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PHILADELPHIA-Pennsylvania Real Estate Investment Trust’s occupancy rates and sales per square foot took a hit in the first quarter, largely because of tenants going bankrupt. But the mall owner is fighting back with an aggressive redevelopment scheme and the leasing of alternate tenants.

PREIT’s occupancy dropped to 84.5% during its first quarter, down from 88.3% in the same period in 2008. Meanwhile, sales per square foot fell to $340 from $356.

“Many of the retailers in our portfolio are facing challenging times, and this is effecting our results,” said Ronald Rubin, the company’s chairman and chief executive officer. The company has given rent abatements on a “case-by-case basis” to struggling retailers, added Edward Glickman, PREIT’s president and chief operating officer.

To more consumers from a regional area, PREIT is renovating some of its key malls. Today it is opening a lifestyle wing at Plymouth Meeting [PA] Mall, with Ann Taylor Loft, Chico’s, Coldwater Creek and other tenants. In March it completed a redesign of Cherry Hill [NJ] Mall, adding a Nordstrom and other tenants.

PREIT, which owns 56 shopping centers mostly on the East Coast, saw its net operating income drop to $71.9 million during the quarter, from $75.8 million during the same year-ago period. FFO fell from $34.1 million to $29.3 million.

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