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x
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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o
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Pennsylvania
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23-6216339
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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200 South Broad Street
Philadelphia, PA
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19102
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Insert Title Here
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Not Applicable
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—
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Item 4.
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Not Applicable
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—
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Item 5.
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Not Applicable
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—
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Item 6.
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(in thousands, except per share amounts)
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June 30,
2014 |
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December 31,
2013 |
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(unaudited)
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ASSETS:
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INVESTMENTS IN REAL ESTATE, at cost:
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Operating properties
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$
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3,437,079
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$
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3,450,317
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Construction in progress
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85,416
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68,835
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Land held for development
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8,716
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8,716
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Total investments in real estate
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3,531,211
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3,527,868
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Accumulated depreciation
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(1,063,080
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)
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(1,012,746
|
)
|
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Net investments in real estate
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2,468,131
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2,515,122
|
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INVESTMENTS IN PARTNERSHIPS, at equity:
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19,170
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15,963
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|
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OTHER ASSETS:
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|
|
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Cash and cash equivalents
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30,741
|
|
|
34,230
|
|
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Tenant and other receivables (net of allowance for doubtful accounts of
$12,352
and $13,123 at June 30, 2014 and December 31, 2013, respectively)
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37,995
|
|
|
46,439
|
|
||
Intangible assets (net of accumulated amortization of $14
,
923
and $14,506 at June 30, 2014 and December 31, 2013, respectively)
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8,434
|
|
|
9,075
|
|
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Deferred costs and other assets
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92,295
|
|
|
97,752
|
|
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Total assets
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$
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2,656,766
|
|
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$
|
2,718,581
|
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LIABILITIES:
|
|
|
|
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Mortgage loans payable
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$
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1,494,801
|
|
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$
|
1,502,650
|
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Term loans
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130,000
|
|
|
—
|
|
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Revolving Facility
|
—
|
|
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130,000
|
|
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Tenants’ deposits and deferred rent
|
17,119
|
|
|
17,896
|
|
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Distributions in excess of partnership investments
|
64,675
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|
|
64,491
|
|
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Fair value of derivative liabilities
|
3,245
|
|
|
844
|
|
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Accrued expenses and other liabilities
|
87,132
|
|
|
76,248
|
|
||
Total liabilities
|
1,796,972
|
|
|
1,792,129
|
|
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COMMITMENTS AND CONTINGENCIES (Note 6):
|
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|
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EQUITY:
|
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|
||||
Series A Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 4,600 shares of Series A Preferred Shares issued and outstanding at each of June 30, 2014 and December 31, 2013; liquidation preference of $115,000
|
46
|
|
|
46
|
|
||
Series B Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 3,450 shares of Series B Preferred Shares issued and outstanding at each of June 30, 2014 and December 31, 2013; liquidation preference of $86,250
|
35
|
|
|
35
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|
||
Shares of beneficial interest, $1.00 par value per share; 200,000 shares authorized; issued and outstanding 68,749 shares at June 30, 2014 and
68,293
shares at December 31, 2013
|
68,749
|
|
|
68,293
|
|
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Capital contributed in excess of par
|
1,470,525
|
|
|
1,467,460
|
|
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Accumulated other comprehensive loss
|
(7,827
|
)
|
|
(6,637
|
)
|
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Distributions in excess of net income
|
(703,758
|
)
|
|
(636,939
|
)
|
||
Total equity—Pennsylvania Real Estate Investment Trust
|
827,770
|
|
|
892,258
|
|
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Noncontrolling interest
|
32,024
|
|
|
34,194
|
|
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Total equity
|
859,794
|
|
|
926,452
|
|
||
Total liabilities and equity
|
$
|
2,656,766
|
|
|
$
|
2,718,581
|
|
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|||||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands of dollars)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
REVENUE:
|
|
|
|
|
|
|
|
||||||||
Real estate revenue:
|
|
|
|
|
|
|
|
||||||||
Base rent
|
$
|
71,646
|
|
|
$
|
69,207
|
|
|
$
|
142,988
|
|
|
$
|
137,709
|
|
Expense reimbursements
|
30,879
|
|
|
30,931
|
|
|
65,230
|
|
|
61,792
|
|
||||
Percentage rent
|
324
|
|
|
584
|
|
|
914
|
|
|
1,566
|
|
||||
Lease termination revenue
|
154
|
|
|
91
|
|
|
254
|
|
|
231
|
|
||||
Other real estate revenue
|
3,142
|
|
|
2,735
|
|
|
5,368
|
|
|
5,428
|
|
||||
Total real estate revenue
|
106,145
|
|
|
103,548
|
|
|
214,754
|
|
|
206,726
|
|
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Other income
|
680
|
|
|
1,395
|
|
|
1,458
|
|
|
2,283
|
|
||||
Total revenue
|
106,825
|
|
|
104,943
|
|
|
216,212
|
|
|
209,009
|
|
||||
EXPENSES:
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
CAM and real estate taxes
|
(35,228
|
)
|
|
(34,642
|
)
|
|
(74,631
|
)
|
|
(69,541
|
)
|
||||
Utilities
|
(5,841
|
)
|
|
(5,068
|
)
|
|
(14,051
|
)
|
|
(10,126
|
)
|
||||
Other operating expenses
|
(3,295
|
)
|
|
(3,909
|
)
|
|
(7,399
|
)
|
|
(7,647
|
)
|
||||
Total operating expenses
|
(44,364
|
)
|
|
(43,619
|
)
|
|
(96,081
|
)
|
|
(87,314
|
)
|
||||
Depreciation and amortization
|
(37,135
|
)
|
|
(35,088
|
)
|
|
(73,370
|
)
|
|
(68,705
|
)
|
||||
Other expenses:
|
|
|
|
|
|
|
|
||||||||
General and administrative expenses
|
(8,774
|
)
|
|
(9,606
|
)
|
|
(17,851
|
)
|
|
(18,462
|
)
|
||||
Impairment of assets
|
(16,098
|
)
|
|
—
|
|
|
(17,398
|
)
|
|
—
|
|
||||
Provision for employee separation expense
|
(4,877
|
)
|
|
(1,035
|
)
|
|
(4,877
|
)
|
|
(2,314
|
)
|
||||
Acquisition costs and other expenses
|
(960
|
)
|
|
(198
|
)
|
|
(2,606
|
)
|
|
(400
|
)
|
||||
Total other expenses
|
(30,709
|
)
|
|
(10,839
|
)
|
|
(42,732
|
)
|
|
(21,176
|
)
|
||||
Interest expense, net
|
(21,550
|
)
|
|
(27,689
|
)
|
|
(41,720
|
)
|
|
(55,027
|
)
|
||||
Total expenses
|
(133,758
|
)
|
|
(117,235
|
)
|
|
(253,903
|
)
|
|
(232,222
|
)
|
||||
Loss before equity in income of partnerships, gain on sale of interest in real estate, discontinued operations and gains on sales of discontinued operations
|
(26,933
|
)
|
|
(12,292
|
)
|
|
(37,691
|
)
|
|
(23,213
|
)
|
||||
Equity in income of partnerships
|
2,784
|
|
|
2,283
|
|
|
5,186
|
|
|
4,736
|
|
||||
Gain on sale of interest in real estate
|
99
|
|
|
—
|
|
|
99
|
|
|
—
|
|
||||
Loss from continuing operations
|
(24,050
|
)
|
|
(10,009
|
)
|
|
(32,406
|
)
|
|
(18,477
|
)
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Operating results from discontinued operations
|
—
|
|
|
1,000
|
|
|
—
|
|
|
2,021
|
|
||||
Gains on sales of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
33,254
|
|
||||
Income from discontinued operations
|
—
|
|
|
1,000
|
|
|
—
|
|
|
35,275
|
|
||||
Net (loss) income
|
(24,050
|
)
|
|
(9,009
|
)
|
|
(32,406
|
)
|
|
16,798
|
|
||||
Less: net loss (income) attributable to noncontrolling interest
|
725
|
|
|
314
|
|
|
977
|
|
|
(691
|
)
|
||||
Net (loss) income attributable to PREIT
|
(23,325
|
)
|
|
(8,695
|
)
|
|
(31,429
|
)
|
|
16,107
|
|
||||
Less: preferred share dividends
|
(3,962
|
)
|
|
(3,962
|
)
|
|
(7,924
|
)
|
|
(7,924
|
)
|
||||
Net (loss) income attributable to PREIT common shareholders
|
$
|
(27,287
|
)
|
|
$
|
(12,657
|
)
|
|
$
|
(39,353
|
)
|
|
$
|
8,183
|
|
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|||||||||||||||
(in thousands of dollars, except per share amounts)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
