PENNSYLVANIA REAL ESTATE INVESTMENT TRUST (Form: 10-K/A, Received: 03/28/2019 17:00:26)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________

FORM 10-K/A

(Amendment No. 1)

_________________________________________________________



ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2018



¨	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 incorporation or organization)		(IRS Employer Identification No.)

The Bellevue 200 South Broad Street Philadelphia, Pennsylvania		19102
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (215) 875-0700

_________________________________________________________

Securities Registered Pursuant to Section 12(b) of the Act:



Title of each class		Name of each exchange on which registered
Shares of Beneficial Interest, par value $1.00 per share		New York Stock Exchange
Series B Preferred Shares, par value $0.01 per share		New York Stock Exchange
Series C Preferred Shares, par value $0.01 per share		New York Stock Exchange
Series D Preferred Shares, par value $0.01 per share		New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

_________________________________________________________

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ý No ¨

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No ý

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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý 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. ý

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý	Accelerated filer	¨

Non-accelerated filer	o	Smaller reporting company	¨

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected to not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

The aggregate market value, as of June 30, 2018, of the shares of beneficial interest, par value $1.00 per share, of the Registrant held by non-affiliates of the Registrant was approximately $0.8 billion. (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 February 19, 2019, 71,095,084 shares of beneficial interest, par value $1.00 per share, of the Registrant were outstanding.

_________________________________________________________

Documents Incorporated by Reference

Portions of the Registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to regulation 14A relating to its 2019 Annual Meeting of Shareholders are incorporated by reference in Part III of this Form 10-K.

Explanatory Note

Pennsylvania Real Estate Investment Trust (“we” or the “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Amendment”) to its Annual Report on Form 10-K for the year ended December 31, 2018, which was originally filed on February 25, 2019 (the “Original 10-K”). We are filing this Amendment respectively to amend Item 15 of Part IV of the Original 10-K to include the separate consolidated financial statements of Lehigh Valley Associates and Subsidiary ("Associates") as required by Rule 3-09 under Regulation S-X (the “Rule 3-09 financial statements”), which were not included in the Original 10-K because they were not available at the time of its filing. Associates is the owner of a substantial portion of Lehigh Valley Mall (the "Mall") in Allentown, Pennsylvania. The Company owns a 50% interest in Associates, which is not consolidated for financial reporting purposes. Associates met the criteria of a significant subsidiary under Rule 3-09 for the years ended December 31, 2016. The Rule 3-09 financial statements include unaudited consolidated balance sheets of Associates as of December 31, 2018 and 2017, respectively, and the related unaudited consolidated statements of operations, partners' deficit and statements of cash flows for the years ended December 31, 2018 and 2017, respectively (see Exhibit 99.1), and audited consolidated balance sheets of Associates as of December 31, 2016 and 2015, and the related consolidated statements of operations, partners' deficit and statements of cash flows for each of the three years in the period ended December 31, 2016 (see Exhibit 99.2).

We are also amending Item 15 of the Original 10-K to include certain other exhibits. This Amendment only amends Item 15 of the Original 10-K, and does not amend or modify any of the other information included in the Original 10-K, nor does it modify or update any information included in the Original 10-K to reflect any events, developments or results that occurred subsequent to February 25, 2019 . Accordingly, this Amendment should be read in conjunction with the Original 10-K and the Company’s other filings made with the Securities and Exchange Commission subsequent to the filing of the Original 10-K.

Item 15. Exhibits and Financial Statement Schedules

The following documents are included in this report:

(1) Financial Statements

The consolidated financial statements of Pennsylvania Real Estate Investment Trust, as listed in Item 15 of the Original 10-K, are included in Item 8 of the Original 10-K.

(2) Financial Statement Schedules

The financial statement schedules of Pennsylvania Real Estate Investment Trust, as listed in Item 15 of the Original 10-K, are included in Item 8 of the Original 10-K.

The financial statements of Associates required by Rule 3-09 of Regulation S-X are provided as Exhibit 99.1 and Exhibit 99.2 to this Amendment.

The Company presented summary financial information for the Mall in the notes to its consolidated financial statements that were included in the Original 10-K. That summary information differs from the Rule 3-09 Financial Statements because the summary information in the Company's consolidated financial statements includes asset and income statement information for a small portion of the Mall that is not owned by Associates. There are also some differences because the Company and Associates have grouped certain balance sheet and income statement accounts differently. The Company does not believe that these differences are significant.

Exhibits

The following exhibits are filed as part of this Amendment or are hereby incorporated by reference to exhibits previously filed with the SEC:




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 as Exhibit 10.1 to PREIT’s Quarterly Report on Form 10-Q filed on August 1, 2014, is incorporated herein by reference.

3.1		Amended and Restated Trust Agreement dated December 18, 2008, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on December 23, 2008, is incorporated herein by reference.

3.2		Amendment, dated June 7, 2012, to Amended and Restated Trust Agreement of Pennsylvania Real Estate Investment Trust dated December 18, 2008, as amended, filed as Exhibit 3.1 to PREIT’s Current Report on Form 8-K filed on June 12, 2012, is incorporated herein by reference.

3.3		By-Laws of PREIT as amended through July 26, 2007, filed as Exhibit 3.2 to PREIT’s Current Report on Form 8-K filed on August 1, 2007, is incorporated herein by reference.

3.4		Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 8.25% Series A Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.2 to PREIT’s Form 8-A filed on April 20, 2012, is incorporated herein by reference.

3.5		Second Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 7.375% Series B Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.1 to PREIT’s Form 8-A filed on October 11, 2012, is incorporated herein by reference.

3.6		Third Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 7.20% Series C Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.4 to PREIT’s Form 8-A filed on January 27, 2017, is incorporated by reference.

3.7		Fourth Designating Amendment to Trust Agreement designating the rights, preferences, privileges, qualifications, limitations and restrictions of PREIT’s 6.875% Series D Cumulative Redeemable Perpetual Preferred Shares, liquidation preference $25.00 per share, par value $0.01 per share, filed as Exhibit 3.5 to PREIT’s Form 8-A filed on September 11, 2017, is incorporated herein by reference.

4.1		First Amended and Restated Agreement of Limited Partnership, dated September 30, 1997, of PREIT Associates, L.P., filed as Exhibit 4.15 to PREIT’s Current Report on Form 8-K dated October 14, 1997, is incorporated herein by reference.

4.2		First Amendment to the First Amended and Restated Agreement of Limited Partnership, dated July 15, 1998, of PREIT Associates, L.P., filed as Exhibit 4.1 to PREIT’s Quarterly Report on Form 10-Q filed on November 13, 1998, is incorporated herein by reference.

4.3		Second Amendment to the First Amended and Restated Agreement of Limited Partnership, dated July 15, 1998, of PREIT Associates, L.P., filed as Exhibit 4.2 to PREIT’s Quarterly Report on Form 10-Q filed on November 13, 1998, is incorporated herein by reference.

4.4		Third Amendment to the First Amended and Restated Agreement of Limited Partnership, dated October 13, 1998, of PREIT Associates, L.P., filed as Exhibit 4.3 to PREIT’s Quarterly Report on Form 10-Q filed on November 13, 1998, is incorporated herein by reference.

4.5		Fourth Amendment to First Amended and Restated Agreement of Limited Partnership, dated May 13, 2003, of PREIT Associates L.P., filed as Exhibit 4.1 to PREIT’s Quarterly Report on Form 10-Q filed on November 7, 2003, is incorporated herein by reference.

4.6		Addendum to First Amended and Restated Agreement of Limited Partnership of PREIT Associates, L.P. designating the rights, obligations, duties and preferences of Series A Preferred Units, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on April 20, 2012, is incorporated herein by reference.

4.7		Second Addendum to First Amended and Restated Agreement of Limited Partnership of PREIT Associates, L.P. designating the rights, obligations, duties and preferences of the Series B Preferred Units, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on October 11, 2012, is incorporated herein by reference.



4.8		Third Addendum to First Amended and Restated Agreement of Limited Partnership of PREIT Associates, L.P. designating the rights, obligations, duties and preferences of the Series C Preferred Units, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on January 27, 2017, is incorporated herein by reference.

4.9		Fourth Addendum to First Amended and Restated Agreement of Limited Partnership of PREIT Associates, L. P. designating the rights, obligations, duties and preferences of the Series D Preferred Units, filed as Exhibit 10.1 to PREIT’s Current Report on form 8-K filed on September 11, 2017, is incorporated herein by reference.

4.10		Form of share certificate evidencing the 8.25% Series A Cumulative Redeemable Perpetual Preferred Shares, filed as Exhibit 4.1 to PREIT’s Form 8-A filed on April 20, 2012, is incorporated herein by reference.

