PENNSYLVANIA REAL ESTATE INVESTMENT TRUST, DEF 14A, 1999-03-31

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
DEF 14A, 1999-03-31
REAL ESTATE INVESTMENT TRUSTS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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4) Proposed maximum aggregate value of transaction:

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5) Total fee paid:

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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:

___________________________________________________________________________
3) Filing Party:

___________________________________________________________________________
4) Date Filed:

___________________________________________________________________________

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[GRAPHIC OMITTED]

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

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NOTICE OF ANNUAL MEETING OF
HOLDERS OF CERTIFICATES OF BENEFICIAL INTEREST
APRIL 29, 1999

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The Annual Meeting of Holders of Certificates of Beneficial Interest
("Shareholders") of Pennsylvania Real Estate Investment Trust (the "Trust")
will be held on Thursday, April 29, 1999 at 11:00 a.m. at the Park Hyatt
Philadelphia at the Bellevue, 200 South Broad Street, Philadelphia,
Pennsylvania for the following purposes:

(1) To elect three Trustees;

(2) To consider and vote upon a proposal to approve the adoption of the
1999 Equity Incentive Plan;

(3) To consider and vote upon a proposal to approve the adoption of the
Qualified Employee Share Purchase Plan;

(4) To consider and vote upon a proposal to amend the 1990 Stock Option
Plan for Non-Employee Trustees; and

(5) To transact such other business as may properly be brought before
the meeting or any adjournment thereof.

The Trustees have fixed the close of business on March 19, 1999 as the
record date for the determination of Shareholders entitled to notice of and to
vote at the meeting.

All Shareholders are cordially invited to attend the meeting. Whether or
not you expect to attend the meeting in person, please mark, sign and date the
enclosed proxy and return it promptly so that your shares may be voted. If you
attend the meeting, you may revoke your proxy and vote in person.

By Order of the Board of Trustees

JEFFREY A. LINN
Secretary

Philadelphia, Pennsylvania
March 29, 1999
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

200 South Broad Street
Philadelphia, Pennsylvania 19102

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PROXY STATEMENT FOR ANNUAL MEETING
OF HOLDERS OF CERTIFICATES OF BENEFICIAL INTEREST
TO BE HELD ON APRIL 29, 1999

This proxy statement and the enclosed proxy are being sent to Holders of
Certificates of Beneficial Interest ("Shareholders") of the Pennsylvania Real
Estate Investment Trust (the "Trust") on or about March 29, 1999 in connection
with the solicitation of proxies for use at the Annual Meeting of Holders of
Certificates of Beneficial Interest of the Trust to be held on April 29, 1999
at 11:00 a.m. at the Park Hyatt Philadelphia at the Bellevue, 200 South Broad
Street, Philadelphia, Pennsylvania.

The enclosed proxy is solicited on behalf of the Board of Trustees of the
Trust. The proxy is revocable at any time prior to its use by delivering a
subsequently executed proxy or written notice of revocation to the Secretary of
the Trust. The Annual Report of the Trust, including financial statements for
the fiscal year ended December 31, 1998 and for the four month period ended
December 31, 1997 is included herewith. No action will be taken with respect to
the Annual Report at the Annual Meeting and it is not to be regarded as proxy
solicitation material.

As of March 19, 1999, there were 13,314,223 Certificates of Beneficial
Interest in the Trust ("Shares") outstanding, each of which is entitled to one
vote on all matters to be presented at the 1999 Annual Meeting.

The Trust will bear the cost of preparing and mailing this Notice and
Proxy Statement and the enclosed proxy. Trustees, officers and regular
employees of the Trust may solicit proxies by personal interview, mail,
telephone or telegraph. Such persons will receive no compensation for any such
solicitation activities other than their regular salary, but will be reimbursed
for actual expenses in connection therewith. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries for proxy
material to be sent to their principals, and the Trust will reimburse such
persons for their expenses in so doing.

CHANGE IN FISCAL YEAR END

In October 1997, the Trust changed its fiscal year end from August 31 to
December 31. References to the "four months ended December 31, 1997" refer to
the transition period between the end of fiscal year 1997 on August 31, 1997
and the beginning of fiscal year 1998 on January 1, 1998. References herein to
fiscal years prior to 1998 refer to the fiscal year ending on August 31 of the
year indicated. References herein to fiscal years subsequent to 1997 refer to
the fiscal year ending on December 31 of the year indicated.

PROPOSAL NO. 1:

ELECTION OF TRUSTEES

The Trustees intend to cause Sylvan M. Cohen, Lee H. Javitch and Jonathan
B. Weller, the three Trustees whose terms expire at the 1999 Annual Meeting, to
be nominated for re-election at the 1999 Annual Meeting as Class A Trustees to
serve until the Annual Meeting to be held in the spring of 2002 and until their
respective successors have been duly elected and have qualified. If any of the
foregoing nominees becomes unable to or declines to serve, the persons named in
the accompanying proxy shall have discretionary authority to vote for a
substitute or substitutes unless the Board of Trustees reduces the number of
Trustees to be elected.

The Trust Agreement of the Trust provides that nominations for election to
the office of Trustee at any Annual or Special Meeting of Shareholders shall be
made by the Trustees, or by petition in writing delivered to the Secretary of
the Trust not fewer than thirty-five days prior to such Annual or Special
Meeting of Shareholders signed by the holders of at least two percent of the
Shares outstanding on the date of such petition. Unless nominations shall have
been made in accordance with such procedures, they will not be considered at
such

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meeting unless the number of persons properly nominated is fewer than the
number of persons to be elected to the office of Trustee at such meeting. In
such event, nominations for the Trustee positions which would not otherwise be
filled may be made at the meeting by any person entitled to vote in the
election of Trustees.

Assuming a quorum is present, the three nominees receiving the highest
number of votes cast at the Annual Meeting will be elected Trustees. For such
purposes, the withholding of authority to vote or the specific direction not to
cast a vote, such as a broker non-vote, will not constitute the casting of a
vote in the election of Trustees.

The Board of Trustees of the Trust currently consists of nine members who
serve staggered three year terms. The following table sets forth certain
information concerning the three nominees for the office of Class A Trustee,
the six Trustees who will continue in office after the 1999 Annual Meeting and
the executive officers of the Trust, including their ages, principal
occupations and the number of Shares of the Trust beneficially owned by them as
of March 1, 1999.

<TABLE>
<CAPTION>
Shares Beneficially Owned
on March 1, 1999 (1)
Principal Occupation Trustee --------------------------
Name Age and Affiliations Since Number Percent
- -------------------- ----- ------------------------------------------------ --------- ---------------- --------
<S> <C> <C> <C> <C> <C>
Nominees for the
Office of Trustee
Class A Trustees; Terms Expire in 1999
Sylvan M. Cohen 84 Chairman of the Board of Trustees of the 1960 739,789(2) 5.5%
Trust. Chief Executive Officer of the Trust
until September 30, 1997. Of counsel to the
Philadelphia law firm of Drinker Biddle &
Reath LLP and formerly partner in the Phila-
delphia law firm of Cohen, Shapiro, Polisher,
Shiekman and Cohen. Director of Orleans
Homebuilders, Inc. Trustee of EQK Realty
Investments I.
Lee H. Javitch 68 Private Investor. Former Chairman and Chief 1985 7,500(3) *
Executive Officer of Giant Food Stores, Inc.,
an owner and operator of supermarkets.
Director of First Maryland BanCorp.
Jonathan B. Weller 52 President and Chief Operating Officer of the 1994 168,645(4) 1.3%
Trust. From 1988 to 1993, Executive Vice
President and Director of Eastdil Realty, Inc.,
a real estate investment banking firm.
Trustees whose
Terms Continue
Class B Trustees; Terms Expire in 2000
Ronald Rubin(5) 67 Since September 30, 1997, Chief Executive 1997 213,859(6) 1.6%
Officer of the Trust. From 1992 to September
1997, Chairman and Chief Executive Officer
of The Rubin Organization, Inc. (now named
PREIT-RUBIN, Inc.). Director, PECO Energy
Corp.
Leonard I. Korman 63 Chairman and Chief Executive Officer, Kor- 1996 454,584(7) 3.4%
man Commercial Properties, Inc., a commer-
cial real estate management and development
firm since January, 1996. General partner, The
Korman Co., a real estate management and
development firm, since 1984.
Jeffrey P. Orleans 52 Chairman of the Board, Chief Executive 1986 60,610(8) *
Officer and Director of Orleans Homebuilders,
Inc. (formerly named FPA Corporation), a
residential real estate developer. Chief Execu-
tive Officer of Orleans Construction Corp., a
residential real estate developer, prior to
Orleans Homebuilders, Inc.'s acquisition of
such company in 1993.
</TABLE>
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<TABLE>
<CAPTION>
Shares Beneficially Owned
on March 1, 1999 (1)
Principal Occupation Trustee --------------------------------
Name Age and Affiliations Since Number Percent
- ---------------------------- ----- ----------------------------------------------- --------- -------------------- ----------
<S> <C> <C> <C> <C> <C>
Class C Trustees; Terms Expire in 2001
William R. Dimeling 57 Partner in Dimeling, Schreiber and Park, a 1982 9,187(9) *
private investment partnership. Director,
Addison Capital Shares.
George F. Rubin(5) 56 President, PREIT-RUBIN, Inc. (formerly 1997 111,612(10) *
named The Rubin Organization, Inc., which
was acquired by the Trust in September 1997)
since 1992.
Rosemarie B. Greco(5) 52 Principal, GRECOventures. From April to 1997 1,750(11) *
September 1998, Interim President and Chief
Executive Officer of the Private Industry
Council. Formerly President, CoreStates
Financial Corp. and President and Chief
Executive Officer, CoreStates Bank, N.A.
Director, PECO Energy Corp. and Sunoco,
Inc.
Non-Trustee
Executive Officers
Edward A. Glickman 41 Since September 30, 1997, Executive Vice -- 26,133(12) *
President and Chief Financial Officer of the
Trust. From 1993 to 1997, Executive Vice
President and Chief Financial Officer of The
Rubin Organization, Inc. (now named PREIT-
RUBIN, Inc.). Director, Strouse Greenberg
Realty Investments, Inc.
Jeffrey A. Linn 50 Senior Vice President-Acquisitions and Secre- -- 51,535(13) *
tary of the Trust.
Dante J. Massimini 65 Senior Vice President-Finance and Treasurer -- 31,124(14) *
of the Trust
All Trustees and executive -- -- -- 1,876,076(15) 13.5%
officers as a group (12
persons)
</TABLE>

- ------------
* Less than one percent.

(1) Unless otherwise indicated in the following footnotes, each Trustee and
Non-Trustee executive officer has sole voting and investment power with
respect to all such Shares.

(2) Includes 186,558 Shares owned by Mr. Cohen's spouse, 37,056 Shares owned
by a trust of which Mr. Cohen's wife is a co-trustee, 252 Shares owned by
a corporation 50% of whose outstanding shares are owned by Mr. Cohen and
the remaining 50% of whose outstanding shares are owned by Jeffrey P.
Orleans, a Trustee of the Trust, 132,023 Shares owned by a charitable
remainder unitrust of which Mr. Cohen is a co-trustee, and 57,813 Shares
subject to options that are currently exercisable or become exercisable
within 60 days from March 1, 1999. Mr. Cohen disclaims beneficial
ownership of all of the Shares referred to in this footnote other than
Shares owned by trusts of which Mr. Cohen is a trustee or a co-trustee,
Shares owned of record by Mr. Cohen's wife and the Shares subject to
options.

(3) Includes 7,500 Shares subject to options that are currently exercisable or
become exercisable within 60 days from March 1, 1999.

(4) Includes 154,445 Shares subject to options that are currently exercisable
or become exercisable within 60 days from March 1, 1999 and 400 Shares
held by Mr. Weller as custodian for his children under the New York
Uniform Gifts to Minors Act.

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(5) Pursuant to the TRO Contribution Agreement, dated as of July 30, 1997 (the
"TRO Contribution Agreement"), the Trust acquired all of the outstanding
non-voting shares of capital stock of The Rubin Organization, Inc. In
accordance with Section 5.19 of the TRO Contribution Agreement, the Board
of Trustees of the Trust elected Ronald Rubin, George F. Rubin and
Rosemarie B. Greco as Trustees of the Trust to fill the vacancies created
by the resignations of Robert Freedman, Jack Farber and Robert G. Rogers.
Ronald Rubin and George F. Rubin are brothers.

(6) Includes 144,359 Class A units of limited partnership interests in PREIT
Associates, L.P. currently redeemable for cash or, at the option of the
Trust, for a like number of Shares, and 37,500 Shares subject to options
that are currently exercisable or become exercisable within 60 days from
March 1, 1999. Excludes 55,525 and 27,661 Class A units of limited
partnership interests in PREIT Associates, L.P. redeemable for cash or a
like number of Shares beginning December 23, 1999 and February 25, 2000,
respectively.

(7) Includes 420 Shares owned by Mr. Korman's spouse, 87,570 Shares held by a
private foundation of which Mr. Korman is a co-trustee, 122,756 Shares
held in trust of which Mr. Korman is a co-trustee, and 750 Shares subject
to options that are currently exercisable or become exercisable within 60
days from March 1, 1999. Mr. Korman disclaims beneficial ownership of all
but 11,278 of the foregoing Shares.

(8) Includes 450 Shares owned by Mr. Orleans' spouse, 1,000 Shares held by Mr.
Orleans as custodian for his children under the Pennsylvania Uniform Gifts
to Minors Act, 947 Shares owned by an adult daughter of Mr. Orleans, 310
Shares held by trusts of which Mr. Orleans is co-trustee, 252 Shares owned
by a corporation 50% of whose shares are owned by Mr. Orleans and the
remaining 50% of whose shares are owned by Sylvan M. Cohen, Chairman of
the Board of Trustees of the Trust, and 4,750 Shares subject to options
that are currently exercisable or become exercisable within 60 days from
March 1, 1999. Mr. Orleans disclaims beneficial ownership of the Shares
owned by his wife and the Shares he holds as custodian under the
Pennsylvania Uniform Gifts to Minors Act.

(9) Includes 3,750 Shares subject to options that are currently exercisable or
become exercisable within 60 days from March 1, 1999.

(10) Includes 86,462 Class A units of limited partnership interests in PREIT
Associates, L.P. currently redeemable for cash or, at the option of the
Trust, for a like number of Shares, and 18,750 Shares subject to options
that are currently exercisable or become exercisable within 60 days from
March 1, 1999. Also includes 900 Shares held by a trust, the beneficiary
of which is Mr. Rubin's daughter, and 500 Shares held by Mr. Rubin's
spouse, of which Mr. Rubin disclaims beneficial ownership. Excludes 20,534
and 14,478 Class A units of limited partnership interest in PREIT
Associates, L.P. redeemable for cash or a like number of Shares beginning
December 23, 1999 and February 25, 2000, respectively.

(11) Includes 250 Shares subject to options that are currently exercisable or
become exercisable within 60 days from March 1, 1999.

(12) Includes 13,633 Class A units of limited partnership interests in PREIT
Associates, L.P. currently redeemable for cash or, at the option of the
Trust, for a like number of Shares, and 12,500 Shares subject to options
that are currently exercisable or become exercisable within 60 days from
March 1, 1999.

(13) Includes 43,195 Shares subject to options that are currently exercisable
or become exercisable within 60 days from March 1, 1999 and 500 Shares
that are held by Mr. Linn as custodian for his son under the Pennsylvania
Uniform Gifts to Minors Act.

(14) Includes 30,524 Shares subject to options that are currently exercisable
or become exercisable within 60 days from March 1, 1999.

(15) Includes 371,727 Shares subject to options that are currently exercisable
or become exercisable within 60 days from March 1, 1999 and 244,454 Class
A units of limited partnership interests in PREIT Associates, L.P.
currently redeemable for cash or, at the option of the Trust, for a like
number of shares. In certain instances, two Trustees beneficially own the
same Shares because they share voting or investment power over such
Shares. Such Shares have been counted only once in this total.

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PROPOSAL NO. 2:

THE 1999 EQUITY INCENTIVE PLAN

The Trust's 1999 Equity Incentive Plan (the "1999 Plan") was adopted by
the Board of Trustees on March 24, 1999. The purpose of the 1999 Plan is to
advance the interests of the Trust and its Shareholders by strengthening the
Trust's ability and the ability of PREIT-RUBIN, Inc. ("PRI") to attract and
retain key individuals with the desired training, experience and expertise, and
to furnish additional incentive to such key individuals to promote the Trust's
financial success by providing them with an equity ownership in the Trust
commensurate with the Trust's performance, as reflected in increased
shareholder value.

Set forth below is a general description of the 1999 Plan. Such
description is qualified in its entirety by reference to the 1999 Plan which is
attached hereto as Appendix A.

Eligible Participants; Maximum Number of Shares

Officers and other key employees of the Trust and its subsidiary entities
and of PRI and its subsidiary entities are eligible for awards under the 1999
Plan. Approximately 69 persons are eligible for awards.

Subject to any future adjustment for share splits and similar events, the
total number of Shares that can be delivered under the 1999 Plan initially is
400,000 (of which only 247,000 Shares are newly authorized; the remaining
153,000 Shares were consolidated from other stock option plans of the Trust and
of PRI by reducing the number of Shares previously authorized and available
under those plans). In addition, Shares that are subject to options under the
Pennsylvania Real Estate Investment Trust 1990 Incentive and Nonqualified Stock
Option Plan, the Pennsylvania Real Estate Investment Trust 1997 Stock Option
Plan, and the PREIT-RUBIN, Inc., 1998 Stock Option Plan that expire or
otherwise terminate will automatically be made available for awards (other than
incentive stock options ("ISOs")) under the 1999 Plan. ISOs may be granted
under the 1999 Plan to purchase a maximum of 400,000 Shares. No individual may
receive options and/or stock appreciation rights for more than 250,000 Shares
during any calendar year under the 1999 Plan. If any award that requires the
participant to exercise it in order for Shares to be delivered terminates
without having been exercised in full, or if any award payable in cash or
Shares is paid in cash rather than in Shares, the number of Shares as to which
such award was not exercised or for which cash was paid will continue to be
available for future awards. In addition, the aggregate fair market value
(determined at the time the option is granted) of Shares with respect to which
ISOs are exercisable for the first time by any participant during any calendar
year (under the 1999 Plan and under any other ISO plan of the Trust or a
related corporation) may not exceed $100,000.

Stock Options

The 1999 Plan permits the Executive Compensation and Human Resources
Committee (the "Compensation Committee") to grant options that qualify as ISOs
under the Internal Revenue Code of 1986, as amended (the "Code"), and stock
options that do not so qualify ("NQSOs"). Only key employees of the Trust or a
related corporation may receive ISOs. The Compensation Committee also
determines the exercise price of each option. However, the exercise price of an
ISO may not be less than 100% of the fair market value of the Shares on the
date of grant (110% in the case of an ISO granted to a greater-than-10%
shareholder). The exercise price of any option may not be less than par value
of the Shares. The Compensation Committee may not reduce the exercise price of
an option after it is granted.

The term of each option will be fixed by the Compensation Committee, but
may not exceed 10 years from the date of grant (five years in the case of an
ISO granted to a greater-than-10% shareholder). The Compensation Committee will
determine at what time or times each option may be exercised. Options may be
made exercisable in installments, and the exercisability of options may be
accelerated by the Compensation Committee. Also, if the fair market value of
the Shares subject to an option (other than an option granted in tandem with a
stock appreciation right) exceeds the exercise price of the option at the time
of exercise, the Compensation Committee in its discretion and upon the request
of the participant holding the option, may cancel the option and pay the
participant an amount in cash or Shares equal to the difference between the
fair market value of the Shares which would have been purchased pursuant to the
exercise (determined on the date the option is canceled) and the exercise price
which would have been paid.