2014
|
|
2013
|
|
2014
|
|
2013
|
|||||||||
Loss from continuing operations
|
$
|
(24,050
|
)
|
|
$
|
(10,009
|
)
|
|
$
|
(32,406
|
)
|
|
$
|
(18,477
|
)
|
Noncontrolling interest
|
725
|
|
|
348
|
|
|
977
|
|
|
677
|
|
||||
Dividends on preferred shares
|
(3,962
|
)
|
|
(3,962
|
)
|
|
(7,924
|
)
|
|
(7,924
|
)
|
||||
Dividends on unvested restricted shares
|
(92
|
)
|
|
(103
|
)
|
|
(205
|
)
|
|
(211
|
)
|
||||
Loss from continuing operations used to calculate loss per share—basic and diluted
|
$
|
(27,379
|
)
|
|
$
|
(13,726
|
)
|
|
$
|
(39,558
|
)
|
|
$
|
(25,935
|
)
|
Income from discontinued operations
|
$
|
—
|
|
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
35,275
|
|
Noncontrolling interest
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
(1,368
|
)
|
||||
Income from discontinued operations used to calculate earnings per share—basic and diluted
|
$
|
—
|
|
|
$
|
966
|
|
|
$
|
—
|
|
|
$
|
33,907
|
|
Basic and diluted (loss) earnings per share:
|
|
|
|
|
|
|
|
||||||||
Loss from continuing operations
|
$
|
(0.40
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(0.43
|
)
|
Income from discontinued operations
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.56
|
|
||||
|
$
|
(0.40
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
0.13
|
|
(in thousands of shares)
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding—basic
|
68,236
|
|
|
63,540
|
|
|
68,091
|
|
|
59,661
|
|
||||
Effect of common share equivalents
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average shares outstanding—diluted
|
68,236
|
|
|
63,540
|
|
|
68,091
|
|
|
59,661
|
|
(1)
|
The Company had net losses from continuing operations for all periods presented. Therefore, the effects of common share equivalents of
309
and
727
for the three months ended
June 30, 2014
and
2013
, respectively, and
326
and
780
for the
six
months ended
June 30, 2014
and
2013
, respectively, are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands of dollars)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(24,050
|
)
|
|
$
|
(9,009
|
)
|
|
$
|
(32,406
|
)
|
|
$
|
16,798
|
|
Unrealized (loss) gain on derivatives
|
(1,919
|
)
|
|
5,917
|
|
|
(3,102
|
)
|
|
8,096
|
|
||||
Amortization of losses of settled swaps, net of gains
|
1,544
|
|
|
3,577
|
|
|
1,837
|
|
|
3,782
|
|
||||
Total comprehensive (loss) income
|
(24,425
|
)
|
|
485
|
|
|
(33,671
|
)
|
|
28,676
|
|
||||
Less: comprehensive loss (income) attributable to noncontrolling interest
|
773
|
|
|
(23
|
)
|
|
1,052
|
|
|
(1,121
|
)
|
||||
Comprehensive (loss) income attributable to PREIT
|
$
|
(23,652
|
)
|
|
$
|
462
|
|
|
$
|
(32,619
|
)
|
|
$
|
27,555
|
|
|
|
|
PREIT Shareholders
|
|
|
||||||||||||||||||||||||||
(in thousands of dollars, except per share amounts)
|
Total
Equity
|
|
Series A
Preferred
Shares,
$.01 par
|
|
Series B
Preferred
Shares,
$.01 par
|
|
Shares of
Beneficial
Interest,
$1.00 Par
|
|
Capital
Contributed
in Excess of
Par
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Distributions
in Excess of
Net Income
|
|
Non-
controlling
interest
|
||||||||||||||||
Balance December 31, 2013
|
$
|
926,452
|
|
|
$
|
46
|
|
|
$
|
35
|
|
|
$
|
68,293
|
|
|
$
|
1,467,460
|
|
|
$
|
(6,637
|
)
|
|
$
|
(636,939
|
)
|
|
$
|
34,194
|
|
Net loss
|
(32,406
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,429
|
)
|
|
(977
|
)
|
||||||||
Other comprehensive loss
|
(1,265
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,190
|
)
|
|
—
|
|
|
(75
|
)
|
||||||||
Shares issued under employee compensation plans, net of shares retired
|
(1,942
|
)
|
|
—
|
|
|
—
|
|
|
456
|
|
|
(2,398
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Amortization of deferred compensation
|
5,463
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,463
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Distributions paid to common shareholders ($0.40 per share)
|
(27,466
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,466
|
)
|
|
—
|
|
||||||||
Distributions paid to Series A preferred shareholders ($1.0312 per share)
|
(4,744
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,744
|
)
|
|
—
|
|
||||||||
Distributions paid to Series B preferred shareholders ($0.9218 per share)
|
(3,180
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,180
|
)
|
|
—
|
|
||||||||
Noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Distributions paid to Operating Partnership unit holders ($0.40 per unit)
|
(852
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(852
|
)
|
||||||||
Other distributions to noncontrolling interests, net
|
(266
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(266
|
)
|
||||||||
Balance June 30, 2014
|
$
|
859,794
|
|
|
$
|
46
|
|
|
$
|
35
|
|
|
$
|
68,749
|
|
|
$
|
1,470,525
|
|
|
$
|
(7,827
|
)
|
|
$
|
(703,758
|
)
|
|
$
|
32,024
|
|
|
Six Months Ended
June 30, |
||||||
(in thousands of dollars)
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net (loss) income
|
$
|
(32,406
|
)
|
|
$
|
16,798
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
68,415
|
|
|
65,430
|
|
||
Amortization
|
4,949
|
|
|
6,995
|
|
||
Straight-line rent adjustments
|
(823
|
)
|
|
(757
|
)
|
||
Provision for doubtful accounts
|
629
|
|
|
1,103
|
|
||
Amortization of deferred compensation
|
5,463
|
|
|
4,422
|
|
||
Loss on hedge ineffectiveness
|
1,238
|
|
|
2,693
|
|
||
Gains on sales of real estate
|
(99
|
)
|
|
(33,254
|
)
|
||
Equity in income of partnerships, net of distributions
|
(853
|
)
|
|
(1,623
|
)
|
||
Impairment of assets and expensed project costs
|
17,659
|
|
|
—
|
|
||
Change in assets and liabilities:
|
|
|
|
||||
Net change in other assets
|
14,739
|
|
|
10,330
|
|
||
Net change in other liabilities
|
4,855
|
|
|
(14,372
|
)
|
||
Net cash provided by operating activities
|
83,766
|
|
|
57,765
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Investments in consolidated real estate acquisitions
|
(20,000
|
)
|
|
(60,879
|
)
|
||
Additions to construction in progress
|
(17,493
|
)
|
|
(13,775
|
)
|
||
Investments in real estate improvements
|
(19,502
|
)
|
|
(11,224
|
)
|
||
Cash proceeds from sales of real estate
|
23,600
|
|
|
126,895
|
|
||
Additions to leasehold improvements
|
(736
|
)
|
|
(145
|
)
|
||
Investments in partnerships
|
(3,651
|
)
|
|
(166
|
)
|
||
Capitalized leasing costs
|
(2,829
|
)
|
|
(2,722
|
)
|
||
Increase in cash escrows
|
(211
|
)
|
|
(470
|
)
|
||
Cash distributions from partnerships in excess of equity in income
|
1,482
|
|
|
577
|
|
||
Net cash (used in) provided by investing activities
|
(39,340
|
)
|
|
38,091
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net proceeds from issuance of common shares
|
—
|
|
|
220,300
|
|
||
Borrowings from (repayments of) term loans
|
130,000
|
|
|
(182,000
|
)
|
||
Net (repayments of) borrowings from revolving facility
|
(130,000
|
)
|
|
35,000
|
|
||
Proceeds from mortgage loans
|
—
|
|
|
76,692
|
|
||
Principal installments on mortgage loans
|
(7,849
|
)
|
|
(8,447
|
)
|
||
Repayments of mortgage loans
|
—
|
|
|
(217,524
|
)
|
||
Payment of deferred financing costs
|
(1,882
|
)
|
|
(3,613
|
)
|
||
Dividends paid to common shareholders
|
(27,466
|
)
|
|
(22,402
|
)
|
||
Dividends paid to preferred shareholders
|
(7,924
|
)
|
|
(7,924
|
)
|
||
Distributions paid to Operating Partnership unit holders
|
(852
|
)
|
|
(813
|
)
|
||
Value of shares of beneficial interest issued
|
2,691
|
|
|
828
|
|
||
Value of shares retired under equity incentive plans, net of shares issued
|
(4,633
|
)
|
|
(2,418
|
)
|
||
Net cash used in financing activities
|
(47,915
|
)
|
|
(112,321
|
)
|
||
Net change in cash and cash equivalents
|
(3,489
|
)
|
|
(16,465
|
)
|
||
Cash and cash equivalents, beginning of period
|
34,230
|
|
|
33,990
|
|
||
Cash and cash equivalents, end of period
|
$
|
30,741
|
|
|
$
|
17,525
|
|
(in thousands of dollars)
|
As of June 30,
2014 |
|
As of December 31,
2013 |
||||
Buildings, improvements and construction in progress
|
$
|
3,056,170
|
|
|
$
|
3,049,758
|
|
Land, including land held for development
|
475,041
|
|
|
478,110
|
|
||
Total investments in real estate
|
3,531,211
|
|
|
3,527,868
|
|
||
Accumulated depreciation
|
(1,063,080
|
)
|
|
(1,012,746
|
)
|
||
Net investments in real estate
|
$
|
2,468,131
|
|
|
$
|
2,515,122
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands of dollars)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Development/Redevelopment Activities:
|
|
|
|
|
|
|
|
||||||||
Salaries and benefits
|
$
|
431
|
|
|
$
|
136
|
|
|
$
|
825
|
|
|
$
|
313
|
|
Interest
|
191
|
|
|
213
|
|
|
294
|
|
|
289
|
|
||||
Leasing Activities:
|
|
|
|
|
|
|
|
||||||||
Salaries, commissions and benefits
|
1,409
|
|
|
1,185
|
|
|
2,829
|
|
|
2,722
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||
(in thousands of dollars)
|
|
2013
|
|
|
2013
|
||||
Real estate revenue
|
|
$
|
2,745
|
|
|
|
$
|
6,888
|
|
Expenses:
|
|
|
|
|
|
||||
Operating expenses
|
|
(795
|
)
|
|
|
(2,881
|
)
|
||
Depreciation and amortization
|
|
(363
|
)
|
|
|
(727
|
)
|
||
Interest expense
|
|
(587
|
)
|
|
|
(1,259
|
)
|
||
Total expenses
|
|
(1,745
|
)
|
|
|
(4,867
|
)
|
||
Operating results from discontinued operations
|
|
1,000
|
|
|
|
2,021
|
|
||
Gains on sales of discontinued operations
|
|
—
|
|
|
|
33,254
|
|
||
Income from discontinued operations
|
|
$
|
1,000
|
|
|
|
$
|
35,275
|
|
(in thousands of dollars)
|
As of June 30, 2014
|
|
As of December 31, 2013
|
||||
ASSETS:
|
|
|
|
||||
Investments in real estate, at cost:
|
|
|
|
||||
Operating properties
|
$
|
419,458
|
|
|
$
|
416,964
|
|
Construction in progress
|
20,037
|
|
|
2,298
|
|
||
Total investments in real estate
|
439,495
|
|
|
419,262
|
|
||
Accumulated depreciation
|
(175,850
|
)
|
|
(169,369
|
)
|
||
Net investments in real estate
|
263,645
|
|
|
249,893
|
|
||
Cash and cash equivalents
|
11,831
|
|
|
15,327
|
|
||
Deferred costs and other assets, net
|
18,011
|
|
|
19,474
|
|
||
Total assets
|
293,487
|
|
|
284,694
|
|
||
LIABILITIES AND PARTNERS’ DEFICIT:
|
|
|
|
||||
Mortgage loans payable
|
395,266
|
|
|
398,717
|
|
||
Other liabilities
|
9,841
|
|
|
9,667
|
|
||
Total liabilities
|
405,107
|
|
|
408,384
|
|
||
Net deficit
|
(111,620
|
)
|
|
(123,690
|
)
|
||
Partners’ share
|
(57,071
|
)
|
|
(66,325
|
)
|
||
PREIT’s share
|
(54,549
|
)
|
|
(57,365
|
)
|
||
Excess investment
(1)
|
9,044
|
|
|
8,837
|
|
||
Net investments and advances
|
$
|
(45,505
|
)
|
|
$
|
(48,528
|
)
|
|
|
|
|
||||
Investment in partnerships, at equity
|
$
|
19,170
|
|
|
$
|
15,963
|
|
Distributions in excess of partnership investments
|
(64,675
|
)
|
|
(64,491
|
)
|
||
Net investments and advances
|
$
|
(45,505
|
)
|
|
$
|
(48,528
|
)
|
(1)
|
Excess investment represents the unamortized difference between our investment and our share of the equity in the underlying net investment in the partnerships. The excess investment is amortized over the life of the properties, and the amortization is included in “Equity in income of partnerships.”
