-----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, U7fwrEdQ037uOsQheJ1nan3bLCyVkA/KKA/1QflXxx7CLH83pUbFMxu4Ny4wGtWA kWHeiN1D69MtHipR2BoRJg== 0000950116-00-000784.txt : 20000410 0000950116-00-000784.hdr.sgml : 20000410 ACCESSION NUMBER: 0000950116-00-000784 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000407 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: 10-K/A SEC ACT: SEC FILE NUMBER: 001-06300 FILM NUMBER: 595449 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 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 10-K/A ----------------- [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________to _______________ Commission File No. 1-6300 PENNSYLVANIA REAL ESTATE INVESTMENT TRUST (Exact name of Registrant as specified in its charter) Pennsylvania 23-6216339 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) The Bellevue 19102 200 S. Broad St. (Zip Code) Philadelphia, Pennsylvania (address of principal executive office) Registrant's telephone number, including area code: (215) 875-0700 Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered ------------------- ----------------------------------------- (1) Shares of Beneficial Interest, par value $1.00 per share New York Stock Exchange (2) Rights to Purchase Shares of Beneficial Interest New York Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Trust was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K |X|. The aggregate market value, as of March 20, 2000, of the voting shares held by non-affiliates of the registrant was $198,779,441. (Aggregate market value is estimated solely for the purposes of this report and shall not be construed as an admission for the purposes of determining affiliate status.) On March 20, 2000, 13,343,821 Shares of Beneficial Interest, par value $1.00 per share (the "Shares"), of Pennsylvania Real Estate Investment Trust were outstanding. Documents Incorporated by Reference The Registrant's definitive proxy statement for its May 10, 2000 Annual Meeting is incorporated by reference in Part III hereof. The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (the "Report") contained a typographical error in the chart on page seven of the Report regarding development properties, which showed the Registrant's interest in Pavilion at Market East as a 100% interest. The Registrant's actual interest in Pavilion at Market East is a 50% interest as reflected in the chart regarding development properties on page seven hereof. Accordingly, the Registrant hereby amends the Report by restating Item 1 thereof as follows: Item 1. Business Pennsylvania Real Estate Investment Trust, a Pennsylvania business trust ("PREIT"), conducts substantially all of its operations through PREIT Associates, L.P., a Delaware limited partnership. As used in this report, unless the context requires otherwise, the terms "Company," "we," "us" and "our" includes PREIT, PREIT Associates and their subsidiaries and affiliates, including PREIT-RUBIN, Inc. (formerly The Rubin Organization, Inc.), a commercial property development and management firm in which PREIT owns 95% of the economic interests in the form of non-voting common shares. The Company PREIT, which is organized as a business trust under Pennsylvania law, is a fully integrated, self-administered and self-managed real estate investment trust, founded in 1960, which acquires, develops, redevelops and operates retail and multifamily properties. We own interests in 22 shopping centers containing an aggregate of approximately 8.3 million square feet, 19 multifamily properties containing 7,242 units and five industrial properties with an aggregate of approximately 549,000 square feet. We also own interests in six shopping centers currently under development, which we expect to contain an aggregate of approximately 3.1 million square feet upon completion. Three of the development properties are under construction currently and we anticipate that the remaining three development properties will be completed during the year 2001. We cannot assure you that all six development properties will be completed successfully. We also provide management, leasing and development services to 17 retail properties containing approximately 7.7 million square feet, 7 office buildings containing approximately 1.9 million square feet and 3 multifamily properties with approximately 1.4 million square feet for affiliated and third-party owners. Recent Developments In the first quarter of 2000, we and an unrelated third-party formed a partnership and purchased the Willow Grove Park shopping center in Willow Grove, Pennsylvania for approximately $140 million. Upon completion of certain requirements, including the funding of an expansion of the shopping center, our current 0.01% interest in the partnership that owns the shopping center will increase to a subordinated 50% interest. In the first quarter of 2000, we purchased, for $11 million, including the assumption of debt, our partner's 35% interest in the Emerald Point Multifamily Community. The property is now 100% owned and operated by us. -1- Our Structure PREIT Associates holds substantially all of our assets. As the sole general partner of PREIT Associates, we have the exclusive power to manage and conduct PREIT Associates' business, subject to limited exceptions. As of December 31, 1999, we owned approximately 90.7% of PREIT Associates. We anticipate that all acquisitions of interests in real estate will be owned, directly or indirectly, by PREIT Associates. Below is a diagram of our ownership structure, including PREIT Associates and PREIT-RUBIN, as of December 31, 1999. +--------------------------+ | Pennsylvania Real Estate | | Investment Trust(1) | +--------------------------+ | 90.7% | | | +------------+ | | Minority | | | Limited | | | Partners(2)| | +------+-----+ +----------------+ | | 9.3% | Employee Stock | | | | Bonus Plan | | | +----------------+ | | | 5% (voting) | | | +-----------+------------+-+ | +---------------| PREIT Associates, L.P. | | | +-----------+--------------+ | | | | | 95% (non-voting) | | | | +-----------------+ | | PREIT-RUBIN, | | | Inc. | | +-----------------+ | | | | +-------------------------+ | 52 Properties(3) | +-------------------------+ - ---------------------- (1) Sole general partner of the PREIT Associates. Of our 90.7% interest in PREIT Associates, we hold 99.3% of our units of limited partnership interest in PREIT Associates ("Units") as a Class A Limited Partner and 0.7% of our Units as the sole general partner. (2) Includes an aggregate of 826,258 Units, 5.6% of the aggregate of all Units outstanding, owned by the persons who were shareholders and affiliates of The Rubin Organization before our acquisition of The Rubin Organization, including Ronald Rubin, PREIT's Chief Executive -2- Officer and one of its Trustee. Under the terms of our acquisition of The Rubin Organization, these individuals have the right to receive up to 637,500 additional Units in respect of their former ownership interest in The Rubin Organization, depending on our adjusted funds from operations over the three year, nine month period commencing on January 1, 