425 1 four25.txt 425 Filed by Pennsylvania Real Estate Investment Trust Subject Company: Crown American Realty Trust Pursuant to Rule 425 under the Securities Act of 1933 And Deemed Filed Pursuant to Rule 14a-12 Under the Securities Exchange Act of 1934 Commission File No.: 1-6300 [Images of stores omitted] -------------------------------------------------------------------------------- [PREIT logo omitted] Pennsylvania Real Estate Investment Trust Annual Shareholder Meeting June 5, 2003 [Listed on NYSE as PEI] -------------------------------------------------------------------------------- [PREIT logo omitted] -------------------------------------------------------------------------------- Ron Rubin Chairman and CEO -------------------------------------------------------------------------------- [PREIT logo omitted] Recent Events -------------------------------------------------------------------------------- o Purchase of 6 Rouse Assets o Sale of Multifamily Portfolio o Merger Agreement with Crown -------------------------------------------------------------------------------- [PREIT logo omitted] Strategy -------------------------------------------------------------------------------- o Value Retail o Concentrated in Mid - Atlantic Region o Repositioning -------------------------------------------------------------------------------- [PREIT logo omitted] Next Steps... -------------------------------------------------------------------------------- o Complete remaining Rouse/Multifamily o Close Crown transaction o Complete integration o Reposition properties o Dispositions of non-core retail assets o Acquisitions consistent with strategy -------------------------------------------------------------------------------- [PREIT logo omitted] -------------------------------------------------------------------------------- Jon Weller President and COO -------------------------------------------------------------------------------- [PREIT logo omitted] PREIT People Make It Happen -------------------------------------------------------------------------------- [Image of PREIT employees omitted] --------------------------------------------------------------------------------
[PREIT logo omitted] Location Map Pro Forma -------------------------------------------------------------------------------- Location Map Pro Forma Wisconsin Massachusetts --------- ------------- Properties Sq. Ft. Properties Sq. Ft. ---------- ------- ---------- ------- Valley View Mall 587,000 Dartmouth Mall 626,557 New Jersey Pennsylvania ---------- ------------ Properties Sq. Ft. Properties Sq. Ft. ---------- ------- ---------- ------ Phillipsburg Mall 551,682 Beaver Valley Mall 1,175,046 Rio Mall* 158,937 Capital City Mall 609,757 Carlisle City Mall (3) 341,885 Delaware Chambersburg Mall 454,583 -------- Creekview Shopping Center 425,002 Properties Sq. Ft. Crest Plaza Shopping Center 155,294 ---------- ------- Festival at Exton 142,649 Christiana Power Center 1 302,409 Laurel Mall* 558,802 Lehigh Valley Mall* 1,051,145 Maryland Logan Valley Mall 784,364 -------- Lycoming Mall 794,635 Properties Sq. Ft. Metroplex Shopping Center* 778,190 ---------- ------- Nittany Mall 531,209 Francis Scott Key Mall 707,060 North Hanover Mall 449,905 Prince George's Plaza 750,023 Northeast Tower Center 472,102 Valley Mall 898,710 Palmer Park Mall 446,739 Paxton Towne Center 715,248 Virginia Red Rose Commons* 463,042 -------- Schuykill Mall (2) 729,239 Properties Sq. Ft. Shenango Valley Mall (2) 513,367 ---------- ------- South Mall 406,727 New River Valley Mall 428,817 Springfield Park I & II* 268,500 Patrick Henry Mall 641,568 The Court at Oxford Valley* 704,486 Uniontown Mall (2) 697,936 North Carolina Viewmont Mall 770,460 -------------- Washington Crown Center 670,738 Properties Sq. Ft. West Manchester Mall(2) 703,448 ---------- ------- Whitehall Mall* 533,721 Jacksonville Mall 414,132 Willow Grove Park* 1,203,624 Wyoming Valley Mall 917,909 South Carolina -------------- Tennessee Properties Sq. Ft. --------- ---------- ------- Properties Sq. Ft. Magnolia Mall 579,244 ---------- ------- The Commons at Magnolia 231,318 Bradley Square (2) 404,049 Oak Ridge Mall(3) 887,780 Georgia ------- West Virginia Properties Sq. Ft. ------------- ---------- ------- Properties Sq. Ft. Mount Brewery Square (2) 478,673 ---------- ------- Crossroads Mall 449,665 Florida Martinsburg Mall 556,419 ------- Properties Sq. Ft. ---------- ------- South Blanding Village 106,857 [Map of Eastern United States omitted] --------------------------------------------------------------------------------
