PREIT pays down $82M of debt through asset sales, excess cash
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Pennsylvania REIT (NYSE:PEI), also known as PREIT, said Tuesday it paid down debt by $82M through June 30, 2022, by using asset sale proceeds and excess cash from operations.
The REIT recently sold the Moorestown Mall land for $12M, which will be used to build 375 residential units, and an outparcel to Four Corners Property Trust (NYSE:FCPT) for $2.4M. In addition PREIT (PEI) expects to close on six more outparcels for $22M in coming weeks.
It is continuing in its plan to raise capital and sell assets with purchase and sale agreement executed for $56M more and additional transactions in its pipeline, the company said.
Even before the pandemic, ecommerce was gaining in popularity at the expense of brick-and-mortar stores. The COVID-19 outbreak only accelerated that trend, forcing some retail REITs to look for other uses for their properties.
"The sale of land for multi-family units at Moorestown Mall is a meaningful step toward PREIT's (PEI) vision to evolve its properties," the company said. "PREIT is focused on evolving its properties into community hubs marked by a healthy mix of apartments, hotels, entertainment, dining, health & wellness, working space, and local small business retail."
Last month PREIT (PEI) finalized the sale of a 25% interest in Gloucester Premium Outlets for $35.4M, and Four Corners Property (FCPT) agreed to buy 11 outparcel properties from PREIT for $32.5M.
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Comments (29)
As far as the preferred shares have fallen, the common has fallen way more. There was the reverse split of 15 for 1 earlier this year, so a share of PEI pre-reverse split is now worth about 28 cents. Depending upon your assumptions, there could be considerable value here. For example, apply the 6.5% cap rate they got on recent sales against total projected NOI and you will get a figure significantly greater than total debt plus preferred liquidation preference. I do not stand behind those assumptions and I believe that even if the actual value of the assets exceeds the liabilities, it is unlikely to be realized due to PEI's poor financial situation. The most likely scenario is that PEI will end up in bankruptcy and will survive but the common and preferred will be almost entirely wiped out with ownership almost entirely being transferred to the debt holders.
"As part of its debt reduction plan, the Company has applied asset sale proceeds and excess cash from operations to pay down debt by $82 million through June 30, 2022. "So, paid off $82 million thru June 30; more to come.
