-----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, GjfpQ+QsGzzY0J5TexbnSg2HjMsXGsmRvrhmtq/o+gxTiBQ5Z90p7JjG6quXb7xw VmALyNFczqirsDuH8RonhQ== 0000950116-98-002154.txt : 19981110 0000950116-98-002154.hdr.sgml : 19981110 ACCESSION NUMBER: 0000950116-98-002154 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980917 ITEM INFORMATION: FILED AS OF DATE: 19981109 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: 0831 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-06300 FILM NUMBER: 98741092 BUSINESS ADDRESS: STREET 1: 455 PENNSYLVANIA AVE STREET 2: STE 135 CITY: FORT WASHINGTON STATE: PA ZIP: 19034 BUSINESS PHONE: 2155429250 MAIL ADDRESS: STREET 1: 455 PENNSYLVANIA AVE STREET 2: STE 135 CITY: FORT WASHINGTON STATE: PA ZIP: 19034 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) September 17, 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.) 455 Pennsylvania Avenue, Suite 135, Fort Washington, Pennsylvania 19034 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (215) 542-9250 -------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets. ------------------------------------- The undersigned registrant hereby amends and restates subparagraphs (a) and (b) of Item 7 of its Current Report on Form 8-K dated September 17, 1998, filed on October 2, 1998, as set forth below: Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------ (a) Financial Statements -------------------- (3) Report of Independent Public Accountants Statements of Revenue and Certain Expenses for the Year ended December 31, 1997 (audited) and the Six Months Ended June 30, 1998 (unaudited) Notes to Statements of Revenue and Certain Expenses (b) Pro Forma Financial Information ------------------------------- (1) Unaudited Pro Forma Consolidating Financial Information: Pro Forma Consolidating Balance Sheet as of June 30, 1998 Pro Forma Consolidating Statement of Income for the Twelve Months Ended August 31, 1997 Pro Forma Consolidating Statement of Income for the Four Months Ended December 31, 1997 Pro Forma Consolidating Statement of Income for the Six Months Ended June 30, 1998 -2- (c) Exhibits -------- 2.1* Purchase and Sale and Contribution Agreement dated as of September 17, 1998 by and among Edgewater Associates #3 Limited Partnership, an Illinois limited partnership, Equity-Prince George's Plaza, Inc., an Illinois corporation, PREIT Associates, L.P., a Delaware limited partnership and PR PG Plaza LLC, a Delaware limited liability company. 23 Consent of Arthur Andersen LLP Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to the Purchase and Sale and Contribution Agreement are omitted. The Purchase and Sale and Contribution Agreement identifies the contents of all schedules and exhibits thereto, and the registrant agrees to furnish supplementally copies of such schedules and exhibits to the Securities and Exchange Commission upon request. 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: November 6, 1998 By: /s/ Jonathan B. Weller --------------------------------------- Jonathan B. Weller President and Chief Operating Officer -3- Exhibit Index ------------- Number Exhibit Page Number - ------ ------- ----------- 23 Consent of Arthur Andersen LLP -4- PRINCE GEORGE'S PLAZA STATEMENT OF REVENUE AND CERTAIN EXPENSES AS OF DECEMBER 31, 1997 TOGETHER WITH AUDITORS' REPORT REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Pennsylvania Real Estate Investment Trust: We have audited the statement of revenue and certain expenses of Prince George's Plaza for the year ended December 31, 1997. This financial statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit 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 statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. 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 audit provides a reasonable basis for our opinion. The statement of revenue and certain expenses was 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 is not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of Prince George's Plaza for the year ended December 31, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Philadelphia, Pennsylvania, July 15, 1998 PRINCE GEORGE'S PLAZA --------------------- STATEMENTS OF REVENUE AND CERTAIN EXPENSES (NOTE 1) ---------------------------------------------------
For the Six Months For the Year Ended Ended June 30, December 31, 1998 1997 (Unaudited) ----------- ----------- REVENUE: Minimum rent (Note 2) $ 6,759,611 $ 3,418,745 Percentage rent (Note 2) 505,791 300,348 Tenant reimbursements 2,767,133 1,418,575 Other income 102,336 194,885 ----------- ----------- Total revenue 10,134,871 5,332,553 ----------- ----------- CERTAIN EXPENSES: Maintenance and other operating expenses 2,795,330 1,193,496 Utilities 304,358 107,041 Real estate taxes 747,428 372,696 ----------- ----------- Total certain expenses 3,847,116 1,673,233 ----------- ----------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 6,287,755 $ 3,659,320 =========== ===========
