x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Pennsylvania | 23-6216339 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
200 South Broad Street Philadelphia, PA | 19102 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page | |||
Item 1. | |||
Item 2. | |||
Item 3. | |||
Item 4. | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | Not Applicable | — | |
Item 4. | Not Applicable | — | |
Item 5. | Not Applicable | — | |
Item 6. | |||
(in thousands, except per share amounts) | March 31, 2016 | December 31, 2015 | |||||
(unaudited) | |||||||
ASSETS: | |||||||
INVESTMENTS IN REAL ESTATE, at cost: | |||||||
Operating properties | $ | 3,305,542 | $ | 3,297,520 | |||
Construction in progress | 66,497 | 64,019 | |||||
Land held for development | 5,906 | 6,350 | |||||
Total investments in real estate | 3,377,945 | 3,367,889 | |||||
Accumulated depreciation | (1,046,632 | ) | (1,015,647 | ) | |||
Net investments in real estate | 2,331,313 | 2,352,242 | |||||
INVESTMENTS IN PARTNERSHIPS, at equity: | 157,995 | 161,029 | |||||
OTHER ASSETS: | |||||||
Cash and cash equivalents | 30,453 | 22,855 | |||||
Tenant and other receivables (net of allowance for doubtful accounts of $7,216 and $6,417 at March 31, 2016 and December 31, 2015, respectively) | 32,562 | 40,324 | |||||
Intangible assets (net of accumulated amortization of $13,972 and $13,441 at March 31, 2016 and December 31, 2015, respectively) | 21,717 | 22,248 | |||||
Deferred costs and other assets, net | 89,974 | 75,450 | |||||
Assets held for sale | 23,371 | 126,244 | |||||
Total assets | $ | 2,687,385 | $ | 2,800,392 | |||
LIABILITIES: | |||||||
Mortgage loans payable | $ | 1,247,173 | $ | 1,321,331 | |||
Term Loans | 398,160 | 398,040 | |||||
Revolving Facility | 115,000 | 65,000 | |||||
Tenants’ deposits and deferred rent | 17,741 | 14,631 | |||||
Distributions in excess of partnership investments | 64,712 | 65,547 | |||||
Fair value of derivative liabilities | 7,248 | 2,756 | |||||
Liabilities related to assets held for sale | — | 69,918 | |||||
Accrued expenses and other liabilities | 76,679 | 78,539 | |||||
Total liabilities | 1,926,713 | 2,015,762 | |||||
COMMITMENTS AND CONTINGENCIES (Note 6): | |||||||
EQUITY: | |||||||
Series A Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 4,600 shares of Series A Preferred Shares issued and outstanding at each of March 31, 2016 and December 31, 2015; liquidation preference of $115,000 | 46 | 46 | |||||
Series B Preferred Shares, $.01 par value per share; 25,000 preferred shares authorized; 3,450 shares of Series B Preferred Shares issued and outstanding at each of March 31, 2016 and December 31, 2015; liquidation preference of $86,250 | 35 | 35 | |||||
Shares of beneficial interest, $1.00 par value per share; 200,000 shares authorized; issued and outstanding 69,459 shares at March 31, 2016 and 69,197 shares at December 31, 2015 | 69,459 | 69,197 | |||||
Capital contributed in excess of par | 1,475,992 | 1,476,397 | |||||
Accumulated other comprehensive loss | (9,052 | ) | (4,193 | ) | |||
Distributions in excess of net income | (929,046 | ) | (912,221 | ) | |||
Total equity—Pennsylvania Real Estate Investment Trust | 607,434 | 629,261 | |||||
Noncontrolling interest | 153,238 | 155,369 | |||||
Total equity | 760,672 | 784,630 | |||||
Total liabilities and equity | $ | 2,687,385 | $ | 2,800,392 |
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
(in thousands of dollars) | 2016 | 2015 | ||||||
REVENUE: | ||||||||
Real estate revenue: | ||||||||
Base rent | $ | 66,993 | $ | 64,273 | ||||
Expense reimbursements | 31,134 | 31,510 | ||||||
Percentage rent | 451 | 524 | ||||||
Lease termination revenue | 235 | 441 | ||||||
Other real estate revenue | 2,643 | 2,035 | ||||||
Total real estate revenue | 101,456 | 98,783 | ||||||
Other income | 516 | 1,274 | ||||||
Total revenue | 101,972 | 100,057 | ||||||
EXPENSES: | ||||||||
Operating expenses: | ||||||||
Property operating expenses: | ||||||||
CAM and real estate taxes | (34,189 | ) | (33,807 | ) | ||||
Utilities | (4,326 | ) | (5,149 | ) | ||||
Other property operating expenses | (4,596 | ) | (4,196 | ) | ||||
Total property operating expenses | (43,111 | ) | (43,152 | ) | ||||
Depreciation and amortization | (33,735 | ) | (33,189 | ) | ||||
General and administrative expenses | (8,586 | ) | (8,943 | ) | ||||
Provision for employee separation expenses | (535 | ) | — | |||||
Acquisition costs and other expenses | (51 | ) | (4,451 | ) | ||||
Total operating expenses | (86,018 | ) | (89,735 | ) | ||||
Interest expense, net | (19,346 | ) | (20,145 | ) | ||||
Impairment of assets | (606 | ) | (6,240 | ) | ||||
Total expenses | (105,970 | ) | (116,120 | ) | ||||
Loss before equity in income of partnerships, gains on sales of interests in non operating real estate and gains on sales of real estate | (3,998 | ) | (16,063 | ) | ||||
Equity in income of partnerships | 3,883 | 2,083 | ||||||
Gains on sales of interests in non operating real estate | 9 | 43 | ||||||
Gain on sale of interests in real estate | 2,035 | — | ||||||
Net income (loss) | 1,929 | (13,937 | ) | |||||
Less: net (income) loss attributable to noncontrolling interest | (208 | ) | 429 | |||||
Net income (loss) attributable to PREIT | 1,721 | (13,508 | ) | |||||
Less: preferred share dividends | (3,962 | ) | (3,962 | ) | ||||
Net loss attributable to PREIT common shareholders | $ | (2,241 | ) | $ | (17,470 | ) |
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||
(in thousands of dollars, except per share amounts) | Three Months Ended March 31, | ||||||
2016 | 2015 | ||||||
Net income (loss) | $ | 1,929 | $ | (13,937 | ) | ||
Noncontrolling interest | (208 | ) | 429 | ||||
Dividends on preferred shares | (3,962 | ) | (3,962 | ) | |||
Dividends on unvested restricted shares | (84 | ) | (86 | ) | |||
Net loss used to calculate loss per share—basic and diluted | $ | (2,325 | ) | $ | (17,556 | ) | |
Basic and diluted loss per share: | $ | (0.03 | ) | $ | (0.26 | ) | |
(in thousands of shares) | |||||||
Weighted average shares outstanding—basic | 68,973 | 68,566 | |||||
Effect of common share equivalents (1) | — | — | |||||
Weighted average shares outstanding—diluted | 68,973 | 68,566 |
(1) | The Company had net losses used to calculate earnings per share for all periods presented. Therefore, the effects of common share equivalents of 298 and 432 for the three months ended March 31, 2016 and 2015, respectively, are excluded from the calculation of diluted loss per share for these periods because they would be antidilutive. |
Three Months Ended March 31, | ||||||||
(in thousands of dollars) | 2016 | 2015 | ||||||
Comprehensive loss: | ||||||||
Net income (loss) | $ | 1,929 | $ | (13,937 | ) | |||
Unrealized loss on derivatives | (5,572 | ) | (2,011 | ) | ||||
Amortization of losses on settled swaps, net of gains | 126 | 772 | ||||||
Total comprehensive loss | (3,517 | ) | (15,176 | ) | ||||
Less: comprehensive loss attributable to noncontrolling interest | 379 | 466 | ||||||
Comprehensive loss attributable to PREIT | $ | (3,138 | ) | $ | (14,710 | ) |
PREIT Shareholders | |||||||||||||||||||||||||||||||
(in thousands of dollars, except per share amounts) | Total Equity | Series A Preferred Shares, $.01 par | Series B Preferred Shares, $.01 par | Shares of Beneficial Interest, $1.00 Par | Capital Contributed in Excess of Par | Accumulated Other Comprehensive Income (Loss) | Distributions in Excess of Net Income | Non- controlling interest | |||||||||||||||||||||||
Balance December 31, 2015 | $ | 784,630 | $ | 46 | $ | 35 | $ | 69,197 | $ | 1,476,397 | $ | (4,193 | ) | $ | (912,221 | ) | $ | 155,369 | |||||||||||||
Net income | 1,929 | — | — | — | — | — | 1,721 | 208 | |||||||||||||||||||||||
Other comprehensive loss | (5,446 | ) | — | — | — | — | (4,859 | ) | — | (587 | ) | ||||||||||||||||||||
Shares issued under employee compensation plans, net of shares retired | (1,716 | ) | — | — | 262 | (1,978 | ) | — | — | — | |||||||||||||||||||||
Amortization of deferred compensation | 1,573 | — | — | — | 1,573 | — | — | — | |||||||||||||||||||||||
Distributions paid to common shareholders ($0.21 per share) | (14,584 | ) | — | — | — | — | — | (14,584 | ) | — | |||||||||||||||||||||
Distributions paid to Series A preferred shareholders ($0.5156 per share) | (2,372 | ) | — | — | — | — | — | (2,372 | ) | — | |||||||||||||||||||||
Distributions paid to Series B preferred shareholders ($0.4609 per share) | (1,590 | ) | — | — | — | — | — | (1,590 | ) | — | |||||||||||||||||||||
Noncontrolling interests: | |||||||||||||||||||||||||||||||
Distributions paid to Operating Partnership unit holders ($0.21 per unit) | (1,752 | ) | — | — | — | — | — | — | (1,752 | ) | |||||||||||||||||||||
Balance March 31, 2016 | $ | 760,672 | $ | 46 | $ | 35 | $ | 69,459 | $ | 1,475,992 | $ | (9,052 | ) | $ | (929,046 | ) | $ | 153,238 |
Three Months Ended March 31, | |||||||
(in thousands of dollars) | 2016 | 2015 | |||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 1,929 | $ | (13,937 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation | 31,400 | 31,364 | |||||
Amortization | 2,991 | 2,450 | |||||
Straight-line rent adjustments | (618 | ) | (272 | ) | |||
Provision for doubtful accounts | 918 | 1,259 | |||||
Amortization of deferred compensation | 1,573 | 1,803 | |||||
Loss on hedge ineffectiveness | 143 | 512 | |||||
Gains on sales of interests in real estate and non operating real estate, net | (2,044 | ) | (43 | ) | |||
Equity in income of partnerships in excess of distributions | (1,346 | ) | (748 | ) | |||
Impairment of assets and expensed project costs | 631 | 6,332 | |||||
Change in assets and liabilities: | |||||||
Net change in other assets | 9,938 | 4,530 | |||||
Net change in other liabilities | (1,032 | ) | (6,332 | ) | |||
Net cash provided by operating activities | 44,483 | 26,918 | |||||
Cash flows from investing activities: | |||||||
Investments in consolidated real estate acquisitions | — | (319,986 | ) | ||||
Additions to construction in progress | (11,839 | ) | (3,211 | ) | |||
Investments in real estate improvements | (5,921 | ) | (6,426 | ) | |||
Cash proceeds from sales of real estate | 84,765 | — | |||||
Additions to leasehold improvements | (141 | ) | (288 | ) | |||
Investments in partnerships | (919 | ) | (7,708 | ) | |||
Capitalized leasing costs | (1,737 | ) | (1,655 | ) | |||
Decrease in cash escrows | 2,085 | 981 | |||||
Cash distributions from partnerships in excess of equity in income | 4,463 | 1,323 | |||||
Net cash provided by (used in) investing activities | 70,756 | (336,970 | ) | ||||
Cash flows from financing activities: | |||||||
Borrowings from term loans | — | 120,000 | |||||
Net borrowings from revolving facility | 50,000 | 210,000 | |||||
Proceeds from mortgage loans | 9,000 | 5,844 | |||||
Principal installments on mortgage loans | (4,263 | ) | (4,742 | ) | |||
Repayments of mortgage loans | (139,843 | ) | — | ||||
Payment of deferred financing costs | (521 | ) | (130 | ) | |||
Dividends paid to common shareholders | (14,584 | ) | (14,510 | ) | |||
