Pennsylvania Real Estate Investment Trust has sold the
Voorhees Town Center in an off-market transaction for $13.4 million, which is
at a loss.
It bought the property, which was then known as the
Echelon Mall, in 2003 as part of a $263 million portfolio acquisition from
Rouse Co.
PREIT has sold the mixed-use property in Voorhees, N.J.
The transaction also included assuming $285 million in
debt and rounded out PREIT's position as a leading owner of regional malls in
the Philadelphia area.
The Cherry Hill Mall, Plymouth Meeting Mall, the Gallery
at Market East, Moorestown Mall and Exton Square were included in that purchase
from Rouse. It was also when PREIT exited the multifamily sector, selling 19
apartment buildings to Morgan Properties of King of Prussia, Pa.
Subsequent filings with the Securities and Exchange
Commission that broke down the purchase price of each asset indicated PREIT
bought the Echelon Mall for $18.3 million when it was 52.3 percent occupied and
ringing in sales of $241 a square foot.
In this latest transaction, the $13.4 million sale price
was “net of credits issued to the buyer,” the company said without elaborating.
It reported an impairment of $51.4 million on the Voorhees Town Center and
Lycoming Mall in the quarter ending Sept. 30 though it couldn’t be determined
how much could be attributed to each property. PREIT declined to disclose the
name of the buyer.
The sale of the Voorhees Town Center is the eighth mall
the Philadelphia real estate investment trust has sold as part of an overall
strategy to focus on large, enclosed malls.
The company had owned Voorhees Town Center for 12 years.
It was a difficult decision to take the unsolicited offer that was made for the
retail property.
“The decision to sell this property was not an easy one.
We have business and personal relationships with mall staff, tenants, Voorhees
township, and other public partners which we greatly value,” said Joseph F.
Coradino, chief executive officer of PREIT, in a statement.
“The property was not listed for sale when we were
approached by the buyer," he said. "We are proud to have created this
successful mixed-use property and believe that the highly-capable staff will
build upon the current foundation and continue to deliver a great experience to
visitors under the property’s new ownership.”
PREIT (NYSE: PEI) spent roughly $80 million, according to
SEC documents, to totally redevelop the former Echelon Mall. That was in 2007
and, at the time, the property totaled 1.1 million square feet and had two
vacant anchor tenants.
The millions of dollars that it plowed into its
redevelopment it turned it into a vibrant mixed-use community. It was renamed
the Voorhees Town Center. It now totals 732,000 square feet.
Part of the redevelopment included putting Voorhees Town
Hall and its municipal offices in the space, as well as constructing
residential components and 100,000 square feet of office space, and
incorporating retail and restaurant tenants into the mix.
The sale is a milestone for the company as it prunes its
portfolio and focuses on enclosed retail properties.
“The execution of our strategic re-merchandising, anchor
risk mitigation and dispositions efforts are clearly yielding positive
results,” Coradino said in a statement regarding the company’s most recent
quarterly results. “We have claimed a unique position within the mall REIT
universe and, while we have a distance to go, our path is clear and there is a
bright light in our future.”
In other business activity, in September, the company
entered into a $170 million, 10-year mortgage secured by Willow Grove Park in
Willow Grove, Pa., and use the money to repay an existing $133.5 million
mortgage and for general corporate purposes. In addition, a partnership that
owns the Springfield Mall in Springfield, Pa., arranged a 10-year, $65 million
mortgage loan to repay an existing $61.8 million mortgage on the property.
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