<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
FORM 8-K/A-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 23, 1998
--------------------------------
Pennsylvania Real Estate Investment Trust
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Pennsylvania 1-6300 23-6216339
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
The Bellevue, 200 S. Broad Street, Philadelphia, Pennsylvania 19102
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 875-0700
-----------------------------
455 Pennsylvania Avenue, Suite 135, Fort Washington, Pennsylvania 19034
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The undersigned registrant hereby amends the following item of its
Current Report on Form 8-K dated December 23, 1998, and filed on January 7,
1999, as set forth in the pages attached hereto:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
(a) Financial Statements.
---------------------
The following financial statements are attached hereto:
(i) Report of Arthur Andersen LLP
(ii) Combined Statements of Revenue and Certain Expenses of
Northeast Tower for each of the three years in the period
ended December 31, 1997 (audited) and for the nine months
ended September 30, 1998 (unaudited)
(iii) Notes to Combined Statements of Revenue and Certain
Expenses of Northeast Tower
(b) Pro Forma Financial Information.
--------------------------------
The following unaudited pro forma consolidating financial
information is attached hereto:
(i) Pro Forma Consolidating Balance Sheet of the Registrant as
of September 30, 1998
(ii) Pro Forma Consolidating Statement of Income of the
Registrant for the Twelve Months Ended December 31, 1997
(iii) Pro Forma Consolidating Statement of Income of the
Registrant for the Twelve Months Ended August 31, 1997
(iv) Pro Forma Consolidating Statement of Income of the
Registrant for the Four Months Ended December 31, 1997
(v) Pro Forma Consolidating Statement of Income of the
Registrant for the Nine Months Ended September 30, 1998
(c) Exhibits
--------
23 Consent of Arthur Andersen LLP
-2-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Date: March 8, 1999 By: /s/ Ronald Rubin
----------------------------------------
Ronald Rubin
Chief Executive Officer
<PAGE>
NORTHEAST TOWER
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1997,
1996, AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Pennsylvania Real Estate Investment Trust:
We have audited the combined statements of revenue and certain expenses of
Northeast Tower for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the Property's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The combined statements of revenue and certain expenses were prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Current Report on Form 8-K of
Pennsylvania Real Estate Investment Trust, as described in Note 1, and are not
intended to be a complete presentation of the Property's revenue and expenses.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the revenue and certain expenses of Northeast Tower for
each of the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
January 30, 1999
<PAGE>
NORTHEAST TOWER
---------------
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1)
------------------------------------------------------------
<TABLE>
<CAPTION>
For The Years Ended
-------------------
For the Nine
Months Ended
September 30,
December 31, December 31, December 31, 1998
1995 1996 1997 (unaudited)
------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
REVENUE:
Minimum rent (Note 2) $ 534,000 $ 1,684,000 $ 2,628,000 $ 2,315,000
Tenant reimbursements 55,000 126,000 289,000 386,000
Other income - 5,000 22,000 27,000
----------- ----------- ----------- -----------
Total revenue 589,000 1,815,000 2,939,000 2,728,000
----------- ----------- ----------- -----------
CERTAIN EXPENSES:
Maintenance and other operating expenses (Note 3) 94,000 480,000 429,000 357,000
Provision for bad debts - - 19,000 25,000
Real estate taxes 83,000 128,000 242,000 200,000
Interest (Note 4) 925,000 925,000 925,000 694,000
----------- ----------- ----------- -----------
Total certain expenses 1,102,000 1,533,000 1,615,000 1,276,000
----------- ----------- ----------- -----------
REVENUE (LESS THAN) IN EXCESS OF CERTAIN EXPENSES $ (513,000) $ 282,000 $ 1,324,000 $ 1,452,000
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NORTHEAST TOWER
---------------
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
------------------------------------------------------------
DECEMBER 31, 1997, 1996, AND 1995
---------------------------------
1. BASIS OF PRESENTATION:
----------------------
The combined statements of revenue and certain expenses reflect the operations
of Northeast Tower (the "Property") located in Philadelphia, Pennsylvania. The
Property includes (i) Northeast Tower Center, a retail shopping center of which
89% was acquired by PREIT Associates, L.P. (the "Operating Partnership"), a
limited partnership of which Pennsylvania Real Estate Investment Trust (the
"Company") is the sole general partner, from Roosevelt II Associates on December
23, 1998 (ii) 100% of a separate combined parcel of land previously owned by
Bradlees which was acquired in January 1999 by the Operating Partnership; and
(iii) a separate parcel of land currently owned by Rubin II, Inc., leased by
Rubin II, Inc. to Roosevelt II Associates under a ground lease, and subleased to
Home Depot U.S.A., Inc. (see Note 4), 89% of which is expected to be acquired by
the Operating Partnership in early 1999. The Property has an aggregate net
rentable area of approximately 511,250 square feet (46% leased as of December
31, 1997) (see Note 5).
The combined statements of revenue and certain expenses are to be included in
the Company's Current Report on Form 8-K, as the above described transaction has
been deemed significant pursuant to the rules and regulations of the Securities
and Exchange Commission. The accompanying financial statements exclude certain
expenses such as certain interest (see Note 4), depreciation and amortization,
and other costs not directly related to the future operations of the Property.
The combined statement of revenue and certain expenses for the nine months ended
September 30, 1998 is unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary for
the fair presentation of the revenue and certain expenses of the Property for
the nine months ended September 30, 1998 have been included. The results of the
interim periods are not necessarily indicative of the results for the full year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. The
ultimate results could differ from those estimates.
<PAGE>
2. OPERATING LEASES:
-----------------
Minimum rent includes straight-line adjustments for rental revenue increases in
accordance with generally accepted accounting principles. The aggregate rental
revenue increases resulting from the straight-line adjustments for the years
ended December 31, 1997, 1996, 1995, and for the nine months ended September 30,
1998 were approximately $70,000, $22,000, $0 and $63,000 (unaudited),
respectively.