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The exercise price of an option granted under the 1999 Plan must be paid
in full in cash or by check, bank draft, or money order or, if the terms of the
option permit, by Shares which have been held by the participant for at least
one year, by delivery of an irrevocable undertaking by a broker to deliver
promptly to the Trust sufficient funds to pay the exercise price, or by any
combination of the foregoing.

In addition to the options described above, the 1999 Plan also requires
the Trust to issue NQSOs to PRI at certain times at a purchase price equal to
the value of the NQSOs as determined as of the date of issuance in accordance
with the Black-Scholes option pricing model. Such NQSOs are to be issued by the
Trust when PRI grants an NQSO under the PREIT-RUBIN, Inc. 1998 Stock Option
Plan (the "PRI Plan") or under a stock option plan that may be established in
the future by PRI (with the prior written consent of the Trust). Currently, no
Shares are available for issuance under the PRI Plan. PRI may only amend the
PRI Plan to increase the number of Shares available under it with the prior
written consent of the Trust, pursuant to the Stock Option Agreement entered
into by the Trust and PRI as of July 15, 1998. NQSOs issued to PRI will have
the terms and conditions required by such Stock Option Agreement.

Stock Appreciation Rights

The Compensation Committee may grant stock appreciation rights, either
alone or in tandem with options, entitling the participant upon exercise to
receive an amount in cash and/or Shares (as determined by the Compensation
Committee), measured by the increase since the date of grant in the value of
the Shares covered by such right. Stock appreciation rights granted in tandem
with options will be exercisable only at such time(s), and to the extent, that
the related option is exercisable and will terminate upon the exercise of the
related option. The Compensation Committee may accelerate the date(s) on which
stock appreciation rights not granted in tandem with stock options may be
exercised.

Restricted Stock

The Compensation Committee may grant Shares to participants either with or
without any required payment by the participant, subject to such restrictions
as the Compensation Committee may determine. The Compensation Committee may
accelerate the date(s) on which the restrictions will lapse. Prior to the lapse
of restrictions on Shares of restricted stock, the participant will have voting
and dividend rights on the Shares. Any participant who makes an election under
Section 83(b) of the Code with respect to restricted stock (regarding the
immediate recognition of income) must provide a copy thereof to the Trust
within 10 days of the filing of such election with the Internal Revenue
Service.

Performance Stock

The Compensation Committee may grant awards entitling a participant to
receive Shares without payment provided certain performance criteria are met.
Receipt of the Shares may be conditioned on the achievement of personal,
corporate, or departmental performance, Share performance, or any other
category of performance that the Compensation Committee determines. Any
conditions in an award of performance stock may be waived or modified by the
Compensation Committee at any time.

Dividend Equivalent Rights

The Compensation Committee may grant awards that entitle the participant
to receive a benefit in lieu of cash dividends that would have been payable on
any or all Shares subject to another award granted to the participant had such
Shares been outstanding.

Loans

The Compensation Committee may authorize a loan from the Trust to a
participant, either on the date of or after the grant of any award to the
participant (except that the ability of the Compensation Committee to authorize
a loan in connection with an ISO must be included in the participant's award
agreement at the time of the award). A loan may be made either in connection
with the purchase of Shares under the award or with the payment of any Federal,
state, or local income tax with respect to income recognized as a result of the
award. The

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Compensation Committee will have full authority to decide whether to make a
loan and to determine the amount, terms, and conditions of the loan. However,
the loan must be made on the participant's personal, negotiable, demand
promissory note and the interest rate may not be lower than the lowest rate
that will avoid the imputation of interest under the Code.

Transferability

No award granted under the 1999 Plan may be transferred other than by will
or by the laws of descent and distribution. During a participant's lifetime, an
award requiring exercise may be exercised only by the participant (or in the
event of the participant's incapacity, the person(s) legally appointed to act
on the participant's behalf).

Treatment of Awards upon Termination of Employment

If a participant's employment terminates by reason of death or disability,
all options and stock appreciation rights then held by the participant that
were not exercisable immediately prior to such termination of employment will
terminate on that date (except as otherwise determined by the Compensation
Committee). Any remaining options and stock appreciation rights will remain
exercisable for one year from the date of termination of employment (or such
shorter or longer period as the Compensation Committee decides). In the event
of any other termination of employment, all options and stock appreciation
rights held by the participant that are not then exercisable shall terminate.
Any options or stock appreciation rights that were exercisable will generally
continue to be so for three months (or for such longer period as the
Compensation Committee decides). Notwithstanding the post-termination exercise
periods described above, no option or stock appreciation right may be exercised
beyond its original term.

If a participant who holds Shares of restricted stock terminates his or
her employment for any reason, including death or disability prior to the lapse
of the restrictions, the participant must resell to the Trust the shares of
restricted stock for the amount paid for such Shares, or forfeit them to the
Trust if no cash was paid; provided, however, that the Compensation Committee
may provide that the restrictions lapse upon any such termination of
employment. Except as otherwise decided by the Compensation Committee, rights
under a performance award and dividend equivalent rights to which a participant
has not become irrevocably entitled will terminate upon the participant's
death, retirement, or other termination of employment with the Trust.

Adjustments in Shares; Certain Corporate Transactions

In the event of a stock dividend, stock split, reverse split, or similar
change in the capitalization of the Trust, the Compensation Committee will make
appropriate adjustments to the maximum number of Shares that may be delivered
under the 1999 Plan, the maximum number of Shares with respect to which ISOs
may be granted, the maximum number of Shares with respect to which other
options or stock appreciation rights may be granted, the exercise price of
outstanding awards, and the number of Shares issuable upon exercise or vesting
of an award.

In the event of a "change in control" of the Trust (as defined in the 1999
Plan), all outstanding options and any stock appreciation rights granted in
tandem with an option will become fully vested and exercisable.

In the event of a corporate transaction (as, for example, a merger,
consolidation, or acquisition of property or stock) each outstanding award will
be assumed by the surviving or successor entity. However, in the event of a
proposed corporate transaction, the Compensation Committee may terminate all or
a portion of any outstanding award if it determines that doing so is in the
best interests of the Trust. If so, the Compensation Committee will give each
participant holding an option or a stock appreciation right not less than seven
days' notice prior to the termination, and any option or stock appreciation
right that is to be so terminated may be exercised (to the extent it is then
exercisable) before the termination. Further, in the event of a corporate
transaction, the Compensation Committee, in its discretion, may (i) accelerate
the date on which options and stock appreciation rights become exercisable,
(ii) remove restrictions from the outstanding Shares of restricted stock, (iii)
cause the delivery of any performance stock, even if the associated performance
goals have not been met, (iv) cause the

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payment of any dividend equivalent rights, and/or (v) forgive all or any
portion of a loan. Finally, the Compensation Committee may, in lieu of the
action described above, arrange to have the surviving or acquiring entity grant
the participant a replacement award substantially equivalent to the award.

Withholding Requirements

The grant or exercise of awards may be subject to tax withholding
requirements, as described under "Federal Income Tax Consequences" below. Where
Shares may be delivered under an award, the Compensation Committee may require
that the participant either remit to the Trust an amount necessary to satisfy
the withholding requirements or make other satisfactory arrangements
(including, if the Compensation Committee so permits, the holding back of
Shares from payments under the award).

Discontinuance, Cancellations, Amendment and Termination

The Compensation Committee may at any time discontinue granting awards
under the 1999 Plan. The Board may at any time amend the 1999 Plan (and the
Compensation Committee may amend any outstanding award, other than lowering the
exercise price of options or the purchase price of restricted stock) for any
purpose, or may at any time terminate the 1999 Plan, except that the following
amendments may not be made without the approval of the shareholders of the
Trust: (i) an increase in the maximum number of Shares with respect to which
ISOs may be granted under the 1999 Plan, (ii) a change in the class of
employees eligible to receive ISOs under the 1999 Plan, (iii) an extension of
the duration of the 1999 Plan with respect to ISOs, and (iv) any amendment to
the 1999 Plan requiring shareholder approval under the $1 million deduction
limit on compensation in Section 162(m) of the Code. Further, no amendment or
termination of the 1999 Plan may adversely affect the rights of any participant
(without the participant's consent) under any award previously granted.

Federal Income Tax Consequences

Based on the advice of counsel, the Trust believes that, with respect to
options granted under the 1999 Plan, the normal operation of the 1999 Plan
should generally have, under the Code and the regulations and rulings
thereunder, all as in effect on March 1, 1999, the principal Federal income tax
consequences described below. The consequences described below do not take into
account any changes to the Code or the regulations thereunder that may occur
after March 1, 1999.

Incentive Stock Options. To the extent options issued under the 1999 Plan
qualify as ISOs under Section 422 of the Code, the principal Federal income tax
consequences to each participant receiving the options (an "optionee") and to
the Trust should generally be as follows:

(1) The optionee will not recognize taxable income upon the grant of an
ISO. Moreover, the optionee generally will not recognize taxable income
upon the exercise by the optionee of an ISO, provided the optionee was an
employee of the Trust or any of its subsidiary corporations, as defined in
Section 424(f) of the Code, during the entire period from the date of
grant of the ISO until three months before the date of exercise (increased
to 12 months if employment ceased due to permanent and total disability).
However, an amount, generally equal to the excess of the fair market value
of the Shares over the exercise price at the time of exercise, will be
included in the optionee's alternative minimum taxable income in the year
of exercise. The employment requirement is waived in the event of the
optionee's death. (Of course, in all of these situations, the ISO itself
may provide a shorter exercise period after employment ceases than the
allowable period under the Code.)

If the employment requirements described above are not met, the tax
consequences relating to NQSOs (discussed below) will apply.

(2) If the optionee disposes of the Shares acquired under an ISO after
at least two years following the date of grant of the ISO and at least one
year following the date of transfer of the Shares to the optionee
following exercise of the ISO, the optionee will recognize a long-term
capital gain or loss equal to the difference between the amount realized
upon the disposition and the exercise price, assuming such Shares were
held by the optionee as capital assets.

8
<PAGE>

(3) If the optionee makes a disqualifying disposition of the Shares
(that is, disposes of the Shares within two years after the date of grant
of the ISO or within one year after the transfer of the Shares to the
optionee), but all other requirements of Section 422 of the Code are met,
the optionee will generally recognize ordinary income upon disposition of
the Shares in an amount equal to the lesser of (i) the fair market value
of the Shares on the date of exercise minus the exercise price, or (ii)
the amount realized on disposition minus the exercise price. Disqualifying
dispositions of Shares may also, depending upon the sales price, result in
either long-term or short-term capital gain or loss under the Code rules
which govern other stock dispositions, assuming that the Shares are held
as capital assets.

(4) Where all requirements of Section 422 of the Code, including the
holding and employment requirements described in (1) and (2) above, are
met, the Trust is not entitled to any Federal income tax deduction with
respect to the ISO. In those cases where any of such requirements are not
met, the Trust will be allowed a Federal income tax deduction to the
extent of the ordinary income includable in the optionee's gross income in
accordance with the provisions of Section 83 of the Code (and Section
162(m) of the Code, to the extent applicable) and the regulations
thereunder.

Nonqualified Stock Options. To the extent options, when granted, are
NQSOs, or to the extent options, when granted, are intended to be ISOs but fail
to qualify as such, the principal Federal income tax consequences to each
optionee and to the Trust should generally be as follows:

(1) The optionee will not recognize taxable income upon the grant of an
NQSO.

(2) Generally, the optionee will recognize ordinary income at the time
of the exercise of the NQSO, in an amount equal to the excess of the fair
market value of the Shares at the time of such exercise over the exercise
price.

(3) The Trust will not be entitled to a deduction upon the grant of an
NQSO. The Trust will be entitled to a deduction to the extent of the
ordinary income recognized by the optionee in accordance with the rules of
Section 83 of the Code (and Section 162(m) of the Code, to the extent
applicable) and the regulations thereunder.

(4) Gain or loss recognized by the recipient upon a subsequent
disposition of such Shares will be short- or long-term capital gain or
loss, if such Shares are otherwise capital assets in the hands of the
recipient.

(5) Section 162(m) of the Code limits the extent to which the
remuneration paid to the chief executive officer of the Trust (or the
person acting in such a capacity) and the four highest compensated
executives (other than the chief executive officer) (collectively, the
"Covered Employees") is deductible by a corporation when the annual
remuneration for any of these officers exceeds $1,000,000 in a calendar
year. Remuneration for purposes of Section 162(m) includes cash
compensation and noncash benefits paid for services (including, with
respect to NQSOs, the difference between the exercise price and the market
value of the stock at the time of exercise), subject to certain
exclusions. Approval of the 1999 Plan by the Trust's stockholders will
prevent the spread upon exercise of NQSOs from treatment as remuneration
for purposes of Section 162(m) so that if any remuneration paid to any of
the Covered Employees exceeds $1,000,000 in the future, any compensation
recognized upon the exercise of the NQSOs granted under the 1999 Plan will
be deductible by the Trust.

Required Vote

The affirmative vote of the holders of a majority of the Shares present in
person or by proxy and casting a vote on this Proposal will be necessary to
approve adoption of the 1999 Plan. For purposes of the foregoing, abstentions
and broker non-votes shall not be deemed to be votes cast.

Board Recommendation

The Board of Trustees recommends that Shareholders vote FOR approval of
the 1999 Equity Incentive Plan.

9
<PAGE>

PROPOSAL NO. 3:

THE QUALIFIED
EMPLOYEE SHARE PURCHASE PLAN

The Qualified Employee Share Purchase Plan (the "Share Purchase Plan") was
adopted by the Board of Trustees on October 13, 1998. The Share Purchase Plan
is intended to encourage share ownership by all eligible employees of the Trust
and of designated subsidiary corporations of the Trust by providing them the
opportunity to acquire an equity interest (or increase their equity interest)
in the Trust. Approximately 130 persons are in the class eligible for awards.

Set forth below is a general description of the Share Purchase Plan. Such
description is qualified in its entirety by reference to the Share Purchase
Plan which is attached hereto as Appendix B.

A participating employee will have the right to authorize deductions from
his compensation for the purpose of purchasing Shares as of the last business
day of each calendar quarter during a calendar year beginning April 1, 1999 (an
"Option" to purchase such Shares). The maximum number of Shares that may be
issued under Options is 82,000.

Administration

The Compensation Committee of the Board of Trustees administers the Share
Purchase Plan.

Duration and Amendment

The Compensation Committee may amend or terminate the Share Purchase Plan
at any time except that no amendment may permit the granting of Options under
the Share Purchase Plan to persons other than employees of the Trust or a
subsidiary corporation, or otherwise cause Options issued under it to fail to
meet the requirements of Section 423 of the Code. Furthermore, the Share
Purchase Plan may not, without shareholder approval, be amended in any manner
that will change the number of Shares subject to the Share Purchase Plan or
change the employees (or class of employees) eligible to receive Options under
the Share Purchase Plan.

Eligible Employees

Persons eligible to receive Options for a calendar year are those
employees of the Trust or a designated subsidiary corporation who are
customarily employed for more than 20 hours per week and for more than five
months in any calendar year. Only employees who have been employed by the Trust
or a designated subsidiary corporation for at least six months and are employed
by the Trust or a designated subsidiary corporation on the date their
participation in the Share Purchase Plan is to begin will be eligible.

No Option may be granted under the Share Purchase Plan to any employee if
the Shares which such employee has a right to acquire under the Option will
aggregate -- together with all Shares then held by the employee and all other
Shares which he has rights to acquire under outstanding incentive and
nonqualified stock options -- 5% or more of the total combined voting power or
value of all classes of then outstanding Shares of the Trust or shares of a
subsidiary corporation (if any).

Payroll Deductions

At the time of completing an authorization for payroll deduction, the
participating employee will elect to have deducted from his pay between 1% and
10% (inclusive) of his basic rate of compensation from the Trust or a
designated subsidiary corporation for the calendar year. Payroll deductions
made under the Share Purchase Plan will be held as general assets of the Trust
or a designated subsidiary corporation and will not be credited with interest.

10
<PAGE>

Grant of Options

On April 1, 1999 (and on the first day of each January thereafter), a
participating employee will be granted an Option, exercisable in installments
on the last business day of each purchase period during the year. There will be
four purchase periods -- coinciding with the calendar quarters (January -
March, April - June, July - September, and October - December) -- during each
calendar year after 1999. (There will be three purchase periods in the April 1
through December 31, 1999 period.)

The number of Shares purchasable by an employee for a purchase period is
determined by dividing the employee's accumulated payroll deductions for the
purchase period by the per-Share exercise price of the Option installment for
such purchase period. However, the aggregate number of full and fractional
Shares purchasable by a participating employee under an Option for a calendar
year may not exceed the lesser of (i) 2,000, or (ii) the number determined by
dividing $25,000 by the fair market value of a Share on the most recent
business day before January 1 of years after 1999 (or on April 1, 1999). The
per-Share fair market value shall be the average between the highest and lowest
quoted selling prices of the Shares as reported on the New York Stock Exchange
on the applicable date.

The exercise price per Share of the Option exercisable on the last
business day of a purchase period shall be the lower of (i) 85% of the
per-Share fair market value of the Shares on the most recent business day
before January 1 of the year in which the purchase period occurs (or on April
1, 1999), or (ii) 85% of the per-Share fair market value of the Shares on the
exercise date (i.e., the last business day) of such purchase period.

No Option shall permit the rights of an employee to purchase Shares under
all employee stock purchase plans that are intended to qualify under Section
423 of the Code to accrue at a rate which exceeds $25,000 in fair market value
of such Shares (determined at the time Options are granted) for each calendar
year in which the Option is outstanding at any time.

Exercise of Options

On the exercise date (i.e., the last business day) of each purchase
period, a participating employee will be automatically deemed to have exercised
his Option installment for that purchase period at the exercise price described
in "Grant of Options" above, unless an election to withdraw all accumulated
payroll deductions has been made. Upon the exercise of the Option, amounts in
the participating employee's account will be applied to purchase the number of
full and fractional Shares purchasable with the employee's accumulated payroll
deductions, subject to the limits described in "Grant of Options" above. Any
remaining unapplied funds in a participating employee's account at the end of a
purchase period will be returned to the employee.

Rights as a Shareholder

An employee will have no rights as a shareholder with respect to any
Shares covered by his Option until the date the Option is exercised in
accordance with the terms of the Share Purchase Plan.

Federal Income Tax Consequences

Based on the advice of counsel, the Trust believes that the normal
operation of the Share Purchase Plan should generally have, under the Code and
the regulations and rulings and thereunder, all as in effect on March 1, 1999,
the principal Federal income tax consequences described below. The tax
consequences described below do not take into account any changes to the Code
or the regulations thereunder that may occur after March 1, 1999.

The Share Purchase Plan is designed to meet the requirements of Section
423 of the Code. Therefore, no income will be recognized for Federal income tax
purposes by employees when they acquire rights under the Share Purchase Plan at
the beginning of an Option term or when they purchase Shares on the exercise
date of a purchase period. The Trust will receive no deduction at either the
beginning of an Option term or when employees purchase Shares.

If an employee disposes of the Shares purchased under the Share Purchase
Plan more than two years after the date the Option was granted to the employee,
or if the employee dies while owning the Shares, the employee

11
<PAGE>

will recognize ordinary income equal to the lesser of (i) 15% of the fair
market value of the Shares on the date the Option was granted to the employee,
or (ii) the amount the employee realized on the disposition minus what the
employee paid for the Shares. The Trust will not receive a deduction for the
amount the employee recognizes as income. Additional gain (or loss), if any,
will be long-term capital gain (or loss).

