<PAGE>
________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000
------------------
[ ] Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ______________________ to _______________________
Commission File Number 1-6300
---------------------------------------------------------
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 Identification No.)
incorporation or organization)
200 South Broad Street, Third Floor, Philadelphia, PA 19102-3803
------------------------------------------------------ ---------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (215) 875-0700
--------------
N/A
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the last 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares of beneficial interest outstanding at November 9, 2000: 13,476,259
--------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
CONTENTS
--------
Page
----
Part I. Financial Information
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets--September 30, 2000
and December 31, 1999 1-2
Consolidated Statements of Income--Three Months
and Nine Months Ended September 30, 2000 and September 30, 1999 3
Consolidated Statements of Cash Flows--Nine Months
Ended September 30, 2000 and September 30, 1999 4
Notes to Unaudited Consolidated Financial Statements 5-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
Part II. Other Information 19
Item 1. Not Applicable -
-
Item 2. Not Applicable
Item 3. Not Applicable -
Item 4. Not Applicable -
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibits Index 21
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
----------------- -----------------
<S> <C> <C>
INVESTMENTS IN REAL ESTATE, at cost:
Multifamily properties $ 248,051 $ 236,859
Retail properties 302,773 294,945
Industrial properties 2,504 5,078
Properties under development 45,928 40,639
----------------- -----------------
Total investments in real estate 599,256 577,521
Less- Accumulated depreciation 89,995 84,577
----------------- -----------------
509,261 492,944
INVESTMENT IN AND ADVANCES TO PREIT-RUBIN, INC. 8,365 10,088
INVESTMENTS IN PARTNERSHIPS AND JOINT VENTURES,
at equity 20,662 17,873
----------------- -----------------
538,288 520,905
Less- Allowance for possible losses 93 528
----------------- -----------------
538,195 520,377
OTHER ASSETS:
Cash and cash equivalents 9,084 7,165
Rents and sundry receivables (net of allowance for doubtful
accounts of $769 and $582, respectively) 6,993 6,249
Deferred costs, prepaid real estate taxes and expenses, net 16,776 13,799
----------------- -----------------
$ 571,048 $ 547,590
================= =================
</TABLE>
(Continued)
1
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
CONSOLIDATED BALANCE SHEETS (CONTINUED)
---------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
----------------- -----------------
<S> <C> <C>
LIABILITIES:
Mortgage notes payable $ 263,583 $ 266,830
Bank and other loans payable 87,700 91,000
Construction loan payable 20,423 6,804
Tenants' deposits and deferred rents 3,211 2,291
Accrued pension and retirement benefits 914 952
Accrued expenses and other liabilities 19,700 13,812
----------------- -----------------
395,531 381,689
----------------- -----------------
MINORITY INTEREST 32,644 32,489
----------------- -----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Shares of beneficial interest, $1 par; authorized
unlimited; issued and outstanding 13,472 shares
at September 30, 2000 and 13,338 shares at
December 31, 1999 13,472 13,338
Capital contributed in excess of par 147,888 145,697
Deferred compensation (1,667) -
Distributions in excess of net income (16,820) (25,623)
------------------ -----------------
142,873 133,412
----------------- -----------------
$ 571,048 $ 547,590
================= =================
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except per share data)
Three Months Ended Nine Months Ended
------------------------------------ -----------------------------
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
----------------- ----------------- ------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Gross revenues from real estate $ 23,203 $ 21,949 $ 74,546 $ 65,184
Interest and other income 454 293 1,010 857
------------- --------------- ----------- -------------
23,657 22,242 75,556 66,041
------------- --------------- ----------- -------------
EXPENSES:
Property operating expenses 8,048 7,925 23,652 23,289
Depreciation and amortization 3,676 3,384 11,103 9,909
General and administrative expenses 939 771 3,380 2,617
Interest expense 5,730 5,676 17,216 16,143
------------- --------------- ----------- -------------
18,393 17,756 55,351 51,958
------------- --------------- ----------- -------------
Income before equity in
unconsolidated entities, gains on
sales of interests in real estate and
minority interest in operating partnership 5,264 4,486 20,205 14,083
EQUITY IN LOSS OF PREIT-RUBIN, INC. (1,634) (618) (5,021) (2,566)
EQUITY IN INCOME OF PARTNERSHIPS
AND JOINT VENTURES 1,853 1,541 5,333 4,384
GAINS ON SALES OF INTERESTS IN
REAL ESTATE 1,388 162 10,298 1,508
------------- --------------- ----------- -------------
Income before minority interest in
operating partnership 6,871 5,571 30,815 17,409
MINORITY INTEREST IN OPERATING
PARTNERSHIP (709) (507) (3,180) (1,557)
------------- --------------- ------------ -------------
NET INCOME $ 6,162 $ 5,064 $ 27,635 $ 15,852
============= =============== =========== =============
BASIC INCOME PER SHARE $ .46 $ .38 $ 2.07 $ 1.19
============= =============== =========== =============
DILUTED INCOME PER SHARE $ .46 $ .38 $ 2.07 $ 1.19
============= =============== =========== =============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
-----------
<TABLE>
<CAPTION>
(In thousands)
Nine Months Ended
--------------------------------
September 30, September 30,
2000 1999
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 27,635 $ 15,852
Adjustments to reconcile net income to net cash
provided by operating activities-
Minority interest in operating partnership 3,180 1,557
Depreciation and amortization 11,103 9,909
Provision for doubtful accounts 187 509
Gains on sales of interests in real estate (10,298) (1,508)
Equity in loss of PREIT-RUBIN, Inc. 5,021 2,566
Decrease in allowance for possible losses (435) (89)
Change in assets and liabilities-
Net change in other assets (4,487) (5,065)
Net change in other liabilities 4,548 (4,160)
------------- --------------
Net cash provided by operating activities 36,454 19,571
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in wholly-owned real estate (34,239) (16,868)
Investments in property under development (3,058) (28,408)
Investment in and advances to PREIT-RUBIN, Inc. (3,366) (1,876)
Investments in partnerships and joint ventures (4,575) (5,817)
Cash proceeds from sale of interest in partnership 2,940 4,693
Cash proceeds from sale of wholly owned real estate 20,044 --
Cash distributions from partnerships and joint ventures
in excess of equity in income 1,108 1,770
------------- -------------
Net cash used in investing activities (21,146) (46,506)
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal installments on mortgage notes payable (3,247) (2,582)
