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PREIT Makes Progress On Debt Payments With $35M 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 shopping malls.

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

The Philadelphia-based, shopping center-focused REIT announced on Tuesday that it has secured agreements for $35M in land sales at its malls, split between $32.5M from sales of 11 outparcels at its properties and a separate $2.5M sale of land slated 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 the 11 outparcel sales will close in staggered fashion, some as early as the end of June, the announcement stated. Those represent a portion of the $109M in revenue from closed sales PREIT expects to realize by the end of June and the $275M worth of transactions in progress, as the company laid out in its first-quarter earnings report on May 5.

Sales of land surrounding its malls are central to PREIT's dual strategies of generating cash to pay off debt costs in the near term and creating mixed uses at its malls through the development of multifamily and hotel properties on land it sells. PREIT also agreed in March to sell its entire ownership of Exton Square Mall in the Philadelphia suburbs to local developer Brandywine Realty Trust for $27.5M, the Philadelphia Business Journal reports.

An additional parcel at Springfield Town Center and an outparcel at Moorestown Mall in South Jersey are among the pending sales for multifamily development that PREIT included in its $275M calculation of deals in progress, PREIT CEO Joe Coradino said on the company's Q1 earnings call on May 5.

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

Although Coradino said all three malls with upcoming maturities are on the upswing in terms of both occupancy and sales, Cherry Hill Mall has for years been the best performer in PREIT's portfolio.

Though news of the $35M in land sales boosted PREIT's stock at the start of trading on Tuesday by 8% over the previous four days, its price still sat at $0.48 per share at 2:30 P.M. ET, less than half of the $1 per share price the company must meet by Aug. 4 to avoid being delisted by the New York Stock Exchange.