4.11		Form of share certificate evidencing the 7.375% Series B Cumulative Redeemable Perpetual Preferred Shares, filed as Exhibit 4.1 to PREIT’s Form 8-A filed on October 11, 2012, is incorporated herein by reference.

4.12		Form of share certificate evidencing the 7.20% Series C Cumulative Redeemable Perpetual Preferred Shares, filed as Exhibit 4.3 to PREIT’s Form 8-A filed on January 27, 2017, is incorporated herein by reference.

4.13		Form of share certificate evidencing the 6.875% Series D Cumulative Redeemable Perpetual Preferred Shares, filed as Exhibit 4.4 to PREIT’s Form 8-A filed on September 11, 2017, is incorporated herein by reference.

4.14		Registration Rights Agreement, dated March 31, 2015, between Pennsylvania Real Estate Investment Trust, Franconia Two, L.P. and PREIT Associates, L.P. filed as Exhibit 4.1 to PREIT’s Current Report on Form 8-K on April 1, 2015, is incorporated herein by reference.

10.1		Amended and Restated Credit Agreement dated as of May 24, 2018 by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT and the financial institutions party thereto, filed as Exhibit 10.1 to PREIT’s Quarterly Report on Form 10-Q filed on August 3, 2018, is incorporated herein by reference.

10.2		Amended and Restated Guaranty dated as of May 24, 2018 in favor of Wells Fargo Bank, National Association, executed by certain direct and indirect subsidiaries of PREIT Associates, L.P., filed as Exhibit 10.2 to PREIT’s Quarterly Report on Form 10-Q filed on August 3, 2018, is incorporated herein by reference.

10.3		Seven-Year Term Loan Agreement dated as of January 8, 2014 by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT and the financial institutions party thereto, filed as Exhibit 10.9 to PREIT’s Annual Report on Form 10-K filed on February 28, 2014, is incorporated herein by reference.

10.4		Seven-Year Term Loan Guaranty dated as of January 8, 2014 in favor of Wells Fargo Bank, National Association, executed by certain direct and indirect subsidiaries of PREIT Associates, L.P, filed as Exhibit 10.10 to PREIT’s Annual Report on Form 10-K filed on February 28, 2014, is incorporated herein by reference.

10.5		First Amendment to Seven-Year Term Loan dated as of November 3, 2014 by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT and the financial institutions party thereto, filed as Exhibit 10.12 to PREIT’s Annual Report on Form 10-K filed on February 23, 2015, is incorporated herein by reference.

10.6		Third Amendment to Seven-Year Term Loan Agreement dated as of June 26, 2015 by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT and the financial institutions party thereto, filed as Exhibit 10.3 to PREIT’s Quarterly Report on Form 10-Q filed on August 3, 2015, is incorporated herein by reference.

10.7		Fourth Amendment to Seven-Year Term Loan Agreement dated as of June 30, 2016 by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT and the financial institutions party thereto, filed as Exhibit 10.2 to PREIT’s Quarterly Report of Form 10-Q filed on July 28, 2016, is incorporated herein by reference.

10.8		Fifth Amendment to Seven-Year Term Loan Agreement dated as of June 5, 2018 by and among PREIT Associates, L.P., PREIT-RUBIN, Inc., PREIT and the financial institutions party thereto, filed as Exhibit 10.3 to PREIT’s Quarterly Report on Form 10-Q filed on August 3, 2018, is incorporated herein by reference.

10.9		Promissory Note, dated August 15, 2012, in the principal amount of $150.0 million, issued by Cherry Hill Center, LLC and PR Cherry Hill STW LLC in favor of New York Life Insurance Company, filed as Exhibit 10.3 to PREIT’s Quarterly Report on Form 10-Q filed on October 26, 2012, is incorporated herein by reference.

10.10		Promissory Note, dated August 15, 2012, in the principal amount of $150.0 million, issued by Cherry Hill Center, LLC and PR Cherry Hill STW LLC in favor of Teachers Insurance and Annuity Association of America, filed as Exhibit 10.4 to PREIT’s Quarterly Report on Form 10-Q filed on October 26, 2012, is incorporated herein by reference.

10.11		Promissory Note, dated December 9, 2005, in the principal amount of $80.0 million, issued by WG Park, L.P. in favor of Prudential Insurance Company of America, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on December 9, 2005, is incorporated herein by reference.



10.12		Promissory Note, dated December 9, 2005, in the principal amount of $80.0 million, issued by WG Park, L.P. in favor of Teachers Insurance and Annuity Association of America, filed as Exhibit 10.2 to PREIT’s Current Report on Form 8-K filed on December 9, 2005, is incorporated herein by reference.

10.13		Promissory Note, dated March 24, 2006, in the principal amount of $156.5 million, issued by PR Woodland Limited Partnership in favor of Prudential Mortgage Capital Company, LLC, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on March 30, 2006, is incorporated herein by reference.

+10.14		Amended and Restated Employment Agreement dated as of April 25, 2012 by and between PREIT and Joseph F. Coradino, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on April 27, 2012, is incorporated herein by reference.

+10.15		Amended and Restated Nonqualified Supplemental Executive Retirement Agreement dated as of June 7, 2012 by and between PREIT and Joseph F. Coradino, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on June 12, 2012, is incorporated herein by reference.

+10.16		Amended and Restated Employment Agreement, dated as of December 31, 2008, between PREIT and Robert F. McCadden, filed as Exhibit 10.4 to PREIT’s Current Report on Form 8-K filed on December 31, 2008, is incorporated herein by reference.

+10.17		Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 6, 2009, between PREIT and Robert F. McCadden, filed as Exhibit 10.1 to PREIT’s Quarterly Report on Form 10-Q filed on May 11, 2009, is incorporated herein by reference.

+10.18		Nonqualified Supplemental Executive Retirement Agreement, effective as of January 1, 2009, between PREIT and Robert F. McCadden, filed as Exhibit 10.9 to PREIT’s Current Report on Form 8-K filed on December 31, 2008, is incorporated herein by reference.

+10.19		Letter Agreement, dated as of May 8, 2013 by and between PREIT Services, LLC and Mario C. Ventresca, Jr., filed as Exhibit 10.29 to PREIT’s Annual Report on form 10-K filed on February 26, 2016, is incorporated herein by reference.

+10.20		Letter Agreement, dated as of May 8, 2013 by and between PREIT Services, LLC and Andrew M. Ioannou, filed as Exhibit 10.70 to PREIT’s Annual Report on Form 10-K filed on February 28, 2017, is incorporated herein by reference.

+10.21**		Letter Agreement, dated as of December 21, 2017 by and between PREIT Services, LLC and Lisa M. Most.

+10.22		Amended and Restated Employment Agreement, effective as of December 31, 2008, between PREIT and Bruce Goldman, filed as Exhibit 10.59 to PREIT’s Annual Report on Form 10-K filed on March 2, 2009, is incorporated herein by reference.

+10.23		Nonqualified Supplemental Executive Retirement Agreement, effective as of January 1, 2009, between PREIT and Bruce Goldman, filed as Exhibit 10.73 to PREIT’s Annual Report on Form 10-K filed on March 2, 2009, is incorporated herein by reference.

+10.24		Separation of Employment Agreement dated December 21, 2017 between PREIT and Bruce Goldman, filed as Exhibit 10.49 to PREIT’s Annual Report on Form 10-K filed on February 16, 2018 is incorporated herein by reference.

+10.25		Severance Agreement and General Release dated September 7, 2018 between PREIT Services, LLC and Jonathan Bell, filed as Exhibit 10.1 to PREIT’s Quarterly Report on Form 10-Q filed on November 1, 2018, is incorporated herein by reference.

+10.26		Amended and Restated Employee Share Purchase Plan, filed as Exhibit 10.2 to PREIT’s Current Report on Form 8-K filed on June 1, 2018, is incorporated herein by reference.

+10.27		PREIT’s Second Amended and Restated 2003 Equity Incentive Plan, filed as Exhibit 10.3 to PREIT’s Current Report on Form 8-K filed on June 12, 2012, is incorporated herein by reference.

+10.28		Amendment No. 1 to Second Amended and Restated 2003 Equity Plan, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on July 22, 2013, is incorporated herein by reference.

+10.29		Form of Restricted Share Award Agreement under PREIT’s 2003 Equity Incentive Plan filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on February 26, 2008, is incorporated herein by reference.

+10.30		Form of Restricted Share Award Agreement under PREIT’s 2003 Equity Incentive Plan filed as Exhibit 10.3 to PREIT’s Quarterly Report on Form 10-Q filed on May 4, 2018, is incorporated herein by reference.

+10.31		2016-2018 Restricted Share Unit Program, filed as Exhibit 10.1 to PREIT’s Quarterly Report on Form 10-Q filed on April 29, 2016, is incorporated herein by reference.



