A $60 million deal to sell a large piece of Center City real estate to the owner of the Gallery at Market East is nearly complete, helping pave the way for a planned redevelopment of the long-struggling urban shopping mall, officials said Monday.
Vornado Realty Trust of Paramus, N.J., in an announcement made on a stormy day that idled markets and major businesses along the East Coast, said it had entered into an agreement to sell 907 Market St. to Pennsylvania Real Estate Investment Trust, a shopping mall company headquartered in Center City.
The transaction, if it were to close as hoped for by the end of the year, would give PREIT virtually full control over a three-block stretch of Market Street, one of Philadelphia's major downtown corridors, though officials remained circumspect about what they planned to do with the indoor mall, which dates back to the 1970s.
Last week, PREIT executives told investors during a corporate earnings call that they were in discussions with public officials "seeking concessions" to help underwrite as-yet-undisclosed plans to reinvent the mall, which has long struggled to attract high-end retailers, rents, and customers despite its splashy debut four decades ago.
The Ninth and Market property being sold by Vornado houses a Kmart that anchors the Gallery. The discount retailer's lease is due to expire in 2014, PREIT chief executive officer Joseph F. Coradino said Monday.
He would not say what plans were being drawn up for the Kmart property, nor would he disclose how soon his company would reveal plans being hatched for the assemblage of contiguous properties it has worked hard to bring into its portfolio over the last few years.
Coradino said the company's thinking had been methodical; it acquired one portion of the Gallery in 2003, another in 2004, a building housing the former Strawbridge & Clothier department store in 2006, and now the behemoth that once housed a Clover store and before that Gimbel Bros.
"In essence," Coradino said, "you've got to look upon this as we've been putting together pieces of the puzzle."
Most of PREIT's holdings are indoor shopping malls along the East Coast, with a concentration in Mid-Atlantic states, including Cherry Hill Mall, Willow Grove Park, Plymouth Meeting Mall, and Exton Square Mall among nine in the region. But Coradino suggested that the company's latest acquisition be viewed through a broader lens.
"Forget about what we do," he said. "Think about controlling three blocks of real estate in the fifth-largest city in the United States on the No. 1 street address - Market Street - between the Convention Center, the Constitution Center, Independence Hall."
Further, he added, the property sits atop the Market-Frankford El, which he said draws 19 million commuters each year.
In that context, Coradino said, the planned acquisition at Ninth and Market is "an important piece of the future of the Gallery."
The Inquirer, the Philadelphia Daily News, and Philly.com are tenants of PREIT in the Gallery.
Contact Maria Panaritis at 215-854-2431 or firstname.lastname@example.org or @panmaritism on Twitter.