The following tenants had minimum rental payments greater than 10% of the total
minimum rent in 1997:
Tenant Minimum Rent
------ ------------
Home Depot $ 1,250,000
PetSmart 365,000
Staples 360,000
The Property is leased to tenants under operating leases with expiration dates
extending to the year 2016. Future minimum rentals under noncancelable operating
leases, excluding tenant reimbursements of operating expenses as of December 31,
1997, are as follows:
1998 $ 3,135,000
1999 3,551,000
2000 3,553,000
2001 3,585,000
2002 3,630,000
2003 & Thereafter 19,582,000
-----------
$37,036,000
===========
Certain leases also include provisions requiring tenants to reimburse the
Property for management costs and other operating expenses up to stipulated
amounts.
3. RELATED PARTY TRANSACTION:
--------------------------
The Property paid total management fees of approximately $96,000, $88,000,
$21,000, and $92,000 (unaudited) for the years ended December 31, 1997, 1996,
1995 and for the nine months ended September 30, 1998, respectively, to
PREIT-RUBIN, Inc., the management company in which 95% of the non-voting stock
is owned by the Company. These management fees are included within maintenance
and other operating expenses in the combined statements of revenue and certain
expenses.
<PAGE>
4. COMMITMENTS AND CONTINGENCIES:
------------------------------
The land owned by Rubin II, Inc. is leased to Roosevelt II Associates and
subleased to Home Depot USA, Inc. (the "Home Depot Parcel"). The primary terms
of the Home Depot ground lease (the "Ground Lease") dated April 25, 1994 are as
follows:
Term: 129 months
Extensions: 3 successive 5-year options and 1 final 4-year option
Rent: $1,250,000 per annum; triple net lease
The Ground Lease contains provisions enabling both Home Depot USA, Inc. ("Home
Depot") and Roosevelt II Associates to terminate the lease at any time after the
eleventh lease year, provided Home Depot pays a lease termination fee, as
defined. In addition, a third party lender, was granted Roosevelt II Associates'
right to terminate the Ground Lease and requires Home Depot to pay the lease
termination fee on or after May 1, 2005.
The ground lease payments of $1,250,000 have been reflected as minimum rental
revenues in the accompanying combined statements of revenue and certain
expenses, and the required annual debt service under a note agreement between
Roosevelt II Associates and the third party lender of $925,000 has been
reflected as interest expense. These amounts will be recurring revenues and
expenses following the Operating Partnership's acquisition of the Home Depot
Parcel.
5. SUBSEQUENT EVENTS (Unaudited):
------------------------------
Subsequent to December 31, 1997, the Property signed additional leases with
tenants aggregating annual rentals of approximately $900,000 and approximately
100,000 aggregate square feet. As of March 1, 1999, the Property is
approximately 94% leased.
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
PRO FORMA CONSOLIDATING FINANCIAL INFORMATION
On February 17, 1998, the Registrant filed a Form 10-Q for the transition period
ended December 31, 1997 and on December 30, 1998, the Registrant filed a Form
8-K with audited financial statements for the transition period. As such, the
following sets forth the pro forma consolidating balance sheet of the Registrant
as of September 30, 1998 and the pro forma consolidating statements of income,
for the calendar year ended December 31, 1997, the fiscal year ended August 31,
1997, the four-month transition period ended December 31, 1997, and the
nine-month period ended September 30, 1998.
The unaudited pro forma consolidating financial information should be read in
conjunction with the historical financial statements of the Registrant,
Northeast Tower, Prince Georges Plaza, Festival at Oaklands, The Woods
Apartments, The Rubin Organization, Inc. (subsequently renamed PREIT-RUBIN,
Inc.), Magnolia Mall, North Dartmouth Mall and Oxford Valley Road Associates and
the related notes thereto. In management's opinion, all adjustments necessary to
reflect the effects of the transactions have been made.
The accompanying unaudited pro forma consolidating financial information is
presented as if the transactions described below had been consummated on
September 30, 1998 for balance sheet purposes and September 1, 1996 for purposes
of the statements of income with the exception of the pro forma consolidating
statement of income for the calendar year ended December 31, 1997, which only
reflects the 1998 events described below as if the transactions had been
consummated on January 1, 1997:
1998 Events
- -----------
o The Registrant acquired an 89% equity interest in Northeast Tower located
in Philadelphia, Pennsylvania on December 23, 1998, for a purchase price of
$25.0 million, consisting of $3.7 million in cash, $3.3 million through the
issuance of OP units and $18.0 million through the assumption of debt and
other liabilities.
o The Registrant acquired Prince Georges Plaza located in Hyattsville,
Maryland on September 17, 1998 for a purchase price of approximately $65.0
million consisting of $19.0 million in cash, $3.0 million through the
issuance of OP Units and $43.0 million through the assumption of debt.
o The Registrant acquired The Festival at Oaklands located in Exton,
Pennsylvania on August 27, 1998 for a cash purchase price of approximately
$18.4 million.
o The Registrant acquired The Woods Apartments located in Ambler,
Pennsylvania on August 7, 1998 for a purchase price of approximately $21.2
million consisting of $12.2 million in cash, $1.7 million through the
issuance of OP Units and $7.3 million through the assumption of debt.
1997 Events
- -----------
o The Registrant consummated an offering in December 1997 (the "Offering")
and applied the net proceeds therefrom as described below:
- The Company issued 4,600,000 shares of beneficial interest at $22.375
per share of which 600,000 shares related to the underwriter's exercise
of the over-allotment option.
- The $8.8 million mortgage on Cobblestone Apartments was prepaid in
full.
