Cherry Hill Mall Owner May Face Bankruptcy, Pending $150M Deal

CHERRY HILL, NJ — The owner of the Cherry Hill Mall said on Thursday that it has reached an agreement with 80 percent of its bank lenders for an additional $150 million to support its continuing operations.

But the Pennsylvania Real Estate Investment Trust (PREIT) also said that if it can’t reach an agreement with the remaining 20 percent of its lenders, it may have to file for Chapter 11 bankruptcy.

"Long before the COVID-19 pandemic hit, we began taking meaningful actions to enhance the financial and operational health of the business," PREIT CEO Joseph F. Coradino said. "These steps have included proactive asset sales, anchor repositioning and redevelopment to significantly minimize our exposure to underperforming assets, as well as, diversifying our tenant base to provide mass-market offerings appealing to shoppers while simultaneously improving the Company's underlying tenant credit profile. The next phase in our evolution is continuing on the path we have charted to create diverse multi-use ecosystems at our properties marked by a healthy mix of multifamily housing, healthcare services, fulfillment centers, and other uses alongside our robust retail, dining and entertainment lineups. We appreciate the support of our bank lending group, and their collective confidence in our portfolio and the progress we are making in positioning PREIT for long-term success. This agreement provides us with the liquidity to compete effectively, meet our obligations, and continue providing our tenants, customers and communities with the high-quality shopping experience they expect at our properties."

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PREIT owns the Moorestown Mall, the Cherry Hill Mall and the Cumberland Mall, and is a part owner of the Gloucester Premium Outlets.

The deal would give PREIT access to $150 million in new capital to strengthen the business and provide financial flexibility. The banks would convert PREIT’s existing credit into a $150 million first lien senior secured facility, a $919 million facility consisting of a first lien senior secured term loan facility and a second lien secured term loan facility all of which will have a two-year term with a 1-year extension option.

PREIT’s existing unencumbered assets will serve as collateral, and PREIT will retain 30 percent of proceeds from non-income producing asset sales. However, the deal is subject to approval by 100 percent of the banks, not just the 80 percent that agreed to the deal as of Thursday.

PREIT is hoping to secure the deal by the end of October, but if it must file for bankruptcy, there would be no impact on shareholders, suppliers and other trade creditors, business partners, or other stakeholders.

PREIT will continue operating as normal with a primary focus on the health and safety of its employees, partners, customers and communities.

The announcement comes about two weeks after the New York Stock Exchange warned PREIT that it is in non-compliance with the exchange's listing standards. Failure to come into compliance may result in PREIT being de-listed. Read more here: New York Stock Exchange Warns Cherry Hill Mall Owner Amid Pandemic

"Given the significant support we have already received from a substantial majority of our lenders, we are confident in our ability to implement the recapitalization agreement quickly and efficiently,” Coradino said. “We appreciate the support of our bank lenders, tenants, and customers, and above all, we are grateful for the continued dedication of our relentless team of associates at PREIT. We are excited to take another big step forward in positioning PREIT for an even more successful future."

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