The parent company of prominent South Jersey malls, including Cherry Hill and Moorestown malls, is facing significant financial challenges, raising concerns about its ability to continue operations in the coming year. The Pennsylvania Real Estate Investment Trust (PREIT) recently disclosed in financial statements that it may encounter difficulties continuing its business operations within the next 12 months.
With approximately $1.1 billion in debt payments due on December 10, PREIT expressed its financial strain in a filing submitted to the U.S. Securities and Exchange Commission (SEC) on Tuesday. The Philadelphia-based corporation, which owns 18 mall properties, filed for Chapter 11 bankruptcy protection in November 2020 amidst the challenges posed by the COVID-19 pandemic and the evolving retail landscape. Although PREIT emerged from bankruptcy protection a month later, the impending debt-payment deadline may necessitate another bankruptcy filing, according to the SEC document.
PREIT is actively engaged in discussions with lenders to explore potential restructuring options. However, the outcome remains uncertain, and the company may not secure an agreement in time to secure its long-term future.
The SEC filing states, “Given the risks associated with the Company’s near-term debt maturities in December 2023 and January 2024, and its ability to implement a successful Restructuring, we believe there is substantial doubt about the Company’s ability to continue to operate as a going concern within one year after the date the consolidated financial statements are issued.”
The financial report reflects data up to September 30.
PREIT anticipates that, during the restructuring negotiations or potential transactions, there won’t be any interruptions to services. However, if the restructuring process is not completed in a timely manner, the company may face challenges in securing funds for daily operations.
The fate of PREIT’s malls, particularly the top-performing Cherry Hill Mall, is uncertain. Despite the financial difficulties, the company has highlighted positive developments at Moorestown Mall, including plans for a Cooper University Healthcare facility and a 375-unit apartment complex. Additionally, a successful ballot question backed by PREIT on Election Day allows the mall to proceed with the development of a substantial family entertainment complex. The unfolding events will undoubtedly shape the future trajectory of these iconic South Jersey malls.