<PAGE>
- The remaining net proceeds of the Offering were used to repay amounts
outstanding on the Registrant's revolving credit facility (the "Credit
Facility").
o The Registrant acquired The Rubin Organization ("TRO") on September 30,
1997 (the "TRO Transaction") which involved a number of related
transactions, the combined effect of which was to form and capitalize an
Operating Partnership and to transfer ownership of the Registrant's direct
and indirect interests in its existing properties, or the economic benefits
thereof, to the Operating Partnership, and to effect the acquisitions
described below:
- TRO Acquisition. The Operating Partnership acquired all of the
non-voting common shares of TRO, constituting 95% of all of the total
equity of TRO, in exchange for the issuance of 200,000 Class A OP Units
and a contingent obligation to issue up to 800,000 additional Class A
OP Units over the following five-year period if the Registrant achieves
certain specified levels of funds from operations, on a per share
basis, over such period.
- Existing Retail Properties Acquisition. The Operating Partnership
acquired the interests of certain affiliates of TRO ("TRO Affiliates")
in four existing shopping centers, or portions of shopping centers (the
"Existing Retail Properties").
Two of the properties (Magnolia Mall and North Dartmouth Mall) were
purchased from Equity Properties and Development Limited Partnership
("EPDLP") for aggregate consideration, excluding transaction costs, of
approximately $80.0 million, of which (i) $25.2 million represents an
assumable mortgage, (ii) $5.0 million was paid through the issuance of
approximately 213,000 Class B Operating Partnership ("OP") units to
EPDLP for their interest in Magnolia Mall; and (iii) the balance was
financed with borrowings under the Credit Facility.
The Operating Partnership issued approximately 233,000 additional
Class A OP units to TRO Affiliates in respect of their 50% equity
interest in the Court at Oxford Valley.
o The Operating Partnership also acquired the rights of certain TRO
Affiliates in respect of three potential shopping center sites in exchange
for (i) a loan of cash to TRO in the amount of $3.4 million representing
actual out-of-pocket expenditures of TRO incurred with respect of such
properties through the Closing Date, and (ii) an obligation to issue, upon
completion of any property subsequently developed, Class A OP Units for
one-half of the difference between the aggregate value of all such
properties at the time of completion and the all-in-cost of all such
properties.
As these transactions are expected to occur in the future at amounts that
are not currently determinable, the financial impact of such future events
has not been reflected in the accompanying pro forma financial statements.
All of the acquisitions described above have been recorded by the Registrant
using the purchase method of accounting.
The pro forma consolidating financial information is unaudited and is not
necessarily indicative of what the actual financial position or results of
operations of the Registrant would have been had the transactions described
above been consummated as of the dates indicated, nor does it purport to
represent the future financial position and the results of operations of the
Registrant.
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
PRO FORMA CONSOLIDATING BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(Unaudited, In thousands)
<TABLE>
<CAPTION>
PREIT
PREIT Woods Festival at Prince Georges Northeast Proforma
Historical Apartments Oaklands Plaza Tower As Adjusted
---------- ---------- ----------- -------------- --------- -----------
(A) (A) (A) (A)
<S> <C> <C> <C> <C> <C> <C>
Multifamily properties $ 185,207 $ 21,200 $ - $ - $ - $ 206,407
Retail properties 204,756 - 18,400 65,000 24,615 312,771
Industrial properties 5,078 - - - - 5,078
Properties under development 23,167 - - - - 23,167
------------------------------------------------------------------------------
Total investments in real estate 418,208 21,200 18,400 65,000 24,615 547,423
Less - accumulated depreciation 59,333 - - - - 59,333
358,875 21,200 18,400 65,000 24,615 488,090
------------------------------------------------------------------------------
Investment in PREIT-RUBIN, Inc. 5,386 - - - - 5,386
Investments in partnerships and joint ventures,
at equity 23,981 - - - - 23,981
Advances to PREIT-RUBIN, Inc. 3,913 - - - - 3,913
------------------------------------------------------------------------------
392,155 21,200 18,400 65,000 24,615 521,370
Less - allowance for possible losses 1,626 - - - - 1,626
------------------------------------------------------------------------------
390,529 21,200 18,400 65,000 24,615 519,744
------------------------------------------------------------------------------
Other Assets:
Cash and cash equivalents 1,333 - - - 358 1,691
Rents and sundry receivables 1,687 - - - 351 2,038
Deferred costs, prepaid real estate taxes and
expenses, net 10,558 - - - 21 10,579
------------------------------------------------------------------------------
$ 404,107 $ 21,200 $ 18,400 $ 65,000 $ 25,345 $ 534,052
==============================================================================
Liabilities
Mortgage notes payable $ 115,423 $ 7,340 $ - $ 43,000 $ 17,000 $ 182,764
Bank and other loans payable 116,261 12,160 18,400 19,000 3,700 169,521
Construction cost payable 2,646 - - - 278 2,924
Tenants' deposits and deferred rents 1,358 - - - 118 1,476
Accrued pension and retirement benefits 985 - - - - 985
Accrued expenses and other liabilities 5,972 - - - 579 6,550
------------------------------------------------------------------------------
242,645 19,500 18,400 62,000 21,675 364,220
------------------------------------------------------------------------------
Minority interest 23,663 1,700 - 3,000 3,670 32,033
------------------------------------------------------------------------------
Shareholders' Equity
Shares of beneficial interest 13,300 - - - - 13,300
Capital contributed in excess of par 144,942 - - - - 144,942
Distributions in excess of net income (20,443) - - - - (20,443)
------------------------------------------------------------------------------
137,799 - - - - 137,799
------------------------------------------------------------------------------
$ 404,107 $ 21,200 $ 18,400 $ 65,000 $ 25,345 $ 534,052
==============================================================================
</TABLE>
The accompanying notes and management's assumptions are an integral
part of this statement.