Repayment of mortgage notes payable -- (17,001)
Proceeds from mortgage note payable -- 120,500
Proceeds from construction loans payable 13,619 --
Net payments to credit facility (3,300) (55,673)
Proceeds from shares of beneficial interest issued 564 111
Payment of deferred financing and equity offering costs -- (1,438)
Distributions paid to shareholders (18,832) (18,777)
Distributions paid to OP Unit holders (2,193) (1,887)
Distributions to minority partners -- (287)
------------- -------------
Net cash (used in) provided by financing activities (13,389) 22,966
-------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,919 (3,969)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,165 6,135
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,084 $ 2,166
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000
------------------------------------
(Unaudited)
(In thousands, except per share data)
1. BASIS OF PRESENTATION:
----------------------
Pennsylvania Real Estate Investment Trust ("PREIT" or the "Company") prepared
the consolidated financial statements pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although we believe that the disclosures
are adequate to make the information presented not misleading. The consolidated
financial statements should be read in conjunction with the audited financial
statements and the notes thereto included in PREIT's latest annual report on
Form 10-K. In management's opinion, all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the consolidated financial
position and the consolidated results of its operations and its cash flows, have
been included. The results of operations for such interim periods are not
necessarily indicative of the results for the full year.
Certain prior period amounts have been reclassified to conform with current
period presentation.
2. INVESTMENT IN PREIT-RUBIN, INC.:
--------------------------------
PREIT-RUBIN, Inc. ("PRI") is responsible for various activities, including
management, leasing and real estate development of certain of PREIT's properties
and for properties on behalf of third parties. Total management fees paid by
PREIT's properties to PRI are included in property operating expenses in the
accompanying consolidated statements of income and amounted to $194 and $632 for
the three and nine-month periods ended September 30, 2000, respectively, and
$192 and $483 for the three and nine-month periods ended September 30, 1999,
respectively. PREIT's properties also paid leasing and development fees to PRI
totaling $488 and $898 for the three and nine-month periods ended September 30,
2000, respectively, and $31 and $473 for the three and nine-month periods ended
September 30, 1999, respectively.
Leasing and development fees paid by PREIT's properties to PRI are capitalized
and amortized to expense in accordance with PREIT's accounting policies.
Intercompany profits earned by PRI related to such activities are deferred and
will be amortized to income over these same periods in order to match revenues
and expenses.
PRI also provides management, leasing and development services for partnerships
and other ventures in which certain officers of PREIT and PRI have either direct
or indirect ownership interests. Total revenues earned by PRI for such services
were $854 and $2,440 for the three and nine-month periods ended September 30,
2000, respectively, and $694 and $2,398 for the three and nine-month periods
ended September 30, 1999, respectively.
Summarized unaudited financial information for PRI as of and for the three and
nine-month periods ended September 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total assets $ 5,629 $ 7,580 $ 5,629 $ 7,580
============= ============ ============== ==============
Management fees $ 832 $ 1,171 $ 2,814 $ 3,640
Leasing commissions 1,096 1,800 3,029 4,202
Development fees 298 190 477 665
Other revenue 870 1,210 1,976 2,708
------------- ------------ ---------------- --------------
Total revenue $ 3,096 $ 4,371 $ 8,296 $ 11,215
============= ============ ============== ==============
Net loss $ (1,643) $ (651) $ (5,055) $ (2,702)
============== ============= =============== ===============
PREIT's share of net loss $ (1,634) $ (618) $ (5,021) $ (2,566)
============== ============= =============== ===============
</TABLE>
5
<PAGE>
3. INVESTMENTS IN PARTNERSHIPS AND JOINT VENTURES:
-----------------------------------------------
The following table presents summarized financial information as to PREIT's
equity in the assets and liabilities of 15 partnerships and joint ventures and 2
properties under development at September 30, 2000, and 16 partnerships and
joint ventures and 2 properties under development at December 31, 1999 and
PREIT's equity in income for the three and nine-months ended September 30, 2000
and 1999:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---------------- -----------------
<S> <C> <C>
ASSETS
Investments in real estate, at cost:
Multifamily properties $ 56,919 $ 56,112
Retail properties 348,828 212,238
Properties under development 74,252 38,766
---------------- -----------------
Total investments in real estate 479,999 307,116
Less- Accumulated depreciation 75,026 70,520
---------------- -----------------
404,973 236,596
Cash and cash equivalents 5,546 7,952
Deferred costs, prepaid real estate taxes and expenses, and
other assets, net 45,714 43,677
---------------- -----------------
Total assets $ 456,233 $ 288,225
---------------- -----------------
LIABILITIES AND PARTNERS' EQUITY
Mortgage notes payable $ 328,573 $ 231,611
Construction loans payable 45,946 22,298
Other liabilities 23,619 16,707
---------------- -----------------
Total liabilities 398,138 270,616
---------------- -----------------
Net equity 58,095 17,609
Less: Partners' share of net (equity) deficit (37,433) 264
----------------- -----------------
Investment in partnerships and joint ventures $ 20,662 $ 17,873
================ =================
</TABLE>
6
<PAGE>
EQUITY IN INCOME OF PARTNERSHIPS AND JOINT VENTURES
---------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------- -----------------------------------
September 30, September 30, September 30 September 30,
2000 1999 2000 1999
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Gross revenues from real estate $ 16,381 $ 14,388 $ 55,942 $ 42,909
--------------- ------------- --------------- ----------------
Expenses:
Property operating expenses 5,468 4,603 18,604 14,285
Mortgage and bank loan interest 5,113 4,398 18,150 13,027
Depreciation and amortization 2,531 2,291 8,592 6,756
--------------- ------------- --------------- ----------------
13,112 11,292 45,346 34,068
--------------- ------------- --------------- ----------------
3,269 3,096 10,596 8,841
Partners' share (1,416) (1,555) (5,263) (4,457)
---------------- ------------- ---------------- ----------------
Equity in income of partnerships and
joint ventures $ 1,853 $ 1,541 $ 5,333 $ 4,384
=============== ============= =============== ================
</TABLE>
In January 2000, PREIT purchased, for $11 million, including the assumption of
debt, its partner's 35% interest in the Emerald Point Multifamily Community.
