PREIT Secures $ 4.5 Million Paycheck Protection Loan for Small Business and Real Estate Tax Delays as Losses Rise
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PREIT, owner of the old Gallery Mall, Cherry Hill Mall and 19 other shopping centers, received a $ 4.5 million forgivable loan from the Federal Paycheck Protection Program and is authorized to defer the payment of $ 11.6 million in property taxes as it seeks to stay afloat in the middle of the coronavirus pandemic.
PREIT, or the Pennsylvania Real Estate Investment Trust, disclosed the loan Thursday in its report on its earnings for the first three months of the year. The money comes from the $ 659 billion federal program to help small businesses deal with damage from the coronavirus.
Property tax deferrals, meanwhile, were part of a series of measures taken by the Philadelphia-based company to help it overcome the continued closure of most of its 21 shopping centers in order to comply with government regulations. virus control.
Other measures include a $ 25 million cut in capital spending, a cut in dividends paid to investors and forbearance agreements with some of its lenders, he said.
“Our head office and a significant number of our properties are located in COVID-19 hotspots,” PREIT CEO Joseph F. Coradino said in a conference call with analysts to discuss the results. “The COVID-19 pandemic has impacted the quarter and will impact our industry going forward. “
Shares of the company closed at $ 1.18 on the New York Stock Exchange on Thursday, down nearly 8% from the previous day. The company reported a loss of $ 13.5 million for the three months ended March 31.
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PREIT and other mall owners, whose survival had already been threatened by the growth of e-commerce, have been hit hard by government-ordered business closures aimed at preventing people from congregating during the health crisis .
PREIT owns the former gallery of Market East Mall in Center City, now known as Fashion District Philadelphia, Willow Grove Park and Plymouth Meeting Mall in suburban Pennsylvania, and Cherry Hill, Moorestown and Cumberland malls. in southern Jersey.
“Many of our tenants have chosen not to pay [rent] during the initial shutdown period, ”said Coradino. After negotiating postponements with tenants, 45% of April and May rents are expected to be collected by the end of this year, with 90% expected by the end of 2021, he said.
Four of its shopping centers will have reopened on Friday with the lifting of closure orders in their surroundings, Coradino said. Among them are the Magnolia Mall in Florence, South Carolina, and the Jacksonville Mall in Jacksonville, North Carolina, he said.
Coradino said he aims to have the company’s remaining malls open with some restrictions by the end of June.
All major tenants of its malls, including JC Penney, which recently filed for bankruptcy, and downsizing retailers such as Macy’s, have told PREIT they plan to resume operations when permitted, Coradino said.
PREIT has not identified the properties for which it has been granted property tax deferrals. NJ.com reported earlier this month that the company had asked New Jersey Gov. Phil Murphy for help delaying payment of state property taxes.
A New Jersey government spokesperson did not immediately comment on whether any postponements had been granted. A spokesperson for the city of Philadelphia was not immediately clear whether tax relief had been given to the Fashion District mall.
Regarding the Small Business Administration’s PPP loan, PREIT acknowledged Thursday that it could be “audited or reviewed following a request for forgiveness.”
The PPP program, which was authorized by the federal coronavirus relief bill signed in March, has allocated $ 349 billion in forgivable loans to companies with fewer than 500 workers to pay their employees during the health crisis. An additional $ 310 billion was made available through subsequent legislation.
But a lot small businesses struggle to borrow of the program, while large corporations have used loopholes in the law to collect hundreds of millions of dollars in recoverable debt.
Federal guidelines revised released at the end of last month discourage publicly traded companies from exploiting the program, as they can raise operating funds in other ways. The position was aimed at putting pressure on these companies to repay the loans granted to them so that others could use the money.
Companies such as Philadelphia hotel operator Hersha Hospitality Trust and restaurant chains Ruth’s Hospitality Group – owner of Ruth’s Chris Steak House – and Shake Shack Inc. have said they will repay their subsidies.
PREIT said there was some risk involved in maintaining its loan.
“If we were to be audited and receive an unfavorable finding in such an audit, we could be required to return the full PPP loan amount, which could… potentially subject us to additional fines and penalties,” he wrote. “Such an audit or review could result in a diversion of management’s time and attention, as well as legal and reputational costs. “
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