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands of dollars)
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Real estate revenue
|
$
|
20,331
|
|
|
$
|
19,528
|
|
|
$
|
41,507
|
|
|
$
|
39,722
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
(5,749
|
)
|
|
(5,725
|
)
|
|
(12,849
|
)
|
|
(11,694
|
)
|
||||
Interest expense
|
(5,452
|
)
|
|
(5,545
|
)
|
|
(10,927
|
)
|
|
(11,094
|
)
|
||||
Depreciation and amortization
|
(3,413
|
)
|
|
(3,534
|
)
|
|
(7,062
|
)
|
|
(7,106
|
)
|
||||
Total expenses
|
(14,614
|
)
|
|
(14,804
|
)
|
|
(30,838
|
)
|
|
(29,894
|
)
|
||||
Net income
|
5,717
|
|
|
4,724
|
|
|
10,669
|
|
|
9,828
|
|
||||
Less: Partners’ share
|
(2,858
|
)
|
|
(2,339
|
)
|
|
(5,331
|
)
|
|
(4,885
|
)
|
||||
PREIT’s share
|
2,859
|
|
|
2,385
|
|
|
5,338
|
|
|
4,943
|
|
||||
Amortization of excess investment
|
(75
|
)
|
|
(102
|
)
|
|
(152
|
)
|
|
(207
|
)
|
||||
Equity in income of partnerships
|
$
|
2,784
|
|
|
$
|
2,283
|
|
|
$
|
5,186
|
|
|
$
|
4,736
|
|
|
|
As of
|
||||||
(in thousands of dollars)
|
|
June 30, 2014
|
|
December 31, 2013
|
||||
Summarized balance sheet information
|
|
|
|
|
||||
Total assets
|
|
$
|
51,379
|
|
|
$
|
55,592
|
|
Mortgage loan payable
|
|
132,484
|
|
|
133,542
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in thousands of dollars)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Summarized statement of operations information
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
|
$
|
8,961
|
|
|
$
|
8,509
|
|
|
$
|
18,096
|
|
|
$
|
17,326
|
|
Property operating expenses
|
|
(2,455
|
)
|
|
(2,385
|
)
|
|
(5,211
|
)
|
|
(4,607
|
)
|
||||
Interest expense
|
|
(1,964
|
)
|
|
(1,994
|
)
|
|
(3,935
|
)
|
|
(3,996
|
)
|
||||
Net income
|
|
3,774
|
|
|
3,326
|
|
|
7,090
|
|
|
7,082
|
|
||||
PREIT's share of equity in income of partnership
|
|
1,887
|
|
|
1,663
|
|
|
3,545
|
|
|
3,541
|
|
Level
|
Ratio of Total Liabilities to Gross Asset Value
|
Applicable Margin
|
|
1
|
Less than 0.450 to 1.00
|
1.50
|
%
|
2
|
Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00
|
1.70
|
%
|
3
|
Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00
|
1.85
|
%
|
4
|
Equal to or greater than 0.550 to 1.00
|
2.05
|
%
|
Level
|
Ratio of Total Liabilities
to Gross Asset Value
|
5 Year Term Loan
Applicable Margin
|
7 Year Term Loan
Applicable Margin
|
1
|
Less than 0.450 to 1.00
|
1.35%
|
1.80%
|
2
|
Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00
|
1.45%
|
1.95%
|
3
|
Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00
|
1.60%
|
2.15%
|
4
|
Equal to or greater than 0.550 to 1.00
|
1.90%
|
2.35%
|
(in millions of dollars)
|
5 Year Term Loan
|
|
7 Year Term Loan
|
||||
Total facility
|
$
|
150.0
|
|
|
$
|
100.0
|
|
Amount outstanding
|
$
|
100.0
|
|
|
$
|
30.0
|
|
Interest rate
|
1.60
|
%
|
|
2.10
|
%
|
||
Maturity date
|
January 2019
|
|
|
January 2021
|
|
|
June 30, 2014
|
|
December 31, 2013
|
||||||||||||
(in millions of dollars)
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Mortgage loans
|
$
|
1,494.8
|
|
|
$
|
1,486.4
|
|
|
$
|
1,502.7
|
|
|
$
|
1,467.9
|
|
(in millions of dollars)
Notional Value
|
|
Fair Value at
June 30,
2014
(1)
|
|
Fair Value at
December 31,
2013 (1) |
|
Interest
Rate
|
|
Maturity Date
|
|||||
Interest Rate Swaps
|
|
|
|
|
|
|
|
|
|||||
$25.0
|
|
$
|
(0.3
|
)
|
|
$
|
(0.3
|
)
|
|
1.10
|
%
|
|
July 31, 2016
|
28.1
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
1.38
|
%
|
|
January 2, 2017
|
||
34.4
|
|
—
|
|
|
0.2
|
|
|
3.72
|
%
|
|
December 1, 2017
|
||
7.6
|
|
—
|
|
|
0.1
|
|
|
1.00
|
%
|
|
January 1, 2018
|
||
55.0
|
|
(0.1
|
)
|
|
0.2
|
|
|
1.12
|
%
|
|
January 1, 2018
|
||
48.0
|
|
(0.1
|
)
|
|
0.2
|
|
|
1.12
|
%
|
|
January 1, 2018
|
||
30.0
|
|
(0.5
|
)
|
|
N/A
|
|
|
1.78
|
%
|
|
January 2, 2019
|
||
20.0
|
|
(0.3
|
)
|
|
N/A
|
|
|
1.78
|
%
|
|
January 2, 2019
|
||
20.0
|
|
(0.3
|
)
|
|
N/A
|
|
|
1.78
|
%
|
|
January 2, 2019
|
||
20.0
|
|
(0.4
|
)
|
|
N/A
|
|
|
1.79
|
%
|
|
January 2, 2019
|
||
20.0
|
|
(0.4
|
)
|
|
N/A
|
|
|
1.79
|
%
|
|
January 2, 2019
|
||
20.0
|
|
(0.3
|
)
|
|
N/A
|
|
|
1.79
|
%
|
|
January 2, 2019
|
||
|
|
$
|
(3.2
|
)
|
|
$
|
(0.1
|
)
|
|
|
|
|
(1)
|
As of
June 30, 2014
and
December 31, 2013
, derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy. As of
June 30, 2014
and
December 31, 2013
, we did not have any significant recurring fair value measurements related to derivative instruments using significant unobservable inputs (Level 3).
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Consolidated
Statements of
Operations
Location
|
||||||||||||
(in millions of dollars)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate products
|
|
|
|
|
|
|
|
|
|
|
||||||||
(Loss) gain recognized in Other Comprehensive Income (Loss) on derivatives
|
|
$
|
(0.3
|
)
|
|
$
|
9.7
|
|
|
$
|
(2.2
|
)
|
|
$
|
7.6
|
|
|
N/A
|
Loss reclassified from Accumulated Other Comprehensive Income (Loss) into income (effective portion)
|
|
$
|
1.2
|
|
|
$
|
3.0
|
|
|
$
|
2.2
|
|
|
$
|
7.0
|
|
|
Interest expense
|
Loss recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing)
|
|
$
|
(1.2
|
)
|
|
$
|
(3.2
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(2.7
|
)
|
|
Interest expense
|
•
|
Except for two properties that we co-manage with our partner, all of the other entities are managed on a day-to-day basis by one of our other partners as the managing general partner in each of the respective partnerships. In the case of the co-managed properties, all decisions in the ordinary course of business are made jointly.
|
•
|
The managing general partner is responsible for establishing the operating and capital decisions of the partnership, including budgets, in the ordinary course of business.
|
•
|
All major decisions of each partnership, such as the sale, refinancing, expansion or rehabilitation of the property, require the approval of all partners.
|
•
|
Voting rights and the sharing of profits and losses are generally in proportion to the ownership percentages of each partner.