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
PRO FORMA CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
1998 Events
-----------------------------------------------------
Woods Festival at Prince Northeast
PREIT Apts Oaklands Georges Plaza Tower Pro Forma PREIT
Historical Historical Historical Historical Historical Adjustments Pro Forma
---------- ---------- ----------- ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Gross revenues from Real Estate $44,061 $2,725 $ 2,267 $ 10,033 $ 2,917 $ - $62,003
Interest and other income 218 123 17 102 22 - 482
-----------------------------------------------------------------------------------------
Total revenues 44,279 2,848 2,284 10,135 2,939 - 62,485
-----------------------------------------------------------------------------------------
Expenses
Property operating expenses 17,880 1,100 602 3,847 689 - 24,118
Depreciation and amortization 6,895 - - - - 2,513(a) 9,408
General and administrative expenses 3,388 - - - - - 3,388
Mortgage and bank loan interest 10,328 - - - 925 9,272(b) 20,525
Provisions for losses on investments 500 - - - - - 500
-----------------------------------------------------------------------------------------
38,991 1,100 602 3,847 1,614 11,785 57,939
-----------------------------------------------------------------------------------------
Income before gains on sales of
interest in real estate, equity in
unconsolidated entities and minority
interest 5,288 1,748 1,682 6,288 1,325 (11,785) 4,546
Equity in income of PREIT-RUBIN, Inc. 259 - - - - - 259
Equity in income of partnerships and
joint ventures 4,873 - - - - - 4,873
Gains on sales of interests in real estate 1,697 - - - - - 1,697
-----------------------------------------------------------------------------------------
Income before minority interest and
extraordinary item 12,117 1,748 1,682 6,288 1,325 (11,785) 11,375
Minority interest (395) - (394)(c) (789)
-----------------------------------------------------------------------------------------
Net income $11,722 $1,748 $ 1,682 $ 6,288 $ 1,325 $(12,179) $10,586
=========================================================================================
Basic Net Income per share $ 1.33 $ 1.20
======= ======
Diluted Net Income per share $ 1.33 $ 1.20
======= ======
Weighted Average Number of Shares
Outstanding:
Basic 8,794 8,794
======= ======
Diluted 8,836 8,836
======= ======
</TABLE>
The accompanying notes and management's assumptions are an integral
part of this statement.
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
PRO FORMA CONSOLIDATING STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED AUGUST 31, 1997
(Unaudited)
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
1997 Events 1998 Events
---------------------------- -----------------------------------------
Woods Festival at
PREIT The TRO The Apts Oaklands
Historical Transaction Offering Historical Historical
---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues
Gross revenues from Real Estate $ 40,231 $ 12,490 (d) $ - $ 2,687 $ 2,216
Interest and other income 254 234 (e) - 126 -
--------------------------------------------------------------------------------------
Total revenues 40,485 12,724 - 2,813 2,216
--------------------------------------------------------------------------------------
Expenses
Property operating expenses 16,289 3,964 (d) - 1,116 527
Depreciation and amortization 6,259 1,918 (f) - - -
General and administrative expenses 3,324 - - - -
Mortgage and bank loan interest 9,086 6,183 (g) (6,102) (j) - -
Provisions for losses on investments 500 - - - -
--------------------------------------------------------------------------------------
35,458 12,065 (6,102) 1,116 527
--------------------------------------------------------------------------------------
Income before gains on sales of
interest in real estate, equity in
unconsolidated entities and minority
interest 5,027 659 6,102 1,697 1,689
Equity in income of PREIT-RUBIN, Inc. - 192 (h) - - -
Equity in income of partnerships and
joint ventures 4,337 420 (i) - - -
Gains on sales of interests in real estate 1,069 - - - -
--------------------------------------------------------------------------------------
Income before minority interest 10,433 1,271 6,102 1,697 1,689
Minority interest (198) - - - -
--------------------------------------------------------------------------------------
Net income $ 10,235 $ 1,271 $ 6,102 $ 1,697 $ 1,689
======================================================================================
Basic Net Income per share $ 1.18
==========
Diluted Net Income per share 1.18
==========
Weighted Average Number of Shares
Outstanding:
Basic 8,679
==========
Diluted 8,704
==========
</TABLE>
The accompanying notes and management's assumptions are an integral
part of this statement.