The accompanying notes are an integral part of these financial statements. PRINCE GEORGE'S PLAZA --------------------- NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES -------------------------------------------------- DECEMBER 31, 1997 ----------------- 1. BASIS OF PRESENTATION: --------------------- The statement of revenue and certain expenses reflect the operations of Prince George's Plaza, a regional mall located in Hyattsville, Maryland (the "Property"). The Property is expected to be acquired by Pennsylvania Real Estate Investment Trust (the "Company") from an entity affiliated with the principals of Equity Properties and Development L.P. (the "Seller") in September 1998. The Property has an aggregate net rentable area of 748,000 square feet and is approximately 91% leased as of December 31, 1997. This statement of revenue and certain expenses is 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 accounting records of the Property are maintained on a modified cash basis. Adjusting entries have been made to present the accompanying financial statements in accordance with generally accepted accounting principles. The accompanying financial statements exclude certain expenses such as interest, depreciation and amortization, and other costs not directly related to the future operations of the Property. 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 revenues and expenses during the reporting period and disclosure of contingent assets and liabilities at the date of the financial statements. The ultimate results could differ from those estimates. The statement of revenue and certain expenses for the six months ended June 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 statement of revenue and certain expenses for the interim period have been included. The results of the interim periods are not necessarily indicative of the results for the full year. 2. OPERATING LEASES: ---------------- Minimum rent presented for the year ended December 31, 1997, includes straight-line adjustments for rental revenue increases in accordance with generally accepted accounting principles. The aggregate rental revenue increase resulting from the straight-line adjustments was $117,121 and $17,117 (unaudited) for the year ended December 31, 1997 and the six months ended June 30, 1998, respectively. The Property is leased to tenants under operating leases with expiration dates extending to the year 2008. No individual tenant had annual minimum rent greater than 10% of total annual minimum rent. Future minimum rentals under noncancelable operating leases, excluding tenant reimbursements of operating expenses as of December 31, 1997, are as follows: 1998 $ 5,812,746 1999 5,242,871 2000 4,339,839 2001 3,032,768 2002 2,424,706 Thereafter 5,203,741 Certain leases also include provisions requiring tenants to reimburse the Property for management costs and other operating expenses up to stipulated amounts. Certain other leases also include provisions requiring additional contingent rental amounts ("percentage rents") based upon the tenant's achieving certain sales thresholds. In May 1998, the Emerging Issues Task Force reached a final consensus on EITF Issue 98-9, "Accounting for Contingent Rent in Interim Financial Periods," that lessors should defer recognition of contingent rental income until the lessee's achievement of the specified target that triggers the contingent rental amount. The Property has adopted the provisions of this pronouncement for the six months ended June 30, 1998 and accordingly has recorded only percentage rent in excess of the specified thresholds achieved during this period. 3. RELATED PARTY TRANSACTIONS: -------------------------- The Property paid management fees of $195,985 and $99,375 (unaudited) for the year ended December 31, 1997 and the six months ended June 30, 1998, respectively, to PREIT-RUBIN, Inc., a related party to the Company, based on percentages as defined in the management agreement. These management fees are included within maintenance and other operating expenses in the statements of revenue and certain expenses. 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. As such, the following sets forth the pro forma consolidating balance sheet of the Registrant as of June 30, 1998 and the pro forma consolidating statements of income for the year ended August 31, 1997, the four-month transition period ended December 31, 1997, and the six-month period ended June 30, 1998. The unaudited pro forma consolidating financial information should be read in conjunction with the historical financial statements of the Registrant, The Rubin Organization, Inc. (subsequently renamed PREIT-RUBIN, Inc.), Magnolia Mall, North Dartmouth Mall, Oxford Valley Road Associates, Prince Georges Plaza, Festival at Oaklands and the Woods Apartments 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 June 30, 1998 for balance sheet purposes and September 1, 1996 for purposes of the statements of income: 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. 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. - Development Properties Acquisition. The Operating Partnership became obligated to acquire, upon completion of construction, for Class A OP Units, the interests of certain TRO Affiliates in two shopping centers currently under construction, at prices based upon a pre-determined formula. o The Operating Partnership also acquired the rights of certain TRO Affiliates with respect to 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 June 30, 1998 (Unaudited) (In thousands)