|
|
Occupancy
(1)
as of June 30,
|
||||||||||||||||
|
Consolidated
Properties
|
|
Unconsolidated
Properties
|
|
Combined
(2)
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||
Retail portfolio weighted average:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total excluding anchors
|
89.1
|
%
|
|
89.3
|
%
|
|
94.3
|
%
|
|
94.1
|
%
|
|
90.0
|
%
|
|
90.2
|
%
|
Total including anchors
|
92.9
|
%
|
|
93.1
|
%
|
|
96.0
|
%
|
|
95.8
|
%
|
|
93.3
|
%
|
|
93.4
|
%
|
Malls weighted average:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total excluding anchors
|
89.0
|
%
|
|
89.3
|
%
|
|
96.0
|
%
|
|
95.9
|
%
|
|
89.5
|
%
|
|
89.8
|
%
|
Total including anchors
|
92.9
|
%
|
|
93.1
|
%
|
|
97.2
|
%
|
|
97.2
|
%
|
|
93.1
|
%
|
|
93.3
|
%
|
Other retail properties
|
99.5
|
%
|
|
N/A
|
|
|
95.2
|
%
|
|
94.9
|
%
|
|
95.3
|
%
|
|
94.9
|
%
|
(1)
|
Occupancy for both periods presented includes all tenants irrespective of the term of their agreements.
|
(2)
|
Combined occupancy is calculated by using occupied gross leasable area (“GLA”) for consolidated and unconsolidated properties and dividing by total GLA for consolidated and unconsolidated properties.
|
|
|
|
|
|
|
Average Gross Rent
psf
|
|
Increase in Gross Rent psf
|
|
Annualized
Tenant
Improvements
psf
(2)
|
|||||||||||||||
|
|
Number
|
|
GLA
|
|
Previous
|
|
New
(1)
|
|
Dollar
|
|
Percentage
|
|
||||||||||||
New Leases:
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
1st Quarter
|
|
39
|
|
|
81,690
|
|
|
N/A
|
|
|
$
|
48.07
|
|
|
$
|
48.07
|
|
|
N/A
|
|
$
|
5.20
|
|
||
2nd Quarter
|
|
52
|
|
|
152,596
|
|
|
N/A
|
|
|
41.71
|
|
|
41.71
|
|
|
N/A
|
|
7.25
|
|
|||||
Total/Average
|
|
91
|
|
|
234,286
|
|
|
N/A
|
|
|
$
|
43.93
|
|
|
$
|
43.93
|
|
|
N/A
|
|
$
|
6.54
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Renewal - non-anchor tenants 10,000 square feet and under:
(4)
|
|||||||||||||||||||||||||
1st Quarter
|
|
48
|
|
|
145,510
|
|
|
$
|
36.02
|
|
|
$
|
38.68
|
|
|
$
|
2.66
|
|
|
7.4
|
%
|
|
$
|
—
|
|
2nd Quarter
|
|
105
|
|
|
286,783
|
|
|
33.75
|
|
|
35.27
|
|
|
1.52
|
|
|
4.5
|
%
|
|
—
|
|
||||
Total/Average
|
|
153
|
|
|
432,293
|
|
|
$
|
34.51
|
|
|
$
|
36.42
|
|
|
$
|
1.90
|
|
|
5.5
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Renewal - non-anchor tenants greater than 10,000 square feet:
(4)
|
|||||||||||||||||||||||||
1st Quarter
|
|
6
|
|
|
107,781
|
|
|
$
|
16.22
|
|
|
$
|
17.04
|
|
|
$
|
0.82
|
|
|
5.1
|
%
|
|
$
|
—
|
|
2nd Quarter
|
|
4
|
|
|
124,249
|
|
|
17.51
|
|
|
18.90
|
|
|
1.39
|
|
|
7.9
|
%
|
|
—
|
|
||||
Total/Average
|
|
10
|
|
|
232,030
|
|
|
$
|
16.91
|
|
|
$
|
18.04
|
|
|
$
|
1.13
|
|
|
6.7
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Anchor New:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
1st Quarter
|
|
1
|
|
|
52,055
|
|
|
N/A
|
|
|
$
|
7.50
|
|
|
$
|
7.50
|
|
|
N/A
|
|
|
$
|
4.00
|
|
|
2nd Quarter
|
|
1
|
|
|
98,391
|
|
|
N/A
|
|
|
15.34
|
|
|
15.34
|
|
|
N/A
|
|
|
8.33
|
|
||||
Total/Average
|
|
2
|
|
|
150,446
|
|
|
N/A
|
|
|
$
|
12.63
|
|
|
$
|
12.63
|
|
|
N/A
|
|
|
$
|
6.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Anchor Renewal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
1st Quarter
|
|
1
|
|
|
101,476
|
|
|
$
|
2.79
|
|
|
$
|
2.80
|
|
|
$
|
0.01
|
|
|
0.4
|
%
|
|
$
|
—
|
|
2nd Quarter
|
|
1
|
|
|
77,688
|
|
|
2.85
|
|
|
2.92
|
|
|
0.07
|
|
|
2.5
|
%
|
|
—
|
|
||||
Total/Average
|
|
2
|
|
|
179,164
|
|
|
$
|
2.82
|
|
|
$
|
2.85
|
|
|
$
|
0.04
|
|
|
1.3
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
New rent is the initial amount payable upon rent commencement. In certain cases, a lower rent may be payable until certain conditions in the lease are satisfied.
|
(2)
|
These leasing costs are presented as annualized costs per square foot and are spread uniformly over the initial lease term.
|
(3)
|
This category includes newly constructed and recommissioned space.
|
(4)
|
This category includes expansions and lease extensions.
|
|
Three Months Ended
June 30, |
|
% Change
2013 to
2014
|
|
Six Months Ended
June 30, |
|
% Change
2013 to
2014
|
||||||||||||
(in thousands of dollars)
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
||||||||||
Real estate revenue
|
$
|
106,145
|
|
|
$
|
103,548
|
|
|
3
|
%
|
|
214,754
|
|
|
206,726
|
|
|
4
|
%
|
Other income
|
680
|
|
|
1,395
|
|
|
(51
|
)%
|
|
1,458
|
|
|
2,283
|
|
|
(36
|
)%
|
||
Operating expenses
|
(44,364
|
)
|
|
(43,619
|
)
|
|
2
|
%
|
|
(96,081
|
)
|
|
(87,314
|
)
|
|
10
|
%
|
||
Depreciation and amortization
|
(37,135
|
)
|
|
(35,088
|
)
|
|
6
|
%
|
|
(73,370
|
)
|
|
(68,705
|
)
|
|
7
|
%
|
||
General and administrative expenses
|
(8,774
|
)
|
|
(9,606
|
)
|
|
(9
|
)%
|
|
(17,851
|
)
|
|
(18,462
|
)
|
|
(3
|
)%
|
||
Impairment of assets
|
(16,098
|
)
|
|
—
|
|
|
N/A
|
|
|
(17,398
|
)
|
|
—
|
|
|
N/A
|
|
||
Provision for employee separation expense
|
(4,877
|
)
|
|
(1,035
|
)
|
|
371
|
%
|
|
(4,877
|
)
|
|
(2,314
|
)
|
|
111
|
%
|
||
Acquisition costs and other expenses
|
(960
|
)
|
|
(198
|
)
|
|
385
|
%
|
|
(2,606
|
)
|
|
(400
|
)
|
|
552
|
%
|
||
Interest expense, net
|
(21,550
|
)
|
|
(27,689
|
)
|
|
(22
|
)%
|
|
(41,720
|
)
|
|
(55,027
|
)
|
|
(24
|
)%
|
||
Equity in income of partnerships
|
2,784
|
|
|
2,283
|
|
|
22
|
%
|
|
5,186
|
|
|
4,736
|
|
|
10
|
%
|
||
Gain on sale of real estate
|
99
|
|
|
—
|
|
|
N/A
|
|
|
99
|
|
|
—
|
|
|
N/A
|
|
||
Net loss from continuing operations
|
(24,050
|
)
|
|
(10,009
|
)
|
|
140
|
%
|
|
(32,406
|
)
|
|
(18,477
|
)
|
|
75
|
%
|
||
Operating results from discontinued operations
|
—
|
|
|
1,000
|
|
|
(100
|
)%
|
|
—
|
|
|
2,021
|
|
|
(100
|
)%
|
||
Gains on sales of discontinued operations
|
—
|
|
|
—
|
|
|
N/A
|
|
|
—
|
|
|
33,254
|
|
|
(100
|
)%
|
||
Net (loss) income
|
$
|
(24,050
|
)
|
|
$
|
(9,009
|
)
|
|
167
|
%
|
|
(32,406
|
)
|
|
16,798
|
|
|
(293
|
)%
|
•
|
an increase of $2.4 million in base rent, including $0.5 million related to properties acquired since March 2013. Base rent also increased due to new store openings and lease renewals with higher base rent, with notable increases at Moorestown Mall and Cherry Hill Mall; and
|
•
|
an increase of $0.4 million in other real estate revenue; partially offset by
|
•
|
a decrease of $0.3 million in percentage rent, due to a combination of lower tenant sales and lease renewals with higher base rents and corresponding higher sales breakpoints for calculating percentage rent.
|
•
|
an increase of $5.3 million in base rent, including $2.2 million related to properties acquired since December 2012. Base rent also increased due to new store openings and lease renewals with higher base rent, with notable increases at Moorestown Mall and Cherry Hill Mall; and
|
•
|
an increase of $3.4 million in expense reimbursements, following increases in snow removal expense, real estate taxes and utility expenses (see “—Operating Expenses”); partially offset by
|
•
|
a decrease of $0.7 million in percentage rent, due to a combination of lower tenant sales and lease renewals with higher base rents and corresponding higher sales breakpoints for calculating percentage rent. Tenant sales during the three months ending March 31, 2014 were negatively affected by severe winter weather that particularly affected our properties located in the Mid-Atlantic states.
|
•
|
an increase of $0.8 million in non-common area utility expense primarily as a result of an increase in electric rates that particularly affected our properties located in Pennsylvania, New Jersey and Maryland; and
|
•
|
an increase of $0.7 million in real estate tax expense, including a $0.5 million increase at three of our properties located in New Jersey due to a combination of increases in the real estate tax assessment values and real estate tax rates, partially offset by;
|
•
|
a decrease of $0.6 million in bad debt expense primarily as a result of a decrease in our estimated reserve related to straight line rent receivables, due to improved historical results in recent periods.
