Struggling Philly real estate owner PREIT sells another mall to pay down its debt

Philadelphia mall operator Pennsylvania Real Estate Investment Trust has sold the Cumberland Mall in Vineland for $45 million, allowing it pay off the mall’s mortgage and put an additional $6 million toward reducing debt, the company said Wednesday. The buyer was not identified.

The firm, known as PREIT and based in Center City, has been liquidating property as it restructures its mall businesses and proposes new uses, such as apartments or health-care facilities, for mall properties. The restructuring has gained some urgency with higher interest rates that drag on its performance through higher debt-servicing costs.

PREIT said Wednesday that the firm had paid down debt by $148 million, mostly through sales that include “out parcels” for other development.

PREIT also has $127 million of assets under contract or negotiation for sale, which are expected to close in the coming months, the company said. Earlier this year, PREIT announced that it was selling the Exton Square Mall in Chester County, but the sale has not closed.

“We were happy with the deal,” Joseph Coradino, PREIT’s chief executive officer and chairman, said of the Cumberland Mall, which is in Cumberland County, N.J. “We are clearly moving in the right direction. We have a lot more in front of us.”

PREIT has faced maturing mall mortgages. According to the company’s regulatory filings, the mortgage on the Cumberland Mall was due in August.

PREIT also obtained short-term extensions on the mortgages on the Cherry Hill Mall, a crown jewel in the company’s mall portfolio. The company’s regulatory filings say the $252.3 million in debt on the Cherry Hill Mall was due in September.

PREIT owes $1.8 billion on mortgages and loans, according to its regulatory filings.

Coradino declined to comment on the Cherry Hill Mall mortgages, saying “it’s a work in progress. No question, it’s a great mall and the focus of our attention. Stay tuned.”

PREIT’s broad strategy is to pay down its mall mortgages and debt while also enhancing the quality of its malls, many of which have fallen out of favor with shoppers in this age of online commerce.

In addition to the Cherry Hill, Exton Square and, until recently, the Cumberland Malls, PREIT owns or has ownership stakes in the Fashion District Philadelphia in Center City and the Plymouth Meeting, Springfield, Moorestown, and Willow Grove Park Malls. PREIT’s portfolio also includes the Court at Oxford Valley in Fairless Hills.

PREIT also owns malls in upstate Pennsylvania, the Washington, D.C., area and other locations.

Cumberland Mall was considered a second-tier property in PREIT’s portfolio, a hybrid of stores facing and accessible from the parking lot but also an enclosed mall area. The outlets include BJ’s Wholesale, Boscov’s, HomeGoods, Home Depot, Regal Cinema and Dick’s Sporting Goods.

“It’s not Cumberland being a bad mall,” Coradino said. “It did not fit into our strategy.”

This year, two shareholder activists joined the PREIT board. The board also approved a reverse stock split to boost the share price. PREIT’s stock fell below $1 a share and was warned that its stock could be delisted from the New York Stock Exchange.

PREIT’s shares closed Wednesday at $3.56, down 1.39%.