million in assets that have been agreed, Coradino added, many of which are in the final stages of negotiations.
PREIT has seen its stock valuation plummet 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, revealing in an annual filing with the Securities and Exchange in March that it had “substantial doubts” given its $1.2 billion in debt. on its survivability. PREIT was trading for just $2.61 a share on Friday.
Coradino said on the Nov. 8 conference call that the trust had implemented a plan to “bulletproof” its portfolio by selling properties in secondary and tertiary markets, highlighting gains in several malls.
He also praised PREIT’s ability to navigate a wave of department store consolidations and the pandemic through debt restructuring and asset sales. The company briefly filed for Chapter 11 bankruptcy in late 2020.
“Now we face economic upheaval, rising interest rates, inflation and a constrained funding environment,” Coradino said. “Nevertheless, we have dramatically improved the portfolio in markets with high barriers to entry that are irreplaceable. And our plan – and, I repeat, and our plan – is to spend the next year exploring all the possible options that are available to the company when our credit facility expires, including refinancing, merger, sale, joint ventures , selling high value assets and more.”
PREIT’s portfolio consists of 22 operating retail properties and one development property, according to the most recent summary filed with the SEC. The operating properties total 18.3 million square feet and include 19 malls and three other retail properties.