EX-99.1 2 exhibit991q413earningsrele.htm EARNINGS RELEASE Exhibit 99.1 Q413 Earnings Release
Exhibit 99.1

CONTACT: AT THE COMPANY
Robert McCadden
EVP & CFO
(215) 875-0735
Heather Crowell
VP, Corporate Communications and Investor Relations
(215) 875-0735

PREIT Reports 2013 Results and Introduces 2014 Guidance
FFO as adjusted increased 20%
Record Non-anchor occupancy of 93.5% achieved
Leverage of 48.4%, at lowest level since 2005

Philadelphia, PA, February 18, 2014 - PREIT (NYSE: PEI) today reported results for the year and quarter ended December 31, 2013.
•
FFO, as adjusted increased 20% to $127.9 million for the year
•
FFO, as adjusted per share increased by 5.0% for the year
•
Same Store NOI improved by 2.6% for the year
◦
Same Store NOI improved by 1.6% for the quarter
•
Same Store NOI excluding lease termination revenue improved by 2.7% for the year
◦
Same Store NOI excluding lease termination revenue improved by 0.3% for the quarter
•
Total Portfolio Occupancy increased to 95.0%, an increase of 90 basis points over the prior year
•
Non-Anchor Occupancy increased 240 basis points to 93.5%
◦
Same Store mall occupancy increased to 93.5%, an increase of 150 basis points
•
Renewal spreads for small format leases were 4.3% during the year
•
Average gross rent at Same Store mall properties increased 3.1% driven by a 4.7% increase at the Company’s Premier malls
•
Portfolio sales per square foot were $380 compared to $372 for the 12 months ended December 31, 2012
•
Activity in the asset disposition program was robust with the sale of six assets for $219.1 million (six assets comprised of three malls and three power centers)
•
Leverage ratio under our 2013 Revolving Facility (Total Liabilities to Gross Asset Value) was reduced to 48.4%
•
New mortgage loans totaling $291.1 million were completed on five properties at an average interest rate of 4.26%, a 127 basis point reduction versus the previous mortgage loans
•
Repaid $218.6 million of mortgage loans secured by four properties
•
Dividends on common shares were increased by 25% since December 2012 and were increased by 11% during the quarter to $0.20/share

“2013 was a standout year for PREIT. In it’s first full year, PREIT’s new management team has delivered a strong balance sheet, improved portfolio quality and solid operating results,” said Joseph F. Coradino, Chief Executive Officer. “We are proud of our accomplishments and are confident that we have the people and portfolio to deliver improved results in 2014.”



PREIT / 2

The following tables set forth information regarding Funds From Operations (“FFO”) and the adjustments to FFO for the quarter and year ended December 31, 2013:

 
Quarter Ended December 31,
 
 
Year Ended December 31,
 
(In millions)
2013

2012

 
2013

2012

FFO
$
41.7

$
29.7

 
$
121.1

$
95.6

Provision for employee separation expense
—

3.7

 
2.3

9.4

Accelerated amortization of deferred financing costs
—

0.7

 
1.1

0.7

Loss on hedge ineffectiveness
—

1.2

 
3.4

1.2

FFO, as adjusted
$
41.7

$
35.2

 
$
127.9

$
106.9

 
 
 
 
 
 
 
Quarter Ended December 31,
 
 
Year Ended December 31,
 
Per Diluted Share and OP Unit
2013

2012

 
2013

2012

FFO
$
0.59

$
0.51

 
$
1.81

$
1.63

 
 
 
 
 
 
FFO, as adjusted
$
0.59

$
0.50

 
$
1.92

$
1.83


The following tables set forth information regarding Net Operating Income (“NOI”) and Same Store NOI for the quarter and year ended December 31, 2013:

 
Quarter Ended December 31,
 
 
Year Ended December 31,
 
(In millions)
2013

2012

 
2013

2012

NOI
$
78.5

$
80.5

 
$
283.4

$
285.4

NOI from discontinued operations
(0.3
)
(4.6)

 
(5.7)

(18.0
)
NOI from acquisitions and other
(1.2
)
(0.1
)
 
(3.4)

0.0

Same Store NOI
77.0

75.8

 
274.3

(267.4
)
Lease termination revenue
(1.1
)
(0.1)

 
(1.7)

(1.8
)
Same Store NOI excluding lease termination revenue
$
75.9

$
75.7

 
$
272.6

$
265.6


The following tables set forth information regarding net income (loss) and net income (loss) per diluted share for the quarter and year ended December 31, 2013:

 
Quarter Ended December 31,
 
Year Ended December 31,
(In millions, except per share amounts)
2013

2012

 
2013

2012

Net income (loss)
$
7.8

$
(6.9
)
 
$
37.2

$
(42.6
)
Net income (loss) per diluted share
$
0.05

$
(0.19
)
 
$
0.31

$
(0.89
)

A description of each non-GAAP financial measure and the related reconciliation to the comparable GAAP measure are located at the end of this press release.

