Pennsylvania Real Estate Investment Trust (PREIT) has been notified by Wells Fargo and other lenders that claim that the mall landlord is in default of a loan agreement, the Philadelphia Business Journal reported. Wells Fargo and other financial institutions also stated that PREIT has breached a restructuring support agreement (RSA) by not filing for chapter 11 bankruptcy on or before Oct. 18, according to a Securities and Exchange Commission filing made by PREIT. PREIT has responded to Wells Fargo, saying in SEC documents that it disputes the lenders’ characterization of the situation and that it didn't breach an agreement and that no event of default under any of the credit agreements has taken place. "The company is engaged in good-faith discussions with its lenders" and is working to push out any date that it would potentially file for chapter 11, PREIT said in the SEC filing. The lenders indicated that, as a result of the default, interest on the outstanding principal balance of the loans began accruing at the increased post-default rate on Oct. 19. The situation comes after PREIT on Oct. 14 said that it had reached a tentative financing plan with a majority of its lenders, warning that it is prepared to file chapter 11 protection if it is unable to reach further agreements on restructuring the company's debt. The Philadelphia mall owner, which has been struggling for some time, said that 80 percent of its lenders had agreed to an arrangement that would provide it with a $150 million loan and other provisions concerning its debt maturities. However, PREIT said that it needs the remainder of its lenders to agree to the arrangement otherwise it may need to seek bankruptcy protection and restructure the company and its debt through a prepackaged reorganization in bankruptcy court.
