Wednesday, April 1, 2020

PREIT to Cut Dividend, Capital Projects and Takes Other Measures to Improve Liquidity

by John Jordan
Locally-based PREIT reports that it is taking a number of steps to increase liquidity, including drastically reducing dividends, cutting capital projects, increasing borrowing limits and selling assets in response to the Coronavirus pandemic.

The Philadelphia-based retail REIT estimates the measures will create nearly $300 million in incremental liquidity.
“As we continue to navigate an uncharted operating environment, we are focused on safeguarding the safety and well-being of our associates and communities while enhancing near-term liquidity,” said Joseph F. Coradino, chairman and CEO of PREIT. “PREIT was among the first companies in our sector to embark on a proactive effort to improve our portfolio through anchor repositioning and redevelopment, completing the program ahead of industry peers and in advance of the COVID-19 pandemic. We are now laser-focused on improving our balance sheet to position PREIT for long-term success.”

Among the company’s steps to improve its liquidity include beginning with the second quarter dividend, proposing reducing the dividend by 90% to a quarterly cash dividend of $0.02 per common share. The reduction will enhance company liquidity by approximately $15 million per quarter, or $60 million in additional liquidity on a full-year basis.

PREIT has increased its borrowing capacity by more than $83 million by executing amendments to its senior credit facilities. PREIT is reviewing its capital spending projections and expects to reduce its planned 2020 spending by 11% or $11 million. Based on current forecasts, the company also expects to realize savings of approximately $2 million per month while its mall operations are suspended.

Other mitigation efforts include working with officials to reduce its municipal tax liabilities, which, if successful, could potentially generate savings of more than $10 million.

In addition, its previously announced property dispositions are expected to generate gross proceeds of $312.6 million. These deals include an agreement for the sale-leaseback of five properties, the sale of land parcels for multifamily development at seven properties, operating outparcel sales and the sale of land for hotel development at two properties.
PREIT states t, it expects to net approximately $200 million in additional liquidity at the close of these transactions.

Tuesday, March 31, 2020

Buyers Pull Out of Two New Jersey Shopping Center Sales Valued at $52 Million

A real estate investment trust's pending sales of two shopping centers in Bergen County, New Jersey, for $52.5 million have been scrapped because the prospective buyers pulled out of the deals.

First Real Estate Investment Trust of New Jersey, based in Hackensack, said the sales of both Franklin Crossing in Franklin Lakes, for $26.5 million, and Westwood Plaza in Westwood, for $26 million, have been terminated.

The REIT disclosed the end of the two separate deals in filings with the Securities and Exchange Commission. First Real Estate Investment didn't identify the prospective buyer in either of the transactions.

The REIT earlier this month saw another one of its pending sales fall through, for a multifamily property that was part of a portfolio New York City-based Kushner Cos. had been slated to acquire from it for $266.5 million. First Real Estate Investment reported that its mortgage lender for Pierre Towers, a 266-unit apartment complex at 185 Prospect Ave. in Hackensack, wouldn't agree to assign that loan to Kushner Cos. So the purchase agreement for that particular property, valued at $80.5 million, was canceled, bringing the portfolio's price tag down to $186 million.

Regarding Franklin Crossing, the REIT reported the would-be buyer prior to the end of a 21-day due diligence period "determined not to proceed with the purchase." That prospective purchaser's $500,000 deposit was returned.

In the Westwood Plaza sale, prior to the end of a 30-day due diligence period in that transaction, its suitor chose not to proceed with the purchase and got its $1 million deposit return.

The filings didn't say why the buyers declined to close on the sales, and First Real Estate Investment on Monday declined to comment beyond what was contained in the SEC documents.

Jared Kushner, the husband of President Trump's daughter Ivanka, once led Kushner Cos., which was founded by his father, Charles Kushner. But the younger Kushner stepped down from his role at the family company after he became a key adviser to the president. He is no longer involved in its daily operations.

In January, when First Real Estate Investment announced the pending portfolio sale to Kushner Cos., the REIT said it planned to wind down and proceed with a voluntary liquidation after that transaction closed.

When To Sell Commercial Real Estate - 5 Questions To Ask Before Listing Your Property (Video)

Tom Barrack Says Real Estate Collapse Will Take Hold in April (Video)

Monday, March 30, 2020

Boston Firm Adds Northeast Philadelphia Industrial Buildings to Growing Portfolio

Full service investment firm NorthBridge Partners has purchased a 281,000-square-foot, four-building portfolio in the Northeast Philadelphia industrial submarket from local development shop Anvil Construction for $25.5 million, or about $91 per square foot.