PREIT now owns 100% of the property.
In January 2000, PREIT sold its 50% interest in the Park Plaza shopping center
in Pinellas Park, Florida for proceeds of $3 million, resulting in a gain of
approximately $2.3 million.
In February 2000, PREIT and an unrelated third-party formed a partnership and
purchased the Willow Grove Park shopping center in Willow Grove, Pennsylvania
for approximately $140 million. Upon completion of certain requirements,
including the funding of an expansion of the shopping center, the Company's
current 0.01% interest in the partnership that owns the shopping center will
increase to a subordinated 50% interest.
In April 2000, PREIT sold the CVS Warehouse and Distribution Center, an
industrial property in Alexandria, Virginia, for total proceeds of approximately
$11.7 million including the sale price of $7.7 million and a lease termination
fee with the building's sole tenant for $4 million. The sale of the property
resulted in a gain of approximately $6.6 million.
In July 2000, PREIT sold the Valley View Shopping Center located in Wilmington,
Delaware, for total proceeds of $9.6 million and recorded a gain of
approximately $1.4 million.
In July 2000, PREIT sold the Forestville Shopping Center in Forestville, MD for
proceeds of $3.0 million. The loss on the sale of approximately $0.4 million had
previously been reserved.
In the second quarter of 2000, PREIT received termination fees of $0.4 million
and $1.2 million at Northeast Tower Community Center and Mandarin Corners
Community Center, respectively.
4. DISTRIBUTIONS:
-------------
The per-share amount declared at the date of this report and the per-share
amount declared in the comparable period for distribution are as follows:
Amount
Per
Date Declared Record Date Payment Date Share
---------------- ----------------- ----------------- -----
October 18, 1999 November 30, 1999 December 15, 1999 $0.47
November 7, 2000 November 30, 2000 December 15, 2000 $0.51
7
<PAGE>
5. EARNINGS PER SHARE:
-------------------
Basic Earnings Per Share is based on the weighted average number of common
shares outstanding during the period. Diluted Earnings Per Share is based on the
weighted average number of shares outstanding during the period adjusted to give
effect to common share equivalents. A reconciliation between basic and diluted
Earnings Per Share is shown below:
<TABLE>
<CAPTION>
For the Three Months Ended For the Three Months Ended
September 30, 2000 September 30, 1999
---------------------------------------- --------------------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Net income $ 6,162 13,387 $ .46 $ 5,064 13,322 $ .38
=========== =========== ========== =========== =========== ===========
DILUTED EARNINGS PER SHARE:
Net income $ 6,162 13,387 $ 5,064 13,322
Common stock equivalents -- -- -- 8
----------- ----------- ----------- -----------
$ 6,162 13,387 $ .46 $ 5,064 13,330 $ .38
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended For the Nine Months Ended
September 30, 2000 September 30, 1999
----------------------------------------- --------------------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
----------- ----------- ---------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Net income $ 27,635 13,371 $ 2.07 $ 15,852 13,315 $ 1.19
=========== =========== ========== ============ =========== ==========
DILUTED EARNINGS PER SHARE:
Net income $ 27,635 13,371 $ 15,852 13,315
Common stock equivalents -- -- -- 9
----------- ----------- ------------ -----------
$ 27,635 13,371 $ 2.07 $ 15,852 13,324 $ 1.19
=========== =========== ========== ============ =========== ==========
</TABLE>
6. CASH FLOW INFORMATION:
----------------------
Cash paid for interest was $15,981 (net of capitalized interest of $2,691) and
$15,100 (net of capitalized interest of $1,500) for the nine month periods ended
September 30, 2000 and September 30, 1999, respectively.
The following non-cash transactions occurred during 2000:
o A $2.2 million fixed asset replacement reserve was established in
connection with the acquisition of the Emerald Point multifamily
community minority interest (See Note 3).
o Restricted stock in the amount of approximately $1.7 million was issued
to the officers of PREIT and PRI and recorded as deferred compensation
on the accompanying balance sheet.
8
<PAGE>
7. COMMITMENTS AND CONTINGENCIES:
------------------------------
Environmental matters have arisen at certain properties in which PREIT has an
interest for which reserves have previously been established. No additional
material incremental cost is expected to be incurred on these properties.
