<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K/A
-----------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________to _______________
Commission File No. 1-6300
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-6216339
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
The Bellevue 19102
200 S. Broad St. (Zip Code)
Philadelphia, Pennsylvania
(address of principal executive office)
Registrant's telephone number, including area code: (215) 875-0700
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
<S> <C> <C>
Title of Each Class Name of each exchange on which registered
------------------- -----------------------------------------
(1) Shares of Beneficial Interest, par value $1.00 per share New York Stock Exchange
(2) Rights to Purchase Shares of Beneficial Interest New York Stock Exchange
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: None
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 such shorter period that the Trust was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K |X|.
The aggregate market value, as of March 20, 2000, of the voting shares held by
non-affiliates of the registrant was $198,779,441. (Aggregate market value is
estimated solely for the purposes of this report and shall not be construed as
an admission for the purposes of determining affiliate status.)
On March 20, 2000, 13,343,821 Shares of Beneficial Interest, par value $1.00 per
share (the "Shares"), of Pennsylvania Real Estate Investment Trust were
outstanding.
Documents Incorporated by Reference
The Registrant's definitive proxy statement for its May 10, 2000 Annual Meeting
is incorporated by reference in Part III hereof.
<PAGE>
The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (the "Report") contained a typographical error in the chart on
page seven of the Report regarding development properties, which showed the
Registrant's interest in Pavilion at Market East as a 100% interest. The
Registrant's actual interest in Pavilion at Market East is a 50% interest as
reflected in the chart regarding development properties on page seven hereof.
Accordingly, the Registrant hereby amends the Report by restating Item 1
thereof as follows:
Item 1. Business
Pennsylvania Real Estate Investment Trust, a Pennsylvania business
trust ("PREIT"), conducts substantially all of its operations through PREIT
Associates, L.P., a Delaware limited partnership. As used in this report, unless
the context requires otherwise, the terms "Company," "we," "us" and "our"
includes PREIT, PREIT Associates and their subsidiaries and affiliates,
including PREIT-RUBIN, Inc. (formerly The Rubin Organization, Inc.), a
commercial property development and management firm in which PREIT owns 95% of
the economic interests in the form of non-voting common shares.
The Company
PREIT, which is organized as a business trust under Pennsylvania law,
is a fully integrated, self-administered and self-managed real estate investment
trust, founded in 1960, which acquires, develops, redevelops and operates retail
and multifamily properties.
We own interests in 22 shopping centers containing an aggregate of
approximately 8.3 million square feet, 19 multifamily properties containing
7,242 units and five industrial properties with an aggregate of approximately
549,000 square feet. We also own interests in six shopping centers currently
under development, which we expect to contain an aggregate of approximately 3.1
million square feet upon completion. Three of the development properties are
under construction currently and we anticipate that the remaining three
development properties will be completed during the year 2001. We cannot assure
you that all six development properties will be completed successfully.
We also provide management, leasing and development services to 17
retail properties containing approximately 7.7 million square feet, 7 office
buildings containing approximately 1.9 million square feet and 3 multifamily
properties with approximately 1.4 million square feet for affiliated and
third-party owners.
Recent Developments
In the first quarter of 2000, we 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, our
current 0.01% interest in the partnership that owns the shopping center will
increase to a subordinated 50% interest.
In the first quarter of 2000, we purchased, for $11 million, including
the assumption of debt, our partner's 35% interest in the Emerald Point
Multifamily Community. The property is now 100% owned and operated by us.
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<PAGE>
Our Structure
PREIT Associates holds substantially all of our assets. As the sole
general partner of PREIT Associates, we have the exclusive power to manage and
conduct PREIT Associates' business, subject to limited exceptions. As of
December 31, 1999, we owned approximately 90.7% of PREIT Associates. We
anticipate that all acquisitions of interests in real estate will be owned,
directly or indirectly, by PREIT Associates. Below is a diagram of our ownership
structure, including PREIT Associates and PREIT-RUBIN, as of December 31, 1999.
+--------------------------+
| Pennsylvania Real Estate |
| Investment Trust(1) |
+--------------------------+
| 90.7%
|
|
| +------------+
| | Minority |
| | Limited |
| | Partners(2)|
| +------+-----+
+----------------+ | | 9.3%
| Employee Stock | | |
| Bonus Plan | | |
+----------------+ | |
| 5% (voting) | |
| +-----------+------------+-+
| +---------------| PREIT Associates, L.P. |
| | +-----------+--------------+
| | |
| | 95% (non-voting) |
| | |
+-----------------+ |
| PREIT-RUBIN, | |
| Inc. | |
+-----------------+ |
|
|
|
+-------------------------+
| 52 Properties(3) |
+-------------------------+
- ----------------------
(1) Sole general partner of the PREIT Associates. Of our 90.7% interest in
PREIT Associates, we hold 99.3% of our units of limited partnership
interest in PREIT Associates ("Units") as a Class A Limited Partner and
0.7% of our Units as the sole general partner.
