Philadelphia Real Estate Investment Company Files for Bankruptcy
Philadelphia, PA – Pennsylvania Real Estate Investment Trust, or PREIT, a Philadelphia-based shopping mall operator, filed for Chapter 11 bankruptcy protection this morning, the company announced. This is not the first time the company has filed for bankruptcy, as it previously did so in November 2020 during the height of the COVID-19 pandemic.
During the previous bankruptcy, PREIT was able to restructure about $2 billion in debt, including an unsecured loan approved by Wells Fargo Bank. However, more than $1 billion in debt this month has put the company in danger of defaulting, prompting the current bankruptcy and financial restructuring of its debts.
After this bankruptcy court process is over, PREIT is not likely to be a publicly traded company on the stock market anymore but will be privately owned by investors.
The company’s shopping mall portfolio includes the Center City Fashion District, the Cherry Hill Mall in New Jersey, Plymouth Meeting Mall, and Willow Grove Park, among others. The future plans for the Fashion District, including a new $1.5 billion NBA arena for the 76ers, are still in the works, according to a statement from 76 Place, the developer.
The deal between Macerich Company and PREIT has changed as a result of the bankruptcy, with Macerich taking over the $350 million debt and the asset, as well as daily operations. This includes a loan taken out in January 2018 to redevelop the Fashion District and repay capital contributions to the venture previously made by the partners.
The COVID-19 pandemic halted the economy, impacting the U.S. brick-and-mortar retail market, and causing the company to struggle financially.
However, despite these challenges, developers are still hoping to generate new tax revenues and jobs through their continued efforts to revitalize the Fashion District. Although PREIT may be facing bankruptcy yet again, it remains to be seen how this will affect their ongoing projects and partnerships.