Festival Woods at Prince Georges PREIT PREIT Apartments Oaklands Plaza Pro Forma, Historical Acquisition Acquisition Acquisition As Adjusted ---------- ----------- -------- ----------- ----------- Assets (A) (A) (A) Investments in Real Estate, at cost: Multifamily properties .................................... $ 162,920 $ 21,200 $ -- $ -- $ 184,120 Industrial properties ..................................... 5,078 -- -- -- 5,078 Retail properties ......................................... 120,369 -- 18,400 65,000 203,769 Properties under development .............................. 13,499 -- -- -- 13,499 --------------------------------------------------------------- Total investments in real estate .......................... 301,866 21,200 18,400 65,000 406,466 Less - accumulated depreciation ........................ 57,204 -- -- -- 57,204 --------------------------------------------------------------- 244,662 21,200 18,400 65,000 349,262 Investment in PREIT-RUBIN, Inc. ........................... 4,113 -- -- -- 4,113 Investments in partnerships and joint ventures, at equity . 20,271 -- -- -- 20,271 Advances to PREIT-RUBIN, Inc. ............................. 3,613 -- -- -- 3,613 --------------------------------------------------------------- 272,659 21,200 18,400 65,000 377,259 Less - allowance for possible losses ...................... 1,672 -- -- -- 1,672 --------------------------------------------------------------- 270,987 21,200 18,400 65,000 375,587 Other Assets: Cash and cash equivalents ................................. 1,113 -- -- -- 1,113 Rents and sundry receivables .............................. 1,219 -- -- -- 1,219 Deferred costs, prepaid real estate taxes and expenses, net 6,754 -- -- -- 6,754 --------------------------------------------------------------- $ 280,073 $ 21,200 $ 18,400 $ 65,000 $ 384,673 =============================================================== Liabilities and Shareholders' Equity Mortgage notes payable .................................... $ 64,766 $ 7,340 $ -- $ 43,000 $ 115,106 Bank and other loans payable .............................. 55,126 12,160 18,400 19,000 104,686 Construction cost payable ................................. 1,090 -- -- -- 1,090 Tenants' deposits and deferred rents ...................... 1,096 -- -- -- 1,096 Accrued pension and retirement benefits ................... 977 -- -- -- 977 Accrued expenses and other liabilities .................... 4,148 -- -- -- 4,148 --------------------------------------------------------------- 127,203 19,500 18,400 62,000 227,103 --------------------------------------------------------------- Minority interest ......................................... 15,837 1,700 -- 3,000 20,537 --------------------------------------------------------------- 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 ..................... (21,209) -- -- -- (21,209) --------------------------------------------------------------- 137,033 -- -- -- 137,033 --------------------------------------------------------------- $ 280,073 $ 21,200 $ 18,400 $ 65,000 $ 384,673 ===============================================================
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 TWELEVE MONTHS ENDED AUGUST 31, 1997 (Unaudited) (In thousands, except share and per share data)
1997 Events 1998 Events -------------------------------- ----------- Woods PREIT The TRO The Apartments Historical Transaction Offering Historical ---------- ----------- -------- ---------- Revenues Gross revenues from real estate ..... $ 40,231 $ 12,490 (a) $ -- $ 2,687 Interest and other income ........... 254 234 (b) -- 126 ------------------------- ---------------------------- Total revenues ...................... 40,485 12,724 -- 2,813 ------------------------- ---------------------------- Expenses Property operating expenses ......... 16,289 3,964 (a) -- 1,116 Depreciation and amortization ....... 6,259 1,918 (c) -- -- General and administrative expenses . 3,324 -- -- -- Mortgage and bank loan interest ..... 9,086 6,183 (d) (6,102) (g) -- Provisions for losses on investments. 500 -- -- -- ------------------------- ---------------------------- 35,458 12,065 (6,102) 1,116 ------------------------- ---------------------------- Income before gains on sales of interests in real estate, equity in unconsolidated entities and minority interest ............................ 5,027 659 6,102 1,697 Equity in income of PREIT-RUBIN, Inc. -- 192 (e) -- -- Equity in income of partnerships and joint ventures ...................... 4,337 420 (f) -- -- Gains on sales of interests in real estate............................... 1,069 -- -- -- ------------------------- ---------------------------- Income before minority interest ..... 10,433 1,271 6,102 1,697 Minority interest ................... (198) -- -- -- ------------------------- ---------------------------- Net income (loss) ..................... $ 10,235 $ 1,271 $ 6,102 $ 1,697 ------------------------- ---------------------------- Basic Net Income Per Share .......... $ 1.18 -------- Diluted Net Income Per Share ........ $ 1.18 -------- Weighted Average Number of Shares Outstanding: Basic ............................. 8,679 -------- Diluted ........................... 8,691 --------