Dividends paid to preferred shareholders | (3,962 | ) | (3,962 | ) | |||
Distributions paid to Operating Partnership unit holders and non controlling interest | (1,752 | ) | (446 | ) | |||
Value of shares of beneficial interest issued | 324 | 337 | |||||
Value of shares retired under equity incentive plans, net of shares issued | (2,040 | ) | (5,292 | ) | |||
Net cash (used in) provided by financing activities | (107,641 | ) | 307,099 | ||||
Net change in cash and cash equivalents | 7,598 | (2,953 | ) | ||||
Cash and cash equivalents, beginning of period | 22,855 | 40,433 | |||||
Cash and cash equivalents, end of period | $ | 30,453 | $ | 37,480 |
(in thousands of dollars) | As of March 31, 2016 | As of December 31, 2015 | |||||
Buildings, improvements and construction in progress | $ | 2,855,977 | $ | 2,847,986 | |||
Land, including land held for development | 521,968 | 519,903 | |||||
Total investments in real estate | 3,377,945 | 3,367,889 | |||||
Accumulated depreciation | (1,046,632 | ) | (1,015,647 | ) | |||
Net investments in real estate | $ | 2,331,313 | $ | 2,352,242 |
Three Months Ended March 31, | |||||||
(in thousands of dollars) | 2016 | 2015 | |||||
Development/Redevelopment Activities: | |||||||
Salaries and benefits | $ | 274 | $ | 154 | |||
Real estate taxes | 19 | — | |||||
Interest | 703 | 35 | |||||
Leasing Activities: | |||||||
Salaries, commissions and benefits | 1,737 | 1,655 |
Sale Date | Property and Location | Description of Real Estate Sold | Capitalization Rate | Sale Price | Gain | ||||||||||
(in millions) | |||||||||||||||
2016 Activity: | |||||||||||||||
March 2016 | Lycoming Mall Pennsdale, Pennsylvania | Mall | 18.0 | % | $ | 26.4 | $ | 0.3 | |||||||
March 2016 | Gadsden Mall, Gadsden, Alabama, New River Valley Mall, Christiansburg, Virginia, and Wiregrass Commons Mall, Dothan, Alabama (1) | Three Malls (single combined transaction) | 17.4 | % | 66.0 | 1.6 | |||||||||
February 2016 | Palmer Park Mall, Easton, Pennsylvania | Mall | 13.6 | % | 18.0 | 0.1 |
(in thousands of dollars) | As of March 31, 2016 | As of December 31, 2015 | |||||
ASSETS: | |||||||
Investments in real estate, at cost: | |||||||
Operating properties | $ | 639,874 | $ | 636,774 | |||
Construction in progress | 128,479 | 126,199 | |||||
Total investments in real estate | 768,353 | 762,973 | |||||
Accumulated depreciation | (191,450 | ) | (186,580 | ) | |||
Net investments in real estate | 576,903 | 576,393 | |||||
Cash and cash equivalents | 29,711 | 37,362 | |||||
Deferred costs and other assets, net | 37,999 | 39,890 | |||||
Total assets | 644,613 | 653,645 | |||||
LIABILITIES AND PARTNERS’ INVESTMENT: | |||||||
Mortgage loans payable | 444,599 | 440,450 | |||||
Other liabilities | 22,853 | 30,425 | |||||
Total liabilities | 467,452 | 470,875 | |||||
Net investment | 177,161 | 182,770 | |||||
Partners’ share | 91,516 | 95,165 | |||||
PREIT’s share | 85,645 | 87,605 | |||||
Excess investment (1) | 7,638 | 7,877 | |||||
Net investments and advances | $ | 93,283 | $ | 95,482 | |||
Investment in partnerships, at equity | $ | 157,995 | $ | 161,029 | |||
Distributions in excess of partnership investments | (64,712 | ) | (65,547 | ) | |||
Net investments and advances | $ | 93,283 | $ | 95,482 |
(1) | Excess investment represents the unamortized difference between our investment and our share of the equity in the underlying net investment in the partnerships. The excess investment is amortized over the life of the properties, and the amortization is included in “Equity in income of partnerships.” |
Three Months Ended March 31, | |||||||
(in thousands of dollars) | 2016 | 2015 | |||||
Real estate revenue | $ | 29,191 | $ | 26,497 | |||
Operating expenses: | |||||||
Property operating expenses | (10,212 | ) | (10,706 | ) | |||
Interest expense | (5,392 | ) | (5,350 | ) | |||
Depreciation and amortization | (5,722 | ) | (6,370 | ) | |||
Total expenses | (21,326 | ) | (22,426 | ) | |||
Net income | 7,865 | 4,071 | |||||
Less: Partners’ share | (4,216 | ) | (2,036 | ) | |||
PREIT’s share | 3,649 | 2,035 | |||||
Amortization of excess investment | 234 | 48 | |||||
Equity in income of partnerships | $ | 3,883 | $ | 2,083 |
Lehigh Valley Associates LP | Metroplex West Associates, LP | |||||||||||||||
As of | As of | |||||||||||||||
(in thousands of dollars) | March 31, 2016 | December 31, 2015 | March 31, 2016 | December 31, 2015 | ||||||||||||
Summarized balance sheet information | ||||||||||||||||
Total assets | $ | 47,580 | $ | 48,352 | $ | 36,230 | $ | 36,164 | ||||||||
Mortgage loan payable | 128,305 | 128,883 | 81,121 | 81,505 |
Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||
(in thousands of dollars) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Summarized statement of operations information | ||||||||||||||||
Revenue | $ | 9,048 | $ | 8,944 | $ | 2,868 | $ | 2,884 | ||||||||
Property operating expenses | (2,226 | ) | (2,480 | ) | (748 | ) | (637 | ) | ||||||||
Interest expense | (1,906 | ) | (1,940 | ) | (1,024 | ) | (1,044 | ) | ||||||||
Net income | 4,083 | 3,461 | 763 | 358 | ||||||||||||
PREIT’s share of equity in income | ||||||||||||||||
of partnership | 2,042 | 1,730 | 381 | 179 |
Three Months Ended March 31, | |||||||||
(in thousands of dollars) | 2016 | 2015 | |||||||
2013 Revolving Facility | |||||||||
Interest expense | $ | 690.1 | $ | 380.9 | |||||
Deferred financing amortization | 198.7 | 358.0 | |||||||
Term Loans | |||||||||
Interest expense | 2,991.9 | 1,257.2 | |||||||
Deferred financing amortization | 119.9 | 76.4 |
Applicable Margin | |||||||||
Level | Ratio of Total Liabilities to Gross Asset Value | 2013 Revolving Facility | 2014 7-Year Term Loan | 2014 5-Year Term Loan | 2015 5-Year Term Loan | ||||
1 | Less than 0.450 to 1.00 | 1.20% | 1.80% | 1.35% | 1.35% | ||||
2 | Equal to or greater than 0.450 to 1.00 but less than 0.500 to 1.00 | 1.25% | (1) | 1.95% | (1) | 1.45% | (1) | 1.45% | (1) |
3 | Equal to or greater than 0.500 to 1.00 but less than 0.550 to 1.00 | 1.30% | 2.15% | 1.60% | 1.60% | ||||
4 | Equal to or greater than 0.550 to 1.00 | 1.55% | 2.35% | 1.90% | 1.90% |
March 31, 2016 | December 31, 2015 | ||||||||||||||
(in millions of dollars) | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||
Mortgage loans | $ | 1,247.2 | $ | 1,267.1 | $ | 1,321.3 | $ | 1,323.3 |
(in millions of dollars) Notional Value | Fair Value at March 31, 2016 (1) | Fair Value at December 31, 2015 (1) | Interest Rate | Effective Date | Maturity Date | ||||||||||
Interest Rate Swaps | |||||||||||||||
$25.0 | $ | — | $ | (0.1 | ) | 1.10 | % | July 31, 2016 | |||||||
28.1 | (0.2 | ) | (0.2 | ) | 1.38 | % | January 2, 2017 | ||||||||
33.0 | N/A | — | 3.72 | % | December 1, 2017 | ||||||||||
48.0 | (0.4 | ) | (0.1 | ) | 1.12 | % | January 1, 2018 | ||||||||
7.6 | — | — | 1.00 | % | January 1, 2018 | ||||||||||
55.0 | (0.4 | ) | (0.1 | ) | 1.12 | % | January 1, 2018 | ||||||||
30.0 | (0.8 | ) | (0.5 | ) | 1.78 | % | January 2, 2019 | ||||||||
20.0 | (0.6 | ) | (0.4 | ) | 1.78 | % | January 2, 2019 | ||||||||
20.0 | (0.6 | ) | (0.3 | ) | 1.78 | % | January 2, 2019 | ||||||||
20.0 | (0.6 | ) | (0.3 | ) | 1.79 | % | January 2, 2019 | ||||||||
20.0 | (0.6 | ) | (0.3 | ) | 1.79 | % | January 2, 2019 | ||||||||
20.0 | (0.6 | ) | (0.3 | ) | 1.79 | % | January 2, 2019 | ||||||||
25.0 | (0.3 | ) | — | 1.16 | % | January 2, 2019 | |||||||||
25.0 | (0.3 | ) | — | 1.16 | % | January 2, 2019 | |||||||||
25.0 | (0.3 | ) | — | 1.16 | % | January 2, 2019 | |||||||||
20.0 | (0.2 | ) | — | 1.16 | % | January 2, 2019 | |||||||||
20.0 | (0.2 | ) | 0.1 | 1.23 | % | June 26, 2020 | |||||||||
20.0 | (0.2 | ) | 0.2 | 1.23 | % | June 26, 2020 | |||||||||
20.0 | (0.2 | ) | 0.2 | 1.23 | % | June 26, 2020 | |||||||||
20.0 | (0.2 | ) | 0.2 | 1.23 | % | June 26, 2020 | |||||||||
20.0 | (0.2 | ) | 0.2 | 1.24 | % | June 26, 2020 | |||||||||
9.0 | (0.1 | ) | N/A | 1.19 | % | February 1, 2021 | |||||||||
48.0 | (0.2 | ) | N/A | 1.42 | % | January 2, 2018 | February 1, 2021 | ||||||||
$ | (7.2 | ) | $ | (1.7 | ) |
(1) | As of March 31, 2016 and December 31, 2015, derivative valuations in their entirety were classified in Level 2 of the fair value hierarchy and we did not have any significant recurring fair value measurements related to derivative instruments using significant unobservable inputs (Level 3). |
Three Months Ended March 31, | Consolidated Statements of Operations Location | |||||||||
(in millions of dollars) | 2016 | 2015 | ||||||||
Derivatives in cash flow hedging relationships: | ||||||||||
Interest rate products | ||||||||||
Gain (loss) recognized in Other Comprehensive Income (Loss) on derivatives | $ | (6.7 | ) | $ | (1.7 | ) | N/A | |||
Loss reclassified from Accumulated Other Comprehensive Income (Loss) into income (effective portion) | $ | 1.4 | $ | 1.0 | Interest expense | |||||
Loss recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing) | $ | (0.1 | ) | $ | (0.5 | ) | Interest expense |
Occupancy (1) as March 31, | |||||||||||||||||
Consolidated Properties | Unconsolidated Properties | Combined(2) | |||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Retail portfolio weighted average: | |||||||||||||||||
Total excluding anchors | 90.0 | % | 91.5 | % | 95.2 | % | 97.0 | % | 91.0 | % | 92.5 | % | |||||
Total including anchors | 93.6 | % | 95.4 | % | 96.1 | % | 97.6 | % | 94.0 | % | 95.7 | % | |||||
Malls weighted average: | |||||||||||||||||
Total excluding anchors | 90.0 | % | 91.5 | % | 95.5 | % | 93.0 | % | 90.4 | % | 91.6 | % | |||||
Total including anchors | 93.6 | % | 95.4 | % | 96.9 | % | 95.3 | % | 93.9 | % | 95.3 | % | |||||
Other retail properties | N/A | N/A | 95.4 | % | 99.9 | % | 95.4 | % | 99.9 | % |
(1) | Occupancy for both periods presented includes all tenants irrespective of the term of their agreements. Retail portfolio and mall occupancy for all periods presented excludes properties sold or classified as held for sale in 2016 and 2015 and the Gallery because the property is under redevelopment. |
(2) | Combined occupancy is calculated by using occupied gross leasable area (“GLA”) for consolidated and unconsolidated properties and dividing by total GLA for consolidated and unconsolidated properties. |
Initial Gross Rent Spread (1) | Avg Rent Spread (2) | Annualized Tenant Improvements psf (3) | |||||||||||||||||||||||||||
Number | GLA | Term | Initial Rent psf | Previous Rent psf | $ | % | % | ||||||||||||||||||||||
Non Anchor | |||||||||||||||||||||||||||||
New Leases | |||||||||||||||||||||||||||||
Under 10,000 sf | 21 | 52,773 | 7.5 | $ | 44.48 | N/A | N/A | N/A | N/A | $ | 8.82 | ||||||||||||||||||
Over 10,000 sf | 2 | 88,278 | 10.0 | 17.22 | N/A | N/A | N/A | N/A | 10.89 | ||||||||||||||||||||
Total New Leases | 23 | 141,051 | 7.7 | $ | 27.42 | N/A | N/A | N/A | N/A | $ | 10.12 | ||||||||||||||||||
Renewal Leases | |||||||||||||||||||||||||||||
Under 10,000 sf | 51 | 132,725 | 3.9 | $ | 58.37 | $ | 52.61 | $ | 5.76 | 10.9% | 17.2% | $ | 0.33 | ||||||||||||||||
Over 10,000 sf | 1 | 10,377 | 5.0 | 26.51 | 23.51 | 3.00 | 12.8% | 15.8% | — | ||||||||||||||||||||
