Pennsylvania Real Estate Investment Trust has sold four
malls in Alabama, Virginia, and Pennsylvania, almost completing its years-long
strategy of shearing lesser-performing shopping centers from its core focus on
assets in populous, heavily shopped areas.
Philadelphia-based PREIT sold the centers to two buyers
for $92.4 million, bringing its total mall sales to 13 in about three years,
according to a statement being released Wednesday. Just one property,
Washington Town Center near Pittsburgh, remains on the market.
The sales come as PREIT, owner of the Cherry Hill and
Willow Grove Park Malls among others locally and a partner in the $325 million
redevelopment of Center City's Gallery at Market East, seeks to concentrate on
holdings best able to turn consistent profits and weather economic downturns.
"There's a higher level of risk among lower-quality
assets," chief executive officer Joseph Coradino said before the statement's
release. "We really de-risked our company."
The recent sales include Lycoming Mall near Williamsport,
Pa., which went to New York-based Kohan Retail Investment Group for $26.35
million, according to PREIT.
Also involved are three malls - Gadsden Mall in Gadsden,
Ala.; Wiregrass Commons Mall in Dothan, Ala.; and New River Valley Mall in
Christiansburg, Va. - that sold to Farallon Capital Management L.L.C. of San
Francisco for $66 million.
The package had earlier been under contract for $95.4 million,
but the loss of one tenant at Wiregrass Commons - a Finish Line sports-apparel
shop - and the bankruptcy filing of another - the Hancock Fabrics chain -
forced the company to renegotiate, Coradino said.
Such setbacks underline the risk of retaining malls with
low sales numbers in less populous parts of the country, which tend to rely on
a less-stable tenant mix, he said. Also, big retailers often close branches
first in such locations, to cut costs.
"Our hypothesis, if you will, was proved
correct," Coradino said.
Since PREIT announced the sell-off plan in November 2012,
its mall sales have earned it more than $600 million, which has been reinvested
in other properties and used to pay down debt, the company said.
Without the lesser performers weighing it down, PREIT's
sales value per square foot - a key measure of mall-operator success - has also
been on an upswing, rising from $372 during the last three months of 2012 to
$432 during the same period last year. The most recent round of sell-offs will
lift the sales value per square foot to $458, it said.
To compare, Indianapolis-based Simon Property Group,
owner of King of Prussia Mall, reported sales value per square foot of $620
during the last three months of 2015. Santa Monica, Calif.-based Macerich,
PREIT's partner in the Gallery's rehabilitation, reported sales value per
square foot of $635.
Coradino said the Gallery project and improvements to
Springfield Town Center in Fairfax County, Va., are expected to elevate PREIT's
sales value beyond $500 a square foot, a level that would earn it more clout
with retail tenants and investors.
Meanwhile, the company awaits word from the state on
whether it will receive $30 million in redevelopment aid that it needs to fully
realize its vision for the Gallery project, Coradino said.
Pennsylvania's long-running budget stalemate - which had
been holding up funds from the Redevelopment Assistance Capital Program - came
to an apparent end this week when Gov. Wolf declined to veto a $6 billion appropriation
bill approved by the House and Senate.
Wolf spokesman Jeff Sheridan wrote in an email Tuesday
that no decisions had been made on grants from the program.
The passage of the budget is "definitely a step in
the right direction" toward clarifying PREIT's final plans for the
Gallery, Coradino said. "But we're not quite there yet."
Source: Philly.com
No comments:
Post a Comment