1999, and also to receive additional Units in respect of their interest in three of the development properties and a completed joint venture project we acquired rights to as part of the acquisition. Although not yet issued, the former shareholders and affiliates of The Rubin Organization are entitled to 167,500 units for the 12 month period from January 1, 1999 through December 31, 1999. (3) Interests in some of these properties are (i) owned directly by us under arrangements in which the entire economic benefit of ownership has been pledged to PREIT Associates, or (ii) owned directly by PREIT Associates. PREIT Associates' interest in these properties ranges from 40% to 100%. The Existing Retail Properties At December 31, 1999, we had interests in 22 retail properties containing an aggregate of approximately 8.3 million square feet. PREIT-RUBIN currently operates fourteen of these properties, of which twelve are wholly-owned and two are joint ventures. The remaining eight joint venture retail properties are managed by our joint venture partners, or an entity we or our joint venture partners designate, and in most instances a change in the management of the property requires the concurrence of both partners. Eleven of the 22 retail properties (containing an aggregate of approximately 4.9 million square feet) are located in Pennsylvania, three (containing an aggregate of approximately 0.5 million square feet) are located in Florida, two (containing an aggregate of approximately 1.0 million square feet) are located in Maryland, two (containing an aggregate of approximately 0.3 million square feet) are located in Delaware, two (containing an aggregate of approximately 0.8 million square feet) are located in South Carolina, and one is located in each of Massachusetts and New Jersey (containing an aggregate of approximately 0.8 million square feet). The following table presents information regarding the existing retail properties, as of December 31, 1999: -3-
Total Leased Year Built Total Owned GLA(3) Percent or Square Square Square Percent Real Property Location Owned* Renovated(1) Feet(2) Feet(2) Feet eased(4) Anchors - ------------- -------- ------ ------------ ------- ---- ---- -------- ------- Lehigh Valley Allentown, PA 50% 1977/1996 1,051,253 698,900 685,054 98% JC Penney, Strawbridges, Macy's Mall The Court at Langhorne, PA 50% 1996 704,486 456,862 456,862 100 Dicks Sporting Goods, Best Buy, Oxford Valley Pharmor, HomePlace, The Home Depot, BJ Wholesale Club North North Dartmouth, 100% 1971/1987 637,866 637,866 552,384 86.6 JC Penney, Sears, Ames, General Dartmouth Mall MA Cinema Whitehall Mall Allentown, PA 50% 1964/82/98/99 530,096 530,096 516,321 97.4 Sears, Kohl's, Bed, Bath & Beyond Magnolia Mall Florence, SC 100% 1979/1992 566,771 566,771 548,567 96.8 JC Penney, Sears, Belk, Rose's Laurel Mall Hazleton, PA 40% 1973/1995 558,801 558,801 528,579 94.6 Boscov's, Kmart, JC Penney Palmer Park Easton, PA 50% 1972/1982 456,879 456,879 425,624 93.2 The Bon-Ton, Boscovs Mall Forestville S/C Forestville, MD 100% 1974/1983 217,934 217,934 99,078 45.5 Ames, US Postal Service, Super Fresh Mandarin Jacksonville, FL 100% 1986 238,861 215,013 215,013 100 Walmart, Upton's, Carmike Corners Cinemas Springfield Springfield, PA 50% 1963/1997 268,500 122,831 93,946 76.5 Target, Bed Bath & Beyond Park I & II(5) Rio Mall Rio Grande, NJ 60% 1973/1992 165,583 165,583 159,145 96.1 Kmart, Staples Crest Plaza S/C Allentown, PA 100% 1959/1991 157,370 157,370 107,986 68.6 Weis Market, Eckerd Drug Store Park Plaza S/C Pinellas Park, FL 50% 1963/1983 155,528 155,528 144,886 93.2 Eckerd Drug Store, Ace (6) Hardware, Publix Supermarket South Blanding Jacksonville, FL 100% 1986 106,857 106,857 100,357 93.9 Food Lion, Scotty's Village Ingleside Thorndale, PA 70% 1981/1995 101,271 101,271 101,271 100 Kmart Center Festival at Exton, PA 100% 1991 144,952 144,952 134,375 92.7 Sears Hardware, Clemens Exton Northeast Philadelphia, PA 89% 1998 479,498 479,498 298,696 62.3 Home Depot, Dicks Sporting Tower Center Goods (7) Prince Hyattsville, MD 100% 1959/1990 744,911 744,911 624,717 83.9 GC Murphy, JC Penney, Hechts Georges Plaza Red Rose Lancaster, PA 50% 1998 463,042 263,452 261,291 99.2 Weis Market, Home Depot Commons Valleyview S/C Wilmington, DE 100% 1999 55,798 55,798 52,598 94.3 Genuardis Florence Florence, SC 100% 1991 197,258 197,258 107,318 54.4 Tags Store, Goodys Family Commons S/C Clothings Christiana Newark, DE 100% 1998 302,439 302,439 293,839 97.2 Costco, Dicks Sporting Goods Power Center Phase I --------- --------- --------- ----- Total/Weighted Average 8,305,954 7,336,870 6,507,907 88.7% (22 Properties) ========= ========= ========= =====
- ----------------------- * By PREIT Associates; we own approximately 90.7% of PREIT Associates. (1) Year initially completed and, where applicable, the most recent year in which the property was renovated substantially or an additional phase of the property was completed. (2) Total Square Feet includes space owned or ground leased by anchors. Owned Square Feet and Percent Leased excludes such space. (3) GLA stands for Gross Leasable Area. (4) Percent Leased is calculated as a percent of Owned Square Feet for which leases were in effect as of December 31, 1999. (5) With respect to Phase I, we have an undivided one-half interest in one of three floors in a free standing department store. (6) We sold our interest to our joint venture partner in January 2000. -4- (7) We expect to acquire the remaining 11% ownership interest during the first quarter of 2002. A portion of the center is currently under development. The following table presents information regarding each anchor in the existing retail properties: Anchor and Square Footage as of December 31, 1999
# Anchor Square Footage Square Footage Total Square Anchor Name(1) Stores Owned By Anchors Leased By Anchors Footage Occupied - ----------- -------- ---------------- ----------------- ---------------- Ames 2 - 166,539 166,539 Bed, Bath & Beyond 2 - 91,975 91,975 Belk 1 - 115,793 115,793 Best Buy 1 - 59,620 59,620 BJ's 1 116,872 - 116,872 Boscov's 2 - 375,110 375,110 Circuit City 2 - 64,733 64,733 Clemens Markets 1 - 40,000 40,000 Costco 1 - 140,814 140,814 Dick's Sporting Goods 3 - 158,101 158,101 Food Lion 1 - 29,000 29,000 Genuardi's 1 - 47,500 47,500 Goody's Clothing 1 - 29,940 29,940 Hecht's 1 - 195,655 195,655 Home Depot 3 265,310 136,633 401,943 Home Place 1 - 54,096 54,096 IGA* 1 - 21,700 - J.C. Penney 5 187,659 403,147 590,806 K-Mart 3 - 334,858 334,858 Kohl's 1 - 81,785 81,785 Macy's 1 - 212,000 212,000 Pet Smart 3 - 81,504 81,504 Pharmor 1 - 45,712 45,712 Publix 1 - 33,490 33,490 Rose's 1 - 53,200 53,200 Scotty's 1 - 44,921 44,921 Sears Hardware 1 - 20,425 20,425 Sears 3 - 412,454 412,454 Staples 1 - 20,000 20,000 Strawbridges 1 164,694 - 164,694 Super Fresh* 1 - 25,622 - Tags Stores 1 - 40,000 40,000 Target 1 145,669 - 145,669 The Bon Ton 1 - 122,125 122,125 Upton's* 1 - 51,800 - Walmart 1 23,848 58,074 81,922 Weis Market 2 65,032 45,000 110,032 -- ------- --------- --------- Total 56 969,084 3,813,326 4,683,288 == ======= ========= =========
- --------------------- (1) Actual tenant may be an affiliate of the entity listed. * Leased, but currently vacant -5- The following table presents, as of December 31, 1999, scheduled lease expirations of malls and shopping centers for the next 10 years, assuming that none of the tenants exercise renewal options or termination rights:
Average Base Rent % of Total Annualized Approximate Per Square Leased GLA (1) Number of Base Rent Square Feet Foot of Represented By Year Ending Leases of Expiring Of Expiring Expiring Expiring December 31 Expiring Leases Leases Leases Leases ----------- --------- ----------- ----------- ---------- -------------- 2000 79 $2,971,007 255,092 $11.65 3.97% 2001 84 4,611,601 612,309 7.53 9.52% 2002 71 3,268,485 214,481 15.24 3.34% 2003 66 4,176,674 325,595 12.83 5.06% 2004 64 5,089,944 460,660 11.05 7.16% 2005 41 3,806,623 273,374 13.92 4.25% 2006 52 5,831,277 625,802 9.32 9.73% 2007 43 5,743,106 689,447 8.33 10.72% 2008 41 4,811,505 627,878 7.66 9.76% 2009 41 4,981,825 281,634 17.69 4.38% -- --------- ------- ----- ----- Total/ 582 $45,292,047 4,366,272 $10.37 67.89% Weighted === =========== ========= ====== ====== Average
- ------------------ (1) Percentage of total leased GLA equals the approximate GLA of expiring leases divided by the total leased GLA square feet (6,430,541) The Development Properties We have rights in six development properties - Paxton Towne Centre, Metroplex Shopping Center, Creekview Shopping Center, Pavilion at Market East, Christiana Power Center Phase II and Frankford Arsenal. We acquired our rights to Metroplex Shopping Center and Christiana Power Center Phase II when we acquired The Rubin Organization, and we hold our rights subject to a contribution agreement executed in connection with that acquisition. The contribution agreement provides for PREIT Associates to issue Units, according to a formula, to former affiliates of The Rubin Organization as consideration for our rights in these properties. As Metroplex Shopping Center and Christiana Power Center Phase II are completed and leased up, they will be valued based on the following principles: o all space leased and occupied by credit-worthy tenants will be valued at ten times adjusted cash flow, computed as specified in the agreement; -6- o all space leased to a credit-worthy tenant but unoccupied will be valued at ten times adjusted cash flow calculated as though the space was built and occupied as shown in the property's budget; and o space not leased or occupied, whether built or unbuilt, will be valued as mutually agreed on or, failing agreement, by appraisal. Additional provisions exist for valuing triple net lease/purchase arrangements. Although each project will be valued as completed and an "account" established against which Units will be deemed to be credited, as well as deemed cash in an amount that would have been distributed on these deemed Units and a 10% interest factor on this deemed cash, no consideration will be paid until the earlier of: o the completion of the last property; o our abandonment of any uncompleted projects; or o September 30, 2002. At that time, we will value any uncompleted projects and PREIT Associates will issue Units equal in value to 50% of the amount, if any, by which the value of PREIT Associates' interest in each project exceeded the aggregate cost of the project at the time of completion. Negative amounts arising in connection with the completion or abandonment of any project will be netted back against earlier completed projects in order of completion. Units issued in respect of the foregoing valuations of the projects will be valued at the greater of (1) the average of the closing prices of the Shares for the twenty trading days before the date of the completion valuation and (2) $19.00. If the average of the closing prices of the Shares on the 20 trading days before each valuation is less than $19.00, PREIT Associates will issue additional Units, of a new class but equal in value to those Units not issued because of the operation of the pricing limitation. The following table presents information, as of December 31, 1999, regarding the development properties:
Percent Planned Owned Or Planned Owned To Be Square Square Expected Development Property Location Acquired* Feet Feet(1) Status(2) Completion -------------------- -------- --------- ---- ------- --------- ---------- Paxton Towne Center Harrisburg, PA 100%(3) 695,251 570,826 Construction 4th Quarter of 2000 Metroplex Shopping Center Plymouth Meeting, PA 50% 780,000 476,730 Construction 4th Quarter of 2000 Creekview Shopping Center Warrington, PA 100%(4) 418,416 129,500 Construction 4th Quarter of 2000 Pavilion at Market East Philadelphia, PA 50% 202,844 202,844 Development 4th Quarter of 2001 Christiana Power Center II Newark, DE 100% 445,000 445,000 Development 4th Quarter of 2001 Frankford Arsenal Philadelphia, PA 100% 508,559 508,559 Development 4th Quarter of 2001 --------- --------- TOTAL (6 Properties): 3,050,070 2,333,459 ========= =========
- ----------------------- * By PREIT Associates; we currently own approximately 90.7% of PREIT Associates. (1) Square footage subject to change. (2) "Development" indicates that development activities, such as site surveys, preparation of architectural plans or initiation of land use approvals or rezoning processes, have commenced, but construction has not commenced. "Construction" indicates that construction activities, such as site preparation, ground-breaking activities or exterior construction, has commenced. We cannot assure you that the properties that remain in the development stage will be constructed ultimately. (3) One of our affiliates owns one unit in a two-unit condominium regime that constitutes the shopping center. The other unit is owned by Target. (4) One of our affiliates owns one unit in a three-unit condominium regime that constitutes the shopping center. The other two units are owned by Target and Lowe's, respectively. -7- The Multifamily Properties We have interests in 19 multifamily properties with an aggregate of 7,242 units. We manage thirteen of these multifamily properties, and the remaining six multifamily properties are managed by one or more of our partners. If our partners currently managing these six multifamily properties are unable or unwilling to perform their obligations or responsibilities, we would manage these properties with our own staff. The following table presents information, as of December 31, 1999, regarding the 19 multifamily properties in which we have an interest:
Approx. Year Number Rentable Calendar 1999 Multifamily Percent Built/ Of Area Percent Average Rent Property Location Owned* Renov(1) Units(2) (Sq. Ft.) Occupied per Unit -------- -------- ------ -------- -------- --------- -------- -------- Emerald Point(3) Virginia Beach, VA 65% 1965/1993 862 846,000 94% $ 551 Boca Palms Boca Raton, FL 100% 1970,1991 522 673,000 95 938 /1994 Lakewood Hills Harrisburg, PA 100% 1972, 1975, 562 630,000 96 657 1982/1988 Regency Lakeside Omaha, NE 50% 1970/1990 433 492,000 97 963 Kenwood Gardens Toledo, OH 100% 1951/1989 504 404,000 92 448 Fox Run, Delaware Bear, DE 100% 1988 414 359,000 96 682 Eagle's Nest Coral Springs, FL 100% 1989 264 343,000 96 933 Palms of Pembroke Pembroke Pines, FL 100% 1989/1995 348 340,000 99 926 Hidden Lakes Dayton, OH 100% 1987/1994 360 306,000 88 624 Cobblestone Pompano Beach, FL 100% 1986/1994 384 297,000 96 742 Countrywood Tampa, FL 50% 1977/1997 536 295,000 97 478 Shenandoah Village West Palm Beach, FL 100% 1985/1993 220 286,000 99 953 Marylander Baltimore, MD 100% 1951/1989 507 279,000 99 538 Camp Hill Plaza Camp Hill, PA 100% 1967/1994 300 277,000 93 686 Fox Run, Warminster Warminster, PA 50% 1969/1992 196 232,000 100 697 Cambridge Hall West Chester, PA 50% 1967/1993 233 186,000 98 659 Will-O-Hill Reading, PA 50% 1970/1986 190 152,000 100 553 2031 Locust Street Philadelphia, PA 100% 1929/1986 87 89,000 100 1327 The Woods Ambler, PA 100% 1974 320 235,000 97 801 ----- --------- --- ---- Total/Weighted 7,242 6,721,000 96% $745 Average ===== ========= === ==== (19 properties) - -----------------------
* By PREIT Associates; we currently own approximately 90.7% of PREIT Associates. (1) Year initially completed and most recently renovated, and where applicable, year(s) in which additional phases were completed at the property. (2) Includes all apartment and commercial units occupied or available for occupancy at December 31, 1999. (3) See Recent Developments. -8- Other Properties Shortly following our organization, we acquired six industrial properties. We have not acquired any property of this type in over 20 years. We do not consider these properties to be strategically held assets. These properties, in the aggregate, contributed less than 3% of our net rental income in our fiscal year ended December 31, 1999, and we have been studying a program for the orderly liquidation of these assets. As part of this program, we sold our 50% interest in a warehouse and plant in Ft. Washington, Pennsylvania in 1999. The following table shows information, as of December 31, 1999, regarding the remaining five industrial properties:
Industrial Properties Year Percent Square Property and Location Acquired Owned* Feet Percentage Leased - --------------------- -------- ------ ---- ----------------- Warehouse and Distribution 1962 100% 294,000 100% Center Alexandria, VA Warehouse 1962 100% 12,034 100% Pennsauken, NJ Warehouse 1962 100% 16,307 100% Allentown, PA Warehouse 1963 100% 29,450 100% Pennsauken, NJ Warehouse and Plant 1963 100% 197,000 100% Lowell, MA ------- Total 548,791 =======
- ----------------------- * By PREIT Associates; we currently own approximately 90.7% of PREIT Associates. -9- Right of First Refusal Properties We obtained rights of first refusal with respect to the interests of some of the former affiliates of The Rubin Organization, after our acquisition of The Rubin Organization, in the three retail properties listed below: Right of First Refusal Properties Percentage Interest Gross Leasable Subject to the Right Property/Location Sq. Ft. of First Refusal - ----------------- ------- ---------------- Cumberland Mall, 463,000 50% Vineland, NJ Fairfield Mall, 418,000 50% Chicopce, MA Christiana Mall, 1,100,000 (1) Newark DE --------- Total 1,981,000 ========= - -------------------------- (1) The interest subject to the right of first refusal is subject to adjustment in connection with the refinancing of the participating mortgage that currently encumbers this property. Acquisition of The Rubin Organization On September 30, 1997, we completed a series of related transactions in which: o we transferred substantially all of our real estate interests to PREIT Associates; o PREIT Associates acquired all of the nonvoting common shares of The Rubin Organization (renamed "PREIT-RUBIN, Inc."), constituting 95% of the total equity of PREIT-RUBIN in exchange for the issuance of 200,000 Class A units of limited partnership interest in PREIT Associates ("Units") and a contingent obligation to issue up to 800,000 additional Units over the next five years, discussed below; o PREIT Associates acquired the interests of some of the former affiliates of The Rubin Organization in The Court at Oxford Valley, Magnolia Mall, North Dartmouth Mall and Springfield Park; Hillview Shopping Center and Northeast Tower Center at prices based upon a pre-determined formula; and subject to related obligations, in Christiana Power Center (Phase I and II), Red Rose Commons and Metroplex Shopping Center. Subsequent to September 30, 1997, by mutual agreement with the former affiliates of The Rubin Organization, PREIT Associates did not acquire Hillview Shopping Center. -10- The 800,000 additional Units discussed above are to be issued over the five-year period beginning October 1, 1997 and ending September 30, 2002 according to a formula based on our adjusted funds from operations per Share during the five year period. The contribution agreement established "hurdles" and "targets" during specified "earn-out periods" to determine whether, and to what extent, the contingent Units would be issued. For the three months ended December 31, 1997, 32,500 Units were earned, resulting in additional purchase price of approximately $830,000. For the year ended December 31, 1998, 130,000 Units were earned resulting in an additional purchase price of approximately $2.5 million. For the year ended December 31, 1999, 167,500 Units were earned, which will result in an additional purchase price of approximately $2.4 million. Under the contribution agreement, the hurdles and targets were adjusted on December 29, 1998 to account for the dilutive effect of our December 1997 public offering, as follows:
Per Share Adjusted FFO Base No. Max. No. ------------------ Contingent Contingent Earn-Out Period Hurdle Target TRO OP TRO OP --------------- ------ ------ ---------- -------- 1-1-98 to 12-31-98 2.13 2.39 20,000 130,000 1-1-99 to 12-31-99 2.30 2.58 57,500 167,500 1-1-00 to 12-31-00 2.43 2.72 57,500 167,500 1-1-01 to 12-31-01 2.72 3.03 57,500 167,500 1-1-02 to 9-30-02 2.19 2.43 52,500 135,000 ------- ------- Total 245,000 767,500 ======= =======
In general: o if the hurdle for any earn-out period is not met, no contingent Units will be issued in respect of that period; o if the target for any earn-out period is met, the maximum number of contingent Units for that period will be issued; and o if adjusted funds from operations for any earn-out period is between the hurdle and the target for the period, PREIT Associates would issue the base contingent Units for that period, plus a pro rata portion of the number of contingent Units by which the maximum contingent Units exceeded the base contingent Units for that period equal to the amount by which the per Share adjusted funds from operations exceeded the hurdle but was less than the target. The foregoing is subject to the right to carry back to prior earn-out periods amounts in excess of the target in the current period, thereby earning additional contingent Units, but never more than the maximum amount, and to carry forward into the next, but only the next, earn-out period amounts of per Share adjusted funds from operations which exceed the target in any such period, provided, in all cases, no amounts in excess of the target in