Philadelphia mall operator Pennsylvania Real Estate Investment Trust is selling Vineland’s Cumberland Mall for $45 million, paying off the mall’s mortgage and using another $6 million to pay off debt. It can, the company said Wednesday. The purchaser was not identified.
The Center City-based company, known as PREIT, is liquidating properties to restructure its mall business and propose new uses such as: As an apartment or medical facility, for mall properties. Restructuring has gained some urgency with rising interest rates weighing on earnings through higher debt service costs.
PREIT announced Wednesday that it has paid off $148 million in debt. This is primarily due to the sale including “parcels” for other developments.
PREIT also has $127 million in assets under sale or under negotiation, which are expected to close in the coming months, the company said. Earlier this year, PREIT Sale at Exton Square Mall Available in Chester County, but not sold out.
PREIT Chief Executive Officer and Chairman Joseph Coradino said of the Cumberland Mall in Cumberland County, New Jersey: We have a lot more ahead of us. “
PREIT is facing the maturity of the mall’s mortgage. His Cumberland Mall mortgage was due in August, according to the company’s regulatory filings.
PREIT also acquired a short-term mortgage extension for Cherry Hill Mall, the crown jewel of the company’s mall portfolio. His $252.3 million debt to Cherry Hill Mall was due in September, according to the company’s regulatory filings.
PREIT owes $1.8 billion in mortgages and loans, according to regulatory filings.
Coradino declined to comment on Cherry Hill Mall’s mortgage, saying, “It’s a work in progress. Definitely, it’s a great mall and it’s the focus of our attention. Stay tuned.”
PREIT’s broader strategy is to pay off the mall’s mortgages and debt while improving the quality of the mall. Many malls have fallen out of favor with shoppers in this age of online commerce.
In addition to Cherry Hill, Exton Square and, most recently, Cumberland Mall, PREIT owns or owns Center City’s Fashion District Philadelphia, Plymouth Meeting, Springfield, Moorestown and Willow Grove Park Malls. PREIT’s portfolio also includes courts in the Oxford Valley of Fairless Hills.
PREIT also owns malls in northern Pennsylvania, Washington, DC, and other locations.
Cumberland Mall was considered a Tier 2 property in PREIT’s portfolio. This is a hybrid of stores that are not only easy to access by facing a parking lot, but also in an enclosed mall area. Outlets include BJ’s Wholesale, Boscov’s, HomeGoods, Home Depot, Regal Cinema and Dick’s Sporting Goods.
“It’s not that Cumberland is a bad mall,” Corradino said. “It didn’t fit our strategy.”
Two shareholder activists joined PREIT’s board of directors this year.Board also approved reverse stock split to raise stock prices. PREIT’s stock price fell below $1 and was warned by the New York Stock Exchange that it may be delisted.
Shares of PREIT closed Wednesday at $3.56, down 1.39%.