Construction of New Macy's Department Store
PHILADELPHIA, Feb. 28 /PRNewswire/ -- Pennsylvania Real Estate Investment
Trust (NYSE: PEI) announced today that Willow Grove Park, a 981,000 square
foot regional shopping center 12 miles north of Philadelphia in Willow Grove,
Pennsylvania, has been purchased through a partnership between the Company and
Pennsylvania State Employee Retirement System (PaSERS) for $140 million. The
property was acquired from a commingled investment account comprised of
pension fund clients managed by Lend Lease Real Estate Investments, Inc.
In conjunction with the acquisition, it was announced that a 230,000
square foot Macy's department store would be added to the complex. The Macy's
store will be a three-level, full-line department store, excluding furniture.
The preliminary schedule has a target opening of the store in the Fall of
2001. Macy's is a division of Federated Department Stores, Inc.
Under the arrangements between PREIT and PaSERS, PREIT will receive fees
for managing the property and performing construction oversight services in
connection with the new Macy's department store and a new parking garage at
the mall. Upon concluding the Macy's development, PREIT's initial limited
partnership interest in the mall will convert to a substantial interest and
the Company will become the managing general partner.
Ronald Rubin, Chief Executive Officer of PREIT, said, "We are excited by
this joint venture with PaSERS which allows us to acquire an interest in this
high quality regional mall with a history of strong sales volume. Currently,
sales at the mall are $365 per square foot. To complement the transaction, we
are thrilled at the prospect of adding the excitement and trend-setting
retailing skills of Macy's to this property. The original design for the site
included a large fourth anchor, and a store like Macy's is precisely what we
had in mind," Mr. Rubin continued.
The acquisition of the mall is the first joint venture between PREIT and
PaSERS. In announcing the purchase, Nicholas J. Maiale, Chairman of the Board
of PaSERS, said, "This will be the fund's largest investment in the
Philadelphia region. In addition to being a solid investment, the renovation
and expansion of the mall will have a positive economic impact in the region."
The fund's advisor in this transaction is the Investment Advisory Group of
Legg Mason Real Estate Services, Inc. which is headquartered in Philadelphia.
Currently, the trade area for Willow Grove Park encompasses more than
650,000 persons, with anticipated growth of another 15,000 persons by 2003.
The trade area's average household income is $78,114, representing many of the
highest income zip codes in Pennsylvania within a two miles radius of the
mall.
"Macy's is an important member of the Philadelphia retail community," said
Harold D. Kahn, chairman of Macy's, "and we're excited to be adding to our
presence in the market with the new Willow Grove Park store. We have built a
loyal following for Macy's quality merchandise, excellent service and exciting
shopping experience and we look forward to expanding our tradition in meeting
the city's needs."
The three-level mall is currently anchored by Bloomingdale's, Sears and
Strawbridge's, and includes 138 specialty, fashion-focused stores and 12 food
court units. When constructed in 1982, Willow Grove Park was colorfully
designed with elegant Victorian accents, and whimsical decor of antique circus
banners, a carillon clock and carousel animals circling a fountain court.
Architect for the project was RTKL, Baltimore, Md.
According to Mr. Rubin, new plans for the property call for $25 million in
renovations including improvements to common areas and construction of a new
parking garage for 700 cars. Management, leasing and redevelopment of Willow
Grove Park will be handled by PREIT's management affiliate, PREIT-RUBIN, Inc.
Willow Grove Park, at Easton Road (Route 611) between Old Welsh Road and
Moreland Road, minutes from Exit 27 of the Pennsylvania Turnpike, was
originally developed by a partnership of The Rubin Organization and Federated
Stores Realty. The Rubin Organization was acquired by PREIT in 1997.
Pennsylvania Real Estate Investment Trust, founded in 1960 and one of the
first equity REITs in the U.S., has a primary investment focus on shopping
centers (approximately 8.1 million square feet) and apartment communities
(7,242 units) located primarily in the eastern United States. The Company's
portfolio currently consists of 46 properties in 10 states. In addition,
there are 6 retail properties under development, which will add approximately
2.9 million square feet to the portfolio. Pennsylvania Real Estate Investment
Trust is headquartered in Philadelphia, Pennsylvania.
Established in 1923, PaSERS is one of the nation's oldest and largest
statewide retirement plans for public employees, with assets over $28 billion
diversified among eight major asset classes. The PaSERS fund currently is
ranked 39th in size among all public and corporate pension funds by Pension &
Investments magazine. PaSERS' real estate assets total more than
$2.3 billion, or about 8.2% of the fund.
Macy's East, a division of Federated Department Stores, Inc., currently
operates 87 stores in 15 states. Annual 1998 sales were nearly $4.6 billion.
Federated Department Stores, Inc., with corporate offices in Cincinnati
and New York, is one of the nation's leading department store retailers with
annual sales of more than $18.2 billion. Federated currently operates more
than 400 department stores in 33 states under the names of Bloomingdale's, The
Bon Marche', Burdines, Goldsmith's, Lazarus, Macy's, Rich's and Stern's.
Federated also operates the Fingerhut, Bloomingdale's By Mail, Macy's By Mail
and macys.com direct-to-consumer catalog and electronic commerce subsidiaries.
Lend Lease Real Estate Investments is one of the largest real estate
investment managers in the world and a leading US real estate advisor to
pension funds. The company has $31 billion in real estate and commercial
mortgages under management for more than 500 institutional and private clients
in the US. On a worldwide basis the Lend Lease Group operates on six
continents with $38 billion in real estate under management and total funds
under management and administration of $56 billion.
With the exception of the historical information contained in the release,
the matters described herein contain forward-looking statements that are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements involve various risks and may cause
actual results to differ materially. These risks include, but are not limited
to, the ability of PREIT to grow internally or by acquisition and to integrate
acquired businesses, changing industry and competitive conditions, and other
risks outside the control of the company referred to in PREIT's registration
statement, and periodic reports filed with the Securities and Exchange
Commission.
To receive additional information on Pennsylvania Real Estate Investment
Trust via fax at no charge, please dial 1-800-PRO-INFO and enter the ticker
symbol PEI.
SOURCE Pennsylvania Real Estate Investment Trust
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Related links:
http://www.preit.com
CONTACT:
Jonathan B. Weller, President of Pennsylvania
REIT, 215-875-0739; or General Info, Joe Calabrese, Analyst Info,
Pamela Belfor, or Media Info, Judith Sylk-Siegel, of The
Financial Relations Board, 212-661-8030
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