-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5DizusLNMOI3v3jcr69Heqep21hS2IM4es/4Y9fXHNj3No+QpsKn/3AkcS8qw76 i02yqJlY9PilgzGVQ87hdw== 0000950116-99-000394.txt : 19990309 0000950116-99-000394.hdr.sgml : 19990309 ACCESSION NUMBER: 0000950116-99-000394 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981223 ITEM INFORMATION: FILED AS OF DATE: 19990308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PENNSYLVANIA REAL ESTATE INVESTMENT TRUST CENTRAL INDEX KEY: 0000077281 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 236216339 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-06300 FILM NUMBER: 99559645 BUSINESS ADDRESS: STREET 1: THE BELLEVUE STREET 2: 200 S BROAD STREET CITY: PHILADELPHIA STATE: PA ZIP: 19102 BUSINESS PHONE: 2155429250 MAIL ADDRESS: STREET 1: THE BELLEVUE STREET 2: 200 S BROAD STREET CITY: PHILADELPHIA STATE: PA ZIP: 19102 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------- FORM 8-K/A-1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) December 23, 1998 -------------------------------- Pennsylvania Real Estate Investment Trust - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Pennsylvania 1-6300 23-6216339 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) The Bellevue, 200 S. Broad Street, Philadelphia, Pennsylvania 19102 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (215) 875-0700 ----------------------------- 455 Pennsylvania Avenue, Suite 135, Fort Washington, Pennsylvania 19034 - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) The undersigned registrant hereby amends the following item of its Current Report on Form 8-K dated December 23, 1998, and filed on January 7, 1999, as set forth in the pages attached hereto: Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------- (a) Financial Statements. --------------------- The following financial statements are attached hereto: (i) Report of Arthur Andersen LLP (ii) Combined Statements of Revenue and Certain Expenses of Northeast Tower for each of the three years in the period ended December 31, 1997 (audited) and for the nine months ended September 30, 1998 (unaudited) (iii) Notes to Combined Statements of Revenue and Certain Expenses of Northeast Tower (b) Pro Forma Financial Information. -------------------------------- The following unaudited pro forma consolidating financial information is attached hereto: (i) Pro Forma Consolidating Balance Sheet of the Registrant as of September 30, 1998 (ii) Pro Forma Consolidating Statement of Income of the Registrant for the Twelve Months Ended December 31, 1997 (iii) Pro Forma Consolidating Statement of Income of the Registrant for the Twelve Months Ended August 31, 1997 (iv) Pro Forma Consolidating Statement of Income of the Registrant for the Four Months Ended December 31, 1997 (v) Pro Forma Consolidating Statement of Income of the Registrant for the Nine Months Ended September 30, 1998 (c) Exhibits -------- 23 Consent of Arthur Andersen LLP -2- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PENNSYLVANIA REAL ESTATE INVESTMENT TRUST Date: March 8, 1999 By: /s/ Ronald Rubin ---------------------------------------- Ronald Rubin Chief Executive Officer NORTHEAST TOWER COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 TOGETHER WITH AUDITORS' REPORT REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Pennsylvania Real Estate Investment Trust: We have audited the combined statements of revenue and certain expenses of Northeast Tower for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Property's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The combined statements of revenue and certain expenses were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Current Report on Form 8-K of Pennsylvania Real Estate Investment Trust, as described in Note 1, and are not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the financial statements referred to above present fairly, in all material respects, the revenue and certain expenses of Northeast Tower for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pennsylvania January 30, 1999 NORTHEAST TOWER --------------- COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1) ------------------------------------------------------------
For The Years Ended ------------------- For the Nine Months Ended September 30, December 31, December 31, December 31, 1998 1995 1996 1997 (unaudited) ------------- --------------- ------------ ------------- REVENUE: Minimum rent (Note 2) $ 534,000 $ 1,684,000 $ 2,628,000 $ 2,315,000 Tenant reimbursements 55,000 126,000 289,000 386,000 Other income - 5,000 22,000 27,000 ----------- ----------- ----------- ----------- Total revenue 589,000 1,815,000 2,939,000 2,728,000 ----------- ----------- ----------- ----------- CERTAIN EXPENSES: Maintenance and other operating expenses (Note 3) 94,000 480,000 429,000 357,000 Provision for bad debts - - 19,000 25,000 Real estate taxes 83,000 128,000 242,000 200,000 Interest (Note 4) 925,000 925,000 925,000 694,000 ----------- ----------- ----------- ----------- Total certain expenses 1,102,000 1,533,000 1,615,000 1,276,000 ----------- ----------- ----------- ----------- REVENUE (LESS THAN) IN EXCESS OF CERTAIN EXPENSES $ (513,000) $ 282,000 $ 1,324,000 $ 1,452,000 =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements. NORTHEAST TOWER --------------- NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES ------------------------------------------------------------ DECEMBER 31, 1997, 1996, AND 1995 --------------------------------- 1. BASIS OF PRESENTATION: ---------------------- The combined statements of revenue and certain expenses reflect the operations of Northeast Tower (the "Property") located in Philadelphia, Pennsylvania. The Property includes (i) Northeast Tower Center, a retail shopping center of which 89% was acquired by PREIT Associates, L.P. (the "Operating Partnership"), a limited partnership of which Pennsylvania Real Estate Investment Trust (the "Company") is the sole general partner, from Roosevelt II Associates on December 23, 1998 (ii) 100% of a separate combined parcel of land previously owned by Bradlees which was acquired in January 1999 by the Operating Partnership; and (iii) a separate parcel of land currently owned by Rubin II, Inc., leased by Rubin