PREIT has written down the value of its investment in the Fashion District Philadelphia mall in Center City by more than a third, as retail businesses struggle to recover from the loss of shopping traffic due to the coronavirus pandemic.

PREIT chief financial officer Mario Ventresca said in a conference call for analysts on Friday that the downward adjustment of $148.5 million was the result of a routine annual appraisal conducted to establish the value of the company’s assets.

It represents a 43% cut to the value of PREIT’s nearly $340-million investment in the property.

“Because foot traffic is down and malls are less relevant, their real estate valuation takes a hit,” said Nick Shields, an analyst with investment-research firm Third Bridge.

But “the writedown implies they don’t expect a recovery” to prepandemic levels of activity, he said. “If they expected a recovery, they might not have written it down.”

The Fashion District writedown accounted for almost three-quarters of PREIT’s net loss of $202.1 million for the three months ended Dec. 31, which compares with a net loss of $21.7-million during the same quarter a year ago.

The drop was also driven by lost revenue from bankrupt clients and ongoing pandemic-related store closures, PREIT said in a release.

Despite the losses, PREIT chief executive Joseph F. Coradino predicted a bright future for the company during the conference call. He asserted that the locations of many of the company’s malls in prosperous suburbs made them attractive sites for businesses, even if many of them wind up not being traditional mall tenants.

As an example, he cited a new deal for Cooper University Health Care to open a 165,000-square-foot specialty-care facility in a former Sears location in the Moorestown mall.

“The end result of all of our work will be a distinguished portfolio comprised of a diverse group of uses, including life sciences, health care, self-storage, grocers and ... apartments, all wrapped around a solid retail core,” Coradino said.

PREIT shares closed at $2.19 on Friday, up 2.3% from their close on Thursday.

Pennsylvania Real Estate Investment Trust, as PREIT is formally known, is the biggest mall owner in Philadelphia and its surrounding counties, with properties that also include the Cherry Hill Mall, Willow Grove Park, and Plymouth Meeting Mall.

It teamed with Santa Monica, Calif.-based Macerich to open the Fashion District shopping emporium in the shell of the old Gallery at Market East mall in 2019 after three years of construction.

But barely a half-year after it reopened, the Fashion District was shuttered for months to help stem the spread of the coronavirus, as were all of PREIT’s other malls and most of its competitors.

By late last year, business losses from the coronavirus pushed PREIT into bankruptcy, where it won approval for a deal giving it some financial flexibility while it pursues a business overhaul that it has said will involve redeveloping some of its malls and selling parts of others.

As part of the restructuring, Macerich took control of the Fashion District mall after making a big payment toward its mortgage debt.

Macerich announced a $163-million “remeasurement” of its investment at the mall when it reported financial results last month. Neither company responded to messages seeking an explanation for the discrepancy between the amounts written down by each of the companies.

Sheldon Grodsky, a West Orange, N.J.-based stockbroker who was the only apparent participant in PREIT’s conference call Friday, said in an interview after the call that the timing of the pandemic was “particularly nasty” for the newly opened Fashion District mall.

“At the time the pandemic began, they were on the verge of breaking through on profitability and occupancy,” he said. “Then the roof caved in.”