Owner and operator of dozens of American malls, the company PREIT could get only half of all of its rental payments from retailers for the second quarter.
Store closures and several bankruptcies due to the pandemic have had the most negative impact on the retail industry. Simultaneously, shopping malls were one of the weakest links, which partially waived rent collection and partly made substantial concessions to tenants. Simultaneously, malls often accumulate their debt, and this imbalance puts many shopping centers on the verge of survival.
An American operator of large shopping centers, the investment fund PREIT has now found itself in a difficult situation. According to the financial company Jefferies, in the second quarter of PREIT, only 53% of rent payments were due. The company’s revenue in the second quarter decreased by about 30% compared to last year. At the same time, the company’s accumulated debt may eventually lead to bankruptcy.
PREIT received a notice from Wells Fargo with a warning for its failure to meet loan obligations. The notification followed an agreement concluded earlier in October, which involved restructuring PREIT’s debt to 80% of its creditors.
The company pledged to continue negotiations with tenants and creditors but promised that if the financial situation fails to improve by October 18. Bankruptcy proceedings will be filed under Chapter 11 of the U.S. Bankruptcy Code. PREIT intends to challenge the kind of problem concerning the financial organization and insists that there was no breach of the deal.
The main reason for the financial difficulties of PREIT was the pandemic; however, the operator of malls noted a gradual decline of income during the last five years. The reason is the departure of large tenants such as Sears, J.C. Penney, and Macy’s, and an overall reduction in retail trade in shopping centers. Thus, the pandemic has only intensified many trends in retailing, which, in turn, has exacerbated financial tensions in this area.
Want to share your company’s latest updates, store openings, or partnerships?
The company has received a commitment of $240 million in debtor-in-possession financing.
Esprit’s French subsidiary follows European collapse.
Esprit’s French subsidiary follows European collapse.
MixC Shenzhen Bay opens in Shenzhen’s Nanshan district, blending luxury retail, art, and lifestyle into one destination, redefining the Asian…
From Nike’s storytelling to IKEA’s precision and Glossier’s human tone—the best retail press releases don’t just announce, they connect.
From Gucci Garden to Amazon’s Just Walk Out, leading retailers turn stores into stages. Here’s why experience is now the…
