Core Mall Total Occupancy Grew to 94.8%
Core Mall Non-Anchor Occupancy Increased 240 Basis Points to 92.1%
Core Mall Sales Per Square Foot Were $606 in January, Growing 1.7% Over December 2022
Average Renewal Spreads Were 1.1% for the Year Ended December 31, 2022
PREIT today reported results for the three months and year ended December 31, 2022. 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.
“As we reflect on our performance, we are pleased with what the team accomplished in the face of increasing economic pressure facing businesses and consumers, delivering new-to-portfolio tenants and robust leasing results including diverse uses and raising capital through opportunistic asset sales,” said Joseph F. Coradino, Chairman and CEO of PREIT. “In spite of the macroeconomic pressures, the prognosis for retail remains positive. The consumer has rediscovered the enclosed mall and is embracing the new experiences we are offering.”
- Same Store NOI, excluding lease termination revenue, decreased 7.7% and 0.3% for the three months and year ended December 31, 2022 compared to the same periods ended December 31, 2021, respectively, driven by outsized credit recoveries in 2021 and an increase in operating costs.
- Robust leasing activity is driving increased occupancy with Core Mall Total Occupancy increasing by 150 basis points to 94.8% compared to the year ended December 31, 2021. Core Mall non-anchor Occupancy improved 240 basis points to 92.1% compared to the year ended December 31, 2021.
- Core Mall total leased space, at 95.7%, exceeds occupied space by 90 basis points, and Core Mall non-anchor leased space, at 93.4%, is higher than occupied space by 130 basis points when including executed new leases slated for future occupancy, demonstrating the rapid pace of leasing activity.
- For the rolling 12 month period ended December 31, 2022, core mall comparable sales grew to $596 per square foot, compared to $539 in 2019. Comparable sales demonstrated further improvement in January, rising to $606 per square foot.
- Average renewal spreads for the three months and year ended December 31, 2022 were -5.6% and 1.1%, respectively.
- The Company made notable advances in its capital-raising efforts, including the sale of Cumberland Mall and several outparcels. Since the beginning of 2022, the Company sold assets generating just over $141 million in gross proceeds. As part of its debt reduction plan, the Company has applied asset sale proceeds and excess cash from operations to pay down debt by $184 million through January 31, 2023.
Leasing and Redevelopment
- 337,000 square feet of leases are signed for future openings, which is expected to contribute annualized gross rent of over $7.4 million.
- Construction is underway on the new self-storage facility in previously unused below grade space at Mall at Prince George’s in Hyattsville, MD, with an anticipated opening in the third quarter of 2023.
- Tilted 10 opened Phase I of its planned two-level indoor family entertainment center at Willow Grove Park in March, adding family entertainment to this locally-loved destination shopping experience. The balance of the facility is expected to open in spring 2023.
- At Moorestown Mall, construction is underway for the new state-of-the-art Cooper University Healthcare facility and the 375-unit Pearl apartment development, following completion of the sale of land in the second quarter of 2022.
- Tenant construction is underway for a new prototype, 32,000 square foot, LEGO® Discovery Center at Springfield Town Center with expected opening in third quarter 2023. Burlington has also executed a lease for a 30,000 square foot location with an anticipated opening later this year. Approvals were obtained for the development of 460 apartments and a 165-room hotel, setting the stage for sale of these parcels in summer 2023.
Primary Factors Affecting Financial Results for the Three Months Ended December 31, 2022 and 2021
- Net loss attributable to PREIT common shareholders was $41.5 million (which takes into consideration the accrual of preferred dividends that accumulated during the quarter but have not been paid), or $(7.81) per basic and diluted share for the three months ended December 31, 2022, compared to net loss attributable to PREIT common shareholders of $34.5 million, or $(6.52) per basic and diluted share for the three months ended December 31, 2021.
- Funds from Operations decreased in the three months ended December 31, 2022 compared to the prior year period primarily due to lower NOI from Same Store properties as a result of declines in expense recoveries and sales, Non-Same Store properties as a result of the sale of our interest in Gloucester Premium Outlets and Cumberland Mall as well as higher interest expense.
- FFO for the three months ended December 31, 2022 was $(0.93) per diluted share and OP Unit compared to $2.50 per diluted share and OP Unit for the three months ended December 31, 2021.
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 and year ended December 31, 2022 and 2021 is included on page 15.
Liquidity and Financing Activities
As of December 31, 2022, the Company had $107.5 million available under its First Lien Revolving Credit Facility. The Company’s corporate cash balances, when combined with available credit, provide total liquidity of $119.9 million. The Company extended the maturity date of our Credit Facilities to December 10, 2023 and is pursuing all available alternatives to address this upcoming maturity.
Additionally, the Fashion District Philadelphia partnership has continued to fund required paydowns of the Fashion District Philadelphia mortgage.
During the quarter, the Company executed on the sale of Cumberland Mall for $44.6 million in gross proceeds, facilitating the repayment of the $39.0 million mortgage loan balance.
The Company also completed the sale of a former department store space at Valley View Mall for gross proceeds of $2.6 million.
Subsequent to the end of the quarter, the Company closed on the sale of its Whole Foods parcel at Plymouth Meeting Mall for $27 million.
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 Wednesday, March, 22 2023, to review the Company’s results and future outlook. To listen to the call, please dial 1(888) 330-2024 (domestic toll free), or 1(646) 960-0187 (international), and request to join the PREIT call, Conference ID 9326912, at least fifteen minutes before the scheduled start time as callers could 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.