Court OKs Mall Giant PREIT's Post-Bankruptcy Restructure

EXTON, PA — PREIT, owner of "quality malls in compelling markets" is keeping its financial head just above water as a judge approved its financial restructure after it filed for bankruptcy last month.

The Pennsylvania Real Estate Investment Trust (PREIT) on Nov. 1 filed a voluntary Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the District of Delaware to implement its Prepackaged Plan for financial reorganization.

The Philadelphia-based mall and entertainment venue operator owns properties that include Exton Square Mall, Plymouth Meeting Mall, Willow Grove Park, Cherry Hill Mall, and Fashion District Philadelphia, and others here and in the Washington D.C. area.

The court this week approved a restructuring plan that allows PREIT to borrow an additional $130 million in loans that will allow PREIT to keep its malls afloat.

Locally, Exton Square Mall will be open for the holiday shopping season.

Exton Square Mall has been in a process of change for several years already, as retail space went vacant and a K-Mart went away, then a Whole Foods Market was added in 2018. More recently, PREIT unloaded property at the mall site to a housing developer who paid $10 million for four acres of land.

Exton Square and Plymouth Meeting malls have struggled for a while, some business analysts say because of their relative proximity to the huge and readily accessible King of Prussia Mall.

The Plymouth Meeting Mall — marked by the giant Lego giraffe that invites visitors to Legoland — also has struggled to keep retail occupancy.

Brick and mortar shopping had been on the downturn long before the pandemic hit. But coronavirus severely exacerbated those existing trends, and shoppers remained apprehensive even with PREIT's malls in Montgomery County reopening in June after the pandemic lockdown.

Executives are optimistic that the declaration will allow them to restructure their finances in a way that helps the company survive. PREIT also owns the Fashion District Philadelphia in downtown, a 1.47 million-square-foot retail center that boasts bowling, an AMC movie theater. The mall also struggled pre-pandemic, replacing its older anchor stores and adding dining and entertainment.

But for now, holiday shopping will go on at PREIT malls, albeit at a distance.

"Today's announcement has no impact on our operations – our employees, tenants, vendors and the communities we serve –and we remain committed to continuing to deliver top-tier experiences and improving our portfolio," PREIT CEO Joseph Coradino said in a statement.

"We are grateful for the significant support we have received from a substantial majority of our lenders, which we expect will enable us to complete our financial restructuring on an expedited basis," Coradino added.

The company entered into a Restructuring Support Agreement with its bank lenders, who have committed to provide $150 million to recapitalize the business and extend the company's debt maturity schedule, keeping PREIT in business, according to RTT news on NASDAQ

The prepackaged plan was approved by 95 percent of voting lenders, the company said.

In the second quarter PREIT reported that revenue decreased $20.1 million, resulting in part from bankruptcies and store closings, and an increase in credit losses for struggling tenants. The company said it had secured $150 million in borrowing to recapitalize its business and extend the company’s debt schedule, according to a recent press release.

"We were able to reach this outcome on an expedited basis thanks to the overwhelming support of our lenders, as well as the continued support of our employees, customers, tenants and vendors. We will remain focused on operating safely, responsibly and efficiently while maintaining a strong balance sheet," said Coradino.