Primary Factors Affecting Financial Results for the Year Ended December 31, 2013:

•
Gains on sales of discontinued operations of $78.5 million
•
Impairment of assets of $30.0 million related to Chambersburg and North Hanover Malls
•
Same Store NOI increased $6.9 million
•
NOI increased $3.3 million from the 907 Market Street acquisition (the retail tenant at this property has announced plans to close its store in the first half of 2014)
•
NOI decreased $12.0 million as a result of the sale of six properties


PREIT / 3

•
Interest expense decreased $28.6 million from lower overall debt balances and lower average interest rates
•
Depreciation and amortization increased $5.3 million
•
General and administrative expenses decreased $0.6 million
•
Dividends on preferred shares increased $7.9 million resulting from the Series A Preferred Shares issued in April 2012 and the Series B Preferred Shares issued in October 2012
•
Employee separation expenses decreased $7.1 million
•
Net loss on hedge ineffectiveness of $3.4 million
•
Accelerated deferred financing costs of $1.1 million

Primary Factors Affecting Financial Results for the Quarter Ended December 31, 2013:

•
Same Store NOI increased $1.2 million
•
NOI increased $1.2 million as a result of the acquisition of the 907 Market Street property in April 2013 (the retail tenant at this property has announced plans to close its store in the first half of 2014)
•
NOI decreased $4.3 million as a result of the sale of five properties
•
Interest expense decreased $9.7 million from lower overall debt balances and lower average interest rates
•
General and administrative expenses increased $1.7 million
•
Depreciation and amortization increased $0.7 million

All amounts referenced as primary factors affecting financial results above include PREIT’s proportionate share of partnership revenues and expenses.

Financing Activities

In December 2013, the Company placed a mortgage loan on Wyoming Valley Mall in Wilkes-Barre, Pennsylvania. The 10-year non-recourse loan amount is $78.0 million and carries a fixed interest rate of 5.17%. The Company used a portion of the proceeds to repay the $42.2 million loan on Beaver Valley Mall in Monaca, Pennsylvania.

In January, the Company entered into two unsecured term loans for an aggregate amount of $250.0 million, comprised of a $150.0 million, 5 Year Term Loan and a $100.0 million, 7 Year Term Loan (collectively “2014 Term Loans”).

Key provisions of the 2014 Term Loans:
•
The loan covenants mirror those under the Company’s 2013 Revolving Facility.
•
The amounts borrowed under the 5 Year Term Loan will bear interest at a rate of LIBOR plus a range of 135 to 190 basis points depending upon the Company’s leverage, initially LIBOR plus 1.45%.
•
The amounts borrowed under the 7 Year Term Loan will bear interest at a rate of LIBOR plus a range of 180 to 235 basis points depending upon the Company’s leverage, initially LIBOR plus 1.95%.
•
The loans include a deferred draw feature that allows the Company to borrow amounts in increments over a one-year period.

The Company made initial borrowings of $100.0 million under the 5 Year Term Loan and $30.0 million under the 7 Year Term Loan, and used the proceeds to repay the then-current $130.0 million outstanding balance under its 2013 Revolving Facility. In connection with these borrowings, the Company entered into hedging transactions that effectively fix the initial rate on $100.0 million of the 5 Year Term Loan at 3.24% for five years and that effectively fix the initial rate on $30.0 million of the 7 Year Term Loan at 3.73% for five years.

Asset Dispositions

During the quarter, the Company sold Chambersburg Mall in Chambersburg, Pennsylvania for $8.5 million.


PREIT / 4

The contract for the sale of North Hanover Mall expired. Beaver Valley Mall has been removed from PREIT’s non-core mall list and has been taken off the market. Non-core malls currently being marketed are North Hanover Mall, South Mall and Nittany Mall.

Retail Operations

The following tables set forth information regarding sales per square foot and occupancy in the Company’s portfolio, including properties owned by partnerships in which the Company owns a non-controlling interest:

 
Rolling Twelve Months Ended:
 
December 31, 2013
December 31, 2012
Portfolio Sales per square foot (1)
$ 380
$ 372

(1) Based on sales reported by tenants leasing 10,000 square feet or less of non-anchor space for at least 24 months.
 