If an employee disposes of the Shares within two years after the date the
Option was granted to the employee, the employee will recognize ordinary income
and the Trust will receive a deduction equal to the fair market value of the
Shares on the date the employee purchased them minus what the employee paid for
the Shares. Additional gain (or loss), if any, will be either long- or
short-term capital gain (or loss), depending on how long the employee held the
Shares.

Required Vote

The affirmative vote of the holders of a majority of the Shares present in
person or by proxy and casting a vote on this Proposal will be necessary to
approve adoption of the Share Purchase Plan. For purposes of the foregoing,
abstentions and broker non-votes shall not be deemed to be votes cast.

Board Recommendation

The Board of Trustees recommends that Shareholders vote FOR approval of
the Qualified Employee Share Purchase Plan.

12
<PAGE>

PROPOSAL NO. 4:

AMENDMENT NO. 2 TO THE 1990 STOCK OPTION PLAN
FOR NON-EMPLOYEE TRUSTEES

The Trust's 1990 Stock Option Plan for Non-Employee Trustees (the "Trustee
Plan") was approved in its original form by the Board of Trustees on September
17, 1990 and by the Shareholders on December 19, 1990. As originally approved,
the Trustee Plan authorized the granting of nonqualified stock options to
purchase up to an aggregate of 100,000 Shares to Trustees of the Trust who were
not employees of the Trust or any affiliate of the Trust. Under the Trustee
Plan as approved in its original form, options to purchase 1,000 Shares are
granted automatically to each non-employee Trustee on the last trading day in
January of each of the years 1991 through 1997. The Trustee Plan was amended
(with the approval of the Shareholders) in 1997 to extend it through January
2004. Options to purchase 42,000 Shares remain available under the Trustee
Plan. Five persons are in the class eligible for options.

By unanimous written consent dated March 24, 1999, the Trustees adopted,
subject to approval by the Shareholders at the Annual Meeting, an amendment to
the Trustee Plan (the "1999 Amendment"). The 1999 Amendment approved by the
Trustees:

o Increases the automatic annual grant in January to each non-employee
Trustee from an option for 1,000 Shares to an option for 2,500 Shares.

o Provides for an automatic grant of an option for 5,000 Shares to a newly
elected (i.e., elected for the first time) non-employee Trustee. If the
automatic grant occurs during the six months preceding an automatic
January grant, the newly elected Trustee will not be eligible for the
automatic January grant.

o Clarifies that option grants may not be made under the Trustee Plan after
January 31, 2004, unless the Trustee Plan is extended further.

Set forth below is a general description of the Trustee Plan, as amended
to give effect to the 1999 Amendment. Such description is qualified in its
entirety by reference to the Trustee Plan, reflecting the 1999 Amendment, which
is attached hereto as Appendix C.

Shares Subject to the Trustee Plan

Under the Trustee Plan, nonqualified stock options ("NQSOs") to purchase
up to an aggregate of 100,000 Shares may be issued by the Trust to Trustees of
the Trust who are not employees of the Trust or any affiliate of the Trust,
subject to adjustments to reflect any stock splits, stock dividends, share
combinations or similar changes in the Trust. Shares issuable under the Trustee
Plan may be authorized but unissued shares or reacquired shares, and the Trust
may purchase shares for this purpose.

Administration

The Trustee Plan will continue to be administered by the Compensation
Committee. The Compensation Committee members will have full authority, subject
to the terms of the Trustee Plan, to administer the Trustee Plan.

Amendment and Duration of the Trustee Plan

Except to the extent limited by the Trustee Plan, the Board of Trustees of
the Trust will continue to have the power, without the consent of the
Shareholders, to discontinue, amend or revise the terms of the Trustee Plan.
The Trustee Plan provides that, without the approval of the Shareholders, no
amendment or revision shall change the selection or eligibility of Trustees to
receive options under the Trustee Plan, change the number of Shares subject to
any such options or the exercise price thereunder, or materially increase the
benefits accruing to participants under the Trustee Plan.

No options may be granted after January 31, 2004, but options outstanding
at that time will remain exercisable in accordance with their terms.

13
<PAGE>

Terms and Conditions of Stock Options

NQSOs may be granted under the Trustee Plan for terms of not more than 10
years at an exercise price per share equal to 100% of the fair market value of
the Shares underlying the options on the date of the grant of the option. Each
option granted under the Trustee Plan will become exercisable and mature in
four equal installments, commencing on the first anniversary of the date of the
grant and annually thereafter. Generally, each option under the Trustee Plan
expires 10 years from the date of the grant. The Compensation Committee may, in
its discretion, revise previously granted options held by a Trustee who is
terminating his or her service on the Board to extend the exercise period and
accelerate the vesting of such options. Options granted under the Trustee Plan
may be exercised only upon payment to the Trust of the full exercise price in
cash or by check at the time of exercise. Options are not assignable or
transferable by any optionee other than by will or by the laws of descent and
distribution.

Stock Option Agreements

The Trustee Plan also requires that optionees enter into written
agreements with the Trust which incorporate the terms and conditions of the
options as set forth in the Trustee Plan.

Adjustments Upon Mergers and Other Events

In the event the Shares, as presently constituted, are changed into or
exchanged for a different number or kind of securities of the Trust or of
another trust or corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split, or otherwise), then there shall be
substituted for or added to each Share previously underlying options granted
under the Trustee Plan the number or kind of Shares or other securities into
which each outstanding Share was changed or for which such Share was exchanged.
In addition, the Board of Trustees has the power to make appropriate amendments
to the price and other terms of such options as the Board may deem to be
equitable. Notwithstanding the foregoing, the Board of Trustees has the power,
in the event of a merger or consolidation of the Trust or other specified
events, to accelerate the vesting and termination of outstanding options, to
require the forfeiture of all options upon payment of certain amounts, or to
make such other amendments to such options as the Board of Trustees deems
equitable.

Other Considerations

The Trustee Plan is not qualified under Section 401(a) of the Code, and,
based upon current law and published interpretations, the Trust believes that
the Trustee Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended.

At March 1, 1999, options for 58,000 Shares had been granted under the
Trustee Plan, 18,500 of which have been exercised. If the 1999 Amendment is
approved by the Shareholders, options to purchase 2,500 Shares will be granted
automatically to each eligible Trustee on the last trading day in each January
from 2000 through 2004 and options to purchase 5,000 Shares will be granted
automatically to each newly elected eligible Trustee through January 2004 (but
if such initial grant occurs during the six months preceding an automatic
January grant, the Trustee will not be eligible for the next automatic January
grant).

Federal Income Tax Consequences

Based on the advice of counsel, the Trust believes that the normal
operation of the Trustee Plan should generally have, under the Code and
regulations and rulings thereunder, all as in effect on March 1, 1999, the
principal Federal income tax consequences described below. The consequences
described below do not take into account any changes to the Code or the
regulations thereunder that may occur after March 1, 1999.

(1) The optionee will not recognize taxable income upon the grant of an
NQSO.

14
<PAGE>

Required Vote

The affirmative vote of the holders of a majority of the Shares present in
person or by proxy and casting a vote on this Proposal will be necessary to
approve adoption of the 1999 Amendment to the Trustee Plan. For purposes of the
foregoing, abstentions and broker non-votes shall not be deemed to be votes
cast.

Board Recommendation

The Board of Trustees recommends that Shareholders vote FOR approval of
the 1999 Amendment to the 1990 Stock Option Plan for Non-Employee Trustees.

15
<PAGE>

ADDITIONAL INFORMATION

Summary Compensation Table

The following table sets forth certain information concerning the
compensation paid by the Trust for the last three complete fiscal years and for
the four months ended December 31, 1997 to the Trust's Chief Executive Officer
and the four other most highly compensated executive officers of the Trust.

<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
--------------------------------------------------- -------------
All Other
Name and Principal Other Annual Compensation
Position Year Salary ($) Bonus ($) Compensation($)(1) Options (#) ($) (2)
- ------------------------ ---- ---------- --------- ----------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sylvan M. Cohen 1998 345,000(4) -- -- -- 9,070
Chairman and Trustee 1997(3) 115,000(5) -- -- -- --
1997 345,000 -- -- -- 9,070
1996 342,333 -- -- -- 9,070

Ronald Rubin 1998 345,000(4) 72,790(6) -- -- --
Chief Executive 1997(3) 92,885(5) -- -- 150,000 --
Officer and Trustee

Jonathan B. Weller 1998 315,000(4) 66,461(6) -- -- 52,741
President and Chief 1997(3) 99,711(5) -- -- -- --
Operating Officer and 1997 301,731 50,000 15,250 20,000 33,775
Trustee 1996 297,212 -- -- 20,000 32,790

Edward A. Glickman 1998 230,000(4) 48,738(6) -- -- --
Executive Vice 1997(3) 61,923(5) -- -- 50,000 --
President And Chief
Financial Officer

Jeffrey A. Linn 1998 160,000(4) 25,000(6) -- -- 40,872
Senior Vice President- 1997(3) 44,625(5) -- -- -- --
Acquisitions and 1997 134,375 20,000 27,825 10,000 20,052
Secretary 1996 130,797 -- -- 10,000 19,277
</TABLE>

- ------------
(1) Amounts shown in fiscal 1997 represent paid accrued vacation salary.

(2) All amounts for Mr. Cohen represent annual premium payments on life
insurance provided under Mr. Cohen's employment agreement. Amounts for Mr.
Weller include $9,750 of annual premium payments on life insurance
provided under Mr. Weller's employment agreement. Amounts shown include
discretionary contributions by the Trust to the accounts of Messrs. Weller
and Linn in the Trust's 401(k) retirement plan in the amounts of $7,164
and $6,010, respectively, in fiscal 1997, and in the amounts of $7,182 and
$5,163, respectively, in fiscal 1996. All other amounts represent
anticipated contributions by the Trust with respect to fiscal 1998, fiscal
1997 and fiscal 1996 under the Supplemental Retirement Plan in which
Messrs. Weller and Linn are participants. Amounts listed as payable under
the Supplemental Retirement Plan for fiscal 1998 include amounts payable
for the four months ended December 31, 1997.

(3) Represents the four months ended December 31, 1997.

(4) With respect to fiscal 1998, all of Mr. Cohen's salary was paid by the
Trust; $70,000 of Mr. Rubin's salary was paid by the Trust and $275,000
was paid by PRI; $189,000 of Mr. Weller's salary was paid by the Trust and
$126,000 was paid by PRI; $92,000 of Mr. Glickman's salary was paid by the
Trust and $138,000 was paid by PRI; and $128,000 of Mr. Linn's salary was
paid by the Trust and $32,000 was paid by PRI.

16
<PAGE>

(5) With respect to the four months ended December 31, 1997, the salaries of
Messrs. Cohen, Weller and Linn were paid by the Trust and the salaries of
Messrs. Rubin and Glickman were paid by PRI.

(6) The bonus for fiscal 1998 was paid on March 15, 1999. With respect to such
bonuses, $14,558 of Mr. Rubin's bonus was paid by the Trust and $58,232
was paid by PRI; $39,877 of Mr. Weller's bonus was paid by the Trust and
$26,584 was paid by PRI; $19,495 of Mr. Glickman's bonus was paid by the
Trust and $29,243 was paid by PRI; $20,000 of Mr. Linn's bonus was paid by
the Trust and $5,000 was paid by PRI.

Employment Agreements

The Trust entered into an Employment Agreement with Mr. Cohen on July 16,
1982, which was amended and restated on March 14, 1985 and further amended as
of January 1, 1990 and September 29, 1997. The Employment Agreement provides
that Mr. Cohen is to serve as Chairman of the Board of Trustees of the Trust
and Chairman of the Property Committee of the Board of Trustees. Pursuant to
the 1997 amendment, the employment term shall continue until December 31, 2000,
with automatic calendar year renewals thereafter that will continue until
written notice of termination is delivered by either Mr. Cohen or the Trust at
least 180 days prior to the end of the then current term. Mr. Cohen's current
annual base compensation is $345,000, and the agreement provides that such
compensation cannot be unilaterally decreased by the Trust. Following the
termination of Mr. Cohen's employment for any reason (including expiration of
the term) other than termination for specified cause, the Trust is required to
make payments to Mr. Cohen and, in the event his wife survives him, to Mr.
Cohen's widow. Post-termination payments to Mr. Cohen are to continue for the
balance of his lifetime at a rate equal to, subject to an annual cost-of-living
adjustment, 50% of the rate of Mr. Cohen's highest annual base compensation
during his employment with the Trust. If Mr. Cohen is survived by his wife, the
Trust is to pay her for the balance of her lifetime at a rate equal to, subject
to an annual cost-of-living adjustment, the greater of (i) 25% of the rate of
Mr. Cohen's highest annual base compensation during Mr. Cohen's employment with
the Trust or (ii) 50% of the rate of the adjusted payments to which Mr. Cohen
shall have been entitled at the time of his death. During fiscal 1998, the
Trust was not required to accrue on its financial statements any additional
amount in respect of the aforementioned post-termination payments. As of the
end of fiscal 1998, such accrual equals approximately $755,000. The Employment
Agreement also requires the Trust to maintain $150,000 of life insurance
coverage on Mr. Cohen's life, payable to beneficiaries designated by Mr. Cohen.

The Trust entered into an Employment Agreement with Mr. Ronald Rubin as of
September 30, 1997 for an initial term of five years and extending year-to-year
thereafter until terminated by either party. The Employment Agreement provides
for annual base salary of $345,000, provided that, at all times during the term
of the Employment Agreement, the base salary must be at least equal to the
highest amount paid to any other person employed by the Trust or PRI. In
accordance with the Employment Agreement, on September 30, 1997, the Trust
granted Mr. Rubin nonqualified stock options to purchase 150,000 Shares at an
exercise price equal to the fair market value of the Shares on such date. If
Mr. Rubin's employment is terminated other than for cause or a change in
control of the Trust, he will be entitled to lump sum severance equal to the
present value of his base salary and a target incentive bonus for the remaining
portion of the contract term at the time of termination. If his employment is
terminated pursuant to a change in control (including voluntary termination by
Mr. Rubin within 60 days of a change in control), the Trust shall pay him up to
three times the present value of his base salary and target incentive
compensation, subject to all necessary reductions to preserve the deductibility
of all such payments under the Code.

The Trust entered into an Employment Agreement with Mr. Weller on December
14, 1993. The Employment Agreement provides that Mr. Weller is to serve as
President and Chief Operating Officer of the Trust with responsibility for the
day-to-day management of the Trust. The employment term, which began on January
31, 1994, was three years, a period that is automatically extended, as of
January 31, 1996 and each January 31 thereafter, for a new three year term
beginning on such January 31 unless the Trust gives Mr. Weller written notice
at least 60 days prior to January 31 in a year that the term is not to be
extended as of such January 31. The agreement further provided for an initial
annual base salary of $275,000 and provides that if the annual salary is
increased, such increased annual salary thereafter constitutes the annual base
salary for purposes of the agreement. Mr. Weller's annual base salary under the
agreement currently is $315,000. In accordance with the Employment Agreement,
on December 14, 1993, the Trust granted Mr. Weller nonqualified stock options
to purchase 100,000 Shares of the Trust at an exercise price equal to the fair
market value of the Shares on such date.

17
<PAGE>

The Trust is required to provide certain employee benefits to Mr. Weller,
including $1,500,000 of life insurance. Mr. Weller was required to invest a
minimum of $250,000 in Shares of the Trust. Upon a termination of employment by
Mr. Weller for specified good reason (including delivery by the Trust of
written notice that the term of the agreement is not to be renewed for a new
three year period) or by the Trust other than for cause, disability or death,
Mr. Weller is entitled to receive a lump-sum cash payment equal to the sum of
any unpaid annual base salary through the date of termination and the amount of
annual base salary that would have been paid during the remaining term of
employment, discounted on a present value basis. The Employment Agreement
provides that all options to purchase Shares granted to Mr. Weller vest and
become immediately exercisable upon a change of control of the Trust or upon a
termination of employment by the Trust without cause or by Mr. Weller for good
reason or upon Mr. Weller's death or disability. The Employment Agreement
provides that, in the event any payments to Mr. Weller result in the imposition
on Mr. Weller of an excise tax under Section 4999 of the Internal Revenue Code,
the Trust shall pay Mr. Weller an additional amount sufficient to reimburse him
for such excise tax.

The Trust entered into an Employment Agreement with Mr. Glickman as of
September 30, 1997. The Employment Agreement provides that Mr. Glickman is to
serve as Chief Financial Officer of the Trust. The employment term, which began
on September 30, 1997, was two years and is automatically extended for
additional two year periods unless and until either party shall give notice of
his or its election to terminate at least six months prior to the end of the
current term. Mr. Glickman's annual base salary under the agreement currently
is $230,000. If Mr. Glickman's employment is terminated pursuant to a change of
control (including resignation for good reason by Mr. Glickman within 60 days
of a change of control), the Trust is required to pay him two times the present
value of his base salary and targeted incentive compensation, subject to all
necessary reductions to preserve the deductibility of all such payments under
the Code.

The Trust has an employment agreement with Mr. Linn, who serves as Senior
Vice President - Acquisitions and Secretary of the Trust. The agreement has an
initial term expiring on December 31, 1999 with automatic one-year renewals
unless either party gives the other not less than 180 days notice prior to the
expiration of the then current term. Mr. Linn's annual base salary under the
agreement currently is $175,000, and such amount may be increased (but not
decreased) by the Board of Trustees.

Stock Option Tables

The following table sets forth certain information with respect to options
to purchase Shares granted to certain executive officers named in the Summary
Compensation Table during the four months ended December 31, 1997. None of the
executive officers named in the Summary Compensation Table were granted options
during the fiscal year 1998. Messrs. Cohen, Weller and Linn were not granted
options in the four months ended December 31, 1997.

Options Granted in the Four Months Ended December 31, 1997

<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------- Potential Realizable
Value at Assumed
% of Total Annual Rates of Stock
Options Price Appreciation for
Options Granted to Exercise Option Term (1)
Granted Employees in Price Expiration -----------------------------
Name (#) Fiscal Year Per Share Date 5% 10%
- ---------------------------- --------- -------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald Rubin ............... 150,000 34.7% $25.41 9/29/07 $2,397,032 $6,074,549
Edward A. Glickman ......... 50,000 11.6% $25.41 9/29/07 $ 799,011 $2,024,850
</TABLE>

- ------------
(1) These amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the end of the option term.
These gains are based on assumed rates of share appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The assumed annual rates of share appreciation are
specified by the Securities and Exchange Commission and are not intended
to forecast possible future appreciation of the Trust's share price.

18
<PAGE>

The following tables set forth certain information as to the exercise of
options to purchase Shares during the fiscal year 1998 and during the four
months ended December 31, 1997 by the persons named in the Summary Compensation
Table and the fiscal year-end value of unexercised options.

Aggregate Option Exercises in Fiscal Year Ended December 31, 1998
and December 31, 1998 Option Values

<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1998 December 31, 1998(1)
on Value ------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ---------- ---------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sylvan M. Cohen ............ -- -- 48,190 36,810 $21,563 $ 7,188
Ronald Rubin ............... -- -- 37,500 112,500 -- --
Jonathan B. Weller ......... -- -- 137,065 37,935 $31,718 $18,594
Edward A. Glickman ......... -- -- 12,500 37,500 -- --
Jeffrey A. Linn ............ -- -- 32,313 23,937 $14,007 $11,852
</TABLE>

- ------------
(1) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. Dollar
amounts shown represent the difference between the option exercise price
and the fair market value of the Shares at December 31, 1998. The closing
price of the Shares on December 31, 1998 was $19.44 per Share.