As part of the merger with PRI, PREIT entered into a contribution agreement (the
"Contribution Agreement") which includes a provision for PREIT Associates, L.P.,
(PREIT's operating partnership) to issue up to 800,000 additional Class A
Operating Partnership ("OP") units over the five-year period beginning October
1, 1997 and ending September 30, 2002 according to a formula based upon PREIT's
adjusted funds from operations per share during the five-year period. The
Contribution Agreement establishes "hurdle" and "target" levels for PREIT's
adjusted funds from operations per share during specified earn-out periods to
determine whether, and to what extent, the contingent OP units will be issued.
As of September 30, 2000, 330,000 of the 800,000 OP units for the period
covering October 1, 1997 to December 31, 1999 had been earned. These OP units
earned resulted in an additional purchase price of approximately $5.7 million.
PREIT intends to account for the further issuance of contingent OP units as
additional purchase price when such additional amounts are determinable.
At September 30, 2000, PREIT had approximately $42 million committed to complete
current development and redevelopment projects. In connection with certain
development properties, PREIT Associates, L.P. may be required to issue
additional OP units upon the achievement of certain financial results.
8. RECENT ACCOUNTING PRONOUNCEMENTS:
---------------------------------
The Financial Accounting Standards Board has issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities", as amended by SFAS No. 138.
The Statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments embedded
in other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. PREIT will be required to adopt this
statement effective as of January 1, 2001. PREIT does not expect the adoption of
this statement to have a material impact on its financial position or results of
operations.
9. SEGMENT INFORMATION:
--------------------
PREIT has four reportable segments: (1) retail properties, (2) multifamily
properties, (3) other, and (4) corporate. The retail segment includes the
operation and management of 22 regional and community shopping centers (12
wholly owned and 10 owned in joint venture form). The multifamily segment
includes the operation and management of 19 apartment communities (14 wholly
owned and 5 owned in joint venture form). The other segment includes the
operation and management of 4 wholly owned industrial properties and investment
in properties under development and construction in progress. The corporate
segment is responsible for cash and investment management and certain other
general support functions.
The accounting policies for the segments are the same as those PREIT uses for
its consolidated financial reporting, except that for segment reporting
purposes, PREIT uses the "proportionate-consolidation method" of accounting (a
non-GAAP measure) for joint venture properties instead of the equity method of
accounting. PREIT calculates the proportionate-consolidation method by applying
its percentage ownership interest to the historical financial statements of its
equity method investments.
9
<PAGE>
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Adjustments
------------------- to Equity Total
September 30, 2000 Retail Multifamily Other Corporate Total Method Consolidated
------------------ --------- ----------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate operating revenues $ 17,200 $13,457 $ 80 -- $30,737 $ (7,534) $ 23,203
Real estate operating expense 4,972 5,602 3 -- 10,577 (2,529) 8,048
-------- --------- -------- --------- --------- ---------- ---------
Net operating income 12,228 7,855 77 -- 20,160 (5,005) 15,155
-------- --------- -------- --------- --------- ---------- ---------
General and administrative expenses -- -- -- (939) (939) -- (939)
Interest income -- -- -- 454 454 -- 454
PRI net operating loss -- -- -- (1,165) (1,165) 1,165 --
-------- --------- -------- ---------- ---------- --------- ---------
EBIDTA 12,228 7,855 77 (1,650) 18,510 (3,840) 14,670
-------- --------- -------- ---------- --------- ---------- ---------
Interest expense (4,454) (3,448) -- (289) (8,191) 2,461 (5,730)
Depreciation and amortization (2,702) (1,813) (13) (308) (4,836) 1,160 (3,676)
Gains on sales of interests in real
estate 1,388 -- -- -- 1,388 -- 1,388
Minority interest in operating
partnership -- -- -- (709) (709) -- (709)
Equity in interest of partnerships
and joint ventures -- -- -- -- -- 1,853 1,853
Equity in loss of PRI -- -- -- -- -- (1,634) (1,634)
-------- -------- -------- --------- --------- ---------- ----------
Net income $ 6,460 $ 2,594 $ 64 $ (2,956) $ 6,162 $ -- $ 6,162
-------- --------- -------- --------- --------- ---------- ---------
Investments in real estate, at cost $408,119 $276,761 $97,667 $ -- $ 782,547 $(183,291) $ 599,256
-------- -------- ------- --------- -------- --------- ---------
Total assets $390,815 $ 215,269 $ 97,161 $ 13,837 $ 717,082 $(146,034) $ 571,048
-------- --------- -------- --------- --------- -------- ---------
Recurring capital expenditures $ 334 $ 733 $ -- $ -- $ 1,067 $ (261) $ 806
-------- -------- -------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Adjustments
------------------- to Equity Total
September 30, 1999 Retail Multifamily Other Corporate Total Method Consolidated
------------------ --------- ----------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate operating revenues $ 15,655 $ 13,004 $ 379 $ -- $29,038 $ (7,089) $ 21,949
Real estate operating expense 4,712 5,469 6 -- 10,187 (2,262) 7,925
-------- --------- -------- --------- --------- --------- ---------
Net operating income 10,943 7,535 373 -- 18,851 (4,827) 14,024
-------- --------- -------- --------- --------- --------- ---------
General and administrative expenses -- -- -- (771) (771) -- (771)
Interest income -- -- -- 293 293 -- 293
PRI net operating loss -- -- -- (149) (149) 149 --