+10.32		Form of 2016-2018 Restricted Share Unit and Dividend Equivalent Rights Award Agreement, filed as Exhibit 10.2 to PREIT’s Quarterly Report on Form 10-Q filed on April 29, 2016, is incorporated herein by reference.

+10.33		2017-2019 Restricted Share Unit Program, filed as Exhibit 10.1 to PREIT’s Quarterly Report on Form 10-Q filed on November 2, 2017, is incorporated herein by reference.

+10.34		Form of 2017-2019 Restricted Share Unit and Dividend Equivalent Rights Award Agreement, filed as 10.2 to PREIT’s Quarterly Report on Form 10-Q filed on November 2, 2017, is incorporated herein by reference.

+10.35		2018-2020 Restricted Share Unit Program, filed as Exhibit 10.1 to PREIT’s Quarterly Report on Form 10-Q filed on May 4, 2018, is incorporated herein by reference.

+10.36		Form of 2018-2020 Restricted Share Unit and Dividend Equivalent Rights Award Agreement, filed as Exhibit 10.2 to PREIT’s Quarterly Report on Form 10-Q on May 4, 2018, is incorporated herein by reference.

10.37		Registration Rights Agreement, dated as of September 30, 1997, between PREIT and Florence Mall Partners, filed as Exhibit 10.31 to PREIT’s Current Report on Form 8-K filed on October 14, 1997, is incorporated herein by reference.

10.38		Registration Rights Agreement, dated as of April 28, 2003, between PREIT and Pan American Associates, filed as Exhibit 10.8 to PREIT’s Current Report on Form 8-K filed on May 13, 2003, is incorporated herein by reference.

10.39		Registration Rights Agreement, dated as of April 28, 2003, among PREIT, The Albert H. Marta Revocable Inter Vivos Trust, Marta Holdings I, L.P. and Ivyridge Investment Corp, filed as Exhibit 10.9 to PREIT’s Current Report on Form 8-K filed on May 13, 2003, is incorporated herein by reference.

10.40		Real Estate Management and Leasing Agreement made as of August 1, 1996 between The Rubin Organization, Inc. and Bellevue Associates, filed as Exhibit 10.102 to PREIT’s Annual Report on Form 10-K filed on March 16, 2005, is incorporated by reference.

10.41		Amendment of Real Estate Management And Leasing Agreement dated as of January 1, 2005 between PREIT-RUBIN, Inc., successor-in-interest to The Rubin Organization, and Bellevue Associates, filed as Exhibit 10.103 to PREIT’s Annual Report on Form 10-K filed on March 16, 2005, is incorporated herein by reference.

10.42		Amended and Restated Office Lease between Bellevue Associates and PREIT effective as of July 12, 1999, as amended by the First Amendment to Office Lease effective as of June 18, 2002, as further amended by the Second Amendment to Office Lease effective as of June 1, 2004, filed as Exhibit 10.10 to PREIT’s Quarterly Report on Form 10-Q filed on August 10, 2009, is incorporated herein by reference.

10.43		Fourth Amendment to Office Lease between Bellevue Associates and PREIT signed on April 26, 2012, filed as Exhibit 10.56 to PREIT’s Annual Report on Form 10-K, filed on March 1, 2013, is incorporated herein by reference.

10.44		Tax Protection Agreement, dated March 31, 2015, between PREIT Associates, L.P., PR Springfield Town Center LLC, Franconia Two, L.P., and Vornado Realty L.P., filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on April 1, 2015, is incorporated herein by reference.

+10.45		PREIT Services, LLC Severance Pay Plan for Certain Officers, effective January 1, 2007, filed as Exhibit 99.1 to PREIT’s Current Report on Form 8-K filed January 18, 2017, is incorporated herein by reference.

+10.46*		Letter Agreement, dated as of May 8, 2013 by and between PREIT Services, LLC and Joseph J. Aristone.

+10.47*		Letter Agreement, dated as of February 24, 2014 by and between PREIT Services, LLC and Heather Crowell.

+10.48		PREIT’s 2018 Equity Incentive Plan, filed as Exhibit 10.1 to PREIT’s Current Report on Form 8-K filed on June 1, 2018, is incorporated herein by reference.

21**		Direct and Indirect Subsidiaries of the Registrant.

23.1**		Consent of KPMG LLP (Independent Registered Public Accounting Firm).

23.2*		Consent of Ernst & Young, LLP (Independent Registered Public Accounting Firm) .

24**		Power of Attorney (included on signature page to the Form 10-K filed on February 25, 2019).

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.

99.1*		Unaudited Financial Statements of Lehigh Valley Associates and Subsidiary as of December 31, 2018 and 2017, and for the two years ended December 31, 2018 .

99.2*		Audited Financial Statements of Lehigh Valley Associates and Subsidiary as of December 31, 2016 and 2015, and for the three years ended December 31, 2016 .

101*		The following financial information from PREIT’s Annual Report on Form 10-K for the period ended December 31, 2018 is formatted in XBRL interactive data files: (i) Consolidated Balance Sheets as of December 31, 2018 and 2017; (ii) Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016; (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017, and 2016; (iv) Consolidated Statements of Equity for the years ended December 31, 2018, 2017 and 2016; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016; and (vi) Notes to Consolidated Financial Statements.

+ Management contract or compensatory plan or arrangement required to be filed as an Exhibit to this form.

* Filed herewith.

** Filed with PREIT’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on February 25, 2019.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		PENNSYLVANIA REAL ESTATE INVESTMENT TRUST

Date:	March 28, 2019	By:	/s/ Joseph F. Coradino
			Joseph F. Coradino
			Chief Executive Office

Exhibit 10.46

200 South Broad Street, 3rd Floor, Philadelphia, PA 19102

Phone: 215-875-0700

Fax : 215-548-7311

May 8, 2013

Joseph I Aristone

Senior Vice President

Pennsylvania Real Estate Investment Trust

200 South Broad Street

Philadelphia, PA 19102

Re: PREIT Services, LLC Severance Plan for Certain Officers ("Plan")

Dear Joseph:

This letter will constitute an amendment to the Plan solely with respect to you and shall not affect the Plan in any respect as to any other past, present or future Eligible Employee. The Executive Compensation and Human Resources Committee (the "Committee") has approved, subject to your acceptance by signing a copy of this letter, the following amendments to the Plan applicable solely to you. You understand that similar or dissimilar individual amendments may be entered into concurrently or from time to time hereafter with other individual employees, which amendments will not affect the Plan as applied to you. Subject to your acceptance below, the following amendments to the Plan shall be given effect on and as of April 10, 2013:


1.	Section 3.1(c)(1) is hereby amended and restated to read in its entirety as follows:

"If Joseph J. Aristone ("Joe") shall be an Eligible Employee who is eligible to receive benefits pursuant to Section 2.3(b)(1), (2) or (3) and who executes a General Release, Joe shall receive an amount equal to 104 Weeks of Pay. The Company will pay this amount in a lump sum to Joe within five days after his Termination Date. Joe shall also receive the "COBRA Benefits" described in Section 3.2 (which shall be paid by the successor company) and a bonus described in Section 3.4A (which shall be paid by the Company within five days after Joe's Termination Date)."

2. Section 3.4 is hereby amended by adding the following at the beginning at the first sentence thereof:

"Except as otherwise provided in Section 3.4A,"


3.	The following is hereby added as Section 3.4A:

3.4A. Double Bonus . If Joe is eligible to receive benefits pursuant to Section 2.3(b)(1), (2) or (3), the Company, in lieu of the pro-rated bonus referred to in Section 3.4, shall pay Joe an amount equal to the average of the last two bonuses received by Joe prior to his Termination Date under the Company's Incentive Compensation Opportunity Award Program [(or the compensation program for leasing officers, if applicable)] multiplied by two. The Company shall pay such amount to Joe within the five-day period after his Termination Date."

Exhibit 10.46

4. Except as expressly amended hereby, none of your rights or obligations or those of the Company under the Plan shall be affected hereby. Capitalized terms used, but not defined, in this amendment shall have the meanings ascribed to such terms in the Plan. This letter contains the entire agreement of the signatories with respect to the amendments to the Plan set forth herein. For purposes of clarity, it is understood and agreed that (a) if the Plan shall be terminated, the amendments set forth in Sections 1, 2 and 3 of this letter shall thereupon cease to have any effect and (b) if an amendment to the Plan applicable to Eligible Employees generally shall be adopted, (i) such amendment shall be applicable to Joe (except as provided in clause (ii)) and (ii) the terms hereof (other than the amounts payable under Sections 3.1(c) (1) and 3.4A of the Plan as set forth above) shall be amended to the extent necessary as determined by the Committee to be consistent with the amendment to the Plan so adopted, in each case without any further action by either of the parties to this letter. Except as provided in the preceding sentence, no modification or claim of waiver of any of the provisions hereof shall be valid unless in writing and signed by the party against whom such modification or waiver is sought to be enforced. The law of the Commonwealth of Pennsylvania shall be the controlling state law in all matters relating to this amendment (without reference to principles of conflict of laws), and shall apply to the extent it is not superseded by ERISA.

