PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
S-3, 1999-01-06
REAL ESTATE INVESTMENT TRUSTS
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<PAGE>

     As filed with the Securities and Exchange Commission on January 6, 1999
                                                      Registration No. 333-_____
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                 --------------
                                    FORM S-3
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                                 ---------------
                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
             (Exact Name of Registrant as Specified in Its Charter)
                                 ---------------
         Pennsylvania                                           23-6216339
(State or other jurisdiction of                             (I.R.S. Employer 
  Incorporation or Organization)                         Identification Number)

<TABLE>
<CAPTION>

<S>                                                                      <C>  
                                                                                            Jeffrey A. Linn                  
                                                                            Senior Vice President-Acquisitions & Secretary   
                The Bellevue, 200 S. Broad Street                                  The Bellevue, 200 S. Broad Street           
                Philadelphia, Pennsylvania 19102                                   Philadelphia, Pennsylvania 19102          
                         (215) 875-0700                                                     (215) 875-0700                   
       (Address, Including Zip Code, and Telephone Number,                 (Name, Address, Including Zip Code, and Telephone 
Including Area Code, of Registrant's Principal Executive Offices)         Number, Including Area Code, of Agent for Service) 
                                                                                       
</TABLE>
                             -----------------------
                                    Copy to:
                             Howard A. Blum, Esquire
                           Drinker Biddle & Reath LLP
                              1345 Chestnut Street
                      Philadelphia, Pennsylvania 19107-3496
                                 (215) 988-2700

         Approximate date of commencement of proposed sale to the public:
February 1, 1999.

         If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|

         If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|


<PAGE>

         If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|

         If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|

         If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.  |_|
<TABLE>
<CAPTION>

CALCULATION OF REGISTRATION FEE
====================================================================================================================================

<S>                                           <C>                   <C>                        <C>                     <C>   
                                                Amount               Proposed Maximum          Proposed Maximum           Amount of
           Title of Shares                       to be                Offering Price               Aggregate            Registration
          to be Registered                    Registered               Per Share (1)           Offering Price(1)             Fee
- ------------------------------------------------------------------------------------------------------------------------------------
Shares of Beneficial Interest,                  250,000                   $19.25                $4,812,500.00            $1,137.88
$1.00 par value
====================================================================================================================================
</TABLE>

(1) Calculated pursuant to Rule 457(c).
         The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================


<PAGE>


THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                  SUBJECT TO COMPLETION, DATED JANUARY 6, 1999

                                 250,000 SHARES
                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
                          SHARES OF BENEFICIAL INTEREST
                           (PAR VALUE $1.00 PER SHARE)

         The shares (the "Shares") of beneficial interest, par value $1.00 per
share, in Pennsylvania Real Estate Investment Trust (the "Company") offered
hereby may be purchased pursuant to the exercise of options issued by the
Company to participants in the Pennsylvania Real Estate Investment Trust 1998
Non-Qualified Employee Share Purchase Plan. See "Description of the Plan."

         On January 5, 1999, the closing price of the Shares on the New York
Stock Exchange was 20.25 per share.

         SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS FOR CERTAIN
FACTORS RELEVANT TO AN INVESTMENT IN THE SHARES.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.



<PAGE>


                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:

         1. The Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997, filed on November 28, 1997, as amended by Form 10-K/A-1 filed
on December 15, 1997.

         2. The description of the Company's Shares of Beneficial Interest
contained in the Registration Statement on Form 8-A/12(b)/A-1 dated November 13,
1997 filed on November 13, 1997 (amended December 17, 1997).

         3. The Company's definitive proxy statement for the Annual Meeting of
Shareholders on December 16, 1997, filed on November 18, 1997.

         4. The Company's definitive proxy statement for its Special Meeting of
Shareholders on September 29, 1997, filed on August 28, 1997.

         5. The Company's Reports on Form 10-Q for the four month period ending
December 31, 1997, dated February 17, 1998, filed February 17, 1998; for the
three month period ending December 31, 1997, dated February 17, 1998, filed
February 17, 1998 (amended February 19, 1998); for the three month period ending
March 31, 1998, dated March 31, 1998, filed May 15, 1998; for the three month
period ending June 30, 1998, dated June 30, 1998, filed August 14, 1998; and for
the three month period ending September 30, 1998, dated September 30, 1998,
filed November 13, 1998.

         6. The Company's Reports on Form 8-K dated October 14, 1997 filed on
October 14, 1997; December 16, 1997 filed on December 17, 1997; dated December
17, 1997 filed on December 22, 1997; dated December 2, 1997 filed on January 6,
1998; dated December 31, 1997 filed on November 9, 1998; dated August 7, 1998
filed on August 13, 1998 (amended September 29, 1998); dated September 17, 1998
filed on October 2, 1998 (amended November 9, 1998); dated August 27, 1998 filed
on October 9, 1998 (amended November 9, 1998) and dated December 18, 1998 filed
on December 31, 1998.


         All documents filed subsequent to the date of this Prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to
termination of the offering of all Shares to which this Prospectus relates shall
be deemed to be incorporated by reference in this Prospectus and shall be part
hereof from the date of filing of such document.

         Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus (in the case of a statement in a previously filed
document incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of Shares or
in any other subsequently filed document that is also incorporated or deemed to
be incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
accompanying Prospectus Supplement. Subject to the foregoing, all information
appearing in this Prospectus and each accompanying Prospectus Supplement is
qualified in its entirety by the information appearing in the documents
incorporated by reference.

                                       2
<PAGE>

         The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon their
written or oral request, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents). Written requests
for such copies should be addressed to Pennsylvania Real Estate Investment
Trust, The Bellevue, 200 S. Broad Street, Philadelphia, Pennsylvania 19102,
Attention: Jeffrey A. Linn, Senior Vice President-Acquisitions and Secretary.
Telephone: (215) 875-0700.

         The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be copied and
inspected at the Public Reference Facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and the following
regional offices of the Commission: 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates, by calling 1-800-SEC-0300. The Commission also
maintains an Internet web site at http://www.sec.gov that contains reports,
proxy statements and other information. In addition, the Company's Shares are
listed on the New York Stock Exchange and such reports, proxy statements and
other information concerning the Company can be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.

         The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement"), of which this Prospectus is a part,
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Shares offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain portions of
which have been omitted as permitted by the rules and regulations of the
Commission. Statements contained in this Prospectus as to the contents of any
contract or other documents are not necessarily complete, and in each instance,
reference is made to the copy of such contract or documents filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto. For further
information regarding the Company and the Shares, reference is hereby made to
the Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.

                                       3
<PAGE>

                              CAUTIONARY STATEMENT

         In this Prospectus and in reports incorporated herein, we use
forward-looking terminology such as "may," "will," "should," "expect,"
"anticipate," "estimate," "plan," or "continue," or the negative thereof or
other variations thereon, or comparable terminology, which are referred to under
the securities laws as "forward-looking statements."

         Our forward looking statements involve known and unknown risks,
 uncertainties and other factors that may cause our actual results, performance
 or achievements to differ materially from the results, performance and
 achievements expressed or implied by our forward-looking statements. Some (but
 not all) of these risks, uncertainties and factors are discussed in this
 Prospectus. However, we disclaim any obligation to update this discussion or to
 announce publicly the result of any revisions to any of the forward-looking
 statements contained herein to reflect future events or developments.

                                   THE COMPANY

         As used herein, unless the context indicates otherwise, the term
"Company" includes Pennsylvania Real Estate Investment Trust (the "Trust"),
PREIT Associates, L.P. (the "Operating Partnership") and their subsidiaries and
affiliates, including PREIT-RUBIN, Inc. (formerly The Rubin Organization, Inc.),
a real estate management company in which the Company owns 95% of the economic
interests in the form of non-voting common shares (together with its
predecessors, PREIT-RUBIN"), and the term "properties" means all of the
Company's real estate assets.

         The Company is a fully integrated, self-administered and self-managed
real estate investment trust that acquires, rehabilitates, develops and operates
shopping centers and multifamily properties. Founded in 1960, the Company
believes that it is one of the 15 largest publicly held operators of retail
properties in the United States (in terms of square feet owned and/or managed).
On September 30, 1997, the Company acquired its current interest in PREIT-RUBIN,
Inc. (formerly known as The Rubin Organization, Inc.), a commercial property
development and management firm, and certain related real estate interests.

         The Company conducts substantially all of its operations through the
Operating Partnership and has elected, and conducts its operations in a manner
intended, to comply with the requirements for qualification as a real estate
investment trust (a "REIT") under the Real Estate Investment Trust Act of 1960,
Sections 856-60 of the Internal Revenue Code of 1986, as amended (the "Code").
Under the Code, a real estate investment trust which meets certain requirements
is not subject to Federal income tax on the portion of its taxable income which
is distributed to its shareholders, if, among other things, at least 95% of its
real estate investment trust taxable income, excluding any net capital gain, is
so distributed.

         The Company is a Pennsylvania business trust created in Pennsylvania as
an unincorporated association in business trust form pursuant to a Trust
Agreement dated December 17, 1960, as amended (the "Trust Agreement"). Since its
inception it has been self-administered by its trustees. The Company's principal
executive offices are located at The Bellevue, 200 S. Broad St., Philadelphia,
Pennsylvania, 19102. Telephone: (215) 875-0700. The Company has regional offices
in Fort Washington, Pennsylvania; Maitland, Florida; Chicago, Illinois; and
Atlanta, Georgia.


                                       4
<PAGE>


                                  RISK FACTORS

         Before you decide to invest, you should consider carefully the risks
described below, together with the information provided in the other parts of
this Prospectus. Our ability to make expected distributions to shareholders and
debt service payments, as well as our prospects as a whole, could be comprised
of any or all of these factors.

Real Estate Industry

         General. We may be affected adversely by general economic conditions
and local real estate conditions. For example, an oversupply of retail space or
apartments in a local area or a decline in the attractiveness of our properties
to shoppers, residents or tenants would have a negative effect on us.

         Other factors that may affect general economic conditions or local real
estate conditions include:

         o     population trends
         o     income tax laws
         o     availability and costs of financing
         o     construction costs
     
         Competition. The real estate business is highly competitive. We compete
for interests in properties with other real estate investors and purchasers,
many of whom have greater financial resources, revenues and geographical
diversity than we do. Furthermore, we compete for tenants with other property
owners. We compete with providers of other forms of housing, such as single
family housing. Competition from single family housing increases when lower
interest rates make mortgages more affordable. All of our shopping center and
apartment properties are subject to significant local competition.

         Regulation. Local zoning and use laws, environmental statutes and other
governmental requirements restrict our expansion, rehabilitation and
reconstruction activities. These regulations may prevent us from taking
advantage of economic opportunities.

         Legislation such as the Americans with Disabilities Act may require us
to modify our properties. Future legislation may impose additional requirements.
We cannot predict what requirements may be enacted.

         Inflation. The effect of inflation on our operations and investment
portfolio is mixed. On one hand, inflation increases rents by increasing the
tenant revenues upon which percentage rentals are based. Fixed rentals also
increase, reflecting higher costs for construction renovations and
rehabilitation. On the other hand, inflation increases our expenses.

         Renewal of Leases and Reletting of Space. When a lease expires, a
tenant may refuse to renew it. We may not be able to relet the property on
similar terms, if we are able to relet the property at all. We have established
an annual budget for renovation and reletting expenses that we believe is
reasonable in light of each property's operating history and local market
characteristics. This budget, however, may not be sufficient to cover these
expenses.


                                       5
<PAGE>



         Bankruptcy and Failure To Make Rent Payments. At any time, a tenant may
experience a downturn in its business which may weaken its financial condition.
As a result, the tenant may fail to make rental payments when due, or may
declare bankruptcy. Either event could result in the termination of that
tenant's lease and material losses to us.

