PREIT selling Center City properties, four malls

PREIT is under contract to sell 1501-05 Walnut St. after restoring the building and signing AT&T Mobility as a tenant.

Pennsylvania Real Estate Investment Trust expects to earn as much as $225 million by the middle of next year through property sales, as the Philadelphia-based mall operator raises cash to spend on its biggest money-makers by selling off lesser performers and non-core properties.

The properties to be sold include two Center City retail buildings and four shopping malls in Pennsylvania, Alabama, and Virginia that have been a drag on the company's overall sales figures, PREIT said in an investor presentation Thursday.

The company aims to attract higher-quality tenants and greater investor interest by improving its properties' sales value per square foot, by which mall success is measured, chief executive Joseph Coradino said in an interview after the presentation. So it is concentrating its resources on malls with good locations in affluent areas and other competitive advantages, he said.

"We have a phrase here which is called 'addition through subtraction,' " Coradino said. "You're not selling assets to sell assets. You sell assets to drive the quality of your portfolio."

PREIT is in negotiations to sell 1501-05 Walnut St. after restoring the building and securing AT&T Mobility as a tenant, and 1520-22 Chestnut St., which accommodates a Dollar Tree store, according to the presentation. The buildings are expected to generate $40 million to $45 million, with the sale expected to close by the end of June.

Non-refundable deposits, meanwhile, have been received toward the purchase of Palmer Park Mall in Easton and for a package of properties consisting of the Gadsden Mall in Gadsden, Ala., Wiregrass Commons Mall in Dothan, Ala., and New River Valley Mall in Christiansburg, Va., with those sales expected to close by June 30, PREIT said. The company announced previously that the three-mall package was under contract to an institutional buyer for $95.4 million.

Two Pennsylvania malls - Lycoming Mall in Pennsdale, outside Williamsport, and Washington Crown Center in Washington, south of Pittsburgh - also are being marketed, with sales expected by the end of the year.

The final anticipated sale involves a land parcel in Gainesville, Fla., that a buyer has under contract. It is expected to close by the end of June 2017.

The transactions build on a selling spree, now entering its third year, during which PREIT unloaded eight malls and several other assets, earning $483.7 million so far.

Coradino said that money is going into projects such as the $325 million renovation of the Gallery at Market East that PREIT is completing with partner Macerich Co. and improvements to the Plymouth Meeting Mall, which recently signed the area's first Legoland Discovery Center as a tenant.

Shedding the lesser-performing malls, meanwhile, has raised the company's average yearly sales per square foot from $384 a year ago to $428 now, boosting its stature in the eyes of investors and potential tenants, he said.

"How do you get any of these high-end tenants? It's by having a high-end portfolio," Coradino said. "You get a much more compelling relationship with retailers."

jadelman@phillynews.com

215-854-2615@jacobadelman

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