II, Inc. to Roosevelt II Associates under a ground lease, and subleased to Home Depot U.S.A., Inc. (see Note 4), 89% of which is expected to be acquired by the Operating Partnership in early 1999. The Property has an aggregate net rentable area of approximately 511,250 square feet (46% leased as of December 31, 1997) (see Note 5). The combined statements of revenue and certain expenses are to be included in the Company's Current Report on Form 8-K, as the above described transaction has been deemed significant pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements exclude certain expenses such as certain interest (see Note 4), depreciation and amortization, and other costs not directly related to the future operations of the Property. The combined statement of revenue and certain expenses for the nine months ended September 30, 1998 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of the revenue and certain expenses of the Property for the nine months ended September 30, 1998 have been included. The results of the interim periods are not necessarily indicative of the results for the full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The ultimate results could differ from those estimates. 2. OPERATING LEASES: ----------------- Minimum rent includes straight-line adjustments for rental revenue increases in accordance with generally accepted accounting principles. The aggregate rental revenue increases resulting from the straight-line adjustments for the years ended December 31, 1997, 1996, 1995, and for the nine months ended September 30, 1998 were approximately $70,000, $22,000, $0 and $63,000 (unaudited), respectively. The following tenants had minimum rental payments greater than 10% of the total minimum rent in 1997: Tenant Minimum Rent ------ ------------ Home Depot $ 1,250,000 PetSmart 365,000 Staples 360,000 The Property is leased to tenants under operating leases with expiration dates extending to the year 2016. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating expenses as of December 31, 1997, are as follows: 1998 $ 3,135,000 1999 3,551,000 2000 3,553,000 2001 3,585,000 2002 3,630,000 2003 & Thereafter 19,582,000 ----------- $37,036,000 =========== Certain leases also include provisions requiring tenants to reimburse the Property for management costs and other operating expenses up to stipulated amounts. 3. RELATED PARTY TRANSACTION: -------------------------- The Property paid total management fees of approximately $96,000, $88,000, $21,000, and $92,000 (unaudited) for the years ended December 31, 1997, 1996, 1995 and for the nine months ended September 30, 1998, respectively, to PREIT-RUBIN, Inc., the management company in which 95% of the non-voting stock is owned by the Company. These management fees are included within maintenance and other operating expenses in the combined statements of revenue and certain expenses. 4. COMMITMENTS AND CONTINGENCIES: ------------------------------ The land owned by Rubin II, Inc. is leased to Roosevelt II Associates and subleased to Home Depot USA, Inc. (the "Home Depot Parcel"). The primary terms of the Home Depot ground lease (the "Ground Lease") dated April 25, 1994 are as follows: Term: 129 months Extensions: 3 successive 5-year options and 1 final 4-year option Rent: $1,250,000 per annum; triple net lease The Ground Lease contains provisions enabling both Home Depot USA, Inc. ("Home Depot") and Roosevelt II Associates to terminate the lease at any time after the eleventh lease year, provided Home Depot pays a lease termination fee, as defined. In addition, a third party lender, was granted Roosevelt II Associates' right to terminate the Ground Lease and requires Home Depot to pay the lease termination fee on or after May 1, 2005. The ground lease payments of $1,250,000 have been reflected as minimum rental revenues in the accompanying combined statements of revenue and certain expenses, and the required annual debt service under a note agreement between Roosevelt II Associates and the third party lender of $925,000 has been reflected as interest expense. These amounts will be recurring revenues and expenses following the Operating Partnership's acquisition of the Home Depot Parcel. 5. SUBSEQUENT EVENTS (Unaudited): ------------------------------ Subsequent to December 31, 1997, the Property signed additional leases with tenants aggregating annual rentals of approximately $900,000 and approximately 100,000 aggregate square feet. As of March 1, 1999, the Property is approximately 94% leased. PENNSYLVANIA REAL ESTATE INVESTMENT TRUST PRO FORMA CONSOLIDATING FINANCIAL INFORMATION On February 17, 1998, the Registrant filed a Form 10-Q for the transition period ended December 31, 1997 and on December 30, 1998, the Registrant filed a Form 8-K with audited financial statements for the transition period. As such, the following sets forth the pro forma consolidating balance sheet of the Registrant as of September 30, 1998 and the pro forma consolidating statements of income, for the calendar year ended December 31, 1997, the fiscal year ended August 31, 1997, the four-month transition period ended December 31, 1997, and the nine-month period ended September 30, 1998. The unaudited pro forma consolidating financial information should be read in conjunction with the historical financial statements of the Registrant, Northeast Tower, Prince Georges Plaza, Festival at Oaklands, The Woods Apartments, The Rubin Organization, Inc. (subsequently renamed PREIT-RUBIN, Inc.), Magnolia Mall, North Dartmouth Mall and Oxford Valley Road Associates and the related notes thereto. In management's opinion, all adjustments necessary to reflect the effects of the transactions have been made. The accompanying unaudited pro forma consolidating financial information is presented as if the transactions described below had been consummated on September 30, 1998 for balance sheet purposes and September 1, 1996 for purposes of the statements of income with the exception of the pro forma consolidating statement of income for the calendar year ended December 31, 1997, which only reflects the 1998 events described below as if the transactions had been consummated on January 1, 1997: 1998 Events - ----------- o The Registrant acquired an 89% equity interest