Occupancy as of:
 
December 31, 2013
December 31, 2012
Same Store Malls:
 
 
   Total including anchors
95.0%
94.4%
   Total excluding anchors
93.5%
92.0%
Portfolio Total Occupancy:
 
 
   Total including anchors
95.0%
94.1%
   Total excluding anchors
93.5%
91.1%

2014 Outlook
The Company estimates FFO for the year ended December 31, 2014 will be between $2.01 and $2.06 per diluted share.

Estimates Per Diluted Share
Lower End
Upper End
FFO
$
2.01

$
2.06

Depreciation and amortization (includes the Company’s proportionate share of unconsolidated properties), net of other adjustments
(2.10
)
(2.07
)
Net income (loss) attributable to PREIT common shareholders
$
(0.09
)
$
(0.01
)

Our 2013 guidance is based on our current assumptions and expectations about market conditions, and our projections regarding occupancy, retail sales and rental rates, and planned capital spending. Our guidance is forward-looking, and is subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements.

Our guidance incorporates the following assumptions, among others:

•
2014 same store NOI growth in the range of 2.6% to 3.2%, excluding lease termination revenue;
•
Lease termination revenue of $1.5 million to $2.0 million;
•
Recurring capital expenditures in the range of $45 to $50 million;
•
Redevelopment capital expenditures in the range of $50 to $60 million;
•
Our guidance does not contemplate any material property dispositions or acquisitions; and
•
Our guidance does not assume any capital market transactions, other than mortgage refinancings in the ordinary course of business.


PREIT / 5

Conference Call Information

Management has scheduled a conference call for 11:00 a.m. Eastern Time on Wednesday, February 19, 2014, to review the Company’s results and future outlook. To listen to the call, please dial (877) 870-4263 (domestic) or (412) 317-0790 (international), at least five minutes before the scheduled start time, and provide conference number 10038735. Investors can also access the call in a "listen only" mode via the Internet at the Company website, preit.com. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the Internet broadcast. Financial and statistical information expected to be discussed on the call will also be available on the Company’s website.

For interested individuals unable to join the conference call, a replay of the call will be available through March 5, 2014 at (877) 344-7529 (domestic) or (412) 317-0088 (international), (Conference number: 10038735). The online archive of the webcast will also be available for 14 days following the call.



PREIT / 6

About Pennsylvania Real Estate Investment Trust

PREIT is a real estate investment trust specializing in the ownership and management of differentiated retail shopping malls designed to fit the dynamic communities they serve. Founded in 1960 as Pennsylvania Real Estate Investment Trust, the Company now owns properties in 12 states in the eastern half of the United States with concentration in the Mid-Atlantic region and Greater Philadelphia. The Company’s current portfolio is comprised of 35 shopping malls, five community and power centers, and three development sites totaling 43 properties and 30.4 million square feet of space. PREIT is headquartered in Philadelphia, Pennsylvania, and is publicly traded on the NYSE under the symbol PEI. Information about the Company can be found at www.preit.com or on Twitter or LinkedIn.

Rounding

Certain summarized information in the tables above may not total due to rounding.

Definitions

Funds From Operations

The National Association of Real Estate Investment Trusts (“NAREIT”) defines Funds From Operations (“FFO”), which is a non-GAAP measure commonly used by REITs, as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate depreciation and amortization; and after adjustments for unconsolidated partnerships and joint ventures to reflect funds from operations on the same basis. We compute FFO in accordance with standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition, or that interpret the current NAREIT definition differently than we do. NAREIT’s established guidance provides that excluding impairment write downs of depreciable real estate is consistent with the NAREIT definition.     

FFO is a commonly used measure of operating performance and profitability among REITs. We use FFO and FFO per diluted share and unit of limited partnership interest in our operating partnership (“OP Unit”) in measuring our performance against our peers and as one of the performance measures for determining incentive compensation amounts earned under certain of our performance based executive compensation programs. FFO does not include gains and losses on sales of operating real estate assets or impairment write downs of depreciable real estate, which are included in the determination of net income in accordance with GAAP. Accordingly, FFO is not a comprehensive measure of our operating cash flows. In addition, since FFO does not include depreciation on real estate assets, FFO may not be a useful performance measure when comparing our operating performance to that of other non-real estate commercial enterprises. We compensate for these limitations by using FFO in conjunction with other GAAP financial performance measures, such as net income and net cash provided by operating activities, and other non-GAAP financial performance measures, such as NOI. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. We believe that net income is the most directly comparable GAAP measurement to FFO.


PREIT / 7

We also present Funds From Operations, as adjusted, and Funds From Operations per diluted share and OP Unit, as adjusted, which are non-GAAP measures, for the three months and years ended December 31, 2013 and 2012 to show the effect of the provision for employee separation expense, accelerated amortization of deferred financing costs and gain and loss on hedge ineffectiveness, which had a significant effect on our results of operations in certain periods, but are not, in our opinion, indicative of our operating performance.

