Pennsylvania Real Estate Investment Trust (PREIT), the Philadelphia-based landlord that owns the Cherry Hill, Plymouth Meeting and Gallery shopping malls and dozens more in the mid-Atlantic region, has agreed to pay Vornado Realty Trust $465 million for the redeveloped Springfield Town Center, Fairfax County, Virginia. Vornado has shut parts of the 1.7 million sq ft mall, to rebuild and update the aging center, which opened in the early 1970s. The deal is scheduled to close, after the work is done and tenants landed, by March 2015, Vornado says here.
UPDATE: "We kind of see this property like another Cherry Hill," PREIT boss Joseph F. Coradino told invesotrs i a conference call Monday. Cherry Hill has become the company's flagship mall since a late 2000s renovation attracted new anchor and boutique stores. EARLIER: The deal calls for PREIT to pay Vornado $340 million in cash and $125 million in "PREIT operating partnership units" to Vornado, which is a major landlord in New York and other metro regions, in a "tax-free exchange." Vornado will write off a $20 million loss in connection with the transaction.
PREIT rebuilt most of its Philadelphia-area malls in the late 2000s, attracting new department stores (Cherry Hill), restaurants (Moorestown), apartments (Voorhees) and medical clinics (Exton), among other updates. PREIT has also been seeking public subsidies and, most recently, a joint-venture investor to update the Gallery. After plans to add a casino or a high-end department store fell through, PREIT has lately sought a supermarket or other food businesses and other potential tenants to replace the K-mart there, which is closing this month. PREIT paid Vornado $60 million for the K-mart building in 2012.
In Monday's call, Coradino said Vornado was not a potential joint-venture partner at the Gallery, but added that the Gallery was a big priority for PREIT, along with the new Virginia center.