-------- --------- -------- ---------- ---------- --------- ----------
EBIDTA 10,943 7,535 373 (627) 18,224 (4,678) 13,546
-------- --------- -------- --------- --------- --------- ----------
Interest expense (4,248) (3,497) (6) (272) (8,023) 2,347 (5,676)
Depreciation and amortization (2,505) (1,889) (24) (374) (4,792) 1,408 (3,384)
Gains on sales of interests in real
estate -- -- 162 -- 162 -- 162
Minority interest in operating
partnership -- -- -- (507) (507) -- (507)
Equity in interest of partnerships
and jt. ventures -- -- -- -- -- 1,541 1,541
Equity in loss of PRI -- -- -- -- -- (618) (618)
-------- --------- -------- --------- --------- --------- ----------
Net income (loss) $ 4,190 $ 2,149 $ 505 $ (1,780) $ 5,064 $ -- $ 5,064
-------- --------- -------- --------- --------- --------- ----------
Investments in real estate, at cost $280,940 $ 235,350 $ 43,940 $ -- $560,230 $ -- $ 560,230
-------- --------- -------- --------- -------- --------- ----------
Total assets $364,401 $ 208,941 $ 74,206 $ 15,240 $ 662,788 $(131,108) $ 531,680
-------- --------- -------- --------- --------- ---------- ----------
Recurring capital expenditures $ 107 $ 909 $ -- $ -- $ 1,016 $ (120) $ 896
-------- --------- -------- --------- ---------- ------------- ---------
</TABLE>
10
<PAGE>
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended Adjustments
------------------ to Equity Total
September 30, 2000 Retail Multifamily Other Corporate Total Method Consolidated
------------------ --------- ----------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate operating revenues $51,663 $ 40,386 $ 4,626 -- $ 96,675 $ (22,129) $ 74,546
Real estate operating expense 14,262 16,428 42 -- 30,732 (7,080) 23,652
-------- --------- -------- --------- --------- ---------- ---------
Net operating income 37,401 23,958 4,584 -- 65,943 (15,049) 50,894
-------- --------- -------- --------- --------- ---------- ---------
General and administrative expenses -- -- -- (3,380) (3,380) -- (3,380)
Interest income -- -- -- 1,010 1,010 -- 1,010
PRI net operating loss -- -- -- (3,732) (3,732) 3,732 --
-------- --------- -------- --------- ---------- --------- ---------
EBIDTA 37,401 23,958 4,584 (6,102) 59,841 (11,317) 48,524
-------- --------- -------- --------- --------- --------- ---------
Interest expense (13,189) (10,455) -- (772) (24,416) 7,200 (17,216)
Depreciation and amortization (8,021) (5,897) (50) (940) (14,908) 3,805 (11,103)
Gains on sales of interests in real
estate 3,650 -- 6,648 -- 10,298 -- 10,298
Minority interest in operating
partnership -- -- -- (3,180) (3,180) -- (3,180)
Equity in interest of partnerships
and joint ventures -- -- -- -- -- 5,333 5,333
Equity in loss of PRI -- -- -- -- -- (5,021) (5,021)
-------- -------- -------- --------- --------- ---------- ---------
Net income $ 19,841 $ 7,606 $ 11,182 $ (10,994) $ 27,635 $ -- $ 27,635
-------- --------- -------- --------- --------- ----------- ---------
Investments in real estate, at cost
$408,119 $ 276,761 $ 97,667 $ -- $ 782,547 $(183,291) $ 599,256
-------- --------- -------- --------- --------- --------- ---------
Total assets $390,815 $ 215,269 $ 97,161 $ 13,837 $ 717,082 $(146,034) $ 571,048
-------- --------- -------- --------- --------- --------- ---------
Recurring capital expenditures $ 637 $ 2,217 $ -- $ -- $ 2,854 $ (584) $ 2,270
-------- --------- -------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Adjustments
------------------ to Equity Total
September 30, 1999 Retail Multifamily Other Corporate Total Method Consolidated
------------------ --------- ----------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Real estate operating revenues $ 46,108 $ 38,589 $ 1,155 $ -- $ 85,852 $ (20,668) $ 65,184
Real estate operating expense 13,966 15,846 20 -- 29,832 (6,543) 23,289
-------- --------- -------- --------- --------- --------- ---------
Net operating income 32,142 22,743 1,135 -- 56,020 (14,125) 41,895
-------- --------- -------- --------- --------- --------- ---------
General and administrative expenses -- -- -- (2,617) (2,617) -- (2,617)
Interest income -- -- -- 857 857 -- 857
PRI net operating loss -- -- -- (1,360) (1,360) 1,360 --
-------- --------- -------- ---------- ---------- --------- --------
EBIDTA 32,142 22,743 1,135 (3,120) 52,900 (12,765) 40,135
-------- --------- -------- --------- --------- --------- ---------
Interest expense (12,989) (9,009) (263) (848) (23,109) 6,966 (16,143)
Depreciation and amortization (7,297) (5,602) (75) (1,036) (14,010) 4,101 (9,909)
PRI income taxes -- -- -- 104 104 (104) --
Gains on sales of interests in real
estate 445 -- 1,063 -- 1,508 -- 1,508
Minority interest in operating
partnership -- -- -- (1,541) (1,541) (16) (1,557)
Equity in interest of partnerships
and jt. ventures -- -- -- -- -- 4,384 4,384
Equity in loss of PRI -- -- -- -- -- (2,566) (2,566)
-------- --------- -------- --------- --------- ---------- ----------
Net income $ 12,301 $ 8,132 $ 1,860 $ (6,441) $ 15,852 $ -- $ 15,852
-------- --------- -------- --------- --------- ----------- ---------
Investments in real estate, at cost $280,940 $ 235,350 $ 43,940 $ -- $ 560,230 $ -- $ 560,230
-------- --------- -------- --------- --------- ----------- ---------
Total assets $364,401 $ 208,941 $ 74,206 $ 15,240 $ 662,788 $(131,108) $ 531,680
-------- --------- -------- --------- --------- ---------- ---------
Recurring capital expenditures $ 1,718 $ 4,696 $ -- $ -- $ 6,414 $ (611) $ 5,803
--------- ---------- --------- --------- --------- ----------- ---------
</TABLE>
11
<PAGE>
Item 2.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
-----------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
Liquidity and Capital Resources
PREIT expects to meet its short-term liquidity requirements generally through
its available working capital and net cash provided by operations. PREIT
believes that the net cash provided by operations will be sufficient to make
distributions to continue to qualify as a REIT under the Internal Revenue Code.