We believe that FFO is helpful to management and investors as a measure of operating performance because it excludes various items included in net income that do not relate to or are not indicative of operating performance, such as gains on sales of operating real estate and depreciation and amortization of real estate, among others. We believe that Funds From Operations, as adjusted, is helpful to management and investors as a measure of operating performance because it adjusts FFO to exclude items that management does not believe are indicative of its operating performance, such as provision for employee separation expense, accelerated amortization of deferred financing costs and gain and loss on hedge ineffectiveness.

Net Operating Income (“NOI”)

NOI (a non-GAAP measure) is derived from real estate revenue (determined in accordance with GAAP, including lease termination revenue) minus operating expenses (determined in accordance with GAAP), plus our share of revenue and operating expenses of our partnership investments, and includes real estate revenue and operating expenses from properties included in discontinued operations, if any. It does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of our liquidity. It is not indicative of funds available for our cash needs, including our ability to make cash distributions. We believe that NOI is helpful to management and investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. We believe that net income is the most directly comparable GAAP measurement to NOI.

NOI excludes interest and other income, general and administrative expenses, provision for employee separation expense, interest expense, depreciation and amortization, gains on sales of interests in real estate, gains on sales of non-operating real estate, gains on sales of discontinued operations, gain on extinguishment of debt, impairment losses, project costs and other expenses.

Same Store NOI

Same Store NOI is calculated using retail properties owned for the full periods presented and exclude properties acquired or disposed of or reclassified as held for sale during the periods presented.


Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange


PREIT / 8




Act of 1934. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements or results and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. In particular, our business might be materially and adversely affected by uncertainties affecting real estate businesses generally as well as the following, among other factors: our substantial debt, stated value of preferred shares and our high leverage ratio; constraining leverage, interest and tangible net worth covenants under our 2013 Revolving Facility and 2014 Term Loans; potential losses on impairment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill; potential losses on impairment of assets that we might be required to record in connection with any dispositions of assets; changes to our corporate management team and any resulting modifications to our business strategies; our ability to refinance our existing indebtedness when it matures, on favorable terms or at all; our ability to raise capital, including through the issuance of equity or equity-related securities if market conditions are favorable, through joint ventures or other partnerships, through sales of properties or interests in properties, or through other actions; our ability to identify and execute on suitable acquisition opportunities and to integrate acquired properties into our portfolio; our short- and long-term liquidity position; current economic conditions and their effect on employment, consumer confidence and spending and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the value and potential impairment of our properties;  general economic, financial and political conditions, including credit market conditions, changes in interest rates or unemployment; changes in the retail industry, including consolidation and store closings, particularly among anchor tenants; the effects of online shopping and other uses of technology on our retail tenants;  our ability to sell properties that we seek to dispose of or our ability to obtain estimated sale prices; our ability to maintain and increase property occupancy, sales and rental rates, in light of the relatively high number of leases that have expired or are expiring in the next two years; increases in operating costs that cannot be passed on to tenants; risks relating to development and redevelopment activities; concentration of our properties in the Mid-Atlantic region; changes in local market conditions, such as the supply of or demand for retail space, or other competitive factors; potential dilution from any capital raising transactions; possible environmental liabilities; our ability to obtain insurance at a reasonable cost; and existence of complex regulations, including those relating to our status as a REIT, and the adverse consequences if we were to fail to qualify as a REIT.  Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed in our most recent Annual Report on Form 10-K and in any subsequent Quarterly Report on Form 10-Q in the section entitled “Item 1A. Risk Factors.” We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.

** Quarterly supplemental financial and operating **
** information will be available on www.preit.com **



PREIT / 9             Pennsylvania Real Estate Investment Trust
Selected Financial Data    


STATEMENTS OF OPERATIONS
 
Quarter Ended
 
Twelve Months Ended
 
 
December 31, 2013
 
December 31, 2012
 
December 31, 2013
 
December 31, 2012
(In thousands, except per share amounts)
 
 
 
 
 
 
 
 
REVENUE:
 
 
 
 
 
 
 
 
Real estate revenue:
 
 
 
 
 
 
 
 
Base rent
 
$
75,514

 
$
73,253

 
$
283,074

 
$
272,036

Expense reimbursements
 
31,842

 
29,523

 
126,909

 
119,993

Percentage rent
 
3,574

 
3,615

 
5,732

 
5,713

Lease termination revenue
 
998

 
62

 
1,565

 
1,753

Other real estate revenue
 
6,009

 
6,009

 
14,448

 
14,318

Real estate revenue
 
117,937

 
112,462

 
431,728

 
413,813

Other income
 
1,459

 
1,280

 
6,950

 
5,534

Total revenue
 
119,396

 
113,742

 
438,678

 
419,347

EXPENSES:
 
