By Linda Moss CoStar News
As part of its continuing effort to pay down its debt, mall landlord Pennsylvania Real Estate Investment Trust has divested two parcels of land for $14.2 million.
PREIT, which is based in Philadelphia, on Tuesday said it sold land at the Moorestown Mall in Moorestown, New Jersey, for roughly $12 million. That site will be home to 375 residential units. The buyer is Bel Canto Asset Growth Fund, headquartered in Plymouth Meeting, Pennsylvania.
PREIT, a real estate investment trust, also reported that it had closed on the sale of an outparcel to Four Corners Property Trust, a REIT based in Mill Valley, California, for $2.4 million. That property is a Red Robin restaurant and is located in Maryland, according to Four Corners, which specializes in acquiring and leasing dining establishments.
“The property is located in a strong retail corridor in Maryland and is occupied under a triple-net lease to the corporate entity with approximately 4 years of term remaining,” Four Corners said in a statement.
PREIT, which emerged from Chapter 11 bankruptcy proceedings in December 2020, expects to close on six additional outparcels for $22 million in the coming weeks, it said in its statement. The company owns and operates shopping malls in 12 states on the East Coast, concentrated in the mid-Atlantic and greater Philadelphia region. But it has been attempting to diversify the uses at its malls, by adding healthcare tenants and multifamily units.
The Red Robin property is part of a deal that Four Corners announced in early June, where it said it had signed a definitive agreement to buy 11 outparcel properties from PREIT for $32.5 million. The portfolio includes eight single-tenant restaurants and three nonrestaurant retail properties.
“We have previously executed multiple out-parcel transactions with the PREIT team and they have been an exceptional partner for us,” Bill Lenehan, Four Corners’ CEO, said in a statement in June. “We are excited to announce this 11-property out-parcel portfolio and to continue our strategy of identifying low-rent out-parcel properties leased to strong-credit operators.”
The properties that Four Corners is acquiring from PREIT are located within highly trafficked and populated corridors in Maryland, Massachusetts, Pennsylvania and South Carolina. Each property has a separate, individual lease, and the leases have a current weighted average remaining term of about eight years, according to Four Corners.
On Tuesday, PREIT said it is continuing to implement its plan to raise capital by selling properties, with purchase and sale agreements executed for another $56 million and additional transactions in the pipeline. As part of its debt reduction plan, the company said it has applied asset-sale proceeds and excess cash from operations to pay down debt by $82 million through June 30.
“We are keenly focused on continuing to raise capital to improve our balance sheet as we simultaneously drive operational enhancements, improving the overall quality of our offering,” PREIT Chairman and CEO Joseph Coradino said in a statement. “The closing of the Moorestown land sale evidences the power of the portfolio and the real estate we have aggregated.”
The sale of land for multifamily units at Moorestown Mall “is a meaningful step toward PREIT’s vision to evolve its properties,” according to the company.
“PREIT is focused on evolving its properties into community hubs marked by a healthy mix of apartments, hotels, entertainment, dining, health and wellness, working space, and local small business retail,” the REIT said. “This initiative capitalizes on PREIT’s portfolio of bull’s eye locations to produce a broader consumer base, offering its communities more and driving success for its tenants.”
For example, Cooper University Health Care has taken over a 165,000-square-foot former Sears store at the Moorestown Mall.
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