in Northeast Tower located in Philadelphia, Pennsylvania on December 23, 1998, for a purchase price of $25.0 million, consisting of $3.7 million in cash, $3.3 million through the issuance of OP units and $18.0 million through the assumption of debt and other liabilities. o The Registrant acquired Prince Georges Plaza located in Hyattsville, Maryland on September 17, 1998 for a purchase price of approximately $65.0 million consisting of $19.0 million in cash, $3.0 million through the issuance of OP Units and $43.0 million through the assumption of debt. o The Registrant acquired The Festival at Oaklands located in Exton, Pennsylvania on August 27, 1998 for a cash purchase price of approximately $18.4 million. o The Registrant acquired The Woods Apartments located in Ambler, Pennsylvania on August 7, 1998 for a purchase price of approximately $21.2 million consisting of $12.2 million in cash, $1.7 million through the issuance of OP Units and $7.3 million through the assumption of debt. 1997 Events - ----------- o The Registrant consummated an offering in December 1997 (the "Offering") and applied the net proceeds therefrom as described below: - The Company issued 4,600,000 shares of beneficial interest at $22.375 per share of which 600,000 shares related to the underwriter's exercise of the over-allotment option. - The $8.8 million mortgage on Cobblestone Apartments was prepaid in full. - The remaining net proceeds of the Offering were used to repay amounts outstanding on the Registrant's revolving credit facility (the "Credit Facility"). o The Registrant acquired The Rubin Organization ("TRO") on September 30, 1997 (the "TRO Transaction") which involved a number of related transactions, the combined effect of which was to form and capitalize an Operating Partnership and to transfer ownership of the Registrant's direct and indirect interests in its existing properties, or the economic benefits thereof, to the Operating Partnership, and to effect the acquisitions described below: - TRO Acquisition. The Operating Partnership acquired all of the non-voting common shares of TRO, constituting 95% of all of the total equity of TRO, in exchange for the issuance of 200,000 Class A OP Units and a contingent obligation to issue up to 800,000 additional Class A OP Units over the following five-year period if the Registrant achieves certain specified levels of funds from operations, on a per share basis, over such period. - Existing Retail Properties Acquisition. The Operating Partnership acquired the interests of certain affiliates of TRO ("TRO Affiliates") in four existing shopping centers, or portions of shopping centers (the "Existing Retail Properties"). Two of the properties (Magnolia Mall and North Dartmouth Mall) were purchased from Equity Properties and Development Limited Partnership ("EPDLP") for aggregate consideration, excluding transaction costs, of approximately $80.0 million, of which (i) $25.2 million represents an assumable mortgage, (ii) $5.0 million was paid through the issuance of approximately 213,000 Class B Operating Partnership ("OP") units to EPDLP for their interest in Magnolia Mall; and (iii) the balance was financed with borrowings under the Credit Facility. The Operating Partnership issued approximately 233,000 additional Class A OP units to TRO Affiliates in respect of their 50% equity interest in the Court at Oxford Valley. o The Operating Partnership also acquired the rights of certain TRO Affiliates in respect of three potential shopping center sites in exchange for (i) a loan of cash to TRO in the amount of $3.4 million representing actual out-of-pocket expenditures of TRO incurred with respect of such properties through the Closing Date, and (ii) an obligation to issue, upon completion of any property subsequently developed, Class A OP Units for one-half of the difference between the aggregate value of all such properties at the time of completion and the all-in-cost of all such properties. As these transactions are expected to occur in the future at amounts that are not currently determinable, the financial impact of such future events has not been reflected in the accompanying pro forma financial statements. All of the acquisitions described above have been recorded by the Registrant using the purchase method of accounting. The pro forma consolidating financial information is unaudited and is not necessarily indicative of what the actual financial position or results of operations of the Registrant would have been had the transactions described above been consummated as of the dates indicated, nor does it purport to represent the future financial position and the results of operations of the Registrant. PENNSYLVANIA REAL ESTATE INVESTMENT TRUST PRO FORMA CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 1998 (Unaudited, In thousands)
PREIT PREIT Woods Festival at Prince Georges Northeast Proforma Historical Apartments Oaklands Plaza Tower As Adjusted ---------- ---------- ----------- -------------- --------- ----------- (A) (A) (A) (A) Multifamily properties $ 185,207 $ 21,200 $ - $ - $ - $ 206,407 Retail properties 204,756 - 18,400 65,000 24,615 312,771 Industrial properties 5,078 - - - - 5,078 Properties under development 23,167 - - - - 23,167 ------------------------------------------------------------------------------ Total investments in real estate 418,208 21,200 18,400 65,000 24,615 547,423 Less - accumulated depreciation 59,333 - - - - 59,333 358,875 21,200 18,400 65,000 24,615 488,090 ------------------------------------------------------------------------------ Investment in PREIT-RUBIN, Inc. 5,386 - - - - 5,386 Investments in partnerships and joint ventures, at equity 23,981 - - - - 23,981 Advances to PREIT-RUBIN, Inc. 3,913 - - - - 3,913 ------------------------------------------------------------------------------ 392,155 21,200 18,400 65,000 24,615 521,370 Less - allowance for possible losses 1,626 - - - - 1,626 ------------------------------------------------------------------------------ 390,529 21,200 18,400 65,000 24,615 519,744 ------------------------------------------------------------------------------ Other Assets: Cash and cash equivalents 1,333 - - - 358 1,691 Rents and sundry receivables 1,687 - - - 351 2,038 Deferred costs, prepaid