Pennsylvania Real Estate Investment Trust, also known as PREIT, is one of the oldest and largest publicly traded real estate investment trusts in the United States. Recently, PREIT has been actively executing its strategic plan to transform its portfolio and strengthen its balance sheet. Through asset sales and securing key lease renewals, PREIT is accelerating its transition towards a more focused and resilient portfolio. PREIT’s latest moves demonstrate the company’s commitment to creating long-term value for shareholders despite near-term challenges.
PREIT completed sales of three non-core assets to generate liquidity
In late 2022, PREIT completed the sales of three non-core assets – Exton Square, Jacksonville Mall and Magnolia Mall. These transactions generated gross proceeds of over $90 million for PREIT, providing the company with much-needed liquidity during this transitional period. With a focused portfolio of higher quality assets, PREIT can better allocate capital towards value-creating opportunities at its core properties. The sales of the three lower productivity malls reflect PREIT’s strategy of disposing weaker assets to strengthen its overall portfolio.
PREIT renewed a key anchor lease with Macy’s at its capital city mall
In January 2023, PREIT announced the renewal of the Macy’s lease at Capital City Mall, one of its top assets located in Camp Hill, PA. Macy’s has been an anchor at the mall since it opened in 1969. The renewal of this 260,000 square-foot lease for another 10 years demonstrates the enduring value of Capital City Mall and provides stable cash flows for PREIT. Securing anchor tenants is critical for malls, and this renewal validates Capital City Mall as a dominant retail hub in the region.
PREIT is strengthening its balance sheet through debt reduction
A priority for PREIT has been reducing its debt load to improve its financial flexibility. In 2022, PREIT reduced total debt by over $150 million. The recent asset sale proceeds will be used for additional debt paydown. With lower leverage, PREIT can better withstand industry challenges and invest in redevelopments to drive growth. The company’s long-term goal is to achieve a total debt-to-gross assets ratio below 40%, which would put it on stronger financial footing going forward.
Through strategic asset dispositions, securing key anchor renewals and reducing debt, PREIT is executing on its plan to transform into a leaner, stronger retail REIT. Its latest moves demonstrate meaningful progress in improving its portfolio quality, balance sheet, and long-term outlook.