<PAGE>
- ------
STUB
- ------
<TABLE>
<CAPTION>
---------------------------
Prince Northeast PREIT
Georges Plaza Tower Pro Forma Pro
Historical Historical Adjustments Forma
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Gross revenues from Real Estate $ 9,955 $ 2,609 $ - $ 70,188
Interest and other income - 17 - 631
----------------------------------------------------------
Total revenues 9,955 2,626 - 70,819
----------------------------------------------------------
Expenses
Property operating expenses 3,606 713 - 26,215
Depreciation and amortization - - 2,513 (k) 10,690
General and administrative expenses - - - 3,324
Mortgage and bank loan interest - 925 9,196 (l) 19,288
Provisions for losses on investments - - - 500
----------------------------------------------------------
3,606 1,638 11,709 60,017
----------------------------------------------------------
Income before gains on sales of
interest in real estate, equity in
unconsolidated entities and minority
interest 6,349 988 (11,709) 10,802
Equity in income of PREIT-RUBIN, Inc. - - - 192
Equity in income of partnerships and
joint ventures - - - 4,757
Gains on sales of interests in real
estate - - - 1,069
----------------------------------------------------------
Income before minority interest 6,349 988 (11,709) 16,820
Minority interest - - (1,153) (m) (1,351)
----------------------------------------------------------
Net income $ 6,349 $ 988 $ (12,862) $ 15,469
==========================================================
Basic Net Income per share $ 1.16
==========
Diluted Net Income per share $ 1.16
==========
Weighted Average Number of Shares
Outstanding:
Basic 13,279
==========
Diluted
13,304
==========
</TABLE>
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
PRO FORMA CONSOLIDATING STATEMENTS OF INCOME
FOR THE FOUR MONTHS ENDED DECEMBER 31, 1997
(Unaudited)
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
1997 Events 1998 Events
---------------------------- -----------------------------------------
Woods Festival at
PREIT The TRO The Apts Oaklands
Historical Transaction Offering Historical Historical
---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenues
Gross revenues from Real Estate $ 17,170 $ 1,008 (n) $ - $ 915 $ 799
Interest and other income 82 32 (o) - 38 -
--------------------------------------------------------------------------------------
Total revenues 17,252 1,040 - 953 799
--------------------------------------------------------------------------------------
Expenses
Property operating expenses 6,835 291 (n) - 384 227
Depreciation and amortization 2,695 160 (p) - - -
General and administrative expenses 1,088 - - -
Mortgage and bank loan interest 4,349 515 (q) (1,906) (t) - -
--------------------------------------------------------------------------------------
14,967 966 (1,906) 384 227
--------------------------------------------------------------------------------------
Income before gains on sales of
interest in real estate, equity in
unconsolidated entities and minority
interest 2,285 74 1,906 569 572
Equity in income of PREIT-RUBIN, Inc. 260 751 (r) - - -
Equity in income of partnerships and
joint ventures 2,101 29 (s) - - -
Gains on sales of interests in real estate 2,090 - - - -
--------------------------------------------------------------------------------------
Income before minority interest 6,736 854 1,906 569 572
Minority interest (474) - - - -
--------------------------------------------------------------------------------------
Net income $ 6,262 $ 854 $ 1,906 $ 569 $ 572
======================================================================================
Basic Net Income per share $ 0.69
=========
Diluted Net Income per share $ 0.69
=========
Weighted Average Number of Shares
Outstanding:
Basic 9,049
=========
Diluted 9,099
=========
</TABLE>
The accompanying notes and management's assumptions are an integral
part of this statement.
<PAGE>
- -------
STUB
- -------
<TABLE>
<CAPTION>
---------------------------
Prince Northeast PREIT
Georges Plaza Tower Pro Forma Pro
Historical Historical Adjustments Forma
------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Gross revenues from Real Estate $ 3,470 $ 1,105 $ - $ 24,467
Interest and other income - 7 - 159
----------------------------------------------------------
Total revenues 3,470 1,112 - 24,626
----------------------------------------------------------
Expenses
Property operating expenses 1,398 231 - 9,366
Depreciation and amortization - - 838 (u) 3,693
General and administrative expenses - - - 1,088
Mortgage and bank loan interest - 308 2,914 (v) 6,180
----------------------------------------------------------
1,398 539 3,752 20,327
----------------------------------------------------------
Income before gains on sales of
interest in real estate, equity in
unconsolidated entities and minority
interest 2,072 573 (3,752) 4,299
Equity in income of PREIT-RUBIN, Inc. - - - 1,011
Equity in income of partnerships and
joint ventures - - - 2,130
Gains on sales of interests in real estate - - - 2,090
----------------------------------------------------------
Income before minority interest 2,072 573 (3,752) 9,530
Minority interest - - (261) (w) (735)
----------------------------------------------------------
Net income $ 2,072 $ 573 $ (4,013) $ 8,795
==========================================================
Basic Net Income per share $ 0.64
==========
Diluted Net Income per share $ 0.64
==========
Weighted Average Number of Shares
Outstanding:
Basic 13,649
==========
Diluted 13,699
==========
</TABLE>
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
PRO FORMA CONSOLIDATING STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
(In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
1998 Events
-----------------------------------------------------
Woods Festival at Prince Northeast PREIT
PREIT Apts Oaklands Georges Plaza Tower Pro Forma Pro
Historical Historical Historical Historical Historical Adjustments Forma
---------- ---------- ----------- ------------- ---------- ----------- ------
<S> <C> <C> <C> <C> <C>
Revenues
Gross revenues from Real Estate $ 42,076 $ 1,745 $ 1,439 $ 7,630 $ 2,701 $ - $ 55,591
Interest and other income 400 - - - 27 - 427
------------------------------------------------------------------------------------------
Total revenues 42,476 1,745 1,439 7,630 2,728 - 56,018
------------------------------------------------------------------------------------------
Expenses
Property operating expenses 15,820 672 369 2,394 581 - 19,836
Depreciation and amortization 6,482 - - - - 1,735 (x) 8,217
General and administrative expenses 2,458 - - - - - 2,458
Mortgage and bank loan interest 6,292 - - - 694 6,544 (y) 13,530
------------------------------------------------------------------------------------------
31,052 672 369 2,394 1,275 8,279 44,041
------------------------------------------------------------------------------------------
Income before gains on sales of
interest in real estate, equity in
unconsolidated entities and minority
interest 11,424 1,073 1,070 5,236 1,453 (8,279) 11,977
Equity in Income of PREIT-RUBIN, Inc. 274 - - - - - 274
Equity in income of partnerships and
joint ventures 4,032 - - - - - 4,032
Gains on sales of interests in real
estate 3,043 - - - - - 3,043
------------------------------------------------------------------------------------------
Income before minority interest 18,773 1,073 1,070 5,236 1,453 (8,279) 19,326
Minority interest (961) - - (378) (z) (1,339)
------------------------------------------------------------------------------------------
Net income $ 17,812 $ 1,073 $ 1,070 $ 5,236 $ 1,453 $ (8,657) $ 17,987
==========================================================================================
Basic Net Income per share $ 1.34 $ 1.35
========= ========
Diluted Net Income per share $ 1.34 $ 1.35
========= ========
Weighted Average Number of Shares
Outstanding:
Basic 13,296 13,296
========= ========
Diluted 13,319 13,319
========= ========
</TABLE>
The accompanying notes and management's assumptions are an integral
part of this statement.