real estate taxes and expenses, net 10,558 - - - 21 10,579 ------------------------------------------------------------------------------ $ 404,107 $ 21,200 $ 18,400 $ 65,000 $ 25,345 $ 534,052 ============================================================================== Liabilities Mortgage notes payable $ 115,423 $ 7,340 $ - $ 43,000 $ 17,000 $ 182,764 Bank and other loans payable 116,261 12,160 18,400 19,000 3,700 169,521 Construction cost payable 2,646 - - - 278 2,924 Tenants' deposits and deferred rents 1,358 - - - 118 1,476 Accrued pension and retirement benefits 985 - - - - 985 Accrued expenses and other liabilities 5,972 - - - 579 6,550 ------------------------------------------------------------------------------ 242,645 19,500 18,400 62,000 21,675 364,220 ------------------------------------------------------------------------------ Minority interest 23,663 1,700 - 3,000 3,670 32,033 ------------------------------------------------------------------------------ Shareholders' Equity Shares of beneficial interest 13,300 - - - - 13,300 Capital contributed in excess of par 144,942 - - - - 144,942 Distributions in excess of net income (20,443) - - - - (20,443) ------------------------------------------------------------------------------ 137,799 - - - - 137,799 ------------------------------------------------------------------------------ $ 404,107 $ 21,200 $ 18,400 $ 65,000 $ 25,345 $ 534,052 ==============================================================================
The accompanying notes and management's assumptions are an integral part of this statement. PENNSYLVANIA REAL ESTATE INVESTMENT TRUST PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 (Unaudited) (In Thousands, Except Share and Per Share Data)
1998 Events ----------------------------------------------------- Woods Festival at Prince Northeast PREIT Apts Oaklands Georges Plaza Tower Pro Forma PREIT Historical Historical Historical Historical Historical Adjustments Pro Forma ---------- ---------- ----------- ------------ ---------- ----------- --------- Revenues Gross revenues from Real Estate $44,061 $2,725 $ 2,267 $ 10,033 $ 2,917 $ - $62,003 Interest and other income 218 123 17 102 22 - 482 ----------------------------------------------------------------------------------------- Total revenues 44,279 2,848 2,284 10,135 2,939 - 62,485 ----------------------------------------------------------------------------------------- Expenses Property operating expenses 17,880 1,100 602 3,847 689 - 24,118 Depreciation and amortization 6,895 - - - - 2,513(a) 9,408 General and administrative expenses 3,388 - - - - - 3,388 Mortgage and bank loan interest 10,328 - - - 925 9,272(b) 20,525 Provisions for losses on investments 500 - - - - - 500 ----------------------------------------------------------------------------------------- 38,991 1,100 602 3,847 1,614 11,785 57,939 ----------------------------------------------------------------------------------------- Income before gains on sales of interest in real estate, equity in unconsolidated entities and minority interest 5,288 1,748 1,682 6,288 1,325 (11,785) 4,546 Equity in income of PREIT-RUBIN, Inc. 259 - - - - - 259 Equity in income of partnerships and joint ventures 4,873 - - - - - 4,873 Gains on sales of interests in real estate 1,697 - - - - - 1,697 ----------------------------------------------------------------------------------------- Income before minority interest and extraordinary item 12,117 1,748 1,682 6,288 1,325 (11,785) 11,375 Minority interest (395) - (394)(c) (789) ----------------------------------------------------------------------------------------- Net income $11,722 $1,748 $ 1,682 $ 6,288 $ 1,325 $(12,179) $10,586 ========================================================================================= Basic Net Income per share $ 1.33 $ 1.20 ======= ====== Diluted Net Income per share $ 1.33 $ 1.20 ======= ====== Weighted Average Number of Shares Outstanding: Basic 8,794 8,794 ======= ====== Diluted 8,836 8,836 ======= ======
The accompanying notes and management's assumptions are an integral part of this statement. PENNSYLVANIA REAL ESTATE INVESTMENT TRUST PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED AUGUST 31, 1997 (Unaudited) (In Thousands, Except Share and Per Share Data)
1997 Events 1998 Events ---------------------------- ----------------------------------------- Woods Festival at PREIT The TRO The Apts Oaklands Historical Transaction Offering Historical Historical ---------- ----------- -------- ---------- ---------- Revenues Gross revenues from Real Estate $ 40,231 $ 12,490 (d) $ - $ 2,687 $ 2,216 Interest and other income 254 234 (e) - 126 - -------------------------------------------------------------------------------------- Total revenues 40,485 12,724 - 2,813 2,216 -------------------------------------------------------------------------------------- Expenses Property operating expenses 16,289 3,964 (d) - 1,116 527 Depreciation and amortization 6,259 1,918 (f) - - - General and administrative expenses 3,324 - - - - Mortgage and bank loan interest 9,086 6,183 (g) (6,102) (j) - - Provisions for losses on investments 500 - - - - -------------------------------------------------------------------------------------- 35,458 12,065 (6,102) 1,116 527 -------------------------------------------------------------------------------------- Income before gains on sales of interest in real estate, equity in unconsolidated entities and minority interest 5,027 659 6,102 1,697 1,689 Equity in income of PREIT-RUBIN, Inc. - 192 (h) - - - Equity in income of partnerships and joint ventures 4,337 420 (i) - - - Gains on sales of interests in real estate 1,069 - - - - -------------------------------------------------------------------------------------- Income before minority interest 10,433 1,271 6,102 1,697 1,689 Minority interest (198) - - - - -------------------------------------------------------------------------------------- Net income $ 10,235 $ 1,271 $ 6,102 $ 1,697 $ 1,689 ====================================================================================== Basic Net Income per share $ 1.18 ========== Diluted Net Income per share 1.18 ========== Weighted Average Number of Shares Outstanding: Basic 8,679 ========== Diluted 8,704 ==========
