In a move to address its financial challenges, PREIT, the Pennsylvania Real Estate Investment Trust, has filed for bankruptcy protection for the second time in three years. The filing, which comes amid a deadline for approximately $1.1 billion in debt payments, is aimed at facilitating a restructuring process that will allow the company’s shopping centers, including the prominent Cherry Hill and Moorestown malls, to continue operations without disruption.
CEO Joseph F. Coradino expressed optimism about the process, stating, “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.”
With a portfolio that includes 18 malls primarily in the Mid-Atlantic region, PREIT faced mounting concerns about its ability to repay debts and sustain operations over the next year. The filing, made under Chapter 11, proposes a reorganization plan that would see a reduction of $880 million in debt. As part of the plan, PREIT will no longer be publicly traded, and stockholders will be compensated with $10 million.
The proposed agreement also extends the company’s maturity runway, granting PREIT a five-year window to repay loans. The plan, which has received unanimous approval from existing lenders, is now pending approval from the federal bankruptcy court in Delaware. PREIT aims to emerge from bankruptcy by early February.
During the bankruptcy proceedings, PREIT is committed to ensuring the continued payment of employees, suppliers, and vendors. The company, founded in 1960 and headquartered in Philadelphia, has steadily built a portfolio of shopping centers. In 2003, PREIT acquired six malls, including those in Cherry Hill and Moorestown, from The Rouse Company.
Despite experiencing financial peaks in the mid-2000s, the company faced a downturn during the Great Recession and ultimately filed for bankruptcy in November 2020, emerging a month later. However, PREIT has struggled financially since, with its stock values closing last week at a mere 24 cents per share.
In the midst of these challenges, the company has expressed confidence in its South Jersey assets. Cherry Hill Mall, a long-time top performer, and the ongoing redevelopment of Moorestown Mall have been highlighted as key strengths. Recent developments at Moorestown Mall include the opening of a 166,000-square foot outpatient facility by Cooper University Health Care, with plans for a 375-unit apartment complex and a large family-entertainment complex underway.
As part of its restructuring efforts, PREIT aims to amend plans for bonuses, employee retention, and the contracts of CEO Joseph F. Coradino and CFO Mario C. Ventresca Jr., with the changes primarily affecting directly employed PREIT staff rather than employees of retailers and businesses within its malls, according to court documents.
