PREIT reaches deal with majority of bank lenders

Infusion of $150M of new capital will enable continued investment

PHILADELPHIA » PREIT, which owns shopping malls in Chester, Montgomery and Delaware counties — has reached agreement with more than 80% of its bank lenders on funding that would support PREIT’s operations and the continued execution of its strategic priorities.

According to Thursday’s announcement, PREIT’s bank lenders would provide an additional $150 million to recapitalize the business and extend the company’s debt maturity schedule.

“Long before the COVID-19 pandemic hit, we began taking meaningful actions to enhance the financial and operational health of the business,” Joseph F. Coradino, CEO of PREIT, said ina statement. “These stepshave included proactive asset sales, anchor repositioning and redevelopment to significantly minimize our exposure to underperforming assets, as well as, diversifying our tenant base to provide mass-market offerings appealing to shopperswhile simultaneously improving the company’s underlying tenant credit profile.”

The next phase, he said, is continuing on the path the company has charted, “to create diverse multi-use ecosystems at our properties marked by a healthymix of multifamily housing, healthcare services, fulfillment centers, and other uses alongside our robust retail, dining and entertainment lineups.”

Coradino added that the agreement provides PREIT with liquidity to meet its obligations, compete and continue to provide its tenants and customers “the high-quality shopping experience they expect at our properties.”

Among the area properties owned by PREIT are: Exton Square Mall in West Whiteland, Chester County; Plymouth Meeting Mall in Plymouth Meeting, Montgomery County; Willow Grove Park Mall in WillowGrove, Montgomery County; and SpringfieldMall in Springfield, Delaware County.

Under the terms of the

agreement, PREIT would have access to $150 million in newcapital to strengthen the business and provide financial flexibility. Specifically, the banks will convert the company’s existing credit facilities into a $150 million first lien senior secured facility, a $919 million facility consisting of a first lien senior secured termloan facility and a second lien secured term loan facility — all of which will have a two-year termwith a 1-year extension option, according to a press release. The company’s current pool of unencumbered assets will serve as collateral for the facility and the company will retain 30% of proceeds fromnon-income producing asset sales.

The agreementmust still

be finalized and approved by 100% of the bank group. PREIT is working toward completing this process before the end of October.

According to information in the release, if the company is unable to secure the support of the remaining lenders, which hold less than 20% of thedebt, itmayneed to complete the restructuring through a prepackaged reorganization under Chapter 11 of the United States Bankruptcy Code.

“The purpose of such a process, if necessary, would be to implement the agreement that already has the support of over 80% of the company’s bank lenders. As such, the company expects that any prepackaged reorganization process would be expedited, and that it

would have no impact on shareholders, suppliers and other trade creditors, business partners, or other stakeholders, all of whom would be unimpaired,” the release stated. The company said it will continue operating as normal.

“Given the significant support we have already received from a substantial majority of our lenders, we are confident in our ability to implement the recapitalization agreement quickly and efficiently,” Coradino added.

Headquartered in Philadelphia, PREIT owns and manages retail shopping malls in 12 states in the eastern U.S. with concentration in the Mid-Atlantic and Greater Philadelphia region. For more information visit www.preit.com.