The accompanying notes and management's assumptions are an integral part of this statement. - ------ STUB - ------
--------------------------- Prince Northeast PREIT Georges Plaza Tower Pro Forma Pro Historical Historical Adjustments Forma ------------- ----------- ----------- ----------- Revenues Gross revenues from Real Estate $ 9,955 $ 2,609 $ - $ 70,188 Interest and other income - 17 - 631 ---------------------------------------------------------- Total revenues 9,955 2,626 - 70,819 ---------------------------------------------------------- Expenses Property operating expenses 3,606 713 - 26,215 Depreciation and amortization - - 2,513 (k) 10,690 General and administrative expenses - - - 3,324 Mortgage and bank loan interest - 925 9,196 (l) 19,288 Provisions for losses on investments - - - 500 ---------------------------------------------------------- 3,606 1,638 11,709 60,017 ---------------------------------------------------------- Income before gains on sales of interest in real estate, equity in unconsolidated entities and minority interest 6,349 988 (11,709) 10,802 Equity in income of PREIT-RUBIN, Inc. - - - 192 Equity in income of partnerships and joint ventures - - - 4,757 Gains on sales of interests in real estate - - - 1,069 ---------------------------------------------------------- Income before minority interest 6,349 988 (11,709) 16,820 Minority interest - - (1,153) (m) (1,351) ---------------------------------------------------------- Net income $ 6,349 $ 988 $ (12,862) $ 15,469 ========================================================== Basic Net Income per share $ 1.16 ========== Diluted Net Income per share $ 1.16 ========== Weighted Average Number of Shares Outstanding: Basic 13,279 ========== Diluted 13,304 ==========
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST PRO FORMA CONSOLIDATING STATEMENTS OF INCOME FOR THE FOUR MONTHS ENDED DECEMBER 31, 1997 (Unaudited) (In Thousands, Except Share and Per Share Data)
1997 Events 1998 Events ---------------------------- ----------------------------------------- Woods Festival at PREIT The TRO The Apts Oaklands Historical Transaction Offering Historical Historical ---------- ----------- -------- ---------- ---------- Revenues Gross revenues from Real Estate $ 17,170 $ 1,008 (n) $ - $ 915 $ 799 Interest and other income 82 32 (o) - 38 - -------------------------------------------------------------------------------------- Total revenues 17,252 1,040 - 953 799 -------------------------------------------------------------------------------------- Expenses Property operating expenses 6,835 291 (n) - 384 227 Depreciation and amortization 2,695 160 (p) - - - General and administrative expenses 1,088 - - - Mortgage and bank loan interest 4,349 515 (q) (1,906) (t) - - -------------------------------------------------------------------------------------- 14,967 966 (1,906) 384 227 -------------------------------------------------------------------------------------- Income before gains on sales of interest in real estate, equity in unconsolidated entities and minority interest 2,285 74 1,906 569 572 Equity in income of PREIT-RUBIN, Inc. 260 751 (r) - - - Equity in income of partnerships and joint ventures 2,101 29 (s) - - - Gains on sales of interests in real estate 2,090 - - - - -------------------------------------------------------------------------------------- Income before minority interest 6,736 854 1,906 569 572 Minority interest (474) - - - - -------------------------------------------------------------------------------------- Net income $ 6,262 $ 854 $ 1,906 $ 569 $ 572 ====================================================================================== Basic Net Income per share $ 0.69 ========= Diluted Net Income per share $ 0.69 ========= Weighted Average Number of Shares Outstanding: Basic 9,049 ========= Diluted 9,099 =========
The accompanying notes and management's assumptions are an integral part of this statement. - ------- STUB - -------
--------------------------- Prince Northeast PREIT Georges Plaza Tower Pro Forma Pro Historical Historical Adjustments Forma ------------- ----------- ----------- ----------- Revenues Gross revenues from Real Estate $ 3,470 $ 1,105 $ - $ 24,467 Interest and other income - 7 - 159 ---------------------------------------------------------- Total revenues 3,470 1,112 - 24,626 ---------------------------------------------------------- Expenses Property operating expenses 1,398 231 - 9,366 Depreciation and amortization - - 838 (u) 3,693 General and administrative expenses - - - 1,088 Mortgage and bank loan interest - 308 2,914 (v) 6,180 ---------------------------------------------------------- 1,398 539 3,752 20,327 ---------------------------------------------------------- Income before gains on sales of interest in real estate, equity in unconsolidated entities and minority interest 2,072 573 (3,752) 4,299 Equity in income of PREIT-RUBIN, Inc. - - - 1,011 Equity in income of partnerships and joint ventures - - - 2,130 Gains on sales of interests in real estate - - - 2,090 ---------------------------------------------------------- Income before minority interest 2,072 573 (3,752) 9,530 Minority interest - - (261) (w) (735) ---------------------------------------------------------- Net income $ 2,072 $ 573 $ (4,013) $ 8,795 ========================================================== Basic Net Income per share $ 0.64 ========== Diluted Net Income per share $ 0.64 ========== Weighted Average Number of Shares Outstanding: Basic 13,649 ========== Diluted 13,699 ==========
PENNSYLVANIA REAL ESTATE INVESTMENT TRUST PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 (Unaudited) (In Thousands, Except Share and Per Share Data)
