Local Malls Sold

Six Philadelphia-area malls could be in for makeovers and more upscale stores after the Pennsylvania Real Estate Investment Trust bought them from the Rouse Co. in a complex $548 million deal.

The real-estate trust, known as PREIT, will buy the Gallery in downtown Philadelphia, the Plymouth Meeting Mall in Montgomery County, Pa., the Exton Mall in Chester County, Pa., the Cherry Hill Mall in Echelon, N.J. and the Moorestown Mall in New Jersey.

As part of the deal, the Rouse Co. will get $225 million in cash and a 50 percent stake in the Christiana Mall in Newark, Del., where average sales per square foot are nearly double that of the six malls being sold.

PREIT will assume $285 million in mortgage debt and also will hand over $38 million worth of stock to a partnership controlled by its executives that held the stake in Christiana.

The six malls being acquired are expected to see more high-end stores, women's fashion and home furnishings shops, better restaurants, and overall renovations.

PREIT, which is credited with a successful renovation of the Willow Grove Mall in Philadelphia's northern suburbs, will own seven of 20 malls in the Philadelphia region, the company said.

"If a retailer wants to do a transaction in the Philadelphia area, it is essential that they talk to us. We can present seven opportunities at once," said Joseph F. Coradino, PREIT's executive vice president for retail operations.

The six malls average sales per square foot of $330, compared to $600 at the Christiana Mall.

The Plymouth Meeting Mall, with average sales of $252 per square foot, and the Echelon Mall, which has a 20 percent vacancy rate and recently lost anchors Sears and J.C. Penney, are early targets for renovations.

Before the sale, PREIT owned eight shopping malls and 14 shopping centers with a 95.2 percent occupancy rate as of Sept. 30, 2002.

The six malls being purchased have an occupancy rate of 90 percent.

The real estate trust will get out of the apartment rental business, selling its portfolio of about 7,250 apartment units in seven states.

PREIT plans to keep the 200 employees now at the Rouse malls, and Rouse expects to keep the 34 workers now at Christiana.

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Author: NBC10/AP