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PREIT Continues Shopping Center Reshaping Effort

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Pennsylvania Real Estate Investment Trust (PREIT) completed the sale of Washington Crown Center in Washington, PA, for $20 million or about $29.50/square foot.

The 676,000-square-foot enclosed mall is anchored by Bon-Ton, Macy’s, Gander Mountain and Sears.

Performance at the center has been declining of late. As of June 30, 2016, the property generated sales per square foot of $313 and non-anchor occupancy of 87.4%, according to PREIT. Both of those numbers are slightly lower than the end of the first quarter when sales per square foot were $318 and occupancy was 87.9%.

“We remain committed to crafting a strong portfolio of assets that are well-positioned for the future,” said Joseph F. Coradino, CEO of PREIT. “This commitment has been evident in our disposition program as well as our remerchandising and redevelopment successes and has resulted in improved operating results including strong renewal spreads, margin improvement and same store NOI growth.”

The Demarcation Line Between Keepers and Non-Strategic Centers

The value of shopping centers generating sales per square foot of more than or less than $400 has grown strikingly in the last year and half.

Centers generating sales per square foot of more than $400 have sold for an average of $666/square foot in the last six quarters, according to data from CoStar COMPs. Shopping centers generating sales per square foot of less than $400 have sold for an average of $136/square foot.

The distinction in cap rates too is striking. Centers generating sales per square foot of more than $400 have been selling at cap rates around 5.4 this summer. Centers with sales less than $400/square foot are going at cap rates of about 7.75.

The market for lower selling malls, though, has still been hot. In the last six quarters there have been more than 5,400 such property sales but only slightly more than 400 for the higher selling shopping centers.

PREIT is currently marketing Beaver Valley Mall, in Monaca, PA, as part of its continued portfolio optimization and capital allocation prioritization plan.

For more information on the sale of Washington Crown Center, see CoStar Sale Comp ID: 3678580

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