PREIT Posts Quarterly Loss As Clock Ticks On $1B Debt

Pennsylvania Real Estate Investment Trust reported a Q3 2023 net loss of about $63.9M on Tuesday, weeks ahead of the Dec. 10 maturity date for $1B in credit facilities. 

The loss was a small improvement from the same quarter last year, when the company lost $77.2M, but still a hit for a company dealing with a raft of financial challenges. The company also posted negative funds from operations of $5.33 per share. 

“Debt service requirements will keep them in the red indefinitely unless something magical happens or something significant happens with their restructuring,” Sheldon Grodsky, owner of Grodsky Associates, told the Philadelphia Business Journal.

PREIT has run out of extensions on the maturity deadline for its credit facilities. The company is reportedly working on debt restructuring with a lender group, but no details have emerged, according to the PBJ.

Another bankruptcy is a distinct possibility for the company, which specializes in retail properties, Grodsky said. The company might consider selling assets, though buyers would be hard to find. So far this year, the company has sold assets for about $30M.

PREIT didn't respond to an inquiry from Bisnow Wednesday morning.

The looming debt also comes amid turmoil for PREIT's board of directors. A shareholder vote of no confidence this summer forced a number of trustees to submit resignation letters, but the board members voted to reject each other's resignations, saying that such a radical change would destabilize the company.

In September, the sudden death of Temple University acting President JoAnne Epps, who was a PREIT trustee, touched off a struggle to fill her open seat. An ad hoc group of shareholder demanded the right to choose her replacement, a demand that the board rejected, as Bisnow reported.

PREIT stock briefly rose to 40 cents per share on Wednesday but soon settled back to 28 cents. Compared with a year ago, its stock has lost more than 91% of its value.