1998 Events ----------------------------------------------------- Woods Festival at Prince Northeast PREIT PREIT Apts Oaklands Georges Plaza Tower Pro Forma Pro Historical Historical Historical Historical Historical Adjustments Forma ---------- ---------- ----------- ------------- ---------- ----------- ------ Revenues Gross revenues from Real Estate $ 42,076 $ 1,745 $ 1,439 $ 7,630 $ 2,701 $ - $ 55,591 Interest and other income 400 - - - 27 - 427 ------------------------------------------------------------------------------------------ Total revenues 42,476 1,745 1,439 7,630 2,728 - 56,018 ------------------------------------------------------------------------------------------ Expenses Property operating expenses 15,820 672 369 2,394 581 - 19,836 Depreciation and amortization 6,482 - - - - 1,735 (x) 8,217 General and administrative expenses 2,458 - - - - - 2,458 Mortgage and bank loan interest 6,292 - - - 694 6,544 (y) 13,530 ------------------------------------------------------------------------------------------ 31,052 672 369 2,394 1,275 8,279 44,041 ------------------------------------------------------------------------------------------ Income before gains on sales of interest in real estate, equity in unconsolidated entities and minority interest 11,424 1,073 1,070 5,236 1,453 (8,279) 11,977 Equity in Income of PREIT-RUBIN, Inc. 274 - - - - - 274 Equity in income of partnerships and joint ventures 4,032 - - - - - 4,032 Gains on sales of interests in real estate 3,043 - - - - - 3,043 ------------------------------------------------------------------------------------------ Income before minority interest 18,773 1,073 1,070 5,236 1,453 (8,279) 19,326 Minority interest (961) - - (378) (z) (1,339) ------------------------------------------------------------------------------------------ Net income $ 17,812 $ 1,073 $ 1,070 $ 5,236 $ 1,453 $ (8,657) $ 17,987 ========================================================================================== Basic Net Income per share $ 1.34 $ 1.35 ========= ======== Diluted Net Income per share $ 1.34 $ 1.35 ========= ======== Weighted Average Number of Shares Outstanding: Basic 13,296 13,296 ========= ======== Diluted 13,319 13,319 ========= ========
The accompanying notes and management's assumptions are an integral part of this statement. PENNSYLVANIA REAL ESTATE INVESTMENT TRUST NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA CONSOLIDATING FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION: Pennsylvania Real Estate Investment Trust (the "Registrant") is a self-administered equity real estate investment trust engaged, directly and through subsidiaries and joint ventures, in owning and managing income producing real estate, with an emphasis on shopping centers and apartment complexes. As of March 1, 1999 the Registrant owned 53 properties of which 5 properties are currently under development. The Registrant's interest in all of the Properties is held through PREIT Associates L.P. (the "Operating Partnership"). 2. ADJUSTMENTS TO PRO FORMA CONSOLIDATING BALANCE SHEET: (A) To reflect the Registrant's recent property acquisitions as follows:
Prince Woods Festival at Georges Northeast Apartments Oaklands Plaza Tower ------------- ------------- --------- ----------- Purchase price of property $21,200 $18,400 $65,000 $24,615 Other assets assumed - - - 730 (1) ------------------------------------------------------------ Total purchase price 21,200 18,400 65,000 25,345 Consideration ------------- Mortgage indebtedness assumed 7,340 -- 43,000 17,000 Borrowings under revolving line of credit 12,160 18,400 19,000 3,700 Issuance of Class A OP Units and other minority interests *1,700 --- **3,000 3,670 (2) Other liabilities assumed - - - 975 (3) ------------------------------------------------------------ $21,200 $18,400 $65,000 $25,345 ============================================================ * 72,592 Class A OP Units at $23.425 per unit ** 131,504 Class A OP Units at $22.813 per unit (1) Other assets assumed includes the following: Cash and cash equivalents $358 Rents and sundry receivables 351 Deferred Costs, prepaid real estate taxes and expenses, net 21 ---------- Total other assets assumed $730 ========== (2) Includes the following: Issuance of 139,454 Class A OP units at $23.40 per unit $3,263 Remaining 11% minority interest 407 ---------- $3,670 ========== (3) Other liabilities assumed includes the following: Construction cost payable $278 Tenant' deposits and deferred rents 118 Accrued expenses and other liabilities 579 ---------- Total other liabilities assumed $975 ==========
3. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997: (a) To record depreciation expense on acquisitions as follows:
Purchase Depreciable Price Basis Life In Years Depreciation -------------------- --------------------- ----------------- ------------------ Woods Apartments $21,200 $16,960 40 $424 Prince Georges Plaza 65,000 52,000 40 1,300 Festival at Oaklands 18,400 14,720 40 368 Northeast Tower 25,000 16,820 40 421 ------ Pro Forma Depreciation Adjustment $2,513 ====== (b) To record interest expense on acquisitions as follows:
Interest on Rate on Credit Credit Assumed Assumed Interest on Facility Facility Total Debt Debt Assumed Debt Borrowings Rate 7.28% Interest ------------------------------------------------------------------------------------------- Woods Apartments 8.625% $7,340 $633 $12,160 $885 $1,518 Prince Georges Plaza 8.700% 43,000 3,741 19,000 1,383 5,124 Festival at Oaklands --- --- --- 18,400 1,340 1,340 Northeast Tower 8.750% 17,000 1,021 3,700 269 1,290 ------ Pro Forma Interest Adjustment $9,272 ====== (c) To adjust the minority interest's share of income in the Operating Partnership to reflect the issuance of 72,592 Class A OP units at $23.425 per unit, 131,504 Class A OP units at $22.813, and 139.454 Class A OP units at $23.40 per unit for the Woods Apartments, Prince Georges Plaza, and Northeast Tower acquisitions, respectively. $(394) ====== 4. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED AUGUST 31, 1997: (d) To record the income and expenses associated with the acquisition of wholly owned shopping center properties as follows:
Magnolia N. Dartmouth Shopping Mall Mall Centers Historical Historical Pro Forma ---------- ------------ --------- Revenues Gross revenues from real estate $6,222 $6,268 $12,490 Interest and other income 17 15 32 ------ ------ ------- 6,239 6,283 12,522