Aggregate Option Exercises in the Four Months Ended December 31, 1997
and December 31, 1997 Option Values

<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1997 December 31, 1997(1)
on Value ------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ---------- ---------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sylvan M. Cohen ............ -- -- 33,668 51,332 $119,664 $153,774
Ronald Rubin ............... -- -- -- 150,000 -- --
Jonathan B. Weller ......... -- -- 119,710 55,290 $ 87,984 $252,641
Edward A. Glickman ......... -- -- -- 50,000 -- --
Jeffrey A. Linn ............ -- -- 21,431 34,819 $ 76,863 $127,277
</TABLE>

- ------------
(1) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. Dollar
amounts shown represent the difference between the option exercise price
and the fair market value of the Shares at December 31, 1997. The closing
price of the Shares on December 31, 1997 was $24.56 per Share.

Stock Option Plans

Pursuant to the Trust's 1990 Incentive and Nonqualified Stock Option Plan
(the "Employee Plan"), incentive stock options (designed to qualify under
Section 422 of the Code) and nonqualified stock options to purchase 390,500 of
the Trust's Shares (decreased from 400,000 Shares by Amendment No. 1 thereto)
have been granted by the Trust to officers and key employees of the Trust. The
Employee Plan is administered by the Compensation Committee. The Employee Plan
requires that the exercise price of options granted thereunder not be less than
the fair market value of the Shares on the date of grant. Pursuant to Amendment
No. 1 to the Employee Plan, no options may be granted under the Employee Plan
on or after April 1, 1999. Further, Shares under any options that expire or
otherwise terminate without having been exercised will automatically become
available for certain awards under the 1999 Plan that is described above under
proposal number 2.

19
<PAGE>

The Trust also has a 1990 Stock Option Plan for Non-Employee Trustees that
is described above under proposal number 4.

The Trust also maintains the 1997 Stock Option Plan (the "1997 Plan").
Pursuant to the 1997 Plan, incentive stock options (designed to qualify under
Section 422 of the Code) and nonqualified stock options to purchase up to an
aggregate of 432,000 of the Trust's Shares (decreased from 560,000 Shares
pursuant to Amendment No. 1 thereto) have been granted by the Trust to key
employees of the Trust and PRI. The 1997 Plan is administered by the
Compensation Committee. The 1997 Plan requires that the exercise price of
options granted thereunder not be less than the fair market value of the Shares
on the grant date. Pursuant to Amendment No. 1 to the 1997 Plan, no options may
be granted under the 1997 Plan on or after April 1, 1999. Further, Shares under
any options that expire or otherwise terminate without having been exercised
will automatically become available for certain awards under the 1999 Plan that
is described above under proposal number 2.

PRI maintains the 1998 Stock Option Plan (the "1998 Plan"). Pursuant to
the 1998 Plan, nonqualified stock options to purchase up to an aggregate of
134,500 of the Trust's Shares (decreased from 150,000 Shares pursuant to
Amendment No. 1 thereto) have been granted by PRI to its key employees. The
1998 Plan requires that the exercise price of options granted thereunder not be
less than the fair market value of the Shares on the grant date. Pursuant to
Amendment No. 1 to the 1998 Plan, no options may be granted under the 1998 Plan
on or after April 1, 1999. Further, Shares under any options that expire or
otherwise terminate without having been exercised will automatically become
available for certain awards under the 1999 Plan that is described above under
proposal number 2.

PRI also maintains the Non-Qualified Employee Share Purchase Plan (the
"PRI Share Purchase Plan"), under which employees of PRI can purchase Shares
beginning April 1, 1999 through salary deductions at a discount equal to the
lesser of 85% of fair market value on the date the right is granted to them
(generally, the first day of each calendar year) or 85% of fair market value on
the date of exercise (the last business day of each calendar quarter). The
aggregate number of Shares that may be issued under the PRI Share Purchase Plan
is 250,000.

In accordance with the terms of Mr. Weller's Employment Agreement with the
Trust, the Trust also maintains the 1993 Jonathan B. Weller Non-Qualified Stock
Option Plan (the "Weller Plan"). Under the Weller Plan, on December 14, 1993,
the Trust granted Mr. Weller options to purchase 100,000 Shares at an exercise
price equal to the fair market value of the Shares on such date. Such options
have a term of 10 years and are all exercisable.

The Trust also maintains the Qualified Employee Share Purchase Plan that
is described above under proposal number 3.

Other Benefit Plans

Section 401(k) Plan. The Trust maintains a Section 401(k) profit sharing
and retirement savings plan in which substantially all of the officers and
employees of the Trust are eligible to participate.

Supplemental Retirement Plan. The Trust maintains a Supplemental
Retirement Plan in which Mr. Weller and Mr. Linn are participants. Under the
Supplemental Retirement Plan, the Trust is required to make defined
contributions annually in amounts equal to amounts that would have been
required to be contributed under the Trust's defined benefit pension plan
(terminated in fiscal 1995) in order to fund the targeted retirement benefit
(after taking into account amounts distributed under the terminated defined
benefit pension plan, together with an assumed rate of return thereon). The
Trust has recorded $83,783, $30,903 and $29,972 of contributions due to Mr.
Weller and Mr. Linn under the provisions of this plan for a period including
the year ended December 31, 1998 and the four months ended December 31, 1997,
and the years ended August 31, 1997, and 1996, respectively.

PREIT-RUBIN Stock Bonus Plan. PRI maintains a stock bonus plan for all of
its employees who have completed at least one year of service. The plan is
qualified for favorable tax treatment under Section 401(a) of the Code. PRI
contributed all of its voting common shares to the plan for the 1997 plan year.
The shares were allocated to the plan accounts of the eligible employees as of
December 31, 1997, pro rata, based on their covered

20
<PAGE>

compensation for 1997. The shares held by the plan are appraised as of each
December 31. The value of an employee's account under the plan is payable to
the employee upon termination of service. Since PRI's Articles of Incorporation
restrict ownership of all of the outstanding voting common shares of PRI to PRI
employees or to a tax-qualified plan for the benefit of employees, benefits to
terminated employees are paid only in cash. Voting on major corporate
transactions (including mergers, recapitalizations, liquidations, and similar
transactions) is passed through by the plan trustee, First Union Bank, N.A., to
the plan's participants. Voting by the plan trustee on other matters is
directed by majority vote of the members of the PRI Stock Bonus Plan Committee,
who are appointed by the Board of Directors of PRI.

Incentive Bonus Plan. The Trust and PRI have established an incentive
bonus plan, effective January 1, 1998, for certain officers and key employees
of the Trust and PRI. The plan is a nonqualified, unfunded plan with bonuses to
be paid from the general assets of the Trust. The Compensation Committee of the
Board of Trustees administers the plan. The Compensation Committee has
designated those officers and key employees who are eligible to receive a bonus
under the plan. A bonus pool has been created equal to a graduated percentage
of "Adjusted Funds Available for Distribution," which is generally defined as
funds from operations less the sum of all obligations of the Trust, including
annual capital expenditures, reserves for capital expenditures, distributions
by the Trust and its operating partnership, and working capital reserves.
One-half of the pool will be paid to the participants based on set individual
percentages. All or a portion of the remainder of the pool may be awarded by
senior management (in its discretion, but subject to the approval of the
Compensation Committee) to any of the participants in the plan and/or to any
other employees of the Trust or PRI who achieved the goals and objectives
stated in the Trust's business plan. The plan provides that in no event will
incentive compensation paid under the plan exceed $1,500,000 in any plan year.

Bonuses will be paid in single-sum cash payments within a reasonable time
after the Trust's fiscal year-end financial statements are approved. Except as
provided in a participant's employment agreement, only participants who are
employed by the Trust or PRI on December 31 of each plan year will be eligible
to receive payments under the plan (unless the participant was no longer an
employee due to a reorganization, or because he retired on or after age 65,
became disabled, or died).

Transactions with Management

On September 30, 1997, the Trust consummated a series of related
transactions (the "TRO Transaction") in which the Trust, inter alia, (i) formed
a Delaware limited partnership (the "Operating Partnership"), of which the
Trust is the sole general partner, (ii) transferred to the Operating
Partnership the Trust's interests in its real property assets, or the economic
benefits thereof, (iii) caused the Operating Partnership to acquire all of the
issued and outstanding non-voting common shares of The Rubin Organization, Inc.
("TRO") (renamed, "PREIT-RUBIN, Inc."), a commercial real estate development
and management firm, representing 95% of the total equity of TRO, in exchange
for 200,000 Class A units of limited partner interest in the Operating
Partnership ("Class A OP Units") and a contingent obligation to issue up to
800,000 additional Class A OP Units over a five year period based on the levels
of the Trust's funds from operations ("FFO") per share during such period, (iv)
caused the Operating Partnership to acquire, or to become obligated to acquire,
in exchange for additional Class A OP Units, the interests of certain
affiliates of TRO ("TRO Affiliates"), or their rights or obligations to acquire
interests in three existing shopping centers or portions thereof, and in two
shopping centers then under construction (the "Development Properties"), (v)
caused the Operating Partnership to acquire the pre-development rights, subject
to the obligations of certain TRO Affiliates, in certain additional proposed
shopping centers (the "Predevelopment Properties"), (vi) implemented, directly
or indirectly, employment agreements with ten members of TRO management,
including Ronald Rubin, who became the Chief Executive Officer of the Trust,
George F. Rubin, who continued as President of PRI, and Edward Glickman, who
became the Chief Financial Officer of the Trust, and (vii) elected three
designees of TRO, Ronald Rubin, George F. Rubin and Rosemarie B. Greco, as
trustees of the Trust.

The Class A OP Units referred to above are redeemable by the Operating
Partnership, at the option of the holder, beginning one year following the
dates of their respective issuance for an amount per unit equal to the average
closing price of a Share on the twenty trading days immediately prior to the
date notice of redemption is received by the Trust in its capacity as general
partner of the Operating Partnership. The Trust has the right

21
<PAGE>

to acquire any Class A OP Units tendered for redemption for (i) cash, or (ii)
Shares, on the basis of one Share for each Class A OP Unit (subject to
adjustments for share splits and other capital changes). Redeeming holders of
Class A OP Units who receive Shares from the Trust will have certain rights to
cause the Trust to register such Shares for resale under the federal securities
laws. Ronald Rubin, George F. Rubin and Edward Glickman, who currently serve as
Chief Executive Officer of the Trust, President of PRI, and Chief Financial
Officer of the Trust, respectively, as a result of the TRO Transaction, will
each be prohibited from reselling more than one-half of the Shares to which he
would be entitled upon redemption of Class A OP Units held by them during the
five year period following the completion of the TRO Transaction if he
continues to hold executive positions with the Trust or PRI during such period.

In the TRO Transaction, in exchange for their direct and indirect
interests in TRO and certain affiliated entities, (i) Ronald Rubin received,
directly or indirectly, beneficial ownership of 144,359 Class A OP Units, (ii)
George F. Rubin received, directly or indirectly, beneficial ownership of
86,462 Class A OP Units, and (iii) Edward Glickman received, directly or
indirectly, beneficial ownership of 13,633 Class A OP Units. All such
individuals are also eligible to receive additional Class A OP Units in respect
of the payment by the Trust for the Development and Predevelopment Properties
in which the Trust acquired interests in the TRO Transaction, all in accordance
with the valuation and payment provisions of the applicable agreements. Such
individuals are also eligible to receive additional Class A OP Units based on
certain financial performance benchmarks established for the Trust. It is
anticipated that holders of Class A OP Units will receive distributions at the
approximate times, and in the same amounts, as dividends are paid by the Trust
to the Shareholders. Certain of the Class A OP Units issued in the TRO
transaction are subject to pledges in favor of the Operating Partnership until
certain obligations of TRO are satisfied.

The amount of consideration paid by the Trust and the manner in which it
would be paid was approved by a Special Committee of the Board of Trustees and
by the Board of Trustees. The Board received an opinion from Lehman Brothers
that the consideration to be paid was fair from a financial point of view, and
the Shareholders of the Trust approved the completion by the Trust of the TRO
Transaction at a Special Meeting of Shareholders held on September 29, 1997.
The Board of Trustees has established a committee consisting of Leonard I.
Korman, Chair, Rosemarie B. Greco and William R. Dimeling for the purpose of
addressing and resolving any matters pertaining to the TRO Transaction as they
arise on an on-going basis. In connection with the monitoring of the TRO
Transaction, such committee determined to lower the financial performance
benchmarks established for the payment of additional Class A OP Units due to
the dilutive effect of the Trust's December 1997 public offering of 4,600,000
Shares and the general performance of the Trust during the period following the
closing of the TRO Transaction.

PRI provides real estate management and other services to 20 properties in
which Mr. Ronald Rubin and/or other TRO Affiliates have direct or indirect
interests. Total revenues earned by PRI for such services were $3,489,000 for
the calendar year ended December 31, 1998 and $1,419,000 for the four months
ended December 31, 1997. As of December 31, 1998 and 1997, $1,682,000 and
$2,104,000, respectively, was due from these affiliates. Of these amounts,
approximately $567,000 and $1,962,000, respectively, were collected subsequent
to December 31, 1998 and 1997.

During fiscal 1998, and in the four months ending December 31, 1997, the
Trust paid or accrued fees and costs to the Philadelphia law firm of Drinker
Biddle & Reath LLP, counsel for the Trust, for legal services rendered to the
Trust, its subsidiaries and its affiliates, including partnerships and other
ventures in which the Trust is involved. Sylvan M. Cohen, Chairman of the
Trust, and Robert Freedman, a Trustee of the Trust until September 1997, are of
counsel to such firm.

Board Matters

The Trust has a standing Audit Committee and a standing Executive
Compensation and Human Resources Committee. There is no standing nominating
committee.

The Audit Committee, which is currently comprised of Rosemarie B. Greco,
Chair, Lee H. Javitch and Jeffrey P. Orleans, did not meet during fiscal 1998
and met once during the four months ended December 31, 1997.

22
<PAGE>

The principal duties of the Audit Committee are to recommend independent public
accountants for appointment by the Trust; to review with the independent
accountants the planned scope and results of the annual audit and their reports
and recommendations; and to review with the independent accountants matters
relating to the Trust's system of internal controls.

The Executive Compensation and Human Resources Committee, which is
currently comprised of Leonard I. Korman, Chair, William R. Dimeling and Lee H.
Javitch, met once during fiscal 1998 and once during the four month period
ended December 31, 1997. The principal duties of the Compensation Committee are
to recommend compensation arrangements for the executive officers of the Trust,
and to administer the Trust's stock option and equity incentive plans.

In addition to the Compensation Committee and the Audit Committee, the
Trust has a standing Property Committee. The Property Committee, which is
currently comprised of Sylvan M. Cohen, Chair, Leonard I. Korman, Jeffrey P.
Orleans, Jonathan B. Weller (ex officio) and Ronald Rubin (ex officio), met
four times in fiscal 1998 and did not meet in the four months ended December
31, 1997. The principal duties of the Property Committee are to review
acquisitions and dispositions of portfolio properties proposed by management
and make recommendations thereon to the Board of Trustees.

The Board of Trustees has constituted a Special Committee, consisting of
Leonard I. Korman, Chair, Rosemarie B. Greco and William R. Dimeling, to review
on an on-going basis any issues which may arise in the implementation of the
TRO Transaction. The Special Committee met three times in fiscal 1998 and did
not meet in the four months ended December 31, 1997.

The Board of Trustees met four times in fiscal year 1998 and two times in
the four months ended December 31, 1997. Trustees who are not officers of the
Trust receive an annual retainer of $7,000 plus $1,250 per Board of Trustees
meeting attended and $750 per committee meeting attended. The Trust made
one-time cash payments of $25,000 each to Mr. Jack Farber and Mr. Robert
Freedman upon their resignations as Trustee in August and September, 1997,
respectively, after 26 years and 9 years of service, respectively. Except for
Mr. Dimeling, who did not attend the one meeting of the Compensation Committee
in the four month period ended December 31, 1997, all of the trustees attended
at least 75% of Board and applicable committee meetings in the fiscal year 1998
and the four month period ended December 31, 1997 respectively.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Trust's executive officers and directors and
persons who own more than ten percent of a registered class of the Trust's
equity securities (collectively, the "reporting persons") to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and to furnish the Trust with copies of these reports.

Based on the Trust's review of the copies of the reports received by it,
and written representations received from certain reporting persons with
respect to the filing of reports on Form 3, 4 and 5, the Trust believes that,
except for the filings discussed below, all filings required to be made by the
reporting persons for fiscal 1998 and fiscal period ended December 31, 1997
were made on a timely basis. Ms. Greco and Messrs. Dimeling, Javitch, Korman
and Orleans are late in filing Forms 5 with respect to the Trust's grant to
them of options under the Trustee Plan, and Mr. Orleans is late in filing a
Form 4 for a transaction in September of 1998.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

During the 1998 fiscal year and the four months ended December 31, 1997,
Sylvan M. Cohen served on the Compensation Committee of Orleans Homebuilders,
Inc, and the Chairman of the Board and Chief Executive Officer of Orleans
Homebuilders, Inc., Jeffrey P. Orleans, served as a Trustee of the Trust.

REPORT OF EXECUTIVE COMPENSATION AND HUMAN
RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION

The Trust's compensation for executive officers is the responsibility of
the entire Board of Trustees acting upon the recommendation of the Compensation
Committee. The Compensation Committee is also responsible for administering the
policies that govern the Trust's stock option and equity incentive plans. The
Compensation Committee consists of three non-employee Trustees of the Trust.

23
<PAGE>

It is the Board of Trustees' belief that the Trust's investment goal is to
invest in assets that provide the opportunity for cash flow growth and capital
appreciation in real terms. Accordingly, the Board of Trustees believes that
the Trust's overall performance in any year should be based on the Trust's
performance in all aspects of the Trust's business during that year, including
development, management, acquisition and capital structure, as well as
financial accomplishments.

The members of the Compensation Committee believe that the Trust's success
is largely due to the efforts of its employees and, in particular, the
leadership exercised by its officers. Therefore, the Compensation Committee
believes it is important to:

o Adopt compensation programs that enhance the Trust's ability to attract
and retain qualified officers while providing the financial motivation
necessary to achieve continued high levels of Trust performance.

o Provide equity-based incentives for executives to ensure that they are
motivated over the long term to respond to the Trust's challenges and
opportunities as owners rather than only employees.

o Provide a mix of cash and stock-based compensation programs that are
competitive with a select group of real estate investment trusts that the
members of the Compensation Committee believe are comparable to the Trust.

Each executive officer's salary, including that of the Chief Executive
Officer and that of the Chief Operating Officer, is based upon his employment
contract and the competitive market for the executive officer's services,
considering the executive's specific responsibilities, experience and overall
performance. The Compensation Committee reviews each executive officer's salary
and adjusts the salary to account for inflation, any change in the executive's
responsibilities and any change in the competitive marketplace. The
Compensation Committee believes that the Trust's overall performance is best
measured by the enhancement of long-term shareholder value. The Compensation
Committee further believes that, as a result of the nature of the Trust's
business, funds from operations is a better measurement of the Trust's
performance as opposed to its reported net income. This standard has been
adopted by the National Association of Real Estate Investment Trusts. The
Compensation Committee recommends compensation levels of the Trust's executive
officers, on an annual basis, to the Board of Trustees.

The Compensation Committee also periodically awards discretionary stock
options to executive officers. These awards are based upon the performance of
the individual executive, the Trust's financial results and the executive
officer's accomplishments in his area of responsibility. The Committee believes
that stock option awards are an important element in the Trust's compensation
structure as such awards promote alignment of the interests of the employees
with the interests of the shareholders.