The properties in the Byberry East and West Section of the Philadelphia Industrial Park are located at 2722 Commerce Way, 2801-17 Southampton Road, 2825-45 Southampton Road and 2191 Hornig Road.

At the time of sale, the portfolio was 94% leased to 12 different tenants including United Natural Foods, Goodman Distribution, the City of Philadelphia, EIS and Riley Sales.

The team at Roddy Inc. will represent NorthBridge in the leasing of the Philadelphia industrial portfolio moving forward. There is currently 24,000 square feet of space available and tenant needs from 6,000 to 24,000 square feet can be accommodated.

Headquartered in Boston, NorthBridge Partners has invested more than $450 million of capital across over 30 separate investments totaling over 4 million square feet since its launch in 2014, according to its website.

New Jersey Unveils 90-Day Mortgage Grace Period in Wake of Pandemic

By Linda Moss CoStar News

Working with financial lenders, New Jersey has arranged for a 90-day grace period for mortgage payments throughout the state in response to the coronavirus pandemic, as confirmed cases of the illness rose to 11,124, No. 2 in the nation.

New Jersey Gov. Phil Murphy unveiled the mortgage-relief initiative for home owners financially hurt by the outbreak Saturday at a press briefing in the state capital in Trenton. The governor's announcement only pertains to residential mortgages, not those on commercial properties, according to a spokesman for his office. New Jersey now also has a 60-day ban on evictions.

Murphy, in an initiative that "closely mirrors" one underway in California, said the Garden State secured support from Citigroup, JPMorgan Chase, U.S. Bank, Wells Fargo and Bank of America in addition to over 40 other federal and state-chartered banks, credit unions, and servicers to offer financial protection to New Jersey home owners. More financial institutions are preparing to sign on in the coming days, according to a statement from the governor's office.

California Gov. Gavin Newsom announced a similar mortgage forbearance arrangement with Citigroup, JPMorgan Chase, U.S. Bank, and Wells Fargo last week. And on Friday Newsom ordered a statewide eviction moratorium, which bars residential landlords from evicting tenants unable to make their rent as a result of lost work, illness or being left to care for a family member because of the virus.
A number of states, not only California but New York and others, have ordered moratoriums on mortgage payments and evictions as residents financially struggle because of the health crisis, which has resulted in thousands of layoffs as businesses are forced to close. The Empire State has the most confirmed coronavirus cases nationally, with Gov. Andrew Cuomo reporting 52,318 as of Saturday.

April 1 looms

New Jersey's action comes in time to help those worried "as that April 1 payment date loomed especially large and foreboding," Murphy said, and builds on an earlier ban on evictions.

"Put together a 90-day grace period and a moratorium on foreclosures and evictions means many New Jersey families can breathe easier, keep their heads above water and have a place they can continue to to call home," the governor said.

Under New Jersey's plan, residents who are struggling financially as a result of COVID-19 may be eligible for relief but must reach out to their financial institutions.

Participaing lenders would offer, consistent with applicable guidelines:

  • Mortgage-payment forbearance of up to 90 days to borrowers economically impacted by the pandemic;
  • Provide borrowers a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
  • Confirm approval of and terms of forbearance program;
  • Provide borrowers the opportunity to request additional relief, as practicable, upon continued showing of hardship due to COVID-19.

The New Jersey Bankers Association, CrossState Credit Union Association and the Mortgage Bankers Association of New Jersey have endorsed the mortgage-payment moratorium and are encouraging their members to adopt these policies, according to a statement from the governor's office.

No harm to credit rating

Home owners who take advantage of the mortgage forbearance won't see their credit ratings negatively impacted as a result, according to Murphy.

During his press conference, Murphy said for at least 90 days, financial institutions will waive or refund mortgage-related late fees and other fees, including early CD withdrawals, subject to applicable federal regulations, for customers who have sought assistance.

Last week, Murphy signed an executive order that imposed a moratorium on removing individuals from their homes pursuant to an eviction or foreclosure proceeding while the order is in effect. Tenants cannot be asked to leave their homes for nonpayment of rent during this time. Building on that order, mortgage lenders have committed to not initiating foreclosure sale or evictions for at least 60 days, the governor said.

The state Department of Community Affairs has received an additional $13 million in federal funds as part of its annual renewal for the Section 8 voucher Program, according to the governor. These funds, based on New Jersey increased use of the prgoram last year, "are critical to helping current voucher tenants maintain their housing stability during the coming year," the governor's office said in a statement.