|
•
|
an increase of $3.9 million in non-common area utility expense as a result of a significant increase in electric rates at many of our properties. The extreme cold weather this winter, and resulting natural gas supply constraints, led to an historic spike in wholesale electricity rates that particularly affected our properties located in Pennsylvania, New Jersey and Maryland;
|
•
|
an increase of $3.3 million in common area maintenance expenses, including increases of $1.9 million in snow removal expense and $1.1 million in common area utility expense. Snow removal expense at our properties located in the Mid-Atlantic States, particularly Pennsylvania and New Jersey, was affected by a severe winter with numerous snowfalls during the three months ended March 31, 2014. In addition, common area utility expense increased as a result of higher electric expense rates as described in more detail above; and
|
•
|
an increase of $1.8 million in real estate tax expense, including a $1.0 million increase at three of our properties located in New Jersey due to a combination of increases in real estate tax assessment values and real estate tax rates.
|
|
Same Store
|
|
Non Same Store
|
|
Total
|
|||||||||||||||||||||||||||
|
Three Months Ended
June 30, |
|
Three Months Ended
June 30, |
|
Three Months Ended
June 30, |
|||||||||||||||||||||||||||
(in thousands of dollars)
|
2014
|
|
2013
|
|
%
Change
|
|
2014
|
|
2013
|
|
%
Change
|
|
2014
|
|
2013
|
|
%
Change
|
|||||||||||||||
Real estate revenue
|
$
|
112,706
|
|
|
$
|
109,845
|
|
|
3
|
%
|
|
$
|
3,526
|
|
|
$
|
6,133
|
|
|
(43
|
)%
|
|
$
|
116,232
|
|
|
$
|
115,978
|
|
|
—
|
%
|
Operating expenses
|
(45,533
|
)
|
|
(44,681
|
)
|
|
2
|
%
|
|
(1,692
|
)
|
|
(2,560
|
)
|
|
(34
|
)%
|
|
(47,225
|
)
|
|
(47,241
|
)
|
|
—
|
%
|
||||||
Net Operating Income
|
$
|
67,173
|
|
|
$
|
65,164
|
|
|
3
|
%
|
|
$
|
1,834
|
|
|
$
|
3,573
|
|
|
(49
|
)%
|
|
$
|
69,007
|
|
|
$
|
68,737
|
|
|
—
|
%
|
•
|
an increase of $1.8 million primarily as a result of a higher asset base resulting from capital improvements related to new tenants at our properties; and
|
•
|
an increase of $0.5 million associated with properties acquired since March 2013; partially offset by
|
•
|
a decrease of $0.2 million associated with the sale of South Mall in June 2014.
|
•
|
an increase of $3.0 million as a result of a higher asset base resulting from capital improvements related to new tenants at our properties; and
|
•
|
an increase of $1.9 million associated with properties acquired since December 2012; partially offset by
|
•
|
a decrease of $0.2 million associated with the sale of South Mall in June 2014.
|
(in thousands of dollars)
|
|
Three Months Ended June 30, 2013
|
|
Six Months Ended June 30, 2013
|
||||
Operating results of:
|
|
|
|
|
||||
Orlando Fashion Square
|
|
$
|
—
|
|
|
$
|
150
|
|
Paxton Towne Centre
|
|
—
|
|
|
(121
|
)
|
||
Phillipsburg Mall
|
|
—
|
|
|
(51
|
)
|
||
Chambersburg Mall
|
|
150
|
|
|
366
|
|
||
Christiana Center
|
|
669
|
|
|
1,321
|
|
||
Commons at Magnolia
|
|
181
|
|
|
356
|
|
||
Operating results from discontinued operations
|
|
1,000
|
|
|
2,021
|
|
||
Gains on sales of discontinued operations
|
|
—
|
|
|
33,254
|
|
||
Income from discontinued operations
|
|
$
|
1,000
|
|
|
$
|
35,275
|
|
(in thousands of dollars, except per share amounts)
|
Three Months Ended
June 30, 2014 |
|
% Change
2013 to 2014
|
|
Three Months Ended
June 30, 2013 |
||||
Funds from operations
|
$
|
26,477
|
|
|
10%
|
|
$
|
23,967
|
|
Acquisition costs
|
554
|
|
|
|
|
—
|
|
||
Provision for employee separation expense
|
4,877
|
|
|
|
|
1,035
|
|
||
Loss on hedge ineffectiveness
|
1,238
|
|
|
|
|
3,146
|
|
||
Accelerated amortization of deferred financing costs
|
—
|
|
|
|
|
112
|
|
||
Funds from operations, as adjusted
|
$
|
33,146
|
|
|
17%
|
|
$
|
28,260
|
|
Funds from operations per diluted share and OP Unit
|
$
|
0.37
|
|
|
3%
|
|
$
|
0.36
|
|
Funds from operations per diluted share and OP Unit, as adjusted
|
$
|
0.47
|
|
|
12%
|
|
$
|
0.42
|
|
|
|
|
|
|
|
||||
Weighted average number of shares outstanding
|
68,236
|
|
|
|
|
63,540
|
|
||
Weighted average effect of full conversion of OP Units
|
2,129
|
|
|
|
|
2,228
|
|
||
Effect of common share equivalents
|
309
|
|
|
|
|
727
|
|
||
Total weighted average shares outstanding, including OP Units
|
70,674
|
|
|
|
|
66,495
|
|
•
|
a
$4.8 million
decrease in interest expense (including our proportionate share of interest expense of our partnership properties) due to lower overall debt balances and lower average interest rates;
|
•
|
a decrease of $1.9 million from hedge ineffectiveness; and
|
•
|
a
$2.0 million
increase in NOI from Same Store properties; partially offset by
|
•
|
an increase of
$3.8 million
in provision for employee separation expense;
|
•
|
a $2.0 million decrease in NOI from properties sold; and
|
•
|
an increase of $0.6 million in acquisition costs related to the pending acquisition of Springfield Town Center.
|
(in thousands of dollars, except per share amounts)
|
Six Months Ended
June 30, 2014 |
|
% Change
2013 to 2014
|
|
Six Months Ended
June 30, 2013 |
||||
Funds from operations
|
$
|
53,092
|
|
|
10%
|
|
$
|
48,143
|
|
Acquisition costs
|
1,941
|
|
|
|
|
—
|
|
||
Provision for employee separation expense
|
4,877
|
|
|
|
|
2,314
|
|
||
Loss on hedge ineffectiveness
|
1,238
|
|
|
|
|
2,682
|
|
||
Accelerated amortization of deferred financing costs
|
—
|
|
|
|
|
1,026
|
|
||
Funds from operations, as adjusted
|
$
|
61,148
|
|
|
13%
|
|
$
|
54,165
|
|
Funds from operations per diluted share and OP Unit
|
$
|
0.75
|
|
|
(3)%
|
|
$
|
0.77
|
|
Funds from operations per diluted share and OP Unit, as adjusted
|
$
|
0.87
|
|
|
1%
|
|
$
|
0.86
|
|
|
|
|
|
|
|
||||
Weighted average number of shares outstanding
|
68,091
|
|
|
|
|
59,661
|
|
||
Weighted average effect of full conversion of OP Units
|
2,129
|
|
|
|
|
2,256
|
|
||
Effect of common share equivalents
|
326
|
|
|
|
|
780
|
|
||
Total weighted average shares outstanding, including OP Units
|
70,546
|
|
|
|
|
62,697
|
|
•
|
a $12.1 million decrease in interest expense (including our proportionate share of interest expense of our partnership properties) due to lower overall debt balances and lower average interest rates; and
|
•
|
and a decrease of $1.4 million from hedge ineffectiveness recorded; partially offset by
|
•
|
a $4.0 million decrease in NOI from from properties sold;
|
•
|
a $2.6 million increase in provision for employee separation expense;
|
•
|
a
$1.8 million
decrease in NOI from Same Store properties; and
|
•
|
an increase of $1.9 million in acquisition costs related to the pending acquisition of Springfield Town Center.