PREIT SERVICES, LLC

By: /s/ Bruce Goldman

ACCEPTED AND AGREED:

/s/Joseph J. Aristone

Joseph J. Aristone

Exhibit 10.47

200 South Broad Street, 3rd Floor, Philadelphia, PA 19102

Phone: 215-875-0700

Fax : 215-548-7311

Heather Crowell

Vice President

Pennsylvania Real Estate Investment Trust

200 South Broad Street

Philadelphia, PA 19102

Re: PREIT Services, LLC Severance Plan for Certain Officers ("Plan")

Dear Heather:

1. Section 3.1(c)(1) is hereby amended and restated to read in its entirety as follows:

"If Heather Crowell ("Heather") shall be an Eligible Employee who is eligible to receive benefits pursuant to Section 2.3(b)(1), (2) or (3) and who executes a General Release, Heather shall receive an amount equal to 104 Weeks of Pay. The Company will pay this amount in a lump sum to Heather within five days after her Termination Date. Heather shall also receive the "COBRA Benefits" described in Section 3.2 (which shall be paid by the successor company) and a bonus described in Section 3.4A (which shall be paid by the Company within five days after Heather’s Termination Date)."

2. Section 3.4 is hereby amended by adding the following at the beginning at the first sentence thereof:

"Except as otherwise provided in Section 3.4A,"

The following is hereby added as Section 3.4A:3.4A. Double Bonus. If Heather is eligible to receive benefits pursuant to Section 2.3(b) (1), (2) or (3), the Company, in lieu of the pro-rated bonus referred to in Section 3.4, shall pay Heather an amount equal to the average of the last two bonuses received by Heather prior to his Termination Date under the Company's Incentive Compensation Opportunity Award Program multiplied by two. The Company shall pay such amount to Heather within the five-day period after her Termination Date."

4. Except as expressly amended hereby, none of your rights or obligations or those

Exhibit 10.47

of the Company under the Plan shall be affected hereby. Capitalized terms used, but not defined, in this amendment shall have the meanings ascribed to such terms in the Plan. This letter contains the entire agreement of the signatories with respect to the amendments to the Plan set forth herein. For purposes of clarity, it is understood and agreed that (a) if the Plan shall be terminated, the amendments set forth in Sections 1, 2 and 3 of this letter shall thereupon cease to have any effect and (b) if an amendment to the Plan applicable to Eligible Employees generally shall be adopted, (i) such amendment shall be applicable to Heather (except as provided in clause (ii)) and (ii) the terms hereof (other than the amounts payable under Sections 3.1(c) (1) and 3.4A of the Plan as set forth above) shall be amended to the extent necessary as determined by the Committee to be consistent with the amendment to the Plan so adopted, in each case without any further action by either of the parties to this letter. Except as provided in the preceding sentence, no modification or claim of waiver of any of the provisions hereof shall be valid unless in writing and signed by the party against whom such modification or waiver is sought to be enforced. The law of the Commonwealth of Pennsylvania shall be the controlling state law in all matters relating to this amendment (without reference to principles of conflict of laws), and shall apply to the extent it is not superseded by ERISA.

PREIT SERVICES, LLC

By: /s/ Bruce Goldman

ACCEPTED AND AGREED:

/s/ Heather Crowell

Heather Crowell

Exhibit 23.2

Consent of Independent Auditors

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-3 No. 333-222187) of Pennsylvania Real Estate Investment Trust;

(2) Registration Statement (Form S-3 No. 333-222189) of Pennsylvania Real Estate Investment Trust;

(3) Registration Statement (Form S-3 No. 333-169488, as amended) of Pennsylvania Real Estate Investment Trust;

(4) Registration Statement (Form S-3 No. 333-144607) of Pennsylvania Real Estate Investment Trust;

(5) Registration Statement (Form S-3 No. 333-144606) of Pennsylvania Real Estate Investment Trust;

(6) Registration Statement (Form S-3 No. 333-121962, as amended) of Pennsylvania Real Estate Investment Trust;

(7) Registration Statement (Form S-3 No. 333-110926) of Pennsylvania Real Estate Investment Trust;

(8) Registration Statement (Form S-3 No. 333-109849) of Pennsylvania Real Estate Investment Trust;

(9) Registration Statement (Form S-3 No. 333-109848) of Pennsylvania Real Estate Investment Trust;

(10) Registration Statement (Form S-3 No. 333-97337) of Pennsylvania Real Estate Investment Trust;

(11) Registration Statement (Form S-3 No. 333-36626) of Pennsylvania Real Estate Investment Trust;

(12) Registration Statement (Form S-3 No. 333-74693) of Pennsylvania Real Estate Investment Trust;

(13) Registration Statement (Form S-3 No. 333-74695) of Pennsylvania Real Estate Investment Trust;

(14) Registration Statement (Form S-3 No. 333-70157, as amended) of Pennsylvania Real Estate Investment Trust;

(15) Registration Statement (Form S-3 No. 333-48917, as amended) of Pennsylvania Real Estate Investment Trust;

(16) Registration Statement (Form S-8 No. 333-225342) of Pennsylvania Real Estate Investment Trust;

(17) Registration Statement (Form S-8 No. 333-225341) of Pennsylvania Real Estate Investment Trust;

(18) Registration Statement (Form S-8 No. 333-183480) of Pennsylvania Real Estate Investment Trust;

(19) Registration Statement (Form S-8 No. 333-169487) of Pennsylvania Real Estate Investment Trust;

(20) Registration Statement (Form S-8 No. 333-148237) of Pennsylvania Real Estate Investment Trust;

(21) Registration Statement (Form S-8 No. 333-103116) of Pennsylvania Real Estate Investment Trust;

(22) Registration Statement (Form S-8 No. 333-97677) of Pennsylvania Real Estate Investment Trust;

(23) Registration Statement (Form S-8 No. 333-69877) of Pennsylvania Real Estate Investment Trust;

(24) Registration Statement (Form S-8 No. 33-59767) of Pennsylvania Real Estate Investment Trust;

(25) Registration Statement (Form S-8 No. 33-59771) of Pennsylvania Real Estate Investment Trust; and,

(26) Registration Statement (Form S-8 No. 33-59773) of Pennsylvania Real Estate Investment Trust;

of our report dated February 13, 2017, with respect to the consolidated financial statements of Lehigh Valley Associates and Subsidiary, included in this Form 10-K/A of Pennsylvania Real Estate Investment Trust for the year ended December 31, 2018.

/s/ Ernst & Young LLP

Indianapolis, Indiana

March 28, 2019

Exhibit 31.1

CERTIFICATION

I, Joseph F. Coradino, certify that:



1	I have reviewed this Annual Report on Form 10-K/A of Pennsylvania Real Estate Investment Trust;



2	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;



3	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;



4	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:


(a)	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;


(b)	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;


(c)	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


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5	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):


(a)	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


(b)	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.



Dated:	March 28, 2019		/s/ Joseph F. Coradino
		Name:	Joseph F. Coradino
		Title:	Chairman and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Robert F. McCadden, certify that:



1	I have reviewed this Annual Report on Form 10-K/A of Pennsylvania Real Estate Investment Trust;



2	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;



3	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;



4	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:


(a)	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;


(b)	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;


(c)	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


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5	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):


(a)	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


(b)	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.



Dated:	March 28, 2019		/s/ Robert F. McCadden
		Name:	Robert F. McCadden
		Title:	Chief Financial Officer

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

I, Joseph F. Coradino, the Chief Executive Officer of Pennsylvania Real Estate Investment Trust (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) the Form 10-K/A of the Company for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K/A”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Form 10-K/A fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated:	March 28, 2019		/s/ Joseph F. Coradino
		Name:	Joseph F. Coradino
		Title:	Chairman and Chief Executive Officer

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

I, Robert F. McCadden, the Chief Financial Officer of Pennsylvania Real Estate Investment Trust (the “Company”), hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge.

(2) the information contained in the Form 10-K/A fairly presents, in all material respects, the financial condition and results of operations of the Company.