 
 
 
 
 
 
 
Property operating expenses:
 
 
 
 
 
 
 
 
CAM and real estate tax
 
(36,727
)
 
(33,793
)
 
(142,684
)
 
(132,901
)
Utilities
 
(5,043
)
 
(4,619
)
 
(22,028
)
 
(21,838
)
Other
 
(5,311
)
 
(5,052
)
 
(17,567
)
 
(18,391
)
Total operating expenses
 
(47,081
)
 
(43,464
)
 
(182,279
)
 
(173,130
)
Depreciation and amortization
 
(36,406
)
 
(33,484
)
 
(140,880
)
 
(127,845
)
Other expenses:
 
 
 
 
 
 
 
 
General and administrative expenses
 
(10,395
)
 
(8,720
)
 
(36,975
)
 
(37,538
)
Provision for employee separation expenses
 
—

 
(3,683
)
 
(2,314
)
 
(9,437
)
Impairment of assets
 
—

 
—

 
(6,304
)
 
—

Project costs and other expenses
 
(561
)
 
(1,159
)
 
(1,422
)
 
(1,936
)
Total other expenses
 
(10,956
)
 
(13,562
)
 
(47,015
)
 
(48,911
)
Interest expense, net
 
(20,227
)
 
(30,587
)
 
(98,731
)
 
(122,118
)
Total expenses
 
(114,670
)
 
(121,097
)
 
(468,905
)
 
(472,004
)
Income (loss) before equity in income of partnerships and discontinued operations
 
4,726

 
(7,355
)
 
(30,227
)
 
(52,657
)
Equity in income of partnerships
 
2,697

 
2,229

 
9,778

 
8,338

Net income (loss) from continuing operations
 
7,423

 
(5,126
)
 
(20,449
)
 
(44,319
)
Discontinued operations:
 
 
 
 
 
 
 
 
Operating results from discontinued operations
 
248

 
1,112

 
2,812

 
4,627

Impairment of assets on discontinued operations
 
—

 
(3,805
)
 
(23,662
)
 
(3,805
)
Gains on sales of discontinued operations
 
160

 
947

 
78,512

 
947

Income (loss) from discontinued operations
 
408

 
(1,746
)
 
57,662

 
1,769

Net income (loss)
 
7,831

 
(6,872
)
 
37,213

 
(42,550
)
Less: net (income) loss attributed to noncontrolling interest
 
(281
)
 
273

 
(1,354
)
 
1,713

Net income (loss) attributable to Pennsylvania Real Estate Investment Trust
 
7,550

 
(6,599
)
 
35,859

 
(40,837
)
Less: dividends on preferred shares
 
(3,962
)
 
(3,768
)
 
(15,848
)
 
(7,984
)
Net income (loss) attributable to Pennsylvania Real Estate Investment Trust common shareholders
 
$
3,588

 
$
(10,367
)
 
$
20,011

 
$
(48,821
)



PREIT / 10             Pennsylvania Real Estate Investment Trust
Selected Financial Data    


STATEMENTS OF OPERATIONS - EARNINGS PER SHARE
 
Quarter Ended
 
Twelve Months Ended
 
 
December 31, 2013
 
December 31, 2012
 
December 31, 2013
 
December 31, 2012
(In thousands, except per share amounts)
 
 
 
 
 
 
 
 
Net income (loss) per share - Pennsylvania Real Estate Investment Trust - basic and diluted (1)
 
$
0.05

 
$
(0.19
)
 
$
0.31

 
$
(0.89
)
Weighted average number of shares outstanding for diluted EPS
 
68,460

 
55,247

 
63,662

 
55,122


 (1)For the three month period ended December 31, 2012 and the twelve month periods ended December 31, 2013 and 2012, respectively, there are net losses from continuing operations, so the effect of common share equivalents is excluded from the calculation of diluted loss per share for these periods.