The Company's Properties

         Development. We incur risks in connection with development activities
in addition to those generally associated with the ownership and operation of
established shopping centers and multi-family properties. These risks include:

         o     expenditure of money and time on projects which may never be
               completed
         o     higher than estimated construction costs
         o     late completion because of unexpected delays in zoning approvals,
               other land use approvals, construction or other factors outside
               of our control
         o     failure to obtain zoning, occupancy or other governmental
               approvals

         The risks described above are compounded by the fact that we must
distribute 95% of our taxable income in order to maintain our qualification as a
REIT. This means that new developments are financed primarily through lines of
credit or other forms of construction financing. Because we incur debt to
finance the developments, our loss could exceed our capital investment in the
developments.

         Furthermore, we must acquire and develop suitable high traffic retail
sites at costs consistent with the overall economics of the project. Because
retail development is extremely competitive, there is no assurance that we can
contract for appropriate sites within our geographic markets.

         Maintenance and Renovation. Many of the properties in which we have an
interest were constructed more than 15 years ago. We generally spend more on
maintenance of these older properties than we do on newer properties. Because
older properties may be obsolete in some respects, they may generate lower
rentals or may require significant capital expense for renovations. Some
apartments lack amenities that are customarily included in modern construction,
such as dishwashers, central air conditioning and microwave ovens. Some
facilities are difficult to lease because they are too large, too small or
inappropriately proportioned for today's market. We generally consider
renovation of properties when renovation will enhance or maintain the long-term
value of those properties.

         Recently Acquired Properties. Subject to the availability of financing
and other considerations, we intend to continue to acquire interests in
properties that we believe will be profitable or will enhance the value of our
portfolios. Some of these properties may have unknown characteristics or
deficiencies. Therefore, it is possible that some properties will be worth less
or will generate less revenue than we currently believe. It is also possible
that the operating performance of some of our properties will decline.

                                       6
<PAGE>

         To manage our growth effectively, we must integrate successfully new
acquisitions into our existing management structure. We cannot assure you that
we will be able successfully to integrate or effectively manage additional
properties.

         When we acquire properties, we also incur other risks, including:

         o     financing risks (some of which are described below)
         o     failure to meet anticipated occupancy or rent levels
         o     failure to receive required zoning, occupancy and other
               governmental approvals
         o     change in applicable zoning and land use laws

         Shopping Centers. We receive a substantial portion of our shopping
center income as rents under long-term leases. If retail tenants are unable to
comply with the terms of their leases because of rising costs or falling sales,
we may modify lease terms to allow tenants to pay a lower rental or a smaller
share of operating costs and taxes.

         Casualty Insurance. We generally maintain casualty insurance on our
assets. We believe that our insurance is adequate. However, we would be required
to bear all losses to the properties that are not adequately covered by
insurance. We cannot assure you that we can obtain insurance in the future at
acceptable levels and reasonable cost.

Financing

         General. We finance parts of our operations and acquisitions through
debt. This debt creates risks, including:

         o     rising interest rates on our floating rate debt
         o     failure to prepay or refinance existing debt, which may result in
               forced disposition of properties on disadvantageous terms
         o     refinancing terms less favorable than the terms of existing debt
         o     failure to meet required payments of principal and interest

         Credit Facility. We currently use an unsecured credit facility for
working capital, acquisitions, renovations and capital improvements to our
properties. The credit facility currently requires PREIT Associates, the
operating partnership through which our properties are held, to maintain certain
asset and income to debt ratios and minimum income and net worth levels. If
PREIT Associates fails to meet any one or more of these requirements, we would
be in default. The lenders, in their sole discretion, may waive a default. We
might secure alternative or substitute financing. We cannot assure you, however,
that we can obtain waivers or alternative financing. Any default may have a
materially adverse effect on our operations and financial condition.


                                       7
<PAGE>



         We expect to use our credit facility from time to time for
acquisitions, renovations and capital improvements to our properties. If the
credit markets tighten, we may encounter resistance from lenders when we seek
financing or refinancing for some of our properties. If the credit facility is
reduced significantly or withdrawn, our operations would be adversely affected.
If we are unable to increase our borrowing capacity under the credit facility,
our ability to make acquisitions and grow would be affected adversely. We cannot
give assurance as to the availability or terms of financing for any particular
property.

         We have entered into agreements limiting the interest rate on portions
of our credit facility. If other parties to these agreements fail to perform as
required by the agreements, we may suffer credit loss.

         Partnerships and Joint Ventures. The profitability of each partnership
or joint venture in which we are a partner or co-venturer that has short-term
financing or debt requiring a balloon payment is dependent on the availability
of long-term financing on satisfactory terms. If satisfactory financing is not
available, we may have to rely upon other sources of short-term financing,
equity contributions or the proceeds of refinancing of existing properties in
order to satisfy debt obligations. Although the Company does not own the entire
interest in connection with many of the Properties held by a partnership or
joint venture, the Company may be required to pay the full amount of any
obligation of such partnership or joint venture that has been guaranteed in
whole or in part by the Company in order to protect its equity interest in such
Property. Additionally, the Company may determine to pay a partnership of joint
venture's obligation in order to protect its equity interest in its assets.

Governance

         Partnerships and Joint Ventures. Of the properties in which we have a
partial interest, most are owned by partnerships in which we are a general
partner. The remaining properties are owned by joint ventures in which we have
substantially the same powers as a general partner. Under the terms of the
partnership and joint venture agreements, major decisions, such as a sale,
lease, refinancing, expansion or rehabilitation of a property, or a change of
property manager, require the consent of all partners or co-venturers. Because
decisions must be unanimous, necessary actions may be delayed significantly. It
may be difficult or even impossible to change a property manager if a partner or
co-venturer is serving as property manager.

         Business disagreements with partners may arise. The Company may incur
substantial expenses in achieving a resolution of such disputes. To preserve its
investment, the Company may be required to make commitments to or on behalf of a
partnership or venture during a dispute. Moreover, we cannot assure you that the
Company's resolution of a dispute with a partner will be on terms that are
favorable to the Company.

         We guarantee the debt of some partnerships and joint ventures so that
those partnerships and joint ventures can obtain financing. Therefore, even
though we do not own the entire interest in properties owned by partnerships or
joint ventures, we may be required to repay all the debt owed by a partnership
or venture. We may also do so to protect our interest in the properties owned by
the partnership or venture.

                                       8
<PAGE>

         Other risks of investments in partnerships and joint ventures include:

         o     partners or co-venturers might become bankrupt or fail to fund
               their share of required capital contributions
         o     partners or co-venturers might have business interests or goals
               that are inconsistent with our business interests or goals
         o     partners or co-venturers may be in a position to take action
               contrary to our policies or objectives
         o     potential liability for the actions of our partners or
               co-venturers

         Restrictions on Change-in-Control. The trust agreement that governs the
Company restricts the possibility of sale or change in control of the Company,
even if a sale or change in control were in the shareholders' interest. These
restrictions include the ownership limit designed to ensure qualification as a
REIT, the staggered terms of our Trustees and our ability to issue preferred
shares.

         Restrictions on Sales of Properties. Because certain limited partners
of PREIT Associates may suffer adverse tax consequences if certain properties
owned by PREIT Associates are sold, the Company, as the general partner of PREIT
Associates, has agreed from time to time, subject to certain exceptions, that
the consent of the holders of a majority of certain limited partner interests
issued by PREIT Associates in exchange for a property is required before that
property may be sold. These agreements may result in our being unable to sell
one or more properties, even in circumstances in which it would be advantageous
to do so. See "Summary of the Operating Partnership Agreement -- Other Rights."

         Issuance of Preferred Shares. The Company's Board of Trustees may issue
up to 25,000,000 preferred shares without shareholder approval. The Board of
Trustees may determine the relative rights, preferences and privileges of each
class or series of preferred shares. Because the Board of Trustees has the power
to establish the preferences and rights of the preferred shares, preferred
shares may have preferences, distributions, powers and rights senior to the
rights of holders of Shares.

         Changes in Policies Without Shareholder Approval. The Board of Trustees
determines the growth, investment, financing, capitalization, borrowing, REIT
status, operating and distribution policies of the Company. Although the Board
of Trustees has no present intention to amend or revise any of these policies,
these policies may be amended or revised without notice to shareholders.
Accordingly, shareholders may not have control over changes in policies of the
Company. We cannot assure you that changes in our policies will serve fully the
interests of all shareholders.

                                       9
<PAGE>

         PREIT Associates; Required Vote of Limited Partners on Fundamental
Changes. Our assets are generally held through PREIT Associates, a Delaware
limited partnership whose sole general partner is the Company. The Company
currently holds a majority of the limited partner interests in PREIT Associates.
However, the Company may from time to time issue additional limited partner
interests in PREIT Associates to third parties in exchange for contributions of
property to PREIT Associates. These issuances will dilute the Company's
percentage ownership of PREIT Associates. Limited partner interests in PREIT
Associates generally do not carry a right to vote on any matter voted on by our
shareholders (although limited partner interests may, under certain
circumstances, be redeemed for Shares). However, prior to the date on which at
least half of the partnership interests issued on September 30, 1997 have been
redeemed, the holders of partnership interests issued on September 30, 1997 are
entitled to vote, along with the general partner's common stock holders, on any
proposal to merge, consolidate or sell substantially all of the Company's
assets. The Company's partnership interests are not included for purposes of
determining when half of the partnership interests have been redeemed, nor are
they counted as votes. There can be no assurances that the Company will not
agree to extend comparable rights to other limited partners in PREIT Associates.

         Dependence on Ronald Rubin. We are dependent on the efforts of Ronald
Rubin, our Chief Executive Officer. The loss of his services could have an
adverse effect on our operations. If Mr. Rubin were to terminate his employment,
his current employment agreement with us would prevent him from becoming an
employee of one of our competitors for one year.

PREIT-RUBIN

         Lack of Control of PREIT-RUBIN. Although PREIT Associates owns 95% of
the equity interests in our management affiliate, PREIT-RUBIN, all of the voting
stock of PREIT-RUBIN is owned by a stock bonus plan created for the benefit of
PREIT-RUBIN's employees. PREIT-RUBIN employees are entitled to vote the common
shares vested in their accounts in the stock bonus plan on fundamental
transactions such as a merger or sale of assets. The Stock Bonus Plan Committee
votes the shares in the stock bonus plan on all other matters. PREIT-RUBIN's
Board of Directors appoints the Stock Bonus Plan Committee's members. Thus, the
Company does not control the day-to-day operations of PREIT-RUBIN and has no
legal power to influence the manner in which it performs its management
obligations, seeks and accepts new business or otherwise determines its business
strategy.

         Third-Party Management Business. PREIT-RUBIN manages a substantial
number of properties owned by third parties. Risks associated with the
management of properties owned by third parties include:

         o     the property owner's termination of the management contract
         o     loss of the management contract in connection with a property
               sale 
         o     non-renewal of the management contract upon expiration 
         o     renewal of the management contract on terms less favorable than
               current terms
         o     decline in management fees as a result of general real estate
               market conditions or local market factors

         Conflicts of Interest. There are numerous potential conflicts of
interest relating to our investment in PREIT-RUBIN. The interest of those
members of our management who are also PREIT-RUBIN affiliates may diverge from
the interests of the shareholders.



                                       10
<PAGE>

         The employees of PREIT-RUBIN have agreed formally that they will devote
their full business time and effort to the business of the Company. However,
PREIT-RUBIN will continue to render management, development, leasing and related
services to a substantial number of properties in which affiliates of
PREIT-RUBIN retain equity interests. We believe that PREIT-RUBIN's management
arrangements with these entities are on terms at least as favorable to
PREIT-RUBIN as the average of management arrangements with parties unrelated to
PREIT-RUBIN. In addition, PREIT-RUBIN leases substantial office space from
entities in which our affiliates have an interest.

Dependence on Primary Markets

         All but one of our properties are located in the eastern United States.
A majority of the properties are located either in Pennsylvania or Florida.
General economic conditions and local real estate conditions in these geographic
regions have a particularly strong effect on us. Other REITs may have a more
geographically diverse portfolio and thus be less susceptible to downturns in
one or more regions.

Environmental Liabilities

         Current and former real estate owners and operators may be required by
law to investigate and clean up hazardous substances released at the properties.
They may also be liable to the government or to third parties for substantial
property damage, investigation costs and cleanup costs. In addition, some
environmental laws create a lien on the contaminated site in favor of the
government for damages and costs the government incurs in connection with the
contamination. Contamination may affect adversely the owner's ability to sell or
lease real estate or to borrow with the real estate as collateral.