PREIT also believes that the foregoing sources of liquidity will be sufficient
to fund its short-term liquidity needs for the foreseeable future, including
recurring capital expenditures, tenant improvements and leasing commissions.
PREIT expects to meet certain long-term liquidity requirements such as property
acquisitions, scheduled debt maturities, renovations, expansions and other
non-recurring capital improvements through long-term secured and unsecured
indebtedness, the issuance of additional equity securities and the use of the
remaining funds available under its $150 million credit facility (the "Credit
Facility"). The Credit Facility matures on December 31, 2000. Management is in
the process of negotiating a new credit facility which is expected to make
additional funds available to the Company. Management expects these negotiations
to be completed in the fourth quarter of 2000.
The Credit Facility
At September 30, 2000, PREIT had borrowed $87.7 million against its Credit
Facility and had pledged $6.7 million as collateral for several letters of
credit. Of the unused portion of the Credit Facility of approximately $55.6
million, as of September 30, 2000, the Company's loan covenant restrictions
allow the Company to borrow approximately an additional $29.3 million (based on
the existing property collateral pool) to fund property acquisitions, scheduled
debt maturities and other uses. At September 30, 2000, the interest rate on the
Credit Facility was 8.34%.
Mortgage Notes
In addition to amounts due under the Credit Facility during the next three
years, construction and mortgage loans, secured by a property owned by a
partnership in which PREIT has an interest, matures by its terms. The balloon
payment on this loan totals $45.9 million of which PREIT's proportionate share
is $23.0 million. Construction and mortgage loans on properties wholly-owned by
PREIT also mature by their terms. Balloon payments on these loans total $35.3
million ($14.9 million in 2000 and $20.4 million in 2001).
12
<PAGE>
Funds from Operations
---------------------
Funds from operations (FFO) increased by $5.9 million for the nine months ended
September 30, 2000, as compared to the nine months ended September 30, 1999, as
follows:
<TABLE>
<CAPTION>
(In thousands)
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------- -----------------------------
Funds from Operations(1) 2000 1999 2000 1999
----------------------------------------------- ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C>
Income before minority interest in $ 6,871 $ 5,571 $ 30,815 $ 17,409
operating partnership
Less: Gains on sales of interests in
real estate (1,388) (162) (10,298) (1,508)
Add:
Depreciation and amortization-
Wholly-owned and consolidated
partnerships 3,676 3,326 11,103 9,748
Unconsolidated partnerships and joint
ventures 977 1,127 3,234 3,323
Excess purchase price over net assets
acquired 73 54 219 161
Refinancing prepayment fee of
partnerships/joint ventures -- -- -- 55
Less:
Depreciation of non-real estate assets (65) (60) (195) (180)
Amortization of deferred financing costs (167) (173) (497) (549)
----------- ----------- ----------- ------------
Funds from operations $ 9,977 $ 9,683 $ 34,381 $ 28,459
=========== =========== =========== ============
Weighted average number of shares
outstanding 13,387 13,322 13,371 13,315
Weighted average effect of full conversion
of OP Units 1,535 1,336 1,537 1,310
----------- ----------- ----------- ------------
14,922 14,658 14,908 14,625
=========== =========== =========== ============
</TABLE>
(1) Funds from operations ("FFO") is defined as income before gains (losses) on
investments, excluding gains (losses) on sale of depreciable operating real
estate and extraordinary items (computed in accordance with generally accepted
accounting principles, "GAAP") plus real estate depreciation and similar
adjustments for unconsolidated joint ventures after adjustments for non-real
estate depreciation and amortization of financing costs. FFO should not be
construed as an alternative to net income (as determined in accordance with
GAAP) as an indicator of PREIT's operating performance, or to cash flows from
operating activities (as determined in accordance with GAAP) as a measure of
liquidity. In addition, PREIT's measure of FFO as presented may not be
comparable to similar measures reported by other companies.
Cash Flows
----------
During the nine months ended September 30, 2000, PREIT generated $36.5 million
in cash flow from operating activities. Investing activities during the nine
months ended September 30, 2000 used cash of $21.1 million including (i) $3.1
million in investments in property under development, (ii) $34.2 million in
investments in wholly-owned real estate assets, (iii) $7.9 million in
investments in the affiliated management company and partnerships, offset by
(iv) cash proceeds from the sale of real estate and partnership interest of
$20.0 million and $2.9 million, respectively, and (v) distributions from
13
<PAGE>
partnerships in excess of equity in income of $1.1 million. Financing activities
used cash of $13.4 million including (i) borrowings of $13.6 million from
construction loans offset by (ii) a net repayment of $3.3 million under the
Company's Credit Facility, (iii) $21.0 million of distributions to shareholders
and OP unit holders, and (iv) principal installments on mortgages of $3.2
million.
Contingent Liabilities
----------------------
At September 30, 2000, PREIT had approximately $42 million committed to complete
current development and redevelopment projects. In connection with certain
development properties, PREIT Associates, L.P., may be required to issue
additional OP units upon the achievement of certain financial results.
PREIT along with certain of its joint venture partners has guaranteed debt
totaling $6.0 million. Also, PREIT and one of its joint venture partners have
jointly and severally guaranteed the construction loan payable on a development
project. The balance of the loan at September 30, 2000 was $45.9 million and the
remaining commitment from the lender was $20.1 million for a total credit line
of $66.0 million.