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
UNAUDITED PRO FORMA CONSOLIDATING FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C>
1. BASIS OF PRESENTATION:
Pennsylvania Real Estate Investment Trust (the "Registrant") is a self-administered equity real estate investment trust
engaged, directly and through subsidiaries and joint ventures, in owning and managing income producing real estate,
with an emphasis on shopping centers and apartment complexes. As of March 1, 1999 the Registrant owned 53 properties of
which 5 properties are currently under development. The Registrant's interest in all of the Properties is held through
PREIT Associates L.P. (the "Operating Partnership").
2. ADJUSTMENTS TO PRO FORMA CONSOLIDATING BALANCE SHEET:
(A) To reflect the Registrant's recent property acquisitions as
follows:
</TABLE>
<TABLE>
<CAPTION>
Prince
Woods Festival at Georges Northeast
Apartments Oaklands Plaza Tower
------------- ------------- --------- -----------
<S> <C> <C> <C> <C>
Purchase price of property $21,200 $18,400 $65,000 $24,615
Other assets assumed - - - 730 (1)
------------------------------------------------------------
Total purchase price 21,200 18,400 65,000 25,345
Consideration
-------------
Mortgage indebtedness assumed 7,340 -- 43,000 17,000
Borrowings under revolving line of credit 12,160 18,400 19,000 3,700
Issuance of Class A OP Units and other
minority interests *1,700 --- **3,000 3,670 (2)
Other liabilities assumed - - - 975 (3)
------------------------------------------------------------
$21,200 $18,400 $65,000 $25,345
============================================================
* 72,592 Class A OP Units at $23.425 per unit
** 131,504 Class A OP Units at $22.813 per unit
(1) Other assets assumed includes the following:
Cash and cash equivalents $358
Rents and sundry receivables 351
Deferred Costs, prepaid real estate taxes and
expenses, net 21
----------
Total other assets assumed $730
==========
(2) Includes the following:
Issuance of 139,454 Class A OP units at $23.40
per unit $3,263
Remaining 11% minority interest 407
----------
$3,670
==========
(3) Other liabilities assumed includes the following:
Construction cost payable $278
Tenant' deposits and deferred rents 118
Accrued expenses and other liabilities 579
----------
Total other liabilities assumed $975
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
3. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997:
(a) To record depreciation expense on acquisitions as follows:
</TABLE>
<TABLE>
<CAPTION>
Purchase Depreciable
Price Basis Life In Years Depreciation
-------------------- --------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Woods Apartments $21,200 $16,960 40 $424
Prince Georges Plaza 65,000 52,000 40 1,300
Festival at Oaklands 18,400 14,720 40 368
Northeast Tower 25,000 16,820 40 421
------
Pro Forma Depreciation Adjustment $2,513
======
(b) To record interest expense on acquisitions as follows:
</TABLE>
<TABLE>
<CAPTION>
Interest on
Rate on Credit Credit
Assumed Assumed Interest on Facility Facility Total
Debt Debt Assumed Debt Borrowings Rate 7.28% Interest
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Woods Apartments 8.625% $7,340 $633 $12,160 $885 $1,518
Prince Georges Plaza 8.700% 43,000 3,741 19,000 1,383 5,124
Festival at Oaklands --- --- --- 18,400 1,340 1,340
Northeast Tower 8.750% 17,000 1,021 3,700 269 1,290
------
Pro Forma Interest Adjustment $9,272
======
(c) To adjust the minority interest's share of income in the Operating Partnership to reflect
the issuance of 72,592 Class A OP units at $23.425 per unit, 131,504 Class A OP units at
$22.813, and 139.454 Class A OP units at $23.40 per unit for the Woods Apartments, Prince
Georges Plaza, and Northeast Tower acquisitions, respectively. $(394)
======
4. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED AUGUST 31, 1997:
(d) To record the income and expenses associated with the acquisition of wholly owned shopping center properties
as follows:
</TABLE>
<TABLE>
<CAPTION>
Magnolia N. Dartmouth Shopping
Mall Mall Centers
Historical Historical Pro Forma
---------- ------------ ---------
<S> <C> <C> <C> <C>
Revenues
Gross revenues from real estate $6,222 $6,268 $12,490
Interest and other income 17 15 32
------ ------ -------
6,239 6,283 12,522
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Expenses
Property operating expenses 1,728 2,236 3,964
------ ------ ------
EBITDA $4,511 $4,047 $8,558
====== ====== ======
(e) To record additional interest and other income as follows:
Interest and other income of Magnolia Mall and North Dartmouth Mall $32
Accrual of interest income on note receivable from PREIT-RUBIN, Inc.