[PREIT logo omitted] Significant Presence in Pennsylvania and the Mid-Atlantic Pro Forma -------------------------------------------------------------------------------- [Pie Chart omitted. Data is as follows: o Pennsylvania - 61% o New Jersey - 13% o Maryland - 7% o Virginia - 3% o West Virginia - 3% o South Carolina - 2% o Alabama - 2% o Massachusetts - 2% o Wisconsin - 2% o Other - 5%] Total Sq Ft: 33.5M ------------------ o Data based on total square footage. Information for PREIT excludes properties under construction, as well as multifamily and indistrial assets. Pro forma for the acquisition of all 6 Rouse assets. o Crown and PREIT data as of December 31, 2002 Form 10K. Rouse information per PREIT's March 6, 2003 press release. [PREIT logo omitted] Asset Type December 31, 2002 -------------------------------------------------------------------------------- PREIT portfolio by Square Footage [Pie chart omitted. Data is as follows: o Strip Center - 6% o Power Center - 24% o Mall - 34% o Multifamily - 36%] Total Sq Ft: 18.5M ------------------------------------------------------------------------------- [PREIT logo omitted] Asset Type Pro Forma -------------------------------------------------------------------------------- Combined portfolio by Square Footage [Pie chart omitted. Data is as follows: o Strip Center - 3% o Power Center - 13% o Mall - 84%] Total Sq Ft: 33.5M -------------------------------------------------------------------------------- [PREIT logo omitted] -------------------------------------------------------------------------------- Ed Glickman Executive VP and CFO -------------------------------------------------------------------------------- [PREIT logo omitted] Performance! (in millions) -------------------------------------------------------------------------------- 2001 2002 Gross Revenues from Real Estate $100.2 $114.6 Company proportionate 35.6 43.7 Share of JVs-Revenues ------ ------ Total Revenues $136.7 $158.3 -------------------------------------------------------------------------------- [PREIT logo omitted] Performance! (in millions) -------------------------------------------------------------------------------- 2001 2002 Gross Revenues from Real Estate $100.2 $114.6 Property Operating Expenses 33.0 37.6 ------ ------ NOI:WO Properties 67.2 77.0 Company proportionate 23.9 28.6 Share of JVs-Revenues ------ ------ NOI $91.1 $105.6 -------------------------------------------------------------------------------- See Exhibit A for reconciliation to net income. [PREIT logo omitted] Investment In Real Estate (in millions) -------------------------------------------------------------------------------- 2001 2002 Investment in Real Estate $636.3 $739.4 Company proportionate Share of JVs Investment in 198.1 213.6 Real Estate ------ ------ Total Investment in Real Estate $834.4 $953.0 -------------------------------------------------------------------------------- [PREIT logo omitted] Stock Price -------------------------------------------------------------------------------- [Line chart detailing stock price from December 2001 through current omitted. Data as follows: Date Stock Price ---------- ----------- 12/31/2001 $23.20 1/31/2002 $23.28 2/28/2002 $23.10 3/31/2002 $25.50 4/30/2002 $25.70 5/31/2002 $25.90 6/30/2002 $27.11 7/31/2002 $25.70 8/31/2002 $26.25 9/30/2002 $25.76 10/31/2002 $25.65 11/30/2002 $25.31 12/31/2002 $26.00 1/31/2003 $25.70 2/28/2003 $25.90 3/31/2003 $28.65 4/30/2003 $28.55 5/31/2003 $28.22 6/04/2003 $28.53] -------------------------------------------------------------------------------- [PREIT logo omitted] Market Capitalization (in millions) Pro Forma Market Cap Est.: $2.7 Billion [Chart detailing Market Capitaliztion from 1998 through 2003 pro forma estimate omitted. Data as follows: Period Market Capitalization ------ --------------------- 1998 $692.6 1999 $703.7 2000 $812.5 2001 $915.2 2002 $1097.3 2003- pro forma est. $2679.5] -------------------------------------------------------------------------------- [PREIT logo omitted] Funds From Operations (per share) [Chart detailing funds from Operations (per share) from 1998 through 2003 pro forma estimate omitted. Data as follows: Period FFO per share ------ ------------- 1998 $2.45 1999 $2.65 2000 $3.06 2001 $2.70 2002 $2.85 2003- pro forma est. $3.40] See Exhibit A for reconciliation to net income. [PREIT logo omitted] Balance Sheet Pro Forma Estimate -------------------------------------------------------------------------------- [Pie chart omitted, Data is as follows: o Debt - 61% o Common Stock - 34% o Preferred Stock - 5%] Pro Forma Market Cap Est.: $2.7 Billion -------------------------------------------------------------------------------- [PREIT