Total Fixed Rent | 52 | 143,102 | 3.9 | $ | 56.06 | $ | 50.50 | $ | 5.56 | 11.0% | 17.1% | $ | 0.31 | ||||||||||||||||
Percentage in Lieu | 6 | 30,663 | 1.8 | $ | 14.09 | $ | 16.06 | $ | (1.97 | ) | (12.3)% | N/A | $ | — | |||||||||||||||
Total Renewal Leases | 58 | 173,765 | 3.7 | $ | 48.65 | $ | 44.42 | $ | 4.23 | 9.5% | N/A | $ | 0.26 | ||||||||||||||||
Total Non Anchor | 81 | 314,816 | 4.8 | $ | 39.14 | ||||||||||||||||||||||||
Anchor | |||||||||||||||||||||||||||||
New Leases | 1 | 90,000 | 10.0 | $ | 16.60 | N/A | N/A | N/A | N/A | 3.68 | |||||||||||||||||||
Renewal Leases | 6 | 644,843 | 3.3 | $ | 3.53 | $ | 3.53 | $ | — | —% | N/A | $ | — | ||||||||||||||||
Total | 7 | 734,843 | 4.3 | $ | 5.13 |
(1) | Initial renewal spread is computed by comparing the initial rent per square foot in the new lease to the final rent per square foot amount in the expiring lease. For purposes of this computation, the rent amount includes minimum rent, common area maintenance (“CAM”) charges, estimated real estate tax reimbursements and marketing charges, but excludes percentage rent. In certain cases, a lower rent amount may be payable for a period of time until specified conditions in the lease are satisfied. |
(2) | Average renewal spread is computed by comparing the average rent per square foot over the new lease term to the final rent per square foot amount in the expiring lease. For purposes of this computation, the rent amount includes minimum rent and fixed CAM charges, but excludes pro rata CAM charges, estimated real estate tax reimbursements, marketing charges and percentage rent. |
(3) | These leasing costs are presented as annualized costs per square foot and are spread uniformly over the initial lease term. |
Three Months Ended March 31, | % Change 2015 to 2016 | ||||||||||
(in thousands of dollars) | 2016 | 2015 | |||||||||
Real estate revenue | $ | 101,456 | $ | 98,783 | 3 | % | |||||
Other income | 516 | 1,274 | (59 | )% | |||||||
Property operating expenses | (43,111 | ) | (43,152 | ) | — | % | |||||
Depreciation and amortization | (33,735 | ) | (33,189 | ) | 2 | % | |||||
General and administrative expenses | (8,586 | ) | (8,943 | ) | (4 | )% | |||||
Provision for employee separation expense | (535 | ) | — | — | % | ||||||
Acquisition costs and other expenses | (51 | ) | (4,451 | ) | (99 | )% | |||||
Interest expense, net | (19,346 | ) | (20,145 | ) | (4 | )% | |||||
Impairment of assets | (606 | ) | (6,240 | ) | (90 | )% | |||||
Equity in income of partnerships | 3,883 | 2,083 | 86 | % | |||||||
Gains on sales of interests in real estate | 2,035 | — | — | % | |||||||
Gain on sales of interests in non operating real estate | 9 | 43 | (79 | )% | |||||||
Net income (loss) | $ | 1,929 | $ | (13,937 | ) | 114 | % |
• | an increase of $7.7 million in real estate revenue from the acquisition of Springfield Town Center in March 2015; |
• | an increase of $1.4 million in Same Store (as defined below) base rent due to increases from new store openings and lease renewals with higher base rental amounts, with notable increases at Cherry Hill Mall and Moorestown Mall; and |
• | an increase of $0.5 million in other Same Store revenue, including a $0.3 million timing difference in seasonal photo income resulting from the Easter holiday occurring in the first quarter of 2016 and in the second quarter of 2015; partially offset by |
• | a decrease of $5.0 million in real estate revenue related to properties sold in 2015 and 2016; |
• | a decrease of $1.3 million in Same Store expense reimbursements, following decreases in snow removal expense and utility expenses (see “—Operating Expenses”); and |
• | a decrease of $0.4 million due to the business failure of an office tenant at Voorhees Town Center. |
• | a decrease of $2.0 million in property operating expenses related to properties sold in 2015 and 2016; |
• | a decrease of $1.3 million in Same Store common area maintenance expense, including decreases of $0.9 million in snow removal expense and $0.2 million in common area utilities. During the three months ended March 31, 2016, weather across the Mid-Atlantic States, where many of our properties are located, was milder and drier compared to the three months ended March 31, 2015; and |
• | a decrease of $0.8 million in Same Store non-common area utility expense. Temperatures across the Mid-Atlantic States, where many of our properties are located, were well above average during the three months ended March 31, 2016, resulting in lower electricity usage compared to the three months ended March 31, 2015. In addition, there was a significant increase in electric rates during February 2015 due to extreme cold weather that particularly affected our properties located in Pennsylvania, New Jersey and Maryland; offset by |
• | an increase of $3.6 million in property operating expenses from the acquisition of Springfield Town Center in March 2015; and |
• | an increase of $0.6 million in Same Store real estate tax expense due to a combination of increases in real estate tax assessment values and real estate tax rates. |
Same Store | Non Same Store | Total | ||||||||||||||||||||||||||||||
(in thousands of dollars) | 2016 | 2015 | % Change | 2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||||||||||
Real estate revenue | $ | 95,754 | $ | 95,143 | 0.6 | % | $ | 19,093 | $ | 16,803 | 13.6 | % | $ | 114,847 | $ | 111,946 | 2.6 | % | ||||||||||||||
Property operating expenses | (37,885 | ) | (39,381 | ) | (3.8 | )% | (9,719 | ) | (8,972 | ) | 8.3 | % | (47,604 | ) | (48,353 | ) | (1.5 | )% | ||||||||||||||
Net Operating Income | $ | 57,869 | $ | 55,762 | 3.8 | % | $ | 9,374 | $ | 7,831 | 19.7 | % | $ | 67,243 | $ | 63,593 | 5.7 | % |
• | an increase of $3.8 million related to the March 2015 acquisition of Springfield Town Center; and |
• | an increase of $0.9 million due to accelerated amortization of capital improvements associated with store closings in the three months ended March 31, 2016; partially offset by |
• | a decrease of $4.6 million related to properties sold in 2015 and 2016. |
(in thousands, except per share amounts) | Three Months Ended March 31, 2016 | % Change 2015 to 2016 | Three Months Ended March 31, 2015 | ||||||
Funds from operations attributable to common shareholders and OP Unit holders | $ | 32,338 | 32.7% | $ | 24,364 | ||||
Acquisition costs | — | 3,330 | |||||||
Provision for employee separation expense | 535 | — | |||||||
Loss on hedge ineffectiveness | 142 | 512 | |||||||
Funds from operations attributable to common shareholders and OP Unit holders, as adjusted | $ | 33,015 | 17.0% | $ | 28,206 | ||||
Funds from operations attributable to common shareholders and OP Unit holders per diluted share and OP Unit | $ | 0.42 | 23.5% | $ | 0.34 | ||||
Funds from operations attributable to common shareholders and OP Unit holders per diluted share and OP Unit, as adjusted | $ | 0.43 | 7.5% | $ | 0.40 | ||||
Weighted average number of shares outstanding | 68,973 | 68,566 | |||||||
Weighted average effect of full conversion of OP Units | 8,338 | 2,192 | |||||||
Effect of common share equivalents | 298 | 432 | |||||||
Total weighted average shares outstanding, including OP Units | 77,609 | 71,190 |
• | Except for two properties that we co-manage with our partner, all of the other entities are managed on a day-to-day basis by one of our other partners as the managing general partner in each of the respective partnerships. In the case of the co-managed properties, all decisions in the ordinary course of business are made jointly. |
• | The managing general partner is responsible for establishing the operating and capital decisions of the partnership, including budgets, in the ordinary course of business. |
• | All major decisions of each partnership, such as the sale, refinancing, expansion or rehabilitation of the property, require the approval of all partners. |
• | Voting rights and the sharing of profits and losses are generally in proportion to the ownership percentages of each partner. |
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | ||||||||||||||||||||||
(in thousands of dollars) | Consolidated | Share of Unconsolidated Partnerships | Total (a non-GAAP measure) | Consolidated | Share of Unconsolidated Partnerships | Total (a non- GAAP measure) | |||||||||||||||||
Real estate revenue | $ | 101,456 | $ | 13,391 | $ | 114,847 | $ | 98,783 | $ | 13,163 | $ | 111,946 | |||||||||||
Property operating expenses | (43,111 | ) | (4,493 | ) | (47,604 | ) | (43,152 | ) | (5,201 | ) | (48,353 | ) | |||||||||||
Net operating income (NOI) | 58,345 | 8,898 | 67,243 | 55,631 | 7,962 | 63,593 | |||||||||||||||||
General and administrative expenses | (8,586 | ) | — | (8,586 | ) | (8,943 | ) | — | (8,943 | ) | |||||||||||||
Provision for employee separation expense | (535 | ) | — | (535 | ) | — | — | — | |||||||||||||||
Other income | 516 | — | 516 | 1,274 | — | 1,274 | |||||||||||||||||
Acquisition costs and other expenses | (51 | ) | — | (51 | ) | (4,451 | ) | (27 | ) | (4,478 | ) | ||||||||||||
Interest expense, net | (19,346 | ) | (2,581 | ) | (21,927 | ) | (20,145 | ) | (2,640 | ) | (22,785 | ) | |||||||||||
Depreciation of non real estate assets | (369 | ) | — | (369 | ) | (378 | ) | — | (378 | ) | |||||||||||||
Gains on sales of interests in non operating real estate | 9 | — | 9 | 43 | — | 43 | |||||||||||||||||
Preferred share dividends | (3,962 | ) | — | (3,962 | ) | (3,962 | ) | — | (3,962 | ) | |||||||||||||
Funds from operations attributable to common shareholders and OP Unit holders (FFO) | 26,021 | 6,317 | 32,338 | 19,069 | 5,295 | 24,364 | |||||||||||||||||
Depreciation of real estate assets | (33,366 | ) | (2,434 | ) | (35,800 | ) | (32,811 | ) | (3,212 | ) | (36,023 | ) | |||||||||||
Equity in income of partnerships | 3,883 | (3,883 | ) | — | 2,083 | (2,083 | ) | — | |||||||||||||||
Impairment of assets | (606 | ) | — | (606 | ) | (6,240 | ) | — | (6,240 | ) | |||||||||||||
Gains on sales of interests in real estate | 2,035 | — | 2,035 | — | — | — | |||||||||||||||||
Preferred share dividends | 3,962 | — | 3,962 | 3,962 | — | 3,962 | |||||||||||||||||
Net income (loss) | $ | 1,929 | $ | — | $ | 1,929 | $ | (13,937 | ) | $ | — | $ | (13,937 | ) |
• | adverse changes or prolonged downturns in general, local or retail industry economic, financial, credit or capital market or competitive conditions, leading to a reduction in real estate revenue or cash flows or an increase in expenses; |
• | deterioration in our tenants’ business operations and financial stability, including anchor or non anchor tenant bankruptcies, leasing delays or terminations, or lower sales, causing deferrals or declines in rent, percentage rent and cash flows; |
• | inability to achieve targets for, or decreases in, property occupancy and rental rates, resulting in lower or delayed real estate revenue and operating income; |
• | increases in operating costs, including increases that cannot be passed on to tenants, resulting in reduced operating income and cash flows; and |
