PHILADELPHIA—Locally-based PREIT reports that it is taking a number of steps to increase liquidity, including drastically reducing dividends, cutting capital projects, increasing borrowing limits and selling assets in response to the Coronavirus pandemic.
The Philadelphia-based retail REIT estimates the measures will create nearly $300 million in incremental liquidity.
“As we continue to navigate an uncharted operating environment, we are focused on safeguarding the safety and well-being of our associates and communities while enhancing near-term liquidity,” said Joseph F. Coradino, chairman and CEO of PREIT. “PREIT was among the first companies in our sector to embark on a proactive effort to improve our portfolio through anchor repositioning and redevelopment, completing the program ahead of industry peers and in advance of the COVID-19 pandemic. We are now laser-focused on improving our balance sheet to position PREIT for long-term success.”
Among the company’s steps to improve its liquidity include beginning with the second quarter dividend, proposing reducing the dividend by 90% to a quarterly cash dividend of $0.02 per common share. The reduction will enhance company liquidity by approximately $15 million per quarter, or $60 million in additional liquidity on a full-year basis.
PREIT has increased its borrowing capacity by more than $83 million by executing amendments to its senior credit facilities. PREIT is reviewing its capital spending projections and expects to reduce its planned 2020 spending by 11% or $11 million. Based on current forecasts, the company also expects to realize savings of approximately $2 million per month while its mall operations are suspended.
Other mitigation efforts include working with officials to reduce its municipal tax liabilities, which, if successful, could potentially generate savings of more than $10 million.
In addition, its previously announced property dispositions are expected to generate gross proceeds of $312.6 million. These deals include an agreement for the sale-leaseback of five properties, the sale of land parcels for multifamily development at seven properties, operating outparcel sales and the sale of land for hotel development at two properties.
PREIT states t, it expects to net approximately $200 million in additional liquidity at the close of these transactions.