based on intercompany advances at a rate of 12.5% 202
----
$234
====
(f) To record additional depreciation expense as follows:
Magnolia Mall - depreciable basis of $45,998 over 40-year useful life $1,150
North Dartmouth Mall - depreciable basis of $30,709 over 40-year useful life 768
------
$1,918
======
(g) To record additional interest expense as follows:
Magnolia Mall $25,200 mortgage note payable assumed at 8.20% $2,066
Magnolia Mall bank borrowings of $10,165 at 7.25% to fund remaining purchase price 737
North Dartmouth Mall bank borrowings of $35,000 at 7.25% to fund purchase price 2,538
Deposit of $5,000 at 7.25% 363
Bank borrowings of $11,482 at 7.25% to fund the cash portion of transaction costs 832
Less capitalized interest on bank borrowings for property under development (605)
Net increase in amortization of financing costs related to Credit Facility 252
------
$6,183
======
(h) To record equity in income (loss) of PREIT-RUBIN, Inc. as follows:
TRO Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
Revenues
Management fees $6,171 $ --- $ 6,171
Leasing commissions 9,605 --- 9,605
Consulting fees 1,763 --- 1,763
Development fees 581 --- 581
Publication income 2,201 --- 2,201
Other income 147 --- 147
--------------------------------------
Total revenues $20,468 $ --- $20,468
======================================
Operating Expenses
Salaries, commissions,
temporary services, payroll
taxes and employee benefits
11,781 300 (1) 12,081
Rent expense 784 - 784
Other operating expenses 3,744 - 3,744
Depreciation and amortization 961 - 961
Non-recurring expenses
associated with the TRO
transaction 890 --- 890
Expenses for start-up of EPDLP
management contracts 951 --- 951
--------------------------------------
Total operating expenses 19,111 300 19,411
======================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Income from operations 1,357 (300) 1,057
Interest expense (891) 362 (2) (529)
Equity in loss from
partnership investments (131) 131 (3) ---
--------------------------------------
Pre-tax loss 335 193 528
Provision for income taxes - (211) (211) (4)
--------------------------------------
Net income $335 $(18) $317
======================================
Amortization of excess purchase price over net assets acquired recorded
in consolidation (115) (5)
Net income after intangible amortization $202
=====
Operating Partnership's interest (95%) in income of PREIT-RUBIN, Inc. $192 (6)
=====
(1) To record additional compensation expense in accordance with
existing employment contracts
(2) To adjust interest expense as follows:
Elimination of interest on debt not assumed $564
Accrual of interest on $1,613 note payable ($3,613 note less $2,000
related to development properties for which interest is capitalized) to
PREIT at 12.5% (202)
-----
$362
=====
(3) To eliminate equity in loss of partnerships and joint ventures not
being acquired.
(4) Estimated tax requirements calculated using 40% effective tax rate.
(5) To record amortization of excess purchase price over net assets
acquired over 35-year amortization period.
(6) Represents 95% of PREIT-RUBIN, Inc.'s net loss after intangible amortization.
(i) To record the Registrant's 50% share of income from The Court at Oxford Valley:
Equity in the net income of The Court at Oxford Valley $605
Less amortization of the excess purchase price over the net book value of assets
acquired (185)
-----
$420
=====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(j) To record the interest expense savings associated with the paydown of the
following debt amounts:
Payment of the mortgage loan on Cobblestone Apartments $690
Payment of bank borrowings incurred in connection with the TRO Transaction 4,469
Payment of other bank borrowings 943
------
$6,102
======
(k) To record depreciation expense on acquisitions as follows:
Purchase Depreciable
Price Basis Life In Years Depreciation
-----------------------------------------------------------
Woods Apartments $21,200 $16,960 40 $424
Prince Georges Plaza 65,000 52,000 40 1,300
Festival at Oaklands 18,400 14,720 40 368
Northeast Tower 25,000 16,820 40 421
------
Pro Forma Depreciation Adjustment $2,513
======
(l) To record interest expense on acquisitions as follows:
Interest on
Rate on Credit Credit
Assumed Assumed Interest on Facility Facility Total
Debt Debt Assumed Debt Borrowings Rate 7.43% Interest
-----------------------------------------------------------------------------------
Woods Apartments 8.625% $7,340 $633 $12,160 $903 $1,536
Prince Georges Plaza 8.700% 43,000 3,741 19,000 1,412 5,153
Festival at Oaklands --- --- --- 18,400 1,367 1,367
Northeast Tower 8.750% 17,000 865 3,700 275 1,140
------
Pro Forma Interest Adjustment $9,196
======
(m) To adjust the minority interest's share of income in the Operating Partnership to
reflect the issuance of 72,592 Class A OP units at $23.425 per unit, 131,504
Class A OP units at $22.813 and 139,454 Class A OP units at $23.40 per unit for
the Woods Apartments, Prince Georges Plaza, and Northeast Tower
acquisitions, respectively. $(1,153)
=======
5. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE FOUR MONTHS ENDED DECEMBER 31, 1997:
(n) To record the income and expenses associated with the acquisition of wholly-owned
shopping center properties as follows:
Magnolia N. Dartmouth Shopping
Mall Mall Centers
Historical Historical Pro Forma
---------- ------------ ---------
Revenues
Gross revenues from real estate $548 $460 $1,008
Interest and other income 2 12 14
----------------------------------------
550 472 1,022
Expenses
Property Operating Expenses 132 159 291
----------------------------------------
Net operating income $418 $313 $731
========================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(o) To record additional interest and other income as follows:
Interest and other income of Magnolia Mall and North Dartmouth Mall $14
Accrual of interest income on Note Receivable from PREIT-RUBIN, Inc. based on
inter-company advances at a rate of 12.5% 18
---
$32
===
(p) To record additional depreciation expense as follows:
Magnolia Mall - depreciable basis of $45,998 over 40-year useful life $96
North Dartmouth Mall - depreciable basis of $30,709 over 40-year useful life 64
----
$160
====
(q) To record additional interest expense as follows:
Magnolia Mall $25,200 mortgage note payable assumed at 8.20% $172
Magnolia Mall bank borrowings of $10,165 at 7.25% to fund remaining purchase price 61
North Dartmouth Mall bank borrowings of $35,000 at 7.25% to fund purchase price 211
Deposit of $5,000 at 7.25% 30
Bank borrowings of $11,482 at 7.25% to fund the cash portion of transaction costs 70
Less capitalized interest on bank borrowings for property under development (50)
Net increase in amortization of financing costs related to Credit Facility 21
----
$515
====
(r) To record equity in income of PREIT-RUBIN, Inc. as follows:
TRO Pro Forma
Historical Adjustments Pro Forma
------------- ------------- -----------
Revenues
Management fees $ 410 $ - $ 410
Leasing commissions 3,474 - 3,474
Consulting fees 104 - 104
Development fees 661 - 661
Publication income 555 - 555
Other income 142 - 142
--------------------------------------------
Total revenues $5,346 $ - $5,346
============================================
Operating Expenses
Salaries, commissions, temporary
services, payroll taxes and
employee benefits 2,554 25 (1) 2,579
Rent expense 77 - 77
Other operating expenses 1,268 - 1,268
Depreciation and amortization 69 - 69
--------------------------------------------
Total operating expenses 3,968 25 3,993
--------------------------------------------
Income from operations 1,378 (25) 1,353
Interest expense -- (18) (2) (18)
Equity in loss from partnership
investments (146) 146 (3) --
--------------------------------------------
Income before income taxes 1,232 103 1,335
Provision for income taxes - (534) (534) (4)
--------------------------------------------
Net income $1,232 $(431) $801
============================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Intangible amortization recorded in consolidation 10
------
Net income after intangible amortization $791 (5)
======
Operating Partnership's interest (95%) in income of PREIT-RUBIN, Inc. $751 (6)
======
(1) To record additional compensation expense in accordance with
existing employment contracts
(2) To accrue interest on $1,613 note payable ($3,613 note less $2,000
related to development properties for which interest is capitalized) to
PREIT at 12.5%. $18
======
(3) To eliminate equity in loss of partnerships and joint ventures not
being acquired.