• | increases in interest rates resulting in higher borrowing costs. |
(in thousands of dollars) | Total | Remainder of 2016 | 2017-2018 | 2019-2020 | Thereafter | ||||||||||||||
Principal payments | $ | 132,976 | $ | 11,964 | $ | 33,196 | $ | 35,782 | $ | 52,034 | |||||||||
Balloon payments (1) | 1,118,498 | 140,484 | 218,469 | 27,161 | 732,384 | ||||||||||||||
Total | $ | 1,251,474 | $ | 152,448 | $ | 251,665 | $ | 62,943 | $ | 784,418 |
(in thousands of dollars) | Total | Remainder of 2016 | 2017-2018 | 2019-2020 | Thereafter | ||||||||||||||
Mortgage loan principal payments | $ | 1,251,474 | $ | 152,448 | $ | 251,665 | $ | 62,943 | $ | 784,418 | |||||||||
Term Loans | 400,000 | — | — | 300,000 | 100,000 | ||||||||||||||
2013 Revolving Facility | 115,000 | — | 115,000 | — | — | ||||||||||||||
Interest on indebtedness (1) | 330,321 | 49,330 | 112,528 | 84,002 | 84,461 | ||||||||||||||
Operating leases | 6,823 | 1,564 | 3,809 | 1,446 | 4 | ||||||||||||||
Ground leases | 455 | 422 | 6 | 6 | 21 | ||||||||||||||
Development and redevelopment commitments (2) | 72,623 | 56,893 | 12,730 | 3,000 | — | ||||||||||||||
Total | $ | 2,176,696 | $ | 260,657 | $ | 495,738 | $ | 451,397 | $ | 968,904 |
• | changes in the retail industry, including consolidation and store closings, particularly among anchor tenants; |
• | 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; |
• | current economic conditions and the state of employment growth and consumer confidence and spending, and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the value and potential impairment of our properties; |
• | our ability to sell properties that we seek to dispose of or our ability to obtain estimated sale prices; |
• | potential losses on impairment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill, including such losses that we might be required to record in connection with any dispositions of assets; |
• | risks relating to development and redevelopment activities; |
• | our ability to identify and execute on suitable acquisition opportunities and to integrate acquired properties into our |
• | our partnerships and joint ventures with third parties to acquire or develop properties; |
• | 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; |
• | changes to our corporate management team and any resulting modifications to our business strategies; |
• | the effects of online shopping and other uses of technology on our retail tenants; |
• | acts of violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and |
• | our substantial debt and stated value of preferred shares and our high leverage ratio; |
• | constraining leverage, unencumbered debt yield, interest and tangible net worth covenants under our Credit Agreements; |
• | 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 short and long-term liquidity position; |
• | potential dilution from any capital raising transactions or other equity issuances; and |
• | general economic, financial and political conditions, including credit and capital market conditions, changes in interest rates or unemployment. |
Fixed Rate Debt | Variable Rate Debt | ||||||||||||
(in thousands of dollars) For the Year Ending December 31, | Principal Payments | Weighted Average Interest Rate (1) | Principal Payments | Weighted Average Interest Rate (1) | |||||||||
2016 | $ | 152,448 | 5.31 | % | $ | — | |||||||
2017 | 166,244 | 5.29 | % | — | |||||||||
2018 | 16,952 | 4.25 | % | 183,469 | (2) | 2.14 | % | ||||||
2019 | 17,692 | 4.25 | % | 150,000 | (3) | 1.89 | % | ||||||
2020 and thereafter | 772,669 | 4.22 | % | 307,000 | (4) | 2.34 | % |
(1) | Based on the weighted average interest rates in effect as of March 31, 2016. |
(2) | Includes 2013 Revolving Facility borrowings of $115.0 million with an interest rate of 1.69% as of March 31, 2016. |
(3) | Includes Term Loan debt balance of $150.0 million with a weighted average interest rate of 1.89% as of March 31, 2016. |
(4) | Includes Term Loan debt balance of $250.0 million with a weighted average interest rate of 2.09% as of March 31, 2016. |
• | Our disclosure controls and procedures are designed to ensure that the information that we are required to disclose in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. |
• | Our disclosure controls and procedures are effective to ensure that information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
January 1 - January 31, 2016 | 48,991 | $ | 19.74 | — | $ | — | |||||||
February 1 - February 29, 2016 | 60,918 | 17.63 | — | — | |||||||||
March 1 - March 31, 2016 | — | — | — | — | |||||||||
Total | 109,909 | $ | 18.57 | — | $ | — |
10.1 | 2016-2018 Restricted Share Unit Program |
10.2 | Form of Restricted Share Unit and Dividend Equivalent Rights Award Agreement |
10.3 | Separation of Employment Agreement dated April 15, 2016 by and between Pennsylvania Real Estate Investment Trust, PREIT Associates L.P., PREIT Services, LLC and Ronald Rubin. |
31.1 | Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101 | Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016 is formatted in XBRL interactive data files: (i) Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015; (ii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2016 and 2015; (iii) Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015; (iv) Consolidated Statements of Equity for the three months ended March 31, 2016; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015; and (vi) Notes to Unaudited Consolidated Financial Statements. |
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST | |||
Date: | April 29, 2016 | ||
By: | /s/ Joseph F. Coradino | ||
Joseph F. Coradino | |||
Chief Executive Officer | |||
By: | /s/ Robert F. McCadden | ||
Robert F. McCadden | |||
Executive Vice President and Chief Financial Officer | |||
By: | /s/ Jonathen Bell | ||
Jonathen Bell | |||
Senior Vice President and Chief Accounting Officer | |||
(Principal Accounting Officer) |
10.1* | 2016-2018 Restricted Share Unit Program |
10.2* | Form of Restricted Share Unit and Dividend Equivalent Rights Award Agreement |
10.3* | Separation of Employment Agreement dated April 15, 2016 by and between Pennsylvania Real Estate Investment Trust, PREIT Associates L.P., PREIT Services, LLC and Ronald Rubin. |
31.1* | Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | Certification pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1** | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2** | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101* | Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016 is formatted in XBRL interactive data files: (i) Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015; (ii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2016 and 2015; (iii) Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015; (iv) Consolidated Statements of Equity for the three months ended March 31, 2016; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015; and (vi) Notes to Unaudited Consolidated Financial Statements. |
* | filed herewith |
** | furnished herewith |
Page | ||
1. | PURPOSES | 1 |
2. | DEFINITIONS | 1 |
3. | AWARD AGREEMENT | 4 |
4. | PREFORMANCE GOAL; DELIVERY OF SHARES | 4 |
5. | BENEFICIARY DESIGNATIONS | 7 |
6. | DELIVERY TO GUARDIAN | 7 |
7. | SOURCE OF SHARES | 7 |
8. | CAPITAL ADJUSTMENTS | 7 |
9. | TAX WITHOLDING | 8 |
10. | ADMINISTRATION | 8 |
11. | AMENDMENT AND TERMINATION | 8 |
12. | HEADINGS | 8 |
13. | INCORPORATION OF PLAN BY REFERENCE | 8 |
APPENDIX A | A-1 | |
APPENDIX B | B-1 | |
APPENDIX C | C-1 | |
Date | Aggregate Base Units | Deemed Dividend | 20-Day Average Share Price | Additional RSUs Credited |
1/1/16 | 250 | — | — | — |
3/15/16 | 250 | $37.50 | $16 | 2.3 |
6/15/16 | 252.3 | $37.85 | $16 | 2.4 |
9/15/16 | 254.7 | $38.21 | $18 | 2.1 |
12/15/16 | 256.8 | $38.52 | $19 | 2 |
3/15/17 | 258.8 | $38.82 | $19 | 2 |
6/15/17 | 260.8 | $39.12 | $20 | 2 |
9/15/17 | 262.8 | $39.42 | $21 | 1.9 |
12/15/17 | 264.7 | $39.71 | $21 | 1.9 |
Date | Aggregate Base Units | Deemed Dividend | 20-Day Average Share Price | Additional RSUs Credited |
3/15/2018 | 266.6 | $39.99 | $22 | 1.8 |
6/15/2018 | 268.4 | $40.26 | $23 | 1.8 |
9/15/2018 | 270.2 | $40.53 | $23 | 1.8 |
12/15/2018 | 272 | $40.80 | $24 | 1.7 |
12/31/2018 | 273.7 | — | — | — |
Percentile | Percent of Base Units Deliverable in Shares |
Below 25th | 0% |
25th | 50% |
40th | 80% |
50th | 100% |
65th | 130% |
75th or above | 150% |
WITNESS: /s/ Gerald Riesenbach | /s/ Ronald Rubin | |
Ronald Rubin | ||
PENNSYLVANIA REAL ESTATE | ||
INVESTMENT TRUST | ||
WITNESS: /s/ Joseph H. Jacovini | By: /s/ Joseph Coradino | |
Name: Joseph Coradino | ||
Title: CEO | ||
PREIT ASSOCIATES, LP | ||
WITNESS: /s/ Joseph H. Jacovini | By: /s/ Joseph Coradino | |
Name: Joseph Coradino | ||
Title: CEO | ||
PREIT SERVICES LLC | ||
WITNESS: /s/ Joseph H. Jacovini | By: /s/ Bruce Goldman | |
Name: Bruce Goldman | ||
Title: CEO | ||
1. | I have reviewed this Quarterly Report on Form 10-Q 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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. |
/s/ Joseph F. Coradino | ||
Name: | Joseph F. Coradino | |
Title: | Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q 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 most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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. |
/s/ Robert F. McCadden | |
Name: | Robert F. McCadden |
Title: | Chief Financial Officer |
/s/ Joseph F. Coradino | |
Name: | Joseph F. Coradino |
Title: | Chief Executive Officer |
/s/ Robert F. McCadden | |
Name: | Robert F. McCadden |
Title: | Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 22, 2016 |
|
Document Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PEI | |
Entity Registrant Name | PENNSYLVANIA REAL ESTATE INVESTMENT TRUST | |
Entity Central Index Key | 0000077281 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 69,470,731 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Tenant and other receivables, allowance for doubtful accounts | $ 7,216,000 | $ 6,417,000 |
Intangible assets, accumulated amortization | $ 13,972,000 | $ 13,441,000 |
Common stock, par value | $ 1.00 | $ 1.00 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 69,459,000 | 69,197,000 |
Common stock, shares outstanding | 69,459,000 | 69,197,000 |
Series A Preferred Shares [Member] | ||
Preferred shares, par value | $ 0.01 | $ 0.01 |
Preferred shares, authorized | 25,000,000 | 25,000,000 |
Preferred shares, issued | 4,600,000 | 4,600,000 |
Preferred shares, outstanding | 4,600,000 | 4,600,000 |
Liquidation preference | $ 115,000,000 | $ 115,000,000 |
Series B Preferred Shares [Member] | ||
Preferred shares, par value | $ 0.01 | $ 0.01 |
Preferred shares, authorized | 25,000,000 | 25,000,000 |
Preferred shares, issued | 3,450,000 | 3,450,000 |
Preferred shares, outstanding | 3,450,000 | 3,450,000 |
Liquidation preference | $ 86,250,000 | $ 86,250,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Income Statement [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 298 | 432 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Comprehensive loss: | ||