(2) Includes an aggregate of 826,258 Units, 5.6% of the aggregate of all
Units outstanding, owned by the persons who were shareholders and
affiliates of The Rubin Organization before our acquisition of The
Rubin Organization, including Ronald Rubin, PREIT's Chief Executive
-2-
<PAGE>
Officer and one of its Trustee. Under the terms of our acquisition of
The Rubin Organization, these individuals have the right to receive up
to 637,500 additional Units in respect of their former ownership
interest in The Rubin Organization, depending on our adjusted funds
from operations over the three year, nine month period commencing on
January 1, 1999, and also to receive additional Units in respect of
their interest in three of the development properties and a completed
joint venture project we acquired rights to as part of the acquisition.
Although not yet issued, the former shareholders and affiliates of The
Rubin Organization are entitled to 167,500 units for the 12 month
period from January 1, 1999 through December 31, 1999.
(3) Interests in some of these properties are (i) owned directly by us
under arrangements in which the entire economic benefit of ownership
has been pledged to PREIT Associates, or (ii) owned directly by PREIT
Associates. PREIT Associates' interest in these properties ranges from
40% to 100%.
The Existing Retail Properties
At December 31, 1999, we had interests in 22 retail properties
containing an aggregate of approximately 8.3 million square feet. PREIT-RUBIN
currently operates fourteen of these properties, of which twelve are
wholly-owned and two are joint ventures. The remaining eight joint venture
retail properties are managed by our joint venture partners, or an entity we or
our joint venture partners designate, and in most instances a change in the
management of the property requires the concurrence of both partners. Eleven of
the 22 retail properties (containing an aggregate of approximately 4.9 million
square feet) are located in Pennsylvania, three (containing an aggregate of
approximately 0.5 million square feet) are located in Florida, two (containing
an aggregate of approximately 1.0 million square feet) are located in Maryland,
two (containing an aggregate of approximately 0.3 million square feet) are
located in Delaware, two (containing an aggregate of approximately 0.8 million
square feet) are located in South Carolina, and one is located in each of
Massachusetts and New Jersey (containing an aggregate of approximately 0.8
million square feet).
The following table presents information regarding the existing retail
properties, as of December 31, 1999:
-3-
<PAGE>
<TABLE>
<CAPTION>
Total
Leased
Year Built Total Owned GLA(3)
Percent or Square Square Square Percent
Real Property Location Owned* Renovated(1) Feet(2) Feet(2) Feet eased(4) Anchors
- ------------- -------- ------ ------------ ------- ---- ---- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lehigh Valley Allentown, PA 50% 1977/1996 1,051,253 698,900 685,054 98% JC Penney, Strawbridges, Macy's
Mall
The Court at Langhorne, PA 50% 1996 704,486 456,862 456,862 100 Dicks Sporting Goods, Best Buy,
Oxford Valley Pharmor, HomePlace, The Home
Depot, BJ Wholesale Club
North North Dartmouth, 100% 1971/1987 637,866 637,866 552,384 86.6 JC Penney, Sears, Ames, General
Dartmouth Mall MA Cinema
Whitehall Mall Allentown, PA 50% 1964/82/98/99 530,096 530,096 516,321 97.4 Sears, Kohl's, Bed, Bath &
Beyond
Magnolia Mall Florence, SC 100% 1979/1992 566,771 566,771 548,567 96.8 JC Penney, Sears, Belk, Rose's
Laurel Mall Hazleton, PA 40% 1973/1995 558,801 558,801 528,579 94.6 Boscov's, Kmart, JC Penney
Palmer Park Easton, PA 50% 1972/1982 456,879 456,879 425,624 93.2 The Bon-Ton, Boscovs
Mall
Forestville S/C Forestville, MD 100% 1974/1983 217,934 217,934 99,078 45.5 Ames, US Postal Service, Super
Fresh
Mandarin Jacksonville, FL 100% 1986 238,861 215,013 215,013 100 Walmart, Upton's, Carmike
Corners Cinemas
Springfield Springfield, PA 50% 1963/1997 268,500 122,831 93,946 76.5 Target, Bed Bath & Beyond
Park I & II(5)
Rio Mall Rio Grande, NJ 60% 1973/1992 165,583 165,583 159,145 96.1 Kmart, Staples
Crest Plaza S/C Allentown, PA 100% 1959/1991 157,370 157,370 107,986 68.6 Weis Market, Eckerd Drug Store
Park Plaza S/C Pinellas Park, FL 50% 1963/1983 155,528 155,528 144,886 93.2 Eckerd Drug Store, Ace
(6) Hardware, Publix Supermarket
South Blanding Jacksonville, FL 100% 1986 106,857 106,857 100,357 93.9 Food Lion, Scotty's
Village
Ingleside Thorndale, PA 70% 1981/1995 101,271 101,271 101,271 100 Kmart
Center
Festival at Exton, PA 100% 1991 144,952 144,952 134,375 92.7 Sears Hardware, Clemens
Exton
Northeast Philadelphia, PA 89% 1998 479,498 479,498 298,696 62.3 Home Depot, Dicks Sporting
Tower Center Goods
(7)
Prince Hyattsville, MD 100% 1959/1990 744,911 744,911 624,717 83.9 GC Murphy, JC Penney, Hechts
Georges Plaza
Red Rose Lancaster, PA 50% 1998 463,042 263,452 261,291 99.2 Weis Market, Home Depot
Commons
Valleyview S/C Wilmington, DE 100% 1999 55,798 55,798 52,598 94.3 Genuardis
Florence Florence, SC 100% 1991 197,258 197,258 107,318 54.4 Tags Store, Goodys Family
Commons S/C Clothings
Christiana Newark, DE 100% 1998 302,439 302,439 293,839 97.2 Costco, Dicks Sporting Goods
Power Center
Phase I
--------- --------- --------- -----
Total/Weighted Average 8,305,954 7,336,870 6,507,907 88.7%
(22 Properties) ========= ========= ========= =====
</TABLE>
- -----------------------
* By PREIT Associates; we own approximately 90.7% of PREIT Associates.