         From time to time, the Company responds to inquiries from environmental
authorities with respect to properties both currently and formerly owned by the
Company. Discussion of pending and recently completed environmental
investigations of the Company can be found in the Company's quarterly, annual
and various other public filings. We cannot assure you of the results of pending
investigations, but we do not believe that resolution of these matters will have
a material adverse effect on the Company's financial condition or results of
operations.

         Since 1987, the Company has attempted to protect itself against
environmental liabilities by conducting an environmental study on each property
it seeks to acquire. In 1997 and 1998, the Company performed environmental
studies on each of the properties in which it had an interest when such studies
were performed. Despite these measures, the Company may be liable for presently
unknown environmental conditions at these properties or at properties formerly
owned by the Company. The Company cannot know the magnitude of this potential
liability.

         A number of the Company's properties contain asbestos in limited
concentrations or in limited areas. Where radon has been identified as a
potential concern, the Company generally has remediated the situation or is
performing additional testing. Lead-based paint has been identified at certain
of the Company's multi-family properties, and the Company has notified tenants
pursuant to applicable disclosure requirements. Based on its current knowledge,
the Company does not believe that the future liabilities associated with
asbestos, radon and lead-based paint at these properties will be material, but
we cannot assure you that they will not.


                                       11
<PAGE>

         The Company has no insurance coverage for the types of environmental
liabilities described above. The Company maintains a reserve on its books for
these matters. We cannot assure you that this reserve will be sufficient to
cover the cost of environmental liabilities.

Legal Proceedings

         From time to time, the Company is a plaintiff or defendant in various
cases arising out of its usual and customary business of owning and investing in
real estate, both individually and through joint ventures and partnerships.
Discussion of the Company's pending and recently completed litigation can be
found in the Company's quarterly, annual and various other public filings. We
cannot assure you of the results of pending litigation, but we do not believe
that resolution of these matters will have a material adverse effect on the
Company's financial condition or results of operations.

Certain Tax Risks

         Tax Liabilities as a Consequence of a Failure to Qualify as a REIT. If
we fail to qualify as a REIT, we will be subject to Federal income tax at
regular corporate rates. In addition, we might be barred from qualification as a
REIT for the four years following disqualification. The additional tax incurred
at regular corporate rates would reduce significantly the cash flow available
for distribution to shareholders and for debt service. See "Federal Income Tax
Considerations - Taxation of the Company."

         To qualify as a REIT, we must comply with certain highly technical and
complex requirements. We cannot be certain we have complied because there are
few judicial and administrative interpretations of these provisions. In
addition, facts and circumstances that may be beyond our control may affect our
ability to qualify as a REIT. We can give you no assurance that new legislation,
regulations, administrative interpretations or court decisions will not change
the tax laws significantly with respect to our qualification as a REIT or with
respect to the federal income tax consequences of qualification. We believe that
we have qualified as a REIT since our inception and intend to continue to
qualify as a REIT. However, we can give you no assurance that we have been
qualified or will remain qualified.

         REIT Distribution Requirements. To obtain the favorable tax treatment
associated with qualifying as a REIT, we are required each year to distribute to
our shareholders at least 95% of our net taxable income. See "Federal Income Tax
Considerations-Taxation of the Company-- Annual Distribution Requirements." We
could be required to borrow funds on a short-term basis to meet the distribution
requirements that are necessary to achieve the tax benefits associated with
qualifying as a REIT, even if conditions were not favorable for borrowing.

                                       12
<PAGE>

Factors Affecting Share Price

         A number of factors may influence adversely the price of our shares in
the public markets. These factors include:

         o     increases in market interest rates, which may lead purchasers of
               shares to demand from us a higher annual yield from distributions
         o     the relatively low daily trading volume of the Company
         o     failure to invest the proceeds of a future offering of securities
               in a manner that will increase earnings 
         o     sales of a substantial number of shares, or the perception that
               such sales could occur
         o     issuance of additional shares, including those reserved for
               issuance according to stock option plans and other obligations.

Year 2000 Issues

         Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed at a time when
data storage was expensive, and the impact of the upcoming century change was
not considered. As a result of this dating limitation, many programs, if not
corrected, may fail or provide inaccurate results at and after the turn of the
century. We (and tenants that provide us with a significant percentage of our
income) use information systems and systems imbedded in certain equipment that
carry two digit dating and are thus susceptible to partial or total failure.

         To assess and address the company's internal systems, we have
established a Year 2000 remediation plan consisting of the following phases:

         o     inventorying systems and devices (including information
               technology ("IT") and non-IT systems) that are vulnerable to the
               Year 2000 problem
         o     assessing the criticality of the inventoried items
         o     remediating the non-compliant items
         o     testing the corrections that have been applied

         We have completed the first phase of our remediation plan for IT
systems. We believe that all mission critical systems are Year 2000 compliant.
In addition, we began the first phase of the remediation plan for non-IT systems
(such as elevators, HVAC and lighting systems) and are currently completing an
inventory of non-IT systems and assessing the potential risks of noncompliance.
The amount of remediation effort is not anticipated to be extensive due to our
use of readily available, off-the-shelf software and hardware products that are
supported by the manufacturers. After evaluating our required compliance
efforts, appropriate contingency plans will be developed based on the outcome of
the assessment phase and a survey of our major suppliers. We expect to complete
the Year 2000 remediation plan, including final testing, by the beginning of the
fourth quarter of 1999. Business partners, suppliers and tenants are also being
surveyed relative to their Year 2000 compliance to mitigate the potential impact
of Year 2000 issues.

                                       13
<PAGE>

         We expect that the aggregate costs that we will incur to remediate our
systems for the Year 2000 problem will be less than $200,000. All costs related
to Year 2000 remediation are expensed as incurred.

         Although we believe our Year 2000 remediation plan is adequate to
address the Year 2000 issue, we cannot assure you that this is so. If the
required remediation efforts are not made, or are not completed timely or if our
tenants experience material Year 2000 problems in their own operations, the Year
2000 issue could have a material impact on our operations.

                                 USE OF PROCEEDS

         The Company will use the proceeds from the Shares sold to employees of
PREIT-RUBIN for general corporate purposes and as working capital.

                             DESCRIPTION OF THE PLAN

The Trust

         The Trust is a Pennsylvania corporation 95% of the equity interests in
which are owned by PREIT Associates. It has executive offices at The Bellevue,
200 S. Broad St., Philadelphia, Pennsylvania 19102. Its telephone number is
215-875-0700.

PREIT-RUBIN

         PREIT-RUBIN is an indirect subsidiary of the Trust with executive
offices at The Bellevue, 200 South Broad Street, Philadelphia, Pennsylvania
19102. Its telephone number is 215-875-0700.

Purpose of the Plan

         The purpose of the Non-Qualified Employee Share Purchase Plan (the
"Plan") is to provide a method whereby eligible employees of PREIT-RUBIN will
have an opportunity to purchase, at a discount, shares of beneficial interest in
the Trust. From time to time, the Trust's Board of Trustees (the "Board") may
approve participation in the Plan by employees of any designated entity
controlled, directly or indirectly, by the Trust or by PREIT-RUBIN.

Shares

         A participating employee will have the right to authorize deductions
from his or her basic compensation from PREIT-RUBIN and the amounts so deducted
may, at the option of the participating employee, be applied to purchase shares
of beneficial interest, par value $1.00 per share, in the Trust ("Shares") as of
the last business day of each calendar quarter during a calendar year. Such
right will be referred to throughout this Prospectus as an "Option" to purchase
such Shares. The aggregate number of Shares which may be issued under Options
shall not exceed 250,000 (subject to adjustments for changes in capitalization).
Shares issuable under the Plan may be authorized but unissued Shares or
reacquired Shares, and the Trust or its agents may purchase Shares on the open
market for this purpose, from time to time, if it deems such purchase to be
advisable.

                                       14
<PAGE>

Administration

         The Plan is administered by the Executive Compensation and Human
Resources Committee (the "Committee") of the Board. Members of the Committee are
appointed by, and serve at the pleasure of, the Board.

         Subject to the express provisions of the Plan, the Committee has
authority in its discretion to interpret and construe any and all provisions of
the Plan, to adopt rules and regulations for administering the Plan and to make
all other determinations deemed necessary or advisable for administering the
Plan. Any and all authority of the Committee may be delegated by the Committee
to a plan administrator.

Adoption, Duration and Amendment

         The Plan was adopted by the Board on October 13, 1998. The Committee
may amend or terminate the Plan at any time. No such amendment or termination,
however, may adversely affect an employee's right to purchase Shares during the
purchase period in which such amendment or termination occurs. The Plan will in
any event terminate on the date on which all Shares available for issuance under
the Plan have been issued.

Eligible Employees

         Persons eligible to receive Options for a calendar year are those
employees (including officers, whether or not they are directors) of PREIT-RUBIN
or a designated affiliate who are customarily employed for 30 or more hours per
week and are not classified by PREIT-RUBIN or a designated affiliate as
temporary or seasonal. Only employees who have been employed by PREIT-RUBIN or a
designated affiliate for at least six months and are employed by PREIT-RUBIN or
a designated affiliate on the date their participation in the Plan is to begin
will be eligible.

         No Options may be granted under the Plan to any employee if the Shares
which such employee has a right to acquire under such Option will
aggregate--together with all Shares then held by the employee and all other
Shares which he or she then 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 its
parent corporation (if any) or a subsidiary corporation (if any) or of
PREIT-RUBIN (or a designated affiliate) or of its parent corporation (if any) or
a subsidiary corporation (if any).

Participation

         An eligible employee who wishes to participate in the Plan for a
calendar year must complete an authorization for payroll deduction, and send it
to the Human Resources Department of PREIT-RUBIN at least 21 days before the
beginning of the calendar year (before February 1, 1999, for the first, 11-month
year). Forms for the authorization of payroll deductions have been distributed
with this Prospectus and additional forms are available from the Human Resources
Department of PREIT-RUBIN. The authorization will be effective from the
beginning of the applicable year through the end of the year, unless terminated
by the employee by giving notice of withdrawal to the Human Resources Department
of PREIT-RUBIN, as described below. Authorization for payroll deduction will
remain in effect for subsequent years until revoked by the employee.

                                       15
<PAGE>

Payroll Deductions

         At the time of completing an authorization for payroll deduction, the
participating employee will elect to have deducted from his or her pay between
1% and 10% (inclusive) of his or her basic rate of compensation from PREIT-RUBIN
or a designated affiliate for the calendar year (or for the first, 11-month
year). For purposes of the Plan, "basic rate of compensation" means the
employee's basic hourly rate or salary, excluding any commissions, bonuses,
overtime, or other extra or incentive pay. Deductions will be made only in whole
percentages; no fractional percentages will be permitted. The amounts deducted
will be credited to a bookkeeping account maintained by PREIT-RUBIN or a
designated affiliate in the employee's name.

         Once an election has been made to participate in the Plan, no changes
may be made to the percentage of an employee's basic rate of compensation which
is to be deducted under the Plan for a calendar year or for the first, 11-month
year, except that an employee may withdraw from the Plan as described below.
Additionally, the only method of participating in the Plan is through authorized
payroll deductions; no separate cash payments will be permitted.

         Payroll deductions made under the Plan will be held as general assets
of PREIT-RUBIN or a designated affiliate and will not be credited with any
interest.

Grant of Options

         On February 1, 1999, and on the first day of each January thereafter, a
participating employee will be deemed to have been granted an Option,
exercisable in installments on the last business day of each purchase period
during the year. There will generally be four, three-month-long purchase
periods--coinciding with the calendar quarters (January - March, April - June,
July - September and October - December)--during each calendar year. However,
the first purchase period for the 11-month year in 1999 will be only two months
long (February-March).

         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 (or for the first, 11-month year) shall 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 the year (including
January 1 before the first, 11-month year). The per-share fair market value
shall be the mean between the highest and lowest quoted selling prices of the
Shares as reported on the New York Stock Exchange on the applicable date.