Net income (loss) | $ 1,929 | $ (13,937) |
Unrealized loss on derivatives | (5,572) | (2,011) |
Amortization of losses on settled swaps, net of gains | 126 | 772 |
Total comprehensive loss | (3,517) | (15,176) |
Less: comprehensive loss attributable to noncontrolling interest | 379 | 466 |
Comprehensive loss attributable to PREIT | $ (3,138) | $ (14,710) |
CONSOLIDATED STATEMENTS OF EQUITY - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands |
Total |
Shares of Beneficial Interest, $1.00 Par [Member] |
Capital Contributed In Excess Of Par [Member] |
Accumulated Other Comprehensive Loss [Member] |
Distributions in Excess of Net Income [Member] |
Non-controlling interest [Member] |
Series B [Member] |
Series B [Member]
Distributions in Excess of Net Income [Member]
|
Series A [Member] |
Series A [Member]
Distributions in Excess of Net Income [Member]
|
Series A Preferred Shares, $25 plus accrued dividends Liquidation Value [Member] |
Series B Preferred Shares, $25 plus accrued dividends Liquidation Value [Member] |
---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2015 at Dec. 31, 2015 | $ 784,630 | $ 69,197 | $ 1,476,397 | $ (4,193) | $ (912,221) | $ 155,369 | $ 46 | $ 35 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Net income | 1,929 | 208 | ||||||||||
Net Income (Loss), Excluding Portion Attributable to Noncontrolling Interest | 1,721 | |||||||||||
Other comprehensive loss | (5,446) | (4,859) | (587) | |||||||||
Shares issued under employee compensation plans, net of shares retired | (1,716) | 262 | (1,978) | |||||||||
Amortization of deferred compensation | 1,573 | 1,573 | ||||||||||
Distributions paid to common shareholders ($0.21 per share) | (14,584) | (14,584) | ||||||||||
Distributions paid to preferred shareholders | $ (1,590) | $ (1,590) | $ (2,372) | $ (2,372) | ||||||||
Noncontrolling interests: | ||||||||||||
Distributions paid to Operating Partnership unit holders ($0.21 per unit) | (1,752) | (1,752) | ||||||||||
March 31, 2016 at Mar. 31, 2016 | $ 760,672 | $ 69,459 | $ 1,475,992 | $ (9,052) | $ (929,046) | $ 153,238 | $ 46 | $ 35 |
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) |
3 Months Ended |
---|---|
Mar. 31, 2016
$ / shares
| |
Common Stock, Dividends, Per Share, Cash Paid | $ 0.21 |
Series A Preferred Shares [Member] | |
Preferred Stock, Dividends, Per Share, Cash Paid | 0.5156 |
Series B [Member] | |
Preferred Stock, Dividends, Per Share, Cash Paid | $ 0.4609 |
Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | BASIS OF PRESENTATION Nature of Operations Pennsylvania Real Estate Investment Trust (“PREIT” or the “Company”) prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. Our unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in PREIT’s Annual Report on Form 10-K for the year ended December 31, 2015. In our opinion, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, the consolidated results of our operations, consolidated statements of other comprehensive income (loss), consolidated statements of equity and our consolidated statements of cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year. PREIT, a Pennsylvania business trust founded in 1960 and one of the first equity real estate investment trusts (“REITs”) in the United States, has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. Our portfolio currently consists of a total of 33 properties in 11 states, including 25 operating shopping malls, four other retail properties and four development or redevelopment properties. Two of the development and redevelopment properties are classified as “mixed use” (a combination of retail and other uses), one is classified as “retail” (redevelopment of The Gallery at Market East (the “Gallery”) into the Fashion Outlets of Philadelphia), and one is classified as “other.” The above property counts do not include two street retail properties in Philadelphia, Pennsylvania, because these properties have been classified as “held for sale” as of March 31, 2016. We hold our interest in our portfolio of properties through our operating partnership, PREIT Associates, L.P. (“PREIT Associates” or the “Operating Partnership”). We are the sole general partner of the Operating Partnership and, as of March 31, 2016, we held an 89.3% controlling interest in the Operating Partnership, and consolidated it for reporting purposes. The presentation of consolidated financial statements does not itself imply that the assets of any consolidated entity (including any special-purpose entity formed for a particular project) are available to pay the liabilities of any other consolidated entity, or that the liabilities of any consolidated entity (including any special-purpose entity formed for a particular project) are obligations of any other consolidated entity. Pursuant to the terms of the partnership agreement of the Operating Partnership, each of the limited partners has the right to redeem such partner’s units of limited partnership interest in the Operating Partnership (“OP Units”) for cash or, at our election, we may acquire such OP Units in exchange for our common shares on a one-for-one basis, in some cases beginning one year following the respective issue dates of the OP Units and in other cases immediately. If all of the outstanding OP Units held by limited partners had been redeemed for cash as of March 31, 2016, the total amount that would have been distributed would have been $182.2 million, which is calculated using our March 31, 2016 closing price on the New York Stock Exchange of $21.85 per share multiplied by the number of outstanding OP Units held by limited partners, which was 8,338,299 as of March 31, 2016. We provide management, leasing and real estate development services through two of our subsidiaries: PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties owned by partnerships in which we own an interest and properties that are owned by third parties in which we do not have an interest. PREIT Services and PRI are consolidated. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer an expanded menu of services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law. We evaluate operating results and allocate resources on a property-by-property basis, and do not distinguish or evaluate our consolidated operations on a geographic basis. Due to the nature of our operating properties, which involve retail shopping, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, we have aggregated our individual properties into one reportable segment. In addition, no single tenant accounts for 10% or more of consolidated revenue, and none of our properties are located outside the United States. Fair Value Fair value accounting applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, these accounting requirements establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs might include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. We utilize the fair value hierarchy in our accounting for derivatives (Level 2) and financial instruments (Level 2) and in our reviews for impairment of real estate assets (Level 3) and goodwill (Level 3). New Accounting Developments In March 2016, the Financial Accounting Standards Board (the “FASB”) issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to record operating and financing leases as assets and liabilities on the balance sheet and lessors to expense costs that are not initial direct leasing costs. This standard will be effective for the first annual reporting period beginning after December 15, 2018. The Company is evaluating the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures. In 2016, the Company adopted Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company evaluated the application of ASU No. 2015-02 and concluded that no change was required to its accounting of its interests in less than wholly owned joint ventures, however, the Operating Partnership now meets the criteria as a variable interest entity. The Company’s significant asset is its investment in the Operating Partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Company’s debt is also an obligation of the Operating Partnership. In March 2015, the FASB issued “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” and “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which intend to simplify the presentation of debt issuance costs. This guidance provides an amendment to the accounting guidance related to the presentation of debt issuance costs and is effective for fiscal years beginning after December 15, 2015, and we have adopted this guidance as of January 1, 2016. This guidance is applied retrospectively to all prior periods. Under the new guidance, debt issuance costs related to a note shall be reported in the Consolidated Balance Sheets as a direct deduction from the face amount of that note. In this regard, debt issuance costs shall not be classified separately from related debt obligations as a deferred charge. Therefore, as a result of adopting this guidance, the Company reclassified in its Consolidated Balance Sheets $4.2 million of debt issuance costs, net of accumulated amortization, at December 31, 2015, from “Deferred costs and other assets, net” to “Mortgage loans payable,” and $2.0 million of debt issuance costs at December 31, 2015, from “Deferred costs and other assets, net” to “Term loans,” thereby decreasing the carrying value of our recognized debt obligations for presentational purposes. |
Real Estate Activities |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Activities | REAL ESTATE ACTIVITIES Investments in real estate as of March 31, 2016 and December 31, 2015 were comprised of the following:
Capitalization of Costs The following table summarizes our capitalized salaries, commissions, benefits, real estate taxes and interest for the three months ended March 31, 2016 and 2015:
Dispositions The following table presents our dispositions for the three months ended March 31, 2016:
_________________________ (1) In connection with this transaction, we issued a mortgage loan to the buyer for $17.0 million, which is recorded in “Deferred costs and other assets, net” on our consolidated balance sheet. The mortgage loan is secured by Wiregrass Commons Mall, bears interest at the rate of 6.00% per annum and has a maturity date of April 2026. Impairment of Assets In March 2016 we recorded a loss on impairment of assets on an office building located in Voorhees, New Jersey of $0.6 million in connection with negotiations with a prospective buyer of the property. In connection with these negotiations, we determined that the holding period of the property was less than previously estimated, which we concluded was a triggering event, leading us to conduct an analysis of possible impairment at this property. Based upon the negotiations, we determined that the estimated undiscounted cash flows, net of capital expenditures for the property, were less than the carrying value of the property, and recorded a loss on impairment of assets. |
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Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Partnerships | INVESTMENTS IN PARTNERSHIPS The following table presents summarized financial information of the equity investments in our unconsolidated partnerships as of March 31, 2016 and December 31, 2015:
_________________________
We record distributions from our equity investments as cash from operating activities up to an amount equal to the equity in income of partnerships. Amounts in excess of our share of the income in the equity investments are treated as a return of partnership capital and recorded as cash from investing activities. The following table summarizes our share of equity in income of partnerships for the three months ended March 31, 2016 and 2015:
Significant Unconsolidated Subsidiaries Two of our unconsolidated subsidiaries, in each of which we have a 50% partnership interest, (i) Lehigh Valley Associates LP, the owner of the substantial majority of Lehigh Valley Mall, and (ii) Metroplex West Associates, LP, the owner of the substantial majority of Metroplex Shopping Center, met the conditions of significant unconsolidated subsidiaries as of March 31, 2016. The financial information of these entities are included in the amounts above. Summarized balance sheet information as of March 31, 2016 and December 31, 2015 and summarized statement of operations information for the three months ended March 31, 2016 and 2015 for these entities, which are accounted for using the equity method, are as follows:
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Financing Activity | FINANCING ACTIVITY Credit Agreements We have entered into four credit agreements (collectively, the “Credit Agreements”), as further discussed in our Annual Report on Form 10-K for the year ended December 31, 2015: (1) the 2013 Revolving Facility, (2) the 2014 7-Year Term Loan, (3) the 2014 5-Year Term Loan, and (4) the 2015 5-Year Term Loan. The 2014 7-Year Term Loan, the 2014 5-Year Term Loan and the 2015 5-Year Term Loan are collectively referred to as the “Term Loans.” As of March 31, 2016, we had borrowed $400.0 million under the Term Loans and $115.0 million under the 2013 Revolving Facility (with $15.3 million pledged as collateral for a letter of credit at March 31, 2016. Interest expense and the deferred financing fee amortization related to the Credit Agreements for the three months ended March 31, 2016 and 2015 was as follows:
Each of the Credit Agreements contain certain affirmative and negative covenants, which are identical to those contained in the other Credit Agreements and which are described in detail in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. As of March 31, 2016, we were in compliance with all financial covenants in the Credit Agreements. Following recent property sales, the net operating income (“NOI”) from our remaining unencumbered properties is at a level such that within the Unencumbered Debt Yield covenant (as described in our Annual Report on Form 10-K for the year ended December 31, 2015), the maximum unsecured amount that was available for us to borrow under the 2013 Revolving Facility as of March 31, 2016 was $209.6 million. Amounts borrowed under the Credit Agreements bear interest at the rate specified below per annum, depending on our leverage, in excess of LIBOR, unless and until we receive an investment grade credit rating and provide notice to the administrative agent (the “Rating Date”), after which alternative rates would apply. In determining our leverage (the ratio of Total Liabilities to Gross Asset Value), the capitalization rate used to calculate Gross Asset Value is 6.50% for each property having an average sales per square foot of more than $500 for the most recent period of 12 consecutive months, and (b) 7.50% for any other property. The 2013 Revolving Facility is subject to a facility fee, which is currently 0.25%, depending on leverage, and is recorded in interest expense in the consolidated statements of operations.
(1) The rate in effect at March 31, 2016. Mortgage Loans The carrying values and estimated fair values of mortgage loans based on interest rates and market conditions at March 31, 2016 and December 31, 2015 were as follows:
The mortgage loans contain various customary default provisions. As of March 31, 2016, we were not in default on any of the mortgage loans. Mortgage Loan Activity In April 2016, we entered into a $130.0 million mortgage loan secured by Woodland Mall in Grand Rapids, Michigan. The new mortgage loan bears interest at the rate of 2.00% plus LIBOR, and has a maturity date of April 2021. In March 2016, we borrowed an additional $9.0 million, lowered the interest rate to 2.35% plus LIBOR, and extended the maturity date to March 2021 on the mortgage loan secured by Viewmont Mall in Scranton, Pennsylvania. In March 2016, we repaid a $79.3 million mortgage loan plus accrued interest secured by Valley Mall in Hagerstown, Maryland using $50.0 million from our 2013 Revolving Facility and the balance from available working capital. In March 2016, we repaid a $32.8 million mortgage loan plus accrued interest secured by Lycoming Mall in Pennsdale, Pennsylvania in connection with the March 2016 sale of the property using proceeds from the sale and available working capital. In March 2016, we repaid a $28.1 million mortgage loan plus accrued interest secured by New River Valley Mall in Christiansburg, Virginia in connection with the March 2016 sale of the property using proceeds from the sale. Interest Rate Risk We follow established risk management policies designed to limit our interest rate risk on our interest bearing liabilities, as further discussed in note 7 to our unaudited consolidated financial statements. |
Cash Flow Information |
3 Months Ended |
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Mar. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | |
Cash Flow Information | CASH FLOW INFORMATION Cash paid for interest was $17.3 million (net of capitalized interest of $0.7 million) and $17.0 million (net of capitalized interest of less than $0.1 million) for the three months ended March 31, 2016 and 2015, respectively. In our statement of cash flows, we show cash flows on our revolving facility on a net basis. Aggregate borrowings on our 2013 Revolving Facility were $70.0 million and $210.0 million for the three months ended March 31, 2016 and 2015, respectively. Aggregate paydowns were $20.0 million for the three months ended March 31, 2016. In connection with the sale of Gadsden Mall, New River Valley Mall and Wiregrass Commons, we issued a mortgage note to the buyer in the amount of $17.0 million that is secured by Wiregrass Commons Mall. |
Commitments and Contingencies |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Contractual Obligations As of March 31, 2016, we had unaccrued contractual and other commitments related to our capital improvement projects and development projects of $72.6 million in the form of tenant allowances and contracts with general service providers and other professional service providers. |
Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | DERIVATIVES In the normal course of business, we are exposed to financial market risks, including interest rate risk on our interest bearing liabilities. We attempt to limit these risks by following established risk management policies, procedures and strategies, including the use of financial instruments such as derivatives. We do not use financial instruments for trading or speculative purposes. Cash Flow Hedges of Interest Rate Risk Our outstanding derivatives have been designated under applicable accounting authority as cash flow hedges. The effective portion of changes in the fair value of derivatives designated as, and that qualify as, cash flow hedges is recorded in “Accumulated other comprehensive income (loss)” and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. To the extent these instruments are ineffective as cash flow hedges, changes in the fair value of these instruments are recorded in “Interest expense, net.” We recognize all derivatives at fair value as either assets or liabilities in the accompanying consolidated balance sheets. The carrying amount of the derivative assets is reflected in “Deferred costs and other assets, net,” the amount of the associated liabilities is reflected in “Accrued expenses and other liabilities” and the amount of the net unrealized income or loss is reflected in “Accumulated other comprehensive income (loss)” in the accompanying balance sheets. Amounts reported in “Accumulated other comprehensive income (loss)” that are related to derivatives will be reclassified to “Interest expense, net” as interest payments are made on our corresponding debt. During the next 12 months, we estimate that $4.0 million will be reclassified as an increase to interest expense in connection with derivatives. The amortization of these amounts could be accelerated in the event that we repay amounts outstanding on the debt instruments and do not replace them with new borrowings. Interest Rate Swaps As of March 31, 2016, we had entered into 21 interest rate swap agreements with a weighted average interest rate of 1.34% on a notional amount of $497.7 million maturing on various dates through February 2021, and one forward starting interest rate swap agreement with an interest rate of 1.42% on a notional amount of $48.0 million, which will be effective starting January 2018 and maturing in February 2021. In April 2016, we entered into five additional interest rate swap agreements with a weighted average interest rate of 1.02% on an aggregate notional amounts of $130.0 million . We entered into these interest rate swap agreements in order to hedge the interest payments associated with our issuances of variable interest rate long term debt. We have assessed the effectiveness of these interest rate swap agreements as hedges at inception and on a quarterly basis. As of March 31, 2016, except as set forth below, we considered these interest rate swap agreements to be highly effective as cash flow hedges. The interest rate swap agreements are net settled monthly. In March 2016, in connection with the sale of, and repayment of, the mortgage loan secured by Lycoming Mall, we recorded a loss on hedge ineffectiveness of $0.1 million. Accumulated other comprehensive loss as of March 31, 2016 includes a net loss of $1.9 million relating to forward starting swaps that we cash settled in prior years that are being amortized over 10 year periods commencing on the closing dates of the debt instruments that are associated with these settled swaps. The following table summarizes the terms and estimated fair values of our interest rate swap derivative instruments at March 31, 2016 and December 31, 2015. The notional values provide an indication of the extent of our involvement in these instruments, but do not represent exposure to credit, interest rate or market risks.