Expenses Property operating expenses 1,728 2,236 3,964 ------ ------ ------ EBITDA $4,511 $4,047 $8,558 ====== ====== ====== (e) To record additional interest and other income as follows: Interest and other income of Magnolia Mall and North Dartmouth Mall $32 Accrual of interest income on note receivable from PREIT-RUBIN, Inc. based on intercompany advances at a rate of 12.5% 202 ---- $234 ==== (f) To record additional depreciation expense as follows: Magnolia Mall - depreciable basis of $45,998 over 40-year useful life $1,150 North Dartmouth Mall - depreciable basis of $30,709 over 40-year useful life 768 ------ $1,918 ====== (g) To record additional interest expense as follows: Magnolia Mall $25,200 mortgage note payable assumed at 8.20% $2,066 Magnolia Mall bank borrowings of $10,165 at 7.25% to fund remaining purchase price 737 North Dartmouth Mall bank borrowings of $35,000 at 7.25% to fund purchase price 2,538 Deposit of $5,000 at 7.25% 363 Bank borrowings of $11,482 at 7.25% to fund the cash portion of transaction costs 832 Less capitalized interest on bank borrowings for property under development (605) Net increase in amortization of financing costs related to Credit Facility 252 ------ $6,183 ====== (h) To record equity in income (loss) of PREIT-RUBIN, Inc. as follows: TRO Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- Revenues Management fees $6,171 $ --- $ 6,171 Leasing commissions 9,605 --- 9,605 Consulting fees 1,763 --- 1,763 Development fees 581 --- 581 Publication income 2,201 --- 2,201 Other income 147 --- 147 -------------------------------------- Total revenues $20,468 $ --- $20,468 ====================================== Operating Expenses Salaries, commissions, temporary services, payroll taxes and employee benefits 11,781 300 (1) 12,081 Rent expense 784 - 784 Other operating expenses 3,744 - 3,744 Depreciation and amortization 961 - 961 Non-recurring expenses associated with the TRO transaction 890 --- 890 Expenses for start-up of EPDLP management contracts 951 --- 951 -------------------------------------- Total operating expenses 19,111 300 19,411 ======================================
Income from operations 1,357 (300) 1,057 Interest expense (891) 362 (2) (529) Equity in loss from partnership investments (131) 131 (3) --- -------------------------------------- Pre-tax loss 335 193 528 Provision for income taxes - (211) (211) (4) -------------------------------------- Net income $335 $(18) $317 ====================================== Amortization of excess purchase price over net assets acquired recorded in consolidation (115) (5) Net income after intangible amortization $202 ===== Operating Partnership's interest (95%) in income of PREIT-RUBIN, Inc. $192 (6) ===== (1) To record additional compensation expense in accordance with existing employment contracts (2) To adjust interest expense as follows: Elimination of interest on debt not assumed $564 Accrual of interest on $1,613 note payable ($3,613 note less $2,000 related to development properties for which interest is capitalized) to PREIT at 12.5% (202) ----- $362 ===== (3) To eliminate equity in loss of partnerships and joint ventures not being acquired. (4) Estimated tax requirements calculated using 40% effective tax rate. (5) To record amortization of excess purchase price over net assets acquired over 35-year amortization period. (6) Represents 95% of PREIT-RUBIN, Inc.'s net loss after intangible amortization. (i) To record the Registrant's 50% share of income from The Court at Oxford Valley: Equity in the net income of The Court at Oxford Valley $605 Less amortization of the excess purchase price over the net book value of assets acquired (185) ----- $420 =====
(j) To record the interest expense savings associated with the paydown of the following debt amounts: Payment of the mortgage loan on Cobblestone Apartments $690 Payment of bank borrowings incurred in connection with the TRO Transaction 4,469 Payment of other bank borrowings 943 ------ $6,102 ====== (k) To record depreciation expense on acquisitions as follows: Purchase Depreciable Price Basis Life In Years Depreciation ----------------------------------------------------------- Woods Apartments $21,200 $16,960 40 $424 Prince Georges Plaza 65,000 52,000 40 1,300 Festival at Oaklands 18,400 14,720 40 368 Northeast Tower 25,000 16,820 40 421 ------ Pro Forma Depreciation Adjustment $2,513 ====== (l) To record interest expense on acquisitions as follows: Interest on Rate on Credit Credit Assumed Assumed Interest on Facility Facility Total Debt Debt Assumed Debt Borrowings Rate 7.43% Interest ----------------------------------------------------------------------------------- Woods Apartments 8.625% $7,340 $633 $12,160 $903 $1,536 Prince Georges Plaza 8.700% 43,000 3,741 19,000 1,412 5,153 Festival at Oaklands --- --- --- 18,400 1,367 1,367 Northeast Tower 8.750% 17,000 865 3,700 275 1,140 ------ Pro Forma Interest Adjustment $9,196 ====== (m) To adjust the minority interest's share of income in the Operating Partnership to reflect the issuance of 72,592 Class A OP units at $23.425 per unit, 131,504 Class A OP units at $22.813 and 139,454 Class A OP units at $23.40 per unit for the Woods Apartments, Prince Georges Plaza, and Northeast Tower acquisitions, respectively. $(1,153) ======= 5. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE FOUR MONTHS ENDED DECEMBER 31, 1997: (n) To record the income and expenses associated with the acquisition of wholly-owned shopping center properties as follows: Magnolia N. Dartmouth Shopping Mall Mall Centers Historical Historical Pro Forma ---------- ------------ --------- Revenues Gross revenues from real estate $548 $460 $1,008 Interest and other income 2 12 14 ---------------------------------------- 550 472 1,022 Expenses Property Operating Expenses 132 159 291 ---------------------------------------- Net operating income $418 $313 $731 ========================================