(1) Year initially completed and, where applicable, the most recent year in
which the property was renovated substantially or an additional phase of
the property was completed.
(2) Total Square Feet includes space owned or ground leased by anchors.
Owned Square Feet and Percent Leased excludes such space.
(3) GLA stands for Gross Leasable Area.
(4) Percent Leased is calculated as a percent of Owned Square Feet for which
leases were in effect as of December 31, 1999.
(5) With respect to Phase I, we have an undivided one-half interest in one
of three floors in a free standing department store.
(6) We sold our interest to our joint venture partner in January 2000.
-4-
<PAGE>
(7) We expect to acquire the remaining 11% ownership interest during the
first quarter of 2002. A portion of the center is currently under
development.
The following table presents information regarding each anchor in the
existing retail properties:
Anchor and Square Footage
as of December 31, 1999
<TABLE>
<CAPTION>
# Anchor Square Footage Square Footage Total Square
Anchor Name(1) Stores Owned By Anchors Leased By Anchors Footage Occupied
- ----------- -------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Ames 2 - 166,539 166,539
Bed, Bath & Beyond 2 - 91,975 91,975
Belk 1 - 115,793 115,793
Best Buy 1 - 59,620 59,620
BJ's 1 116,872 - 116,872
Boscov's 2 - 375,110 375,110
Circuit City 2 - 64,733 64,733
Clemens Markets 1 - 40,000 40,000
Costco 1 - 140,814 140,814
Dick's Sporting Goods 3 - 158,101 158,101
Food Lion 1 - 29,000 29,000
Genuardi's 1 - 47,500 47,500
Goody's Clothing 1 - 29,940 29,940
Hecht's 1 - 195,655 195,655
Home Depot 3 265,310 136,633 401,943
Home Place 1 - 54,096 54,096
IGA* 1 - 21,700 -
J.C. Penney 5 187,659 403,147 590,806
K-Mart 3 - 334,858 334,858
Kohl's 1 - 81,785 81,785
Macy's 1 - 212,000 212,000
Pet Smart 3 - 81,504 81,504
Pharmor 1 - 45,712 45,712
Publix 1 - 33,490 33,490
Rose's 1 - 53,200 53,200
Scotty's 1 - 44,921 44,921
Sears Hardware 1 - 20,425 20,425
Sears 3 - 412,454 412,454
Staples 1 - 20,000 20,000
Strawbridges 1 164,694 - 164,694
Super Fresh* 1 - 25,622 -
Tags Stores 1 - 40,000 40,000
Target 1 145,669 - 145,669
The Bon Ton 1 - 122,125 122,125
Upton's* 1 - 51,800 -
Walmart 1 23,848 58,074 81,922
Weis Market 2 65,032 45,000 110,032
-- ------- --------- ---------
Total 56 969,084 3,813,326 4,683,288
== ======= ========= =========
</TABLE>
- ---------------------
(1) Actual tenant may be an affiliate of the entity listed.
* Leased, but currently vacant
-5-
<PAGE>
The following table presents, as of December 31, 1999, scheduled lease
expirations of malls and shopping centers for the next 10 years, assuming that
none of the tenants exercise renewal options or termination rights:
<TABLE>
<CAPTION>
Average
Base Rent % of Total
Annualized Approximate Per Square Leased GLA (1)
Number of Base Rent Square Feet Foot of Represented By
Year Ending Leases of Expiring Of Expiring Expiring Expiring
December 31 Expiring Leases Leases Leases Leases
----------- --------- ----------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
2000 79 $2,971,007 255,092 $11.65 3.97%
2001 84 4,611,601 612,309 7.53 9.52%
2002 71 3,268,485 214,481 15.24 3.34%
2003 66 4,176,674 325,595 12.83 5.06%
2004 64 5,089,944 460,660 11.05 7.16%
2005 41 3,806,623 273,374 13.92 4.25%
2006 52 5,831,277 625,802 9.32 9.73%
2007 43 5,743,106 689,447 8.33 10.72%
2008 41 4,811,505 627,878 7.66 9.76%
2009 41 4,981,825 281,634 17.69 4.38%
-- --------- ------- ----- -----
Total/ 582 $45,292,047 4,366,272 $10.37 67.89%
Weighted === =========== ========= ====== ======
Average
</TABLE>
- ------------------
(1) Percentage of total leased GLA equals the approximate GLA of expiring leases
divided by the total leased GLA square feet (6,430,541)
The Development Properties
We have rights in six development properties - Paxton Towne Centre,
Metroplex Shopping Center, Creekview Shopping Center, Pavilion at Market East,
Christiana Power Center Phase II and Frankford Arsenal. We acquired our rights
to Metroplex Shopping Center and Christiana Power Center Phase II when we
acquired The Rubin Organization, and we hold our rights subject to a
contribution agreement executed in connection with that acquisition. The
contribution agreement provides for PREIT Associates to issue Units, according
to a formula, to former affiliates of The Rubin Organization as consideration
for our rights in these properties.
