Business & Finance
Business and Finance
Business and Finance
Tue, August 17, 2010
Mon, August 16, 2010 
PHILADELPHIA--([ BUSINESS WIRE ])--Pennsylvania Real Estate Investment Trust (NYSE: PEI) today announced the signing of agreements for the sale of its interests in up to seven power centers to Cedar Shopping Centers, Inc. (NYSE: CDR).
Under the agreements, PREIT will sell five wholly-owned power centers to Cedar for approximately $134 million. A portion of the proceeds will be used to repay approximately $40 million of mortgage debt secured by three of the properties and to pay approximately $57 million to release two properties securing PREITa™s 2010 Credit Facility. This transaction is expected to close by the end of 2010.
The five wholly-owned properties are Creekview Center in Warrington, Pennsylvania; Monroe Marketplace in Selinsgrove, Pennsylvania; New River Valley Center in Christiansburg, Virginia; Pitney Road Plaza in Lancaster, Pennsylvania; and Sunrise Plaza in Forked River, New Jersey. These five properties contain 936,000 total owned square feet.
PREIT has also signed agreements to sell to Cedar its 50% interest in each of two additional power centers. The two properties, Red Rose Commons in Lancaster, Pennsylvania and Whitehall Mall in Allentown, Pennsylvania, contain 821,000 total owned square feet. PREITa™s share of the sales prices for the two properties is approximately $34 million, and PREITa™s proportionate share of the mortgage debt on these properties is approximately $18 million. The sale of each of these properties is expected to close during the fourth quarter of 2010 or the first quarter of 2011; however, the sale of Red Rose Commons is subject to the terms and conditions of the partnership agreement with PREITa™s partner in the property and the joinder by that partner, and the sale of Whitehall Mall is subject to agreement with, and joinder by, PREITa™s co-owner in that property. In addition, it is proposed that Cedar assume the current mortgage on Whitehall Mall, the terms of which do not include any provision for assumption (which would require the consent of the lender) and do include a prepayment premium. These conditions may delay or prevent the closing of the sale of either or both of these properties. Cedar is not obligated to close on either property unless it acquires 100% ownership of that property.
After the repayment of mortgages secured by these properties and the payment of the applicable release prices under the Credit Facility, PREIT will use the net proceeds to repay borrowings under its Credit Facility, in accordance with its terms, and for general corporate purposes.
The sale agreements provide that PREIT will retain certain undeveloped parcels at the wholly-owned properties which Cedar may acquire at a formulated price. The agreements with Cedar provide that PREIT will serve as management and leasing agent for the properties for a period of three years, subject to certain termination provisions and to the terms of the final agreements with PREITa™s partner in Red Rose Commons and PREITa™s co-owner in Whitehall Mall. PREIT also will earn additional sales consideration for leasing currently vacant space, if such leasing occurs during the two years following the closing of the sale. The agreements are subject to certain terms and conditions customary for transactions of this nature, and there can be no assurance that all or any of the properties will be sold or will be sold on the terms described herein.
About Pennsylvania Real Estate Investment Trust
Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the first equity REITs in the U.S., has a primary investment focus on retail shopping malls and power centers. Currently, the Company's portfolio consists of 54 properties, including 38 shopping malls, 13 strip and power centers, and three development properties. The Company's properties are located in 13 states in the eastern half of the United States, primarily in the Mid-Atlantic region. The operating retail properties have approximately 35 million total square feet of space. PREIT is headquartered in Philadelphia, Pennsylvania. The Company's website can be found at [ www.preit.com ]. PREIT is publicly traded on the NYSE under the symbol PEI.
Forward Looking Statements
This press release contains certain aforward-looking statementsa within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect PREITa™s current views about future events and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. Closing under the sale agreements referred to above are subject to the satisfaction of conditions in favor of the purchaser that are generally customary for transactions of the nature described above, and there is therefore no assurance that the properties will be sold as described above. Moreover, PREITa™s business might be affected by uncertainties affecting real estate businesses generally as well as the following, among other factors: PREITa™s substantial debt and high leverage ratio; constraining leverage, interest and tangible net worth covenants under the 2010 Credit Facility, as well as capital application provisions and limits on PREITa™s ability to pay distributions on our common shares; PREITa™s ability to refinance its existing indebtedness when it matures on favorable terms, or at all; PREITa™s ability to raise capital, including through the issuance of equity or equity-related securities if market conditions are favorable, through joint ventures or other partnerships, through sales of properties, or through other actions; PREITa™s short- and long-term liquidity position; the effects on PREIT of dislocations and liquidity disruptions in the capital and credit markets; the current economic downturn and its effect on employment, consumer confidence and consumer spending; tenant business and solvency and leasing decisions and the value and potential impairment of PREITa™s properties; and PREITa™s ability to maintain and increase property occupancy, sales and rental rates, including at recently redeveloped properties. Additionally, there can be no assurance that PREITa™s actual results will not differ significantly from the estimates set forth in press releases or other disclosures, or that PREITa™s returns on its developments, redevelopments or acquisitions will be consistent with the estimates outlined in press releases or other disclosures. Investors are also directed to consider the risks and uncertainties discussed in documents PREIT has filed with the Securities and Exchange Commission and, in particular, PREIT's Annual Report on Form 10-K for the year ended December 31, 2009. PREIT does not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.
Additional information about PREIT is available on [ www.preit.com ].
