Pennsylvania Real Estate Investment Trust (PREIT/NYSE: PEI) has completed the previously announced sale of Paxton Towne Centre, a power center in Harrisburg, Pennsylvania, for $76.8 million, representing a gain on sale of approximately $33.6 million. The sale marks another key step in PREIT executing its business plan.
PREIT developed Paxton Towne Centre in 2001 for approximately $55 million and the property had a book value of $57.9 million as of September 30, 2012. The 717,000 square foot property is anchored by Target, Costco, Kohl’s, and Weis Markets. Other key retailers at the property include H.H. Gregg, Michael’s, Books-A-Million, Babies“R”Us and Bed, Bath and Beyond. The property secured a mortgage loan with an outstanding balance of $50.0 million. In connection with the transaction, the Company used $50.0 million in proceeds to repay this mortgage, yielding net proceeds of $24.9 million after closing costs and before certain post-closing obligations. The Company intends to use the proceeds to make further reductions in debt and for general corporate purposes.
“By completing the sale of Paxton Towne Centre, PREIT is improving its balance sheet by reducing debt, while creating more focus on our core mall portfolio,” said Joseph F. Coradino, CEO of PREIT. “Market fundamentals have led to increased demand for high quality power centers, making this an ideal time to harvest the value created through development, management and leasing of this property.”
PREIT also has received a non-refundable deposit to sell another non-core power center, Christiana Center in Newark, Delaware, to an affiliate of the Paxton Towne Centre buyer. This transaction is expected to close by the end of the first quarter of 2013. The contract price for the sale of Christiana Center is $75.0 million. The property currently secures a mortgage loan with an outstanding balance of $49.9 million as of September 30, 2012.