Executive Compensation and Human Resources Committee
Leonard I. Korman, Chairman
William R. Dimeling
Lee H. Javitch

24
<PAGE>

PERFORMANCE GRAPH

The graph below compares the Trust's cumulative shareholder return with
the cumulative total return of the S&P 500 and the index of all equity real
estate investment trusts excluding health care real estate investment trusts as
prepared by the National Association of Real Estate Investment Trusts. Equity
real estate investment trusts are defined as those which derive more than 75%
of their income from equity investments in real estate assets. The graph
assumes that the value of the investment in each of the three was $100 at
August 31, 1993 and that all dividends were reinvested.

<TABLE>
<CAPTION>
August 31, August 31, August 31, August 31, August 31, December 31, December 31,
1993 1994 1995 1996 1997 1997 1998
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Trust 100 103.96 101.79 104.06 141.07 136.80 118.06

Equity w/o
Healthcare 100 101.45 107.82 127.67 169.28 187.24 154.42

S&P 500 100 105.45 128.08 151.93 213.69 231.87 298.14
</TABLE>

<PAGE>

PRINCIPAL SECURITY HOLDERS

The following table sets forth certain information as of March 1, 1999
concerning beneficial ownership of the Trust's Shares by the only persons shown
by Securities and Exchange Commission records or the Trust's records to own
beneficially more than 5% of the Trust's Shares:

<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Title of Name and Address Beneficial Outstanding
Class of Beneficial Owner Ownership Shares
- ---------------- ---------------------------------- --------------- ------------
<S> <C> <C> <C>
Certificates Morgan Stanley Dean Witter & Co. 1,060,300 (1) 8.0%
of Beneficial 1585 Broadway
Interest New York, NY 10036
Certificates Sylvan M. Cohen 739,789 (2) 5.5%
of Beneficial 200 South Broad Street
Interest Philadelphia, PA 19102
</TABLE>

- ------------
(1) Includes shares beneficially owned by Morgan Stanley Dean Witter Investment
Management Inc., a wholly owned subsidiary of Morgan Stanley Dean Witter &
Co.

(2) See footnote 2 to table appearing under the heading "ELECTION OF TRUSTEES."

OTHER MATTERS

The Trust has selected Arthur Andersen LLP to be its principal independent
public accountants for the current fiscal year. The accounting firm has been
the principal independent public accounting firm for the Trust for more than 25
years. Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and to be available to respond to appropriate questions. The
representatives of Arthur Andersen LLP will be given an opportunity to make a
statement, if they so desire.

The management of the Trust knows of no matters other than those stated
above to come before the meeting. However, if any other matters should properly
come before the meeting, the enclosed proxy confers discretionary authority
with respect thereto.

SHAREHOLDERS' PROPOSALS

Under Securities and Exchange Commission rules, certain shareholder
proposals may be included in the Trust's proxy statement. Any shareholder
desiring to have such a proposal included in the Trust's proxy statement for
the Annual Meeting to be held in 2000 must deliver a proposal in full
compliance with Rule 14a-8 under the Securities Exchange Act of 1934 to the
Trust's executive offices by November 29, 1999.

By Order of the Board of Trustees

Jeffrey A. Linn
Secretary

March 29, 1999

26
<PAGE>

APPENDIX A

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

1999 EQUITY INCENTIVE PLAN

WHEREAS, the Pennsylvania Real Estate Investment Trust (the "Trust")
desires to have the ability (i) to award certain equity-based benefits and/or
loans to certain of the officers and other key employees of the Trust, its
Subsidiary Entities, PREIT-RUBIN, Inc. ("PRI"), and its Subsidiary Entities,
and (ii) to transfer nonqualified stock options to PRI for adequate
consideration in order to provide PRI with a means of acquiring shares of
beneficial interest in the Trust for its use in granting options to its
employees and employees of its Subsidiary Entities;

NOW, THEREFORE, the Pennsylvania Real Estate Investment Trust 1999 Equity
Incentive Plan is hereby adopted under the following terms and conditions:

1. Purpose. The Plan is intended to provide a means whereby the Trust may
grant ISOs and NQSOs to Key Employees of the Trust and certain of its
Subsidiary Entities; may grant Restricted Stock, Stock Appreciation Rights,
Performance Stock, Dividend Equivalent Rights, and/or Loans to Key Employees;
and may transfer NQSOs to PRI for adequate consideration. Thereby, the Trust
expects to attract and retain such Key Employees and to motivate them to
exercise their best efforts on behalf of the Trust and its Subsidiary Entities,
and on behalf PRI and its Subsidiary Entities.

2. Definitions

(a) "Award" shall mean ISOs, NQSOs, Restricted Stock, Stock Appreciation
Rights, Performance Stock, Dividend Equivalent Rights, and/or Loans awarded
by the Committee to a Participant.

(b) "Award Agreement" shall mean a written document evidencing the grant
of an Award, as described in Section 11.1.

(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(e) "Committee" shall mean the Trust's Executive Compensation and Human
Resources Committee, which shall consist solely of not fewer than two
trustees of the Trust who shall be appointed by, and serve at the pleasure
of, the Board (taking into consideration the rules under section 16(b) of
the Exchange Act and the requirements of section 162(m) of the Code).

(f) "Disability" shall mean separation from service as a result of
"permanent and total disability," as defined in section 22(e)(3) of the
Code.

(g) "Dividend Equivalent Right" shall mean an Award that entitles the
recipient to receive a benefit in lieu of cash dividends that would have
been payable on any or all Shares subject to another Award granted to the
Participant had such Shares been outstanding.

(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

(i) "Fair Market Value" shall mean the following, arrived at by a good
faith determination of the Committee:

(i) if there are sales of Shares on a national securities exchange
or in an over-the-counter market on the date of grant (or on such other
date as value must be determined), then the mean between the highest and
lowest quoted selling price on such date; or

(ii) if there are no such sales of Shares on the date of grant (or
on such other date as value must be determined) but there are such sales
on dates within a reasonable period both before and after such date, the
weighted average of the means between the highest and lowest selling
price on the nearest date before and the nearest date after such date on
which there were such sales; or

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(iii) if actual sales are not available during a reasonable period
beginning before and ending after the date of grant (or on such other
date as value must be determined), then the mean between the bid and
asked price on such date as reported by the National Quotation Bureau;
or

(iv) if (1) through (3) are not applicable, then such other method
of determining fair market value as shall be adopted by the Committee.

(j) "ISO" shall mean an Option which, at the time such Option is granted
under the Plan, qualifies as an incentive stock option within the meaning
of section 422 of the Code, unless the Award Agreement states that the
Option will not be treated as an ISO.

(k) "Key Employee" shall mean an officer or other key employee of the
Trust or one of its Subsidiary Entities or of PRI or one of its Subsidiary
Entities.

(l) "NQSO" shall mean an Option that, at the time such Option is granted
to a Participant (or issued to PRI under Section 9), does not meet the
definition of an ISO, whether or not it is designated as a nonqualified
stock option in the Award Agreement.

(m) "Option" is an Award entitling the Participant on exercise thereof
to purchase Shares at a specified exercise price.

(n) "Participant" shall mean a Key Employee who has been granted an
Award under the Plan.

(o) "Performance Stock" shall mean an Award that entitles the recipient
to receive Shares, without payment, following the attainment of designated
Performance Goals.

(p) "Performance Goals" shall mean goals which may be related to
personal performance, corporate performance, departmental performance,
stock performance, or any other category of performance deemed by the
Committee to be important to the success of the Trust or any of its
Subsidiary Entities or to PRI or any of its Subsidiary Entities.

(q) "Plan" shall mean the Pennsylvania Real Estate Investment Trust 1999
Equity Incentive Plan, as set forth herein and as it may be amended from
time to time.

(r) "PRI" shall mean PREIT-RUBIN, Inc., a Pennsylvania business
corporation the majority of the equity (but not the voting power) of which
is indirectly owned by the Trust.

(s) "Related Corporation" shall mean either a "subsidiary corporation"
of the Trust, as defined in section 424(f) of the Code, or the "parent
corporation" of the Trust (if any), as defined in section 424(e) of the
Code.

(t) "Restricted Stock" shall mean an Award that grants the recipient at
no cost (or entitles the recipient to acquire, for a purchase price to be
specified by the Committee, but in no event less than par value) Shares
subject to whatever restrictions are determined by the Committee.

(u) "Securities Act" shall mean the Securities Act of 1933, as amended.

(v) "Shares" shall mean shares of beneficial interest in the Trust, par
value $1.00 per share.

(w) "Stock Appreciation Right" shall mean an Award entitling the
recipient on exercise to receive an amount, in cash or Shares or a
combination thereof (such form to be determined by the Committee),
determined in whole or in part by reference to appreciation in Share value.

(x) "Subsidiary Entity" shall mean an affiliate of the Trust or PRI (as
applicable) that is controlled by the Trust or PRI (as applicable)
directly, or indirectly through one or more intermediaries.

(y) "Trust" shall mean the Pennsylvania Real Estate Investment Trust, a
Pennsylvania business trust.

3. Administration

(a) The Plan shall be administered by the Committee. Each member of the
Committee, while serving as such, shall be deemed to be acting in his
capacity as a trustee of the Trust. Acts approved by a majority

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of the members of the Committee at which a quorum is present, or acts
without a meeting reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. Any and
all authority of the Committee may be delegated to a Plan administrator.

(b) The Committee shall have the authority:

(i) to grant Awards at such time or times as it may choose;

(ii) to determine the type and size of each Award, including the
number of Shares subject to the Award;

(iii) to determine the terms and conditions of each Award;

(iv) to amend an existing Award in whole or in part (including the
extension of the exercise period for any NQSO), except that the
Committee may not, (i) lower the exercise price of any Option or the
purchase price of any Restricted Stock, or (ii) without the consent of
the Participant holding the Award, take any action under this clause if
such action would adversely affect the rights of such Participant;

(v) to adopt, amend, and rescind rules and regulations for the
administration of the Plan; and

(vi) to interpret the Plan and decide any questions and settle any
controversies that may arise in connection with it.

Such determinations and actions of the Committee, and all other determinations
and actions of the Committee made or taken under authority granted by any
provision of the Plan, shall be conclusive and shall bind all parties. Nothing
in this subsection (b) shall be construed as limiting the power of the Board or
the Committee to make the adjustments described in Sections 8.3 and 8.4.

4. Effective Date and Term of Plan

(a) Effective Date. The Plan, having been adopted by the Board on March
24, 1999, shall become effective on that date, but subject to the approval
of the stockholders of the Trust pursuant to Section 10(b). Awards may be
granted under the Plan prior to such stockholder approval (but after the
Board's adoption of the Plan), subject to such stockholder approval.

(b) Term of Plan for ISOs. No ISO may be granted under the Plan after
March 24, 2009, but ISOs previously granted may extend beyond that date.
Awards other than ISOs may be granted after that date.

5. Shares Subject to the Plan. The aggregate number of Shares that may be
delivered under the Plan is the sum of 400,000 plus the Shares that are subject
to options under the Pennsylvania Real Estate Investment Trust 1990 Incentive
and Nonqualified Stock Option Plan, the Pennsylvania Real Estate Investment
Trust 1997 Stock Option Plan, and the PREIT-RUBIN, Inc. 1998 Stock Option Plan,
that expire or otherwise terminate for any reason whatsoever (including,
without limitation, the optionee's surrender of them) without having been
exercised. However, ISOs may be granted under the Plan to purchase up to a
maximum of only 400,000 Shares. Further, no Key Employee shall receive Options
and/or Stock Appreciation Rights for more than 250,000 Shares during any
calendar year under the Plan. However, the limits in the preceding three
sentences shall be subject to the adjustment described in Section 8.3. Shares
delivered under the Plan may be authorized but unissued Shares or reacquired
Shares, and the Trust may purchase Shares required for this purpose, from time
to time, if it deems such purchase to be advisable. If any Award that requires
the Participant to exercise it in order for Shares to be delivered terminates
(or if any NQSO issued to PRI under Section 9 terminates) without having been
exercised in full, or if any Award that is payable in Shares or cash is
satisfied in cash rather than in Shares, the number of Shares as to which such
Award (or such NQSO) was not exercised or for which cash was substituted shall
continue to be available for future Awards granted (or NQSOs issued to PRI)
under the Plan.

6. Eligibility. The class of employees who shall be eligible to receive
Awards under the Plan shall be the Key Employees (including any trustees of the
Trust who are also officers or key employees). More than one Award may be
granted to a Key Employee under the Plan.

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7. Types of Awards

7.1 Options

(a) Kinds of Options. Both ISOs and NQSOs may be granted under the Plan.
However, ISOs may only be granted to Key Employees of the Trust or of a
Related Corporation and NQSOs may only be granted to Key Employees of the
Trust or its Subsidiary Entities. (NQSOs may also be issued to PRI for
adequate consideration pursuant to Section 9.) Once an ISO has been
granted, no action by the Committee that would cause the Option to lose its
status as an ISO under the Code will be effective without the consent of
the Participant holding the Option.

(b) $100,000 Limit. The aggregate Fair Market Value of the Shares with
respect to which ISOs are exercisable for the first time by a Key Employee
during any calendar year (counting ISOs under this Plan and under any other
stock option plan of the Trust or a Related Corporation) shall not exceed
$100,000. If an Option intended as an ISO is granted to a Key Employee and
the Option may not be treated in whole or in part as an ISO pursuant to the
$100,000 limit, the Option shall be treated as an ISO to the extent it may
be so treated under the limit and as an NQSO as to the remainder. For
purposes of determining whether an ISO would cause the limit to be
exceeded, ISOs shall be taken into account in the order granted. The annual
limits set forth above for ISOs shall not apply to NQSOs.

(i) The exercise price of an ISO shall not be less than 100 percent
(110 percent in the case of an ISO granted to a 10-percent shareholder)
of the Fair Market Value of the Shares subject to the Option, determined
as of the time the Option is granted. A "10-percent shareholder" is any
person who at the time of grant owns, directly or indirectly, or is
deemed to own by reason of the attribution rules of section 424(d) of
the Code, Shares possessing more than 10 percent of the total combined
voting power of all classes of Shares of the Trust or of a Related
Corporation.

(ii) In no case may the exercise price paid for Shares be less than
the par value per Share.

(d) Term of Options. The term of each Option may not be more than 10
years (five years, in the case of an ISO granted to a "10-percent
shareholder," as defined in subsection (c) above) from the date the Option
was granted, or such earlier date as may be specified in the Award
Agreement.

(e) Exercise of Options. Except as provided in Section 9 regarding NQSOs
issued to PRI, an Option shall become exercisable at such time or times,
and on such conditions, as the Committee may specify. The Committee may at
any time and from time to time accelerate the time at which all or any part
of the Option may be exercised. Any exercise of an Option must be in
writing, signed by the proper person, and delivered or mailed to the Trust,
accompanied by (i) any other documents required by the Committee and (ii)
payment in full in accordance with subsection (f) below for the number of
Shares for which the Option is exercised.

(f) Payment for Shares. Except as provided in Section 9 regarding NQSOs
issued to PRI, Shares purchased on the exercise of an Option shall be paid
for as follows:

(i) in cash or by check (acceptable to the Committee), bank draft,
or money order payable to the order of the Trust;

(ii) through the delivery of Shares (which, in the case of Shares
acquired from the Trust, have been held by the Participant for at least
one year as of the exercise date) having a Fair Market Value on the last
business day preceding the exercise date equal to the purchase price;

(iii) by delivering a properly executed notice of exercise of the
Option to the Trust and a broker, with irrevocable instructions to the
broker promptly to deliver to the Trust the amount of sale or loan
proceeds necessary to pay the exercise price of the Option; or

(iv) by any combination of the above-listed forms of payment.

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(g) Discretionary Payments. If the Fair Market Value of Shares subject
to an Option (other than an Option which is in tandem with a Stock
Appreciation Right or an NQSO issued to PRI under Section 9) exceeds the
exercise price of the Option at the time of its exercise, the Committee,
upon the request of the Participant holding the Option, in its discretion
may cancel the Option and cause the Trust to pay in cash or in Shares (at a
price per Share equal to the Fair Market Value per Share) to the
Participant an amount equal to the difference between the Fair Market Value
of the Shares which would have been purchased pursuant to the exercise
(determined on the date the Option is canceled) and the aggregate exercise
price which would have been paid.

7.2 Stock Appreciation Rights

(a) Nature of Stock Appreciation Rights. A Stock Appreciation Right
entitles the Participant to receive, with respect to each Share as to which
the Stock Appreciation Right is exercised, the excess of the Share's Fair
Market Value on the date of exercise over its Fair Market Value on the date
the Stock Appreciation Right was granted. Such excess shall be paid in
cash, Shares, or a combination thereof, as determined by the Committee.

(b) Grant of Stock Appreciation Rights. Stock Appreciation Rights may be
granted in tandem with, or independently of, Options granted under the
Plan. A Stock Appreciation Right granted in tandem with an Option that is
not an ISO may be granted either at or after the time the Option is
granted. A Stock Appreciation Right granted in tandem with an ISO may be
granted only at the time the Option is granted.

(c) Rules Applicable to Tandem Awards. When Stock Appreciation Rights
are granted in tandem with Options, the number of Stock Appreciation Rights
granted to a Participant that shall be exercisable during a specified
period shall not exceed the number of Shares that the Participant may
purchase upon the exercise of the related Option during such period. Upon
the exercise of an Option, the Stock Appreciation Right relating to the
Shares covered by such Option will terminate. Upon the exercise of a Stock
Appreciation Right, the related Option will terminate to the extent of an
equal number of Shares. The Stock Appreciation Right will be exercisable
only at such time or times, and to the extent, that the related Option is
exercisable and will be exercisable in accordance with the procedure
required for exercise of the related Option. The Stock Appreciation Right
will be transferable only when the related Option is transferable, and
under the same conditions. A Stock Appreciation Right granted in tandem
with an ISO may be exercised only when the Fair Market Value of the Shares
subject to the Option exceeds the exercise price of such Option.

(d) Exercise of Independent Stock Appreciation Rights. A Stock
Appreciation Right not granted in tandem with an Option shall become
exercisable at such time or times, and on such conditions, as the Committee
may specify in the Award Agreement. The Committee may at any time
accelerate the time at which all or any part of the Stock Appreciation
Right may be exercised. Any exercise of an independent Stock Appreciation
Right must be in writing, signed by the proper person, and delivered or
mailed to the Trust, accompanied by any other documents required by the
Committee.

7.3 Restricted Stock

(a) General Requirements. Restricted Stock may be issued or transferred
for consideration or for no consideration, as determined by the Committee.
If for consideration, payment may be in cash or check (acceptable to the
Committee), bank draft, or money order payable to the order of the Trust.

(b) Rights as a Stockholder. Unless the Committee determines otherwise,
a Participant who receives Restricted Stock shall have certain rights of a
stockholder with respect to the Restricted Stock, including voting and
dividend rights, subject to the restrictions described in subsection (c)
below and any other conditions imposed by the Committee at the time of
grant. Unless the Committee determines otherwise, certificates evidencing
shares of Restricted Stock will remain in the possession of the Trust until
such Shares are free of all restrictions under the Plan.

(c) Restrictions. Except as otherwise specifically provided by the Plan,
Restricted Stock may not be sold, assigned, transferred, pledged, or
otherwise encumbered or disposed of, and if the Participant ceases to be an
employee of any of the Trust or its Subsidiary Entities or of PRI or its
Subsidiary Entities for any

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reason, must be offered to the Trust for purchase for the amount paid for
the Shares, or forfeited to the Trust if nothing was so paid. These
restrictions will lapse at such time or times, and on such conditions, as
the Committee may specify in the Award Agreement. Upon the lapse of all
restrictions, Shares will cease to be Restricted Stock for purposes of the
Plan. The Committee may at any time accelerate the time at which the
restrictions on all or any part of the Shares will lapse.