RESTUBBED TABLE
1998 Events -------------------------- Prince Festival at Georges Oaklands Plaza Pro Forma PREIT Historical Historical Adjustments Pro Forma ---------- ---------- ----------- --------- Revenues Gross revenues from real estate ..... $ 2,216 $ 9,955 $ -- $ 67,579 Interest and other income ........... -- -- -- 614 ------------------------------------------- --------- Total revenues ...................... 2,216 9,955 -- 68,193 ------------------------------------------- --------- Expenses Property operating expenses ......... 527 3,606 -- 25,502 Depreciation and amortization ....... -- -- 2,092 (h) 10,269 General and administrative expenses . -- -- -- 3,324 Mortgage and bank loan interest ..... -- -- 8,056 (i) 17,223 Provisions for losses on investments. -- -- -- 500 ------------------------------------------- --------- 527 3,606 10,148 56,818 ------------------------------------------- --------- Income before gains on sales of interests in real estate, equity in unconsolidated entities and minority interest............................. 1,689 6,349 (10,148) 11,375 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 ..... 1,689 6,349 (10,148) 17,393 Minority interest ................... -- -- (1,035) (j) (1,233) ------------------------------------------- --------- Net income (loss) ..................... $ 1,689 $ 6,349 $(11,183) $ 16,160 ------------------------------------------- --------- Basic Net Income Per Share .......... $ 1.22 --------- Diluted Net Income Per Share ........ $ 1.22 --------- Weighted Average Number of Shares Outstanding: Basic ............................. 13,279 --------- Diluted ........................... 13,291 ---------
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 FOUR MONTHS ENDED DECEMBER 31, 1997 (Unaudited) (In Thousands, except Per Share Data)
1997 Events 1998 Events ---------------------------------- ----------- Woods PREIT The TRO The Apartments Historical Transaction Offering Acquisition ---------- ----------- -------- ----------- Revenues Gross revenues from real estate .......... $ 17,170 $ 1,008 (k) $ -- $ 915 Interest and other income ................ 82 32 (l) -- 38 -------------------------------------------------------------- Total revenues ........................... 17,252 1,040 -- 953 -------------------------------------------------------------- Expenses Property operating expenses .............. 6,835 291 (k) -- 384 Depreciation and amortization ............ 2,695 160 (m) -- -- General and administrative expenses ...... 1,088 -- -- -- Mortgage and bank loan interest .......... 4,349 515 (n) (1,906) (q) -- -------------------------------------------------------------- 14,967 966 (1,906) 384 -------------------------------------------------------------- Income before equity in unconsolidated entities, gains on sales of interest in real estate and minority interest......... 2,285 74 1,906 569 Equity in income of PREIT-RUBIN, Inc. .... 260 751 (o) -- -- Equity in income of partnerships and joint ventures.................................. 2,101 29 (p) -- -- Gains on sales of interests in real estate 2,090 -- -- -- -------------------------------------------------------------- Income before minority interest and extraordinary item........................ 6,736 854 1,906 569 Minority interest ........................ (474) -- -- -- Extraordinary loss on early extinguishment of debt .................................. (300) -- -- -- -------------------------------------------------------------- Net income $5,962 $ 854 $ 1,906 $ 569 ============================================================== BASIC INCOME PER SHARE: Income before extraordinary item per share Extraordinary loss on early extinguishment $ 0.69 of debt ................................... (0.03) --------- Net Income Per Share ...................... $ 0.66 ========= Weighted Average Number of Shares Outstanding 9,025 ========= DILUTED INCOME PER SHARE: Income before extraordinary item per share. $ 0.69 Extraordinary loss on early extinguishment of debt.................................... (0.03) --------- Net Income Per Share....................... $ 0.66 ========= Weighted Average Number of Shares Outstanding................................ 9,049 =========
RESTUBBED TABLE