Interest Rate Protection
------------------------
In order to reduce exposure to variable interest rates, PREIT entered into a
six-year interest rate swap agreement with First Union on $20 million of
indebtedness, which fixes a rate of 6.12% per annum versus 30-day LIBOR until
June 2001.
Results of Operations
---------------------
Nine Month Periods Ended September 30, 2000 and 1999
----------------------------------------------------
Gross revenues from real estate increased by $9.3 million to $74.5 million for
the nine-month period ended September 30, 2000, as compared to the corresponding
period in 1999. Retail property revenues increased by $4.1 million. Of this
amount $1.3 million is attributable to 1999 acquisitions and properties under
development in 1999 now placed in service. $1.6 million in termination fees were
received during the 2000 period. The remaining $1.2 million represents an
increase for properties owned during both periods. Multifamily property revenues
increased by $1.7 million for properties owned during both periods due to rental
rate increases and higher occupancy rates. Industrial property revenues
increased by $3.5 million primarily due to the $4.0 million CVS lease
termination fee offset by a decrease in rents of $0.5 million due to the CVS
lease termination.
Property operating expenses increased by $0.4 million to $23.7 million for the
nine months ended September 30, 2000 as compared to the nine months ended
September 30, 1999. Retail property operating expenses decreased by $0.2 million
with a $0.3 million increase attributable to 1999 acquisitions and properties
under development in 1999 now placed in service, offset by operating expenses
for properties owned during both periods which decreased by $0.5 million due to
the reversal of tenant receivable reserves. Multifamily operating expenses
increased by $0.6 million due to increased repairs and maintenance, payroll and
bad debt costs.
Depreciation and amortization increased by $1.2 million to $11.1 million for the
nine months ended September 30, 2000 as compared to the nine months ended
September 30, 1999. Retail property depreciation increased by $0.8 million, of
which $0.3 million is the result of 1999 acquisitions and the new development
properties placed in service. Retail depreciation increased by $0.5 million for
properties owned during both periods because of a higher asset base. Multifamily
depreciation increased by $0.4 million for properties owned during both periods
due to a higher asset base.
Interest expense increased by $1.1 million to $17.2 million for the nine months
ended September 30, 2000 as compared to the nine months ended September 30,
1999. Interest expense incurred on the newly placed multifamily mortgages
resulted in a $2.0 million increase. Interest expense on the Credit Facility
decreased by $0.9 million because of the reduced weighted-average amount
outstanding for the 2000 period of $84.7 million as compared to $96.0 million
for the 1999 period.
14
<PAGE>
Equity in income of partnerships and joint ventures increased by $6.1 million to
$20.2 million for the nine months ended September 30, 2000 as compared to the
nine months ended September 30, 1999. This is primarily attributable to
increased income from Whitehall Mall which was under redevelopment in the 1999
period.
Equity in net loss of PREIT-RUBIN, Inc. for the 2000 period was $5.0 million as
compared to $2.6 million in the 1999 period. The $2.4 million increase in the
equity in net loss was primarily due to decreases in nonrecurring brokerage
commissions of $1.2 million, management fees of $0.8 million, and write off of
development costs of $0.4 million.
Gains from the sale of interests in real estate were $10.3 million for the nine
months ended September 30, 2000 as compared to $1.5 million for the nine months
ended September 30, 1999. The 2000 period reflects a gain on the sale of
interest in Park Plaza Shopping Center in Pinellas Park, FL, the CVS Warehouse
and Distribution Center in Alexandria, VA and the Valley View Shopping Center in
Wilmington, DE. The 1999 period includes gains on the sale of interests in 135
Commerce Drive, Ft. Washington, PA and an undeveloped land parcel at Crest Plaza
in Allentown, PA.
Minority interest in the operating partnership increased by $1.6 million to $3.2
million for the nine months ended September 30, 2000 as compared to the nine
months ended September 30, 1999 primarily as a result of higher earnings and
167,500 additional contingent OP units earned under the Contribution Agreement
related to the acquisition of The Rubin Organization in 1997.
Net income for the nine months ended September 30, 2000 increased to $27.6
million from $15.9 million as reported in the comparable period in the prior
year due to the factors noted above.
Quarters Ended September 30, 2000 and 1999
------------------------------------------
Gross revenues from real estate increased by $1.3 million to $23.2 million for
the quarter ended September 30, 2000, as compared to the corresponding period in
1999. Retail property revenues increased by $1.1 million. Of this amount $0.8
million is attributable to 1999 acquisitions and properties under development in
1999 now placed in service. The remaining $0.3 million represents an increase
for properties owned during both periods. Multifamily revenues increased by $0.5
million for properties owned during both periods due to rental rate increases
and higher occupancy rates. Industrial property revenues decreased by $0.3
million due to the sale of CVS Warehouse and Distribution Center.
Property operating expenses increased by $0.1 million to $8.0 million for the
quarter ended September 30, 2000 as compared to the quarter ended September 30,
1999. Retail property operating expenses were unchanged as a result of $0.1
million related to 1999 acquisitions and properties under development in 1999
now placed in service offset by operating expenses for properties owned during
both periods which decreased by $0.1 million due to the recovery of tenant
receivable amounts previously reserved in 2000. Multifamily operating expenses
increased by $0.1 million due to increased repairs and maintenance, payroll and
bad debt expense.
Depreciation and amortization increased by $0.3 million to $3.7 million for the
quarter ended September 30, 2000 as compared to the quarter ended September 30,
1999. Retail property depreciation increased by $0.3 million, of which $0.2
million is the result of 1999 acquisitions and the new development properties
placed in service. Retail depreciation increased by $0.1 million for properties
owned during both periods because of a higher asset base. Multifamily
depreciation was unchanged.
