Pennsylvania Real Estate Investment Trust is preparing for a potential bankruptcy filing as soon as next month, as the company faces the imminent maturity of its $1 billion credit facility on Dec. 10 amid rapidly declining liquidity, according to sources.
Plans could change, and the company may restructure its balance sheet on an out-of-court basis, the sources added.
PREIT
disclosed this morning that through its advisors, it has engaged in discussions with certain members of a lender group, including negotiating the terms and conditions of a financial restructuring.
As Reorg
reported, PREIT’s credit facility, consisting of a revolver and both a first and second lien term loan, totaled $1.023 billion as of June 30 and comes due next month. In December 2022, the company
exercised a one-time option to extend the facility by one year.
Early last month, Reorg
estimated that the company’s liquidity had fallen to approximately $56.7 million and possibly lower on a pro forma basis, after PREIT disclosed that it had amended its credit facility to remove certain negative covenants.
This allowed the Philadelphia-based mall operator to draw $54 million to pay off the mortgage loan on its Dartmouth Mall property. At the time, the company said it may also “use up to a certain amount of proceeds” to acquire another property, neither of which were disclosed.
PREIT Associates LP, an affiliate of PREIT,
filed a chapter 11 petition in the Bankruptcy Court for the District of Delaware on Nov. 1, 2020.
PREIT declined to comment.