any period may be -11- applied to result in the issuance of additional contingent Units in any other period until first applied to eliminate all shortfalls from targets in all prior periods. The contribution agreement provides that if we declared a share split, share dividend or other similar change in our capitalization, the "hurdle" and "target" levels will be proportionately adjusted. The contribution agreement also provides for the creation of a special committee of three independent Trustees to consider, among other matters, whether other equitable adjustments, either upward or downward, should be effected in the "hurdle" and "target" levels to reflect: o our incurrence of non-project specific indebtedness or our raising of equity capital; o our breach of any of our representations or warranties in the contribution agreement which may adversely affect adjusted funds from operations; and o the effect on adjusted funds from operations of any adverse judgment in litigation pending against us. For the two years and nine months commencing January 1, 2000, we may be required to issue the remaining 470,000 Units, depending on our per share "adjusted funds from operations" during this period. "Adjusted funds from operations" is defined as our consolidated net income for any period, plus, to the extent deducted in computing such net income: o depreciation attributable to real property; o certain amortization expenses; o the expenses of the acquisition of The Rubin Organization; o losses on the sale of real estate; o material write-downs on real estate; o material prepayment fees; and o rents currently due in excess of rents reported, minus: - rental revenue reported in excess of amounts currently due; - lease termination fees; and - gains on the sale of real estate. Competition, Regulation and Other Factors REAL ESTATE INDUSTRY WE FACE RISKS ASSOCIATED WITH LOCAL REAL ESTATE CONDITIONS IN AREAS WHERE WE OWN PROPERTIES We may be affected adversely by general economic conditions and local real estate conditions. For example, an oversupply of retail space or apartments -12- in a local area or a decline in the attractiveness of our properties to shoppers, residents or tenants would have a negative effect on us. Other factors that may affect general economic conditions or local real estate conditions include: o population trends o income tax laws o availability and costs of financing o construction costs WE MAY BE UNABLE TO COMPETE WITH OUR LARGER COMPETITORS AND OTHER ALTERNATIVES TO OUR PORTFOLIO OF PROPERTIES The real estate business is highly competitive. We compete for interests in properties with other real estate investors and purchasers, many of whom have greater financial resources, revenues and geographical diversity than we have. Furthermore, we compete for tenants with other property owners. Our apartment properties portfolio competes with providers of other forms of housing, such as single family housing. Competition from single family housing increases when lower interest rates make mortgages more affordable. All of our shopping center and apartment properties are subject to significant local competition. WE ARE SUBJECT TO SIGNIFICANT REGULATION THAT INHIBITS OUR ACTIVITIES Local zoning and use laws, environmental statutes and other governmental requirements restrict our expansion, rehabilitation and reconstruction activities. These regulations may prevent us from taking advantage of economic opportunities. Legislation such as the Americans with Disabilities Act may require us to modify our properties. Future legislation may impose additional requirements. We cannot predict what requirements may be enacted. OUR PROPERTIES WE FACE RISKS THAT MAY RESTRICT OUR ABILITY TO DEVELOP PROPERTIES There are risks associated with our development activities in addition to those generally associated with the ownership and operation of established shopping centers and multifamily properties. These risks include: o expenditure of money and time on projects that may never be completed o higher than estimated construction costs o late completion because of unexpected delays in zoning approvals, other land use approvals, construction or other factors outside of our control o failure to obtain zoning, occupancy or other governmental approvals -13- The risks described above are compounded by the fact that we must distribute 95% of our taxable income in order to maintain our qualification as a REIT. As a result of these distribution requirements, new developments are financed primarily through lines of credit or other forms of construction financing. Because we incur debt to finance the developments, our loss could exceed our equity investment in these developments. Furthermore, we must acquire and develop suitable high traffic retail sites at costs consistent with the overall economics of the project. Because retail development is extremely competitive, we cannot assure you that we can contract for appropriate sites within our geographic markets. MANY OF OUR PROPERTIES ARE OLD AND IN NEED OF MAINTENANCE AND/OR RENOVATION Many of the properties in which we have an interest were constructed more than 15 years ago. We generally spend more on maintenance of these older properties than we do on newer properties. Because older properties may be obsolete in some respects, they may generate lower rentals or may require significant capital expense for renovations. Some apartments lack amenities that are customarily included in modern construction, such as dishwashers, central air conditioning and microwave ovens. Some facilities are difficult to lease because they are too large, too small or inappropriately proportioned for today's market. We generally consider renovation of properties when renovation will enhance or maintain the long-term value of our properties. WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE AND EFFECTIVELY MANAGE THE PROPERTIES WE ACQUIRE Subject to the availability of financing and other considerations, we intend to continue to acquire interests in properties that we believe will be profitable or will enhance the value of our portfolios. Some of these properties may have unknown characteristics or deficiencies. Therefore, it is possible that some properties will be worth less or will generate less revenue than we believe at the time of acquisition. It is also possible that the operating performance of some of our properties will decline. To manage our growth effectively, we must successfully integrate new acquisitions. We cannot assure you that we will be able to successfully integrate or effectively manage additional properties. When we acquire properties, we also take on other risks, including: o financing risks (some of which are described below) o the risk that we will not meet anticipated occupancy or rent levels o the risk that we will not obtain required zoning, occupancy and other governmental approvals -14- o the risk that there will be changes in applicable zoning and land use laws that affect adversely the operation or development of our properties WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE When a lease expires, a tenant