Interest expense increased by $0.1 million to $5.7 million for the quarter ended
September 30, 2000 as compared to the quarter ended September 30, 1999 due to
interest on the Credit Facility which increased because of higher interest rates
during the 2000 period and a higher average amount outstanding during the 2000
period as compared to the 1999 period.
Equity in income of partnerships and joint ventures increased by $0.3 million to
$1.9 million for the quarter ended September 30, 2000 as compared to the quarter
ended September 30, 1999. This is primarily attributable to increased income
from Whitehall Mall which was under redevelopment in the 1999 period.
15
<PAGE>
Equity in net loss of PREIT-RUBIN, Inc. for the 2000 period was $1.6 million as
compared to $0.6 million in the 1999 period. The $1.0 million increase in the
equity in net loss was due to nonrecurring brokerage commissions of $0.7 million
and a decrease in management fees of $0.3 million.
Gains from the sale of interests in real estate were $1.4 million for the
quarter ended September 30, 2000 resulting from the sale of interest in the
Valley View Shopping Center. The sale of undeveloped land in the corresponding
1999 period resulted in a gain of $0.2 million.
Minority interest in the operating partnership increased by $0.2 million to $0.7
million for the quarter ended September 30, 2000 as compared to the quarter
ended September 30, 1999 primarily as a result of higher earnings and 167,500
additional contingent OP units earned under the Contribution Agreement related
to the acquisition of The Rubin Organization in 1997.
Net income for the quarter ended September 30, 2000 increased to $6.2 million
from $5.1 million as reported in the comparable period in the prior year.
Acquisitions and Dispositions
-----------------------------
PREIT is actively involved in pursuing and evaluating a number of individual
property and portfolio acquisition opportunities. In addition, PREIT has stated
that a key strategic goal is to obtain managerial control of all of its assets.
In certain cases where existing joint venture assets are managed by outside
partners, PREIT is considering the possible acquisition of these outside
interests. In certain cases where that opportunity does not exist, PREIT is
considering the disposition of its interests. There can be no assurance that
PREIT will consummate any such acquisition or disposition.
In January 2000, PREIT purchased, for $11 million, including the assumption of
debt, its partner's 35% interest in the Emerald Point Multifamily Community.
PREIT now owns 100% of the property.
In January 2000, PREIT sold its 50% interest in the Park Plaza shopping center
in Pinellas Park, Florida for proceeds of $3 million, resulting in a gain of
$2.3 million.
In February 2000, PREIT and an unrelated third-party formed a partnership and
purchased the Willow Grove Park shopping center in Willow Grove, Pennsylvania
for approximately $140 million. Upon completion of certain investment
requirements, including the funding of an expansion of the shopping center, the
Company's current 0.01% interest in the partnership that owns the shopping
center will increase to a subordinated 50% interest.
In April 2000, PREIT sold a 294,000 square foot industrial property in
Alexandria, Virginia for total proceeds of approximately $11.7 million including
the sale price of $7.7 million and a lease termination fee with the building's
sole tenant for $4 million. The sale of the property resulted in a gain of
approximately $6.6 million.
In July 2000, PREIT sold the Valley View Shopping Center located in Wilmington,
Delaware, for total proceeds of $9.6 million and expects to record a gain of
approximately $1.4 million.
In July 2000, PREIT sold the Forestville Shopping Center in Forestville, MD for
proceeds of $3.0 million. The loss on the sale of approximately $0.4 million had
previously been reserved.
Development, Expansions and Renovations
---------------------------------------
PREIT is involved in a number of development and redevelopment projects, that
may require equity funding by PREIT or third-party debt or equity financing. In
each case, PREIT will evaluate the financing opportunities available to it at
the time a project requires funding. In cases where the project is undertaken
with a joint venture partner, PREIT's flexibility in funding the project may be
governed by the joint venture agreement or the covenants existing in its line of
credit which limit the use of borrowed funds in joint venture projects.
16
<PAGE>
Forward-Looking Statements
--------------------------
The matters discussed in this report, as well as news releases issued from time
to time by PREIT include use of 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 constitute "forward-looking statements." Such forward-looking statements
(including without limitation, information concerning PREIT's planned
acquisition, development and divestiture activities, short- and long-term
liquidity position, ability to raise capital through public and private
offerings of debt and/or equity securities, availability of adequate funds at
reasonable cost, revenues and operating expenses for some or all of the
properties, leasing activities, occupancy rates, changes in local market
conditions or other competitive factors) involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of PREIT's results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. PREIT disclaims any obligation to update any such
factors or to publicly announce the result of any revisions to any of the
forward-looking statements contained herein to reflect future events or
developments.
17
<PAGE>
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
There has been no material change in the net financial instrument position or
sensitivity to market risk since December 31, 1999 as reported by PREIT in its
Form 10-K for the year ended December 31, 1999.
18
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
PREIT issued a press release on November 9, 2000 containing financial
information for the quarter ended September 30, 2000. A copy of the press
release is attached hereto as Exhibit 99.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
27 Financial Data Schedule
99 Press Release, issued November 9, 2000 containing financial
information for the quarter ended September 30, 2000.
(b) Reports on Form 8-K
None.
19
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
By /s/ Ronald Rubin
----------------------------------
Ronald Rubin
Chief Executive Officer
By /s/ Edward A. Glickman
-----------------------------------
Edward A. Glickman
Executive Vice President and
Chief Financial Officer
By /s/ David J. Bryant
-----------------------------------
David J. Bryant
Senior Vice President and Treasurer
(Principal Accounting Officer)
20
<PAGE>
Exhibit Index
-------------
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
99 Press Release, issued November 9, 2000, containing financial
information for the period ended September 30, 2000
21