Dated:	March 28, 2019		/s/ Robert F. McCadden
		Name:	Robert F. McCadden
		Title:	Chief Financial Officer

Exhibit 99.1

Unaudited Consolidated Financial Statements

Lehigh Valley Associates and Subsidiary

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

Exhibit 99.1

Lehigh Valley Associates and Subsidiary

Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

Contents



Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Partners' Deficit	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7

Exhibit 99.1

Lehigh Valley Associates and Subsidiary

Unaudited Consolidated Balance Sheets



	December 31			December 31
	2018			2017
Assets
Investment property, at cost	$	92,216,066		$	89,159,958
Less accumulated depreciation	53,545,558			53,392,594
	38,670,508			35,767,364

Cash and cash equivalents	7,056,753			2,711,025
Tenant receivables, net of allowance for credit losses of $198,208 and $176,248, respectively	727,936			498,265
Accrued straight-line rent	2,742,725			2,554,277
Deferred costs, net	1,296,708			1,025,918
Other assets	2,249,632			1,823,741
Total assets	$	52,744,262		$	44,380,590

Liabilities and partners’ deficit
Mortgage notes payable, net	$	195,422,419		$	198,441,376
Accounts payable and accrued expenses	4,810,508			3,802,309
Capital expenditures payable	3,309,314			1,453,524
Total liabilities	203,542,241			203,697,209

Partners’ deficit	(150,797,979		)	(159,316,619		)
Total liabilities and partners’ deficit	$	52,744,262		$	44,380,590

The accompanying notes are an integral part of these unaudited consolidated statements.

Exhibit 99.1

Lehigh Valley Associates and Subsidiary

Unaudited Consolidated Statements of Operations



		For the Years Ended
		December 31
		2018		2017
Revenue:
	Minimum rent	$	22,119,638	$	21,674,741
	Overage rent	356,643		213,035
	Tenant reimbursements	12,104,441		12,585,144
	Other income	1,081,513		320,482
Total revenue		35,662,235		34,793,402

Expenses:
	Property operating	3,764,747		3,777,334
	Depreciation and amortization	2,820,964		3,611,259
	Real estate taxes	3,284,457		3,259,024
	Repairs and maintenance	873,773		974,013
	Advertising and promotion	694,919		814,961
	Provision for credit losses	41,986		(269,468		)
	Other	354,440		321,689
Total expenses		11,835,286		12,488,812

Operating income		23,826,949		22,304,590
Prepayment penalty for early payoff of debt		—		3,114,407
Interest expense		8,222,309		7,792,506
Net income		$	15,604,640	$	11,397,677

The accompanying notes are an integral part of these unaudited consolidated statements.

Exhibit 99.1

Lehigh Valley Associates and Subsidiary

Unaudited Consolidated Statements of Partners' Deficit

For the Years Ended December 31, 2018 and 2017



		PREIT			Kravco Simon
		Associates, L.P.			Investments, L.P.
		and Affiliate			and Affiliate
		(General Partner			(General Partner
		and Limited			and Limited
		Partner)			Partner)			Total

Partners’ percentage equity interest		50.0%			50.0%			100.0%

Partners’ deficit at January 1, 2017		$	(41,654,041	)	$	(41,654,053	)	$	(83,308,094	)
	Distributions	(43,703,101		)	(43,703,101		)	(87,406,202		)
	Net income	5,698,838			5,698,839			11,397,677
Partners’ deficit at December 31, 2017		$	(79,658,304	)	$	(79,658,315	)	$	(159,316,619	)
	Distributions	(3,543,000		)	(3,543,000		)	(7,086,000		)
	Net income	7,802,320			7,802,320			15,604,640
Partners’ deficit at December 31, 2018		$	(75,398,984	)	$	(75,398,995	)	$	(150,797,979	)

The accompanying notes are an integral part of these unaudited consolidated statements.

Exhibit 99.1

Lehigh Valley Associates and Subsidiary

Unaudited Consolidated Statements of Cash Flows



			For the Years Ended
			December 31
			2018			2017
Cash flows from operating activities			$	15,604,640		$	11,397,677
Net income
Adjustments to reconcile net income to net
cash provided by operating activities:
	Straight-line rent		(188,448		)	194,851
	Depreciation and amortization		2,924,531			3,817,535
	Amortization of tenant inducements		123,381			127,017
	Provision for credit losses		41,986			(269,468		)
	Prepayment penalty		—			3,114,407
	Changes in assets and liabilities:
		Tenant receivables	(271,657		)	229,452
		Deferred costs and other assets	(643,951		)	(309,231		)
		Accounts payable and accrued expenses	1,008,199			(1,548,130		)
Net cash provided by operating activities			18,598,681			16,754,110

Cash flows from investing activities
Capital expenditures			(5,526,992		)	(1,805,636		)
Change in capital escrow reserves			(373,228		)	(690,201		)
Change in capital expenditures payable			1,855,790			751,709
Net cash used in investing activities			(4,044,430		)	(1,744,128		)

Cash flows from financing activities
Proceeds from new mortgage, net of deferred
		financing costs of $1,035,668	—			198,964,332
Repayment of previous mortgage note payable			—			(124,576,276		)
Prepayment penalty			—			(3,114,407		)
Mortgage principal payments			(3,122,523		)	(2,673,163		)
Distributions to partners			(7,086,000		)	(87,406,202		)
Net cash used in financing activities			(10,208,523		)	(18,805,716		)

Increase (Decrease) in cash and cash equivalents			4,345,728			(3,795,734		)
Cash and cash equivalents, beginning of year			2,711,025			6,506,759
Cash and cash equivalents, end of year			$	7,056,753		$	2,711,025

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

1. General

Lehigh Valley Associates (the Partnership) is a Pennsylvania limited partnership. On June 2, 2006, the Partnership formed Mall at Lehigh Valley, L.P. (the Mall), a Delaware limited partnership. The Partnership transferred all the assets and liabilities related to its regional shopping center and an office building (the Property), located in Whitehall, Pennsylvania, to the Mall in exchange for 100% ownership therein. The Partnership also entered into a lease agreement for the Property with its wholly owned subsidiary. The intercompany lease is eliminated in the accompanying consolidated financial statements. The Property leases space to retailers (national and international chains and locally owned stores) in the ordinary course of business.

The Partnership will terminate on December 31, 2073, unless terminated earlier as provided for in the agreement. Income, losses, and distributions are allocated to the partners in proportion to their respective ownership interests.

Simon Property Group, Inc. (SPG), a publicly traded real estate investment trust (REIT), owned a controlling 86.8% and 86.9% of SPG, L.P. at December 31, 2018 and 2017, respectively.

2. Summary of Significant Accounting Policies

Consolidation

The accompanying consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiary, the Mall. All significant intercompany balances and transactions have been eliminated. Hereafter, references to the Partnership include Lehigh Valley Associates and its wholly owned subsidiary, Mall at Lehigh Valley, L.P.

Use of Estimates

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

2. Summary of Significant Accounting Policies (continued)

liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the reported periods. Actual results could differ from these estimates.

Investment Property

Investment property is recorded at cost. Investment property includes costs of acquisition, development, predevelopment and construction, tenant allowances and improvements, and interest and real estate taxes incurred during construction. Certain improvements and replacements from repairs and maintenance are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. All other repair and maintenance items are expensed as incurred. Depreciation on building and improvements is provided utilizing the straight-line method over an estimated original useful life, which is generally 10 to 35 years. Depreciation on tenant allowances and improvements is provided utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter. Depreciation on equipment and fixtures is provided utilizing the straight-line method over five to ten years.

Investment property is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of investment property may not be recoverable. These circumstances include, but are not limited to, declines in cash flows, ending occupancy, and comparable sales per square foot. Impairment of investment property is measured when estimated undiscounted operating income before depreciation and amortization plus its residual value is less than the carrying value of the property. To the extent that impairment has occurred, the excess of carrying value of the property over its estimated fair value is charged to expense.

Deferred Costs, Net

Deferred costs consist primarily of leasing commissions and related costs, and tenant inducements. Deferred leasing costs are amortized on a straight-line basis over the terms of the related leases. Tenant inducements represent payments to tenants that do not qualify as tenant allowances or improvements. Tenant inducements are amortized as a reduction to minimum rent on a straight-line basis over the term of the related lease.

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

2. Summary of Significant Accounting Policies (continued)

Deferred costs, net, consist of the following at December 31:



	2018	2017

Leasing costs and other	$2,005,941	$1,428,140
Tenant inducements	1,486,841	1,526,841
	3,492,782	2,954,981
Less accumulated amortization	2,196,074	1,929,063
	$1,296,708	$1,025,918

Depreciation and amortization in the accompanying Consolidated Statements of Operations includes amortization of deferred leasing costs of $249,780 and $227,479 for the years ended December 31, 2018 and 2017, respectively. Minimum rent in the accompanying Consolidated Statements of Operations is reduced by amortization of tenant inducements of $123,381 and $127,017 for the years ended December 31, 2018 and 2017, respectively.

Revenue Recognition

The Partnership, as a lessor, has retained substantially all of the risks and benefits of ownership of the Property and accounts for its leases as operating leases. Minimum rents are accrued on a straight-line basis over the terms of their respective leases. Substantially all of the retail tenants are also required to pay overage rents based on sales over a stated base amount during the lease year. The Partnership recognizes overage rents only when each tenant’s sales exceed its sales threshold.