OTHER COMPREHENSIVE INCOME (LOSS)
 
Quarter Ended
 
Twelve Months Ended
 
 
December 31, 2013
 
December 31, 2012
 
December 31, 2013
 
December 31, 2012
(In thousands)
 
 
 
 
 
 
 
 
Net income (loss)
 
$
7,831

 
$
(6,872
)
 
$
37,213

 
$
(42,550
)
Unrealized gain on derivatives
 
900

 
4,063

 
9,647

 
11,370

Amortization of (gains) losses of settled swaps, net
 
303

 
1,622

 
5,069

 
2,419

Total comprehensive income (loss)
 
9,034

 
(1,187
)
 
51,929

 
(28,761
)
Less: Comprehensive (income) loss attributable to noncontrolling interest
 
(327
)
 
43

 
(1,840
)
 
1,156

Comprehensive income (loss) attributable to Pennsylvania Real Estate Investment Trust
 
$
8,707

 
$
(1,144
)
 
$
50,089

 
$
(27,605
)


PREIT / 11             Pennsylvania Real Estate Investment Trust
Selected Financial Data    



 
 
 
Quarter Ended December 31, 2013
 
Quarter Ended December 31, 2012
RECONCILIATION OF NOI AND
FFO TO NET LOSS
 
Consolidated
 
PREIT's Share
unconsolidated
partnerships
 
Discontinued
operations
 
Total
 
Consolidated
 
PREIT's Share
unconsolidated
partnerships
 
Discontinued
operations
 
Total
(In thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate revenue(1)
 
$
117,937

 
$
10,512

 
$
634

 
$
129,083

 
$
112,462

 
$
9,946

 
$
8,562

 
$
130,970

Operating expenses
 
(47,081
)
 
(3,192
)
 
(299
)
 
(50,572
)
 
(43,464
)
 
(3,049
)
 
(3,935
)
 
(50,448
)
NET OPERATING INCOME
 
70,856

 
7,320

 
335

 
78,511

 
68,998

 
6,897

 
4,627

 
80,522

General and administrative expenses
 
(10,395
)
 
—

 
—

 
(10,395
)
 
(8,720
)
 
—

 
—

 
(8,720
)
Provision for employee separation expenses
 
—

 
—

 
—

 
—

 
(3,683
)
 
—

 
—

 
(3,683
)
Other income
 
1,459

 
—

 
—

 
1,459

 
1,280

 
—

 
—

 
1,280

Project costs and other expenses
 
(561
)
 
—

 
—

 
(561
)
 
(1,159
)
 
—

 
—

 
(1,159
)
Interest expense, net
 
(20,227
)
 
(2,779
)
 
—

 
(23,006
)
 
(30,587
)
 
(2,809
)
 
(1,171
)
 
(34,567
)
Depreciation on non real estate assets
 
(332
)
 
—

 
—

 
(332
)
 
(220
)
 
—

 
—

 
(220
)
Preferred share dividends
 
(3,962
)
 
—

 
—

 
(3,962
)
 
(3,768
)
 
—

 
—

 
(3,768
)
FUNDS FROM OPERATIONS
 
36,838

 
4,541

 
335

 
41,714

 
22,141

 
4,088

 
3,456

 
29,685

Depreciation on real estate assets
 
(36,074
)
 
(1,844
)
 
(87
)
 
(38,005
)
 
(33,264
)
 
(1,859
)
 
(2,344
)
 
(37,467
)
Equity in income of partnerships
 
2,697

 
(2,697
)
 
—

 
—

 
2,229

 
(2,229
)
 
—

 
—

Operating results from discontinued operations
 
248

 
—

 
(248
)
 
—

 
1,112

 
—

 
(1,112
)
 
—

Impairment of assets - discontinued operations
 
—

 
—

 
—

 
—

 
(3,805
)
 
—

 
—

 
(3,805
)
Gain on sales of discontinued operations
 
160

 
—

 
—

 
160

 
947

 
—

 
—

 
947

Preferred share dividends
 
3,962

 
—

 
—

 
3,962

 
3,768

 
—

 
—

 
3,768

Net income (loss)
 
$
7,831

 
$
—

 
$
—

 
$
7,831

 
$
(6,872
)
 
$
—

 
$
—

 
$
(6,872
)
(1)Total includes the non-cash effect of straight-line rent of $426 and $938 for the quarters ended December 31, 2013 and 2012, respectively.
Weighted average number of shares outstanding
 
 
 
67,617

 
 
 
 
 
 
 
55,247

Weighted average effect of full conversion of OP Units
 
 
 
2,129

 
 
 
 
 
 
 
2,301

Effect of common share equivalents
 
 
 
 
 
 
 
844

 
 
 
 
 
 
 
1,149

Total weighted average shares outstanding, including OP Units
 
 
 
70,590

 
 
 
 
 
 
 
58,697

FUNDS FROM OPERATIONS
 
 
 
 
 
 
 
$
41,714

 
 
 
 
 
 
 
$
29,685

Provision for employee separation expenses
 
 
 
 
 
—

 
 
 
 
 
 
 
3,683

Accelerated amortization of deferred financing costs
 
—

 
 
 
 
 
 
 
690

Loss on hedge ineffectiveness
 
 
 
 
 
 
 
—

 
 
