EASTERN PA — The owner of several major Philadelphia area malls has filed for bankruptcy protection for the second time in three years.
The Pennsylvania Real Estate Investment Trust (Preit), owner of the Fashion District in Philadelphia, Willow Grove Park, Plymouth Meeting, and Springfield malls in the suburbs, and Cherry Hill and Moorestown malls in South Jersey, filed a Chapter 11 petition Sunday.
The weekend marked the deadline for the trust to pay back about $1.1 billion in debt. But though the deadline passed, the bankruptcy filing will allow shopping centers to continue operations without interruption during a coming restructuring process, official ssaid.
"We look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multi-use property experiences throughout our portfolio," CEO Joseph F. Coradino said in a statement.
Preit's assets include 18 malls all told, mostly in the Mid-Atlantic. With the debt maturity looming, the company expressed doubts last month that it could repay the debt or continue operating within the next year, according to financial disclosures.
Despite the financial turmoil, Preit has expressed confidence in its local assets. Cherry Hill Mall has long been its top performer, while executives have touted the redevelopment of Plymouth Meeting and Moorestown malls as company bright spots.
Willow Grove Park, meanwhile, has seen massive investment in recent months, including the opening of a massive indoor amusement park and grounbreaking on an adjacent apartment complex.
Under Preit's proposed re-organization plan, announced Monday, the corporation will reduce its debt by $880 million. Preit will no longer be publicly traded and will pay its stockholders $10 million.The agreement also extends the corporation's maturity runway, providing Preit with a five-year window to repay the loans.
Preit's existing lenders unanimously agreed to the proposal, which is subject to approval from the federal bankruptcy court in Delaware. The investment trust plans to emerge from bankruptcy by early February.
Preit will pay all of its employees, suppliers and vendors during bankruptcy proceedings. Founded in 1960, the Philadelphia-based company steadily built up a portfolio of shopping centers. In 2003, Preit acquired six malls from The Rouse Company, including those in Cherry Hill and Moorestown.
Preit thrived in the mid-2000s and peaked at $721.50 per share in July 2005. But its stock values cratered during the Great Recession and totaled $42.75 per share in early 2009. The company rebuilt some of that value, reaching about $350 per share in 2016. But thereafter, stock values steadily declined, with the pandemic dealing the final blow before Preit filed for bankruptcy in November 2020.
Although Preit emerged from bankruptcy protection one month later, the company has financially struggled since. Last summer, shareholders voted for seven trustees to leave their positions.
The company closed last week at 24 cents per share.
According to court documents, Preit hopes to amend plans for bonuses, employee retention, and the contracts of Coradino and CFO Mario C. Ventresca Jr. The changes would impact people directly employed by Preit, rather than employees of retailers and businesses in its malls, a company spokesperson told Patch.
With reporting from Patch correspondent Josh Bakan