Mall operator Pennsylvania Real Estate Investment Trust filed for Chapter 11 bankruptcy protection this week, three years after a previous bankruptcy filing. PREIT will pay all vendors, suppliers and employees during the Chapter 11 proceedings, per a company press release.
In court documents filed at the U.S. Bankruptcy Court for the District of Delaware, the mall REIT lists $2 billion in total debts, with assets of $1.7 billion. Before filing, the company had “robustly marketed the Company's properties, sought capital infusion and otherwise explored any available options” without success, Lead Independent Trustee Michael DeMarco said in a statement.
The REIT’s debt maturities forced the bankruptcy, according to a research note from Morningstar Credit analysts led by Michael Magerman, adding that its malls with commercial mortgage-backed security debt have continued to report performance declines this year.
PREIT came to court with a prepackaged plan, including debtor-in-possession and exit revolver financing amounting to about $135 million, from investors led by Redwood Capital Management and Nut Tree Capital Management. The plan will shed about $880 million in debt and extend the company’s debt maturity runway, per its press release.
Shareholders will receive $10 million and the company will no longer be publicly traded.
In its most recent quarter, PREIT’s net loss narrowed to $57.9 million from $71.3 million. Same-store net operating income fell 5.3% year over year, as core mall total occupancy declined by 70 basis points to 93.6%. Core mall non-anchor occupancy also declined, down 100 basis points to 90.3%, per an earnings release last month.