(4) Estimated tax requirements calculated using 40% effective tax rate.
(5) To record amortization of excess purchase price over net assets
acquired over 35-year amortizable period.
(6) Represents 95% of PREIT-RUBIN, Inc.'s net income after
intangible amortization.
(s) To record the Registrant's 50% share of income from The Court at
Oxford Valley:
Equity in the net income of The Court at Oxford Valley $44
Less amortization of the excess purchase price over the net book value of
assets acquired (15)
------
$29
======
(t) To record the interest expense savings associated with the paydown of the
following debt amounts:
Payment of the mortgage loan on Cobblestone Apartments $216
Payment of bank borrowings incurred in connection with the TRO Transaction 1,396
Payment of other bank borrowings 294
------
$1,906
======
(u) To record depreciation expense on acquisitions as follows:
Purchase Depreciable
Price Basis Life In Years Depreciation
-----------------------------------------------------------
Woods Apartments $21,200 $16,960 40 $141
Prince Georges Plaza 65,000 52,000 40 434
Festival at Oaklands 18,400 14,720 40 123
Northeast Tower 25,000 16,820 40 140
----
Pro Forma Depreciation Adjustment $838
====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(v) To record interest expense on acquisitions as follows:
Interest on
Rate on Credit Credit
Assumed Assumed Interest on Facility Facility Total
Debt Debt Assumed Debt Borrowings Rate 7.47% Interest
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Woods Apartments 8.625% $7,340 $211 $12,160 $303 $514
Prince Georges Plaza 8.700% 43,000 1,247 19,000 473 1,720
Festival at Oaklands --- --- --- 18,400 458 458
Northeast Tower 8.750% 17,000 130 3,700 92 222
------
Pro Forma Interest Adjustment $2,914
======
(w) To adjust the minority interest's share of income in the Operating Partnership
to reflect the issuance of 72,592 Class A OP units at $23.425 per unit
approximately 131,504 Class A OP units at $22.813 and 139,454 Class A OP
units at $23.40 for the Woods Apartments, Prince Georges Plaza and Northeast
Tower, acquisitions, respectively. $(261)
======
6. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998:
(x) To record depreciation expense on acquisitions as follows:
Purchase Depreciable
Price Basis Life In Years Depreciation
-----------------------------------------------------------
Woods Apartments $21,200 $16,960 40 $254
Prince Georges Plaza 65,000 52,000 40 925
Festival at Oaklands 18,400 14,720 40 241
Northeast Tower 25,000 16,820 40 315
------
Pro Forma Depreciation Adjustment $1,735
======
(y) To record interest expense on acquisitions as follows:
Interest on
Rate on Credit Credit
Assumed Assumed Interest on Facility Facility Total
Debt Debt Assumed Debt Borrowings Rate 7.20% Interest
-------------------------------------------------------------------------------------------
Woods Apartments 8.625% $7,340 $378 $12,160 $523 $901
Prince Georges Plaza 8.700% 43,000 2,654 19,000 971 3,625
Festival at Oaklands --- --- --- 18,400 864 864
Northeast Tower 8.750% 17,000 954 3,700 200 1,154
------
Pro Forma Interest Adjustment $6,544
======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(z) To adjust the minority interest's share of income in the Operating Partnership
to reflect the issuance of 72,592 Class A OP units at $23.425 per unit, 131,504
Class A OP units at $22.813, and 139,454 Class A OP units at $23.40 per unit
for the Woods Apartments, Prince Georges Plaza, and Northeast Tower
acquisitions, respectively. $(378)
=====
</TABLE>
<PAGE>
Exhibit Index
-------------
Number Exhibit Page Number
- ------ ------- -----------
23 Consent of Arthur Andersen LLP
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated January 30, 1999 included in this Form 8-K/A No. 1 dated December
23, 1998 on the combined statements of revenue and certain expenses of Northeast
Tower into the Registrant's previously filed Registration Statements on Forms
S-3 (File No. 33-61115, File No. 333-48917 and File No. 333-70157, as amended)
and Forms S-8 (File No. 33-59771, File No. 33-59773, File No. 33-59767 and File
No. 333-69877).
/s/ ARTHUR ANDERSEN LLP
-----------------------
Philadelphia, Pennsylvania
March 8, 1999
