Pennsylvania Real Estate Investment Trust is under agreement to sell the office space it owns in the former Strawbridge & Clothier building at 801 Market St. in Center City, as the Philadelphia-based mall developer and operator continues to raise cash to invest in the retail properties at the core of its business.
Also under contract are PREIT’s Logan Valley Mall in Altoona and a 4.9-acre land parcel at its Exton Square mall, which is to be acquired by an apartment or condo developer, the company said in a release Tuesday. The Exton Square property is across from that mall’s Whole Foods store, along the new entry from Route 100.
The three transactions are expected to generate $75 million, which will be put toward improvements at the company’s other properties, PREIT chief executive Joseph F. Coradino said in the release. Those properties include the former Gallery at Market East shopping mall, attached to the Strawbridge’s building, which PREIT is redeveloping in partnership with Macerich of Santa Monica, Calif.
“This is a critical step in the further transformation of PREIT into a top-tier mall company,” Coradino said. “As the retail industry evolves, there are many opportunities to improve the shopping environment, and raising capital through the sale of non-core properties provides the perfect vehicle for creating value for our shareholders.”
PREIT sold off 16 lower-earning malls and other non-core assets between the start of 2013 and January, when it announced that it was marketing the Logan Valley Mall and the Valley View Mall in LaCrosse, Wis. The two are the worst-performing and eighth-worst-performing of PREIT’s 22 remaining malls on a sales-per-square-foot basis, according to its most recent quarterly financial disclosures.
The Strawbridge’s building offices, meanwhile, have been an outlier among the retail-focused company’s holdings. The sale at the 1930s structure is to include the building’s third through sixth floors, encompassing 300,000 square feet of office space, PREIT spokeswoman Heather Crowell said in an email. Tenants of those floors include the parent company of the Inquirer, the Philadelphia Daily News, and Philly.com, as well as local offices of the state Department of Labor and Industry.
Crowell declined to identify the buyer of the property before the closing.
PREIT will retain ownership of the Strawbridge’s building’s lower floors of retail space, including areas occupied by the Century 21 discount store, Crowell said. Floors seven though 13 of the building, encompassing 382,800 of offices, were sold in November as a separate property to New York investment firm Cohen Equities.