(d) Notice of Tax Election. Any Participant making an election under
section 83(b) of the Code for the immediate recognition of income
attributable to the Award of Restricted Stock must provide a copy thereof
to the Trust within 10 days of the filing of such election with the
Internal Revenue Service.

7.4 Performance Stock; Performance Goals

(a) Grant. The Committee may grant Performance Stock to any Key
Employee, conditioned upon the meeting of designated Performance Goals. The
Committee shall determine the number of Shares of Performance Stock to be
granted.

(b) Performance Period and Performance Goals. When Performance Stock is
granted, the Committee shall establish the performance period during which
performance shall be measured, the Performance Goals, and such other
conditions of the Award as the Committee deems appropriate.

(c) Delivery of Performance Stock. At the end of each performance
period, the Committee shall determine to what extent the Performance Goals
and other conditions of the Award have been met and the number of Shares,
if any, to be delivered with respect to the Award.

7.5 Dividend Equivalent Rights. The Committee may provide for payment to
the Participant of Dividend Equivalent Rights, either currently or in the
future, or for the investment of such Dividend Equivalent Rights on behalf of
the Participant.

7.6 Loans. The Committee may authorize a Loan from the Trust to a
Participant, either on the date of or after the grant of any Award to the
Participant (except that the ability of the Committee to authorize a Loan in
connection with an Award of ISOs must be included in the Participant's Award
Agreement at the time of the Award). A Loan may be made either in connection
with the purchase of Shares under the Award or with the payment of any Federal,
state, and local income tax with respect to income recognized as a result of
the Award. The Committee will have full authority to decide whether to make a
Loan and to determine the amount, terms, and conditions of the Loan, whether
the Loan is to be secured or unsecured, the terms on which the Loan is to be
repaid, and the conditions, if any, under which it may be forgiven. However,
the Loan will be made on the Participant's personal, negotiable, demand
promissory note, and will bear interest at a rate not lower than the lowest
rate that will avoid imputation of interest under section 7872 of the Code.

8. Events Affecting Outstanding Awards

8.1 Termination of Employment (Other Than by Death or Disability). If a
Participant ceases to be an employee of any of the Trust or its Subsidiary
Entities or of PRI or its Subsidiary Entities for any reason other than death or
Disability, as the case may be, the following shall apply:

(a) Except as otherwise determined by the Committee, all Options and
Stock Appreciation Rights held by the Participant that were not exercisable
immediately prior to the Participant's termination of employment shall
terminate at that time. Any Options or Stock Appreciation Rights that were
exercisable immediately prior to the termination of employment will
continue to be exercisable for three months (or for such longer period as
the Committee may determine), and shall thereupon terminate, unless the
Award Agreement provides by its terms for immediate termination in the
event of termination of employment. In no event, however, shall an Option
or Stock Appreciation Right remain exercisable beyond the latest date on
which it could have been exercised without regard to this Section. For
purposes of this subsection (a), a termination of employment shall not be
deemed to have resulted by reason of a sick leave or other bona fide leave
of absence approved for purposes of the Plan by the Committee.

(b) Except as otherwise determined by the Committee, all Restricted
Stock held by the Participant at the time of the termination of employment
must be transferred to the Trust (and, in the event the certificates
representing such Restricted Stock are held by the Trust, such Restricted
Stock shall be so transferred without any further action by the
Participant), in accordance with Section 7.3.

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(c) Except as otherwise determined by the Committee, all Performance
Stock to which the Participant was not irrevocably entitled prior to the
termination of employment shall be forfeited and the Award cancelled as of
the date of such termination of employment.

(d) Except as otherwise determined by the Committee, all Dividend
Equivalent Rights to which the Participant was not irrevocably entitled
prior to the termination of employment shall be forfeited and the Award
cancelled as of the date of such termination of employment.

(e) Payment of any outstanding Loan upon a Participant's termination of
employment shall be governed by the terms of the loan agreement entered
into by the Trust and the Participant.

8.2 Death or Disability. If a Participant dies or incurs a Disability,
the following shall apply:

(a) Except as otherwise determined by the Committee, all Options and
Stock Appreciation Rights held by the Participant immediately prior to
death or Disability, as the case may be, to the extent then exercisable,
may be exercised by the Participant's executor or administrator or by the
person or persons to whom the Option or Stock Appreciation Right is
transferred by will or the laws of descent and distribution, at any time
within the one-year period ending with the first anniversary of the
Participant's death or Disability (or such shorter or longer period as the
Committee may determine), and shall thereupon terminate. In no event,
however, shall an Option or Stock Appreciation Right remain exercisable
beyond the latest date on which it could have been exercised without regard
to this Section. Except as otherwise determined by the Committee, all
Options and Stock Appreciation Rights held by a Participant immediately
prior to death or Disability that are not then exercisable shall terminate
at the date of death or Disability.

(b) Except as otherwise determined by the Committee, all Restricted
Stock held by the Participant at the date of death or Disability, as the
case may be, must be transferred to the Trust (and, in the event the
certificates representing such Restricted Stock are held by the Trust, such
Restricted Stock shall be so transferred without any further action by the
Participant), in accordance with Section 7.3.

(c) Except as otherwise determined by the Committee, all Performance
Stock to which the Participant was not irrevocably entitled prior to death
or Disability, as the case may be, shall be forfeited and the Award
canceled as of the date of death or Disability.

(d) Except as otherwise determined by the Committee, all Dividend
Equivalent Rights to which the Participant was not irrevocably entitled
prior to death or Disability, as the case may be, shall be forfeited and
the Award canceled as of the date of death or Disability.

(e) Payment of any outstanding Loan upon a Participant's death or
Disability shall be governed by the terms of the loan agreement entered
into by the Trust and the Participant.

8.3 Capital Adjustments. The number of Shares that may be delivered under
the Plan, the maximum number of Shares that may be made subject to ISOs, and the
maximum number of Shares with respect to which Options or Stock Appreciation
Rights may be granted to any Key Employee under the Plan, all as stated in
Section 5, and the number of Shares issuable upon the exercise or vesting of
outstanding Awards under the Plan (as well as the exercise price per Share under
outstanding Options) shall be proportionately adjusted, as may be deemed
appropriate by the Committee, to reflect any increase or decrease in the number
of issued Shares resulting from a subdivision (share-split), consolidation
(reverse split), stock dividend, or similar change in the capitalization of the
Trust.

8.4 Certain Corporate Transactions

(a) In the event of a corporate transaction (as, for example, a merger,
consolidation, acquisition of property or stock, separation,
reorganization, or liquidation), each outstanding Award shall be assumed by
the surviving or successor entity; provided, however, that in the event of
a proposed corporate transaction, the Committee may terminate all or a
portion of any outstanding Award if it determines that such termination is
in the best interests of the Trust. If the Committee decides to terminate
outstanding Options or Stock Appreciation Rights, the Committee shall give
each Key Employee holding an Option or Stock Appreciation Right to be
terminated not less than seven days' notice prior to any such termination,
and any Option or Stock Appreciation Right that is to be so terminated may
be exercised (if and only to the extent that it

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is then exercisable) up to, and including the date immediately preceding
such termination. Further, the Committee, in its discretion, may (i)
accelerate, in whole or in part, the date on which any or all Options and
Stock Appreciation Rights become exercisable, (ii) remove the restrictions
from the outstanding Shares of Restricted Stock, (iii) cause the delivery
of any Performance Stock, even if the associated Performance Goals have not
been met, (iv) cause the payment of any Dividend Equivalent Rights, and/or
(v) forgive all or any portion of the principal of, or interest on, a Loan.
The Committee also may, in its discretion, change the terms of any
outstanding Award to reflect any such corporate transaction, provided that,
in the case of ISOs, such change would not constitute a "modification"
under section 424(h) of the Code, unless the Participant consents to the
change.

(b) With respect to an outstanding Award held by a Participant who,
following the corporate transaction, will be employed by or otherwise
providing services to an entity which is a surviving or acquiring entity in
such transaction or an affiliate of such an entity, the Committee may, in
lieu of the action described in subsection (a) above, arrange to have such
surviving or acquiring entity or affiliate grant to the Participant a
replacement award which, in the judgment of the Committee, is substantially
equivalent to the Award.

8.5 Exercise Upon Change in Control

(a) Notwithstanding any other provision of this Plan and except as
provided in Section 9 regarding NQSOs issued to PRI, all outstanding
Options and any Stock Appreciation Rights in tandem with such Options shall
become fully vested and exercisable upon a Change in Control.

(b) "Change in Control" shall mean:

(1) The acquisition by an individual, entity, or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30 percent or more of the
combined voting power of the then outstanding voting securities of the
Trust entitled to vote generally in the election of trustees (the
"Outstanding Shares"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Trust, (ii) any acquisition by the Trust,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Trust or any corporation controlled by
the Trust, (iv) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of paragraph
(3) below, or (v) any acquisition by any Person entitled to file Form
13G under the Exchange Act with respect to such acquisition; or

(2) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
trustee subsequent to the date hereof whose appointment, election, or
nomination for election by the Trust's shareholders was approved by a
vote of at least a majority of the trustees then comprising the
Incumbent Board (other than an appointment, election, or nomination of
an individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of the
trustees of the Trust, as such terms are used in Rule 14a-1 promulgated
under the Exchange Act) shall be, for purposes of this Plan, considered
as though such person were a member of the Incumbent Board; or

(3) Approval by the shareholders of the Trust of a reorganization,
merger, or consolidation, or sale or other disposition of all or
substantially all of the assets of the Trust (a "Business Combination"),
in each case, unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Shares immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
60 percent of, respectively, the then outstanding shares of stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of trustees, as the case may
be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Trust or all or substantially all of the Trust's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior

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to such Business Combination of the Outstanding Shares, (ii) no Person
(excluding any employee benefit plan (or related trust) of the Trust or
such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 30 percent or more of, respectively, the
then outstanding shares of stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination, and (iii)
at least a majority of the members of the board of trustees or directors
of the entity resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

(4) Approval by the shareholders of the Trust of a complete
liquidation or dissolution of the Trust.

9. Issuance of Options to PRI. Upon PRI's grant of an NQSO to a Key
Employee of PRI or one of its Subsidiary Entities under the PREIT-RUBIN, INC.
1998 Stock Option Plan (or under such other stock option plan that may be
established by PRI with the prior, written consent of the Trust), the Trust
shall issue an NQSO (the "PRI Option") to PRI for a number of Shares equal to
the number of Shares subject to such Key Employee's NQSO. Pursuant to the Stock
Option Agreement entered into by the Trust and PRI as of July 15, 1998, the
purchase price of each PRI Option shall equal the value of such PRI Option as
determined as of the date of grant in accordance with the Black-Scholes option
pricing model, and PRI shall pay the Trust such purchase price (in cash, or in
the form of a note payable to the Trust with terms and conditions mutually
acceptable to the Trust and PRI) promptly following the calculation of such
value by the Trust. Each of the PRI Options issued shall have the terms and
conditions required by such Stock Option Agreement, as it may be amended from
time to time.

10. Amendment or Termination of the Plan

(a) In General. The Board, pursuant to a written resolution, may from
time to time suspend or terminate the Plan or amend it, and, except as
provided in Section 3(b)(4), the Committee may amend any outstanding Awards
in any respect whatsoever; except that, without the approval of the
shareholders (given in the manner set forth in subsection (b) below):

(i) no amendment may be made that would:

(A) change the class of employees eligible to participate in the
Plan with respect to ISOs;

(B) except as permitted under Section 8.3, increase the maximum
number of Shares with respect to which ISOs may be granted under
the Plan; or

(ii) no amendment may be made that would constitute a modification
of the material terms of the "performance goal" within the meaning of
Treas. Reg. ss. 1.162-27(e)(4)(vi) or any successor thereto (to the
extent compliance with section 162(m) of the Code is desired).

Notwithstanding the foregoing, no such suspension, discontinuance, or amendment
shall materially impair the rights of any Participant holding an outstanding
Award without the consent of such Participant.

(b) Manner of Shareholder Approval. The approval of shareholders must
be effected by a majority of the votes cast (including abstentions, to the
extent abstentions are counted as voting under applicable state law), in a
separate vote at a duly held shareholders' meeting at which a quorum
representing a majority of all outstanding voting Shares is, either in
person or by proxy, present and voting on the Plan.

11. Miscellaneous

11.1 Documentation of Awards. Awards shall be evidenced by such written
Award Agreements, if any, as may be prescribed by the Committee from time to
time. Such instruments may be in the form of agreements to be executed by both
the Participant and the Trust, or certificates, letters, or similar
instruments, which need not be executed by the Participant but acceptance of
which will evidence agreement to the terms thereof.

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11.2 Rights as a Stockholder. Except as specifically provided by the Plan
or an Award Agreement, the receipt of an Award shall not give a Participant
rights as a stockholder; instead, the Participant shall obtain such rights,
subject to any limitations imposed by the Plan or the Award Agreement, upon the
actual receipt of Shares.

11.3 Conditions on Delivery of Shares. The Trust shall not deliver any
Shares pursuant to the Plan or remove restrictions from Shares previously
delivered under the Plan (i) until all conditions of the Award have been
satisfied or removed, (ii) until all applicable Federal and state laws and
regulations have been complied with, and (iii) if the outstanding Shares are at
the time of such delivery listed on any stock exchange, until the Shares to be
delivered have been listed or authorized to be listed on such exchange. If an
Award is exercised by the Participant's legal representative, the Trust will be
under no obligation to deliver Shares pursuant to such exercise until the Trust
is satisfied as to the authority of such representative.

11.4 Investment Purpose. Each Award shall be granted on the condition that
the purchase or grant of Shares thereunder shall be for investment purposes and
not with a view to resale or distribution, except that in the event the Shares
subject to such Award are registered under the Securities Act, or in the event
a resale of such Shares without such registration would otherwise be
permissible, such condition shall be inoperative if in the opinion of counsel
for the Trust such condition is not required under the Securities Act or any
other applicable law, regulation, or rule of any governmental agency.

11.5 Registration and Listing of Shares. If the Trust shall deem it
necessary to register under the Securities Act or any other applicable statute
any Shares purchased under this Plan, or to qualify any such Shares for an
exemption from any such statutes, the Trust shall take such action at its own
expense. If Shares are listed on any national securities exchange at the time
any Shares are purchased hereunder, the Trust shall make prompt application for
the listing on such national securities exchange of such Shares, at its own
expense. Purchases and grants of Shares hereunder shall be postponed as
necessary pending any such action.

11.6 Compliance with Rule 16b-3. All elections and transactions under this
Plan by persons subject to Rule 16b-3, promulgated under section 16(b) of the
Exchange Act, or any successor to such Rule, are intended to comply with at
least one of the exemptive conditions under such Rule. The Committee shall
establish such administrative guidelines to facilitate compliance with at least
one such exemptive condition under Rule 16b-3 as the Committee may deem
necessary or appropriate. If any provision of this Plan, any administrative
guideline, or any act or omission with respect to this Plan (including any act
or omission by an employee) fails to satisfy such exemptive condition under
Rule 16b-3 or otherwise is inconsistent with such condition, such provision,
guideline, or act or omission shall be deemed null and void.

11.7 Tax Withholding

(a) Obligation to Withhold. The Trust shall withhold from any cash
payment made pursuant to an Award an amount sufficient to satisfy all
Federal, state, and local withholding tax requirements (the "withholding
requirements"). In the case of an Award pursuant to which Shares may be
delivered, the Committee may require that the Participant or other
appropriate person remit to the Trust an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such requirements, prior to the delivery of any
Shares.

(b) Election to Withhold Shares. If the Committee so permits, a
Participant may elect to satisfy the Trust's income tax withholding
obligation with respect to an Award paid in Shares by having Shares
withheld up to the number necessary to satisfy the minimum Federal income
tax withholding requirements. Shares shall be valued, for purposes of this
subsection (b), at their Fair Market Value (determined as of the date the
amount attributable to the Award is includible in the Participant's income
under section 83 of the Code).

11.8 Nontransferability of Awards. No Award may be transferred other than
by will or by the laws of descent and distribution, and during a Participant's
lifetime an Award requiring exercise may be exercised only by the Participant
(or in the event of the Participant's incapacity, by the person or persons
legally appointed to act on the Participant's behalf).

11.9 Employment Rights. Neither the adoption of the Plan nor the grant of
Awards will confer upon any person any right to continued employment by the
Trust or any of its Subsidiary Entities or by PRI or any of its Subsidiary
Entities or affect in any way the right of any of the foregoing to terminate an
employment relationship at any time.

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11.10 Indemnification of Board and Committee. Without limiting any other
rights of indemnification that they may have from the Trust or any of its
Subsidiary Entities or from PRI or any of its Subsidiary Entities, the members
of the Board and the members of the Committee shall be indemnified by the Trust
against all costs and expenses reasonably incurred by them in connection with
any claim, action, suit, or proceeding to which they or any of them may be a
party by reason of any action taken or failure to act under, or in connection
with, the Plan or any Award granted thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by legal
counsel selected by the Trust) or paid by them in satisfaction of a judgment in
any such action, suit, or proceeding, except a judgment based upon a finding of
willful misconduct or recklessness on their part. Upon the making or
institution of any such claim, action, suit, or proceeding, the Board or
Committee member shall notify the Trust in writing, giving the Trust an
opportunity, at its own expense, to handle and defend the same before such
Board or Committee member undertakes to handle it on his own behalf. The
provisions of this Section shall not give members of the Board or the Committee
greater rights than they would have under the Trust's by-laws or Pennsylvania
law.

11.11 Application of Funds. Any cash proceeds received by the Trust from
the sale of Shares pursuant to Awards granted under the Plan shall be added to
the general funds of the Trust. Any Shares received in payment for additional
Shares upon exercise of an Option shall become treasury stock.

11.12 Governing Law. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the
Commonwealth of Pennsylvania shall govern the operation of, and the rights of
Key Employees under, the Plan, and Awards granted hereunder.

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APPENDIX B

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

QUALIFIED EMPLOYEE SHARE PURCHASE PLAN
(Effective as of January 1, 1999)

1. Purpose. The Pennsylvania Real Estate Investment Trust (the "Trust")
has adopted this Qualified Employee Share Purchase Plan (the "Plan") in order
to encourage share ownership by all eligible employees of the Trust by
providing them the opportunity to acquire a proprietary interest (or increase
their proprietary interest) in the Trust. It is intended that options issued
pursuant to this Plan shall constitute options issued pursuant to an "employee
stock purchase plan," within the meaning of ss. 423 of the Internal Revenue
Code of 1986, as amended (the "Code"). The Trust's Board of Trustees (the
"Board") may, from time to time, approve participation in the Plan by employees
of any "subsidiary corporation" of the Trust (as defined in ss. 424(f) of
the Code) and/or of any "parent corporation" of the Trust (as defined in
ss. 24(e) of the Code).

2. Administration. The Plan shall be administered by the Executive
Compensation and Human Resources Committee (the "Committee") of the Board. Acts
approved by a majority of the Committee at which a quorum is present, or acts
without a meeting reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. Each member
of the Committee, while serving as such, shall be deemed to be acting in his or
her capacity as a trustee of the Trust.

The Committee shall have full and final authority, in its discretion but
subject to the express provisions of the Plan: (i) to interpret the Plan; (ii)
to make, amend, and rescind rules and regulations relating to the Plan; (iii)
to determine the terms and provisions of the instruments by which options shall
be evidenced; and (iv) to make all other determinations necessary or advisable
for the administration of the Plan. No member of the Board or of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any option granted hereunder. Any and all authority of the
Committee may be delegated by the Committee to a plan administrator.