As Metroplex Shopping Center and Christiana Power Center Phase II are
completed and leased up, they will be valued based on the following principles:
o all space leased and occupied by credit-worthy tenants will be
valued at ten times adjusted cash flow, computed as specified in
the agreement;
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<PAGE>
o all space leased to a credit-worthy tenant but unoccupied will be
valued at ten times adjusted cash flow calculated as though the
space was built and occupied as shown in the property's budget;
and
o space not leased or occupied, whether built or unbuilt, will be
valued as mutually agreed on or, failing agreement, by appraisal.
Additional provisions exist for valuing triple net lease/purchase
arrangements. Although each project will be valued as completed and an "account"
established against which Units will be deemed to be credited, as well as deemed
cash in an amount that would have been distributed on these deemed Units and a
10% interest factor on this deemed cash, no consideration will be paid until the
earlier of:
o the completion of the last property;
o our abandonment of any uncompleted projects; or
o September 30, 2002.
At that time, we will value any uncompleted projects and PREIT
Associates will issue Units equal in value to 50% of the amount, if any, by
which the value of PREIT Associates' interest in each project exceeded the
aggregate cost of the project at the time of completion. Negative amounts
arising in connection with the completion or abandonment of any project will be
netted back against earlier completed projects in order of completion. Units
issued in respect of the foregoing valuations of the projects will be valued at
the greater of (1) the average of the closing prices of the Shares for the
twenty trading days before the date of the completion valuation and (2) $19.00.
If the average of the closing prices of the Shares on the 20 trading days before
each valuation is less than $19.00, PREIT Associates will issue additional
Units, of a new class but equal in value to those Units not issued because of
the operation of the pricing limitation.
The following table presents information, as of December 31, 1999,
regarding the development properties:
<TABLE>
<CAPTION>
Percent Planned
Owned Or Planned Owned
To Be Square Square Expected
Development Property Location Acquired* Feet Feet(1) Status(2) Completion
-------------------- -------- --------- ---- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paxton Towne Center Harrisburg, PA 100%(3) 695,251 570,826 Construction 4th Quarter of 2000
Metroplex Shopping Center Plymouth Meeting, PA 50% 780,000 476,730 Construction 4th Quarter of 2000
Creekview Shopping Center Warrington, PA 100%(4) 418,416 129,500 Construction 4th Quarter of 2000
Pavilion at Market East Philadelphia, PA 50% 202,844 202,844 Development 4th Quarter of 2001
Christiana Power Center II Newark, DE 100% 445,000 445,000 Development 4th Quarter of 2001
Frankford Arsenal Philadelphia, PA 100% 508,559 508,559 Development 4th Quarter of 2001
--------- ---------
TOTAL (6 Properties): 3,050,070 2,333,459
========= =========
</TABLE>
- -----------------------
* By PREIT Associates; we currently own approximately 90.7% of PREIT
Associates.
(1) Square footage subject to change.
(2) "Development" indicates that development activities, such as site
surveys, preparation of architectural plans or initiation of land use
approvals or rezoning processes, have commenced, but construction has
not commenced. "Construction" indicates that construction activities,
such as site preparation, ground-breaking activities or exterior
construction, has commenced. We cannot assure you that the properties
that remain in the development stage will be constructed ultimately.
(3) One of our affiliates owns one unit in a two-unit condominium regime
that constitutes the shopping center. The other unit is owned by Target.
(4) One of our affiliates owns one unit in a three-unit condominium regime
that constitutes the shopping center. The other two units are owned by
Target and Lowe's, respectively.
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<PAGE>
The Multifamily Properties
We have interests in 19 multifamily properties with an aggregate of
7,242 units. We manage thirteen of these multifamily properties, and the
remaining six multifamily properties are managed by one or more of our partners.
If our partners currently managing these six multifamily properties are unable
or unwilling to perform their obligations or responsibilities, we would manage
these properties with our own staff.
The following table presents information, as of December 31, 1999,
regarding the 19 multifamily properties in which we have an interest:
<TABLE>
<CAPTION>
Approx.
Year Number Rentable Calendar 1999
Multifamily Percent Built/ Of Area Percent Average Rent
Property Location Owned* Renov(1) Units(2) (Sq. Ft.) Occupied per Unit
-------- -------- ------ -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Emerald Point(3) Virginia Beach, VA 65% 1965/1993 862 846,000 94% $ 551
Boca Palms Boca Raton, FL 100% 1970,1991 522 673,000 95 938
/1994
Lakewood Hills Harrisburg, PA 100% 1972, 1975, 562 630,000 96 657
1982/1988
Regency Lakeside Omaha, NE 50% 1970/1990 433 492,000 97 963
Kenwood Gardens Toledo, OH 100% 1951/1989 504 404,000 92 448
Fox Run, Delaware Bear, DE 100% 1988 414 359,000 96 682
Eagle's Nest Coral Springs, FL 100% 1989 264 343,000 96 933
Palms of Pembroke Pembroke Pines, FL 100% 1989/1995 348 340,000 99 926
Hidden Lakes Dayton, OH 100% 1987/1994 360 306,000 88 624
Cobblestone Pompano Beach, FL 100% 1986/1994 384 297,000 96 742
Countrywood Tampa, FL 50% 1977/1997 536 295,000 97 478
Shenandoah Village West Palm Beach, FL 100% 1985/1993 220 286,000 99 953
Marylander Baltimore, MD 100% 1951/1989 507 279,000 99 538
Camp Hill Plaza Camp Hill, PA 100% 1967/1994 300 277,000 93 686
Fox Run, Warminster Warminster, PA 50% 1969/1992 196 232,000 100 697
Cambridge Hall West Chester, PA 50% 1967/1993 233 186,000 98 659
Will-O-Hill Reading, PA 50% 1970/1986 190 152,000 100 553
2031 Locust Street Philadelphia, PA 100% 1929/1986 87 89,000 100 1327
The Woods Ambler, PA 100% 1974 320 235,000 97 801
----- --------- --- ----
Total/Weighted 7,242 6,721,000 96% $745
Average ===== ========= === ====
(19 properties)
- -----------------------
</TABLE>
* By PREIT Associates; we currently own approximately 90.7% of PREIT Associates.
