On Feb. 5 PREIT discovered that it inadvertently had not elected to treat Metroplex LLC, a corporation in which it owns a 50% share of stock, as a TRS--an election that is necessary to maintaining REIT status. The discovery, which came as PREIT was about to commence with an offering of 4.35 million shares of common stock, sent PREIT management, its auditors, legal counsel and stock underwriters into an all-night scramble to withdraw the offering, announce the discovery to Wall Street analysts and seek relief from the IRS.
The now-withdrawn public offering was "opportunistic," advanced because the "timing for raising capital seemed favorable," according to Edward Glickman, PREIT's EVP and CFO. The selling price had been set at $37.08 per share. An hour after PREIT announced today's IRS ruling, shares, which trade under PEI on the NYSE, rose from a low of $35 per share at the market's close on Friday, to slightly above $36 a share.
PREIT's portfolio encompasses approximately 33.4 million sf and consists of 58 shopping malls, strip malls and power centers along with four industrial properties in 14 states. Its stake in Metroplex applies only to the 778,190-sf Metroplex Shopping Center in Plymouth Meeting, PA.
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