1998 Events ------------------------------ Prince Festival At Georges Oaklands Plaza Pro Forma PREIT Acquisition Acquisition Adjustments Pro Forma ----------- ----------- ----------- --------- Revenues Gross revenues from real estate .......... $ 799 $ 3,470 $ -- $ 23,362 Interest and other income ................ -- -- -- 152 ----------------------------------------------------------------- Total revenues ........................... 799 3,470 -- 23,514 ----------------------------------------------------------------- Expenses Property operating expenses .............. 227 1,398 -- 9,135 Depreciation and amortization ............ -- -- 697 (r) 3,552 General and administrative expenses ...... -- -- -- 1,088 Mortgage and bank loan interest .......... -- -- 2,692 (s) 5,650 ----------------------------------------------------------------- 227 1,398 3,389 19,425 ----------------------------------------------------------------- Income before equity in unconsolidated entities, gains on sales of interest in real estate and minority interest......... 572 2,072 (3,389) 4,089 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 and extraordinary item ....................... 572 2,072 (3,389) 9,320 Minority interest ........................ -- -- (162) (t) (636) Extraordinary Loss on early extinguishment -- -- -- (300) ----------------------------------------------------------------- of debt .................................. $ 572 $ 2,072 $ (3,551) $ 8,384 ================================================================= Net income BASIC INCOME PER SHARE: Income before extraordinary item per share $ 0.64 Extraordinary loss on early extinguishment of debt .................................. (0.02) -------- Net Income Per Share ..................... $ 0.62 ======== Weighted Average Number of Shares Outstanding 13,625 ======== DILUTED INCOME PER SHARE: Income before extraordinary item per share $ 0.64 Extraordinary loss on early extinguishment of debt .................................. (0.02) -------- Net Income Per Share ..................... $ 0.62 ======== Weighted Average Number of Shares Outstanding .............................. 13,649 ========
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 SIX MONTHS ENDED JUNE 30, 1998 (Unaudited) (In Thousands, except Per Share Data)
Woods Festival at Prince Georges PREIT Apartments Oaklands Plaza Pro Forma PREIT Historical Historical Historical Historical Adjustments Pro Forma ---------- ---------- ---------- ---------- ----------- --------- Revenues Gross revenues from real estate ......................... $ 27,308 $ 1,449 $ 1,094 $ 5,332 $ -- $ 35,183 Interest and other income ............................... 255 -- 255 -------------------------------------------------------------------- 27,563 1,449 1,094 5,332 -- 35,438 -------------------------------------------------------------------- Expenses` Property operating expenses ............................. 10,019 558 281 1,673 -- 12,531 Depreciation and amortization ........................... 4,251 -- -- -- 1,046 (u) 5,297 General and administrative expenses ..................... 1,607 -- -- -- -- 1,607 Mortgage and bank loan interest ......................... 3,834 -- -- -- 3,976 (v) 7,810 -------------------------------------------------------------------- 19,711 558 281 1,673 5,022 27,245 -------------------------------------------------------------------- Income before equity in unconsolidated entities, gains on sales of interests in real estate, and minority interest 7,852 891 813 3,659 (5,022) 8,193 Equity in loss of PREIT-RUBIN, Inc. ..................... (859) -- -- -- -- (859) Equity in income of partnerships and joint ventures ..... 2,689 -- -- -- -- 2,689 Gains on sales of interests in real estate income before minority interest ....................................... 1,766 -- -- -- -- 1,766 -------------------------------------------------------------------- Income before minority interest ......................... 11,448 891 813 3,659 (5,022) 11,789 Minority interest ....................................... (652) -- -- -- (172)(w) (824) -------------------------------------------------------------------- Net income ................................................ $ 10,796 $ 891 $ 813 3,659 $ (5,194) $10,965 ==================================================================== Basic Net Income Per Share ............................. $ 0.81 $ 0.82 ======== ======= Diluted Net Income Per Share $ 0.81 $ 0.82 ======== ======= Weighted Average Number of Shares Outstanding Basic 13,297 13,297 ======== ======= Diluted 13,324 13,324 ======== =======
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 November 9, 1998 the Registrant owned 53 properties of which 7 properties are currently under development. The Registrant's interest in all of the Properties is held through PREIT Associates LP (the "Operating Partnership"). 2. ADJUSTMENTS TO PRO FORMA CONSOLIDATING BALANCE SHEET: (A) Reflects the Registrant's recent property acquisitions as follows:
Woods Festival at Prince Georges Apartments Oaklands Plaza ---------- -------- ----- Purchase price $21,200 $18,400 $65,000 Consideration: Mortgage indebtedness assumed 7,340 -- 43,000 Borrowings under revolving line of credit 12,160 18,400 19,000 Issuance of Class A OP Units *1,700 --- **3,000 -------------------------------------------------- $21,200 $18,400 $65,000 ==================================================
