PREIT Reports Strong Sales and Holiday Traffic and Progress on Key Strategic Initiatives

Rhea-AI Summary

PREIT (NYSE: PEI) reported a significant increase in shopper traffic over the holiday season, building on strong sales from October and November. In 2021, the company executed 1.2 million square feet of new leases, which is nearly three times more than 2019, projected to generate $4 million annually. Holiday traffic grew by 25% YoY, with 8 million visitors. The company is focused on raising over $350 million to reduce debt, including selling properties valued at over $120 million. PREIT is engaging advisors to explore options to strengthen its capital structure.

Positive

• Shopper traffic increased by 25% YoY during the holiday season.
• Executed leases for 1.2 million square feet in 2021, nearly three times more than 2019.
• Projected annual revenue increase of $4 million from new leases.

Negative

• The company's high debt levels remain a concern.
• Engaged advisors for strategic review indicates potential financial instabilities.

PHILADELPHIA, Jan. 12, 2022 /PRNewswire/ -- PREIT (NYSE: PEI) (the "Company"), a leading real estate investment trust focused on creating thoughtful, community-centric properties, today announced meaningful increases in shopper traffic over the holiday season, building on strong sales during the early shopping season in October and November. PREIT also provided an update on its ongoing efforts to improve its financial position, including a process now underway to consider a wide range of options to reduce debt and strengthen the Company's capital structure.

Joseph F. Coradino, Chairman and CEO of PREIT, said, "We are encouraged by the increased customer traffic and positive sales trends throughout the holiday season, which demonstrate continued momentum in the pace of recovery. Continued consumer confidence, coupled with our strong operational execution, position PREIT's portfolio for success as we enter the new year."

Robust Leasing Activity and Shopper Traffic over Holiday Season

Following years of strategic portfolio pruning and reinvestment of capital in proactive anchor repositioning, the strength of PREIT's portfolio is evident in its 2021 leasing and tenant sales results.

In 2021, the Company executed transactions for 1.2 million square feet of new space – more than any of the past five years and nearly three times as much as 2019. This creates a strong foundation for the future, as PREIT begins 2022 with executed leases to come online during the year which is expected to generate $4 million of new revenue annually.

During 2021, over 1.1 million square feet of space opened throughout PREIT's portfolio. Notable first-to-portfolio 2021 openings included:

• Aldi at Dartmouth Mall
• Miniso, Peloton and Purple at Cherry Hill Mall
• Power Warehouse at Cumberland Mall
• Turn 7 at Moorestown Mall
• Rose & Remington, Lovisa and Offline by aerie (opening this week) at Woodland Mall

Strong demand is driving improved results across PREIT's portfolio. This is illustrated by existing tenant sales which, on a rolling 12-month basis through November, were up over five percent in the core portfolio compared to the rolling 12-month period ended November 30, 2019. Traffic during the holiday season (November and December) grew by 25% over 2020 at core malls with over 8 million customers visiting PREIT malls during that time. Anecdotally, retailers operating in the Company's portfolio experienced strong sales throughout the season on the heels of a strong fall where sales for comparable tenants grew by 9.3% and 6.1% in October and November, respectively. Estimated core mall comparable sales per square foot reached a record high of $590 for the period ended November 30, 2021.

Capital-Raising Activity

Capital-raising, to reduce debt and the Company's interest burden, remains a key focus of management.  The Company's capital plan includes raising over $350 million in multiple phases.

During its Q3 2021 earnings call, the Company outlined its intention to sell over 10 land and operating parcels for over $120 million in proceeds between now and the middle of 2022 as part of its initial phase of capital-raising, including approximately $40 million in multi-family land sales and $80 million in other parcel sales.

As a second phase of capital-raising, the Company has contracts for additional multi-family land sales for another $60 million and an additional phase of multi-family land sales estimated at $100 million in value.  The Company is also marketing several other parcels for approximately $70 million. Capital raised will be used to reduce the Company's outstanding debt.

Mr. Coradino continued, "Raising capital is a key strategic priority to further strengthen PREIT's financial flexibility for the benefit of our stakeholders. We have several significant capital-raising initiatives in advanced stages of implementation and will continue to opportunistically reduce our overall debt and interest obligations. This holiday season highlighted the strength of our portfolio, which we expect will continue to solidify as new tenants and uses come online in 2022 and we execute on our balance sheet improvement initiatives."

The status of Phase I initiatives, for $120 million in gross proceeds, can be found below.  Over 67% is executed or in documentation.

Multi-family Land Sales

Closing on land parcels for multi-family development is an important way the Company is efficiently raising capital and further evolving its properties. PREIT is progressing on all facets of the announced projects and currently expects to close on three sales with a current contract value of approximately $40 million before June 30, 2022. Three additional sales are currently under contract for over $60 million and are expected to close before the end of 2023.  A phase II multi-family opportunity is estimated to potentially raise an additional $100 million for over 2,000 units. 