(1) Year initially completed and most recently renovated, and where applicable,
year(s) in which additional phases were completed at the property.
(2) Includes all apartment and commercial units occupied or available for
occupancy at December 31, 1999.
(3) See Recent Developments.
-8-
<PAGE>
Other Properties
Shortly following our organization, we acquired six industrial
properties. We have not acquired any property of this type in over 20 years. We
do not consider these properties to be strategically held assets. These
properties, in the aggregate, contributed less than 3% of our net rental income
in our fiscal year ended December 31, 1999, and we have been studying a program
for the orderly liquidation of these assets. As part of this program, we sold
our 50% interest in a warehouse and plant in Ft. Washington, Pennsylvania in
1999.
The following table shows information, as of December 31, 1999,
regarding the remaining five industrial properties:
<TABLE>
<CAPTION>
Industrial Properties
Year Percent Square
Property and Location Acquired Owned* Feet Percentage Leased
- --------------------- -------- ------ ---- -----------------
<S> <C> <C> <C> <C>
Warehouse and Distribution 1962 100% 294,000 100%
Center
Alexandria, VA
Warehouse 1962 100% 12,034 100%
Pennsauken, NJ
Warehouse 1962 100% 16,307 100%
Allentown, PA
Warehouse 1963 100% 29,450 100%
Pennsauken, NJ
Warehouse and Plant 1963 100% 197,000 100%
Lowell, MA -------
Total 548,791
=======
</TABLE>
- -----------------------
* By PREIT Associates; we currently own approximately 90.7% of PREIT Associates.
-9-
<PAGE>
Right of First Refusal Properties
We obtained rights of first refusal with respect to the interests of
some of the former affiliates of The Rubin Organization, after our acquisition
of The Rubin Organization, in the three retail properties listed below:
Right of First Refusal Properties
Percentage Interest
Gross Leasable Subject to the Right
Property/Location Sq. Ft. of First Refusal
- ----------------- ------- ----------------
Cumberland Mall, 463,000 50%
Vineland, NJ
Fairfield Mall, 418,000 50%
Chicopce, MA
Christiana Mall, 1,100,000 (1)
Newark DE ---------
Total 1,981,000
=========
- --------------------------
(1) The interest subject to the right of first refusal is subject to
adjustment in connection with the refinancing of the participating
mortgage that currently encumbers this property.
Acquisition of The Rubin Organization
On September 30, 1997, we completed a series of related transactions in
which:
o we transferred substantially all of our real estate interests to
PREIT Associates;
o PREIT Associates acquired all of the nonvoting common shares of
The Rubin Organization (renamed "PREIT-RUBIN, Inc."), constituting
95% of the total equity of PREIT-RUBIN in exchange for the
issuance of 200,000 Class A units of limited partnership interest
in PREIT Associates ("Units") and a contingent obligation to issue
up to 800,000 additional Units over the next five years, discussed
below;
o PREIT Associates acquired the interests of some of the former
affiliates of The Rubin Organization in The Court at Oxford
Valley, Magnolia Mall, North Dartmouth Mall and Springfield Park;
Hillview Shopping Center and Northeast Tower Center at prices
based upon a pre-determined formula; and subject to related
obligations, in Christiana Power Center (Phase I and II), Red Rose
Commons and Metroplex Shopping Center. Subsequent to September 30,
1997, by mutual agreement with the former affiliates of The Rubin
Organization, PREIT Associates did not acquire Hillview Shopping
Center.
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<PAGE>
The 800,000 additional Units discussed above are to be issued over the
five-year period beginning October 1, 1997 and ending September 30, 2002
according to a formula based on our adjusted funds from operations per Share
during the five year period. The contribution agreement established "hurdles"
and "targets" during specified "earn-out periods" to determine whether, and to
what extent, the contingent Units would be issued. For the three months ended
December 31, 1997, 32,500 Units were earned, resulting in additional purchase
price of approximately $830,000. For the year ended December 31, 1998, 130,000
Units were earned resulting in an additional purchase price of approximately
$2.5 million. For the year ended December 31, 1999, 167,500 Units were earned,
which will result in an additional purchase price of approximately $2.4 million.
Under the contribution agreement, the hurdles and targets were adjusted on
December 29, 1998 to account for the dilutive effect of our December 1997 public
offering, as follows:
<TABLE>
<CAPTION>
Per Share Adjusted
FFO Base No. Max. No.