(o) To record additional interest and other income as follows: Interest and other income of Magnolia Mall and North Dartmouth Mall $14 Accrual of interest income on Note Receivable from PREIT-RUBIN, Inc. based on inter-company advances at a rate of 12.5% 18 --- $32 === (p) To record additional depreciation expense as follows: Magnolia Mall - depreciable basis of $45,998 over 40-year useful life $96 North Dartmouth Mall - depreciable basis of $30,709 over 40-year useful life 64 ---- $160 ==== (q) To record additional interest expense as follows: Magnolia Mall $25,200 mortgage note payable assumed at 8.20% $172 Magnolia Mall bank borrowings of $10,165 at 7.25% to fund remaining purchase price 61 North Dartmouth Mall bank borrowings of $35,000 at 7.25% to fund purchase price 211 Deposit of $5,000 at 7.25% 30 Bank borrowings of $11,482 at 7.25% to fund the cash portion of transaction costs 70 Less capitalized interest on bank borrowings for property under development (50) Net increase in amortization of financing costs related to Credit Facility 21 ---- $515 ==== (r) To record equity in income of PREIT-RUBIN, Inc. as follows: TRO Pro Forma Historical Adjustments Pro Forma ------------- ------------- ----------- Revenues Management fees $ 410 $ - $ 410 Leasing commissions 3,474 - 3,474 Consulting fees 104 - 104 Development fees 661 - 661 Publication income 555 - 555 Other income 142 - 142 -------------------------------------------- Total revenues $5,346 $ - $5,346 ============================================ Operating Expenses Salaries, commissions, temporary services, payroll taxes and employee benefits 2,554 25 (1) 2,579 Rent expense 77 - 77 Other operating expenses 1,268 - 1,268 Depreciation and amortization 69 - 69 -------------------------------------------- Total operating expenses 3,968 25 3,993 -------------------------------------------- Income from operations 1,378 (25) 1,353 Interest expense -- (18) (2) (18) Equity in loss from partnership investments (146) 146 (3) -- -------------------------------------------- Income before income taxes 1,232 103 1,335 Provision for income taxes - (534) (534) (4) -------------------------------------------- Net income $1,232 $(431) $801 ============================================
Intangible amortization recorded in consolidation 10 ------ Net income after intangible amortization $791 (5) ====== Operating Partnership's interest (95%) in income of PREIT-RUBIN, Inc. $751 (6) ====== (1) To record additional compensation expense in accordance with existing employment contracts (2) To accrue interest on $1,613 note payable ($3,613 note less $2,000 related to development properties for which interest is capitalized) to PREIT at 12.5%. $18 ====== (3) To eliminate equity in loss of partnerships and joint ventures not being acquired. (4) Estimated tax requirements calculated using 40% effective tax rate. (5) To record amortization of excess purchase price over net assets acquired over 35-year amortizable period. (6) Represents 95% of PREIT-RUBIN, Inc.'s net income after intangible amortization. (s) To record the Registrant's 50% share of income from The Court at Oxford Valley: Equity in the net income of The Court at Oxford Valley $44 Less amortization of the excess purchase price over the net book value of assets acquired (15) ------ $29 ====== (t) To record the interest expense savings associated with the paydown of the following debt amounts: Payment of the mortgage loan on Cobblestone Apartments $216 Payment of bank borrowings incurred in connection with the TRO Transaction 1,396 Payment of other bank borrowings 294 ------ $1,906 ====== (u) To record depreciation expense on acquisitions as follows: Purchase Depreciable Price Basis Life In Years Depreciation ----------------------------------------------------------- Woods Apartments $21,200 $16,960 40 $141 Prince Georges Plaza 65,000 52,000 40 434 Festival at Oaklands 18,400 14,720 40 123 Northeast Tower 25,000 16,820 40 140 ---- Pro Forma Depreciation Adjustment $838 ====
(v) To record interest expense on acquisitions as follows: Interest on Rate on Credit Credit Assumed Assumed Interest on Facility Facility Total Debt Debt Assumed Debt Borrowings Rate 7.47% Interest ------------------------------------------------------------------------------------------- Woods Apartments 8.625% $7,340 $211 $12,160 $303 $514 Prince Georges Plaza 8.700% 43,000 1,247 19,000 473 1,720 Festival at Oaklands --- --- --- 18,400 458 458 Northeast Tower 8.750% 17,000 130 3,700 92 222 ------ Pro Forma Interest Adjustment $2,914 ====== (w) To adjust the minority interest's share of income in the Operating Partnership to reflect the issuance of 72,592 Class A OP units at $23.425 per unit approximately 131,504 Class A OP units at $22.813 and 139,454 Class A OP units at $23.40 for the Woods Apartments, Prince Georges Plaza and Northeast Tower, acquisitions, respectively. $(261) ====== 6. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998: (x) To record depreciation expense on acquisitions as follows: Purchase Depreciable Price Basis Life In Years Depreciation ----------------------------------------------------------- Woods Apartments $21,200 $16,960 40 $254 Prince Georges Plaza 65,000 52,000 40 925 Festival at Oaklands 18,400 14,720 40 241 Northeast Tower 25,000 16,820 40 315 ------ Pro Forma Depreciation Adjustment $1,735 ====== (y) To record interest expense on acquisitions as follows: Interest on Rate on Credit Credit Assumed Assumed Interest on Facility Facility Total Debt Debt Assumed Debt Borrowings Rate 7.20% Interest ------------------------------------------------------------------------------------------- Woods Apartments 8.625% $7,340 $378 $12,160 $523 $901 Prince Georges Plaza 8.700% 43,000 2,654 19,000 971 3,625 Festival at Oaklands --- --- --- 18,400 864 864 Northeast Tower 8.750% 17,000 954 3,700 200 1,154 ------ Pro Forma Interest Adjustment $6,544 ======
(z) To adjust the minority interest's share of income in the Operating Partnership to reflect the issuance of 72,592 Class A OP units at $23.425 per unit, 131,504 Class A OP units at $22.813, and 139,454 Class A OP units at $23.40 per unit for the Woods Apartments, Prince Georges Plaza, and Northeast Tower acquisitions, respectively. $(378) =====
Exhibit Index ------------- Number Exhibit Page Number - ------ ------- ----------- 23 Consent of Arthur Andersen LLP EX-23 2 EXHIBIT 23 Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated January 30, 1999 included in this Form 8-K/A No. 1 dated December 23, 1998 on the combined statements of revenue and certain expenses of Northeast Tower into the Registrant's previously filed Registration Statements on Forms S-3 (File No. 33-61115, File No. 333-48917 and File No. 333-70157, as amended) and Forms S-8 (File No. 33-59771, File No. 33-59773, File No. 33-59767 and File No. 333-69877). /s/ ARTHUR ANDERSEN LLP ----------------------- Philadelphia, Pennsylvania March 8, 1999 -----END PRIVACY-ENHANCED MESSAGE-----