logo omitted] Summary -------------------------------------------------------------------------------- o Company is undergoing transformation o New strategic focus o Enhanced position in the capital markets -------------------------------------------------------------------------------- [PREIT logo omitted] Forward Looking Statements -------------------------------------------------------------------------------- This presentation contains forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and other matters that are not historical facts. These forward-looking statements reflect PREIT's current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause future events, achievements or results to differ materially from those expressed by the forward-looking statements. In particular, PREIT may not be able to consummate the merger with Crown's or the acquisition of Echelon Mall and Plymouth Meeting Mall from the Rouse Company on previously announced terms, on otherwise favorable terms to PREIT, or at all. If such transactions are consummated, PREIT's actual results may differ significantly from those expressed in any forward-looking statement. Certain factors that could cause PREIT not to consummate such transactions or could cause PREIT's actual results to differ materially from expected results include, without limitation, failure of the requisite number of PREIT and Crown shareholders to approve the merger, the satisfaction of closing conditions applicable to such transactions (some of which are beyond PREIT's control); and other economic, business or competitive factors. In addition, PREIT's business is subject to uncertainties regarding the revenues, operating expenses, leasing activities, occupancy rates, and other competitive factors relating to PREIT's portfolio and the properties proposed to be acquired and changes in local market conditions as well as general economic, financial and political conditions, including the possibility of outbreak or escalation of war or terrorist attacks, any of which may cause future events, achievements or results to differ materially from those expressed by the forward-looking statements. PREIT does not intend to and disclaims any duty or obligation to update or revise any forward-looking statements or industry information set forth in this document to reflect new information, future events or otherwise. -------------------------------------------------------------------------------- [PREIT logo omitted] Investor Notice -------------------------------------------------------------------------------- In connection with the merger with Crown American Realty Trust, PREIT and Crown American Realty Trust intend to file a joint proxy statement/prospectus on Form S-4 and other materials with the Securities and Exchange Commission. SECURITY HOLDERS ARE URGED TO READ THESE MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of these materials when they become available as well as other materials filed with the Securities and Exchange Commission concerning PREIT and Crown American Realty Trust at the Securities and Exchange Commission's website at http://www.sec.gov. In addition, these materials and other documents filed by PREIT may be obtained for free by directing a request to Pennsylvania Real Estate Investment Trust at The Bellevue, 200 S. Broad Street, Philadelphia, PA 19102; Attn: Investor Relations. In addition, these materials and other documents filed by Crown American Realty Trust may be obtained for free by directing a request to Crown American Realty at Pasquerilla Plaza, Johnstown, Pennsylvania 15901; Attn: Investor Relations. PREIT and Crown American Realty Trust, and their respective trustees and executive officers and other members of their management and employees, may be deemed to be participants in the solicitation of proxies from the shareholders of PREIT and Crown American Realty Trust in connection with the merger. Information about the trustees and executive officers of PREIT and their ownership of PREIT shares is set forth in the proxy statement for PREIT's 2003 Annual Meeting of Shareholders, which was filed with the Securities and Exchange Commission on April 30, 2003. Information about the trustees and executive officers of Crown American Realty Trust and their ownership of Crown American Realty Trust stock is set forth in the Crown American Realty Trust's Annual Report on Form 10-K and the amendment to its Form 10-K filed with the Securities and Exchange Commission on March 31, 2003 and April 22, 2003, respectively. Investors may obtain additional information regarding the interests of such participants by reading the joint proxy statement/prospectus when its becomes available. -------------------------------------------------------------------------------- Exhibit A - Reconciliation to Net Income
