It's Chapter 11 bankruptcy for Philadelphia-based Pennsylvania Real Estate Investment Trust (PREIT) as the mall operator looks to "solidify future of business."
On Monday, PREIT announced it was "taking steps to execute a comprehensive reorganization to strengthen its balance sheet, reduce its total indebtedness by approximately $880 million and extend its maturity runway," in a news release announcing the Chapter 11 bankruptcy plan.
The mall-operator applied for voluntary Chapter 11 protection in United States Bankruptcy Court in Delaware over the weekend.
The restructuring plan is being dubbed the "Prepackaged Plan." Besides the bankruptcy, PREIT will walk away from its 50% stake in Center City's Fashion District, which it previously co-owned with Macerich, reports NBC10 newsgathering partners The Philadelphia Business Journal.
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PREIT had previously relinquished its controlling stake in Fashion District when it applied for Chapter 11 bankruptcy back in December 2020. They emerged from that bankruptcy filing about a month later, PBJ.com reports.
This time around PREIT promises to "continue all business operations without interruption while it obtains necessary approvals of its financial restructuring."
PREIT currently has around 18 malls across eight states in its portfolio, including the Cherry Hill Mall and Moorestown malls in New Jersey and the Exton Square, Plymouth Meeting, Springfield and Willow Grove Park malls in the Pennsylvania suburbs.
"The PREIT team’s primary focus remains creating compelling retail and experiential destinations while prioritizing the experience of our employees, partners, customers and communities," PREIT said in a statement sent to NBC10. "The unanimous support from the Company’s existing lender group for the Prepackaged Plan is a testament to the lenders’ confidence in the Company’s forward path."
A statement posted Monday on PREIT's website from company chairman and CEO Joseph Coradino further touted the "Prepackaged Plan" while acknowledging challenges for shopping centers coming out of the COVID pandemic.
“We are pleased to be moving forward with strengthening the Company’s balance sheet and positioning it for long-term success through this Prepackaged Plan. Following the pandemic disruption, PREIT has worked tirelessly to enhance the portfolio, dramatically improve occupancy and diversify its tenancy. However, unusual economic conditions have limited the Company’s options with respect to its debt obligations as meaningful achievements on the operating front were met with inflation and rising interest rates.
“Today’s announcement will position a restructured PREIT to execute on strategic initiatives to continue transforming its portfolio for the tenants and communities it serves. We look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multi-use property experiences throughout our portfolio.”
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