|
|
Three Months Ended June 30, 2014
|
||||||||||
|
Continuing Operations
|
|
|
||||||||
(in thousands of dollars)
|
Consolidated
|
|
Share of
Unconsolidated
Partnerships
|
|
Total
|
||||||
Real estate revenue
|
$
|
106,145
|
|
|
$
|
10,087
|
|
|
$
|
116,232
|
|
Operating expenses
|
(44,364
|
)
|
|
(2,861
|
)
|
|
(47,225
|
)
|
|||
Net operating income (NOI)
|
61,781
|
|
|
7,226
|
|
|
69,007
|
|
|||
General and administrative expenses
|
(8,774
|
)
|
|
—
|
|
|
(8,774
|
)
|
|||
Provision for employee separation expense
|
(4,877
|
)
|
|
—
|
|
|
(4,877
|
)
|
|||
Other income
|
680
|
|
|
—
|
|
|
680
|
|
|||
Acquisition costs and other expenses
|
(960
|
)
|
|
—
|
|
|
(960
|
)
|
|||
Interest expense, net
|
(21,550
|
)
|
|
(2,718
|
)
|
|
(24,268
|
)
|
|||
Depreciation of non real estate assets
|
(369
|
)
|
|
—
|
|
|
(369
|
)
|
|||
Preferred share dividends
|
(3,962
|
)
|
|
—
|
|
|
(3,962
|
)
|
|||
Funds from operations (FFO)
|
21,969
|
|
|
4,508
|
|
|
26,477
|
|
|||
Depreciation of real estate assets
|
(36,766
|
)
|
|
(1,724
|
)
|
|
(38,490
|
)
|
|||
Equity in income of partnerships
|
2,784
|
|
|
(2,784
|
)
|
|
—
|
|
|||
Gain on sale of real estate assets
|
99
|
|
|
—
|
|
|
99
|
|
|||
Impairment of assets
|
(16,098
|
)
|
|
—
|
|
|
(16,098
|
)
|
|||
Preferred share dividends
|
3,962
|
|
|
—
|
|
|
3,962
|
|
|||
Net loss
|
$
|
(24,050
|
)
|
|
$
|
—
|
|
|
$
|
(24,050
|
)
|
|
Three Months Ended June 30, 2013
|
||||||||||||||
|
Continuing Operations
|
|
|
|
|
||||||||||
(in thousands of dollars)
|
Consolidated
|
|
Share of
Unconsolidated
Partnerships
|
|
Discontinued
Operations
|
|
Total
|
||||||||
Real estate revenue
|
$
|
103,548
|
|
|
$
|
9,685
|
|
|
$
|
2,745
|
|
|
$
|
115,978
|
|
Operating expenses
|
(43,619
|
)
|
|
(2,827
|
)
|
|
(795
|
)
|
|
(47,241
|
)
|
||||
Net operating income (NOI)
|
59,929
|
|
|
6,858
|
|
|
1,950
|
|
|
68,737
|
|
||||
General and administrative expenses
|
(9,606
|
)
|
|
—
|
|
|
—
|
|
|
(9,606
|
)
|
||||
Provision for employee separation expense
|
(1,035
|
)
|
|
—
|
|
|
—
|
|
|
(1,035
|
)
|
||||
Other income
|
1,395
|
|
|
—
|
|
|
—
|
|
|
1,395
|
|
||||
Acquisition costs and other expenses
|
(198
|
)
|
|
—
|
|
|
—
|
|
|
(198
|
)
|
||||
Interest expense, net
|
(27,689
|
)
|
|
(2,765
|
)
|
|
(587
|
)
|
|
(31,041
|
)
|
||||
Depreciation of non real estate assets
|
(323
|
)
|
|
—
|
|
|
—
|
|
|
(323
|
)
|
||||
Preferred share dividends
|
(3,962
|
)
|
|
—
|
|
|
—
|
|
|
(3,962
|
)
|
||||
Funds from operations (FFO)
|
18,511
|
|
|
4,093
|
|
|
1,363
|
|
|
23,967
|
|
||||
Depreciation of real estate assets
|
(34,765
|
)
|
|
(1,810
|
)
|
|
(363
|
)
|
|
(36,938
|
)
|
||||
Equity in income of partnerships
|
2,283
|
|
|
(2,283
|
)
|
|
—
|
|
|
—
|
|
||||
Operating results from discontinued operations
|
1,000
|
|
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
||||
Preferred share dividends
|
3,962
|
|
|
—
|
|
|
—
|
|
|
3,962
|
|
||||
Net loss
|
$
|
(9,009
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(9,009
|
)
|
|
Six Months Ended June 30, 2014
|
||||||||||
|
Continuing Operations
|
|
|
||||||||
(in thousands of dollars)
|
Consolidated
|
|
Share of
Unconsolidated Partnerships |
|
Total
|
||||||
Real estate revenue
|
$
|
214,754
|
|
|
$
|
20,596
|
|
|
$
|
235,350
|
|
Operating expenses
|
(96,081
|
)
|
|
(6,396
|
)
|
|
(102,477
|
)
|
|||
Net operating income (NOI)
|
118,673
|
|
|
14,200
|
|
|
132,873
|
|
|||
General and administrative expenses
|
(17,851
|
)
|
|
—
|
|
|
(17,851
|
)
|
|||
Provision for employee separation expense
|
(4,877
|
)
|
|
—
|
|
|
(4,877
|
)
|
|||
Other income
|
1,458
|
|
|
—
|
|
|
1,458
|
|
|||
Acquisition costs and other expenses
|
(2,606
|
)
|
|
—
|
|
|
(2,606
|
)
|
|||
Interest expense, net
|
(41,720
|
)
|
|
(5,448
|
)
|
|
(47,168
|
)
|
|||
Depreciation of non real estate assets
|
(813
|
)
|
|
—
|
|
|
(813
|
)
|
|||
Preferred share dividends
|
(7,924
|
)
|
|
—
|
|
|
(7,924
|
)
|
|||
Funds from operations (FFO)
|
44,340
|
|
|
8,752
|
|
|
53,092
|
|
|||
Depreciation of real estate assets
|
(72,557
|
)
|
|
(3,566
|
)
|
|
(76,123
|
)
|
|||
Equity in income of partnerships
|
5,186
|
|
|
(5,186
|
)
|
|
—
|
|
|||
Gain on sale of real estate assets
|
99
|
|
|
—
|
|
|
99
|
|
|||
Impairment of assets
|
(17,398
|
)
|
|
—
|
|
|
(17,398
|
)
|
|||
Preferred share dividends
|
7,924
|
|
|
—
|
|
|
7,924
|
|
|||
Net loss
|
$
|
(32,406
|
)
|
|
$
|
—
|
|
|
$
|
(32,406
|
)
|
|
Six Months Ended June 30, 2013
|
||||||||||||||
|
Continuing Operations
|
|
|
|
|
||||||||||
(in thousands of dollars)
|
Consolidated
|
|
Share of
Unconsolidated Partnerships |
|
Discontinued
Operations |
|
Total
|
||||||||
Real estate revenue
|
$
|
206,726
|
|
|
$
|
19,704
|
|
|
$
|
6,888
|
|
|
$
|
233,318
|
|
Operating expenses
|
(87,314
|
)
|
|
(5,798
|
)
|
|
(2,881
|
)
|
|
(95,993
|
)
|
||||
Net operating income (NOI)
|
119,412
|
|
|
13,906
|
|
|
4,007
|
|
|
137,325
|
|
||||
General and administrative expenses
|
(18,462
|
)
|
|
—
|
|
|
—
|
|
|
(18,462
|
)
|
||||
Provision for employee separation expense
|
(2,314
|
)
|
|
—
|
|
|
—
|
|
|
(2,314
|
)
|
||||
Other income
|
2,283
|
|
|
—
|
|
|
—
|
|
|
2,283
|
|
||||
Acquisition costs and other expenses
|
(400
|
)
|
|
—
|
|
|
—
|
|
|
(400
|
)
|
||||
Interest expense, net
|
(55,027
|
)
|
|
(5,531
|
)
|
|
(1,259
|
)
|
|
(61,817
|
)
|
||||
Depreciation of non real estate assets
|
(548
|
)
|
|
—
|
|
|
—
|
|
|
(548
|
)
|
||||
Preferred share dividends
|
(7,924
|
)
|
|
—
|
|
|
—
|
|
|
(7,924
|
)
|
||||
Funds from operations (FFO)
|
37,020
|
|
|
8,375
|
|
|
2,748
|
|
|
48,143
|
|
||||
Depreciation of real estate assets
|
(68,157
|
)
|
|
(3,639
|
)
|
|
(727
|
)
|
|
(72,523
|
)
|
||||
Equity in income of partnerships
|
4,736
|
|
|
(4,736
|
)
|
|
—
|
|
|
—
|
|
||||
Operating results from discontinued operations
|
2,021
|
|
|
—
|
|
|
(2,021
|
)
|
|
—
|
|
||||
Gain on sale of discontinued operations
|
33,254
|
|
|
—
|
|
|
—
|
|
|
33,254
|
|
||||
Preferred share dividends
|
7,924
|
|
|
—
|
|
|
—
|
|
|
7,924
|
|
||||
Net income
|
$
|
16,798
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16,798
|
|
•
|
adverse changes or prolonged downturns in general, local or retail industry economic, financial, credit or capital market or competitive conditions, leading to a reduction in real estate revenue or cash flows or an increase in expenses;
|
•
|
deterioration in our tenants’ business operations and financial stability, including anchor or non anchor tenant bankruptcies, leasing delays or terminations, or lower sales, causing deferrals or declines in rent, percentage rent and cash flows;
|
•
|
inability to achieve targets for, or decreases in, property occupancy and rental rates, resulting in lower or delayed real estate revenue and operating income;
|
•
|
increases in operating costs, including increases that cannot be passed on to tenants, resulting in reduced operating income and cash flows; and
|
•
|
increases in interest rates resulting in higher borrowing costs.
|
Level
|
Ratio of Total Liabilities to Gross Asset Value
|
Applicable Margin
|
|
1
|
Less than 0.450 to 1.00
|
1.50
|
%
|
2
|
Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00
|
1.70
|
%
|
3
|
Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00
|
1.85
|
%
|
4
|
Equal to or greater than 0.550 to 1.00
|
2.05
|
%
|
Level
|
Ratio of Total Liabilities
to Gross Asset Value
|
5 Year Term Loan
Applicable Margin
|
7 Year Term Loan
Applicable Margin
|
1
|
Less than 0.450 to 1.00
|
1.35%
|
1.80%
|
2
|
Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00
|
1.45%
|
1.95%
|
3
|
Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00
|
1.60%
|
2.15%
|
4
|
Equal to or greater than 0.550 to 1.00
|
1.90%
|
2.35%
|
(in millions of dollars)
|
5 Year Term Loan
|
|
7 Year Term Loan
|
||||
Total facility
|
$
|
150.0
|
|
|
$
|
100.0
|
|
Initial borrowing
|
$
|
100.0
|
|
|
$
|
30.0
|
|
Initial interest rate
|
1.60
|
%
|
|
2.10
|
%
|
||
Maturity date
|
January 2019
|
|
|
January 2021
|
|
(in thousands of dollars)
|
Total
|
|
Remainder of 2014
|
|
2015-2016
|
|
2017-2018
|
|
Thereafter
|
||||||||||
Principal payments
|
$
|
117,080
|
|
|
$
|
9,608
|
|
|
$
|
35,519
|
|
|
$
|
24,476
|
|
|
$
|
47,477
|
|
Balloon payments
(1)
|
1,377,721
|
|
|
51,000
|
|
|
514,544
|
|
|
291,532
|
|
|
520,645
|
|
|||||
Total
|
$
|
1,494,801
|
|
|
$
|
60,608
|
|
|
$
|
550,063
|
|
|
$
|
316,008
|
|
|
$
|
568,122
|
|
(1)
|
In July 2014, we repaid a
$51.0 million
mortgage loan plus accrued interest on Logan Valley Mall in Altoona, Pennsylvania using
$50.0 million
from our 2013 Revolving Facility and
$1.0 million
from available working capital.
