Back in February, Philadelphia magazine published a story profiling Pennsylvania Real Estate Investment Trust’s (PREIT) plan to revitalize its malls by bringing in outposts from big name Center City chefs such as Marc Vetri. The focus of the story was on its malls in New Jersey, but Plymouth Meeting Mall, which PREIT also owns, has also used food to build up interest in the mall.
PREIT has brought in higher end chains such as PF Changs, Redstone and Uncle Julio’s in recent years, plus a Whole Foods. For the past couple of years, my family has went to the Plymouth Meeting Mall a lot, but not to shop. The indoor play area is a free alternative on a rainy or cold day. It is amazing to see all the cars in the parking lot, just to find out that inside the mall is pretty empty. The Whole Foods and restaurants are busy, the mall is not.
The effort to revitalize its malls has not satisfied one of PREIT’s investors, Connecticut-based Jonathan Litt. Litt’s investment fund has $10 million invested in PREIT. Earlier this week, Litt published a letter and presentation he sent to PREIT’s CEO, which acknowledged that it has improved the value of its malls, but suggested that PREIT sell off its under-performing malls, which includes the Plymouth Meeting Mall.
PREIT responded with a press release stating its research did not find the same results as Litt’s. The letter states:
While it is the Company’s policy not to comment on specific discussions with shareholders, we note that we have had numerous discussions with representatives of Land & Buildings and have thoroughly reviewed a previous proposal from Land & Buildings, which recommended that PREIT sell a pool of assets into a liquidating trust. We have determined that such a strategy would not achieve optimal execution price or be value enhancing; furthermore, a liquidating trust would have significant leverage, liquidity, operating and cash flow implications, and would not be in the best interest of all shareholders.
So for now, PREIT is resisting liquidating its under-performing malls. Joseph N. DiStefano of the Philadelphia Inquirer shared in his article that Litt hopes to attract others invested in PREIT to his view.