PREIT Improves Terms of $146 Million of Mortgage Loans on Three Malls
PHILADELPHIA--(BUSINESS WIRE)-- Pennsylvania Real Estate Investment Trust (NYS: PEI) announced today that it has completed favorable amendments to the terms of three mortgage loans on Lycoming Mall, Viewmont Mall and Francis Scott Key Mall. PREIT has refinanced these mortgages for an aggregate amount of $146.1 million at an average interest rate of 3.91% over terms of five years. These transactions generated excess proceeds of approximately $9.7 million and reduced average interest rates by 172 basis points, after giving effect to interest rate swaps entered into in connection with these loans.
The loan on Lycoming Mall was increased from $33.4 million to $35.5 million and the interest rate was reduced from 6.84% to 3.72%. The loans on Viewmont Mall and Francis Scott Key Mall, after giving effect to previously in-place swaps, will carry interest rates of 5.50% and 5.26%, respectively, through November 2013 and then drop to fixed rates of 3.72% and 3.71%, respectively, for the remainder of their respective terms. The loan on Francis Scott Key Mall was increased from $55.0 million to $62.6 million, and contains an option to increase the balance further to $70.5 million under prescribed conditions.
"The completion of these transactions is further evidence of success in the Company's ongoing effort to lower its overall financing costs while extending its maturity profile," said Joseph Coradino, Chief Executive Officer of PREIT. "We are pleased with our continued ability to achieve attractive financing terms on properties across the portfolio."
Lycoming Mall is a 0.8 million square foot regional mall with sales per square foot of $270 as of December 31, 2012. Viewmont Mall is a 0.7 million square foot regional mall with sales per square foot of $370 as of December 31, 2012. Francis Scott Key Mall is a 0.7 million square foot regional mall with sales per square foot of $344 as of December 31, 2012. All three malls are anchored by jcpenney, Macy's and Sears stores. Each property is wholly owned by the Company.
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. Currently, the Company's portfolio of 46 properties comprises 36 shopping malls, seven community 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 31.0 million total square feet of space. PREIT, headquartered in Philadelphia, Pennsylvania, is publicly traded on the NYSE under the symbol PEI. The Company's website can be found at www.preit.com.
Forward Looking Statements
This press release contains certain "forward-looking statements" 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 our current views about future events, achievements or results 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. In particular, our business might be materially and adversely affected by uncertainties affecting real estate businesses generally as well as the following, among other factors: our substantial debt and our high leverage ratio; constraining leverage, interest and tangible net worth covenants under our 2010 Credit Facility; potential losses on impairment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill; potential losses on impairment of assets that we might be required to record in connection with any dispositions of assets; recent changes to our corporate management team and any resulting modifications to our business strategies; our ability to refinance our existing indebtedness when it matures, on favorable terms or at all, due in part to the effects on us of dislocations and liquidity disruptions in the capital and credit markets; our 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 interests in properties, or through other actions; our short- and long-term liquidity position; current economic conditions and their effect on employment, consumer confidence and spending and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the value and potential impairment of our properties; general economic, financial and political conditions, including credit market conditions, changes in interest rates or unemployment; changes in the retail industry, including consolidation and store closings, particularly among anchor tenants; our ability to maintain and increase property occupancy, sales and rental rates, in light of the relatively high number of leases that have expired or are expiring in the next two years; increases in operating costs that cannot be passed on to tenants; risks relating to development and redevelopment activities; the effects of online shopping and other uses of technology on our retail tenants; concentration of our properties in the Mid-Atlantic region; changes in local market conditions, such as the supply of or demand for retail space, or other competitive factors; potential dilution from any capital raising transactions; possible environmental liabilities; our ability to obtain insurance at a reasonable cost; and existence of complex regulations, including those relating to our status as a REIT, and the adverse consequences if we were to fail to qualify as a REIT. Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed in the section of our Annual Report on Form 10-K in the section entitled "Item 1A. Risk Factors" and in our Quarterly Reports on Form 10-Q. We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.
Pennsylvania Real Estate Investment Trust
Robert McCadden, 215-875-0735
EVP & CFO
KEYWORDS: United States North America Pennsylvania
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