PREIT seeks to sell two more malls to boost quality of portfolio
The sale of the lesser-performing malls is expected to boost PREIT's portfolio-wide sales per square foot by $10, the company said.
Pennsylvania Real Estate Investment Trust is putting two more malls on the market as it seeks to burnish its sales averages and raise cash to invest in its most promising assets amid faltering stock prices.
Philadelphia-based PREIT said in a release Monday that it is seeking buyers for Logan Valley Mall in Altoona, Pa., and Valley View Mall in LaCrosse, Wis., both of which have generated "unsolicited interest."
The move follows the company's sell-off of 16 lower-earning malls and other non-core assets between the start of 2013 and this January, when PREIT announced the sale of Beaver Valley Mall in the Western Pennsylvania town of Monaca and Crossroads Mall in Beckley, W.Va.
The earlier sell-off earned PREIT about $730 million and helped elevate its properties' average sales per square foot — a measure of mall-portfolio performance closely tracked by Wall Street — to $465 during the three months ended March 31, up 22 percent from four years earlier, according to company disclosures.
Logan Valley and Valley View are the worst performing and eighth worst performing of PREIT's 22 remaining malls on a sales-per-square-foot basis, according to its most recent quarterly financial disclosures. Selling the malls is expected to boost the PREIT portfolio's sales per square foot by $10, the company said Monday.
Investors, however, have seemed little impressed by the company's efforts. At the end of this year's first quarter, PREIT shares were down 19 percent from the third quarter of 2013, the year in which the company started selling off malls.
The FTSE NAREIT Regional Mall Subsector Index, which tracks the performance of PREIT and six of its peers, rose 14.2 percent over that period, according to calculations based on data compiled by Bloomberg.
Mall-Specialty Real Estate Trusts
On Monday, PREIT shares closed down 0.8 percent, to $10.84 in New York.
"The current negative sentiment for mall stocks has made investment in transformation stories hard to stomach," Floris van Dijkum, an analyst with Conshohocken investment firm Boenning & Scattergood, said in a May 15 report downgrading PREIT from outperform to neutral.
PREIT is converting Center City's Gallery at Market East shopping mall into an outlet center in partnership with Macerich of Santa Monica, Calif.
Other redevelopment activities include the transforming of a former Macy's department store property at South Jersey's Moorestown Mall into space for three new retailers and the completion of a Whole Foods store at the Exton Square Mall in Chester County.
"Anticipated proceeds [from mall sales] will position us to continue strategically investing in the most value-enhancing assets to create more compelling and productive environments," Coradino said in Monday's release. "PREIT will also continue to engage in discussions with third parties as we seek to further optimize our portfolio and drive shareholder value."