                                       16
<PAGE>

         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 (including January 1 before the
first, 11-month year), 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.

         An eligible employee who chooses not to participate in the Plan for a
year in the manner and within the time prescribed in "Participation" above is
deemed to have surrendered the Option granted to him or her for that year and
has no further rights under the Plan with respect to the surrendered Option.
However, any such surrender will not affect an employee's eligibility to
participate in succeeding years under the Plan.

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 or her 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, as described in "Withdrawal"
below. 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.

         A participating employee recognizes income equal to the difference
between the fair market value of Shares purchased and the exercise price paid by
the employee. Consequently, this amount is subject to withholding for income and
payroll tax purposes. PREIT-RUBIN or a designated affiliate which is the
employee's employer may withhold such taxes from other wages paid to the
employee.

         Following the exercise date of each purchase period, the participating
employee may request the Company to deliver a certificate to him or her or to a
broker representing the number of full Shares purchased. Alternatively, the
Company's transfer agent will record the Shares on behalf of the employee. The
certificate may be registered in the employee's name or, subject to applicable
law, in the names of the employee and one other person, as joint tenants with
right of survivorship. The Committee may charge an employee for registering the
certificate in two names.

         Any remaining unapplied funds in a participating employee's account at
the end of a purchase period will be returned to the employee. Also, no
fractional Share certificates will be issued. Cash equal to the fair market
value of the employee's fractional Share (if any) will be distributed to the
employee (at the same time a certificate is delivered to him or her) in lieu of
the fractional Share unless the employee, in light of Rule 16b-3 (see
"Restrictions on Resale," below) waives his or her right to the cash payment.

                                       17
<PAGE>

         If the total number of Shares for which Options are to be exercised on
any particular exercise date exceeds the number of Shares still available for
issuance under the Plan, then the Committee will make a pro rata allocation of
the available Shares on a uniform and nondiscriminatory basis, and any payroll
deductions not applied to the purchase of the available Shares will be refunded
to the participating employees.

         It is intended that Shares purchasable under the Plan will be
registered under the Securities Act of 1933, as amended, and listed in the New
York Stock Exchange by the Trust. Purchases of Shares hereunder may be postponed
as necessary pending any such action.

Withdrawal

         A participating employee may elect to surrender his or her Option
during any purchase period of a calendar year (or of the first, 11-month year)
and withdraw all payroll deductions already made for such purchase period by
giving written notice to PREIT-RUBIN or the designated affiliate which is the
employee's employer. However, in order for such surrender and withdrawal to be
effective for the purchase period, the employee's written notice must be
received by PREIT-RUBIN or the designated affiliate on or before the 30th
calendar day prior to the end of the purchase period.

         A withdrawing employee will be ineligible to participate during the
remainder of the year in which he or she had been enrolled, but such withdrawal
will not affect the employee's eligibility to participate in succeeding calendar
years under the Plan. To participate in succeeding calendar years, an eligible
employee must complete an authorization for payroll deductions, as described in
"Participation" above.

         If the employee surrenders his or her Option, as described above, his
or her accumulated payroll deductions will be refunded to him or her without
interest.

Termination of Employment; Change in Status

         Upon termination of a participating employee's employment with
PREIT-RUBIN and all designated affiliates as an eligible employee for any reason
other than death, his or her accumulated payroll deductions in the bookkeeping
account established under the Plan will be automatically refunded to the
employee (without interest) and the employee will not be entitled to purchase
any additional Shares under the Plan. The refund will be made as soon as
practicable after the Committee is notified of the termination of employment.

         For purposes of the Plan, a transfer of employment from PREIT-RUBIN or
a designated affiliate to a designated affiliate, PREIT-RUBIN, or the Trust
during a calendar year (or during the first, 11-month year) does not constitute
a termination of employment in the case of an eligible employee who is
participating during the year. The employee may continue to participate in this
Plan through the end of the year at the same rate on the same terms as before
his or her transfer of employment, subject to the terms of the Plan. The
Committee will determine, in accordance with applicable law, whether an
authorized leave of absence for military or governmental service constitutes
termination of employment under the Plan. The Committee's determination will be
final and conclusive.

                                       18
<PAGE>

         In the event an employee dies while participating in a year, his or her
accumulated payroll deductions will be automatically refunded to the person
entitled to such deductions by the last beneficiary designation filed by the
employee with the Committee or, if none, to the employee's estate. Similarly,
any Shares purchased for the employee for which no certificate has been
delivered to the employee and which have not been credited to a brokerage
account maintained for the employee shall be transferred to the person entitled
to such Shares by the last beneficiary designation filed by the employee with
the Committee or, if none, to the employee's estate.

Transferability

         Except as described in "Termination of Employment; Change in Status"
above, neither payroll deductions credited to an employee's account nor any
rights with regard to the exercise of an Option nor rights to receive Shares
under the Plan may be assigned, transferred, pledged or otherwise disposed of in
any way by the employee. Any attempted assignment, transfer, pledge or other
disposition will be without effect. Only the employee may exercise an Option
granted to the employee under the Plan.

Adjustments

         The maximum number of Shares issuable under the Plan, the maximum
number of Shares purchasable under an Option, the number of Shares covered by
each outstanding Option, and the price per Share of each such Option, will be
proportionately adjusted by the Committee for any increase or decrease in the
number of issued Shares 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.

         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 the Plan will, 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 Committee will cause each outstanding Option to
terminate, provided that each employee granted an Option under the Plan will, 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 will be deemed to be Shares
within the meaning of the Plan.

                                       19
<PAGE>

         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 will be final, binding and conclusive.

         Except as expressly provided above, an employee will 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 will be made with respect to, the
number or price of Shares subject to the Option.

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 to which the record date is prior to the date the
Option is exercised, except as provided in "Adjustments" above.

Risks Involved

         If an employee has elected payroll deductions for a calendar year (or
for the first, 11-month year), he or she may not decrease the amount of his or
her deduction during the year. An employee may, however, elect to cease further
payroll deductions for the remainder of a year and withdraw accumulated payroll
deductions during a year; however, such an election will not be effective for a
purchase period unless written notice is given to the employee's employer at
least 30 days before the end of the purchase period. Further, after the deadline
has passed for receiving back his or her investment for any purchase period, and
once he or she owns Shares, the employee will share in any gains or losses in
the market value of the Shares.

Restrictions on Resale

         Securities Act of 1933 and Rule 144. Shares acquired under the Plan
will be registered under the Securities Act of 1933, as amended (the "1933
Act"). Accordingly, such Shares are not "restricted securities" within the
meaning of Rule 144 under the 1933 Act and, except for resales by "affiliates"
of the Trust, may be resold without reference to the holding period, manner of
sale, volume, and other requirements imposed by Rule 144. An "affiliate" of the
Trust, under applicable Securities and Exchange Commission ("SEC") regulations
and interpretations, is a person who, alone or with others, directly or
indirectly, controls the Trust. Despite registration of Shares under the Plan,
an "affiliate" of the Trust may only sell such Shares in compliance with Rule
144 (or in an exempt nonpublic sale), except that the minimum holding period
requirement of the Rule is not applicable.

                                       20
<PAGE>

         Short-Swing Profit Restrictions. Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules thereunder
generally require directors, "officers" (as defined in the rules), and direct or
indirect beneficial owners of more than 10% of the Trust's Shares to repay to
the Trust any "profits" (as determined under the rules) which they may realize,
directly or indirectly, from any purchase and sale, or sale and purchase, of
equity securities of the Trust in any period of less than six months. Under
rules adopted by the SEC, purchases of securities at the end of each purchase
period under the Plan are deemed to be exempt purchases for short-swing profit
liability purposes. Accordingly, the sale of Shares immediately following the
purchase of Shares under the Plan at the end of a purchase period will not
result in a violation of Section 16(b) (in terms of being matched against such
purchase). However, notwithstanding the exemption of the purchase described
above, any sale of Shares immediately following an exercise will constitute a
"sale" for purposes of Section 16(b), and so will be matched with purchases of
equity securities (other than the exempt purchase under the Plan) within a
period of less than six months before or after the sale of the Shares.

         The foregoing is a very brief summary of complex rules. Any individual
who is a trustee or an officer of the Trust or the beneficial owner of more than
10% of the Shares of the Trust is advised to consult with counsel prior to
effecting any purchase or sale of Shares of the Trust or exercising any Option
under this Plan.

         Other. The sale of Shares purchased under the Plan is also subject to
other applicable provisions of the securities laws (such as the prohibition
against trading on inside information).

Federal Tax Aspects

         Based on the advice of counsel, the Trust believes that the normal
operation of the Plan should generally have, under the Code and the regulations
thereunder, all as in effect on the date of this Prospectus, the principal
Federal income tax consequences described below. The tax treatment described
below does not take into account any changes to the Code or the regulations
thereunder which may occur after the date of this Prospectus. The following
discussion is only a summary; it is not intended to be all inclusive or to
constitute tax advice and, among other things, does not cover possible state,
local, or foreign tax consequences.

         No income will be recognized for Federal income tax purposes by
employees when they acquire rights under the Plan at the beginning of a calendar
year (or at the beginning of the first, 11-month year), and neither the Trust
nor PREIT-RUBIN or any designated affiliate will receive a deduction at that
time.

         The Plan is not designed to meet the requirements of Section 423 of the
Code. Therefore, upon the purchase of Shares, the employee will recognize income
for Federal income tax purposes in an amount per Share equal to the excess of
the fair market value of a Share at the time of exercise of the option over the
exercise price. The employee will be subject to Federal wage tax withholding on
the income recognized as a result of the exercise of the Option. In accordance
with the rules of Section 83 of the Code and the regulations thereunder,
PREIT-RUBIN or a designated affiliate that is the employee's employer will
generally be entitled to a deduction to the extent of the ordinary income
recognized by the employee. The Trust will not be entitled to a deduction.


                                       21
<PAGE>

         The basis of the Shares received by an employee upon the exercise of an
Option under the Plan will be the fair market value of the Shares on the date of
exercise. The employee's holding period for such Shares will begin on the day
after the date on which the employee recognizes income with respect to the
transfer of such Shares, i.e., generally the day after the exercise date. When
the employee disposes of such Shares, he or she will recognize capital gain or
loss under the Code rules which govern stock dispositions, assuming that the
Shares are held as a capital asset.

         Any net capital gain (i.e., the excess of net long-term capital gains
for the taxable year over net short-term capital losses for such taxable year)
will generally be taxed at a capital gains rate of up to 20%. Any net capital
loss can only be used to offset up to $3,000 per year of ordinary income
(reduced to $1,500 in the case of a married individual filing separately) or
carried forward to a subsequent year.

         BECAUSE OF COMPLEXITIES INVOLVED IN THE APPLICATION OF FEDERAL, STATE,
AND LOCAL TAX LAWS TO SPECIFIC CIRCUMSTANCES, AND THE UNCERTAINTIES AS TO
POSSIBLE FUTURE CHANGES IN THE TAX LAWS, IT IS STRONGLY URGED THAT EACH EMPLOYEE
CONSULT A TAX ADVISOR WITH RESPECT TO SUCH EMPLOYEE'S OWN SITUATION.

Additional Documents and Information

         Accompanying the Prospectus is a copy of the Trust's Annual Report to
Shareholders containing audited financial statements for the Trust's latest
fiscal year; provided, however, that if the Trust's latest fiscal year ended
within 120 days prior to the date of delivery of this Prospectus, the Annual
Report may relate to the fiscal year preceding the latest fiscal year, but in
such event the Trust will deliver an Annual Report for the latest fiscal year as
soon as available and in any event not later than 120 days after the end of the
latest fiscal year.

         The Trust also will deliver to employees who receive Options under the
Plan who do not otherwise receive such material, copies of all reports, proxy
statements, and other communications distributed by the Trust to its security
holders generally.

         Neither the Trust nor PREIT-RUBIN or any designated affiliate sends
regular reports to participants in the Plan concerning the amount of their
payroll deductions or Options under the Plan.

         The Plan is neither subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended, nor is it qualified under
Section 401 of the Code. Participants are not afforded the protection of the
provisions thereof.

