PREIT Gets Lifeline, Extends Key Debt Maturities By A Year

PREIT can live to fight its debt battles another day.

The Philadelphia-based, shopping mall-focused REIT secured one-year extensions on its two credit facilities that were due to expire this month, the company announced.

The two loans, held primarily by Wells Fargo Bank with a combined principal over $900M, have no more extension options and will mature on Dec. 10, 2023, if they are not refinanced, a PREIT spokesperson confirmed to Bisnow.

PREIT met the conditions required to extend its credit facilities by maintaining over $35M in liquidity, achieving more than 8% debt yield and demonstrating the properties securing the facilities have a loan-to-value of below 105%. The combined balance of the two credit facilities, two-thirds of which is floating-rate, represents nearly half of PREIT's overall debt load.

The company had paid down $148M in debt by the end of October, fueled in part by $110M in asset sales this year, it announced. PREIT's debt load totaled $1.9B midyear, including the two credit facilities and several property-level loans.

Mortgages for three of its malls — Woodland Mall in Michigan, Dartmouth Mall in Massachusetts and Cherry Hill Mall in New Jersey — will now mature before the Wells Fargo credit facilities.

In October, PREIT extended the maturity date for its mortgage for Cherry Hill Mall, the crown jewel of its portfolio in terms of sales per square foot. That $246M loan is now due in June.

Dartmouth Mall and Woodland Mall have experienced recent sales and leasing growth, and also count among PREIT's better malls, a PREIT spokesperson said in an email.

PREIT has achieved rent and sales growth across its portfolio in the past several quarters, mostly in service of raising capital to manage its debt load.

Even as it takes steps to shrink that load, however, the cost of debt service has risen due to the rising interest rate environment that also has shut down the market for refinancing, PREIT CEO Joe Coradino said on the company's Q3 earnings call in November.

PREIT still has some assets under contract for sale that have yet to close. A spokesperson declined to identify the location or value of those assets.

If the proceeds from those sales are in line with what PREIT brought in this year, it may have to take more drastic measures like selling previously untouchable properties or finding a merger partner, Coradino said on the Q3 call.

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