PREIT Sells Off “Lower Productivity” Malls
PREIT, the Philly-based real estate trust that specializes in owning and operating shopping malls, announced today it has sold four of its underperforming malls, allowing the company to better focus on managing its prime locations.
Joseph Coradino, PREIT’s CEO, told the Wall Street Journal the newly shed malls had high vacancy rates and low sales per square foot, hurting the company’s overall brand. “If we were a car dealership, it would be like putting all our worst vehicles in front,” he told the paper. “The Aston Martins, Lamborghinis and Ferraris were being covered over by a bunch of junkers.”
The properties being sold include Lycoming Mall, in Pennsdale, Pa., was sold for $26.35 million. Three other properties were sold together for $66 million: Gadsden Mall in Gadsden, Ala.; New River Valley Mall in Christiansburg, Va.; and Wiregrass Commons Mall in Dothan, Ala.
The company said in a press release that it is nearly complete with a process that has seen PREIT shed 13 underperforming malls since 2012. Those properties had average sales per square foot of $267; PREIT’s remaining stores, as of February, had average sales of $458 per square foot. The company’s goal: To get to $500 per square foot.
“We are now a more compelling platform for retailers and investors,” Coradino said in the announcement.
He told WSJ retailers would sometimes use the lower-performing malls as leverage to get deals for entry into the company’s prime properties. “National tenants would say, ‘I’ll stay in Lycoming if you give me a deal on one of your better assets,’ ” he said.
PREIT said in its announcement that it has one mall remaining to sell as part of its effort to shed lower-performing properties. The mall was not identified. In Philadelphia, PREIT is currently redeveloping The Gallery into the higher-end Fashion Outlets of Philadelphia.