------------------ Contingent Contingent
Earn-Out Period Hurdle Target TRO OP TRO OP
--------------- ------ ------ ---------- --------
<S> <C> <C> <C> <C>
1-1-98 to 12-31-98 2.13 2.39 20,000 130,000
1-1-99 to 12-31-99 2.30 2.58 57,500 167,500
1-1-00 to 12-31-00 2.43 2.72 57,500 167,500
1-1-01 to 12-31-01 2.72 3.03 57,500 167,500
1-1-02 to 9-30-02 2.19 2.43 52,500 135,000
------- -------
Total 245,000 767,500
======= =======
</TABLE>
In general:
o if the hurdle for any earn-out period is not met, no contingent
Units will be issued in respect of that period;
o if the target for any earn-out period is met, the maximum number
of contingent Units for that period will be issued; and
o if adjusted funds from operations for any earn-out period is
between the hurdle and the target for the period, PREIT Associates
would issue the base contingent Units for that period, plus a pro
rata portion of the number of contingent Units by which the
maximum contingent Units exceeded the base contingent Units for
that period equal to the amount by which the per Share adjusted
funds from operations exceeded the hurdle but was less than the
target.
The foregoing is subject to the right to carry back to prior earn-out
periods amounts in excess of the target in the current period, thereby earning
additional contingent Units, but never more than the maximum amount, and to
carry forward into the next, but only the next, earn-out period amounts of per
Share adjusted funds from operations which exceed the target in any such period,
provided, in all cases, no amounts in excess of the target in any period may be
-11-
<PAGE>
applied to result in the issuance of additional contingent Units in any other
period until first applied to eliminate all shortfalls from targets in all prior
periods.
The contribution agreement provides that if we declared a share split,
share dividend or other similar change in our capitalization, the "hurdle" and
"target" levels will be proportionately adjusted. The contribution agreement
also provides for the creation of a special committee of three independent
Trustees to consider, among other matters, whether other equitable adjustments,
either upward or downward, should be effected in the "hurdle" and "target"
levels to reflect:
o our incurrence of non-project specific indebtedness or our raising
of equity capital;
o our breach of any of our representations or warranties in the
contribution agreement which may adversely affect adjusted funds
from operations; and
o the effect on adjusted funds from operations of any adverse
judgment in litigation pending against us.
For the two years and nine months commencing January 1, 2000, we may be
required to issue the remaining 470,000 Units, depending on our per share
"adjusted funds from operations" during this period. "Adjusted funds from
operations" is defined as our consolidated net income for any period, plus, to
the extent deducted in computing such net income:
o depreciation attributable to real property;
o certain amortization expenses;
o the expenses of the acquisition of The Rubin Organization;
o losses on the sale of real estate;
o material write-downs on real estate;
o material prepayment fees; and
o rents currently due in excess of rents reported, minus:
- rental revenue reported in excess of amounts currently due;
- lease termination fees; and
- gains on the sale of real estate.
Competition, Regulation and Other Factors
REAL ESTATE INDUSTRY
WE FACE RISKS ASSOCIATED WITH LOCAL REAL ESTATE CONDITIONS IN AREAS
WHERE WE OWN PROPERTIES
We may be affected adversely by general economic conditions and local
real estate conditions. For example, an oversupply of retail space or apartments
-12-
<PAGE>
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
WE MAY BE UNABLE TO COMPETE WITH OUR LARGER COMPETITORS AND OTHER
ALTERNATIVES TO OUR PORTFOLIO OF PROPERTIES
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 have. Furthermore, we compete for tenants with other property owners. Our
apartment properties portfolio competes 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.
WE ARE SUBJECT TO SIGNIFICANT REGULATION THAT INHIBITS OUR ACTIVITIES
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.
OUR PROPERTIES
WE FACE RISKS THAT MAY RESTRICT OUR ABILITY TO DEVELOP PROPERTIES
There are risks associated with our development activities in addition
to those generally associated with the ownership and operation of established
shopping centers and multifamily properties. These risks include:
o expenditure of money and time on projects that 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
-13-
<PAGE>
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. As a result of these distribution requirements, 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 equity investment in these 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, we cannot assure you that we can
contract for appropriate sites within our geographic markets.
MANY OF OUR PROPERTIES ARE OLD AND IN NEED OF MAINTENANCE AND/OR
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 our properties.
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE AND EFFECTIVELY MANAGE THE
PROPERTIES WE ACQUIRE
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 believe
at the time of acquisition. It is also possible that the operating performance
of some of our properties will decline.
To manage our growth effectively, we must successfully integrate new
acquisitions. We cannot assure you that we will be able to successfully
integrate or effectively manage additional properties.
When we acquire properties, we also take on other risks, including:
o financing risks (some of which are described below)
o the risk that we will not meet anticipated occupancy or rent
levels
o the risk that we will not obtain required zoning, occupancy and
other governmental approvals
-14-
<PAGE>
o the risk that there will be changes in applicable zoning and land
use laws that affect adversely the operation or development of our
properties
WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE
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.
OUR TENANTS MAY FAIL TO MAKE RENTAL PAYMENTS WHEN DUE
At any time, a tenant may experience a downturn in its business that
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.
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.