may refuse to renew it. We may not be able to relet the property on similar terms, if we are able to relet the property at all. We have established an annual budget for renovation and reletting expenses that we believe is reasonable in light of each property's operating history and local market characteristics. This budget, however, may not be sufficient to cover these expenses. OUR TENANTS MAY FAIL TO MAKE RENTAL PAYMENTS WHEN DUE At any time, a tenant may experience a downturn in its business that may weaken its financial condition. As a result, the tenant may fail to make rental payments when due, or may declare bankruptcy. Either event could result in the termination of that tenant's lease and material losses to us. We receive a substantial portion of our shopping center income as rents under long-term leases. If retail tenants are unable to comply with the terms of their leases because of rising costs or falling sales, we may modify lease terms to allow tenants to pay a lower rental or a smaller share of operating costs and taxes. OUR CASUALTY INSURANCE MAY BE INADEQUATE We generally maintain casualty insurance on our assets. We believe that our insurance is adequate. However, we would be required to bear all losses to the properties that are not adequately covered by insurance. We cannot assure you that we can obtain insurance in the future at acceptable levels and reasonable cost. WE FACE RISKS DUE TO LACK OF GEOGRAPHIC DIVERSITY All but one of our properties are located in the eastern United States. A majority of the properties are located either in Pennsylvania or Florida. General economic conditions and local real estate conditions in these geographic regions have a particularly strong effect on us. Other REITs may have a more geographically diverse portfolio and thus may be less susceptible to downturns in one or more regions. WE FACE POSSIBLE ENVIRONMENTAL LIABILITIES Current and former real estate owners and operators may be required by law to investigate and clean up hazardous substances released at the properties they own or operate. They may also be liable to the government or to third parties for substantial property damage, investigation costs and cleanup costs. -15- In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs in connection with the contamination. Contamination may affect adversely the owner's ability to sell or lease real estate or to borrow with the real estate as collateral. From time to time, we respond to inquiries from environmental authorities with respect to properties both currently and formerly owned by us. We cannot assure you of the results of pending investigations, but we do not believe that resolution of these matters will have a material adverse effect on our financial condition or results of operations. We have no way of determining at this time the magnitude of any potential liability to which we may be subject arising out of unknown environmental conditions or violations with respect to the properties we formerly owned. Environmental laws today can impose liability on a previous owner or operator of a property that owned or operated the property at a time when hazardous or toxic substances were disposed of, or released from, the property. A conveyance of the property, therefore, does not relieve the owner or operator from liability. As to five properties, two of which we no longer own, we or a partnership in which we have an interest have responded to inquiries from environmental authorities. In one of these properties, we believe that the contamination was caused by a former tenant and we have sought indemnification from the tenant. The remaining estimated cost to remediate this property ranges from $50,000 to $100,000. In another instance, we will only be liable for remediation costs in excess of $1.0 million, and we do not anticipate currently that remediation costs will exceed $1.0 million. If remediation costs for this property exceed $1.0 million, our liability is not expected to exceed $0.3 million. At four properties in which we currently have an interest, the environmental conditions continue to be investigated and have not been remediated fully. At three of these properties, groundwater contamination has been found. At one of the properties, the former owner of the property is remediating the groundwater contamination. At two of the properties, the groundwater contamination was associated with a dry cleaning operation. Although the properties with contamination arising from dry cleaning operations may be eligible under a state law for remediation with state funds, we cannot assure you that sufficient funds will be available under the legislation to pay the full costs of any such remediation. There are asbestos-containing materials in a number of our properties, primarily in the form of floor tiles and adhesives. The floor tiles and adhesives are generally in good condition. Fire-proofing material containing asbestos is present at some of our properties in limited concentrations or in limited areas. At properties where radon has been identified as a potential concern, we have remediated or are performing additional testing. Lead-based paint has been identified at certain of our multifamily properties and we have notified tenants under applicable disclosure requirements. Based on our current knowledge, we do not believe that the future liabilities associated with asbestos, radon and lead-based paint at the foregoing properties will be material. We have no insurance coverage for the types of environmental liabilities described above. In 1994, we established a reserve for environmental -16- remediation costs of $0.6 million. In addition, we received a credit of $0.4 million for environmental matters in connection with the acquisition of two properties. Since 1994, a total of $0.7 million has been charged against the reserve. We also reduced the reserve by $0.2 million, leaving a balance of $0.1 million, which approximates our share of the remaining environmental liability. We cannot assure you that these amounts will be adequate to cover future environmental costs. We are aware of environmental concerns at three of our development properties. Our present view is that our share of any remediation costs necessary in connection with the development of these properties will be within the budgets for development of these properties, but the final costs and necessary remediation are not known and may cause us to decide not to develop one or more of these properties. FINANCING RISKS WE FACE RISKS GENERALLY ASSOCIATED WITH OUR DEBT We finance parts of our operations and acquisitions through debt. This debt creates risks, including: o rising interest rates on our floating rate debt o failure to prepay or refinance existing debt, which may result in forced disposition of properties on disadvantageous terms o refinancing terms less favorable than the terms of existing debt o failure to meet required payments of principal and interest WE MAY NOT BE ABLE TO COMPLY WITH LEVERAGE RATIOS IMPOSED BY OUR CREDIT FACILITY OR TO USE OUR CREDIT FACILITY WHEN CREDIT MARKETS ARE TIGHT We currently use a secured credit