3. Eligibility. (a) General Rule. Except as provided in paragraph (b)
below and subject to ss. 9(e), each employee of the Trust or of a designated
subsidiary corporation who has been employed by the Trust or a designated
subsidiary corporation for at least six months shall be eligible for option
grants described in ss. 5.

(b) Exceptions. An employee will not be eligible to participate in the
Plan if he or she is customarily employed by the Trust or a designated
subsidiary corporation for 20 hours or less per week or if he or she is
customarily employed by the Trust or a designated subsidiary corporation for
not more than five months in any calendar year. In addition, in no event may an
employee be granted an option if such employee, immediately after the option is
granted, would own shares possessing five percent or more of the total combined
voting power or value of all classes of shares of the Trust or of its parent
corporation (if any) or of a subsidiary corporation (if any) then outstanding.
For purposes of determining share ownership under this paragraph (b), the rules
of ss. 424(d) of the Code (relating to attribution of share ownership) shall
apply, and shares which the employee may purchase under outstanding options
shall be treated as shares owned by the employee.

4. Shares. The shares subject to the options as provided herein shall be
shares of beneficial interest in the Trust, par value $1.00 per share
("Shares"). The aggregate number of Shares that may be issued under options
shall not exceed 82,000; provided that such number shall be adjusted if
required by ss. 9(i). Shares issuable under the Plan may be authorized but
unissued shares or reacquired shares, and the Trust may purchase shares
required for this purpose, from time to time, if it deems such purchase to be
advisable.

5. Grant of Option. (a) Grant of Option. Employees shall have the right
to purchase Shares under options granted as of January 1, 1999 (or, in the
Committee's discretion, as soon as administratively practicable thereafter) and
as of each subsequent January 1 (the "Grant Dates"). Each employee who meets
the eligibility requirements of ss. 3 shall be granted an option on the
first Grant Date coinciding with or immediately following the date he or she
becomes an eligible employee, and on each succeeding Grant Date, provided he or
she continues to meet the eligibility requirements of ss. 3. The term of the
options (the "Option Term") shall be 12 calendar months (from January 1 to
December 31).

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(b) Purchase Periods. Each Option Term shall contain four three-month
Purchase Periods (January-March, April-June, July-September, and
October-December).

(c) Number of Shares Purchasable Under Option. Subject to the limitation
in paragraph (d) below, at the beginning of each Option Term each eligible
employee shall be granted an option, exercisable in installments at the end of
each Purchase Period during such Option Term, to purchase up to a number of
Shares equal to the total of the number of Shares purchasable by the employee
for each Purchase Period in the Option Term. The number of Shares purchasable
for a Purchase Period shall be determined by dividing the employee's
accumulated payroll deductions (as described in ss. 6) for the Purchase
Period by the per-share exercise price (determined in accordance with
ss. 9(b)) of the option installment for such Purchase Period. For example,
if an employee makes payroll deductions of $6,000 for a 12-month Option Term
($1,500 for each Purchase Period in the Option Term) and the per-share exercise
price for each Purchase Period is $19.55, $20.40, $21.25, and $22.10,
respectively, then the number of Shares purchasable by the employee for the
Option Term is 286, determined as follows:

$1,500 $1,500 $1,500 $1,500
------ ------ ------ ------- = 76 + 73 + 70 + 67 =286
$19.55 + $20.40 + $21.25 + $22.10

Full and fractional Shares shall be purchasable under the Plan. However, in
accordance with ss. 9(m), no fractional Share certificates shall be issued.

(d) Limitation on Aggregate Number of Shares Purchasable Under Option.
Subject to the limitations described in ss. 9(e) and ss. 9(l), the
aggregate number of full Shares purchasable under an option for an Option Term
shall not exceed the lesser of (i) 2,000 (subject to adjustment under
ss. 9(i)), or (ii) the number determined by dividing $25,000 by the fair
market value of a Share (as described in ss. 9(b)) on the most recent
business day before the Grant Date for such Option Term. Further, if the total
number of Shares to be purchased on any date in accordance with ss. 7(a)
exceeds the Shares then available under the Plan (after deduction of all Shares
that have been purchased under ss. 7(a)), the Committee shall make a pro
rata allocation of the Shares remaining available in as nearly a uniform manner
as shall be practical and as it shall determine to be equitable.

6. Participation. (a) Payroll Deductions. Subject to rules established by
the Committee from time to time, an eligible employee may elect to participate
in the Plan by making payroll deductions (as a whole percentage of the
employee's basic rate of compensation each pay, subject to the limits set forth
in paragraph (b) below) for each Option Term in which the employee is eligible
to participate. For purposes of this Plan, "basic rate of compensation" shall
mean an employee's basic hourly rate or salary, excluding any commissions,
bonuses, overtime, or other extra or incentive pay.

(b) Maximum Payroll Deduction. The maximum total payroll deductions for
any employee for an Option Term may not exceed 10 percent of the employee's
basic rate of compensation for the Option Term.

(c) General Assets; Taxes; No Interest. All payroll deductions made for an
employee shall be credited to his or her account as of the payday as of which
the deduction is made. All payroll deductions shall be held by the Trust (or by
a designated subsidiary corporation as agent for the Trust). All such
contributions shall be held as part of the general assets of the Trust , and
shall not be held in trust or otherwise segregated from the Trust's general
assets. No interest shall be paid or accrued on any such contributions. Each
employee's right to the contributions credited to his or her account shall be
that of a general and unsecured creditor of the Trust. The Trust and each
designated subsidiary corporation shall have the right to make such provisions
as it deems necessary or appropriate to satisfy any tax laws with respect to
purchases of Shares made under this Plan.

(d) Automatic Refund. The balance credited to the account of an employee
automatically shall be refunded in full (without interest) if his or her status
as an employee of the Trust and all designated subsidiary corporations
terminates for any reason whatsoever during a Purchase Period. Such refunds
shall be made as soon as practicable after the Committee has actual notice of
any such termination.

(e) Participation after Surrender. Each employee who has satisfied the
eligibility requirements of ss. 3 but who has elected to surrender all or a
portion of his or her option in accordance with ss. 8 (or, as described in
paragraph (g) below, is deemed to have surrendered his or her option) for an
Option Term, shall be granted an option in accordance with ss. 5 in
subsequent Option Terms, provided the employee continues to meet the
eligibility requirements of ss. 3. However, such employee must submit a new
payroll deduction agreement under paragraph (a) above in order to begin payroll
deductions for a subsequent Option Term.

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(f) No Contract to Purchase. Electing to make payroll deductions for any
Option Term will not constitute a contract to purchase any of the Shares
purchasable under an option.

(g) Waiver of Rights. An employee who fails to elect to participate in the
Plan for an Option Term in the manner and within the time provided under
paragraph (a) above shall be deemed to have surrendered the option granted to
the employee for such Option Term and shall have no further rights under the
Plan with respect to such surrendered option.

7. Exercise of Option. (a) Method of Exercise. Unless the employee has
surrendered his or her option in accordance with ss. 8(a) (or is deemed to
have surrendered his or her option under ss. 6(g)) before the end of a
Purchase Period, as of the last business day of the Purchase Period (the
"Exercise Date"), the employee will be credited for such number of whole Shares
and any fraction of a whole share (computed to the number of decimal places set
by the Committee) as his or her accumulated payroll deductions shall be
sufficient to pay for, subject to the limitations of ss. 5(d).

(b) Return of Excess Payroll Deductions. Any payroll deductions remaining
after the employee exercises an option for an Option Term shall be refunded to
the employee.

8. Employee's Right to Surrender Option. (a) Surrender of Option. An
employee may elect to surrender his or her option during any Purchase Period of
an Option Term and withdraw any payroll deductions already made for such
Purchase Period under the Plan by giving written notice to the Trust. However,
in order for such surrender to be effective for the Purchase Period, the
employee's written notice must be received by the Trust on or before the 30th
calendar day prior to the end of the Purchase Period. All of such employee's
payroll deductions will be refunded to him or her as soon as practicable after
the Trust receives the employee's notice of withdrawal, and no further payroll
deductions will be made from the employee's pay until the employee completes a
new payroll deduction agreement in accordance with ss. 6(a) for a subsequent
Option Term. As to any option so surrendered, the employee shall have no
further right of any nature at any subsequent time.

(b) Effect on Later Participation. An election to surrender an option
during a Purchase Period of an Option Term shall preclude the employee from
participating in any remaining Purchase Periods of such Option Term, but will
not have any effect upon his or her eligibility to participate in the Plan for
subsequent Option Terms.

9. Terms and Conditions of Options. Options granted pursuant to the Plan
shall be evidenced by agreements in such form as the Committee shall prescribe,
provided that all employees granted such options shall have the same rights and
privileges (except as otherwise required by ss. 5), and provided further
that such options and option agreements shall comply with and be subject to the
terms and conditions set forth below.

(a) Employee Notification and Agreement. Employees shall be notified (i)
of the requirements they must meet to be granted options under the Plan, (ii)
about the terms and conditions of such options, and (iii) that any employee
eligible to be granted options under the Plan may request a copy of the Plan.
An employee's agreement to the terms of an option will be evidenced by his or
her payroll deduction agreement with the Trust or a subsidiary corporation for
an Option Term.

(b) Option Price. The per-share exercise price of an option for each Purchase
Period of an Option Term shall be the lesser of (i) 85% of the fair market value
of a Share as of the most recent business day before the Grant Date for such
Option Term, or (ii) 85% of the fair market value of a Share as of the
applicable Exercise Date. In making such determination for a Purchase Period,
during such time as the Shares are listed upon an established stock exchange or
exchanges, the per share "fair market value" shall be deemed to be the mean
between the highest and lowest quoted selling prices on the relevant date.
During such time as the Shares are not listed upon an established stock
exchange, the per-share fair market value shall be determined by the Committee
by a method sanctioned by the Code, or rules and regulations thereunder. The
fair market value per share is to be determined in accordance with Treas. Reg.
ss. 1.421-7(e) and 20.2031-2. Subject to the foregoing, the Committee in fixing
the exercise price shall have full authority and be fully protected in doing so.

(c) Medium and Time of Payment. The exercise price of an option for a
Purchase Period shall be payable in United States dollars upon the exercise of
the option for such Purchase Period, and shall be payable only by accumulated
payroll deductions made in accordance with ss. 6.

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(d) Term of Option. No option may be exercised after the end of the Option
Term in which the option was granted.

(e) Accrual Limitation. No option shall permit the rights of an employee
to purchase shares under all employee stock purchase plans, which are intended
to qualify under ss. 423 of the Code, of the Trust and its parent
corporation (if any) and subsidiary corporations (if any) to accrue at a rate
which exceeds $25,000 in fair market value of such shares (determined at the
time options are granted) for each calendar year in which the option is
outstanding at any time. Thus, the maximum number of Shares an employee may
purchase under an option under this Plan for a calendar year for which the
employee receives an option is determined by dividing (i) $25,000 by (ii) the
per share fair market value of Shares on the Grant Date of the Option Term
occurring in such calendar year.

For purposes of this paragraph (e) -- (i) the right to purchase Shares
under an option accrues when the option (or any portion thereof) first becomes
exercisable during the calendar year; (ii) the right to purchase Shares under
an option accrues at the rate provided in the option but in no case may such
rate exceed $25,000 of fair market value of such Shares (determined on the
Grant Date of such option) for any one calendar year; and (iii) a right to
purchase Shares which has accrued under one option granted pursuant to the Plan
may not be carried over to any other option.

(f) Termination of Employment; Change in Status. In the event that an
employee ceases to be employed by the Trust and all designated subsidiary
corporations as an eligible employee for any reason during the employee's
participation in an Option Term, his or her accumulated payroll deductions
shall be refunded in accordance with ss. 6(d). Whether an authorized leave
of absence for military or governmental service shall constitute termination of
employment for the purposes of the Plan shall be determined by the Committee in
accordance with applicable law, which determination, unless modified by the
Board (in accordance with applicable law), shall be final and conclusive.

(g) Designation of Beneficiary. An eligible employee may designate a
beneficiary (i) who shall receive the balance credited to his or her account if
the employee dies before the end of a Purchase Period and (ii) who shall
receive the Shares, if any, purchased for the employee under this Plan if the
employee dies after the end of a Purchase Period but before either the
certificate representing such Shares has been delivered to the employee or
before such Shares have been credited to a brokerage account maintained for the
employee. Such designation may be revised in writing at any time by the
employee by filing an amended designation, and his or her revised designation
shall be effective at such time as the Committee receives such amended
designation. If a deceased employee failed to designate a beneficiary or, if no
person so designated survives an employee or, if after checking his or her last
known mailing address, the whereabouts of the person so designated are unknown,
then the employee's estate shall be treated as his or her designated
beneficiary under this paragraph (g).

(h) Nontransferability. Except as provided in paragraph (g) above, neither
payroll deductions made by an employee, nor any rights with regard to the
exercise of an option or to receive Shares, nor any rights to a return of
payroll deductions under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the employee or by his or her beneficiary.
Any such attempted assignment, transfer, pledge, or other disposition shall be
without effect. An option may be exercised only by the employee.

(i) Changes In Capital Structure. Subject to any required action by the
shareholders, the number of Shares designated in ss. 4 and ss. 5(d)(i),
the number of Shares covered by each outstanding option, and the price per
share of each such option, shall be proportionately adjusted for any increase
or decrease in the number of issued Shares of the Trust resulting from a
subdivision (share-split) or consolidation (reverse-split) of shares or the
payment of a share dividend (but only on the Shares) or any other similar
change in the capitalization of the Trust, without receipt of consideration by
the Trust.

Subject to any required action by the shareholders, if the Trust is not
the surviving entity in any merger or consolidation, the Committee, in its
discretion may either (i) cause each outstanding option to apply to the
securities to which a holder of the number of Shares subject to the option
would have been entitled or (ii) cause each outstanding option to terminate,
provided that each employee granted an option under this Plan shall, in such
event, have the right immediately prior to such merger or consolidation, to
exercise his or her option to the extent of his or her accumulated payroll
deductions. In the event of the dissolution or liquidation of the Trust, the

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Committee shall cause each outstanding option to terminate, provided that each
employee granted an option under this Plan shall, in such event, have the right
immediately prior to such dissolution or liquidation, to exercise his or her
option to the extent of his or her accumulated payroll deductions.

In the event of a change in the Shares of the Trust as presently
constituted which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be
Shares within the meaning of the Plan.

To the extent that the foregoing adjustments relate to shares or
securities of the Trust, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive provided
that each option granted pursuant to this Plan shall not be adjusted in a
manner that causes the option to fail to continue to qualify as an option
issued pursuant to an "employee stock purchase plan" within the meaning of
ss. 423 of the Code.

Except as expressly provided in this paragraph (i), an employee shall have
no rights by reason of any subdivision or consolidation of shares of any class,
the payment of any share dividend, any other increase or decrease in the number
of shares of any class, or any dissolution, liquidation, merger, or
consolidation or spin-off of assets or shares of another corporation; and any
issue by the Trust of shares of any class, or securities convertible into
shares of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares subject to the
option.

The grant of an option pursuant to the Plan shall not affect in any way
the right or power of the Trust to make adjustments, reclassification,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part
of its business or assets.

(j) Rights as a Shareholder. An employee shall have no rights as a
shareholder with respect to any Shares covered by his or her option until the
date the option is exercised in accordance with the terms of the Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities, or other property) or distributions or other rights for which
the record date is prior to the date such share certificate is issued, except
as provided in paragraph (i) above.

(k) Investment Purpose. Each option under the Plan shall be granted on the
condition that the purchases of Shares thereunder shall be for investment
purposes and not with a view to resale or distribution, except that in the
event the Shares subject to such option are registered under the Securities Act
of 1933, as amended (the "Securities Act"), or in the event a resale of such
Shares without such registration would otherwise be permissible, such condition
shall be inoperative if in the opinion of counsel for the Trust such condition
is not required under the Securities Act or any other applicable law,
regulation or rule of any governmental agency.

(l) Adjustment in Number of Shares Exercisable. If the aggregate number of
Shares to be purchased under options granted under the Plan exceeds the
aggregate number of Shares specified in ss. 4, the Trust shall make a pro
rata allocation of the Shares available for distribution so that the limit of
ss. 4 is not exceeded, and the balance of payroll deductions made by each
participating employee shall be returned to him or her as promptly as possible.

(m) Delivery. A book-entry record of the Shares purchased by each employee
shall be maintained by the Trust's Share transfer agent and no certificates
shall be issued for such Shares except to the extent that an employee
specifically so requests. Notwithstanding the foregoing, when a refund is made
to an employee pursuant to ss. 6(d), certificates shall be delivered to him
or her for all Shares then held for the employee under the Plan. A Share
certificate delivered to an employee shall be registered in his or her name or,
if the employee so elects and if permissible under applicable law, in the names
of the employee and one such other person as may be designated by the employee,
as joint tenants with rights of survivorship. However, (i) no Share certificate
representing a fractional Share shall be delivered to an employee or to an
employee and any other person, (ii) cash equal to the fair market value of an
employee's fractional share shall be distributed (when an employee requests a
distribution of certificates for all of the Shares held for him or her) in lieu
of such fractional share unless an employee in light of Rule 16b-3 (as
described in ss. 10) waives his or her right to such cash payment, and (iii)
the Committee shall have the right to charge an employee for registering Shares
in the name of the

B-5
<PAGE>

employee and any other person. No employee (or any person who makes a claim
for, on behalf of, or in place of an employee) shall have any interest in any
Shares under this Plan until they have been reflected in the book-entry record
maintained by the Share transfer agent or the certificate for such Shares has
been delivered to such person.

(n) Registration and Listing of Shares. If the Trust shall deem it
necessary to register under the Securities Act or any other applicable statutes
any Shares purchased under this Plan, or to qualify any such Shares for an
exemption from any such statutes, the Trust shall take such action at its own
expense. If Shares are listed on any national securities exchange at the time
any Shares are purchased hereunder, the Trust shall make prompt application for
the listing on such national share exchange of such Shares, at its own expense.
Purchases of Shares hereunder shall be postponed as necessary pending any such
action.

(o) Other Provisions. The option agreements authorized under the Plan
shall contain such other provisions as the Committee shall deem advisable,
provided that no such provision may in any way be in conflict with the terms of
the Plan.

10. Compliance With Rule 16B-3. All elections and transactions under this
Plan by persons subject to Rule 16b-3, promulgated under ss. 16(b) of the
Securities Exchange Act of 1934, as amended, or any successor to such Rule, are
intended to comply with at least one of the exemptive conditions under such
Rule. The Committee shall establish such administrative guidelines to
facilitate compliance with at least one such exemptive condition under Rule
16b-3 as the Committee may deem necessary or appropriate. If any provision of
this Plan, any administrative guideline, or any act or omission with respect to
this Plan (including any act or omission by an employee) fails to satisfy such
exemptive condition under Rule 16b-3 or otherwise is inconsistent with such
condition, such provision, guideline, or act or omission shall be deemed null
and void.

11. Indeminification of Committee. In addition to such other rights of
indemnification as they may have as trustees or as members of the Committee,
the members of the Committee shall be indemnified by the Trust against the
reasonable expenses, including attorneys' fees actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection
with the Plan or any option granted thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by independent
legal counsel selected by the Trust) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his or her duties; provided that within 60 days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Trust
the opportunity, at its own expense, to handle and defend the same.

