Pennsylvania Real Estate Trust (PREIT), the owner of malls throughout the eastern region of the United States, including the newly opened Fashion District Mall in Center City Philadelphia, has filed for Chapter 11 bankruptcy. The company describes the filing as a prepackaged restructuring plan providing $150 million in new borrowing to provide capital to operate through the COVID-19 pandemic.
The Chapter 11 petition comes about two weeks after the company first outlined the restructuring plan, saying it aimed to avoid a bankruptcy filing by persuading all its lenders to back the proposal. It ultimately received support from 95% of its creditors, the release stated.
“With the overwhelming support of our lenders, we look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multiuse ecosystems throughout our portfolio,” PREIT Chief Executive Joseph F. Coradino said. Under the deal, PREIT would put up properties that it owns free and clear as collateral for its $919 million in existing unsecured debt and the $150 million in new borrowing. That would mean PREIT’s lenders could foreclose on those properties if it defaulted.
The company had been in the process of repositioning many of its malls, including an Apple store at Cherry Hill Mall, White House | Black Market and Windsor at Woodland Mall and Planet Fitness at Moorestown Mall, among many tenant additions. However, the COVID-19 pandemic shuttered many properties for months, creating financial stress on PREIT as many of its tenants were unwilling or unable to pay rent.