OUR CASUALTY INSURANCE MAY BE INADEQUATE
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.
WE FACE RISKS DUE TO LACK OF GEOGRAPHIC DIVERSITY
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 may be less susceptible to downturns
in one or more regions.
WE FACE POSSIBLE 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 own or operate. They may also be liable to the government or to third
parties for substantial property damage, investigation costs and cleanup costs.
-15-
<PAGE>
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, we respond to inquiries from environmental
authorities with respect to properties both currently and formerly owned by us.
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
our financial condition or results of operations.
We have no way of determining at this time the magnitude of any
potential liability to which we may be subject arising out of unknown
environmental conditions or violations with respect to the properties we
formerly owned. Environmental laws today can impose liability on a previous
owner or operator of a property that owned or operated the property at a time
when hazardous or toxic substances were disposed of, or released from, the
property. A conveyance of the property, therefore, does not relieve the owner or
operator from liability.
As to five properties, two of which we no longer own, we or a
partnership in which we have an interest have responded to inquiries from
environmental authorities. In one of these properties, we believe that the
contamination was caused by a former tenant and we have sought indemnification
from the tenant. The remaining estimated cost to remediate this property ranges
from $50,000 to $100,000. In another instance, we will only be liable for
remediation costs in excess of $1.0 million, and we do not anticipate currently
that remediation costs will exceed $1.0 million. If remediation costs for this
property exceed $1.0 million, our liability is not expected to exceed $0.3
million.
At four properties in which we currently have an interest, the
environmental conditions continue to be investigated and have not been
remediated fully. At three of these properties, groundwater contamination has
been found. At one of the properties, the former owner of the property is
remediating the groundwater contamination. At two of the properties, the
groundwater contamination was associated with a dry cleaning operation. Although
the properties with contamination arising from dry cleaning operations may be
eligible under a state law for remediation with state funds, we cannot assure
you that sufficient funds will be available under the legislation to pay the
full costs of any such remediation.
There are asbestos-containing materials in a number of our properties,
primarily in the form of floor tiles and adhesives. The floor tiles and
adhesives are generally in good condition. Fire-proofing material containing
asbestos is present at some of our properties in limited concentrations or in
limited areas. At properties where radon has been identified as a potential
concern, we have remediated or are performing additional testing. Lead-based
paint has been identified at certain of our multifamily properties and we have
notified tenants under applicable disclosure requirements. Based on our current
knowledge, we do not believe that the future liabilities associated with
asbestos, radon and lead-based paint at the foregoing properties will be
material.
We have no insurance coverage for the types of environmental
liabilities described above. In 1994, we established a reserve for environmental
-16-
<PAGE>
remediation costs of $0.6 million. In addition, we received a credit of $0.4
million for environmental matters in connection with the acquisition of two
properties. Since 1994, a total of $0.7 million has been charged against the
reserve. We also reduced the reserve by $0.2 million, leaving a balance of $0.1
million, which approximates our share of the remaining environmental liability.
We cannot assure you that these amounts will be adequate to cover future
environmental costs.
We are aware of environmental concerns at three of our development
properties. Our present view is that our share of any remediation costs
necessary in connection with the development of these properties will be within
the budgets for development of these properties, but the final costs and
necessary remediation are not known and may cause us to decide not to develop
one or more of these properties.
FINANCING RISKS
WE FACE RISKS GENERALLY ASSOCIATED WITH OUR DEBT
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
WE MAY NOT BE ABLE TO COMPLY WITH LEVERAGE RATIOS IMPOSED BY OUR CREDIT
FACILITY OR TO USE OUR CREDIT FACILITY WHEN CREDIT MARKETS ARE TIGHT
We currently use a secured credit facility for working capital,
acquisitions, renovations and capital improvements to our properties. The credit
facility currently requires our operating partnership, PREIT-Associates, 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.
We expect to use our credit facility from time to time for
acquisitions, development, renovations and capital improvements to our
-17-
<PAGE>
properties. When the credit markets are tight, 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
affected adversely. 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 assure you 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.
WE MAY BE UNABLE TO OBTAIN LONG-TERM FINANCING REQUIRED TO FINANCE OUR
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 on other sources of short-term financing, equity contributions or the
proceeds of refinancing of existing properties to satisfy debt obligations.
Although we do not own the entire interest in connection with many of the
properties held by a partnership or joint venture, we may be required to pay the
full amount of any obligation of the partnership or joint venture that we have
guaranteed in whole or in part to protect our equity interest in the property
owned by the partnership or joint venture. Additionally, we may determine to pay
a partnership's or joint venture's obligation to protect our equity interest in
its assets.
GOVERNANCE
WE MAY BE UNABLE TO EFFECTIVELY MANAGE OUR PARTNERSHIPS AND JOINT
VENTURES DUE TO DISAGREEMENTS WITH OUR PARTNERS AND JOINT VENTURERS
Generally, we hold interests in our portfolio properties through PREIT
Associates. In many cases we hold properties through joint ventures or
partnerships with third-party partners and joint venturers and, thus, we hold
less than 100% of the ownership interests in these properties. Of the properties
with respect to which our ownership is partial, 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. We may incur
substantial expenses in resolving these disputes. To preserve our investment, we
may be required to make commitments to or on behalf of a partnership or venture
during a dispute. Moreover, we cannot assure you that our resolution of a
dispute with a partner will be on terms that are favorable to us.