         For additional information concerning the Plan and its administrators,
please contact the Human Resources Department of PREIT-RUBIN at The Bellevue,
200 S. Broad Street, Philadelphia, Pennsylvania 19102 (215-875-0733).




                                       22
<PAGE>




                        FEDERAL INCOME TAX CONSIDERATIONS

General

         The following discussion summarizes the Federal income tax
considerations that may be material to a prospective holder of Shares. Drinker
Biddle & Reath LLP, counsel for the Company, has provided an opinion letter to
the Company respecting the discussion set forth below under this heading
"Federal Income Tax Considerations," and this opinion is included as an Exhibit
to the Registration Statement. The following discussion, which is not exhaustive
of all possible tax considerations, does not give a detailed discussion of any
state, local or foreign tax considerations; nor does it discuss all of the
aspects of Federal income taxation that may be relevant to a prospective
shareholder in light of his or her particular circumstances or to certain types
of shareholders (including insurance companies, tax-exempt entities, financial
institutions or broker-dealers, foreign corporations and persons who are not
citizens or residents of the United States) who are subject to special treatment
under the Federal income tax laws.

         EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN
TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE
PURCHASE, OWNERSHIP AND SALE OF SHARES IN AN ENTITY ELECTING TO BE TAXED AS A
REIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF
SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.

Taxation of the Company

         General. The Company is designed to qualify and has elected to qualify
as a "real estate investment trust" under Sections 856-60 of the Code. The
Company believes that it has been organized and has operated in such a manner as
to qualify for taxation as a REIT under the Code, and the Company intends to
continue to operate in such a manner. No assurance, however, can be given that
the Company has operated in a manner so as to qualify as a REIT or that it will
continue to operate in such a manner in the future. Qualification and taxation
as a REIT depends upon the Company's ability to meet on a continuing basis,
through actual annual operating results, distribution levels and diversity of
share ownership, the various qualification tests imposed under the Code on
REITs, some of which are summarized below. While the Company intends to operate
so that it qualifies as a REIT, given the highly complex nature of the rules
governing REITs, the ongoing importance of factual determinations, and the
possibility of future changes in circumstances of the Company, no assurance can
be given that the Company satisfies such tests or will continue to do so. See
"Failure to Qualify" below.

         The following is a general summary of the Code provisions that govern
the Federal income tax treatment of a REIT and its shareholders. These
provisions of the Code are highly technical and complex. This summary is
qualified in its entirety by the applicable Code provisions, Treasury
Regulations and administrative and judicial interpretations thereof. If the
Company qualifies for taxation as a REIT, it generally will not be subject to
Federal corporate income taxes on net income that it currently distributes to
shareholders. However, the Company will be subject to Federal income tax on any
income that it does not distribute and will be subject to Federal income tax in
certain circumstances on certain types of income even though that income is
distributed.

                                       23
<PAGE>

         Requirements for Qualification. The Code defines a REIT as a
corporation, trust or association (i) that is managed by one or more trustees or
directors; (ii) the beneficial ownership of which is evidenced by transferable
shares of stock, or by transferable certificates of beneficial interest; (iii)
that would be taxable as a domestic corporation, but for Sections 856 through
859 of the Code; (iv) that is neither a financial institution nor an insurance
company subject to certain provisions of the Code; (v) the beneficial ownership
of which is held by 100 or more persons; (vi) that during the last half of each
taxable year not more than 50% in value of the outstanding stock of which is
owned, directly or indirectly, by five or fewer individuals (as defined in the
Code to include certain entities); and (vii) that meets certain other tests,
described below, regarding the nature of its income and assets. The Code
provides that conditions (i) through (iv), inclusive, must be met during the
entire taxable year and that condition (v) must be met during at least 335 days
of a taxable year of 12 months, or during a proportionate part of a taxable year
of less than 12 months. The Company's Trust Agreement provides certain
disclosure requirements for 1% or greater shareholders and certain restrictions
regarding the transfers of Company shares that are intended to assist the
Company in continuing to satisfy the share ownership requirements described in
(v) and (vi) above.

         A REIT is permitted to have a wholly owned subsidiary (also referred to
as a "qualified REIT subsidiary"). A qualified REIT subsidiary is not treated as
a separate entity for Federal income tax purposes. Rather, all of the assets,
liabilities and items of income, deductions and credit of a qualified REIT
subsidiary are treated as if they were those of the REIT.

         A REIT is deemed to own its proportionate share of the assets of a
partnership in which it is a partner and is deemed to receive its proportionate
share of the income of the partnership. Thus, the Company's proportionate share
of the assets, liabilities and items of income of PREIT Associates (the
"Operating Partnership") and each of the real estate partnerships or other
pass-through entities in which the Operating Partnership holds an interest (the
"Title Holding Partnerships") will be treated as assets, liabilities and items
of income of the Company for purposes of applying the requirements described
herein, provided that the Operating Partnership and the Title Holding
Partnerships are treated as partnerships for Federal income tax purposes.

         Income Tests. To maintain its qualification as a REIT, a REIT must
satisfy two gross income requirements each year. First, at least 75% of the
REIT's gross income (excluding gross income from prohibited transactions) for
each year must be derived directly or indirectly from investments in real
property or mortgages on real property (including "rents from real property"
and, in certain circumstances, interest) or from certain types of temporary
investments. Second, at least 95% of the REIT's gross income (excluding gross
income from prohibited transactions) for each year must be derived from the same
items that qualify under the 75% income test, and from dividends, interest and
gain from the sale or disposition of stock or securities, or from any
combination of the foregoing.

         Rents received by the Company will qualify as "rents from real
property" in satisfying the gross income requirements for a REIT described above
only if several conditions (related to the identity of the tenant, the
computation of the rent payable, and the nature of the property leased) are met.
The Company does not anticipate receiving rents in excess of five (5%) percent
of gross income that fail to meet these conditions. In addition, for rents
received to qualify as "rents from real property," the Company generally must
not operate or manage the property or furnish or render more than a de minimus
amount of services to tenants, other than through an "independent contractor"
from whom the Company derives no revenue. The "independent contractor"
requirement, however, does not apply to the extent the services provided by the
Company are "usually or customarily rendered" in connection with the rental of
space for occupancy only and are not otherwise considered "rendered to the
occupant." Although PREIT-RUBIN renders services with respect to rental
properties of the Operating Partnership and the Title Holding Partnerships, and
PREIT-RUBIN does not constitute an "independent contractor" for this purpose,
the Company believes that the services being provided by PREIT-RUBIN with
respect to such properties are usual or customary or should not otherwise be
considered "rendered to the occupant." The Company believes, moreover, that the
aggregate amount of any nonqualifying income in any taxable year earned by the
Operating Partnership and the Title Holding Partnerships has not caused, and
will not cause, the Company to exceed the limits on nonqualifying income under
the 75% and 95% gross income tests.

                                       24
<PAGE>

         The Operating Partnership owns all of the nonvoting common shares of
PREIT-RUBIN, a corporation that is taxable as a regular corporation. PREIT-RUBIN
performs management, development and leasing services for the Operating
Partnership and other real estate owned in whole or in part by third parties.
The third-party income earned by and taxed to PREIT-RUBIN would be nonqualifying
income if earned directly by the Company. As a result of the corporate
structure, all third-party and other services income will be earned by and taxed
to PREIT-RUBIN at applicable Federal and state corporate income tax rates and
will be received by the Company only indirectly as dividends (after reduction by
such taxes). Although dividends generally qualify under the 95% test, the IRS
refuses to rule on this issue when the dividends are earned in this manner.

         If the Company fails to satisfy one or both of the 75% or the 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code. It
is not possible, however, to state whether in all circumstances the Company
would be entitled to the benefit of these relief provisions. Even if these
relief provisions were to apply, however, a tax would be imposed with respect to
the "excess net income" attributable to the failure to satisfy the 75% and 95%
gross income tests.

         Asset Tests. The Company, at the close of each quarter of its taxable
year, must also satisfy three tests relating to the nature of its assets: (i) at
least 75% of the value of the Company's total assets must be represented by
"real estate assets," cash, cash items and government securities; (ii) not more
than 25% of the Company's total assets may be represented by securities other
than those in the 75% asset class; and (iii) of the investments included in the
25% asset class, the value of any one issuer's securities (other than an
interest in a partnership, shares of a "qualified REIT subsidiary" or another
REIT) owned by the Company may not exceed 5% of the value of the Company's total
assets, and the Company may not own more than 10% of any one issuer's
outstanding voting securities (other than an interest in a partnership, shares
of a qualified REIT subsidiary or another REIT).

         The Company believes that it has complied, and anticipates that it will
continue to comply, with these asset tests. The Company is deemed to hold
directly its proportionate share of all real estate and other assets of the
Operating Partnership and all assets deemed owned by the Operating Partnership
through its ownership of partnership interests in other partnerships. As a
result, the Company believes that more than 75% of its assets are real estate
assets. In addition, the Company does not plan to hold any securities
representing more than 10% of any one issuer's voting securities, other than any
qualified REIT subsidiary of the Company, nor securities of any one issuer
exceeding 5% of the value of the Company's gross assets. As previously
discussed, the Company is deemed to own its proportionate share of the assets of
a partnership in which it is a partner so that the partnership interest, itself,
is not a security for purposes of this asset test.

         The Operating Partnership owns all of the nonvoting common shares of
PREIT-RUBIN. The Operating Partnership does not own any of the voting securities
of PREIT-RUBIN. The Company believes that its indirect interest in the
securities of PREIT-RUBIN did not as of September 30, 1997 and does not
currently exceed 5% of the total value of the Company's assets. However, no
independent appraisals have been obtained.


                                       25
<PAGE>

         No assurance can be given that the Company's indirect ownership of
PREIT-RUBIN will meet the 10% voting securities test. Prior to June 1994, the
Internal Revenue Service (the "IRS") routinely issued rulings that the 10%
voting securities test was met in any case where the REIT did not own more than
10% of a management company's voting stock. However, in September 1994, the IRS
reevaluated its position on this issue and now refuses to issue a ruling on
whether the 10% voting securities test is met.

         After initially meeting the asset tests at the close of any quarter,
the Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset values.
If the failure to satisfy the asset tests results from an acquisition of
securities or other property during a quarter, the failure can be cured by
disposition of sufficient nonqualifying assets within 30 days after the close of
that quarter. The Company intends to maintain adequate records of the value of
its assets to ensure compliance with the asset tests, and to take such other
action within 30 days after the close of any quarter as may be required to cure
any noncompliance. We cannot assure you, however, that such other action will
always be successful.

         It should also be noted that certain proposed changes to the tax laws
regarding REITs have been considered in the past and may be enacted in the
future. Of potential relevance to the Company is one proposed change, considered
but not enacted by Congress in 1998, that would generally have prohibited a REIT
from owning 10% or more of the vote or value of the outstanding shares of any
corporation other than a qualified REIT subsidiary. Under the proposal, existing
ownership arrangements such as the Company's ownership of shares of PREIT-RUBIN
would have been grandfathered, provided that the subsidiary -- in this case
PREIT-RUBIN -- does not enter into a new trade or business or acquire
substantial new assets after the effective date of the change in the law.

         Annual Distribution Requirements. To qualify as a REIT, the Company
generally must distribute to its shareholders at least 95% of its income each
year. In addition, the Company will be subject to tax on the undistributed
amount at regular corporate rates and also may be subject to a 4% excise tax on
undistributed income.

         The Company believes that it has made, and expects to continue to make,
timely distributions sufficient to satisfy the annual distribution requirements.
It is possible, however, that the Company, from time to time, may not have
sufficient cash or other liquid assets to meet the distribution requirements. In
that event, the Company may arrange for short-term, or possibly long-term,
borrowing (by itself or by the Operating Partnership) to permit the payments of
required dividends.

         Failure to Qualify. If the Company fails to qualify for taxation as a
REIT in any taxable year, the Company will be subject to tax (including any
applicable alternative minimum tax) on its taxable income at regular corporate
rates. Unless entitled to relief under specific statutory provisions, the
Company also will be disqualified from taxation as a REIT for the four taxable
years following the year during which qualification was lost. It is not possible
to state whether in all circumstances the Company would be entitled to such
statutory relief.