facility for working capital, acquisitions, renovations and capital improvements to our properties. The credit facility currently requires our operating partnership, PREIT-Associates, to maintain certain asset and income to debt ratios and minimum income and net worth levels. If PREIT Associates fails to meet any one or more of these requirements, we would be in default. The lenders, in their sole discretion, may waive a default. We might secure alternative or substitute financing. We cannot assure you, however, that we can obtain waivers or alternative financing. Any default may have a materially adverse effect on our operations and financial condition. We expect to use our credit facility from time to time for acquisitions, development, renovations and capital improvements to our -17- properties. When the credit markets are tight, we may encounter resistance from lenders when we seek financing or refinancing for some of our properties. If the credit facility is reduced significantly or withdrawn, our operations would be affected adversely. If we are unable to increase our borrowing capacity under the credit facility, our ability to make acquisitions and grow would be affected adversely. We cannot assure you as to the availability or terms of financing for any particular property. We have entered into agreements limiting the interest rate on portions of our credit facility. If other parties to these agreements fail to perform as required by the agreements, we may suffer credit loss. WE MAY BE UNABLE TO OBTAIN LONG-TERM FINANCING REQUIRED TO FINANCE OUR PARTNERSHIPS AND JOINT VENTURES. The profitability of each partnership or joint venture in which we are a partner or co-venturer that has short-term financing or debt requiring a balloon payment is dependent on the availability of long-term financing on satisfactory terms. If satisfactory financing is not available, we may have to rely on other sources of short-term financing, equity contributions or the proceeds of refinancing of existing properties to satisfy debt obligations. Although we do not own the entire interest in connection with many of the properties held by a partnership or joint venture, we may be required to pay the full amount of any obligation of the partnership or joint venture that we have guaranteed in whole or in part to protect our equity interest in the property owned by the partnership or joint venture. Additionally, we may determine to pay a partnership's or joint venture's obligation to protect our equity interest in its assets. GOVERNANCE WE MAY BE UNABLE TO EFFECTIVELY MANAGE OUR PARTNERSHIPS AND JOINT VENTURES DUE TO DISAGREEMENTS WITH OUR PARTNERS AND JOINT VENTURERS Generally, we hold interests in our portfolio properties through PREIT Associates. In many cases we hold properties through joint ventures or partnerships with third-party partners and joint venturers and, thus, we hold less than 100% of the ownership interests in these properties. Of the properties with respect to which our ownership is partial, most are owned by partnerships in which we are a general partner. The remaining properties are owned by joint ventures in which we have substantially the same powers as a general partner. Under the terms of the partnership and joint venture agreements, major decisions, such as a sale, lease, refinancing, expansion or rehabilitation of a property, or a change of property manager, require the consent of all partners or co-venturers. Because decisions must be unanimous, necessary actions may be delayed significantly. It may be difficult or even impossible to change a property manager if a partner or co-venturer is serving as property manager. Business disagreements with partners may arise. We may incur substantial expenses in resolving these disputes. To preserve our investment, we may be required to make commitments to or on behalf of a partnership or venture during a dispute. Moreover, we cannot assure you that our resolution of a dispute with a partner will be on terms that are favorable to us. -18- Other risks of investments in partnerships and joint ventures include: o partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions o partners or co-venturers might have business interests or goals that are inconsistent with our business interests or goals o partners or co-venturers may be in a position to take action contrary to our policies or objectives o potential liability for the actions of our partners or co-venturers WE ARE RESTRICTED FROM EXPERIENCING A SALE OR CHANGE IN CONTROL Our Trust Agreement restricts the possibility of our sale or change in control, even if a sale or change in control were in our shareholders' interest. These restrictions include the ownership limit designed to ensure qualification as a REIT, the staggered terms of our Trustees and our ability to issue preferred shares. Additionally, we have adopted a rights plan that may deter a potential acquiror from attempting to acquire us. WE HAVE ENTERED INTO AGREEMENTS RESTRICTING OUR ABILITY TO SELL SOME OF OUR PROPERTIES Because some limited partners of PREIT Associates may suffer adverse tax consequences if certain properties owned by PREIT Associates are sold, we, as the general partner of PREIT Associates, have agreed from time to time, subject to certain exceptions, that the consent of the holders of a majority (or all) of certain limited partner interests issued by PREIT Associates in exchange for a property is required before that property may be sold. These agreements may result in our being unable to sell one or more properties, even in circumstances in which it would be advantageous to do so. WE MAY ISSUE PREFERRED SHARES WITH GREATER RIGHTS THAN YOUR SHARES Our Board of Trustees may issue up to 25,000,000 preferred shares without shareholder approval. Our Board of Trustees may determine the relative rights, preferences and privileges of each class or series of preferred shares. Because our Board of Trustees has the power to establish the preferences and rights of the preferred shares, preferred shares may have preferences, distributions, powers and rights senior to your rights as a shareholder. WE MAY AMEND OUR BUSINESS POLICIES WITHOUT YOUR APPROVAL Our Board of Trustees determines our growth, investment, financing, capitalization, borrowing, REIT status, operating and distribution policies. Although the Board of Trustees has no present intention to amend or revise any of these policies, these policies may be amended or revised without notice to shareholders. Accordingly, shareholders may not have control over changes in our policies. We cannot assure you that changes in our policies will serve fully the interests of all shareholders. -19- LIMITED PARTNERS OF PREIT ASSOCIATES, L.P. MAY VOTE ON FUNDAMENTAL CHANGES WE PROPOSE Our assets are generally held through PREIT Associates, a Delaware limited partnership of which we are the sole general partner. We currently hold a majority of the limited partner interests in PREIT Associates. However, PREIT Associates may from time to time issue additional limited partner interests in PREIT Associates to third parties in exchange for contributions