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<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
WE ARE RESTRICTED FROM EXPERIENCING A SALE OR CHANGE IN CONTROL
Our Trust Agreement restricts the possibility of our sale or change in
control, even if a sale or change in control were in our 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. Additionally, we have adopted a rights plan that may deter
a potential acquiror from attempting to acquire us.
WE HAVE ENTERED INTO AGREEMENTS RESTRICTING OUR ABILITY TO SELL SOME
OF OUR PROPERTIES
Because some limited partners of PREIT Associates may suffer adverse
tax consequences if certain properties owned by PREIT Associates are sold, we,
as the general partner of PREIT Associates, have agreed from time to time,
subject to certain exceptions, that the consent of the holders of a majority (or
all) 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.
WE MAY ISSUE PREFERRED SHARES WITH GREATER RIGHTS THAN YOUR SHARES
Our Board of Trustees may issue up to 25,000,000 preferred shares
without shareholder approval. Our Board of Trustees may determine the relative
rights, preferences and privileges of each class or series of preferred shares.
Because our 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 your rights as a shareholder.
WE MAY AMEND OUR BUSINESS POLICIES WITHOUT YOUR APPROVAL
Our Board of Trustees determines our growth, investment, financing,
capitalization, borrowing, REIT status, operating and distribution policies.
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 our
policies. We cannot assure you that changes in our policies will serve fully the
interests of all shareholders.
-19-
<PAGE>
LIMITED PARTNERS OF PREIT ASSOCIATES, L.P. MAY VOTE ON FUNDAMENTAL
CHANGES WE PROPOSE
Our assets are generally held through PREIT Associates, a Delaware
limited partnership of which we are the sole general partner. We currently hold
a majority of the limited partner interests in PREIT Associates. However, PREIT
Associates 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 our 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, before 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 our
shareholders, on any proposal to merge, consolidate or sell substantially all of
our assets. Our partnership interests are not included for purposes of
determining when half of the partnership interests have been redeemed, nor are
they counted as votes. We cannot assure you that we will not agree to extend
comparable rights to other limited partners in PREIT Associates.
OUR SUCCESS DEPENDS IN PART 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
WE DO NOT CONTROL OUR MANAGEMENT COMPANY, PREIT-RUBIN
Although PREIT Associates owns 95% of the equity interests in our
management affiliate, PREIT-RUBIN, all of PREIT-RUBIN's voting stock is owned by
a stock bonus plan created for the benefit of PREIT-RUBIN's employees.
PREIT-RUBIN's 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. A 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, we do not control the day-to-day
operations of PREIT-RUBIN and we have 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.
WE FACE RISKS ASSOCIATED WITH PREIT-RUBIN'S MANAGEMENT OF PROPERTIES
OWNED BY THIRD PARTIES
-20-
<PAGE>
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 after 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
OUR EMPLOYEES WHO WORK BOTH FOR US AND FOR PREIT-RUBIN MAY HAVE
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 your interests.
PREIT-RUBIN's employees work on our behalf. 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.
OTHER RISKS
WE MAY FAIL TO QUALIFY AS A REIT AND YOU MAY INCUR TAX LIABILITIES AS
A RESULT
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.
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 cannot assure you 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 cannot assure you that we have been qualified or
will remain qualified.
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<PAGE>
WE MAY BE UNABLE TO COMPLY WITH THE STRICT INCOME DISTRIBUTION
REQUIREMENTS APPLICABLE TO REITS
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. 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.
Employees
We employ approximately 745 people on a full-time basis.
-22-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to its
Annual Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
Date: April 5, 2000 By: /s/ Jonathan B. Weller
----------------------
Jonathan B. Weller
President and Chief Operating Officer
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<TABLE>
<CAPTION>
Name Capacity Date
---- -------- ----
<S> <C> <C>
* /s/ Sylvan M. Cohen Chairman and Trustee April 5, 2000
- --------------------------
Sylvan M. Cohen
* /s/ Ronald Rubin Chief Executive Officer and Trustee April 5, 2000
- --------------------------
Ronald Rubin
/s/ Jonathan B. Weller President, Chief Operating Officer and Trustee April 5, 2000
- --------------------------
Jonathan B. Weller
* /s/ George Rubin Trustee April 5, 2000
- --------------------------
George Rubin
* /s/ William R. Dimeling Trustee April 5, 2000
- --------------------------
William R. Dimeling
* /s/ Lee Javitch Trustee April 5, 2000
- --------------------------
Lee Javitch
* /s/ Leonard I. Korman Trustee April 5, 2000
- --------------------------
Leonard I. Korman
* /s/ Jeffrey P. Orleans Trustee April 5, 2000
- --------------------------
Jeffrey P. Orleans
* /s/Rosemarie B. Greco Trustee April 5, 2000
- --------------------------
Rosemarie B. Greco
/s/ Edward Glickman Executive Vice President and Chief April 5, 2000
- -------------------------- Financial Officer (principal financial
Edward Glickman officer)
/s/ Dante J. Massimini Senior Vice President - Finance and Treasurer April 5, 2000
- ------------------------- (principal accounting officer)
Dante J. Massimini
* By /s/ Jonathan B. Weller (as attorney in fact)
-----------------------
Jonathan B. Weller
</TABLE>
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