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REIT Recovery; the Story of Pennsylvania Real Estate Investment Trust (NYSE: PEI)

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Pennsylvania Real Estate Investment Trust (NYSE: PEI) has been making a powerful move up the charts in recent days since reversing off $0.35 lows last week. Q stocks are well known for making powerful moves once on the OTCBB and PEI has been no exception so far.

PEI filed for Chapter 11 bankruptcy protection on November 1 after the coronavirus decimated their business, hitting REITs especially hard and forced the Company to default on some of their debt. The Company has implemented a restructuring plan, which is supported by 95% of its lender group. Many PEI shareholders think the Company can out of the bankruptcy with the commons intact. PEI has the experience and expertise to extract the most value out of its properties as we exit the pandemic and no creditor wants to own a bunch of malls in these circumstances.

Pennsylvania Real Estate Investment Trust (NYSE: PEI) has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. The Company holds interest in 26 retail properties, of which 25 are operating properties and one is a development property. The 25 operating properties include 21 shopping malls and four other retail properties, have a total of 20.1 million square feet and are located in nine states. The Company and partnerships in which it holds an interest own 15.7 million square feet at these properties. The largest core mall in PEI retail portfolio is 1.4 million square feet and contains 172 stores, and the smallest core mall is 0.5 million square feet and contains 80 stores. The other properties in its retail portfolio range from 370,000 to 780,000 square feet.

The Company has 18 operating retail properties in its portfolio with a total of 15.2 million square feet, of which it owns 12.1 million square feet.  Fashion District Philadelphia, the Company’s recently redeveloped property owned with its 50/50 joint venture partner, the Macerich Company opened on September 19, 2019. The partnership continues to progress through the lease-up phase of the project with stabilization of the project expected after the anticipated opening of several key tenants in 2020. The Company is currently forecasting stabilization in the first half of 2021.

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PEI

In October, the Company executed a Restructuring Support Agreement (RSA) with over 80% of its lenders supporting either an out of court or in court “prepackaged” restructuring of its bank facilities.  On October 17, PEI completed the expansion of its Bridge Facility by $25M to a total of $55M to maintain liquidity through the restructuring timeline.  On November 1, 2020, the Company filed voluntary Chapter 11 petitions in order to implement its prepackaged restructuring plan, which is supported by 95% of its lender group.

On November 6 PEI reported operating results for the Three Months Ended September 30, 2020. Net loss attributable to PREIT common shareholders was $35.7 million (which takes into consideration the accrual of preferred dividends that accumulated during the quarter but have not been paid), or $0.46 per basic and diluted share for the three months ended September 30, 2020, compared to net income attributable to PREIT common shareholders of $17.4 million, or $0.22 per basic and diluted share for the three months ended September 30, 2019.

The Company has executed agreements of sale for land parcels for anticipated multifamily development in the amount of $107.3 million.  The agreements are with three different buyers across five properties for 2,650 units as part of Phase I of the Company’s previously announced multifamily land sale plan.  PEI also executed two agreements of sale to convey land parcels for anticipated hotel development in the amount of $3.75 million.  The agreements are with two separate buyers for approximately 250 rooms.  In August 2020, Valley View Mall was transferred to a special servicer as part of the Company’s non-core property disposition program.

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PEI has been making a powerful move up the charts in recent days since reversing off $0.35 lows last week. Q stocks are well known for making powerful moves once on the OTCBB and PEI has been no exception so far. PEI filed for Chapter 11 bankruptcy protection on November 1 after the coronavirus decimated their business, hitting REITs especially hard and forced the Company to default on some of their debt. The Company has implemented a restructuring plan, which is supported by 95% of its lender group. Many PEI shareholders think the Company can out of the bankruptcy with the commons intact. PEI has the experience and expertise to extract the most value out of its properties as we exit the pandemic and no creditor wants to own a bunch of malls in these circumstances. For more on PEI Subscribe Right now by entering your email below.

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Disclosure: we hold no position in PEI either long or short and we have not been compensated for this article.

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