Leases are typically structured to allow the Partnership to recover a significant portion of property operating and repairs and maintenance expenses (referred to herein as CAM), as well as other expenses such as real estate taxes and advertising and promotion expenses from the tenants. Such property operating expenses typically include utility, insurance, security, janitorial, landscaping, food court, and other administrative expenses. The Partnership accrues reimbursements from tenants for recoverable portions of all of these expenses as revenue in the period the applicable expenditures are incurred. The Partnership receives a fixed payment from most tenants for the CAM component, which is recorded as revenue when earned.

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

2. Summary of Significant Accounting Policies (continued)

The Partnership receives payments for these reimbursements from substantially all tenants throughout the year. This reduces the risk of loss on uncollectible accounts once the Partnership performs the final year-end billings for recoverable expenditures. Differences between actual and estimated tenant reimbursements are recognized in the subsequent year. Advertising and promotion costs are expensed as incurred.

Allowance for Credit Losses

A provision for credit losses is recorded based on management’s judgment of tenant creditworthiness, ability to pay, and probability of collection. Accounts are written off when they are deemed to be no longer collectible. In addition, the retail sector in which the tenant operates and the historical collection experience in cases of bankruptcy are considered, if applicable.

Income Taxes

As a partnership, the allocated share of the operating results for each period is includable in the income tax returns of the partners; accordingly, income taxes are not reflected in the Partnership’s consolidated financial statements. Management evaluates the potential that the Partnership may be subject to income taxes in the future. As of December 31, 2018 and 2017, there were no uncertain tax positions that had a material impact on the Partnership’s consolidated financial statements.

Fair Value Measurements

Level 1 fair value inputs are quoted prices for identical items in active, liquid, and visible markets, such as stock exchanges. Level 2 fair value inputs are observable information for similar items in active or inactive markets and appropriately consider counterparty creditworthiness in the valuations. Level 3 fair value inputs reflect the Partnership’s best estimate of inputs and assumptions market participants would use in pricing an asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate. The Partnership has no investments for which fair value is measured on a recurring basis using Level 3 inputs.

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

2. Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of 90 days or less are considered cash and cash equivalents. Cash equivalents are carried at cost, which approximates market value. However, at certain times, such cash and cash equivalents may be in excess of Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insurance limits.

Cash paid for interest by the Partnership was $7,451,764 and $8,126,352 during 2018 and 2017, respectively.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue From Contracts With Customers . ASU 2014-09 amends the existing accounting standards for revenue recognition. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property, including real estate.

The Partnership’s revenues impacted by this standard primarily include other ancillary income earned. Upon adoption of the new guidance, the amount and timing of revenue recognition will be consistent with the prior treatment. The Partnership adopted the standard using the modified retrospective approach on January 1, 2018, and there was no cumulative effect adjustment to recognize.

In February 2016, the FASB issued ASU 2016-02, Leases , which will result in lessees recognizing most leased assets and corresponding lease liabilities on the balance sheet. Lessor accounting will remain substantially similar to the current accounting; however, certain refinements were made to conform the standard with the recently issued revenue recognition guidance in ASU 2014-09, specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components.

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

2. Summary of Significant Accounting Policies (continued)

Substantially all of the Partnership’s revenues are earned from arrangements that are within the scope of ASU 2016-02. Upon adoption of ASU 2016-02, consideration related to non-lease components identified in the Partnership’s lease arrangements will be accounted for using the guidance in ASU 2014-09, which would (i) necessitate that management reallocate consideration received under many of the lease arrangements between the lease and non-lease component, (ii) result in recognizing revenue allocated to the primary non-lease component (consideration received from fixed common area maintenance arrangements) on a straight-line basis, and (iii) require separate presentation of revenue recognized from lease and non-lease components on the statement of operations. However, on July 30, 2018, the FASB issued ASU 2018-11, which created a practical expedient that provides lessors an option not to separate lease and non-lease components when certain criteria are met and instead account for those components as a single lease component. The Partnership determined that its lease arrangements will meet the criteria under the practical expedient to account for lease and non-lease components as a single lease component, which alleviates the requirement upon adoption of ASU 2016-02 that the Partnership reallocate or separately present lease and non-lease components. As a result, the Partnership will recognize consideration received from fixed common area maintenance arrangements on a straight-line basis as this consideration is attributed to the lease component. The Partnership adopted ASU 2016-02 and any subsequent amendments beginning in 2019.

Subsequent Events

Subsequent events have been evaluated by the Partnership through March 28, 2019, the date the consolidated financial statements were available to be issued.

3. Investment Property

Investment property consists of the following at December 31:



	2018	2017

Land	$5,738,037	$5,738,037
Building and improvements	84,058,066	81,221,937
Total land, building, and improvements	89,796,103	86,959,974

Furniture, fixtures, and equipment	2,419,963	2,199,984
Investment property, at cost	92,216,066	89,159,958

Less accumulated depreciation	53,545,558	53,392,594
Investment property, at cost, net	$38,670,508	$35,767,364

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

3. Investment Property (continued)

Investment property includes $580,622 and $1,777,503 of work-in-progress at December 31, 2018 and 2017, respectively.

4. Mortgage Notes Payable, Net

The Partnership, through its subsidiary the Mall, had a mortgage note payable with an original principal balance of $140,000,000 (the Old Note), which bore interest at a fixed rate of 5.88% and required monthly principal and interest payments of $828,600 through its maturity date of July 5, 2020.

On October 13, 2017, the Mall refinanced the loan for a $200,000,000 mortgage note (the New Note), which bears interest at a fixed rate of 4.056% and requires monthly principal and interest payments of $961,299 through its maturity date of November 1, 2027. The majority of the proceeds from the New Note were used to pay down the outstanding balance of the Old Note and accrued interest, including a prepayment penalty of $3,114,407, which is reflected in the 2017 Consolidated Statement of Operations. The remaining proceeds were distributed to the partners. As of December 31, 2018 and 2017, the principal amount outstanding on the New Note was $196,328,416 and $199,450,939, respectively.

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

4. Mortgage Notes Payable, Net (continued)

The New Note is secured by the investment property and related rents and leases of the Partnership. The New Note also requires a monthly rollover reserve escrow deposit until a reserve cap of $2,994,258 is met. The escrow balance as of December 31, 2018 and 2017, was $1,063,429 and $690,201, respectively.

If a trigger event occurs (debt service coverage ratio, as defined, falls below 1.5 to 1 for two consecutive quarters based upon the trailing four quarters), the Partnership will be required to establish a cash management account under the sole dominion and control of the lender. As of December 31, 2018, no such triggering event has occurred.

As of December 31, 2018, scheduled principal repayments on the mortgage note, over the next five years and thereafter, are as follows:



2019	$3,528,195
2020	3,653,715
2021	3,829,169
2022	3,989,640
2023	4,156,835
Thereafter	177,170,862
Mortgage note payable	196,328,416
Deferred financing costs, net	(905,997)
Mortgage note payable, net	$195,422,419

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

4. Mortgage Notes Payable, Net (continued)

During the years ended December 31, 2018 and 2017, amortization of deferred financing costs totaled $103,567 and $206,276, respectively.

Based on the borrowing rates currently available to the Partnership for loans with similar terms and maturities, the fair value of the mortgage note at December 31, 2018 and 2017, was approximately $188,300,000 and $197,700,000, respectively, and the estimated discount rate was 4.69% and 4.41%, respectively.

5. Rentals Under Operating Leases

The Partnership receives rental income from the leasing of retail space under operating leases. The leases also provide for the tenants to pay electricity charges to an affiliate of KSI. Future minimum rentals to be received under noncancelable operating leases for each of the next five years and thereafter, excluding tenant reimbursements of operating expenses and percentage rent based on tenant sales volume, as of December 31, 2018, are as follows:



2019	$16,691,236
2020	15,168,493
2021	13,536,390
2022	11,188,743
2023	6,782,402
Thereafter	11,264,712
	$74,631,976

6. Commitments and Contingencies

Litigation

The Partnership currently is not subject to any material litigation nor to management’s knowledge is any material litigation currently threatened against the Partnership other than routine litigation, claims, and administrative proceedings arising in the ordinary course of business. Management believes that such routine litigation, claims, and administrative

Lehigh Valley Associates and Subsidiary

Notes to Unaudited Consolidated Financial Statements

As of December 31, 2018 and 2017, and for the Two Years Ended December 31, 2018

6. Commitments and Contingencies (continued)

proceedings will not have a material adverse impact on the Partnership’s consolidated financial position or results of operations.