of property to PREIT Associates. These issuances will dilute our percentage ownership of PREIT Associates. Limited partner interests in PREIT Associates generally do not carry a right to vote on any matter voted on by our shareholders, although limited partner interests may, under certain circumstances, be redeemed for Shares. However, before the date on which at least half of the partnership interests issued on September 30, 1997 have been redeemed, the holders of partnership interests issued on September 30, 1997 are entitled to vote, along with our shareholders, on any proposal to merge, consolidate or sell substantially all of our assets. Our partnership interests are not included for purposes of determining when half of the partnership interests have been redeemed, nor are they counted as votes. We cannot assure you that we will not agree to extend comparable rights to other limited partners in PREIT Associates. OUR SUCCESS DEPENDS IN PART ON RONALD RUBIN We are dependent on the efforts of Ronald Rubin, our Chief Executive Officer. The loss of his services could have an adverse effect on our operations. If Mr. Rubin were to terminate his employment, his current employment agreement with us would prevent him from becoming an employee of one of our competitors for one year. PREIT-RUBIN WE DO NOT CONTROL OUR MANAGEMENT COMPANY, PREIT-RUBIN Although PREIT Associates owns 95% of the equity interests in our management affiliate, PREIT-RUBIN, all of PREIT-RUBIN's voting stock is owned by a stock bonus plan created for the benefit of PREIT-RUBIN's employees. PREIT-RUBIN's employees are entitled to vote the common shares vested in their accounts in the stock bonus plan on fundamental transactions such as a merger or sale of assets. A Stock Bonus Plan Committee votes the shares in the stock bonus plan on all other matters. PREIT-RUBIN's Board of Directors appoints the Stock Bonus Plan Committee's members. Thus, we do not control the day-to-day operations of PREIT-RUBIN and we have no legal power to influence the manner in which it performs its management obligations, seeks and accepts new business or otherwise determines its business strategy. WE FACE RISKS ASSOCIATED WITH PREIT-RUBIN'S MANAGEMENT OF PROPERTIES OWNED BY THIRD PARTIES -20- PREIT-RUBIN manages a substantial number of properties owned by third parties. Risks associated with the management of properties owned by third parties include: o the property owner's termination of the management contract o loss of the management contract in connection with a property sale o non-renewal of the management contract after expiration o renewal of the management contract on terms less favorable than current terms o decline in management fees as a result of general real estate market conditions or local market factors OUR EMPLOYEES WHO WORK BOTH FOR US AND FOR PREIT-RUBIN MAY HAVE CONFLICTS OF INTEREST There are numerous potential conflicts of interest relating to our investment in PREIT-RUBIN. The interest of those members of our management who are also PREIT-RUBIN affiliates may diverge from your interests. PREIT-RUBIN's employees work on our behalf. However, PREIT-RUBIN will continue to render management, development, leasing and related services to a substantial number of properties in which affiliates of PREIT-RUBIN retain equity interests. We believe that PREIT-RUBIN's management arrangements with these entities are on terms at least as favorable to PREIT-RUBIN as the average of management arrangements with parties unrelated to PREIT-RUBIN. In addition, PREIT-RUBIN leases substantial office space from entities in which our affiliates have an interest. OTHER RISKS WE MAY FAIL TO QUALIFY AS A REIT AND YOU MAY INCUR TAX LIABILITIES AS A RESULT If we fail to qualify as a REIT, we will be subject to Federal income tax at regular corporate rates. In addition, we might be barred from qualification as a REIT for the four years following disqualification. The additional tax incurred at regular corporate rates would reduce significantly the cash flow available for distribution to shareholders and for debt service. To qualify as a REIT, we must comply with certain highly technical and complex requirements. We cannot be certain we have complied because there are few judicial and administrative interpretations of these provisions. In addition, facts and circumstances that may be beyond our control may affect our ability to qualify as a REIT. We cannot assure you that new legislation, regulations, administrative interpretations or court decisions will not change the tax laws significantly with respect to our qualification as a REIT or with respect to the federal income tax consequences of qualification. We believe that we have qualified as a REIT since our inception and intend to continue to qualify as a REIT. However, we cannot assure you that we have been qualified or will remain qualified. -21- WE MAY BE UNABLE TO COMPLY WITH THE STRICT INCOME DISTRIBUTION REQUIREMENTS APPLICABLE TO REITS To obtain the favorable tax treatment associated with qualifying as a REIT, we are required each year to distribute to our shareholders at least 95% of our net taxable income. We could be required to borrow funds on a short-term basis to meet the distribution requirements that are necessary to achieve the tax benefits associated with qualifying as a REIT, even if conditions were not favorable for borrowing. Employees We employ approximately 745 people on a full-time basis. -22- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to its Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. PENNSYLVANIA REAL ESTATE INVESTMENT TRUST Date: April 5, 2000 By: /s/ Jonathan B. Weller ---------------------- Jonathan B. Weller President and Chief Operating Officer -23-
Name Capacity Date ---- -------- ---- * /s/ Sylvan M. Cohen Chairman and Trustee April 5, 2000 - -------------------------- Sylvan M. Cohen * /s/ Ronald Rubin Chief Executive Officer and Trustee April 5, 2000 - -------------------------- Ronald Rubin /s/ Jonathan B. Weller President, Chief Operating Officer and Trustee April 5, 2000 - -------------------------- Jonathan B. Weller * /s/ George Rubin Trustee April 5, 2000 - -------------------------- George Rubin * /s/ William R. Dimeling Trustee April 5, 2000 - -------------------------- William R. Dimeling * /s/ Lee Javitch Trustee April 5, 2000 - -------------------------- Lee Javitch * /s/ Leonard I. Korman Trustee April 5, 2000 - -------------------------- Leonard I. Korman * /s/ Jeffrey P. Orleans Trustee April 5, 2000 - -------------------------- Jeffrey P. Orleans * /s/Rosemarie B. Greco Trustee April 5, 2000 - -------------------------- Rosemarie B. Greco /s/ Edward Glickman Executive Vice President and Chief April 5, 2000 - -------------------------- Financial Officer (principal financial Edward Glickman officer) /s/ Dante J. Massimini Senior Vice President - Finance and Treasurer April 5, 2000 - ------------------------- (principal accounting officer) Dante J. Massimini * By /s/ Jonathan B. Weller (as attorney in fact) ----------------------- Jonathan B. Weller
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