12. Amendment of Plan. The Committee may, to the extent permitted by law,
from time to time, with respect to any Shares other than those Shares subject
to options that may be exercised in the Purchase Period in which the action
occurs, suspend, discontinue, revise, or amend the Plan in any respect
whatsoever except that no such revision or amendment may permit the granting of
options under this Plan to persons other than employees of the Trust, its
parent corporation (if any), or a subsidiary corporation, or otherwise cause
options issued under it to fail to meet the requirements of ss. 423 of the
Code. Furthermore, the Plan may not, without the approval of a majority of the
votes cast at a duly held shareholders' meeting at which a quorum representing
a majority of all outstanding shares is, either in person or by proxy, present
and voting on the Plan, be amended in any manner that will change the number of
Shares subject to the Plan or change the employees (or class of employees)
eligible to receive options under the Plan.

13. Effective Date of Plan. In the discretion of the Committee, the Plan
will become effective as of January 1, 1999, or as soon as administratively
practicable thereafter, subject, however, to approval by the holders of at
least a majority of the Shares present or represented, and entitled to vote, at
a special or annual meeting of the shareholders at which a quorum is present
held within 12 months before or after the date the Plan is approved by the
Board. If the Plan is not so approved, the Plan shall not become effective.

B-6
<PAGE>

14. Absence of Rights. The granting of an option to a person shall not
entitle that person to continued employment by the Trust or a subsidiary
corporation or affect the terms and conditions of such employment. The Trust or
any subsidiary corporation shall have the absolute right, in its discretion, to
terminate an employee's employment, whether or not such termination may result
in a partial or total termination of his or her option under this Plan.

15. Application of Funds. The proceeds received by the Trust from the sale
of Shares pursuant to options will be used for general corporate purposes.

16. Miscellaneous. (a) Provisions of Plan Binding. The provisions of the
Plan shall, in accordance with its terms, be binding upon, and inure to the
benefit of, all successors of each employee participating in the Plan,
including, without limitation, such employee's estate and the executors,
administrator or trustees thereof, heirs and legatees, and any receiver,
trustee in bankruptcy or representative of creditors of such employee.

(b) Consistent Treatment. All rules and determinations of the Committee in
the administration of the Plan shall be uniformly and consistently applied to
all persons in similar circumstances.

(c) Employment. The right to participate in this Plan shall not constitute
an offer of employment and no election to participate in this Plan shall
constitute an employment agreement for an employee. Any such right or election
shall have no bearing whatsoever on the employment relationship between an
employee and any other person. Finally, no employee shall be induced to
participate in this Plan, or shall participate in this Plan, with the
expectation that such participation will lead to continued employment.

(d) Applicable Law. Pennsylvania law shall govern all matters relating to
this Plan except to the extent it is superseded by federal law.

B-7
<PAGE>

AMENDMENT NO. 1
TO THE
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

QUALIFIED EMPLOYEE SHARE PURCHASE PLAN
(Effective as of April 1, 1999)

WHEREAS, the Pennsylvania Real Estate Investment Trust (the "Trust")
adopted the Pennsylvania Real Estate Investment Trust Qualified Employee Share
Purchase Plan (the "Plan"), originally to be effective January 1, 1999;

WHEREAS, pursuant to ss. 5(a) of the Plan, the Executive Compensation
and Human Resources Committee (the "Committee") has decided to delay the
initial grant of options under the Plan until April 1, 1999;

WHEREAS, pursuant to ss. 12 of the Plan, the Committee, with certain
inapplicable limitations, has the right to amend the Plan; and

WHEREAS, the Committee has decided to amend the Plan to reflect the
delayed implementation date;

NOW, THEREFORE, effective April 1, 1999, the following changes are hereby
made to the Plan:

1. Paragraphs (a) and (b) of ss. 5 of the Plan ("GRANT OF OPTION") are
hereby replaced by the following:

(a) Grant of Option. Employees shall have the right to purchase Shares
under options granted as of April 1, 1999 (or, in the Committee's discretion,
as soon as administratively practicable thereafter) and as of each subsequent
January 1 (the "Grant Dates"). Each employee who meets the eligibility
requirements of ss. 3 shall be granted an option on the first Grant Date
coinciding with or immediately following the date he or she becomes an eligible
employee, and on each succeeding Grant Date, provided he or she continues to
meet the eligibility requirements of ss. 3. The term of the options (the
"Option Term") shall be 12 calendar months (from January 1 through December
31), except for the first Option Term, which shall be nine calendar months
(from April 1 through December 31, 1999).

(b) Purchase Periods. Each Option Term shall contain four three-month
Purchase Periods (January-March, April-June, July-September, and
October-December), except for the first Option Term which shall contain three
three-month Purchase Periods (April-June, July-September, and October-December,
1999).

2. Ss. 13 of the Plan is hereby replaced by the following:

13. EFFECTIVE DATE OF PLAN

The Plan will become effective as of April 1, 1999 or, in the discretion of the
Committee, as soon as administratively practicable thereafter, subject,
however, to approval by the holders of at least a majority of the Shares
present or represented, and entitled to vote, at a special or annual meeting of
the shareholders at which a quorum is present and that is held within 12 months
before or after October 13, 1998, the date the Plan was approved by the Board.
If the Plan is not so approved by the shareholders, the Plan shall not become
effective.

B-8

<PAGE>

APPENDIX C

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

1990 STOCK OPTION PLAN
FOR NON-EMPLOYEE TRUSTEES*

1. Purpose. The purpose of this 1990 Stock Option Plan for Non-Employee
Trustees (the "Plan") of the Pennsylvania Real Estate Investment Trust (the
"Trust") is to increase the ownership interest in the Trust of Non-Employee
Trustees whose services are considered essential to the Trust's continued
progress and to provide a further incentive to serve as a Trustee of the Trust.

2. The Plan. The Plan shall consist of options to acquire Shares of
Beneficial Interest, par value $1.00 per share, of the Trust (the "Shares").

3. Administration. The Plan shall be administered by a Committee
consisting of Trustees who are not eligible to participate in the Plan (the
"Committee"). Subject to the provisions of the Plan, the Committee shall be
authorized to interpret the Plan, to establish, amend and rescind any rules or
regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan. However, the
Committee shall have no discretion with the respect to the eligibility or
selection of Trustees to receive options under the Plan, the number of shares
subject to any such options or the Plan, or the purchase price thereunder.
Further, the Committee shall not have the authority to take any action to make
any determination that would materially increase the benefits accruing to
Trustees under the Plan except that the Committee may, in its discretion,
revise previously granted Options, held by a Trustee who is terminating his or
her service on such Board, to extend the exercise date of all or any portion of
any outstanding Options held by such Trustee and to accelerate the vesting of
all or any portion of such outstanding Options to a schedule in advance of that
set forth in clause (iii) of ss. 7 hereof. The determination of the
Committee in the administration of the Plan, as described herein, shall be
final and conclusive and binding upon all persons including, without
limitation, the Trust, its shareholders and persons granted options under the
Plan. The Secretary of the Trust shall be authorized to implement the Plan in
accordance with its terms and to take such actions of a ministerial nature as
shall be necessary to effectuate the intent and purposes thereof. The validity,
construction and effect of the Plan and any rules and regulations relating to
the Plan shall be determined in accordance with the laws of the Commonwealth of
Pennsylvania.

4. Participation in the Plan. Trustees of the Trust who are not employees
of the Trust or any affiliate of the Trust shall be eligible to participate in
the Plan ("Eligible Trustees").

5. Shares Subject to the Plan. Subject to adjustment as provided in
ss. 8, an aggregate of One Hundred Thousand (100,000) Shares shall be
available for issuance upon the exercise of options granted under the Plan. The
Shares deliverable upon the exercise of an option may be made available from
unissued Shares not reserved for any other purpose or Shares reacquired by the
Trust, including Shares purchased in the open market or in private
transactions. If any option granted under the Plan shall expire or terminate
for any reason without having been exercised in full, the Shares subject to,
but not delivered under, such option may again become available for the grant
of other options under the Plan.

6. Non-Statutory Stock Options. All options granted under the Plan shall
be non-statutory options not intended to qualify under Section 422A 422 of the
Internal Revenue Code of 1986, as amended.

7. Terms, Conditions and Form of Options. Each option granted under this
Plan shall be evidenced by a written agreement with the Trust, in such form as
the Committee shall from time to time approve, which agreements shall comply
with and be subject to the following terms and conditions:

(i) Option Grant Dates.

(a) Newly-Elected Trustee. Options to purchase 5,000 Shares (as
adjusted pursuant to Section 8) shall be granted automatically to each
newly elected (i.e., elected for the first time) Eligible Trustee on
the first stock trading day of the national securities exchange upon
which the Shares are traded that occurs on or after the date of such

- ------------
* Reflects the changes in the Plan proposed to be effected by the 1999
Amendment; language proposed to be added in by the 1999 Amendment is in bold;
language proposed to be deleted by the 1999 Amendment is struck through.

C-1
<PAGE>

election or, if the Shares are not listed on a national securities
exchange and are traded over-the-counter, the date of the first trade
as reported by NASDAQ (or, if not reported by NASDAQ, the date of the
first trade that is reported as being made) on or after the date of
such election.

(b) Eligible Trustee. Annual options to purchase 2,500 Shares (as
adjusted pursuant to Section 8) shall be granted automatically to each
Eligible Trustee except for an Eligible Trustee who received an
automatic grant described in (a) above during the six months preceding
the applicable January grant date. The grant date shall be the last
stock trading day of the national securities exchange upon which the
Shares are traded in each January through 2004 or, if the Shares are
not listed on a national securities exchange and are traded
over-the-counter, the date of the last trade as reported by NASDAQ (or,
if not reported by NASDAQ, the date of the last trade that is reported
as being made) in each January through 2004.

(ii) Purchase Price. The purchase price of Shares upon exercise of an
option shall be 100% of the fair market value of the Shares on the date of
grant of an option; which shall be: (i) if the Shares are listed on a
national securities exchange, the closing price of the Shares on such
date; provided, however, if on such date the Shares were traded on more
than one national securities exchange, then the closing price on the
exchange on which the greatest volume of Shares were traded on such day;
(ii) if the Shares are not listed on a national securities exchange and
are traded over-the-counter, the last sale price of the Shares on such
date as reported by NASDAQ or, if not reported by NASDAQ, the average of
the closing bid and asked prices for the Shares on such date; and (iii) if
the Shares are neither listed on a national securities exchange nor traded
in the over-the-counter market, such value as the Committee shall in good
faith determine. If the Shares are listed on a national securities
exchange or are traded over-the-counter but are not traded on the date of
grant, then the price shall be determined by the Committee by applying the
principles contained in Proposed Treasury Regulation section 1.422A-2(e)
and Treasury Regulation section 20.2031-2 or successor provisions thereto.
The fair market value of the Shares shall be determined by, and in
accordance with, procedures to be established by the Committee, whose
determination shall be final.

(iii) Exercisability and Term of Options. Each option granted under the
Plan will become exercisable and mature in four equal installments,
commencing on the first anniversary of the date of grant and annually
thereafter except that for the 1990 Grant the first installment shall
mature and become exercisable on January 31, 1991, and each subsequent
installment of such grant shall mature and become exercisable on the last
day of each subsequent January. Each option granted under the Plan shall
expire ten years from the date of the grant and shall be subject to
earlier termination as hereinafter provided.

(iv) Termination of Service. In the event of the termination of service
on the Board by the holder of any option, other than by reason of total
and permanent disability or death as set forth in Paragraph (v) hereof,
the then outstanding options of such holder may be exercised only to the
extent that they were exercisable on the date of such termination and
shall expire three months after such termination, or on their stated
expiration date, whichever occurs first.

(v) Disability or Death. In the event of termination of service by
reason of the total and permanent disability of the holder of any option,
each of the then outstanding options of such holder will continue to
mature and become exercisable in accordance with Paragraph (iii) above,
and the holder may exercise the matured installments at any time within
five years after such disability, but in no event after the expiration
date of the term of the option. In the event of the death of the holder of
any option, each of the then outstanding options of such holder will
immediately mature in full and become exercisable by the holder's legal
representative at any time within a period of five years after death, but
in no event after the

C-2
<PAGE>

expiration date of the term of the option. However, if the holder dies
within five years following termination of service on the Board by reason
of total and permanent disability, such option shall only be exercisable
for two years after the holder's death or five years after total and
permanent disability, whichever is longer, or until the expiration date of
the term of the option, if earlier.

(vi) Payment. Options may be exercised only upon payment to the Trust in
full of the purchase price of the Shares to be delivered. Such payment
shall be made only in cash or check at the time of purchase.

8. Adjustment upon Changes in Shares.

(i) In the event the Shares, as presently constituted, shall be changed
into or exchanged for a different number or kind or shares of stock or
other securities of the Trust or of another trust or corporation (whether
by reason of merger, consolidation, recapitalization, reclassification,
split, reverse split, combination of shares or otherwise), then there
shall be substituted for or added to each Share theretofore appropriated
or thereafter subject or which may become subject to an option under this
Plan, the number and kind of Shares or other securities into which each
outstanding Share shall be so changed or for which each such Share shall
be exchanged, or to which each such Share shall be entitled, as the case
may be. Outstanding options shall also be appropriately amended as to
price and other terms as may be necessary to reflect the foregoing events.
In the event there shall be any other change in the number or kind of the
outstanding Shares or of any share or other securities into which such
Shares shall have been changed, or for which it shall have been exchanged,
then, if the Board shall, in its sole discretion, determine that such
change equitably requires an adjustment in any option theretofore granted
or which may be granted under the Plan, such adjustments shall be made in
accordance with such determination.

(ii) Notwithstanding Section (i) above, the Board shall have the power,
in the event of the disposition of all or substantially all of the assets
of the Trust, or the dissolution of the Trust, or the merger or
consolidation of the Trust with or into any other real estate investment
trust, corporation, or the merger or consolidation of any other real
estate investment trust or corporation into the Trust, or the making of a
tender offer to purchase all or a substantial portion of the Shares of the
Trust, to amend all outstanding options (upon such conditions as it shall
deem appropriate) to (a) permit the exercise of all such options prior to
the effectiveness of any such transaction and to terminate such options as
of such effectiveness, or (b) require the forfeiture of all options,
provided the Trust pays to the Grantee the excess of the fair market value
of the Shares in which the Grantee's rights have not become vested at such
date over the purchase price, as provided for in Section 7(ii) hereof, or
(c) make such other provisions as the Board shall deem equitable.

9. Options Non-Assignable and Non-Transferable. Each option and all rights
thereunder shall be non-assignable and non-transferable other than by will or
the laws of descent and distribution and shall be exercisable during the
holder's lifetime only by the holder or the holder's guardian or legal
representative.

10. Limitations of Rights.

(i) No Right to Continue as a Trustee. Neither the Plan nor the
granting of an option nor any other action taken pursuant to the Plan,
shall constitute or be evidence of any agreement or understanding, express
or implied, that the Trustee has a right to continue as a Trustee for any
period of time, or at any particular rate of compensation.

(ii) No Shareholders' Rights for Optionee. An optionee shall have no
rights as a shareholder with respect to the Shares covered by options
granted hereunder until the date of the issuance of a stock certificate
therefor, and no adjustment will be made for dividend distributions or
other rights for which the record date is prior to the date such
certificate is issued.

11. Effective Date and Duration of Plan. The Plan became effective
immediately following approval by the shareholders at the 1990 Annual Meeting of
shareholders. The period during which option grants shall be made under the Plan
shall terminate on February 1, 2004 (unless the Plan is extended, or terminated
on an earlier date, by shareholders) but such termination shall not affect the
terms of any then outstanding options.

C-3
<PAGE>

12. Amendment, Suspension or Termination of the Plan. The Board of
Trustees may suspend or terminate the Plan or revise or amend it in any respect
whatsoever; provided, however, that without approval of the shareholders, no
revision or amendment shall change the selection or eligibility of Trustees to
receive options under the Plan, the number of Shares subject to any such
options or the Plan, the purchase price thereunder, or materially increase the
benefits accruing to participants under the Plan.

13. Notice. Any written notice to the Trust required by any of the
provisions of this Plan shall be addressed to the Secretary of the Trust and
shall become effective when it is received.

14. Use of Proceeds. Proceeds from the sale of Shares pursuant to options
granted under the Plan shall constitute general funds of the Trust.

15. Fractional Shares. No fractional Shares shall be issued pursuant to
options granted hereunder, but in lieu thereof, the cash value of such
fractions shall be paid.

16. Expenses of the Plan. All of the expenses of administering the Plan
shall be paid by the Trust.

17. Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, the Trust shall not be obligated to cause to be issued or delivered
any certificates for Shares to be delivered pursuant to the exercise of an
option unless and until the Trust is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable laws,
regulations or governmental authority and the requirements of any exchange upon
which Shares are traded. The Trust shall in no event be obligated to register
any securities pursuant to the Securities Act of 1933 (as now in effect or as
hereafter amended) or to take any other action in order to cause the issuance
and delivery of such certificates to comply with any such law, regulations or
requirement. The Committee may require, as a condition of the issuance and
delivery of such certificates and in order to insure compliance with such laws,
regulations and requirements, such representations as the Committee, in its
sole discretion, deems necessary or desirable. Each option shall be subject to
the further requirement that if at any time the Board shall determine in its
discretion that the listing or qualification of the Shares subject to such
option, under any securities exchange or association requirements or under any
applicable law, where the consent or approval of any governmental regulatory
body, is necessary as a condition of, or in connection with, the granting of
such option or the issuance of Shares thereunder, such option may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board.

18. Governing Law. Except to the extent pre-empted by federal law, this
Plan shall be construed and enforced in accordance with, and governed by, the
laws of the Commonwealth of Pennsylvania.

Date of Adoption
By the Board: September 17, 1990

Date of Approval
By the Shareholders: December 19, 1990.

C-4

<PAGE>
- --------------------------------------------------------------------------------

PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
This Proxy is Solicited on behalf of the Board of Trustees

The undersigned, revoking all prior proxies, hereby appoints RONALD RUBIN,
GEORGE F. RUBIN and WILLIAM R. DIMELING, and each and any of them, as proxies of
the undersigned, with full power of substitution, to vote and act with respect
to all Certificates of Beneficial Interest of Pennsylvania Real Estate
Investment Trust (the "Shares") held of record by the undersigned at the close
of business on March 19, 1999 at the Annual Meeting of Holders of Certificates
of Beneficial Interest to be held on Thursday, April 29, 1999 and at any
adjournment thereof.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE. NO POSTAGE REQUIRED.

(continued on reverse side)

Please mark sign, date and mail your
proxy card back as soon as possible!

Annual Meeting of Shareholders
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

April 29, 1999

Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
| | Please mark your
A | | votes as in this
| | example

WITHHOLD
FOR all AUTHORITY
Nominees listed to vote for all
except as marked nominees listed

(INSTRUCTION: To withhold authority to vote
for any individual nominee, strike a line
through the nominee's name at right.)

5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING

THE SHARES REPRESENTED BY THIS PROXY, DULY EXECUTED, WILL BE VOTED AS
INSTRUCTED ABOVE. IF INSTRUCTIONS ARE NOT GIVEN, THEY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED IN PROPOSAL NO. 1 AT LEFT, FOR ADOPTION OF THE
1999 EQUITY INCENTIVE PLAN, FOR ADOPTION OF THE QUALIFIED EMPLOYEE SHARE
PURCHASE PLAN AND FOR ADOPTION OF THE 1999 AMENDMENT TO THE 1990 STOCK OPTION
PLAN FOR NON-EMPLOYEE TRUSTEES.

You are urged to sign and return this proxy so that you may be sure that your
shares will be voted.
Signature___________________Signature___________________Dated:______________1999

Note: Please sign exactly as your name appears hereon. When certificate(s) are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.