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The table below presents the effect of derivative financial instruments on our consolidated statements of operations and on our share of our partnerships’ statements of operations for the three months ended March 31, 2016 and 2015:
Credit-Risk-Related Contingent Features We have agreements with some of our derivative counterparties that contain a provision pursuant to which, if our entity that originated such derivative instruments defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. As of March 31, 2016, we were not in default on any of our derivative obligations. We have an agreement with a derivative counterparty that incorporates the loan covenant provisions of our loan agreement with a lender affiliated with the derivative counterparty. Failure to comply with the loan covenant provisions would result in our being in default on any derivative instrument obligations covered by the agreement. As of March 31, 2016, the fair value of derivatives in a net liability position, which excludes accrued interest but includes any adjustment for nonperformance risk related to these agreements, was $7.2 million. If we had breached any of the default provisions in these agreements as of March 31, 2016, we might have been required to settle our obligations under the agreements at their termination value (including accrued interest) of $7.8 million. We had not breached any of these provisions as of March 31, 2016. |
Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | BASIS OF PRESENTATION Nature of Operations Pennsylvania Real Estate Investment Trust (“PREIT” or the “Company”) prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. Our unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in PREIT’s Annual Report on Form 10-K for the year ended December 31, 2015. In our opinion, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, the consolidated results of our operations, consolidated statements of other comprehensive income (loss), consolidated statements of equity and our consolidated statements of cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year. PREIT, a Pennsylvania business trust founded in 1960 and one of the first equity real estate investment trusts (“REITs”) in the United States, has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. Our portfolio currently consists of a total of 33 properties in 11 states, including 25 operating shopping malls, four other retail properties and four development or redevelopment properties. Two of the development and redevelopment properties are classified as “mixed use” (a combination of retail and other uses), one is classified as “retail” (redevelopment of The Gallery at Market East (the “Gallery”) into the Fashion Outlets of Philadelphia), and one is classified as “other.” The above property counts do not include two street retail properties in Philadelphia, Pennsylvania, because these properties have been classified as “held for sale” as of March 31, 2016. We hold our interest in our portfolio of properties through our operating partnership, PREIT Associates, L.P. (“PREIT Associates” or the “Operating Partnership”). We are the sole general partner of the Operating Partnership and, as of March 31, 2016, we held an 89.3% controlling interest in the Operating Partnership, and consolidated it for reporting purposes. The presentation of consolidated financial statements does not itself imply that the assets of any consolidated entity (including any special-purpose entity formed for a particular project) are available to pay the liabilities of any other consolidated entity, or that the liabilities of any consolidated entity (including any special-purpose entity formed for a particular project) are obligations of any other consolidated entity. Pursuant to the terms of the partnership agreement of the Operating Partnership, each of the limited partners has the right to redeem such partner’s units of limited partnership interest in the Operating Partnership (“OP Units”) for cash or, at our election, we may acquire such OP Units in exchange for our common shares on a one-for-one basis, in some cases beginning one year following the respective issue dates of the OP Units and in other cases immediately. If all of the outstanding OP Units held by limited partners had been redeemed for cash as of March 31, 2016, the total amount that would have been distributed would have been $182.2 million, which is calculated using our March 31, 2016 closing price on the New York Stock Exchange of $21.85 per share multiplied by the number of outstanding OP Units held by limited partners, which was 8,338,299 as of March 31, 2016. We provide management, leasing and real estate development services through two of our subsidiaries: PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties owned by partnerships in which we own an interest and properties that are owned by third parties in which we do not have an interest. PREIT Services and PRI are consolidated. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer an expanded menu of services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law. We evaluate operating results and allocate resources on a property-by-property basis, and do not distinguish or evaluate our consolidated operations on a geographic basis. Due to the nature of our operating properties, which involve retail shopping, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, we have aggregated our individual properties into one reportable segment. In addition, no single tenant accounts for 10% or more of consolidated revenue, and none of our properties are located outside the United States. Fair Value Fair value accounting applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, these accounting requirements establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs might include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. We utilize the fair value hierarchy in our accounting for derivatives (Level 2) and financial instruments (Level 2) and in our reviews for impairment of real estate assets (Level 3) and goodwill (Level 3). New Accounting Developments In March 2016, the Financial Accounting Standards Board (the “FASB”) issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to record operating and financing leases as assets and liabilities on the balance sheet and lessors to expense costs that are not initial direct leasing costs. This standard will be effective for the first annual reporting period beginning after December 15, 2018. The Company is evaluating the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures. In 2016, the Company adopted Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company evaluated the application of ASU No. 2015-02 and concluded that no change was required to its accounting of its interests in less than wholly owned joint ventures, however, the Operating Partnership now meets the criteria as a variable interest entity. The Company’s significant asset is its investment in the Operating Partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Company’s debt is also an obligation of the Operating Partnership. In March 2015, the FASB issued “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” and “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which intend to simplify the presentation of debt issuance costs. This guidance provides an amendment to the accounting guidance related to the presentation of debt issuance costs and is effective for fiscal years beginning after December 15, 2015, and we have adopted this guidance as of January 1, 2016. This guidance is applied retrospectively to all prior periods. Under the new guidance, debt issuance costs related to a note shall be reported in the Consolidated Balance Sheets as a direct deduction from the face amount of that note. In this regard, debt issuance costs shall not be classified separately from related debt obligations as a deferred charge. Therefore, as a result of adopting this guidance, the Company reclassified in its Consolidated Balance Sheets $4.2 million of debt issuance costs, net of accumulated amortization, at December 31, 2015, from “Deferred costs and other assets, net” to “Mortgage loans payable,” and $2.0 million of debt issuance costs at December 31, 2015, from “Deferred costs and other assets, net” to “Term loans,” thereby decreasing the carrying value of our recognized debt obligations for presentational purposes. |
Nature of Operations | Nature of Operations Pennsylvania Real Estate Investment Trust (“PREIT” or the “Company”) prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although we believe that the included disclosures are adequate to make the information presented not misleading. Our unaudited consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in PREIT’s Annual Report on Form 10-K for the year ended December 31, 2015. In our opinion, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial position, the consolidated results of our operations, consolidated statements of other comprehensive income (loss), consolidated statements of equity and our consolidated statements of cash flows are included. The results of operations for the interim periods presented are not necessarily indicative of the results for the full year. PREIT, a Pennsylvania business trust founded in 1960 and one of the first equity real estate investment trusts (“REITs”) in the United States, has a primary investment focus on retail shopping malls located in the eastern half of the United States, primarily in the Mid-Atlantic region. Our portfolio currently consists of a total of 33 properties in 11 states, including 25 operating shopping malls, four other retail properties and four development or redevelopment properties. Two of the development and redevelopment properties are classified as “mixed use” (a combination of retail and other uses), one is classified as “retail” (redevelopment of The Gallery at Market East (the “Gallery”) into the Fashion Outlets of Philadelphia), and one is classified as “other.” The above property counts do not include two street retail properties in Philadelphia, Pennsylvania, because these properties have been classified as “held for sale” as of March 31, 2016. We hold our interest in our portfolio of properties through our operating partnership, PREIT Associates, L.P. (“PREIT Associates” or the “Operating Partnership”). We are the sole general partner of the Operating Partnership and, as of March 31, 2016, we held an 89.3% controlling interest in the Operating Partnership, and consolidated it for reporting purposes. The presentation of consolidated financial statements does not itself imply that the assets of any consolidated entity (including any special-purpose entity formed for a particular project) are available to pay the liabilities of any other consolidated entity, or that the liabilities of any consolidated entity (including any special-purpose entity formed for a particular project) are obligations of any other consolidated entity. Pursuant to the terms of the partnership agreement of the Operating Partnership, each of the limited partners has the right to redeem such partner’s units of limited partnership interest in the Operating Partnership (“OP Units”) for cash or, at our election, we may acquire such OP Units in exchange for our common shares on a one-for-one basis, in some cases beginning one year following the respective issue dates of the OP Units and in other cases immediately. If all of the outstanding OP Units held by limited partners had been redeemed for cash as of March 31, 2016, the total amount that would have been distributed would have been $182.2 million, which is calculated using our March 31, 2016 closing price on the New York Stock Exchange of $21.85 per share multiplied by the number of outstanding OP Units held by limited partners, which was 8,338,299 as of March 31, 2016. We provide management, leasing and real estate development services through two of our subsidiaries: PREIT Services, LLC (“PREIT Services”), which generally develops and manages properties that we consolidate for financial reporting purposes, and PREIT-RUBIN, Inc. (“PRI”), which generally develops and manages properties that we do not consolidate for financial reporting purposes, including properties owned by partnerships in which we own an interest and properties that are owned by third parties in which we do not have an interest. PREIT Services and PRI are consolidated. PRI is a taxable REIT subsidiary, as defined by federal tax laws, which means that it is able to offer an expanded menu of services to tenants without jeopardizing our continuing qualification as a REIT under federal tax law. We evaluate operating results and allocate resources on a property-by-property basis, and do not distinguish or evaluate our consolidated operations on a geographic basis. Due to the nature of our operating properties, which involve retail shopping, we have concluded that our individual properties have similar economic characteristics and meet all other aggregation criteria. Accordingly, we have aggregated our individual properties into one reportable segment. In addition, no single tenant accounts for 10% or more of consolidated revenue, and none of our properties are located outside the United States. |
Fair Value | Fair Value Fair value accounting applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements. Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, these accounting requirements establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs might include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. We utilize the fair value hierarchy in our accounting for derivatives (Level 2) and financial instruments (Level 2) and in our reviews for impairment of real estate assets (Level 3) and goodwill (Level 3). |
