Dive Brief:
- Mall operator PREIT’s February comparable sales at core malls hit an “all-time high” of $618 per square foot, according to a press release.
- The company, which filed and emerged from bankruptcy in 2020, also said that over 60% of that portfolio had sales productivity of more than $550 per square foot.
- Growing the most month over month were the Mall at Prince George’s, Springfield Town Center, Moorestown, Jacksonville and Capital City Malls.
Dive Insight:
PREIT made progress in 2021 toward digging itself out of the hole created in the mall world by the advent of COVID-19.
After filing for bankruptcy in 2020, PREIT recapitalized, grew its sales and cut its losses by nearly half. Its losses, though, still remained substantial at $135.9 million for 2021.
“We’ve continued our recovery ahead of expectation, capitalizing on broad based momentum, and confirming that the work we’ve done in shaping our portfolio, replacing anchors and remerchandising has positioned [the] portfolio to perform,” CEO and Chairman Joe Coradino told analysts earlier in March, according to a Seeking Alpha transcript.
A massive shortfall in rent payments sent PREIT into Chapter 11, along with its peer CBL Properties, as retailers worked through the financial impact of temporary store closures and lingering traffic declines during the early phases of the pandemic. For PREIT and other mall operators, the challenges of the pandemic followed years of decline in revenue as the mall’s place in the U.S. continued to diminish through the past decade.
PREIT today is still heavily dependent on two middle-of-the-road department store retailers, namely Macy’s, which occupies more than 15% of PREIT’s total space, and J.C. Penney, which occupies 9.4%. (Neither, though, pay in the top five share of renters to the real estate company.)
PREIT has been working to replace anchors, according to Coradino. In the release, the company noted that a Tilted 10 bowling complex would replace a J.C. Penney at its Willow Grove Park mall. The company touted other additions at its malls, including Eddie V’s, Warby Parker, M20 Burgers and a Lego Discovery Center.
The mall operator’s strong sales in February also represent another data point showing that malls and specialty retailers are making headway after January’s steep surge in COVID-19 cases caused by the omicron variant.
Placer.ai data showed a “major setback” in mall traffic in January that amounted to a short lived decline, with traffic rebounding over February, according to commentary from Ethan Chernofsky, vice president of marketing at Placer.ai.
