PHILADELPHIA Real-estate company is shopping for more malls

STAFF/WIRE REPORT
PHILADELPHIA -- Two companies specializing in midsize shopping malls plan to merge later this year into a regional powerhouse that would own 54 malls and plazas in 12 states.
The Pennsylvania Real Estate Investment Trust said Wednesday it will pay $381 million in stock to acquire the Johnstown-based Crown American Realty Trust, which includes the Shenango Valley Mall in Hermitage, Pa., among its holdings.
The merged company would be worth $2.7 billion and include properties with about 33.5 million square feet of space. The companies said they plan to complete the merger by the fourth quarter.
The union is being driven, in part, by a new strategy at PREIT, one of the nation's oldest publicly traded real-estate investment trusts.
Specialization
After decades of investing in a variety of kinds of real estate, the company has decided its future is in shopping. The company is in the process of buying six Philadelphia-area malls from the Rouse Co. for $548 million.
Crown American would add 26 more malls to PREIT's portfolio.
At the same time, PREIT, which owned shares of just eight malls a year ago, has sought to divest itself of other real-estate holdings. It recently announced the sale of 19 residential complexes with 7,200 homes and apartments.
The changes, PREIT Chief Financial Officer Edward Glickman said, are part of an effort to transform the company into an enterprise with a single focus: retail shopping.
He said PREIT hopes to exploit what it considers its knack for taking midsize suburban malls, sprucing them up and luring hipper tenants.
Part of that process, Glickman said, is supplementing or replacing traditional flagship department stores with smaller anchors such as Old Navy, Best Buy electronics stores and Borders bookstores.