         Income Taxation of the Operating Partnership, the Title Holding
Partnerships and Their Partners. The following discussion summarizes certain
Federal income tax considerations applicable to the Company's investment in the
Operating Partnership and the Title Holding Partnerships:

                                       26
<PAGE>

         Classification of the Operating Partnership and Title Holding
Partnerships as Partnerships. The Company will be entitled to include in its
income its distributive share of the income and to deduct its distributive share
of the losses of the Operating Partnership (including the Operating
Partnership's share of the income or losses of the Title Holding Partnerships)
only if the Operating Partnership and the Title Holding Partnerships
(collectively, the "Partnerships") are classified for Federal income tax
purposes as partnerships rather than as associations taxable as corporations.
The Partnerships have not elected, and do not intend to elect, to be taxable for
Federal income tax purposes as corporations. Accordingly, under applicable
"check-the-box" regulations, they should be classified as partnerships for
Federal income tax purposes.

         Partnership Allocations. Although a partnership agreement will
generally determine the allocation of income and losses among partners, such
allocations will be disregarded for tax purposes under Section 704(b) of the
Code if they do not comply with the provisions of Section 704(b) of the Code and
the Treasury Regulations promulgated thereunder as to substantial economic
effect and other requirements.

         If an allocation is not recognized for Federal income tax purposes, the
item subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership, which will be determined by taking into
account all of the facts and circumstances relating to the economic arrangement
of the partners with respect to such item. The Operating Partnership's
allocations of taxable income and loss are intended to comply with the
requirements of Section 704(b) of the Code and the Treasury Regulations
promulgated thereunder.

         Tax Allocations With Respect to Contributed Properties. The properties
contributed directly or indirectly to the Operating Partnership have generally
been appreciated as of the time of contribution, and it is likely that
properties contributed in the future will also be appreciated. Pursuant to
Section 704(c) of the Code, items of income, gain, loss, and deduction
attributable to appreciated or depreciated property that is contributed to a
partnership in exchange for an interest in the partnership must be allocated for
Federal income tax purposes in a manner such that the contributor is charged
with or benefits from the unrealized gain or unrealized loss associated with the
property at the time of the contribution. The amount of such unrealized gain or
unrealized loss is generally equal to the difference between the fair market
value of the contributed property at the time of contribution and the adjusted
tax basis of such property at the time of contribution. The partnership
agreements of the Partnerships require allocations of income, gain, loss and
deduction attributable to such contributed property to be made in a manner that
is consistent with Section 704(c) of the Code. If the Partnerships sell
contributed property at a gain or loss, such gain or loss will be allocated to
the contributing partner(s) generally to the extent of the precontribution
unrealized gain or loss.

         Depreciation. The Partnerships' assets other than cash consist largely
of appreciated property contributed by its partners. Assets contributed to a
partnership in a tax-free transaction carry over their depreciation schedules.
Accordingly, the Operating Partnership's depreciation deductions for its real
property are based largely on the historic depreciation schedules for the
properties. The properties are being depreciated over a range of 15 to 40 years
using various methods of depreciation which were determined at the time that
each item of depreciable property was placed in service. Any real property
purchased by the Partnerships will be depreciated over at least 39 years. In
certain instances where a partnership interest rather than real estate is
contributed to the Partnership, the real estate may not carry over its
depreciation schedule but rather may, similarly, be subject to the lengthier
depreciation period.

                                       27
<PAGE>

         Section 704(c) of the Code requires that depreciation as well as gain
and loss be allocated in a manner so as to take into account the variation
between the fair market value and tax basis of the property contributed.
Depreciation with respect to any property purchased by the Operating Partnership
subsequent to the admission of its partners, however, will be allocated among
the partners in accordance with their respective percentage interests in the
Partnerships.

         Sale of Partnership Property. Generally, any gain realized by a
partnership on the sale of property held by the partnership for more than one
year will be long-term capital gain, except for any portion of such gain that is
treated as depreciation or cost recovery recapture. However, under the REIT
requirements, the Company's share as a partner of any gain realized by the
Partnerships on the sale of any property held as inventory or other property
held primarily for sale to customers in the ordinary course of a trade or
business will be treated as income from a prohibited transaction that is subject
to a 100% penalty tax. Such prohibited transaction income could also have an
adverse effect upon the Company's ability to satisfy the income tests for REIT
status. Under existing law, whether property is held as inventory or primarily
for sale to customers in the ordinary course of a trade or business is a
question of fact that depends on all the facts and circumstances with respect to
the particular transaction. A safe harbor to avoid classification as a
prohibited transaction exists as to real estate assets held for the production
of rental income by a REIT for at least four years where in any taxable year the
REIT has made no more than seven sales of property or, in the alternative, the
aggregate of the adjusted bases of all properties sold does not exceed 10% of
the adjusted bases of all of the REIT's properties during the year and the
expenditures includible in a property's net sales price. The Partnerships intend
to hold properties for investment with a view to long-term appreciation, to
engage in the business of acquiring, developing, owning, and operating and
leasing properties and to make such occasional sales of the properties as are
consistent with the Company's and the Operating Partnership's investment
objectives. No assurance can be given, however, that no property sale by the
Partnerships will constitute a sale of inventory or other property held
primarily for sale to customers.

Taxation of Shareholders

         Taxation of Taxable Domestic Shareholders. As long as the Company
qualifies as a REIT, distributions made to the Company's taxable domestic
shareholders out of current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income, and corporate shareholders will not be eligible for the
dividends received deduction as to such amounts. Distributions that are
designated as 20%-rate capital gain dividends will be taxed as long-term capital
gains, and distributions that are designated as 25%-rate gain dividends will be
taxed as 25%-rate gain, in each case without regard to the period for which the
shareholder has held its Shares. However, corporate shareholders may be required
to treat up to 20% of certain capital gain dividends as ordinary income.
Distributions in excess of current or accumulated earnings and profits will not
be taxable to a shareholder to the extent that they do not exceed the adjusted
basis of the shareholder's Shares, but rather will reduce the adjusted basis of
such Shares. To the extent that such distributions exceed the adjusted basis of
a shareholder's Shares, they will be included in income as long-term capital
gain (or short-term capital gain if the Shares have been held for one year or
less, assuming the Shares are a capital asset in the hands of the shareholder.



                                       28
<PAGE>

         In addition, to the extent, if any, that the Company does not
distribute all its net capital gain (including 25%-rate gain) in a year, the
Company may elect to designate (in a written notice to shareholders) that such
undistributed capital gain shall nonetheless be treated for Federal income tax
purposes as if it had been distributed proportionately to the Company's
shareholders as of the end of the year and recontributed to the Company's
capital. In that case, the shareholders will be taxed on such gain, but will
receive a tax credit for the tax paid by the Company on the gain, and each
shareholder's basis in Shares of the Company will be increased by the excess of
the amount of such gain over the amount of such tax credit.

         In general, a domestic shareholder will realize capital gain or loss on
the disposition of Shares equal to the difference between (i) the amount of cash
and the fair market value of any property received on such disposition and (ii)
the shareholder's adjusted basis of such Shares. Such gain or loss generally
will constitute long-term capital gain or loss if the shareholder has held such
shares for more than one year. Loss upon a sale or exchange of Shares by a
shareholder who has held such Shares for six months or less (after applying
certain holding period rules) will be treated as a long-term capital loss to the
extent of distributions from the Company required to be treated by such
shareholder as long-term capital gain (including both 20%- and 25%-rate gain).

         Under certain circumstances, domestic shareholders may be subject to
backup withholding at the rate of 31% with respect to dividends paid.

         Taxation of Tax-Exempt Shareholders. The Company does not expect that
distributions by the Company to a shareholder that is a tax-exempt entity will
constitute "unrelated business taxable income" ("UBTI"), provided that the
tax-exempt entity has not financed the acquisition of its Shares with
"acquisition indebtedness" within the meaning of the Code and the Shares are not
otherwise used in an unrelated trade or business of the tax-exempt entity.

         Taxation of Non-U.S. Shareholders. The rules governing U.S. Federal
income taxation of nonresident alien individuals, foreign corporations, foreign
partnerships and other foreign shareholders (collectively, "Non-U.S.
Shareholders") are complex, and no attempt will be made herein to provide more
than a limited summary of such rules. Prospective Non-U.S. Shareholders should
consult with their own tax advisors to determine the impact of U.S. Federal,
state and local income tax laws with regard to an investment in Shares,
including any reporting requirements. In particular, Non-U.S. Shareholders who
are engaged in a trade or business in the United States, and Non-U.S.
Shareholders who are individuals and who were present in the United States for
183 days or more during the tax year and have a "tax home" in the United States,
may be subject to tax rules different from those described below.

         Distributions that are not attributable to gain from sales or exchanges
by the Company of U.S. real property interests and not designated by the Company
as capital gain dividends will be treated as dividends of ordinary income to the
extent that they are made out of current or accumulated earnings and profits of
the Company. Such distributions, ordinarily, will be subject to a withholding
tax equal to 30% of the gross amount of the distribution unless an applicable
tax treaty reduces that tax. Distributions in excess of current and accumulated
earnings and profits of the Company will not be taxable to a Non-U.S.
Shareholder to the extent that they do not exceed the adjusted basis of the
shareholder's Shares, but rather will reduce the adjusted basis of such Shares.
To the extent that such distributions exceed the adjusted basis of a Non-U.S.
Shareholder's Shares, they will give rise to tax liability if the Non-U.S.
Shareholder would otherwise be subject to tax on any gain from the sale or
disposition of Shares as described below (in which case they also may be subject
to a 30% branch profits tax if the shareholder is a foreign corporation). If it
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current or accumulated earnings and profits,
the entire distribution will be subject to withholding at the rate applicable to
dividends. However, the Non-U.S. Shareholder may seek a refund of such amounts
from the IRS if it is subsequently determined that such distribution was, in
fact, in excess of current or accumulated earnings and profits of the Company.


                                       29
<PAGE>

         For any year in which the Company qualifies as a REIT, distributions
that are attributable to gain from sales or exchanges by the Company of U.S.
real property interests will be taxed to a Non-U.S. Shareholder under the
provisions of the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA")
at the normal capital gain rates applicable to U.S. shareholders (subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals). Also, distributions subject to FIRPTA
may be subject to a 30% branch profits tax in the hands of a corporate Non-U.S.
Shareholder not entitled to treaty relief or exemption. The Company is required
by applicable Treasury Regulations to withhold 35% of any distribution that is
or could be designated by the Company as a capital gain dividend. The amount
withheld is creditable against the Non-U.S. Shareholder's FIRPTA tax liability.

         Although the law is not entirely clear on the matter, it appears that
amounts of undistributed capital gain that are designated by the Company as
deemed distributions (as discussed under "Taxation of Taxable Domestic
Shareholders" above) would be treated with respect to Non-U.S. Shareholders in
the manner outlined in the preceding paragraph for actual distributions by the
Company of capital gain dividends. Under that approach, the Non-U.S.
Shareholders would be able to offset as a credit against their United States
Federal income tax liability resulting therefrom their proportionate share of
the tax paid by the Company on such undistributed capital gains (and to receive
from the IRS a refund to the extent their proportionate share of such tax paid
by the Company were to exceed their actual United States Federal income tax
liability).

         Gain recognized by a Non-U.S. Shareholder upon a sale of Shares
generally will not be taxed under FIRPTA if the Company is a "domestically
controlled REIT," defined generally as a REIT in which at all times during a
specified testing period less than 50% in value of the stock was held directly
or indirectly by foreign persons. The Company believes that it is a
"domestically controlled REIT," and, therefore, that the sale of Shares will not
be subject to taxation under FIRPTA. If the gain on the sale of Shares were to
be subject to tax under FIRPTA, the Non-U.S. Shareholder would be subject to the
same treatment as U.S. shareholders with respect to such gain (subject to
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals), and the purchaser of the Shares would be
required to withhold and remit to the IRS 10% of the purchase price.