 
 
 
 
 
1,162

FUNDS FROM OPERATIONS AS ADJUSTED
 
$
41,714

 
 
 
 
 
 
 
$
35,220

FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT
 
$
0.59

 
 
 
 
 
 
 
$
0.51

FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT AS ADJUSTED
 
$
0.59

 
 
 
 
 
 
 
$
0.60

 
SAME STORE RECONCILIATION
 
Quarter Ended December 31,
 
 
Same Store
 
Non-Same Store
 
Total
 
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Real estate revenue
 
$
126,351

 
$
121,874

 
$
2,732

 
$
9,096

 
$
129,083

 
$
130,970

Operating expenses
 
(49,341
)
 
(46,109
)
 
(1,231
)
 
(4,339
)
 
(50,572
)
 
(50,448
)
NET OPERATING INCOME (NOI)
 
$
77,010

 
$
75,765

 
$
1,501

 
$
4,757

 
$
78,511

 
$
80,522

Less: Lease termination revenue
 
1,095

 
78

 
30

 
—

 
1,125

 
78

NOI - EXCLUDING LEASE TERMINATION REVENUE
 
$
75,915

 
$
75,687

 
$
1,471

 
$
4,757

 
$
77,386

 
$
80,444

 


PREIT / 12             Pennsylvania Real Estate Investment Trust
Selected Financial Data    


 
 
Twelve Months Ended December 31, 2013
 
Twelve Months Ended December 31, 2012
RECONCILIATION OF NOI AND
FFO TO NET INCOME (LOSS)
 
Consolidated
 
PREIT's Share
unconsolidated
partnerships
 
Discontinued
operations
 
Total
 
Consolidated
 
PREIT's Share
unconsolidated
partnerships
 
Discontinued
operations
 
Total
(In thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate revenue(1)
 
$
431,728

 
$
40,195

 
$
10,014

 
$
481,937

 
$
413,813

 
$
38,452

 
$
33,046

 
$
485,311

Operating expenses
 
(182,279
)
 
(11,960
)
 
(4,288
)
 
(198,527
)
 
(173,130
)
 
(11,458
)
 
(15,340
)
 
(199,928
)
NET OPERATING INCOME
 
249,449

 
28,235

 
5,726

 
283,410

 
240,683

 
26,994

 
17,706

 
285,383

General and administrative expenses
 
(36,975
)
 
—

 
—

 
(36,975
)
 
(37,538
)
 
—

 
—

 
(37,538
)
Provision for employee separation expenses
 
(2,314
)
 
—

 
—

 
(2,314
)
 
(9,437
)
 
—

 
—

 
(9,437
)
Other income
 
6,950

 
—

 
—

 
6,950

 
5,534

 
—

 
—

 
5,534

Project costs and other expenses
 
(1,422
)
 
—

 
—

 
(1,422
)
 
(1,936
)
 
(2
)
 
—

 
(1,938
)
Interest expense, net
 
(98,731
)
 
(11,084
)
 
(1,753
)
 
(111,568
)
 
(122,118
)
 
(11,258
)
 
(4,202
)
 
(137,578
)
Depreciation on non real estate assets
 
(1,132
)
 
—

 
—

 
(1,132
)
 
(825
)
 
—

 
—

 
(825
)
Preferred share dividends
 
(15,848
)
 
—

 
—

 
(15,848
)
 
(7,984
)
 
—

 
—

 
(7,984
)
FUNDS FROM OPERATIONS
 
99,977

 
17,151

 
3,973

 
121,101

 
66,379

 
15,734

 
13,504

 
95,617

Depreciation on real estate assets
 
(139,748
)
 
(7,373
)
 
(1,161
)
 
(148,282
)
 
(127,020
)
 
(7,396
)
 
(8,877
)
 
(143,293
)
Impairment of assets
 
(6,304
)
 
—

 
—

 
(6,304
)
 
—

 
—

 
—

 
—

Equity in income of partnerships
 
9,778

 
(9,778
)
 
—

 
—

 
8,338

 
(8,338
)
 
—

 
—

Operating results from discontinued operations
 
2,812

 
—

 
(2,812
)
 
—

 
4,627

 
—

 
(4,627
)
 
—

Impairment of assets - discontinued operations
 
(23,662
)
 
—

 
—

 
(23,662
)
 
(3,805
)
 
—

 
—

 
(3,805
)
Gain on sales of discontinued operations
 
78,512

 
—

 
—

 
78,512

 
947

 
—

 
—

 
947

Preferred share dividends
 
15,848

 
—

 
—

 
15,848

 
7,984

 
—

 
—

 
7,984

Net income (loss)
 