Evaluating Opportunities to Further Reduce Debt and Strengthen the Company's Capital Structure

"Over the past several years, we have improved operational efficiency and drove stable and increasing cash flows from operations while advancing our portfolio. Today, our business is performing well, as most recently evidenced by a strong holiday season," said Coradino. "While we are pleased with our progress to date, and look forward to reducing PREIT's debt to position ourselves to exercise our credit facility extension option, we are undertaking a thorough review of our business and capital structure. Our Board and management team are evaluating a wide range of opportunities to further strengthen the Company's balance sheet and financial flexibility."

To assist the Board of Trustees and management team in pursuing strategic and financial options that will strengthen the Company's balance sheet, PREIT has engaged PJT Partners, a premier global advisory-focused investment bank. There can be no assurance that the process will result in any particular outcome, and the Company notes that it will take the appropriate time to complete the review. PREIT does not intend to provide updates concerning this process until such time as the Company determines that further disclosure is necessary or appropriate.

About PREIT

PREIT (NYSE:PEI) is a publicly traded real estate investment trust that owns and manages innovative properties developed to be thoughtful, community-centric hubs. PREIT's robust portfolio of carefully curated, ever-evolving properties generates success for its tenants and meaningful impact for the communities it serves by keenly focusing on five core areas of established and emerging opportunity: multi-family & hotel, health & tech, retail, essentials & grocery and experiential. Located primarily in densely-populated regions, PREIT is a top operator of high quality, purposeful places that serve as one-stop destinations for customers to shop, dine, play and stay. Additional information is available at www.preit.com or on Twitter, Instagram or LinkedIn.

Forward Looking Statements

This press release contains certain forward-looking statements that can be identified by the use of words such as "anticipate," "believe," "estimate," "expect," "project," "intend," "may" or similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current expectations and assumptions regarding our business, the economy and other future events and conditions and are based on currently available financial, economic and competitive data and our current business plans. Actual results could vary materially depending on risks, uncertainties and changes in circumstances that may affect our operations, markets, services, prices and other factors as discussed in the Risk Factors section of our other filings with the Securities and Exchange Commission. While we believe our assumptions are reasonable, we caution you against relying on any forward-looking statements as it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the effectiveness of strategies we may employ to address our liquidity and capital resources in the future, our ability to achieve our forecasted revenue and pro forma leverage ratio and generate free cash flow to further reduce our indebtedness; our ability to manage our business through the impacts of the COVID-19 pandemic, a weakening of global economic and financial conditions, changes in governmental regulations and related compliance and litigation costs and the other factors listed in our SEC filings. Additionally, our business might be materially and adversely affected by changes in the retail and real estate industries, including bankruptcies, consolidation and store closings, particularly among anchor tenants; current economic conditions, including consumer confidence and spending levels and supply chain challenges and the impact of the COVID-19 pandemic and the public health and governmental response as well as the corresponding effects on tenant business performance, prospects, solvency and leasing decisions; our inability to collect rent due to the bankruptcy or insolvency of tenants or otherwise; our ability to maintain and increase property occupancy, sales and rental rates; increases in operating costs that cannot be passed on to tenants; the effects of online shopping and other uses of technology on our retail tenants; risks related to our development and redevelopment activities, including delays, cost overruns and our inability to reach projected occupancy or rental rates; social unrest and acts of vandalism and violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and sales; the frequency, severity and impact of extreme weather events at or near our properties; our ability to sell properties that we seek to dispose of or our ability to obtain prices we seek; our substantial debt and the liquidation preference of our preferred shares and our high leverage ratio and our ability to remain in compliance with our financial covenants under our debt facilities; our ability to refinance our existing indebtedness when it matures, on favorable terms or at all; our ability to raise capital, including through sales of properties or interests in properties and through the issuance of equity or equity-related securities if market conditions are favorable; and potential dilution from any capital raising transactions or other equity issuances.

Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed herein, and in the sections entitled "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

Contact:
Heather Crowell
EVP, Strategy and Communications
(215) 454-1241
heather.crowell@preit.com 

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SOURCE PREIT

FAQ

What is the latest sales trend for PREIT stock PEI as of January 2022?

In January 2022, PREIT saw a 25% increase in shopper traffic YoY, indicating a positive sales trend.

How much does PREIT plan to raise to reduce debt?

PREIT aims to raise over $350 million to strengthen its capital structure and reduce debt.

What significant leasing activity occurred for PREIT in 2021?

PREIT executed leases for 1.2 million square feet in 2021, marking a strong leasing performance.

How many visitors did PREIT malls attract during the holiday season?

PREIT malls attracted over 8 million visitors during the holiday season.

What are PREIT's projections for new revenue from leases?

PREIT projects to generate $4 million in new annual revenue from executed leases.