|
(in thousands of dollars)
|
Total
|
|
Remainder of
2014
|
|
2015-2016
|
|
2017-2018
|
|
Thereafter
|
||||||||||
Mortgage loans
(1)
|
$
|
1,494,801
|
|
|
$
|
60,608
|
|
|
$
|
550,063
|
|
|
$
|
316,008
|
|
|
$
|
568,122
|
|
Term Loans
|
130,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130,000
|
|
|||||
Letter of Credit
|
46,500
|
|
|
—
|
|
|
46,500
|
|
|
—
|
|
|
—
|
|
|||||
Interest on indebtedness
(2)
|
313,458
|
|
|
37,747
|
|
|
116,685
|
|
|
70,029
|
|
|
88,997
|
|
|||||
Operating leases
|
8,758
|
|
|
1,046
|
|
|
3,639
|
|
|
2,921
|
|
|
1,152
|
|
|||||
Ground leases
|
41,545
|
|
|
279
|
|
|
1,110
|
|
|
1,070
|
|
|
39,086
|
|
|||||
Springfield Town Center Contribution Agreement
(3)
|
465,000
|
|
|
465,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Development and redevelopment commitments
(4)
|
21,738
|
|
|
21,738
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
2,521,800
|
|
|
$
|
586,418
|
|
|
$
|
717,997
|
|
|
$
|
390,028
|
|
|
$
|
827,357
|
|
(1)
|
In July 2014, we repaid a
$51.0 million
mortgage loan plus accrued interest on Logan Valley Mall in Altoona, Pennsylvania using
$50.0 million
from our 2013 Revolving Facility and
$1.0 million
from available working capital.
|
(2)
|
Includes payments expected to be made in connection with interest rate swaps and forward starting interest rate swap agreements.
|
(3)
|
We expect to use Operating Partnership units with a value of $125.0 million towards the $465.0 million purchase price of Springfield Town Center. The Springfield Town Center closing is expected to occur between October 2014 and March 2015.
|
(4)
|
The timing of the payments of these amounts is uncertain. We expect that the majority of such payments will be made prior to December 31, 2014, but cannot provide any assurance that changed circumstances at these projects will not delay the settlement of these obligations.
|
•
|
our substantial debt and stated value of preferred shares and our high leverage ratio;
|
•
|
constraining leverage, interest and tangible net worth covenants under our 2013 Revolving Facility, our 2014 Term Loans and the Letter of Credit;
|
•
|
potential losses on impairment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill, including such losses that we might be required to record in connection with any dispositions of assets;
|
•
|
changes to our corporate management team and any resulting modifications to our business strategies;
|
•
|
our ability to refinance our existing indebtedness when it matures, on favorable terms or at all;
|
•
|
our ability to raise capital, including through the issuance of equity or equity-related securities if market conditions are favorable, through joint ventures or other partnerships, through sales of properties or interests in properties, or through other actions;
|
•
|
our ability to identify and execute on suitable acquisition opportunities and to integrate acquired properties into our
|
•
|
our partnerships and joint ventures with third parties to acquire or develop properties;
|
•
|
our short and long-term liquidity position;
|
•
|
current economic conditions and their effect on employment and consumer confidence and spending, and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the value and potential impairment of our properties;
|
•
|
changes in the retail industry, including consolidation and store closings, particularly among anchor tenants;
|
•
|
the effects of online shopping and other uses of technology on our retail tenants;
|
•
|
general economic, financial and political conditions, including credit and capital market conditions, changes in interest rates or unemployment;
|
•
|
risks relating to development and redevelopment activities;
|
•
|
our ability to sell properties that we seek to dispose of or our ability to obtain estimated sale prices;
|
•
|
our ability to maintain and increase property occupancy, sales and rental rates, in light of the relatively high number of leases that have expired or are expiring in the next two years;
|
•
|
acts of violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and
|
•
|
increases in operating costs that cannot be passed on to tenants;
|
•
|
concentration of our properties in the Mid-Atlantic region;
|
•
|
changes in local market conditions, such as the supply of or demand for retail space, or other competitive factors; and
|
•
|
potential dilution from any capital raising transactions or other equity issuances.
|
|
Fixed Rate Debt
|
|
Variable Rate Debt
|
||||||||||
(in thousands of dollars)
For the Year Ending December 31,
|
Principal
Payments
|
|
Weighted
Average
Interest Rate
(1)
|
|
Principal
Payments
|
|
Weighted
Average
Interest Rate
(1)
|
||||||
2014
|
$
|
8,808
|
|
|
5.22
|
%
|
|
$
|
51,800
|
|
(2)
|
2.26
|
%
|
2015
|
291,342
|
|
|
5.75
|
%
|
|
1,655
|
|
|
2.62
|
%
|
||
2016
|
231,340
|
|
|
5.38
|
%
|
|
25,726
|
|
|
2.29
|
%
|
||
2017
|
161,400
|
|
|
5.36
|
%
|
|
1,001
|
|
|
2.90
|
%
|
||
2018 and thereafter
|
551,980
|
|
|
4.37
|
%
|
|
299,749
|
|
(3)
|
2.16
|
%
|
(1)
|
Based on the weighted average interest rates in effect as of
June 30, 2014
.
|
(2)
|
In July 2014, we repaid a
$51.0 million
mortgage loan plus accrued interest on Logan Valley Mall in Altoona, Pennsylvania using
$50.0 million
from our 2013 Revolving Facility and
$1.0 million
from available working capital.
|
(3)
|
Includes 2014 Term Loan borrowings of $130.0 million with a weighted average interest rate of
1.72%
as of
June 30, 2014
.
|
•
|
Our disclosure controls and procedures are designed to ensure that the information that we are required to disclose in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
|
•
|
Our disclosure controls and procedures are effective to ensure that information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
|
Period
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid per
Share
|
|
Total Number of
Shares Purchased
as part of Publicly
Announced Plans
or Programs
|
|
Maximum Number
(or Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs
|
||||||
April 1—April 30, 2014
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
May 1—May 31, 2014
|
9,643
|
|
|
18.11
|
|
|
—
|
|
|
—
|
|
||
June 1—June 30, 2014
|
16,194
|
|
|
17.91
|
|
|
—
|
|
|
—
|
|
||
Total
|
25,837
|
|
|
$
|
17.98
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
2.1
|
Contribution Agreement, dated as of March 2, 2014, by and among Franconia Two, L.P., PR Springfield Town Center LLC, PREIT Associates, L.P. and Vornado Realty L.P., filed herewith and as Exhibit 2.1 to our Current Report on Form 8-K filed on March 3, 2014.
|
|
|
10.1
|
Separation of Employment Agreement and General Release between Pennsylvania Real Estate Investment Trust, PREIT Services, L.P. and George Rubin dated as of June 13, 2014.
|
|
|
31.1
|
Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101
|
Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014 is formatted in XBRL interactive data files: (i) Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013; (ii) Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2014 and 2013; (iii) Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013; (iv) Consolidated Statements of Equity for the six months ended June 30, 2014; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013; and (vi) Notes to Unaudited Consolidated Financial Statements.
|
|
|
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST
|
|
Date:
|
August 1, 2014
|
|
|
|
|
By:
|
/s/ Joseph F. Coradino
|
|
|
|
Joseph F. Coradino
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
By:
|
/s/ Robert F. McCadden
|
|
|
|
Robert F. McCadden
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
By:
|
/s/ Jonathen Bell
|
|
|
|
Jonathen Bell
|
|
|
|
Senior Vice President and Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer)
|
|
|
2.1*
|
Contribution Agreement, dated as of March 2, 2014, by and among Franconia Two, L.P., PR Springfield Town Center LLC, PREIT Associates, L.P. and Vornado Realty L.P., filed herewith and as Exhibit 2.1 to our Current Report on Form 8-K filed on March 3, 2014.
|
|
|
10.1*
|
Separation of Employment Agreement and General Release between Pennsylvania Real Estate Investment Trust, PREIT Services, L.P. and George Rubin dated as of June 13, 2014.
|
|
|
31.1*
|
Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2*
|
Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1**
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.2**
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101*
|
Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014 is formatted in XBRL interactive data files: (i) Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013; (ii) Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2014 and 2013; (iii) Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013; (iv) Consolidated Statements of Equity for the six months ended June 30, 2014; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013; and (vi) Notes to Unaudited Consolidated Financial Statements.
|
*
|
filed herewith
|
**
|
furnished herewith
|
|
|
ARTICLE I
DEFINITIONS
|
1
|
Section 1.1
|
Definitions
1
|
ARTICLE II
CONTRIBUTION AGREEMENT
|
15
|
Section 2.1
|
Agreement
15
|
Section 2.2
|
PREIT Newco
16
|
Section 2.3
|
Assumed Contracts, Warranties and Other Property
16
|
ARTICLE III
CONSIDERATION
|
17
|
Section 3.1
|
Consideration
17
|
Section 3.2
|
Assumption of Obligations
17
|
Section 3.3
|
Cash Amount; Section 1.707-4(d) Reimbursement
17
|
Section 3.4
|
Units
18
|
Section 3.5
|
Earnout
20
|
Section 3.6
|
Intentionally Omitted
.