Year Ended 12/31 (in thousands except per share amounts) ---------------------------------------------------------------- 2002 2001 2000 1999 1998 Gross revenues from real estate $ 114,599 $ 100,215 $ 97,447 $ 87,079 $ 59,641 Property operating expenses (37,548) (33,037) (32,251) (31,375) (22,080) ---------------------------------------------------------------- Net operating income: wholly-owned properties 77,051 67,178 65,196 55,704 37,561 Company's proportionate share of partnerships and joint ventures net operating income 28,592 23,913 21,102 19,353 18,222 ---------------------------------------------------------------- Combined net operating income (1) 105,643 91,091 86,298 75,057 55,783 ================================================================ Company's share of PREIT-RUBIN, Inc. net operating (loss) income -- -- (4,498) (2,504) 762 Interest and other income 711 361 1,385 1,144 650 Management fees 11,003 11,336 -- -- -- General and administrative expenses (24,747) (23,577) (4,953) (3,560) (3,351) ---------------------------------------------------------------- 92,610 79,211 78,232 70,137 53,844 Interest expense (41,697) (35,594) (34,315) (30,440) (18,946) Depreciation and amortization (28,857) (23,634) (19,668) (19,300) (13,969) PREIT-RUBIN, Inc. income taxes -- -- -- 56 123 Minority interest in operating partnership (2,194) (2,499) (3,627) (2,061) (1,372) Discontinued operations (269) 198 1,334 584 462 Gains on sales of real estate 4,085 2,107 10,298 1,763 3,043 ---------------------------------------------------------------- Net income $ 23,678 $ 19,789 $ 32,254 $ 20,739 $ 23,185 ================================================================ Net income per share $ 1.44 $ 1.35 $ 2.41 $ 1.56 $ 1.74 ================================================================
See definition slide for net operating income definition. Exhibit A (continued) - Reconciliation to Net Income
Funds From Operations Year Ended 12/31 ---------------------------------------------------------------- 2002 2001 2000 1999 1998 ---------------------------------------------------------------- Net income $ 23,678 $ 19,789 $ 32,254 $ 20,739 $ 23,185 Minority interest in operating partnership 2,194 2,499 3,627 2,061 1,372 Minority interest in discontinued operations 421 25 157 60 51 Gains on sales of interests in real estate -- (2,107) (10,298) (1,763) (3,043) Gains on dispositions of discontinued operations (4,085) -- -- -- -- Depreciation and amortization: Wholly owned & consolidated partnerships, net 21,151 17,145 14,825 12,743 8,219 Unconsolidated partnerships & joint ventures 7,446 6,264 4,585 4,458 4,011 Discontinued operations 285 406 403 363 396 Excess purchase price over net assets acquired -- 423 291 195 115 Prepayment fee 77 255 -- 55 270 ---------------------------------------------------------------- Funds from operations (2) $ 51,167 $ 44,699 $ 45,844 $ 38,911 $ 34,576 ================================================================ FFO per share $ 2.85 $ 2.70 $ 3.06 $ 2.65 $ 2.45 ================================================================
See definition slide for funds from operations definition. Exhibit A (continued) - Definitions (1) Net Operating Income ("NOI") is derived from real estate revenues (determined in accordance with GAAP) minus property operating expenses (determined in accordance with GAAP). NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of the Company's financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity; nor is it indicative of funds available for the Company's cash needs, including its ability to make cash distributions. In addition, the Company's measure of NOI as presented may not be comparable to similarly titled measures reported by other companies. (2) Funds from operations ("FFO") is defined as income before gains (losses) on property sales and extraordinary items (computed in accordance with generally accepted accounting principles ("GAAP") plus real estate depreciation and similar adjustments for unconsolidated joint ventures after adjustments for non-real estate depreciation and amortization for financing costs. FFO should not be construed as an alternative to net income (as determined in accordance with GAAP) as an indicator of the Company's operating preformance, or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. In addition, the Company's measure of FFO as presented may not be comparable to similarly titled measures reported by other companies.