Other Tax Considerations

         State and Local Taxes. The Company and its shareholders may be subject
to state or local taxation in various state or local jurisdictions, including
those in which it or they transact business or reside. The state and local tax
treatment of the Company and its shareholders may not conform to the Federal
income tax consequences discussed above. Consequently, prospective shareholders
should consult their own tax advisors regarding the effect of state and local
tax laws on an investment in the Shares of the Company.


                                       30
<PAGE>

                                  LEGAL MATTERS

         The legality of the Shares offered hereby will be passed upon for the
Company by Drinker Biddle & Reath LLP. Drinker Biddle & Reath LLP will also pass
on certain federal income tax matters respecting the Company. Sylvan M. Cohen,
Chairman of the Board of the Company, is of counsel to Drinker Biddle & Reath
LLP. Mr. Cohen is the beneficial owner of a substantial number of shares of
beneficial interest in the Company.

                                     EXPERTS

         The financial statements and financial statement schedules incorporated
by reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.

         The financial statements of Lehigh Valley Associates included in the
Company's Annual Report have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such financial statements are incorporated herein by
reference in reliance upon such report given the authority of such firm as
experts in accounting and auditing.


                                       31
<PAGE>



                                TABLE OF CONTENTS

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...........................   2
CAUTIONARY STATEMENT......................................................   4
THE COMPANY...............................................................   4
RISK FACTORS..............................................................   5
USE OF PROCEEDS...........................................................  14
DESCRIPTION OF THE PLAN...................................................  14
FEDERAL INCOME TAX CONSIDERATIONS.........................................  23
LEGAL MATTERS.............................................................  31
EXPERTS...................................................................  31
                                                                            
                                                                          

                                       32
<PAGE>



                                     PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS


Item 14. Other Expenses of Issuance and Distribution.

         The following table sets forth the estimated expenses payable by the
Registrant in connection with this Registration Statement.

         Securities and Exchange Commission Registration Fee.......  $ 1,337.88 
                                                                     ---------
         Legal Fees and Expenses...................................   10,000
         Miscellaneous Expenses....................................    5,000
         Total.....................................................  $16,337.88 
                                                                     ==========

Item 15. Indemnification of Directors and Officers.

         The Company's Trust Agreement, as amended, provides that (a) no Trustee
shall be personally liable for monetary damages for any action, or any failure
to take action, except that a Trustee shall remain personally liable for
monetary damages to the same extent that a director of a Pennsylvania business
corporation remains liable under the provisions of 15 Pa. C.S. Section 1713, and
(b) no officer who performs his duties in good faith, in a manner reasonably
believed to be in the best interests of the Company and with such care, skill
and diligence as a person of ordinary diligence would use will not be liable by
reason of having been an officer of the Company.

         The Company's Trust Agreement provides that every Trustee and officer
shall be entitled as of right to be indemnified by the Company against
reasonable expense (including attorney's fees) and any liability, loss,
judgment, excise tax, fine, penalties, and settlements paid or incurred by such
person in connection with an actual (whether pending or completed) or threatened
claim, action, suit or proceeding, civil, criminal, administrative,
investigative or other, whether brought by or in the right of the Company or
otherwise, in which he or she may be involved, as a party or otherwise, by
reason of such person's being or having been a Trustee or officer of the Company
or by reason of the fact that such person is or was serving in any capacity at
the request of the Company as a trustee, director, officer, employee, agent,
partner, fiduciary or other representative or another real estate investment
trust, corporation, partnership, joint venture, trust, employee benefit plan or
other entity; provided, however, that no such right of indemnification shall
exist with respect to an action brought by a Trustee or officer against the
Company and further provided that no indemnification shall be made in any case
where the act or failure to act giving rise to the claim for indemnification is
determined by the final judgment of a court of competent jurisdiction to have
constituted willful misconduct or recklessness. The Trust Agreement further
provides that such right to indemnification shall be contractual in nature and
shall include the right to be paid in advance the expenses incurred in
connection with such proceedings; provided, however, that such advance payments
must be made in accordance with applicable law and must be accompanied by an
undertaking by or on behalf of such Trustee or officer to repay all amounts so
advanced if it is ultimately determined that such Trustee or officer is not
entitled to be indemnified under the Trust Agreement.
<PAGE>

         The Company's By-laws require the Company to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or proceeding, including actions by or in the right of the
Company, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was a trustee or officer of the Company, or is
or was serving while a trustee or officer of the Company at the request of the
Company as a director, officer, employee, agent, fiduciary or other
representative of another for profit or not-for-profit corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees), judgments, fines, excise taxes and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such action or proceeding unless the act or failure to act giving rise to
the claim for indemnification is determined by a court to have constituted
willful misconduct or recklessness. The Company's By-laws also provide that such
right to indemnification shall be contractual in nature and shall include the
right to be paid the expenses (including attorneys fees) incurred in defending
any action or proceeding in advance of the final disposition of such action or
proceeding upon receipt by the Company of an undertaking by or on behalf of such
person to repay such amount if it is ultimately determined that the person is
not entitled to indemnification.

         In addition, the Trust Agreement and Pennsylvania law permit the
Company to provide similar indemnification to employees, agents and other
persons who are not Trustees or officers. Pennsylvania law also permits
indemnification in connection with a proceeding brought by or in the right of
the Company to procure a judgment in its favor and requires indemnification in
certain cases where the Trustee or officer is the prevailing party. Certain of
the employment agreements the Company has entered into with its officers provide
for indemnification for such officer. Generally, these contracts require the
Company to indemnify the officer to the fullest extent permitted under the Trust
Agreement. The Limited Partnership Agreement for PREIT Associates, L.P., the
Company's operating partnership (the "Operating Partnership") also provides for
indemnification of the Company, the Trustees and the Company's officers for any
and all actions with respect to the Operating Partnership; provided, however,
that the Operating Partnership will not indemnify such parties for (i) willful
misconduct or knowing violation of the law; (ii) any action where the covered
person received an improper personal benefit in violation or breach of the
Limited Partnership Agreement for the Operating Partnership; (iii) any violation
of the Limited Partnership Agreement for the Operating Partnership or (iv) any
liability such person may have to the Limited Partnership under certain
documents delivered in the transaction in which properties were or will be
contributed to the Operating Partnership. The Company currently maintains
insurance for its Trustees and officers.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to Trustees, officers, or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in that Act and is
therefore unenforceable.


Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits:
Exhibit
Number                      Description
4         Non-Qualified Employee Share Purchase Plan
5         Opinion of Drinker Biddle & Reath LLP
8         Opinion of Drinker Biddle & Reath LLP regarding tax matters



<PAGE>

23.1      Consent of Arthur Andersen LLP (Independent Public Accountants of
          the Company)
23.2      Consent of Ernst & Young LLP (Independent Auditors of Lehigh Valley  
          Associates)
23.3      Consent of Zelenkofske Axelrod and Co., Ltd (Independent Auditors
          of Oxford Valley Road Associates)
23.4      Consent of Drinker Biddle & Reath LLP (included in Exhibits 5 and 8)
24        Powers of Attorney - Included on signature page.


Item 17. Undertakings.

         The undersigned registrant hereby undertakes:

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

                  (i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;

                  (ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.

                  (iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

         Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement.

         (2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

         (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
<PAGE>

         The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.


<PAGE>


                                   SIGNATURES


Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
December 22, 1998.

                                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST



                                    By:  /s/ Jonathan B. Weller  
                                         ------------------------------------- 
                                         Jonathan B. Weller,
                                         President and Chief Operating Officer


                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, does hereby constitute and appoint RONALD RUBIN, SYLVAN M. COHEN
and JONATHAN B. WELLER, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution, resubstitution
and revocation, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:


<PAGE>



<TABLE>
<CAPTION>


<S>                                             <C>                                                   <C> 
        Name                                              Capacity                                         Date
        ----                                              --------                                         ----


/s/  Sylvan M. Cohen                            Chairman of the Board and Trustee                      December 22, 1998
- ------------------------
Sylvan M. Cohen


/s/  Ronald Rubin                               Chief Executive Officer and Trustee                    December 22, 1998
- ------------------------
Ronald Rubin


/s/  Jonathan B. Weller                         President, Chief Operating Officer and                 December 22, 1998
- ------------------------
Jonathan B. Weller                              Trustee


/s/  William R. Dimeling                        Trustee                                                December 22, 1998
- ------------------------
William R. Dimeling



- ------------------------                        Trustee                                                December __, 1998
Rosemarie B. Greco



/s/  Lee H. Javitch                             Trustee                                                December 22, 1998
- ------------------------
Lee H. Javitch


/s/  Leonard I. Korman                          Trustee                                                December 22, 1998
- ------------------------
Leonard I. Korman


/s/  Jeffrey P. Orleans                         Trustee                                                December 22, 1998
- ------------------------
Jeffrey P. Orleans


/s/  George F. Rubin                            Trustee                                                December 22, 1998
- ------------------------
George F. Rubin


/s/  Edward A. Glickman                         Executive Vice President and                           December 22, 1998
- ------------------------                        Chief Financial   
Edward A. Glickman                              Officer


/s/  Dante J. Massimini
- ------------------------                        Senior Vice President - Finance and                    December 22, 1998
Dante J. Massimini                              Treasurer (Chief Accounting Officer)

</TABLE>


<PAGE>


                                  EXHIBIT INDEX

Exhibit Number
           Description
4          Non-Qualified Employee Share Purchase Plan
5          Opinion of Drinker Biddle & Reath LLP
8          Opinion of Drinker Biddle & Reath LLP regarding tax matters
23.1       Consent of Arthur Andersen LLP (Independent Public Accountants of
           the Company)
23.2       Consent of Ernst & Young LLP (Independent Auditors of Lehigh Valley
           Associates)
23.3       Consent of Zelenkofske Axelrod and Co., Ltd (Independent Auditors
           of Oxford Valley Road Associates)
23.4       Consent of Drinker Biddle & Reath LLP (included in Exhibits 5 and 8)
24         Powers of Attorney - Included on signature page.





<PAGE>




                                                                       EXHIBIT 4




                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

                   NON-QUALIFIED EMPLOYEE SHARE PURCHASE PLAN

                       (Effective as of February 1, 1999)



<PAGE>




                                TABLE OF CONTENTS

                                                                           Page

1.       PURPOSE.............................................................1
2.       ADMINISTRATION......................................................1
3.       ELIGIBILITY.........................................................1
4.       SHARES..............................................................2
5.       GRANT OF OPTION.....................................................2
6.       PARTICIPATION.......................................................3
7.       EXERCISE OF OPTION..................................................4
8.       EMPLOYEE'S RIGHT TO SURRENDER OPTION................................4
9.       TERMS AND CONDITIONS OF OPTIONS.....................................5
10.      COMPLIANCE WITH RULE 16B-3..........................................9
11.      INDEMNIFICATION OF COMMITTEE........................................9
12.      AMENDMENT OF PLAN...................................................9
13.      EFFECTIVE DATE OF PLAN..............................................9
14.      ABSENCE OF RIGHTS..................................................10
15.      APPLICATION OF FUNDS...............................................10
16.      MISCELLANEOUS......................................................10


<PAGE>


                    PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
                   NON-QUALIFIED EMPLOYEE SHARE PURCHASE PLAN
                       (Effective as of February 1, 1999)




1.       PURPOSE

         The Pennsylvania Real Estate Investment Trust (the "Trust") has adopted
this Non-Qualified Employee Share Purchase Plan (the "Plan") in order to provide
eligible employees of PREIT-RUBIN, Inc. ("PRI") the opportunity to purchase, at
a discount, shares of beneficial interest in the Trust. It is not 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 designated entity controlled, directly or indirectly, by the
Trust or PRI ("Affiliate").

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 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, each employee of
PRI or of a designated Affiliate who has been employed by PRI or by the
designated Affiliate 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 not eligible for employee benefits from PRI or a designated
Affiliate (i.e., he or she is customarily employed for less than 30 hours per
week or is classified by PRI or the designated Affiliate as a temporary or
seasonal employee). In addition, to the extent required to comply with 17 C.F.R.
ss.240.16b-3 (or any successor thereto), 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 then outstanding of the Trust or of its parent
corporation (if any) or a subsidiary corporation of the Trust (if any) (as
defined in ss.424(e) and (f) of the Code, respectively) or of PRI (or a
designated Affiliate) or a parent corporation (if any) or subsidiary corporation
(if any) of PRI (or a designated Affiliate). 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.