New Accounting Developments | New Accounting Developments In March 2016, the Financial Accounting Standards Board (the “FASB”) issued guidance intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance allows for entities to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, the guidance allows employers to withhold shares to satisfy minimum statutory tax withholding requirements up to the employees’ maximum individual tax rate without causing the award to be classified as a liability. The guidance also stipulates that cash paid by an employer to a taxing authority when directly withholding shares for tax-withholding purposes should be classified as a financing activity on the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is in the process of evaluating the impact of this new guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to record operating and financing leases as assets and liabilities on the balance sheet and lessors to expense costs that are not initial direct leasing costs. This standard will be effective for the first annual reporting period beginning after December 15, 2018. The Company is evaluating the effect that ASU No. 2016-02 will have on its consolidated financial statements and related disclosures. In 2016, the Company adopted Accounting Standards Update (“ASU”) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The Company evaluated the application of ASU No. 2015-02 and concluded that no change was required to its accounting of its interests in less than wholly owned joint ventures, however, the Operating Partnership now meets the criteria as a variable interest entity. The Company’s significant asset is its investment in the Operating Partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Company’s debt is also an obligation of the Operating Partnership. In March 2015, the FASB issued “Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” and “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which intend to simplify the presentation of debt issuance costs. This guidance provides an amendment to the accounting guidance related to the presentation of debt issuance costs and is effective for fiscal years beginning after December 15, 2015, and we have adopted this guidance as of January 1, 2016. This guidance is applied retrospectively to all prior periods. Under the new guidance, debt issuance costs related to a note shall be reported in the Consolidated Balance Sheets as a direct deduction from the face amount of that note. In this regard, debt issuance costs shall not be classified separately from related debt obligations as a deferred charge. Therefore, as a result of adopting this guidance, the Company reclassified in its Consolidated Balance Sheets $4.2 million of debt issuance costs, net of accumulated amortization, at December 31, 2015, from “Deferred costs and other assets, net” to “Mortgage loans payable,” and $2.0 million of debt issuance costs at December 31, 2015, from “Deferred costs and other assets, net” to “Term loans,” thereby decreasing the carrying value of our recognized debt obligations for presentational purposes. |
Real Estate Activities (Tables) |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Real Estate | Investments in real estate as of March 31, 2016 and December 31, 2015 were comprised of the following:
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Real Estate Capitalized Costs [Table Text Block] | The following table summarizes our capitalized salaries, commissions, benefits, real estate taxes and interest for the three months ended March 31, 2016 and 2015:
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Real Estate Activities Dispositions (Tables) |
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Dispositions [Table Text Block] |
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Investments in Partnerships (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Equity Investments | The following table presents summarized financial information of the equity investments in our unconsolidated partnerships as of March 31, 2016 and December 31, 2015:
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Summary of Share of Equity in Income of Partnerships | The following table summarizes our share of equity in income of partnerships for the three months ended March 31, 2016 and 2015:
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Financing Activity (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of credit facility interest expense [Table Text Block] |
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Carrying and Fair Values of Mortgage Loans | The carrying values and estimated fair values of mortgage loans based on interest rates and market conditions at March 31, 2016 and December 31, 2015 were as follows:
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Derivatives (Tables) |
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Fair Value of Derivative Instruments |
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Effect of Our Derivative Financial Instruments on Our Consolidated Statements of Operations | The table below presents the effect of derivative financial instruments on our consolidated statements of operations and on our share of our partnerships’ statements of operations for the three months ended March 31, 2016 and 2015:
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Basis of Presentation Noncontrolling interest (Details) $ / shares in Units, $ in Millions |
Mar. 31, 2016
USD ($)
$ / shares
shares
|
---|---|
Noncontrolling Interest [Line Items] | |
Closing share price | $ / shares | $ 21.85 |
Interest in the Operating Partnership | 89.30% |
Redeemable Noncontrolling Interest, Equity, Other, Fair Value | $ | $ 182.2 |
Limited Partners' Capital Account, Units Outstanding | shares | 8,338,299 |
Basis of Presentation - Additional Information (Detail) $ in Millions |
3 Months Ended | |
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Mar. 31, 2016
Segment
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Dec. 31, 2015
USD ($)
|
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Debt Instrument [Line Items] | ||
Number of reportable segment | Segment | 1 | |
Mortgages [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized Debt Issuance Expense | $ 4.2 | |
Term Loans [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized Debt Issuance Expense | $ 2.0 |
Real Estate Activities - Investments in Real Estate (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
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Investment [Line Items] | |||
Buildings, improvements and construction in progress | $ 2,855,977 | $ 2,847,986 | |
Land, including land held for development | 521,968 | 519,903 | |
Total investments in real estate | 3,377,945 | 3,367,889 | |
Accumulated depreciation | (1,046,632) | (1,015,647) | |
Net investments in real estate | 2,331,313 | $ 2,352,242 | |
Gains (Losses) on Sales of Investment Real Estate | $ 2,035 | $ 0 |
Real Estate Activities - Summary of Capitalized Salaries, Commissions and Benefits, Real Estate Taxes and Interest (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Salaries and benefits | Development/Redevelopment Activities [Member] | ||
Real Estate Capitalized Costs [Line Items] | ||
Real estate capitalized cost | $ 274 | $ 154 |
Capitalized Real Estate Taxes [Member] | Development/Redevelopment Activities [Member] | ||
Real Estate Capitalized Costs [Line Items] | ||
Real estate capitalized cost | 19 | |
Interest | Development/Redevelopment Activities [Member] | ||
Real Estate Capitalized Costs [Line Items] | ||
Real estate capitalized cost | 703 | 35 |
Salaries, commissions and benefits | Leasing Activities [Member] | ||
Real Estate Capitalized Costs [Line Items] | ||
Real estate capitalized cost | $ 1,737 | $ 1,655 |
Real Estate Activities Real Estate Activities - Impairment of Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
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Schedule of Asset Impairments [Line Items] | ||
Asset Impairment Charges | $ 606 | $ 6,240 |
Impairment of assets and expensed project costs | 631 | $ 6,332 |
Voorhees Town Center [Member] | ||
Schedule of Asset Impairments [Line Items] | ||
Impairment of assets and expensed project costs | $ 600 |
Investments in Partnerships - Summary of Equity Investments (Detail) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
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Schedule of Equity Method Investments [Line Items] | ||||
Total assets | $ 644,613 | $ 653,645 | ||
Investments in real estate, at cost: | ||||
Operating properties | 639,874 | 636,774 | ||
Construction in progress | 128,479 | 126,199 | ||
Total investments in real estate | 768,353 | 762,973 | ||
Accumulated depreciation | (191,450) | (186,580) | ||
Net investments in real estate | 576,903 | 576,393 | ||
Cash and cash equivalents | 29,711 | 37,362 | ||
Deferred costs and other assets, net | 37,999 | 39,890 | ||
Total assets | 644,613 | 653,645 | ||
LIABILITIES AND PARTNERS’ INVESTMENT: | ||||
Mortgage loans payable | 444,599 | 440,450 | ||
Other liabilities | 22,853 | 30,425 | ||
Total liabilities | 467,452 | 470,875 | ||
Net investment | 177,161 | 182,770 | ||
Partners’ share | 91,516 | 95,165 | ||
PREIT’s share | 85,645 | 87,605 | ||
Excess investment | [1] | 7,638 | 7,877 | |
Net investments and advances | 93,283 | 95,482 | ||
Investment in partnerships, at equity | 157,995 | 161,029 | ||
Distributions in excess of partnership investments | $ (64,712) | $ (65,547) | ||
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Investments in Partnerships Mortgage Loan Activity Partnerships (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
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Debt Instrument [Line Items] | ||
Mortgage loans payable | $ 1,247,173 | $ 1,321,331 |
Financing Activity - Carrying and Fair Values of Mortgage Loans (Detail) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
Mortgage loans, Carrying Value | $ 1,247,173 | $ 1,321,331 |
Mortgage loans, Fair Value | $ 1,267,100 | $ 1,323,300 |
Financing Activity - Mortgage Loan Activity (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Apr. 08, 2016 |
Dec. 31, 2015 |
|
Mortgage Loan Activity [Line Items] | |||
Mortgage loans payable | $ 1,247,173 | $ 1,321,331 | |
Repayments of Secured Debt | $ 139,843 | ||
Woodland Mall [Member] | |||
Mortgage Loan Activity [Line Items] | |||
Mortgage Loans on Real Estate, Face Amount of Mortgages | $ 130,000 | ||
Stated Interest Rate | 2.00% | ||
Debt Instrument, Maturity Date | Apr. 08, 2021 | ||
Viewmont Mall [Member] | |||
Mortgage Loan Activity [Line Items] | |||
Stated Interest Rate | 2.35% | ||
Debt Instrument, Maturity Date | Mar. 29, 2021 | ||
Mortgage Loans on Real Estate, Other Additions | $ 9,000 | ||
Valley Mall [Member] | |||
Mortgage Loan Activity [Line Items] | |||
Repayments of Secured Debt | 79,300 | ||
Revolving Facility Debt Used To Repay Mortgage Debt | 50,000 | ||
Lycoming Mall [Member] | |||
Mortgage Loan Activity [Line Items] | |||
Repayments of Secured Debt | 32,800 | ||
New River Valley Mall [Member] | |||
Mortgage Loan Activity [Line Items] | |||
Repayments of Secured Debt | $ 28,100 |
Cash Flow Information - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Other Significant Noncash Transactions [Line Items] | ||
Cash paid for interest | $ 17.3 | $ 17.0 |
Net of capitalized interest | 0.7 | 0.1 |
Line of credit facilities gross borrowings | 70.0 | $ 210.0 |
Line of credit facilities gross repayments | 20.0 | |
Wiregrass Commons [Member] | ||
Other Significant Noncash Transactions [Line Items] | ||
Loans Receivable with Fixed Rates of Interest | $ 17.0 |
Commitments and Contingencies Contractual Obligations (Details) $ in Millions |
Mar. 31, 2016
USD ($)
|
---|---|
Construction in Progress [Member] | |
Other Commitments [Line Items] | |
Unaccrued Contractual And Other Commitments | $ 72.6 |
Derivatives - Additional Information (Detail) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
Agreement
|
Apr. 08, 2016
USD ($)
|
|
Derivative Instruments [Line Items] | ||
Repayments of Secured Debt | $ 139,843 | |
Estimate increase to interest expense | 4,000 | |
Loss on Fair Value Hedge Ineffectiveness | 100 | |
Net loss | 1,900 | |
Fair value of derivatives in a net liability position | (7,200) | |
Termination value | $ 7,800 | |
Interest rate swaps [Member] | ||
Derivative Instruments [Line Items] | ||
Number of derivative, interest rate swap agreement | Agreement | 21 | |
Derivative, Weighted average interest rate | 1.34% | |
Derivative, notional amount | $ 497,700 | $ 130,000 |
Interest Rate Swap Twelve [Member] | ||
Derivative Instruments [Line Items] | ||
Maturity Date | Jan. 02, 2019 | |
Settled Interest Rate Swaps [Member] | ||
Derivative Instruments [Line Items] | ||
Amortized period | 10 years | |
Subsequent Event [Member] | Interest rate swaps [Member] | ||
Derivative Instruments [Line Items] | ||
Derivative, Weighted average interest rate | 1.02% |
Derivatives - Effect of Our Derivative Financial Instruments on Our Consolidated Statements of Operations (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Derivatives in cash flow hedging relationships: | ||
Gain (loss) recognized in Other Comprehensive Income (Loss) on derivatives | $ (6.7) | $ (1.7) |
Interest | ||
Derivatives in cash flow hedging relationships: | ||
Loss reclassified from Accumulated Other Comprehensive Income (Loss) into income (effective portion) | 1.4 | 1.0 |
Loss recognized in income on derivatives (ineffective portion and amount excluded from effectiveness testing) | $ (0.1) | $ (0.5) |
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