$
37,213

 
$
—

 
$
—

 
$
37,213

 
$
(42,550
)
 
$
—

 
$
—

 
$
(42,550
)
(1) Total includes the non-cash effect of straight-line rent of $1,571 and $2,171 for the twelve months ended December 31, 2013 and 2012, respectively.
Weighted average number of shares outstanding
 
63,662

 
 
 
 
 
 
 
55,122

Weighted average effect of full conversion of OP Units
 
2,194

 
 
 
 
 
 
 
2,310

Effect of common share equivalents
 
876

 
 
 
 
 
 
 
1,131

Total weighted average shares outstanding, including OP Units
 
66,732

 
 
 
 
 
 
 
58,563

FUNDS FROM OPERATIONS
 
 
 
 
 
 
 
$
121,101

 
 
 
 
 
 
 
$
95,617

Provision for employee separation expenses
 
 
 
 
 
2,314

 
 
 
 
 
 
 
9,437

Accelerated amortization of deferred financing costs
 
 
 
1,076

 
 
 
 
 
 
 
690

Loss on hedge ineffectiveness
 
 
 
 
 
 
 
3,409

 
 
 
 
 
 
 
1,162

FUNDS FROM OPERATIONS AS ADJUSTED
 
$
127,900

 
 
 
 
 
 
 
$
106,906

FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT
 
$
1.81

 
 
 
 
 
 
 
$
1.63

FUNDS FROM OPERATIONS PER DILUTED SHARE AND OP UNIT AS ADJUSTED
 
$
1.92

 
 
 
 
 
 
 
$
1.83

 
SAME STORE RECONCILIATION
 
Twelve Months Ended December 31,
 
 
Same Store
 
Non-Same Store
 
Total
 
 
2013
 
2012
 
2013
 
2012
 
2013
 
2012
Real estate revenue
 
$
465,473

 
$
450,280

 
$
16,464

 
$
35,031

 
$
481,937

 
$
485,311

Operating expenses
 
(191,141
)
 
(182,851
)
 
(7,386
)
 
(17,077
)
 
(198,527
)
 
(199,928
)
NET OPERATING INCOME (NOI)
 
$
274,332

 
$
267,429

 
$
9,078

 
$
17,954

 
$
283,410

 
$
285,383

Less: Lease termination revenue
 
1,688

 
1,827

 
78

 
75

 
1,766

 
1,902

NOI - EXCLUDING LEASE TERMINATION REVENUE
 
$
272,644

 
$
265,602

 
$
9,000

 
$
17,879

 
$
281,644

 
$
283,481


 
 


PREIT / 13             Pennsylvania Real Estate Investment Trust
Selected Financial Data    


 
CONSOLIDATED BALANCE SHEETS
 
December 31, 2013
 
December 31, 2012
 
 
 
 
 
(In thousands)
 
 
 
 
ASSETS:
 
 
 
 
INVESTMENTS IN REAL ESTATE, at cost:
 
 
 
 
Operating properties
 
$
3,450,317

 
$
3,395,681

Construction in progress
 
68,835

 
68,619

Land held for development
 
8,716

 
13,240

Total investments in real estate
 
3,527,868

 
3,477,540

Accumulated depreciation
 
(1,012,746
)
 
(907,928
)
Net investments in real estate
 
2,515,122

 
2,569,612

INVESTMENTS IN PARTNERSHIPS, at equity:
 
15,963

 
14,855

OTHER ASSETS:
 
 
 
 
Cash and cash equivalents
 
34,230

 
33,990

Tenant and other receivables (net of allowance for doubtful accounts of $13,123 and $14,042 at December 31, 2013 and December 31, 2012, respectively)
 
46,439

 
38,473

Intangible assets (net of accumulated amortization of $14,506 and $14,940 at December 31, 2013 and December 31, 2012, respectively)
 
9,075

 
8,673

Deferred costs and other assets, net
 
97,752

 
97,399

Assets held for sale
 
—

 
114,622

Total assets
 
2,718,581

 
2,877,624

LIABILITIES:
 
 
 
 
Mortgage loans
 
$
1,502,650

 
$
1,718,052

Term loans
 
—

 
182,000

Revolving facility
 
130,000

 
—

Tenants deposits and deferred rent
 
17,896

 
14,862

Distributions in excess of partnership investments
 
64,491

 
64,874

Fair value of derivative liabilities
 
844

 
9,742

Liabilities on assets held for sale
 
—

 
102,417

Accrued expenses and other liabilities
 
76,248

 
72,448

Total liabilities
 
1,792,129

 
2,164,395

EQUITY:
 
926,452

 
713,229

Total liabilities and equity
 
$
2,718,581

 
$
2,877,624

# # #