Yahoo Finance PREIT Adds Yard House at Willow Grove Park, Enhances Portfolio
Pennsylvania Real Estate Investment Trust PEI — better known as PREIT — is leaving no stone unturned to drive tenants and traffic at its malls. Recently, the company announced the addition of Yard House at Willow Grove Park, located in Willow Grove, PA. Yard House, which will occupy 8,500 square feet of space, is slated to open this winter.
Yard House features the world’s largest selection of draft beer, and a wide-ranging menu of American favorites and globally-inspired flavors. Its addition boosts experiential tenant lineup at Willow Grove Park, which already has Bloomingdales, Apple AAPL, Michael Kors, Sephora, Vans, The Cheesecake Factory and Primark, among others as tenants. It has emerged as the company’s most productive property on a sale per square foot basis, exceeding $700.
Admittedly, shrinking mall traffic and store closures amid aggressive growth in online sales have kept retail REITs, including PREIT and others like Taubman Centers, Inc. TCO and Macerich Company MAC, on tenterhooks. Additionally, tenants are demanding substantial lease concessions due to a turbulent retail real estate market scenario.
Nonetheless, retail REITs are countering this dreary situation and putting in every effort to enhance the productivity of malls by trying to grab attention from the new and productive tenants, and discarding the non-productive ones. Further, retail REITs have been transforming traditional retail hubs into entertainment destinations by avoiding heavy dependence on apparel and accessories and instead, expanding the dining options, recreational facilities and fitness centers.
Similarly, PREIT, along with its remerchandising efforts, resorted to a portfolio rejig, selling low productive assets and investing heavily in refurbishments to enhance the property value. Particularly, the company’s focus on adding dining and entertainment offerings are aimed at elevating shopping experience and drive mall traffic. In fact, since 2012, the company has increased its space leased to dining and entertainment tenants by nearly 50%, which is encouraging.
Although such steps are likely to help PREIT efficiently tide over the lackluster retail real estate environment, portfolio-redevelopment measures entail a considerable capital investment and tend to drag down margins in the near term.
PREIT currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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