* 72,592 Class A OP Units at $23.425 per unit ** 131,504 Class A OP Units at $22.813 per unit 3. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED AUGUST 31, 1997: (a) 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 ====== ====== ======
(b) 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 ============== (c) 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 ============== (d) 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 to fund remaining purchase price 737 North Dartmouth Mall bank borrowings of $35,000 to fund purchase price 2,538 Deposit of $5,000 on Magnolia Mall 363 Bank borrowings of $11,482 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 ============== (e) To record equity in income 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 (5) consolidation (115) -------- 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 income after intangible amortization. (f) 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 =============== (g) 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 ===============
(h) To record depreciation on acquisitions as follows: Purchase Depreciable Price Building Portion (80%) 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 ---------- Pro Forma Depreciation $2,092 ========== (i) 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 ------------ $ 8,056 ============ (j) 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 and approximately 131,504 Class A OP units at $22.813 for the Woods Apartments and Prince Georges Plaza acquisitions, respectively. $(1,035) ============ 4. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE FOUR MONTHS ENDED DECEMBER 31, 1997: (k) 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 ================ ================== ================ (l) 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 ===================
(m) To record additional depreciation expense as follows: Magnolia Mall - depreciable basis of $45,998 over 40-year useful life North Dartmouth Mall - depreciable basis of $96 $30,709 over 40-year useful life 64 ------------------- $160 =================== (n) 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 to fund remaining purchase price 61 North Dartmouth Mall bank borrowings of $35,000 to fund purchase price 211 Deposit of $5,000 on Magnolia Mall 30 Bank borrowings of $11,482 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 =================== (o) 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. (p) 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 ============== (q) 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 ============== (r) To record depreciation expense on acquisitions as follows: Purchase Depreciable Price Building Portion (80%) Life In Years Depreciation -------------------------------------------------------------------------------------- Woods Apartments $21,200 $16,960 40 $141 Prince Georges Plaza 65,000 52,000 40 433 Festival at Oaklands 18,400 14,720 40 123 --------------- $697 =============== (s) 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 ------------------- $2,692 ===================
(t) 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 and approximately 131,504 Class A OP units at $22.813 for the Woods Apartments and Prince Georges Plaza acquisitions, respectively. $(162) =================== 5. ADJUSTMENTS TO PRO FORMA CONSOLIDATING STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998: (u) To record depreciation expense on acquisitions as follows: Purchase Depreciable Price Building Portion (80%) Life In Years Depreciation ----- --------------------- ------------- ------------ Woods Apartments $21,200 $16,960 40 $212 Prince Georges Plaza 65,000 52,000 40 650 Festival at Oaklands 18,400 14,720 40 184 ---------------- Pro Forma Depreciation Adjustment $1,046 ================ (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 7.22% Interest ------------ ------------- ----------------- -------------- --------------- ------------------- Woods Apartments 8.625% $ 7,340 $ 317 $12,160 $ 439 $ 756 Prince Georges Plaza 8.700% 43,000 1,870 19,000 686 2,556 Festival at Oaklands --- --- --- 18,400 664 664 ------------------- Pro Forma Interest Adjustment $3,976 =================== (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 and approximately 131,504 Class A OP units at $22.813 for the Woods Apartments and Prince Georges Plaza acquisitions, respectively. $(172) ===================
EX-23 2 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated July 15, 1998 included in this Form 8-K/A dated September 17, 1998 on the statement of revenue and certain expenses of Prince Georges Plaza into the Registrant's previously filed Registration Statements on Forms S-3 (File No. 33-61115 and File No. 333-49817) and Forms S-8 (File No. 33-59771, File No. 33-59773 and File No. 33-59767). /s/ ARTHUR ANDERSEN LLP Philadelphia, Pa., November 9, 1998 -----END PRIVACY-ENHANCED MESSAGE-----