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Moorestown Mall Owner Disputes Wells Fargo's Default Claim

Patch logo Patch 10/27/2020 Anthony Bellano
a sign in front of a building: One of PREIT's lenders is claiming the mall operator defaulted on a deadline to file for bankruptcy protections. © Photo Credit: Anthony Bellano One of PREIT's lenders is claiming the mall operator defaulted on a deadline to file for bankruptcy protections.

MOORESTOWN, NJ — The owner of the Moorestown Mall is disputing a claim by one of its lenders that it is in breach of a recent agreement it reached for an additional $150 million to support its continuing operations, according to court filings.

Wells Fargo Bank N.A. is claiming the Pennsylvania Real Estate Investment Trust (PREIT) is in violation of an agreement the mall owner reached with 80 percent of its lenders because it failed to seek bankruptcy protection as described in the agreement by Oct. 18, according to a recent filing with the U.S. Securities and Exchange Commission (SEC).

Wells Fargo also claims that as a result of this default, cross-defaults related to the agreement were also triggered, which should result in PREIT accruing interest as of Saturday.

When the agreement was reached earlier this month, PREIT had said it would need to reach an agreement with the remaining 20 percent of its lenders to avoid filing for Chapter 11 bankruptcy. Read more here: Moorestown Mall Owner May Face Bankruptcy, Pending $150M Deal

In disputing Wells Fargo’s claim, PREIT said it is talking with its lenders about an amendment to the deal that would extend the deadline for PREIT to seek bankruptcy protections.

PREIT owns the Moorestown Mall, the Cherry Hill Mall and the Cumberland Mall, and is a part owner of the Gloucester Premium Outlets. It had been hoping to secure the deal by the end of the month.

Under the deal, PREIT would have access to $150 million in new capital to strengthen the business and provide financial flexibility. The banks would convert PREIT's existing credit into a $150 million first lien senior secured facility, a $919 million facility consisting of a first lien senior secured term loan facility and a second lien secured term loan facility all of which will have a two-year term with a 1-year extension option.

The deal was announced about two weeks after the New York Stock Exchange warned PREIT that it is in non-compliance with the exchange's listing standards. Failure to come into compliance may result in PREIT being de-listed. Read more here: New York Stock Exchange Warns Moorestown Mall Owner Amid Pandemic

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