Year-to-Date Leasing Volume Over 500% Greater Than Full Year 2020 and 35% Ahead of Full Year 2019
Liquidity Profile Continues to Improve; Total Liquidity of $103.6 Million at End of First Quarter
Traffic approaching pre-COVID levels across portfolio at 86.4% of 2019 for Comparable Portfolio in April
PREIT (NYSE: PEI) today reported results for the three months ended March 31, 2021. A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP financial measure is provided in the tables accompanying this release.
“There brick and mortar recovery is gaining momentum and we believe our portfolio is poised to capitalize on this momentum. The foundation we have created with a portfolio of properties in high barrier-to-entry markets that accommodate a broad array of uses, as well as properties that have won the in-market competitive battle for the consumer, are seeing strong results as the rebound continues,” said Joseph F. Coradino, Chairman and CEO of PREIT. “Traffic is improving across the portfolio with retailers posting strong sales in March, which has led to improved collections, increased liquidity and vigorous tenant demand creating a robust pipeline of leasing activity.”
- Same Store NOI, excluding lease termination revenue, decreased 21.2% for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.
- The quarter was impacted by a decrease in real estate revenue of $8.7 million primarily resulting from prior year bankruptcies and related store closings, an increase in credit losses for challenged tenants and reduced expense recoveries resulting from temporary rent restructuring.
- Snow removal costs increased $1.2 million from the prior year quarter as a result of several snowstorms impacting the northeastern states.
- Cash collections continued to improve, increasing to 119% of billings for the first quarter of 2021 and exceeded 140% of monthly billings during April as collection of deferred rents continued to accelerate.
- As of March 31, 2021, we collected 81% of billed first quarter 2021 rents, an increase from receipts of 73% and 61% of billed rents as of the end of each of the fourth and third quarters of 2020, respectively.
- The Company’s accounts receivable balance decreased significantly in the first quarter of 2021, down to $40.4 million as of March 31, 2021 from $54.5 million as of December 31, 2020.
- As a result of strong collections, we had cash inflow from operating activities of $16.2 million for the three months ended March 31, 2021.
- Core Mall total occupancy was 89.2%. Core Mall non-anchor occupancy was 87.0%.
- Core Mall non-anchor leased space, at 88.2%, exceeds occupied space by 120 basis points when factoring in executed new leases slated for future occupancy.
- Based on a comparable set of tenants who reported sales in March of 2019 and 2021, sales grew at 14 of the Company’s managed properties in March and more than half of the portfolio for the quarter.
- Average renewal spreads for the quarter ended March 31, 2021 were 2.2% in the wholly-owned portfolio for spaces less than 10,000 square feet.
Leasing and Redevelopment
- 390,000 square feet of leases are signed for future openings, which is expected to contribute annual gross rent of $8.3 million.
- Leasing momentum continues to build with transactions executed for nearly 600,000 square feet of occupancy thus far this year.
- Construction is underway for Aldi to open its first store in the portfolio at Dartmouth Mall in Dartmouth, MA in Q3 2021.
- A lease has been executed for a new self-storage facility in previously unused below grade space at Mall at Prince George’s in Hyattsville, MD with an anticipated opening in Q1 2022.
- Tilt Studios is under construction to replace JCPenney at Magnolia Mall in Florence, SC. The family-focused destination is expected to open in Q3 2021.
- A transaction has been executed with Cooper Hospital for an outpatient location in the former Sears space at Moorestown Mall in Moorestown, NJ.
- The Company executed a rezoning agreement to allow for the addition of up to 1,065 multifamily units and a hotel at Moorestown Mall.
Primary Factors Affecting Financial Results for the Three Months Ended March 31, 2021 and 2020
- Net loss attributable to PREIT common shareholders was $49.6 million (which takes into consideration the accrual of preferred dividends that accumulated during the quarter but have not been paid), or $0.64 per basic and diluted share for the three months ended March 31, 2021, compared to net loss attributable to PREIT common shareholders of $19.9 million, or $0.26 per basic and diluted share for the three months ended March 31, 2020.
- Same Store NOI, including lease terminations, decreased by $10.1 million, or 21.1%. The decrease is primarily due to reduced revenues from bankrupt tenants, an increase in credit losses and a reduction in expense recoveries resulting from temporary rent restructuring transactions, partially offset by new store openings, including contributions from replacement anchors.
- Non-Same Store NOI decreased by $1.6 million, primarily due to lost revenues from bankrupt tenants, an increase in credit losses and increased operating expenses. Other decreases in NOI from Non-Same Store properties is due to the transfer of property at Valley View Mall during the third quarter of 2020.
- FFO for the three months ended March 31, 2021 was $(0.14) per diluted share and OP Unit compared to $0.14 per diluted share and OP Unit for the three months ended March 31, 2020. Adjustments to FFO in the first quarter of 2021 were related to $(0.02) per share from gain on hedge ineffectiveness, offset by reorganization expenses and provision for employee separation expense.
All NOI and FFO amounts referenced as primary factors affecting financial results above include our share of unconsolidated properties’ revenues and expenses. Additional information regarding changes in operating results for the three months ended March 31, 2021 and 2020 is included on page 15.
Liquidity and Financing Activities
As of March 31, 2021, the Company had $75.2 million available under its First Lien Revolving Credit Facility. The Company’s corporate cash balances, when combined with available credit, provides total liquidity of $103.6 million.
The Company refinanced the mortgage on Woodland Mall, extending the maturity to December 2021 with an option to extend for one year to December 2022.
Multifamily Land Parcels: The Company has executed agreements of sale for land parcels for anticipated multifamily development in the amount of $87.2 million. The agreements are with multiple buyers across five properties for approximately 2,200 units as part of Phase I of the Company’s previously announced multifamily land sale plan. Closing on the transactions is subject to customary due diligence provisions and securing entitlements.
Hotel Parcels: The Company has an executed agreement of sale to convey a land parcel for anticipated hotel development in the amount of $2.5 million for approximately 125 rooms. Closing on the transaction is subject to customary due diligence provisions and securing entitlements.
The Company is not issuing detailed guidance at this time.
Conference Call Information
Management has scheduled a conference call for 11:00 a.m. Eastern Time on Thursday
May 6, 2021, to review the Company’s results and future outlook. To listen to the call, please dial 1-844-885-9139 (domestic toll free), or 1-647-689-4441 (international), and request to join the PREIT call, Conference ID 9844099, at least fifteen minutes before the scheduled start time as callers may experience delays. Investors can also access the call in a “listen only” mode via the internet at the Company’s website, preit.com. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company’s website.
For interested individuals unable to join the conference call, the online archive of the webcast will also be available for one year following the call.