                                       1
<PAGE>

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
250,000, provided that such number shall be adjusted if required by ss.9(h).
Shares issuable under the Plan may be authorized but unissued shares or
reacquired shares, and the Trust or its agent may purchase shares on the open
market 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 February 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), except for
the options granted on February 1, 1999, which shall have an 11-month Option
Term (from February 1, 1999 to 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 one two-month Purchase
Period (February-March), as well as the remaining three three-month Purchase
Periods.

(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:

                                       2
<PAGE>

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

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

                  (d) Limitation on Aggregate Number of Shares Purchasable Under
Option. Subject to the limitation described in ss.9(k), the aggregate number of
Shares purchasable under an option for an Option Term shall not exceed the
lesser of (i) 2,000 (subject to adjustment under ss.9(h)), 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 (except for the first Option Term, for which the fair market value
shall be determined as of the most recent business day before January 1, 1999).
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 (after notice to and consultation with PRI or the designated
Affiliate which employs the eligible employee), 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 from PRI and its designated
subsidiaries.

         (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 PRI (or by a
designated affiliate as agent for PRI). All such contributions shall be held as
part of the general assets of PRI, and shall not be held in trust or otherwise
segregated from PRI'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 PRI. PRI
and each designated affiliate 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 PRI and all designated affiliates 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.

                                       3
<PAGE>

         (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.

         (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). The Trust will arrange with PRI or the designated
Affiliate for a mutually acceptable method of transferring such payroll
deductions to the Trust in payment for such Shares. In addition, PRI or the
designated Affiliate will be responsible to the Trust for the difference between
such payroll deductions and the fair market value of the Shares purchased.

         (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 PRI or the designated Affiliate. However, in order for such
surrender to be effective for the Purchase Period, the employee's written notice
must be received by PRI or the designated Affiliate 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
PRI or the designated Affiliate 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.

                                       4
<PAGE>

         (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 PRI or the designated Affiliate 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 (except for the first Option Term, for which the per-share
exercise price shall be 85% of the fair market value of a Share as of the most
recent business day before January 1, 1999), 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.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.

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

                                       5
<PAGE>


         (e) Termination of Employment; Change in Status. In the event that an
employee ceases to be employed by PRI and all designated subsidiaries 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). Notwithstanding the foregoing, if any employee who is
participating in an Option Term transfers employment from PRI or a designated
Affiliate to a designated Affiliate, PRI, or the Trust during such Option Term,
such transfer shall not constitute a termination of employment and such employee
shall continue to be eligible to participate through the end of the Option Term,
provided he or she continues to be an employee of a designated Affiliate, PRI,
or the Trust. Such an employee's participation shall continue at the same rate
and on the same terms as before his or her transfer of employment, subject to
the terms of the Plan.

         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.

         (f) 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 (f).

         (g) Nontransferability. Except as provided in paragraph (f) 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.

         (h) Changes in Capital Structure. Subject to any required action by the
Trust's 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.

                                       6
<PAGE>


         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 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.

         Except as expressly provided in this paragraph (h), 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.

         (i) 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 (h) above.

         (j) 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.


                                       7
<PAGE>


         (k) 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.

         (l) 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 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.

         (m) 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.

         (n) 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.


                                       8
<PAGE>


11.      INDEMNIFICATION 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 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.

13.      EFFECTIVE DATE OF PLAN

         In the discretion of the Committee, the Plan will become effective as
of February 1, 1999, or as soon as administratively practicable thereafter.

14.      ABSENCE OF RIGHTS

         The granting of an option to a person shall not entitle that person to
continued employment by PRI or a designated Affiliate or affect the terms and
conditions of such employment. PRI or any designated Affiliate 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.


                                       9
<PAGE>


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.

                                       10

<PAGE>

                                                                       EXHIBIT 5

                                                         January 5, 1999


Pennsylvania Real Estate Investment Trust
The Bellevue, 200 S. Broad St.
Philadelphia, Pennsylvania  19102

Ladies and Gentlemen:

                  We have acted as counsel to Pennsylvania Real Estate
Investment Trust, a Pennsylvania business trust (the "Trust"), in connection
with the preparation and filing with the Securities and Exchange Commission of
the Trust's Registration Statement on Form S-3 (the "Registration Statement")
under the Securities Act of 1933, as amended, relating to up to 250,000 shares
of beneficial interest in the Trust, par value $1.00 per share (the "Additional
Shares"), that may be issued by the Trust upon the exercise of options granted
under the Trust's Non-Qualified Employee Share Purchase Plan, as amended (the
"Plan").

                  For purposes of this opinion, we have examined the originals
or copies, certified or otherwise identified to our satisfaction, of the Trust
Agreement and Bylaws of the Trust, each as amended to date, resolutions adopted
by the Trust's Board of Trustees, the Plan and such other agreements,
instruments, documents and records relating to the Trust and the issuance of the
Additional Shares as we have deemed appropriate. In all such examinations, we
have assumed the genuineness of signatures, the authenticity of documents
submitted to us as originals, the conformity to authentic original documents of
documents submitted to us as copies and the accuracy and completeness of all
records and other information made available to us by the Trust. As to various
questions of fact material to our opinion, we have relied on representations of
officers of the Trust.

                  We express no opinion concerning the laws of any jurisdiction
other than the federal law of the United States and the law of the Commonwealth
of Pennsylvania.

                  Based upon the foregoing and consideration of such questions
of law as we have deemed relevant, we are of the opinion that the issuance of
the Additional Shares by the Trust upon the exercise of options properly granted
under the Plan has been duly authorized by the necessary action of the Board of
Trustees, and such Additional Shares, when and if issued upon exercise of such
options and payment therefor in accordance with the terms of the Plan, will be
validly issued, fully paid and nonassessable by the Trust.

                  We hereby consent to the use of this opinion as an exhibit to
the Registration Statement. In giving this consent we do not admit that we come
within the categories of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended.

                  Sylvan M. Cohen, founder, Chairman of the Board, and a
principal shareholder of the Trust, is "of counsel" to this firm.


                                 Very truly yours,


                                 /s/ Drinker Biddle & Reath LLP
                                 -------------------------------------
                                 DRINKER BIDDLE & REATH LLP




<PAGE>


                                                                       EXHIBIT 8










                                                         January 5, 1999



Pennsylvania Real Estate Investment Trust
The Bellevue, 200 S. Broad St.
Philadelphia, Pennsylvania  19102

Ladies and Gentlemen:

                  You have requested our opinion concerning certain federal
income tax matters in connection with the preparation of a Prospectus for
Pennsylvania Real Estate Investment Trust, a Pennsylvania business trust (the
"Company"), with respect to the issuance of up to 250,000 shares of beneficial
interest in the Company pursuant to the Company's Non-Qualified Employee Share
Purchase Plan.

                  This opinion is based, in part, on various assumptions and the
representations made by you as to factual matters set forth in the Prospectus
and in a letter delivered to us by you today. This opinion is also based upon
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder and existing administrative and judicial interpretations
thereof, all as they exist as of the date of this letter. All of the foregoing
statutes, regulations and interpretations are subject to change, in some
circumstances with retroactive effect. Any changes to the foregoing authorities
might result in modifications of our opinions contained herein.

                  Based on the foregoing, we are of the opinion that:

                  1. For all years as to which the Company's tax returns remain
open for adjustment by the Internal Revenue Service, the Company has been
organized in conformity with the requirements for qualification as a "real
estate investment trust" under the Code, and the Company's method of operation,
as described in the representations referred to above, has been such as to
enable it to meet, and to continue to meet, the requirements for qualification
and taxation as a "real estate investment trust" under the Code.

                  2. The statements in the Prospectus set forth under the
caption "Federal Income Tax Considerations," to the extent such statements
constitute matters of law, summaries of legal matters or legal conclusions, have
been reviewed by us and are accurate in all material respects.

                  We express no opinion with respect to the transactions
described in the Prospectus other than those expressly set forth herein. This
opinion represents our best legal judgment, but it has no binding effect or
official status of any kind, and no assurance can be given that contrary
positions may not be taken by the Internal Revenue Service or a court.

                  We hereby consent to the filing of this opinion with the
Securities and Exchange Commission and to the references to our firm in the
Prospectus under the captions "Federal Income Tax Considerations and "Legal
Matters." This does not constitute a consent under Section 7 of the Securities
Act of 1933, and in so consenting we have not certified any part of the
Prospectus and Prospectus Supplements and do not otherwise come within the
categories of persons whose consent is required under Section 7 or under the
rules and regulations of the Securities and Exchange Commission issued
thereunder.

                  Sylvan M. Cohen, founder, Chairman of the Board, and a
principal shareholder of the Trust, is "of counsel" to this firm.

                                      Very truly yours,



                                      DRINKER BIDDLE & REATH LLP

<PAGE>

                                                                    EXHIBIT 23.1


                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement on Form S-3 of our
report dated October 17, 1997 on the consolidated financial statements of
Pennsylvania Real Estate Investment Trust (the "Company"), included in the
Company's Annual Report of Form 10-K for the year ended August 31, 1997; our
report dated June 16, 1997 on the statement of revenue and certain expenses of
Magnolia Mall, incorporated by reference in the Company's Current Report on Form
8-K dated October 14, 1997; our report dated June 20, 1997 on the statement of
revenue and certain expenses of North Dartmouth Mall, incorporated by reference
in the Company's Current Report on Form 8-K dated October 14, 1997; our report
dated June 23, 1997 on the consolidated financial statement of The Rubin
Organization, Inc., incorporated by reference in the Company's Current Report on
Form 8-K dated October 14, 1997; our report dated June 22, 1998 on the statement
of revenue and certain expenses of the Woods Apartments, incorporated by
reference in the Company's Current Report on Form 8-K dated August 13, 1998; our
report dated July 15, 1998 on the statement of revenue and certain expenses of
Prince Georges Plaza, incorporated by reference in the Company's Current Report
on Form 8-K dated November 9, 1998; our report dated August 28, 1998 on the
combined statement of revenue and certain expenses of Festival at Oaklands
Shopping Center, incorporated by reference in the Company's Current Report on
Form 8-K dated November 9, 1998; our report dated December 21, 1998 on the
consolidated financial statements of the Company for the four-month period ended
December 31, 1997, incorporated by reference in the Company's Current Report on
Form 8-K dated December 18, 1998 and to all references to our Firm included in
this registration statement.


                                              /s/ Arthur Andersen LLP



Philadelphia, PA
January 4, 1999


<PAGE>


                                                                    EXHIBIT 23.2


                         CONSENT OF INDEPENDENT AUDITORS


         We consent to the reference to our firm under the caption "Experts" and
to the incorporation by reference of our report dated October 18, 1996 with
respect to the financial statements of Lehigh Valley Associates included in
Pennsylvania Real Estate Investment Trust's Annual Report on Form 10-K for the
fiscal year ended August 31, 1997 (as amended by Form 10-K/A-1 filed on December
15, 1997) in this Registration Statement Form S-3 and related Prospectus of
Pennsylvania Real Estate Investment Trust for the registration of 250,000 shares
of its beneficial interest.


                                           /s/ Ernst & Young LLP


Philadelphia, PA
January 4, 1999


<PAGE>


                                                                    EXHIBIT 23.3


                       CONSENT OF INDEPENDENT ACCOUNTANTS

         We consent to the incorporation by reference of our report dated June
30, 1997 with respect to the financial statements of Oxford Valley Road
Associates, incorporated by reference into Pennsylvania Real Estate Investment
Trust's Current Report on Form 8-K dated October 14, 1997, in this Registration
Statement and related Prospectus of Pennsylvania Real Estate Investment Trust
for the registration of 250,000 shares of its beneficial interests.


                                    /s/ Zelenkofske Axelrod and Co., Ltd.


Jenkintown, PA
January 5, 1999



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