With Fashion District Finally Open, Insiders Buying, 5% Investor Stake Disclosed - Philadelphia REIT Is At The Inflection Point

Marel profile picture


  • Fashion District is finally open, anticipated to generate $15M+ annual NOI. This is an important milestone, following ~4 years construction. PREIT invested $200-210M, but for ~4 yrs, this capital didn't generate income.
  • Insiders are buying. An SEC filing on 12 September 2019 revealed that the Company’s trustees and executive officers entered into stock purchase commitments.
  • Each of them agreed to purchase common shares in the open market. This is already happening. Also, in March 2019, property developer Steven Korman disclosed a 5%+ stake in PEI.
  • Fashion District and other high-impact redevelopments such as Woodland Mall are anticipated to generate more than $30M of annual recurring NOI.
  • On a pro-forma basis, the common dividend is well-covered on an FFO as well as AFFO/FAD basis. Management reiterated once again the dividend is "secure".

This is not your grandmother's mall

- Joe Coradino, CEO of Pennsylvania Real Estate Investment Trust (PEI).

He was referring to Fashion District, a ~$420M redevelopment of The Gallery in downtown Philadelphia project - 50/50 JV between PEI and Macerich (MAC) - which opened on 19 September 2019. PEI is a Philly-based company and Fashion District is in their own backyard. It is their biggest project, with sentimental value as PEI acquired the first piece of what is now Fashion District sixteen years ago.

Crowds were building. Officials gathered. The ribbon was cut. Cannons popped confetti into the sky. The Temple University marching band played. After almost 4 years of construction, Fashion District is finally open.

Fashion District

Spanning three city blocks in the heart of downtown Philadelphia, Fashion District will be an immersive, metropolitan shopping experience that combines style, dining, entertainment, and arts. PEI and MAC envisioned a space that would be accessible and inviting for people to come in and explore retail, dining, and entertainment opportunities. As Heather Crowell PEI's Executive VP of Strategy & Communications explains:

For the longest time, you went from the historic district to City Hall without any invitation in, and now we're wide open, we have over 20 new entrances - we used to have three... it's much more inviting.

It is important to note that Fashion District is connected to Reading Terminal, the Pennsylvania Convention Center and SEPTA's Jefferson Station - a convenient, transit-oriented location offering accessibility for millions of Philadelphia residents, commuters and visitors. Fashion District provides direct, weather-protected access to PATCO and the Market-Frankford line as well.

Fashion District aims to truly redefine the national consumer experience and the future of retail. The breakthrough mix of uses differentiates Fashion District. As Tom O'Hern, CEO of MAC notes:

This experience-forward project is

This article was written by

Marel profile picture
Value-oriented investor focusing on marketable securities, real estate as well as early-stage companies.

Disclosure: I am/we are long PEI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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