7. Related-Party Transactions

The Partnership has a management agreement with an affiliate of SPG, L.P. A management fee based on rental income, as defined by the agreement, is charged for management services and is included in property operating expenses in the accompanying Consolidated Statements of Operations. In addition, the affiliate is compensated for other services provided beyond the scope of the management fees, including leasing, consulting, legal, technical, and other services, which are also included in property operating expenses in the accompanying Consolidated Statements of Operations, unless capitalized. Certain commercial general liability and property damage insurance is provided to the Partnership by affiliates of SPG, L.P. Insurance premiums charged to the Partnership are included in property operating expenses in the accompanying Consolidated Statements of Operations. Also, certain national advertising and promotion programs are provided to the Partnership by affiliates of SPG, L.P., and these charges are included in advertising and promotion expense in the accompanying Consolidated Statements of Operations.

A summary of the transactions described above and charged by affiliates is as follows:



Related-Party Activity	2018	2017

Management fees	$1,010,650	$986,159
Insurance	279,223	294,455
Advertising and promotion	313,075	362,763
Other services	316,134	226,941
Total fees and compensation expense	1,919,082	1,870,318

Capitalized leasing and other fees	423,135	287,168
Total fees and compensation	$2,342,217	$2,157,486

During 2018 and 2017, the Partnership was charged $297,737 and $253,390, respectively, for electricity usage by an affiliate of SPG, L.P. These charges are included in property operating expenses in the accompanying Consolidated Statements of Operations.

At December 31, 2018 and 2017, $403,083 and $289,003, respectively, were payable to SPG, L.P. and its affiliates. The amounts owed are included in accounts payable and accrued expenses in the accompanying Consolidated Balance Sheets.

Exhibit 99.2

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Lehigh Valley Associates and Subsidiary

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

With Report of Independent Auditors

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Audited Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

Contents



	Report of Independent Auditors	1

	Audited Consolidated Financial Statements

	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Partners’ Deficit	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7

Exhibit 99.2

Report of Independent Auditors

To the Partners of

Lehigh Valley Associates and Subsidiary:

We have audited the accompanying financial statements of Lehigh Valley Associates, a Pennsylvania limited partnership, and Subsidiary (the Partnership), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the related consolidated statements of operations, partners’ deficit, and cash flows for each of the three years ended December 31, 2016, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Partnership’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Exhibit 99.2

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lehigh Valley Associates and Subsidiary at December 31, 2016 and 2015, and the consolidated results of their operations and their cash flows for each of the three years ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst and Young LLP

February 13, 2017

Exhibit 99.2



Lehigh Valley Associates and Subsidiary

Consolidated Balance Sheets


	December 31
	2016			2015
Assets
Investment property, at cost	$	89,085,474		$	88,048,064
Less accumulated depreciation	51,739,966			48,735,354
	37,345,508			39,312,710

Cash and cash equivalents	6,506,759			4,799,185
Tenant receivables, net of allowance for credit losses of
$249,834 and $45,533 for 2014 and 2013, respectively	458,249			573,465
Accrued straight-line rent	2,749,128			2,794,675
Deferred costs, net	1,093,247			1,323,182
Other assets	1,111,476			1,115,963
Total assets	$	49,264,367		$	49,919,180

Liabilities and partners’ deficit
Mortgage note payable	$	126,520,207		$	128,883,023
Accounts payable and accrued expenses	5,350,439			5,867,635
Capital expenditures payable	701,815			778,881
Total liabilities	132,572,461			135,529,539

Partners’ deficit	(83,308,094		)	(85,610,359		)
Total liabilities and partners’ deficit	$	49,264,367		$	49,919,180

The accompanying notes are an integral part of these consolidated statements.

Exhibit 99.2



Lehigh Valley Associates and Subsidiary

Consolidated Statements of Operations


	For the Years Ended
	December 31
	2016			2015		2014
Revenue:
Minimum rent	$	22,638,350		$	22,095,609	$	22,598,061
Overage rent	366,760			300,349		240,426
Tenant reimbursements	13,487,784			13,615,261		13,391,928
Other income	430,133			485,321		374,342
Total revenue	36,923,027			36,496,540		36,604,757

Expenses:
Property operating	3,760,805			4,058,265		4,205,071
Depreciation and amortization	3,429,770			3,346,211		3,806,781
Real estate taxes	3,154,133			3,119,558		3,061,232
Repairs and maintenance	969,862			1,087,883		1,322,040
Advertising and promotion	897,320			939,470		864,523
(Recovery of) provision for credit losses	(445,371		)	89,507		263,707
Other	322,114			303,727		310,499
Total expenses	12,088,633			12,944,621		13,833,853

Operating income	24,834,394			23,551,919		22,770,904
Interest expense	7,570,129			7,708,328		7,838,799
Net income	$	17,264,265		$	15,843,591	$	14,932,105

The accompanying notes are an integral part of these consolidated statements.

Exhibit 99.2



Lehigh Valley Associates and Subsidiary

Consolidated Statements of Partners’ Deficit

For the Years Ended December 31, 2016, 2015 and 2014


	PREIT			Kravco Simon
	Associates, L.P.			Investments, L.P.
	and Affiliate			and Affiliate
	(General Partner			(General Partner
	and Limited			and Limited
	Partner)			Partner)			Total

Partners’ percentage equity interest	50%			50%			100%

Partners' deficit at January 1, 2014	$	(43,060,022	)	$	(43,060,033	)	$	(86,120,055	)
Distributions	(7,972,500		)	(7,972,500		)	(15,945,000		)
Net income	7,466,053			7,466,052			14,932,105
Partners’ deficit at December 31, 2014	(43,566,469		)	(43,566,481		)	(87,132,950		)
Distributions	(7,160,500		)	(7,160,500		)	(14,321,000		)
Net income	7,921,795			7,921,796			15,843,591
Partners’ deficit at December 31, 2015	(42,805,174		)	(42,805,185		)	(85,610,359		)
Distributions	(7,481,000		)	(7,481,000		)	(14,962,000		)
Net income	8,632,133			8,632,132			17,264,265
Partners’ deficit at December 31, 2016	$	(41,654,041	)	$	(41,654,053	)	$	(83,308,094	)

The accompanying notes are an integral part of these consolidated statements.

Exhibit 99.2



Lehigh Valley Associates and Subsidiary

Consolidated Statements of Cash Flows

	For the Years Ended
	December 31
	2016			2015			2014
Cash flows from operating activities
Net income	$	17,264,265		$	15,843,591		$	14,932,105
Adjustments to reconcile net income to net
cash provided by operating activities:
Straight-line rent	45,547			(8,522		)	(154,836		)
Depreciation and amortization	3,482,550			3,398,990			3,859,705
Amortization of tenant inducements	127,017			127,017			127,365
Gain on sale of land (Note 3)	—			(86,874		)	—
(Recovery of) provision for credit losses	(445,371		)	89,507			263,707
Changes in assets and liabilities:
Tenant receivables	560,587			(59,584		)	(399,493		)
Deferred costs and other assets	(88,166		)	(249,049		)	(256,468		)
Accounts payable and accrued expenses	(517,196		)	(868,284		)	(857,725		)
Net cash provided by operating activities	20,429,233			18,186,792			17,514,360

Cash flows from investing activities
Capital expenditures	(1,266,998		)	(2,763,063		)	(1,906,455		)
Net proceeds from the sale of land (Note 3)	—			100,920			—
Change in capital expenditures payable	(77,066		)	72,346			129,810
Net cash used in investing activities	(1,344,064		)	(2,589,797		)	(1,776,645		)

Cash flows from financing activities
Mortgage payments	(2,415,595		)	(2,277,981		)	(2,148,205		)
Distributions to partners	(14,962,000		)	(14,321,000		)	(15,945,000		)
Cash used in financing activities	(17,377,595		)	(16,598,981		)	(18,093,205		)

(Decrease) increase in cash and cash equivalents	1,707,574			(1,001,986		)	(2,355,490		)
Cash and cash equivalents, beginning of year	4,799,185			5,801,171			8,156,661
Cash and cash equivalents, end of year	$	6,506,759		$	4,799,185		$	5,801,171

The accompanying notes are an integral part of these consolidated statements.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

1. General

The Partnership is owned 50% by PREIT Associates, L.P. and its wholly owned subsidiary (general and limited partner), 49.5% by Kravco Simon Investments, L.P. (KSI, limited partner), and 0.5% by Delta Ventures, Inc. (DV, general partner). DV is a wholly owned subsidiary of KSI. Prior to January 10, 2014, KSI was owned by Simon Property Group, L.P. (SPG, L.P.) and the Powell family. Effective January 10, 2014, SPG, L.P. purchased the Powell family’s interest in KSI, resulting in SPG, L.P. indirectly owning 50% of the Partnership.

Simon Property Group, Inc. (SPG), a publicly traded real estate investment trust (REIT), owned a controlling 86.9% and 85.7% of SPG, L.P. at December 31, 2016 and 2015, respectively.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

2. Summary of Significant Accounting Policies

Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the reported periods. Actual results could differ from these estimates.