21
|
Section 3.7
|
Assumption and Payoff of Vornado Debt
21
|
Section 3.8
|
No Financing Contingency
21
|
Section 3.9
|
Tax Reporting; Withholding; REIT Certifications
21
|
ARTICLE IV
DEPOSIT L/C
|
22
|
Section 4.1
|
Deposit L/C; Cash Deposit
22
|
ARTICLE V
INSPECTION OF PROPERTY
|
23
|
Section 5.1
|
Partnership’s Inspection of the Property
23
|
Section 5.2
|
Entry and Inspection Obligations
24
|
Section 5.3
|
Documents
25
|
Section 5.4
|
Contribution “AS IS”
26
|
Section 5.5
|
No Due Diligence Contingency
29
|
ARTICLE VI
TITLE AND SURVEY MATTERS
|
29
|
Section 6.1
|
Survey and Title Commitment
29
|
Section 6.2
|
Title Update; Title Objections
29
|
Section 6.3
|
Contributor Cure Rights
29
|
Section 6.4
|
Partnership Remedies for Title Defects
30
|
ARTICLE VII
PRE-CLOSING COVENANTS
|
30
|
Section 7.1
|
New Contracts; Modification of Contracts
30
|
Section 7.2
|
Leasing; TI Expenditures and Leasing Expenditures
30
|
Section 7.3
|
Estoppel Certificates
32
|
Section 7.4
|
Management of the Property
34
|
Section 7.5
|
Redevelopment
35
|
Section 7.6
|
Offsite Improvements
36
|
Section 7.7
|
Vornado Debt
37
|
Section 7.8
|
Removal of Storage Tank
37
|
Section 7.9
|
Recording of Deed 37
|
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
|
37
|
Section 8.1
|
Contributor’s Representations and Warranties
37
|
Section 8.2
|
Partnership’s Representations and Warranties
43
|
Section 8.3
|
No Other Representations and Warranties
45
|
Section 8.4
|
Survival of Representations and Warranties
45
|
Section 8.5
|
Post-Closing Liability for Representations and Warranties
45
|
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
|
46
|
Section 9.1
|
Conditions Precedent to Obligation of the Partnership
46
|
Section 9.2
|
Conditions Precedent to Obligation of Contributor
47
|
ARTICLE X
CLOSING
|
48
|
Section 10.1
|
Closing
48
|
Section 10.2
|
Partnership’s Closing Obligations
49
|
Section 10.3
|
Contributor’s Closing Obligations
51
|
Section 10.4
|
Prorations and Credits
53
|
Section 10.5
|
Method of Rent Adjustment
56
|
Section 10.6
|
Insurance
57
|
Section 10.7
|
Utility Service Deposits
57
|
Section 10.8
|
Costs of Title Company and Closing Costs
57
|
Section 10.9
|
Cooperation and General Efforts
58
|
ARTICLE XI
CONDEMNATION AND CASUALTY
|
58
|
Section 11.1
|
Casualty
58
|
Section 11.2
|
Condemnation of Property
59
|
ARTICLE XII
CONFIDENTIALITY/PRESS RELEASES
|
59
|
Section 12.1
|
Confidentiality
59
|
ARTICLE XIII
REMEDIES
|
60
|
Section 13.1
|
Failure to Satisfy Redevelopment Condition
60
|
Section 13.2
|
Other Defaults by Contributor
62
|
Section 13.3
|
Default by the Partnership
62
|
Section 13.4
|
Termination for Changes in Tax Laws
63
|
Section 13.5
|
No Consequential Damages
63
|
Section 13.6
|
Return of Deposit L/C(s), Initial Cash Deposit or Cash Deposit
63
|
Section 13.7
|
Survival
64
|
ARTICLE XIV
NOTICES
|
64
|
Section 14.1
|
Notices
64
|
ARTICLE XV
ASSIGNMENT AND BINDING EFFECT; TRANSFER of REAL property
|
66
|
Section 15.1
|
Assignment; Binding Effect
66
|
Section 15.2
|
Transfer of Real Property
66
|
ARTICLE XVI
BROKERAGE; VRLP GUARANTEE
|
66
|
Section 16.1
|
Brokers
66
|
Section 16.2
|
VRLP Guarantee
66
|
Section 16.3
|
Representations and Warranties of VRLP
67
|
ARTICLE XVII
MISCELLANEOUS
|
68
|
Section 17.1
|
Waivers
68
|
Section 17.2
|
Time of the Essence
68
|
Section 17.3
|
Intentionally Omitted
68
|
Section 17.4
|
Arbitration
68
|
Section 17.5
|
Construction
68
|
Section 17.6
|
Counterparts
69
|
Section 17.7
|
Severability
69
|
Section 17.8
|
Business Days
69
|
Section 17.9
|
Entire Agreement
69
|
Section 17.10
|
Governing Law
69
|
Section 17.11
|
No Recording
69
|
Section 17.12
|
Further Actions
70
|
Section 17.13
|
No Partnership
70
|
Section 17.14
|
Limitations on Benefits
70
|
Section 17.15
|
Tax Protest
70
|
Section 17.16
|
Waiver of Jury Trial
70
|
Section 17.17
|
Attorneys’ Fees
71
|
Section 17.18
|
Independent Counsel
71
|
Exhibit 1.1(D)
|
Related Work Requirements
|
(i)
|
liens for Taxes and assessments not yet due and payable (it being agreed that if any Tax or assessment is levied or assessed with respect to the Property after the Effective Date and the owner of the Property has the election to pay such Tax or assessment either immediately or under a payment plan with interest, Contributor may elect to pay under a payment plan,
provided
that Contributor shall pay at or prior to closing any installment due prior to the Closing Date and
provided
,
further
, that either (i) such payment plan allows the unpaid portion of such Tax or assessment to be paid on the Closing Date without penalty (and without any interest relating to a period after the Closing Date being due) or (ii) Contributor pays such penalty or interest at Closing;
|
(ii)
|
any exclusions from coverage set forth in the jacket in the form of owner’s policy of title insurance used by the Title Company, it being agreed that Contributor shall deliver a title affidavit in the form attached hereto as
Exhibit 10.3(m)
to permit the Title Company to omit or modify certain of such exclusions;
|
(iii)
|
any exceptions caused by the Partnership, its agents, representatives or employees;
|
(iv)
|
any matters deemed to constitute Permitted Exceptions under Article VI hereof;
|
(v)
|
matters disclosed or described on the Survey;
|
(vi)
|
title defects and encumbrances to title that are listed on
Exhibit 1.1(A)
;
|
(vii)
|
such other exceptions as the Title Company shall commit to insure over without any additional cost to the Partnership, whether such insurance is made available in consideration of payment, bonding, indemnity of Contributor or otherwise;
|
(viii)
|
notices of commencement or other liens or encumbrances related to ongoing construction build-out of any Tenant spaces pursuant to the terms of Leases, and any mechanic’s liens filed with respect to work at the Property performed by or for (other than by Contributor) any of the Tenants and which the Tenant in question remains obligated to pay and discharge in full at its sole cost and expense, and any other lien, encumbrance or governmental obligation that affects solely the property of a Tenant or subtenant or is caused by a Tenant or subtenant and which such Tenant or subtenant is responsible to remove;
|
(ix)
|
notices of commencement or other liens or encumbrances related to the Redevelopment, and any mechanic’s liens filed with respect to the same;
|
(x)
|
the Leases and the Assumed Contracts, and the rights of Tenants under the Leases;
|
(xi)
|
liens and security interests securing or evidencing the Vornado Debt;
|
(xii)
|
any state of facts which are reflected in the Plans and Specifications;
|
(xiii)
|
possible non-material variations between the tax diagram on the tax map and the record description of the Real Property;
|
(xiv)
|
all rights for electricity, gas, telephone, water, cable, television and any other utilities to maintain and operate lines, cables, poles and distribution boxes serving the Property in, over, upon or under the Property;
provided
that such matters, individually or in the aggregate, could not reasonably be expected to materially adversely impact or materially interfere with the Property’s value or use for its current or intended purpose;
|
(xv)
|
local, state and federal Governmental Regulations, including building, land use and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Property, and any violations thereof, whether or not noticed; and
|
(xv)
|
imperfections of title or encumbrances which, individually or in the aggregate, could not reasonably be expected to materially adversely impact or materially interfere with the Property’s value or use for its current or intended purpose.
|
(i)
|
ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY,
|
(ii)
|
ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE,
|
(iii)
|
ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
|
(iv)
|
ANY RIGHTS OF THE PARTNERSHIP UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION,
|
(v)
|
ANY CLAIM BY THE PARTNERSHIP FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, PATENT OR LATENT, WITH RESPECT TO THE IMPROVEMENTS OR THE CONSTRUCTION OR
|
(vi)
|
THE FINANCIAL CONDITION OR PROSPECTS OF THE PROPERTY OR ANY TENANT OR PROSPECTIVE TENANT,
|
(vii)
|
ANY OPEN BUILDING PERMITS OR OUTSTANDING BUILDING CODE VIOLATIONS RELATED TO THE PROPERTY, WHICH EXCEPT AS OTHERWISE SET FORTH HEREIN THE PARTNERSHIP AGREES CONTRIBUTOR SHALL HAVE NO OBLIGATION TO CURE, AND
|
(viii)
|
THE COMPLIANCE OR LACK THEREOF OF THE REAL PROPERTY OR THE IMPROVEMENTS WITH GOVERNMENTAL REGULATIONS, INCLUDING ENVIRONMENTAL LAWS, NOW EXISTING OR HEREAFTER ENACTED OR PROMULGATED.
|
By:
|
Pennsylvania Real Estate Investment Trust, its General Partner
|
By:
|
Franconia GP LLC
|
By:
|
/s/ Joseph Macnow
|
By:
|
Vornado Realty Trust, its general partner
|
By:
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/s/ Joseph Macnow
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Pennsylvania Real Estate Investment Trust;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Joseph F. Coradino
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Name:
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Joseph F. Coradino
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Title:
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Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Pennsylvania Real Estate Investment Trust;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of trustees (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Robert F. McCadden
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Name:
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Robert F. McCadden
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Title:
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Chief Financial Officer
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/s/ Joseph F. Coradino
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Name:
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Joseph F. Coradino
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Title:
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Chief Executive Officer
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/s/ Robert F. McCadden
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Name:
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Robert F. McCadden
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Title:
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Chief Financial Officer
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