PREIT emerges from Chapter 11 bankruptcy, cuts $880 million of debt

By Sarah Lizee

Olympia, Wash., April 1 – Pennsylvania Real Estate Investment Trust (PREIT) had its pre-packaged Chapter 11 plan of reorganization go into effect on Monday, according to a notice filed with the U.S. Bankruptcy Court for the District of Delaware.

The plan, which was confirmed on Jan. 23 and supported by 100% of first- and second-lien lenders, aimed to strengthen the company’s balance sheet, reduce its total debt by about $880 million and extend its maturity runway.

The plan is premised on the equitization of the entire second-lien term loan facility of about $727 million (almost 63% of the debtors’ total funded debt) and the refinancing of the first-lien facility and post-emergence liquidity in the form of a new-money exit revolver of $75 million.

According to a term sheet filed with the court, the refinanced first-lien term loans will bear interest at SOFR plus 550 basis points and mature in 2029. The exit revolver will bear interest at SOFR plus 700 bps and mature 91 days prior to the term loan’s maturity date.

The plan also provides for the satisfaction in full or reinstatement, as applicable, of all general unsecured debt, and the reinstatement of all guaranties issued in connection with property-level debt.

Existing preferred and common shares of PREIT will be canceled and PREIT will no longer be a publicly traded company.

A $10 million payment, net of costs defined in the pre-packaged plan and subject to some conditions, will be provided to holders of the existing preferred and common stock. The payment was to be allocated as follows: 70% for preferred shareholders and 30% for common shareholders.

PREIT is a Philadelphia-based real estate investment trust. The company filed Chapter 11 for a second time on Dec. 10 under case number 23-11974.

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