Consolidation

Investment Property

Investment property is recorded at cost. Investment property includes costs of acquisition, development, predevelopment and construction, tenant allowances and improvements, and interest and real estate taxes incurred during construction. Certain improvements and replacements from repairs and maintenance are capitalized when they extend the useful life, increase capacity, or improve the efficiency of the asset. All other repair and maintenance items are expensed as incurred. Depreciation on building and improvements is provided utilizing the straight-line method over an estimated original useful life, which is generally 15 to 40 years. Depreciation on tenant allowances and improvements is provided utilizing the straight-line method over the term of the related lease or occupancy term of the tenant, if shorter. Depreciation on equipment and fixtures is provided utilizing the straight-line method over five to ten years.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

2. Summary of Significant Accounting Policies (continued)

Deferred Costs, Net

Deferred costs, net, consist of the following at December 31:



	2016		2015
Leasing costs and other	$	1,382,292	$	1,489,119
Tenant inducements	1,526,841		1,526,840
	2,909,133		3,015,959
Less accumulated amortization	1,815,886		1,692,777
	$	1,093,247	$	1,323,182

Depreciation and amortization in the accompanying Consolidated Statements of Operations includes amortization of deferred leasing costs of $195,571, $204,598, and $202,611 for the years ended December 31, 2016, 2015, and 2014, respectively. Minimum rent in the accompanying Consolidated Statements of Operations is reduced by amortization of tenant inducements of $127,017 for the years ended December 31, 2016 and 2015, and $127,365 for the year ended December 31, 2014. The Partnership wrote off $199,479, $168,019, and $221,786 of fully amortized deferred costs during 2016, 2015, and 2014, respectively.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

2. Summary of Significant Accounting Policies (continued)

Revenue Recognition

Leases are typically structured to allow the Partnership to recover a significant portion of property operating and repairs and maintenance expenses (referred to herein as CAM), as well as other expenses such as real estate taxes and advertising and promotion expenses from the tenants. Such property operating expenses typically include utility, insurance, security, janitorial, landscaping, food court, and other administrative expenses. The Partnership accrues reimbursements from tenants for recoverable portions of all of these expenses as revenue in the period the applicable expenditures are incurred. The Partnership receives a fixed payment from substantially all tenants for the CAM component, which is recorded as revenue when earned. When not reimbursed by the fixed CAM component, CAM expense reimbursements are based on the tenant’s proportionate share of the allocable operating expenses and CAM capital expenditures for the property.

Allowance for Credit Losses

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

2. Summary of Significant Accounting Policies (continued)

Income Taxes

As a partnership, the allocated share of the operating results for each period is includable in the income tax returns of the partners; accordingly, income taxes are not reflected in the Partnership’s consolidated financial statements. Management evaluates the potential that the Partnership may be subject to income taxes in the future. As of December 31, 2016 and 2015, there were no uncertain tax positions that had a material impact on the Partnership’s consolidated financial statements.

Fair Value Measurements

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of 90 days or less are considered cash and cash equivalents. Cash equivalents are carried at cost, which approximates market value. The Partnership places cash and cash equivalents with institutions with high credit quality. However, at certain times, such cash and cash equivalents may be in excess of FDIC and SIPC insurance limits.

Cash paid for interest by the Partnership was $7,527,608, $7,665,223, and $7,794,998 during 2016, 2015, and 2014, respectively.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

2. Summary of Significant Accounting Policies (continued)

New Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-03, Simplifying the Presentation of Debt Issuance Costs . ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Partnership adopted this standard as required on January 1, 2016, resulting in a reclassification of $232,950 from deferred costs to a reduction of the carrying amount of mortgage note payable as of December 31, 2015.

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers . ASU 2014-09 amends the existing accounting standards for revenue recognition and is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. The Partnership plans to adopt the new standard effective January 1, 2018. The new standard can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Partnership is currently evaluating the impact adopting the new standard (and the transition method of such adoption) will have on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases , which is expected to result in lessees recognizing most leased assets on the balance sheet. Lessor accounting generally retains the operating lease model similar to the current accounting; however, certain refinements were made, which may impact the timing of certain revenue recognition and the classification of such amounts in the financial statements. The Partnership plans to adopt this new guidance effective January 1, 2019. The Partnership is currently evaluating the impact adopting the new accounting standard will have on the consolidated financial statements.

Subsequent Events

Subsequent events have been evaluated by the Partnership through February 13, 2017, the date the consolidated financial statements were available to be issued.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

3. Investment Property

Investment property consists of the following at December 31:



	2016		2015

Land	$	5,738,037	$	5,738,037
Building and improvements	81,160,529		80,271,593
Total land, building, and improvements	86,898,566		86,009,630

Furniture, fixtures, and equipment	2,186,908		2,038,434
Investment property, at cost	89,085,474		88,048,064

Less accumulated depreciation	51,739,966		48,735,354
Investment property, at cost, net	$	37,345,508	$	39,312,710

Investment property includes $529,850 and $1,353,549 of work-in-progress at December 31, 2016 and 2015, respectively. The Partnership wrote off $229,588 and $464,401 of fully depreciated assets during fiscal year 2016 and 2015, respectively.

During 2015, the Partnership sold approximately 0.20 acres of land to the Commonwealth of Pennsylvania for net proceeds of $100,920. In connection with the sale, the Partnership recognized a gain of $86,874, which is included in other income in the accompanying Consolidated Statements of Operations.

4. Mortgage Note Payable

On June 8, 2010, the Partnership, through its subsidiary, the Mall, obtained a $140,000,000 mortgage note. The mortgage note bears interest at a fixed rate of 5.88% and requires monthly principal and interest payments of $828,600, based on a 30-year amortization period, through the mortgage note’s maturity date of July 5, 2020, at which time the remaining principal and interest balance of $117,610,923 is due. The mortgage note is secured by the investment property and related rents and leases of the Partnership. The principal amount outstanding on the mortgage note was $126,700,378 and $129,115,973 as of December 31, 2016 and 2015, respectively.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

4. Mortgage Note Payable (continued)

As of December 31, 2016, scheduled principal repayments on the mortgage note, over the next four years, are as follows:



2017	$	2,561,523
2018	2,716,267
2019	2,880,359
2020	118,542,229
Mortgage note payable	126,700,378
Deferred financing costs, net	(180,171		)
Mortgage note payable, net	$	126,520,207

Financing fees incurred to obtain long-term financing are recorded as a reduction to the related debt obligation. These deferred financing costs are amortized to interest expense in the accompanying Consolidated Statements of Operations on a straight-line basis over the term of the respective debt agreement. As of December 31, 2016 and 2015, the balance of the mortgage note payable is net of unamortized deferred financing costs of $180,171 and $232,950, respectively. During the years ended December 31, 2016 and 2015, amortization of deferred financing costs totaled $52,779. During the year ended December 31, 2014, amortization of deferred financing costs totaled $52,924.

Based on the borrowing rates currently available to the Partnership for loans with similar terms and maturities, the fair value of the mortgage note at December 31, 2016 and 2015, was approximately $133,300,000 and $136,900,000, respectively, and the estimated discount rate was 3.47% and 3.76%, respectively.

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

5. Rentals Under Operating Leases



2017	$	17,588,671
2018	13,568,376
2019	10,860,866
2020	9,743,196
2021	8,630,031
Thereafter	14,578,964
	$	74,970,104

6. Commitments and Contingencies

Litigation

Exhibit 99.2

Lehigh Valley Associates and Subsidiary

Notes to Consolidated Financial Statements

As of December 31, 2016 and 2015, and for the Three Years Ended December 31, 2016

7. Related-Party Transactions

Statements of Operations. Also, certain national advertising and promotion programs are provided to the Partnership by affiliates of SPG, L.P., and these charges are included in advertising and promotion expense in the accompanying Consolidated Statements of Operations.

A summary of the fees described above and charged by affiliates is as follows:



Related-Party Fees and Compensation	2016		2015		2014

Management fees	$	1,033,360	$	1,007,108	$	1,014,912
Insurance	299,167		301,928		296,343
Advertising and promotion	409,655		403,268		388,158
Other services	225,183		202,200		240,598
Total fees and compensation expensed	1,967,365		1,914,504		1,940,011

Capitalized leasing and other fees	92,653		136,219		203,865
Total fees and compensation	$	2,060,018	$	2,050,723	$	2,143,876

During 2016, 2015, and 2014, the Partnership was charged $168,576, $335,063, and $450,635, respectively, for electricity usage by an affiliate of KSI. These charges are included in property operating expenses in the accompanying Consolidated Statements of Operations.

At December 31, 2016 and 2015, $188,664 and $153,008, respectively, were payable to the affiliate and are included in accounts payable and accrued expenses in the accompanying Consolidated Balance Sheets.